Fourth Quarter Results
- Net income of $44.5 million, $1.16 per diluted common share,
or $1.21 per diluted common share when excluding $2.4 million
FDIC special assessment1
- Net interest margin (“NIM”) of 4.23%, quarterly decrease of
10 basis points
- Net interest income of $140.7 million, quarterly decrease of
$0.9 million
- Total loans of $10.9 billion, quarterly increase of $267.3
million, or 10% annualized
- Total deposits of $12.2 billion, quarterly increase of
$266.5 million
- Return on Average Assets (“ROAA”) of 1.23%, or 1.28%
adjusted for FDIC special assessment1
- Return on Average Tangible Common Equity (“ROATCE”)1 of
14.38%, or 14.98% adjusted for FDIC special assessment1
- Tangible common equity to tangible assets1 of 8.96%
- Tangible book value per share1 of $33.85, quarterly increase
of 9%
2023 Results
- Net income of $194.1 million, $5.07 per diluted common
share, or $5.12 per diluted common share when excluding $2.4
million FDIC special assessment1
- Net interest income of $562.6 million, increase of $88.7
million
- Total loans increased $1.1 billion, or 12%
- Total deposits increased $1.3 billion, or 12%
- ROAA of 1.41%, or 1.42% adjusted for FDIC special
assessment1
- ROATCE1 of 16.25% or 16.40% adjusted for FDIC special
assessment1
- Tangible book value per share1 increased $5.18, or
18%
Jim Lally, President and Chief Executive Officer of Enterprise
Financial Services Corp (Nasdaq: EFSC) (the “Company” or
“EFSC”), commented, “I am pleased with how strong we finished 2023,
although we unfortunately had an elevated level of charge-offs in
the fourth quarter, with the largest charge-off attributable to a
single agricultural relationship. This relationship had specific
aspects that drove the loss that we believe is an isolated
issue.”
Lally added, “While the charge-offs and related provision for
credit losses reduced our earnings for the year, we achieved a 1.4%
ROAA1 driven by a 10% increase in pre-provision net revenue
('PPNR')1. Our consistent marketing efforts and partnership with
our customers resulted in a 12% increase in net loan growth, with
the increase being primarily funded with core deposits. For the
full year, we reported earnings per share ('EPS') of $5.07 and a
16.4% return on average tangible common equity1. As we look to
2024, we expect to continue to capitalize on opportunities to grow
and strengthen the Company.”
Full-Year Highlights For 2023, net income was $194.1
million, or $5.07 per diluted share, compared to $203.0 million, or
$5.31 per diluted share, in 2022. Excluding the impact of the FDIC
special assessment of $2.4 million, EPS was $5.12 for 2023. PPNR1
for 2023 was $284.8 million, compared to $258.9 million in 2022.
Organic earning-asset growth and expansion of net interest income
due to the increase in market interest rates were the primary
contributors to the PPNR increase in 2023. Offsetting the increase
in PPNR was a $37.2 million increase in the provision for credit
losses in 2023 compared to 2022.
The Company’s asset sensitive balance sheet benefited from the
increase in market interest rates during 2023. NIM expanded to
4.43% in 2023, from 3.89% in 2022. The increase in NIM and average
interest-earning asset growth of $508.2 million resulted in total
net interest income of $562.6 million in 2023, a 19% increase from
$473.9 million in 2022.
Noninterest income was $68.7 million, an increase of 16% from
$59.2 million in 2022. The increase was primarily due to higher
volumes in tax credit income, private equity and community
development income, and gains on the sale of SBA loans. Offsetting
these amounts were a decrease in deposit services charges due to
higher earnings credit rates, and a decrease in card services due
to the full year impact of the Durbin Amendment. Total noninterest
expense was $348.2 million in 2023, a 27% increase from $274.2
million in 2022. The increase was primarily from higher customer
servicing deposit costs due to higher deposit balances and an
increase in earnings credit rates, and an increase in compensation
from a larger associate base, and annual merit increases. The core
efficiency ratio2 was 53.4% in 2023, compared to 49.8% in 2022.
Nonperforming assets were 0.34% of total assets at the end of
2023, compared to 0.08% at the end of 2022. Net charge-offs were
0.37% of average loans in 2023, compared to 0.04% in 2022. The
allowance for credit losses declined to 1.24% of total loans at the
end of 2023, from 1.41% at the end of 2022. The decrease was
primarily due to the charge-off of certain nonperforming loans and
an improvement in forecasted economic factors. Excluding guaranteed
portions of loans, the allowance to loans ratio was 1.35% and 1.56%
at the end of 2023 and 2022, respectively. A provision for credit
losses of $36.6 million was recorded in 2023 primarily due to net
charge-offs in the year, compared to a benefit for credit losses of
$0.6 million in 2022.
The Company maintained a strong liquidity position in 2023, with
total deposits of $12.2 billion, a loan-to-deposit ratio of 89.4%
and cash and investment securities of $2.9 billion. This compares
to total deposits of $10.8 billion, a loan-to-deposit ratio of
89.9% and cash and investment securities of $2.6 billion at the end
of 2022. Non-interest bearing deposits comprise 32.5% of total
deposits at December 31, 2023, compared to 42.9% at the end of
2022. Excluding brokered certificates of deposits, core deposits as
of December 31, 2023 totaled $11.7 billion, an increase of $983.4
million from the prior year.
Total shareholders’ equity was $1.7 billion and $1.5 billion as
of December 31, 2023 and December 31, 2022, respectively. The
increase was primarily due to net income of $194.1 million and an
increase in accumulated other comprehensive income (“AOCI”) of
$29.3 million. The change in AOCI was primarily due to an
improvement in the fair value of available for sale investment
securities due to a decline in longer-term market interest rates.
The Company returned $37.4 million, or $1.00 per share, to common
shareholders and $3.8 million, or $50.00 per share, to preferred
shareholders in 2023.
Fourth Quarter Highlights
- Earnings - Net income in the fourth quarter 2023 was
$44.5 million, a decrease of $0.1 million compared to the linked
quarter and a decrease of $15.5 million from the prior year
quarter. EPS was $1.16 for the fourth quarter 2023, compared to
$1.17 and $1.58 for the linked and prior year quarters,
respectively. Excluding the impact of the FDIC special assessment
of $2.4 million, EPS was $1.21 for the fourth quarter 2023.
- PPNR - PPNR1 of $75.8 million in the fourth quarter 2023
increased $10.7 million and decreased $2.8 million from the linked
and prior year quarters, respectively. The increase from the linked
quarter was primarily due to an increase in noninterest income,
partially offset by an increase in noninterest expense. The
decrease from the prior year quarter was primarily due to an
increase in customer deposit servicing costs as a result of higher
market interest rates.
- Net interest income and NIM - Net interest income of
$140.7 million for the fourth quarter 2023 decreased $0.9 million
and increased $1.9 million from the linked and prior year quarters,
respectively. NIM was 4.23% for the fourth quarter 2023, compared
to 4.33% and 4.66% for the linked and prior year quarters,
respectively. Compared to the linked quarter, net interest income
declined due to higher deposit interest expense, partially offset
by higher average loan and investment balances and expanding yields
on earning assets.
- Noninterest income - Noninterest income of $25.5 million
for the fourth quarter 2023 increased $13.4 million from the linked
quarter and increased $8.6 million from the prior year quarter. The
increase from the linked and prior year quarters was primarily due
to an increase in tax credit income. Tax credit income improved due
to higher volumes and from the impact on fair value from the
decrease in market interest rates on projects carried at fair
value.
- Loans - Total loans increased $267.3 million from the
linked quarter to $10.9 billion as of December 31, 2023. Loans grew
10% on an annualized basis, from the linked quarter and 12% for the
year. Average loans totaled $10.7 billion for the fourth quarter
2023, compared to $10.5 billion and $9.4 billion for the linked and
prior year quarters, respectively.
- Asset quality - The allowance for credit losses to loans
was 1.24% at December 31, 2023, compared to 1.34% at September 30,
2023 and 1.41% at December 31, 2022. Nonperforming assets to total
assets was 0.34% at December 31, 2023, compared to 0.40% and 0.08%
at September 30, 2023 and December 31, 2022, respectively. A
provision for credit losses of $18.1 million was recorded in the
fourth quarter 2023, compared to $8.0 million and $2.1 million for
the linked and prior year quarters, respectively.
- Deposits - Total deposits increased $266.5 million from
the linked quarter to $12.2 billion as of December 31, 2023.
Average deposits totaled $12.2 billion for the fourth quarter 2023,
compared to $11.9 billion and $11.0 billion for the linked and
prior year quarters, respectively. At December 31, 2023,
noninterest-bearing deposit accounts represented 32.5% of total
deposits, and the loan to deposit ratio was 89.4%.
- Capital - Total shareholders’ equity was $1.7 billion
and the tangible common equity to tangible assets ratio1 was 8.96%
at December 31, 2023, compared to 8.43% at December 31, 2022. The
tangible common equity to tangible assets ratio increased due to
strong earnings growth and an increase in accumulated other
comprehensive income from an improvement in the fair value of
available-for-sale securities. Enterprise Bank & Trust remains
“well-capitalized,” with a common equity tier 1 ratio of 12.2% and
a total risk-based capital ratio of 13.2% as of December 31, 2023.
The Company’s common equity tier 1 ratio and total risk-based
capital ratio was 11.3% and 14.2%, respectively, at December 31,
2023. The Company’s Board of Directors approved a quarterly
dividend of $0.25 per common share, payable on March 29, 2024 to
shareholders of record as of March 15, 2024. The Board of Directors
also declared a cash dividend of $12.50 per share of Series A
Preferred Stock (or $0.3125 per depositary share) representing a 5%
per annum rate for the period commencing (and including) December
15, 2023 to (but excluding) March 15, 2024. The dividend will be
payable on March 15, 2024 to shareholders of record on February 29,
2024.
1
ROATCE, tangible common equity to tangible
assets, tangible book value per share, and PPNR are non-GAAP
measures. EPS, ROAA and ROATCE when excluding FDIC special
assessment are non-GAAP measures. Please refer to discussion and
reconciliation of these measures in the accompanying financial
tables.
2
Core efficiency ratio is a non-GAAP
measure. Please refer to discussion and reconciliation of this
measure in the accompanying financial tables.
Net Interest Income and NIM Average Balance Sheets The
following table presents, for the periods indicated, certain
information related to our average interest-earning assets and
interest-bearing liabilities, as well as, the corresponding
interest rates earned and paid, all on a tax-equivalent basis.
Quarter ended
December 31, 2023
September 30, 2023
December 31, 2022
($ 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
$
10,685,961
$
184,982
6.87
%
$
10,521,966
$
180,382
6.80
%
$
9,423,984
$
139,432
5.87
%
Securities2
2,276,915
18,385
3.20
2,302,850
18,076
3.11
2,204,211
16,191
2.91
Interest-earning deposits
420,762
5,631
5.31
335,771
4,509
5.33
367,100
3,097
3.35
Total interest-earning assets
13,383,638
208,998
6.20
13,160,587
202,967
6.12
11,995,295
158,720
5.25
Noninterest-earning assets
949,166
908,273
991,273
Total assets
$
14,332,804
$
14,068,860
$
12,986,568
Liabilities and Shareholders’
Equity
Interest-bearing liabilities:
Interest-bearing demand accounts
$
2,844,847
$
17,248
2.41
%
$
2,672,084
$
13,701
2.03
%
$
2,242,268
$
4,136
0.73
%
Money market accounts
3,342,979
30,579
3.63
3,079,221
26,427
3.40
2,696,417
9,509
1.40
Savings accounts
609,645
268
0.17
646,187
250
0.15
775,488
100
0.05
Certificates of deposit
1,373,808
14,241
4.11
1,519,119
14,976
3.91
524,938
1,017
0.77
Total interest-bearing deposits
8,171,279
62,336
3.03
7,916,611
55,354
2.77
6,239,111
14,762
0.94
Subordinated debentures and notes
155,907
2,475
6.30
155,769
2,466
6.28
155,359
2,376
6.07
FHLB advances
—
—
—
10,326
141
5.42
8,864
104
4.65
Securities sold under agreements to
repurchase
150,827
1,226
3.22
146,893
969
2.61
182,362
282
0.61
Other borrowings
49,013
314
2.54
50,571
337
2.66
26,993
378
5.56
Total interest-bearing liabilities
8,527,026
66,351
3.09
8,280,170
59,267
2.84
6,612,689
17,902
1.07
Noninterest-bearing liabilities:
Demand deposits
3,992,067
4,005,923
4,763,503
Other liabilities
160,829
134,162
119,784
Total liabilities
12,679,922
12,420,255
11,495,976
Shareholders' equity
1,652,882
1,648,605
1,490,592
Total liabilities and shareholders'
equity
$
14,332,804
$
14,068,860
$
12,986,568
Total net interest income
$
142,647
$
143,700
$
140,818
Net interest margin
4.23
%
4.33
%
4.66
%
1 Average balances include nonaccrual
loans. Interest income includes loan fees of $3.1 million, $3.3
million, and $3.7 million for the three months ended December 31,
2023, September 30, 2023, and December 31, 2022, respectively.
2 Non-taxable income is presented on a
fully tax-equivalent basis using a tax rate of approximately 25%.
The tax-equivalent adjustments were $1.9 million, $2.1 million, and
$2.0 million for the three months ended December 31, 2023,
September 30, 2023, and December 31, 2022, respectively.
Net interest income for the fourth quarter was $140.7 million, a
decrease of $0.9 million from the linked quarter and an increase of
$1.9 million from the prior year period. Net interest income on a
tax equivalent basis was $142.6 million, $143.7 million, and $140.8
million for the current, linked and prior year quarters,
respectively. The decrease from the linked quarter was primarily
due to the impact of rising rates and continued remixing into
higher cost categories on the deposit portfolio. The increase from
the prior year quarter reflects the benefit of higher market
interest rates on the Company’s asset sensitive balance sheet
combined with organic growth.
Interest income increased $6.2 million during the quarter
primarily due to a $4.6 million increase in loan interest income
and a $1.1 million increase in interest income on cash accounts.
Interest on loans benefited from a 7 basis point increase in
average yield and a $164.0 million increase in average loan
balances, compared to the linked quarter. The average interest rate
of new loan originations in the fourth quarter 2023 was 7.95%.
Interest on cash accounts increased due to a $85.0 million increase
in average balances.
Interest expense increased $7.1 million in the fourth quarter
2023 primarily due to increased deposit interest expense. The
increase in deposit interest expense reflects higher rates paid on
deposits as well as successful marketing efforts that increased
average deposits. The average cost of interest-bearing deposits was
3.03%, an increase of 26 basis points compared to the linked
quarter. The total cost of deposits, including noninterest-bearing
demand accounts, was 2.03% during the fourth quarter 2023, compared
to 1.84% in the linked quarter.
NIM, on a tax equivalent basis, was 4.23% in the fourth quarter
2023, a decrease of 10 basis points from the linked quarter and a
decrease of 43 basis points from the prior year quarter. For the
month of December 2023, the loan portfolio yield was 6.92% and the
cost of total deposits was 2.07%.
Investments
Quarter ended
December 31, 2023
September 30, 2023
December 31, 2022
($ in thousands)
Carrying
Value
Net
Unrealized
Loss
Carrying Value
Net
Unrealized
Loss
Carrying
Value
Net
Unrealized
Loss
Available-for-sale (AFS)
$
1,618,273
$
(150,861
)
$
1,487,104
$
(235,013
)
$
1,535,807
$
(193,247
)
Held-to-maturity (HTM)
750,434
(54,572
)
730,655
(108,780
)
709,915
(82,133
)
Total
$
2,368,707
$
(205,433
)
$
2,217,759
$
(343,793
)
$
2,245,722
$
(275,380
)
Investment securities totaled $2.4 billion at December 31, 2023,
an increase of $150.9 million from the linked quarter. The increase
was primarily due to a $84.2 million increase in the fair value of
available-for-sale securities due to a decline in longer-term rates
in the quarter. Investment purchases in the fourth quarter 2023 had
a weighted average, tax equivalent yield of 5.4%.
The average duration of the investment portfolio was
approximately 6 years at December 31, 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 $325 million.
The tangible common equity to tangible assets ratio adjusted for
unrealized losses on held-to-maturity securities was 8.67% at
December 31, 2023, compared to 7.91% at September 30, 2023.
Loans The following table presents total loans for the
most recent five quarters:
Quarter ended
($ in thousands)
December 31,
2023
September 30,
2023
June 30,
2023
March 31,
2023
December 31,
2022
C&I
$
2,186,203
$
2,020,303
$
2,029,370
$
2,005,539
$
1,904,654
CRE investor owned
2,291,660
2,260,220
2,290,701
2,239,932
2,176,424
CRE owner occupied
1,262,264
1,255,885
1,208,675
1,173,985
1,174,094
SBA loans*
1,281,632
1,309,497
1,327,667
1,315,732
1,312,378
Sponsor finance*
872,264
888,000
879,491
677,529
635,061
Life insurance premium finance*
956,162
928,486
912,274
859,910
817,115
Tax credits*
734,594
683,580
609,137
547,513
559,605
Residential real estate
359,957
364,618
354,588
348,726
379,924
Construction and land development
670,567
639,555
599,375
590,509
534,753
Other
268,815
266,676
301,345
252,543
243,130
Total loans
$
10,884,118
$
10,616,820
$
10,512,623
$
10,011,918
$
9,737,138
Total loan yield
6.87
%
6.80
%
6.64
%
6.33
%
5.87
%
Variable interest rate loans to total
loans
61
%
61
%
62
%
63
%
63
%
*Specialty loan category
Loans totaled $10.9 billion at December 31, 2023, increasing
$267.3 million, or 10% on an annualized basis, from the linked
quarter. The increase was driven primarily by a C&I increase of
$165.9 million, a CRE and construction increase of $68.8 million
and a specialty lending increase of $35.1 million. Average line
utilization was approximately 42% for the quarter ended December
31, 2023, compared to 41% for both the linked and prior year
quarters, respectively.
Asset Quality The following table presents the categories
of nonperforming assets and related ratios for the most recent five
quarters:
Quarter ended
($ in thousands)
December 31,
2023
September 30,
2023
June 30,
2023
March 31,
2023
December 31,
2022
Nonperforming loans*
$
43,728
$
48,932
$
16,112
$
11,972
$
9,981
Other
5,736
6,933
—
250
269
Nonperforming assets*
$
49,464
$
55,865
$
16,112
$
12,222
$
10,250
Nonperforming loans to total loans
0.40
%
0.46
%
0.15
%
0.12
%
0.10
%
Nonperforming assets to total assets
0.34
%
0.40
%
0.12
%
0.09
%
0.08
%
Allowance for credit losses to loans
1.24
%
1.34
%
1.34
%
1.38
%
1.41
%
Net charge-offs (recoveries)
$
28,479
$
6,856
$
2,973
$
(264
)
$
2,075
*Guaranteed balances excluded
$
10,682
$
5,974
$
6,666
$
6,835
$
6,708
Nonperforming assets decreased $6.4 million during the fourth
quarter 2023 and increased $39.2 million from the prior year
quarter. The decrease from the linked quarter was primarily due to
a $5.2 million reduction in nonperforming loans. In the fourth
quarter 2023, $32.2 million of new loans moved into nonperforming
status, $24.4 million of which were charged-off in the quarter. The
bulk of the charged-off amount was related to two relationships,
one in the agricultural portfolio that surfaced late in the quarter
and another to a commercial real estate developer. The agricultural
and commercial real estate developer relationships totaled $16.4
million and $10.0 million, respectively, of which $13.0 million and
$10.0 million, respectively, were charged-off in the fourth quarter
2023. The increase in nonperforming loans from the prior year
quarter was primarily due to a $30.4 million increase in real
estate loans and a $3.3 million increase in C&I loans. Net
charge-offs totaled 37 basis points of average loans in 2023,
compared to 4 basis points in 2022.
The $43.7 million in nonperforming loans at December 31, 2023
consists primarily of 8 relationships representing 81% of total
nonperforming loans that each have a balance greater than $1
million.
The provision for credit losses totaled $18.1 million in the
fourth quarter 2023, compared to $8.0 million and $2.1 million in
the linked and prior year quarters, respectively. The provision for
credit losses in the fourth quarter primarily relates to
charge-offs and loan growth, partially offset by an improvement in
the economic forecast.
The allowance for credit losses to loans was 1.24% at December
31, 2023, a decrease of 10 basis points from the linked
quarter.
Deposits The following table presents deposits broken out
by type for the most recent five quarters:
Quarter ended
($ in thousands)
December 31,
2023
September 30,
2023
June 30,
2023
March 31,
2023
December 31,
2022
Noninterest-bearing demand accounts
$
3,958,743
$
3,852,486
$
3,880,561
$
4,192,523
$
4,642,732
Interest-bearing demand accounts
2,950,259
2,749,598
2,629,339
2,395,901
2,256,295
Money market and savings accounts
3,994,455
3,837,145
3,577,856
3,672,539
3,399,415
Brokered certificates of deposit
482,759
695,551
893,808
369,505
118,968
Other certificates of deposit
790,155
775,127
638,296
524,168
411,740
Total deposit portfolio
$
12,176,371
$
11,909,907
$
11,619,860
$
11,154,636
$
10,829,150
Noninterest-bearing deposits to total
deposits
32.5
%
32.3
%
33.4
%
37.6
%
42.9
%
Total costs of deposits
2.03
%
1.84
%
1.46
%
0.92
%
0.53
%
Total deposits at December 31, 2023 were $12.2 billion, an
increase of $266.5 million and $1.3 billion from the linked and
prior year quarters, respectively. Excluding brokered certificates
of deposits, deposits increased $479.3 million and $983.4 million
from the linked and prior year quarters, respectively. Reciprocal
deposits, which are placed through third party programs to provide
FDIC insurance on larger deposit relationships, totaled $1.2
billion at December 31, 2023, compared to $1.1 billion at September
30, 2023.
Total estimated insured deposits, which includes collateralized
deposits, reciprocal accounts and accounts that qualify for
pass-through insurance, totaled $8.3 billion, or 69% of total
deposits, at the end of December 31, 2023, compared to $8.5
billion, or 71% of total deposits, in the linked quarter.
Noninterest Income The following table presents a
comparative summary of the major components of noninterest income
for the periods indicated:
Linked quarter comparison
Prior year comparison
Quarter ended
Quarter ended
($ in thousands)
December 31,
2023
September 30,
2023
Increase (decrease)
December 31,
2022
Increase (decrease)
Deposit service charges
4,334
4,187
$
147
4
%
$
4,463
$
(129
)
(3
)%
Wealth management revenue
2,428
2,614
(186
)
(7
)%
2,423
5
—
%
Card services revenue
2,666
2,560
106
4
%
2,345
321
14
%
Tax credit income (loss)
9,688
(2,673
)
12,361
462
%
2,389
7,299
306
%
Other income
6,336
5,397
939
17
%
5,253
1,083
21
%
Total noninterest income
$
25,452
$
12,085
$
13,367
111
%
$
16,873
$
8,579
51
%
Total noninterest income for the fourth quarter 2023 was $25.5
million, an increase of $13.4 million from the linked quarter and
an increase of $8.6 million from the prior year quarter. The
increase from both the linked and prior year quarters was primarily
due to an increase in tax credit income. Tax credit income is
typically highest in the fourth quarter of each year and will vary
in other periods based on transaction volumes and fair value
changes on credits carried at fair value. The discount rate used in
the fair value determination is the 10-year SOFR swap rate, which
decreased approximately 80 basis points in the fourth quarter.
The following table presents a comparative summary of the major
components of other income for the periods indicated:
Linked quarter comparison
Prior year comparison
Quarter ended
Quarter ended
($ in thousands)
December 31,
2023
September 30,
2023
Increase (decrease)
December 31,
2022
Increase (decrease)
BOLI
$
1,279
$
822
$
457
56
%
$
773
$
506
65
%
Community development investments
1,027
338
689
204
%
2,775
(1,748
)
(63
)%
Private equity fund distributions
725
181
544
301
%
433
292
67
%
Servicing fees
774
701
73
10
%
181
593
328
%
Swap fees
163
54
109
202
%
189
(26
)
(14
)%
Gain on SBA loan sales
—
1,514
(1,514
)
(100
)%
—
—
—
%
Miscellaneous income
2,368
1,787
581
33
%
902
1,466
163
%
Total other income
$
6,336
$
5,397
$
939
17
%
$
5,253
$
1,083
21
%
The increase in bank-owned life insurance income in the fourth
quarter 2023 compared to the linked and prior year quarters was
related to a policy benefit payment. While a small portfolio of SBA
loans was sold in the linked quarter, no loans were sold in the
fourth quarter 2023. However, $11 million of investment securities
were sold in the fourth quarter 2023 resulting in a gain of $0.2
million that is included in miscellaneous income.
Noninterest Expense The following table presents a
comparative summary of the major components of noninterest expense
for the periods indicated:
Linked quarter comparison
Prior year comparison
Quarter ended
Quarter ended
($ in thousands)
December 31,
2023
September 30,
2023
Increase (decrease)
December 31,
2022
Increase (decrease)
Employee compensation and benefits
$
39,651
$
40,771
$
(1,120
)
(3
)%
$
38,175
$
1,476
4
%
Occupancy
4,313
4,198
115
3
%
4,248
65
2
%
Deposit costs
21,606
20,987
619
3
%
13,256
8,350
63
%
FDIC special assessment
2,412
—
2,412
—
%
—
2,412
—
%
Other expense
24,621
22,688
1,933
9
%
21,470
3,151
15
%
Total noninterest expense
$
92,603
$
88,644
$
3,959
4
%
$
77,149
$
15,454
20
%
Noninterest expense was $92.6 million for the fourth quarter
2023, a $4.0 million increase from the linked quarter, and a $15.5
million increase from the prior year quarter. Included in
noninterest expense in the fourth quarter 2023 was an assessment of
$2.4 million from the FDIC to recover losses in the Deposit
Insurance Fund related to the 2023 bank failures. Employee
compensation and benefits decreased $1.1 million from the linked
quarter primarily due to lower performance-based incentive accruals
and a reduction in accrued PTO from vacation usage. Deposit costs
increased $0.6 million from the linked quarter, primarily due to
growth in average balances that receive an earnings credit rate.
Other expense increased due to higher OREO and loan workout
expenses, along with an increase in charitable contributions and
data processing expenses.
The increase in noninterest expense of $15.5 million from the
prior year quarter was primarily due to an $8.4 million increase in
variable deposit costs, an increase in the associate base, merit
increases throughout 2022 and 2023, and the FDIC special
assessment.
For the fourth quarter 2023, the Company’s core efficiency
ratio2 was 53.1% for the quarter ended December 31, 2023, compared
to 56.2% for the linked quarter and 48.1% for the prior year
quarter.
Income Taxes The Company’s effective tax rate was 19.8%
in the fourth quarter 2023, compared to 21.7% and 21.5% in the
linked and prior year quarters, respectively. In conjunction with
the completion of the 2022 tax returns in the fourth quarter 2023,
the effective tax rate was decreased due to a lower state tax
apportionment. The anticipated effective tax rate for 2024 is
approximately 21%.
Capital The following table presents total equity and
various EFSC capital ratios for the most recent five quarters:
Quarter ended
Percent
December 31,
2023*
September 30,
2023
June 30,
2023
March 31,
2023
December 31,
2022
Shareholders’ equity
$
1,716,068
$
1,611,880
$
1,618,233
$
1,592,820
$
1,522,263
Total risk-based capital to risk-weighted
assets
14.2
%
14.1
%
14.1
%
14.3
%
14.2
%
Tier 1 capital to risk-weighted assets
12.7
%
12.6
%
12.5
%
12.6
%
12.6
%
Common equity tier 1 capital to
risk-weighted assets
11.3
%
11.2
%
11.1
%
11.2
%
11.1
%
Leverage ratio
11.0
%
10.9
%
11.0
%
11.1
%
10.9
%
Tangible common equity to tangible
assets
8.96
%
8.51
%
8.65
%
8.81
%
8.43
%
*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 $1.7 billion at December 31, 2023, an increase
of $104.2 million from the linked quarter. The increase from the
linked quarter was primarily due to the current quarter’s net
income of $44.5 million and a $66.8 million increase in accumulated
other comprehensive income due to a net fair value increase in the
Company’s fixed-rate, available-for-sale investment portfolio.
Offsetting these increases were $10.3 million in common and
preferred dividends. The Company’s tangible common book value per
share was $33.85 at December 31, 2023, compared to $31.06 and
$28.67 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.
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, ROACE, ROATCE, ROAA, 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, ROACE,
ROATCE, ROAA, 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 the FDIC special
assessment, 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 23, 2024. During the call, management will review
the fourth 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/EFSC4Q2023EarningsCallRegistration. 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 $14.5
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, 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
Year ended
(in thousands, except per share data)
Dec 31,
2023
Sep 30,
2023
Jun 30,
2023
Mar 31,
2023
Dec 31,
2022
Dec 31,
2023
Dec 31,
2022
EARNINGS SUMMARY
Net interest income
$
140,732
$
141,639
$
140,692
$
139,529
$
138,835
$
562,592
$
473,903
Provision (benefit) for credit losses
18,053
8,030
6,339
4,183
2,123
36,605
(611
)
Noninterest income
25,452
12,085
14,290
16,898
16,873
68,725
59,162
Noninterest expense
92,603
88,644
85,956
80,983
77,149
348,186
274,216
Income before income tax expense
55,528
57,050
62,687
71,261
76,436
246,526
259,460
Income tax expense
10,999
12,385
13,560
15,523
16,435
52,467
56,417
Net income
44,529
44,665
49,127
55,738
60,001
194,059
203,043
Preferred stock dividends
937
938
937
938
937
$
3,750
$
4,041
Net income available to common
shareholders
$
43,592
$
43,727
$
48,190
$
54,800
$
59,064
$
190,309
$
199,002
Diluted earnings per common share
$
1.16
$
1.17
$
1.29
$
1.46
$
1.58
$
5.07
$
5.31
Return on average assets1
1.28
%
1.26
%
1.44
%
1.72
%
1.83
%
1.42
%
1.52
%
Return on average common equity1
11.40
%
11.00
%
12.48
%
14.85
%
16.52
%
12.39
%
13.95
%
ROATCE1
14.98
%
14.49
%
16.53
%
19.93
%
22.62
%
16.40
%
19.10
%
Net interest margin (tax equivalent)
4.23
%
4.33
%
4.49
%
4.71
%
4.66
%
4.43
%
3.89
%
Efficiency ratio
55.72
%
57.66
%
55.46
%
51.77
%
49.55
%
55.15
%
51.44
%
Core efficiency ratio1
53.06
%
56.18
%
54.04
%
50.47
%
48.10
%
53.42
%
49.77
%
Assets
$
14,518,590
$
14,025,042
$
13,871,154
$
13,325,982
$
13,054,172
Average assets
$
14,332,804
$
14,068,860
$
13,671,985
$
13,131,195
$
12,986,568
$
13,805,236
$
13,319,624
Period end common shares outstanding
37,416
37,385
37,359
37,311
37,253
Dividends per common share
$
0.25
$
0.25
$
0.25
$
0.25
$
0.24
$
1.00
$
0.90
Tangible book value per common share1
$
33.85
$
31.06
$
31.23
$
30.55
$
28.67
Tangible common equity to tangible
assets1
8.96
%
8.51
%
8.65
%
8.81
%
8.43
%
Total risk-based capital to risk-weighted
assets2
14.2
%
14.1
%
14.1
%
14.3
%
14.2
%
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 CONSOLIDATED FINANCIAL SUMMARY (unaudited)
(continued)
Quarter ended
Year ended
($ in thousands, except per share
data)
Dec 31,
2023
Sep 30,
2023
Jun 30,
2023
Mar 31,
2023
Dec 31,
2022
Dec 31,
2023
Dec 31,
2022
INCOME STATEMENTS
NET INTEREST INCOME
Interest income
$
207,083
$
200,906
$
187,897
$
169,033
$
156,737
$
764,919
$
515,082
Interest expense
66,351
59,267
47,205
29,504
17,902
202,327
41,179
Net interest income
140,732
141,639
140,692
139,529
138,835
562,592
473,903
Provision (benefit) for credit losses
18,053
8,030
6,339
4,183
2,123
36,605
(611
)
Net interest income after provision
(benefit) for credit losses
122,679
133,609
134,353
135,346
136,712
525,987
474,514
NONINTEREST INCOME
Deposit service charges
4,334
4,187
3,910
4,128
4,463
16,559
18,326
Wealth management revenue
2,428
2,614
2,472
2,516
2,423
10,030
10,010
Card services revenue
2,666
2,560
2,464
2,338
2,345
10,028
11,551
Tax credit income (loss)
9,688
(2,673
)
368
1,813
2,389
9,196
2,558
Other income
6,336
5,397
5,076
6,103
5,253
22,912
16,717
Total noninterest income
25,452
12,085
14,290
16,898
16,873
68,725
59,162
NONINTEREST EXPENSE
Employee compensation and benefits
39,651
40,771
41,641
42,503
38,175
164,566
147,029
Occupancy
4,313
4,198
3,954
4,061
4,248
16,526
17,640
Deposit costs
21,606
20,987
16,980
12,720
13,256
72,293
31,082
FDIC special assessment
2,412
—
—
—
—
2,412
—
Other expense
24,621
22,688
23,381
21,699
21,470
92,389
78,465
Total noninterest expense
92,603
88,644
85,956
80,983
77,149
348,186
274,216
Income before income tax expense
55,528
57,050
62,687
71,261
76,436
246,526
259,460
Income tax expense
10,999
12,385
13,560
15,523
16,435
52,467
56,417
Net income
$
44,529
$
44,665
$
49,127
$
55,738
$
60,001
$
194,059
$
203,043
Preferred stock dividends
937
938
937
938
937
3,750
4,041
Net income available to common
shareholders
$
43,592
$
43,727
$
48,190
$
54,800
$
59,064
$
190,309
$
199,002
Basic earnings per common share
$
1.16
$
1.17
$
1.29
$
1.47
$
1.59
$
5.09
$
5.32
Diluted earnings per common share
$
1.16
$
1.17
$
1.29
$
1.46
$
1.58
$
5.07
$
5.31
ENTERPRISE FINANCIAL SERVICES
CORP CONSOLIDATED FINANCIAL SUMMARY (unaudited)
(continued)
Quarter ended
($ in thousands)
Dec 31,
2023
Sep 30,
2023
Jun 30,
2023
Mar 31,
2023
Dec 31,
2022
BALANCE SHEETS
ASSETS
Cash and due from banks
$
193,275
$
190,806
$
202,702
$
210,813
$
229,580
Interest-earning deposits
243,610
184,245
125,328
81,241
69,808
Debt and equity investments
2,434,902
2,279,578
2,340,821
2,338,746
2,309,512
Loans held for sale
359
212
551
261
1,228
Loans
10,884,118
10,616,820
10,512,623
10,011,918
9,737,138
Allowance for credit losses
(134,771
)
(142,133
)
(141,319
)
(138,295
)
(136,932
)
Total loans, net
10,749,347
10,474,687
10,371,304
9,873,623
9,600,206
Fixed assets, net
42,681
41,268
41,988
42,340
42,985
Goodwill
365,164
365,164
365,164
365,164
365,164
Intangible assets, net
12,318
13,425
14,544
15,680
16,919
Other assets
476,934
475,657
408,752
398,114
418,770
Total assets
$
14,518,590
$
14,025,042
$
13,871,154
$
13,325,982
$
13,054,172
LIABILITIES AND SHAREHOLDERS’ EQUITY
Noninterest-bearing deposits
$
3,958,743
$
3,852,486
$
3,880,561
$
4,192,523
$
4,642,732
Interest-bearing deposits
8,217,628
8,057,421
7,739,299
6,962,113
6,186,418
Total deposits
12,176,371
11,909,907
11,619,860
11,154,636
10,829,150
Subordinated debentures and notes
155,984
155,844
155,706
155,569
155,433
FHLB advances
—
—
150,000
100,000
100,000
Other borrowings
297,829
182,372
199,390
213,489
324,119
Other liabilities
172,338
165,039
127,965
109,468
123,207
Total liabilities
12,802,522
12,413,162
12,252,921
11,733,162
11,531,909
Shareholders’ equity:
Preferred stock
71,988
71,988
71,988
71,988
71,988
Common stock
374
374
374
373
373
Additional paid-in capital
995,208
992,044
988,355
984,281
982,660
Retained earnings
749,513
715,303
680,981
642,153
597,574
Accumulated other comprehensive loss
(101,015
)
(167,829
)
(123,465
)
(105,975
)
(130,332
)
Total shareholders’ equity
1,716,068
1,611,880
1,618,233
1,592,820
1,522,263
Total liabilities and shareholders’
equity
$
14,518,590
$
14,025,042
$
13,871,154
$
13,325,982
$
13,054,172
ENTERPRISE FINANCIAL SERVICES
CORP CONSOLIDATED FINANCIAL SUMMARY (unaudited)
(continued)
Year ended
December 31, 2023
December 31, 2022
($ in thousands)
Average
Balance
Interest
Income/
Expense
Average
Yield/
Rate
Average
Balance
Interest
Income/
Expense
Average
Yield/
Rate
Assets
Interest-earning assets:
Loans1, 2
$
10,324,951
$
688,439
6.67
%
$
9,193,682
$
456,703
4.97
%
Securities2
2,291,552
71,129
3.10
2,100,687
54,822
2.61
Interest-earning deposits
260,214
13,430
5.16
1,074,165
10,599
0.99
Total interest-earning assets
12,876,717
772,998
6.00
12,368,534
522,124
4.22
Noninterest-earning assets
928,519
951,090
Total assets
$
13,805,236
$
13,319,624
Liabilities and Shareholders’
Equity
Interest-bearing liabilities:
Interest-bearing demand accounts
$
2,559,238
$
46,976
1.84
%
$
2,318,363
$
7,038
0.30
%
Money market accounts
3,043,794
92,976
3.05
2,781,579
19,306
0.69
Savings accounts
668,368
975
0.15
819,043
305
0.04
Certificates of deposit
1,198,551
42,796
3.57
569,272
3,509
0.62
Total interest-bearing deposits
7,469,951
183,723
2.46
6,488,257
30,158
0.46
Subordinated debentures and notes
155,702
9,781
6.28
155,160
9,166
5.91
FHLB advances
54,615
2,752
5.04
33,467
599
1.79
Securities sold under agreements to
repurchase
168,745
3,647
2.16
211,039
506
0.24
Other borrowings
71,738
2,424
3.38
22,812
750
3.29
Total interest-bearing liabilities
7,920,751
202,327
2.55
6,910,735
41,179
0.60
Noninterest-bearing liabilities:
Demand deposits
4,131,163
4,805,549
Other liabilities
130,201
104,581
Total liabilities
12,182,115
11,820,865
Shareholders' equity
1,623,121
1,498,759
Total liabilities and shareholders'
equity
$
13,805,236
$
13,319,624
Total net interest income
$
570,671
$
480,945
Net interest margin
4.43
%
3.89
%
1 Average balances include nonaccrual
loans. Interest income includes loan fees of $13.8 million and
$16.7 million for the years ended December 31, 2023 and December
31, 2022, respectively.
2 Non-taxable income is presented on a
fully tax-equivalent basis using a tax rate of approximately 25%.
The tax-equivalent adjustments were $8.1 million and $7.0 million
for the years ended December 31, 2023 and December 31, 2022,
respectively.
ENTERPRISE FINANCIAL SERVICES
CORP CONSOLIDATED FINANCIAL SUMMARY (unaudited)
(continued)
Quarter ended
($ in thousands)
Dec 31,
2023
Sep 30,
2023
Jun 30,
2023
Mar 31,
2023
Dec 31,
2022
LOAN PORTFOLIO
Commercial and industrial
$
4,672,559
$
4,448,535
$
4,360,862
$
4,032,189
$
3,859,882
Commercial real estate
4,803,571
4,794,355
4,802,293
4,699,302
4,628,371
Construction real estate
760,425
723,796
671,573
663,264
611,565
Residential real estate
372,188
376,120
368,867
364,059
395,537
Other
275,375
274,014
309,028
253,104
241,783
Total loans
$
10,884,118
$
10,616,820
$
10,512,623
$
10,011,918
$
9,737,138
DEPOSIT PORTFOLIO
Noninterest-bearing demand accounts
$
3,958,743
$
3,852,486
$
3,880,561
$
4,192,523
$
4,642,732
Interest-bearing demand accounts
2,950,259
2,749,598
2,629,339
2,395,901
2,256,295
Money market and savings accounts
3,994,455
3,837,145
3,577,856
3,672,539
3,399,415
Brokered certificates of deposit
482,759
695,551
893,808
369,505
118,968
Other certificates of deposit
790,155
775,127
638,296
524,168
411,740
Total deposits
$
12,176,371
$
11,909,907
$
11,619,860
$
11,154,636
$
10,829,150
AVERAGE BALANCES
Loans
$
10,685,961
$
10,521,966
$
10,284,873
$
9,795,045
$
9,423,984
Securities
2,276,915
2,302,850
2,297,995
2,288,451
2,204,211
Interest-earning assets
13,383,638
13,160,587
12,756,653
12,189,750
11,995,295
Assets
14,332,804
14,068,860
13,671,985
13,131,195
12,986,568
Deposits
12,163,346
11,922,534
11,387,813
10,913,489
11,002,614
Shareholders’ equity
1,652,882
1,648,605
1,621,337
1,568,451
1,490,592
Tangible common equity1
1,202,872
1,197,486
1,169,091
1,115,052
1,035,896
YIELDS (tax equivalent)
Loans
6.87
%
6.80
%
6.64
%
6.33
%
5.87
%
Securities
3.20
3.11
3.06
3.03
2.91
Interest-earning assets
6.20
6.12
5.97
5.69
5.25
Interest-bearing deposits
3.03
2.77
2.26
1.56
0.94
Deposits
2.03
1.84
1.46
0.92
0.53
Subordinated debentures and notes
6.30
6.28
6.27
6.28
6.07
FHLB advances and other borrowed funds
3.06
2.76
3.45
2.60
1.39
Interest-bearing liabilities
3.09
2.84
2.40
1.72
1.07
Net interest margin
4.23
4.33
4.49
4.71
4.66
1 Refer 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)
Dec 31,
2023
Sep 30,
2023
Jun 30,
2023
Mar 31,
2023
Dec 31,
2022
ASSET QUALITY
Net charge-offs (recoveries)
$
28,479
$
6,856
$
2,973
$
(264
)
$
2,075
Nonperforming loans
43,728
48,932
16,112
11,972
9,981
Classified assets
185,389
184,393
108,065
110,384
99,122
Nonperforming loans to total loans
0.40
%
0.46
%
0.15
%
0.12
%
0.10
%
Nonperforming assets to total assets
0.34
%
0.40
%
0.12
%
0.09
%
0.08
%
Allowance for credit losses to total
loans
1.24
%
1.34
%
1.34
%
1.38
%
1.41
%
Allowance for credit losses to loans,
excluding guaranteed loans
1.35
%
1.47
%
1.48
%
1.53
%
1.56
%
Allowance for credit losses to
nonperforming loans
308.2
%
290.5
%
877.1
%
1,155.2
%
1,371.9
%
Net charge-offs (recoveries) to average
loans -annualized
1.06
%
0.26
%
0.12
%
(0.01
)%
0.09
%
WEALTH MANAGEMENT
Trust assets under management
$
2,235,073
$
2,129,408
$
1,992,563
$
1,956,146
$
1,885,394
SHARE DATA
Book value per common share
$
43.94
$
41.19
$
41.39
$
40.76
$
38.93
Tangible book value per common share1
$
33.85
$
31.06
$
31.23
$
30.55
$
28.67
Market value per share
$
44.65
$
37.50
$
39.10
$
44.59
$
48.96
Period end common shares outstanding
37,416
37,385
37,359
37,311
37,253
Average basic common shares
37,421
37,405
37,347
37,305
37,257
Average diluted common shares
37,554
37,520
37,495
37,487
37,415
CAPITAL
Total risk-based capital to risk-weighted
assets2
14.2
%
14.1
%
14.1
%
14.3
%
14.2
%
Tier 1 capital to risk-weighted
assets2
12.7
%
12.6
%
12.5
%
12.6
%
12.6
%
Common equity tier 1 capital to
risk-weighted assets2
11.3
%
11.2
%
11.1
%
11.2
%
11.1
%
Tangible common equity to tangible
assets1
8.96
%
8.51
%
8.65
%
8.81
%
8.43
%
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,
2023
Sep 30,
2023
Jun 30,
2023
Mar 31,
2023
Dec 31,
2022
Dec 31,
2023
Dec 31,
2022
CORE EFFICIENCY RATIO
Net interest income (GAAP)
$
140,732
$
141,639
$
140,692
$
139,529
$
138,835
$
562,592
$
473,903
Tax equivalent adjustment
1,915
2,061
2,062
2,041
1,983
8,079
7,042
Noninterest income (GAAP)
25,452
12,085
14,290
16,898
16,873
68,725
59,162
Less gain on sale of investment
securities
220
—
—
381
—
601
—
Less gain (loss) on sale of other real
estate owned
—
—
97
90
—
187
(93
)
Core revenue (non-GAAP)
167,879
155,785
156,947
157,997
157,691
638,608
540,200
Noninterest expense (GAAP)
92,603
88,644
85,956
80,983
77,149
348,186
274,216
Less FDIC special assessment
2,412
—
—
—
—
2,412
—
Less amortization on intangibles
1,108
1,118
1,136
1,239
1,299
4,601
5,367
Core noninterest expense (non-GAAP)
89,083
87,526
84,820
79,744
75,850
341,173
268,849
Core efficiency ratio (non-GAAP)
53.06
%
56.18
%
54.04
%
50.47
%
48.10
%
53.42
%
49.77
%
Quarter ended
(in thousands, except per share data)
Dec 31,
2023
Sep 30,
2023
Jun 30,
2023
Mar 31,
2023
Dec 31,
2022
TANGIBLE COMMON EQUITY, TANGIBLE BOOK
VALUE PER SHARE AND TANGIBLE COMMON EQUITY RATIO
Shareholders’ equity
$
1,716,068
$
1,611,880
$
1,618,233
$
1,592,820
$
1,522,263
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
12,318
13,425
14,544
15,680
16,919
Tangible common equity (non-GAAP)
$
1,266,598
$
1,161,303
$
1,166,537
$
1,139,988
$
1,068,192
Less net unrealized losses on HTM
securities, after tax
41,038
81,367
53,611
48,630
61,435
Tangible common equity adjusted for
unrealized losses on HTM securities (non-GAAP)
$
1,225,560
$
1,079,936
$
1,112,926
$
1,091,358
$
1,006,757
Common shares outstanding
37,416
37,385
37,359
37,311
37,253
Tangible book value per share
(non-GAAP)
$
33.85
$
31.06
$
31.23
$
30.55
$
28.67
Total assets
$
14,518,590
$
14,025,042
$
13,871,154
$
13,325,982
$
13,054,172
Less goodwill
365,164
365,164
$
365,164
365,164
365,164
Less intangible assets
12,318
13,425
$
14,544
15,680
16,919
Tangible assets (non-GAAP)
$
14,141,108
$
13,646,453
$
13,491,446
$
12,945,138
$
12,672,089
Tangible common equity to tangible assets
(non-GAAP)
8.96
%
8.51
%
8.65
%
8.81
%
8.43
%
Tangible common equity to tangible assets
adjusted for unrealized losses on HTM securities (non-GAAP)
8.67
%
7.91
%
8.25
%
8.43
%
7.94
%
Quarter Ended
Year ended
($ in thousands)
Dec 31,
2023
Sep 30,
2023
Jun 30,
2023
Mar 31,
2023
Dec 31,
2022
Dec 31,
2023
Dec 31,
2022
RETURN ON AVERAGE TANGIBLE COMMON
EQUITY (ROATCE)
Average shareholder’s equity
$
1,652,882
$
1,648,605
$
1,621,337
$
1,568,451
$
1,490,592
$
1,623,121
$
1,498,759
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
12,858
13,967
15,094
16,247
17,544
14,531
19,516
Average tangible common equity
$
1,202,872
$
1,197,486
$
1,169,091
$
1,115,052
$
1,035,896
$
1,171,438
$
1,042,091
Net income available to common
shareholders (GAAP)
$
43,592
$
43,727
$
48,190
$
54,800
$
59,064
$
190,309
$
199,002
FDIC special assessment (after tax)
1,814
—
—
—
—
1,814
—
Net income available to common
shareholders adjusted (non-GAAP)
$
45,406
$
43,727
$
48,190
$
54,800
$
59,064
$
192,123
$
199,002
Return on average common equity excluding
FDIC assessment (non-GAAP)
11.40
%
11.00
%
12.48
%
14.85
%
16.52
%
12.39
%
13.95
%
ROATCE (non-GAAP)
14.38
%
14.49
%
16.53
%
19.93
%
22.62
%
16.25
%
19.10
%
ROATCE excluding FDIC special assessment
(non-GAAP)
14.98
%
14.49
%
16.53
%
19.93
%
22.62
%
16.40
%
19.10
%
Quarter ended
Year ended
($ in thousands)
Dec 31,
2023
Sep 30,
2023
Jun 30,
2023
Mar 31,
2023
Dec 31,
2022
Dec 31,
2023
Dec 31,
2022
CALCULATION OF PRE-PROVISION NET
REVENUE (PPNR)
Net interest income
$
140,732
$
141,639
$
140,692
$
139,529
$
138,835
$
562,592
$
473,903
Noninterest income
25,452
12,085
14,290
16,898
16,873
68,725
59,162
FDIC special assessment
2,412
—
—
—
—
2,412
—
Less gain on sale of investment
securities
220
—
—
381
—
601
—
Less gain (loss) on sale of other real
estate owned
—
—
97
90
—
187
(93
)
Less noninterest expense
92,603
88,644
85,956
80,983
77,149
348,186
274,216
PPNR (non-GAAP)
$
75,773
$
65,080
$
68,929
$
74,973
$
78,559
$
284,755
$
258,942
Average assets
$
14,332,804
$
14,068,860
$
13,671,985
$
13,131,195
$
12,986,568
$
13,805,236
$
13,319,624
PPNR ROAA (non-GAAP)
2.10
%
1.84
%
2.02
%
2.32
%
2.40
%
2.06
%
1.94
%
Quarter ended
($ in thousands)
Dec 31,
2023
Sep 30,
2023
CALCULATION OF ESTIMATED INSURED
DEPOSITS
Estimated uninsured deposits per Call
Report
$
4,297,447
$
3,886,299
Collateralized/affiliate deposits
(459,872
)
(455,553
)
Accrued interest on deposits
(7,291
)
(6,231
)
Adjusted uninsured/uncollateralized
deposits
3,830,284
3,424,515
Estimated insured/collateralized
deposits
8,346,087
8,485,392
Total deposits
$
12,176,371
$
11,909,907
Quarter ended
Year ended
(in thousands, except per share data)
Dec 31,
2023
Sep 30,
2023
Jun 30,
2023
Mar 31,
2023
Dec 31,
2022
Dec 31,
2023
Dec 31,
2022
RETURN ON AVERAGE ASSETS AND DILUTED
EARNINGS PER SHARE
Net income
$
44,529
$
44,665
$
49,127
$
55,738
$
60,001
$
194,059
$
203,043
FDIC special assessment (after tax)
1,814
—
—
—
—
1,814
—
Net income adjusted (non-GAAP)
$
46,343
$
44,665
$
49,127
$
55,738
$
60,001
$
195,873
$
203,043
Average assets
$
14,332,804
$
14,068,860
$
13,671,985
$
13,131,195
$
12,986,568
$
13,805,236
$
13,319,624
ROAA (GAAP)
1.23
%
1.26
%
1.44
%
1.72
%
1.83
%
1.41
%
1.52
%
ROAA adjusted for FDIC special assessment
(non-GAAP)
1.28
%
1.26
%
1.44
%
1.72
%
1.83
%
1.42
%
1.52
%
Average diluted common shares
37,555
37,520
37,495
37,487
37,415
37,506
37,500
EPS excluding FDIC special assessment
(non-GAAP)
$
1.21
$
1.17
$
1.29
$
1.46
$
1.58
$
5.12
$
5.31
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240122703804/en/
Investor Relations: Keene Turner, Senior 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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Enterprise Financial Ser... (NASDAQ:EFSC)
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