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Enterprise Financial Reports Second Quarter 2024 Results

Second Quarter Results

  • Net income of $45.4 million, or $1.19 per diluted common share, compared to $1.05 in the linked quarter and $1.29 in the prior year quarter
  • Net interest margin of 4.19%, quarterly increase of 6 basis points
  • Net interest income of $140.5 million, quarterly increase of $2.8 million
  • Total loans of $11.0 billion, quarterly decrease of $28.5 million
  • Total deposits of $12.3 billion, quarterly increase of $28.7 million
  • Return on Average Assets (“ROAA”) of 1.25%, compared to 1.12% and 1.44% in the linked and prior year quarters, respectively
  • Return on Average Tangible Common Equity (“ROATCE”)1 of 13.77%, compared to 12.31% and 16.53% in the linked and prior year quarters, respectively
  • Tangible common equity to tangible assets1 of 9.18%, an increase of 17 basis points and 53 basis points from the linked and prior year quarters, respectively
  • Tangible book value per share1 of $35.02, annualized increase of 10%
  • Repurchased 225,135 shares and increased quarterly dividend $0.01 to $0.27 per common share for the third quarter 2024

Jim Lally, President and Chief Executive Officer of Enterprise Financial Services Corp (Nasdaq: EFSC) (the “Company” or “EFSC”), said today upon the release of EFSC’s second quarter earnings, “I was very pleased with our second quarter results, including our strong asset quality and the growth in operating revenue, customer deposits, and tangible common equity. We had a return on average assets of 1.25% and a return on tangible common equity of 13.8%. These returns increased our tangible book value per share by 10% on an annualized basis this quarter. Over the past 10 years, we have produced a compounded annual growth rate of 10% on our tangible book value per share. With the strength of our balance sheet and our solid return profile, we opportunistically repurchased over $8 million of common stock and announced another increase to our quarterly dividend.”

Highlights

  • Earnings - Net income in the second quarter 2024 was $45.4 million, an increase of $5.0 million and a decrease of $3.7 million compared to the linked and prior year quarters, respectively. Earnings per share (“EPS”) was $1.19 per diluted common share for the second quarter 2024, compared to $1.05 and $1.29 per diluted common share for the linked and prior year quarters, respectively. Adjusted diluted earnings per share1 was $1.21 for the second quarter 2024, compared to $1.07 for the linked quarter.
  • Pre-provision net revenue (“PPNR”)1 - PPNR of $63.3 million in the second quarter 2024 increased $5.9 million and decreased $5.7 million from the linked and prior year quarters, respectively. The increase from the linked quarter was primarily due to higher noninterest income, primarily tax credit income, and higher net interest income that benefited from higher average loan balances and expanding yields on earning assets. These increases were partially offset by an increase in deposit interest expense. The decrease compared to the prior year quarter was primarily due to the higher interest rate environment that increased deposit interest expense and the cost of variable deposit services costs, which are influenced by current market rates.
  • Net interest income and net interest margin (“NIM”) - Net interest income of $140.5 million for the second quarter 2024 increased $2.8 million and decreased $0.2 million from the linked and prior year quarters, respectively. Compared to the linked quarter, net interest income for the second quarter 2024 increased due to an expanded net interest spread and higher average loan and interest-earning asset balances. NIM was 4.19% for the second quarter 2024, compared to 4.13% and 4.49% for the linked and prior year quarters, respectively. The total cost of deposits of 2.16% for the second quarter 2024 increased 3 basis points and 70 basis points from the linked and prior year quarters, respectively.
  • Noninterest income - Noninterest income of $15.5 million for the second quarter 2024 increased $3.3 million and $1.2 million from the linked and prior year quarters, respectively. The increase from the linked and prior year quarters was primarily due to an increase in tax credit income on higher activity that was partially offset by an increase in market interest rates that decreased the fair value of certain tax credits.
  • Noninterest expense - Noninterest expense of $94.0 million for the second quarter 2024 increased $0.5 million and $8.1 million from the linked and prior year quarters, respectively. The increase from the linked quarter was primarily driven by higher variable deposit servicing costs and expenses related to the core system conversion, partially offset by a decrease in employee compensation and the FDIC special assessment. The increase from the prior year quarter was primarily due to variable deposit servicing costs and employee compensation.
  • Loans - Loans totaled $11.0 billion at June 30, 2024, a decrease of $28.5 million from the linked quarter and an increase of $487.4 million from the prior year quarter. Average loans totaled $11.0 billion for the quarter ended June 30, 2024, compared to $10.9 billion and $10.3 billion for the linked and prior year quarters, respectively.
  • Asset quality - The allowance for credit losses to total loans was 1.27% at June 30, 2024, compared to 1.23% at March 31, 2024 and 1.34% at June 30, 2023. The ratio of nonperforming assets to total assets was 0.33% at June 30, 2024, compared to 0.30% and 0.12% at March 31, 2024 and June 30, 2023, respectively. The provision for credit losses recorded in the second quarter 2024 was $4.8 million, compared to $5.8 million and $6.3 million for the linked and prior year quarters, respectively.
  • Deposits - Total deposits increased $28.7 million from March 31, 2024 to $12.3 billion at June 30, 2024, despite a decrease of $164.1 million in brokered certificates of deposit. Excluding brokered certificates of deposits, deposits increased $192.8 million. Average deposits were $12.3 billion, $12.2 billion and $11.4 billion for the current, linked and prior year quarters, respectively. At June 30, 2024, noninterest-bearing deposit accounts totaled $3.9 billion, or 32.0% of total deposits, and the loan to deposit ratio was 89.6%.
  • Liquidity - The total available on- and off-balance-sheet liquidity was approximately $5.6 billion at June 30, 2024. On-balance-sheet liquidity consisted of cash of $392.8 million and $1.2 billion in unpledged investment securities at June 30, 2024. Off-balance-sheet liquidity consisted of $1.2 billion available through the Federal Home Loan Bank, $2.6 billion available through the Federal Reserve and $140.0 million through correspondent bank lines. The Company also has an unused $25.0 million revolving line of credit and maintains a shelf registration allowing for the issuance of various forms of equity and debt securities.
  • Capital - Total shareholders’ equity was $1.8 billion and the tangible common equity to tangible assets ratio2 was 9.18% at June 30, 2024, compared to 9.01% at March 31, 2024. Enterprise Bank & Trust remains “well-capitalized,” with a common equity tier 1 ratio of 12.4% and a total risk-based capital ratio of 13.5% at June 30, 2024. The Company’s common equity tier 1 ratio and total risk-based capital ratio were 11.7% and 14.6%, respectively, at June 30, 2024.



    The Company’s board of directors approved a quarterly dividend of $0.27 per common share, payable on September 30, 2024 to shareholders of record as of September 16, 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) June 15, 2024 to (but excluding) September 15, 2024. The dividend will be payable on September 15, 2024 and will be paid on September 16, 2024 to holders of record of Series A Preferred Stock as of August 30, 2024.

Net Interest Income and NIM

Average Balance Sheets

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

 

Quarter ended

 

June 30, 2024

 

March 31, 2024

 

June 30, 2023

($ 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

$

10,962,488

 

$

189,346

 

6.95

%

 

$

10,927,932

 

$

186,703

 

6.87

%

 

$

10,284,873

 

$

170,314

 

6.64

%

Securities2

 

2,396,519

 

 

19,956

 

3.35

 

 

 

2,400,571

 

 

19,491

 

3.27

 

 

 

2,297,995

 

 

17,550

 

3.06

 

Interest-earning deposits

 

325,452

 

 

4,389

 

5.42

 

 

 

268,068

 

 

3,569

 

5.35

 

 

 

173,785

 

 

2,095

 

4.84

 

Total interest-earning assets

 

13,684,459

 

 

213,691

 

6.28

 

 

 

13,596,571

 

 

209,763

 

6.20

 

 

 

12,756,653

 

 

189,959

 

5.97

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-earning assets

 

961,922

 

 

 

 

 

 

959,548

 

 

 

 

 

 

915,332

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

$

14,646,381

 

 

 

 

 

$

14,556,119

 

 

 

 

 

$

13,671,985

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing demand accounts

$

2,950,827

 

$

18,801

 

2.56

%

 

$

2,924,276

 

$

18,612

 

2.56

%

 

$

2,509,805

 

$

10,120

 

1.62

%

Money market accounts

 

3,434,712

 

 

31,926

 

3.74

 

 

 

3,401,802

 

 

31,357

 

3.71

 

 

 

2,920,079

 

 

20,499

 

2.82

 

Savings accounts

 

573,115

 

 

335

 

0.24

 

 

 

587,113

 

 

303

 

0.21

 

 

 

686,973

 

 

227

 

0.13

 

Certificates of deposit

 

1,412,263

 

 

15,312

 

4.36

 

 

 

1,341,990

 

 

14,201

 

4.26

 

 

 

1,219,500

 

 

10,526

 

3.46

 

Total interest-bearing deposits

 

8,370,917

 

 

66,374

 

3.19

 

 

 

8,255,181

 

 

64,473

 

3.14

 

 

 

7,336,357

 

 

41,372

 

2.26

 

Subordinated debentures and notes

 

156,188

 

 

2,684

 

6.91

 

 

 

156,046

 

 

2,484

 

6.40

 

 

 

155,632

 

 

2,431

 

6.27

 

FHLB advances

 

40,308

 

 

561

 

5.60

 

 

 

73,791

 

 

1,029

 

5.61

 

 

 

98,912

 

 

1,279

 

5.19

 

Securities sold under agreements to repurchase

 

158,969

 

 

1,401

 

3.54

 

 

 

204,898

 

 

1,804

 

3.54

 

 

 

162,606

 

 

704

 

1.74

 

Other borrowings

 

36,203

 

 

95

 

1.06

 

 

 

42,736

 

 

205

 

1.93

 

 

 

133,770

 

 

1,419

 

4.25

 

Total interest-bearing liabilities

 

8,762,585

 

 

71,115

 

3.26

 

 

 

8,732,652

 

 

69,995

 

3.22

 

 

 

7,887,277

 

 

47,205

 

2.40

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

3,973,336

 

 

 

 

 

 

3,925,522

 

 

 

 

 

 

4,051,456

 

 

 

 

Other liabilities

 

162,220

 

 

 

 

 

 

159,247

 

 

 

 

 

 

111,915

 

 

 

 

Total liabilities

 

12,898,141

 

 

 

 

 

 

12,817,421

 

 

 

 

 

 

12,050,648

 

 

 

 

Shareholders' equity

 

1,748,240

 

 

 

 

 

 

1,738,698

 

 

 

 

 

 

1,621,337

 

 

 

 

Total liabilities and shareholders' equity

$

14,646,381

 

 

 

 

 

$

14,556,119

 

 

 

 

 

$

13,671,985

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total net interest income

 

 

$

142,576

 

 

 

 

 

$

139,768

 

 

 

 

 

$

142,754

 

 

Net interest margin

 

 

 

 

4.19

%

 

 

 

 

 

4.13

%

 

 

 

 

 

4.49

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1 Average balances include nonaccrual loans. Interest income includes loan fees of $2.2 million, $2.4 million, and $3.7 million for the three months ended June 30, 2024, March 31, 2024, and June 30, 2023, 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 $2.1 million, $2.0 million, and $2.1 million for the three months ended June 30, 2024, March 31, 2024, and June 30, 2023, respectively.

Net interest income of $140.5 million for the second quarter 2024 increased $2.8 million and decreased $0.2 million from the linked and prior year quarters, respectively. Net interest income on a tax equivalent basis was $142.6 million, $139.8 million and $142.8 million for the current, linked and prior year quarters, respectively. The increase from the linked quarter was primarily due to an expansion of the loan portfolio and securities yields, and to a lesser extent, an increase in average earning assets. This was partially offset by an increase in both the cost and average balance of interest-bearing deposits. The decrease from the prior year quarter reflects higher interest expense on the deposit portfolio and continued remixing into higher cost deposit categories.

Interest income increased $3.9 million during the second quarter 2024. Interest on loans benefited from a $34.6 million increase in average loan balances compared to the linked quarter, as well as an 8 basis point increase in yield. The average interest rate of new loan originations in the second quarter 2024 was 8.07%, an increase of 23 basis points from the linked quarter. Interest on cash accounts increased $0.8 million from the linked quarter due to a $57.4 million increase in average balances, and interest on securities increased $0.5 million due to an 8 basis point increase in yield.

Interest expense increased $1.1 million in the second quarter 2024 primarily due to an increase in interest expense on certificates of deposit that includes brokered amounts. Average certificates of deposit increased $70.3 million and the cost increased 10 basis points in the second quarter 2024. The average cost of interest-bearing deposits was 3.19%, an increase of 5 basis points compared to the linked quarter. The total cost of deposits, including noninterest-bearing demand accounts, was 2.16% during the second quarter 2024, compared to 2.13% in the linked quarter. While the total cost of deposits increased over the linked quarter, the monthly cost of total deposits has been stable since March 2024.

NIM, on a tax equivalent basis, was 4.19% in the second quarter 2024, an increase of 6 basis points from the linked quarter and a decrease of 30 basis points from the prior year quarter. For the month of June 2024, the loan portfolio yield was 6.92% and the cost of total deposits was 2.17%.

Investments

 

At

 

June 30, 2024

 

March 31, 2024

 

June 30, 2023

($ in thousands)

Carrying Value

 

Net Unrealized Loss

 

Carrying Value

 

Net Unrealized Loss

 

Carrying Value

 

Net Unrealized Loss

Available-for-sale (AFS)

$

1,615,930

 

$

(172,734

)

 

$

1,611,883

 

$

(165,586

)

 

$

1,550,375

 

$

(179,857

)

Held-to-maturity (HTM)

 

772,648

 

 

(69,442

)

 

 

758,017

 

 

(63,593

)

 

 

723,959

 

 

(71,673

)

Total

$

2,388,578

 

$

(242,176

)

 

$

2,369,900

 

$

(229,179

)

 

$

2,274,334

 

$

(251,530

)

 

 

 

 

 

 

 

 

 

 

 

 

Investment securities totaled $2.4 billion at June 30, 2024, an increase of $18.7 million from the linked quarter. Investment purchases in the second quarter 2024 had a weighted average, tax equivalent yield of 5.43%. The tangible common equity to tangible assets ratio adjusted for unrealized losses on held-to-maturity securities3 was 8.82% at June 30, 2024, compared to 8.68% at March 31, 2024.

Loans

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

 

At

($ in thousands)

June 30,

2024

 

March 31,

2024

 

December 31, 2023

 

September 30, 2023

 

June 30,

2023

C&I

$

2,107,097

 

 

$

2,263,817

 

 

$

2,186,203

 

 

$

2,020,303

 

 

$

2,029,370

 

CRE investor owned

 

2,308,926

 

 

 

2,280,990

 

 

 

2,291,660

 

 

 

2,260,220

 

 

 

2,290,701

 

CRE owner occupied

 

1,313,742

 

 

 

1,279,929

 

 

 

1,262,264

 

 

 

1,255,885

 

 

 

1,208,675

 

SBA loans*

 

1,269,145

 

 

 

1,274,780

 

 

 

1,281,632

 

 

 

1,309,497

 

 

 

1,327,667

 

Sponsor finance*

 

865,883

 

 

 

865,180

 

 

 

872,264

 

 

 

888,000

 

 

 

879,491

 

Life insurance premium financing*

 

996,154

 

 

 

1,003,597

 

 

 

956,162

 

 

 

928,486

 

 

 

912,274

 

Tax credits*

 

738,249

 

 

 

718,383

 

 

 

734,594

 

 

 

683,580

 

 

 

609,137

 

Residential real estate

 

339,889

 

 

 

354,615

 

 

 

359,957

 

 

 

364,618

 

 

 

354,588

 

Construction and land development

 

791,780

 

 

 

726,742

 

 

 

670,567

 

 

 

639,555

 

 

 

599,375

 

Other

 

269,142

 

 

 

260,459

 

 

 

268,815

 

 

 

266,676

 

 

 

301,345

 

Total loans

$

11,000,007

 

 

$

11,028,492

 

 

$

10,884,118

 

 

$

10,616,820

 

 

$

10,512,623

 

 

 

 

 

 

 

 

 

 

 

Quarterly loan yield

 

6.95

%

 

 

6.87

%

 

 

6.87

%

 

 

6.80

%

 

 

6.64

%

Variable interest rate loans to total loans

 

61

%

 

 

61

%

 

 

61

%

 

 

61

%

 

 

62

%

 

*Specialty loan category

Loans totaled $11.0 billion at June 30, 2024, a decrease of $28.5 million compared to the linked quarter. During the current quarter, C&I loans and residential real estate loans decreased $156.7 million and $14.7 million, respectively, while construction loans and CRE loans increased $65.0 million and $61.7 million, respectively. Loan origination activity and advances on lines of credit were strong during the second quarter 2024, but were offset by paydowns and maturities in the current quarter that were at the highest quarterly level in the past five quarters. Average line utilization was approximately 46% for the quarter ended June 30, 2024, compared to 44% and 45% 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:

 

At

($ in thousands)

June 30,

2024

 

March 31,

2024

 

December 31,

2023

 

September 30,

2023

 

June 30,

2023

Nonperforming loans*

$

39,384

 

 

$

35,642

 

 

$

43,728

 

 

$

48,932

 

 

$

16,112

 

Other

 

8,746

 

 

 

8,466

 

 

 

5,736

 

 

 

6,933

 

 

 

 

Nonperforming assets*

$

48,130

 

 

$

44,108

 

 

$

49,464

 

 

$

55,865

 

 

$

16,112

 

 

 

 

 

 

 

 

 

 

 

Nonperforming loans to total loans

 

0.36

%

 

 

0.32

%

 

 

0.40

%

 

 

0.46

%

 

 

0.15

%

Nonperforming assets to total assets

 

0.33

%

 

 

0.30

%

 

 

0.34

%

 

 

0.40

%

 

 

0.12

%

Allowance for credit losses to total loans

 

1.27

%

 

 

1.23

%

 

 

1.24

%

 

 

1.34

%

 

 

1.34

%

Quarterly net charge-offs

$

605

 

 

$

5,864

 

 

$

28,479

 

 

$

6,856

 

 

$

2,973

 

 

 

 

 

 

 

 

 

 

 

*Guaranteed balances excluded

$

12,933

 

 

$

9,630

 

 

$

10,682

 

 

$

5,974

 

 

$

6,666

 

Nonperforming assets increased $4.0 million during the second quarter 2024 and increased $32.0 million from the prior year quarter. The increase in nonperforming assets in the current quarter was primarily related to the addition of an agricultural relationship that moved into nonperforming status during the period, partially offset by a reduction from charge-offs and repayments. Included in nonperforming loans is $1.3 million of loans that are 90 days past due and accruing interest. The Company anticipates full repayment of these loans. The increase in nonperforming assets from the prior year quarter was primarily due to a $27.1 million increase in real estate loans and an $8.7 million increase in OREO and other repossessed assets, partially offset by a $2.9 million decrease in C&I loans. Annualized net charge-offs totaled 2 basis points of average loans in the second quarter 2024, compared to 22 basis points in the linked quarter and 12 basis point in the prior year quarter.

The provision for credit losses totaled $4.8 million in the second quarter 2024, compared to $5.8 million and $6.3 million in the linked and prior year quarters, respectively. The provision for credit losses in the second quarter 2024 was primarily related to an increase in reserves on individually evaluated loans and updates to qualitative factors used in the allowance calculation.

Deposits

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

 

At

($ in thousands)

June 30,

2024

 

March 31,

2024

 

December 31,

2023

 

September 30,

2023

 

June 30,

2023

Noninterest-bearing demand accounts

$

3,928,308

 

 

$

3,805,334

 

 

$

3,958,743

 

 

$

3,852,486

 

 

$

3,880,561

 

Interest-bearing demand accounts

 

2,951,899

 

 

 

2,956,282

 

 

 

2,950,259

 

 

 

2,749,598

 

 

 

2,629,339

 

Money market and savings accounts

 

4,039,626

 

 

 

4,006,702

 

 

 

3,994,455

 

 

 

3,837,145

 

 

 

3,577,856

 

Brokered certificates of deposit

 

494,870

 

 

 

659,005

 

 

 

482,759

 

 

 

695,551

 

 

 

893,808

 

Other certificates of deposit

 

867,680

 

 

 

826,378

 

 

 

790,155

 

 

 

775,127

 

 

 

638,296

 

Total deposit portfolio

$

12,282,383

 

 

$

12,253,701

 

 

$

12,176,371

 

 

$

11,909,907

 

 

$

11,619,860

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits to total deposits

 

32.0

%

 

 

31.1

%

 

 

32.5

%

 

 

32.3

%

 

 

33.4

%

Quarterly cost of deposits

 

2.16

%

 

 

2.13

%

 

 

2.03

%

 

 

1.84

%

 

 

1.46

%

Total deposits at June 30, 2024 were $12.3 billion, an increase of $28.7 million and $662.5 million from the linked and prior year quarters, respectively. Excluding brokered certificates of deposits, total deposits increased $192.8 million and $1.1 billion, 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 June 30, 2024, compared to $1.1 billion at March 31, 2024.

Total estimated insured deposits4, which includes collateralized deposits, reciprocal accounts and accounts that qualify for pass-through insurance, totaled $8.7 billion, or 71% of total deposits, at both June 30, 2024 and March 31, 2024.

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)

June 30,

2024

 

March 31, 2024

 

Increase (decrease)

 

June 30,

2023

 

Increase (decrease)

Deposit service charges

$

4,542

 

$

4,423

 

 

$

119

 

 

3

%

 

$

3,910

 

$

632

 

 

16

%

Wealth management revenue

 

2,590

 

 

2,544

 

 

 

46

 

 

2

%

 

 

2,472

 

 

118

 

 

5

%

Card services revenue

 

2,497

 

 

2,412

 

 

 

85

 

 

4

%

 

 

2,464

 

 

33

 

 

1

%

Tax credit income (loss)

 

1,874

 

 

(2,190

)

 

 

4,064

 

 

186

%

 

 

368

 

 

1,506

 

 

409

%

Other income

 

3,991

 

 

4,969

 

 

 

(978

)

 

(20

)%

 

 

5,076

 

 

(1,085

)

 

(21

)%

Total noninterest income

$

15,494

 

$

12,158

 

 

$

3,336

 

 

27

%

 

$

14,290

 

$

1,204

 

 

8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total noninterest income was $15.5 million for the second quarter 2024, an increase of $3.3 million from the linked quarter and an increase of $1.2 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 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 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)

June 30,

2024

 

March 31, 2024

 

Increase (decrease)

 

June 30,

2023

 

Increase (decrease)

Gain on SBA loan sales

$

 

$

1,415

 

$

(1,415

)

 

(100

)%

 

$

 

$

 

 

%

BOLI

 

855

 

 

864

 

 

(9

)

 

(1

)%

 

 

797

 

 

58

 

 

7

%

Community development investments

 

381

 

 

585

 

 

(204

)

 

(35

)%

 

 

2,077

 

 

(1,696

)

 

(82

)%

Private equity fund distributions

 

411

 

 

162

 

 

249

 

 

154

%

 

 

371

 

 

40

 

 

11

%

Servicing fees

 

594

 

 

287

 

 

307

 

 

107

%

 

 

407

 

 

187

 

 

46

%

Swap fees

 

217

 

 

45

 

 

172

 

 

382

%

 

 

173

 

 

44

 

 

25

%

Miscellaneous income

 

1,533

 

 

1,611

 

 

(78

)

 

(5

)%

 

 

1,251

 

 

282

 

 

23

%

Total other income

$

3,991

 

$

4,969

 

$

(978

)

 

(20

)%

 

$

5,076

 

$

(1,085

)

 

(21

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The decrease in other income from the linked quarter was primarily driven by gains on the sale of SBA loans that were recognized in the linked quarter, while the decrease from the prior year quarter was due to lower community development income. Community development income and private equity fund distributions are not consistent sources of income and fluctuate based on distributions from the underlying funds.

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)

June 30,

2024

 

March 31,

2024

 

Increase (decrease)

 

June 30,

2023

 

Increase (decrease)

Employee compensation and benefits

$

44,524

 

$

45,262

 

$

(738

)

 

(2

)%

 

$

41,641

 

$

2,883

 

 

7

%

Deposit costs

 

21,706

 

 

20,277

 

 

1,429

 

 

7

%

 

 

16,980

 

 

4,726

 

 

28

%

Occupancy

 

4,197

 

 

4,326

 

 

(129

)

 

(3

)%

 

 

3,954

 

 

243

 

 

6

%

FDIC special assessment

 

 

 

625

 

 

(625

)

 

(100

)%

 

 

 

 

 

 

%

Core conversion expense

 

1,250

 

 

350

 

 

900

 

 

257

%

 

 

 

 

1,250

 

 

100

%

Other expense

 

22,340

 

 

22,661

 

 

(321

)

 

(1

)%

 

 

23,381

 

 

(1,041

)

 

(4

)%

Total noninterest expense

$

94,017

 

$

93,501

 

$

516

 

 

1

%

 

$

85,956

 

$

8,061

 

 

9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Employee compensation and benefits decreased $0.7 million from the linked quarter primarily due to employer payroll taxes that are seasonally higher in the first quarter each year and a decline in self-insured medical claims. Deposit costs relate to certain specialized deposit businesses that receive an earnings credit allowance for deposit related expenses that are impacted by interest rates and average balances. Deposit costs increased $1.4 million from the linked quarter primarily due to the expiration of unused allowances that reduced expense in the first quarter and growth in deposits. Expenses related to the core system conversion increased $0.9 million from the linked quarter due to the continued progress on the project.

The increase in noninterest expense of $8.1 million from the prior year quarter was primarily due to an increase in the associate base, merit increases throughout 2023 and 2024, an increase in variable deposit costs due to higher earnings credit rates and average balances, and additional expenses incurred related to the core system conversion.

For the second quarter 2024, the core efficiency ratio5 was 58.1%, compared to 60.2% for the linked quarter and 54.0% for the prior year quarter.

Income Taxes

The effective tax rate was 20.5%, compared to 20.2% and 21.6% in the linked and prior year quarters, respectively. The decrease in the effective tax rate from the prior year quarter was driven by tax credit opportunities the Company has deployed as part of its tax planning strategy.

Capital

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

 

At

($ in thousands)

June 30, 2024*

 

March 31, 2024

 

December 31, 2023

 

September 30, 2023

 

June 30,

2023

Shareholders’ equity

$

1,755,273

 

 

$

1,731,725

 

 

$

1,716,068

 

 

$

1,611,880

 

 

$

1,618,233

 

Total risk-based capital to risk-weighted assets

 

14.6

%

 

 

14.3

%

 

 

14.2

%

 

 

14.1

%

 

 

14.1

%

Tier 1 capital to risk weighted assets

 

13.0

%

 

 

12.8

%

 

 

12.7

%

 

 

12.6

%

 

 

12.5

%

Common equity tier 1 capital to risk-weighted assets

 

11.7

%

 

 

11.4

%

 

 

11.3

%

 

 

11.2

%

 

 

11.1

%

Leverage ratio

 

11.1

%

 

 

11.0

%

 

 

11.0

%

 

 

10.9

%

 

 

11.0

%

Tangible common equity to tangible assets

 

9.18

%

 

 

9.01

%

 

 

8.96

%

 

 

8.51

%

 

 

8.65

%

*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 $1.8 billion at June 30, 2024, an increase of $23.5 million from the linked quarter. Tangible common book value per share was $35.02 at June 30, 2024, compared to $34.21 and $31.23 at March 31, 2024 and June 30, 2023, respectively.

The Company’s regulatory capital ratios continue to exceed the “well-capitalized” regulatory benchmark. Capital ratios for the current quarter are subject to, among other things, completion and filing of the Company’s regulatory reports and ongoing regulatory review.

________________________________

1 ROATCE, tangible common equity to tangible assets, tangible book value per share, adjusted diluted earnings per share and PPNR are non-GAAP measures. Please refer to discussion and reconciliation of these measures in the accompanying financial tables.

2 Tangible common equity to tangible assets ratio is a non-GAAP measure. Please refer to discussion and reconciliation of this measure in the accompanying financial tables.

3 The tangible common equity to tangible assets ratio adjusted for unrealized losses on held-to-maturity securities is a non-GAAP measure. Refer to discussion and reconciliation of this measure in the accompanying financial tables.

4 Estimated insured deposits is a non-GAAP measure. Refer to discussion and reconciliation of this measure in the accompanying financial tables.

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

Use of Non-GAAP Financial Measures

The Company’s accounting and reporting policies conform to generally accepted accounting principles in the United States (“GAAP”) and the prevailing practices in the banking industry. However, the Company provides additional financial measures, such as tangible common equity, PPNR, ROATCE, core efficiency ratio, the tangible common equity ratio, tangible book value per common share, estimated insured deposits and adjusted diluted earnings 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, core efficiency ratio, the tangible common equity ratio, tangible book value per common share, estimated insured deposits and adjusted diluted earnings 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 the FDIC special assessment, core conversion expenses, 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, July 23, 2024. During the call, management will review the second quarter 2024 results and related matters. This press release as well as a related slide presentation will be accessible on the Company’s website at www.enterprisebank.com under “Investor Relations” prior to the scheduled broadcast of the conference call. The call can be accessed via this same website page, or via telephone at 1-800-715-9871. We encourage participants to pre-register for the conference call using the following link: https://bit.ly/EFSC2Q2024EarningsCallRegistration. 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 $14.6 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”, “pipeline” 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, 2023, 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

 

Six months ended

(in thousands, except per share data)

Jun 30,

2024

 

Mar 31,

2024

 

Dec 31,

2023

 

Sep 30,

2023

 

Jun 30,

2023

 

Jun 30,

2024

 

Jun 30,

2023

EARNINGS SUMMARY

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

$

140,529

 

 

$

137,728

 

 

$

140,732

 

 

$

141,639

 

 

$

140,692

 

 

$

278,257

 

 

$

280,221

 

Provision for credit losses

 

4,819

 

 

 

5,756

 

 

 

18,053

 

 

 

8,030

 

 

 

6,339

 

 

 

10,575

 

 

 

10,522

 

Noninterest income

 

15,494

 

 

 

12,158

 

 

 

25,452

 

 

 

12,085

 

 

 

14,290

 

 

 

27,652

 

 

 

31,188

 

Noninterest expense

 

94,017

 

 

 

93,501

 

 

 

92,603

 

 

 

88,644

 

 

 

85,956

 

 

 

187,518

 

 

 

166,939

 

Income before income tax expense

 

57,187

 

 

 

50,629

 

 

 

55,528

 

 

 

57,050

 

 

 

62,687

 

 

 

107,816

 

 

 

133,948

 

Income tax expense

 

11,741

 

 

 

10,228

 

 

 

10,999

 

 

 

12,385

 

 

 

13,560

 

 

 

21,969

 

 

 

29,083

 

Net income

 

45,446

 

 

 

40,401

 

 

 

44,529

 

 

 

44,665

 

 

 

49,127

 

 

 

85,847

 

 

 

104,865

 

Preferred stock dividends

 

937

 

 

 

938

 

 

 

937

 

 

 

938

 

 

 

937

 

 

 

1,875

 

 

 

1,875

 

Net income available to common shareholders

$

44,509

 

 

$

39,463

 

 

$

43,592

 

 

$

43,727

 

 

$

48,190

 

 

$

83,972

 

 

$

102,990

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per common share

$

1.19

 

 

$

1.05

 

 

$

1.16

 

 

$

1.17

 

 

$

1.29

 

 

$

2.24

 

 

$

2.75

 

Adjusted diluted earnings per common share1

$

1.21

 

 

$

1.07

 

 

$

1.21

 

 

$

1.17

 

 

$

1.29

 

 

$

2.28

 

 

$

2.75

 

Return on average assets

 

1.25

%

 

 

1.12

%

 

 

1.23

%

 

 

1.26

%

 

 

1.44

%

 

 

1.18

%

 

 

1.58

%

Adjusted return on average assets1

 

1.27

%

 

 

1.14

%

 

 

1.28

%

 

 

1.26

%

 

 

1.44

%

 

 

1.21

%

 

 

1.58

%

Return on average common equity1

 

10.68

%

 

 

9.52

%

 

 

10.94

%

 

 

11.00

%

 

 

12.48

%

 

 

10.10

%

 

 

13.64

%

Adjusted return on average common equity1

 

10.90

%

 

 

9.70

%

 

 

11.40

%

 

 

11.00

%

 

 

12.48

%

 

 

10.30

%

 

 

13.64

%

ROATCE1

 

13.77

%

 

 

12.31

%

 

 

14.38

%

 

 

14.49

%

 

 

16.53

%

 

 

13.04

%

 

 

18.18

%

Adjusted ROATCE1

 

14.06

%

 

 

12.53

%

 

 

14.98

%

 

 

14.49

%

 

 

16.53

%

 

 

13.30

%

 

 

18.18

%

Net interest margin (tax equivalent)

 

4.19

%

 

 

4.13

%

 

 

4.23

%

 

 

4.33

%

 

 

4.49

%

 

 

4.16

%

 

 

4.60

%

Efficiency ratio

 

60.26

%

 

 

62.38

%

 

 

55.72

%

 

 

57.66

%

 

 

55.46

%

 

 

61.30

%

 

 

53.61

%

Core efficiency ratio1

 

58.09

%

 

 

60.21

%

 

 

53.06

%

 

 

56.18

%

 

 

54.04

%

 

 

59.13

%

 

 

52.25

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

$

14,615,666

 

 

$

14,613,338

 

 

$

14,518,590

 

 

$

14,025,042

 

 

$

13,871,154

 

 

 

 

 

Average assets

$

14,646,381

 

 

$

14,556,119

 

 

$

14,332,804

 

 

$

14,068,860

 

 

$

13,671,985

 

 

$

14,601,250

 

 

$

13,403,084

 

Period end common shares outstanding

 

37,344

 

 

 

37,515

 

 

 

37,416

 

 

 

37,385

 

 

 

37,359

 

 

 

 

 

Dividends per common share

$

0.26

 

 

$

0.25

 

 

$

0.25

 

 

$

0.25

 

 

$

0.25

 

 

$

0.51

 

 

$

0.50

 

Tangible book value per common share1

$

35.02

 

 

$

34.21

 

 

$

33.85

 

 

$

31.06

 

 

$

31.23

 

 

 

 

 

Tangible common equity to tangible assets1

 

9.18

%

 

 

9.01

%

 

 

8.96

%

 

 

8.51

%

 

 

8.65

%

 

 

 

 

Total risk-based capital to risk-weighted assets2

 

14.6

%

 

 

14.3

%

 

 

14.2

%

 

 

14.1

%

 

 

14.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

2Capital ratios for the current quarter are preliminary and subject to, among other things, completion and filing of the Company’s regulatory reports and ongoing regulatory review.

ENTERPRISE FINANCIAL SERVICES CORP

CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)

 

 

Quarter ended

 

Six months ended

(in thousands, except per share data)

Jun 30,

2024

 

Mar 31,

2024

 

Dec 31,

2023

 

Sep 30,

2023

 

Jun 30,

2023

 

Jun 30,

2024

 

Jun 30,

2023

INCOME STATEMENTS

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INTEREST INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

$

211,644

 

$

207,723

 

 

$

207,083

 

$

200,906

 

 

$

187,897

 

$

419,367

 

 

$

356,930

Interest expense

 

71,115

 

 

69,995

 

 

 

66,351

 

 

59,267

 

 

 

47,205

 

 

141,110

 

 

 

76,709

Net interest income

 

140,529

 

 

137,728

 

 

 

140,732

 

 

141,639

 

 

 

140,692

 

 

278,257

 

 

 

280,221

Provision for credit losses

 

4,819

 

 

5,756

 

 

 

18,053

 

 

8,030

 

 

 

6,339

 

 

10,575

 

 

 

10,522

Net interest income after provision for credit losses

 

135,710

 

 

131,972

 

 

 

122,679

 

 

133,609

 

 

 

134,353

 

 

267,682

 

 

 

269,699

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NONINTEREST INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposit service charges

 

4,542

 

 

4,423

 

 

 

4,334

 

 

4,187

 

 

 

3,910

 

 

8,965

 

 

 

8,038

Wealth management revenue

 

2,590

 

 

2,544

 

 

 

2,428

 

 

2,614

 

 

 

2,472

 

 

5,134

 

 

 

4,988

Card services revenue

 

2,497

 

 

2,412

 

 

 

2,666

 

 

2,560

 

 

 

2,464

 

 

4,909

 

 

 

4,802

Tax credit income (loss)

 

1,874

 

 

(2,190

)

 

 

9,688

 

 

(2,673

)

 

 

368

 

 

(316

)

 

 

2,181

Other income

 

3,991

 

 

4,969

 

 

 

6,336

 

 

5,397

 

 

 

5,076

 

 

8,960

 

 

 

11,179

Total noninterest income

 

15,494

 

 

12,158

 

 

 

25,452

 

 

12,085

 

 

 

14,290

 

 

27,652

 

 

 

31,188

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NONINTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

 

Employee compensation and benefits

 

44,524

 

 

45,262

 

 

 

39,651

 

 

40,771

 

 

 

41,641

 

 

89,786

 

 

 

84,144

Deposit costs

 

21,706

 

 

20,277

 

 

 

21,606

 

 

20,987

 

 

 

16,980

 

 

41,983

 

 

 

29,700

Occupancy

 

4,197

 

 

4,326

 

 

 

4,313

 

 

4,198

 

 

 

3,954

 

 

8,523

 

 

 

8,015

FDIC special assessment

 

 

 

625

 

 

 

2,412

 

 

 

 

 

 

 

625

 

 

 

Core conversion expense

 

1,250

 

 

350

 

 

 

 

 

 

 

 

 

 

1,600

 

 

 

Other expense

 

22,340

 

 

22,661

 

 

 

24,621

 

 

22,688

 

 

 

23,381

 

 

45,001

 

 

 

45,080

Total noninterest expense

 

94,017

 

 

93,501

 

 

 

92,603

 

 

88,644

 

 

 

85,956

 

 

187,518

 

 

 

166,939

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income tax expense

 

57,187

 

 

50,629

 

 

 

55,528

 

 

57,050

 

 

 

62,687

 

 

107,816

 

 

 

133,948

Income tax expense

 

11,741

 

 

10,228

 

 

 

10,999

 

 

12,385

 

 

 

13,560

 

 

21,969

 

 

 

29,083

Net income

$

45,446

 

$

40,401

 

 

$

44,529

 

$

44,665

 

 

$

49,127

 

$

85,847

 

 

$

104,865

Preferred stock dividends

 

937

 

 

938

 

 

 

937

 

 

938

 

 

 

937

 

 

1,875

 

 

 

1,875

Net income available to common shareholders

$

44,509

 

$

39,463

 

 

$

43,592

 

$

43,727

 

 

$

48,190

 

$

83,972

 

 

$

102,990

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per common share

$

1.19

 

$

1.05

 

 

$

1.16

 

$

1.17

 

 

$

1.29

 

$

2.24

 

 

$

2.76

Diluted earnings per common share

$

1.19

 

$

1.05

 

 

$

1.16

 

$

1.17

 

 

$

1.29

 

$

2.24

 

 

$

2.75

ENTERPRISE FINANCIAL SERVICES CORP

CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)

 

 

At

($ in thousands)

Jun 30,

2024

 

Mar 31,

2024

 

Dec 31,

2023

 

Sep 30,

2023

 

Jun 30,

2023

BALANCE SHEET

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

Cash and due from banks

$

176,698

 

 

$

157,697

 

 

$

193,275

 

 

$

190,806

 

 

$

202,702

 

Interest-earning deposits

 

219,342

 

 

 

215,951

 

 

 

243,610

 

 

 

184,245

 

 

 

125,328

 

Debt and equity investments

 

2,460,549

 

 

 

2,443,977

 

 

 

2,434,902

 

 

 

2,279,578

 

 

 

2,340,821

 

Loans held for sale

 

606

 

 

 

610

 

 

 

359

 

 

 

212

 

 

 

551

 

 

 

 

 

 

 

 

 

 

 

Loans

 

11,000,007

 

 

 

11,028,492

 

 

 

10,884,118

 

 

 

10,616,820

 

 

 

10,512,623

 

Allowance for credit losses

 

(139,464

)

 

 

(135,498

)

 

 

(134,771

)

 

 

(142,133

)

 

 

(141,319

)

Total loans, net

 

10,860,543

 

 

 

10,892,994

 

 

 

10,749,347

 

 

 

10,474,687

 

 

 

10,371,304

 

 

 

 

 

 

 

 

 

 

 

Fixed assets, net

 

44,831

 

 

 

44,382

 

 

 

42,681

 

 

 

41,268

 

 

 

41,988

 

Goodwill

 

365,164

 

 

 

365,164

 

 

 

365,164

 

 

 

365,164

 

 

 

365,164

 

Intangible assets, net

 

10,327

 

 

 

11,271

 

 

 

12,318

 

 

 

13,425

 

 

 

14,544

 

Other assets

 

477,606

 

 

 

481,292

 

 

 

476,934

 

 

 

475,657

 

 

 

408,752

 

Total assets

$

14,615,666

 

 

$

14,613,338

 

 

$

14,518,590

 

 

$

14,025,042

 

 

$

13,871,154

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

$

3,928,308

 

 

$

3,805,334

 

 

$

3,958,743

 

 

$

3,852,486

 

 

$

3,880,561

 

Interest-bearing deposits

 

8,354,075

 

 

 

8,448,367

 

 

 

8,217,628

 

 

 

8,057,421

 

 

 

7,739,299

 

Total deposits

 

12,282,383

 

 

 

12,253,701

 

 

 

12,176,371

 

 

 

11,909,907

 

 

 

11,619,860

 

Subordinated debentures and notes

 

156,265

 

 

 

156,124

 

 

 

155,984

 

 

 

155,844

 

 

 

155,706

 

FHLB advances

 

78,000

 

 

 

125,000

 

 

 

 

 

 

 

 

 

150,000

 

Other borrowings

 

178,269

 

 

 

195,246

 

 

 

297,829

 

 

 

182,372

 

 

 

199,390

 

Other liabilities

 

165,476

 

 

 

151,542

 

 

 

172,338

 

 

 

165,039

 

 

 

127,965

 

Total liabilities

 

12,860,393

 

 

 

12,881,613

 

 

 

12,802,522

 

 

 

12,413,162

 

 

 

12,252,921

 

Shareholders’ equity:

 

 

 

 

 

 

 

 

 

Preferred stock

 

71,988

 

 

 

71,988

 

 

 

71,988

 

 

 

71,988

 

 

 

71,988

 

Common stock

 

373

 

 

 

375

 

 

 

374

 

 

 

374

 

 

 

374

 

Additional paid-in capital

 

994,116

 

 

 

995,969

 

 

 

995,208

 

 

 

992,044

 

 

 

988,355

 

Retained earnings

 

810,935

 

 

 

778,784

 

 

 

749,513

 

 

 

715,303

 

 

 

680,981

 

Accumulated other comprehensive loss

 

(122,139

)

 

 

(115,391

)

 

 

(101,015

)

 

 

(167,829

)

 

 

(123,465

)

Total shareholders’ equity

 

1,755,273

 

 

 

1,731,725

 

 

 

1,716,068

 

 

 

1,611,880

 

 

 

1,618,233

 

Total liabilities and shareholders’ equity

$

14,615,666

 

 

$

14,613,338

 

 

$

14,518,590

 

 

$

14,025,042

 

 

$

13,871,154

 

ENTERPRISE FINANCIAL SERVICES CORP

CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)

 

 

Six months ended

 

June 30, 2024

 

June 30, 2023

($ in thousands)

Average

Balance

 

Interest

Income/

Expense

 

Average Yield/ Rate

 

Average

Balance

 

Interest

Income/

Expense

 

Average Yield/ Rate

AVERAGE BALANCE SHEET

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

Loans1, 2

$

10,945,211

 

$

376,049

 

6.91

%

 

$

10,041,312

 

$

323,076

 

6.49

%

Securities2

 

2,398,545

 

 

39,447

 

3.31

 

 

 

2,293,249

 

 

34,667

 

3.05

 

Interest-earning deposits

 

296,759

 

 

7,958

 

5.39

 

 

 

140,206

 

 

3,290

 

4.73

 

Total interest-earning assets

 

13,640,515

 

 

423,454

 

6.24

 

 

 

12,474,767

 

 

361,033

 

5.84

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-earning assets

 

960,735

 

 

 

 

 

 

928,317

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

$

14,601,250

 

 

 

 

 

$

13,403,084

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing demand accounts

$

2,937,551

 

$

37,413

 

2.56

%

 

$

2,356,708

 

$

16,027

 

1.37

%

Money market accounts

 

3,418,257

 

 

63,283

 

3.72

 

 

 

2,873,715

 

 

35,970

 

2.52

 

Savings accounts

 

580,115

 

 

637

 

0.22

 

 

 

709,490

 

 

457

 

0.13

 

Certificates of deposit

 

1,377,126

 

 

29,514

 

4.31

 

 

 

946,527

 

 

13,579

 

2.89

 

Total interest-bearing deposits

 

8,313,049

 

 

130,847

 

3.17

 

 

 

6,886,440

 

 

66,033

 

1.93

 

Subordinated debentures and notes

 

156,117

 

 

5,168

 

6.66

 

 

 

155,565

 

 

4,840

 

6.27

 

FHLB advances

 

57,049

 

 

1,590

 

5.60

 

 

 

104,887

 

 

2,611

 

5.02

 

Securities sold under agreements to repurchase

 

181,933

 

 

3,205

 

3.54

 

 

 

188,958

 

 

1,453

 

1.55

 

Other borrowings

 

39,470

 

 

300

 

1.53

 

 

 

94,048

 

 

1,772

 

3.80

 

Total interest-bearing liabilities

 

8,747,618

 

 

141,110

 

3.24

 

 

 

7,429,898

 

 

76,709

 

2.08

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

3,949,429

 

 

 

 

 

 

4,265,521

 

 

 

 

Other liabilities

 

160,734

 

 

 

 

 

 

112,625

 

 

 

 

Total liabilities

 

12,857,781

 

 

 

 

 

 

11,808,044

 

 

 

 

Shareholders' equity

 

1,743,469

 

 

 

 

 

 

1,595,040

 

 

 

 

Total liabilities and shareholders' equity

$

14,601,250

 

 

 

 

 

$

13,403,084

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total net interest income

 

 

$

282,344

 

 

 

 

 

$

284,324

 

 

Net interest margin

 

 

 

 

4.16

%

 

 

 

 

 

4.60

%

 

 

 

 

 

 

 

 

 

 

 

 

1 Average balances include nonaccrual loans. Interest income includes loan fees of $4.6 million and $7.4 million for the six months ended June 30, 2024 and June 30, 2023, 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 $4.1 million for both the six months ended June 30, 2024 and June 30, 2023, respectively.

 

 

 

 

 

 

 

 

 

 

 

 

ENTERPRISE FINANCIAL SERVICES CORP

CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)

 

 

At or for the quarter ended

($ in thousands)

Jun 30,

2024

 

Mar 31,

2024

 

Dec 31,

2023

 

Sep 30,

2023

 

Jun 30,

2023

LOAN PORTFOLIO

 

 

 

 

 

 

 

 

 

Commercial and industrial

$

4,619,448

 

 

$

4,766,310

 

 

$

4,672,559

 

 

$

4,448,535

 

 

$

4,360,862

 

Commercial real estate

 

4,856,751

 

 

 

4,804,803

 

 

 

4,803,571

 

 

 

4,794,355

 

 

 

4,802,293

 

Construction real estate

 

893,672

 

 

 

820,416

 

 

 

760,425

 

 

 

723,796

 

 

 

671,573

 

Residential real estate

 

351,934

 

 

 

367,218

 

 

 

372,188

 

 

 

376,120

 

 

 

368,867

 

Other

 

278,202

 

 

 

269,745

 

 

 

275,375

 

 

 

274,014

 

 

 

309,028

 

Total loans

$

11,000,007

 

 

$

11,028,492

 

 

$

10,884,118

 

 

$

10,616,820

 

 

$

10,512,623

 

 

 

 

 

 

 

 

 

 

 

DEPOSIT PORTFOLIO

 

 

 

 

 

 

 

 

 

Noninterest-bearing demand accounts

$

3,928,308

 

 

$

3,805,334

 

 

$

3,958,743

 

 

$

3,852,486

 

 

$

3,880,561

 

Interest-bearing demand accounts

 

2,951,899

 

 

 

2,956,282

 

 

 

2,950,259

 

 

 

2,749,598

 

 

 

2,629,339

 

Money market and savings accounts

 

4,039,626

 

 

 

4,006,702

 

 

 

3,994,455

 

 

 

3,837,145

 

 

 

3,577,856

 

Brokered certificates of deposit

 

494,870

 

 

 

659,005

 

 

 

482,759

 

 

 

695,551

 

 

 

893,808

 

Other certificates of deposit

 

867,680

 

 

 

826,378

 

 

 

790,155

 

 

 

775,127

 

 

 

638,296

 

Total deposits

$

12,282,383

 

 

$

12,253,701

 

 

$

12,176,371

 

 

$

11,909,907

 

 

$

11,619,860

 

 

 

 

 

 

 

 

 

 

 

AVERAGE BALANCES

 

 

 

 

 

 

 

 

 

Loans

$

10,962,488

 

 

$

10,927,932

 

 

$

10,685,961

 

 

$

10,521,966

 

 

$

10,284,873

 

Securities

 

2,396,519

 

 

 

2,400,571

 

 

 

2,276,915

 

 

 

2,302,850

 

 

 

2,297,995

 

Interest-earning assets

 

13,684,459

 

 

 

13,596,571

 

 

 

13,383,638

 

 

 

13,160,587

 

 

 

12,756,653

 

Assets

 

14,646,381

 

 

 

14,556,119

 

 

 

14,332,804

 

 

 

14,068,860

 

 

 

13,671,985

 

Deposits

 

12,344,253

 

 

 

12,180,703

 

 

 

12,163,346

 

 

 

11,922,534

 

 

 

11,387,813

 

Shareholders’ equity

 

1,748,240

 

 

 

1,738,698

 

 

 

1,652,882

 

 

 

1,648,605

 

 

 

1,621,337

 

Tangible common equity1

 

1,300,305

 

 

 

1,289,776

 

 

 

1,202,872

 

 

 

1,197,486

 

 

 

1,169,091

 

 

 

 

 

 

 

 

 

 

 

YIELDS (tax equivalent)

 

 

 

 

 

 

 

 

 

Loans

 

6.95

%

 

 

6.87

%

 

 

6.87

%

 

 

6.80

%

 

 

6.64

%

Securities

 

3.35

 

 

 

3.27

 

 

 

3.20

 

 

 

3.11

 

 

 

3.06

 

Interest-earning assets

 

6.28

 

 

 

6.20

 

 

 

6.20

 

 

 

6.12

 

 

 

5.97

 

Interest-bearing deposits

 

3.19

 

 

 

3.14

 

 

 

3.03

 

 

 

2.77

 

 

 

2.26

 

Deposits

 

2.16

 

 

 

2.13

 

 

 

2.03

 

 

 

1.84

 

 

 

1.46

 

Subordinated debentures and notes

 

6.91

 

 

 

6.40

 

 

 

6.30

 

 

 

6.28

 

 

 

6.27

 

FHLB advances and other borrowed funds

 

3.52

 

 

 

3.80

 

 

 

3.06

 

 

 

2.76

 

 

 

3.45

 

Interest-bearing liabilities

 

3.26

 

 

 

3.22

 

 

 

3.09

 

 

 

2.84

 

 

 

2.40

 

Net interest margin

 

4.19

 

 

 

4.13

 

 

 

4.23

 

 

 

4.33

 

 

 

4.49

 

1Refer to Reconciliations of Non-GAAP Financial Measures tables 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)

Jun 30,

2024

 

Mar 31,

2024

 

Dec 31,

2023

 

Sep 30,

2023

 

Jun 30,

2023

ASSET QUALITY

 

 

 

 

 

 

 

 

 

Net charge-offs

$

605

 

 

$

5,864

 

 

$

28,479

 

 

$

6,856

 

 

$

2,973

 

Nonperforming loans

 

39,384

 

 

 

35,642

 

 

 

43,728

 

 

 

48,932

 

 

 

16,112

 

Classified assets

 

169,822

 

 

 

185,150

 

 

 

185,389

 

 

 

184,393

 

 

 

108,065

 

Nonperforming loans to total loans

 

0.36

%

 

 

0.32

%

 

 

0.40

%

 

 

0.46

%

 

 

0.15

%

Nonperforming assets to total assets

 

0.33

%

 

 

0.30

%

 

 

0.34

%

 

 

0.40

%

 

 

0.12

%

Allowance for credit losses to total loans

 

1.27

%

 

 

1.23

%

 

 

1.24

%

 

 

1.34

%

 

 

1.34

%

Allowance for credit losses to total loans, excluding guaranteed loans

 

1.38

%

 

 

1.34

%

 

 

1.35

%

 

 

1.47

%

 

 

1.48

%

Allowance for credit losses to nonperforming loans

 

354.1

%

 

 

380.2

%

 

 

308.2

%

 

 

290.5

%

 

 

877.1

%

Net charge-offs to average loans -annualized

 

0.02

%

 

 

0.22

%

 

 

1.06

%

 

 

0.26

%

 

 

0.12

%

 

 

 

 

 

 

 

 

 

 

WEALTH MANAGEMENT

 

 

 

 

 

 

 

 

 

Trust assets under management

$

2,367,409

 

 

$

2,352,902

 

 

$

2,235,073

 

 

$

2,129,408

 

 

$

1,992,563

 

 

 

 

 

 

 

 

 

 

 

SHARE DATA

 

 

 

 

 

 

 

 

 

Book value per common share

$

45.08

 

 

$

44.24

 

 

$

43.94

 

 

$

41.19

 

 

$

41.39

 

Tangible book value per common share1

$

35.02

 

 

$

34.21

 

 

$

33.85

 

 

$

31.06

 

 

$

31.23

 

Market value per share

$

40.91

 

 

$

40.56

 

 

$

44.65

 

 

$

37.50

 

 

$

39.10

 

Period end common shares outstanding

 

37,344

 

 

 

37,515

 

 

 

37,416

 

 

 

37,385

 

 

 

37,359

 

Average basic common shares

 

37,485

 

 

 

37,490

 

 

 

37,421

 

 

 

37,405

 

 

 

37,347

 

Average diluted common shares

 

37,540

 

 

 

37,597

 

 

 

37,554

 

 

 

37,520

 

 

 

37,495

 

 

 

 

 

 

 

 

 

 

 

CAPITAL

 

 

 

 

 

 

 

 

 

Total risk-based capital to risk-weighted assets2

 

14.6

%

 

 

14.3

%

 

 

14.2

%

 

 

14.1

%

 

 

14.1

%

Tier 1 capital to risk-weighted assets2

 

13.0

%

 

 

12.8

%

 

 

12.7

%

 

 

12.6

%

 

 

12.5

%

Common equity tier 1 capital to risk-weighted assets2

 

11.7

%

 

 

11.4

%

 

 

11.3

%

 

 

11.2

%

 

 

11.1

%

Tangible common equity to tangible assets1

 

9.18

%

 

 

9.01

%

 

 

8.96

%

 

 

8.51

%

 

 

8.65

%

 

 

 

 

 

 

 

 

 

 

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

2Capital ratios for the current quarter are preliminary and subject to, among other things, completion and filing of the Company’s regulatory reports and ongoing regulatory review.

ENTERPRISE FINANCIAL SERVICES CORP

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

 

 

Quarter ended

 

Six months ended

($ in thousands)

Jun 30,

2024

 

Mar 31,

2024

 

Dec 31,

2023

 

Sep 30,

2023

 

Jun 30,

2023

 

Jun 30,

2024

 

Jun 30,

2023

CORE EFFICIENCY RATIO

 

 

 

 

Net interest income (GAAP)

$

140,529

 

 

$

137,728

 

 

$

140,732

 

 

$

141,639

 

 

$

140,692

 

 

$

278,257

 

 

$

280,221

 

Tax-equivalent adjustment

 

2,047

 

 

 

2,040

 

 

 

1,915

 

 

 

2,061

 

 

 

2,062

 

 

 

4,087

 

 

 

4,103

 

Noninterest income (GAAP)

 

15,494

 

 

 

12,158

 

 

 

25,452

 

 

 

12,085

 

 

 

14,290

 

 

 

27,652

 

 

 

31,188

 

Less gain on sale of investment securities

 

 

 

 

 

 

 

220

 

 

 

 

 

 

 

 

 

 

 

 

381

 

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

 

 

 

 

(2

)

 

 

 

 

 

 

 

 

97

 

 

 

(2

)

 

 

187

 

Core revenue (non-GAAP)

 

158,070

 

 

 

151,928

 

 

 

167,879

 

 

 

155,785

 

 

 

156,947

 

 

 

309,998

 

 

 

314,944

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense (GAAP)

 

94,017

 

 

 

93,501

 

 

 

92,603

 

 

 

88,644

 

 

 

85,956

 

 

 

187,518

 

 

 

166,939

 

Less FDIC special assessment

 

 

 

 

625

 

 

 

2,412

 

 

 

 

 

 

 

 

 

625

 

 

 

 

Less core conversion expense

 

1,250

 

 

 

350

 

 

 

 

 

 

 

 

 

 

 

 

1,600

 

 

 

 

Less amortization on intangibles

 

944

 

 

 

1,047

 

 

 

1,108

 

 

 

1,118

 

 

 

1,136

 

 

 

1,991

 

 

 

2,375

 

Core noninterest expense (non-GAAP)

 

91,823

 

 

 

91,479

 

 

 

89,083

 

 

 

87,526

 

 

 

84,820

 

 

 

183,302

 

 

 

164,564

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core efficiency ratio (non-GAAP)

 

58.09

%

 

 

60.21

%

 

 

53.06

%

 

 

56.18

%

 

 

54.04

%

 

 

59.13

%

 

 

52.25

%

 

Quarter ended

(in thousands, except per share data)

Jun 30,

2024

 

Mar 31,

2024

 

Dec 31,

2023

 

Sep 30,

2023

 

Jun 30,

2023

TANGIBLE COMMON EQUITY, TANGIBLE BOOK VALUE PER SHARE AND TANGIBLE COMMON EQUITY RATIO

Shareholders’ equity (GAAP)

$

1,755,273

 

 

$

1,731,725

 

 

$

1,716,068

 

 

$

1,611,880

 

 

$

1,618,233

 

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

 

10,327

 

 

 

11,271

 

 

 

12,318

 

 

 

13,425

 

 

 

14,544

 

Tangible common equity (non-GAAP)

$

1,307,794

 

 

$

1,283,302

 

 

$

1,266,598

 

 

$

1,161,303

 

 

$

1,166,537

 

Less net unrealized losses on HTM securities, after tax

 

52,220

 

 

 

47,822

 

 

 

41,038

 

 

 

81,367

 

 

 

53,611

 

Tangible common equity adjusted for unrealized losses on HTM securities (non-GAAP)

$

1,255,574

 

 

$

1,235,480

 

 

$

1,225,560

 

 

$

1,079,936

 

 

$

1,112,926

 

 

 

 

 

 

 

 

 

 

 

Common shares outstanding

 

37,344

 

 

 

37,515

 

 

 

37,416

 

 

 

37,385

 

 

 

37,359

 

Tangible book value per share (non-GAAP)

$

35.02

 

 

$

34.21

 

 

$

33.85

 

 

$

31.06

 

 

$

31.23

 

 

 

 

 

 

 

 

 

 

 

Total assets (GAAP)

$

14,615,666

 

 

$

14,613,338

 

 

$

14,518,590

 

 

$

14,025,042

 

 

$

13,871,154