Enterprise Financial Reports Fourth Quarter and Full Year 2022 Results
--2022 Results
Jim Lally, President and Chief Executive Officer of Enterprise Financial Services Corp (Nasdaq: EFSC) (the "Company" or "EFSC"), commented, "We finished 2022 with strong financial results in the fourth quarter and the full year. Our performance is a result of our commitment to building partnerships with our clients, the execution of our strategic initiatives and our diversified business platform. We reported earnings per share ("EPS") of $1.58 for the fourth quarter and $5.31 for 2022, both of which are records for the Company. We also achieved loan growth of 16% and 8% for the fourth quarter, annualized, and full year, respectively. Our record earnings in the fourth quarter resulted in a 1.83% return on average assets and a 22.62% return on average tangible common equity.(1) For the full year, we had a 1.52% return on average assets and a 19.10% return on average tangible common equity.(1) As we look to 2023, we are excited for the opportunity to continue the strong momentum we built during 2022."
(1) Return on average tangible common equity, tangible common equity to tangible assets, and tangible book value per share are non-GAAP measures. Please refer to discussion and reconciliation of this measure in the accompanying financial tables.
Full-Year Highlights
Please note comparisons to the prior year are impacted by the acquisition of First Choice Bancorp ("First Choice" or "FCBP") in the third quarter of 2021.
For 2022, net income was $203.0 million, or $5.31 per diluted share, compared to $133.1 million, or $3.86 per diluted share, in 2021. Pre-provision net revenue ("PPNR")(2) for 2022 was $258.8 million, compared to $207.5 million in 2021. Organic earning-asset growth and expansion of net interest margin due to the increase in market interest rates were the primary contributors to the PPNR increase in 2022. Additionally, 2022 included the first full year of operations from the FCBP acquisition.
The Company's asset sensitive balance sheet benefited from the increase in market interest rates during 2022. Net interest margin ("NIM") expanded to 3.89% in 2022, from 3.41% in 2021. The increase in NIM and average interest-earning asset growth of $1.7 billion resulted in total net interest income of $473.9 million in 2022, a 32% increase from $360.2 million in 2021.
Noninterest income was $59.2 million, a decrease of 13% from $67.7 million in 2021. While the increase in interest rates benefited net interest income, higher interest rates resulted in lower mortgage banking and tax credit income. The Company also became subject to the Durbin Amendment limitation on interchange income in 2022, which reduced card services revenue. Total noninterest expense was $274.2 million in 2022, a 12% increase from $245.9 million in 2021. However, the core efficiency ratio(3)remained stable at 49.8% in 2022, compared to 49.5% in 2021.
Credit quality remained favorable, with nonperforming assets declining to 0.08% of total assets, from 0.23% at the end of 2021. Net charge-offs were 0.04% of average loans in 2022, compared to 0.14% in 2021. The improvements in credit quality resulted in the allowance for credit losses declining to 1.41% of total loans at the end of 2022, from 1.61% at the end of 2021. Excluding guaranteed portions of loans, which includes Paycheck Protection Program ("PPP") loans, the allowance to loans ratio was 1.56% and 1.84% at the end of 2022 and 2021, respectively. The allowance for credit losses to nonperforming loans increased year-over-year as nonperforming loans declined $18.0 million, or 64%, from the prior year. A provision benefit of $0.6 million was recorded in 2022, compared to a provision expense of $13.4 million in 2021.
The Company maintained a strong liquidity position in 2022, with total deposits of $10.8 billion, a loan-to-deposit ratio of 89.9% and cash and investment securities of $2.6 billion. This compares to total deposits of $11.3 billion, a loan-to-deposit ratio of 79.5% and cash and investment securities of $3.9 billion in 2021. Total deposits include a significant non-interest bearing deposit portfolio that comprises 42.9% of total deposits at December 31, 2022.
Total shareholders' equity was $1.5 billion at the end of both 2022 and 2021. Net income of $203.0 million was partially offset by a decline in the fair value of available for sale investment securities of $149.8 million from the increase in market interest rates. In addition, the Company returned $66.5 million to common shareholders through dividends of $33.6 million, or $0.90 per share, and share repurchases of $32.9 million in 2022.
(2)PPNR is a non-GAAP measure. Please refer to discussion and reconciliation of these measures in the accompanying financial tables.
Fourth Quarter Highlights
Earnings - Net income in the fourth quarter 2022 was $60.0 million, an increase of $9.8 million compared to the linked quarter and an increase of $9.2 million from the prior year quarter. EPS was $1.58 per diluted common share for the fourth quarter 2022, compared to $1.32 and $1.33 per diluted common share for the linked and prior year quarters, respectively. PPNR - PPNR(2) of $78.6 million in the fourth quarter 2022 increased $13.7 million and $15.2 million from the linked and prior year quarters, respectively. The increase from both the linked and prior year quarters was primarily due to an increase in operating revenue, partially offset by an increase in noninterest expense. Net interest income and NIM - Net interest income of $138.8 million for the fourth quarter 2022 increased $14.5 million and $36.8 million from the linked and prior year quarters, respectively. NIM was 4.66% for the fourth quarter 2022, compared to 4.10% and 3.32% for the linked and prior year quarters, respectively. Net interest income and NIM benefited from higher average loan and investment balances and expanding yields on earning assets, partially offset by higher deposit costs and a decline in average interest-earning cash. Noninterest income - Noninterest income of $16.9 million for the fourth quarter 2022 increased $7.4 million from the linked quarter and declined $5.8 million from the prior year quarter. The increase from the linked quarter was primarily due to an increase in tax credit income and fees earned on community development investments. Tax credit income in the linked quarter was lower due to the impact from the increase in certain market interest rates on tax credit projects carried at fair value. The decrease in noninterest income from the prior year quarter was primarily due to lower fees from community development investments, tax credit income and card services revenue. Loans - Total loans increased $382.2 million from the linked quarter to $9.7 billion as of December 31, 2022. Loans grew 16.5%, on an annualized basis, from the linked quarter and 11.3% for the year when excluding PPP loan balances. Average loans totaled $9.4 billion for the fourth quarter 2022, compared to $9.2 billion and $9.0 billion for the linked and prior year quarters, respectively. Asset quality - The allowance for credit losses to loans was 1.41% at December 31, 2022, compared to 1.50% at September 30, 2022 and 1.61% at December 31, 2021. Nonperforming assets to total assets was 0.08% at December 31, 2022, compared to 0.14% and 0.23% at September 30, 2022 and December 31, 2021, respectively. A provision for credit losses of $2.1 million and $0.7 million was recorded in the fourth quarter 2022 and the linked quarter, respectively. A provision benefit of $3.7 million was recorded in the prior year quarter. Deposits - Total deposits decreased $228.4 million from $11.1 billion as of the linked quarter to $10.8 billion as of December 31, 2022. The Company has actively managed its deposit rates to remain competitive and to support deposit retention. This has been accomplished while maintaining a relatively low increase in deposit yields compared to the overall increase in market interest rates. The decline in deposits from the linked quarter and the end of the prior year was due primarily to the managed run-off of certain interest-rate sensitive, large balance accounts and reflects a shift in our deposit mix aligned with our disciplined focus on relationship-based, lower-cost deposits. These customers were single service customers and were not part of broader banking relationships. Additionally, certain large deposit outflows experienced in the year were related to customer business transactions. Average deposits totaled $11.0 billion for the fourth quarter 2022, compared to $11.2 billion for both the linked and prior year quarters. At December 31, 2022, noninterest-bearing deposit accounts represented 42.9% of total deposits, and the loan to deposit ratio was 89.9%. Capital - Total shareholders' equity was $1.5 billion and the tangible common equity to tangible assets ratio(1) was 8.4% at December 31, 2022, compared to 7.9% at September 30, 2022. Enterprise Bank & Trust remains "well-capitalized," with a common equity tier 1 ratio of 12.1% and a total risk-based capital ratio of 13.1% as of December 31, 2022. The Company's common equity tier 1 ratio and total risk-based capital ratio was 11.1% and 14.2%, respectively, at December 31, 2022.
The Company's Board of Directors approved a quarterly dividend of $0.25 per common share, payable on March 31, 2023 to shareholders of record as of March 15, 2023, an increase of $0.01, or 4%, compared to the fourth quarter 2022. The Board of Directors also declared a cash dividend of $12.50 per share of Series A Preferred Stock (or $0.3125 per depositary share) representing a 5% per annum rate for the period commencing (and including) December 15, 2022 to (but excluding) March 15, 2023. The dividend will be payable on March 15, 2023 to shareholders of record on February 28, 2023.
Net Interest Income
Average Balance Sheets
The following table presents, for the periods indicated, certain information related to our average interest-earning assets and interest-bearing liabilities, as well as, the corresponding interest rates earned and paid, all on a tax-equivalent basis.
Quarter ended
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
December 31, 2022 September 30, 2022 December 31, 2021
---------------------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------------
($ in thousands) Average Interest Average Average Interest Average Average Interest Average
Balance Income/ Yield/ Balance Income/ Yield/ Balance Income/ Yield/
Expense Rate Expense Rate Expense Rate
--------------------------------------------------------------- ------------------------------ ------------------------------ ------------------------------ ------------------------------ ------------------------------ ------------------------------ ------------------------------ ------------------------------ ------------------------------
Assets
Interest-earning assets:
$ 9,423,984 $ 139,432 5.87 % $ 9,230,738 $ 118,642 5.10 % $ 9,030,982 $ 98,412 4.32 %
Loans(1, 2)
2,204,211 16,191 2.91 2,202,255 14,717 2.65 1,753,159 10,146 2.30
Securities(2)
367,100 3,097 3.35 765,258 4,190 2.17 1,589,008 590 0.15
Interest-earning deposits
-------------------- ---------- -------------------- ---------- -------------------- ---------- -------------------- ---------- -------------------- ---------- -------------------- ----------
Total interest-earning assets 11,995,295 158,720 5.25 12,198,251 137,549 4.47 12,373,149 109,148 3.50
Noninterest-earning assets 991,273 959,870 894,044
-------------------- ---------- -------------------- ---------- -------------------- ----------
Total assets $ 12,986,568 $ 13,158,121 $ 13,267,193
==================== ========== ==================== ========== ==================== ==========
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
$ 2,242,268 $ 4,136 0.73 % $ 2,200,619 $ 1,707 0.31 % $ 2,383,059 $ 491 0.08 %
Interest-bearing demand accounts
2,696,417 9,509 1.40 2,791,822 6,067 0.86 2,853,655 1,412 0.20
Money market accounts
775,488 100 0.05 828,747 69 0.03 776,695 64 0.03
Savings accounts
524,938 1,017 0.77 554,987 844 0.60 616,347 831 0.53
Certificates of deposit
-------------------- ---------- -------------------- ---------- -------------------- ---------- -------------------- ---------- -------------------- ---------- -------------------- ----------
Total interest-bearing deposits 6,239,111 14,762 0.94 6,376,175 8,687 0.54 6,629,756 2,798 0.17
Subordinated debentures and notes 155,359 2,376 6.07 155,225 2,313 5.91 171,453 2,439 5.64
FHLB advances 8,864 104 4.65 25,543 103 1.60 50,000 199 1.58
Securities sold under agreements to repurchase 182,362 282 0.61 198,027 123 0.25 246,525 60 0.10
Other borrowings 26,993 378 5.56 19,984 179 3.55 24,270 85 1.39
-------------------- ---------- -------------------- ---------- -------------------- ---------- -------------------- ---------- -------------------- ---------- -------------------- ----------
Total interest-bearing liabilities 6,612,689 17,902 1.07 6,774,954 11,405 0.67 7,122,004 5,581 0.31
-------------------- ---------- -------------------- ---------- -------------------- ----------
Noninterest-bearing liabilities:
4,763,503 4,778,720 4,537,247
Demand deposits
119,784 109,943 112,546
Other liabilities
-------------------- ---------- -------------------- ---------- -------------------- ----------
Total liabilities 11,495,976 11,663,617 11,771,797
Shareholders' equity 1,490,592 1,494,504 1,495,396
-------------------- ---------- -------------------- ---------- -------------------- ----------
Total liabilities and shareholders' equity $ 12,986,568 $ 13,158,121 $ 13,267,193
==================== ========== ==================== ========== ==================== ==========
Total net interest income $ 140,818 $ 126,144 $ 103,567
==================== ========== ==================== ========== ==================== ==========
Net interest margin 4.66 % 4.10 % 3.32 %
--------------------------------------------------------------- ------------------------------ -------------------- ------------------------------ -------------------- ---------- -------------------- -------------------- ------------------------------ -------------------- ------------------------------ -------------------- ---------- -------------------- -------------------- ------------------------------ -------------------- ------------------------------ -------------------- ---------- --------------------
(1) Average balances include nonaccrual loans. Interest income includes loan fees of $3.7 million, $3.6 million, and $6.3 million for the three months ended December 31, 2022, September 30, 2022, and December 31, 2021, respectively.
Net interest income for the fourth quarter was $138.8 million, an increase of $14.5 million from the linked quarter and an increase of $36.8 million from the prior year period. Interest income increased during the quarter due to an increase in certain market interest rates combined with organic loan growth, driving the 11.7% increase in net interest income over the linked quarter. The effective federal funds rate for the fourth quarter 2022 was 3.65%, an increase of 145 basis points, compared to the linked quarter, and a 357 basis point increase over the prior year quarter. Average total loans increased $193.2 million, or 8.3% on an annualized basis, from the linked quarter. The increase in loan interest income was partially offset by higher interest expense on the deposit portfolio, which also reflects an increase in interest rates.
The earning asset yield was 5.25% in the fourth quarter 2022, an increase of 78 basis points compared to the linked quarter. The average loan yield was 5.87% in the fourth quarter 2022, an increase of 77 basis points from the linked quarter. The average loan yield increased due to the repricing of variable-rate loans and the origination of new loans at an average rate of 6.64%. Approximately 17% of the variable-rate loan portfolio reprices on the first day of each quarter and thus, interest income in the period did not benefit from the current quarter's rate movement. These loans will reset early in the first quarter of 2023.
The average investment yield was 2.91%, an increase of 26 basis points from the linked quarter, while the average investment balance remained relatively stable. The investment yield increased due to the purchase of new investments at higher yields. Investments purchased in the fourth quarter 2022 had a tax equivalent average yield of 5.14%. The yield on interest earning cash deposits was 3.35%, an increase of 118 basis points from the linked quarter, while the average balance declined $398.2 million from the linked quarter to $367.1 million in the fourth quarter 2022.
The interest-bearing liability yield was 1.07% in the fourth quarter 2022, an increase of 40 basis points compared to the linked quarter. The average cost of interest-bearing deposits was 0.94% in the fourth quarter 2022, an increase of 40 basis points over the linked quarter. The increase was primarily due to higher rates paid on money market accounts, which increased 54 basis points to 1.40% in the fourth quarter 2022, and interest bearing demand deposits that increased 42 basis points to 0.73% in the current quarter. The total cost of deposits, including noninterest-bearing demand accounts, was 53 basis points during the fourth quarter 2022.
NIM, on a tax equivalent basis, was 4.66% in the fourth quarter 2022, an increase of 56 basis points from the linked quarter and an increase of 134 basis points from the prior year quarter, as changing interest rates had a greater impact on assets with variable interest rates than on deposit costs. The pace of deposit rate increases has continued to lag the increase in loan rates, resulting in a positive impact on our NIM.
Loans
The following table presents total loans for the most recent five quarters:
Quarter ended
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
($ in thousands) December 31, September 30, June 30, March 31, December 31,
2022 2022 2022 2022 2021
------------------------------------------- ------------------------------------------------- -------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- -------------------------------------------------
C&I $ 1,904,654 $ 1,780,677 $ 1,641,740 $ 1,438,607 $ 1,478,689
CRE investor owned 2,176,424 2,106,458 1,977,806 1,982,645 1,955,087
CRE owner occupied 1,174,094 1,133,467 1,118,895 1,138,106 1,112,463
SBA loans* 1,312,378 1,269,065 1,284,279 1,249,929 1,241,449
Sponsor finance* 635,061 650,102 647,180 641,476 508,469
Life insurance premium finance* 817,115 779,606 748,376 695,640 653,028
Tax credits* 559,605 507,681 550,662 518,020 486,881
SBA PPP loans 7,272 13,165 49,175 134,084 271,958
Residential real estate 379,924 381,634 391,867 410,173 430,985
Construction and land development 534,753 513,452 626,577 610,830 625,526
Other 235,858 219,680 232,619 236,563 253,107
-------------------- --------- -------------------- -------------------- --------- -------------------- -------------------- --------- -------------------- -------------------- --------- -------------------- -------------------- --------- --------------------
$ 9,737,138 $ 9,354,987 $ 9,269,176 $ 9,056,073 $ 9,017,642
Total loans
==================== ========= ==================== ==================== ========= ==================== ==================== ========= ==================== ==================== ========= ==================== ==================== ========= ====================
Total loan yield 5.87 % 5.10 % 4.51 % 4.34 % 4.32 %
Variable interest rate loans to total loans 63 % 63 % 64 % 63 % 63 %
------------------------------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- --------------------
Certain prior period amounts have been reclassified among the categories to conform to the current period presentation.
Loans totaled $9.7 billion at December 31, 2022, increasing $382.2 million, compared to the linked quarter. Excluding PPP loans, loans grew $388.0 million, or 16.5% on an annualized basis, from the linked quarter. The increase was driven primarily by C&I and CRE loans with an increase of $124.0 million and $110.6 million, respectively. The specialty lending areas also increased, specifically in tax credits, SBA, and life insurance premium finance, partially offset by a small decline in sponsor finance. Average line utilization was approximately 41% for the quarter ended December 31, 2022, compared to 43% and 40% for the linked and prior year quarters, respectively.
Asset Quality
The following table presents the categories of nonperforming assets and related ratios for the most recent five quarters:
Quarter ended
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
($ in thousands) December 31, September 30, June 30, March 31, December 31,
2022 2022 2022 2022 2021
------------------------------------ ---------------------------------------------- ---------------------------------------------- ---------------------------------------------- ---------------------------------------------- ----------------------------------------------
Nonperforming loans* $ 9,981 $ 18,184 $ 19,560 $ 21,160 $ 28,024
Other real estate 269 269 955 1,459 3,493
-------------------- ------ -------------------- -------------------- ------ -------------------- -------------------- ------ -------------------- -------------------- ------ -------------------- -------------------- ------ --------------------
Nonperforming assets* $ 10,250 $ 18,453 $ 20,515 $ 22,619 $ 31,517
==================== ====== ==================== ==================== ====== ==================== ==================== ====== ==================== ==================== ====== ==================== ==================== ====== ====================
Nonperforming loans to total loans 0.10 % 0.19 % 0.21 % 0.23 % 0.31 %
Nonperforming assets to total assets 0.08 % 0.14 % 0.16 % 0.17 % 0.23 %
Allowance for credit losses to loans 1.41 % 1.50 % 1.52 % 1.54 % 1.61 %
Net charge-offs (recoveries) $ 2,075 $ 478 $ (175 ) $ 1,521 $ 3,263
Nonperforming assets declined $8.2 million during the fourth quarter 2022 and $21.3 million from the prior year quarter. Net charge-offs to average loans were nine basis points in the fourth quarter 2022, compared to two basis points in the linked quarter and 14 basis points in the prior year quarter. The Company recorded a provision for credit losses of $2.1 million in the fourth quarter 2022, compared to a provision for credit losses of $0.7 million in the linked quarter and a provision benefit of $3.7 million in the prior year quarter when economic forecasts were improving. The provision for credit losses in the fourth quarter primarily relates to growth in loans and unfunded commitments and a modest deterioration of economic forecasts, partially offset by an overall improvement in credit quality.
The allowance for credit losses to loans was 1.41% at December 31, 2022, a decrease of nine basis points from the linked quarter. The decline in nonperforming loans and a related decrease in specific loan reserves, along with a shift in the composition of the loan portfolio to categories with lower reserve levels, drove the decline in the ratio of allowance for credit losses to loans. This decline was partially offset by a modest decline in economic forecasts. Loan growth in the quarter was primarily in commercial real estate and C&I loans that generally have a lower reserve level. The ratio of allowance for credit losses to nonperforming loans increased in the current quarter as nonperforming loans declined $8.2 million and $18.0 million from the linked and prior year quarter, respectively.
Deposits
The following table presents deposits broken out by type for the most recent five quarters:
Quarter ended
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
($ in thousands) December 31, September 30, June 30, March 31, December 31,
2022 2022 2022 2022 2021
---------------------------------------------- -------------------------------------------------- -------------------- -------------------------------------------------- -------------------- -------------------------------------------------- -------------------------------------------------- --------------------------------------------------
Noninterest-bearing demand accounts $ 4,642,732 $ 4,642,539 $ 4,746,478 $ 4,881,043 $ 4,578,436
Interest-bearing demand accounts 2,256,295 2,270,898 2,197,957 2,547,482 2,465,884
Money market and savings accounts 3,399,415 3,617,249 3,562,982 3,678,135 3,691,186
Brokered certificates of deposit 118,968 129,039 129,064 129,017 128,970
Other certificates of deposit 411,740 397,869 456,137 468,458 479,323
-------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
$ 10,829,150 $ 11,057,594 $ 11,092,618 $ 11,704,135 $ 11,343,799
Total deposit portfolio
==================== ========== ==================== ==================== ========== ==================== ==================== ========== ==================== ==================== ========== ==================== ==================== ========== ====================
Noninterest-bearing deposits to total deposits 42.9 % 42.0 % 42.8 % 41.7 % 40.4 %
Total deposits at December 31, 2022 were $10.8 billion, a decrease of $228.4 million from September 30, 2022, and a decrease of $514.6 million from December 31, 2021. Deposits declined from the end of the prior year due primarily to the managed run-off of certain interest-rate sensitive, large balance accounts and reflects a shift in the deposit mix aligned with the Company's disciplined focus on relationship-based, lower-cost deposits. These customers were single service customers and were not part of broader banking relationships.
Noninterest Income and Expense
The following tables present a comparative summary of the major components of noninterest income, other income, and noninterest expense for the periods indicated:
Linked quarter comparison Prior year comparison
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------
Quarter ended Quarter ended
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------
($ in thousands) December 31, September 30, Increase December 31, Increase
2022 2022 (decrease) 2021 (decrease)
--------------------------- -------------------------- ---------------------------------------------- ---------------------------------------------------------------------------------- -------------------------- ------------------------------------------------------------------------
Deposit service charges 4,463 4,951 $ (488 ) (10 ) % $ 3,962 $ 501 13 %
Wealth management revenue 2,423 2,432 (9 ) -- % 2,687 (264 ) (10 ) %
Card services revenue 2,345 2,652 (307 ) (12 ) % 3,223 (878 ) (27 ) %
Tax credit income (loss) 2,389 (3,625 ) 6,014 166 % 4,374 (1,985 ) (45 ) %
Other income 5,253 3,044 2,209 73 % 8,384 (3,131 ) (37 ) %
-------------------- ------ -------------------- ------ -------------------- -------------------- ----- -------------------- -------------------- ------ -------------------- ------ --------------------
$ 16,873 $ 9,454 $ 7,419 78 % $ 22,630 $ (5,757 ) (25 ) %
Total noninterest income
==================== ====== ==================== ====== ==================== ==================== ===== ==================== ============== === ==================== ====== ==================== ====== ==================== === ===
Total noninterest income for the fourth quarter 2022 was $16.9 million, an increase of $7.4 million from the linked quarter and a decrease of $5.8 million from the prior year quarter. The increase from the linked quarter was primarily due to an increase in tax credit income and fees earned on community development investments (included in Other income). Tax credit income in the current quarter was higher as market interest rates did not negatively impact tax credits held at fair value and tax credit sales reflected seasonal activity. Conversely, an increase in certain interest rates in the third quarter 2022 increased the discount rate used in the fair value of these projects, resulting in a lower fair value. The decrease in noninterest income from the prior year quarter was primarily due to lower fees from community development investments, lower tax credit income, and lower card services revenue. The Durbin Amendment limits the amount of interchange income the Company can earn on debit card transactions. This limitation went into effect for the Company in the third quarter 2022 and reduced card services revenue.
Linked quarter comparison Prior year comparison
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------- -----------------------------------------------------------------------------------------------------------------------
Quarter ended Quarter ended
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------- -----------------------------------------------------------------------------------------------------------------------
($ in thousands) December 31, September 30, Increase December 31, Increase
2022 2022 (decrease) 2021 (decrease)
--------------------------------- ---------------------------------- -------------------------- ------------------------------------------------------------------------- -------------------------- -------------------------------------------------------------------------
BOLI $ 773 $ 769 $ 4 1 % $ 746 $ 27 4 %
Community development investments 2,775 170 2,605 1,532 % 4,966 (2,191 ) (44 ) %
Mortgage banking -- 45 (45 ) (100 ) % 507 (507 ) (100 ) %
Private equity fund distribution 433 64 369 577 % 573 (140 ) (24 ) %
Servicing fees 181 655 (474 ) (72 ) % 269 (88 ) (33 ) %
Swap fees 189 166 23 14 % 108 81 75 %
Miscellaneous income 902 1,175 (273 ) (23 ) % 1,215 (313 ) (26 ) %
-------------------- -------------- -------------------- ------ -------------------- ----- -------------------- -------------------- ------ -------------------- ------ --------------------
$ 5,253 $ 3,044 $ 2,209 73 % $ 8,384 $ (3,131 ) (37 ) %
Total other income
==================== ============== ==================== ====== ==================== ===== ==================== ===== === ==================== ====== ==================== ====== ==================== ==== ===
Community development and private equity distributions included in other income are not consistent sources of income and fluctuate based on distributions from the underlying funds. Servicing fee income is primarily earned from servicing SBA loans and may fluctuate based on prepayment experience and changes to the discount rate used in the valuation of the servicing rights. Mortgage banking revenue has declined since the prior year quarter due to higher interest rates, which have reduced sales volume.
Linked quarter comparison Prior year comparison
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- -----------------------------------------------------------------------------------------------------------------------
Quarter ended Quarter ended
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- -----------------------------------------------------------------------------------------------------------------------
($ in thousands) December 31, September 30, Increase December 31, Increase
2022 2022 (decrease) 2021 (decrease)
---------------------------------- ---------------------------------- ---------------------------------- ------------------------------------------------------------------------------------------- -------------------------- -------------------------------------------------------------------------
Employee compensation and benefits $ 38,175 $ 36,999 $ 1,176 3 % $ 33,488 $ 4,687 14 %
Occupancy 4,248 4,497 (249 ) (6 ) % 4,510 (262 ) (6 ) %
Deposit costs 13,256 7,661 5,595 73 % 4,745 8,511 179 %
Merger-related expenses -- -- -- -- % 2,320 (2,320 ) (100 ) %
Other expense 21,470 19,686 1,784 9 % 18,631 2,839 15 %
-------------------- -------------- -------------------- -------------- -------------------- -------------- -------------------- -------------------- ------ -------------------- ------ --------------------
$ 77,149 $ 68,843 $ 8,306 12 % $ 63,694 $ 13,455 21 %
Total noninterest expense
==================== ============== ==================== ============== ==================== ============== ==================== ============== === ==================== ====== ==================== ====== ==================== ==== ===
Noninterest expense was $77.1 million for the fourth quarter 2022, compared to $68.8 million for the linked quarter, and $63.7 million for the prior year quarter. Employee compensation and benefits increased $1.2 million from the linked quarter primarily due to higher performance-based incentive accruals, resulting from fourth quarter growth and continued overall improvement in the Company's financial performance. Deposit costs increased $5.6 million and $8.5 million from the linked and prior year quarters, respectively, primarily due to variable deposit costs in certain of the Company's specialized deposit businesses that are impacted by higher interest rates, as well as increasing average balances. The increase in noninterest expense of $13.5 million from the prior year quarter was primarily due to an $8.5 million increase in deposit costs that are higher due to growth in specialized deposits and the increase in market interest rates; a $4.7 million increase in employee compensation from merit increases throughout 2021 and 2022 and growth in the associate base; and generally higher operating expenses due to an expanded business platform (e.g. first full year for First Choice). These increases were partially offset by a reduction of $2.3 million in merger costs from the First Choice acquisition recognized in the prior year quarter.
For the fourth quarter 2022, the Company's efficiency ratio was 49.6%, compared to 51.5% and 51.1% for the linked quarter and prior year quarter, respectively. The Company's core efficiency ratio(3) was 48.1% for the quarter ended December 31, 2022, compared to 49.8% for the linked quarter and 47.5% for the prior year quarter.
(3)Core efficiency ratio is a non-GAAP measure. Please refer to discussion and reconciliation of this measure in the accompanying financial tables.
Income Taxes
The Company's effective tax rate was 22% for both the quarter ended December 31, 2022 and September 30, 2022, compared to 21% for the prior year quarter.
Capital
The following table presents total equity and various EFSC capital ratios for the most recent five quarters:
Quarter ended
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Percent December 31, September 30, June 30, March 31, December 31,
2022* 2022 2022 2022 2021
---------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- -------------------------------------------------
Shareholders' equity $ 1,522,263 $ 1,446,218 $ 1,447,412 $ 1,473,177 $ 1,529,116
Total risk-based capital to risk-weighted assets 14.2 % 14.2 % 14.2 % 14.4 % 14.7 %
Tier 1 capital to risk weighted assets 12.6 % 12.6 % 12.5 % 12.7 % 13.0 %
Common equity tier 1 capital to risk-weighted assets 11.1 % 11.0 % 10.9 % 11.0 % 11.3 %
Tangible common equity to tangible assets 8.4 % 7.9 % 7.8 % 7.6 % 8.1 %
Leverage ratio 10.9 % 10.4 % 9.8 % 9.6 % 9.7 %
---------------------------------------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- --------------------
Total equity was $1.5 billion at December 31, 2022, an increase of $76.0 million from the linked quarter. The increase from the linked quarter was primarily due to the current quarter's net income of $60.0 million and a $22.9 million increase in accumulated other comprehensive income. The increase in accumulated other comprehensive income was due to a net fair value increase in the Company's fixed-rate, available-for-sale investment portfolio from changes in market interest rates during the period, partially offsetting the unrealized losses recognized earlier in 2022. Offsetting these increases were $9.9 million in common and preferred dividends. The Company's tangible common book value per share increased 7.7% in the current quarter to $28.67 at December 31, 2022, compared to $26.62 and $28.28 in the linked and prior year quarters, respectively. The Company's regulatory capital ratios continue to exceed the "well-capitalized" regulatory benchmark.
Use of Non-GAAP Financial Measures
The Company's accounting and reporting policies conform to generally accepted accounting principles in the United States ("GAAP") and the prevailing practices in the banking industry. However, the Company provides other financial measures, such as tangible common equity, PPNR, ROATCE, financial metrics adjusted for PPP impact, core efficiency ratio, the tangible common equity ratio, and tangible book value per share, in this release that are considered "non-GAAP financial measures." Generally, a non-GAAP financial measure is a numerical measure of a company's financial performance, financial position, or cash flows that exclude (or include) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP.
The Company considers its tangible common equity, PPNR, ROATCE, financial metrics adjusted for PPP impact, core efficiency ratio, the tangible common equity ratio, and tangible book value per share, collectively "core performance measures," presented in this earnings release and the included tables as important measures of financial performance, even though they are non-GAAP measures, as they provide supplemental information by which to evaluate the impact of certain non-comparable items, and the Company's operating performance on an ongoing basis. Core performance measures exclude certain other income and expense items, such as merger-related expenses, facilities charges, and the gain or loss on sale of investment securities, that the Company believes to be not indicative of or useful to measure the Company's operating performance on an ongoing basis. The attached tables contain a reconciliation of these core performance measures to the GAAP measures. The Company believes that the tangible common equity ratio provides useful information to investors about the Company's capital strength even though it is considered to be a non-GAAP financial measure and is not part of the regulatory capital requirements to which the Company is subject.
The Company believes these non-GAAP measures and ratios, when taken together with the corresponding GAAP measures and ratios, provide meaningful supplemental information regarding the Company's performance and capital strength. The Company's management uses, and believes that investors benefit from referring to, these non-GAAP measures and ratios in assessing the Company's operating results and related trends and when forecasting future periods. However, these non-GAAP measures and ratios should be considered in addition to, and not as a substitute for or preferable to, ratios prepared in accordance with GAAP. In the attached tables, the Company has provided a reconciliation of, where applicable, the most comparable GAAP financial measures and ratios to the non-GAAP financial measures and ratios, or a reconciliation of the non-GAAP calculation of the financial measures for the periods indicated.
Conference Call and Webcast Information
The Company will host a conference call and webcast at 10:00 a.m. Central Time on Tuesday, January 24, 2023. During the call, management will review the fourth quarter 2022 results and related matters. This press release as well as a related slide presentation will be accessible on the Company's website at www.enterprisebank.com under "Investor Relations" prior to the scheduled broadcast of the conference call. The call can be accessed via this same website page, or via telephone at 1-888-550-5279 (Conference ID #7004515). A recorded replay of the conference call will be available on the website approximately two hours after the call's completion. Visit https://bit.ly/EFSC4Q2022 to register. The replay will be available for approximately two weeks following the conference call.
About Enterprise Financial Services Corp
Enterprise Financial Services Corp (Nasdaq: EFSC), with approximately $13.1 billion in assets, is a financial holding company headquartered in Clayton, Missouri. Enterprise Bank & Trust, a Missouri state-chartered trust company with banking powers and a wholly-owned subsidiary of EFSC, operates branch offices in Arizona, California, Kansas, Missouri, Nevada, and New Mexico, and SBA loan and deposit production offices throughout the country. Enterprise Bank & Trust offers a range of business and personal banking services and wealth management services. Enterprise Trust, a division of Enterprise Bank & Trust, provides financial planning, estate planning, investment management and trust services to businesses, individuals, institutions, retirement plans and non-profit organizations. Additional information is available at www.enterprisebank.com.
Enterprise Financial Services Corp's common stock is traded on the Nasdaq Stock Market under the symbol "EFSC." Please visit our website at www.enterprisebank.com to see our regularly posted material information.
Forward-looking Statements
Readers should note that, in addition to the historical information contained herein, this press release contains "forward-looking statements" within the meaning of, and intended to be covered by, the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on management's current expectations and beliefs concerning future developments and their potential effects on the Company including, without limitation, plans, strategies and goals, and statements about the Company's expectations regarding revenue and asset growth, financial performance and profitability, loan and deposit growth, yields and returns, loan diversification and credit management, shareholder value creation and the impact of the First Choice acquisition and other acquisitions.
Forward-looking statements are typically identified by words such as "believe," "expect," "anticipate," "intend," "outlook," "opportunity," "estimate," "forecast," "project," "pro forma" and other similar words and expressions. Forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made. Because forward-looking statements are subject to assumptions and uncertainties, actual results or future events could differ, possibly materially, from those anticipated in the forward-looking statements and future results could differ materially from historical performance. They are neither statements of historical fact nor guarantees or assurances of future performance. While there is no assurance that any list of risks and uncertainties or risk factors is complete, important factors that could cause actual results to differ materially from those in the forward-looking statements include the following, without limitation: the Company's ability to efficiently integrate acquisitions, including the First Choice acquisition, into its operations, retain the customers of these businesses and grow the acquired operations, as well as credit risk, changes in the appraised valuation of real estate securing impaired loans, outcomes of litigation and other contingencies, exposure to general and local economic and market conditions, high unemployment rates, higher inflation and its impacts (including U.S. federal government measures to address higher inflation), U.S. fiscal debt, budget and tax matters, and any slowdown in global economic growth, risks associated with rapid increases or decreases in prevailing interest rates, consolidation in the banking industry, competition from banks and other financial institutions, the Company's ability to attract and retain relationship officers and other key personnel, burdens imposed by federal and state regulation, changes in legislative or regulatory requirements, as well as current, pending or future legislation or regulation that could have a negative effect on our revenue and businesses, including rules and regulations relating to bank products and financial services, changes in accounting policies and practices or accounting standards, changes in the method of determining LIBOR and the phase out of LIBOR, natural disasters, terrorist activities, war and geopolitical matters (including the war in Ukraine and the imposition of additional sanctions and export controls in connection therewith), or pandemics, including the COVID-19 pandemic, and their effects on economic and business environments in which we operate, including the ongoing disruption to the financial market and other economic activity caused by the continuing COVID-19 pandemic, and those factors and risks referenced from time to time in the Company's filings with the Securities and Exchange Commission (the "SEC"), including in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021, and the Company's other filings with the SEC. The Company cautions that the preceding list is not exhaustive of all possible risk factors and other factors could also adversely affect the Company's results.
For any forward-looking statements made in this press release or in any documents, EFSC claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
Readers are cautioned not to place undue reliance on any forward-looking statements. Except to the extent required by applicable law or regulation, EFSC disclaims any obligation to revise or publicly release any revision or update to any of the forward-looking statements included herein to reflect events or circumstances that occur after the date on which such statements were made.
ENTERPRISE FINANCIAL SERVICES CORP
CONSOLIDATED FINANCIAL SUMMARY (unaudited)
Quarter ended Year ended
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ ----------------------------------------------------------------------------------------------------------------------------
(in thousands, except per share data) Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Dec 31, Dec 31,
2022 2022 2022 2022 2021 2022 2021
------------------------------------------------ -------------------------------------------------- -------------------------------------------------- -------------------------------------------------- -------------------------------------------------- ------------------------------------------------------ -------------------------------------------------- ------------------------------------------------------
EARNINGS SUMMARY
Net interest income $ 138,835 $ 124,290 $ 109,613 $ 101,165 $ 102,060 $ 473,903 $ 360,194
Provision (benefit) for credit losses 2,123 676 658 (4,068 ) (3,660 ) (611 ) 13,385
Noninterest income 16,873 9,454 14,194 18,641 22,630 59,162 67,743
Noninterest expense 77,149 68,843 65,424 62,800 63,694 274,216 245,919
-------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- -------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------- --------------------
Income before income tax expense 76,436 64,225 57,725 61,074 64,656 259,460 168,633
Income tax expense 16,435 14,025 12,576 13,381 13,845 56,417 35,578
-------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- -------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------- --------------------
Net income 60,001 50,200 45,149 47,693 50,811 203,043 133,055
Preferred stock dividends 937 937 938 1,229 -- $ 4,041 $ --
-------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------- --------------------
Net income available to common shareholders $ 59,064 $ 49,263 $ 44,211 $ 46,464 $ 50,811 $ 199,002 $ 133,055
==================== ========== ==================== ==================== ========== ==================== ==================== ========== ==================== ==================== ========== ==================== ==================== ============== ==================== ==================== ========== ==================== ==================== ============== ====================
Diluted earnings per common share $ 1.58 $ 1.32 $ 1.19 $ 1.23 $ 1.33 $ 5.31 $ 3.86
Return on average assets 1.83 % 1.51 % 1.34 % 1.42 % 1.52 % 1.52 % 1.16 %
Return on average common equity 16.52 % 13.74 % 12.65 % 12.87 % 13.81 % 13.95 % 10.49 %
ROATCE(1) 22.62 % 18.82 % 17.44 % 17.49 % 18.81 % 19.10 % 14.18 %
Net interest margin (tax equivalent) 4.66 % 4.10 % 3.55 % 3.28 % 3.32 % 3.89 % 3.41 %
Efficiency ratio 49.55 % 51.47 % 52.84 % 52.42 % 51.08 % 51.44 % 57.47 %
Core efficiency ratio(1) 48.10 % 49.81 % 51.11 % 50.58 % 47.45 % 49.79 % 49.47 %
Loans $ 9,737,138 $ 9,354,987 $ 9,269,176 $ 9,056,073 $ 9,017,642
Average loans $ 9,423,984 $ 9,230,738 $ 9,109,131 $ 9,005,875 $ 9,030,982 $ 9,193,682 $ 8,055,873
Assets $ 13,054,172 $ 12,994,787 $ 13,084,506 $ 13,706,769 $ 13,537,358
Average assets $ 12,986,568 $ 13,158,121 $ 13,528,474 $ 13,614,003 $ 13,267,193 $ 13,319,624 $ 11,467,310
Deposits $ 10,829,150 $ 11,057,594 $ 11,092,618 $ 11,704,135 $ 11,343,799
Average deposits $ 11,002,614 $ 11,154,895 $ 11,530,432 $ 11,494,212 $ 11,167,003 $ 11,293,806 $ 9,573,056
Period end common shares outstanding 37,253 37,223 37,206 37,516 37,820
Dividends per common share $ 0.24 $ 0.23 $ 0.22 $ 0.21 $ 0.20 $ 0.90 $ 0.75
Tangible book value per common share(1) $ 28.67 $ 26.62 $ 26.63 $ 27.06 $ 28.28
Tangible common equity to tangible assets(1) 8.43 % 7.86 % 7.80 % 7.62 % 8.13 %
Total risk-based capital to risk-weighted assets 14.2 % 14.2 % 14.2 % 14.4 % 14.7 %
ENTERPRISE FINANCIAL SERVICES CORP
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
Quarter ended Year ended
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------
($ in thousands, except per share data) Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Dec 31, Dec 31,
2022 2022 2022 2022 2021 2022 2021
--------------------------------------------------------------- ---------------------------------- ------------------------------------------------------ ---------------------------------- ------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------ ----------------------------------
INCOME STATEMENTS
NET INTEREST INCOME
Interest income $ 156,737 $ 135,695 $ 116,069 $ 106,581 $ 107,641 $ 515,082 $ 383,230
Interest expense 17,902 11,405 6,456 5,416 5,581 41,179 23,036
-------------------- -------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- --------------
Net interest income 138,835 124,290 109,613 101,165 102,060 473,903 360,194
Provision (benefit) for credit losses 2,123 676 658 (4,068 ) (3,660 ) (611 ) 13,385
-------------------- -------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- --------------
Net interest income after provision (benefit) for credit losses 136,712 123,614 108,955 105,233 105,720 474,514 346,809
NONINTEREST INCOME
Deposit service charges 4,463 4,951 4,749 4,163 3,962 18,326 15,428
Wealth management revenue 2,423 2,432 2,533 2,622 2,687 10,010 10,259
Card services revenue 2,345 2,652 3,514 3,040 3,223 11,551 11,880
Tax credit income (loss) 2,389 (3,625 ) 1,186 2,608 4,374 2,558 8,028
Other income 5,253 3,044 2,212 6,208 8,384 16,717 22,148
-------------------- -------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- --------------
Total noninterest income 16,873 9,454 14,194 18,641 22,630 59,162 67,743
NONINTEREST EXPENSE
Employee compensation and benefits 38,175 36,999 36,028 35,827 33,488 147,029 124,904
Occupancy 4,248 4,497 4,309 4,586 4,510 17,640 16,286
Branch closure expenses -- -- -- -- -- -- 3,441
Merger-related expenses -- -- -- -- 2,320 -- 22,082
Other expense 34,726 27,347 25,087 22,387 23,376 109,547 79,206
-------------------- -------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- --------------
Total noninterest expense 77,149 68,843 65,424 62,800 63,694 274,216 245,919
Income before income tax expense 76,436 64,225 57,725 61,074 64,656 259,460 168,633
Income tax expense 16,435 14,025 12,576 13,381 13,845 56,417 35,578
-------------------- -------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- --------------
Net income $ 60,001 $ 50,200 $ 45,149 $ 47,693 $ 50,811 $ 203,043 $ 133,055
-------------------- -------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- --------------
Preferred stock dividends 937 937 938 1,229 -- 4,041 --
-------------------- -------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- --------------
Net income available to common shareholders $ 59,064 $ 49,263 $ 44,211 $ 46,464 $ 50,811 $ 199,002 $ 133,055
==================== ============== ==================== ============== ==================== ==================== ============== ==================== ============== ==================== ==================== ============== ==================== ==================== ============== ==================== ==================== ==============
Basic earnings per common share $ 1.59 $ 1.32 $ 1.19 $ 1.23 $ 1.33 $ 5.32 $ 3.86
ENTERPRISE FINANCIAL SERVICES CORP
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
Quarter ended
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
($ in thousands) Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
2022 2022 2022 2022 2021
--------------------------------------------------------------- ------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------ -------------------------------------------------- --------------------------------------------------
BALANCE SHEETS
ASSETS
Cash and due from banks $ 229,580 $ 264,078 $ 271,763 $ 252,706 $ 209,177
Interest-earning deposits 69,808 489,825 680,343 1,735,708 1,819,508
Debt and equity investments 2,309,512 2,171,942 2,172,318 1,993,927 1,855,583
Loans held for sale 1,228 785 4,615 4,270 6,389
Loans 9,737,138 9,354,987 9,269,176 9,056,073 9,017,642
Allowance for credit losses (136,932 ) (140,572 ) (140,546 ) (139,212 ) (145,041 )
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
9,600,206 9,214,415 9,128,630 8,916,861 8,872,601
Total loans, net
Fixed assets, net 42,985 43,882 46,028 46,900 47,915
Goodwill 365,164 365,164 365,164 365,164 365,164
Intangible assets, net 16,919 18,217 19,528 20,855 22,286
Other assets 418,770 426,479 396,117 370,378 338,735
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
$ 13,054,172 $ 12,994,787 $ 13,084,506 $ 13,706,769 $ 13,537,358
Total assets
==================== ============== ==================== ==================== ============== ==================== ==================== ============== ==================== ==================== ========== ==================== ==================== ========== ====================
LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-bearing deposits $ 4,642,732 $ 4,642,539 $ 4,746,478 $ 4,881,043 $ 4,578,436
Interest-bearing deposits 6,186,418 6,415,055 6,346,140 6,823,092 6,765,363
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
10,829,150 11,057,594 11,092,618 11,704,135 11,343,799
Total deposits
Subordinated debentures and notes 155,433 155,298 155,164 155,031 154,899
FHLB advances 100,000 -- 50,000 50,000 50,000
Other borrowings 324,119 197,422 226,695 228,846 353,863
Other liabilities 123,207 138,255 112,617 95,580 105,681
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
11,531,909 11,548,569 11,637,094 12,233,592 12,008,242
Total liabilities
Shareholders' equity:
71,988 71,988 71,988 71,988 71,988
Preferred stock
373 372 372 395 398
Common stock
-- -- -- (73,528 ) (73,528 )
Treasury stock
982,660 979,543 976,684 1,010,446 1,018,799
Additional paid-in capital
597,574 547,506 506,849 523,136 492,682
Retained earnings
(130,332 ) (153,191 ) (108,481 ) (59,260 ) 18,777
Accumulated other comprehensive (loss) income
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
1,522,263 1,446,218 1,447,412 1,473,177 1,529,116
Total shareholders' equity
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Year ended
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
December 31, 2022 December 31, 2021
--------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------------------------------
($ in thousands) Average Interest Average Average Interest Average
Balance Income/ Yield/ Balance Income/ Yield/
Expense Rate Expense Rate
----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- -----------------------------------
Assets
Interest-earning assets:
$ 9,193,682 $ 456,703 4.97 % $ 8,055,873 $ 349,112 4.33 %
Loans(1, 2)
2,100,687 54,822 2.61 1,567,993 37,773 2.41
Securities(2)
Interest-earning deposits 1,074,165 10,599 0.99 1,084,853 1,496 0.14
-------------------- --------------- -------------------- --------------- -------------------- --------------- -------------------- ---------------
12,368,534 522,124 4.22 10,708,719 388,381 3.63
Total interest-earning assets
Noninterest-earning assets 951,090 758,591
-------------------- --------------- -------------------- ---------------
Total assets $ 13,319,624 $ 11,467,310
==================== =============== ==================== ===============
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
$ 2,318,363 $ 7,038 0.30 % $ 2,122,752 $ 1,614 0.08 %
Interest-bearing demand accounts
2,781,579 19,306 0.69 2,557,836 4,669 0.18
Money market accounts
819,043 305 0.04 724,768 225 0.03
Savings accounts
569,272 3,509 0.62 570,496 4,160 0.73
Certificates of deposit
-------------------- --------------- -------------------- --------------- -------------------- --------------- -------------------- ---------------
Total interest-bearing deposits 6,488,257 30,158 0.46 5,975,852 10,668 0.18
Subordinated debentures and notes 155,160 9,166 5.91 195,686 10,960 5.60
FHLB advances 33,467 599 1.79 59,945 803 1.34
Securities sold under agreements to repurchase 211,039 487 0.23 225,895 235 0.10
Other borrowings 22,812 769 3.37 26,427 370 1.40
-------------------- --------------- -------------------- --------------- -------------------- --------------- -------------------- ---------------
Total interest-bearing liabilities 6,910,735 41,179 0.60 6,483,805 23,036 0.36
-------------------- --------------- -------------------- ---------------
Noninterest-bearing liabilities:
4,805,549 3,597,204
Demand deposits
104,581 109,148
Other liabilities
-------------------- --------------- -------------------- ---------------
Total liabilities 11,820,865 10,190,157
Shareholders' equity 1,498,759 1,277,153
-------------------- --------------- -------------------- ---------------
Total liabilities and shareholders' equity $ 13,319,624 $ 11,467,310
==================== =============== ==================== ===============
Total net interest income $ 480,945 $ 365,345
==================== =============== ==================== ===============
Net interest margin 3.89 % 3.41 %
(1) Average balances include nonaccrual loans. Interest income includes loan fees of $16.7 million and $28.4 million for the years ended December 31, 2022 and December 31, 2021, respectively. Loan fees in 2022 and 2021 included PPP fees of $4.1 million and $21.7 million, respectively.
ENTERPRISE FINANCIAL SERVICES CORP
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
Quarter ended
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
($ in thousands) Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
2022 2022 2022 2022 2021
----------------------------------------------- -------------------------------------------------- -------------------------------------------------- -------------------------------------------------- -------------------------------------------------- --------------------------------------------------
LOAN PORTFOLIO
Commercial and industrial $ 3,859,882 $ 3,709,893 $ 3,596,701 $ 3,398,723 $ 3,392,375
Commercial real estate 4,628,371 4,438,647 4,294,375 4,278,138 4,176,928
Construction real estate 611,565 583,649 724,163 702,630 734,073
Residential real estate 395,537 397,450 413,727 432,639 454,052
Other 241,783 225,348 240,210 243,943 260,214
-------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
$ 9,737,138 $ 9,354,987 $ 9,269,176 $ 9,056,073 $ 9,017,642
Total loans
==================== ========== ==================== ==================== ========== ==================== ==================== ========== ==================== ==================== ========== ==================== ==================== ========== ====================
DEPOSIT PORTFOLIO
Noninterest-bearing demand accounts $ 4,642,732 $ 4,642,539 $ 4,746,478 $ 4,881,043 $ 4,578,436
Interest-bearing demand accounts 2,256,295 2,270,898 2,197,957 2,547,482 2,465,884
Money market and savings accounts 3,399,415 3,617,249 3,562,982 3,678,135 3,691,186
Brokered certificates of deposit 118,968 129,039 129,064 129,017 128,970
Other certificates of deposit 411,740 397,869 456,137 468,458 479,323
-------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
$ 10,829,150 $ 11,057,594 $ 11,092,618 $ 11,704,135 $ 11,343,799
Total deposits
==================== ========== ==================== ==================== ========== ==================== ==================== ========== ==================== ==================== ========== ==================== ==================== ========== ====================
AVERAGE BALANCES
Loans $ 9,423,984 $ 9,230,738 $ 9,109,131 $ 9,005,875 $ 9,030,982
Securities 2,204,211 2,202,255 2,068,119 1,923,969 1,753,159
Interest-earning assets 11,995,295 12,198,251 12,579,211 12,711,116 12,373,149
Assets 12,986,568 13,158,121 13,528,474 13,614,003 13,267,193
Deposits 11,002,614 11,154,895 11,530,432 11,494,212 11,167,003
Shareholders' equity 1,490,592 1,494,504 1,474,267 1,536,221 1,495,396
Tangible common equity(1) 1,035,896 1,038,495 1,016,940 1,077,529 1,071,902
YIELDS (tax equivalent)
Loans 5.87 % 5.10 % 4.51 % 4.34 % 4.32 %
Securities 2.91 2.65 2.51 2.31 2.30
Interest-earning assets 5.25 4.47 3.76 3.45 3.50
Interest-bearing deposits 0.94 0.54 0.24 0.17 0.17
Deposits 0.53 0.31 0.13 0.10 0.10
Subordinated debentures 6.07 5.91 5.84 5.81 5.64
FHLB advances and other borrowed funds 1.39 0.66 0.51 0.41 0.43
Interest-bearing liabilities 1.07 0.67 0.37 0.30 0.31
Net interest margin 4.66 4.10 3.55 3.28 3.32
PPP details:
Quarter ended
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
($ in thousands, except per share data) Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
2022 2022 2022 2022 2021
------------------------------------------- ---------------------------------------------- ---------------------------------------------- ---------------------------------------------- ----------------------------------------------- -----------------------------------------------
PPP loans outstanding, net of deferred fees $ 7,272 $ 13,165 $ 49,175 $ 134,084 $ 271,958
Average PPP loans outstanding, net 11,546 26,113 89,152 194,382 365,295
PPP interest and fee income recognized 81 471 1,557 2,858 4,864
PPP deferred fees remaining 82 119 524 1,851 4,215
Quarter ended
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Sep 30, Jun 30, Mar 31, Dec 31,
2022 2022 2022 2021
---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------
Financial Metrics: As Excluding As Excluding As Excluding As Excluding
Reported PPP* Reported PPP* Reported PPP* Reported PPP*
--------------------------------------- ---------------------------------------------- ---------------------------------------------- ---------------------------------------------- ---------------------------------------------- ---------------------------------------------- ---------------------------------------------- ---------------------------------------------- ----------------------------------------------
EPS $ 1.32 $ 1.31 $ 1.19 $ 1.15 $ 1.23 $ 1.17 $ 1.33 $ 1.23
ROAA 1.51 % 1.51 % 1.34 % 1.31 % 1.42 % 1.38 % 1.52 % 1.45 %
PPNR ROAA* 1.96 % 1.95 % 1.73 % 1.70 % 1.70 % 1.64 % 1.89 % 1.80 %
Tangible common equity/tangible assets* 7.86 % 7.86 % 7.80 % 7.83 % 7.62 % 7.70 % 8.13 % 8.31 %
Leverage ratio 10.4 % 10.4 % 9.8 % 9.8 % 9.6 % 9.7 % 9.7 % 10.0 %
NIM 4.10 % 4.10 % 3.55 % 3.52 % 3.28 % 3.23 % 3.32 % 3.26 %
* Non-GAAP measures. Refer to discussion and reconciliation of these measures in the accompanying financial tables.
ENTERPRISE FINANCIAL SERVICES CORP
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
Quarter ended
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
(in thousands, except per share data) Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
2022 2022 2022 2022 2021
---------------------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- -------------------------------------------------
ASSET QUALITY
Net charge-offs (recoveries) $ 2,075 $ 478 $ (175 ) $ 1,521 $ 3,263
Nonperforming loans 9,981 18,184 19,560 21,160 28,024
Classified assets 99,122 98,078 96,801 93,199 100,797
Nonperforming loans to total loans 0.10 % 0.19 % 0.21 % 0.23 % 0.31 %
Nonperforming assets to total assets 0.08 % 0.14 % 0.16 % 0.17 % 0.23 %
Allowance for credit losses to loans 1.41 % 1.50 % 1.52 % 1.54 % 1.61 %
Allowance for credit losses to loans, excluding guaranteed loans 1.56 % 1.67 % 1.69 % 1.73 % 1.84 %
Allowance for credit losses to nonperforming loans 1,371.9 % 773.1 % 718.5 % 657.9 % 517.6 %
Net charge-offs (recoveries) to average loans -annualized 0.09 % 0.02 % (0.01 ) % 0.07 % 0.14 %
WEALTH MANAGEMENT
Trust assets under management $ 1,885,394 $ 1,691,230 $ 1,757,228 $ 1,943,428 $ 2,083,543
SHARE DATA
Book value per common share $ 38.93 $ 36.92 $ 36.97 $ 37.35 $ 38.53
Tangible book value per common share(1) $ 28.67 $ 26.62 $ 26.63 $ 27.06 $ 28.28
Market value per share $ 48.96 $ 44.04 $ 41.50 $ 47.31 $ 47.09
Period end common shares outstanding 37,253 37,223 37,206 37,516 37,820
Average basic common shares 37,257 37,241 37,243 37,788 38,228
Average diluted common shares 37,415 37,348 37,282 37,858 38,311
CAPITAL(2)
Total risk-based capital to risk-weighted assets 14.2 % 14.2 % 14.2 % 14.4 % 14.7 %
Tier 1 capital to risk-weighted assets 12.6 % 12.6 % 12.5 % 12.7 % 13.0 %
Common equity tier 1 capital to risk-weighted assets 11.1 % 11.0 % 10.9 % 11.0 % 11.3 %
Tangible common equity to tangible assets(1) 8.4 % 7.9 % 7.8 % 7.6 % 8.1 %
(1)Refer to Reconciliations of Non-GAAP Financial Measures table for a reconciliation of these measures to GAAP.
ENTERPRISE FINANCIAL SERVICES CORP
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
Quarter ended Year ended
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ -------------------------------------------------------------------------------------------------------------------------
($ in thousands) Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Dec 31, Dec 31,
2022 2022 2022 2022 2021 2022 2021
------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------ -----------------------------------------------
CORE EFFICIENCY RATIO*
Net interest income (GAAP) $ 138,835 $ 124,290 $ 109,613 $ 101,165 $ 102,060 $ 473,903 $ 360,194
Tax equivalent adjustment 1,983 1,854 1,699 1,506 1,507 7,042 5,151
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- ------- --------------------
Net interest income - FTE (non-GAAP) 140,818 126,144 111,312 102,671 103,567 480,945 365,345
Noninterest income 16,873 9,454 14,194 18,641 22,630 59,162 67,743
-- (22 ) (90 ) 19 -- (93 ) 884
Less gain (loss) on sale of other real estate owned
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- ------- --------------------
Total core revenue (non-GAAP) 157,691 135,576 125,416 121,331 126,197 540,014 433,972
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- ------- --------------------
Noninterest expense (GAAP) 77,149 68,843 65,424 62,800 63,694 274,216 245,919
1,299 1,310 1,328 1,430 1,491 5,367 5,691
Less amortization of intangibles
-- -- -- -- -- -- 3,441
Less branch closure expenses
-- -- -- -- 2,320 -- 22,082
Less merger-related expenses
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- ------- --------------------
Core noninterest expense (non-GAAP) 75,850 67,533 64,096 61,370 59,883 268,849 214,705
Core efficiency ratio (non-GAAP) 48.10 % 49.81 % 51.11 % 50.58 % 47.45 % 49.79 % 49.47 %
Quarter ended
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
($ in thousands, except per share data) Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
2022 2022 2022 2022 2021
----------------------------------------------- -------------------------------------------------- -------------------------------------------------- -------------------------------------------------- -------------------------------------------------- --------------------------------------------------
TANGIBLE BOOK VALUE PER SHARE AND TANGIBLE COMMON EQUITY RATIO
Shareholders' equity $ 1,522,263 $ 1,446,218 $ 1,447,412 $ 1,473,177 $ 1,529,116
71,988 71,988 71,988 71,988 71,988
Less preferred stock
365,164 365,164 365,164 365,164 365,164
Less goodwill
16,919 18,217 19,528 20,855 22,286
Less intangible assets
-------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Tangible common equity $ 1,068,192 $ 990,849 $ 990,732 $ 1,015,170 $ 1,069,678
==================== ========== ==================== ==================== ========== ==================== ==================== ========== ==================== ==================== ========== ==================== ==================== ========== ====================
Period end shares outstanding 37,253 37,223 37,206 37,516 37,820
Tangible book value per share $ 28.67 $ 26.62 $ 26.63 $ 27.06 $ 28.28
Total assets $ 13,054,172 $ 12,994,787 $ 13,084,506 $ 13,706,769 $ 13,537,358
365,164 365,164 365,164 365,164 365,164
Less goodwill
16,919 18,217 19,528 20,855 22,286
Less intangible assets
-------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- --------------------
Tangible assets $ 12,672,089 $ 12,611,406 $ 12,699,814 $ 13,320,750 $ 13,149,908
==================== ========== ==================== ==================== ========== ==================== ==================== ========== ==================== ==================== ========== ==================== ==================== ========== ====================
Quarter Ended Year ended
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ ----------------------------------------------------------------------------------------------------------------------
($ in thousands) Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Dec 31, Dec 31,
2022 2022 2022 2022 2021 2022 2021
------------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- -------------------------------------------------
RETURN ON AVERAGE TANGIBLE COMMON EQUITY (ROATCE)
Average shareholder's equity $ 1,490,592 $ 1,494,504 $ 1,474,267 $ 1,536,221 $ 1,495,396 $ 1,498,759 $ 1,277,153
71,988 71,988 71,988 71,988 35,322 71,988 8,903
Less average preferred stock
365,164 365,164 365,164 365,164 365,164 365,164 307,614
Less average goodwill
17,544 18,857 20,175 21,540 23,008 19,516 22,460
Less average intangible assets
-------------------- --------- -------------------- -------------------- --------- -------------------- -------------------- --------- -------------------- -------------------- --------- -------------------- -------------------- --------- -------------------- -------------------- --------- -------------------- -------------------- --------- --------------------
Average tangible common equity $ 1,035,896 $ 1,038,495 $ 1,016,940 $ 1,077,529 $ 1,071,902 $ 1,042,091 $ 938,176
==================== ========= ==================== ==================== ==================== ========= ==================== ==================== ==================== ========= ==================== ==================== ==================== ========= ==================== ==================== ==================== ========= ==================== ==================== ========= ==================== ==================== ========= ====================
Net income available to common shareholders $ 59,064 $ 49,263 $ 44,211 $ 46,464 $ 50,811 $ 199,002 $ 133,055
Quarter ended Quarter ended Year ended
------------------------ ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ ----------------------------------------------------------------------------------------------------------------------------
($ in thousands) Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Dec 31, Dec 31,
2022 2022 2022 2022 2021 2022 2021
------------------------ ------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------ --------------------------------------------------
CALCULATION OF PRE-PROVISION NET REVENUE
Net interest income $ 138,835 $ 124,290 $ 109,613 $ 101,165 $ 102,060 $ 473,903 $ 360,194
Noninterest income 16,873 9,454 14,194 18,641 22,630 59,162 67,743
Less noninterest expense 77,149 68,843 65,424 62,800 63,694 274,216 245,919
Branch closure expenses -- -- -- -- -- -- 3,441
Merger-related expenses -- -- -- 2,320 -- 22,082
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- ------------------------------------------------------ -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- ---------- --------------------
PPNR $ 78,559 $ 64,901 $ 58,383 $ 57,006 $ 63,316 $ 258,849 $ 207,541
==================== ============== ==================== ==================== ============== ==================== ==================== ============== ==================== ==================== ============== ==================== ==================== ============== ==================== ==================== ============== ==================== ==================== ==================== ========== ====================
Average assets $ 12,986,568 $ 13,158,121 $ 13,528,474 $ 13,614,003 $ 13,267,193 $ 13,319,624 $ 11,467,310
ROAA - GAAP net income 1.83 % 1.51 % 1.34 % 1.42 % 1.52 % 1.52 % 1.16 %
Quarter Ended Quarter Ended
---------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
($ in thousands, except per share data) Sep 30, Jun 30, Mar 31, Dec 31,
2022 2022 2022 2021
---------------------------------------------------------------------------------------------------- -------------------------------------------------- -------------------------------------------------- -------------------------------------------------- ------------------------------------------------------
IMPACT OF PAYCHECK PROTECTION PROGRAM*
Net income (GAAP) $ 50,200 $ 45,149 $ 47,693 $ 50,811
PPP interest and fee income (471 ) (1,557 ) (2,858 ) (4,864 )
Related tax effect 119 392 720 1,226
-------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- -------------- --------------------
Adjusted net income (non-GAAP) $ 49,848 $ 43,984 $ 45,555 $ 47,173
Preferred stock dividends 937 938 1,229 --
-------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- -------------- --------------------
Adjusted net income available to common shareholders (non-GAAP) $ 48,911 $ 43,046 $ 44,326 $ 47,173
==================== ========== ==================== ==================== ========== ==================== ==================== ========== ==================== ==================== ============== ====================
Average diluted common shares 37,348 37,282 37,858 38,311
EPS (GAAP) net income available to common shareholders $ 1.32 $ 1.19 $ 1.23 $ 1.33
EPS - Adjusted net income available to common shareholders $ 1.31 $ 1.15 $ 1.17 $ 1.23
---------------------------------------------------------------------------------------------------- -------------------------------------------------- -------------------------------------------------- -------------------------------------------------- ------------------------------------------------------
Average Assets (GAAP) $ 13,158,121 $ 13,528,474 $ 13,614,003 $ 13,267,193
Average PPP loans, net (26,113 ) (89,152 ) (194,382 ) (365,295 )
-------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- -------------- --------------------
Adjusted average assets (non-GAAP) $ 13,132,008 $ 13,439,322 $ 13,419,621 $ 12,901,898
==================== ========== ==================== ==================== ========== ==================== ==================== ========== ==================== ==================== ============== ====================
ROAA (GAAP) net income 1.51 % 1.34 % 1.42 % 1.52 %
ROAA - Adjusted net income, adjusted average assets 1.51 % 1.31 % 1.38 % 1.45 %
---------------------------------------------------------------------------------------------------- -------------------------------------------------- -------------------------------------------------- -------------------------------------------------- ------------------------------------------------------
PPNR (non-GAAP) (see reconciliation above) $ 64,901 $ 58,383 $ 57,006 $ 63,316
PPP interest and fee income (471 ) (1,557 ) (2,858 ) (4,864 )
-------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- -------------- --------------------
Adjusted PPNR (non-GAAP) $ 64,430 $ 56,826 $ 54,148 $ 58,452
==================== ========== ==================== ==================== ========== ==================== ==================== ========== ==================== ==================== ============== ====================
PPNR ROAA 1.96 % 1.73 % 1.70 % 1.89 %
PPNR ROAA - adjusted PPNR, adjusted average assets 1.95 % 1.70 % 1.64 % 1.80 %
---------------------------------------------------------------------------------------------------- -------------------------------------------------- -------------------------------------------------- -------------------------------------------------- ------------------------------------------------------
Tangible assets (non-GAAP) (see reconciliation above) $ 12,611,406 $ 12,699,814 $ 13,320,750 $ 13,149,908
PPP loans outstanding, net (13,165 ) (49,175 ) (134,084 ) (271,958 )
-------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- -------------- --------------------
Adjusted tangible assets (non-GAAP) $ 12,598,241 $ 12,650,639 $ 13,186,666 $ 12,877,950
==================== ========== ==================== ==================== ========== ==================== ==================== ========== ==================== ==================== ============== ====================
Tangible common equity (non-GAAP) (see reconciliation above) $ 990,849 $ 990,732 $ 1,015,170 $ 1,069,678
Tangible common equity to tangible assets 7.86 % 7.80 % 7.62 % 8.13 %
Tangible common equity to tangible assets - adjusted tangible assets 7.86 % 7.83 % 7.70 % 8.31 %
---------------------------------------------------------------------------------------------------- -------------------------------------------------- -------------------------------------------------- -------------------------------------------------- ------------------------------------------------------
Average assets for leverage ratio $ 12,918,632 $ 13,265,790 $ 13,273,520 $ 12,915,944
Average PPP loans, net (26,113 ) (89,152 ) (194,382 ) (365,295 )
-------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- -------------- --------------------
Adjusted average assets for leverage ratio (non-GAAP) $ 12,892,519 $ 13,176,638 $ 13,079,138 $ 12,550,649
==================== ========== ==================== ==================== ========== ==================== ==================== ========== ==================== ==================== ============== ====================
Tier 1 capital $ 1,340,252 $ 1,295,791 $ 1,271,342 $ 1,257,462
Leverage ratio 10.4 % 9.8 % 9.6 % 9.7 %
Leverage ratio - adjusted average assets for leverage ratio 10.4 % 9.8 % 9.7 % 10.0 %
---------------------------------------------------------------------------------------------------- -------------------------------------------------- -------------------------------------------------- -------------------------------------------------- ------------------------------------------------------
Net interest income - tax equivalent $ 126,144 $ 111,312 $ 102,671 $ 103,567
PPP interest and fee income (471 ) (1,557 ) (2,858 ) (4,864 )
-------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- -------------- --------------------
Adjusted net interest income - tax equivalent $ 125,673 $ 109,755 $ 99,813 $ 98,703
==================== ========== ==================== ==================== ========== ==================== ==================== ========== ==================== ==================== ============== ====================
Average earning assets (GAAP) $ 12,198,251 $ 12,579,211 $ 12,711,116 $ 12,373,149
Average PPP loans, net (26,113 ) (89,152 ) (194,382 ) (365,295 )
-------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- -------------- --------------------
Adjusted average earning assets (non-GAAP) $ 12,172,138 $ 12,490,059 $ 12,516,734 $ 12,007,854
==================== ========== ==================== ==================== ========== ==================== ==================== ========== ==================== ==================== ============== ====================
Net interest margin - tax equivalent 4.10 % 3.55 % 3.28 % 3.32 %
Net interest margin - tax equivalent - adjusted net interest income, adjusted average earning assets 4.10 % 3.52 % 3.23 % 3.26 %
---------------------------------------------------------------------------------------------------- -------------------------------------------------- -------------------------------------------------- -------------------------------------------------- ------------------------------------------------------
Loans (GAAP) $ 9,354,987 $ 9,269,176 $ 9,056,073 $ 9,017,642
PPP and other guaranteed loans, net (924,605 ) (967,396 ) (1,023,509 ) (1,151,895 )
-------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- -------------- --------------------
Adjusted loans (non-GAAP) $ 8,430,382 $ 8,301,780 $ 8,032,564 $ 7,865,747
==================== ========== ==================== ==================== ========== ==================== ==================== ========== ==================== ==================== ============== ====================
Allowance for credit losses $ 140,572 $ 140,546 $ 139,212 $ 145,041
Allowance for credit losses/loans (GAAP) 1.50 % 1.52 % 1.54 % 1.61 %
Allowance for credit losses/loans - adjusted loans 1.67 % 1.69 % 1.73 % 1.84 %
View source version on businesswire.com: https://www.businesswire.com/news/home/20230123005718/en/
SOURCE: Enterprise Financial Services Corp
Investor Relations: Keene Turner, Executive Vice President and CFO (314) 512-7233 Media: Steve Richardson, Senior Vice President (314) 995-5695
COMTEX_423161648/1006/2023-01-23T16:05:01