1. | FOR IMMEDIATE RELEASE |
For more information, contact:
Kevin Eichner (314) 725 5500
Frank Sanfilippo (314) 725 5500
Melissa Sturges (816) 235 7733
ENTERPRISE FINANCIAL REPORTS 58.3% INCREASE IN EARNINGS PER SHARE OVER PREVIOUS YEAR
Strong Trust Company Growth. Noninterest income grows 120.2%
St. Louis, July 21, 2003—Enterprise Financial Services Corp. (OTCBB: EFSC), the parent company of Enterprise Bank and Enterprise Trust reported second quarter net income of $2.6 million or $0.26 per fully diluted share and $3.7 million or $0.38 per fully diluted share for the six months ended June 30, 2003. The reported earnings per fully diluted share for the six months ended June 30, 2003 represent a 58.3% increase over the same period in 2002.
“We are particularly pleased with the performance of our noninterest income generators and with our ability to hold margins in our core banking business in this environment,” said Kevin Eichner, President and CEO of Enterprise Financial.
Portfolio loans grew by 8.2% or $56 million since December 31, 2002 and ended the quarter at $736 million. This growth was funded in part by increases of $32 million or 4.4% in deposits. Net interest income for the six months ended June 30, 2003 was $16.2 million; a $1.2 million or 8.3% increase over the same period last year. During the same period, the net interest rate margin increased to 4.07% from 4.04% in the same period last year primarily due to a better overall liabilities mix and favorable repricing of core deposits.
Total noninterest income grew by $3,532,000 for the six months ended June 30, 2003 versus the same period in 2002. This increase was generated from a $3,088,000 gain on the sale of three branches in April less a $150,000 write-off of related goodwill, increases in gains on the sale of mortgage loans, service charges, and securities gains. Heavy refinance volume in the home loan category continues to produce record gains on the sale of mortgage loans. Expanded services provided to Enterprise Financial clients and increased deposit accounts drove the service charge gains.
Trust and financial advisory performance was also strong in the six months ended June 30, 2003, generating fee income of $1,260,000. Enterprise Trust has again been named one of the fastest growing trust companies in the U.S. over the past three years according toTrust Report.
Provision for loan losses was $2,093,000 in the six months ended June 30, 2003 compared to $1,120,000 for the same period 2002. This increase reflects management’s cautionary view of the economic environment as the company continues its strong loan growth. The company also realized net charge-offs totaling $1,154,000 (versus $190,000 in the same period one year ago), due almost entirely to one problem loan relationship, which has now been largely resolved. The allowance for loan losses of $9.5 million at June 30, 2003 represents 1.30% of ending portfolio loans. This same ratio was 1.27% at December 31, 2002. Enterprise’s loan loss experience continues to compare favorably with peer institutions.
Expense ratios continued to improve as reduced staffing levels, productivity increases, and business process improvements were implemented. The efficiency ratio improved from 72.81% in the six months ended June 30, 2002 to 64.57% in the same period for 2003.
“Our focus on serving privately held businesses through our integrated approach to commercial banking and wealth creation services is unique in our markets and gaining greater acceptance every day. While this economy continues to challenge us, we are more confident than ever that we have a winning strategy being well executed by our team,” said CEO Eichner.
Enterprise Financial operates commercial banking and wealth management businesses in metropolitan St. Louis and Kansas City, Mo., with a primary focus on serving the needs of privately held businesses, their owners and other success-minded individuals.
Please refer to Enterprise Financial’s consolidated balance sheets as of June 30, 2003 and December 31, 2002 and consolidated statements of operations for the three and six months ended June 30, 2003 and 2002 attached for more details.
###
Readers should note that in addition to the historical information contained herein, this press release may contain forward-looking statements which are inherently subject to risks and uncertainties that could cause actual results to differ materially from those contemplated from such statements. Factors that could cause or contribute to such differences include, but are not limited to, burdens imposed by federal and state regulations of banks, credit risk, exposure to local economic conditions, risks associated with rapid increase or decrease in prevailing interest rates and competition from banks and other financial institutions, as well as those in Enterprise Financial’s 2002 Annual Report on Form 10-K.
ENTERPRISE FINANCIAL SERVICES CORP AND SUBSIDIARIES
Consolidated Balance Sheets (unaudited)
(Dollars in thousands, except per share data)
June 30, 2003 | December 31, 2002 | |||||
Assets | ||||||
Cash and due from banks | $ | 34,750 | $ | 39,052 | ||
Federal funds sold | 19,374 | 33,367 | ||||
Interest-bearing deposits | 409 | 66 | ||||
Investments in debt and equity securities: | ||||||
Available for sale, at estimated fair value | 57,441 | 66,619 | ||||
Held to maturity, at amortized cost (estimated fair value of $11 at June 30, 2003 and $13 at December 31, 2002) | 11 | 13 | ||||
Total investments in debt and equity securities | 57,452 | 66,632 | ||||
Loans held for sale | 5,088 | 6,991 | ||||
Loans, less unearned loan fees | 735,733 | 679,799 | ||||
Less allowance for loan losses | 9,539 | 8,600 | ||||
Loans, net | 726,194 | 671,199 | ||||
Other real estate owned | 345 | 125 | ||||
Fixed assets, net | 7,051 | 7,686 | ||||
Accrued interest receivable | 3,266 | 3,459 | ||||
Goodwill | 1,938 | 2,088 | ||||
Assets held for sale | — | 36,401 | ||||
Prepaid expenses and other assets | 10,417 | 9,721 | ||||
Total assets | $ | 866,284 | $ | 876,787 | ||
Liabilities and Shareholders’ Equity | ||||||
Deposits: | ||||||
Demand | $ | 161,499 | $ | 155,597 | ||
Interest-bearing transaction accounts | 49,765 | 59,058 | ||||
Money market accounts | 347,457 | 341,590 | ||||
Savings | 4,399 | 3,421 | ||||
Certificates of deposit: | ||||||
$100,000 and over | 138,272 | 105,030 | ||||
Other | 46,622 | 51,618 | ||||
Total deposits | 748,014 | 716,314 | ||||
Guaranteed preferred beneficial interests in subordinated debentures | 15,000 | 15,000 | ||||
Federal Home Loan Bank advances | 29,108 | 29,464 | ||||
Notes payable and other borrowings | 2,359 | 2,359 | ||||
Accrued interest payable | 1,137 | 1,264 | ||||
Liabilities held for sale | — | 50,054 | ||||
Accounts payable and accrued expenses | 7,545 | 3,522 | ||||
Total liabilities | 803,163 | 817,977 | ||||
Shareholders’ equity: | ||||||
Common stock, $.01 par value; authorized 20,000,000 shares; issued and outstanding 9,565,123 shares at June 30, 2003 and 9,497,794 shares at December 31, 2002 | 96 | 95 | ||||
Surplus | 39,209 | 38,401 | ||||
Retained earnings | 22,025 | 18,674 | ||||
Accumulated other comprehensive income | 1,791 | 1,640 | ||||
Total shareholders’ equity | 63,121 | 58,810 | ||||
Total liabilities and shareholders’ equity | $ | 866,284 | $ | 876,787 | ||
ENTERPRISE FINANCIAL SERVICES CORP AND SUBSIDIARIES
Consolidated Statements of Operations (unaudited)
(Dollars in thousands, except per share data)
Three months ended June 30, | Six months ended June 30, | |||||||||||
2003 | 2002 | 2003 | 2002 | |||||||||
Interest income: | ||||||||||||
Interest and fees on loans | $ | 10,305 | $ | 10,964 | $ | 20,673 | $ | 21,426 | ||||
Interest on debt and equity securities: | ||||||||||||
Taxable | 421 | 373 | 889 | 818 | ||||||||
Nontaxable | 4 | — | 5 | 1 | ||||||||
Interest on federal funds sold | 48 | 35 | 86 | 127 | ||||||||
Interest on interest-bearing deposits | — | 5 | — | 23 | ||||||||
Dividends on equity securities | 19 | 15 | 34 | 27 | ||||||||
Total interest income | 10,797 | 11,392 | 21,687 | 22,422 | ||||||||
Interest expense: | ||||||||||||
Interest-bearing transaction accounts | 49 | 69 | 101 | 137 | ||||||||
Money market accounts | 885 | 1,212 | 1,812 | 2,487 | ||||||||
Savings | 3 | 22 | 18 | 43 | ||||||||
Certificates of deposit: | ||||||||||||
$100,000 and over | 741 | 789 | 1,409 | 1,619 | ||||||||
Other | 377 | 1,062 | 941 | 2,273 | ||||||||
Guaranteed preferred beneficial interests in subordinated debentures | 309 | 263 | 617 | 521 | ||||||||
Federal Home Loan Bank borrowings | 312 | 178 | 603 | 362 | ||||||||
Notes payable and other borrowings | 19 | 47 | 29 | 63 | ||||||||
Total interest expense | 2,695 | 3,642 | 5,530 | 7,505 | ||||||||
Net interest income | 8,102 | 7,750 | 16,157 | 14,917 | ||||||||
Provision for loan losses | 1,094 | 530 | 2,093 | 1,120 | ||||||||
Net interest income after provision for loan losses | 7,008 | 7,220 | 14,064 | 13,797 | ||||||||
Noninterest income: | ||||||||||||
Service charges on deposit accounts | 406 | 449 | 893 | 861 | ||||||||
Trust and financial advisory income | 670 | 540 | 1,260 | 1,169 | ||||||||
Other service charges and fee income | 91 | 83 | 187 | 174 | ||||||||
Gain on sale of mortgage loans | 586 | 285 | 1,114 | 645 | ||||||||
Gain on sale of securities | — | — | 78 | — | ||||||||
Gain on sale of branches | 2,938 | — | 2,938 | — | ||||||||
Recoveries and income from Merchant Banc investments | — | 89 | — | 89 | ||||||||
Total noninterest income | 4,691 | 1,446 | 6,470 | 2,938 | ||||||||
Noninterest expense: | ||||||||||||
Salaries | 4,040 | 3,352 | 7,803 | 6,813 | ||||||||
Payroll taxes and employee benefits | 635 | 651 | 1,349 | 1,322 | ||||||||
Occupancy | 499 | 460 | 975 | 918 | ||||||||
Furniture and equipment | 233 | 255 | 454 | 507 | ||||||||
Data processing | 270 | 260 | 512 | 512 | ||||||||
Other | 1,900 | 1,389 | 3,517 | 2,927 | ||||||||
Total noninterest expense | 7,577 | 6,367 | 14,610 | 12,999 | ||||||||
Income before income tax expense | 4,122 | 2,299 | 5,924 | 3,736 | ||||||||
Income tax expense | 1,524 | 850 | 2,191 | 1,415 | ||||||||
Net income | $ | 2,598 | $ | 1,449 | $ | 3,733 | $ | 2,321 | ||||
Per share amounts | ||||||||||||
Basic earnings per share | $ | 0.27 | $ | 0.15 | $ | 0.39 | $ | 0.25 | ||||
Basic weighted average common shares outstanding | 9,560,529 | 9,399,560 | 9,541,552 | 9,349,433 | ||||||||
Diluted earnings per share | $ | 0.26 | $ | 0.15 | $ | 0.38 | $ | 0.24 | ||||
Diluted weighted average common shares outstanding | 9,892,558 | 9,575,650 | 9,855,507 | 9,576,225 |