Exhibit 99.1
For more information, contact: |
Kevin Eichner (314) 725 5500 |
Frank Sanfilippo (314) 725 5500 |
Melissa Sturges (816) 221 7500 |
ENTERPRISE FINANCIAL REPORTS 45% INCREASE IN SECOND QUARTER
EARNINGS PER SHARE
Year-To-Date EPS Up 51%
Wealth Management Income Increases 50%
Company Stock Listed In Russell Index
St. Louis, July 18, 2005 – Enterprise Financial Services Corp (NASDAQ: EFSC), the parent company of Enterprise Bank & Trust, reported net income of $3.1 million or $0.29 per fully diluted share for the second quarter of 2005 versus $2.0 million or $0.20 per share in the same quarter of 2004—a 45% increase. For the six months ended June 30, 2005, the Company reported net income of $5.6 million or $0.53 per fully diluted share versus $3.5 million or $0.35 per share for the same period in 2004—a 51% increase.
“Enterprise Financial’s strong earnings momentum continues, reflecting robust growth in our banking and wealth management businesses,” said Kevin Eichner, president and CEO of Enterprise Financial. “We are enjoying a record year on many fronts. We were especially pleased to be included in the Russell 3000 Index recently – another milestone for EFSC – and to see a growing interest in our Company by institutional investors.”
The company’s net interest rate margin improved from 3.80% in the second quarter of 2004 to 4.19% in the same quarter of 2005. Driving this improvement was a 119 basis point increase in the yield on earning assets, and an increasing benefit from non-interest bearing deposits and equity, partially offset by a 102 basis point increase in the cost of interest-bearing liabilities. Approximately 62% of the loan portfolio (including impact of interest rate swaps) floats with the prime rate.
Net interest income increased $2.1 million or 23% in the second quarter of 2005 versus 2004. Portfolio loans are up $60 million or 13% annualized for the year from December 31, 2004 and over $92 million from prior year. Following a strong 33% annualized first quarter increase, portfolio loans at June 30, 2005 were down $14 million from March 31, 2005. Total deposits grew $59 million during the second quarter and year-to-date were up $56 million or 12% annualized. Noninterest bearing deposits as a percentage of total deposits were 20% as the company continues to protect its core funding advantages.
High asset quality continues to be a major attribute of Enterprise. The company experienced net charge-offs of $96,000 during the second quarter of 2005 versus net loan recoveries of $22,000 for the same period last year. Year-to-date, the company reported net loan recoveries of $92,000 versus net charge-offs of $479,000 in the same period in 2004, a positive variance of $571,000. Loan loss provision in the second quarter of 2005 was $226,000, compared to $740,000 in the same quarter last year due to lower nonperforming loan levels and slower loan growth in the quarter. Nonperforming loans were $2.1 million or 22 basis points of total loans at June 30, 2005 versus 28 basis points and 20 basis points at June 30, 2004 and December 31, 2004, respectively. The allowance for loan losses represented 1.33% of loans at June 30, 2005. This compares to 1.30% at year end 2004 and 1.32% one year ago.
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The Company’s Wealth Management business continues to thrive. Wealth Management income increased 50% from $1.0 million in the second quarter of 2004 to $1.5 million in second quarter of 2005. Year-to-date, Wealth Management income is up $807,000 or 42%. Approximately $305,000 of the year-to-date increase over the prior year is coming from the Company’s new Wealth Products Group which was launched in March of 2004. Assets under administration were $1.5 billion at June 30, 2005, a 15% increase over December 31, 2004.
A rising earnings credit rate on commercial accounts offset by increased account activity resulted in deposit service charges remaining basically unchanged in the second quarter as compared to the same quarter in 2004. A rising interest rate environment and the resulting lower refinancing opportunities led to a decline in mortgage gains from $142,000 in second quarter 2004 to $80,000 in second quarter 2005.
The company’s efficiency ratio improved from 66.36% in the second quarter of 2004 to 61.78% in the second quarter of 2005. Noninterest expenses increased from $7.1 million in the second quarter of 2004 to $8.2 million in the same quarter of 2005. The increase in expense during the second quarter of 2005 was due primarily to the company’s new long term incentive plan and related expensing of Restricted Stock Units, higher bonus expense related to the Company’s annual performance incentive program, more competitive director compensation levels, higher commission expenses due to related revenues in Wealth Management, and higher professional fees associated with Sarbanes Oxley Section 404 compliance.
“We continue to see increased operating leverage as the combination of expense controls and strong growth in both business lines gives us significant lift. This is especially significant when one considers the impact of new types of expenses hitting our P&L such as those related to Sarbanes Oxley and the expensing of long term incentives,” said Eichner.
The Company’s effective tax rate for the quarter ended June 30, 2005 was 35.0% versus 30.8% for the same quarter last year. The 2004 tax rate is lower due to $163,000 of state income tax refunds related to amendments of prior state income tax returns that the Company recognized during the second quarter of 2004.
Enterprise Financial operates commercial banking and wealth management businesses in metropolitan St. Louis and Kansas City, with a primary focus on serving the needs of privately held businesses, their owners and other success-minded individuals. The Company’s stock is listed nationally on NASDAQ under the symbol EFSC.
Please refer to the Consolidated Financial Summary attached for more details.
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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 2004 Annual Report on Form 10-K.
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ENTERPRISE FINANCIAL SERVICES CORP
CONSOLIDATED FINANCIAL SUMMARY
(unaudited)
| | For the Quarter Ended
June 30 | | For the Six Months Ended
June 30 | |
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(In thousands except per share data) | | 2005 | | 2004 | | 2005 | | 2004 | |
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INCOME STATEMENTS | | | | | | | | | | | | | |
Total interest income | | $ | 16,232 | | $ | 11,701 | | $ | 30,886 | | $ | 22,645 | |
Total interest expense | | | 5,230 | | | 2,778 | | | 9,361 | | | 5,332 | |
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Net interest income | | | 11,002 | | | 8,923 | | | 21,525 | | | 17,313 | |
Provision for loan loss | | | 226 | | | 740 | | | 1,012 | | | 1,337 | |
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Net interest income after provision for loan losses | | | 10,776 | | | 8,183 | | | 20,513 | | | 15,976 | |
NONINTEREST INCOME | | | | | | | | | | | | | |
Deposit service charges | | | 537 | | | 540 | | | 1,020 | | | 997 | |
Wealth Management income | | | 1,487 | | | 1,048 | | | 2,711 | | | 1,904 | |
Gain on sale of loans | | | 80 | | | 142 | | | 102 | | | 210 | |
Other income | | | 121 | | | 88 | | | 229 | | | 186 | |
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Total noninterest income | | | 2,225 | | | 1,818 | | | 4,062 | | | 3,297 | |
NONINTEREST EXPENSE | | | | | | | | | | | | | |
Salaries and benefits | | | 5,402 | | | 4,585 | | | 10,600 | | | 9,274 | |
Occupancy | | | 554 | | | 522 | | | 1,084 | | | 1,018 | |
Furniture and equipment | | | 188 | | | 176 | | | 360 | | | 358 | |
Other | | | 2,027 | | | 1,845 | | | 3,845 | | | 3,349 | |
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Total noninterest expense | | | 8,171 | | | 7,128 | | | 15,889 | | | 13,999 | |
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Income before income tax | | | 4,830 | | | 2,873 | | | 8,686 | | | 5,274 | |
Income taxes | | | 1,689 | | | 886 | | | 3,098 | | | 1,761 | |
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Net income | | $ | 3,141 | | $ | 1,987 | | $ | 5,588 | | $ | 3,513 | |
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Basic earnings per share | | $ | 0.31 | | $ | 0.21 | | $ | 0.56 | | $ | 0.36 | |
Diluted earnings per share | | $ | 0.29 | | $ | 0.20 | | $ | 0.53 | | $ | 0.35 | |
Return on average assets | | | 1.13 | % | | 0.80 | % | | 1.03 | % | | 0.74 | % |
Return on average equity | | | 16.01 | % | | 11.72 | % | | 14.66 | % | | 10.52 | % |
Net interest rate margin (fully tax equivalized) | | | 4.19 | % | | 3.80 | % | | 4.18 | % | | 3.84 | % |
Yield on earning assets (fully tax equivalized) | | | 6.15 | % | | 4.96 | % | | 5.98 | % | | 5.00 | % |
Cost of paying liabilities | | | 2.53 | % | | 1.51 | % | | 2.31 | % | | 1.51 | % |
Net interest spread | | | 3.62 | % | | 3.45 | % | | 3.67 | % | | 3.49 | % |
Efficiency ratio | | | 61.78 | % | | 66.36 | % | | 62.10 | % | | 67.92 | % |
Noninterest expense to average assets | | | 2.94 | % | | 2.88 | % | | 2.93 | % | | 2.94 | % |
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ENTERPRISE FINANCIAL SERVICES CORP
CONSOLIDATED FINANCIAL SUMMARY (cont.)
(unaudited)
(In thousands except per share data) | | Jun 30
2005 | | Mar 31
2005 | | Dec 31
2004 | | Sep 30
2004 | | Jun 30
2004 | |
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BALANCE SHEETS | | | | | | | | | | | | | | | | |
ASSETS | | | | | | | | | | | | | | | | |
Cash and due from banks | | $ | 35,156 | | $ | 32,085 | | $ | 28,324 | | $ | 29,316 | | $ | 31,790 | |
Interest-bearing deposits | | | 94 | | | 141 | | | 156 | | | 142 | | | 90 | |
Debt and equity investments | | | 89,193 | | | 92,572 | | | 121,638 | | | 93,007 | | | 93,492 | |
Federal funds sold | | | 43,149 | | | — | | | — | | | 38,712 | | | 12,396 | |
Loans held for sale | | | 3,996 | | | 4,180 | | | 2,376 | | | 1,599 | | | 2,383 | |
Portfolio loans | | | 958,878 | | | 972,802 | | | 898,505 | | | 874,092 | | | 866,814 | |
Less allowance for loan losses | | | 12,769 | | | 12,639 | | | 11,665 | | | 11,441 | | | 11,448 | |
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Net loans | | | 946,109 | | | 960,163 | | | 886,840 | | | 862,651 | | | 855,366 | |
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Premises and equipment, net | | | 9,556 | | | 8,413 | | | 8,044 | | | 7,071 | | | 7,067 | |
Goodwill | | | 1,938 | | | 1,938 | | | 1,938 | | | 1,938 | | | 1,938 | |
Other assets | | | 11,331 | | | 11,090 | | | 10,634 | | | 11,954 | | | 11,577 | |
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Total assets | | $ | 1,140,522 | | $ | 1,110,582 | | $ | 1,059,950 | | $ | 1,046,390 | | $ | 1,016,099 | |
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LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | | | | | | | | | |
Non-interest bearing deposits | | $ | 199,136 | | $ | 190,667 | | $ | 197,283 | | $ | 184,426 | | $ | 182,679 | |
Interest bearing deposits | | | 796,548 | | | 746,126 | | | 742,345 | | | 752,509 | | | 688,333 | |
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Total deposits | | | 995,684 | | | 936,793 | | | 939,628 | | | 936,935 | | | 871,012 | |
Subordinated debentures | | | 20,620 | | | 20,620 | | | 20,620 | | | 20,619 | | | 20,619 | |
FHLB advances | | | 30,564 | | | 68,879 | | | 10,299 | | | 11,413 | | | 51,432 | |
Federal funds purchased | | | — | | | — | | | 6,333 | | | — | | | — | |
Other borrowings | | | 7,230 | | | 2,303 | | | 3,532 | | | 430 | | | 296 | |
Other liabilities | | | 5,984 | | | 5,263 | | | 6,812 | | | 5,947 | | | 5,355 | |
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Total liabilities | | | 1,060,082 | | | 1,033,858 | | | 987,224 | | | 975,344 | | | 948,714 | |
Shareholders’ equity | | | 80,440 | | | 76,724 | | | 72,726 | | | 71,046 | | | 67,385 | |
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Total liabilities and shareholders’ equity | | $ | 1,140,522 | | $ | 1,110,582 | | $ | 1,059,950 | | $ | 1,046,390 | | $ | 1,016,099 | |
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ENTERPRISE FINANCIAL SERVICES CORP
CONSOLIDATED FINANCIAL SUMMARY (cont.)
(unaudited)
| | For the Quarter Ended | |
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(In thousands except per share data) | | Jun 30,
2005 | | Mar 31,
2005 | | Dec 31,
2004 | | Sep 30,
2004 | | Jun 30,
2004 | |
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EARNINGS SUMMARY | | | | | | | | | | | | | | | | |
Net interest income | | $ | 11,002 | | $ | 10,522 | | $ | 10,018 | | $ | 9,394 | | $ | 8,923 | |
Provision for loan losses | | | 226 | | | 786 | | | 775 | | | 100 | | | 740 | |
Wealth Mangement income | | | 1,487 | | | 1,223 | | | 1,283 | | | 1,119 | | | 1,048 | |
Noninterest income | | | 738 | | | 614 | | | 663 | | | 758 | | | 770 | |
Noninterest expense | | | 8,171 | | | 7,717 | | | 8,276 | | | 7,057 | | | 7,128 | |
Income before income tax | | | 4,830 | | | 3,856 | | | 2,913 | | | 4,114 | | | 2,873 | |
Net income | | | 3,141 | | | 2,447 | | | 1,846 | | | 2,853 | | | 1,987 | |
Diluted earnings per share | | $ | 0.29 | | $ | 0.23 | | $ | 0.18 | | $ | 0.28 | | $ | 0.20 | |
Return on average equity | | | 16.01 | % | | 13.23 | % | | 10.15 | % | | 16.50 | % | | 11.72 | % |
Net interest rate margin (fully tax equivalized) | | | 4.19 | % | | 4.18 | % | | 3.85 | % | | 3.85 | % | | 3.80 | % |
Efficiency ratio | | | 61.78 | % | | 62.44 | % | | 69.17 | % | | 62.61 | % | | 66.36 | % |
MARKET DATA | | | | | | | | | | | | | | | | |
Book value per share | | $ | 8.00 | | $ | 7.65 | | $ | 7.44 | | $ | 7.30 | | $ | 6.96 | |
Market value per share | | $ | 23.65 | | $ | 19.00 | | $ | 18.50 | | $ | 14.60 | | $ | 14.70 | |
Period end common shares | | | 10,056 | | | 10,032 | | | 9,778 | | | 9,732 | | | 9,684 | |
Average basic common shares | | | 10,046 | | | 9,922 | | | 9,747 | | | 9,724 | | | 9,680 | |
Average diluted common shares | | | 10,676 | | | 10,521 | | | 10,224 | | | 10,074 | | | 9,987 | |
ASSET QUALITY | | | | | | | | | | | | | | | | |
Net charge-offs (recoveries) | | $ | 96 | | $ | (188 | ) | $ | 551 | | $ | 107 | | $ | (22 | ) |
Nonperforming loans | | $ | 2,136 | | $ | 3,134 | | $ | 1,826 | | $ | 1,722 | | $ | 2,401 | |
Nonperforming loans to total loans | | | 0.22 | % | | 0.32 | % | | 0.20 | % | | 0.20 | % | | 0.28 | % |
Allowance for loan loss to total loans | | | 1.33 | % | | 1.30 | % | | 1.30 | % | | 1.31 | % | | 1.32 | % |
Net charge-offs (recoveries) to average loans (annualized) | | | 0.04 | % | | (0.08 | )% | | 0.25 | % | | 0.05 | % | | (0.01 | )% |
CAPITAL | | | | | | | | | | | | | | | | |
Average equity to average assets | | | 7.07 | % | | 6.98 | % | | 6.62 | % | | 6.72 | % | | 6.85 | % |
Tier 1 capital to risk-weighted assets | | | 10.14 | % | | 9.73 | % | | 9.94 | % | | 9.89 | % | | 9.83 | % |
Total capital to risk-weighted assets | | | 11.39 | % | | 10.98 | % | | 11.19 | % | | 11.14 | % | | 11.08 | % |
AVERAGE BALANCES | | | | | | | | | | | | | | | | |
Portfolio loans | | $ | 963,570 | | $ | 932,910 | | $ | 872,700 | | $ | 856,221 | | $ | 849,868 | |
Earning assets | | | 1,067,366 | | | 1,034,525 | | | 1,047,990 | | | 983,331 | | | 957,518 | |
Total assets | | | 1,113,075 | | | 1,075,724 | | | 1,092,674 | | | 1,022,998 | | | 995,139 | |
Deposits | | | 942,466 | | | 919,910 | | | 977,359 | | | 904,583 | | | 863,433 | |
Shareholders’ equity | | | 78,701 | | | 75,037 | | | 72,345 | | | 68,769 | | | 68,183 | |
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