Exhibit 99.1
For more information, contact:
Kevin Eichner (314) 725 5500
Frank Sanfilippo (314) 725 5500
Melissa Sturges (816) 221 7500
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ENTERPRISE FINANCIAL REPORTS 27% INCREASE IN YEAR-TO-DATE EARNINGS PER SHARE |
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Wealth Management Income Increases 38% YTD |
Company Announces Significant Wealth Management Acquisition |
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St. Louis, October 17, 2005 – Enterprise Financial Services Corp (NASDAQ: EFSC), the parent company of Enterprise Bank & Trust, reported net income of $2.9 million or $0.27 per fully diluted share for the third quarter of 2005 versus $2.9 million or $0.28 per fully diluted share in the same quarter of 2004. For the nine months ended September 30, 2005, the Company reported net income of $8.5 million or $0.80 per fully diluted share versus $6.4 million or $0.63 per share for the same period in 2004—a 27% increase.
“We remain pleased with our company’s progress in both lines of business,” said Kevin Eichner, president and CEO of Enterprise Financial. “The banking business is healthy and growing and we are especially excited about the potential of our recently announced acquisition of the Millennium Brokerage Group to enhance our Wealth Management fee income and profitability.”
Enterprise Financial announced last week the acquisition of the Millennium Brokerage Group, a highly regarded life insurance advisory and brokerage operation headquartered in Nashville, Tennessee with thirteen offices supporting operations in forty-nine states (see press release issued 10/13/05). The company previously announced its expectation for the Millennium acquisition to be accretive to earnings per share by $0.10 - $0.14 in 2006.
For the third quarter of 2005, the company’s net interest rate margin improved to 4.03% from 3.85% in the same quarter of 2004. Driving this improvement was a 121 basis point increase in the yield on earning assets, and an increasing benefit from non-interest bearing deposits and equity, partially offset by a 129 basis point increase in the cost of interest-bearing liabilities. Approximately 59% of the loan portfolio (including impact of interest rate swaps) floats with the prime rate.
Net interest income increased $1.8 million or 19% in the third quarter of 2005 versus 2004. Portfolio loans were up $78 million or 12% annualized for the year from December 31, 2004 and were up $103 million from the prior year. During the third quarter, portfolio loans grew by $18 million. Total deposits grew $27 million during the third quarter and year-to-date were up $83 million or 12% annualized. A key indicator of the Company’s success is the ratio of non-interest bearing deposits to total deposits. This ratio remained at a high level of 20% as the company continued to protect its core funding advantages.
Asset quality continues to be a major attribute of Enterprise. The company experienced net charge-offs of only $10,000 during the third quarter of 2005 versus net charge-offs of $107,000 for the same period last year. Year-to-date, the company reported net loan recoveries of $83,000 versus net charge-offs of $586,000 in the same period in 2004, a positive variance of $669,000. Loan loss provision in the third quarter of 2005 was $408,000, compared to $100,000 in the same quarter last year due to higher loan growth in the quarter. Nonperforming loans were $1.8 million or 18 basis points of total loans at September 30, 2005 versus 20 basis points at both September 30, 2004 and December 31, 2004. The allowance for loan losses represented 1.35% of loans at September 30, 2005. This compares to 1.30% at year end 2004 and 1.31% one year ago.
The Company’s Wealth Management business continued its advance. Wealth Management income increased 36% from $1.1 million in the third quarter of 2004 to $1.5 million in the third quarter of 2005. Year-to-date, Wealth Management income is up $1.2 million or 38%. Approximately $428,000 of the year-to-date increase over the prior year came from the Company’s new Wealth Products Group that was launched in March of 2004. This number is expected to grow materially in the future as a result of the addition of Millennium to this business segment. Assets under administration were $1.5 billion at September 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 third quarter as compared to the same quarter in 2004. Higher production activity led to an increase in mortgage gains from $9,000 in third quarter 2004 to $145,000 in third quarter 2005. The Company sold a foreclosed real estate property during the third quarter 2005 for a gain of $91,000 and the Company recorded $85,000 in losses on the sale of securities during the third quarter, versus $125,000 in gains for the same quarter in 2004. In both cases, the securities were sold to assist in repositioning the balance sheet for the anticipated interest rate environment.
Noninterest expenses increased from $7.1 million in the third quarter of 2004 to $8.5 million in the same quarter of 2005. The increase in expense during the third quarter of 2005 was due primarily to the company’s new long term incentive plan and related expensing of Restricted Stock Units, higher bonus and 401K match 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 and acquisition activities. For the nine months ended September 30, 2005, the efficiency ratio was 62.6%, versus 66.0% for the same period in the prior year.
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“Our people continue to perform at an admirable level in a tough competitive environment. Our ‘fewer but better’ model of human resource deployment is consistently driving our productivity increases – something we see as essential for the long term,” commented Eichner.
The Company’s effective tax rate for the quarter ended September 30, 2005 was 36.1% versus 30.6% for the same quarter last year. The 2004 tax rate was lower due to a $241,000 reversal of deferred tax valuation allowance recorded in the third quarter of 2004.
Enterprise Financial operates commercial banking and wealth management businesses in metropolitan St. Louis and Kansas City, with a primary focus on serving the needs of privately held businesses, their owners and other success-minded individuals. The Company’s stock is listed nationally on NASDAQ under the symbol EFSC.
Please refer to the Consolidated Financial Summary attached for more details.
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Readers should note that in addition to the historical information contained herein, this press release may contain forward-looking statements which are inherently subject to risks and uncertainties that could cause actual results to differ materially from those contemplated from such statements. Factors that could cause or contribute to such differences include, but are not limited to, burdens imposed by federal and state regulations of banks, credit risk, exposure to local economic conditions, risks associated with rapid increase or decrease in prevailing interest rates and competition from banks and other financial institutions, as well as those in Enterprise Financial’s 2004 Annual Report on Form 10-K.
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ENTERPRISE FINANCIAL SERVICES CORP
CONSOLIDATED FINANCIAL SUMMARY
(unaudited)
| | For the Quarter Ended
September 30 | | For the Nine Months Ended
September 30 | |
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($ in thousands, except per share data) | | 2005 | | 2004 | | 2005 | | 2004 | |
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INCOME STATEMENTS | | | | | | | | | | | | | |
Total interest income | | $ | 17,611 | | $ | 12,550 | | $ | 48,497 | | $ | 35,195 | |
Total interest expense | | | 6,452 | | | 3,156 | | | 15,813 | | | 8,489 | |
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Net interest income | | | 11,159 | | | 9,394 | | | 32,684 | | | 26,706 | |
Provision for loan loss | | | 408 | | | 100 | | | 1,420 | | | 1,437 | |
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Net interest income after provision for loan losses | | | 10,751 | | | 9,294 | | | 31,264 | | | 25,269 | |
NONINTEREST INCOME | | | | | | | | | | | | | |
Deposit service charges | | | 533 | | | 532 | | | 1,553 | | | 1,529 | |
Wealth Management income | | | 1,474 | | | 1,119 | | | 4,184 | | | 3,023 | |
Gain on sale of mortgage loans | | | 145 | | | 9 | | | 247 | | | 219 | |
Gain on sale of other real estate | | | 91 | | | — | | | 91 | | | — | |
Gain (loss) on sale of securities | | | (85 | ) | | 125 | | | (85 | ) | | 126 | |
Other income | | | 119 | | | 92 | | | 348 | | | 278 | |
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Total noninterest income | | | 2,277 | | | 1,877 | | | 6,338 | | | 5,175 | |
NONINTEREST EXPENSE | | | | | | | | | | | | | |
Salaries and benefits | | | 5,503 | | | 4,574 | | | 16,103 | | | 13,848 | |
Occupancy | | | 568 | | | 523 | | | 1,652 | | | 1,540 | |
Furniture and equipment | | | 212 | | | 176 | | | 572 | | | 534 | |
Other | | | 2,242 | | | 1,783 | | | 6,086 | | | 5,133 | |
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Total noninterest expense | | | 8,525 | | | 7,056 | | | 24,413 | | | 21,055 | |
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Income before income tax | | | 4,503 | | | 4,115 | | | 13,189 | | | 9,389 | |
Income taxes | | | 1,625 | | | 1,261 | | | 4,723 | | | 3,022 | |
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Net income | | $ | 2,878 | | $ | 2,854 | | $ | 8,466 | | $ | 6,367 | |
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Basic earnings per share | | $ | 0.29 | | $ | 0.29 | | $ | 0.85 | | $ | 0.66 | |
Diluted earnings per share | | $ | 0.27 | | $ | 0.28 | | $ | 0.80 | | $ | 0.63 | |
Return on average assets | | | 0.98 | % | | 1.11 | % | | 1.01 | % | | 0.87 | % |
Return on average equity | | | 13.84 | % | | 16.51 | % | | 14.37 | % | | 12.57 | % |
Net interest rate margin (fully tax equivalized) | | | 4.03 | % | | 3.85 | % | | 4.13 | % | | 3.84 | % |
Yield on earning assets (fully tax equivalized) | | | 6.33 | % | | 5.12 | % | | 6.10 | % | | 5.04 | % |
Cost of paying liabilities | | | 2.94 | % | | 1.65 | % | | 2.53 | % | | 1.56 | % |
Net interest spread | | | 3.39 | % | | 3.47 | % | | 3.57 | % | | 3.48 | % |
Efficiency ratio | | | 63.45 | % | | 62.60 | % | | 62.56 | % | | 66.04 | % |
Noninterest expense to average assets | | | 2.92 | % | | 2.74 | % | | 2.92 | % | | 2.87 | % |
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ENTERPRISE FINANCIAL SERVICES CORP
CONSOLIDATED FINANCIAL SUMMARY (cont.)
(unaudited)
($ in thousands) | | Sep 30,
2005 | | Jun 30,
2005 | | Mar 31,
2005 | | Dec 31,
2004 | | Sep 30,
2004 | |
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BALANCE SHEETS | | | | | | | | | | | | | | | | |
ASSETS | | | | | | | | | | | | | | | | |
Cash and due from banks | | $ | 38,542 | | $ | 35,156 | | $ | 32,085 | | $ | 28,324 | | $ | 29,316 | |
Interest-bearing deposits | | | 101 | | | 94 | | | 141 | | | 156 | | | 142 | |
Debt and equity investments | | | 96,684 | | | 89,193 | | | 92,572 | | | 121,638 | | | 93,007 | |
Federal funds sold | | | 45,281 | | | 43,149 | | | — | | | — | | | 38,712 | |
Loans held for sale | | | 2,273 | | | 3,996 | | | 4,180 | | | 2,376 | | | 1,599 | |
Portfolio loans | | | 976,804 | | | 958,878 | | | 972,802 | | | 898,505 | | | 874,092 | |
Less allowance for loan losses | | | 13,168 | | | 12,769 | | | 12,639 | | | 11,665 | | | 11,441 | |
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Net loans | | | 963,636 | | | 946,109 | | | 960,163 | | | 886,840 | | | 862,651 | |
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Premises and equipment, net | | | 10,098 | | | 9,556 | | | 8,413 | | | 8,044 | | | 7,071 | |
Goodwill | | | 1,938 | | | 1,938 | | | 1,938 | | | 1,938 | | | 1,938 | |
Other assets | | | 11,289 | | | 11,331 | | | 11,090 | | | 10,634 | | | 11,954 | |
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Total assets | | $ | 1,169,842 | | $ | 1,140,522 | | $ | 1,110,582 | | $ | 1,059,950 | | $ | 1,046,390 | |
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LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | | | | | | | | | |
Non-interest bearing deposits | | $ | 206,724 | | $ | 199,136 | | $ | 190,667 | | $ | 197,283 | | $ | 184,426 | |
Interest bearing deposits | | | 816,241 | | | 796,548 | | | 746,126 | | | 742,345 | | | 752,509 | |
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Total deposits | | | 1,022,965 | | | 995,684 | | | 936,793 | | | 939,628 | | | 936,935 | |
Subordinated debentures | | | 20,620 | | | 20,620 | | | 20,620 | | | 20,620 | | | 20,619 | |
FHLB advances | | | 28,749 | | | 30,564 | | | 68,879 | | | 10,299 | | | 11,413 | |
Federal funds purchased | | | — | | | — | | | — | | | 6,333 | | | — | |
Other borrowings | | | 6,975 | | | 7,230 | | | 2,303 | | | 3,532 | | | 430 | |
Other liabilities | | | 7,036 | | | 5,984 | | | 5,263 | | | 6,812 | | | 5,947 | |
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Total liabilities | | | 1,086,345 | | | 1,060,082 | | | 1,033,858 | | | 987,224 | | | 975,344 | |
Shareholders’ equity | | | 83,497 | | | 80,440 | | | 76,724 | | | 72,726 | | | 71,046 | |
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Total liabilities and shareholders’ equity | | $ | 1,169,842 | | $ | 1,140,522 | | $ | 1,110,582 | | $ | 1,059,950 | | $ | 1,046,390 | |
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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) | | Sep 30,
2005 | | Jun 30,
2005 | | Mar 31,
2005 | | Dec 31,
2004 | | Sep 30,
2004 | |
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EARNINGS SUMMARY | | | | | | | | | | | | | | | | |
Net interest income | | $ | 11,159 | | $ | 11,002 | | $ | 10,522 | | $ | 10,018 | | $ | 9,394 | |
Provision for loan losses | | | 408 | | | 226 | | | 786 | | | 775 | | | 100 | |
Wealth Mangement income | | | 1,474 | | | 1,487 | | | 1,223 | | | 1,283 | | | 1,119 | |
Noninterest income | | | 803 | | | 738 | | | 614 | | | 663 | | | 758 | |
Noninterest expense | | | 8,525 | | | 8,171 | | | 7,717 | | | 8,276 | | | 7,056 | |
Income before income tax | | | 4,503 | | | 4,830 | | | 3,856 | | | 2,913 | | | 4,115 | |
Net income | | | 2,878 | | | 3,141 | | | 2,447 | | | 1,846 | | | 2,854 | |
Diluted earnings per share | | $ | 0.27 | | $ | 0.29 | | $ | 0.23 | | $ | 0.18 | | $ | 0.28 | |
Return on average equity | | | 13.84 | % | | 16.01 | % | | 13.23 | % | | 10.15 | % | | 16.51 | % |
Net interest rate margin (fully tax equivalized) | | | 4.03 | % | | 4.19 | % | | 4.18 | % | | 3.85 | % | | 3.85 | % |
Efficiency ratio | | | 63.45 | % | | 61.78 | % | | 62.44 | % | | 69.17 | % | | 62.60 | % |
MARKET DATA | | | | | | | | | | | | | | | | |
Book value per share | | $ | 8.26 | | $ | 8.00 | | $ | 7.65 | | $ | 7.44 | | $ | 7.30 | |
Market value per share | | $ | 21.22 | | $ | 23.65 | | $ | 19.00 | | $ | 18.50 | | $ | 14.60 | |
Period end common shares | | | 10,111 | | | 10,056 | | | 10,032 | | | 9,778 | | | 9,732 | |
Average basic common shares | | | 10,083 | | | 10,046 | | | 9,922 | | | 9,747 | | | 9,724 | |
Average diluted common shares | | | 10,782 | | | 10,676 | | | 10,521 | | | 10,224 | | | 10,074 | |
ASSET QUALITY | | | | | | | | | | | | | | | | |
Net charge-offs (recoveries) | | $ | 10 | | $ | 96 | | $ | (188 | ) | $ | 551 | | $ | 107 | |
Nonperforming loans | | $ | 1,777 | | $ | 2,136 | | $ | 3,134 | | $ | 1,826 | | $ | 1,722 | |
Nonperforming loans to total loans | | | 0.18 | % | | 0.22 | % | | 0.32 | % | | 0.20 | % | | 0.20 | % |
Allowance for loan losses to total loans | | | 1.35 | % | | 1.33 | % | | 1.30 | % | | 1.30 | % | | 1.31 | % |
Net charge-offs (recoveries) to average loans (annualized) | | | 0.00 | % | | 0.04 | % | | (0.08 | )% | | 0.25 | % | | 0.05 | % |
CAPITAL | | | | | | | | | | | | | | | | |
Average equity to average assets | | | 7.12 | % | | 7.07 | % | | 6.98 | % | | 6.62 | % | | 6.72 | % |
Tier 1 capital to risk-weighted assets | | | 10.29 | % | | 10.14 | % | | 9.73 | % | | 9.94 | % | | 9.89 | % |
Total capital to risk-weighted assets | | | 11.54 | % | | 11.39 | % | | 10.98 | % | | 11.19 | % | | 11.14 | % |
AVERAGE BALANCES | | | | | | | | | | | | | | | | |
Portfolio loans | | $ | 968,802 | | $ | 963,570 | | $ | 932,910 | | $ | 872,700 | | $ | 856,221 | |
Earning assets | | | 1,114,508 | | | 1,067,366 | | | 1,034,525 | | | 1,047,990 | | | 983,331 | |
Total assets | | | 1,159,341 | | | 1,113,075 | | | 1,075,724 | | | 1,092,674 | | | 1,022,998 | |
Deposits | | | 1,012,070 | | | 942,466 | | | 919,910 | | | 977,359 | | | 904,583 | |
Shareholders’ equity | | | 82,495 | | | 78,701 | | | 75,037 | | | 72,345 | | | 68,769 | |
LOAN PORTFOLIO | | | | | | | | | | | | | | | | |
Commercial and industrial | | $ | 263,286 | | $ | 264,451 | | $ | 278,752 | | $ | 253,594 | | $ | 250,029 | |
Commercial real estate | | | 363,566 | | | 352,005 | | | 356,670 | | | 328,986 | | | 311,107 | |
Construction real estate | | | 128,444 | | | 134,459 | | | 132,297 | | | 127,180 | | | 117,251 | |
Residential real estate | | | 177,948 | | | 168,315 | | | 162,111 | | | 149,293 | | | 153,999 | |
Consumer and other | | | 43,559 | | | 39,649 | | | 42,972 | | | 39,451 | | | 41,705 | |
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Total loan portfolio | | $ | 976,804 | | $ | 958,878 | | $ | 972,802 | | $ | 898,505 | | $ | 874,092 | |
DEPOSIT PORTFOLIO | | | | | | | | | | | | | | | | |
Noninterest-bearing accounts | | $ | 206,724 | | $ | 199,136 | | $ | 190,667 | | $ | 197,283 | | $ | 184,426 | |
Interest-bearing transaction accounts | | | 85,824 | | | 86,815 | | | 91,512 | | | 85,523 | | | 77,952 | |
Money market and savings accounts | | | 450,107 | | | 449,793 | | | 429,102 | | | 436,259 | | | 438,670 | |
Certificates of deposit | | | 280,310 | | | 259,940 | | | 225,512 | | | 220,563 | | | 235,887 | |
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Total deposit portfolio | | $ | 1,022,965 | | $ | 995,684 | | $ | 936,793 | | $ | 939,628 | | $ | 936,935 | |
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