Exhibit 99.1
For more information contact:
Kevin Eichner or Frank Sanfilippo (314) 725 5500
Melissa Sturges (816) 221 7500 or Ann Marie Mayuga (314) 469 4798
ENTERPRISE FINANCIAL REPORTS RECORD THIRD QUARTER EPS ON
STRENGTH OF 20% INCREASE IN NET INCOME
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- Company produced record quarterly EPS of $0.40
- Fully diluted EPS up 14% from 3Q ’06, up 11% from 2Q ‘07
- Bank reports 16% annualized organic loan growth, 23% overall
- Non-performing loans decline by $4.1 million to 0.55% of total loans
- Net interest rate margin improves
- Company announces plans to enter Phoenix, AZ market in ‘08
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St. Louis, October 16, 2007. Enterprise Financial Services Corp (NASDAQ: EFSC), the parent company of Enterprise Bank & Trust, announced today that third quarter net income rose to $5.0 million, an increase of 20% from the $4.2 million reported in the third quarter of 2006. Earnings per share were $0.40, up 14% from the same period in 2006 and up 11% from second quarter of 2007. Total shares outstanding were 12,388,000 at September 30, 2007 versus 11,452,000 at September 30, 2006, as the Company issued nearly 700,000 additional shares related to its February 2007 acquisition of Great American Bank in the Kansas City market.
Commenting on the quarter and year-to-date results, EFSC President and CEO, Kevin C. Eichner, said, “It is gratifying to see continued earnings momentum and to achieve a new all-time high in quarterly EPS. We are especially pleased with a return to more normalized loan growth rates from our banking division coupled with reductions in non-performing loans and stronger margin performance in an environment where these trends are truly exceptional.”
Regarding the Company’s plans to enter the Phoenix, Arizona market in 2008, Eichner commented, “We are very excited about the potential of this vibrant market with Jack Barry and his colleagues. We believe that deploying our business model to a third urban growth market will ultimately drive higher returns and strengthen our entire platform. As we demonstrated with our two recent acquisitions in Kansas City and with the ongoing build-out of our Wealth Management line of business, we continue to make investments with a view toward generating long-term value.”
Banking Line of Business
Net interest income increased $2.3 million, or 16% in the third quarter of 2007 versus the same quarter in 2006. At quarter end, portfolio loans were up $247 million from year-end and $289 million, or 23%, from one year ago. Organic loan growth during the quarter was $58 million or 16% on an annualized basis.
Total deposits grew $131 million from December 31, 2006 and $164 million, or 13%, from the same period one year ago. The deposit mix for the third quarter remained favorable as non-interest bearing DDA deposits represented 15% of average deposits and brokered deposits represented approximately 10% of total deposits. Treasury management pipelines remain strong and typical seasonal increases in deposits are expected as the Company moves into the fourth quarter.
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Exhibit 99.1
The tax-equivalent net interest rate margin for the third quarter was 3.87%, an increase of 6 basis points from the second quarter of 2007. The Company is realizing the benefits of aggressively managing its deposit costs, reducing non-performing assets and continued discipline in loan pricing.
Non-performing loans totaled $8.5 million or 0.55% of total loans versus 0.84% at June 30, 2007 and 0.49% at December 31, 2006. Reflecting industry-wide conditions, $7.1 million or 83% of the non-performing loans relate to residential home builders in St. Louis and Kansas City. The largest of these loans is $2.7 million and several are below $400,000. Bank management does not expect to incur significant losses on these non-performing loans.
The Company’s net charge-offs during the quarter were $549,000 or 0.14% annualized. Year-to-date, net charge-offs were $1.4 million or 0.13% annualized. For the quarter, the provision for loan losses was $600,000 versus $240,000 in the same quarter of 2006. Higher absolute non-performing loan levels and higher net loan growth drove the increase in the provision levels in the current quarter.
The Company’s allowance for loan losses represented 1.27% of portfolio loans at September 30, 2007. One year ago, the allowance for loan losses rose to 1.40% of portfolio loans as a result of conforming adjustments made to risk ratings for NorthStar Bank’s loan portfolio. Enterprise acquired NorthStar in July 2006. At December 31, 2006, the ratio was 1.31%.
Increases in Deposit Service Charges and Other Income for the third quarter versus the same quarter in 2006 are largely related to the acquisition of Great American along with organic growth in deposit products and related services, including International services. Gains on sale of mortgage loans slowed during the third quarter versus the prior year due to less refinancing and slower home sales in our markets.
Wealth Management Line of Business
After doubling in 2006, Wealth Management revenue in the third quarter of 2007 was $3.5 million, essentially flat with the same quarter in 2006.
Enterprise Trust revenues grew 6% with pre-tax earnings up 15% in comparison with the same quarter in 2006. For the nine months ended September 30, 2007, pre-tax earnings for Enterprise Trust are up 10% over 2006. Total assets under administration were $1.7 billion, up 11% over the prior year period. The Trust operation continues to be heavily engaged in re-structuring and re-staffing related to preparation for a new national trust charter, which is expected this year. The unit is rolling out new pricing strategies and service lines during the fourth quarter and into next year that are expected to help offset some significant increases in staffing and infrastructure costs planned for 2008.
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Exhibit 99.1
After amortization of intangibles, the cost of related debt, and minority interest, Millennium posted pre-tax earnings of $619,000 in the third quarter versus $474,000 in the same quarter of 2006, an increase of 31%. For the nine months ended September 30, 2007, Millennium pre-tax earnings were $791,000 versus $1.4 million in the same period last year. Although paid premium sales growth has been exemplary at 23% year over year, lower margins have dampened revenue growth. A shift in carrier mix and higher payouts to producers continue to adversely affect the margin and net profits relative to plan.
Through September 30, 2007 the Company has accrued 100% of Millennium’s earnings in line with our contractual priority return rights.
Other Business Results
For the quarter, the Company’s efficiency ratio improved from 62% in the second quarter 2007 to 60%. The ratio was flat with the prior year third quarter as the Company continues to digest its most recent acquisitions. Non-interest expenses were $12.2 million in the third quarter of 2007 versus $11.0 million in the same quarter of 2006, an increase of $1.3 million or 11%. In addition to increased expenses at Millennium, approximately $848,000 was due to incremental expenses related to Great American.
Commenting on the outlook for the remainder of 2007, Eichner noted, “We are encouraged by our progress this year in the face of some real environmental turbulence in our industry. We expect our results to continue to compare favorably with those of our peers, as we move within striking distance of our earlier guidance. However, achievement of our previously announced EPS goals for the year remains a challenge as we are not yet realizing the planned lift from Wealth Management expected in the second half.”
Enterprise Financial operates commercial banking and wealth management businesses in metropolitan St. Louis and Kansas City with a recent announcement of its intent to enter the Phoenix, Arizona market with a state de novo bank charter in 2008. The Company is primarily focused on serving the needs of privately held businesses, their owner families, executives and professionals.
Please refer to the Consolidated Financial Summary attached for more details.
# # #
Readers should note that in addition to the historical information contained herein, this press release contains 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 and national economic conditions, risks associated with rapid increase or decrease in prevailing interest rates, effects of mergers and acquisitions, effects of critical accounting policies and judgments, legal and regulatory developments and competition from banks and other financial institutions, as well as other risk factors described in Enterprise Financial’s 2006 Annual Report on Form 10-K. Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update them in light of new information or future events.
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ENTERPRISE FINANCIAL SERVICES CORP
CONSOLIDATED FINANCIAL SUMMARY
(unaudited)
| (In thousands, except per share data) | For the Quarter Ended | | For the Nine Months Ended |
| | Sep 30, | | Sep 30, | | Sep 30, | | Sep 30, |
| INCOME STATEMENTS | 2007 | | 2006 | | 2007 | | 2006 |
| Total interest income | $ | 31,807 | | $ | 26,364 | | $ | 90,600 | | $ | 67,452 |
| Total interest expense | | 16,002 | | | 12,525 | | | 45,750 | | | 30,214 |
| Net interest income | | 15,805 | | | 13,839 | | | 44,850 | | | 37,238 |
| Provision for loan losses | | 600 | | | 240 | | | 2,165 | | | 1,777 |
| Net interest income after provision for loan losses | | 15,205 | | | 13,599 | | | 42,685 | | | 35,461 |
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| NONINTEREST INCOME | | | | | | | | | | | |
| Wealth Management revenue | | 3,495 | | | 3,468 | | | 9,916 | | | 10,018 |
| Deposit service charges | | 839 | | | 603 | | | 2,302 | | | 1,636 |
| Gain on sale of mortgage loans | | 34 | | | 95 | | | 229 | | | 165 |
| Gain (loss) on sale of other real estate | | 7 | | | - | | | (5) | | | - |
| Other income | | 263 | | | 159 | | | 1,000 | | | 435 |
| Total noninterest income | | 4,638 | | | 4,325 | | | 13,442 | | | 12,254 |
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| NONINTEREST EXPENSE | | | | | | | | | | | |
| Salaries and benefits | | 7,523 | | | 6,754 | | | 21,972 | | | 18,398 |
| Occupancy | | 995 | | | 737 | | | 2,898 | | | 1,957 |
| Furniture and equipment | | 370 | | | 317 | | | 1,055 | | | 806 |
| Other | | 3,314 | | | 3,144 | | | 10,508 | | | 8,405 |
| Total noninterest expense | | 12,202 | | | 10,952 | | | 36,433 | | | 29,566 |
| |
| Minority interest in net income of consolidated subsidiary | | - | | | (434) | | | - | | | (826) |
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| Income before income tax | | 7,641 | | | 6,538 | | | 19,694 | | | 17,323 |
| Income taxes | | 2,642 | | | 2,357 | | | 7,022 | | | 6,242 |
| Net income | $ | 4,999 | | $ | 4,181 | | $ | 12,672 | | $ | 11,081 |
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| Basic earnings per share | $ | 0.40 | | $ | 0.37 | | $ | 1.04 | | $ | 1.03 |
| Diluted earnings per share | $ | 0.40 | | $ | 0.35 | | $ | 1.01 | | $ | 0.99 |
| Return on average assets | | 1.11% | | | 1.10% | | | 0.99% | | | 1.11% |
| Return on average equity | | 11.85% | | | 12.99% | | | 10.75% | | | 13.88% |
| Efficiency ratio | | 59.69% | | | 60.30% | | | 62.50% | | | 59.74% |
| Noninterest expense to average assets | | 2.72% | | | 2.89% | | | 2.84% | | | 2.95% |
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| YIELDS (fully tax equivalent) | | | | | | | | | | | |
| Loans | | 7.96% | | | 7.90% | | | 7.96% | | | 7.61% |
| Securities | | 4.67% | | | 4.11% | | | 4.49% | | | 4.01% |
| Federal funds sold | | 5.53% | | | 5.25% | | | 5.40% | | | 4.75% |
| Yield on earning assets | | 7.73% | | | 7.53% | | | 7.71% | | | 7.24% |
| Interest bearing deposits | | 4.44% | | | 4.17% | | | 4.45% | | | 3.79% |
| Subordinated debt | | 7.20% | | | 7.31% | | | 7.20% | | | 7.09% |
| Borrowed funds | | 5.00% | | | 5.04% | | | 5.01% | | | 4.81% |
| Cost of paying liabilities | | 4.59% | | | 4.31% | | | 4.59% | | | 3.96% |
| Net interest spread | | 3.14% | | | 3.22% | | | 3.12% | | | 3.28% |
| Net interest rate margin | | 3.87% | | | 3.99% | | | 3.85% | | | 4.03% |
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ENTERPRISE FINANCIAL SERVICES CORP
CONSOLIDATED FINANCIAL SUMMARY (cont.)
(unaudited)
| (In thousands) | | | | | | | | | | | | | | |
| | Sep 30, | | Jun 30, | | Mar 31, | | Dec 31, | | Sep 30, |
| BALANCE SHEETS | 2007 | | 2007 | | 2007 | | 2006 | | 2006 |
| ASSETS | | | | | | | | | | | | | | |
| Cash and due from banks | $ | 47,593 | | $ | 45,081 | | $ | 41,846 | | $ | 41,558 | | $ | 53,113 |
| Federal funds sold | | 2,585 | | | 2,059 | | | 6,992 | | | 7,066 | | | 6,959 |
| Interest-bearing deposits | | 1,100 | | | 1,021 | | | 1,144 | | | 1,669 | | | 2,614 |
| Debt and equity investments | | 122,204 | | | 111,617 | | | 119,056 | | | 111,210 | | | 114,860 |
| Loans held for sale | | 1,117 | | | 3,840 | | | 4,650 | | | 2,602 | | | 5,268 |
| |
| Portfolio loans | | 1,558,885 | | | 1,500,512 | | | 1,492,460 | | | 1,311,723 | | | 1,269,391 |
| Less allowance for loan losses | | 19,754 | | | 19,703 | | | 19,220 | | | 16,988 | | | 17,805 |
| Net loans | | 1,539,131 | | | 1,480,809 | | | 1,473,240 | | | 1,294,735 | | | 1,251,586 |
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| Other real estate | | 857 | | | 441 | | | 1,064 | | | 1,500 | | | 1,182 |
| Premises and equipment, net | | 22,487 | | | 22,801 | | | 22,777 | | | 17,050 | | | 15,295 |
| Goodwill | | 55,661 | | | 54,841 | | | 55,284 | | | 29,983 | | | 29,804 |
| Core deposit intangible | | 3,511 | | | 3,693 | | | 3,886 | | | 2,153 | | | 2,261 |
| Other amortizing intangibles | | 2,952 | | | 3,180 | | | 3,408 | | | 3,636 | | | 3,864 |
| Other assets | | 29,061 | | | 23,929 | | | 23,276 | | | 22,425 | | | 21,369 |
| Total assets | $ | 1,828,259 | | $ | 1,753,312 | | $ | 1,756,623 | | $ | 1,535,587 | | $ | 1,508,175 |
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| LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | | | | | | | | | | |
| Non-interest bearing deposits | $ | 212,903 | | $ | 215,771 | | $ | 214,965 | | $ | 234,849 | | $ | 222,668 |
| Interest bearing deposits | | 1,233,532 | | | 1,212,353 | | | 1,231,139 | | | 1,080,659 | | | 1,059,282 |
| Total deposits | | 1,446,435 | | | 1,428,124 | | | 1,446,104 | | | 1,315,508 | | | 1,281,950 |
| Subordinated debentures | | 56,807 | | | 56,807 | | | 56,807 | | | 35,054 | | | 35,054 |
| FHLB advances | | 131,746 | | | 88,192 | | | 75,387 | | | 26,995 | | | 38,162 |
| Other borrowings | | 10,613 | | | 7,593 | | | 12,786 | | | 13,757 | | | 13,731 |
| Other liabilities | | 13,415 | | | 9,527 | | | 6,837 | | | 11,279 | | | 11,113 |
| Total liabilities | | 1,659,016 | | | 1,590,243 | | | 1,597,921 | | | 1,402,593 | | | 1,380,010 |
| Shareholders' equity | | 169,243 | | | 163,069 | | | 158,702 | | | 132,994 | | | 128,165 |
| Total liabilities and shareholders' equity | $ | 1,828,259 | | $ | 1,753,312 | | $ | 1,756,623 | | $ | 1,535,587 | | $ | 1,508,175 |
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ENTERPRISE FINANCIAL SERVICES CORP
CONSOLIDATED FINANCIAL SUMMARY (cont.)
(unaudited)
| (In thousands, except per share data) | For the Quarter Ended |
| | Sep 30, | | Jun 30, | | Mar 31, | | Dec 31, | | Sep 30, |
| | 2007 | | 2007 | | 2007 | | 2006 | | 2006 |
| EARNINGS SUMMARY | | | | | | | | | | | | | | |
| Net interest income | $ | 15,805 | | $ | 15,125 | | $ | 13,921 | | $ | 14,039 | | $ | 13,839 |
| Provision for loan losses | | 600 | | | 715 | | | 850 | | | 350 | | | 240 |
| Wealth Mangement revenue | | 3,495 | | | 3,458 | | | 2,963 | | | 3,791 | | | 3,468 |
| Noninterest income | | 1,143 | | | 1,448 | | | 934 | | | 871 | | | 857 |
| Noninterest expense | | 12,202 | | | 12,370 | | | 11,861 | | | 11,828 | | | 10,952 |
| Minority interest in net income of consolidated subsidiary | | - | | | 157 | | | (157) | | | (48) | | | (434) |
| Income before income tax | | 7,641 | | | 7,103 | | | 4,950 | | | 6,475 | | | 6,538 |
| Net income | | 4,999 | | | 4,515 | | | 3,158 | | | 4,391 | | | 4,182 |
| Diluted earnings per share | $ | 0.40 | | $ | 0.36 | | $ | 0.26 | | $ | 0.37 | | $ | 0.35 |
| Return on average equity | | 11.85% | | | 11.20% | | | 8.92% | | | 13.24% | | | 12.99% |
| Net interest rate margin (fully tax equivalized) | | 3.87% | | | 3.81% | | | 3.86% | | | 3.98% | | | 3.99% |
| Efficiency ratio | | 59.69% | | | 61.75% | | | 66.57% | | | 63.25% | | | 60.30% |
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| MARKET DATA | | | | | | | | | | | | | | |
| Book value per share | $ | 13.66 | | $ | 13.20 | | $ | 12.86 | | $ | 11.52 | | $ | 11.19 |
| Tangible book value per share | $ | 8.65 | | $ | 8.20 | | $ | 8.03 | | $ | 8.42 | | $ | 8.05 |
| Market value per share | $ | 24.34 | | $ | 24.86 | | $ | 28.00 | | $ | 32.58 | | $ | 30.86 |
| Period end common shares outstanding | | 12,388 | | | 12,354 | | | 12,340 | | | 11,540 | | | 11,452 |
| Average basic common shares | | 12,380 | | | 12,346 | | | 11,835 | | | 11,491 | | | 11,397 |
| Average diluted common shares | | 12,652 | | | 12,692 | | | 12,198 | | | 11,892 | | | 11,823 |
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| ASSET QUALITY | | | | | | | | | | | | | | |
| Net charge-offs (recoveries) | $ | 549 | | $ | 232 | | $ | 628 | | $ | 1,167 | | $ | (46) |
| Nonperforming loans | $ | 8,542 | | $ | 12,661 | | $ | 9,855 | | $ | 6,363 | | $ | 6,214 |
| Nonperforming loans to total loans | | 0.55% | | | 0.84% | | | 0.66% | | | 0.49% | | | 0.49% |
| Allowance for loan losses to total loans | | 1.27% | | | 1.31% | | | 1.29% | | | 1.30% | | | 1.40% |
| Net charge-offs (recoveries) to average loans (annualized) | | 0.14% | | | 0.06% | | | 0.19% | | | 0.37% | | | (0.01%) |
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| CAPITAL | | | | | | | | | | | | | | |
| Average equity to average assets | | 9.40% | | | 9.22% | | | 8.96% | | | 8.65% | | | 8.49% |
| Tier 1 capital to risk-weighted assets | | 9.85% | | | 9.82% | | | 9.50% | | | 9.63% | | | 9.54% |
| Total capital to risk-weighted assets | | 11.05% | | | 11.09% | | | 10.85% | | | 10.87% | | | 10.79% |
| Tangible equity to tangible assets | | 6.07% | | | 5.99% | | | 5.67% | | | 6.48% | | | 6.26% |
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| AVERAGE BALANCES | | | | | | | | | | | | | | |
| Portfolio loans | $ | 1,526,259 | | $ | 1,492,573 | | $ | 1,365,340 | | $ | 1,265,000 | | $ | 1,257,394 |
| Earning assets | | 1,645,697 | | | 1,622,139 | | | 1,487,193 | | | 1,426,341 | | | 1,400,706 |
| Total assets | | 1,780,239 | | | 1,754,297 | | | 1,601,266 | | | 1,521,640 | | | 1,504,253 |
| Deposits | | 1,453,497 | | | 1,426,002 | | | 1,327,177 | | | 1,301,686 | | | 1,262,544 |
| Shareholders' equity | | 167,310 | | | 161,663 | | | 143,514 | | | 131,621 | | | 127,685 |
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| LOAN PORTFOLIO | | | | | | | | | | | | | | |
| Commercial and industrial | $ | 416,715 | | $ | 391,237 | | $ | 379,147 | | $ | 352,914 | | $ | 343,776 |
| Commercial real estate | | 703,772 | | | 681,735 | | | 671,709 | | | 576,172 | | | 553,486 |
| Construction real estate | | 252,476 | | | 247,722 | | | 251,184 | | | 196,851 | | | 185,743 |
| Residential real estate | | 155,489 | | | 149,182 | | | 157,473 | | | 150,244 | | | 148,369 |
| Consumer and other | | 30,433 | | | 30,636 | | | 32,947 | | | 35,542 | | | 38,017 |
| Total loan portfolio | $ | 1,558,885 | | $ | 1,500,512 | | $ | 1,492,460 | | $ | 1,311,723 | | $ | 1,269,391 |
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| DEPOSIT PORTFOLIO | | | | | | | | | | | | | | |
| Noninterest-bearing accounts | $ | 212,903 | | $ | 215,771 | | $ | 214,965 | | $ | 234,849 | | $ | 222,668 |
| Interest-bearing transaction accounts | | 120,069 | | | 128,808 | | | 123,848 | | | 111,725 | | | 101,262 |
| Money market and savings accounts | | 596,226 | | | 552,678 | | | 582,231 | | | 556,947 | | | 507,407 |
| Certificates of deposit | | 517,237 | | | 530,867 | | | 525,060 | | | 411,987 | | | 450,613 |
| Total deposit portfolio | $ | 1,446,435 | | $ | 1,428,124 | | $ | 1,446,104 | | $ | 1,315,508 | | $ | 1,281,950 |
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ENTERPRISE FINANCIAL SERVICES CORP
CONSOLIDATED FINANCIAL SUMMARY (cont.)
(unaudited)
| (In thousands) | | For the Quarter Ended |
| Sep 30, | | Jun 30, | | Mar 31, | | Dec 31, | | Sep 30, |
| 2007 | | 2007 | | 2007 | | 2006 | | 2006 |
| YIELDS (fully tax equivalent) | | | | | | | | | | | | | | |
| Loans | | 7.96% | | | 7.98% | | | 7.94% | | | 7.95% | | | 7.90% |
| Securities | | 4.67% | | | 4.50% | | | 4.31% | | | 4.21% | | | 4.11% |
| Federal funds sold | | 5.53% | | | 5.49% | | | 5.51% | | | 5.43% | | | 5.29% |
| Yield on earning assets | | 7.73% | | | 7.72% | | | 7.66% | | | 7.57% | | | 7.54% |
| Interest bearing deposits | | 4.44% | | | 4.47% | | | 4.42% | | | 4.32% | | | 4.17% |
| Borrowed funds | | 5.00% | | | 5.04% | | | 4.99% | | | 4.61% | | | 5.04% |
| Subordinated debt | | 7.20% | | | 7.19% | | | 7.21% | | | 7.37% | | | 7.31% |
| Cost of paying liabilities | | 4.59% | | | 4.63% | | | 4.55% | | | 4.42% | | | 4.31% |
| Net interest spread | | 3.14% | | | 3.09% | | | 3.11% | | | 3.15% | | | 3.23% |
| Net interest rate margin | | 3.87% | | | 3.81% | | | 3.86% | | | 3.98% | | | 3.99% |
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| WEALTH MANAGEMENT | | | | | | | | | | | | | | |
| Trust Assets under management | $ | 1,106,214 | | $ | 1,111,042 | | $ | 1,047,700 | | $ | 1,042,146 | | $ | 996,142 |
| Trust Assets under administration | | 1,734,761 | | | 1,742,426 | | | 1,659,573 | | | 1,634,834 | | | 1,567,164 |
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