 | Exhibit 99.1 |
| For more information contact: Peter Benoist, President and CEO (314) 725-5500 Frank Sanfilippo, Chief Financial Officer (314) 725-5500 Jerry Mueller, Senior Vice President (314) 512-7251 Ann Marie Mayuga, AMM Communications (314) 485-4390 | |
| ENTERPRISE FINANCIAL REPORTS THIRD QUARTER 2009 RESULTS | |
| |
St. Louis, October 23, 2009. Enterprise Financial Services Corp (NASDAQ: EFSC) earned net income of $4.7 million for the quarter ended September 30, 2009 compared to $1.2 million for the prior year period. After deducting dividends on preferred stock, the Company reported net income of $0.31 per fully diluted share for the third quarter of 2009 compared to $0.09 per fully diluted share for the third quarter of 2008.
Third quarter 2009 results include the effects of adjustments to correct the Company’s accounting for loan participations sold. The adjustments result in presenting the participated portion of such loans as Company assets, with the related amounts received from the participating banks presented as liabilities. In connection with the adjustments, the Company recorded a $5.3 million pre-tax gain, or $0.26 per fully diluted share, in the third quarter related to the foreclosure of one of its participated loans. The accounting adjustments are described in more detail later in this release.
The Company’s pre-tax, pre-provision operating earnings for the third quarter of 2009 were $7.7 million, or 4% higher than the second quarter of 2009 and 4% lower than the third quarter of 2008. Operating earnings exclude provision expense and gain on extinguishment of debt related to the loan participation accounting adjustments.
Pre-tax, pre-provision operating earnings, which are non-GAAP (Generally Accepted Accounting Principles) financial measures, are presented because the Company believes adjusting its results to exclude loan loss provision expense, impairment charges, special FDIC assessments and unusual gains or losses provides shareholders with a more comparable basis for evaluating period-to-period operating results. A schedule reconciling GAAP pre-tax income (loss) to pre-tax operating earnings before provision is provided in the attached tables.
Peter Benoist, President and CEO, commented, “From an operating perspective, Enterprise’s third quarter results reflect a continuation of several favorable trends established during the first half of the year. Our operating earnings, absent the unusually high provision expense and extraordinary charges of the past few quarters, continue to grow. Third quarter operating earnings were up 4% over the second quarter and 7% over the first quarter. Liquidity also continues to improve. Core deposits continued to increase in the third quarter and have risen 13% since year-end.”
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“With regard to asset quality,” Benoist continued, “Non-performing asset totals have leveled off over the first three quarters of this year and non-performing loans dropped 14% during the third quarter. However, we remain cautious about the near term economic environment and continue to build our loan loss reserve position. It is important to note that our loan loss reserves now cover 96% of all non-performing loans.”
Accounting Adjustments for Loan Participations
The Company sells interests in loan receivables through participation agreements. Loan participations at September 30, 2009 were $229 million. Previously, the Company accounted for loans participated to other banks as sales. During a review of loan participation agreements, the Company determined that certain of these agreements contained language inconsistent with sale accounting treatment under specific provisions of SFAS 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities.” In order to align the accounting treatment with the participation agreements, the Company recorded the participated portion of such loans as assets, along with a loan participation liability to finance the assets. These adjustments also had the effect of reducing net interest rate margin and certain capital ratios. The Company also recorded a $5.3 million pre-tax gain from the extinguishment of debt resulting from the foreclosure of one of its participated loans. For comparative purposes the affected prior period results, excluding Tier 1 and Total Risk-based capital ratios, have been revised.
Subsequent to September 30, 2009, the Company has modified the affected loan participation agreements to comply with sale treatment under SFAS 140. As a result, the Company will eliminate the participated loans, net of the allowance for losses, and the related liability from its balance sheet, and is expected to recognize an additional gain from the extinguishment of debt of approximately $1.1 million in the fourth quarter of 2009. The accounting adjustments effectively shifted additional provision for loan losses to certain prior periods, offset by the extinguishment gains in the third and fourth quarters of 2009. The overall effect of these adjustments by December 31, 2009 is expected to be neutral to the Company’s financial results and certain key ratios. Details of the adjustments are provided in the attached tables under the section “Changes to Prior Period Balances”.
Banking Line of Business
Deposits and liquidity
Total deposits rose $166 million, or 10%, from a year ago. On a linked quarter basis, deposits increased $94 million, or 5%.
Core deposits, which include all deposits other than brokered CDs, increased $302 million, or 22%, over September 30, 2008. On a linked quarter basis, core deposits rose $123 million, or 8%. The Company has placed particular emphasis on increasing non-interest bearing deposits and those deposits rose $33 million, or 15%, over the prior year third quarter and $20 million, or 8%, over the second quarter of 2009. At September 30, 2009, core deposits represented 89% of total deposits. Year-over year, the Company reduced its level of brokered CDs from 20% to 11% of total deposits.
The Company increased its interest-bearing deposits and investment portfolio by $80 million and $42 million, respectively, during the third quarter of 2009, further improving its on-balance sheet liquidity and reducing noninterest earning cash balances.
Loans
Portfolio loans decreased $11 million from a year ago. On a linked quarter basis, portfolio loans decreased $23 million, or 1%, reflecting the weaker business climate and clients’ continuing de-leveraging of their own balance sheets.
The Company’s loan portfolio remains well-diversified among industry segments and collateral types. Steve Marsh, Chairman and CEO of the Company’s Enterprise Bank & Trust subsidiary, noted, “Commercial real estate as an asset class is under considerable scrutiny as an emerging credit risk concern for banks. At Enterprise, while real estate collateralizes two-thirds of our loan portfolio, true investment-oriented commercial real estate loans represent only about a fourth of the portfolio. Our focus has always been on private businesses, and owner-occupied real estate is often part of the collateral package with those relationships.”
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Asset Quality
Non-performing loans totaled $47.0 million, or 2.22% of total loans at September 30, 2009, compared to $31.9 million, or 1.50%, at September 30, 2008. On a linked quarter basis, non-performing loans decreased $7.7 million from June 30, 2009. The percentage of non-performing loans also declined from the second quarter 2009 level of 2.56%.
Loans 30-89 days past due, excluding non-performing loans, represented 0.74% of loans at September 30, 2009, a modest increase from the 0.49% level at June 30, 2009.
Following is the year-to-date trend in non-performing loans (NPL) by industry segment (in millions):
| Sept 30, 2009 | Jun 30, 2009 | Dec 31, 2008 | |||||||||||||||
| % of | % of | % of | |||||||||||||||
| NPL | Total | NPL | Total | NPL | Total | ||||||||||||
| Commercial Real Estate | $ | 19.5 | 41.5 | % | $ | 28.9 | 52.8 | % | $ | 21.9 | 61.8 | % | |||||
| Residential Construction/Land | |||||||||||||||||
| Acquisition and Development | 24.6 | 52.4 | % | 23.6 | 43.2 | % | 11.8 | 33.3 | % | ||||||||
| Commercial and Industrial | 2.9 | 6.1 | % | 2.2 | 4.0 | % | 1.7 | 4.7 | % | ||||||||
| Other | 0.0 | 0.0 | % | 0.0 | 0.0 | % | 0.1 | 0.2 | % | ||||||||
| Total NPL | $ | 47.0 | 100.0 | % | $ | 54.7 | 100.0 | % | $ | 35.5 | 100.0 | % | |||||
The $47.0 million in non-performing loans represent 32 relationships. The largest of these is a commercial real estate loan of less than $8 million. Seven relationships comprise 50% of non-performing loans. Approximately 54% of the Company’s non-performing loans are in the Kansas City market.
Other real estate owned at September 30, 2009 totaled $19.3 million, a $3.2 million net increase from June 30, 2009. The Company added $9.9 million in Other real estate in the third quarter, comprised largely of a medical office building that had represented the Company’s largest single non-performing loan, a retail development project and a commercial strip center. The Company sold $6.0 million in Other real estate in the third quarter and recorded an $86,000 gain.
Total non-performing assets were $66.3 million, or 2.63% of total assets at September 30, 2009 compared to $70.8 million, or 2.89% of assets, at June 30, 2009. By comparison, non-performing assets totaled $49.4 million, or 1.98% of assets at December 31, 2008.
Provision for loan losses was $6.5 million in the third quarter of 2009 compared to $9.1 million in the second quarter of 2009. Loan loss provision for the prior year third quarter was $3.0 million. The lower loan loss provision in the third quarter of 2009 compared to second quarter was attributable to fewer risk rating downgrades and a leveling off of non-performing loans. Provision expense covered 104% of net charge-offs in the third quarter as the Company continued to build loan loss reserves to 2.13% of portfolio loans at September 30, 2009 over its 2.10% level at June 30, 2009. By comparison, loan loss reserves represented 1.54% of portfolio loans at December 31, 2008.
Net charge-offs in the third quarter were $6.2 million, an annualized rate of 1.16% of average loans. Approximately 64% of the charge-offs related to residential real estate, 34% related to commercial real estate and less than 2% related to commercial and industrial loans. By comparison, net charge-offs in the second quarter of 2009 were $6.6 million, or 1.22% annualized. Net charge-offs for the prior year third quarter were $1.1 million, or 0.22% annualized.
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Net interest income
Net interest income in the banking segment increased $1.0 million, or 6%, in the third quarter of 2009 versus the comparable period in 2008. On a linked quarter basis, net interest income was essentially flat.
Net interest margin was 2.97% in the third quarter of 2009 compared to 3.07% in the third quarter of 2008 and 3.10% in the second quarter of 2009. The decrease in the third quarter net interest margin compared to the second quarter was largely driven by a less favorable earning asset mix resulting from weaker loan demand and higher levels of investment securities. Loan yields in the third quarter were roughly equivalent to the second quarter yields. The Company continues to benefit from CD repricing and lower three month LIBOR rates on floating rate debt as well as a generally more rational deposit pricing environment. Non-performing loan levels reduced loan yields by approximately 13 basis points in the third quarter, excluding interest reversals.
Wealth Management Line of Business
Fee income from the Wealth Management line of business, including results from state tax credit brokerage activities, totaled $2.9 million for the third quarter of 2009, a 10% decline compared to the same period in 2008. On a linked quarter basis, Wealth Management revenues increased 24%, largely due to gains related to the Company’s state tax credit brokerage activities.
Trust
Fee income from Trust declined 21% from the third quarter of 2008 to the third quarter of 2009. Revenue declines were largely attributable to lower asset values due to client turnover and adverse financial markets. Compared to the second quarter of 2009, Trust revenues declined 4%.
During the third quarter, Enterprise Trust hired three additional experienced advisors in St. Louis and continues to recruit aggressively in all three Enterprise markets.
Millennium Brokerage Group
MBG revenues in the third quarter of 2009 declined $320,000, or 27%, compared to the third quarter of 2008. The decline in revenues was attributable to the recessionary economic environment and tighter insurance carrier underwriting standards. MBG’s sales margin improved to 35% from 25% in the prior year. The increased margin helped to partially offset sales declines. On a linked quarter basis, MBG revenues declined 18% due to lower sales volumes.
State tax credit brokerage
For the third quarter of 2009, the Company recorded a $911,000 gain from state tax credit activities compared to a $109,000 gain in the second quarter of 2009 and a $593,000 gain in the third quarter of 2008. State tax credit revenues include realized gains from sales in addition to unrealized gains and losses on certain tax credit assets carried at fair value and related interest rate caps used to hedge against changes in the fair value of the state tax credits.
Other Business Results
Non-interest income for the third quarter of 2009, excluding Wealth Management, state tax credit revenues and the gain on extinguishment of debt, was $1.7 million, an 8% increase over the prior year period after adjusting for the effect of $2.8 million in branch sale gains recorded in the third quarter of 2008.
Total non-interest expenses for the third quarter of 2009 were $14.0 million, 6% higher than the comparable 2008 period, excluding the effect of the $5.9 million non-cash goodwill impairment charge related to MBG recorded in the third quarter of 2008. Due to stringent personnel expense containment efforts, our third quarter 2009 employee compensation and benefit expenses were 5% lower than the comparable 2008 period. Offsetting this decrease were higher loan collection and other expenses related to foreclosed real estate and additional FDIC insurance premiums.
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On September 29, 2009, the FDIC announced that on December 29, 2009, insured institutions will be required to prepay their estimated quarterly risk-based assessments for the fourth quarter of 2009 and for all of 2010, 2011 and 2012. We expect the prepayment amount will be approximately $11.0 million. To account for the prepayments, the entire amount of the prepaid FDIC assessment will be recorded as an asset (prepaid expense) on December 30, 2009 and expensed over the subsequent three years.
The Company’s efficiency ratio in the third quarter of 2009 was 51% compared to 79% in the third quarter of 2008. Absent the gain on extinguishment of debt in the third quarter of 2009 and the branch sale gain and impairment charges in the third quarter of 2008, the efficiency ratio was 64% and 62%, respectively.
Enterprise Financial operates commercial banking and wealth management businesses in metropolitan St. Louis and Kansas City and a loan production office in Phoenix. Enterprise is primarily focused on serving the needs of privately held businesses, their owner families, executives and professionals.
# # #
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. We use the words “expect” and “intend” and variations of such words and similar expressions in this communication to identify such forward-looking 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 2008 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 | 2009 | 2008 | 2009 | 2008 | ||||||||||||
| NET INTEREST INCOME | ||||||||||||||||
| Total interest income | $ | 30,316 | $ | 31,455 | $ | 90,480 | $ | 95,569 | ||||||||
| Total interest expense | 12,931 | 14,871 | 38,746 | 46,043 | ||||||||||||
| Net interest income | 17,385 | 16,584 | 51,734 | 49,526 | ||||||||||||
| Provision for loan losses | 6,480 | 3,007 | 32,012 | 10,214 | ||||||||||||
| Net interest income after provision for loan losses | 10,905 | 13,577 | 19,723 | 39,312 | ||||||||||||
| NONINTEREST INCOME | ||||||||||||||||
| Wealth Management revenue | 2,010 | 2,640 | 7,530 | 7,905 | ||||||||||||
| Deposit service charges | 1,247 | 1,102 | 3,791 | 3,241 | ||||||||||||
| Sale of other real estate | 86 | 242 | 143 | 584 | ||||||||||||
| State tax credit activity, net | 910 | 593 | 973 | 1,577 | ||||||||||||
| Sale of securities | - | - | 952 | 73 | ||||||||||||
| Sales of branch/charter | - | 2,840 | - | 3,400 | ||||||||||||
| Gain on extinguishment of debt | 5,326 | - | 5,326 | - | ||||||||||||
| Other income | 369 | 223 | 945 | 841 | ||||||||||||
| Total noninterest income | 9,948 | 7,640 | 19,660 | 17,621 | ||||||||||||
| NONINTEREST EXPENSE | ||||||||||||||||
| Salaries and benefits | 7,417 | 7,792 | 21,762 | 23,706 | ||||||||||||
| Occupancy | 1,291 | 1,100 | 3,719 | 3,160 | ||||||||||||
| Furniture and equipment | 397 | 346 | 1,120 | 1,065 | ||||||||||||
| Goodwill impairment charge | - | 5,900 | 45,377 | 5,900 | ||||||||||||
| Other | 4,874 | 3,995 | 16,826 | 11,858 | ||||||||||||
| Total noninterest expense | 13,979 | 19,133 | 88,804 | 45,689 | ||||||||||||
| Income (loss) before income tax | 6,874 | 2,084 | (49,422 | ) | 11,244 | |||||||||||
| Income tax expense (benefit) | 2,187 | 882 | (2,321 | ) | 4,055 | |||||||||||
| Net income (loss) | 4,687 | 1,202 | (47,101 | ) | 7,189 | |||||||||||
| Dividends on preferred stock | (605 | ) | - | (1,806 | ) | - | ||||||||||
| Net income (loss) available to common shareholders | $ | 4,082 | $ | 1,202 | $ | (48,907 | ) | $ | 7,189 | |||||||
| Basic earnings (loss) per share | $ | 0.32 | $ | 0.09 | $ | (3.81 | ) | $ | 0.57 | |||||||
| Diluted earnings (loss) per share | $ | 0.31 | $ | 0.09 | $ | (3.81 | ) | $ | 0.56 | |||||||
| Return on average assets | 0.65 | % | 0.20 | % | (2.64 | %) | 0.43 | % | ||||||||
| Return on average common equity | 12.04 | % | 2.59 | % | (43.88 | %) | 5.34 | % | ||||||||
| Efficiency ratio | 51.15 | % | 78.98 | % | 124.39 | % | 68.04 | % | ||||||||
| Noninterest expense to average assets | 2.22 | % | 3.23 | % | 4.79 | % | 2.71 | % | ||||||||
| YIELDS (fully tax equivalent) | ||||||||||||||||
| Loans | 5.47 | % | 5.85 | % | 5.42 | % | 6.30 | % | ||||||||
| Securities | 3.33 | % | 4.75 | % | 3.70 | % | 4.72 | % | ||||||||
| Federal funds sold | 0.17 | % | 2.12 | % | 0.27 | % | 2.76 | % | ||||||||
| Yield on earning assets | 5.12 | % | 5.78 | % | 5.24 | % | 6.19 | % | ||||||||
| Interest-bearing deposits | 1.91 | % | 2.72 | % | 2.02 | % | 2.97 | % | ||||||||
| Subordinated debt | 5.91 | % | 5.63 | % | 6.17 | % | 6.00 | % | ||||||||
| Borrowed funds | 3.96 | % | 3.72 | % | 3.54 | % | 4.22 | % | ||||||||
| Cost of paying liabilities | 2.48 | % | 3.04 | % | 2.52 | % | 3.34 | % | ||||||||
| Net interest spread | 2.64 | % | 2.74 | % | 2.72 | % | 2.85 | % | ||||||||
| Net interest rate margin | 2.97 | % | 3.07 | % | 3.03 | % | 3.23 | % | ||||||||
RECONCILATION OF GAAP PRE-TAX INCOME (LOSS) TO PRE-TAX OPERATING EARNINGS BEFORE PROVISION
| For the Quarter Ended | |||||||||||||||
| Sep 30, | Jun 30, | Mar 30, | Sep 30, | ||||||||||||
| (In thousands) | 2009 | 2009 | 2009 | 2008 | |||||||||||
| U.S. GAAP income (loss) before income tax | $ | 6,874 | $ | (2,077 | ) | $ | (54,219 | ) | $ | 2,084 | |||||
| Goodwill impairment charge | - | - | 45,377 | 5,900 | |||||||||||
| Sale of Kansas City nonstrategic branch/charter | - | - | - | (2,840 | ) | ||||||||||
| Sale of other real estate | (86 | ) | 2 | (59 | ) | (242 | ) | ||||||||
| Sale of securities | - | (636 | ) | (316 | ) | - | |||||||||
| Retention payment | - | - | - | 125 | |||||||||||
| Gain on extinguishment of debt | (5,326 | ) | - | - | - | ||||||||||
| FDIC special assessment (included in Other noninterest expense) | (202 | ) | 1,100 | - | - | ||||||||||
| Operating earnings (loss) before income tax | 1,260 | (1,611 | ) | (9,217 | ) | 5,027 | |||||||||
| Provision for loan losses | 6,480 | 9,073 | 16,459 | 3,007 | |||||||||||
| Operating earnings before income taxes and provision for loan losses | $ | 7,740 | $ | 7,462 | $ | 7,242 | $ | 8,034 | |||||||
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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 | 2009 | 2009 | 2009 | 2008 | 2008 | ||||||||||
| ASSETS | |||||||||||||||
| Cash and due from banks | $ | 12,519 | $ | 41,490 | $ | 41,875 | $ | 25,626 | $ | 38,641 | |||||
| Federal funds sold | 1,771 | 4,252 | 3,310 | 2,637 | 1,718 | ||||||||||
| Interest-bearing deposits | 82,651 | 2,893 | 5,852 | 14,384 | 2,178 | ||||||||||
| Debt and equity investments | 211,069 | 169,309 | 123,773 | 108,315 | 113,932 | ||||||||||
| Loans held for sale | 2,130 | 2,004 | 2,659 | 2,632 | 520 | ||||||||||
| Portfolio loans | 2,113,365 | 2,136,125 | 2,191,291 | 2,201,457 | 2,124,255 | ||||||||||
| Less allowance for loan losses | 45,019 | 44,768 | 42,286 | 33,808 | 28,517 | ||||||||||
| Net loans | 2,068,346 | 2,091,357 | 2,149,005 | 2,167,649 | 2,095,738 | ||||||||||
| Other real estate | 19,273 | 16,053 | 13,251 | 13,868 | 11,285 | ||||||||||
| Premises and equipment, net | 23,042 | 23,872 | 24,608 | 25,158 | 25,166 | ||||||||||
| State tax credits, held for sale | 47,950 | 42,609 | 43,474 | 39,142 | 37,751 | ||||||||||
| Goodwill | 3,134 | 3,134 | 3,134 | 48,512 | 51,312 | ||||||||||
| Core deposit intangible | 1,759 | 1,874 | 1,997 | 2,126 | 2,256 | ||||||||||
| Other amortizing intangibles | 932 | 1,081 | 1,230 | 1,378 | 2,090 | ||||||||||
| Other assets | 44,049 | 46,337 | 43,476 | 42,340 | 33,641 | ||||||||||
| Total assets | $ | 2,518,625 | $ | 2,446,265 | $ | 2,457,644 | $ | 2,493,767 | $ | 2,416,228 | |||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||||||
| Noninterest-bearing deposits | 257,901 | 238,139 | 238,449 | 247,361 | 225,013 | ||||||||||
| Interest-bearing deposits | 1,595,730 | 1,521,125 | 1,507,110 | 1,545,423 | 1,463,040 | ||||||||||
| Total deposits | 1,853,631 | 1,759,264 | 1,745,559 | 1,792,784 | 1,688,053 | ||||||||||
| Subordinated debentures | 85,081 | 85,081 | 85,081 | 85,081 | 59,307 | ||||||||||
| FHLB advances | 139,001 | 139,520 | 119,939 | 119,957 | 222,926 | ||||||||||
| Federal funds purchased | - | 21,650 | 74,400 | 19,400 | 36,600 | ||||||||||
| Loan participations sold | 229,012 | 236,110 | 231,027 | 226,809 | 181,655 | ||||||||||
| Other borrowings | 36,097 | 33,824 | 31,767 | 26,760 | 36,632 | ||||||||||
| Other liabilities | 9,132 | 9,366 | 7,073 | 8,404 | 7,923 | ||||||||||
| Total liabilities | 2,351,954 | 2,284,815 | 2,294,846 | 2,279,195 | 2,233,096 | ||||||||||
| Shareholders' equity | 166,671 | 161,450 | 162,798 | 214,572 | 183,132 | ||||||||||
| Total liabilities and shareholders' equity | $ | 2,518,625 | $ | 2,446,265 | $ | 2,457,644 | $ | 2,493,767 | $ | 2,416,228 | |||||
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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, | ||||||||||||||||
| 2009 | 2009 | 2009 | 2008 | 2008 | ||||||||||||||||
| EARNINGS SUMMARY | ||||||||||||||||||||
| Net interest income | $ | 17,385 | $ | 17,498 | $ | 16,851 | $ | 17,196 | $ | 16,584 | ||||||||||
| Provision for loan losses | 6,480 | 9,073 | 16,459 | 16,296 | 3,007 | |||||||||||||||
| Wealth Mangement revenue | 2,010 | 2,249 | 3,271 | 2,943 | 2,640 | |||||||||||||||
| Noninterest income | 7,938 | 2,568 | 1,624 | 4,711 | 5,000 | |||||||||||||||
| Noninterest expense | 13,979 | 15,319 | 59,506 | 17,816 | 19,133 | |||||||||||||||
| Income (loss) before income tax | 6,874 | (2,077 | ) | (54,219 | ) | (9,263 | ) | 2,084 | ||||||||||||
| Net income (loss) | 4,687 | (301 | ) | (51,487 | ) | (5,341 | ) | 1,202 | ||||||||||||
| Net income (loss) available to common shareholders | 4,082 | (903 | ) | (52,086 | ) | (5,421 | ) | 1,202 | ||||||||||||
| Diluted earnings (loss) per common share | $ | 0.31 | $ | (0.07 | ) | $ | (4.06 | ) | $ | (0.42 | ) | $ | 0.09 | |||||||
| Return on average common equity | 12.04 | % | (2.79 | %) | (115.37 | %) | (11.72 | %) | 2.59 | % | ||||||||||
| Net interest rate margin (fully tax equivalent) | 2.97 | % | 3.10 | % | 3.02 | % | 3.07 | % | 3.07 | % | ||||||||||
| Efficiency ratio | 51.15 | % | 68.65 | % | 273.63 | % | 71.70 | % | 78.98 | % | ||||||||||
| MARKET DATA | ||||||||||||||||||||
| Book value per common share | $ | 10.52 | $ | 10.13 | $ | 10.25 | $ | 14.33 | $ | 14.43 | ||||||||||
| Tangible book value per common share | $ | 10.07 | $ | 9.65 | $ | 9.76 | $ | 10.27 | $ | 10.04 | ||||||||||
| Market value per share | $ | 9.25 | $ | 9.09 | $ | 9.76 | $ | 15.24 | $ | 22.56 | ||||||||||
| Period end common shares outstanding | 12,834 | 12,834 | 12,833 | 12,801 | 12,694 | |||||||||||||||
| Average basic common shares | 12,834 | 12,833 | 12,828 | 12,702 | 12,664 | |||||||||||||||
| Average diluted common shares | 14,277 | 12,833 | 12,828 | 12,768 | 12,817 | |||||||||||||||
| ASSET QUALITY | ||||||||||||||||||||
| Net charge-offs | 6,229 | $ | 6,592 | $ | 7,981 | $ | 11,005 | $ | 1,123 | |||||||||||
| Nonperforming loans | $ | 46,982 | $ | 54,699 | $ | 54,421 | $ | 35,487 | $ | 31,898 | ||||||||||
| Nonperforming loans to total loans | 2.22 | % | 2.56 | % | 2.48 | % | 1.61 | % | 1.50 | % | ||||||||||
| Nonperforming assets to total assets | 2.63 | % | 2.89 | % | 2.75 | % | 1.98 | % | 1.79 | % | ||||||||||
| Allowance for loan losses to total loans | 2.13 | % | 2.10 | % | 1.93 | % | 1.54 | % | 1.34 | % | ||||||||||
| Net charge-offs to average loans (annualized) | 1.16 | % | 1.22 | % | 1.47 | % | 2.04 | % | 0.22 | % | ||||||||||
| CAPITAL | ||||||||||||||||||||
| Average common equity to average assets | 5.40 | % | 5.31 | % | 7.32 | % | 7.53 | % | 7.84 | % | ||||||||||
| Tier 1 capital to risk-weighted assets | 7.54 | % | 8.47 | % | 8.21 | % | 8.89 | % | 8.83 | % | ||||||||||
| Total capital to risk-weighted assets | 11.87 | % | 13.13 | % | 12.75 | % | 12.81 | % | 10.18 | % | ||||||||||
| Tangible common equity to tangible assets | 5.14 | % | 5.08 | % | 5.11 | % | 5.38 | % | 5.40 | % | ||||||||||
| AVERAGE BALANCES | ||||||||||||||||||||
| Portfolio loans | $ | 2,121,518 | $ | 2,168,417 | $ | 2,208,519 | $ | 2,147,731 | $ | 2,057,083 | ||||||||||
| Earning assets | 2,386,575 | 2,323,334 | 2,333,247 | 2,271,600 | 2,181,291 | |||||||||||||||
| Total assets | 2,493,058 | 2,447,863 | 2,502,008 | 2,445,248 | 2,358,570 | |||||||||||||||
| Deposits | 1,826,230 | 1,748,637 | 1,716,291 | 1,739,525 | 1,645,396 | |||||||||||||||
| Shareholders' equity | 166,068 | 161,315 | 214,271 | 188,449 | 184,959 | |||||||||||||||
| LOAN PORTFOLIO | ||||||||||||||||||||
| Commercial and industrial | $ | 703,662 | $ | 673,154 | $ | 660,651 | $ | 672,720 | $ | 638,382 | ||||||||||
| Commercial real estate | 793,569 | 846,079 | 878,543 | 879,963 | 896,336 | |||||||||||||||
| Construction real estate | 376,882 | 348,598 | 366,908 | 381,897 | 341,720 | |||||||||||||||
| Residential real estate | 220,215 | 245,296 | 256,946 | 241,710 | 222,267 | |||||||||||||||
| Consumer and other | 19,037 | 22,998 | 28,243 | 25,167 | 25,550 | |||||||||||||||
| Total loan portfolio | $ | 2,113,365 | $ | 2,136,125 | $ | 2,191,291 | $ | 2,201,457 | $ | 2,124,255 | ||||||||||
| DEPOSIT PORTFOLIO | ||||||||||||||||||||
| Noninterest-bearing accounts | $ | 257,901 | $ | 238,139 | $ | 238,449 | $ | 247,361 | $ | 225,013 | ||||||||||
| Interest-bearing transaction accounts | 121,935 | 129,680 | 129,389 | 126,644 | 118,614 | |||||||||||||||
| Money market and savings accounts | 635,607 | 619,686 | 630,744 | 710,712 | 664,436 | |||||||||||||||
| Certificates of deposit | 838,188 | 771,759 | 746,977 | 708,067 | 679,990 | |||||||||||||||
| Total deposit portfolio | $ | 1,853,631 | $ | 1,759,264 | $ | 1,745,559 | $ | 1,792,784 | $ | 1,688,053 | ||||||||||
- 8 -
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, | ||||||||||||||||
| 2009 | 2009 | 2009 | 2008 | 2008 | ||||||||||||||||
| YIELDS (fully tax equivalent) | ||||||||||||||||||||
| Loans | 5.47 | % | 5.45 | % | 5.34 | % | 5.64 | % | 5.85 | % | ||||||||||
| Securities | 3.33 | % | 3.63 | % | 4.44 | % | 4.70 | % | 4.75 | % | ||||||||||
| Federal funds sold | 0.17 | % | 0.61 | % | 0.64 | % | 1.59 | % | 2.12 | % | ||||||||||
| Yield on earning assets | 5.12 | % | 5.32 | % | 5.28 | % | 5.58 | % | 5.78 | % | ||||||||||
| Interest-bearing deposits | 1.91 | % | 2.03 | % | 2.13 | % | 2.47 | % | 2.72 | % | ||||||||||
| Subordinated debt | 5.91 | % | 6.19 | % | 6.43 | % | 6.04 | % | 5.63 | % | ||||||||||
| Borrowed funds | 3.96 | % | 3.51 | % | 3.21 | % | 3.54 | % | 3.72 | % | ||||||||||
| Cost of paying liabilities | 2.48 | % | 2.53 | % | 2.56 | % | 2.82 | % | 3.04 | % | ||||||||||
| Net interest spread | 2.64 | % | 2.79 | % | 2.72 | % | 2.76 | % | 2.74 | % | ||||||||||
| Net interest rate margin | 2.97 | % | 3.10 | % | 3.02 | % | 3.07 | % | 3.07 | % | ||||||||||
| WEALTH MANAGEMENT | ||||||||||||||||||||
| Trust Assets under management | $ | 710,224 | $ | 691,927 | $ | 681,839 | $ | 790,646 | $ | 930,100 | ||||||||||
| Trust Assets under administration | 1,190,130 | 1,113,466 | 1,084,830 | 1,220,733 | 1,453,476 | |||||||||||||||
CHANGES TO PRIOR PERIOD BALANCES
The tables below highlight certain revised prior period items related to the loan participation accounting adjustments.
| At or for the quarter ended September 30, 2009 | ||||||||||||
| Loan | ||||||||||||
| Participations | ||||||||||||
| Impact | As reported | |||||||||||
| Income Statement | ||||||||||||
| Total interest income | $ | 2,749 | $ | 30,316 | ||||||||
| Total interest expense | 2,749 | 12,931 | ||||||||||
| Provision for loan losses | (420 | ) | 6,480 | |||||||||
| Gain on extinguishment of debt | 5,326 | 5,326 | ||||||||||
| Income tax expense (benefit) | 2,068 | 2,187 | ||||||||||
| Net income (loss) | 3,677 | 4,687 | ||||||||||
| Net income (loss) available to common shareholders | 3,677 | 4,082 | ||||||||||
| Balance sheet | ||||||||||||
| Portfolio loans | 229,012 | 2,113,365 | ||||||||||
| Allowance for loan losses | 1,713 | 45,019 | ||||||||||
| Other assets | 617 | 44,049 | ||||||||||
| Total assets | 227,916 | 2,518,625 | ||||||||||
| Loan participations sold | 229,012 | 229,012 | ||||||||||
| Total liabilities | 229,012 | 2,351,954 | ||||||||||
| Shareholders' equity | (1,096 | ) * | 166,671 | |||||||||
| * In the fourth quarter of 2009, an after-tax gain on extinguishment of debt is expected to be recorded for this amount. | ||||||||||||
| Selected Key Ratios | ||||||||||||
| Net interest rate margin (fully tax equivalent) | 3.26 | % | -0.29 | % | 2.97 | % | ||||||
| Nonperforming loans to total loans | 2.38 | % | -0.16 | % | 2.22 | % | ||||||
| Nonperforming assets to total assets | 2.80 | % | -0.17 | % | 2.63 | % | ||||||
| Allowance for loan losses to total loans | 2.30 | % | -0.17 | % | 2.13 | % | ||||||
| Net charge-offs to average loans (annualized) | 1.31 | % | -0.15 | % | 1.16 | % | ||||||
| Tangible common equity to tangible assets | 5.71 | % | -0.57 | % | 5.14 | % | ||||||
| At or for the quarter ended June 30, 2009 | ||||||||||||
| As originally | Accounting | |||||||||||
| reported | adjustment | As revised | ||||||||||
| Income Statement | ||||||||||||
| Total interest income | $ | 27,758 | $ | 2,586 | $ | 30,344 | ||||||
| Total interest expense | 10,260 | 2,586 | 12,846 | |||||||||
| Provision for loan losses | 8,000 | 1,073 | 9,073 | |||||||||
| Income tax expense (benefit) | (1,390 | ) | (386 | ) | (1,776 | ) | ||||||
| Net income (loss) | 386 | (687 | ) | (301 | ) | |||||||
| Net income (loss) available to common shareholders | (216 | ) | (687 | ) | (903 | ) | ||||||
| Balance sheet | ||||||||||||
| Portfolio loans | 1,905,340 | 230,785 | 2,136,125 | |||||||||
| Allowance for loan losses | 42,635 | 2,133 | 44,768 | |||||||||
| Other assets | 43,653 | 2,685 | 46,338 | |||||||||
| Total assets | 2,214,929 | 231,337 | 2,446,266 | |||||||||
| Loan participations sold | - | 236,110 | 236,110 | |||||||||
| Total liabilities | 2,048,705 | 236,110 | 2,284,815 | |||||||||
| Shareholders' equity | 166,224 | (4,774 | ) | 161,450 | ||||||||
| Selected Key Ratios | ||||||||||||
| Net interest rate margin (fully tax equivalent) | 3.41 | % | -0.31 | % | 3.10 | % | ||||||
| Nonperforming loans to total loans | 2.58 | % | -0.02 | % | 2.56 | % | ||||||
| Nonperforming assets to total assets | 2.95 | % | -0.06 | % | 2.89 | % | ||||||
| Allowance for loan losses to total loans | 2.24 | % | -0.14 | % | 2.10 | % | ||||||
| Net charge-offs to average loans (annualized) | 1.03 | % | 0.19 | % | 1.22 | % | ||||||
| Tangible common equity to tangible assets | 5.83 | % | -0.75 | % | 5.08 | % | ||||||
- 9 -
ENTERPRISE FINANCIAL SERVICES CORP
CONSOLIDATED FINANCIAL SUMMARY (cont.)
(unaudited)
| CHANGES TO PRIOR PERIOD BALANCES (cont.) | ||||||||||||
| At or for the quarter ended March 31, 2009 | ||||||||||||
| As originally | Accounting | |||||||||||
| reported | adjustment | As revised | ||||||||||
| Income Statement | ||||||||||||
| Total interest income | $ | 27,326 | $ | 2,494 | $ | 29,820 | ||||||
| Total interest expense | 10,475 | 2,494 | 12,969 | |||||||||
| Provision for loan losses | 15,100 | 1,359 | 16,459 | |||||||||
| Income tax expense (benefit) | (2,243 | ) | (489 | ) | (2,732 | ) | ||||||
| Net income (loss) | (50,617 | ) | (870 | ) | (51,487 | ) | ||||||
| Net income (loss) available to common shareholders | (51,216 | ) | (870 | ) | (52,086 | ) | ||||||
| Balance sheet | ||||||||||||
| Portfolio loans | 1,963,975 | 227,316 | 2,191,291 | |||||||||
| Allowance for loan losses | 39,612 | 2,675 | 42,287 | |||||||||
| Other assets | 41,177 | 2,299 | 43,476 | |||||||||
| Total assets | 2,230,703 | 226,940 | 2,457,643 | |||||||||
| Loan participations sold | - | 231,027 | 231,027 | |||||||||
| Total liabilities | 2,063,819 | 231,027 | 2,294,846 | |||||||||
| Shareholders' equity | 166,884 | (4,087 | ) | 162,797 | ||||||||
| Selected Key Ratios | ||||||||||||
| Net interest rate margin (fully tax equivalent) | 3.32 | % | -0.30 | % | 3.02 | % | ||||||
| Nonperforming loans to total loans | 2.57 | % | -0.09 | % | 2.48 | % | ||||||
| Nonperforming assets to total assets | 2.86 | % | -0.11 | % | 2.75 | % | ||||||
| Allowance for loan losses to total loans | 2.02 | % | -0.09 | % | 1.93 | % | ||||||
| Net charge-offs to average loans (annualized) | 1.39 | % | 0.08 | % | 1.47 | % | ||||||
| Tangible common equity to tangible assets | 5.81 | % | -0.70 | % | 5.11 | % | ||||||
| At or for the quarter ended December 31, 2008 | ||||||||||||
| Income Statement | ||||||||||||
| Total interest income | $ | 29,163 | $ | 2,329 | $ | 31,492 | ||||||
| Total interest expense | 11,963 | 2,329 | 14,292 | |||||||||
| Provision for loan losses | 14,125 | 2,171 | 16,296 | |||||||||
| Income tax expense (benefit) | (3,140 | ) | (782 | ) | (3,922 | ) | ||||||
| Net income (loss) | (3,952 | ) | (1,390 | ) | (5,342 | ) | ||||||
| Net income (loss) available to common shareholders | (4,031 | ) | (1,390 | ) | (5,421 | ) | ||||||
| Balance sheet | ||||||||||||
| Portfolio loans | 1,977,175 | 224,282 | 2,201,457 | |||||||||
| Allowance for loan losses | 31,309 | 2,500 | 33,809 | |||||||||
| Other assets | 40,530 | 1,810 | 42,340 | |||||||||
| Total assets | 2,270,174 | 223,592 | 2,493,766 | |||||||||
| Loan participations sold | - | 226,809 | 226,809 | |||||||||
| Total liabilities | 2,052,386 | 226,809 | 2,279,195 | |||||||||
| Shareholders' equity | 217,788 | (3,217 | ) | 214,571 | ||||||||
| Selected Key Ratios | ||||||||||||
| Net interest rate margin (fully tax equivalent) | 3.37 | % | -0.30 | % | 3.07 | % | ||||||
| Nonperforming loans to total loans | 1.50 | % | 0.11 | % | 1.61 | % | ||||||
| Nonperforming assets to total assets | 1.92 | % | 0.06 | % | 1.98 | % | ||||||
| Allowance for loan losses to total loans | 1.58 | % | -0.04 | % | 1.54 | % | ||||||
| Net charge-offs to average loans (annualized) | 1.73 | % | 0.31 | % | 2.04 | % | ||||||
| Tangible common equity to tangible assets | 6.07 | % | -0.69 | % | 5.38 | % | ||||||
| At or for the quarter ended September 30, 2008 | ||||||||||||
| Income Statement | ||||||||||||
| Total interest income | $ | 29,289 | $ | 2,166 | $ | 31,455 | ||||||
| Total interest expense | 12,705 | 2,166 | 14,871 | |||||||||
| Provision for loan losses | 2,825 | 182 | 3,007 | |||||||||
| Income tax expense (benefit) | 948 | (65 | ) | 883 | ||||||||
| Net income (loss) | 1,319 | (116 | ) | 1,203 | ||||||||
| Net income (loss) available to common shareholders | 1,319 | (116 | ) | 1,203 | ||||||||
| Balance sheet | ||||||||||||
| Portfolio loans | 1,942,600 | 181,655 | 2,124,255 | |||||||||
| Allowance for loan losses | 25,662 | 2,855 | 28,517 | |||||||||
| Other assets | 32,614 | 1,028 | 33,642 | |||||||||
| Total assets | 2,236,401 | 179,828 | 2,416,229 | |||||||||
| Loan participations sold | - | 181,655 | 181,655 | |||||||||
| Total liabilities | 2,051,442 | 181,655 | 2,233,097 | |||||||||
| Shareholders' equity | 184,959 | (1,827 | ) | 183,132 | ||||||||
| Selected Key Ratios | ||||||||||||
| Net interest rate margin (fully tax equivalent) | 3.34 | % | -0.27 | % | 3.07 | % | ||||||
| Nonperforming loans to total loans | 1.21 | % | 0.29 | % | 1.50 | % | ||||||
| Nonperforming assets to total assets | 1.56 | % | 0.23 | % | 1.79 | % | ||||||
| Allowance for loan losses to total loans | 1.32 | % | 0.02 | % | 1.34 | % | ||||||
| Net charge-offs to average loans (annualized) | 0.24 | % | -0.02 | % | 0.22 | % | ||||||
| Tangible common equity to tangible assets | 5.93 | % | -0.53 | % | 5.40 | % | ||||||
- 10 -