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Enterprise Financial Reports Third Quarter 2021 Results

Enterprise Financial Services Corp (Nasdaq: EFSC) (the “Company” or “EFSC”) reported net income of $13.9 million for the third quarter 2021, a decrease of $24.5 million compared to the linked second quarter (“linked quarter”) and a decrease of $4.0 million from the prior year quarter. Earnings per diluted share (“EPS”) was $0.38 for the third quarter 2021, compared to $1.23 and $0.68 for the linked and prior year quarters, respectively. Excluding merger-related, branch closure expenses and the FCBP CECL double count charge, adjusted EPS2, adjusted ROAA2, and adjusted ROATCE2 for the third quarter 2021 were $1.27, 1.51% and 18.15%, respectively.

Net income and earnings per share in the current quarter were impacted by the following items:

($ in thousands, except per share data)

Net Income (pretax)

EPS

Merger-related expenses

$

(14,671)

$

(0.31)

FCBP CECL double count

(25,353)

(0.51)

Branch closure expenses

(3,441)

(0.07)

Jim Lally, EFSC’s President and Chief Executive Officer, commented, “Our third quarter results included a record pre-provision net revenue1 of $56 million, or 1.81% of average assets. Our results were bolstered by the acquisition of FCBP that closed during the quarter, furthering our commercial banking capabilities in the Southern California market. This augments our Southwest presence, and when combined with our specialty loan and deposit business lines, supports our overall growth initiatives. Additionally, we recently received a $60.0 million allocation from the New Market Tax Credit program that will enable us to continue supporting our communities through our CDE, while also enhancing our tax credit lending specialty. I am pleased with our financial results and the actions we have taken this quarter to strengthen our franchise.”

1 PPNR and PPNR return on average assets are a non-GAAP measure. Refer to discussion and reconciliation of these measures in the accompanying financial tables.

2 Adjusted EPS, adjusted ROAA, and adjusted ROATCE are non-GAAP measures. Refer to discussion and reconciliation of these measures in the accompanying financial tables.

Highlights

The Company closed its acquisition of FCBP on July 21, 2021. The results of operations of FCBP are included in our consolidated results from this date forward and are excluded from preceding periods. Comparisons to the prior year are also impacted by the acquisition of Seacoast Commerce Banc Holdings (“Seacoast”), which closed in the fourth quarter 2020.

Included in the current quarter results are the following contributions from the FCBP and Seacoast acquisitions:

($ in thousands)

FCBP

Seacoast

Net interest income

$

16,696

$

14,065

Noninterest income

1,424

741

Noninterest expense

6,964

10,129

Pretax net income (excluding CECL double count)

11,156

4,901

  • Earnings - Net income in the third quarter 2021 was $13.9 million, a decrease of $24.5 million compared to the linked quarter and a decrease of $4.0 million from the prior year quarter. EPS was $0.38 per diluted share for the third quarter 2021, compared to $1.23 and $0.68 per diluted share for the linked and prior year quarters, respectively. Merger-related expenses, CECL double-count and branch closure expenses collectively reduced pre-tax net income $43.5 million, or $0.89 per diluted share.
  • Pre-provision net revenue1 (“PPNR”) - PPNR of $56.1 million in the third quarter 2021 increased $8.7 million and $18.1 million from the linked and prior year quarters, respectively. The increases were primarily due to the positive contribution from the FCBP and Seacoast acquisitions.
  • Net interest income and net interest margin (“NIM”) - Net interest income of $97.3 million for the third quarter 2021 increased $15.5 million and $33.9 million from the linked quarter and prior year quarter, respectively. NIM was 3.40% for the third quarter 2021, compared to 3.46% and 3.29% for the linked quarter and prior year quarter, respectively. The underlying base NIM was relatively stable in the period, excluding the impact of certain items discussed below.
  • Noninterest income - Noninterest income of $17.6 million for the third quarter 2021 increased $1.4 million and $5.0 million from the linked quarter and prior year quarter, respectively. The increases were primarily due to tax credit revenue and deposit service charge income from the FCBP and Seacoast acquisitions.
  • Loans - Total loans increased $1.9 billion from the linked quarter to $9.1 billion as of September 30, 2021. The acquisition of FCBP added $1.9 billion of loans, while legacy PPP loans declined $164 million. Excluding PPP and FCBP, loans grew $110.6 million, or 6%, on an annualized basis from the linked quarter. Average loans totaled $8.7 billion for the quarter ended September 30, 2021 compared to $7.3 billion and $6.1 billion for the linked and prior year quarters, respectively.

PPP details:

Quarter ended

($ in thousands, except per share data)

Sep 30,
2021

Jun 30,
2021

Mar 31,
2021

Dec 31,
2020

Sep 30,
2020

PPP loans outstanding, net of deferred fees

$

438,959

$

396,660

$

737,660

$

698,645

$

819,100

Average PPP loans outstanding, net

489,104

664,375

692,161

806,697

813,244

PPP average loan size

210

171

220

187

216

PPP interest and fee income

6,048

7,940

8,475

10,261

5,226

PPP deferred fees

7,428

12,243

16,676

11,304

19,522

PPP average yield

4.91

%

4.79

%

4.97

%

5.06

%

2.56

%

Quarter ended

Sep 30,
2021

Jun 30,
2021

Mar 31,
2021

Dec 31,
2020

Sep 30,
2020

Financial Metrics:

As Reported

Excluding PPP*

As Reported

Excluding PPP*

As Reported

Excluding PPP*

As Reported

Excluding PPP*

As Reported

Excluding PPP*

EPS

$

0.38

$

0.25

$

1.23

$

1.04

$

0.96

$

0.75

$

1.00

$

0.73

$

0.68

$

0.53

ROAA

0.45

%

0.31

%

1.50

%

1.35

%

1.22

%

1.03

%

1.26

%

1.01

%

0.86

%

0.74

%

PPNR ROAA*

1.81

%

1.68

%

1.85

%

1.65

%

1.66

%

1.41

%

2.07

%

1.78

%

1.81

%

1.73

%

Tangible common equity/tangible assets*

8.40

%

8.71

%

8.32

%

8.66

%

8.18

%

8.84

%

8.40

%

9.07

%

7.99

%

8.89

%

Leverage ratio

9.7

%

10.2

%

9.4

%

10.0

%

9.5

%

10.2

%

10.0

%

11.0

%

9.2

%

10.2

%

NIM

3.40

%

3.33

%

3.46

%

3.36

%

3.50

%

3.39

%

3.66

%

3.52

%

3.29

%

3.37

%

Allowance for credit losses/loans

1.67

%

1.94

%

1.77

%

2.09

%

1.80

%

2.22

%

1.89

%

2.31

%

2.01

%

2.32

%

* Non-GAAP measures. Refer to discussion and reconciliation of these measures in the accompanying financial tables. Calculations not adjusted for increase in average deposits or increase in deposit expense, as applicable.

  • Asset quality - The allowance for credit losses to total loans was 1.67% at September 30, 2021, compared to 1.77% at June 30, 2021 and 2.01% at September 30, 2020. The allowance for credit losses on the acquired FCBP loan portfolio was approximately 1.57%, which primarily contributed to the reduction of the ratio of the allowance for credit losses to total loans at September 30, 2021 as compared to the prior periods presented. Nonperforming assets to total assets was 0.35% at September 30, 2021 compared to 0.44% and 0.53% at June 30, 2021 and September 30, 2020, respectively.
  • Deposits - Total deposits increased $2.2 billion from the linked quarter to $10.8 billion as of September 30, 2021, primarily due to the addition of FCBP deposits of $1.9 billion. Average deposits totaled $10.3 billion for the quarter ended September 30, 2021 compared to $8.6 billion and $6.7 billion for the linked and prior year quarters, respectively. Noninterest-bearing deposit accounts represented 40.4% of total deposits, and the loan to deposit ratio was 84.2% at September 30, 2021.
  • Capital - Total shareholders’ equity was $1.4 billion and the tangible common equity to tangible assets ratio3 was 8.4% at September 30, 2021, compared to 8.3% at June 30, 2021. The Bank’s regulatory capital ratios remain “well-capitalized,” with a common equity tier 1 ratio of 12.3% and a total risk-based capital ratio of 13.4% as of September 30, 2021. The Company’s common equity tier 1 ratio and total risk-based capital ratio was 11.2% and 14.5%, respectively, at September 30, 2021.

    The Company issued 7,808,459 shares totaling $343.7 million in the third quarter 2021 as merger consideration in connection with the FCBP acquisition.

    The Company has 1,277,951 shares available for repurchase under its common stock repurchase authorization. The Company repurchased 470,412 shares totaling $21.2 million in the third quarter 2021 for an average price of $45.15 per share. Total shares repurchased year-to-date total 722,049 at an average price of $45.80.

    The Company intends to redeem its $50.0 million fixed-to-floating subordinated debentures on the first call date of November 1, 2021.

    The Company’s Board of Directors unanimously approved a quarterly dividend of $0.20 per common share, payable on December 31, 2021 to shareholders of record as of December 15, 2021, an increase of $0.01, or 5.0%, compared to the third quarter.

    3 Tangible common equity to tangible assets ratio is a non-GAAP measure. Refer to discussion and reconciliation of this measure in the accompanying financial tables.
  • Liquidity - The Company maintains a high level of both on-balance-sheet and off-balance-sheet liquidity. At September 30, 2021, on-balance-sheet liquidity consisted of cash and unpledged investment securities of $1.2 billion. Off-balance-sheet liquidity totaled $1.8 billion through the Federal Home Loan Bank, Federal Reserve and correspondent bank lines. The Company also has an unused $25 million revolving line of credit at the holding company and has an effective shelf registration statement on file with the U.S. Securities and Exchange Commission allowing for the issuance of various forms of equity and debt securities.
  • Branch Consolidation - As part of the integration of FCBP, the Company commenced the process to close three branch locations in California. A lease and fixed asset impairment charge of $0.4 million was recognized and reported in merger expenses. The Company expects to realize annual cost savings of approximately $0.8 million. Additionally, the Company has also commenced the process to close two branches in St. Louis and consolidate the operations and customers of these branches with other nearby locations. An impairment charge of $3.4 million on these branches was recognized in the third quarter 2021 for buildings, leases and fixed assets. The Company expects to realize annual cost savings of approximately $1.5 million on these two branches. These branch closures are reflective of current trends in the industry and traffic as a result of technology adoption and other business climate trends.

Net Interest Income

Average Balance Sheets

The following table presents, for the periods indicated, certain information related to our average interest-earning assets and interest-bearing liabilities, as well as, the corresponding interest rates earned and paid, all on a tax-equivalent basis.

Quarter ended

September 30, 2021

June 30, 2021

September 30, 2020

($ in thousands)

Average

Balance

Interest

Income/

Expense

Average Yield/ Rate

Average

Balance

Interest

Income/

Expense

Average Yield/ Rate

Average

Balance

Interest

Income/

Expense

Average Yield/ Rate

Assets

Interest-earning assets:

Loans*

$

8,666,353

$

94,465

4.32

%

$

7,306,471

$

79,162

4.35

%

$

6,112,715

$

62,751

4.08

%

Debt and equity investments*

1,594,938

9,583

2.38

1,502,582

9,226

2.46

1,361,515

8,761

2.56

Short-term investments

1,251,988

480

0.15

806,928

237

0.12

295,854

113

0.15

Total interest-earning assets

11,513,279

104,528

3.60

9,615,981

88,625

3.70

7,770,084

71,625

3.67

Noninterest-earning assets

821,279

665,363

571,884

Total assets

$

12,334,558

$

10,281,344

$

8,341,968

Liabilities and Shareholders’ Equity

Interest-bearing liabilities:

Interest-bearing transaction accounts

$

2,228,466

$

459

0.08

%

$

1,985,811

$

336

0.07

%

$

1,529,097

$

255

0.07

%

Money market accounts

2,675,405

1,294

0.19

2,344,871

988

0.17

1,981,026

1,003

0.20

Savings

747,927

61

0.03

718,193

52

0.03

605,475

45

0.03

Certificates of deposit

604,594

927

0.61

522,633

1,091

0.84

630,076

2,409

1.52

Total interest-bearing deposits

6,256,392

2,741

0.17

5,571,508

2,467

0.18

4,745,674

3,712

0.31

Subordinated debentures

204,011

2,855

5.55

203,849

2,847

5.60

203,438

2,826

5.53

FHLB advances

89,457

211

0.94

50,000

197

1.58

250,000

720

1.15

Securities sold under agreements to repurchase

216,403

58

0.11

209,062

58

0.11

199,308

59

0.12

Other borrowings

25,699

90

1.39

27,147

94

1.39

31,413

116

1.47

Total interest-bearing liabilities

6,791,962

5,955

0.35

6,061,566

5,663

0.37

5,429,833

7,433

0.54

Noninterest-bearing liabilities:

Demand deposits

4,040,761

3,008,703

1,920,694

Other liabilities

107,739

94,106

105,945

Total liabilities

10,940,462

9,164,375

7,456,472

Shareholders' equity

1,394,096

1,116,969

885,496

Total liabilities and shareholders' equity

$

12,334,558

$

10,281,344

$

8,341,968

Total net interest income

$

98,573

$

82,962

$

64,192

Net interest margin

3.40

%

3.46

%

3.29

%

* Non-taxable income is presented on a tax-equivalent basis using a 24.9% and 24.7% tax rate in 2021 and 2020, respectively. The tax-equivalent adjustments were $1.3 million for the three months ended September 30, 2021, $1.2 million for the three months ended June 30, 2021 and $0.8 million for the three months ended September 30, 2020.

Net interest income for the third quarter increased $15.6 million to $97.3 million from $81.7 million in the linked quarter, and increased $33.9 million from the prior year period. NIM, on a tax equivalent basis, was 3.40% for the third quarter, compared to 3.46% in the linked quarter, and 3.29% in the third quarter 2020. The increase in net interest income from the linked quarter was primarily due to greater average earning assets resulting from the FCBP acquisition. Interest income increased mainly due to a $1.4 billion increase in average loans compared to the linked period, including $1.5 billion of average loans acquired from FCBP, partially offset by reduced income from PPP loans and other purchase accounting income. While PPP loans (excluding FCBP acquired PPP loans) decreased $164.0 million in the current quarter, forgiveness of these loans by the SBA accelerated deferred loan fees into income that benefits net interest margin. The increase in interest income was partially offset by higher interest expense related to the addition of $685 million of interest bearing liabilities from FCBP.

NIM decreased six basis points from the linked quarter to 3.40% during the current quarter primarily due to a ten basis point decrease in earning asset yields. The decrease in the earning asset yield was primarily due to higher levels of cash related to payoffs of PPP loans and deposit growth (14 bps), an increased balance and lower yields on investment securities (2 bp), and lower purchase accounting accretion on legacy Enterprise loans (6 bps), partially offset by higher loan yields (4 bps) and the addition of higher yielding loans from FCBP (9 bps). The cost of interest-bearing liabilities declined two basis points from the linked quarter, primarily due to lower rates on time deposits (1 bp) and the addition of low cost deposits from FCBP (1 bp).

Loans

The following table presents total loans for the most recent five quarters:

Quarter ended

September 30, 2021

($ in thousands)

FCBPa, b

Legacy EFSCa

Consolidated

June 30, 2021

March 31, 2021

December 31, 2020c

September 30, 2020

C&I

$

242,740

$

1,215,338

$

1,458,078

$

1,116,229

$

1,048,839

$

1,103,060

$

1,075,421

CRE investor owned

553,490

1,381,794

1,935,284

1,467,243

1,491,244

1,420,905

1,281,567

CRE owner occupied

301,929

861,307

1,163,236

789,220

805,581

825,846

766,919

SBA loans*

160,833

1,038,925

1,199,758

1,010,727

941,075

895,930

15,927

Sponsor finance*

454,431

454,431

463,744

394,207

396,487

367,337

Life insurance premium financing*

572,492

572,492

564,366

543,084

534,092

517,559

Tax credits*

462,168

462,168

423,258

387,968

382,602

368,908

SBA PPP loans

206,284

232,675

438,959

396,660

737,660

698,645

819,100

Residential real estate

226,321

293,538

519,859

302,007

299,517

318,091

321,258

Construction and land development

219,600

432,627

652,227

467,586

438,303

474,399

450,225

Other

32,547

227,544

260,091

225,227

201,303

174,878

142,086

Total Loans

$

1,943,744

$

7,172,839

$

9,116,583

$

7,226,267

$

7,288,781

$

7,224,935

$

6,126,307

Total loan yield

4.32

%

4.35

%

4.35

%

4.46

%

4.08

%

Variable interest rate loans to total loans

63

%

57

%

56

%

57

%

50

%

Certain prior period amounts have been reclassified among the categories to conform to the current period presentation.

*Specialty loan category

a Amounts reported are as of September 30, 2021 and are separately shown attributable to the FCBP loan portfolio acquired on July 21, 2021, and the Company’s pre-FCBP acquisition loan portfolio.

b Excluding PPP and purchase accounting adjustments, FCBP gross loans increased $71.8 million from acquisition on July 21, 2021.

c $1.2 billion is attributable to the Seacoast loan portfolio acquired on November 12, 2020.

Loans totaled $9.1 billion at September 30, 2021, increasing $1.9 billion compared to the linked quarter. The acquisition of FCBP added $1.9 billion of loans, while legacy PPP loans declined $164.0 million. Excluding FCBP and PPP, loans grew $110.6 million, or 6%, on an annualized basis from the linked quarter. The increase was driven by C&I loans ($99.1 million) and a broad-based increase in specialty lending ($65.9 million). SBA loans represent $28.2 million of the increase in specialty lending during the current quarter, primarily driven by the expansion of our SBA lending capabilities following our acquisition of Seacoast in the fourth quarter 2020. Year-over-year, loans increased $3.0 billion, or 48.8%. The year-over-year increase was primarily due to the FCBP and Seacoast acquisitions. For the quarter ended September 30, 2021 average line draw utilization was 38.2% compared to 38.9% and 40.4% for the linked quarter and prior-year quarter, respectively. Line draw usage for third quarter 2021 increased $265 million compared to the linked quarter.

Asset Quality

The following table presents the categories of nonperforming assets and related ratios for the most recent five quarters:

Quarter ended

($ in thousands)

September 30,
2021

June 30,
2021

March 31,
2021

December 31,
2020

September 30,
2020

Nonperforming loans*

$

41,554

$

42,252

$

36,659

$

38,507

$

39,623

Other real estate

3,493

3,612

6,164

5,330

4,835

Nonperforming assets*

$

45,047

$

45,864

$

42,823

$

43,837

$

44,458

Nonperforming loans to total loans

0.46

%

0.58

%

0.50

%

0.53

%

0.65

%

Nonperforming assets to total assets

0.35

%

0.44

%

0.42

%

0.45

%

0.53

%

Allowance for credit losses to total loans

1.67

%

1.77

%

1.80

%

1.89

%

2.01

%

Net charge-offs (recoveries)

$

1,850

$

869

$

5,647

$

(612

)

$

1,027

*Excludes government guaranteed balances.

The provision for credit losses was $19.7 million for the third quarter 2021 compared to a benefit of $2.7 million for the linked quarter and a $14.1 million provision for the prior year quarter. A provision for credit losses of $23.9 million was recorded to establish the initial allowance for credit losses on FCBP non-PCD loans, which we refer to as the “CECL double-count” adjustment. An additional $1.4 million provision was recognized to establish the reserve for FCBP’s unfunded loan commitments. The provision for credit losses from the FCBP acquisition was offset by a $5.7 million provision benefit on the legacy loan portfolio due to a combination of improving economic forecasts and the Company’s stable credit quality.

Gross charge-offs of $4.3 million in the quarter primarily consisted of a loan that had previously defaulted and was fully reserved in a prior period. Net charge-offs to average loans for the third quarter 2021, the linked quarter, and the prior year quarter totaled eight basis points, five basis points and seven basis points, respectively.

Deposits

The following table presents deposits broken out by type for the most recent five quarters:

Quarter ended

September 30, 2021

($ in thousands)

FCBPa

Legacy EFSCa

Consolidated

June 30, 2021

March 31, 2021

December 31, 2020b

September 30, 2020

Noninterest-bearing accounts

$

1,041,622

$

3,334,091

$

4,375,713

$

3,111,581

$

2,910,216

$

2,711,828

$

1,929,540

Interest-bearing transaction accounts

317,301

1,936,338

2,253,639

2,013,129

1,990,308

1,768,497

1,499,756

Money market and savings accounts

370,179

3,201,073

3,571,252

3,000,460

3,093,569

2,954,969

2,634,885

Brokered certificates of deposit

78,714

50,209

128,923

50,209

50,209

50,209

65,209

Other certificates of deposit

51,832

446,416

498,248

464,125

471,142

499,886

546,836

Total deposit portfolio

$

1,859,648

$

8,968,127

$

10,827,775

$

8,639,504

$

8,515,444

$

7,985,389

$

6,676,226

Noninterest-bearing deposits to total deposits

56.0

%

37.2

%

40.4

%

36.0

%

34.2

%

34.0

%

28.9

%

aAmounts reported are as of September 30, 2021 and are shown separately attributable to the FCBP deposit portfolio acquired on July 21, 2021, and the Company’s pre-FCBP acquisition deposit portfolio.

b $1.1 billion is attributable to the Seacoast deposit portfolio acquired on November 12, 2020.

Total deposits at September 30, 2021 were $10.8 billion, an increase of $2.2 billion from June 30, 2021, and an increase of $4.2 billion from September 30, 2020. The increase from the linked quarter was primarily due to the FCBP acquisition, and the year-over-year increase was primarily due to the FCBP and Seacoast acquisitions.

Core deposits, defined as total deposits excluding certificates of deposits, were $10.2 billion at September 30, 2021, an increase of $2.1 billion from the linked quarter. FCBP core deposits were $1.7 billion at September 30, 2021. The Company’s participation in PPP, the low rate environment and high personal savings rate continues to contribute to the increase in deposits. Noninterest-bearing deposits were $4.4 billion at September 30, 2021, or 40.4% of total deposits. Specialty deposits increased $449.7 million over the linked quarter to $1.9 billion primarily attributable to community associations, third party escrow and FCBP deposit specialties. The total cost of deposits was 0.11% for the current quarter compared to 0.12% and 0.22% for the linked quarter and prior year quarter, respectively.

Noninterest Income

The following table presents a comparative summary of the major components of noninterest income for the periods indicated:

Linked quarter comparison

Prior year comparison

Quarter ended

Quarter ended

($ in thousands)

September 30, 2021

June 30, 2021

Increase (decrease)

September 30, 2020

Increase (decrease)

Deposit service charges

$

4,520

$

3,862

$

658

17

%

$

2,798

$

1,722

62

%

Wealth management revenue

2,573

2,516

57

2

%

2,456

117

5

%

Card services revenue

3,186

2,975

211

7

%

2,498

688

28

%

Tax credit income

3,325

1,370

1,955

143

%

748

2,577

345

%

Miscellaneous income

4,015

5,481

(1,466)

(27)

%

4,129

(114)

(3)

%

Total noninterest income

$

17,619

$

16,204

$

1,415

9

%

$

12,629

$

4,990

40

%

Total noninterest income for the third quarter 2021 was $17.6 million, an increase of $1.4 million from the linked quarter and an increase of $5.0 million from the prior year quarter. The increase from the linked quarter was primarily due to tax credit income and deposit service charges, partially offset by a decline in miscellaneous income from a private equity fund distribution received in the second quarter. The increase from the prior year quarter was broad-based, reflecting higher volumes in tax credit activity, card services, wealth management and deposit service charges. FCBP noninterest income totaled $1.4 million in the third quarter, primarily in deposit service charges and servicing fees.

Noninterest Expenses

Noninterest expense was $76.9 million for the third quarter 2021, compared to $52.5 million for the linked quarter, and $39.5 million for the prior year quarter. The increase from the linked quarter was primarily due to merger-related expenses of $14.7 million (an increase of $12.7 million from the linked quarter), FCBP noninterest expense of $7.0 million, and branch closure expenses of $3.4 million.

For the third quarter 2021, the Company’s efficiency ratio was 66.9% compared to 53.6% and 52.0% for the linked quarter and prior year quarter, respectively. The Company’s core efficiency ratio4 improved to 51.3% for the quarter ended September 30, 2021, compared to 51.9% for the linked quarter and 51.0% for the prior year quarter.

4 Core efficiency ratio is a non-GAAP measure. Refer to discussion and reconciliation of this measure in the accompanying financial tables.

Income Taxes

The Company’s effective tax rate was 24% for the quarter ended September 30, 2021, compared to 20% for both the linked quarter and the prior year quarter. The increase reflects the impact of non-deductible merger expenses and an increase in state taxes that increased the effective tax rate approximately 3% in the current quarter.

Capital

The following table presents various EFSC capital ratios:

Quarter ended

Percent

September 30, 2021

June 30, 2021

March 31, 2021

December 31, 2020

September 30, 2020

Total risk-based capital to risk-weighted assets

14.5

%

14.9

%

15.1

%

14.9

%

14.6

%

Tier 1 capital to risk weighted assets

12.2

%

12.3

%

12.3

%

12.1

%

11.6

%

Common equity tier 1 capital to risk-weighted assets

11.2

%

11.1

%

11.0

%

10.9

%

10.2

%

Tangible common equity to tangible assets

8.4

%

8.3

%

8.2

%

8.4

%

8.0

%

Total equity was $1.4 billion at September 30, 2021, an increase of $320.9 million from the linked quarter. The Company issued 7.8 million shares to FCBP shareholders as merger consideration totaling $343.7 million based on the closing stock price of the Company’s common stock on July 21, 2021, and repurchased $21.2 million of common stock in the third quarter 2021. The Company’s regulatory capital ratios continue to exceed the “well-capitalized” regulatory benchmark. Capital ratios for the current quarter are subject to, among other things, completion and filing of the Company’s regulatory reports and ongoing regulatory review.

Use of Non-GAAP Financial Measures

The Company’s accounting and reporting policies conform to generally accepted accounting principles in the United States (“GAAP”) and the prevailing practices in the banking industry. However, the Company provides other financial measures, such as tangible common equity, PPNR, PPNR ROAA, financial metrics adjusted for PPP impact, core efficiency ratio, and the tangible common equity ratio, in this release that are considered “non-GAAP financial measures.” Generally, a non-GAAP financial measure is a numerical measure of a company’s financial performance, financial position, or cash flows that exclude (or include) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP.

The Company considers its tangible common equity, PPNR, PPNR ROAA, financial metrics adjusted for PPP impact, core efficiency ratio, and the tangible common equity ratio, collectively “core performance measures,” presented in this earnings release and the included tables as important measures of financial performance, even though they are non-GAAP measures, as they provide supplemental information by which to evaluate the impact of certain non-comparable items, and the Company’s operating performance on an ongoing basis. Core performance measures exclude certain other income and expense items, such as merger-related expenses, facilities charges, and the gain or loss on sale of investment securities, the Company believes to be not indicative of or useful to measure the Company’s operating performance on an ongoing basis. The attached tables contain a reconciliation of these core performance measures to the GAAP measures. The Company believes that the tangible common equity ratio provides useful information to investors about the Company’s capital strength even though it is considered to be a non-GAAP financial measure and is not part of the regulatory capital requirements to which the Company is subject.

The Company believes these non-GAAP measures and ratios, when taken together with the corresponding GAAP measures and ratios, provide meaningful supplemental information regarding the Company’s performance and capital strength. The Company’s management uses, and believes that investors benefit from referring to, these non-GAAP measures and ratios in assessing the Company’s operating results and related trends and when forecasting future periods. However, these non-GAAP measures and ratios should be considered in addition to, and not as a substitute for or preferable to, ratios prepared in accordance with GAAP. In the attached tables, the Company has provided a reconciliation of, where applicable, the most comparable GAAP financial measures and ratios to the non-GAAP financial measures and ratios, or a reconciliation of the non-GAAP calculation of the financial measures for the periods indicated.

Conference Call and Webcast Information

The Company will host a conference call and webcast at 10:00 a.m. Central Time on Tuesday, October 26, 2021. During the call, management will review the third quarter of 2021 results and related matters. This press release as well as a related slide presentation will be accessible on the Company’s website at www.enterprisebank.com under “Investor Relations” prior to the scheduled broadcast of the conference call. The call can be accessed via this same website page, or via telephone at 1-800-377-9510 (Conference ID #7088056). A recorded replay of the conference call will be available on the website approximately two hours after the call’s completion. Visit https://bit.ly/EFSC3Q2021 and register to receive a dial in number, passcode, and pin number. The replay will be available for approximately two weeks following the conference call.

About Enterprise Financial Services Corp

Enterprise Financial Services Corp (Nasdaq: EFSC), with approximately $12.9 billion in assets, is a financial holding company headquartered in Clayton, Missouri. Enterprise Bank & Trust, a Missouri state-chartered trust company with banking powers and a wholly-owned subsidiary of EFSC, operates branch offices in Arizona, California, Kansas, Missouri, Nevada, and New Mexico, and SBA loan and deposit production offices throughout the country. Enterprise Bank & Trust offers a range of business and personal banking services and wealth management services. Enterprise Trust, a division of Enterprise Bank & Trust, provides financial planning, estate planning, investment management and trust services to businesses, individuals, institutions, retirement plans and non-profit organizations. Additional information is available at www.enterprisebank.com.

Enterprise Financial Services Corp’s common stock is traded on the Nasdaq Stock Market under the symbol “EFSC.” Please visit our website at www.enterprisebank.com to see our regularly posted material information.

Forward-looking Statements

Readers should note that, in addition to the historical information contained herein, this press release contains “forward-looking statements” within the meaning of, and intended to be covered by, the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements based on management’s current expectations and beliefs concerning future developments and their potential effects on the Company including, without limitation, plans, strategies and goals, and statements about the Company’s expectations regarding revenue and asset growth, financial performance and profitability, loan and deposit growth, yields and returns, loan diversification and credit management, shareholder value creation and the impact of the FCBP acquisition and other acquisitions.

Forward-looking statements are typically identified by words such as “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project,” “pro forma” and other similar words and expressions. Forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made. Because forward-looking statements are subject to assumptions and uncertainties, actual results or future events could differ, possibly materially, from those anticipated in the forward-looking statements and future results could differ materially from historical performance. Factors that could cause or contribute to such differences include, but are not limited to, the Company’s ability to efficiently integrate acquisitions, including the FCBP acquisition, into its operations, retain the customers of these businesses and grow the acquired operations, as well as credit risk, changes in the appraised valuation of real estate securing impaired loans, outcomes of litigation and other contingencies, exposure to general and local economic conditions, risks associated with rapid increases or decreases in prevailing interest rates, consolidation in the banking industry, competition from banks and other financial institutions, the Company’s ability to attract and retain relationship officers and other key personnel, burdens imposed by federal and state regulation, changes in regulatory requirements, changes in accounting policies and practices or accounting standards, uncertainty regarding the future of LIBOR, natural disasters, war or terrorist activities, or pandemics, or the outbreak of COVID-19 or similar outbreaks, and their effects on economic and business environments in which we operate, and those factors and risks referenced from time to time in EFSC’s filings with the SEC, including in the Company's Annual Reports on Form 10-K for the fiscal year ended December 31, 2020, and the Company's other filings with the SEC. For any forward-looking statements made in this press release or in any documents, EFSC claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

Except to the extent required by applicable law or regulation, EFSC disclaims any obligation to revise or publicly release any revision or update to any of the forward-looking statements included herein to reflect events or circumstances that occur after the date on which such statements were made.

ENTERPRISE FINANCIAL SERVICES CORP

CONSOLIDATED FINANCIAL SUMMARY (unaudited)

Quarter ended

Nine months ended

(in thousands, except per share data)

Sep 30,
2021

Jun 30,
2021

Mar 31,
2021

Dec 31,
2020

Sep 30,
2020

Sep 30,
2021

Sep 30,
2020

EARNINGS SUMMARY

Net interest income

$

97,273

$

81,738

$

79,123

$

77,446

$

63,354

$

258,134

$

192,555

Provision (benefit) for credit losses

19,668

(2,669

)

46

9,463

14,080

17,045

55,935

Noninterest income

17,619

16,204

11,290

18,506

12,629

45,113

35,997

Noninterest expense

76,885

52,456

52,884

51,050

39,524

182,225

116,109

Income before income tax expense

18,339

48,155

37,483

35,439

22,379

103,977

56,508

Income tax expense

4,426

9,750

7,557

6,508

4,428

21,733

11,055

Net income

$

13,913

$

38,405

$

29,926

$

28,931

$

17,951

$

82,244

$

45,453

Diluted earnings per share

$

0.38

$

1.23

$

0.96

$

1.00

$

0.68

$

2.48

$

1.73

Return on average assets

0.45

%

1.50

%

1.22

%

1.26

%

0.86

%

1.01

%

0.76

%

Return on average common equity

3.96

%

13.79

%

11.07

%

11.60

%

8.06

%

9.14

%

6.96

%

Return on average tangible common equity

5.37

%

18.44

%

14.92

%

15.73

%

10.94

%

12.31

%

9.51

%

Net interest margin (tax equivalent)

3.40

%

3.46

%

3.50

%

3.66

%

3.29

%

3.45

%

3.52

%

Efficiency ratio

66.92

%

53.56

%

58.49

%

53.20

%

52.02

%

60.09

%

50.80

%

Core efficiency ratio1

51.30

%

51.86

%

55.02

%

50.93

%

51.04

%

52.59

%

50.97

%

Total loans

$

9,116,583

$

7,226,267

$

7,288,781

$

7,224,935

$

6,126,307

Total average loans

$

8,666,353

$

7,306,471

$

7,192,776

$

6,780,701

$

6,112,715

$

7,727,265

$

5,833,369

Total assets

$

12,888,016

$

10,346,993

$

10,190,699

$

9,751,571

$

8,367,976

Total average assets

$

12,334,558

$

10,281,344

$

9,940,052

$

9,141,159

$

8,341,968

$

10,860,756

$

7,956,006

Total deposits

$

10,827,775

$

8,639,504

$

8,515,444

$

7,985,389

$

6,676,226

Total average deposits

$

10,297,153

$

8,580,211

$

8,207,379

$

7,311,074

$

6,666,368

$

9,035,902

$

6,353,087

Period end common shares outstanding

38,372

31,185

31,259

31,210

26,210

Dividends per common share

$

0.19

$

0.18

$

0.18

$

0.18

$

0.18

$

0.55

$

0.54

Tangible book value per common share

$

27.38

$

26.85

$

25.92

$

25.48

$

24.80

Tangible common equity to tangible assets1

8.40

%

8.32

%

8.18

%

8.40

%

7.99

%

Total risk-based capital to risk-weighted assets

14.5

%

14.9

%

15.1

%

14.9

%

14.6

%

1Refer to Reconciliations of Non-GAAP Financial Measures table for a reconciliation of these measures to GAAP.

ENTERPRISE FINANCIAL SERVICES CORP

CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)

Quarter ended

Nine months ended

($ in thousands, except per share data)

Sep 30,
2021

Jun 30,
2021

Mar 31,
2021

Dec 31,
2020

Sep 30,
2020

Sep 30,
2021

Sep 30,
2020

INCOME STATEMENTS

NET INTEREST INCOME

Total interest income

$

103,228

$

87,401

$

84,960

$

84,113

$

70,787

$

275,589

$

220,666

Total interest expense

5,955

5,663

5,837

6,667

7,433

17,455

28,111

Net interest income

97,273

81,738

79,123

77,446

63,354

258,134

192,555

Provision (benefit) for credit losses

19,668

(2,669

)

46

9,463

14,080

17,045

55,935

Net interest income after provision for credit losses

77,605

84,407

79,077

67,983

49,274

241,089

136,620

NONINTEREST INCOME

Deposit service charges

4,520

3,862

3,084

3,160

2,798

11,466

8,557

Wealth management revenue

2,573

2,516

2,483

2,449

2,456

7,572

7,283

Card services revenue

3,186

2,975

2,496

2,511

2,498

8,657

6,970

Tax credit income (expense)

3,325

1,370

(1,041

)

4,048

748

3,654

2,563

Other income

4,015

5,481

4,268

6,338

4,129

13,764

10,624

Total noninterest income

17,619

16,204

11,290

18,506

12,629

45,113

35,997

NONINTEREST EXPENSE

Employee compensation and benefits

33,722

28,132

29,562

26,174

22,040

91,416

66,114

Occupancy

4,496

3,529

3,751

3,517

3,408

11,776

9,940

Branch closure expenses

3,441

3,441

Merger-related expenses

14,671

1,949

3,142

2,611

1,563

19,762

1,563

Other

17,114

18,846

16,429

18,748

12,513

52,389

38,492

Total noninterest expense

76,885

52,456

52,884

51,050

39,524

182,225

116,109

Income before income tax expense

18,339

48,155

37,483

35,439

22,379

103,977

56,508

Income tax expense

4,426

9,750

7,557

6,508

4,428

21,733

11,055

Net income

$

13,913

$

38,405

$

29,926

$

28,931

$

17,951

$

82,244

$

45,453

Basic earnings per share

$

0.38

$

1.23

$

0.96

$

1.00

$

0.68

$

2.48

$

1.73

Diluted earnings per share

$

0.38

$

1.23

$

0.96

$

1.00

$

0.68

$

2.48

$

1.73

ENTERPRISE FINANCIAL SERVICES CORP

CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)

Quarter ended

($ in thousands)

Sep 30,
2021

Jun 30,
2021

Mar 31,
2021

Dec 31,
2020

Sep 30,
2020

BALANCE SHEETS

ASSETS

Cash and due from banks

$

179,826

$

126,789

$

103,367

$

99,760

$

98,816

Interest-earning deposits

1,216,470

889,960

788,464

445,569

301,773

Debt and equity investments

1,717,442

1,585,847

1,463,818

1,448,803

1,375,931

Loans held for sale

5,068

5,763

8,531

13,564

14,032

Loans

9,116,583

7,226,267

7,288,781

7,224,935

6,126,307

Allowance for credit losses

(152,096

)

(128,185

)

(131,527

)

(136,671

)

(123,270

)

Total loans, net

8,964,487

7,098,082

7,157,254

7,088,264

6,003,037

Fixed assets, net

48,697

50,972

52,078

53,169

56,807

Goodwill

365,415

260,567

260,567

260,567

210,344

Intangible assets, net

23,777

20,358

21,670

23,084

21,820

Other assets

366,834

308,655

334,950

318,791

285,416

Total assets

$

12,888,016

$

10,346,993

$

10,190,699

$

9,751,571

$

8,367,976

LIABILITIES AND SHAREHOLDERS’ EQUITY

Noninterest-bearing deposits

$

4,375,713

$

3,111,581

$

2,910,216

$

2,711,828

$

1,929,540

Interest-bearing deposits

6,452,062

5,527,923

5,605,228

5,273,561

4,746,686

Total deposits

10,827,775

8,639,504

8,515,444

7,985,389

6,676,226

Subordinated debentures

204,103

203,940

203,778

203,637

203,510

FHLB advances

50,000

50,000

50,000

50,000

250,000

Federal funds purchased

Other borrowings

243,770

234,509

229,389

301,081

239,038

Other liabilities

122,733

100,739

99,591

132,489

116,935

Total liabilities

11,448,381

9,228,692

9,098,202

8,672,596

7,485,709

Shareholders’ equity

1,439,635

1,118,301

1,092,497

1,078,975

882,267

Total liabilities and shareholders’ equity

$

12,888,016

$

10,346,993

$

10,190,699

$

9,751,571

$

8,367,976

Nine months ended

September 30, 2021

September 30, 2020

($ in thousands)

Average

Balance

Interest

Income/

Expense

Average Yield/ Rate

Average

Balance

Interest

Income/

Expense

Average Yield/ Rate

Assets

Interest-earning assets:

Loans*

$

7,727,264

$

250,699

4.34

%

$

5,833,368

$

194,630

4.46

%

Debt and equity investments*

1,505,592

27,626

2.45

1,356,796

27,688

2.73

Short-term investments

914,954

906

0.13

188,849

500

0.35

Total interest-earning assets

10,147,810

279,231

3.68

7,379,013

222,818

4.03

Noninterest-earning assets

712,946

576,993

Total assets

$

10,860,756

$

7,956,006

Liabilities and Shareholders’ Equity

Interest-bearing liabilities:

Interest-bearing transaction accounts

$

2,035,029

$

1,123

0.07

%

$

1,464,144

$

1,836

0.17

%

Money market accounts

2,458,146

3,257

0.18

1,911,584

6,738

0.47

Savings

707,269

160

0.03

579,619

233

0.05

Certificates of deposit

555,045

3,329

0.80

713,633

9,176

1.72

Total interest-bearing deposits

5,755,489

7,869

0.18

4,668,980

17,983

0.51

Subordinated debentures

203,853

8,521

5.59

171,465

7,061

5.50

FHLB advances

63,297

603

1.27

240,596

2,070

1.15

Securities sold under agreements to repurchase

218,942

176

0.11

197,776

479

0.32

Other borrowed funds

27,154

285

1.40

32,836

518

2.11

Total interest-bearing liabilities

6,268,735

17,454

0.37

5,311,653

28,111

0.71

Noninterest-bearing liabilities:

Demand deposits

3,280,414

1,684,107

Other liabilities

108,001

87,302

Total liabilities

9,657,150

7,083,062

Shareholders' equity

1,203,606

872,944

Total liabilities and shareholders' equity

$

10,860,756

$

7,956,006

Total net interest income

$

261,777

$

197,934

Net interest margin

3.45

%

3.52

%

* Non-taxable income is presented on a tax-equivalent basis using a 24.9% and 24.7% tax rate in 2021 and 2020, respectively. The tax-equivalent adjustments were $3.6 million and $2.2 million for the nine months ended September 30, 2021 and 2020, respectively.

ENTERPRISE FINANCIAL SERVICES CORP

CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)

Quarter ended

($ in thousands)

Sep 30,
2021

Jun 30,
2021

Mar 31,
2021

Dec 31,
2020

Sep 30,
2020

LOAN PORTFOLIO

Commercial and industrial

$

3,379,171

$

2,930,805

$

3,079,643

$

3,088,995

$

3,152,394

Commercial real estate

4,179,712

3,200,748

3,186,970

3,087,827

2,027,886

Construction real estate

747,758

556,776

510,501

546,686

474,727

Residential real estate

542,690

305,497

303,047

319,179

321,792

Other

267,252

232,441

208,620

182,248

149,508

Total loans

$

9,116,583

$

7,226,267

$

7,288,781

$

7,224,935

$

6,126,307

DEPOSIT PORTFOLIO

Noninterest-bearing accounts

$

4,375,713

$

3,111,581

$

2,910,216

$

2,711,828

$

1,929,540

Interest-bearing transaction accounts

2,253,639

2,013,129

1,990,308

1,768,497

1,499,756

Money market and savings accounts

3,571,252

3,000,460

3,093,569

2,954,969

2,634,885

Brokered certificates of deposit

128,923

50,209

50,209

50,209

65,209

Other certificates of deposit

498,248

464,125

471,142

499,886

546,836

Total deposit portfolio

$

10,827,775

$

8,639,504

$

8,515,444

$

7,985,389

$

6,676,226

AVERAGE BALANCES

Total loans

$

8,666,353

$

7,306,471

$

7,192,776

$

6,780,701

$

6,112,715

Debt and equity investments

1,594,938

1,502,582

1,417,305

1,395,806

1,361,515

Interest-earning assets

11,513,279

9,615,981

9,289,741

8,524,136

7,770,084

Total assets

12,334,558

10,281,344

9,940,052

9,141,159

8,341,968

Deposits

10,297,153

8,580,211

8,207,379

7,311,074

6,666,368

Shareholders’ equity

1,394,096

1,116,969

1,096,481

992,017

885,496

Tangible common equity1

1,028,001

835,405

813,568

731,813

652,663

YIELDS (tax equivalent)

Total loans

4.32

%

4.35

%

4.35

%

4.46

%

4.08

%

Debt and equity investments

2.38

2.46

2.52

2.56

2.56

Interest-earning assets

3.60

3.70

3.76

3.97

3.67

Interest-bearing deposits

0.17

0.18

0.20

0.25

0.31

Total deposits

0.11

0.12

0.13

0.17

0.22

Subordinated debentures

5.55

5.60

5.61

5.52

5.53

FHLB advances and other borrowed funds

0.43

0.49

0.46

0.61

0.74

Interest-bearing liabilities

0.35

0.37

0.40

0.47

0.54

Net interest margin

3.40

3.46

3.50

3.66

3.29

1Refer to Reconciliations of Non-GAAP Financial Measures table for a reconciliation of these measures to GAAP.

ENTERPRISE FINANCIAL SERVICES CORP

CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)

Quarter ended

(in thousands, except per share data)

Sep 30,
2021

Jun 30,
2021

Mar 31,
2021

Dec 31,
2020

Sep 30,
2020

ASSET QUALITY

Net charge-offs (recoveries)

$

1,850

$

869

$

5,647

$

(612

)

$

1,027

Nonperforming loans

41,554

42,252

36,659

38,507

39,623

Classified assets

104,220

100,063

114,713

123,808

84,710

Nonperforming loans to total loans

0.46

%

0.58

%

0.50

%

0.53

%

0.65

%

Nonperforming assets to total assets

0.35

%

0.44

%

0.42

%

0.45

%

0.53

%

Allowance for credit losses to total loans

1.67

%

1.77

%

1.80

%

1.89

%

2.01

%

Allowance for credit losses to nonperforming loans

366.0

%

303.4

%

358.8

%

354.9

%

311.1

%

Net charge-offs (recoveries) to average loans (annualized)

0.08

%

0.05

%

0.32

%

(0.04

)

%

0.07

%

WEALTH MANAGEMENT

Trust assets under management

$

2,017,178

$

1,945,293

$

1,809,001

$

1,783,089

$

1,641,980

Trust assets under administration

2,486,152

2,487,545

2,427,448

2,504,318

2,433,026

MARKET DATA

Book value per common share

$

37.52

$

35.86

$

34.95

$

34.57

$

33.66

Tangible book value per common share1

$

27.38

$

26.85

$

25.92

$

25.48

$

24.80

Market value per share

$

45.28

$

46.39

$

49.44

$

34.95

$

27.27

Period end common shares outstanding

38,372

31,185

31,259

31,210

26,210

Average basic common shares

36,878

31,265

31,247

28,929

26,217

Average diluted common shares

36,946

31,312

31,306

28,968

26,228

CAPITAL

Total risk-based capital to risk-weighted assets

14.5

%

14.9

%

15.1

%

14.9

%

14.6

%

Tier 1 capital to risk-weighted assets

12.2

%

12.3

%

12.3

%

12.1

%

11.6

%

Common equity tier 1 capital to risk-weighted assets

11.2

%

11.1

%

11.0

%

10.9

%

10.2

%

Tangible common equity to tangible assets1

8.4

%

8.3

%

8.2

%

8.4

%

8.0

%

1Refer to Reconciliations of Non-GAAP Financial Measures table for a reconciliation of these measures to GAAP.

ENTERPRISE FINANCIAL SERVICES CORP

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

Quarter ended

Nine months ended

($ in thousands)

Sep 30,
2021

Jun 30,
2021

Mar 31,
2021

Dec 31,
2020

Sep 30,
2020

Sep 30,
2021

Sep 30,
2020

CORE PERFORMANCE MEASURES

Net interest income

$

97,273

$

81,738

$

79,123

$

77,446

$

63,354

$

258,134

$

192,555

Less: Incremental accretion income

856

1,235

3,227

Core net interest income

97,273

81,738

79,123

76,590

62,119

258,134

189,328

Total noninterest income

17,619

16,204

11,290

18,506

12,629

45,113

35,997

Less: Gain on sale of investment securities

417

421

Less: Gain on sale of other real estate owned

335

549

884

Less: Other non-core income

265

Core noninterest income

17,284

15,655

11,290

18,506

12,212

44,229

35,311

Total core revenue

114,557

97,393

90,413

95,096

74,331

302,363

224,639

Total noninterest expense

76,885

52,456

52,884

51,050

39,524

182,225

116,109

Less: Other expenses related to non-core acquired loans

8

25

49

Less: Branch closure expenses

3,441

3,441

Less: Merger-related expenses

14,671

1,949

3,142

2,611

1,563

19,762

1,563

Core noninterest expense

58,773

50,507

49,742

48,431

37,936

159,022

114,497

Core efficiency ratio

51.30

%

51.86

%

55.02

%

50.93

%

51.04

%

52.59

%

50.97

%

Quarter ended

($ in thousands)

Sep 30,
2021

Jun 30,
2021

Mar 31,
2021

Dec 31,
2020

Sep 30,
2020

SHAREHOLDERS’ EQUITY TO TANGIBLE COMMON EQUITY AND TOTAL ASSETS TO TANGIBLE ASSETS

Shareholders’ equity

$

1,439,635

$

1,118,301

$

1,092,497

$

1,078,975

$

882,267

Less: Goodwill

365,415

260,567

260,567

260,567

210,344

Less: Intangible assets

23,777

20,358

21,670

23,084

21,820

Tangible common equity

$

1,050,443

$

837,376

$

810,260

$

795,324

$

650,103

Total assets

$

12,888,016

$

10,346,993

$

10,190,699

$

9,751,571

$

8,367,976

Less: Goodwill

365,415

260,567

260,567

260,567

210,344

Less: Intangible assets

23,777

20,358

21,670

23,084

21,820

Tangible assets

$

12,498,824

$

10,066,068

$

9,908,462

$

9,467,920

$

8,135,812

Tangible common equity to tangible assets

8.40

%

8.32

%

8.18

%

8.40

%

7.99

%

Quarter Ended

($ in thousands)

Sep 30,
2021

Jun 30,
2021

Sep 30,
2020

AVERAGE SHAREHOLDERS’ EQUITY AND AVERAGE TANGIBLE COMMON EQUITY

Average shareholder’s equity

$

1,394,096

$

1,116,969

$

885,496

Less average goodwill

342,622

260,567

210,344

Less average intangible assets

23,473

20,997

22,489

Average tangible common equity

$

1,028,001

$

835,405

$

652,663

Quarter Ended

($ in thousands)

Sep 30,
2021

Jun 30,
2021

Mar 31,
2021

Dec 31,
2020

Sep 30,
2020

CALCULATION OF PRE-PROVISION NET REVENUE

Net interest income

$

97,273

$

81,738

$

79,123

$

77,446

$

63,354

Noninterest income

17,619

16,204

11,290

18,506

12,629

Less: Noninterest expense

76,885

52,456

52,884

51,050

39,524

Branch closure expenses

3,441

Merger-related expenses

14,671

1,949

3,142

2,611

1,563

PPNR

$

56,119

$

47,435

$

40,671

$

47,513

$

38,022

Average assets

$

12,334,558

$

10,281,344

$

9,940,052

$

9,141,159

$

8,341,968

ROAA - GAAP net income

0.45

%

1.50

%

1.22

%

1.26

%

0.86

%

PPNR ROAA - PPNR

1.81

%

1.85

%

1.66

%

2.07

%

1.81

%

Quarter Ended

($ in thousands)

Sep 30,
2021

CALCULATION OF ADJUSTED FINANCIAL METRICS

Net income - GAAP

$

13,913

Branch closure expenses

3,441

FCBP CECL double count

25,353

Merger-related expenses

14,671

Related tax effect

(10,340

)

Adjusted Net income

$

47,038

EPS - GAAP net income

$

0.38

EPS - Adjusted net income

$

1.27

Average assets

$

12,334,558

ROAA - GAAP net income

0.45

%

ROAA - Adjusted net income

1.51

%

Average tangible common equity

$

1,028,001

ROATCE - GAAP net income

5.37

%

ROATCE - Adjusted net income

18.15

%

Quarter Ended

($ in thousands, except per share data)

Sep 30,
2021

Jun 30,
2021

Mar 31,
2021

Dec 31,
2020

Sep 30,
2020

IMPACT OF PAYCHECK PROTECTION PROGRAM

Net income - GAAP

$

13,913

$

38,405

$

29,926

$

28,931

$

17,951

PPP interest and fee income

(6,048

)

(7,940

)

(8,475

)

(10,261

)

(5,226

)

Related tax effect

1,506

1,977

2,110

2,534

1,291

Adjusted net income - Non-GAAP

$

9,371

$

32,442

$

23,561

$

21,204

$

14,016

Average diluted common shares

36,946

31,312

31,303

28,968

26,228

EPS - GAAP net income

$

0.38

$

1.23

$

0.96

$

1.00

$

0.68

EPS - Adjusted net income

$

0.25

$

1.04

$

0.75

$

0.73

$

0.53

Average assets - GAAP

$

12,334,558

$

10,281,344

$

9,940,052

$

9,141,159

$

8,341,968

Average PPP loans, net

(489,104

)

(664,375

)

(692,161

)

(806,697

)

(813,244

)

Adjusted average assets - Non-GAAP

$

11,845,454

$

9,616,969

$

9,247,891

$

8,334,462

$

7,528,724

ROAA - GAAP net income

0.45

%

1.50

%

1.22

%

1.26

%

0.86

%

ROAA - Adjusted net income, adjusted average assets

0.31

%

1.35

%

1.03

%

1.01

%

0.74

%

PPNR - Non-GAAP (see reconciliation above)

$

56,119

$

47,435

$

40,671

$

47,513

$

38,022

PPP interest and fee income

(6,048

)

(7,940

)

(8,475

)

(10,261

)

(5,226

)

Adjusted PPNR - Non-GAAP

$

50,071

$

39,495

$

32,196

$

37,252

$

32,796

PPNR ROAA - PPNR

1.81

%

1.85

%

1.66

%

2.07

%

1.81

%

PPNR ROAA - adjusted PPNR, adjusted average assets

1.68

%

1.65

%

1.41

%

1.78

%

1.73

%

Tangible assets - Non-GAAP (see reconciliation above)

$

12,498,824

$

10,066,068

$

9,908,462

$

9,467,920

$

8,135,812

PPP loans outstanding, net

(438,959

)

(396,660

)

(737,660

)

(698,645

)

(819,100

)

Adjusted tangible assets - Non-GAAP

$

12,059,865

$

9,669,408

$

9,170,802

$

8,769,275

$

7,316,712

Tangible common equity Non - GAAP (see reconciliation above)

$

1,050,443

$

837,376

$

810,260

$

795,324

$

650,103

Tangible common equity to tangible assets

8.40

%

8.32

%

8.18

%

8.40

%

7.99

%

Tangible common equity to tangible assets - adjusted tangible assets

8.71

%

8.66

%

8.84

%

9.07

%

8.89

%

Average assets for leverage ratio

$

11,972,171

$

10,021,240

$

9,675,300

$

8,868,548

$

8,115,020

Average PPP loans, net

(489,104

)

(664,375

)

(692,161

)

(806,697

)

(813,244

)

Adjusted average assets for leverage ratio - Non-GAAP

$

11,483,067

$

9,356,865

$

8,983,139

$

8,061,851

$

7,301,776

Tier 1 capital

$

1,166,529

$

937,840

$

914,459

$

889,527

$

745,397

Leverage ratio

9.7

%

9.4

%

9.5

%

10.0

%

9.2

%

Leverage ratio - adjusted average assets for leverage ratio

10.2

%

10.0

%

10.2

%

11.0

%

10.2

%

Net interest income - tax equivalent

$

98,573

$

82,963

$

80,243

$

78,484

$

64,192

PPP interest and fee income

(6,048

)

(7,940

)

(8,475

)

(10,261

)

(5,226

)

Adjusted net interest income - tax equivalent

$

92,525

$

75,023

$

71,768

$

68,223

$

58,966

Average earning assets -GAAP

$

11,513,279

$

9,615,981

$

9,289,741

$

8,524,136

$

7,770,084

Average PPP loans, net

(489,104

)

(664,375

)

(692,161

)

(806,697

)

(813,244

)

Adjusted average earning assets - Non-GAAP

$

11,024,175

$

8,951,606

$

8,597,580

$

7,717,439

$

6,956,840

Net interest margin - tax equivalent

3.40

%

3.46

%

3.50

%

3.66

%

3.29

%

Net interest margin - tax equivalent - adjusted net interest income, adjusted average earning assets

3.33

%

3.36

%

3.39

%

3.52

%

3.37

%

Loans - GAAP

$

9,116,583

$

7,226,267

$

7,288,781

$

7,224,935

$

6,126,307

PPP and other guaranteed loans, net

(1,277,452

)

(1,106,414

)

(1,377,302

)

(1,297,212

)

(819,100

)

Adjusted loans - Non-GAAP

$

7,839,131

$

6,119,853

$

5,911,479

$

5,927,723

$

5,307,207

Allowance for credit losses

$

152,096

$

128,185

$

131,527

$

136,671

$

123,270

Allowance for credit losses/loans - GAAP

1.67

%

1.77

%

1.80

%

1.89

%

2.01

%

Allowance for credit losses/loans - adjusted loans

1.94

%

2.09

%

2.22

%

2.31

%

2.32

%

Contacts:

Investor Relations: Keene Turner, Executive Vice President and CFO (314) 512-7233
Media: Steve Richardson, Vice President (314) 512-7183

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