-- Company Reports Net Income of $4.7 Million
-- After Deducting Preferred Stock Dividends, Company Reports
$0.31 Per Fully Diluted Share for Third Quarter
-- Pre-Tax, Pre-Provision Operating Earnings Total $7.7 Million
-- Third Quarter Earnings Include a $5.3 Million Pre-Tax Gain on
Extinguishment of Debt Related to the Foreclosure of a
Participated Loan
-- Non-Performing Loans Reduced by 14%, Non-Performing Assets
Reduced by 6% From Second Quarter 2009
-- Core Deposits Grow 8% in the Third Quarter, Up 13% Year-to-Date
ST. LOUIS, Oct. 23, 2009 (GLOBE NEWSWIRE) -- 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."
"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."
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, Jun 30, Dec 31,
2009 2009 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.
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.
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.
ENTERPRISE FINANCIAL SERVICES CORP
CONSOLIDATED FINANCIAL SUMMARY
(unaudited)
(In thousands, except For the Quarter For the Nine Months
per share data) Ended 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
Minority interest in net income
of consolidated subsidiary -- -- -- --
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%
RECONCILIATION 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
======= ======= ======== =======
ENTERPRISE FINANCIAL SERVICES CORP
CONSOLIDATED FINANCIAL SUMMARY (cont.)
(unaudited)
(In thousands)
BALANCE Sep 30, Jun 30, Mar 31, Dec 31, Sep 30,
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
particip-
ations 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
liabil-
ities 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
sharehold-
ers'
equity $2,518,625 $2,446,265 $2,457,644 $2,493,767 $2,416,228
========== ========== ========== ========== ==========
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
Management
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
Minority
interest in
net income of
consolidated
subsidiary -- -- -- -- --
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
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
administra-
tion 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%
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%