8-K 1 ef911687.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)
April 18, 2005

ENTERPRISE FINANCIAL SERVICES CORP

(Exact name of registrant as specified in its charter)

Delaware

001-15373

43-1706259

(State or Other Jurisdiction
of Incorporation)

(Commission
File Number)

(IRS Employer
Identification No.)

 

 

 

150 N. Meramec, St. Louis, Missouri

63105

(Address of principal executive offices)

(Zip Code)

 

 

 

Registrant’s telephone number, including area code

(314) 725-5500

 

 

 

Not applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

 

o

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

 

o

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

 

o

Pre-commencement communications pursuant to Rule 13e-4© under the Exchange Act (17 CFR 240.13e-4(c))

 

 


ITEM 9.01          Financial Statements and Exhibits

(c)     Exhibits

Exhibit No.

 

Description

 

99.1

 

Press Release dated April 18, 2005

ITEM 2.02          RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On April 18, 2005, Registrant issued a press release announcing financial information for its first quarter ended March 31, 2005. The press release is attached hereto as Exhibit 99.1 and is furnished to, but not filed with, the Commission.


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized.

Date: April 19, 2005

 

ENTERPRISE FINANCIAL SERVICES CORP

 

 

 

/s/ KEVIN C. EICHNER

 

 

Kevin C. Eichner

 

Chief Executive Officer

INDEX TO EXHIBITS

Exhibit No.

 

Description

 

99.1

 

Press Release dated April 18, 2005*

*This exhibit is furnished to, but not filed with, the Commission by inclusion herein.

 

For more information, contact:

 

Kevin Eichner (314) 725 5500

 

Frank Sanfilippo (314) 725 5500

 

Erin Curtin (816) 221 7500

ENTERPRISE FINANCIAL REPORTS 53% INCREASE IN EARNINGS PER SHARE FOR
THE FIRST QUARTER OF 2005
Loans Growing At Annualized Rate of 33%
Wealth Management Income Increases 43%

St. Louis, April 18, 2005 – Enterprise Financial Services Corp (NASDAQ: EFSC), the parent company of Enterprise Bank & Trust, reported net income of $2.4 million or $0.23 per fully diluted share for the first quarter of 2005 versus $1.5 million or $0.15 per share in the same quarter of 2004—a 53% increase.

“This was an excellent first quarter reflecting continued growth momentum in our banking and wealth management businesses,” said Kevin Eichner, president and CEO of Enterprise Financial. “Our people are clearly impacting the marketplace very positively.”

Net interest income increased $1.9 million or 25% in the first quarter of 2005 versus 2004. Portfolio loans grew by $74 million since December 31, 2004 and ended the quarter at $973 million. The loan growth in the quarter was funded by $29 million of maturities in the investment portfolio that were not replaced, and short term FHLB advances. While Enterprise deposits have historically declined in the first quarter, balances at March 31, 2005 of $937 million were essentially flat with 2004 year-end balances. Included in deposits were $74 million of brokered certificates of deposit, a net increase of $10 million from year-end, but still only 8% of total deposits. The ratio of non-interest bearing deposits to total deposits remains strong at 20% - a high number in relation to most peers.

The company’s net interest rate margin improved from 3.88% in the first quarter of 2004 to 4.18% in the same quarter of 2005. Driving this improvement was a 79 basis point increase in the yield on the loan portfolio, and an increasing benefit of non-interest bearing deposits and equity, partially offset by a 58 basis point increase in the cost of interest-bearing liabilities. Approximately 64% of the loan portfolio (including interest rate swap impacts) floats with the prime rate, which has increased 175 basis points since first quarter of 2004. Price competition for new loans also continues to be a factor in overall loan yields.

Overall asset quality remains favorable for EFSC. The company had net loan recoveries of $188,000 during the first quarter of 2005 versus net loan charge-offs of $501,000 for the same period last year. The provision for loan losses was $786,000 in the first quarter of 2005, versus $597,000 in the same quarter last year due to slightly higher nonperforming loan levels and the afore-mentioned loan growth. Nonperforming loans were $3.1 million or 32 basis points of total loans at March 31, 2005 versus 18 basis points and 20 basis points at March 31, 2004 and December 31, 2004, respectively. The increase in nonperforming loans was primarily due to a $1.1 million credit that is secured by a first mortgage on a residential property. The allowance for loan losses represented 1.30%, 1.30% and 1.29% of loans at March 31, 2005, December 31 2004 and March 31, 2004, respectively.

- 1 -


Wealth Management income continued to grow rapidly, up 43% from $856,000 in the first quarter of 2004 to $1.2 million in first quarter of 2005. Approximately $150,000 of additional revenue came from the addition of the company’s Wealth Products Group in March, 2004, while the Fiduciary and Advisory units increased their revenues approximately 22% over first quarter of 2004. Assets under administration were $1.4 billion at March 31, 2005, a 5% increase over December 31, 2004.

Though hampered by a rising earnings credit rate on commercial analysis accounts, deposit service charges grew about 6% in the first quarter of 2005 to $483,000 versus $457,000 in the same quarter last year. A higher interest rate environment and the resulting lower refinancing opportunities led to a decline in mortgage gains from $68,000 in first quarter 2004 to $22,000 in first quarter 2005.

“The company’s drive to increase its operating leverage on its expense base continued to pay significant dividends through the combination of exceptional growth in revenue and expense controls”, said Eichner.

The company’s efficiency ratio improved from 69.61% in the first quarter of 2004 to 62.44% in the first quarter of 2005. While noninterest expense increased $847,000 or about 12% in the first quarter of 2005 versus the prior year, the level of noninterest expense to average assets declined from 3.00% to 2.91% respectively. The increase in expense during the first quarter of 2005 was due primarily to the company’s new long term incentive plan and related expensing of Restricted Stock Units, more competitive director compensation levels, expenses associated with nonperforming loans, higher commission expenses due to related revenues in Wealth Management, and higher professional fees associated with Sarbanes Oxley Section 404 compliance.

“We are fortunate to be able to digest these new expense levels through our growth, since some are the result of uncontrollable external and regulatory factors in the industry,” commented Eichner.

Enterprise announced a national listing of its stock on February 8, 2005 and has seen its trading volumes increase significantly. EFSC (the company’s trading symbol on the NASDAQ) stock value increased 32% in 2004 and has more than doubled since July of 2002.

Enterprise Financial operates commercial banking and wealth management businesses in metropolitan St. Louis and Kansas City, with a primary focus on serving the needs of privately held businesses, their owners and other success-minded individuals.

Please refer to the Consolidated Financial Summary attached for more details.

###

Readers should note that in addition to the historical information contained herein, this press release may contain forward-looking statements which are inherently subject to risks and uncertainties that could cause actual results to differ materially from those contemplated from such statements. Factors that could cause or contribute to such differences include, but are not limited to, burdens imposed by federal and state regulations of banks, credit risk, exposure to local economic conditions, risks associated with rapid increase or decrease in prevailing interest rates and competition from banks and other financial institutions, as well as those in Enterprise Financial’s 2004 Annual Report on Form 10-K.

- 2 -


ENTERPRISE FINANCIAL SERVICES CORP
CONSOLIDATED FINANCIAL SUMMARY
(unaudited)

(In thousands except per share data)

 

 

For the Quarter Ended

 

 

 

 

 

 

Mar 31,
 2005

 

Dec 31,
 2004

 

Sep 30,
 2004

 

Jun 30,
 2004

 

Mar 31,
 2004

 

 

 

 

 

 

 

 

EARNINGS SUMMARY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total interest income

 

$

14,653

 

$

13,698

 

$

12,550

 

$

11,701

 

$

10,944

 

Total interest expense

 

 

4,131

 

 

3,680

 

 

3,156

 

 

2,778

 

 

2,554

 

 

 

 

 

 

 

 

Net interest income

 

$

10,522

 

$

10,018

 

$

9,394

 

$

8,923

 

$

8,390

 

Provision for loan loss

 

 

786

 

 

775

 

 

100

 

 

740

 

 

597

 

 

 

 

 

 

 

 

Net interest income after provision for loan losses

 

$

9,736

 

$

9,243

 

$

9,294

 

$

8,183

 

$

7,793

 

NONINTEREST INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposit service charges

 

$

483

 

$

503

 

$

532

 

$

540

 

$

457

 

Gain on sale of loans

 

 

22

 

 

43

 

 

9

 

 

142

 

 

68

 

Wealth Management income

 

 

1,223

 

 

1,283

 

 

1,119

 

 

1,048

 

 

856

 

Other income

 

 

109

 

 

117

 

 

217

 

 

88

 

 

98

 

 

 

 

 

 

 

 

Total noninterest income

 

$

1,837

 

$

1,946

 

$

1,877

 

$

1,818

 

$

1,479

 

NONINTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and benefits

 

$

5,198

 

$

4,705

 

$

4,574

 

$

4,585

 

$

4,689

 

Occupancy

 

 

530

 

 

550

 

 

523

 

 

522

 

 

496

 

Furniture and equipment

 

 

172

 

 

186

 

 

176

 

 

176

 

 

182

 

Other

 

 

1,817

 

 

2,835

 

 

1,784

 

 

1,845

 

 

1,503

 

 

 

 

 

 

 

 

Total noninterest expense

 

$

7,717

 

$

8,276

 

$

7,057

 

$

7,128

 

$

6,870

 

 

 

 

 

 

 

 

Income before income tax

 

$

3,856

 

$

2,913

 

$

4,114

 

$

2,873

 

$

2,402

 

Income taxes

 

 

1,409

 

 

1,067

 

 

1,261

 

 

886

 

 

875

 

 

 

 

 

 

 

 

Net income

 

$

2,447

 

$

1,846

 

$

2,853

 

$

1,987

 

$

1,527

 

 

 

 

 

 

 

 

Basic earnings per share

 

$

0.25

 

$

0.19

 

$

0.29

 

$

0.21

 

$

0.16

 

Diluted earnings per share

 

$

0.23

 

$

0.18

 

$

0.28

 

$

0.20

 

$

0.15

 

Return on average assets

 

 

0.92

%

 

0.67

%

 

1.11

%

 

0.80

%

 

0.67

%

Return on average equity

 

 

13.23

%

 

10.15

%

 

16.50

%

 

11.72

%

 

9.29

%

Net interest rate margin (fully tax equivalized)

 

 

4.18

%

 

3.85

%

 

3.85

%

 

3.81

%

 

3.88

%

Yield on earning assets (fully tax equivalized)

 

 

5.80

%

 

5.25

%

 

5.12

%

 

4.98

%

 

5.05

%

Cost of paying liabilities

 

 

2.08

%

 

1.82

%

 

1.65

%

 

1.51

%

 

1.50

%

Net interest spread

 

 

3.72

%

 

3.43

%

 

3.47

%

 

3.47

%

 

3.55

%

Efficiency ratio

 

 

62.44

%

 

69.17

%

 

62.61

%

 

66.36

%

 

69.61

%

Noninterest expense to average assets

 

 

2.91

%

 

3.01

%

 

2.74

%

 

2.88

%

 

3.00

%

- 3 -


ENTERPRISE FINANCIAL SERVICES CORP
CONSOLIDATED FINANCIAL SUMMARY (cont.)
(unaudited)

(In thousands except per share data)

 

 

Mar 31,
 2005

 

Dec 31,
 2004

 

Sep 30,
 2004

 

Jun 30,
 2004

 

Mar 31,
 2004

 

 

 

 

 

 

 

 

BALANCE SHEET DATA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

32,085

 

$

28,324

 

$

29,316

 

$

31,790

 

$

25,417

 

Interest-bearing deposits

 

 

141

 

 

156

 

 

142

 

 

90

 

 

843

 

Debt and equity investments

 

 

92,572

 

 

121,638

 

 

93,007

 

 

93,492

 

 

51,413

 

Federal funds sold

 

 

—  

 

 

—  

 

 

38,712

 

 

12,396

 

 

41,750

 

Loans held for sale

 

 

4,180

 

 

2,376

 

 

1,599

 

 

2,383

 

 

2,645

 

Portfolio loans

 

$

972,802

 

$

898,505

 

$

874,092

 

$

866,814

 

$

830,948

 

Less allowance for loan losses

 

 

12,639

 

 

11,665

 

 

11,441

 

 

11,448

 

 

10,686

 

 

 

 

 

 

 

 

Net loans

 

$

960,163

 

$

886,840

 

$

862,651

 

$

855,366

 

$

820,262

 

 

 

 

 

 

 

 

Premises and equipment, net

 

$

8,413

 

$

8,044

 

$

7,071

 

$

7,067

 

$

7,222

 

Goodwill

 

 

1,938

 

 

1,938

 

 

1,938

 

 

1,938

 

 

1,938

 

Other assets

 

 

11,090

 

 

10,634

 

 

11,954

 

 

11,532

 

 

12,104

 

 

 

 

 

 

 

 

Total assets

 

$

1,110,582

 

$

1,059,950

 

$

1,046,390

 

$

1,016,054

 

$

963,594

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest bearing deposits

 

$

190,667

 

$

197,283

 

$

184,426

 

$

182,679

 

$

171,176

 

Interest bearing deposits

 

 

746,126

 

 

742,345

 

 

752,509

 

 

688,333

 

 

689,465

 

 

 

 

 

 

 

 

Total deposits

 

$

936,793

 

$

939,628

 

$

936,935

 

$

871,012

 

$

860,641

 

Subordinated debentures

 

 

20,620

 

 

20,620

 

 

20,619

 

 

20,619

 

 

15,464

 

FHLB advances

 

 

68,879

 

 

10,299

 

 

11,413

 

 

51,432

 

 

14,468

 

Federal funds purchased

 

 

—  

 

 

6,333

 

 

—  

 

 

—  

 

 

—  

 

Other borrowings

 

 

2,303

 

 

3,532

 

 

430

 

 

296

 

 

987

 

Other liabilities

 

 

5,263

 

 

6,812

 

 

5,947

 

 

5,310

 

 

4,878

 

 

 

 

 

 

 

 

Total liabilities

 

$

1,033,858

 

$

987,224

 

$

975,344

 

$

948,669

 

$

896,438

 

Shareholders’ equity

 

 

76,724

 

 

72,726

 

 

71,046

 

 

67,385

 

 

67,156

 

 

 

 

 

 

 

 

Total liabilities and shareholders’ equity

 

$

1,110,582

 

$

1,059,950

 

$

1,046,390

 

$

1,016,054

 

$

963,594

 

 

 

 

 

 

 

 

- 4 -


ENTERPRISE FINANCIAL SERVICES CORP
CONSOLIDATED FINANCIAL SUMMARY (cont.)
(unaudited)

(In thousands except per share data)

 

 

For the Quarter Ended

 

 

 

 

 

 

Mar 31,
 2005

 

Dec 31,
 2004

 

Sep 30,
 2004

 

Jun 30,
 2004

 

Mar 31,
 2004

 

 

 

 

 

 

 

 

MARKET DATA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Book value per share

 

$

7.65

 

$

7.44

 

$

7.30

 

$

6.96

 

$

6.94

 

Market value per share

 

$

19.00

 

$

18.50

 

$

14.60

 

$

14.70

 

$

13.50

 

Period end common shares

 

 

10,032

 

 

9,778

 

 

9,732

 

 

9,684

 

 

9,677

 

Average basic common shares

 

 

9,922

 

 

9,747

 

 

9,724

 

 

9,680

 

 

9,640

 

Average diluted common shares

 

 

10,521

 

 

10,224

 

 

10,074

 

 

9,987

 

 

9,942

 

ASSET QUALITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net charge-offs (recoveries)

 

$

(188

)

$

551

 

$

107

 

$

(22

)

$

501

 

Nonperforming loans

 

$

3,134

 

$

1,826

 

$

1,722

 

$

2,401

 

$

1,480

 

Nonperforming loans to total loans

 

 

0.32

%

 

0.20

%

 

0.20

%

 

0.28

%

 

0.18

%

Allowance for loan loss to total loans

 

 

1.30

%

 

1.30

%

 

1.31

%

 

1.32

%

 

1.29

%

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

 

 

(0.08

)%

 

0.25

%

 

0.05

%

 

(0.01

)%

 

0.25

%

CAPITAL

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average equity to average assets

 

 

6.98

%

 

6.62

%

 

6.72

%

 

6.85

%

 

7.18

%

Tier 1 capital to risk-weighted assets

 

 

9.14

%

 

9.94

%

 

9.89

%

 

9.83

%

 

9.36

%

Total capital to risk-weighted assets

 

 

10.39

%

 

11.19

%

 

11.14

%

 

11.08

%

 

10.61

%

AVERAGE BALANCES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Portfolio loans

 

$

932,910

 

$

872,700

 

$

856,221

 

$

849,868

 

$

801,671

 

Earning assets

 

 

1,034,526

 

 

1,047,990

 

 

983,332

 

 

954,910

 

 

881,529

 

Total assets

 

 

1,075,675

 

 

1,092,677

 

 

1,022,998

 

 

995,004

 

 

920,314

 

Deposits

 

 

919,909

 

 

977,358

 

 

904,583

 

 

863,433

 

 

808,799

 

Shareholders’ equity

 

 

75,039

 

 

72,345

 

 

68,769

 

 

68,183

 

 

66,082

 

- 5 -