EX-99.1 2 ef71663ex991.htm EXHIBIT 99.1

Exhibit 99.1

For more information, contact:
Kevin Eichner (314) 725 5500
Frank Sanfilippo (314) 725 5500
Melissa Sturges (816) 221 7500

 

ENTERPRISE FINANCIAL REPORTS 27% INCREASE IN YEAR-TO-DATE EARNINGS PER SHARE

 

Wealth Management Income Increases  38% YTD

Company Announces Significant Wealth Management Acquisition

 

St. Louis, October 17, 2005 – Enterprise Financial Services Corp (NASDAQ:  EFSC), the parent company of Enterprise Bank & Trust, reported net income of $2.9 million or $0.27 per fully diluted share for the third quarter of 2005 versus $2.9 million or $0.28 per fully diluted share in the same quarter of 2004.  For the nine months ended September 30, 2005, the Company reported net income of $8.5 million or $0.80 per fully diluted share versus $6.4 million or $0.63 per share for the same period in 2004—a 27% increase. 

“We remain pleased with our company’s progress in both lines of business,” said Kevin Eichner, president and CEO of Enterprise Financial.  “The banking business is healthy and growing and we are especially excited about the potential of our recently announced acquisition of the Millennium Brokerage Group to enhance our Wealth Management fee income and profitability.”

Enterprise Financial announced last week the acquisition of the Millennium Brokerage Group, a highly regarded life insurance advisory and brokerage operation headquartered in Nashville, Tennessee with thirteen offices supporting operations in forty-nine states (see press release issued 10/13/05).  The company previously announced its expectation for the Millennium acquisition to be accretive to earnings per share by $0.10 - $0.14 in 2006.

For the third quarter of 2005, the company’s net interest rate margin improved to 4.03% from 3.85% in the same quarter of 2004.  Driving this improvement was a 121 basis point increase in the yield on earning assets, and an increasing benefit from non-interest bearing deposits and equity, partially offset by a 129 basis point increase in the cost of interest-bearing liabilities.  Approximately 59% of the loan portfolio (including impact of interest rate swaps) floats with the prime rate.


Net interest income increased $1.8 million or 19% in the third quarter of 2005 versus 2004.  Portfolio loans were up $78 million or 12% annualized for the year from December 31, 2004 and were up $103 million from the prior year.  During the third quarter, portfolio loans grew by $18 million.  Total deposits grew $27 million during the third quarter and year-to-date were up $83 million or 12% annualized.  A key indicator of the Company’s success is the ratio of non-interest bearing deposits to total deposits.  This ratio remained at a high level of 20% as the company continued to protect its core funding advantages.

Asset quality continues to be a major attribute of Enterprise.  The company experienced net charge-offs of only $10,000 during the third quarter of 2005 versus net charge-offs of $107,000 for the same period last year.  Year-to-date, the company reported net loan recoveries of $83,000 versus net charge-offs of $586,000 in the same period in 2004, a positive variance of $669,000.  Loan loss provision in the third quarter of 2005 was $408,000, compared to $100,000 in the same quarter last year due to higher loan growth in the quarter.  Nonperforming loans were $1.8 million or 18 basis points of total loans at September 30, 2005 versus 20 basis points at both September 30, 2004 and December 31, 2004.  The allowance for loan losses represented 1.35% of loans at September 30, 2005.  This compares to 1.30% at year end 2004 and 1.31% one year ago.

The Company’s Wealth Management business continued its advance.  Wealth Management income increased 36% from $1.1 million in the third quarter of 2004 to $1.5 million in the third quarter of 2005.  Year-to-date, Wealth Management income is up $1.2 million or 38%.  Approximately $428,000 of the year-to-date increase over the prior year came from the Company’s new Wealth Products Group that was launched in March of 2004.  This number is expected to grow materially in the future as a result of the addition of Millennium to this business segment.  Assets under administration were $1.5 billion at September 30, 2005, a 15% increase over December 31, 2004. 

A rising earnings credit rate on commercial accounts offset by increased account activity resulted in deposit service charges remaining basically unchanged in the third quarter as compared to the same quarter in 2004.  Higher production activity led to an increase in mortgage gains from $9,000 in third quarter 2004 to $145,000 in third quarter 2005.  The Company sold a foreclosed real estate property during the third quarter 2005 for a gain of $91,000 and the Company recorded $85,000 in losses on the sale of securities during the third quarter, versus $125,000 in gains for the same quarter in 2004.  In both cases, the securities were sold to assist in repositioning the balance sheet for the anticipated interest rate environment.

Noninterest expenses increased from $7.1 million in the third quarter of 2004 to $8.5 million in the same quarter of 2005.  The increase in expense during the third quarter of 2005 was due primarily to the company’s new long term incentive plan and related expensing of Restricted Stock Units, higher bonus and 401K match expense related to the Company’s annual performance incentive program, more competitive director compensation levels, higher commission expenses due to related revenues in Wealth Management, and higher professional fees associated with Sarbanes Oxley Section 404 compliance and acquisition activities.  For the nine months ended September 30, 2005, the efficiency ratio was 62.6%, versus 66.0% for the same period in the prior year.

2


“Our people continue to perform at an admirable level in a tough competitive environment.  Our  ‘fewer but better’ model of human resource deployment is consistently driving our productivity increases – something we see as essential for the long term,” commented Eichner.

The Company’s effective tax rate for the quarter ended September 30, 2005 was 36.1% versus 30.6% for the same quarter last year.  The 2004 tax rate was lower due to a $241,000 reversal of deferred tax valuation allowance recorded in the third quarter of 2004.

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.  The Company’s stock is listed nationally on NASDAQ under the symbol EFSC.

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.

3


ENTERPRISE FINANCIAL SERVICES CORP
CONSOLIDATED FINANCIAL SUMMARY
(unaudited)

 

 

For the Quarter Ended
September 30

 

For the Nine Months Ended
September 30

 

 

 

 

 

($ in thousands, except per share data)

 

2005

 

2004

 

2005

 

2004

 

 

 

 

 

 

INCOME STATEMENTS

 

 

 

 

 

 

 

 

 

 

 

 

 

Total interest income

 

$

17,611

 

$

12,550

 

$

48,497

 

$

35,195

 

Total interest expense

 

 

6,452

 

 

3,156

 

 

15,813

 

 

8,489

 

 

 

 

 

 

 

Net interest income

 

 

11,159

 

 

9,394

 

 

32,684

 

 

26,706

 

Provision for loan loss

 

 

408

 

 

100

 

 

1,420

 

 

1,437

 

 

 

 

 

 

 

Net interest income after provision for loan losses

 

 

10,751

 

 

9,294

 

 

31,264

 

 

25,269

 

NONINTEREST INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposit service charges

 

 

533

 

 

532

 

 

1,553

 

 

1,529

 

Wealth Management income

 

 

1,474

 

 

1,119

 

 

4,184

 

 

3,023

 

Gain on sale of mortgage loans

 

 

145

 

 

9

 

 

247

 

 

219

 

Gain on sale of other real estate

 

 

91

 

 

—  

 

 

91

 

 

—  

 

Gain (loss) on sale of securities

 

 

(85

)

 

125

 

 

(85

)

 

126

 

Other income

 

 

119

 

 

92

 

 

348

 

 

278

 

 

 

 

 

 

 

Total noninterest income

 

 

2,277

 

 

1,877

 

 

6,338

 

 

5,175

 

NONINTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and benefits

 

 

5,503

 

 

4,574

 

 

16,103

 

 

13,848

 

Occupancy

 

 

568

 

 

523

 

 

1,652

 

 

1,540

 

Furniture and equipment

 

 

212

 

 

176

 

 

572

 

 

534

 

Other

 

 

2,242

 

 

1,783

 

 

6,086

 

 

5,133

 

 

 

 

 

 

 

Total noninterest expense

 

 

8,525

 

 

7,056

 

 

24,413

 

 

21,055

 

 

 

 

 

 

 

Income before income tax

 

 

4,503

 

 

4,115

 

 

13,189

 

 

9,389

 

Income taxes

 

 

1,625

 

 

1,261

 

 

4,723

 

 

3,022

 

 

 

 

 

 

 

Net income

 

$

2,878

 

$

2,854

 

$

8,466

 

$

6,367

 

 

 

 

 

 

 

Basic earnings per share

 

$

0.29

 

$

0.29

 

$

0.85

 

$

0.66

 

Diluted earnings per share

 

$

0.27

 

$

0.28

 

$

0.80

 

$

0.63

 

Return on average assets

 

 

0.98

%

 

1.11

%

 

1.01

%

 

0.87

%

Return on average equity

 

 

13.84

%

 

16.51

%

 

14.37

%

 

12.57

%

Net interest rate margin (fully tax equivalized)

 

 

4.03

%

 

3.85

%

 

4.13

%

 

3.84

%

Yield on earning assets (fully tax equivalized)

 

 

6.33

%

 

5.12

%

 

6.10

%

 

5.04

%

Cost of paying liabilities

 

 

2.94

%

 

1.65

%

 

2.53

%

 

1.56

%

Net interest spread

 

 

3.39

%

 

3.47

%

 

3.57

%

 

3.48

%

Efficiency ratio

 

 

63.45

%

 

62.60

%

 

62.56

%

 

66.04

%

Noninterest expense to average assets

 

 

2.92

%

 

2.74

%

 

2.92

%

 

2.87

%

4


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

($ in thousands)

 

Sep 30,
2005

 

Jun 30,
2005

 

Mar 31,
2005

 

Dec 31,
2004

 

Sep 30,
2004

 

 

 

 

 

 

 

BALANCE SHEETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

38,542

 

$

35,156

 

$

32,085

 

$

28,324

 

$

29,316

 

Interest-bearing deposits

 

 

101

 

 

94

 

 

141

 

 

156

 

 

142

 

Debt and equity investments

 

 

96,684

 

 

89,193

 

 

92,572

 

 

121,638

 

 

93,007

 

Federal funds sold

 

 

45,281

 

 

43,149

 

 

—  

 

 

—  

 

 

38,712

 

Loans held for sale

 

 

2,273

 

 

3,996

 

 

4,180

 

 

2,376

 

 

1,599

 

Portfolio loans

 

 

976,804

 

 

958,878

 

 

972,802

 

 

898,505

 

 

874,092

 

Less allowance for loan losses

 

 

13,168

 

 

12,769

 

 

12,639

 

 

11,665

 

 

11,441

 

 

 

 

 

 

 

 

Net loans

 

 

963,636

 

 

946,109

 

 

960,163

 

 

886,840

 

 

862,651

 

 

 

 

 

 

 

 

Premises and equipment, net

 

 

10,098

 

 

9,556

 

 

8,413

 

 

8,044

 

 

7,071

 

Goodwill

 

 

1,938

 

 

1,938

 

 

1,938

 

 

1,938

 

 

1,938

 

Other assets

 

 

11,289

 

 

11,331

 

 

11,090

 

 

10,634

 

 

11,954

 

 

 

 

 

 

 

 

Total assets

 

$

1,169,842

 

$

1,140,522

 

$

1,110,582

 

$

1,059,950

 

$

1,046,390

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest bearing deposits

 

$

206,724

 

$

199,136

 

$

190,667

 

$

197,283

 

$

184,426

 

Interest bearing deposits

 

 

816,241

 

 

796,548

 

 

746,126

 

 

742,345

 

 

752,509

 

 

 

 

 

 

 

 

Total deposits

 

 

1,022,965

 

 

995,684

 

 

936,793

 

 

939,628

 

 

936,935

 

Subordinated debentures

 

 

20,620

 

 

20,620

 

 

20,620

 

 

20,620

 

 

20,619

 

FHLB advances

 

 

28,749

 

 

30,564

 

 

68,879

 

 

10,299

 

 

11,413

 

Federal funds purchased

 

 

—  

 

 

—  

 

 

—  

 

 

6,333

 

 

—  

 

Other borrowings

 

 

6,975

 

 

7,230

 

 

2,303

 

 

3,532

 

 

430

 

Other liabilities

 

 

7,036

 

 

5,984

 

 

5,263

 

 

6,812

 

 

5,947

 

 

 

 

 

 

 

 

Total liabilities

 

 

1,086,345

 

 

1,060,082

 

 

1,033,858

 

 

987,224

 

 

975,344

 

Shareholders’ equity

 

 

83,497

 

 

80,440

 

 

76,724

 

 

72,726

 

 

71,046

 

 

 

 

 

 

 

 

Total liabilities and shareholders’ equity

 

$

1,169,842

 

$

1,140,522

 

$

1,110,582

 

$

1,059,950

 

$

1,046,390

 

 

 

 

 

 

 

 

5


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

 

 

For the Quarter Ended

 

 

 

 

($ in thousands, except per share data)

 

Sep 30,
2005

 

Jun 30,
2005

 

Mar 31,
2005

 

Dec 31,
2004

 

Sep 30,
2004

 

 

 

 

 

 

 

EARNINGS SUMMARY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

$

11,159

 

$

11,002

 

$

10,522

 

$

10,018

 

$

9,394

 

Provision for loan losses

 

 

408

 

 

226

 

 

786

 

 

775

 

 

100

 

Wealth Mangement income

 

 

1,474

 

 

1,487

 

 

1,223

 

 

1,283

 

 

1,119

 

Noninterest income

 

 

803

 

 

738

 

 

614

 

 

663

 

 

758

 

Noninterest expense

 

 

8,525

 

 

8,171

 

 

7,717

 

 

8,276

 

 

7,056

 

Income before income tax

 

 

4,503

 

 

4,830

 

 

3,856

 

 

2,913

 

 

4,115

 

Net income

 

 

2,878

 

 

3,141

 

 

2,447

 

 

1,846

 

 

2,854

 

Diluted earnings per share

 

$

0.27

 

$

0.29

 

$

0.23

 

$

0.18

 

$

0.28

 

Return on average equity

 

 

13.84

%

 

16.01

%

 

13.23

%

 

10.15

%

 

16.51

%

Net interest rate margin (fully tax equivalized)

 

 

4.03

%

 

4.19

%

 

4.18

%

 

3.85

%

 

3.85

%

Efficiency ratio

 

 

63.45

%

 

61.78

%

 

62.44

%

 

69.17

%

 

62.60

%

MARKET DATA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Book value per share

 

$

8.26

 

$

8.00

 

$

7.65

 

$

7.44

 

$

7.30

 

Market value per share

 

$

21.22

 

$

23.65

 

$

19.00

 

$

18.50

 

$

14.60

 

Period end common shares

 

 

10,111

 

 

10,056

 

 

10,032

 

 

9,778

 

 

9,732

 

Average basic common shares

 

 

10,083

 

 

10,046

 

 

9,922

 

 

9,747

 

 

9,724

 

Average diluted common shares

 

 

10,782

 

 

10,676

 

 

10,521

 

 

10,224

 

 

10,074

 

ASSET QUALITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net charge-offs (recoveries)

 

$

10

 

$

96

 

$

(188

)

$

551

 

$

107

 

Nonperforming loans

 

$

1,777

 

$

2,136

 

$

3,134

 

$

1,826

 

$

1,722

 

Nonperforming loans to total loans

 

 

0.18

%

 

0.22

%

 

0.32

%

 

0.20

%

 

0.20

%

Allowance for loan losses to total loans

 

 

1.35

%

 

1.33

%

 

1.30

%

 

1.30

%

 

1.31

%

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

 

 

0.00

%

 

0.04

%

 

(0.08

)%

 

0.25

%

 

0.05

%

CAPITAL

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average equity to average assets

 

 

7.12

%

 

7.07

%

 

6.98

%

 

6.62

%

 

6.72

%

Tier 1 capital to risk-weighted assets

 

 

10.29

%

 

10.14

%

 

9.73

%

 

9.94

%

 

9.89

%

Total capital to risk-weighted assets

 

 

11.54

%

 

11.39

%

 

10.98

%

 

11.19

%

 

11.14

%

AVERAGE BALANCES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Portfolio loans

 

$

968,802

 

$

963,570

 

$

932,910

 

$

872,700

 

$

856,221

 

Earning assets

 

 

1,114,508

 

 

1,067,366

 

 

1,034,525

 

 

1,047,990

 

 

983,331

 

Total assets

 

 

1,159,341

 

 

1,113,075

 

 

1,075,724

 

 

1,092,674

 

 

1,022,998

 

Deposits

 

 

1,012,070

 

 

942,466

 

 

919,910

 

 

977,359

 

 

904,583

 

Shareholders’ equity

 

 

82,495

 

 

78,701

 

 

75,037

 

 

72,345

 

 

68,769

 

LOAN PORTFOLIO

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

$

263,286

 

$

264,451

 

$

278,752

 

$

253,594

 

$

250,029

 

Commercial real estate

 

 

363,566

 

 

352,005

 

 

356,670

 

 

328,986

 

 

311,107

 

Construction real estate

 

 

128,444

 

 

134,459

 

 

132,297

 

 

127,180

 

 

117,251

 

Residential real estate

 

 

177,948

 

 

168,315

 

 

162,111

 

 

149,293

 

 

153,999

 

Consumer and other

 

 

43,559

 

 

39,649

 

 

42,972

 

 

39,451

 

 

41,705

 

 

 

 

 

 

 

 

Total loan portfolio

 

$

976,804

 

$

958,878

 

$

972,802

 

$

898,505

 

$

874,092

 

DEPOSIT PORTFOLIO

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing accounts

 

$

206,724

 

$

199,136

 

$

190,667

 

$

197,283

 

$

184,426

 

Interest-bearing transaction accounts

 

 

85,824

 

 

86,815

 

 

91,512

 

 

85,523

 

 

77,952

 

Money market and savings accounts

 

 

450,107

 

 

449,793

 

 

429,102

 

 

436,259

 

 

438,670

 

Certificates of deposit

 

 

280,310

 

 

259,940

 

 

225,512

 

 

220,563

 

 

235,887

 

 

 

 

 

 

 

 

Total deposit portfolio

 

$

1,022,965

 

$

995,684

 

$

936,793

 

$

939,628

 

$

936,935

 

6