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Enterprise Financial Reports First Quarter 2021 Results

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Enterprise Financial Services Corp (Nasdaq: EFSC) (the “Company” or “EFSC”) reported net income of $29.9 million for the first quarter 2021, an increase of $1.0 million compared to the linked fourth quarter (“linked quarter”) and an increase of $17.1 million from the prior year quarter. Earnings per diluted share (“EPS”) was $0.96 for the first quarter 2021, compared to $1.00 and $0.48 for the linked and prior year quarters, respectively.

Jim Lally, EFSC’s President and Chief Executive Officer, commented, ‘Today we announced the acquisition of First Choice headquartered in Cerritos, California. This transaction strengthens our California presence with a pro forma asset base of $3.8 billion. I am excited about how this adds to our expected growth prospects and diversification of our business, particularly in close proximity to the successful first quarter core systems integration for Seacoast. We are off to a solid start in 2021, with earnings of $0.96 per share and continued execution on the Paycheck Protection Program (“PPP”) for the benefit of our customers. In addition, we issued our inaugural Environmental, Social and Governance report during March. I am pleased that we have taken the first step in reporting our ESG efforts and demonstrating the importance of our ESG objectives in meeting our mission.”

Highlights

  • Earnings - Net income in the first quarter 2021 was $29.9 million, an increase of $1.0 million compared to the linked quarter and an increase of $17.1 million from the prior year quarter. EPS was $0.96 per diluted share for the first quarter 2021, compared to $1.00 and $0.48 per diluted share for the linked and prior year quarters, respectively. Merger-related expenses from the Seacoast transaction reduced net income $2.4 million, or $0.07 per share. The increase in net income and EPS from the prior year quarter was primarily due to a decrease of $22.2 million in the provision for credit losses.
  • Pre-provision net revenue1 (“PPNR”) - PPNR of $40.7 million in the first quarter 2021 decreased $6.8 million and increased $2.6 million from the linked and prior year quarters, respectively. The decrease from the linked quarter was primarily due to a decline in tax credit revenue and PPP fees. The increase from the prior year quarter was primarily from the Seacoast acquisition that was completed in the fourth quarter and income from PPP that started in the second quarter of 2020.

1 PPNR is a non-GAAP measure. Refer to discussion and reconciliation of these measures in the accompanying financial tables.

  • Net interest income and net interest margin (“NIM”) - Net interest income of $79.1 million for the first quarter 2021 increased $1.7 million and $15.8 million from the linked quarter and prior year quarter, respectively. NIM was 3.50% for the first quarter 2021, compared to 3.66% and 3.79% for the linked quarter and prior year quarter, respectively.
  • Noninterest income - Noninterest income of $11.3 million for the first quarter 2021 decreased $7.2 million and $2.1 million from the linked quarter and prior year quarter, respectively. The decrease was primarily due to a decline in tax credit activity caused by delays in projects, which declined $5.1 million from the linked quarter and $3.1 million from the prior year quarter.
  • Loans - Total loans increased $63.8 million, or 3.6% on an annualized basis, from the linked quarter to $7.3 billion as of March 31, 2021. Year-over-year, loans grew $1.8 billion, or 33.6% from $5.5 billion as of March 31, 2020, primarily due to Seacoast loans of $1.2 billion upon acquisition and PPP loans of $737.7 million. Average loans totaled $7.2 billion for the quarter ended March 31, 2021 compared to $6.8 billion and $5.4 billion for the linked and prior year quarters, respectively.

PPP details:

 

Quarter ended

($ in thousands, except per share data)

March 31, 2021

 

December 31, 2020

 

September 30, 2020

 

June 30, 2020

PPP loans outstanding, net of deferred fees

$

737,660

 

 

$

698,645

 

 

$

819,100

 

 

$

807,814

 

Average PPP loans outstanding, net

692,161

 

 

806,697

 

 

813,244

 

 

634,632

 

PPP average loan size

220

 

 

187

 

 

216

 

 

224

 

PPP interest and fee income

8,475

 

 

10,261

 

 

5,226

 

 

4,083

 

PPP deferred fees

16,676

 

 

11,304

 

 

19,522

 

 

22,414

 

PPP average yield

4.97

%

 

5.06

%

 

2.56

%

 

2.59

%

 

Quarter ended

 

March 31, 2021

 

December 31, 2020

 

September 30, 2020

 

June 30, 2020

Financial Metrics:

As

Reported

 

Excluding

PPP*

 

As

Reported

 

Excluding

PPP*

 

As

Reported

 

Excluding

PPP*

 

As

Reported

 

Excluding

PPP*

EPS

$

0.96

 

 

$

0.75

 

 

$

1.00

 

 

$

0.73

 

 

$

0.68

 

 

$

0.53

 

 

$

0.56

 

 

$

0.44

 

ROAA

1.22

%

 

1.03

%

 

1.26

%

 

1.01

%

 

0.86

%

 

0.74

%

 

0.72

%

 

0.62

%

PPNR ROAA

1.66

%

 

1.41

%

 

2.07

%

 

1.78

%

 

1.81

%

 

1.73

%

 

1.87

%

 

1.81

%

Tangible common

equity/tangible

assets*

8.18

%

 

8.84

%

 

8.40

%

 

9.07

%

 

7.99

%

 

8.89

%

 

7.81

%

 

8.67

%

Leverage ratio

9.5

%

 

10.2

%

 

10.0

%

 

11.0

%

 

9.2

%

 

10.2

%

 

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Enterprise Finl Svcs Corp

NASDAQ:EFSC

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United States
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