Enterprise Financial Reports Third Quarter 2020 Results

Company Release - 10/19/2020 4:03 PM ET

Third Quarter Results

  • Net income of $18.0 million, $0.68 per diluted share, including the impact of provision for credit losses of $0.40 per share
  • Net interest margin (tax equivalent) of 3.29%
  • Return on average assets of 0.86%
  • Maintained dividend of $0.18 per share for fourth quarter
  • Received Federal Reserve and FDIC approval for announced acquisition of Seacoast Commerce Banc Holdings (“Seacoast”) and Seacoast Commerce Bank

ST. LOUIS--(BUSINESS WIRE)-- Enterprise Financial Services Corp(Nasdaq: EFSC) (the “Company” or “EFSC”) reported net income of $18.0 million for the third quarter 2020, an increase of $3.3 million compared to the linked second quarter (“linked quarter”) and a decrease of $11.1 million from the prior year quarter. Earnings per diluted share (“EPS”) was $0.68 for the third quarter 2020, compared to $0.56 and $1.08 for the linked and prior year quarters, respectively. Net income and EPS in the current quarter increased from the linked quarter primarily due to a reduction in provision for credit losses and an increase in noninterest income. This increase was partially offset by $1.6 million of merger-related expenses. The decrease in net income and EPS from the prior year quarter was primarily due to an increase in provision for credit losses.

Jim Lally, EFSC’s President and Chief Executive Officer, commented, “Today we reported earnings of $0.68 per diluted share for the third quarter. These financial results reflect solid performance with pre-provision net revenue1 of $38.0 million, or 1.81% of average assets. Given the ongoing economic uncertainty, we continued to build our allowance for credit losses, and our earnings profile allowed us to also build capital during the third quarter. As we move into the end of 2020, we remain well positioned to continue to support our customers, complete the acquisition of Seacoast and execute on our business plans.”

Highlights

  • Earnings - Net income in the third quarter 2020 was $18.0 million, an increase of $3.3 million compared to the linked quarter and a decrease of $11.1 million from the prior year quarter. EPS was $0.68 per diluted share for the third quarter 2020, compared to $0.56 and $1.08 per diluted share for the linked and prior year quarters, respectively.
  • Pre-provision net revenue1 (“PPNR”) - PPNR (excluding merger-related expenses) of $38.0 million in the third quarter 2020 increased $0.1 million and decreased $0.7 million from the linked and prior year quarters, respectively.

1 PPNR is a nonGAAP 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 $63.4 million for the third quarter 2020 decreased $2.5 million and increased $0.3 million, from the linked quarter and prior year quarter, respectively. NIM was 3.29% for the third quarter 2020, compared to 3.53% and 3.81% for the linked quarter and prior year quarter, respectively.
  • Noninterest income - Noninterest income of $12.6 million for the third quarter 2020 increased $2.7 million and decreased $0.9 million from the linked quarter and prior year quarter, respectively. The current quarter increase was driven by volume increases in deposit services, card services, mortgage banking and tax credit activity.
  • Loans - Total loans declined $13.7 million, or 0.9% on an annualized basis, from the linked quarter to $6.1 billion as of September 30, 2020. Year-over-year, loans grew $898.3 million, or 17.2% on an annualized basis, from $5.2 billion as of September 30, 2019. Average loans totaled $6.1 billion for the quarter ended September 30, 2020 compared to $6.0 billion and $5.2 billion for the linked and prior year quarters, respectively. Paycheck Protection Program (“PPP”) loans primarily contributed to growth in the loan portfolio over the prior year quarter. As of September 30, 2020, loan modifications in a deferral status comprised 2% of the loan portfolio.

PPP details:

 

Quarter ended

($ in thousands, except per share data)

September 30, 2020

 

June 30, 2020

PPP loans outstanding, net of unearned fees

$

819,100

 

 

$

807,814

 

Average PPP loans outstanding, net

813,244

 

 

634,632

 

PPP average loan size

216

 

 

224

 

PPP interest and fee income

5,226

 

 

4,083

 

PPP unearned fees

19,522

 

 

22,414

 

PPP average yield

2.56

%

 

2.59

%

 

Quarter ended