Enterprise Financial Services Corp. (EFSC, Financial) filed Quarterly Report for the period ended 2010-03-31.
Enterprise Financial Services Corp. has a market cap of $152.6 million; its shares were traded at around $10.27 with and P/S ratio of 1.2. The dividend yield of Enterprise Financial Services Corp. stocks is 2%.EFSC is in the portfolios of Chuck Royce of Royce& Associates.
Loan growth – At March 31, 2010, portfolio loans were $1.80 billion, a decrease of $391.0 million, or 18%, from March 31, 2009. Portfolio loans decreased by $32.9 million, or 2%, from December 31, 2009. Excluding the effects of derecognizing $227.3 million in loan participations at March 31, 2009, loans decreased $163.4 million, or 8%, from March 31, 2009. The decrease from first quarter 2009 and year end is primarily due to clients paying down their lines, weak new loan demand and charge-offs. The Company anticipates modest loan growth over the course of the year. Deposit growth – Total deposits were $1.90 billion at March 31, 2010, an increase of $158.5 million, or 9%, from March 31, 2009. Total deposits decreased $37.4 million, or 2%, from December 31, 2009. Our deposit mix continues to improve. Noninterest-bearing demand deposits were $300.8 million at March 31, 2010, or 16% of total deposits compared to $238.4 million, or 14% of total deposits at March 31, 2009 and 15% of total deposits at December 31, 2009. The increase in noninterest bearing demand deposits from March 2009 was $62.4 million, or 26%, while the increase from December 2009 was $11.2 million, or 4%. Brokered deposits were $132.0 million at March 31, 2010, a decrease of $125.2 million from March 31, 2009 and $24.2 million from December 31, 2009. For the first quarter of 2010, brokered certificates of deposit represented 8% of total deposits on average compared to 10% for the fourth quarter of 2009 and 18% for the first quarter of 2009. Excluding brokered certificates of deposit, “core” deposits grew $283.7 million, or 19%, from a year ago and declined $13.1 million, or 1%, during the quarter, which is consistent with the seasonality typically seen in our deposit base. Core deposits include certificates of deposit sold to clients through the reciprocal CDARS program. As of March 31, 2010, Enterprise had $147.9 million of reciprocal CDARS deposits outstanding compared to $98.4 million at March 31, 2009 and $134.8 million December 31, 2009.
Asset quality – Nonperforming loans totaled $55.8 million at March 31, 2010, an increase of $1.4 million from the prior year period, and an increase of $17.3 million from year end 2009. The first quarter increase in nonperforming loans, following three consecutive quarters of relative stability, reflected significant deterioration of the commercial real estate markets as vacancy rates remain high in the face of continued high unemployment. Provision for loan losses was $13.8 million in the first quarter, down from $16.5 million in the prior year first quarter and up from $8.4 million in the linked fourth quarter. The linked quarter increase in loan loss provision was largely attributable to increased reserves on impaired loans driven by continuing declining values of the underlying collateral of several large commercial and residential real estate credits.
Arizona Operations - In February 2010, Enterprise opened a new branch in the West Valley suburbs of Phoenix. The Company currently operates a loan production office in central Phoenix and plans to open another full-service branch in central Phoenix in the summer of 2010. During June, the Company plans to close its branch in Mesa, Arizona, which was acquired in an FDIC-assisted acquisition in December, 2009. Total Arizona deposits were $23.9 million and total loans were $42.4 million at March 31, 2010. Loans at fair value covered under the December 2009 loss sharing agreement with the FDIC were $14.0 million. Wealth Management Segment Fee income from the Wealth Management segment, including results from state tax credit brokerage activity, totaled $1.3 million in the first quarter of 2010, an increase of $137,000, or 12%, from the same quarter of 2009. See Noninterest Income in this section for more information.
Average interest-earning assets decreased $125.9 million, or 5%, to $2.2 billion for the quarter ended March 31, 2010 compared to $2.3 billion for the quarter ended March 31, 2009. Loans decreased $389.2 million, or 18%, to $1.8 billion, including the derecognition of $227.6 million of loan participations in the first quarter of 2009. Investment securities increased $263.3 million, or 217%, to $384.7 million from the first quarter of 2009 as increased core deposits were deployed to offset weak loan demand. Short-term investments, including cash balances at the Federal Reserve, increased $84.8 million to $98.0 million compared to $13.2 million in the same period of 2009. Interest income on loans increased $1.9 million due to higher rates, but was offset by a decrease of $5.6 million due to lower volumes, for a net decrease of $3.7 million versus the first quarter of 2009.
For the quarter ended March 31, 2010, average interest-bearing liabilities decreased $172.8 million, or 8%, to $1.9 billion compared to $2.1 billion for the quarter ended March 31, 2009. The decline in interest-bearing liabilities resulted from a $230.8 million decrease in borrowings related to the derecognition of loan participations, a $99.4 million decrease in federal funds purchased and a $159.8 million decrease in brokered certificates of deposit, offset by a $292.4 million increase in core deposits, and a $24.8 million increase in borrowings. For the first quarter of 2010, interest expense on interest-bearing liabilities decreased $1.5 million due to decreases in volume, while the impact of declining rates decreased interest expense on interest-bearing liabilities by $2.8 million versus first quarter of 2009, for a net decrease of $4.3 million.
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Enterprise Financial Services Corp. has a market cap of $152.6 million; its shares were traded at around $10.27 with and P/S ratio of 1.2. The dividend yield of Enterprise Financial Services Corp. stocks is 2%.EFSC is in the portfolios of Chuck Royce of Royce& Associates.
Highlight of Business Operations:
Executive Summary We reported a net loss from continuing operations of $3.0 million, or $0.25 per fully diluted share after deducting dividends on preferred stock, compared to a net loss from continuing operations of $51.8 million, or $4.09 per share, for the prior year period. The first quarter 2010 net loss was attributable to $13.8 million in loan loss provision. The net loss reported for the first quarter of 2009 was driven by $16.5 million in loan loss provision and a $45.4 million non-cash accounting charge to eliminate banking segment goodwill.Loan growth – At March 31, 2010, portfolio loans were $1.80 billion, a decrease of $391.0 million, or 18%, from March 31, 2009. Portfolio loans decreased by $32.9 million, or 2%, from December 31, 2009. Excluding the effects of derecognizing $227.3 million in loan participations at March 31, 2009, loans decreased $163.4 million, or 8%, from March 31, 2009. The decrease from first quarter 2009 and year end is primarily due to clients paying down their lines, weak new loan demand and charge-offs. The Company anticipates modest loan growth over the course of the year. Deposit growth – Total deposits were $1.90 billion at March 31, 2010, an increase of $158.5 million, or 9%, from March 31, 2009. Total deposits decreased $37.4 million, or 2%, from December 31, 2009. Our deposit mix continues to improve. Noninterest-bearing demand deposits were $300.8 million at March 31, 2010, or 16% of total deposits compared to $238.4 million, or 14% of total deposits at March 31, 2009 and 15% of total deposits at December 31, 2009. The increase in noninterest bearing demand deposits from March 2009 was $62.4 million, or 26%, while the increase from December 2009 was $11.2 million, or 4%. Brokered deposits were $132.0 million at March 31, 2010, a decrease of $125.2 million from March 31, 2009 and $24.2 million from December 31, 2009. For the first quarter of 2010, brokered certificates of deposit represented 8% of total deposits on average compared to 10% for the fourth quarter of 2009 and 18% for the first quarter of 2009. Excluding brokered certificates of deposit, “core” deposits grew $283.7 million, or 19%, from a year ago and declined $13.1 million, or 1%, during the quarter, which is consistent with the seasonality typically seen in our deposit base. Core deposits include certificates of deposit sold to clients through the reciprocal CDARS program. As of March 31, 2010, Enterprise had $147.9 million of reciprocal CDARS deposits outstanding compared to $98.4 million at March 31, 2009 and $134.8 million December 31, 2009.
Asset quality – Nonperforming loans totaled $55.8 million at March 31, 2010, an increase of $1.4 million from the prior year period, and an increase of $17.3 million from year end 2009. The first quarter increase in nonperforming loans, following three consecutive quarters of relative stability, reflected significant deterioration of the commercial real estate markets as vacancy rates remain high in the face of continued high unemployment. Provision for loan losses was $13.8 million in the first quarter, down from $16.5 million in the prior year first quarter and up from $8.4 million in the linked fourth quarter. The linked quarter increase in loan loss provision was largely attributable to increased reserves on impaired loans driven by continuing declining values of the underlying collateral of several large commercial and residential real estate credits.
Arizona Operations - In February 2010, Enterprise opened a new branch in the West Valley suburbs of Phoenix. The Company currently operates a loan production office in central Phoenix and plans to open another full-service branch in central Phoenix in the summer of 2010. During June, the Company plans to close its branch in Mesa, Arizona, which was acquired in an FDIC-assisted acquisition in December, 2009. Total Arizona deposits were $23.9 million and total loans were $42.4 million at March 31, 2010. Loans at fair value covered under the December 2009 loss sharing agreement with the FDIC were $14.0 million. Wealth Management Segment Fee income from the Wealth Management segment, including results from state tax credit brokerage activity, totaled $1.3 million in the first quarter of 2010, an increase of $137,000, or 12%, from the same quarter of 2009. See Noninterest Income in this section for more information.
Average interest-earning assets decreased $125.9 million, or 5%, to $2.2 billion for the quarter ended March 31, 2010 compared to $2.3 billion for the quarter ended March 31, 2009. Loans decreased $389.2 million, or 18%, to $1.8 billion, including the derecognition of $227.6 million of loan participations in the first quarter of 2009. Investment securities increased $263.3 million, or 217%, to $384.7 million from the first quarter of 2009 as increased core deposits were deployed to offset weak loan demand. Short-term investments, including cash balances at the Federal Reserve, increased $84.8 million to $98.0 million compared to $13.2 million in the same period of 2009. Interest income on loans increased $1.9 million due to higher rates, but was offset by a decrease of $5.6 million due to lower volumes, for a net decrease of $3.7 million versus the first quarter of 2009.
For the quarter ended March 31, 2010, average interest-bearing liabilities decreased $172.8 million, or 8%, to $1.9 billion compared to $2.1 billion for the quarter ended March 31, 2009. The decline in interest-bearing liabilities resulted from a $230.8 million decrease in borrowings related to the derecognition of loan participations, a $99.4 million decrease in federal funds purchased and a $159.8 million decrease in brokered certificates of deposit, offset by a $292.4 million increase in core deposits, and a $24.8 million increase in borrowings. For the first quarter of 2010, interest expense on interest-bearing liabilities decreased $1.5 million due to decreases in volume, while the impact of declining rates decreased interest expense on interest-bearing liabilities by $2.8 million versus first quarter of 2009, for a net decrease of $4.3 million.
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