Second Quarter Results
- Net income of $49.1 million, $1.29 per diluted common share
- Net interest margin of 4.49%, quarterly decrease of 22 basis points
- Net interest income of $140.7 million, quarterly increase of $1.2 million
- Total loans of $10.5 billion, quarterly increase of $500.7 million
- Total deposits of $11.6 billion, quarterly increase of $465.2 million
- Tangible common equity to tangible assets1 of 8.65%
ST. LOUIS–(BUSINESS WIRE)–Jim Lally, President and Chief Executive Officer of Enterprise Financial Services Corp (Nasdaq: EFSC) (the “Company” or “EFSC”), said today upon the release of EFSC’s second quarter earnings, “I am pleased with our strong financial performance in the second quarter and our associates continued commitment to our customers and communities. We had significant loan growth across our geographic regions and business lines, building on the momentum from the first quarter. This increase in average loans has helped accelerate interest income to mitigate the effect of rising deposit interest expense. We remain focused on executing our strategic initiatives, including a focus on customer engagement and onboarding to support deposit growth and operational efficiencies.”
Highlights
- Earnings – Net income in the second quarter 2023 was $49.1 million, a decrease of $6.6 million, compared to the linked quarter and an increase of $4.0 million from the prior year quarter. Earnings per share (“EPS”) was $1.29 per diluted common share for the second quarter 2023, compared to $1.46 and $1.19 per diluted common share for the linked and prior year quarters, respectively.
- Pre-provision net revenue2 (“PPNR”) – PPNR of $68.9 million in the second quarter 2023 decreased $6.0 million from the linked quarter and increased $10.5 million from the prior year quarter.
- Net interest income and net interest margin (“NIM”) – Net interest income of $140.7 million for the second quarter 2023 increased $1.2 million and $31.1 million from the linked and prior year quarters, respectively. NIM was 4.49% for the second quarter 2023, compared to 4.71% and 3.55% for the linked and prior year quarters, respectively. Net interest income and NIM benefited from higher average loan and investment balances combined with expanding yields on earning assets. NIM decreased 22 basis points from the linked quarter, primarily due to the increase in deposit interest expense.
- Noninterest income – Noninterest income of $14.3 million for the second quarter 2023 decreased $2.6 million and increased $0.1 million from the linked quarter and the prior year quarter, respectively. The decline from the linked quarter was primarily due to decreases in tax credit income and in gains on the sale of investment securities and SBA loans.
- Noninterest expense – Noninterest expense of $86.0 million for the second quarter 2023 increased $5.0 million and $20.5 million from the linked quarter and the prior year quarter, respectively. The increase from both the linked and prior year quarters was primarily due to an increase in variable deposit costs and operational losses. An increase in employee compensation also contributed to the increase from the prior year quarter.
- Loans – Loans totaled $10.5 billion at June 30, 2023, an increase of $500.7 million, or 20.1% on an annualized basis, from the linked quarter and an increase of $1.2 billion from the prior year period. Average loans totaled $10.3 billion for the quarter ended June 30, 2023, compared to $9.8 billion and $9.1 billion for the linked and prior year quarters, respectively.
- Asset quality – The allowance for credit losses to total loans was 1.34% at June 30, 2023, compared to 1.38% at March 31, 2023 and 1.52% at June 30, 2022. Nonperforming assets to total assets was 0.12% at June 30, 2023, compared to 0.09% and 0.16% at March 31, 2023 and June 30, 2022, respectively. The provision for credit losses of $6.3 million recorded in the second quarter 2023 was primarily related to loan growth, net charge-offs and a change in economic factors.
- Deposits – Total deposits increased $465.2 million from the linked quarter to $11.6 billion as of June 30, 2023. Total estimated insured deposits, which includes collateralized deposits and accounts that qualify for pass through insurance, totaled $8.3 billion at June 30, 2023. Average deposits totaled $11.4 billion for the quarter ended June 30, 2023, compared to $10.9 billion and $11.5 billion for the linked and prior year quarters, respectively. At June 30, 2023, noninterest-bearing deposit accounts totaled $3.9 billion, or 33.4% of total deposits, and the loan to deposit ratio was 90.5%.
- Liquidity – The Company’s total available on- and off-balance-sheet liquidity was approximately $4.5 billion at June 30, 2023. On-balance-sheet liquidity consisted of cash of $322.0 million and unpledged investment securities with a fair value of $647.3 million at June 30, 2023. Off-balance-sheet liquidity consisted of $764.1 million available through the Federal Home Loan Bank, $2.6 billion through the Federal Reserve and $140.0 million through correspondent bank lines. The Company also has an unused $25.0 million revolving line of credit and maintains a shelf registration allowing for the issuance of various forms of equity and debt securities.
- Capital – Total shareholders’ equity was $1.6 billion and the tangible common equity to tangible assets ratio3 was 8.65% at June 30, 2023, compared to 8.81% at March 31, 2023. The tangible common equity to tangible assets ratio, adjusted for unrealized losses on held-to-maturity securities,3 was 8.25% at June 30, 2023 and 8.43% at March 31, 2023. Enterprise Bank & Trust remains “well-capitalized,” with a common equity tier 1 ratio of 12.0% and a total risk-based capital ratio of 13.0% as of June 30, 2023. The Company’s common equity tier 1 ratio and total risk-based capital ratio was 11.1% and 14.1%, respectively, at June 30, 2023.
The Company’s Board of Directors approved a quarterly dividend of $0.25 per common share, payable on September 29, 2023 to shareholders of record as of September 15, 2023. The board of directors also declared a cash dividend of $12.50 per share of Series A Preferred Stock (or $0.3125 per depositary share) representing a 5% per annum rate for the period commencing (and including) June 15, 2023 to (but excluding) September 15, 2023. The dividend will be payable on September 15, 2023 to holders of record of Series A Preferred Stock as of August 31, 2023.
Net Interest Income and NIM
Average Balance Sheets
The following table presents, for the periods indicated, certain information related to our average interest-earning assets and interest-bearing liabilities, as well as the corresponding average interest rates earned and paid, all on a tax-equivalent basis.
|
|
Quarter ended |
|||||||||||||||||||||||||
|
|
June 30, 2023 |
|
March 31, 2023 |
|
June 30, 2022 |
|||||||||||||||||||||
|
($ in thousands) |
Average Balance |
|
Interest Income/ Expense |
|
Average Yield/ Rate |
|
Average Balance |
|
Interest Income/ Expense |
|
Average Yield/ Rate |
|
Average Balance |
|
Interest Income/ Expense |
|
Average Yield/ Rate |
|||||||||
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Interest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Loans1, 2 |
$ |
10,284,873 |
|
$ |
170,314 |
|
6.64 |
% |
|
$ |
9,795,045 |
|
$ |
152,762 |
|
6.33 |
% |
|
$ |
9,109,131 |
|
$ |
102,328 |
|
4.51 |
% |
|
Securities2 |
|
2,297,995 |
|
|
17,550 |
|
3.06 |
|
|
|
2,288,451 |
|
|
17,117 |
|
3.03 |
|
|
|
2,068,119 |
|
|
12,944 |
|
2.51 |
|
|
Interest-earning deposits |
|
173,785 |
|
|
2,095 |
|
4.84 |
|
|
|
106,254 |
|
|
1,195 |
|
4.56 |
|
|
|
1,401,961 |
|
|
2,496 |
|
0.71 |
|
|
Total interest-earning assets |
|
12,756,653 |
|
|
189,959 |
|
5.97 |
|
|
|
12,189,750 |
|
|
171,074 |
|
5.69 |
|
|
|
12,579,211 |
|
|
117,768 |
|
3.76 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Noninterest-earning assets |
|
915,332 |
|
|
|
|
|
|
941,445 |
|
|
|
|
|
|
949,263 |
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Total assets |
$ |
13,671,985 |
|
|
|
|
|
$ |
13,131,195 |
|
|
|
|
|
$ |
13,528,474 |
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Liabilities and Shareholders’ Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Interest-bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Interest-bearing demand accounts |
$ |
2,509,805 |
|
$ |
10,120 |
|
1.62 |
% |
|
$ |
2,201,910 |
|
$ |
5,907 |
|
1.09 |
% |
|
$ |
2,329,431 |
|
$ |
659 |
|
0.11 |
% |
|
Money market accounts |
|
2,920,079 |
|
|
20,499 |
|
2.82 |
|
|
|
2,826,836 |
|
|
15,471 |
|
2.22 |
|
|
|
2,767,595 |
|
|
2,270 |
|
0.33 |
|
|
Savings accounts |
|
686,973 |
|
|
227 |
|
0.13 |
|
|
|
732,256 |
|
|
230 |
|
0.13 |
|
|
|
854,860 |
|
|
70 |
|
0.03 |
|
|
Certificates of deposit |
|
1,219,500 |
|
|
10,526 |
|
3.46 |
|
|
|
670,521 |
|
|
3,053 |
|
1.85 |
|
|
|
591,091 |
|
|
851 |
|
0.58 |
|
|
Total interest-bearing deposits |
|
7,336,357 |
|
|
41,372 |
|
2.26 |
|
|
|
6,431,523 |
|
|
24,661 |
|
1.56 |
|
|
|
6,542,977 |
|
|
3,850 |
|
0.24 |
|
|
Subordinated debentures and notes |
|
155,632 |
|
|
2,431 |
|
6.27 |
|
|
|
155,497 |
|
|
2,409 |
|
6.28 |
|
|
|
155,092 |
|
|
2,257 |
|
5.84 |
|
|
FHLB advances |
|
98,912 |
|
|
1,279 |
|
5.19 |
|
|
|
110,928 |
|
|
1,332 |
|
4.87 |
|
|
|
50,000 |
|
|
197 |
|
1.58 |
|
|
Securities sold under agreements to repurchase |
|
162,606 |
|
|
704 |
|
1.74 |
|
|
|
215,604 |
|
|
749 |
|
1.41 |
|
|
|
202,537 |
|
|
41 |
|
0.08 |
|
|
Other borrowings |
|
133,770 |
|
|
1,419 |
|
4.25 |
|
|
|
53,885 |
|
|
353 |
|
2.66 |
|
|
|
21,413 |
|
|
111 |
|
2.08 |
|
|
Total interest-bearing liabilities |
|
7,887,277 |
|
|
47,205 |
|
2.40 |
|
|
|
6,967,437 |
|
|
29,504 |
|
1.72 |
|
|
|
6,972,019 |
|
|
6,456 |
|
0.37 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Noninterest-bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Demand deposits |
|
4,051,456 |
|
|
|
|
|
|
4,481,966 |
|
|
|
|
|
|
4,987,455 |
|
|
|
|
||||||
|
Other liabilities |
|
111,915 |
|
|
|
|
|
|
113,341 |
|
|
|
|
|
|
94,733 |
|
|
|
|
||||||
|
Total liabilities |
|
12,050,648 |
|
|
|
|
|
|
11,562,744 |
|
|
|
|
|
|
12,054,207 |
|
|
|
|
||||||
|
Shareholders’ equity |
|
1,621,337 |
|
|
|
|
|
|
1,568,451 |
|
|
|
|
|
|
1,474,267 |
|
|
|
|
||||||
|
Total liabilities and shareholders’ equity |
$ |
13,671,985 |
|
|
|
|
|
$ |
13,131,195 |
|
|
|
|
|
$ |
13,528,474 |
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Total net interest income |
|
|
$ |
142,754 |
|
|
|
|
|
$ |
141,570 |
|
|
|
|
|
$ |
111,312 |
|
|
||||||
|
Net interest margin |
|
|
|
|
4.49 |
% |
|
|
|
|
|
4.71 |
% |
|
|
|
|
|
3.55 |
% |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
1 Average balances include nonaccrual loans. Interest income includes loan fees of $3.7 million, $3.7 million, and $4.2 million for the three months ended June 30, 2023, March 31, 2023, and June 30, 2022, respectively. |
||||||||||||||||||||||||||
|
2 Non-taxable income is presented on a fully tax-equivalent basis using a 25.2% tax rate. The tax-equivalent adjustments were $2.1 million, $2.0 million, and $1.7 million for the three months ended June 30, 2023, March 31, 2023, and June 30, 2022, respectively. |
||||||||||||||||||||||||||
Net interest income (on a tax equivalent basis) for the second quarter 2023 was $142.8 million, an increase of $1.2 million, compared to the linked quarter and an increase of $31.4 million from the prior year period. The increase from the linked and prior year quarters reflects the benefit of higher market interest rates on the Company’s asset sensitive balance sheet combined with organic growth.
Interest income increased $18.9 million during the second quarter 2023 primarily due to an increase of $17.6 million in loan interest income from continued loan growth and higher loan yields. Interest on loans benefited from a 31 basis point increase in yield and a $489.8 million increase in average loans, compared to the linked quarter. The average interest rate of new loan originations in the second quarter 2023 was 7.60%.
Interest expense increased $17.7 million in the second quarter 2023 primarily due to a $16.7 million increase in deposit interest expense and a $1.0 million increase in interest expense on other borrowings. The increase in deposit interest expense reflects a shift in the deposit mix from demand deposits and interest-bearing demand deposits to money market accounts and certificates of deposit, as well as higher rates paid on deposits. The average cost of interest-bearing deposits was 2.26%, an increase of 70 basis points over the linked quarter. The increase was primarily due to higher rates paid on certificates of deposit and commercial money market accounts, which increased 161 basis points and 60 basis points, respectively, in addition to a higher average certificate of deposit balance. The total cost of deposits, including noninterest-bearing demand accounts, was 1.46% during the second quarter 2023, compared to 0.92% in the linked quarter. The increase in interest expense on other borrowings was primarily from higher average borrowings to increase on-balance-sheet liquidity primarily due to the uncertain impact of the federal government debt ceiling debate.
NIM, on a tax equivalent basis, was 4.49% in the second quarter 2023, a decrease of 22 basis points from the linked quarter and an increase of 94 basis points from the prior year quarter. For the month of June 2023, the loan portfolio yield was 6.74% and the cost of total deposits was 1.60%.
Investments
|
|
Quarter ended |
|||||||||||||||||||
|
|
June 30, 2023 |
|
March 31, 2023 |
|
June 30, 2022 |
|||||||||||||||
|
($ in thousands) |
Carrying Value |
|
Net Unrealized Loss |
|
Carrying Value |
|
Net Unrealized Loss |
|
Carrying Value |
|
Net Unrealized Loss |
|||||||||
|
Available-for-sale (AFS) |
$ |
1,550,375 |
|
$ |
(179,857 |
) |
|
$ |
1,555,109 |
|
$ |
(161,572 |
) |
|
$ |
1,493,277 |
|
$ |
(165,135 |
) |
|
Held-to-maturity (HTM) |
|
723,959 |
|
|
(71,673 |
) |
|
|
720,694 |
|
|
(65,013 |
) |
|
|
617,767 |
|
|
(80,899 |
) |
|
Total |
$ |
2,274,334 |
|
$ |
(251,530 |
) |
|
$ |
2,275,803 |
|
$ |
(226,585 |
) |
|
$ |
2,111,044 |
|
$ |
(246,034 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Investment securities totaled $2.3 billion at June 30, 2023, a decrease of $1.5 million from the linked quarter. The decrease was primarily due to an $18.3 million increase in the unrealized loss on available-for-sale securities due to a decline in longer-term rates in the quarter. The increase in the unrealized loss was partially offset by new investment purchases from the reinvestment of cash flows on the portfolio in the current quarter. Investment purchases in the second quarter 2023 had a weighted average, tax equivalent yield of 5.07%.
The average duration of the investment portfolio was 5.3 years at June 30, 2023. Due to the shorter average duration of the loan portfolio, of approximately 3 years, the Company leverages the investment portfolio to lengthen the overall duration of the balance sheet, primarily using high-quality municipal securities. The expected cash flow from pay downs, maturities and interest over the next 12 months is approximately $270 million. The tangible common equity to tangible assets ratio adjusted for unrealized losses on held-to-maturity securities4 was 8.25% at June 30, 2023, compared to 8.43% at March 31, 2023.
Loans
The following table presents total loans for the most recent five quarters:
|
|
Quarter ended |
||||||||||||||||||
|
($ in thousands) |
June 30, 2023 |
|
March 31, 2023 |
|
December 31, 2022 |
|
September 30, 2022 |
|
June 30, 2022 |
||||||||||
|
C&I |
$ |
2,029,370 |
|
|
$ |
2,005,539 |
|
|
$ |
1,904,654 |
|
|
$ |
1,780,677 |
|
|
$ |
1,641,740 |
|
|
CRE investor owned |
|
2,290,701 |
|
|
|
2,239,932 |
|
|
|
2,176,424 |
|
|
|
2,106,458 |
|
|
|
1,977,806 |
|
|
CRE owner occupied |
|
1,208,675 |
|
|
|
1,173,985 |
|
|
|
1,174,094 |
|
|
|
1,133,467 |
|
|
|
1,118,895 |
|
|
SBA loans* |
|
1,327,667 |
|
|
|
1,315,732 |
|
|
|
1,312,378 |
|
|
|
1,269,065 |
|
|
|
1,284,279 |
|
|
Sponsor finance* |
|
879,491 |
|
|
|
677,529 |
|
|
|
635,061 |
|
|
|
650,102 |
|
|
|
647,180 |
|
|
Life insurance premium financing* |
|
912,274 |
|
|
|
859,910 |
|
|
|
817,115 |
|
|
|
779,606 |
|
|
|
748,376 |
|
|
Tax credits* |
|
609,137 |
|
|
|
547,513 |
|
|
|
559,605 |
|
|
|
507,681 |
|
|
|
550,662 |
|
|
SBA PPP loans |
|
5,173 |
|
|
|
5,438 |
|
|
|
7,272 |
|
|
|
13,165 |
|
|
|
49,175 |
|
|
Residential real estate |
|
354,588 |
|
|
|
348,726 |
|
|
|
379,924 |
|
|
|
381,634 |
|
|
|
391,867 |
|
|
Construction and land development |
|
599,375 |
|
|
|
590,509 |
|
|
|
534,753 |
|
|
|
513,452 |
|
|
|
626,577 |
|
|
Other |
|
296,172 |
|
|
|
247,105 |
|
|
|
235,858 |
|
|
|
219,680 |
|
|
|
232,619 |
|
|
Total loans |
$ |
10,512,623 |
|
|
$ |
10,011,918 |
|
|
$ |
9,737,138 |
|
|
$ |
9,354,987 |
|
|
$ |
9,269,176 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Total loan yield |
|
6.64 |
% |
|
|
6.33 |
% |
|
|
5.87 |
% |
|
|
5.10 |
% |
|
|
4.51 |
% |
|
Variable interest rate loans to total loans |
|
62 |
% |
|
|
63 |
% |
|
|
63 |
% |
|
|
63 |
% |
|
|
64 |
% |
|
|
|||||||||||||||||||
|
*Specialty loan category |
|||||||||||||||||||
Loans totaled $10.5 billion at June 30, 2023, increasing $500.7 million, compared to the linked quarter. The increase was broad based across geographic regions and lines of business, particularly within the sponsor finance specialty area. Average line utilization was approximately 45% for the second quarter 2023, compared to 42% and 44% for the linked and prior year quarters, respectively. The weighted average life of the loan portfolio is approximately 3 years at June 30, 2023.
Asset Quality
The following table presents the categories of nonperforming assets and related ratios for the most recent five quarters:
|
|
Quarter ended |
||||||||||||||||||
|
($ in thousands) |
June 30, 2023 |
|
March 31, 2023 |
|
December 31, 2022 |
|
September 30, 2022 |
|
June 30, 2022 |
||||||||||
|
Nonperforming loans* |
$ |
16,112 |
|
|
$ |
11,972 |
|
|
$ |
9,981 |
|
|
$ |
18,184 |
|
|
$ |
19,560 |
|
|
Other |
|
— |
|
|
|
250 |
|
|
|
269 |
|
|
|
269 |
|
|
|
955 |
|
|
Nonperforming assets* |
$ |
16,112 |
|
|
$ |
12,222 |
|
|
$ |
10,250 |
|
|
$ |
18,453 |
|
|
$ |
20,515 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Nonperforming loans to total loans |
|
0.15 |
% |
|
|
0.12 |
% |
|
|
0.10 |
% |
|
|
0.19 |
% |
|
|
0.21 |
% |
|
Nonperforming assets to total assets |
|
0.12 |
% |
|
|
0.09 |
% |
|
|
0.08 |
% |
|
|
0.14 |
% |
|
|
0.16 |
% |
|
Allowance for credit losses to total loans |
|
1.34 |
% |
|
|
1.38 |
% |
|
|
1.41 |
% |
|
|
1.50 |
% |
|
|
1.52 |
% |
|
Net charge-offs (recoveries) |
$ |
2,973 |
|
|
$ |
(264 |
) |
|
$ |
2,075 |
|
|
$ |
478 |
|
|
$ |
(175 |
) |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
*Guaranteed balances excluded |
$ |
6,666 |
|
|
$ |
6,835 |
|
|
$ |
6,708 |
|
|
$ |
6,532 |
|
|
$ |
6,063 |
|
Nonperforming assets increased $3.9 million during the second quarter 2023 and decreased $4.4 million from the prior year quarter. The increase from the linked quarter was primarily related to the addition of one credit relationship that was partially written down in the period. Annualized net charge-offs totaled 12 basis points of average loans in the second quarter 2023, compared to a net recovery of one basis point in the linked and prior year quarters.
The provision for credit losses totaled $6.3 million in the second quarter 2023, compared to $4.2 million and $0.7 million in the linked quarter and prior year quarter, respectively. The provision for credit losses in the second quarter 2023 was primarily related to loan growth, net charge-offs, and a change in forecasted economic factors. The provision in the linked quarter was primarily related to the impairment of an available-for-sale investment security of a failed bank and loan growth. The allowance for credit losses to total loans was 1.34% at June 30, 2023, compared to 1.38% and 1.52% in the linked and prior year quarters, respectively, and is reflective of the trend in credit quality.
Deposits
The following table presents deposits broken out by type for the most recent five quarters:
|
|
Quarter ended |
||||||||||||||||||
|
($ in thousands) |
June 30, 2023 |
|
March 31, 2023 |
|
December 31, 2022 |
|
September 30, 2022 |
|
June 30, 2022 |
||||||||||
|
Noninterest-bearing demand accounts |
$ |
3,880,561 |
|
|
$ |
4,192,523 |
|
|
$ |
4,642,732 |
|
|
$ |
4,642,539 |
|
|
$ |
4,746,478 |
|
|
Interest-bearing demand accounts |
|
2,629,339 |
|
|
|
2,395,901 |
|
|
|
2,256,295 |
|
|
|
2,270,898 |
|
|
|
2,197,957 |
|
|
Money market and savings accounts |
|
3,577,856 |
|
|
|
3,672,539 |
|
|
|
3,399,415 |
|
|
|
3,617,249 |
|
|
|
3,562,982 |
|
|
Brokered certificates of deposit |
|
893,808 |
|
|
|
369,505 |
|
|
|
118,968 |
|
|
|
129,039 |
|
|
|
129,064 |
|
|
Other certificates of deposit |
|
638,296 |
|
|
|
524,168 |
|
|
|
411,740 |
|
|
|
397,869 |
|
|
|
456,137 |
|
|
Total deposit portfolio |
$ |
11,619,860 |
|
|
$ |
11,154,636 |
|
|
$ |
10,829,150 |
|
|
$ |
11,057,594 |
|
|
$ |
11,092,618 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Noninterest-bearing deposits to total deposits |
|
33.4 |
% |
|
|
37.6 |
% |
|
|
42.9 |
% |
|
|
42.0 |
% |
|
|
42.8 |
% |
|
Total costs of deposits |
|
1.46 |
% |
|
|
0.92 |
% |
|
|
0.53 |
% |
|
|
0.31 |
% |
|
|
0.13 |
% |
Total deposits at June 30, 2023 were $11.6 billion, an increase of $465.2 million and $527.2 million from the linked quarter and prior year quarter, respectively. The increase from the linked quarter includes $524.3 million in brokered certificates of deposit that are a stable funding source to support loan growth. This strategy helped preserve wholesale borrowing capacity and liquidity measures. The mix of the deposit portfolio continued the shift from noninterest bearing demand deposits to higher yielding categories that began in the first quarter 2023. Competitive pricing pressures and the Federal Reserve’s monetary policy actions have continued to pressure industry-wide deposit flows. Reciprocal deposits, which are placed through third party programs to provide FDIC insurance on larger deposit relationships, totaled $926.6 million at June 30, 2023, compared to $486.7 million at March 31, 2023.
Total estimated insured deposits, which includes collateralized deposits, reciprocal accounts and accounts that qualify for pass-through insurance, totaled $8.3 billion, or 72% of total deposits, at the end of June 30, 2023, compared to $7.7 billion, or 69% of total deposits, in the linked quarter.
Noninterest Income
The following table presents a comparative summary of the major components of noninterest income for the periods indicated:
|
|
Linked quarter comparison |
|
Prior year comparison |
|||||||||||||||||||
|
|
Quarter ended |
|
Quarter ended |
|||||||||||||||||||
|
($ in thousands) |
June 30, 2023 |
|
March 31, 2023 |
|
Increase (decrease) |
|
June 30, 2022 |
|
Increase (decrease) |
|||||||||||||
|
Deposit service charges |
|
3,910 |
|
|
4,128 |
|
$ |
(218 |
) |
|
(5 |
)% |
|
|
4,749 |
|
$ |
(839 |
) |
|
(18 |
)% |
|
Wealth management revenue |
|
2,472 |
|
|
2,516 |
|
|
(44 |
) |
|
(2 |
)% |
|
|
2,533 |
|
|
(61 |
) |
|
(2 |
)% |
|
Card services revenue |
|
2,464 |
|
|
2,338 |
|
|
126 |
|
|
5 |
% |
|
|
3,514 |
|
|
(1,050 |
) |
|
(30 |
)% |
|
Tax credit income |
|
368 |
|
|
1,813 |
|
|
(1,445 |
) |
|
(80 |
)% |
|
|
1,186 |
|
|
(818 |
) |
|
(69 |
)% |
|
Other income |
|
5,076 |
|
|
6,103 |
|
|
(1,027 |
) |
|
(17 |
)% |
|
|
2,212 |
|
|
2,864 |
|
|
129 |
% |
|
Total noninterest income |
$ |
14,290 |
|
$ |
16,898 |
|
$ |
(2,608 |
) |
|
(15 |
)% |
|
$ |
14,194 |
|
$ |
96 |
|
|
1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Total noninterest income was $14.3 million for the current quarter, a decrease of $2.6 million from the linked quarter and stable with the prior year quarter. The $2.6 million decrease from the linked quarter was primarily due to decreases in tax credit income and other income. Tax credit income is typically highest in the fourth quarter of each year and will vary in other periods based on transaction volumes and fair value changes on credits carried at fair value. The decrease in other income was primarily due to gains on the sale of investment securities and SBA loans in the linked quarter that did not reoccur in the second quarter 2023.
The following table presents a comparative summary of the major components of other income for the periods indicated:
|
|
Linked quarter comparison |
|
Prior year comparison |
||||||||||||||||||
|
|
Quarter ended |
|
Quarter ended |
||||||||||||||||||
|
($ in thousands) |
June 30, 2023 |
|
March 31, 2023 |
|
Increase (decrease) |
|
June 30, 2022 |
|
Increase (decrease) |
||||||||||||
|
BOLI |
$ |
797 |
|
$ |
791 |
|
$ |
6 |
|
|
1 |
% |
|
$ |
748 |
|
$ |
49 |
|
7 |
% |
|
Community development investments |
|
2,077 |
|
|
595 |
|
|
1,482 |
|
|
249 |
% |
|
|
193 |
|
|
1,884 |
|
976 |
% |
|
Private equity fund distribution |
|
371 |
|
|
1,749 |
|
|
(1,378 |
) |
|
(79 |
)% |
|
|
240 |
|
|
131 |
|
55 |
% |
|
Servicing fees |
|
407 |
|
|
512 |
|
|
(105 |
) |
|
(21 |
)% |
|
|
165 |
|
|
242 |
|
147 |
% |
|
Swap fees |
|
173 |
|
|
250 |
|
|
(77 |
) |
|
(31 |
)% |
|
|
102 |
|
|
71 |
|
70 |
% |
|
Miscellaneous income |
|
1,251 |
|
|
2,206 |
|
|
(955 |
) |
|
(43 |
)% |
|
|
764 |
|
|
487 |
|
64 |
% |
|
Total other income |
$ |
5,076 |
|
$ |
6,103 |
|
$ |
(1,027 |
) |
|
(17 |
)% |
|
$ |
2,212 |
|
$ |
2,864 |
|
129 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Community development and private equity distributions included in other income are not consistent sources of income and fluctuate based on distributions from the underlying funds. Servicing fee income may also fluctuate based on prepayment experience and changes to the discount rate used in the valuation of the servicing rights. Swap fee income is generated from customer hedging activities and varies based on customer transaction volume. The decrease in miscellaneous income from the linked quarter was primarily due to the gains on the sale of SBA loans and investment securities that were recognized in the linked quarter.
Noninterest Expense
The following table presents a comparative summary of the major components of noninterest expense for the periods indicated:
|
|
Linked quarter comparison |
|
Prior year comparison |
|||||||||||||||||||
|
|
Quarter ended |
|
Quarter ended |
|||||||||||||||||||
|
($ in thousands) |
June 30, 2023 |
|
March 31, 2023 |
|
Increase (decrease) |
|
June 30, 2022 |
|
Increase (decrease) |
|||||||||||||
|
Employee compensation and benefits |
$ |
41,641 |
|
$ |
42,503 |
|
$ |
(862 |
) |
|
(2 |
)% |
|
$ |
36,028 |
|
$ |
5,613 |
|
|
16 |
% |
|
Occupancy |
|
3,954 |
|
|
4,061 |
|
(107 |
) |
|
(3 |
)% |
|
|
4,309 |
|
|
(355 |
) |
|
(8 |
)% |
|
|
Deposit costs |
|
16,980 |
|
|
12,720 |
|
|
4,260 |
|
|
33 |
% |
|
|
5,905 |
|
|
11,075 |
|
|
188 |
% |
|
Other expense |
|
23,381 |
|
|
21,699 |
|
|
1,682 |
|
|
8 |
% |
|
|
19,182 |
|
|
4,199 |
|
|
22 |
% |
|
Total noninterest expense |
$ |
85,956 |
|
$ |
80,983 |
|
$ |
4,973 |
|
|
6 |
% |
|
$ |
65,424 |
|
$ |
20,532 |
|
|
31 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Employee compensation and benefits decreased $0.9 million from the linked quarter due to a $2.
Contacts
Investor Relations: Keene Turner, Senior Executive Vice President and CFO (314) 512-7233
Media: Steve Richardson, Senior Vice President (314) 995-5695
