Enterprise Financial Services
Annual Report 2003

Plain-text annual report

40843_Final ANNUAL REPORT 3/17/04 9:13 AM Page 2 40843_Final ANNUAL REPORT 3/17/04 9:17 AM Page 3 40843_Final ANNUAL REPORT 3/17/04 9:21 AM Page 4 1 40843_Final ANNUAL REPORT 3/17/04 11:32 AM Page 5 DEAR SHAREHOLDER, I always feel proud to be part of an organization with such extraordinary talent, strength and passion. This feeling is especially strong this year, as 2003 represents a new high-water mark for Enterprise Financial in every area of performance. After adjusting for the onetime effects of the Southeast Kansas branch sales, net income rose 15% (38.5% on a GAAP basis). Loans grew 15%. Margin remained strong at 4.01%. Asset quality performance ratios improved further from already strong positions. Wealth Management assets under administration grew to $1.15 billion with gross revenues over $4.5 million. This growth was accomplished while holding total non-interest expenses to a 1.8% increase (after eliminating onetime expenses associated with the Southeast Kansas branch sales). While there were many financial highlights in 2003 which are discussed in greater detail elsewhere in this report, I believe our greatest accomplishment was in the personnel area. 2003 may well be remembered as the year when some of the very finest talent in St. Louis and Kansas City joined Enterprise. These people have already contributed greatly to a team which many observers have suggested is second-to-none in either of our primary markets. This team believes deeply in our vision and strategy and has found our culture personally and professionally supportive in every way. When people like Steve Marsh and so many others with outstanding reputations choose to invest their careers and clients in Enterprise, we as shareholders should feel very optimistic about the future of our company. Clearly, we have become the platform of choice for top professionals in both of our core lines of business. Our company has enjoyed a fine reputation for sixteen years now. We have worked very hard to be known for responsiveness, innovation, and responsible leadership. Our good name has become synonymous with serving the lifetime financial needs of private businesses and their owner families. 41488_Final ANNUAL REPORT 5/6/04 11:28 AM Page 6 3 This work has paid off handsomely. The value of our company has increased many times over. We have forged exceptional relationships with thousands of companies and individuals. And when the sale of Allegiant Bancorp to National City of Cleveland is completed, Enterprise will be left as the largest publicly traded, St. Louis-based, banking institution in the St. Louis area. It is now time for our company to elevate its place in the minds of our clients, prospects and communities as a leading force for serving the lifetime financial needs of private businesses and their owner families. Because we believe that business owners continue to hunger for a truly integrated approach to their business and personal needs, we need one powerful brand in which we can build equity for many years to come. Accordingly, we have announced our new name, Enterprise Bank & Trust. For the first time ever it will be supported with television, radio and print advertising in St. Louis, and in print media in Kansas City. This name change is not a radical shift. Nothing radical is required or desirable. In that spirit, our holding company name, Enterprise Financial Services Corp, will not change, nor will our stock symbol, EFSC. This change is, however, a reflection of our intent to continuously and seamlessly integrate commercial banking and wealth management. The decision to change and more aggressively market our name and our company is consistent with our desire to seize the high ground in competing for the business of privately held companies and their owner families. Talent. Strength. Passion. Fine qualities. Timeless attributes. All aimed at building a great company for our shareholders, clients and associates. That is our vision. That is our commitment. Thank you, as always, for your support. Sincerely, Kevin C. Eichner President & CEO ENTERPRISE FINANCIAL 40843_Final ANNUAL REPORT 3/17/04 11:37 AM Page 7 TALENT. Talent is the lifeblood of any service business. Comparing the caliber and quality of people is a surefire way to distinguish one company from another. While Enterprise Bank & Trust has always been blessed with talent in abundance, it is fair to say that never in our sixteen years have we had a team to compare with this one. And, those of us with a little more gray hair than others have never in our careers seen a group with a stronger blend of experience, energy, creativity and grow-power than the one which now carries our business cards. Ours is the kind of talent that commands respect from our clients and even our competitors. It is the kind that develops new businesses from scratch and grows them to record levels in a short time. It is the kind that makes good judgments in the face of uncertainties. And, it is the kind that attracts others who want to be part of a select and proud team. At the end of the day, as shareholders or clients, we place our trust far more in people than strategy, assets or systems. It always comes down to the talent. This has been a fundamental principle on which Enterprise has operated since our founding. It remains more so than ever before. 40843_Final ANNUAL REPORT 3/17/04 9:21 AM Page 8 5 ENTERPRISE FINANCIAL 40843_Final ANNUAL REPORT 3/17/04 11:42 AM Page 9 STRENGTH. Strength is one of the great words in the English language. That’s one reason why it occupies a prominent position in our branding program. Strength can mean raw, physical power. Size. Scope. Scale. While our objectives do not necessarily include being the largest bank in St. Louis or Kansas City, it is important for our clients and prospects to know that our company is very well capitalized, has the size and capacity to serve their needs, and is a safe place to get advice and to invest their money. We have quietly grown to over $2 billion in combined banking and trust assets, and we have a market cap of nearly $135 million at year end. There is also strength of purpose. While the other dimensions of strength are important, this facet is even more important to us. We have been focused from Day One on helping privately held business owners and their families to achieve lifetime financial success. This focus produces clarity. And clarity is essential to drive a high performance company. It also allows us to be the very best at serving particular types of clients rather than being just “Okay” at serving many. Our vision is to be more capable of meeting the unique needs of business owners and their families than any other competitor. That is strength of purpose in action. Strong people. A strong balance sheet. Strong capabilities. A strong client base. Clear purpose and vision. All of these are adding up to make Enterprise Bank & Trust a major player in the St. Louis and Kansas City markets. 40843_Final ANNUAL REPORT 3/17/04 9:21 AM Page 10 7 ENTERPRISE FINANCIAL 40843_Final ANNUAL REPORT 3/17/04 11:43 AM Page 11 PASSION. Talent and strength are wonderful attributes, but passion is the magical ingredient that brings them to life to create the Enterprise Client Experience. At Enterprise Bank & Trust, our people are passionate about our clients, our business, and even each other. From top to bottom, this is an organization which cares deeply about performance, service, quality, and integrity. Our passion is dynamic. It leverages all of our assets to create new areas of growth and opportunity. Our new Wealth Products Group and Enterprise Business Consulting alliances will bring added bandwidth and revenue opportunities to our already formidable bank and trust units. Innovative products like our new MBA–Maximum Benefits Account–leverages our commercial expertise and reputation to attract the personal business of our private business clientele. Our new and expanding Internet banking capabilities and services are being used to outflank our competitors’ brick and mortar facilities. We are opening “24/7/365 branches” right on the corner of our clients’ home and office desks. We see ourselves engaged in a noble profession – helping others to achieve a lifetime of financial success and personal satisfaction. For us, it’s much more than a few basis points or financial ratios. It’s about making a difference for our clients, shareholders, and communities. It’s about building a great company, not merely a better one. Like you, many of our associates are also shareholders. We are real “skin-in-the-game” partners who not only expect exceptional returns on our investments over the long run, but want to be a part of building something very special. We want to be part of an organization which fills wallets and hearts. We love what we do. At Enterprise, passion has always meant going beyond doing the right thing to doing the “right-est” thing. People tell us it shows. 40843_Final ANNUAL REPORT 3/17/04 9:21 AM Page 12 9 ENTERPRISE FINANCIAL 40843_Final ANNUAL REPORT 3/18/04 2:06 PM Page 13 FINANCIAL HIGHLIGHTS As we have often stated, growth in earnings per share is our number one financial priority. On a GAAP basis, earnings per share rose 34.6% to $0.70. Loan growth was very strong, reaching $784 million at year-end, an increase of 15%. Deposits grew to $796 million, a very respectable increase of 11%. Margins held up well despite a down-rate environment, averaging 4.01% for the year. As our outstanding commercial banking talent led by Peter Benoist, Steve Marsh and Jack Sutherland gains additional market traction, we are targeting even stronger growth in 2004. Asset quality–historically a strength of our company–remained solid. Under the vigilant eye of Chief Credit Officer, Duncan Burdette, non-performing asset ratios improved from 2002 and were outstanding when compared to other high performing peers. Net charge-offs of $1.6 million remain well within peer norms at 22 basis points. At 1.35% of loans outstanding, the allowance for loan losses is adequate and comparable to our peer groups. We are very comfortable with our asset quality as we position for accelerating growth in a rebounding economy. Our Wealth Management business also enjoyed a record year hitting new highs in assets under administration of $1.15 billion and in gross revenue of $4.5 million. Most significantly our Trust company came within $25,000 of breakeven. This is remarkable for a trust operation in just its fifth year! Non-interest income (excluding gain on sale of branches) totaled $7.2 million, an increase of $1.8 million or 33%. This more than offset our expense increase and contributed to a rapidly improving efficiency ratio. It took $0.66 in non-interest expense to generate one dollar of revenue in 2003 vs. $0.76 in 2002. As our anticipated growth and tight cost controls drive further productivity gains, we expect this ratio to continue to improve. 2003 was, indeed, a very strong year in virtually every financial dimension. 40843_Final ANNUAL REPORT 3/17/04 9:21 AM Page 14 CONSOLIDATED BALANCE SHEETS ENTERPRISE FINANCIAL SERVICES CORP AND SUBSIDIARIES Assets Cash and due from banks Federal funds sold Interest-bearing deposits Investments in debt and equity securities: Available for sale, at estimated fair value Held to maturity, at amortized cost (estimated fair value of $9,923 at December 31, 2003 and $12,780 at December 31, 2002) Total investments in debt and equity securities Loans held for sale Loans, less unearned loan fees Less allowance for loan losses Loans, net Other real estate owned Fixed assets, net Accrued interest receivable Goodwill Assets held for sale Prepaid expenses and other assets Total assets Liabilities and Shareholders’ Equity Deposits: Demand Interest-bearing transaction accounts Money market accounts Savings Certificates of deposit: $100,000 and over Other Total deposits Subordinated debentures Federal Home Loan Bank advances Other borrowings Accrued interest payable Liabilities held for sale Accounts payable and accrued expenses Total liabilities Shareholders' equity: Common stock, $.01 par value; authorized 20,000,000 shares; issued and outstanding 9,618,482 shares at December 31, 2003 and 9,497,794 shares at December 31, 2002 Additional paid-in capital Retained earnings Accumulated other comprehensive income Total shareholders’ equity 11 December 31, 2003 2002 $ 26,271,251 - 216,926 $ 39,052,123 33,367,011 66,349 83,938,696 67,082,764 9,848 83,948,544 2,848,214 783,877,820 10,590,001 773,287,819 - 7,317,664 3,278,904 1,937,537 - 8,619,345 $ 907,726,204 12,600 67,095,364 6,991,421 679,799,399 8,600,001 671,199,398 125,000 7,685,682 3,458,596 2,087,537 36,401,416 9,720,812 $ 877,250,709 $ 164,952,091 58,925,540 371,582,696 4,123,387 $ 155,596,970 59,058,224 341,589,829 3,420,987 154,142,327 42,674,146 796,400,187 15,464,208 14,500,056 9,647,094 1,150,539 - 5,176,416 842,338,500 96,185 39,841,177 24,832,021 618,321 65,387,704 105,030,371 51,617,893 716,314,274 15,464,208 29,464,044 2,358,753 1,264,600 50,053,023 3,521,857 818,440,759 94,978 38,401,814 18,673,619 1,639,539 58,809,950 Total liabilities and shareholders’ equity $ 907,726,204 $ 877,250,709 ENTERPRISE FINANCIAL 40843_Final ANNUAL REPORT 3/17/04 9:21 AM Page 15 CONSOLIDATED STATEMENTS OF OPERATIONS ENTERPRISE FINANCIAL SERVICES CORP AND SUBSIDIARIES Interest income: Interest and fees on loans Interest on debt and equity securities: Taxable Nontaxable Interest on federal funds sold Interest on interest-bearing deposits Dividends on equity securities Total interest income Interest expense: Interest-bearing transaction accounts Money market accounts Savings Certificates of deposit: $100,000 and over Other Subordinated debentures Federal Home Loan Bank borrowings Other borrowings Total interest expense Net interest income Provision for loan losses Net interest income after provision for loan losses Noninterest income: 12 Service charges on deposit accounts Trust income Other service charges and fee income Gain on sale of mortgage loans Gain on sale of securities Gain on sale of branches Recovery/income (loss) from Merchant Banc investments Miscellaneous income Total noninterest income Noninterest expense: Compensation Payroll taxes and employee benefits Occupancy Furniture and equipment Data processing Losses and settlement Other Total noninterest expense Income before income tax expense Income tax expense Net income (loss) Per share amounts: Basic earnings (loss) per share Basic weighted average common shares outstanding Diluted earnings (loss) per share Diluted weighted average common shares outstanding Years Ended December 31, 2003 2002 2001 $ 41,221,259 $ 43,013,955 $ 48,684,303 1,690,554 23,239 196,094 2,409 111,278 43,244,833 169,455 3,475,014 24,209 2,972,276 1,559,600 1,270,086 1,033,296 39,596 10,543,532 32,701,301 3,627,082 1,495,968 917 574,094 28,406 93,728 45,207,068 269,189 5,000,759 84,093 3,144,962 3,687,543 1,152,399 918,496 85,902 14,343,343 30,863,725 2,250,578 2,129,348 17,378 1,634,289 27,332 151,884 52,644,534 554,671 9,589,652 156,665 5,106,034 6,597,185 1,074,862 505,629 258,140 23,842,838 28,801,696 3,230,000 29,074,219 28,613,147 25,571,696 1,781,621 3,621,927 369,352 927,395 77,884 2,937,976 - 375,000 10,091,155 15,371,302 2,326,974 1,973,874 841,280 932,426 80,585 6,688,953 28,215,394 10,949,980 4,024,761 1,771,417 2,353,927 380,433 771,298 - - 88,889 - 5,365,964 13,496,376 2,431,353 1,900,812 1,001,671 1,011,860 1,371,361 6,150,461 27,363,894 6,615,217 1,613,737 1,298,611 1,426,078 390,790 491,138 74,658 - (5,716,138 - (2,034,863 ) ) 12,798,723 2,256,867 1,677,965 1,081,314 1,092,234 26,551 5,895,926 24,829,580 (1,292,747 1,241,944 ) $ 6,925,219 $ 5,001,480 $ (2,534,691 ) $ 0.72 9,566,059 $ 0.70 9,875,141 $ 0.53 9,399,374 $ 0.52 9,611,108 $ (0.28) 9,203,224 $ (0.28) 9,203,224 40843_Final ANNUAL REPORT 3/17/04 9:21 AM Page 16 SELECTED FINANCIAL DATA ENTERPRISE FINANCIAL SERVICES CORP AND SUBSIDIARIES Dollars in thousands, except per share amounts Years Ended December 31, Earnings summary: 2003 2002 2001 2000 Interest income Interest expense Net interest income Provision for loan losses Noninterest income Noninterest expense Income before income taxes Income taxes Income before cumulative effect of a change in accounting principle Cumulative effect on prior years of a change in asset classification Net Income Per share data: Net income per share-basic Net income per share-diluted Cash dividends per share Book value per share Balance sheet data: Yearend balances: Loans Allowance for loan losses Assets held for sale Assets Deposits Subordinated debentures Borrowings Liabilities held for sale Shareholders’ equity Average balances: Loans Earning assets Assets Interest-bearing liabilities Shareholders’ equity Selected Ratios: Return on average equity Return on average assets Efficiency ratio Average equity to average assets Yield on average interest earning assets Cost of interest-bearing liabilities Net interest rate spread Net interest rate margin Nonperforming loans to total loans Nonperforming assets to total assets Net chargeoffs to average loans Allowance for loan losses to total loans Dividend payout ratio-basic $ $ 43,245 10,544 32,701 3,627 10,091 28,215 10,950 4,025 $ 45,207 14,343 30,864 2,251 5,366 27,364 6,615 1,614 52,612 23,810 28,802 3,230 (2,035 24,830 (1,293 1,242 ) ) $ $ 56,030 27,596 28,434 1,043 2,863 21,845 8,409 3,208 6,925 5,001 (2,535 ) 5,201 – $ 6,925 $ – 5,001 – $ (2,535 ) $ – 5,201 $ 1999 41,076 18,160 22,916 2,496 3,022 17,522 5,920 2,335 3,585 121 3,706 13 $ $ 0.72 0.70 0.08 6.80 0.53 0.52 0.07 6.19 $ (0.28) (0.28) 0.06 5.60 $ 0.58 0.54 0.05 5.90 $ 0.41 0.39 0.04 5.26 $ 783,878 10,590 – 907,726 796,400 15,464 24,147 – 65,388 $ 679,799 8,600 36,401 877,251 716,314 15,464 31,823 50,053 58,810 $ 602,747 7,296 40,575 795,590 655,553 11,340 15,399 58,800 51,897 $ $ 738,572 825,973 868,303 647,087 63,175 $ 693,551 779,194 820,730 629,651 55,361 613,539 701,582 743,503 583,343 56,623 $ $ $ $ 516,810 7,097 41,222 711,278 576,268 11,340 11,191 56,169 53,484 517,381 628,222 662,497 529,527 50,132 445,448 6,758 36,695 615,483 488,555 11,340 12,417 53,774 47,044 429,408 492,351 527,318 411,769 46,261 % 10.96 0.80 65.94 7.28 5.29 1.63 3.66 4.01 0.20 0.17 0.22 1.35 11.11 % 9.03 0.61 75.53 6.75 5.84 2.28 3.56 4.00 0.57 0.46 0.14 1.27 13.21 % N/A N/A 92.76 7.62 7.52 4.09 3.43 4.12 0.62 0.49 0.49 1.21 N/A % 10.37 0.79 69.80 7.57 8.95 5.21 3.74 4.55 0.39 0.29 0.14 1.37 8.62 % 7.88 0.70 67.55 8.77 8.37 4.41 3.96 4.69 0.57 0.48 0.04 1.52 9.66 ENTERPRISE FINANCIAL 40843_Final ANNUAL REPORT 3/17/04 11:48 AM Page 17 AN ENGINE FOR GROWTH Excellent Unit Leadership Each of our presidents turned in very strong performances at the unit level in 2003. In St. Louis, Chuck Leuck (St. Charles County) and James Graser (South County) led their units to significant growth and contribution to company earnings. Linda Hanson (Overland Park, KS) continued her excellent performance in growing our business in that key market. And new Kansas City Plaza leader Kurt Knutson managed to achieve that unit’s growth objectives in just six months, having taken the helm there in July of 2003. Jack Challis and Paul Vogel led our Trust company to yet another tremendous year, amassing over $1.15 billion in assets under administration and $4.5 million in gross revenue. These presidents are the backbone of our distribution and market-based service organization, and we are very fortunate to have them as our senior partners in building Enterprise Bank & Trust. A Strong Service Culture Results of our bi-annual customer service survey were once again very rewarding. Our people clearly “get it” with respect to the importance of great client service. It is embedded in the DNA of our culture. This does not happen by accident. Credit must be given to Jim Wagner, Frank Sgroi, Joe Feld and their outstanding teams in operations, I.T., and Enterprise Direct for keeping this key attribute very much alive as we grow our business. Our Finance and Compliance areas under CFO Frank Sanfilippo also turned in excellent performances, serving our Board and management team as internal clients to the very highest standard. Coming of Age as a Marketing Organization 2003 saw the development and refinement of our marketing strategies, and the maturation of the company in moving beyond good service and sales to intentional client targeting and branding. Enterprise University was launched in July to rave reviews. Offering a full suite of hard-hitting, practical workshops for our clients and prospects, the University now has served nearly one thousand business owners, executives and private investors. 40843_Final ANNUAL REPORT 3/18/04 7:41 PM Page 18 The University provides meaningful differentiation from our competitors, real value-added for our clients, and a superb platform for introducing prospects to their unique Enterprise Client Experience. Our new website at www.enterprisebank.com was launched in December, also to very positive reviews. It allows us to feature our exceptional Internet capabilities while providing ease of navigation and much more content than before. For example, our stock price is updated every day in the Investor Relations section. Internet banking continues to play an increasing role in our marketing 15 and we are very fortunate to have outstanding technology capabilities. Our branding, advertising, and public relations programs have all been shifted into high gear to take advantage of the increased market opportunities caused by continued market mergers and a general uplift in business activity. One by one, major competitors for our chosen market niches are being acquired, leaving Enterprise with the opportunity to do some open field running in the marketplace. Enterprise is, indeed, becoming a true marketing entity. And at just the right time. An Abundant Recruiting Harvest As mentioned in the CEO’s shareholder letter, 2003 was a banner year for recruiting. We have always been blessed with fine people. Now, with the addition of Steve Marsh, Jim Lally, Scott Goodman, Mitch Baris and James McGauley as senior leaders and relationship managers in St. Louis and Kurt Knutson, Steve Giles, and Robert Owens in Kansas City, we have added some major bandwidth to our commercial banking. Steve Bassett, Debbie Barstow, Don Wuller and Karen Sher have done the same for the financial and administrative sides of our company. Through aggressive performance contracting and accountability management, we have managed to add this talent with very little increase in personnel overall. In fact, we ended 2003 with 208 associates compared to 263 positions in July of 2002. Effective Corporate Governance Under the leadership of Board Chairman, Paul McKee, 2003 saw continued progress in developing the effectiveness of our Board and overall corporate governance. Though Enterprise Financial is considered a small-cap public company, our Board and management have taken the approach that we should operate in every way as if we were one of the largest. Our Chairman and CEO positions are separate (have been since inception), we have independent and qualified directors on our Executive Committee, Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee. Our auditor, KPMG, reports directly to the Audit Committee on behalf of the Board. Board members are being evaluated by the Nominating Committee, and a new self-imposed term structure is being implemented to encourage continuous freshening of Board talent. Enterprise shareholders can be assured that their elected Board is competent, engaged, and diligent. ENTERPRISE FINANCIAL 40843_Final ANNUAL REPORT 3/18/04 5:17 PM Page 19 THE ENTERPRISE CLIENT EXPERIENCE “We have never had difficulty getting attention or help with financial situations and they have been very aggressive in responding to our needs.” Joe Osborn, Principal Osborn & Barr Communications, Inc. St. Louis and Kansas City, Missouri “When we were looking for a bank for our business nine years ago, we were really too small for any of the bigger banks. Enterprise Bank & Trust was the perfect size for the scale of our business. I continue to be impressed with their responsiveness. The leadership and staff at Enterprise have always treated us as an important client, regardless of the amount of our deposits, loans, or lines of credit. We have never had difficulty getting attention or help with financial situations and they have been very aggressive in responding to our needs. As a result, our company has grown quite a bit and much of that credit is due to Enterprise Bank & Trust. Enterprise has really been a strong partner for us.” “After reviewing approximately seven area banks, I chose Enterprise Bank & Trust. Our new bank had to have an interactive, fully supported Internet banking capability in order that I could monitor instantaneous transactions of my Chicago company, CBK & Associates.” Greg Slack,President and CEO Trabue Industrial Systems St. Louis, Missouri “I served on the Board of Directors of a major banking organization before I voluntarily resigned in December of last year. My reasons for resignation were due to its size and recent acquisitions. It, in fact, offered very little service to its customers. My own personal experience was that service was slow to respond to our needs and the needs of some of my business friends that had loans renewing. I just couldn’t, in good conscience, sit on the Board preaching what I didn’t believe. I went shopping for a new bank that would serve our company needs, as well as my personal needs. After reviewing approximately seven area banks, I chose Enterprise Bank & Trust. Our new bank had to have an interactive, fully supported Internet banking capability in order that I could monitor instantaneous transactions of my Chicago company, CBK & Associates.” 40843_Final ANNUAL REPORT 3/17/04 9:21 AM Page 20 “Enterprise Bank & Trust has helped me learn to manage my own finances. They have not only provided me with outstanding service, they have provided me with the education to take control of my financial situation.” Dr. Marsha McBride Obstetrics & Gynecology, Inc. St. Louis, Missouri “I was first introduced to Enterprise Bank & Trust when I started with my current practice. Enterprise had already established a working relationship with the practice and I was looking for someone to help manage my personal retirement account. Charles Eisenkramer introduced me to the people in the Trust department and I was so pleased with the service that I transferred all of my accounts to Enterprise Bank & Trust. I really appreciate the personal service I receive from Enterprise. I feel as if they antic- ipate and fulfill my financial needs before I even know I am going to have them. Like many people, my schedule is very busy, but if I need anything, from a cashier’s check to a line of credit on the house, all I need to do is call. The people at Enterprise Bank & Trust are happy to deliver papers for me to refinance my home or bring checks to me whenever I need them. I like that it’s a smaller bank – not a huge institution. I always see the same familiar faces when I’m there and 17 it’s very comforting. In the past, I have to admit that I have been a little naïve about some financial matters, but Enterprise Bank & Trust has helped me learn to manage my own finances. They have not only provided me with outstanding service, they have provided me with the education to take control of my financial situation. My experience with Enterprise Bank & Trust is exceptional. There really isn’t a financial need of mine that Enterprise has not met. And it’s done with little or no hassle.” “The Internet banking service was crucial for us because the closest Enterprise Bank & Trust to Lexington is in Kansas City. The bank personnel provided excellent support in training us on the Internet banking system and now deposits, as well as other transactions, are convenient and easy for us.” Major General John Little, Commandant Wentworth Military Academy Lexington, Missouri “I was referred to Enterprise Bank & Trust by a member of our Board of Trustees. We were looking toward expansion on our school with a new dormitory, but price points and service had hindered us with other financial institutions. Enterprise Bank & Trust was exactly what we needed. We were especially impressed with how quickly the people at Enterprise responded to our needs. We needed to consolidate a loan and open up a line of credit. Shortly after our inquiry, Enterprise representatives came to Lexington to look at the property, put together an appraisal plan, as well as a plan of action. It all went very smoothly and we were quickly able to begin construction on the new dormitory. We have now been with Enterprise Bank & Trust for a year and a half and we continue to receive the highest quality service. In fact, service is one of the best parts of our Enterprise Experience. Each person we work with is very cooperative and is dedicated to meet all of our needs. Any issues that come up, large or small, are always cared for and given high importance.” ENTERPRISE FINANCIAL 40843_Final ANNUAL REPORT 3/17/04 11:49 AM Page 21 THE ENTERPRISE CLIENT EXPERIENCE “I wanted the kind of bank that I could walk into and people would know me and my name on sight. That’s why for the past four years, I’ve been banking at Enterprise Bank & Trust.” Howard Jacobsen, President Paragon Capital Management Overland Park, Kansas “I was always looking for a bank with a ‘small town feel.’ I wanted the kind of bank that I could walk into and people would know me and my name on sight. That’s why for the past four years, I’ve been banking at Enterprise Bank & Trust. I’m in the investment business and I need Enterprise Bank & Trust for my partnership accounts, but I also understand the importance of relationship building. Since I have been doing business with Enterprise, I have seen little turnover in terms of staff. I can walk into the branch in Overland Park and say, “Hello,” to Misty and the rest of my friends at the bank. I feel confident in the experience, knowledge, and capability of the people working hard to process my financial requests. I often refer Enterprise’s services for loans and deposits to my friends and colleagues. Among those who take my advice, everyone shares the same good experiences. Being a very civic-minded professional, I am concerned and active in the welfare of our community. I am happy to see Enterprise’s involvement in local community efforts.” “The size of the Bank is one of its greatest assets, especially for small to mid-size business owners. It allows me to have a close relationship with the decision makers.” Bob Saur, President Conrad Properties St. Louis, Missouri “As one of the founding members of Enterprise Bank & Trust, I’ve been fortunate enough to experience the benefits of its services for over 15 years. Enterprise Bank & Trust really became an anchor for me and for my business from day one. As a Real Estate Developer, I have the opportunity to work with a lot of different banks. In many instances, I deal with complex financial situations that involve rapid turnaround, and Enterprise Bank & Trust has always been available to help. The size of the Bank is one of its greatest assets, especially for small to mid-size business owners. It allows me to have a close relationship with the decision makers. They keep me informed of the progress of my requests and provide welcome advice to me on business decisions. The service at Enterprise is outstanding and the people are very knowledgeable.” 41488_Final ANNUAL REPORT 5/6/04 11:29 AM Page 22 BOARD OF DIRECTORS ENTERPRISE FINANCIAL SERVICES CORP Benoist, Peter F. Enterprise Bank & Trust and Enterprise Financial Services Corp Cahn, Paul R. Elan-Polo Inc. Downey, William H. Kansas City Power & Light Company Eichner, Kevin C. Enterprise Bank & Trust and Enterprise Financial Services Corp Guest, Jr., Robert E. Benson & Guest, LLP Henges, Ronald E. Retired Kent, Jerald* Cequel III, LLP Masinton, Richard S. Russell Stover Candies McElhatton, Jerry L. Global Technology and Operations MasterCard International Chairman McKee, Jr., Paul J. McEagle Properties LLC Moskoff, William B. Tyler Group Mullins, Birch M. Baur Properties Murphy, Jr., James J. Murphy Company Murray, Ted A. Grubb Ellis/The Winbury Group Oliver, Stephen A. SKO Automotive Group, Inc. Saur, Robert E. Conrad Properties Corp. Schick, Peter G.* Moneta Group, Inc. Warshaw, Henry D. Virtual Realty Enterprises Wilhite, James L. Stange Company Williams, James A. Sunset Transportation BANK BOARD Benoist, Peter F. Enterprise Bank & Trust and Enterprise Financial Services Corp Burdette, C. Duncan Enterprise Bank & Trust Challis, T. Jack Enterprise Bank & Trust Eichner, Kevin C. Enterprise Bank & Trust and Enterprise Financial Services Corp Finerty, Steven L. Argent Capital Management, LLC Gloss, John J. BJC Health System Graser, James E. Enterprise Bank & Trust Guest, Jr., Robert E. Benson & Guest, LLP Hanson, Linda M. Enterprise Bank & Trust Kaiser, Robert M. Kaiser Electric Knutson, Kurt A. Enterprise Bank & Trust Leuck, Richard C. Enterprise Bank & Trust Marsh, Stephen P. Enterprise Bank & Trust Masinton, Richard S. Russell Stover Candies Murray, Ted A. Grubb Ellis/The Winbury Group Oliver, Stephen A. SKO Automotive Group, Inc. Sanfilippo, Frank H. Enterprise Bank & Trust and Enterprise Financial Services Corp Sutherland, Jack L. Enterprise Bank & Trust Wagner, James C. Enterprise Bank & Trust and Enterprise Financial Services Corp Wilhite, James L. Stange Company Williams, James A. Sunset Transportation CLAYTON Abeles, Ronald G. Abeles & Hoffman, P.C. CLAYTON MEDICAL ADVISORY Avins, Dr. Laurence R. Retina and Vitreous Consultants, Inc. Benoist, Peter F. Enterprise Bank & Trust and Enterprise Financial Services Corp Brauch, John E. Interstate Cleaning Corp. Chod, Dr. Ronald J. Washington University School of Medicine Conran, Joseph Husch Eppenberger LLC Eisenkramer, Charles C. Enterprise Bank & Trust Flatness, Dennis D. Welsch, Flatness & Lutz, Inc. Fowler, Flint Herbert Hoover Boy’s Club Guest, Jr., Robert E. Benson & Guest, LLP Hoagland, Gina G. Collaborative Strategies, Inc. Iken, Jeffrey B. CIS Communications L.L.C. Karakas, Anthony D. Marcus Investors Kniepman, Michael A. Corporate Benefit Strategies Marsh, Stephen P. Enterprise Bank & Trust McCormick Jr., William M. Ideacom Midwest, Inc. Mickes, Thomas A. Doster Mickes, James & Ullon LLC Middendorf, Orville J. Middendorf Meat/Quality Foods, Inc. Mueller, Harry C. Delta Group Electronics, Inc. Price, Dr. Hilton I. Midwest Radiological Associates Schultz, Edward A. Code Consultants, Inc. Truetzel, David W. Gryphon Holdings, II Ballal, Dr. Hebri S. Southwest Medical Center Blath, Dr. Richard A. Christian Hospital Northeast Chod, Dr. Ronald J. Washington University School of Medicine Eisenkramer, Charles C. Enterprise Bank & Trust 19 Galakatos, Dr. AndrewE. Professor of Clinical Obstetrics and Gynecology, Washington University School of Medicine Garrett, Dr. Pat F. Southwest Medical Center Grossberg, Dr. George St. Louis University Health Sciences Center Hruza, Dr. George J. Laser and Dermatologic Surgery Center, Inc. Johnson, Dr. Glen E. Parkcrest Orthopedics Kramer, Dr. Robert S. Metropolitan Orthopedics Lyss, Dr. Alan P. Missouri Baptist Cancer Center Marbarger, Jr., Dr. John St. Johns Mercy Medical Center McBride, Dr. Marsha Obstetrics & Gynecology Inc. Monterubio, Dr. John R. Monterubio and Herbosa Oral & Maxillofacial Surgery, PC O’Brien, Jr., Dr. Edward Excel Imaging Omell, Dr. Gary H. Diagnostic Imaging Associates LTD Price, Dr. Hilton I. Midwest Radiological Associates Stein, Dr. Paul M. Bi-State Medical Consultants, Inc. *Advisory Board Member ENTERPRISE FINANCIAL 41488_Final ANNUAL REPORT 5/6/04 11:30 AM Page 23 20 ST. PETERS Beck, Rudy D. Attorney at Law P.C. Bennett, Charles W. C. Bennett Building Supply Brown, Dale C. Botz, Deal & Co. P.C. Burkemper, Timothy J. Burkemper Construction Conway, Dorothy The Conway Group Cross,William C. Cross Homes, Inc. Dempsey, Ernest Pio’s Restaurant Dunne, Jr., Thomas P. Fred Weber, Inc. Finke,W. Dale ISU Corporate Insurance Management Francis, Richard L. Bax Engineering Franta, Bradley R. Client Services, Inc. Gloss, John J. BJC Health Systems Gnade, Daniel J. Price-Gnade Ford Mercury Inc. Keeven, Mark F. Missouri Turf Inc. Leuck, Richard C. Enterprise Bank & Trust Phillips, David R. Retired–formerly Major League Baseball Umpire McCown, Patrick J. McCown Gordon Construction Murray, Ted A. Grubb Ellis/The Winbury Group O’Donnell, Thomas Polsinelli, Shalton & Welte Rosser, Alex S. Investments Schoen, Kelly J. Buzz Print Soule, Margo C. Sonnenschein-Nath & Rosenthal TRUST Brody, Lawrence Bryan Cave LLP Challis, T. Jack Enterprise Bank & Trust Finerty, Steven L. Argent Capital Management LLC Henges, Ronald E. Retired Moskoff, William B. Tyler Group Schick, Peter G. Moneta Group Inc. Schraier, Mark Z. Blumenfeld Kaplan & Sandweiss PC Steiner, John S. Attorney-at-Law Vogel, Paul L. Enterprise Bank & Trust Wilkinson, Donna Wilkinson Group Inc. KANSAS CIT Y REGIONAL Burdette, C. Duncan Enterprise Bank & Trust Hagemann, Alfred C. Investments Hanson, Linda M. Enterprise Bank & Trust Jacobson, Howard T. Paragon Capital Managment Knutson, Kurt A. Enterprise Bank & Trust Masinton, Richard S. Russell Stover Candies Murray, Ted A. Grubb Ellis/The Winbury Group Oliver, Stephen A. SKO Automotive Group, Inc. Rosser, Alex S. Investments Sherman, John J. Inergy L.P. Saale, Shawn T. Saale & Bailey, L.C. Steiniger, Michael T. Kuesel Excavating Company Thiebauth, John J. Financial Consulting, LLC Wapelhorst, Thomas N. Walters Jewelry Inc. Wilhite, James L. Stange Company SUNSET HILLS Barry, Joseph E. Retired - formerly Barry Sales Engineering, Inc. Cohen, James A. Orthotic & Prosthetic Lab, Inc. Sutherland, Jack L. Enterprise Bank & Trust Garlich, Brad R. Garlich Printing Company Welte, Wendy B. American Century Investments Grana, Paul A. Attorney-at-Law Graser, James E. Enterprise Bank & Trust Kaiser, Robert M. Kaiser Electric Meyer, Robert J. Meyer Group, Inc. Nothum, J. Glenn Nothum Homes, Inc. O’Loughlin, Robert F. Lodging Hospitality Management Raineri, Dominic P. Raineri Building Materials, Inc. Schneider III, Charles W. Kirkwood Glass Co., Inc. Wilcutt, Gary S. Enterprise Bank & Trust OVERLAND PARK Dean, Duane A. Miller Stauch Construction Dunn, Steven M. Ken-a-Vision Hanson, Linda M. Enterprise Bank & Trust Hatfield, Jim Ponderosa Financial Jaben, Michael H. Seal-O-Matic Paving Koutelas, W. Curt Arrowhead Contracting Swink, Earl W. Swink, Fiehler & Co., P.C. Tiggard, Harry O. Trademark Medical & Trademark Creative Tipton, John H. Da Com, Corp Vogel Sr., Thomas F. Tom Vogel Agency, Inc. Williams, James A. Sunset Transportation Witte, Alan Suelthaus & Walsh, P.C. Larsen, Randy J. Schifman, Remley & Associates Pummill, Clifton E. Dimension Graphics Sherman, John J. Inergy L.P. Stueck, Matthew N. Suburban Lawn & Garden Ying, John Central Power Products, Inc. PLAZA Downey,William H. Kansas City Power & Light Company Goodman, Cary C. Gould Evans Goodman Assoc. Knutson, Kurt A. Enterprise Bank & Trust Lukens II, David Lockton Companies, Inc. 40843_Final ANNUAL REPORT 3/17/04 9:29 AM Page 24 CORPORATE HEADQUARTERS Enterprise Financial Services Corp 150 North Meramec, Suite 300 Clayton, Missouri 63105 314-725-5500 or Toll Free: 800-396-8141 ANNUAL MEETING The Annual Meeting of Enterprise Financial Services Corp shareholders will be held at 4:00 p.m. on Wednesday, April 21, 2004, at the Marriott West, 600 Maryville Centre Dr., St. Louis, Missouri 63141 10-K REPORT AVAILABLE A copy of the Enterprise Financial Services Corp 2003 Annual Report on Form 10-K to the Securities and Exchange Commission accompanies this Summary Annual Report. Additional copies are available upon request to the Company. LEGAL COUNSEL Armstrong Teasdale LLP One Metropolitan Square, Suite 2800 St. Louis, Missouri 63102 314-621-5070 INDEPENDENT AUDITORS KPMG LLP 10 South Broadway St. Louis, Missouri 63101 314-444-1400 STOCK TRANSFER AGENT UMB Bank, N.A. Securities Transfer Division 928 Grand Blvd., 13th Floor Kansas City, Missouri 64106 800-884-4225 Readers should note that in addition to the historical information contained herein, this 2003 Annual Report contains forward-looking statements which are inherently subject to risks and uncertainties that could cause actual results to differ materially from those con- templated by such statements. Factors that could cause or con- tribute to such differences include, but are not limited to, burdens imposed by federal and state regulations of banks, credit risk, expo- sure to local rapid increase or decrease in prevailing interest rates and competition from banks and other financial institutions, as well as those discussed in the Company’s Annual Report on Form 10-K. Shareholders are invited to address issues, questions or concerns to the Enterprise Shareholder Relations Department, c/o Jim Wagner, Executive Vice President at 314-512-7111, jwagner@enterprisebank.com, 150 N. Meramec, Suite 300, Clayton, MO 63105. Kevin Eichner welcomes shareholder contact and plans to continue the small group shareholder interactive sessions such as the ones he hosted in 2003. Shareholders can get share prices, volumes, insider trading information, and other valuable facts on www.enterprisebank.com by clicking on the Investor Relations tab on the Enterprise home page or www. Nasdaq.com by entering the company’s trading symbol “EFSC” and following the prescribed protocol. The Shareholder Relations Department stands ready to be of assistance in any way. ENTERPRISE FINANCIAL 40843_Final ANNUAL REPORT 3/17/04 9:12 AM Page 1 ST. LOUIS REGION Clayton 150 North Meramec Clayton, Missouri 63105 314-725-5500 St. Peters 300 St. Peters Centre Boulevard St. Peters, Missouri 63376 636-926-3900 Sunset Hills 3890 South Lindbergh Boulevard St. Louis, Missouri 63127 314-849-7500 KANSAS CITY REGION Overland Park 12965 Metcalf Avenue Overland Park, Kansas 66213 913-663-5525 Plaza 444 West 47th Street Kansas City, Missouri 64112 816-531-5353 ENTERPRISE OPERATIONS CENTER 1281 North Warson Road St. Louis, Missouri 63132 314-993-6200 or Toll-Free 800-438-0378 www.enterprisebank.com 

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