Acquisitions & Divestitures

12 Months Ended

Dec. 31, 2021

Mergers, Acquisitions and Dispositions Disclosures [Text Block]

ACQUISITIONS

The acquisition noted below has been accounted for as a business combination using the acquisition method of accounting which requires assets acquired and liabilities assumed to be recognized at fair value as of the acquisition date. Goodwill arising from the acquisitions consist largely of the synergies and economies of scale expected from combining the operations into Enterprise. None of the goodwill recognized is expected to be deductible for income tax purposes.

Acquisition of First Choice Bancorp

On July 21, 2021, the Company closed its acquisition of 100% of First Choice and its wholly-owned subsidiary, FCB, which operated eight full-service branches in California.

First Choice shareholders received 0.6603 shares of EFSC common stock for each First Choice common share and cash in lieu of any fractional shares. In connection with the merger, Enterprise issued approximately 7.8 million shares of EFSC Common Stock valued at $44.01 per share, which was the closing price of Enterprise common stock on July 21, 2021. The value of the transaction consideration was approximately $346 million, which includes approximately $2.1 million payable to holders of First Choice stock options. For the year ended December 31, 2021, the Company recognized $18.8 million of merger-related costs recorded in noninterest expense in the statement of operations related to the First Choice acquisition.

The following tables present the assets acquired and liabilities assumed. The consideration exchanged, assets acquired and liabilities assumed of First Choice were recorded at estimated fair value on the date of acquisition. Fair values are considered preliminary until final fair values are determined, or the measurement period has passed, which is no later than one year from the date of acquisition.


(in thousands)	As Recorded by First Choice		Adjustments			As Recorded by EFSC
Assets acquired:
Cash and cash equivalents	$	214,794	$	—		$	214,794

Securities	34,533		(44)		(a)	34,489
Loans	1,937,635		5,508		(b)	1,943,143

Allowance	(19,626)		12,620		(b)	(7,006)
Other investments	19,178		138		(c)	19,316
Fixed assets	1,869		(870)		(c)	999
Accrued interest receivable	7,131		20		(c)	7,151
Goodwill	73,425		(73,425)		(d)	—
Intangible assets	4,517		375		(e)	4,892
Deferred tax assets	7,558		(1,943)		(c)	5,615
Other assets	23,024		1,645		(c)	24,669
Total assets acquired	$	2,304,038	$	(55,976)		$	2,248,062

Liabilities assumed:
Deposits	$	1,840,716	$	(287)	(c)	$	1,840,429

FHLB advances	160,000		—			160,000
Accrued interest payable	124		—			124
Other liabilities	8,464		(2,160)		(c)	6,304
Total liabilities assumed	$	2,009,304	$	(2,447)		$	2,006,857

Net assets acquired	$	294,734	$	(53,529)		$	241,205

Consideration paid:
Cash						$	2,152
Common stock1						343,650
Total consideration paid						$	345,802

Goodwill						$	104,597

1 Common stock consideration was $342,280, net of $1,370 for shares withheld on the settlement of share-based awards of FCBP employees.

(a)Fair value adjustments based on the Company’s evaluation of the acquired securities portfolio.

(b)Fair value adjustments based on the Company’s evaluation of the acquired loan portfolio, write-off of net deferred loan costs and elimination of the allowance for loan losses recorded by FCBP.

(c)Other miscellaneous fair value adjustments.

(d)Adjustment to eliminate goodwill.

(e)Eliminate acquired intangibles and record the core deposit intangible asset on the acquired core deposit accounts. Amount to be amortized using a sum-of-years digits method over a useful life of 10 years.

The following table provides the unaudited pro forma information for the results of operations for the twelve months ended December 31, 2021 and 2020, as if the acquisition had occurred on January 1, 2020. The pro forma results combine the historical results of FCBP with the Company’s Consolidated Statements of Income, adjusted for the impact of the application of the acquisition method of accounting including amortization and accretion of fair value adjustments. The pro forma results have been prepared for comparative purposes only and are not necessarily indicative of the results that would have been obtained had the acquisition actually occurred on January 1, 2020. No

assumptions have been applied to the pro forma results of operations regarding possible revenue enhancements, expense efficiencies or asset dispositions. Only the acquisition-related expenses that have been incurred as of December 31, 2021 are included in net income in the table below.



	Twelve months ended December 31,
(in thousands, except per share data)		2021		2020
Total revenues (net interest income plus noninterest income)		$	488,280	$	420,487
Net income		188,416		67,275
Diluted earnings per common share		4.86		1.94

For the year ended December 31, 2021, total revenue and pre-tax net income from FCBP of $40.5 million and $25.9 million (excluding the provision for credit losses of $25.4 million on the acquired loan portfolio and unfunded loan commitments) were included in the Company’s consolidated results.