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Enterprise Financial Services (NasdaqGS:EFSC) Q3 2025 Earnings Call October 28, 2025 11:00 AM ET Company ParticipantsDouglas Bauche - Chief Banking OfficerJim Lally - President and CEOKeene Turner - CFO and COODamon DelMonte - Managing Director of Equity ResearchConference Call ParticipantsNathan Race - Managing Director, Senior Research AnalystBrian Martin - Director and Senior Equity Research AnalystJeff Rulis - Managing Director Senior Research AnalystOperatorThank you for standing by. My name is Carly, ...

Financial Data and Key Metrics Changes - The company reported earnings per share of $1.19 for Q3 2025, down from $1.36 in the previous quarter and $1.32 in Q3 2024 [4] - Return on average assets was 1.11% and pre-provision return on average assets was 1.61% [5] - Net interest income increased by $5.5 million compared to the previous quarter, reaching $158 million, while net interest margin improved by two basis points to 4.23% [5][25] - Non-performing assets increased by $22 million, resulting in a ratio of 83 basis points compared to 71 basis points in the linked quarter [20][28] Business Line Data and Key Metrics Changes - Loan growth for the quarter was 6% or $174 million, net of $22 million in guaranteed loan sales [6][14] - Deposit growth was exceptional, with an increase of $240 million in the quarter, leading to a total year-over-year increase of approximately 7% [7][18] - Specialty deposits grew by $189 million in the quarter and $681 million year-over-year, reflecting a 22% increase [18] Market Data and Key Metrics Changes - The company experienced strong loan origination in the Southwest markets, particularly in Dallas and Las Vegas [6][13] - Growth in deposits was observed across all regions year-over-year, with non-interest-bearing accounts representing over 32% of total deposits [18] Company Strategy and Development Direction - The company is focused on integrating new branches acquired in Arizona and Kansas City, which will enhance its market presence [3][11] - The strategy emphasizes organic growth and maintaining a balanced approach to lending and deposit generation [11][58] - The management is optimistic about the economic environment, with expectations of continued loan production and client onboarding [12][13] Management's Comments on Operating Environment and Future Outlook - Management noted that clients are showing increased confidence due to recent economic developments, including interest rate cuts and clarity in trade policies [12][13] - The company expects to maintain or slightly accelerate loan production levels moving forward [12] - There is confidence in returning non-performing assets to historical levels in the coming quarters [10][21] Other Important Information - The company increased its quarterly dividend by $0.01 to $0.32 per share for Q4 2025 [9][31] - The acquisition of branches is expected to be accretive to net interest margin, despite recent interest rate cuts [27] Q&A Session Summary Question: Can you provide clarity on the resolution timeline for the Southern California credits and the life insurance premium finance loan? - Management indicated that the resolution for the Southern California loans may take longer than anticipated due to a secondary bankruptcy filing, while the life insurance loan is expected to be resolved through litigation, with full principal coverage assured [36][38] Question: What is the company's exposure to non-depository financial institutions (NDFIs)? - The company has approximately $260 to $270 million in balances across 18 to 20 relationships with private lenders, primarily secured by first mortgages on residential real estate [39][40] Question: What are the expectations for non-interest expenses in the fourth quarter? - The company anticipates total expenses to be around $112 million, factoring in branch acquisition costs and normalizing for non-recurring items [67] Question: How does the company view its capital priorities moving forward? - The focus remains on organic growth, with potential for share buybacks if suitable M&A opportunities do not arise [58][76] Question: What is driving the growth in specialty deposits? - The company has invested in people and systems, leading to a variable cost model that is profitable and allows for market share growth [77]

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Exhibit 99.2 Enterprise Financial Services Corp 2025 Third Quarter Earnings Webcast Forward-Looking Statements Some of the information in this report may contain "forward-looking statements" within the meaning of and intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may include projections based on management's current expectations and beliefs concerning future developments and their potential effects on the Company ...

Core Insights - Enterprise Financial Services (EFSC) reported quarterly earnings of $1.2 per share, missing the Zacks Consensus Estimate of $1.3 per share, representing a -7.69% earnings surprise [1] - The company posted revenues of $204.94 million for the quarter ended September 2025, exceeding the Zacks Consensus Estimate by 17.54% and up from $164.89 million year-over-year [2] Earnings Performance - Over the last four quarters, EFSC has surpassed consensus EPS estimates three times [2] - The company had a previous quarter earnings of $1.37 per share, which was a +14.17% surprise compared to the expected $1.2 [1] Stock Performance - EFSC shares have declined approximately 1.8% since the beginning of the year, while the S&P 500 has gained 15.5% [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating expected underperformance in the near future [6] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $1.43 on revenues of $183.1 million, and for the current fiscal year, it is $5.40 on revenues of $696.83 million [7] - The outlook for the industry, specifically the Banks - Midwest sector, is favorable, ranking in the top 26% of over 250 Zacks industries [8]

Financial Performance - Net income for Q3 2025 was $45.2 million, a decrease of $6.1 million from the linked quarter and $5.4 million from the prior year quarter, with diluted earnings per share at $1.19[2] - Net income available to common stockholders for Q3 2025 was $44,297,000, down 11.4% from $50,447,000 in Q2 2025[46] - Net income (GAAP) for the quarter ended September 30, 2025, was $45,235,000, compared to $51,384,000 in the previous quarter, reflecting a decrease of 10.5%[57] - Basic earnings per common share for Q3 2025 were $1.20, a decrease from $1.36 in Q2 2025[46] - Return on average assets for Q3 2025 was 1.11%, a decline from 1.30% in Q2 2025 and 1.30% in Q1 2025[43] - Return on average common equity (non-GAAP) decreased to 9.29% from 11.03% in the previous quarter, a decline of 15.7%[57] Revenue and Income Sources - Net interest income increased to $158.3 million, up $5.5 million from the linked quarter, and net interest margin (NIM) was 4.23%, a quarterly increase of 2 basis points[3] - Noninterest income included $30.1 million from anticipated insurance proceeds related to a tax credit recapture event, with total noninterest income at $46.6 million[4] - Noninterest income for Q3 2025 was $46.6 million, a significant increase of $26.0 million from the linked quarter, primarily due to $30.1 million in accrued insurance proceeds[21] - Noninterest income (GAAP) rose significantly to $46,649,000, compared to $20,604,000 in the previous quarter, indicating an increase of 126.5%[58] Loans and Deposits - Total loans reached $11.6 billion, reflecting a quarterly increase of $174.3 million, while total deposits rose to $13.6 billion, an increase of $250.6 million[4] - Total loans reached $11,583,109,000 as of September 30, 2025, up from $11,079,892,000 a year earlier, representing an increase of about 4.5%[52] - Loan production for the quarter was $863.3 million, exceeding repayment activity of $689.0 million[16] - Total deposits increased to $13,567,912,000 in Q3 2025, compared to $13,317,359,000 in Q2 2025, reflecting a growth of 1.9%[48] Expenses and Costs - Noninterest expense rose to $109.8 million, an increase of $4.1 million from the linked quarter, primarily due to higher variable deposit costs and loan-related expenses[4] - Total noninterest expense for Q3 2025 was $109,790,000, an increase from $105,702,000 in Q2 2025[46] - Noninterest expense (GAAP) rose to $109,790,000 in Q3 2025 from $105,702,000 in Q2 2025, highlighting increased operational costs[56] Credit Quality and Losses - The provision for credit losses was $8.4 million, compared to $3.5 million in the linked quarter, with the allowance for credit losses to total loans at 1.29%[4] - Nonperforming loans increased to $127.9 million, up from $105.8 million in the previous quarter, resulting in a nonperforming loans to total loans ratio of 1.10%[17] - Net charge-offs increased to $4,057,000 in Q3 2025 from $630,000 in Q2 2025, reflecting a significant rise in credit losses[54] - The allowance for credit losses stood at $148,854,000 as of September 30, 2025, up from $145,133,000 at the end of Q2 2025[48] Capital and Equity - The tangible common equity to tangible assets ratio was 9.60%, an increase of 18 basis points from the linked quarter[6] - Total equity increased to $2.0 billion at September 30, 2025, up $59.4 million (3%) from the linked quarter and $150.3 million (8%) from the prior year quarter[29] - Tangible book value per common share rose to $41.58, compared to $40.02 in the linked quarter and $37.26 in the prior year quarter[29] - The Tier 1 capital to risk-weighted assets ratio was 13.3% for Q3 2025, slightly up from 13.2% in the linked quarter[28] Tax and Regulatory - The effective tax rate for Q3 2025 was 47.8%, significantly higher than 20.0% in the linked quarter, primarily due to $24.1 million in transferrable tax credits recaptured[27] - The adjusted effective tax rate (non-GAAP) remained stable at 20.0% in both Q3 2025 and Q2 2025[59] Other Notable Items - The Company completed the acquisition of 10 branches in Arizona and two in Kansas, enhancing its market presence[1] - The quarterly dividend was increased to $0.32 per share, payable on December 31, 2025[5] - The Company realized a net gain of $1.1 million on the sale of $22.2 million of guaranteed SBA loans in the current quarter, contrasting with a net gain of $3.2 million on the sale of OREO in the prior year quarter[24]

Core Points - Enterprise Financial Services Corp has completed the acquisition of twelve branches from First Interstate Bank, enhancing its market presence in Arizona and Kansas City [1][2] - The acquisition includes approximately $300 million in loans and $645 million in deposits, bringing Enterprise's total assets to approximately $17 billion [1][2] Summary by Sections Acquisition Details - The acquisition adds ten branches in Arizona and two branches in Kansas, significantly expanding Enterprise's footprint in these regions [1][2] - The branches have been fully converted to Enterprise Bank & Trust offices, allowing former First Interstate Bank customers access to a wider range of banking products and services [2] Company Profile - Enterprise Financial Services Corp, headquartered in Clayton, Missouri, had approximately $16.1 billion in assets as of June 30, 2025 [4] - The company operates branch offices across several states, offering a variety of business and personal banking services, as well as wealth management services [4] Transaction Advisors - Janney Montgomery Scott LLC served as the financial advisor, while Holland & Knight LLP acted as the legal advisor for the transaction [3]

Core Points - Enterprise Financial Services Corp (Nasdaq: EFSC) will release its third quarter 2025 financial results on October 27, 2025 [1] - A conference call and webcast will be held on October 28, 2025, at 10:00 a.m. CT [1] - Participants are encouraged to pre-register for the conference call via a provided link [1]

Core Viewpoint - Enterprise Financial Services (EFSC) has received a Zacks Rank 2 (Buy) upgrade, indicating a positive outlook driven by rising earnings estimates [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system is based on changes in earnings estimates, which are strongly correlated with near-term stock price movements [4][6]. - Institutional investors often adjust their valuations based on earnings estimates, leading to significant stock price movements when estimates change [4]. Recent Performance and Outlook - For the fiscal year ending December 2025, EFSC is expected to earn $5.39 per share, unchanged from the previous year, but the Zacks Consensus Estimate has increased by 3.7% over the past three months [8]. - The upgrade reflects an improvement in EFSC's underlying business, which is likely to attract investor interest and push the stock price higher [5][10]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks, which have averaged a +25% annual return since 1988 [7]. - EFSC's upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating a strong potential for market-beating returns in the near term [9][10].