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].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-Q ☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 2025. ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from ______ to ______ Commission file number 001-15373 ENTERPRISE FINANCIAL SERVICES CORP Incorporated in the State of Delaware I.R.S. Employer Identification # 43-1706259 Addr ...

Group 1 - The banking sector company Enterprise Financial Services Corp (EFSC) shows consistent growth in key areas, particularly in its balance sheet [1] - Crude Value Insights provides an investment service focused on oil and natural gas, emphasizing cash flow and companies that generate it, which leads to value and growth prospects [1] Group 2 - Subscribers to Crude Value Insights benefit from a 50+ stock model account, in-depth cash flow analyses of exploration and production (E&P) firms, and live chat discussions about the sector [2] - A two-week free trial is available for new subscribers to explore the oil and gas investment opportunities [3]

Company Overview - Enterprise Financial Services (EFSC) is based in Clayton and operates in the Finance sector, with a year-to-date share price change of -2.15% [3] - The company currently pays a dividend of $0.30 per share, resulting in a dividend yield of 2.17%, which is lower than the Banks - Midwest industry's yield of 3.07% and the S&P 500's yield of 1.48% [3] Dividend Performance - The current annualized dividend of EFSC is $1.20, reflecting a 13.2% increase from the previous year [4] - Over the past five years, EFSC has increased its dividend four times, achieving an average annual increase of 11.88% [4] - The company's current payout ratio is 23%, indicating that it paid out 23% of its trailing 12-month earnings per share as dividends [4] Earnings Growth Expectations - For the fiscal year, EFSC anticipates solid earnings growth, with the Zacks Consensus Estimate for 2025 at $5.34 per share, representing a 9.43% increase from the previous year [5] Investment Appeal - EFSC is considered an attractive dividend play and a compelling investment opportunity, currently holding a Zacks Rank of 2 (Buy) [6]

Core Viewpoint - Enterprise Financial Services Corp (EFSC) reported strong and consistent performance in Q2 2025, continuing a multiyear trend driven by a diversified business model targeting higher growth markets [4]. Group 1: Company Overview - The earnings call featured key participants including James Brian Lally (President, CEO & Director), Keene S. Turner (Senior EVP & CFO), and Scott R. Goodman (President) [2]. - The company emphasized its strategic focus on leveraging a diversified business model to achieve growth [4]. Group 2: Financial Performance - The second quarter results reflect a continuation of the company's intentional strategy aimed at capitalizing on various high-growth markets [4].

Financial Data and Key Metrics Changes - The company reported earnings per share of $1.36 for the second quarter, an increase from $1.31 in the previous quarter and $1.19 year-over-year [4][23] - Adjusted return on assets was 1.31% and pre-provision ROAA was 1.72% [5] - Net interest income increased by $5.2 million to $153 million, with net interest margin expanding by six basis points to 4.21% [5][27] - Year-over-year core deposit base grew by nearly $800 million, maintaining a loan-to-deposit ratio of 86% [8][9] - Tangible book value per common share increased to $40.2, reflecting a 15% annualized quarterly increase [9] Business Line Data and Key Metrics Changes - Loan growth for the quarter was $110 million, with a 4% annualized growth rate, driven primarily by C&I loans and investor-owned commercial real estate [6][13] - SBA loan production remained stable, with a decision to sell $25 million of SBA loans contributing $1.2 million in fee income [8][16] - Life insurance premium finance balances increased by 16% year-over-year, while tax credit balances rose by $30 million [17] Market Data and Key Metrics Changes - All geographic markets showed loan growth, with notable contributions from the Midwest and Southwest regions [18][19] - Client deposits grew by $73 million in the quarter, with a year-over-year increase of approximately 7% [19][20] - Specialty deposit verticals grew by $63 million for the quarter and $552 million or 18% year-over-year [20][21] Company Strategy and Development Direction - The company focuses on a diversified business model that capitalizes on higher growth markets while maintaining pricing discipline [4][5] - The strategic acquisition of a branch from First Interstate Bank is expected to enhance growth opportunities in 2025 and 2026 [9][10] - Management emphasizes a relationship-oriented approach to capitalize on additional opportunities while balancing quality and pricing [10][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued loan growth, anticipating a pickup in the second half of 2025 due to pent-up demand and improved economic clarity [11][58] - The company expects to navigate economic uncertainties while leveraging opportunities from ongoing M&A activity in the market [12][86] - Management remains focused on achieving loan and deposit goals while maintaining asset quality [10][29] Other Important Information - The company increased its dividend by $0.01 to $0.31 per share for 2025 [10][35] - Non-performing assets remained stable, with a slight decrease in non-performing loans [10][30] - The company is well-capitalized, with a tangible common equity ratio of 9.42% and a common equity Tier 1 ratio of 11.9% [9][34] Q&A Session Summary Question: Expectations for fee income in the second half of the year - Management expects fee income to be similar to the first quarter, with potential contributions from SBA sales and other line items [39][40] Question: Outlook on expenses and merit increases - Management indicated that the current expense levels are expected to grow, influenced by merit increases and legal expenses related to non-performing loans [42][44] Question: Capital levels and branch acquisition impact - Management confirmed that the branch acquisition will normalize capital levels and support growth, with plans to call subordinated debt in the near term [49][50] Question: Margin outlook and potential pressures - Management anticipates stable margins moving forward, with some near-term pressures due to securities purchases and floating rate debt [53][56] Question: Loan growth expectations for the second half of the year - Management expects loan growth to pick up, potentially reaching 5-7% as economic conditions improve [58][59] Question: Commentary on SBA loan sales strategy - Management is exploring SBA loan sales as a strategy to solidify fee income, with expectations for some level of gains in the upcoming quarters [80][81] Question: M&A activity and strategic priorities - Management emphasized the importance of onboarding new clients from the branch acquisition before considering further M&A opportunities [85][86]

Financial Data and Key Metrics Changes - The company reported earnings per share of $1.36 for Q2 2025, an increase from $1.31 in the previous quarter and $1.19 year-over-year [4][23] - Adjusted return on assets was 1.31% and pre-provision ROAA was 1.72% [5] - Net interest income increased by $5.2 million to $153 million, with net interest margin expanding by six basis points to 4.21% [5][27] - Tangible common equity to tangible assets ratio was 9.42%, with a return on tangible common equity of 13.96% [9][34] - Non-interest income increased by $2.1 million to $21 million, driven by bank-owned life insurance and community development income [31] Business Line Data and Key Metrics Changes - Loan growth for the quarter was $110 million, with a year-over-year increase of approximately 4% [6][13] - The largest portion of loan growth came from commercial and industrial (C&I) loans, with new loan originations up 23% year-over-year [13][14] - Life insurance premium finance balances increased by $160 million or 16% year-over-year [17] - Specialty deposit verticals grew by $63 million for the quarter and $552 million or 18% year-over-year [20][21] Market Data and Key Metrics Changes - All geographic markets showed loan growth, with notable contributions from the Midwest and Southwest regions [18][19] - Client deposits grew by $73 million in the quarter and $778 million or roughly 7% year-over-year [19][20] - The company maintained a total loan to deposit ratio of 86% [7] Company Strategy and Development Direction - The company focuses on a diversified business model that capitalizes on higher growth markets while maintaining pricing discipline [4][5] - The strategic acquisition of a branch from First Interstate Bank is expected to enhance growth opportunities [10][35] - The management anticipates that ongoing economic improvements and M&A disruptions will lead to strong financial performance in the coming quarters [12] Management's Comments on Operating Environment and Future Outlook - Management noted that most clients are performing well, with sales and profits in line with 2024 expectations [11] - There is optimism for loan growth to exceed 4% in the latter half of 2025 due to pent-up demand and improved economic clarity [12][60] - The company is prepared to guide clients through economic uncertainties while taking advantage of M&A opportunities [12] Other Important Information - The company increased its dividend by $0.01 to $0.31 per share for 2025 [10][35] - Non-performing assets remained stable at 71 basis points of total assets, with a focus on managing credit quality [30] Q&A Session Summary Question: Expectations for fee income in the second half of the year - Management expects fee income to be similar to the first quarter, with potential contributions from SBA sales and other line items [39][40] Question: Outlook on expense levels - Management indicated that the current expense levels are expected to grow, influenced by merit increases and legal expenses related to non-performing loans [42][43] Question: Capital levels and branch acquisition impact - The branch acquisition is expected to normalize capital levels, with a focus on supporting growth and evaluating dividend policies [49][50] Question: Margin outlook for the next quarters - Management is optimistic about maintaining stable margins, with potential growth in net interest income dollars [54][56] Question: Loan growth expectations for the back half of the year - Management anticipates loan growth to increase to 5-7% in the latter half of the year due to improved economic conditions [60] Question: Team integration in Texas and growth strategy - A new team in Texas has begun operations without non-compete restrictions, focusing on low to mid-sized C&I businesses [75] Question: SBA loan sales strategy - The company is exploring SBA loan sales as a strategy to solidify fee income, with expectations for some level of gain in the third quarter [80]

Earnings Performance - Net income reached $51.4 million, an increase of $1.4 million, resulting in an EPS of $1.36[7] - Net interest income increased to $152.8 million, up by $5.2 million, with a net interest margin (NIM) of 4.21%[7] - Pre-provision net revenue (PPNR) amounted to $68.1 million, reflecting a $2.0 million increase[7] - Adjusted return on average assets (ROAA) stood at 1.31%, compared to 1.29% previously[7] Loans and Deposits - Total loans amounted to $11.4 billion, an increase of $110.1 million[10] - Total deposits reached $13.3 billion, up by $283.1 million, or an increase of $72.9 million excluding brokered CDs[10] - Noninterest-bearing deposits accounted for 32% of total deposits[10] Asset Quality - Nonperforming loans represented 0.93% of total loans[8] - Nonperforming assets accounted for 0.71% of total assets[11] - The allowance coverage ratio was 1.27%, or 1.38% when adjusted for guaranteed loans[11] Capital and Dividends - The CET1 ratio was 11.9%, compared to 11.8% in the previous quarter[7] - Tangible common equity to tangible assets ratio was 9.42%, compared to 9.30%[7] - Tangible book value per common share increased to $40.02, compared to $38.54[7] - A quarterly common stock dividend of $0.30 per share was declared for the second quarter of 2025, representing a $0.01 increase[7]

Core Insights - Enterprise Financial Services (EFSC) reported revenue of $173.37 million for the quarter ended June 2025, marking an 11.1% year-over-year increase and a 6.23% surprise over the Zacks Consensus Estimate of $163.2 million [1] - The earnings per share (EPS) for the same period was $1.37, compared to $1.21 a year ago, resulting in a 14.17% surprise over the consensus EPS estimate of $1.20 [1] Financial Performance Metrics - Net Interest Margin was reported at 4.2%, slightly above the average estimate of 4.1% based on two analysts [4] - The Efficiency Ratio was 61%, compared to the estimated 59.9% by two analysts [4] - Total Noninterest Income reached $20.6 million, exceeding the estimated $16.3 million by two analysts [4] Stock Performance - Shares of Enterprise Financial Services have returned +0.3% over the past month, while the Zacks S&P 500 composite increased by +4.9% [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

Group 1: Earnings Performance - Enterprise Financial Services (EFSC) reported quarterly earnings of $1.37 per share, exceeding the Zacks Consensus Estimate of $1.2 per share, and up from $1.21 per share a year ago, representing an earnings surprise of +14.17% [1] - The company has surpassed consensus EPS estimates for four consecutive quarters [2] - EFSC posted revenues of $173.37 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 6.23%, compared to year-ago revenues of $156.02 million [2] Group 2: Stock Performance and Outlook - EFSC shares have declined approximately 0.9% since the beginning of the year, while the S&P 500 has gained 8.6% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters [4] - The current consensus EPS estimate for the next quarter is $1.24 on revenues of $165.7 million, and for the current fiscal year, it is $5.14 on revenues of $670.15 million [7] Group 3: Industry Context - The Zacks Industry Rank indicates that the Banks - Midwest sector is currently in the top 20% of over 250 Zacks industries, suggesting a favorable environment for stocks in this category [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact EFSC's stock performance [5] - The unfavorable estimate revisions trend prior to the earnings release has resulted in a Zacks Rank 4 (Sell) for EFSC, indicating expected underperformance in the near future [6]