Enterprise Financial(US:EFSC)2025-10-28 16:02Financial 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 [5][24] - Return on average assets was 1.11% and pre-provision return on average assets was 1.61% [6] - 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% [6][27] - Non-performing assets increased by $22 million, resulting in a ratio of 83 basis points compared to 71 basis points in the linked quarter [10][21] Business Line Data and Key Metrics Changes - Loan growth was annualized at 6%, amounting to $174 million, net of $22 million in guaranteed loans sold during the quarter [8][16] - Deposit growth was exceptional, with an increase of $240 million in the quarter, leading to a total deposit growth of $822 million year-over-year [9][19] - Specialty deposits grew by $189 million in the quarter and $681 million year-over-year, reflecting a 22% increase [20] Market Data and Key Metrics Changes - Growth was observed in the Southwest markets, particularly in Dallas and Las Vegas, contributing to high-quality loan growth [8][14] - The company experienced solid customer deposit growth across all regions year-over-year, with non-interest-bearing accounts representing over 32% of total deposits [19] Company Strategy and Development Direction - The company is focused on integrating new associates from recent branch acquisitions and enhancing its presence in strong markets [12] - The strategy emphasizes organic growth and maintaining a balanced deposit base while exploring potential M&A opportunities that align with its growth objectives [59][60] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding client confidence due to recent economic developments, including interest rate cuts and clarity in trade policies [12][13] - The company anticipates continued loan production and onboarding of new clients, with expectations for a strong finish to 2025 [13][34] Other Important Information - The company increased its quarterly dividend by $0.01 to $0.32 per share for Q4 2025, reflecting confidence in its financial performance [10][34] - The provision for credit losses increased to $8.4 million, primarily due to net charge-offs and an increase in non-performing loans [31] 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 [40][41] Question: What is the company's exposure to non-depository financial institutions (NDFIs)? - The company maintains a portfolio of approximately $260 to $270 million in balances across various private lending relationships, focusing on first mortgage secured loans [42][43] Question: What is the expense outlook for the fourth quarter and into 2026? - The company expects total expenses to increase by approximately 3.5% year-over-year, with additional costs related to the branch acquisition factored in [49][50] Question: How does the company view fee income growth moving forward? - Management anticipates fee income growth to be mid-single-digit, with expectations for a rebound in the fourth quarter, although it may not reach the highs of previous quarters [50][73] Question: What are the company's priorities regarding capital deployment? - The primary focus is on organic growth, with M&A opportunities considered if they align with strategic goals; share buybacks are also on the table if suitable opportunities arise [59][76]