Enterprise Financial(US:EFSC)2026-01-27 17:02Financial Data and Key Metrics Changes - The company reported earnings of $1.45 per diluted share for Q4 2025, an increase from $1.19 in the linked quarter and $1.28 in Q4 2024 [4] - Return on average assets was 1.27%, and pre-provision return on average assets was 1.74% [4] - Net interest income for the quarter reached $168 million, up $10 million from the linked quarter and $22 million from Q4 2024 [4][24] - The tangible common equity to tangible assets ratio was 9.07%, with a return on tangible common equity of 14.02% for Q4 [6][7] Business Line Data and Key Metrics Changes - Loan growth for the quarter was $217 million, primarily due to acquired loans from the branch acquisition [8] - The loan portfolio saw a mix of growth across commercial and industrial businesses, with C&I, CRE owner-occupied, and SBA lending making up over 50% of the portfolio [16] - Specialty lending, particularly in SBA 7(a) owner-occupied CRE, topped $250 million in originations for the year [18] Market Data and Key Metrics Changes - Deposits grew by $1 billion in Q4, with $400 million from new and existing clients and approximately $600 million from the branch purchase [9] - The cost of deposits decreased to 1.64%, and the level of DDA to total deposits improved to 33.4% [9] - Organic deposit growth for the year was 6.5%, amounting to $854 million [19] Company Strategy and Development Direction - The branch acquisition accelerated the company's strategy in higher growth markets by several years, enhancing long-term performance [5] - The company aims to continue growing its balance sheet at a mid- to high single-digit pace, achieving an 11% growth in 2025 [6] - The focus remains on improving productivity and efficiency through technology investments while maintaining a diversified, relationship-oriented business model [12] Management's Comments on Operating Environment and Future Outlook - Clients remain optimistic about the economy, particularly in sectors related to power generation and infrastructure improvements [13] - The company expects to see a reduction in non-performing assets (NPAs) to more historical levels in the next couple of quarters [22] - Management is confident in the ability to produce high-quality earnings and maintain a strong balance sheet moving into 2026 [14][35] Other Important Information - The company increased its dividend by $0.01 per share to $0.32 for Q4 and repurchased 67,000 shares at an average price of $52.64 [8] - Non-interest income for Q4 was $25.4 million, a decrease from the linked quarter, but an increase when excluding the impact of tax credit recapture [32] Q&A Session Summary Question: Update on foreclosed properties and timing for NPAs reduction - Management confirmed that six of the seven properties were taken into OREO in December, with expectations for resolution by the end of Q2 [41][42] Question: Insights on fee income and non-interest expense growth - Fee income is expected to grow at about 5% year-over-year, with non-interest expenses projected to increase around 5% as well [49][50] Question: Details on loans migrating to non-accrual and timing for resolution - Two loans totaling $28 million migrated to non-accrual, with management confident in their secured position and actively negotiating exits [60][61] Question: Expectations for SBA gain on sale revenue growth - SBA gain on sale revenue is expected to grow modestly by about 5% from 2025 levels [62] Question: Outlook on provisioning and charge-offs - Management anticipates charge-offs to decrease from elevated levels as they approach a more normalized state [76][78] Question: Capital management and buyback plans - The company has remaining capacity for buybacks and plans to continue focusing on growth and dividend increases in 2026 [80][84]