Enterprise Financial Services Corp Q1 FY2026 earnings call

• Financial performance: Earnings per diluted share $1.30, return on assets 1.16%, pre-provision ROAA 1.65%. Net interest income stable at $166 million, margin 4.28%. Balance sheet strong, capital levels stable. - Loan portfolio: Slight dip in loans due to various factors, core geographic markets and certain business lines had growth. - Deposits: Seasonal outflows but national deposit verticals provided growth. - Asset quality: Making progress on OREO loans with four under contract and progress on others. - Priorities: Asset quality improvement, expected balance sheet growth, focus on efficiency gains through automation.

For the first quarter, earnings per diluted share were $1.30. Net interest income was $166 million, net interest margin expanded to 4.28%. Loans dipped slightly due to several significant closings sliding to Q2, a $100 million pay down in low-income housing tax credit portfolio, and sale of $25 million of SBA loans. Diversified deposit base had typical first quarter outflows but national deposit verticals grew by $187 million. Loan portfolio breakdown by asset class: $97 million loan growth in core CNI and owner-occupied real estate portfolios, $21 million in life insurance premium finance, offset by $101 million reduction in low-income housing tax credit portfolio. Specialty lending portfolio relatively flat, core geographic markets had growth. Deposits had seasonal outflows but national deposit verticals grew. Core deposit base well diversified.

• Bullish on overall mid-single digit balance sheet growth for 2026. - Uncertainty from Iran conflict may impact future loan growth. - Expect net interest margin to remain in low to mid 4.2% range with stable net interest income growth. - Provision for credit losses was $7.2 million, influenced by net charge-offs and qualitative adjustment for Iran conflict. - Dividend increased by one cent per share to 34 cents per share for Q2 2026.

• Uncertainty from the conflict in Iran could impact borrower sentiments and future loan growth. - Competitive pressures squeezing spreads and credit across footprints.

Q: Jeff Rolls asked about timing of sale of four properties under contract and anticipated gains.

A: Three of four should transact in Q2, fourth later this year. It's early to say on gains but confident in recognition.

Q: Jeff Rolls asked about margin timeline.

A: Margin guide is current run rate, expected to hold stable through end of year, with balance sheet growth starting in Q2.

Q: Damon Del Monte asked about expense outlook.

A: First quarter is seasonally heavy on compensation, expecting relief sequentially, deposit expense to step up, expenses expected to be on similar run rate in Q2 with potential for growth in other items.

Q: Damon Del Monte asked about provision going forward.

A: Charge-offs on recurring basis, took reserves for economic uncertainty, provision can abate with growth and charge-offs.

Q: Damon Del Monte asked about capital management.

A: Will continue evaluating repurchases and dividends, with growth as priority, M&A low priority.

Q: Nathan Race asked about pricing on new loan production and deposit growth.

A: Seeing competitive pressures on loan yields, expecting to originate credit in low to mid-6% range, loan growth to be funded by deposit gathering with securities portfolio proportion maintained.

Q: Nathan Race asked about M&A appetite.

A: Laser focused on organic growth, M&A low priority