Enterprise Financial Services Corp Q3 FY2025 earnings call

• Jim Lally discussed loan growth, acquisition of 10 branches in Arizona and 2 in Kansas City area ($650M deposits, $300M loans), increase in provision for loan losses, recapture of solar tax credits covered by insurance, earnings per share, net interest income and margin growth. Focus on strategic consultative experience for clients.
• Doug Bauche talked about geographic market opportunities, loan growth by sector, deposit growth by region and specialty verticals, asset quality with details on nonperforming assets.
• Keene Turner discussed earnings per share, net interest income and margin, provision for credit losses, noninterest income and expense, capital metrics, and commentary on solar tax credits and insurance recovery.

Loan growth was 6% annualized, with $174 million net loan increase, including $79 million investor-owned CRE, $31 million C&I, $73 million tax credit lending. Deposit growth was exceptional, net of brokered CDs, up $240 million, with DDA at 32%. Nonperforming assets increased $22 million, primarily due to a $12 million life insurance premium loan and 7 commercial real estate loans in Southern California. Net interest income was $158 million, up $5.5 million, net interest margin 4.23%, up 2 basis points. Earnings per share $1.19. Tangible book value grew 4% in the quarter and 12% in the past year. Dividend increased to $0.32 per share for Q4 2025.

• Expect NPAs to return to historical levels over next few quarters.
• Dividend increased by $0.01 per share for Q4 2025 to $0.32 per share.
• Anticipate net interest margin to be defended with mid-single-digit loan and deposit growth expected for next year.
• Expenses year-to-year expected to be up roughly 3.5% with branch acquisition run rate expenses.
• Fee income expected to be between second and third quarter levels in Q4, with fourth quarter between second and third quarter levels on a full-year basis.

• Increase in provision for loan losses due to $22M increase in nonperforming assets and net charge-offs.
• Uncertainty in resolution timeline for Southern California real estate loans and life insurance premium finance loan.
• Volatility in tax credit income line item affecting fee income.

Q: Jeff Rulis asked about workout process for Southern California credits and life insurance loan, NDFI exposure.

A: Douglas Bauche discussed resolution timeline uncertainty for Southern California loans, life insurance loan litigation uncertainty, and NDFI exposure in portfolio.

Q: Jeff Rulis asked about margin offsetting rate cut and go-forward commentary.

A: Keene Turner discussed margin offsetting rate cut with branch accretion, expecting modest pressure but defending net interest margin.

Q: Damon Del Monte asked about expense outlook from branch acquisition and fee income rebound.

A: Keene Turner discussed expense run rate and branch acquisition expenses, and fee income expected between second and third quarter levels in Q4.

Q: Nathan Race asked about deposit beta assumptions, M&A front, share repurchases, and core deposit intangible goodwill impact.

A: Keene Turner discussed deposit beta assumption, Jim Lally talked about M&A focus on integration, and Keene Turner discussed core deposit intangible goodwill impact.

Q: Brian Martin asked about expense clarification, fee income outlook, and specialty deposits.

A: Keene Turner clarified expense levels, discussed fee income outlook between second and third quarter levels, and James Lally discussed drivers and growth of specialty deposits'}}{