Enterprise Financial Services Corp (EFSC) Q3 2025 Earnings Call Transcript
Earnings Per Share (EPS) $1.19 in the third quarter of 2025, compared to $1.36 in the linked quarter and $1.32 in the third quarter of 2024. The decrease is attributed to the recapture of transferable solar tax credits and an increase in provision for loan losses.
Return on Average Assets (ROAA) 1.11% in the current quarter, with a pre-provision ROAA of 1.61%. This reflects steady growth and pricing discipline.
Net Interest Income Increased by $5.5 million compared to the previous quarter, marking the sixth consecutive quarter of growth. This was driven by disciplined pricing and steady growth.
Net Interest Margin Improved by 2 basis points to 4.23% in the third quarter of 2025, reflecting disciplined pricing and asset growth.
Loan Growth Annualized growth of 6% or $174 million net of $22 million of guaranteed loans sold during the quarter. Growth was driven by high-quality loans in markets like Dallas and Las Vegas.
Deposit Growth Increased by $240 million net of brokered CDs, with DDA remaining at 32%. Growth was driven by national verticals and all regions year-over-year.
Tangible Common Equity to Tangible Assets Ratio 9.60%, yielding a return on tangible common equity of 11.56%. Tangible book value per common share increased over 15% on an annualized quarterly basis.
Nonperforming Assets (NPAs) Increased by $22 million, primarily due to a $12 million life insurance premium loan and 7 commercial real estate loans in Southern California. These are expected to return to historical levels in the coming quarters.
Net Charge-Offs $4.1 million in the third quarter, compared to $1 million in the linked quarter. This increase contributed to a higher provision for credit losses.
Provision for Credit Losses Increased to $8.4 million in the third quarter, up from $3.5 million in the linked quarter, due to net charge-offs, higher nonperforming loans, and loan growth.
Noninterest Income Decreased by $4.1 million from the linked quarter to $17 million, excluding a $30 million insurance recovery related to solar tax credits. The decrease was due to lower tax credit and community development income.
Noninterest Expense Increased by $4.1 million from the second quarter to $109.8 million, driven by higher deposit costs and legal expenses associated with problem loans.
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Enterprise Financial Services Corp Q4 2025 Earnings Highlights
- Earnings Growth: In Q4 2025, earnings per share reached $1.45, an increase from $1.19 in the previous quarter and $1.28 in Q4 2024, indicating sustained profitability improvements for the company.
- Net Interest Income Increase: The quarter's net interest income hit $168 million, up $10 million from the prior quarter, primarily driven by branch acquisitions in Arizona and Kansas, which accelerated the company's strategic expansion in high-growth markets.
- Asset Quality Improvement Outlook: Management anticipates a significant reduction in nonperforming assets over the next two quarters, targeting a decrease from 95 basis points to a historically normalized level of 35 to 40 basis points, reflecting confidence in asset quality recovery.
- Increased Shareholder Returns: The quarterly dividend was raised to $0.32 per share, alongside an 11% growth in the balance sheet, demonstrating the company's commitment to creating value while returning capital to shareholders.
Enterprise Financial Services Declares Quarterly Dividend Increase
- Quarterly Dividend Increase: Enterprise Financial Services (EFSC) declares a quarterly dividend of $0.33 per share, reflecting a 3.1% increase from the previous $0.32, indicating sustained profitability and potentially attracting more investor interest.
- Forward Yield: The forward yield of 2.36% not only provides shareholders with stable cash returns but also enhances the company's appeal in the capital markets, likely contributing to stock price stability.
- Dividend Payment Schedule: The dividend is payable on March 31, with a record date of March 13 and an ex-dividend date also on March 13, ensuring timely returns for shareholders and bolstering investor confidence.
- Historical Performance Support: The dividend growth aligns with EFSC's historical earnings data, demonstrating robust financial management and profitability, further solidifying its position in the financial services industry.