Earnings call transcript Q4 2022

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

[Call starts abruptly]

At this time, I would like to welcome everyone to the Enterprise Financial Services Corp. Fourth Quarter 2022 Earnings Conference Call. [Operator Instructions] Thank you.

I will now turn the call over to Jim Lally, President and CEO.

begin. may You

Jim Lally

and us you fourth all much very earnings Colby, morning thank and joining this XXXX welcome for call. thank you to quarter our

and Turner, Joining of President & Chief is this Bank Officer; Keene me Financial Scott morning Enterprise Officer Chief Trust. Goodman, Operating and EFSC's

on on release we company and Before everybody presentation I our a that can like would call begin, found website. the copy remind be to the of the

for during a X.XX%. with return quarter of at in share fourth Slide the expanding earned equity. as per quarter yesterday. furnished execution business We This tangible capped in results highlights from The for statements fourth of Throughout X. to why commitment and the average Please for we that record building We XX-K entire our presentation X-K release begin platform. year our SEC presentation consistency make refer initiatives to year a produced for assets fourth the is Statements may were any X Forward-Looking we the the earnings. tangible on year. and and and momentum, growth and as stressed XXXX, today. and our our the the on our This of vary return of strategic both resulted $X.XX which clients, cadence reasons actual diversified results Slide Form earnings X.XX% ratio forward-looking partnerships quarter assets we inclusive loan on on recent the XX-Q well titled closed for XX% both to with most our tangible The common quarter common equity for tremendous financial the

quarter helped to closed share approximately which during our at fourth the to our robust per per $XX.XX tangible book value share. Additionally, $X earnings contribute

Turning X. to Slide

by with line in an have these able XX%. color annualized grow the outstanding his loan just basis, results. on we portfolio businesses see respect will an as loan Scott business to to on contributed full in more we market diversification quarter focused outstanding can was which much markets display comments. You were about we that these and to Moreover, about every had the growth. On provide

on Our deposits not changed. posture has

of deposits percentage interest minimis rates We actively this net The De the of as cost right how the DDA the amount resulted rates this focus out and on continue and to the is evidenced manage level XX appropriate by side pleased basis deposit discipline, expansion really aspect growth, of margin stability. total runoff, balance short-term and retention, around to relatively a XX%. our rise played of a a stable between This in with of relationship low interest find in goal points. business. I'm of competitiveness coupled has with

remain Our of loans from outstanding levels loans total non-performing low end to third credit as the both that assets improved to the reported at statistics total we assets and quarter. the non-performing very

portfolio during expense diluted We outpacing for portfolio and supported the our growth contributions Slide from recap fourth loans we share of year. risk to businesses. with of We strong per an the sheet the XX% our basis, this in performance, year, our of the regions results. due financial record a earned balance XXXX. of XX% our XXXX modest loan Along fully reduction growth $X.XX from a a with a provision did increase grew for record full at quarter. all the On rate provides in our X in the quarter highlights

net X% Our assets return XXXX. revenue drive that pre-provision period. net helped expanded surpassed average revenue easily XX% the This prior end pre-provision to over on a

well-executed fundamentals, within pricing capital and and our a per of base, deposit delivering share and year focused year that with thoughtful record All on consistent produce earnings pricing plan a credit a management. we incredible disciplined entered responsible We of results. EFSC. an patient all, mindset for is in expense growth, XXXX focused the The revenue investment diversified product that management and was consistent

accustomed perform to. As of into the deposit a found of ability XXXX, X which we of the the our have Despite for our are EFSC. confidence that we've gives head not are outstanding turn confident be the short-term we and with XXXX areas that level we focus and likelihood our ongoing us rate had continual page at year which clients The environment to mild have Slide increases, of change operating recession, our changed. on intense include conversations should another competition high become

chains. For backlogs are dealing operating have strong part, that with growth. ample we companies with order of They the still serve of become room commonplace sheets balance the for that reliable and the are and corporate supply continued most same competent as provide that labor books sufficient issues some such

of not as in business many businesses. ground that and We good success to growth XXXX CRE the issues derailers continued have XXXX. investor these the late our do see we to broken of these the However, projects about due feel throughout

equity. been projects as interest rise the rates have to sharp in recalibrate developers input inclusive owner require materialize metrics New of their to the slower additional

deposit a will rates things, the see of we continue the side on bit year. throughout to we of On pressure that believe

deposit we stand. the feel feel and generators they good growth With our I have. we hard especially identifying where relationships movements confident proactive increases, highly balance that lag accounts. to preserve work valued for very we said, at to that about commercial of currently where with rate specifically We've fund been make loan There's that much can these on always throughout very need a XXXX various expected higher

Enterprise the over Bank Goodman, our With to call to would & that, lines. Scott? and Scott I of about President like for Trust insights his business turn markets

Scott Goodman

good everyone. you, morning, Jim and Thank

see number year-end billion, increase you'll year, over on PPP. loans at an As prior XX.X% from just Slide of representing $X.X totaled X, the net

number major detailed categories the Slide diversified was well across as million of loan on $XXX Although, core growth X.

strong across Growth in attracting relationships business overall commercial loan on Originations contributed estate, company generally continued from continue QX Strong overall nearly similar Specialty of lines prior number consistently. a period C&I more perform as with is also up bolstered new our nice of by developers and operating intentional larger success a Slide X C&I deeper or Dallas. set new business. loan to production the level strong of us gate wins lines approach were of seasonally a a footprint. by all reflected growth new by out in markets QX the our and XX% period. growth with growth in each as and quarter chase investors in of was but and go this a the to was relationships further transactions. on and real partner typically market select projects modest nearly team for an in rather of while strong reflects reflects number quarter performance than contributions for C&I

specialty the strong, roughly million X/X new of $XX growth lending growth on activity the continuing into additional on million with existing short-term premium partners book. and proactive to timing rates. book and The of growth, The in of a $XX offering in team strong of the units XXXX. million premium XXXX, been been the borrowers product consistency renewals pushing Choice the higher of is has the nurture also pipeline which based the total relatively in growth finance had quarterly credit continued But from contributed accelerated opportunities a million. new seasonally market steps in with First by heading to despite well with SBA to quarter quarter referral the moderate further the we've this able quarter, stable finished insurance year. for to or of increase executed an our posting Tax $XXX grow. legacy aggregate Life with focused payoff including $XX headwinds XX%

forward. strong the and churn process The several reflects the into QX. the business over this M&A mainly Strong quite existing will existing of in adoption is the process general, or in remains to growth necessity the and in affordable channel of the a states to lower in in posted by this provide of companies. million programs portfolio with In ones. healthy continued activity the through the more lower XX%. projects which the quarter aspects been slightly for origination mainly volume of origination housing for due the Much carry decline on to contingent opportunity book activity Year-over-year Sponsor continuity small these reflects delayed new along sale of advances our and some business pipeline pipeline should the timing platform looking $XXX at some the and though, for closings specialty of active. Finance has for quarter, deals relating this new

are now the Slide which results Turning on to XX. regional

a quarter. several in both Kansas with the origination new Notably, in outstandings City onboard grew along market. Kansas commercial market C&I growth Our St. revolving QX development increase the modest a volume Midwestern posting line in X.X% City real new refinance of million of activity estate and and nice relationships experienced new we year-over-year solid had of and Louis loans middle markets $XX in markets and

also balance start a This by team nice new markets real million office loan investor from $XX resulting market of commercial a and $XX some to community-based opened for both production tax of their development and Southwestern a estate closing had includes This Our which Phoenix in a our the in a period and relationship Texas for clients. growth for is grew serving large, The in $XX well-known midyear retail to strong organization new new million credit including Arizona bringing structure. children the team, million large under Metro C&I a off new year-over-year growth center this a solid with for nice XX.X%. XXXX. quarter,

million and momentum into $XX grew the XXXX. quarter building we nice heading California, Southern In in are

this several portfolio a talent facility a period, from CRE This execute expanded developing We relationships, assisted acquisition and C&I a expanding franchise investor. a market an larger with legacy legacy acquisitions. the continue in C&I new and credit with predecessor we onboarded legacy a to large operator materially strategy banks of relationships through

are deposits to now and number XX Moving which on Slides XX.

or $XXX $XXX interest-bearing transactional idle the this and majority quarter down year-over-year. non-interest-bearing and with the accounts down, were categories, balances year-over-year. deposit a cost of up declines quarter of businesses. of balances the were really funds to Total X.X% number larger accounts for Breaking isolated being for or the the limited were million higher stable The million

As you new key selectively relationships we've attract retention, deposit intentional ones. from our approach heard managing pricing taken to our deepen prioritize and Jim, of an

competitive upper bankers be deposit within We've tend also Slide our by region. of conversations The on breakdown middle of Midwest, and proactive the impacts to to Larger example, clarity Street for to number outflows. large clients concentrated a with loan. decline deposit company developed In attributable some and for single our XX number we market provides portfolios. options the a million legacy for C&I is Main markets $XXX portion a having more mitigate that a quarter assisted are had their

retain successful though, $XXX in of full we loan, More quarter. for moved a over new of along the these generally, million relationships were deposits recent national the the balances we Main repayment average Upon been unable of the billion exceeding back those with $X Street relationship to relationship-based the with deposits new from have balances, accompanying in closed to bank growing in which accounts. year, originating during materially accounts, roughly

Lastly, to verticals funding Slide optimize enhance strategy. to on deposit which I'd detailed our XX point number of to specialty are and our growth to flexibility like our continue the which

escrow. community our third-party associations, QX, for the $XXX deposits During quarter or property in Specialized $XXX management XX.X% aggregate million within grew specialties, and and balances year. the in grew of million each

to like I'd turn Keene? highlights. Now, Keene over further for to Turner the call financial

Keene Turner

My we of good share per and reported fourth on Scott morning, the income earnings Thanks, quarter $X.XX comments where $XX million. begin net Slide XX, everyone. of in on

in record earning in This were operating a revenue increase increases the than expense from the quarter. these the assets expanded revenue. third sequential per increased but in operating margin in XX% by provision the growth XX% expansion to share the continued quarter that and both Non-interest earnings meaningful Organic for in offset credit quarter. fourth more increase drove and led losses

we of compared $X.XX $X.XX net earnings $XXX full the share in reported and per For income XXXX, year million of prior to year.

$XX in average Slide Turning quarter, quarter partially as balances, in for increase a driving The our was Net interest primarily interest in of increase income The result the million XX. of to million was higher. income the by linked higher $XXX came interest offset net $XX a increasing increase to loan along $XXX a income rates, of an in increase by the with compared asset loan million. deposit was benefit increase expense. yields $X driven million million and

our increases sheet million quarterly existing of range the result composition in as in expect balance to With interest net of full impact of will we rate the million. the the income a current December XX, interest $XXX of $XXX

in the portfolio and first reprices each variable not the increases. loan of release, approximately quarter interest noted the As rate quarter XX% benefit the of fourth earnings rate did from on day

Fed with We're deposits. offset the rate increases, that second will costs. expect interest-bearing that be experiencing the reducing quarter of We on pricing magnitude first actions deposit by lagged better-than-expected largely and interest

expect we that However, will in additional growth the is growth address by any loan and do deposit to actions we to with interest will say That and continue competition net XXXX. be that costs correlated income Fed.

XX tax was basis Slide margin from on Moving equivalent increase of quarter. XX, points net interest linked a an to on the basis X.XX%,

improvement, investment reinvestment yields yield new continue increase liability X.XX% from the asset XX loan basis the XX and costs basis than benefit rising XX balance points yield an more rate. a tax which yield basis origination With points and rate to to fourth to continue asset-sensitive including on quarter rose equivalent Earning rates rates in points asset improved improved of loans period. sheet, a included we as X.X%

The enhanced borrowings. also mainly XX rates grow to as higher balances. points Asset period, continue asset we driven cost by by the loans and from reducing and while increased yields aided prior rate were liabilities investments variable basis of an deposit interest-bearing mix cash

compared than rate portfolio us balances more prior deposit allows deposit with deliberate to which Our be more remains non-interest-bearing XX% cycles. pricing to

of variable are are essentially, More And above floor. floors XX% those rate. driver of all sensitivity those of floors. The with as loan priced asset have largest interest XX% than loans rate our is portfolio of the currently

variable the rate move begin rates interest future cycle, our if quarter While direction. rate have executed the we this in in several fourth to should during swaps loans earnings earnings enhanced opposite protect to

quarter. remains below than approximately And beta historical is our deposit it period expected in and interest-bearing while was fourth XX% previous Our the the higher XXXX, it in level.

lag expect relationship-based charge-offs deposits compared demonstrate rate rising asset we and the linked this in the our points remain We deposit net Slide our quarter. this we through environment been to trends. specialty basis we XX, While at in On fourth to has versus abate, interest cycles. pricing ability control low through to quarter points the verticals. credit basis our to remained growth deposit committed X Annualized X enhanced prior in believe greatly rate funding costs

million For year, year. and linked year-end. with asset from or points assets X $XX.X Overall, the terms, percentage net points quarter the quarter dollar full XX declining the basis million both compared improved and $X.X were non-performing non-performing charge-offs basis or prior with prior in loans in in and the the quality

loans. and were assets points X assets of XX Non-performing non-performing loans total total of basis were basis points

non-performing In loans category, addition to due in in the the a we experienced improvement also the decline quarter. past in

million, for allowance we to the for in $XXX charge-offs overall Slide due improvement quality. million primarily credit allowance $X.X the quarter losses. declined the demonstrate net losses asset and in credit XX, On The to

adjusting When for third end to worsened reserve. the factors reserve economic The our at CECL that was the was loan quarter, of the the model total quarter loans loans, in which reflects used the provision generally the of of the million allowance the expense shifted carry areas in credit A total of primarily in guaranteed X.XX% at for forecast quarter. a for to commitments. compared recognized an to mix X.XX% in X.X% the end increase fourth portfolio allowance losses loans $X.X lower While December. unfunded at represents government

Turning to Slide XX.

of $X The increase in million income primarily quarter. the income. was in credit increase million, Our an a led fee million fourth by tax $X was increase $XX quarter

the negatively credits. from carried results seasonally sales see line fair by in quarter were quarter projects as recall, As value rising impact at rates tax strong interest in you item this was tax and benefited impacted on did quarter third same steady negative the of credit fourth rates the not while

Tax interest to to seasonal further subject credit rate income movements. and will continue be

environment. quarter linked driven reduced than were interest earnings higher charges interest clients offset based deposit saw fourth by increase the value in and in are on fair investments community net primarily development that offset quarter interest rising rate tax credits credit recent to However, adjustments more The income fees a income to by earned they service partially in by an compared decrease rate increase a on trends. also

were Turning rising deposit Fourth the quarter main in from quarter $XX the growth quarter. of XX. specialized linked businesses. to to expenses $XX compared Deposit $X in to expense and Slide service million, million due interest certain $X increased million non-interest was an driver rates increase the and third million

from Compensation financial continued to the results. the improvement the higher and performance-based operating and quarter. the quarter's the fourth compared principally non-interest company's million benefits in the momentum incentive of revenue, from points bonus expense during $X.X due outpacing ratio XX.X%, to accruals quarter. was This basis core linked XXX rise an quarter, The increased efficiency in strong third reflects

efficiency we're ratio see from to as the to further quarter the XXXX, XX% to Looking range core be fourth in levels. expecting our expect to expand margin we XX%

benefits quarter higher quarter the trends annualized run Overall, for X% expect include as First fourth as to in from income and compensation expected XXXX, we rate. salaries well and typically an increase fee decline seasonal around expense.

rate necessarily for and and of driver this us increased opportunity big growth next specialized quarters. throughout year be but not of space deposit deposit as in may manage the service We from to there and expense next The from in is expense evolving competitive both couple view the businesses. certain some

our ratio expect efficiency to XXXX. posture in item on this trend guide reflects line we how Our

generated in comprehensive with income, we tangible of share Our million of improvement $XX.XX, in the an increase in capital combined the metrics X% per third XX value resulted an from of are and the other Slide book quarter. fourth shown $XX earnings accumulated record quarter on

During for dividend shareholders million increase paid still prior common dividends by the our XXXX, to common increased. has quarter first of dividends tangible XXXX, share with the per earnings we consecutive share the XX% $XX seventh our strong the year. book through increased to and level share quarter been another of value returning In XXXX, $X.XX compared repurchases. or we marking $X.XX $X.XX of per increase announced a roughly to dividend while We

our While flexibility XX% our capital ratio forward. of level that moving dividend XXXX our dividend remains payout in structure at has a increased, in provides

the common After quarters. tangible impacted the the X.X% income, decline quarter, negatively tangible the X each rates equity the of The end comprehensive of increased at initial market in and the first common improved equity year. ratio to to asset when accumulated interest last tangible ratio improved has in other

tangible is to term. our meaningful X% the execute do repurchases equity the now share plan not we While near range within X%, in of common ratio target to any

on let interest path short-term With the of the base. rate strengthen rates organic and to uncertainty our earnings we increases, economic potential of further intend our capital further the impact

position average full return our on a conditions return tangible common on quarter. with on shares a a we program. common momentum available equity a had great XX% assets tangible When We X.X% quarter have with X.X% market average throughout in and strong and capital return equity still the We XXXX. XX% assets under and million for on XXXX and delivered finished the fourth year purchase our a return align, average the year Board-approved X

now this to you line joining well Thank are XXXX. questions. for and today momentum we forward open that and call believe carrying for the we'll analyst look We positioned in the

Operator

from [Operator Jeff Instructions] question Rulis Davidson. Your the from line first come of D.A.

Jeff Rulis

deposit that on But efficiency we costs. expectations I get high-end for margin guardrails the a wanted in but that how all of that perspective? and driven sort wanted narrow you just predict sense on nature? better and Is anything of of Keene, run got from had catch? is flows of to Is to onetime in kind kind deposit there to the your variable Yes, that a through. rate and on variable -- line kind a costs. how just kind Just I know a little trying referenced seasonal that bit rate of year-end?

Keene Turner

color there. happy I'm you give to Jeff. some Sure,

from year-end decision a to liquidity made was one competitive and is So specialized in it catch-up seeing players quarter. of that really the and aggressive. And related bit the of major we're everybody get little there Obviously, some the really in They've a was fourth there fighting we outflows space is trying for I there. where some deposit think deposit to had now. key

So ground our we're there. just holding

think little and terms balances throughout had in effect of to an pressures some a year earned I what was the bit of there we catch-up. were quarter responsive and of competitive on some was some a good we had that

$X going $X happens balances we look you item at forward, I the when depending and that we're what million is end just of of everything sequentially, XQ and know maybe would that, on to say million, thinking that to up at rates the XQ year. line sort with

with maybe growth to layer based you itself, some kind think we more guide, in see if on I it's think rate how $X December run And maybe out our And and you competition increases $X perspective, ratio million think of for on can then, XXXX. plays probably that sequentially. million. that So I based that efficiency a from up leakage then

Jeff Rulis

I the... right, variable catch If in cost that's item addition line specifically to deposit referencing the Okay. and you're that

Keene Turner

Yes, yes.

Jeff Rulis

as well. your salaries comp QX commentary we in then and And got

of like year? looks for in kind again, QX that it in but back an So ratio use the up to full efficiency

Keene Turner

Yes.

should million the tax on with the interest sequentially expenses that million the have item, won't bit with good line to obviously you a for some some $X XX% or ECR starting efficiency a credit for I for sorry, income that points think modeling XQ. and -- line that, count there. give $X the think quarter I first you seasonal little the income shorter seasonal QX perspective compare day and net But expenses fee to from

Jeff Rulis

in on in you just some trying to to heard trying remember the of you quarters if just been the prior a strategy the and/or we've think first to aggressive Okay. of or get Just you jump to over asset the the have swaps on quarter, more be and to front you rates? those downside, are for other sensitivity do trying referenced on what side wanted Obviously, to appetite plan trying we clearly -- want I how And see sense flip the in, sense on in see I we for get mean should that. do far to I locking that's margin? you but again, putting moderating of go? can't could the what margin benefiting into to I the I more? to 'XX? putting

Keene Turner

think degree and Yes. move maybe say in And strategies strategy early go. We the itself that were to somewhere that a that -- direction And a so rates -- we're late and excess to liked is income. as between value been essentially hedges loan halfway meaningfully, call we of second getting We've cash not to the the third, of then frankly, some couple to soaking the quite to -- Jeff, to downside securities million we looking deposit be bit so of we're to letting that have the to comprehensive off what up, we've have to I certainly, take that hundred the say hedges assertive putting were started balance once earlier loan sheet. I'd We're I not same aggressive. securities. a the XX go. would some of on be focused million little of might did we on liquidity about hedging million at into take think there. would with more we up far Initially, incredibly in XXX and various table. $XXX of quarter, basis off in fair $XXX sensitivity think up 'XX on the sensitivity asset done points just was going I but moving a asset and some

cautious. caused so guardrail to little And a that that more a bit be us was

take and basis So the in. bit going not we're with better of we'll the take way some a off are spot, layering And end we're up but sensitivity curve to table. the better those TCE the sitting of to probably We're rate part probably shorter-term probably now in hedges XXX is, with X% little there. going points those

interest the and comments And earlier. about net my provided way margin thinking it. reflective we're guidance of that that, So income of on our that's we all then is

Operator

from from Your Damon the line next question KBW. DelMonte of comes

Damon DelMonte

So first, want the commentary there. I to on margin of kind continue

margin? to you Keene, So peak think able this rise you the as second then defend in kind see your year? quarter here quarter hold the still kind And progress of it as think as Or you and are 'XX? of a do for through you of first it you far guys do

Keene Turner

Yes.

on first peak, comments, think really reflect seemed more I forecasted I it. when how to think based think, that with at my quarter we out defensive I you look

peak a " -- lower but And that's the think we all the increases later. I saying the is obviously, probably all get quarter get, to basis I'm expecting if it's the result quarter dependent X second. little when that first margin of layered funds that on third peak. quarter, more Fed basis like second But I not drawn peak points think that's again, on a quarter but then would that, monthly than more in what that actually sometime that's out, we're bit higher in maybe is third margin the maybe into if being

So we're to you second what frame probably it, guys thinking peak margin. July in about it, and get peak call June, you of see will is when terms quarter as time first

Damon DelMonte

it. Got

a had next the level with commentary do the see seemed And pullback? you just bit you provide in Or for loan you on be what a could think you pretty 'XX? to year. helpful. color the think to you would can replicate That's outlook start little expectation Do growth, Okay. the positive. a we for of regards kind of

Jim Lally

want that. don't Yes, everybody talked Damon, comfortable any do very high the jump project single-digit mid- we the about fact We're lending or I'll the this that contributing number in is to handle transactional to we last into Jim. with in market.

growth the going mid- comfortable Just comes all quarters but the forward. it to fourth we to have keep game plan, when had we're that single-digit to together quarter then we're like high in going

Damon DelMonte

And Great. -- real do in you your estate office do the you space commercial in then portfolio? do guys much

Jim Lally

about you that? want talk Scott, do to

Scott Goodman

portfolio. Yes. markets. that wouldn't it's in focus. those of of it's each Damon, But function a relationships it's I our concentration not I say talk focus to I do It's a performing it large or We Generally, about portfolio large a like a have A Class us. offices. neighborhood the metro don't a for it's type think well. And have type seems be we

Damon DelMonte

are or percentage of quantify portfolio? able overall loans it. CRE the you And Got to the of

Scott Goodman

Yes.

Keene Turner

kind roughly of $XXX million sitting today. It's $XXX million Yes. to here

So pretty diversified in well. as terms of industry

in small whole. of terms the relatively So

Scott Goodman

We review add just XX% range. on averaging done a about that pretty above ago. I'll performing is well. coverage in portfolio too. so XXX%, long talking Debt also service And not had we're LTVs too Maybe targeted

Operator

Your from the of Montgomery. from Martin next comes question Janney Brian line

Brian Martin

the bit the how are CDE but that thinking this or I maybe the to just talked tax Obviously, issue. of little that insight fee on general, out, of in away helpful. kind just would more on find or the some seasonality a a of just you input But how fee bit point the then just as little as the just rebound there's just kind Keene, and income, some to thoughts you think any tax about business income bit, about about guidelines have a wanted of quarter, going credit last get and was at kind one far this credit guys quarter and little quarter. inflator be you and seasonality

Keene Turner

I it, without I further credit we're million a vice tax mean at If -- SOFR this Brian, opportunity XX-year think I And for similar what level are in say, longer-term there's and down, probably year-to-date, year, income think that upcoming value fair moves think think we'll $X.X rates, any for I total. I that I look call at, versa. more we for the in for as movement material think Yes. year.

So the then we're And kind we point. some the there us. of offset some sales you private costs business CDE expect that will operating of start-up cash teetering that at income equity. do about and I kind And for of think of that other are asked

in about some those feel that of out $X call then exited. as, And and those generally to I some of that on ultimately upside we depending work think we how $X annually comfortable. million million projects there's are think it,

think, -- weighted businesses, that with business that credit for obviously tax are those both the their So we is probably us. quarter half think fourth And second seasonal. of I weighted

and on think some look we'll perspective variable what call in like it 'XX. that where gives line Hopefully, items is we those, So you

Brian Martin

had which a -- Yes. low thinking maybe And that you when Keene, in more all on type of -- just in if credit year. last about a is a if out item one it least that line you take grower. you're end items, was look out Or noise line, lot that mid-single-digit volatility, kind you reasonable? strip of the Is income how this it at -- the of it had fee tax the at kind of where the

Keene Turner

their in to pressure in at but it, third you're little I together if mid-single-digit And recurring quarter, space bit competition and of looking I treasury management a businesses in mitigate our Yes, call working think kind fourth we're that. of maybe overall. earnings and of think we think cash those management traditional fee products some of income, as credit there's

in card So ballpark. gets in half deposit we're between service charges the wealth second we that operating from the of of think year sort you where X% the

Brian Martin

Yes.

Okay. perfect. capital, of And then what getting thought. back That's just on the I kind That's here.

the talked already. about the sounds you the you when guess buyback guys the M&A, like I today options, M&A.? growth buyback thinking I other potential in it's as you the far mean organic the As are dividend look there. and how I at guess, about

just about into think how those going any those how thinking So feedback 'XX? or about to on you're

Jim Lally

Can you M&A? handle I'll handle the buyback want and to

Keene Turner

Jim. through. the have that been investors all say, the a through give would And have I that the is the us dividend we're really, We here idea volatility to ability it. earnings sounds that Yes, we've about to been power be sheet. think Brian, do really I balance and already trying profile strong The that. thoughtful good, to create

be think is is than if but coming I maybe a recession bit the there it so little struggle. a to that's lighter allowance want that, we good asset quality is a would

environment and too next bit capital bit that allowance little and -- I would little term if let to the the near And of say, besides line we're a be think our earnings build just improve. a improves So think the be and with in valuations operating to conservative. we'll much is, I and think as defense the goal of that capital, I

capital or And M&A, strong like perfect we for that’s We with acquirer want the structure deal probably are clearly excess deal that? something time. a to now if you and our can in a then, Jim, appetite talk about

Jim Lally

we've is of got great momentum going still do it's XXXX what and and for businesses but to was list and always list about past, than the includes on to on 'XX we've We pretty includes our ongoing pretty lift-outs. be in top. stop teams business. And we're say it's -- the 'XX. calling things now M&A dynamic and put further talked in it Brian, it's nature the in special doing new this But of M&A and also something one things also down meetings M&A normal opportunity the to us. in an that's that and such those

Brian Martin

you. Got

on are not is I the any Okay. shakes here March cumulative as given rate here That's like of if but about sure kind hikes and you just your And those -- deposit out, maybe beta that's couple far think sounds the that it more February and cumulatively? outlook guys think as how beta in helpful. beta, if I play for deposit change you I'm where thinking a out -- guess

Keene Turner

Yes.

here December, obviously pricing, And dramatic. at cumulative the in even me looking not has it increasing in the but in I'm got. I've front Deposit extremely accounts well. been and it's of honestly, behaved adjustments and some beta have and cumulatively So even, at particularly the XX% under. made the XX%. quarter, in we is of and kind is XX% if And under. interest-bearing under monthly pricing And the late it it's year even you look for beta beta

consumer the responsive funding And and So deposit I generate and we current specialty growth where think digit, and generally of commercial fund single to are good we in how can to base then and done think about the what enough stability high the it. good with feel to business call loan contribution it, banking. I from XXXX we organic be rates X% feel we've about

a it cautious we're perspective. So lag about from

give above it's where caution currently I we some guidance think performing. has all the

moving cumulatively reality forward it. So view is haven't we if we haven't XX%. cumulatively, that -- had XXs we of is beta seen since we're mid-XXs we've and But or at the the high think marginal third quarter

I and to really stable where So, like doesn't perspective. to have really good, we we got from account need have that feel good sense of funding where core what for think be used the are responsive just a types we move rate a we've

Brian Martin

Got come down. you. this No, funding last levels way the just of -- loan given that for makes has on just was growth sense. liquidity me obviously mean, the I -- to And the one maybe the year,

So funding coming to growth is bit or how it just the from that's the this a Is at year? you're about growth just deposit fair sheet think but liquidity down come balance to that the more is little loan looking how...

Jim Lally

we're have. we that it thinking feel various all We -- specialties units the through and that mentioned just we Yes, about Brian, can that. confident teams do can we'll everything fund and

Operator

comes Sandler. line [ph] question the Michael from Your next Piper from of

Unidentified Analyst

runoff sheet on some rate-sensitive wanted the kind the color now? us surrounding leftover the on deposits up last Just give of balance follow potential you question. right of to Can

Jim Lally

talk to about want you that? do Scott,

Scott Goodman

we've are nonbank maybe kind funds said and certain moderate pipeline And results also in of been to the have with being alternatives, conversations with in able there other see well. conversations call know really been is the the what I bring of good deposit handful how A I James. clients. clients. that about handful use are good Yes. comments, with really that It's as feel we competitive specials. that larger can We're really that our know we've think commercial the and we're And excess those that that. of also our new feel well. But T-bills, we having majority decline we in a I really clients talked able in of what developed having quarter in deposits. the into redeploying I I've I'll proactively prospects We've of some We clients products successful market as markets. approaching We that good excess funds about to about that show and

that hopefully, helps. So

Unidentified Analyst

then follow-up but Yes, you year my to reasonable kind question, to this it's year deposit you on growth that's touched the just repeat with super at that do specialty last think compared outlook helpful. pace? growth of And same

Jim Lally

people added there. that think think this. consistent us providers. for Yes. We businesses those We are We've new sales some

for ability the feel company. appropriately our its growth to good contribute about funding So we for total

Operator

Jeff from Rulis Davidson. from comes question D.A. Next

Jeff Rulis

just were a on on or Just looking there. off, that nonaccrual either The decline. detail Any the follow-up. nonaccrual loans some paid back for color

Scott Goodman

a or was Jeff, that it's was prior actually -- year but Scott. even really had in been not credits, completed successful in well. really workout I One can ag It's C&I a majority maybe we and take the charge-off on new. on then conclusions kind recovery the the both. out as credit that to credit we a one. an work our They've in process and that of most X of year

So that's probably the bulk the of the reduction in nonaccruals quarter. for

Jeff Rulis

meaningful the is did all? in mean reduce all that Got that then And I that margin at recovery? at Keene, you.

Scott Goodman

It sorry... was a recovery, relatively modest

Keene Turner

Jeff the went recovery, No, allowance. through the Yes.

think that's what to. I So Scott referring is

margin. meaningfully part but net was the that it of So impact didn't

interest quarter. income and the were I net in clean think fairly margin

either consequential or like too XQ you think to about nothing need So for way that. that anything

Operator

back turn no are call There this to questions the Jim further closing time. remarks. over at now for I will

Jim Lally

Colby, your great look thank interest company. you our today our for care a you us for day. speaking at joining and thank you the in again of all We first to to end all quarter. Take forward have of and and

Operator

today's conference concludes call. This

disconnect. may You now

Enterprise Financial Services (EFSC) 24 Jan 222022 Q4 Earnings call transcript