EFSC - Earnings call 4 2023 | Enterprise Financial Services Corp

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

Operator

Thank you for standing by, and welcome to the Enterprise Financial Services Corp. Fourth Quarter 2023 Earnings Conference Call. I would now like to welcome Jim Lally, President and CEO, to begin the call. Jim, over to you.

James Lally

Well, thank you, Mandeep, and thank you all very much for joining us this morning, and welcome to our 2023 fourth quarter earnings call. XXXX. XX, January is Today Credit And joining Financial President Turner, Chief Bauche, is Enterprise Trust. Bank this and Chief morning Chief Doug Officer and Goodman, & Keene for Operating Enterprise Bank & EFSC's Trust; me Officer Officer; of Scott .

power a earnings copy I per be a may versus yesterday. found third earnings website. results that make presentation the quarter we on call showed actual most $X.XX begin, everybody release Diluted the of today. The few why accompanying we despite Slide the and $X.XX experienced. X titled fourth XXXX. earnings to again recent quarter presentation and our in manifestation the and was credit on from that company refer X-K like our any Please would Before quarter release $X.XX SEC were of in remind reasons challenges and the to and for fourth on the of that XX-K forward-looking statements of once share can we Form strong XX-Q Statements vary furnished presentation The the for of Forward-Looking quarter our the

into and quarter as level like some charged described during highlights Before I X that we quarter. I relationships be charge-offs very to the could extraordinary strong we experienced off the get that a and briefly of of address of quarter elevated would year, uncharacteristic. the during the

we was was directly credit not underwriting. first our was The loan, isolated an related such credit that incident agricultural believe an to which

off ultimately shortfall. the relationship $XX placed full million challenges masked by provided $XX fourth quarter, charged the status million it shortfall. a million collateral There that In were irregularities information a financial $XX nonperforming was correspondingly and facing up in and the we on a covered the borrower

are resources remaining the recover we outstanding. we $X million actions available and all to the utilizing can taking appropriate Additionally, what for

and space, few this $XXX the new relationships approximately the originating credit stopped will have million wind portfolio in agricultural We next over down years.

are we collateral conducting validate inspections each audits findings engaging and not have including We of relationship have more the any this extensive to to physical to reinforce reviews to third ensure in of a actively portfolio. We'll be thorough party field one. the engaged these that we our and farm our confidence similar balance team other even situations do

provides with of comfort review the to portfolio. initial health the Our remainder the respect of

but was keep quarter, reserve to current, third fourth in took action in other Southern legacy major After part exposure was The unsecured unsecured up suitable and quarter. the We $X California that to a the to a with attempts million charge credit. shore credit related was identified loss this appropriate $XX to this payments the this relationship credit real charged quarter off that to commercial estate of the full million inability $XX collateral Choice we portion. this the find First a experienced off $X million the we unsuccessful in for investor. in remaining borrowers' unfortunate to of reserved ultimately several million

will pursue to continue recovery. for of remedies We all sort any

year-end Delinquencies portfolio to over declined classified at has anticipated. XX% while remained points. at basis of year-end. to quarter million performed remainder XX well loan we stable were and held controlled in The only classified our loans the NPLs Overall, at XX% steady $XX loans as capital at

for XXXX. an of entirety and both begins quarter X. in our very deliver confident historically to Slide this our fourth XXXX, our unusual strong The provision in expense, with appropriate the company performance. Despite of financial on level are results charge-offs, this ability asset of the our to increase Entering that delivered I'm strong quality summary line results

performance in highlights. but financial detail more much would ahead to full a these, I of on quarterly his Keene like few provide comments, will our year provide and

prospects compared million to robust of PPNR performance XX.XX%. These income compared third ROA to financial ROTCEX the the absorb per the earned of or reflect that our means remain increasing we to to quarter X.XX%. experienced We and needs of an needs reserves of a while deposit in during strong clients fourth returns with to loan our positioned also us growth. deterioration of we channels shareholders sheet, growth low profile when up in quarter. supporting and net earnings some improved the fourth Combined XX.XX% these a Our continued diluted in as to quarter. This in we continues $X.XX of existing well. Like quarter new credit and allowed typical the fulfill produced The open during operate to past, ability balance share ROAA and and to as to $XX.X results strong both have past. continue X.XX% we the delivering years clients. strength

million increased loans $XXX quarter, XX% annualized. the or For

this brokered We our of able at increased in fund deposits, with we, growth of DDA came year the again, a CDs. with million after total in important, to which reduction the XX.X%. XX.X% quarter deposits ratio client $XXX to out As were and netting in finished by the our ratio loan-to-deposit

results. A mentioning things couple of worth these regarding

both the or are years these financial in This on results. businesses and markets we in we're these continue markets to numbers. intentional terms achieve. geography to has X seeing fruits relying past, themselves or X any of manifest Unlike and our to been investments and in revenue diversification, all of First, not contributing businesses

March growth we loan year's but deposits. the post did this, funded to success. only set we Secondly, do we about second the half half loan our with entire client just a goal growth second Not crisis, banking fund with our

the of keep a XX%, this of also to total We we goal percentage set north too. to deposits DDA accomplished and

markets that be the able and that encouraged fund on XXXX months. relatively deposits. where stable believe the income Scott net much have that businesses loan more last saw daily but we'll our Finally, well-priced the in NII, success, stabilized to remained mid-single-digit means we interest give I'm growth has we with we which relationship-oriented our color several client will continued

capital. on Moving to

positioned at increase and and for per was growth. earnings strong to continued return strong, remained quarter at strong remains sheet balance of profile. due our ratio common $XX.XX. with value This is TCE book in XX% levels an share Capital our Tangible to TA end and year-end stable X.XX%. at Our XXXX is and

future. reiterate move on that million buffer pre-provision of Before profile to per we have the in to year. focused quarter are earnings ever particularly provides when we levels, loan or the strength very that X issues absorb significant for strong the averaged where shows credit earnings short XXXX, before also over reserves at want I touching This generates loan focused our this to of considering will our be a duration where loss I Slide foreseeable our are capital that $XX portfolio.

will on Just half in be of XXXX, growth we future like continue focused to the second with loan funding deposits. client done we've

Additionally, that confident I'm the shareholder we through of can strategy. improve to value execution our continue

on consistently rate the We our combined environment with lines improving our that are will should focused in. continued earnings performance current performance expense strong business all in improved management economic amid and steadfast and produce and continually stay credit we markets. This,

hear of business optimism model, review Throughout our our from from clients. One My the for and confidence stems XXXX, prospects note. optimism loan our in portfolio our continue careful both that final my to on same our on while this improving further will working XX efficiency core a be quality system conversion in after the system, also upgrade data. years the accessibility of many we'll our improve areas and I

Goodman. Scott? I turn call over the would like to Scott to that, With

Scott Goodman

everyone. morning, good and Jim, you, Thank

for from both you geographic considering magnitude of As they're and results fully growth heard and us Jim, diversified are in deposit and annual categories These also XXXX. that organic pushing was the highly but just significant, on not double-digit QX strong, lines. growth specialty growth, based business across markets loan to when the

for Loans, billion which were materially Slides of year most on $X.XX this categories contributing highlighted major XX% the X and portfolio the with up to growth. X are or

contributing for which from of up is of our displaying the quarter, rose year portfolio. out characteristic quarter the million, on traditional our Loans the Slide For XX% broken growth lift, and seasonal $XXX prior the XXX% X.

C&I was life tax strong seasonal lines premium Specialized insurance the from was credit revolving helped growth of business. new quarter, elevated loan usage several relationships on and benefiting of a performance in significant by and standout finance this lines client credit.

In experienced the increase originate and referral we steady Advances QX to tax typical on continue and the the in from loans of premium closings in the payments network majority finance, our on due projects credit affordable premium process new existing uptick policy policies. accounted for portfolio. housing the for

and and push million committed QX, be continue below the to headwind. but somewhat prepayments. estate secured the SBA real higher to is expectations, environment, due and high and be rate relatively by the stressed production mainly slower came gross on For remain to down consistent, Prepayments remains to elevated of a in our we Much credit owner-occupied execution QX pipeline $XX pipeline to continue expected lag standards focus loans. of into paydowns to

book space during slowed space finance the -- in QX. general posted general activity the sponsor quarter slowed a decline in in as modest actively The the in in

Following of impact activity to consider their digest pace acquisition year, and on half robust equity this their to rate opportunities. of environment activity the pipeline and in interest of the the the direction first private slowed and

growth expect We're and rate structures we moderate the in to this disciplined year. to these segment, sponsors credit also would a approach to the and coming in taking factors

continued Loan XX. year growth related facilities grew posted Specialty lines major for in of for market portfolios up finance the quarter and loan Kansas aforementioned $XX elevated annualized, materials niche growth this fundings as deals construction and $XX the well of business nearly full new X across projects markets and the the or loan Slide new with additional all the originations. full a process. process in relationships include million and well portfolios on line XX% business Midwest, in up as million Notable by modestly usage, lending increased relationship combined for hospitality middle on year the in originations up were the XXXX. In Moving were vertical, in new the was the to with $XX quarter was fundings existing construction the quarter. Results QX million current regions provider long-time and Louis industries. In as in and growth $XXX and QX as St. bolstered practice for balanced finance showing between construction the Southwest, new million which XX% for the a and quarter City year to XXXX.

additions a include in relationships and premier in of Significant with talent as we new onboarding well $XX a year by quarter middle related The this contractor which large, loan specialty grew California, manufacturer up new electric and success production market the round Vegas. In our region a in general primarily Las million portfolio manufacturing a new this in our Western contractor, were spaces. by X.X%. specialty is companies out food precision recent Southern well-established parts balances of QX to including number loans as business, in services to relationships, by increase Phoenix financial

We sectors. clients estate also franchise with legacy book new continue expand in relationships this and in loans the to real top-tier commercial to

deposits and year-over-year increases to depositors this on were down, similar rate accounts the DDA remixing deposit $XXX mainly accelerated billion Breaking of quarter year-over-year. up with up amount by now were XX down XXXX. behavior and by million, XX.X% due Moving the noninterest-bearing a Slides precipitated to for million Total by throughout XX. $XXX or interest-bearing balances $X.X accounts DDA

and banking to relationships, grew commercial however, as as In new well some cash escrow DDA increased quarter, third-party relating onboarding seasonal $XXX by build. million the success noninterest-bearing management C&I balances property of accounts

being region the quarter by the client deposits on growth the balances We by $XXX specialty large all several growth throughout well XX. experienced Slide in to geographic grew in growth footprint C&I new deposit as is spread of Louis Midwest, out was million larger and brokered and and regions. St. across Kansas but our Deposit markets, relationships. C&I City with relating broken the CDs net Higher highlighted in books mainly by

from Specialty new detail impacts a the quarter In deposits our to focused as broken existing the balances well million consolidation the in $XX attract West and of balances new as in effort the Slide through clients. reflect regions, relationships on XX. and funds out higher Southwest grew are of more

third-party new accounts and these The we increases property to continue with relationships. of segments business expand this were quarter new as management mainly within and the lines escrow

fund as QX opened, line seasonally quarter paid new assessments the will are softer begin are expenses then is QX. during to and a accounts association typically growth be community as in which up collected

relationship-based commercial balances, on has account shift clients. detail mix seen which represents majority pace base, the aforementioned our is treasury mix the account DDA from while the the management has trend Additional underlying core reside channels. balance on intentional generally XX% closed of still have all accounts interest-bearing and reflect also open options, funding the activity elevated XX% growth Slide into shown this with XX. A noninterest-bearing activity favorably are accounts balances been this of of comparing quarter which we closed new across total slowed. The exceeding net account core and our emphasizing of efforts toward activity in accounts accounts. our when and new deposits, increases continues to to accounts and And with

Now to turn Keene? to over for comments. I'd like call Turner Keene the his

Keene Turner

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

growth in asset in the $X.XX and increase of due pricing per to increase was impact quarter deposit share, mostly remixing the the an offset on quarter. stable, income and Net loans third disciplined relatively interest EPS the the assessment, the special earning in rate expense interest quarter deposits, changes. and from Excluding the was FDIC

Fee quarter, growth. discussed, which as revenue. fourth Jim typical for for XX% current the losses net The was by income million in of charge-offs from was pre-provision provision driven mostly the quarter. the quarter due in quarter increased credit and or $XX in third increase primary seasonally of noninterest assessment. Overall, higher million was quarter And operating the is driver the special to higher, the the the and increased loan $XX expense net for FDIC revenue

ability up Pre-provision XXXX increase million $X our year, when XX% and revenue XXXX balance $XXX pre-provision to net of the an consider This generate of year. XXXX. PPP you net from did to For repeat that support in was XX% income this was full revenue in included that our net pre-provision capital revenue million, the growth. sheet reflect of profile to not strength continues and earnings

XXXX recent quarter. for a was month increased the rates Turning modestly compared the XX. the levels of fourth which to million, loans. Net loan less in $X.X as million income Interest interest portfolio $XXX higher growth XXXX and increased by fourth mainly to increased of driven a the of linked is Slide strong million details interest the yields quarter decrease also Cash quarter, income were was more Slide $X than result X.XX% X continued and million and by fourth $X quarter The follow customer balances to points rate million. under originations added higher income. Loan funding More than X% average XX. interest on basis average $XXX just in while loan yield of was overall. on new most loan on

the X.XX% growth Customer The the we XX fourth by outpaced DDA performance was coupled was at was XX to approximately slightly net interest most allowed remaining aided million. basis overall was of the pricing in previous point in of XXXX, recent only X.XX% income margin deposit quarter a the in the linked funding $XXX increase slightly and stabilize interest level and from basis growth deposits which is the deposits quarter by resulting to of pricing results points quarter million percentage in while with where X.XX% XX%. The margin higher the reduce increase the represents the increased in off. decrease the September. We're broker deposits, continues expense X the deposit encouraged The in that has fourth margin month demonstrate still half net observed in further from basis point recent present, the that interest quarter. With said, by begin cost at was of pressure to additional drift cost quarter. month. in and of total This Interest balances in deposit a quarter. $XXX us growth balance nearly

lower the of longer, growth existing around or move will X higher sheet. Current spreads for rates somewhat at Looking overall costs allow that income to basis expect higher of to see we continue albeit funding drift interest margin margin points will remain forward, interest defend with us next should current couple slightly the on overall. we at quarter per asset over dollars balance current net quarters, levels while and

equates we additional in or of an prospect income. points $X.X million to With funds loss reduction to cuts the of margin to interest X rate $X rate X the of quarterly the Fed million X.XX-point anticipate initially on table, net each basis

we that reducing deposit them. remain order competitive, cautious rates. we were to stable With additional Our may be and rates be is in will in those were need to expectation just rates will more we cuts, methodical initially in more Fed we when moving deposit be as increasing down,

reserve into pay loans from the the provision quarter $X.X loans of nonperforming X This benefit so loan were to higher net benefit last in forward the relates a and $X.X through The from losses. in loans credit end for the of in assets the XX An outstanding to quarters from third were $XX of Between million additional for fourth the of loans that of end off. total by not at into charged million status a $X the basis represents relationships for commitments moved is million which gross funds to charge-offs the that of charged charge-offs, basis net other real represents income, fourth indexed move in California problem arose provision of loans. On million moved charge-off of charge-offs late a XXXX. this an in that to assets improvement loan fourth that the allowance discussed, that, with majority half points office quarter offset equates Slide off estate on representing $X economic funds issues of expense the quarter for commitments. balances of for a quarter, credits general were of the reduction income, loan was the modest interest for of and XX largely proactively our in reduction X.XX% into year. The of total quarter real to as government which million expense nonperforming Net million and when the and primarily nonperforming current impact that the Slide were these million reflects partially the X.XX% We in during the of over item. With rate relate advance than approximately September. million underlying recoveries points the the more million unfunded the not the Jim investor-owned impact on year. Nonperforming rates XX points reduction $XX the in while noninterest majority developer unexpectedly is of to Fed or were commitments in losses line decreased the X losses adjusting XX worked strongest on $XX $XX basis allowance due are Included credit component credit quarter, the the And rate. The Fed the fourth of quarter. Slide typically year, of credit There would third the September. in to losses on in interest charge-offs the at trends credit end fourth the estate the income the quarter positively XX. primarily nonperforming agricultural points deposit-related Each compared tax basis These were by for coupled were for driven in reduction on charge-offs quarter. loans growth, average quarter. the increase forecast. for we'll of that at guaranteed number trends downs, the of annual $XX third make $XX $XX credit and assets XX, quarter. fee up XX carried million in million the

SBA XX the fair the In quarter. to positively addition the half helped XX-year quarter in third value, increases to SOFR impact community decrease from development, at and quarterly distributions offset carried basis rate credits point the loan in sales an quarter, driving the related equity BOLI approximately of gain private profit. Linked on the to seasonality,

and As period. development a seasonal equity period income, reminder, with community credit fluctuate from will along the tax distributions private to

and to be due drive increased was to million, the growth, in moderation Other primarily the expect expense quarter's higher quarter the linked fee to performance-based the to XX. income With the a Deposit Slide specialized in driven a current were balances, in $X quarter, do core third but FDIC deposits time fourth Included offset increase basis related efficiency line were compensation $X.X mentioned. We to of decrease the $XX paid special to margin from net expense accrued efficiency seasonally million. this quarter and quarter noninterest in of income, compared up an XX.X%, expense quarter. Fourth partially we continue to lower off. The to average reduction strong income. expenses was net in quarter, incentive lower growth overall do which million primarily Turning by service compared in assessment the expect compared core some a to expenses higher. significant the third addition increase to accruals to fee to the by and item Scott of move coming XXX will contributor points of interest our expectations, as quarters. interest benefits linked was continue

maintain other For prudently expense to we all controls. cost categories, expect

Our the third value quarter, $XX.XX, increase ratio in of at capital end X.X% share per in derivatives equity and the of earnings rebound over the tangible fair from increased drove a XX, our are our Slide the a quarter. linked book securities X% the was the up which on and in basis, The quarter. On strength expansion is X% metrics a shown common profile tangible the to third and of quarter. value

value per share And frame, last full book years. or compounded over increased tangible annually by value per the For share XX% looking X $X.XX have longer XX%. a year, back the over successfully we book time tangible

and great industry foundation XXXX. with capital, significant success in with at return as strong the operating our a And returns. into we equity and had to client assets. the for X.X% common balance there look a expanding equity we tangible while base in our liquidity and start XX% tangible delivered average sheet on delivered X.X% With average We we're year a turmoil average generating return positions year, strong common on and was

We're With and appreciate that, going for I open line attention. the to I'll conclude questions. your my comments,

Operator

[Operator Instructions] Jeff Rulis from Our line question the with D.A. comes Davidson. first of

Jeff Rulis

I flat larger credit some detail the from were I charge-offs? on the On what flat those good into is kind keep guess rotated rather linked despite the a of pretty balance quarter kind filled or maybe classified charge-offs. side, improving follow-on with than assets guess -- the classified segments of into it to charge-offs. in

James Lally

I think -- Jeff, this is Jim.

I think out. relative didn't to loans that cleaned in these it sit the in stabilization which that were through those areas charged long there of maintained the rolled classifieds such that and and necessarily it the rapidity is off those enough

Jeff Rulis

Okay.

rotation some maybe where could there's another a increases segment-wise or where identified -- some the other into Is saw credits to that So fairly that way, there classifieds. granular? than put you you you point

James Lally

I think granular. very it's

list, Looking types. widespread and at and the I studied through it's various it, markets the

good And list. will, there's think credit that the small in theme, what's other as per to it's is relative you if So I news dollars well. no relatively

Jeff Rulis

Okay.

Just one on balances the they down I last think amount. decent credit. guess a the were quarter, criticized last I

were quarter. $XX quarter? balances quarter they relative linked were million maybe the third think to in down those fourth the I What

James Lally

comment Why have Doug? that, I on Bauche don't Doug

Douglas Bauche

relationship now so to Yes. from compressed a would were company risk cycle just well, a rating in some one, monitor experiencing performed has Thanks, rating, Jeff. relationships on that mortgage right is the a was a related downgraded be X X down special flows, mention. Really to special industry, that cash that mention downgraded that the to but

downgrade good one special of curtail was actions the well that and the but properties, continue estate Good appropriate their forward mix mention to at a on would commercial perform. portfolio a other current rate X-family loans X- and to estate, there we to market, interest real environment, The under taken risk the diverse confident to recourse of California looking feel -- in be again, has few of real some in monetize the the repricing ability performing as largely the a well. to debt taken relationship long-term borrower

Jeff Rulis

Got it.

criticized quarter. that... overall lifted balances So linked Is

Douglas Bauche

Correct.

Jeff Rulis

in down And increase if the range Okay. any size, you you this what quarter, were did of million quarter? $XX prior

Douglas Bauche

back up, saw Yes, the we're that reduction up probably million a Jeff, probably, in $XX similar we back prior the quarter.

Jeff Rulis

enough. Fair

Okay.

Any would Keene, the growth accelerate trajectory to that -- cuts. quick guess hopping bottom kind on Just -- on discussion of X here. as over that basis quarter approaching you a loan margin and given we expectations the NII for in I But you drift we thoughts points sit even of loop margin your bit on think, as a I well. are said with sounds, maybe the And kind real backdrop? of per then NII, if could rate

Keene Turner

I Yes, Jeff, growth sheet. I then dollars to for static. expecting of think be we're generally points depending think the helpful balance how both of rate really sides will And basis is a growth mid-single-digit X that. The on it occurs,

be difficult we'll as even from day of a year, net count interest in the going to middle this But income. year. XQ day start to see the quarter, somewhere first XQ of the overcome dollars though it's the in with to the think looks extra with to pickup I it

depending ruined little we get we the than a bit may of net albeit be be interest some half, water on about absent if half, margin. rate be with would changes, more it'll think -- still pretty back back challenging, could good that may have otherwise. But treading feel the continued some that dollars interest on net we income I we and a And increasing little cuts of bit drift

Operator

of KBW. with from Damon the line Our comes question DelMonte next

Damon Del Monte

the Just ask to on front wanted here. expense

you specialty you're about of think How to operating on the the should I upgrade system systems year. kind a cost line outside expenses related a of we think quarterly mentioned of be could working cadence that during the upgrade? course this for deposit

Keene Turner

Damon, other Keene. you'll and I this I think anticipate can that mean, going we things -- have but payroll I our to don't for that absorb be -- up, some staffing is generally. there's

what's there's those or $X think the in depending point going up to the I say come sort capitalized that versus come out, implementation during some and to on could the that we'll would expenses needs generally. that may through year $X I And million be for are to P&L. to what mid the year late occur those through million of

out. XX quarter. continue expecting. the step fourth the going bit think little But up, run we'll a here is the those and better for in point So the to what to Comp benefits it first and is then quarter was in we're I you've the obviously got rate first from to seasonality quarter, probably XX to

just year, inclusive we're what thinking, of deposits. what quarters. in we'll related sense those maybe the a core are in that's we later the numbers and also get some expenses, that's So upcoming again, better for specialty and of those have then And

Damon Del Monte

you. Got

Okay. for you XX positive $X basis say impact on that a about in million deposit specialty then expenses? rates, a cut And that's did the point

Keene Turner

Yes, you line proportions in compression I net think roughly would are on be there half that's of offset item. correct. get the in expense interest a basis that income And the noninterest quarterly

of timing, expecting. generally run but through, may flush that we're that's Some be out subject it to once and that what you

Damon Del Monte

other ag it. then And Great. just question portfolio. on the Got Okay.

a down. I wind to you're $XXX million and you think, about Jim, portfolio, that said look it's going to

portfolio areas still there that are your go early could it see is what to Given review? of particular through any credit, within as this early signs other you with happened you Or that X tell? too stress

James Lally

we view our Damon, and -- livestock course So and in this was area. was -- we have focused the on the problem top,

do course about but at where review shows on in just to So we party the more outset said, a And validate by us, feel being what this in That stand. seen. it, only not we we also area. work to we'll there's good that very we've focused the third bring initially

the only maybe you the of of livestock relates what because rest can to portfolio, talk we Doug, see this represent it -- only X/X the portfolio, correct? about As

Douglas Bauche

it's Damon, Yes, Doug.

clients So relationships the spread really real mix a and operations $XXX these here. you're XX agricultural so throughout well-balanced million strong been right, across or Midwest to crop collateral portfolio long-term of livestock have pretty our Many consisting performing of of real farm team. of estate,

that the collateral regular financial early want reports, it we in and credit irregularities were sure disclosed relates and revealed We cause we financial that the were it's an that is a right? had And listen, monitoring. to information I make good information to too historical to information This as We here. problem December receiving was and information. reiterate, just the we received

in what and that intensifying simply portfolio inspections collateral have we're the the reaffirming is historically our So and audits done. the just we doing now risk

Damon Del Monte

it. Got

on Okay. Keene. line And item, the just then lastly, very quarter. strong tax fourth credit Obviously,

full As knowing of the be of fourth expect, the strongest 'XX, of year the could kind to that you have kind a what quarter do range look of targeted we of them? tends at you

Keene Turner

Yes.

year-to-date here. got until reminder, a we we until negative were Just think I

sales on almost like -- back we're was little I get opportunity will level So what $XX think weaker any fourth robust. expecting income, SBA there equity we'll year. item, next through I think But to slightly quarter back we even a loan roughly did exceeded an we're then get more decide CDE sell the through of for private don't maybe and line that And expecting we if execute with year. bit net-net, to SBA maybe that to item we line last and loans if million on or

Operator

the Our Instructions] of from next with comes question line Brian [Operator Martin Janney.

Brian Martin

just fee the on question that credit. tax the last Keene, of line outside on income

other you're you're referring you're you there as to the the how back trying -- [indiscernible], were think far getting -- thinking as as you just or said, misunderstood that? to about even I far saying what line what as

Keene Turner

Yes.

$XX through if of think sales total, CDE a have tax on back credit we're and loan you getting going couple numbers you I I million in thinking I both the about other each. SBA to out stripped mentioned PE that million Brian, even, of guess, and and the

for year I get basically to the you to back again, then you you if would And SBA sold that XXXX. loans, that comparable full level levels gets think back exceed? or

Brian Martin

Okay.

fee talking other that You're total to clear. income, not just be line, total just

Keene Turner

both. talking yes, yes, -- So I'm Correct.

Brian Martin

Okay. you. Got

I just the Okay. rate, . it question. was XX% a you XX% The range. lower Is I I mentioned And going -- kind bit quarter. guess, think to revert one back of tax guys guess, this low fair? that forward,

Keene Turner

some that We're that worked That around There's for rate upcoming the will state XX% point planning lower 'XX. and right other we continue. things year some that effective think actually with for have a tax through.

number is for a year. the So good XX%

Brian Martin

what the back the you margin to what going X walk are minute, side just you back I talked think on the offset your side. the what Keene, heard Can you for loan does just on just I it cuts And just rate the with Okay. said then the to comments, what about asset side, sensitivity if through deposit rates lower? is

Keene Turner

earnings million quarter affects a or that's deposit cut. item the and charge million $X about points line $X that rate quarter point and credit annually XX for every on service Yes, obviously basis

interest that on proportion half So income. I net is the of think roughly compression

it opportunity it. totally grow more doesn't it manageable the us So makes gives it, and it mute but to through

Brian Martin

Yes.

rate Okay. the cuts? think through otherwise, -- depending bit guess, stabilize commentary many And it's it was or lower you rate you the how on your rate grow that I cuts, of a can maybe absent or that timing cuts the

Keene Turner

Correct.

of mean, points has status think I we deposit pricing of view on quo my have that that deposit repricing is improving. basis rate continued been X the I comments of -- in And drift.

reprice to quarter X to in the have continues some it trends going a first DDA fourth say and factors rate. at higher, at quarter, then seasonal So day with we're just would count. lower the are remixing I probably the unfavorable but

income as stable net dollars. first net interplay, early although margin said, it's a factors that I shapes to interest sometime and events forecast got ability just those after the on there's dollars how pretty of on be like our we'll of been good -- that, per with we income start even growth we've matter of interest So up, net interest last and chance drift income but midyear, depending as to able hit how positive a we've quarter year top stacking

going It's with get we're to and back think QX disadvantage we'll stable just you're little to QX, the day still improvement. to without lower this from more I -- point, here. at bit count reset a then

Brian Martin

was? you. margin you monthly did what December, the Got that give in And

Keene Turner

might XXX [ didn't ] ]. XXX I -- given sorry, it have it but give [ what was was, I --

few a basis only the it's right were top So and points December in each quarter. lower November were on other. than And where of we

that were from shape. pretty perspective, So good in we

the quarter with in deposit out of had CDs brokered pay little the the those inability experience margin bit And or the because we in fourth diluted time. time down more a just to was

the quarter more was mix we and think So and than little be a thought would here little muted I with first maybe positive quarter. in bit it margin in maybe that itself the of in will shift bit a

Brian Martin

you. Got

and that? the there, Okay. from thinking just you're of organic And thinking utilization of XXXX as just how optionality in one the about in you levels is capital just how far think perspective, then about buyback me the on as capital have you're a general, last kind for kind I M&A, growth,

James Lally

we've this growth. Yes, going you. this now, We've would it's I the is -- business. say primarily to growing have a to plate got for relative lot our on -- conversion, our that Right what it core be Jim. got continue

So growth on M&A our -- -- but not focusing talk down And I'm not M&A going really, the the play certainly, certainly, utilizing into talking But our is this list. or for we'll further buybacks year. we're about always sure forward. it's come

Operator

the line of next Andrew Piper question Our from Sandler. Liesch with comes

Andrew Liesch

growth there in should quarter have that a is outlook you how And curious Just or balances just X of wins be on investing any next, question that. I there? for those I know looking in at is in been the the the going -- specialty deposits. Just the guess, seasonality there lumpy? the spending to be we trend? money guys Are in how a business? lot growth what's

Scott Goodman

it's Scott. Andrew,

depleted is, as the I to management, the really think, the property and community The main in the paid, in we then comment seasonality continue expect third-party accounts to year year reopened grow, mainly yes, associations early escrow the right, fund think do and in steady. X expenses are the those lines, those community that I fourth exists business associations, overall the up quarter. again they're where generally throughout and then amongst

think So at it's time, that's that business that seasonality. if But over main you'll the growing. I also look you see

think relationship and perspective, and favorably cost we very continue we'll view to grow. a I invest from So those a and

Operator

remarks. to I the like would Jim call over now for Lally closing to turn

James Lally

we joining company, much, morning quarter. Well, very to and thank a speaking thank Have you us and in our for and you day. forward for again interest to first look your the all after great you this

Operator

today's call. concludes This

You may now disconnect.

Enterprise Financial Services (EFSC) 23 Jan 242023 Q4 Earnings call transcript