Enterprise Financial Services Corp (NASDAQ:EFSC) Q3, 2022, Earnings Call October 25, 2022 11:00 AM ET

Company Participants

Jim Lally - President and Chief Executive Officer

Keene Turner - Chief Financial Officer and Chief Operating Officer

Scott Goodman - President, Enterprise Bank and Trust

Conference Call Participants

Jeffrey Rulis - D.A. Davidson

Andrew Liesch - Piper Sandler

Damon DelMonte - KBW

Brian Martin - Janney Montgomery

Operator

Good day. And welcome to the Enterprise Financial Services Corporation Third Quarter 2022 Earnings Conference Call. [Operator Instructions] Thank you.

At this time, I would like to turn the conference over to Jim Lally, President and CEO. Sir, you may begin your conference.

Jim Lally

Well, thank you, Erica and good morning. I welcome everyone to our third quarter earnings call. I appreciate all of you taking time to listen in. Joining me this morning is Keene Turner, our company's Chief Financial and Chief Operating Officer; and Scott Goodman, President of Enterprise Bank & Trust.

Before we begin, I would like to remind everyone on the call that a copy of the release and accompanying presentation can be found on our website. The presentation and earnings release were furnished on SEC Form 8-K yesterday.

Please refer to Slide 2 of the presentation titled forward-looking statements and our most recent 10-K and 10-Q for reasons why actual results may vary from any forward-looking statements that we make this morning.

Please turn to Slide 3 for our financial highlights of the second quarter. We’re very pleased with our third quarter as they reflect the cadence of consistency that we established since the beginning of the fourth quarter of 2021. These earnings are a product of the diversified franchise that we are building with a laser focus on establishing long-term relationships with privately held businesses while building a culture of operational excellence. For the quarter we were in $1.32 per diluted share, which compared favorably to the $1.19 that we earned in the second quarter. Our patience with respect to our loan and investment portfolios, coupled with our low-cost deposit base allowed us to take advantage of the rising interest rate environment. For the quarter, our net interest income increased to $124 million. This represented a 13% increase over the linked quarter. It was bolstered by our net interest margin of 4.10%.

Our return profile improved as well. Pre-provision return on average assets was 1.96% versus 1.73% in the second quarter, and 1.81% a year ago. Return on tangible common equity also improved increasing to 19% compared to 17% at 6/30/22. Scott will provide much more detail on how our markets and specialty businesses fared during the quarter. At a very high level, loans increased 5% annually net of PPP and depository made north of $11 billion, decreasing modestly by $35 million. At the end of the quarter, our loan to deposit ratio stood at 85% with DDA representing 42% of our total deposits. Keen will spend much more time on capital. But I just wanted to comment that our TC to total assets was stable at 7.86% despite AOCI pressure and CET1 was 11%. Keeping with the pattern that we established several quarters ago; we did increase our dividend per common share for the fourth quarter to $0.24 cents from $0.23.