Enterprise Financial Services Corp. (NASDAQ:EFSC) Q4 2019 Earnings Conference Call - Final Transcript

Jan 21, 2020 • 03:30 pm ET


Enterprise Financial Services Corp. (NASDAQ:EFSC) Q4 2019 Earnings Conference Call - Final Transcript


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Good day, and welcome to the EFSC Earnings Conference Call. [Operator Instructions]

At this time, I would like to turn the conference over to Jim Lally, President and CEO. Please go ahead, sir.

James B. Lally

Thank you, Todd. And good afternoon and welcome to our fourth quarter earnings call. I appreciate all of you taking time to listen in. Joining me today on the call is Keene Turner, our company's Chief Financial Officer 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 this morning. 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 today.

2019 was a pivotal year for Enterprise Financial Services Corp. We expanded our geographic presence into New Mexico with the acquisition of integrate -- an integration of Trinity Capital. We organically grew the balance sheet, quality loan and deposit growth and strategically managed our capital to provide a high return for our shareholders.

The following are just some of the highlights. During the year, we earned a net income of $93 million or $3.55 per diluted share. We organically grew our loan portfolio by 7.5%. As I stated previously, we had a successful integration of Trinity Capital, our company's largest acquisition. Outstanding attention to net interest margin and expense control, which contributed to an ROAA of 1.55% excluding merger cost. The fourth quarter was equally spectacular as we posted record earnings per diluted share of $1.09. The quarter was highlighted by solid growth in loans and deposits when annualized, these results were 7% and 10% respectively. We further scaled our investment in technology and people, which drove an attractive ROAA of 1.58% and ROATCE of 19%. Scott and Keene will provide much more details on the solid results.

Our financial scorecard can be found on Slide 3. Compared to a year ago, we were able to grow our earnings per share by 7%. Contributing to these strong results was our ability to grow net interest income dollars by 22%, despite the compression of our core net interest margin, which fell by 13 basis points. Certainly the growth attributable to the Trinity merger helped, but our leadership team was assertive and prudent in pricing loans and deposits during a very turbulent year. Credit quality remains a hallmark of our company, despite a modest uptick in NPLs compared to last year, at 50 basis points we still compare favorably to our peer group. Additionally, we are not worried that this is a trend as much of this represents one credit that we feel we resolve given the relative reserve provided in previous quarters.

As I have mentioned on previous calls, we constantly strive to incrementally improve