Enterprise Financial Services (EFSC) Q4 2023 earnings summary

Executive summary

• Q4 net income was $44.5 million, or $1.16 per diluted share; adjusted EPS excluding the $2.4 million FDIC assessment was $1.21.

• FY2023 net income was $194.1 million, down $9.0 million YoY; diluted EPS was $5.07 versus $5.31, or $5.12 excluding the FDIC assessment.

• Loans grew 12% to $10.9 billion and deposits grew 12% to $12.2 billion, primarily funded by core deposits.

• Elevated Q4 charge-offs reduced earnings; the largest loss involved an agricultural relationship described as isolated.

Financial highlights

• Q4 net interest income was $140.7 million, down $0.9 million QoQ; PPNR was $75.8 million, up $10.7 million QoQ and down $2.8 million YoY.

• Q4 noninterest income was $25.5 million and noninterest expense was $92.6 million; tax-credit income drove much of the QoQ increase in noninterest income.

• FY2023 net interest income rose 19% to $562.6 million; noninterest income rose 16% to $68.7 million.

• FY2023 PPNR was $284.8 million versus $258.9 million in 2022; noninterest expense rose 27% to $348.2 million.

• Q4 loans increased $267.3 million QoQ and deposits increased $266.5 million; deposits excluding specialty deposits and brokered CDs rose $394 million.

Outlook and guidance

• 2024 priorities include pursuing growth opportunities, strengthening operations, and maintaining organic loan and deposit growth funded by customer deposits.

• Focus areas include disciplined pricing, credit underwriting and monitoring, a strong balance sheet, and the long-term earnings trajectory.

• Capital targets are TCE of 8–9%, CET1 near 10%, Tier 1 near 12%, and total capital near 14%; priorities include organic growth and selective M&A for franchise and geographic diversification.