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Key takeaways from the call include:
During the call, Enterprise Financial Services Corp reported growth in specialized businesses, with a 15% annualized growth for the quarter and 19% year-over-year. The Practice Finance unit also performed well, growing by $70 million year-to-date, including $23 million in Q3.
The company reported a decrease in fee income by $2 million, primarily due to a decline in tax credit income. However, they expect fee income from tax credits to rebound in the fourth quarter and could reach seven or eight figures in 2024, depending on rate stability.
The company’s tangible common equity ratio was 8.5% at the end of the third quarter, down from 8.6% in the previous quarter, mainly due to the impact of longer-term interest rates on the fair value of securities and derivatives. Despite this, the company’s regulatory capital ratios remain above well-capitalized minimums.
Looking ahead, the company plans to continue expanding its deposit costs but at a diminishing level. They expect the majority of the expense to be driven by volumes. They also discussed their proactive approach in working out non-performing loans and did not anticipate a larger wave of economic challenges.
In terms of future strategies, the company plans to invest in associates, technology, and training while maintaining discipline in spending. They expect the efficiency ratio to slightly increase but at a decreasing rate. They also anticipate healthy loan growth and do not foresee loan utilization as a long-term issue.
The call concluded with company representatives expressing gratitude to participants and stating they look forward to the next call in early 2025.
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