Tech stock under pressure: Enterprise Financial Services Corp (NASDAQ: EFSC)

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Enterprise Financial Services Corp (NASDAQ: EFSC) stock lost over 3.5% on Jan 21st, 2020 (as of 12:18 pm GMT-5; Source: Google finance) after the company posted mixed results for the fourth quarter of FY 19. The company has reported the net income of $92.7 million for the year ended December 31, 2019, compared to $89.2 million, for the prior year period. The merger-related expenses from the Trinity acquisition had reduced the net income by $18 million pretax ($14.0 million after tax). The Company has reported the net income of $29.1 million for both the third and fourth quarters of 2019.

Moreover, the company has reported the net interest income for the fourth quarter of 2019 of $61.6 million, which represent a decline of $1.4 million, from the linked quarter. Interest rates had continued to decline during the fourth quarter. Portfolio loan growth, along with the Company’s ability to modestly reprice deposits, helped to deliver a consistent level of core net interest income of $61.0 million for both the third and fourth quarter. Further, the core net interest margin has also contracted by five basis points to 3.64% during the fourth quarter 2019 mainly on a back of a 26-basis point decrease in loan yields. This is driven due to the decline of both the one-month LIBOR and Prime interest rates during the fourth quarter, which had impacted the underlying interest rates of the Company’s loan portfolio, 59% of which is priced to variable interest rate indices.

Furthermore, the company has posted $8.7 million increase in the nonperforming assets to $32.8 million at December 31, 2019 from $24.1 million at September 30, 2019. EFSC in the fourth quarter of FY 19 has reported the adjusted earnings per share of $1.09, which is in line with the analysts’ estimates for the adjusted earnings per share of $1.09, according to analysts surveyed by Zacks Investment Research. The company had reported the adjusted revenue of $76 million in the fourth quarter of FY 19, missing the analysts’ estimates for revenue.

Additionally, the company has paid dividends in 2019 of $0.62 per share, which has increased $0.15 per share, or 32%, compared to $0.47 per share in 2018. The Company has also declared the Company’s quarterly dividend of $0.18 per common share for the first quarter of 2020, which is an increase from $0.17 for the prior quarter, payable on March 31, 2020 to shareholders of record as of March 16, 2020.

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