Good day and welcome to the Enterprise Financial Services Corp Earnings Call Conference. Today's conference is being recorded. At this time, I would like to turn the conference over to Peter Benoist. Please go ahead, sir.

Thank you, Kevin, and good afternoon, everyone. Thank you for joining our Second Quarter Conference Call. Joining me on the call today are Scott Goodman, the President of our Bank; and Keene Turner, our Chief Financial Officer. I’d like to remind our listeners that during this call, we will be making forward looking statements. Actual results may differ materially from results contemplated in our forward statements, as a result of various important factors including those described in our 2014 Annual Report on Form 10-K and in subsequent Filings with the SEC. Forward looking statements speak only as of today Thursday, July 23, 2015, and the company undertakes no obligation to update them in light of new information or future events. I would also like to remind you that you can find a copy of our second quarter press release which includes reconsolidations of non-GAAP financial measures referred to in this conference call in the investor relations section of our website. Our second quarter results exhibited continued strong performance in our core fundaments. Our reported earnings of $0.43 per diluted share represented a 19% increase over prior year earnings and importantly core net income represented just under 90% of reported earnings. Loans rebounded nicely in the quarter, increasing $107 million or 18% on an annualized basis, lead by strong growth in commercial and industrial loans which increased $70 million or 22% annualized. We experienced strong demand in our enterprise value lending or senior debt and life insurance premium finance specialty segments as well as general commercial and industrial loan categories. Additionally our portfolio loan yields increased two basis points on a linked quarter basis. Core deposits excluding certificates of deposit increased 3.4% or 13.6% on an annualized basis as we saw good success in our targeted deposit calling strategies initiated during…

Thank you, Peter. As you heard from Peter, loan growth for the second quarter was healthy with balances of $107 million. As you can see on Slide number 3, this represents a trailing 12 month growth rate of 13%. The increase was spread across all of our geographical regions and generally reflect elevated origination activity complemented by some expected seasonal rebound in several niche lending sectors. All major areas of the portfolio experienced growth for the quarter including commercial real estate, construction and development, consumer and residential with the largest increase coming from the C&I segment of the business. As Slide number 4 shows, C&I contributed $17 million or 65% of our increase for the period and continues on our strong growth trajectory of 18% over a year ago. The components of our growth are broken down by segments on Slide number 5. The largest increase of $47 million came from enterprise value lending or EVL which is our senior debt product for structured private equity relationships within M&A space. Deal activity accelerated in the second quarter following a typically quiet first quarter for M&A. Our EVL teams in St. Louis and Kansas City has continued to expand the relationships with private equity sponsors of small and mid-sized portfolio companies. In the Enterprise Bank and Trust brands has gained traction in this space. In addition to our core market at St. Louis, Kansas city and Phoenix we are leveraging sponsor relationships that would take us into other markets such as Indianapolis, Minneapolis, Charlotte, Nashville, Cleveland, and Dallas and while competition is elevated into sector, we continue to garner risk based pricing for these deals with coupons generally in the 50 to 100 basis points above the general C&I. We’ve also experienced high origination levels in the general C&I and commercial…

Thank you, Scott. For the second quarter, we continued to build on our earnings momentum and trends for the last several quarters and our financial performance for 2015 continued to improve. Our 2015 return on average assets is 1.11% and our return on average tangible common equity is 12.5%. Results for the second quarter were favorable both on a reported and core basis, Slide 8 depicts the adjustments from $0.43 of diluted earnings per share to our core results of $0.38 of diluted earnings per share. Accelerations on purchase credit impaired loans contributed $0.05 per share to overall EPS, but we are focused primarily on continued progress on our financial priorities which relate to core performance trends. Slide number 9 demonstrates the drivers of the changes in our core earnings per share in the linked quarter. Net interest income dollars grew and contributed an additional $0.02 per share, while non-interest income contributed an additional $0.03. Expenses were stable in the quarter and we continue to provide sufficient levels for credit losses despite favorable asset quality measures. Our core performance further advanced our return on average assets to 93 basis points, year-to-date we are at 91 basis points of return on average assets, a meaningful improvement from 77 basis points for the 2014 year-to-date period. Portfolio loan growth resumed this quarter and returned to our expected 10% year-to-date pace. As you heard from Scott, EVL contributed materially to the loan growth for the quarter. It also aided the continue defense of our 3.4% core net interest margin, which is depicted on Slide 10. Loan growth, stable net interest margin in one additional day during the quarter supported a $0.7 million or 11% annualized growth in net interest income in the linked quarter. The results in core net interest income was $26.3…

[Operator Instructions] We will take our first question from Jeff Rulis with D.A. Davidson. Your line is now open.

Thanks, good afternoon.

Hi Jeff.

Peter a question on you mentioned bringing over some talent in the quarter, I don’t know if you could itemize that in number of vendors and are there a specific lending focus those individuals?

Yes Jeff we have brought on a commercial lender in Kansas City, we have brought on two here in St. Louis, I think the Kansas City hire was in mid quarter and the St. Louis hire toward the end of the quarter.

Great. Okay. And I guess trying to revisit the loan growth guidance, Keene mentioned you are kind of sticking to the 10% thing is kind of year-to-date you are pushing that number is there some expectation for run-off in Q4, I guess the pipeline sounds like it’s fairly positive into Q3. Maybe you could just wrap more color around your guidance versus the already year-to-date performance?

I guess I would say I think we were expecting to be a little bit more stable as we move through the end of the year depending on when we get pay off and when we actually get some deals closed, it does vary quarter-to-quarter, I don’t think we expect to see quite as much as disparity between the quarter as you have saw in first versus second. I would expect it to be a little bit more steady going into third and then we typically have a slightly stronger fourth quarter based on our history.

Okay. I will step back, thanks.

Thanks Jeff.

Thank you.

We will take our next question from Chris McGratty with KBW. Your line is now open.

Hey good afternoon everybody.

Hi Chris.

Peter maybe a question on capital for you, you got the buyback and you guys are generating quite a bit of capital despite pretty good growth, what is the thought process on the two million share buyback at this point?

Well I think on one I just wanted to have it in place from a board perspective, we did not have it in place. So positioning it I think was sort of issue number one which we did last quarter. There is no near-term plan necessarily to exercise on it because our growth rates are pretty good right now and I think our expectation is that core growth will continue to be pretty good as we've indicated. So I would say it is more positioning move from our perspective than any immediate capital move in terms of how we are thinking about it, obviously as you do know we increased the dividend price in the last two quarters too. So I think in that context we feel pretty good about our capital position.

Okay that is helpful and just on just given the loss share; you are seeing some of your peers kind of terminate them, what is the thought process kind of at this point?

I think we said this before, we certainly are aware what’s going on and we have interest if it makes sense to us economically. So I think you may be seen a shift in posture in the FDIC and I think we’ve seen institutions being able to do it that under terms that are advantageous both to the FDIC and the institution and I think no different. So we would be looking at it that way and those deals are at least from a non-single family perspective will be out of coverage in the third quarter of next year. So we certainly are motivated to do something there to make sense.

Okay. Last question more on the - if you can as well on the positioning for higher rates, I think you talked about 62% of the book floats, I guess I’m a little bit surprised by the modest sensitivity to rates comment, I guess how to presume you guys, maybe this is a conservatism on your behalf, I’m interested in kind of how you guys are thinking about the margin kind of going forward, thanks.

Well I guess that is really a couple of different questions, so in terms of margin I think we still expect there will be a little bit of headwind that is principally driven by the underlying contractual cash flows on the PCI book. So we had overcame four basis points this quarter, we overcame five basis points in the first quarter. So we’ve mitigated effectively nine basis points of margin compression year-to-date. In terms of asset sensitivity, I think what we are really looking at is driving improved earnings in all interest rate scenarios. So we want to get it now and later to the extent possible. So that is the reason for the positioning on modest asset sensitivity and I would also say two in how that works itself out and positions itself the percentage has decreased or stayed relatively stable since we did the restructure at the end of the year. But that is principally due to the fact that we have also driven our expectations for base net interest income up during those periods as well given the strong loan growth we've had.

Okay. Thanks a lot.

Sure.

We will take our next question from Andrew Liesch with Sandler O'Neill and Partners. Your line is now open.

Hey guys, just following upon on the capital question with the dividend, like in this phrase if there is a like a payout ratio that you target or if it maybe this $0.07 level, what is the right number?

I think the dividend has become part of our overall capital management strategy as we continue to drive earnings I think you will see us continue to revaluate that periodically, we declared $0.07 for the third quarter and we will continue to look at it as we move, I also wouldn’t say we necessarily have a target payout ratio, but it is certainly a component along with the share repurchase program we referenced earlier that will utilize to flow or manage our capital build as market conditions persist.

Okay. And then just on the higher provision, it certainly sounded like you guys planning on building of - parking away reserve, but are you seeing anything in your markets that might concern you?

I’ll take that one Andrew. No I will say there is no major trends of signals that are concerning the addition of a non-performers who are this quarter varied by industry and markets. So and the answer is no, no major signals.

Very good. Thank you so much.

Thanks Andrew.

Thank you.

We will take our next question from Brian Martin with FIG Partners. Your line is now open.

Hey guys.

Hi Brian.

So maybe Keene could you just talk a little bit about the expenses and it sounds like you brought these guys, you brought them down and cut those stable here but in the collection cost and there is other ones that you kind of pulled from don’t seem to be available anymore and you’re growing the bank and investing in the franchise, I guess the kind of the way to think about the expenses longer term as far as the growth rate, sustainable growth rate for the core bank is it kind of a 2% to 3% type of level is a bit more less than that?

I guess I would say absent any professional fees or loan legal I think we expect them to trend towards the bottom of our guidance. We do have plans to make investment overtime to continue our growth rate but I would prefer the next two to three to four quarter I think we’d expect them to stay where they are our recruiting efforts I think we continue to be in the market and trying to meet the right people and our expense targets went necessarily preclude us from making the right investment at least in terms of acquiring talents. So hopefully that gives you some color there.

Yes okay. As far as just the funding cost and loan to deposit ratios kind of back up a little bit this quarter, again, any pressure that that’s going to create on funding or the loan grow, you are looking at the second half of the year was probably, how the impact?

I think we are very comfortable with where we are we certainly have become much more focused on deposit gathering, we tend to have a trend of gathering deposits more gradually, where our loans tend to growth pretty precipitously in one quarter and then maybe ease off the next. So we tend to look at both on average and where we’re going. So I don’t really have a concern I think we are encouraged by the fact that our growth in the deposits actually blended down our coast of deposits and our overall cost of funds. I think we are feeling of added and there is really no concern other real discussion about what improvement that mighty to our loan growth.

And as far as you guys have talked about the last couple of quarter, the potential for M&A and I guess is that something you are still kind of looking out on your more or less opportunities, I know you kind of at least identify that the targets that might fit to, I think it was pretty limited but any more update on M&A and its potential in so forth.

I wouldn’t say that there is really any shift in our posture there I think we continue to say that anything that would on a long term basis, would meaningfully accelerate any of our financial priorities would be something we would look at very carefully. And be very intentional about, but otherwise, we are not really seeing any increased or decreased level of interest or activity right now. The environment remains about the same.

Okay. Prefect. Thanks very much.

Thanks, Brian.

And we’ll take our next question from Daniel Cardenas with Raymond James. Your line is now open.

Hey, guys, good afternoon.

Hi, Dan.

So just kind of following-up on the M&A question, I mean is the preference for you guys more on acquiring individuals and teams or would it be more on acquiring organizations?

Hey Dan its Peter, obviously if you heard our comments, we’re really focused on core fundaments here in that contextual, acquiring talent is something we are very interested in and we are very focused on and as you said our preference that’s to acquire talent. We are firm believers in our growth, we have talked a lot about opportunities in the marketplace relative to institutions that would have the kind of culture and capabilities that we have and it’s just know the field is limited let’s put it that way from a target perspective. So we do think the right strategy is to continue to hone in on trying to bring talent on the platform and growing the book organically.

And what’s the market like for talent right now, are you seeing a lot of opportunities to talk to focus or does that ebb and flow?

It’s a long-term process for the right people, some of the focuses that we have dialogued with, we’ve had dialogue and continue to have dialogue for extended periods of time and it’s a question of really being there at the right time at the right place. So there is really, specific answer to that other than making sure we’ve communicating with the folks that we think could do exceptionally well in our platform and they are aware of our interest and when the right time occurs we’ re the alternative for them and we find with that in of strategy that works pretty well for us.

And then last question, is there any geography that you guys have a preference in expanding that talent basis.

I’ll Scott comment - I would say if Phoenix is a market that from a talent perspective, we would like to have more success, I would put it that way if you said what are we really focusing in on but we’re not making a distinction by market relative our ability to attract talent.

I would just add that I think our approach is more perspective than it has been in the past in terms of ongoing conversations that are necessary. The talent that we added in this quarter for example, our elevated in Kansas City over the last few years, with the growth we've had there has really opened up some discussions that wouldn’t have been there in the past and so the talent we brought on there, their experience bankers and you are seeing some of the traction that we’re gaining in that market because of that. Same issue in St. Louis, we’ve hand the elevated profile here, we have the attention of all the talents that we want, we’ve been opportunistic because there has been some consolidation in St. Louis, so the bankers that we attracted here came from institutions that changed that were acquired or had leadership changes and we had positioned ourselves with those discussions to take advantage of that.

Okay. Great. Great, thanks guys.

Thank you, Dan.

[Operator Instructions] We’ll take our next question from [indiscernible] with Private Bank Investor. Your line is now open.

Hi good afternoon. I just wanted to circle back on the discussion about the loan loss provision, you clearly have indicated that the provision on the quarter was nothing to do with the rising problem loan it was more due to loan growth. So my question is that rate of provisioning consistent with what we might see in the next couple of quarters based on your loan growth expectations for the year? Is that provisioning rate a good way to look at if you book another $100 million or $150 million worth of loans is that a good way to look at it against those good loans.

[Eric] (ph), I think I wouldn’t necessarily want to give you exact forward guidance on provisioning because there is obviously lot more factors that go into it than just a pure coverage percentage but I will say that over the last two years, we had a very similar level of allowance to our total loans within a couple of basis points and so the lot of factors that have been moving around behind that. Some of that is dependent on the type of growth and also other movements in the portfolio and obviously the level of charge-offs. But I would point you to the history and say we would likely not to make a dramatic shift in the course of the next couple of quarters.

Okay. That’s fine. Let me ask you just another question related to that, if the composition of your growth were even more tilted towards the EVL type of products compared to a broadened variety commercial or commercial real estate loans, does that type of credit entail establishing a little bit larger reserve against that generally against that type of loans?

I guess that with any portfolio that we continue to put material growth into we tend to look at more conservatively because growth is one of the factors that we consider when we are looking at our allowance and how much investment we’re making in it. So each one is different by segment and we don’t necessarily in terms of the way we look at the loan portfolio categories breakout that separately from C&I, but the presence of the level of growth that we have had is certainly a risk factor that we tend to look at more conservatively when we evaluate and provide for our losses.

Okay. Thanks very much.

You’re welcome. End of Q&A

And it appears we have no further questions at this time, so I will turn it back to our speakers for any additional or closing remarks.

We appreciate that Kevin. No we don’t have any further remarks other than just to say again thank you for your interest in Enterprise and for joining us this afternoon. And we look forward to joining again next quarter. Thanks very much.

This does conclude today’s teleconference. You may now disconnect. Thank you and have a great day.