ENTERPRISE FINANCIAL SERVICES CORP

Previous wording

This Quarterly Report on Form 10-Q contains information and statements that are considered “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements are based on management’s current expectations and beliefs concerning future developments and their potential effects on the Company, and include, without limitation, statements about the Company’s plans, strategies, goals, objectives, expectations, or consequences of statements about the future performance, operations, products and services of the Company and its subsidiaries, as well as statements about the Company’s expectations regarding revenue and asset growth, financial performance and profitability, loan and deposit growth, yields and returns, loan diversification and credit management, products and services, shareholder value creation and the impact of acquisitions. Forward-looking statements are typically identified with the use of terms such as “may,” “might,” “will,” “would,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “could,” “continue,” “intend,” and the negative and other variations of these terms and similar words and expressions, although some forward-looking statements may be expressed differently. Forward-looking statements are inherently subject to risks and uncertainties and our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. You should be aware that our actual results could differ materially from those contained in the forward-looking statements.

Current wording

This Quarterly Report on Form 10-Q contains information and statements that are considered “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements are based on management’s current expectations and beliefs concerning future developments and their potential effects on the Company, and include, without limitation, statements about the Company’s plans, strategies, goals, objectives, expectations, or consequences of statements about the future performance, operations, products and services of the Company and its subsidiaries, as well as statements about the Company’s expectations regarding revenue and asset growth, financial performance and profitability, loan and deposit growth, yields and returns, loan diversification and credit management, products and services, stockholder value creation and the impact of acquisitions. Forward-looking statements are typically identified with the use of terms such as “may,” “might,” “will,” “would,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “could,” “continue,” “intend,” and the negative and other variations of these terms and similar words and expressions, although some forward-looking statements may be expressed differently. Forward-looking statements are inherently subject to risks and uncertainties and our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. You should be aware that our actual results could differ materially from those contained in the forward-looking statements.

Previous wording

While there is no assurance that any list of risks and uncertainties or risk factors is complete, important factors that could cause actual results to differ materially from those in the forward-looking statements include the following, without limitation: our ability to efficiently integrate acquisitions into our operations, retain the customers of these businesses and grow the acquired operations; credit risk; changes in the appraised valuation of real estate securing impaired loans; our ability to recover our investment in loans; fluctuations in the fair value of collateral underlying loans; outcomes of litigation and other contingencies; exposure to general and local economic and market conditions, including risk of recession, high unemployment rates, higher inflation and its impacts (including U.S. federal government measures to address higher inflation), U.S. fiscal debt, budget and tax matters, and any slowdown in global economic growth; risks associated with rapid increases or decreases in prevailing interest rates; changes in business prospects that could impact goodwill estimates and assumptions; consolidation within the banking industry; competition from banks and other financial institutions; the ability to attract and retain relationship officers and other key personnel; burdens imposed by federal and state regulation; changes in legislative or regulatory requirements, as well as current, pending or future legislation or regulation that could have a negative effect on our revenue and business, including rules and regulations relating to bank products and financial services; changes in accounting policies and practices or accounting standards; natural disasters; terrorist activities, war and geopolitical matters (including the war in Israel and potential for a broader regional conflict and the war in Ukraine and the imposition of additional sanctions and export controls in connection therewith), or pandemics, or other health emergencies and their effects on economic and business environments in which we operate, including the related disruption to the financial market and other economic activity; and other risks discussed under the caption “Risk Factors” under Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, and other reports filed with the SEC, all of which could cause the Company’s actual results to differ from those set forth in the forward-looking statements. The Company cautions that the preceding list is not exhaustive of all possible risk factors and other factors could also adversely affect the Company’s results.

Current wording

While there is no assurance that any list of risks and uncertainties or risk factors is complete, important factors that could cause actual results to differ materially from those in the forward-looking statements include the following, without limitation: the Company’s ability to efficiently integrate acquisitions into its operations, retain the customers of these businesses and grow the acquired operations, as well as credit risk, changes in the appraised valuation of real estate securing impaired loans, outcomes of litigation and other contingencies, exposure to general and local economic and market conditions, high unemployment rates, higher inflation and its impacts (including U.S. federal government measures to address higher inflation), impacts of trade and tariff policies, U.S. fiscal debt, budget and tax matters, and any slowdown in global economic growth, risks associated with rapid increases or decreases in prevailing interest rates, our ability to attract and retain deposits and access to other sources of liquidity, consolidation in the banking industry, competition from banks and other financial institutions, the Company’s ability to attract and retain relationship officers and other key personnel, burdens imposed by federal and state regulation, changes in legislative or regulatory requirements, as well as current, pending or future legislation or regulation that could have a negative effect on our revenue and businesses, including rules and regulations relating to bank products and financial services, changes in accounting policies and practices or accounting standards, natural disasters (such as wildfires and earthquakes), terrorist activities, war and geopolitical matters (including the war in Israel and potential for a broader regional conflict and the war in Ukraine and the imposition of additional sanctions and export controls in connection therewith), or pandemics, and their effects on economic and business environments in which we operate, including the related disruption to the financial market and other economic activity; and other risks discussed under the caption “Risk Factors” under Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, and other reports filed with the SEC, all of which could cause the Company’s actual results to differ from those set forth in the forward-looking statements. The Company cautions that the preceding list is not exhaustive of all possible risk factors and other factors could also adversely affect the Company’s results.

Previous wording

Readers are cautioned not to place undue reliance on our forward-looking statements, which reflect management’s analysis and expectations only as of the date of such statements. Forward-looking statements speak only as of the date they are made, and the Company does not intend, and undertakes no obligation, to publicly revise or update forward-looking statements after the date of this report, whether as a result of new information, future events or otherwise, except as required by federal securities law. You should understand that it is not possible to predict or identify all risk factors. Readers should carefully review all disclosures we file from time to time with the SEC which are available on our website at www.enterprisebank.com under “Investor Relations.”

Current wording

Readers are cautioned not to place undue reliance on forward-looking statements, which reflect management’s analysis and expectations only as of the date of such statements. Forward-looking statements speak only as of the date they are made, and the Company does not intend, and undertakes no obligation, to publicly revise or update forward-looking statements after the date of this report, whether as a result of new information, future events or otherwise, except as required by federal securities law. You should understand that it is not possible to predict or identify all risk factors. Readers should carefully review all disclosures we file from time to time with the SEC which are available on the Company’s website at www.enterprisebank.com under “Investor Relations.”

Previous wording

The following discussion describes the significant changes to the financial condition of the Company that have occurred during the first nine months of 2024 compared to the financial condition as of December 31, 2023. In addition, this discussion summarizes the significant factors affecting the results of operations of the Company for the three months ended September 30, 2024, compared to the linked second quarter of 2024 (“linked quarter”) and the results of operations, liquidity and cash flows for the nine months ended September 30, 2024 compared to the same period in 2023 (“prior year-to-date period”). In light of the nature of the Company’s business, the Company’s management believes that the comparison to the linked quarter is the most relevant to understand the financial results from management’s perspective. For purposes of the Quarterly Report on Form 10-Q, the Company is presenting a comparison to the corresponding prior year-to-date period. This discussion should be read in conjunction with the accompanying condensed consolidated financial statements included in this report and the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Current wording

The following discussion describes the significant changes to the financial condition of the Company that have occurred during the first three months of 2025 compared to the financial condition as of December 31, 2024. In addition, this discussion summarizes the significant factors affecting the results of operations of the Company for the three months ended March 31, 2025, compared to the linked fourth quarter of 2024 (“linked quarter”) and the results of operations, liquidity and cash flows for the three months ended March 31, 2025 compared to the same period in 2024 (“prior year quarter”). In light of the nature of the Company’s business, the Company’s management believes that the comparison to the linked quarter is the most relevant to understand the financial results from management’s perspective. For purposes of the Quarterly Report on Form 10-Q, the Company is presenting a comparison to the corresponding prior year quarter. This discussion should be read in conjunction with the accompanying condensed consolidated financial statements included in this report and the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

Previous wording

Allowance for Credit Losses on Loans

Current wording

Allowance for Credit Losses

Previous wording

The Company maintains separate allowances for funded loans, unfunded loans, and held-to-maturity securities, collectively referred to as the ACL. The ACL is a valuation account to adjust the cost basis to the amount expected to be collected, based on management’s experience, current conditions, and reasonable and supportable forecasts. For purposes of determining the allowance for funded and unfunded loans, the portfolios are segregated into pools that share similar risk characteristics and are then further segregated by credit grades. Loans that do not share similar risk characteristics are evaluated on an individual basis and are not included in the collective evaluation. The Company estimates the amount of the allowance based on loan loss experience, adjusted for current and forecasted economic conditions, including unemployment, changes in GDP, and commercial and residential real estate prices. The Company’s forecast of economic conditions uses internal and external information and considers a weighted average of a baseline, upside, and downside scenarios. Because economic conditions can change and are difficult to predict, the anticipated amount of estimated loan defaults and losses, and therefore the adequacy of the allowance, could change significantly and have a direct impact on the Company’s credit costs. The Company’s allowance for credit losses on loans was $139.8 million at September 30, 2024 based on the weighting of the different economic scenarios. As a hypothetical example, if the Company had only used the upside scenario, the allowance would have decreased $26.5 million. Conversely, the allowance would have increased $45.8 million using only the downside scenario.

Current wording

The Company maintains separate allowances for funded loans, unfunded loans, and held-to-maturity securities, collectively referred to as the ACL. The ACL is a valuation account to adjust the cost basis to the amount expected to be collected, based on management’s experience, current conditions, and reasonable and supportable forecasts. For purposes of determining the allowance for funded and unfunded loans, the portfolios are segregated into pools that share similar risk characteristics that are then further segregated by credit grades. Loans that do not share similar risk characteristics are evaluated on an individual basis and are not included in the collective evaluation. The Company estimates the amount of the allowance based on loan loss experience, adjusted for current and forecasted economic conditions, including unemployment, changes in GDP, and commercial and residential real estate prices. The Company’s forecast of economic conditions uses internal and external information and considers a weighted average of a baseline, upside, and downside scenarios. Because economic conditions can change and are difficult to predict, the anticipated amount of estimated loan defaults and losses, and therefore the adequacy of the allowance, could change significantly and have a direct impact on the Company’s credit costs. The Company’s allowance for credit losses on loans was $142.9 million at March 31, 2025 based on the weighting of the different economic scenarios. As a hypothetical example, if the Company had only used the upside scenario, the allowance would have decreased $30.4 million. Conversely, the allowance would have increased $49.8 million using only the downside scenario.

Previous wording

•Net interest income of $143.5 million for the third quarter 2024 and $421.7 million for the nine months ended September 30, 2024 increased $2.9 million and decreased $0.1 million from the linked and prior year-to-date period, respectively. The NIM was 4.17% for both the third quarter 2024 and the nine months ended September 30, 2024, compared to 4.19% and 4.50% for the linked and prior year-to-date period, respectively. Compared to the linked quarter, the increase in net interest income reflects the benefit of organic growth and an additional day in the quarter. The decrease from the prior year-to-date period reflects higher interest expense on the deposit portfolio, as lagged deposit rates have increased, partially offset by the benefit of higher market interest rates. In late September 2024, the Federal Reserve reduced the federal funds target rate by 50 basis points. In response, the Company has adjusted deposit pricing to partially mitigate the impact on income from the repricing of variable rate loans.

Current wording

•Net interest income and NIM -Net interest income of $147.5 million for the first quarter 2025 increased $1.1 million and $9.8 million from the linked and prior year quarters, respectively. NIM was 4.15% for the first quarter 2025, compared to 4.13% for both the linked and prior year quarters, respectively. Compared to the linked and prior year quarters, the increase in net interest income was primarily due to higher average loan and other interest-earning asset balances, as well as lower short-term interest rates that decreased interest expense. Since September 2024, the Federal Reserve has reduced the federal funds target rate 100 basis points. In response, the Company adjusted deposit pricing to partially mitigate the impact on income from the repricing of variable rate loans.

Previous wording

•Loans – Total loans increased $195.8 million, or 1.80%, to $11.1 billion at September 30, 2024, compared to $10.9 billion at December 31, 2023. Average loans totaled $11.0 billion for the nine months ended September 30, 2024 compared to $10.2 billion for the nine months ended September 30, 2023.

Current wording

•Loans – Total loans increased $78.4 million, or 3% on an annualized basis, to $11.3 billion at March 31, 2025, compared to $11.2 billion at December 31, 2024. Average loans totaled $11.2 billion for the three months ended March 31, 2025 compared to $11.1 billion for the three months ended December 31, 2024.

Previous wording

•Deposits – Total deposits increased $289.0 million, to $12.5 billion at September 30, 2024 from $12.2 billion at December 31, 2023. Total estimated insured deposits 1, which includes collateralized deposits, reciprocal deposits and accounts that qualify for pass through insurance, totaled $8.8 billion at September 30, 2024, compared to $8.3 billion at December 31, 2023. Average deposits totaled $12.4 billion for the nine months ended September 30, 2024 compared to $11.4 billion for the prior year-to-date period. Noninterest-bearing deposit accounts represented 31.6% of total deposits and the loan to deposit ratio was 88.9% at September 30, 2024, compared to 32.5% and 89.4%, respectively, at December 31, 2023.

Current wording

•Deposits – Total deposits decreased $112.3 million, to $13.0 billion at March 31, 2025 from $13.1 billion at December 31, 2024. Average deposits totaled $13.1 billion for the quarter ended March 31, 2025 compared to $13.0 billion for the linked quarter. Noninterest-bearing deposit accounts represented 33% of total deposits and the loan to deposit ratio was 87% at March 31, 2025, compared to 34% and 85%, respectively, at December 31, 2024.

Previous wording

•Asset quality – The allowance for credit losses on loans to total loans was 1.26% at September 30, 2024, compared to 1.24% at December 31, 2023. The ratio of nonperforming assets to total assets was 0.22% at September 30, 2024 compared to 0.34% at December 31, 2023. A provision for credit losses of $4.1 million and $14.7 million was recorded in the third quarter of 2024 and the nine months ended September 30, 2024, respectively. This compares to $4.8 million in the linked quarter and $18.6 million in the prior year-to-date period.

Current wording

•Asset quality – The allowance for credit losses on loans to total loans was 1.27% at March 31, 2025, compared to 1.23% at December 31, 2024. The ratio of nonperforming assets to total assets was 0.72% at March 31, 2025 compared to 0.30% at December 31, 2024. A provision for credit losses of $5.2 million was recorded in the first quarter of 2025 compared to $6.8 million and $5.8 million in the linked and prior year quarters, respectively.

Previous wording

•Shareholders’ equity– Total shareholders’ equity was $1.83 billion at September 30, 2024, compared to $1.72 billion at December 31, 2023, and the tangible common equity to tangible assets ratio 2 was 9.50% at September 30, 2024 compared to 8.96% at December 31, 2023. The Company and the Bank’s regulatory capital ratios exceeded the “well-capitalized” levels at September 30, 2024.

Current wording

•Stockholders’ equity – Total stockholders’ equity was $1.9 billion at March 31, 2025, compared to $1.8 billion at December 31, 2024, and the tangible common equity to tangible assets ratio 2 was 9.30% at March 31, 2025 compared to 9.05% at December 31, 2024. The Company and the Bank’s regulatory capital ratios exceeded the “well-capitalized” levels at March 31, 2025.

Previous wording

The Company’s board of directors approved a quarterly dividend of $0.28 per common share, payable on December 31, 2024 to shareholders of record as of December 16, 2024. The board of directors also declared a cash dividend of $12.50 per share of Series A Preferred Stock (or $0.3125 per depositary share) representing a 5% per annum rate for the period commencing (and including) September 15, 2024 to (but excluding) December 15, 2024. The dividend will be payable on December 15, 2024 and will be paid on December 16, 2024 to holders of record of Series A Preferred Stock as of November 29, 2024.

Current wording

The Company’s Board of Directors approved a quarterly dividend of $0.30 per share of common stock, payable on June 30, 2025 to stockholders of record as of June 16, 2025. The Board of Directors also declared a cash dividend of $12.50 per share of Series A Preferred Stock (or $0.3125 per depositary share) representing a 5% per annum rate for the period commencing (and including) March 15, 2025 to (but excluding) June 15, 2025. The dividend will be payable on June 15, 2025 and will be paid on June 16, 2025 to holders of record of Series A Preferred Stock as of May 30, 2025.

Previous wording

NIM, on a tax equivalent basis, was 4.17% in the third quarter 2024 and the first nine months of 2024, a decrease of 2 basis points and 33 basis points from the linked and prior year-to-date period, respectively.

Current wording

NIM, on a tax equivalent basis, was 4.15% in the first quarter 2025, an increase of 2 basis points from the linked and prior year quarters, respectively.

Previous wording

Total noninterest income for the third quarter 2024 was $21.4 million, an increase of $5.9 million from the linked quarter. The increase from the linked quarter was primarily due to an increase in tax credit income from a positive change in credits carried at fair value, and a net gain on the sale of other real estate owned that is included in Other income. Tax credit income varies based on transaction volumes and fair value changes on credits carried at fair value.

Current wording

Total noninterest income for the first quarter 2025 was $18.5 million, a decrease of $2.1 million and an increase of $6.3 million from the linked and prior year quarters, respectively. The decrease from the linked quarter was primarily due to a seasonal decrease in the first quarter in tax credit income, partially offset by a gain on the sale of the guaranteed portion of SBA loans included in other income. The increase from the prior year quarter was primarily due to an increase in tax credit income as a result of decreased market interest rates that improved the fair value of certain tax credits. Tax credit income varies based on transaction volumes and fair value changes on credits carried at fair value.

Previous wording

Noninterest expense was $98.0 million for the third quarter 2024, an increase of $4.0 million from $94.0 million in the linked quarter. Employee compensation and benefits increased $0.8 million from the linked quarter primarily due to an increase in the number of work days in the quarter and the success in recruiting new relationship bankers. Deposit costs relate to certain deposit accounts that receive an earnings credit allowance for expenses related to the maintenance of the deposit accounts. These expenses are impacted by interest rates and average balances. Deposit costs increased $2.1 million from the linked quarter primarily due to an increase of $151.6 million in average deposit vertical balances from the linked quarter. Expenses related to the core system conversion included in Data processing for the current and linked quarters were $1.4 million and $1.3 million, respectively, due to the continued progress on the project.

Current wording

Noninterest expense was $99.8 million for the first quarter 2025, an increase of $0.3 million from $99.5 million in the linked quarter and an increase of $6.3 million from $93.5 million in the prior year quarter. Employee compensation and benefits increased $0.6 million from the linked quarter primarily due to the first quarter reset of payroll taxes and paid time-off accruals, along with annual merit increases that became effective March 1, 2025. Deposit costs relate to certain deposit accounts that receive an earnings credit allowance for expenses related to the maintenance of the deposit accounts. These expenses are impacted by interest rates and average balances. Deposit costs increased $0.9 million from the linked quarter primarily due to an increase of $255.3 million in average deposit vertical balances from the linked quarter. The increase of $6.3 million from the prior year quarter was primarily due to annual merit increases, long-term, performance based incentives and deposit costs that increased due to higher average balances.

Previous wording

The Company’s effective tax rate was 19.4% for the third quarter 2024 and 20.0% for the nine months ended September 30, 2024. This compares to the linked quarter and prior year-to-date effective tax rate of 20.5% and 21.7%, respectively. The decreases from the linked and prior year-to-date effective tax rates were driven by tax credit opportunities the Company has deployed as part of its tax planning strategy.

Current wording

The Company’s effective tax rate was 18.1% for the first quarter 2025. This compares to the linked and prior year quarter effective tax rate of 19.5% and 20.2%, respectively. The decreases from the linked and prior year quarter effective tax rates were driven by tax credit opportunities the Company has deployed as part of its tax planning strategy. In addition, the effective tax rate for the first quarter 2025 was further reduced due to the tax impact associated with vesting of stock-based awards.

Previous wording

Total assets were $15.0 billion at September 30, 2024, an increase of $435.5 million from December 31, 2023 primarily due to a $195.8 million increase in loans and a $269.7 million increase in investment securities. Total liabilities of $13.1 billion increased $319.6 million from December 31, 2023 primarily due to a $289.0 million increase in deposits.

Current wording

Total assets were $15.7 billion at March 31, 2025, an increase of $80.2 million from December 31, 2024 primarily due to a $78.4 million increase in loans and a $233.1 million increase in investment securities, partially offset by a $282.5 million decrease in cash and cash equivalents. Total liabilities of $13.8 billion increased $36.1 million from December 31, 2024 primarily due to a $205.0 million increase in FHLB advances, partially offset by a $112.3 million decrease in deposits.

Previous wording

Investment securities were $2.6 billion or 18% of total assets at September 30, 2024. At December 31, 2023, investment securities were $2.4 billion or 16% of total assets. The portfolio is comprised of both available-for-sale and held-to-maturity securities.

Current wording

At March 31, 2025, investment securities were $3.0 billion or 19% of total assets compared to $2.8 billion or 18% of total assets at December 31, 2024. The portfolio is comprised of both available-for-sale and held-to-maturity securities.

Previous wording

Investment purchases in the third quarter 2024 had a weighted average, tax equivalent yield of 4.97%. The average duration of the investment portfolio was 4.9 years at September 30, 2024. The Company leverages the investment portfolio to lengthen the overall duration of the balance sheet, primarily using high-quality municipal securities. The expected cash flow from pay downs, maturities and interest over the next 12 months is approximately $434.5 million.

Current wording

Investment purchases in the first quarter 2025 had a weighted average, tax equivalent yield of 5.20%. The average duration of the investment portfolio was 5.2 years at March 31, 2025. The Company leverages the investment portfolio to lengthen the overall duration of the balance sheet, primarily using high-quality municipal securities. The expected cash flow from pay downs, maturities and interest over the next 12 months is approximately $500.9 million.

Previous wording

Loans totaled $11.1 billion at September 30, 2024 compared to $10.9 billion at December 31, 2023. The increase was primarily due to an increase of $135.9 million in construction loans and an increase of $111.6 million in CRE loans, partially offset by a decrease in C&I loans of $44.1 million. Average revolving line draw utilization was 44% for the third quarter 2024, compared to 43% for the year ended December 31, 2023.

Current wording

Loans totaled $11.3 billion at March 31, 2025 compared to $11.2 billion at December 31, 2024. The increase was primarily due to an increase in C&I loans of $13.0 million and an increase of $71.5 million in CRE loans, partially offset by a decrease of $10.4 million in construction loans. Average revolving line draw utilization was 42% for the first quarter 2025, compared to 43% for the year ended December 31, 2024.

Previous wording

The following table provides additional information on certain categories of loans that are included in total loans above:

Current wording

The following table sets forth additional information on certain categories of loans that are included in total loans above at the periods indicated:

Previous wording

These lending categories, including sponsor finance, life insurance premium financing, and tax credits, consist primarily of C&I loans. Sponsor finance and life insurance premium financing loans are sourced through relationships developed with private equity funds and estate planning firms and are not bound geographically by our markets. These loan products offer opportunities to expand and diversify geographically by entering new markets. The Company continues to focus on originating high-quality C&I relationships, as they typically have variable interest rates and allow for cross selling opportunities involving other banking products. Life insurance premium financing and tax credits are typically lower risk products due to the high collateral value securing the loans.

Current wording

Sponsor finance, life insurance premium financing, and tax credits lending consist primarily of C&I loans. Sponsor finance and life insurance premium financing loans are sourced through relationships developed with private equity funds and estate planning firms and are not bound geographically by our markets. These loan products offer opportunities to expand and diversify geographically by entering new markets. The Company continues to focus on originating high-quality C&I relationships, as they typically have variable interest rates and allow for cross selling opportunities involving other banking products. Life insurance premium financing and tax credits are typically lower risk products due to the high collateral value securing the loans.

Previous wording

SBA loans are also generated on a national basis, and primarily consist of loans collateralized by first lien, owner-occupied real estate properties. These loans predominantly have a 75% guarantee from the SBA. The Company may sell the guaranteed portion of the loan and retain servicing rights, and in the first quarter 2024, SBA loans totaling $23.1 million were sold.

Current wording

SBA loans are also generated on a national basis, and primarily consist of loans collateralized by first lien, owner-occupied real estate properties. These loans predominantly have a 75% guarantee from the SBA. The Company may sell the guaranteed portion of the loan and retain servicing rights, and in the first quarter 2025, the guaranteed portion of SBA loans totaling $31.3 million were sold.

Previous wording

The ACL on loans was 1.26% of total loans at September 30, 2024, compared to 1.24% of loans at December 31, 2023. The decrease in the ratio of ACL on loans to total loans is primarily due to loan growth and charge-offs. Excluding guaranteed loans, the ACL on loans to total loans was 1.38%4 at September 30, 2024, compared to 1.35% at December 31, 2023.

Current wording

The ACL on loans was 1.27% of total loans at March 31, 2025, compared to 1.23% of loans at December 31, 2024. Excluding guaranteed loans, the ACL on loans to total loans was 1.38%4 at March 31, 2025, compared to 1.34% at December 31, 2024.

Previous wording

To the extent the Company does not recognize charge-offs and economic forecasts improve in future periods, the Company could recognize provision reversals. Conversely, if economic conditions and the Company’s forecast worsens and charge-offs increase, the Company could recognize elevated levels of provision for credit losses. The provision is also reflective of charge-offs (recoveries) in the period.

Current wording

To the extent the Company does not recognize charge-offs and economic forecasts improve in future periods, the Company could recognize provision reversals. Conversely, if economic conditions and the Company’s forecast worsen and charge-offs increase, the Company could recognize elevated levels of provision for credit losses. The provision is also reflective of charge-offs (recoveries) in the period.

Previous wording

Total deposits excluding brokered certificates of deposits were $12.0 billion at September 30, 2024, an increase of $290.8 million from December 31, 2023. The Company has deposit verticals focusing on property management, community associations, and escrow industries. These deposits increased to $3.1 billion at September 30, 2024 from $2.8 billion at December 31, 2023 due to continued success at generating organic deposit growth.

Current wording

Total deposits excluding brokered certificates of deposits were $12.5 billion at March 31, 2025, a decrease of $169.8 million from December 31, 2024. The decrease from the linked quarter was primarily in noninterest bearing commercial deposits that typically decline in the first part of the year due to tax and bonus distributions. The Company has deposit verticals focusing on property management, community associations, and escrow industries. These deposits increased to $3.5 billion at March 31, 2025 from $3.4 billion at December 31, 2024 due to continued success at generating organic deposit growth.

Previous wording

To provide customers a deposit product with enhanced FDIC insurance, the Company participates in several programs through third parties that provide full FDIC insurance on deposit amounts by exchanging or reciprocating larger depository relationships with other member banks. Total reciprocal deposits were $1.2 billion at both September 30, 2024 and December 31, 2023. The Company considers reciprocal accounts as customer-related deposits due to the customer relationship that generated the transaction.

Current wording

To provide customers a deposit product with enhanced FDIC insurance, the Company participates in several programs through third parties that provide full FDIC insurance on deposit amounts by exchanging or reciprocating larger depository relationships with other member banks. Total reciprocal deposits were $1.3 billion at both March 31, 2025 and December 31, 2024. The Company considers reciprocal accounts as customer-related deposits due to the customer relationship that generated the transaction.

Previous wording

Shareholders’ equity totaled $1.8 billion at September 30, 2024, an increase of $115.9 million from December 31, 2023. Significant activity during the first nine months of 2024 was as follows:

Current wording

Stockholders’ equity totaled $1.9 billion at March 31, 2025, an increase of $44.1 million from December 31, 2024. Significant activity during the first three months of 2025 was as follows:

Previous wording

•Increase from net income of $136.4 million,

Current wording

•Increase from net income of $50.0 million,

Previous wording

•Increase in fair value of securities and cash flow hedges of $22.2 million,

Current wording

•Increase in fair value of securities and cash flow hedges of $15.3 million,

Previous wording

•Decrease from dividends paid on common and preferred stock of $32.0 million, and

Current wording

•Decrease from dividends paid on common and preferred stock of $11.3 million, and

Previous wording

•Decrease from common stock repurchases of $18.4 million.

Current wording

•Decrease from common stock repurchases of $10.6 million.

Previous wording

Additionally, liquidity is provided from lines of credit with the FHLB, the Federal Reserve Bank, and correspondent banks; the ability to acquire large and brokered deposits, sales of the securities portfolio, and the ability to sell loans or loan participations to other banks. These alternatives are an important part of our liquidity plan and provide flexibility and efficient execution of the asset-liability management strategy.

Current wording

Liquidity is provided from lines of credit with the FHLB, the Federal Reserve, and correspondent banks; the ability to acquire large and brokered deposits, sales of the securities portfolio, and the ability to sell loans or loan participations to other banks. These alternatives are an important part of our liquidity plan and provide flexibility and efficient execution of the asset-liability management strategy.

Previous wording

Liquidity from assets is available primarily from cash balances and the investment portfolio. Cash and interest-bearing deposits with other banks totaled $426.4 million at September 30, 2024 and $433.0 million at December 31, 2023. Investment securities are another important tool in liquidity planning. Securities totaled $2.6 billion and $2.4 billion at September 30, 2024 and December 31, 2023, respectively and included $1.2 billion and $1.6 billion at September 30, 2024 and December 31, 2023, respectively, pledged as collateral for deposits of public institutions, loan notes and other requirements. The unpledged portion of the securities portfolio could be pledged or sold to enhance liquidity, if necessary. The Company also has a portfolio of SBA guaranteed loans, a portion of which could be sold in the secondary market to generate earnings and liquidity.

Current wording

Liquidity from assets is available primarily from cash balances and the investment portfolio. Cash and interest-bearing deposits with other banks totaled $481.7 million at March 31, 2025, compared to $764.2 million at December 31, 2024. Investment securities are another important tool in liquidity planning. Securities totaled $3.0 billion and $2.8 billion at March 31, 2025 and December 31, 2024, respectively, and included $1.5 billion at both March 31, 2025 and December 31, 2024, respectively, pledged as collateral for deposits of public institutions, loan notes and other requirements. The unpledged portion of the securities portfolio could be pledged or sold to enhance liquidity, if necessary.

Previous wording

Liability liquidity funding sources are available to increase financial flexibility. In addition to amounts borrowed at September 30, 2024, the Company could borrow an additional $1.2 billion from the FHLB of Des Moines under blanket loan pledges and has additional real estate loans that could be pledged. In the first nine months of 2024, the Company pledged additional loans to the FHLB to increase the borrowing capacity by $334.6 million. The Company also has $2.6 billion available from the Federal Reserve Bank under a pledged loan agreement. In the first quarter 2024, the Federal Reserve Bank borrowing capacity declined due to the expiration of the Bank Term Funding Program on March 11, 2024. The Company also has unsecured federal funds lines with seven correspondent banks totaling $140 million.

Current wording

Liability liquidity funding sources are available to increase financial flexibility. In addition to amounts borrowed at March 31, 2025, the Company could borrow an additional $1.1 billion from the FHLB of Des Moines under blanket loan pledges and has additional real estate loans that could be pledged. The Company also has $2.9 billion available from the Federal Reserve under a pledged loan agreement. The Company also has unsecured federal funds lines with seven correspondent banks totaling $140 million.

Previous wording

In the normal course of business, the Company enters into certain forms of off-balance sheet transactions, including unfunded loan commitments and letters of credit. These transactions are managed through the Company’s various risk management processes. Management considers both on-balance sheet and off-balance sheet transactions in its evaluation of the Company’s liquidity. The Company has $2.9 billion in unused commitments to extend credit as of September 30, 2024. However, the nature of these commitments is such that the likelihood of funding them in the aggregate at any one time is low.

Current wording

In the normal course of business, the Company enters into certain forms of off-balance sheet transactions, including unfunded loan commitments and letters of credit. These transactions are managed through the Company’s various risk management processes. Management considers both on-balance sheet and off-balance sheet transactions in its evaluation of the Company’s liquidity. The Company has $3.0 billion in unused commitments to extend credit as of March 31, 2025. While this commitment level would exhaust the majority of the Company’s current liquidity resources, the nature of these commitments is such that the likelihood of funding them in the aggregate at any one time is low.

Previous wording

At the holding company level, the primary funding sources are dividends and payments from the Bank and proceeds from the issuance of equity (i.e. stock option exercises, stock offerings) and debt instruments. The main use of this liquidity is to provide the funds necessary to pay dividends to shareholders, service debt, invest in subsidiaries as necessary, repurchase common stock and satisfy other operating requirements. The holding company maintains a revolving line of credit for an aggregate amount up to $25 million, all of which was available at September 30, 2024. The line of credit has a one-year term and was renewed in February 2024 for an additional one-year term. The proceeds can be used for general corporate purposes.

Current wording

At the holding company level, our primary funding sources are dividends and payments from the Bank and proceeds from the issuance of equity (i.e. stock option exercises, stock offerings) and debt instruments. The main use of this liquidity is to provide the funds necessary to pay dividends to stockholders, service debt, invest in subsidiaries as necessary, repurchase common stock and satisfy other operating requirements. In February 2025, EFSC’s revolving line of credit for an aggregate amount $25 million matured, of which the Company anticipates renewing in the second quarter of 2025.

Previous wording

Strong capital ratios, credit quality and core earnings are essential to retaining cost-effective access to the wholesale funding markets. Deterioration in any of these factors could have a negative impact on the Company’s ability to access these funding sources and, as a result, these factors are monitored on an ongoing basis as part of the liquidity management process. The Bank is subject to regulations and, among other things, may be limited in its ability to pay dividends or transfer funds to the parent company. Accordingly, consolidated cash flows as presented in the consolidated statements of cash flows may not represent cash immediately available for the payment of cash dividends to the Company’s shareholders or for other cash needs.

Current wording

Strong capital ratios, credit quality and core earnings are essential to retaining cost-effective access to the wholesale funding markets. Deterioration in any of these factors could have a negative impact on the Company’s ability to access these funding sources and, as a result, these factors are monitored on an ongoing basis as part of the liquidity management process. The Bank is subject to regulations and, among other things, may be limited in its ability to pay dividends or transfer funds to the parent company. Accordingly, consolidated cash flows as presented in the consolidated statements of cash flows may not represent cash immediately available for the payment of cash dividends to the Company’s stockholders or for other cash needs.

Previous wording

Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (set forth in the following table) of total, Tier 1, and common equity tier 1 capital to risk-weighted assets, and of Tier 1 capital to average assets. To be categorized as “well capitalized”, banks must maintain minimum total risk-based (10%), Tier 1 risk-based (8%), common equity tier 1 risk-based (6.5%), and Tier 1 leverage ratios (5%). In addition, the Company must maintain an additional CCB above the regulatory minimum ratio requirements. The CCB is designed to insulate banks from periods of stress and impose constraints on dividends, share repurchases and discretionary bonus payments when capital levels fall below prescribed levels. As of September 30, 2024, and December 31, 2023, the Company and the Bank met all capital adequacy requirements to which they are subject and exceeded the amounts required to be “well capitalized”.

Current wording

Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (set forth in the following table) of total, Tier 1, and common equity tier 1 capital to risk-weighted assets, and of Tier 1 capital to average assets. To be categorized as “well capitalized”, banks must maintain minimum total risk-based (10%), Tier 1 risk-based (8%), common equity tier 1 risk-based (6.5%), and Tier 1 leverage ratios (5%). In addition, the Company must maintain an additional CCB above the regulatory minimum ratio requirements. The CCB is designed to insulate banks from periods of stress and impose constraints on dividends, stock repurchases and discretionary bonus payments when capital levels fall below prescribed levels. As of March 31, 2025, and December 31, 2024, the Company and the Bank met all capital adequacy requirements to which they are subject and exceeded the amounts required to be “well capitalized”.

Previous wording

The Company’s accounting and reporting policies conform to generally accepted accounting principles in the United States (“GAAP”) and the prevailing practices in the banking industry. However, the Company provides additional financial measures, such as tangible common equity, adjusted ROAA, adjusted return on average common equity, ROATCE, adjusted ROATCE, ACL on loans to total loans adjusted for guaranteed loans, core efficiency ratio, PPNR, estimated insured deposits, tangible book value per common share and the tangible common equity ratio, in this report that are considered “non-GAAP financial measures.” Generally, a non-GAAP financial measure is a numerical measure of a company’s financial performance, financial position, or cash flows that exclude (or include) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP.

Current wording

The Company’s accounting and reporting policies conform to generally accepted accounting principles in the United States (“GAAP”) and the prevailing practices in the banking industry. However, the Company provides additional financial measures, such as tangible common equity, ROAA, adjusted return on average common equity, ROATCE, adjusted ROATCE, ACL on loans to total loans adjusted for guaranteed loans, core efficiency ratio, PPNR, tangible book value per common share, return on average common equity and the tangible common equity ratio, in this report that are considered “non-GAAP financial measures.” Generally, a non-GAAP financial measure is a numerical measure of a company’s financial performance, financial position, or cash flows that exclude (or include) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP.