ENTERPRISE FINANCIAL SERVICES CORP

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: 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.

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, the Company’s ability to collect insurance proceeds from claims made related to tax recapture events, 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 (including the effect of a prolonged U.S. federal government shutdown), 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

The following discussion describes the significant changes to the financial condition of the Company that have occurred during the first six 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 June 30, 2025, compared to the linked first quarter of 2025 (“linked quarter”) and the results of operations, liquidity and cash flows for the six months ended June 30, 2025 compared to the same period in 2024 (“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, 2024.

Current wording

The following discussion describes the significant changes to the financial condition of the Company that have occurred during the first nine 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 September 30, 2025, compared to the linked second quarter of 2025 (“linked quarter”) and the results of operations, liquidity and cash flows for the nine months ended September 30, 2025 compared to the same period in 2024 (“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, 2024.

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 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 $145.1 million at June 30, 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 $28.2 million. Conversely, the allowance would have increased $43.0 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 $148.9 million at September 30, 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 $30.7 million. Conversely, the allowance would have increased $44.9 million using only the downside scenario.

Previous wording

•Net interest income and NIM -Net interest income of $152.8 million for the second quarter of 2025 and $300.3 million for the six months ended June 30, 2025 increased $5.2 million and $22.0 million from the linked and prior year-to-date periods, respectively. NIM was 4.21% for the second quarter of 2025 and 4.18% for the six months ended June 30, 2025 compared to 4.15% and 4.16% for the linked and prior year-to-date periods, respectively. Compared to the linked and prior year-to-date periods, the increase in net interest income was primarily due to higher average loan and securities balances, as well as higher yields on the securities portfolio. Compared to the prior year-to-date period, net interest income also benefited from lower short-term interest rates that decreased deposit interest expense. Since September 2024, the Federal Reserve has reduced the federal funds target rate 100 basis points. In response, the Company has proactively 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 $158.3 million for the third quarter of 2025 and $458.6 million for the nine months ended September 30, 2025 increased $5.5 million and $36.8 million from the linked and prior year-to-date periods, respectively. NIM was 4.23% for the third quarter of 2025 and 4.20% for the nine months ended September 30, 2025 compared to 4.21% and 4.17% for the linked and prior year-to-date periods, respectively. Compared to the linked and prior year-to-date periods, the increase in net interest income was primarily due to higher average loan and securities balances, as well as higher yields on the securities portfolio. Compared to the prior year-to-date period, net interest income also benefited from lower short-term interest rates that decreased deposit interest expense. Since September 2024, the Federal Reserve has reduced the federal funds target rate 125 basis points. In response, the Company has proactively adjusted deposit pricing to partially mitigate the impact on income from the repricing of variable rate loans.

Previous wording

•Noninterest income -Noninterest income of $20.6 million for the second quarter of 2025 and $39.1 million for the six months ended June 30, 2025 increased $2.1 million and $11.4 million from the linked and prior year-to-date periods, respectively. The increase in noninterest income from the linked and prior year-to-date periods was primarily due to higher BOLI income and community development investment income. Compared to the prior year-to-date period, the increase was also due to a $5.1 million increase in tax credit income and a $1.6 million increase in gain on SBA loan sales.

Current wording

•Noninterest income -Noninterest income of $48.6 million for the third quarter of 2025 and $87.7 million for the nine months ended September 30, 2025 increased $28.0 million and $38.6 million from the linked and prior year-to-date periods, respectively. The increase in noninterest income from the linked and prior year-to-date periods was primarily due to the $32.1 million of anticipated insurance proceeds from the pending claim related to the tax credit recapture event during the quarter. Compared to the prior year-to-date period, the increase was also due to a $1.6 million increase in tax credit income, a $2.7 million increase in BOLI income, and a $2.8 million increase in gain on SBA loan sales.

Previous wording

•Noninterest expense -Noninterest expense of $105.7 million for the second quarter of 2025 and $205.5 million for the six months ended June 30, 2025 increased $5.9 million and $18.0 million from the linked and prior year-to-date periods, respectively. The increase from the linked and prior year-to-date periods was primarily driven by higher employee compensation, variable deposit costs and higher loan and legal expenses related to loan workouts and OREO.

Current wording

•Noninterest expense -Noninterest expense of $109.8 million for the third quarter of 2025 and $315.3 million for the nine months ended September 30, 2025 increased $4.1 million and $29.8 million from the linked and prior year-to-date periods, respectively. The increase from the linked and prior year-to-date periods was primarily driven by variable deposit costs and higher loan and legal expenses related to loan workouts and OREO. Compared to the prior year-to-date period, the increase was also due to a $12.9 million increase in employee compensation.

Previous wording

•Loans – Total loans increased $188.5 million, or 2%, to $11.4 billion at June 30, 2025, compared to $11.2 billion at December 31, 2024. Average loans totaled $11.3 billion for the six months ended June 30, 2025 compared to $10.9 billion for the six months ended June 30, 2024.

Current wording

•Loans – Total loans increased $362.8 million, or 3%, to $11.6 billion at September 30, 2025, compared to $11.2 billion at December 31, 2024. Average loans totaled $11.4 billion for the nine months ended September 30, 2025 compared to $11.0 billion for the nine months ended September 30, 2024.

Previous wording

•Deposits – Total deposits increased $170.9 million, to $13.3 billion at June 30, 2025 from $13.1 billion at December 31, 2024. Average deposits totaled $13.2 billion for the six months ended June 30, 2025 compared to $12.3 billion for the prior year-to-date period. Noninterest-bearing deposit accounts represented 32% of total deposits and the loan to deposit ratio was 86% at June 30, 2025, compared to 34% and 85%, respectively, at December 31, 2024.

Current wording

•Deposits – Total deposits increased $421.4 million, to $13.6 billion at September 30, 2025 from $13.1 billion at December 31, 2024. Average deposits totaled $13.3 billion for the nine months ended September 30, 2025 compared to $12.4 billion for the prior year-to-date period. Noninterest-bearing deposit accounts represented 32% of total deposits and the loan to deposit ratio was 85% at September 30, 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 1.27% at June 30, 2025, compared to 1.23% at December 31, 2024. The ratio of nonperforming assets to total assets was 0.71% at June 30, 2025 compared to 0.30% at December 31, 2024. A provision for credit losses of $3.5 million and $8.7 million was recorded in the second quarter of 2025 and the six months ended June 30, 2025, respectively. This compares to $5.2 million and $10.6 million in the linked and prior year-to-date periods, respectively.

Current wording

•Asset quality – The allowance for credit losses on loans to total loans was 1.29% at September 30, 2025, compared to 1.23% at December 31, 2024. The ratio of nonperforming assets to total assets was 0.83% at September 30, 2025 compared to 0.30% at December 31, 2024. A provision for credit losses of $8.4 million and $17.1 million was recorded in the third quarter of 2025 and the nine months ended September 30, 2025, respectively. This compares to $3.5 million and $14.7 million in the linked and prior year-to-date periods, respectively. During the third quarter 2025, a $12 million life insurance premium loan with adequate collateralization migrated into nonperforming assets. This relationship, along with a Southern California relationship discussed in the Nonperforming Assets section below, represents approximately 60% of nonperforming assets at September 30, 2025. The Company has a high certainty of collection for both of these relationships.

Previous wording

•Stockholders’ equity – Total stockholders’ equity was $1.9 billion at June 30, 2025, compared to $1.8 billion at December 31, 2024, and the tangible common equity to tangible assets ratio 2 was 9.42% at June 30, 2025 compared to 9.05% at December 31, 2024. The Company and the Bank’s regulatory capital ratios exceeded the “well-capitalized” levels at June 30, 2025.

Current wording

•Stockholders’ equity – Total stockholders’ equity was $2.0 billion at September 30, 2025, compared to $1.8 billion at December 31, 2024, and the tangible common equity to tangible assets ratio 2 was 9.60% at September 30, 2025 compared to 9.05% at December 31, 2024. The Company and the Bank’s regulatory capital ratios exceeded the “well-capitalized” levels at September 30, 2025.

Previous wording

The Company’s Board of Directors approved a quarterly dividend of $0.31 per share of common stock, payable on September 30, 2025 to stockholders of record as of September 15, 2025. The Board 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) June 15, 2025 to (but excluding) September 15, 2025. The dividend will be payable on September 15, 2025 to holders of record of Series A Preferred Stock as of August 29, 2025.

Current wording

The Company’s Board of Directors approved a quarterly dividend of $0.32 per share of common stock, payable on December 31, 2025 to stockholders of record as of December 15, 2025. The Board 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, 2025 to (but excluding) December 15, 2025. The dividend will be payable on December 15, 2025 to holders of record of Series A Preferred Stock as of November 28, 2025.

Previous wording

Net interest income on a tax equivalent basis of $155.5 million for the quarter ended June 30, 2025 and $305.5 million for the six months ended June 30, 2025, increased $5.5 million and increased $23.1 million from the linked and prior year-to-date periods, respectively. The increase from the linked and prior year-to-date periods reflects organic loan growth and continued investment in the securities portfolio, partially offset by an increase in wholesale borrowings (FHLB advances and brokered certificates of deposits). Net interest income for the current quarter also benefited by one additional day compared to the linked quarter. On June 1, 2025, $63.3 million of subordinated debt converted from a fixed 5.75% rate to a floating rate of three-month term SOFR plus a spread of 5.66%, resulting in higher rates incurred for one month. The subordinated debt has a quarterly call feature. The cost of interest-bearing deposits has declined due to lower short-term rates, partially offset by an increase in deposit balances. Since September 2024, the Federal Reserve has reduced the federal funds target rate 100 basis points. In response, the Company has proactively adjusted deposit pricing to partially mitigate the impact on income from the repricing of variable rate loans.

Current wording

Net interest income on a tax equivalent basis of $161.3 million for the quarter ended September 30, 2025 and $466.8 million for the nine months ended September 30, 2025, increased $5.8 million and $38.9 million from the linked and prior year-to-date periods, respectively. The increase from the linked quarter reflects organic loan growth and continued investment in the securities portfolio, partially offset by an increase in average balances of interest-bearing liabilities. Net interest income for the current quarter also benefited by one additional day compared to the linked quarter. On September 2, 2025, the Company called $63.3 million of subordinated debt at a floating rate of three-month Term SOFR plus a spread of 5.66% that was replaced by a $63.3 million single advance term loan. The term loan is payable in quarterly installments on March 31, June 30, September 30 and December 31 with a final installment due on the five year anniversary of the initial advance date. The interest rate on the term loan is one-month Term SOFR plus 2.50%. The cost of interest-bearing deposits has declined due to lower short-term rates, partially offset by an increase in average deposit balances. Since September 2024, the Federal Reserve has reduced the federal funds target rate 125 basis points. In response, the Company has proactively adjusted deposit pricing to partially mitigate the impact on income from the repricing of variable rate loans.

Previous wording

Compared to the linked quarter, tax equivalent interest income increased $7.5 million primarily due to an increase of $117.4 million in average loan balances and a seven basis point increase in the average loan yield. The average securities balance increased $218.1 million and the yield increased 11 basis points due to new purchases and the reinvestment of cash flows from the runoff of lower yielding investments. The average interest rate of new loan originations in the second quarter of 2025 was 7.26%, an increase of 14 basis points from the linked quarter. Investment purchases in the second quarter of 2025 had a weighted average, tax equivalent yield of 5.30%.

Current wording

Compared to the linked quarter, tax equivalent interest income increased $6.7 million primarily due to an increase of $96.0 million in average loan balances, an increase of $204.3 million in average securities balances, and a seven basis point increase in yield on securities due to new purchases and the reinvestment of cash flows from the runoff of lower yielding investments. The average interest rate of new loan originations in the third quarter of 2025 was 6.98%, a decrease of 28 basis points from the linked quarter. Investment purchases in the third quarter of 2025 had a weighted average, tax equivalent yield of 4.99%.

Previous wording

Tax equivalent interest income increased $12.5 million over the prior year-to-date period primarily due to a $354.6 million increase in average loan balances, a $642.0 million increase in average securities balances, and a 50 basis point increase in yield on securities. These increases were partially offset by a 31 basis point decline in the loan yield to 6.60%, from 6.91% in the prior year-to-date period.

Current wording

Tax equivalent interest income increased $22.6 million over the prior year-to-date period primarily due to a $397.8 million increase in average loan balances, a $712.3 million increase in average securities balances, and a 51 basis point increase in yield on securities. These increases were partially offset by a 31 basis point decline in the loan yield to 6.61%, from 6.92% in the prior year-to-date period.

Previous wording

Compared to the linked quarter, interest expense increased $1.9 million primarily due to higher organic growth in deposits, an increase in wholesale borrowings and the higher rate incurred on subordinated debt for one month in the quarter. These increases were partially offset by a decline in the average balance of customer repurchase agreements. The total cost of deposits, including noninterest-bearing demand accounts, was 1.82% during the second quarter of 2025, compared to 1.83% in the linked quarter.

Current wording

Compared to the linked quarter, interest expense increased $0.9 million primarily due to organic growth in the average balance of interest-bearing deposits, an increase in wholesale borrowings and the higher rate incurred on subordinated debt for two months in the quarter. These increases were partially offset by a decline in the average balance of customer repurchase agreements and a reduction in the cost of interest-bearing deposits due to the Federal Reserve’s reduction in the target federal funds rate. The total cost of deposits, including noninterest-bearing demand accounts, was 1.80% during the third quarter 2025, compared to 1.82% in the linked quarter.

Previous wording

Interest expense decreased $10.6 million over the prior year-to-date period primarily due to a 43 basis point decline in the average cost of interest-bearing deposits and a 56 basis point decline in the average cost of money market accounts, partially offset by organic growth in the deposit portfolio. The total cost of deposits, including noninterest-bearing demand accounts, was 1.82% during the six months ended June 30, 2025, compared to 2.15% in the prior year-to-date period.

Current wording

Interest expense decreased $16.4 million compared to the prior year-to-date period primarily due to a 47 basis point decline in the average cost of interest-bearing deposits, including a 60 basis point decline in the average cost of money market accounts, partially offset by organic growth in the deposit portfolio. The total cost of deposits, including noninterest-bearing demand accounts, was 1.81% during the nine months ended September 30, 2025, compared to 2.16% in the prior year-to-date period.

Previous wording

NIM, on a tax equivalent basis, was 4.21% in the second quarter of 2025 and 4.18% for the first six months of 2025, an increase of six basis points and two basis points from the linked and prior year-to-date periods, respectively.

Current wording

NIM, on a tax equivalent basis, was 4.23% in the third quarter of 2025 and 4.20% for the first nine months of 2025, an increase of two basis points and three basis points from the linked and prior year-to-date periods, respectively.

Previous wording

Total noninterest income for the second quarter of 2025 was $20.6 million, an increase of $2.1 million from the linked quarter primarily due to higher deposit service charges and other income. The increase in other income from the linked quarter was primarily driven by a $1.7 million increase in BOLI income, as well as a $0.7 million increase in community development investment income. The increase in BOLI income was primarily due to the purchase of additional policies in the first quarter 2025 and, to a lesser extent, the payout of a policy in the second quarter of 2025. Community development investment income is not a consistent source of income and fluctuates based on distributions from the underlying funds.

Current wording

Total noninterest income for the third quarter of 2025 was $48.6 million, an increase of $28.0 million from the linked quarter primarily driven by the $32.1 million in accrued insurance proceeds that are anticipated to be received as a result of the recaptured tax credits during the current quarter, partially offset by lower tax credit income and other income. Tax credit income is typically highest in the fourth quarter of each year and will vary in other periods based on transaction volumes and fair value changes on credits carried at fair value. The decrease in other income was primarily due to a decrease of $0.5 million in BOLI income, as well as a $1.1 million decrease in community development investment income. During the linked quarter, the Company received the payout of a BOLI policy that did not recur in the third quarter 2025. Community development investment income is not a consistent source of income and fluctuates based on distributions from the underlying funds.

Previous wording

Total noninterest income for the six months ended June 30, 2025 was $39.1 million, an increase from the prior year-to-date period of $11.4 million. The increase was primarily due to a $5.1 million increase in tax credit income, which varies based on transaction volumes and fair value changes on credits carried at fair value, and a $5.9 million increase in other income. Other income increased compared to the prior year-to-date period primarily due to a $1.7 million increase in BOLI income and a $1.6 million increase in gain on SBA loan sales. On a periodic basis, the Company will opportunistically sell SBA guaranteed loans. The Company sold $55.7 million and $23.1 million of the guaranteed portion of SBA 7(a) loans during the six months ended June 30, 2025 and June 30, 2024, respectively. A gain on sale of $3.0 million and $1.4 million was recognized during the six months ended June 30, 2025 and June 30, 2024, respectively.

Current wording

Total noninterest income for the nine months ended September 30, 2025 was $87.7 million, an increase from the prior year-to-date period of $38.6 million. The increase was primarily driven by the $32.1 million in accrued insurance proceeds that are anticipated to be received as a result of the recaptured tax credits during the current quarter, an increase of $1.6 million in tax credit income, which varies based on transaction volumes and fair value changes on credits carried at fair value, and a $4.3 million increase in other income. Other income increased compared to the prior year-to-date period primarily due to a $2.7 million increase in BOLI income and a $2.8 million increase in gain on SBA loan sales. On a periodic basis, the Company will opportunistically sell SBA guaranteed loans. The Company sold $78.0 million and $23.1 million of the guaranteed portion of SBA 7(a) loans during the nine months ended September 30, 2025 and September 30, 2024, respectively. A gain on sale of $4.2 million and $1.4 million was recognized during the nine months ended September 30, 2025 and September 30, 2024, respectively.

Previous wording

Noninterest expense was $105.7 million for the second quarter of 2025, an increase of $5.9 million from $99.8 million in the linked quarter. Employee compensation and benefits increased $2.0 million from the linked quarter primarily due to a full quarter of merit increases that were effective on March 1, 2025, an increase in variable compensation and the number of working days in the quarter. Deposit costs relate to certain businesses in the deposit verticals that receive an earnings credit allowance for deposit related expenses that are impacted by interest rates and average balances. Deposit costs increased $0.9 million from the linked quarter primarily due to an increase of $62.1 million in average deposit vertical balances from the linked quarter. Acquisition costs relate to the previously announced branch acquisition that is expected to close in the fourth quarter 2025. Loan and legal expenses, included in other expense, increased $1.1 million during the quarter due to loan workouts and the foreclosure of certain properties related to nonperforming loans.

Current wording

Noninterest expense was $109.8 million for the third quarter of 2025, an increase of $4.1 million from $105.7 million in the linked quarter. Deposit costs relate to certain businesses in the deposit verticals that receive an earnings credit allowance for deposit related expenses that are impacted by interest rates and average balances. Deposit costs increased $2.4 million from the linked quarter primarily due to an increase of $146.0 million in average deposit vertical balances from the linked quarter. Acquisition costs of $0.6 million during the quarter relate to the previously announced branch acquisition that closed on October 10, 2025.

Previous wording

Total noninterest expense of $205.5 million for the first six months of 2025 increased $18.0 million from the prior year-to-date period primarily due to an increase in the associate base, merit increases throughout 2024 and 2025, and a $6.6 million increase in deposit costs due to higher earnings credit allowances and deposit vertical average balances.

Current wording

Total noninterest expense of $315.3 million for the first nine months of 2025 increased $29.8 million from the prior year-to-date period primarily due to an increase of $12.9 million in employee compensation related to the associate base and merit increases throughout 2024 and 2025, a $10.0 million increase in deposit costs due to higher earnings credit allowances and deposit vertical average balances, and an increase of $1.1 million in acquisition costs related to the previously announced branch acquisition. These increases were partially offset by a decline in core conversion expenses due to the completion of the core implementation in the fourth quarter 2024 and the FDIC special assessment that did not recur in the current period.

Previous wording

Total assets were $16.1 billion at June 30, 2025, an increase of $479.9 million from December 31, 2024 primarily due to a $504.5 million increase in investment securities and a $188.5 million increase in loans, partially offset by a $272.7 million decrease in cash and cash equivalents. Total liabilities of $14.2 billion increased $381.0 million from December 31, 2024 primarily due to a $294.0 million increase in FHLB advances and a $170.9 million increase in deposits.

Current wording

Total assets were $16.4 billion at September 30, 2025, an increase of $806.0 million from December 31, 2024 primarily due to a $642.1 million increase in investment securities and a $362.8 million increase in loans, partially offset by a $292.2 million decrease in cash and cash equivalents. Total liabilities of $14.4 billion increased $647.6 million from December 31, 2024 primarily due to a $327.0 million increase in FHLB advances and a $421.4 million increase in deposits.

Previous wording

At June 30, 2025, investment securities were $3.3 billion or 21% 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.

Current wording

At September 30, 2025, investment securities were $3.4 billion or 21% 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 second quarter of 2025 had a weighted average, tax equivalent yield of 5.30%. The average duration of the investment portfolio was 5.1 years at June 30, 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 $547.5 million.

Current wording

Investment purchases in the third quarter of 2025 had a weighted average, tax equivalent yield of 4.99%. The average duration of the investment portfolio was 5.2 years at September 30, 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 $591.7 million.

Previous wording

The Company has a diversified loan portfolio, with no particular concentration of credit in any one economic sector; however, a substantial portion of the portfolio, including the C&I category, is secured by real estate. The ability of the Company’s borrowers to honor their contractual obligations is partially dependent upon the local economy and its effect on the real estate market.

Current wording

The Company has a diversified loan portfolio, with no particular concentration of credit in any one economic sector; however, a large part of the portfolio, including the C&I category, is secured by real estate. The ability of the Company’s borrowers to honor their contractual obligations is partially dependent upon the local economy and its effect on the real estate market.

Previous wording

Loans totaled $11.4 billion at June 30, 2025 compared to $11.2 billion at December 31, 2024. The increase was primarily due to an increase in C&I loans of $153.6 million and an increase of $99.3 million in CRE loans, partially offset by a decrease of $46.6 million in construction loans. Average revolving line draw utilization was 46% for the second quarter of 2025, compared to 43% for the year ended December 31, 2024.

Current wording

Loans totaled $11.6 billion at September 30, 2025 compared to $11.2 billion at December 31, 2024. The increase was primarily due to an increase in C&I loans of $226.9 million and an increase of $203.9 million in CRE loans. Average revolving line draw utilization was 45% for the third quarter of 2025, compared to 43% for the year ended December 31, 2024.

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 three and six months ended June 30, 2025, the guaranteed portion of SBA loans totaling $24.4 million and $55.7 million, respectively, 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 three and nine months ended September 30, 2025, the guaranteed portion of SBA loans totaling $22.2 million and $78.0 million, respectively, were sold.

Previous wording

A provision for credit losses of $3.5 million for the second quarter of 2025 and $8.7 million for the six months ended June 30, 2025, decreased $1.7 million and $1.9 million from the linked and prior year-to-date periods, respectively. The provision for credit losses in the second quarter of 2025 and six months ended June 30, 2025 was primarily related to loan growth and changes in the economic forecast that influences projected future losses in the allowance calculation.

Current wording

A provision for credit losses of $8.4 million for the third quarter of 2025 and $17.1 million for the nine months ended September 30, 2025, increased $5.0 million and $2.4 million from the linked and prior year-to-date periods, respectively. The provision for credit losses in the third quarter of 2025 and nine months ended September 30, 2025 was primarily related to net charge-offs, the increase in nonperforming loans, loan growth and changes in the economic forecast that influences projected future losses in the allowance calculation.

Previous wording

The ACL on loans was 1.27% of total loans at June 30, 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 June 30, 2025, compared to 1.34% at December 31, 2024.

Current wording

The ACL on loans was 1.29% of total loans at September 30, 2025, compared to 1.23% of loans at December 31, 2024. Excluding guaranteed loans, the ACL on loans to total loans was 1.40%5 at September 30, 2025, compared to 1.34% at December 31, 2024.

Previous wording

4 ACL on loans to total loans adjusted for guaranteed loans is a non-GAAP measure. Refer to discussion and reconciliation of this measure in the accompanying financial tables.

Current wording

5 ACL on loans to total loans adjusted for guaranteed loans is a non-GAAP measure. Refer to discussion and reconciliation of this measure in the accompanying financial tables.

Previous wording

Nonperforming loans at June 30, 2025 increased $63.1 million, or 148%, when compared to December 31, 2024. The increase in nonperforming assets during the six months ended June 30, 2025 was primarily related to seven commercial real estate loans to two commercial banking relationships in Southern California that share common managing general partners. Six loans totaling $41.7 million are personally guaranteed by one individual, and the seventh loan totaling $26.7 million is guaranteed by a separate party. Litigation resulting from a business dispute between the general/managing partner and certain limited partners has resulted in all seven of the borrowing entities filing bankruptcy, and the Company expects to collect the full balance of these loans. These commercial real estate investor-owned loans and residential real estate loans are well-secured by real estate properties with up-to-date appraisals. Loan-to-value ratios for the individual properties range from 39% to 79% based on March 2025 appraisals performed. Furthermore, all seven loans include substantial personal guarantees, and $48.6 million of the $68.4 million relationship remains on accrual despite being 90+ days past due. A summary of the relationship is as follows:

Current wording

Nonperforming loans at September 30, 2025 increased $85.2 million, or 200%, when compared to December 31, 2024. The increase in nonperforming assets during the nine months ended September 30, 2025 was primarily related to seven commercial real estate loans totaling $68.4 million to special purpose entities (each an “SPE Borrower”) affiliated with two commercial banking relationships in Southern California that share some common ownership. Litigation resulting from a business dispute between the owners of the entities resulted in all of the SPE Borrowers filing bankruptcy in the first quarter of 2025, which was subsequently dismissed. The SPE Borrowers were again placed in bankruptcy in October 2025. In August 2025, the Bank commenced foreclosure proceedings with respect to the real property collateral owned by each SPE Borrower. As a result of the Bank’s senior secured first lien collateral position with respect to the real property owned by the SPE Borrowers, the Company expects to collect the full balance of these loans. These commercial real estate investor-owned loans and residential real estate loans are well-secured by real estate properties with up-to-date appraisals. Loan-to-value ratios for the individual properties range from 39% to 79% based on recent appraisals performed. Furthermore, all seven loans include substantial personal guarantees, and $48.6 million of the $68.4 million relationship remains on accrual despite being 90+ days past due. A summary of the relationship is as follows:

Previous wording

Total deposits excluding brokered certificates of deposits were $12.6 billion at June 30, 2025, a decrease of $97.0 million from December 31, 2024. Brokered certificates of deposit at June 30, 2025 increased $267.8 million from December 31, 2024 and continue to be used as a stable funding source. The Company has deposit verticals focusing on property management, community associations, and escrow industries. These deposits increased to $3.6 billion at June 30, 2025 from $3.4 billion at December 31, 2024 due to continued success at generating organic deposit growth.

Current wording

Total deposits excluding brokered certificates of deposits were $12.8 billion at September 30, 2025, an increase of $143.5 million from December 31, 2024. Brokered certificates of deposit at September 30, 2025 increased $277.9 million from December 31, 2024 and continue to be used as a stable funding source. The Company has deposit verticals focusing on property management, community associations, and escrow industries. These deposits increased to $3.8 billion at September 30, 2025 from $3.4 billion at December 31, 2024 due to continued success at generating organic deposit growth.

Previous wording

The total cost of deposits was 1.82% for the current quarter and six months ended June 30, 2025, respectively, compared to 1.83% and 2.15% for the linked and prior year-to-date periods, respectively.

Current wording

The total cost of deposits was 1.80% for the current quarter and 1.81% for the nine months ended September 30, 2025, respectively, compared to 1.82% and 2.16% for the linked and prior year-to-date periods, respectively.

Previous wording

Stockholders’ equity totaled $1.9 billion at June 30, 2025, an increase of $98.9 million from December 31, 2024. Significant activity during the first six months of 2025 was as follows:

Current wording

Stockholders’ equity totaled $2.0 billion at September 30, 2025, an increase of $158.3 million from December 31, 2024. Significant activity during the first nine months of 2025 was as follows:

Previous wording

•Increase from net income of $101.3 million,

Current wording

•Increase from net income of $146.6 million,

Previous wording

•Increase in fair value of securities and cash flow hedges of $27.7 million,

Current wording

•Increase in fair value of securities and cash flow hedges of $48.7 million,

Previous wording

•Decrease from dividends paid on common and preferred stock of $23.7 million, and

Current wording

•Decrease from dividends paid on common and preferred stock of $36.1 million, and

Previous wording

Liquidity from assets is available primarily from cash balances and the investment portfolio. Cash and interest-bearing deposits with other banks totaled $491.5 million at June 30, 2025, compared to $764.2 million at December 31, 2024. Investment securities are another important tool in liquidity planning. Securities totaled $3.3 billion and $2.8 billion at June 30, 2025 and December 31, 2024, respectively, and included $1.7 billion and $1.5 billion at June 30, 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.

Current wording

Liquidity from assets is available primarily from cash balances and the investment portfolio. Cash and interest-bearing deposits with other banks totaled $472.0 million at September 30, 2025, compared to $764.2 million at December 31, 2024. Investment securities are another important tool in liquidity planning. Securities totaled $3.4 billion and $2.8 billion at September 30, 2025 and December 31, 2024, respectively, and included $1.6 billion and $1.5 billion at September 30, 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

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. The guaranteed portion of SBA loans totaling $55.7 million and $23.1 million were sold during the six months ended June 30, 2025 and 2024, respectively.

Current wording

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. The guaranteed portion of SBA loans totaling $78.0 million and $23.1 million were sold during the nine months ended September 30, 2025 and 2024, respectively.

Previous wording

Liability liquidity funding sources are available to increase financial flexibility. In addition to amounts borrowed at June 30, 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 $3.2 billion available from the Federal Reserve under a pledged loan agreement. The Company also has unsecured federal funds lines with eight correspondent banks totaling $160.0 million.

Current wording

Liability liquidity funding sources are available to increase financial flexibility. In addition to amounts borrowed at September 30, 2025, the Company could borrow an additional $1.0 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 $3.3 billion available from the Federal Reserve under a pledged loan agreement. The Company also has unsecured federal funds lines with eight correspondent banks totaling $160.0 million.