ENTERPRISE FINANCIAL SERVICES CORP
For the period ended Mar 31, 2026. Filed May 1, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2026 · Filed May 1, 2026
EFSC$62.05-0.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-09-30; filed 2025-10-31.
0001025835-25-000210
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ANDCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-01.
0001025835-26-000108
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ANDThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 126 previous paragraphs and 122 current paragraphs.
69 unchanged; 39 reworded; 13 added; 18 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 31 previous and 26 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (13)
Current report
ACL
Current report
•PPNR 1 - PPNR of $70.4 million for the first quarter of 2026 decreased $4.4 million from the linked quarter and increased $4.3 million from the prior year quarter. The decrease from the linked quarter was primarily due to a decrease in net interest income due to a lower day count and noninterest income, specifically tax credit income that is typically highest in the fourth quarter of each year, and an increase in noninterest expense, primarily due to the reset of payroll tax limits and paid time-off accruals. The increase compared to the prior year quarter was primarily due to higher net interest income from organic and acquired loan growth, continued investment in the securities portfolio and proactive management of the cost of deposits, partially offset by a decline in asset yields due to lower short-term interest rates.
Current report
•Net interest income and NIM -Net interest income of $166.1 million for the first quarter of 2026 decreased $2.0 million and increased $18.6 million from the linked and prior year quarters, respectively. Net interest income during the current quarter was impacted by lower short-term interest rates that decreased asset yields and fewer days in the period, partially offset by a favorable decrease on rates paid on interest-bearing liabilities. Compared to the prior year quarter, net interest income also benefitted from higher average loan and investment securities balances, and higher yields on the investment portfolio. NIM was 4.28% for the first quarter 2026, compared to 4.26% and 4.15% for the linked and prior year quarters, respectively.
Current report
•Noninterest income -Noninterest income of $19.1 million for the first quarter of 2026 decreased $6.3 million and increased $0.6 million from the linked and prior year quarters, respectively. The decrease in noninterest income from the linked quarter was primarily due to a gain on OREO in the linked quarter that did not reoccur and tax credit income, which is typically highest in the fourth quarter of each year, partially offset by a gain on the guaranteed portion of SBA loans sold during the current quarter. The Company opportunistically sold $25.4 million of SBA guaranteed loans during the first quarter 2026 for a gain of $1.4 million.
Current report
•Asset quality – The ACL on loans to total loans was 1.21% at March 31, 2026, compared to 1.19% at December 31, 2025. The ratio of nonperforming assets to total assets was 0.87% at March 31, 2026 compared to 0.95% at December 31, 2025. A provision for credit losses of $7.2 million was recorded in the first quarter of 2026. This compares to $9.2 million and $5.2 million in the linked and prior year quarters, respectively.
Current report
Net Interest Income and NIM
Current report
Tax equivalent interest income decreased $7.3 million and increased $14.2 million from the linked and prior year quarters, respectively. Compared to the linked quarter, loan yields decreased 13 basis points and there were two fewer days in the period, partially offset by a $158.9 million increase in average investment securities balances and an 11 basis point increase in yield on securities. Compared to the prior year quarter, interest-earning assets increased $1.4 billion, including a $536.9 million increase in average loan balances and an $851.9 million increase in average securities balances, and the yield on securities increased 38 basis points. These increases were partially offset by a 19 basis point decline in the loan yield to 6.38%, from 6.57% in the prior year quarter.
Current report
Interest expense decreased $5.2 million and $5.3 million from the linked and prior year quarters, respectively, primarily due to a reduction in the cost of interest-bearing deposits due to decreased interest paid on interest-bearing deposits. The total cost of deposits, including noninterest-bearing demand accounts, was 1.52% during the three months ended March 31, 2026, compared to 1.64% and 1.83% in the linked and prior year quarters, respectively.
Current report
The effective tax rate for the current and linked quarters was 21.5%, respectively, compared to 18.1% in the prior year quarter. The increase in the effective tax rate from the prior year quarter was due to an increase in state taxes from apportionment factors and a decrease in tax credit investments.
Current report
Provision and ACL
Current report
Nonperforming loans at March 31, 2026 decreased $17.9 million, or 22%, when compared to December 31, 2025. The decrease in nonperforming assets during the three months ended March 31, 2026 was primarily related to two loans totaling $17.5 million that went on nonaccrual in the second half of 2025 and were subsequently paid off in the first quarter 2026.
Current report
OREO
Current report
Four properties in OREO at March 31, 2026 with a carrying value of $46 million are currently under contract to sell.
Removed paragraphs (18)
Previous report
Allowance for Credit Losses
Previous report
•PPNR 1 - PPNR of $65.6 million for the third quarter of 2025 and $199.8 million for the nine months ended September 30, 2025 decreased $2.5 million from the linked quarter and increased $14.1 million from the prior year-to-date period. Excluding the anticipated insurance proceeds from the tax credit recapture included in noninterest income, the decrease from the linked quarter was primarily due to a decrease in noninterest income and an increase in noninterest expense, partially offset by higher net interest income from higher average balances in the loan and securities portfolios. Compared to the prior year-to-date period, the increase was primarily driven by higher net interest income that benefited from an increase in average interest-earning asset balances and lower rates paid on interest-bearing liabilities.
Previous report
•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 report
•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 report
Net Interest Income and Net Interest Margin
Previous report
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 report
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 report
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 report
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 report
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 report
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 report
The Company’s effective tax rate was 49.0% for the third quarter of 2025 and 31.5% for the nine months ended September 30, 2025. This compares to 20.0% for the linked quarter and prior year-to-date period, respectively. Included in the tax expense during the current quarter is $24.1 million in transferrable tax credits that were recaptured as discussed above and approximately $8.0 million of incremental tax liability attributable to the anticipated insurance proceeds from the insured recaptured credits. Excluding these items, the adjusted effective tax rate 4 was 20.0% and 19.4% for the three and nine months ended September 30, 2025, respectively.
Previous report
4 Adjusted effective tax rate is a non-GAAP measure. Refer to discussion and reconciliation of this measure in the accompanying financial tables.
Previous report
Provision and Allowance for Credit Losses
Previous report
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 report
Other real estate
Previous report
The following table summarizes the changes in other real estate:
Previous report
Adjusted Effective Tax Rate
Reworded paragraphs (39)
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, 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.
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 clients 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 in Israel, Iran and 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, 2025, 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 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.
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 2026 compared to the financial condition as of December 31, 2025. In addition, this discussion summarizes the significant factors affecting the results of operations of the Company for the three months ended March 31, 2026, compared to the linked fourth quarter of 2025 (“linked quarter”) and the results of operations, liquidity and cash flows for the three months ended March 31, 2026 compared to the same period in 2025 (“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, 2025.
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 $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.
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 ACL on loans was $142.1 million at March 31, 2026 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 $24.6 million. Conversely, the allowance would have increased $36.4 million using only the downside scenario.
Previous 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.
Current wording
•Noninterest expense -Noninterest expense of $115.1 million for the first quarter of 2026 increased $0.6 million and $15.4 million from the linked and prior year quarters, respectively. The increase from the prior year quarter was primarily driven by higher employee compensation cost, variable deposit costs and loan and legal expenses related to loan workouts and OREO.
Previous 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.
Current wording
•Loans – Total loans decreased $107.6 million, or 1%, to $11.7 billion at March 31, 2026, compared to $11.8 billion at December 31, 2025. Average loans totaled $11.8 billion for the three months ended March 31, 2026 compared to $11.2 billion for the three months ended March 31, 2025.
Previous 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.
Current wording
•Deposits – Total deposits decreased $84.9 million, to $14.5 billion at March 31, 2026 from $14.6 billion at December 31, 2025. Average deposits totaled $14.6 billion for the three months ended March 31, 2026 compared to $13.1 billion for the three months ended March 31, 2025. Noninterest-bearing deposit accounts represented 33% of total deposits and the loan to deposit ratio was 81% at March 31, 2026 and December 31, 2025, respectively.
Previous 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.
Current wording
•Stockholders’ equity – Total stockholders’ equity was $2.0 billion at March 31, 2026 and December 31, 2025, respectively, and the tangible common equity to tangible assets ratio 2 was 9.01% at March 31, 2026 compared to 9.07% at December 31, 2025. The Company and the Bank’s regulatory capital ratios exceeded the “well-capitalized” levels at March 31, 2026.
Previous 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.
Current wording
The Company’s Board of Directors (the “Board”) approved a quarterly dividend of $0.34 per common share, payable on June 30, 2026 to stockholders of record as of June 15, 2026. 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) March 15, 2026 to (but excluding) June 15, 2026. The dividend will be payable on June 15, 2026 to stockholders of record of Series A Preferred Stock as of May 29, 2026.
Previous 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.
Current wording
Net interest income on a tax equivalent basis of $169.5 million for the quarter ended March 31, 2026 decreased $2.2 million and increased $19.5 million from the linked and prior year quarters, respectively. The change from the linked and prior year quarters was related to the impact of lower short-term interest rates on loan yields and the cost of interest-bearing liabilities, in addition to growth in both interest-earning assets and interest-bearing liabilities. Net interest income also declined from the linked quarter due to two fewer days in the current quarter. Since September 2024, the Federal Reserve has reduced the federal funds target rate 175 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
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.
Current wording
NIM, on a tax equivalent basis, was 4.28% in the first quarter of 2026, an increase of two basis points and 13 basis points from the linked and prior year quarters, respectively.
Previous 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.
Current wording
Total noninterest income for the first quarter of 2026 was $19.1 million, a decrease of $6.3 million and an increase of $0.6 million from the linked and prior year quarters, respectively. The decrease from the linked quarter was primarily due to a seasonal decrease in tax credit income and a gain on OREO in the linked quarter that did not reoccur, partially offset by higher private equity fund distributions and a gain on the sale of the guaranteed portion of SBA loans included in other income. Compared to the prior year quarter, tax credit income decreased $2.8 million, partially offset by higher BOLI income and private equity fund distributions. Tax credit income varies based on transaction volumes and fair value changes on credits carried at fair value. Private equity fund distributions are not a consistent source of income and fluctuate based on distributions from the underlying funds.
Previous 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.
Current wording
Noninterest expense increased $0.6 million and $15.4 million from the linked and prior year quarters, respectively. Employee compensation and benefits increased $5.6 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, 2026. Deposit costs relate to certain businesses in the deposit verticals that receive an earnings credit allowance for deposit-related services provided to us. These earnings credit allowances are impacted by, among other things, interest rates and average balances. Deposit costs decreased $1.5 million from the linked quarter primarily due to the expiration of certain allowances that were not used. The decline in acquisition costs from the linked quarter is due to the completion of the Branch Acquisition that closed in the fourth quarter 2025.
Previous 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.
Current wording
The increase in noninterest expense from the prior year quarter was primarily due to an increase in the associate base as a result of the Branch Acquisition, merit increases throughout 2025 and 2026, an increase of $2.2 million in deposit costs due to higher earnings credit allowances and deposit vertical average balances, and an increase of $1.8 million in loan and legal expenses due to loan workouts and the foreclosure of certain properties.
Previous 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.
Current wording
Total assets were $17.2 billion at March 31, 2026, a decrease of $73.1 million from December 31, 2025 primarily due to a $107.6 million decrease in loans and a $47.4 million decrease in cash and cash equivalents, partially offset by a $99.2 million increase in investment securities. Total liabilities of $15.2 billion decreased $55.9 million from December 31, 2025 primarily due to an $84.9 million decrease in deposits.
Previous 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.
Current wording
At March 31, 2026, investment securities were $3.8 billion compared to $3.7 billion at December 31, 2025, or 22% of total assets for both periods. The portfolio is comprised of both available-for-sale and held-to-maturity securities.
Previous wording
The table below sets forth the carrying value of investment securities, excluding the allowance for credit losses:
Current wording
The table below sets forth the carrying value of investment securities, excluding the ACL:
Previous 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.
Current wording
Investment purchases in the first quarter of 2026 had a weighted average, tax equivalent yield of 4.51%. The average duration of the investment portfolio was 5.0 years at March 31, 2026. 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 $703.9 million.
Previous 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.
Current wording
Loans totaled $11.7 billion at March 31, 2026 compared to $11.8 billion at December 31, 2025. Loan sales of $25.4 million mitigated growth in the SBA category during the current quarter. Average revolving line draw utilization was 45% for the first quarter of 2026, compared to 44% for the year ended December 31, 2025.
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 nine months ended September 30, 2025, the guaranteed portion of SBA loans totaling $22.2 million and $78.0 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 months ended March 31, 2026, the guaranteed portion of SBA loans totaling $25.4 million were sold.
Previous 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.
Current wording
A provision for credit losses of $7.2 million was recognized for the first quarter of 2026, a decrease of $2.0 million and an increase of $2.1 million from the linked and prior year quarters, respectively. The provision for credit losses in the first quarter of 2026 was primarily related to the net charge-offs and qualitative adjustments to recognize the broader macroeconomic risks to the loan portfolio from the conflict in Iran.
Previous 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.
Current wording
The ACL on loans was 1.21% of total loans at March 31, 2026, compared to 1.19% of loans at December 31, 2025. Excluding guaranteed loans, the ACL on loans to total loans was 1.32%4 at March 31, 2026, compared to 1.29% at December 31, 2025.
Previous 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.
Current 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.
Previous 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.
Current wording
Total deposits were $14.5 billion at March 31, 2026, a decrease of $84.9 million from December 31, 2025. Brokered certificates of deposit at March 31, 2026 increased $2.8 million from December 31, 2025 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 $4.0 billion at March 31, 2026 from $3.8 billion at December 31, 2025 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 $1.4 billion and $1.3 billion at September 30, 2025 and December 31, 2024, respectively. The Company considers reciprocal accounts as customer-related deposits due to the customer relationship that generated the transaction.
Current wording
To provide clients 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 and $1.4 billion at March 31, 2026 and December 31, 2025, respectively. The Company considers reciprocal accounts as client-related deposits due to the client relationship that generated the transaction. At March 31, 2026, estimated uninsured deposits totaled $4.5 billion, or 31% of total deposits, compared to $4.6 billion, or 32% of total deposits, at December 31, 2025.
Previous 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.
Current wording
The total cost of deposits was 1.52% for the current quarter compared to 1.64% and 1.83% for the linked and prior year quarters, respectively.
Previous 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:
Current wording
Stockholders’ equity totaled $2.0 billion at March 31, 2026, a decrease of $17.2 million from December 31, 2025. Significant activity during the first three months of 2026 was as follows:
Previous wording
•Increase from net income of $146.6 million,
Current wording
•Increase from net income of $49.4 million,
Previous wording
•Increase in fair value of securities and cash flow hedges of $48.7 million,
Current wording
•Decrease in fair value of securities and cash flow hedges of $27.0 million,
Previous wording
•Decrease from dividends paid on common and preferred stock of $36.1 million, and
Current wording
•Decrease from dividends paid on common and preferred stock of $13.1 million, and
Previous wording
•Decrease from common stock repurchases of $10.6 million.
Current wording
•Decrease from common stock repurchases of $27.3 million.
Previous wording
The objective of liquidity management is to ensure we have the ability to generate sufficient cash or cash equivalents in a timely and cost-effective manner to meet our commitments as they become due. Typical demands on liquidity are changes in deposit levels, maturing time deposits which are not renewed, and fundings under credit commitments to customers. Funds are available from a number of sources, such as the core deposit base and loan and security repayments and maturities.
Current wording
The objective of liquidity management is to ensure we have the ability to generate sufficient cash or cash equivalents in a timely and cost-effective manner to meet our commitments as they become due. Typical demands on liquidity are changes in deposit levels, maturing time deposits which are not renewed, and fundings under credit commitments to clients. Funds are available from a number of sources, such as the core deposit base and loan and security repayments and maturities.
Previous 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.
Current wording
Liquidity from assets is available primarily from cash balances and the investment portfolio. Cash and interest-bearing deposits with other banks totaled $634.5 million at March 31, 2026, compared to $681.9 million at December 31, 2025. Investment securities are another important tool in liquidity planning. Securities totaled $3.8 billion and $3.7 billion at March 31, 2026 and December 31, 2025, respectively, and included $1.6 billion and $1.7 billion at March 31, 2026 and December 31, 2025, 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 $78.0 million and $23.1 million were sold during the nine months ended September 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 $25.4 million and $31.3 million were sold during the three months ended March 31, 2026 and 2025, respectively.
Previous 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.
Current wording
Liability liquidity funding sources are available to increase financial flexibility. In addition to amounts borrowed at March 31, 2026, the Company could borrow an additional $1.5 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 $3.1 billion available from the Federal Reserve under a pledged loan agreement. The Company also has unsecured federal funds lines with eight correspondent banks totaling $135.0 million as of March 31, 2026.
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 $3.0 billion in unused commitments to extend credit as of September 30, 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.
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 $3.2 billion in unused commitments to extend credit as of March 31, 2026. 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, 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. The holding company maintains a revolving line of credit for an aggregate amount $25 million, all of which was available at September 30, 2025. The line of credit was renewed in the second quarter of 2025 and was effective as of February 22, 2025. The line of credit has a one-year term and 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. The holding company maintains a revolving line of credit for an aggregate amount $25 million, all of which was available at March 31, 2026. The line of credit was renewed in the first quarter of 2026, has a one-year term, has an interest rate of one-month Term SOFR plus 185 basis points, and the annual unused commitment fee is 0.40%. The proceeds can be used for general corporate purposes.
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, tangible book value per common share, return on average common equity, adjusted effective tax rate and tangible common equity to tangible assets 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 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, tangible book value per common share, return on average common equity and tangible common equity to tangible assets 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.
Previous wording
The Company considers its 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, tangible book value per common share, return on average common equity, adjusted effective tax rate and tangible common equity to tangible assets ratio, collectively “core performance measures,” presented in this report and the included tables as important measures of financial performance, even though they are non-GAAP measures, as they provide supplemental information by which to evaluate the impact of certain non-comparable items, and the Company’s operating performance on an ongoing basis. Core performance measures exclude certain other income and expense items, such as the FDIC special assessment, core conversion expenses, acquisition costs, accrued insurance proceeds anticipated to be received as a result of recaptured tax credits, the gain or loss on the sale of other real estate owned, and the gain or loss on sale of investment securities, that the Company believes to be not indicative of or useful to measure the Company’s operating performance on an ongoing basis. The attached tables contain a reconciliation of these core performance measures to the GAAP measures. The Company believes that the tangible common equity ratio provides useful information to investors about the Company’s capital strength even though it is considered to be a non-GAAP financial measure and is not part of the regulatory capital requirements to which the Company is subject.
Current wording
The Company considers its 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, tangible book value per common share, return on average common equity and tangible common equity to tangible assets ratio, collectively “core performance measures,” presented in this report and the included tables as important measures of financial performance, even though they are non-GAAP measures, as they provide supplemental information by which to evaluate the impact of certain non-comparable items, and the Company’s operating performance on an ongoing basis. Core performance measures exclude certain other income and expense items, such as the FDIC special assessment, acquisition costs, the net gain or loss on OREO, and the net gain or loss on sale of investment securities, that the Company believes to be not indicative of or useful to measure the Company’s operating performance on an ongoing basis. The attached tables contain a reconciliation of these core performance measures to the GAAP measures. The Company believes that the tangible common equity ratio provides useful information to investors about the Company’s capital strength even though it is considered to be a non-GAAP financial measure and is not part of the regulatory capital requirements to which the Company is subject.
Previous wording
Return on Average Common Equity, Return on Average Tangible Common Equity (ROATCE) and Return on Average Assets (ROAA)
Current wording
Adjusted Return on Average Common Equity, Return on Average Tangible Common Equity (ROATCE) and Adjusted Return on Average Assets (ROAA)
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
The following table summarizes the changes in OREO: