ENTERPRISE FINANCIAL SERVICES CORP
For the period ended Jun 30, 2026. Filed Jul 31, 2026.
View on SEC.govAbout this filing
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.
Jun 30, 2026 · Filed Jul 31, 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 2026-03-31; filed 2026-05-01.
0001025835-26-000108
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ANDCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-07-31.
0001025835-26-000146
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 122 previous paragraphs and 127 current paragraphs.
82 unchanged; 33 reworded; 11 added; 7 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 26 previous and 29 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 (11)
Current report
•Net interest income and NIM -Net interest income of $168.7 million for the second quarter of 2026 and $334.9 million for the six months ended June 30, 2026 increased $2.6 million and $34.6 million from the linked and prior year-to-date periods, respectively. Compared to the linked quarter, net interest income benefitted from higher loan and securities yields, as well as an additional day during the period. The increase from the prior year-to-date period was primarily due to higher interest-earning asset balances and lower rates paid on interest-bearing liabilities, partially offset by lower yields on loans. NIM was 4.30% for the second quarter 2026 and 4.29% for the six months ended June 30, 2026, compared to 4.28% and 4.18% for the linked and prior year-to-date periods, respectively.
Current report
•Noninterest income -Noninterest income of $13.5 million for the second quarter of 2026 and $32.6 million for the six months ended June 30, 2026 decreased $5.6 million and $6.5 million from the linked and prior year-to-date periods, respectively. The decrease in noninterest income from the linked and prior year-to-date periods was primarily due to a net loss on sales of investment securities and a decrease in tax credit income. During the quarter, the Company executed balance sheet transactions to optimize future earnings. This included the sale of investment securities with a tax-equivalent yield of 3.13% and the reinvestment of the proceeds into new securities with a tax-equivalent yield of 5.20%. The Company also sold Visa Class B-1 common stock along with a parcel of land.
Current report
•Subordinated notes - In the second quarter 2026, the Company issued $175.0 million of 6.25% fixed-to-floating rate subordinated notes due in 2036 for general corporate purposes and to bolster capital. The notes are callable starting in July 2031 and are included in tier 2 capital.
Current report
On July 20, 2026, the Company’s Board of Directors (the “Board”) approved the repurchase of up to 2,000,000 additional shares of the Company’s common stock, which are in addition to the 249,400 shares available for repurchase under the Company’s stock repurchase plan announced in May 2022 for 2,000,000 shares of common stock.
Current report
Net interest income on a tax-equivalent basis of $172.1 million for the quarter ended June 30, 2026 and $341.6 million for the six months ended June 30, 2026 increased $2.7 million and $36.1 million from the linked and prior year-to-date periods, respectively. The increase from the linked quarter reflects higher loan and securities yields, and the current quarter benefitted by one additional day compared to the linked quarter. These increases were partially offset by an increase in the average balance of interest-bearing liabilities, primarily wholesale funding sources including subordinated notes and FHLB advances. The increase from the prior year-to-date period was primarily related to growth in interest-earning assets and lower short-term interest rates on the cost of interest-bearing liabilities, partially offset by lower loan yields.
Current report
Interest expense increased $1.7 million and decreased $10.9 million from the linked and prior year-to-date periods, respectively. Compared to the linked quarter, the increase was primarily due to higher average subordinated debt and other borrowed funds balances. Compared to the prior year-to-date period, the decrease was primarily due to a 44 basis point decline in the cost of interest-bearing liabilities, including a 58 basis point decrease in the average cost of money market accounts, partially offset by a $816.7 million increase in average interest-bearing liabilities balances. The total cost of deposits, including noninterest-bearing demand accounts, was 1.53% and 1.52% during the three and six months ended June 30, 2026, respectively, compared to 1.52% and 1.82% in the linked and prior year-to-date periods, respectively.
Current report
Total noninterest income for the second quarter of 2026 was $13.5 million and $32.6 million for the six months ended June 30, 2026, a decrease of $5.6 million and $6.5 million from the linked and prior year-to-date periods, respectively. The decrease from the linked and prior year-to-date periods was primarily due to lower tax credit income and a $2.1 million net loss on sales of investment securities, partially offset by a $0.7 million gain on sales of fixed assets. The decrease from the linked quarter was also due to a gain on the sale of guaranteed SBA loans that did not reoccur in the current quarter. 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. Changes in the interest rate environment had a negative impact on tax credit projects carried at fair value. During the period, the Company sold investment securities with a tax-equivalent yield of 3.13% and reinvested the proceeds into securities with a tax-equivalent yield of approximately 5.20%. A pre-tax loss of approximately $6 million on the sale of these securities was partially offset by a pre-tax gain of approximately $4.4 million from the sales of Visa Class B-1 common stock and a piece of land.
Current report
A provision for credit losses of $14.2 million was recognized for the second quarter of 2026 and $21.5 million for the six months ended June 30, 2026, an increase of $7.0 million and $12.8 million from the linked and prior year-to-date periods, respectively. The provision for credit losses in the second quarter 2026 and six months ended June 30, 2026 was primarily related to net charge-offs. Most of these losses came from two accounts: an $8.3 million C&I relationship in Texas and a $5.2 million Sponsor Finance relationship. Annualized net charge-offs totaled 46 basis points of average loans in the current quarter, compared to 15 basis points in the linked quarter and two basis points of average loans in the prior year quarter.
Current report
(2)Annualized.
Current report
The Company has an effective automatic shelf registration statement on Form S-3 allowing for the issuance of various forms of equity and debt securities. The Company’s ability to offer securities pursuant to the registration statement depends on market conditions and the Company’s continuing eligibility to use the Form S-3 under rules of the SEC.
Current report
On June 17, 2026, the Company issued $175.0 million aggregate principal amount of 6.25% fixed-to-floating rate subordinated notes with a maturity date of July 1, 2036, which initially bear an annual interest rate of 6.25%, with interest payable semiannually. Beginning July 1, 2031, the interest rate resets quarterly to the three-month term SOFR rate plus a spread of 232 basis points, payable quarterly.
Removed paragraphs (7)
Previous 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.
Previous 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.
Previous report
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 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.
Previous report
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 report
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 report
Four properties in OREO at March 31, 2026 with a carrying value of $46 million are currently under contract to sell.
Reworded paragraphs (33)
Previous 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.
Current wording
The following discussion describes the significant changes to the financial condition of the Company that have occurred during the first six 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 June 30, 2026, compared to the linked first quarter of 2026 (“linked quarter”) and the results of operations, liquidity and cash flows for the six months ended June 30, 2026 compared to the same period in 2025 (“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, 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 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.
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 $139.2 million at June 30, 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 $26.9 million. Conversely, the allowance would have increased $40.5 million using only the downside scenario.
Previous wording
Below are highlights of the Company’s financial performance for the periods indicated.
Current wording
Below are highlights of the Company’s financial performance for the periods indicated. Comparisons to prior year periods are affected by the acquisition of 12 branches in Arizona and Kansas in the fourth quarter 2025 (the “Branch Acquisition”).
Previous wording
•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 wording
•PPNR 1 - PPNR of $68.2 million for the second quarter of 2026 and $138.6 million for the six months ended June 30, 2026 decreased $2.2 million from the linked quarter and increased $4.4 million from the prior year-to-date period. The decrease from the linked quarter was primarily due to a decrease in noninterest income. Compared to the prior year-to-date period, the increase was primarily due to higher net interest income from organic and acquired loan growth, continued investment in the securities portfolio and lower rates paid on interest-bearing liabilities, partially offset by a decline in asset yields due to lower short-term interest rates.
Previous 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.
Current wording
•Noninterest expense -Noninterest expense of $115.7 million for the second quarter of 2026 and $230.9 million for the six months ended June 30, 2026 increased $0.6 million and $25.4 million from the linked and prior year-to-date periods, respectively. The increase from the prior year-to-date period was primarily driven by higher employee compensation cost and headcount from the Branch Acquisition, variable deposit costs, and loan and legal expenses related to loan workouts and OREO.
Previous 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.
Current wording
•Loans – Total loans increased $92.1 million, or 1%, to $11.9 billion at June 30, 2026, compared to $11.8 billion at December 31, 2025. Average loans totaled $11.8 billion for the six months ended June 30, 2026 compared to $11.3 billion for the six months ended June 30, 2025.
Previous 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.
Current wording
•Deposits – Total deposits decreased $106.8 million, to $14.5 billion at June 30, 2026 from $14.6 billion at December 31, 2025. Average deposits totaled $14.6 billion for the six months ended June 30, 2026 compared to $13.2 billion for the six months ended June 30, 2025. Noninterest-bearing deposit accounts represented 34% of total deposits and the loan to deposit ratio was 82% at June 30, 2026, compared to 33% and 81%, respectively, at December 31, 2025.
Previous wording
•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 wording
•Asset quality – The ACL on loans to total loans was 1.17% at June 30, 2026, compared to 1.19% at December 31, 2025. The ratio of nonperforming assets to total assets was 0.92% at June 30, 2026 compared to 0.95% at December 31, 2025. A provision for credit losses of $14.2 million was recorded in the second quarter of 2026 and $21.5 million for the six months ended June 30, 2026. This compares to $7.2 million and $8.7 million in the linked and prior year-to-date periods, respectively.
Previous 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.
Current wording
•Stockholders’ equity – Total stockholders’ equity was $2.0 billion at June 30, 2026 and December 31, 2025, respectively, and the tangible common equity to tangible assets ratio 2 was 9.04% at June 30, 2026 compared to 9.07% at December 31, 2025. The Company and the Bank’s regulatory capital ratios exceeded the “well-capitalized” levels at June 30, 2026.
Previous 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.
Current wording
The Board approved a quarterly dividend of $0.35 per common share, payable on September 30, 2026 to stockholders of record as of September 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) June 15, 2026 to (but excluding) September 15, 2026. The dividend will be payable on September 15, 2026 to stockholders of record of Series A Preferred Stock as of August 31, 2026.
Previous wording
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 wording
Tax-equivalent interest income increased $4.3 million and $25.2 million from the linked and prior year-to-date periods, respectively. Compared to the linked quarter, interest income increased primarily due to a five and eight basis point increase in yield on loans and securities, respectively, and a $51.2 million increase in average investment securities balances. Compared to the prior year-to-date period, interest-earning assets increased $1.3 billion, including a $477.0 million increase in average loan balances and an $768.0 million increase in average securities balances, and the yield on securities increased 36 basis points. These increases were partially offset by a 19 basis point decline in the loan yield to 6.41%, from 6.60% in the prior year-to-date period. The Company sold approximately $180 million of investment securities with a tax-equivalent yield of 3.13% and reinvested the proceeds into new securities with a tax-equivalent yield of 5.20%. This transaction improved the overall tax-equivalent yield on securities by 200 basis points and will increase net interest income by $3.5 million annually.
Previous 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.
Current wording
NIM, on a tax-equivalent basis, was 4.30% in the second quarter of 2026 and 4.29% for the six months ended June 30, 2026, an increase of two basis points and 11 basis points from the linked and prior year-to-date periods, respectively.
Previous 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.
Current wording
Noninterest expense increased $0.6 million and $25.4 million from the linked and prior year-to-date periods, respectively. Employee compensation and benefits decreased $2.6 million from the linked quarter primarily due to employer payroll taxes and certain other benefits that are seasonally higher in the first quarter each year and accrued paid time off benefits that fluctuate based on usage. 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 increased $1.8 million from the linked quarter primarily due to the expiration of certain unused allowances that reduced expense in the first quarter.
Previous 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.
Current wording
The increase in noninterest expense from the prior year-to-date period 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 $5.2 million in deposit costs due to higher earnings credit allowances and deposit vertical average balances, and an increase of $2.5 million in loan and legal expenses due to loan workouts and the foreclosure of certain properties.
Previous wording
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 wording
The Company’s effective tax rate was 21.7% for the second quarter of 2026 and 21.6% for the six months ended June 30, 2026. This compares to the linked and prior year-to-date effective tax rate of 21.5% and 19.1%. The increase in the effective tax rate from the prior year-to-date period was due to an increase in state taxes from apportionment factors and a decrease in tax credit investments.
Previous 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.
Current wording
Total assets were $17.4 billion at June 30, 2026, an increase of $98.1 million from December 31, 2025 primarily due to a $102.2 million and $92.1 million increase in securities and loans respectively, partially offset by a $129.8 million decrease in cash and cash equivalents. Total liabilities of $15.4 billion increased $96.7 million from December 31, 2025 primarily due to the issuance of $175 million of subordinated notes, partially offset by a $106.8 million decrease in deposits.
Previous 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.
Current wording
Investment purchases in the second quarter of 2026 had a weighted average, tax-equivalent yield of 5.03%. The average duration of the investment portfolio was 5.0 years at June 30, 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 $645.8 million.
Previous 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.
Current wording
Loans totaled $11.9 billion at June 30, 2026 compared to $11.8 billion at December 31, 2025. Average revolving line draw utilization was 47% for the second 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 months ended March 31, 2026, the guaranteed portion of SBA loans totaling $25.4 million were sold.
Current wording
SBA loans are also generated on a national basis, and primarily consist of loans collateralized by first lien, owner-occupied real estate properties. These loans predominantly have a 75% guarantee from the SBA. The Company may sell the guaranteed portion of the loan and retain servicing rights, and in the six months ended June 30, 2026, the guaranteed portion of SBA loans totaling $25.4 million were sold.
Previous 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.
Current wording
The ACL on loans was 1.17% of total loans at June 30, 2026, compared to 1.19% of loans at December 31, 2025. Excluding guaranteed loans, the ACL on loans to total loans was 1.27%4 at June 30, 2026, compared to 1.29% at December 31, 2025.
Previous wording
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 wording
Nonperforming loans at June 30, 2026 decreased $6.7 million, or 8%, when compared to December 31, 2025. The decrease in nonperforming assets during the six months ended June 30, 2026 was primarily related to charge-offs and 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. The decrease in nonperforming loans was partially offset by additions to nonperforming loans, including a $16.0 million CRE relationship and a $5.8 million C&I relationship that went on nonaccrual during the period.
Previous 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.
Current wording
Total deposits were $14.5 billion at June 30, 2026, a decrease of $106.8 million from December 31, 2025. Brokered certificates of deposit at June 30, 2026 increased $14.4 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 $4.1 billion at June 30, 2026 from $3.8 billion at December 31, 2025 due to continued success at generating organic deposit growth.
Previous 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.
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 $1.2 billion and $1.4 billion at June 30, 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 June 30, 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 1.52% for the current quarter compared to 1.64% and 1.83% for the linked and prior year quarters, respectively.
Current wording
The total cost of deposits was 1.53% for the current quarter and 1.52% for the six months ended June 30, 2026, compared to 1.52% and 1.82% for the linked and prior year-to-date periods, respectively.
Previous 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:
Current wording
Stockholders’ equity totaled $2.0 billion at June 30, 2026, an increase of $1.5 million from December 31, 2025. Significant activity during the first six months of 2026 was as follows:
Previous wording
•Increase from net income of $49.4 million,
Current wording
•Increase from net income of $90.3 million,
Previous wording
•Decrease in fair value of securities and cash flow hedges of $27.0 million,
Current wording
•Decrease in fair value of securities and cash flow hedges of $19.1 million,
Previous wording
•Decrease from dividends paid on common and preferred stock of $13.1 million, and
Current wording
•Decrease from dividends paid on common and preferred stock of $26.4 million, and
Previous wording
•Decrease from common stock repurchases of $27.3 million.
Current wording
•Decrease from common stock repurchases of $50.3 million.
Previous 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.
Current wording
Liquidity from assets is available primarily from cash balances and the investment portfolio. Cash and interest-bearing deposits with other banks totaled $552.1 million at June 30, 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 June 30, 2026 and December 31, 2025, respectively, and included $1.6 billion and $1.7 billion at June 30, 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 $25.4 million and $31.3 million were sold during the three months ended March 31, 2026 and 2025, 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 $55.7 million were sold during the six months ended June 30, 2026 and 2025, respectively.
Previous 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.
Current wording
Liability liquidity funding sources are available to increase financial flexibility. In addition to amounts borrowed at June 30, 2026, the Company could borrow an additional $1.2 billion from the FHLB of Des Moines under blanket loan pledges and has additional real estate loans that could be pledged. The Company also has $3.0 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 June 30, 2026.
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 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.
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 acquisition costs, the net gain or loss on sales of fixed assets, the net gain or loss on OREO, and the net gain or loss on sales 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.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
(1)Excludes loans held for sale.