Enterprise Financial Services Corporation

10/30/2026 | Press release | Distributed by Public on 10/30/2026 13:22

Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Forward Looking Statements
This Quarterly Report on Form 10-Q contains information and statements that are considered "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements are based on management's current expectations and beliefs concerning future developments and their potential effects on the Company, and include, without limitation, statements about the Company's plans, strategies, goals, objectives, expectations, or consequences of statements about the future performance, operations, products and services of the Company and its subsidiaries, as well as statements about the Company's expectations regarding revenue and asset growth, financial performance and profitability, loan and deposit growth, yields and returns, loan diversification and credit management, products and services, stockholder value creation and the impact of acquisitions. Forward-looking statements are typically identified with the use of terms such as "may," "might," "will," "would," "should," "expect," "plan," "anticipate," "believe," "estimate," "predict," "potential," "could," "continue," "intend," and the negative and other variations of these terms and similar words and expressions, although some forward-looking statements may be expressed differently. Forward-looking statements are inherently subject to risks and uncertainties and our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. You should be aware that our actual results could differ materially from those contained in the forward-looking statements.
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, debt ceiling and tax matters, and any slowdown in global economic growth, risks associated with rapid increases or decreases in prevailing interest rates, our ability to attract and retain deposits and access to other sources of liquidity, consolidation in the banking industry, competition from banks and other financial institutions, the Company's ability to attract and retain relationship officers and other key personnel, burdens imposed by federal and state regulation, changes in legislative or regulatory requirements, as well as current, pending or future legislation or regulation that could have a negative effect on our revenue and businesses, including rules and regulations relating to bank products and financial services, changes in accounting policies and practices or accounting standards, natural disasters (such as wildfires and earthquakes), terrorist activities, war and geopolitical instability (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, cybersecurity threats and the cost of defending against them; 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.
Readers are cautioned not to place undue reliance on forward-looking statements, which reflect management's analysis and expectations only as of the date of such statements. Forward-looking statements speak only as of the date they are made, and the Company does not intend, and undertakes no obligation, to publicly revise or update forward-looking statements after the date of this report, whether as a result of new information, future events or otherwise, except as required by federal securities law. You should understand that it is not possible to predict or identify all risk factors. Readers should carefully review all disclosures we file from time to time with the SEC which are available on the Company's website at www.enterprisebank.com under "Investor Relations."
Introduction
The following discussion describes the significant changes to the financial condition of the Company that have occurred during the first nine 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 September 30, 2026, compared to the linked second quarter of 2026 ("linked quarter") and the results of operations, liquidity and cash flows for the nine months ended September 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.
Critical Accounting Policies and Estimates
The Company's critical accounting policies are considered important to the understanding of the Company's financial condition and results of operations. These accounting policies require management's most difficult, subjective and complex judgments about matters that are inherently uncertain. Because these estimates and judgments are based on current circumstances, they may change over time or prove to be inaccurate based on actual experience. If different assumptions or conditions were to prevail, and depending upon the severity of such changes, the possibility of a materially different financial condition and/or results of operations could reasonably be expected.
A full description of our critical accounting policies and the impact and any associated risks related to those policies on our business operations are discussed throughout "Management's Discussion and Analysis of Financial Condition and Results of Operations," where such policies affect our reported and expected financial results. For a detailed discussion on the application of these and other accounting policies, see the Company's Annual Report on Form 10-K for the year ended December 31, 2025.
The Company has prepared all of the consolidated financial information in this report in accordance with GAAP. The Company makes estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Such estimates include the valuation of loans, goodwill, intangible assets, and other long-lived assets, along with assumptions used in the calculation of income taxes, among others. These estimates and assumptions are based on management's best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using loss experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. We adjust such estimates and assumptions when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in estimates resulting from continuing changes in the economic environment will be reflected in the financial statement in future periods. There can be no assurances that actual results will not differ from those estimates.
ACL
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 $144.5 million at September 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 $26.3 million. Conversely, the allowance would have increased $41.7 million using only the downside scenario.
Executive Summary
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"). Noninterest income for the prior year period also included $32.1 million of anticipated insurance proceeds from a pending claim related to a recapture event with respect to a $24.1 million solar tax credit that the Company purchased and applied to prior taxable periods. The anticipated proceeds from the insurance policy and tax liability resulting from the recapture event, both totaling $32.1 million, are included in "Noninterest Income" and "Income Tax Expense", respectively, in the Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2025.
($ in thousands, except per share data) Three months ended Nine months ended
September 30,
2026 		June 30,
2026 		September 30,
2025 		September 30,
2026 		September 30,
2025
EARNINGS
Total interest income $ 238,234 $ 229,313 $ 225,390 $ 692,638 $ 656,137
Total interest expense 63,628 60,597 67,104 183,169 197,573
Net interest income 174,606 168,716 158,286 509,469 458,564
Provision for credit losses 18,107 14,210 8,447 39,560 17,101
Net interest income after provision for credit losses 156,499 154,506 149,839 469,909 441,463
Total noninterest income 13,214 13,478 48,624 45,780 87,711
Total noninterest expense 114,654 115,739 109,790 345,530 315,275
Income before income tax expense 55,059 52,245 88,673 170,159 213,899
Income tax expense 12,615 11,318 43,438 37,426 67,319
Net income $ 42,444 $ 40,927 $ 45,235 $ 132,733 $ 146,580
Preferred dividends 938 937 938 2,813 2,813
Net income available to common stockholders $ 41,506 $ 39,990 $ 44,297 $ 129,920 $ 143,767
Basic earnings per common share $ 1.15 $ 1.10 $ 1.20 $ 3.56 $ 3.89
Diluted earnings per common share $ 1.14 $ 1.09 $ 1.19 $ 3.54 $ 3.86
Return on average assets 0.95 % 0.95 % 1.11 % 1.02 % 1.23 %
Adjusted return on average assets1
0.98 % 0.98 % 1.12 % 1.04 % 1.24 %
Return on average common equity 8.37 % 8.10 % 9.29 % 8.75 % 10.45 %
Adjusted return on average common equity1
8.58 % 8.37 % 9.40 % 8.93 % 10.51 %
Return on average tangible common equity1
10.74 % 10.39 % 11.56 % 11.22 % 13.10 %
Adjusted return on average tangible common equity1
11.01 % 10.73 % 11.70 % 11.44 % 13.18 %
NIM (tax-equivalent) 4.30 % 4.30 % 4.23 % 4.29 % 4.20 %
Efficiency ratio 61.0 % 63.5 % 53.1 % 62.2 % 57.7 %
Core efficiency ratio1
58.9 % 61.1 % 61.0 % 60.1 % 59.7 %
Common dividend payout ratio2
30.70 % 31.19 % 26.05 % 28.81 % 23.32 %
Book value per common share $ 51.58 $ 54.30 $ 51.62
Tangible book value per common share1
$ 39.45 $ 42.30 $ 41.58
Average common equity to average assets 11.12 % 11.44 % 11.70 %
Tangible common equity to tangible assets1
8.13 % 9.04 % 9.60 %
ASSET QUALITY
Net charge-offs
$ 11,036 $ 13,555 $ 4,057 $ 28,998 $ 3,628
Nonperforming loans 87,270 76,144 127,878
Nonaccrual loans 87,173 75,958 78,831
Nonperforming assets 182,852 160,403 135,699
Classified assets 416,025 413,779 352,792
Total assets 17,792,510 17,399,009 16,402,405
Total loans 12,344,705 11,892,399 11,583,109
Classified assets to total assets 2.34 % 2.38 % 2.15 %
Nonperforming loans to total loans 0.71 % 0.64 % 1.10 %
Nonperforming assets to total assets 1.03 % 0.92 % 0.83 %
ACL on loans to total loans 1.17 % 1.17 % 1.29 %
Net charge-offs to average loans (annualized)
0.36 % 0.46 % 0.14 % 0.33 % 0.04 %
1 A non-GAAP measure. A reconciliation has been included in this section under the caption "Use of Non-GAAP Financial Measures."
2 Dividends per common share divided by diluted earnings per common share.
Financial results and other notable items include:
•PPNR1 - PPNR of $74.6 million for the third quarter of 2026 and $213.2 million for the nine months ended September 30, 2026 increased $6.4 million and $13.4 million from the linked and prior year-to-date periods, respectively. The increase from the linked and prior year-to-date periods was primarily due to an increase in net interest income. Compared to the prior year-to-date period, the increase was partially offset by an increase in noninterest expense.
•Net interest income and NIM - Net interest income of $174.6 million for the third quarter of 2026 and $509.5 million for the nine months ended September 30, 2026 increased $5.9 million and $50.9 million from the linked and prior year-to-date periods, respectively. Compared to the linked quarter, net interest income benefitted from organic loan growth, as well as an additional day during the period. Compared to the prior year-to-date period, the increase was primarily attributable to growth in average interest-earning assets and lower rates paid on interest-bearing liabilities, partially offset by higher average balances of interest-bearing liabilities. NIM was 4.30% for the third quarter 2026 and 4.29% for the nine months ended September 30, 2026, compared to 4.30% and 4.20% for the linked and prior year-to-date periods, respectively.
•Noninterest income - Noninterest income of $13.2 million for the third quarter of 2026 and $45.8 million for the nine months ended September 30, 2026 decreased $0.3 million and $41.9 million from the linked and prior year-to-date periods, respectively. Excluding the $32.1 million of anticipated insurance proceeds from the pending claim related to the tax credit recapture event included in the prior year-to-date period, noninterest income decreased $9.8 million. The decrease in noninterest income from the prior year-to-date period was primarily due to a decrease in tax credit income.
•Noninterest expense - Noninterest expense of $114.7 million for the third quarter of 2026 and $345.5 million for the nine months ended September 30, 2026 decreased $1.1 million from the linked quarter and increased $30.3 million from the prior year-to-date period. The decrease from the linked quarter was primarily driven by lower employee compensation cost, partially offset by an increase in loan and legal expenses related to OREO and loan workouts. 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, legal, foreclosure and property maintenance expenses related to OREO and loan workouts.
Balance sheet highlights:
•Loans - Total loans increased $544.4 million, or 5%, to $12.3 billion at September 30, 2026, compared to $11.8 billion at December 31, 2025. Average loans totaled $11.9 billion for the nine months ended September 30, 2026 compared to $11.4 billion for the nine months ended September 30, 2025.
•Deposits - Total deposits increased $517.6 million, to $15.1 billion at September 30, 2026 from $14.6 billion at December 31, 2025. Average deposits totaled $14.7 billion for the nine months ended September 30, 2026 compared to $13.3 billion for the nine months ended September 30, 2025. Noninterest-bearing deposit accounts represented 33% of total deposits and the loan to deposit ratio was 82% at September 30, 2026, compared to 33% and 81%, respectively, at December 31, 2025.
•Asset quality - The ACL on loans to total loans was 1.17% at September 30, 2026, compared to 1.19% at December 31, 2025. The ratio of nonperforming assets to total assets was 1.03% at September 30, 2026 compared to 0.95% at December 31, 2025. A provision for credit losses of $18.1 million was recorded in the third quarter of 2026 and $39.6 million for the nine months ended September 30, 2026. This compares to $14.2 million and $17.1 million in the linked and prior year-to-date periods, respectively.
1 PPNR is a non-GAAP measure. Refer to discussion and reconciliation of this measure in the accompanying financial tables.
•Stockholders' equity - Total stockholders' equity was $1.9 billion at September 30, 2026, compared to $2.0 billion at December 31, 2025, and the tangible common equity to tangible assets ratio2 was 8.13% at September 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 September 30, 2026.
The Board approved a quarterly dividend of $0.36 per common share, payable on December 31, 2026 to stockholders of record as of December 15, 2026. The Board also declared a cash dividend of $12.50 per share of Series A Preferred Stock (or $0.3125 per depositary share) representing a 5% per annum rate for the period commencing (and including) September 15, 2026 to (but excluding) December 15, 2026. The dividend will be payable on December 15, 2026 to stockholders of record of Series A Preferred Stock as of November 30, 2026.
2 Tangible common equity to tangible assets ratio is a non-GAAP measure. Refer to discussion and reconciliation of this measure in the accompanying financial tables.
RESULTS OF OPERATIONS
Net Interest Income and NIM
Average Balance Sheet
The following tables present, for the periods indicated, certain information related to our average interest-earning assets and interest-bearing liabilities, as well as the corresponding interest rates earned and paid, all on a tax-equivalent basis. Average balances are presented on a daily average basis.
Three months ended September 30,
Three months ended June 30,
Three months ended September 30,
2026 2026 2025
($ in thousands) Average Balance Interest
Income/Expense 		Average
Yield/
Rate 		Average Balance Interest
Income/Expense 		Average
Yield/
Rate 		Average Balance Interest
Income/Expense 		Average
Yield/
Rate
Assets
Interest-earning assets:
Loans1, 2
$ 12,067,288 $ 195,309 6.42 % $ 11,775,879 $ 188,819 6.43 % $ 11,454,183 $ 191,589 6.64 %
Taxable securities 2,589,972 29,378 4.50 2,539,301 27,898 4.41 2,100,748 21,705 4.10
Non-taxable securities2
1,294,511 12,510 3.83 1,294,693 12,317 3.82 1,252,557 11,503 3.64
Total securities 3,884,483 41,888 4.28 3,833,994 40,215 4.21 3,353,305 33,208 3.93
Interest-earning deposits 465,119 4,343 3.70 431,044 3,697 3.44 328,392 3,638 4.40
Total interest-earning assets 16,416,890 241,540 5.84 16,040,917 232,731 5.82 15,135,880 228,435 5.99
Noninterest-earning assets 1,279,189 1,266,799 1,042,208
Total assets $ 17,696,079 $ 17,307,716 $ 16,178,088
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Interest-bearing demand accounts $ 3,641,074 $ 16,877 1.84 % $ 3,438,895 $ 15,149 1.77 % $ 3,298,022 $ 17,488 2.10 %
Money market accounts 4,047,970 26,316 2.58 4,009,504 25,788 2.58 3,706,891 28,734 3.08
Savings accounts 536,184 170 0.13 546,880 164 0.12 532,015 183 0.14
Certificates of deposit 1,697,479 14,648 3.42 1,698,565 14,569 3.44 1,609,346 15,210 3.75
Total interest-bearing deposits 9,922,707 58,011 2.32 9,693,844 55,670 2.30 9,146,274 61,615 2.67
Subordinated debentures and notes 262,795 4,408 6.65 120,277 2,061 6.87 136,895 2,683 7.78
FHLB advances 19,511 200 4.07 88,011 861 3.92 106,130 1,207 4.51
Securities sold under agreements to repurchase 169,322 914 2.14 200,060 1,162 2.33 159,039 1,155 2.88
Other borrowings 36,262 95 1.04 84,609 843 4.00 56,164 444 3.14
Total interest-bearing liabilities 10,410,597 63,628 2.42 10,186,801 60,597 2.39 9,604,502 67,104 2.77
Noninterest-bearing liabilities:
Demand deposits 5,065,373 4,914,670 4,458,028
Other liabilities 179,865 154,012 151,432
Total liabilities 15,655,835 15,255,483 14,213,962
Stockholders' equity 2,040,244 2,052,233 1,964,126
Total liabilities & stockholders' equity $ 17,696,079 $ 17,307,716 $ 16,178,088
Net interest income $ 177,912 $ 172,134 $ 161,331
Net interest spread 3.42 % 3.43 % 3.22 %
NIM 4.30 % 4.30 % 4.23 %
1 Average balances include nonaccrual loans. Interest income includes net loan fees of $2.0 million, $1.5 million, and $1.9 million for the three months ended September 30, 2026, June 30, 2026, and September 30, 2025, respectively.
2 Non-taxable income is presented on a fully tax-equivalent basis using a tax rate of approximately 25%. The tax-equivalent adjustments were $3.3 million, $3.4 million, and $3.0 million for each of the three months ended September 30, 2026, June 30, 2026, and September 30, 2025, respectively.
Nine months ended
September 30, 2026 September 30, 2025
($ in thousands) Average
Balance 		Interest
Income/
Expense 		Average Yield/ Rate Average
Balance 		Interest
Income/
Expense 		Average Yield/ Rate
Assets
Interest-earning assets:
Loans1, 2
$ 11,874,692 $ 569,508 6.41 % $ 11,351,848 $ 561,635 6.61 %
Taxable securities 2,537,213 83,384 4.39 1,964,496 59,270 4.03
Non-taxable securities2
1,296,933 37,217 3.84 1,181,460 31,360 3.55
Total securities 3,834,146 120,601 4.21 3,145,956 90,630 3.85
Interest-earning deposits 466,757 12,573 3.60 373,870 12,130 4.34
Total interest-earning assets 16,175,595 702,682 5.81 14,871,674 664,395 5.97
Noninterest-earning assets 1,264,114 1,023,889
Total assets $ 17,439,709 $ 15,895,563
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Interest-bearing demand accounts $ 3,511,893 $ 46,966 1.79 % $ 3,230,832 $ 51,697 2.14 %
Money market accounts 4,003,666 77,302 2.58 3,656,546 85,675 3.13
Savings accounts 540,544 486 0.12 533,084 555 0.14
Certificates of deposit 1,687,456 43,676 3.46 1,491,047 42,933 3.85
Total interest-bearing deposits 9,743,559 168,430 2.31 8,911,509 180,860 2.71
Subordinated debentures and notes 159,552 7,991 6.70 150,015 7,982 7.11
FHLB advances 37,810 1,117 3.95 96,396 3,295 4.57
Securities sold under agreements to repurchase 212,777 3,690 2.32 211,429 4,764 3.01
Other borrowings 71,712 1,941 3.62 42,932 672 2.09
Total interest-bearing liabilities 10,225,410 183,169 2.39 9,412,281 197,573 2.81
Noninterest-bearing liabilities:
Demand deposits 4,993,391 4,420,552
Other liabilities 164,714 151,199
Total liabilities 15,383,515 13,984,032
Stockholders' equity 2,056,194 1,911,531
Total liabilities & stockholders' equity $ 17,439,709 $ 15,895,563
Net interest income $ 519,513 $ 466,822
Net interest spread 3.42 % 3.16 %
NIM 4.29 % 4.20 %
1 Average balances include nonaccrual loans. Interest income includes net loan fees of $4.9 million and $5.3 million for the nine months ended September 30, 2026 and September 30, 2025, respectively.
2 Non-taxable income is presented on a fully tax-equivalent basis using a tax rate of approximately 25%. The tax-equivalent adjustments were $10.0 million and $8.3 million for the nine months ended September 30, 2026 and September 30, 2025, respectively.
Rate/Volume
The following table sets forth, on a tax-equivalent basis for the periods indicated, a summary of the changes in interest income and interest expense resulting from changes in yield/rates and volume.
Three months ended September 30, 2026
Nine months ended September 30, 2026
compared to compared to
Three months ended June 30, 2026
Nine months ended September 30, 2025
Increase (decrease) due to Increase (decrease) due to
($ in thousands)
Volume1
Rate2
Net
Volume1
Rate2
Net
Interest earned on:
Loans $ 6,695 $ (205) $ 6,490 $ 25,379 $ (17,506) $ 7,873
Taxable securities 717 763 1,480 18,460 5,654 24,114
Non-taxable securities3
2 191 193 3,201 2,656 5,857
Interest-earning deposits 328 318 646 2,710 (2,267) 443
Total interest-earning assets $ 7,742 $ 1,067 $ 8,809 $ 49,750 $ (11,463) $ 38,287
Interest paid on:
Interest-bearing demand accounts $ 1,020 $ 708 $ 1,728 $ 4,242 $ (8,973) (4,731)
Money market accounts 528 - 528 7,632 (16,005) (8,373)
Savings accounts (3) 9 6 8 (77) (69)
Certificates of deposit 9 70 79 5,332 (4,589) 743
Subordinated debentures and notes 2,415 (68) 2,347 492 (483) 9
FHLB advances (692) 31 (661) (1,780) (398) (2,178)
Securities sold under agreements to repurchase (163) (85) (248) 30 (1,104) (1,074)
Other borrowed funds (326) (422) (748) 608 661 1,269
Total interest-bearing liabilities 2,788 243 3,031 16,564 (30,968) (14,404)
Net interest income $ 4,954 $ 824 $ 5,778 $ 33,186 $ 19,505 52,691
1 Change in volume multiplied by yield/rate of prior period.
2 Change in yield/rate multiplied by volume of prior period.
3 Nontaxable income is presented on a tax-equivalent basis.
NOTE: The change in interest due to both rate and volume has been allocated to rate and volume changes in proportion to the relationship of the absolute dollar amounts of the change in each.
Net interest income on a tax-equivalent basis of $177.9 million for the quarter ended September 30, 2026 and $519.5 million for the nine months ended September 30, 2026 increased $5.8 million and $52.7 million from the linked and prior year-to-date periods, respectively. The increase from the linked quarter reflects organic loan growth and the benefit of one additional day compared to the linked quarter. These increases were partially offset by an increase in the average balance of interest-bearing liabilities. 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 higher average balances of interest-bearing liabilities.
Tax-equivalent interest income increased $8.8 million and $38.3 million from the linked and prior year-to-date periods, respectively. Compared to the linked quarter, interest income increased primarily due to a $291.4 million increase in average loans, a $50.5 million increase in average securities balances and one additional day during the period. Compared to the prior year-to-date period, interest-earning assets increased $1.3 billion, including a $688.2 million increase in average securities balances and a $522.8 million increase in average loan balances, and the yield on securities increased 36 basis points. These increases were partially offset by a 20 basis point decline in the loan yield to 6.41%, from 6.61% in the prior year-to-date period.
Interest expense increased $3.0 million and decreased $14.4 million from the linked and prior year-to-date periods, respectively. Compared to the linked quarter, the increase in interest expense was primarily due to the first full quarter of $175 million of subordinated debt issued in the linked quarter and higher interest-bearing demand account balances, partially offset by the redemption of $7.7 million of 10.2% fixed rate trust preferred securities in the current quarter. Compared to the prior year-to-date period, the decrease was primarily due to a 42 basis point decline in the cost of interest-bearing liabilities, including a 55 basis point decrease in the average cost of money market accounts, partially offset by a $813.1 million increase in average balances of interest-bearing liabilities. The total cost of deposits, including noninterest-bearing demand accounts, was 1.54% and 1.53% during the three and nine months ended September 30, 2026, respectively, compared to 1.53% and 1.81% in the linked and prior year-to-date periods, respectively.
NIM, on a tax-equivalent basis, was 4.30% in the third quarter of 2026 and 4.29% for the nine months ended September 30, 2026, stable with the linked quarter and an increase of nine basis points from the prior year-to-date period.
Noninterest Income
The following table presents a comparative summary of the major components of noninterest income for the periods indicated.
Linked quarter comparison Prior year comparison
Quarter ended Nine months ended
($ in thousands) September 30,
2026 		June 30, 2026 Increase (decrease) September 30,
2026 		September 30, 2025 Increase (decrease)
Deposit service charges $ 5,407 $ 5,477 $ (70) (1) % $ 16,140 $ 14,295 $ 1,845 13 %
Wealth management revenue 2,864 2,804 60 2 % 8,380 7,814 566 7 %
Card services revenue 2,621 2,545 76 3 % 7,701 7,374 327 4 %
Tax credit income (loss)
(5,030) (1,733) (3,297) (190) % (6,942) 4,517 (11,459) (254) %
Anticipated insurance recoveries - - - - % - 32,112 (32,112) (100) %
Other income 7,352 4,385 2,967 68 % 20,501 21,599 (1,098) (5) %
Total noninterest income $ 13,214 $ 13,478 $ (264) (2) % $ 45,780 $ 87,711 $ (41,931) (48) %
Total noninterest income for the third quarter of 2026 was $13.2 million and $45.8 million for the nine months ended September 30, 2026, a decrease of $0.3 million and $41.9 million from the linked and prior year-to-date periods, respectively. The decrease from the linked quarter was primarily due to lower tax credit income and a $1.4 million net loss on OREO, partially offset by a $3.8 million increase in rental income from OREO and a $2.1 million net loss on sales of investment securities in the linked quarter that did not reoccur included in 'Other income' in the table above. 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.
Compared to the prior year-to-date period, the decrease 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 recognized in the prior year-to-date period that did not reoccur, and a $11.5 million decrease in tax credit income.
Noninterest Expense
The following table presents a comparative summary of the major components of noninterest expense for the periods indicated.
Linked quarter comparison Prior year comparison
Quarter ended Nine months ended
($ in thousands) September 30, 2026 June 30, 2026 Increase (decrease) September 30, 2026 September 30, 2025 Increase
(decrease)
Employee compensation and benefits $ 50,581 $ 53,114 $ (2,533) (5) % $ 159,454 $ 148,012 $ 11,442 8 %
Deposit costs 27,482 27,832 (350) (1) % 81,310 75,760 5,550 7 %
Occupancy 5,893 5,909 (16) - % 17,704 14,390 3,314 23 %
Data processing 5,655 5,999 (344) (6) % 17,298 14,544 2,754 19 %
Professional fees 1,675 1,965 (290) (15) % 5,211 6,377 (1,166) (18) %
Other expense 23,368 20,920 2,448 12 % 64,553 56,192 8,361 15 %
Total noninterest expense $ 114,654 $ 115,739 $ (1,085) (1) % $ 345,530 $ 315,275 $ 30,255 10 %
Efficiency ratio 61.0 % 63.5 % (3) % 62.2 % 57.7 % 4 %
Core efficiency ratio3 58.9 % 61.1 % (2) % 60.1 % 59.7 % - %
Noninterest expense decreased $1.1 million and increased $30.3 million from the linked and prior year-to-date periods, respectively. Employee compensation and benefits decreased $2.5 million from the linked quarter primarily due to a lower associate base and a reduction in variable compensation accruals, partially offset by an increase in loan, legal, foreclosure and property maintenance expenses related to OREO and loan workouts.
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 and merit increases throughout 2025 and 2026, an increase of $5.6 million in deposit costs due to higher deposit vertical average balances, and an increase of $4.9 million in loan, legal, foreclosure and property maintenance expenses related to OREO and loan workouts included in 'Other expense' in the table above. 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.
Income Taxes
The Company's effective tax rate was 22.9% for the third quarter of 2026 and 22.0% for the nine months ended September 30, 2026. This compares to the linked and prior year-to-date effective tax rate of 21.7% and 31.5%. Included in the tax expense during the prior year-to-date period is $24.1 million in transferrable tax credits that were recaptured and approximately $8.0 million of incremental tax liability attributable to the anticipated insurance proceeds from the insured recaptured credits. Excluding these items, the adjusted effective tax rate3 was 19.4% for the nine months ended September 30, 2025. The increase in the effective tax rate from the linked and prior year-to-date periods was due to an increase in state taxes.
3 Core efficiency ratio and adjusted effective tax rate are non-GAAP measures. Refer to discussion and reconciliation of these measures in the accompanying financial tables.
Summary Balance Sheet
($ in thousands) September 30, 2026 December 31, 2025 Increase (decrease)
Cash and cash equivalents $ 487,874 $ 681,902 $ (194,028) (28) %
Securities 3,760,680 3,729,992 30,688 1 %
Loans 12,344,705 11,800,338 544,367 5 %
Assets 17,792,510 17,300,884 491,626 3 %
Deposits 15,126,964 14,609,342 517,622 4 %
Liabilities 15,875,184 15,261,498 613,686 4 %
Stockholders' equity 1,917,326 2,039,386 (122,060) (6) %
Total assets were $17.8 billion at September 30, 2026, an increase of $491.6 million from December 31, 2025 primarily due to a $544.4 million increase in the loan portfolio, partially offset by a $194.0 million decrease in cash and cash equivalents. Total liabilities of $15.9 billion increased $613.7 million from December 31, 2025 primarily due to a $517.6 million increase in deposits and the issuance of $175 million of subordinated notes in the second quarter 2026.
Investment Securities
At September 30, 2026, investment securities were $3.8 billion or 21% of total assets, compared to $3.7 billion or 22% of total assets at December 31, 2025. The portfolio is comprised of both available-for-sale and held-to-maturity securities.
The table below sets forth the carrying value of investment securities, excluding the ACL:
September 30, 2026 December 31, 2025
($ in thousands) Amount % Amount %
Obligations of U.S. government sponsored enterprises $ 134,581 3.6 % $ 182,572 4.9 %
Obligations of states and political subdivisions 1,410,668 37.5 % 1,492,904 40.0 %
Agency mortgage-backed securities 1,955,017 52.0 % 1,753,150 47.0 %
U.S. treasury bills 131,308 3.5 % 170,984 4.6 %
Corporate debt securities 129,271 3.4 % 130,527 3.5 %
Total $ 3,760,845 100.0 % $ 3,730,137 100.0 %
Net Unrealized Losses
($ in thousands) September 30, 2026 December 31, 2025
Available-for-sale securities $ (251,071) $ (83,258)
Held-to-maturity securities (116,265) (35,288)
Total $ (367,336) $ (118,546)
Investment purchases in the third quarter of 2026 had a weighted average, tax-equivalent yield of 4.74%. The average duration of the investment portfolio was 5.2 years at September 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 $675.6 million.
Loans by Type
The Company has a diversified loan portfolio, with no particular concentration of credit in any one economic sector; however, a large part of the portfolio, including the C&I category, is secured by real estate. The ability of the Company's borrowers to honor their contractual obligations is partially dependent upon the local economy and its effect on the real estate market.
The following table sets forth the composition of the loan portfolio by type of loans:
($ in thousands) September 30, 2026 December 31, 2025 Increase (decrease)
C&I $ 5,467,434 $ 5,231,616 $ 235,818 5 %
CRE - investor owned 3,234,368 2,984,858 249,510 8 %
CRE - owner occupied 2,490,751 2,468,963 21,788 1 %
Construction and land development 744,787 687,584 57,203 8 %
Residential real estate 357,184 367,682 (10,498) (3) %
Consumer 50,181 59,635 (9,454) (16) %
Total loans $ 12,344,705 $ 11,800,338 $ 544,367 5 %
Loans totaled $12.3 billion at September 30, 2026 compared to $11.8 billion at December 31, 2025. Average revolving line draw utilization was 47% for the third quarter of 2026, compared to 44% for the year ended December 31, 2025.
The following table sets forth additional information on certain categories of loans that are included in total loans above at the periods indicated:
($ in thousands) September 30, 2026 December 31, 2025 Increase (decrease)
SBA Loans $ 1,245,288 $ 1,262,456 $ (17,168) (1) %
Sponsor finance 713,614 694,905 18,709 3 %
Life insurance premium financing 1,349,925 1,187,128 162,797 14 %
Tax credits 749,810 802,818 (53,008) (7) %
Sponsor finance, life insurance premium financing, and tax credits lending consist primarily of C&I loans. Sponsor finance and life insurance premium financing loans are sourced through relationships developed with private equity funds and estate planning firms and are not bound geographically by our markets. These loan products offer opportunities to expand and diversify geographically by entering new markets. The Company continues to focus on originating high-quality C&I relationships, as they typically have variable interest rates and allow for cross selling opportunities involving other banking products. Life insurance premium financing and tax credits are typically lower risk products due to the high collateral value securing the loans.
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 nine months ended September 30, 2026, the guaranteed portion of SBA loans totaling $25.4 million were sold.
Provision and ACL
The following table presents the components of the provision for credit losses:
Quarter ended Nine months ended
($ in thousands) September 30, 2026 June 30,
2026 		September 30, 2026 September 30, 2025
Provision for credit losses on loans
$ 16,317 $ 10,729 $ 33,495 $ 14,532
Provision for off-balance sheet commitments
526 2,100 3,042 283
Provision (benefit) for held-to-maturity securities
12 (49) 20 (87)
Charge-off of accrued interest
1,252 1,430 3,003 2,373
Provision for credit losses
$ 18,107 $ 14,210 $ 39,560 $ 17,101
The provision for credit losses, which includes a provision for losses on unfunded commitments, is a charge to earnings to maintain the ACL on loans at a level consistent with management's assessment of expected losses in the loan portfolio at the balance sheet date. The Company also records reversals of interest on nonaccrual loans and interest recoveries directly through the provision of credit losses.
The provision for credit losses of $18.1 million was recognized for the third quarter of 2026 and $39.6 million for the nine months ended September 30, 2026, an increase of $3.9 million and $22.5 million from the linked and prior year-to-date periods, respectively. The provision for credit losses in the third quarter 2026 and nine months ended September 30, 2026 was primarily related to net charge-offs, the increase in nonperforming loans and organic loan growth. Charge-offs during the period primarily consisted of a $7.0 million C&I relationship in Missouri and a $2.6 million CRE relationship in California. Annualized net charge-offs totaled 36 and 33 basis points of average loans for the third quarter 2026 and nine months ended September 30, 2026, respectively, compared to 46 basis points in the linked quarter and four basis points of average loans in the prior year-to-date period.
The following table summarizes the allocation of the ACL on loans:
September 30, 2026 December 31, 2025
($ in thousands) Allowance Percent of loans in each category to total loans Allowance Percent of loans in each category to total loans
C&I $ 81,464 44.3 % $ 68,345 44.4 %
Real estate:
Commercial 40,888 46.4 % 50,783 46.2 %
Construction and land development 13,462 6.0 % 11,016 5.8 %
Residential 7,121 2.9 % 8,023 3.1 %
Consumer 1,584 0.4 % 1,855 0.5 %
Total $ 144,519 100.0 % $ 140,022 100.0 %
The ACL on loans was 1.17% of total loans at September 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 September 30, 2026, compared to 1.29% at December 31, 2025.
The following table is a summary of net charge-offs (recoveries) to average loans for the periods indicated:
Quarter ended
September 30, 2026 June 30, 2026
($ in thousands)
Net Charge-offs (Recoveries)
Average Loans(1)
Net Charge-offs (Recoveries)/Average Loans(2)
Net Charge-offs (Recoveries)
Average Loans(1)
Net Charge-offs (Recoveries)/Average Loans(2)
C&I $ 8,430 $ 5,342,289 0.63 % $ 12,625 $ 5,234,280 0.97 %
Real estate:
Commercial 2,825 5,606,382 0.20 % 395 5,487,631 0.03 %
Construction and land development (93) 705,418 (0.05) % 782 645,330 0.49 %
Residential (199) 361,875 (0.22) % (352) 352,624 (0.40) %
Consumer 73 50,697 0.57 % 105 55,160 0.76 %
Total $ 11,036 $ 12,066,661 0.36 % $ 13,555 $ 11,775,025 0.46 %
(1) Excludes loans held for sale.
(2)Annualized.
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.
Nine months ended
September 30, 2026 September 30, 2025
($ in thousands)
Net Charge-offs (Recoveries)
Average Loans(1)
Net Charge-offs (Recoveries) /Average Loans(2)
Net Charge-offs
Average Loans(1)
Net Charge-offs/Average Loans(2)
C&I $ 24,563 $ 5,281,215 0.62 % $ 2,757 $ 4,801,342 0.08 %
Real estate:
Commercial 3,156 5,509,253 0.08 % 194 5,033,284 0.01 %
Construction and land development 1,717 671,916 0.34 % 109 864,820 0.02 %
Residential (546) 356,910 (0.20) % 143 363,817 0.05 %
Consumer 108 54,759 0.26 % 425 287,883 0.20 %
Total $ 28,998 $ 11,874,053 0.33 % $ 3,628 $ 11,351,146 0.04 %
(1) Excludes loans held for sale.
(2)Annualized.
To the extent the Company does not recognize charge-offs and economic forecasts improve in future periods, the Company could recognize provision reversals. Conversely, if economic conditions and the Company's forecast worsen and charge-offs increase, the Company could recognize elevated levels of provision for credit losses. The provision is also reflective of charge-offs (recoveries) in the period.
Nonperforming assets
The following table presents the categories of nonperforming assets and other ratios, excluding government guaranteed portions, as of the dates indicated:
($ in thousands) September 30, 2026 December 31, 2025
Nonaccrual loans $ 87,173 $ 81,180
Loans past due 90 days or more and still accruing interest 97 1,629
Total nonperforming loans 87,270 82,809
OREO 95,582 81,544
Total nonperforming assets $ 182,852 $ 164,353
Total assets $ 17,792,510 $ 17,300,884
Total loans 12,344,705 11,800,338
Total ACL on loans 144,519 140,022
ACL on loans to nonaccrual loans 166 % 172 %
ACL on loans to nonperforming loans 166 % 169 %
ACL on loans to total loans 1.17 % 1.19 %
Nonaccrual loans to total loans 0.71 % 0.69 %
Nonperforming loans to total loans 0.71 % 0.70 %
Nonperforming assets to total assets 1.03 % 0.95 %
Nonperforming loans based on loan type were as follows:
($ in thousands) September 30, 2026 December 31, 2025
C&I $ 33,038 $ 27,979
CRE 51,278 46,326
Construction and land development 1,729 155
Residential real estate 1,216 8,340
Consumer 9 9
Total $ 87,270 $ 82,809
The following table summarizes the changes in nonperforming loans:
Nine months ended
($ in thousands) September 30, 2026
Nonperforming loans, beginning of period $ 82,809
Additions to nonperforming loans 119,092
Charge-offs (33,041)
Principal payments (51,434)
Moved to OREO (30,156)
Nonperforming loans, end of period $ 87,270
Nonperforming loans at September 30, 2026 increased $4.5 million, or 5%, when compared to December 31, 2025. The increase in nonperforming assets during the nine months ended September 30, 2026 was primarily related to additions to nonperforming loans, including two agricultural-related relationships totaling $18.0 million, a $7.5 million CRE relationship and a $4.1 million C&I relationship that went on nonaccrual during the period. The increase in nonperforming loans was partially offset by principal payments, including 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. In the current quarter, the Company foreclosed on a CRE relationship with a book value of $15.5 million that was transferred to OREO at fair market value, less selling costs, resulting in a partial charge-off of $2.6 million.
OREO
The following table summarizes the changes in OREO:
Nine months ended
($ in thousands) September 30, 2026
OREO, beginning of period $ 81,544
Additions 31,583
Change in valuation allowance (2,058)
Sales (15,487)
OREO, end of period $ 95,582
Deposits
The following table shows the breakdown of deposits by type:
($ in thousands) September 30, 2026 December 31, 2025 Increase (decrease)
Noninterest-bearing demand accounts $ 5,043,875 $ 4,874,115 $ 169,760 3 %
Interest-bearing demand accounts 3,723,393 3,537,334 186,059 5 %
Money market accounts 4,140,131 3,991,110 149,021 4 %
Savings accounts 524,381 537,400 (13,019) (2) %
Certificates of deposit:
Brokered 735,993 721,977 14,016 2 %
Customer 959,191 947,406 11,785 1 %
Total deposits $ 15,126,964 $ 14,609,342 $ 517,622 4 %
Noninterest-bearing deposits / total deposits 33 % 33 %
The following table shows the average balance and average rate of the Company's deposits by type:
Quarter ended
September 30, 2026 June 30, 2026 September 30, 2025
($ in thousands) Average Balance Average Rate Paid Average Balance Average Rate Paid Average Balance Average Rate Paid
Noninterest-bearing deposit accounts $ 5,065,373 - % $ 4,914,670 - % $ 4,458,028 - %
Interest-bearing demand accounts 3,641,074 1.84 3,438,895 1.77 3,298,022 2.10
Money market accounts 4,047,970 2.58 4,009,504 2.58 3,706,891 3.08
Savings accounts 536,184 0.13 546,880 0.12 532,015 0.14
Certificates of deposit 1,697,479 3.42 1,698,565 3.44 1,609,346 3.75
Total interest-bearing deposits $ 9,922,707 2.32 $ 9,693,844 2.30 $ 9,146,274 2.67
Total average deposits $ 14,988,080 1.54 $ 14,608,514 1.53 $ 13,604,302 1.80
Nine months ended
September 30, 2026 September 30, 2025
($ in thousands) Average Balance Average Rate Paid Average Balance Average Rate Paid
Noninterest-bearing deposit accounts $ 4,993,391 - % $ 4,420,552 - %
Interest-bearing demand accounts 3,511,893 1.79 3,230,832 2.14
Money market accounts 4,003,666 2.58 3,656,546 3.13
Savings accounts 540,544 0.12 533,084 0.14
Certificates of deposit 1,687,456 3.46 1,491,047 3.85
Total interest-bearing deposits $ 9,743,559 2.31 $ 8,911,509 2.71
Total average deposits $ 14,736,950 1.53 $ 13,332,061 1.81
Total deposits were $15.1 billion at September 30, 2026, an increase of $517.6 million from December 31, 2025. Brokered certificates of deposit at September 30, 2026 increased $14.0 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 $4.2 billion at September 30, 2026 from $3.8 billion at December 31, 2025 due to continued success at generating organic deposit growth.
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 September 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 September 30, 2026, estimated uninsured deposits totaled $5.4 billion, or 35% of total deposits, compared to $4.6 billion, or 32% of total deposits, at December 31, 2025.
The total cost of deposits was 1.54% for the current quarter and 1.53% for the nine months ended September 30, 2026, compared to 1.53% and 1.81% for the linked and prior year-to-date periods, respectively.
Stockholders' Equity
Stockholders' equity totaled $1.9 billion at September 30, 2026, a decrease of $122.1 million from December 31, 2025. Significant activity during the first nine months of 2026 was as follows:
•Increase from net income of $132.7 million,
•Decrease in fair value of securities and cash flow hedges of $142.2 million,
•Decrease from dividends paid on common and preferred stock of $39.8 million, and
•Decrease from common stock repurchases of $84.8 million.
Liquidity and Capital Resources
Liquidity
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.
Liquidity is provided from lines of credit with the FHLB, the Federal Reserve, and correspondent banks; the ability to acquire large and brokered deposits, sales of the securities portfolio, and the ability to sell loans or loan participations to other banks. These alternatives are an important part of our liquidity plan and provide flexibility and efficient execution of the asset-liability management strategy.
The Company's Asset-Liability Management Committee oversees our liquidity position, the parameters of which are approved by the Bank's Board of Directors. Our liquidity position is monitored daily. Our liquidity management framework includes measurement of several key elements, such as the loan to deposit ratio, a liquidity ratio, and a dependency ratio. The Company's liquidity framework also incorporates contingency planning to assess the nature and volatility of funding sources and to determine alternatives to these sources. While core deposits and loan and investment repayments are principal sources of liquidity, funding diversification is another key element of liquidity management and is achieved by strategically varying depositor types, terms, funding markets, and instruments.
Liquidity from assets is available primarily from cash balances and the investment portfolio. Cash and interest-bearing deposits with other banks totaled $487.9 million at September 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 September 30, 2026 and December 31, 2025, respectively, and included $1.7 billion at September 30, 2026 and December 31, 2025, respectively, pledged as collateral for deposits of public institutions, loan notes and other requirements. The unpledged portion of the securities portfolio could be pledged or sold to enhance liquidity, if necessary.
Available on- and off-balance sheet liquidity sources include the following items:
($ in thousands) September 30, 2026
Federal Reserve borrowing capacity $ 2,931,434
FHLB borrowing capacity 1,447,457
Unpledged securities 2,051,513
Federal funds lines (eight correspondent banks)
135,000
Cash and interest-bearing deposits 487,874
Holding Company line of credit 25,000
Total $ 7,078,278
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 $78.0 million were sold during the nine months ended September 30, 2026 and 2025, respectively.
Liability liquidity funding sources are available to increase financial flexibility. In addition to amounts borrowed at September 30, 2026, the Company could borrow an additional $1.4 billion from the FHLB of Des Moines under blanket loan pledges and has additional real estate loans that could be pledged. The Company also has $2.9 billion available from the Federal Reserve under a pledged loan agreement. The Company also has unsecured federal funds lines with eight correspondent banks totaling $135.0 million as of September 30, 2026.
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 September 30, 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.
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, 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.
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.
Strong capital ratios, credit quality and core earnings are essential to retaining cost-effective access to the wholesale funding markets. Deterioration in any of these factors could have a negative impact on the Company's ability to access these funding sources and, as a result, these factors are monitored on an ongoing basis as part of the liquidity management process. The Bank is subject to regulations and, among other things, may be limited in its ability to pay dividends or transfer funds to the parent company. Accordingly, consolidated cash flows as presented in the consolidated statements of cash flows may not represent cash immediately available for the payment of cash dividends to the Company's stockholders or for other cash needs.
Through the normal course of operations, the Company has entered into certain contractual obligations and other commitments. Such obligations relate to funding operations through deposits or debt issuances, as well as leases for premises and equipment. As a financial services provider, the Company routinely enters into commitments to extend credit. While contractual obligations represent future cash requirements of the Company, a significant portion of commitments to extend credit may expire without being drawn upon. Such commitments are subject to the same credit policies and approval process accorded to loans made by the Company. The Company also enters into derivative contracts under which the Company either receives cash from or pays cash to counterparties depending on changes in interest rates. Derivative contracts are carried at fair value on the consolidated balance sheet with the fair value representing the net present value of expected future cash receipts or payments based on market interest rates as of the balance sheet date. The fair value of these contracts changes daily as market interest rates change.
Capital Resources
The Company and the Bank are subject to various regulatory capital requirements administered by federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possible additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and its bank affiliate must meet specific capital guidelines that involve quantitative measures of assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The banking affiliate's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.
Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (set forth in the following table) of total, Tier 1, and common equity tier 1 capital to risk-weighted assets, and of Tier 1 capital to average assets. To be categorized as "well capitalized", banks must maintain minimum total risk-based (10%), Tier 1 risk-based (8%), common equity tier 1 risk-based (6.5%), and Tier 1 leverage ratios (5%). In addition, the Company must maintain an additional CCB above the regulatory minimum ratio requirements. The CCB is designed to insulate banks from periods of stress and impose constraints on dividends, stock repurchases and discretionary bonus payments when capital levels fall below prescribed levels. As of September 30, 2026, and December 31, 2025, the Company and the Bank met all capital adequacy requirements to which they are subject and exceeded the amounts required to be "well capitalized".
The following table summarizes the Company's various capital ratios:
September 30, 2026 December 31, 2025
($ in thousands) EFSC Bank EFSC Bank To Be Well-Capitalized Minimum Ratio
with CCB
Common Equity Tier 1 Capital to Risk Weighted Assets 11.1 % 11.8 % 11.6 % 11.9 % 6.5 % 7.0 %
Tier 1 Capital to Risk Weighted Assets 12.2 % 11.8 % 12.8 % 11.9 % 8.0 % 8.5 %
Total Capital to Risk Weighted Assets 14.4 % 12.8 % 13.9 % 13.0 % 10.0 % 10.5 %
Leverage Ratio (Tier 1 Capital to Average Assets) 10.2 % 9.8 % 10.5 % 9.7 % 5.0 % N/A
Tangible common equity to tangible assets1
8.13 % 9.07 %
1 Not a required regulatory capital ratio.
The Company believes the tangible common equity ratio is an important measure of capital strength, even though it is considered a non-GAAP measure. A reconciliation has been included in this section under the caption "Use of Non-GAAP Financial Measures."
Use of Non-GAAP Financial Measures:
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, adjusted effective tax rate, 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.
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, adjusted effective tax rate, 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.
The Company believes these non-GAAP measures and ratios, when taken together with the corresponding GAAP measures and ratios, provide meaningful supplemental information regarding the Company's performance and capital strength. The Company's management uses, and believes that investors benefit from referring to, these non-GAAP measures and ratios in assessing the Company's operating results and related trends and when forecasting future periods. However, these non-GAAP measures and ratios should be considered in addition to, and not as a substitute for or preferable to, ratios prepared in accordance with GAAP. In the attached tables, the Company has provided a reconciliation of, where applicable, the most comparable GAAP financial measures and ratios to the non-GAAP financial measures and ratios, or a reconciliation of the non-GAAP calculation of the financial measures for the periods indicated.
Core Efficiency Ratio
Quarter ended Nine months ended
($ in thousands) September 30,
2026 		June 30,
2026 		September 30,
2025 		September 30,
2026 		September 30,
2025
Net interest income (GAAP) $ 174,606 $ 168,716 $ 158,286 $ 509,469 $ 458,564
Tax-equivalent adjustment 3,306 3,418 3,045 10,044 8,258
Net interest income - FTE (non-GAAP) $ 177,912 $ 172,134 $ 161,331 $ 519,513 $ 466,822
Noninterest income (GAAP) 13,214 13,478 48,624 45,780 87,711
Less insurance recoveries1
- - 32,112 - 32,112
Less gain on sales of fixed assets - 687 - 687 -
Less net gain (loss) on sales of investment securities
- (2,146) - (2,146) 106
Less net gain (loss) on OREO
(1,402) (302) 7 (1,999) 86
Core revenue (non-GAAP) $ 192,528 $ 187,373 $ 177,836 $ 568,751 $ 522,229
Noninterest expense (GAAP) $ 114,654 $ 115,739 $ 109,790 $ 345,530 $ 315,275
Less amortization on intangibles 1,279 1,297 736 3,976 2,344
Less acquisition costs - - 609 - 1,127
Core noninterest expense (non-GAAP) $ 113,375 $ 114,442 $ 108,445 $ 341,554 $ 311,804
Core efficiency ratio (non-GAAP) 58.9 % 61.1 % 61.0 % 60.1 % 59.7 %
1Represents anticipated proceeds from a pending insurance claim related to a third quarter 2025 solar tax credit recapture event.
Tangible Common Equity, Tangible Book Value per Common Share, and Tangible Common Equity to Tangible Assets Ratio
At
(in thousands, except per share data) September 30, 2026 June 30,
2026 		September 30, 2025
Stockholders' equity (GAAP) $ 1,917,326 $ 2,040,846 $ 1,982,332
Less preferred stock 71,988 71,988 71,988
Less goodwill 416,968 416,968 365,164
Less intangible assets 16,948 18,228 6,140
Tangible common equity (non-GAAP) $ 1,411,422 $ 1,533,662 $ 1,539,040
Common stock outstanding 35,775 36,258 37,011
Tangible book value per common share (non-GAAP) $ 39.45 $ 42.30 $ 41.58
Total assets (GAAP) $ 17,792,510 $ 17,399,009 $ 16,402,405
Less goodwill 416,968 416,968 365,164
Less intangible assets 16,948 18,228 6,140
Tangible assets (non-GAAP) $ 17,358,594 $ 16,963,813 $ 16,031,101
Tangible common equity to tangible assets (non-GAAP) 8.13 % 9.04 % 9.60 %
ACL on Loans to Total Loans Adjusted for Guaranteed Loans
At
($ in thousands) September 30, 2026 June 30, 2026 September 30, 2025
Total loans (GAAP) $ 12,344,705 $ 11,892,399 $ 11,583,109
Less guaranteed loans, net 946,578 939,255 922,168
Total adjusted loans (non-GAAP) $ 11,398,127 $ 10,953,144 $ 10,660,941
ACL on loans $ 144,519 $ 139,238 $ 148,854
ACL on loans to total loans 1.17 % 1.17 % 1.29 %
ACL on loans to total adjusted loans 1.27 % 1.27 % 1.40 %
Pre-Provision Net Revenue (PPNR)
Quarter ended Nine months ended
($ in thousands) September 30,
2026 		June 30,
2026 		September 30,
2025 		September 30,
2026 		September 30,
2025
Net interest income (GAAP) $ 174,606 $ 168,716 $ 158,286 $ 509,469 $ 458,564
Noninterest income (GAAP) 13,214 13,478 48,624 45,780 87,711
Acquisition costs - - 609 - 1,127
Less gain on sales of fixed assets - 687 - 687 -
Less net gain (loss) on sales of investment securities
- (2,146) - (2,146) 106
Less net gain (loss) on OREO
(1,402) (302) 7 (1,999) 86
Less insurance recoveries - - 32,112 - 32,112
Less noninterest expense (GAAP) 114,654 115,739 109,790 345,530 315,275
PPNR (non-GAAP) $ 74,568 $ 68,216 $ 65,610 $ 213,177 $ 199,823
Adjusted Effective Tax Rate
Nine months ended
($ in thousands) September 30
2026 		September 30
2025
Income before income tax expense (GAAP) $ 170,159 $ 213,899
Less insurance recoveries - 32,112
Adjusted income before income tax expense (non-GAAP) $ 170,159 $ 181,787
Income tax expense (GAAP) $ 37,426 $ 67,319
Less tax credit recapture and tax applied to insurance recoveries1
- 32,112
Adjusted income tax expense (non-GAAP) $ 37,426 $ 35,207
Effective tax rate (GAAP) 22.0 % 31.5 %
Adjusted effective tax rate (non-GAAP) 22.0 % 19.4 %
1 Represents recapture of $24.1 million solar tax credit and approximately $8.0 million of estimated tax liability related to anticipated proceeds from pending insurance claim related to the recapture event.
Adjusted Return on Average Common Equity, Return on Average Tangible Common Equity (ROATCE) and Adjusted Return on Average Assets (ROAA)
Quarter ended Nine months ended
($ in thousands) September 30,
2026 		June 30,
2026 		September 30,
2025 		September 30,
2026 		September 30,
2025
Average stockholder's equity (GAAP) $ 2,040,244 $ 2,052,233 $ 1,964,126 $ 2,056,194 $ 1,911,531
Less average preferred stock 71,988 71,988 71,988 71,988 71,988
Less average goodwill 416,968 416,968 365,164 416,968 365,164
Less average intangible assets 17,568 18,860 6,498 18,938 7,248
Average tangible common equity (non-GAAP) $ 1,533,720 $ 1,544,417 $ 1,520,476 $ 1,548,300 $ 1,467,131
Net income (GAAP) $ 42,444 $ 40,927 $ 45,235 $ 132,733 $ 146,580
Acquisition costs (after tax) - - 549 - 1,011
Less gain on sales of fixed assets (after tax) - 515 - 515 -
Less net gain (loss) on sales of investment securities (after tax)
- (1,607) - (1,607) 80
Less net gain (loss) on OREO (after tax)
(1,050) (226) 5 (1,497) 64
Net income adjusted (non-GAAP) $ 43,494 $ 42,245 $ 45,779 $ 135,322 $ 147,447
Less preferred stock dividends 938 937 938 2,813 2,813
Net income available to common stockholders adjusted (non-GAAP) $ 42,556 $ 41,308 $ 44,841 $ 132,509 $ 144,634
Return on average common equity (GAAP) 8.37 % 8.10 % 9.29 % 8.75 % 10.45 %
Adjusted return on average common equity (non-GAAP) 8.58 % 8.37 % 9.40 % 8.93 % 10.51 %
ROATCE (non-GAAP) 10.74 % 10.39 % 11.56 % 11.22 % 13.10 %
Adjusted ROATCE (non-GAAP) 11.01 % 10.73 % 11.70 % 11.44 % 13.18 %
Average assets $ 17,696,079 $ 17,307,716 $ 16,178,088 $ 17,439,709 $ 15,895,563
Return on average assets (GAAP) 0.95 % 0.95 % 1.11 % 1.02 % 1.23 %
Adjusted return on average assets (non-GAAP) 0.98 % 0.98 % 1.12 % 1.04 % 1.24 %
Enterprise Financial Services Corporation published this content on October 30, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on October 30, 2026 at 19:22 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]