UNITEDSTATES

SECURITIES ANDEXCHANGECOMMISSION

WASHINGTON,D.C. 20549

FORM 10-Q

[X]	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 2012.
[   ]	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from ______ to ______
	Commission file number 001-15373

ENTERPRISE FINANCIAL SERVICES CORP

Incorporated in the State of Delaware

I.R.S. Employer Identification # 43-1706259

Address: 150 North Meramec

Clayton, MO 63105

Telephone: (314) 725-5500

___________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes [X]  No [   ] 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files ). Yes [X]  No [   ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o	Accelerated filer R	Non-accelerated filer o	Smaller reporting company o
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company as defined in Rule 12b-2 of the Exchange Act

Yes [   ]  No [X]

As of October 30, 2012, the Registrant had 17,963,888 shares of outstanding common stock.

This document is also available through our website at http://www.enterprisebank.com.

ENTERPRISE FINANCIAL SERVICES CORP AND SUBSIDIARIES

TABLE OF CONTENTS

	Page
PART I - FINANCIAL INFORMATION
Item 1.  Financial Statements
Condensed Consolidated Balance Sheets (Unaudited)	1
Condensed Consolidated Statements of Operations (Unaudited)	2
Condensed Consolidated Statements of Comprehensive Income (Unaudited)	3
Condensed Consolidated Statements of Shareholders' Equity (Unaudited)	4
Condensed Consolidated Statements of Cash Flows (Unaudited)	5
Notes to Condensed Consolidated Financial Statements (Unaudited)	6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3. Quantitative and Qualitative Disclosures About Market Risk	47
Item 4. Controls and Procedures	48
PART II - OTHER INFORMATION
Item 1.  Legal Proceedings	49
Item 1A.  Risk Factors	50
Item 6. Exhibits	51
Signatures	52

PART 1 – ITEM 1 – FINANCIAL STATEMENTS

ENTERPRISE FINANCIAL SERVICES CORP AND SUBSIDIARIES

Condensed Consolidated Balance Sheets (Unaudited)

(In thousands, except share and per share data)	September 30, 2012			December 31, 2011
Assets
Cash and due from banks	$	28,964		$	20,791
Federal funds sold	30			143
Interest-bearing deposits (including $3,800 and $2,650 pledged as collateral)	56,681			167,209
Total cash and cash equivalents	85,675			188,143
Interest-bearing deposits greater than 90 days	1,000			1,502
Securities available for sale	610,357			593,182
Mortgage loans held for sale	8,245			6,494
Portfolio loans not covered under FDIC loss share	1,987,166			1,897,074
Less: Allowance for loan losses	34,222			37,989
Portfolio loans not covered under FDIC loss share, net	1,952,944			1,859,085
Portfolio loans covered under FDIC loss share, net of the allowance for loan losses ($11,102 and $1,635, respectively)	210,331			298,975
Portfolio loans, net	2,163,275			2,158,060
Other real estate not covered under FDIC loss share	12,549			17,217
Other real estate covered under FDIC loss share	18,810			36,471
Other investments, at cost	16,362			14,527
Fixed assets, net	21,469			18,986
Accrued interest receivable	10,481			9,193
State tax credits, held for sale, including $25,069 and $26,350 carried at fair value, respectively	65,873			50,446
FDIC loss share receivable	75,851			184,554
Goodwill	30,334			30,334
Intangibles, net	7,846			9,285
Other assets	65,565			59,385
Total assets	$	3,193,692		$	3,377,779
Liabilities and Shareholders' Equity
Demand deposits	$	621,070		$	585,479
Interest-bearing transaction accounts	259,902			253,504
Money market accounts	975,216			1,084,304
Savings	81,552			51,145
Certificates of deposit:
$100 and over	420,672			550,535
Other	192,521			266,386
Total deposits	2,550,933			2,791,353
Subordinated debentures	85,081			85,081
Federal Home Loan Bank advances	126,000			102,000
Other borrowings	147,104			154,545
Accrued interest payable	1,377			1,762
Other liabilities	15,681			3,473
Total liabilities	2,926,176			3,138,214
Shareholders' equity:
Preferred stock, $0.01 par value; 5,000,000 shares authorized; 35,000 shares issued and outstanding	33,914			33,293
Common stock, $0.01 par value; 30,000,000 shares authorized; 18,039,710 and 17,849,862 shares issued, respectively	180			178
Treasury stock, at cost; 76,000 shares	(1,743		)	(1,743		)
Additional paid in capital	172,545			169,138
Retained earnings	53,232			35,097
Accumulated other comprehensive income	9,388			3,602
Total shareholders' equity	267,516			239,565
Total liabilities and shareholders' equity	$	3,193,692		$	3,377,779

See accompanying notes to condensed consolidated financial statements.

1

ENTERPRISE FINANCIAL SERVICES CORP AND SUBSIDIARIES

Condensed Consolidated Statements of Operations (Unaudited)

	Three months ended September 30,				Nine months ended September 30,
(In thousands, except per share data)	2012		2011		2012			2011
Interest income:
Interest and fees on loans	$	39,886	$	30,983	$	111,519		$	93,565
Interest on debt securities:
Taxable	2,628		2,853		7,440			8,666
Nontaxable	264		184		734			449
Interest on federal funds sold	—		—		—			1
Interest on interest-bearing deposits	53		166		195			427
Dividends on equity securities	43		99		230			269
Total interest income	42,874		34,285		120,118			103,377
Interest expense:
Interest-bearing transaction accounts	182		211		566			606
Money market accounts	1,024		2,004		3,694			6,210
Savings	68		35		209			53
Certificates of deposit:
$100 and over	1,691		2,297		5,500			6,959
Other	597		855		2,103			2,708
Subordinated debentures	982		1,128		3,111			3,375
Federal Home Loan Bank advances	721		881		2,327			2,669
Notes payable and other borrowings	125		105		362			316
Total interest expense	5,390		7,516		17,872			22,896
Net interest income	37,484		26,769		102,246			80,481
Provision for loan losses not covered under FDIC loss share	1,048		5,400		2,841			13,300
Provision for loan losses covered under FDIC loss share	10,889		2,672		13,380			2,947
Net interest income after provision for loan losses	25,547		18,697		86,025			64,234
Noninterest income:
Wealth Management revenue	1,825		1,832		5,525			5,173
Service charges on deposit accounts	1,456		1,332		4,199			3,663
Other service charges and fee income	676		464		1,848			1,105
Gain on sale of other real estate	739		517		3,152			1,039
Gain on state tax credits, net	256		1,368		1,180			2,510
Gain on sale of investment securities	—		768		1,156			1,448
Change in FDIC loss share receivable	1,912		1,513		(6,738		)	1,148
Miscellaneous income	968		932		2,338			1,821
Total noninterest income	7,832		8,726		12,660			17,907
Noninterest expense:
Employee compensation and benefits	11,441		9,329		32,956			26,282
Occupancy	1,399		1,306		4,162			3,586
Furniture and equipment	384		431		1,234			1,216
Data processing	881		642		2,530			1,872
FDIC and other insurance	862		828		2,658			3,183
Loan legal and other real estate expense	1,187		1,576		5,216			7,267
Other	5,128		4,190		15,304			10,885
Total noninterest expense	21,282		18,302		64,060			54,291
Income before income tax expense	12,097		9,121		34,625			27,850
Income tax expense	4,167		3,289		11,744			9,633
Net income	$	7,930	$	5,832	$	22,881		$	18,217
Net income available to common shareholders	$	7,282	$	5,200	$	20,948		$	16,329
Earnings per common share
Basic	$	0.41	$	0.29	$	1.17		$	1.00
Diluted	0.39		0.29		1.14			0.98

See accompanying notes to condensed consolidated financial statements.

2

ENTERPRISE FINANCIAL SERVICES CORP AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

	Three months ended September 30,					Nine months ended September 30,
(in thousands)	2012		2011			2012			2011
Net income	$	7,930	$	5,832		$	22,881		$	18,217
Other comprehensive income, net of tax:
Unrealized gain (loss) on investment securities arising during the period, net of tax	3,248		(261		)	6,526			6,302
Less reclassification adjustment for realized gain on sale of securities included in net income, net of tax	—		(491		)	(740		)	(926		)
Reclassification of cash flow hedge, net of tax	—		(28		)	—			(85		)
Total other comprehensive income (loss)	3,248		(780		)	5,786			5,291
Total comprehensive income	$	11,178	$	5,052		$	28,667		$	23,508

See accompanying notes to condensed consolidated financial statements.

3

ENTERPRISE FINANCIAL SERVICES CORP AND SUBSIDIARIES

Condensed Consolidated Statements of Shareholders’ Equity (Unaudited)

(in thousands, except per share data)	Preferred Stock		Common Stock		Treasury Stock			Additional paid in capital		Retained earnings			Accumulated other comprehensive income (loss)			Total shareholders' equity
Balance January 1, 2012	$	33,293	$	178	$	(1,743	)	$	169,138	$	35,097		$	3,602		$	239,565
Net income	—		—		—			—		22,881			—			22,881
Change in fair value of available for sale securities, net of tax	—		—		—			—		—			6,526			6,526
Reclassification adjustment for realized gain on sale of securities included in net income, net of tax	—		—		—			—		—			(740		)	(740		)
Total comprehensive income																28,667
Cash dividends paid on common shares, $0.1575 per share	—		—		—			—		(2,813		)	—			(2,813		)
Cash dividends paid on preferred stock	—		—		—			—		(1,312		)	—			(1,312		)
Preferred stock accretion of discount	621		—		—			—		(621		)	—			—
Issuance under equity compensation plans, net, 189,848 shares	—		2		—			1,530		—			—			1,532
Share-based compensation	—		—		—			1,791		—			—			1,791
Excess tax benefit related to equity compensation plans	—		—		—			86		—			—			86
Balance September 30, 2012	$	33,914	$	180	$	(1,743	)	$	172,545	$	53,232		$	9,388		$	267,516

(in thousands, except per share data)	Preferred Stock		Common Stock		Treasury Stock			Additional paid in capital		Retained earnings			Accumulated other comprehensive income (loss)			Total shareholders' equity
Balance January 1, 2011	$	32,519	$	150	$	(1,743	)	$	133,673	$	15,775		$	(573	)	$	179,801
Net income	—		—		—			—		18,217			—			18,217
Change in fair value of available for sale securities, net of tax	—		—		—			—		—			6,302			6,302
Reclassification adjustment for realized gain on sale of securities included in net income, net of tax	—		—		—			—		—			(926		)	(926		)
Reclassification of cash flow hedge, net of tax	—		—		—			—		—			(85		)	(85		)
Total comprehensive income																23,508
Cash dividends paid on common shares, $0.1575 per share	—		—		—			—		(2,644		)	—			(2,644		)
Cash dividends paid on preferred stock	—		—		—			—		(1,313		)	—			(1,313		)
Preferred stock accretion of discount	575		—		—			—		(575		)	—			—
Issuance under equity compensation plans, net, 109,812 shares	—		1		—			1,368		—			—			1,369
Issuance under public stock offering 2,743,900 shares	—		27		—			32,581		—			—			32,608
Share-based compensation	—		—		—			1,120		—			—			1,120
Excess tax benefit related to equity compensation plans	—		—		—			22		—			—			22
Balance September 30, 2011	$	33,094	$	178	$	(1,743	)	$	168,764	$	29,460		$	4,718		$	234,471

See accompanying notes to condensed consolidated financial statements.

4

ENTERPRISE FINANCIAL SERVICES CORP AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited)

	Nine months ended September 30,
(in thousands)	2012			2011
Cash flows from operating activities:
Net income	$	22,881		$	18,217
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation	1,944			2,057
Provision for loan losses	16,221			16,247
Deferred income taxes	(1,982		)	5,091
Net amortization of debt securities	5,839			3,983
Amortization of intangible assets	1,440			490
Gain on sale of investment securities	(1,156		)	(1,448		)
Mortgage loans originated for sale	(71,085		)	(48,772		)
Proceeds from mortgage loans sold	68,987			49,147
Gain on sale of other real estate	(3,152		)	(1,039		)
Gain on state tax credits, net	(1,180		)	(2,510		)
Excess tax benefit of share-based compensation	(86		)	(22		)
Share-based compensation	1,791			1,120
Valuation adjustment on other real estate	2,201			3,261
Net accretion of loan discount and indemnification asset	(18,754		)	(10,964		)
Changes in:
Accrued interest receivable	(1,288		)	165
Accrued interest payable	(385		)	(501		)
Prepaid FDIC insurance	1,837			2,336
Other assets	1,298			(6,294		)
Other liabilities	12,567			(5,558		)
Net cash provided by operating activities	37,938			25,006
Cash flows from investing activities:
Cash received from acquisition of Legacy Bank	—			8,926
Cash received from acquisition of The First National Bank of Olathe	—			112,778
Net increase in loans	(10,478		)	(84,022		)
Net cash proceeds received from FDIC loss share receivable	85,173			35,932
Proceeds from the sale of debt and equity securities, available for sale	110,876			84,456
Proceeds from the maturity of debt and equity securities, available for sale	91,498			122,934
Proceeds from the redemption of other investments	6,296			5,774
Proceeds from the sale of state tax credits held for sale	4,408			8,045
Proceeds from the sale of other real estate	44,273			27,429
Payments for the purchase/origination of:
Available for sale debt and equity securities	(214,935		)	(255,210		)
Other investments	(8,138		)	(1,361		)
State tax credits held for sale	(18,577		)	—
Fixed assets	(4,433		)	(416		)
Net cash provided by investing activities	85,963			65,265
Cash flows from financing activities:
Net increase in noninterest-bearing deposit accounts	35,591			101,351
Net decrease in interest-bearing deposit accounts	(276,011		)	(204,372		)
Proceeds from Federal Home Loan Bank advances	157,500			—
Repayments of Federal Home Loan Bank advances	(133,500		)	(23,254		)
Net decrease in other borrowings	(7,440		)	(20,332		)
Cash dividends paid on common stock	(2,813		)	(2,645		)
Excess tax benefit of share-based compensation	86			22
Cash dividends paid on preferred stock	(1,312		)	(1,313		)
Issuance of common stock	—			32,608
Proceeds from the issuance of equity instruments	1,530			1,369
Net cash used in financing activities	(226,369		)	(116,566		)
Net decrease in cash and cash equivalents	(102,468		)	(26,295		)
Cash and cash equivalents, beginning of period	188,143			293,668
Cash and cash equivalents, end of period	$	85,675		$	267,373
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	17,487		$	23,442
Income taxes	10,953			16,871
Noncash transactions:
Transfer to other real estate owned in settlement of loans	$	19,799		$	20,287
Sales of other real estate financed	5,264			2,135

See accompanying notes to condensed consolidated financial statements.

5

ENTERPRISE FINANCIAL SERVICES CORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies used by Enterprise Financial Services Corp (the “Company” or “Enterprise”) in the preparation of the condensed consolidated financial statements are summarized below:

Business and Consolidation

Enterprise is a financial holding company that provides a full range of banking and wealth management services to individuals and corporate customers located in the St. Louis, Kansas City and Phoenix metropolitan markets through its banking subsidiary, Enterprise Bank & Trust (the “Bank”).

Operating results for the three and nine months ended September 30, 2012 are not necessarily indicative of the results that may be expected for any other interim period or for the year ending December 31, 2012. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

Basis of Financial Statement Presentation

The condensed consolidated financial statements of the Company and its subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. They do not include all information and footnotes required by U.S. GAAP for annual financial statements. The condensed consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly owned. All intercompany accounts and transactions have been eliminated. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Certain 2011 amounts in the consolidated financial statements have been reclassified to conform to the 2012 presentation. These reclassifications have no effect on Net income or Shareholders' equity as previously reported.

NOTE 2 - EARNINGS PER SHARE

Basic earnings per common share data is calculated by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the period. Common shares outstanding include common stock and restricted stock awards where recipients have satisfied the vesting terms. Diluted earnings per common share gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and the if-converted method for convertible securities related to the issuance of trust preferred securities.

6

The following table presents a summary of per common share data and amounts for the periods indicated.

	Three months ended September 30,						Nine months ended September 30,
(in thousands, except per share data)	2012			2011			2012			2011
Net income as reported	$	7,930		$	5,832		$	22,881		$	18,217
Preferred stock dividend	(436		)	(437		)	(1,312		)	(1,313		)
Accretion of preferred stock discount	(212		)	(195		)	(621		)	(575		)
Net income available to common shareholders	$	7,282		$	5,200		$	20,948		$	16,329
Impact of assumed conversions
Interest on 9% convertible trust preferred securities, net of income tax	371			371			1,113			1,113
Net income available to common shareholders and assumed conversions	$	7,653		$	5,571		$	22,061		$	17,442
Weighted average common shares outstanding	17,876			17,741			17,829			16,322
Incremental shares from assumed conversions of convertible trust preferred securities	1,439			1,439			1,439			1,439
Additional dilutive common stock equivalents	100			22			34			20
Weighted average diluted common shares outstanding	19,415			19,202			19,302			17,781
Basic earnings per common share:	$	0.41		$	0.29		$	1.17		$	1.00
Diluted earnings per common share:	$	0.39		$	0.29		$	1.14		$	0.98

For the three months ended September 30, 2012 and 2011, the amount of common stock equivalents that were excluded from the earnings per share calculations because their effect was anti-dilutive was 1.0 million (including 324,074 common stock warrants) and 744,632 common stock equivalents (including 324,074 common stock warrants), respectively. For the nine months ended September 30, 2012 and 2011, the amount of common stock equivalents that were excluded from the earnings per share calculations because their effect was anti-dilutive was 1.0 million (including 324,074 common stock warrants) and 888,821 (including 324,074 common stock warrants), respectively.

7

NOTE 3 - INVESTMENTS

The following table presents the amortized cost, gross unrealized gains and losses and fair value of securities available-for-sale:

	September 30, 2012
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available for sale securities:
Obligations of U.S. Government sponsored enterprises	$	124,721	$	3,284	$	—		$	128,005
Obligations of states and political subdivisions	43,720		2,429		(360		)	45,789
Residential mortgage-backed securities	426,992		9,773		(202		)	436,563
	$	595,433	$	15,486	$	(562	)	$	610,357
	December 31, 2011
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available for sale securities:
Obligations of U.S. Government sponsored enterprises	$	126,305	$	678	$	(66	)	$	126,917
Obligations of states and political subdivisions	38,489		1,729		(381		)	39,837
Residential mortgage-backed securities	422,761		5,269		(1,602		)	426,428
	$	587,555	$	7,676	$	(2,049	)	$	593,182

At September 30, 2012, and December 31, 2011, there were no holdings of securities of any one issuer in an amount greater than 10% of shareholders’ equity, other than the U.S. government agencies and sponsored enterprises. The residential mortgage-backed securities are all issued by U.S. government sponsored enterprises. Available for sale securities having a fair value of $271.8 million and $287.8 million at September 30, 2012, and December 31, 2011, respectively, were pledged as collateral to secure deposits of public institutions and for other purposes as required by law or contract provisions.

The amortized cost and estimated fair value of debt securities classified as available for sale at September 30, 2012, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. The weighted average life of the mortgage-backed securities is approximately 3 years.

(in thousands)	Amortized Cost		Estimated Fair Value
Due in one year or less	$	2,299	$	2,325
Due after one year through five years	118,719		122,152
Due after five years through ten years	42,958		45,014
Due after ten years	4,465		4,303
Mortgage-backed securities	426,992		436,563
	$	595,433	$	610,357

8

The following table represents a summary of available-for-sale investment securities that had an unrealized loss:

	September 30, 2012
	Less than 12 months				12 months or more				Total
(in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Obligations of the state and political subdivisions	$	540	$	2	$	3,388	$	358	$	3,928	$	360
Residential mortgage-backed securities	16,764		71		9,161		131		25,925		202
	$	17,304	$	73	$	12,549	$	489	$	29,853	$	562
	December 31, 2011
	Less than 12 months				12 months or more				Total
(in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Obligations of U.S. government sponsored enterprises	$	23,389	$	66	$	—	$	—	$	23,389	$	66
Obligations of the state and political subdivisions	1,503		8		3,027		373		4,530		381
Residential mortgage-backed securities	86,954		1,598		4,203		4		91,157		1,602
	$	111,846	$	1,672	$	7,230	$	377	$	119,076	$	2,049

The unrealized losses at both September 30, 2012, and December 31, 2011, were primarily attributable to changes in market interest rates since the securities were purchased. Management systematically evaluates investment securities for other-than-temporary declines in fair value on a quarterly basis. This analysis requires management to consider various factors, which include (1) the present value of the cash flows expected to be collected compared to the amortized cost of the security, (2) duration and magnitude of the decline in value, (3) the financial condition of the issuer or issuers, (4) structure of the security and (5) the intent to sell the security or whether it is more likely than not that the Company would be required to sell the security before its anticipated recovery in market value. At September 30, 2012, management performed its quarterly analysis of all securities with an unrealized loss and concluded no individual securities were other-than-temporarily impaired.

The gross gains and gross losses realized from sales of available-for-sale investment securities were as follows:

	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2012		2011		2012			2011
Gross gains realized	$	—	$	768	$	1,399		$	1,448
Gross losses realized	—		—		(243		)	—
Proceeds from sales	—		49,033		110,876			84,456

9

NOTE 4 - PORTFOLIO LOANS NOT COVERED BY LOSS SHARE ("Non-covered")

Below is a summary of Non-covered loans by category at September 30, 2012, and December 31, 2011:

(in thousands)	September 30, 2012		December 31, 2011
Real Estate Loans:
Construction and Land Development	$	146,236	$	140,147
Commercial real estate - Investor Owned	476,501		477,154
Commercial real estate - Owner Occupied	325,379		334,416
Residential real estate	146,940		171,034
Total real estate loans	$	1,095,056	$	1,122,751
Commercial and industrial	880,394		763,202
Consumer & other	11,694		11,459
Portfolio Loans	$	1,987,144	$	1,897,412
Unearned loan costs, net	22		(338		)
Portfolio loans, including unearned loan costs	$	1,987,166	$	1,897,074

The Company grants commercial, residential, and consumer loans primarily in the St. Louis, Kansas City and Phoenix metropolitan areas. The Company has a diversified loan portfolio, with no particular concentration of credit in any one economic sector; however, a substantial portion of the portfolio is concentrated in and 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.

10

A summary of the year-to-date activity in the allowance for loan losses and the recorded investment in Non-covered loans by portfolio class and category based on impairment method through September 30, 2012, and at December 31, 2011, is as follows:

(in thousands)	Commercial & Industrial			Commercial Real Estate Owner Occupied			Commercial Real Estate Investor Owned			Construction and Land Development			Residential Real Estate			Consumer & Other		Qualitative Adjustment			Total
Allowance for Loan Losses:
Balance at December 31, 2011	$	11,945		$	6,297		$	6,751		$	5,847		$	3,931		$	14	$	3,204		$	37,989
Provision charged to expense	929			1,231			216			269			(555		)	—		(372		)	1,718
Losses charged off	(585		)	(746		)	(185		)	(856		)	(362		)	—		—			(2,734		)
Recoveries	96			2			15			152			356			2		—			623
Balance at March 31, 2012	$	12,385		$	6,784		$	6,797		$	5,412		$	3,370		$	16	$	2,832		$	37,596
Provision charged to expense	(3,201		)	(744		)	3,518			442			(189		)	3		246			75
Losses charged off	(406		)	(739		)	(108		)	(502		)	(216		)	—		—			(1,971		)
Recoveries	203			5			15			97			284			—		—			604
Balance at June 30, 2012	$	8,981		$	5,306		$	10,222		$	5,449		$	3,249		$	19	$	3,078		$	36,304
Provision charged to expense	(204		)	(738		)	604			2,551			(1,202		)	4		33			1,048
Losses charged off	(1,479		)	(625		)	(639		)	(949		)	(282		)	—		—			(3,974		)
Recoveries	142			1			14			15			672			—		—			844
Balance at September 30, 2012	$	7,440		$	3,944		$	10,201		$	7,066		$	2,437		$	23	$	3,111		$	34,222

(in thousands)	Commercial & Industrial		Commercial Real Estate Owner Occupied		Commercial Real Estate Investor Owned		Construction and Land Development		Residential Real Estate		Consumer & Other		Qualitative Adjustment		Total
Balance September 30, 2012
Allowance for Loan Losses - Ending Balance:
Individually evaluated for impairment	$	1,165	$	379	$	2,199	$	2,538	$	506	$	—	$	—	$	6,787
Collectively evaluated for impairment	6,275		3,565		8,002		4,528		1,931		23		3,111		27,435
Total	$	7,440	$	3,944	$	10,201	$	7,066	$	2,437	$	23	$	3,111	$	34,222
Loans - Ending Balance:
Individually evaluated for impairment	$	2,849	$	5,584	$	9,647	$	10,095	$	3,883	$	—	$	—	$	32,058
Collectively evaluated for impairment	877,545		319,795		466,854		136,141		143,057		11,716		—		1,955,108
Total	$	880,394	$	325,379	$	476,501	$	146,236	$	146,940	$	11,716	$	—	$	1,987,166
Balance at December 31, 2011
Allowance for Loan Losses - Ending Balance:
Individually evaluated for impairment	$	3,214	$	1,377	$	2,315	$	2,927	$	896	$	—	$	—	$	10,729
Collectively evaluated for impairment	8,731		4,920		4,436		2,920		3,035		14		3,204		27,260
Total	$	11,945	$	6,297	$	6,751	$	5,847	$	3,931	$	14	$	3,204	$	37,989
Loans - Ending Balance:
Individually evaluated for impairment	$	5,634	$	4,572	$	11,127	$	14,767	$	5,522	$	—	$	—	$	41,622
Collectively evaluated for impairment	757,568		329,844		466,027		125,380		165,512		11,121		—		1,855,452
Total	$	763,202	$	334,416	$	477,154	$	140,147	$	171,034	$	11,121	$	—	$	1,897,074

11

A summary of Non-covered loans individually evaluated for impairment by category at September 30, 2012, and December 31, 2011, is as follows:

	September 30, 2012
(in thousands)	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment
Commercial & Industrial	$	4,081	$	291	$	2,558	$	2,849	$	1,165	$	6,322
Real Estate:
Commercial - Owner Occupied	6,154		2,875		2,709		5,584		379		8,653
Commercial - Investor Owned	14,053		1,865		7,782		9,647		2,199		9,793
Construction and Land Development	13,192		748		9,347		10,095		2,538		11,295
Residential	4,164		1,705		2,178		3,883		506		4,800
Consumer & Other	—		—		—		—		—		—
Total	$	41,644	$	7,484	$	24,574	$	32,058	$	6,787	$	40,863

	December 31, 2011
(in thousands)	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment
Commercial & Industrial	$	7,517	$	128	$	5,506	$	5,634	$	3,214	$	6,571
Real Estate:
Commercial - Owner Occupied	5,099		—		4,572		4,572		1,377		2,711
Commercial - Investor Owned	15,676		914		10,213		11,127		2,315		10,562
Construction and Land Development	19,685		1,628		13,139		14,767		2,927		16,114
Residential	6,465		2,211		3,311		5,522		896		9,588
Consumer & Other	—		—		—		—		—		—
Total	$	54,442	$	4,881	$	36,741	$	41,622	$	10,729	$	45,546

There were no loans over 90 days past due and still accruing interest at September 30, 2012. If interest on impaired loans would have been accrued based upon the original contractual terms, such income would have been $708,000 and $2.2 million for the three and nine months ended September 30, 2012, respectively. The cash amount collected and recognized as interest income on impaired loans was $120,000 and $361,000 for the three and nine months ended September 30, 2012, respectively. The amount recognized as interest income on impaired loans continuing to accrue interest was $174,000 and $412,000 for the three and nine months ended September 30, 2012, respectively. At September 30, 2012, there were $543,000 of unadvanced commitments on impaired loans. Other Liabilities include approximately $98,000 for estimated losses attributable to the unadvanced commitments on impaired loans.

12

The recorded investment in impaired Non-covered loans by category at September 30, 2012, and December 31, 2011, is as follows:

	September 30, 2012
(in thousands)	Non-accrual		Restructured		Loans over 90 days past due and still accruing interest		Total
Commercial & Industrial	$	2,849	$	—	$	—	$	2,849
Real Estate:
Commercial - Investor Owned	9,647		—		—		9,647
Commercial - Owner Occupied	5,377		207		—		5,584
Construction and Land Development	7,286		2,809		—		10,095
Residential	2,187		1,696		—		3,883
Consumer & Other	—		—		—		—
Total	$	27,346	$	4,712	$	—	$	32,058

	December 31, 2011
(in thousands)	Non-accrual		Restructured		Loans over 90 days past due and still accruing interest		Total
Commercial & Industrial	$	4,475	$	1,159	$	—	$	5,634
Real Estate:
Commercial - Investor Owned	6,647		4,480		—		11,127
Commercial - Owner Occupied	4,129		443		—		4,572
Construction and Land Development	10,335		3,677		755		14,767
Residential	5,299		223		—		5,522
Consumer & Other	—		—		—		—
Total	$	30,885	$	9,982	$	755	$	41,622

The recorded investment by category for the Non-covered loans that have been restructured for the three and nine months ended September 30, 2012, is as follows:

	Three months ended September 30, 2012					Nine months ended September 30, 2012
(in thousands, except for number of loans)	Number of Loans	Pre-Modification Outstanding Recorded Balance		Post-Modification Outstanding Recorded Balance		Number of Loans	Pre-Modification Outstanding Recorded Balance		Post-Modification Outstanding Recorded Balance
Commercial & Industrial	1	$	150	$	—	—	$	—	$	—
Real Estate:
Commercial - Owner Occupied	1	207