EX-99.1 2 ex991financialstatementsan.htm EARNINGS RELEASE Document

EXHIBIT 99.1
enterprisefinancialservicesa.jpg
ENTERPRISE FINANCIAL REPORTS FIRST QUARTER 2023 RESULTS

First Quarter Results
•Net income of $55.7 million, $1.46 per diluted common share
•Net interest margin of 4.71%, quarterly increase of five basis points
•Total loans of $10.0 billion, quarterly increase of $274.8 million
•Total deposits of $11.2 billion, quarterly increase of $325.5 million
•    Tangible common equity to tangible assets1 of 8.81%

St. Louis, Mo. April 24, 2023 – Jim Lally, President and Chief Executive Officer of Enterprise Financial Services Corp (Nasdaq: EFSC) (the “Company” or “EFSC”), said today upon the release of EFSC’s first quarter earnings, “We delivered strong results in the first quarter, with high quality loan growth, enhanced liquidity and an improved capital position. In a competitive and challenging environment, we have continued to serve our customers with products and relationship-based services that meet their needs, driving a $75 million increase in customer deposits in the first quarter. Our focus in these areas resulted in a return on assets of 1.7% and a return on tangible common equity1 of 20% for the first quarter. As we look to the remainder of 2023, we believe the strength of our balance sheet and our diversified business model have us well positioned.”

Highlights
•Earnings - Net income in the first quarter 2023 was $55.7 million, a decrease of $4.3 million compared to the linked quarter and an increase of $8.0 million from the prior year quarter. Earnings per share (“EPS”) was $1.46 per diluted common share for the first quarter 2023, compared to $1.58 and $1.23 per diluted common share for the linked and prior year quarters, respectively.

•Pre-provision net revenue2 (“PPNR”) - PPNR of $75.0 million in the first quarter 2023 decreased $3.6 million from the linked quarter and increased $18.0 million from the prior year quarter, respectively. The decrease from the linked quarter was primarily due to a seasonal increase in noninterest expense, partially offset by an increase in net interest income. The increase compared to the prior year quarter was primarily due to an increase in net interest income, partially offset by an increase in noninterest expense.

•Net interest income and net interest margin (“NIM”) - Net interest income of $139.5 million for the first quarter 2023 increased $0.7 million and $38.4 million from the linked and prior year quarters, respectively. NIM was 4.71% for the first quarter 2023, compared to 4.66% and 3.28% for the linked and prior year quarters, respectively. Net interest income and NIM benefited from higher average loan and investment balances combined with expanding yields on earning assets, partially offset by higher deposit costs and a decline in average interest-earning cash balances.
•Noninterest income - Noninterest income of $16.9 million for the first quarter 2023 was stable compared to the linked quarter and decreased $1.7 million from the prior year quarter. The decline from the prior year quarter was primarily due to a decrease in customer swap fee income, card services revenue and tax credit income. Lower transaction volumes led to the decrease in customer swap fee income and tax credit income, and the Durbin Amendment cap on debit card income limited card services revenue since July 1, 2022.
1 Tangible common equity to tangible assets and return on tangible common equity are non-GAAP measures. Refer to discussion and reconciliation of these measures in the accompanying financial tables.
2 Pre-provision net revenue is a non-GAAP measure. Refer to discussion and reconciliation of this measure in the accompanying financial tables.

•Loans - Loans totaled $10.0 billion at March 31, 2023, an increase of $274.8 million, or 11.4% on an annualized basis, from the linked quarter and an increase of $955.8 million from the prior year period. Average loans totaled $9.8 billion for the quarter ended March 31, 2023, compared to $9.4 billion and $9.0 billion for the linked and prior year quarters, respectively.
•Asset quality - The allowance for credit losses to total loans was 1.38% at March 31, 2023, compared to 1.41% at December 31, 2022 and 1.54% at March 31, 2022. Nonperforming assets to total assets was 0.09% at March 31, 2023, compared to 0.08% and 0.17% at December 31, 2022 and March 31, 2022, respectively. The provision for credit losses of $4.2 million recorded in the first quarter 2023 was primarily related to the credit impairment of an investment security in subordinated debt of a failed bank, and to loan growth, partially offset by a decrease in the reserve for unfunded commitments.

•Deposits - Total deposits increased $325.5 million from the linked quarter to $11.2 billion as of March 31, 2023. Total estimated insured deposits, which includes collateralized deposits and accounts that qualify for pass through insurance, totaled $7.7 billion at March 31, 2023. Average deposits totaled $10.9 billion for the quarter ended March 31, 2023 compared to $11.0 billion and $11.5 billion for the linked and prior year quarters, respectively. At March 31, 2023, noninterest-bearing deposit accounts represented 37.6% of total deposits, and the loan to deposit ratio was 89.8%.

•Capital - Total shareholders’ equity was $1.6 billion and the tangible common equity to tangible assets ratio was 8.8% at March 31, 2023, compared to 8.4% at December 31, 2022. The tangible common equity to tangible assets ratio, adjusted for unrealized losses on held-to-maturity securities,3 was 8.4% at March 31, 2023 and 7.9% at December 31, 2022. Enterprise Bank & Trust remains “well-capitalized,” with a common equity tier 1 ratio of 12.0% and a total risk-based capital ratio of 13.1% as of March 31, 2023. The Company’s common equity tier 1 ratio and total risk-based capital ratio was 11.2% and 14.3%, respectively, at March 31, 2023.

The Company’s Board of Directors approved a quarterly dividend of $0.25 per common share, payable on June 30, 2023 to shareholders of record as of June 15, 2023. The Board of Directors also declared a cash dividend of $12.50 per share of Series A Preferred Stock (or $0.3125 per depositary share) representing a 5% per annum rate for the period commencing (and including) March 15, 2023 to (but excluding) June 15, 2023. The dividend will be payable on June 15, 2023 to holders of record of Series A Preferred Stock as of May 31, 2023.

•Liquidity - The Company’s total available on- and off-balance-sheet liquidity was approximately $4.4 billion at March 31, 2023. On-balance-sheet liquidity consisted of cash of $285.1 million and unpledged investment securities with a fair value of $449.2 million at March 31, 2023. In the first quarter 2023, the Company pledged additional securities to the Federal Reserve to increase its available borrowing capacity. The Company also has $937.4 million of SBA guaranteed loans, a portion of which could be sold in the secondary market to generate earnings and liquidity. Off-balance-sheet liquidity consisted of $824.1 million available through the Federal Home Loan Bank, $2.7 billion through the Federal Reserve and $140.0 million through correspondent bank lines. The Company also has an unused $25.0 million revolving line of credit and maintains a shelf registration allowing for the issuance of various forms of equity and debt securities.



3 Tangible common equity to tangible assets ratio and the tangible common equity to tangible assets ratio adjusted for unrealized losses on held-to-maturity securities are non-GAAP measures. Refer to discussion and reconciliation of these measures in the accompanying financial tables.
2

Net Interest Income and NIM
Average Balance Sheets
The following table presents, for the periods indicated, certain information related to our average interest-earning assets and interest-bearing liabilities, as well as the corresponding average interest rates earned and paid, all on a tax-equivalent basis.
Quarter ended
March 31, 2023December 31, 2022March 31, 2022
($ in thousands)Average
Balance		Interest
Income/
Expense		Average Yield/ RateAverage
Balance		Interest
Income/
Expense		Average Yield/ RateAverage
Balance		Interest
Income/
Expense		Average Yield/ Rate
Assets
Interest-earning assets:
Loans1, 2
$9,795,045 $152,762 6.33 %$9,423,984 $139,432 5.87 %$9,005,875 $96,301 4.34 %
Securities2
2,288,451 17,117 3.03 2,204,211 16,191 2.91 1,923,969 10,969 2.31 
Interest-earning deposits106,254 1,195 4.56 367,100 3,097 3.35 1,781,272 817 0.19 
Total interest-earning assets12,189,750 171,074 5.69 11,995,295 158,720 5.25 12,711,116 108,087 3.45 
Noninterest-earning assets941,445 991,273 902,887 
Total assets$13,131,195 $12,986,568 $13,614,003 
Liabilities and Shareholders’ Equity
Interest-bearing liabilities:
Interest-bearing demand accounts$2,201,910 $5,907 1.09 %$2,242,268 $4,136 0.73 %$2,505,319 $536 0.09 %
Money market accounts2,826,836 15,471 2.22 2,696,417 9,509 1.40 2,872,302 1,460 0.21 
Savings732,256 230 0.13 775,488 100 0.05 817,431 66 0.03 
Certificates of deposit670,521 3,053 1.85 524,938 1,017 0.77 607,133 797 0.53 
Total interest-bearing deposits6,431,523 24,661 1.56 6,239,111 14,762 0.94 6,802,185 2,859 0.17 
Subordinated debentures155,497 2,409 6.28 155,359 2,376 6.07 154,959 2,220 5.81 
FHLB advances110,928 1,332 4.87 8,864 104 4.65 50,000 195 1.58 
Securities sold under agreements to repurchase215,604 749 1.41 182,362 282 0.61 262,252 60 0.09 
Other borrowings53,885 353 2.66 26,993 378 5.56 22,841 82 1.46 
Total interest-bearing liabilities6,967,437 29,504 1.72 6,612,689 17,902 1.07 7,292,237 5,416 0.30 
Noninterest-bearing liabilities:
Demand deposits4,481,966 4,763,503 4,692,027 
Other liabilities113,341 119,784 93,518 
Total liabilities11,562,744 11,495,976 12,077,782 
Shareholders' equity1,568,451 1,490,592 1,536,221 
Total liabilities and shareholders' equity$13,131,195 $12,986,568 $13,614,003 
Total net interest income$141,570 $140,818 $102,671 
Net interest margin4.71 %4.66 %3.28 %
1 Average balances include nonaccrual loans. Interest income includes loan fees of $3.7 million, $3.7 million, and $5.2 million for the three months ended March 31, 2023, December 31, 2022, and March 31, 2022, respectively.
2 Non-taxable income is presented on a fully tax-equivalent basis using a 25.2% tax rate. The tax-equivalent adjustments were $2.0 million, $2.0 million, and $1.5 million for the three months ended March 31, 2023, December 31, 2022, and March 31, 2022, respectively.

Net interest income for the first quarter was $139.5 million, an increase of $0.7 million compared to the linked quarter and an increase of $38.4 million from the prior year period. The increase from the linked and prior year quarters reflects the benefit of higher market interest rates on the Company’s asset sensitive balance sheet combined with organic growth. The effective federal funds rate for the first quarter 2023 was 4.52%, an increase of 87 basis points compared to the linked quarter, and a 440 basis point increase over the prior year quarter.


3


Interest income increased $12.3 million during the first quarter 2023 primarily due to higher interest earned on a larger loan base resulting in a $13.3 million sequential expansion. This increase was partially offset by a $1.9 million decrease in interest on cash balances. Interest on loans benefited from a 46 basis point increase in yield and a $371.1 million increase in average loans compared to the linked quarter. The average interest rate of new loan originations in the first quarter 2023 was 6.53%. The yield on interest-earning cash deposits increased 121 basis points in the quarter but was offset by a $260.8 million decrease in the average balance which reduced interest income in the first quarter 2023.

Interest expense increased $11.6 million in the first quarter 2023 primarily due to a $9.9 million increase in deposit interest expense and a $1.2 million increase in interest expense on FHLB borrowings. The increase in interest expense reflects a shift in the deposit mix from demand deposits and interest-bearing demand deposits to money market accounts and certificates of deposit, as well as higher rates paid on deposits. This deposit shift principally occurred during March following the turmoil in the banking markets. The interest-bearing liability rate was 1.72%, an increase of 65 basis points compared to the linked quarter. The average cost of interest-bearing deposits was 1.56%, an increase of 62 basis points over the linked quarter. The increase was primarily due to higher rates paid on commercial money market accounts, which increased 82 basis points to 2.22% in the current quarter. The total cost of deposits, including noninterest-bearing demand accounts, was 0.92% during the first quarter 2023, compared to 0.53% in the linked quarter.

NIM, on a tax equivalent basis, was 4.71% in the first quarter 2023, an increase of five basis points from the linked quarter and an increase of 143 basis points from the prior year quarter. For the month of March 2023, the loan portfolio yield was 6.40% and the cost of total deposits was 1.04%.

Investments

Quarter ended
March 31, 2023December 31, 2022March 31, 2022
($ in thousands)Carrying ValueNet Unrealized LossCarrying ValueNet Unrealized LossCarrying ValueNet Unrealized Loss
Available-for-sale (AFS)$1,555,109 $(161,572)$1,535,807 $(193,247)$1,392,444 $(99,304)
Held-to-maturity (HTM)720,694 (65,013)709,915 (82,133)541,039 (48,255)
Total$2,275,803 $(226,585)$2,245,722 $(275,380)$1,933,483 $(147,559)

Investment securities totaled $2.3 billion at March 31, 2023, an increase of $30.1 million from the linked quarter. The increase was primarily due to a $31.7 million decrease in the unrealized loss on available-for-sale securities primarily due to a decline in longer-term rates in the quarter. Investment purchases in the quarter had a weighted average, tax equivalent yield of 4.79%. In January 2023, $28.4 million of available-for-sale investment securities with a tax equivalent yield of 4.0% were sold at a net gain of $0.4 million and were reinvested in securities with a 4.5% yield.

The average duration of the investment portfolio was 5.5 years at March 31, 2023. Due to the shorter average duration of the loan portfolio, approximately 3 years, 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 $260 million. Investment securities represented 17% of total assets at the end of the current and linked quarters, which is comparable to the Company’s historical percentage dating back to 2019. The ratio of investments to assets was 14% in the prior year quarter and was lower primarily due to the high level of on-balance-sheet liquidity due to the low rate environment at that time. The tangible common equity to tangible assets ratio adjusted for unrealized losses on held-to-maturity securities2 was 8.4% at March 31, 2023, compared to 7.9% at December 31, 2022.



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Loans
The following table presents total loans for the most recent five quarters:
Quarter ended
($ in thousands)March 31, 2023December 31, 2022September 30, 2022June 30, 2022March 31, 2022
C&I$2,005,539 $1,904,654 $1,780,677 $1,641,740 $1,438,607 
CRE investor owned2,239,932 2,176,424 2,106,458 1,977,806 1,982,645 
CRE owner occupied1,173,985 1,174,094 1,133,467 1,118,895 1,138,106 
SBA loans*1,315,732 1,312,378 1,269,065 1,284,279 1,249,929 
Sponsor finance*677,529 635,061 650,102 647,180 641,476 
Life insurance premium financing*859,910 817,115 779,606 748,376 695,640 
Tax credits*547,513 559,605 507,681 550,662 518,020 
SBA PPP loans5,438 7,272 13,165 49,175 134,084 
Residential real estate348,726 379,924 381,634 391,867 410,173 
Construction and land development590,509 534,753 513,452 626,577 610,830 
Other247,105 235,858 219,680 232,619 236,563 
Total loans$10,011,918 $9,737,138 $9,354,987 $9,269,176 $9,056,073 
Total loan yield6.33 %5.87 %5.10 %4.51 %4.34 %
Variable interest rate loans to total loans63 %63 %63 %64 %63 %
*Specialty loan category

Loans totaled $10.0 billion at March 31, 2023, increasing $274.8 million compared to the linked quarter. The increase was driven primarily by increases in C&I, CRE investor owned, construction and specialty loans. The increase in specialty loans was primarily in sponsor finance and life insurance. Each of the Company’s geographic regions increased loans during the quarter. Average line utilization was approximately 42% for the quarter ended March 31, 2023, compared to 41% and 40% for the linked and prior year quarters, respectively. The weighted average life of the loan portfolio is approximately 3 years.

Asset Quality
The following table presents the categories of nonperforming assets and related ratios for the most recent five quarters:
Quarter ended
($ in thousands)March 31,
2023		December 31,
2022		September 30,
2022		June 30,
2022		March 31,
2022
Nonperforming loans*$11,972 $9,981 $18,184 $19,560 $21,160 
Other 250 269 269 955 1,459 
Nonperforming assets*$12,222 $10,250 $18,453 $20,515 $22,619 
Nonperforming loans to total loans0.12 %0.10 %0.19 %0.21 %0.23 %
Nonperforming assets to total assets0.09 %0.08 %0.14 %0.16 %0.17 %
Allowance for credit losses to total loans1.38 %1.41 %1.50 %1.52 %1.54 %
Net charge-offs (recoveries)$(264)$2,075 $478 $(175)$1,521 
*Guaranteed balances excluded$6,835 $6,708 $6,532 $6,063 $3,954 

Nonperforming assets increased $2.0 million during the first quarter 2023 and decreased $10.4 million from the prior year quarter. A net recovery to average loans of one basis point was recognized in the first quarter 2023, compared to nine basis points of net charge-offs in the linked quarter and seven basis points of net charge-offs in the prior year quarter.



5

The provision for credit losses totaled $4.2 million in the current quarter, compared to $2.1 million in the linked quarter and a benefit of $4.1 million in the prior year quarter. The provision in the current quarter was primarily related to the impairment of an available-for-sale investment security of a failed bank and loan growth. The allowance for credit losses to total loans was 1.38% at March 31, 2023, compared to 1.41% and 1.54% in the linked and prior year quarters, respectively, and is reflective of the trend in credit quality.

Deposits
The following table presents deposits broken out by type for the most recent five quarters:
Quarter ended
($ in thousands)March 31, 2023December 31, 2022September 30, 2022June 30, 2022March 31, 2022
Noninterest-bearing demand accounts$4,192,523 $4,642,732 $4,642,539 $4,746,478 $4,881,043 
Interest-bearing demand accounts2,395,901 2,256,295 2,270,898 2,197,957 2,547,482 
Money market and savings accounts3,672,539 3,399,415 3,617,249 3,562,982 3,678,135 
Brokered certificates of deposit369,505 118,968 129,039 129,064 129,017 
Other certificates of deposit524,168 411,740 397,869 456,137 468,458 
Total deposit portfolio$11,154,636 $10,829,150 $11,057,594 $11,092,618 $11,704,135 
Noninterest-bearing deposits to total deposits37.6 %42.9 %42.0 %42.8 %41.7 %
Total costs of deposits0.92 %0.53 %0.31 %0.13 %0.10 %

Total deposits at March 31, 2023 were $11.2 billion, an increase of $325.5 million from December 31, 2022, and a decrease of $549.5 million from March 31, 2022. The increase from the linked quarter includes $250.5 million in brokered certificates of deposit used for term liquidity purposes in place of FHLB borrowings. The mix of the deposit portfolio shifted from noninterest bearing demand deposits to higher yielding categories in the current quarter primarily due to the competitive interest rate environment. Excluding brokered certificates of deposit, total deposits increased $75.0 million in the current quarter. Reciprocal deposits, which are placed through third party programs to provide FDIC insurance on larger deposit relationships, totaled $486.7 million at March 31, 2023, compared to $205.8 million at December 31, 2022.

Total estimated insured deposits, which includes collateralized deposits, reciprocal accounts and accounts that qualify for pass-through insurance, totaled $7.7 billion at the end of March 31, 2023 compared to $4.9 billion in the linked quarter. The increase in insured deposits was the result of an increase in reciprocal deposits and accounts that qualify for pass-through insurance.

Noninterest Income and Expense
The following tables present a comparative summary of the major components of noninterest income, other income, and noninterest expense for the periods indicated:
Linked quarter comparisonPrior year comparison
Quarter ended Quarter ended
($ in thousands)March 31, 2023December 31, 2022Increase (decrease)March 31, 2022Increase (decrease)
Deposit service charges4,128 4,463 $(335)(8)%4,163 $(35)(1)%
Wealth management revenue2,516 2,423 93 4 %2,622 (106)(4)%
Card services revenue2,338 2,345 (7)— %3,040 (702)(23)%
Tax credit income 1,813 2,389 (576)(24)%2,608 (795)(30)%
Other income6,103 5,253 850 16 %6,208 (105)(2)%
Total noninterest income$16,898 $16,873 $25 — %$18,641 $(1,743)(9)%



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Total noninterest income was $16.9 million for the current quarter, stable with the linked quarter and a decrease of $1.7 million from the prior year quarter. The $1.7 million decrease from the prior year quarter was primarily due to decreases in tax credit income and card services revenue. Lower transaction volumes led to the decrease in tax credit income while the Durbin Amendment cap on debit card income limited card services revenue since July 1, 2022.

Linked quarter comparisonPrior year comparison
Quarter ended Quarter ended
($ in thousands)March 31, 2023December 31, 2022Increase (decrease)March 31, 2022Increase (decrease)
BOLI$791 $773 $18 2 %$1,034 $(243)(24)%
Community development investments595 2,775 (2,180)(79)%2,166 (1,571)(73)%
Private equity fund distribution1,749 433 1,316 304 %188 1,561 830 %
Servicing fees512 181 331 183 %658 (146)(22)%
Swap fees250 189 61 32 %1,156 (906)(78)%
Miscellaneous income2,206 902 1,304 145 %1,006 1,200 119 %
Total other income$6,103 $5,253 $850 16 %$6,208 $(105)(2)%

Community development and private equity distributions included in other income are not consistent sources of income and fluctuate based on distributions from the underlying funds. Servicing fee income may also fluctuate based on prepayment experience and changes to the discount rate used in the valuation of the servicing rights. Swap fee income is generated from customer hedging activities and was higher in the prior year quarter when market rates started to increase. The increase in miscellaneous income from the linked and prior year quarters was primarily due to a gain on the sale of SBA loans and a gain on the sale of investment securities. In the first quarter 2023, SBA loans totaling $8.8 million were sold and $28.4 million of lower-yielding investment securities were sold in January at a gain and the proceeds were reinvested at a higher yield.
Linked quarter comparisonPrior year comparison
Quarter ended Quarter ended
($ in thousands)March 31, 2023December 31,
2022		Increase (decrease)March 31, 2022Increase (decrease)
Employee compensation and benefits$42,503 $38,175 $4,328 11 %$35,827 $6,676 19 %
Occupancy4,061 4,248 (187)(4)%4,586 (525)(11)%
Deposit costs12,720 13,256 (536)(4)%4,260 8,460 199 %
Other expense21,699 21,470 229 1 %18,127 3,572 20 %
Total noninterest expense$80,983 $77,149 $3,834 5 %$62,800 $18,183 29 %
Noninterest expense was $81.0 million for the first quarter 2023, compared to $77.1 million for the linked quarter, and $62.8 million for the prior year quarter. Employee compensation and benefits increased $4.3 million from the linked quarter primarily due to a $3.4 million increase in employer payroll taxes and 401(k) matches that are seasonally higher in the first quarter each year, and a $3.3 million increase in salaries due to annual merit increases that became effective on March 1, 2023 and an increase in the associate base. These increases were partially offset by a $3.8 million decline in variable compensation that is typically higher in the fourth quarter each year. Deposit costs declined slightly from the linked quarter primarily due to higher year-end settlements that occurred in the linked quarter. Deposit costs relate to certain specialized deposit businesses that are impacted by higher interest rates as well as increasing average balances.

The increase in noninterest expense of $18.2 million from the prior year quarter was primarily an increase in the associate base, merit increases throughout 2022 and 2023, and an increase in variable deposit costs.

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For the first quarter 2023, the Company’s efficiency ratio was 51.8%, compared to 49.6% and 52.4% for the linked quarter and prior year quarter, respectively. The Company’s core efficiency ratio4 was 50.5% for the quarter ended March 31, 2023, compared to 48.1% for the linked quarter and 50.6% for the prior year quarter.

Income Taxes
The Company’s effective tax rate was 22% for each of the current, linked and prior year quarters.

Capital
The following table presents total equity and various EFSC capital ratios for the most recent five quarters:
Quarter ended
($ in thousands)March 31, 2023*December 31, 2022September 30, 2022June 30, 2022March 31, 2022
Shareholders’ equity$1,592,820 $1,522,263 $1,446,218 $1,447,412 $1,473,177 
Total risk-based capital to risk-weighted assets14.3 %14.2 %14.2 %14.2 %14.4 %
Tier 1 capital to risk weighted assets12.6 %12.6 %12.6 %12.5 %12.7 %
Common equity tier 1 capital to risk-weighted assets11.2 %11.1 %11.0 %10.9 %11.0 %
Tangible common equity to tangible assets8.8 %8.4 %7.9 %7.8 %7.6 %
Leverage ratio11.1 %10.9 %10.4 %9.8 %9.6 %
                
*Capital ratios for the current quarter are preliminary and subject to, among other things, completion and filing of the Company’s regulatory reports and ongoing regulatory review.

Total equity was $1.6 billion at March 31, 2023, an increase of $70.6 million from the linked quarter. The increase was primarily due to current period net income of $55.7 million and a $24.4 million increase in accumulated other comprehensive income, primarily due to a net fair value increase in the Company’s fixed-rate, available-for-sale investment portfolio. These increases were partially offset by common and preferred stock dividends of $10.3 million. The Company’s tangible common book value per share was $30.55 at March 31, 2023, compared to $28.67 and $27.06 in the linked and prior year quarters, respectively.

The Company’s regulatory capital ratios continue to exceed the “well-capitalized” regulatory benchmark. Capital ratios for the current quarter are subject to, among other things, completion and filing of the Company’s regulatory reports and ongoing regulatory review.

Use of Non-GAAP Financial Measures
The Company’s accounting and reporting policies conform to generally accepted accounting principles in the United States (“GAAP”) and the prevailing practices in the banking industry. However, the Company provides other financial measures, such as tangible common equity, PPNR, ROATCE, PPNR return on average assets (“PPNR ROAA”), core efficiency ratio, the tangible common equity ratio, and tangible book value per common share, in this release 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, PPNR, ROATCE, PPNR ROAA, core efficiency ratio, the tangible common equity ratio, and tangible book value per common share, collectively “core performance measures,” presented in this earnings release 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 merger-related expenses, facilities charges, and the gain or loss on sale of investment securities, that the Company believes to be

4 Core efficiency ratio is a non-GAAP measure. Refer to discussion and reconciliation of this measure in the accompanying financial tables.
8

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.

Conference Call and Webcast Information
The Company will host a conference call and webcast at 10:00 a.m. Central Time on Tuesday, April 25, 2023. During the call, management will review the first quarter 2023 results and related matters. This press release as well as a related slide presentation will be accessible on the Company’s website at www.enterprisebank.com under “Investor Relations” prior to the scheduled broadcast of the conference call. The call can be accessed via this same website page, or via telephone at 1-888-550-5279 (Conference ID #7004515). A recorded replay of the conference call will be available on the website approximately two hours after the call’s completion. Visit https://bit.ly/EFSC1Q2023earnings to register. The replay will be available for approximately two weeks following the conference call.

About Enterprise Financial Services Corp
Enterprise Financial Services Corp (Nasdaq: EFSC), with approximately $13.3 billion in assets, is a financial holding company headquartered in Clayton, Missouri. Enterprise Bank & Trust, a Missouri state-chartered trust company with banking powers and a wholly-owned subsidiary of EFSC, operates branch offices in Arizona, California, Florida, Kansas, Missouri, Nevada, and New Mexico, and SBA loan and deposit production offices throughout the country. Enterprise Bank & Trust offers a range of business and personal banking services and wealth management services. Enterprise Trust, a division of Enterprise Bank & Trust, provides financial planning, estate planning, investment management and trust services to businesses, individuals, institutions, retirement plans and non-profit organizations. Additional information is available at www.enterprisebank.com.

Enterprise Financial Services Corp’s common stock is traded on the Nasdaq Stock Market under the symbol “EFSC.” Please visit our website at www.enterprisebank.com to see our regularly posted material information.

Forward-looking Statements
Readers should note that, in addition to the historical information contained herein, this press release contains “forward-looking statements” within the meaning of, and intended to be covered by, the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on management’s current expectations and beliefs concerning future developments and their potential effects on the Company including, without limitation, plans, strategies and goals, and statements about the Company’s expectations regarding revenue and asset growth, financial performance and profitability, loan and deposit growth, liquidity, yields and returns, loan diversification and credit management, shareholder value creation and the impact of acquisitions.

Forward-looking statements are typically identified by words such as “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project,” “pro forma” and other similar words and expressions. Forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made. Because forward-looking statements are subject to assumptions
9

and uncertainties, actual results or future events could differ, possibly materially, from those anticipated in the forward-looking statements and future results could differ materially from historical performance. They are neither statements of historical fact nor guarantees or assurances of future performance. While there is no assurance that any list of risks and uncertainties or risk factors is complete, important factors that could cause actual results to differ materially from those in the forward-looking statements include the following, without limitation: the Company’s ability to efficiently integrate acquisitions into its operations, retain the customers of these businesses and grow the acquired operations, as well as credit risk, changes in the appraised valuation of real estate securing impaired loans, outcomes of litigation and other contingencies, exposure to general and local economic and market conditions, high unemployment rates, higher inflation and its impacts (including U.S. federal government measures to address higher inflation), U.S. fiscal debt, budget and tax matters, and any slowdown in global economic growth, risks associated with rapid increases or decreases in prevailing interest rates, our ability to attract and retain deposits and access to other sources of liquidity, consolidation in the banking industry, competition from banks and other financial institutions, the Company’s ability to attract and retain relationship officers and other key personnel, burdens imposed by federal and state regulation, changes in legislative or regulatory requirements, as well as current, pending or future legislation or regulation that could have a negative effect on our revenue and businesses, including rules and regulations relating to bank products and financial services, changes in accounting policies and practices or accounting standards, changes in the method of determining LIBOR and the phase out of LIBOR, natural disasters, terrorist activities, war and geopolitical matters (including the war in Ukraine and the imposition of additional sanctions and export controls in connection therewith), or pandemics, including the COVID-19 pandemic, and their effects on economic and business environments in which we operate, including the ongoing disruption to the financial market and other economic activity caused by the continuing COVID-19 pandemic, and those factors and risks referenced from time to time in the Company’s filings with the Securities and Exchange Commission (the “SEC”), including in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, and the Company’s other filings with the SEC. 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.

For any forward-looking statements made in this press release or in any documents, EFSC claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

Readers are cautioned not to place undue reliance on any forward-looking statements. Except to the extent required by applicable law or regulation, EFSC disclaims any obligation to revise or publicly release any revision or update to any of the forward-looking statements included herein to reflect events or circumstances that occur after the date on which such statements were made.

For more information contact
Investor Relations: Keene Turner, Executive Vice President and CFO (314) 512-7233
Media: Steve Richardson, Senior Vice President (314) 995-5695
10

ENTERPRISE FINANCIAL SERVICES CORP
CONSOLIDATED FINANCIAL SUMMARY (unaudited)
Quarter ended
(in thousands, except per share data)Mar 31,
2023		Dec 31,
2022		Sep 30,
2022		Jun 30,
2022		Mar 31,
2022
EARNINGS SUMMARY
Net interest income$139,529 $138,835 $124,290 $109,613 $101,165 
Provision (benefit) for credit losses4,183 2,123 676 658 (4,068)
Noninterest income16,898 16,873 9,454 14,194 18,641 
Noninterest expense80,983 77,149 68,843 65,424 62,800 
Income before income tax expense71,261 76,436 64,225 57,725 61,074 
Income tax expense15,523 16,435 14,025 12,576 13,381 
Net income55,738 60,001 50,200 45,149 47,693 
Preferred stock dividends938 937 937 938 1,229 
Net income available to common shareholders$54,800 $59,064 $49,263 $44,211 $46,464 
Diluted earnings per common share$1.46 $1.58 $1.32 $1.19 $1.23 
Return on average assets1.72 %1.83 %1.51 %1.34 %1.42 %
Return on average common equity14.85 %16.52 %13.74 %12.65 %12.87 %
ROATCE1
19.93 %22.62 %18.82 %17.44 %17.49 %
Net interest margin (tax equivalent)4.71 %4.66 %4.10 %3.55 %3.28 %
Efficiency ratio51.77 %49.55 %51.47 %52.84 %52.42 %
Core efficiency ratio1
50.47 %48.10 %49.80 %51.03 %50.60 %
Loans$10,011,918 $9,737,138 $9,354,987 $9,269,176 $9,056,073 
Average loans$9,795,045 $9,423,984 $9,230,738 $9,109,131 $9,005,875 
Assets$13,325,982 $13,054,172 $12,994,787 $13,084,506 $13,706,769 
Average assets$13,131,195 $12,986,568 $13,158,121 $13,528,474 $13,614,003 
Deposits$11,154,636 $10,829,150 $11,057,594 $11,092,618 $11,704,135 
Average deposits$10,913,489 $11,002,614 $11,154,895 $11,530,432 $11,494,212 
Period end common shares outstanding37,311 37,253 37,223 37,206 37,516 
Dividends per common share$0.25 $0.24 $0.23 $0.22 $0.21 
Tangible book value per common share$30.55 $28.67 $26.62 $26.63 $27.06 
Tangible common equity to tangible assets1
8.81 %8.43 %7.86 %7.80 %7.62 %
Total risk-based capital to risk-weighted assets14.3 %14.2 %14.2 %14.2 %14.4 %
1Refer to Reconciliations of Non-GAAP Financial Measures table for a reconciliation of these measures to GAAP.



11

ENTERPRISE FINANCIAL SERVICES CORP
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
Quarter ended
($ in thousands, except per share data)Mar 31,
2023		Dec 31,
2022		Sep 30,
2022		Jun 30,
2022		Mar 31,
2022
INCOME STATEMENTS
NET INTEREST INCOME
Interest income$169,033 $156,737 $135,695 $116,069 $106,581 
Interest expense29,504 17,902 11,405 6,456 5,416 
Net interest income139,529 138,835 124,290 109,613 101,165 
Provision (benefit) for credit losses4,183 2,123 676 658 (4,068)
Net interest income after provision (benefit) for credit losses135,346 136,712 123,614 108,955 105,233 
NONINTEREST INCOME
Deposit service charges4,128 4,463 4,951 4,749 4,163 
Wealth management revenue2,516 2,423 2,432 2,533 2,622 
Card services revenue2,338 2,345 2,652 3,514 3,040 
Tax credit income (loss)1,813 2,389 (3,625)1,186 2,608 
Other income6,103 5,253 3,044 2,212 6,208 
Total noninterest income16,898 16,873 9,454 14,194 18,641 
NONINTEREST EXPENSE
Employee compensation and benefits42,503 38,175 36,999 36,028 35,827 
Occupancy4,061 4,248 4,497 4,309 4,586 
Deposit costs12,720 13,256 7,661 5,905 4,260 
Other expense21,699 21,470 19,686 19,182 18,127 
Total noninterest expense80,983 77,149 68,843 65,424 62,800 
Income before income tax expense71,261 76,436 64,225 57,725 61,074 
Income tax expense15,523 16,435 14,025 12,576 13,381 
Net income $55,738 $60,001 $50,200 $45,149 $47,693 
Preferred stock dividends938 937 937 938 1,229 
Net income available to common shareholders$54,800 $59,064 $49,263 $44,211 $46,464 
Basic earnings per common share$1.47 $1.59 $1.32 $1.19 $1.23 
Diluted earnings per common share$1.46 $1.58 $1.32 $1.19 $1.23 

12

ENTERPRISE FINANCIAL SERVICES CORP
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
    
Quarter ended
($ in thousands)Mar 31,
2023		Dec 31,
2022		Sep 30,
2022		Jun 30,
2022		Mar 31,
2022
BALANCE SHEETS
ASSETS
Cash and due from banks$210,813 $229,580 $264,078 $271,763 $252,706 
Interest-earning deposits81,241 69,808 489,825 680,343 1,735,708 
Debt and equity investments2,338,746 2,309,512 2,171,942 2,172,318 1,993,927 
Loans held for sale261 1,228 785 4,615 4,270 
Loans10,011,918 9,737,138 9,354,987 9,269,176 9,056,073 
Allowance for credit losses(138,295)(136,932)(140,572)(140,546)(139,212)
Total loans, net9,873,623 9,600,206 9,214,415 9,128,630 8,916,861 
Fixed assets, net42,340 42,985 43,882 46,028 46,900 
Goodwill365,164 365,164 365,164 365,164 365,164 
Intangible assets, net15,680 16,919 18,217 19,528 20,855 
Other assets398,114 418,770 426,479 396,117 370,378 
Total assets$13,325,982 $13,054,172 $12,994,787 $13,084,506 $13,706,769 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Noninterest-bearing deposits$4,192,523 $4,642,732 $4,642,539 $4,746,478 $4,881,043 
Interest-bearing deposits6,962,113 6,186,418 6,415,055 6,346,140 6,823,092 
Total deposits11,154,636 10,829,150 11,057,594 11,092,618 11,704,135 
Subordinated debentures and notes155,569 155,433 155,298 155,164 155,031 
FHLB advances100,000 100,000 — 50,000 50,000 
Other borrowings213,489 324,119 197,422 226,695 228,846 
Other liabilities109,468 123,207 138,255 112,617 95,580 
Total liabilities11,733,162 11,531,909 11,548,569 11,637,094 12,233,592 
Shareholders’ equity:
Preferred stock71,988 71,988 71,988 71,988 71,988 
Common stock373 373 372 372 395 
Treasury stock— — — — (73,528)
Additional paid-in capital984,281 982,660 979,543 976,684 1,010,446 
Retained earnings642,153 597,574 547,506 506,849 523,136 
Accumulated other comprehensive loss(105,975)(130,332)(153,191)(108,481)(59,260)
Total shareholders’ equity1,592,820 1,522,263 1,446,218 1,447,412 1,473,177 
Total liabilities and shareholders’ equity$13,325,982 $13,054,172 $12,994,787 $13,084,506 $13,706,769 


13

ENTERPRISE FINANCIAL SERVICES CORP
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
Quarter ended
($ in thousands)Mar 31,
2023		Dec 31,
2022		Sep 30,
2022		Jun 30,
2022		Mar 31,
2022
LOAN PORTFOLIO
Commercial and industrial$4,032,189 $3,859,882 $3,709,893 $3,596,701 $3,398,723 
Commercial real estate4,699,302 4,628,371 4,438,647 4,294,375 4,278,138 
Construction real estate663,264 611,565 583,649 724,163 702,630 
Residential real estate364,059 395,537 397,450 413,727 432,639 
Other253,104 241,783 225,348 240,210 243,943 
Total loans$10,011,918 $9,737,138 $9,354,987 $9,269,176 $9,056,073 
DEPOSIT PORTFOLIO
Noninterest-bearing demand accounts$4,192,523 $4,642,732 $4,642,539 $4,746,478 $4,881,043 
Interest-bearing demand accounts2,395,901 2,256,295 2,270,898 2,197,957 2,547,482 
Money market and savings accounts3,672,539 3,399,415 3,617,249 3,562,982 3,678,135 
Brokered certificates of deposit369,505 118,968 129,039 129,064 129,017 
Other certificates of deposit524,168 411,740 397,869 456,137 468,458 
Total deposits$11,154,636 $10,829,150 $11,057,594 $11,092,618 $11,704,135 
AVERAGE BALANCES
Loans$9,795,045 $9,423,984 $9,230,738 $9,109,131 $9,005,875 
Securities2,288,451 2,204,211 2,202,255 2,068,119 1,923,969 
Interest-earning assets12,189,750 11,995,295 12,198,251 12,579,211 12,711,116 
Assets13,131,195 12,986,568 13,158,121 13,528,474 13,614,003 
Deposits10,913,489 11,002,614 11,154,895 11,530,432 11,494,212 
Shareholders’ equity1,568,451 1,490,592 1,494,504 1,474,267 1,536,221 
Tangible common equity1
1,115,052 1,035,896 1,038,495 1,016,940 1,077,529 
YIELDS (tax equivalent)
Loans6.33 %5.87 %5.10 %4.51 %4.34 %
Securities3.03 2.91 2.65 2.51 2.31 
Interest-earning assets5.69 5.25 4.47 3.76 3.45 
Interest-bearing deposits1.56 0.94 0.54 0.24 0.17 
Deposits0.92 0.53 0.31 0.13 0.10 
Subordinated debentures and notes6.28 6.07 5.91 5.84 5.81 
FHLB advances and other borrowed funds2.60 1.39 0.66 0.51 0.41 
Interest-bearing liabilities1.72 1.07 0.67 0.37 0.30 
Net interest margin4.71 4.66 4.10 3.55 3.28 
1Refer to Reconciliations of Non-GAAP Financial Measures table for a reconciliation of these measures to GAAP.


14

ENTERPRISE FINANCIAL SERVICES CORP
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
Quarter ended
(in thousands, except per share data)Mar 31,
2023		Dec 31,
2022		Sep 30,
2022		Jun 30,
2022		Mar 31,
2022
ASSET QUALITY
Net charge-offs (recoveries)$(264)$2,075 $478 $(175)$1,521 
Nonperforming loans11,972 9,981 18,184 19,560 21,160 
Classified assets110,384 99,122 98,078 96,801 93,199 
Nonperforming loans to total loans0.12 %0.10 %0.19 %0.21 %0.23 %
Nonperforming assets to total assets0.09 %0.08 %0.14 %0.16 %0.17 %
Allowance for credit losses to total loans1.38 %1.41 %1.50 %1.52 %1.54 %
Allowance for credit losses to nonperforming loans1,155.2 %1,371.9 %773.1 %718.5 %657.9 %
Net charge-offs (recoveries) to average loans -annualized(0.01)%0.09 %0.02 %(0.01)%0.07 %
WEALTH MANAGEMENT
Trust assets under management$1,956,146 $1,885,394 $1,691,230 $1,757,228 $1,943,428 
MARKET DATA
Book value per common share$40.76 $38.93 $36.92 $36.97 $37.35 
Tangible book value per common share1
$30.55 $28.67 $26.62 $26.63 $27.06 
Market value per share$44.59 $48.96 $44.04 $41.50 $47.31 
Period end common shares outstanding37,311 37,253 37,223 37,206 37,516 
Average basic common shares37,305 37,257 37,241 37,243 37,788 
Average diluted common shares37,487 37,415 37,348 37,282 37,858 
CAPITAL
Total risk-based capital to risk-weighted assets14.3 %14.2 %14.2 %14.2 %14.4 %
Tier 1 capital to risk-weighted assets12.6 %12.6 %12.6 %12.5 %12.7 %
Common equity tier 1 capital to risk-weighted assets11.2 %11.1 %11.0 %10.9 %11.0 %
Tangible common equity to tangible assets1
8.8 %8.4 %7.9 %7.8 %7.6 %
1Refer to Reconciliations of Non-GAAP Financial Measures table for a reconciliation of these measures to GAAP.
15

ENTERPRISE FINANCIAL SERVICES CORP
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
Quarter ended
($ in thousands)Mar 31,
2023		Dec 31,
2022		Sep 30,
2022		Jun 30,
2022		Mar 31,
2022
CORE EFFICIENCY RATIO
Net interest income (GAAP)$139,529 $138,835 $124,290 $109,613 $101,165 
Tax-equivalent adjustment2,041 1,983 1,854 1,699 1,506 
Noninterest income (GAAP)16,898 16,873 9,454 14,194 18,641 
Less gain on sale of investment securities381 — — — — 
Less gain (loss) on sale of other real estate owned90 — (22)(90)19 
Core revenue (non-GAAP)157,997 157,691 135,620 125,596 121,293 
Noninterest expense (GAAP)80,983 77,149 68,843 65,424 62,800 
Less amortization on intangibles1,239 1,299 1,310 1,328 1,430 
Core noninterest expense (non-GAAP)79,744 75,850 67,533 64,096 61,370 
Core efficiency ratio (non-GAAP)50.47 %48.10 %49.80 %51.03 %50.60 %

Quarter ended
($ in thousands)Mar 31,
2023		Dec 31,
2022		Sep 30,
2022		Jun 30,
2022		Mar 31,
2022
TANGIBLE COMMON EQUITY, TANGIBLE BOOK VALUE PER SHARE AND TANGIBLE COMMON EQUITY RATIO
Shareholders’ equity$1,592,820 $1,522,263 $1,446,218 $1,447,412 $1,473,177 
Less preferred stock71,988 71,988 71,988 71,988 71,988 
Less goodwill365,164 365,164 365,164 365,164 365,164 
Less intangible assets15,680 16,919 18,217 19,528 20,855 
Tangible common equity$1,139,988 $1,068,192 $990,849 $990,732 $1,015,170 
Less net unrealized losses on HTM portfolio, after tax of 25.2%48,630 61,435 81,752 60,512 36,095 
Tangible common equity adjusted for unrealized losses on HTM securities$1,091,358 $1,006,757 $909,097 $930,220 $979,075 
Common shares outstanding37,311 37,253 37,223 37,206 37,516 
Tangible book value per share$30.55 $28.67 $26.62 $26.63 $27.06 
Total assets$13,325,982 $13,054,172 $12,994,787 $13,084,506 $13,706,769 
Less goodwill365,164 365,164 365,164 365,164 365,164 
Less intangible assets15,680 16,919 18,217 19,528 20,855 
Tangible assets$12,945,138 $12,672,089 $12,611,406 $12,699,814 $13,320,750 
Tangible common equity to tangible assets8.81 %8.43 %7.86 %7.80 %7.62 %
Tangible common equity to tangible assets adjusted for unrealized losses on HTM securities8.43 %7.94 %7.21 %7.32 %7.35 %


16

Quarter Ended
($ in thousands)Mar 31,
2023		Dec 31,
2022		Sep 30,
2022		Jun 30,
2022		Mar 31,
2022
RETURN ON AVERAGE TANGIBLE COMMON EQUITY (ROATCE)
Average shareholder’s equity $1,568,451 $1,490,592 $1,494,504 $1,474,267 $1,536,221 
Less average preferred stock71,988 71,988 71,988 71,988 71,988 
Less average goodwill365,164 365,164 365,164 365,164 365,164 
Less average intangible assets16,247 17,544 18,857 20,175 21,540 
Average tangible common equity$1,115,052 $1,035,896 $1,038,495 $1,016,940 $1,077,529 
Net income available to common shareholders (GAAP)$54,800 $59,064 $49,263 $44,211 $46,464 
ROATCE19.93 %22.62 %18.82 %17.44 %17.49 %
Quarter ended
($ in thousands)Mar 31,
2023		Dec 31,
2022		Sep 30,
2022		Jun 30,
2022		Mar 31,
2022
CALCULATION OF PRE-PROVISION NET REVENUE (PPNR)
Net interest income$139,529 $138,835 $124,290 $109,613 $101,165 
Noninterest income16,898 16,873 9,454 14,194 18,641 
Less gain on sale of investment securities381 — — — — 
Less gain (loss) on sale of other real estate owned90 — (22)(90)19 
Less noninterest expense80,983 77,149 68,843 65,424 62,800 
PPNR$74,973 $78,559 $64,923 $58,473 $56,987 
Average assets$13,131,195 $12,986,568 $13,158,121 $13,528,474 $13,614,003 
ROAA - GAAP net income1.72 %1.83 %1.51 %1.34 %1.42 %
PPNR ROAA - PPNR 2.32 %2.40 %1.96 %1.73 %1.70 %

17