Enterprise Financial Services Corp Reports Third Quarter 2026 Results

ST. LOUIS--(BUSINESS WIRE)--Enterprise Financial Services Corp (Nasdaq: EFSC) (the “Company” or “EFSC”) today announced financial results for the third quarter of 2026. “The strong loan and deposit growth that our team delivered this quarter reflects our associates’ continued commitment to our clients and the strength of our diversified business platform,” said Jim Lally, President and Chief Executive Officer. “We have continued to grow net interest income which helped offset a higher provision for credit losses for the quarter. The strength of our balance sheet and solid return profile provides the foundation to support our growth while continuing to return capital to stockholders.”

Comparisons to the prior year quarter 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 quarter 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.

Highlights

• Earnings - Net income in the third quarter 2026 was $42.4 million, an increase of $1.5 million and a decrease of $2.8 million compared to the linked and prior year quarters, respectively. Earnings per diluted common share for the third quarter 2026 was $1.14, compared to $1.09 and $1.19 for the linked and prior year quarters, respectively. Adjusted diluted earnings per share² was $1.17 in the third quarter 2026, compared to $1.13 and $1.20 in the linked and prior year quarters, respectively.

• Pre-provision net revenue (“PPNR”)² - PPNR of $74.6 million in the third quarter 2026 increased $6.4 million and $9.0 million from the linked and prior year quarter, respectively. The increase from the linked and prior year quarters was primarily due to an increase in net interest income. Compared to the prior year quarter, 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 2026 increased $5.9 million and $16.3 million from the linked and prior year quarters, 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 quarter, net interest income increased primarily due to higher average loan and investment balances and a decrease on rates paid on interest-bearing liabilities. NIM was 4.30% for the current and linked quarters, respectively, and 4.23% for the prior year quarter. The total cost of deposits of 1.54% for the third quarter 2026 increased one basis point and decreased 26 basis points from the linked and prior year quarters, respectively.

• Noninterest income - Noninterest income of $13.2 million for the third quarter 2026 decreased $0.3 million and $35.4 million from the linked and prior year quarters, respectively. Excluding the anticipated insurance proceeds from the pending claim related to the tax credit recapture event included in the prior year quarter, noninterest income decreased $3.3 million from the prior year quarter. The decrease in noninterest income from the linked and prior year quarters was primarily due to a decrease in tax credit income and a net loss on other real estate owned (“OREO”), partially offset by higher rental income included in other income.

• Noninterest expense - Noninterest expense of $114.7 million for the third quarter 2026 decreased $1.1 million from the linked quarter and increased $4.9 million from the prior year quarter. The decrease from the linked quarter was primarily driven by lower employee compensation, partially offset by an increase in loan and legal expenses related to OREO and loan workouts. Compared to the prior year quarter, the increase was primarily due to an increase in loan and legal expenses related to OREO and loan workouts, and higher employee compensation as a result of an increase in the associate base and merit increases.

• Loans - Loans totaled $12.3 billion at September 30, 2026, an increase of $452.3 million and $761.6 million from the linked and prior year quarters, respectively. Average loans totaled $12.1 billion for the current quarter, compared to $11.8 billion and $11.5 billion for the linked and prior year quarters, respectively.

• Asset quality - The allowance for credit losses to total loans was 1.17% at September 30, 2026 and June 30, 2026, respectively, and 1.29% at September 30, 2025. The provision for credit losses in the third quarter 2026 was $18.1 million, compared to $14.2 million and $8.4 million for the linked and prior year quarters, respectively. The ratio of nonperforming assets to total assets was 1.03% at September 30, 2026, compared to 0.92% and 0.83% at June 30, 2026 and September 30, 2025, respectively.

• Deposits - Deposits totaled $15.1 billion at September 30, 2026, an increase of $624.4 million and $1.6 billion from the linked and prior year quarters, respectively. Average deposits were $15.0 billion for the current quarter, compared to $14.6 billion and $13.6 billion for the linked and prior year quarter, respectively. At September 30, 2026, noninterest-bearing deposit accounts totaled $5.0 billion, or 33% of total deposits, and the loan to deposit ratio was 82%.

• Capital - Total stockholders’ equity was $1.9 billion and the tangible common equity to tangible assets ratio³ was 8.13% at September 30, 2026, compared to $2.0 billion and 9.04%, respectively, at June 30, 2026. Enterprise Bank & Trust remains “well-capitalized,” with a common equity tier 1 ratio of 11.8% and a total risk-based capital ratio of 12.8% at September 30, 2026. The Company’s common equity tier 1 ratio and total risk-based capital ratio were 11.1% and 14.4%, respectively, at September 30, 2026.

The Company’s Board of Directors (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.

Net Interest Income and NIM

Average Balance Sheets

The following table presents, for the periods indicated, certain information related to the 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.

Net interest income of $174.6 million for the third quarter 2026 increased $5.9 million and $16.3 million from the linked and prior year quarters, respectively. Net interest income on a tax-equivalent basis was $177.9 million, $172.1 million and $161.3 million for the current, linked and prior year quarters, 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. Compared to the prior year quarter, the increase in net interest income was primarily due to growth in the average balance of interest-earning assets and lower rates paid on interest-bearing liabilities, specifically certificates of deposit and money market accounts.

Interest income for the third quarter 2026 increased $8.9 million and $12.8 million from the linked and prior year quarters, respectively. The increase from the linked quarter was 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 quarter, the increase in interest income was primarily due to an increase of $613.1 million and $531.2 million in average loan and investment securities balances, respectively, partially offset by a 15 basis point decrease in the yield on interest-earning assets. The average interest rate of new loan originations in the third quarter 2026 was 6.61%, and investment purchases in the third quarter 2026 had a weighted average, tax-equivalent yield of 4.74%.

Interest expense in the third quarter 2026 increased $3.0 million and decreased $3.5 million from the linked and prior year quarters, 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 quarter, the decrease was primarily due to decreased interest paid on interest-bearing liabilities, partially offset by a $806.1 million increase in the average balance of interest-bearing liabilities. The rate paid on interest-bearing liabilities was 2.42% during the third quarter 2026, compared to 2.39% and 2.77% in the linked and prior year quarters, respectively.

NIM, on a tax-equivalent basis, was 4.30% in the third quarter 2026, stable with the linked quarter and an increase of seven basis points from the prior year quarter. For the month of September 2026, the loan portfolio yield was 6.47% and the cost of total deposits was 1.57%.

Investments

Investment securities totaled $3.8 billion at September 30, 2026, a decrease of $71.5 million from the linked quarter. The tangible common equity to tangible assets ratio adjusted for unrealized losses on HTM securities⁴ was 7.63% at September 30, 2026, compared to 8.87% at June 30, 2026.

Loans

The following table presents total loans for the most recent five quarters:

Loans totaled $12.3 billion at September 30, 2026, an increase of $452.3 million compared to the linked quarter. The increase from the linked quarter was primarily driven by a 12% increase in the construction and land development portfolio, an 8% increase in the life insurance premium financing portfolio and a 5% increase in the CRE investor owned portfolio. Combined, these three categories accounted for $310 million in net loan growth during the current quarter. Loan production outpaced repayment activity in the quarter with loan volume of $1.3 billion compared to repayment activity of $800.7 million. Average line utilization was approximately 47% for the current and linked quarters, respectively, compared to 45% for the prior year quarter.

Asset Quality

The following table presents the categories of nonperforming assets and related ratios for the most recent five quarters:

The following table presents a summary of nonperforming assets by loan category as of September 30, 2026:

Nonperforming assets increased $22.4 million and $47.2 million from the linked and prior year quarters, respectively. 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. The increase in nonperforming assets compared to the linked quarter is primarily due to $18.0 million in agricultural-related loans, a $7.5 million CRE relationship and a $4.1 million C&I relationship that went on nonaccrual.

The provision for credit losses totaled $18.1 million in the third quarter 2026, compared to $14.2 million and $8.4 million in the linked and prior year quarters, respectively. The third quarter 2026 provision for credit losses was driven mainly by $11.0 million in 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 the $2.6 million charge-off noted above. Annualized net charge-offs totaled 36 basis points of average loans in the current quarter, compared to 46 basis points in the linked quarter and 14 basis points of average loans in the prior year quarter.

Deposits

The following table presents deposits broken out by type for the most recent five quarters:

Total deposits at September 30, 2026 were $15.1 billion, an increase of $624.4 million and $1.6 billion from the linked and prior year quarters, respectively. Average deposits for the three months ended September 30, 2026 were $15.0 billion, compared to $14.6 billion and $13.6 billion for the three months ended June 30, 2026 and September 30, 2025, respectively. Reciprocal deposits, which are placed through third party programs to provide FDIC insurance on larger deposit relationships, totaled $1.3 billion and $1.2 billion at September 30, 2026 and June 30, 2026, respectively.

Noninterest Income

The following table presents a comparative summary of the major components of noninterest income for the periods indicated:

Total noninterest income was $13.2 million for the third quarter 2026, a decrease of $0.3 million and $35.4 million from the linked and prior year quarters, respectively. The decrease from the linked quarter was primarily due to lower tax credit income, partially offset by an increase in other income, which is discussed further below. Compared to the prior year quarter, the decrease was primarily due to a decrease in other income, consisting primarily of the anticipated insurance proceeds from the tax credit recapture, and lower tax credit income. Tax credit income is typically highest in the fourth quarter of each year and will vary in other periods based on transaction volumes and fair value changes. Changes in the interest rate environment had a negative impact on tax credit projects carried at fair value.

The following table presents a comparative summary of the major components of other income for the periods indicated:

Other income in the third quarter 2026 increased $3.0 million and decreased $31.5 million compared to the linked and prior year quarters, respectively. The increase from the linked quarter was primarily due to a $3.8 million increase in rental income from OREO included in miscellaneous income and a $2.1 million net loss on sales of investment securities in the linked quarter that did not reoccur, partially offset by a $1.4 million net loss on OREO. Compared to the prior year quarter, 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 quarter that did not reoccur.

Noninterest Expense

The following table presents a comparative summary of the major components of noninterest expense for the periods indicated:

Noninterest expense decreased $1.1 million from the linked quarter and increased $4.9 million from the prior year quarter. The decrease from the linked quarter was primarily due to a $2.5 million decrease in employee compensation and benefits from 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 quarter was primarily due to an increase of $2.5 million in loan, legal, foreclosure and property maintenance expenses related to OREO and loan workouts, and an increase in the associate base as a result of the Branch Acquisition and merit increases throughout 2025 and 2026. For the third quarter 2026, the core efficiency ratio⁵ was 58.9%, compared to 61.1% for the linked quarter and 61.0% for the prior year quarter.

Income Taxes

The effective tax rate for the current quarter was 22.9%, compared to 21.7% and 49.0% in the linked and prior year quarters, respectively. Included in tax expense during the prior year quarter is $24.1 million in transferrable tax credits that were recaptured as discussed above and approximately $8.0 million of incremental tax liability attributable to the anticipated insurance proceeds from the insured recaptured credits. Excluding these items, the adjusted effective tax rate⁵ for the third quarter 2025 was 20.0%. The increase in the effective tax rate from the linked and prior year quarters was due to an increase in state taxes.

Capital

The following table presents total equity and various capital ratios for the most recent five quarters:

Total equity was $1.9 billion at September 30, 2026, a decrease of $123.5 million and $65.0 million from the linked and prior year quarters, respectively. The decrease in total equity was primarily due to higher unrealized losses on the AFS investment securities portfolio due to an increase in interest rates. Tangible book value per common share⁵ was $39.45 at September 30, 2026, compared to $42.30 and $41.58 at June 30, 2026 and September 30, 2025, respectively. The Company repurchased 525,767 shares at an average price of $64.74 in the third quarter 2026.

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, adjusted ROATCE, core efficiency ratio, adjusted effective tax rate, tangible common equity to tangible assets ratio, tangible common equity to tangible assets ratio adjusted for unrealized losses on held-to-maturity securities, tangible book value per common share, return on average common equity, adjusted return on average common equity, allowance for credit losses to total loans excluding guaranteed loans, adjusted ROAA, and adjusted diluted earnings per 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, adjusted ROATCE, core efficiency ratio, adjusted effective tax rate, tangible common equity to tangible assets ratio, tangible common equity to tangible assets ratio adjusted for unrealized losses on held-to-maturity securities, tangible book value per common share, return on average common equity, adjusted return on average common equity, allowance for credit losses to total loans excluding guaranteed loans, adjusted ROAA and adjusted diluted earnings per 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 the FDIC special assessment, acquisition costs, accrued insurance proceeds anticipated to be received as a result of recaptured tax credits, 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 to tangible assets 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 Thursday, October 22, 2026. During the call, management will review the third quarter 2026 results and related matters. This press release as well as a related slide presentation will be accessible via the “Investor Relations” page of the Company’s website, https://investor.enterprisebank.com/events-and-presentations, prior to the scheduled broadcast of the conference call. The call can be accessed via this same website page, or via telephone at 1-833-461-5787. After connecting, you may say the name of the conference or enter the Conference ID 416436528. We encourage participants to pre-register for the conference call using the following link: https://bit.ly/EFSC3Q2026EarningsCallRegistration. Callers who pre-register will be given a conference passcode and unique PIN to gain immediate access to the call and bypass the live operator. Participants may pre-register at any time, including up to and after the call start time. A recorded replay of the conference call will be available on the website after the call’s completion. The replay will be available for at least two weeks following the conference call.

About Enterprise Financial Services Corp

Enterprise Financial Services Corp (Nasdaq: EFSC), with approximately $17.8 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, 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 Global Select 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, stockholder 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”, “pipeline” 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 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, 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, changes in business prospects that could impact goodwill estimates and assumptions, 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 (including 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, or other health emergencies 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 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, 2025, 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.