0001025835FALSE150 N. Meramec AvenueSt. LouisMissouri6310500010258352021-01-252021-01-25

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) 
January 25, 2021
ENTERPRISE FINANCIAL SERVICES CORP
(Exact name of registrant as specified in its charter)
Delaware 
001-15373 
43-1706259 
(State or Other Jurisdiction
of Incorporation) 		(Commission
File Number) 		(IRS Employer
Identification No.)
150 N. Meramec Avenue, St. Louis, Missouri
(Address of principal executive offices)
63105
(Zip Code)

Registrant's telephone number, including area code
(314) 725-5500

Not applicable 
(Former name or former address, if changed since last report) 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, par value $0.01 per share EFSC Nasdaq Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐



Item 2.02 Results of Operations and Financial Condition.

On January 25, 2021, Enterprise Financial Services Corp (the "Company" or "EFSC") issued a press release announcing financial information for the quarter ended December 31, 2020. A copy of the press release is furnished as Exhibit 99.1 and is incorporated herein by reference.
On January 26, 2021, at 10:00 a.m. Central time, the Company intends to hold a webcast to present information on its results of operations for the quarter ended December 31, 2020. The slide presentation which will accompany the webcast is furnished as Exhibit 99.2 and is incorporated herein by reference.
The press release, slide presentation and information contained therein and in this Item 2.02 shall not be deemed “filed” with the Securities and Exchange Commission.

Item 9.01 Financial Statements and Exhibits.

(d)     Exhibits.

Exhibit     
Number    Description

99.1        Press Release dated January 25, 2021
99.2        Presentation to be conducted January 26, 2021
104        The cover page of this Current Report on Form 8-K, formatted in Inline XBRL


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

ENTERPRISE FINANCIAL SERVICES CORP
Date: January 25, 2021 By: /s/ Troy R. Dumlao
Troy R. Dumlao
Senior Vice President and Chief Accounting Officer





EXHIBIT 99.1

ENTERPRISEFINANCIAL1A.JPG
ENTERPRISE FINANCIAL REPORTS FOURTH QUARTER AND FULL YEAR 2020 RESULTS

Fourth Quarter Results
•Closed the acquisition of Seacoast Commerce Banc Holdings (“Seacoast”), adding approximately $1.3 billion in assets, $1.2 billion in loans and $1.0 billion in deposits
•Net income of $28.9 million, or $1.00 per diluted share.
•Net interest margin of 3.66%
•Return on average assets (“ROAA”) of 1.26%; Pre-Provision Net Revenue (“PPNR”) ROAA1 of 2.07%

2020 Results
•Net income of $74.4 million, or $2.76 per diluted share
•ROAA of 0.90%; PPNR ROAA1 of 1.96%
•Net interest margin of 3.56%
•Issued $63.3 million of subordinated debt to strengthen capital
•Repurchased 456,251 shares at an average price of $33.64 per share
•Maintained $0.18 per share quarterly common stock cash dividend

St. Louis, Mo. January 25, 2021. Enterprise Financial Services Corp (Nasdaq: EFSC) (the “Company” or “EFSC”) reported net income of $28.9 million for the fourth quarter 2020, an increase of $11.0 million compared to the linked third quarter “(linked quarter”) and comparable to net income of $29.1 million in the prior year quarter. Earnings per diluted share (“EPS”) was $1.00 for the fourth quarter 2020, compared to $0.68 and $1.09 for the linked and prior year quarters, respectively.

Net income and earnings per share in the fourth quarter were impacted by the following items:
($ in thousands, except per share data) Net Income (pretax) EPS
Accelerated fees on Paycheck Protection Program (“PPP”) loan forgiveness $ 5,192  $ 0.13 
Provision for credit losses on Seacoast acquired loans (8,557) (0.22)
Swap termination expenses (3,160) (0.08)
Merger-related expenses (2,611) (0.08)

Jim Lally, EFSC’s President and Chief Executive Officer, commented, “We achieved several critical milestones as we concluded the fourth quarter. We closed the acquisition of Seacoast, we supported our customers in navigating the PPP forgiveness process, and we continued to effectively operate and communicate with our associates in a virtual environment.”

Lally added, “We were able to execute on these achievements while producing earnings per share of $1.00 and a pre-provision net revenue1 of $47.5 million, or 2.07% of average assets. I am extremely proud to lead the Enterprise team and the franchise that we have strategically built over the past few years. Looking to 2021, we are well-positioned financially and organizationally to leverage our relationship-based banking model to achieve our strategic objectives.”

1 Pre-provision net revenue is a non-GAAP measure. Refer to discussion and reconciliation of these measures in the accompanying financial tables.




The Company closed its acquisition of Seacoast on November 12, 2020. The results of operations of Seacoast are included in our consolidated results from this date forward and are excluded from preceding periods. The acquisition of Seacoast in 2020 represents the third acquisition the Company has completed in the last four years.

Full-Year Highlights

For 2020, net income was $74.4 million, or $2.76 per diluted share, compared to $92.7 million, or $3.55 per diluted share, in 2019. PPNR1 for the year was $161.5 million, compared to $140.4 million in 2019. While interest rates declined significantly in 2020, the Company maintained a stable PPNR for the first three quarters of 2020. PPNR increased in the fourth quarter due to the acquisition of Seacoast and PPP loan fees, which were accelerated by the forgiveness process.

The Company strengthened its liquidity and capital position in the second quarter 2020 through the issuance of $63.3 million of subordinated debentures. The Company’s capital position improved further with 2020 earnings, the increase in the ACL and the acquisition of Seacoast, supporting organic balance sheet growth of $1.1 billion, primarily related to the execution of the PPP lending program. In 2020, the Company continued to provide shareholder dividends of $0.72 per share. In addition, the Company issued approximately 5.0 million shares of its common stock to Seacoast’s shareholders upon consummation of the Seacoast acquisition. The shares of common stock issued to Seacoast’s shareholders were valued at approximately $167.0 million based upon the Company’s closing stock price on November 12, 2020, the closing date of the acquisition.

In addition, under the Current Expected Credit Loss (“CECL”) methodology the allowance for credit losses excluding guaranteed portions of loans (which includes PPP loans) the coverage ratio was increased to 2.31% at the end of 2020 from 0.81% at the end of 2019. Noninterest income increased 11% in 2020, while expenses remained well-controlled with a core efficiency ratio2 of 50.96%, compared to 52.36% in 2019.

PPP was impactful in 2020. The Company successfully assisted its customers, both new and existing, by offering over $800 million in PPP loans, generating $19.6 million of interest and fee income. PPP fundings, together with the $1.1 billion of deposits acquired from Seacoast, were the primary drivers of the $2.2 billion increase in deposits as of December 31, 2020 as compared to the prior year end.

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

Fourth Quarter Highlights

•Earnings - Net income in the fourth quarter 2020 was $28.9 million, an increase of $11.0 million compared to the linked quarter and a decrease of $0.2 million from the prior year quarter. EPS was $1.00 per diluted share for the fourth quarter 2020, compared to $0.68 and $1.09 per diluted share for the linked and prior year quarters, respectively. Seacoast operations contributed $2.1 million of net income excluding the provision for credit losses.

•Pre-provision net revenue - PPNR1 of $47.5 million in the fourth quarter 2020 increased $9.5 million and $9.8 million from the linked and prior year quarters, respectively. The increase in PPNR was primarily due to accelerated fee income on PPP loans, the acquisition of Seacoast and an increase in noninterest income. The increase in noninterest income was due primarily to seasonally strong growth in tax credit income.

•Net interest income and net interest margin (“NIM”) - Net interest income of $77.4 million for the fourth quarter 2020 increased $14.1 million and $15.8 million, from the linked quarter and prior year quarter, respectively. NIM was 3.66% for the fourth quarter 2020, compared to 3.29% and 3.68% for the linked quarter and prior year quarter, respectively. Accelerated PPP fee income of $5.2 million contributed 24 basis points to NIM in the fourth quarter. In addition, the acquisition of Seacoast’s earning assets and low-cost deposit portfolio positively benefited net interest income and NIM.


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•Noninterest income - Noninterest income of $18.5 million for the fourth quarter 2020 increased $5.9 million and $4.1 million from the linked quarter and prior year quarter, respectively. The increase was driven primarily by tax credit activity, mortgage banking, and fees earned on community development investments.

•Loans - Total loans increased $1.1 billion from the linked quarter to $7.2 billion as of December 31, 2020. The acquisition of Seacoast added $1.2 billion of loans during the current quarter, while PPP loans (excluding PPP loans originated by Seacoast) declined $206.2 million as the forgiveness process accelerated during the quarter. Average loans totaled $6.8 billion for the quarter ended December 31, 2020 compared to $6.1 billion and $5.3 billion for the linked and prior year quarters, respectively. As of December 31, 2020, modified loans that remain in a deferral status comprised 1% of the loan portfolio.

Quarter ended
($ in thousands, except per share data) December 31, 2020 September 30, 2020 June 30, 2020
PPP loans outstanding, net of unearned fees $ 698,645  $ 819,100  $ 807,814 
Average PPP loans outstanding, net 806,697  813,244  634,632 
PPP average loan size 187  216  224 
PPP interest and fee income 10,261  5,226  4,083 
PPP unearned fees 11,304  19,522  22,414 
PPP average yield 5.06  % 2.56  % 2.59  %

Quarter ended
December 31, 2020 September 30, 2020 June 30, 2020
Financial Metrics: As Reported Excluding PPP* As Reported Excluding PPP* As Reported Excluding PPP*
EPS $ 1.00  $ 0.73  $ 0.68  $ 0.53  $ 0.56  $ 0.44 
ROAA 1.26  % 1.01  % 0.86  % 0.74  % 0.72  % 0.62  %
PPNR ROAA 2.07  % 1.78  % 1.81  % 1.73  % 1.87  % 1.81  %
Tangible common equity/tangible assets* 8.40  % 9.07  % 7.99  % 8.89  % 7.81  % 8.67  %
Leverage ratio 10.0  % 11.0  % 9.2  % 10.2  % 9.2  % 10.0  %
NIM 3.66  % 3.52  % 3.29  % 3.37  % 3.53  % 3.62  %
Allowance for credit losses on loans/loans 1.89  % 2.09  % 2.01  % 2.32  % 1.80  % 2.07  %
* Non-GAAP measures. Refer to discussion and reconciliation of these measures in the accompanying financial tables. Calculations not adjusted for increase in average deposits or increase in deposit expense, as applicable.


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•Asset quality - The allowance for credit losses on loans to total loans decreased to 1.89% at December 31, 2020 from 2.01% at September 30, 2020, primarily as a result of the increase of $645.3 million of government guaranteed loans acquired from Seacoast, partially offset by an $8.6 million increase in the allowance for credit losses at December 31, 2020 as a result of the application of the CECL methodology for acquired non-purchased credit deteriorated loans (“non-PCD”) and $3.5 million increase in the allowance for credit losses for acquired purchased credit deteriorated (“PCD”) loans, in each case with respect to loans acquired from Seacoast.

The increase in the allowance for credit losses on loans to total loans from 0.81% at December 31, 2019 was largely a result of the $28.4 million increase in the allowance as of January 1, 2021 in connection with the adoption of CECL, approximately $56.8 million of provision for credit losses (excluding acquisition adjustments), as well as the adjustments related to non-PCD and PCD loans acquired from Seacoast, partially offset by the $645.3 million of government guaranteed loans acquired from Seacoast. Nonperforming assets to total assets was 0.45% at December 31, 2020 compared to 0.53% and 0.45% at September 30, 2020 and December 31, 2019, respectively.

•Deposits - Total deposits increased $1.3 billion from the linked quarter to $8.0 billion as of December 31, 2020 primarily due to the addition of Seacoast deposits of $1.1 billion. Average deposits totaled $7.3 billion for the quarter ended December 31, 2020 compared to $6.7 billion and $5.8 billion for the linked and prior year quarters, respectively. Year-over-year, deposits grew $2.2 billion from $5.8 billion as of December 31, 2019. In addition to the deposits acquired from Seacoast, the year-over-year increase is attributable primarily to PPP loan fundings that remained as deposits with Enterprise Bank & Trust (the “Bank”). Noninterest deposit accounts represented 34.0% of total deposits at December 31, 2020, and the loan to deposit ratio was 90.5% at that date.

•Capital - Total shareholders’ equity was $1.1 billion and the tangible common equity to tangible assets ratio was 8.4% at December 31, 2020, compared to $882.3 million and 7.99% at September 30, 2020. Shareholder’s equity increased in the fourth quarter from the issuance of $167.0 million of common stock in the Seacoast acquisition. The Bank’s regulatory capital ratios remain “well-capitalized,” with a common equity tier 1 ratio of 12.5% and a total risk-based capital ratio of 13.7% as of December 31, 2020. The Company’s common equity tier 1 ratio and total risk-based capital ratio was 10.9% and 14.9%, respectively, at December 31, 2020.

The Company has 95,907 shares available for repurchase under the existing common stock repurchase authorization.

The Company’s Board of Directors approved a quarterly dividend of $0.18 per common share, payable on March 31, 2021 to shareholders of record as of March 15, 2021.

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Net Interest Income

Average Balance Sheet
The following tables present, for the periods indicated, certain information related to our average interest-earning assets and interest-bearing liabilities, as well as, the corresponding interest rates earned and paid, all on a tax equivalent basis.
Quarter ended
December 31, 2020 September 30, 2020 December 31, 2019
($ in thousands) Average
Balance 		Interest
Income/
Expense 		Average Yield/ Rate Average
Balance 		Interest
Income/
Expense 		Average Yield/ Rate Average
Balance 		Interest
Income/
Expense 		Average Yield/ Rate
Assets
Interest-earning assets:
Loans* $ 6,780,702  $ 76,044  4.46  % $ 6,112,715  $ 62,751  4.08  % $ 5,279,500  $ 67,661  5.08  %
Debt and equity investments* 1,395,806  8,986  2.56  % 1,361,515  8,761  2.56  % 1,322,017  9,699  2.91 
Short-term investments 347,629  120  0.14  % 295,854  113  0.15  % 102,989  406  1.56 
Total earning assets 8,524,137  85,150  3.97  7,770,084  71,625  3.67  6,704,506  77,766  4.60 
Noninterest-earning assets 617,022  571,884  617,990 
Total assets $ 9,141,159  $ 8,341,968  $ 7,322,496 
Liabilities and Shareholders’ Equity
Interest-bearing liabilities:
Interest-bearing transaction accounts $ 1,584,369  $ 265  0.07  % $ 1,529,097  $ 255  0.07  % $ 1,325,363  $ 1,620  0.48  %
Money market accounts 2,175,111  1,016  0.19  1,981,026  1,003  0.20  1,693,357  5,797  1.36 
Savings 620,248  46  0.03  605,475  45  0.03  543,571  195  0.14 
Certificates of deposit 567,456  1,739  1.22  630,076  2,409  1.52  846,253  4,096  1.92 
Total interest-bearing deposits 4,947,184  3,066  0.25  4,745,674  3,712  0.31  4,408,544  11,708  1.05 
Subordinated debentures 203,564  2,824  5.52  203,438  2,826  5.53  141,217  1,945  5.46 
FHLB advances 244,730  603  0.98  250,000  720  1.15  291,057  1,371  1.87 
Securities sold under agreements to repurchase 231,836  64  0.11  199,308  59  0.12  170,481  308  0.72 
Other borrowings 30,095  110  1.45  31,413  116  1.47  36,220  293  3.21 
Total interest-bearing liabilities 5,657,409  6,667  0.47  5,429,833  7,433  0.54  5,047,519  15,625  1.23 
Noninterest-bearing liabilities:
Demand deposits 2,363,890  1,920,694  1,347,748 
Other liabilities 127,843  105,945  67,555 
Total liabilities 8,149,142  7,456,472  6,462,822 
Shareholders' equity 992,017  885,496  859,674 
Total liabilities and shareholders' equity $ 9,141,159  $ 8,341,968  $ 7,322,496 
Total net interest income $ 78,483  $ 64,192  $ 62,141 
Net interest margin 3.66  % 3.29  % 3.68  %
* Non-taxable income is presented on a fully tax-equivalent basis using a 24.7% tax rate. The tax-equivalent adjustments were $1.0 million for the three months ended December 31, 2020, $0.8 million for the three months ended September 30, 2020, and $0.5 million for the three months ended December 31, 2019.

Net interest income for the fourth quarter increased $14.1 million to $77.5 million from $63.4 million in the linked quarter, and increased $15.8 million from the prior year period. NIM, on a tax equivalent basis, was 3.66% for the fourth quarter, compared to 3.29% in the linked quarter, and 3.68% in the fourth quarter of 2019. The increase in net interest income from the linked quarter was primarily due to earnings on acquired Seacoast assets, along with accelerated fee income related to PPP loan forgiveness.

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NIM increased 37 basis points from the linked quarter to 3.66% during the current quarter primarily due to a 30 basis point increase in earning asset yields, and a seven basis point decrease in the cost of liabilities. The increase in the earning asset yield was primarily due to a combination of higher income from accelerated loan fees related to PPP loan forgiveness (24 bps), partially offset by lower yields and purchase accounting income on non-PPP loans (4 bps), each as compared to the linked quarter. The addition of higher yielding Seacoast assets for the partial period increased the earning asset yield by seven basis points.

The cost of interest-bearing liabilities declined seven basis points from the linked quarter, primarily due to lower rates on time deposits and the addition of low-cost deposits from Seacoast.

Loans

The following table presents total loans for the most recent five quarters.
Quarter ended
December 31, 2020
($ in thousands)
Seacoastb
Legacy EFSCb
Consolidated September 30,
2020 		June 30,
2020 		March 31,
2020 		December 31,
2019
C&I $ 16,079  $ 1,086,981  $ 1,103,060  $ 1,075,421  $ 1,052,373  $ 1,180,675  $ 1,179,169 
CRE investor owned 107,449  1,313,456  1,420,905  1,281,567  1,298,801  1,316,501  1,287,633 
CRE owner occupied 98,134  727,712  825,846  766,919  782,258  743,962  713,563 
SBA loans 874,578  21,352  895,930  15,927  17,195  17,381  19,249 
SBA PPP loans 85,729  612,916  698,645  819,100  807,814  —  — 
Sponsor finance —  396,487  396,487  367,337  383,458  440,764  428,896 
Life insurance premium financing —  534,092  534,092  517,559  520,705  496,472  472,822 
Residential real estate 9,138  308,953  318,091  321,258  326,467  346,225  366,024 
Construction and land development 32,535  441,864  474,399  450,225  455,686  445,909  428,681 
Tax credits —  382,602  382,602  368,908  363,222  354,046  294,210 
Other 764  174,114  174,878  142,086  132,072  115,582  124,090 
Total Loans $ 1,224,406  $ 6,000,529  $ 7,224,935  $ 6,126,307  $ 6,140,051  $ 5,457,517  $ 5,314,337 
Total loan yield 4.46  % 4.08  % 4.31  % 5.06  % 5.08  %
Total C&I loans to total loans 43  % 51  % 51  % 45  % 44  %
Variable interest rate loans to total loans 57  % 50  % 51  % 60  % 59  %
Certain prior period amounts have been reclassified among the categories to conform to the current period presentation.
b Amounts reported are as of December 31, 2020 and are separately shown attributable to the Seacoast loan portfolio acquired on November 12, 2020, and the Company’s pre-Seacoast acquisition loan portfolio.

Loans totaled $7.2 billion at December 31, 2020, increasing $1.1 billion compared to the linked quarter. The increase is primarily attributable to the acquisition of $1.2 billion in Seacoast loans. The Seacoast SBA loan portfolio is comprised primarily of 1st lien real-estate loans, including $559.6 million that is guaranteed by the SBA. This increase was partially offset by a decline in legacy Enterprise PPP loans of $206.2 million. Excluding acquired loans and PPP loans, the loan portfolio increased $80.4 million from the linked quarter. The increase was primarily due to increases in C&I, specialty, and other loans, partially offset by a decline in CRE, residential real estate, and construction loans. Year-over-year, loans grew $1.9 billion from $5.2 billion as of December 31, 2019, due to the

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Seacoast acquisition and the funding of $612.9 million of PPP loans. Revolving line usage at December 31, 2020 was 38.1% compared to 40.4% and 46.2% in the linked and prior year quarters, respectively.

The Company has implemented several loan programs to assist its customers impacted by the COVID-19 pandemic. These programs include consumer and business deferral programs and expanded small business lines of credit.

The following table presents loans modified as part of our COVID-19 deferral programs that remained in a deferral status at the dates presented:
Quarter ended
($ in thousands) December 31, 2020 September 30, 2020 June 30, 2020
Commercial real estate $ 26,122  $ 48,081  $ 404,295 
Commercial and industrial 15,708  46,041  171,108 
Construction real estate 20,892  44,243  88,369 
Residential real estate 255  974  21,762 
Other —  12  134 
Total loan modifications $ 62,977  $ 139,351  $ 685,668 
Percentage of total loans 1  % 2  % 11  %

Asset Quality

The following table presents the categories of nonperforming assets and related ratios for the most recent five quarters.
Quarter ended
($ in thousands) December 31,
2020 		September 30,
2020 		June 30,
2020 		March 31,
2020 		December 31,
2019
Nonperforming loans* $ 38,507  $ 39,623  $ 41,473  $ 37,204  $ 26,425 
Other real estate 5,330  4,835  4,874  5,072  6,344 
Nonperforming assets* $ 43,837  $ 44,458  $ 46,347  $ 42,276  $ 32,769 
Nonperforming loans to total loans 0.53  % 0.65  % 0.68  % 0.68  % 0.50  %
Nonperforming assets to total assets 0.45  % 0.53  % 0.55  % 0.56  % 0.45  %
Allowance for loan losses to total loans 1.89  % 2.01  % 1.80  % 1.69  % 0.81  %
Net charge-offs $ (612) $ 1,027  $ 309  $ 1,183  $ 2,544 
*Excludes government guaranteed balances.

Nonperforming assets decreased $0.6 million to $43.8 million at December 31, 2020 from $44.5 million at September 30, 2020. The decrease was primarily from principal reductions, partially offset by the addition of $1.1 million from Seacoast acquired nonperforming assets.

The Company recorded a provision for credit losses of $9.5 million for the fourth quarter 2020 compared to $14.1 million for the linked quarter and $1.3 million for the prior year quarter. The provision for credit losses in the fourth quarter 2020 was primarily due to an $8.6 million reserve on the acquired Seacoast non-PCD loan portfolio.



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Deposits
The following table presents total deposits for the most recent five quarters.
Quarter ended
December 31, 2020
($ in thousands)
Seacoasta
Legacy EFSCa
Consolidated September 30, 2020 June 30, 2020 March 31, 2020 December 31, 2019
Noninterest-bearing accounts $ 666,447  $ 2,045,381  $ 2,711,828  $ 1,929,540  $ 1,965,868  $ 1,354,571  $ 1,327,348 
Interest-bearing transaction accounts 55,590  1,712,907  1,768,497  1,499,756  1,508,535  1,389,603  1,367,444 
Money market and savings accounts 327,471  2,627,498  2,954,969  2,634,885  2,566,011  2,479,828  2,249,784 
Brokered certificates of deposit —  50,209  50,209  65,209  85,414  170,667  215,758 
Other certificates of deposit 10,325  489,561  499,886  546,836  573,752  595,237  610,689 
Total deposit portfolio $ 1,059,833  $ 6,925,556  $ 7,985,389  $ 6,676,226  $ 6,699,580  $ 5,989,906  $ 5,771,023 
Noninterest-bearing deposits to total deposits 62.9  % 29.5  % 34.0  % 28.9  % 29.3  % 22.6  % 23.0  %
aAmounts reported are as of December 31, 2020 and are shown separately attributable to the Seacoast deposit portfolio acquired on November 12, 2020, and the Company’s pre-Seacoast acquisition deposit portfolio.

Total deposits at December 31, 2020 were $8.0 billion, an increase of $1.3 billion from September 30, 2020, and an increase of $2.2 billion, or 38%, from December 31, 2019. The increase from the linked quarter was primarily due to the Seacoast acquisition, and the year-over-year increase was primarily due to the Seacoast acquisition and PPP loan fundings. Certificates of deposit, the highest cost portion of the deposit portfolio, has declined each quarter in 2020 and decreased $62.0 million from the linked quarter and $276.4 million from the prior year quarter.

Core deposits, defined as total deposits excluding time deposits, were $7.4 billion at December 31, 2020, an increase of $1.4 billion from the linked quarter, and an increase of $2.5 billion from the prior year period. The acquisition of Seacoast added $766.5 million of specialty deposits in the property management, community associations, 1031 exchange and escrow industries. Excluding acquired deposits, noninterest bearing demand deposits increased $115.8 million and interest-bearing demand deposits increased $213.2 million compared to the linked quarter. Noninterest-bearing deposits were $2.7 billion at December 31, 2020, and represented 34% of total deposits at that date. The total cost of deposits was 0.17% for the current quarter compared to 0.22% and 0.81% for the linked quarter and prior year quarter, respectively.

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Noninterest Income

The following table presents a comparative summary of the major components of noninterest income for the periods indicated:
Linked quarter comparison Prior year comparison
Quarter ended Quarter ended
($ in thousands) December 31, 2020 September 30, 2020 Increase (decrease) December 31, 2019 Increase (decrease)
Service charges on deposit accounts $ 3,160  $ 2,798  $ 362  13  % $ 3,254  $ (94) (3) %
Wealth management revenue 2,449  2,456  (7) —  % 2,618  (169) (6) %
Card services revenue 2,511  2,498  13  1  % 2,409  102  4  %
Tax credit income 4,048  748  3,300  441  % 3,425  623  18  %
Miscellaneous income 6,338  4,129  2,209  53  % 2,712  3,626  134  %
Total noninterest income $ 18,506  $ 12,629  $ 5,877  47  % $ 14,418  $ 4,088  28  %

Total noninterest income for the fourth quarter 2020 was $18.5 million, an increase of $5.9 million from the linked quarter and an increase of $4.1 million from the prior year quarter. The increase from the linked quarter was primarily due to seasonally strong tax credit activity, continued growth in card services and mortgage revenue and fees earned on community development investments. Seacoast operations contributed approximately $0.8 million to noninterest income, primarily in deposit service charges and miscellaneous income.

Noninterest Expenses

Noninterest expense was $51.1 million for the fourth quarter 2020, compared to $39.5 million for the linked quarter, and $38.4 million for the fourth quarter 2019. The increase from the linked quarter and prior year quarter was primarily due to a partial quarter of Seacoast operating expenses of $6.0 million, swap termination charges of $3.2 million, and merger-related expenses of $2.6 million.

For the fourth quarter 2020, the Company’s efficiency ratio was 53.2% compared to 52.0% and 50.5% for the linked quarter and prior year quarter, respectively. The Company’s core efficiency ratio2 was 50.9% for the quarter ended December 31, 2020, compared to 51.0% for the linked quarter and 50.7% for the prior year quarter.
2 Core efficiency ratio is a non-GAAP measure. Refer to discussion and reconciliation of this measure in the accompanying financial tables.

Income Taxes

The Company’s effective tax rate was 18% for the fourth quarter of 2020, compared to 20% in the linked and prior year quarters, respectively. Tax planning initiatives, including a net operating loss carryback and tax credit investments in the fourth quarter reduced tax expense by $0.6 million and were partially offset by nondeductible merger-related expenses of $0.4 million that increased tax expense.

9


Capital

The following table presents various EFSC capital ratios:
Quarter ended
Percent December 31, 2020 September 30, 2020 June 30, 2020 March 31, 2020 December 31, 2019
Total risk-based capital to risk-weighted assets 14.9  % 14.6  % 14.4  % 12.9  % 12.9  %
Tier 1 capital to risk weighted assets 12.1  % 11.6  % 11.4  % 11.0  % 11.4  %
Common equity tier 1 capital to risk-weighted assets 10.9  % 10.2  % 9.9  % 9.6  % 9.9  %
Tangible common equity to tangible assets1
8.4  % 8.0  % 7.8  % 8.4  % 8.9  %

The Company’s strong earnings profile continues to build total capital even with the elevated level of provision for credit losses in 2020. Growth in the balance sheet due to PPP loans did not negatively impact the Company’s regulatory capital ratios due to the SBA guarantee characteristics of PPP loans. The issuance of subordinated debt during the second quarter of 2020 enhanced year-end total risk-based capital. The acquisition of Seacoast in the fourth quarter of 2020 further enhanced regulatory capital due to the shares of Company common stock issued to Seacoast’s shareholders in the acquisition and the low level of acquired risk-weighted assets due to the guaranty on the acquired Seacoast SBA loan portfolio. 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, PPNR ROAA, financial metrics adjusted for PPP impact, core efficiency ratio, and the tangible common equity ratio, 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, PPNR ROAA, financial metrics adjusted for PPP impact, core efficiency ratio, and the tangible common equity ratio, 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, the Company believes to be not indicative of or useful to measure the Company’s operating performance on an ongoing basis. The attached tables contain a reconciliation of these core performance measures to the GAAP measures. The Company believes that the tangible common equity ratio provides useful information to investors about the Company’s capital strength even though it is considered to be a non-GAAP financial measure and is not part of the regulatory capital requirements to which the Company is subject.

The Company believes these non-GAAP measures and ratios, when taken together with the corresponding GAAP measures and ratios, provide meaningful supplemental information regarding the Company’s performance and capital strength. The Company’s management uses, and believes that investors benefit from referring to, these non-GAAP measures and ratios in assessing the Company’s operating results and related trends and when forecasting future periods. However, these non-GAAP measures and ratios should be considered in addition to, and not as a substitute for or preferable to, ratios prepared in accordance with GAAP. In the attached tables, the Company has provided a reconciliation of, where applicable, the most comparable GAAP financial measures and ratios to the non-GAAP financial measures and ratios, or a reconciliation of the non-GAAP calculation of the financial measures for the periods indicated.

10


Conference Call and Webcast Information

The Company will host a conference call and webcast at 10:00 a.m. Central Time on Tuesday, January 26, 2021. During the call, management will review the fourth quarter and full year of 2020 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” beginning prior to the scheduled broadcast of the conference call. The call can be accessed via this same website page, or via telephone at 1-800-367-2403 (Conference ID #5852150). A recorded replay of the conference call will be available on the website two hours after the call’s completion. Visit http://bit.ly/EFSC4Q2020earnings and register to receive a dial-in number, passcode, and pin number. The replay will be available for approximately two weeks following the conference call.

About Enterprise

Enterprise Financial Services Corp (Nasdaq: EFSC), with approximately $9.7 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 39 branch offices in Arizona, California, Kansas, Missouri, Nevada, and New Mexico, and SBA loan and deposit production offices in Arizona, California, Colorado, Illinois, Indiana, Massachusetts, Michigan, Nevada, Ohio, Oregon, Texas, Utah, and Washington. 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 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, yields and returns, loan diversification and credit management, shareholder value creation and the impact of the Seacoast acquisition and other acquisitions.

Forward-looking statements include, but are not limited to, statements about the Company’s plans, expectations, and projections of future financial and operating results, as well as statements regarding the Company’s plans, objectives, expectations or consequences of announced transactions. The Company uses words such as “may,” “might,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “could,” “continue,” and “intend”, and variations of such words and similar expressions, in this release to identify such forward-looking statements. Forward-looking statements are inherently subject to risks and uncertainties that could cause actual results to differ materially from those contemplated from such statements. The COVID-19 pandemic is adversely affecting us, our customers, counterparties, employees, and third-party service providers, and the ultimate extent of the impacts on our business, financial position, results of operations, liquidity, and prospects is uncertain. Continued deterioration in general business and economic conditions, including further increases in unemployment rates, or turbulence in domestic or global financial markets could adversely affect our revenues and the values of our assets and liabilities, reduce the availability of funding, lead to a tightening of credit, and further increase stock price volatility. In addition, changes to statutes, regulations, or regulatory policies or practices as a result of, or in response to COVID-19, could affect us in substantial and unpredictable ways. Other factors that could cause or contribute to such differences include, but are not limited to, the Company’s ability to efficiently integrate acquisitions, including the Seacoast acquisition, into its operations, retain the customers of these businesses and grow the acquired operations, as well as

11

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 conditions, risks associated with rapid increases or decreases in prevailing interest rates, 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 regulatory requirements, changes in accounting policies and practices or accounting standards, including ASU 2016-13 (Topic 326), “Measurement of Credit Losses on Financial Instruments,” commonly referenced as the Current Expected Credit Loss (“CECL”) model, which we adopted on January 1, 2020 and which changed how we estimate credit losses and may increase the required level of our allowance for credit losses in future periods, uncertainty regarding the future of LIBOR, natural disasters, war or terrorist activities, or pandemics, or the outbreak of COVID-19 or similar outbreaks, and their effects on economic and business environments in which we operate, as well as other risk factors described in the Company’s 2019 Annual Report on Form 10-K and other reports filed with the Securities and Exchange Commission (the “SEC”). Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update them in light of new information or future events unless required under the federal securities laws.

For more information contact:
Investor Relations: Keene Turner, Executive Vice President and CFO (314) 512-7233
Media: Steve Richardson, VP Corporate Communications (314) 512-7183


12

ENTERPRISE FINANCIAL SERVICES CORP
CONSOLIDATED FINANCIAL SUMMARY (unaudited)
Quarter ended Year ended
($ in thousands, except per share data) Dec 31,
2020 		Sep 30,
2020 		Jun 30,
2020 		Mar 31,
2020 		Dec 31,
2019 		Dec 31,
2020 		Dec 31,
2019
EARNINGS SUMMARY
Net interest income $ 77,446  $ 63,354  $ 65,833  $ 63,368  $ 61,613  $ 270,001  $ 238,717 
Provision for loan losses 9,463  14,080  19,591  22,264  1,341  65,398  6,372 
Noninterest income 18,506  12,629  9,960  13,408  14,418  54,503  49,176 
Noninterest expense 51,050  39,524  37,912  38,673  38,354  167,159  165,485 
Income before income tax expense 35,439  22,379  18,290  15,839  36,336  91,947  116,036 
Income tax expense 6,508  4,428  3,656  2,971  7,246  17,563  23,297 
Net income $ 28,931  $ 17,951  $ 14,634  $ 12,868  $ 29,090  $ 74,384  $ 92,739 
Diluted earnings per share $ 1.00  $ 0.68  $ 0.56  $ 0.48  $ 1.09  $ 2.76  $ 3.55 
Return on average assets 1.26  % 0.86  % 0.72  % 0.70  % 1.58  % 0.90  % 1.35  %
Return on average common equity 11.60  % 8.06  % 6.78  % 5.98  % 13.43  % 8.24  % 11.66  %
Return on average tangible common equity 15.73  % 10.94  % 9.28  % 8.22  % 18.54  % 11.23  % 16.08  %
Net interest margin (fully tax equivalent) 3.66  % 3.29  % 3.53  % 3.79  % 3.68  % 3.56  % 3.80  %
Efficiency ratio 53.20  % 52.02  % 50.02  % 50.37  % 50.45  % 51.51  % 57.48  %
Core efficiency ratio1
50.93  % 51.04  % 50.66  % 51.21  % 50.73  % 50.96  % 52.36  %
Total assets $ 9,751,571  $ 8,367,976  $ 8,357,501  $ 7,500,643  $ 7,333,791 
Total average assets $ 9,141,159  $ 8,341,968  $ 8,158,204  $ 7,363,605  $ 7,322,496  $ 8,253,913  $ 6,894,291 
Total deposits $ 7,985,389  $ 6,676,226  $ 6,699,580  $ 5,989,906  $ 5,771,023 
Total average deposits $ 7,311,074  $ 6,666,368  $ 6,551,734  $ 5,837,717  $ 5,756,292  $ 6,593,893  $ 5,412,211 
Period end common shares outstanding 31,210  26,210  26,196  26,161  26,543 
Dividends per common share $ 0.18  $ 0.18  $ 0.18  $ 0.18  $ 0.17  $ 0.72  $ 0.62 
Tangible book value per common share $ 25.48  $ 24.80  $ 24.22  $ 23.38  $ 23.76 
Tangible common equity to tangible assets1
8.40  % 7.99  % 7.81  % 8.42  % 8.89  %
Total risk-based capital to risk-weighted assets 14.9  % 14.6  % 14.4  % 12.9  % 12.9  %
1Refer to Reconciliations of Non-GAAP Financial Measures table for a reconciliation of these measures to GAAP.

13

ENTERPRISE FINANCIAL SERVICES CORP
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
Quarter ended Year ended
($ in thousands, except per share data) Dec 31,
2020 		Sep 30,
2020 		Jun 30,
2020 		Mar 31,
2020 		Dec 31,
2019 		Dec 31,
2020 		Dec 31,
2019
INCOME STATEMENTS
NET INTEREST INCOME
Total interest income $ 84,113  $ 70,787  $ 73,191  $ 76,688  $ 77,238  $ 304,779  $ 305,134 
Total interest expense 6,667  7,433  7,358  13,320  15,625  34,778  66,417 
Net interest income 77,446  63,354  65,833  63,368  61,613  270,001  238,717 
Provision for credit losses 9,463  14,080  19,591  22,264  1,341  65,398  6,372 
Net interest income after provision for credit losses 67,983  49,274  46,242  41,104  60,272  204,603  232,345 
NONINTEREST INCOME
Deposit service charges 3,160  2,798  2,616  3,143  3,254  11,717  12,801 
Wealth management revenue 2,449  2,456  2,326  2,501  2,618  9,732  9,932 
Card services revenue 2,511  2,498  2,225  2,247  2,409  9,481  9,154 
Tax credit income 4,048  748  (221) 2,036  3,425  6,611  5,393 
Other income 6,338  4,129  3,014  3,481  2,712  16,962  11,896 
Total noninterest income 18,506  12,629  9,960  13,408  14,418  54,503  49,176 
NONINTEREST EXPENSE
Employee compensation and benefits 26,174  22,040  22,389  21,685  20,411  92,288  81,295 
Occupancy 3,517  3,408  3,185  3,347  3,461  13,457  12,465 
Merger-related expenses 2,611  1,563  —  —  —  4,174  17,969 
Other 18,748  12,513  12,338  13,641  14,482  57,240  53,756 
Total noninterest expenses 51,050  39,524  37,912  38,673  38,354  167,159  165,485 
Income before income tax expense 35,439  22,379  18,290  15,839  36,336  91,947  116,036 
Income tax expense 6,508  4,428  3,656  2,971  7,246  17,563  23,297 
Net income $ 28,931  $ 17,951  $ 14,634  $ 12,868  $ 29,090  $ 74,384  $ 92,739 
Basic earnings per share $ 1.00  $ 0.68  $ 0.56  $ 0.49  $ 1.10  $ 2.76  $ 3.56 
Diluted earnings per share $ 1.00  $ 0.68  $ 0.56  $ 0.48  $ 1.09  $ 2.76  $ 3.55 


14

ENTERPRISE FINANCIAL SERVICES CORP
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
    
Quarter ended
($ in thousands) Dec 31,
2020 		Sep 30,
2020 		Jun 30,
2020 		Mar 31,
2020 		Dec 31,
2019
BALANCE SHEETS
ASSETS
Cash and due from banks $ 99,760  $ 98,816  $ 100,804  $ 98,619  $ 74,769 
Interest-earning deposits 445,569  301,773  254,830  88,794  96,217 
Debt and equity investments 1,448,803  1,375,931  1,387,001  1,382,149  1,354,527 
Loans held for sale 13,564  14,032  16,029  8,430  5,570 
Loans 7,224,935  6,126,307  6,140,051  5,457,517  5,314,337 
Less: Allowance for credit losses on loans 136,671  123,270  110,270  92,187  43,288 
Total loans, net 7,088,264  6,003,037  6,029,781  5,365,330  5,271,049 
Fixed assets, net 53,169  56,807  58,231  59,358  60,013 
Goodwill 260,567  210,344  210,344  210,344  210,344 
Intangible assets, net 23,084  21,820  23,196  24,585  26,076 
Other assets 318,791  285,416  277,285  263,034  235,226 
Total assets $ 9,751,571  $ 8,367,976  $ 8,357,501  $ 7,500,643  $ 7,333,791 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Noninterest-bearing deposits $ 2,711,828  $ 1,929,540  $ 1,965,868  $ 1,354,571  $ 1,327,348 
Interest-bearing deposits 5,273,561  4,746,686  4,733,712  4,635,335  4,443,675 
Total deposits 7,985,389  6,676,226  6,699,580  5,989,906  5,771,023 
Subordinated debentures 203,637  203,510  203,384  141,336  141,258 
FHLB advances 50,000  250,000  250,000  222,000  222,406 
Other borrowings 301,081  239,038  227,961  205,918  265,172 
Other liabilities 132,489  116,935  108,613  95,047  66,747 
Total liabilities 8,672,596  7,485,709  7,489,538  6,654,207  6,466,606 
Shareholders’ equity 1,078,975  882,267  867,963  846,436  867,185 
Total liabilities and shareholders’ equity $ 9,751,571  $ 8,367,976  $ 8,357,501  $ 7,500,643  $ 7,333,791 



















15

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 interest rates earned and paid, all on a tax equivalent basis.
Year ended
December 31, 2020 December 31, 2019
($ in thousands) Average
Balance 		Interest
Income/
Expense 		Average Yield/ Rate Average
Balance 		Interest
Income/
Expense 		Average Yield/ Rate
Assets
Interest-earning assets:
Loans* $ 6,071,496  $ 270,673  4.46  % $ 5,018,568  $ 269,864  5.38  %
Debt and equity investments* 1,366,601  36,675  2.68  1,196,074  34,753  2.91 
Short-term investments 228,760  620  0.27  107,433  2,128  1.98 
Total earning assets 7,666,857  307,968  4.02  6,322,075  306,745  4.85 
Noninterest-earning assets 587,057  572,216 
Total assets $ 8,253,914  $ 6,894,291 
Liabilities and Shareholders’ Equity
Interest-bearing liabilities:
Interest-bearing transaction accounts $ 1,494,364  $ 2,101  0.14  % $ 1,286,641  $ 7,592  0.59  %
Money market accounts 1,977,826  7,754  0.39  1,608,349  26,267  1.63 
Savings 589,832  279  0.05  489,310  841  0.17 
Certificates of deposit 676,889  10,915  1.61  799,079  15,156  1.90 
Total interest-bearing deposits 4,738,911  21,049  0.44  4,183,379  49,856  1.19 
Subordinated debentures 179,534  9,885  5.51  136,950  7,507  5.48 
FHLB advances 241,635  2,673  1.11  287,474  6,668  2.32 
Securities sold under agreements to repurchase 206,338  542  0.26  169,179  1,246  0.74 
Other borrowings 32,147  629  1.96  32,392  1,140  3.52 
Total interest-bearing liabilities 5,398,565  34,778  0.64  4,809,374  66,417  1.38 
Noninterest-bearing liabilities:
Demand deposits 1,854,982  1,228,832 
Other liabilities 97,492  60,608 
Total liabilities 7,351,039  6,098,814 
Shareholders’ equity 902,875  795,477 
Total liabilities and shareholders’ equity $ 8,253,914  $ 6,894,291 
Total net interest income $ 273,190  $ 240,328 
Net interest margin 3.56  % 3.80  %
* Non-taxable income is presented on a fully tax-equivalent basis using a 24.7% tax rate. The tax-equivalent adjustments were $3.2 million, and $1.6 million for the years ended December 31, 2020, and 2019, respectively.

16

ENTERPRISE FINANCIAL SERVICES CORP
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
Quarter ended
($ in thousands) Dec 31,
2020 		Sep 30,
2020 		Jun 30,
2020 		Mar 31,
2020 		Dec 31,
2019
LOAN PORTFOLIO
Commercial and industrial $ 3,088,995  $ 3,152,394  $ 3,143,197  $ 2,469,013  $ 2,361,157 
Commercial real estate 3,087,827  2,027,886  2,048,444  2,048,357  1,997,321 
Construction real estate 546,686  474,727  481,221  469,627  457,273 
Residential real estate 319,179  321,792  326,992  346,758  366,261 
Other 182,248  149,508  140,197  123,762  132,325 
Total loans $ 7,224,935  $ 6,126,307  $ 6,140,051  $ 5,457,517  $ 5,314,337 
DEPOSIT PORTFOLIO
Noninterest-bearing accounts $ 2,711,828  $ 1,929,540  $ 1,965,868  $ 1,354,571  $ 1,327,348 
Interest-bearing transaction accounts 1,768,497  1,499,756  1,508,535  1,389,603  1,367,444 
Money market and savings accounts 2,954,969  2,634,885  2,566,011  2,479,828  2,249,784 
Brokered certificates of deposit 50,209  65,209  85,414  170,667  215,758 
Other certificates of deposit 499,886  546,836  573,752  595,237  610,689 
Total deposit portfolio $ 7,985,389  $ 6,676,226  $ 6,699,580  $ 5,989,906  $ 5,771,023 
AVERAGE BALANCES
Total loans $ 6,780,701  $ 6,112,715  $ 6,032,076  $ 5,352,243  $ 5,279,500 
Debt and equity investments 1,395,806  1,361,515  1,361,853  1,346,968  1,322,017 
Interest-earning assets 8,524,136  7,770,084  7,571,196  6,791,459  6,704,506 
Total assets 9,141,159  8,341,968  8,158,204  7,363,605  7,322,496 
Deposits 7,311,074  6,666,368  6,551,734  5,837,717  5,756,292 
Shareholders’ equity 992,017  885,496  868,163  865,035  859,674 
Tangible common equity1
731,813  652,663  633,946  629,390  622,502 
YIELDS (fully tax equivalent)
Total loans 4.46  % 4.08  % 4.31  % 5.06  % 5.08  %
Debt and equity investments 2.56  2.56  2.72  2.90  2.91 
Interest-earning assets 3.97  3.67  3.93  4.58  4.60 
Interest-bearing deposits 0.25  0.31  0.37  0.88  1.05 
Total deposits 0.17  0.22  0.27  0.68  0.81 
Subordinated debentures 5.52  5.53  5.50  5.46  5.46 
FHLB advances and other borrowed funds 0.61  0.74  0.56  1.33  1.57 
Interest-bearing liabilities 0.47  0.54  0.55  1.05  1.23 
Net interest margin 3.66  3.29  3.53  3.79  3.68 
1Refer to Reconciliations of Non-GAAP Financial Measures table for a reconciliation of these measures to GAAP.


17

ENTERPRISE FINANCIAL SERVICES CORP
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
Quarter ended
(in thousands, except per share data) Dec 31,
2020 		Sep 30,
2020 		Jun 30,
2020 		Mar 31,
2020 		Dec 31,
2019
ASSET QUALITY
Net charge-offs $ (612) $ 1,027  $ 309  $ 1,183  $ 2,544 
Nonperforming loans 38,507  39,623  41,473  37,204  26,425 
Classified assets 123,808  84,710  96,678  104,754  85,897 
Nonperforming loans to total loans 0.53  % 0.65  % 0.68  % 0.68  % 0.50  %
Nonperforming assets to total assets 0.45  % 0.53  % 0.55  % 0.56  % 0.45  %
Allowance for loan losses to total loans 1.89  % 2.01  % 1.80  % 1.69  % 0.81  %
Allowance for loan losses to nonperforming loans 354.9  % 311.1  % 265.9  % 247.8  % 163.8  %
Net charge-offs (recoveries) to average loans (annualized) (0.04) % 0.07  % 0.02  % 0.09  % 0.19  %
WEALTH MANAGEMENT
Trust assets under management $ 1,783,089  $ 1,641,980  $ 1,602,358  $ 1,445,521  $ 1,671,082 
Trust assets under administration 2,504,318  2,433,026  2,455,111  2,139,673  2,524,478 
MARKET DATA
Book value per common share $ 34.57  $ 33.66  $ 33.13  $ 32.36  $ 32.67 
Tangible book value per common share1
$ 25.48  $ 24.80  $ 24.22  $ 23.38  $ 23.76 
Market value per share $ 34.95  $ 27.27  $ 31.12  $ 27.91  $ 48.21 
Period end common shares outstanding 31,210  26,210  26,196  26,161  26,543 
Average basic common shares 28,929  26,217  26,180  26,473  26,540 
Average diluted common shares 28,968  26,228  26,195  26,539  26,668 
CAPITAL
Total risk-based capital to risk-weighted assets 14.9  % 14.6  % 14.4  % 12.9  % 12.9  %
Tier 1 capital to risk-weighted assets 12.1  % 11.6  % 11.4  % 11.0  % 11.4  %
Common equity tier 1 capital to risk-weighted assets 10.9  % 10.2  % 9.9  % 9.6  % 9.9  %
Tangible common equity to tangible assets1
8.4  % 8.0  % 7.8  % 8.4  % 8.9  %
1Refer to Reconciliations of Non-GAAP Financial Measures table for a reconciliation of these measures to GAAP.

18

ENTERPRISE FINANCIAL SERVICES CORP
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
Quarter ended Year ended
($ in thousands, except per share data) Dec 31,
2020 		Sep 30,
2020 		Jun 30,
2020 		Mar 31,
2020 		Dec 31,
2019 		Dec 31,
2020 		Dec 31,
2019
CORE PERFORMANCE MEASURES
Net interest income $ 77,446  $ 63,354  $ 65,833  $ 63,368  $ 61,613  $ 270,001  $ 238,717 
Less: Incremental accretion income 856  1,235  719  1,273  576  4,083  4,783 
Core net interest income 76,590  62,119  65,114  62,095  61,037  265,918  233,934 
Total noninterest income 18,506  12,629  9,960  13,408  14,418  54,503  49,176 
Less: Other income from non-core acquired assets —  —  —  —  4  —  1,372 
Less: Gain (loss) on sale of investment securities —  417  —  4  (94) 421  243 
Less: Other non-core income —  —  265  —  —  265  266 
Core noninterest income 18,506  12,212  9,695  13,404  14,508  53,817  47,295 
Total core revenue 95,096  74,331  74,809  75,499  75,545  319,735  281,229 
Total noninterest expense 51,050  39,524  37,912  38,673  38,354  167,159  165,485 
Less: Other expenses related to non-core acquired loans 8  25  12  12  33  57  257 
Less: Merger related expenses 2,611  1,563  —  —  —  4,174  17,969 
Core noninterest expense 48,431  37,936  37,900  38,661  38,321  162,928  147,259 
Core efficiency ratio 50.93  % 51.04  % 50.66  % 51.21  % 50.73  % 50.96  % 52.36  %
Quarter ended
($ in thousands) Dec 31,
2020 		Sep 30,
2020 		Jun 30,
2020 		Mar 31,
2020 		Dec 31,
2019
SHAREHOLDERS’ EQUITY TO TANGIBLE COMMON EQUITY AND TOTAL ASSETS TO TANGIBLE ASSETS
Shareholders’ equity $ 1,078,975  $ 882,267  $ 867,963  $ 846,436  $ 867,185 
Less: Goodwill 260,567  210,344  210,344  210,344  210,344 
Less: Intangible assets 23,084  21,820  23,196  24,585  26,076 
Tangible common equity $ 795,324  $ 650,103  $ 634,423  $ 611,507  $ 630,765 
Total assets $ 9,751,571  $ 8,367,976  $ 8,357,501  $ 7,500,643  $ 7,333,791 
Less: Goodwill 260,567  210,344  210,344  210,344  210,344 
Less: Intangible assets 23,084  21,820  23,196  24,585  26,076 
Tangible assets $ 9,467,920  $ 8,135,812  $ 8,123,961  $ 7,265,714  $ 7,097,371 
Tangible common equity to tangible assets 8.40  % 7.99  % 7.81  % 8.42  % 8.89  %

Quarter ended
($ in thousands) Dec 31,
2020 		Sep 30,
2020 		Dec 31,
2019
AVERAGE SHAREHOLDERS’ EQUITY AND AVERAGE TANGIBLE COMMON EQUITY
Average shareholder’s equity $ 992,017  $ 885,496  $ 859,674 
Less average goodwill 237,639  210,344  210,344 
Less average intangible assets 22,565  22,489  26,828 
Average tangible common equity $ 731,813  $ 652,663  $ 622,502 



19

Quarter Ended Year ended
($ in thousands) Dec 31,
2020 		Sep 30,
2020 		Jun 30,
2020 		Mar 31,
2020 		Dec 31,
2019 		Dec 31,
2020 		Dec 31,
2019
CALCULATION OF PRE-PROVISION NET REVENUE
Net interest income $ 77,446  $ 63,354  $ 65,833  $ 63,368  $ 61,613  $ 270,001  $ 238,717 
Noninterest income 18,506  12,629  9,960  13,408  14,418  54,503  49,176 
Less: Noninterest expense 51,050  39,524  37,912  38,673  38,354  167,159  165,485 
Merger-related expenses 2,611  1,563  —  —  —  4,174  17,969 
PPNR (excluding merger-related expenses) $ 47,513  $ 38,022  $ 37,881  $ 38,103  $ 37,677  $ 161,519  $ 140,377 
Average assets $ 9,141,159  $ 8,341,968  $ 8,158,204  $ 7,363,605  $ 7,322,496  $ 8,253,913  $ 6,894,291 
ROAA - GAAP net income 1.26  % 0.86  % 0.72  % 0.70  % 1.58  % 0.90  % 1.35  %
PPNR ROAA - Adjusted net income 2.07  % 1.81  % 1.87  % 2.08  % 2.04  % 1.96  % 2.04  %












20

Quarter Ended
($ in thousands, except per share data) Dec 31,
2020 		Sep 30,
2020 		Jun 30,
2020
IMPACT OF PAYCHECK PROTECTION PROGRAM
Net income - GAAP $ 28,931  $ 17,951  $ 14,634 
PPP interest and fee income (10,261) (5,226) (4,083)
Related tax effect 2,534  1,291  1,009 
Adjusted net income - Non-GAAP $ 21,204  $ 14,016  $ 11,560 
Average diluted common shares 28,968  26,228  26,195 
EPS - GAAP net income $ 1.00  $ 0.68  $ 0.56 
EPS - Adjusted net income $ 0.73  $ 0.53  $ 0.44 
Average assets - GAAP $ 9,141,159  $ 8,341,968  $ 8,158,204 
Average PPP loans, net (806,697) (813,244) (634,632)
Adjusted average assets - Non-GAAP $ 8,334,462  $ 7,528,724  $ 7,523,572 
ROAA - GAAP net income 1.26  % 0.86  % 0.72  %
ROAA - Adjusted net income, adjusted average assets 1.01  % 0.74  % 0.62  %
PPNR (excluding merger-related expenses) - Non-GAAP (see reconciliation above) $ 47,513  $ 38,022  $ 37,881 
PPP interest and fees (10,261) (5,226) (4,083)
Adjusted PPNR (excluding merger-related expenses) - Non-GAAP $ 37,252  $ 32,796  $ 33,798 
PPNR ROAA (excluding merger-related expenses) - PPNR (excluding merger-related expenses) 2.07  % 1.81  % 1.87  %
PPNR ROAA (excluding merger-related expenses) - adjusted PPNR (excluding merger-related expenses), adjusted average assets 1.78  % 1.73  % 1.81  %
Tangible assets - Non-GAAP (see reconciliation above) $ 9,467,920  $ 8,135,812  $ 8,123,961 
PPP loans outstanding, net (698,645) (819,100) (807,814)
Adjusted tangible assets - Non-GAAP $ 8,769,275  $ 7,316,712  $ 7,316,147 
Tangible common equity Non - GAAP (see reconciliation above) $ 795,324  $ 650,103  $ 634,423 
Tangible common equity to tangible assets 8.40  % 7.99  % 7.81  %
Tangible common equity to tangible assets - adjusted tangible assets 9.07  % 8.89  % 8.67  %
Average assets for leverage ratio $ 8,886,916  $ 8,115,020  $ 7,928,286 
Average PPP loans, net (806,697) (813,244) (634,632)
Adjusted average assets for leverage ratio - Non-GAAP $ 8,080,219  $ 7,301,776  $ 7,293,654 
Tier 1 capital $ 889,527  $ 745,397  $ 726,574 
Leverage ratio 10.0  % 9.2  % 9.2  %
Leverage ratio - adjusted average assets for leverage ratio 11.0  % 10.2  % 10.0  %
Net interest income - tax equivalent $ 78,484  $ 64,192  $ 66,537 
PPP interest and fees (10,261) (5,226) (4,083)
Adjusted net interest income - tax equivalent $ 68,223  $ 58,966  $ 62,454 
Average earning assets -GAAP $ 8,524,136  $ 7,770,084  $ 7,571,196 
Average PPP loans, net (806,697) (813,244) (634,632)
Adjusted average earning assets - Non-GAAP $ 7,717,439  $ 6,956,840  $ 6,936,564 
Net interest margin - tax equivalent 3.66  % 3.29  % 3.53  %
Net interest margin - tax equivalent - adjusted net interest income, adjusted average earning assets 3.52  % 3.37  % 3.62  %
Loans - GAAP $ 7,224,935  $ 6,126,307  $ 6,140,051 
PPP loans outstanding, net (698,645) (819,100) (807,814)
Adjusted loans - Non-GAAP $ 6,526,290  $ 5,307,207  $ 5,332,237 
Allowance for credit losses on loans $ 136,671  $ 123,270  $ 110,270 
Allowance for credit losses on loans/loans - GAAP 1.89  % 2.01  % 1.80  %
Allowance for credit losses on loans/loans - adjusted loans 2.09  % 2.32  % 2.07  %

21
Enterprise Financial Services Corp 2020 Fourth Quarter Earnings Webcast

 
Forward-Looking Statements Some of the information in this report may contain “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 may include projections 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, yields and returns, loan diversification and credit management, shareholder value creation and the impact of the Company's pending acquisition of Seacoast Commerce Banc Holdings ("Seacoast") and other acquisitions. Forward-looking statements include, but are not limited to, statements about the Company’s plans, expectations, and projections of future financial and operating results, as well as statements regarding the Company’s plans, objectives, expectations or consequences of announced transactions. The Company uses words such as “may,” “might,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “could,” “continue,” and “intend”, and variations of such words and similar expressions, in this release to identify such forward-looking statements. Forward-looking statements are inherently subject to risks and uncertainties that could cause actual results to differ materially from those contemplated from such statements. The COVID-19 pandemic is adversely affecting us, our customers, counterparties, employees, and third-party service providers, and the ultimate extent of the impacts on our business, financial position, results of operations, liquidity, and prospects is uncertain. Continued deterioration in general business and economic conditions, including further increases in unemployment rates, or turbulence in domestic or global financial markets could adversely affect our revenues and the values of our assets and liabilities, reduce the availability of funding, lead to a tightening of credit, and further increase stock price volatility. In addition, changes to statutes, regulations, or regulatory policies or practices as a result of, or in response to COVID-19, could affect us in substantial and unpredictable ways.  Other factors that could cause or contribute to such differences include, but are not limited to, the Company’s ability to efficiently integrate acquisitions, including the Seacoast acquisition, 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 conditions, risks associated with rapid increases or decreases in prevailing interest rates, 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 regulatory requirements, changes in accounting policies and practices or accounting standards, including ASU 2016-13 (Topic 326), “Measurement of Credit Losses on Financial Instruments,” commonly referenced as the Current Expected Credit Loss (“CECL”) model, which we adopted on January 1, 2020 and which changed how we estimate credit losses and may increase the required level of our allowance for credit losses in future periods, uncertainty regarding the future of LIBOR, natural disasters, war or terrorist activities, or pandemics, or the outbreak of COVID-19 or similar outbreaks, and their effects on economic and business environments in which we operate, as well as other risk factors described in the Company’s 2019 Annual Report on Form 10-K and other reports filed with the Securities and Exchange Commission (the “SEC”). Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update them in light of new information or future events unless required under the federal securities laws. 2

 
Financial Highlights - Q4 '20 Capital • Tangible Common Equity/Tangible Assets - 8.40%; Adjusted for PPP* 9.07% • Quarterly dividend of $0.18 per share • Net Income $28.9 million; Earnings per Share $1.00 • PPNR* $47.5 million • ROAA 1.26%; PPNR ROAA* 2.07% • ROATCE* 15.73% Earnings *A Non-GAAP Measure, Refer to Appendix for Reconciliation. Loans & Deposits • Total Loans $7.2 billion • PPP Loans $698.6 million • Loan/Deposits 90% • Total Deposits $8.0 billion • Noninterest-bearing Deposits/Total Deposits 34% Asset Quality • Nonperforming Assets/Assets 0.45% • Nonperforming Loans/Loans 0.53% • Allowance Coverage Ratio 1.89%; 2.31% adjusted for guaranteed loans including PPP Acquisition • Closed acquisition of Seacoast on November 12, 2020 • $1.2 billion in loans and $1.1 billion in deposits 3

 
Areas of Focus Integration of Seacoast Commerce Banc Holdings and Seacoast Commerce Bank • Closed on November 12, 2020 Organic Loan Growth and Pipeline Leverage PPP Opportunities • Cross-selling Opportunities • Client acquisition Workforce Opportunities • Operational Efficiencies • Remote Workforce • Economical Branch Structure 4

 
Total Loan Trends In Millions 36% T otal Lo an Gro wth PPP $808 PPP $819 PPP* $613 *Represents PPP loans originated by EFSC Seacoast $1,224 5

 
Loan Details Q4 ’20 Q3 ’20 QTRChange Seacoast Q4 ’19 LTM Change C&I $ 1,103 $ 1,075 $ 28 $ 16 $ 1,179 $ (76) CRE, Investor Owned 1,421 1,282 139 107 1,288 133 CRE, Owner Occupied 826 767 59 98 713 113 SBA loans1 896 15 881 875 19 877 SBA PPP loans 699 819 (120) 86 — 699 Sponsor Finance 396 367 29 — 429 (33) Life Insurance Premium Financing 534 518 16 — 473 61 Residential Real Estate 318 322 (4) 9 366 (48) Construction and Land Development 474 450 24 32 429 45 Tax Credits 383 369 14 — 294 89 Other 175 142 33 1 124 51 Total Loans $ 7,225 $ 6,126 $ 1,099 $ 1,224 $ 5,314 $ 1,911 1Includes $575 million of SBA guaranteed loans In Millions 6

 
Total Loans By Business Unit In Millions Note: Q3 '20 and Q4 '20 excludes PPP loans **Acquisition of Seacoast closed on November 12, 2020 *Q4 '20 includes acquired Seacoast SBA loans 7

 
➢ 1% coupon, 2.6% average yield, 3.47% YTD average yield ➢ 99% 2 year maturity; 1% 5 year maturity ➢ No PPP loans or servicing have been sold ➢ Forgiveness process started October 29, 2020 ➢ 2,066 PPP loans totaling $39.3 million are < $50,000; $1.6 million in fees ➢ $218.5 million has been forgiven as of December 31, 2020 Professional Technical 14.2% Manufacturing 9.0% Retail Trade 8.9% Accomodation 8.8% Construction 8.4% Health Care 7.6% Real Estate 5.3% Other* 37.8% Southeast 3.2% West 14.2% Northeast 2.0% Southwest 22.1% Midwest 58.5% Total $699 Million PPP Loans by Size $ In Millions PPP Loans PPP Loans by LocationPPP Loans by Industry Size Number of Loans Balance Average Balance $5-10 Million 6 $44.4 $7.4 $2-5 Million 68 192.0 2.8 < $2 Million 3,655 462.2 0.1 Total 3,729 $698.6 $0.2 *Includes $86 million in Seacoast PPP loans 8

 
Last Twelve Months Growth Rate = 38% In Millions Deposit Trend u Seacoast $1,060 9

 
Loan Portfolio CRE 31.0% Construction 6.6% Residential 4.4% Other 2.4% Sponsor Finance 5.5% LIPF 7.4% Tax Credit 5.3% SBA 12.4% PPP 9.7% C&I 15.3% Loans by Product Type Real Estate/ Rental/Leasing 23.5% Finance and Insurance 14.5% Manufacturing 8.4% Other Services 7.9% Accomodation/Food Service 7.9%Construction 5.7% Other 32.1% Loans by Industry Type Fixed 33.7% PPP Fixed 9.7%Prime 17.6% Other Adjustable 4.2% LIBOR 34.8% Loans by Rate Type Total $7.2 Billion ➢ In December 2020, the Company participated in the Federal Reserve Main Street Lending program, lending $256 million of which 5% is retained in the loan portfolio. 10

 
Loan Deferrals Loan Deferrals by Loan Type Total Deferrals in 2020 Loans Moved out of Deferral Status Loans in Deferral Status at 12/31/20 Multiple Round Deferrals (Included in 12/31/20 balance) Commercial Real Estate $426,276 $400,154 $26,122 $8,327 Commercial and Industrial 140,815 125,107 15,708 14,384 Construction Real Estate 101,738 80,846 20,892 7,592 Residential Real Estate 18,834 18,579 255 - Other 105 105 - - Total $687,768 $624,791 $62,977 $30,303 In Thousands Current 30-89 Days Past Due 90+ Days Past Due Total Commercial Real Estate $416,478 $733 $9,065 $426,276 Commercial and Industrial 138,568 2,247 - 140,815 Construction Real Estate 101,738 - - 101,738 Residential Real Estate 17,197 1,029 608 18,834 Other 105 - - 105 Total $674,086 $4,009 $9,673 $687,768 Aging of Loan Deferrals Risk Rating at time of Deferment Risk Rating Current Risk Rating of Multiple Round Deferrals Pass (1-2) $5,222 $5,077 $545 Pass (4) 18,464 - - Pass (5) 285,761 99,373 - Pass (6) 325,396 381,539 881 Watch (7) 34,193 170,975 23,110 Classified (8) 18,732 30,804 5,767 Total $687,768 $687,768 $30,303 Risk Ratings of Loan Deferrals Jan 2021 Feb 2021 Mar 2021 Apr 2021 Total Commercial Real Estate $4,264 $5,767 $15,648 $443 $26,122 Commercial and Industrial 13,358 1,805 - 545 15,708 Construction Real Estate 13,392 - - 7,500 20,892 Residential Real Estate 255 - - - 255 Other - - - - - Total $31,269 $7,572 $15,648 $8,488 $62,977 Expiration of Loan Deferrals In Thousands In Thousands In Thousands 11

 
Allowance for Credit Losses for Loans $110,270 $123,270 Q4 '20 In Thousands ACL Loans ACL as a % of Loans Commercial and industrial $ 58,812 $ 3,088,995 1.90 % Commercial real estate 49,074 3,087,827 1.59 % Construction real estate 21,413 546,686 3.92 % Residential real estate 4,585 319,179 1.44 % Other 2,787 182,248 1.53 % Total loans $ 136,671 $ 7,224,935 1.89 % Reserves on sponsor finance, which is included in the categories above, represented $19.0 million. Total ACL percentage of loans excluding PPP and other government guaranteed loans was 2.31% 12

 
Earnings Per Share Trend - 2020 2019 Net Interest Income Provision for Credit Losses Noninterest Income 2020Change in Shares Noninterest Expense Merger-Related Expense Change in EPS PPP Acceleration $3.55 $2.76 Change in Effective Tax Rate Seacoast Day 2 Swap Termination 13

 
Earnings Per Share Trend - Q4 2020 Change in EPS Q3 '20 Q4 '20Net Interest Income Noninterest Income PPP Acceleration Provision for Credit Losses Merger-Related Expense $0.68 $1.00 Change in Shares Noninterest Expense Change in Effective Tax Rate Seacoast Day 2 Swap Termination 14

 
Net Interest Income Trend In Millions 26% NII Gro wth PPP Acceleration $5.2 Seacoast $8.0 15

 
Credit Trends for Loans Q4 '20 Q4 '19 NPAs/Assets = 0.45% 0.45% NPLs/Loans = 0.53% 0.50% ALLL/NPLs = 354.9% 163.8% ALLL/Loans** = 2.31% 0.81% Net Charge-offs (Recoveries) In Millions bps bps bps bps bps In Millions Loan Growth and Line of Credit Utilization* *Excludes acquisition of Seacoast for Q4 '20 **Excludes guaranteed loans for Q4 '20. 16

 
Change in Allowance for Credit Losses for Loans In Thousands $123,270 $136,371 • New loans and changes in composition of existing loans • Changes in risk ratings, past due status and reserves on individually evaluated loans • Charge-offs and recoveries • Change in macro- economic and qualitative factors *The PCD ACL was established as part of the amortized cost basis of the acquired loans and did not impact the provision for credit losses 17

 
Noninterest Income Trend Other Fee Income DetailFee Income In Millions 18

 
Operating Expenses Trend * A Non-GAAP Measure, Refer to Appendix for Reconciliation In Millions 19

 
Capital *A Non-GAAP Measure, Refer to Appendix for Reconciliation. Excludes PPP loans for Q2, Q3, and Q4 2020 In Thousands Holding Company liquidity position continues to support strategic capital planning initiatives, including debt service and dividends. 8.0% 11.4% 11.0% 11.4% 11.6% 12.1% 20

 
Appendix Fourth Quarter 2020 Earnings Webcast

 
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, ROATCE, PPNR, PPNR ROAA, financial metrics adjusted for PPP impact, and the tangible common equity ratio, 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, ROATCE, PPNR, PPNR ROAA, financial metrics adjusted for PPP impact, and the tangible common equity ratio, 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 non-core acquired loans, which were acquired from the FDIC and previously covered by loss share agreements, and the related income and expenses, the impact of certain non-comparable items, and the Company’s operating performance on an ongoing basis. Core performance measures include contractual interest on non-core acquired loans, but exclude incremental accretion on these loans. Core performance measures also exclude expenses directly related to non-core acquired loans. Core performance measures also exclude certain other income and expense items, such as merger related expenses, facilities charges, and the gain or loss on sale of investment securities, the Company believes to be not indicative of or useful to measure the Company’s operating performance on an ongoing basis. The attached tables contain a reconciliation of these core performance measures to the GAAP measures. The Company believes that the tangible common equity ratio provides useful information to investors about the Company’s capital strength even though it is considered to be a non-GAAP financial measure and is not part of the regulatory capital requirements to which the Company is subject. The Company believes these non-GAAP measures and ratios, when taken together with the corresponding GAAP measures and ratios, provide meaningful supplemental information regarding the Company’s performance and capital strength. The Company’s management uses, and believes that investors benefit from referring to, these non-GAAP measures and ratios in assessing the Company’s operating results and related trends and when forecasting future periods. However, these non-GAAP measures and ratios should be considered in addition to, and not as a substitute for or preferable to, ratios prepared in accordance with GAAP. In the attached tables, the Company has provided a reconciliation of, where applicable, the most comparable GAAP financial measures and ratios to the non-GAAP financial measures and ratios, or a reconciliation of the non-GAAP calculation of the financial measures for the periods indicated. 22

 
Reconciliation of Non-GAAP Financial Measures Quarter ended ($ in thousands) Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 SHAREHOLDERS’ EQUITY TO TANGIBLE COMMON EQUITY AND TOTAL ASSETS TO TANGIBLE ASSETS Shareholders’ equity $ 1,078,975 $ 882,267 $ 867,963 $ 846,436 $ 867,185 Less: Goodwill 260,567 210,344 210,344 210,344 210,344 Less: Intangible assets 23,084 21,820 23,196 24,585 26,076 Tangible common equity $ 795,324 $ 650,103 $ 634,423 $ 611,507 $ 630,765 Total assets $ 9,751,571 $ 8,367,976 $ 8,357,501 $ 7,500,643 $ 7,333,791 Less: Goodwill 260,567 210,344 210,344 210,344 210,344 Less: Intangible assets 23,084 21,820 23,196 24,585 26,076 Tangible assets $ 9,467,920 $ 8,135,812 $ 8,123,961 $ 7,265,714 $ 7,097,371 Tangible common equity to tangible assets 8.40 % 7.99 % 7.81 % 8.42 % 8.89 % 23

 
Reconciliation of Non-GAAP Financial Measures Quarter ended ($ in thousands) Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 CALCULATION OF PRE-PROVISION NET REVENUE Net interest income $ 77,446 $ 63,354 $ 65,833 $ 63,368 $ 61,613 Noninterest income 18,506 12,629 9,960 13,408 14,418 Less: Noninterest expense 51,050 39,524 37,912 38,673 38,354 Merger-related expenses 2,611 1,563 — — — PPNR (excluding merger-related expenses) $ 47,513 $ 38,022 $ 37,881 $ 38,103 $ 37,677 Average assets $ 9,141,159 $ 8,341,968 ROAA - GAAP net income 1.26 % 0.86 % PPNR ROAA - Non-GAAP 2.07 % 1.81 % Quarter ended ($ in thousands) Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 IMPACT OF PAYCHECK PROTECTION PROGRAM Tangible assets - Non-GAAP (see reconciliation above) $ 9,467,920 $ 8,135,812 $ 8,123,961 PPP loans outstanding, net (698,645) (819,100) (807,814) Adjusted tangible assets - Non-GAAP $ 8,769,275 $ 7,316,712 $ 7,316,147 Tangible common equity Non - GAAP (see reconciliation above) $ 795,324 $ 650,103 $ 634,423 Tangible common equity to tangible assets 8.40 % 7.99 % 7.81 % Tangible common equity to tangible assets - adjusted tangible assets 9.07 % 8.89 % 8.67 % AVERAGE SHAREHOLDERS’ EQUITY AND AVERAGE TANGIBLE COMMON EQUITY Average shareholder’s equity $ 992,017 Less average goodwill 237,639 Less average intangible assets 22,565 Average tangible common equity $ 731,813 Return on average tangible common equity 15.73 % 24

 
Q & A Fourth Quarter 2020 Earnings Webcast