EX-99.1 2 ex991financialstatements0930.htm EARNINGS RELEASE
EXHIBIT 99.1
ENTERPRISE FINANCIAL REPORTS THIRD QUARTER 2017 RESULTS
Reported Third Quarter Highlights

• | Net income of $0.69 per diluted share

• | Return on average assets of 1.27%

• | Portfolio loans grew 14% on an annualized basis

• | Efficiency ratio decreased to 50.75%

• | Repurchase of 429,955 shares at an average price of $38.69

Third Quarter Core Highlights 1

• | Net income of $0.66 per diluted share

• | Return on average assets of 1.21%

• | Net interest margin remained stable at 3.75%

• | Efficiency ratio decreased to 51.64%

St. Louis, Mo. October 23, 2017 – Enterprise Financial Services Corp (NASDAQ: EFSC) (the “Company”) reported net income of $16.3 million for the quarter ended September 30, 2017, an increase of $4.4 million, or 36%, and $4.5 million, or 38%, as compared to the linked second quarter and prior year quarter, respectively. Net income per diluted share was $0.69 for the quarter ended September 30, 2017, an increase of $0.19 and $0.10, compared to $0.50 and $0.59 per diluted share for the linked second quarter and prior year period, respectively. The linked quarter increase was primarily due to lower noninterest expense and provision costs.
On a core basis 1, the Company reported net income of $15.5 million, or $0.66 per diluted share, for the quarter ended September 30, 2017, compared to $13.2 million, or $0.56 per diluted share, in the linked second quarter. Third quarter 2017 core net income 1 increased 56% from $9.9 million for the prior year period, and diluted core earnings per share 1 grew 35% from $0.49 for the prior year period. The diluted earnings per share 1 increase of $0.17 from the prior year period was primarily due to higher levels of core net interest income from continued growth in earning asset balances combined with 21 basis points of core net interest margin 1 expansion. The increase from the linked second quarter resulted primarily from achievement of synergies from the acquisition of Jefferson County Bancshares, Inc. ("JCB"), as well as a reduction in the provision for loan losses.
The Company's Board of Directors approved the Company’s quarterly dividend of $0.11 per common share, payable on December 29, 2017 to shareholders of record as of December 15, 2017.
Jim Lally, EFSC’s President and Chief Executive Officer, commented, "The third quarter was highlighted by record earnings on both a total and core basis. With acquisition integration efforts largely complete, the quarter’s results highlighted the strength of our core earnings power. Core revenue 1 grew 3%, including growth in fee income, while core noninterest expenses 1 declined 3%. Core return on average assets 1 of 1.21% represented increases of 15 basis points and 17 basis points from the linked quarter and prior year."
Lally added, "Portfolio loan growth of 14%, on an annualized basis, was well diversified across our markets and lending platforms. Additionally, we took steps to manage our overall capital levels prudently, returning $17 million to shareholders through share repurchases while maintaining strong capital positions to support future growth. In addition, we continue to opportunistically hire in support of sustained growth."
1 A non-GAAP measure. Refer to discussion & reconciliation of these measures in the accompanying financial tables.
1

Net Interest Income
Net interest income in the third quarter remained stable from the linked second quarter at $45.6 million, but increased $11.8 million from the prior year period due to two full quarters of impact from the acquisition of JCB, strong growth in portfolio loan balances funded principally with core deposits and an increase in core net interest margin discussed below. Net interest margin, on a fully tax equivalent basis, was 3.88% for the third quarter, compared to 3.98% in the linked second quarter, and 3.80% in the third quarter of 2016. Net interest margin decreased primarily from a decrease in contributions from non-core acquired assets.
The yield on portfolio loans improved to 4.69% in the third quarter, an increase of six basis points from the linked second quarter, and 44 basis points from the prior year quarter. The increase was primarily due to the effect of increasing interest rates on our existing loan portfolio and higher interest rates on newly originated loans. The cost of total deposits was limited to a five basis point increase in the linked quarter and a nine basis point increase from the prior year quarter. The cost of interest-bearing liabilities increased nine basis points to 0.78% in the third quarter of 2017 from 0.69% in the linked second quarter, and is 26 basis points higher than 0.52% in the third quarter of 2016. The increases were due to the issuance of $50 million of subordinated debt issued November 1, 2016, the acquisition of JCB, and the impact of rising interest rates on the Company's borrowed funds.
Core net interest margin 1, (fully tax equivalent), excludes incremental accretion on non-core acquired loans. See the table below for a quarterly comparison.

| For the Quarter ended
($ in thousands) | September 30, 2017 |  | June 30, 2017 |  | March 31, 2017 |  | December 31, 2016 |  | September 30, 2016
Core net interest income 1 | 44,069 |  |  | 43,049 |  |  | 37,567 |  |  | 32,175 |  |  | 31,534 |
Core net interest margin 1 | 3.75 | % |  | 3.76 | % |  | 3.63 | % |  | 3.44 | % |  | 3.54 | %

Core net interest income 1 increased by $1.0 million to $44.1 million, or 2% compared to the linked quarter, and increased $12.5 million, or 40%, compared to the prior year period due to strong portfolio loan growth funded by core deposits and from the acquisition of JCB. Core net interest margin 1 decreased one basis point to 3.75% from the linked quarter. Core net interest margin 1 expanded 21 basis points from the prior year quarter, primarily due to increased yield on portfolio loans out-pacing the increase to borrowing costs, as well as purchase accounting impacts from the JCB acquisition. The Company continues to manage its balance sheet to grow core net interest income and expects to maintain core net interest margin over the coming quarters; however, pressure on funding costs could negate the expected trends in core net interest margin.
Portfolio Loans
Note: Non-core acquired loans were those acquired from the FDIC and were previously covered by shared-loss agreements. These loans continue to be accounted for as Purchased Credit Impaired ("PCI") loans. Approximately $48 million of loans in JCB's portfolio are also accounted for as PCI loans. However, all loans acquired from JCB are included in portfolio loans.
1 A non-GAAP measure. Refer to discussion & reconciliation of these measures in the accompanying financial tables.
2

The following table presents portfolio loans with selected specialized lending detail for the most recent five quarters:

| At the Quarter ended
|  |  |  |  | March 31, 2017 |  |  |  |
($ in thousands) | Sept 30, 2017 |  | June 30, 2017 |  | JCB |  | Legacy Enterprise |  | Consolidated |  | Dec 31, 2016 |  | Sept 30, 2016
Enterprise value lending | $ | 455,983 |  |  | $ | 433,766 |  |  | $ | — |  |  | $ | 429,957 |  |  | $ | 429,957 |  |  | $ | 388,798 |  |  | $ | 394,923 |
C&I - general | 886,498 |  |  | 894,787 |  |  | 79,021 |  |  | 810,781 |  |  | 889,802 |  |  | 794,451 |  |  | 755,829 |
Life insurance premium financing | 330,957 |  |  | 317,848 |  |  | — |  |  | 312,335 |  |  | 312,335 |  |  | 305,779 |  |  | 298,845 |
Tax credits | 188,497 |  |  | 149,941 |  |  | — |  |  | 141,770 |  |  | 141,770 |  |  | 143,686 |  |  | 149,218 |
CRE, construction, and land development | 1,638,521 |  |  | 1,563,131 |  |  | 465,736 |  |  | 1,074,908 |  |  | 1,540,644 |  |  | 1,089,498 |  |  | 1,044,827 |
Residential real estate | 341,695 |  |  | 348,678 |  |  | 121,232 |  |  | 239,080 |  |  | 360,312 |  |  | 240,760 |  |  | 233,960 |
Consumer and other | 154,350 |  |  | 150,812 |  |  | 12,420 |  |  | 165,732 |  |  | 178,152 |  |  | 155,420 |  |  | 160,103 |
Portfolio loans | $ | 3,996,501 |  |  | $ | 3,858,963 |  |  | $ | 678,409 |  |  | $ | 3,174,563 |  |  | $ | 3,852,972 |  |  | $ | 3,118,392 |  |  | $ | 3,037,705 |
Portfolio loan yield | 4.69 | % |  | 4.63 | % |  |  |  |  |  | 4.45 | % |  | 4.24 | % |  | 4.25 | %

Portfolio loans were $4.0 billion at September 30, 2017, increasing $138 million, or 14% annualized, when compared to the linked quarter. On a year over year basis, portfolio loans increased $959 million, of which $281 million, or 9%, was organic loan growth and $678 million was from the acquisition of JCB. The Company continues to expect portfolio loan growth, excluding the acquisition of JCB, at or above 10% for 2017. For 2018, the Company expects organic loan growth in dollars to be at least equivalent to 2017 levels. With continued organic growth and the impact of the JCB acquisition increasing portfolio loan balances, 2018 portfolio loan growth is expected to be approximately 7% - 9%.
The Company continues to focus on originating high-quality Commercial and Industrial ("C&I") relationships, as they typically have variable interest rates and allow for cross selling opportunities involving other banking products. C&I loans increased $66 million during the third quarter of 2017 from the linked second quarter and represented 47% of the Company's loan portfolio at September 30, 2017.
Since September 30, 2016, C&I loans have grown organically by $184 million, or 12% to $1.9 billion. C&I loan growth supports management's efforts to maintain the Company's asset sensitive interest rate risk position. At September 30, 2017, and June 30, 2017, 57% of portfolio loans had variable interest rates, as compared to 64% at September 30, 2016. The change from prior year is due to the acquisition of JCB; however, the Company remains modestly asset sensitive to interest rate increases.
Non-Core Acquired Loans
Non-core acquired loans totaled $34.2 million at September 30, 2017, a decrease of $1.7 million, or 5% from the linked second quarter, and $13.3 million, or 28%, from the prior year period, primarily as a result of principal payments and loan payoffs.
Non-core acquired loans contributed $1.0 million of net earnings in the third quarter of 2017, compared to $1.7 million in the linked second quarter. At September 30, 2017, the remaining accretable yield on the portfolio was estimated to be $10 million and the non-accretable difference was approximately $15 million. Accelerated cash flows and other incremental accretion from PCI loans was $1.6 million for the quarter ended September 30, 2017, $2.6 million for the linked quarter, and $2.3 million for the prior year quarter. The Company estimates 2017 income from accelerated cash flows and other incremental accretion to be between $6 million and $8 million.
1 A non-GAAP measure. Refer to discussion & reconciliation of these measures in the accompanying financial tables.
3

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

| For the Quarter ended
($ in thousands) | September 30, 2017 |  | June 30, 2017 |  | March 31, 2017 |  | December 31, 2016 |  | September 30, 2016
Nonperforming loans | $ | 8,985 |  |  | $ | 13,081 |  |  | $ | 13,847 |  |  | $ | 14,905 |  |  | $ | 19,942 |
Other real estate | 491 |  |  | 529 |  |  | 2,925 |  |  | 980 |  |  | 2,959 |
Nonperforming assets | $ | 9,476 |  |  | $ | 13,610 |  |  | $ | 16,772 |  |  | $ | 15,885 |  |  | $ | 22,901 |
Nonperforming loans to total loans a | 0.23 | % |  | 0.34 | % |  | 0.36 | % |  | 0.48 | % |  | 0.66 | %
Nonperforming assets to total assets | 0.18 | % |  | 0.27 | % |  | 0.33 | % |  | 0.39 | % |  | 0.59 | %
Allowance for portfolio loan losses to total loans a | 0.97 | % |  | 0.96 | % |  | 1.03 | % |  | 1.20 | % |  | 1.23 | %
Net charge-offs (recoveries) | $ | 803 |  |  | $ | 6,104 |  |  | $ | (56 | ) |  | $ | 897 |  |  | $ | 1,038 |

a Excludes loans accounted for as PCI loans
At September 30, 2017, nonperforming loans decreased to 0.23% of portfolio loans, and nonperforming assets declined to 0.18% of total assets. Nonperforming loans decreased 31% to $9.0 million at September 30, 2017, from $13.1 million at June 30, 2017, and decreased 55% from $19.9 million at September 30, 2016. During the quarter, nonperforming loan activity included $4.8 million in paydowns.
The Company recorded provision for portfolio loan losses of $2.4 million compared to $3.6 million in the linked quarter and $3.0 million in the prior year period. The provision is reflective of the decline in net chargeoffs, growth in portfolio loan balances, and maintaining a prudent credit risk posture. The allowance for portfolio loan losses to portfolio loans was 0.97% at September 30, 2017.
Deposits
The following table presents deposits broken out by type:

| At the Quarter ended
|  |  |  |  | March 31, 2017 |  |  |  |
($ in thousands) | Sept 30, 2017 |  | June 30, 2017 |  | JCB |  | Legacy Enterprise |  | Consolidated |  | Dec 31, 2016 |  | Sept 30, 2016
Noninterest-bearing accounts | $ | 1,047,910 |  |  | $ | 1,019,064 |  |  | $ | 168,775 |  |  | $ | 868,226 |  |  | $ | 1,037,001 |  |  | $ | 866,756 |  |  | $ | 762,155 |
Interest-bearing transaction accounts | 814,338 |  |  | 803,104 |  |  | 96,207 |  |  | 748,568 |  |  | 844,775 |  |  | 731,539 |  |  | 633,100 |
Money market and savings accounts | 1,579,767 |  |  | 1,506,001 |  |  | 371,000 |  |  | 1,172,737 |  |  | 1,543,737 |  |  | 1,161,907 |  |  | 1,241,725 |
Brokered certificates of deposit | 170,701 |  |  | 133,606 |  |  | — |  |  | 145,436 |  |  | 145,436 |  |  | 117,145 |  |  | 137,592 |
Other certificates of deposit | 446,495 |  |  | 459,476 |  |  | 138,012 |  |  | 322,659 |  |  | 460,671 |  |  | 356,014 |  |  | 350,253 |
Total deposit portfolio | $ | 4,059,211 |  |  | $ | 3,921,251 |  |  | $ | 773,994 |  |  | $ | 3,257,626 |  |  | $ | 4,031,620 |  |  | $ | 3,233,361 |  |  | $ | 3,124,825 |

Total deposits at September 30, 2017 were $4.1 billion, an increase of $138 million, or 4% from June 30, 2017, and an increase of $934 million, or 30%, from September 30, 2016. Core deposits, defined as total deposits excluding certificates of deposits, were $3.4 billion at September 30, 2017, an increase of $114 million, or 3% from the linked quarter, and an increase of $805 million, or 31%, when compared to the prior year period. The overall positive trends in deposits reflect continued progress across our business lines, expected seasonality, and the acquisition of JCB.
1 A non-GAAP measure. Refer to discussion & reconciliation of these measures in the accompanying financial tables.
4

Noninterest-bearing deposits increased $29 million compared to June 30, 2017, and increased $286 million compared to September 30, 2016. The composition of noninterest-bearing deposits remained relatively stable at 26% of total deposits at September 30, 2017, and June 30, 2017, compared to 24% at September 30, 2016. The total cost of deposits was limited to an increase of five basis points and totaled 0.46% compared to 0.41% at June 30, 2017. The cost of deposits increased nine basis points since September 30, 2016.
Noninterest Income
Total noninterest income was $8.4 million for the quarter ended September 30, 2017. Deposit service charges for the third quarter of 2017 of $2.8 million remained solid for the quarter, and grew 28% when compared to the prior year quarter, due primarily to the acquisition of JCB and growth in client base.
Wealth management revenues for the third quarter of 2017 of $2.1 million grew 22% when compared to the prior year period, due to the JCB acquisition and addition of new clients.Trust assets under management were $1.3 billion at September 30, 2017, an increase of $39 million, or 3%, when compared to June 30, 2017, and an increase of $389 million, or 42%, when compared to the prior year period. The increase from the linked quarter was primarily due to market appreciation and new customers.
Card services revenue increased 5% to $1.5 million compared to the linked quarter and increased $0.7 million, or 81% compared to the prior year period from the JCB acquisition and continued benefit from new and expanded use by customers of its in-house credit card, merchant and debit card products and services.
The Company expects continued growth in fee income of 5% - 7% for 2018.
Noninterest Expenses
Noninterest expenses were $27.4 million for the quarter ended September 30, 2017, compared to $32.7 million for the quarter ended June 30, 2017, and $20.8 million for the quarter ended September 30, 2016. Noninterest expenses for the quarter included $0.3 million of merger related expenses compared to $4.5 million in the linked second quarter. Core noninterest expenses 1 were $27.1 million for the quarter ended September 30, 2017, compared to $27.8 million for the linked quarter, and $20.2 million for the prior year period. The decrease from the linked quarter was primarily due to the continued cost efficiencies obtained in the integration of JCB. The synergies realized from JCB were partially offset by $0.4 million of amortization of a new tax credit investment, which benefits our effective tax rate.
The Company's core efficiency ratio 1 decreased to 51.6% for the quarter ended September 30, 2017, compared to 54.5% for the linked quarter, and 52.8% for the prior year period, and reflects continuing efforts to leverage its expense base and execution of the initiatives necessary to realize the expected cost savings from the JCB acquisition. The conversion of JCB's core systems was completed late in the second quarter of 2017. The Company expects to continue to invest in revenue producing associates and other infrastructure that supports additional growth. These investments are expected to result in expense growth, at a rate of 35% - 45% of projected revenue growth for 2018, resulting in modest improvement to the Company's efficiency ratio.
Income Taxes
The Company's effective tax rate was 32.5% for the quarter ended September 30, 2017 compared to 31.7% for the quarter ended June 30, 2017, and 34.8% for the quarter ended September 30, 2016. The increase in the quarter resulted primarily from increased pre-tax earnings, which lessen the rate impact of permanent tax differences, and lower excess tax benefits from equity compensation awards due to a new accounting standard adopted this year. These increases were partially offset by the benefit of the aforementioned tax credit investment and other income tax planning initiatives.
1 A non-GAAP measure. Refer to discussion & reconciliation of these measures in the accompanying financial tables.
5

Capital
The total risk based capital ratio 1 was 12.33% at September 30, 2017, compared to 12.84% at June 30, 2017, and 12.01% at September 30, 2016. The Company's Common equity tier 1 capital ratio 1 was 8.93% at September 30, 2017, compared to 9.34% at June 30, 2017, and 9.33% at September 30, 2016. The tangible common equity ratio 1 was 8.18% at September 30, 2017, versus 8.56% at June 30, 2017, and 8.99% at September 30, 2016. In the third quarter of 2017, as part of its capital management efforts, the Company repurchased 429,955 shares of its common stock for $16.6 million pursuant to its publicly announced program. The repurchase of these shares is the primary reason for the decline in capital ratios this quarter.
Capital ratios for the current quarter are based on the Basel III regulatory capital framework as applied to the Company’s current businesses and operations, and are subject to, among other things, completion and filing of the Company’s regulatory reports and ongoing regulatory review and implementation guidance. The attached tables contain a reconciliation of these ratios to U.S. GAAP financial measures.
For more information contact:
Investor Relations: Keene Turner, Executive Vice President and CFO (314) 512-7233
Media: Karen Loiterstein, Senior Vice President (314) 512-7141
Use of Non-GAAP Financial Measures 1
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 core net income and net interest margin, and other core performance measures, regulatory capital ratios, 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 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 and 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 the gain or loss on sale of other real estate from non-core acquired loans, and expenses directly related to non-core acquired loans and other assets formerly covered under FDIC loss share agreements. Core performance measures also exclude certain other income and expense items, such as executive separation costs, 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
1 A non-GAAP measure. Refer to discussion & reconciliation of these measures in the accompanying financial tables.
6

financial measures and ratios, or a reconciliation of the non-GAAP calculation of the financial measure for the periods indicated.
The Company will host a conference call and webcast at 2:30 p.m. Central time on Tuesday, October 24, 2017. During the call, management will review the third quarter of 2017 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 1-877-830-2636 (Conference ID #6750100.) A recorded replay of the conference call will be available on the website two hours after the call's completion. Visit http://bit.ly/EFSC3QEarnings 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.
Enterprise Financial Services Corp operates commercial banking and wealth management businesses in metropolitan St. Louis, Kansas City, and Phoenix. The Company is primarily focused on serving the needs of privately held businesses, their owner families, executives and professionals.
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. 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 communication 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. Factors that could cause or contribute to such differences include, but are not limited to, the Company's ability to efficiently integrate acquisitions into its operations, retain the customers of these businesses and grow the acquired operations, as well as credit risk, changes in the appraised valuation of real estate securing impaired loans, outcomes of litigation and other contingencies, exposure to general and local economic 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 regulation or standards applicable to banks, as well as other risk factors described in the Company's 2016 Annual Report on Form 10-K and other reports filed with the Securities and Exchange Commission. 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.
1 A non-GAAP measure. Refer to discussion & reconciliation of these measures in the accompanying financial tables.
7

ENTERPRISE FINANCIAL SERVICES CORP
CONSOLIDATED FINANCIAL SUMMARY (unaudited)

| For the Quarter ended |  | For the Nine Months ended
($ in thousands, except per share data) | Sep 30, 2017 |  | Jun 30, 2017 |  | Mar 31, 2017 |  | Dec 31, 2016 |  | Sep 30, 2016 |  | Sep 30, 2017 |  | Sep 30, 2016
EARNINGS SUMMARY |  |  |  |  |  |  |  |  |  |  |  |  |
Net interest income | $ | 45,625 |  |  | $ | 45,633 |  |  | $ | 38,642 |  |  | $ | 35,454 |  |  | $ | 33,830 |  |  | $ | 129,900 |  |  | $ | 100,041 |
Provision for portfolio loan losses | 2,422 |  |  | 3,623 |  |  | 1,533 |  |  | 964 |  |  | 3,038 |  |  | 7,578 |  |  | 4,587 |
Provision reversal for purchased credit impaired loan losses | — |  |  | (207 | ) |  | (148 | ) |  | (343 | ) |  | (1,194 | ) |  | (355 | ) |  | (1,603 | )
Noninterest income | 8,372 |  |  | 7,934 |  |  | 6,976 |  |  | 9,029 |  |  | 6,976 |  |  | 23,282 |  |  | 20,030 |
Noninterest expense | 27,404 |  |  | 32,651 |  |  | 26,736 |  |  | 23,181 |  |  | 20,814 |  |  | 86,791 |  |  | 62,929 |
Income before income tax expense | 24,171 |  |  | 17,500 |  |  | 17,497 |  |  | 20,681 |  |  | 18,148 |  |  | 59,168 |  |  | 54,158 |
Income tax expense | 7,856 |  |  | 5,545 |  |  | 5,106 |  |  | 7,053 |  |  | 6,316 |  |  | 18,507 |  |  | 18,949 |
Net income | $ | 16,315 |  |  | $ | 11,955 |  |  | $ | 12,391 |  |  | $ | 13,628 |  |  | $ | 11,832 |  |  | $ | 40,661 |  |  | $ | 35,209 |
Diluted earnings per share | $ | 0.69 |  |  | $ | 0.50 |  |  | $ | 0.56 |  |  | $ | 0.67 |  |  | $ | 0.59 |  |  | $ | 1.75 |  |  | $ | 1.74 |
Return on average assets | 1.27 | % |  | 0.96 | % |  | 1.10 | % |  | 1.36 | % |  | 1.23 | % |  | 1.11 | % |  | 1.26 | %
Return on average common equity | 11.69 | % |  | 8.78 | % |  | 10.65 | % |  | 14.04 | % |  | 12.46 | % |  | 10.37 | % |  | 12.83 | %
Return on average tangible common equity | 15.23 | % |  | 11.49 | % |  | 12.96 | % |  | 15.33 | % |  | 13.64 | % |  | 13.25 | % |  | 14.10 | %
Net interest margin (fully tax equivalent) | 3.88 | % |  | 3.98 | % |  | 3.73 | % |  | 3.79 | % |  | 3.80 | % |  | 3.87 | % |  | 3.87 | %
Efficiency ratio | 50.75 | % |  | 60.95 | % |  | 58.61 | % |  | 52.11 | % |  | 51.01 | % |  | 56.66 | % |  | 52.41 | %
CORE PERFORMANCE SUMMARY (NON-GAAP)1 |  |  |  |  |  |  |  |  |  |
Net interest income | $ | 44,069 |  |  | $ | 43,049 |  |  | $ | 37,567 |  |  | $ | 32,175 |  |  | $ | 31,534 |  |  | $ | 124,685 |  |  | $ | 91,340 |
Provision for portfolio loan losses | 2,422 |  |  | 3,623 |  |  | 1,533 |  |  | 964 |  |  | 3,038 |  |  | 7,578 |  |  | 4,587 |
Noninterest income | 8,350 |  |  | 7,934 |  |  | 6,976 |  |  | 7,849 |  |  | 6,828 |  |  | 23,260 |  |  | 18,938 |
Noninterest expense | 27,070 |  |  | 27,798 |  |  | 24,946 |  |  | 21,094 |  |  | 20,242 |  |  | 79,814 |  |  | 61,123 |
Income before income tax expense | 22,927 |  |  | 19,562 |  |  | 18,064 |  |  | 17,966 |  |  | 15,082 |  |  | 60,553 |  |  | 44,568 |
Income tax expense | 7,391 |  |  | 6,329 |  |  | 4,916 |  |  | 6,021 |  |  | 5,142 |  |  | 18,636 |  |  | 15,276 |
Net income | $ | 15,536 |  |  | $ | 13,233 |  |  | $ | 13,148 |  |  | $ | 11,945 |  |  | $ | 9,940 |  |  | $ | 41,917 |  |  | $ | 29,292 |
Diluted earnings per share | $ | 0.66 |  |  | $ | 0.56 |  |  | $ | 0.59 |  |  | $ | 0.59 |  |  | $ | 0.49 |  |  | $ | 1.81 |  |  | $ | 1.45 |
Return on average assets | 1.21 | % |  | 1.06 | % |  | 1.17 | % |  | 1.19 | % |  | 1.04 | % |  | 1.14 | % |  | 1.05 | %
Return on average common equity | 11.13 | % |  | 9.72 | % |  | 11.29 | % |  | 12.31 | % |  | 10.47 | % |  | 10.69 | % |  | 10.67 | %
Return on average tangible common equity | 14.50 | % |  | 12.72 | % |  | 13.75 | % |  | 13.44 | % |  | 11.46 | % |  | 13.66 | % |  | 11.73 | %
Net interest margin (fully tax equivalent) | 3.75 | % |  | 3.76 | % |  | 3.63 | % |  | 3.44 | % |  | 3.54 | % |  | 3.71 | % |  | 3.53 | %
Efficiency ratio | 51.64 | % |  | 54.52 | % |  | 56.01 | % |  | 52.70 | % |  | 52.77 | % |  | 53.95 | % |  | 55.43 | %
1 Refer to Reconciliations of Non-GAAP Financial Measures table for a reconciliation of these measures to GAAP.

8

ENTERPRISE FINANCIAL SERVICES CORP
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)

| For the Quarter ended |  | For the Nine Months ended
($ in thousands, except per share data) | Sep 30, 2017 |  | Jun 30, 2017 |  | Mar 31, 2017 |  | Dec 31, 2016 |  | Sep 30, 2016 |  | Sep 30, 2017 |  | Sep 30, 2016
INCOME STATEMENTS |  |  |  |  |  |  |  |  |  |  |  |  |
NET INTEREST INCOME |  |  |  |  |  |  |  |  |  |  |  |  |
Total interest income | $ | 52,468 |  |  | $ | 51,542 |  |  | $ | 43,740 |  |  | $ | 39,438 |  |  | $ | 37,293 |  |  | $ | 147,750 |  |  | $ | 109,786 |
Total interest expense | 6,843 |  |  | 5,909 |  |  | 5,098 |  |  | 3,984 |  |  | 3,463 |  |  | 17,850 |  |  | 9,745 |
Net interest income | 45,625 |  |  | 45,633 |  |  | 38,642 |  |  | 35,454 |  |  | 33,830 |  |  | 129,900 |  |  | 100,041 |
Provision for portfolio loan losses | 2,422 |  |  | 3,623 |  |  | 1,533 |  |  | 964 |  |  | 3,038 |  |  | 7,578 |  |  | 4,587 |
Provision reversal for purchased credit impaired loans | — |  |  | (207 | ) |  | (148 | ) |  | (343 | ) |  | (1,194 | ) |  | (355 | ) |  | (1,603 | )
Net interest income after provision for loan losses | 43,203 |  |  | 42,217 |  |  | 37,257 |  |  | 34,833 |  |  | 31,986 |  |  | 122,677 |  |  | 97,057 |
NONINTEREST INCOME |  |  |  |  |  |  |  |  |  |  |  |  |
Deposit service charges | 2,820 |  |  | 2,816 |  |  | 2,510 |  |  | 2,184 |  |  | 2,200 |  |  | 8,146 |  |  | 6,431 |
Wealth management revenue | 2,062 |  |  | 2,054 |  |  | 1,833 |  |  | 1,729 |  |  | 1,694 |  |  | 5,949 |  |  | 5,000 |
Card services revenue | 1,459 |  |  | 1,392 |  |  | 1,037 |  |  | 894 |  |  | 804 |  |  | 3,888 |  |  | 2,236 |
State tax credit activity, net | 77 |  |  | 9 |  |  | 246 |  |  | 1,748 |  |  | 228 |  |  | 332 |  |  | 899 |
Gain (loss) on sale of other real estate | — |  |  | 17 |  |  | — |  |  | 1,235 |  |  | (226 | ) |  | 17 |  |  | 602 |
Gain on sale of investment securities | 22 |  |  | — |  |  | — |  |  | — |  |  | 86 |  |  | 22 |  |  | 86 |
Other income | 1,932 |  |  | 1,646 |  |  | 1,350 |  |  | 1,239 |  |  | 2,190 |  |  | 4,928 |  |  | 4,776 |
Total noninterest income | 8,372 |  |  | 7,934 |  |  | 6,976 |  |  | 9,029 |  |  | 6,976 |  |  | 23,282 |  |  | 20,030 |
NONINTEREST EXPENSE |  |  |  |  |  |  |  |  |  |  |  |  |
Employee compensation and benefits | 15,090 |  |  | 15,798 |  |  | 15,208 |  |  | 12,448 |  |  | 12,091 |  |  | 46,096 |  |  | 37,398 |
Occupancy | 2,434 |  |  | 2,265 |  |  | 1,929 |  |  | 1,892 |  |  | 1,705 |  |  | 6,628 |  |  | 4,997 |
Merger related expenses | 315 |  |  | 4,480 |  |  | 1,667 |  |  | 1,084 |  |  | 302 |  |  | 6,462 |  |  | 302 |
Other | 9,565 |  |  | 10,108 |  |  | 7,932 |  |  | 7,757 |  |  | 6,716 |  |  | 27,605 |  |  | 20,232 |
Total noninterest expense | 27,404 |  |  | 32,651 |  |  | 26,736 |  |  | 23,181 |  |  | 20,814 |  |  | 86,791 |  |  | 62,929 |
Income before income tax expense | 24,171 |  |  | 17,500 |  |  | 17,497 |  |  | 20,681 |  |  | 18,148 |  |  | 59,168 |  |  | 54,158 |
Income tax expense | 7,856 |  |  | 5,545 |  |  | 5,106 |  |  | 7,053 |  |  | 6,316 |  |  | 18,507 |  |  | 18,949 |
Net income | $ | 16,315 |  |  | $ | 11,955 |  |  | $ | 12,391 |  |  | $ | 13,628 |  |  | $ | 11,832 |  |  | $ | 40,661 |  |  | $ | 35,209 |
Basic earnings per share | $ | 0.70 |  |  | $ | 0.51 |  |  | $ | 0.57 |  |  | $ | 0.68 |  |  | $ | 0.59 |  |  | $ | 1.77 |  |  | $ | 1.76 |
Diluted earnings per share | 0.69 |  |  | 0.50 |  |  | 0.56 |  |  | 0.67 |  |  | 0.59 |  |  | 1.75 |  |  | 1.74 |

9

ENTERPRISE FINANCIAL SERVICES CORP
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)

| At the Quarter ended
($ in thousands) | Sep 30, 2017 |  | Jun 30, 2017 |  | Mar 31, 2017 |  | Dec 31, 2016 |  | Sep 30, 2016
BALANCE SHEETS |  |  |  |  |  |  |  |  |
ASSETS |  |  |  |  |  |  |  |  |
Cash and due from banks | $ | 76,777 |  |  | $ | 77,815 |  |  | $ | 73,387 |  |  | $ | 54,288 |  |  | $ | 56,789 |
Interest-earning deposits | 108,976 |  |  | 41,419 |  |  | 138,309 |  |  | 145,494 |  |  | 63,690 |
Debt and equity investments | 708,725 |  |  | 727,975 |  |  | 697,143 |  |  | 556,100 |  |  | 540,429 |
Loans held for sale | 6,411 |  |  | 4,285 |  |  | 5,380 |  |  | 9,562 |  |  | 7,663 |
Portfolio loans | 3,996,501 |  |  | 3,858,962 |  |  | 3,852,972 |  |  | 3,118,392 |  |  | 3,037,705 |
Less: Allowance for loan losses | 38,292 |  |  | 36,673 |  |  | 39,148 |  |  | 37,565 |  |  | 37,498 |
Portfolio loans, net | 3,958,209 |  |  | 3,822,289 |  |  | 3,813,824 |  |  | 3,080,827 |  |  | 3,000,207 |
Non-core acquired loans, net of the allowance for loan losses | 29,258 |  |  | 30,682 |  |  | 32,615 |  |  | 33,925 |  |  | 41,016 |
Total loans, net | 3,987,467 |  |  | 3,852,971 |  |  | 3,846,439 |  |  | 3,114,752 |  |  | 3,041,223 |
Other real estate | 491 |  |  | 529 |  |  | 2,925 |  |  | 980 |  |  | 2,959 |
Fixed assets, net | 32,803 |  |  | 33,987 |  |  | 34,291 |  |  | 14,910 |  |  | 14,498 |
State tax credits, held for sale | 35,291 |  |  | 35,247 |  |  | 35,431 |  |  | 38,071 |  |  | 44,180 |
Goodwill | 117,345 |  |  | 116,186 |  |  | 113,886 |  |  | 30,334 |  |  | 30,334 |
Intangible assets, net | 11,745 |  |  | 12,458 |  |  | 11,758 |  |  | 2,151 |  |  | 2,357 |
Other assets | 145,457 |  |  | 135,824 |  |  | 147,277 |  |  | 114,686 |  |  | 105,522 |
Total assets | $ | 5,231,488 |  |  | $ | 5,038,696 |  |  | $ | 5,106,226 |  |  | $ | 4,081,328 |  |  | $ | 3,909,644 |
LIABILITIES AND SHAREHOLDERS' EQUITY |  |  |  |  |  |  |  |  |
Noninterest-bearing deposits | $ | 1,047,910 |  |  | $ | 1,019,064 |  |  | $ | 1,037,001 |  |  | $ | 866,756 |  |  | $ | 762,155 |
Interest-bearing deposits | 3,011,301 |  |  | 2,902,187 |  |  | 2,994,619 |  |  | 2,366,605 |  |  | 2,362,670 |
Total deposits | 4,059,211 |  |  | 3,921,251 |  |  | 4,031,620 |  |  | 3,233,361 |  |  | 3,124,825 |
Subordinated debentures | 118,093 |  |  | 118,080 |  |  | 118,067 |  |  | 105,540 |  |  | 56,807 |
Federal Home Loan Bank advances | 248,868 |  |  | 200,992 |  |  | 151,115 |  |  | — |  |  | 129,000 |
Other borrowings | 209,104 |  |  | 217,180 |  |  | 235,052 |  |  | 276,980 |  |  | 190,022 |
Other liabilities | 49,876 |  |  | 32,440 |  |  | 32,451 |  |  | 78,349 |  |  | 27,892 |
Total liabilities | 4,685,152 |  |  | 4,489,943 |  |  | 4,568,305 |  |  | 3,694,230 |  |  | 3,528,546 |
Shareholders' equity | 546,336 |  |  | 548,753 |  |  | 537,921 |  |  | 387,098 |  |  | 381,098 |
Total liabilities and shareholders' equity | $ | 5,231,488 |  |  | $ | 5,038,696 |  |  | $ | 5,106,226 |  |  | $ | 4,081,328 |  |  | $ | 3,909,644 |

10

ENTERPRISE FINANCIAL SERVICES CORP
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)

| For the Quarter ended
($ in thousands) | Sep 30, 2017 |  | Jun 30, 2017 |  | Mar 31, 2017 |  | Dec 31, 2016 |  | Sep 30, 2016
LOAN PORTFOLIO |  |  |  |  |  |  |  |  |
Commercial and industrial | $ | 1,861,935 |  |  | $ | 1,796,342 |  |  | $ | 1,773,864 |  |  | $ | 1,632,714 |  |  | $ | 1,598,815 |
Commercial real estate | 1,332,111 |  |  | 1,275,771 |  |  | 1,243,479 |  |  | 894,956 |  |  | 855,971 |
Construction real estate | 306,410 |  |  | 287,360 |  |  | 297,165 |  |  | 194,542 |  |  | 188,856 |
Residential real estate | 341,695 |  |  | 348,678 |  |  | 360,312 |  |  | 240,760 |  |  | 233,960 |
Consumer and other | 154,350 |  |  | 150,812 |  |  | 178,152 |  |  | 155,420 |  |  | 160,103 |
Total portfolio loans | 3,996,501 |  |  | 3,858,963 |  |  | 3,852,972 |  |  | 3,118,392 |  |  | 3,037,705 |
Non-core acquired loans | 34,157 |  |  | 35,807 |  |  | 38,092 |  |  | 39,769 |  |  | 47,449 |
Total loans | $ | 4,030,658 |  |  | $ | 3,894,770 |  |  | $ | 3,891,064 |  |  | $ | 3,158,161 |  |  | $ | 3,085,154 |
DEPOSIT PORTFOLIO |  |  |  |  |  |  |  |  |
Noninterest-bearing accounts | $ | 1,047,910 |  |  | $ | 1,019,064 |  |  | $ | 1,037,001 |  |  | $ | 866,756 |  |  | $ | 762,155 |
Interest-bearing transaction accounts | 814,338 |  |  | 803,104 |  |  | 844,775 |  |  | 731,539 |  |  | 633,100 |
Money market and savings accounts | 1,579,767 |  |  | 1,506,001 |  |  | 1,543,737 |  |  | 1,161,907 |  |  | 1,241,725 |
Brokered certificates of deposit | 170,701 |  |  | 133,606 |  |  | 145,436 |  |  | 117,145 |  |  | 137,592 |
Other certificates of deposit | 446,495 |  |  | 459,476 |  |  | 460,671 |  |  | 356,014 |  |  | 350,253 |
Total deposit portfolio | $ | 4,059,211 |  |  | $ | 3,921,251 |  |  | $ | 4,031,620 |  |  | $ | 3,233,361 |  |  | $ | 3,124,825 |
AVERAGE BALANCES |  |  |  |  |  |  |  |  |
Portfolio loans | $ | 3,899,493 |  |  | $ | 3,839,266 |  |  | $ | 3,504,910 |  |  | $ | 3,067,124 |  |  | $ | 2,947,949 |
Non-core acquired loans | 35,120 |  |  | 36,767 |  |  | 39,287 |  |  | 42,804 |  |  | 53,198 |
Loans held for sale | 5,144 |  |  | 4,994 |  |  | 6,547 |  |  | 6,273 |  |  | 10,224 |
Debt and equity investments | 711,056 |  |  | 667,781 |  |  | 637,226 |  |  | 527,601 |  |  | 527,516 |
Interest-earning assets | 4,712,672 |  |  | 4,641,198 |  |  | 4,259,198 |  |  | 3,767,272 |  |  | 3,589,080 |
Total assets | 5,095,494 |  |  | 5,017,213 |  |  | 4,573,588 |  |  | 3,993,132 |  |  | 3,814,918 |
Deposits | 3,932,038 |  |  | 3,909,600 |  |  | 3,568,759 |  |  | 3,242,561 |  |  | 3,069,156 |
Shareholders' equity | 553,713 |  |  | 546,282 |  |  | 472,077 |  |  | 386,147 |  |  | 377,861 |
Tangible common equity | 425,056 |  |  | 417,239 |  |  | 387,728 |  |  | 353,563 |  |  | 345,061 |
YIELDS (fully tax equivalent) |  |  |  |  |  |  |  |  |
Portfolio loans | 4.69 | % |  | 4.63 | % |  | 4.45 | % |  | 4.24 | % |  | 4.25 | %
Non-core acquired loans | 23.82 | % |  | 34.79 | % |  | 17.24 | % |  | 37.07 | % |  | 23.07 | %
Total loans | 4.86 | % |  | 4.92 | % |  | 4.59 | % |  | 4.69 | % |  | 4.58 | %
Debt and equity investments | 2.49 | % |  | 2.51 | % |  | 2.49 | % |  | 2.22 | % |  | 2.25 | %
Interest-earning assets | 4.45 | % |  | 4.49 | % |  | 4.21 | % |  | 4.21 | % |  | 4.18 | %
Interest-bearing deposits | 0.62 | % |  | 0.55 | % |  | 0.53 | % |  | 0.49 | % |  | 0.49 | %
Total deposits | 0.46 | % |  | 0.41 | % |  | 0.39 | % |  | 0.37 | % |  | 0.37 | %
Subordinated debentures | 4.42 | % |  | 4.37 | % |  | 4.19 | % |  | 3.64 | % |  | 2.59 | %
Borrowed funds | 0.85 | % |  | 0.64 | % |  | 0.49 | % |  | 0.27 | % |  | 0.32 | %
Cost of paying liabilities | 0.78 | % |  | 0.69 | % |  | 0.65 | % |  | 0.58 | % |  | 0.52 | %
Net interest margin | 3.88 | % |  | 3.98 | % |  | 3.73 | % |  | 3.79 | % |  | 3.80 | %

11

ENTERPRISE FINANCIAL SERVICES CORP
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)

| For the Quarter ended
(in thousands, except % and per share data) | Sep 30, 2017 |  | Jun 30, 2017 |  | Mar 31, 2017 |  | Dec 31, 2016 |  | Sep 30, 2016
ASSET QUALITY |  |  |  |  |  |  |  |  |
Net charge-offs (recoveries)1 | $ | 803 |  |  | $ | 6,104 |  |  | $ | (56 | ) |  | $ | 897 |  |  | $ | 1,038 |
Nonperforming loans 1 | 8,985 |  |  | 13,081 |  |  | 13,847 |  |  | 14,905 |  |  | 19,942 |
Classified assets | 80,757 |  |  | 93,795 |  |  | 86,879 |  |  | 93,452 |  |  | 101,545 |
Nonperforming loans to total loans 1 | 0.23 | % |  | 0.34 | % |  | 0.36 | % |  | 0.48 | % |  | 0.66 | %
Nonperforming assets to total assets 2 | 0.18 | % |  | 0.27 | % |  | 0.33 | % |  | 0.39 | % |  | 0.59 | %
Allowance for loan losses to total loans 1 | 0.97 | % |  | 0.96 | % |  | 1.03 | % |  | 1.20 | % |  | 1.23 | %
Allowance for loan losses to nonperforming loans 1 | 426.2 | % |  | 280.4 | % |  | 282.7 | % |  | 252.0 | % |  | 188.0 | %
Net charge-offs (recoveries) to average loans (annualized)1 | 0.08 | % |  | 0.64 | % |  | (0.01 | )% |  | 0.12 | % |  | 0.14 | %
WEALTH MANAGEMENT |  |  |  |  |  |  |  |  |
Trust assets under management | $ | 1,319,123 |  |  | $ | 1,279,836 |  |  | $ | 1,229,383 |  |  | $ | 1,033,577 |  |  | $ | 929,946 |
Trust assets under administration | 2,102,800 |  |  | 2,024,958 |  |  | 1,875,424 |  |  | 1,652,471 |  |  | 1,535,033 |
MARKET DATA |  |  |  |  |  |  |  |  |
Book value per common share | $ | 23.69 |  |  | $ | 23.37 |  |  | $ | 22.95 |  |  | $ | 19.31 |  |  | $ | 19.07 |
Tangible book value per common share | $ | 18.09 |  |  | $ | 17.89 |  |  | $ | 17.59 |  |  | $ | 17.69 |  |  | $ | 17.43 |
Market value per share | $ | 42.35 |  |  | $ | 40.80 |  |  | $ | 42.40 |  |  | $ | 43.00 |  |  | $ | 31.25 |
Period end common shares outstanding | 23,063 |  |  | 23,485 |  |  | 23,438 |  |  | 20,045 |  |  | 19,988 |
Average basic common shares | 23,324 |  |  | 23,475 |  |  | 21,928 |  |  | 20,009 |  |  | 19,997 |
Average diluted common shares | 23,574 |  |  | 23,732 |  |  | 22,309 |  |  | 20,309 |  |  | 20,224 |
CAPITAL |  |  |  |  |  |  |  |  |
Total risk-based capital to risk-weighted assets | 12.33 | % |  | 12.84 | % |  | 12.76 | % |  | 13.48 | % |  | 12.01 | %
Tier 1 capital to risk-weighted assets | 10.36 | % |  | 10.82 | % |  | 10.68 | % |  | 10.99 | % |  | 10.82 | %
Common equity tier 1 capital to risk-weighted assets | 8.93 | % |  | 9.34 | % |  | 9.20 | % |  | 9.52 | % |  | 9.33 | %
Tangible common equity to tangible assets | 8.18 | % |  | 8.56 | % |  | 8.28 | % |  | 8.76 | % |  | 8.99 | %
1 Excludes loans accounted for as PCI loans.
2 Excludes PCI loans and related assets, except for inclusion in total assets.

12

ENTERPRISE FINANCIAL SERVICES CORP
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

| For the Quarter ended |  | For the Nine Months ended
($ in thousands, except per share data) | Sep 30, 2017 |  | Jun 30, 2017 |  | Mar 31, 2017 |  | Dec 31, 2016 |  | Sep 30, 2016 |  | Sep 30, 2017 |  | Sep 30, 2016
CORE PERFORMANCE MEASURES |  |  |  |
Net interest income | $ | 45,625 |  |  | $ | 45,633 |  |  | $ | 38,642 |  |  | $ | 35,454 |  |  | $ | 33,830 |  |  | $ | 129,900 |  |  | $ | 100,041 |
Less: Incremental accretion income | 1,556 |  |  | 2,584 |  |  | 1,075 |  |  | 3,279 |  |  | 2,296 |  |  | 5,215 |  |  | 8,701 |
Core net interest income | 44,069 |  |  | 43,049 |  |  | 37,567 |  |  | 32,175 |  |  | 31,534 |  |  | 124,685 |  |  | 91,340 |
Total noninterest income | 8,372 |  |  | 7,934 |  |  | 6,976 |  |  | 9,029 |  |  | 6,976 |  |  | 23,282 |  |  | 20,030 |
Less: Gain (loss) on sale of other real estate from non-core acquired loans | — |  |  | — |  |  | — |  |  | 1,085 |  |  | (225 | ) |  | — |  |  | 480 |
Less: Other income from non-core acquired assets | — |  |  | — |  |  | — |  |  | 95 |  |  | 287 |  |  | — |  |  | 526 |
Less: Gain on sale of investment securities | 22 |  |  | — |  |  | — |  |  | — |  |  | 86 |  |  | 22 |  |  | 86 |
Core noninterest income | 8,350 |  |  | 7,934 |  |  | 6,976 |  |  | 7,849 |  |  | 6,828 |  |  | 23,260 |  |  | 18,938 |
Total core revenue | 52,419 |  |  | 50,983 |  |  | 44,543 |  |  | 40,024 |  |  | 38,362 |  |  | 147,945 |  |  | 110,278 |
Provision for portfolio loan losses | 2,422 |  |  | 3,623 |  |  | 1,533 |  |  | 964 |  |  | 3,038 |  |  | 7,578 |  |  | 4,587 |
Total noninterest expense | 27,404 |  |  | 32,651 |  |  | 26,736 |  |  | 23,181 |  |  | 20,814 |  |  | 86,791 |  |  | 62,929 |
Less: Other expenses related to non-core acquired loans | 19 |  |  | (16 | ) |  | 123 |  |  | 172 |  |  | 270 |  |  | 126 |  |  | 922 |
Less: Executive severance | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 332 |
Less: Facilities disposal | — |  |  | 389 |  |  | — |  |  | 1,040 |  |  | — |  |  | 389 |  |  | — |
Less: Merger related expenses | 315 |  |  | 4,480 |  |  | 1,667 |  |  | 1,084 |  |  | 302 |  |  | 6,462 |  |  | 302 |
Less: Other non-core expenses | — |  |  | — |  |  | — |  |  | (209 | ) |  | — |  |  | — |  |  | 250 |
Core noninterest expense | 27,070 |  |  | 27,798 |  |  | 24,946 |  |  | 21,094 |  |  | 20,242 |  |  | 79,814 |  |  | 61,123 |
Core income before income tax expense | 22,927 |  |  | 19,562 |  |  | 18,064 |  |  | 17,966 |  |  | 15,082 |  |  | 60,553 |  |  | 44,568 |
Core income tax expense 1 | 7,391 |  |  | 6,329 |  |  | 4,916 |  |  | 6,021 |  |  | 5,142 |  |  | 18,636 |  |  | 15,276 |
Core net income | $ | 15,536 |  |  | $ | 13,233 |  |  | $ | 13,148 |  |  | $ | 11,945 |  |  | $ | 9,940 |  |  | $ | 41,917 |  |  | $ | 29,292 |
Core diluted earnings per share | $ | 0.66 |  |  | $ | 0.56 |  |  | $ | 0.59 |  |  | $ | 0.59 |  |  | $ | 0.49 |  |  | $ | 1.81 |  |  | $ | 1.45 |
Core return on average assets | 1.21 | % |  | 1.06 | % |  | 1.17 | % |  | 1.19 | % |  | 1.04 | % |  | 1.14 | % |  | 1.05 | %
Core return on average common equity | 11.13 | % |  | 9.72 | % |  | 11.29 | % |  | 12.31 | % |  | 10.47 | % |  | 10.69 | % |  | 10.67 | %
Core return on average tangible common equity | 14.50 | % |  | 12.72 | % |  | 13.75 | % |  | 13.44 | % |  | 11.46 | % |  | 13.66 | % |  | 11.73 | %
Core efficiency ratio | 51.64 | % |  | 54.52 | % |  | 56.01 | % |  | 52.70 | % |  | 52.77 | % |  | 53.95 | % |  | 55.43 | %
NET INTEREST MARGIN TO CORE NET INTEREST MARGIN (FULLY TAX EQUIVALENT) |  |  |  |
Net interest income | $ | 46,047 |  |  | $ | 46,096 |  |  | $ | 39,147 |  |  | $ | 35,884 |  |  | $ | 34,263 |  |  | $ | 131,290 |  |  | $ | 101,377 |
Less: Incremental accretion income | 1,556 |  |  | 2,584 |  |  | 1,075 |  |  | 3,279 |  |  | 2,296 |  |  | 5,215 |  |  | 8,701 |
Core net interest income | $ | 44,491 |  |  | $ | 43,512 |  |  | $ | 38,072 |  |  | $ | 32,605 |  |  | $ | 31,967 |  |  | $ | 126,075 |  |  | $ | 92,676 |
Average earning assets | $ | 4,712,672 |  |  | $ | 4,641,198 |  |  | $ | 4,259,198 |  |  | $ | 3,767,272 |  |  | $ | 3,589,080 |  |  | $ | 4,539,350 |  |  | $ | 3,503,538 |
Reported net interest margin | 3.88 | % |  | 3.98 | % |  | 3.73 | % |  | 3.79 | % |  | 3.80 | % |  | 3.87 | % |  | 3.87 | %
Core net interest margin | 3.75 | % |  | 3.76 | % |  | 3.63 | % |  | 3.44 | % |  | 3.54 | % |  | 3.71 | % |  | 3.53 | %
1 Non-core income tax expense calculated at 38% of non-core pretax income plus an estimate of taxes payable related to non-deductible JCB acquisition costs.

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| At the Quarter ended
($ in thousands) | Sep 30, 2017 |  | Jun 30, 2017 |  | Mar 31, 2017 |  | Dec 31, 2016 |  | Sep 30, 2016
REGULATORY CAPITAL TO RISK-WEIGHTED ASSETS
Shareholders' equity | $ | 546,336 |  |  | $ | 548,753 |  |  | $ | 537,921 |  |  | $ | 387,098 |  |  | $ | 381,098 |
Less: Goodwill | 117,345 |  |  | 116,186 |  |  | 113,886 |  |  | 30,334 |  |  | 30,334 |
Less: Intangible assets, net of deferred tax liabilities | 5,825 |  |  | 6,179 |  |  | 5,832 |  |  | 800 |  |  | 873 |
Less: Unrealized gains (losses) | (489 | ) |  | 329 |  |  | (1,174 | ) |  | (1,741 | ) |  | 4,668 |
Plus: Other | 12 |  |  | 12 |  |  | 12 |  |  | 24 |  |  | 24 |
Common equity tier 1 capital | 423,667 |  |  | 426,071 |  |  | 419,389 |  |  | 357,729 |  |  | 345,247 |
Plus: Qualifying trust preferred securities | 67,600 |  |  | 67,600 |  |  | 67,600 |  |  | 55,100 |  |  | 55,100 |
Plus: Other | 48 |  |  | 48 |  |  | 48 |  |  | 36 |  |  | 35 |
Tier 1 capital | 491,315 |  |  | 493,719 |  |  | 487,037 |  |  | 412,865 |  |  | 400,382 |
Plus: Tier 2 capital | 93,616 |  |  | 91,874 |  |  | 94,700 |  |  | 93,484 |  |  | 44,006 |
Total risk-based capital | $ | 584,931 |  |  | $ | 585,593 |  |  | $ | 581,737 |  |  | $ | 506,349 |  |  | $ | 444,388 |
Total risk-weighted assets | $ | 4,743,779 |  |  | $ | 4,562,322 |  |  | $ | 4,557,860 |  |  | $ | 3,757,161 |  |  | $ | 3,699,757 |
Common equity tier 1 capital to risk-weighted assets | 8.93 | % |  | 9.34 | % |  | 9.20 | % |  | 9.52 | % |  | 9.33 | %
Tier 1 capital to risk-weighted assets | 10.36 | % |  | 10.82 | % |  | 10.69 | % |  | 10.99 | % |  | 10.82 | %
Total risk-based capital to risk-weighted assets | 12.33 | % |  | 12.84 | % |  | 12.76 | % |  | 13.48 | % |  | 12.01 | %
SHAREHOLDERS' EQUITY TO TANGIBLE COMMON EQUITY AND TOTAL ASSETS TO TANGIBLE ASSETS
Shareholders' equity | $ | 546,336 |  |  | $ | 548,753 |  |  | $ | 537,921 |  |  | $ | 387,098 |  |  | $ | 381,098 |
Less: Goodwill | 117,345 |  |  | 116,186 |  |  | 113,886 |  |  | 30,334 |  |  | 30,334 |
Less: Intangible assets | 11,745 |  |  | 12,458 |  |  | 11,758 |  |  | 2,151 |  |  | 2,357 |
Tangible common equity | $ | 417,246 |  |  | $ | 420,109 |  |  | $ | 412,277 |  |  | $ | 354,613 |  |  | $ | 348,407 |
Total assets | $ | 5,231,488 |  |  | $ | 5,038,696 |  |  | $ | 5,106,226 |  |  | $ | 4,081,328 |  |  | $ | 3,909,644 |
Less: Goodwill | 117,345 |  |  | 116,186 |  |  | 113,886 |  |  | 30,334 |  |  | 30,334 |
Less: Intangible assets | 11,745 |  |  | 12,458 |  |  | 11,758 |  |  | 2,151 |  |  | 2,357 |
Tangible assets | $ | 5,102,398 |  |  | $ | 4,910,052 |  |  | $ | 4,980,582 |  |  | $ | 4,048,843 |  |  | $ | 3,876,953 |
Tangible common equity to tangible assets | 8.18 | % |  | 8.56 | % |  | 8.28 | % |  | 8.76 | % |  | 8.99 | %

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