EX-99.1 2 ex991financialstatemen.htm EARNINGS RELEASE
EXHIBIT 99.1
ENTERPRISE FINANCIAL REPORTS SECOND QUARTER 2020 RESULTS
Second Quarter Results

• | Net income of $14.6 million, $0.56 per diluted share, including the impact of provision for credit losses of $0.56 per share

• | Net interest margin (tax equivalent) of 3.53%

• | Return on average assets of 0.72%

• | Maintained dividend of $0.18 per share for third quarter

St. Louis, Mo. July 20, 2020 – Enterprise Financial Services Corp (Nasdaq: EFSC) (the “Company” or “EFSC”) reported net income of $14.6 million for the second quarter 2020, an increase of $1.8 million compared to the linked first quarter (“linked quarter”) and a decrease of $3.8 million from the prior year quarter. Earnings per diluted share (“EPS”) was $0.56 for the second quarter 2020, compared to $0.48 and $0.68 for the linked and prior year quarters, respectively. Net income and EPS in the current quarter increased from the linked quarter primarily due to interest income on the Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) loans and a reduction in provision for credit losses partially offset by a reduction in tax credit income. The decrease in net income and EPS from the prior year quarter was primarily due to an increase in provision for credit losses partially offset by merger-related expenses incurred in the prior year period.
The provision for credit losses was $19.6 million for the second quarter 2020, compared to $22.3 million for the linked quarter and $1.7 million for the prior year quarter. The decline in the underlying economic forecast used for estimating the allowance for credit losses was the primary driver of both the first and second quarter provision for credit losses. For the second quarter 2020, the forecast model reflected continued deterioration in unemployment, GDP, and the CRE index while extending the estimated recovery period.
Jim Lally, EFSC’s President and Chief Executive Officer, commented, “We are operating in a challenging environment and remain committed to the health and well-being of our employees and customers. We have diligently worked with our customers on PPP and loan structuring and continue to be a supportive financial partner for our customers and communities. As we continue to focus on the Company’s long-term success, we believe the strength of our pre-provision earnings creates a strong foundation for that success. We increased our reserve build through the allowance for credit losses and strengthened our overall capital position during the period while generating $0.56 of earnings per diluted share.”
Highlights

• | Earnings - Net income in the second quarter 2020 was $14.6 million, and EPS was $0.56 per diluted share.

• | Pre-tax pre-provision income1 (“PTPP”) - PTPP of $37.9 million in the second quarter 2020, decreased $0.2 million and increased $13.3 million from the linked-quarter and prior year quarter, respectively.

• | Net interest income and net interest margin - Net interest income of $65.8 million for the second quarter 2020, increased $2.5 million and $4.1 million, from the linked quarter and prior year quarter, respectively. Net interest margin (“NIM”) was 3.53% for the second quarter 2020, compared to 3.79% and 3.86% for the linked quarter and prior year quarter, respectively.

1

• | Loans - Total loans grew $682.5 million, or 12.5%, from the linked quarter to $6.1 billion as of June 30, 2020. Year-over-year, loans grew $990.6 million, or 19.2%, from $5.1 billion as of June 30, 2019. PPP loans primarily contributed to growth in the loan portfolio during the current quarter. As of June 30, 2020, loan modifications comprised 11% of the loan portfolio.

PPP details:

| Quarter ended
($ in thousands, except per share data) | June 30, 2020
PPP loans outstanding, net of unearned fees | $ | 807,814 |
Average PPP loans outstanding, net | 634,632 |
PPP average loan size | 224 |
PPP interest and fee income | 4,083 |
PPP unearned fees | 22,414 |
PPP average yield | 2.59 | %

Financial Metrics: | As Reported |  | Excluding PPP*
EPS | $ | 0.56 |  |  | $ | 0.44 |
ROAA | 0.72 | % |  | 0.62 | %
PTPP ROAA | 1.87 | % |  | 1.81 | %
Tangible common equity/tangible assets* | 7.81 | % |  | 8.67 | %
Leverage ratio | 9.16 | % |  | 9.96 | %
NIM (tax equivalent) | 3.53 | % |  | 3.62 | %
Allowance for credit losses on loans/loans | 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.

• | Asset quality - The allowance for credit losses on loans to total loans increased to 1.80% at June 30, 2020 from 1.69% and 0.85% at March 31, 2020 and June 30, 2019, respectively. Nonperforming assets to total assets was 0.55% at June 30, 2020 compared to 0.56% and 0.42% at March 31, 2020 and June 30, 2019, respectively.

• | Deposits - Total deposits grew $709.7 million, or 11.8%, from the linked quarter to $6.7 billion as of June 30, 2020. Year-over-year, deposits grew $1.1 billion, or 20.5%, from $5.6 billion as of June 30, 2019. Deposits attributable to PPP loan fundings primarily contributed to the growth in deposits during the current quarter. Noninterest deposit accounts represented 29.3% of total deposits at June 30, 2020, and the loan to deposit ratio was 91.6%.

• | Subordinated Notes - In the second quarter 2020, the Company issued $63.3 million of 5.75% fixed-to-floating rate subordinated notes due in 2030 for general corporate purposes and to bolster capital. The notes are callable starting in June 2025 and are included in tier 2 capital.

• | Capital - Total shareholders’ equity was $868.0 million and the tangible common equity to tangible assets ratio was 7.81% at June 30, 2020, which compares with 8.42% at March 31, 2020. Balance sheet growth from the PPP was the primary cause of the decline in the tangible common equity to tangible assets ratio. Bank regulatory capital ratios remain “well-capitalized,” with a common equity tier 1 ratio of 11.75% and a total risk-based capital ratio of 13.00%. The Company’s common equity tier 1 ratio and total risk-based capital ratio was 9.91% and 14.40%, respectively, at June 30, 2020.

The Company suspended its repurchase of shares through the share repurchase plan in March 2020. There are 95,907 shares available for repurchase under the existing authorization.
The Company’s Board of Directors approved a quarterly dividend of $0.18 per common share, payable on September 30, 2020 to shareholders of record as of September 15, 2020.
2

• | Liquidity - The Company maintains a high level of both on-balance-sheet and off-balance-sheet liquidity. At June 30, 2020, on-balance-sheet liquidity consisted of cash and unpledged investment securities of $1.0 billion. Off-balance-sheet liquidity totaled $1.5 billion through the Federal Home Loan Bank, Federal Reserve and correspondent bank lines. The Company also has an unused $25 million revolving line of credit and maintains a shelf registration allowing for the issuance of various forms of equity and debt securities. The $63.3 million subordinated debt issuance in the second quarter 2020 has also enhanced the holding company’s liquidity position.

1 PTPP is a non-GAAP measure. Refer to discussion and reconciliation of these measures in the accompanying financial tables.
3

Net Interest Income
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.

| Quarter ended
| June 30, 2020 |  | March 31, 2020 |  | June 30, 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, excluding incremental accretion* | $ | 6,032,076 |  |  | $ | 63,869 |  |  | 4.26 | % |  | $ | 5,352,243 |  |  | $ | 66,017 |  |  | 4.96 | % |  | $ | 5,095,181 |  |  | $ | 68,830 |  |  | 5.42 | %
Debt and equity investments* | 1,361,853 |  |  | 9,220 |  |  | 2.72 |  |  | 1,346,968 |  |  | 9,708 |  |  | 2.90 |  |  | 1,246,529 |  |  | 9,152 |  |  | 2.93 |
Short-term investments | 177,267 |  |  | 87 |  |  | 0.20 |  |  | 92,248 |  |  | 300 |  |  | 1.31 |  |  | 111,291 |  |  | 703 |  |  | 2.53 |
Total earning assets | 7,571,196 |  |  | 73,176 |  |  | 3.89 |  |  | 6,791,459 |  |  | 76,025 |  |  | 4.50 |  |  | 6,453,001 |  |  | 78,685 |  |  | 4.89 |
Noninterest-earning assets | 587,008 |  |  |  |  |  |  | 572,146 |  |  |  |  |  |  | 604,604 |  |  |  |  |
Total assets | $ | 8,158,204 |  |  |  |  |  |  | $ | 7,363,605 |  |  |  |  |  |  | $ | 7,057,605 |  |  |  |  |
Liabilities and Shareholders’ Equity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest-bearing liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest-bearing transaction accounts | $ | 1,487,467 |  |  | $ | 244 |  |  | 0.07 | % |  | $ | 1,375,154 |  |  | $ | 1,338 |  |  | 0.39 | % |  | $ | 1,384,090 |  |  | $ | 2,134 |  |  | 0.62 | %
Money market accounts | 1,941,874 |  |  | 995 |  |  | 0.21 |  |  | 1,811,090 |  |  | 4,740 |  |  | 1.05 |  |  | 1,576,333 |  |  | 6,996 |  |  | 1.78 |
Savings | 590,104 |  |  | 45 |  |  | 0.03 |  |  | 542,993 |  |  | 143 |  |  | 0.11 |  |  | 562,503 |  |  | 231 |  |  | 0.16 |
Certificates of deposit | 718,529 |  |  | 3,099 |  |  | 1.73 |  |  | 793,213 |  |  | 3,667 |  |  | 1.86 |  |  | 815,138 |  |  | 3,758 |  |  | 1.85 |
Total interest-bearing deposits | 4,737,974 |  |  | 4,383 |  |  | 0.37 |  |  | 4,522,450 |  |  | 9,888 |  |  | 0.88 |  |  | 4,338,064 |  |  | 13,119 |  |  | 1.21 |
Subordinated debentures | 169,311 |  |  | 2,316 |  |  | 5.50 |  |  | 141,295 |  |  | 1,919 |  |  | 5.46 |  |  | 141,059 |  |  | 1,958 |  |  | 5.57 |
FHLB advances | 251,231 |  |  | 455 |  |  | 0.73 |  |  | 220,453 |  |  | 895 |  |  | 1.63 |  |  | 263,384 |  |  | 1,696 |  |  | 2.58 |
Securities sold under agreements to repurchase | 192,117 |  |  | 57 |  |  | 0.12 |  |  | 201,887 |  |  | 343 |  |  | 0.68 |  |  | 164,037 |  |  | 338 |  |  | 0.83 |
Other borrowings | 32,842 |  |  | 147 |  |  | 1.80 |  |  | 34,270 |  |  | 275 |  |  | 3.23 |  |  | 40,338 |  |  | 375 |  |  | 3.73 |
Total interest-bearing liabilities | 5,383,475 |  |  | 7,358 |  |  | 0.55 |  |  | 5,120,355 |  |  | 13,320 |  |  | 1.05 |  |  | 4,946,882 |  |  | 17,486 |  |  | 1.42 |
Noninterest-bearing liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Demand deposits | 1,813,760 |  |  |  |  |  |  | 1,315,267 |  |  |  |  |  |  | 1,244,008 |  |  |  |  |
Other liabilities | 92,806 |  |  |  |  |  |  | 62,948 |  |  |  |  |  |  | 53,609 |  |  |  |  |
Total liabilities | 7,290,041 |  |  |  |  |  |  | 6,498,570 |  |  |  |  |  |  | 6,244,499 |  |  |  |  |
Shareholders' equity | 868,163 |  |  |  |  |  |  | 865,035 |  |  |  |  |  |  | 813,106 |  |  |  |  |
Total liabilities and shareholders' equity | $ | 8,158,204 |  |  |  |  |  |  | $ | 7,363,605 |  |  |  |  |  |  | $ | 7,057,605 |  |  |  |  |
Core net interest income3 |  |  | 65,818 |  |  |  |  |  |  | 62,705 |  |  |  |  |  |  | 61,199 |  |  |
Core net interest margin3 |  |  |  |  | 3.50 | % |  |  |  |  |  | 3.71 | % |  |  |  |  |  | 3.80 | %
Incremental accretion on non-core acquired loans |  |  | 719 |  |  |  |  |  |  | 1,273 |  |  |  |  |  |  | 910 |  |  |
Total net interest income |  |  | $ | 66,537 |  |  |  |  |  |  | $ | 63,978 |  |  |  |  |  |  | $ | 62,109 |  |  |
Net interest margin |  |  |  |  | 3.53 | % |  |  |  |  |  | 3.79 | % |  |  |  |  |  | 3.86 | %
* Non-taxable income is presented on a tax-equivalent basis using a 24.7% tax rate. The tax-equivalent adjustments were $0.7 million for the three months ended June 30, 2020, $0.6 million for the three months ended March 31, 2020, and $0.4 million for the three months ended June 30, 2019.

3 Core net interest income and core NIM are non-GAAP measures. Refer to discussion and reconciliation of these measures in the accompanying financial tables.
4

Net interest income for the second quarter increased $2.5 million to $65.8 million from $63.4 million in the linked quarter, and increased $4.1 million from the prior year period. The increase from the linked quarter was primarily due to PPP income. Lower loan yields from the decline in LIBOR and the cost of the new subordinated debt issuance were partially offset by effectively managing deposit rates. NIM, on a tax equivalent basis, was 3.53% for the second quarter, compared to 3.79% in the linked quarter, and 3.86% in the second quarter of 2019.
Core net interest income and core NIM noted in the table below exclude incremental accretion on non-core acquired loans.

| Quarter ended
($ in thousands) | June 30, 2020 |  | March 31, 2020 |  | December 31, 2019 |  | September 30, 2019 |  | June 30, 2019
Net interest income | $ | 65,833 |  |  | $ | 63,368 |  |  | $ | 61,613 |  |  | $ | 63,046 |  |  | $ | 61,715 |
Less: Incremental accretion income2 | 719 |  |  | 1,273 |  |  | 576 |  |  | 2,140 |  |  | 910 |
Core net interest income3 | $ | 65,114 |  |  | $ | 62,095 |  |  | $ | 61,037 |  |  | $ | 60,906 |  |  | $ | 60,805 |
Net interest margin (tax equivalent) | 3.53 | % |  | 3.79 | % |  | 3.68 | % |  | 3.81 | % |  | 3.86 | %
Core net interest margin3 (tax equivalent) | 3.50 | % |  | 3.71 | % |  | 3.64 | % |  | 3.69 | % |  | 3.80 | %

2 Represents incremental accretion income on non-core acquired loans which were acquired from the FDIC and previously covered by shared-loss agreements.
3 Core net interest income and core NIM are non-GAAP measures. Refer to discussion and reconciliation of these measures in the accompanying financial tables.
NIM decreased 26 basis points from the linked quarter to 3.53% during the current quarter primarily due to a 61 basis point decrease in the earning asset yield that was partially offset by a 50 basis point decrease in the cost of funds. The decrease in the earning asset yield was primarily due to the decline in one-month LIBOR and the addition of PPP loans during the quarter at a significantly lower yield than the existing loan portfolio. Significant reductions in interest rates, including one-month LIBOR, continue to impact the Company’s variable-rate loans. The Company responded to interest rate trends by reducing the cost of certain managed money market and interest-bearing transaction accounts. This effort improved the cost of money market accounts by 84 basis points compared to the linked quarter. In addition, the new subordinated debt issuance in the quarter reduced NIM by two basis points.
The Company manages its balance sheet to defend against pressures on core NIM, which could be negatively impacted by continued competition for deposits, current interest rate conditions, and movements in short-term rates.
5

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

| Quarter ended
($ in thousands) | June 30, 2020 |  | March 31, 2020 |  | December 31, 2019 |  | September 30, 2019 |  | June 30, 2019
C&I - general | $ | 1,057,899 |  |  | $ | 1,186,240 |  |  | $ | 1,186,667 |  |  | $ | 1,174,569 |  |  | $ | 1,103,908 |
CRE investor owned - general | 1,302,235 |  |  | 1,319,316 |  |  | 1,290,258 |  |  | 1,281,332 |  |  | 1,235,596 |
CRE owner occupied - general | 599,800 |  |  | 584,491 |  |  | 582,579 |  |  | 566,219 |  |  | 591,401 |
SBA PPP loans | 807,814 |  |  | — |  |  | — |  |  | — |  |  | — |
Enterprise value lendinga | 382,828 |  |  | 440,764 |  |  | 428,896 |  |  | 417,521 |  |  | 445,981 |
Life insurance premium financinga | 520,705 |  |  | 496,471 |  |  | 472,822 |  |  | 468,051 |  |  | 465,777 |
Residential real estate - general | 326,697 |  |  | 346,461 |  |  | 366,261 |  |  | 386,174 |  |  | 409,200 |
Construction and land development - general | 455,686 |  |  | 445,909 |  |  | 428,681 |  |  | 403,590 |  |  | 376,597 |
Tax creditsa | 363,222 |  |  | 354,046 |  |  | 294,210 |  |  | 265,626 |  |  | 268,405 |
Agriculture | 191,093 |  |  | 168,237 |  |  | 139,873 |  |  | 136,249 |  |  | 131,671 |
Other | 132,072 |  |  | 115,582 |  |  | 124,090 |  |  | 128,683 |  |  | 120,961 |
Total Loans | $ | 6,140,051 |  |  | $ | 5,457,517 |  |  | $ | 5,314,337 |  |  | $ | 5,228,014 |  |  | $ | 5,149,497 |
Total loan yield | 4.31 | % |  | 5.06 | % |  | 5.08 | % |  | 5.47 | % |  | 5.49 | %
Total C&I loans to total loans | 51 | % |  | 45 | % |  | 44 | % |  | 44 | % |  | 44 | %
Variable interest rate loans to total loans | 51 | % |  | 60 | % |  | 59 | % |  | 60 | % |  | 60 | %
Certain prior period amounts have been reclassified among the categories to conform to the current period presentation
a Specialized categories may include a mix of C&I, CRE, Construction and land development, or Other loans.

Loans totaled $6.1 billion at June 30, 2020, increasing $682.5 million, or 12.5%, compared to the linked quarter. Year-over-year, loans increased $990.6 million, or 19.2%. The increase in the quarter was primarily due to the $807.8 million of PPP loans. New loan originations (excluding PPP) and revolving line advances declined during the quarter, while loan paydowns accelerated to the highest quarterly level over the past year. The categories with the largest paydowns included C&I general, CRE investor-owned, enterprise value lending, along with residential real estate due to refinancing activity. Excluding PPP, the largest growth category was life insurance premium financing which has a historically low loss rate and is secured by the cash surrender value of related life insurance policies. Agriculture loans increased primarily due to one relationship for hog and pig farming, and other loans increased primarily due to loans to financial institutions as part of the Company’s correspondent business unit.
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 information on loan modifications as of June 30, 2020:

($ in thousands) | Total Loan Modifications |  | Percentage of Modifications by Category
Commercial and industrial | $ | 404,295 |  |  | 13 | %
Commercial real estate | 171,108 |  |  | 8 | %
Construction real estate | 88,369 |  |  | 18 | %
Residential real estate | 21,762 |  |  | 7 | %
Other | 134 |  |  | — | %
Total loans | $ | 685,668 |  |  | 11 | %

6

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

| Quarter ended
($ in thousands) | June 30, 2020 |  | March 31, 2020 |  | December 31, 2019 |  | September 30, 2019 |  | June 30, 2019
Nonperforming loans | $ | 41,473 |  |  | $ | 37,204 |  |  | $ | 26,425 |  |  | $ | 15,569 |  |  | $ | 19,842 |
Other real estate | 4,874 |  |  | 5,072 |  |  | 6,344 |  |  | 8,498 |  |  | 10,531 |
Nonperforming assets | $ | 46,347 |  |  | $ | 42,276 |  |  | $ | 32,769 |  |  | $ | 24,067 |  |  | $ | 30,373 |
Nonperforming loans to total loans | 0.68 | % |  | 0.68 | % |  | 0.50 | % |  | 0.30 | % |  | 0.39 | %
Nonperforming assets to total assets | 0.55 | % |  | 0.56 | % |  | 0.45 | % |  | 0.33 | % |  | 0.42 | %
Allowance for loan losses to total loans | 1.80 | % |  | 1.69 | % |  | 0.81 | % |  | 0.85 | % |  | 0.85 | %
Net charge-offs | $ | 309 |  |  | $ | 1,183 |  |  | $ | 2,543 |  |  | $ | 1,070 |  |  | $ | 970 |

Nonperforming loans increased $4.3 million to $41.5 million at June 30, 2020 from $37.2 million at March 31, 2020 primarily due to one C&I relationship. In the second quarter 2020, the Company had net charge-offs of $0.3 million primarily driven by a charge-off of $3.0 million and a recovery of $2.7 million. Other real estate decreased during the second quarter 2020 due to write-downs and sales of $0.1 million each.
The Company recorded a provision for credit losses of $19.6 million for the second quarter 2020 compared to $22.3 million for the linked quarter and $1.7 million for the second quarter 2019, respectively. The provision for credit losses in the second quarter 2020 was primarily due to a continued worsening in economic forecasts of GDP and unemployment and does not reflect observed credit deterioration in the portfolio at the end of the quarter. To the extent that the Company does not recognize charge-offs and economic forecasts improve in future periods, the Company could recognize a reversal of provision for credit losses. Conversely, if economic conditions and the Company’s forecast continue to worsen, the Company could recognize elevated levels of provision for credit losses.
Deposits
The following table presents deposits broken out by type for the most recent five quarters:

| Quarter ended
($ in thousands) | June 30, 2020 |  | March 31, 2020 |  | December 31, 2019 |  | September 30, 2019 |  | June 30, 2019
Noninterest-bearing accounts | $ | 1,965,868 |  |  | $ | 1,354,571 |  |  | $ | 1,327,348 |  |  | $ | 1,295,450 |  |  | $ | 1,181,577 |
Interest-bearing transaction accounts | 1,508,535 |  |  | 1,389,603 |  |  | 1,367,444 |  |  | 1,307,855 |  |  | 1,392,586 |
Money market and savings accounts | 2,566,011 |  |  | 2,479,828 |  |  | 2,249,784 |  |  | 2,201,052 |  |  | 2,162,605 |
Brokered certificates of deposit | 85,414 |  |  | 170,667 |  |  | 215,758 |  |  | 209,754 |  |  | 213,138 |
Other certificates of deposit | 573,752 |  |  | 595,237 |  |  | 610,689 |  |  | 610,269 |  |  | 609,432 |
Total deposit portfolio | $ | 6,699,580 |  |  | $ | 5,989,906 |  |  | $ | 5,771,023 |  |  | $ | 5,624,380 |  |  | $ | 5,559,338 |
Noninterest-bearing deposits to total deposits | 29.3 | % |  | 22.6 | % |  | 23.0 | % |  | 23.0 | % |  | 21.3 | %

Total deposits at June 30, 2020 were $6.7 billion, an increase of $709.7 million from March 31, 2020, and an increase of $1.1 billion from June 30, 2019.
Core deposits, defined as total deposits excluding certificates of deposits, were $6.0 billion at June 30, 2020, an increase of $816.4 million from the linked quarter. The increase in deposits has been influenced by the PPP, as many of the recipients have maintained increased deposit levels since receiving PPP funding. Noninterest-bearing deposits were $2.0 billion at June 30, 2020, an increase of $611.3 million compared to March 31, 2020, and an increase of $784.3 million compared to June 30, 2019. The total cost of deposits was 0.27% for the current quarter compared to 0.68% and 0.94% for the linked quarter and prior year quarter, respectively.
7

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) | June 30, 2020 |  | March 31, 2020 |  | Increase (decrease) |  | June 30, 2019 |  | Increase (decrease)
Service charges on deposit accounts | $ | 2,616 |  |  | $ | 3,143 |  |  | $ | (527 | ) |  | (17 | )% |  | $ | 3,366 |  |  | $ | (750 | ) |  | (22 | )%
Wealth management revenue | 2,326 |  |  | 2,501 |  |  | (175 | ) |  | (7 | )% |  | 2,661 |  |  | (335 | ) |  | (13 | )%
Card services revenue | 2,225 |  |  | 2,247 |  |  | (22 | ) |  | (1 | )% |  | 2,461 |  |  | (236 | ) |  | (10 | )%
Tax credit income | (221 | ) |  | 2,036 |  |  | (2,257 | ) |  | (111 | )% |  | 572 |  |  | (793 | ) |  | (139 | )%
Miscellaneous income | 3,014 |  |  | 3,481 |  |  | (467 | ) |  | (13 | )% |  | 2,904 |  |  | 110 |  |  | 4 | %
Total noninterest income | $ | 9,960 |  |  | $ | 13,408 |  |  | $ | (3,448 | ) |  | (26 | )% |  | $ | 11,964 |  |  | $ | (2,004 | ) |  | (17 | )%

Total noninterest income for second quarter 2020 was $10.0 million, a decrease of $3.4 million from the linked quarter and $2.0 million from the second quarter 2019. The decrease from the linked quarter is primarily from lower tax credit income due to timing delays on projects. The increase in deposit balances has provided more earnings credits to business customers on analysis, resulting in lower service charge income compared to the linked and prior year quarters. Lower transaction volumes on credit and debit cards has impacted card services revenue in 2020.
Noninterest Expenses
Noninterest expenses were $37.9 million for the second quarter 2020, compared to $38.7 million for the linked quarter, and $49.1 million for the second quarter 2019. The decrease from the linked quarter is primarily due to decreased general operating costs and declines in seasonal payroll taxes. The decrease in noninterest expense from the second quarter 2019 was primarily due to merger-related expenses incurred in 2019.
For the second quarter 2020, the Company’s efficiency ratio was 50.0% compared to 50.4% and 66.6% for the linked quarter and prior year quarter, respectively. The Company’s core efficiency ratio4 was 50.7% for the quarter ended June 30, 2020, compared to 51.2% for the linked quarter and 53.3% for the prior year quarter.
4 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 20% for the quarter ended June 30, 2020, compared to 19% for the linked quarter and prior year quarter, respectively.
8

Capital
The following table presents various EFSC capital ratios:

| Quarter ended
Percent | June 30, 2020 |  | March 31, 2020 |  | December 31, 2019 |  | September 30, 2019 |  | June 30, 2019
Total risk-based capital to risk-weighted assets | 14.40 | % |  | 12.85 | % |  | 12.90 | % |  | 12.72 | % |  | 12.62 | %
Tier 1 capital to risk weighted assets | 11.37 | % |  | 11.03 | % |  | 11.40 | % |  | 11.17 | % |  | 11.06 | %
Common equity tier 1 capital to risk-weighted assets | 9.91 | % |  | 9.58 | % |  | 9.90 | % |  | 9.64 | % |  | 9.51 | %
Tangible common equity to tangible assets5 | 7.81 | % |  | 8.42 | % |  | 8.89 | % |  | 8.54 | % |  | 8.43 | %
5 Tangible common equity to tangible assets is a non-GAAP measure. Refer to discussion and reconciliation of this measure in the accompanying financial tables.

The Company’s strong earnings profile continues to build our capital position even with the elevated level of provision for credit losses in 2020. The growth in the balance sheet due to PPP did not negatively impact the Company’s regulatory capital ratios due to the SBA guarantee. The issuance of subordinated debt during the current quarter enhanced total risk-based capital. 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 core net interest income, core net interest margin, tangible common equity, core efficiency ratios, ROATCE, PTPP, 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 core net interest income, core net interest margin, core efficiency ratio, ROATCE, PTPP, 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 shared-loss 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
9

financial measures and ratios, or a reconciliation of the non-GAAP calculation of the financial measures for the periods indicated.
Conference Call and Webcast Information
The Company will host a conference call and webcast at 10:00 a.m. Central Time on Tuesday, July 21, 2020. During the call, management will review the second quarter 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” prior to the scheduled broadcast of the conference call. The call can be accessed via this same website page, or via telephone at 1-866-248-8441 (Conference ID #9990905). A recorded replay of the conference call will be available on the website two hours after the call’s completion. Visit http://bit.ly/EFSC2Q2020earnings 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 $8 billion in assets, is a financial holding company headquartered in Clayton, Missouri. Enterprise Bank & Trust, a Missouri state-chartered trust company with banking powers and a wholly-owned subsidiary of EFSC, operates 34 branch offices in Arizona, Kansas, Missouri and New Mexico. 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 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 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
10

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 changed how we estimate credit losses and may increase the required level of our allowance for credit losses after adoption on January 1, 2020, 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: Karen Loiterstein, Senior Vice President (314) 512-7141
11

ENTERPRISE FINANCIAL SERVICES CORP
CONSOLIDATED FINANCIAL SUMMARY (unaudited)

| Quarter ended |  | Six Months ended
(in thousands, except per share data) | Jun 30, 2020 |  | Mar 31, 2020 |  | Dec 31, 2019 |  | Sep 30, 2019 |  | Jun 30, 2019 |  | Jun 30, 2020 |  | Jun 30, 2019
EARNINGS SUMMARY |  |  |  |  |  |  |  |  |  |  |  |  |
Net interest income | $ | 65,833 |  |  | $ | 63,368 |  |  | $ | 61,613 |  |  | $ | 63,046 |  |  | $ | 61,715 |  |  | $ | 129,201 |  |  | $ | 114,058 |
Provision for credit losses | 19,591 |  |  | 22,264 |  |  | 1,341 |  |  | 1,833 |  |  | 1,722 |  |  | 41,855 |  |  | 3,198 |
Noninterest income | 9,960 |  |  | 13,408 |  |  | 14,418 |  |  | 13,564 |  |  | 11,964 |  |  | 23,368 |  |  | 21,194 |
Noninterest expense | 37,912 |  |  | 38,673 |  |  | 38,354 |  |  | 38,239 |  |  | 49,054 |  |  | 76,585 |  |  | 88,892 |
Income before income tax expense | 18,290 |  |  | 15,839 |  |  | 36,336 |  |  | 36,538 |  |  | 22,903 |  |  | 34,129 |  |  | 43,162 |
Income tax expense | 3,656 |  |  | 2,971 |  |  | 7,246 |  |  | 7,469 |  |  | 4,479 |  |  | 6,627 |  |  | 8,582 |
Net income | $ | 14,634 |  |  | $ | 12,868 |  |  | $ | 29,090 |  |  | $ | 29,069 |  |  | $ | 18,424 |  |  | $ | 27,502 |  |  | $ | 34,580 |
Diluted earnings per share | $ | 0.56 |  |  | $ | 0.48 |  |  | $ | 1.09 |  |  | $ | 1.08 |  |  | $ | 0.68 |  |  | $ | 1.04 |  |  | $ | 1.36 |
Return on average assets | 0.72 | % |  | 0.70 | % |  | 1.58 | % |  | 1.60 | % |  | 1.05 | % |  | 0.71 | % |  | 1.07 | %
Return on average common equity | 6.78 | % |  | 5.98 | % |  | 13.43 | % |  | 13.66 | % |  | 9.09 | % |  | 6.38 | % |  | 9.45 | %
Return on average tangible common equity | 9.28 | % |  | 8.22 | % |  | 18.54 | % |  | 19.08 | % |  | 12.92 | % |  | 8.76 | % |  | 12.93 | %
Net interest margin (tax equivalent) | 3.53 | % |  | 3.79 | % |  | 3.68 | % |  | 3.81 | % |  | 3.86 | % |  | 3.65 | % |  | 3.87 | %
Core net interest margin (tax equivalent)1 | 3.50 | % |  | 3.71 | % |  | 3.64 | % |  | 3.69 | % |  | 3.80 | % |  | 3.60 | % |  | 3.80 | %
Efficiency ratio | 50.02 | % |  | 50.37 | % |  | 50.45 | % |  | 49.91 | % |  | 66.58 | % |  | 50.20 | % |  | 65.72 | %
Core efficiency ratio1 | 50.66 | % |  | 51.21 | % |  | 50.73 | % |  | 51.73 | % |  | 53.30 | % |  | 50.94 | % |  | 53.65 | %
Total assets | $ | 8,357,501 |  |  | $ | 7,500,643 |  |  | $ | 7,333,791 |  |  | $ | 7,346,791 |  |  | $ | 7,181,855 |  |  |  |  |
Total average assets | 8,158,204 |  |  | 7,363,605 |  |  | 7,322,496 |  |  | 7,222,357 |  |  | 7,057,605 |  |  | $ | 7,760,904 |  |  | $ | 6,509,888 |
Total deposits | 6,699,580 |  |  | 5,989,906 |  |  | 5,771,023 |  |  | 5,624,380 |  |  | 5,559,338 |  |  |  |  |
Total average deposits | 6,551,734 |  |  | 5,837,717 |  |  | 5,756,292 |  |  | 5,597,343 |  |  | 5,582,072 |  |  | 6,194,726 |  |  | 5,143,219 |
Period end common shares outstanding | 26,196 |  |  | 26,161 |  |  | 26,543 |  |  | 26,613 |  |  | 26,906 |  |  |  |  |
Dividends per common share | $ | 0.18 |  |  | $ | 0.18 |  |  | $ | 0.17 |  |  | $ | 0.16 |  |  | $ | 0.15 |  |  | $ | 0.36 |  |  | $ | 0.29 |
Tangible book value per common share | $ | 24.22 |  |  | $ | 23.38 |  |  | $ | 23.76 |  |  | $ | 22.82 |  |  | $ | 21.74 |  |  |  |  |
Tangible common equity to tangible assets1 | 7.81 | % |  | 8.42 | % |  | 8.89 | % |  | 8.54 | % |  | 8.43 | % |  |  |  |
Total risk-based capital to risk-weighted assets | 14.40 | % |  | 12.85 | % |  | 12.90 | % |  | 12.72 | % |  | 12.62 | % |  |  |  |
1Refer to Reconciliations of Non-GAAP Financial Measures table for a reconciliation of these measures to GAAP.

12

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

| Quarter ended |  | Six Months ended
($ in thousands, except per share data) | Jun 30, 2020 |  | Mar 31, 2020 |  | Dec 31, 2019 |  | Sep 30, 2019 |  | Jun 30, 2019 |  | Jun 30, 2020 |  | Jun 30, 2019
INCOME STATEMENTS |  |  |  |  |  |  |  |  |  |  |  |  |
NET INTEREST INCOME |  |  |  |  |  |  |  |  |  |  |  |  |
Total interest income | $ | 73,191 |  |  | $ | 76,688 |  |  | $ | 77,238 |  |  | $ | 81,078 |  |  | $ | 79,201 |  |  | $ | 149,879 |  |  | $ | 146,818 |
Total interest expense | 7,358 |  |  | 13,320 |  |  | 15,625 |  |  | 18,032 |  |  | 17,486 |  |  | 20,678 |  |  | 32,760 |
Net interest income | 65,833 |  |  | 63,368 |  |  | 61,613 |  |  | 63,046 |  |  | 61,715 |  |  | 129,201 |  |  | 114,058 |
Provision for credit losses | 19,591 |  |  | 22,264 |  |  | 1,341 |  |  | 1,833 |  |  | 1,722 |  |  | 41,855 |  |  | 3,198 |
Net interest income after provision for credit losses | 46,242 |  |  | 41,104 |  |  | 60,272 |  |  | 61,213 |  |  | 59,993 |  |  | 87,346 |  |  | 110,860 |
NONINTEREST INCOME |  |  |  |  |  |  |  |  |  |  |  |  |
Deposit service charges | 2,616 |  |  | 3,143 |  |  | 3,254 |  |  | 3,246 |  |  | 3,366 |  |  | 5,759 |  |  | 6,301 |
Wealth management revenue | 2,326 |  |  | 2,501 |  |  | 2,618 |  |  | 2,661 |  |  | 2,661 |  |  | 4,827 |  |  | 4,653 |
Card services revenue | 2,225 |  |  | 2,247 |  |  | 2,409 |  |  | 2,494 |  |  | 2,461 |  |  | 4,472 |  |  | 4,251 |
Tax credit income | (221 | ) |  | 2,036 |  |  | 3,425 |  |  | 1,238 |  |  | 572 |  |  | 1,815 |  |  | 730 |
Other income | 3,014 |  |  | 3,481 |  |  | 2,712 |  |  | 3,925 |  |  | 2,904 |  |  | 6,495 |  |  | 5,259 |
Total noninterest income | 9,960 |  |  | 13,408 |  |  | 14,418 |  |  | 13,564 |  |  | 11,964 |  |  | 23,368 |  |  | 21,194 |
NONINTEREST EXPENSE |  |  |  |  |  |  |  |  |  |  |  |  |
Employee compensation and benefits | 22,389 |  |  | 21,685 |  |  | 20,411 |  |  | 20,845 |  |  | 20,687 |  |  | 44,074 |  |  | 40,039 |
Occupancy | 3,185 |  |  | 3,347 |  |  | 3,461 |  |  | 3,179 |  |  | 3,188 |  |  | 6,532 |  |  | 5,825 |
Merger-related expenses | — |  |  | — |  |  | — |  |  | 393 |  |  | 10,306 |  |  | — |  |  | 17,576 |
Other | 12,338 |  |  | 13,641 |  |  | 14,482 |  |  | 13,822 |  |  | 14,873 |  |  | 25,979 |  |  | 25,452 |
Total noninterest expense | 37,912 |  |  | 38,673 |  |  | 38,354 |  |  | 38,239 |  |  | 49,054 |  |  | 76,585 |  |  | 88,892 |
Income before income tax expense | 18,290 |  |  | 15,839 |  |  | 36,336 |  |  | 36,538 |  |  | 22,903 |  |  | 34,129 |  |  | 43,162 |
Income tax expense | 3,656 |  |  | 2,971 |  |  | 7,246 |  |  | 7,469 |  |  | 4,479 |  |  | 6,627 |  |  | 8,582 |
Net income | $ | 14,634 |  |  | $ | 12,868 |  |  | $ | 29,090 |  |  | $ | 29,069 |  |  | $ | 18,424 |  |  | $ | 27,502 |  |  | $ | 34,580 |
Basic earnings per share | $ | 0.56 |  |  | $ | 0.49 |  |  | $ | 1.10 |  |  | $ | 1.09 |  |  | $ | 0.69 |  |  | $ | 1.04 |  |  | $ | 1.36 |
Diluted earnings per share | $ | 0.56 |  |  | $ | 0.48 |  |  | $ | 1.09 |  |  | $ | 1.08 |  |  | $ | 0.68 |  |  | $ | 1.04 |  |  | $ | 1.36 |

13

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

| Quarter ended
($ in thousands) | Jun 30, 2020 |  | Mar 31, 2020 |  | Dec 31, 2019 |  | Sep 30, 2019 |  | Jun 30, 2019
BALANCE SHEETS |  |  |  |  |  |  |  |  |
ASSETS |  |  |  |  |  |  |  |  |
Cash and due from banks | $ | 100,804 |  |  | $ | 98,619 |  |  | $ | 74,769 |  |  | $ | 153,730 |  |  | $ | 106,835 |
Interest-earning deposits | 254,830 |  |  | 88,794 |  |  | 96,217 |  |  | 106,747 |  |  | 85,315 |
Debt and equity investments | 1,387,001 |  |  | 1,382,149 |  |  | 1,354,527 |  |  | 1,354,986 |  |  | 1,328,767 |
Loans held for sale | 16,029 |  |  | 8,430 |  |  | 5,570 |  |  | 6,281 |  |  | 1,437 |
Loans | 6,140,051 |  |  | 5,457,517 |  |  | 5,314,337 |  |  | 5,228,014 |  |  | 5,149,497 |
Less: Allowance for loan losses | 110,270 |  |  | 92,187 |  |  | 43,288 |  |  | 44,555 |  |  | 43,822 |
Total loans, net | 6,029,781 |  |  | 5,365,330 |  |  | 5,271,049 |  |  | 5,183,459 |  |  | 5,105,675 |
Fixed assets, net | 58,231 |  |  | 59,358 |  |  | 60,013 |  |  | 59,216 |  |  | 58,888 |
Goodwill | 210,344 |  |  | 210,344 |  |  | 210,344 |  |  | 211,251 |  |  | 211,251 |
Intangible assets, net | 23,196 |  |  | 24,585 |  |  | 26,076 |  |  | 27,626 |  |  | 29,201 |
Other assets | 277,285 |  |  | 263,034 |  |  | 235,226 |  |  | 243,495 |  |  | 254,486 |
Total assets | $ | 8,357,501 |  |  | $ | 7,500,643 |  |  | $ | 7,333,791 |  |  | $ | 7,346,791 |  |  | $ | 7,181,855 |
LIABILITIES AND SHAREHOLDERS’ EQUITY |  |  |  |  |  |  |  |  |
Noninterest-bearing deposits | $ | 1,965,868 |  |  | $ | 1,354,571 |  |  | $ | 1,327,348 |  |  | $ | 1,295,450 |  |  | $ | 1,181,577 |
Interest-bearing deposits | 4,733,712 |  |  | 4,635,335 |  |  | 4,443,675 |  |  | 4,328,930 |  |  | 4,377,761 |
Total deposits | 6,699,580 |  |  | 5,989,906 |  |  | 5,771,023 |  |  | 5,624,380 |  |  | 5,559,338 |
Subordinated debentures | 203,384 |  |  | 141,336 |  |  | 141,258 |  |  | 141,179 |  |  | 141,100 |
FHLB advances | 250,000 |  |  | 222,000 |  |  | 222,406 |  |  | 461,426 |  |  | 389,446 |
Other borrowings | 227,961 |  |  | 205,918 |  |  | 265,172 |  |  | 199,634 |  |  | 198,104 |
Other liabilities | 108,613 |  |  | 95,047 |  |  | 66,747 |  |  | 74,077 |  |  | 68,366 |
Total liabilities | 7,489,538 |  |  | 6,654,207 |  |  | 6,466,606 |  |  | 6,500,696 |  |  | 6,356,354 |
Shareholders’ equity | 867,963 |  |  | 846,436 |  |  | 867,185 |  |  | 846,095 |  |  | 825,501 |
Total liabilities and shareholders’ equity | $ | 8,357,501 |  |  | $ | 7,500,643 |  |  | $ | 7,333,791 |  |  | $ | 7,346,791 |  |  | $ | 7,181,855 |

14

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.

| Six Months ended
| June 30, 2020 |  | June 30, 2019
($ in thousands) | Average Balance |  | Interest Income/ Expense |  | Average Yield/ Rate |  | Average Balance |  | Interest Income/ Expense |  | Average Yield/ Rate
Assets |  |  |  |  |  |  |  |  |  |  |
Interest-earning assets: |  |  |  |  |  |  |  |  |  |  |
Loans, excluding incremental accretion* | $ | 5,692,159 |  |  | $ | 129,886 |  |  | 4.59 | % |  | $ | 4,804,898 |  |  | $ | 128,803 |  |  | 5.41 | %
Debt and equity investments* | 1,354,410 |  |  | 18,928 |  |  | 2.81 |  |  | 1,072,698 |  |  | 15,444 |  |  | 2.90 |
Short-term investments | 134,758 |  |  | 387 |  |  | 0.58 |  |  | 106,752 |  |  | 1,150 |  |  | 2.17 |
Total earning assets | 7,181,327 |  |  | 149,201 |  |  | 4.18 |  |  | 5,984,348 |  |  | 145,397 |  |  | 4.90 |
Noninterest-earning assets | 579,577 |  |  |  |  |  |  | 525,540 |  |  |  |  |
Total assets | $ | 7,760,904 |  |  |  |  |  |  | $ | 6,509,888 |  |  |  |  |
Liabilities and Shareholders’ Equity |  |  |  |  |  |  |  |  |  |  |
Interest-bearing liabilities: |  |  |  |  |  |  |  |  |  |  |
Interest-bearing transaction accounts | $ | 1,431,311 |  |  | $ | 1,581 |  |  | 0.22 | % |  | $ | 1,231,537 |  |  | $ | 3,924 |  |  | 0.64 | %
Money market accounts | 1,876,482 |  |  | 5,735 |  |  | 0.61 |  |  | 1,549,255 |  |  | 13,511 |  |  | 1.76 |
Savings | 566,549 |  |  | 188 |  |  | 0.07 |  |  | 431,843 |  |  | 414 |  |  | 0.19 |
Certificates of deposit | 755,871 |  |  | 6,767 |  |  | 1.80 |  |  | 763,988 |  |  | 7,090 |  |  | 1.87 |
Total interest-bearing deposits | 4,630,213 |  |  | 14,271 |  |  | 0.62 |  |  | 3,976,623 |  |  | 24,939 |  |  | 1.26 |
Subordinated debentures | 155,303 |  |  | 4,235 |  |  | 5.48 |  |  | 132,653 |  |  | 3,606 |  |  | 5.48 |
FHLB advances | 235,842 |  |  | 1,350 |  |  | 1.15 |  |  | 239,535 |  |  | 3,094 |  |  | 2.60 |
Securities sold under agreements to repurchase | 197,002 |  |  | 419 |  |  | 0.43 |  |  | 175,603 |  |  | 611 |  |  | 0.70 |
Other borrowed funds | 33,556 |  |  | 403 |  |  | 2.42 |  |  | 27,689 |  |  | 510 |  |  | 3.71 |
Total interest-bearing liabilities | 5,251,916 |  |  | 20,678 |  |  | 0.79 |  |  | 4,552,103 |  |  | 32,760 |  |  | 1.45 |
Noninterest-bearing liabilities: |  |  |  |  |  |  |  |  |  |  |
Demand deposits | 1,564,513 |  |  |  |  |  |  | 1,166,595 |  |  |  |  |
Other liabilities | 77,876 |  |  |  |  |  |  | 52,994 |  |  |  |  |
Total liabilities | 6,894,305 |  |  |  |  |  |  | 5,771,692 |  |  |  |  |
Shareholders' equity | 866,599 |  |  |  |  |  |  | 738,196 |  |  |  |  |
Total liabilities and shareholders' equity | $ | 7,760,904 |  |  |  |  |  |  | $ | 6,509,888 |  |  |  |  |
Core net interest income1 |  |  | 128,523 |  |  |  |  |  |  | 112,637 |  |  |
Core net interest margin1 |  |  |  |  | 3.60 | % |  |  |  |  |  | 3.80 | %
Incremental accretion on non-core acquired loans |  |  | 1,992 |  |  |  |  |  |  | 2,067 |  |  |
Total net interest income |  |  | $ | 130,515 |  |  |  |  |  |  | $ | 114,704 |  |  |
Net interest margin |  |  |  |  | 3.65 | % |  |  |  |  |  | 3.87 | %
* Non-taxable income is presented on a tax-equivalent basis using a 24.7% tax rate. The tax-equivalent adjustments were $1.3 million and $0.6 million for the six months ended June 30, 2020 and 2019, respectively.

15

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

| Quarter ended
($ in thousands) | Jun 30, 2020 |  | Mar 31, 2020 |  | Dec 31, 2019 |  | Sep 30, 2019 |  | Jun 30, 2019
LOAN PORTFOLIO |  |  |  |  |  |  |  |  |
Commercial and industrial | $ | 3,143,197 |  |  | $ | 2,469,013 |  |  | $ | 2,361,157 |  |  | $ | 2,303,495 |  |  | $ | 2,265,480 |
Commercial real estate | 2,048,444 |  |  | 2,048,357 |  |  | 1,997,321 |  |  | 1,967,888 |  |  | 1,940,958 |
Construction real estate | 481,221 |  |  | 469,627 |  |  | 457,273 |  |  | 433,486 |  |  | 404,557 |
Residential real estate | 326,992 |  |  | 346,758 |  |  | 366,261 |  |  | 386,173 |  |  | 409,200 |
Other | 140,197 |  |  | 123,762 |  |  | 132,325 |  |  | 136,972 |  |  | 129,302 |
Total loans | $ | 6,140,051 |  |  | $ | 5,457,517 |  |  | $ | 5,314,337 |  |  | $ | 5,228,014 |  |  | $ | 5,149,497 |
DEPOSIT PORTFOLIO |  |  |  |  |  |  |  |  |
Noninterest-bearing accounts | $ | 1,965,868 |  |  | $ | 1,354,571 |  |  | $ | 1,327,348 |  |  | $ | 1,295,450 |  |  | $ | 1,181,577 |
Interest-bearing transaction accounts | 1,508,535 |  |  | 1,389,603 |  |  | 1,367,444 |  |  | 1,307,855 |  |  | 1,392,586 |
Money market and savings accounts | 2,566,011 |  |  | 2,479,828 |  |  | 2,249,784 |  |  | 2,201,052 |  |  | 2,162,605 |
Brokered certificates of deposit | 85,414 |  |  | 170,667 |  |  | 215,758 |  |  | 209,754 |  |  | 213,138 |
Other certificates of deposit | 573,752 |  |  | 595,237 |  |  | 610,689 |  |  | 610,269 |  |  | 609,432 |
Total deposit portfolio | $ | 6,699,580 |  |  | $ | 5,989,906 |  |  | $ | 5,771,023 |  |  | $ | 5,624,380 |  |  | $ | 5,559,338 |
AVERAGE BALANCES |  |  |  |  |  |  |  |  |
Total loans | $ | 6,032,077 |  |  | $ | 5,352,243 |  |  | $ | 5,279,500 |  |  | $ | 5,178,009 |  |  | $ | 5,095,181 |
Debt and equity investments | 1,361,853 |  |  | 1,346,968 |  |  | 1,322,017 |  |  | 1,312,860 |  |  | 1,246,529 |
Interest-earning assets | 7,571,196 |  |  | 6,791,459 |  |  | 6,704,506 |  |  | 6,604,083 |  |  | 6,453,001 |
Total assets | 8,158,204 |  |  | 7,363,605 |  |  | 7,322,496 |  |  | 7,222,357 |  |  | 7,057,605 |
Deposits | 6,551,734 |  |  | 5,837,717 |  |  | 5,756,292 |  |  | 5,597,343 |  |  | 5,582,072 |
Shareholders’ equity | 868,163 |  |  | 865,035 |  |  | 859,674 |  |  | 843,974 |  |  | 813,106 |
Tangible common equity1 | 633,946 |  |  | 629,390 |  |  | 622,502 |  |  | 604,331 |  |  | 571,890 |
YIELDS (tax equivalent) |  |  |  |  |  |  |  |  |
Total loans | 4.31 | % |  | 5.06 | % |  | 5.08 | % |  | 5.47 | % |  | 5.49 | %
Debt and equity investments | 2.72 |  |  | 2.90 |  |  | 2.91 |  |  | 2.90 |  |  | 2.95 |
Interest-earning assets | 3.93 |  |  | 4.58 |  |  | 4.60 |  |  | 4.90 |  |  | 4.95 |
Interest-bearing deposits | 0.37 |  |  | 0.88 |  |  | 1.05 |  |  | 1.20 |  |  | 1.21 |
Total deposits | 0.27 |  |  | 0.68 |  |  | 0.81 |  |  | 0.94 |  |  | 0.94 |
Subordinated debentures | 5.50 |  |  | 5.46 |  |  | 5.46 |  |  | 5.50 |  |  | 5.57 |
FHLB advances and other borrowed funds | 0.56 |  |  | 1.33 |  |  | 1.57 |  |  | 1.99 |  |  | 2.07 |
Interest-bearing liabilities | 0.55 |  |  | 1.05 |  |  | 1.23 |  |  | 1.41 |  |  | 1.42 |
Net interest margin | 3.53 |  |  | 3.79 |  |  | 3.68 |  |  | 3.81 |  |  | 3.86 |

1Refer to Reconciliations of Non-GAAP Financial Measures table for a reconciliation of these measures to GAAP.
16

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

| Quarter ended
(in thousands, except per share data) | Jun 30, 2020 |  | Mar 31, 2020 |  | Dec 31, 2019 |  | Sep 30, 2019 |  | Jun 30, 2019
ASSET QUALITY |  |  |  |  |  |  |  |  |
Net charge-offs | $ | 309 |  |  | $ | 1,183 |  |  | $ | 2,543 |  |  | $ | 1,070 |  |  | $ | 970 |
Nonperforming loans | 41,473 |  |  | 37,204 |  |  | 26,425 |  |  | 15,569 |  |  | 19,842 |
Classified assets | 96,678 |  |  | 104,754 |  |  | 85,897 |  |  | 93,984 |  |  | 91,715 |
Nonperforming loans to total loans | 0.68 | % |  | 0.68 | % |  | 0.50 | % |  | 0.30 | % |  | 0.39 | %
Nonperforming assets to total assets | 0.55 | % |  | 0.56 | % |  | 0.45 | % |  | 0.33 | % |  | 0.42 | %
Allowance for loan losses to total loans | 1.80 | % |  | 1.69 | % |  | 0.81 | % |  | 0.85 | % |  | 0.85 | %
Allowance for loan losses to nonperforming loans | 265.9 | % |  | 247.8 | % |  | 163.8 | % |  | 286.2 | % |  | 220.9 | %
Net charge-offs to average loans (annualized) | 0.02 | % |  | 0.09 | % |  | 0.19 | % |  | 0.08 | % |  | 0.08 | %
WEALTH MANAGEMENT |  |  |  |  |  |  |  |  |
Trust assets under management | $ | 1,602,358 |  |  | $ | 1,445,521 |  |  | $ | 1,671,082 |  |  | $ | 1,583,260 |  |  | $ | 1,627,050 |
Trust assets under administration | 2,455,111 |  |  | 2,139,673 |  |  | 2,524,478 |  |  | 2,404,950 |  |  | 2,428,551 |
MARKET DATA |  |  |  |  |  |  |  |  |
Book value per common share | $ | 33.13 |  |  | $ | 32.36 |  |  | $ | 32.67 |  |  | $ | 31.79 |  |  | $ | 30.68 |
Tangible book value per common share1 | $ | 24.22 |  |  | $ | 23.38 |  |  | $ | 23.76 |  |  | $ | 22.82 |  |  | $ | 21.74 |
Market value per share | $ | 31.12 |  |  | $ | 27.91 |  |  | $ | 48.21 |  |  | $ | 40.75 |  |  | $ | 41.60 |
Period end common shares outstanding | 26,196 |  |  | 26,161 |  |  | 26,543 |  |  | 26,613 |  |  | 26,906 |
Average basic common shares | 26,180 |  |  | 26,473 |  |  | 26,540 |  |  | 26,778 |  |  | 26,887 |
Average diluted common shares | 26,195 |  |  | 26,539 |  |  | 26,668 |  |  | 26,868 |  |  | 26,940 |
CAPITAL |  |  |  |  |  |  |  |  |
Total risk-based capital to risk-weighted assets | 14.40 | % |  | 12.85 | % |  | 12.90 | % |  | 12.72 | % |  | 12.62 | %
Tier 1 capital to risk-weighted assets | 11.37 | % |  | 11.03 | % |  | 11.40 | % |  | 11.17 | % |  | 11.06 | %
Common equity tier 1 capital to risk-weighted assets | 9.91 | % |  | 9.58 | % |  | 9.90 | % |  | 9.64 | % |  | 9.51 | %
Tangible common equity to tangible assets1 | 7.81 | % |  | 8.42 | % |  | 8.89 | % |  | 8.54 | % |  | 8.43 | %
1Refer to Reconciliations of Non-GAAP Financial Measures table for a reconciliation of these measures to GAAP.

17

ENTERPRISE FINANCIAL SERVICES CORP
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

| Quarter ended |  | Six Months ended
($ in thousands) | Jun 30, 2020 |  | Mar 31, 2020 |  | Dec 31, 2019 |  | Sep 30, 2019 |  | Jun 30, 2019 |  | Jun 30, 2020 |  | Jun 30, 2019
CORE PERFORMANCE MEASURES |  |  |  |
Net interest income | $ | 65,833 |  |  | $ | 63,368 |  |  | $ | 61,613 |  |  | $ | 63,046 |  |  | $ | 61,715 |  |  | $ | 129,201 |  |  | $ | 114,058 |
Less: Incremental accretion income | 719 |  |  | 1,273 |  |  | 576 |  |  | 2,140 |  |  | 910 |  |  | 1,992 |  |  | 2,067 |
Core net interest income | 65,114 |  |  | 62,095 |  |  | 61,037 |  |  | 60,906 |  |  | 60,805 |  |  | 127,209 |  |  | 111,991 |
Total noninterest income | 9,960 |  |  | 13,408 |  |  | 14,418 |  |  | 13,564 |  |  | 11,964 |  |  | 23,368 |  |  | 21,194 |
Less: Other income from non-core acquired assets | — |  |  | — |  |  | 4 |  |  | 1,001 |  |  | 2 |  |  | — |  |  | 367 |
Less: Gain on sale of investment securities | — |  |  | 4 |  |  | (94 | ) |  | 337 |  |  | — |  |  | 4 |  |  | — |
Less: Other non-core income | 265 |  |  | — |  |  | — |  |  | — |  |  | 266 |  |  | 265 |  |  | 266 |
Core noninterest income | 9,695 |  |  | 13,404 |  |  | 14,508 |  |  | 12,226 |  |  | 11,696 |  |  | 23,099 |  |  | 20,561 |
Total core revenue | 74,809 |  |  | 75,499 |  |  | 75,545 |  |  | 73,132 |  |  | 72,501 |  |  | 150,308 |  |  | 132,552 |
Total noninterest expense | 37,912 |  |  | 38,673 |  |  | 38,354 |  |  | 38,239 |  |  | 49,054 |  |  | 76,585 |  |  | 88,892 |
Less: Other expenses related to non-core acquired loans | 12 |  |  | 12 |  |  | 33 |  |  | 18 |  |  | 103 |  |  | 24 |  |  | 206 |
Less: Merger-related expenses | — |  |  | — |  |  | — |  |  | 393 |  |  | 10,306 |  |  | — |  |  | 17,576 |
Core noninterest expense | 37,900 |  |  | 38,661 |  |  | 38,321 |  |  | 37,828 |  |  | 38,645 |  |  | 76,561 |  |  | 71,110 |
Core efficiency ratio | 50.66 | % |  | 51.21 | % |  | 50.73 | % |  | 51.73 | % |  | 53.30 | % |  | 50.94 | % |  | 53.65 | %
NET INTEREST MARGIN TO CORE NET INTEREST MARGIN (TAX EQUIVALENT)
Net interest income | $ | 66,537 |  |  | $ | 63,978 |  |  | $ | 62,141 |  |  | $ | 63,483 |  |  | $ | 62,109 |  |  | $ | 130,515 |  |  | $ | 114,704 |
Less: Incremental accretion income | 719 |  |  | 1,273 |  |  | 576 |  |  | 2,140 |  |  | 910 |  |  | 1,992 |  |  | 2,067 |
Core net interest income | $ | 65,818 |  |  | $ | 62,705 |  |  | $ | 61,565 |  |  | $ | 61,343 |  |  | $ | 61,199 |  |  | $ | 128,523 |  |  | $ | 112,637 |
Average earning assets | $ | 7,571,196 |  |  | $ | 6,791,459 |  |  | $ | 6,704,506 |  |  | $ | 6,604,083 |  |  | $ | 6,453,001 |  |  | $ | 7,181,328 |  |  | $ | 5,984,348 |
Reported net interest margin | 3.53 | % |  | 3.79 | % |  | 3.68 | % |  | 3.81 | % |  | 3.86 | % |  | 3.65 | % |  | 3.87 | %
Core net interest margin | 3.50 | % |  | 3.71 | % |  | 3.64 | % |  | 3.69 | % |  | 3.80 | % |  | 3.60 | % |  | 3.80 | %

| Quarter ended
($ in thousands) | Jun 30, 2020 |  | Mar 31, 2020 |  | Dec 31, 2019 |  | Sep 30, 2019 |  | Jun 30, 2019
SHAREHOLDERS’ EQUITY TO TANGIBLE COMMON EQUITY AND TOTAL ASSETS TO TANGIBLE ASSETS
Shareholders’ equity | $ | 867,963 |  |  | $ | 846,436 |  |  | $ | 867,185 |  |  | $ | 846,095 |  |  | $ | 825,501 |
Less: Goodwill | 210,344 |  |  | 210,344 |  |  | 210,344 |  |  | 211,251 |  |  | 211,251 |
Less: Intangible assets | 23,196 |  |  | 24,585 |  |  | 26,076 |  |  | 27,626 |  |  | 29,201 |
Tangible common equity | $ | 634,423 |  |  | $ | 611,507 |  |  | $ | 630,765 |  |  | $ | 607,218 |  |  | $ | 585,049 |
Total assets | $ | 8,357,501 |  |  | $ | 7,500,643 |  |  | $ | 7,333,791 |  |  | $ | 7,346,791 |  |  | $ | 7,181,855 |
Less: Goodwill | 210,344 |  |  | 210,344 |  |  | 210,344 |  |  | 211,251 |  |  | 211,251 |
Less: Intangible assets | 23,196 |  |  | 24,585 |  |  | 26,076 |  |  | 27,626 |  |  | 29,201 |
Tangible assets | $ | 8,123,961 |  |  | $ | 7,265,714 |  |  | $ | 7,097,371 |  |  | $ | 7,107,914 |  |  | $ | 6,941,403 |
Tangible common equity to tangible assets | 7.81 | % |  | 8.42 | % |  | 8.89 | % |  | 8.54 | % |  | 8.43 | %

18

| Quarter ended
($ in thousands) | Jun 30, 2020 |  | Mar 31, 2020 |  | Jun 30, 2019
AVERAGE SHAREHOLDERS’ EQUITY AND AVERAGE TANGIBLE COMMON EQUITY
Average shareholder’s equity | $ | 868,163 |  |  | $ | 865,035 |  |  | $ | 813,106 |
Less average goodwill | 210,344 |  |  | 210,344 |  |  | 211,251 |
Less average intangible assets | 23,873 |  |  | 25,301 |  |  | 29,965 |
Average tangible common equity | $ | 633,946 |  |  | $ | 629,390 |  |  | $ | 571,890 |

| Quarter Ended
($ in thousands) | Jun 30, 2020 |  | Mar 31, 2020 |  | Dec 31, 2019 |  | Sep 30, 2019 |  | Jun 30, 2019
CALCULATION OF PRE-TAX, PRE-PROVISION INCOME
Net interest income | $ | 65,833 |  |  | $ | 63,368 |  |  | $ | 61,613 |  |  | $ | 63,046 |  |  | $ | 61,715 |
Noninterest income | 9,960 |  |  | 13,408 |  |  | 14,418 |  |  | 13,564 |  |  | 11,964 |
Noninterest expense | 37,912 |  |  | 38,673 |  |  | 38,354 |  |  | 38,239 |  |  | 49,054 |
PTPP income | 37,881 |  |  | 38,103 |  |  | 37,677 |  |  | 38,371 |  |  | 24,625 |
Provision for credit losses | 19,591 |  |  | 22,264 |  |  | 1,341 |  |  | 1,833 |  |  | 1,722 |
Income before income tax expense | 18,290 |  |  | 15,839 |  |  | 36,336 |  |  | 36,538 |  |  | 22,903 |
Income tax expense | 3,656 |  |  | 2,971 |  |  | 7,246 |  |  | 7,469 |  |  | 4,479 |
Net income | $ | 14,634 |  |  | $ | 12,868 |  |  | $ | 29,090 |  |  | $ | 29,069 |  |  | $ | 18,424 |

19

| Quarter Ended
($ in thousands, except per share data) | Jun 30, 2020
IMPACT OF PAYCHECK PROTECTION PROGRAM
Net income - GAAP | $ | 14,634 |
PPP interest and fee income | (4,083 | )
Related tax effect | 1,009 |
Adjusted net income - Non-GAAP | $ | 11,560 |
Average diluted common shares | 26,195 |
EPS - GAAP net income | $ | 0.56 |
EPS - Adjusted net income | $ | 0.44 |
Average assets - GAAP | $ | 8,158,204 |
Average PPP loans, net | (634,632 | )
Adjusted average assets - Non-GAAP | $ | 7,523,572 |
ROAA - GAAP net income | 0.72 | %
ROAA - Adjusted net income, adjusted average assets | 0.62 | %
PTPP Income - Non-GAAP (see reconciliation above) | $ | 37,881 |
PPP interest and fees | (4,083 | )
Adjusted PTPP income - Non-GAAP | $ | 33,798 |
PTPP ROAA - PTPP income | 1.87 | %
PTPP ROAA - adjusted PTPP income, adjusted average assets | 1.81 | %
Tangible assets - Non-GAAP (see reconciliation above) | $ | 8,123,961 |
PPP loans outstanding, net | (807,814 | )
Adjusted tangible assets - Non-GAAP | $ | 7,316,147 |
Tangible common equity Non - GAAP (see reconciliation above) | $ | 634,423 |
Tangible common equity to tangible assets | 7.81 | %
Tangible common equity to tangible assets - adjusted tangible assets | 8.67 | %
Average assets for leverage ratio | $ | 7,928,286 |
Average PPP loans, net | (634,632 | )
Adjusted average assets for leverage ratio - Non-GAAP | $ | 7,293,654 |
Tier 1 capital | $ | 726,574 |
Leverage ratio | 9.16 | %
Leverage ratio - adjusted average assets for leverage ratio | 9.96 | %
Net interest income - tax equivalent | $ | 66,537 |
PPP interest and fees | (4,083 | )
Adjusted net interest income - tax equivalent | $ | 62,454 |
Average earning assets -GAAP | $ | 7,571,196 |
Average PPP loans, net | (634,632 | )
Adjusted average earning assets - Non-GAAP | $ | 6,936,564 |
Net interest margin - tax equivalent | 3.53 | %
Net interest margin - tax equivalent - adjusted net interest income, adjusted average earning assets | 3.62 | %
Loans - GAAP | $ | 6,140,051 |
PPP loans outstanding, net | (807,814 | )
Adjusted loans - Non-GAAP | $ | 5,332,237 |
Allowance for credit losses on loans | $ | 110,270 |
Allowance for credit losses on loans/loans - GAAP | 1.80 | %
Allowance for credit losses on loans/loans - adjusted loans | 2.07 | %

20