EX-99.1 2 ex991financialstatementsan.htm EARNINGS RELEASE
EXHIBIT 99.1
ENTERPRISE FINANCIAL REPORTS THIRD QUARTER 2021 RESULTS
Third Quarter Results
•Closed the acquisition of First Choice Bancorp (“FCBP”), adding approximately $2.3 billion in assets and approximately $1.9 billion in both loans and deposits
•Net income of $13.9 million, $0.38 per diluted share, including merger and branch closure expenses
•Net interest margin (tax equivalent) of 3.40%
•Pre-provision return on average assets 1 of 1.81%
•Increased quarterly dividend 5% to $0.20 per share for fourth quarter
•Repurchased 470,412 shares at an average price of $45.15 per share
•Closure and consolidation of 5 branch locations
St. Louis, Mo. October 25, 2021 – Enterprise Financial Services Corp (Nasdaq: EFSC) (the “Company” or “EFSC”) reported net income of $13.9 million for the third quarter 2021, a decrease of $24.5 million compared to the linked second quarter (“linked quarter”) and a decrease of $4.0 million from the prior year quarter. Earnings per diluted share (“EPS”) was $0.38 for the third quarter 2021, compared to $1.23 and $0.68 for the linked and prior year quarters, respectively. Excluding merger-related, branch closure expenses and the FCBP CECL double count charge, adjusted EPS 2, adjusted ROAA 2, and adjusted ROATCE 2 for the third quarter 2021 were $1.27, 1.51% and 18.15%, respectively.
Net income and earnings per share in the current quarter were impacted by the following items:

($ in thousands, except per share data) | Net Income (pretax) |  | EPS
Merger-related expenses | $ | (14,671) |  |  | $ | (0.31) |
FCBP CECL double count | (25,353) |  |  | (0.51) |
Branch closure expenses | (3,441) |  |  | (0.07) |

Jim Lally, EFSC’s President and Chief Executive Officer, commented, “Our third quarter results included a record pre-provision net revenue 1 of $56 million, or 1.81% of average assets. Our results were bolstered by the acquisition of FCBP that closed during the quarter, furthering our commercial banking capabilities in the Southern California market. This augments our Southwest presence, and when combined with our specialty loan and deposit business lines, supports our overall growth initiatives. Additionally, we recently received a $60.0 million allocation from the New Market Tax Credit program that will enable us to continue supporting our communities through our CDE, while also enhancing our tax credit lending specialty. I am pleased with our financial results and the actions we have taken this quarter to strengthen our franchise.”
1 PPNR and PPNR return on average assets are a non-GAAP measure. Refer to discussion and reconciliation of these measures in the accompanying financial tables.
2 Adjusted EPS, adjusted ROAA, and adjusted ROATCE are non-GAAP measures. Refer to discussion and reconciliation of these measures in the accompanying financial tables.

Highlights
The Company closed its acquisition of FCBP on July 21, 2021. The results of operations of FCBP are included in our consolidated results from this date forward and are excluded from preceding periods. Comparisons to the prior year are also impacted by the acquisition of Seacoast Commerce Banc Holdings (“Seacoast”), which closed in the fourth quarter 2020.
Included in the current quarter results are the following contributions from the FCBP and Seacoast acquisitions:

($ in thousands) | FCBP |  | Seacoast
Net interest income | $ | 16,696 |  |  | $ | 14,065 |
Noninterest income | 1,424 |  |  | 741 |
Noninterest expense | 6,964 |  |  | 10,129 |
Pretax net income (excluding CECL double count) | 11,156 |  |  | 4,901 |

•Earnings - Net income in the third quarter 2021 was $13.9 million, a decrease of $24.5 million compared to the linked quarter and a decrease of $4.0 million from the prior year quarter. EPS was $0.38 per diluted share for the third quarter 2021, compared to $1.23 and $0.68 per diluted share for the linked and prior year quarters, respectively. Merger-related expenses, CECL double-count and branch closure expenses collectively reduced pre-tax net income $43.5 million, or $0.89 per diluted share.
•Pre-provision net revenue 1 (“PPNR”) - PPNR of $56.1 million in the third quarter 2021 increased $8.7 million and $18.1 million from the linked and prior year quarters, respectively. The increases were primarily due to the positive contribution from the FCBP and Seacoast acquisitions.
•Net interest income and net interest margin (“NIM”) - Net interest income of $97.3 million for the third quarter 2021 increased $15.5 million and $33.9 million from the linked quarter and prior year quarter, respectively. NIM was 3.40% for the third quarter 2021, compared to 3.46% and 3.29% for the linked quarter and prior year quarter, respectively. The underlying base NIM was relatively stable in the period, excluding the impact of certain items discussed below.
•Noninterest income - Noninterest income of $17.6 million for the third quarter 2021 increased $1.4 million and $5.0 million from the linked quarter and prior year quarter, respectively. The increases were primarily due to tax credit revenue and deposit service charge income from the FCBP and Seacoast acquisitions.
•Loans - Total loans increased $1.9 billion from the linked quarter to $9.1 billion as of September 30, 2021. The acquisition of FCBP added $1.9 billion of loans, while legacy PPP loans declined $164 million. Excluding PPP and FCBP, loans grew $110.6 million, or 6%, on an annualized basis from the linked quarter. Average loans totaled $8.7 billion for the quarter ended September 30, 2021 compared to $7.3 billion and $6.1 billion for the linked and prior year quarters, respectively.
2

PPP details:

| Quarter ended
($ in thousands, except per share data) | Sep 30, 2021 |  | Jun 30, 2021 |  | Mar 31, 2021 |  | Dec 31, 2020 |  | Sep 30, 2020
PPP loans outstanding, net of deferred fees | $ | 438,959 |  |  | $ | 396,660 |  |  | $ | 737,660 |  |  | $ | 698,645 |  |  | $ | 819,100 |
Average PPP loans outstanding, net | 489,104 |  |  | 664,375 |  |  | 692,161 |  |  | 806,697 |  |  | 813,244 |
PPP average loan size | 210 |  |  | 171 |  |  | 220 |  |  | 187 |  |  | 216 |
PPP interest and fee income | 6,048 |  |  | 7,940 |  |  | 8,475 |  |  | 10,261 |  |  | 5,226 |
PPP deferred fees | 7,428 |  |  | 12,243 |  |  | 16,676 |  |  | 11,304 |  |  | 19,522 |
PPP average yield | 4.91 | % |  | 4.79 | % |  | 4.97 | % |  | 5.06 | % |  | 2.56 | %

|  |  |  | Quarter ended
| Sep 30, 2021 | Jun 30, 2021 |  | Mar 31, 2021 |  | Dec 31, 2020 |  | Sep 30, 2020
Financial Metrics: | As Reported |  | Excluding PPP* | As Reported |  | Excluding PPP* |  | As Reported |  | Excluding PPP* |  | As Reported |  | Excluding PPP* |  | As Reported |  | Excluding PPP*
EPS | $ | 0.38 |  |  | $ | 0.25 |  | $ | 1.23 |  |  | $ | 1.04 |  |  | $ | 0.96 |  |  | $ | 0.75 |  |  | $ | 1.00 |  |  | $ | 0.73 |  |  | $ | 0.68 |  |  | $ | 0.53 |
ROAA | 0.45 | % |  | 0.31 | % | 1.50 | % |  | 1.35 | % |  | 1.22 | % |  | 1.03 | % |  | 1.26 | % |  | 1.01 | % |  | 0.86 | % |  | 0.74 | %
PPNR ROAA* | 1.81 | % |  | 1.68 | % | 1.85 | % |  | 1.65 | % |  | 1.66 | % |  | 1.41 | % |  | 2.07 | % |  | 1.78 | % |  | 1.81 | % |  | 1.73 | %
Tangible common equity/tangible assets* | 8.40 | % |  | 8.71 | % | 8.32 | % |  | 8.66 | % |  | 8.18 | % |  | 8.84 | % |  | 8.40 | % |  | 9.07 | % |  | 7.99 | % |  | 8.89 | %
Leverage ratio | 9.7 | % |  | 10.2 | % | 9.4 | % |  | 10.0 | % |  | 9.5 | % |  | 10.2 | % |  | 10.0 | % |  | 11.0 | % |  | 9.2 | % |  | 10.2 | %
NIM | 3.40 | % |  | 3.33 | % | 3.46 | % |  | 3.36 | % |  | 3.50 | % |  | 3.39 | % |  | 3.66 | % |  | 3.52 | % |  | 3.29 | % |  | 3.37 | %
Allowance for credit losses/loans | 1.67 | % |  | 1.94 | % | 1.77 | % |  | 2.09 | % |  | 1.80 | % |  | 2.22 | % |  | 1.89 | % |  | 2.31 | % |  | 2.01 | % |  | 2.32 | %
* 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 to total loans was 1.67% at September 30, 2021, compared to 1.77% at June 30, 2021 and 2.01% at September 30, 2020. The allowance for credit losses on the acquired FCBP loan portfolio was approximately 1.57%, which primarily contributed to the reduction of the ratio of the allowance for credit losses to total loans at September 30, 2021 as compared to the prior periods presented. Nonperforming assets to total assets was 0.35% at September 30, 2021 compared to 0.44% and 0.53% at June 30, 2021 and September 30, 2020, respectively.
•Deposits - Total deposits increased $2.2 billion from the linked quarter to $10.8 billion as of September 30, 2021, primarily due to the addition of FCBP deposits of $1.9 billion. Average deposits totaled $10.3 billion for the quarter ended September 30, 2021 compared to $8.6 billion and $6.7 billion for the linked and prior year quarters, respectively. Noninterest-bearing deposit accounts represented 40.4% of total deposits, and the loan to deposit ratio was 84.2% at September 30, 2021.
•Capital - Total shareholders’ equity was $1.4 billion and the tangible common equity to tangible assets ratio 3 was 8.4% at September 30, 2021, compared to 8.3% at June 30, 2021. The Bank’s regulatory capital ratios remain “well-capitalized,” with a common equity tier 1 ratio of 12.3% and a total risk-based capital ratio of 13.4% as of September 30, 2021. The Company’s common equity tier 1 ratio and total risk-based capital ratio was 11.2% and 14.5%, respectively, at September 30, 2021.
The Company issued 7,808,459 shares totaling $343.7 million in the third quarter 2021 as merger consideration in connection with the FCBP acquisition.
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The Company has 1,277,951 shares available for repurchase under its common stock repurchase authorization. The Company repurchased 470,412 shares totaling $21.2 million in the third quarter 2021 for an average price of $45.15 per share. Total shares repurchased year-to-date total 722,049 at an average price of $45.80.
The Company intends to redeem its $50.0 million fixed-to-floating subordinated debentures on the first call date of November 1, 2021.
The Company’s Board of Directors unanimously approved a quarterly dividend of $0.20 per common share, payable on December 31, 2021 to shareholders of record as of December 15, 2021, an increase of $0.01, or 5.0%, compared to the third quarter.
3 Tangible common equity to tangible assets ratio is a non-GAAP measure. Refer to discussion and reconciliation of this measure in the accompanying financial tables.
•Liquidity - The Company maintains a high level of both on-balance-sheet and off-balance-sheet liquidity. At September 30, 2021, on-balance-sheet liquidity consisted of cash and unpledged investment securities of $1.2 billion. Off-balance-sheet liquidity totaled $1.8 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 at the holding company and has an effective shelf registration statement on file with the U.S. Securities and Exchange Commission allowing for the issuance of various forms of equity and debt securities.
•Branch Consolidation - As part of the integration of FCBP, the Company commenced the process to close three branch locations in California. A lease and fixed asset impairment charge of $0.4 million was recognized and reported in merger expenses. The Company expects to realize annual cost savings of approximately $0.8 million. Additionally, the Company has also commenced the process to close two branches in St. Louis and consolidate the operations and customers of these branches with other nearby locations. An impairment charge of $3.4 million on these branches was recognized in the third quarter 2021 for buildings, leases and fixed assets. The Company expects to realize annual cost savings of approximately $1.5 million on these two branches. These branch closures are reflective of current trends in the industry and traffic as a result of technology adoption and other business climate trends.
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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
| September 30, 2021 |  | June 30, 2021 |  | September 30, 2020
($ 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* | $ | 8,666,353 |  |  | $ | 94,465 |  |  | 4.32 | % |  | $ | 7,306,471 |  |  | $ | 79,162 |  |  | 4.35 | % |  | $ | 6,112,715 |  |  | $ | 62,751 |  |  | 4.08 | %
Debt and equity investments* | 1,594,938 |  |  | 9,583 |  |  | 2.38 |  |  | 1,502,582 |  |  | 9,226 |  |  | 2.46 |  |  | 1,361,515 |  |  | 8,761 |  |  | 2.56 |
Short-term investments | 1,251,988 |  |  | 480 |  |  | 0.15 |  |  | 806,928 |  |  | 237 |  |  | 0.12 |  |  | 295,854 |  |  | 113 |  |  | 0.15 |
Total interest-earning assets | 11,513,279 |  |  | 104,528 |  |  | 3.60 |  |  | 9,615,981 |  |  | 88,625 |  |  | 3.70 |  |  | 7,770,084 |  |  | 71,625 |  |  | 3.67 |
Noninterest-earning assets | 821,279 |  |  |  |  |  |  | 665,363 |  |  |  |  |  |  | 571,884 |  |  |  |  |
Total assets | $ | 12,334,558 |  |  |  |  |  |  | $ | 10,281,344 |  |  |  |  |  |  | $ | 8,341,968 |  |  |  |  |
Liabilities and Shareholders’ Equity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest-bearing liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest-bearing transaction accounts | $ | 2,228,466 |  |  | $ | 459 |  |  | 0.08 | % |  | $ | 1,985,811 |  |  | $ | 336 |  |  | 0.07 | % |  | $ | 1,529,097 |  |  | $ | 255 |  |  | 0.07 | %
Money market accounts | 2,675,405 |  |  | 1,294 |  |  | 0.19 |  |  | 2,344,871 |  |  | 988 |  |  | 0.17 |  |  | 1,981,026 |  |  | 1,003 |  |  | 0.20 |
Savings | 747,927 |  |  | 61 |  |  | 0.03 |  |  | 718,193 |  |  | 52 |  |  | 0.03 |  |  | 605,475 |  |  | 45 |  |  | 0.03 |
Certificates of deposit | 604,594 |  |  | 927 |  |  | 0.61 |  |  | 522,633 |  |  | 1,091 |  |  | 0.84 |  |  | 630,076 |  |  | 2,409 |  |  | 1.52 |
Total interest-bearing deposits | 6,256,392 |  |  | 2,741 |  |  | 0.17 |  |  | 5,571,508 |  |  | 2,467 |  |  | 0.18 |  |  | 4,745,674 |  |  | 3,712 |  |  | 0.31 |
Subordinated debentures | 204,011 |  |  | 2,855 |  |  | 5.55 |  |  | 203,849 |  |  | 2,847 |  |  | 5.60 |  |  | 203,438 |  |  | 2,826 |  |  | 5.53 |
FHLB advances | 89,457 |  |  | 211 |  |  | 0.94 |  |  | 50,000 |  |  | 197 |  |  | 1.58 |  |  | 250,000 |  |  | 720 |  |  | 1.15 |
Securities sold under agreements to repurchase | 216,403 |  |  | 58 |  |  | 0.11 |  |  | 209,062 |  |  | 58 |  |  | 0.11 |  |  | 199,308 |  |  | 59 |  |  | 0.12 |
Other borrowings | 25,699 |  |  | 90 |  |  | 1.39 |  |  | 27,147 |  |  | 94 |  |  | 1.39 |  |  | 31,413 |  |  | 116 |  |  | 1.47 |
Total interest-bearing liabilities | 6,791,962 |  |  | 5,955 |  |  | 0.35 |  |  | 6,061,566 |  |  | 5,663 |  |  | 0.37 |  |  | 5,429,833 |  |  | 7,433 |  |  | 0.54 |
Noninterest-bearing liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Demand deposits | 4,040,761 |  |  |  |  |  |  | 3,008,703 |  |  |  |  |  |  | 1,920,694 |  |  |  |  |
Other liabilities | 107,739 |  |  |  |  |  |  | 94,106 |  |  |  |  |  |  | 105,945 |  |  |  |  |
Total liabilities | 10,940,462 |  |  |  |  |  |  | 9,164,375 |  |  |  |  |  |  | 7,456,472 |  |  |  |  |
Shareholders' equity | 1,394,096 |  |  |  |  |  |  | 1,116,969 |  |  |  |  |  |  | 885,496 |  |  |  |  |
Total liabilities and shareholders' equity | $ | 12,334,558 |  |  |  |  |  |  | $ | 10,281,344 |  |  |  |  |  |  | $ | 8,341,968 |  |  |  |  |
Total net interest income |  |  | $ | 98,573 |  |  |  |  |  |  | $ | 82,962 |  |  |  |  |  |  | $ | 64,192 |  |  |
Net interest margin |  |  |  |  | 3.40 | % |  |  |  |  |  | 3.46 | % |  |  |  |  |  | 3.29 | %
* Non-taxable income is presented on a tax-equivalent basis using a 24.9% and 24.7% tax rate in 2021 and 2020, respectively. The tax-equivalent adjustments were $1.3 million for the three months ended September 30, 2021, $1.2 million for the three months ended June 30, 2021 and $0.8 million for the three months ended September 30, 2020.

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Net interest income for the third quarter increased $15.6 million to $97.3 million from $81.7 million in the linked quarter, and increased $33.9 million from the prior year period. NIM, on a tax equivalent basis, was 3.40% for the third quarter, compared to 3.46% in the linked quarter, and 3.29% in the third quarter 2020. The increase in net interest income from the linked quarter was primarily due to greater average earning assets resulting from the FCBP acquisition. Interest income increased mainly due to a $1.4 billion increase in average loans compared to the linked period, including $1.5 billion of average loans acquired from FCBP, partially offset by reduced income from PPP loans and other purchase accounting income. While PPP loans (excluding FCBP acquired PPP loans) decreased $164.0 million in the current quarter, forgiveness of these loans by the SBA accelerated deferred loan fees into income that benefits net interest margin. The increase in interest income was partially offset by higher interest expense related to the addition of $685 million of interest bearing liabilities from FCBP.
NIM decreased six basis points from the linked quarter to 3.40% during the current quarter primarily due to a ten basis point decrease in earning asset yields. The decrease in the earning asset yield was primarily due to higher levels of cash related to payoffs of PPP loans and deposit growth (14 bps), an increased balance and lower yields on investment securities (2 bp), and lower purchase accounting accretion on legacy Enterprise loans (6 bps), partially offset by higher loan yields (4 bps) and the addition of higher yielding loans from FCBP (9 bps). The cost of interest-bearing liabilities declined two basis points from the linked quarter, primarily due to lower rates on time deposits (1 bp) and the addition of low cost deposits from FCBP (1 bp).
Loans
The following table presents total loans for the most recent five quarters:

| Quarter ended
| September 30, 2021 |  |  |  |  |  |  |  |  |  |  |  |
($ in thousands) | FCBP a, b |  | Legacy EFSC a |  | Consolidated |  | June 30, 2021 |  | March 31, 2021 |  |  |  |  |  | December 31, 2020 c |  | September 30, 2020
C&I | $ | 242,740 |  |  | $ | 1,215,338 |  |  | $ | 1,458,078 |  |  | $ | 1,116,229 |  |  | $ | 1,048,839 |  |  |  |  |  |  | $ | 1,103,060 |  |  | $ | 1,075,421 |
CRE investor owned | 553,490 |  |  | 1,381,794 |  |  | 1,935,284 |  |  | 1,467,243 |  |  | 1,491,244 |  |  |  |  |  |  | 1,420,905 |  |  | 1,281,567 |
CRE owner occupied | 301,929 |  |  | 861,307 |  |  | 1,163,236 |  |  | 789,220 |  |  | 805,581 |  |  |  |  |  |  | 825,846 |  |  | 766,919 |
SBA loans* | 160,833 |  |  | 1,038,925 |  |  | 1,199,758 |  |  | 1,010,727 |  |  | 941,075 |  |  |  |  |  |  | 895,930 |  |  | 15,927 |
Sponsor finance* | — |  |  | 454,431 |  |  | 454,431 |  |  | 463,744 |  |  | 394,207 |  |  |  |  |  |  | 396,487 |  |  | 367,337 |
Life insurance premium financing* | — |  |  | 572,492 |  |  | 572,492 |  |  | 564,366 |  |  | 543,084 |  |  |  |  |  |  | 534,092 |  |  | 517,559 |
Tax credits* | — |  |  | 462,168 |  |  | 462,168 |  |  | 423,258 |  |  | 387,968 |  |  |  |  |  |  | 382,602 |  |  | 368,908 |
SBA PPP loans | 206,284 |  |  | 232,675 |  |  | 438,959 |  |  | 396,660 |  |  | 737,660 |  |  |  |  |  |  | 698,645 |  |  | 819,100 |
Residential real estate | 226,321 |  |  | 293,538 |  |  | 519,859 |  |  | 302,007 |  |  | 299,517 |  |  |  |  |  |  | 318,091 |  |  | 321,258 |
Construction and land development | 219,600 |  |  | 432,627 |  |  | 652,227 |  |  | 467,586 |  |  | 438,303 |  |  |  |  |  |  | 474,399 |  |  | 450,225 |
Other | 32,547 |  |  | 227,544 |  |  | 260,091 |  |  | 225,227 |  |  | 201,303 |  |  |  |  |  |  | 174,878 |  |  | 142,086 |
Total Loans | $ | 1,943,744 |  |  | $ | 7,172,839 |  |  | $ | 9,116,583 |  |  | $ | 7,226,267 |  |  | $ | 7,288,781 |  |  |  |  |  |  | $ | 7,224,935 |  |  | $ | 6,126,307 |
Total loan yield |  |  |  |  | 4.32 | % |  | 4.35 | % |  | 4.35 | % |  |  |  |  |  | 4.46 | % |  | 4.08 | %
Variable interest rate loans to total loans |  |  |  |  | 63 | % |  | 57 | % |  | 56 | % |  |  |  |  |  | 57 | % |  | 50 | %
Certain prior period amounts have been reclassified among the categories to conform to the current period presentation.
*Specialty loan category |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
a Amounts reported are as of September 30, 2021 and are separately shown attributable to the FCBP loan portfolio acquired on July 21, 2021, and the Company’s pre-FCBP acquisition loan portfolio.
b Excluding PPP and purchase accounting adjustments, FCBP gross loans increased $71.8 million from acquisition on July 21, 2021.
c $1.2 billion is attributable to the Seacoast loan portfolio acquired on November 12, 2020.

Loans totaled $9.1 billion at September 30, 2021, increasing $1.9 billion compared to the linked quarter. The acquisition of FCBP added $1.9 billion of loans, while legacy PPP loans declined $164.0 million. Excluding FCBP and PPP, loans grew $110.6 million, or 6%, on an annualized basis from the linked quarter. The increase was driven by C&I loans ($99.1 million) and a broad-based increase in specialty lending ($65.9 million). SBA loans represent
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$28.2 million of the increase in specialty lending during the current quarter, primarily driven by the expansion of our SBA lending capabilities following our acquisition of Seacoast in the fourth quarter 2020. Year-over-year, loans increased $3.0 billion, or 48.8%. The year-over-year increase was primarily due to the FCBP and Seacoast acquisitions. For the quarter ended September 30, 2021 average line draw utilization was 38.2% compared to 38.9% and 40.4% for the linked quarter and prior-year quarter, respectively. Line draw usage for third quarter 2021 increased $265 million compared to the linked quarter.
Asset Quality
The following table presents the categories of nonperforming assets and related ratios for the most recent five quarters:

| Quarter ended
($ in thousands) | September 30, 2021 |  | June 30, 2021 |  | March 31, 2021 |  | December 31, 2020 |  | September 30, 2020
Nonperforming loans* | $ | 41,554 |  |  | $ | 42,252 |  |  | $ | 36,659 |  |  | $ | 38,507 |  |  | $ | 39,623 |
Other real estate | 3,493 |  |  | 3,612 |  |  | 6,164 |  |  | 5,330 |  |  | 4,835 |
Nonperforming assets* | $ | 45,047 |  |  | $ | 45,864 |  |  | $ | 42,823 |  |  | $ | 43,837 |  |  | $ | 44,458 |
Nonperforming loans to total loans | 0.46 | % |  | 0.58 | % |  | 0.50 | % |  | 0.53 | % |  | 0.65 | %
Nonperforming assets to total assets | 0.35 | % |  | 0.44 | % |  | 0.42 | % |  | 0.45 | % |  | 0.53 | %
Allowance for credit losses to total loans | 1.67 | % |  | 1.77 | % |  | 1.80 | % |  | 1.89 | % |  | 2.01 | %
Net charge-offs (recoveries) | $ | 1,850 |  |  | $ | 869 |  |  | $ | 5,647 |  |  | $ | (612) |  |  | $ | 1,027 |
*Excludes government guaranteed balances.

The provision for credit losses was $19.7 million for the third quarter 2021 compared to a benefit of $2.7 million for the linked quarter and a $14.1 million provision for the prior year quarter. A provision for credit losses of $23.9 million was recorded to establish the initial allowance for credit losses on FCBP non-PCD loans, which we refer to as the “CECL double-count” adjustment. An additional $1.4 million provision was recognized to establish the reserve for FCBP’s unfunded loan commitments. The provision for credit losses from the FCBP acquisition was offset by a $5.7 million provision benefit on the legacy loan portfolio due to a combination of improving economic forecasts and the Company’s stable credit quality.
Gross charge-offs of $4.3 million in the quarter primarily consisted of a loan that had previously defaulted and was fully reserved in a prior period. Net charge-offs to average loans for the third quarter 2021, the linked quarter, and the prior year quarter totaled eight basis points, five basis points and seven basis points, respectively.
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Deposits
The following table presents deposits broken out by type for the most recent five quarters:

| Quarter ended
| September 30, 2021 |  |  |  |  |  |  |  |
($ in thousands) | FCBP a |  | Legacy EFSC a |  | Consolidated |  | June 30, 2021 |  | March 31, 2021 |  | December 31, 2020 b |  | September 30, 2020
Noninterest-bearing accounts | $ | 1,041,622 |  |  | $ | 3,334,091 |  |  | $ | 4,375,713 |  |  | $ | 3,111,581 |  |  | $ | 2,910,216 |  |  | $ | 2,711,828 |  |  | $ | 1,929,540 |
Interest-bearing transaction accounts | 317,301 |  |  | 1,936,338 |  |  | 2,253,639 |  |  | 2,013,129 |  |  | 1,990,308 |  |  | 1,768,497 |  |  | 1,499,756 |
Money market and savings accounts | 370,179 |  |  | 3,201,073 |  |  | 3,571,252 |  |  | 3,000,460 |  |  | 3,093,569 |  |  | 2,954,969 |  |  | 2,634,885 |
Brokered certificates of deposit | 78,714 |  |  | 50,209 |  |  | 128,923 |  |  | 50,209 |  |  | 50,209 |  |  | 50,209 |  |  | 65,209 |
Other certificates of deposit | 51,832 |  |  | 446,416 |  |  | 498,248 |  |  | 464,125 |  |  | 471,142 |  |  | 499,886 |  |  | 546,836 |
Total deposit portfolio | $ | 1,859,648 |  |  | $ | 8,968,127 |  |  | $ | 10,827,775 |  |  | $ | 8,639,504 |  |  | $ | 8,515,444 |  |  | $ | 7,985,389 |  |  | $ | 6,676,226 |
Noninterest-bearing deposits to total deposits | 56.0 | % |  | 37.2 | % |  | 40.4 | % |  | 36.0 | % |  | 34.2 | % |  | 34.0 | % |  | 28.9 | %
a Amounts reported are as of September 30, 2021 and are shown separately attributable to the FCBP deposit portfolio acquired on July 21, 2021, and the Company’s pre-FCBP acquisition deposit portfolio.
b $1.1 billion is attributable to the Seacoast deposit portfolio acquired on November 12, 2020.

Total deposits at September 30, 2021 were $10.8 billion, an increase of $2.2 billion from June 30, 2021, and an increase of $4.2 billion from September 30, 2020. The increase from the linked quarter was primarily due to the FCBP acquisition, and the year-over-year increase was primarily due to the FCBP and Seacoast acquisitions.
Core deposits, defined as total deposits excluding certificates of deposits, were $10.2 billion at September 30, 2021, an increase of $2.1 billion from the linked quarter. FCBP core deposits were $1.7 billion at September 30, 2021. The Company’s participation in PPP, the low rate environment and high personal savings rate continues to contribute to the increase in deposits. Noninterest-bearing deposits were $4.4 billion at September 30, 2021, or 40.4% of total deposits. Specialty deposits increased $449.7 million over the linked quarter to $1.9 billion primarily attributable to community associations, third party escrow and FCBP deposit specialties. The total cost of deposits was 0.11% for the current quarter compared to 0.12% and 0.22% for the linked quarter and prior year quarter, respectively.
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) | September 30, 2021 |  | June 30, 2021 |  | Increase (decrease) |  | September 30, 2020 |  | Increase (decrease)
Deposit service charges | $ | 4,520 |  |  | $ | 3,862 |  |  | $ | 658 |  |  | 17 | % |  | $ | 2,798 |  |  | $ | 1,722 |  |  | 62 | %
Wealth management revenue | 2,573 |  |  | 2,516 |  |  | 57 |  |  | 2 | % |  | 2,456 |  |  | 117 |  |  | 5 | %
Card services revenue | 3,186 |  |  | 2,975 |  |  | 211 |  |  | 7 | % |  | 2,498 |  |  | 688 |  |  | 28 | %
Tax credit income | 3,325 |  |  | 1,370 |  |  | 1,955 |  |  | 143 | % |  | 748 |  |  | 2,577 |  |  | 345 | %
Miscellaneous income | 4,015 |  |  | 5,481 |  |  | (1,466) |  |  | (27) | % |  | 4,129 |  |  | (114) |  |  | (3) | %
Total noninterest income | $ | 17,619 |  |  | $ | 16,204 |  |  | $ | 1,415 |  |  | 9 | % |  | $ | 12,629 |  |  | $ | 4,990 |  |  | 40 | %

Total noninterest income for the third quarter 2021 was $17.6 million, an increase of $1.4 million from the linked quarter and an increase of $5.0 million from the prior year quarter. The increase from the linked quarter was
8

primarily due to tax credit income and deposit service charges, partially offset by a decline in miscellaneous income from a private equity fund distribution received in the second quarter. The increase from the prior year quarter was broad-based, reflecting higher volumes in tax credit activity, card services, wealth management and deposit service charges. FCBP noninterest income totaled $1.4 million in the third quarter, primarily in deposit service charges and servicing fees.
Noninterest Expenses
Noninterest expense was $76.9 million for the third quarter 2021, compared to $52.5 million for the linked quarter, and $39.5 million for the prior year quarter. The increase from the linked quarter was primarily due to merger-related expenses of $14.7 million (an increase of $12.7 million from the linked quarter), FCBP noninterest expense of $7.0 million, and branch closure expenses of $3.4 million.
For the third quarter 2021, the Company’s efficiency ratio was 66.9% compared to 53.6% and 52.0% for the linked quarter and prior year quarter, respectively. The Company’s core efficiency ratio 4 improved to 51.3% for the quarter ended September 30, 2021, compared to 51.9% for the linked quarter and 51.0% 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 24% for the quarter ended September 30, 2021, compared to 20% for both the linked quarter and the prior year quarter. The increase reflects the impact of non-deductible merger expenses and an increase in state taxes that increased the effective tax rate approximately 3% in the current quarter.
Capital
The following table presents various EFSC capital ratios:

| Quarter ended
Percent | September 30, 2021 |  | June 30, 2021 |  | March 31, 2021 |  | December 31, 2020 |  | September 30, 2020
Total risk-based capital to risk-weighted assets | 14.5 | % |  | 14.9 | % |  | 15.1 | % |  | 14.9 | % |  | 14.6 | %
Tier 1 capital to risk weighted assets | 12.2 | % |  | 12.3 | % |  | 12.3 | % |  | 12.1 | % |  | 11.6 | %
Common equity tier 1 capital to risk-weighted assets | 11.2 | % |  | 11.1 | % |  | 11.0 | % |  | 10.9 | % |  | 10.2 | %
Tangible common equity to tangible assets | 8.4 | % |  | 8.3 | % |  | 8.2 | % |  | 8.4 | % |  | 8.0 | %

Total equity was $1.4 billion at September 30, 2021, an increase of $320.9 million from the linked quarter. The Company issued 7.8 million shares to FCBP shareholders as merger consideration totaling $343.7 million based on the closing stock price of the Company’s common stock on July 21, 2021, and repurchased $21.2 million of common stock in the third quarter 2021. The Company’s regulatory capital ratios continue to exceed the “well-capitalized” regulatory benchmark. Capital ratios for the current quarter are subject to, among other things, completion and filing of the Company’s regulatory reports and ongoing regulatory review.
Use of Non-GAAP Financial Measures
The Company’s accounting and reporting policies conform to generally accepted accounting principles in the United States (“GAAP”) and the prevailing practices in the banking industry. However, the Company provides other financial measures, such as tangible common equity, PPNR, PPNR ROAA, financial metrics adjusted for PPP impact, core efficiency ratio, and the tangible common equity ratio, in this release that are considered “non-GAAP financial measures.” Generally, a non-GAAP financial measure is a numerical measure of a company’s financial performance, financial position, or cash flows that exclude (or include) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP.
The Company considers its tangible common equity, PPNR, PPNR ROAA, financial metrics adjusted for PPP impact, core efficiency ratio, and the tangible common equity ratio, collectively “core performance measures,” presented in this earnings release and the included tables as important measures of financial performance, even
9

though they are non-GAAP measures, as they provide supplemental information by which to evaluate the impact of certain non-comparable items, and the Company’s operating performance on an ongoing basis. Core performance measures exclude certain other income and expense items, such as merger-related expenses, facilities charges, and the gain or loss on sale of investment securities, the Company believes to be not indicative of or useful to measure the Company’s operating performance on an ongoing basis. The attached tables contain a reconciliation of these core performance measures to the GAAP measures. The Company believes that the tangible common equity ratio provides useful information to investors about the Company’s capital strength even though it is considered to be a non-GAAP financial measure and is not part of the regulatory capital requirements to which the Company is subject.
The Company believes these non-GAAP measures and ratios, when taken together with the corresponding GAAP measures and ratios, provide meaningful supplemental information regarding the Company’s performance and capital strength. The Company’s management uses, and believes that investors benefit from referring to, these non-GAAP measures and ratios in assessing the Company’s operating results and related trends and when forecasting future periods. However, these non-GAAP measures and ratios should be considered in addition to, and not as a substitute for or preferable to, ratios prepared in accordance with GAAP. In the attached tables, the Company has provided a reconciliation of, where applicable, the most comparable GAAP financial measures and ratios to the non-GAAP financial measures and ratios, or a reconciliation of the non-GAAP calculation of the financial measures for the periods indicated.
Conference Call and Webcast Information
The Company will host a conference call and webcast at 10:00 a.m. Central Time on Tuesday, October 26, 2021. During the call, management will review the third quarter of 2021 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 1-800-377-9510 (Conference ID #7088056). A recorded replay of the conference call will be available on the website approximately two hours after the call’s completion. Visit http://bit.ly/EFSC3Q2021 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 Financial Services Corp
Enterprise Financial Services Corp (Nasdaq: EFSC), with approximate ly $12.9 billion in assets, is a financial holding company headquartered in Clayton, Missouri. Enterprise Bank & Trust, a Missouri state-chartered trust company with banking powers and a wholly-owned subsidiary of EFSC, operates branch offices in Arizona, California, Kansas, Missouri, Nevada, and New Mexico, and SBA loan and deposit production offices throughout the country. Enterprise Bank & Trust offers a range of business and personal banking services and wealth management services. Enterprise Trust, a division of Enterprise Bank & Trust, provides financial planning, estate planning, investment management and trust services to businesses, individuals, institutions, retirement plans and non-profit organizations. Additional information is available at www.enterprisebank.com.
Enterprise Financial Services Corp’s common stock is traded on the Nasdaq Stock Market under the symbol “EFSC.” Please visit our website at www.enterprisebank.com to see our regularly posted material information.
Forward-looking Statements
Readers should note that, in addition to the historical information contained herein, this press release contains “forward-looking statements” within the meaning of, and intended to be covered by, the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements based on management’s current expectations and beliefs concerning future developments and their potential effects on the Company including, without limitation, plans, strategies and goals, and statements about the Company’s expectations regarding revenue and asset growth, financial performance and profitability, loan and deposit growth, yields and returns, loan diversification and credit management, shareholder value creation and the impact of the FCBP acquisition and other acquisitions.
10

Forward-looking statements are typically identified by words such as “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project,” “pro forma” and other similar words and expressions. Forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made. Because forward-looking statements are subject to assumptions and uncertainties, actual results or future events could differ, possibly materially, from those anticipated in the forward-looking statements and future results could differ materially from historical performance. Factors that could cause or contribute to such differences include, but are not limited to, the Company’s ability to efficiently integrate acquisitions, including the FCBP acquisition, into its operations, retain the customers of these businesses and grow the acquired operations, as well as credit risk, changes in the appraised valuation of real estate securing impaired loans, outcomes of litigation and other contingencies, exposure to general and local economic conditions, risks associated with rapid increases or decreases in prevailing interest rates, consolidation in the banking industry, competition from banks and other financial institutions, the Company’s ability to attract and retain relationship officers and other key personnel, burdens imposed by federal and state regulation, changes in regulatory requirements, changes in accounting policies and practices or accounting standards, 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, and those factors and risks referenced from time to time in EFSC’s filings with the SEC, including in the Company's Annual Reports on Form 10-K for the fiscal year ended December 31, 2020, and the Company's other filings with the SEC. For any forward-looking statements made in this press release or in any documents, EFSC claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
Except to the extent required by applicable law or regulation, EFSC disclaims any obligation to revise or publicly release any revision or update to any of the forward-looking statements included herein to reflect events or circumstances that occur after the date on which such statements were made.
For more information contact
Investor Relations: Keene Turner, Executive Vice President and CFO (314) 512-7233
Media: Steve Richardson, Vice President (314) 512-7183
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ENTERPRISE FINANCIAL SERVICES CORP
CONSOLIDATED FINANCIAL SUMMARY (unaudited)

| Quarter ended |  | Nine months ended
(in thousands, except per share data) | Sep 30, 2021 |  | Jun 30, 2021 |  | Mar 31, 2021 |  | Dec 31, 2020 |  | Sep 30, 2020 |  | Sep 30, 2021 |  | Sep 30, 2020
EARNINGS SUMMARY |  |  |  |  |  |  |  |  |  |  |  |  |
Net interest income | $ | 97,273 |  |  | $ | 81,738 |  |  | $ | 79,123 |  |  | $ | 77,446 |  |  | $ | 63,354 |  |  | $ | 258,134 |  |  | $ | 192,555 |
Provision (benefit) for credit losses | 19,668 |  |  | (2,669) |  |  | 46 |  |  | 9,463 |  |  | 14,080 |  |  | 17,045 |  |  | 55,935 |
Noninterest income | 17,619 |  |  | 16,204 |  |  | 11,290 |  |  | 18,506 |  |  | 12,629 |  |  | 45,113 |  |  | 35,997 |
Noninterest expense | 76,885 |  |  | 52,456 |  |  | 52,884 |  |  | 51,050 |  |  | 39,524 |  |  | 182,225 |  |  | 116,109 |
Income before income tax expense | 18,339 |  |  | 48,155 |  |  | 37,483 |  |  | 35,439 |  |  | 22,379 |  |  | 103,977 |  |  | 56,508 |
Income tax expense | 4,426 |  |  | 9,750 |  |  | 7,557 |  |  | 6,508 |  |  | 4,428 |  |  | 21,733 |  |  | 11,055 |
Net income | $ | 13,913 |  |  | $ | 38,405 |  |  | $ | 29,926 |  |  | $ | 28,931 |  |  | $ | 17,951 |  |  | $ | 82,244 |  |  | $ | 45,453 |
Diluted earnings per share | $ | 0.38 |  |  | $ | 1.23 |  |  | $ | 0.96 |  |  | $ | 1.00 |  |  | $ | 0.68 |  |  | $ | 2.48 |  |  | $ | 1.73 |
Return on average assets | 0.45 | % |  | 1.50 | % |  | 1.22 | % |  | 1.26 | % |  | 0.86 | % |  | 1.01 | % |  | 0.76 | %
Return on average common equity | 3.96 | % |  | 13.79 | % |  | 11.07 | % |  | 11.60 | % |  | 8.06 | % |  | 9.14 | % |  | 6.96 | %
Return on average tangible common equity | 5.37 | % |  | 18.44 | % |  | 14.92 | % |  | 15.73 | % |  | 10.94 | % |  | 12.31 | % |  | 9.51 | %
Net interest margin (tax equivalent) | 3.40 | % |  | 3.46 | % |  | 3.50 | % |  | 3.66 | % |  | 3.29 | % |  | 3.45 | % |  | 3.52 | %
Efficiency ratio | 66.92 | % |  | 53.56 | % |  | 58.49 | % |  | 53.20 | % |  | 52.02 | % |  | 60.09 | % |  | 50.80 | %
Core efficiency ratio 1 | 51.30 | % |  | 51.86 | % |  | 55.02 | % |  | 50.93 | % |  | 51.04 | % |  | 52.59 | % |  | 50.97 | %
Total loans | $ | 9,116,583 |  |  | $ | 7,226,267 |  |  | $ | 7,288,781 |  |  | $ | 7,224,935 |  |  | $ | 6,126,307 |  |  |  |  |
Total average loans | $ | 8,666,353 |  |  | $ | 7,306,471 |  |  | $ | 7,192,776 |  |  | $ | 6,780,701 |  |  | $ | 6,112,715 |  |  | $ | 7,727,265 |  |  | $ | 5,833,369 |
Total assets | $ | 12,888,016 |  |  | $ | 10,346,993 |  |  | $ | 10,190,699 |  |  | $ | 9,751,571 |  |  | $ | 8,367,976 |  |  |  |  |
Total average assets | $ | 12,334,558 |  |  | $ | 10,281,344 |  |  | $ | 9,940,052 |  |  | $ | 9,141,159 |  |  | $ | 8,341,968 |  |  | $ | 10,860,756 |  |  | $ | 7,956,006 |
Total deposits | $ | 10,827,775 |  |  | $ | 8,639,504 |  |  | $ | 8,515,444 |  |  | $ | 7,985,389 |  |  | $ | 6,676,226 |  |  |  |  |
Total average deposits | $ | 10,297,153 |  |  | $ | 8,580,211 |  |  | $ | 8,207,379 |  |  | $ | 7,311,074 |  |  | $ | 6,666,368 |  |  | $ | 9,035,902 |  |  | $ | 6,353,087 |
Period end common shares outstanding | 38,372 |  |  | 31,185 |  |  | 31,259 |  |  | 31,210 |  |  | 26,210 |  |  |  |  |
Dividends per common share | $ | 0.19 |  |  | $ | 0.18 |  |  | $ | 0.18 |  |  | $ | 0.18 |  |  | $ | 0.18 |  |  | $ | 0.55 |  |  | $ | 0.54 |
Tangible book value per common share | $ | 27.38 |  |  | $ | 26.85 |  |  | $ | 25.92 |  |  | $ | 25.48 |  |  | $ | 24.80 |  |  |  |  |
Tangible common equity to tangible assets 1 | 8.40 | % |  | 8.32 | % |  | 8.18 | % |  | 8.40 | % |  | 7.99 | % |  |  |  |
Total risk-based capital to risk-weighted assets | 14.5 | % |  | 14.9 | % |  | 15.1 | % |  | 14.9 | % |  | 14.6 | % |  |  |  |
1 Refer 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 |  | Nine months ended
($ in thousands, except per share data) | Sep 30, 2021 |  | Jun 30, 2021 |  | Mar 31, 2021 |  | Dec 31, 2020 |  | Sep 30, 2020 |  | Sep 30, 2021 |  | Sep 30, 2020
INCOME STATEMENTS |  |  |  |  |  |  |  |  |  |  |  |  |
NET INTEREST INCOME |  |  |  |  |  |  |  |  |  |  |  |  |
Total interest income | $ | 103,228 |  |  | $ | 87,401 |  |  | $ | 84,960 |  |  | $ | 84,113 |  |  | $ | 70,787 |  |  | $ | 275,589 |  |  | $ | 220,666 |
Total interest expense | 5,955 |  |  | 5,663 |  |  | 5,837 |  |  | 6,667 |  |  | 7,433 |  |  | 17,455 |  |  | 28,111 |
Net interest income | 97,273 |  |  | 81,738 |  |  | 79,123 |  |  | 77,446 |  |  | 63,354 |  |  | 258,134 |  |  | 192,555 |
Provision (benefit) for credit losses | 19,668 |  |  | (2,669) |  |  | 46 |  |  | 9,463 |  |  | 14,080 |  |  | 17,045 |  |  | 55,935 |
Net interest income after provision for credit losses | 77,605 |  |  | 84,407 |  |  | 79,077 |  |  | 67,983 |  |  | 49,274 |  |  | 241,089 |  |  | 136,620 |
NONINTEREST INCOME |  |  |  |  |  |  |  |  |  |  |  |  |
Deposit service charges | 4,520 |  |  | 3,862 |  |  | 3,084 |  |  | 3,160 |  |  | 2,798 |  |  | 11,466 |  |  | 8,557 |
Wealth management revenue | 2,573 |  |  | 2,516 |  |  | 2,483 |  |  | 2,449 |  |  | 2,456 |  |  | 7,572 |  |  | 7,283 |
Card services revenue | 3,186 |  |  | 2,975 |  |  | 2,496 |  |  | 2,511 |  |  | 2,498 |  |  | 8,657 |  |  | 6,970 |
Tax credit income (expense) | 3,325 |  |  | 1,370 |  |  | (1,041) |  |  | 4,048 |  |  | 748 |  |  | 3,654 |  |  | 2,563 |
Other income | 4,015 |  |  | 5,481 |  |  | 4,268 |  |  | 6,338 |  |  | 4,129 |  |  | 13,764 |  |  | 10,624 |
Total noninterest income | 17,619 |  |  | 16,204 |  |  | 11,290 |  |  | 18,506 |  |  | 12,629 |  |  | 45,113 |  |  | 35,997 |
NONINTEREST EXPENSE |  |  |  |  |  |  |  |  |  |  |  |  |
Employee compensation and benefits | 33,722 |  |  | 28,132 |  |  | 29,562 |  |  | 26,174 |  |  | 22,040 |  |  | 91,416 |  |  | 66,114 |
Occupancy | 4,496 |  |  | 3,529 |  |  | 3,751 |  |  | 3,517 |  |  | 3,408 |  |  | 11,776 |  |  | 9,940 |
Branch closure expenses | 3,441 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 3,441 |  |  | — |
Merger-related expenses | 14,671 |  |  | 1,949 |  |  | 3,142 |  |  | 2,611 |  |  | 1,563 |  |  | 19,762 |  |  | 1,563 |
Other | 17,114 |  |  | 18,846 |  |  | 16,429 |  |  | 18,748 |  |  | 12,513 |  |  | 52,389 |  |  | 38,492 |
Total noninterest expense | 76,885 |  |  | 52,456 |  |  | 52,884 |  |  | 51,050 |  |  | 39,524 |  |  | 182,225 |  |  | 116,109 |
Income before income tax expense | 18,339 |  |  | 48,155 |  |  | 37,483 |  |  | 35,439 |  |  | 22,379 |  |  | 103,977 |  |  | 56,508 |
Income tax expense | 4,426 |  |  | 9,750 |  |  | 7,557 |  |  | 6,508 |  |  | 4,428 |  |  | 21,733 |  |  | 11,055 |
Net income | $ | 13,913 |  |  | $ | 38,405 |  |  | $ | 29,926 |  |  | $ | 28,931 |  |  | $ | 17,951 |  |  | $ | 82,244 |  |  | $ | 45,453 |
Basic earnings per share | $ | 0.38 |  |  | $ | 1.23 |  |  | $ | 0.96 |  |  | $ | 1.00 |  |  | $ | 0.68 |  |  | $ | 2.48 |  |  | $ | 1.73 |
Diluted earnings per share | $ | 0.38 |  |  | $ | 1.23 |  |  | $ | 0.96 |  |  | $ | 1.00 |  |  | $ | 0.68 |  |  | $ | 2.48 |  |  | $ | 1.73 |

13

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

| Quarter ended
($ in thousands) | Sep 30, 2021 |  | Jun 30, 2021 |  | Mar 31, 2021 |  | Dec 31, 2020 |  | Sep 30, 2020
BALANCE SHEETS |  |  |  |  |  |  |  |  |
ASSETS |  |  |  |  |  |  |  |  |
Cash and due from banks | $ | 179,826 |  |  | $ | 126,789 |  |  | $ | 103,367 |  |  | $ | 99,760 |  |  | $ | 98,816 |
Interest-earning deposits | 1,216,470 |  |  | 889,960 |  |  | 788,464 |  |  | 445,569 |  |  | 301,773 |
Debt and equity investments | 1,717,442 |  |  | 1,585,847 |  |  | 1,463,818 |  |  | 1,448,803 |  |  | 1,375,931 |
Loans held for sale | 5,068 |  |  | 5,763 |  |  | 8,531 |  |  | 13,564 |  |  | 14,032 |
Loans | 9,116,583 |  |  | 7,226,267 |  |  | 7,288,781 |  |  | 7,224,935 |  |  | 6,126,307 |
Allowance for credit losses | (152,096) |  |  | (128,185) |  |  | (131,527) |  |  | (136,671) |  |  | (123,270) |
Total loans, net | 8,964,487 |  |  | 7,098,082 |  |  | 7,157,254 |  |  | 7,088,264 |  |  | 6,003,037 |
Fixed assets, net | 48,697 |  |  | 50,972 |  |  | 52,078 |  |  | 53,169 |  |  | 56,807 |
Goodwill | 365,415 |  |  | 260,567 |  |  | 260,567 |  |  | 260,567 |  |  | 210,344 |
Intangible assets, net | 23,777 |  |  | 20,358 |  |  | 21,670 |  |  | 23,084 |  |  | 21,820 |
Other assets | 366,834 |  |  | 308,655 |  |  | 334,950 |  |  | 318,791 |  |  | 285,416 |
Total assets | $ | 12,888,016 |  |  | $ | 10,346,993 |  |  | $ | 10,190,699 |  |  | $ | 9,751,571 |  |  | $ | 8,367,976 |
LIABILITIES AND SHAREHOLDERS’ EQUITY |  |  |  |  |  |  |  |  |
Noninterest-bearing deposits | $ | 4,375,713 |  |  | $ | 3,111,581 |  |  | $ | 2,910,216 |  |  | $ | 2,711,828 |  |  | $ | 1,929,540 |
Interest-bearing deposits | 6,452,062 |  |  | 5,527,923 |  |  | 5,605,228 |  |  | 5,273,561 |  |  | 4,746,686 |
Total deposits | 10,827,775 |  |  | 8,639,504 |  |  | 8,515,444 |  |  | 7,985,389 |  |  | 6,676,226 |
Subordinated debentures | 204,103 |  |  | 203,940 |  |  | 203,778 |  |  | 203,637 |  |  | 203,510 |
FHLB advances | 50,000 |  |  | 50,000 |  |  | 50,000 |  |  | 50,000 |  |  | 250,000 |
Federal funds purchased | — |  |  | — |  |  | — |  |  | — |  |  | — |
Other borrowings | 243,770 |  |  | 234,509 |  |  | 229,389 |  |  | 301,081 |  |  | 239,038 |
Other liabilities | 122,733 |  |  | 100,739 |  |  | 99,591 |  |  | 132,489 |  |  | 116,935 |
Total liabilities | 11,448,381 |  |  | 9,228,692 |  |  | 9,098,202 |  |  | 8,672,596 |  |  | 7,485,709 |
Shareholders’ equity | 1,439,635 |  |  | 1,118,301 |  |  | 1,092,497 |  |  | 1,078,975 |  |  | 882,267 |
Total liabilities and shareholders’ equity | $ | 12,888,016 |  |  | $ | 10,346,993 |  |  | $ | 10,190,699 |  |  | $ | 9,751,571 |  |  | $ | 8,367,976 |

14

| Nine months ended
| September 30, 2021 |  | September 30, 2020
($ in thousands) | Average Balance |  | Interest Income/ Expense |  | Average Yield/ Rate |  | Average Balance |  | Interest Income/ Expense |  | Average Yield/ Rate
Assets |  |  |  |  |  |  |  |  |  |  |
Interest-earning assets: |  |  |  |  |  |  |  |  |  |  |
Loans* | $ | 7,727,264 |  |  | $ | 250,699 |  |  | 4.34 | % |  | $ | 5,833,368 |  |  | $ | 194,630 |  |  | 4.46 | %
Debt and equity investments* | 1,505,592 |  |  | 27,626 |  |  | 2.45 |  |  | 1,356,796 |  |  | 27,688 |  |  | 2.73 |
Short-term investments | 914,954 |  |  | 906 |  |  | 0.13 |  |  | 188,849 |  |  | 500 |  |  | 0.35 |
Total interest-earning assets | 10,147,810 |  |  | 279,231 |  |  | 3.68 |  |  | 7,379,013 |  |  | 222,818 |  |  | 4.03 |
Noninterest-earning assets | 712,946 |  |  |  |  |  |  | 576,993 |  |  |  |  |
Total assets | $ | 10,860,756 |  |  |  |  |  |  | $ | 7,956,006 |  |  |  |  |
Liabilities and Shareholders’ Equity |  |  |  |  |  |  |  |  |  |  |
Interest-bearing liabilities: |  |  |  |  |  |  |  |  |  |  |
Interest-bearing transaction accounts | $ | 2,035,029 |  |  | $ | 1,123 |  |  | 0.07 | % |  | $ | 1,464,144 |  |  | $ | 1,836 |  |  | 0.17 | %
Money market accounts | 2,458,146 |  |  | 3,257 |  |  | 0.18 |  |  | 1,911,584 |  |  | 6,738 |  |  | 0.47 |
Savings | 707,269 |  |  | 160 |  |  | 0.03 |  |  | 579,619 |  |  | 233 |  |  | 0.05 |
Certificates of deposit | 555,045 |  |  | 3,329 |  |  | 0.80 |  |  | 713,633 |  |  | 9,176 |  |  | 1.72 |
Total interest-bearing deposits | 5,755,489 |  |  | 7,869 |  |  | 0.18 |  |  | 4,668,980 |  |  | 17,983 |  |  | 0.51 |
Subordinated debentures | 203,853 |  |  | 8,521 |  |  | 5.59 |  |  | 171,465 |  |  | 7,061 |  |  | 5.50 |
FHLB advances | 63,297 |  |  | 603 |  |  | 1.27 |  |  | 240,596 |  |  | 2,070 |  |  | 1.15 |
Securities sold under agreements to repurchase | 218,942 |  |  | 176 |  |  | 0.11 |  |  | 197,776 |  |  | 479 |  |  | 0.32 |
Other borrowed funds | 27,154 |  |  | 285 |  |  | 1.40 |  |  | 32,836 |  |  | 518 |  |  | 2.11 |
Total interest-bearing liabilities | 6,268,735 |  |  | 17,454 |  |  | 0.37 |  |  | 5,311,653 |  |  | 28,111 |  |  | 0.71 |
Noninterest-bearing liabilities: |  |  |  |  |  |  |  |  |  |  |
Demand deposits | 3,280,414 |  |  |  |  |  |  | 1,684,107 |  |  |  |  |
Other liabilities | 108,001 |  |  |  |  |  |  | 87,302 |  |  |  |  |
Total liabilities | 9,657,150 |  |  |  |  |  |  | 7,083,062 |  |  |  |  |
Shareholders' equity | 1,203,606 |  |  |  |  |  |  | 872,944 |  |  |  |  |
Total liabilities and shareholders' equity | $ | 10,860,756 |  |  |  |  |  |  | $ | 7,956,006 |  |  |  |  |
Total net interest income |  |  | $ | 261,777 |  |  |  |  |  |  | $ | 197,934 |  |  |
Net interest margin |  |  |  |  | 3.45 | % |  |  |  |  |  | 3.52 | %
* Non-taxable income is presented on a tax-equivalent basis using a 24.9% and 24.7% tax rate in 2021 and 2020, respectively. The tax-equivalent adjustments were $3.6 million and $2.2 million for the nine months ended September 30, 2021 and 2020, respectively.

15

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

| Quarter ended
($ in thousands) | Sep 30, 2021 |  | Jun 30, 2021 |  | Mar 31, 2021 |  | Dec 31, 2020 |  | Sep 30, 2020
LOAN PORTFOLIO |  |  |  |  |  |  |  |  |
Commercial and industrial | $ | 3,379,171 |  |  | $ | 2,930,805 |  |  | $ | 3,079,643 |  |  | $ | 3,088,995 |  |  | $ | 3,152,394 |
Commercial real estate | 4,179,712 |  |  | 3,200,748 |  |  | 3,186,970 |  |  | 3,087,827 |  |  | 2,027,886 |
Construction real estate | 747,758 |  |  | 556,776 |  |  | 510,501 |  |  | 546,686 |  |  | 474,727 |
Residential real estate | 542,690 |  |  | 305,497 |  |  | 303,047 |  |  | 319,179 |  |  | 321,792 |
Other | 267,252 |  |  | 232,441 |  |  | 208,620 |  |  | 182,248 |  |  | 149,508 |
Total loans | $ | 9,116,583 |  |  | $ | 7,226,267 |  |  | $ | 7,288,781 |  |  | $ | 7,224,935 |  |  | $ | 6,126,307 |
DEPOSIT PORTFOLIO |  |  |  |  |  |  |  |  |
Noninterest-bearing accounts | $ | 4,375,713 |  |  | $ | 3,111,581 |  |  | $ | 2,910,216 |  |  | $ | 2,711,828 |  |  | $ | 1,929,540 |
Interest-bearing transaction accounts | 2,253,639 |  |  | 2,013,129 |  |  | 1,990,308 |  |  | 1,768,497 |  |  | 1,499,756 |
Money market and savings accounts | 3,571,252 |  |  | 3,000,460 |  |  | 3,093,569 |  |  | 2,954,969 |  |  | 2,634,885 |
Brokered certificates of deposit | 128,923 |  |  | 50,209 |  |  | 50,209 |  |  | 50,209 |  |  | 65,209 |
Other certificates of deposit | 498,248 |  |  | 464,125 |  |  | 471,142 |  |  | 499,886 |  |  | 546,836 |
Total deposit portfolio | $ | 10,827,775 |  |  | $ | 8,639,504 |  |  | $ | 8,515,444 |  |  | $ | 7,985,389 |  |  | $ | 6,676,226 |
AVERAGE BALANCES |  |  |  |  |  |  |  |  |
Total loans | $ | 8,666,353 |  |  | $ | 7,306,471 |  |  | $ | 7,192,776 |  |  | $ | 6,780,701 |  |  | $ | 6,112,715 |
Debt and equity investments | 1,594,938 |  |  | 1,502,582 |  |  | 1,417,305 |  |  | 1,395,806 |  |  | 1,361,515 |
Interest-earning assets | 11,513,279 |  |  | 9,615,981 |  |  | 9,289,741 |  |  | 8,524,136 |  |  | 7,770,084 |
Total assets | 12,334,558 |  |  | 10,281,344 |  |  | 9,940,052 |  |  | 9,141,159 |  |  | 8,341,968 |
Deposits | 10,297,153 |  |  | 8,580,211 |  |  | 8,207,379 |  |  | 7,311,074 |  |  | 6,666,368 |
Shareholders’ equity | 1,394,096 |  |  | 1,116,969 |  |  | 1,096,481 |  |  | 992,017 |  |  | 885,496 |
Tangible common equity 1 | 1,028,001 |  |  | 835,405 |  |  | 813,568 |  |  | 731,813 |  |  | 652,663 |
YIELDS (tax equivalent) |  |  |  |  |  |  |  |  |
Total loans | 4.32 | % |  | 4.35 | % |  | 4.35 | % |  | 4.46 | % |  | 4.08 | %
Debt and equity investments | 2.38 |  |  | 2.46 |  |  | 2.52 |  |  | 2.56 |  |  | 2.56 |
Interest-earning assets | 3.60 |  |  | 3.70 |  |  | 3.76 |  |  | 3.97 |  |  | 3.67 |
Interest-bearing deposits | 0.17 |  |  | 0.18 |  |  | 0.20 |  |  | 0.25 |  |  | 0.31 |
Total deposits | 0.11 |  |  | 0.12 |  |  | 0.13 |  |  | 0.17 |  |  | 0.22 |
Subordinated debentures | 5.55 |  |  | 5.60 |  |  | 5.61 |  |  | 5.52 |  |  | 5.53 |
FHLB advances and other borrowed funds | 0.43 |  |  | 0.49 |  |  | 0.46 |  |  | 0.61 |  |  | 0.74 |
Interest-bearing liabilities | 0.35 |  |  | 0.37 |  |  | 0.40 |  |  | 0.47 |  |  | 0.54 |
Net interest margin | 3.40 |  |  | 3.46 |  |  | 3.50 |  |  | 3.66 |  |  | 3.29 |

1 Refer 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) | Sep 30, 2021 |  | Jun 30, 2021 |  | Mar 31, 2021 |  | Dec 31, 2020 |  | Sep 30, 2020
ASSET QUALITY |  |  |  |  |  |  |  |  |
Net charge-offs (recoveries) | $ | 1,850 |  |  | $ | 869 |  |  | $ | 5,647 |  |  | $ | (612) |  |  | $ | 1,027 |
Nonperforming loans | 41,554 |  |  | 42,252 |  |  | 36,659 |  |  | 38,507 |  |  | 39,623 |
Classified assets | 104,220 |  |  | 100,063 |  |  | 114,713 |  |  | 123,808 |  |  | 84,710 |
Nonperforming loans to total loans | 0.46 | % |  | 0.58 | % |  | 0.50 | % |  | 0.53 | % |  | 0.65 | %
Nonperforming assets to total assets | 0.35 | % |  | 0.44 | % |  | 0.42 | % |  | 0.45 | % |  | 0.53 | %
Allowance for credit losses to total loans | 1.67 | % |  | 1.77 | % |  | 1.80 | % |  | 1.89 | % |  | 2.01 | %
Allowance for credit losses to nonperforming loans | 366.0 | % |  | 303.4 | % |  | 358.8 | % |  | 354.9 | % |  | 311.1 | %
Net charge-offs (recoveries) to average loans (annualized) | 0.08 | % |  | 0.05 | % |  | 0.32 | % |  | (0.04) | % |  | 0.07 | %
WEALTH MANAGEMENT |  |  |  |  |  |  |  |  |
Trust assets under management | $ | 2,017,178 |  |  | $ | 1,945,293 |  |  | $ | 1,809,001 |  |  | $ | 1,783,089 |  |  | $ | 1,641,980 |
Trust assets under administration | 2,486,152 |  |  | 2,487,545 |  |  | 2,427,448 |  |  | 2,504,318 |  |  | 2,433,026 |
MARKET DATA |  |  |  |  |  |  |  |  |
Book value per common share | $ | 37.52 |  |  | $ | 35.86 |  |  | $ | 34.95 |  |  | $ | 34.57 |  |  | $ | 33.66 |
Tangible book value per common share 1 | $ | 27.38 |  |  | $ | 26.85 |  |  | $ | 25.92 |  |  | $ | 25.48 |  |  | $ | 24.80 |
Market value per share | $ | 45.28 |  |  | $ | 46.39 |  |  | $ | 49.44 |  |  | $ | 34.95 |  |  | $ | 27.27 |
Period end common shares outstanding | 38,372 |  |  | 31,185 |  |  | 31,259 |  |  | 31,210 |  |  | 26,210 |
Average basic common shares | 36,878 |  |  | 31,265 |  |  | 31,247 |  |  | 28,929 |  |  | 26,217 |
Average diluted common shares | 36,946 |  |  | 31,312 |  |  | 31,306 |  |  | 28,968 |  |  | 26,228 |
CAPITAL |  |  |  |  |  |  |  |  |
Total risk-based capital to risk-weighted assets | 14.5 | % |  | 14.9 | % |  | 15.1 | % |  | 14.9 | % |  | 14.6 | %
Tier 1 capital to risk-weighted assets | 12.2 | % |  | 12.3 | % |  | 12.3 | % |  | 12.1 | % |  | 11.6 | %
Common equity tier 1 capital to risk-weighted assets | 11.2 | % |  | 11.1 | % |  | 11.0 | % |  | 10.9 | % |  | 10.2 | %
Tangible common equity to tangible assets 1 | 8.4 | % |  | 8.3 | % |  | 8.2 | % |  | 8.4 | % |  | 8.0 | %
1 Refer 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 |  | Nine months ended
($ in thousands) | Sep 30, 2021 |  | Jun 30, 2021 |  | Mar 31, 2021 |  | Dec 31, 2020 |  | Sep 30, 2020 |  | Sep 30, 2021 |  | Sep 30, 2020
CORE PERFORMANCE MEASURES |  |  |  |
Net interest income | $ | 97,273 |  |  | $ | 81,738 |  |  | $ | 79,123 |  |  | $ | 77,446 |  |  | $ | 63,354 |  |  | $ | 258,134 |  |  | $ | 192,555 |
Less: Incremental accretion income | — |  |  | — |  |  | — |  |  | 856 |  |  | 1,235 |  |  | — |  |  | 3,227 |
Core net interest income | 97,273 |  |  | 81,738 |  |  | 79,123 |  |  | 76,590 |  |  | 62,119 |  |  | 258,134 |  |  | 189,328 |
Total noninterest income | 17,619 |  |  | 16,204 |  |  | 11,290 |  |  | 18,506 |  |  | 12,629 |  |  | 45,113 |  |  | 35,997 |
Less: Gain on sale of investment securities | — |  |  | — |  |  | — |  |  | — |  |  | 417 |  |  | — |  |  | 421 |
Less: Gain on sale of other real estate owned | 335 |  |  | 549 |  |  | — |  |  | — |  |  | — |  |  | 884 |  |  | — |
Less: Other non-core income | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 265 |
Core noninterest income | 17,284 |  |  | 15,655 |  |  | 11,290 |  |  | 18,506 |  |  | 12,212 |  |  | 44,229 |  |  | 35,311 |
Total core revenue | 114,557 |  |  | 97,393 |  |  | 90,413 |  |  | 95,096 |  |  | 74,331 |  |  | 302,363 |  |  | 224,639 |
Total noninterest expense | 76,885 |  |  | 52,456 |  |  | 52,884 |  |  | 51,050 |  |  | 39,524 |  |  | 182,225 |  |  | 116,109 |
Less: Other expenses related to non-core acquired loans | — |  |  | — |  |  | — |  |  | 8 |  |  | 25 |  |  | — |  |  | 49 |
Less: Branch closure expenses | 3,441 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 3,441 |  |  | — |
Less: Merger-related expenses | 14,671 |  |  | 1,949 |  |  | 3,142 |  |  | 2,611 |  |  | 1,563 |  |  | 19,762 |  |  | 1,563 |
Core noninterest expense | 58,773 |  |  | 50,507 |  |  | 49,742 |  |  | 48,431 |  |  | 37,936 |  |  | 159,022 |  |  | 114,497 |
Core efficiency ratio | 51.30 | % |  | 51.86 | % |  | 55.02 | % |  | 50.93 | % |  | 51.04 | % |  | 52.59 | % |  | 50.97 | %

| Quarter ended
($ in thousands) | Sep 30, 2021 |  | Jun 30, 2021 |  | Mar 31, 2021 |  | Dec 31, 2020 |  | Sep 30, 2020
SHAREHOLDERS’ EQUITY TO TANGIBLE COMMON EQUITY AND TOTAL ASSETS TO TANGIBLE ASSETS
Shareholders’ equity | $ | 1,439,635 |  |  | $ | 1,118,301 |  |  | $ | 1,092,497 |  |  | $ | 1,078,975 |  |  | $ | 882,267 |
Less: Goodwill | 365,415 |  |  | 260,567 |  |  | 260,567 |  |  | 260,567 |  |  | 210,344 |
Less: Intangible assets | 23,777 |  |  | 20,358 |  |  | 21,670 |  |  | 23,084 |  |  | 21,820 |
Tangible common equity | $ | 1,050,443 |  |  | $ | 837,376 |  |  | $ | 810,260 |  |  | $ | 795,324 |  |  | $ | 650,103 |
Total assets | $ | 12,888,016 |  |  | $ | 10,346,993 |  |  | $ | 10,190,699 |  |  | $ | 9,751,571 |  |  | $ | 8,367,976 |
Less: Goodwill | 365,415 |  |  | 260,567 |  |  | 260,567 |  |  | 260,567 |  |  | 210,344 |
Less: Intangible assets | 23,777 |  |  | 20,358 |  |  | 21,670 |  |  | 23,084 |  |  | 21,820 |
Tangible assets | $ | 12,498,824 |  |  | $ | 10,066,068 |  |  | $ | 9,908,462 |  |  | $ | 9,467,920 |  |  | $ | 8,135,812 |
Tangible common equity to tangible assets | 8.40 | % |  | 8.32 | % |  | 8.18 | % |  | 8.40 | % |  | 7.99 | %

18

| Quarter Ended
($ in thousands) | Sep 30, 2021 |  | Jun 30, 2021 |  | Sep 30, 2020
AVERAGE SHAREHOLDERS’ EQUITY AND AVERAGE TANGIBLE COMMON EQUITY
Average shareholder’s equity | $ | 1,394,096 |  |  | $ | 1,116,969 |  |  | $ | 885,496 |
Less average goodwill | 342,622 |  |  | 260,567 |  |  | 210,344 |
Less average intangible assets | 23,473 |  |  | 20,997 |  |  | 22,489 |
Average tangible common equity | $ | 1,028,001 |  |  | $ | 835,405 |  |  | $ | 652,663 |

| Quarter Ended
($ in thousands) | Sep 30, 2021 |  | Jun 30, 2021 |  | Mar 31, 2021 |  | Dec 31, 2020 |  | Sep 30, 2020
CALCULATION OF PRE-PROVISION NET REVENUE
Net interest income | $ | 97,273 |  |  | $ | 81,738 |  |  | $ | 79,123 |  |  | $ | 77,446 |  |  | $ | 63,354 |
Noninterest income | 17,619 |  |  | 16,204 |  |  | 11,290 |  |  | 18,506 |  |  | 12,629 |
Less: Noninterest expense | 76,885 |  |  | 52,456 |  |  | 52,884 |  |  | 51,050 |  |  | 39,524 |
Branch closure expenses | 3,441 |  |  | — |  |  | — |  |  | — |  |  | — |
Merger-related expenses | 14,671 |  |  | 1,949 |  |  | 3,142 |  |  | 2,611 |  |  | 1,563 |
PPNR | $ | 56,119 |  |  | $ | 47,435 |  |  | $ | 40,671 |  |  | $ | 47,513 |  |  | $ | 38,022 |
Average assets | $ | 12,334,558 |  |  | $ | 10,281,344 |  |  | $ | 9,940,052 |  |  | $ | 9,141,159 |  |  | $ | 8,341,968 |
ROAA - GAAP net income | 0.45 | % |  | 1.50 | % |  | 1.22 | % |  | 1.26 | % |  | 0.86 | %
PPNR ROAA - PPNR | 1.81 | % |  | 1.85 | % |  | 1.66 | % |  | 2.07 | % |  | 1.81 | %

| Quarter Ended
($ in thousands) | Sep 30, 2021
CALCULATION OF ADJUSTED FINANCIAL METRICS
Net income - GAAP | $ | 13,913 |
Branch closure expenses | 3,441 |
FCBP CECL double count | 25,353 |
Merger-related expenses | 14,671 |
Related tax effect | (10,340) |
Adjusted Net income | $ | 47,038 |
EPS - GAAP net income | $ | 0.38 |
EPS - Adjusted net income | $ | 1.27 |
Average assets | $ | 12,334,558 |
ROAA - GAAP net income | 0.45 | %
ROAA - Adjusted net income | 1.51 | %
Average tangible common equity | $ | 1,028,001 |
ROATCE - GAAP net income | 5.37 | %
ROATCE - Adjusted net income | 18.15 | %

19

| Quarter Ended
($ in thousands, except per share data) | Sep 30, 2021 |  | Jun 30, 2021 |  | Mar 31, 2021 |  | Dec 31, 2020 |  | Sep 30, 2020
IMPACT OF PAYCHECK PROTECTION PROGRAM
Net income - GAAP | $ | 13,913 |  |  | $ | 38,405 |  |  | $ | 29,926 |  |  | $ | 28,931 |  |  | $ | 17,951 |
PPP interest and fee income | (6,048) |  |  | (7,940) |  |  | (8,475) |  |  | (10,261) |  |  | (5,226) |
Related tax effect | 1,506 |  |  | 1,977 |  |  | 2,110 |  |  | 2,534 |  |  | 1,291 |
Adjusted net income - Non-GAAP | $ | 9,371 |  |  | $ | 32,442 |  |  | $ | 23,561 |  |  | $ | 21,204 |  |  | $ | 14,016 |
Average diluted common shares | 36,946 |  |  | 31,312 |  |  | 31,303 |  |  | 28,968 |  |  | 26,228 |
EPS - GAAP net income | $ | 0.38 |  |  | $ | 1.23 |  |  | $ | 0.96 |  |  | $ | 1.00 |  |  | $ | 0.68 |
EPS - Adjusted net income | $ | 0.25 |  |  | $ | 1.04 |  |  | $ | 0.75 |  |  | $ | 0.73 |  |  | $ | 0.53 |
Average assets - GAAP | $ | 12,334,558 |  |  | $ | 10,281,344 |  |  | $ | 9,940,052 |  |  | $ | 9,141,159 |  |  | $ | 8,341,968 |
Average PPP loans, net | (489,104) |  |  | (664,375) |  |  | (692,161) |  |  | (806,697) |  |  | (813,244) |
Adjusted average assets - Non-GAAP | $ | 11,845,454 |  |  | $ | 9,616,969 |  |  | $ | 9,247,891 |  |  | $ | 8,334,462 |  |  | $ | 7,528,724 |
ROAA - GAAP net income | 0.45 | % |  | 1.50 | % |  | 1.22 | % |  | 1.26 | % |  | 0.86 | %
ROAA - Adjusted net income, adjusted average assets | 0.31 | % |  | 1.35 | % |  | 1.03 | % |  | 1.01 | % |  | 0.74 | %
PPNR - Non-GAAP (see reconciliation above) | $ | 56,119 |  |  | $ | 47,435 |  |  | $ | 40,671 |  |  | $ | 47,513 |  |  | $ | 38,022 |
PPP interest and fee income | (6,048) |  |  | (7,940) |  |  | (8,475) |  |  | (10,261) |  |  | (5,226) |
Adjusted PPNR - Non-GAAP | $ | 50,071 |  |  | $ | 39,495 |  |  | $ | 32,196 |  |  | $ | 37,252 |  |  | $ | 32,796 |
PPNR ROAA - PPNR | 1.81 | % |  | 1.85 | % |  | 1.66 | % |  | 2.07 | % |  | 1.81 | %
PPNR ROAA - adjusted PPNR, adjusted average assets | 1.68 | % |  | 1.65 | % |  | 1.41 | % |  | 1.78 | % |  | 1.73 | %
Tangible assets - Non-GAAP (see reconciliation above) | $ | 12,498,824 |  |  | $ | 10,066,068 |  |  | $ | 9,908,462 |  |  | $ | 9,467,920 |  |  | $ | 8,135,812 |
PPP loans outstanding, net | (438,959) |  |  | (396,660) |  |  | (737,660) |  |  | (698,645) |  |  | (819,100) |
Adjusted tangible assets - Non-GAAP | $ | 12,059,865 |  |  | $ | 9,669,408 |  |  | $ | 9,170,802 |  |  | $ | 8,769,275 |  |  | $ | 7,316,712 |
Tangible common equity Non - GAAP (see reconciliation above) | $ | 1,050,443 |  |  | $ | 837,376 |  |  | $ | 810,260 |  |  | $ | 795,324 |  |  | $ | 650,103 |
Tangible common equity to tangible assets | 8.40 | % |  | 8.32 | % |  | 8.18 | % |  | 8.40 | % |  | 7.99 | %
Tangible common equity to tangible assets - adjusted tangible assets | 8.71 | % |  | 8.66 | % |  | 8.84 | % |  | 9.07 | % |  | 8.89 | %
Average assets for leverage ratio | $ | 11,972,171 |  |  | $ | 10,021,240 |  |  | $ | 9,675,300 |  |  | $ | 8,868,548 |  |  | $ | 8,115,020 |
Average PPP loans, net | (489,104) |  |  | (664,375) |  |  | (692,161) |  |  | (806,697) |  |  | (813,244) |
Adjusted average assets for leverage ratio - Non-GAAP | $ | 11,483,067 |  |  | $ | 9,356,865 |  |  | $ | 8,983,139 |  |  | $ | 8,061,851 |  |  | $ | 7,301,776 |
Tier 1 capital | $ | 1,166,529 |  |  | $ | 937,840 |  |  | $ | 914,459 |  |  | $ | 889,527 |  |  | $ | 745,397 |
Leverage ratio | 9.7 | % |  | 9.4 | % |  | 9.5 | % |  | 10.0 | % |  | 9.2 | %
Leverage ratio - adjusted average assets for leverage ratio | 10.2 | % |  | 10.0 | % |  | 10.2 | % |  | 11.0 | % |  | 10.2 | %
Net interest income - tax equivalent | $ | 98,573 |  |  | $ | 82,963 |  |  | $ | 80,243 |  |  | $ | 78,484 |  |  | $ | 64,192 |
PPP interest and fee income | (6,048) |  |  | (7,940) |  |  | (8,475) |  |  | (10,261) |  |  | (5,226) |
Adjusted net interest income - tax equivalent | $ | 92,525 |  |  | $ | 75,023 |  |  | $ | 71,768 |  |  | $ | 68,223 |  |  | $ | 58,966 |
Average earning assets -GAAP | $ | 11,513,279 |  |  | $ | 9,615,981 |  |  | $ | 9,289,741 |  |  | $ | 8,524,136 |  |  | $ | 7,770,084 |
Average PPP loans, net | (489,104) |  |  | (664,375) |  |  | (692,161) |  |  | (806,697) |  |  | (813,244) |
Adjusted average earning assets - Non-GAAP | $ | 11,024,175 |  |  | $ | 8,951,606 |  |  | $ | 8,597,580 |  |  | $ | 7,717,439 |  |  | $ | 6,956,840 |
Net interest margin - tax equivalent | 3.40 | % |  | 3.46 | % |  | 3.50 | % |  | 3.66 | % |  | 3.29 | %
Net interest margin - tax equivalent - adjusted net interest income, adjusted average earning assets | 3.33 | % |  | 3.36 | % |  | 3.39 | % |  | 3.52 | % |  | 3.37 | %
Loans - GAAP | $ | 9,116,583 |  |  | $ | 7,226,267 |  |  | $ | 7,288,781 |  |  | $ | 7,224,935 |  |  | $ | 6,126,307 |
PPP and other guaranteed loans, net | (1,277,452) |  |  | (1,106,414) |  |  | (1,377,302) |  |  | (1,297,212) |  |  | (819,100) |
Adjusted loans - Non-GAAP | $ | 7,839,131 |  |  | $ | 6,119,853 |  |  | $ | 5,911,479 |  |  | $ | 5,927,723 |  |  | $ | 5,307,207 |
Allowance for credit losses | $ | 152,096 |  |  | $ | 128,185 |  |  | $ | 131,527 |  |  | $ | 136,671 |  |  | $ | 123,270 |
Allowance for credit losses/loans - GAAP | 1.67 | % |  | 1.77 | % |  | 1.80 | % |  | 1.89 | % |  | 2.01 | %
Allowance for credit losses/loans - adjusted loans | 1.94 | % |  | 2.09 | % |  | 2.22 | % |  | 2.31 | % |  | 2.32 | %

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