PART I - FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements for Enterprise Financial Services Corp, detailing financial position, performance, and cash flows as of June 30, 2025 Condensed Consolidated Balance Sheets As of June 30, 2025, total assets increased to $16.08 billion from $15.60 billion at year-end 2024, driven by growth in loans and securities, with total liabilities rising to $14.15 billion and stockholders' equity to $1.92 billion | ($ in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $16,076,299 | $15,596,431 | | Total loans, net | $11,263,707 | $11,082,405 | | Total securities (AFS & HTM) | $3,295,749 | $2,791,205 | | Total cash and cash equivalents | $491,520 | $764,170 | | Total Liabilities | $14,153,400 | $13,772,429 | | Total deposits | $13,317,359 | $13,146,492 | | FHLB advances | $294,000 | $0 | | Total Stockholders' Equity | $1,922,899 | $1,824,002 | Condensed Consolidated Statements of Income Net income for the second quarter of 2025 increased to $51.4 million from $45.4 million in Q2 2024, driven by higher net interest income and a lower provision for credit losses | ($ in thousands, except per share data) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net interest income | $152,762 | $140,529 | $300,278 | $278,257 | | Provision for credit losses | $3,470 | $4,819 | $8,654 | $10,575 | | Total noninterest income | $20,604 | $15,494 | $39,087 | $27,652 | | Total noninterest expense | $105,702 | $94,017 | $205,485 | $187,518 | | Net income | $51,384 | $45,446 | $101,345 | $85,847 | | Diluted EPS | $1.36 | $1.19 | $2.67 | $2.24 | Condensed Consolidated Statements of Comprehensive Income Total comprehensive income for Q2 2025 significantly increased to $63.8 million from $38.7 million in Q2 2024, primarily due to positive changes in unrealized gains on available-for-sale securities | ($ in thousands) | Three months ended June 30, 2025 | Six months ended June 30, 2025 | | :--- | :--- | :--- | | Net income | $51,384 | $101,345 | | Change in unrealized gain (loss) on AFS securities | $11,348 | $24,233 | | Total other comprehensive income (loss), net of tax | $12,406 | $27,733 | | Total comprehensive income | $63,790 | $129,078 | Condensed Consolidated Statements of Stockholders' Equity Total stockholders' equity increased to $1.92 billion at June 30, 2025, driven by net income and positive other comprehensive income, partially offset by dividends and stock repurchases - Key changes in stockholders' equity for the six months ended June 30, 2025 included net income of $101.3 million, common stock dividends of $21.8 million ($0.59 per share), and common stock repurchases of $10.6 million17 Condensed Consolidated Statements of Cash Flows Net cash provided by operating activities was $101.3 million for the six months ended June 30, 2025, while investing activities used $732.3 million, resulting in a net decrease in cash and cash equivalents of $272.7 million | ($ in thousands) | Six months ended June 30, 2025 | | :--- | :--- | | Net cash provided by operating activities | $101,309 | | Net cash used in investing activities | ($732,273) | | Net cash provided by financing activities | $358,314 | | Net decrease in cash and cash equivalents | ($272,650) | Notes to Condensed Consolidated Financial Statements This section provides detailed disclosures on accounting policies and specific financial statement items, including a pending branch acquisition, investment and loan portfolio composition, and an analysis of credit losses - The company announced a pending acquisition of twelve branches from First Interstate Bank, which is expected to close in the fourth quarter of 2025, subject to customary closing conditions28 | ($ in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Securities Available-for-Sale | $2,204,511 | $1,862,270 | | Gross Unrealized Losses | ($139,936) | ($164,400) | | Securities Held-to-Maturity, net | $1,091,238 | $928,935 | | Gross Unrealized Losses | ($77,813) | ($72,956) | | ($ in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Commercial and industrial | $4,875,484 | $4,720,428 | | Total real estate loans | $6,278,003 | $6,219,197 | | Total Loans | $11,408,840 | $11,220,355 | - The Allowance for Credit Losses (ACL) on loans increased to $145.1 million at June 30, 2025, from $138.0 million at year-end 2024, including a qualitative adjustment of approximately $40.6 million with $19.6 million allocated to sponsor finance loans4547 - Nonperforming loans increased significantly to $105.8 million at June 30, 2025, from $42.7 million at December 31, 2024, primarily due to two well-secured borrowing relationships that filed for bankruptcy50 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial performance, highlighting strong growth in net interest income, proactive deposit management, and an increase in nonperforming loans concentrated in specific, well-collateralized relationships Executive Summary The company reported strong financial performance with increased Pre-Provision Net Revenue and net interest income, alongside growth in loan and deposit balances, while maintaining a strong capital position despite an increase in nonperforming loans | ($ in thousands, except per share data) | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Net Income | $51,384 | $49,961 | $45,446 | | Diluted EPS | $1.36 | $1.31 | $1.19 | | Net Interest Margin (tax equivalent) | 4.21% | 4.15% | 4.19% | | Nonperforming loans to total loans | 0.93% | 0.97% | 0.36% | - Total loans grew by $188.5 million (2%) to $11.4 billion since year-end 2024, while total deposits increased by $170.9 million to $13.3 billion111 - A pending acquisition of 12 branches from First Interstate is expected to close in Q4 2025, adding approximately $705 million in deposits and $300 million in loans112 Results of Operations Net interest income grew due to loan growth and higher-yielding securities, while noninterest income increased from BOLI and community development, and noninterest expense rose due to compensation and loan workout costs - Net interest income (tax-equivalent) increased by $5.5 million from the linked quarter, reflecting loan growth and a higher-yielding securities portfolio, with the Net Interest Margin (NIM) expanding to 4.21% in Q2 2025 from 4.15% in Q1 2025119124 - Noninterest income rose by $2.1 million from the linked quarter, primarily due to a $1.7 million increase in Bank-Owned Life Insurance (BOLI) income and higher community development investment income126 - Noninterest expense increased by $5.9 million from the linked quarter, driven by higher employee compensation, variable deposit costs, and a $1.1 million increase in loan and legal expenses related to workouts129 Financial Condition Total assets reached $16.1 billion at June 30, 2025, driven by growth in loans and investment securities, while nonperforming assets increased due to specific commercial real estate loans, and deposits grew to $13.3 billion - The investment securities portfolio grew by $504.5 million to $3.3 billion since year-end 2024, with an average duration of 5.1 years and expected cash flow of approximately $547.5 million over the next 12 months133134136 - The loan portfolio increased by $188.5 million to $11.4 billion, led by growth in Commercial & Industrial (C&I) and Commercial Real Estate (CRE) loans137 - Nonperforming loans increased to $105.8 million (0.93% of total loans) from $42.7 million at year-end, primarily driven by seven loans to two relationships totaling $68.4 million, which are well-secured by real estate with loan-to-value ratios ranging from 39% to 79%146147 - Total deposits grew by $170.9 million to $13.3 billion, though noninterest-bearing deposits decreased to 32% of total deposits from 34% at year-end 2024149 Liquidity and Capital Resources The company maintains a strong liquidity position with $6.6 billion in available sources and capital ratios well above regulatory requirements for a "well-capitalized" institution | ($ in thousands) | June 30, 2025 | | :--- | :--- | | Federal Reserve borrowing capacity | $3,161,125 | | FHLB borrowing capacity | $1,087,454 | | Unpledged securities | $1,633,867 | | Total Available Liquidity | $6,558,966 | | Capital Ratios | June 30, 2025 | Well Capitalized Minimum | | :--- | :--- | :--- | | Common Equity Tier 1 | 11.9% | 6.5% | | Tier 1 Capital | 13.2% | 8.0% | | Total Capital | 14.7% | 10.0% | | Leverage Ratio | 11.1% | 5.0% | Item 3. Quantitative and Qualitative Disclosures About Market Risk The company manages interest rate risk to optimize net interest income, with simulation modeling indicating that a +100 basis point parallel rate shock would increase net interest income by 3.6% over the next 12 months | Rate Shock | Annual % change in net interest income | | :--- | :--- | | +300 bp | 10.2% | | +100 bp | 3.6% | | -100 bp | (3.3)% | | -300 bp | (9.2)% | - The company holds $6.8 billion in variable rate loans, of which $4.7 billion have interest rate floors, with nearly all loans at or above their respective floors as of June 30, 2025180 Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal controls over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2025185 - No material changes were made to internal controls over financial reporting during the quarter186 PART II - OTHER INFORMATION Item 1. Legal Proceedings The company states that it is not party to any legal proceedings that would have a material adverse effect on its business or financial condition - Management believes there are no pending or threatened legal proceedings that would materially and adversely affect the company188 Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to the risk factors from the Form 10-K for the fiscal year ended December 31, 2024, have been reported190 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - None191 Item 5. Other Information During the quarter, no officer or director adopted or terminated a Rule 10b5-1 trading plan or any non-Rule 10b5-1 trading arrangement - No officer or director adopted or terminated a Rule 10b5-1 trading plan during the quarter ended June 30, 2025197 Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications by the CEO and CFO, and XBRL data files
ENTERPRISE FINL(EFSCP) - 2025 Q2 - Quarterly Report