Second Quarter Results

Net income of $38.4 million, $1.23 per diluted share
Net interest margin (tax equivalent) of 3.46%
Return on average assets of 1.50%
Loan growth of $278.5 million, excluding PPP loan activity, or 17% annualized
Increased dividend 6% to $0.19 per share for third quarter
Repurchased 251,637 shares at an average price of $47.00 per share

Enterprise Financial Services Corp (NASDAQ:EFSC) (the "Company" or "EFSC") reported net income of $38.4 million for the second quarter 2021, an increase of $8.5 million compared to the linked first quarter ("linked quarter") and an increase of $23.8 million from the prior year quarter. Earnings per diluted share ("EPS") was $1.23 for the second quarter 2021, compared to $0.96 and $0.56 for the linked and prior year quarters, respectively.

Jim Lally, EFSC's President and Chief Executive Officer, commented, "We have successfully navigated the challenges posed over the past year due to the pandemic, while also completing the acquisition and integration of Seacoast. These successes are evident in our second quarter results that produced a record net income of $38.4 million and a strong pre-provision net revenue ("PPNR") return on average assets of 1.85%¹. Core loan growth accelerated during the period, with solid growth in C&I and our specialty niches, partially offset by PPP forgiveness. Fee income rebounded from the first quarter, net interest margin was stable and our expenses were well-controlled. Continued improvement in the economic forecast and our improving asset quality metrics led to an allowance release of $2.7 million in the quarter, while still maintaining a significant allowance coverage ratio of 2.09% when excluding guaranteed loans. The strength of our operating fundamentals supported an increase of our dividend by approximately 6% and the repurchase of $12 million of stock during the quarter as a way to provide an additional return to our shareholders."

Lally added, "We announced the closing of the First Choice acquisition last week that significantly expands our commercial banking presence in California. I am excited about our future with an expanded footprint, a strengthening economy and customer base and the increased ability for in-person collaboration."

¹ PPNR and PPNR return on assets are a non-GAAP measure. Refer to discussion and reconciliation of these measures in the accompanying financial tables.

Highlights

Comparisons to the prior year are impacted by the acquisition of Seacoast Commerce Banc Holdings ("Seacoast") that closed in the fourth quarter 2020.

Earnings - Net income in the second quarter 2021 was $38.4 million, an increase of $8.5 million compared to the linked quarter and an increase of $23.8 million from the prior year quarter. EPS was $1.23 per diluted share for the second quarter 2021, compared to $0.96 and $0.56 per diluted share for the linked and prior year quarters, respectively. Merger-related expenses of $1.9 million and $3.1 million for second quarter 2021 and first quarter 2021, respectively, reduced EPS by $0.04 and $0.07 per share in the current quarter and linked quarter, respectively.

Pre-provision net revenue¹ ("PPNR") - PPNR of $47.4 million in the second quarter 2021 increased $6.8 million and $9.6 million from the linked and prior year quarters, respectively. The increase from the linked quarter was primarily due to stronger noninterest income. The increase from the prior year quarter was primarily from the Seacoast acquisition that was completed in the fourth quarter 2020 and an increase in PPP fee income due to an increase in loan forgiveness.

Net interest income and net interest margin ("NIM") - Net interest income of $81.7 million for the second quarter 2021 increased $2.6 million and $15.9 million from the linked quarter and prior year quarter, respectively. NIM was 3.46% for the second quarter 2021, compared to 3.50% and 3.53% for the linked quarter and prior year quarter, respectively. Additional cash on the balance sheet reduced NIM by approximately 5 bps compared to the linked quarter.

Noninterest income - Noninterest income of $16.2 million for the second quarter 2021 increased $4.9 million and $6.2 million from the linked quarter and prior year quarter, respectively. The increase was primarily due to tax credit revenue and income from private equity investments.

Loans - Total loans decreased $62.5 million from the linked quarter to $7.2 billion as of June 30, 2021. The decrease was due to net paydowns in PPP loans of $341.0 million. Excluding PPP, loans grew $278.5 million, or 17.1%, on an annualized basis from the linked quarter. Average loans totaled $7.3 billion for the quarter ended June 30, 2021 compared to $7.2 billion and $6.0 billion for the linked and prior year quarters, respectively.

PPP details:

	Quarter ended
($ in thousands, except per share data)	Jun 30, 2021			Mar 31, 2021			Dec 31, 2020			Sep 30, 2020			Jun 30, 2020
PPP loans outstanding, net of deferred fees	$	396,660		$	737,660		$	698,645		$	819,100		$	807,814
Average PPP loans outstanding, net	664,375			692,161			806,697			813,244			634,632
PPP average loan size	171			220			187			216			224
PPP interest and fee income	7,940			8,475			10,261			5,226			4,083
PPP deferred fees	12,243			16,676			11,304			19,522			22,414
PPP average yield	4.79		%	4.97		%	5.06		%	2.56		%	2.59		%

							Quarter ended
	Jun 30, 2021						Mar 31, 2021						Dec 31, 2020						Sep 30, 2020						Jun 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	$	1.23		$	1.04		$	0.96		$	0.75		$	1.00		$	0.73		$	0.68		$	0.53		$	0.56		$	0.44
ROAA	1.50		%	1.35		%	1.22		%	1.03		%	1.26		%	1.01		%	0.86		%	0.74		%	0.72		%	0.62		%
PPNR ROAA	1.85		%	1.65		%	1.66		%	1.41		%	2.07		%	1.78		%	1.81		%	1.73		%	1.87		%	1.81		%
Tangible common equity/tangible assets*	8.32		%	8.66		%	8.18		%	8.84		%	8.40		%	9.07		%	7.99		%	8.89		%	7.81		%	8.67		%
Leverage ratio	9.4		%	10.0		%	9.5		%	10.2		%	10.0		%	11.0		%	9.2		%	10.2		%	9.2		%	10.0		%
NIM	3.46		%	3.36		%	3.50		%	3.39		%	3.66		%	3.52		%	3.29		%	3.37		%	3.53		%	3.62		%
Allowance for credit losses/loans	1.77		%	2.09		%	1.80		%	2.22		%	1.89		%	2.31		%	2.01		%	2.32		%	1.80		%	2.07		%

* Non-GAAP measures. Refer to discussion and reconciliation of these measures in the accompanying financial tables. Calculations not adjusted for increase in average deposits or increase in deposit expense, as applicable.

Asset quality - The allowance for credit losses to total loans was 1.77% at June 30, 2021, compared to 1.80% at March 31, 2021 and June 30, 2020. The ratio of nonperforming assets to total assets was 0.44% at June 30, 2021 compared to 0.42% and 0.55% at March 31, 2021 and June 30, 2020, respectively. The decline in the allowance to total loans ratio in the second quarter 2021 was primarily due to a provision benefit of $2.7 million supported by high-quality credit metrics and continued improvement in economic forecasts, and growth in portfolio loan balances.

Deposits - Total deposits increased $124.1 million, or 1.5%, from the linked quarter to $8.6 billion as of June 30, 2021. Year-over-year, deposits grew $1.9 billion, or 29.0%, from $6.7 billion as of June 30, 2020. Average deposits totaled $8.6 billion for the quarter ended June 30, 2021 compared to $8.2 billion and $6.6 billion for the linked and prior year quarters, respectively. Noninterest-bearing deposit accounts represented 36.0% of total deposits, and the loan to deposit ratio was 83.6% at June 30, 2021.

Capital - Total shareholders' equity was $1.1 billion and the tangible common equity to tangible assets ratio was 8.3% at June 30, 2021, compared to 8.2% at March 31, 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 June 30, 2021. The Company's common equity tier 1 ratio and total risk-based capital ratio was 11.1% and 14.9%, respectively, at June 30, 2021.

The Company has 1,748,363 shares available for repurchase under its common stock repurchase authorization. The Company repurchased 251,637 shares totaling $11.8 million in the quarter.

The Company's Board of Directors unanimously approved a quarterly dividend of $0.19 per common share, payable on September 30, 2021 to shareholders of record as of September 15, 2021, an increase of $0.01 compared to the second quarter.

Liquidity - The Company maintains a high level of both on-balance-sheet and off-balance-sheet liquidity. At June 30, 2021, on-balance-sheet liquidity consisted of cash and unpledged investment securities of $1.2 billion. Off-balance-sheet liquidity totaled $1.9 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 maintains a shelf registration allowing for the issuance of various forms of equity and debt securities.

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, 2021						March 31, 2021						June 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*	$	7,306,471	$	79,162	4.35	%	$	7,192,776	$	77,073	4.35	%	$	6,032,076	$	63,869	4.26	%
Debt and equity investments*	1,502,582		9,226		2.46		1,417,305		8,818		2.52		1,361,853		9,220		2.72
Short-term investments	806,928		237		0.12		679,659		189		0.11		177,267		87		0.20
Total interest-earning assets	9,615,981		88,625		3.70		9,289,740		86,080		3.76		7,571,196		73,176		3.89

Noninterest-earning assets	665,363						650,312						587,008

Total assets	$	10,281,344					$	9,940,052					$	8,158,204

Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Interest-bearing transaction accounts	$	1,985,811	$	336	0.07	%	$	1,887,059	$	328	0.07	%	$	1,487,467	$	244	0.07	%
Money market accounts	2,344,871		988		0.17		2,350,592		975		0.17		1,941,874		995		0.21
Savings	718,193		52		0.03		654,662		48		0.03		590,104		45		0.03
Certificates of deposit	522,633		1,091		0.84		537,166		1,312		0.99		718,529		3,099		1.73
Total interest-bearing deposits	5,571,508		2,467		0.18		5,429,479		2,663		0.20		4,737,974		4,383		0.37
Subordinated debentures	203,849		2,847		5.60		203,694		2,819		5.61		169,311		2,316		5.50
FHLB advances	50,000		197		1.58		50,000		195		1.58		251,231		455		0.73
Securities sold under agreements to repurchase	209,062		58		0.11		231,527		60		0.11		192,117		57		0.12
Other borrowings	27,147		94		1.39		28,650		100		1.42		32,842		147		1.80
Total interest-bearing liabilities	6,061,566		5,663		0.37		5,943,350		5,837		0.40		5,383,475		7,358		0.55

Noninterest-bearing liabilities:
Demand deposits	3,008,703						2,777,900						1,813,760
Other liabilities	94,106						122,321						92,806
Total liabilities	9,164,375						8,843,571						7,290,041
Shareholders' equity	1,116,969						1,096,481						868,163
Total liabilities and shareholders' equity	$	10,281,344					$	9,940,052					$	8,158,204

Total net interest income			$	82,962					$	80,243					$	66,537
Net interest margin					3.46	%					3.50	%					3.53	%
* 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 $1.2 million for the three months ended June 30, 2021, $1.1 million for the three months ended March 31, 2021 and $0.7 million for the three months ended June 30, 2020.

Net interest income for the second quarter increased $2.6 million to $81.7 million from $79.1 million in the linked quarter, and increased $15.9 million from the prior year period. NIM, on a tax equivalent basis, was 3.46% for the second quarter, compared to 3.50% in the linked quarter, and 3.53% in the second quarter 2020. The increase in net interest income from the linked quarter was primarily due to higher volumes on loans and investments While PPP loans decreased in the current quarter, forgiveness of these loans by the SBA accelerated deferred loan fees into income that benefits net interest margin. In addition, improvement in the loan mix benefited net interest income, as the reduction in PPP loans that bear a 1% interest rate have mostly been replaced with loans at a higher yield.

NIM decreased four basis points from the linked quarter to 3.46% during the current quarter primarily due to a six 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 (5 bps), and lower yields on investment securities (1 bp), partially offset by loans (1 bp) and lower cost of funds (1 bp).

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

Loans

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

	Quarter ended
							December 31, 2020
($ in thousands)	June 30, 2021			March 31, 2021			Seacoast^a		Legacy EFSC^a		Consolidated			September 30, 2020			June 30, 2020
C&I	$	1,116,229		$	1,048,839		$	16,079	$	1,086,981	$	1,103,060		$	1,075,421		$	1,052,373
CRE investor owned	1,467,243			1,491,244			107,449		1,313,456		1,420,905			1,281,567			1,298,801
CRE owner occupied	789,220			805,581			98,134		727,712		825,846			766,919			782,258
SBA loans*	1,010,727			941,075			874,578		21,352		895,930			15,927			17,195
Sponsor finance*	463,744			394,207			—		396,487		396,487			367,337			383,458
Life insurance premium financing*	564,366			543,084			—		534,092		534,092			517,559			520,705
Tax credits*	423,258			387,968			—		382,602		382,602			368,908			363,222
SBA PPP loans	396,660			737,660			85,729		612,916		698,645			819,100			807,814
Residential real estate	302,007			299,517			9,138		308,953		318,091			321,258			326,467
Construction and land development	467,586			438,303			32,535		441,864		474,399			450,225			455,686
Other	225,227			201,303			764		174,114		174,878			142,086			132,072
Total Loans	$	7,226,267		$	7,288,781		$	1,224,406	$	6,000,529	$	7,224,935		$	6,126,307		$	6,140,051

Total loan yield	4.35		%	4.35		%					4.46		%	4.08		%	4.31		%
Variable interest rate loans to total loans	60		%	56		%					57		%	50		%	51		%

Certain prior period amounts have been reclassified among the categories to conform to the current period presentation.
*Specialty loan category
^aAmounts reported are as of December 31, 2020 and are separately shown attributable to the Seacoast loan portfolio acquired on November 12, 2020, and the Company's pre-Seacoast acquisition loan portfolio.

Loans totaled $7.2 billion at June 30, 2021, decreasing $62.5 million compared to the linked quarter. Excluding PPP, loans grew $278.5 million, or 17.1%, on an annualized basis from the linked quarter. The increase was driven by C&I loans ($69.8 million) and a broad-based increase in specialty lending ($130.7 million). The recent acquisition of Seacoast expanded the Company's SBA lending capabilities. SBA loans represent $70 million of the increase in specialty lending during the current quarter. Year-over-year, loans increased $1.1 billion, or 17.7%. The year-over-year increase was primarily due to the Seacoast acquisition. Line draw utilization continues to be below the historical average. For the quarter ended June 30, 2021 average line draw utilization was 38.9% compared to 37.0% and 42.6% for the linked quarter and prior-year quarter, respectively.

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, 2021			March 31, 2021			December 31, 2020			September 30, 2020			June 30, 2020
Nonperforming loans*	$	42,252		$	36,659		$	38,507		$	39,623		$	41,473
Other real estate	3,612			6,164			5,330			4,835			4,874
Nonperforming assets*	$	45,864		$	42,823		$	43,837		$	44,458		$	46,347

Nonperforming loans to total loans	0.58		%	0.50		%	0.53		%	0.65		%	0.68		%
Nonperforming assets to total assets	0.44		%	0.42		%	0.45		%	0.53		%	0.55		%
Allowance for credit losses to total loans	1.77		%	1.80		%	1.89		%	2.01		%	1.80		%
Net charge-offs (recoveries)	$	869		$	5,647		$	(612)		$	1,027		$	309
*Excludes government guaranteed balances.

The provision for credit losses was a benefit of $2.7 million for the second quarter 2021 compared to an expense of $46 thousand for the linked quarter and $19.6 million for the prior year quarter. Gross charge-offs of $1.8 million in the quarter primarily consisted of one retail loan that had previously defaulted and was fully reserved in a prior period. The Company's strong asset quality metrics and strengthening customer credit risk profiles, along with an improvement in the economic forecast, particularly GDP and unemployment, led to a decline in the allowance for credit losses in the second quarter 2021.

Deposits

The following table presents deposits broken out by type for the most recent five quarters:

	Quarter ended
							December 31, 2020
($ in thousands)	June 30, 2021			March 31, 2021			Seacoast^a			Legacy EFSC^a			Consolidated			September 30, 2020			June 30, 2020
Noninterest-bearing accounts	$	3,111,581		$	2,910,216		$	666,447		$	2,045,381		$	2,711,828		$	1,929,540		$	1,965,868
Interest-bearing transaction accounts	2,013,129			1,990,308			55,590			1,712,907			1,768,497			1,499,756			1,508,535
Money market and savings accounts	3,000,460			3,093,569			327,471			2,627,498			2,954,969			2,634,885			2,566,011
Brokered certificates of deposit	50,209			50,209			—			50,209			50,209			65,209			85,414
Other certificates of deposit	464,125			471,142			10,325			489,561			499,886			546,836			573,752
Total deposit portfolio	$	8,639,504		$	8,515,444		$	1,059,833		$	6,925,556		$	7,985,389		$	6,676,226		$	6,699,580

Noninterest-bearing deposits to total deposits	36.0		%	34.2		%	62.9		%	29.5		%	34.0		%	28.9		%	29.3		%
^aAmounts reported are as of December 31, 2020 and are shown separately attributable to the Seacoast deposit portfolio acquired on November 12, 2020, and the Company's pre-Seacoast acquisition deposit portfolio.

Total deposits at June 30, 2021 were $8.6 billion, an increase of $124.1 million from March 31, 2021, and an increase of $1.9 billion from June 30, 2020.

Core deposits, defined as total deposits excluding certificates of deposits, were $8.1 billion at June 30, 2021, an increase of $131.1 million from the linked quarter. The Company's participation in PPP continues to contribute to the increase in deposits. Money market and savings accounts decreased $93.1 million compared to the linked quarter, while interest-bearing and noninterest-bearing deposits increased $22.8 million and $201.4 million, respectively. Noninterest-bearing deposits were $3.1 billion at June 30, 2021, or 36.0% of total deposits. Specialty deposits increased $153.0 million over the linked quarter primarily attributable to community associations, third party escrow, and sponsor finance. The Kansas City region experienced growth of $65.7 million compared to the linked quarter while the St. Louis region experienced a decline in deposits of $119.7 million for the same period. Certificates of deposit decreased $7.0 million from the linked quarter and $144.8 million from the prior year quarter. The total cost of deposits was 0.12% for the current quarter compared to 0.13% and 0.27% 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)	June 30, 2021		March 31, 2021			Increase (decrease)				June 30, 2020			Increase (decrease)
Deposit service charges	$	3,862	$	3,084		$	778	25	%	$	2,616		$	1,246	48	%
Wealth management revenue	2,516		2,483			33		1	%	2,326			190		8	%
Card services revenue	2,975		2,496			479		19	%	2,225			750		34	%
Tax credit income (expense)	1,370		(1,041		)	2,411		232	%	(221		)	1,591		(720	)%
Miscellaneous income	5,481		4,268			1,213		28	%	3,014			2,467		82	%
Total noninterest income	$	16,204	$	11,290		$	4,914	44	%	$	9,960		$	6,244	63	%

Total noninterest income for the second quarter 2021 was $16.2 million, an increase of $4.9 million from the linked quarter and an increase of $6.2 million from the prior year quarter. The increase from the linked quarter and prior year quarter was primarily due to tax credit income, along with a private equity fund distribution and gain on sale of other real estate reported in miscellaneous income. Deposit service charges and card services revenue increased over the linked quarter due to improving activity levels.

Noninterest Expenses

Noninterest expense was $52.5 million for the second quarter 2021, compared to $52.9 million for the linked quarter, and $37.9 million for the prior year quarter. Employee compensation declined $1.4 million from the linked quarter due to seasonally higher payroll taxes in the first quarter. Merger-related expenses also declined and were $1.9 million and $3.1 million in the current and linked quarter, respectively. These decreases were offset by a $2.4 million increase in Other expense, primarily attributed to higher customer deposit and card servicing costs due to higher volumes. The increase from the prior year quarter was primarily due to acquired Seacoast operations.

For the second quarter 2021, the Company's efficiency ratio was 53.6% compared to 58.5% and 50.0% for the linked quarter and prior year quarter, respectively. The Company's core efficiency ratio² was 51.9% for the quarter ended June 30, 2021, compared to 55.0% for the linked quarter and 50.7% for the prior year quarter.

²Core 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, 2021, as well as for both the linked quarter and the prior year quarter.

Capital

The following table presents various EFSC capital ratios:

	Quarter ended
Percent	June 30, 2021		March 31, 2021		December 31, 2020		September 30, 2020		June 30, 2020
Total risk-based capital to risk-weighted assets	14.9	%	15.1	%	14.9	%	14.6	%	14.4	%
Tier 1 capital to risk weighted assets	12.3	%	12.3	%	12.1	%	11.6	%	11.4	%
Common equity tier 1 capital to risk-weighted assets	11.1	%	11.0	%	10.9	%	10.2	%	9.9	%
Tangible common equity to tangible assets	8.3	%	8.2	%	8.4	%	8.0	%	7.8	%

Total equity was $1.1 billion at June 30, 2021, an increase of $25.8 million from the linked quarter. The Company repurchased $11.8 million of common stock in the second quarter 2021 which reduced total capital. However, due to the Company's strong earnings profile, tangible book value per common share increased 3.5% to $26.85 at June 30, 2021 from $25.92 at March 31, 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 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, July 27, 2021. During the call, management will review the second 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 1-800-363-2106 (Conference ID #3330879). 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/EFSC2Q2021 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 $12.7 billion in assets, is a financial holding company headquartered in Clayton, Missouri. Enterprise Bank & Trust, a Missouri state-chartered trust company with banking powers and a wholly-owned subsidiary of EFSC, operates 47 branch offices in Arizona, California, Kansas, Missouri, Nevada, and New Mexico, and SBA loan and deposit production offices in Arizona, California, Colorado, Illinois, Indiana, Massachusetts, Michigan, Nevada, Ohio, Oregon, Texas, Utah, and Washington. Enterprise Bank & Trust offers a range of business and personal banking services and wealth management services. Enterprise Trust, a division of Enterprise Bank & Trust, provides financial planning, estate planning, investment management and trust services to businesses, individuals, institutions, retirement plans and non-profit organizations. Additional information is available at www.enterprisebank.com.

Enterprise Financial Services Corp's common stock is traded on the Nasdaq Stock Market under the symbol "EFSC." Please visit our website at www.enterprisebank.com to see our regularly posted material information.

Forward-looking Statements

Certain statements contained in this Current Report on Form 8-K may be considered forward-looking statements regarding Enterprise, including its wholly-owned subsidiary EB&T, First Choice, including its wholly-owned subsidiary FCB, and Enterprise's proposed acquisition of First Choice and FCB. These forward-looking statements may include: statements regarding the acquisition, the consideration payable in connection with the acquisition, and the ability of the parties to consummate the acquisition. 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 that Enterprise anticipated in its 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 possibility: that expected benefits of the acquisition may not materialize in the timeframe expected or at all, or may be more costly to achieve; that the acquisition may not be timely completed, if at all; the occurrence of any event, change or other circumstances that could give rise to the right of one or both of the parties to terminate the definitive transaction agreement; the outcome of any legal proceedings that may be instituted against Enterprise or First Choice; that prior to the completion of the acquisition or thereafter, Enterprise's and First Choice's respective businesses may not perform as expected due to transaction-related uncertainty or other factors; that the parties are unable to successfully implement integration strategies; that required regulatory, Enterprise shareholder or First Choice shareholder or other approvals are not obtained or other closing conditions are not satisfied in a timely manner or at all; that adverse regulatory conditions may be imposed in connection with regulatory approvals of the acquisition; reputational risks and the reaction of the companies' employees or customers to the transaction; diversion of management time on acquisition-related issues; that the COVID-19 pandemic, including uncertainty and volatility in financial, commodities and other markets, and disruptions to banking and other financial activity, could harm Enterprise and First Choice's business, financial position and results of operations, and could adversely affect the timing and anticipated benefits of the proposed acquisition; and those factors and risks referenced from time to time in Enterprise's filings with the Securities and Exchange Commission, or the SEC, including in Enterprise's Annual Report on Form 10-K for the fiscal year ended December 31, 2020, its other filings with the SEC. For any forward-looking statements made in this Current Report on Form 8-K or in any documents, Enterprise claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

Annualized, pro forma, projected and estimated numbers in this document are used for illustrative purposes only, are not forecasts and may not reflect actual results.

Except to the extent required by applicable law or regulation, Enterprise 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.

ENTERPRISE FINANCIAL SERVICES CORP CONSOLIDATED FINANCIAL SUMMARY (unaudited)

	Quarter ended															Six Months ended
(in thousands, except per share data)	Jun 30, 2021			Mar 31, 2021			Dec 31, 2020			Sep 30, 2020			Jun 30, 2020			Jun 30, 2021			Jun 30, 2020
EARNINGS SUMMARY
Net interest income	$	81,738		$	79,123		$	77,446		$	63,354		$	65,833		$	160,861		$	129,201
Provision (benefit) for credit losses	(2,669)			46			9,463			14,080			19,591			(2,623)			41,855
Noninterest income	16,204			11,290			18,506			12,629			9,960			27,494			23,368
Noninterest expense	52,456			52,884			51,050			39,524			37,912			105,340			76,585
Income before income tax expense	48,155			37,483			35,439			22,379			18,290			85,638			34,129
Income tax expense	9,750			7,557			6,508			4,428			3,656			17,307			6,627
Net income	$	38,405		$	29,926		$	28,931		$	17,951		$	14,634		$	68,331		$	27,502

Diluted earnings per share	$	1.23		$	0.96		$	1.00		$	0.68		$	0.56		$	2.18		$	1.04
Return on average assets	1.50		%	1.22		%	1.26		%	0.86		%	0.72		%	1.36		%	0.71		%
Return on average common equity	13.79		%	11.07		%	11.60		%	8.06		%	6.78		%	12.45		%	6.38		%
Return on average tangible common equity	18.44		%	14.92		%	15.73		%	10.94		%	9.28		%	16.71		%	8.76		%
Net interest margin (tax equivalent)	3.46		%	3.50		%	3.66		%	3.29		%	3.53		%	3.48		%	3.65		%
Efficiency ratio	53.56		%	58.49		%	53.20		%	52.02		%	50.02		%	55.93		%	50.20		%
Core efficiency ratio¹	51.86		%	55.02		%	50.93		%	51.04		%	50.66		%	53.38		%	50.94		%

Total loans	$	7,226,267		$	7,288,781		$	7,224,935		$	6,126,307		$	6,140,051
Total average loans	$	7,306,471		$	7,192,776		$	6,780,701		$	6,112,715		$	6,032,076
Total assets	$	10,346,993		$	10,190,699		$	9,751,571		$	8,367,976		$	8,357,501
Total average assets	$	10,281,344		$	9,940,052		$	9,141,159		$	8,341,968		$	8,158,204		$	9,940,052		$	7,760,904
Total deposits	$	8,639,504		$	8,515,444		$	7,985,389		$	6,676,226		$	6,699,580
Total average deposits	$	8,580,211		$	8,207,379		$	7,311,074		$	6,666,368		$	6,551,734		$	8,207,379		$	6,194,726
Period end common shares outstanding	31,185			31,259			31,210			26,210			26,196
Dividends per common share	$	0.18		$	0.18		$	0.18		$	0.18		$	0.18		$	0.36		$	0.36
Tangible book value per common share	$	26.85		$	25.92		$	25.48		$	24.80		$	24.22
Tangible common equity to tangible assets¹	8.32		%	8.18		%	8.40		%	7.99		%	7.81		%
Total risk-based capital to risk-weighted assets	14.9		%	15.1		%	14.9		%	14.6		%	14.4		%

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

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

	Quarter ended													Six Months ended
($ in thousands, except per share data)	Jun 30, 2021			Mar 31, 2021			Dec 31, 2020		Sep 30, 2020		Jun 30, 2020			Jun 30, 2021			Jun 30, 2020
INCOME STATEMENTS
NET INTEREST INCOME
Total interest income	$	87,401		$	84,960		$	84,113	$	70,787	$	73,191		$	172,361		$	149,879
Total interest expense	5,663			5,837			6,667		7,433		7,358			11,500			20,678
Net interest income	81,738			79,123			77,446		63,354		65,833			160,861			129,201
Provision (benefit) for credit losses	(2,669		)	46			9,463		14,080		19,591			(2,623		)	41,855
Net interest income after provision for credit losses	84,407			79,077			67,983		49,274		46,242			163,484			87,346

NONINTEREST INCOME
Deposit service charges	3,862			3,084			3,160		2,798		2,616			6,946			5,759
Wealth management revenue	2,516			2,483			2,449		2,456		2,326			4,999			4,827
Card services revenue	2,975			2,496			2,511		2,498		2,225			5,471			4,472
Tax credit income (expense)	1,370			(1,041		)	4,048		748		(221		)	329			1,815
Other income	5,481			4,268			6,338		4,129		3,014			9,749			6,495
Total noninterest income	16,204			11,290			18,506		12,629		9,960			27,494			23,368

NONINTEREST EXPENSE
Employee compensation and benefits	28,132			29,562			26,174		22,040		22,389			57,694			44,074
Occupancy	3,529			3,751			3,517		3,408		3,185			7,280			6,532
Merger-related expenses	1,949			3,142			2,611		1,563		—			5,091			—
Other	18,846			16,429			18,748		12,513		12,338			35,275			25,979
Total noninterest expense	52,456			52,884			51,050		39,524		37,912			105,340			76,585

Income before income tax expense	48,155			37,483			35,439		22,379		18,290			85,638			34,129
Income tax expense	9,750			7,557			6,508		4,428		3,656			17,307			6,627
Net income	$	38,405		$	29,926		$	28,931	$	17,951	$	14,634		$	68,331		$	27,502

Basic earnings per share	$	1.23		$	0.96		$	1.00	$	0.68	$	0.56		$	2.19		$	1.04
Diluted earnings per share	$	1.23		$	0.96		$	1.00	$	0.68	$	0.56		$	2.18		$	1.04

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

	Quarter ended
($ in thousands)	Jun 30, 2021		Mar 31, 2021		Dec 31, 2020		Sep 30, 2020		Jun 30, 2020
BALANCE SHEETS
ASSETS
Cash and due from banks	$	126,789	$	103,367	$	99,760	$	98,816	$	100,804
Interest-earning deposits	889,960		788,464		445,569		301,773		254,830
Debt and equity investments	1,585,847		1,463,818		1,448,803		1,375,931		1,387,001
Loans held for sale	5,763		8,531		13,564		14,032		16,029

Loans	7,226,267		7,288,781		7,224,935		6,126,307		6,140,051
Less: Allowance for credit losses	128,185		131,527		136,671		123,270		110,270
Total loans, net	7,098,082		7,157,254		7,088,264		6,003,037		6,029,781

Fixed assets, net	50,972		52,078		53,169		56,807		58,231
Goodwill	260,567		260,567		260,567		210,344		210,344
Intangible assets, net	20,358		21,670		23,084		21,820		23,196
Other assets	308,655		334,950		318,791		285,416		277,285
Total assets	$	10,346,993	$	10,190,699	$	9,751,571	$	8,367,976	$	8,357,501

LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-bearing deposits	$	3,111,581	$	2,910,216	$

Enterprise Financial Reports Second Quarter 2021 Results