Net income of $40.9 million, or $1.09 per diluted common share, compared to $1.30 for the linked quarter and $1.36 for the prior year quarter
Net interest margin (“NIM”) of 4.30%, quarterly increase of two basis points
Net interest income of $168.7 million, quarterly increase of $2.6 million
Total loans of $11.9 billion, quarterly increase of $199.6 million
Total deposits of $14.5 billion, quarterly decrease of $21.8 million
Return on average assets (“ROAA”) of 0.95%, compared to 1.16% for the linked quarter and 1.30% for the prior year quarter
Return on average tangible common equity (“ROATCE”)1 of 10.39%, compared to 12.53% for the linked quarter and 13.84% for the prior year quarter
Tangible common equity to tangible assets1 of 9.04%, compared to 9.01% in the linked quarter and 9.42% in the prior year quarter
Tangible book value per common share1 of $42.30, compared to $41.38 for the linked quarter and an increase of 6% from the prior year quarter
Issued $175 million of 6.25% fixed-to-floating rate subordinated notes due in 2036. The notes are callable beginning in 2031 and are included in tier 2 capital
Returned $22.9 million to stockholders through the repurchase of 382,083 shares and $12.3 million through common stock dividends
Increased quarterly dividend $0.01 to $0.35 per common share for the third quarter 2026
ST. LOUIS, July 22, 2026–(BUSINESS WIRE)–Enterprise Financial Services Corp (Nasdaq: EFSC) (the “Company” or “EFSC”) today announced financial results for the second quarter of 2026. “Our strategic initiatives this quarter focused on driving sustainable profitability and capital efficiency. Through a targeted restructuring of our investment portfolio, we successfully enhanced our revenue profile and expanded margin. Simultaneously, we bolstered our regulatory capital base through the issuance of $175 million of subordinated debentures. While late-quarter challenges with two commercial credits led to higher charge-offs and provision expense, our core portfolio trends are relatively stable and our underwriting standards remain high,” said Jim Lally, President and Chief Executive Officer. “Looking toward the second half of 2026, we are committed to improving asset quality, securing disciplined loan and deposit growth and leveraging technology to boost operational efficiency.”
Comparisons to the prior year quarter are affected by the acquisition of 12 branches in Arizona and Kansas in the fourth quarter 2025 (the “Branch Acquisition”).
Earnings – Net income in the second quarter 2026 was $40.9 million, a decrease of $8.4 million and $10.5 million compared to the linked and prior year quarters, respectively. Earnings per diluted common share for the second quarter 2026 was $1.09, compared to $1.30 and $1.36 for the linked and prior year quarters, respectively. Adjusted diluted earnings per share2 was $1.13 in the second quarter 2026, compared to $1.31 and $1.37 in the linked and prior year quarters, respectively.
Pre-provision net revenue (“PPNR”)2 – PPNR of $68.2 million in the second quarter 2026 decreased $2.2 million from the linked quarter and increased $0.1 million from the prior year quarter. The decrease from the linked quarter was primarily due to a decrease in noninterest income.
Net interest income and NIM – Net interest income of $168.7 million for the second quarter 2026 increased $2.6 million and $16.0 million from the linked and prior year quarters, respectively. Compared to the linked quarter, net interest income benefitted from higher loan and securities yields, as well as an additional day during the period. Compared to the prior year quarter, net interest income increased primarily due to higher average loan and investment balances, higher investment yields, and a decrease on rates paid on interest-bearing liabilities. NIM was 4.30% for the second quarter 2026, compared to 4.28% and 4.21% for the linked and prior year quarters, respectively. The total cost of deposits of 1.53% for the second quarter 2026 increased one basis point and decreased 29 basis points from the linked and prior year quarters, respectively.
Noninterest income – Noninterest income of $13.5 million for the second quarter 2026 decreased $5.6 million and $7.1 million from the linked and prior year quarters, respectively. The decrease in noninterest income from the linked and prior year quarters was primarily due to a net loss on sales of investment securities and a decrease in tax credit income. During the quarter, the Company executed balance sheet transactions to optimize future earnings. This included the sale of approximately $179 million of securities with a tax-equivalent yield of 3.13% and the reinvestment of the proceeds into new securities with a tax-equivalent yield of 5.20%. The Company also sold Visa Class B-1 common stock along with a parcel of land. A net loss of $1.5 million was recognized on these transactions. Tax credit income declined due to an increase in interest rates that negatively impacted the value of projects carried at fair value.
Noninterest expense – Noninterest expense of $115.7 million for the second quarter 2026 increased $0.6 million and $10.0 million from the linked and prior year quarters, respectively. The increase from the prior year quarter was primarily driven by higher employee compensation cost, variable deposit costs and loan and legal expenses related to loan workouts and other real estate owned (“OREO”).
Loans – Loans totaled $11.9 billion at June 30, 2026, an increase of $199.6 million and $483.6 million from the linked and prior year quarters, respectively. Average loans totaled $11.8 billion for the current and linked quarters, respectively, and $11.4 billion for the prior year quarter.
Asset quality – The allowance for credit losses to total loans was 1.17% at June 30, 2026, compared to 1.21% at March 31, 2026 and 1.27% at June 30, 2025. The provision for credit losses in the second quarter 2026 was $14.2 million, compared to $7.2 million and $3.5 million for the linked and prior year quarters, respectively. The ratio of nonperforming assets to total assets was 0.92% at June 30, 2026, compared to 0.87% and 0.71% at March 31, 2026 and June 30, 2025, respectively.
Deposits – Deposits totaled $14.5 billion at June 30, 2026, a decrease of $21.8 million and an increase of $1.2 billion from the linked and prior year quarters, respectively. Average deposits were $14.6 billion for the current and linked quarters, respectively, and $13.2 billion for the prior year quarter. At June 30, 2026, noninterest-bearing deposit accounts totaled $4.9 billion, or 34% of total deposits, and the loan to deposit ratio was 82%.
Subordinated notes – In the second quarter 2026, the Company issued $175.0 million of 6.25% fixed-to-floating rate subordinated notes due in 2036 for general corporate purposes and to bolster capital. The notes are callable starting in July 2031 and are included in tier 2 capital.
Capital – Total stockholders’ equity was $2.0 billion and the tangible common equity to tangible assets ratio3 was 9.04% at June 30, 2026, compared to 9.01% at March 31, 2026. Enterprise Bank & Trust remains “well-capitalized,” with a common equity tier 1 ratio of 12.1% and a total risk-based capital ratio of 13.1% at June 30, 2026. The Company’s common equity tier 1 ratio and total risk-based capital ratio were 11.5% and 15.0%, respectively, at June 30, 2026.The Company’s Board of Directors (the “Board”) approved a quarterly dividend of $0.35 per common share, payable on September 30, 2026 to stockholders of record as of September 15, 2026. The Board also declared a cash dividend of $12.50 per share of Series A Preferred Stock (or $0.3125 per depositary share) representing a 5% per annum rate for the period commencing (and including) June 15, 2026 to (but excluding) September 15, 2026. The dividend will be payable on September 15, 2026 to stockholders of record of Series A Preferred Stock as of August 31, 2026.
|
____________________ |
|
1 ROATCE, tangible common equity to tangible assets, and tangible book value per common share are non-GAAP measures. Please refer to discussion and reconciliation of these measures in the accompanying financial tables. |
|
2 Adjusted diluted earnings per share and PPNR are non-GAAP measures. Please refer to discussion and reconciliation of these measures in the accompanying financial tables. |
|
3 Tangible common equity to tangible assets ratio is a non-GAAP measure. Please refer to discussion and reconciliation of this measure in the accompanying financial tables. |
1 ROATCE, tangible common equity to tangible assets, and tangible book value per common share are non-GAAP measures. Please refer to discussion and reconciliation of these measures in the accompanying financial tables.
2 Adjusted diluted earnings per share and PPNR are non-GAAP measures. Please refer to discussion and reconciliation of these measures in the accompanying financial tables.
3 Tangible common equity to tangible assets ratio is a non-GAAP measure. Please refer to discussion and reconciliation of this measure in the accompanying financial tables.
Net Interest Income and NIM
The following table presents, for the periods indicated, certain information related to the average interest-earning assets and interest-bearing liabilities, as well as the corresponding average interest rates earned and paid, all on a tax-equivalent basis.
|
Quarter ended |
||||||||||||||||||||||||||
|
June 30, 2026 |
March 31, 2026 |
June 30, 2025 |
||||||||||||||||||||||||
|
($ 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: |
||||||||||||||||||||||||||
|
Loans1, 2 |
$ |
11,775,879 |
$ |
188,819 |
6.43 |
% |
$ |
11,777,727 |
$ |
185,380 |
6.38 |
% |
$ |
11,358,209 |
$ |
188,007 |
6.64 |
% |
||||||||
|
Taxable securities |
2,539,301 |
27,898 |
4.41 |
2,481,169 |
26,108 |
4.27 |
1,971,025 |
19,940 |
4.06 |
|||||||||||||||||
|
Non-taxable securities2 |
1,294,693 |
12,317 |
3.82 |
1,301,675 |
12,390 |
3.86 |
1,177,985 |
10,390 |
3.54 |
|||||||||||||||||
|
Total securities |
3,833,994 |
40,215 |
4.21 |
3,782,844 |
38,498 |
4.13 |
3,149,010 |
30,330 |
3.86 |
|||||||||||||||||
|
Interest-earning deposits |
431,044 |
3,697 |
3.44 |
504,541 |
4,533 |
3.64 |
315,738 |
3,368 |
4.28 |
|||||||||||||||||
|
Total interest-earning assets |
16,040,917 |
232,731 |
5.82 |
16,065,112 |
228,411 |
5.77 |
14,822,957 |
221,705 |
6.00 |
|||||||||||||||||
|
Noninterest-earning assets |
1,266,799 |
1,245,991 |
1,036,764 |
|||||||||||||||||||||||
|
Total assets |
$ |
17,307,716 |
$ |
17,311,103 |
$ |
15,859,721 |
||||||||||||||||||||
|
Liabilities and Stockholders’ Equity |
||||||||||||||||||||||||||
|
Interest-bearing liabilities: |
||||||||||||||||||||||||||
|
Interest-bearing demand accounts |
$ |
3,438,895 |
$ |
15,149 |
1.77 |
% |
$ |
3,453,650 |
$ |
14,940 |
1.75 |
% |
$ |
3,225,611 |
$ |
17,152 |
2.13 |
% |
||||||||
|
Money market accounts |
4,009,504 |
25,788 |
2.58 |
3,952,475 |
25,198 |
2.59 |
3,660,053 |
28,437 |
3.12 |
|||||||||||||||||
|
Savings accounts |
546,880 |
164 |
0.12 |
538,597 |
152 |
0.11 |
532,754 |
183 |
0.14 |
|||||||||||||||||
|
Certificates of deposit |
1,698,565 |
14,569 |
3.44 |
1,665,977 |
14,459 |
3.52 |
1,486,522 |
14,207 |
3.83 |
|||||||||||||||||
|
Total interest-bearing deposits |
9,693,844 |
55,670 |
2.30 |
9,610,699 |
54,749 |
2.31 |
8,904,940 |
59,979 |
2.70 |
|||||||||||||||||
|
Subordinated debentures and notes |
120,277 |
2,061 |
6.87 |
93,725 |
1,522 |
6.59 |
156,753 |
2,737 |
7.00 |
|||||||||||||||||
|
FHLB advances |
88,011 |
861 |
3.92 |
5,756 |
56 |
3.95 |
156,868 |
1,801 |
4.61 |
|||||||||||||||||
|
Securities sold under agreements to repurchase |
200,060 |
1,162 |
2.33 |
270,057 |
1,614 |
2.42 |
209,493 |
1,592 |
3.05 |
|||||||||||||||||
|
Other borrowings |
84,609 |
843 |
4.00 |
94,910 |
1,003 |
4.29 |
36,208 |
96 |
1.06 |
|||||||||||||||||
|
Total interest-bearing liabilities |
10,186,801 |
60,597 |
2.39 |
10,075,147 |
58,944 |
2.37 |
9,464,262 |
66,205 |
2.81 |
|||||||||||||||||
|
Noninterest-bearing liabilities: |
||||||||||||||||||||||||||
|
Demand deposits |
4,914,670 |
4,998,734 |
4,340,301 |
|||||||||||||||||||||||
|
Other liabilities |
154,012 |
160,718 |
149,069 |
|||||||||||||||||||||||
|
Total liabilities |
15,255,483 |
15,234,599 |
13,953,632 |
|||||||||||||||||||||||
|
Stockholders’ equity |
2,052,233 |
2,076,504 |
1,906,089 |
|||||||||||||||||||||||
|
Total liabilities and stockholders’ equity |
$ |
17,307,716 |
$ |
17,311,103 |
$ |
15,859,721 |
||||||||||||||||||||
|
Total net interest income |
$ |
172,134 |
$ |
169,467 |
$ |
155,500 |
||||||||||||||||||||
|
Net interest margin |
4.30 |
% |
4.28 |
% |
4.21 |
% |
||||||||||||||||||||
|
1 Average balances include nonaccrual loans. Interest income includes net loan fees of $1.5 million, $1.4 million, and $1.8 million for each of the three months ended June 30, 2026, March 31, 2026, and June 30, 2025, respectively. |
||||||||||||||||||||||||||
|
2 Non-taxable income is presented on a fully tax-equivalent basis using a tax rate of approximately 25%. The tax-equivalent adjustments were $3.4 million, $3.3 million, and $2.7 million for each of the three months ended June 30, 2026, March 31, 2026, and June 30, 2025, respectively. |
||||||||||||||||||||||||||
Total interest-earning assets
Noninterest-earning assets
Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Interest-bearing demand accounts
Total interest-bearing deposits
Subordinated debentures and notes
Securities sold under agreements to repurchase
Total interest-bearing liabilities
Noninterest-bearing liabilities:
Total liabilities and stockholders’ equity
1 Average balances include nonaccrual loans. Interest income includes net loan fees of $1.5 million, $1.4 million, and $1.8 million for each of the three months ended June 30, 2026, March 31, 2026, and June 30, 2025, respectively.
2 Non-taxable income is presented on a fully tax-equivalent basis using a tax rate of approximately 25%. The tax-equivalent adjustments were $3.4 million, $3.3 million, and $2.7 million for each of the three months ended June 30, 2026, March 31, 2026, and June 30, 2025, respectively.
Net interest income of $168.7 million for the second quarter 2026 increased $2.6 million and $16.0 million from the linked and prior year quarters, respectively. Net interest income on a tax-equivalent basis was $172.1 million, $169.5 million and $155.5 million for the current, linked and prior year quarters, respectively. The increase from the linked quarter reflects higher loan and securities yields, and the current quarter benefitted by one additional day compared to the linked quarter. These increases were partially offset by an increase in the average balance of interest-bearing liabilities. Compared to the prior year quarter, the increase in net interest income was primarily due to growth in the average balance of interest-earning assets and lower rates paid on interest-bearing liabilities, specifically securities under agreements to repurchase and money market accounts.
During the current quarter, the Company issued $175.0 million aggregate principal amount of 6.25% fixed-to-floating rate subordinated notes with a maturity date of July 1, 2036, which initially bear an annual interest rate of 6.25%, with interest payable semiannually. Beginning July 1, 2031, the interest rate resets quarterly to the three-month term SOFR rate plus a spread of 232.0 basis points, payable quarterly. The Company also sold approximately $179 million of investment securities with a tax-equivalent yield of 3.13% and reinvested the proceeds into new securities with a tax-equivalent yield of 5.20%. This transaction improved the overall tax-equivalent yield on securities by 10 basis points and will increase net interest income by $3.5 million annually.
Interest income for the second quarter 2026 increased $4.2 million and $10.3 million from the linked and prior year quarters, respectively. The increase from the linked quarter was primarily due to a five and eight basis point increase in loans and securities yields, respectively, as well as a $51.2 million increase in average investment securities balances and one additional day during the period. Compared to the prior year quarter, the increase in interest income was primarily due to an increase of $417.7 million and $685.0 million in average loan and investment securities balances, respectively. The average interest rate of new loan originations in the second quarter 2026 was 6.58%, and investment purchases in the second quarter 2026 had a weighted average, tax-equivalent yield of 5.03%.
Interest expense in the second quarter 2026 increased $1.7 million and decreased $5.6 million from the linked and prior year quarters, respectively. Compared to the linked quarter, the increase was primarily due to higher average subordinated debt and other borrowed funds balances. Compared to the prior year quarter, the decrease was primarily due to decreased interest paid on interest-bearing liabilities. The rate paid on interest-bearing liabilities was 2.39% during the second quarter 2026, compared to 2.81% in the prior year quarter.
NIM, on a tax-equivalent basis, was 4.30% in the second quarter 2026, an increase of two basis points and nine basis points from the linked and prior year quarters, respectively. For the month of June 2026, the loan portfolio yield was 6.50% and the cost of total deposits was 1.52%.
|
At |
||||||||||||||||||||
|
June 30, 2026 |
March 31, 2026 |
June 30, 2025 |
||||||||||||||||||
|
($ in thousands) |
Carrying Value |
Net Unrealized Loss |
Carrying Value |
Net Unrealized Loss |
Carrying Value |
Net Unrealized Loss |
||||||||||||||
|
Available-for-sale (AFS) |
$ |
2,795,725 |
$ |
(101,080 |
) |
$ |
2,773,667 |
$ |
(116,745 |
) |
$ |
2,204,511 |
$ |
(131,094 |
) |
|||||
|
Held-to-maturity (HTM) |
1,036,477 |
(38,163 |
) |
1,055,495 |
(52,176 |
) |
1,091,238 |
(75,144 |
) |
|||||||||||
|
Total |
$ |
3,832,202 |
$ |
(139,243 |
) |
$ |
3,829,162 |
$ |
(168,921 |
) |
$ |
3,295,749 |
$ |
(206,238 |
) |
|||||
Investment securities totaled $3.8 billion at June 30, 2026, an increase of $3.0 million from the linked quarter. The tangible common equity to tangible assets ratio adjusted for unrealized losses on HTM securities4 was 8.87% at June 30, 2026, compared to 8.78% at March 31, 2026.
|
____________________ |
|
4 The tangible common equity to tangible assets ratio adjusted for unrealized losses on held-to-maturity securities is a non-GAAP measure. Refer to discussion and reconciliation of this measure in the accompanying financial tables. |
4 The tangible common equity to tangible assets ratio adjusted for unrealized losses on held-to-maturity securities is a non-GAAP measure. Refer to discussion and reconciliation of this measure in the accompanying financial tables.
The following table presents total loans for the most recent five quarters:
|
At |
|||||||||||||||||||
|
($ in thousands) |
June 30, |
March 31, |
December 31, |
September 30, |
June 30, |
||||||||||||||
|
C&I |
$ |
2,628,065 |
$ |
2,655,273 |
$ |
2,606,472 |
$ |
2,320,868 |
$ |
2,316,609 |
|||||||||
|
CRE investor owned |
2,902,890 |
2,763,227 |
2,786,139 |
2,626,657 |
2,547,859 |
||||||||||||||
|
CRE owner occupied |
1,421,859 |
1,452,350 |
1,404,704 |
1,296,902 |
1,281,572 |
||||||||||||||
|
SBA loans* |
1,237,294 |
1,230,455 |
1,262,456 |
1,257,817 |
1,249,225 |
||||||||||||||
|
Sponsor finance* |
708,449 |
661,946 |
694,905 |
774,142 |
771,280 |
||||||||||||||
|
Life insurance premium financing* |
1,250,250 |
1,208,098 |
1,187,128 |
1,151,700 |
1,155,623 |
||||||||||||||
|
Tax credits* |
725,452 |
702,080 |
802,818 |
780,767 |
708,401 |
||||||||||||||
|
Residential real estate |
356,342 |
340,966 |
362,278 |
359,315 |
356,722 |
||||||||||||||
|
Construction and land development |
608,923 |
621,988 |
633,803 |
784,218 |
… |
||||||||||||||
Life insurance premium financing*
Construction and land development