What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-26 compared with 2023-02-24 · 293 added, 218 removed, 1434 unchanged (26% of the section changed)

32 unchanged sentences

The DCF method incorporates assumptions for probability of default, loss given default, prepayments and curtailments over the contractual term of the loans.

In determining the probability of default, the Company utilized a regression analysis to determine certain economic factors that are relevant loss drivers in the portfolio segments based on historical or peer evaluations such as unemployment or gross domestic product.

Additionally, the Company applies qualitative adjustments to address risks not directly captured in the quantitative reserve;

Additionally, the Company applies qualitative adjustments to address risks not directly captured in the quantitative

including to address macroeconomic uncertainty by weighting the forecasted baseline, upside, and downside economic factors.

We identified the allowance for credit losses as a critical audit matter because of the complexity of the Company’s model and the significant assumptions used by management.

Auditing the allowance for credit losses required a high degree of auditor judgment and an increased extent of effort, including the need to involve credit specialists when performing audit procedures to evaluate the reasonableness of management’s models and assumptions.

We identified the ACL on loans as a critical audit matter because of the complexity of the Company’s model and the significant assumptions used by management.

Auditing the ACL on loans required a high degree of auditor judgment and an increased extent of effort, including the need to involve credit specialists when performing audit procedures to evaluate the reasonableness of management’s models and assumptions.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the Company’s ACL included the following, among others:

We tested the design and operating effectiveness of management’s controls covering the key data, assumptions and judgments impacting the allowance for credit losses.

We evaluated the appropriateness of the Company’s accounting policies, methodologies, and elections involved in determining the allowance.

We involved credit specialists to assist us in evaluating the Company’s development of the CECL model, including the selection of and calibration to economic factors.

Our audit procedures related to the Company’s ACL on loans included the following, among others:

• We tested the design and operating effectiveness of management’s controls covering the key data, assumptions and judgments impacting the ACL on loans.

• We evaluated the appropriateness of the Company’s accounting policies, methodologies, and elections involved in determining the ACL on loans.

• We involved credit specialists to assist us in evaluating the Company’s development of the ACL model, including the selection of and calibration to economic factors.

• We assessed the reasonableness of the Company’s qualitative methodology, tested key calculations utilized within the qualitative estimate, and agreed underlying data within the calculation to source documents.

34 unchanged sentences

Federal funds sold 2,880 1,753

Interest-earning deposits (including $ — and $ 14,595 pledged as collateral, respectively)

60,026 1,811,156

Interest-earning deposits 236,874 60,026

Total cash and cash equivalents 433,029 291,359

19 unchanged sentences

Brokered 482,759 118,968

Other 411,740 479,323

Customer 790,155 411,740

Total deposits 12,176,371 10,829,150

12 unchanged sentences

75,000,000 shares authorized;

37,253,292 shares issued and outstanding and 39,799,615 shares issued, respectively

Treasury stock, at cost;

— and 1,980,093 shares, respectively

37,416,028 and 37,253,292 shares issued and outstanding, respectively

Additional paid-in capital 995,208 982,660

Retained earnings 749,513 597,574

Accumulated other comprehensive (loss) income, net ( 130,332 ) 18,777

Accumulated other comprehensive loss, net ( 101,015 ) ( 130,332 )

Total shareholders' equity 1,716,068 1,522,263

Total liabilities and shareholders' equity $ 14,518,590 $ 13,054,172

See accompanying notes to consolidated financial statements.

The accompanying notes are an integral part of these Consolidated Financial Statements.

ENTERPRISE FINANCIAL SERVICES CORP AND SUBSIDIARIES

21 unchanged sentences

Noninterest income:

Service charges on deposit accounts 18,326 15,428 11,717

Deposit service charges 16,559 18,326 15,428

Wealth management revenue 10,030 10,010 10,259

5 unchanged sentences

Employee compensation and benefits 164,566 147,029 124,904

Deposit costs 72,293 31,082 14,211

Occupancy 16,526 17,640 16,286

3 unchanged sentences

Merger-related expenses — — 22,082

Other expenses 88,955 62,675 44,250

Other expense 73,886 57,873 48,464

Total noninterest expense 348,186 274,216 245,919

2 unchanged sentences

Net income $ 194,059 $ 203,043 $ 133,055

Dividends on preferred stock 4,041 — —

Preferred stock dividends 3,750 4,041 —

Net income available to common shareholders $ 190,309 $ 199,002 $ 133,055

2 unchanged sentences

Diluted 5.07 5.31 3.86

See accompanying notes to consolidated financial statements.

The accompanying notes are an integral part of these Consolidated Financial Statements.

ENTERPRISE FINANCIAL SERVICES CORP AND SUBSIDIARIES

12 unchanged sentences

Total comprehensive income $ 223,376 $ 53,934 $ 114,712

See accompanying notes to consolidated financial statements.

The accompanying notes are an integral part of these Consolidated Financial Statements.

ENTERPRISE FINANCIAL SERVICES CORP AND SUBSIDIARIES

5 unchanged sentences

Net income — $ — — $ — $ — $ — $ 133,055 $ — $ 133,055

Other comprehensive income — — — — — — — 19,371 19,371

Common stock dividends ($ 0.72 per share)

— — — — — — ( 19,795 ) — ( 19,795 )

Repurchase of common stock — — ( 456 ) — ( 15,347 ) — — — ( 15,347 )

Issuance under equity compensation plans, net — — 146 1 — 77 — — 78

Shares issued in connection with acquisition of Seacoast Commerce Banc Holdings 4,977 50 — 166,985 — — 167,035

Share-based compensation — — — — — 4,178 — — 4,178

Reclassification for the adoption of ASU 2016-13 (CECL) — — — — — — ( 18,114 ) — ( 18,114 )

Balance December 31, 2020 — $ — 31,210 $ 332 $ ( 73,528 ) $ 697,839 $ 417,212 $ 37,120 $ 1,078,975

Net income — $ — — $ — $ — $ — $ 133,055 $ — $ 133,055

Other comprehensive loss — — — — — — — ( 18,343 ) ( 18,343 )

21 unchanged sentences

Balance December 31, 2022 75 $ 71,988 37,253 $ 373 $ — $ 982,660 $ 597,574 $ ( 130,332 ) $ 1,522,263

See accompanying notes to consolidated financial statements.

Net income — $ — — $ — $ — $ — $ 194,059 $ — $ 194,059

Other comprehensive income — — — — — — — 29,317 29,317

Common stock dividends ($ 1.00 per share)

— — — — — — ( 37,368 ) — ( 37,368 )

Preferred stock dividends ($ 50.00 per share)

— — — — — — ( 3,750 ) — ( 3,750 )

Issuance under equity compensation plans, net — — 163 1 — 2,402 ( 1,002 ) — 1,401

Share-based compensation — — — — — 10,146 — — 10,146

Balance December 31, 2023 75 $ 71,988 37,416 $ 374 $ — $ 995,208 $ 749,513 $ ( 101,015 ) $ 1,716,068

The accompanying notes are an integral part of these Consolidated Financial Statements.

ENTERPRISE FINANCIAL SERVICES CORP AND SUBSIDIARIES

17 unchanged sentences

Investment securities ( 601 ) — —

Loans sold ( 2,015 ) — —

Other real estate ( 187 ) 93 ( 931 )

5 unchanged sentences

Net cash provided by operating activities

268,238 216,640 160,575

Cash flows from investing activities:

6 unchanged sentences

Redemption of other investments 92,879 12,989 18,159

Sale of loans 44,975 — —

Sale of state tax credits held-for-sale 4,592 20,645 18,507

9 unchanged sentences

Net cash used in investing activities

( 1,307,782 ) ( 1,383,784 ) ( 23,114 )

Year ended December 31,

1 unchanged sentence

Cash flows from financing activities:

Net increase in noninterest-bearing deposit accounts $ 64,296 $ 869,203 $ 627,756

Net (decrease) increase in noninterest-bearing deposit accounts $ ( 683,989 ) $ 64,296 $ 869,203

Net (decrease) increase in interest-bearing deposit accounts 2,031,210 ( 578,945 ) 648,778

Proceeds from the issuance of subordinated notes — — 61,953

Payments for the redemption of subordinated notes — — ( 50,000 )

1 unchanged sentence

Repayments of long-term FHLB advances — ( 50,000 ) —

Repayment of PPPLF advances — — ( 86,096 )

Repayments of notes payable ( 5,714 ) ( 5,714 ) ( 7,143 )

5 unchanged sentences

Other, net 1,401 1,773 516

Net cash (used in) provided by financing activities ( 563,186 ) 1,346,525 937,762

Net cash provided by (used in) financing activities

1,181,214 ( 563,186 ) 1,346,525

Net (decrease) increase in cash and cash equivalents 141,670 ( 1,730,330 ) 1,483,986

6 unchanged sentences

Noncash investing and financing transactions:

Transfer to other real estate owned in settlement of loans $ — $ 3,227 $ 798

Transfer to other real estate and repossessed assets owned in settlement of loans $ 6,933 $ — $ 3,227

Sales of other real estate financed — — 228

Transfer of securities from available-for-sale to held-to-maturity — 116,927 —

Transfer to loans from fixed assets for deconsolidation of partnership — — 3,336

Transfer to loans from fixed assets for building sale and leaseback 1,460 — —

Right-of-use assets obtained in exchange for lease obligations 15,640 9,512 5,658

Leasehold improvement allowance in other assets 2,483 — —

Common shares issued in connection with acquisitions — — 343,650

See accompanying notes to consolidated financial statements.

The accompanying notes are an integral part of these Consolidated Financial Statements.

ENTERPRISE FINANCIAL SERVICES CORP AND SUBSIDIARIES

3 unchanged sentences

Business and Consolidation

Enterprise is a financial holding company that provides a full range of banking and wealth management services to individuals and corporate customers primarily located in the Arizona, California, Kansas, Missouri, Nevada, and New Mexico markets through its banking subsidiary, Enterprise Bank & Trust.

Enterprise is a financial holding company that provides a full range of banking and wealth management services to individuals and corporate customers primarily located in Arizona, California, Florida, Kansas, Missouri, Nevada, and New Mexico through its banking subsidiary, Enterprise Bank & Trust.

All intercompany accounts and transactions have been eliminated.

11 unchanged sentences

Cash Flow Information

For purposes of reporting cash flows, the Company considers cash and due from banks, interest-bearing deposits and federal funds sold that mature within 90 days of the balance sheet date to be cash and cash equivalents.

The balances at December 31, 2022 and 2021 were not subject to reserve requirements from the Federal Reserve.

For purposes of reporting cash flows, the Company considers cash and due from banks, interest-bearing deposits and federal funds sold that mature within 90 days to be cash and cash equivalents.

Cash balances include deposits in transit and drafts in the process of collection.

The Federal Reserve is authorized to establish reserve requirements on depository institutions.

In 2020, the Federal Reserve reduced the reserve requirement to zero percent.

As such, cash balances at the Federal Reserve at December 31, 2023 and 2022 were not subject to a reserve requirement.

Recent Accounting Pronouncements

9 unchanged sentences

Troubled Debt Restructurings and Vintage Disclosures.

ASU 2022-02 was issued in March 2022 and eliminates the accounting guidance on troubled debt restructurings for creditors in ASC 310-40 and amends the guidance on “vintage disclosures” to require disclosure of current-period gross write-offs by year of origination.

The ASU also updates the requirements related to accounting for credit losses under ASC 326 and adds enhanced disclosures for creditors with respect to loan

refinancings and restructurings for borrowers experiencing financial difficulty.

ASU 2022-02 was issued in March 2022 and eliminates the accounting guidance on troubled

debt restructurings for creditors in ASC 310-40 and amends the guidance on “vintage disclosures” to require disclosure of current-period gross write-offs by year of origination.

The ASU also updates the requirements related to accounting for credit losses under ASC 326 and adds enhanced disclosures for creditors with respect to loan refinancings and restructurings for borrowers experiencing financial difficulty.

The amendments in this update will be effective for fiscal years beginning after December 15, 2022 for entities that have adopted the amendments in ASU 2016-13, Financial Instruments–Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments .

The Company is evaluating the accounting and disclosure requirements of ASU 2022-02 and does not expect them to have a material effect on the consolidated financial statements.

The adoption of ASU 2022-02 did not have a material effect on the consolidated financial statements.

FASB ASU 2022-03, Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions.

2 unchanged sentences

The Company has evaluated the accounting and disclosure requirements of ASU 2022-03 and does not expect them to have a material effect on the consolidated financial statements.

The Company has classified all investments in debt securities as available-for-sale or held-to-maturity.

FASB ASU 2023-02, Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method .

ASU 2023-02 was issued in March 2023 to allow reporting entities to consistently account for equity investments made primarily for the purpose of receiving income tax credits and other income tax benefits.

If certain conditions are met, a reporting entity may elect to account for its tax equity investments by using the proportional amortization method regardless of the program from which it receives income tax credits, instead of only low-income-housing tax credit (“LIHTC”) structures.

This amendment also eliminates certain LIHTC-specific guidance aligning the accounting with other equity investments in tax credit structures.

The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years.

The Company is evaluating the accounting and disclosure requirements of ASU 2023-02 and does not expect them to have a material effect on the consolidated financial statements.

FASB ASU 2023-07, Improvements to Reportable Segment Disclosures .

ASU 2023-07 was issued in November 2023 to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment disclosures.

The amendments in this update require annual and interim disclosures on significant segment expenses that are regularly provided to the chief operating decision maker and require annual and interim disclosures on “other segment items” that comprise the difference between segment revenue less segment expense compared to the reported measure of segment profit or loss.

In addition, the amendments will require all annual disclosures that are currently required to be reported on an interim basis and requires disclosure of the title and position of the chief operating decision maker and how that position uses the information to assess segment performance and the allocation of resources.

ASU 2023-07 also requires entities that have a single reportable segment, such as the Company, to provide all disclosures required in this update and the existing segment disclosures in Topic 280.

The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

The Company is evaluating the accounting and disclosure requirements of ASU 2023-07 and does not expect them to have a material effect on the consolidated financial statements.

FASB ASU 2023-09, Income Tax Disclosures .

ASU 2023-09 was issued in December 2023 to require annual disclosures on specific categories in the income tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold.

Annual disclosures are required on income taxes paid, including the amounts paid for federal, state and foreign taxes and the amount paid in individual jurisdictions if the amount is equal to or greater than 5% of total income taxes paid (net of refunds received).

Additional annual disclosures are required on pre-tax income from continuing operations and income tax expense, disaggregated by domestic and foreign amounts.

The amendments in this update are effective for fiscal years beginning after December 15, 2024.

The Company is evaluating the accounting and disclosure requirements of ASU 2023-09 and does not expect them to have a material effect on the consolidated financial statements.

The Company has classified all investments in debt securities as either available-for-sale or held-to-maturity.

Securities classified as available-for-sale are carried at fair value.

17 unchanged sentences

Upon receipt of an application for a real estate loan, the Company determines whether the loan will be sold into the secondary market or retained in the Company’s loan portfolio.

The interest rates on the loans sold are locked with

the buyer and the Company bears no interest rate risk related to these loans.

The interest rates on the loans sold are locked with the buyer and the Company bears no interest rate risk related to these loans.

Mortgage loans held-for-sale are carried at the lower of cost or fair value, which is determined on a specific identification method.

52 unchanged sentences

The primary risks of CRE loans include the borrower’s inability to pay, material decreases in the value of the real estate being held as collateral and significant increases in interest rates, which may make the real estate mortgage loan unprofitable.

Real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy.

Real estate loans may be more adversely affected by conditions in the real estate markets and in the general economy.

Construction and Land Development – The Company originates loans to finance construction projects including 1-4 family residences, multifamily residences, commercial office, and industrial projects.

9 unchanged sentences

Agricultural loans are primarily included as a component of CRE and C&I loans.

As of December 31, 2023, the Company has ceased originating new agricultural credit relationships.

Consumer – The Company provides a broad range of consumer loans to customers, including personal lines of credit, credit cards, recreational vehicles, yachts and automobile loans.

7 unchanged sentences

The annual percentage change in a commercial real estate index, national house price index and national retail sales are used in the CRE, Residential Real Estate and C&I portfolios, respectively.

The contractual term excludes expected extensions, renewals, and modifications unless either of the following applies:

management has a reasonable expectation at the reporting date that a troubled debt restructuring will be executed with an individual borrower, or the extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancellable by the Company.

The contractual term excludes expected extensions, renewals, and modifications unless the extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancellable by the Company.

The Company uses a one-year reasonable and supportable forecast that considers baseline, upside and downside economic scenarios.

7 unchanged sentences

Loans are charged-off when the primary and secondary sources of repayment (cash flow, collateral, guarantors, etc.) are less than their carrying value and the amounts are deemed uncollectible.

Other Real Estate

Other Real Estate and Repossessed Assets

Other real estate represents property acquired through foreclosure or deeded to the Company in lieu of foreclosure on loans on which the borrowers have defaulted on the payment of principal or interest.

5 unchanged sentences

Gains and losses resulting from the sale of other real estate are credited or charged to current period earnings.

Costs of maintaining and operating other real estate are expensed as incurred, and expenditures to complete or improve

other real estate properties are capitalized if the expenditures are expected to be recovered upon ultimate sale of the property.

Costs of maintaining and operating other real estate are expensed as incurred, and expenditures to complete or improve other real estate properties are capitalized if the expenditures are expected to be recovered upon ultimate sale of the property.

Repossessed assets represent property, other than real estate, that is acquired through repossession and is initially recorded at estimated fair value on the date of acquisition, less costs to sell.

Subsequent to repossession, the assets are carried at the lower of cost or fair value, less estimated costs to sell.

Buildings, leasehold improvements, furniture, fixtures, and equipment are stated at cost less accumulated depreciation.

57 unchanged sentences

It is possible that others, given the same information, may at any point in time reach different reasonable conclusions regarding the estimated amounts of accrued taxes.

Stock-Based Compensation

Stock-based compensation is recognized as an expense for stock options, restricted stock awards, performance stock units, and restricted stock units granted to employees, directors, and advisors in return for service.

Share-Based Compensation

Share-based compensation is recognized as an expense for stock options, restricted stock awards, performance stock units, and restricted stock units granted to employees and directors in return for service.

Equity classified awards are measured at the grant date fair value using either an observable market value or a valuation methodology, and are recognized over the requisite service period on a straight-line basis.

Forfeitures are recorded as they occur.

A description of the Company’s stock-based employee compensation plan is included in “Note 15 - Shareholders’ Equity and Compensation Plans.”

A description of the Company’s share-based employee compensation plan is included in “Note 15 - Shareholders’ Equity and Compensation Plans.”

Specialty Deposits

The Company offers specialty deposit accounts to customers in certain industries, primarily community associations, property management, third party escrow, and trust services.

These customers will typically receive an earnings credit rate on average collected balances that is used to offset their cost of maintaining the deposit accounts.

Earnings credits, otherwise referred to as Deposit costs, are reflected as a component of non-interest expense in the Consolidated Statement of Income.

Acquisitions and Divestitures

26 unchanged sentences

Reclassifications

Certain amounts reported in prior periods have been reclassified to conform to the current presentation.

Certain amounts, including deposit costs and other noninterest expense, reported in prior periods in the “Consolidated Statements of Income,” and “Note 20 – Supplemental Financial Information,” have been reclassified to conform to the current presentation.

The reclassifications had no effect on net income or shareholders’ equity.

NOTE 2 - EARNINGS PER SHARE

The following table presents a summary of earnings per common share data and amounts for the periods indicated.

Basic earnings per common share data is calculated by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the period.

Diluted earnings per common share gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method.

The following table presents a summary of per common share data and amounts for the periods indicated.

Year ended December 31,

($ in thousands, except per share data) 2022 2021 2020

($ and shares in thousands, except per share data) 2023 2022 2021

Net income available to common shareholders $ 190,309 $ 199,002 $ 133,055

45 unchanged sentences

Total securities held-to-maturity, net $ 709,915

During 2022, the Company transferred $ 116.7 million of securities from available-for-sale to held-to-maturity.

During 2023, the Company did no t transfer any securities from available-for-sale to held-to-maturity.

The Company believes the held-to-maturity category is consistent with the Company’s intent for these securities.

In 2022, the Company transferred $ 116.7 million of securities from available-for-sale to held-to-maturity.

The transfer of securities was made at fair value at the time of transfer.

The unamortized portion of the unrealized holding gain at the time of transfer is retained in accumulated other comprehensive income and in the carrying value of held-to-maturity securities.

The balance of held-to-maturity securities in the “Amortized Cost” column in the

table above includes a cumulative net unamortized, unrealized gain of $ 17.6 million and $ 21.0 million at December 31, 2022 and 2021, respectively.

The unamortized portion of the unrealized holding gain at the time of transfer is retained in accumulated other comprehensive income and in the carrying value of held-to-

maturity securities.

The balance of held-to-maturity securities in the “Amortized Cost” column in the table above includes a cumulative net unamortized, unrealized gain of $ 14.1 million and $ 17.6 million at December 31, 2023 and 2022, respectively.

Such amounts are amortized over the remaining life of the securities.

3 unchanged sentences

Government-sponsored enterprises.

Securities having a fair value of $ 734.5 million and $ 752.7 million at December 31, 2022, and December 31, 2021, respectively, were pledged as collateral to secure deposits of public institutions and for other purposes as required by law or contract provisions.

Securities of $ 1.6 billion and $ 734.5 million at December 31, 2023 and December 31, 2022, respectively, were pledged as collateral to secure deposits of public institutions and for other purposes as required by law or contract provisions.

The amortized cost and estimated fair value of debt securities at December 31, 2023, by contractual maturity, are shown below.

10 unchanged sentences

$ 1,769,134 $ 1,618,273 $ 751,219 $ 696,647

There were approximately 740 available-for-sale securities and 290 available-for-sale securities in an unrealized loss position as of December 31, 2022 and December 31, 2021, respectively, included in the following tables:

There were 753 and 740 available-for-sale securities in an unrealized loss position as of December 31, 2023 and 2022, respectively, included in the following tables:

December 31, 2023

15 unchanged sentences

Agency mortgage-backed securities 334,431 20,038 281,321 48,942 615,752 68,980

Corporate debt securities 12,640 1,110 — — 12,640 1,110

Treasury Bills 198,688 4,908 — — 198,688 4,908

1 unchanged sentence

The unrealized losses at both December 31, 2023 and 2022, were primarily attributable to changes in market interest rates since the securities were purchased.

At both December 31, 2022 and 2021, the Company had not recorded an ACL on available-for-sale securities.

In 2023, an allowance for credit losses on available-for-sale investment securities was established through a provision for credit losses of $ 4.2 million.

A debt security of $ 4.2 million was subsequently charged-off against that allowance.

At both December 31, 2023 and 2022, there was no ACL on available-for-sale securities outstanding.

Accrued interest receivable on held-to-maturity debt securities totaled $ 6.5 million and $ 5.8 million at December 31, 2023 and 2022, respectively, and is excluded from the estimate of expected credit losses.

5 unchanged sentences

Proceeds from sales 40,393 — 27,135

The Company sold $ 28.4 million of available-for-sale securities in January 2023 for a gain of $ 0.4 million.

Other Investments

2 unchanged sentences

The FHLB capital stock of $ 7.8 million, and $ 14.0 million at December 31, 2023 and 2022, respectively, is recorded at cost, which represents redemption value, and is included in other investments in the consolidated balance sheets.

The remaining amounts in other investments primarily include various investments in SBICs, CDFIs, and the Company’s investment in unconsolidated trusts used to issue preferred securities to third parties, see “Note 10 – Subordinated Debentures.”

NOTE 4 - LOANS

Below is a summary of loans by category:

The following table presents a summary of loans by category:

($ in thousands) December 31, 2023 December 31, 2022

10 unchanged sentences

Loans, including unearned loan fees $ 10,884,118 $ 9,737,138

PPP loans totaled $ 7.4 million at December 31, 2022, or $ 7.3 million net of unearned fees of $ 0.1 million.

PPP loans totaled $ 276.2 million at December 31, 2021, or $ 272.0 million net of unearned fees of $ 4.2 million.

The loan balance includes a net premium on acquired loans of $ 11.9 million at both December 31, 2022 and 2021.

At December 31, 2022 loans of $ 2.8 billion were pledged to the FHLB and the Federal Reserve.

The loan balance includes a net premium on acquired loans of $ 9.6 million and $ 11.9 million at December 31, 2023 and 2022, respectively.

At December 31, 2023 and 2022 loans of $ 4.8 billion and $ 2.8 billion, respectively, were pledged to the FHLB and the Federal Reserve.

Consumer mortgage loans secured by residential real estate in process of foreclosure totaled $ 1.0 million at December 31, 2023.

There were no consumer mortgage loans secured by residential real estate in process of foreclosure at December 31, 2022.

Loans to executive officers and directors, or to entities in which such individuals had beneficial interests as a shareholder, officer, or director totaled $ 0.1 million and $ 0.1 million for the year ended December 31, 2023 and 2022, respectively.

3 unchanged sentences

Balance at December 31, 2021

Allowance for loan losses:

Allowance for credit losses on loans:

Balance, beginning of year $ 58,812 $ 32,062 $ 17,012 $ 21,413 $ 4,585 $ 2,787 $ 136,671

Provision for loan losses 28,373 11,037 7,845 13,438 674 2,012 63,379

Provision (benefit) for credit losses 14,361 568 ( 550 ) ( 7,365 ) 3,900 2,079 12,993

Initial allowance on acquired PCD loans 1,077 3,651 1,504 37 — 737 7,006

3 unchanged sentences

Balance at December 31, 2022

Allowance for loan losses:

Allowance for credit losses on loans:

Balance, beginning of year $ 63,825 $ 35,877 $ 17,560 $ 14,536 $ 7,927 $ 5,316 $ 145,041

Provision (benefit) for loan losses 14,361 568 ( 550 ) ( 7,365 ) 3,900 2,079 12,993

Initial allowance on acquired PCD loans 1,077 3,651 1,504 37 — 737 7,006

Provision (benefit) for credit losses ( 6,121 ) 46 4,867 ( 3,145 ) 540 ( 397 ) ( 4,210 )

Charge-offs ( 6,082 ) ( 478 ) ( 395 ) — ( 2,068 ) ( 370 ) ( 9,393 )

2 unchanged sentences

Balance at December 31, 2023

Allowance for credit losses:

Allowance for credit losses on loans:

Balance, beginning of year $ 53,835 $ 36,191 $ 22,752 $ 11,444 $ 7,928 $ 4,782 $ 136,932

Provision (benefit) for loan losses ( 6,121 ) 46 4,867 ( 3,145 ) 540 ( 397 ) ( 4,210 )

Provision (benefit) for credit losses 38,308 ( 335 ) 523 ( 1,300 ) ( 2,109 ) 796 35,883

Charge-offs ( 36,302 ) ( 4,869 ) — ( 9 ) ( 656 ) ( 1,379 ) ( 43,215 )

1 unchanged sentence

Balance, end of year $ 58,886 $ 31,280 $ 23,405 $ 10,198 $ 6,142 $ 4,860 $ 134,771

The Company recorded a provision benefit of $ 4.2 million and a provision for credit losses on loans of $ 13.0 million for the years ended December 31, 2022 and 2021, respectively.

An additional provision for credit losses of $ 3.6 million and $ 0.4 million was recorded in 2022 and 2021, respectively, for HTM securities, unfunded commitments and the recapture of accrued interest on nonaccrual loans.

The Company recorded a provision for credit losses on loans of $ 35.9 million and a provision benefit for credit losses of $ 4.2 million for the years ended December 31, 2023 and 2022, respectively.

An additional provision for credit losses of $ 0.7 million and $ 3.6 million was recorded in 2023 and 2022, respectively, for securities, unfunded commitments and accrued interest on nonaccrual loans.

Acquisition-related provision expense of $ 25.4 million in 2021 was included in the provision for credit losses.

4 unchanged sentences

The Company weights these scenarios at 40%, 30%, and 30%, respectively, which added approximately $ 12.3 million to the ACL over the baseline model at December 31, 2023.

These forecasts at the end of 2022 incorporate an expectation that the Federal Reserve will continue quantitative tightening and raise the federal funds rate further into 2023, and that the pandemic will continue to recede and be less disruptive to global supply chains and labor markets.

The Company has also recognized various risks posed by loans in certain segments, including the hospitality and commercial office sectors, by allocating additional reserves to those segments.

Some of the key risks to the forecasts that could result in future provision for credit losses are market reactions to the Federal Reserve policy actions that could push the economy into a recession, persistently higher inflation, continued or worsening supply-chain issues, labor supply and job growth worsens, or financial market conditions tighten more than expected.

The forecasts at the end of 2023 incorporate an expectation that the federal funds rate has peaked at the range of 5.25% to 5.50% and will begin falling in the latter half of 2024.

It is also assumed that the bank failures in early 2023 were not an indication of a broader problem in the industry.

The Company has also recognized various risks posed by loans in certain segments, including the commercial office sector, by allocating additional reserves to those segments.

Some of the key risks to the forecasts that could result in future provision for credit losses are market reactions to the Federal Reserve policy actions that could push the economy into a recession, persistently higher inflation, tightening in the credit markets, and further weakness in the financial system.

In addition to the CECL methodology, the Company incorporates qualitative adjustments into the ACL on loans to capture credit risks inherent within the loan portfolio that are not captured in the DCF model.

Included in these risks are 1) changes in lending policies and procedures, 2) actual and expected changes in business and economic conditions, 3) changes in the nature and volume of the portfolio, 4) changes in lending management, 5) changes in volume and the severity of past due loans, 6) changes in the quality of the loan review system, 7) changes in the value of underlying collateral, 8) the existence and effect of concentrations of credit and 9) other factors such as the regulatory, legal and competitive environments and events such as natural disasters and pandemics.

At December 31, 2022, the ACL on loans included a qualitative adjustment of approximately $ 41.1 million.

Of this amount, approximately $ 9.4 million was allocated to Sponsor Finance loans due to their unsecured nature.

The recorded investment in nonperforming loans by category at December 31, 2022 and 2021 is as follows:

At December 31, 2023, the ACL on loans included a qualitative adjustment of $ 37.4 million.

Of this amount, $ 15.2 million was allocated to Sponsor Finance loans due to their unsecured nature.

G ross charge-offs by loan class and year of origination is presented in the following table:

December 31, 2023

Term Loans by Origination Year

($ in thousands) 2023 2022 2021 2020 2019 Prior Revolving Loans Converted to Term Loans Revolving Loans Total

Commercial and industrial $ 600 $ 2,999 $ 1,940 $ 2,539 $ — $ — $ 12,533 $ 15,178 $ 35,789

Commercial - investor owned — — 170 — 4,692 7 — — 4,869

Construction and land development — — — — — 9 — — 9

Residential — — — — — 480 176 — 656

Other — 3 459 — — 319 12 — 793

Total charge-offs by origination year $ 600 $ 3,002 $ 2,569 $ 2,539 $ 4,692 $ 815 $ 12,721 $ 15,178 $ 42,116

Total gross charge-offs by performing status 1,099

Total gross charge-offs $ 43,215

The following tables present the recorded investment in nonperforming loans by category, excluding government guaranteed balances:

December 31, 2023

($ in thousands) Non-accrual Restructured, accruing Loans over 90 days past due and still accruing interest Total nonperforming loans Nonaccrual loans with no allowance

11 unchanged sentences

Commercial - owner occupied 1,177 — — 1,177 —

Construction and land development 1,192 — — 1,192 1,192

Residential — 73 — 73 —

1 unchanged sentence

Total $ 9,766 $ 73 $ 142 $ 9,981 $ 2,239

The nonperforming loan balances at December 31, 2023 and December 31, 2022 exclude government guaranteed balances of $ 10.7 million and $ 6.7 million, respectively.

Interest income recognized on nonaccrual loans was immaterial in the years ending December 31, 2021, 2022 and 2023.

The amortized cost basis of collateral-dependent nonperforming loans by class of loan is presented for the periods indicated:

Collateral-dependent nonperforming loans by class of loan is presented as of the dates indicated:

December 31, 2023

Type of Collateral

(in thousands) Commercial Real Estate Residential Real Estate Blanket Lien

($ in thousands) Commercial Real Estate Residential Real Estate Blanket Lien Other

Commercial and industrial $ 527 $ 1,864 $ 344 $ 3,445

10 unchanged sentences

Commercial - owner occupied 1,177 — —

Construction and land development — 1,192 —

Residential — 73 —

Total $ 3,415 $ 2,050 $ 1,047

No loans were restructured during the year ended 2022.

The recorded investment by category for loans restructured during the year ended December 31, 2021 is as follows:

Year ended December 31, 2021

($ in thousands, except for number of loans) Number of Loans Pre-Modification Outstanding

Recorded Balance Post-Modification Outstanding

Recorded Balance

Residential 1 221 221

Restructured loans primarily resulted from interest rate concessions.

As of December 31, 2022, the Company allocated an immaterial amount in specific reserves to loans that have been restructured.

No restructured loans subsequently defaulted during the year ended December 31, 2022.

Loans restructured that subsequently defaulted during the year ended December 31, 2021 are as follows:

Year ended December 31, 2021

($ in thousands, except for number of loans) Number of Loans Recorded Balance

Residential 1 $ 148

The aging of the recorded investment in past due loans by class and category is shown below:

The aging of the recorded investment in past due loans by class and category is presented as of the dates indicated.

December 31, 2023

26 unchanged sentences

Total $ 9,737,138

The allowance for credit losses incorporates an estimate of lifetime expected credit losses and is recorded on each asset upon origination or acquisition.

The starting point for the estimate of the allowance for credit losses is historical loss information, which includes losses from modifications of receivables to borrowers experiencing financial difficulty.

The Company uses a probability of default and loss given default model to determine the allowance for credit losses.

An assessment of whether a borrower is experiencing financial difficulty is made on the date of a modification.

The effect of most modifications made to borrowers experiencing financial difficulty is already included in the allowance for credit losses because of the measurement methodologies used to estimate the allowance.

The most common concession the Company provides to borrowers experiencing financial difficulty is a term extension.

In limited circumstances, the Company may modify loans by providing principal forgiveness or an interest rate reduction.

When principal forgiveness is provided, the amortized cost basis of the asset is written off against the allowance for credit losses.

The amount of the principal forgiveness is deemed to be uncollectible;

therefore, that portion of the loan is written off, resulting in a reduction of the amortized cost basis and a corresponding adjustment to the allowance for credit losses.

In some cases, the Company will modify a loan by providing multiple types of concessions.

Typically, one type of concession, such as a term extension, is granted initially.

If the borrower continues to experience financial difficulty, another concession, such as an interest rate reduction or principal forgiveness, may be granted.

The following table shows the recorded investment at the end of the reporting period for loans modified to borrowers experiencing financial difficulty, disaggregated by loan class and type of concession granted:

Term Extension

Twelve months ended

($ in thousands) December 31, 2023 Percent of Total Loan Class

Commercial and industrial $ 39,437 0.84 %

Commercial - investor owned 9,411 0.38 %

Commercial - owner occupied 94 — %

Construction and land development 1,137 0.15 %

Residential 7,601 2.04 %

Total $ 57,684

The following table summarizes the financial impacts of loan modifications made to borrowers experiencing financial difficulty and outstanding at the end of the year:

Weighted Average Term Extension (in months)

Twelve months ended

December 31, 2023

Commercial and industrial 5

Commercial - investor owned 4

Commercial - owner occupied 3

Construction and land development 7

Residential 3

The following table shows the aging of the recorded investment in modified loans by class:

December 31, 2023

($ in thousands) Current 30-89 Days

Past Due 90 or More

Past Due Total

Commercial and industrial $ 39,187 $ 250 $ — $ 39,437

Commercial - investor owned 9,411 — — 9,411

Commercial - owner occupied — 94 — 94

Construction and land development 1,137 — — 1,137

Residential 7,527 74 — 7,601

Other — 4 — 4

Total $ 57,262 $ 422 $ — $ 57,684

As of December 31, 2023, no loans experienced a default subsequent to being granted a term extension modification in the prior twelve months.

Default is defined as movement to nonperforming status, foreclosure or charge-off.

As of December 31, 2023, the Company allocated an immaterial amount in specific reserves to loans that have been restructured.

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as current financial information, payment experience, credit documentation, and current economic factors among other factors.

88 unchanged sentences

For certain loans the Company evaluates credit quality based on the aging status.

The following tables present the recorded investment in loans based on payment activity as of the dates indicated:

December 31, 2023

3 unchanged sentences

Commercial - owner occupied 28,373 — 28,373

Construction and land development — — —

Residential 712 — 712

6 unchanged sentences

Commercial - owner occupied 29,397 — 29,397

Construction and land development 2,690 — 2,690

Residential 743 — 743

2 unchanged sentences

NOTE 5 - LEASES

Lessee Arrangements

The Company has banking and limited-service facilities, data centers, and certain equipment under lease agreements.

Most of the leases expire between 2024 and 2028 and include one or more renewal options for up to 5 years.

One lease expires in 2030 and another in 2031.

Five leases expire between 2030 and 2034.

All leases are classified as operating leases.

6 unchanged sentences

Right-of-use assets obtained in exchange for lease obligations totaled $ 15.6 million and $ 9.5 million during the twelve months ended December 31, 2023 and 2022, respectively.

The additions in 2022 were primarily from lease renewals.

The additions in 2021 were primarily from the First Choice acquisition.

In 2021, an impairment of $ 1.1 million was recognized on right-of-use assets concurrent with the announced closure of certain leased locations.

For further discussion see “Note 7 – Fixed Assets.”

The additions in 2023 and 2022 were primarily from lease renewals.

Supplemental balance sheet information related to leases is as follows:

11 unchanged sentences

Operating lease liabilities $ 28,635

Lessor income was $ 1.9 million for each of the twelve months en ded December 31, 2022, and 2021.

Lessor Arrangements

The Company leases office space to a third party through an operating lease.

This lease has remaining lease terms of two years .

Lessor income was $ 1.8 million and $ 1.9 million for the twelve months en ded December 31, 2023, and 2022.

NOTE 6 - DERIVATIVE FINANCIAL INSTRUMENTS

Risk Management Objective of Using Derivatives

The Company is exposed to certain risk arising from both its business operations and economic conditions.

The Company is exposed to certain risks arising from both its business operations and economic conditions.

The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities.

1 unchanged sentence

Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates.

The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s borrowings.

The Company does not enter into derivative financial instruments for trading purposes.

Cash Flow Hedges of Interest Rate Risk

The Company’s objectives in using interest rate derivatives are to add stability to interest income and expense and to manage its exposure to interest rate movements.

To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy to fix certain variable cash flows without exchange of the underlying notional amount.

To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy.

For hedges of the Company’s variable-rate loans, interest rate swaps designated as cash flow hedges involve the receipt of fixed amounts and the Company making variable rate payments.

2 unchanged sentences

In January 2023, the Company entered into another hedge on the prime based loan portfolio with a notional value of $ 50.0 million, that effectively fixes the interest rate at 6.56 % for the notional amount and has a maturity date of February 1, 2027.

In addition, the Company executed a prime based interest rate collar in the fourth quarter 2022 with a notional amount of $ 100.0 million.

In addition, the Company executed a prime based interest rate collar in the fourth quarter of 2022 with a notional amount of $ 100.0 million.

The collar includes a cap of 8.14 % and a floor of 5.25 %.

1 unchanged sentence

The collar matures on October 1, 2029.

Interest rate swaps designated as cash flow hedges of variable rate debt involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements.

The Company has executed a series of cash flow hedges to fix the effective interest rate for payments due on $ 62.0 million of LIBOR-based junior subordinated debentures to a weighted-average-fixed rate of 2.62 %.

For hedges of the variable-rate liabilities, interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

The Company has executed a series of cash flow hedges to fix the effective interest rate for payments due on $ 62.0 million of junior subordinated debentures to a weighted-average-fixed rate o f 2.62 %.

Select terms of the hedges are as follows:

5 unchanged sentences

$ 13,506 2.64 % March 17, 2026

For derivatives designated and qualified as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in accumulated other comprehensive income and subsequently reclassified into interest income or expense in the same period(s) during which the hedged transaction affects earnings.

Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest income or expense as interest payments are paid on the hedged items.

During the next twelve months, the Company estimates an additional $ 1.5 million will be reclassified as a decrease to interest expense and $ 1.3 million will be reclassified as a decrease to interest income.

The gain or loss on derivatives designated and qualified as cash flow hedges of interest rate risk are recorded in accumulated other comprehensive income and subsequently reclassified into interest income or expense in the same period(s) during which the hedged transaction affects earnings.

Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest income or expense as interest payments are paid on the Company’s variable-rate loans and debt.

During the next twelve months, the Company estimates an

additional $ 0.9 million will be reclassified as a decrease to interest expense and $ 1.7 million will be reclassified as a decrease to interest income.

Non-designated Hedges

17 unchanged sentences

Gross Amounts Not Offset in the Statement of Financial Position

($ in thousands)

Gross Amounts Recognized Gross Amounts Offset in the Statement of Financial Position Net Amounts of Assets presented in the Statement of Financial Position Financial Instruments Fair Value Collateral Posted Net Amount

Interest rate swaps $ 22,958 $ — $ 22,958 $ — $ 9,010 $ 13,948

($ in thousands) Gross Amounts Recognized Gross Amounts Offset in the Statement of Financial Position Net Amounts of Assets presented in the Statement of Financial Position Financial Instruments Fair Value Collateral Posted Net Amount

Interest rate swaps $ 17,275 $ — $ 17,275 $ 1,105 $ 16,170 $ —

Interest rate collar 514 — 514 — — 514

Interest rate swaps $ 16,184 $ — $ 16,184 $ 1,105 $ — $ 15,079

Securities sold under agreements to repurchase 250,197 — 250,197 — 250,197 —

4 unchanged sentences

Interest rate swaps $ 21,533 $ — $ 21,533 $ — $ — $ 21,533

Interest rate collar 48 — 48 — — 48

Securities sold under agreements to repurchase 270,773 — 270,773 — 270,773 —

As of December 31, 2022, the fair value of derivatives in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements was $ 20.7 million.

The company has minimum collateral posting thresholds with certain of its derivative counterparties and posts collateral related to derivatives in a net liability position.

As of December 31, 2023, the fair value of counterparty derivatives in a net liability position, which includes accrued interest, related to these agreements was $ 15.8 million.

The company has minimum collateral posting thresholds with certain derivative counterparties and posts collateral related to derivatives in a net liability position.

The Company has received cash collateral from counterparties on derivatives that were in a net asset position as noted in the tables above.

9 unchanged sentences

Depreciation and amortization of fixed assets included in noninterest expense amounted to $ 5.1 million, $ 5.6 million, and $ 6.1 million in 2023, 2022, and 2021, respectively.

In 2023, the Company completed an asset sale-leaseback on a branch location in the Kansas City market and recorded a gain of $ 0.1 million.

In 2021 the Company commenced the process to close three branch locations in California related to the First Choice acquisition.

4 unchanged sentences

NOTE 8 - GOODWILL AND INTANGIBLE ASSETS

The table below presents a summary of goodwill:

($ in thousands) Years ended December 31,

Goodwill, beginning of year $ 365,164 $ 260,567

Additions from acquisition — 104,597

Goodwill, end of year $ 365,164 $ 365,164

The Company’s goodwill was $ 365.2 million for the years ending December 31, 2023 and 2022, respectively.

The table below presents a summary of intangible assets:

1 unchanged sentence

Core deposit intangible, net, beginning of year $ 16,919 $ 22,286

Additions from acquisition — 4,892

Amortization ( 4,601 ) ( 5,367 )

Core deposit intangible, net, end of year $ 12,318 $ 16,919

Amortization expense on the core deposit intangibles was $ 5.4 million for the year ended December 31, 2022 and $ 5.7 million for each of the years ended December 31, 2021 and 2020.

Amortization expense on the core deposit intangibles was $ 4.6 million, $ 5.4 million, and $ 5.7 million for the years ended December 31, 2023, 2022, and 2021, respectively.

The core deposit intangibles are being amortized over a 10 -year period.

15 unchanged sentences

The Company is a participant in certain networks that offer deposit placement services on a reciprocal basis that qualify large deposits for FDIC insurance.

At December 31, 2022, the Company had $ 10.6 million of certificates of deposits and $ 195.1 million of demand deposits in these reciprocal accounts.

The Company had $ 91.7 million and $ 10.6 million of certificates of deposits, and $ 1.1 billion and $ 195.1 million of demand deposits in these reciprocal accounts at December 31, 2023 and 2022, respectively.

At December 31, 2023 and 2022, overdraft deposits of $ 1.6 million and $ 3.2 million, respectively, were reclassified to loans.

3 unchanged sentences

($ in thousands) 2023 2022

EFSC Clayco Statutory Trust I $ 3,196 $ 3,196 December 17, 2033 December 17, 2008 Floats @ 3MO LIBOR + 2.85 %

EFSC Capital Trust II 5,155 5,155 June 17, 2034 June 17, 2009 Floats @ 3MO LIBOR + 2.65 %

EFSC Statutory Trust III 11,341 11,341 December 15, 2034 December 15, 2009 Floats @ 3MO LIBOR + 1.97 %

EFSC Clayco Statutory Trust II 4,124 4,124 September 15, 2035 September 15, 2010 Floats @ 3MO LIBOR + 1.83 %

EFSC Statutory Trust IV 10,310 10,310 December 15, 2035 December 15, 2010 Floats @ 3MO LIBOR + 1.44 %

EFSC Statutory Trust V 4,124 4,124 September 15, 2036 September 15, 2011 Floats @ 3MO LIBOR + 1.60 %

EFSC Capital Trust VI 14,433 14,433 March 30, 2037 March 30, 2012 Floats @ 3MO LIBOR + 1.60 %

EFSC Capital Trust VII 4,124 4,124 December 15, 2037 December 15, 2012 Floats @ 3MO LIBOR + 2.25 %

EFSC Clayco Statutory Trust I $ 3,196 $ 3,196 December 17, 2033 December 17, 2008 Floats @ 3 month term SOFR + 2.85 %

EFSC Capital Trust II 5,155 5,155 June 17, 2034 June 17, 2009 Floats @ 3 month term SOFR + 2.65 %

EFSC Statutory Trust III 11,341 11,341 December 15, 2034 December 15, 2009 Floats @ 3 month term SOFR + 1.97 %

EFSC Clayco Statutory Trust II 4,124 4,124 September 15, 2035 September 15, 2010 Floats @ 3 month term SOFR + 1.83 %

EFSC Statutory Trust IV 10,310 10,310 December 15, 2035 December 15, 2010 Floats @ 3 month term SOFR + 1.44 %

EFSC Statutory Trust V 4,124 4,124 September 15, 2036 September 15, 2011 Floats @ 3 month term SOFR + 1.60 %

EFSC Capital Trust VI 14,433 14,433 March 30, 2037 March 30, 2012 Floats @ 3 month term SOFR + 1.60 %

EFSC Capital Trust VII 4,124 4,124 December 15, 2037 December 15, 2012 Floats @ 3 month term SOFR + 2.25 %

JEFFCO Stat Trust I 7,732 7,732 February 22, 2031 February 22, 2011 Fixed @ 10.20 %

JEFFCO Stat Trust II (2) 4,550 4,496 March 17, 2034 March 17, 2009 Floats @ 3MO LIBOR + 2.75 %

Trinity Capital Trust III (2) 5,406 5,339 September 8, 2034 September 8, 2009 Floats @ 3MO LIBOR + 2.70 %

JEFFCO Stat Trust II (2) 4,604 4,550 March 17, 2034 March 17, 2009 Floats @ 3 month term SOFR + 2.75 %

Trinity Capital Trust III (2) 5,473 5,406 September 8, 2034 September 8, 2009 Floats @ 3 month term SOFR + 2.70 %

Trinity Capital Trust IV 10,310 10,310 November 23, 2035 August 23, 2010 Fixed @ 6.88 %

Trinity Capital Trust V (2) 8,032 7,869 December 15, 2036 September 15, 2011 Floats @ 3MO LIBOR + 1.65 %

Trinity Capital Trust V (2) 8,195 8,032 December 15, 2036 September 15, 2011 Floats @ 3 month term SOFR + 1.65 %

Total junior subordinated debentures 93,121 92,837

5.75% Fixed-to-floating rate subordinated notes 63,250 63,250 June 1, 2030 June 1, 2025 Fixed @ 5.75 % until

5.75 % Fixed-to-floating rate subordinated notes

63,250 63,250 June 1, 2030 June 1, 2025 Fixed @ 5.75 % until

June 1, 2025, then floats @ Benchmark rate (3 month term SOFR) + 5.66 %

14 unchanged sentences

Interest on the subordinated debentures held by the trusts is recorded as interest expense in the Company’s Consolidated Statements of Income.

The Company’s investment of $ 2.9 million at December 31, 2022, in these trusts is included in other investments in the consolidated balance sheets.

The Company has fixed the interest rate on a portion of its junior subordinated debentures through a series of interest rate swaps.

The Company’s investment in these trusts of $ 2.9 million at December 31, 2023 is included in other investments in the consolidated balance sheets.

The Company has fixed the interest rate on a portion of its junior subordinated debentures through a series of

interest rate swaps.

For further discussion of the interest rate swaps and the corresponding terms, see “Note 6 – Derivative Financial Instruments.”

1 unchanged sentence

The notes initially bore a fixed annual interest rate of 4.75 %, with interest payable semiannually in arrears on May 1 and November 1 of each year, commencing May 1, 2017.

On November 1, 2021, the Company redeemed the

$ 50.0 million of subordinated debentures at par.

On November 1, 2021, the Company redeemed the $ 50.0 million of subordinated debentures at par.

A loss of $ 0.7 million on the redemption was recognized for the write-off of unamortized debt issuance costs.

8 unchanged sentences

FHLB advances are collateralized by 1-4 family residential real estate loans, business loans, and certain commercial real estate loans.

At December 31, 2022 and 2021, the carrying value of the loans pledged to the FHLB of Des Moines was $ 1.4 billion.

The secured line of credit had availability of approximately $ 752.1 million at December 31, 2022.

At December 31, 2023 and 2022, the carrying value of the loans pledged to the FHLB of Des Moines was $ 1.9 billion and $ 1.4 billion, respectively.

The loans are pledged to the secured line of credit to maintain the borrowing base, which had availability of approximately $ 1.0 billion at December 31, 2023.

The following table summarizes the Company’s FHLB advances at December 31:

1 unchanged sentence

Non-amortizing fixed advance $ — — % $ 100,000 4.57 %

At December 31, 2022, the Company had advances of $ 50 million with a one-week maturity and $ 50 million in overnight funds.

In August 2019, the Company entered into agreements totaling $ 50 million for convertible advances with a weighted average rate of 1.56 % and maturity dates in August 2024 that were called during 2022.

NOTE 12 - OTHER BORROWINGS

18 unchanged sentences

As of December 31, 2023, $ 2.5 billion was available under this line.

This line is secured by a pledge of certain eligible loans aggregating $ 1.6 billion.

Included in this line is $ 215.0 million related to the Bank Term Funding program.

On January 24, 2024, the Federal Reserve announced that the program would cease making new loans on March 11, 2024.

This line is secured by a pledge of certain eligible loans and securities aggregating $ 2.9 billion.

There were no amounts drawn on the Federal Reserve line of credit as of December 31, 2023.

1 unchanged sentence

The Bank has $ 36.2 million of borrowings from various entities related to New Market Tax Credit investments.

These notes have varying terms that range from 26 - 31 years.

These notes have remaining terms that range from 25 - 30 years.

These notes have an interest rate of 1.0 % and are generally interest only for the first 7 years.

1 unchanged sentence

In February 2016, the Company entered into a senior unsecured revolving credit agreement (the “Revolving Agreement”) with another bank.

The Revolving Agreement has a one-year term, maturing on February 22, 2023, allows for borrowings up to $ 25 million, and had an interest rate of one-month LIBOR plus 125 basis points until February 2022.

In February 2022, the Revolving Agreement was renewed for a one-year term and the interest rate was amended to one-month Term SOFR plus 136 basis points.

The Revolving Agreement has a one-year term, maturing on February 22, 2024, allows for borrowings up to $ 25 million, and had an interest rate of one-month Term SOFR plus 136 basis points until February 2024.

A fee of 0.30 % annually is assessed against the unused commitment.

The proceeds can be used for general corporate purposes.

4 unchanged sentences

In February 2022, the interest rate on the Term Loan was amended to one-month Term SOFR plus 136 basis points.

The term loan agreement matures in February 2024.

A summary of the Term Loan is as follows:

21 unchanged sentences

Total Capital to Risk Weighted Assets 14.2 % 13.2 % 14.2 % 13.1 % 10.0 % 10.5 %

Leverage Ratio (Tier 1 Capital to Average Assets) 10.9 % 10.5 % 9.7 % 9.3 % 5.0 % 4.0 %

Leverage Ratio (Tier 1 Capital to Average Assets) 11.0 % 10.6 % 10.9 % 10.5 % 5.0 % N/A

NOTE 15 - SHAREHOLDERS’ EQUITY AND COMPENSATION PLANS

16 unchanged sentences

Preferred Stock

The Company has 5,000,000 shares of authorized preferred stock with a par value of $ 0.01 with 75,000 shares issued and outstanding at the end of 2022.

The Company has 5,000,000 shares of authorized preferred stock with a par value of $ 0.01 with 75,000 shares issued and outstanding at the end of 2023 and 2022.

The Board of Directors has the right to set for each series of preferred stock, subject to the laws of the State of Delaware, the dividend rate, conversion and redemption terms, voting rights and liquidation preferences, among others.

7 unchanged sentences

If dividends on the Series A Preferred stock have not been declared or paid in six quarterly periods, whether or not consecutive, the number of directors on the board will automatically be increased by two and the holders of the Series A preferred stock will be entitled to vote for the additional directors.

Dividends on the Company’s capital stock are prohibited under the terms of the junior subordinated debenture agreements, see “Note 10 – Subordinated Debentures,” if the Company is in continuous default on its payment obligations to the capital trusts, has elected to defer interest payments on the debentures or extends the interest payment period.

Furthermore, unless dividends on all outstanding shares of the Series A Preferred Stock for the

most recently completed dividend period have been paid or declared, dividends on, and repurchases of, common stock is prohibited.

Quarterly dividends have been declared and paid in all periods since the preferred stock was issued.

Dividends on the Company’s capital stock are prohibited under the terms of the junior subordinated debenture agreements, see “Note 10 – Subordinated Debentures and Notes,” if the Company is in continuous default on its payment obligations to the capital trusts, has elected to defer interest payments on the debentures or extends the

interest payment period.

Furthermore, unless dividends on all outstanding shares of the Series A Preferred Stock for the most recently completed dividend period have been paid or declared, dividends on, and repurchases of, common stock is prohibited.

At December 31, 2023, the Company was not in default on any of the junior subordinated debenture issuances or preferred stock.

4 unchanged sentences

Net change ( 17,049 ) ( 3,624 ) 2,330 ( 18,343 )

Transfer from available-for-sale to held-to-maturity ( 16,284 ) 16,284 — —

Balance, December 31, 2021 $ 5,271 $ 15,684 $ ( 2,178 ) $ 18,777

Net change ( 149,623 ) ( 2,696 ) 3,210 ( 149,109 )

Transfer from available-for-sale to held-to-maturity ( 197 ) 197 — —

Balance, December 31, 2022 $ ( 144,549 ) $ 13,185 $ 1,032 $ ( 130,332 )

Net change 31,705 ( 2,605 ) 217 29,317

Transfer from available-for-sale to held-to-maturity ( 197 ) $ 197 $ — $ —

Balance, December 31, 2023 $ ( 112,844 ) $ 10,580 $ 1,249 $ ( 101,015 )

4 unchanged sentences

Reclassification of gain on sale of available-for-sale securities(a) ( 601 ) ( 151 ) ( 450 ) — — — — — —

Reclassification of gain on held-to-maturity securities(b) ( 3,605 ) ( 909 ) ( 2,696 ) ( 4,672 ) ( 1,048 ) ( 3,624 ) ( 2,537 ) ( 627 ) ( 1,910 )

Reclassification of gain on held-to-maturity securities(a) ( 3,483 ) ( 878 ) ( 2,605 ) ( 3,605 ) ( 909 ) ( 2,696 ) ( 4,672 ) ( 1,048 ) ( 3,624 )

Change in unrealized gain (loss) on cash flow hedges ( 656 ) ( 165 ) ( 491 ) 3,741 943 2,798 1,533 372 1,161

2 unchanged sentences

(a) The pre-tax amount is reported in noninterest income/expense in the Consolidated Statements of Income.

(b) The pre-tax amount is reported in interest income/expense in the Consolidated Statements of Income, except for a $ 3.2 million termination fee in 2020 recognized in noninterest expense.

(b) The pre-tax amount is reported in interest income/expense in the Consolidated Statements of Income.

Compensation Plans

4 unchanged sentences

At December 31, 2023, there was $ 14.5 million of total unrecognized compensation cost related to unvested share-based compensation awards.

The cost is expected to be recognized over a weighted-average term of 2 years.

The cost is expected to be recognized over a weighted-average term of approximately 2 years.

The following table summarizes share-based compensation expense:

5 unchanged sentences

Total share-based compensation expense $ 10,146 $ 8,006 $ 6,017

Performance Units

Performance Stock Units

The Company has entered into long-term incentive agreements with certain key employees.

1 unchanged sentence

The awards contain minimum (threshold), target, and maximum (exceptional) performance levels.

In the event of a change in control, as defined in the plan, the awards will vest at a minimum of the target level.

In the event of a change in control, as defined in the plan, the awards will vest at least at the target level.

The amount of the awards is determined at the end of the three-year vesting and performance period.

The fair value of performance units vesting in 2022, 2021, and 2020 were $ 0.5 million, $ 0.9 million, and $ 2.8 million, respectively.

The fair value of performance units issued upon vesting in 2023, 2022, and 2021 were $ 1.6 million, $ 0.5 million, and $ 0.9 million, respectively.

Information related to the outstanding grants at December 31, 2023 is shown below:

($ in thousands) 2020 - 2022 Cycle 2021 - 2023 Cycle 2022 - 2024 Cycle

($ in thousands, except per share data) 2021 - 2023 Cycle 2022 - 2024 Cycle 2023 - 2025 Cycle

Shares issuable at target 38,412 41,765 56,424

1 unchanged sentence

Unrecognized compensation cost $ 77 $ 1,001 $ 2,340

Weighted average grant date fair value $ 38.09 $ 47.16 $ 51.91

Weighted average grant date fair value (per share) $ 47.16 $ 51.91 $ 62.19

Maximum Shares Issuable

2 unchanged sentences

Vested (issued 31,142 shares)

Forfeited ( 7,368 )

Outstanding at December 31, 2023 273,202

7 unchanged sentences

($ in thousands) 2023 2022 2021

Total fair value at vesting date $ 3,888 $ 2,855 $ 1,702

Total fair value of awards vesting during the year $ 3,894 $ 3,888 $ 2,855

Unrecognized compensation cost 8,438 8,507 4,622

2 unchanged sentences

A summary of the status of the Company’s RSU awards as of December 31, 2023 and changes during the year then ended is presented below.

Shares Weighted Average

Shares Weighted Average Grant Date

Outstanding at December 31, 2022 269,868 $ 46.49

20 unchanged sentences

Following is a summary of stock option activity for 2023.

($ in thousands, except per share data) Shares Weighted

Shares Weighted

Exercise Price Weighted

6 unchanged sentences

Exercisable at December 31, 2023 53,208 $ 45.30 7.5 years

The intrinsic value of options exercised totaled $ 0.1 million in 2022.

There were no options exercised in 2021 or 2020.

The intrinsic value of options exercised totaled $ 0.1 million and $ 0.1 million in 2023 and 2022, respectively.

Employee Stock Purchase Plan

42 unchanged sentences

Total income tax expense $ 52,467 $ 56,417 $ 35,578

The net amount recognized as a component of tax expense for tax credits, other tax benefits, and amortization from LIHTC investments recognized per the table above was $ 0.2 million, $ 0.1 million and $ 0.4 million for the years ended December 31, 2022, 2021, and 2020 respectively.

The net amount recognized as a component of tax expense for tax credits, other tax benefits, and amortization from LIHTC investments recognized per the table above was immaterial for the year ended December 31, 2023, and $ 0.2 million and $ 0.1 million for the years ended December 31, 2022, and December 31, 2021, respectively.

As of December 31, 2023 and 2022, the carrying value of the investments related to low-income housing tax credits was $ 17.2 million and $ 7.3 million, respectively.

14 unchanged sentences

Other investments 5,341 4,293

Research and experimental expenses 1,944 —

Fixed assets 2,341 2,867

Other deferred tax assets 4,823 3,596

2 unchanged sentences

Acquired loans 2,388 2,212

Unrealized gains on securities, net — 6,171

Intangible assets 8,576 8,676

10 unchanged sentences

A valuation allowance is provided on deferred tax assets when it is more likely than not that some portion of the assets will not be realized.

The company determined it was more likely than not that some of the acquired note operating loss and tax credit assets would not be realized and has recognized a valuation allowance of $ 2.8 million at both December 31, 2022 and 2021, respectively.

The Company and its subsidiaries file income tax returns in the federal jurisdiction and in thirty-one states.

The Company is no longer subject to federal, state or local income tax audits by tax authorities for years before 2017, with the exception of 2016 being an open year by one state taxing authority.

The company determined it was more likely than not that some of the acquired net operating loss and tax credit assets would not be realized and has recognized a valuation allowance of $ 2.8 million at December 31, 2023 and 2022, respectively.

The Company and its subsidiaries file income tax returns in the federal jurisdiction and in thirty-two states.

The Company is no longer subject to federal, state or local income tax audits by tax authorities for years before 2018, with the exception of 2016 and 2017 being open years by state taxing authorities.

Net operating losses generated prior to 2016 that are utilized going forward would still be subject to examination.

As of December 31, 2022, the gross amount of unrecognized tax benefits was $ 2.7 million and the total amount of net unrecognized tax benefits that would impact the effective tax rate, if recognized, was $ 2.2 million.

As of December 31, 2021 and 2020, the total amount of the net unrecognized tax benefits that would impact the effective tax rate, if recognized, was $ 2.5 million and $ 3.1 million, respectively.

The Company believes it is reasonably possible the gross amount of unrecognized benefits will be reduced by approximately $ 0.4 million as a result of a

lapse of statute of limitations in the next 12 months.

As of December 31, 2023, the gross amount of unrecognized tax benefits was $ 3.1 million and the total amount of net unrecognized tax benefits that would impact the effective tax rate, if recognized, was $ 2.4 million compared to $ 2.2 million and $ 2.5 million as of December 31, 2022 and 2021, respectively.

The Company believes it is reasonably possible the gross amount of unrecognized benefits will be reduced by approximately $ 0.4 million as a

result of a lapse of statute of limitations in the next 12 months.

The Company is under audit by the state of Missouri, and while the Company has concluded it has adequately provided for uncertain tax positions, the outcome of such audits are always uncertain and could result in additional tax expense, though immaterial.

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense and classifies such interest and penalties in the liability for unrecognized tax benefits.

The amount accrued for interest and penalties was $ 0.6 million as of December 31, 2022, $ 0.5 million for 2021, and $ 0.9 million for 2020.

The amount accrued for interest and penalties was $ 1.0 million for 2023, $ 0.6 million as of 2022, and $ 0.5 million for 2021.

The activity in the gross liability for unrecognized tax benefits was as follows:

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Balance at end of year $ 3,077 $ 2,724 $ 2,697

NOTE 17 - COMMITMENTS

NOTE 17 - COMMITMENTS AND CONTINGENT LIABILITIES

Long-term Lease Commitments

6 unchanged sentences

The Company uses the same credit policies in making commitments and conditional obligations as it does for financial instruments included on its consolidated balance sheets.

The contractual amounts of off-balance-sheet financial instruments as of December 31, 2022, and December 31, 2021, are as follows:

The contractual amounts of off-balance-sheet financial instruments are as follows:

($ in thousands) December 31, 2023 December 31, 2022

4 unchanged sentences

There was an insignificant amount of unadvanced commitments on impaired loans at December 31, 2023 and December 31, 2022.

Other liabilities include approximately $ 12.1 million for an allowance for credit losses attributable to unadvanced commitments at December 31, 2022.

Other liabilities include an allowance for credit losses on unadvanced commitments of $ 6.6 million and $ 12.1 million at December 31, 2023 and 2022, respectively.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract.

Commitments usually have fixed expiration dates or other termination clauses, may have significant usage restrictions, and may require payment of a fee.

Of the total commitments to extend credit at

December 31, 2022, and December 31, 2021, $ 246.5 million and $ 238.7 million, respectively, represent fixed rate loan commitments.

Of the total commitments to extend credit at December 31, 2023, and December 31, 2022, $ 191.6 million and $ 246.5 million, respectively, represent fixed rate loan commitments.

Since certain of the commitments may expire without being drawn upon or may be revoked, the total commitment amounts do not necessarily represent future cash obligations.

The Company evaluates each customer’s credit worthiness on a case-by-case basis.

The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the borrower.

The amount of collateral obtained, if deemed necessary by the

Company upon extension of credit, is based on management’s credit evaluation of the borrower.

Collateral held varies, but may include accounts receivable, inventory, premises and equipment, and real estate.

18 unchanged sentences

Active Markets

for Identical Assets

for Identical

(Level 1) Significant

Observable Inputs

(Level 2) Significant

9 unchanged sentences

Other investments — 2,941 — 2,941

Derivative financial instruments — 22,958 — 22,958

Derivatives — 17,789 — 17,789

Total assets $ — $ 1,639,003 $ — $ 1,639,003

Derivative financial instruments $ — $ 21,581 $ — $ 21,581

Derivatives $ — $ 16,184 $ — $ 16,184

Total liabilities $ — $ 16,184 $ — $ 16,184

2 unchanged sentences

Active Markets

for Identical Assets

for Identical

(Level 1) Significant

Observable Inputs

(Level 2) Significant

14 unchanged sentences

• Securities available-for-sale .

Securities classified as available-for-sale are reported at fair value utilizing Level 2 inputs.

Fair values for Level 2 securities are based upon dealer quotes, market spreads, the U.S.

Fair values for available-for-sale securities are based upon dealer quotes, market spreads, the U.S.

Treasury yield curve, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions at the security level.

18 unchanged sentences

• Other real estate.

These assets are reported at the lower of the loan carrying amount at foreclosure or fair value.

These assets are initially reported at fair value, less cost to sell, and subsequently at the lower of cost or fair value, less cost to sell.

Fair value is based on third party appraisals of each property and the Company’s judgment of other relevant market conditions.

3 unchanged sentences

Market-based cash flow modeling and discounting models specific to the SBA industry are provided by a third-party valuation service and are considered Level 2 inputs.

The following tables present financial instruments and non-financial assets measured at fair value on a non-recurring basis.

The following tables present financial instruments and non-financial assets still held as of the reporting date measured at fair value on a non-recurring basis.

December 31, 2023

3 unchanged sentences

(Level 2) Significant

Individually-evaluated loans $ 5,138 $ — $ — $ 5,138

Other real estate 5,736 — — 5,736

Loan servicing asset 1,027 $ 1,027 $ —

Total $ 10,874 $ — $ — $ 10,874

4 unchanged sentences

(Level 2) Significant

Impaired loans $ 6,406 $ — $ — $ 6,406

Other real estate 269 — — 269

2 unchanged sentences

(1) The amounts represent balances measured at fair value during the period and still held as of the reporting date.

Carrying amount and fair value at December 31, 2022 and 2021

Carrying amount and fair value

Following is a summary of the carrying amounts and fair values of the Company’s financial instruments on the consolidated balance sheets at December 31, 2023 and 2022.

25 unchanged sentences

In addition, these estimates do not reflect any premium or discount that could result from offering for sale the Company’s entire holdings of a particular financial instrument at one time.

Fair value estimates are based on existing on-balance and off-balance-sheet financial instruments without

attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments.

Fair value estimates are based on existing on-balance and off-balance-sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not

considered financial instruments.

In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in many of the estimates.

39 unchanged sentences

Net cash provided by operating activities

44,519 77,074 87,868

Cash flows from investing activities:

Proceeds (cash paid) for acquisitions, net of cash acquired — 2,346 ( 1,243 )

Proceeds from acquisitions, net of cash acquired — — 2,346

Purchases of other investments ( 1,002 ) ( 2,187 ) ( 2,204 )

Proceeds from distributions on other investments 3,314 3,878 2,656

Net cash provided by (used in) investing activities 1,691 2,798 ( 1,644 )

Net cash provided by investing activities

2,312 1,691 2,798

Cash flows from financing activities:

Proceeds from issuance of subordinated notes — — 61,953

Payments for the redemption of subordinated notes — — ( 50,000 )

5 unchanged sentences

Other 1,401 1,773 516

Net cash provided by (used in) financing activities ( 74,507 ) ( 71,381 ) 22,603

Net cash used in financing activities

( 45,431 ) ( 74,507 ) ( 71,381 )

Net increase in cash and cash equivalents 1,400 4,258 19,285

16 unchanged sentences

Banking expenses 8,110 7,212 6,123

Deposit costs 31,082 14,211 1,410

FDIC and other insurance 13,164 7,098 5,789

5 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data