What changed in this filing

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Item 1. Business

2025-02-28 compared with 2024-02-26 · 99 added, 76 removed, 272 unchanged (39% of the section changed)

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Forward-looking statements typically are identified with use of terms such as “may,” “might,” “will, “would,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “intend,” “potential,” “could,” “continue” and the negative and other variations of these terms and similar words, although some forward-looking statements may be expressed differently.

Forward-looking statements also include, but are not limited to, statements regarding plans, objectives, expectations or consequences of announced transactions, known trends, and statements about future performance, operations, products and services.

Forward-looking statements are typically identified by words such as “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project,” “pro forma”, “pipeline” and other similar words and expressions.

Forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time.

Forward-looking statements speak only as of the date they are made.

Because forward-looking statements are subject to assumptions and uncertainties, actual results or future events could differ, possibly materially, from those anticipated in the forward-looking statements and future results could differ materially from historical performance.

Further, the ability to predict results or the actual effect of future plans or strategies is inherently uncertain.

They are neither statements of historical fact nor guarantees or assurances of future performance.

While there is no assurance that any list of risks and uncertainties or risk factors is complete, important factors that could cause actual results to differ materially from those in the forward-looking statements include the following, without limitation:

our ability to efficiently integrate acquisitions into our operations, retain the customers of these businesses and grow the acquired operations;

changes in the appraised valuation of real estate securing impaired loans;

our ability to recover our investment in loans;

fluctuations in the fair value of collateral underlying loans;

outcomes of litigation and other contingencies;

exposure to general and local economic and market conditions, including risk of recession, high unemployment rates, higher inflation and its impacts (including U.S.

the Company’s ability to efficiently integrate acquisitions into its operations, retain the customers of these businesses and grow the acquired operations, as well as credit risk, changes in the appraised valuation of real estate securing impaired loans, outcomes of litigation and other contingencies, exposure to general and local economic and market conditions, high unemployment rates, higher inflation and its impacts (including U.S.

federal government measures to address higher inflation), U.S.

fiscal debt, budget and tax matters, and any slowdown in global economic growth;

risks associated with rapid increases or decreases in prevailing interest rates;

changes in business prospects that could impact goodwill estimates and assumptions;

consolidation within the banking industry;

competition from banks and other financial institutions;

the ability to attract and retain relationship officers and other key personnel;

burdens imposed by federal and state regulation;

changes in legislative or regulatory requirements, as well as current, pending or future legislation or regulation that could have a negative effect on our revenue and business, including rules and regulations relating to bank products and financial services;

changes in accounting policies and practices or accounting standards;

natural disasters;

terrorist activities, war and geopolitical matters (including the war in Israel and potential for a broader regional conflict and the war in Ukraine and the imposition of additional sanctions and export controls in connection therewith), or pandemics, or other health emergencies and their effects on economic and business environments in which we operate, including the related disruption to the financial market and other economic activity;

fiscal debt, budget and tax matters, and any slowdown in global economic growth, risks associated with rapid increases or decreases in prevailing interest rates, our ability to attract and retain deposits and access to other sources of liquidity, consolidation in the banking industry, competition from banks and other financial institutions, the Company’s ability to attract and retain relationship officers and other key personnel, burdens imposed by federal and state regulation, changes in legislative or regulatory requirements, as well as current, pending or future legislation or regulation that could have a negative effect on our revenue and businesses, including rules and regulations relating to bank products and financial services, changes in accounting policies and practices or accounting standards, natural disasters (such as wildfires and earthquakes), terrorist activities, war and geopolitical matters (including the war in Israel and potential for a broader regional conflict and the war in Ukraine and the imposition of additional sanctions and export controls in connection therewith), or pandemics, and their effects on economic and business environments in which we operate, including the related disruption to the financial market and other economic activity;

and other risks discussed under the caption “Risk Factors” in Item 1A of this Annual Report on Form 10-K, all of which could cause actual results to differ from those set forth in the forward-looking statements.

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We believe this strategy allows us to maximize organic growth opportunities, which we supplement and enhance through disciplined growth through acquisition.

As described in greater detail below, the Company offers a broad range of business and personal banking services, including wealth management services provided through Enterprise Trust.

As described in greater detail below, the Company offers a broad range of business and personal banking services, including wealth management services.

Lending services include C&I, CRE, real estate construction and development, residential real estate, SBA, consumer and other loan products.

A wide variety of deposit products, including property management and community associations along with a complete suite of treasury management and international trade services for operating businesses, complement our lending capabilities.

A wide variety of deposit products, along with a complete suite of treasury management and international trade services, complement our lending capabilities.

Building long-term client relationships – Our growth strategy is first and foremost client relationship driven.

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• Life Insurance Premium Finance .

We specialize in financing whole life insurance premiums utilized in high net worth estate planning through relationships with boutique estate planners throughout the United States.

We specialize in financing whole life insurance premiums utilized in high net worth estate planning through relationships with boutique estate planners throughout the country.

• Sponsor Finance .

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We are a secured lender on affordable housing projects funded through the use of federal and state low income housing tax credits.

In addition, we provide leveraged and other loans on projects funded through the U.S.

Department of the Treasury Community Development Financial Institution (“ Treasury

CDFI”) New Markets Tax Credit (“NMTC”) Program.

In 2023, we were awarded a $60.0 million NMTC allocation from the Treasury CDFI.

This was our sixth NMTC allocation and brings the total amount of these allocations to $303.0 million.

In addition, we provide leveraged and other loans on projects

funded through the U.S.

Department of the Treasury Community Development Financial Institution (“Treasury CDFI”) New Markets Tax Credit (“NMTC”) Program.

In 2023 and 2024, we were awarded $60.0 million and $50.0 million, respectively, in NMTC allocations from the Treasury CDFI.

These were our sixth and seventh NMTC allocations, respectively, and brings the total amount of these allocations to $353.0 million.

We will continue to participate in the application process for future awards, as well as serve as a secured lender to other allocatees.

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We have a minority ownership in a partnership that acquires, invests and sells, state low income housing tax credits.

We lend the partnership money with 6 - 12 year terms and receive interest income and fee income as projects close or credits are sold.

Specialty deposits – In addition to commercial operating accounts for our C&I customers, we offer specialty deposit accounts to customers in certain industries with complex account needs.

Our focus areas include community associations, property management, third party escrow, and trust services.

We lend to the partnership and receive interest income and fee income as projects close or credits are sold.

Deposit verticals – In addition to commercial operating accounts for our C&I customers, we offer deposit vertical accounts to customers in certain industries with complex account needs.

Our focus areas include community associations, property management, legal industry and escrow services.

These accounts are primarily demand accounts and have a low overall interest cost.

Customers in our specialty deposit products will typically receive an earnings credit rate that is used to offset the cost of maintaining the deposit accounts.

Payments made by the Company through the application of the earnings credit is reflected as a component of non-interest expense in the Consolidated Statement of Income.

Customers in our deposit vertical products will typically receive an earnings credit that is used to offset the cost of maintaining the deposit accounts.

Payments made by the Company through the application of the earnings credit is reflected as a component of noninterest expense in the Consolidated Statement of Income.

Fee income business – We offer a broad range of treasury management products and services that benefit businesses ranging from large national clients to local businesses.

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In response to ever increasing needs for data/information security and functional efficiency, we continue to offer cash management systems that employ mobile technology and fraud detection/mitigation services.

Enterprise Trust offers a wide range of fiduciary, investment management, and financial advisory services to facilitate providing these services.

We offer a wide range of fiduciary, investment management, and financial advisory services.

We also offer customer hedging products, international banking, card services and tax credit businesses that generate fee income.

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Technology products are also extensively utilized within the organization by associates in all lines of business including operations and support, customer service, and financial reporting for internal management purposes and for external compliance.

We have begun the process of converting our primary operating system to a leading core solution, and plan to implement the new core in late 2024.

In 2024, the Company successfully completed the conversion of its legacy core system into a new core banking platform.

Maintaining asset quality – We monitor asset quality through formal, ongoing, multiple-level reviews of loans in each market and specialized lending niche.

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Our geographic markets are served by multiple large financial and bank holding companies with substantial capital resources and lending capacity.

We face competition not only from other financial holding companies and commercial banks, but also from credit unions, investment managers, insurers, brokerage firms, financial technology companies, and other providers of financial services and products.

We face competition not only from other financial holding companies and commercial banks, but also from credit unions, investment managers, insurers, brokerage firms, private credit, financial technology companies, and other providers of financial services and products.

Strong competition for deposit and loan products affects the rates of those products, as well as the terms on which they are offered to customers.

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In addition, as a Federal Reserve non-member bank, the Bank is subject to supervision and regulation by the FDIC.

The Company has more than $10 billion in assets and therefore is subject to examination by the CFPB.

The Company has securities registered with the SEC under the Securities Exchange Act of 1934, as amended.

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The descriptions are qualified in their entirety by reference to the related statutes and regulations.

The regulatory and supervisory structure establishes a comprehensive framework of activities in which an institution can engage and is intended primarily for the protection of depositors, the deposit insurance funds and the banking system as a whole, rather than for the protection of shareholders or creditors.

The regulatory and supervisory structure establishes a comprehensive framework of activities in which an institution can engage and is intended primarily for the protection of depositors, the deposit insurance fund and the banking system as a whole, rather than for the protection of shareholders or creditors.

The regulatory structure also gives the regulatory authorities extensive discretion in connection with their supervisory and enforcement activities and examination policies, including policies concerning the establishment of deposit insurance assessment fees, classification of assets and establishment of adequate credit loss reserves for regulatory purposes.

If federal or state regulatory authorities were to take the position that the Company has violated any law or commitment or engaged in any unsafe or unsound practice, formal or informal corrective or enforcement actions could be taken against the Company and institution-affiliated parties (such as directors, officers, and agents).

These enforcement actions could include an imposition of civil monetary penalties and could directly affect not only the Company and institution-affiliated parties but also the Company’s counterparties, shareholders, and creditors and its commitments, arrangements, or other dealings.

Various legislation is from time to time introduced in Congress and state legislatures where we operate.

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The Dodd-Frank Act is a comprehensive legislative act that contains a set of provisions designed to govern the practices and oversight of financial institutions and other participants in the financial markets.

The Dodd-Frank Act made extensive changes in the regulation of financial institutions and their holding companies.

Some of the changes brought about by the Dodd-Frank Act have been modified by the Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018, signed into law on May 24, 2018.

The Dodd-Frank Act made extensive changes in the regulation of financial institutions and their holding companies, including modifications made by the Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018.

Financial Holding Company

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Acquisitions:

With certain limited exceptions, the BHCA requires every financial holding company or bank holding company to obtain the prior approval of the Federal Reserve before (i) acquiring substantially all the assets of any bank, (ii) acquiring direct or indirect ownership or control of any voting shares of any bank if, after such acquisition, it would own or control more than 5% of the voting shares of such bank (unless it already owns or controls the majority of such shares), or (iii) merging or consolidating with another bank holding company.

Under amendments to the BHCA promulgated by the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 and the Dodd-Frank Act, the Company may acquire banks outside of its home State of Missouri, subject to specified limits and may establish new branches in other States to the same extent as banks chartered in those States.

With certain limited exceptions, the BHCA requires every financial holding company or bank holding company to obtain the prior approval of the Federal Reserve and possibly other government authorities before (i) acquiring substantially all the assets of any bank, (ii) acquiring direct or indirect ownership or control of any voting shares of any bank if, after such acquisition, it would own or control more than 5% of the voting shares of such bank (unless it already owns or controls the majority of such shares), or (iii) merging or consolidating with another bank holding company.

Additionally, the BHCA provides that the Federal Reserve may not approve any of these transactions if it would result in or tend to create a monopoly, substantially lessen competition, or otherwise function as a restraint of trade, unless the anti-competitive effects of the proposed transaction are clearly outweighed by the public interest in meeting the convenience and needs of the community to be served.

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Support of Bank Subsidiary:

Under Federal Reserve policy, the Company is expected to act as a source of financial and managerial strength for the Bank and to commit resources to support the Bank.

Under Federal Reserve policy, the Company is expected to act as a source of financial and managerial strength for the Bank and to commit capital and financial resources to support the Bank.

The Dodd-Frank Act codified this longstanding policy by adopting a provision requiring, among other things, that bank holding companies serve as a source of strength for an subsidiary depository institution.

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From time to time the Company may engage in share repurchases.

The Federal Reserve requires that bank and financial holding companies, where certain conditions are triggered,

provide prior notice to, consult with, and in certain circumstances seek the approval of, the Federal Reserve or reserve bank staff prior to implementing a share repurchase plan.

The Federal Reserve requires that bank and financial holding companies, where certain conditions are triggered, provide prior notice to, consult with, and in certain circumstances seek the approval of, the Federal Reserve or reserve bank staff prior to purchasing or redeeming its equity securities.

Under Federal Reserve policies, financial holding companies may pay cash dividends on common stock only out of income available over the past year if prospective earnings retention is consistent with the organization’s expected future needs and financial condition and if the organization is not in danger of failing to meet its minimum regulatory capital requirements.

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In October 2022, the SEC adopted rules requiring securities exchanges, including Nasdaq, to adopt listing standards that require issuers to develop and implement a policy providing, under certain circumstances, for the recovery of erroneously awarded incentive-based compensation received by current or former executive officers.

The new rules, which were mandated as part of the Dodd-Frank Act became effective in January 2023.

The rules, which were mandated as part of the Dodd-Frank Act became effective in January 2023.

Pursuant to Nasdaq listing standards, the Company adopted a clawback policy that implemented the rules in the third quarter of 2023.

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Federal law establishes a system of prompt corrective action to resolve the problems of undercapitalized banks.

Under this system, the FDIC has established five capital categories (“well-capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized,” and “critically undercapitalized”) and is required to take various mandatory supervisory actions, and is authorized to take other discretionary actions with respect to banks in the three undercapitalized categories.

Under this system, the FDIC has established five capital categories (“well-capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized,” and “critically undercapitalized.") Federal and state bank regulators are authorized and required to take various mandatory supervisory and other discretionary actions with respect to banks in the three undercapitalized categories.

The severity of any such actions taken will depend upon the capital category in which a bank is placed.

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A bank that becomes “undercapitalized,” “significantly undercapitalized,” or “critically undercapitalized” is required to submit an acceptable capital restoration plan to the FDIC.

An “undercapitalized” bank also is generally prohibited from increasing its average total assets, making acquisitions, establishing new branches, or engaging in any new line of business, except in accordance with an accepted capital restoration plan or with the approval of the

The capital restoration plan will not be accepted by the regulators unless each company having control of the undercapitalized bank guarantees the bank subsidiary’s compliance with the capital restoration plan up to a certain specified amount.

The aggregate liability of the holding company of an undercapitalized bank is limited to the lesser of 5% of the institution’s assets at the time it became undercapitalized or the amount necessary to cause the institution to be “adequately capitalized.” An “undercapitalized” bank also is generally prohibited from increasing its average total assets, making acquisitions, establishing new branches, or engaging in any new line of business, except in accordance with an accepted capital restoration plan or with the approval of the FDIC.

Also, the FDIC may treat an “undercapitalized” bank as being “significantly undercapitalized” if it determines that those actions are necessary to carry out the purpose of the law.

The prompt corrective action regulations do not apply to bank holding companies, such as EFSC.

However, the Federal Reserve is authorized to take appropriate action at the bank holding company level, based upon the undercapitalized status of the bank holding company's depository institution subsidiaries.

In certain instances, relating to an undercapitalized depository institution subsidiary, the bank holding company would be required to guarantee the performance of the undercapitalized subsidiary’s capital restoration plan and might be liable for civil money damages for failure to fulfill its commitments on that guarantee.

Furthermore, in the event of the bankruptcy of the bank holding company, the guarantee would take priority over the bank holding company's general unsecured creditors, as described in “Support of Bank Subsidiary” above.

All of the Bank’s capital ratios were at levels that qualify it to be “well-capitalized” for regulatory purposes as of December 31, 2024 (see “Item 8.

Note 14 – Regulatory Capital”).

FDIC Insurance of Certain Accounts and Regulation by the FDIC:

The Bank’s deposits are insured under the Federal Deposit Insurance Act (the "FDIA") up to the maximum applicable limits and are subject to deposit insurance assessments designed to tie what banks pay for deposit insurance to the risks they pose.

Under the FDIC’s assessment system for determining payments to the Deposit Insurance Fund (the "DIF"), large insured depository institutions ("IDIs") with more than $10 billion in assets, like the Bank, are assessed pursuant to a complex methodology that seeks to capture both the probability that an individual large IDI will fail and the magnitude of the impact on the DIF if such a failure occurs.

The assessment base of a large IDI is its total assets less tangible equity.

In November 2023, the FDIC finalized a rule that imposes special assessments to recover the losses to the DIF resulting from the FDIC’s use, in March 2023, of the systemic risk exception to the least-cost resolution test under the FDIA in connection with the receiverships of Silicon Valley Bank and Signature Bank.

The special assessments will be collected at an annual rate of approximately 13.4 basis points per year (3.36 basis points per quarter) over eight quarters in 2024 and 2025.

The first assessment period began January 1, 2024.

Because the estimated loss pursuant to the systemic risk determination will be periodically adjusted, the FDIC retains the ability to cease collection early, extend the special assessment collection period and impose a final shortfall special assessment on a one-time basis.

In June 2024, due to the increased estimate of losses, the FDIC announced that it projects that the special assessment will be collected for an additional two quarters beyond the initial eight-quarter collection period, at a lower rate.

Consumer Financial Protection Bureau:

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Depository institutions with more than $10 billion in assets, such as the Bank, are subject to examination by the CFPB.

The CFPB has broad rule-making authority for a wide range of consumer protection laws that apply to all banks, including the authority to prohibit unfair, deceptive or abusive acts and practices.

The CFPB has broad rule-making authority for a wide range of federal consumer protection laws that apply to all banks, including the authority to prohibit unfair, deceptive or abusive acts and practices.

In addition, the Dodd-Frank Act enhanced the regulation of mortgage banking and gave to the CFPB oversight of many of the core laws which regulate the mortgage industry and the authority to implement mortgage regulations.

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The Bank must comply with the applicable provisions of these consumer protection laws and regulations as part of its ongoing customer relations.

The Bank’s consumer-oriented activities are also subject to various states and local consumer protection laws analogous, and in addition, to those listed above which among other things, impose obligations relating to marketing, origination, servicing and collection activities in our consumer business.

Failure to comply with these laws and regulations could give rise to regulatory sanctions, customer rescission rights, action by state and local attorneys general, and civil or criminal liability.

UDAP and UDAAP:

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Dividends by the Bank Subsidiary:

The Bank is a legal entity that is separate and distinct from EFSC.

Statutory and regulatory limitations apply to the Bank's payment of dividends to EFSC.

Under Missouri law, the Bank may pay dividends to the Company only from a portion of its undivided profits and may not pay dividends if its capital is impaired.

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The FDIC has issued policy statements providing that insured banks generally should pay dividends only from their current operating earnings.

The Bank’s payment of dividends also could be affected or limited by other

factors, such as events or circumstances which would lead the FDIC to require that it maintain capital in excess of regulatory guidelines.

The Bank’s payment of dividends also could be affected or limited by other factors, such as events or circumstances which would lead the FDIC to require that it maintain capital in excess of regulatory guidelines.

Transactions with Affiliates and Insiders:

The Bank is subject to the provisions of Regulation W promulgated by the Federal Reserve, which encompasses Sections 23A and 23B of the Federal Reserve Act.

Regulation W places limits and conditions on the amount of loans or extensions of credit to, investments in, or certain other transactions with, affiliates and on the amount of advances to third parties collateralized by the securities or obligations of affiliates.

Regulation W places limits

and conditions on the amount of loans or extensions of credit to, investments in, or certain other transactions with, affiliates and on the amount of advances to third parties collateralized by the securities or obligations of affiliates.

Regulation W also prohibits, among other things, an institution from engaging in certain transactions with certain affiliates unless the transactions are on terms substantially the same, or at least as favorable to such institution or its subsidiaries, as those prevailing at the time for comparable transactions with nonaffiliated companies.

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The CRA requires that, in connection with examinations of financial institutions within its jurisdiction, the FDIC is required to evaluate the record of the financial institutions in meeting the credit needs of their local communities, including low and moderate income neighborhoods, consistent with the safe and sound operation of those institutions.

The CRA does not establish specific lending requirements or programs for financial institutions nor does it limit an institution's discretion to develop the types of products and services that it believes are best suited to its particular community, but depository institutions may only receive CRA credit for certain types of lending and for lending, investments and services that support community development, as defined in the CRA regulations.

These factors are also considered in evaluating mergers, acquisitions, and applications to open a branch or facility.

If the Bank fails to maintain at least a "satisfactory" rating under the CRA, it would be subject to restrictions on certain new activities and acquisitions.

Additionally, federal banking agencies may take compliance with fair lending laws and practices, including CRA into account when regulating and supervising other activities.

The Bank has a satisfactory rating under CRA.

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The objective of the final rule is to strengthen the achievement of the core purpose of the statute, and adapt to changes in the banking industry, including the expanded role of mobile and online banking.

The final rule becomes effective on April 1, 2024, while most of the new requirements are applicable beginning January 1, 2026, and the remaining requirements are applicable January 1, 2027.

The final rule became effective on April 1, 2024, and most of the new requirements are applicable beginning January 1, 2026, and the remaining requirements are applicable January 1, 2027.

Privacy and Cybersecurity Regulations:

Our businesses are subject to numerous laws and regulations relating to the privacy of information regarding clients, employees and others.

These include, but are not limited to, the Gramm-Leach-Bliley Act, MO Rev Stat § 362.422 and the California Consumer Privacy Act of 2018.

Generally, privacy laws impose obligations with regard to the collection, use and disclosure of personal information and require public disclosure of privacy practices.

Some privacy laws offer individuals certain rights about how their personal information is processed, provide for significant penalties for non-compliance, and, under certain circumstances, impose requirements for transfers of personal data across national borders.

Under federal law and state laws, a financial institution must provide to its customers, at the inception of the customer relationship and annually thereafter, the institution’s policies and procedures regarding the handling of customers’ nonpublic personal financial information.

These provisions also provide that, except for certain limited exceptions, a financial institution may not provide such personal information to unaffiliated third parties unless the institution discloses to the customer that such information may be so provided and the customer is given the opportunity to opt out of such disclosure.

Anti-Money Laundering, Anti-Terrorism and Sanctions:

The Bank Secrecy Act (the "BSA") requires all financial institutions, including banks, to, among other things, establish a risk-based system of internal controls reasonably designed to prevent money laundering and the financing of terrorism.

It includes a variety of recordkeeping and reporting requirements (such as cash and suspicious activity reporting) as well as due diligence/know-your-customer documentation requirements.

In June 2024, the United States Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”) issued a proposed rule that would amend the anti-money laundering/countering the financing of terrorism (“AML/CFT”) program requirements for all financial institutions subject to the BSA with

AML/CFT program obligations, including the Bank.

The proposed rule would, among other things, require that (i) financial institutions have a risk assessment process to identify, evaluate, and document the financial institution’s money laundering, terrorist financing, and other illicit activity risks, and (ii) the risk assessment process must be updated on a periodic basis, including when certain material changes occur in the financial institution’s products, services, customer base, intermediaries, and geographic footprint.

In July 2024, the OCC, the Federal Reserve, and the FDIC each proposed rules to amend their respective BSA compliance program rules to align with FinCEN’s June 2024 proposed rule.

USA PATRIOT Act:

The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the “USA PATRIOT Act”) requires each financial institution to:

The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the “USA PATRIOT Act”) further augments and strengthens the requirements set forth in the BSA and requires each financial institution to:

(i) establish an anti-money laundering program;

(ii) establish due diligence policies, procedures and controls with respect to its private banking accounts and correspondent banking accounts involving foreign individuals and certain foreign banks;

and (iii) implement certain due diligence policies, procedures and controls with regard to correspondent accounts in the United States for, or on behalf of, a foreign bank that does not have a physical presence in any country.

(iii) implement certain due diligence policies, procedures and controls with regard to correspondent accounts in the United States for, or on behalf of, a foreign bank that does not have a physical presence in any country;

and (iv) eliminates civil liability for persons who file suspicious activity reports.

In addition, the USA PATRIOT Act contains a provision encouraging cooperation among financial institutions, regulatory authorities and law enforcement authorities with respect to individuals, entities and organizations engaged in, or reasonably suspected of engaging in, terrorist acts or money laundering activities.

The USA PATRIOT Act includes provisions providing the government with the power to investigate terrorism, including expanded government access to bank account records.

Commercial Real Estate Lending:

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In addition, the fraud-prevention adjustment would increase from 1 cent to 1.3 cents.

In January 2024, the Federal

Reserve announced it would extend the comment period from February 2024 to May 2024.

We will continue to monitor for final rulemaking and will evaluate the impact of any changes.

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Human Capital Management

We pride ourselves in creating an open, diverse, and transparent culture that celebrates teamwork and recognizes associates at all levels.

We expect and encourage participation and collaboration, and understand that we need each other to be successful.

We focus on creating an inclusive and transparent culture that celebrates teamwork and recognizes associates at all levels.

We expect and encourage participation and collaboration, and understand we need each other to be successful.

We value accountability because it is essential to our success, and we accept our responsibility to hold ourselves and others accountable for meeting shareholder commitments and achieving exceptional standards of performance.

We also believe in supporting our associates to achieve a work/life balance.

We also believe in supporting our associates to prioritize their wellness.

Attracting and Retaining Talent.

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Performance evaluations facilitate our ongoing assessment of associates’ skills and improvements as needed.

We use annual talent reviews to identify high performing associates and future potential leaders, provide

insight into critical development needs and retention risks, and identify business-critical talent needs, including anticipated workforce planning challenges.

Additionally, we have established succession plans to ensure continuation of critical roles and operations.

We use annual talent reviews to identify high-performing associates and future potential leaders, provide insight into critical development needs and retention risks, and identify business-critical talent needs, including anticipated workforce planning challenges.

Additionally, we have established succession plans to ensure continuation of essential roles and operations.

We are committed to offering a competitive total compensation package that is consistent with our principles and aligned with the Company’s financial performance.

We regularly compare compensation and benefits with peer companies and market data, making adjustments as needed to ensure our compensation stays competitive.

We regularly compare compensation and benefits with peer companies and market data, making adjustments to compensation as needed to ensure we remain competitive.

In addition to base salary, approximately 67% of associates are eligible to participate in the Company’s Short Term Incentive Plan (“STIP”) program.

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We also offer a wide array of benefits for our associates and their families including 401(k), paid time off, parental leave, medical, dental and vision benefits as well as life insurance and short-term disability for all full-time associates.

Our wellness program is designed to help associates avoid illness while improving and maintaining their general health.

The program offers financial rewards to associates who adopt healthy habits and participate in wellness education and health screens.

Annual health screenings are provided to all associates enrolled in medical benefits at no charge.

Our wellness program offers financial rewards to associates who adopt healthy habits and participate in wellness education and health screenings.

Annual health screenings for associates and spouses/domestic partners enrolled in our medical plans are provided to all associates at no charge.

Associate Feedback .

We conduct associate surveys to ensure we understand what is important to our associates, including their opinions on a variety of topics.

We conduct associate surveys to ensure we understand what is important to our associates.

The adoption of a volunteer time-off policy and improvements to internal communication processes are examples of changes that have been made in response to survey results.

Our efforts are being recognized.

For the past six years, the Bank has been included in the “Best Banks to Work for” by American Banker magazine for our dedication to employee satisfaction.

In 2023, we were ranked fifth among similar financial institutions with more than $10 billion in assets.

Diversity, Equity & Inclusion .

We believe diversity of thought and experiences results in better outcomes and empowers our associates to make more meaningful contributions within our company and communities.

We continue to learn and grow, and our current initiatives reflect our ongoing efforts around a more diverse, inclusive and equitable workplace.

Our Diversity, Equity & Inclusion Council is tasked with making recommendations to help us foster a diverse, equitable and inclusive environment for our associates and the communities we serve.

For the past seven years, the Bank has been included in the “Best Banks to Work for” by American Banker magazine for our dedication to employee satisfaction.

In 2024, we were ranked fourth among similar financial institutions with more than $10 billion in assets.

Belonging & Inclusion .

We believe diversity of thought and experiences helps us build better teams and improve our client experience, results in better outcomes, and empowers our associates to make more meaningful contributions within our company and communities.

We have made progress in this area, but continue to strive to further diversify our workforce and deepen our culture of inclusion.

Our Belonging & Inclusion Council is a management committee which provides information, ideas and insights from a variety of diverse perspectives to help us foster an inclusive environment for our associates and the communities we serve.

In addition, we have several associate development programs that help to create a more inclusive environment by giving associates and other individuals of all backgrounds additional opportunities to succeed and contribute.

These programs include:

• Career Acceleration Program - This trainee program introduces participants to the foundations of credit and commercial banking, while allowing participants to experience a wide range of assignments by rotating through the various product partners and operational areas of the Company.

• Career Acceleration Program - This trainee program introduces participants to the foundations of credit and commercial banking, while allowing them to experience a wide range of assignments by rotating through the various product partners and operational areas of the Company.

Upon successful completion of the program, the associate is placed in a role that aligns with their strengths and talents and helps meet the needs of our organization.

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Upon successful completion of the program, participants receive a small stipend and are guaranteed an interview with one of the program sponsors.

• Business Resource Groups - These groups bring together associates with a shared identity, interest or goal to create community and opportunities for improvement and engagement.

We track the representation of women and underrepresented minorities because we believe that diversity helps us build more effective teams and improve our client experience, leading to greater success for the Company and our shareholders.

Our diversity data is monitored by the Board.

We have made progress in this area and continue to strive to further diversify our workforce and strengthen our culture of inclusion.

• Business Resource Groups - These groups, which are open to all associates, bring together associates with a shared identity, interest or goal to create community and opportunities for improvement and engagement.

Focusing on a Safe and Healthy Workplace .

We value our associates and are committed to providing a safe and healthy workplace.

Our formal Health & Safety (“HS”) Policy mandates all tasks be conducted in a safe and efficient manner and comply with all local, state and federal health and safety regulations, and special safety concerns.

The HS Policy encompasses all facilities and operations and addresses on-site emergencies, injuries and illnesses, evacuation procedures, cell phone usage and general safety rules.

Our formal Health & Safety (“HS”) Policy mandates all tasks be conducted in a safe and efficient manner and comply with all local, state, and federal safety and health regulations, and addresses special safety concerns.

Our HS Policy encompasses all facilities and operations and addresses on-site emergencies, injuries and illnesses, evacuation procedures, cell phone usage and general safety rules.

Additionally, our Business Continuity Plan is an important component in helping maintain the health and safety of our associates and clients.

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 1. Business