Enterprise Financial Services (EFSC) risk factors, FY2025 10-K

Risks Relating to General Economic and Market Conditions

1. 01An economic downturn could adversely affect our financial condition, results of operations or cash flows
2. 02We face potential risk from changes in governmental monetary and fiscal policies
3. 03in the banking system and could have a material effect on our operations and/or stock priceNew

Legal, Regulatory and Tax Risks

1. 04Changes in government regulation and supervision may increase our costs or impact our ability to operate in certain lines of business
2. 05We are subject to numerous laws designed to protect consumers, including the CRA and fair lending laws, and failure to comply with these laws could lead to a wide variety of sanctions
3. 06We are subject to compliance with the Bank Secrecy Act and other anti-money laundering statutes and regulations, and failure to comply with these laws could lead to a wide variety of sanctions
4. 07If the Company or the Bank incur losses that erode its capital, it may become subject to enhanced regulation or supervisory action

Financial Risks

1. 08Our business is subject to interest rate risk and variations in interest rates may negatively affect our financial performance
2. 09Our ACL may not be adequate to cover actual loan losses27% rewritten
3. 10We may not be able to maintain our historical rate of growth or profitability, which could have a material adverse effect on our ability to successfully implement our business strategy
4. 11We may incur impairments to goodwill
5. 12Declines in asset values may result in impairment charges and adversely impact the value of our investments and our financial performance and capital
6. 13We invest in mortgage-backed obligations and such obligations have been, and are likely to continue to be, impacted by market dislocations, declining home values and prepayment risk, which may lead to volatility in cash flow and market risk and declines in the value of our investment portfolio
7. 14Our loan and deposit portfolios are in certain markets which could result in increased concentration risk
8. 15There are material risks involved in commercial lending that could adversely affect our business
9. 16The ability of our borrowers to repay their loans may be adversely affected by an increase in market interest rates which could result in increased credit losses. These increased credit losses, where the Bank has retained credit exposure, could decrease our assets, net income and available cash
10. 17Our loan portfolio includes loans secured by real estate, which could result in increased credit risk
11. 18Widespread financial difficulties or downgrades in the financial strength or credit ratings of life insurance providers could lessen the value of the collateral securing our life insurance premium finance loans and impair our financial condition and liquidity
12. 19Our construction and land development loans are based upon estimates of costs and value associated with the completed project. These estimates may be inaccurate and we may be exposed to more losses on these projects than on other loans
13. 20We are subject to environmental risks associated with owning real estate or collateral
14. 21We may be obligated to indemnify certain counterparties in financing transactions we enter into pursuant to the New Markets Tax Credit Program45% rewritten
15. 22If we fail to comply with requirements of the federal New Markets Tax Credit program, the Treasury CDFI could seek any remedies available under its Allocation Agreement with us, and we could suffer significant reputational harm and be subject to greater scrutiny from banking regulatorsNew
16. 23Liquidity risk could impair our ability to fund operations and meet debt coverage obligations, and jeopardize our financial condition
17. 24Our utilization of brokered deposits could adversely affect our liquidity and results of operations24% rewritten
18. 25By engaging in derivative transactions, we are exposed to additional credit and market risk in our banking business
19. 26The loss of any of our executive officers or other key employees, or the inability to recruit highly skilled and other key employees, may adversely affect our operations
20. 27We face significant competition
21. 28Technology is continually changing and we must effectively implement new innovations in providing services to our clients
22. 29Costs and levels of deposits are affected by competition that could increase our funding costs or liquidity risk
23. 30We have engaged in and may continue to engage in expansion through acquisitions, and these acquisitions present a number of risks related both to the acquisition transactions and to the integration of the acquired businesses
24. 31We may be unable to successfully integrate new business lines into our existing operations
25. 32As we expand outside our current markets, we may encounter additional risks that may adversely affect us

Technology and Cybersecurity Risks

1. 33We rely on third-party vendors to provide key components of our business infrastructure

Risks Relating to Our Common Stock and Depositary Shares

1. 34The price of our common stock and depositary shares may be volatile or may decline
2. 35The trading volume in our common stock and depositary shares is less than that of other larger financial institutions
3. 36An investment in our common stock or depositary shares is not insured and you could lose the value of your entire investment
4. 37Our ability to pay dividends is limited by various statutes and regulations and depends primarily on the Bank’s ability to distribute funds to us and is also limited by various statutes and regulations
5. 38There can be no assurance of any future dividends on our common stock or our depositary shares
6. 39Our outstanding preferred stock and debt securities, including debt securities related to our trust preferred securities, restrict our ability to pay dividends on our capital stock
7. 40Anti-takeover provisions could negatively impact our stockholders
8. 41Climate change may materially adversely affect our business and results of operations