ENTERPRISE FINANCIAL SERVICES CORPEFSC

ENTERPRISE FINANCIAL SERVICES CORP Commitments Disclosure

10-KFiled Feb 27, 20262 min read
COMMITMENTS AND CONTINGENT LIABILITIES
Long-term Lease Commitments
See “Note 6 – Leases” in this report for information regarding the Company’s long-term lease commitments.

Off-Balance-Sheet Commitments
The Company issues financial instruments in the normal course of the business of meeting the financing needs of its clients. These financial instruments include commitments to extend credit and standby letters of credit. These instruments may involve, to varying degrees, elements of credit and interest rate risk in excess of the amounts recognized in the Consolidated Balance Sheets. The Company’s extent of involvement and maximum potential exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is not more than the contractual amount of these
instruments. 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 following table summarizes the contractual amounts of off-balance-sheet financial instruments as of the periods indicated: 
($ in thousands)December 31, 2025December 31, 2024
Commitments to extend credit$2,866,028 $3,001,565 
Letters of credit102,884 137,926 
Tax creditsNM1,801 
Limited partnership commitments43,785 39,278 

There was an insignificant amount of unadvanced commitments on impaired loans at December 31, 2025 and December 31, 2024. Other liabilities include an ACL on unadvanced commitments of $6.0 million and $6.1 million at December 31, 2025 and 2024, respectively.

Commitments to extend credit are agreements to lend to a client 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, 2025, and December 31, 2024, $124.9 million and $156.5 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 client’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. Collateral held varies, but may include accounts receivable, inventory, premises and equipment, and real estate.

Letters of credit are conditional commitments issued by the Company to guarantee the performance of a client to a third party. These letters of credit are issued to support contractual obligations of the Company’s clients. The credit risk involved in issuing letters of credit is essentially the same as the risk involved in extending loans to clients. The approximate remaining term of letters of credit range from one month to four years, six months at December 31, 2025.

The Company also has off-balance sheet commitments for purchases of tax credits and commitments for various capital raises for limited partnership investments.
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About Commitments Disclosures

Commitments and contingencies disclosures catalog a company's off-balance-sheet obligations and legal exposures — purchase commitments, guarantee arrangements, pending litigation, and regulatory proceedings. These items represent potential future cash outflows that may not appear as liabilities on the balance sheet until they become probable and estimable.

Key signals: litigation reserves and disclosed loss ranges quantify management's estimate of legal exposure, but unquantified "reasonably possible" losses often represent the larger risk. Watch for changes in language around pending cases — shifts from "remote" to "reasonably possible" or increases in estimated loss ranges signal deteriorating outcomes. Unconditional purchase obligations and take-or-pay contracts create fixed cost structures that reduce operational flexibility. Guarantee arrangements for subsidiaries or joint ventures can create cascading obligations. Compare the total commitment schedule against projected free cash flow to assess whether the company can meet its obligations without additional financing.

Other Available Disclosures

Income TaxesEarnings Per ShareFair ValuePP&EGoodwill & IntangiblesLeasesSegmentsNew Standards