ENTERPRISE FINANCIAL SERVICES CORPEFSC
ENTERPRISE FINANCIAL SERVICES CORP Fair Value Disclosure
FAIR VALUE MEASUREMENTS
The fair value of an asset or liability is the exchange price that would be received to sell that asset or paid to transfer that liability in an orderly transaction occurring in the principal market (or most advantageous market in the absence of a principal market) for such asset or liability. Inputs to valuation techniques include the assumptions that market participants would use in pricing an asset or liability. ASC Topic 820, Fair Value Measurements and Disclosures, establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:
•Level 1 Inputs - Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.
•Level 2 Inputs - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, volatilities, prepayment speeds, credit
risks, etc.) or inputs that are derived principally from or corroborated by market data by correlation or other means.
•Level 3 Inputs - Unobservable inputs for determining the fair values of assets or liabilities that reflect an entity’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities.
Fair value on a recurring basis
The following tables summarize financial instruments measured at fair value on a recurring basis, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:
| December 31, 2025 | |||||||||||||||||||||||
| ($ in thousands) | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total Fair Value | |||||||||||||||||||
| Assets | |||||||||||||||||||||||
| Securities available-for-sale | |||||||||||||||||||||||
| Obligations of U.S. Government-sponsored enterprises | $ | — | $ | 182,572 | $ | — | $ | 182,572 | |||||||||||||||
| Obligations of states and political subdivisions | — | 572,705 | — | 572,705 | |||||||||||||||||||
| Agency mortgage-backed securities | — | 1,709,311 | — | 1,709,311 | |||||||||||||||||||
| U.S. Treasury Bills | — | 170,984 | — | 170,984 | |||||||||||||||||||
| Corporate debt securities | — | 19,463 | — | 19,463 | |||||||||||||||||||
| Total securities available-for-sale | — | 2,655,035 | — | 2,655,035 | |||||||||||||||||||
| Other investments | — | 3,148 | — | 3,148 | |||||||||||||||||||
| Derivatives | — | 12,484 | — | 12,484 | |||||||||||||||||||
| Total assets | $ | — | $ | 2,670,667 | $ | — | $ | 2,670,667 | |||||||||||||||
| Liabilities | |||||||||||||||||||||||
| Derivatives | $ | — | $ | 10,114 | $ | — | $ | 10,114 | |||||||||||||||
| Total liabilities | $ | — | $ | 10,114 | $ | — | $ | 10,114 | |||||||||||||||
| December 31, 2024 | |||||||||||||||||||||||
| ($ in thousands) | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total Fair Value | |||||||||||||||||||
| Assets | |||||||||||||||||||||||
| Securities available-for-sale | |||||||||||||||||||||||
| Obligations of U.S. Government-sponsored enterprises | $ | — | $ | 276,040 | $ | — | $ | 276,040 | |||||||||||||||
| Obligations of states and political subdivisions | — | 409,197 | — | 409,197 | |||||||||||||||||||
| Agency mortgage-backed securities | — | 1,027,394 | — | 1,027,394 | |||||||||||||||||||
| U.S. Treasury Bills | — | 128,893 | — | 128,893 | |||||||||||||||||||
| Corporate debt securities | — | 20,746 | — | 20,746 | |||||||||||||||||||
| Total securities available-for-sale | — | 1,862,270 | — | 1,862,270 | |||||||||||||||||||
| Other investments | — | 2,983 | — | 2,983 | |||||||||||||||||||
| — | 15,144 | — | 15,144 | ||||||||||||||||||||
| Total assets | $ | — | $ | 1,880,397 | $ | — | $ | 1,880,397 | |||||||||||||||
| Liabilities | |||||||||||||||||||||||
| $ | — | $ | 18,692 | $ | — | $ | 18,692 | ||||||||||||||||
| Total liabilities | $ | — | $ | 18,692 | $ | — | $ | 18,692 | |||||||||||||||
•Securities available-for-sale. 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. Changes in fair value are recognized through accumulated other comprehensive income.
•Derivatives. Derivatives are reported at fair value utilizing Level 2 inputs. The Company obtains counterparty quotations to value its interest rate swaps and caps. In addition, the Company validates the counterparty quotations with third-party valuation sources. Derivatives with negative fair values are included in “Other liabilities” in the Consolidated Balance Sheets. Derivatives with positive fair value are included in “Other assets” in the Consolidated Balance Sheets. Changes in the fair value of client-related derivative instruments are recognized through net income. For the years ended December 31, 2025 and 2024, the gains and losses substantially offset each other due to the Company’s hedging of the client swaps with other bank counterparties.
Fair value on a non-recurring basis
Certain financial assets and financial liabilities are measured at fair value on a non-recurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment).
•Individually-evaluated loans. On a quarterly basis, fair value adjustments are recorded as necessary on loans that no longer exhibit risk characteristics similar to other loans to account for (1) partial write-downs based on the current appraised or market-quoted value of the underlying collateral or (2) the full charge-off of the loan carrying value. In some cases, the properties for which market quotes or appraised values have been obtained are located in areas where comparable sales data is limited, outdated, or unavailable. In addition, the Company may adjust the valuations based on other relevant market conditions or information. Accordingly, fair value estimates, including those obtained from real estate brokers or other third-party consultants, for collateral-dependent loans are classified in Level 3 of the valuation hierarchy. Fair value estimates on individually-evaluated loans utilizing a discounted cash flow approach are also classified as Level 3.
•OREO. 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. These are considered Level 3 inputs.
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, 2025 | |||||||||||||||||||||||
| (1) | (1) | (1) | (1) | ||||||||||||||||||||
| ($ in thousands) | Total Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||||||||
| Individually-evaluated loans | $ | 2,200 | $ | — | $ | — | $ | 2,200 | |||||||||||||||
| OREO | 81,544 | — | — | 81,544 | |||||||||||||||||||
| Total | $ | 83,744 | $ | — | $ | — | $ | 83,744 | |||||||||||||||
(1) The amounts represent balances measured at fair value during the period and still held as of the reporting date.
| December 31, 2024 | |||||||||||||||||||||||
| (1) | (1) | (1) | (1) | ||||||||||||||||||||
| ($ in thousands) | Total Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||||||||
| Individually-evaluated loans | $ | 15,370 | $ | — | $ | — | $ | 15,370 | |||||||||||||||
| OREO | 3,955 | — | — | 3,955 | |||||||||||||||||||
| Total | $ | 19,325 | $ | — | $ | — | $ | 19,325 | |||||||||||||||
(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
The following table is a summary of the carrying amounts and fair values of the Company’s financial instruments on the Consolidated Balance Sheets at December 31, 2025 and 2024. This summary excludes certain financial assets and liabilities for which carrying value approximates fair value and financial instruments that are recorded at fair value on a recurring basis disclosed above. Financial instruments for which carrying values approximate fair value include cash and due from banks, federal funds sold, interest bearing deposits, accrued interest receivable/payable, demand, savings and money market deposits.
| December 31, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||||||||
| ($ in thousands) | Carrying Amount | Estimated fair value | Level | Carrying Amount | Estimated fair value | Level | |||||||||||||||||||||||||||||
| Balance sheet assets | |||||||||||||||||||||||||||||||||||
| Securities held-to-maturity, net | $ | 1,074,957 | $ | 1,039,814 | Level 2 | $ | 928,935 | $ | 858,871 | Level 2 | |||||||||||||||||||||||||
| Other investments | 77,737 | 77,737 | Level 2 | 69,801 | 69,801 | Level 2 | |||||||||||||||||||||||||||||
| Loans held-for-sale | 928 | 928 | Level 2 | 110 | 110 | Level 2 | |||||||||||||||||||||||||||||
| Loans, net | 11,660,316 | 11,622,939 | Level 3 | 11,082,405 | 10,983,459 | Level 3 | |||||||||||||||||||||||||||||
| State tax credits, held-for-sale | 11,141 | 11,904 | Level 3 | 14,663 | 15,518 | Level 3 | |||||||||||||||||||||||||||||
| Servicing asset | 3,021 | 4,733 | Level 2 | 2,256 | 3,570 | Level 2 | |||||||||||||||||||||||||||||
| Balance sheet liabilities | |||||||||||||||||||||||||||||||||||
| Certificates of deposit | $ | 1,669,383 | $ | 1,665,449 | Level 3 | $ | 1,369,604 | $ | 1,364,377 | Level 3 | |||||||||||||||||||||||||
| Subordinated debentures and notes | 93,688 | 92,093 | Level 2 | 156,551 | 155,102 | Level 2 | |||||||||||||||||||||||||||||
| Other borrowings | 387,717 | 364,901 | Level 2 | 280,821 | 258,461 | Level 2 | |||||||||||||||||||||||||||||
Limitations
Fair value estimates are made at a specific point in time based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment, and therefore, cannot be determined with precision. Such estimates include the valuation of loans, goodwill, intangible assets, and other long-lived assets, along with assumptions used in the calculation of income taxes, among others. These estimates and assumptions are based on management’s best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using experience and other factors, including the current economic environment. Such estimates and assumptions are adjusted when facts and circumstances dictate. Changing real estate values, illiquid credit markets, volatile equity markets, and changes in consumer spending have combined to increase the uncertainty inherent in such estimates and assumptions. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in estimates resulting from continuing changes in the economic environment will be reflected in the financial statements in future periods. 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. 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.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Feb 28, 2025 | |
| 2023 | Feb 26, 2024 | |
| 2022 | Feb 24, 2023 | |
| 2021 | Feb 25, 2022 | |
| 2020 | Feb 19, 2021 | |
| 2019 | Feb 21, 2020 | |
| 2018 | Feb 22, 2019 | |
| 2017 | Feb 23, 2018 | |
| 2016 | Feb 24, 2017 | |
| 2015 | Feb 26, 2016 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.