EFSC

New in FY2025

• Adverse developments affecting the banking industry, and resulting media coverage, could eroded client confidence in the banking system and could have a material effect on our operations and/or stock price.
• In the event there is concern about the financial stability of the banking industry, there is a risk that clients may choose to maintain deposits with larger financial institutions or invest in higher yielding short-term fixed income securities, all of which could affect our liquidity, cost of funding, loan funding capacity, net interest margin, capital and results of operations.
• If we lose our status as a Preferred Lender, we may lose some or all of our clients to lenders who are Preferred Lenders, and as a result we could experience a material adverse effect to our financial results.
• When we originate SBA loans, we incur credit risk on the non-guaranteed portion of the loans, and if a client defaults on a loan, we share any loss and recovery related to the loan pro-rata with the SBA.
• Banking regulations are primarily intended to protect depositors’ funds, federal deposit insurance funds and the banking system as a whole, rather than stockholders.
• Our ACL may not be adequate to cover actual loan losses.
• We maintain an ACL, which is a reserve established through a provision for credit losses charged to expense, that represents management’s estimate of probable losses within the existing loan portfolio.
• In addition, bank regulatory agencies periodically review our ACL and may require an increase in the provision for credit losses or the recognition of further loan charge-offs, based on judgments that can differ somewhat from those of our own management.
• In addition, if charge-offs in future periods exceed the ACL (i.e., if the ACL is inadequate), we may need additional credit loss provisions to increase the allowance for loan losses.
• Additional provisions to increase the ACL, should they become necessary, would result in a decrease in net income and a reduction in capital, and may have a material adverse effect on our financial condition and results of operations.
• As of December 31, 2025, we had $417 million recorded as goodwill.
• Increases in nonperforming commercial loans could result in operating losses, impaired liquidity and erosion of our capital, and could have a material adverse effect on our financial condition and results of operations.
• An increase in nonperforming loans could result in a net loss of earnings from these loans, an increase in the provision for credit losses, and an increase in loan charge-offs, all of these factors could impact allowance, earnings and/or capital levels.
• Our C&I loans and sponsor finance loans are underwritten based primarily on cash flow, profitability and enterprise value of the client and are not fully covered by the value of tangible assets or collateral of the client.
• Consequently, if any of these transactions becomes nonperforming, we could experience significant losses.
• Thus, if a cash flow transaction becomes nonperforming, our primary recourse to recover some or all of the principal of our loan or other debt product would be to force the sale of all or part of the company as a going concern.
• We participate in and have previously been an “Allocatee” of the New Markets Tax Credit Program of the Treasury CDFI.
• If this were to occur, the amount we may be required to pay a bank investor could be substantial and could have an adverse effect on our results of operations and financial condition.
• If 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 regulators.
• These developments could have an adverse effect on our reputation, business, and financial condition.
• However, we may not be able to effectively implement new technology-driven products and services or be successful in marketing these products and services to our clients.
• The acquisition of other financial services companies or assets, such as the Branch Acquisition we completed in 2025, present risks to us in addition to those presented by the nature of the business acquired.
• We are headquartered in Missouri, but have branch locations in the Kansas City, Phoenix, Tucson, Los Angeles, and San Diego metropolitan areas, as well as Northern New Mexico, Florida and Nevada.
• Our stock price and the price of our depositary shares can fluctuate significantly in response to a variety of factors including, among other things: • actual or anticipated quarterly fluctuations in our operating results and financial condition; • changes in revenue or earnings estimates or publication of research reports and recommendations by financial analysts; • reputation; • failure to meet analysts’ revenue or earnings estimates; • speculation in the press or investment community; • strategic actions by us or our competitors, such as acquisitions or restructurings; • actions by institutional stockholders; • fluctuations in the stock prices and operating results of our competitors; • general market conditions and, in particular, developments related to market conditions for the financial services industry; • proposed or adopted regulatory changes or developments; • anticipated or pending investigations, proceedings or litigation that involve or affect us; and/or • domestic and international economic factors unrelated to our performance.
• A significant decline in our stock or depositary share prices could result in substantial losses for individual stockholders and could lead to costly and disruptive securities litigation.
• Business – Supervision and Regulation - Financial Holding Company - Dividend Restrictions and Stock Repurchases” for additional information.
• Anti-takeover provisions could negatively impact our stockholders.
• Such issuance could occur regardless of whether our stockholders favorably view the merger, tender offer or other attempt to gain control of the Company.
• These and other provisions could make it more difficult for a third party to acquire us even if an acquisition might be in the best interests of our stockholders.
• Although we did not issue any additional shares of our authorized preferred stock in the current year, there can be no assurance that the Company will not do so in the future.

Gone since FY2024

• Adverse developments affecting the banking industry, and resulting media coverage, have eroded customer confidence in the banking system and could have a material effect on our operations and/or stock price.
• The high-profile bank failures in the first quarter of 2023 generated significant market volatility among publicly traded bank holding companies and, in particular, regional banks.
• In assessing the failures in 2023, the banking regulators noted that each of the failed banks had a high proportion of deposits that exceeded FDIC deposit insurance limits.
• The industry has stabilized since these failures and the customer confidence in the safety and soundness of smaller regional banks has improved considerably.
• Nevertheless, risks remain that customers may choose to maintain deposits with larger financial institutions or invest in higher yielding short-term fixed income securities, all of which impacted our liquidity, cost of funding, loan funding capacity, net interest margin, capital and results of operations.
• While the Department of the Treasury, the Federal Reserve, and the FDIC historically have ensured that depositors of failed banks had access to their deposits, including uninsured deposit accounts, there is no guarantee that such actions will continue to be successful in restoring customer confidence in regional banks and the banking system more broadly.
• In addition, the banking operating environment and public trading prices of banking institutions can be highly correlated, in particular during times of stress, which could adversely impact the trading prices of our common stock and potentially our results of operations.
• If we lose our status as a Preferred Lender, we may lose some or all of our customers to lenders who are Preferred Lenders, and as a result we could experience a material adverse effect to our financial results.
• When we originate SBA loans, we incur credit risk on the non-guaranteed portion of the loans, and if a customer defaults on a loan, we share any loss and recovery related to the loan pro-rata with the SBA.
• Banking regulations are primarily intended to protect depositors’ funds, federal deposit insurance funds and the banking system as a whole, rather than shareholders.
• Our allowance for credit losses may not be adequate to cover actual loan losses.
• We maintain an allowance for credit losses, which is a reserve established through a provision for credit losses charged to expense, that represents management’s estimate of probable losses within the existing loan portfolio.
• In addition, bank regulatory agencies periodically review our allowance for credit losses and may require an increase in the provision for credit losses or the recognition of further loan charge-offs, based on judgments that can differ somewhat from those of our own management.
• In addition, if charge-offs in future periods exceed the allowance for credit losses (i.e., if the allowance for credit losses is inadequate), we may need additional credit loss provisions to increase the allowance for loan losses.
• Additional provisions to increase the allowance for credit losses, should they become necessary, would result in a decrease in net income and a reduction in capital, and may have a material adverse effect on our financial condition and results of operations.
• As of December 31, 2024, we had $365 million recorded as goodwill.
• Increases in non-performing commercial loans could result in operating losses, impaired liquidity and erosion of our capital, and could have a material adverse effect on our financial condition and results of operations.
• An increase in non-performing loans could result in a net loss of earnings from these loans, an increase in the provision for credit losses, and an increase in loan charge-offs, all of these factors could impact allowance, earnings and/or capital levels.
• Our commercial and industrial loans and sponsor finance loans are underwritten based primarily on cash flow, profitability and enterprise value of the client and are not fully covered by the value of tangible assets or collateral of the client.
• Consequently, if any of these transactions becomes non-performing, we could experience significant losses.
• Thus, if a cash flow transaction becomes non-performing, our primary recourse to recover some or all of the principal of our loan or other debt product would be to force the sale of all or part of the company as a going concern.
• We participate in and have previously been an “Allocatee” of the New Markets Tax Credit Program of the U.S.
• Department of the Treasury Community Development Financial Institutions Fund.
• If this were to occur, the amount we may be required to pay a bank investor could be substantial and could have a material adverse effect on our results of operations and financial condition.
• If we fail to comply with requirements of the federal New Markets Tax Credit program, the U.S.
• Department of the Treasury Community Development Financial Institutions Fund 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 regulators.
• These developments could have a material adverse impact on our reputation, business, and financial condition.
• In 2024, the FDIC issued a proposed rule that would revise the FDIC’s regulations governing the classification and treatment of brokered deposits.
• If the proposed rule is finalized as proposed, the Company may be required to classify certain deposits as brokered deposits.
• Among other changes, this may increase deposit insurance assessments and impact liquidity metrics.
• We may not be able, however, to effectively implement new technology-driven products and services or be successful in marketing these products and services to our clients.
• The acquisition of other financial services companies or assets present risks to us in addition to those presented by the nature of the business acquired.
• We are headquartered in Missouri, but have branch locations in the Kansas City, Phoenix, Los Angeles, and San Diego metropolitan areas, as well as Northern New Mexico, Florida and Nevada.
• Our core operating system conversion may result in business interruptions or other adverse developments.
• On October 11, 2024, we replaced our core operating systems, including those for loans, deposits, financials and other ancillary systems (collectively referred to as “core system”).
• We use the core system to track client relationships and accounts and report financial information.
• The core system is integrated with various other applications that are used to service client requests by Bank personnel or directly by clients (such as online and mobile banking).
• Changing the core system subjects us to operational risks, including disruptions to technology systems, which may adversely impact our clients.
• We have documented plans, policies and procedures designed to prevent or limit the risks of a failure during and after the conversion of our core system.
• However, there can be no assurance that any such adverse developments will not occur or, if they do occur, that they will be timely and adequately remediated.

and 8 more.