Enterprise Financial Services : Annual Report

Table of Contents

Letter to Our Shareholders..........	01
Management's Discussion and Analysis..........	02
Independent Auditor's Report..........	17
Consolidated Statements of Financial Condition..........	19
Consolidated Statements of Income..........	21
Consolidated Statements of Stockholders' Equity..........	23
Consolidated Statements of Cash Flows..........	24
Notes to Consolidated Financial Statements..........	26

Letter to Our Shareholders

Dear Fellow Shareholders:

We are pleased to report that Enterprise Financial Services Group, Inc. has continued to expand the bottom line while remaining focused on helping small business and operating in the small business niche. This was the most profitable year in our history! Our capital level has grown stronger and it is the Board's intent to begin buying back the preferred stock over the next five years.

The Bank's asset quality has continued to strengthen with charge-offs dropping to historical lows. The Bank's small business clients have been largely successful at mitigating the negative business climate challenges brought on by COVID-19.

The Bank did experience some losses related to OREO that were beyond management's control. Two separate buildings experienced structural deterioration. One resulting from a neighboring building's damages migrating to our property and the second from wind creating structural roof damage. Both losses were outside of our insurance coverage.

The Bank began a remodel of the office building next to the Bank. All Bank subsidiaries will move into this newly renovated building in the first half of 2022. This should enable material expansion in the non- traditional banking business lines. We hope to make a material profit in the future operations of these subsidiaries.

The Bank continues to control technology related expenses but this is an area of great concern due to the constant barrage of IT attacks from a myriad of individuals and foreign governments. The constant attempts to find and explore IT system weaknesses has caused the industry to expend large amounts of money to protect depositors.

The Bank incurred material expense over the last few years to defend itself from what management believes are frivolous lawsuits. This year we prevailed in one of the lawsuits and were able to recover all of our costs in the process.

We encourage you to read Management's Discussion and Analysis contained in the Annual Report to gain a more thorough understanding of the operational and financial results.

As always, we appreciate your investment, your trust, and your ongoing support of Enterprise Financial Services Group, Inc.

Sincerely,

Charles H. Leyh	Douglas W. Lockard
Chariman of the Board	Vice Chairman of the Board

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Management's Discussion & Analysis

For The Year Ended September 30, 2021

This discussion provides additional information and analysis of the results of operations for Enterprise Financial Services Group, Inc. (the "Company") and its wholly owned subsidiary, Enterprise Bank (the "Bank"), for the fiscal year ended September 30, 2021 ("2021"). This discussion includes results of operations for the Bank's wholly owned subsidiaries Enterprise Insurance Services, Inc., Enterprise Business Consultants, Inc., Kuzneski & Lockard, Inc., Buildonus, Inc. and Enterprise Intangible Assets, LLC. This discussion is provided as a supplement to the audited financial statements and accompanying disclosures included in the Company's 2021 Annual Report.

Peer group data used in preparing the accompanying charts was taken from the Bank's Uniform Bank Performance Report ("UBPR") as published quarterly by the Federal Financial Institutions Examination Council ("FFIEC"). The Bank's UBPR designated peer group for 2021 includes all insured commercial banks in the United States of America with total assets between $300 million and $1 billion. The Bank's UBPR designated peer group for years 2018 and prior includes all banks in the United States of America, located in a metropolitan area, with total assets between $100 million and $300 million and two or fewer full service offices. Please note that UBPR data is prepared on a calendar year basis. Therefore, unless specifically noted, when peer data is used in the charts the Bank's data has also been presented on a calendar year basis.

OVERALL PERFORMANCE SUMMARY

In 2021, Management continued to navigate through the challenges of operating during the global COVID-19 pandemic. At the same time, there was continued emphasis on meeting overall strategic goals. This included targeted growth in the core loan portfolio while maintaining credit quality and stable costs of operation. Focus on supporting the Bank's small business client base during this difficult period remained a priority. In 2021, the Bank was again a participating lender in the 2nd round of Paycheck Protection Program ("PPP") loans to help small businesses. This program provided funding to small businesses that was 100% guaranteed by the SBA and eligible for forgiveness if the borrower met certain criteria.

The solid line in accompanying Chart #1 illustrates the Company's annual pre-tax income for the last five fiscal years (2017 through 2021). In 2021, pre-tax income increased $1.8 million over the prior year, to a total of approximately $5.3 million. This represents a 51% increase over the prior year.

Chart #1 also illustrates the Company's annual income before tax and before provision for loan losses for the same five year period. This is indicated by the dotted line. Income before provision for loan losses eliminates the impact of loan loss provisions which have been volatile year to year in the current environment. Pre-tax income, excluding loan loss provisions, increased $1.2 million or 29% versus the prior year.

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