8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) 
October 16, 2007

ENTERPRISE FINANCIAL SERVICES
CORP
(Exact name of registrant as specified in its charter)

Delaware	001-15373	43-1706259
(State or Other Jurisdiction	(Commission	(IRS Employer
of Incorporation)	File Number)	Identification No.)

150 N. Meramec, St. Louis, Missouri	63105
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code
(314) 725-5500

Not applicable

(Former name or former address, if changed since last report) 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o   Pre-commencement communications pursuant to Rule 13e-4© under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On October 16, 2007, Registrant issued a press release announcing financial information for its third quarter ended September 30, 2007. The press release is attached hereto as Exhibit 99.1 and is furnished to, but not filed with, the Commission.

ITEM 9.01 Financial Statements and Exhibits

(d) Exhibits

Exhibit No.	Description
99.1	Press Release dated October 16, 2007

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized.

Date: October 17, 2007

ENTERPRISE FINANCIAL SERVICES CORP 

/s/ Kevin C. Eichner 

Kevin C. Eichner 

Chief Executive Officer 

INDEX TO EXHIBITS

Exhibit No.	Description
99.1	Press Release dated October 16, 2007*

*This exhibit is furnished to, but not filed with, the Commission by inclusion herein.

EX-99.1

Exhibit 99.1

For more information contact:
Kevin Eichner or Frank Sanfilippo (314) 725 5500
Melissa Sturges (816) 221 7500 or Ann Marie Mayuga (314) 469 4798

ENTERPRISE FINANCIAL REPORTS RECORD THIRD QUARTER EPS ON
STRENGTH OF 20% INCREASE IN NET INCOME
 

• Company produced record quarterly EPS of $0.40
• Fully diluted EPS up 14% from 3Q ’06, up 11% from 2Q ‘07
• Bank reports 16% annualized organic loan growth, 23% overall
• Non-performing loans decline by $4.1 million to 0.55% of total loans
• Net interest rate margin improves
• Company announces plans to enter Phoenix, AZ market in ‘08

St. Louis, October 16, 2007. Enterprise Financial Services Corp (NASDAQ: EFSC), the parent company of Enterprise Bank & Trust, announced today that third quarter net income rose to $5.0 million, an increase of 20% from the $4.2 million reported in the third quarter of 2006. Earnings per share were $0.40, up 14% from the same period in 2006 and up 11% from second quarter of 2007. Total shares outstanding were 12,388,000 at September 30, 2007 versus 11,452,000 at September 30, 2006, as the Company issued nearly 700,000 additional shares related to its February 2007 acquisition of Great American Bank in the Kansas City market.

Commenting on the quarter and year-to-date results, EFSC President and CEO, Kevin C. Eichner, said, “It is gratifying to see continued earnings momentum and to achieve a new all-time high in quarterly EPS. We are especially pleased with a return to more normalized loan growth rates from our banking division coupled with reductions in non-performing loans and stronger margin performance in an environment where these trends are truly exceptional.”

Regarding the Company’s plans to enter the Phoenix, Arizona market in 2008, Eichner commented, “We are very excited about the potential of this vibrant market with Jack Barry and his colleagues. We believe that deploying our business model to a third urban growth market will ultimately drive higher returns and strengthen our entire platform. As we demonstrated with our two recent acquisitions in Kansas City and with the ongoing build-out of our Wealth Management line of business, we continue to make investments with a view toward generating long-term value.”

Banking Line of Business

Net interest income increased $2.3 million, or 16% in the third quarter of 2007 versus the same quarter in 2006. At quarter end, portfolio loans were up $247 million from year-end and $289 million, or 23%, from one year ago. Organic loan growth during the quarter was $58 million or 16% on an annualized basis.

Total deposits grew $131 million from December 31, 2006 and $164 million, or 13%, from the same period one year ago. The deposit mix for the third quarter remained favorable as non-interest bearing DDA deposits represented 15% of average deposits and brokered deposits represented approximately 10% of total deposits. Treasury management pipelines remain strong and typical seasonal increases in deposits are expected as the Company moves into the fourth quarter.

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Exhibit 99.1

The tax-equivalent net interest rate margin for the third quarter was 3.87%, an increase of 6 basis points from the second quarter of 2007. The Company is realizing the benefits of aggressively managing its deposit costs, reducing non-performing assets and continued discipline in loan pricing.

Non-performing loans totaled $8.5 million or 0.55% of total loans versus 0.84% at June 30, 2007 and 0.49% at December 31, 2006. Reflecting industry-wide conditions, $7.1 million or 83% of the non-performing loans relate to residential home builders in St. Louis and Kansas City. The largest of these loans is $2.7 million and several are below $400,000. Bank management does not expect to incur significant losses on these non-performing loans.

The Company’s net charge-offs during the quarter were $549,000 or 0.14% annualized. Year-to-date, net charge-offs were $1.4 million or 0.13% annualized. For the quarter, the provision for loan losses was $600,000 versus $240,000 in the same quarter of 2006. Higher absolute non-performing loan levels and higher net loan growth drove the increase in the provision levels in the current quarter.

The Company’s allowance for loan losses represented 1.27% of portfolio loans at September 30, 2007. One year ago, the allowance for loan losses rose to 1.40% of portfolio loans as a result of conforming adjustments made to risk ratings for NorthStar Bank’s loan portfolio. Enterprise acquired NorthStar in July 2006. At December 31, 2006, the ratio was 1.31%.

Increases in Deposit Service Charges and Other Income for the third quarter versus the same quarter in 2006 are largely related to the acquisition of Great American along with organic growth in deposit products and related services, including International services. Gains on sale of mortgage loans slowed during the third quarter versus the prior year due to less refinancing and slower home sales in our markets.

Wealth Management Line of Business

After doubling in 2006, Wealth Management revenue in the third quarter of 2007 was $3.5 million, essentially flat with the same quarter in 2006.

Enterprise Trust revenues grew 6% with pre-tax earnings up 15% in comparison with the same quarter in 2006. For the nine months ended September 30, 2007, pre-tax earnings for Enterprise Trust are up 10% over 2006. Total assets under administration were $1.7 billion, up 11% over the prior year period. The Trust operation continues to be heavily engaged in re-structuring and re-staffing related to preparation for a new national trust charter, which is expected this year. The unit is rolling out new pricing strategies and service lines during the fourth quarter and into next year that are expected to help offset some significant increases in staffing and infrastructure costs planned for 2008.

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Exhibit 99.1

After amortization of intangibles, the cost of related debt, and minority interest, Millennium posted pre-tax earnings of $619,000 in the third quarter versus $474,000 in the same quarter of 2006, an increase of 31%. For the nine months ended September 30, 2007, Millennium pre-tax earnings were $791,000 versus $1.4 million in the same period last year. Although paid premium sales growth has been exemplary at 23% year over year, lower margins have dampened revenue growth. A shift in carrier mix and higher payouts to producers continue to adversely affect the margin and net profits relative to plan.

Through September 30, 2007 the Company has accrued 100% of Millennium’s earnings in line with our contractual priority return rights.

Other Business Results

For the quarter, the Company’s efficiency ratio improved from 62% in the second quarter 2007 to 60%. The ratio was flat with the prior year third quarter as the Company continues to digest its most recent acquisitions. Non-interest expenses were $12.2 million in the third quarter of 2007 versus $11.0 million in the same quarter of 2006, an increase of $1.3 million or 11%. In addition to increased expenses at Millennium, approximately $848,000 was due to incremental expenses related to Great American.

Commenting on the outlook for the remainder of 2007, Eichner noted, “We are encouraged by our progress this year in the face of some real environmental turbulence in our industry. We expect our results to continue to compare favorably with those of our peers, as we move within striking distance of our earlier guidance. However, achievement of our previously announced EPS goals for the year remains a challenge as we are not yet realizing the planned lift from Wealth Management expected in the second half.”

Enterprise Financial operates commercial banking and wealth management businesses in metropolitan St. Louis and Kansas City with a recent announcement of its intent to enter the Phoenix, Arizona market with a state de novo bank charter in 2008. The Company is primarily focused on serving the needs of privately held businesses, their owner families, executives and professionals.

Please refer to the Consolidated Financial Summary attached for more details.

# # #

Readers should note that in addition to the historical information contained herein, this press release contains forward-looking statements, which are inherently subject to risks and uncertainties that could cause actual results to differ materially from those contemplated from such statements. Factors that could cause or contribute to such differences include, but are not limited to, burdens imposed by federal and state regulations of banks, credit risk, exposure to local and national economic conditions, risks associated with rapid increase or decrease in prevailing interest rates, effects of mergers and acquisitions, effects of critical accounting policies and judgments, legal and regulatory developments and competition from banks and other financial institutions, as well as other risk factors described in Enterprise Financial’s 2006 Annual Report on Form 10-K. Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update them in light of new information or future events.

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ENTERPRISE FINANCIAL SERVICES CORP
CONSOLIDATED FINANCIAL SUMMARY
(unaudited)

(In thousands, except per share data)	For the Quarter Ended				For the Nine Months Ended
	Sep 30,		Sep 30,		Sep 30,		Sep 30,
INCOME STATEMENTS	2007		2006		2007		2006
Total interest income	$	31,807	$	26,364	$	90,600	$	67,452
Total interest expense		16,002		12,525		45,750		30,214
Net interest income		15,805		13,839		44,850		37,238
Provision for loan losses		600		240		2,165		1,777
Net interest income after provision for loan losses		15,205		13,599		42,685		35,461
NONINTEREST INCOME
Wealth Management revenue		3,495		3,468		9,916		10,018
Deposit service charges		839		603		2,302		1,636
Gain on sale of mortgage loans		34		95		229		165
Gain (loss) on sale of other real estate		7		-		(5)		-
Other income		263		159		1,000		435
Total noninterest income		4,638		4,325		13,442		12,254
NONINTEREST EXPENSE
Salaries and benefits		7,523		6,754		21,972		18,398
Occupancy		995		737		2,898		1,957
Furniture and equipment		370		317		1,055		806
Other		3,314		3,144		10,508		8,405
Total noninterest expense		12,202		10,952		36,433		29,566
Minority interest in net income of consolidated subsidiary		-		(434)		-		(826)
Income before income tax		7,641		6,538		19,694		17,323
Income taxes		2,642		2,357		7,022		6,242
Net income	$	4,999	$	4,181	$	12,672	$	11,081
Basic earnings per share	$	0.40	$	0.37	$	1.04	$	1.03
Diluted earnings per share	$	0.40	$	0.35	$	1.01	$	0.99
Return on average assets		1.11%		1.10%		0.99%		1.11%
Return on average equity		11.85%		12.99%		10.75%		13.88%
Efficiency ratio		59.69%		60.30%		62.50%		59.74%
Noninterest expense to average assets		2.72%		2.89%		2.84%		2.95%
YIELDS (fully tax equivalent)
Loans		7.96%		7.90%		7.96%		7.61%
Securities		4.67%		4.11%		4.49%		4.01%
Federal funds sold		5.53%		5.25%		5.40%		4.75%
Yield on earning assets		7.73%		7.53%		7.71%		7.24%
Interest bearing deposits		4.44%		4.17%		4.45%		3.79%
Subordinated debt		7.20%		7.31%		7.20%		7.09%
Borrowed funds		5.00%		5.04%		5.01%		4.81%
Cost of paying liabilities		4.59%		4.31%		4.59%		3.96%
Net interest spread		3.14%		3.22%		3.12%		3.28%
Net interest rate margin		3.87%		3.99%		3.85%		4.03%

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ENTERPRISE FINANCIAL SERVICES CORP
CONSOLIDATED FINANCIAL SUMMARY (cont.)
(unaudited)

(In thousands)
	Sep 30,		Jun 30,		Mar 31,		Dec 31,		Sep 30,
BALANCE SHEETS	2007		2007		2007		2006		2006
ASSETS
Cash and due from banks	$	47,593	$	45,081	$	41,846	$	41,558	$	53,113
Federal funds sold		2,585		2,059		6,992		7,066		6,959
Interest-bearing deposits		1,100		1,021		1,144		1,669		2,614
Debt and equity investments		122,204		111,617		119,056		111,210		114,860
Loans held for sale		1,117		3,840		4,650		2,602		5,268
Portfolio loans		1,558,885		1,500,512		1,492,460		1,311,723		1,269,391
Less allowance for loan losses		19,754		19,703		19,220		16,988		17,805
Net loans		1,539,131		1,480,809		1,473,240		1,294,735		1,251,586
Other real estate		857		441		1,064		1,500		1,182
Premises and equipment, net		22,487		22,801		22,777		17,050		15,295
Goodwill		55,661		54,841		55,284		29,983		29,804
Core deposit intangible		3,511		3,693		3,886		2,153		2,261
Other amortizing intangibles		2,952		3,180		3,408		3,636		3,864
Other assets		29,061		23,929		23,276		22,425		21,369
Total assets	$	1,828,259	$	1,753,312	$	1,756,623	$	1,535,587	$	1,508,175
LIABILITIES AND SHAREHOLDERS' EQUITY
Non-interest bearing deposits	$	212,903	$	215,771	$	214,965	$	234,849	$	222,668
Interest bearing deposits		1,233,532		1,212,353		1,231,139		1,080,659		1,059,282
Total deposits		1,446,435		1,428,124		1,446,104		1,315,508		1,281,950
Subordinated debentures		56,807		56,807		56,807		35,054		35,054
FHLB advances		131,746		88,192		75,387		26,995		38,162
Other borrowings		10,613		7,593		12,786		13,757		13,731
Other liabilities		13,415		9,527		6,837		11,279		11,113
Total liabilities		1,659,016		1,590,243		1,597,921		1,402,593		1,380,010
Shareholders' equity		169,243		163,069		158,702		132,994		128,165
Total liabilities and shareholders' equity	$	1,828,259	$	1,753,312	$	1,756,623	$	1,535,587	$	1,508,175

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ENTERPRISE FINANCIAL SERVICES CORP
CONSOLIDATED FINANCIAL SUMMARY (cont.)
(unaudited)

(In thousands, except per share data)	For the Quarter Ended
	Sep 30,		Jun 30,		Mar 31,		Dec 31,		Sep 30,
	2007		2007		2007		2006		2006
EARNINGS SUMMARY
Net interest income	$	15,805	$	15,125	$	13,921	$	14,039	$	13,839
Provision for loan losses		600		715		850		350		240
Wealth Mangement revenue		3,495		3,458		2,963		3,791		3,468
Noninterest income		1,143		1,448		934		871		857
Noninterest expense		12,202		12,370		11,861		11,828		10,952
Minority interest in net income of consolidated subsidiary		-		157		(157)		(48)		(434)
Income before income tax		7,641		7,103		4,950		6,475		6,538
Net income		4,999		4,515		3,158		4,391		4,182
Diluted earnings per share	$	0.40	$	0.36	$	0.26	$	0.37	$	0.35
Return on average equity		11.85%		11.20%		8.92%		13.24%		12.99%
Net interest rate margin (fully tax equivalized)		3.87%		3.81%		3.86%		3.98%		3.99%
Efficiency ratio		59.69%		61.75%		66.57%		63.25%		60.30%
MARKET DATA
Book value per share	$	13.66	$	13.20	$	12.86	$	11.52	$	11.19
Tangible book value per share	$	8.65	$	8.20	$	8.03	$	8.42	$	8.05
Market value per share	$	24.34	$	24.86	$	28.00	$	32.58	$	30.86
Period end common shares outstanding		12,388		12,354		12,340		11,540		11,452
Average basic common shares		12,380		12,346		11,835		11,491		11,397
Average diluted common shares		12,652		12,692		12,198		11,892		11,823
ASSET QUALITY
Net charge-offs (recoveries)	$	549	$	232	$	628	$	1,167	$	(46)
Nonperforming loans	$	8,542	$	12,661	$	9,855	$	6,363	$	6,214
Nonperforming loans to total loans		0.55%		0.84%		0.66%		0.49%		0.49%
Allowance for loan losses to total loans		1.27%		1.31%		1.29%		1.30%		1.40%
Net charge-offs (recoveries) to average loans (annualized)		0.14%		0.06%		0.19%		0.37%		(0.01%)
CAPITAL
Average equity to average assets		9.40%		9.22%		8.96%		8.65%		8.49%
Tier 1 capital to risk-weighted assets		9.85%		9.82%		9.50%		9.63%		9.54%
Total capital to risk-weighted assets		11.05%		11.09%		10.85%		10.87%		10.79%
Tangible equity to tangible assets		6.07%		5.99%		5.67%		6.48%		6.26%
AVERAGE BALANCES
Portfolio loans	$	1,526,259	$	1,492,573	$	1,365,340	$	1,265,000	$	1,257,394
Earning assets		1,645,697		1,622,139		1,487,193		1,426,341		1,400,706
Total assets		1,780,239		1,754,297		1,601,266		1,521,640		1,504,253
Deposits		1,453,497		1,426,002		1,327,177		1,301,686		1,262,544
Shareholders' equity		167,310		161,663		143,514		131,621		127,685
LOAN PORTFOLIO
Commercial and industrial	$	416,715	$	391,237	$	379,147	$	352,914	$	343,776
Commercial real estate		703,772		681,735		671,709		576,172		553,486
Construction real estate		252,476		247,722		251,184		196,851		185,743
Residential real estate		155,489		149,182		157,473		150,244		148,369
Consumer and other		30,433		30,636		32,947		35,542		38,017
Total loan portfolio	$	1,558,885	$	1,500,512	$	1,492,460	$	1,311,723	$	1,269,391
DEPOSIT PORTFOLIO
Noninterest-bearing accounts	$	212,903	$	215,771	$	214,965	$	234,849	$	222,668
Interest-bearing transaction accounts		120,069		128,808		123,848		111,725		101,262
Money market and savings accounts		596,226		552,678		582,231		556,947		507,407
Certificates of deposit		517,237		530,867		525,060		411,987		450,613
Total deposit portfolio	$	1,446,435	$	1,428,124	$	1,446,104	$	1,315,508	$	1,281,950

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ENTERPRISE FINANCIAL SERVICES CORP
CONSOLIDATED FINANCIAL SUMMARY (cont.)
(unaudited)

(In thousands)		For the Quarter Ended
	Sep 30,		Jun 30,		Mar 31,		Dec 31,		Sep 30,
	2007		2007		2007		2006		2006
YIELDS (fully tax equivalent)
Loans		7.96%		7.98%		7.94%		7.95%		7.90%
Securities		4.67%		4.50%		4.31%		4.21%		4.11%
Federal funds sold		5.53%		5.49%		5.51%		5.43%		5.29%
Yield on earning assets		7.73%		7.72%		7.66%		7.57%		7.54%
Interest bearing deposits		4.44%		4.47%		4.42%		4.32%		4.17%
Borrowed funds		5.00%		5.04%		4.99%		4.61%		5.04%
Subordinated debt		7.20%		7.19%		7.21%		7.37%		7.31%
Cost of paying liabilities		4.59%		4.63%		4.55%		4.42%		4.31%
Net interest spread		3.14%		3.09%		3.11%		3.15%		3.23%
Net interest rate margin		3.87%		3.81%		3.86%		3.98%		3.99%
WEALTH MANAGEMENT
Trust Assets under management	$	1,106,214	$	1,111,042	$	1,047,700	$	1,042,146	$	996,142
Trust Assets under administration		1,734,761		1,742,426		1,659,573		1,634,834		1,567,164

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