Enterprise Bancorp, Inc. Announces Third Quarter 2016 Net Income of $4.7 Million, Quarterly Loan and Deposit Growth of $87 Million and $52 Million, Respectively

LOWELL, Mass., Oct. 20, 2016 (GLOBE NEWSWIRE) — Enterprise Bancorp, Inc. (the “Company”) (NASDAQ:EBTC), parent of Enterprise Bank, announced net income for the three months ended September 30, 2016 amounted to $4.7 million, an increase of $422 thousand, or 10%, compared to the same three-month period in 2015.  Diluted earnings per share were $0.41 for both the three months ended September 30, 2016 and 2015.  Net income for the nine months ended September 30, 2016 amounted to $13.8 million, an increase of $2.4 million, or 21%, compared to the nine months ended September 30, 2015.  Diluted earnings per share were $1.27 for the nine months ended September 30, 2016, an increase of 15%, compared to the nine months ended September 30, 2015.  In 2016, diluted earnings per share for the quarter fully includes the dilution impact of the Company’s recent equity offering and the nine months ended September 30, 2016 includes the dilutive effect from June 23th to September 30th.

As previously announced on October 18, 2016, the Company declared a quarterly dividend of $0.13 per share to be paid on December 1, 2016 to shareholders of record as of November 10, 2016.  The 2016 dividend rate represents a 4.0% increase over the 2015 dividend rate. 

Chief Executive Officer Jack Clancy commented, “The increase in our 2016 earnings compared to 2015 is largely driven by our growth over the last twelve months.  Loans, total assets, and deposits, excluding brokered deposits, have increased 11%, 13%, and 17%, respectively, as compared to September 30, 2015.  This growth continues to be driven by the collective efforts and contributions of our dedicated Enterprise team, active community involvement, relationship building and a customer-focused mindset, market expansion, and ongoing enhancements to our state-of-the-art product and service offerings.”

Founder and Chairman of the Board George Duncan commented, “This quarter represents our 108th consecutive profitable quarter.  The consistency of our profitability and our organic-focused growth have allowed us to think and plan long-term which has truly benefited our shareholders, customers, employees and the communities in which we operate.  Strategically, our focus remains on organic growth and continually planning for and investing in our future.  Our well-appointed 23rd branch, on Route 101A in Nashua, NH, which opened in early July has been well received.  We are also very pleased to have recently announced that we anticipate opening our 24th branch office in Windham, NH in 2017, which will fill a gap in our New Hampshire footprint.”

Results of Operations

Net interest income for the three months ended September 30, 2016 amounted to $21.8 million, an increase of $1.9 million, or 9%, compared to the same period in 2015.  Net interest income for the nine months ended September 30, 2016 amounted to $64.2 million, an increase of $6.6 million, or 11%, compared to the nine months ended September 30, 2015.  The increase in net interest income was due primarily to loan growth.  Average loan balances (including loans held for sale) increased $185.6 million and $181.8 million for the three and nine months ended September 30, 2016, respectively, compared to the same 2015 period averages.  Net interest margin was 3.86% for the three months ended September 30, 2016 compared to 3.98% for the three months ended September 30, 2015. The third quarter of 2016 was impacted by higher balances in low-yielding interest-earning assets from short-term customer deposits.  Net interest margin was 3.96% for the nine months ended September 30, 2016, compared to 3.97% for the nine months ended September 30, 2015.

For the three months ended September 30, 2016 and September 30, 2015, the provision for loan losses amounted to $1.4 million and $250 thousand, respectively.  For the nine months ended September 30, 2016 and September 30, 2015, the provision for loan losses amounted to $2.5 million and $2.1 million, respectively.

In determining the provision to the allowance for loan losses, management takes into consideration the level of loan growth (including new loan growth which requires a provision for general reserves) and an estimate of credit risk, which includes such items as adversely classified and non-performing loans, the estimated specific reserves needed for impaired loans, the level of net charge-offs, and the estimated impact of current economic conditions on credit quality.  Loan growth for the nine months ended September 30, 2016 was $125.9 million compared to $118.0 million during the nine months ended September 30, 2015.  Loan growth in 2016 was particularly strong in the third quarter compared to the same quarter in 2015.  Total non-performing loans as a percentage of total loans declined to 0.50% at September 30, 2016, compared to 0.81% at September 30, 2015.  The Company recorded net recoveries of $78 thousand for the nine months ended September 30, 2016, compared to net charge-offs of $1.1 million for the nine months ended September 30, 2015.  The balance of the allowance for loan losses allocated to impaired and classified loans amounted to $4.1 million at September 30, 2016, compared to $3.2 million at September 30, 2015. This increase was due primarily to the credit rating downgrade of three larger commercial relationships to “criticized” or “adverse” risk ratings, based on a review of their individual business circumstances, requiring higher levels of reserves in the current period, which increased the provision and the allowance to total loan ratio compared to December 31, 2015; however, these loans continue to perform in accordance with their original terms.

The allowance for loan losses to total loans ratio was 1.59% at September 30, 2016, 1.56% at December 31, 2015 and 1.57% at September 30, 2015.  In general, the credit quality of the loan portfolio is improving, in part due to improved economic conditions over the past twelve months; however, individual loan downgrades, such as those noted above, which will occur due to individual business circumstances, slightly increased the ratio.

Non-interest income for the three months ended September 30, 2016 amounted to $3.9 million, an increase of $764 thousand, or 24%, compared to the same quarter last year.  This increase was primarily due to an increase in net gains on the sales of investment securities.  Non-interest income for the nine months ended September 30, 2016 amounted to $10.7 million, a decrease of $151 thousand, or 1%, compared to the nine months ended September 30, 2015.  This decrease was due primarily to a decrease in net gains on the sales of investment securities, partially offset by increases in deposit and interchange fees and income on bank-owned life insurance.

Non-interest expense for the quarter ended September 30, 2016 amounted to $17.4 million, an increase of $866 thousand, or 5%, compared to the same quarter in the prior year.  For the nine months ended September 30, 2016, non-interest expense amounted to $51.8 million, an increase of $2.8 million, or 6%, over the nine months ended September 30, 2015.  Increases in expenses over the prior year primarily related to increases in the Company’s strategic growth and market expansion initiatives, particularly salaries and benefits and technology expenses.

Key Financial Highlights

  • Total assets amounted to $2.47 billion at September 30, 2016, compared to $2.29 billion at December 31, 2015, an increase of $185.3 million, or 8%.  Since June 30, 2016, total assets have increased $37.8 million, or 2%.
  • Total loans amounted to $1.99 billion at September 30, 2016 compared to $1.86 billion at December 31, 2015, an increase of $125.9 million, or 7%.  Since June 30, 2016, total loans have increased $86.7 million, or 5%.
  • Total deposits, excluding brokered deposits, were $2.16 billion at September 30, 2016, compared to $1.91 billion at December 31, 2015, an increase of $250.9 million, or 13%.  Since June 30, 2016, total deposits, excluding brokered deposits, have increased $52.2 million, or 2%.  Brokered deposits were $59.3 million at September 30, 2016, compared to $74.3 million and $106.8 million at June 30, 2016 and at December 31, 2015, respectively.
  • Investment assets under management amounted to $709.8 million at September 30, 2016, compared to $678.4 million at December 31, 2015, an increase of $31.4 million, or 5%.  Since June 30, 2016, investment assets under management have increased $25.9 million, or 4%.
  • Total assets under management amounted to $3.26 billion at September 30, 2016, compared to $3.04 billion at December 31, 2015, an increase of $226.3 million, or 7%.  Since June 30, 2016, total assets under management have increased $66.9 million, or 2%.

Enterprise Bancorp, Inc. is a Massachusetts corporation that conducts substantially all of its operations through Enterprise Bank and Trust Company, commonly referred to as Enterprise Bank. The Company is principally engaged in the business of attracting deposits from the general public and investing in commercial loans and investment securities.  Through Enterprise Bank and its subsidiaries, the Company offers a range of commercial and consumer loan products, and deposit and cash management services.  The Company also offers investment advisory and wealth management, trust, and insurance services.  The Company’s headquarters and the bank’s main office are located at 222 Merrimack Street in Lowell, Massachusetts.  The Company’s primary market area is the greater Merrimack Valley and North Central regions of Massachusetts and Southern New Hampshire.  Enterprise Bank has 23 full-service branch offices located in the Massachusetts communities of Lowell, Acton, Andover, Billerica, Chelmsford, Dracut, Fitchburg, Lawrence, Leominster, Methuen, Tewksbury, Tyngsborough and Westford and in the New Hampshire communities of Derry, Hudson, Nashua, Pelham and Salem.  The Company is also in the process of obtaining regulatory approvals to establish a branch office in Windham, NH and anticipates that the office will open in 2017.

This earnings release contains statements about future events that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements may be identified by reference to a future period or periods or by the use of the words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “assume,” “will,” “should,” “plan,” and other similar terms or expressions.  Forward-looking statements should not be relied on because they involve known and unknown risks, uncertainties and other factors, some of which are beyond the control of the Company.  These risks, uncertainties and other factors may cause the actual results, performance, and achievements of the Company to be materially different from the anticipated future results, performance or achievements expressed or implied by the forward-looking statements.  Factors that could cause such differences include, but are not limited to, general economic conditions, changes in interest rates, regulatory considerations, competition, and the receipt of required regulatory approvals.  For more information about these factors, please see our reports filed with or furnished to the Securities and Exchange Commission (the “SEC”), including our most recent Annual Report on Form 10-K on file with the SEC, including the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”  Any forward-looking statements contained in this press release are made as of the date hereof, and we undertake no duty, and specifically disclaim any duty, to update or revise any such statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

ENTERPRISE BANCORP, INC.
Consolidated Balance Sheets
(unaudited)
 
(Dollars in thousands)   September 30,
 2016
  December 31,
 2015
  September 30,
 2015
Assets            
Cash and cash equivalents:            
Cash and due from banks   $ 34,337     $ 32,318     $ 35,093  
Interest-earning deposits   27,823     19,177     20,693  
Total cash and cash equivalents   62,160     51,495     55,786  
Investment securities at fair value   349,064     300,358     281,027  
Federal Home Loan Bank stock   1,884     3,050     4,239  
Loans held for sale   2,171     1,709     1,325  
Loans, less allowance for loan losses of $31,589 at September 30, 2016, $29,008 at December 31, 2015 and $28,130 at September 30, 2015   1,954,265     1,830,954     1,762,478  
Premises and equipment, net   33,861     30,553     30,153  
Accrued interest receivable   8,467     7,790     7,734  
Deferred income taxes, net   13,405     14,111     13,684  
Bank-owned life insurance   28,582     28,018     28,063  
Prepaid income taxes   57     57      
Prepaid expenses and other assets   11,277     11,780     5,169  
Goodwill   5,656     5,656     5,656  
Total assets   $ 2,470,849     $ 2,285,531     $ 2,195,314  
Liabilities and Stockholders’ Equity            
Liabilities            
Deposits   $ 2,221,609     $ 2,018,148     $ 1,963,615  
Borrowed funds   671     53,671     24,171  
Subordinated debt   14,831     14,822     14,819  
Accrued expenses and other liabilities   17,504     18,287     15,440  
Income taxes payable           313  
Accrued interest payable   194     276     252  
Total liabilities   2,254,809     2,105,204     2,018,610  
Commitments and Contingencies            
Stockholders’ Equity            
Preferred stock, $0.01 par value per share; 1,000,000 shares authorized; no shares issued            
Common stock $0.01 par value per share; 20,000,000 shares authorized; 11,448,502 shares issued and outstanding at September 30, 2016 (including 142,162 shares of unvested participating restricted awards), 10,377,787 shares issued and outstanding at December 31, 2015 (including 144,717 shares of unvested participating restricted awards) and 10,359,395 shares issued and outstanding at September 30, 2015 (including 145,762 shares of unvested participating restricted awards)   114     104     104  
Additional paid-in capital   83,394     61,008     60,042  
Retained earnings   126,543     116,941     113,515  
Accumulated other comprehensive income   5,989     2,274     3,043  
Total stockholders’ equity   216,040     180,327     176,704  
Total liabilities and stockholders’ equity   $ 2,470,849     $ 2,285,531     $ 2,195,314  
                         

ENTERPRISE BANCORP, INC.
Consolidated Statements of Income
(unaudited)
 
  Three months ended September 30,   Nine months ended September 30,
(Dollars in thousands, except per share data) 2016   2015   2016   2015
Interest and dividend income:              
Loans and loans held for sale $ 21,466     $ 19,785     $ 63,379     $ 57,538  
Investment securities 1,629     1,377     4,720     3,825  
Other interest-earning assets 96     62     189     137  
Total interest and dividend income 23,191     21,224     68,288     61,500  
Interest expense:              
Deposits 1,138     1,022     3,325     3,033  
Borrowed funds 2     10     79     32  
Subordinated debt 234     232     695     837  
Total interest expense 1,374     1,264     4,099     3,902  
Net interest income 21,817     19,960     64,189     57,598  
Provision for loan losses 1,386     250     2,503     2,100  
Net interest income after provision for loan losses 20,431     19,710     61,686     55,498  
Non-interest income:              
Investment advisory fees 1,162     1,182     3,593     3,568  
Deposit and interchange fees 1,272     1,207     3,790     3,575  
Income on bank-owned life insurance, net 182     157     564     358  
Net gains on sales of investment securities 546     7     611     1,363  
Gains on sales of loans 198     89     392     373  
Other income 588     542     1,786     1,650  
Total non-interest income 3,948     3,184     10,736     10,887  
Non-interest expense:              
Salaries and employee benefits 10,948     10,255     32,458     29,934  
Occupancy and equipment expenses 1,859     1,775     5,453     5,484  
Technology and telecommunications expenses 1,577     1,428     4,548     4,223  
Advertising and public relations expenses 591     641     2,087     2,180  
Audit, legal and other professional fees 446     564     1,342     1,305  
Deposit insurance premiums 347     299     997     889  
Supplies and postage expenses 241     226     728     736  
Investment advisory and custodial expenses 107     102     283     237  
Other operating expenses 1,298     1,258     3,929     4,037  
Total non-interest expense 17,414     16,548     51,825     49,025  
Income before income taxes 6,965     6,346     20,597     17,360  
Provision for income taxes 2,251     2,054     6,799     5,933  
Net income $ 4,714     $ 4,292     $ 13,798     $ 11,427  
               
Basic earnings per share $ 0.41     $ 0.41     $ 1.28     $ 1.11  
Diluted earnings per share $ 0.41     $ 0.41     $ 1.27     $ 1.10  
               
Basic weighted average common shares outstanding 11,430,134     10,349,232     10,801,278     10,308,310  
Diluted weighted average common shares outstanding 11,498,990     10,414,254     10,869,405     10,373,464  
                       

ENTERPRISE BANCORP, INC.
Selected Consolidated Financial Data and Ratios
(unaudited)
 
(Dollars in thousands, except per share data)   At or for the
nine months ended
September 30, 2016
  At or for the
year ended 
December 31, 2015
  At or for the
nine months ended
September 30, 2015
 
               
BALANCE SHEET AND OTHER DATA              
Total assets   $ 2,470,849     $ 2,285,531     $ 2,195,314    
Loans serviced for others   80,836     71,272     68,891    
Investment assets under management   709,781     678,377     672,076    
Total assets under management   $ 3,261,466     $ 3,035,180     $ 2,936,281    
               
Book value per share   $ 18.87     $ 17.38     $ 17.06    
Dividends paid per common share   $ 0.390     $ 0.500     $ 0.375    
Total capital to risk weighted assets   11.74 %   10.70 %   10.88 %  
Tier 1 capital to risk weighted assets   9.74 %   8.66 %   8.81 %  
Tier 1 capital to average assets   8.41 %   7.73 %   7.85 %  
Common equity tier 1 capital to risk weighted assets   9.74 %   8.66 %   8.81 %  
Allowance for loan losses to total loans   1.59 %   1.56 %   1.57 %  
Non-performing assets   $ 9,888     $ 13,845     $ 14,452    
Non-performing assets to total assets   0.40 %   0.61 %   0.66 %  
                           
INCOME STATEMENT DATA  (annualized)                          
Return on average total assets   0.79 %   0.76 %   0.73 %  
Return on average stockholders’ equity   9.39 %   9.29 %   8.88 %  
Net interest margin (tax equivalent)   3.96 %   3.97 %   3.97 %  
                     

 

CONTACT: Contact Info: James A. Marcotte, Executive Vice President, Chief Financial Officer and Treasurer (978) 656-5614