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Enterprise Bancorp, Inc. Announces Second Quarter 2016 Net Income of $4.8 Million

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LOWELL, Mass., July 21, 2016 (GLOBE NEWSWIRE) -- Enterprise Bancorp, Inc. (the "Company") (NASDAQ: EBTC), parent of Enterprise Bank, announces net income for the three months ended June 30, 2016 amounted to $4.8 million, an increase of $1.3 million, or 36%, compared to the same three-month period in 2015.  Diluted earnings per share were $0.45 for the three months ended June 30, 2016, an increase of 32%, compared to the same three-month period in 2015.  Net income for the six months ended June 30, 2016 amounted to $9.1 million, an increase of $1.9 million, or 27%, compared to the six months ended June 30, 2015.  Diluted earnings per share were $0.86 for the six months ended June 30, 2016, an increase of 25% compared to the six months ended June 30, 2015.

As previously announced on July 19, 2016, the Company declared a quarterly dividend of $0.13 per share to be paid on September 1, 2016 to shareholders of record as of August 11, 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 9%, 12%, and 15%, respectively, as compared to June 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."

Mr. Clancy continued, "Our 23rd branch, on Route 101A, in Nashua, NH, opened in early July and we recently announced we anticipate opening our 24th office, in Windham, NH, in 2017.  Strategically, our focus remains on organic growth and continually planning for and investing in our future.  As part of our focus on long-term strategic growth, we recently completed a $20 million shareholder subscription rights offering combined with a supplemental community offering.  Although this additional capital will slightly dilute EPS as we go forward, we believe this capital will help position us to continue to take advantage of growth opportunities."

Founder and Chairman of the Board George Duncan commented, "While we are proud of our continued and consistent growth and profitability, the true value of that growth is reflected in what it means for our customers, shareholders, and our community.  Along with strong customer service, the growth of our lending and deposit base ties directly to our ever advancing and progressive commercial lending, cash management, mobile banking, wealth management, trust, insurance and overall state-of-the-art services."

Mr. Duncan also noted, "We are very appreciative of the strong support and confidence we received from our shareholders and the community in our recently completed successful $20 million offering.  Due to the strong support we received, we increased the offering size from $10 million to $20 million.  It was gratifying to see this support not only from existing shareholders but from new community shareholders.  We believe that expanding our shareholder base in the local community is an important part of our long term growth.  Having local shareholders referring business, and doing business themselves in our bank lobbies every day, is very powerful."

Results of Operations

Net interest income for the three months ended June 30, 2016 amounted to $21.3 million, an increase of $2.1 million, or 11%, compared to the same period in 2015.  Net interest income for the six months ended June 30, 2016 amounted to $42.4 million, an increase of $4.7 million, or 13%, compared to the six months ended June 30, 2015.  The increase in net interest income was due primarily to loan growth.  Average loan balances (including loans held for sale) increased $179.3 million and $180.1 million for the three and six months ended June 30, 2016, respectively, compared to the same 2015 period averages.  Net interest margin was 4.02% for the three months ended June 30, 2016 compared to 3.98% for the three months ended June 30, 2015.  Net interest margin was 4.02% for the six months ended June 30, 2016, compared to 3.96% for the six months ended June 30, 2015.

For the three months ended June 30, 2016 and June 30, 2015, the provision for loan losses amounted to $267 thousand and $1.2 million, respectively.  For the six months ended June 30, 2016 and June 30, 2015, the provision for loan losses amounted to $1.1 million and $1.9 million, respectively.  The decrease in the provision for 2016 was due primarily to improving credit quality, a lower level of charge-offs, and the level of loan growth during the 2016 period, as compared to the 2015 period. 

In determining the provision to the allowance for loan losses, management takes into consideration the level of loan growth 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 six months ended June 30, 2016 was $39.2 million compared to $63.9 million during the six months ended June 30, 2015.  Total non-performing loans as a percentage of total loans declined to 0.54% at June 30, 2016, compared to 0.92% at June 30, 2015.  The balance of the allowance for loan losses allocated to impaired loans amounted to $2.1 million at June 30, 2016, compared to $2.6 million at June 30, 2015.  The balance of the allowance for loan losses allocated to non-impaired classified loans amounted to $2.0 million at June 30, 2016, compared to $1.2 million at June 30, 2015.  The Company recorded net recoveries of $220 thousand for the six months ended June 30, 2016, compared to net charge-offs of $809 thousand for the six months ended June 30, 2015. 

The allowance for loan losses to total loans ratio was 1.60% at June 30, 2016, 1.56% at December 31, 2015 and 1.62% at June 30, 2015.  The decline in the allowance ratio reflects the generally improving credit quality of the loan portfolio, in part due to improved economic conditions over the past twelve months.  However, in 2016, the credit ratings of three larger commercial relationships were downgraded 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 allowance to total loan ratio compared to December 31, 2015.

Non-interest income for the three months ended June 30, 2016 amounted to $3.6 million, a decrease of $96 thousand, or 3%, compared to the same quarter last year.  Non-interest income for the six months ended June 30, 2016 amounted to $6.8 million, a decrease of $915 thousand, or 12%, compared to the six months ended June 30, 2015.  These decreases were due primarily to a decrease in net gains on the sales of investment securities, partially offset by increases in deposit and interchange fees, investment advisory fees, and income on bank-owned life insurance.

Non-interest expense for the quarter ended June 30, 2016 amounted to $17.5 million, an increase of $1.3 million, or 8%, compared to the same quarter in the prior year.  For the six months ended June 30, 2016, non-interest expense amounted to $34.4 million, an increase of $1.9 million, or 6%, over the six months ended June 30, 2015.  Increases in expenses over the prior year primarily related to increases in salaries and benefits and technology expenses due to the Company's strategic growth and market expansion initiatives.  Non-interest expense for the six months ended June 30, 2016 also included increases in audit, legal and other professional costs.  The decrease in year-to-date other expenses was impacted by the 2015 prepayment fees associated with the redemption of the Trust Preferred Securities, partially offset by an increase in outsources services in the current year. 

Key Financial Highlights

  • Total assets amounted to $2.43 billion at June 30, 2016, compared to $2.29 billion at December 31, 2015, an increase of $147.5 million, or 6%.  Since March 31, 2016, total assets have increased $128.4 million, or 6%.
  • Total loans amounted to $1.90 billion at June 30, 2016 compared to $1.86 billion at December 31, 2015, an increase of $39.2 million, or 2%.  Since March 31, 2016, total loans have increased $34.5 million, or 2%.
  • Total deposits, excluding brokered deposits, were $2.11 billion at June 30, 2016, compared to $1.91 billion at December 31, 2015, an increase of $198.7 million, or 10%.  Since March 31, 2016, total deposits, excluding brokered deposits, have increased $111.7 million, or 6%.  Brokered deposits were $74.3 million at June 30, 2016, compared to $89.3 million and $106.8 million at March 31, 2016 and at December 31, 2015, respectively. 
  • Investment assets under management amounted to $683.9 million at June 30, 2016, compared to $678.4 million at December 31, 2015, an increase of $5.5 million.  Since March 31, 2016, investment assets under management have decreased $4.4 million.
  • Total assets under management amounted to $3.19 billion at June 30, 2016, compared to $3.04 billion at December 31, 2015, an increase of $159.4 million, or 5%.  Since March 31, 2016, total assets under management have increased $130.4 million, or 4%. 

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, and has reported 107 consecutive profitable quarters. 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 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)
 
  June 30, December 31, June 30,
(Dollars in thousands) 2016 2015 2015
Assets      
Cash and cash equivalents:      
Cash and due from banks $99,013  $32,318  $55,172 
Interest-earning deposits 42,849  19,177  60,489 
Total cash and cash equivalents 141,862  51,495  115,661 
Investment securities at fair value 319,503  300,358  260,969 
Federal Home Loan Bank stock 1,879  3,050  4,239 
Loans held for sale 1,971  1,709  1,325 
Loans, less allowance for loan losses of $30,345 at June 30, 2016, $29,008 at December 31, 2015 and $28,162 at June 30, 2015 1,868,841  1,830,954  1,708,384 
Premises and equipment, net 34,140  30,553  30,461 
Accrued interest receivable 7,838  7,790  6,880 
Deferred income taxes, net 11,506  14,111  13,570 
Bank-owned life insurance 28,400  28,018  16,516 
Prepaid income taxes 776  57  778 
Prepaid expenses and other assets 10,681  11,780  6,038 
Goodwill 5,656  5,656  5,656 
Total assets $2,433,053  $2,285,531  $2,170,477 
Liabilities and Stockholders' Equity      
Liabilities      
Deposits $2,184,430  $2,018,148  $1,959,498 
Borrowed funds 671  53,671  1,316 
Subordinated debt 14,828  14,822  14,815 
Accrued expenses and other liabilities 20,374  18,287  22,287 
Accrued interest payable 252  276  253 
Total liabilities 2,220,555  2,105,204  1,998,169 
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; 11,420,426 shares issued and outstanding at June 30, 2016
(including 143,671 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 10,343,351 shares issued and outstanding at June 30, 2015
(including 147,421 shares of unvested participating restricted awards)


 114  104  103 
Additional paid-in capital 82,387  61,008  59,317 
Retained earnings 123,313  116,941  110,517 
Accumulated other comprehensive income 6,684  2,274  2,371 
Total stockholders' equity 212,498  180,327  172,308 
   Total liabilities and stockholders' equity $2,433,053  $2,285,531  $2,170,477 
             



ENTERPRISE BANCORP, INC.
Consolidated Statements of Income
(unaudited)
 
 Three months ended June 30, Six months ended June 30,
(Dollars in thousands, except per share data)2016 2015 2016 2015
Interest and dividend income:       
Loans and loans held for sale$21,032  $19,171  $41,913  $37,753 
Investment securities1,551  1,223  3,091  2,448 
Other interest-earning assets49  43  93  75 
Total interest and dividend income22,632  20,437  45,097  40,276 
Interest expense:       
Deposits1,099  1,019  2,187  2,011 
Borrowed funds14  1  77  22 
Subordinated debt230  233  461  605 
Total interest expense1,343  1,253  2,725  2,638 
Net interest income21,289  19,184  42,372  37,638 
Provision for loan losses267  1,225  1,117  1,850 
Net interest income after provision for loan losses21,022  17,959  41,255  35,788 
Non-interest income:       
Investment advisory fees1,327  1,209  2,431  2,386 
Deposit and interchange fees1,276  1,214  2,518  2,368 
Income on bank-owned life insurance, net191  101  382  201 
Net gains on sales of investment securities63  456  65  1,356 
Gains on sales of loans105  128  194  284 
Other income620  570  1,198  1,108 
Total non-interest income3,582  3,678  6,788  7,703 
Non-interest expense:       
Salaries and employee benefits11,025  10,098  21,510  19,679 
Occupancy and equipment expenses1,781  1,749  3,594  3,709 
Technology and telecommunications expenses1,548  1,378  2,971  2,795 
Advertising and public relations expenses817  809  1,496  1,539 
Audit, legal and other professional fees408  382  896  741 
Deposit insurance premiums324  297  650  590 
Supplies and postage expenses258  252  487  510 
Investment advisory and custodial expenses87  89  176  135 
Other operating expenses1,294  1,213  2,631  2,779 
Total non-interest expense17,542  16,267  34,411  32,477 
Income before income taxes7,062  5,370  13,632  11,014 
Provision for income taxes2,291  1,855  4,548  3,879 
  Net income$4,771  $3,515  $9,084  $7,135 
        
Basic earnings per share$0.45  $0.34  $0.87  $0.69 
Diluted earnings per share$0.45  $0.34  $0.86  $0.69 
        
Basic weighted average common shares outstanding10,561,680  10,331,485  10,483,396  10,287,509 
Diluted weighted average common shares outstanding10,629,900  10,394,496  10,550,842  10,352,730 
            



ENTERPRISE BANCORP, INC. 
Selected Consolidated Financial Data and Ratios 
(unaudited) 
  
  At or for the At or for the At or for the 
  six months ended year ended six months ended 
(Dollars in thousands, except per share data) June 30, 2016 December 31, 2015 June 30, 2015 
        
BALANCE SHEET AND OTHER DATA       
Total assets $2,433,053  $2,285,531  $2,170,477  
Loans serviced for others 77,648  71,272  67,337  
Investment assets under management 683,884  678,377  709,292  
Total assets under management $3,194,585  $3,035,180  $2,947,106  
        
Book value per share $18.61  $17.38  $16.66  
Dividends paid per common share $0.26  $0.50  $0.25  
Total capital to risk weighted assets 11.93% 10.70% 11.48% 
Tier 1 capital to risk weighted assets 9.91% 8.66% 9.32% 
Tier 1 capital to average assets 8.69% 7.73% 7.94% 
Common equity tier 1 capital to risk weighted assets 9.91% 8.66% 9.32% 
Allowance for loan losses to total loans 1.60% 1.56% 1.62% 
Non-performing assets $10,271  $13,845  $16,004  
Non-performing assets to total assets 0.42% 0.61% 0.74% 
              
INCOME STATEMENT DATA  (annualized)             
Return on average total assets 0.80% 0.76% 0.70% 
Return on average stockholders' equity 9.75% 9.29% 8.43% 
Net interest margin (tax equivalent) 4.02% 3.97% 3.96% 



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

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