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Enterprise Bancorp, Inc. Announces First Quarter 2016 Net Income of $4.3 Million, a 19% Increase Over the Prior Year

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LOWELL, Mass., April 21, 2016 (GLOBE NEWSWIRE) -- Enterprise Bancorp, Inc. (the "Company") (NASDAQ: EBTC), parent of Enterprise Bank, announces net income for the three months ended March 31, 2016 amounted to $4.3 million, an increase of $693 thousand, or 19%, compared to the three months ended March 31, 2015.  Diluted earnings per share was $0.41 for the three months ended March 31, 2016, an increase of 17% compared to the three months ended March 31, 2015.

As previously announced on April 19, 2016, the Company declared a quarterly dividend of $0.13 per share to be paid on June 1, 2016 to shareholders of record as of May 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 first quarter earnings compared to 2015 is largely driven by our growth over the last twelve months.  Loans and deposits, excluding brokered deposits, have increased $183 million, or 11%, and $253 million, or 14%, respectively, as compared to March 31, 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.  Additionally, as part of our continued organic growth, our 23rd branch, on route 101A, in Nashua, NH is scheduled to open in the second quarter of 2016."

Mr. Clancy continued, "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 announced a shareholder rights offering combined with a community offering.  This additional capital will help ensure that we are positioned to continue to take advantage of growth opportunities."

Founder and Chairman of the Board George Duncan commented, "Our March quarter represents our 106th consecutive profitable quarter.  While we are proud of our continued growth and profitability, the true value of that growth is reflected in what it means for our customers and shareholders.  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, "Our planned shareholder rights offering provides each stockholder with the equitable opportunity to retain their ownership percentage, and combined with the community offering, positions us for future growth.  We believe the rights and community offering is the best way for us to support our customers and communities, expand our local shareholder base and ultimately benefit our shareholders."

Results of Operations

The Company's growth contributed to increases in net interest income and non-interest expenses.  This growth and other items impacting the Company's net income are discussed further below.

Net interest income for the three months ended March 31, 2016 amounted to $21.1 million, an increase of $2.6 million, or 14%, compared to the three months ended March 31, 2015.  The increase in net interest income was due primarily to loan growth.  Average loan balances (including loans held for sale) increased $181.0 million for the three months ended March 31, 2016 compared to the same 2015 period average.  Net interest margin was 4.02% for the three months ended March 31, 2016, compared to 3.97% and 3.95% for the three months ended December 31, 2015 and March 31, 2015, respectively.

For the three months ended March 31, 2016 and March 31, 2015, the provision for loan losses amounted to $850 thousand and $625 thousand, respectively.  The increase in the provision for the three months ended March 31, 2016 was due primarily to additional reserves allocated to classified commercial loans.

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 three months ended March 31, 2016 was $4.7 million compared to $9.5 million during the three months ended March 31, 2015.  Total non-performing loans as a percentage of total loans declined to 0.60% at March 31, 2016, compared to 1.07% at March 31, 2015.  The balance of the allowance for loan losses allocated to impaired loans amounted to $2.1 million at March 31, 2016, compared to $2.7 million at March 31, 2015.  The balance of the allowance for loan losses allocated to non-impaired classified loans amounted to $2.2 million at March 31, 2016, compared to $1.6 million at March 31, 2015.  The Company recorded net recoveries of $52 thousand for the three months ended March 31, 2016, compared to net recoveries of $57 thousand for the three months ended March 31, 2015. 

The allowance for loan losses to total loans ratio was 1.60% at March 31, 2016, 1.56% at December 31, 2015 and 1.65% at March 31, 2015.  The decline in the allowance ratio reflects the generally improving credit quality of the loan portfolio, in part, due to improved economic conditions.  However, in the current period, the credit ratings of three larger commercial relationships were downgraded, 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 March 31, 2016 amounted to $3.2 million, a decrease of $819 thousand, or 20%, compared to the three months ended March 31, 2015 due primarily to a decrease in net gains on the sales of investment securities.  Included in other income for the three months ended March 31, 2015 was the net loss on the Company's Capital Trust subsidiary due to the write-off of debt issuance costs related to the redemption of Trust Preferred Securities (Subordinated Debt), partially offset by gains on the sales of other real estate owned.

For the three months ended March 31, 2016, non-interest expense amounted to $16.9 million, an increase of $659 thousand, or 4%, over the three months ended March 31, 2015.  Increases in expenses over the prior year primarily related to increases in salaries and benefits due to the Company's strategic growth and market expansion initiatives.  Non-interest expense for three months ended March 31, 2015 was also impacted by prepayment fees associated with the redemption of the Trust Preferred Securities mentioned above, included in other expenses.

Key Financial Highlights

  • Total assets amounted to $2.30 billion at March 31, 2016, compared to $2.29 billion at December 31, 2015, an increase of $19.1 million, or 1%. 
  • Total loans amounted to $1.86 billion at both March 31, 2016 and December 31, 2015.
  • Total deposits, excluding brokered deposits, were $2.00 billion at March 31, 2016, compared to $1.91 billion at December 31, 2015, an increase of $87.1 million, or 5%.  Brokered deposits were $89.3 million at March 31, 2016, compared to $106.8 million at December 31, 2015.
  • Investment assets under management amounted to $688.3 million at March 31, 2016, compared to $678.4 million at December 31, 2015, an increase of $9.9 million, or 1%.
  • Total assets under management amounted to $3.06 billion at March 31, 2016, compared to $3.04 billion at December 31, 2015, an increase of $29.0 million, or 1%.

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 22 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 has also obtained the necessary regulatory approvals to establish its second branch in Nashua, NH and anticipates that the office will open in the second quarter of 2016.

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)
 
  March 31, December 31, March 31,
(Dollars in thousands) 2016  2015  2015
Assets      
Cash and cash equivalents:      
Cash and due from banks $34,018  $32,318  $55,314 
Interest-earning deposits 24,912  19,177  35,846 
Total cash and cash equivalents 58,930  51,495  91,160 
Investment securities at fair value 304,946  300,358  240,068 
Federal Home Loan Bank stock 2,793  3,050  4,239 
Loans held for sale 770  1,709  1,125 
Loans, less allowance for loan losses of $29,910 at March 31, 2016, $29,008 at December 31, 2015 and $27,803 at March 31, 2015 1,834,782  1,830,954  1,654,317 
Premises and equipment, net 31,984  30,553  30,070 
Accrued interest receivable 8,393  7,790  7,001 
Deferred income taxes, net 12,962  14,111  12,368 
Bank-owned life insurance 28,209  28,018  16,415 
Prepaid income taxes   57   
Prepaid expenses and other assets 15,207  11,780  6,311 
Goodwill 5,656  5,656  5,656 
Total assets $2,304,632  $2,285,531  $2,068,730 
Liabilities and Stockholders' Equity      
Liabilities      
Deposits $2,087,737  $2,018,148  $1,865,294 
Borrowed funds 671  53,671  900 
Subordinated debt 14,825  14,822  14,810 
Accrued expenses and other liabilities 13,497  18,287  15,322 
Income taxes payable 1,551    632 
Accrued interest payable 266  276  284 
Total liabilities 2,118,547  2,105,204  1,897,242 
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;  10,473,738 shares issued and outstanding at March 31, 2016 (including 155,421 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 10,323,539 shares issued and outstanding at March 31, 2015 (including 148,490 shares of unvested participating restricted awards) 105  104  103 
Additional paid-in capital 61,927  61,008  58,529 
Retained earnings 119,904  116,941  108,292 
Accumulated other comprehensive income 4,149  2,274  4,564 
Total stockholders' equity 186,085  180,327  171,488 
Total liabilities and stockholders' equity $2,304,632  $2,285,531  $2,068,730 




ENTERPRISE BANCORP, INC.
Consolidated Statements of Income
(unaudited)
 
  Three months ended March 31,
(Dollars in thousands, except per share data) 2016 2015
Interest and dividend income:    
Loans and loans held for sale $20,881  $18,582 
Investment securities 1,540  1,225 
Other interest-earning assets 44  32 
Total interest and dividend income 22,465  19,839 
Interest expense:    
Deposits 1,088  992 
Borrowed funds 63  21 
Subordinated debt 231  372 
Total interest expense 1,382  1,385 
Net interest income 21,083  18,454 
Provision for loan losses 850  625 
Net interest income after provision for loan losses 20,233  17,829 
Non-interest income:    
Investment advisory fees 1,104  1,177 
Deposit and interchange fees 1,242  1,154 
Income on bank-owned life insurance, net 191  100 
Net gains on sales of investment securities 2  900 
Gains on sales of loans 89  156 
Other income 578  538 
Total non-interest income 3,206  4,025 
Non-interest expense:    
Salaries and employee benefits 10,485  9,581 
Occupancy and equipment expenses 1,813  1,960 
Technology and telecommunications expenses 1,423  1,417 
Advertising and public relations expenses 679  730 
Audit, legal and other professional fees 488  359 
Deposit insurance premiums 326  293 
Supplies and postage expenses 229  258 
Investment advisory and custodial expenses 89  46 
Other operating expenses 1,337  1,566 
Total non-interest expense 16,869  16,210 
Income before income taxes 6,570  5,644 
Provision for income taxes 2,257  2,024 
Net income $4,313  $3,620 
     
Basic earnings per share $0.41  $0.35 
Diluted earnings per share $0.41  $0.35 
     
Basic weighted average common shares outstanding 10,405,112  10,243,044 
Diluted weighted average common shares outstanding 10,471,784  10,310,474 


ENTERPRISE BANCORP, INC. 
Selected Consolidated Financial Data and Ratios 
(unaudited) 
  
  At or for the At or for the At or for the 
  three months ended year ended three months ended 
(Dollars in thousands, except per share data) March 31, 2016 December 31, 2015 March 31, 2015 
        
BALANCE SHEET AND OTHER DATA       
Total assets $2,304,632  $2,285,531  $2,068,730  
Loans serviced for others 71,294  71,272  65,553  
Investment assets under management 688,294  678,377  707,789  
Total assets under management $3,064,220  $3,035,180  $2,842,072  
        
Book value per share $17.77  $17.38  $16.61  
Dividends paid per common share $0.130  $0.500  $0.125  
Total capital to risk weighted assets 10.97% 10.70% 11.68% 
Tier 1 capital to risk weighted assets 8.93% 8.66% 9.47% 
Tier 1 capital to average assets 7.76% 7.73% 7.96% 
Common equity tier 1 capital to risk weighted assets 8.93% 8.66% 9.47% 
Allowance for loan losses to total loans 1.60% 1.56% 1.65% 
Non-performing assets $11,264  $13,845  $18,149  
Non-performing assets to total assets 0.49% 0.61% 0.88% 
              
INCOME STATEMENT DATA  (annualized)             
Return on average total assets 0.76% 0.76% 0.72% 
Return on average stockholders' equity 9.43% 9.29% 8.67% 
Net interest margin (tax equivalent) 4.02% 3.97% 3.95% 

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

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