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Enterprise Bancorp, Inc. Announces First Quarter 2018 Net Income of $6.8 Million

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LOWELL, Mass., April 19, 2018 (GLOBE NEWSWIRE) -- Enterprise Bancorp, Inc. (the "Company") (NASDAQ:EBTC), parent of Enterprise Bank, announced net income for the three months ended March 31, 2018 of $6.8 million, an increase of $1.3 million, or 22%, compared to the three months ended March 31, 2017.  Diluted earnings per share were $0.58 for the three months ended March 31, 2018, an increase of 21%, as compared to $0.48 for the three months ended March 31, 2017.

As previously announced on April 17, 2018, the Company declared a quarterly dividend of $0.145 per share to be paid on June 1, 2018 to shareholders of record as of May 11, 2018.  The 2018 dividend rate represents a 7.4% increase over the 2017 dividend rate.

Chief Executive Officer Jack Clancy commented, "The increase in our 2018 first quarter earnings as compared to 2017 is largely attributable to our growth over the last twelve months and the positive impact of lower tax rates in 2018 from the 2017 Tax Cuts and Jobs Act. Total assets, loans, and customer deposits have increased 10%, 11%, and 8%, respectively, as compared to March 31, 2017.  The collective efforts and contributions of our dedicated Enterprise team, including active community involvement, relationship building and a customer-focused mindset, and ongoing enhancements to our state-of-the-art product and service offerings continue to drive this growth."

Mr. Clancy added, "Strategically, our focus remains on organic growth and continually planning for and investing in our future.  We expect the relocation of our Leominster, MA branch to be completed later this spring.  This branch, along with our new Windham, NH branch and our recently relocated branch in Salem, NH, are in prime locations and will provide improved, state-of-the-art experiences in these communities to better serve our customers."

Founder and Chairman of the Board George Duncan commented, "This past quarter represents the start of our 30th year in business.  As we reflect on this incredible journey, we are profoundly grateful to our shareholders, customers and team members who have helped to turn our vision for a new kind of independent, innovative bank - one that would value the entrepreneurial spirit and stimulate the economy by helping to create new businesses, meaningful jobs, vibrant communities and a dynamic work environment for our team members - into our Enterprise Bank of today."

Results of Operations

Net interest income for the three months ended March 31, 2018 amounted to $26.0 million, an increase of $3.2 million, or 14%, compared to the three months ended March 31, 2017.  The increase in net interest income was due primarily to loan growth.  Average loan balances (including loans held for sale) increased $226.3 million for the three months ended March 31, 2018, compared to the 2017 respective period average.  Net interest margin was 3.95% for the three months ended March 31, 2018, compared to 3.90% for the three months ended March 31, 2017.

For the three months ended March 31, 2018 and March 31, 2017, the provisions to the allowance for loan losses amounted to $1.6 million and $125 thousand, respectively. The 2018 provision was due primarily to an increase in specific reserves in the three months ended March 31, 2018.

The primary factor in the increase in the provision for loan losses compared to the prior year was an increase in the balance of the allowance for loan losses allocated to impaired and classified loans of $1.4 million for the three months ended March 31, 2018, compared to a decrease of $390 thousand during the three months ended March 31, 2017.  This increase in 2018 was primarily due to credit deterioration of two impaired commercial relationships for which management determined that the additional provisions were necessary, based on a review of their individual business circumstances.

Partially offsetting these additional reserves were generally stabilized credit quality metrics and underlying collateral values, and the level of loan growth, as indicated by the following factors:

  • The Company recorded net recoveries of $9 thousand for the three months ended March 31, 2018, compared to net recoveries of $216 thousand for the three months ended March 31, 2017.
     
  • Total non-performing loans as a percentage of total loans amounted to 0.46% at March 31, 2018, compared to 0.45% at March 31, 2017.
     
  • The ratio of adversely classified loans (substandard, doubtful, loss) to total loans amounted to 1.19% at March 31, 2018, compared to 1.55% at March 31, 2017.
     
  • Loan growth for the three months ended March 31, 2018 was $20.3 million, compared to $42.1 million during the three months ended March 31, 2017. 

The allowance for loan losses to total loans ratio was 1.51% at March 31, 2018, 1.45% at December 31, 2017 and 1.53% at March 31, 2017.

Non-interest income for the three months ended March 31, 2018 amounted to $3.8 million, a decrease of $343 thousand, or 8%, compared to the three months ended March 31, 2017.  This decrease compared to the prior year period was due primarily to decreases in net gains on sales of investment securities, partially offset by increases in investment advisory fees and deposit and interchange fees.

For the three months ended March 31, 2018, non-interest expense amounted to $19.4 million, which is relatively consistent with non-interest expense for the three months ended March 31, 2017.  The provision for income taxes amounted to $1.9 million for the three months ended March 31, 2018, an increase of $70 thousand, or 4%, compared to the three months ended March 31, 2017.  This increase was primarily due to lower tax benefits from equity compensation in the current year ($195 thousand for the three months ended March 31, 2018 compared to $667 thousand for the three months ended March 31, 2017) and higher taxable income levels, largely offset by the positive impact of the 2017 Tax Cuts and Jobs Act (the "2017 Tax Act").

Key Financial Highlights

  • Total assets amounted to $2.83 billion at March 31, 2018, compared to $2.82 billion at December 31, 2017, an increase of $17.4 million. 
     
  • Total loans amounted to $2.29 billion at March 31, 2018, compared to $2.27 billion at December 31, 2017, an increase of $20.3 million. 
     
  • Customer deposits (total deposits excluding brokered deposits) were $2.39 billion at March 31, 2018, compared to $2.29 billion at December 31, 2017, an increase of $92.0 million, or 4%.  Brokered deposits were $185.5 million at March 31, 2018 and $147.5 million at December 31, 2017.
     
  • Investment assets under management amounted to $846.9 million at March 31, 2018, compared to $845.0 million at December 31, 2017, an increase of $1.9 million. 
     
  • Total assets under management amounted to $3.77 billion at March 31, 2018, compared to $3.75 billion at December 31, 2017, an increase of $19.0 million. 

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 114 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, residential and consumer loan products, deposit products and cash management services, as well as 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 (Southern Hillsborough and Rockingham counties).  Enterprise Bank has 24 full-service branches 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, Salem and Windham.

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 references 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, the receipt of required regulatory approvals, and changes in tax laws including, among other risks, potential future tax rate changes, and the risk that costs associated with the 2017 Tax Act and changes to the deferred tax assets and liabilities may be greater than expected.  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 earnings 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)   March 31,
 2018
  December 31,
 2017
  March 31,
 2017
Assets            
Cash and cash equivalents:            
Cash and due from banks   $ 34,703     $ 40,310     $ 35,432  
Interest-earning deposits   22,175     14,496     18,858  
Total cash and cash equivalents   56,878     54,806     54,290  
Investment securities at fair value   412,508     405,206     376,212  
Federal Home Loan Bank stock   2,370     5,215     3,174  
Loans held for sale       208     752  
Loans, less allowance for loan losses of $34,524 at March 31, 2018, $32,915 at December 31, 2017, and $31,683 at March 31, 2017   2,255,649     2,236,989     2,033,168  
Premises and equipment, net   37,212     37,022     34,991  
Accrued interest receivable   11,210     10,614     9,282  
Deferred income taxes, net   12,858     10,751     16,387  
Bank-owned life insurance   29,634     29,466     28,941  
Prepaid income taxes       1,301     534  
Prepaid expenses and other assets   10,953     20,330     8,972  
Goodwill   5,656     5,656     5,656  
Total assets   $ 2,834,928     $ 2,817,564     $ 2,572,359  
Liabilities and Stockholders' Equity            
Liabilities            
Deposits   $ 2,571,389     $ 2,441,362     $ 2,274,912  
Borrowed funds       89,000     46,671  
Subordinated debt   14,850     14,847     14,837  
Accrued expenses and other liabilities   16,400     40,067     15,885  
Income taxes payable   53          
Accrued interest payable   596     478     226  
Total liabilities   2,603,288     2,585,754     2,352,531  
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; 40,000,000 shares authorized; 11,682,914 shares issued and outstanding at March 31, 2018, 11,609,853 shares issued and outstanding at December 31, 2017, and 11,566,722 shares issued and outstanding at March 31, 2017   117     116     116  
Additional paid-in capital   89,159     88,205     85,826  
Retained earnings   148,212     143,073     134,015  
Accumulated other comprehensive (loss) income   (5,848 )   416     (129 )
Total stockholders' equity   231,640     231,810     219,828  
Total liabilities and stockholders' equity   $ 2,834,928     $ 2,817,564     $ 2,572,359  
                         


 
ENTERPRISE BANCORP, INC.
Consolidated Statements of Income
(unaudited)
 
  Three months ended
  March 31,
(Dollars in thousands, except per share data) 2018   2017
Interest and dividend income:      
Loans and loans held for sale $ 26,150     $ 22,371  
Investment securities 2,487     1,920  
Other interest-earning assets 134     73  
Total interest and dividend income 28,771     24,364  
Interest expense:      
Deposits 2,236     1,228  
Borrowed funds 292     61  
Subordinated debt 228     228  
Total interest expense 2,756     1,517  
Net interest income 26,015     22,847  
Provision for loan losses 1,600     125  
Net interest income after provision for loan losses 24,415     22,722  
Non-interest income:      
Investment advisory fees 1,408     1,225  
Deposit and interchange fees 1,489     1,340  
Income on bank-owned life insurance, net 168     176  
Net gains on sales of investment securities 1     540  
Gains on sales of loans 84     133  
Other income 641     720  
Total non-interest income 3,791     4,134  
Non-interest expense:      
Salaries and employee benefits 12,108     12,692  
Occupancy and equipment expenses 2,157     1,939  
Technology and telecommunications expenses 1,553     1,582  
Advertising and public relations expenses 720     619  
Audit, legal and other professional fees 507     363  
Deposit insurance premiums 500     383  
Supplies and postage expenses 232     233  
Other operating expenses 1,670     1,609  
Total non-interest expense 19,447     19,420  
Income before income taxes 8,759     7,436  
Provision for income taxes 1,934     1,864  
Net income $ 6,825     $ 5,572  
       
Basic earnings per share $ 0.59     $ 0.48  
Diluted earnings per share $ 0.58     $ 0.48  
       
Basic weighted average common shares outstanding 11,628,587     11,508,811  
Diluted weighted average common shares outstanding 11,700,854     11,598,862  
           


 
ENTERPRISE BANCORP, INC.
Selected Consolidated Financial Data and Ratios
(unaudited)
 
    At or for the three months ended   At or for the year ended   At or for the three months ended
(Dollars in thousands, except per share data)   March 31, 2018   December 31, 2017   March 31, 2017
             
BALANCE SHEET AND OTHER DATA            
Total assets   $ 2,834,928     $ 2,817,564     $ 2,572,359  
Loans serviced for others   88,816     89,059     82,671  
Investment assets under management   846,853     844,977     747,469  
Total assets under management   $ 3,770,597     $ 3,751,600     $ 3,402,499  
             
Book value per share   $ 19.83     $ 19.97     $ 19.01  
Dividends paid per common share   $ 0.145     $ 0.540     $ 0.135  
Total capital to risk weighted assets   11.48 %   11.21 %   11.86 %
Tier 1 capital to risk weighted assets   9.62 %   9.34 %   9.87 %
Tier 1 capital to average assets   8.24 %   8.22 %   8.40 %
Common equity tier 1 capital to risk weighted assets   9.62 %   9.34 %   9.87 %
Allowance for loan losses to total loans   1.51 %   1.45 %   1.53 %
Non-performing assets   $ 10,558     $ 9,032     $ 9,357  
Non-performing assets to total assets   0.37 %   0.32 %   0.36 %
             
INCOME STATEMENT DATA (annualized)            
Return on average total assets   0.98 %   0.73 %   0.88 %
Return on average stockholders' equity   12.00 %   8.58 %   10.41 %
Net interest margin (tax equivalent)   3.95 %   3.97 %   3.90 %
                   

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

 


 

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