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Enterprise Bancorp, Inc. Announces Second Quarter 2019 Net Income of $7.8 Million   

LOWELL, Mass., July 18, 2019 (GLOBE NEWSWIRE) -- Enterprise Bancorp, Inc. (the "Company" or "Enterprise") (NASDAQ: EBTC), parent of Enterprise Bank, announced net income for the three months ended June 30, 2019 of $7.8 million, an increase of $189 thousand, or 2%, compared to the three months ended June 30, 2018. Diluted earnings per share were $0.66 for the three months ended June 30, 2019, an increase of 3%, compared to $0.64 for the three months ended June 30, 2018.  Net income for the six months ended June 30, 2019 amounted to $16.5 million, an increase of $2.1 million, or 14%, compared to the six months ended June 30, 2018.  Diluted earnings per share were $1.39 for the six months ended June 30, 2019, an increase of 13%, compared to $1.23 for the six months ended June 30, 2018.

As previously announced on July 16, 2019, the Company declared a quarterly dividend of $0.16 per share to be paid on September 3, 2019 to shareholders of record as of August 13, 2019.

Chief Executive Officer Jack Clancy commented, "Over the past twelve months, total assets, total loans, and customer deposits increased by 8%, 5%, and 14%, respectively, compared to June 30, 2018.  The increase in customer deposits includes several relationships which, as of June 30, 2019, had large short-term balances.  Loan and deposit growth, along with a reduction in the loan loss provision due to improved credit metrics compared to the six months ended June 30, 2018, were the key drivers to our earnings increase as compared to the same prior year-to-date period."

Mr. Clancy added, "The collective efforts and contributions of our dedicated Enterprise team, including active community involvement, relationship building, a customer-focused mindset, and ongoing enhancements to our leading-edge product and service offerings, continue to drive our growth.  This includes operating from a sense of purpose to serve our fellow team members, customers and communities.  Our top priority and focus has been, and always will be, ongoing investment in our greatest asset: our people.  We also remain focused on organic growth and continually planning for and investing in our future with an emphasis on people, technology, digital transformation, branch transformation and consistent market expansion."

As announced in early June, Lexington, Massachusetts will be the site of a new branch; our twenty-fifth branch, which will be located at 76 Bedford Street, and is expected to open in late fall. Founder and Chairman of the Board George Duncan commented, "We are delighted to be establishing a presence in Lexington, a community rich in history and vibrant in culture that is home to a significant base of our customers.  Lexington is a natural next step in the organic growth of our branch network that, coupled with our commitment to community and active civic engagement, has been integral to Enterprise Bank's success.  We look forward to contributing to the success of our Lexington customers and the Lexington community."

Results of Operations

Net interest income for the three months ended June 30, 2019 amounted to $28.8 million, an increase of $1.6 million, or 6%, compared to the same period in 2018.  Net interest income for the six months ended June 30, 2019 amounted to $56.9 million, an increase of $3.6 million, or 7%, compared to the six months ended June 30, 2018.  The increase in net interest income was due largely to interest-earning asset growth, primarily in loans.  Average loan balances increased $99.8 million for the three months ended June 30, 2019 and $99.3 million for the six months ended June 30, 2019, compared to the same respective 2018 period averages.  Tax equivalent net interest margin ("Margin") was 3.96% for the three months ended June 30, 2019, compared to 4.03% for the three months ended June 30, 2018.  Margin was 3.97% for the six months ended June 30, 2019, compared to 3.99% for the six months ended June 30, 2018.

For the three months ended June 30, 2019, the provision to the allowance for loan losses amounted to $955 thousand, compared to $300 thousand during the three months ended June 30, 2018.  The increase in the provision in the second quarter of 2019 was due to the higher levels of: loan growth; reserves necessary for credit impaired and classified commercial relationships; and net charge-offs compared to the same three month period in 2018.

For the six months ended June 30, 2019, the provision to the allowance for loan losses was $555 thousand, compared to the provision of $1.9 million for the six months ended June 30, 2018.  The decrease compared to the prior year was due primarily to generally improved credit metrics compared to the prior year period.  The 2018 period was impacted by credit deterioration of several impaired and classified commercial relationships and the level of loan growth, primarily during the first quarter of that period.

Affecting the provision for loan losses for three and six month periods ended June 30, 2019 compared to the same periods in the prior year were:

  • The ratio of classified loans to total loans amounted to 2.37% at June 30, 2019, compared to 2.54% at June 30, 2018.

  • Loan growth for the six months ended June 30, 2019 was $26.6 million (predominantly in the second quarter of 2019), compared to $28.7 million during the six months ended June 30, 2018 (the majority in the  first quarter of 2018).

  • Net charge-offs were $333 thousand for the three months ended June 30, 2019, compared to net charge-offs of $27 thousand for the three months ended June 30, 2018.

  • Net charge-offs were $53 thousand for the six months ended June 30, 2019, compared to net charge-offs of $18 thousand for the six months ended June 30, 2018.

  • After foreclosure proceedings in 2019, one previously classified commercial loan relationship was transferred to Other Real Estate Owned with a net carry value of $255 thousand as of June 30, 2019.  The Company carried no OREO during 2018.

The allowance for loan losses to total loans ratio was 1.42% at both June 30, 2019 and December 31, 2018.  At June 30, 2018, the ratio was 1.51%.

Non-interest income for the three months ended June 30, 2019 amounted to $4.0 million, an increase of $307 thousand, or 8%, compared to the three months ended June 30, 2018.  Non-interest income for the six months ended June 30, 2019 amounted to $7.9 million, an increase of $352 thousand, or 5%, compared to the six months ended June 30, 2018.  Non-interest income increased in 2019 primarily due to increases in deposit and interchange fees, net gains on sales of investments, and gains on fair value adjustments of equity securities, which is included in other income, partially offset by lower wealth management income.

Non-interest expense for the three months ended June 30, 2019 amounted to $21.8 million, an increase of $945 thousand, or 5%, compared to the three months ended June 30, 2018.  For the six months ended June 30, 2019, non-interest expense amounted to $42.6 million, an increase of $2.3 million, or 6%, compared to the six months ended June 30, 2018.  Increases in non-interest expense in 2019 primarily related to the Company's strategic growth initiatives, particularly salaries and employee benefits expenses.

Key Financial Highlights

  • Total assets amounted to $3.17 billion at June 30, 2019, compared to $2.96 billion at December 31, 2018, an increase of $203.2 million, or 7%.  Since March 31, 2019, total assets have increased $93.7 million, or 3%.
     
  • Total loans amounted to $2.41 billion at June 30, 2019, compared to $2.39 billion at December 31, 2018, an increase of $26.6 million, or 1%.  Since March 31, 2019, total loans have increased $29.5 million, or 1%.
     
  • Customer deposits were $2.83 billion at June 30, 2019, compared to $2.51 billion at December 31, 2018, an increase of $322.1 million, or 13%.  Since March 31, 2019, customer deposits have increased $104.5 million, or 4%.  The Company did not have any brokered deposits at June 30, 2019.
     
  • Investment assets under management amounted to $857.2 million at June 30, 2019, compared to $800.8 million at December 31, 2018, an increase of $56.4 million, or 7%.  Since March 31, 2019, investment assets under management have increased $8.8 million, or 1%.
     
  • Total assets under management amounted to $4.11 billion at June 30, 2019, compared to $3.85 billion at December 31, 2018, an increase of $257.0 million, or 7%.  Since March 31, 2019, total assets under management have increased $99.0 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, and has reported 119 consecutive profitable quarters.  Enterprise Bank 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, digital banking options, and insurance services.  Enterprise Bank also provides a range of wealth management, wealth services and trust services delivered via two channels, Enterprise Wealth Management and Enterprise Wealth Services.  The Company's headquarters and Enterprise Bank's main office are located at 222 Merrimack Street in Lowell, Massachusetts.  The Company's primary market area is the Greater Merrimack Valley, Nashoba 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 (2), Acton, Andover, Billerica (2), Chelmsford (2), Dracut, Fitchburg, Lawrence, Leominster, Methuen, Tewksbury (2), Tyngsborough and Westford and in the New Hampshire communities of Derry, Hudson, Nashua (2), Pelham, Salem and Windham.  The Company is also in the process of obtaining regulatory approvals to establish a branch office in Lexington, Massachusetts and anticipates that the office will open in the fall of 2019.

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 in, 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 market expansion opportunities, changes in non-interest expenditures or in the anticipated benefits of such expenditures, the receipt of required regulatory approvals, and changes in tax laws.  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) June 30,
 2019
 December 31,
 2018
 June 30,
 2018
Assets      
Cash and cash equivalents:      
Cash and due from banks $46,918  $43,865  $41,172 
Interest-earning deposits 139,961  19,255  97,161 
 Total cash and cash equivalents 186,879  63,120  138,333 
Investments:      
Debt securities at fair value 465,944  431,473  421,225 
Equity securities at fair value 2,428  1,448  949 
 Total investment securities at fair value 468,372  432,921  422,174 
Federal Home Loan Bank stock 1,576  5,357  2,618 
Loans held for sale 1,376  701  657 
Loans, less allowance for loan losses of $34,351 at June 30, 2019, $33,849 at December 31, 2018, and $34,797 at June 30, 2018 2,379,751  2,353,657  2,263,798 
Premises and equipment, net 39,575  37,588  37,999 
Lease right-of-use asset 19,339     
Accrued interest receivable 12,236  11,462  10,955 
Deferred income taxes, net 8,711  11,747  13,223 
Bank-owned life insurance 30,462  30,138  29,804 
Prepaid income taxes 1,143  732  1,350 
Prepaid expenses and other assets 12,442  11,279  7,396 
Goodwill 5,656  5,656  5,656 
 Total assets $3,167,518  $2,964,358  $2,933,963 
Liabilities and Stockholders' Equity      
Liabilities      
Deposits:      
Customer deposits $2,830,148  $2,507,999  $2,481,554 
Brokered deposits   56,783  178,800 
 Total deposits 2,830,148  2,564,782  2,660,354 
Borrowed funds 484  100,492  501 
Subordinated debt 14,866  14,860  14,853 
Lease liability 18,382     
Accrued expenses and other liabilities 22,049  27,948  19,901 
Accrued interest payable 962  979  777 
 Total liabilities 2,886,891  2,709,061  2,696,386 
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; 11,806,008 shares issued and outstanding at June 30, 2019, 11,708,218 shares issued and outstanding at December 31, 2018, and 11,696,204 shares issued and outstanding at June 30, 2018 118  117  117 
Additional paid-in capital 92,767  91,281  90,019 
Retained earnings 177,880  165,183  154,094 
Accumulated other comprehensive income (loss) 9,862  (1,284) (6,653)
Total stockholders' equity 280,627  255,297  237,577 
   Total liabilities and stockholders' equity $3,167,518  $2,964,358  $2,933,963 
 


ENTERPRISE BANCORP, INC.
Consolidated Statements of Income
(unaudited)

 Three months ended Six months ended
 June 30, June 30,
(Dollars in thousands, except per share data)2019 2018 2019 2018
Interest and dividend income:       
Loans and loans held for sale$30,419  $27,527  $60,035  $53,677 
Investment securities3,285  2,606  6,507  5,093 
Other interest-earning assets597  187  1,056  321 
Total interest and dividend income34,301  30,320  67,598  59,091 
Interest expense:       
Deposits5,292  2,837  9,998  5,073 
Borrowed funds  34  279  326 
Subordinated debt231  231  459  459 
Total interest expense5,523  3,102  10,736  5,858 
 Net interest income28,778  27,218  56,862  53,233 
Provision for loan losses955  300  555  1,900 
 Net interest income after provision for loan losses27,823  26,918  56,307  51,333 
Non-interest income:       
Wealth management fees1,371  1,418  2,670  2,826 
Deposit and interchange fees1,687  1,567  3,251  3,056 
Income on bank-owned life insurance, net162  170  324  338 
Net gains on sales of investment securities147    146  1 
Gains on sales of loans69  48  105  132 
Other income604  530  1,380  1,171 
Total non-interest income4,040  3,733  7,876  7,524 
Non-interest expense:       
Salaries and employee benefits14,041  13,267  27,512  25,375 
Occupancy and equipment expenses2,096  2,037  4,308  4,194 
Technology and telecommunications expenses1,701  1,639  3,427  3,192 
Advertising and public relations expenses870  1,112  1,585  1,832 
Audit, legal and other professional fees438  419  861  926 
Deposit insurance premiums366  346  717  846 
Supplies and postage expenses262  266  486  498 
Other operating expenses1,979  1,722  3,707  3,392 
Total non-interest expense21,753  20,808  42,603  40,255 
Income before income taxes10,110  9,843  21,580  18,602 
Provision for income taxes2,347  2,269  5,121  4,203 
 Net income$7,763  $7,574  $16,459  $14,399 
        
Basic earnings per share$0.66  $0.65  $1.40  $1.24 
Diluted earnings per share$0.66  $0.64  $1.39  $1.23 
        
Basic weighted average common shares outstanding11,798,942  11,687,182  11,764,901  11,658,046 
Diluted weighted average common shares outstanding11,834,507  11,764,411  11,808,833  11,733,391 
            


ENTERPRISE BANCORP, INC.
Selected Consolidated Financial Data and Ratios
(unaudited)

  At or for the
six months ended

 At or for the
year ended
 At or for the
six months ended

(Dollars in thousands, except per share data) June 30, 2019 December 31, 2018 June 30, 2018
       
BALANCE SHEET AND OTHER DATA      
Total assets $3,167,518  $2,964,358  $2,933,963 
Loans serviced for others 86,677  89,232  92,465 
Investment assets under management 857,187  800,751  848,181 
Total assets under management $4,111,382  $3,854,341  $3,874,609 
       
Book value per share $23.77  $21.80  $20.31 
Dividends paid per common share $0.32  $0.58  $0.29 
Total capital to risk weighted assets 12.02% 11.77% 11.66%
Tier 1 capital to risk weighted assets 10.20% 9.93% 9.80%
Tier 1 capital to average assets 8.61% 8.56% 8.35%
Common equity tier 1 capital to risk weighted assets 10.20% 9.93% 9.80%
Allowance for loan losses to total loans 1.42% 1.42% 1.51%
Non-performing assets $12,233  $11,784  $11,077 
Non-performing assets to total assets 0.39% 0.40% 0.38%
       
INCOME STATEMENT DATA (annualized)      
Return on average total assets 1.09% 1.00% 1.02%
Return on average stockholders' equity 12.50% 12.15% 12.51%
Net interest margin (tax equivalent)(1) 3.97% 3.97% 3.99%

(1) Tax equivalent net interest margin is net interest income adjusted for the tax equivalent effect associated with tax exempt loan and investment income, expressed as a percentage of average interest earning assets.


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

 

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