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Enterprise Bancorp, Inc. Announces First Quarter 2019 Net Income of $8.7 Million

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LOWELL, Mass., April 18, 2019 (GLOBE NEWSWIRE) -- Enterprise Bancorp, Inc. (the "Company" or "Enterprise") (EBTC), parent of Enterprise Bank, announced net income for the three months ended March 31, 2019 of $8.7 million, an increase of $1.9 million, or 27%, compared to the three months ended March 31, 2018. Diluted earnings per share were $0.74 for the three months ended March 31, 2019, an increase of 28%, compared to $0.58 for the three months ended March 31, 2018.

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

Chief Executive Officer Jack Clancy commented, "Over the past twelve months, total assets increased 8%, total loans increased 4% and customer deposits have increased 14% as compared to March 31, 2018. The increase in customer deposits includes several relationships which had large short-term balance increases in the quarter. Loan and deposit growth, along with a reduction in the loan loss provision due to improved credit metrics compared to the March 2018 quarter, were the key drivers to our earnings increase as compared to the first quarter of 2018."

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 renovations and market expansion."

Founder and Chairman of the Board George Duncan commented, "We are profoundly grateful for the trust and confidence placed in us by those who create our success—our shareholders, our customers, our team members, and the communities we are privileged to serve—and who embrace our mission as a genuine community bank to create a lasting and positive impact in our world. All of us at Enterprise Bank have an overwhelming sense of pride and accomplishment in what we have achieved to date—a branch network consisting of 24 locations in 19 communities, assets in excess of $3 billion, assets under management in excess of $4 billion and 118 consecutive profitable quarters—and we are extremely excited about the opportunities that lie ahead."

Results of Operations

Net interest income for the three months ended March 31, 2019 amounted to $28.1 million, an increase of $2.1 million, or 8%, compared to the three months ended March 31, 2018. The increase in net interest income was due largely to interest-earning asset growth, primarily in loans. Average loan balances (including loans held for sale) increased $98.7 million for the three months ended March 31, 2019, compared to the same 2018 period average. Tax equivalent net interest margin was 3.98% for the three months ended March 31, 2019, compared to 3.95% for the three months ended March 31, 2018.

For the three months ended March 31, 2019 there was a negative provision to the allowance for loan losses of $400 thousand, compared to a provision of $1.6 million for the three months ended March 31, 2018. The primary factor in the decrease in the year-to-date provision for loan losses compared to the prior year was a reduction in the balance of the allowance for loan losses allocated to impaired, adversely classified, and criticized loans of $81 thousand for the three months ended March 31, 2019, compared to an increase of $1.4 million during the three months ended March 31, 2018.

Also affecting the provision for loan losses for the three months ended March 31, 2019 compared to the prior year were:

  • Net recoveries of $280 thousand for the three months ended March 31, 2019, compared to net recoveries of $9 thousand for the three months ended March 31, 2018.

  • Total non-performing loans as a percentage of total loans amounted to 0.46% at both March 31, 2019 and March 31, 2018.

  • The ratio of adversely classified loans ("substandard," "doubtful," "loss") to total loans amounted to 1.45% at March 31, 2019, compared to 1.19% at March 31, 2018. However, the reserves allocated to these loans declined $472 thousand over the same period due to generally improved collateral values on impaired loans.

  • Loan growth for the three months ended March 31, 2019 was relatively flat, compared to loan growth of $20.3 million during the three months ended March 31, 2018. The allowance for loan losses allocated to general reserves for non-classified loans declined $39 thousand for the three months ended March 31, 2019, compared to an increase of $233 thousand for the three months ended March 31, 2018.

The allowance for loan losses to total loans ratio was 1.41% at March 31, 2019, 1.42% at December 31, 2018 and 1.51% at March 31, 2018.

Non-interest income for the three months ended March 31, 2019 amounted to $3.8 million and was relatively flat compared to the three months ended March 31, 2018. Increases in deposit and interchange fees and other income, primarily as a result of market value adjustment gains on equity securities, were partially offset by lower wealth management fees.

For the three months ended March 31, 2019, non-interest expense amounted to $20.9 million, an increase of $1.4 million, or 7%, compared to the three months ended March 31, 2018. Increases in non-interest expense over the first quarter of 2018 primarily related to the Company's strategic growth, digital and market initiatives, particularly salaries and employee benefits expenses and technology and telecommunications expenses, partially offset by lower FDIC deposit insurance expenses in the first quarter of 2019.

Key Financial Highlights

  • Total assets amounted to $3.07 billion at March 31, 2019, compared to $2.96 billion at December 31, 2018, an increase of $109.4 million, or 4%.

  • Total loans amounted to $2.38 billion at March 31, 2019, compared to $2.39 billion at December 31, 2018, a decrease of $2.9 million, or 0.1%.

  • Customer deposits (total deposits excluding brokered deposits) were $2.73 billion at March 31, 2019, compared to $2.51 billion at December 31, 2018, an increase of $217.7 million, or 9%.

  • Investment assets under management amounted to $848.4 million at March 31, 2019, compared to $800.8 million at December 31, 2018, an increase of $47.7 million, or 6%.

  • Total assets under management amounted to $4.01 billion at March 31, 2019, compared to $3.85 billion at December 31, 2018, an increase of $158.1 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. 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.

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)

March 31,
2019

December 31,
2018

March 31,
2018

Assets

Cash and cash equivalents:

Cash and due from banks

$

35,715

$

43,865

$

34,703

Interest-earning deposits

99,547

19,255

22,175

Total cash and cash equivalents

135,262

63,120

56,878

Investments:

Debt securities at fair value

458,765

431,473

412,213

Equity securities at fair value

2,049

1,448

295

Total investment securities at fair value

460,814

432,921

412,508

Federal Home Loan Bank stock

1,491

5,357

2,370

Loans held for sale

332

701

Loans, less allowance for loan losses of $33,729 at March 31, 2019, $33,849 at December 31, 2018, and $34,524 at March 31, 2018

2,350,908

2,353,657

2,255,649

Premises and equipment, net

38,446

37,588

37,212

Lease right-of-use asset

18,851

Accrued interest receivable

12,619

11,462

11,210

Deferred income taxes, net

10,632

11,747

12,858

Bank-owned life insurance

30,300

30,138

29,634

Prepaid income taxes

732

Prepaid expenses and other assets

8,470

11,279

10,953

Goodwill

5,656

5,656

5,656

Total assets

$

3,073,781

$

2,964,358

$

2,834,928

Liabilities and Stockholders' Equity

Liabilities

Deposits:

Customer deposits

$

2,725,667

$

2,507,999

$

2,385,895

Brokered deposits

30,499

56,783

185,494

Total deposits

2,756,166

2,564,782

2,571,389

Borrowed funds

488

100,492

Subordinated debt

14,863

14,860

14,850

Lease liability

17,871

Accrued expenses and other liabilities

16,431

27,948

16,400

Income taxes payable

809

53

Accrued interest payable

1,092

979

596

Total liabilities

2,807,720

2,709,061

2,603,288

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; 11,798,114 shares issued and outstanding at March 31, 2019, 11,708,218 shares issued and outstanding at December 31, 2018, and 11,682,914 shares issued and outstanding at March 31, 2018

118

117

117

Additional paid-in capital

92,089

91,281

89,159

Retained earnings

172,004

165,183

148,212

Accumulated other comprehensive income (loss)

1,850

(1,284

)

(5,848

)

Total stockholders' equity

266,061

255,297

231,640

Total liabilities and stockholders' equity

$

3,073,781

$

2,964,358

$

2,834,928

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

Three months ended

March 31,

(Dollars in thousands, except per share data)

2019

2018

Interest and dividend income:

Loans and loans held for sale

$

29,616

$

26,150

Investment securities

3,222

2,487

Other interest-earning assets

459

134

Total interest and dividend income

33,297

28,771

Interest expense:

Deposits

4,706

2,236

Borrowed funds

279

292

Subordinated debt

228

228

Total interest expense

5,213

2,756

Net interest income

28,084

26,015

Provision for loan losses

(400

)

1,600

Net interest income after provision for loan losses

28,484

24,415

Non-interest income:

Wealth management fees

1,299

1,408

Deposit and interchange fees

1,564

1,489

Income on bank-owned life insurance, net

162

168

Net (losses) gains on sales of investment securities

(1

)

1

Gains on sales of loans

36

84

Other income

776

641

Total non-interest income

3,836

3,791

Non-interest expense:

Salaries and employee benefits

13,471

12,108

Occupancy and equipment expenses

2,212

2,157

Technology and telecommunications expenses

1,726

1,553

Advertising and public relations expenses

715

720

Audit, legal and other professional fees

423

507

Deposit insurance premiums

351

500

Supplies and postage expenses

224

232

Other operating expenses

1,728

1,670

Total non-interest expense

20,850

19,447

Income before income taxes

11,470

8,759

Provision for income taxes

2,774

1,934

Net income

$

8,696

$

6,825

Basic earnings per share

$

0.74

$

0.59

Diluted earnings per share

$

0.74

$

0.58

Basic weighted average common shares outstanding

11,730,482

11,628,587

Diluted weighted average common shares outstanding

11,783,405

11,700,854

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, 2019

December 31, 2018

March 31, 2018

BALANCE SHEET AND OTHER DATA

Total assets

$

3,073,781

$

2,964,358

$

2,834,928

Loans serviced for others

90,200

89,232

88,816

Investment assets under management

848,412

800,751

846,853

Total assets under management

$

4,012,393

$

3,854,341

$

3,770,597

Book value per share

$

22.55

$

21.80

$

19.83

Dividends paid per common share

$

0.16

$

0.58

$

0.145

Total capital to risk weighted assets

11.89

%

11.77

%

11.48

%

Tier 1 capital to risk weighted assets

10.06

%

9.93

%

9.62

%

Tier 1 capital to average assets

8.57

%

8.56

%

8.24

%

Common equity tier 1 capital to risk weighted assets

10.06

%

9.93

%

9.62

%

Allowance for loan losses to total loans

1.41

%

1.42

%

1.51

%

Non-performing assets

$

11,304

$

11,784

$

10,558

Non-performing assets to total assets

0.37

%

0.40

%

0.37

%

INCOME STATEMENT DATA (annualized)

Return on average total assets

1.17

%

1.00

%

0.98

%

Return on average stockholders' equity

13.59

%

12.15

%

12.00

%

Net interest margin (tax equivalent)(1)

3.98

%

3.97

%

3.95

%

(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