Enterprise Bancorp, Inc. Announces Second Quarter Financial Results

Enterprise Bancorp Inc

LOWELL, Mass., July 25, 2023 (GLOBE NEWSWIRE) -- Enterprise Bancorp, Inc. (NASDAQ: EBTC), parent of Enterprise Bank, announced its financial results for the three and six months ended June 30, 2023.

Executive Chairman & Founder George Duncan commented, "We are pleased with our second quarter results. Our operating strategy has always been to serve our customers and communities through consistent and disciplined lending, a conservative and long-term focus, being highly responsive to our customers' banking needs and making ongoing investments in our products, services, and people to provide the best banking services through all economic cycles. We have always sought to fund asset growth with relationship-based customer deposits and use wholesale borrowings as supplemental funding for relatively short periods of time. This approach has served us well over time and especially now. We have a relatively high level of liquidity with significant funding capacity and are well positioned to take advantage of market opportunities in the current environment."

Key financial results at or for the three months ended June 30, 2023, are as follows:

• Net income amounted to $9.7 million, or $0.79 per diluted common share, compared to $8.2 million, or $0.67 per diluted common share, for the three months ended June 30, 2022 and $10.8 million, or $0.88 per diluted common share, for the three months ended March 31, 2023.

• Included in pre-tax income were $3.4 million in Employee Retention Credits ("ERC"), which the Company recognized as a reduction to salary and benefits expense, a loss on the sale of debt securities of $2.4 million and a provision for credit losses of $2.3 million.

• Total loans amounted to $3.35 billion, an increase of $115.5 million, or 4%, compared to March 31, 2023. Loans outstanding have increased 9% compared to June 30, 2022.

• Total customer deposits amounted to $4.08 billion, an increase of $59.4 million, or 1%, compared to March 31, 2023. Customer deposits have increased 1% compared to June 30, 2022.

• Cash and equivalents amounted to $258.8 million, while wholesale borrowings amounted to $3.3 million at June 30, 2023.
  
  

Chief Executive Officer Jack Clancy commented, "Loan growth was strong during the quarter, and we continue to see good demand in our markets." Mr. Clancy continued, "In June, to increase asset sensitivity and earnings, the Company sold $84.8 million in investment securities, reinvesting the proceeds into higher yielding short-term investments, and separately entered into a two-year, pay fixed loan hedge with a notional balance of $50.0 million. These initiatives provide an annualized income enhancement of approximately $2.0 million to net interest income based on interest rates at June 30, 2023."

Net Income
Net income for the three months ended June 30, 2023, amounted to $9.7 million, an increase of $1.5 million, or 19%, compared to the three months ended June 30, 2022.

• The increase in net income during the period was due primarily to an increase in net interest income of $2.3 million and a decrease in non-interest expense of $1.2 million, partially offset by a decrease in non-interest income of $1.3 million. The components of the increase in net income are detailed below.
  
  

Net Interest Income
Net interest income for the three months ended June 30, 2023, amounted to $38.1 million, an increase of $2.3 million, or 6%, compared to the three months ended June 30, 2022.

• The increase in net interest income during the period was due largely to increases in loan interest income of $9.7 million and other interest-earning asset income of $1.5 million, partially offset by an increase in deposit interest expense of $9.0 million, due primarily to higher market interest rates over the comparable periods and increased competition for deposits from bank and non-bank alternatives.
  
  

Net Interest Margin
Three months ended – June 30, 2023 compared to March 31, 2023

Tax-equivalent net interest margin ("net interest margin") (non-GAAP) was 3.55% for the three months ended June 30, 2023, compared to 3.76% for the three months ended March 31, 2023.

Net interest margin compared to the prior quarter was impacted by the following factors:

• Average interest-earning deposits with banks decreased $42.9 million, or 22%, while the yield increased 37 basis points. The decrease in average balance resulted from funding loan growth, partially offset by a decrease in average debt securities, while the increase in yield reflected the increase in market interest rates during the period.

• Average debt securities decreased $20.3 million, or 2%, while the tax-equivalent yield remained unchanged. The decrease in average balance resulted from principal pay-downs, calls, maturities and sales of debt securities during the three months ended June 30, 2023.

• Average loan balances increased $67.7 million, or 2%, and the tax-equivalent yield increased 12 basis points. The increase in loan yields resulted primarily from increases in market interest rates during the period.

• Average total deposits increased $3.9 million and the yield increased 36 basis points. The increase in yield resulted from increases in market interest rates and competition from bank and non-bank alternatives during the period.

Three months ended – June 30, 2023 compared to June 30, 2022

Net interest margin was 3.55% for the three months ended June 30, 2023, compared to 3.45% for the three months ended June 30, 2022.

Net interest margin compared to the prior year quarter was impacted by the following factors:

• Average interest-earning deposits with banks decreased $58.3 million, or 28%, while the yield increased 413 basis points. The decrease in average balance resulted primarily from funding loan growth, partially offset by a decrease in average debt securities and an increase in average total deposits. The increase in yield reflected a significant increase in market interest rates during the period.

• Average debt securities decreased $54.3 million, or 6%, while the tax-equivalent yield increased 20 basis points. The decrease in average balance resulted from principal pay-downs, calls, maturities and sales of debt securities during the three months ended June 30, 2023, with funds redeployed into higher yielding interest-earning deposits.

• Average loan balances increased $248.5 million, or 8%, and the tax-equivalent yield increased 86 basis points. The increase in loan yields resulted primarily from increases in market interest rates during the period.

• Average total deposits increased $94.6 million, or 2%, and the yield increased 90 basis points. The increase in yield resulted from increases in market interest rates, a shift in deposit mix to higher yielding products and competition from bank and non-bank alternatives, occurring principally over the last nine months.

Provision for Credit Losses
The provision for credit losses for the three months ended June 30, 2023, amounted to $2.3 million, compared to $2.4 million for the three months ended June 30, 2022. The provision expense for the second quarter of 2023 resulted mainly from an increase in loans outstanding and, to a lesser extent, an increase in off-balance sheet commitments during the period.

Non-Interest Income
Non-interest income for the three months ended June 30, 2023, amounted to $2.8 million, a decrease of $1.3 million, or 32%, compared to the three months ended June 30, 2022.

• Non-interest income for the three months ended June 30, 2023 included losses on sales of debt securities of $2.4 million and gains on equity securities of $189 thousand. Non-interest income during the three months ended June 30, 2022 had no losses on sales of debt securities and losses on equity securities of $429 thousand.

• Excluding the items above, non-interest income increased $487 thousand, or 11%, due primarily to an increase in deposit and interchange fees of $295 thousand.
  
  

Non-Interest Expense
Non-interest expense for the three months ended June 30, 2023, amounted to $25.6 million, a decrease of $1.2 million, or 5%, compared to the three months ended June 30, 2022. The decrease resulted primarily from a decrease in salaries and employee benefits of $1.6 million, due primarily to the receipt of $3.4 million in ERC, which were recognized as a reduction to salary and benefits expense.

• Excluding the ERC, non-interest expense increased $2.2 million, or 8%, due primarily to an increase in salaries and benefits of $1.8 million, or 10%.

• The increase in non-interest expense, excluding the ERC, was also impacted by increases in advertising and public relations expenses of $244 thousand and deposit insurance premiums of $249 thousand, partially offset by a decrease in technology and telecommunications expenses of $283 thousand.
  
  

Income Taxes
The effective tax rate was 25.6% and 23.7% for the three months ended June 30, 2023 and 2022, respectively. The increase in the effective tax rate for the current quarter compared to the prior year quarter resulted primarily from the transfers of funds from the Bank's investment subsidiary corporations and a partially non-deductible loss on the sale of debt securities. The Company established a valuation allowance against the capital loss carryforward deferred tax asset which resulted from the sale of securities. The effective tax rate was 24.2% and 23.2% for the six months ended June 30, 2023 and 2022, respectively.

Balance Sheet
Total assets amounted to $4.50 billion at June 30, 2023, compared to $4.44 billion at December 31, 2022, an increase of $64.0 million, or 1%.

Total interest-earning deposits with banks, which consist of overnight and short-term investments, amounted to $208.8 million at June 30, 2023, compared to $230.7 million at December 31, 2022, a decrease of $21.9 million, or 9%. The decrease was due primarily to the funding of loan growth, partially offset by sales of debt securities, investment cash flows and deposit growth.

Total investment securities at fair value amounted to $712.9 million at June 30, 2023, compared to $820.4 million at December 31, 2022, a decrease of $107.5 million, or 13%. The decrease was attributable principally to $84.8 million in sales of debt securities and, to a lesser extent, principal pay downs, calls and maturities. Net unrealized losses on the debt securities portfolio, which were attributable to an increase in market interest rates, amounted to $113.1 million at June 30, 2023 and $124.1 million at December 31, 2022. Management has determined that no allowance for credit losses ("ACL") for available-for-sale securities was necessary as of June 30, 2023.

Total loans amounted to $3.35 billion at June 30, 2023, compared to $3.18 billion at December 31, 2022, an increase of $165.1 million, or 5%. Growth during the six months ended June 30, 2023 was primarily in commercial real estate of $87.9 million, or 5%, and commercial construction of $63.0 million, or 15%.

Customer deposits amounted to $4.08 billion at June 30, 2023, compared to $4.04 billion at December 31, 2022, an increase of $39.8 million, or 1%. The deposit balance at June 30, 2023 was positively impacted by a large deposit received in March 2023 of approximately $60.0 million that management believes may be temporary in nature and resulted from a customer business transaction. In addition, the Company experienced a shift in deposit mix at June 30, 2023, compared to December 31, 2022, resulting from customers moving funds out of lower yielding checking and savings accounts (which together, decreased 3%) into higher yielding money market and certificate of deposit products (which together, increased 7%).

Deposit portfolio segmentation at June 30, 2023, compared to December 31, 2022, was as follows:

• Checking accounts represented 48% of total deposits, compared to 51%.

• Savings and money market accounts represented 41% of total deposits, compared to 42%.

• Certificates of deposit accounts represented 10% of total deposits, compared to 7%.
  
  

Shareholders' Equity & Regulatory Capital
Total shareholders' equity amounted to $307.5 million at June 30, 2023, compared to $282.3 million at December 31, 2022, an increase of $25.2 million, or 9%. The increase was due primarily to an increase in retained earnings and a decrease in the accumulated other comprehensive loss ("AOCL"), which resulted from an increase in the fair value of debt securities.

Total capital and tier 1 capital to risk weighted assets, of which AOCL is not a component, amounted to 13.37% and 10.52%, respectively, at June 30, 2023 compared to 13.49% and 10.56%, respectively, at December 31, 2022. The decreases were driven primarily by commercial loan growth, partially offset by an increase in retained earnings during the period.

Credit Quality
The increases in the ACL for loans and reserve for unfunded commitments compared to December 31, 2022, as noted below, resulted primarily from an increased probability and severity of forecasted economic conditions in our allowance model, and to a lesser extent, growth in the Company's loan portfolio and off-balance sheet commitments.

• The ACL for loans amounted to $56.9 million, or 1.70% of total loans, at June 30, 2023, compared to $52.6 million, or 1.66% of total loans, at December 31, 2022.

• The reserve for unfunded commitments (included in other liabilities) amounted to $5.0 million at June 30, 2023, compared to $4.3 million at December 31, 2022.

• Non-performing loans amounted to $7.6 million, or 0.23% of total loans, at June 30, 2023, compared to $6.1 million, or 0.19% of total loans, at December 31, 2022.

• Net charge-offs for the three months ended June 30, 2023, amounted to $146 thousand, compared to net recoveries of $84 thousand for the three months ended June 30, 2022.
  
  

Liquidity & Funding Capacity
All balances and ratios presented in this section are at June 30, 2023 unless otherwise indicated.

• Overnight and short-term investment amounted to $208.8 million, which were reported on the Company's consolidated balance sheet as interest-earning deposits with banks.

• Uninsured deposits amounted to 36% of total deposits.

• Deposit balances that utilize third party enhanced Federal Deposit Insurance Corporation ("FDIC") insured products amounted to $796.8 million. Additional capacity to utilize these enhanced FDIC insured products exceeds the Company's total deposits balance.

• There were no brokered deposits outstanding. Borrowed funds amounted to $3.3 million and related to the Company's participation in specific pass-through community development programs under the Federal Home Loan Bank of Boston ("FHLB") and, to a lesser extent, the New Hampshire Business Finance Authority.

• FHLB and Federal Reserve Bank of Boston secured borrowing capacity amounted to $1.1 billion.

• The Company has several brokered deposit relationships (unsecured borrowings) which management estimated could provide an additional $800.0 million in funding capacity.
  
  

Wealth Management
Wealth assets under management and wealth assets under administration, which are not carried as assets on the Company's consolidated balance sheets, amounted to $1.0 billion and $214.1 million, respectively, at June 30, 2023, representing increases of $117.9 million, or 13%, and $15.5 million, or 8%, respectively, compared to December 31, 2022. The increase in assets under management resulted from an increase in market values as well as assets attracted through new and expanded client relationships.

About Enterprise Bancorp, Inc.
Enterprise Bancorp, Inc. is a Massachusetts corporation that conducts substantially all its operations through Enterprise Bank and Trust Company, commonly referred to as Enterprise Bank, and has reported 135 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, electronic and digital banking options, as well as wealth management, and trust 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 Northern Middlesex, Northern Essex, and Northern Worcester counties of Massachusetts and the Southern Hillsborough and Southern Rockingham counties in New Hampshire. Enterprise Bank has 27 full-service branches located in the Massachusetts communities of Acton, Andover, Billerica (2), Chelmsford (2), Dracut, Fitchburg, Lawrence, Leominster, Lexington, Lowell (2), Methuen, North Andover, Tewksbury (2), Tyngsborough and Westford and in the New Hampshire communities of Derry, Hudson, Londonderry, Nashua (2), Pelham, Salem and Windham.

Forward-Looking Statements
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," "could," "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, potential recession in the United States and our market areas, the impacts related to or resulting from recent bank failures and any continuation of the recent uncertainty in the banking industry, including the associated impact to the Company and other financial institutions of any regulatory changes or other mitigation efforts taken by government agencies in response thereto, increased competition for deposits and related changes in deposit customer behavior, changes in market interest rates, the persistence of the current inflationary environment in our market areas and the United States, the uncertain impacts of ongoing quantitative tightening and current and future monetary policies of the Board of Governors of the Federal Reserve System, the effects of declines in housing prices in the United States and our market areas, increases in unemployment rates in the United States and our market areas, declines in commercial real estate prices, uncertainty regarding United States fiscal debt and budget matters, severe weather, natural disasters, acts of war or terrorism or other external events, 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, changes in tax laws, and current or future litigation, regulatory examinations or other legal and/or regulatory actions. Therefore, the Company can give no assurance that the results contemplated in the forward-looking statements will be realized and readers are cautioned not to place undue reliance on the forward-looking statements contained in this press release. For more information about these factors, please see our reports filed with or furnished to the U.S. Securities and Exchange Commission (the "SEC"), including our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q 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, except per share data)		June 30, 2023				December 31, 2022
Assets
Cash and cash equivalents:
Cash and due from banks		$	49,996			$	36,901
Interest-earning deposits with banks			208,829				230,688
Total cash and cash equivalents			258,825				267,589
Investments:
Debt securities at fair value (amortized cost of $820,004 and $940,227, respectively)			706,953				816,102
Equity securities at fair value			5,898				4,269
Total investment securities at fair value			712,851				820,371
Federal Home Loan Bank stock			2,404				2,343
Loans:
Total loans			3,345,667				3,180,518
Allowance for credit losses			(56,899	)			(52,640	)
Net loans			3,288,768				3,127,878
Premises and equipment, net			43,603				44,228
Lease right-of-use asset			24,578				24,923
Accrued interest receivable			16,885				17,117
Deferred income taxes, net			48,875				51,981
Bank-owned life insurance			64,779				64,156
Prepaid income taxes			2,790				683
Prepaid expenses and other assets			32,330				11,408
Goodwill			5,656				5,656
Total assets		$	4,502,344			$	4,438,333
Liabilities and Shareholders' Equity
Liabilities
Deposits		$	4,075,598			$	4,035,806
Borrowed funds			3,334				3,216
Subordinated debt			59,340				59,182
Lease liability			24,148				24,415
Accrued expenses and other liabilities			29,161				31,442
Accrued interest payable			3,273				2,005
Total liabilities			4,194,854				4,156,066
Commitments and Contingencies
Shareholders' 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; 12,244,733 and 12,133,516 shares issued and outstanding, respectively			122				121
Additional paid-in capital			105,552				103,793
Retained earnings			289,409				274,560
Accumulated other comprehensive loss			(87,593	)			(96,207	)
Total shareholders' equity			307,490				282,267
Total liabilities and shareholders' equity		$	4,502,344			$	4,438,333

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)			2023				2022				2023				2022
Interest and dividend income:
Loans and loans held for sale		$	41,798			$	32,148			$	81,354			$	62,843
Investment securities			4,967				4,781				10,040				9,369
Other interest-earning assets			1,917				393				4,125				574
Total interest and dividend income			48,682				37,322				95,519				72,786
Interest expense:
Deposits			9,692				671				15,679				1,271
Borrowed funds			30				13				42				26
Subordinated debt			867				817				1,734				1,635
Total interest expense			10,589				1,501				17,455				2,932
Net interest income			38,093				35,821				78,064				69,854
Provision for credit losses			2,268				2,409				5,004				2,939
Net interest income after provision for credit losses			35,825				33,412				73,060				66,915
Non-interest income:
Wealth management fees			1,673				1,610				3,260				3,339
Deposit and interchange fees			2,295				2,000				4,343				3,802
Income on bank-owned life insurance, net			316				295				623				590
Net (losses) gains on sales of debt securities			(2,419	)			—				(2,419	)			1,062
Net gains on sales of loans			6				—				20				22
Gains (losses) on equity securities			189				(429	)			173				(495	)
Other income			759				656				1,576				1,407
Total non-interest income			2,819				4,132				7,576				9,727
Non-interest expense:
Salaries and employee benefits			16,135				17,743				34,656				34,535
Occupancy and equipment expenses			2,505				2,364				5,006				4,779
Technology and telecommunications expenses			2,636				2,919				5,311				5,555
Advertising and public relations expenses			804				560				1,485				1,227
Audit, legal and other professional fees			782				675				1,422				1,385
Deposit insurance premiums			615				366				1,290				922
Supplies and postage expenses			247				224				502				444
Other operating expenses			1,899				2,002				3,991				3,763
Total non-interest expense			25,623				26,853				53,663				52,610
Income before income taxes			13,021				10,691				26,973				24,032
Provision for income taxes			3,337				2,530				6,521				5,584
Net income		$	9,684			$	8,161			$	20,452			$	18,448
Basic earnings per common share		$	0.79			$	0.67			$	1.68			$	1.53
Diluted earnings per common share		$	0.79			$	0.67			$	1.67			$	1.52
Basic weighted average common shares outstanding			12,228,081				12,107,804				12,191,857				12,082,041
Diluted weighted average common shares outstanding			12,244,863				12,151,712				12,218,735				12,136,610

ENTERPRISE BANCORP, INC.
Selected Consolidated Financial Data and Ratios
(unaudited)
		At or for the three months ended
(Dollars in thousands, except per share data)		June 30, 2023				March 31, 2023				December 31, 2022				September 30, 2022				June 30, 2022
Balance Sheet Data
Total cash and cash equivalents		$	258,825			$	215,693			$	267,589			$	413,688			$	306,460
Total investment securities at fair value			712,851				830,895				820,371				831,030				866,580
Total loans			3,345,667				3,230,156				3,180,518				3,109,369				3,084,915
Allowance for credit losses			(56,899	)			(55,002	)			(52,640	)			(51,211	)			(50,703	)
Total assets			4,502,344				4,441,896				4,438,333				4,529,820				4,417,447
Total deposits			4,075,598				4,016,156				4,035,806				4,138,038				4,016,814
Subordinated debt			59,340				59,261				59,182				59,102				59,039
Total shareholders' equity			307,490				311,318				282,267				272,193				285,110
Total liabilities and shareholders' equity			4,502,344				4,441,896				4,438,333				4,529,820				4,417,447
Wealth Management
Wealth assets under management		$	1,009,386			$	930,714			$	891,451			$	835,661			$	849,536
Wealth assets under administration		$	214,116			$	206,569			$	198,586			$	185,977			$	205,646
Shareholders' Equity Ratios
Book value per common share		$	25.11			$	25.47			$	23.26			$	22.44			$	23.53
Dividends paid per common share		$	0.230			$	0.230			$	0.205			$	0.205			$	0.205
Regulatory Capital Ratios
Total capital to risk weighted assets			13.37	%			13.55	%			13.49	%			13.49	%			13.38	%
Tier 1 capital to risk weighted assets(1)			10.52	%			10.64	%			10.56	%			10.52	%			10.38	%
Tier 1 capital to average assets			8.62	%			8.47	%			8.10	%			7.89	%			8.03	%
Credit Quality Data
Non-performing loans		$	7,647			$	7,532			$	6,122			$	5,717			$	6,321
Non-performing loans to total loans			0.23	%			0.23	%			0.19	%			0.18	%			0.20	%
Non-performing assets to total assets			0.17	%			0.17	%			0.14	%			0.13	%			0.14	%
ACL for loans to total loans			1.70	%			1.70	%			1.66	%			1.65	%			1.64	%
Income Statement Data
Net interest income		$	38,093			$	39,971			$	42,165			$	39,779			$	35,821
Provision for credit losses			2,268				2,736				1,861				1,000				2,409
Total non-interest income			2,819				4,757				4,210				4,525				4,132
Total non-interest expense			25,623				28,040				28,167				27,537				26,853
Income before income taxes			13,021				13,952				16,347				15,767				10,691
Provision for income taxes			3,337				3,184				4,041				3,805				2,530
Net income		$	9,684			$	10,768			$	12,306			$	11,962			$	8,161
Income Statement Ratios
Diluted earnings per common share		$	0.79			$	0.88			$	1.01			$	0.98			$	0.67
Return on average total assets			0.88	%			0.99	%			1.08	%			1.05	%			0.76	%
Return on average shareholders' equity			12.63	%			14.67	%			18.08	%			16.47	%			11.24	%
Net interest margin (tax-equivalent)(2)			3.55	%			3.76	%			3.81	%			3.61	%			3.45	%

(1) Ratio also represents common equity tier 1 capital to risk weighted assets as of the periods presented.

(2) 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.

ENTERPRISE BANCORP, INC.
Consolidated Loan and Deposit Data
(unaudited)
Major classifications of loans at the dates indicated were as follows:
(Dollars in thousands)		June 30, 2023				March 31, 2023				December 31, 2022				September 30, 2022				June 30, 2022
Commercial real estate		$	2,009,263			$	1,929,544			$	1,921,410			$	1,886,365			$	1,865,198
Commercial and industrial			420,095				423,864				414,490				413,347				422,006
Commercial construction			487,018				456,735				424,049				396,027				385,752
SBA PPP			—				—				—				2,725				15,288
Total commercial loans			2,916,376				2,810,143				2,759,949				2,698,464				2,688,244
Residential mortgages			346,523				335,834				332,632				321,663				307,131
Home equity loans and lines			74,374				75,809				79,807				80,882				81,648
Consumer			8,394				8,370				8,130				8,360				7,892
Total retail loans			429,291				420,013				420,569				410,905				396,671
Total loans			3,345,667				3,230,156				3,180,518				3,109,369				3,084,915
ACL for loans			(56,899	)			(55,002	)			(52,640	)			(51,211	)			(50,703	)
Net loans		$	3,288,768			$	3,175,154			$	3,127,878			$	3,058,158			$	3,034,212

Deposits are summarized as follows as of the periods indicated:
(Dollars in thousands)		June 30, 2023			March 31, 2023			December 31, 2022			September 30, 2022			June 30, 2022
Non-interest checking		$	1,273,968		$	1,247,253		$	1,361,588		$	1,441,104		$	1,457,220
Interest-bearing checking			701,701			641,194			678,715			719,474			712,898
Savings			310,321			297,790			326,666			351,665			334,728
Money market			1,373,816			1,454,858			1,381,645			1,395,756			1,293,453
CDs $250,000 or less			244,114			222,116			187,758			163,520			144,084
CDs greater than $250,000			171,678			152,945			99,434			66,519			74,431
Deposits		$	4,075,598		$	4,016,156		$	4,035,806		$	4,138,038		$	4,016,814

ENTERPRISE BANCORP, INC.
Consolidated Average Balance Sheets and Yields (tax-equivalent basis)
(unaudited)
The following table presents the Company's average balance sheets, net interest income and average rates for the periods indicated:
		Three months ended June 30, 2023									Three months ended March 31, 2023									Three months ended June 30, 2022
(Dollars in thousands)		Average Balance			Interest(1)			Average Yield(1)			Average Balance			Interest(1)			Average Yield(1)			Average Balance			Interest(1)			Average Yield(1)
Assets:
Loans and loans held for sale(2) (tax-equivalent)		$	3,268,586		$	41,930		5.14	%		$	3,200,842		$	39,679		5.02	%		$	3,020,113		$	32,259		4.28	%
Investment securities(3) (tax-equivalent)			917,965			5,189		2.26	%			937,382			5,300		2.26	%			969,563			5,012		2.07	%
Other interest-earning assets(4)			155,934			1,917		4.93	%			198,741			2,208		4.51	%			214,167			393		0.74	%
Total interest-earnings assets (tax-equivalent)			4,342,485			49,036		4.53	%			4,336,965			47,187		4.40	%			4,203,843			37,664		3.59	%
Other assets			92,909									86,580									115,413
Total assets		$	4,435,394								$	4,423,545								$	4,319,256
Liabilities and stockholders' equity:
Interest checking, savings and money market		$	2,351,011			6,880		1.17	%		$	2,354,967			4,105		0.71	%		$	2,296,268			456		0.08	%
CDs			393,387			2,812		2.87	%			337,361			1,882		2.26	%			198,766			215		0.43	%
Borrowed funds			4,595			30		2.58	%			3,206			12		1.57	%			2,961			13		1.73	%
Subordinated debt(5)			59,293			867		5.85	%			59,213			867		5.85	%			59,021			817		5.54	%
Total interest-bearing funding			2,808,286			10,589		1.51	%			2,754,747			6,866		1.01	%			2,557,016			1,501		0.24	%
Non-interest checking			1,269,339			—						1,317,534			—						1,424,132			—
Total deposits, borrowed funds and subordinated debt			4,077,625			10,589		1.04	%			4,072,281			6,866		0.68	%			3,981,148			1,501		0.15	%
Other liabilities			50,113									53,665									46,945
Total liabilities			4,127,738									4,125,946									4,028,093
Stockholders' equity			307,656									297,599									291,163
Total liabilities and stockholders' equity		$	4,435,394								$	4,423,545								$	4,319,256
Net interest-rate spread (tax-equivalent)								3.02	%								3.39	%								3.35	%
Net interest income (tax-equivalent)						38,447									40,321									36,163
Net interest margin (tax-equivalent)								3.55	%								3.76	%								3.45	%
Less tax-equivalent adjustment						354									350									342
Net interest income					$	38,093								$	39,971								$	35,821
Net interest margin								3.52	%								3.73	%								3.42	%

(1) Average yields and interest income are presented on a tax-equivalent basis, calculated using a U.S. federal income tax rate of 21% for each period presented, based on tax-equivalent adjustments associated with tax-exempt loans and investments interest income.

(2) Average loans and loans held for sale include non-accrual loans and are net of average deferred loan fees.

(3) Average investments are presented at average amortized cost.

(4) Average other interest-earning assets include interest-earning deposits with banks, federal funds sold and FHLB stock.

(5) Subordinated debt is net of average deferred debt issuance costs.

Contact Info: Joseph R. Lussier, Executive Vice President, Chief Financial Officer and Treasurer (978) 656-5578