LOWELL, Mass., Oct. 17, 2019 (GLOBE NEWSWIRE) — Enterprise Bancorp, Inc. (the “Company” or “Enterprise”) (NASDAQ: EBTC), parent of Enterprise Bank, announced net income for the three months ended September 30, 2019 of $9.0 million, an increase of $1.0 million, or 13%, compared to the three months ended September 30, 2018. Diluted earnings per share were $0.76 for the three months ended September 30, 2019, an increase of 12%, compared to $0.68 for the three months ended September 30, 2018. Net income for the nine months ended September 30, 2019 amounted to $25.5 million, an increase of $3.1 million, or 14%, compared to the nine months ended September 30, 2018. Diluted earnings per share were $2.15 for the nine months ended September 30, 2019, an increase of 13%, compared to $1.91 for the nine months ended September 30, 2018.
As previously announced on October 15, 2019, the Company declared a quarterly dividend of $0.16 per share to be paid on December 2, 2019 to shareholders of record as of November 11, 2019.
Chief Executive Officer Jack Clancy commented, “Over the past twelve months, assets, loans, and customer deposits increased by 9%, 7%, and 12%, respectively, compared to September 30, 2018. Loan and deposit growth, along with a reduction in the loan loss provision, were the key drivers to our earnings increase as compared to the nine months ended September 30, 2018.”
Mr. Clancy added, “The collective efforts and contributions of our dedicated Enterprise team, including fostering a positive culture, active community involvement, relationship building, a customer-focused mindset, and ongoing enhancements to our leading-edge product and service offerings, continues to drive our growth. Our culture and customer-centric philosophy starts by Enterprise team members operating from a genuine sense of purpose to serve our fellow team members, customers and communities. Our top priority will always be ongoing investment in our greatest asset: our people. We also remain highly focused on the continual, organic growth of our branch network. As recently announced, our 25th and 26th branches in Lexington and North Andover, Massachusetts, are anticipated to open in late fall 2019 and late spring 2020, respectively.”
On September 5, 2019, Enterprise Bank was recognized at the Boston Business Journal’s Corporate Citizenship Summit as ranking #2 for the highest average hours of community service and #55 among the largest corporate donors in Massachusetts. Founder and Chairman George L. Duncan said, “While we at Enterprise Bank are proud of our financial growth and consistency, we are equally proud of our commitment to the communities we serve, which is entrenched in our culture and reflects our deep sense of purpose as a genuine community bank. We do not seek recognition for our efforts; our reward comes in knowing that the lives of our neighbors are enriched by the non-profit organizations and charities we support, as well as the lives of our team members who take pride in making such a meaningful impact where they work and live. These recognitions are truly a tribute to our team members, who embrace Enterprise Bank’s corporate values and make a difference in the lives of so many.”
Results of Operations
Net interest income for the three months ended September 30, 2019 amounted to $29.4 million, an increase of $2.0 million, or 7%, compared to the same three-month period in 2018. Net interest income for the nine months ended September 30, 2019 amounted to $86.3 million, an increase of $5.6 million, or 7%, compared to the nine months ended September 30, 2018. The increase in net interest income was due largely to interest-earning asset growth, primarily in loans. Average loan balances increased $132.4 million, or 6%, for the three months ended September 30, 2019 and $110.4 million, or 5%, for the nine months ended September 30, 2019, compared to the same respective 2018 period averages. Tax equivalent net interest margin (“Margin”) was 3.93% for the three months ended September 30, 2019, compared to 3.89% for the three months ended September 30, 2018. Margin was 3.96% for the nine months ended September 30, 2019, compared to 3.95% for the nine months ended September 30, 2018.
For the three months ended September 30, 2019, the provision to the allowance for loan losses amounted to $1.0 million, compared to $750 thousand during the three months ended September 30, 2018. The increase in the provision in the third quarter of 2019 was due to the higher levels of loan growth, compared to the same three- month period in 2018.
For the nine months ended September 30, 2019, the provision to the allowance for loan losses was $1.6 million, compared to the provision of $2.7 million for the nine months ended September 30, 2018. The decrease compared to the prior year was due primarily to generally improved credit metrics compared to the prior year period, partially offset by the impact of loan growth in the current period.
The allowance for loan losses to total loans ratio was 1.37% at September 30, 2019, compared to 1.42% at December 31, 2018 and 1.49% at September 30, 2018.
Affecting the provision for loan losses for the three- and nine-month periods ended September 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 September 30, 2019, compared to 2.54% at September 30, 2018.
- Loan growth for the nine months ended September 30, 2019 was $84.6 million, compared to $40.6 million during the nine months ended September 30, 2018. Loan growth was $58.0 million and $11.9 million for the three-month periods ended September 30, 2019 and September 30, 2018, respectively.
- Net charge-offs were $1.5 million for the nine months ended September 30, 2019, compared to net charge-offs of $1.0 million for the nine months ended September 30, 2018.
- After foreclosure proceedings in 2019, one previously classified commercial loan relationship was transferred to Other Real Estate Owned (“OREO”) with a net carry value of $255 thousand and the property was sold during the third quarter of 2019. The Company carried no OREO during 2018.
Non-interest income for the three months ended September 30, 2019 amounted to $4.1 million, an increase of $425 thousand, or 11%, compared to the three months ended September 30, 2018. Non-interest income for the nine months ended September 30, 2019 amounted to $12.0 million, an increase of $777 thousand, or 7%, compared to the nine months ended September 30, 2018. Non-interest income increased in 2019 primarily due to increases in deposit and interchange fees. Year-to-date non-interest income was also impacted by net gains on sales of investments, and net 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 September 30, 2019 amounted to $21.1 million, an increase of $1.1 million, or 6%, compared to the three months ended September 30, 2018. For the nine months ended September 30, 2019, non-interest expense amounted to $63.7 million, an increase of $3.5 million, or 6%, compared to the nine months ended September 30, 2018. Increases in non-interest expense in 2019 primarily related to the Company’s strategic growth initiatives, particularly salaries and employee benefit expenses, partially offset by a reduction in deposit insurance premiums primarily resulting from a Small Bank Assessment Credit from the FDIC Deposit Insurance Fund of $376 thousand.
Key Financial Highlights
- Total assets amounted to $3.14 billion at September 30, 2019, compared to $2.96 billion at December 31, 2018, an increase of $174.4 million, or 6%. Since June 30, 2019, total assets decreased $28.8 million, or 1%.
- Total loans amounted to $2.47 billion at September 30, 2019, compared to $2.39 billion at December 31, 2018, an increase of $84.6 million, or 4%. Since June 30, 2019, total loans increased $58.0 million, or 2%.
- Customer deposits were $2.78 billion at September 30, 2019, compared to $2.51 billion at December 31, 2018, an increase of $276.4 million, or 11%. Since June 30, 2019, customer deposits decreased $45.8 million, or 2%.
- Investment assets under management amounted to $875.0 million at September 30, 2019, compared to $800.8 million at December 31, 2018, an increase of $74.3 million, or 9%. Since June 30, 2019, investment assets under management increased $17.9 million, or 2%.
- Total assets under management amounted to $4.11 billion at September 30, 2019, compared to $3.85 billion at December 31, 2018, an increase of $253.1 million, or 7%. Since June 30, 2019, total assets under management are relatively flat.
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 120 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 establishing branch offices in the Massachusetts communities of Lexington and North Andover and anticipates that these offices will open in the late fall of 2019 and late spring 2020, respectively.
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. Therefore, the Company can give no assurance that the results contemplated in the forward-looking statements will be realized. 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) | September 30, 2019 |
December 31, 2018 |
September 30, 2018 |
|||||||||
| Assets | ||||||||||||
| Cash and cash equivalents: | ||||||||||||
| Cash and due from banks | $ | 52,927 | $ | 43,865 | $ | 29,453 | ||||||
| Interest-earning deposits | 29,482 | 19,255 | 35,672 | |||||||||
| Total cash and cash equivalents | 82,409 | 63,120 | 65,125 | |||||||||
| Investments: | ||||||||||||
| Debt securities at fair value | 482,106 | 431,473 | 433,017 | |||||||||
| Equity securities at fair value | 1,433 | 1,448 | 1,263 | |||||||||
| Total investment securities at fair value | 483,539 | 432,921 | 434,280 | |||||||||
| Federal Home Loan Bank stock | 2,024 | 5,357 | 2,593 | |||||||||
| Loans held for sale | 3,297 | 701 | 618 | |||||||||
| Loans, less allowance for loan losses of $33,935 at September 30, 2019, $33,849 at December 31, 2018, and $34,534 at September 30, 2018 | 2,438,195 | 2,353,657 | 2,275,958 | |||||||||
| Premises and equipment, net | 43,519 | 37,588 | 37,649 | |||||||||
| Lease right-of-use asset | 19,184 | — | — | |||||||||
| Accrued interest receivable | 12,356 | 11,462 | 11,701 | |||||||||
| Deferred income taxes, net | 8,139 | 11,747 | 14,040 | |||||||||
| Bank-owned life insurance | 30,620 | 30,138 | 29,971 | |||||||||
| Prepaid income taxes | 1,729 | 732 | 1,017 | |||||||||
| Prepaid expenses and other assets | 8,057 | 11,279 | 11,996 | |||||||||
| Goodwill | 5,656 | 5,656 | 5,656 | |||||||||
| Total assets | $ | 3,138,724 | $ | 2,964,358 | $ | 2,890,604 | ||||||
| Liabilities and Stockholders’ Equity | ||||||||||||
| Liabilities | ||||||||||||
| Deposits: | ||||||||||||
| Customer deposits | $ | 2,784,393 | $ | 2,507,999 | $ | 2,487,873 | ||||||
| Brokered deposits | — | 56,783 | 123,839 | |||||||||
| Total deposits | 2,784,393 | 2,564,782 | 2,611,712 | |||||||||
| Borrowed funds | 4,177 | 100,492 | 497 | |||||||||
| Subordinated debt | 14,869 | 14,860 | 14,857 | |||||||||
| Lease liability | 18,250 | — | — | |||||||||
| Accrued expenses and other liabilities | 25,433 | 27,948 | 20,238 | |||||||||
| Accrued interest payable | 920 | 979 | 1,315 | |||||||||
| Total liabilities | 2,848,042 | 2,709,061 | 2,648,619 | |||||||||
| 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; 11,816,071 shares issued and outstanding at September 30, 2019, 11,708,218 shares issued and outstanding at December 31, 2018, and 11,703,874 shares issued and outstanding at September 30, 2018 | 118 | 117 | 117 | |||||||||
| Additional paid-in capital | 93,459 | 91,281 | 90,725 | |||||||||
| Retained earnings | 184,994 | 165,183 | 160,380 | |||||||||
| Accumulated other comprehensive income (loss) | 12,111 | (1,284 | ) | (9,237 | ) | |||||||
| Total stockholders’ equity | 290,682 | 255,297 | 241,985 | |||||||||
| Total liabilities and stockholders’ equity | $ | 3,138,724 | $ | 2,964,358 | $ | 2,890,604 | ||||||
ENTERPRISE BANCORP, INC.
Consolidated Statements of Income
(unaudited)
| Three months ended | Nine months ended | ||||||||||||||
| September 30, | September 30, | ||||||||||||||
| (Dollars in thousands, except per share data) | 2019 | 2018 | 2019 | 2018 | |||||||||||
| Interest and dividend income: | |||||||||||||||
| Loans and loans held for sale | $ | 30,938 | $ | 28,109 | $ | 90,973 | $ | 81,786 | |||||||
| Investment securities | 3,278 | 2,742 | 9,785 | 7,835 | |||||||||||
| Other interest-earning assets | 632 | 497 | 1,688 | 818 | |||||||||||
| Total interest and dividend income | 34,848 | 31,348 | 102,446 | 90,439 | |||||||||||
| Interest expense: | |||||||||||||||
| Deposits | 5,158 | 3,697 | 15,156 | 8,770 | |||||||||||
| Borrowed funds | 36 | 6 | 315 | 332 | |||||||||||
| Subordinated debt | 233 | 233 | 692 | 692 | |||||||||||
| Total interest expense | 5,427 | 3,936 | 16,163 | 9,794 | |||||||||||
| Net interest income | 29,421 | 27,412 | 86,283 | 80,645 | |||||||||||
| Provision for loan losses | 1,025 | 750 | 1,580 | 2,650 | |||||||||||
| Net interest income after provision for loan losses | 28,396 | 26,662 | 84,703 | 77,995 | |||||||||||
| Non-interest income: | |||||||||||||||
| Wealth management fees | 1,407 | 1,388 | 4,077 | 4,214 | |||||||||||
| Deposit and interchange fees | 1,790 | 1,552 | 5,041 | 4,608 | |||||||||||
| Income on bank-owned life insurance, net | 158 | 167 | 482 | 505 | |||||||||||
| Net gains on sales of investment securities | — | (34 | ) | 146 | (33 | ) | |||||||||
| Gains on sales of loans | 139 | 47 | 244 | 179 | |||||||||||
| Other income | 655 | 604 | 2,035 | 1,775 | |||||||||||
| Total non-interest income | 4,149 | 3,724 | 12,025 | 11,248 | |||||||||||
| Non-interest expense: | |||||||||||||||
| Salaries and employee benefits | 14,382 | 13,026 | 41,982 | 38,479 | |||||||||||
| Occupancy and equipment expenses | 2,034 | 2,110 | 6,342 | 6,304 | |||||||||||
| Technology and telecommunications expenses | 1,863 | 1,568 | 5,290 | 4,760 | |||||||||||
| Advertising and public relations expenses | 430 | 530 | 1,927 | 2,284 | |||||||||||
| Audit, legal and other professional fees | 528 | 435 | 1,389 | 1,361 | |||||||||||
| Deposit insurance premiums | 16 | 418 | 733 | 1,264 | |||||||||||
| Supplies and postage expenses | 232 | 236 | 718 | 734 | |||||||||||
| Other operating expenses | 1,613 | 1,652 | 5,320 | 5,044 | |||||||||||
| Total non-interest expense | 21,098 | 19,975 | 63,701 | 60,230 | |||||||||||
| Income before income taxes | 11,447 | 10,411 | 33,027 | 29,013 | |||||||||||
| Provision for income taxes | 2,445 | 2,429 | 7,566 | 6,632 | |||||||||||
| Net income | $ | 9,002 | $ | 7,982 | $ | 25,461 | $ | 22,381 | |||||||
| Basic earnings per share | $ | 0.76 | $ | 0.68 | $ | 2.16 | $ | 1.92 | |||||||
| Diluted earnings per share | $ | 0.76 | $ | 0.68 | $ | 2.15 | $ | 1.91 | |||||||
| Basic weighted average common shares outstanding | 11,808,603 | 11,697,951 | 11,779,629 | 11,671,494 | |||||||||||
| Diluted weighted average common shares outstanding | 11,843,497 | 11,770,719 | 11,820,388 | 11,745,935 | |||||||||||
ENTERPRISE BANCORP, INC.
Selected Consolidated Financial Data and Ratios
(unaudited)
| At or for the nine months ended |
At or for the year ended |
At or for the nine months ended |
||||||||||
| (Dollars in thousands, except per share data) | September 30, 2019 | December 31, 2018 | September 30, 2018 | |||||||||
| BALANCE SHEET AND OTHER DATA | ||||||||||||
| Total assets | $ | 3,138,724 | $ | 2,964,358 | $ | 2,890,604 | ||||||
| Loans serviced for others | 93,672 | 89,232 | 91,931 | |||||||||
| Investment assets under management | 875,049 | 800,751 | 883,032 | |||||||||
| Total assets under management | $ | 4,107,445 | $ | 3,854,341 | $ | 3,865,567 | ||||||
| Book value per share | $ | 24.60 | $ | 21.80 | $ | 20.68 | ||||||
| Dividends paid per common share | $ | 0.480 | $ | 0.580 | $ | 0.435 | ||||||
| Total capital to risk weighted assets | 12.04 | % | 11.77 | % | 11.98 | % | ||||||
| Tier 1 capital to risk weighted assets | 10.23 | % | 9.93 | % | 10.12 | % | ||||||
| Tier 1 capital to average assets | 8.68 | % | 8.56 | % | 8.34 | % | ||||||
| Common equity tier 1 capital to risk weighted assets | 10.23 | % | 9.93 | % | 10.12 | % | ||||||
| Allowance for loan losses to total loans | 1.37 | % | 1.42 | % | 1.49 | % | ||||||
| Non-performing assets | $ | 12,183 | $ | 11,784 | $ | 11,621 | ||||||
| Non-performing assets to total assets | 0.39 | % | 0.40 | % | 0.40 | % | ||||||
| INCOME STATEMENT DATA (annualized) | ||||||||||||
| Return on average total assets | 1.10 | % | 1.00 | % | 1.04 | % | ||||||
| Return on average stockholders’ equity | 12.49 | % | 12.15 | % | 12.74 | % | ||||||
| Net interest margin (tax equivalent)(1) | 3.96 | % | 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: Joseph R. Lussier, Executive Vice President, Chief Financial Officer and Treasurer (978) 656-5578