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Enterprise Bancorp, Inc. Announces Second Quarter 2016 Net Income of $4.8 Million

LOWELL, Mass., July 21, 2016 (GLOBE NEWSWIRE) -- Enterprise Bancorp, Inc. (the “Company”) (NASDAQ:EBTC), parent of Enterprise Bank, announces net income for the three months ended June 30, 2016 amounted to $4.8 million, an increase of $1.3 million, or 36%, compared to the same three-month period in 2015. Diluted earnings per share were $0.45 for the three months ended June 30, 2016, an increase of 32%, compared to the same three-month period in 2015. Net income for the six months ended June 30, 2016 amounted to $9.1 million, an increase of $1.9 million, or 27%, compared to the six months ended June 30, 2015. Diluted earnings per share were $0.86 for the six months ended June 30, 2016, an increase of 25% compared to the six months ended June 30, 2015.

As previously announced on July 19, 2016, the Company declared a quarterly dividend of $0.13 per share to be paid on September 1, 2016 to shareholders of record as of August 11, 2016. The 2016 dividend rate represents a 4.0% increase over the 2015 dividend rate.

Chief Executive Officer Jack Clancy commented, “The increase in our 2016 earnings compared to 2015 is largely driven by our growth over the last twelve months. Loans, total assets, and deposits, excluding brokered deposits, have increased 9%, 12%, and 15%, respectively, as compared to June 30, 2015. This growth continues to be driven by the collective efforts and contributions of our dedicated Enterprise team, active community involvement, relationship building and a customer-focused mindset, market expansion, and ongoing enhancements to our state-of-the-art product and service offerings.”

Mr. Clancy continued, “Our 23rd branch, on Route 101A, in Nashua, NH, opened in early July and we recently announced we anticipate opening our 24th office, in Windham, NH, in 2017. Strategically, our focus remains on organic growth and continually planning for and investing in our future. As part of our focus on long-term strategic growth, we recently completed a $20 million shareholder subscription rights offering combined with a supplemental community offering. Although this additional capital will slightly dilute EPS as we go forward, we believe this capital will help position us to continue to take advantage of growth opportunities.”

Founder and Chairman of the Board George Duncan commented, “While we are proud of our continued and consistent growth and profitability, the true value of that growth is reflected in what it means for our customers, shareholders, and our community. Along with strong customer service, the growth of our lending and deposit base ties directly to our ever advancing and progressive commercial lending, cash management, mobile banking, wealth management, trust, insurance and overall state-of-the-art services.”

Mr. Duncan also noted, “We are very appreciative of the strong support and confidence we received from our shareholders and the community in our recently completed successful $20 million offering. Due to the strong support we received, we increased the offering size from $10 million to $20 million. It was gratifying to see this support not only from existing shareholders but from new community shareholders. We believe that expanding our shareholder base in the local community is an important part of our long term growth. Having local shareholders referring business, and doing business themselves in our bank lobbies every day, is very powerful.”

Results of Operations

Net interest income for the three months ended June 30, 2016 amounted to $21.3 million, an increase of $2.1 million, or 11%, compared to the same period in 2015. Net interest income for the six months ended June 30, 2016 amounted to $42.4 million, an increase of $4.7 million, or 13%, compared to the six months ended June 30, 2015. The increase in net interest income was due primarily to loan growth. Average loan balances (including loans held for sale) increased $179.3 million and $180.1 million for the three and six months ended June 30, 2016, respectively, compared to the same 2015 period averages. Net interest margin was 4.02% for the three months ended June 30, 2016 compared to 3.98% for the three months ended June 30, 2015. Net interest margin was 4.02% for the six months ended June 30, 2016, compared to 3.96% for the six months ended June 30, 2015.

For the three months ended June 30, 2016 and June 30, 2015, the provision for loan losses amounted to $267 thousand and $1.2 million, respectively. For the six months ended June 30, 2016 and June 30, 2015, the provision for loan losses amounted to $1.1 million and $1.9 million, respectively. The decrease in the provision for 2016 was due primarily to improving credit quality, a lower level of charge-offs, and the level of loan growth during the 2016 period, as compared to the 2015 period.

In determining the provision to the allowance for loan losses, management takes into consideration the level of loan growth and an estimate of credit risk, which includes such items as adversely classified and non-performing loans, the estimated specific reserves needed for impaired loans, the level of net charge-offs, and the estimated impact of current economic conditions on credit quality. Loan growth for the six months ended June 30, 2016 was $39.2 million compared to $63.9 million during the six months ended June 30, 2015. Total non-performing loans as a percentage of total loans declined to 0.54% at June 30, 2016, compared to 0.92% at June 30, 2015. The balance of the allowance for loan losses allocated to impaired loans amounted to $2.1 million at June 30, 2016, compared to $2.6 million at June 30, 2015. The balance of the allowance for loan losses allocated to non-impaired classified loans amounted to $2.0 million at June 30, 2016, compared to $1.2 million at June 30, 2015. The Company recorded net recoveries of $220 thousand for the six months ended June 30, 2016, compared to net charge-offs of $809 thousand for the six months ended June 30, 2015.

The allowance for loan losses to total loans ratio was 1.60% at June 30, 2016, 1.56% at December 31, 2015 and 1.62% at June 30, 2015. The decline in the allowance ratio reflects the generally improving credit quality of the loan portfolio, in part due to improved economic conditions over the past twelve months. However, in 2016, the credit ratings of three larger commercial relationships were downgraded to "criticized" or "adverse" risk ratings, based on a review of their individual business circumstances, requiring higher levels of reserves in the current period, which increased the allowance to total loan ratio compared to December 31, 2015.

Non-interest income for the three months ended June 30, 2016 amounted to $3.6 million, a decrease of $96 thousand, or 3%, compared to the same quarter last year. Non-interest income for the six months ended June 30, 2016 amounted to $6.8 million, a decrease of $915 thousand, or 12%, compared to the six months ended June 30, 2015. These decreases were due primarily to a decrease in net gains on the sales of investment securities, partially offset by increases in deposit and interchange fees, investment advisory fees, and income on bank-owned life insurance.

Non-interest expense for the quarter ended June 30, 2016 amounted to $17.5 million, an increase of $1.3 million, or 8%, compared to the same quarter in the prior year. For the six months ended June 30, 2016, non-interest expense amounted to $34.4 million, an increase of $1.9 million, or 6%, over the six months ended June 30, 2015. Increases in expenses over the prior year primarily related to increases in salaries and benefits and technology expenses due to the Company’s strategic growth and market expansion initiatives. Non-interest expense for the six months ended June 30, 2016 also included increases in audit, legal and other professional costs. The decrease in year-to-date other expenses was impacted by the 2015 prepayment fees associated with the redemption of the Trust Preferred Securities, partially offset by an increase in outsources services in the current year.

Key Financial Highlights

  • Total assets amounted to $2.43 billion at June 30, 2016, compared to $2.29 billion at December 31, 2015, an increase of $147.5 million, or 6%. Since March 31, 2016, total assets have increased $128.4 million, or 6%.
  • Total loans amounted to $1.90 billion at June 30, 2016 compared to $1.86 billion at December 31, 2015, an increase of $39.2 million, or 2%. Since March 31, 2016, total loans have increased $34.5 million, or 2%.
  • Total deposits, excluding brokered deposits, were $2.11 billion at June 30, 2016, compared to $1.91 billion at December 31, 2015, an increase of $198.7 million, or 10%. Since March 31, 2016, total deposits, excluding brokered deposits, have increased $111.7 million, or 6%. Brokered deposits were $74.3 million at June 30, 2016, compared to $89.3 million and $106.8 million at March 31, 2016 and at December 31, 2015, respectively.
  • Investment assets under management amounted to $683.9 million at June 30, 2016, compared to $678.4 million at December 31, 2015, an increase of $5.5 million. Since March 31, 2016, investment assets under management have decreased $4.4 million.
  • Total assets under management amounted to $3.19 billion at June 30, 2016, compared to $3.04 billion at December 31, 2015, an increase of $159.4 million, or 5%. Since March 31, 2016, total assets under management have increased $130.4 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, and has reported 107 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 and consumer loan products, and deposit and cash management services. The Company also offers 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. Enterprise Bank has 23 full-service branch offices 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 and Salem. The Company is also in the process of obtaining regulatory approvals to establish a branch in Windham, NH and anticipates that the office will open in 2017.

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 reference 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, and the receipt of required regulatory approvals. 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 press 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)
June 30, December 31, June 30,
(Dollars in thousands) 2016 2015 2015
Assets
Cash and cash equivalents:
Cash and due from banks $99,013 $32,318 $55,172
Interest-earning deposits 42,849 19,177 60,489
Total cash and cash equivalents 141,862 51,495 115,661
Investment securities at fair value 319,503 300,358 260,969
Federal Home Loan Bank stock 1,879 3,050 4,239
Loans held for sale 1,971 1,709 1,325
Loans, less allowance for loan losses of $30,345 at June 30, 2016, $29,008 at December 31, 2015 and $28,162 at June 30, 2015 1,868,841 1,830,954 1,708,384
Premises and equipment, net 34,140 30,553 30,461
Accrued interest receivable 7,838 7,790 6,880
Deferred income taxes, net 11,506 14,111 13,570
Bank-owned life insurance 28,400 28,018 16,516
Prepaid income taxes 776 57 778
Prepaid expenses and other assets 10,681 11,780 6,038
Goodwill 5,656 5,656 5,656
Total assets $2,433,053 $2,285,531 $2,170,477
Liabilities and Stockholders’ Equity
Liabilities
Deposits $2,184,430 $2,018,148 $1,959,498
Borrowed funds 671 53,671 1,316
Subordinated debt 14,828 14,822 14,815
Accrued expenses and other liabilities 20,374 18,287 22,287
Accrued interest payable 252 276 253
Total liabilities 2,220,555 2,105,204 1,998,169
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; 20,000,000 shares authorized; 11,420,426 shares issued and outstanding at June 30, 2016
(including 143,671 shares of unvested participating restricted awards), 10,377,787 shares issued and outstanding at December 31, 2015
(including 144,717 shares of unvested participating restricted awards) and 10,343,351 shares issued and outstanding at June 30, 2015
(including 147,421 shares of unvested participating restricted awards)
114 104 103
Additional paid-in capital 82,387 61,008 59,317
Retained earnings 123,313 116,941 110,517
Accumulated other comprehensive income 6,684 2,274 2,371
Total stockholders’ equity 212,498 180,327 172,308
Total liabilities and stockholders’ equity $2,433,053 $2,285,531 $2,170,477


ENTERPRISE BANCORP, INC.
Consolidated Statements of Income
(unaudited)
Three months ended June 30, Six months ended June 30,
(Dollars in thousands, except per share data)2016 2015 2016 2015
Interest and dividend income:
Loans and loans held for sale$21,032 $19,171 $41,913 $37,753
Investment securities1,551 1,223 3,091 2,448
Other interest-earning assets49 43 93 75
Total interest and dividend income22,632 20,437 45,097 40,276
Interest expense:
Deposits1,099 1,019 2,187 2,011
Borrowed funds14 1 77 22
Subordinated debt230 233 461 605
Total interest expense1,343 1,253 2,725 2,638
Net interest income21,289 19,184 42,372 37,638
Provision for loan losses267 1,225 1,117 1,850
Net interest income after provision for loan losses21,022 17,959 41,255 35,788
Non-interest income:
Investment advisory fees1,327 1,209 2,431 2,386
Deposit and interchange fees1,276 1,214 2,518 2,368
Income on bank-owned life insurance, net191 101 382 201
Net gains on sales of investment securities63 456 65 1,356
Gains on sales of loans105 128 194 284
Other income620 570 1,198 1,108
Total non-interest income3,582 3,678 6,788 7,703
Non-interest expense:
Salaries and employee benefits11,025 10,098 21,510 19,679
Occupancy and equipment expenses1,781 1,749 3,594 3,709
Technology and telecommunications expenses1,548 1,378 2,971 2,795
Advertising and public relations expenses817 809 1,496 1,539
Audit, legal and other professional fees408 382 896 741
Deposit insurance premiums324 297 650 590
Supplies and postage expenses258 252 487 510
Investment advisory and custodial expenses87 89 176 135
Other operating expenses1,294 1,213 2,631 2,779
Total non-interest expense17,542 16,267 34,411 32,477
Income before income taxes7,062 5,370 13,632 11,014
Provision for income taxes2,291 1,855 4,548 3,879
Net income$4,771 $3,515 $9,084 $7,135
Basic earnings per share$0.45 $0.34 $0.87 $0.69
Diluted earnings per share$0.45 $0.34 $0.86 $0.69
Basic weighted average common shares outstanding10,561,680 10,331,485 10,483,396 10,287,509
Diluted weighted average common shares outstanding10,629,900 10,394,496 10,550,842 10,352,730


ENTERPRISE BANCORP, INC.
Selected Consolidated Financial Data and Ratios
(unaudited)
At or for the At or for the At or for the
six months ended year ended six months ended
(Dollars in thousands, except per share data) June 30, 2016 December 31, 2015 June 30, 2015
BALANCE SHEET AND OTHER DATA
Total assets $2,433,053 $2,285,531 $2,170,477
Loans serviced for others 77,648 71,272 67,337
Investment assets under management 683,884 678,377 709,292
Total assets under management $3,194,585 $3,035,180 $2,947,106
Book value per share $18.61 $17.38 $16.66
Dividends paid per common share $0.26 $0.50 $0.25
Total capital to risk weighted assets 11.93% 10.70% 11.48%
Tier 1 capital to risk weighted assets 9.91% 8.66% 9.32%
Tier 1 capital to average assets 8.69% 7.73% 7.94%
Common equity tier 1 capital to risk weighted assets 9.91% 8.66% 9.32%
Allowance for loan losses to total loans 1.60% 1.56% 1.62%
Non-performing assets $10,271 $13,845 $16,004
Non-performing assets to total assets 0.42% 0.61% 0.74%
INCOME STATEMENT DATA (annualized)
Return on average total assets 0.80% 0.76% 0.70%
Return on average stockholders’ equity 9.75% 9.29% 8.43%
Net interest margin (tax equivalent) 4.02% 3.97% 3.96%


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

Source:Enterprise Bancorp, Inc.