LOWELL, Mass., Jan. 25, 2018 (GLOBE NEWSWIRE) -- Enterprise Bancorp, Inc. (the "Company") (NASDAQ:EBTC), parent of Enterprise Bank, announced net income for the year ended December 31, 2017 of $19.4 million, an increase of $642 thousand compared to the year ended December 31, 2016. Diluted earnings per share were $1.66 for the year ended December 31, 2017, as compared to $1.70 for the year ended December 31, 2016. Diluted earnings per share for the year ended December 31, 2017 includes the full year dilutive impact of the Company’s equity offering issued on June 23, 2016. Net income for the three months ended December 31, 2017 amounted to $2.7 million, a decrease of $2.2 million compared to the same three-month period in 2016. Diluted earnings per share were $0.23 for the three months ended December 31, 2017, as compared to $0.43 for the same three-month period in 2016.
Like most banks, the Company’s fourth quarter and year end 2017 results were impacted by a tax expense adjustment to the Bank's net deferred tax assets because of the recently enacted Tax Cuts and Jobs Act ("the new federal tax bill"). This noncash expense for the Company was approximately $4.8 million. The new federal tax bill will reduce the Bank’s federal tax rate in future periods, beginning in 2018, to 21% from its current level of approximately 35%. This reduced rate will positively impact net income in future periods, but as noted above also requires the Bank to revalue its net deferred tax assets for the year ended 2017 based upon the lower rate at which they will be recovered, thereby lowering their value.
As previously announced on January 16, 2018, the Company declared a quarterly dividend of $0.145 per share to be paid on March 1, 2018 to shareholders of record as of February 8, 2018. The 2018 dividend rate represents a 7.4% increase over the 2017 dividend rate.
Chief Executive Officer Jack Clancy commented, "2017 was a strong year of growth for our franchise and this growth positively impacted our financial results. Total assets, loans, and customer deposits have increased 12%, 12%, and 4%, respectively, as compared to December 31, 2016. During the fourth quarter our loan and customer deposit growth was strong, as loans grew $68 million, or 3%, and customer deposits grew $74 million, or 3%. The collective efforts and contributions of our dedicated Enterprise team, including active community involvement, relationship building and a customer-focused mindset, and ongoing enhancements to our state-of-the-art product and service offerings continue to drive this growth. In addition to our recently opened 24th branch, in Windham, NH, and the completed relocation of our branch in Salem, NH, we expect the relocation of our Leominster, MA branch to be completed in the spring of 2018. These new branches in prime locations will provide improved, state-of-the-art experiences in these communities to better serve our customers. Strategically, our focus remains on organic growth and continually planning for and investing in our future."
Mr. Clancy continued, "Among the many highlights of 2017, the recognition of Enterprise Bank by the Boston Globe as the #1 Top Place to Work among large-sized companies in Massachusetts was a standout. The importance of our workplace culture - where our team members treat one another with care and respect - is a hallmark of our organization and something we take great pride in. We are very grateful and humbled to be recognized again as an employer of choice by our Enterprise team members."
Founder and Chairman of the Board George Duncan commented, "We are also grateful to the Boston Business Journal for their recognition of Enterprise Bank for our commitment to community through their Corporate Citizenship Summit. Enterprise Bank was ranked #52 in the list of largest corporate donors for Massachusetts and ranked #4 for the highest average hours (55.67 hours per employee) of community service. Our contribution to charitable organizations, both in staff time and philanthropic giving, strengthens the very fabric of the communities we are so privileged to serve. This reflects our deep sense of purpose as a community bank, holding ourselves to a responsibility beyond our own success through our core belief that business should be a force for good, serving a social purpose and making a positive contribution to society.”
Results of Operations
Net interest income for the year ended December 31, 2017 amounted to $97.5 million, an increase of $10.7 million, or 12%, compared to the year ended December 31, 2016. Net interest income for the three months ended December 31, 2017 amounted to $26.0 million, an increase of $3.4 million, or 15%, compared to the same period in 2016. The increase in net interest income was due primarily to loan growth. Average loan balances (including loans held for sale) increased $209.5 million for the year ended December 31, 2017 and $232.4 million for the three months ended December 31, 2017, compared to the same 2016 respective period averages. Net interest margin ("margin") was 3.97% for the year ended December 31, 2017, compared to 3.94% for the year ended December 31, 2016. Margin was 4.05% for the three months ended December 31, 2017 and 4.03% for the three months ended September 30, 2017, while margin was 3.86% for the three months ended December 31, 2016. Contributing to the increase in margin in the fourth quarter was slightly higher than normal non-accrual interest income recognized from loan payoffs, as well as the positive impact of recent interest rate increases on loan yields.
For the years ended December 31, 2017 and December 31, 2016, the provisions to the allowance for loan losses amounted to $1.4 million and $3.0 million, respectively. During the three months ended December 31, 2017, there was a reduction to the allowance for loan losses of $200 thousand, compared to a provision of $490 thousand during the three months ended December 31, 2016. The decrease in the provision for the year ended December 31, 2017 was due primarily to generally improved credit quality metrics and underlying collateral values, partially offset by increased loan growth compared to the prior year.
Contributing to the changes in the provision for loan losses compared to the prior year were:
- Total non-performing loans as a percentage of total loans amounted to 0.40% at December 31, 2017, compared to 0.47% at December 31, 2016.
- The ratio of adversely classified loans to total loans amounted to 1.16% at December 31, 2017, compared to 1.70% at December 31, 2016.
- The balance of the allowance for loan losses allocated to impaired and adversely classified loans decreased by $1.4 million for the year ended December 31, 2017, compared to an increase of $1.2 million during the year ended December 31, 2016.
- The Company recorded net recoveries of $143 thousand for the year ended December 31, 2017, compared to net charge-offs of $659 thousand for the year ended December 31, 2016.
- Loan growth for the year ended December 31, 2017 was $247.2 million, compared to $162.8 million during the year ended December 31, 2016.
The allowance for loan losses to total loans ratio was 1.45% at December 31, 2017, and 1.55% at December 31, 2016.
Non-interest income for the year ended December 31, 2017 amounted to $15.7 million, an increase of $1.2 million, or 9%, compared to the year ended December 31, 2016. Non-interest income for the three months ended December 31, 2017 amounted to $4.2 million, an increase of $452 thousand, or 12%, compared to the same quarter in the prior year. Both year-to-date and quarter-to-date increases in non-interest income over the prior year periods were due primarily to increases in deposit and interchange fees and investment advisory fees, partially offset by decreases in loan sale income.
For the year ended December 31, 2017, non-interest expense amounted to $76.1 million, an increase of $5.8 million, or 8%, over the year ended December 31, 2016. Non-interest expense for the quarter ended December 31, 2017 amounted to $19.1 million, an increase of $635 thousand, or 3%, compared to the same quarter in the prior year. Increases in expenses over the same periods in the prior year primarily related to the Company’s strategic growth and market expansion initiatives, mainly increases in salaries and benefits expenses.
In addition to the impact from the new federal tax bill, in the first quarter of 2017 the Company adopted a new accounting standard, ASU No. 2016-09 “Compensation-Stock Compensation (Topic 718) Improvements to Employee Share-Based Payment Accounting,” which, among other aspects, relates to the tax treatment of equity compensation. The Company's provision for income taxes decreased by approximately $922 thousand for the year ended December 31, 2017 related to the adoption of this standard.
Key Financial Highlights
- Total assets amounted to $2.82 billion at December 31, 2017, compared to $2.53 billion at December 31, 2016, an increase of $291.3 million, or 12%. Since September 30, 2017, total assets have increased $92.1 million, or 3%.
- Total loans amounted to $2.27 billion at December 31, 2017, compared to $2.02 billion at December 31, 2016, an increase of $247.2 million, or 12%. Since September 30, 2017, total loans have increased $67.5 million, or 3%.
- Customer deposits (total deposits excluding brokered deposits) were $2.29 billion at December 31, 2017, compared to $2.21 billion at December 31, 2016, an increase of $84.3 million, or 4%. Since September 30, 2017, customer deposits have increased $73.7 million, or 3%. Brokered deposits were $147.5 million at December 31, 2017, $82.5 million at September 30, 2017 and $59.4 million at December 31, 2016.
- Investment assets under management amounted to $845.0 million at December 31, 2017, compared to $725.3 million at December 31, 2016, an increase of $119.6 million, or 16%. Since September 30, 2017, investment assets under management have increased $44.5 million, or 6%.
- Total assets under management amounted to $3.75 billion at December 31, 2017, compared to $3.33 billion at December 31, 2016, an increase of $419.0 million, or 13%. Since September 30, 2017, total assets under management have increased $138.9 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 113 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, residential and consumer loan products, deposit products and cash management services, as well as 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 24 full-service branches 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, 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 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, the receipt of required regulatory approvals, and changes in tax laws including, among other risks, potential future tax rate changes, and the risk that costs associated with the new federal tax bill and changes to the deferred tax assets and liabilities may be greater than expected. 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.
Contact Info: James A. Marcotte, Executive Vice President, Chief Financial Officer and Treasurer (978) 656-5614
|ENTERPRISE BANCORP, INC.|
|Consolidated Balance Sheets|
|(Dollars in thousands)||December 31,|
|Cash and cash equivalents:|
|Cash and due from banks||$||40,310||$||33,047|
|Total cash and cash equivalents||54,806||50,475|
|Investment securities at fair value||405,206||374,790|
|Federal Home Loan Bank stock||5,215||2,094|
|Loans held for sale||208||1,569|
|Loans, less allowance for loan losses of $32,915 at December 31, 2017, and $31,342 at December 31, 2016||2,236,989||1,991,387|
|Premises and equipment, net||37,022||33,540|
|Accrued interest receivable||10,614||8,792|
|Deferred income taxes, net||10,751||17,020|
|Bank-owned life insurance||29,466||28,765|
|Prepaid income taxes||1,301||1,344|
|Prepaid expenses and other assets||20,330||10,837|
|Liabilities and Stockholders’ Equity|
|Accrued expenses and other liabilities||40,067||16,794|
|Accrued interest payable||478||263|
|Commitments and Contingencies|
|Preferred stock, $0.01 par value per share; 1,000,000 shares authorized; no shares issued||—||—|
|Common stock $0.01 par value per share; 40,000,000 shares authorized; 11,609,853 shares issued and outstanding at December 31, 2017, and 11,475,742 shares issued and outstanding at December 31, 2016||116||115|
|Additional paid-in capital||88,205||85,421|
|Accumulated other comprehensive income (loss)||342||(758||)|
|Total stockholders’ equity||231,810||214,786|
|Total liabilities and stockholders’ equity||$||2,817,564||$||2,526,269|
|ENTERPRISE BANCORP, INC.|
|Consolidated Statements of Income|
|Three months ended||Year ended|
|December 31,||December 31,|
|(Dollars in thousands, except per share data)||2017||2016||2017||2016|
|Interest and dividend income:|
|Loans and loans held for sale||$||26,015||$||22,011||$||96,559||$||85,390|
|Other interest-earning assets||126||96||428||285|
|Total interest and dividend income||28,285||24,027||105,032||92,315|
|Total interest expense||2,279||1,424||7,510||5,523|
|Net interest income||26,006||22,603||97,522||86,792|
|Provision for loan losses||(200||)||490||1,430||2,993|
|Net interest income after provision for loan losses||26,206||22,113||96,092||83,799|
|Investment advisory fees||1,346||1,181||5,149||4,774|
|Deposit and interchange fees||1,622||1,334||6,011||5,124|
|Income on bank-owned life insurance, net||174||183||701||747|
|Net gains on sales of investment securities||231||191||716||802|
|Gains on sales of loans||101||209||460||601|
|Total non-interest income||4,157||3,705||15,674||14,441|
|Salaries and employee benefits||11,718||11,428||48,379||43,886|
|Occupancy and equipment expenses||2,083||1,909||7,960||7,362|
|Technology and telecommunications expenses||1,583||1,532||6,372||6,080|
|Advertising and public relations expenses||842||746||2,855||2,833|
|Audit, legal and other professional fees||507||480||1,565||1,721|
|Deposit insurance premiums||405||390||1,535||1,387|
|Supplies and postage expenses||273||237||999||965|
|Other operating expenses||1,727||1,781||6,480||6,094|
|Total non-interest expense||19,138||18,503||76,145||70,328|
|Income before income taxes||11,225||7,315||35,621||27,912|
|Provision for income taxes||8,505||2,362||16,228||9,161|
|Basic earnings per share||$||0.23||$||0.43||$||1.68||$||1.71|
|Diluted earnings per share||$||0.23||$||0.43||$||1.66||$||1.70|
|Basic weighted average common shares outstanding||11,602,188||11,457,907||11,568,430||10,966,333|
|Diluted weighted average common shares outstanding||11,685,151||11,539,491||11,651,763||11,039,511|
|ENTERPRISE BANCORP, INC.|
|Selected Consolidated Financial Data and Ratios|
|At or for the year |
|At or for the year |
|(Dollars in thousands, except per share data)||December 31, 2017||December 31, 2016|
|BALANCE SHEET AND OTHER DATA|
|Loans serviced for others||89,059||80,996|
|Investment assets under management||844,977||725,338|
|Total assets under management||$||3,751,600||$||3,332,603|
|Book value per share||$||19.97||$||18.72|
|Dividends paid per common share||$||0.54||$||0.52|
|Total capital to risk weighted assets||11.21||%||11.79||%|
|Tier 1 capital to risk weighted assets||9.34||%||9.80||%|
|Tier 1 capital to average assets||8.22||%||8.34||%|
|Common equity tier 1 capital to risk weighted assets||9.34||%||9.80||%|
|Allowance for loan losses to total loans||1.45||%||1.55||%|
|Non-performing assets to total assets||0.32||%||0.38||%|
|INCOME STATEMENT DATA|
|Return on average total assets||0.73||%||0.78||%|
|Return on average stockholders’ equity||8.58||%||9.33||%|
|Net interest margin (tax equivalent)||3.97||%||3.94||%|
Source:Enterprise Bancorp Inc