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Enterprise Bancorp, Inc. Announces Its 92nd Consecutive Profitable Quarter With Third Quarter Net Income of $3.1 Million

Enterprise Bancorp, Inc. Logo

LOWELL, Mass., Oct. 18, 2012 (GLOBE NEWSWIRE) -- Enterprise Bancorp, Inc. (the "Company") (Nasdaq:EBTC), parent of Enterprise Bank, announces net income of $3.1 million for the three months ended September 30, 2012, an increase of $126 thousand, or 4%, compared to the three months ended September 30, 2011. Diluted earnings per share were $0.32 for the three months ended September 30, 2012, an increase of $0.01, or 3%, compared to the same period in 2011. Net income for the nine months ended September 30, 2012 amounted to $9.1 million, an increase of $1.1 million, or 13%, compared to the same nine-month period in 2011. Diluted earnings per share were $0.95 for the nine months ended September 30, 2012, an increase of $0.09, or 10%, compared to the same period in 2011.

As previously announced on October 16, 2012, the Company declared a quarterly dividend of $0.11 per share to be paid on December 3, 2012 to shareholders of record as of November 12, 2012. The quarterly dividend represents a 4.8% increase over the 2011 dividend rate.

Chief Executive Officer Jack Clancy commented, "Our strong 2012 financial results to date reflect our continued growth. Deposits and loans outstanding have increased by $137 million, or 10%, and $54 million, or 4%, respectively, since December 31, 2011, which are annualized growth rates of 14% and 6%, respectively. During the third quarter, deposits increased $17 million and loans outstanding increased $12 million. Additionally, investment assets under management increased $74 million, or 15%, since December 31, 2011, and $27 million, or 5%, since June 30, 2012, to $579 million at September 30, 2012."

Mr. Clancy further stated, "We believe our strong performance, coupled with plans for two new branch locations, well positions us for the future. We anticipate opening the Tyngsboro, MA branch in November and the Lawrence, MA branch in the first quarter of 2013. Strategically, our focus remains on organic growth and market expansion, while continually planning for our future by investing in our branch network, technology, progressive product capabilities, our communities and, most importantly, in our people."

Founder and Chairman of the Board George Duncan stated, "The September quarter represents our 92nd consecutive profitable quarter and our total assets under management have grown to $2.29 billion. These represent significant achievements. We believe we were able to achieve such success because of our strong service and products capabilities combined with our core values. We are proud to report that Enterprise was recognized at the Boston Business Journal's 7th Annual Corporate Philanthropy Summit on September 12, 2012, for our corporate philanthropy and for hours spent by our employees in community-based activities."

Results of Operations

The Company's growth contributed to increases in net interest income and the level of operating expenses for both the quarter and the year-to-date periods ended September 30, 2012. In 2012, the provision for loan losses decreased compared to the 2011 periods, while non-interest income decreased mainly due to lower gains on security sales in the current year. The increases in both the quarter and year-to-date pre-tax net income were partially offset by a higher tax rate in 2012, mainly due to higher taxable income in the current year.

Net interest income for the quarter ended September 30, 2012 amounted to $15.6 million, an increase of $909 thousand, or 6%, compared to the September 2011 quarter. Net interest income for the nine months ended September 30, 2012 amounted to $46.0 million, an increase of $3.0 million, or 7%, compared to the same period in 2011. The increase in net interest income was due primarily to revenue generated from loan growth which has been funded through non-interest bearing deposits, partially offset by a decrease in tax equivalent net interest margin ("margin"). Average loan balances for the three and nine months ended September 30, 2012 increased $84.3 million and $95.7 million, respectively, compared to the three and nine month averages for the same periods in 2011. Net interest margin was 4.20% for the quarter ended September 30, 2012 compared to 4.32% for the quarter ended September 30, 2011. The margin was 4.31% for the quarter ended June 30, 2012. Year-to-date margins were 4.29% and 4.36% for the nine months ended September 30, 2012 and 2011, respectively. Consistent with the industry, the 2012 margin continues to trend downward, as the yield on interest-earning assets has declined faster than the rate on the cost of funds, as the cost of funds is approaching a floor.

The provision for loan losses amounted to $800 thousand for the three months ended September 30, 2012, compared to $1.8 million for the same period in 2011. For the nine months ended September 30, 2012 and 2011, the provision for loan losses amounted to $2.2 million and $4.0 million, respectively. The decrease in the provision reflects credit stabilization within the loan portfolio compared to the 2011 periods. In making the provision to the allowance for loan losses, management takes into consideration the level of loan growth, adversely classified and non-performing loans, specific reserves for impaired loans, net charge-offs, and the estimated impact of current economic conditions on credit quality. The level of loan growth for the nine months ended September 30, 2012 was $53.6 million, compared to $86.2 million during the same period in 2011. The balance of the allowance for loan losses allocated to impaired loans amounted to $4.3 million at September 30, 2012, compared to $4.1 million at September 30, 2011. Total non-performing assets as a percentage of total assets were 1.50% at September 30, 2012, compared to 1.81% at September 30, 2011. For the year-to-date period ended September 30, 2012, the Company recorded net charge-offs of $1.4 million, the majority of which had reserves specifically allocated in prior periods. For the same period in 2011, net charge-offs were $800 thousand. Management continues to closely monitor the non-performing assets, charge-offs and necessary allowance levels, including specific reserves. The allowance for loan losses to total loans ratio was 1.84% at September 30, 2012, compared to 1.85% at December 31, 2011 and 1.84% at September 30, 2011.

Non-interest income for the three months ended September 30, 2012 amounted to $3.0 million, a decrease of $225 thousand, or 7%, compared to the third quarter of 2011. Non-interest income for the nine months ended September 30, 2012 amounted to $8.9 million, a decrease of $80 thousand, or 1%, compared to the 2011 year-to-date period. Both the quarter and year-to-date results were impacted by a decrease in gains on securities sales, partially offset by an increase in gains on loan sales and higher "other income" in the current year. The increase in other income is primarily due to increases in insurance commissions in both the quarter and year-to-date periods.

Non-interest expense for the three months ended September 30, 2012 amounted to $13.0 million, an increase of $1.2 million, or 10%, compared to the same period in the prior year. For the nine months ended September 30, 2012, non-interest expense amounted to $38.8 million, an increase of $2.7 million, or 7%, compared to the same period in the prior year. Increased expenses related to salaries and benefits and technology in both the quarter and the year-to-date periods were primarily due to the Company's strategic growth initiatives, including branch growth. The year-to-date expenses were also impacted primarily by increases in legal and other professional services and occupancy expenses, partially offset by a reduction in FDIC insurance expenses.

Key Financial Highlights

  • Total assets were $1.64 billion at September 30, 2012 as compared to $1.49 billion at December 31, 2011, an increase of $148.4 million, or 10%. Since June 30, 2012, total assets have increased $22.5 million, or 1%.
  • Total loans amounted to $1.30 billion at September 30, 2012, an increase of $53.6 million, or 4%, since December 31, 2011. Since June 30, 2012, total loans have increased $11.6 million, or 1%.
  • Total deposits were $1.47 billion at September 30, 2012 as compared to $1.33 billion at December 31, 2011, an increase of $137.3 million, or 10%. Since June 30, 2012, total deposits have increased $16.8 million, or 1%.
  • Investment assets under management amounted to $578.9 million at September 30, 2012 as compared to $505.2 million at December 31, 2011, an increase of $73.8 million, or 15%. Since June 30, 2012, investment assets under management have increased $26.6 million, or 5%. The increase is attributable primarily to asset growth from new business and from market value appreciation.
  • Total assets under management amounted to $2.29 billion at September 30, 2012, compared to $2.06 billion at December 31, 2011, an increase of $229.3 million, or 11%. Since June 30, 2012, total assets under management have increased $53.8 million, or 2%.

Enterprise Bancorp, Inc. (the "Company"), 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 92 consecutive profitable quarters. The Company principally is engaged in the business of attracting deposits from the general public and investing in commercial loans and investment securities. Through the bank and its subsidiaries, the Company offers a range of commercial and consumer loan products, deposit and cash management products as well as investment advisory and wealth management, 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 Merrimack Valley and North Central regions of Massachusetts and Southern New Hampshire. Enterprise Bank has nineteen full-service branch offices located in the Massachusetts cities and towns of Lowell, Acton, Andover, Billerica, Chelmsford, Dracut, Fitchburg, Leominster, Methuen, Tewksbury, and Westford and in the New Hampshire towns of Derry, Hudson, Pelham and Salem. The Company has also obtained the necessary regulatory approvals for its planned new branches in Tyngsboro and Lawrence, MA and anticipates that the Tyngsboro office will open in November 2012 and the Lawrence office will open in the first quarter of 2013.

The Enterprise Bancorp, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=11408

The above text 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 the use of the words "believe," "expect," "anticipate," "intend," "estimate," "assume," "will," "should," and other expressions that predict or indicate future events or trends and which do not relate to historical matters. 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 and competition. For more information about these factors, please see 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.

ENTERPRISE BANCORP, INC.
Consolidated Balance Sheets
(unaudited)
(Dollars in thousands) September 30,
2012
December 31,
2011
September 30,
2011
Assets
Cash and cash equivalents:
Cash and due from banks $ 50,978 $ 30,231 $ 30,373
Interest-earning deposits 25,413 6,785 6,743
Fed funds sold 5,879 2,115 45,066
Total cash and cash equivalents 82,270 39,131 82,182
Investment securities at fair value 191,696 140,405 128,922
Federal Home Loan Bank stock 4,260 4,740 4,740
Loans, less allowance for loan losses of $23,930 at September 30, 2012 and $23,160 at December 31, 2011 and $22,569 at September 30, 2011 respectively 1,280,123 1,227,329 1,206,989
Premises and equipment 27,267 27,310 25,893
Accrued interest receivable 5,830 5,821 5,418
Deferred income taxes, net 12,132 12,411 12,129
Bank-owned life insurance 15,321 14,937 14,801
Prepaid income taxes 719 287 377
Prepaid expenses and other assets 12,273 11,136 9,693
Goodwill 5,656 5,656 5,656
Total assets $ 1,637,547 $ 1,489,163 $ 1,496,800
Liabilities and Stockholders' Equity
Liabilities
Deposits $ 1,470,426 $ 1,333,158 $ 1,345,488
Borrowed funds 2,994 4,494 4,494
Junior subordinated debentures 10,825 10,825 10,825
Accrued expenses and other liabilities 16,444 12,487 11,080
Accrued interest payable 323 751 366
Total liabilities 1,501,012 1,361,715 1,372,253
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; 9,632,904, 9,472,748 and 9,444,428 shares issued and outstanding at September 30, 2012, December 31, 2011 and September 30, 2011 respectively 96 95 94
Additional paid-in capital 47,304 45,158 44,577
Retained earnings 84,985 78,999 77,133
Accumulated other comprehensive income 4,150 3,196 2,743
Total stockholders' equity 136,535 127,448 124,547
Total liabilities and stockholders' equity $ 1,637,547 $ 1,489,163 $ 1,496,800

ENTERPRISE BANCORP, INC.
Consolidated Statements of Income
(unaudited)
Three months ended September 30, Nine months ended September 30,
(Dollars in thousands, except per share data) 2012 2011 2012 2011
Interest and dividend income:
Loans $ 16,324 $ 16,078 $ 48,510 $ 46,915
Investment securities 833 824 2,467 2,679
Other interest-earning assets 25 11 68 49
Total interest and dividend income 17,182 16,913 51,045 49,643
Interest expense:
Deposits 1,228 1,858 4,133 5,676
Borrowed funds 12 22 41 66
Junior subordinated debentures 294 294 883 883
Total interest expense 1,534 2,174 5,057 6,625
Net interest income 15,648 14,739 45,988 43,018
Provision for loan losses 800 1,840 2,150 3,954
Net interest income after provision for loan losses 14,848 12,899 43,838 39,064
Non-interest income:
Investment advisory fees 925 919 2,880 2,844
Deposit service fees 1,153 1,157 3,281 3,313
Income on bank-owned life insurance, net 122 132 384 409
Net gains on sales of investment securities 38 486 197 747
Gains on sales of loans 211 119 669 403
Other income 536 397 1,500 1,275
Total non-interest income 2,985 3,210 8,911 8,991
Non-interest expense:
Salaries and employee benefits 8,190 7,177 23,534 21,275
Occupancy and equipment expenses 1,400 1,346 4,244 4,147
Technology and telecommunications expenses 1,122 959 3,198 2,893
Advertising and public relations expenses 408 471 1,694 1,717
Deposit insurance premiums 283 276 843 1,049
Audit, legal and other professional fees 336 331 1,306 1,003
Supplies and postage expenses 232 212 659 636
Investment advisory and custodial expenses 110 97 319 327
Other operating expenses 929 979 3,003 3,050
Total non-interest expense 13,010 11,848 38,800 36,097
Income before income taxes 4,823 4,261 13,949 11,958
Provision for income taxes 1,760 1,324 4,808 3,872
Net income $ 3,063 $ 2,937 $ 9,141 $ 8,086
Basic earnings per share $ 0.32 $ 0.31 $ 0.96 $ 0.86
Diluted earnings per share $ 0.32 $ 0.31 $ 0.95 $ 0.86
Basic weighted average common shares outstanding 9,613,386 9,429,360 9,567,294 9,383,678
Diluted weighted average common shares outstanding 9,692,290 9,463,664 9,639,122 9,435,506
ENTERPRISE BANCORP, INC.
Selected Consolidated Financial Data and Ratios
(unaudited)
(Dollars in thousands, except per share data) At or for the nine
months ended
September 30, 2012
At or for the
year ended
December 31, 2011
At or for the nine
months ended
September 30, 2011
BALANCE SHEET AND OTHER DATA
Total assets $ 1,637,547 $ 1,489,163 $ 1,496,800
Loans serviced for others 74,529 67,367 64,006
Investment assets under management 578,918 505,163 470,590
Total assets under management $ 2,290,994 $ 2,061,693 $ 2,031,396
Book value per share $ 14.17 $ 13.45 $ 13.19
Dividends paid per common share $ 0.330 $ 0.420 $ 0.315
Total capital to risk weighted assets 11.57% 11.42% 11.14%
Tier 1 capital to risk weighted assets 10.26% 10.14% 9.88%
Tier 1 capital to average assets 8.58% 8.63% 8.67%
Allowance for loan losses to total loans 1.84% 1.85% 1.84%
Non-performing assets $ 24,561 $ 27,321 $ 27,121
Non-performing assets to total assets 1.50% 1.83% 1.81%
INCOME STATEMENT DATA (annualized)
Return on average total assets 0.78% 0.75% 0.76%
Return on average stockholders' equity 9.25% 8.98% 8.97%
Net interest margin (tax equivalent) 4.29% 4.37% 4.36%
CONTACT: Mary Ellen Fitzpatrick Senior Vice President, Corporate Communications (978) 656-5520

Source:Enterprise Bancorp, Inc.