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Enterprise Bancorp, Inc. Announces 2013 Second Quarter Net Income of $3.1 Million; Strong Loan and Deposit Growth

Enterprise Bancorp, Inc. Logo

LOWELL, Mass., July 18, 2013 (GLOBE NEWSWIRE) -- Enterprise Bancorp, Inc. (the "Company") (Nasdaq:EBTC), parent of Enterprise Bank, announces net income for the three months ended June 30, 2013 of $3.1 million, an increase of $174 thousand, or 6%, compared to the same three-month period in 2012. Diluted earnings per share were $0.31 for the three months ended June 30, 2013, an increase of $0.01, or 3%, compared to the same period in 2012. Net income for the six months ended June 30, 2013 amounted to $6.5 million, an increase of $434 thousand, or 7%, compared to the same six-month period in 2012. Diluted earnings per share were $0.66 for the six months ended June 30, 2013, an increase of $0.03, or 5%, compared to the same period in 2012.

As previously announced on July 16, 2013, the Company declared a quarterly dividend of $0.115 per share to be paid on September 3, 2013 to shareholders of record as of August 13, 2013. The quarterly dividend represents a 4.5% increase over the 2012 dividend rate.

Total assets increased $87.6 million, or 5.3%, since December 31, 2012, amounting to $1.75 billion at June 30, 2013. Loans outstanding and deposits, excluding brokered deposits, have increased $87.7 million, or 6.4%, and $54.8 million, or 3.7%, respectively, in the first six months of 2013.

Chief Executive Officer Jack Clancy commented, "Our second quarter results reflect our continued organic growth and market expansion. Total assets and loans have grown 11% and 13%, respectively, on an annualized basis in 2013. Average deposits, excluding brokered deposits, for the first six months of 2013 have increased 6% as compared to the same period in 2012. We continue to focus on investments in technology, our communities, and most importantly, our family of Enterprise employees as we look to continue to strengthen our franchise in Massachusetts and Southern New Hampshire."

George L. Duncan, Founder and Chairman, commented that "Our expanding branch network and our highly skilled and experienced banking team combined with state-of-the-art products and services position us well for the future. We were extremely grateful for the warm and enthusiastic welcome Enterprise Bankers received in April as we opened our new office at 290 Merrimack Street, in the Riverwalk complex in Lawrence. Our Lawrence team has cultivated many new business and community relationships during its first months in operation. We are also looking forward to our new Nashua, NH office, which is scheduled to open in the fourth quarter of 2013. We continue to focus our efforts to play a leadership role in all the communities we serve. One example of this deeply- rooted commitment is Enterprise's 'Celebration of Excellence,' held May 7 at the Lowell Memorial Auditorium. The evening celebrated the many unsung heroes in our region, including individuals, educators, non-profits and businesses, that make our region so special. We are extremely proud of this signature Enterprise event and look forward to hosting our 5th Celebration of Excellence in late 2014."

Results of Operations

The Company's growth contributed to increases in net interest income, non-interest income and the level of operating expenses for the current year compared to the same 2012 period. Non-interest income also increased as a result of higher gains on securities sales in the current year. Additionally, the quarter ended June 30, 2013 was impacted by a lower loan loss provision compared to the same period in 2012, partially offset by the costs of our community event held in May 2013.

Net interest income for the three months ended June 30, 2013 amounted to $16.1 million, an increase of $716 thousand, or 5%, compared to the same period in 2012. Net interest income for the six months ended June 30, 2013 amounted to $31.9 million, an increase of $1.6 million, or 5%, compared to the same period in 2012. This increase in net interest income was due primarily to revenue generated from loan growth, primarily in commercial real estate loans, partially offset by a decrease in tax equivalent net interest margin ("margin"). Average loan balances (including loans held for sale) increased $162.3 million and $150.6 million for the three and six months ended June 30, 2013, respectively, compared to the same periods in 2012. Net interest margin was 4.08% for the quarter ended June 30, 2013, compared to 4.31% for the quarter ended June 30, 2012. Margin was 4.16% for the quarter ended March 31, 2013. Year-to-date margins were 4.12% and 4.33% for the six months ended June 30, 2013 and 2012, respectively. Consistent with the industry, the margin continued to trend downward, as the yield on interest-earning assets declined faster than the cost of funding, as funding rates have reached a level leaving little room for significant reductions.

The provision for loan losses amounted to $534 thousand for the three months ended June 30, 2013, compared to $1.1 million for the same period in 2012. For the six months ended June 30, 2013 and 2012, the provision for loan losses amounted to $1.3 million and $1.4 million, respectively. 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. The level of loan growth for the six months ended June 30, 2013, was $87.7 million, compared to $44.7 million during the same period in 2012. The balance of the allowance for loan losses allocated to impaired loans amounted to $4.2 million at June 30, 2013, compared to $3.6 million at June 30, 2012. Total non-performing assets as a percentage of total assets were 1.24% at June 30, 2013, compared to 1.61% at June 30, 2012. For the six months ended June 30, 2013, the Company recorded net recoveries of $100 thousand. For the six months ended June 30, 2012, net charge-offs were $1.4 million. 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 1.77% at June 30, 2013, 1.78% at December 31, 2012 and 1.79% at June 30, 2012.

Non-interest income for the three and six months ended June 30, 2013 amounted to $3.6 million and $7.2 million, increases of $601 thousand, or 20%, and $1.3 million, or 21%, respectively compared to the same periods in 2012. The increases over the 2012 periods were primarily due to increases in gains on securities sales, deposit and interchange fees and investment advisory fee income. The year-to-date increase also benefited from gains on loan sales.

Non-interest expense for the three months ended June 30, 2013 amounted to $14.5 million, an increase of $1.5 million, or 11%, compared to the second quarter of 2012. For the six months ended June 30, 2013, non-interest expense amounted to $27.9 million, an increase of $2.1 million, or 8%, compared to the same period in the prior year. Increased expenses related to salaries and benefits, occupancy and technology over the comparable periods in the prior year were primarily due to the Company's strategic growth initiatives, including branch expansion. Advertising increased over the prior year periods primarily due to the timing of corporate community events. Partially offsetting these increases were reductions in legal and other professional costs.

Key Financial Highlights

  • Total assets were $1.75 billion at June 30, 2013 as compared to $1.67 billion at December 31, 2012, an increase of $87.6 million, or 5%. Since March 31, 2013, total assets have increased $59.4 million, or 4%.
  • Total loans amounted to $1.45 billion at June 30, 2013, an increase of $87.7 million, or 6%, since December 31, 2012. Since March 31, 2013, total loans have increased $43.2 million, or 3%.
  • Total deposits, excluding brokered deposits, were $1.53 billion at June 30, 2013 as compared to $1.47 billion at December 31, 2012, an increase of $54.8 million, or 4%. Since March 31, 2013, total deposits, excluding brokered deposits, increased $45.1 million, or 3%. Brokered deposits were $52.5 million at June 30, 2013 and $3.0 million at both March 31, 2013 and December 31, 2012.
  • Investment assets under management amounted to $613.2 million at June 30, 2013 as compared to $592.4 million at December 31, 2012, an increase of $20.8 million, or 4%. Since March 31, 2013, investment assets under management have decreased $1.8 million.
  • Total assets under management amounted to $2.44 billion at June 30, 2013, compared to $2.33 billion at December 31, 2012, an increase of $108.0 million, or 5%. Since March 31, 2013, total assets under management have increased $56.6 million, or 2%.

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 95 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 21 full-service branch offices located in the Massachusetts cities and towns of Lowell, Acton, Andover, Billerica, Chelmsford, Dracut, Fitchburg, Lawrence, Leominster, Methuen, Tewksbury, Tyngsboro and Westford and in the New Hampshire towns of Derry, Hudson, Pelham and Salem. The Company is also completing construction on our new Nashua, NH office which is scheduled to open in the fourth quarter of 2013.

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 reference to a future period or periods or by the use of the words "believe," "expect," "anticipate," "intend," "estimate," "assume," "will," "should," 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 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)
June 30, December 31, June 30,
(Dollars in thousands) 2013 2012 2012
Assets
Cash and cash equivalents:
Cash and due from banks $40,795 $38,007 $40,995
Interest-earning deposits 6,878 12,218 38,550
Fed funds sold 4,055 2,510 21,311
Total cash and cash equivalents 51,728 52,735 100,856
Investment securities at fair value 190,459 184,464 165,211
Federal Home Loan Bank stock 4,324 4,260 4,260
Loans held for sale 3,917 8,557 2,263
Loans, less allowance for loan losses of $25,671 at June 30, 2013, $24,254 at December 31, 2012 and $23,126 at June 30, 2012 1,421,675 1,335,401 1,267,040
Premises and equipment 28,602 27,206 26,516
Accrued interest receivable 6,092 5,828 5,630
Deferred income taxes, net 13,771 12,548 12,180
Bank-owned life insurance 15,678 15,443 15,199
Prepaid income taxes 1,387 174 1,374
Prepaid expenses and other assets 10,047 13,454 8,897
Goodwill 5,656 5,656 5,656
Total assets $1,753,336 $1,665,726 $1,615,082
Liabilities and Stockholders' Equity
Liabilities
Deposits $1,579,293 $1,475,027 $1,453,612
Borrowed funds 1,880 26,540 2,869
Junior subordinated debentures 10,825 10,825 10,825
Accrued expenses and other liabilities 16,766 13,182 13,897
Accrued interest payable 579 603 582
Total liabilities 1,609,343 1,526,177 1,481,785
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; 9,872,735 shares issued and outstanding at June 30, 2013 (including 171,481 shares of unvested participating restricted awards), 9,676,477 shares issued and outstanding at December 31, 2012 (including 154,186 shares of unvested participating restricted awards) and 9,605,243 shares issued and outstanding at June 30, 2012 (including 154,144 shares of unvested participating restricted awards) 99 97 96
Additional paid-in capital 50,479 48,194 46,600
Retained earnings 91,427 87,159 82,979
Accumulated other comprehensive income 1,988 4,099 3,622
Total stockholders' equity 143,993 139,549 133,297
Total liabilities and stockholders' equity $1,753,336 $1,665,726 $1,615,082
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) 2013 2012 2013 2012
Interest and dividend income:
Loans and loans held for sale $16,653 $16,228 $33,026 $32,186
Investment securities 794 835 1,604 1,634
Other interest-earning assets 11 24 21 43
Total interest and dividend income 17,458 17,087 34,651 33,863
Interest expense:
Deposits 996 1,368 2,030 2,905
Borrowed funds 40 13 86 29
Junior subordinated debentures 295 295 589 589
Total interest expense 1,331 1,676 2,705 3,523
Net interest income 16,127 15,411 31,946 30,340
Provision for loan losses 534 1,050 1,317 1,350
Net interest income after provision for loan losses 15,593 14,361 30,629 28,990
Non-interest income:
Investment advisory fees 1,045 934 2,061 1,955
Deposit and interchange fees 1,181 1,107 2,289 2,128
Income on bank-owned life insurance, net 119 128 235 262
Net gains on sales of investment securities 468 112 948 159
Gains on sales of loans 222 218 557 458
Other income 518 453 1,102 964
Total non-interest income 3,553 2,952 7,192 5,926
Non-interest expense:
Salaries and employee benefits 8,651 7,841 16,699 15,344
Occupancy and equipment expenses 1,488 1,430 3,059 2,844
Technology and telecommunications expenses 1,203 1,077 2,356 2,076
Advertising and public relations expenses 946 497 1,566 1,286
Audit, legal and other professional fees 411 487 825 970
Deposit insurance premiums 284 283 533 560
Supplies and postage expenses 250 196 487 427
Investment advisory and custodial expenses 134 112 260 209
Other operating expenses 1,094 1,049 2,130 2,074
Total non-interest expense 14,461 12,972 27,915 25,790
Income before income taxes 4,685 4,341 9,906 9,126
Provision for income taxes 1,606 1,436 3,394 3,048
Net income $3,079 $2,905 $6,512 $6,078
Basic earnings per share $0.31 $0.30 $0.67 $0.64
Diluted earnings per share $0.31 $0.30 $0.66 $0.63
Basic weighted average common shares outstanding 9,825,335 9,588,420 9,770,559 9,543,994
Diluted weighted average common shares outstanding 9,889,639 9,655,728 9,840,016 9,612,187
ENTERPRISE BANCORP, INC.
Selected Consolidated Financial Data and Ratios
(unaudited)
(Dollars in thousands, except per share data) At or for the six
months ended
June 30, 2013
At or for the
year ended
December 31, 2012
At or for the
six months ended
June 30, 2012
BALANCE SHEET AND OTHER DATA
Total assets $1,753,336 $1,665,726 $1,615,082
Loans serviced for others 75,418 75,854 69,886
Investment assets under management 613,166 592,355 552,274
Total assets under management $2,441,920 $2,333,935 $2,237,242
Book value per share $14.58 $14.42 $13.88
Dividends paid per common share $0.23 $0.44 $0.22
Total capital to risk weighted assets 11.28% 11.46% 11.44%
Tier 1 capital to risk weighted assets 9.96% 10.15% 10.15%
Tier 1 capital to average assets 8.62% 8.64% 8.65%
Allowance for loan losses to total loans 1.77% 1.78% 1.79%
Non-performing assets $21,707 $22,101 $25,946
Non-performing assets to total assets 1.24% 1.33% 1.61%
INCOME STATEMENT DATA (annualized)
Return on average total assets 0.78% 0.78% 0.80%
Return on average stockholders' equity 9.23% 9.27% 9.36%
Net interest margin (tax equivalent) 4.12% 4.27% 4.33%

CONTACT: Mary Ellen Fitzpatrick, Senior Vice President Corporate Communications (978) 656-5520

Source:Enterprise Bancorp, Inc.