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CST: 19/08/2019 05:29:03   

Enterprise Bancorp, Inc. Announces Second Quarter 2019 Net Income of $7.8 Million   

31 Days ago

LOWELL, Mass., July 18, 2019 (GLOBE NEWSWIRE) -- Enterprise Bancorp, Inc. (the "Company" or "Enterprise") (NASDAQ: EBTC), parent of Enterprise Bank, announced net income for the three months ended June 30, 2019 of $7.8 million, an increase of $189 thousand, or 2%, compared to the three months ended June 30, 2018. Diluted earnings per share were $0.66 for the three months ended June 30, 2019, an increase of 3%, compared to $0.64 for the three months ended June 30, 2018.  Net income for the six months ended June 30, 2019 amounted to $16.5 million, an increase of $2.1 million, or 14%, compared to the six months ended June 30, 2018.  Diluted earnings per share were $1.39 for the six months ended June 30, 2019, an increase of 13%, compared to $1.23 for the six months ended June 30, 2018.

As previously announced on July 16, 2019, the Company declared a quarterly dividend of $0.16 per share to be paid on September 3, 2019 to shareholders of record as of August 13, 2019.

Chief Executive Officer Jack Clancy commented, "Over the past twelve months, total assets, total loans, and customer deposits increased by 8%, 5%, and 14%, respectively, compared to June 30, 2018.  The increase in customer deposits includes several relationships which, as of June 30, 2019, had large short-term balances.  Loan and deposit growth, along with a reduction in the loan loss provision due to improved credit metrics compared to the six months ended June 30, 2018, were the key drivers to our earnings increase as compared to the same prior year-to-date period."

Mr. Clancy added, "The collective efforts and contributions of our dedicated Enterprise team, including active community involvement, relationship building, a customer-focused mindset, and ongoing enhancements to our leading-edge product and service offerings, continue to drive our growth.  This includes operating from a sense of purpose to serve our fellow team members, customers and communities.  Our top priority and focus has been, and always will be, ongoing investment in our greatest asset: our people.  We also remain focused on organic growth and continually planning for and investing in our future with an emphasis on people, technology, digital transformation, branch transformation and consistent market expansion."

As announced in early June, Lexington, Massachusetts will be the site of a new branch; our twenty-fifth branch, which will be located at 76 Bedford Street, and is expected to open in late fall. Founder and Chairman of the Board George Duncan commented, "We are delighted to be establishing a presence in Lexington, a community rich in history and vibrant in culture that is home to a significant base of our customers.  Lexington is a natural next step in the organic growth of our branch network that, coupled with our commitment to community and active civic engagement, has been integral to Enterprise Bank's success.  We look forward to contributing to the success of our Lexington customers and the Lexington community."

Results of Operations

Net interest income for the three months ended June 30, 2019 amounted to $28.8 million, an increase of $1.6 million, or 6%, compared to the same period in 2018.  Net interest income for the six months ended June 30, 2019 amounted to $56.9 million, an increase of $3.6 million, or 7%, compared to the six months ended June 30, 2018.  The increase in net interest income was due largely to interest-earning asset growth, primarily in loans.  Average loan balances increased $99.8 million for the three months ended June 30, 2019 and $99.3 million for the six months ended June 30, 2019, compared to the same respective 2018 period averages.  Tax equivalent net interest margin ("Margin") was 3.96% for the three months ended June 30, 2019, compared to 4.03% for the three months ended June 30, 2018.  Margin was 3.97% for the six months ended June 30, 2019, compared to 3.99% for the six months ended June 30, 2018.

For the three months ended June 30, 2019, the provision to the allowance for loan losses amounted to $955 thousand, compared to $300 thousand during the three months ended June 30, 2018.  The increase in the provision in the second quarter of 2019 was due to the higher levels of: loan growth; reserves necessary for credit impaired and classified commercial relationships; and net charge-offs compared to the same three month period in 2018.

For the six months ended June 30, 2019, the provision to the allowance for loan losses was $555 thousand, compared to the provision of $1.9 million for the six months ended June 30, 2018.  The decrease compared to the prior year was due primarily to generally improved credit metrics compared to the prior year period.  The 2018 period was impacted by credit deterioration of several impaired and classified commercial relationships and the level of loan growth, primarily during the first quarter of that period.

Affecting the provision for loan losses for three and six month periods ended June 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 June 30, 2019, compared to 2.54% at June 30, 2018.

  • Loan growth for the six months ended June 30, 2019 was $26.6 million (predominantly in the second quarter of 2019), compared to $28.7 million during the six months ended June 30, 2018 (the majority in the  first quarter of 2018).

  • Net charge-offs were $333 thousand for the three months ended June 30, 2019, compared to net charge-offs of $27 thousand for the three months ended June 30, 2018.

  • Net charge-offs were $53 thousand for the six months ended June 30, 2019, compared to net charge-offs of $18 thousand for the six months ended June 30, 2018.

  • After foreclosure proceedings in 2019, one previously classified commercial loan relationship was transferred to Other Real Estate Owned with a net carry value of $255 thousand as of June 30, 2019.  The Company carried no OREO during 2018.

The allowance for loan losses to total loans ratio was 1.42% at both June 30, 2019 and December 31, 2018.  At June 30, 2018, the ratio was 1.51%.

Non-interest income for the three months ended June 30, 2019 amounted to $4.0 million, an increase of $307 thousand, or 8%, compared to the three months ended June 30, 2018.  Non-interest income for the six months ended June 30, 2019 amounted to $7.9 million, an increase of $352 thousand, or 5%, compared to the six months ended June 30, 2018.  Non-interest income increased in 2019 primarily due to increases in deposit and interchange fees, net gains on sales of investments, and 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 June 30, 2019 amounted to $21.8 million, an increase of $945 thousand, or 5%, compared to the three months ended June 30, 2018.  For the six months ended June 30, 2019, non-interest expense amounted to $42.6 million, an increase of $2.3 million, or 6%, compared to the six months ended June 30, 2018.  Increases in non-interest expense in 2019 primarily related to the Company's strategic growth initiatives, particularly salaries and employee benefits expenses.

Key Financial Highlights

  • Total assets amounted to $3.17 billion at June 30, 2019, compared to $2.96 billion at December 31, 2018, an increase of $203.2 million, or 7%.  Since March 31, 2019, total assets have increased $93.7 million, or 3%.
     
  • Total loans amounted to $2.41 billion at June 30, 2019, compared to $2.39 billion at December 31, 2018, an increase of $26.6 million, or 1%.  Since March 31, 2019, total loans have increased $29.5 million, or 1%.
     
  • Customer deposits were $2.83 billion at June 30, 2019, compared to $2.51 billion at December 31, 2018, an increase of $322.1 million, or 13%.  Since March 31, 2019, customer deposits have increased $104.5 million, or 4%.  The Company did not have any brokered deposits at June 30, 2019.
     
  • Investment assets under management amounted to $857.2 million at June 30, 2019, compared to $800.8 million at December 31, 2018, an increase of $56.4 million, or 7%.  Since March 31, 2019, investment assets under management have increased $8.8 million, or 1%.
     
  • Total assets under management amounted to $4.11 billion at June 30, 2019, compared to $3.85 billion at December 31, 2018, an increase of $257.0 million, or 7%.  Since March 31, 2019, total assets under management have increased $99.0 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 119 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 obtaining regulatory approvals to establish a branch office in Lexington, Massachusetts and anticipates that the office will open in the fall of 2019.

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.  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)   June 30,
 2019
  December 31,
 2018
  June 30,
 2018
Assets            
Cash and cash equivalents:            
Cash and due from banks   $ 46,918     $ 43,865     $ 41,172  
Interest-earning deposits   139,961     19,255     97,161  
 Total cash and cash equivalents   186,879     63,120     138,333  
Investments:            
Debt securities at fair value   465,944     431,473     421,225  
Equity securities at fair value   2,428     1,448     949  
 Total investment securities at fair value   468,372     432,921     422,174  
Federal Home Loan Bank stock   1,576     5,357     2,618  
Loans held for sale   1,376     701     657  
Loans, less allowance for loan losses of $34,351 at June 30, 2019, $33,849 at December 31, 2018, and $34,797 at June 30, 2018   2,379,751     2,353,657     2,263,798  
Premises and equipment, net   39,575     37,588     37,999  
Lease right-of-use asset   19,339          
Accrued interest receivable   12,236     11,462     10,955  
Deferred income taxes, net   8,711     11,747     13,223  
Bank-owned life insurance   30,462     30,138     29,804  
Prepaid income taxes   1,143     732     1,350  
Prepaid expenses and other assets   12,442     11,279     7,396  
Goodwill   5,656     5,656     5,656  
 Total assets   $ 3,167,518     $ 2,964,358     $ 2,933,963  
Liabilities and Stockholders' Equity            
Liabilities            
Deposits:            
Customer deposits   $ 2,830,148     $ 2,507,999     $ 2,481,554  
Brokered deposits       56,783     178,800  
 Total deposits   2,830,148     2,564,782     2,660,354  
Borrowed funds   484     100,492     501  
Subordinated debt   14,866     14,860     14,853  
Lease liability   18,382          
Accrued expenses and other liabilities   22,049     27,948     19,901  
Accrued interest payable   962     979     777  
 Total liabilities   2,886,891     2,709,061     2,696,386  
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; 11,806,008 shares issued and outstanding at June 30, 2019, 11,708,218 shares issued and outstanding at December 31, 2018, and 11,696,204 shares issued and outstanding at June 30, 2018   118     117     117  
Additional paid-in capital   92,767     91,281     90,019  
Retained earnings   177,880     165,183     154,094  
Accumulated other comprehensive income (loss)   9,862     (1,284 )   (6,653 )
Total stockholders' equity   280,627     255,297     237,577  
   Total liabilities and stockholders' equity   $ 3,167,518     $ 2,964,358     $ 2,933,963  
 


ENTERPRISE BANCORP, INC.
Consolidated Statements of Income
(unaudited)

  Three months ended   Six months ended
  June 30,   June 30,
(Dollars in thousands, except per share data) 2019   2018   2019   2018
Interest and dividend income:              
Loans and loans held for sale $ 30,419     $ 27,527     $ 60,035     $ 53,677  
Investment securities 3,285     2,606     6,507     5,093  
Other interest-earning assets 597     187     1,056     321  
Total interest and dividend income 34,301     30,320     67,598     59,091  
Interest expense:              
Deposits 5,292     2,837     9,998     5,073  
Borrowed funds     34     279     326  
Subordinated debt 231     231     459     459  
Total interest expense 5,523     3,102     10,736     5,858  
 Net interest income 28,778     27,218     56,862     53,233  
Provision for loan losses 955     300     555     1,900  
 Net interest income after provision for loan losses 27,823     26,918     56,307     51,333  
Non-interest income:              
Wealth management fees 1,371     1,418     2,670     2,826  
Deposit and interchange fees 1,687     1,567     3,251     3,056  
Income on bank-owned life insurance, net 162     170     324     338  
Net gains on sales of investment securities 147         146     1  
Gains on sales of loans 69     48     105     132  
Other income 604     530     1,380     1,171  
Total non-interest income 4,040     3,733     7,876     7,524  
Non-interest expense:              
Salaries and employee benefits 14,041     13,267     27,512     25,375  
Occupancy and equipment expenses 2,096     2,037     4,308     4,194  
Technology and telecommunications expenses 1,701     1,639     3,427     3,192  
Advertising and public relations expenses 870     1,112     1,585     1,832  
Audit, legal and other professional fees 438     419     861     926  
Deposit insurance premiums 366     346     717     846  
Supplies and postage expenses 262     266     486     498  
Other operating expenses 1,979     1,722     3,707     3,392  
Total non-interest expense 21,753     20,808     42,603     40,255  
Income before income taxes 10,110     9,843     21,580     18,602  
Provision for income taxes 2,347     2,269     5,121     4,203  
 Net income $ 7,763     $ 7,574     $ 16,459     $ 14,399  
               
Basic earnings per share $ 0.66     $ 0.65     $ 1.40     $ 1.24  
Diluted earnings per share $ 0.66     $ 0.64     $ 1.39     $ 1.23  
               
Basic weighted average common shares outstanding 11,798,942     11,687,182     11,764,901     11,658,046  
Diluted weighted average common shares outstanding 11,834,507     11,764,411     11,808,833     11,733,391  
                       


ENTERPRISE BANCORP, INC.
Selected Consolidated Financial Data and Ratios
(unaudited)

    At or for the
six months ended

  At or for the
year ended
  At or for the
six months ended

(Dollars in thousands, except per share data)   June 30, 2019   December 31, 2018   June 30, 2018
             
BALANCE SHEET AND OTHER DATA            
Total assets   $ 3,167,518     $ 2,964,358     $ 2,933,963  
Loans serviced for others   86,677     89,232     92,465  
Investment assets under management   857,187     800,751     848,181  
Total assets under management   $ 4,111,382     $ 3,854,341     $ 3,874,609  
             
Book value per share   $ 23.77     $ 21.80     $ 20.31  
Dividends paid per common share   $ 0.32     $ 0.58     $ 0.29  
Total capital to risk weighted assets   12.02 %   11.77 %   11.66 %
Tier 1 capital to risk weighted assets   10.20 %   9.93 %   9.80 %
Tier 1 capital to average assets   8.61 %   8.56 %   8.35 %
Common equity tier 1 capital to risk weighted assets   10.20 %   9.93 %   9.80 %
Allowance for loan losses to total loans   1.42 %   1.42 %   1.51 %
Non-performing assets   $ 12,233     $ 11,784     $ 11,077  
Non-performing assets to total assets   0.39 %   0.40 %   0.38 %
             
INCOME STATEMENT DATA (annualized)            
Return on average total assets   1.09 %   1.00 %   1.02 %
Return on average stockholders' equity   12.50 %   12.15 %   12.51 %
Net interest margin (tax equivalent)(1)   3.97 %   3.97 %   3.99 %

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

 

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