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CST: 20/05/2019 19:55:10   

Enterprise Bancorp, Inc. Announces First Quarter 2019 Net Income of $8.7 Million

32 Days ago

LOWELL, Mass., April 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 March 31, 2019 of $8.7 million, an increase of $1.9 million, or 27%, compared to the three months ended March 31, 2018.  Diluted earnings per share were $0.74 for the three months ended March 31, 2019, an increase of 28%, compared to $0.58 for the three months ended March 31, 2018.

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

Chief Executive Officer Jack Clancy commented, "Over the past twelve months, total assets increased 8%, total loans increased 4% and customer deposits have increased 14% as compared to March 31, 2018.  The increase in customer deposits includes several relationships which had large short-term balance increases in the quarter.  Loan and deposit growth, along with a reduction in the loan loss provision due to improved credit metrics compared to the March 2018 quarter, were the key drivers to our earnings increase as compared to the first quarter of 2018."

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 renovations and market expansion."

Founder and Chairman of the Board George Duncan commented, "We are profoundly grateful for the trust and confidence placed in us by those who create our success—our shareholders, our customers, our team members, and the communities we are privileged to serve—and who embrace our mission as a genuine community bank to create a lasting and positive impact in our world.  All of us at Enterprise Bank have an overwhelming sense of pride and accomplishment in what we have achieved to date—a branch network consisting of 24 locations in 19 communities, assets in excess of $3 billion, assets under management in excess of $4 billion and 118 consecutive profitable quarters—and we are extremely excited about the opportunities that lie ahead."

Results of Operations

Net interest income for the three months ended March 31, 2019 amounted to $28.1 million, an increase of $2.1 million, or 8%, compared to the three months ended March 31, 2018.  The increase in net interest income was due largely to interest-earning asset growth, primarily in loans.  Average loan balances (including loans held for sale) increased $98.7 million for the three months ended March 31, 2019, compared to the same 2018 period average.  Tax equivalent net interest margin was 3.98% for the three months ended March 31, 2019, compared to 3.95% for the three months ended March 31, 2018.

For the three months ended March 31, 2019 there was a negative provision to the allowance for loan losses of $400 thousand, compared to a provision of $1.6 million for the three months ended March 31, 2018.  The primary factor in the decrease in the year-to-date provision for loan losses compared to the prior year was a reduction in the balance of the allowance for loan losses allocated to impaired, adversely classified, and criticized loans of $81 thousand for the three months ended March 31, 2019, compared to an increase of $1.4 million during the three months ended March 31, 2018.

Also affecting the provision for loan losses for the three months ended March 31, 2019 compared to the prior year were:

  • Net recoveries of $280 thousand for the three months ended March 31, 2019, compared to net recoveries of $9 thousand for the three months ended March 31, 2018.
     
  • Total non-performing loans as a percentage of total loans amounted to 0.46% at both March 31, 2019 and March 31, 2018.
     
  • The ratio of adversely classified loans ("substandard," "doubtful," "loss") to total loans amounted to 1.45% at March 31, 2019, compared to 1.19% at March 31, 2018.  However, the reserves allocated to these loans declined $472 thousand over the same period due to generally improved collateral values on impaired loans.
     
  • Loan growth for the three months ended March 31, 2019 was relatively flat, compared to loan growth of $20.3 million during the three months ended March 31, 2018.  The allowance for loan losses allocated to general reserves for non-classified loans declined $39 thousand for the three months ended March 31, 2019, compared to an increase of $233 thousand for the three months ended March 31, 2018.

The allowance for loan losses to total loans ratio was 1.41% at March 31, 2019, 1.42% at December 31, 2018 and 1.51% at March 31, 2018.

Non-interest income for the three months ended March 31, 2019 amounted to $3.8 million and was relatively flat compared to the three months ended March 31, 2018.  Increases in deposit and interchange fees and other income, primarily as a result of market value adjustment gains on equity securities, were partially offset by lower wealth management fees.

For the three months ended March 31, 2019, non-interest expense amounted to $20.9 million, an increase of $1.4 million, or 7%, compared to the three months ended March 31, 2018.  Increases in non-interest expense over the first quarter of 2018 primarily related to the Company's strategic growth, digital and market initiatives, particularly salaries and employee benefits expenses and technology and telecommunications expenses, partially offset by lower FDIC deposit insurance expenses in the first quarter of 2019.

Key Financial Highlights

  • Total assets amounted to $3.07 billion at March 31, 2019, compared to $2.96 billion at December 31, 2018, an increase of $109.4 million, or 4%.
     
  • Total loans amounted to $2.38 billion at March 31, 2019, compared to $2.39 billion at December 31, 2018, a decrease of $2.9 million, or 0.1%.
     
  • Customer deposits (total deposits excluding brokered deposits) were $2.73 billion at March 31, 2019, compared to $2.51 billion at December 31, 2018, an increase of $217.7 million, or 9%.
     
  • Investment assets under management amounted to $848.4 million at March 31, 2019, compared to $800.8 million at December 31, 2018, an increase of $47.7 million, or 6%.
     
  • Total assets under management amounted to $4.01 billion at March 31, 2019, compared to $3.85 billion at December 31, 2018, an increase of $158.1 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.  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.

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)   March 31,
 2019
  December 31,
 2018
  March 31,
 2018
Assets            
Cash and cash equivalents:            
Cash and due from banks   $ 35,715     $ 43,865     $ 34,703  
Interest-earning deposits   99,547     19,255     22,175  
Total cash and cash equivalents   135,262     63,120     56,878  
Investments:            
Debt securities at fair value   458,765     431,473     412,213  
Equity securities at fair value   2,049     1,448     295  
Total investment securities at fair value   460,814     432,921     412,508  
Federal Home Loan Bank stock   1,491     5,357     2,370  
Loans held for sale   332     701      
Loans, less allowance for loan losses of $33,729 at March 31, 2019, $33,849 at December 31, 2018, and $34,524 at March 31, 2018   2,350,908     2,353,657     2,255,649  
Premises and equipment, net   38,446     37,588     37,212  
Lease right-of-use asset   18,851          
Accrued interest receivable   12,619     11,462     11,210  
Deferred income taxes, net   10,632     11,747     12,858  
Bank-owned life insurance   30,300     30,138     29,634  
Prepaid income taxes       732      
Prepaid expenses and other assets   8,470     11,279     10,953  
Goodwill   5,656     5,656     5,656  
Total assets   $ 3,073,781     $ 2,964,358     $ 2,834,928  
Liabilities and Stockholders' Equity            
Liabilities            
Deposits:            
Customer deposits   $ 2,725,667     $ 2,507,999     $ 2,385,895  
Brokered deposits   30,499     56,783     185,494  
Total deposits   2,756,166     2,564,782     2,571,389  
Borrowed funds   488     100,492      
Subordinated debt   14,863     14,860     14,850  
Lease liability   17,871          
Accrued expenses and other liabilities   16,431     27,948     16,400  
Income taxes payable   809         53  
Accrued interest payable   1,092     979     596  
Total liabilities   2,807,720     2,709,061     2,603,288  
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; 11,798,114 shares issued and outstanding at March 31, 2019, 11,708,218 shares issued and outstanding at December 31, 2018, and 11,682,914 shares issued and outstanding at March 31, 2018   118     117     117  
Additional paid-in capital   92,089     91,281     89,159  
Retained earnings   172,004     165,183     148,212  
Accumulated other comprehensive income (loss)   1,850     (1,284 )   (5,848 )
Total stockholders' equity   266,061     255,297     231,640  
Total liabilities and stockholders' equity   $ 3,073,781     $ 2,964,358     $ 2,834,928  
                         

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

  Three months ended
  March 31,
(Dollars in thousands, except per share data) 2019   2018
Interest and dividend income:      
Loans and loans held for sale $ 29,616     $ 26,150  
Investment securities 3,222     2,487  
Other interest-earning assets 459     134  
Total interest and dividend income 33,297     28,771  
Interest expense:      
Deposits 4,706     2,236  
Borrowed funds 279     292  
Subordinated debt 228     228  
Total interest expense 5,213     2,756  
Net interest income 28,084     26,015  
Provision for loan losses (400 )   1,600  
Net interest income after provision for loan losses 28,484     24,415  
Non-interest income:      
Wealth management fees 1,299     1,408  
Deposit and interchange fees 1,564     1,489  
Income on bank-owned life insurance, net 162     168  
Net (losses) gains on sales of investment securities (1 )   1  
Gains on sales of loans 36     84  
Other income 776     641  
Total non-interest income 3,836     3,791  
Non-interest expense:      
Salaries and employee benefits 13,471     12,108  
Occupancy and equipment expenses 2,212     2,157  
Technology and telecommunications expenses 1,726     1,553  
Advertising and public relations expenses 715     720  
Audit, legal and other professional fees 423     507  
Deposit insurance premiums 351     500  
Supplies and postage expenses 224     232  
Other operating expenses 1,728     1,670  
Total non-interest expense 20,850     19,447  
Income before income taxes 11,470     8,759  
Provision for income taxes 2,774     1,934  
Net income $ 8,696     $ 6,825  
       
Basic earnings per share $ 0.74     $ 0.59  
Diluted earnings per share $ 0.74     $ 0.58  
       
Basic weighted average common shares outstanding 11,730,482     11,628,587  
Diluted weighted average common shares outstanding 11,783,405     11,700,854  
           

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

    At or for the
three months ended
  At or for the
year ended
  At or for the
three months ended
(Dollars in thousands, except per share data)   March 31, 2019   December 31, 2018   March 31, 2018
             
BALANCE SHEET AND OTHER DATA            
Total assets   $ 3,073,781     $ 2,964,358     $ 2,834,928  
Loans serviced for others   90,200     89,232     88,816  
Investment assets under management   848,412     800,751     846,853  
Total assets under management   $ 4,012,393     $ 3,854,341     $ 3,770,597  
             
Book value per share   $ 22.55     $ 21.80     $ 19.83  
Dividends paid per common share   $ 0.16     $ 0.58     $ 0.145  
Total capital to risk weighted assets   11.89 %   11.77 %   11.48 %
Tier 1 capital to risk weighted assets   10.06 %   9.93 %   9.62 %
Tier 1 capital to average assets   8.57 %   8.56 %   8.24 %
Common equity tier 1 capital to risk weighted assets   10.06 %   9.93 %   9.62 %
Allowance for loan losses to total loans   1.41 %   1.42 %   1.51 %
Non-performing assets   $ 11,304     $ 11,784     $ 10,558  
Non-performing assets to total assets   0.37 %   0.40 %   0.37 %
             
INCOME STATEMENT DATA (annualized)            
Return on average total assets   1.17 %   1.00 %   0.98 %
Return on average stockholders' equity   13.59 %   12.15 %   12.00 %
Net interest margin (tax equivalent)(1)   3.98 %   3.97 %   3.95 %
                   

(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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