Enterprise Bancorp, Inc. Announces First Quarter 2018 Net Income of $6.8 Million


LOWELL, Mass., April 19, 2018 (GLOBE NEWSWIRE) -- Enterprise Bancorp, Inc. (the "Company") (NASDAQ:EBTC), parent of Enterprise Bank, announced net income for the three months ended March 31, 2018 of $6.8 million, an increase of $1.3 million, or 22%, compared to the three months ended March 31, 2017.  Diluted earnings per share were $0.58 for the three months ended March 31, 2018, an increase of 21%, as compared to $0.48 for the three months ended March 31, 2017.

As previously announced on April 17, 2018, the Company declared a quarterly dividend of $0.145 per share to be paid on June 1, 2018 to shareholders of record as of May 11, 2018.  The 2018 dividend rate represents a 7.4% increase over the 2017 dividend rate.

Chief Executive Officer Jack Clancy commented, "The increase in our 2018 first quarter earnings as compared to 2017 is largely attributable to our growth over the last twelve months and the positive impact of lower tax rates in 2018 from the 2017 Tax Cuts and Jobs Act. Total assets, loans, and customer deposits have increased 10%, 11%, and 8%, respectively, as compared to March 31, 2017.  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."

Mr. Clancy added, "Strategically, our focus remains on organic growth and continually planning for and investing in our future.  We expect the relocation of our Leominster, MA branch to be completed later this spring.  This branch, along with our new Windham, NH branch and our recently relocated branch in Salem, NH, are in prime locations and will provide improved, state-of-the-art experiences in these communities to better serve our customers."

Founder and Chairman of the Board George Duncan commented, "This past quarter represents the start of our 30th year in business.  As we reflect on this incredible journey, we are profoundly grateful to our shareholders, customers and team members who have helped to turn our vision for a new kind of independent, innovative bank - one that would value the entrepreneurial spirit and stimulate the economy by helping to create new businesses, meaningful jobs, vibrant communities and a dynamic work environment for our team members - into our Enterprise Bank of today.”

Results of Operations

Net interest income for the three months ended March 31, 2018 amounted to $26.0 million, an increase of $3.2 million, or 14%, compared to the three months ended March 31, 2017.  The increase in net interest income was due primarily to loan growth.  Average loan balances (including loans held for sale) increased $226.3 million for the three months ended March 31, 2018, compared to the 2017 respective period average.  Net interest margin was 3.95% for the three months ended March 31, 2018, compared to 3.90% for the three months ended March 31, 2017.

For the three months ended March 31, 2018 and March 31, 2017, the provisions to the allowance for loan losses amounted to $1.6 million and $125 thousand, respectively. The 2018 provision was due primarily to an increase in specific reserves in the three months ended March 31, 2018.

The primary factor in the increase in the provision for loan losses compared to the prior year was an increase in the balance of the allowance for loan losses allocated to impaired and classified loans of $1.4 million for the three months ended March 31, 2018, compared to a decrease of $390 thousand during the three months ended March 31, 2017.  This increase in 2018 was primarily due to credit deterioration of two impaired commercial relationships for which management determined that the additional provisions were necessary, based on a review of their individual business circumstances.

Partially offsetting these additional reserves were generally stabilized credit quality metrics and underlying collateral values, and the level of loan growth, as indicated by the following factors:

  • The Company recorded net recoveries of $9 thousand for the three months ended March 31, 2018, compared to net recoveries of $216 thousand for the three months ended March 31, 2017.
     
  • Total non-performing loans as a percentage of total loans amounted to 0.46% at March 31, 2018, compared to 0.45% at March 31, 2017.
     
  • The ratio of adversely classified loans (substandard, doubtful, loss) to total loans amounted to 1.19% at March 31, 2018, compared to 1.55% at March 31, 2017.
     
  • Loan growth for the three months ended March 31, 2018 was $20.3 million, compared to $42.1 million during the three months ended March 31, 2017. 

The allowance for loan losses to total loans ratio was 1.51% at March 31, 2018, 1.45% at December 31, 2017 and 1.53% at March 31, 2017.

Non-interest income for the three months ended March 31, 2018 amounted to $3.8 million, a decrease of $343 thousand, or 8%, compared to the three months ended March 31, 2017.  This decrease compared to the prior year period was due primarily to decreases in net gains on sales of investment securities, partially offset by increases in investment advisory fees and deposit and interchange fees.

For the three months ended March 31, 2018, non-interest expense amounted to $19.4 million, which is relatively consistent with non-interest expense for the three months ended March 31, 2017.  The provision for income taxes amounted to $1.9 million for the three months ended March 31, 2018, an increase of $70 thousand, or 4%, compared to the three months ended March 31, 2017.  This increase was primarily due to lower tax benefits from equity compensation in the current year ($195 thousand for the three months ended March 31, 2018 compared to $667 thousand for the three months ended March 31, 2017) and higher taxable income levels, largely offset by the positive impact of the 2017 Tax Cuts and Jobs Act (the "2017 Tax Act").

Key Financial Highlights

  • Total assets amounted to $2.83 billion at March 31, 2018, compared to $2.82 billion at December 31, 2017, an increase of $17.4 million. 
     
  • Total loans amounted to $2.29 billion at March 31, 2018, compared to $2.27 billion at December 31, 2017, an increase of $20.3 million. 
     
  • Customer deposits (total deposits excluding brokered deposits) were $2.39 billion at March 31, 2018, compared to $2.29 billion at December 31, 2017, an increase of $92.0 million, or 4%.  Brokered deposits were $185.5 million at March 31, 2018 and $147.5 million at December 31, 2017.
     
  • Investment assets under management amounted to $846.9 million at March 31, 2018, compared to $845.0 million at December 31, 2017, an increase of $1.9 million. 
     
  • Total assets under management amounted to $3.77 billion at March 31, 2018, compared to $3.75 billion at December 31, 2017, an increase of $19.0 million. 

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 114 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 (Southern Hillsborough and Rockingham counties).  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 2017 Tax Act 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.

 
ENTERPRISE BANCORP, INC.
Consolidated Balance Sheets
(unaudited)
 
(Dollars in thousands) March 31,
 2018
 December 31,
 2017
 March 31,
 2017
Assets      
Cash and cash equivalents:      
Cash and due from banks $34,703  $40,310  $35,432 
Interest-earning deposits 22,175  14,496  18,858 
Total cash and cash equivalents 56,878  54,806  54,290 
Investment securities at fair value 412,508  405,206  376,212 
Federal Home Loan Bank stock 2,370  5,215  3,174 
Loans held for sale   208  752 
Loans, less allowance for loan losses of $34,524 at March 31, 2018, $32,915 at December 31, 2017, and $31,683 at March 31, 2017 2,255,649  2,236,989  2,033,168 
Premises and equipment, net 37,212  37,022  34,991 
Accrued interest receivable 11,210  10,614  9,282 
Deferred income taxes, net 12,858  10,751  16,387 
Bank-owned life insurance 29,634  29,466  28,941 
Prepaid income taxes   1,301  534 
Prepaid expenses and other assets 10,953  20,330  8,972 
Goodwill 5,656  5,656  5,656 
Total assets $2,834,928  $2,817,564  $2,572,359 
Liabilities and Stockholders’ Equity      
Liabilities      
Deposits $2,571,389  $2,441,362  $2,274,912 
Borrowed funds   89,000  46,671 
Subordinated debt 14,850  14,847  14,837 
Accrued expenses and other liabilities 16,400  40,067  15,885 
Income taxes payable 53     
Accrued interest payable 596  478  226 
Total liabilities 2,603,288  2,585,754  2,352,531 
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; 11,682,914 shares issued and outstanding at March 31, 2018, 11,609,853 shares issued and outstanding at December 31, 2017, and 11,566,722 shares issued and outstanding at March 31, 2017 117  116  116 
Additional paid-in capital 89,159  88,205  85,826 
Retained earnings 148,212  143,073  134,015 
Accumulated other comprehensive (loss) income (5,848) 416  (129)
Total stockholders’ equity 231,640  231,810  219,828 
Total liabilities and stockholders’ equity $2,834,928  $2,817,564  $2,572,359 
             


 
ENTERPRISE BANCORP, INC.
Consolidated Statements of Income
(unaudited)
 
 Three months ended
 March 31,
(Dollars in thousands, except per share data)2018 2017
Interest and dividend income:   
Loans and loans held for sale$26,150  $22,371 
Investment securities2,487  1,920 
Other interest-earning assets134  73 
Total interest and dividend income28,771  24,364 
Interest expense:   
Deposits2,236  1,228 
Borrowed funds292  61 
Subordinated debt228  228 
Total interest expense2,756  1,517 
Net interest income26,015  22,847 
Provision for loan losses1,600  125 
Net interest income after provision for loan losses24,415  22,722 
Non-interest income:   
Investment advisory fees1,408  1,225 
Deposit and interchange fees1,489  1,340 
Income on bank-owned life insurance, net168  176 
Net gains on sales of investment securities1  540 
Gains on sales of loans84  133 
Other income641  720 
Total non-interest income3,791  4,134 
Non-interest expense:   
Salaries and employee benefits12,108  12,692 
Occupancy and equipment expenses2,157  1,939 
Technology and telecommunications expenses1,553  1,582 
Advertising and public relations expenses720  619 
Audit, legal and other professional fees507  363 
Deposit insurance premiums500  383 
Supplies and postage expenses232  233 
Other operating expenses1,670  1,609 
Total non-interest expense19,447  19,420 
Income before income taxes8,759  7,436 
Provision for income taxes1,934  1,864 
Net income$6,825  $5,572 
    
Basic earnings per share$0.59  $0.48 
Diluted earnings per share$0.58  $0.48 
    
Basic weighted average common shares outstanding11,628,587  11,508,811 
Diluted weighted average common shares outstanding11,700,854  11,598,862 
      


 
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, 2018 December 31, 2017 March 31, 2017
       
BALANCE SHEET AND OTHER DATA      
Total assets $2,834,928  $2,817,564  $2,572,359 
Loans serviced for others 88,816  89,059  82,671 
Investment assets under management 846,853  844,977  747,469 
Total assets under management $3,770,597  $3,751,600  $3,402,499 
       
Book value per share $19.83  $19.97  $19.01 
Dividends paid per common share $0.145  $0.540  $0.135 
Total capital to risk weighted assets 11.48% 11.21% 11.86%
Tier 1 capital to risk weighted assets 9.62% 9.34% 9.87%
Tier 1 capital to average assets 8.24% 8.22% 8.40%
Common equity tier 1 capital to risk weighted assets 9.62% 9.34% 9.87%
Allowance for loan losses to total loans 1.51% 1.45% 1.53%
Non-performing assets $10,558  $9,032  $9,357 
Non-performing assets to total assets 0.37% 0.32% 0.36%
       
INCOME STATEMENT DATA (annualized)      
Return on average total assets 0.98% 0.73% 0.88%
Return on average stockholders’ equity 12.00% 8.58% 10.41%
Net interest margin (tax equivalent) 3.95% 3.97% 3.90%
          

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