Contact Info: James A. Marcotte, Executive Vice President, Chief Financial Officer and Treasurer (978) 656-5614
Enterprise Bancorp, Inc. Announces Third Quarter 2016 Net Income of $4.7 Million, Quarterly Loan and Deposit Growth of $87 Million and $52 Million, Respectively
LOWELL, Mass., October 20, 2016 (GLOBE NEWSWIRE) - Enterprise Bancorp, Inc. (the “Company”) (NASDAQ: EBTC), parent of Enterprise Bank, announced net income for the three months ended September 30, 2016 amounted to $4.7 million, an increase of $422 thousand, or 10%, compared to the same three-month period in 2015. Diluted earnings per share were $0.41 for both the three months ended September 30, 2016 and 2015. Net income for the nine months ended September 30, 2016 amounted to $13.8 million, an increase of $2.4 million, or 21%, compared to the nine months ended September 30, 2015. Diluted earnings per share were $1.27 for the nine months ended September 30, 2016, an increase of 15%, compared to the nine months ended September 30, 2015. In 2016, diluted earnings per share for the quarter fully includes the dilution impact of the Company’s recent equity offering and the nine months ended September 30, 2016 includes the dilutive effect from June 23th to September 30th.
As previously announced on October 18, 2016, the Company declared a quarterly dividend of $0.13 per share to be paid on December 1, 2016 to shareholders of record as of November 10, 2016. The 2016 dividend rate represents a 4.0% increase over the 2015 dividend rate.
Chief Executive Officer Jack Clancy commented, “The increase in our 2016 earnings compared to 2015 is largely driven by our growth over the last twelve months. Loans, total assets, and deposits, excluding brokered deposits, have increased 11%, 13%, and 17%, respectively, as compared to September 30, 2015. This growth continues to be driven by the collective efforts and contributions of our dedicated Enterprise team, active community involvement, relationship building and a customer-focused mindset, market expansion, and ongoing enhancements to our state-of-the-art product and service offerings.”
Founder and Chairman of the Board George Duncan commented, “This quarter represents our 108th consecutive profitable quarter. The consistency of our profitability and our organic-focused growth have allowed us to think and plan long-term which has truly benefited our shareholders, customers, employees and the communities in which we operate. Strategically, our focus remains on organic growth and continually planning for and investing in our future. Our well-appointed 23rd branch, on Route 101A in Nashua, NH, which opened in early July has been well received. We are also very pleased to have recently announced that we anticipate opening our 24th branch office in Windham, NH in 2017, which will fill a gap in our New Hampshire footprint.”
Results of Operations
Net interest income for the three months ended September 30, 2016 amounted to $21.8 million, an increase of $1.9 million, or 9%, compared to the same period in 2015. Net interest income for the nine months ended September 30, 2016 amounted to $64.2 million, an increase of $6.6 million, or 11%, compared to the nine months ended September 30, 2015. The increase in net interest income was due primarily to loan growth. Average loan balances (including loans held for sale) increased $185.6 million and $181.8 million for the three and nine months ended September 30, 2016, respectively, compared to the same 2015 period averages. Net interest margin was 3.86% for the three months ended September 30, 2016 compared to 3.98% for the three months ended September 30, 2015. The third quarter of 2016 was impacted by higher balances in low-yielding interest-earning assets from short-term customer deposits. Net interest margin was 3.96% for the nine months ended September 30, 2016, compared to 3.97% for the nine months ended September 30, 2015.
For the three months ended September 30, 2016 and September 30, 2015, the provision for loan losses amounted to $1.4 million and $250 thousand, respectively. For the nine months ended September 30, 2016 and September 30, 2015, the provision for loan losses amounted to $2.5 million and $2.1 million, respectively.
In determining the provision to the allowance for loan losses, management takes into consideration the level of loan growth (including new loan growth which requires a provision for general reserves) 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. Loan growth for the nine months ended September 30, 2016 was $125.9 million compared to $118.0 million during the nine months ended September 30, 2015. Loan growth in 2016 was particularly strong in the third quarter compared to the same quarter in 2015. Total non-performing loans as a percentage of total loans declined to 0.50% at September 30, 2016, compared to 0.81% at September 30, 2015. The Company recorded net recoveries of $78 thousand for the nine months ended September 30, 2016, compared to net charge-offs of $1.1 million for the nine months ended September 30, 2015. The balance of the allowance for loan losses allocated to impaired and classified loans amounted to $4.1 million at September 30, 2016, compared to $3.2 million at September 30, 2015. This increase was due primarily to the credit rating downgrade of three larger commercial relationships to "criticized" or "adverse" risk ratings, based on a review of their individual business circumstances, requiring higher levels of reserves in the current period, which increased the provision and the allowance to total loan ratio compared to December 31, 2015; however, these loans continue to perform in accordance with their original terms.
The allowance for loan losses to total loans ratio was 1.59% at September 30, 2016, 1.56% at December 31, 2015 and 1.57% at September 30, 2015. In general, the credit quality of the loan portfolio is improving, in part due to improved economic conditions over the past twelve months; however, individual loan downgrades, such as those noted above, which will occur due to individual business circumstances, slightly increased the ratio.
Non-interest income for the three months ended September 30, 2016 amounted to $3.9 million, an increase of $764 thousand, or 24%, compared to the same quarter last year. This increase was primarily due to an increase in net gains on the sales of investment securities. Non-interest income for the nine months ended September 30, 2016 amounted to $10.7 million, a decrease of $151 thousand, or 1%, compared to the nine months ended September 30, 2015. This decrease was due primarily to a decrease in net gains on the sales of investment securities, partially offset by increases in deposit and interchange fees and income on bank-owned life insurance.
Non-interest expense for the quarter ended September 30, 2016 amounted to $17.4 million, an increase of $866 thousand, or 5%, compared to the same quarter in the prior year. For the nine months ended September 30, 2016, non-interest expense amounted to $51.8 million, an increase of $2.8 million, or 6%, over the nine months ended September 30, 2015. Increases in expenses over the prior year primarily related to increases in the Company’s strategic growth and market expansion initiatives, particularly salaries and benefits and technology expenses.
Key Financial Highlights
| |
| ▪ | Total assets amounted to $2.47 billion at September 30, 2016, compared to $2.29 billion at December 31, 2015, an increase of $185.3 million, or 8%. Since June 30, 2016, total assets have increased $37.8 million, or 2%. |
| |
| ▪ | Total loans amounted to $1.99 billion at September 30, 2016 compared to $1.86 billion at December 31, 2015, an increase of $125.9 million, or 7%. Since June 30, 2016, total loans have increased $86.7 million, or 5%. |
| |
| ▪ | Total deposits, excluding brokered deposits, were $2.16 billion at September 30, 2016, compared to $1.91 billion at December 31, 2015, an increase of $250.9 million, or 13%. Since June 30, 2016, total deposits, excluding brokered deposits, have increased $52.2 million, or 2%. Brokered deposits were $59.3 million at September 30, 2016, compared to $74.3 million and $106.8 million at June 30, 2016 and at December 31, 2015, respectively. |
| |
| ▪ | Investment assets under management amounted to $709.8 million at September 30, 2016, compared to $678.4 million at December 31, 2015, an increase of $31.4 million, or 5%. Since June 30, 2016, investment assets under management have increased $25.9 million, or 4%. |
| |
| ▪ | Total assets under management amounted to $3.26 billion at September 30, 2016, compared to $3.04 billion at December 31, 2015, an increase of $226.3 million, or 7%. Since June 30, 2016, total assets under management have increased $66.9 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. 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 and consumer loan products, and deposit and cash management services. The Company also offers 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. Enterprise Bank has 23 full-service branch offices 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 and Salem. The Company is also in the process of obtaining regulatory approvals to establish a branch office in Windham, NH and anticipates that the office will open in 2017.
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 reference 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, and the receipt of required regulatory approvals. 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 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, except as required by applicable law.
ENTERPRISE BANCORP, INC.
Consolidated Balance Sheets
(unaudited)
|
| | | | | | | | | | | | |
| (Dollars in thousands) | | September 30,
2016 | | December 31,
2015 | | September 30,
2015 |
| Assets | | |
| | |
| | |
| Cash and cash equivalents: | | |
| | |
| | |
| Cash and due from banks | | $ | 34,337 |
| | $ | 32,318 |
| | $ | 35,093 |
|
| Interest-earning deposits | | 27,823 |
| | 19,177 |
| | 20,693 |
|
| Total cash and cash equivalents | | 62,160 |
| | 51,495 |
| | 55,786 |
|
| Investment securities at fair value | | 349,064 |
| | 300,358 |
| | 281,027 |
|
| Federal Home Loan Bank stock | | 1,884 |
| | 3,050 |
| | 4,239 |
|
| Loans held for sale | | 2,171 |
| | 1,709 |
| | 1,325 |
|
| Loans, less allowance for loan losses of $31,589 at September 30, 2016, $29,008 at December 31, 2015 and $28,130 at September 30, 2015 | | 1,954,265 |
| | 1,830,954 |
| | 1,762,478 |
|
| Premises and equipment, net | | 33,861 |
| | 30,553 |
| | 30,153 |
|
| Accrued interest receivable | | 8,467 |
| | 7,790 |
| | 7,734 |
|
| Deferred income taxes, net | | 13,405 |
| | 14,111 |
| | 13,684 |
|
| Bank-owned life insurance | | 28,582 |
| | 28,018 |
| | 28,063 |
|
| Prepaid income taxes | | 57 |
| | 57 |
| | — |
|
| Prepaid expenses and other assets | | 11,277 |
| | 11,780 |
| | 5,169 |
|
| Goodwill | | 5,656 |
| | 5,656 |
| | 5,656 |
|
| Total assets | | $ | 2,470,849 |
| | $ | 2,285,531 |
| | $ | 2,195,314 |
|
| Liabilities and Stockholders’ Equity | | | | | | |
| Liabilities | | | | | | |
| Deposits | | $ | 2,221,609 |
| | $ | 2,018,148 |
| | $ | 1,963,615 |
|
| Borrowed funds | | 671 |
| | 53,671 |
| | 24,171 |
|
| Subordinated debt | | 14,831 |
| | 14,822 |
| | 14,819 |
|
| Accrued expenses and other liabilities | | 17,504 |
| | 18,287 |
| | 15,440 |
|
| Income taxes payable | | — |
| | — |
| | 313 |
|
| Accrued interest payable | | 194 |
| | 276 |
| | 252 |
|
| Total liabilities | | 2,254,809 |
| | 2,105,204 |
| | 2,018,610 |
|
| 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; 11,448,502 shares issued and outstanding at September 30, 2016 (including 142,162 shares of unvested participating restricted awards), 10,377,787 shares issued and outstanding at December 31, 2015 (including 144,717 shares of unvested participating restricted awards) and 10,359,395 shares issued and outstanding at September 30, 2015 (including 145,762 shares of unvested participating restricted awards) | | 114 |
| | 104 |
| | 104 |
|
| Additional paid-in capital | | 83,394 |
| | 61,008 |
| | 60,042 |
|
| Retained earnings | | 126,543 |
| | 116,941 |
| | 113,515 |
|
| Accumulated other comprehensive income | | 5,989 |
| | 2,274 |
| | 3,043 |
|
| Total stockholders’ equity | | 216,040 |
| | 180,327 |
| | 176,704 |
|
| Total liabilities and stockholders’ equity | | $ | 2,470,849 |
| | $ | 2,285,531 |
| | $ | 2,195,314 |
|
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) | 2016 | | 2015 | | 2016 | | 2015 |
| Interest and dividend income: | | | | | | | |
| Loans and loans held for sale | $ | 21,466 |
| | $ | 19,785 |
| | $ | 63,379 |
| | $ | 57,538 |
|
| Investment securities | 1,629 |
| | 1,377 |
| | 4,720 |
| | 3,825 |
|
| Other interest-earning assets | 96 |
| | 62 |
| | 189 |
| | 137 |
|
| Total interest and dividend income | 23,191 |
| | 21,224 |
| | 68,288 |
| | 61,500 |
|
| Interest expense: | |
| | |
| | |
| | |
|
| Deposits | 1,138 |
| | 1,022 |
| | 3,325 |
| | 3,033 |
|
| Borrowed funds | 2 |
| | 10 |
| | 79 |
| | 32 |
|
| Subordinated debt | 234 |
| | 232 |
| | 695 |
| | 837 |
|
| Total interest expense | 1,374 |
| | 1,264 |
| | 4,099 |
| | 3,902 |
|
| Net interest income | 21,817 |
| | 19,960 |
| | 64,189 |
| | 57,598 |
|
| Provision for loan losses | 1,386 |
| | 250 |
| | 2,503 |
| | 2,100 |
|
| Net interest income after provision for loan losses | 20,431 |
| | 19,710 |
| | 61,686 |
| | 55,498 |
|
| Non-interest income: | | | |
| | |
| | |
|
| Investment advisory fees | 1,162 |
| | 1,182 |
| | 3,593 |
| | 3,568 |
|
| Deposit and interchange fees | 1,272 |
| | 1,207 |
| | 3,790 |
| | 3,575 |
|
| Income on bank-owned life insurance, net | 182 |
| | 157 |
| | 564 |
| | 358 |
|
| Net gains on sales of investment securities | 546 |
| | 7 |
| | 611 |
| | 1,363 |
|
| Gains on sales of loans | 198 |
| | 89 |
| | 392 |
| | 373 |
|
| Other income | 588 |
| | 542 |
| | 1,786 |
| | 1,650 |
|
| Total non-interest income | 3,948 |
| | 3,184 |
| | 10,736 |
| | 10,887 |
|
| Non-interest expense: | | | | | | | |
| Salaries and employee benefits | 10,948 |
| | 10,255 |
| | 32,458 |
| | 29,934 |
|
| Occupancy and equipment expenses | 1,859 |
| | 1,775 |
| | 5,453 |
| | 5,484 |
|
| Technology and telecommunications expenses | 1,577 |
| | 1,428 |
| | 4,548 |
| | 4,223 |
|
| Advertising and public relations expenses | 591 |
| | 641 |
| | 2,087 |
| | 2,180 |
|
| Audit, legal and other professional fees | 446 |
| | 564 |
| | 1,342 |
| | 1,305 |
|
| Deposit insurance premiums | 347 |
| | 299 |
| | 997 |
| | 889 |
|
| Supplies and postage expenses | 241 |
| | 226 |
| | 728 |
| | 736 |
|
| Investment advisory and custodial expenses | 107 |
| | 102 |
| | 283 |
| | 237 |
|
| Other operating expenses | 1,298 |
| | 1,258 |
| | 3,929 |
| | 4,037 |
|
| Total non-interest expense | 17,414 |
| | 16,548 |
| | 51,825 |
| | 49,025 |
|
| Income before income taxes | 6,965 |
| | 6,346 |
| | 20,597 |
| | 17,360 |
|
| Provision for income taxes | 2,251 |
| | 2,054 |
| | 6,799 |
| | 5,933 |
|
| Net income | $ | 4,714 |
| | $ | 4,292 |
| | $ | 13,798 |
| | $ | 11,427 |
|
| | | |
|
| | | | |
| Basic earnings per share | $ | 0.41 |
| | $ | 0.41 |
| | $ | 1.28 |
| | $ | 1.11 |
|
| Diluted earnings per share | $ | 0.41 |
| | $ | 0.41 |
| | $ | 1.27 |
| | $ | 1.10 |
|
| | | | | | | | |
| Basic weighted average common shares outstanding | 11,430,134 |
| | 10,349,232 |
| | 10,801,278 |
| | 10,308,310 |
|
| Diluted weighted average common shares outstanding | 11,498,990 |
| | 10,414,254 |
| | 10,869,405 |
| | 10,373,464 |
|
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, 2016 | | At or for the
year ended
December 31, 2015 | | At or for the
nine months ended September 30, 2015 | |
| | | | | | | | |
| BALANCE SHEET AND OTHER DATA | | |
| | |
| | |
| |
| Total assets | | $ | 2,470,849 |
| | $ | 2,285,531 |
| | $ | 2,195,314 |
| |
| Loans serviced for others | | 80,836 |
| | 71,272 |
| | 68,891 |
| |
| Investment assets under management | | 709,781 |
| | 678,377 |
| | 672,076 |
| |
| Total assets under management | | $ | 3,261,466 |
| | $ | 3,035,180 |
| | $ | 2,936,281 |
| |
| | | | | | | | |
| Book value per share | | $ | 18.87 |
| | $ | 17.38 |
| | $ | 17.06 |
| |
| Dividends paid per common share | | $ | 0.390 |
| | $ | 0.500 |
| | $ | 0.375 |
| |
| Total capital to risk weighted assets | | 11.74 | % | | 10.70 | % | | 10.88 | % | |
| Tier 1 capital to risk weighted assets | | 9.74 | % | | 8.66 | % | | 8.81 | % | |
| Tier 1 capital to average assets | | 8.41 | % | | 7.73 | % | | 7.85 | % | |
| Common equity tier 1 capital to risk weighted assets | | 9.74 | % | | 8.66 | % | | 8.81 | % | |
| Allowance for loan losses to total loans | | 1.59 | % | | 1.56 | % | | 1.57 | % | |
| Non-performing assets | | $ | 9,888 |
| | $ | 13,845 |
| | $ | 14,452 |
| |
| Non-performing assets to total assets | | 0.40 | % | | 0.61 | % | | 0.66 | % | |
| | | | | | | | |
| INCOME STATEMENT DATA (annualized) | | | | | | | |
| Return on average total assets | | 0.79 | % | | 0.76 | % | | 0.73 | % | |
| Return on average stockholders’ equity | | 9.39 | % | | 9.29 | % | | 8.88 | % | |
| Net interest margin (tax equivalent) | | 3.96 | % | | 3.97 | % | | 3.97 | % | |
