Exhibit 99
Dear Shareholder:
Enterprise Bancorp, Inc. reported net income for the quarter ended March 31, 2005 of $1.851 million, compared to $1.715 million for the quarter ended March 31, 2004, an increase of 8%.
The first quarter of 2005 results benefited from an increase in net interest income, which was partially offset by a reduction in non-interest income and an increase in non-interest expenses. The increase in net interest income was due to growth in interest earning assets and an increase in the net interest margin, due to the recent increases in market interest rates. Non-interest income declined primarily due to the higher level of gains realized on the sales of investment securities in the prior period, and a reduction in deposit-servicing fee income in 2005, mainly due to higher earnings credit rates paid on business checking accounts. The increase in non-interest expenses reflects the company’s continued growth and strategic initiatives, including our 2004 branch expansion into the new markets of Andover, MA and Salem, New Hampshire. The 2004 period also reflects a higher provision for loan losses compared to the first quarter of 2005, contributing to the increase in current net income over the prior period. The higher provision for loan losses in the 2004 period reflects management’s ongoing assessments of the allowance and estimates of the credit risk within the loan portfolio, including the level of charge-offs during the period. Net charge-offs in the first quarter of 2004 were $407 thousand as compared to net recoveries of $14 thousand in the first quarter of 2005.
Total assets increased 12% over the prior year, amounting to $867.9 million at March 31, 2005. Total loans increased to $590.6 million at March 31, 2005, up 17% over March 31, 2004 levels. Deposits totaled $754.2 million, an increase of 10%, versus the prior year. Total assets under management increased 7% since March 31, 2004, and amounted to $1.268 billion at March 31, 2005.
Enterprise Bank has always been a public company. As reported to you earlier this year, in recognition of the bank’s growth, and in an effort to improve the liquidity of our stock and increase flexibility for our shareholders to buy and sell shares, Enterprise Bancorp, Inc. was listed (as of February 14, 2005) on the NASDAQ National Market under the stock symbol “EBTC.” Shareholders are now able to buy and sell shares directly through their broker. Our NASDAQ listing provides shareholders the benefits of a public marketplace as we continue to grow as a strong, independent community bank. Listing on a national market is common for banks our size.
The bank continued aggressive customer calling efforts in all markets throughout the first quarter, with special emphasis on the new opportunities created due to the bank’s expansion into the Southern New Hampshire region. Our Salem office, which opened December 6, 2004, reports impressive growth during its first full quarter in business. Commercial lenders and branch personnel are very involved in business and community activities in the Salem area, and we have been very encouraged by the warm reception Enterprise Bank has received.
Professional business women have been a target market for our bank. On March 15, 2005, we further positioned Enterprise to be the bank of choice for area business women when Enterprise hosted a seminar “Creating Opportunities” sponsored by Enterprise’s Women in Business CollaborativeSM. The half-day program attracted a large audience to the Westford Regency Hotel as guests participated in discussions conducted by nationally-recognized experts on topics of interest to business owners and professionals. Such forums provide an excellent opportunity
for Enterprise to showcase its commitment to helping create successful businesses, and opportunities for our customers and prospects.
In March, Marie S. Tucarella joined Enterprise Bank as Vice President of Commercial Lending. A Salem, New Hampshire resident, Marie is a highly-skilled banking professional who brings over twenty-seven years experience to her new responsibilities. Marie has a strong customer base in the Merrimack Valley market, where she managed a loan portfolio in excess of $30 million, and will be a great asset to Enterprise as we continue to expand in the Northern Merrimack Valley area. A graduate of Merrimack College, Marie is a member of the Board of Directors of Northern Essex Community College, and serves on the finance committee of Holy Family Hospital’s Sports for Life program. Marie can be reached at our Andover office.
At the April 19 meeting of the Board of Directors, it was voted to increase the annual dividend to $0.48 per share, payable on June 24 to shareholders of record as of June 3, 2005. The 2005 annual dividend represents a 12% increase over the 2004 payout of $0.43 per share. The majority of shareholders has elected to participate in the bank’s dividend reinvestment plan. We invite additional shareholders interested in dividend reinvestment to contact Equiserve, our transfer agent, toll free at 1-888-218-4300, prior to June 3 to arrange for dividend reinvestment. A confirmation of your reinvestment transaction, including the number of additional shares purchased will be sent to all participants on June 24.
We appreciate the positive input we’ve received from shareholders concerning our 2004 annual report. As a reminder, in preparation for our 2005 annual meeting, proxy materials were recently mailed to all shareholders. The 2005 annual meeting is scheduled for Tuesday, May 3, 2005 at 4 p.m. at the American Textile History Museum, 491 Dutton Street, Lowell. Each year, we look forward to this special opportunity to speak with you concerning the bank’s plans for continued growth and profitability. We hope to see you on May 3. Thank you for your ongoing support.
Sincerely,
| | 
| | 
|
George L. Duncan | | Richard W. Main | | John P. Clancy, Jr |
Chairman/CEO | | President/Chief Lending Officer | | Executive Vice |
| | | | President/Chief |
| | | | Operating Officer |
Enterprise Bancorp, Inc. and Subsidiaries
STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
(unaudited)
| | Three Months Ended March 31, | |
| | 2005 | | 2004 | |
INTEREST AND DIVIDEND INCOME | | | | | |
Loans | | $ | 8,837 | | $ | 7,559 | |
Investment securities | | 1,820 | | 1,724 | |
Total short-term investments | | 61 | | 14 | |
| | | | | |
Total interest and dividend income | | 10,718 | | 9,297 | |
| | | | | |
INTEREST EXPENSE | | | | | |
Deposits | | 1,672 | | 1,456 | |
Repurchase agreements | | 7 | | 10 | |
Federal Home Loan Bank borrowings | | 78 | | 57 | |
Junior subordinated debentures | | 294 | | 294 | |
| | | | | |
Total interest expense | | 2,051 | | 1,817 | |
| | | | | |
NET INTEREST INCOME | | 8,667 | | 7,480 | |
| | | | | |
Provision for loan losses | | 200 | | 750 | |
| | | | | |
Net interest income after provision for loan losses | | 8,467 | | 6,730 | |
| | | | | |
Non-interest income | | 1,334 | | 1,549 | |
Net gains on sales of investment securities | | 200 | | 631 | |
Operating expenses | | (7,124 | ) | (6,199 | ) |
| | | | | |
Income before income taxes | | 2,877 | | 2,711 | |
| | | | | |
Income tax expense | | 1,026 | | 996 | |
| | | | | |
NET INCOME | | $ | 1,851 | | $ | 1,715 | |
| | | | | |
EARNINGS PER SHARE | | | | | |
Basic earnings per share | | $ | 0.50 | | $ | 0.48 | |
| | | | | |
Diluted earnings per share | | $ | 0.48 | | $ | 0.45 | |
| | | | | |
Dividend per common share (1) | | $ | — | | $ | — | |
| | | | | |
Basic weighted average common shares outstanding (2) | | 3,690,797 | | 3,605,344 | |
| | | | | |
Diluted weighted average common shares outstanding | | 3,829,906 | | 3,789,679 | |
(1) Annual dividends are generally declared in the second quarter of each fiscal year.
(2) Weighted average common shares outstanding have increased due to the exercise of employee stock options and reinvestment of dividends from the dividend reinvestment plan.
Enterprise Bancorp, Inc. and Subsidiaries
BALANCE SHEETS
(Dollars in thousands)
(unaudited)
| | March 31, 2005 | | December 31, 2004 | | March 31, 2004 | |
ASSETS | | | | | | | |
Cash and due from banks | | $ | 32,130 | | $ | 25,180 | | $ | 32,147 | |
Total short-term investments | | 35,146 | | 40,290 | | 38,500 | |
Investment securities at fair value | | 189,376 | | 187,601 | | 179,320 | |
Loans | | 590,603 | | 570,459 | | 505,731 | |
Allowance for loan losses | | (11,138 | ) | (10,923 | ) | (10,329 | ) |
Net loans | | 579,465 | | 559,536 | | 495,402 | |
Premises and equipment | | 11,898 | | 11,914 | | 12,218 | |
Intangible assets | | 6,364 | | 6,397 | | 6,497 | |
Other assets | | 13,495 | | 17,253 | | 12,041 | |
| | | | | | | |
TOTAL ASSETS | | $ | 867,874 | | $ | 848,171 | | $ | 776,125 | |
| | | | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | |
Deposits | | $ | 754,248 | | $ | 768,644 | | $ | 688,500 | |
Repurchase agreements | | 6,292 | | 1,718 | | 14,505 | |
Federal Home Loan Bank borrowings | | 29,888 | | 1,933 | | 1,933 | |
Junior subordinated debentures | | 10,825 | | 10,825 | | 10,825 | |
Other liabilities | | 4,774 | | 3,367 | | 3,143 | |
Total liabilities | | 806,027 | | 786,487 | | 718,906 | |
| | | | | | | |
Stockholders’ equity | | 61,910 | | 60,043 | | 54,282 | |
Net unrealized appreciation (depreciation) on investment securities, net of taxes | | (63 | ) | 1,641 | | 2,937 | |
|
Total stockholders’ equity | | 61,847 | | 61,684 | | 57,219 | |
| | | | | | | |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | | $ | 867,874 | | $ | 848,171 | | $ | 776,125 | |
| | | | | | | |
Investment assets under management | | $ | 364,574 | | $ | 363,250 | | $ | 386,661 | |
| | | | | | | |
Loans serviced for others | | $ | 35,911 | | $ | 35,067 | | $ | 28,064 | |
| | | | | | | |
Total assets under management | | $ | 1,268,359 | | $ | 1,246,488 | | $ | 1,190,850 | |
| | | | | | | | | | | | | | |
