Contact Info: | Mary Ellen Fitzpatrick (978) 656-5520 |
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| Senior Vice President, Corporate Communications |
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Enterprise Bancorp, Inc. Announces 2006 Third Quarter
Financial Results and Quarterly Dividend
LOWELL, Mass—(BUSINESS WIRE)-Oct. 17, 2006-Enterprise Bancorp, Inc. (the “company”) (NASDAQ:EBTC) announced third quarter 2006 net income of $2.451 million compared to $2.253 million during the third quarter of 2005, an increase of 9%. Diluted earnings per share were $0.31 for the quarter compared to $0.29 for third quarter 2005, an increase of 7%. All prior period per share amounts have been adjusted to reflect the two-for-one stock split paid on June 30, 2006 in the form of a stock dividend.
Net income for the nine months ended September 30, 2006 amounted to $6.689 million compared to $6.085 million for the same period in 2005, an increase of 10%. Diluted earnings per share were $0.86 for the nine months ended September 30, 2006 compared to $0.79 for the same period in 2005, an increase of 9%.
The company also announced a quarterly dividend of $0.07 to be paid on December 1, 2006 to shareholders of record as of November 10, 2006. Prior to 2006, dividends were paid once a year. On an annualized basis, year-to-date dividends represent a 17% increase over the prior year’s annual dividend.
The company’s net income growth continues to result primarily from increases in net interest income, partially offset by increases in non-interest expense. Net interest income for the nine months ended September 30, 2006 amounted to $31.0 million compared to $27.8 million for the same period in 2005, an increase of 11%. The primary driver of net interest income growth over the period was loan growth, which increased 12% since September 30, 2005. Net interest margin, the spread earned between interest-earning assets and the company’s funding sources, primarily deposits, was 4.79% for both the nine months ended September 30, 2006 and 2005.
Non-interest expense amounted to $24.5 million for the nine months ended September 30, 2006 compared to $22.3 million for the same period in 2005, an increase of 10%, and reflected the strategic and operational costs necessary to support the company’s continued growth.
The year-to-date results also included non-interest income of $5.1 million, an increase of $312 thousand over the prior nine month period, consisting primarily of strong growth from investment advisory fees and other income, partially offset by a reduction in the net gains on the sales of investment securities. Included in other income were $62 thousand of tax credit-related income that was not present in the prior year period and a $177 thousand increase in bank-owned life insurance income over the prior-year period.
The provision for loan losses, which is impacted by asset quality and loan growth, amounted to $892 thousand for the year-to-date results compared to $835 thousand in the prior year-to-date period. Asset quality remained favorable during the year-to-date period with net charge-offs of 0.03% of average total loans or $221 thousand. The allowance for loan losses to total loans ratio was 1.70% at September 30, 2006 compared to 1.72% at December 31, 2005.
Key Financial Highlights
· Total loans increased 7% since December 31, 2005, amounting to $746.6 million at September 30, 2006.
· Total assets were $972.8 million at September 30, 2006 as compared to $918.5 million at December 31, 2005, an increase of 6%.
· Total deposits were $867.9 million at September 30, 2006 and $775.4 million at December 31, 2005, an increase of 12%. Included in total deposits were brokered deposits of $83.6 million and $10.0 million at those respective dates. Deposits excluding brokered deposits increased 2% over December 31, 2005. The company utilizes brokered deposits as an alternative funding source to Federal Home Loan Bank borrowings.
· Investment assets under management increased to $462.8 million at September 30, 2006 compared to $425.0 million at December 31, 2005, an increase of 9%.
· Total assets under management amounted to $1.458 billion at September 30, 2006 as compared to $1.366 billion at December 31, 2005, an increase of 7%.
George L. Duncan, Chairman and Chief Executive Officer of Enterprise Bancorp, Inc. summarized the 2006 results by stating, “The current interest rate environment and the highly competitive marketplace continue to present a growth and earnings challenge for the banking industry. At Enterprise, this environment has contributed to slower loan and deposit growth and continued pressure on margin from rising funding costs. In light of these economic and industry issues, we are very pleased to report net income growth of 10% and 9% for the year-to-date and quarter-to-date September 30 results.”
Duncan also commented, “We view this challenging period, when many banks are reporting weaker earnings, as an opportunity and remain committed to a long term strategy of commercial loan growth, geographic expansion, and prudent expense growth, delivered by a highly-skilled management team and a well-trained, service-orientated employee base.”
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 principally is engaged in the business of attracting deposits from the general public and investing in commercial loans and investment securities. Through the bank and its subsidiaries, the company offers a range of commercial and consumer loan and deposit products as well as investment 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 Merrimack Valley, North Central region of Massachusetts and South Central New Hampshire. The company has fourteen full-service branch banking offices located in the Massachusetts cities and towns of Lowell, Andover, Billerica, Chelmsford, Dracut, Fitchburg, Leominster, Tewksbury, and Westford, and in Salem, New Hampshire, which serve those cities and towns as well as the surrounding communities.
The above text 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 the use of the words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “assume,” “will,” “should,” and other expressions that predict or indicate future events or trends and which do not relate to historical matters. 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 and competition. For more information about these factors, please see 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.
ENTERPRISE BANCORP, INC.
Consolidated Statements of Income
Three and nine months ended September 30, 2006 and 2005
(unaudited)
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| Three Months Ended Sept.30, |
| Nine Months Ended Sept.30, |
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(Dollars in thousands, except per share data) |
| 2006 |
| 2005 |
| 2006 |
| 2005 |
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Interest and dividend income: |
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Loans |
| $ | 13,991 |
| $ | 10,627 |
| $ | 39,802 |
| $ | 29,171 |
|
Investment securities |
| 1,510 |
| 1,714 |
| 4,558 |
| 5,360 |
| ||||
Total short-term investments |
| 97 |
| 41 |
| 257 |
| 213 |
| ||||
Total interest and dividend income |
| 15,598 |
| 12,382 |
| 44,617 |
| 34,744 |
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Interest expense: |
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Deposits |
| 4,722 |
| 2,135 |
| 12,021 |
| 5,714 |
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Borrowed funds |
| 95 |
| 121 |
| 726 |
| 312 |
| ||||
Junior subordinated debentures |
| 294 |
| 294 |
| 883 |
| 883 |
| ||||
Total interest expense |
| 5,111 |
| 2,550 |
| 13,630 |
| 6,909 |
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Net interest income |
| 10,487 |
| 9,832 |
| 30,987 |
| 27,835 |
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Provision for loan losses |
| 375 |
| 360 |
| 892 |
| 835 |
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Net interest income after provision for loan losses |
| 10,112 |
| 9,472 |
| 30,095 |
| 27,000 |
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Non-interest income: |
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Investment advisory fees |
| 730 |
| 588 |
| 1,994 |
| 1,678 |
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Deposit service fees |
| 454 |
| 435 |
| 1,281 |
| 1,242 |
| ||||
Net gains on sales of investment securities |
| 28 |
| 22 |
| 19 |
| 227 |
| ||||
Gains on sales of loans |
| 39 |
| 98 |
| 117 |
| 195 |
| ||||
Other income |
| 605 |
| 605 |
| 1,694 |
| 1,451 |
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Total non-interest income |
| 1,856 |
| 1,748 |
| 5,105 |
| 4,793 |
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Non-interest expense: |
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Salaries and employee benefits |
| 4,835 |
| 4,736 |
| 14,964 |
| 13,534 |
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Occupancy expenses |
| 1,539 |
| 1,372 |
| 4,474 |
| 4,126 |
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Audit, legal and other professional fees |
| 406 |
| 405 |
| 1,224 |
| 1,170 |
| ||||
Advertising and public relations |
| 326 |
| 206 |
| 955 |
| 653 |
| ||||
Supplies and postage |
| 235 |
| 256 |
| 636 |
| 664 |
| ||||
Investment advisory and custodial expenses |
| 130 |
| 119 |
| 364 |
| 352 |
| ||||
Other operating expenses |
| 609 |
| 591 |
| 1,915 |
| 1,762 |
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Total non-interest expense |
| 8,080 |
| 7,685 |
| 24,532 |
| 22,261 |
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Income before income taxes |
| 3,888 |
| 3,535 |
| 10,668 |
| 9,532 |
| ||||
Income tax expense |
| 1,437 |
| 1,282 |
| 3,979 |
| 3,447 |
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Net income |
| $ | 2,451 |
| $ | 2,253 |
| $ | 6,689 |
| $ | 6,085 |
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Basic earnings per share |
| $ | 0.32 |
| $ | 0.30 |
| $ | 0.88 |
| $ | 0.82 |
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Diluted earnings per share |
| $ | 0.31 |
| $ | 0.29 |
| $ | 0.86 |
| $ | 0.79 |
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Basic weighted average common shares outstanding |
| 7,691,407 |
| 7,515,734 |
| 7,644,641 |
| 7,437,712 |
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Diluted weighted average common shares outstanding |
| 7,840,578 |
| 7,731,416 |
| 7,811,668 |
| 7,675,956 |
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ENTERPRISE BANCORP, INC.
Consolidated Balance Sheets
(unaudited)
|
| September 30, |
| December 31, |
| September 30, |
| |||
(Dollars in thousands) |
| 2006 |
| 2005 |
| 2005 |
| |||
Assets |
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Cash and cash equivalents: |
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Cash and due from banks |
| $ | 28,408 |
| $ | 32,950 |
| $ | 42,067 |
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Short-term investments |
| 20,856 |
| 5,431 |
| 12,536 |
| |||
Total cash and cash equivalents |
| 49,264 |
| 38,381 |
| 54,603 |
| |||
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Investment securities at fair value |
| 142,936 |
| 156,521 |
| 171,182 |
| |||
Loans, less allowance for loan losses of $12,721 at September 30, 2006, $12,050 at December 31, 2005, and $11,759 at September 30, 2005 |
| 733,841 |
| 687,676 |
| 653,811 |
| |||
Premises and equipment |
| 13,848 |
| 11,530 |
| 11,761 |
| |||
Accrued interest receivable |
| 5,615 |
| 4,888 |
| 4,361 |
| |||
Deferred income taxes, net |
| 6,241 |
| 6,200 |
| 5,661 |
| |||
Bank-owned life insurance |
| 12,074 |
| 3,877 |
| 2,914 |
| |||
Prepaid expenses and other assets |
| 1,959 |
| 2,392 |
| 2,207 |
| |||
Income taxes receivable |
| 842 |
| 748 |
| — |
| |||
Core deposit intangible, net of amortization |
| 509 |
| 608 |
| 642 |
| |||
Goodwill |
| 5,656 |
| 5,656 |
| 5,656 |
| |||
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Total assets |
| $ | 972,785 |
| $ | 918,477 |
| $ | 912,798 |
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Liabilities and Stockholders’ Equity |
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Liabilities |
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Deposits |
| $ | 867,917 |
| $ | 775,387 |
| $ | 811,614 |
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Borrowed funds |
| 9,967 |
| 58,639 |
| 16,622 |
| |||
Junior subordinated debentures |
| 10,825 |
| 10,825 |
| 10,825 |
| |||
Accrued expenses and other liabilities |
| 7,580 |
| 4,624 |
| 6,396 |
| |||
Income taxes payable |
| — |
| — |
| 863 |
| |||
Accrued interest payable |
| 2,433 |
| 1,172 |
| 517 |
| |||
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Total liabilities |
| 898,722 |
| 850,647 |
| 846,837 |
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Commitments and Contingencies |
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Stockholders’ Equity |
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Preferred stock, $0.01 par value per share; |
| — |
| — |
| — |
| |||
Common stock $0.01 par value per share; 10,000,000 shares authorized; |
| 77 |
| 76 |
| 75 |
| |||
Additional paid-in capital |
| 25,463 |
| 24,253 |
| 23,774 |
| |||
Retained earnings |
| 49,120 |
| 44,034 |
| 41,705 |
| |||
Accumulated other comprehensive (loss)/income |
| (597 | ) | (533 | ) | 407 |
| |||
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| |||
Total stockholders’ equity |
| 74,063 |
| 67,830 |
| 65,961 |
| |||
|
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| |||
Total liabilities and stockholders’ equity |
| $ | 972,785 |
| $ | 918,477 |
| $ | 912,798 |
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ENTERPRISE BANCORP, INC.
Selected Consolidated Financial Data and Ratios
(unaudited)
|
| At or for the |
| At or for the |
| At or for the |
| |||
|
| nine months |
| year |
| nine months |
| |||
|
| ended |
| ended |
| ended |
| |||
|
| September 30, |
| December 31, |
| September 30, |
| |||
(Dollars in thousands, except per share data) |
| 2006 |
| 2005 |
| 2005 |
| |||
Balance Sheet Items: |
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| |||
Total assets |
| $ | 972,785 |
| $ | 918,477 |
| $ | 912,798 |
|
Loans serviced for others |
| 22,152 |
| 22,938 |
| 29,795 |
| |||
Investment assets under management |
| 462,811 |
| 424,953 |
| 407,069 |
| |||
Total assets under management |
| $ | 1,457,748 |
| $ | 1,366,368 |
| $ | 1,349,662 |
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Book value per share |
| $ | 9.62 |
| $ | 8.93 |
| $ | 8.76 |
|
Dividends per common share (1) |
| $ | 0.21 |
| $ | 0.24 |
| $ | 0.24 |
|
Total capital to risk weighted assets |
| 11.22 | % | 11.12 | % | 11.11 | % | |||
Tier 1 capital to risk weighted assets |
| 9.95 | % | 9.85 | % | 9.85 | % | |||
Tier 1 capital to average assets |
| 8.32 | % | 8.04 | % | 8.06 | % | |||
Allowance for loan losses to total loans |
| 1.70 | % | 1.72 | % | 1.77 | % | |||
Non-performing loans to total loans |
| 0.26 | % | 0.21 | % | 0.27 | % | |||
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Income Statement Items (annualized): |
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Return on average assets |
| 0.95 | % | 0.97 | % | 0.96 | % | |||
Return on average stockholders’ equity |
| 12.71 | % | 13.10 | % | 12.83 | % | |||
Net interest margin (tax equivalent) |
| 4.79 | % | 4.82 | % | 4.79 | % |
(1) In 2006, the company has paid three quarterly dividends of $0.07 each. Prior to 2006, dividends were paid annually in June. The 2005 annual dividend of $0.24 is reflected in the September 30, 2005 and December 31, 2005 periods.