Exhibit 99.1
Dear Shareholders,
Enterprise Bancorp, Inc. announced net income of $2.222 million for the quarter ended March 31, 2007 compared to $2.056 million during the quarter ended March 31, 2006, an increase of 8%. Diluted earnings per share were $0.28 for the quarter compared to $0.26 for 2006, an increase of 8%. 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. The company also announced a quarterly dividend of $0.08 to be paid on June 1, 2007 to shareholders of record as of May 11, 2007. The quarterly dividend represents a 14% increase over the 2006 dividend rate.
Net income growth resulted primarily from an increase in non-interest income and a decrease in the provision for loan losses, partially offset by an increase in non-interest expense. Net interest income for the quarter ended March 31, 2007 amounted to $10.0 million, representing a $55 thousand decrease from the same period in 2006. Net interest margin, the spread earned between interest-earning assets and the company’s funding sources, primarily deposits, was 4.59% for the quarter ended March 31, 2007 compared to 4.74% and 4.79% for the quarters ended December 31, and March 31, 2006, respectively. The decrease in margin resulted from both the flat yield curve and a highly-competitive marketplace.
Non-interest income was $2.08 million for the quarter ended March 31, 2007, an increase of $397 thousand or 24% over the same period in 2006. The growth resulted primarily from increases of $149 thousand in investment advisory fees, $107 thousand in bank-owned life insurance income and $89 thousand in deposit service fees. Non-interest expense amounted to $8.52 million for the quarter ended March 31, 2007 compared to $8.22 million for the same period in 2006, an increase of 4%. The increases were predominantly in occupancy and compensation-related costs necessary to support the company’s growth.
The provision for loan losses, which is impacted by asset quality and loan growth, amounted to $83 thousand for the quarter ended March 31, 2007 compared to $273 thousand in the first quarter of 2006. The reduced provision reflects continued favorable asset quality, evidenced by a non-performing loan ratio of 0.38% at March 31, 2007 and net recoveries of $73 thousand during the quarter. The allowance for loan losses to total loans ratio was 1.68% at March 31, 2007 compared to 1.70% at December 31, 2006.
Total loans increased 3% since December 31, 2006, amounting to $780.4 million at March 31, 2007. Total assets were $995.0 million at March 31, 2007 as compared to $979.3 million at December 31, 2006, an increase of 2%. Total deposits, excluding brokered deposits, were $791.6 million at March 31, 2007 and $802.6 million at December 31, 2006, a decrease of 1%. Brokered deposits amounted to $89.9 million and $64.9 million on those respective dates. Investment assets under management increased to $513.3 million at March 31, 2007 compared to $502.1 million at December 31, 2006, an increase of 2%. Total assets under management amounted to $1.529 billion at March 31, 2007 as compared to $1.503 billion at December 31, 2006, an increase of 2%.
Our reputation as the regional leader in commercial and construction lending continues to grow. We are now listed among the “top 20” community banks nationwide, in a ranking (by size) of commercial and industrial loan portfolios1 (American Banker, 2/21/07). Throughout the first quarter, the bank’s lending team continued outreach efforts to develop new commercial relationships for the bank. Campaigns are underway in all markets and your personal assistance here is most welcome. We greatly value your
1 Independent banks with less than $1 billion or whose holding companies have less than $1 billion as of 9/30/06.
referrals, and from past experience we know it truly makes a significant difference. Please do not hesitate to refer a friend or business associate to the bank at any time.
Our mission to help create strong and vibrant communities is ongoing. Directors and employees join in this bankwide effort. During the first quarter of 2007, Bank Director James F. Conway III, Chairman & CEO of Courier Corporation, was honored by the Yankee Clipper Council Inc. of the Boy Scouts of America with “Greater Lowell’s 2007 Distinguished Citizen Award.” Jim was recognized for his long-standing commitment to our community at ceremonies at the Lowell Memorial Auditorium; Director Nancy L. Donahue was recently named as one of three Merrimack Valley leaders to join the Board of Directors of the United Way of Massachusetts Bay and Merrimack Valley; and Enterprise Bank was honored at the annual banquet of the Merrimack Valley Red Cross for our leadership efforts immediately following the area floods last spring. The bank partnered with the Red Cross and quickly raised over $68,000 to help local residents who were affected by the disaster.
We appreciate the favorable comments shareholders have made concerning our 2006 Annual Report which was mailed in late March. Please return all proxy materials promptly, or vote via the internet at www.investorvote.com or by phone 1-800-652-8683, whether or not you intend to participate in person at the Annual Meeting on May 1 at 4:00 pm at the Boston University Conference Center in Tyngsboro. We look forward to sharing another chapter in Enterprise Bank’s success story with you at that time. Thank you for your continued loyalty and support.
Sincerely, | | | | |
| | | | |
/s/ George L. Duncan | | /s/ John P. Clancy, Jr | | /s/ Richard W. Main |
| | | | |
George L. Duncan | | John P. Clancy, Jr. | | Richard W. Main |
Chairman | | CEO | | President |
| | | | Chief Lending Officer |
SELECTED CONDENSED CONSOLIDATED FINANCIAL HIGHLIGHTS
(unaudited)
| | For the three months ended March 31, | |
CONDENSED CONSOLIDATED INCOME STATEMENTS | | 2007 | | 2006 | |
(Dollars in thousands, except per share data) | | | | | |
Net interest income | | $ | 10,036 | | $ | 10,091 | |
Provision for loan losses | | 83 | | 273 | |
Net interest income after provision for loan losses | | 9,953 | | 9,818 | |
Non-interest income | | 2,078 | | 1,681 | |
Non-interest expense | | 8,520 | | 8,218 | |
Income before income taxes | | 3,511 | | 3,281 | |
Income tax expense | | 1,289 | | 1,225 | |
Net Income | | $ | 2,222 | | $ | 2,056 | |
| | | | | |
Basic earnings per share | | $ | 0.29 | | $ | 0.27 | |
Diluted earnings per share | | $ | 0.28 | | $ | 0.26 | |
Basic weighted average common shares outstanding | | 7,747,985 | | 7,603,694 | |
Diluted weighted average common shares outstanding | | 7,879,334 | | 7,795,572 | |
CONDENSED CONSOLIDATED BALANCE SHEETS | | March 31, 2007 | | December 31, 2006 | | March 31, 2006 | |
(Dollars in thousands) | | | | | | | |
Cash and cash equivalents | | $ | 46,686 | | $ | 50,887 | | $ | 52,915 | |
Investment securities at fair value | | 129,354 | | 131,540 | | 153,011 | |
Loans, net of allowance for loan losses | | 767,258 | | 748,173 | | 706,464 | |
Other assets | | 51,656 | | 48,659 | | 36,300 | |
Total assets | | $ | 994,954 | | $ | 979,259 | | $ | 948,690 | |
| | | | | | | |
Deposits | | $ | 881,549 | | $ | 867,522 | | $ | 832,976 | |
Borrowed funds | | 15,168 | | 15,105 | | 29,474 | |
Junior subordinated debentures | | 10,825 | | 10,825 | | 10,825 | |
Other liabilities | | 7,838 | | 8,764 | | 5,878 | |
Total stockholders’ equity | | 79,574 | | 77,043 | | 69,537 | |
Total liabilities and stockholders’ equity | | $ | 994,954 | | $ | 979,259 | | $ | 948,690 | |
| | At or for the three
months ended | | At or for the
year ended | | At or for the three
months ended | |
CONSOLIDATED FINANCIAL DATA AND RATIOS | | March 31, 2007 | | December 31, 2006 | | March 31, 2006 | |
(Dollars in thousands, except per share data) | | | | | | | |
Balance Sheet Items: | | | | | | | |
Total assets | | $ | 994,954 | | $ | 979,259 | | $ | 948,690 | |
Loans serviced for others | | 21,163 | | 21,659 | | 22,729 | |
Investment assets under management | | 513,261 | | 502,059 | | 441,612 | |
Total assets under management | | $ | 1,529,378 | | $ | 1,502,977 | | $ | 1,413,031 | |
| | | | | | | |
Book value per share | | $ | 10.24 | | $ | 9.98 | | $ | 9.13 | |
Dividends per common share | | $ | 0.08 | | $ | 0.28 | | $ | 0.07 | |
Allowance for loan losses to total loans | | 1.68 | % | 1.70 | % | 1.71 | % |
Non-performing loans to total loans | | 0.38 | % | 0.24 | % | 0.21 | % |
| | | | | | | |
Income Statement Items: | | | | | | | |
Return on average assets | | 0.93 | % | 0.98 | % | 0.90 | % |
Return on average stockholders’ equity | | 11.54 | % | 12.89 | % | 12.12 | % |
Net interest margin (tax equivalent) | | 4.59 | % | 4.78 | % | 4.79 | % |
