Exhibit 99
Dear Shareholder:
Enterprise Bancorp, Inc. announced net income of $1.5 million for the three months ended March 31, 2009, compared to $2.0 million for the three months ended March 31, 2008. Diluted earnings per share were $0.19 compared to $0.25 for the same period in 2008. On April 21, 2009, the Company declared a quarterly dividend of $0.095 per share to be paid on June 1, 2009, to shareholders of record as of May 11, 2009, compared to a quarterly dividend of $0.09 per share paid on June 2, 2008.
Loans increased by 3% or $27.8 million since December 31, 2008, a quarterly increase which amounts to an annualized growth rate of 12%, and loan quality remains solid. Total deposits, excluding brokered deposits, increased 6% or $52.4 million since December 31, 2008, representing an annualized growth rate of 24%. On January 12, 2009, Enterprise opened its sixteenth branch in Acton, MA and in March 2009, the Company opened a loan production office in Derry, NH.
The current environment continues to provide many opportunities for a strong, well-capitalized, local community commercial bank like Enterprise, as demonstrated by our strong loan and deposit growth, as we continue to provide capital to the local businesses in the communities in which we operate. During the quarter, we celebrated the opening of our Acton branch, as well as the Derry loan production office, which was opened in anticipation of our full-service Derry branch that we expect to have in operation in 2009. We are also expanding our presence in Salem, NH and will be relocating to a larger facility on the same property during the second quarter. This is a testament to the hard work of the Salem team, and our successful expansion in that market. Although these growth initiatives and accompanying expenses have impacted earnings in the short term, such initiatives are an investment in the long-term growth and value of the Company and are reflective of the opportunities in the marketplace for community banks such as Enterprise. Our Enterprise Bank team continues to grow as the leading, most capable and trusted source of commercial loans, cash management, insurance services, and investment management in our region.
Enterprise Bank continues to apply its consistent and disciplined lending strategy with ongoing investments in our products, customer service, employees and branch network, allowing us to benefit from the market shift towards community banks. Our strong tradition of community involvement continues with our non-profit collaborative series and philanthropic activity. Given the current economic environment, we believe that these efforts are extremely important. We are committed to stimulating economic growth within the communities we serve in the Merrimack Valley and North Central regions of Massachusetts and South Central New Hampshire. In essence, our role as a stable and trusted financial advisor and strong corporate citizen is more important today than ever before.
Net income for the March 2009 quarter, when compared to the same quarter in 2008, was impacted primarily by an increase in the provision for loan losses and non-interest expenses, partially offset by an increase in net interest income. Net interest income for the quarter ended March 31, 2009 amounted to $11.2 million, compared to $9.9 million in the March 2008 quarter, an increase of $1.3 million or 13%. The increase in net interest income over the comparable prior-year period was due primarily to strong loan growth. Average loan balances increased $119.4 million, or 14%, for the quarter ended March 31, 2009 compared to the first quarter in 2008. Quarterly net interest margin was
4.17% for the three months ended March 31, 2009, compared to 4.24% and 4.18% for the quarters ended December 31, 2008 and March 31, 2008, respectively.
The provision for loan losses amounted to $1.1 million for the three months ended March 31, 2009 compared to $317 thousand for the same period in 2008. The increased provision was due to several factors, including 2009 net charge-offs of $386 thousand compared to net recoveries of $24 thousand for the same period last year; an increase in specific reserves on impaired loans; and loan growth during the period. The allowance for loan losses to total loans ratio was 1.64% at March 31, 2009, compared to 1.61% at March 31, 2008. In light of the current economic environment, overall asset quality remains solid, with annualized year-to-date net charge-offs amounting to 0.16% of average total loans in 2009, and non-performing assets to total assets of 0.93% at March 31, 2009 compared to 0.73% and 0.55% at December 31, 2008 and March 31, 2008, respectively.
Non-interest income for the three months ended March 31, 2009 and March 31, 2008 amounted to $2.4 million. Net gains on security sales of $971 thousand, resulting from the sale of securities in the first quarter of 2009, and $758 thousand in other than temporary impairment on certain equity securities amounted to a net of $213 thousand in income, which was an increase of $166 thousand compared to the quarter ended March 31, 2008. Investment advisory income decreased $171 thousand as a result of the decline in the value of assets under management due to market conditions.
Non-interest expense for the three months ended March 31, 2009, amounted to $10.3 million, an increase of 14%, compared to the same quarter last year. The increase in non-interest expense was related primarily to the Company’s strategic growth initiatives resulting in increases in the areas of compensation-related costs, occupancy, and advertising and public relations expenses. In addition, in 2009 the Company’s deposit insurance premiums increased due to changes in the FDIC insurance assessment rates which applied to all insured banks.
Total assets were $1.22 billion at March 31, 2009 as compared to $1.18 billion at December 31, 2008, an increase of 3%. Total loans increased $27.8 million, or 3%, since December 31, 2008 amounting to $976.4 million at March 31, 2009. Total deposits, excluding brokered deposits, were $925 million at March 31, 2009 compared to $872.5 million at December 31, 2008, an increase of 6%. Brokered deposits amounted to $72.6 million and $75.4 million on those respective dates. Investment assets under management amounted to $409.8 million at March 31, 2009 compared to $439.7 million at December 31, 2008, a decrease of 7%. The decrease is attributable primarily to the effects of declines in the equity markets on investment account balances, as well as declines in commercial sweep account balances during the period. Total assets under management amounted to $1.65 billion at both March 31, 2009 and December 31, 2008.
Our May 5 Annual Meeting will be held at Vesper Country Club, 185 Pawtucket Blvd. in Tyngsboro, MA. The meeting presents a special opportunity for us to speak with shareholders concerning our plans for Enterprise Bank’s future growth and profitability, and to express our appreciation for your loyal support. We hope you are able to join us on May 5 at 4 pm.
Thank you for your continued support over the past twenty years.
Sincerely,
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George L. Duncan | John P. Clancy, Jr. | Richard W. Main |
Chairman | CEO | President |
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| Chief Lending Officer |
SELECTED CONDENSED CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)
(Dollars in thousands, except per share data)
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| For the three months ended March 31, |
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CONDENSED CONSOLIDATED INCOME STATEMENTS |
| 2009 |
| 2008 |
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Net interest income |
| $ | 11,192 |
| $ | 9,916 |
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Provision for loan losses |
| 1,102 |
| 317 |
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Net interest income after provision for loan losses |
| 10,090 |
| 9,599 |
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Non-interest income |
| 2,373 |
| 2,397 |
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Non-interest expense |
| 10,325 |
| 9,031 |
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Income before income taxes |
| 2,138 |
| 2,965 |
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Provision for Income taxes |
| 620 |
| 948 |
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Net Income |
| $ | 1,518 |
| $ | 2,017 |
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Basic earnings per share |
| $ | 0.19 |
| $ | 0.25 |
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Diluted earnings per share |
| $ | 0.19 |
| $ | 0.25 |
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Basic weighted average common shares outstanding |
| 8,059,337 |
| 7,937,988 |
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Diluted weighted average common shares outstanding |
| 8,065,636 |
| 7,980,505 |
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CONDENSED CONSOLIDATED BALANCE SHEETS |
| March 31, 2009 |
| December 31, 2008 |
| March 31, 2008 |
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Cash and cash equivalents |
| $ | 72,862 |
| $ | 25,276 |
| $ | 41,033 |
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Investment securities at fair value |
| 118,941 |
| 159,373 |
| 145,140 |
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Loans, net of allowance for loan losses |
| 960,449 |
| 933,372 |
| 846,776 |
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Other assets |
| 62,810 |
| 62,456 |
| 54,518 |
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Total assets |
| $ | 1,215,062 |
| $ | 1,180,477 |
| $ | 1,087,467 |
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Deposits |
| $ | 997,597 |
| $ | 947,903 |
| $ | 905,587 |
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Borrowed funds |
| 104,244 |
| 121,250 |
| 72,589 |
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Junior subordinated debentures |
| 10,825 |
| 10,825 |
| 10,825 |
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Other liabilities |
| 10,228 |
| 9,395 |
| 9,885 |
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Total stockholders’ equity |
| 92,168 |
| 91,104 |
| 88,581 |
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Total liabilities and stockholders’ equity |
| $ | 1,215,062 |
| $ | 1,180,477 |
| $ | 1,087,467 |
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| At or for the |
| At or for the |
| At or for the |
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CONSOLIDATED FINANCIAL DATA AND RATIOS |
| March 31, 2009 |
| December 31, 2008 |
| March 31, 2008 |
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Balance Sheet Items: |
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Total assets |
| $ | 1,215,062 |
| $ | 1,180,477 |
| $ | 1,087,467 |
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Loans serviced for others |
| 28,933 |
| 28,341 |
| 24,998 |
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Investment assets under management |
| 409,772 |
| 439,711 |
| 532,687 |
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Total assets under management |
| $ | 1,653,767 |
| $ | 1,648,529 |
| $ | 1,645,152 |
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Book value per share |
| $ | 11.31 |
| $ | 11.35 |
| $ | 11.13 |
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Dividends per common share |
| $ | 0.095 |
| $ | 0.360 |
| $ | 0.090 |
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Allowance for loan losses to total loans |
| 1.64 | % | 1.61 | % | 1.61 | % | |||
Non-performing assets to total assets |
| 0.93 | % | 0.73 | % | 0.55 | % | |||
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Income Statement Items (annualized): |
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Return on average assets |
| 0.52 | % | 0.51 | % | 0.77 | % | |||
Return on average stockholders’ equity |
| 6.67 | % | 6.26 | % | 9.25 | % | |||
Net interest margin (tax equivalent) |
| 4.17 | % | 4.23 | % | 4.18 | % |