EXHIBIT 99
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[LOGO]
Dear Shareholder:
Enterprise Bancorp, Inc. reported net income of $504,074 for the first quarter
of 2003 compared to $1,488,430 for the same period in 2002. As noted in
correspondence sent to you on March 22, 2003, the current year includes a
one-time tax charge of $1.9 million related to legislative changes in
Massachusetts tax laws enacted in March of 2003, which are retroactive to 1999.
Outside legal counsel has advised us that this retroactive provision may be
unconstitutional. Nonetheless, Enterprise Bank, along with an estimated 50
Massachusetts banks affected, were advised by their accounting firms to
immediately reserve for the entire amount of any possible retroactive state tax
due. We cannot predict at this time whether we, or other banks, will recoup all
or part of the income tax that we are now required to charge to earnings.
Notwithstanding this one-time charge, we continue to estimate net income for the
full year 2003 to be in the range of $6.0 million to $6.4 million compared to
$6.3 million for 2002.
Total assets, investment assets under management, and mortgage loans serviced
for others amounted to $1,083,152,412 at March 31, 2003, an increase of 11% over
the prior year. Individually, total assets, deposits plus repurchase agreements,
loans, and investment assets under management totaled $732,939,525,
$652,396,256, $431,593,565 and $333,237,613 respectively on March 31, 2003,
increases of 14%, 12%, 11%, and 6% versus a year ago. Our loan pipeline, a good
indicator of future business, is steady, and we expect to complete a large
number of transactions in the months ahead. The investment assets under
management total includes trust and brokerage assets, which are affected by
fluctuations in financial markets. The 6% increase in the portfolio compared to
the prior year consists of asset growth, offset by declining investment market
values as a result of the decline in stock market values.
In late January, Christopher McCarthy was named group director and Senior Vice
President of our Investment Management and Trust Group. Chris brings over 14
years of investment managerial, brokerage and banking experience to Enterprise.
A graduate of Nichols College (B.S. and M.B.A degrees), Chris has strong ties to
the North Central Region. He serves on the Executive Board of the Nashoba Valley
Boy Scouts of America and is a member of the Worcester Economic Club. In
addition to his investment expertise and management skills, Chris' business ties
are a great asset to our Fitchburg and Leominster offices.
On May 5, our new Fitchburg branch will officially open at 420 John Fitch
Highway. Many business development initiatives in the Fitchburg area are
currently underway. A strong officer calling effort is in progress, in addition
to a targeted advertising campaign. We welcome all shareholders to contact
Cheryl Gaudreau, manager of our new Fitchburg office, at (978) 656-5538,
concerning business referrals in the Fitchburg area. Our Fitchburg team will be
pleased to follow up immediately on leads our shareholders provide.
In March, the bank hosted a special program throughout our branch network
recognizing the many significant achievements made by local businesswomen. As
part of our Women's Week activities, displays were placed in branch lobbies
celebrating entrepreneurs from our community. In April, several workshops were
held at various branch locations as we continue to seek opportunities to act as
a resource for women in business. If you or your associates are interested in
upcoming activities, please contact Dale Marcy at (978) 656-5544, or via email
at Dale.Marcy@ebtc.com.
On April 29, bank employees will gather to celebrate the retirements of three
valued members of the Enterprise Bank family. Jack McGovern from our Trust and
Investment Group, Eileen Trainor from our Customer Sales and Service Center, and
Jackie Sheehan from our Dracut branch are each ending their banking careers.
These three individuals represent over 117 combined years of service to the
banking community in Greater Lowell. We salute Jack, Eileen, and Jackie for
their outstanding contributions to the success of Enterprise Bank during their
tenure here, and we wish them good health and happiness in the years ahead.
At the April 15 meeting of the board of directors, it was voted to increase the
annual dividend to 38 cents per share, payable on June 27, to shareholders of
record as of June 6, 2003. The 2003 dividend payment represents a 15% increase
over last year's payout of 33 cents per share. Over the past four years, the
majority of shareholders have elected to participate in our dividend
reinvestment plan. We are pleased to invite additional shareholders interested
in dividend reinvestment to contact Finance Officer Katelin Deschenes at (978)
656-5584, or via email at Katelin.Deschenes@ebtc.com, prior to June 6 to arrange
for dividend reinvestment. A confirmation of your dividend reinvestment
activity, indicating the number of additional shares purchased, will be sent to
all participants on June 27.
Your positive feedback concerning our 2002 annual report is appreciated. We were
especially pleased to hear from shareholders and friends from Billerica as their
community was featured in this year's report. As a reminder, in preparation for
our 2003 annual meeting, proxy material was mailed to all shareholders in late
March. The 2003 annual meeting is scheduled on May 6, 2003 at 4:00 p.m. at the
American Textile Museum, 491 Dutton Street, in Lowell. It is important that you
participate by voting your proxy as soon as possible, whether or not you plan to
join us on May 6. We look forward to the annual meeting as it presents a special
opportunity for us to speak with shareholders concerning our plans for the
bank's future growth and profitability. It also gives us the chance to express
our appreciation to you for your loyal support of our Enterprise.
Sincerely,
/s/ George L. Duncan /s/ Richard W. Main /s/ John P. Clancy, Jr.
- --------------------- ------------------- -----------------------
George L. Duncan Richard W. Main John P. Clancy, Jr.
Chairman/ President/Chief Lending EVP/Treasurer/CFO of
Chief Executive Officer Officer/Chief Operating Enterprise Bank and
Of Enterprise Bank and Officer of Enterprise President of Enterprise
Enterprise Bancorp, Inc. Bank Bancorp, Inc.
Forward Looking Information
This quarterly statement contains "forward-looking statements" regarding our
anticipated net income for 2003. We caution readers that there can be no
assurance that this estimated future net income level will hold true and a
variety of factors may adversely affect our results for 2003. These factors are
described in detail on page 2 of our Annual Report on Form 10-K for the year
ended December 31, 2002, which was included as an insert in our 2002 Annual
Report to shareholders.
Enterprise Bancorp, Inc. and Subsidiaries
STATEMENTS OF INCOME
(unaudited)
For the three months ended March 31,
INTEREST INCOME 2003 2002
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Interest and fees on loans $6,889,722 $6,880,965
Interest on investment securities 2,501,598 2,581,901
Interest on federal funds sold 24,018 36,695
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Total interest income 9,415,338 9,499,561
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INTEREST EXPENSE
Interest on deposits 1,852,407 2,327,708
Interest on repurchase agreements 2,926 182,845
Interest on Federal Home Loan Bank borrowings 22,599 6,983
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Total interest expense 1,877,932 2,517,536
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NET INTEREST INCOME 7,537,406 6,982,025
Provision for loan losses 300,000 390,000
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Net interest income after provision for loan losses 7,237,406 6,592,025
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Operating expenses (5,472,793) (5,727,333)
Depreciation (662,965) (577,645)
Amortization of intangible assets (33,193) (33,193)
Non-interest income 1,580,737 1,357,298
Net gains on sales of investment securities 1,315,754 416,027
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Income before provision for income taxes 3,964,946 2,027,179
Provision for income taxes 3,460,872 538,749
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NET INCOME $ 504,074 $1,488,430
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EARNINGS PER SHARE
Basic earnings per common share $ 0.14 $ 0.43
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Diluted earnings per common share $ 0.14 $ 0.42
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Dividends per common share* $ - $ -
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Basic weighted average common shares outstanding ** 3,533,488 3,462,232
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Diluted weighted average common shares outstanding 3,660,855 3,578,384
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* Annual dividends are generally declared in the second quarter of each
fiscal year, thus no dividends are reflected in the periods above.
** Weighted average common shares outstanding have increased due to exercise
of employee stock options and reinvestment of dividends from the dividend
reinvestment plan.
Enterprise Bancorp, Inc. and Subsidiaries
BALANCE SHEETS
(unaudited) (unaudited)
March 31, 2003 December 31, 2002 March 31, 2002
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ASSETS
Cash and due from banks $ 34,252,334 $ 45,778,048 $ 30,649,287
Federal funds sold 38,500,000 -- 5,000,000
Investment securities 208,002,227 239,295,617 196,637,883
Loans 431,593,565 414,123,485 387,900,706
Allowance for loan losses (9,744,360) (9,371,057) (8,901,943)
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Net loans 421,849,205 404,752,428 378,998,763
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Bank premises and equipment 13,271,471 13,143,900 12,988,852
Intangible assets 6,629,700 6,662,892 6,762,469
Other assets 10,434,588 9,062,794 9,952,260
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TOTAL ASSETS $ 732,939,525 $ 718,695,679 $ 640,989,514
=============== =============== ===============
LIABILITIES, TRUST PREFERRED SECURITIES AND
STOCKHOLDERS' EQUITY
Deposits 651,433,424 638,031,838 542,678,637
Repurchase agreements 962,832 762,737 39,720,867
Federal Home Loan Bank borrowings 10,470,000 16,470,000 470,000
Other liabilities 10,496,192 2,850,774 4,490,624
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Total liabilities 673,362,448 658,115,349 587,360,128
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Trust preferred securities 10,500,000 10,500,000 10,500,000
Stockholders' equity 46,134,145 45,612,399 40,900,222
Net unrealized appreciation on investment
securities, net of taxes 2,942,932 4,467,931 2,229,164
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Total stockholders' equity 49,077,077 50,080,330 43,129,386
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TOTAL LIABILITIES, TRUST PREFERRED
SECURITIES AND STOCKHOLDERS' EQUITY $ 732,939,525 $ 718,695,679 $ 640,989,514
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Investment assets under management $ 333,237,613 $ 314,095,210 $ 314,446,406
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Mortgage loans serviced for others $ 16,975,274 $ 16,860,951 $ 20,655,272
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Total assets, investment assets under
management and mortgage loans serviced for
others $ 1,083,152,412 $ 1,049,651,840 $ 976,091,192
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