EXHIBIT 99
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[LOGO]
April 27, 2004
Dear Shareholder:
Enterprise Bancorp, Inc.'s net income amounted to $1.7 million for the three
months ended March 31, 2004, compared to $0.5 million for the same period in
2003. The primary factors contributing to the increase in net income in the
first quarter of 2004, as compared to the first quarter of 2003, were a decrease
in the provision for income tax expenses (primarily due to the $1.9 million
provision in 2003 related to changes in the Massachusetts tax laws concerning
the company's REIT subsidiary(1) ), offset by a decrease in net gains on sales
of investment securities, and an increase in the provision for loan losses
during the first quarter of 2004.
At March 31, 2004, total assets amounted to $776.1 million, an increase of 6%
from March 31, 2003. Total loans were $505.7 million at March 31, 2004, an
increase of 17% over the prior year. Deposits plus repurchase agreements grew to
$703.0 million at March 31, 2004, an increase of 8% over March 31, 2003. In
addition, the Investment Management and Trust Group reported investment assets
under management of $386.7 million, a 15% increase versus one year ago. Total
assets, investment assets under management, and mortgage loans serviced for
others amounted to $1.2 billion at March 31, 2004, an increase of 8% from March
31, 2003.
At our February 11 annual Employees' Celebration of Success, the Bank recognized
the retirement of three valued members of the Enterprise Bank family. VP/Human
Resources Manager Jeannette Sheehan, Mary Lou Allen from the Mortgage Center,
and SVP/Sr. Trust Officer Paul Shaughnessy from our Investment Management and
Trust Group are ending successful banking careers. These three individuals
represent over 70 combined years of service to the banking community in Greater
Lowell. We salute Jeannie, Mary Lou and Paul for their contributions to the
success of Enterprise Bank during their tenure here, and we wish them good
health and happiness in the years ahead. For those shareholders and customers
that did business with Paul Shaughnessy, he will be available on a limited basis
throughout 2004 to assist clients during the transition period.
The first quarter of 2004 was a period of significant business development at
Enterprise. On March 15, we opened our twelfth branch office at 63 Park Street
in Andover. Staffed by a talented group of local professionals, our Andover team
was very encouraged by the warm welcome we received from the large group of
business and community leaders on hand at ribbon-cutting ceremonies. After only
thirty days, business is strong in Andover. Our new branch reports deposits of
approximately of $20 million! Such growth is truly impressive, and far exceeds
our original projections. The 63 Park Street facility is about one half the size
of our typical branch facility. We opened there to create a presence in the
Andover market quickly, as we wanted to take full advantage of market
opportunities presented by the current bank-acquisition turmoil. Due to the
strong growth we've experienced, and the tremendous potential for Enterprise
Bank in the Andover area, we plan to relocate into a larger, more permanent
office in downtown Andover at 8 High Street, within the next 12-18 months. We
plan to share more details with you concerning this major initiative in the
months ahead.
At our April 20 meeting of the Board of Directors, it was voted to increase the
annual dividend to 43 cents per share, payable on June 25 to shareholders of
record as of June 4, 2004. The 2004 dividend represents a 13% increase over last
year's payout of 38 cents per share. 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
Equiserve, Inc., our recently-appointed transfer agent, toll-free, at
1-888-218-4390 prior to June 4 to arrange for dividend reinvestment. A
confirmation of your dividend reinvestment transaction, including the number of
additional shares purchased, will be sent to all participants on June 25.
We appreciate the positive reaction we've received from shareholders concerning
our 2003 annual report. As a reminder, in preparation for our 2004 annual
meeting, proxy materials were mailed to all shareholders on March 26. The 2004
annual meeting is scheduled for May 4, 2004, at 4 p.m. at the American Textile
History 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 4. A ballot and self-addressed envelope to Equiserve Inc., was
enclosed in the March mailing. We look forward to the annual meeting as it
presents an opportunity for us to discuss plans for the bank's continued growth
and profitability. Our annual meeting also gives us a special chance to express
our appreciation to you for your loyal support over the past sixteen years.
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/Chief President/Chief Lending President/Enterprise
Executive Officer Officer/Chief Operating Bancorp Inc./EVP/
Officer Treasurer/Enterprise
Bank
(1) In June 2003, the company subsequently reversed $0.8 million of the March
tax charge. The reversal was due to a settlement agreement between the
Massachusetts Department of Revenue and Enterprise Bank, along with
approximately sixty-five other Massachusetts banks, regarding disputed
retroactive assessments for 1999 through 2002. Under the terms of the
settlement, the tax expense recorded in 2003 related to prior year assessments,
was approximately $1.1 million.
Enterprise Bancorp, Inc. and Subsidiaries
STATEMENTS OF INCOME
(unaudited)
Three Months Ended March 31,
---------------------------------
2004 2003
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INTEREST AND DIVIDEND INCOME
Loans $ 7,559,331 $ 6,889,722
Investment securities 1,723,787 2,501,598
Short term investments 14,358 24,018
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Total interest and dividend income 9,297,476 9,415,338
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INTEREST EXPENSE
Deposits 1,455,989 1,852,407
Repurchase agreements 10,541 2,926
Federal Home Loan Bank borrowings 56,653 22,599
Junior subordinated debentures 294,305 294,305
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Total interest expense 1,817,488 2,172,237
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NET INTEREST INCOME 7,479,988 7,243,101
Provision for loan losses 750,000 300,000
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Net interest income after provision for loan losses 6,729,988 6,943,101
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Non-interest income 1,549,176 1,588,699
Net gains on sales of investment securities 630,917 1,315,754
Operating expenses (6,199,090) (5,882,608)
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Income before provision for income taxes 2,710,991 3,964,946
Provision for income taxes 995,745 3,460,872
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NET INCOME $ 1,715,246 $ 504,074
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EARNINGS PER SHARE
Basic earnings per common share $ 0.48 $ 0.14
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Diluted earnings per common share $ 0.45 $ 0.14
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Dividend per common share (1) $ - $ -
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Basic weighted average common shares outstanding (2) 3,605,344 3,533,488
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Diluted weighted average common shares outstanding 3,789,679 3,660,855
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(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
(unaudited)
March 31, 2004 December 31, 2003 March 31, 2003
------------------- ------------------ ----------------
ASSETS
Cash and due from banks $ 32,146,863 $ 31,101,961 $ 34,252,334
Short term investments 38,500,000 14,000,000 38,500,000
Investment securities 179,320,102 196,308,098 208,002,227
Loans 505,731,228 488,839,152 431,593,565
Allowance for loan losses (10,329,239) (9,986,425) (9,744,360)
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Net loans 495,401,989 478,852,727 421,849,205
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Bank premises and equipment 12,217,891 12,429,021 13,271,471
Intangible assets 6,496,931 6,530,123 6,629,700
Other assets 12,041,146 12,323,241 10,490,826
--------------- --------------- ---------------
TOTAL ASSETS $ 776,124,922 $ 751,545,171 $ 732,995,763
=============== =============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $ 688,499,974 $ 660,824,382 $ 651,471,411
Repurchase agreements 14,505,876 953,924 962,832
Federal Home Loan Bank borrowings 1,932,500 20,470,000 10,470,000
Junior subordinated debentures 10,825,000 10,825,000 10,825,000
Other liabilities 3,143,034 3,721,291 10,498,451
--------------- --------------- ---------------
Total liabilities 718,906,384 696,794,597 684,227,694
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Stockholders' equity 54,282,128 52,511,133 46,134,145
Net unrealized appreciation on investment
securities, net of taxes 2,936,410 2,239,441 2,633,924
--------------- --------------- ---------------
Total stockholders' equity 57,218,538 54,750,574 48,768,069
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TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 776,124,922 $ 751,545,171 $ 732,995,763
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Investment assets under management $ 386,661,205 $ 375,296,992 $ 336,537,613
=============== =============== ===============
Mortgage loans serviced for others $ 14,741,485 $ 15,077,295 $ 16,975,274
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Total assets, investment assets under management
and mortgage loans serviced for others $ 1,177,527,612 $ 1,141,919,458 $ 1,086,508,650
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