Enterprise Bancorp, Inc. Announces Third Quarter Net Income Increase of 32%
LOWELL, Mass., Oct 16, 2009 (BUSINESS WIRE) --
Company: Enterprise Bancorp Inc (EBTC)
Enterprise Bancorp, Inc. ("Enterprise") (NASDAQ: EBTC), parent of Enterprise Bank, announced net income of $2.3 million, or $0.28 per diluted share, for the quarter ended September 30, 2009, compared to $1.7 million, or $0.21 per diluted share, for the quarter ended September 30, 2008. Net income for the nine months ended September 30, 2009 amounted to $5.2 million, or $0.63 diluted earnings per share, compared to $5.5 million, or $0.69 diluted earnings per share, for the comparable 2008 period.
Loans outstanding totaled $1.06 billion at September 30, 2009, an increase of $110.3 million, or 12%, since December 31, 2008, representing an annualized growth rate of 16%, and an increase of $39.5 million since June 30, 2009. Deposits, excluding brokered deposits, totaled $1.04 billion at September 30, 2009, an increase of $167 million, or 19%, since December 31, 2008, representing an annualized growth rate of 26%, and an increase of $14.7 million since June 30, 2009.
Enterprise also announced today that it has declared a quarterly dividend of $0.095 per share to be paid on December 1, 2009, to shareholders of record as of November 10, 2009, compared to the quarterly dividend of $0.09 per share paid in December 2008. The quarterly dividend represents a 5.6% increase over the 2008 dividend rate.
Chief Executive Officer Jack Clancy commented, "We are very pleased with Enterprise's earnings, continued deposit and loan growth, overall financial results, and progress. Our significant investments that have been made to further position Enterprise Bank to seize the current market opportunities, including investments in branch expansion, technology, marketing, personnel, and other investments, are resulting in strong deposit and loan growth and increased earnings. The 32% increase in net income in the third quarter was achieved in spite of increased FDIC insurance premiums impacting all banks, and ongoing expenditures to position Enterprise for continued growth and branch expansion.
Mr. Clancy continued, "The current environment provides what we believe are unprecedented opportunities for community banks like Enterprise, as customers migrate from larger, national banks to local community banks, choosing to do business with banking professionals they know and trust. At a time when many large regional and national financial institutions are retrenching, Enterprise is successfully growing loans and deposits, as indicated by our 2009 year-to-date annualized growth rates of 16% and 26%, respectively, while we continue to expand our branch network and invest in our infrastructure and in our employees. During the quarter, our temporary Derry, NH loan production office began operating as a full-service branch. We also recently began construction on our permanent Derry location, which we expect to be open in late spring 2010."
Founder and Chairman of the Board George Duncan stated, "We believe that the need for and the desire of local businesses, professionals, non profits and individuals to do business with a stable, local community bank, like Enterprise, is stronger than ever. We anticipate that the current banking environment will continue to provide abundant opportunities for Enterprise to acquire new customers, increase market share and expand geographically over the coming years."
Results of Operations
The increase in net income for the quarter ended September 30, 2009, when compared to the same period in 2008, was primarily due to an increase in net interest income, partially offset by a decrease in gains on sales of investments and increases in FDIC insurance premiums and other non-interest expenses.
Net income for year-to-date September 2009, when compared to the same period in 2008, was impacted primarily by an increase in net interest income, which was more than offset by increases in the provision for loan losses, a decrease in non interest income, and increases in FDIC insurance premiums and other non-interest expenses.
Net interest income for the quarter ended September 30, 2009 amounted to $12.5 million, compared to $10.9 million in the September 2008 quarter, an increase of $1.6 million or 15%. Net interest income for the nine-month period ended September 30, 2009 amounted to $35.3 million, an increase of 14%, compared to $31.0 million for the nine months ended September 30, 2008. The increase in net interest income over the comparable quarter and year-to-date 2008 periods was due primarily to strong loan growth. Average loan balances increased $150.6 million and $133.6 million for the quarter-over-quarter and year-over-year periods, respectively.
Net interest margin was 4.32% for the three months ended September 30, 2009, compared to 4.19% and 4.27% for the quarters ended June 30, 2009 and September 30, 2008, respectively. Year-to-date net interest margin was 4.23% for the nine months ended September 30, 2009 compared to 4.22% for the same period in 2008, and 4.23% for the year ended December 31, 2008.
The provision for loan losses amounted to $1.1 million for the three months ended September 30, 2009, compared to $1.2 million for the same period in 2008, and amounted to $3.1 million and $2.0 million for the nine months ended September 30, 2009 and 2008, respectively. The increase in the year-to-date provision was due to several factors: the level of loan growth during the period; 2009 year-to-date net charge-offs of $887 thousand compared to $387 thousand for the same period last year; and an increase in specific reserves. Annualized year-to-date net charge-offs amounted to 0.12% of average total loans in 2009 compared to 0.06% for the same period in 2008. Non-performing assets amounted to 1.30% of total assets at September 30, 2009 compared to 1.09%, 0.73% and 0.63% at June 30, 2009, December 31, 2008 and September 30, 2008, respectively. The ratio of loans 60-89 days past due to total loans declined to 0.12% at September 30, 2009 compared to 0.32% at June 30, 2009 and 0.28% at December 31, 2008. The allowance for loan losses to total loans ratio was 1.65% at September 30, 2009, compared to 1.64% at June 30, 2009, and 1.61% at December 31, 2008. In general, the trends in non-performing statistics are consistent with the economic environment at the local level, which has been less severely impacted than nationally. Our credit quality and allowance ratios continue to compare favorably to peer groups.
Non-interest income for the three months ended September 30, 2009 amounted to $2.4 million as compared to $2.6 million at September 30, 2008. Non-interest income for the nine months ended September 30, 2009 and September 30, 2008 amounted to $7.1 million and $7.4 million, respectively. Year-to-date investment advisory income decreased $405 thousand over the same period in the prior year due to the decline in the value of assets under management resulting primarily from investment market conditions. During the nine months ended September 30, 2009, net gains on security sales were offset in part by the other than temporary impairment on certain equity securities and resulted in net gains of $189 thousand, compared to net gains of $267 thousand for the nine months ended September 30, 2008. Gains realized on the sales of loans increased $426 thousand over the comparable year-to-date period due to the increase in volume of residential loan production as a result of the favorable market interest rates in 2009.
Non-interest expense for the three months ended September 30, 2009, amounted to $10.5 million, an increase of 9%, compared to the same quarter last year. Non-interest expense for the nine months ended September 30, 2009, amounted to $32.1 million, an increase of 13%, compared to the same period in the prior year. The increase in non-interest expense was related primarily to strategic growth, new branches opened and increases in FDIC deposit insurance assessments. Strategic growth initiatives resulted in increases in the areas of compensation-related costs, occupancy, and advertising and public relations expenses. Year-to-date deposit insurance premiums increased $1.2 million compared to the same nine month period in 2008, due to changes in the FDIC insurance assessment rates and a special June 30, 2009 assessment, which applied to all insured banks, intended to replenish the FDIC's deposit insurance reserves.
Key Financial Highlights
-- Total assets were $1.29 billion at September 30, 2009 as compared to $1.18 billion at December 31, 2008, an increase of 9%.
-- Total loans increased $110.3 million, or 12%, since December 31, 2008 amounting to $1.06 billion at September 30, 2009.
-- Total deposits, excluding brokered deposits, were $1.04 billion at September 30, 2009 compared to $872.5 million at December 31, 2008, an increase of 19%. Brokered deposits amounted to $88.2 million and $75.4 million on those respective dates.
-- Investment assets under management amounted to $421.6 million at September 30, 2009 compared to $439.7 million at December 31, 2008, a decrease of 4%. The decrease is attributable primarily to declines in commercial sweep account balances during the period partially offset by an increase in Investment Advisory assets in the last quarter.
-- Total assets under management amounted to $1.75 billion at September 30, 2009 and $1.65 billion at December 31, 2008.
Enterprise Bancorp, Inc. (the "Company"), is a Massachusetts corporation that conducts substantially all of its operations through Enterprise Bank and Trust Company, commonly referred to as Enterprise Bank, and has reported 80 consecutive profitable quarters. 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 products, deposit and cash management 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 and North Central regions of Massachusetts and South Central New Hampshire. Enterprise Bank has seventeen full-service branch offices located in the Massachusetts cities and towns of Lowell, Acton, Andover, Billerica, Chelmsford, Dracut, Fitchburg, Leominster, Methuen, Tewksbury, and Westford and in the New Hampshire towns of Derry and Salem.
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, 2009 and 2008
(unaudited)
Three Months Ended Sept 30, Nine Months Ended Sept 30,
(Dollars in thousands, except per share data) 2009 2008 2009 2008
Interest and dividend income:
Loans $ 14,721 $ 14,501 $ 42,436 $ 43,154
Investment securities 1,055 1,415 3,759 4,427
Short-term investments 15 60 88 165
Total interest and dividend income 15,791 15,976 46,283 47,746
Interest expense:
Deposits 2,941 4,210 9,874 14,156
Borrowed funds 49 557 211 1,721
Junior subordinated debentures 294 294 883 883
Total interest expense 3,284 5,061 10,968 16,760
Net interest income 12,507 10,915 35,315 30,986
Provision for loan losses 1,140 1,173 3,106 2,040
Net interest income after provision for loan losses
11,367 9,742 32,209 28,946
Non-interest income:
Investment advisory fees 688 778 2,034 2,439
Deposit service fees 1,037 988 2,815 2,826
Income on bank-owned life insurance 155 157 466 464
Other than temporary impairment on investment securities (8 ) - (782 ) -
Net gains on sales of investment securities - 220 971 267
Gains on sales of loans 148 40 526 100
Other income 337 442 1,055 1,314
Total non-interest income 2,357 2,625 7,085 7,410
Non-interest expense:
Salaries and employee benefits 6,158 5,791 18,203 16,948
Occupancy expenses 1,892 1,685 5,672 4,937
Audit, legal and other professional fees 350 331 1,110 1,096
Advertising and public relations expenses 514 434 1,506 1,272
Deposit insurance premiums 393 194 1,720 537
Supplies and postage expenses 209 222 626 685
Investment advisory and custodial expenses 85 72 304 274
Other operating expenses 919 910 2,934 2,525
Total non-interest expense 10,520 9,639 32,075 28,274
Income before income taxes 3,204 2,728 7,219 8,082
Provision for income taxes 935 1,009 2,058 2,563
Net income $ 2,269 $ 1,719 $ 5,161 $ 5,519
Basic earnings per share $ 0.28 $ 0.22 $ 0.63 $ 0.69
Diluted earnings per share $ 0.28 $ 0.21 $ 0.63 $ 0.69
Basic weighted average common shares outstanding 8,228,897 7,984,628 8,157,273 7,961,943
Diluted weighted average common shares outstanding 8,239,729 8,012,595 8,171,171 7,997,111
ENTERPRISE BANCORP, INC.
Consolidated Balance Sheets
(unaudited)
September 30, December 31, September 30,
(Dollars in thousands) 2009 2008 2008
Assets
Cash and cash equivalents:
Cash and due from banks $ 30,737 $ 21,479 $ 31,858
Short-term investments 11,102 3,797 14,296
Total cash and cash equivalents 41,839 25,276 46,154
Investment securities at fair value 142,904 159,373 137,535
Loans, less allowance for loan losses of $17,488 at Sept. 30, 2009, 1,041,410 933,372 893,573
$15,269 at December 31, 2008 and $15,198 at Sept. 30, 2008
Premises and equipment 22,281 21,651 20,423
Accrued interest receivable 5,504 5,357 5,475
Deferred income taxes, net 9,646 9,349 9,601
Bank-owned life insurance 13,697 13,290 13,156
Prepaid income taxes 359 1,034 1,067
Prepaid expenses and other assets 4,021 5,910 3,663
Core deposit intangible, net of amortization 110 209 243
Goodwill 5,656 5,656 5,656
Total assets $ 1,287,427 $ 1,180,477 $ 1,136,546
Liabilities and Stockholders' Equity
Liabilities
Deposits $ 1,127,701 $ 947,903 $ 944,253
Borrowed funds 31,170 121,250 83,476
Junior subordinated debentures 10,825 10,825 10,825
Accrued expenses and other liabilities 19,003 7,546 7,709
Accrued interest payable 1,270 1,849 1,607
Total liabilities 1,189,969 1,089,373 1,047,870
Commitments and Contingencies
Stockholders' Equity
Preferred stock, $0.01 par value per share; 1,000,000 shares
authorized; no shares issued
- - -
Common stock $0.01 par value per share; 20,000,000 shares
authorized; 8,242,291 and, 8,025,239 and 7,999,089 shares issued
and outstanding at Sept 30, 2009, December 31, 2008 and Sept 30,
2008, respectively
82 80 80
Additional paid-in capital 31,302 29,698 29,347
Retained earnings 63,040 60,200 60,890
Accumulated other comprehensive income (loss) 3,034 1,126 (1,641 )
Total stockholders' equity 97,458 91,104 88,676
Total liabilities and stockholders' equity $ 1,287,427 $ 1,180,477 $ 1,136,546
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
Sept 30, December 31, Sept 30,
(Dollars in thousands, except per share data) 2009 2008 2008
Balance Sheet Items:
Total assets $ 1,287,427 $ 1,180,477 $ 1,136,546
Loans serviced for others 44,010 28,341 20,683
Investment assets under management 421,553 439,711 516,457
Total assets under management $ 1,752,990 $ 1,648,529 $ 1,673,686
Book value per share $ 11.82 $ 11.35 $ 11.09
Dividends per common share $ 0.285 $ 0.360 $ 0.270
Total capital to risk weighted assets 10.35 % 10.70 % 11.05 %
Tier 1 capital to risk weighted assets 9.02 % 9.45 % 9.80 %
Tier 1 capital to average assets 7.91 % 8.28 % 8.46 %
Allowance for loan losses to total loans 1.65 % 1.61 % 1.67 %
Non-performing assets $ 16,766 $ 8,585 $ 7,168
Non-performing assets to total assets 1.30 % 0.73 % 0.63 %
Income Statement Items (annualized):
Return on average assets 0.56 % 0.51 % 0.68 %
Return on average stockholders' equity 7.36 % 6.26 % 8.33 %
Net interest margin (tax equivalent) 4.23 % 4.23 % 4.22 %
SOURCE: Enterprise Bancorp, Inc.
Enterprise Bancorp, Inc. Mary Ellen Fitzpatrick, 978-656-5520 Senior Vice President, Corporate Communications
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Company: Enterprise Bancorp Inc (EBTC)
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