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| 8-K - 8-K - ENTERPRISE BANCORP INC /MA/ | a8-kx6x30x16financialpress.htm |
Exhibit 99
Contact Info: James A. Marcotte, Executive Vice President, Chief Financial Officer and Treasurer (978) 656-5614
Enterprise Bancorp, Inc. Announces Second Quarter 2016 Net Income of $4.8 Million
LOWELL, Mass., July 21, 2016 (GLOBE NEWSWIRE) - Enterprise Bancorp, Inc. (the “Company”) (NASDAQ: EBTC), parent of Enterprise Bank, announces net income for the three months ended June 30, 2016 amounted to $4.8 million, an increase of $1.3 million, or 36%, compared to the same three-month period in 2015. Diluted earnings per share were $0.45 for the three months ended June 30, 2016, an increase of 32%, compared to the same three-month period in 2015. Net income for the six months ended June 30, 2016 amounted to $9.1 million, an increase of $1.9 million, or 27%, compared to the six months ended June 30, 2015. Diluted earnings per share were $0.86 for the six months ended June 30, 2016, an increase of 25% compared to the six months ended June 30, 2015.
As previously announced on July 19, 2016, the Company declared a quarterly dividend of $0.13 per share to be paid on September 1, 2016 to shareholders of record as of August 11, 2016. The 2016 dividend rate represents a 4.0% increase over the 2015 dividend rate.
Chief Executive Officer Jack Clancy commented, “The increase in our 2016 earnings compared to 2015 is largely driven by our growth over the last twelve months. Loans, total assets, and deposits, excluding brokered deposits, have increased 9%, 12%, and 15%, respectively, as compared to June 30, 2015. This growth continues to be driven by the collective efforts and contributions of our dedicated Enterprise team, active community involvement, relationship building and a customer-focused mindset, market expansion, and ongoing enhancements to our state-of-the-art product and service offerings.”
Mr. Clancy continued, “Our 23rd branch, on Route 101A, in Nashua, NH, opened in early July and we recently announced we anticipate opening our 24th office, in Windham, NH, in 2017. Strategically, our focus remains on organic growth and continually planning for and investing in our future. As part of our focus on long-term strategic growth, we recently completed a $20 million shareholder subscription rights offering combined with a supplemental community offering. Although this additional capital will slightly dilute EPS as we go forward, we believe this capital will help position us to continue to take advantage of growth opportunities.”
Founder and Chairman of the Board George Duncan commented, “While we are proud of our continued and consistent growth and profitability, the true value of that growth is reflected in what it means for our customers, shareholders, and our community. Along with strong customer service, the growth of our lending and deposit base ties directly to our ever advancing and progressive commercial lending, cash management, mobile banking, wealth management, trust, insurance and overall state-of-the-art services.”
Mr. Duncan also noted, “We are very appreciative of the strong support and confidence we received from our shareholders and the community in our recently completed successful $20 million offering. Due to the strong support we received, we increased the offering size from $10 million to $20 million. It was gratifying to see this support not only from existing shareholders but from new community shareholders. We believe that expanding our shareholder base in the local community is an important part of our long term growth. Having local shareholders referring business, and doing business themselves in our bank lobbies every day, is very powerful.”
Results of Operations
Net interest income for the three months ended June 30, 2016 amounted to $21.3 million, an increase of $2.1 million, or 11%, compared to the same period in 2015. Net interest income for the six months ended June 30, 2016 amounted to $42.4 million, an increase of $4.7 million, or 13%, compared to the six months ended June 30, 2015. The increase in net interest income was due primarily to loan growth. Average loan balances (including loans held for sale) increased $179.3 million and $180.1 million for the three and six months ended June 30, 2016, respectively, compared to the same 2015 period averages. Net interest margin was 4.02% for the three months
ended June 30, 2016 compared to 3.98% for the three months ended June 30, 2015. Net interest margin was 4.02% for the six months ended June 30, 2016, compared to 3.96% for the six months ended June 30, 2015.
For the three months ended June 30, 2016 and June 30, 2015, the provision for loan losses amounted to $267 thousand and $1.2 million, respectively. For the six months ended June 30, 2016 and June 30, 2015, the provision for loan losses amounted to $1.1 million and $1.9 million, respectively. The decrease in the provision for 2016 was due primarily to improving credit quality, a lower level of charge-offs, and the level of loan growth during the 2016 period, as compared to the 2015 period.
In determining the provision to the allowance for loan losses, management takes into consideration the level of loan growth and an estimate of credit risk, which includes such items as adversely classified and non-performing loans, the estimated specific reserves needed for impaired loans, the level of net charge-offs, and the estimated impact of current economic conditions on credit quality. Loan growth for the six months ended June 30, 2016 was $39.2 million compared to $63.9 million during the six months ended June 30, 2015. Total non-performing loans as a percentage of total loans declined to 0.54% at June 30, 2016, compared to 0.92% at June 30, 2015. The balance of the allowance for loan losses allocated to impaired loans amounted to $2.1 million at June 30, 2016, compared to $2.6 million at June 30, 2015. The balance of the allowance for loan losses allocated to non-impaired classified loans amounted to $2.0 million at June 30, 2016, compared to $1.2 million at June 30, 2015. The Company recorded net recoveries of $220 thousand for the six months ended June 30, 2016, compared to net charge-offs of $809 thousand for the six months ended June 30, 2015.
The allowance for loan losses to total loans ratio was 1.60% at June 30, 2016, 1.56% at December 31, 2015 and 1.62% at June 30, 2015. The decline in the allowance ratio reflects the generally improving credit quality of the loan portfolio, in part due to improved economic conditions over the past twelve months. However, in 2016, the credit ratings of three larger commercial relationships were downgraded to "criticized" or "adverse" risk ratings, based on a review of their individual business circumstances, requiring higher levels of reserves in the current period, which increased the allowance to total loan ratio compared to December 31, 2015.
Non-interest income for the three months ended June 30, 2016 amounted to $3.6 million, a decrease of $96 thousand, or 3%, compared to the same quarter last year. Non-interest income for the six months ended June 30, 2016 amounted to $6.8 million, a decrease of $915 thousand, or 12%, compared to the six months ended June 30, 2015. These decreases were due primarily to a decrease in net gains on the sales of investment securities, partially offset by increases in deposit and interchange fees, investment advisory fees, and income on bank-owned life insurance.
Non-interest expense for the quarter ended June 30, 2016 amounted to $17.5 million, an increase of $1.3 million, or 8%, compared to the same quarter in the prior year. For the six months ended June 30, 2016, non-interest expense amounted to $34.4 million, an increase of $1.9 million, or 6%, over the six months ended June 30, 2015. Increases in expenses over the prior year primarily related to increases in salaries and benefits and technology expenses due to the Company’s strategic growth and market expansion initiatives. Non-interest expense for the six months ended June 30, 2016 also included increases in audit, legal and other professional costs. The decrease in year-to-date other expenses was impacted by the 2015 prepayment fees associated with the redemption of the Trust Preferred Securities, partially offset by an increase in outsources services in the current year.
Key Financial Highlights
▪ | Total assets amounted to $2.43 billion at June 30, 2016, compared to $2.29 billion at December 31, 2015, an increase of $147.5 million, or 6%. Since March 31, 2016, total assets have increased $128.4 million, or 6%. |
▪ | Total loans amounted to $1.90 billion at June 30, 2016 compared to $1.86 billion at December 31, 2015, an increase of $39.2 million, or 2%. Since March 31, 2016, total loans have increased $34.5 million, or 2%. |
▪ | Total deposits, excluding brokered deposits, were $2.11 billion at June 30, 2016, compared to $1.91 billion at December 31, 2015, an increase of $198.7 million, or 10%. Since March 31, 2016, total deposits, excluding brokered deposits, have increased $111.7 million, or 6%. Brokered deposits were $74.3 million at June 30, 2016, compared to $89.3 million and $106.8 million at March 31, 2016 and at December 31, 2015, respectively. |
▪ | Investment assets under management amounted to $683.9 million at June 30, 2016, compared to $678.4 million at December 31, 2015, an increase of $5.5 million. Since March 31, 2016, investment assets under management have decreased $4.4 million. |
▪ | Total assets under management amounted to $3.19 billion at June 30, 2016, compared to $3.04 billion at December 31, 2015, an increase of $159.4 million, or 5%. Since March 31, 2016, total assets under management have increased $130.4 million, or 4%. |
Enterprise Bancorp, Inc. 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 107 consecutive profitable quarters. The Company is principally engaged in the business of attracting deposits from the general public and investing in commercial loans and investment securities. Through Enterprise Bank and its subsidiaries, the Company offers a range of commercial and consumer loan products, and deposit and cash management services. The Company also offers investment advisory and wealth 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 greater Merrimack Valley and North Central regions of Massachusetts and Southern New Hampshire. Enterprise Bank has 23 full-service branch offices located in the Massachusetts communities of Lowell, Acton, Andover, Billerica, Chelmsford, Dracut, Fitchburg, Lawrence, Leominster, Methuen, Tewksbury, Tyngsborough and Westford and in the New Hampshire communities of Derry, Hudson, Nashua, Pelham and Salem. The Company is also in the process of obtaining regulatory approvals to establish a branch in Windham, NH and anticipates that the office will open in 2017.
This earnings release 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 reference to a future period or periods or by the use of the words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “assume,” “will,” “should,” “plan,” and other similar terms or expressions. 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, competition, and the receipt of required regulatory approvals. For more information about these factors, please see our reports filed with or furnished to the Securities and Exchange Commission (the “SEC”), including 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, except as required by applicable law.
ENTERPRISE BANCORP, INC.
Consolidated Balance Sheets
(unaudited)
(Dollars in thousands) | June 30, 2016 | December 31, 2015 | June 30, 2015 | |||||||||
Assets | ||||||||||||
Cash and cash equivalents: | ||||||||||||
Cash and due from banks | $ | 99,013 | $ | 32,318 | $ | 55,172 | ||||||
Interest-earning deposits | 42,849 | 19,177 | 60,489 | |||||||||
Total cash and cash equivalents | 141,862 | 51,495 | 115,661 | |||||||||
Investment securities at fair value | 319,503 | 300,358 | 260,969 | |||||||||
Federal Home Loan Bank stock | 1,879 | 3,050 | 4,239 | |||||||||
Loans held for sale | 1,971 | 1,709 | 1,325 | |||||||||
Loans, less allowance for loan losses of $30,345 at June 30, 2016, $29,008 at December 31, 2015 and $28,162 at June 30, 2015 | 1,868,841 | 1,830,954 | 1,708,384 | |||||||||
Premises and equipment, net | 34,140 | 30,553 | 30,461 | |||||||||
Accrued interest receivable | 7,838 | 7,790 | 6,880 | |||||||||
Deferred income taxes, net | 11,506 | 14,111 | 13,570 | |||||||||
Bank-owned life insurance | 28,400 | 28,018 | 16,516 | |||||||||
Prepaid income taxes | 776 | 57 | 778 | |||||||||
Prepaid expenses and other assets | 10,681 | 11,780 | 6,038 | |||||||||
Goodwill | 5,656 | 5,656 | 5,656 | |||||||||
Total assets | $ | 2,433,053 | $ | 2,285,531 | $ | 2,170,477 | ||||||
Liabilities and Stockholders’ Equity | ||||||||||||
Liabilities | ||||||||||||
Deposits | $ | 2,184,430 | $ | 2,018,148 | $ | 1,959,498 | ||||||
Borrowed funds | 671 | 53,671 | 1,316 | |||||||||
Subordinated debt | 14,828 | 14,822 | 14,815 | |||||||||
Accrued expenses and other liabilities | 20,374 | 18,287 | 22,287 | |||||||||
Accrued interest payable | 252 | 276 | 253 | |||||||||
Total liabilities | 2,220,555 | 2,105,204 | 1,998,169 | |||||||||
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; 11,420,426 shares issued and outstanding at June 30, 2016 (including 143,671 shares of unvested participating restricted awards), 10,377,787 shares issued and outstanding at December 31, 2015 (including 144,717 shares of unvested participating restricted awards) and 10,343,351 shares issued and outstanding at June 30, 2015 (including 147,421 shares of unvested participating restricted awards) | 114 | 104 | 103 | |||||||||
Additional paid-in capital | 82,387 | 61,008 | 59,317 | |||||||||
Retained earnings | 123,313 | 116,941 | 110,517 | |||||||||
Accumulated other comprehensive income | 6,684 | 2,274 | 2,371 | |||||||||
Total stockholders’ equity | 212,498 | 180,327 | 172,308 | |||||||||
Total liabilities and stockholders’ equity | $ | 2,433,053 | $ | 2,285,531 | $ | 2,170,477 | ||||||
ENTERPRISE BANCORP, INC.
Consolidated Statements of Income
(unaudited)
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
(Dollars in thousands, except per share data) | 2016 | 2015 | 2016 | 2015 | |||||||||||
Interest and dividend income: | |||||||||||||||
Loans and loans held for sale | $ | 21,032 | $ | 19,171 | $ | 41,913 | $ | 37,753 | |||||||
Investment securities | 1,551 | 1,223 | 3,091 | 2,448 | |||||||||||
Other interest-earning assets | 49 | 43 | 93 | 75 | |||||||||||
Total interest and dividend income | 22,632 | 20,437 | 45,097 | 40,276 | |||||||||||
Interest expense: | |||||||||||||||
Deposits | 1,099 | 1,019 | 2,187 | 2,011 | |||||||||||
Borrowed funds | 14 | 1 | 77 | 22 | |||||||||||
Subordinated debt | 230 | 233 | 461 | 605 | |||||||||||
Total interest expense | 1,343 | 1,253 | 2,725 | 2,638 | |||||||||||
Net interest income | 21,289 | 19,184 | 42,372 | 37,638 | |||||||||||
Provision for loan losses | 267 | 1,225 | 1,117 | 1,850 | |||||||||||
Net interest income after provision for loan losses | 21,022 | 17,959 | 41,255 | 35,788 | |||||||||||
Non-interest income: | |||||||||||||||
Investment advisory fees | 1,327 | 1,209 | 2,431 | 2,386 | |||||||||||
Deposit and interchange fees | 1,276 | 1,214 | 2,518 | 2,368 | |||||||||||
Income on bank-owned life insurance, net | 191 | 101 | 382 | 201 | |||||||||||
Net gains on sales of investment securities | 63 | 456 | 65 | 1,356 | |||||||||||
Gains on sales of loans | 105 | 128 | 194 | 284 | |||||||||||
Other income | 620 | 570 | 1,198 | 1,108 | |||||||||||
Total non-interest income | 3,582 | 3,678 | 6,788 | 7,703 | |||||||||||
Non-interest expense: | |||||||||||||||
Salaries and employee benefits | 11,025 | 10,098 | 21,510 | 19,679 | |||||||||||
Occupancy and equipment expenses | 1,781 | 1,749 | 3,594 | 3,709 | |||||||||||
Technology and telecommunications expenses | 1,548 | 1,378 | 2,971 | 2,795 | |||||||||||
Advertising and public relations expenses | 817 | 809 | 1,496 | 1,539 | |||||||||||
Audit, legal and other professional fees | 408 | 382 | 896 | 741 | |||||||||||
Deposit insurance premiums | 324 | 297 | 650 | 590 | |||||||||||
Supplies and postage expenses | 258 | 252 | 487 | 510 | |||||||||||
Investment advisory and custodial expenses | 87 | 89 | 176 | 135 | |||||||||||
Other operating expenses | 1,294 | 1,213 | 2,631 | 2,779 | |||||||||||
Total non-interest expense | 17,542 | 16,267 | 34,411 | 32,477 | |||||||||||
Income before income taxes | 7,062 | 5,370 | 13,632 | 11,014 | |||||||||||
Provision for income taxes | 2,291 | 1,855 | 4,548 | 3,879 | |||||||||||
Net income | $ | 4,771 | $ | 3,515 | $ | 9,084 | $ | 7,135 | |||||||
Basic earnings per share | $ | 0.45 | $ | 0.34 | $ | 0.87 | $ | 0.69 | |||||||
Diluted earnings per share | $ | 0.45 | $ | 0.34 | $ | 0.86 | $ | 0.69 | |||||||
Basic weighted average common shares outstanding | 10,561,680 | 10,331,485 | 10,483,396 | 10,287,509 | |||||||||||
Diluted weighted average common shares outstanding | 10,629,900 | 10,394,496 | 10,550,842 | 10,352,730 | |||||||||||
ENTERPRISE BANCORP, INC.
Selected Consolidated Financial Data and Ratios
(unaudited)
(Dollars in thousands, except per share data) | At or for the six months ended June 30, 2016 | At or for the year ended December 31, 2015 | At or for the six months ended June 30, 2015 | ||||||||||
BALANCE SHEET AND OTHER DATA | |||||||||||||
Total assets | $ | 2,433,053 | $ | 2,285,531 | $ | 2,170,477 | |||||||
Loans serviced for others | 77,648 | 71,272 | 67,337 | ||||||||||
Investment assets under management | 683,884 | 678,377 | 709,292 | ||||||||||
Total assets under management | $ | 3,194,585 | $ | 3,035,180 | $ | 2,947,106 | |||||||
Book value per share | $ | 18.61 | $ | 17.38 | $ | 16.66 | |||||||
Dividends paid per common share | $ | 0.26 | $ | 0.50 | $ | 0.25 | |||||||
Total capital to risk weighted assets | 11.93 | % | 10.70 | % | 11.48 | % | |||||||
Tier 1 capital to risk weighted assets | 9.91 | % | 8.66 | % | 9.32 | % | |||||||
Tier 1 capital to average assets | 8.69 | % | 7.73 | % | 7.94 | % | |||||||
Common equity tier 1 capital to risk weighted assets | 9.91 | % | 8.66 | % | 9.32 | % | |||||||
Allowance for loan losses to total loans | 1.60 | % | 1.56 | % | 1.62 | % | |||||||
Non-performing assets | $ | 10,271 | $ | 13,845 | $ | 16,004 | |||||||
Non-performing assets to total assets | 0.42 | % | 0.61 | % | 0.74 | % | |||||||
INCOME STATEMENT DATA (annualized) | |||||||||||||
Return on average total assets | 0.80 | % | 0.76 | % | 0.70 | % | |||||||
Return on average stockholders’ equity | 9.75 | % | 9.29 | % | 8.43 | % | |||||||
Net interest margin (tax equivalent) | 4.02 | % | 3.97 | % | 3.96 | % | |||||||