Enterprise Bancorp, Inc. (the “Company”) (NASDAQ: EBTC), parent of Enterprise Bank, announced net income of $2.7 million, or $0.28 per diluted share, for the three months ended June 30, 2011 compared to $2.6 million, or $0.28 per diluted share for the comparable 2010 period. Net income for the six months ended June 30, 2011 amounted to $5.1 million, or $0.55 per diluted share, compared to $5.5 million, or $0.60 per diluted share for the comparable 2010 period.

As previously announced on July 19, 2011, the Company declared a quarterly dividend of $0.105 per share to be paid on September 1, 2011 to shareholders of record as of August 11, 2011. The quarterly dividend represents a 5.0% increase over the 2010 dividend rate.

Chief Executive Officer Jack Clancy commented, “We are very pleased with our financial results and continued growth during both the second quarter and year-to-date 2011. The increase in net income in the second quarter of 2011 as compared to the prior year is primarily attributed to our continued successful growth. Operating income for the six months to date was comparable to the prior year levels, as the $340 thousand decrease in net income, compared to the same quarter in 2010, was primarily due to the higher level of gains realized on sales of investment securities in the first quarter of 2010. Deposits, excluding brokered deposits, have grown $76.0 million, or 6%, since December 31, 2010, or 12% on an annualized basis. While many banks continue to experience declining loan portfolios, our loan balances grew $32.3 million, or 3%, since December 31, 2010, or 6% on an annualized basis.”

Mr. Clancy further stated, “Our focus remains on increasing market share and on growing all of our business lines, including quality lending, deposits, investment assets managed and insurance services through organic growth and strategic expansion, as we seek to take advantage of market opportunities that continue to be presented to strong community banks. We remain committed to making investments in our branch network, technology, and most importantly in our employees, customers and communities, while positioning the Bank for long-term growth. During the second quarter, we announced our fourth Southern New Hampshire location in Pelham, that we anticipate opening in early 2012.”

Founder and Chairman of the Board George Duncan stated, “It is because of our commitment to the markets in which we operate that we have recorded 87 consecutive quarters of profitability. Our employees have an unwavering commitment and focus on the communities and customers that we serve. Local businesses, professionals, non-profits and individuals continue to seek the flexibility, responsiveness and personalized service that a community bank such as Enterprise provides. As a strong, well-capitalized community bank with state-of-the-art product capabilities delivered with a local and dedicated customer-service focus, we believe that we are well positioned to meet our communities’ needs.”

Results of Operations

In both the quarter and year-to-date periods ended June 30, 2011, the Company’s growth contributed to increases in net interest income and the level of operating expenses. Net income for the three months ended June 30, 2011, as compared to the second quarter of 2010, also included increases in non-interest income, partially offset by the provision for loan losses. Net income for the six months ended June 30, 2011, as compared to the same period last year, was also impacted by a $516 thousand decline in gains on investment securities sales and an increase in the provision for loan losses, partially offset by increases in other non-interest revenue streams.

Net interest income for the quarter ended June 30, 2011 amounted to $14.3 million, an increase of $414 thousand, or 3%, compared to the June 2010 quarter. Net interest income increased $1.2 million, or 5% for the six-month period ended June 30, 2011 and amounted to $28.3 million for the six months ended June 30, 2011. The increase in net interest income over the comparable 2010 periods was due primarily to loan growth. For the three and six months ended June 30, 2011, average loan balances were $57.3 million and $58.4 million, respectively, above the comparable periods in 2010. Tax equivalent net interest margin decreased to 4.34% for the quarter ended June 30, 2011, as compared to 4.48% for the quarter ended June 30, 2010. Year-to-date net interest margin was 4.38% and 4.46% for the six months ended June 30, 2011 and 2010, respectively. The 2011 margin continues to be impacted by higher average balances in lower yielding short-term investments, primarily from deposit growth in excess of loan growth in the first half of 2011.

The provision for loan losses amounted to $1.2 million for the three months ended June 30, 2011 compared to $1.0 million for the same period in 2010. For the six months ended June 30, 2011 and 2010, the provision for loan losses amounted to $2.1 million and $1.9 million, respectively. The provisions made to the allowance for loan losses are a function of trends in asset quality, taking into consideration net charge-offs, the level of non-performing and adversely classified loans, and specific reserves for impaired loans, and the level of loan growth. For the year-to-date period ended June 30, 2011, the Company recorded net charge-offs of $219 thousand, compared to net charge-offs of $848 thousand for the comparable period ended June 30, 2010. Annualized net charge-offs to average loans for the six months ended June 30, 2011 amounted to 0.04% compared to 0.16% in 2010. Total non-performing assets to total assets were 1.73% at June 30, 2011, compared to 1.40% at June 30, 2010. The balance of the allowance for loan losses allocated to impaired loans amounted to $3.7 million at June 30, 2011, compared to $3.1 million at June 30, 2010. Management continues to closely monitor the non-performing assets, charge-offs and necessary allowance levels, including specific reserves, and believes that current loan quality statistics are a function of the ongoing effects of the recent economic environment. The level of loan growth during the first six months of 2011 was comparable to the same period in 2010, and amounted to $32.3 million. The allowance for loan losses to total loans ratio was 1.81% at June 30, 2011, compared to 1.70% at December 31, 2010 and 1.73% at June 30, 2010.

Non-interest income for the three months ended June 30, 2011 amounted to $3.0 million, an increase of $189 thousand, or 7%, compared to the second quarter of 2010. This increase was primarily due to increases in deposit fees and investment advisory income. Non-interest income for the six months ended June 30, 2011 amounted to $5.8 million a decrease of $122 thousand, or 2%, compared to the 2010 year-to-date period. This decrease primarily resulted from lower levels of gains on sales of investment securities and gains on sales of foreclosed real estate, which is included in Other Income, partially offset by increases in investment advisory fees, deposit fee income, and gains on loan sales.

Non-interest expense for the three months ended June 30, 2011, amounted to $12.1 million, an increase of $322 thousand, or 3%, compared to the same period in the prior year. For the six months ended June 30, 2011, non-interest expense amounted to $24.3 million, an increase of $1.4 million, or 6%, compared to the same period in the prior year. We continue to expand the branch network and invest in our infrastructure, communities, and employees to position Enterprise for continued long-term growth. Increases in both the quarter and year-to-date expenses resulted primarily from an increase in compensation-related expenses, partially offset by a reduction in FDIC insurance expenses, resulting from changes made by the FDIC (effective April 1, 2011) in their deposit insurance assessment. Advertising and public relations expense decreased in the quarter, primarily due to the Bank’s community recognition event, which was held in the Spring of 2010 and is planned to be held in the Fall of 2011. Year-to-date occupancy expense increased, primarily in the first quarter of 2011, as a result of the unusually high snow removal costs. Increases in Other Operating Expenses of $207 thousand and $345 thousand, respectively, for the quarter and year-to-date periods, included foreclosed real estate and loan workout expenses of $69 thousand and $104 thousand, respectively.

Key Financial Highlights
  • Total assets were $1.47 billion at June 30, 2011 as compared to $1.40 billion at December 31, 2010, an increase of $73.2 million, or 5%, primarily due to increases in both short-term investments, as a result of deposit growth in excess of loan funding, and loans. Since March 31, 2011, total assets have increased $41.1 million, or 3%.
  • Total loans amounted to $1.18 billion at June 30, 2011, an increase of $32.3 million, or 3%, since December 31, 2010. Since March 31, 2011, total loans have increased $24.0 million, or 2%.
  • Total deposits, excluding brokered deposits, were $1.32 billion at June 30, 2011 as compared to $1.24 billion at December 31, 2010, an increase of $76.0 million, or 6%. The Company had no brokered deposit balances at June 30, 2011 and amounts were minimal at December 31, 2010. Total deposits, excluding brokered deposits, have increased $34.9 million, or 3%, since March 31, 2011.
  • Investment assets under management amounted to $512.5 million at June 30, 2011 as compared to $493.1 million at December 31, 2010, an increase of $19.5 million, or 4%. Investment assets under management have increased $4.3 million, or 1%, since March 31, 2011. The increase is attributable primarily to asset growth, both from new business and market value appreciation.
  • Total assets under management amounted to $2.04 billion at June 30, 2011 as compared to $1.95 billion at December 31, 2010, an increase of $90.0 million, or 5%. Since March 31, 2011, total assets under management have increased $43.0 million, or 2%.

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 87 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 Southern New Hampshire. Enterprise Bank has eighteen 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, Hudson, and Salem. The Company has also obtained the necessary regulatory approvals to establish a new branch in Pelham, New Hampshire, and expects that this office will be open for business in early 2012.

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 Six months ended June 30, 2011 and 2010

(unaudited)
 
 

Three Months Ended June 30,

Six Months Ended June 30,
(Dollars in thousands, except per share data) 2011 2010 2011 2010
 
Interest and dividend income:
Loans $ 15,567 $ 15,354 $ 30,837 $ 30,123
Investment securities 907 1,057 1,866 2,147
Short-term investments   16   14   27   20
Total interest and dividend income   16,490   16,425   32,730   32,290
 
Interest expense:
Deposits 1,903 2,224 3,818 4,555
Borrowed funds 22 50 44 107
Junior subordinated debentures   295   295   589   589
Total interest expense   2,220   2,569   4,451   5,251
 
Net interest income 14,270 13,856 28,279 27,039
 
Provision for loan losses   1,192   1,033   2,114   1,912
Net interest income after provision for loan losses
  13,078   12,823   26,165   25,127
 
Non-interest income:
Investment advisory fees 969 879 1,925 1,733
Deposit service fees 1,116 1,034 2,139 2,006
Income on bank-owned life insurance 160 166 322 322
Other than temporary impairment on investment securities - (7 ) - (8 )
Net gains on sales of investment securities 261 276 261 777
Gains on sales of loans 64 103 284 184
Other income   476   406   895   934
Total non-interest income   3,046   2,857   5,826   5,948
 
Non-interest expense:
Salaries and employee benefits 7,122 6,676 14,098 13,122
Occupancy and equipment expenses 1,334 1,332 2,778 2,639
Technology and telecommunications expenses 961 1,010 1,934 1,922
Advertising and public relations expenses 581 755 1,246 1,281
Deposit insurance premiums 284 449 773 909
Audit, legal and other professional fees 362 328 672 595
Supplies and postage expenses 206 201 424 397
Investment advisory and custodial expenses 126 110 230 246
Other operating expenses   1,118   911   2,139   1,794
Total non-interest expense   12,094   11,772   24,294   22,905
 
Income before income taxes 4,030 3,908 7,697 8,170
Provision for income taxes   1,345   1,305   2,548   2,681
 
Net income $ 2,685 $ 2,603 $ 5,149 $ 5,489
 
Basic earnings per share $ 0.29 $ 0.28 $ 0.55 $ 0.60
Diluted earnings per share $ 0.28 $ 0.28 $ 0.55 $ 0.60
Basic weighted average common shares outstanding 9,401,932 9,219,171 9,360,458 9,172,194
Diluted weighted average common shares outstanding 9,497,299 9,223,965 9,426,633 9,176,734
             

ENTERPRISE BANCORP, INC.

Consolidated Balance Sheets

(unaudited)
 
June 30, December 31, June 30,
(Dollars in thousands) 2011 2010 2010
 
Assets
Cash and cash equivalents:
Cash and due from banks $ 29,205 $ 30,541 $ 30,504
Short-term investments   74,091   24,465   40,050
Total cash and cash equivalents   103,296   55,006   70,554
 
Investment securities at fair value 134,124 142,060 133,008
Federal Home Loan Bank Stock 4,740 4,740 4,740

Loans, less allowance for loan losses of $21,310 at June 30, 2011, $19,415 at December 31, 2010 and $19,282 at June 30, 2010, respectively
1,154,303 1,123,931 1,096,978
Premises and equipment 25,658 24,924 24,360
Accrued interest receivable 5,447 5,532 5,432
Deferred income taxes, net 10,425 11,039 10,211
Bank-owned life insurance 14,670 14,397 14,114
Prepaid income taxes 1,113 379 1,041
Prepaid expenses and other assets 11,076 9,657 7,922
Core deposit intangible, net of amortization - - 10
Goodwill   5,656   5,656   5,656
 
Total assets $ 1,470,508 $ 1,397,321 $ 1,374,026
 
Liabilities and Stockholders’ Equity
 
Liabilities
Deposits $ 1,319,959 $ 1,244,071 $ 1,215,161
Borrowed funds 4,779 15,541 25,372
Junior subordinated debentures 10,825 10,825 10,825
Accrued expenses and other liabilities 11,715 9,297 9,003
Accrued interest payable   815   914   1,011
 
Total liabilities   1,348,093   1,280,648   1,261,372
 
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; 9,422,087, 9,290,465, and 9,237,765 shares issued and outstanding at June 30, 2011, December 31, 2010 and June 30, 2010, respectively
 
94 93 92
Additional paid-in capital 44,039 42,590 41,608
Retained earnings 75,186 72,000 68,699
Accumulated other comprehensive income   3,096   1,990   2,255
 
Total stockholders’ equity   122,415   116,673   112,654
 
Total liabilities and stockholders’ equity $ 1,470,508 $ 1,397,321 $ 1,374,026
             

ENTERPRISE BANCORP, INC.

Selected Consolidated Financial Data and Ratios

(unaudited)
 
(Dollars in thousands, except per share data)   At or for thesix monthsendedJune 30,2011       At or for theyearendedDecember 31,2010 At or for thesix monthsendedJune 30,2010
Balance Sheet Items:
Total assets $ 1,470,508 $ 1,397,321 $ 1,374,026
Loans serviced for others 61,172 63,807 68,081
Investment assets under management   512,536   493,078   441,733
Total assets under management $ 2,044,216 $ 1,954,206 $ 1,883,840
 
Book value per share $ 12.99 $ 12.56 $ 12.19
Dividends per common share $ 0.21 $ 0.40 $ 0.20
Total capital to risk weighted assets 11.36% 11.44% 11.26%
Tier 1 capital to risk weighted assets 10.06% 10.14% 9.98%
Tier 1 capital to average assets 8.70% 8.55% 8.59%
Allowance for loan losses to total loans 1.81% 1.70% 1.73%
Non-performing assets $ 25,375 $ 21,166 $ 19,199
Non-performing assets to total assets 1.73% 1.51% 1.40%
 
Income Statement Items (annualized):
Return on average assets 0.73% 0.78% 0.83%
Return on average stockholders’ equity 8.71% 9.42% 10.04%
Net interest margin (tax equivalent) 4.38% 4.41% 4.46%

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