Mr. Clancy continued, "During the third quarter, we opened our 24 th branch in Windham, NH and completed the relocation of our branch in Salem, NH to its new location. We expect the relocation of our Leominster branch to be completed in early 2018. The relocation of our branches in Salem, NH and Leominster, MA will provide improved and state-of-the-art branches in those communities to better serve our customers. Strategically, our focus remains on organic growth and continually planning for and investing in our future."Founder and Chairman of the Board George Duncan commented, "This quarter represents our 112 th consecutive profitable quarter, which is certainly a significant milestone for any company. Strategically expanding to adjacent markets and becoming deeply rooted in each community that we serve have been key ingredients to our success. Our ability to attract and retain like-minded, talented individuals as Enterprise Bankers, who possess a passion and commitment for community, teamwork and customer service, remains a key component of our operating model. We are extremely grateful to our customers and shareholders for their continued trust and support." Results of Operations Net interest income for the three months ended September 30, 2017 amounted to $25.1 million, an increase of $3.3 million, or 15%, compared to the same period in 2016. Net interest income for the nine months ended September 30, 2017 amounted to $71.5 million, an increase of $7.3 million, or 11%, compared to the nine months ended September 30, 2016. The increase in net interest income was due primarily to loan growth. Average loan balances (including loans held for sale) increased $204.2 million and $201.6 million for the quarter and nine months ended September 30, 2017, respectively, compared to the 2016 respective period averages. Net interest margin was 4.03% for the three months ended September 30, 2017 and 3.90% for the three months ended June 30, 2017, while net interest margin was 3.86% for the three months ended September 30, 2016. Net interest margin was 3.95% for the nine months ended September 30, 2017, compared to 3.96% for the nine months ended September 30, 2016.
For the three months ended September 30, 2017 and September 30, 2016, the provision for loan losses amounted to $1.2 million and $1.4 million, respectively. For the nine months ended September 30, 2017 and September 30, 2016, the provision for loan losses amounted to $1.6 million and $2.5 million, respectively. The decrease in the provision for the nine months ended September 30, 2017 was due primarily to generally improved credit quality metrics and underlying collateral values, partially offset by increased loan growth compared to the prior year.Contributing to the provision for loan losses were:
- Total non-performing loans as a percentage of total loans (a measure of credit risk) amounted to 0.57% at September 30, 2017, compared to 0.50% at September 30, 2016. Impacting the current period, among other changes, were new impaired/non-accrual status classifications of two larger commercial relationships totaling approximately $4.5 million, which, based on a review of their individual business circumstances, management determined that no reserves were necessary as of September 30, 2017.
- The balance of the allowance for loan losses allocated to impaired and adversely classified loans decreased by $761 thousand for the nine months ended September 30, 2017, compared to an increase of $863 thousand during the nine months ended September 30, 2016.
- The Company recorded net recoveries of $212 thousand for the nine months ended September 30, 2017, compared to net recoveries of $78 thousand for the nine months ended September 30, 2016.
- Loan growth for the nine months ended September 30, 2017 was $179.6 million, compared to $125.9 million during the nine months ended September 30, 2016.
Non-interest expense for the quarter ended September 30, 2017 amounted to $18.8 million, an increase of $1.4 million, or 8%, compared to the same quarter in the prior year. For the nine months ended September 30, 2017, non-interest expense amounted to $57.0 million, an increase of $5.2 million, or 10%, over the nine months ended September 30, 2016. Increases in expenses over the same periods in the prior year primarily related to the Company's strategic growth and market expansion initiatives, mainly increases in salaries and benefits expenses.In the first quarter of 2017, the Company adopted a new accounting standard, ASU No. 2016-09 "Compensation-Stock Compensation (Topic 718) Improvements to Employee Share-Based Payment Accounting," which among other aspects relates to the tax treatment of equity compensation. Since the adoption of this standard, the provision for income taxes has decreased, increasing earnings by approximately $832 thousand for the nine months ended September 30, 2017. Key Financial Highlights
- Total assets amounted to $2.73 billion at September 30, 2017, compared to $2.53 billion at December 31, 2016, an increase of $199.2 million, or 8%. Since June 30, 2017, total assets have increased $68.9 million, or 3%.
- Total loans amounted to $2.20 billion at September 30, 2017, compared to $2.02 billion at December 31, 2016, an increase of $179.6 million, or 9%. Since June 30, 2017, total loans have increased $88.0 million, or 4%.
- Customer deposits (total deposits excluding brokered deposits) were $2.22 billion at September 30, 2017, compared to $2.21 billion at December 31, 2016, an increase of $10.6 million. Since June 30, 2017, customer deposits have decreased $46.1 million. Brokered deposits were $82.5 million at September 30, 2017, $87.5 million at June 30, 2017 and $59.4 million at December 31, 2016.
- Investment assets under management amounted to $800.5 million at September 30, 2017, compared to $725.3 million at December 31, 2016, an increase of $75.2 million, or 10%. Since June 30, 2017, investment assets under management have increased $19.4 million, or 2%.
- Total assets under management amounted to $3.61 billion at September 30, 2017, compared to $3.33 billion at December 31, 2016, an increase of $280.1 million, or 8%. Since June 30, 2017, total assets under management have increased $91.8 million, or 3%.
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 references 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, changes in tax laws, 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 earnings 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)||September 30, 2017||December 31, 2016||September 30, 2016|
|Cash and cash equivalents:|
|Cash and due from banks||$||35,920||$||33,047||$||34,337|
|Total cash and cash equivalents||50,691||50,475||62,160|
|Investment securities at fair value||385,942||374,790||349,064|
|Federal Home Loan Bank stock||7,225||2,094||1,884|
|Loans held for sale||876||1,569||2,171|
|Loans, less allowance for loan losses of $33,184 at September 30, 2017, $31,342 at December 31, 2016, and $31,589 at September 30, 2016||2,169,189||1,991,387||1,954,265|
|Premises and equipment, net||36,260||33,540||33,861|
|Accrued interest receivable||10,088||8,792||8,467|
|Deferred income taxes, net||15,889||17,020||13,405|
|Bank-owned life insurance||29,292||28,765||28,582|
|Prepaid income taxes||906||1,344||57|
|Prepaid expenses and other assets||13,458||10,837||11,277|
|Liabilities and Stockholders' Equity|
|Accrued expenses and other liabilities||26,540||16,794||17,504|
|Accrued interest payable||273||263||194|
|Commitments and Contingencies|
|Preferred stock, $0.01 par value per share; 1,000,000 shares authorized; no shares issued||—||—||—|
|Common stock $0.01 par value per share; 40,000,000 shares authorized; 11,599,266 shares issued and outstanding at September 30, 2017, 11,475,742 shares issued and outstanding at December 31, 2016, and 11,448,502 shares issued and outstanding at September 30, 2016||116||115||114|
|Additional paid-in capital||87,492||85,421||83,394|
|Accumulated other comprehensive income (loss)||2,287||(758||)||5,989|
|Total stockholders' equity||231,887||214,786||216,040|
|Total liabilities and stockholders' equity||$||2,725,472||$||2,526,269||$||2,470,849|
|ENTERPRISE BANCORP, INC.Consolidated Statements of Income(unaudited)|
|Three months ended||Nine months ended|
|September 30,||September 30,|
|(Dollars in thousands, except per share data)||2017||2016||2017||2016|
|Interest and dividend income:|
|Loans and loans held for sale||$||24,892||$||21,466||$||70,544||$||63,379|
|Other interest-earning assets||136||96||302||189|
|Total interest and dividend income||27,045||23,191||76,747||68,288|
|Total interest expense||1,911||1,374||5,231||4,099|
|Net interest income||25,134||21,817||71,516||64,189|
|Provision for loan losses||1,225||1,386||1,630||2,503|
|Net interest income after provision for loan losses||23,909||20,431||69,886||61,686|
|Investment advisory fees||1,311||1,162||3,803||3,593|
|Deposit and interchange fees||1,527||1,272||4,389||3,790|
|Income on bank-owned life insurance, net||174||182||527||564|
|Net gains (losses) on sales of investment securities||(284||)||546||485||611|
|Gains on sales of loans||88||198||359||392|
|Total non-interest income||3,444||3,948||11,517||10,736|
|Salaries and employee benefits||12,177||10,948||36,661||32,458|
|Occupancy and equipment expenses||1,993||1,859||5,877||5,453|
|Technology and telecommunications expenses||1,601||1,577||4,789||4,548|
|Advertising and public relations expenses||597||591||2,013||2,087|
|Audit, legal and other professional fees||381||409||1,058||1,241|
|Deposit insurance premiums||371||347||1,130||997|
|Supplies and postage expenses||248||241||726||728|
|Other operating expenses||1,465||1,442||4,753||4,313|
|Total non-interest expense||18,833||17,414||57,007||51,825|
|Income before income taxes||8,520||6,965||24,396||20,597|
|Provision for income taxes||3,014||2,251||7,723||6,799|
|Basic earnings per share||$||0.48||$||0.41||$||1.44||$||1.28|
|Diluted earnings per share||$||0.47||$||0.41||$||1.43||$||1.27|
|Basic weighted average common shares outstanding||11,589,039||11,430,134||11,557,054||10,801,278|
|Diluted weighted average common shares outstanding||11,669,159||11,498,990||11,640,373||10,869,405|
|ENTERPRISE BANCORP, INC.Selected Consolidated Financial Data and Ratios(unaudited)|
|At or for the ninemonths ended||At or for the yearended||At or for the ninemonths ended|
|(Dollars in thousands, except per share data)||September 30,2017||December 31,2016||September 30,2016|
|BALANCE SHEET AND OTHER DATA|
|Loans serviced for others||86,738||80,996||80,836|
|Investment assets under management||800,499||725,338||709,781|
|Total assets under management||$||3,612,709||$||3,332,603||$||3,261,466|
|Book value per share||$||19.99||$||18.72||$||18.87|
|Dividends paid per common share||$||0.405||$||0.520||$||0.390|
|Total capital to risk weighted assets||11.57||%||11.79||%||11.74||%|
|Tier 1 capital to risk weighted assets||9.65||%||9.80||%||9.74||%|
|Tier 1 capital to average assets||8.40||%||8.34||%||8.41||%|
|Common equity tier 1 capital to risk weighted assets||9.65||%||9.80||%||9.74||%|
|Allowance for loan losses to total loans||1.51||%||1.55||%||1.59||%|
|Non-performing assets to total assets||0.46||%||0.38||%||0.40||%|
|INCOME STATEMENT DATA (annualized)|
|Return on average total assets||0.85||%||0.78||%||0.79||%|
|Return on average stockholders' equity||9.97||%||9.33||%||9.39||%|
|Net interest margin (tax equivalent)||3.95||%||3.94||%||3.96||%|