Enterprise Bancorp, Inc. (NASDAQ: EBTC), parent of Enterprise Bank,
announced net income for the three months ended March 31,
2021 of $10.4 million, or $0.86 per diluted common share,
compared to $4.0 million, or $0.34 per diluted common share, for
the three months ended March 31, 2020.
As previously announced on April 20, 2021, the Company
declared a quarterly dividend of $0.185 per common share to be paid
on June 1, 2021 to shareholders of record as of May 11,
2021.
Chief Executive Officer Jack Clancy commented, “Our first
quarter 2021 results compared to 2020 were largely the result of
growth in net interest income and a decrease in the provision for
credit losses. As of March 31, 2021, both loans and customer
deposits have grown significantly compared to March 31, 2020,
with loan growth derived principally from PPP loans, which has also
positively impacted deposit growth. Deposit growth has additionally
benefited from government stimulus checks and customers proactively
building liquidity in response to the economic uncertainty caused
by the pandemic. We anticipate that as the majority of outstanding
PPP loans are forgiven or paid off, which we believe will occur
principally during the remainder of 2021, and as customers spend
down their PPP funds, that we will likely experience a reduction in
assets, loans and deposits.”
Mr. Clancy further commented, “The government's extension of the
Paycheck Protection Program has continued to be a significant
initiative for the Bank in 2021 and has provided much needed
financial support to many of our customers. We have actively
participated in round three of the PPP, which began on January 11,
2021, and through April 20, 2021 we have received approval from the
SBA for 1,317 PPP loans amounting to $200.9 million with an average
loan size of $153 thousand. In total, we have received
approval from the SBA for 4,080 PPP loans amounting to $710.3
million and received $25.8 million in SBA fees since the program
began in April 2020.”
As previously announced on April 2, 2021, the Company redeemed
on March 31, 2021, $15.0 million in 6.00% fixed-to-floating
rate subordinated notes that were issued in January 2015 and due on
January 30, 2030. Founder and Chairman of the Board George
Duncan noted, “The opportunity to prepay the subordinated notes
resulted from our strong capital and allowance for credit loss
positions, the $60.0 million in subordinated notes we issued last
July, and the stabilizing economy. The early redemption resulted in
an expense of approximately $713 thousand which will be
recovered through a reduction in interest expense in approximately
nine months and will result in annual pre-tax savings of
approximately $900 thousand beginning in 2022.”
Mr. Duncan further commented, “We remain steadfastly committed
to our long-term focus of serving our customers, building
relationships, investing in our future, cultivating our digital
evolution, expanding our market area, and further developing our
services and products. Regarding our branch network, we opened our
26th branch in North Andover, Massachusetts in January 2021 and
expect to open our 27th branch in Londonderry, New Hampshire in
early 2022. We are relocating our Lawrence, Massachusetts branch
this summer within the same building to the end unit to provide for
a drive-up window and drive-up ATM and will also move from our
temporary Lexington, Massachusetts location later this year to a
prime location in the Lexington downtown area where we will have
dedicated parking and a vestibule for an ATM and night-time deposit
drop.”
Mr. Clancy and Mr. Duncan jointly added, “We want to thank our
valued customers for their patience and understanding over the past
year as we navigated through the various pandemic protocols which
were all intended to keep everyone safe. We have been intensely
focused on our team members’ and customers’ safety and well-being.
We want to thank every team member in our Enterprise family. We
could not be prouder of the dedication, care and teamwork each team
member has displayed for our customers and each other. It has
really energized us both and we look forward to continued growth
and achievement in the years to come.”
Paycheck Protection Program (“PPP”)Throughout this press release
we have noted certain balances, ratios or other measures of the
Company’s performance which exclude the impact of PPP loans, which
we expect to be short-term in nature. We refer to any balance,
ratio or measure that excludes PPP loans as “core.” The core
balances, ratios and measures were derived in order to provide more
meaningful comparisons to prior periods as the majority of PPP
loans outstanding are expected to pay off during the next several
quarters. The table on page 9 provides a reconciliation of the
non-GAAP measures to the information presented under U.S. generally
accepted accounting principles (“GAAP”).
The PPP was created by the Coronavirus Aid, Relief, and Economic
Security Act (the “CARES Act”) and instituted by the Small Business
Administration (“SBA”). The PPP allowed entities to apply for a
1.00% interest rate loan with payments generally deferred until the
date the lender receives the applicable forgiveness amount from the
SBA. The PPP loans may be partially or fully forgiven by the SBA if
the entity meets certain conditions. The maturity term for any
principal portion left unforgiven is either 2 or 5 years from the
funding date, depending on when the loan was originated. All PPP
loans are fully guaranteed by the SBA and are included in total
loans.
As of March 31, 2021, the Company had 3,150 PPP loans
outstanding with a principal balance of $496.5 million and deferred
SBA fees of $12.3 million.
Results of Operations
Net income for the three months ended March 31, 2021
amounted to $10.4 million, an increase of $6.3 million,
compared to the three months ended March 31, 2020.
The increase in net income for the three months ended
March 31, 2021 was driven primarily by an increase in net
interest income and a decrease in the provision for credit losses,
partially offset by an increase in non-interest expense.
Net interest income for the three months ended March 31,
2021 amounted to $34.7 million, an increase of $4.8 million, or
16%, compared to the three months ended March 31, 2020. The
increase in net interest income was due largely to interest-earning
asset growth, primarily in PPP loans, and lower deposit interest
expense, partially offset by an increase in subordinated debt
interest expense. For the three months ended March 31, 2021,
net interest income included $1.1 million in PPP interest income
and $4.9 million in PPP related SBA fee income.
Average loan balances (including loans held for sale)
increased $468.7 million, or 18%, for the three months
ended March 31, 2021, compared to the three months ended
March 31, 2020. Average balances, excluding PPP loans, have
remained relatively unchanged compared to the three months ended
March 31, 2020. Tax equivalent net interest margin (“net
interest margin” or “margin”) was 3.62%, 3.49%, and 3.89% for the
three months ended March 31, 2021, December 31, 2020, and
March 31, 2020, respectively. The change in net interest
margin for the three months ended March 31, 2021 compared to
March 31, 2020, resulted primarily from lower interest rates
and interest-earning asset yields declining more than the cost of
funds.
Margin for the three months ended March 31, 2021 and
December 31, 2020 was positively impacted by accelerated SBA fee
income on PPP loan forgiveness and negatively impacted by large
interest-earning deposit balances, which consists primarily of
short-term, overnight balances held at the Federal Reserve Bank.
PPP loan forgiveness amounted to approximately $153.0 million and
$46.6 million for the three months ended March 31, 2021 and
December 31, 2020, respectively, resulting in higher margin for the
three months ended March 31, 2021 compared to the three months
ended December 31, 2020. The quarterly average interest-earning
deposit balance was $279.8 million, $303.7 million and $35.5
million for the three months ended March 31, 2021, December
31, 2020, and March 31, 2020, respectively. The increase in
the March 31, 2021 and December 31, 2020 periods compared to
the March 31, 2020 period resulted primarily from increases in
customer deposit balances and to a lesser extent funds received
from PPP loan forgiveness. Adjusted net interest margin, excluding
PPP loans and average interest-earning deposit balances, was 3.68%,
3.76%, and 3.92% for the three months ended March 31, 2021,
December 31, 2020, and March 31, 2020, respectively.
For the three months ended March 31, 2021, the provision for
credit losses amounted to $680 thousand, compared to $6.1
million for the three months ended March 31, 2020. The
provision for the quarter ended March 31, 2021 resulted from
an increase in specific reserves and a change in loan mix,
partially offset by a slight decrease in core loans during the
period. The provision for the prior year quarter reflected
increases in reserves related to the impact of COVID-19 and from an
increase in impaired loan reserves.
Non-interest income for the three months ended March 31, 2021,
amounted to $4.3 million, an increase of $101 thousand, or 2%,
compared to the three months ended March 31, 2020.
Quarter-to-date non-interest income increased in 2021 due
primarily to increases in wealth management fees and gains on
equity investment fair values, partially offset by a decrease in
loan derivative fees. The latter two items are included in other
income.
Non-interest expense for the three months ended March 31, 2021,
amounted to $24.7 million, an increase of $2.0 million, or 9%,
compared to the three months ended March 31, 2020. Increases
in non-interest expense in the first quarter of 2021 related
primarily to the Company’s strategic growth initiatives,
particularly salaries and employee benefits, and to a lesser extent
occupancy, technology and telecommunications expenses. The increase
in non-interest expense also resulted from a loss of
$713 thousand on the early redemption of $15.0 million in
6.00% fixed-to-floating rate subordinated notes issued in January
2015 and due in January 2030. The loss on the extinguishment of
subordinated debt consisted of $600 thousand in prepayment
penalties and $113 thousand in unamortized issuance costs.
CECL Adoption
In the first quarter of 2021, the Company adopted the Financial
Accounting Standards Board’s Accounting Standards Update 2016-13,
Measurement of Credit Losses on Financial Instruments, including
the current expected credit losses (“CECL”) methodology for
estimating the allowance for credit losses ("ACL"). The CECL
methodology requires earlier recognition of credit losses using a
lifetime credit loss measurement approach that also requires the
consideration of reasonable and supportable forecasts in the
estimate.
The adoption of CECL resulted in the Company recording a net
cumulative-effect adjustment, effective January 1, 2021, that
decreased retained earnings by $6.5 million, net of $2.5 million in
deferred income taxes. The ACL for loans increased by $6.6 million
and the ACL for unfunded commitments (included in other
liabilities) increased by $2.4 million.
Credit Quality
At March 31, 2021, the ACL for loans amounted to $49.9
million, or 1.60% of total loans and 1.90% of total core loans,
compared to $44.6 million, or 1.45% of total loans and 1.69% of
core loans at December 31, 2020. The ACL for unfunded
commitments amounted to $2.5 million.
Net charge-offs for the quarters ended March 31, 2021 and
December 31, 2020 amounted to $1.8 million and $1.4 million,
respectively, compared to net recoveries of $3 thousand for
the quarter ended March 31, 2020. The net charge-offs for the
quarter ended March 31, 2021, related primarily to an
individually evaluated commercial real estate loan, which was fully
reserved in late 2020. The charge-off resulted in the loan being
recorded at the estimated fair value less cost to sell the
underlying collateral. The Company transferred the property to
other real estate owned (“OREO”) in April 2021 by accepting the
deed in-lieu of foreclosure.
As of March 31, 2021, short-term payment deferrals due to
the COVID-19 pandemic remained active on 31 loans, amounting to
$39.9 million, or 1.52%, of total core loans, compared to 47 loans
amounting to $46.7 million, or 1.78%, of total core loans, as of
December 31, 2020. As of April 20, 2021, the balance of loans with
a short-term payment deferral was reduced to 0.75% of total core
loans.
Non-performing assets are comprised of non-accrual loans and
OREO. The Company had no OREO at March 31, 2021, December 31,
2020 or March 31, 2020. As noted above, in April of 2021, the
Company transferred a commercial office building with a net book
value of $2.4 million to OREO. Non-performing assets to total core
assets amounted to 0.94% at March 31, 2021, compared to 1.07%
and 0.47% at December 31, 2020 and March 31, 2020,
respectively.
Non-performing loans to total core loans amounted to 1.36% at
March 31, 2021, compared to 1.45% and 0.59% at December 31,
2020 and March 31, 2020, respectively. The increase at
March 31, 2021, compared to March 31, 2020, was due to
credit downgrades partially offset by payoffs, credit upgrades and
charge-offs since the prior period. Credit downgrades included
three commercial relationships which became non-accrual in the
fourth quarter of 2020 and are in industries that have been highly
impacted by the pandemic. One of these relationships had a
charge-off of $1.8 million during the quarter ended March 31,
2021, which largely accounted for the decrease compared to December
31, 2020. This relationship was transferred to OREO in April
2021.
Key Financial Highlights
- Total assets amounted to $4.26 billion at March 31, 2021,
compared to $4.01 billion at December 31, 2020, an increase of
$243.4 million, or 6%. Total core assets have increased $202.3
million, or 6%, since December 31, 2020.
- The increase in total assets since December 31, 2020, is
related primarily to the increase in interest-earning deposits of
$187.6 million. Total interest-earning deposits, which consists
primarily of short-term, overnight balances held at the Federal
Reserve Bank, amounted to $400.8 million at March 31, 2021
compared to $213.1 million at December 31, 2020. The increase
relates primarily to increases in customer deposit balances, and to
a lesser extent, funds received from the SBA for PPP loan
forgiveness.
- Total loans amounted to $3.11 billion at March 31, 2021,
compared to $3.07 billion at December 31, 2020, an increase of
$35.5 million, or 1%. Total core loans have decreased slightly
since December 31, 2020.
- Customer deposits amounted to $3.74 billion at March 31,
2021, compared to $3.48 billion at December 31, 2020, an
increase of $264.9 million, or 8%. Management believes the deposit
growth since December 31, 2020 was due in large part to
customers depositing funds received from round three PPP loan
advances, stimulus checks, and generally maintaining higher
liquidity in response to the pandemic.
- Investment assets under management, which are not carried as
assets on the Company's Consolidated Balance Sheets, amounted to
$930.2 million at March 31, 2021, compared to $1.00 billion at
December 31, 2020, a decrease of $73.6 million, or 7%. The
decrease resulted primarily from the departure of a large,
institutional relationship, following the client's merger,
partially offset by net new assets and increases in market
values.
- The Total Regulatory Capital and Tier 1 Capital to risk
weighted asset ratios for the Company, on a consolidated basis,
were 14.28% and 10.94%, respectively, at March 31, 2021,
compared to 14.62% and 10.77%, respectively, at December 31,
2020, and 11.61% and 9.84%, respectively, at March 31,
2020.
- The decrease in the Company's Total Regulatory Capital since
December 31, 2020 primarily reflects the March 31, 2021
redemption of $15.0 million in fixed-to-floating rate subordinated
notes issued in January 2015 and due in January 2030. The
subordinated notes were classified as Tier 2 capital for the
Company and Tier 1 capital was not impacted by the redemption.
Additionally, Total Regulatory Capital and Tier 1 Capital were
impacted by the $6.5 million deduction from the adoption of CECL,
offset by net income less dividends paid.
- The increase in the Company's Total Regulatory Capital to risk
weighted asset ratio since March 31, 2020 reflects primarily
the Company’s issuance of $60.0 million in fixed-to-floating rate
subordinated notes in July 2020. The July 2020 notes were
classified as Tier 2 regulatory capital for the Company and did not
impact the Company's Tier 1 capital ratios. Additionally, the Total
Regulatory Capital and Tier 1 Capital ratios increased over the
period from growth in net income less dividends paid, and from low
core loan growth during the period. Despite the increase in Tier 1
capital, the Company's Tier 1 capital to average assets ratio did
not increase due to average asset growth from PPP loans, which are
excluded from the risk weighted capital ratios.
- During the quarter, the Bank's Total Regulatory and Tier 1
capital ratios were impacted by the adoption of CECL and the
redemption of the subordinated notes.
Enterprise Bancorp, Inc. is a Massachusetts corporation that
conducts substantially all its operations through Enterprise Bank
and Trust Company, commonly referred to as Enterprise Bank, and has
reported 126 consecutive profitable quarters. Enterprise Bank 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, residential and consumer loan
products, deposit products and cash management services, electronic
and digital banking options, and commercial insurance services, as
well as wealth management, and trust services. The Company’s
headquarters and Enterprise Bank’s main office are located at 222
Merrimack Street in Lowell, Massachusetts. The Company’s primary
market area is the Greater Merrimack Valley, Nashoba Valley, and
North Central regions of Massachusetts and Southern New Hampshire
(Southern Hillsborough and Rockingham counties). Enterprise Bank
has 26 full-service branches located in the Massachusetts
communities of Acton, Andover, Billerica (2), Chelmsford (2),
Dracut, Fitchburg, Lawrence, Leominster, Lexington, Lowell (2),
Methuen, North Andover, Tewksbury (2), Tyngsborough and Westford
and in the New Hampshire communities of Derry, Hudson, Nashua (2),
Pelham, Salem and Windham. The Company is in the process of
establishing a branch office in Londonderry, New Hampshire and
anticipates that this location will open in early 2022.
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 in, or implied by, the forward-looking
statements. Factors that could cause such differences include, but
are not limited to, general economic conditions, the impact of the
ongoing COVID-19 pandemic, changes in interest rates, regulatory
considerations, competition and market expansion opportunities,
changes in non-interest expenditures or in the anticipated benefits
of such expenditures, the receipt of required regulatory approvals,
changes in tax laws, and current or future litigation, regulatory
examinations or other legal and/or regulatory actions, including as
a result of our participation in and execution of government
programs related to the COVID-19 pandemic. Therefore, the Company
can give no assurance that the results contemplated in the
forward-looking statements will be realized. For more information
about these factors, please see our reports filed with or furnished
to the U.S. Securities and Exchange Commission (the “SEC”),
including our most recent Annual Report on Form 10-K and Quarterly
Reports on Form 10-Q 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, except per share
data) |
|
March 31,2021 |
|
December 31,2020 |
|
March 31,2020 |
Assets |
|
|
|
|
|
|
Cash and cash equivalents: |
|
|
|
|
|
|
Cash and due from banks |
|
$ |
40,539 |
|
|
$ |
40,636 |
|
|
$ |
32,833 |
|
Interest-earning deposits |
|
400,777 |
|
|
213,146 |
|
|
42,024 |
|
Total cash and cash equivalents |
|
441,316 |
|
|
253,782 |
|
|
74,857 |
|
Investments: |
|
|
|
|
|
|
Debt securities at fair value (amortized cost of $581,360,
$551,191, and $482,699, respectively) |
|
601,264 |
|
|
582,303 |
|
|
505,671 |
|
Equity securities at fair value |
|
1,197 |
|
|
746 |
|
|
588 |
|
Total investment securities at fair value |
|
602,461 |
|
|
583,049 |
|
|
506,259 |
|
Federal Home Loan Bank stock |
|
2,010 |
|
|
1,905 |
|
|
5,624 |
|
Loans held for sale |
|
7,545 |
|
|
371 |
|
|
476 |
|
Loans: |
|
|
|
|
|
|
Total loans |
|
3,109,360 |
|
|
3,073,860 |
|
|
2,683,927 |
|
Allowance for credit losses |
|
(49,899 |
) |
|
(44,565 |
) |
|
(39,764 |
) |
Net Loans |
|
3,059,461 |
|
|
3,029,295 |
|
|
2,644,163 |
|
Premises and equipment, net |
|
46,040 |
|
|
46,708 |
|
|
46,734 |
|
Lease right-of-use asset |
|
18,279 |
|
|
18,439 |
|
|
18,893 |
|
Accrued interest receivable |
|
15,958 |
|
|
16,079 |
|
|
12,977 |
|
Deferred income taxes, net |
|
16,239 |
|
|
11,290 |
|
|
9,045 |
|
Bank-owned life insurance |
|
31,499 |
|
|
31,363 |
|
|
30,929 |
|
Prepaid income taxes |
|
3,600 |
|
|
2,449 |
|
|
1,005 |
|
Prepaid expenses and other assets |
|
7,697 |
|
|
13,938 |
|
|
10,535 |
|
Goodwill |
|
5,656 |
|
|
5,656 |
|
|
5,656 |
|
Total assets |
|
$ |
4,257,761 |
|
|
$ |
4,014,324 |
|
|
$ |
3,367,153 |
|
Liabilities and Stockholders’
Equity |
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
Customer deposits |
|
$ |
3,741,146 |
|
|
$ |
3,476,268 |
|
|
$ |
2,912,850 |
|
Brokered deposits |
|
75,015 |
|
|
74,995 |
|
|
— |
|
Total deposits |
|
3,816,161 |
|
|
3,551,263 |
|
|
2,912,850 |
|
Borrowed funds |
|
8,631 |
|
|
4,774 |
|
|
84,169 |
|
Subordinated debt |
|
58,889 |
|
|
73,744 |
|
|
14,876 |
|
Lease liability |
|
17,397 |
|
|
17,539 |
|
|
17,968 |
|
Accrued expenses and other liabilities |
|
26,979 |
|
|
30,638 |
|
|
31,756 |
|
Accrued interest payable |
|
949 |
|
|
1,940 |
|
|
897 |
|
Total liabilities |
|
3,929,006 |
|
|
3,679,898 |
|
|
3,062,516 |
|
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; 40,000,000 shares
authorized; 12,007,998 shares issued and outstanding at March 31,
2021;11,937,795 shares issued and outstanding at December 31, 2020;
and 11,897,322 shares issued and outstanding at March 31, 2020 |
|
120 |
|
|
119 |
|
|
119 |
|
Additional paid-in capital |
|
97,970 |
|
|
97,137 |
|
|
94,920 |
|
Retained earnings |
|
216,610 |
|
|
214,977 |
|
|
193,791 |
|
Accumulated other comprehensive income |
|
14,055 |
|
|
22,193 |
|
|
15,807 |
|
Total stockholders’ equity |
|
328,755 |
|
|
334,426 |
|
|
304,637 |
|
Total liabilities and stockholders’ equity |
|
$ |
4,257,761 |
|
|
$ |
4,014,324 |
|
|
$ |
3,367,153 |
|
ENTERPRISE
BANCORP, INC.Consolidated Statements of
Income(unaudited)
|
|
Three months ended |
|
|
March 31, |
(Dollars in thousands, except per share data) |
|
2021 |
|
2020 |
Interest and dividend income: |
|
|
|
|
Loans and loans held for sale |
|
$ |
33,650 |
|
|
$ |
31,298 |
|
Investment securities |
|
3,394 |
|
|
3,484 |
|
Other interest-earning assets |
|
65 |
|
|
165 |
|
Total interest and dividend income |
|
37,109 |
|
|
34,947 |
|
Interest expense: |
|
|
|
|
Deposits |
|
1,323 |
|
|
4,405 |
|
Borrowed funds |
|
8 |
|
|
415 |
|
Subordinated debt |
|
1,042 |
|
|
231 |
|
Total interest expense |
|
2,373 |
|
|
5,051 |
|
Net interest income |
|
34,736 |
|
|
29,896 |
|
Provision for credit
losses |
|
680 |
|
|
6,147 |
|
Net interest income after provision for credit losses |
|
34,056 |
|
|
23,749 |
|
Non-interest income: |
|
|
|
|
Wealth management fees |
|
1,612 |
|
|
1,440 |
|
Deposit and interchange fees |
|
1,606 |
|
|
1,691 |
|
Income on bank-owned life insurance, net |
|
136 |
|
|
153 |
|
Net gains on sales of debt securities |
|
128 |
|
|
100 |
|
Net gains on sales of loans |
|
128 |
|
|
147 |
|
Other income |
|
689 |
|
|
667 |
|
Total non-interest income |
|
4,299 |
|
|
4,198 |
|
Non-interest expense: |
|
|
|
|
Salaries and employee benefits |
|
15,721 |
|
|
14,819 |
|
Occupancy and equipment expenses |
|
2,381 |
|
|
2,176 |
|
Technology and telecommunications expenses |
|
2,554 |
|
|
2,188 |
|
Advertising and public relations expenses |
|
514 |
|
|
645 |
|
Audit, legal and other professional fees |
|
567 |
|
|
605 |
|
Deposit insurance premiums |
|
356 |
|
|
404 |
|
Supplies and postage expenses |
|
227 |
|
|
247 |
|
Loss on extinguishment of subordinated debt |
|
713 |
|
|
— |
|
Other operating expenses |
|
1,651 |
|
|
1,595 |
|
Total non-interest expense |
|
24,684 |
|
|
22,679 |
|
Income before income
taxes |
|
13,671 |
|
|
5,268 |
|
Provision for income
taxes |
|
3,319 |
|
|
1,251 |
|
Net income |
|
$ |
10,352 |
|
|
$ |
4,017 |
|
|
|
|
|
|
Basic earnings per common
share |
|
$ |
0.87 |
|
|
$ |
0.34 |
|
Diluted earnings per common
share |
|
$ |
0.86 |
|
|
$ |
0.34 |
|
|
|
|
|
|
Basic weighted average common
shares outstanding |
|
11,959,469 |
|
|
11,841,392 |
|
Diluted weighted average
common shares outstanding |
|
11,994,437 |
|
|
11,877,031 |
|
ENTERPRISE
BANCORP, INC.Selected Consolidated Financial Data and
Ratios(unaudited)
|
|
At or for the three months
ended |
|
At or for theyear ended |
|
At or for the three months
ended |
(Dollars in thousands, except per share
data) |
|
March 31,2021 |
|
December 31,2020 |
|
March 31,2020 |
BALANCE SHEET DATA |
|
|
|
|
|
|
Total assets |
|
$ |
4,257,761 |
|
|
$ |
4,014,324 |
|
|
$ |
3,367,153 |
|
Loans serviced for others |
|
80,176 |
|
|
|
78,991 |
|
|
97,195 |
|
Investment assets under
management |
|
930,226 |
|
|
|
1,003,841 |
|
|
793,185 |
|
Total assets under
management |
|
$ |
5,268,163 |
|
|
$ |
5,097,156 |
|
|
$ |
4,257,533 |
|
|
|
|
|
|
|
|
INCOME STATEMENT
RATIOS (annualized) |
|
|
|
|
|
|
Return on average total
assets |
|
1.03 |
% |
|
0.82 |
% |
|
0.49 |
% |
Return on average
stockholders’ equity |
|
12.78 |
% |
|
9.95 |
% |
|
5.34 |
% |
Net interest margin (tax
equivalent)(1) |
|
3.62 |
% |
|
3.59 |
% |
|
3.89 |
% |
|
|
|
|
|
|
|
STOCKHOLDERS EQUITY
RATIOS |
|
|
|
|
|
|
Book value per common
share |
|
$ |
27.38 |
|
|
$ |
28.01 |
|
|
$ |
25.61 |
|
Dividends paid per common
share |
|
$ |
0.185 |
|
|
$ |
0.700 |
|
|
$ |
0.175 |
|
|
|
|
|
|
|
|
CAPITAL
RATIOS |
|
|
|
|
|
|
Total capital to risk weighted
assets |
|
14.28 |
% |
|
14.62 |
% |
|
11.61 |
% |
Tier 1 capital to risk
weighted assets |
|
10.94 |
% |
|
10.77 |
% |
|
9.84 |
% |
Tier 1 capital to average
assets |
|
7.62 |
% |
|
7.52 |
% |
|
8.69 |
% |
Common equity tier 1 capital
to risk weighted assets |
|
10.94 |
% |
|
10.77 |
% |
|
9.84 |
% |
|
|
|
|
|
|
|
CREDIT QUALITY
DATA |
|
|
|
|
|
|
Non-performing assets |
|
$ |
35,630 |
|
|
$ |
38,050 |
|
|
$ |
15,801 |
|
Non-performing assets to total
assets |
|
0.84 |
% |
|
0.95 |
% |
|
0.47 |
% |
Non-performing assets to total core assets |
|
0.94 |
% |
|
1.07 |
% |
|
0.47 |
% |
Non-performing loans to total
loans |
|
1.15 |
% |
|
1.24 |
% |
|
0.59 |
% |
Non-performing loans to total core loans |
|
1.36 |
% |
|
1.45 |
% |
|
0.59 |
% |
Allowance for credit losses to
total loans |
|
1.60 |
% |
|
1.45 |
% |
|
1.48 |
% |
Allowance for credit losses to total core loans |
|
1.90 |
% |
|
1.69 |
% |
|
1.48 |
% |
(1) Tax equivalent net interest margin is net
interest income adjusted for the tax equivalent effect associated
with tax exempt loan and investment income, expressed as a
percentage of average interest-earning assets.Enterprise Bank’s
capital ratios as of the periods indicated:
|
|
March
31,2021(2) |
|
December
31,2020(2) |
|
March 31, 2020 |
Total capital to risk weighted assets |
|
14.27 |
% |
|
14.55 |
% |
|
11.60 |
% |
Tier 1 capital to risk
weighted assets |
|
13.01 |
% |
|
13.29 |
% |
|
10.35 |
% |
Tier 1 capital to average
assets |
|
9.06 |
% |
|
9.27 |
% |
|
9.14 |
% |
Common equity tier 1 capital
to risk weighted assets |
|
13.01 |
% |
|
13.29 |
% |
|
10.35 |
% |
(2) Increased capital ratios since
March 31, 2020 reflect the investment of $53.0 million from
the Company to the Bank resulting from the Company’s issuance on
July 7, 2020 of $60.0 million in subordinated notes, net
income growth less dividends paid, and low core loan growth during
the period. The decreased capital ratios since December 31,
2020 reflect the adoption of CECL and a dividend from the Bank to
the Company to fund the redemption of the 2015 subordinated notes.
Despite the increase in Tier 1 capital, the Bank’s Tier 1 capital
to average assets ratio did not increase due to average asset
growth from PPP loans, which are excluded from the risk weighted
capital ratios.
ENTERPRISE
BANCORP, INC.Selected Consolidated Financial Data and
Ratios (continued)(unaudited)
NON-GAAP MEASURES
The accompanying unaudited consolidated interim financial
statements have been prepared in accordance with GAAP. However,
certain financial measures and ratios we present, including
PPP-adjusted metrics are supplemental measures that are not
required by, or are not presented in accordance with, GAAP. These
non-GAAP measures are intended to provide the reader with
additional supplemental perspectives on operating results,
performance trends, and financial condition. Non-GAAP financial
measures are not a substitute for GAAP measures; they should be
read and used in conjunction with the Company’s GAAP financial
information. In addition, the non-GAAP financial measures we
present may differ from non-GAAP financial measures used by our
peers or other companies.
Certain non-GAAP measures provided in this press release exclude
the outstanding balance of PPP loans that theCompany began
originating in April 2020, and which are expected to be short-term
in nature. We refer to anybalance, ratio or measure that excludes
PPP loans as “core.” The Company normalized for this activity by
excludingPPP loans from the calculations below in order to provide
a more informative analysis of results.
The following table summarizes the reconciliation of GAAP items
to non-GAAP items related to the impact of PPP loans on total loans
and assets:
(Dollars in thousands) |
|
March 31,2021 |
|
December 31,2020 |
TOTAL CORE LOANS |
|
|
|
|
Total loans (GAAP) |
|
$ |
3,109,360 |
|
|
$ |
3,073,860 |
|
Adjustment: PPP loans |
|
(496,457 |
) |
|
(453,084 |
) |
Adjustment: Deferred PPP
fees |
|
12,282 |
|
|
10,014 |
|
Total core loans
(non-GAAP) |
|
$ |
2,625,185 |
|
|
$ |
2,630,790 |
|
|
|
|
|
|
TOTAL CORE
ASSETS |
|
|
|
|
Total assets (GAAP) |
|
$ |
4,257,761 |
|
|
$ |
4,014,324 |
|
Adjustment: PPP loans |
|
(496,457 |
) |
|
(453,084 |
) |
Adjustment: Deferred PPP
fees |
|
12,282 |
|
|
10,014 |
|
Total core assets
(non-GAAP) |
|
$ |
3,773,586 |
|
|
$ |
3,571,254 |
|
ENTERPRISE
BANCORP, INC.Selected Consolidated Financial Data and
Ratios (continued)(unaudited)
Additional non-GAAP measures provided in this press release
exclude the impact of PPP loans and interest-earning deposits,
which have abnormally impacted margin over the past several
quarters. Customer deposit growth has benefited from government
stimulus checks and customers proactively building liquidity in
response to the economic uncertainty caused by the pandemic. This
deposit inflow has in turn increased our liquidity held as
short-term interest-earning deposits. We refer to any balance,
ratio or measure that excludes the impact of PPP loans and
interest-earning deposits as “adjusted.” The Company has normalized
for this activity in order to provide a more meaningful comparison
to prior periods.
The following table summarizes the reconciliation of GAAP items
to non-GAAP items related to the impact of PPP loans and
interest-earning deposits on margin:
|
|
Three months ended |
|
Three months ended |
|
Three months ended |
(Dollars in thousands) |
|
March 31,2021 |
|
December 31,2020 |
|
March 31,2020 |
ADJUSTED INTEREST-EARNING ASSETS |
|
|
|
|
|
|
Total average interest-earning assets (GAAP) |
|
$ |
3,924,153 |
|
|
$ |
3,940,679 |
|
|
$ |
3,127,401 |
|
Adjustment: Average PPP loans,
net |
|
|
(452,813) |
|
|
|
(481,012) |
|
|
|
— |
|
Adjustment: Average
interest-earning deposits |
|
|
(279,796) |
|
|
|
(303,745) |
|
|
|
(35,538) |
|
Total adjusted average
interest-earning assets (non-GAAP) |
|
$ |
3,191,544 |
|
|
$ |
3,155,922 |
|
|
$ |
3,091,863 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED INTEREST
INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
Interest income (tax
equivalent) (GAAP) |
|
$ |
37,454 |
|
|
$ |
37,314 |
|
|
$ |
35,307 |
|
Adjustment: PPP income |
|
|
(6,013) |
|
|
|
(4,685) |
|
|
|
— |
|
Adjustment: Interest on
interest-earning deposits |
|
|
(68) |
|
|
|
(71) |
|
|
|
(93) |
|
Adjusted interest income (tax
equivalent) (non-GAAP) |
|
$ |
31,373 |
|
|
$ |
32,558 |
|
|
$ |
35,214 |
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED NET INTEREST
MARGIN |
|
|
|
|
|
|
|
|
|
|
Net interest margin (tax
equivalent) (GAAP) |
|
3.62 |
% |
|
|
3.49 |
% |
|
|
3.89 |
% |
Adjustment: PPP effect(1) |
|
(0.23) |
% |
|
|
(0.05) |
% |
|
|
— |
% |
Adjustment: Interest-earning
deposits effect(2) |
|
0.29 |
% |
|
|
0.32 |
% |
|
|
0.03 |
% |
Adjusted net interest margin
(tax equivalent) (non-GAAP) |
|
3.68 |
% |
|
|
3.76 |
% |
|
|
3.92 |
% |
(1) PPP loan adjustments include an elimination
of average PPP loans, net of deferred SBA fees, as well as interest
income on PPP loans and related SBA fee accretion, included in
interest income.
(2) Interest-earning deposit adjustments
include an elimination of average interest-earning deposits, as
well as interest income on interest-earning deposits, included in
interest income.
Contact Info: Joseph R. Lussier, Executive Vice President, Chief
Financial Officer and Treasurer (978) 656-5578
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