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| 8-K - 8-K - ENTERPRISE BANCORP INC /MA/ | form8-kxx12x31x12pressrele.htm |
Contact Info: Mary Ellen Fitzpatrick, Senior Vice President, Corporate Communications (978) 656-5520
Enterprise Bancorp, Inc. Announces 93rd Consecutive Profitable Quarter; 2012 Annual Net Income of $12.4 Million; Deposit Growth of $141.9 Million; and Loan Growth of $114.2 Million
LOWELL, MA-(GlobeNewswire)-(January 24, 2013) - Enterprise Bancorp, Inc. (the “Company”) (NASDAQ: EBTC), parent of Enterprise Bank, announces net income for the twelve months ended December 31, 2012 of $12.4 million, an increase of $1.4 million, or 13%, compared to the same twelve-month period in 2011. Diluted earnings per share were $1.28 for the twelve months ended December 31, 2012, an increase of $0.12, or 10%, compared to the same period in 2011. Net income for the three months ended December 31, 2012 amounted to $3.2 million, an increase of $376 thousand, or 13%, compared to the three months ended December 31, 2011. Diluted earnings per share were $0.33 for the three months ended December 31, 2012, an increase of $0.03, or 10%, compared to the same period in 2011. Total assets increased 12% in 2012, ending the year at $1.67 billion, while increases in deposits and loans outstanding were 11%, and 9%, respectively. Investment assets under management increased 17% since December 31, 2011, amounting to $592 million at December 31, 2012.
As previously announced on January 15, 2013, the Company declared a quarterly dividend of $0.115 per share to be paid on March 1, 2013 to shareholders of record as of February 8, 2013. The quarterly dividend represents a 4.5% increase over the 2012 dividend rate.
Chief Executive Officer Jack Clancy commented, “We believe our growth and performance is a direct reflection of our talented banking team, our strong customer experience culture, and our deep community banking roots, and this is what positions us well for the future. In 2012, we opened two new branches, in Pelham, NH and Tyngsboro, MA, and anticipate an early Spring opening of our new Lawrence, MA branch, which will be our twenty-first banking center. Strategically, our focus remains on organic growth and market expansion, while continually planning for our future by investing in our branch network, technology, progressive product capabilities, and, most importantly, in our people.”
Founder and Chairman of the Board George Duncan added, “The quarter ending December 31, 2012 represents our 93rd consecutive profitable quarter and our total assets under management have grown to $2.33 billion. These milestones represent significant accomplishments in only twenty-four years for our community bank. We believe we were able to achieve such success because of our strong service culture and product capabilities, combined with our core values. As we embark on our twenty-fifth year of caring for the financial needs of our customers and our communities, we believe we are better positioned than ever to serve our expanding market area with a broad range of competitive products, state-of-the-art delivery channels, and a dedicated team of knowledgeable banking professionals.”
Results of Operations
The Company's growth contributed to increases in net interest income and the level of operating expenses for both the quarter and the year ended December 31, 2012. In 2012, the provision for loan losses decreased compared to the 2011 periods, while non-interest income increased.
Net interest income for the quarter ended December 31, 2012 amounted to $15.9 million, an increase of $614 thousand, or 4%, compared to the December 2011 quarter. Net interest income for the twelve months ended December 31, 2012 amounted to $61.9 million, an increase of $3.6 million, or 6%, compared to the same period in 2011. The increases in net interest income over the comparable 2011 periods were due primarily to revenue generated from loan growth, which has been funded primarily through non-interest bearing deposits, partially offset by a decrease in tax equivalent net interest margin ("margin"). Average loan balances (including loans held for sale)
increased $102.8 million and $97.5 million, respectively, for the three and twelve months ended December 31, 2012, compared to the three and twelve month averages for the same periods in 2011. Net interest margin was 4.21% for the quarter ended December 31, 2012, compared to 4.39% for the quarter ended December 31, 2011. The margin was 4.20% for the quarter ended September 30, 2012. Margin for the twelve months ended December 31, 2012 was 4.27% compared to 4.37% for 2011. Consistent with the industry, the 2012 margin continued to trend downward, as the yield on interest-earning assets declined faster than the cost of funding, as funding rates have reached a level leaving little room for significant reductions.
The provision for loan losses amounted to $600 thousand for the three months ended December 31, 2012, compared to $1.2 million for the same period in 2011. For the twelve months ended December 31, 2012 and 2011, the provision for loan losses amounted to $2.8 million and $5.2 million, respectively. The decreases in the provision reflects modest credit stabilization within the loan portfolio compared to the 2011 periods. In making the provision to the allowance for loan losses, management takes into consideration the level of loan growth, adversely classified and non-performing loans, specific reserves for impaired loans, net charge-offs, and the estimated impact of current economic conditions on credit quality. The level of loan growth for the twelve months ended December 31, 2012, excluding $26.4 million of purchased residential loans, was $87.8 million, compared to $108.5 million during the same period in 2011. These purchased loans are booked at fair market value and in accordance with accounting guidance, they do not carry an initial allowance for loan losses. The balance of the allowance for loan losses allocated to impaired loans amounted to $4.1 million at December 31, 2012, compared to $4.4 million at December 31, 2011. Total non-performing assets as a percentage of total assets were 1.33% at December 31, 2012, compared to 1.83% at December 31, 2011. For the year ended December 31, 2012, the Company recorded net charge-offs of $1.7 million, the majority of which had reserves specifically allocated in prior periods. For 2011, net charge-offs were $1.5 million. Management continues to closely monitor the non-performing assets, charge-offs and necessary allowance levels, including specific reserves. The allowance for loan losses to total loans ratio was 1.78% at December 31, 2012, compared to 1.86% at December 31, 2011.
Non-interest income for the three months ended December 31, 2012 amounted to $3.3 million, an increase of $313 thousand, or 11%, compared to the fourth quarter of 2011. Non-interest income for the twelve months ended December 31, 2012 amounted to $12.2 million, an increase of $233 thousand, or 2%, compared to the 2011 year-to-date period. The increase over the 2011 quarter was primarily due to increases in deposit and interchange fees, investment advisory fees, and other income, primarily due to increases in other fee income and gains on sales of OREO properties. In addition to changes noted for the quarter, the year-over-year results were impacted by a decrease in gains on securities sales, partially offset by an increase in gains on loan sales and higher other income in the current year primarily due to increases in insurance commissions.
Non-interest expense for the three months ended December 31, 2012 amounted to $13.8 million, an increase of $943 thousand, or 7%, compared to the same period in the prior year. For the twelve months ended December 31, 2012, non-interest expense amounted to $52.6 million, an increase of $3.6 million, or 7%, compared to the same period in the prior year. Increased expenses related to salaries and benefits and technology over the comparable quarter and year were primarily due to the Company's strategic growth initiatives, including branch growth. The year-to-date expenses were also impacted by increases in legal and other professional services and occupancy expenses. Partially offsetting these increases were reductions in FDIC insurance expense and costs of advertising and public relations compared to the 2011 quarter and year.
Key Financial Highlights
▪ | Total assets were $1.67 billion at December 31, 2012 as compared to $1.49 billion at December 31, 2011, an increase of $176.6 million, or 12%. Since September 30, 2012, total assets have increased $28.2 million, or 2%. |
▪ | Total loans amounted to $1.36 billion at December 31, 2012, an increase of $114.2 million, or 9%, since December 31, 2011. Since September 30, 2012, total loans have increased $61.3 million, or 5%. Contributing to the fourth quarter loan growth was the purchase of $26.4 million of variable-rate residential mortgage loans. |
▪ | Total deposits were $1.48 billion at December 31, 2012 as compared to $1.33 billion at December 31, 2011, an increase of $141.9 million, or 11%. Since September 30, 2012, total deposits have increased $4.6 million, or 0.3%. |
▪ | Investment assets under management amounted to $592.4 million at December 31, 2012 as compared to $505.2 million at December 31, 2011, an increase of $87.2 million, or 17%. Since September 30, 2012, investment assets under management have increased $13.4 million, or 2%. |
▪ | Total assets under management amounted to $2.33 billion at December 31, 2012, compared to $2.06 billion at December 31, 2011, an increase of $272.2 million, or 13%. Since September 30, 2012, total assets under management have increased $42.9 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 93 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 advisory and wealth management, 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 twenty full-service branch offices located in the Massachusetts cities and towns of Lowell, Acton, Andover, Billerica, Chelmsford, Dracut, Fitchburg, Leominster, Methuen, Tewksbury, Tyngsboro and Westford and in the New Hampshire towns of Derry, Hudson, Pelham and Salem. The Company is also currently constructing a new branch in Lawrence, MA and anticipates that this office will open in the early Spring of 2013.
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 reference to a future period or periods or by the use of the words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “assume,” “will,” “should,” 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 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 Balance Sheets
(unaudited)
(Dollars in thousands) | December 31, 2012 | December 31, 2011 | |||||||
Assets | |||||||||
Cash and cash equivalents: | |||||||||
Cash and due from banks | $ | 38,007 | $ | 30,231 | |||||
Interest-earning deposits | 12,218 | 6,785 | |||||||
Fed funds sold | 2,510 | 2,115 | |||||||
Total cash and cash equivalents | 52,735 | 39,131 | |||||||
Investment securities at fair value | 184,464 | 140,405 | |||||||
Federal Home Loan Bank stock | 4,260 | 4,740 | |||||||
Loans held for sale | 8,557 | 5,061 | |||||||
Loans, less allowance for loan losses of $24,254 at December 31, 2012 and $23,160 at December 31, 2011 | 1,335,401 | 1,222,268 | |||||||
Premises and equipment | 27,206 | 27,310 | |||||||
Accrued interest receivable | 5,828 | 5,821 | |||||||
Deferred income taxes, net | 12,548 | 12,411 | |||||||
Bank-owned life insurance | 15,443 | 14,937 | |||||||
Prepaid income taxes | 174 | 287 | |||||||
Prepaid expenses and other assets | 13,454 | 11,136 | |||||||
Goodwill | 5,656 | 5,656 | |||||||
Total assets | $ | 1,665,726 | $ | 1,489,163 | |||||
Liabilities and Stockholders’ Equity | |||||||||
Liabilities | |||||||||
Deposits | $ | 1,475,027 | $ | 1,333,158 | |||||
Borrowed funds | 26,540 | 4,494 | |||||||
Junior subordinated debentures | 10,825 | 10,825 | |||||||
Accrued expenses and other liabilities | 13,182 | 12,487 | |||||||
Accrued interest payable | 603 | 751 | |||||||
Total liabilities | 1,526,177 | 1,361,715 | |||||||
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; 9,676,477 issued and outstanding at December 31, 2012 (including 154,186 shares of unvested participating restricted awards) and 9,472,748 shares issued and outstanding at December 31, 2011(including 132,800 shares of unvested participating restricted awards) | 97 | 95 | |||||||
Additional paid-in capital | 48,194 | 45,158 | |||||||
Retained earnings | 87,159 | 78,999 | |||||||
Accumulated other comprehensive income | 4,099 | 3,196 | |||||||
Total stockholders’ equity | 139,549 | 127,448 | |||||||
Total liabilities and stockholders’ equity | $ | 1,665,726 | $ | 1,489,163 | |||||
ENTERPRISE BANCORP, INC.
Consolidated Statements of Income
(unaudited)
Three months ended December 31, | Year ended December 31, | ||||||||||||||
(Dollars in thousands, except per share data) | 2012 | 2011 | 2012 | 2011 | |||||||||||
Interest and dividend income: | |||||||||||||||
Loans and loans held for sale | $ | 16,435 | $ | 16,448 | $ | 64,945 | $ | 63,363 | |||||||
Investment securities | 911 | 860 | 3,378 | 3,539 | |||||||||||
Other interest-earning assets | 14 | 18 | 82 | 67 | |||||||||||
Total interest and dividend income | 17,360 | 17,326 | 68,405 | 66,969 | |||||||||||
Interest expense: | |||||||||||||||
Deposits | 1,131 | 1,703 | 5,264 | 7,379 | |||||||||||
Borrowed funds | 13 | 21 | 54 | 87 | |||||||||||
Junior subordinated debentures | 294 | 294 | 1,177 | 1,177 | |||||||||||
Total interest expense | 1,438 | 2,018 | 6,495 | 8,643 | |||||||||||
Net interest income | 15,922 | 15,308 | 61,910 | 58,326 | |||||||||||
Provision for loan losses | 600 | 1,243 | 2,750 | 5,197 | |||||||||||
Net interest income after provision for loan losses | 15,322 | 14,065 | 59,160 | 53,129 | |||||||||||
Non-interest income: | |||||||||||||||
Investment advisory fees | 958 | 884 | 3,838 | 3,728 | |||||||||||
Deposit and interchange fees | 1,219 | 1,125 | 4,500 | 4,438 | |||||||||||
Income on bank-owned life insurance, net | 122 | 139 | 506 | 548 | |||||||||||
Net gains on sales of investment securities | 39 | 44 | 236 | 791 | |||||||||||
Gains on sales of loans | 320 | 284 | 989 | 687 | |||||||||||
Other income | 606 | 475 | 2,106 | 1,750 | |||||||||||
Total non-interest income | 3,264 | 2,951 | 12,175 | 11,942 | |||||||||||
Non-interest expense: | |||||||||||||||
Salaries and employee benefits | 8,500 | 7,396 | 32,034 | 28,671 | |||||||||||
Occupancy and equipment expenses | 1,434 | 1,338 | 5,678 | 5,485 | |||||||||||
Technology and telecommunications expenses | 1,118 | 993 | 4,316 | 3,886 | |||||||||||
Advertising and public relations expenses | 573 | 944 | 2,267 | 2,661 | |||||||||||
Audit, legal and other professional fees | 369 | 390 | 1,675 | 1,393 | |||||||||||
Deposit insurance premiums | 221 | 270 | 1,064 | 1,319 | |||||||||||
Supplies and postage expenses | 266 | 246 | 925 | 882 | |||||||||||
Investment advisory and custodial expenses | 119 | 85 | 438 | 412 | |||||||||||
Other operating expenses | 1,212 | 1,207 | 4,215 | 4,257 | |||||||||||
Total non-interest expense | 13,812 | 12,869 | 52,612 | 48,966 | |||||||||||
Income before income taxes | 4,774 | 4,147 | 18,723 | 16,105 | |||||||||||
Provision for income taxes | 1,540 | 1,289 | 6,348 | 5,161 | |||||||||||
Net income | $ | 3,234 | $ | 2,858 | $ | 12,375 | $ | 10,944 | |||||||
Basic earnings per share | $ | 0.34 | $ | 0.30 | $ | 1.29 | $ | 1.16 | |||||||
Diluted earnings per share | $ | 0.33 | $ | 0.30 | $ | 1.28 | $ | 1.16 | |||||||
Basic weighted average common shares outstanding | 9,644,826 | 9,455,235 | 9,586,783 | 9,401,714 | |||||||||||
Diluted weighted average common shares outstanding | 9,725,941 | 9,483,429 | 9,660,676 | 9,445,725 | |||||||||||
ENTERPRISE BANCORP, INC.
Selected Consolidated Financial Data and Ratios
(unaudited)
(Dollars in thousands, except per share data) | At or for the year ended December 31, 2012 | At or for the year ended December 31, 2011 | ||||||||
BALANCE SHEET AND OTHER DATA | ||||||||||
Total assets | $ | 1,665,726 | $ | 1,489,163 | ||||||
Loans serviced for others | 75,854 | 67,367 | ||||||||
Investment assets under management | 592,355 | 505,163 | ||||||||
Total assets under management | $ | 2,333,935 | $ | 2,061,693 | ||||||
Book value per share | $ | 14.42 | $ | 13.45 | ||||||
Dividends paid per common share | $ | 0.44 | $ | 0.42 | ||||||
Total capital to risk weighted assets | 11.46 | % | 11.42 | % | ||||||
Tier 1 capital to risk weighted assets | 10.15 | % | 10.14 | % | ||||||
Tier 1 capital to average assets | 8.64 | % | 8.63 | % | ||||||
Allowance for loan losses to total loans | 1.78 | % | 1.86 | % | ||||||
Non-performing assets | $ | 22,101 | $ | 27,321 | ||||||
Non-performing assets to total assets | 1.33 | % | 1.83 | % | ||||||
INCOME STATEMENT DATA | ||||||||||
Return on average total assets | 0.78 | % | 0.75 | % | ||||||
Return on average stockholders’ equity | 9.27 | % | 8.98 | % | ||||||
Net interest margin (tax equivalent) | 4.27 | % | 4.37 | % | ||||||