• Enterprise Bancorp, Inc. Announces Fourth Quarter Financial Results

    Источник: Nasdaq GlobeNewswire / 26 янв 2023 16:15:40   America/Chicago

    LOWELL, Mass., Jan. 26, 2023 (GLOBE NEWSWIRE) -- Enterprise Bancorp, Inc. (NASDAQ: EBTC), parent of Enterprise Bank, announced net income for the three months ended December 31, 2022, of $12.3 million, or $1.01 per diluted common share, compared to $10.8 million, or $0.90 per diluted common share, for the three months ended December 31, 2021. Net income for the year ended December 31, 2022, amounted to $42.7 million, or $3.52 per diluted common share, compared to $42.2 million, or $3.50 per diluted common share, for the year ended December 31, 2021.

    Chief Executive Officer Jack Clancy commented, "Net income for the quarter increased 13% over the prior year period led by strong loan growth and higher interest rates. In the fourth quarter, loans increased by 2% (9% annualized) and tax-equivalent net interest margin (non-GAAP) increased to 3.81%, which was the highest level since the first quarter of 2020."

    Mr. Clancy continued, "Core loan growth (non-GAAP), which excludes PPP loans, was 12% for the full year and was funded primarily from our overnight liquidity position. Total customer deposits increased 1% over the prior year. Credit quality and loan reserves remain solid. Non-performing loans amounted to 0.19% of total loans and the allowance for credit losses to total loans was 1.66% as of December 31, 2022. Additionally, we had $4.3 million in reserves for unfunded commitments."

    Executive Chairman & Founder George Duncan commented, "2022 was a very successful year with net income of $42.7 million and diluted earnings per share of $3.52 for the year ended December 31, 2022, and on January 17, 2023, the Company declared a quarterly dividend of $0.23 per share, an increase of 12% over the prior year quarter."

    Mr. Duncan continued, "During 2022, we opened a branch in Londonderry, New Hampshire, which was our third branch opening since the pandemic began in 2020, following successful openings in Lexington, Massachusetts in 2020 and North Andover, Massachusetts in 2021. Our branch growth strategy is to enter strong demographic markets and invest significantly in business development and community initiatives. Our focus on community involvement, outstanding and responsive service, and a strong digital platform provides the foundation to deliver valued products and services including commercial lending, residential mortgages, cash management, and wealth management. Our approach has been highly successful and we are experiencing excellent market penetration in these new locations."

    Mr. Duncan also highlighted, "In November 2022, we were recognized by the Boston Globe for our deep commitment to our team members. Enterprise Bank ranked 7th on the Boston Globe's Top Places to Work ("TPTW") list. We were the highest rated bank in our category of large sized companies in Massachusetts and our inclusion in 2022 was our eleventh consecutive year on the TPTW list. I want to personally thank and commend our entire dedicated team for their continual efforts in fostering an employee-centric culture whose foundation is based on respect, trust, care, personal accountability and excellence."

    Net Income

    Net income for the three months ended December 31, 2022, amounted to $12.3 million, an increase of $1.5 million, or 13%, compared to the three months ended December 31, 2021.

    • The increase in net income was due primarily to an increase in net interest income of $6.5 million, partially offset by increases in the provision for credit losses of $838 thousand and non-interest expense of $1.6 million and a decrease in non-interest income of $1.8 million.
    • The decrease in non-interest income for the three months ended December 31, 2022 was impacted by three non-core operating transactions further discussed under the heading "Non-Interest Income," below.

    Net Interest Income

    Net interest income for the three months ended December 31, 2022, amounted to $42.2 million, an increase of $6.5 million, or 18%, compared to the three months ended December 31, 2021.

    • The increase in net interest income was due largely to increases in loan income, excluding Paycheck Protection Program ("PPP") income (non-GAAP), of $8.5 million and other interest-earning asset income of $3.2 million, partially offset by a decrease in PPP income of $3.2 million and an increase in deposit interest expense of $2.4 million.

    Net Interest Margin

    Tax-equivalent net interest margin ("net interest margin") (non-GAAP) was 3.81% for the three months ended December 31, 2022, compared to 3.61% and 3.34% for the three months ended September 30, 2022 and December 31, 2021, respectively.

    Net interest margin has been favorably impacted by increases in market interest rates and the prime lending rate over the comparable periods. In particular, interest-earning deposits with banks have been impacted most favorably, as noted below.

    • Average interest-earning deposits with banks amounted to $358.2 million, a decrease of $173.3 million, or 33%, while the yield increased 354 basis points. The decrease in average interest-earning deposits with banks resulted primarily from funding growth in the loan portfolio and the increase in yield reflected a significant change in market interest rates during 2022.

    Other items impacting net interest margin for the three months ended December 31, 2022, compared to the prior year period, included:

    • Average investment securities increased $81.6 million, or 9%, while the tax-equivalent yield remained unchanged.
    • Average loans increased $245.3 million, or 9%, and the tax-equivalent yield increased 32 basis points.
      • Average core loans (non-GAAP) increased $347.1 million, or 13%, and the yield increased 62 basis points. Core loan yields (non-GAAP) have benefited primarily from increases in the prime lending rate of 425 basis points between March and December of 2022.
      • Average PPP loans outstanding decreased $101.7 million, or 98%, due to the continued forgiveness of PPP loans by the Small Business Administration (the "SBA") during the period. PPP income amounted to $24 thousand for the three months ended December 31, 2022, compared to $3.2 million for the three months ended December 31, 2021.
    • Average total deposits increased $128.8 million, or 3%, and the yield increased 23 basis points as a result of higher market rates due to competition within the market.

    Provision for Credit Losses

    The provision for credit losses for the three months ended December 31, 2022, amounted to $1.9 million, compared to $1.0 million for the three months ended December 31, 2021.

    • The provision for the three months ended December 31, 2022, consisted of $1.6 million for loans outstanding and $266 thousand for reserves on unfunded commitments (included in other liabilities).
    • The majority of the provision for credit losses during the fourth quarter of 2022 related to growth in the Company's loan portfolio and in off-balance sheet commitments.

    Non-Interest Income

    Non-interest income for the three months ended December 31, 2022, amounted to $4.2 million, a decrease of $1.8 million, or 30%, compared to the three months ended December 31, 2021 and was impacted by the following three non-core operating items:

    • On October 5, 2022, the Company ended its revenue sharing relationship with an insurance agency and sold the rights to the future cash flows on these insurance policies to the agency. The transaction resulted in a one-time gain on sale of insurance commissions of $2.0 million and the Company has no other insurance agency relationships. Prior to the sale, the Company had referred clients, assisted with servicing and shared the resulting revenue.
    • In the fourth quarter, the Company realized net losses on sales of debt securities of $3.0 million after executing a bond restructure in which it sold lower-yielding debt securities with an amortized cost of $39.9 million.
    • Non-interest income for the prior year quarter was impacted by a gain on the sale of other real estate owned ("OREO") of $1.1 million.

    Excluding these three non-core operating items, non-interest income increased $359 thousand, or 7%, resulting primarily from increases in deposit and interchange fees of $448 thousand, partially offset by a decrease in wealth management fees of $201 thousand.

    Non-Interest Expense

    Non-interest expense for the three months ended December 31, 2022, amounted to $28.2 million, an increase of $1.6 million, or 6%, compared to the three months ended December 31, 2021.

    • The increase in non-interest expense over the prior year period resulted primarily from increases in salaries and employee benefits of $1.4 million, audit, legal and other professional fees of $226 thousand and advertising and public relation expense of $250 thousand.

    Credit Quality

    The allowance for credit losses ("ACL") for loans amounted to $52.6 million, or 1.66% of total loans, at December 31, 2022, compared to $47.7 million, or 1.63% of total loans, at December 31, 2021. The reserve for unfunded commitments (included in other liabilities) amounted to $4.3 million at December 31, 2022, compared to $3.7 million at December 31, 2021. The Company’s reserves were impacted by growth and worsening forecasted economic conditions, partially offset by strong credit quality.

    Net charge-offs for the three months ended December 31, 2022, amounted to $166 thousand, compared to net recoveries of $108 thousand for the three months ended December 31, 2021.

    Non-performing loans amounted to $6.1 million, or 0.19% of total loans, at December 31, 2022, compared to $26.5 million, or 0.91% of total loans, at December 31, 2021. The decrease in non-performing loans was due primarily to two commercial relationships, amounting to $17.9 million, which were upgraded and restored to accrual status during the second quarter of 2022, due to improved financial strength and consistent payment history. At December 31, 2022 and December 31, 2021, the Company had no OREO.

    Balance Sheet

    Total assets amounted to $4.44 billion at December 31, 2022, compared to $4.45 billion at December 31, 2021, a decrease of $9.5 million.

    Total interest-earning deposits with banks amounted to $230.7 million at December 31, 2022, compared to $403.0 million at December 31, 2021, a decrease of $172.3 million, or 43%. The decrease in interest-earning deposits with banks was primarily from loan growth.

    Total investment securities at fair value amounted to $820.4 million at December 31, 2022, compared to $958.2 million at December 31, 2021, a decrease of $137.8 million, or 14%. The change resulted primarily from a decline in the fair value of the Company's debt securities portfolio of $130.0 million during the period. Management has concluded that the unrealized losses resulted from significant increases in market interest rates during 2022 and that no allowance for credit losses was considered necessary as of December 31, 2022.

    Total loans amounted to $3.18 billion at December 31, 2022, compared to $2.92 billion at December 31, 2021, an increase of $259.8 million, or 9%.

    • Core loans (non-GAAP) increased $329.1 million, or 12%, over the respective periods. Included in the loan growth for the period was $75.7 million in retained residential mortgages.
    • At December 31, 2022, the Company had $2.2 million in PPP loans outstanding, compared to $71.5 million at December 31, 2021. Loans that were originated under the PPP and remained outstanding at December 31, 2022 are considered to be core loans (non-GAAP), as management does not expect the majority of the remaining balances to be forgiven by the SBA.

    Customer deposits amounted to $4.04 billion at December 31, 2022, compared to $3.98 billion at December 31, 2021, an increase of $55.6 million, or 1%.

    Shareholders' Equity & Regulatory Capital

    Total shareholders' equity amounted to $282.3 million at December 31, 2022, compared to $346.9 million at December 31, 2021, a decrease of $64.6 million, or 19%. The change was attributable primarily to a decrease in accumulated other comprehensive income ("AOCI") of $100.9 million since December 31, 2021, partially offset by an increase in retained earnings of $32.8 million over the same period. The change in AOCI resulted from a decrease in the fair value of debt securities, which is attributed to the significant increase in market interest rates during the year ended December 31, 2022. The Company classifies all debt securities as available-for-sale and anticipates they will mature or be called at par value.

    The Company's reported book value per common share and return on average shareholders' equity ratios were impacted by the change in AOCI as follows:

    • Book value per common share was $23.26 at December 31, 2022, compared to $28.82 at December 31, 2021, a decrease of 19%. Excluding AOCI (non-GAAP), book value per common share was $31.19 at December 31, 2022, compared to $28.43 at December 31, 2021, an increase of 10%.
    • Return on average shareholders' equity was 18.08% and 12.56% for the quarters ended December 31, 2022, and December 31, 2021, respectively. Return on average shareholders' equity, excluding AOCI (non-GAAP), was 13.03% and 12.69% for the quarters ended December 31, 2022, and December 31, 2021, respectively.

    Total Capital and Tier 1 Capital to risk weighted assets, of which AOCI is not a component, amounted to 13.49% and 10.56%, respectively, at December 31, 2022 compared to 13.73% and 10.62%, respectively, at December 31, 2021. The decrease in capital ratios was attributed mostly to loan growth.

    Wealth Management

    Wealth assets under management and wealth assets under administration, which are not carried as assets on the Company's consolidated balance sheets, amounted to $891.5 million and $198.6 million, respectively, at December 31, 2022, representing decreases of $150.0 million, or 14%, and $59.3 million, or 23%, respectively, compared to December 31, 2021. The decreases in wealth assets under management and wealth assets under administration were attributable primarily to declines in market values during the year ended December 31, 2022.

    Non-GAAP Measures

    Throughout this press release, certain measures have been adjusted to provide what management believes are more meaningful comparisons between periods. The items principally impacted and reported as non-GAAP were loans (PPP loans), shareholders' equity (AOCI), and any related measures presented. We refer to any prior period measure that excludes PPP loans as "core". The remaining PPP loans outstanding at December 31, 2022 are included in core loans (non-GAAP), as the majority of the remaining balances are no longer expected to be forgiven by the SBA. The activity which resulted in the Company's use of non-GAAP measures consisted of: (1) the Company's origination of over $715 million in short-term PPP loans between April 2020 and May 2021; (2) forgiveness of PPP loans by the SBA which began in November 2020 and continued through the current period, and approximately 99.7% of the principal balance of PPP loans originated by the Company has been forgiven by the SBA through December 31, 2022; and (3) the significant increase in market interest rates during 2022 has resulted in unrealized losses in the Company's available-for-sale debt securities portfolio at December 31, 2022 of $124.1 million and an accumulated other comprehensive loss, included in shareholder's equity, of $96.2 million. The tables beginning on page 12 of this press release provide a reconciliation of the non-GAAP measures to the information presented under U.S. generally accepted accounting principles ("GAAP").

    About Enterprise Bancorp, Inc.

    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 133 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, 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 Northern Middlesex, Northern Essex, and Northern Worcester counties of Massachusetts and the Southern Hillsborough and Southern Rockingham counties in New Hampshire. Enterprise Bank has 27 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, Londonderry, Nashua (2), Pelham, Salem and Windham.

    Forward-Looking Statements

    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 changes in market interest rates, the persistence of the current inflationary environment in our market areas and the United States, the uncertain impacts of quantitative tightening and current and future monetary policies of the Federal Reserve, regulatory considerations, the impact of the ongoing COVID-19 pandemic and any current or future variants thereof, 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 and readers are cautioned not to place undue reliance on the forward-looking statements contained in this press release. 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) December 31,
    2022    		 December 31,
    2021
    Assets    
    Cash and cash equivalents:    
    Cash and due from banks $36,901  $33,572 
    Interest-earning deposits with banks  230,688   403,004 
    Total cash and cash equivalents  267,589   436,576 
    Investments:    
    Debt securities at fair value (amortized cost of $940,227 and $950,523, respectively)  816,102   956,430 
    Equity securities at fair value  4,269   1,785 
    Total investment securities at fair value  820,371   958,215 
    Federal Home Loan Bank ("FHLB") stock  2,343   2,164 
    Loans:    
    Total loans  3,180,518   2,920,684 
    Allowance for credit losses  (52,640)  (47,704)
    Net loans  3,127,878   2,872,980 
    Premises and equipment, net  44,228   44,689 
    Lease right-of-use asset  24,923   24,295 
    Accrued interest receivable  17,117   13,354 
    Deferred income taxes, net  51,981   19,644 
    Bank-owned life insurance  64,156   62,954 
    Prepaid income taxes  683   279 
    Prepaid expenses and other assets  11,408   7,013 
    Goodwill  5,656   5,656 
    Total assets $4,438,333  $4,447,819 
    Liabilities and Shareholders' Equity    
    Liabilities    
    Deposits $4,035,806  $3,980,239 
    Borrowed funds  3,216   5,479 
    Subordinated debt  59,182   58,979 
    Lease liability  24,415   23,627 
    Accrued expenses and other liabilities  31,442   31,063 
    Accrued interest payable  2,005   1,537 
    Total liabilities  4,156,066   4,100,924 
    Commitments and Contingencies    
    Shareholders' 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; 12,133,516 and 12,038,382 shares issued and outstanding, respectively  121   120 
    Additional paid-in capital  103,793   100,352 
    Retained earnings  274,560   241,761 
    Accumulated other comprehensive (loss) income  (96,207)  4,662 
    Total shareholders' equity  282,267   346,895 
    Total liabilities and shareholders' equity $4,438,333  $4,447,819 
     
     

    ENTERPRISE BANCORP, INC.
    Consolidated Statements of Income
    (unaudited)

      Three months ended Year ended
      December 31, December 31,
    (Dollars in thousands, except per share data) 2022 2021 2022 2021
    Interest and dividend income:        
    Loans and loans held for sale $37,785 $32,478 $135,934 $133,208
    Investment securities 4,868 4,428 18,965 15,143
    Other interest-earning assets 3,372 211 6,014 682
    Total interest and dividend income 46,025 37,117 160,913 149,033
    Interest expense:        
    Deposits 2,980 627 5,711 3,922
    Borrowed funds 13 17 52 60
    Subordinated debt 867 818 3,352 3,495
    Total interest expense 3,860 1,462 9,115 7,477
    Net interest income 42,165 35,655 151,798 141,556
    Provision for credit losses 1,861 1,023 5,800 1,770
    Net interest income after provision for credit losses 40,304 34,632 145,998 139,786
    Non-interest income:        
    Wealth management fees 1,568 1,769 6,533 6,787
    Deposit and interchange fees 2,349 1,901 8,196 6,971
    Income on bank-owned life insurance, net 309 303 1,202 821
    Net (losses) gains on sales of debt securities (3,035) — (1,973) 128
    Net gains on sales of loans — 38 30 833
    Net gain on sale of OREO — 1,126 — 1,126
    Net gain on sale of insurance commissions 2,034 — 2,034 —
    Loss on termination of swaps — — — (1,847)
    Gain (loss) on equity securities 174 92 (514) 246
    Other income 811 748 2,954 3,042
    Total non-interest income 4,210 5,977 18,462 18,107
    Non-interest expense:        
    Salaries and employee benefits 18,670 17,256 72,120 66,633
    Occupancy and equipment expenses 2,317 2,382 9,299 9,650
    Technology and telecommunications expenses 2,581 2,697 10,735 10,574
    Advertising and public relations expenses 1,021 771 2,758 2,373
    Audit, legal and other professional fees 871 645 2,949 2,347
    Deposit insurance premiums 470 583 1,783 1,910
    Supplies and postage expenses 249 214 912 819
    Loss on extinguishment of subordinated debt — — — 713
    Other operating expenses 1,988 1,978 7,758 7,116
    Total non-interest expense 28,167 26,526 108,314 102,135
    Income before income taxes 16,347 14,083 56,146 55,758
    Provision for income taxes 4,041 3,235 13,430 13,587
    Net income $12,306 $10,848 $42,716 $42,171
             
    Basic earnings per common share $1.01 $0.90 $3.53 $3.51
    Diluted earnings per common share $1.01 $0.90 $3.52 $3.50
             
    Basic weighted average common shares outstanding 12,128,019 12,031,471 12,103,033 12,005,838
    Diluted weighted average common shares outstanding 12,168,753 12,093,097 12,149,777 12,051,293
             
             

    ENTERPRISE BANCORP, INC.
    Selected Consolidated Financial Data and Ratios
    (unaudited)

      At or for the three months ended
    (Dollars in thousands, except per share data) December 31, 
    2022    		 September 30,
    2022    		 June 30,
    2022    		 March 31,
    2022    		 December 31, 
    2021
    Balance Sheet Data          
    Total cash and cash equivalents $267,589  $413,688  $306,460  $429,687  $436,576 
    Total investment securities at fair value  820,371   831,030   866,580   910,013   958,215 
    Total loans  3,180,518   3,109,369   3,084,915   2,962,721   2,920,684 
    Allowance for credit losses  (52,640)  (51,211)  (50,703)  (48,424)  (47,704)
    Total assets  4,438,333   4,529,820   4,417,447   4,454,474   4,447,819 
    Total deposits  4,035,806   4,138,038   4,016,814   4,034,500   3,980,239 
    Subordinated debt  59,182   59,102   59,039   59,009   58,979 
    Total shareholders' equity  282,267   272,193   285,110   310,539   346,895 
    Total liabilities and shareholders' equity  4,438,333   4,529,820   4,417,447   4,454,474   4,447,819 
               
    Wealth Management          
    Wealth assets under management $891,451  $835,661  $849,536  $961,491  $1,041,409 
    Wealth assets under administration $198,586  $185,977  $205,646  $243,247  $257,867 
               
    Shareholders' Equity Ratios          
    Book value per common share $23.26  $22.44  $23.53  $25.66  $28.82 
    Dividends paid per common share $0.205  $0.205  $0.205  $0.205  $0.185 
               
    Regulatory Capital Ratios          
    Total capital to risk weighted assets  13.49%  13.49%  13.38%  13.72%  13.73%
    Tier 1 capital to risk weighted assets(1)  10.56%  10.52%  10.38%  10.65%  10.62%
    Tier 1 capital to average assets  8.10%  7.89%  8.03%  7.83%  7.56%
               
    Credit Quality Data          
    Non-performing loans $6,122  $5,717  $6,321  $25,173  $26,522 
    Non-performing loans to total loans  0.19%  0.18%  0.20%  0.85%  0.91%
    Non-performing assets to total assets  0.14%  0.13%  0.14%  0.57%  0.60%
    ACL for loans to total loans  1.66%  1.65%  1.64%  1.63%  1.63%
               
    Income Statement Data          
    Net interest income $42,165  $39,779  $35,821  $34,033  $35,655 
    Provision for credit losses  1,861   1,000   2,409   530   1,023 
    Total non-interest income  4,210   4,525   4,132   5,595   5,977 
    Total non-interest expense  28,167   27,537   26,853   25,757   26,526 
    Income before income taxes  16,347   15,767   10,691   13,341   14,083 
    Provision for income taxes  4,041   3,805   2,530   3,054   3,235 
    Net income $12,306  $11,962  $8,161  $10,287  $10,848 
               
    Income Statement Ratios          
    Diluted earnings per common share $1.01  $0.98  $0.67  $0.85  $0.90 
    Return on average total assets  1.08%  1.05%  0.76%  0.95%  0.97%
    Return on average shareholders' equity  18.08%  16.47%  11.24%  12.56%  12.56%
    Net interest margin (tax-equivalent)(2)  3.81%  3.61%  3.45%  3.28%  3.34%

    (1) Ratio also represents common equity tier 1 capital to risk weighted assets as of the periods presented.
    (2) 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 BANCORP, INC.
    Consolidated Loan and Deposit Data
    (unaudited)

    Major classifications of loans at the dates indicated were as follows:

    (Dollars in thousands) December 31,
    2022    		 September 30,
    2022    		 June 30,
    2022    		 March 31,
    2022    		 December 31,
    2021
    Commercial real estate $1,921,410  $1,886,365  $1,865,198  $1,779,691  $1,680,792 
    Commercial and industrial  412,277   413,347   422,006   408,341   412,070 
    Commercial construction  424,049   396,027   385,752   375,709   410,443 
    SBA PPP  2,213   2,725   15,288   32,153   71,502 
    Total commercial loans  2,759,949   2,698,464   2,688,244   2,595,894   2,574,807 
               
    Residential mortgages  332,632   321,663   307,131   280,507   256,940 
    Home equity loans and lines  79,807   80,882   81,648   78,557   80,467 
    Consumer  8,130   8,360   7,892   7,763   8,470 
    Total retail loans  420,569   410,905   396,671   366,827   345,877 
    Total loans  3,180,518   3,109,369   3,084,915   2,962,721   2,920,684 
               
    ACL for loans  (52,640)  (51,211)  (50,703)  (48,424)  (47,704)
    Net loans $3,127,878  $3,058,158  $3,034,212  $2,914,297  $2,872,980 
     

    Deposits are summarized as follows as of the periods indicated:

    (Dollars in thousands) December 31,
    2022    		 September 30,
    2022    		 June 30,
    2022    		 March 31,
    2022    		 December 31,
    2021
    Non-interest checking $1,361,588 $1,441,104 $1,457,220 $1,444,047 $1,364,258
    Interest-bearing checking  678,715  719,474  712,898  718,107  743,587
    Savings  326,666  351,665  334,728  334,923  310,244
    Money market  1,381,645  1,395,756  1,293,453  1,337,670  1,355,701
    CDs $250,000 or less  187,758  163,520  144,084  149,309  154,403
    CDs greater than $250,000  99,434  66,519  74,431  50,444  52,046
    Deposits $4,035,806 $4,138,038 $4,016,814 $4,034,500 $3,980,239
     
     

    ENTERPRISE BANCORP, INC.
    Consolidated Average Balance Sheets and Yields (tax-equivalent basis)
    (unaudited)

    The following table presents the Company's average balance sheets, net interest income and average rates for the three months ended December 31, 2022 and 2021:

      Three months ended December 31, 2022 Three months ended December 31, 2021
    (Dollars in thousands) Average
    Balance    		 Interest(1) Average
    Yield(1)    		 Average
    Balance    		 Interest(1) Average
    Yield(1)
    Assets:            
    Loans and loans held for sale(2) (tax-equivalent) $3,118,304 $37,895 4.82% $2,872,959 $32,593 4.50%
    Investment securities(3) (tax-equivalent)  952,975  5,099 2.14%  871,368  4,660 2.14%
    Other interest-earning assets(4)  360,557  3,372 3.71%  533,653  211 0.16%
    Total interest-earnings assets (tax-equivalent)  4,431,836  46,366 4.16%  4,277,980  37,464 3.48%
    Other assets  71,289      179,178    
    Total assets $4,503,125     $4,457,158    
                 
    Liabilities and stockholders' equity:            
    Interest checking, savings and money market $2,413,646  2,211 0.36% $2,331,973  355 0.06%
    CDs  260,265  769 1.17%  209,299  272 0.52%
    Borrowed funds  2,999  13 1.69%  7,306  17 0.90%
    Subordinated debt(5)  59,132  867 5.86%  58,961  818 5.55%
    Total interest-bearing funding  2,736,042  3,860 0.56%  2,607,539  1,462 0.22%
    Non-interest checking  1,442,108  —    1,445,934  —  
    Total deposits, borrowed funds and subordinated debt  4,178,150  3,860 0.37%  4,053,473  1,462 0.14%
    Other liabilities  54,922      61,050    
    Total liabilities  4,233,072      4,114,523    
    Stockholders' equity  270,053      342,635    
    Total liabilities and stockholders' equity $4,503,125     $4,457,158    
                 
    Net interest-rate spread (tax-equivalent)     3.60%     3.26%
    Net interest income (tax-equivalent)    42,506      36,002  
    Net interest margin (tax-equivalent)     3.81%     3.34%
    Less tax-equivalent adjustment    341      347  
    Net interest income   $42,165     $35,655  
    Net interest margin     3.78%     3.31%

    (1) Average yields and interest income are presented on a tax-equivalent basis, calculated using a U.S. federal income tax rate of 21% in both 2022 and 2021, based on tax-equivalent adjustments associated with tax-exempt loans and investments interest income.
    (2) Average loans and loans held for sale include non-accrual loans and are net of average deferred loan fees.
    (3) Average investments are presented at average amortized cost.
    (4) Average other interest-earning assets include interest-earning deposits with banks, federal funds sold and FHLB stock.
    (5) The subordinated debt is net of average deferred debt issuance costs.


    ENTERPRISE BANCORP, INC.
    Consolidated Average Balance Sheets and Yields (tax-equivalent basis)
    (unaudited)

    The following table presents the Company's average balance sheets, net interest income and average rates for the years ended December 31, 2022 and 2021:

      Year ended December 31, 2022 Year ended December 31, 2021
    (Dollars in thousands) Average
    Balance    		 Interest(1) Average
    Yield(1)    		 Average
    Balance    		 Interest(1) Average
    Yield(1)
    Assets:            
    Loans and loans held for sale(2) (tax-equivalent) $3,034,608 $136,381 4.49% $2,969,777 $133,696 4.50%
    Investment securities(3) (tax-equivalent)  955,927  19,891 2.08%  680,261  16,072 2.36%
    Other interest-earning assets(4)  333,433  6,014 1.80%  501,201  682 0.14%
    Total interest-earnings assets (tax-equivalent)  4,323,968  162,286 3.75%  4,151,239  150,450 3.62%
    Other assets  110,238      169,315    
    Total assets $4,434,206     $4,320,554    
                 
    Liabilities and stockholders' equity:            
    Interest checking, savings and money market $2,381,774  4,091 0.17% $2,249,023  1,558 0.07%
    CDs  221,050  1,620 0.73%  224,627  1,700 0.76%
    Brokered deposits  —  — —%  45,617  664 1.46%
    Borrowed funds  3,286  52 1.58%  7,632  60 0.79%
    Subordinated debt(5)  59,050  3,352 5.68%  62,546  3,495 5.59%
    Total interest-bearing funding  2,665,160  9,115 0.34%  2,589,445  7,477 0.29%
    Non-interest checking  1,422,618  —    1,341,633  —  
    Total deposits, borrowed funds and subordinated debt  4,087,778  9,115 0.22%  3,931,078  7,477 0.19%
    Other liabilities  51,274      51,913    
    Total liabilities  4,139,052      3,982,991    
    Stockholders' equity  295,154      337,563    
    Total liabilities and stockholders' equity $4,434,206     $4,320,554    
                 
    Net interest-rate spread (tax-equivalent)     3.41%     3.33%
    Net interest income (tax-equivalent)    153,171      142,973  
    Net interest margin (tax-equivalent)     3.54%     3.44%
    Less tax-equivalent adjustment    1,373      1,417  
    Net interest income   $151,798     $141,556  
    Net interest margin     3.51%     3.41%

    (1) Average yields and interest income are presented on a tax-equivalent basis, calculated using a U.S. federal income tax rate of 21% in both 2022 and 2021, based on tax-equivalent adjustments associated with tax-exempt loans and investments interest income.
    (2) Average loans and loans held for sale include non-accrual loans and are net of average deferred loan fees.
    (3) Average investments are presented at average amortized cost.
    (4) Average other interest-earning assets include interest-earning deposits with banks, federal funds sold and FHLB stock.
    (5) The subordinated debt is net of average deferred debt issuance costs.


    ENTERPRISE BANCORP, INC.
    Non-GAAP Financial Measures and Reconciliations
    (unaudited)

    NON-GAAP MEASURES

    The accompanying unaudited consolidated interim financial statements have been prepared in accordance with GAAP. However, certain financial measures we present 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; therefore, these measures may not be comparable to other similarly titled measures as presented by other companies.

    The following tables summarize the reconciliation of GAAP to non-GAAP measures related to the impact of PPP loans on total loans and loan interest income:

    (Dollars in thousands) December 31,
    2022    		 September 30,
    2022    		 June 30,
    2022    		 March 31,
    2022    		 December 31,
    2021
    Total Core Loans          
    Total loans $3,180,518 $3,109,369  $3,084,915  $2,962,721  $2,920,684 
    Adjustment: PPP loans(1)  —  (2,725)  (15,288)  (32,153)  (71,502)
    Total core loans (non-GAAP) $3,180,518 $3,106,644  $3,069,627  $2,930,568  $2,849,182 

    (1) PPP loan outstanding at December 31, 2022, amounting to $2.2 million, are considered core loans (non-GAAP), as the remaining balances are not expected to be forgiven by the SBA.

         
      Three months ended Year ended
      December 31, December 31,
    (Dollars in thousands)  2022   2021   2022   2021 
    Loan Income Excluding PPP Income        
    Loan income $37,785  $32,478  $135,934  $133,208 
    Adjustment: PPP income  (24)  (3,195)  (2,561)  (19,691)
    Loan income excluding PPP income (non-GAAP) $37,761  $29,283  $133,373  $113,517 
             
    Net Interest Income Excluding PPP Income        
    Net interest income $42,165  $35,655  $151,798  $141,556 
    Adjustment: PPP income  (24)  (3,195)  (2,561)  (19,691)
    Net interest income excluding PPP income (non-GAAP) $42,141  $32,460  $149,237  $121,865 
     
     

    ENTERPRISE BANCORP, INC.
    Non-GAAP Financial Measures and Reconciliations (continued)
    (unaudited)

    The following tables summarize the reconciliation of GAAP to non-GAAP measures related to the impact of AOCI on the Company's reported book value per common share and return on average shareholders' equity:

      At or for the three months ended
    (Dollars in thousands, except per share data) December 31,
    2022    		 December 31,
    2021
    Shareholders' Equity    
    Total shareholders' equity (as reported) $282,267  $346,895 
    Less: accumulated other comprehensive (loss) income  (96,207)  4,662 
    Shareholders' equity excluding AOCI (non-GAAP) $378,474  $342,233 
         
    Book Value Per Common Share    
    Book value per common share (as reported) $23.26  $28.82 
    Book value per common share excluding AOCI (non-GAAP) $31.19  $28.43 
         
    Average Shareholders' Equity    
    Total average shareholders' equity (as reported) $270,053  $342,635 
    Less: average accumulated other comprehensive (loss) income  (104,617)  3,585 
    Average shareholders' equity excluding AOCI (non-GAAP) $374,670  $339,050 
         
    Return on Average Shareholders' Equity    
    Return on average shareholders' equity (as reported)  18.08%  12.56%
    Return on average shareholders' equity excluding AOCI (non-GAAP)  13.03%  12.69%
             

    Contact Info: Joseph R. Lussier, Executive Vice President, Chief Financial Officer and Treasurer (978) 656-5578 


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