• Enterprise Bancorp, Inc. Announces Second Quarter Financial Results

    Source: Nasdaq GlobeNewswire / 25 Jul 2023 16:50:47   America/New_York

    LOWELL, Mass., July 25, 2023 (GLOBE NEWSWIRE) -- Enterprise Bancorp, Inc. (NASDAQ: EBTC), parent of Enterprise Bank, announced its financial results for the three and six months ended June 30, 2023.

    Executive Chairman & Founder George Duncan commented, "We are pleased with our second quarter results. Our operating strategy has always been to serve our customers and communities through consistent and disciplined lending, a conservative and long-term focus, being highly responsive to our customers' banking needs and making ongoing investments in our products, services, and people to provide the best banking services through all economic cycles. We have always sought to fund asset growth with relationship-based customer deposits and use wholesale borrowings as supplemental funding for relatively short periods of time. This approach has served us well over time and especially now. We have a relatively high level of liquidity with significant funding capacity and are well positioned to take advantage of market opportunities in the current environment."

    Key financial results at or for the three months ended June 30, 2023, are as follows:

    • Net income amounted to $9.7 million, or $0.79 per diluted common share, compared to $8.2 million, or $0.67 per diluted common share, for the three months ended June 30, 2022 and $10.8 million, or $0.88 per diluted common share, for the three months ended March 31, 2023.
    • Included in pre-tax income were $3.4 million in Employee Retention Credits ("ERC"), which the Company recognized as a reduction to salary and benefits expense, a loss on the sale of debt securities of $2.4 million and a provision for credit losses of $2.3 million.
    • Total loans amounted to $3.35 billion, an increase of $115.5 million, or 4%, compared to March 31, 2023. Loans outstanding have increased 9% compared to June 30, 2022.
    • Total customer deposits amounted to $4.08 billion, an increase of $59.4 million, or 1%, compared to March 31, 2023. Customer deposits have increased 1% compared to June 30, 2022.
    • Cash and equivalents amounted to $258.8 million, while wholesale borrowings amounted to $3.3 million at June 30, 2023.

    Chief Executive Officer Jack Clancy commented, "Loan growth was strong during the quarter, and we continue to see good demand in our markets." Mr. Clancy continued, "In June, to increase asset sensitivity and earnings, the Company sold $84.8 million in investment securities, reinvesting the proceeds into higher yielding short-term investments, and separately entered into a two-year, pay fixed loan hedge with a notional balance of $50.0 million. These initiatives provide an annualized income enhancement of approximately $2.0 million to net interest income based on interest rates at June 30, 2023."

    Net Income
    Net income for the three months ended June 30, 2023, amounted to $9.7 million, an increase of $1.5 million, or 19%, compared to the three months ended June 30, 2022.

    • The increase in net income during the period was due primarily to an increase in net interest income of $2.3 million and a decrease in non-interest expense of $1.2 million, partially offset by a decrease in non-interest income of $1.3 million. The components of the increase in net income are detailed below.

    Net Interest Income
    Net interest income for the three months ended June 30, 2023, amounted to $38.1 million, an increase of $2.3 million, or 6%, compared to the three months ended June 30, 2022.

    • The increase in net interest income during the period was due largely to increases in loan interest income of $9.7 million and other interest-earning asset income of $1.5 million, partially offset by an increase in deposit interest expense of $9.0 million, due primarily to higher market interest rates over the comparable periods and increased competition for deposits from bank and non-bank alternatives.

    Net Interest Margin
    Three months ended – June 30, 2023 compared to March 31, 2023

    Tax-equivalent net interest margin ("net interest margin") (non-GAAP) was 3.55% for the three months ended June 30, 2023, compared to 3.76% for the three months ended March 31, 2023.

    Net interest margin compared to the prior quarter was impacted by the following factors:

    • Average interest-earning deposits with banks decreased $42.9 million, or 22%, while the yield increased 37 basis points. The decrease in average balance resulted from funding loan growth, partially offset by a decrease in average debt securities, while the increase in yield reflected the increase in market interest rates during the period.
    • Average debt securities decreased $20.3 million, or 2%, while the tax-equivalent yield remained unchanged. The decrease in average balance resulted from principal pay-downs, calls, maturities and sales of debt securities during the three months ended June 30, 2023.
    • Average loan balances increased $67.7 million, or 2%, and the tax-equivalent yield increased 12 basis points. The increase in loan yields resulted primarily from increases in market interest rates during the period.
    • Average total deposits increased $3.9 million and the yield increased 36 basis points. The increase in yield resulted from increases in market interest rates and competition from bank and non-bank alternatives during the period.

    Three months ended – June 30, 2023 compared to June 30, 2022

    Net interest margin was 3.55% for the three months ended June 30, 2023, compared to 3.45% for the three months ended June 30, 2022.

    Net interest margin compared to the prior year quarter was impacted by the following factors:

    • Average interest-earning deposits with banks decreased $58.3 million, or 28%, while the yield increased 413 basis points. The decrease in average balance resulted primarily from funding loan growth, partially offset by a decrease in average debt securities and an increase in average total deposits. The increase in yield reflected a significant increase in market interest rates during the period.
    • Average debt securities decreased $54.3 million, or 6%, while the tax-equivalent yield increased 20 basis points. The decrease in average balance resulted from principal pay-downs, calls, maturities and sales of debt securities during the three months ended June 30, 2023, with funds redeployed into higher yielding interest-earning deposits.
    • Average loan balances increased $248.5 million, or 8%, and the tax-equivalent yield increased 86 basis points. The increase in loan yields resulted primarily from increases in market interest rates during the period.
    • Average total deposits increased $94.6 million, or 2%, and the yield increased 90 basis points. The increase in yield resulted from increases in market interest rates, a shift in deposit mix to higher yielding products and competition from bank and non-bank alternatives, occurring principally over the last nine months.

    Provision for Credit Losses
    The provision for credit losses for the three months ended June 30, 2023, amounted to $2.3 million, compared to $2.4 million for the three months ended June 30, 2022. The provision expense for the second quarter of 2023 resulted mainly from an increase in loans outstanding and, to a lesser extent, an increase in off-balance sheet commitments during the period.

    Non-Interest Income
    Non-interest income for the three months ended June 30, 2023, amounted to $2.8 million, a decrease of $1.3 million, or 32%, compared to the three months ended June 30, 2022.

    • Non-interest income for the three months ended June 30, 2023 included losses on sales of debt securities of $2.4 million and gains on equity securities of $189 thousand. Non-interest income during the three months ended June 30, 2022 had no losses on sales of debt securities and losses on equity securities of $429 thousand.
    • Excluding the items above, non-interest income increased $487 thousand, or 11%, due primarily to an increase in deposit and interchange fees of $295 thousand.

    Non-Interest Expense
    Non-interest expense for the three months ended June 30, 2023, amounted to $25.6 million, a decrease of $1.2 million, or 5%, compared to the three months ended June 30, 2022. The decrease resulted primarily from a decrease in salaries and employee benefits of $1.6 million, due primarily to the receipt of $3.4 million in ERC, which were recognized as a reduction to salary and benefits expense.

    • Excluding the ERC, non-interest expense increased $2.2 million, or 8%, due primarily to an increase in salaries and benefits of $1.8 million, or 10%.
    • The increase in non-interest expense, excluding the ERC, was also impacted by increases in advertising and public relations expenses of $244 thousand and deposit insurance premiums of $249 thousand, partially offset by a decrease in technology and telecommunications expenses of $283 thousand.

    Income Taxes
    The effective tax rate was 25.6% and 23.7% for the three months ended June 30, 2023 and 2022, respectively. The increase in the effective tax rate for the current quarter compared to the prior year quarter resulted primarily from the transfers of funds from the Bank's investment subsidiary corporations and a partially non-deductible loss on the sale of debt securities. The Company established a valuation allowance against the capital loss carryforward deferred tax asset which resulted from the sale of securities. The effective tax rate was 24.2% and 23.2% for the six months ended June 30, 2023 and 2022, respectively.

    Balance Sheet
    Total assets amounted to $4.50 billion at June 30, 2023, compared to $4.44 billion at December 31, 2022, an increase of $64.0 million, or 1%.

    Total interest-earning deposits with banks, which consist of overnight and short-term investments, amounted to $208.8 million at June 30, 2023, compared to $230.7 million at December 31, 2022, a decrease of $21.9 million, or 9%. The decrease was due primarily to the funding of loan growth, partially offset by sales of debt securities, investment cash flows and deposit growth.

    Total investment securities at fair value amounted to $712.9 million at June 30, 2023, compared to $820.4 million at December 31, 2022, a decrease of $107.5 million, or 13%. The decrease was attributable principally to $84.8 million in sales of debt securities and, to a lesser extent, principal pay downs, calls and maturities. Net unrealized losses on the debt securities portfolio, which were attributable to an increase in market interest rates, amounted to $113.1 million at June 30, 2023 and $124.1 million at December 31, 2022. Management has determined that no allowance for credit losses ("ACL") for available-for-sale securities was necessary as of June 30, 2023.

    Total loans amounted to $3.35 billion at June 30, 2023, compared to $3.18 billion at December 31, 2022, an increase of $165.1 million, or 5%. Growth during the six months ended June 30, 2023 was primarily in commercial real estate of $87.9 million, or 5%, and commercial construction of $63.0 million, or 15%.

    Customer deposits amounted to $4.08 billion at June 30, 2023, compared to $4.04 billion at December 31, 2022, an increase of $39.8 million, or 1%. The deposit balance at June 30, 2023 was positively impacted by a large deposit received in March 2023 of approximately $60.0 million that management believes may be temporary in nature and resulted from a customer business transaction. In addition, the Company experienced a shift in deposit mix at June 30, 2023, compared to December 31, 2022, resulting from customers moving funds out of lower yielding checking and savings accounts (which together, decreased 3%) into higher yielding money market and certificate of deposit products (which together, increased 7%).

    Deposit portfolio segmentation at June 30, 2023, compared to December 31, 2022, was as follows:

    • Checking accounts represented 48% of total deposits, compared to 51%.
    • Savings and money market accounts represented 41% of total deposits, compared to 42%.
    • Certificates of deposit accounts represented 10% of total deposits, compared to 7%.

    Shareholders' Equity & Regulatory Capital
    Total shareholders' equity amounted to $307.5 million at June 30, 2023, compared to $282.3 million at December 31, 2022, an increase of $25.2 million, or 9%. The increase was due primarily to an increase in retained earnings and a decrease in the accumulated other comprehensive loss ("AOCL"), which resulted from an increase in the fair value of debt securities.

    Total capital and tier 1 capital to risk weighted assets, of which AOCL is not a component, amounted to 13.37% and 10.52%, respectively, at June 30, 2023 compared to 13.49% and 10.56%, respectively, at December 31, 2022. The decreases were driven primarily by commercial loan growth, partially offset by an increase in retained earnings during the period.

    Credit Quality
    The increases in the ACL for loans and reserve for unfunded commitments compared to December 31, 2022, as noted below, resulted primarily from an increased probability and severity of forecasted economic conditions in our allowance model, and to a lesser extent, growth in the Company's loan portfolio and off-balance sheet commitments.

    • The ACL for loans amounted to $56.9 million, or 1.70% of total loans, at June 30, 2023, compared to $52.6 million, or 1.66% of total loans, at December 31, 2022.
    • The reserve for unfunded commitments (included in other liabilities) amounted to $5.0 million at June 30, 2023, compared to $4.3 million at December 31, 2022.
    • Non-performing loans amounted to $7.6 million, or 0.23% of total loans, at June 30, 2023, compared to $6.1 million, or 0.19% of total loans, at December 31, 2022.
    • Net charge-offs for the three months ended June 30, 2023, amounted to $146 thousand, compared to net recoveries of $84 thousand for the three months ended June 30, 2022.

    Liquidity & Funding Capacity
    All balances and ratios presented in this section are at June 30, 2023 unless otherwise indicated.

    • Overnight and short-term investment amounted to $208.8 million, which were reported on the Company's consolidated balance sheet as interest-earning deposits with banks.
    • Uninsured deposits amounted to 36% of total deposits.
    • Deposit balances that utilize third party enhanced Federal Deposit Insurance Corporation ("FDIC") insured products amounted to $796.8 million. Additional capacity to utilize these enhanced FDIC insured products exceeds the Company's total deposits balance.
    • There were no brokered deposits outstanding. Borrowed funds amounted to $3.3 million and related to the Company's participation in specific pass-through community development programs under the Federal Home Loan Bank of Boston ("FHLB") and, to a lesser extent, the New Hampshire Business Finance Authority.
    • FHLB and Federal Reserve Bank of Boston secured borrowing capacity amounted to $1.1 billion.
    • The Company has several brokered deposit relationships (unsecured borrowings) which management estimated could provide an additional $800.0 million in funding capacity.

    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 $1.0 billion and $214.1 million, respectively, at June 30, 2023, representing increases of $117.9 million, or 13%, and $15.5 million, or 8%, respectively, compared to December 31, 2022. The increase in assets under management resulted from an increase in market values as well as assets attracted through new and expanded client relationships.

    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 135 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," "could," "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, potential recession in the United States and our market areas, the impacts related to or resulting from recent bank failures and any continuation of the recent uncertainty in the banking industry, including the associated impact to the Company and other financial institutions of any regulatory changes or other mitigation efforts taken by government agencies in response thereto, increased competition for deposits and related changes in deposit customer behavior, changes in market interest rates, the persistence of the current inflationary environment in our market areas and the United States, the uncertain impacts of ongoing quantitative tightening and current and future monetary policies of the Board of Governors of the Federal Reserve System, the effects of declines in housing prices in the United States and our market areas, increases in unemployment rates in the United States and our market areas, declines in commercial real estate prices, uncertainty regarding United States fiscal debt and budget matters, severe weather, natural disasters, acts of war or terrorism or other external events, 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. 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) June 30,
    2023    		 December 31,
    2022
    Assets    
    Cash and cash equivalents:    
    Cash and due from banks $49,996  $36,901 
    Interest-earning deposits with banks  208,829   230,688 
         Total cash and cash equivalents  258,825   267,589 
    Investments:    
    Debt securities at fair value (amortized cost of $820,004 and $940,227, respectively)  706,953   816,102 
    Equity securities at fair value  5,898   4,269 
         Total investment securities at fair value  712,851   820,371 
    Federal Home Loan Bank stock  2,404   2,343 
    Loans:    
    Total loans  3,345,667   3,180,518 
    Allowance for credit losses  (56,899)  (52,640)
         Net loans  3,288,768   3,127,878 
    Premises and equipment, net  43,603   44,228 
    Lease right-of-use asset  24,578   24,923 
    Accrued interest receivable  16,885   17,117 
    Deferred income taxes, net  48,875   51,981 
    Bank-owned life insurance  64,779   64,156 
    Prepaid income taxes  2,790   683 
    Prepaid expenses and other assets  32,330   11,408 
    Goodwill  5,656   5,656 
         Total assets $4,502,344  $4,438,333 
    Liabilities and Shareholders' Equity    
    Liabilities    
    Deposits $4,075,598  $4,035,806 
    Borrowed funds  3,334   3,216 
    Subordinated debt  59,340   59,182 
    Lease liability  24,148   24,415 
    Accrued expenses and other liabilities  29,161   31,442 
    Accrued interest payable  3,273   2,005 
         Total liabilities  4,194,854   4,156,066 
    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; 12,244,733 and 12,133,516 shares issued and outstanding, respectively  122   121 
    Additional paid-in capital  105,552   103,793 
    Retained earnings  289,409   274,560 
    Accumulated other comprehensive loss  (87,593)  (96,207)
         Total shareholders' equity  307,490   282,267 
         Total liabilities and shareholders' equity $4,502,344  $4,438,333 


     
     
    ENTERPRISE BANCORP, INC.
    Consolidated Statements of Income
    (unaudited)
     
      Three months ended Six months ended
      June 30, June 30,
    (Dollars in thousands, except per share data)  2023   2022   2023   2022 
    Interest and dividend income:        
    Loans and loans held for sale $41,798  $32,148  $81,354  $62,843 
    Investment securities  4,967   4,781   10,040   9,369 
    Other interest-earning assets  1,917   393   4,125   574 
    Total interest and dividend income  48,682   37,322   95,519   72,786 
    Interest expense:        
    Deposits  9,692   671   15,679   1,271 
    Borrowed funds  30   13   42   26 
    Subordinated debt  867   817   1,734   1,635 
    Total interest expense  10,589   1,501   17,455   2,932 
         Net interest income  38,093   35,821   78,064   69,854 
    Provision for credit losses  2,268   2,409   5,004   2,939 
         Net interest income after provision for credit losses  35,825   33,412   73,060   66,915 
    Non-interest income:        
    Wealth management fees  1,673   1,610   3,260   3,339 
    Deposit and interchange fees  2,295   2,000   4,343   3,802 
    Income on bank-owned life insurance, net  316   295   623   590 
    Net (losses) gains on sales of debt securities  (2,419)  —   (2,419)  1,062 
    Net gains on sales of loans  6   —   20   22 
    Gains (losses) on equity securities  189   (429)  173   (495)
    Other income  759   656   1,576   1,407 
         Total non-interest income  2,819   4,132   7,576   9,727 
    Non-interest expense:        
    Salaries and employee benefits  16,135   17,743   34,656   34,535 
    Occupancy and equipment expenses  2,505   2,364   5,006   4,779 
    Technology and telecommunications expenses  2,636   2,919   5,311   5,555 
    Advertising and public relations expenses  804   560   1,485   1,227 
    Audit, legal and other professional fees  782   675   1,422   1,385 
    Deposit insurance premiums  615   366   1,290   922 
    Supplies and postage expenses  247   224   502   444 
    Other operating expenses  1,899   2,002   3,991   3,763 
         Total non-interest expense  25,623   26,853   53,663   52,610 
    Income before income taxes  13,021   10,691   26,973   24,032 
    Provision for income taxes  3,337   2,530   6,521   5,584 
         Net income $9,684  $8,161  $20,452  $18,448 
             
    Basic earnings per common share $0.79  $0.67  $1.68  $1.53 
    Diluted earnings per common share $0.79  $0.67  $1.67  $1.52 
             
    Basic weighted average common shares outstanding  12,228,081   12,107,804   12,191,857   12,082,041 
    Diluted weighted average common shares outstanding  12,244,863   12,151,712   12,218,735   12,136,610 


     
     
    ENTERPRISE BANCORP, INC.
    Selected Consolidated Financial Data and Ratios
    (unaudited)
     
      At or for the three months ended
    (Dollars in thousands, except per share data) June 30,
    2023    		 March 31,
    2023    		 December 31,
    2022    		 September 30,
    2022    		 June 30,
    2022
    Balance Sheet Data          
    Total cash and cash equivalents $258,825  $215,693  $267,589  $413,688  $306,460 
    Total investment securities at fair value  712,851   830,895   820,371   831,030   866,580 
    Total loans  3,345,667   3,230,156   3,180,518   3,109,369   3,084,915 
    Allowance for credit losses  (56,899)  (55,002)  (52,640)  (51,211)  (50,703)
    Total assets  4,502,344   4,441,896   4,438,333   4,529,820   4,417,447 
    Total deposits  4,075,598   4,016,156   4,035,806   4,138,038   4,016,814 
    Subordinated debt  59,340   59,261   59,182   59,102   59,039 
    Total shareholders' equity  307,490   311,318   282,267   272,193   285,110 
    Total liabilities and shareholders' equity  4,502,344   4,441,896   4,438,333   4,529,820   4,417,447 
               
    Wealth Management          
    Wealth assets under management $1,009,386  $930,714  $891,451  $835,661  $849,536 
    Wealth assets under administration $214,116  $206,569  $198,586  $185,977  $205,646 
               
    Shareholders' Equity Ratios          
    Book value per common share $25.11  $25.47  $23.26  $22.44  $23.53 
    Dividends paid per common share $0.230  $0.230  $0.205  $0.205  $0.205 
               
    Regulatory Capital Ratios          
    Total capital to risk weighted assets  13.37%  13.55%  13.49%  13.49%  13.38%
    Tier 1 capital to risk weighted assets(1)  10.52%  10.64%  10.56%  10.52%  10.38%
    Tier 1 capital to average assets  8.62%  8.47%  8.10%  7.89%  8.03%
               
    Credit Quality Data          
    Non-performing loans $7,647  $7,532  $6,122  $5,717  $6,321 
    Non-performing loans to total loans  0.23%  0.23%  0.19%  0.18%  0.20%
    Non-performing assets to total assets  0.17%  0.17%  0.14%  0.13%  0.14%
    ACL for loans to total loans  1.70%  1.70%  1.66%  1.65%  1.64%
               
    Income Statement Data          
    Net interest income $38,093  $39,971  $42,165  $39,779  $35,821 
    Provision for credit losses  2,268   2,736   1,861   1,000   2,409 
    Total non-interest income  2,819   4,757   4,210   4,525   4,132 
    Total non-interest expense  25,623   28,040   28,167   27,537   26,853 
    Income before income taxes  13,021   13,952   16,347   15,767   10,691 
    Provision for income taxes  3,337   3,184   4,041   3,805   2,530 
    Net income $9,684  $10,768  $12,306  $11,962  $8,161 
               
    Income Statement Ratios          
    Diluted earnings per common share $0.79  $0.88  $1.01  $0.98  $0.67 
    Return on average total assets  0.88%  0.99%  1.08%  1.05%  0.76%
    Return on average shareholders' equity  12.63%  14.67%  18.08%  16.47%  11.24%
    Net interest margin (tax-equivalent)(2)  3.55%  3.76%  3.81%  3.61%  3.45%

    (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) June 30,
    2023    		 March 31,
    2023    		 December 31,
    2022    		 September 30,
    2022    		 June 30,
    2022
    Commercial real estate $2,009,263  $1,929,544  $1,921,410  $1,886,365  $1,865,198 
    Commercial and industrial  420,095   423,864   414,490   413,347   422,006 
    Commercial construction  487,018   456,735   424,049   396,027   385,752 
    SBA PPP  —   —   —   2,725   15,288 
    Total commercial loans  2,916,376   2,810,143   2,759,949   2,698,464   2,688,244 
               
    Residential mortgages  346,523   335,834   332,632   321,663   307,131 
    Home equity loans and lines  74,374   75,809   79,807   80,882   81,648 
    Consumer  8,394   8,370   8,130   8,360   7,892 
    Total retail loans  429,291   420,013   420,569   410,905   396,671 
    Total loans  3,345,667   3,230,156   3,180,518   3,109,369   3,084,915 
               
    ACL for loans  (56,899)  (55,002)  (52,640)  (51,211)  (50,703)
    Net loans $3,288,768  $3,175,154  $3,127,878  $3,058,158  $3,034,212 


    Deposits are summarized as follows as of the periods indicated:
     
    (Dollars in thousands) June 30,
    2023    		 March 31,
    2023    		 December 31,
    2022    		 September 30,
    2022    		 June 30,
    2022
    Non-interest checking $1,273,968 $1,247,253 $1,361,588 $1,441,104 $1,457,220
    Interest-bearing checking  701,701  641,194  678,715  719,474  712,898
    Savings  310,321  297,790  326,666  351,665  334,728
    Money market  1,373,816  1,454,858  1,381,645  1,395,756  1,293,453
    CDs $250,000 or less  244,114  222,116  187,758  163,520  144,084
    CDs greater than $250,000  171,678  152,945  99,434  66,519  74,431
    Deposits $4,075,598 $4,016,156 $4,035,806 $4,138,038 $4,016,814


     
     
    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 periods indicated:
     
      Three months ended June 30, 2023 Three months ended March 31, 2023 Three months ended June 30, 2022
    (Dollars in thousands) Average
    Balance    		 Interest(1) Average
    Yield(1)    		 Average
    Balance    		 Interest(1) Average
    Yield(1)    		 Average
    Balance    		 Interest(1) Average
    Yield(1)
    Assets:                  
    Loans and loans held for sale(2) (tax-equivalent) $3,268,586 $41,930 5.14% $3,200,842 $39,679 5.02% $3,020,113 $32,259 4.28%
    Investment securities(3) (tax-equivalent)  917,965  5,189 2.26%  937,382  5,300 2.26%  969,563  5,012 2.07%
    Other interest-earning assets(4)  155,934  1,917 4.93%  198,741  2,208 4.51%  214,167  393 0.74%
    Total interest-earnings assets (tax-equivalent)  4,342,485  49,036 4.53%  4,336,965  47,187 4.40%  4,203,843  37,664 3.59%
    Other assets  92,909      86,580      115,413    
    Total assets $4,435,394     $4,423,545     $4,319,256    
                       
    Liabilities and stockholders' equity:                  
    Interest checking, savings and money market $2,351,011  6,880 1.17% $2,354,967  4,105 0.71% $2,296,268  456 0.08%
    CDs  393,387  2,812 2.87%  337,361  1,882 2.26%  198,766  215 0.43%
    Borrowed funds  4,595  30 2.58%  3,206  12 1.57%  2,961  13 1.73%
    Subordinated debt(5)  59,293  867 5.85%  59,213  867 5.85%  59,021  817 5.54%
    Total interest-bearing funding  2,808,286  10,589 1.51%  2,754,747  6,866 1.01%  2,557,016  1,501 0.24%
    Non-interest checking  1,269,339  —    1,317,534  —    1,424,132  —  
    Total deposits, borrowed funds and subordinated debt  4,077,625  10,589 1.04%  4,072,281  6,866 0.68%  3,981,148  1,501 0.15%
    Other liabilities  50,113      53,665      46,945    
    Total liabilities  4,127,738      4,125,946      4,028,093    
    Stockholders' equity  307,656      297,599      291,163    
    Total liabilities and stockholders' equity $4,435,394     $4,423,545     $4,319,256    
                       
    Net interest-rate spread (tax-equivalent)     3.02%     3.39%     3.35%
    Net interest income (tax-equivalent)    38,447      40,321      36,163  
    Net interest margin (tax-equivalent)     3.55%     3.76%     3.45%
    Less tax-equivalent adjustment    354      350      342  
    Net interest income   $38,093     $39,971     $35,821  
    Net interest margin     3.52%     3.73%     3.42%

    (1) Average yields and interest income are presented on a tax-equivalent basis, calculated using a U.S. federal income tax rate of 21% for each period presented, 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) Subordinated debt is net of average deferred debt issuance costs.

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


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