• Enterprise Bancorp, Inc. Announces Second Quarter Financial Results

    المصدر: Nasdaq GlobeNewswire / 21 يوليو 2022 16:05:26   America/New_York

    LOWELL, Mass., July 21, 2022 (GLOBE NEWSWIRE) -- Enterprise Bancorp, Inc. (NASDAQ: EBTC), parent of Enterprise Bank, announced net income for the three months ended June 30, 2022, of $8.2 million, or $0.67 per diluted common share, compared to $11.1 million, or $0.92 per diluted common share, for the three months ended June 30, 2021.

    As previously announced on July 19, 2022, the Company declared a quarterly dividend of $0.205 per common share to be paid on September 1, 2022, to shareholders of record as of August 11, 2022.

    Chief Executive Officer Jack Clancy commented, "Our second quarter 2022 operating results were very positive, highlighted by strong loan growth, a significant improvement in our non-performing loan ratio, and strong growth in pre-tax earnings after excluding the provision for credit losses and PPP income. As of June 30, 2022, total loans, excluding PPP loans, increased 16% versus a year ago. Loan growth was especially strong in the second quarter with an increase of 5% (19% annualized) at June 30, 2022, compared to March 31, 2022, resulting from high customer demand and strong business development efforts. The non-performing loan to total loan ratio, excluding PPP loans, decreased to 0.21% at June 30, 2022 from 0.86% at March 31, 2022 and 1.21% at June 30, 2021. The improvement in the second quarter of 2022 resulted primarily from two credits being returned to accrual status due to improved financial strength and consistent payment history. The relatively high provision for credit losses of $2.4 million for the second quarter of 2022 compared to $39 thousand in the second quarter of 2021 was attributable mainly to loan growth, and to a lesser extent, the worsening of forecasted economic conditions due to the rising interest rate environment and persistent high inflation levels, partially offset by improved credit quality. PPP income was $622 thousand in the quarter compared to $5.6 million in the prior year period. Our pre-tax income excluding the provision for credit losses and PPP income increased by 34% compared to the second quarter of 2021."

    Executive Chairman & Founder George Duncan commented, "Other significant items during the second quarter of 2022 were the dividend declaration of $0.205 per share on July 19th, an increase of 11% over the prior year period, and the opening of our Londonderry, New Hampshire branch in May. The new branch is in a highly visible location and reflects our strategy of contiguous organic expansion into strong commercial markets. Mr. Duncan continued, "Our operating strategy also includes ongoing investment in our team members, a deep commitment to our communities and continuous strengthening of our digital security and capabilities, with the latter allowing us to enhance existing customer relationships, expand beyond our physical locations and improve operating efficiency."

    Net Income

    Net income for the three months ended June 30, 2022, amounted to $8.2 million, a decrease of $3.0 million, or 27%, compared to the prior year period. Pre-tax income for three months ended June 30, 2022, decreased by $4.2 million, or 28%, compared to the prior year period. For the three months ended June 30, 2022, the effective tax rate was 23.7%, compared to 25.0% for the three months ended June 30, 2021.

    • The decrease in pre-tax income was attributable primarily to increases in the provision for credit losses of $2.4 million and non-interest expense of $1.7 million, partially offset by an increase in net interest income of $535 thousand.
    • Tax expense for the three months ended June 30, 2022, benefited from a lower effective tax rate compared to the prior year period due to increases in tax-exempt and lower-taxed income at the Bank's security corporation subsidiaries.

    Net Interest Income

    Net interest income for the three months ended June 30, 2022, amounted to $35.8 million, an increase of $535 thousand, or 2%, compared to the three months ended June 30, 2021.

    • The increase in net interest income was due largely to increases in loan income, excluding Paycheck Protections Program ("PPP") income (non-GAAP), of $3.5 million and investment security income of $1.4 million, and a decrease in deposit interest expense of $439 thousand, partially offset by a decrease in PPP income of $5.0 million.
    • PPP income amounted to $622 thousand for three months ended June 30, 2022, compared to $5.6 million for the three months ended June 30, 2021. PPP loans outstanding amounted to $15.3 million at June 30, 2022, compared to $300.1 million at June 30, 2021, due to the continued forgiveness of PPP loans by the Small Business Administration (the "SBA") during the period.

    Net Interest Margin

    Tax equivalent net interest margin ("net interest margin" or "margin") was 3.45% for each of the three-month periods ended June 30, 2022 and June 30, 2021, respectively.

    Key items impacting margin for the three months ended June 30, 2022, compared to the prior year period included:

    • Average interest-earning deposits with banks decreased $292.8 million while the yield increased 61 basis points. The decrease in average balance resulted primarily from the funding of growth in the Company's investment and core loan portfolios, partially offset by funds received from the forgiveness of PPP loans by the SBA. The increase in yield reflected higher market interest rates during the current period.
    • Average investment securities increased $379.1 million, or 64%, while the tax-equivalent yield decreased 41 basis points. The increase in average balance resulted from investment security purchases in the second half of 2021 when market interest rates were lower than the current period.
    • Average loans decreased $30.2 million, or 1%, and the yield decreased 16 basis points.
      • Average PPP loans outstanding decreased $387.9 million, or 94%.
      • Average core loans (non-GAAP) increased $357.7 million, or 14%, while the yield decreased 5 basis points.
    • Average total deposits increased $58.2 million, or 2%, while the yield decreased 5 basis points.
    • Adjusted net interest margin (non-GAAP), amounted to 3.55% and 3.71%, respectively.
    • Adjusted net interest margin (non-GAAP) for the three months ended March 31, 2022, as disclosed in the prior quarter earnings release, amounted to 3.47%.

    Provision for Credit Losses

    The provision for credit losses for the three months ended June 30, 2022, amounted to $2.4 million, compared to $39 thousand for the three months ended June 30, 2021.

    • The provision for the three months ended June 30, 2022, consisted of $2.2 million for loans outstanding and $214 thousand for reserves on unfunded commitments (included in other liabilities).
    • Most of the provision during the period related to the Company's strong loan growth during the second quarter of 2022, and to a lesser extent, a deterioration in the economic forecast, offset by improved credit quality.

    Non-Interest Income

    Non-interest income for the three months ended June 30, 2022, amounted to $4.1 million, a decrease of $620 thousand, or 13%, compared to the three months ended June 30, 2021.

    • The decrease in non-interest income over the respective periods resulted primarily from a decrease in gains on sales of loans of $490 thousand and a decline in equity investment fair values of $493 thousand (included in other income), partially offset by an increase in deposit and interchange fees of $349 thousand.

    Non-Interest Expense
    Non-interest expense for the three months ended June 30, 2022, amounted to $26.9 million, an increase of $1.7 million, or 7%, compared to the three months June 30, 2021.

    • The increase in non-interest expense over the respective periods resulted primarily from an increase in salaries and employee benefits of $1.3 million, or 8%. The increase in salaries and employee benefit expense included an increase of $596 thousand in performance-based accruals. Excluding this, the increases in non-interest expense and salaries and benefits expense amounted to $1.1 million, or 5% and $715 thousand, or 5% respectively, compared to the prior year period.

    Credit Quality

    The allowance for credit losses ("ACL") for loans amounted to $50.7 million, or 1.64% of total loans, at June 30, 2022, compared to $47.7 million, or 1.63% of total loans, at December 31, 2021. The ACL to total core loans ratio (non-GAAP) was 1.65% at June 30, 2022 compared to 1.67% at December 31, 2021. The reserve for unfunded commitments (included in other liabilities) amounted to $3.6 million at June 30, 2022, compared to $3.7 million at December 31, 2021. The Company continues to closely monitor credit quality as concerns regarding forecasted economic conditions worsen due to the rising interest rate environment and persistent high inflation levels.

    Charge-offs and recoveries for the three months ended June 30, 2022, and June 30, 2021 were not significant.

    Non-performing assets amounted to $6.3 million, or 0.14% of total assets, at June 30, 2022, compared to $26.6 million, or 0.60% of total assets, at December 31, 2021. The decrease in non-performing assets 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.

    Balance Sheet

    Total assets amounted to $4.42 billion at June 30, 2022, compared to $4.45 billion at December 31, 2021, a decrease of $30.4 million, or 1%.

    Total interest-earning deposits with banks amounted to $250.3 million at June 30, 2022, compared to $403.0 million at December 31, 2021, a decrease of $152.7 million, or 38%. The change in liquidity was related primarily to core loan growth (non-GAAP) during the six months ended June 30, 2022.

    Total investment securities at fair value amounted to $866.6 million at June 30, 2022, compared to $958.2 million at December 31, 2021, a decrease of $91.6 million, or 10%. The change resulted primarily from a decrease in the fair value of debt securities held in the Company's securities portfolio of $99.4 million during the period, resulting from significant increases in market interest rates during the first half of 2022.

    Total loans amounted to $3.08 billion at June 30, 2022, compared to $2.92 billion at December 31, 2021, an increase of $164.2 million, or 6%. Core loans (non-GAAP) increased $220.4 million, or 8%, over the respective period, driven primarily by high customer demand and strong business development efforts. Included in the loan growth for the period was $50.2 million in retained residential mortgages.

    Customer deposits amounted to $4.02 billion at June 30, 2022, compared to $3.98 billion at December 31, 2021, an increase of $36.6 million, or 1%.

    Shareholders' Equity & Regulatory Capital

    Total shareholders' equity amounted to $285.1 million at June 30, 2022, compared to $346.9 million at December 31, 2021, a decrease of $61.8 million, or 18%. The change was attributable primarily to a decrease in accumulated other comprehensive income ("AOCI") of $77.0 million since December 31, 2021, partially offset by an increase in retained earnings of $13.5 million over the same period. The change in AOCI resulted from a decrease in the fair value of debt securities held in the Company's securities portfolio, which is attributed to the significant increase in market interest rates during the period. The Company classifies all of its debt securities held in the Company's securities portfolio 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 $23.53 at June 30, 2022, compared to $28.82 at December 31, 2021, a decrease of 18%. Excluding AOCI (non-GAAP), book value per common share was $29.51 at June 30, 2022 and $28.43 at December 31, 2021, an increase of 4%.
    • Return on average shareholders' equity was 11.24% and 12.56% for the quarters June 30, 2022, and December 31, 2021, respectively. Return on average shareholders' equity, excluding AOCI (non-GAAP), was 9.09% and 12.69% for the quarters ended June 30, 2022, and December 31, 2021, respectively.

    Total Capital and Tier 1 Capital to risk weighted assets, of which AOCI is not of component, amounted to 13.38% and 10.38%, respectively, at June 30, 2022 compared to 13.73% and 10.62%, respectively, at December 31, 2021. The decrease in each ratio was due primarily to strong loan growth over the respective period.

    Tier 1 Capital to average assets, of which AOCI is not a component, amounted to 8.04% at June 30, 2022, compared to 7.56% at December 31, 2021. The increase was driven primarily by the increase in retained earnings noted above and to a lesser extent a reduction in average assets.

    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 $849.5 million and $205.6 million, at June 30, 2022, respectively, representing decreases of $191.9 million, or 18%, and $52.2 million, or 20%, 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 six months ended June 30, 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), liquidity (interest-earning deposits with banks), shareholders' equity (AOCI), and any related measures presented. We refer to any measure that excludes PPP loans as "core" and any measure that excludes PPP loans and interest-earning deposits with banks as "adjusted." The activity which resulted in the Company's use of non-GAAP measures consisted of: (1) the Company originated over $715 million in short-term PPP loans between April 2020 and May 2021; (2) forgiveness of PPP loans by the SBA began in November 2020 and continued through the current period, and approximately 98% of the principal balance of PPP loans originated by the Company has been forgiven by the SBA through June 30, 2022; (3) liquidity, carried as lower-yielding interest-earning deposits with banks, had increased significantly following the trends in customer deposits and PPP loan forgiveness over the past two years; and (4) the significant increase in market interest rates during the first half of 2022 has resulted in unrealized losses in the Company's available-for-sale debt securities portfolio of $93.5 million and an accumulated other comprehensive loss, included in shareholder's equity, of $72.4 million at June 30, 2022. 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 131 consecutive profitable quarters. Enterprise Bank is principally engaged in the business of attracting deposits from the general public and investing in commercial loans and investment securities. Through Enterprise Bank and its subsidiaries, the Company offers a range of commercial, residential and consumer loan products, deposit products and cash management services, electronic and digital banking options, and commercial insurance services, as well as wealth management, and trust services. The Company's headquarters and Enterprise Bank's main office are located at 222 Merrimack Street in Lowell, Massachusetts. The Company's primary market area is the 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, the impact of the ongoing COVID-19 pandemic and any current or future variants thereof, changes in market interest rates, the persistence of the inflationary environment in the United States and our market areas, regulatory considerations, competition and market expansion opportunities, changes in non-interest expenditures or in the anticipated benefits of such expenditures, the receipt of required regulatory approvals, changes in tax laws, and current or future litigation, regulatory examinations or other legal and/or regulatory actions, including as a result of our participation in and execution of government programs related to the COVID-19 pandemic and any current or future variants thereof. 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,
    2022    		 December 31,
    2021    		 June 30,
    2021
    Assets      
    Cash and cash equivalents:      
    Cash and due from banks $56,201  $33,572  $48,335 
    Interest-earning deposits with banks  250,259   403,004   690,909 
    Total cash and cash equivalents  306,460   436,576   739,244 
    Investments:      
    Debt securities at fair value (amortized cost of $956,934, $950,523, and $611,827 respectively)  863,401   956,430   632,759 
    Equity securities at fair value  3,179   1,785   1,265 
    Total investment securities at fair value  866,580   958,215   634,024 
    Federal Home Loan Bank ("FHLB") stock  2,343   2,164   2,164 
    Loans held for sale  —   —   1,304 
    Loans:      
    Total loans  3,084,915   2,920,684   2,954,189 
    Allowance for credit losses  (50,703)  (47,704)  (50,041)
    Net loans  3,034,212   2,872,980   2,904,148 
    Premises and equipment, net  44,769   44,689   45,046 
    Lease right-of-use asset  24,738   24,295   20,550 
    Accrued interest receivable  14,260   13,354   14,042 
    Deferred income taxes, net  43,858   19,644   15,402 
    Bank-owned life insurance  63,544   62,954   31,631 
    Prepaid income taxes  2,003   279   1,716 
    Prepaid expenses and other assets  9,024   7,013   13,074 
    Goodwill  5,656   5,656   5,656 
    Total assets $4,417,447  $4,447,819  $4,428,001 
    Liabilities and Shareholders' Equity      
    Liabilities      
    Deposits:      
    Customer deposits $4,016,814  $3,980,239  $3,889,619 
    Brokered deposits  —   —   75,014 
    Total deposits  4,016,814   3,980,239   3,964,633 
    Borrowed funds  2,954   5,479   8,620 
    Subordinated debt  59,039   58,979   58,919 
    Lease liability  24,156   23,627   19,726 
    Accrued expenses and other liabilities  27,829   31,063   35,086 
    Accrued interest payable  1,545   1,537   1,700 
    Total liabilities  4,132,337   4,100,924   4,088,684 
    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; 12,115,924, 12,038,382, and 12,014,933 shares issued and outstanding, respectively  121   120   120 
    Additional paid-in capital  102,108   100,352   98,708 
    Retained earnings  255,259   241,761   225,529 
    Accumulated other comprehensive (loss) income  (72,378)  4,662   14,960 
    Total shareholders' equity  285,110   346,895   339,317 
    Total liabilities and shareholders' equity $4,417,447  $4,447,819  $4,428,001 
                 


    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) 2022 2021 2022 2021
    Interest and dividend income:        
    Loans and loans held for sale $32,148 $33,660 $62,843 $67,310
    Investment securities  4,781  3,428  9,369  6,822
    Other interest-earning assets  393  144  574  209
    Total interest and dividend income  37,322  37,232  72,786  74,341
    Interest expense:        
    Deposits  671  1,110  1,271  2,433
    Borrowed funds  13  18  26  26
    Subordinated debt  817  818  1,635  1,860
    Total interest expense  1,501  1,946  2,932  4,319
    Net interest income  35,821  35,286  69,854  70,022
    Provision for credit losses  2,409  39  2,939  719
    Net interest income after provision for credit losses  33,412  35,247  66,915  69,303
    Non-interest income:        
    Wealth management fees  1,610  1,638  3,339  3,250
    Deposit and interchange fees  2,000  1,651  3,802  3,257
    Income on bank-owned life insurance, net  295  132  590  268
    Net gains on sales of debt securities  —  —  1,062  128
    Net gains on sales of loans  —  490  22  618
    Other income  227  841  912  1,530
    Total non-interest income  4,132  4,752  9,727  9,051
    Non-interest expense:        
    Salaries and employee benefits  17,743  16,432  34,535  32,153
    Occupancy and equipment expenses  2,364  2,416  4,779  4,797
    Technology and telecommunications expenses  2,919  2,740  5,555  5,294
    Advertising and public relations expenses  560  653  1,227  1,167
    Audit, legal and other professional fees  675  577  1,385  1,144
    Deposit insurance premiums  366  378  922  734
    Supplies and postage expenses  224  178  444  405
    Loss on extinguishment of subordinated debt  —  —  —  713
    Other operating expenses  2,002  1,782  3,763  3,433
    Total non-interest expense  26,853  25,156  52,610  49,840
    Income before income taxes  10,691  14,843  24,032  28,514
    Provision for income taxes  2,530  3,704  5,584  7,023
    Net income $8,161 $11,139 $18,448 $21,491
             
    Basic earnings per common share $0.67 $0.93 $1.53 $1.79
    Diluted earnings per common share $0.67 $0.92 $1.52 $1.79
             
    Basic weighted average common shares outstanding  12,107,804  12,009,358  12,082,041  11,984,283
    Diluted weighted average common shares outstanding  12,151,712  12,055,744  12,136,610  12,025,028
                 


    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,
    2022    		 March 31,
    2022    		 December 31,
    2021    		 September 30,
    2021    		 June 30,
    2021
    Balance Sheet Data          
    Total cash and cash equivalents $306,460  $429,687  $436,576  $644,377  $739,244 
    Total investment securities at fair value  866,580   910,013   958,215   819,222   634,024 
    Total loans  3,084,915   2,962,721   2,920,684   2,848,110   2,954,189 
    Allowance for credit losses  (50,703)  (48,424)  (47,704)  (47,262)  (50,041)
    Total assets  4,417,447   4,454,474   4,447,819   4,451,432   4,428,001 
    Total deposits  4,016,814   4,034,500   3,980,239   3,970,936   3,964,633 
    Subordinated debt  59,039   59,009   58,979   58,949   58,919 
    Total shareholders' equity  285,110   310,539   346,895   346,540   339,317 
    Total liabilities and shareholders' equity  4,417,447   4,454,474   4,447,819   4,451,432   4,428,001 
               
    Wealth Management          
    Wealth assets under management $849,536  $961,491  $1,041,409  $966,180  $966,393 
    Wealth assets under administration $205,646  $243,247  $257,867  $235,002  $236,547 
               
    Shareholders' Equity Ratios          
    Book value per common share $23.53  $25.66  $28.82  $28.81  $28.24 
    Dividends paid per common share $0.410  $0.205  $0.740  $0.555  $0.370 
               
    Regulatory Capital Ratios          
    Total capital to risk weighted assets  13.38%  13.72%  13.73%  14.16%  14.46%
    Tier 1 capital to risk weighted assets(1)  10.38%  10.65%  10.62%  10.94%  11.15%
    Tier 1 capital to average assets  8.04%  7.83%  7.56%  7.42%  7.44%
               
    Credit Quality Data          
    Non-performing loans $6,321  $25,173  $26,581  $27,835  $32,061 
    Other real estate owned  —   —   —   2,400   2,400 
    Non-performing assets $6,321  $25,173  $26,581  $30,235  $34,461 
    Non-performing loans to total loans  0.20%  0.85%  0.91%  0.98%  1.09%
    Non-performing assets to total assets  0.14%  0.57%  0.60%  0.68%  0.78%
    ACL for loans to total loans  1.64%  1.63%  1.63%  1.66%  1.69%
    ACL for loans to total core loans (non-GAAP)(2)  1.65%  1.65%  1.67%  1.75%  1.89%
               
    Income Statement Data          
    Net interest income $35,821  $34,033  $35,655  $35,879  $35,286 
    Provision for credit losses  2,409   530   1,023   28   39 
    Total non-interest income  4,132   5,595   5,977   3,079   4,752 
    Total non-interest expense  26,853   25,757   26,526   25,769   25,156 
    Income before income taxes  10,691   13,341   14,083   13,161   14,843 
    Provision for income taxes  2,530   3,054   3,235   3,329   3,704 
    Net income $8,161  $10,287  $10,848  $9,832  $11,139 
               
    Income Statement Ratios          
    Diluted earnings per common share $0.67  $0.85  $0.90  $0.81  $0.92 
    Return on average total assets  0.76%  0.95%  0.97%  0.88%  1.04%
    Return on average shareholders' equity  11.24%  12.56%  12.56%  11.30%  13.39%
    Net interest margin (tax-equivalent)(3)  3.45%  3.28%  3.34%  3.39%  3.45%

    (1)   Ratio also represents common equity tier 1 capital to risk weighted assets as of the periods presented.

    (2)   See non-GAAP measures table below for PPP-adjusted balances referred to as core.

    (3)   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)

    (Dollars in thousands) June 30,
    2022    		 March 31,
    2022    		 December 31,
    2021    		 September 30,
    2021    		 June 30,
    2021
    Commercial real estate $1,865,198  $1,779,691  $1,680,792  $1,556,240  $1,541,397 
    Commercial and industrial  422,006   408,341   412,070   401,718   404,432 
    Commercial construction  385,752   375,709   410,443   412,332   383,807 
    SBA PPP  15,288   32,153   71,502   148,240   300,083 
    Total commercial loans  2,688,244   2,595,894   2,574,807   2,518,530   2,629,719 
               
    Residential mortgages  307,131   280,507   256,940   239,960   233,580 
    Home equity loans and lines  81,648   78,557   80,467   81,217   82,336 
    Consumer  7,892   7,763   8,470   8,403   8,554 
    Total retail loans  396,671   366,827   345,877   329,580   324,470 
    Total loans  3,084,915   2,962,721   2,920,684   2,848,110   2,954,189 
               
    ACL for loans  (50,703)  (48,424)  (47,704)  (47,262)  (50,041)
    Net loans $3,034,212  $2,914,297  $2,872,980  $2,800,848  $2,904,148 

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

    (Dollars in thousands) June 30,
    2022    		 March 31,
    2022    		 December 31,
    2021    		 September 30,
    2021    		 June 30,
    2021
    Non-interest checking $1,457,220 $1,444,047 $1,364,258 $1,404,353 $1,373,353
    Interest-bearing checking  712,898  718,107  743,587  713,991  694,508
    Savings  334,728  334,923  310,244  294,143  303,663
    Money market  1,293,453  1,337,670  1,355,701  1,344,116  1,293,733
    CDs $250,000 or less  144,084  149,309  154,403  160,810  163,821
    CDs greater than $250,000  74,431  50,444  52,046  53,523  60,541
    Total customer deposits  4,016,814  4,034,500  3,980,239  3,970,936  3,889,619
    Brokered deposits  —  —  —  —  75,014
    Deposits $4,016,814 $4,034,500 $3,980,239 $3,970,936 $3,964,633
                    

    Deposits are summarized as follows as of the periods indicated:

    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 June 30, 2022 and 2021:

      Three months ended June 30, 2022 Three months ended June 30, 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) $3,020,113 $32,259 4.28% $3,050,289 $33,786 4.44%
    Investment securities(3) (tax equivalent)  969,563  5,012 2.07%  590,488  3,661 2.48%
    Other interest-earning assets(4)  214,167  393 0.74%  506,803  144 0.11%
    Total interest-earnings assets (tax equivalent)  4,203,843  37,664 3.59%  4,147,580  37,591 3.63%
    Other assets  115,413      157,297    
    Total assets $4,319,256     $4,304,877    
                 
    Liabilities and stockholders' equity:            
    Interest checking, savings and money market $2,296,268  456 0.08% $2,234,017  381 0.07%
    CDs  198,766  215 0.43%  230,028  470 0.82%
    Brokered deposits  —  — —%  75,001  259 1.39%
    Borrowed funds  2,961  13 1.73%  8,625  18 0.83%
    Subordinated debt(5)  59,021  817 5.54%  58,901  818 5.55%
    Total interest-bearing funding  2,557,016  1,501 0.24%  2,606,572  1,946 0.30%
    Non-interest checking  1,424,132  —    1,321,903  — — 
    Total deposits, borrowed funds and subordinated debt  3,981,148  1,501 0.15%  3,928,475  1,946 0.20%
    Other liabilities  46,945      42,816    
    Total liabilities  4,028,093      3,971,291    
    Stockholders' equity  291,163      333,586    
    Total liabilities and stockholders' equity $4,319,256     $4,304,877    
                 
    Net interest-rate spread (tax equivalent)     3.35%     3.33%
    Net interest income (tax equivalent)    36,163      35,645  
    Net interest margin (tax equivalent)     3.45%     3.45%
    Less tax equivalent adjustment    342      359  
    Net interest income   $35,821     $35,286  
    Net interest margin     3.42%     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.
    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 six months ended June 30, 2022 and 2021:

      Six months ended June 30, 2022 Six months ended June 30, 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) $2,965,998 $63,064 4.29% $3,058,424 $67,562 4.45%
    Investment securities(3) (tax equivalent)  958,211  9,833 2.05%  583,172  7,287 2.50%
    Other interest-earning assets(4)  298,409  574 0.39%  394,888  209 0.11%
    Total interest-earnings assets (tax equivalent)  4,222,618  73,471 3.50%  4,036,484  75,058 3.75%
    Other assets  134,683      157,943    
    Total assets $4,357,301     $4,194,427    
                 
    Liabilities and stockholders' equity:            
    Interest checking, savings and money market $2,333,587  835 0.07% $2,166,805  851 0.08%
    CDs  200,723  436 0.44%  235,089  1,069 0.92%
    Brokered deposits  —  — —%  75,000  513 1.38%
    Borrowed funds  3,608  26 1.46%  7,302  26 0.72%
    Subordinated debt(5)  59,006  1,635 5.54%  66,206  1,860 5.62%
    Total interest-bearing funding  2,596,924  2,932 0.23%  2,550,402  4,319 0.34%
    Non-interest checking  1,398,840  —    1,268,133  —  
    Total deposits, borrowed funds and subordinated debt  3,995,764  2,932 0.15%  3,818,535  4,319 0.23%
    Other liabilities  50,051      44,812    
    Total liabilities  4,045,815      3,863,347    
    Stockholders' equity  311,486      331,080    
    Total liabilities and stockholders' equity $4,357,301     $4,194,427    
                 
    Net interest-rate spread (tax equivalent)     3.27%     3.41%
    Net interest income (tax equivalent)    70,539      70,739  
    Net interest margin (tax equivalent)     3.36%     3.53%
    Less tax equivalent adjustment    685      717  
    Net interest income   $69,854     $70,022  
    Net interest margin     3.33%     3.49%

    (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) June 30,
    2022    		 March 31,
    2022    		 December 31,
    2021    		 September 30,
    2021    		 June 30,
    2021
    Total Core Loans          
    Total loans $3,084,915  $2,962,721  $2,920,684  $2,848,110  $2,954,189 
    Adjustment: PPP loans  (15,758)  (33,182)  (73,885)  (153,552)  (309,710)
    Adjustment: Deferred PPP fees  470   1,029   2,383   5,312   9,627 
    Total core loans (non-GAAP) $3,069,627  $2,930,568  $2,849,182  $2,699,870  $2,654,106 


      Three months ended Six months ended
      June 30, June 30,
    (Dollars in thousands)  2022   2021   2022   2021 
    Loan Income Excluding PPP Income        
    Loan income $32,148  $33,660  $62,843  $67,310 
    Adjustment: PPP income  (622)  (5,584)  (2,100)  (11,597)
    Loan income excluding PPP income (non-GAAP) $31,526  $28,076  $60,743  $55,713 
             
    Net Interest Income Excluding PPP Income        
    Net interest income $35,821  $35,286  $69,854  $70,022 
    Adjustment: PPP income  (622)  (5,584)  (2,100)  (11,597)
    Net interest income excluding PPP income (non-GAAP) $35,199  $29,702  $67,754  $58,425 


    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 PPP loans and interest-earning deposits with banks on net interest margin:

      Three months ended Six months ended
    (Dollars in thousands) June 30,
    2022    		 June 30,
    2021    		 June 30,
    2022    		 June 30,
    2021
    Adjusted Average Interest-Earning Assets        
    Total average interest-earning assets $4,203,843  $4,147,580  $4,222,618  $4,036,484 
    Adjustment: Average PPP loans, net  (23,997)  (411,867)  (36,394)  (432,227)
    Adjustment: Average interest-earning deposits with banks  (211,844)  (504,649)  (296,212)  (392,844)
    Total adjusted average interest-earning assets (non-GAAP) $3,968,002  $3,231,064  $3,890,012  $3,211,413 
             
    Adjusted Net Interest Income        
    Net interest income (tax equivalent) $36,163  $35,645  $70,539  $70,739 
    Adjustment: PPP income  (622)  (5,584)  (2,100)  (11,597)
    Adjustment: Interest on interest-earning deposits with banks  (380)  (136)  (552)  (204)
    Adjusted net interest income (tax equivalent) (non-GAAP) $35,161  $29,925  $67,887  $58,938 
             
    Adjusted Net Interest Margin        
    Net interest margin (tax equivalent)  3.45%  3.45%  3.36%  3.53%
    Adjustment: PPP effect(1) (0.04)        % (0.22)        % (0.07)        % (0.22)        %
    Adjustment: Interest-earning deposits with banks effect(2)  0.14%  0.48%  0.22%  0.39%
    Adjusted net interest margin (tax equivalent) (non-GAAP)  3.55%  3.71%  3.51%  3.70%

    (1)   PPP loan adjustments include an elimination of average PPP loans, net of deferred SBA fees, as well as interest income on PPP loans and related SBA fee accretion, included in net interest income.

    (2)   Interest-earning deposit adjustments include an elimination of average interest-earning deposits with banks, as well as interest income on interest-earning deposits with banks, included in net interest income.

    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) June 30,
    2022    		 December 31,
    2021
    Shareholders' Equity    
    Total shareholders' equity (as reported) $285,110  $346,895 
    Less: accumulated other comprehensive (loss) income  (72,378)  4,662 
    Shareholders' equity excluding AOCI (non-GAAP) $357,488  $342,233 
         
    Book Value Per Common Share    
    Book value per common share (as reported) $23.53  $28.82 
    Book value per common share excluding AOCI (non-GAAP) $29.51  $28.43 
         
    Average Shareholders' Equity    
    Total average shareholders' equity (as reported) $291,163  $342,635 
    Less: average accumulated other comprehensive (loss) income  (69,125)  3,585 
    Average shareholders' equity excluding AOCI (non-GAAP) $360,288  $339,050 
         
    Return on Average Shareholders' Equity    
    Return on average shareholders' equity (as reported)  11.24%  12.56%
    Return on average shareholders' equity excluding AOCI (non-GAAP)  9.09%  12.69%
             

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


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