• Enterprise Bancorp, Inc. Announces 2021 Financial Results

    Source: Nasdaq GlobeNewswire / 27 Jan 2022 16:10:00   America/New_York

    LOWELL, Mass., Jan. 27, 2022 (GLOBE NEWSWIRE) -- Enterprise Bancorp, Inc. (NASDAQ: EBTC), parent of Enterprise Bank, announced net income for the three months ended December 31, 2021, of $10.8 million, or $0.90 per diluted common share, compared to $9.9 million, or $0.82 per diluted common share, for the three months ended December 31, 2020. Net income for the year ended December 31, 2021, amounted to $42.2 million, or $3.50 per diluted common share, compared to $31.5 million, or $2.64 per diluted common share, for the year ended December 31, 2020.

    As previously announced on January 18, 2022, the Company declared a quarterly dividend of $0.205 per common share to be paid on March 1, 2022, to shareholders of record as of February 8, 2022.

    Chief Executive Officer Jack Clancy commented, "We ended our 33rd year of operations financially strong and well positioned in our markets. Our financial results for the fourth quarter and year to date 2021 were solid with increases of 10% and 34% in net income over the comparable prior year periods. Our operating results were substantially impacted by PPP income, which amounted to $19.7 million in 2021, compared to $10.7 million in 2020, and a decrease in the provision for credit losses, which amounted to $1.8 million in 2021, compared to $12.5 million in 2020."

    Mr. Clancy continued, "Shifting to our balance sheet, we experienced strong loan growth, excluding PPP loans, ("core loans," non-GAAP) in 2021 of $218.4 million, or 8%, with growth concentrated in the fourth quarter when core loans (non-GAAP) increased by $149.3 million, or 6%. Growth in core loans (non-GAAP) was largely in our commercial real estate portfolio and reflected our strong business development efforts."

    Mr. Clancy further noted, "During the quarter, we continued to experience high liquidity primarily from significant customer deposit growth of $504.0 million, or 14%, for 2021 and from $587.0 million in funds received for PPP loan forgiveness during 2021. We have continued to manage our high liquidity by making considerable investments in our bond portfolio. Total investment securities at fair value amounted to $958.2 million at December 31, 2021, an increase of $375.2 million, or 64%, from December 31, 2020. The increase during the fourth quarter was $139.0 million, or 17%."

    Executive Chairman & Founder George Duncan commented, "In November of 2021, we were recognized by the Boston Globe for our deep commitment to our team members. Enterprise Bank ranked 4th on the Boston Globe's Top Places to Work ("TPTW") list among large sized companies in Massachusetts. This was our fifth consecutive year in the top five and our tenth 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."

    Construction of our 27th branch, which will be in Londonderry, New Hampshire, is progressing well and an opening in the third quarter of 2022 is anticipated. We also expect to complete our Lexington, Massachusetts branch relocation in March 2022, to a larger more convenient downtown location.

    Net Income

    Net income for the quarter and year ended December 31, 2021, amounted to $10.8 million, an increase of $1.0 million, or 10%, and $42.2 million, an increase of $10.7 million, or 34%, compared to the respective prior year periods.

    • The quarter-to-date increase in net income was attributable primarily to increases in net interest income and non-interest income of $1.5 million and $1.3 million, respectively, and a decrease in the provision for credit losses of $1.1 million, partially offset by an increase in non-interest expense of $3.0 million.
    • The year-to-date increase in net income was attributable largely to an increase in net interest income of $11.4 million, and a decrease in the provision for credit losses of $10.7 million, partially offset by an increase in non-interest expense of $8.9 million.
    • Year-to-date non-interest income results, which are reviewed below, increased $860 thousand, or 5% over the prior year period and were impacted by non-recurring items related to a gain on sale of an other real estate owned ("OREO") property and the early termination of interest rate swaps.

    Net Interest Income

    Net interest income for the quarter and year ended December 31, 2021, amounted to $35.7 million, an increase of $1.5 million, or 4%, and $141.6 million, an increase of $11.4 million, or 9%, compared to the respective prior year periods.

    • The quarter-to-date increase in net interest income was due largely to increases in core loan income (non-GAAP) of $349 thousand, investment security income of $1.2 million and a decrease in deposit interest expense of $1.1 million, partially offset by a decrease in PPP income of $1.5 million.
    • The year-to-date increase in net interest income was due largely to an increase in PPP income of $9.0 million and a decrease in deposit interest expense of $7.7 million, partially offset by a decrease in core loan income (non-GAAP) of $6.9 million.
    • Net interest income included PPP income of $3.2 million and $19.7 million for the quarter and year ended December 31, 2021, compared to $4.8 million and $10.7 million for the respective prior year periods.

    Net Interest Margin

    Tax equivalent net interest margin ("net interest margin" or "margin") was 3.34% and 3.49% for the quarters ended December 31, 2021, and 2020, respectively. Margin was 3.44% and 3.59% for the years ended December 31, 2021, and 2020, respectively.

    Margin has been negatively impacted by large balances in lower-yielding interest-earning deposits with banks, and to a lesser extent, loan pay-downs, new loan originations, investment purchases and lower interest yields, partially offset by PPP income.

    For the quarters ended December 31, 2021, and 2020:

    • Average interest-earning deposits with banks amounted to $531.5 million and $303.7 million.
    • Average PPP loan balances, net of deferred SBA fees, amounted to $104.3 million and $481.0 million.
    • Adjusted net interest margin (non-GAAP) was 3.56% and 3.76%.

    For the years ended December 31, 2021, and 2020:

    • Average interest-earning deposits with banks amounted to $499.1 million and $186.0 million.
    • Average PPP loan balances, net of deferred SBA fees, amounted to $297.0 million and $336.5 million.
    • Adjusted net interest margin (non-GAAP) was 3.65% and 3.84%.

    Provision for Credit Losses

    The provision for credit losses for the quarter and year ended December 31, 2021, amounted to $1.0 million and $1.8 million, decreases of $1.1 million and $10.7 million, compared to the respective prior year periods.

    • The provision for the quarter and year ended December 31, 2021, resulted primarily from core loan growth (non-GAAP) and an increase in reserves for unfunded commitments (included in other liabilities), partially offset by a reduction in loan loss reserve factors and declines in reserves for individually evaluated loans.
    • The provision in the prior year periods reflected increases in reserves primarily related to the estimated impact of the COVID-19 pandemic on the credit quality of the loan portfolio at December 31, 2020, and increases in reserves for individually evaluated loans.

    Non-Interest Income

    Non-interest income for the quarter and year ended December 31, 2021, amounted to $6.0 million, an increase of $1.3 million, or 27%, and $18.1 million, an increase of $860 thousand, or 5%, compared to the respective prior year periods.

    • The quarter-to-date increase in non-interest income resulted primarily from a gain on sale of OREO of $1.1 million and increases in deposit and interchange fees of $279 thousand and wealth management fees of $209 thousand, partially offset by a decrease in net gains on sales of loans of $557 thousand, resulting largely from the Company holding more residential loan production in the loan portfolio.
    • The year-to-date increase in non-interest income resulted primarily from increases in wealth management fees of $1.0 million, deposit and interchange fees of $545 thousand, gain on sale of OREO of $1.1 million and equity securities market value gains of $290 thousand which are included in other income, partially offset by a $1.8 million loss on the early termination of $75.0 million in interest-rate swaps, realized in the third quarter of 2021 and a decrease in net gains on sales of loans of $576 thousand, resulting largely from lower origination volume and the Company holding more residential loan production in the loan portfolio.

    Non-Interest Expense

    Non-interest expense for the quarter and year ended December 31, 2021, amounted to $26.5 million, an increase of $3.0 million, or 13%, and $102.1 million, an increase of $8.9 million, or 10%, compared to the respective prior year periods and due primarily to the Company's long-term growth and technology initiatives.

    • The quarter-to-date increase in non-interest expense resulted primarily from increases in salaries and employee benefits of $1.9 million, technology and telecommunications of $315 thousand, and occupancy and equipment of $193 thousand.
    • The year-to-date increase in non-interest expense resulted primarily from increases in salaries and employee benefits of $5.1 million, occupancy and equipment of $1.1 million, technology and telecommunications of $1.4 million, and a loss on the redemption of subordinated debt of $713 thousand.
    • The current quarter and year-to-date results were impacted by increases of $932 thousand and $3.2 million, respectively, related to the Company's bank-wide variable compensation and performance incentive plans, which are included in salary and employee benefits. Excluding these increases, non-interest expense for the quarter and year-to date periods increased 10% and 6% over the respective prior year periods.

    Adoption of CECL

    In the first quarter of 2021, the Company adopted the Financial Accounting Standards Board's guidance related to measuring credit losses, including the current expected credit losses ("CECL") methodology for estimating the allowance for credit losses ("ACL"). The CECL methodology requires earlier recognition of credit losses using a lifetime credit loss measurement approach that also requires the consideration of reasonable and supportable forecasts in the estimate.

    The adoption of CECL resulted in the Company recording a net cumulative-effect adjustment, effective January 1, 2021, that decreased retained earnings by $6.5 million, net of $2.5 million in deferred income taxes. The ACL for loans increased by $6.6 million and the reserve for unfunded commitments (included in other liabilities) increased by $2.4 million.

    Asset Quality

    The ACL for loans amounted to $47.7 million, or 1.63% of total loans or 1.67% of total core loans (non-GAAP), at December 31, 2021, compared to $44.6 million, or 1.45% of total loans or 1.69% of total core loans (non-GAAP), at December 31, 2020. The reserve for unfunded commitments (included in other liabilities) amounted to $3.7 million at December 31, 2021.

    Charge-offs and recoveries for the quarter and year ended December 31, 2021, amounted to net recoveries of $108 thousand and net charge-offs of $4.0 million, compared to net charge-offs of $1.4 million and $1.5 million for the respective prior year periods. Net charge-offs for the year ended December 31, 2021, related primarily to two individually evaluated commercial loans, which were fully reserved for prior to 2021.

    Non-performing assets amounted to $26.6 million, or 0.60% of total assets, at December 31, 2021, compared to $38.1 million, or 0.95% of total assets, at December 31, 2020.

    • The decrease in non-performing assets was due to the partial charge-off of two commercial relationships, as well as principal pay-downs and credit upgrades, partially offset by additional downgrades. One of the charge-offs related to a commercial office building that was reclassified to OREO in April 2021 and sold in October 2021. The property sold was the Company’s only OREO asset during the years ended December 31, 2021, and 2020.

    Balance Sheet

    Total assets amounted to $4.45 billion at December 31, 2021, compared to $4.01 billion at December 31, 2020, an increase of $433.5 million, or 11%. The increase related primarily to increases in interest-earning deposits with banks, investments and core loans (non-GAAP), partially offset by a decrease in PPP loans.

    Total interest-earning deposits with banks amounted to $403.0 million at December 31, 2021, compared to $213.1 million at December 31, 2020. The increase resulted primarily from increases in customer deposits and PPP loan forgiveness payments received from the SBA. Excess liquidity was partially utilized to fund growth in the Company's investment security portfolio and core loan (non-GAAP) growth, particularly during the third and fourth quarters of 2021.

    Total investments amounted to $958.2 million at December 31, 2021, compared to $583.0 million at December 31, 2020, an increase of $375.2 million, or 64%. The increase resulted primarily from purchases of $211.4 million and $190.6 million during the third and fourth quarters of 2021.

    Total loans amounted to $2.92 billion at December 31, 2021, compared to $3.07 billion at December 31, 2020, a decrease of $153.2 million, or 5%.

    • As of December 31, 2021, the Company had 396 PPP loans outstanding with a principal balance of $73.9 million and deferred SBA fees of $2.4 million compared to 2,633 PPP loans outstanding with a principal balance of $453.1 million and deferred SBA fees of $10.0 million at December 31, 2020.
    • During the year ended December 31, 2021, PPP forgiveness payments received from the SBA amounted to $587.0 million and round three PPP loan originations, which ended in May 2021, amounted to $207.8 million.

    Total core loans (non-GAAP) amounted to $2.85 billion at December 31, 2021, an increase of $218.4 million, or 8%, compared to December 31, 2020. Core loans (non-GAAP) increased $149.3 million, or 6%, during the fourth quarter of 2021.

    Customer deposits amounted to $3.98 billion at December 31, 2021, compared to $3.48 billion at December 31, 2020, an increase of $504.0 million, or 14%. Of the year-to-date increase in customer deposits, $9.3 million was experienced during the fourth quarter of 2021.

    Wealth assets under management, which are not carried as assets on the Company's consolidated balance sheets, amounted to $1.04 billion at December 31, 2021, compared to $976.5 million at December 31, 2020, an increase of $64.9 million, or 7%.

    Capital

    The Total Capital and Tier 1 Capital to risk weighted asset ratios were 13.73% and 10.62%, respectively, at December 31, 2021 compared to 14.62% and 10.77%, respectively, at December 31, 2020. The Company's December 31, 2021 capital ratios have been impacted by the following since December 31, 2020:

    • The redemption of $15.0 million of fixed-to-floating rate subordinated notes in the first quarter of 2021, which were classified as Tier 2 capital. Tier 1 capital was not impacted by the redemption.
    • The adoption of CECL in the first quarter of 2021, which resulted in a $6.5 million deduction from capital.
    • Growth in 2021 in total investments and total core loans (non-GAAP), which require higher capital reserves than interest-earning deposits with banks.

    Non-GAAP Measures

    Throughout this press release we have noted certain balances, ratios or other measures of the Company’s performance which exclude the impact of PPP loans, which we expect to be short-term in nature. We refer to any balance, ratio or measure that excludes PPP loans as "core." In addition, we refer to any balance, ratio or measure that excludes PPP loans and interest-earning deposits with banks as "adjusted." The core and adjusted balances, ratios and measures were derived in order to provide more meaningful comparisons to prior periods as: (1) PPP loans outstanding have been originated within the last 21 months and the majority are expected to pay off during the next several quarters; and (2) growth in customer deposits and PPP loan forgiveness have led to temporarily high liquidity, carried as lower-yielding interest-earning deposits with banks, compared to prior periods. The tables beginning on page 10 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 129 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 26 full-service branches located in the Massachusetts communities of Acton, Andover, Billerica (2), Chelmsford (2), Dracut, Fitchburg, Lawrence, Leominster, Lexington, Lowell (2), Methuen, North Andover, Tewksbury (2), Tyngsborough and Westford and in the New Hampshire communities of Derry, Hudson, Nashua (2), Pelham, Salem and Windham. The Company is in the process of constructing a branch office in Londonderry, New Hampshire and anticipates that this location will open in the third quarter of 2022.

    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 of, changes in interest rates, regulatory considerations, competition and market expansion opportunities, changes in non-interest expenditures or in the anticipated benefits of such expenditures, the receipt of required regulatory approvals, changes in tax laws, and current or future litigation, regulatory examinations or other legal and/or regulatory actions, including as a result of our participation in and execution of government programs related to the COVID-19 pandemic and any current or future variants of. 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,
    2021    		 December 31,
    2020
    Assets   
    Cash and cash equivalents:   
    Cash and due from banks$33,572  $40,636 
    Interest-earning deposits with banks 403,004   213,146 
      Total cash and cash equivalents 436,576   253,782 
    Investments:   
    Debt securities at fair value (amortized cost of $950,523 and $551,191 respectively) 956,430   582,303 
    Equity securities at fair value 1,785   746 
      Total investment securities at fair value 958,215   583,049 
    Federal Home Loan Bank stock 2,164   1,905 
    Loans held for sale —   371 
    Loans:   
    Total loans 2,920,684   3,073,860 
    Allowance for credit losses (47,704)  (44,565)
      Net loans 2,872,980   3,029,295 
    Premises and equipment, net 44,689   46,708 
    Lease right-of-use asset 24,295   18,439 
    Accrued interest receivable 13,354   16,079 
    Deferred income taxes, net 19,644   11,290 
    Bank-owned life insurance 62,954   31,363 
    Prepaid income taxes 279   2,449 
    Prepaid expenses and other assets 7,013   13,938 
    Goodwill 5,656   5,656 
      Total assets$4,447,819  $4,014,324 
    Liabilities and Stockholders’ Equity   
    Liabilities   
    Deposits:   
    Customer deposits$3,980,239  $3,476,268 
    Brokered deposits —   74,995 
      Total deposits 3,980,239   3,551,263 
    Borrowed funds 5,479   4,774 
    Subordinated debt 58,979   73,744 
    Lease liability 23,627   17,539 
    Accrued expenses and other liabilities 31,063   30,638 
    Accrued interest payable 1,537   1,940 
      Total liabilities 4,100,924   3,679,898 
    Commitments and Contingencies   
    Stockholders’ Equity   
    Preferred stock, $0.01 par value per share; 1,000,000 shares authorized; no shares issued —   — 
    Common stock, $0.01 par value per share; 40,000,000 shares authorized; 12,038,382 and 11,937,795 shares issued and outstanding, respectively 120   119 
    Additional paid-in capital 100,352   97,137 
    Retained earnings 241,761   214,977 
    Accumulated other comprehensive income 4,662   22,193 
    Total stockholders’ equity 346,895   334,426 
      Total liabilities and stockholders’ equity$4,447,819  $4,014,324 


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

     Three months ended Year ended
     December 31, December 31,
    (Dollars in thousands, except per share data) 2021  2020  2021   2020
    Interest and dividend income:       
    Loans and loans held for sale$32,478 $33,619 $133,208  $131,091
    Investment securities 4,428  3,254  15,143   13,347
    Other interest-earning assets 211  87  682   402
    Total interest and dividend income 37,117  36,960  149,033   144,840
    Interest expense:       
    Deposits 627  1,743  3,922   11,599
    Borrowed funds 17  3  60   606
    Subordinated debt 818  1,033  3,495   2,501
    Total interest expense 1,462  2,779  7,477   14,706
      Net interest income 35,655  34,181  141,556   130,134
    Provision for credit losses 1,023  2,102  1,770   12,499
      Net interest income after provision for credit losses 34,632  32,079  139,786   117,635
    Non-interest income:       
    Wealth management fees 1,769  1,560  6,787   5,815
    Deposit and interchange fees 1,901  1,622  6,971   6,426
    Income on bank-owned life insurance, net 303  141  821   587
    Net gains on sales of debt securities —  —  128   227
    Net gains on sales of loans 38  595  833   1,409
    Net gain on sale of OREO 1,126  —  1,126   —
    Loss on termination of swaps —  —  (1,847)  —
    Other income 840  797  3,288   2,783
      Total non-interest income 5,977  4,715  18,107   17,247
    Non-interest expense:       
    Salaries and employee benefits 17,256  15,313  66,633   61,580
    Occupancy and equipment expenses 2,382  2,189  9,650   8,546
    Technology and telecommunications expenses 2,697  2,382  10,574   9,197
    Advertising and public relations expenses 771  645  2,373   2,151
    Audit, legal and other professional fees 645  558  2,347   2,273
    Deposit insurance premiums 583  434  1,910   2,124
    Supplies and postage expenses 214  223  819   898
    Loss on extinguishment of subordinated debt —  —  713   —
    Other operating expenses 1,978  1,733  7,116   6,485
      Total non-interest expense 26,526  23,477  102,135   93,254
    Income before income taxes 14,083  13,317  55,758   41,628
    Provision for income taxes 3,235  3,460  13,587   10,172
      Net income$10,848 $9,857 $42,171  $31,456
            
    Basic earnings per common share$0.90 $0.83 $3.51  $2.64
    Diluted earnings per common share$0.90 $0.82 $3.50  $2.64
            
    Basic weighted average common shares outstanding 12,031,471  11,930,578  12,005,838   11,897,813
    Diluted weighted average common shares outstanding 12,093,097  11,951,882  12,051,293   11,919,508


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

      At or for the
    year ended
    		 At or for the
    year ended
    (Dollars in thousands, except per share data) December 31,
    2021    		 December 31,
    2020
    ASSET DATA    
    Total assets $4,447,819  $4,014,324 
    Wealth assets under management  1,041,409   976,502 
    Total assets under management (non-GAAP) $5,489,228  $4,990,826 
         
    INCOME STATEMENT RATIOS    
    Return on average total assets  0.98%  0.82%
    Return on average stockholders’ equity  12.49%  9.95%
    Net interest margin (tax-equivalent)(1)  3.44%  3.59%
         
    STOCKHOLDERS' EQUITY RATIOS    
    Book value per common share $28.82  $28.01 
    Dividends paid per common share $0.74  $0.70 
         
    CAPITAL RATIOS    
    Total capital to risk weighted assets  13.73%  14.62%
    Tier 1 capital to risk weighted assets(2)  10.62%  10.77%
    Tier 1 capital to average assets  7.56%  7.52%
         
    CREDIT QUALITY DATA    
    Non-performing loans $26,581  $38,050 
    Non-performing assets $26,581  $38,050 
         
    Non-performing loans to total loans  0.91%  1.24%
    Non-performing loans to total core loans (non-GAAP)(3)  0.93%  1.45%
         
    Non-performing assets to total assets  0.60%  0.95%
    Non-performing assets to total core assets (non-GAAP)(3)  0.61%  1.07%
         
    Allowance for credit losses to total loans  1.63%  1.45%
    Allowance for credit losses to total core loans (non-GAAP)(3)  1.67%  1.69%


     (1) Tax equivalent net interest margin is net interest income adjusted for the tax equivalent effect associated with tax-exempt loan and investment income, expressed as a percentage of average interest-earning assets.
     (2) Ratio also represents common equity tier 1 capital to risk weighted assets as of December 31 of the years presented.
     (3) See non-GAAP measures table below for PPP-adjusted balances referred to as core.


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

    NON-GAAP MEASURES

    The accompanying unaudited consolidated interim financial statements have been prepared in accordance with GAAP. However, certain financial measures and ratios we present 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.

    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,
    2021    		 December 31,
    2020
    TOTAL CORE LOANS    
    Total loans $2,920,684  $3,073,860 
    Adjustment: PPP loans  (73,885)  (453,084)
    Adjustment: Deferred PPP fees  2,383   10,014 
    Total core loans (non-GAAP) $2,849,182  $2,630,790 


      Three months ended
      December 31,
    (Dollars in thousands)  2021   2020 
    CORE LOAN INCOME    
    Loan income $32,478  $33,619 
    Adjustment: PPP income  (3,195)  (4,685)
    Core loan income (non-GAAP) $29,283  $28,934 


      Year ended
      December 31,
    (Dollars in thousands)  2021   2020 
    CORE LOAN INCOME    
    Loan income $133,208  $131,091 
    Adjustment: PPP income  (19,691)  (10,675)
    Core loan income (non-GAAP) $113,517  $120,416 



    ENTERPRISE BANCORP, INC.
    Selected Consolidated Financial Data and Ratios (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 Three months ended
    (Dollars in thousands) December 31,
    2021    		 December 31,
    2020
    ADJUSTED INTEREST-EARNING ASSETS    
    Total average interest-earning assets $4,277,980  $3,940,679 
    Adjustment: Average PPP loans, net  (104,287)  (481,012)
    Adjustment: Average interest-earning deposits with banks  (531,489)  (303,745)
    Total adjusted average interest-earning assets (non-GAAP) $3,642,204  $3,155,922 
         
    ADJUSTED NET INTEREST INCOME    
    Net interest income (tax equivalent) $36,002  $34,535 
    Adjustment: PPP income  (3,195)  (4,685)
    Adjustment: Interest on interest-earning deposits with banks  (197)  (71)
    Adjusted net interest income (tax equivalent) (non-GAAP) $32,610  $29,779 
         
    ADJUSTED NET INTEREST MARGIN    
    Net interest margin (tax equivalent)  3.34%  3.49%
    Adjustment: PPP effect(1)  (0.22)%  (0.05)%
    Adjustment: Interest-earning deposits with banks effect(2)  0.44%  0.32%
    Adjusted net interest margin (tax equivalent) (non-GAAP)  3.56%  3.76%


      Year ended Year ended
    (Dollars in thousands) December 31,
    2021    		 December 31,
    2020
    ADJUSTED INTEREST-EARNING ASSETS    
    Total average interest-earning assets $4,151,239  $3,663,344 
    Adjustment: Average PPP loans, net  (296,985)  (336,493)
    Adjustment: Average interest-earning deposits with banks  (499,097)  (185,994)
    Total adjusted average interest-earning assets (non-GAAP) $3,355,157  $3,140,857 
         
    ADJUSTED INTEREST INCOME    
    Net interest income (tax equivalent)(3) $142,973  $131,561 
    Adjustment: PPP income  (19,691)  (10,675)
    Adjustment: Interest on interest-earning deposits with banks  (655)  (262)
    Adjusted net interest income (tax equivalent) (non-GAAP) $122,627  $120,624 
         
    ADJUSTED NET INTEREST MARGIN    
    Net interest margin (tax equivalent)  3.44%  3.59%
    Adjustment: PPP effect(1)  (0.25)%  0.04%
    Adjustment: Interest-earning deposits with banks effect(2)  0.46%  0.21%
    Adjusted net interest margin (tax equivalent) (non-GAAP)  3.65%  3.84%


     (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.
     (3) Year-to-date results reflect tax equivalent adjustments as of December 31 of the years presented.


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


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