Enterprise Bancorp Announces Its Seventy-Sixth Consecutive Profitable Quarter. Consistent...

Enterprise Bancorp Announces Its Seventy-Sixth Consecutive Profitable Quarter. Consistent Loan Growth Highlights the Period.

LOWELL, Mass.--(Business Wire)--
Enterprise Bancorp, Inc. (the "company") (NASDAQ:EBTC) announced
net income of $1.7 million for the quarter ended September 30, 2008
compared to $2.6 million for the quarter ended September 30, 2007.
Diluted earnings per share were $0.21 for the third quarter compared
to $0.33 for the same period in 2007. Net income for the nine months
ended September 30, 2008 amounted to $5.5 million compared to $7.2
million for the same period in 2007. Diluted earnings per share were
$0.69 for the nine months ended September 30, 2008 compared to $0.91
for the comparable 2007 period. On October 21, the company announced a
fourth quarter dividend of $0.09 per share to be paid on December 1,
2008 to shareholders of record as of November 10, 2008. The quarterly
dividend represents a 12.5% increase over the 2007 dividend rate.

Chief Executive Officer Jack Clancy commented, "At Enterprise
Bank, our position has never been stronger. With the many stories
about financial institutions in the press today, we are proud that
Enterprise Bank has a very positive story to report. Enterprise has
never offered a sub-prime loan product, never held any Fannie Mae or
Freddie Mac stock, and never invested in a corporate bond and,
therefore has not experienced the problems that plagued many of the
Wall Street investment banks, national banks, and mortgage companies.
In contrast, Enterprise Bank has concentrated on traditional mortgage
lending and local business, professional and community lending. Our
loan growth was $75 million, or 9%, year-to-date. With much of the
world's large financial institutions in turmoil, there has never been
a stronger case for traditional commercial community banks like
Enterprise Bank. Our purpose statement, "The Enterprise Bank team
helps create successful businesses, jobs, opportunities, wealth and
vibrant, prosperous communities," shows the relationship between
Enterprise Bank and our customers which is at the heart of our strong
asset quality and strength.

We have solid earnings and the company is well capitalized; we
continue to expand our franchise in the new markets of Acton, MA and
Derry, NH; and have undertaken many significant initiatives which,
while increasing expenses in the short-term, will further position and
differentiate the Bank in a positive way. Experience taught us early
on we could best serve our customers through consistent and
disciplined lending, open and honest communication and ongoing
investment in our products, services, and people. Since our inception
twenty years ago, we have embraced this strategy and feel that it is
the cornerstone of our success."

Founder and Chairman of the Board George Duncan stated, "I have
been a community banker for over five decades through a variety of
economic cycles, and I feel very positive about the bank's ability to
meet the current economic challenges. At Enterprise Bank, we have
never lost sight of our fiduciary responsibility to safeguard our
customers' deposits. While others are retrenching in the financial
markets, Enterprise Bank continues to actively seek out lending
opportunities with growing businesses, non-profits and professionals
in the communities we serve. We are an economic engine stimulating
growth in the Merrimack Valley, North Central Worcester County and
Southern New Hampshire. In essence, our role as trusted financial
advisors is more important today than ever before."

Results of Operations

The current year net income continues to be impacted by the margin
compression caused by market interest rate reductions, which began in
September 2007 and continued through April 2008, however, the
company's net interest income has improved in recent quarters. The
current year results also included an increase in the provision for
loan losses and lower levels of security gains realized in 2008 than
in 2007. Additionally, the company benefited from a decrease in its
effective income tax rate in 2008; however, third quarter income taxes
were impacted by approximately $130 thousand related to legislative
changes in future tax rates applicable to Massachusetts financial
institutions.

Net interest margin improved during the current quarter as deposit
rates declined, higher-cost brokered CDs matured, and rates on
wholesale funding (particularly short-term FHLB rates) continued to
decline. In addition, strong loan growth helped to partially offset
the reduction in asset yields. The nine-month net interest margin
decreased as a result of asset yields repricing downward, due to the
market rate reductions referenced above. Deposit and funding costs
also declined over this period, but initially at a slower pace due to
tight credit markets and a highly-competitive marketplace for deposits
during that period. Net interest margin was 4.21% for the quarter
ended September 30, 2008 compared to 4.11% and 4.36% for the quarters
ended June 30, 2008 and September 30, 2007, respectively. Net interest
margin was 4.14% for the nine months ended September 30, 2008,
compared to 4.45% for the same period in 2007, and 4.40% for the year
ended December 31, 2007.

Net interest income for the quarter ended September 30, 2008
amounted to $10.9 million, compared to $10.3 million in the September
2007 quarter. For the nine months ended September 30, 2008, net
interest income amounted to $31.0 million, compared to $30.4 million
year-to-date September 2007. The increase in net interest income over
the prior-year periods was due to strong loan growth which was
partially offset by the margin compression, as noted above.

The provision for loan losses, amounted to $1.2 million for the
third quarter of 2008, as compared to $215 thousand in the third
quarter of 2007. The provision for loan losses for the nine months
ended September 30, 2008 amounted to $2.0 million, compared to $350
thousand for the same period in 2007. The increases over the
prior-year periods were primarily due to loan growth and the effect of
net charge-offs and specific reserves. Total loans have increased
$75.0 million, or 9%, since December 31, 2007. Year-to-date, the
company recorded 2008 net charge-offs of $387 thousand, compared to
2007 year-to-date net recoveries of $109 thousand. The current quarter
also reflected additional specific reserves of $600 thousand,
comprised primarily of reserves for three larger commercial
relationships. However, in light of the current economic environment,
overall asset quality remains strong with annualized year-to-date net
charge-offs amounting to only 0.06% of average total loans, and
non-performing assets to total assets of 0.63% at September 30, 2008.
The allowance for loan losses to total loans ratio was 1.67% at
September 30, 2008, compared to 1.60% at June 30, 2008, and 1.62% at
December 31, 2007.

Non-interest income for the quarter ended September 30, 2008
amounted to $2.6 million, an increase of $81 thousand, or 3%, over the
same quarter in the prior year. Non-interest income for the nine
months ended September 30, 2008 was $7.4 million, an increase of $273
thousand, or 4%, compared to the same period in 2007. The increases
were due primarily to an increase in deposit-service fees, partially
offset by lower levels of security gains realized in 2008 than in
2007. Excluding security gains, non-interest income increased $252
thousand, or 12%, and $875 thousand, or 14%, over the comparable three
and nine-month periods, respectively, in the prior year.

Non-interest expense was $9.6 million for the quarter ended
September 30, 2008, an increase of $1.0 million, or 12%, over the
comparable period in 2007. For the nine months ended September 30,
2008, non-interest expense amounted to $28.3 million, an increase of
$2.2 million, or 8%, compared to the same period in 2007. The
increases in non-interest expense were primarily related to the
company's strategic growth initiatives resulting in increases
primarily in the areas of compensation-related costs, advertising, and
training expenses. In addition, in 2008 the company's deposit
insurance premiums increased due to changes in the FDIC insurance
assessment rates, related to 2005 legislation, which applied to all
insured banks.

Key Financial Highlights

-- Total assets were $1.137 billion at September 30, 2008 as
compared to $1.058 billion at December 31, 2007, an increase
of 7.5%.

-- Total loans increased 9% since December 31, 2007 amounting to
$908.8 million at September 30, 2008. Total loans have
increased 12% since September 30, 2007.

-- Total deposits, excluding brokered deposits, were $876.9
million at September 2008 compared to $798.1 million at
December 31, 2007, an increase of 10%. Brokered deposits
amounted to $67.4 million and $70.7 million on those
respective dates.

-- Investment assets under management amounted to $516.5 million
at September 30, 2008 compared to $573.6 million at December
31, 2007, a decrease of 10%. The decrease is primarily
attributable to a reduction in investment assets, and declines
in equity market values during the period.

-- Total assets under management amounted to $1.674 billion at
September 30, 2008 as compared to $1.652 billion at December
31, 2007, an increase of 1%.

Enterprise Bancorp, Inc. is a Massachusetts corporation that
conducts substantially all of its operations through Enterprise Bank
and Trust Company, commonly referred to as Enterprise Bank. The
company principally is engaged in the business of attracting deposits
from the general public and investing in commercial loans and
investment securities. Through the bank and its subsidiaries, the
company offers a range of commercial and consumer loan products,
deposit and cash management products as well as investment management,
trust and insurance services. The company's headquarters and the
bank's main office are located at 222 Merrimack Street in Lowell,
Massachusetts. The company's primary market area is the Merrimack
Valley and North Central regions of Massachusetts and South Central
New Hampshire. The company has fifteen full-service branch offices
located in the Massachusetts cities and towns of Lowell, Andover,
Billerica, Chelmsford, Dracut, Fitchburg, Leominster, Methuen,
Tewksbury and Westford and in Salem, New Hampshire. The company has
also obtained regulatory approval to establish two new branches, to be
located in Derry, New Hampshire and Acton, Massachusetts, and expects
that these offices will be open for business in 2009.

The above text contains statements about future events that
constitute forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Forward-looking
statements may be identified by the use of the words "believe,"
"expect," "anticipate," "intend," "estimate," "assume," "will,"
"should," and other expressions that predict or indicate future events
or trends and which do not relate to historical matters.
Forward-looking statements should not be relied on, because they
involve known and unknown risks, uncertainties and other factors, some
of which are beyond the control of the company. These risks,
uncertainties and other factors may cause the actual results,
performance and achievements of the company to be materially different
from the anticipated future results, performance or achievements
expressed or implied by the forward-looking statements. Factors that
could cause such differences include, but are not limited to general
economic conditions, changes in interest rates, regulatory
considerations and competition. For more information about these
factors, please see our most recent Annual Report on Form 10-K on file
with the SEC, including the sections entitled "Risk Factors" and
"Management's Discussion and Analysis of Financial Condition and
Results of Operations." Any forward-looking statements contained in
this press release are made as of the date hereof, and we undertake no
duty, and specifically disclaim any duty, to update or revise any such
statements, whether as a result of new information, future events or
otherwise.

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*T
ENTERPRISE BANCORP, INC.

Consolidated Statements of Income
Three and nine months ended September 30, 2008 and 2007
(unaudited)

Three Months Ended Nine Months Ended
September 30, September 30,
(Dollars in thousands,
except per share data) 2008 2007 2008 2007
---------- ---------- ---------- ----------

Interest and dividend
income:
Loans $ 14,501 $ 15,096 $ 43,154 $ 43,936
Investment securities 1,415 1,463 4,427 4,151
Short-term investments 60 143 165 209
---------- ---------- ---------- ----------
Total interest and
dividend income 15,976 16,702 47,746 48,296
---------- ---------- ---------- ----------

Interest expense:
Deposits 4,210 5,946 14,156 16,451
Borrowed funds 557 183 1,721 589
Junior subordinated
debentures 294 294 883 883
---------- ---------- ---------- ----------
Total interest
expense 5,061 6,423 16,760 17,923
---------- ---------- ---------- ----------

Net interest income 10,915 10,279 30,986 30,373

Provision for loan losses 1,173 215 2,040 350
---------- ---------- ---------- ----------

Net interest income
after provision
for loan losses 9,742 10,064 28,946 30,023
---------- ---------- ---------- ----------

Non-interest income:
Investment advisory fees 778 794 2,439 2,389
Deposit service fees 988 756 2,826 2,067
Bank-owned life insurance 157 152 464 448
Net gains on sales of
investment securities 220 391 267 869
Gains on sales of loans 40 45 100 144
Other income 442 406 1,314 1,220
---------- ---------- ---------- ----------
Total non-interest
income 2,625 2,544 7,410 7,137
---------- ---------- ---------- ----------

Non-interest expense:
Salaries and employee
benefits 5,791 5,303 16,948 15,945
Occupancy expenses 1,685 1,520 4,937 4,873
Audit, legal and other
professional fees 331 289 1,096 1,081
Advertising and public
relations 434 283 1,272 875
Deposit insurance
premiums 194 25 537 77
Supplies and postage 222 222 685 704
Investment advisory and
custodial expenses 72 132 274 384
Other operating expenses 910 818 2,525 2,137
---------- ---------- ---------- ----------
Total non-interest
expense 9,639 8,592 28,274 26,076
---------- ---------- ---------- ----------

Income before income taxes 2,728 4,016 8,082 11,084
Income tax expense 1,009 1,393 2,563 3,921
---------- ---------- ---------- ----------

Net income $ 1,719 $ 2,623 $ 5,519 $ 7,163
========== ========== ========== ==========

Basic earnings per share $ 0.22 $ 0.33 $ 0.69 $ 0.92
========== ========== ========== ==========

Diluted earnings per share $ 0.21 $ 0.33 $ 0.69 $ 0.91
========== ========== ========== ==========

Basic weighted average
common shares outstanding 7,984,628 7,846,563 7,961,943 7,797,682
========== ========== ========== ==========

Diluted weighted average
common shares outstanding 8,012,595 7,921,918 7,997,111 7,899,919
========== ========== ========== ==========
*T

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*T
ENTERPRISE BANCORP, INC.

Consolidated Balance Sheets
(unaudited)

September
30, December 31, September 30,
(Dollars in thousands) 2008 2007 2007
----------- ----------------------------

Assets
Cash and cash equivalents:
Cash and due from banks $ 31,858 $ 24,930 $ 29,500
Short-term investments 14,296 7,788 3,542
----------- ------------- --------------
Total cash and cash
equivalents 46,154 32,718 33,042
----------- ------------- --------------

Investment securities at fair
value 137,535 145,517 147,391
Loans, less allowance for
loan losses of $15,198 at
September 30, 2008,
$13,545 at December 31,
2007, and $13,399 at
September 30, 2007 893,573 820,274 798,740
Premises and equipment 20,423 19,296 18,585
Accrued interest receivable 5,475 5,777 6,139
Deferred income taxes, net 9,601 7,722 6,590
Bank-owned life insurance 13,156 12,736 12,594
Prepaid income taxes 1,067 378 1,150
Prepaid expenses and other
assets 3,663 7,250 2,910
Core deposit intangible, net
of amortization 243 342 376
Goodwill 5,656 5,656 5,656
----------- ------------- --------------

Total assets $1,136,546 $ 1,057,666 $ 1,033,173
=========== ============= ==============

Liabilities and Stockholders'
Equity

Liabilities
Deposits $ 944,253 $ 868,786 $ 898,336
Borrowed funds 83,476 81,429 30,402
Junior subordinated
debentures 10,825 10,825 10,825
Accrued expenses and other
liabilities 7,709 6,245 6,399
Accrued interest payable 1,607 3,369 2,782
----------- ------------- --------------

Total liabilities 1,047,870 970,654 948,744
----------- ------------- --------------

Commitments and
Contingencies

Stockholders' Equity
Preferred stock, $0.01 par
value per share;
1,000,000 shares authorized;
no shares issued - - -
Common stock $0.01 par value
per share; 20,000,000
shares authorized;
7,999,089, 7,912,715 and
7,860,818 shares issued and
outstanding at September
30, 2008, December 31, 2007
and September 30, 2007,
respectively 80 79 79
Additional paid-in capital 29,347 28,051 27,487
Retained earnings 60,890 58,527 56,421
Accumulated other
comprehensive (loss) /
income (1,641) 355 442
----------- ------------- --------------

Total stockholders'
equity 88,676 87,012 84,429
----------- ------------- --------------

Total liabilities and
stockholders' equity $1,136,546 $ 1,057,666 $ 1,033,173
=========== ============= ==============
*T

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*T
ENTERPRISE BANCORP, INC.

Selected Consolidated Financial Data and Ratios
(unaudited)

At or for At or for
the nine At or for the nine
months the year months
ended ended ended
September December September
30, 31, 30,
(Dollars in thousands, except per
share data) 2008 2007 2007
----------------------------------------------------------------------
Balance Sheet Items:
Total assets $1,136,546 $1,057,666 $1,033,173
Loans serviced for others 20,683 20,826 20,516
Investment assets under
management 516,457 573,608 546,030
----------- ----------- -----------
Total assets under management $1,673,686 $1,652,100 $1,599,719
=========== =========== ===========

Book value per share $ 11.09 $ 11.00 $ 10.74
Dividends per common share $ 0.27 $ 0.32 $ 0.24
Total capital to risk weighted
assets 11.05% 11.44% 11.46%
Tier 1 capital to risk weighted
assets 9.80% 10.19% 10.17%
Tier 1 capital to average assets 8.46% 8.84% 8.77%
Allowance for loan losses to total
loans 1.67% 1.62% 1.65%
Non-performing assets $ 7,168 $ 4,156 $ 3,796
Non-performing assets to total
assets 0.63% 0.39% 0.37%

Income Statement Items
(annualized):
Return on average assets 0.68% 0.99% 0.97%
Return on average stockholders'
equity 8.33% 12.11% 11.92%
Net interest margin (tax
equivalent) 4.14% 4.40% 4.45%
*T

Enterprise Bancorp
Mary Ellen Fitzpatrick, 978-656-5520
Senior Vice President, Corporate Communications

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