Enterprise Bancorp, Inc. :EBTC-US: Earnings Analysis: Q4, 2016 By the Numbers : February 1, 2017

Enterprise Bancorp, Inc. reports financial results for the quarter ended December 31, 2016.

We analyze the earnings along side the following peers of Enterprise Bancorp, Inc. – Century Bancorp, Inc. Class A, Boston Private Financial Holdings, Inc., Independent Bank Corp., Merchants Bancshares, Inc., Webster Financial Corporation, Washington Trust Bancorp, Inc., Brookline Bancorp, Inc. and Northeast Bancorp (CNBKA-US, BPFH-US, INDB-US, MBVT-US, WBS-US, WASH-US, BRKL-US and NBN-US) that have also reported for this period.

Highlights

  • Summary numbers: Revenues of USD 0.01 million, Net Earnings of USD 0.00 million.
  • Net interest income margins widened from 83.53% to 85.92% compared to the same period last year.
  • Net loan assets changed -99.97% compared to same period last year and -99.97% from previous period, total deposits changed -99.97% compared to same period last year and -99.97% from previous period.
  • Earnings decline from worsening in operating margins as well as one-time items.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income (See complete table at the end of this report):

2016-12-31 2016-09-30 2016-06-30 2016-03-31 2015-12-31
Relevant Numbers (Quarterly)
Revenues (mil) 0.01 25.77 24.87 24.29 24.78
Revenue Growth (%YOY) -99.97 11.32 8.79 7.14 8.09
Earnings (mil) 0 4.71 4.77 4.31 4.72
Earnings Growth (%YOY) -99.97 9.83 35.73 19.14 18.03
Net Margin (%) 18.83 18.3 19.18 17.76 19.05
EPS 0 0.41 0.45 0.41 0.45
Return on Equity (%) 0.01 8.8 9.58 9.42 10.58
Return on Assets (%) 0 0.77 0.81 0.75 0.84

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Market Share Versus Profits

Revenues History
Earnings History

EBTC-US‘s change in revenue this period compared to the same period last year of -99.97% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that EBTC-US is holding onto its market share. Also, for comparison purposes, revenues changed by -99.97% and earnings by -99.97% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s year-on-year earnings decline has not come as a result of decline in net interest income margins or because of any loan loss provisions. Both net interest income margins and net interest income after provisions margins have actually improved. In fact, net interest income margins went from 83.53% to 85.92% and net interest income after provisions margins improved from 78.82% to 84.05% over this period. In addition, loan loss provisions as a percentage of net interest income were 2.17% this period , and 5.64% a year ago.

Net Interest Income Margin Versus Loan Loss Provisions Margin

Quadrant label definitions. Hover to know more

High Risk; High Reward Loans, Risky Loan Portfolio, Conservative Loan Portfolio, Safer Loan Portfolio
Net Interest Income Margin History
Loan Loss Provisions Margin History

Net Loans and Total Deposits

A financial institution’s core operations represented by Net Interest Income and Net Interest Income after Provisions are dependent on both the growth and quality of its deposits as well as the growth and quality of its loans. A firm could boost its interest income in the short-term by just increasing its loan assets with less concern about their quality – but this would eventually lead to greater loan loss provisions. Similarly a drive to increase deposits could result in higher interest expenses and eventually effect the firm’s equity. It is thus important to understand net interest income performance in context to loan loss provisions, loan assets and deposits.

Loan Assets Growth Rate History (Qtr YOY)
Total Deposits Growth Rate History (Qtr YOY)

EBTC-US‘s improvement in net interest income margins came in spite of relative drops in the levels of net loan assets and total deposits. On an absolute basis, net loan assets changed -99.97% compared to the same period last year and -99.97% from the previous period. Total deposits changed -99.97% compared to the same period last year and -99.97% from the previous period.

Margins

The company’s decline in earnings has been influenced by the following factors: (1) Contraction of operating margins from 27.86% to 27.81% and (2) One-time items that contributed to a decrease in pretax margins from 27.86% to 27.81%

EBIT Margin History
PreTax Margin History
EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables

Access our Ratings and Scores for Enterprise Bancorp, Inc.

Company Profile

Enterprise Bancorp, Inc. operates as a bank holding company, which engages in the provision of gathering deposits. It offers commercial and consumer loan products, deposit products, and cash management services through its subsidiaries. It also includes investment advisory and wealth management, trust and insurance services. The company was founded by George L. Duncan on February 29, 1996 and is headquartered in Lowell, MA.

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