(State or other jurisdiction of | (I.R.S. Employer Identification No.) | ||||||||||
incorporation or organization) | |||||||||||
(Address of principal executive offices) | (Zip code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Page Number | ||||||||
Financial Statements (unaudited) | ||||||||
(Dollars in thousands, except per share data) | June 30, 2023 | December 31, 2022 | ||||||||||||
Assets | ||||||||||||||
Cash and cash equivalents: | ||||||||||||||
Cash and due from banks | $ | $ | ||||||||||||
Interest-earning deposits with banks | ||||||||||||||
Total cash and cash equivalents | ||||||||||||||
Investments: | ||||||||||||||
Debt securities at fair value (amortized cost of $ | ||||||||||||||
Equity securities at fair value | ||||||||||||||
Total investment securities at fair value | ||||||||||||||
Federal Home Loan Bank ("FHLB") stock | ||||||||||||||
Loans: | ||||||||||||||
Total loans | ||||||||||||||
Allowance for credit losses | ( | ( | ||||||||||||
Net loans | ||||||||||||||
Premises and equipment, net | ||||||||||||||
Lease right-of-use asset | ||||||||||||||
Accrued interest receivable | ||||||||||||||
Deferred income taxes, net | ||||||||||||||
Bank-owned life insurance | ||||||||||||||
Prepaid income taxes | ||||||||||||||
Prepaid expenses and other assets | ||||||||||||||
Goodwill | ||||||||||||||
Total assets | $ | $ | ||||||||||||
Liabilities and shareholders' Equity | ||||||||||||||
Liabilities | ||||||||||||||
Deposits | $ | $ | ||||||||||||
Borrowed funds | ||||||||||||||
Subordinated debt | ||||||||||||||
Lease liability | ||||||||||||||
Accrued expenses and other liabilities | ||||||||||||||
Accrued interest payable | ||||||||||||||
Total liabilities | ||||||||||||||
Commitments and Contingencies | ||||||||||||||
Shareholders' Equity | ||||||||||||||
Preferred stock, $ | ||||||||||||||
Common stock, $ | ||||||||||||||
Additional paid-in capital | ||||||||||||||
Retained earnings | ||||||||||||||
Accumulated other comprehensive loss | ( | ( | ||||||||||||
Total shareholders' equity | ||||||||||||||
Total liabilities and shareholders' equity | $ | $ |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||
(Dollars in thousands, except per share data) | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||
Interest and dividend income: | ||||||||||||||||||||||||||
Loans and loans held for sale | $ | $ | $ | $ | ||||||||||||||||||||||
Investment securities | ||||||||||||||||||||||||||
Other interest-earning assets | ||||||||||||||||||||||||||
Total interest and dividend income | ||||||||||||||||||||||||||
Interest expense: | ||||||||||||||||||||||||||
Deposits | ||||||||||||||||||||||||||
Borrowed funds | ||||||||||||||||||||||||||
Subordinated debt | ||||||||||||||||||||||||||
Total interest expense | ||||||||||||||||||||||||||
Net interest income | ||||||||||||||||||||||||||
Provision for credit losses | ||||||||||||||||||||||||||
Net interest income after provision for credit losses | ||||||||||||||||||||||||||
Non-interest income: | ||||||||||||||||||||||||||
Wealth management fees | ||||||||||||||||||||||||||
Deposit and interchange fees | ||||||||||||||||||||||||||
Income on bank-owned life insurance, net | ||||||||||||||||||||||||||
Net (losses) gains on sales of debt securities | ( | ( | ||||||||||||||||||||||||
Net gains on sales of loans | ||||||||||||||||||||||||||
Net gain (loss) on equity securities | ( | ( | ||||||||||||||||||||||||
Other income | ||||||||||||||||||||||||||
Total non-interest income | ||||||||||||||||||||||||||
Non-interest expense: | ||||||||||||||||||||||||||
Salaries and employee benefits | ||||||||||||||||||||||||||
Occupancy and equipment expenses | ||||||||||||||||||||||||||
Technology and telecommunications expenses | ||||||||||||||||||||||||||
Advertising and public relations expenses | ||||||||||||||||||||||||||
Audit, legal and other professional fees | ||||||||||||||||||||||||||
Deposit insurance premiums | ||||||||||||||||||||||||||
Supplies and postage expenses | ||||||||||||||||||||||||||
Other operating expenses | ||||||||||||||||||||||||||
Total non-interest expense | ||||||||||||||||||||||||||
Income before income taxes | ||||||||||||||||||||||||||
Provision for income taxes | ||||||||||||||||||||||||||
Net income | $ | $ | $ | $ | ||||||||||||||||||||||
Basic earnings per share | $ | $ | $ | $ | ||||||||||||||||||||||
Diluted earnings per share | $ | $ | $ | $ | ||||||||||||||||||||||
Basic weighted average common shares outstanding | ||||||||||||||||||||||||||
Diluted weighted average common shares outstanding |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||
(Dollars in thousands) | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||
Net income | $ | $ | $ | $ | ||||||||||||||||||||||
Other comprehensive (loss) income, net of tax | ||||||||||||||||||||||||||
Net change in fair value of debt securities | ( | ( | ( | |||||||||||||||||||||||
Total other comprehensive (loss) income, net of tax | ( | ( | ( | |||||||||||||||||||||||
Total comprehensive (loss) income, net | $ | ( | $ | ( | $ | $ | ( | |||||||||||||||||||
Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Total Shareholders' Equity | ||||||||||||||||||||||||||||||||||
(Dollars in thousands, except per share data) | Shares | Amount | ||||||||||||||||||||||||||||||||||||
Balance at March 31, 2023 | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||
Net income | ||||||||||||||||||||||||||||||||||||||
Other comprehensive loss, net | ( | ( | ||||||||||||||||||||||||||||||||||||
Common stock dividend declared ($ | ( | ( | ||||||||||||||||||||||||||||||||||||
Common stock issued under dividend reinvestment plan | — | |||||||||||||||||||||||||||||||||||||
Common stock issued, other | — | |||||||||||||||||||||||||||||||||||||
Stock-based compensation, net | — | |||||||||||||||||||||||||||||||||||||
Net settlement for employee taxes on restricted stock and options | ( | — | ( | ( | ||||||||||||||||||||||||||||||||||
Stock options exercised, net | — | |||||||||||||||||||||||||||||||||||||
Balance at June 30, 2023 | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||
Balance at March 31, 2022 | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||
Net income | ||||||||||||||||||||||||||||||||||||||
Other comprehensive loss, net | ( | ( | ||||||||||||||||||||||||||||||||||||
Common stock dividend declared ($ | ( | ( | ||||||||||||||||||||||||||||||||||||
Common stock issued under dividend reinvestment plan | — | |||||||||||||||||||||||||||||||||||||
Common stock issued, other | — | |||||||||||||||||||||||||||||||||||||
Stock-based compensation, net | — | |||||||||||||||||||||||||||||||||||||
Stock options exercised, net | — | |||||||||||||||||||||||||||||||||||||
Balance at June 30, 2022 | $ | $ | $ | $ | ( | $ |
Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income/(Loss) | Total Stockholders' Equity | ||||||||||||||||||||||||||||||||||
(Dollars in thousands, except per share data) | Shares | Amount | ||||||||||||||||||||||||||||||||||||
Balance at December 31, 2022 | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||
Net income | ||||||||||||||||||||||||||||||||||||||
Other comprehensive income, net | ||||||||||||||||||||||||||||||||||||||
Common stock dividend declared ($ | ( | ( | ||||||||||||||||||||||||||||||||||||
Common stock issued under dividend reinvestment plan | — | |||||||||||||||||||||||||||||||||||||
Common stock issued, other | — | |||||||||||||||||||||||||||||||||||||
Stock-based compensation, net | ||||||||||||||||||||||||||||||||||||||
Net settlement for employee taxes on restricted stock and options | ( | — | ( | ( | ||||||||||||||||||||||||||||||||||
Stock options exercised, net | — | |||||||||||||||||||||||||||||||||||||
Balance at June 30, 2023 | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||
Balance at December 31, 2021 | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||
Net income | ||||||||||||||||||||||||||||||||||||||
Other comprehensive loss, net | ( | ( | ||||||||||||||||||||||||||||||||||||
Common stock dividend declared ($ | ( | ( | ||||||||||||||||||||||||||||||||||||
Common stock issued under dividend reinvestment plan | — | |||||||||||||||||||||||||||||||||||||
Common stock issued, other | — | |||||||||||||||||||||||||||||||||||||
Stock-based compensation, net | ||||||||||||||||||||||||||||||||||||||
Net settlement for employee taxes on restricted stock and options | ( | — | ( | ( | ||||||||||||||||||||||||||||||||||
Stock options exercised, net | — | |||||||||||||||||||||||||||||||||||||
Balance at June 30, 2022 | $ | $ | $ | $ | ( | $ |
Six months ended June 30, | ||||||||||||||
(Dollars in thousands) | 2023 | 2022 | ||||||||||||
Cash flows from operating activities: | ||||||||||||||
Net income | $ | $ | ||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||
Provision for credit losses | ||||||||||||||
Depreciation and amortization | ||||||||||||||
Stock-based compensation expense | ||||||||||||||
Income on bank-owned life insurance, net | ( | ( | ||||||||||||
Net losses (gains) on sales of debt securities | ( | |||||||||||||
Mortgage loans originated for sale | ( | ( | ||||||||||||
Proceeds from mortgage loans sold | ||||||||||||||
Net gains on sales of loans | ( | ( | ||||||||||||
Net (gains) losses on equity securities | ( | |||||||||||||
Changes in: | ||||||||||||||
Net increase in other assets | ( | ( | ||||||||||||
Net decrease in other liabilities | ( | ( | ||||||||||||
Net cash provided by operating activities | ||||||||||||||
Cash flows from investing activities: | ||||||||||||||
Proceeds from sales of debt securities | ||||||||||||||
Purchase of debt securities | ( | |||||||||||||
Proceeds from maturities, calls and pay-downs of debt securities | ||||||||||||||
Net purchases of equity securities | ( | ( | ||||||||||||
Net purchases of FHLB capital stock | ( | ( | ||||||||||||
Net increase in loans | ( | ( | ||||||||||||
Additions to premises and equipment, net | ( | ( | ||||||||||||
Net cash used in investing activities | ( | ( | ||||||||||||
Cash flows from financing activities: | ||||||||||||||
Net increase in deposits | ||||||||||||||
Net increase (decrease) in borrowed funds | ( | |||||||||||||
Cash dividends paid, net of dividend reinvestment plan | ( | ( | ||||||||||||
Proceeds from issuance of common stock | ||||||||||||||
Net settlement for employee taxes on restricted stock and options | ( | ( | ||||||||||||
Net proceeds from stock option exercises | ||||||||||||||
Net cash provided by financing activities | ||||||||||||||
Net decrease in cash and cash equivalents | ( | ( | ||||||||||||
Cash and cash equivalents at beginning of period | ||||||||||||||
Cash and cash equivalents at end of period | $ | $ | ||||||||||||
ENTERPRISE BANCORP, INC. Notes to the Unaudited Consolidated Interim Financial Statements |
ENTERPRISE BANCORP, INC. Notes to the Unaudited Consolidated Interim Financial Statements |
ENTERPRISE BANCORP, INC. Notes to the Unaudited Consolidated Interim Financial Statements |
June 30, 2023 | ||||||||||||||||||||||||||
(Dollars in thousands) | Amortized Cost | Unrealized Gains | Unrealized Losses | Fair Value | ||||||||||||||||||||||
Federal agency obligations | $ | $ | $ | $ | ||||||||||||||||||||||
U.S. treasury securities | ||||||||||||||||||||||||||
Federal agency collateralized mortgage obligations ("CMO") | ||||||||||||||||||||||||||
Federal agency mortgage-backed securities ("MBS") | ||||||||||||||||||||||||||
Taxable municipal securities | ||||||||||||||||||||||||||
Tax-exempt municipal securities | ||||||||||||||||||||||||||
Corporate bonds | ||||||||||||||||||||||||||
Subordinated corporate bonds | ||||||||||||||||||||||||||
Total debt securities, at fair value | $ | $ | $ | $ |
December 31, 2022 | ||||||||||||||||||||||||||
(Dollars in thousands) | Amortized Cost | Unrealized Gains | Unrealized Losses | Fair Value | ||||||||||||||||||||||
Federal agency obligations | $ | $ | $ | $ | ||||||||||||||||||||||
U.S. treasury securities | ||||||||||||||||||||||||||
Federal agency CMO | ||||||||||||||||||||||||||
Federal agency MBS | ||||||||||||||||||||||||||
Taxable municipal securities | ||||||||||||||||||||||||||
Tax-exempt municipal securities | ||||||||||||||||||||||||||
Corporate bonds | ||||||||||||||||||||||||||
Subordinated corporate bonds | ||||||||||||||||||||||||||
Total debt securities, at fair value | $ | $ | $ | $ | ||||||||||||||||||||||
ENTERPRISE BANCORP, INC. Notes to the Unaudited Consolidated Interim Financial Statements |
June 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||
Less than 12 months | 12 months or longer | Total | ||||||||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | # of Holdings | |||||||||||||||||||||||||||||||||||||
Federal agency obligations | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
U.S. treasury securities | ||||||||||||||||||||||||||||||||||||||||||||
Federal agency CMO | ||||||||||||||||||||||||||||||||||||||||||||
Federal agency MBS | ||||||||||||||||||||||||||||||||||||||||||||
Taxable municipal securities | ||||||||||||||||||||||||||||||||||||||||||||
Tax-exempt municipal securities | ||||||||||||||||||||||||||||||||||||||||||||
Corporate bonds | ||||||||||||||||||||||||||||||||||||||||||||
Subordinated corporate bonds | ||||||||||||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ |
December 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||
Less than 12 months | 12 months or longer | Total | ||||||||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | # of Holdings | |||||||||||||||||||||||||||||||||||||
Federal agency obligations | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
U.S. treasury securities | ||||||||||||||||||||||||||||||||||||||||||||
Federal agency CMO | ||||||||||||||||||||||||||||||||||||||||||||
Federal agency MBS | ||||||||||||||||||||||||||||||||||||||||||||
Taxable municipal securities | ||||||||||||||||||||||||||||||||||||||||||||
Tax-exempt municipal securities | ||||||||||||||||||||||||||||||||||||||||||||
Corporate bonds | ||||||||||||||||||||||||||||||||||||||||||||
Subordinated corporate bonds | ||||||||||||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ |
(Dollars in thousands) | Amortized Cost | Fair Value | ||||||||||||
Due in one year or less | $ | $ | ||||||||||||
Due after one, but within five years | ||||||||||||||
Due after five, but within ten years | ||||||||||||||
Due after ten years | ||||||||||||||
Total debt securities | $ | $ |
ENTERPRISE BANCORP, INC. Notes to the Unaudited Consolidated Interim Financial Statements |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||
(Dollars in thousands) | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||
Amortized cost of debt securities sold (1) | $ | $ | $ | $ | ||||||||||||||||||||||
Gross realized gains on sales | ||||||||||||||||||||||||||
Gross realized losses on sales | ( | ( | ||||||||||||||||||||||||
Total proceeds from sales of debt securities | $ | $ | $ | $ |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||
(Dollars in thousands) | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||
Net gains (losses) recognized during the period on equity securities | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||
Less: Net losses recognized on equity securities sold during the period | ( | ( | ||||||||||||||||||||||||
Unrealized gains (losses) recognized during the reporting period on equity securities still held at the end of the period | $ | $ | ( | $ | $ | ( |
(Dollars in thousands) | June 30, 2023 | December 31, 2022 | ||||||||||||
Commercial real estate | $ | $ | ||||||||||||
Commercial and industrial | ||||||||||||||
Commercial construction | ||||||||||||||
Total commercial loans | ||||||||||||||
Residential mortgages | ||||||||||||||
Home equity loans and lines | ||||||||||||||
Consumer | ||||||||||||||
Total retail loans | ||||||||||||||
Total loans | ||||||||||||||
ACL for loans | ( | ( | ||||||||||||
Net loans | $ | $ |
ENTERPRISE BANCORP, INC. Notes to the Unaudited Consolidated Interim Financial Statements |
(Dollars in thousands) | June 30, 2023 | December 31, 2022 | ||||||||||||
Commercial real estate | $ | $ | ||||||||||||
Residential mortgages | ||||||||||||||
Home equity | ||||||||||||||
Total loans pledged to FHLB | $ | $ |
ENTERPRISE BANCORP, INC. Notes to the Unaudited Consolidated Interim Financial Statements |
Balance at June 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Term Loans by Origination Year | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | 2023 | 2022 | 2021 | 2020 | 2019 | Prior | Revolving Loans | Revolving Loans Converted to Term | Total | |||||||||||||||||||||||||||||||||||||||||||||||
Commercial real estate | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
Special mention | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Substandard | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total commercial real estate | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Current period charge-offs | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial and industrial | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Special mention | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Substandard | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total commercial and industrial | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Current period charge-offs | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial construction | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Special mention | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total commercial construction | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Current period charge-offs | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Residential mortgages | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Special mention | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Substandard | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total residential mortgages | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Current period charge-offs | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Home equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Substandard | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total home equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Current period charge-offs | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Consumer | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total consumer | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Current period charge-offs | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total loans | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
Total current period charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | $ |
ENTERPRISE BANCORP, INC. Notes to the Unaudited Consolidated Interim Financial Statements |
Balance at December 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Term Loans by Origination Year | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | 2022 | 2021 | 2020 | 2019 | 2018 | Prior | Revolving Loans | Revolving Loans Converted to Term | Total | |||||||||||||||||||||||||||||||||||||||||||||||
Commercial real estate | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
Special mention | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Substandard | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total commercial real estate | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial and industrial | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Special mention | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Substandard | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total commercial and industrial | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial construction | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Special mention | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Substandard | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total commercial construction | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Residential mortgages | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Special mention | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Substandard | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total residential mortgages | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Home equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Substandard | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total home equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Consumer | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total consumer | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total loans | $ | $ | $ | $ | $ | $ | $ | $ | $ |
ENTERPRISE BANCORP, INC. Notes to the Unaudited Consolidated Interim Financial Statements |
Balance at June 30, 2023 | ||||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | 30-59 Days Past Due | 60-89 Days Past Due | Past Due 90 Days or More | Total Past Due Loans(1) | Current Loans(1) | Total Loans | ||||||||||||||||||||||||||||||||
Commercial real estate | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
Commercial and industrial | ||||||||||||||||||||||||||||||||||||||
Commercial construction | ||||||||||||||||||||||||||||||||||||||
Residential mortgages | ||||||||||||||||||||||||||||||||||||||
Home equity | ||||||||||||||||||||||||||||||||||||||
Consumer | ||||||||||||||||||||||||||||||||||||||
Total loans | $ | $ | $ | $ | $ | $ |
Balance at December 31, 2022 | ||||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | 30-59 Days Past Due | 60-89 Days Past Due | Past Due 90 Days or More | Total Past Due Loans(1) | Current Loans(1) | Total Loans | ||||||||||||||||||||||||||||||||
Commercial real estate | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
Commercial and industrial | ||||||||||||||||||||||||||||||||||||||
Commercial construction | ||||||||||||||||||||||||||||||||||||||
Residential mortgages | ||||||||||||||||||||||||||||||||||||||
Home equity | ||||||||||||||||||||||||||||||||||||||
Consumer | ||||||||||||||||||||||||||||||||||||||
Total loans | $ | $ | $ | $ | $ | $ |
Balance at June 30, 2023 | ||||||||||||||||||||||||||
(Dollars in thousands) | Total Non-accrual Loans | Non-accrual Loans without a Specific Reserve | Non-accrual Loans with a Specific Reserve | Related Specific Reserve | ||||||||||||||||||||||
Commercial real estate | $ | $ | $ | $ | ||||||||||||||||||||||
Commercial and industrial | ||||||||||||||||||||||||||
Commercial construction | ||||||||||||||||||||||||||
Residential mortgages | ||||||||||||||||||||||||||
Home equity | ||||||||||||||||||||||||||
Consumer | ||||||||||||||||||||||||||
Total loans | $ | $ | $ | $ |
ENTERPRISE BANCORP, INC. Notes to the Unaudited Consolidated Interim Financial Statements |
Balance at December 31, 2022 | ||||||||||||||||||||||||||
(Dollars in thousands) | Total Non-accrual Loans | Non-accrual Loans without a Specific Reserve | Non-accrual Loans with a Specific Reserve | Related Specific Reserve | ||||||||||||||||||||||
Commercial real estate | $ | $ | $ | $ | ||||||||||||||||||||||
Commercial and industrial | ||||||||||||||||||||||||||
Commercial construction | ||||||||||||||||||||||||||
Residential mortgages | ||||||||||||||||||||||||||
Home equity | ||||||||||||||||||||||||||
Consumer | ||||||||||||||||||||||||||
Total loans | $ | $ | $ | $ |
Balance at June 30, 2023 | ||||||||||||||||||||||||||||||||
(Dollars in thousands) | Unpaid Contractual Principal Balance | Total Recorded Investment in Collateral Dependent Loans | Recorded Investment without a Specific Reserve | Recorded Investment with a Specific Reserve | Related Specific Reserve | |||||||||||||||||||||||||||
Commercial real estate | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Commercial and industrial | ||||||||||||||||||||||||||||||||
Commercial construction | ||||||||||||||||||||||||||||||||
Residential mortgages | ||||||||||||||||||||||||||||||||
Home equity | ||||||||||||||||||||||||||||||||
Consumer | ||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ |
Balance at December 31, 2022 | ||||||||||||||||||||||||||||||||
(Dollars in thousands) | Unpaid Contractual Principal Balance | Total Recorded Investment in Collateral Dependent Loans | Recorded Investment without a Specific Reserve | Recorded Investment with a Specific Reserve | Related Specific Reserve | |||||||||||||||||||||||||||
Commercial real estate | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Commercial and industrial | ||||||||||||||||||||||||||||||||
Commercial construction | ||||||||||||||||||||||||||||||||
Residential mortgages | ||||||||||||||||||||||||||||||||
Home equity | ||||||||||||||||||||||||||||||||
Consumer | ||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ |
ENTERPRISE BANCORP, INC. Notes to the Unaudited Consolidated Interim Financial Statements |
Three months ended | ||||||||||||||
June 30, 2023 | ||||||||||||||
(Dollars in thousands) | Payment Deferrals | % of Loan Class Total | ||||||||||||
Residential mortgages | $ | % | ||||||||||||
Home equity loans and lines | % | |||||||||||||
Total | $ | % |
Six months ended | ||||||||||||||
June 30, 2023 | ||||||||||||||
(Dollars in thousands) | Payment Deferrals | % of Loan Class Total | ||||||||||||
Commercial real estate | $ | % | ||||||||||||
Commercial and industrial | % | |||||||||||||
Residential mortgages | % | |||||||||||||
Home equity loans and lines | % | |||||||||||||
Total | $ | % |
Three months ended | ||||||||
June 30, 2023 | ||||||||
Weighted-Average Payment Deferrals | ||||||||
Commercial and industrial | ||||||||
Residential mortgages | ||||||||
ENTERPRISE BANCORP, INC. Notes to the Unaudited Consolidated Interim Financial Statements |
Six months ended | ||||||||
June 30, 2023 | ||||||||
Weighted-Average Payment Deferrals | ||||||||
Commercial real estate | ||||||||
Commercial and industrial | ||||||||
Residential mortgages | ||||||||
Home equity loans and lines | ||||||||
Balance at June 30, 2023 | ||||||||||||||||||||||||||||||||
(Dollars in thousands) | Current | 30-59 Days Past Due | 60-89 Days Past Due | Past Due 90 Days or More | Total Past Due | |||||||||||||||||||||||||||
Commercial real estate | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Commercial and industrial | ||||||||||||||||||||||||||||||||
Commercial construction | ||||||||||||||||||||||||||||||||
Residential mortgages | ||||||||||||||||||||||||||||||||
Home equity | ||||||||||||||||||||||||||||||||
Consumer | ||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ |
Three months ended | ||||||||||||||||||||
June 30, 2022 | ||||||||||||||||||||
(Dollars in thousands) | Number of Restructurings | Pre-modification Outstanding Recorded Investment | Post-modification Outstanding Recorded Investment | |||||||||||||||||
Commercial real estate | $ | $ | ||||||||||||||||||
Total | $ | $ |
ENTERPRISE BANCORP, INC. Notes to the Unaudited Consolidated Interim Financial Statements |
Six months ended | ||||||||||||||||||||
June 30, 2022 | ||||||||||||||||||||
(Dollars in thousands) | Number of Restructurings | Pre-modification Outstanding Recorded Investment | Post-modification Outstanding Recorded Investment | |||||||||||||||||
Commercial real estate | $ | $ | ||||||||||||||||||
Total | $ | $ |
Three months ended | ||||||||||||||
June 30, 2022 | ||||||||||||||
(Dollars in thousands) | Number of TDRs that Defaulted | Post-modification Outstanding Recorded Investment | ||||||||||||
Commercial real estate | $ | |||||||||||||
Total | $ |
Six months ended | ||||||||||||||
June 30, 2022 | ||||||||||||||
(Dollars in thousands) | Number of TDRs that Defaulted | Post- modification Outstanding Recorded Investment | ||||||||||||
Commercial real estate | $ | |||||||||||||
Total | $ |
Six months ended | ||||||||||||||
June 30, 2022 | ||||||||||||||
(Dollars in thousands) | Number of Restructurings | Amount | ||||||||||||
Temporary payment reduction and payment re-amortization of remaining principal over extended term | $ | |||||||||||||
Temporary interest only payment plan | ||||||||||||||
Other payment concessions | ||||||||||||||
Total | $ | |||||||||||||
Amount of ACL for loans associated with TDRs listed above | $ |
ENTERPRISE BANCORP, INC. Notes to the Unaudited Consolidated Interim Financial Statements |
Three months ended | Six months ended | |||||||||||||||||||||||||
(Dollars in thousands) | June 30, 2023 | June 30, 2022 | June 30, 2023 | June 30, 2022 | ||||||||||||||||||||||
Provision for credit losses on loans | $ | $ | $ | $ | ||||||||||||||||||||||
Provision for unfunded commitments | ( | |||||||||||||||||||||||||
Total provision for credit losses | $ | $ | $ | $ |
(Dollars in thousands) | Commercial Real Estate | Commercial and Industrial | Commercial Construction | Residential Mortgage | Home Equity | Consumer | Total | |||||||||||||||||||||||||||||||||||||
Beginning Balance at March 31, 2023 | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
Provision for credit losses on loans | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
Recoveries | ||||||||||||||||||||||||||||||||||||||||||||
Less: Charge-offs | ||||||||||||||||||||||||||||||||||||||||||||
Ending Balance at June 30, 2023 | $ | $ | $ | $ | $ | $ | $ |
(Dollars in thousands) | Commercial Real Estate | Commercial and Industrial | Commercial Construction | Residential Mortgage | Home Equity | Consumer | Total | |||||||||||||||||||||||||||||||||||||
Beginning Balance at March 31, 2022 | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
Provision for credit losses on loans | ( | |||||||||||||||||||||||||||||||||||||||||||
Recoveries | ||||||||||||||||||||||||||||||||||||||||||||
Less: Charge-offs | ||||||||||||||||||||||||||||||||||||||||||||
Ending Balance at June 30, 2022 | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | Commercial Real Estate | Commercial and Industrial | Commercial Construction | Residential Mortgage | Home Equity | Consumer | Total | |||||||||||||||||||||||||||||||||||||
Beginning Balance at December 31, 2022 | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
Provision for credit losses for loans | ||||||||||||||||||||||||||||||||||||||||||||
Recoveries | ||||||||||||||||||||||||||||||||||||||||||||
Less: Charge-offs | ||||||||||||||||||||||||||||||||||||||||||||
Ending Balance at June 30, 2023 | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | Commercial Real Estate | Commercial and Industrial | Commercial Construction | Residential Mortgage | Home Equity | Consumer | Total | |||||||||||||||||||||||||||||||||||||
Beginning Balance at December 31, 2021 | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
Provision for credit losses for loans | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||
Recoveries | ||||||||||||||||||||||||||||||||||||||||||||
Less: Charge-offs | ||||||||||||||||||||||||||||||||||||||||||||
Ending Balance at June 30, 2022 | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
ENTERPRISE BANCORP, INC. Notes to the Unaudited Consolidated Interim Financial Statements |
(Dollars in thousands) | Operating Leases | |||||||
2023 (six remaining months) | $ | |||||||
2024 | ||||||||
2025 | ||||||||
2026 | ||||||||
2027 | ||||||||
Thereafter | ||||||||
Total lease payments | ||||||||
Less: Imputed interest | ||||||||
Total lease liability | $ |
(Dollars in thousands) | June 30, 2023 | December 31, 2022 | ||||||||||||
Non-interest checking | $ | $ | ||||||||||||
Interest-bearing checking | ||||||||||||||
Savings | ||||||||||||||
Money market | ||||||||||||||
CDs $250,000 or less | ||||||||||||||
CDs greater than $250,000 | ||||||||||||||
Deposits | $ | $ |
ENTERPRISE BANCORP, INC. Notes to the Unaudited Consolidated Interim Financial Statements |
June 30, 2023 | December 31, 2022 | |||||||||||||||||||||||||
(Dollars in thousands) | Balance | Rate | Balance | Rate | ||||||||||||||||||||||
Over 5 years | $ | % | $ | % | ||||||||||||||||||||||
Total borrowed funds | $ | % | $ | % |
June 30, 2023 | ||||||||||||||||||||||||||
(Dollars in thousands) | Asset Notional Amount | Asset Derivatives(1) | Liability Notional Amount | Liability Derivatives(1) | ||||||||||||||||||||||
Derivatives designated as hedging instruments | ||||||||||||||||||||||||||
Interest-rate contracts - pay fixed, receive floating | $ | $ | $ | $ | ||||||||||||||||||||||
Total derivatives designated as hedging instruments | $ | $ | $ | $ | ||||||||||||||||||||||
Derivatives not subject to hedge accounting | ||||||||||||||||||||||||||
Interest-rate contracts - pay floating, receive fixed | $ | $ | $ | $ | ||||||||||||||||||||||
Interest-rate contracts - pay fixed, receive floating | ||||||||||||||||||||||||||
Risk participation agreements sold | ||||||||||||||||||||||||||
Total derivatives not subject to hedge accounting | $ | $ | $ | $ |
December 31, 2022 | ||||||||||||||||||||||||||
(Dollars in thousands) | Asset Notional Amount | Asset Derivatives(1) | Liability Notional Amount | Liability Derivatives(1) | ||||||||||||||||||||||
Derivatives not subject to hedge accounting | ||||||||||||||||||||||||||
Interest-rate contracts - pay floating, receive fixed | $ | $ | $ | $ | ||||||||||||||||||||||
Interest-rate contracts - pay fixed, receive floating | ||||||||||||||||||||||||||
Risk participation agreements sold | ||||||||||||||||||||||||||
Total derivatives not subject to hedge accounting | $ | $ | $ | $ |
ENTERPRISE BANCORP, INC. Notes to the Unaudited Consolidated Interim Financial Statements |
ENTERPRISE BANCORP, INC. Notes to the Unaudited Consolidated Interim Financial Statements |
Actual | Minimum Capital for Capital Adequacy Purposes(1) | Minimum Capital to be Well Capitalized(2) | ||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||||||||||||||||||||||||||||||
As of June 30, 2023 | ||||||||||||||||||||||||||||||||||||||
The Company | ||||||||||||||||||||||||||||||||||||||
Total Capital to risk-weighted assets ("RWA") | $ | % | $ | % | N/A | N/A | ||||||||||||||||||||||||||||||||
Tier 1 Capital to RWA | % | % | N/A | N/A | ||||||||||||||||||||||||||||||||||
Tier 1 Capital to average assets ("AA") or Leverage Ratio | % | % | N/A | N/A | ||||||||||||||||||||||||||||||||||
Common Equity Tier 1 Capital to RWA | % | % | N/A | N/A | ||||||||||||||||||||||||||||||||||
The Bank | ||||||||||||||||||||||||||||||||||||||
Total Capital to RWA | $ | % | $ | % | $ | % | ||||||||||||||||||||||||||||||||
Tier 1 Capital to RWA | % | % | % | |||||||||||||||||||||||||||||||||||
Tier 1 Capital to AA, Leverage Ratio | % | % | % | |||||||||||||||||||||||||||||||||||
Common Equity Tier 1 Capital to RWA | % | % | % |
Actual | Minimum Capital for Capital Adequacy Purposes(1) | Minimum Capital to be Well Capitalized(2) | ||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||||||||||||||||||||||||||||||
As of December 31, 2022 | ||||||||||||||||||||||||||||||||||||||
The Company | ||||||||||||||||||||||||||||||||||||||
Total Capital to RWA | $ | % | $ | % | N/A | N/A | ||||||||||||||||||||||||||||||||
Tier 1 Capital to RWA | % | % | N/A | N/A | ||||||||||||||||||||||||||||||||||
Tier 1 Capital to AA, Leverage Ratio | % | % | N/A | N/A | ||||||||||||||||||||||||||||||||||
Common Equity Tier 1 Capital to RWA | % | % | N/A | N/A | ||||||||||||||||||||||||||||||||||
The Bank | ||||||||||||||||||||||||||||||||||||||
Total Capital to RWA | $ | % | $ | % | $ | % | ||||||||||||||||||||||||||||||||
Tier 1 Capital to RWA | % | % | % | |||||||||||||||||||||||||||||||||||
Tier 1 Capital to AA, Leverage Ratio | % | % | % | |||||||||||||||||||||||||||||||||||
Common Equity Tier 1 Capital to RWA | % | % | % |
ENTERPRISE BANCORP, INC. Notes to the Unaudited Consolidated Interim Financial Statements |
Three months ended June 30, 2023 | Three months ended June 30, 2022 | |||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | Pre-Tax | Tax Benefit | After Tax Amount | Pre-Tax | Tax Benefit | After Tax Amount | ||||||||||||||||||||||||||||||||
Change in fair value of debt securities | $ | ( | $ | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||||
Less: net security losses reclassified into non-interest income | ( | ( | ||||||||||||||||||||||||||||||||||||
Net change in fair value of debt securities | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||
Total other comprehensive loss, net | $ | ( | $ | $ | ( | $ | ( | $ | $ | ( |
Six months ended June 30, 2023 | Six months ended June 30, 2022 | |||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | Pre-Tax | Tax (Expense) Benefit | After Tax Amount | Pre-Tax | Tax Benefit (Expense) | After Tax Amount | ||||||||||||||||||||||||||||||||
Change in fair value of debt securities | $ | $ | ( | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||||||||||
Less: net security (losses) gains reclassified into non-interest income | ( | ( | ( | |||||||||||||||||||||||||||||||||||
Net change in fair value of debt securities | ( | ( | ( | |||||||||||||||||||||||||||||||||||
Total other comprehensive income (loss), net | $ | $ | ( | $ | $ | ( | $ | $ | ( |
Three months ended June 30, 2023 | Three months ended June 30, 2022 | |||||||||||||||||||||||||
(Dollars in thousands) | Unrealized Losses on Debt Securities | Total | Unrealized Losses on Debt Securities | Total | ||||||||||||||||||||||
Accumulated other comprehensive loss - beginning balance | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Total other comprehensive loss, net | ( | ( | ( | ( | ||||||||||||||||||||||
Accumulated other comprehensive loss - ending balance | $ | ( | $ | ( | $ | ( | $ | ( |
Six months ended June 30, 2023 | Six months ended June 30, 2022 | |||||||||||||||||||||||||
(Dollars in thousands) | Unrealized Losses on Debt Securities | Total | Unrealized Gains (Losses) on Debt Securities | Total | ||||||||||||||||||||||
Accumulated other comprehensive loss - beginning balance | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||
Total other comprehensive income (loss), net | ( | ( | ||||||||||||||||||||||||
Accumulated other comprehensive loss - ending balance | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
ENTERPRISE BANCORP, INC. Notes to the Unaudited Consolidated Interim Financial Statements |
Six months ended | ||||||||
June 30, 2022 | ||||||||
Options granted | ||||||||
Term in years | ||||||||
Weighted average assumptions used in the fair value model: | ||||||||
Expected volatility | % | |||||||
Expected dividend yield | % | |||||||
Expected life in years | ||||||||
Risk-free interest-rate | % | |||||||
Weighted average market price on date of grants | $ | |||||||
Per share weighted average fair value | $ | |||||||
Fair value as a percentage of market value at grant date | % |
Six months ended June 30, | ||||||||||||||
Restricted Stock Awards (number of underlying shares) | 2023 | 2022 | ||||||||||||
Two-year vesting | ||||||||||||||
Four-year vesting | ||||||||||||||
Performance-based vesting | ||||||||||||||
Total restricted stock awards granted | ||||||||||||||
Weighted average grant date fair value | $ | $ |
ENTERPRISE BANCORP, INC. Notes to the Unaudited Consolidated Interim Financial Statements |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
Basic weighted average common shares outstanding | ||||||||||||||||||||||||||
Dilutive shares | ||||||||||||||||||||||||||
Diluted weighted average common shares outstanding |
ENTERPRISE BANCORP, INC. Notes to the Unaudited Consolidated Interim Financial Statements |
June 30, 2023 | ||||||||||||||||||||||||||
Fair Value Measurements Using: | ||||||||||||||||||||||||||
(Dollars in thousands) | Fair Value | (Level 1) | (Level 2) | (Level 3) | ||||||||||||||||||||||
Assets measured on a recurring basis: | ||||||||||||||||||||||||||
Debt securities | $ | $ | $ | $ | ||||||||||||||||||||||
Equity securities | ||||||||||||||||||||||||||
FHLB stock | ||||||||||||||||||||||||||
Interest-rate swaps | ||||||||||||||||||||||||||
Assets measured on a non-recurring basis: | ||||||||||||||||||||||||||
Individually evaluated loans (collateral dependent) | ||||||||||||||||||||||||||
Liabilities measured on a recurring basis: | ||||||||||||||||||||||||||
Interest-rate swaps | $ | $ | $ | $ | ||||||||||||||||||||||
RPAs sold |
December 31, 2022 | ||||||||||||||||||||||||||
Fair Value Measurements Using: | ||||||||||||||||||||||||||
(Dollars in thousands) | Fair Value | (Level 1) | (Level 2) | (Level 3) | ||||||||||||||||||||||
Assets measured on a recurring basis: | ||||||||||||||||||||||||||
Debt securities | $ | $ | $ | $ | ||||||||||||||||||||||
Equity securities | ||||||||||||||||||||||||||
FHLB stock | ||||||||||||||||||||||||||
Interest-rate swaps | ||||||||||||||||||||||||||
Assets measured on a non-recurring basis: | ||||||||||||||||||||||||||
Individually evaluated loans (collateral dependent) | ||||||||||||||||||||||||||
Liabilities measured on a recurring basis: | ||||||||||||||||||||||||||
Interest-rate swaps | $ | $ | $ | $ | ||||||||||||||||||||||
RPAs sold |
ENTERPRISE BANCORP, INC. Notes to the Unaudited Consolidated Interim Financial Statements |
Fair Value | ||||||||||||||||||||||||||||||||
(Dollars in thousands) | June 30, 2023 | December 31, 2022 | Valuation Technique | Unobservable Input | Unobservable Input Value or Range | |||||||||||||||||||||||||||
Assets measured on a non-recurring basis: | ||||||||||||||||||||||||||||||||
Individually evaluated loans (collateral dependent) | $ | $ | Appraisal of collateral | Appraisal adjustments(1) | ||||||||||||||||||||||||||||
June 30, 2023 | ||||||||||||||||||||||||||||||||
Fair Value Measurement | ||||||||||||||||||||||||||||||||
(Dollars in thousands) | Carrying Value | Fair Value | Level 1 Inputs | Level 2 Inputs | Level 3 Inputs | |||||||||||||||||||||||||||
Financial assets: | ||||||||||||||||||||||||||||||||
Loans, net | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Financial liabilities: | ||||||||||||||||||||||||||||||||
CDs | ||||||||||||||||||||||||||||||||
Borrowed funds | ||||||||||||||||||||||||||||||||
Subordinated debt |
December 31, 2022 | ||||||||||||||||||||||||||||||||
Fair Value Measurement | ||||||||||||||||||||||||||||||||
(Dollars in thousands) | Carrying Value | Fair Value | Level 1 Inputs | Level 2 Inputs | Level 3 Inputs | |||||||||||||||||||||||||||
Financial assets: | ||||||||||||||||||||||||||||||||
Loans, net | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Financial liabilities: | ||||||||||||||||||||||||||||||||
CDs | ||||||||||||||||||||||||||||||||
Borrowed funds | ||||||||||||||||||||||||||||||||
Subordinated debt |
ENTERPRISE BANCORP, INC. Notes to the Unaudited Consolidated Interim Financial Statements |
Six months ended June 30, | ||||||||||||||
(Dollars in thousands) | 2023 | 2022 | ||||||||||||
Supplemental financial data: | ||||||||||||||
Cash paid for: interest | $ | $ | ||||||||||||
Cash paid for: income taxes | ||||||||||||||
Cash paid for: lease liability | ||||||||||||||
At or for the three months ended | ||||||||||||||||||||||||||||||||
(Dollars in thousands, except per share data) | June 30, 2023 | March 31, 2023 | December 31, 2022 | September 30, 2022 | June 30, 2022 | |||||||||||||||||||||||||||
Balance Sheet Data | ||||||||||||||||||||||||||||||||
Total cash and cash equivalents | $ | 258,825 | $ | 215,693 | $ | 267,589 | $ | 413,688 | $ | 306,460 | ||||||||||||||||||||||
Total investment securities at fair value | 712,851 | 830,895 | 820,371 | 831,030 | 866,580 | |||||||||||||||||||||||||||
Total loans | 3,345,667 | 3,230,156 | 3,180,518 | 3,109,369 | 3,084,915 | |||||||||||||||||||||||||||
Allowance for credit losses | (56,899) | (55,002) | (52,640) | (51,211) | (50,703) | |||||||||||||||||||||||||||
Total assets | 4,502,344 | 4,441,896 | 4,438,333 | 4,529,820 | 4,417,447 | |||||||||||||||||||||||||||
Total deposits | 4,075,598 | 4,016,156 | 4,035,806 | 4,138,038 | 4,016,814 | |||||||||||||||||||||||||||
Subordinated debt | 59,340 | 59,261 | 59,182 | 59,102 | 59,039 | |||||||||||||||||||||||||||
Total shareholders' equity | 307,490 | 311,318 | 282,267 | 272,193 | 285,110 | |||||||||||||||||||||||||||
Total liabilities and shareholders' equity | 4,502,344 | 4,441,896 | 4,438,333 | 4,529,820 | 4,417,447 | |||||||||||||||||||||||||||
Wealth Management | ||||||||||||||||||||||||||||||||
Wealth assets under management | $ | 1,009,386 | $ | 930,714 | $ | 891,451 | $ | 835,661 | $ | 849,536 | ||||||||||||||||||||||
Wealth assets under administration | $ | 214,116 | $ | 206,569 | $ | 198,586 | $ | 185,977 | $ | 205,646 | ||||||||||||||||||||||
Shareholders' Equity Ratios | ||||||||||||||||||||||||||||||||
Book value per common share | $ | 25.11 | $ | 25.47 | $ | 23.26 | $ | 22.44 | $ | 23.53 | ||||||||||||||||||||||
Dividends paid per common share | $ | 0.230 | $ | 0.230 | $ | 0.205 | $ | 0.205 | $ | 0.205 | ||||||||||||||||||||||
Regulatory Capital Ratios | ||||||||||||||||||||||||||||||||
Total capital to risk weighted assets | 13.37 | % | 13.55 | % | 13.49 | % | 13.49 | % | 13.38 | % | ||||||||||||||||||||||
Tier 1 capital to risk weighted assets(1) | 10.52 | % | 10.64 | % | 10.56 | % | 10.52 | % | 10.38 | % | ||||||||||||||||||||||
Tier 1 capital to average assets | 8.62 | % | 8.47 | % | 8.10 | % | 7.89 | % | 8.03 | % | ||||||||||||||||||||||
Credit Quality Data | ||||||||||||||||||||||||||||||||
Non-performing loans | $ | 7,647 | $ | 7,532 | $ | 6,122 | $ | 5,717 | $ | 6,321 | ||||||||||||||||||||||
Non-performing loans to total loans | 0.23 | % | 0.23 | % | 0.19 | % | 0.18 | % | 0.20 | % | ||||||||||||||||||||||
Non-performing assets to total assets | 0.17 | % | 0.17 | % | 0.14 | % | 0.13 | % | 0.14 | % | ||||||||||||||||||||||
ACL for loans to total loans | 1.70 | % | 1.70 | % | 1.66 | % | 1.65 | % | 1.64 | % | ||||||||||||||||||||||
Income Statement Data | ||||||||||||||||||||||||||||||||
Net interest income | $ | 38,093 | $ | 39,971 | $ | 42,165 | $ | 39,779 | $ | 35,821 | ||||||||||||||||||||||
Provision for credit losses | 2,268 | 2,736 | 1,861 | 1,000 | 2,409 | |||||||||||||||||||||||||||
Total non-interest income | 2,819 | 4,757 | 4,210 | 4,525 | 4,132 | |||||||||||||||||||||||||||
Total non-interest expense | 25,623 | 28,040 | 28,167 | 27,537 | 26,853 | |||||||||||||||||||||||||||
Income before income taxes | 13,021 | 13,952 | 16,347 | 15,767 | 10,691 | |||||||||||||||||||||||||||
Provision for income taxes | 3,337 | 3,184 | 4,041 | 3,805 | 2,530 | |||||||||||||||||||||||||||
Net income | $ | 9,684 | $ | 10,768 | $ | 12,306 | $ | 11,962 | $ | 8,161 | ||||||||||||||||||||||
Income Statement Ratios | ||||||||||||||||||||||||||||||||
Diluted earnings per common share | $ | 0.79 | $ | 0.88 | $ | 1.01 | $ | 0.98 | $ | 0.67 | ||||||||||||||||||||||
Return on average total assets | 0.88 | % | 0.99 | % | 1.08 | % | 1.05 | % | 0.76 | % | ||||||||||||||||||||||
Return on average shareholders' equity | 12.63 | % | 14.67 | % | 18.08 | % | 16.47 | % | 11.24 | % | ||||||||||||||||||||||
Net interest margin (tax-equivalent)(2) | 3.55 | % | 3.76 | % | 3.81 | % | 3.61 | % | 3.45 | % |
Increase (decrease) due to | ||||||||||||||||||||
(Dollars in thousands) | Net Change | Volume | Rate | |||||||||||||||||
Interest income | ||||||||||||||||||||
Loans and loans held for sale (tax-equivalent) | $ | 9,671 | $ | 2,719 | $ | 6,952 | ||||||||||||||
Investment securities (tax-equivalent) | 177 | (287) | 464 | |||||||||||||||||
Other interest-earning assets(1) | 1,524 | (135) | 1,659 | |||||||||||||||||
Total interest-earning assets (tax-equivalent) | 11,372 | 2,297 | 9,075 | |||||||||||||||||
Interest expense | ||||||||||||||||||||
Interest checking, savings and money market | 6,424 | 12 | 6,412 | |||||||||||||||||
Certificates of deposit | 2,597 | 382 | 2,215 | |||||||||||||||||
Borrowed funds | 17 | 9 | 8 | |||||||||||||||||
Subordinated debt | 50 | 4 | 46 | |||||||||||||||||
Total interest-bearing funding | 9,088 | 407 | 8,681 | |||||||||||||||||
Change in net interest income (tax-equivalent) | $ | 2,284 | $ | 1,890 | $ | 394 |
Three months ended June 30, 2023 | Three months ended June 30, 2022 | |||||||||||||||||||||||||||||||||||||
(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) | $ | 3,268,586 | $ | 41,930 | 5.14 | % | $ | 3,020,113 | $ | 32,259 | 4.28 | % | ||||||||||||||||||||||||||
Investment securities(3) (tax equivalent) | 917,965 | 5,189 | 2.26 | % | 969,563 | 5,012 | 2.07 | % | ||||||||||||||||||||||||||||||
Other interest-earning assets(4) | 155,934 | 1,917 | 4.93 | % | 214,167 | 393 | 0.74 | % | ||||||||||||||||||||||||||||||
Total interest-earnings assets (tax equivalent) | 4,342,485 | 49,036 | 4.53 | % | 4,203,843 | 37,664 | 3.59 | % | ||||||||||||||||||||||||||||||
Other assets | 92,909 | 115,413 | ||||||||||||||||||||||||||||||||||||
Total assets | $ | 4,435,394 | $ | 4,319,256 | ||||||||||||||||||||||||||||||||||
Liabilities and stockholders' equity: | ||||||||||||||||||||||||||||||||||||||
Interest checking, savings and money market | $ | 2,351,011 | 6,880 | 1.17 | % | $ | 2,296,268 | 456 | 0.08 | % | ||||||||||||||||||||||||||||
CDs | 393,387 | 2,812 | 2.87 | % | 198,766 | 215 | 0.43 | % | ||||||||||||||||||||||||||||||
Borrowed funds | 4,595 | 30 | 2.58 | % | 2,961 | 13 | 1.73 | % | ||||||||||||||||||||||||||||||
Subordinated debt(5) | 59,293 | 867 | 5.85 | % | 59,021 | 817 | 5.54 | % | ||||||||||||||||||||||||||||||
Total interest-bearing funding | 2,808,286 | 10,589 | 1.51 | % | 2,557,016 | 1,501 | 0.24 | % | ||||||||||||||||||||||||||||||
Non-interest checking | 1,269,339 | — | — | % | 1,424,132 | — | — | % | ||||||||||||||||||||||||||||||
Total deposits, borrowed funds and subordinated debt | 4,077,625 | 10,589 | 1.04 | % | 3,981,148 | 1,501 | 0.15 | % | ||||||||||||||||||||||||||||||
Other liabilities | 50,113 | 46,945 | ||||||||||||||||||||||||||||||||||||
Total liabilities | 4,127,738 | 4,028,093 | ||||||||||||||||||||||||||||||||||||
Stockholders' equity | 307,656 | 291,163 | ||||||||||||||||||||||||||||||||||||
Total liabilities and stockholders' equity | $ | 4,435,394 | $ | 4,319,256 | ||||||||||||||||||||||||||||||||||
Net interest-rate spread (tax equivalent) | 3.02 | % | 3.35 | % | ||||||||||||||||||||||||||||||||||
Net interest income (tax equivalent) | 38,447 | 36,163 | ||||||||||||||||||||||||||||||||||||
Net interest margin (tax equivalent) | 3.55 | % | 3.45 | % | ||||||||||||||||||||||||||||||||||
Less tax equivalent adjustment | 354 | 342 | ||||||||||||||||||||||||||||||||||||
Net interest income | $ | 38,093 | $ | 35,821 | ||||||||||||||||||||||||||||||||||
Net interest margin | 3.52 | % | 3.42 | % |
Increase (decrease) due to | ||||||||||||||||||||
(Dollars in thousands) | Net Change | Volume | Rate | |||||||||||||||||
Interest income | ||||||||||||||||||||
Loans and loans held for sale (tax equivalent) | $ | 18,545 | $ | 5,833 | $ | 12,712 | ||||||||||||||
Investment securities (tax equivalent) | 656 | (334) | 990 | |||||||||||||||||
Other interest-earning assets(1) | 3,551 | (325) | 3,876 | |||||||||||||||||
Total interest-earning assets (tax equivalent) | 22,752 | 5,174 | 17,578 | |||||||||||||||||
Interest expense | ||||||||||||||||||||
Interest checking, savings and money market | 10,150 | 7 | 10,143 | |||||||||||||||||
CDs | 4,258 | 613 | 3,645 | |||||||||||||||||
Borrowed funds | 16 | 2 | 14 | |||||||||||||||||
Subordinated debt | 99 | 7 | 92 | |||||||||||||||||
Total interest-bearing funding | 14,523 | 629 | 13,894 | |||||||||||||||||
Change in net interest income (tax equivalent) | $ | 8,229 | $ | 4,545 | $ | 3,684 |
Six months ended June 30, 2023 | Six months ended June 30, 2022 | |||||||||||||||||||||||||||||||||||||
(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) | $ | 3,234,901 | $ | 81,609 | 5.08 | % | $ | 2,965,998 | $ | 63,064 | 4.29 | % | ||||||||||||||||||||||||||
Investment securities(3) (tax equivalent) | 927,620 | 10,489 | 2.26 | % | 958,211 | 9,833 | 2.05 | % | ||||||||||||||||||||||||||||||
Other interest-earning assets(4) | 177,219 | 4,125 | 4.69 | % | 298,409 | 574 | 0.39 | % | ||||||||||||||||||||||||||||||
Total interest-earnings assets (tax equivalent) | 4,339,740 | 96,223 | 4.47 | % | 4,222,618 | 73,471 | 3.50 | % | ||||||||||||||||||||||||||||||
Other assets | 89,762 | 134,683 | ||||||||||||||||||||||||||||||||||||
Total assets | $ | 4,429,502 | $ | 4,357,301 | ||||||||||||||||||||||||||||||||||
Liabilities and stockholders' equity: | ||||||||||||||||||||||||||||||||||||||
Interest checking, savings and money market | $ | 2,352,978 | 10,985 | 0.94 | % | $ | 2,333,587 | 835 | 0.07 | % | ||||||||||||||||||||||||||||
CDs | 365,529 | 4,694 | 2.59 | % | 200,723 | 436 | 0.44 | % | ||||||||||||||||||||||||||||||
Borrowed funds | 3,904 | 42 | 2.17 | % | 3,608 | 26 | 1.46 | % | ||||||||||||||||||||||||||||||
Subordinated debt(5) | 59,253 | 1,734 | 5.85 | % | 59,006 | 1,635 | 5.54 | % | ||||||||||||||||||||||||||||||
Total interest-bearing funding | 2,781,664 | 17,455 | 1.26 | % | 2,596,924 | 2,932 | 0.23 | % | ||||||||||||||||||||||||||||||
Non-interest checking | 1,293,303 | — | — | % | 1,398,840 | — | — | % | ||||||||||||||||||||||||||||||
Total deposits, borrowed funds and subordinated debt | 4,074,967 | 17,455 | 0.86 | % | 3,995,764 | 2,932 | 0.15 | % | ||||||||||||||||||||||||||||||
Other liabilities | 51,880 | 50,051 | ||||||||||||||||||||||||||||||||||||
Total liabilities | 4,126,847 | 4,045,815 | ||||||||||||||||||||||||||||||||||||
Stockholders' equity | 302,655 | 311,486 | ||||||||||||||||||||||||||||||||||||
Total liabilities and stockholders' equity | $ | 4,429,502 | $ | 4,357,301 | ||||||||||||||||||||||||||||||||||
Net interest-rate spread (tax equivalent) | 3.21 | % | 3.27 | % | ||||||||||||||||||||||||||||||||||
Net interest income (tax equivalent) | 78,768 | 70,539 | ||||||||||||||||||||||||||||||||||||
Net interest margin (tax equivalent) | 3.65 | % | 3.36 | % | ||||||||||||||||||||||||||||||||||
Less tax equivalent adjustment | 704 | 685 | ||||||||||||||||||||||||||||||||||||
Net interest income | $ | 78,064 | $ | 69,854 | ||||||||||||||||||||||||||||||||||
Net interest margin | 3.62 | % | 3.33 | % |
June 30, 2023 | December 31, 2022 | June 30, 2022 | ||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | Amount | Percent | Amount | Percent | Amount | Percent | ||||||||||||||||||||||||||||||||
Commercial real estate | $ | 2,009,263 | 60 | % | $ | 1,921,410 | 61 | % | $ | 1,865,198 | 60 | % | ||||||||||||||||||||||||||
Commercial and industrial | 420,095 | 13 | % | 414,490 | 13 | % | 422,006 | 14 | % | |||||||||||||||||||||||||||||
Commercial construction | 487,018 | 15 | % | 424,049 | 13 | % | 385,752 | 13 | % | |||||||||||||||||||||||||||||
SBA PPP | — | — | % | — | — | % | 15,288 | — | % | |||||||||||||||||||||||||||||
Total commercial loans | 2,916,376 | 88 | % | 2,759,949 | 87 | % | 2,688,244 | 87 | % | |||||||||||||||||||||||||||||
Residential mortgages | 346,523 | 10 | % | 332,632 | 10 | % | 307,131 | 10 | % | |||||||||||||||||||||||||||||
Home equity | 74,374 | 2 | % | 79,807 | 3 | % | 81,648 | 3 | % | |||||||||||||||||||||||||||||
Consumer | 8,394 | — | % | 8,130 | — | % | 7,892 | — | % | |||||||||||||||||||||||||||||
Total retail loans | 429,291 | 12 | % | 420,569 | 13 | % | 396,671 | 13 | % | |||||||||||||||||||||||||||||
Total loans | 3,345,667 | 100 | % | 3,180,518 | 100 | % | 3,084,915 | 100 | % | |||||||||||||||||||||||||||||
Allowance for credit losses | (56,899) | (52,640) | (50,703) | |||||||||||||||||||||||||||||||||||
Net loans | $ | 3,288,768 | $ | 3,127,878 | $ | 3,034,212 |
(Dollars in thousands) | June 30, 2023 | December 31, 2022 | June 30, 2022 | |||||||||||||||||
Non-accrual loan summary: | ||||||||||||||||||||
Commercial real estate | $ | 4,609 | $ | 3,355 | $ | 4,367 | ||||||||||||||
Commercial and industrial | 988 | 730 | 1,223 | |||||||||||||||||
Commercial construction | — | 294 | — | |||||||||||||||||
Residential mortgages | 1,546 | 1,532 | 501 | |||||||||||||||||
Home equity | 504 | 211 | 230 | |||||||||||||||||
Consumer | — | — | — | |||||||||||||||||
Total non-performing loans | 7,647 | 6,122 | 6,321 | |||||||||||||||||
Total loans | $ | 3,345,667 | $ | 3,180,518 | $ | 3,084,915 | ||||||||||||||
Delinquent loans 60-89 days past due and still accruing | $ | 3,509 | $ | 1,307 | $ | 1,334 | ||||||||||||||
Loans 60-89 days past due and still accruing to total loans | 0.10 | % | 0.04 | % | 0.04 | % | ||||||||||||||
Non-performing loans to total loans | 0.23 | % | 0.19 | % | 0.20 | % | ||||||||||||||
Non-performing assets to total assets | 0.17 | % | 0.14 | % | 0.14 | % | ||||||||||||||
Allowance for credit losses for loans | $ | 56,899 | $ | 52,640 | $ | 50,703 | ||||||||||||||
Allowance for credit losses for loans to non-performing loans | 744.07 | % | 859.85 | % | 802.14 | % | ||||||||||||||
Allowance for credit losses for loans to total loans | 1.70 | % | 1.66 | % | 1.64 | % | ||||||||||||||
Six months ended | ||||||||||||||
(Dollars in thousands) | June 30, 2023 | June 30, 2022 | ||||||||||||
Provision for credit losses on loans | $ | 4,361 | $ | 3,020 | ||||||||||
Provision for unfunded commitments | 643 | (81) | ||||||||||||
Total provision for credit losses | $ | 5,004 | $ | 2,939 |
Six months ended June 30, | ||||||||||||||
(Dollars in thousands) | 2023 | 2022 | ||||||||||||
Balance at beginning of year | $ | 52,640 | $ | 47,704 | ||||||||||
Provision for credit losses for loans | 4,361 | 3,020 | ||||||||||||
Recoveries on charged-off loans: | ||||||||||||||
Commercial real estate | — | — | ||||||||||||
Commercial and industrial | 211 | 110 | ||||||||||||
Commercial construction | — | — | ||||||||||||
Residential mortgages | — | — | ||||||||||||
Home equity | 5 | 7 | ||||||||||||
Consumer | 6 | 10 | ||||||||||||
Total recovered | 222 | 127 | ||||||||||||
Charged-off loans | ||||||||||||||
Commercial real estate | — | — | ||||||||||||
Commercial and industrial | 303 | 110 | ||||||||||||
Commercial construction | — | — | ||||||||||||
Residential mortgages | — | — | ||||||||||||
Home equity | — | — | ||||||||||||
Consumer | 21 | 38 | ||||||||||||
Total charged-off | 324 | 148 | ||||||||||||
Net loans charged-off | 102 | 21 | ||||||||||||
Ending balance | $ | 56,899 | $ | 50,703 | ||||||||||
Annualized net loans (recovered) charged-off to average loans outstanding | 0.01 | % | — | % |
June 30, 2023 | December 31, 2022 | June 30, 2022 | ||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | Amount | Percent | Amount | Percent | Amount | Percent | ||||||||||||||||||||||||||||||||
Checking | $ | 1,975,669 | 49 | % | $ | 2,040,303 | 51 | % | $ | 2,170,118 | 54 | % | ||||||||||||||||||||||||||
Money markets and savings | 1,684,137 | 41 | % | 1,708,311 | 42 | % | 1,628,181 | 40 | % | |||||||||||||||||||||||||||||
CDs | 415,792 | 10 | % | 287,192 | 7 | % | 218,515 | 6 | % | |||||||||||||||||||||||||||||
Deposits | $ | 4,075,598 | 100 | % | $ | 4,035,806 | 100 | % | $ | 4,016,814 | 100 | % |
(Dollars in thousands, except for percentage data) | June 30, 2023 | December 31, 2022 | ||||||||||||
Changes in interest rates | Percentage Change | Percentage Change | ||||||||||||
Rates Rise 400 Basis Points | 0.12 | % | 1.20 | % | ||||||||||
Rates Rise 200 Basis Points | (0.10) | % | 0.45 | % | ||||||||||
Rates Unchanged | — | % | — | % | ||||||||||
Rates Decline 200 Basis Points | (2.22) | % | (5.34) | % |
Total number of shares repurchased(1) | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Announced | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs | |||||||||||||||||||||||
April | 1,410 | $ | 28.45 | — | — | |||||||||||||||||||||
May | — | $ | — | — | — | |||||||||||||||||||||
June | 240 | $ | 28.94 | — | — |
ENTERPRISE BANCORP, INC. | |||||||||||
DATE: | August 8, 2023 | By: | /s/ Joseph R. Lussier | ||||||||
Joseph R. Lussier | |||||||||||
Executive Vice President, Treasurer | |||||||||||
and Chief Financial Officer | |||||||||||
Date: | August 8, 2023 | /s/ John P. Clancy, Jr. | ||||||
John P. Clancy, Jr. | ||||||||
Chief Executive Officer (Principal Executive Officer) |
Date: | August 8, 2023 | /s/ Joseph R. Lussier | ||||||
Joseph R. Lussier | ||||||||
Executive Vice President, Chief Financial Officer and Treasurer, (Principal Financial Officer) |
/s/ John P. Clancy, Jr. | ||
John P. Clancy, Jr. | ||
Chief Executive Officer (Principal Executive Officer) | ||
/s/ Joseph R. Lussier | ||
Joseph R. Lussier | ||
Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer) |
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Jun. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Debt securities, amortized cost | $ 820,004 | $ 940,227 |
Preferred stock, par value (in usd per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 1,000,000 | 1,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Common stock, par value (in usd per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 40,000,000 | 40,000,000 |
Common stock, shares issued (in shares) | 12,244,733 | 12,133,516 |
Common stock, outstanding (in shares) | 12,244,733 | 12,133,516 |
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
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Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 9,684 | $ 8,161 | $ 20,452 | $ 18,448 |
Other comprehensive (loss) income, net of tax | ||||
Net change in fair value of debt securities | (11,634) | (32,078) | 8,614 | (77,040) |
Total other comprehensive (loss) income, net of tax | (11,634) | (32,078) | 8,614 | (77,040) |
Total comprehensive (loss) income, net | $ (1,950) | $ (23,917) | $ 29,066 | $ (58,592) |
Consolidated Statement of Changes in Shareholders' Equity (Parenthetical) - $ / shares |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
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Statement of Stockholders' Equity [Abstract] | ||||
Common stock dividends declared (in usd per share) | $ 0.230 | $ 0.205 | $ 0.46 | $ 0.41 |
Summary of Significant Accounting Policies |
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies (a) Organization of the Company and Basis of Presentation The accompanying unaudited consolidated interim financial statements and these notes should be read in conjunction with the December 31, 2022 audited consolidated financial statements and notes thereto contained in the Annual Report on Form 10-K of Enterprise Bancorp, Inc. (the "Company," "Enterprise," "we," or "our") for the year ended December 31, 2022 (the "2022 Annual Report on Form 10-K") as filed with the Securities and Exchange Commission (the "SEC") on March 8, 2023. The Company has not materially changed its significant accounting policies from those disclosed in its 2022 Annual Report on Form 10-K. See Item (e), "Recent Accounting Pronouncements," below in this Note 1. The accompanying unaudited consolidated interim financial statements of the Company include the accounts of the Company and its wholly owned subsidiary, Enterprise Bank and Trust Company, commonly referred to as Enterprise Bank (the "Bank"). The Bank is a Massachusetts trust company and state chartered commercial bank organized in 1989. Substantially all of the Company's operations are conducted through the Bank and its subsidiaries. The Bank's subsidiaries include Enterprise Insurance Services, LLC and Enterprise Wealth Services, LLC, both organized under the laws of the State of Delaware, to engage in insurance sales activities and offer non-deposit investment products and services, respectively. In addition, the Bank has the following subsidiaries that are incorporated in the Commonwealth of Massachusetts and classified as security corporations in accordance with applicable Massachusetts General Laws: Enterprise Security Corporation; Enterprise Security Corporation II; and Enterprise Security Corporation III. The security corporations, which hold various types of qualifying securities, are limited to conducting investment activities that the Bank itself would be allowed to conduct under applicable laws. In February 2023, the Bank organized the EBTC NMTC Investment Fund - CHC, LLC (the "NMTC Investment Fund") under the laws of the State of Delaware, in conjunction with the Bank's investment in a qualifying New Market Tax Credit ("NMTC") project. The NMTC Investment Fund is the Company's only unconsolidated Variable Interest Entity ("VIE"). Otherwise, the services offered through the Bank and its subsidiaries are managed as one strategic unit and represent the Company's only reportable operating segment. The accompanying unaudited consolidated interim financial statements, and notes thereto, in this Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2023 (this "Form 10-Q"), have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and the SEC instructions for Quarterly Reports on Form 10-Q. In the opinion of management, the accompanying unaudited consolidated interim financial statements reflect all necessary adjustments, consisting of normal recurring accruals and elimination of intercompany balances, for a fair presentation. Interim results are not necessarily indicative of results to be expected for the entire year, or any future period. (b) Uses of Estimates In preparing the unaudited consolidated interim financial statements in conformity with GAAP, management is required to exercise judgment in determining many of the methodologies, assumptions and estimates to be utilized. These assumptions and estimates affect the reported values of assets and liabilities as of the balance sheet dates and income and expenses for the period then ended. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates should the assumptions and estimates used be incorrect or change over time due to changes in circumstances. Changes in those estimates resulting from continuing changes in the economic environment and other factors will be reflected in the consolidated financial statements and results of operations in future periods. As discussed in the Company's 2022 Annual Report on Form 10-K, the most significant areas in which management applies critical assumptions and estimates are: the estimates of the allowance for credit losses ("ACL") for loans, available for sale securities and reserve for unfunded commitments, and the impairment review of goodwill. Refer to Note 1, "Summary of Significant Accounting Policies," to the Company's audited consolidated financial statements included in the Company's 2022 Annual Report on Form 10-K for accounting policies related to these significant estimates. (c) Unconsolidated Variable Interest Entity / Proportional Accounting In March 2023, the Bank made an equity contribution to the NMTC Investment Fund, a newly formed Delaware limited liability company, in order to invest in the NMTC program administered by the U.S. Department of the Treasury's Community Development Financial Institutions Fund and allocated to Community Development Entities ("CDE"). The NMTC program provides federal tax incentives for investments in distressed communities and promotes economic improvements through the development of successful businesses in these communities. The NMTCs are available to investors over a seven-year period and are subject to recapture if certain events occur during such period. The Bank invested $3.7 million in the Investment Fund and anticipates receiving $4.8 million of federal tax credits over the next seven years (5% in each of the first three years, and 6% in each of the next four years). The underlying project is structured through a qualified CDE, which in turn has made loans to a qualified active low-income business. The Bank has no unfunded commitments associated with its NMTC investment. The Company has elected to account for the tax equity investment using the proportional amortization method. Under this accounting method, the NMTC Investment Fund is not consolidated with the Company and, instead, the initial cost of the investment is amortized in proportion to the amount of tax credits and other tax benefits received over the allotment period. The investment is carried within the line "Prepaid expenses and other assets" on the Company's Consolidated Balance Sheet and the investment amortization expense and tax credits are presented on a net basis within the line "Provision for income taxes" on the Company's Consolidated Statements of Income. During the three and six months ended June 30, 2023, the related amortization expense amounted to $147 thousand and $191 thousand, respectively, and the related tax credits amounted to $153 thousand and $306 thousand, respectively. (d) Income Taxes Deferred income taxes are recognized based on the expected future tax consequences of differences between the financial statement and tax basis of assets and liabilities, calculated using currently enacted tax rates. Management records net deferred tax assets to the extent we believe these assets will more likely than not be realized. In making this determination, we consider all available positive and negative evidence, including recent financial operations and projected future taxable income. During the second quarter of 2023, the Company sold debt securities with an amortized cost of approximately $87.2 million realizing net losses of $2.4 million. For the majority of the realized losses, the Company had capital gains available for loss carry-back. At June 30, 2023, the Company established a $206 thousand valuation allowance against the capital loss carryforward deferred tax asset, for the amount management believes is not more-likely-than-not to be realized during the five-year capital loss carryforward period. (e) Recent Accounting Pronouncements Accounting pronouncements adopted by the Company In March 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-02, "Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method." ASU 2023-02 permits reporting entities to elect to account for their tax equity investments, regardless of the tax credit program from which the income tax credits are received, using the proportional amortization method if certain conditions are met. The election can be made for each individual qualifying tax credit investment. Under the proportional amortization method, the initial cost of an investment is amortized in proportion to the amount of tax credits and other tax benefits received, with the amortization and tax credits recognized as a component of income tax expense. To qualify for the proportional amortization method, all of the following conditions must be met: (1) It is probable that the income tax credits allocated to the tax equity investor will be available; (2) The tax equity investor does not have the ability to exercise significant influence over the operating and financial policies of the underlying project; (3) Substantially all of the projected benefits are from income tax credits and other income tax benefits; (4) The tax equity investor's projected yield based solely on the cash flows from the income tax credits and other income tax benefits is positive; and (5) The tax equity investor is a limited liability investor in the limited liability entity for both legal and tax purposes, and the tax equity investor's liability is limited to its capital investment. Under the proportional amortization method, the investment shall be tested for impairment when events or changes in circumstances indicate that it is more likely than not that the carrying amount of the investment will not be realized. An impairment loss shall be measured as the amount by which the carrying amount of an investment exceeds its fair value. A previously recognized impairment loss shall not be reversed. ASU 2023-02 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2023. The Company has elected to early adopt ASU 2022-01 effective on January 1, 2023, applying the new guidance to a new investment in NMTC made in the first quarter of 2023, and the adoption did not have a significant impact on the financial statements. In March 2022, the FASB issued ASU 2022-01, "Derivatives and Hedging (Topic 815): Fair Value Hedging—Portfolio Layer Method." This ASU clarifies the guidance on fair value hedge accounting of interest rate risk for portfolios of financial assets. The ASU amends the guidance in ASU 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities," that, among other things, established the "last-of-layer" method for making the fair value hedge accounting for these portfolios more accessible. ASU 2022-01 renames that method the "portfolio layer" method and addresses feedback from stakeholders regarding its application. The Company adopted ASU 2022-01 effective on January 1, 2023 and the adoption did not have a significant impact on the financial statements. In March 2022, the FASB issued ASU 2022-02, "Financial Instruments—Credit Losses (Topic 326), Troubled Debt Restructurings and Vintage Disclosures." This ASU eliminates the accounting guidance for troubled debt restructurings by creditors that have adopted the current expected credit loss ("CECL") methodology for estimating allowances for credit losses and enhances the disclosure requirements for loan restructurings made with borrowers experiencing financial difficulty. In addition, the amendments require a public business entity to disclose current-period gross charge-offs for financing receivables and net investment in leases by year of origination in the vintage disclosures. The Company adopted ASU 2022-02 effective on January 1, 2023, prospectively, and the adoption did not have a significant impact on the financial statements. (f) Subsequent Events The Company has evaluated subsequent events and transactions from June 30, 2023 through the date this Form 10-Q was filed with the SEC for potential recognition or disclosure as required by GAAP and determined there were no material subsequent events requiring recognition or disclosure.
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Investment Securities |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment Securities | Investment Securities Debt Securities All of the Company's debt securities were classified as available-for-sale and carried at fair value as of the dates specified in the tables below. The amortized cost and fair values of debt securities at the dates specified are summarized as follows:
Accrued interest receivable on available-for-sale debt securities, included in the "Accrued Interest Receivable" line item on the Company's Consolidated Balance Sheets, amounted to $3.4 million and $4.0 million at June 30, 2023 and December 31, 2022, respectively. At June 30, 2023, management performed its quarterly analysis of all securities with unrealized losses and determined that the losses were primarily attributable to significant increases in market interest rates experienced during the last fifteen months. Management concluded that no ACL for available-for-sale securities was necessary as of June 30, 2023 and anticipates they will mature or be called at par value. The following tables summarize the duration of unrealized losses for debt securities at June 30, 2023 and December 31, 2022:
The contractual maturity distribution at June 30, 2023 of debt securities was as follows:
Scheduled contractual maturities shown above may not reflect the actual maturities of the investments. The actual MBS/CMO cash flows likely will be faster than presented above due to prepayments and amortization. Similarly, included in the table above are callable securities, comprised of municipal securities and corporate bonds, with a fair value of $131.8 million, which can be redeemed by the issuers prior to the maturity presented above. Management considers these factors when evaluating the interest-rate risk in the Company's asset-liability management program. From time to time, the Company may pledge debt securities as collateral for deposit account balances of municipal customers, and for borrowing capacity with the FHLB and the Federal Reserve Bank of Boston ("FRB"). The fair value of debt securities pledged as collateral for these purposes was $696.8 million and $804.2 million at June 30, 2023 and December 31, 2022, respectively. Debt security sales during the three and six months ended June 30, 2023 were made in order to improve the Company's balance sheet positioning and enhance future earnings. Sales of debt securities for the three and six months ended June 30, 2023 and June 30, 2022 are summarized as follows:
_________________________________________ (1)Amortized cost of investments sold is determined on a specific identification basis and includes pending trades based on trade date, if applicable. Equity Securities The Company held equity securities with a fair value of $5.9 million at June 30, 2023 and $4.3 million at December 31, 2022. At June 30, 2023, the equity portfolio consisted of investments in broad-based equity index funds and common stock of entities in the financial services industry. The equity portfolio also included mutual funds held in conjunction with the Company's supplemental executive retirement and deferred compensation plan. Gains and losses on equity securities for the three and six months ended June 30, 2023 and June 30, 2022 are summarized as follows:
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Loans |
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Loans | Loans Loan Portfolio Classifications Major classifications of loans and their amortized cost as of the dates indicated were as follows:
Net deferred loan origination fees, included in the amortized costs of loans reflected in the table above, amounted to $5.4 million at June 30, 2023 and $5.2 million at December 31, 2022. Accrued interest receivable on loans amounted to $13.5 million and $13.1 million at June 30, 2023 and December 31, 2022, respectively, and was included in the "Accrued interest receivable" line item on the Company's Consolidated Balance Sheets. Commercial loans originated by other banks in which the Company is a participating institution are carried at the pro-rata share of ownership and amounted to $107.6 million at June 30, 2023 and $94.8 million at December 31, 2022. See also "Loans serviced for others" below for information related to commercial loans participated out to various other institutions. Loans serviced for others At June 30, 2023 and December 31, 2022, the Company was servicing residential mortgage loans owned by investors amounting to $8.3 million and $8.9 million, respectively. Additionally, the Company was servicing commercial loans originated by the Company and participated out to various other institutions amounting to $68.9 million and $59.1 million at June 30, 2023 and December 31, 2022, respectively. Loans serving as collateral Loans designated as qualified collateral and pledged to the FHLB for borrowing capacity as of the dates indicated are summarized below:
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ACL for Loans |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACL for Loans | ACL for Loans There have been no material changes to the Company's ACL for loans methodology, underwriting practices, or credit risk management system used to estimate credit loss exposure since December 31, 2022. See Note 4, "ACL for Loans," to the Company's audited consolidated financial statements contained in the 2022 Annual Report on Form 10-K. Risk ratings and adversely classified loans The Company's loan risk rating system classifies loans depending on risk of loss characteristics. Adversely classified ratings for loans determined to be of weaker credit range from "special mention," for loans that may need additional monitoring, to the more severe adverse classifications of "substandard," "doubtful," and "loss" based on criteria established under banking regulations. The following tables present the amortized cost basis of the Company's loan portfolio risk ratings within portfolio classifications, by origination date, or revolving status as of the dates indicated:
The total amortized cost basis of adversely classified loans amounted to $42.1 million, or 1.26% of total loans, at June 30, 2023, and $47.0 million, or 1.48% of total loans, at December 31, 2022. Past due and non-accrual loans The following tables present an age analysis of past due loans by portfolio classification as of the dates indicated:
_______________________________________ (1)The loan balances in the tables above include loans designated as non-accrual according to their payment due status. At June 30, 2023 and December 31, 2022, all loans past due 90 days or more were carried as non-accrual, however, not all non-accrual loans were 90 days or more past due in their payments. Loans that were less than 90 days past due where reasonable doubt existed as to the full and timely collection of interest or principal have also been designated as non-accrual, despite their payment due status. The following tables present the amortized cost of non-accrual loans by portfolio classification as of the dates indicated:
The ratio of non-accrual loans to total loans amounted to 0.23% and 0.19% at June 30, 2023 and December 31, 2022, respectively. At June 30, 2023 and December 31, 2022, additional funding commitments for non-accrual loans were not material. Collateral dependent loans The total recorded investment in collateral dependent loans amounted to $9.6 million at June 30, 2023 compared to $25.2 million at December 31, 2022. Total accruing collateral dependent loans amounted to $2.1 million while non-accrual collateral dependent loans amounted to $7.5 million as of June 30, 2023. As of December 31, 2022, total accruing collateral dependent loans amounted to $19.5 million, while non-accrual collateral dependent loans amounted to $5.7 million. The following tables present the recorded investment in collateral dependent loans and the related specific allowance by portfolio allocation as of the dates indicated:
At June 30, 2023 and December 31, 2022, additional funding commitments for collateral dependent loans were not material. Loan modifications to borrowers experiencing financial difficulty Effective on January 1, 2023, the Company adopted ASU 2022-02, "Financial Instruments—Credit Losses (Topic 326), Troubled Debt Restructurings ("TDR") and Vintage Disclosures," which eliminated the accounting guidance for TDRs and enhanced the disclosure requirements for loan restructurings made with borrowers experiencing financial difficulty. The adoption did not have a significant impact on the financial statements. The Company continues to work with loan customers experiencing financial difficulty and may enter into loan modifications to the extent deemed to be necessary or appropriate while attempting to achieve the best mutual outcome given the individual financial circumstances and future prospects of the borrower. An assessment of whether a borrower is experiencing financial difficulty is made on the date of the modification. Modifications made for borrowers experiencing financial difficulty may be concessions in the form of principal forgiveness, interest rate reductions, payment deferrals of principal, interest or both, or term extensions, or some combination thereof. When a debt has been previously modified, the Company considers the cumulative effect of modifications made within the prior twelve-month period before the current modification, when determining whether or not a delay in payment resulting from the current modification is insignificant. The following table presents the amortized cost basis of loan modifications made to borrowers experiencing financial difficulty by type of concession granted during the period indicated:
The following table presents the amortized cost basis of loan modifications made to borrowers experiencing financial difficulty by type of concession granted during the period indicated:
The following table presents the financial effect of loan modifications made to borrowers experiencing financial difficulty during the period indicated:
The following table presents the financial effect of loan modifications made to borrowers experiencing financial difficulty during the period indicated:
The Company closely monitors the performance of loans that are modified for borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following table presents the performance status of loans that had been modified within the preceding twelve months for borrowers experiencing financial difficulty, at the period indicated.
During the six months ended June 30, 2023, there were no subsequent defaults on loans that had been modified within the preceding twelve months for borrowers experiencing financial difficulty, and at June 30, 2023, additional funding commitments to borrowers experiencing financial difficulty who were party to a loan modification were immaterial. Prior-period troubled debt restructuring disclosures Prior to adopting the new accounting standard on loan modifications, the Company accounted for modifications of loans to borrowers experiencing financial difficulty as TDRs, when the modification resulted in a concession and specific reserves were charged to the ACL if necessary for the amount of estimated credit loss. The following discussion reflects loans that were considered TDRs prior to January 1, 2023. For further information on the Company's TDR accounting policies, see Note 1, "Summary of Significant Accounting Policies," to the Company's audited consolidated financial statements contained in the 2022 Annual Report on Form 10-K. At June 30, 2022, additional funding commitments for TDR loans were immaterial. The following table presents the number and balance of loans modified as TDRs, by portfolio classification, during the three months indicated:
The following table presents the number and balance of loans modified as TDRs, by portfolio classification, during the six months indicated:
There were no subsequent charge-offs associated with the TDRs noted in the table above during the six months ended June 30, 2022. Payment defaults by portfolio classification, during the three months indicated, on loans modified as TDRs within the preceding twelve months are detailed below:
Payment defaults by portfolio classification, during the six months indicated, on loans modified as TDRs within the preceding twelve months are detailed below:
The following table sets forth the post modification balances of TDRs listed by type of modification for TDRs that occurred during the six-month period indicated:
ACL for loans and provision for credit loss activity The following table presents changes in the provision for credit losses on loans and unfunded commitments during the three- and six-month periods indicated:
ACL for loans The ACL for loans amounted to $56.9 million and $52.6 million at June 30, 2023 and December 31, 2022, respectively. The ACL for loans to total loans ratio was 1.70% and 1.66% at June 30, 2023 and December 31, 2022, respectively. The following tables present changes in the ACL for loans by portfolio classification, during the three months indicated:
The following tables present changes in the ACL for loans by portfolio classification, during the six months indicated:
Reserve for unfunded commitments The Company's reserve for unfunded commitments amounted to $5.0 million at June 30, 2023 and $4.3 million at December 31, 2022. Management believes that the Company's ACL for loans and reserve for unfunded commitments were adequate as of June 30, 2023. Other real estate owned ("OREO") The Company carried no OREO at June 30, 2023 and December 31, 2022. At June 30, 2023, the Company had $1.1 million in consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings were in process according to local requirements of the applicable jurisdictions. The Company had no such loans at December 31, 2022.
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Leases |
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Leases As of June 30, 2023, the Company had 16 facilities contracted under various non-cancelable operating leases, most of which provide options to the Company to extend the lease periods and include periodic rent adjustments. Lease expense for the three and six months ended June 30, 2023 amounted to $397 thousand and $801 thousand, respectively, compared to $400 thousand and $816 thousand for the three and six months ended June 30, 2022, respectively. Variable lease costs and short-term lease expenses included in lease expense during these periods were immaterial. The weighted average remaining lease term for operating leases at June 30, 2023 and June 30, 2022 was 29.0 years and 29.9 years, respectively. The weighted average discount rate was 3.51% at June 30, 2023 and 3.45% at June 30, 2022. At June 30, 2023, the remaining undiscounted cash flows by year of these lease liabilities were as follows:
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Deposits |
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Deposits [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deposits | Deposits Deposits are summarized as follows as of the periods indicated:
All of the Company's deposits outstanding at both June 30, 2023 and December 31, 2022 were customer deposits, and the Company had no brokered deposits at either June 30, 2023 or December 31, 2022. Customer deposits include reciprocal balances from checking, money market deposits and CDs received from participating banks in nationwide deposit networks due to our customers electing to participate in Company offered programs which allow for third-party enhanced Federal Deposit Insurance Corporation ("FDIC") deposit insurance. Under this enhanced deposit insurance program, the equivalent of the customers' original deposited funds comes back to the Company and are carried within the appropriate category under deposits. The Company's balances in these reciprocal products were $796.8 million and $589.7 million at June 30, 2023 and December 31, 2022, respectively.
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Borrowed Funds and Subordinated Debt |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Borrowed Funds and Subordinated Debt | Borrowed Funds and Subordinated Debt Borrowed funds at June 30, 2023 and December 31, 2022 are summarized, as follows:
The Company's borrowed funds at June 30, 2023 and December 31, 2022 were comprised of FHLB advances related to specific lending projects under the FHLB's community development and affordable housing programs as well as a small portion of borrowed funds from the New Hampshire Business Finance Authority borrowing under a New Hampshire community development program. The Company also had outstanding subordinated debt (net of deferred issuance costs) of $59.3 million at June 30, 2023 and $59.2 million at December 31, 2022. The outstanding subordinated notes are due on July 15, 2030 and callable at the Company's option on or after July 15, 2025.
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Derivatives and Hedging Activities |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives and Hedging Activities | Derivatives and Hedging Activities For further information on the Company's derivatives and hedging activities, see Note 9, "Derivatives and Hedging," to the Company's audited consolidated financial statements contained in the 2022 Annual Report on Form 10-K. The tables below present a summary of the Company's derivative financial instruments, notional amounts and fair values at the periods presented:
__________________________________________ (1) Accrued interest balances related to the Company's interest-rate swaps are not included in the fair values above and are immaterial. The Company had no derivatives designated as cash flow hedges at either June 30, 2023 or December 31, 2022. Derivatives designated as hedging instruments Fair value hedges Derivatives designated as fair value hedges are utilized to mitigate the risk of adverse interest-rate fluctuations on specifically identified assets or liabilities. The Company's fair value hedges are used to manage its exposure to changes in the fair value of hedged items caused by changes in interest rates. During the second quarter of 2023, the Company entered into two pay fixed, receive float, interest rate swaps to hedge against fixed-rate commercial real estate loan pools. Each swap has a notional value of $25.0 million and a term of two years. At June 30, 2023, these interest rate swaps were designated as fair value hedges and involve the net settlement of receiving floating-rate payments from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. Derivatives not subject to hedge accounting Interest-rate Contracts Each back-to-back interest-rate swap consists of two interest-rate swaps (a customer swap and offsetting counterparty swap) and amounted to a total number of four interest-rate swaps outstanding at June 30, 2023 and December 31, 2022. As a result of this offsetting relationship, there were no net gains or losses recognized in income on back-to-back swaps during the six months ended June 30, 2023 or June 30, 2022. Interest-rate swaps with counterparties are subject to master netting agreements, while interest-rate swaps with customers are not. At June 30, 2023 and December 31, 2022, all back-to-back swaps with the counterparty were in asset positions, therefore there was no netting reflected in the Company's Consolidated Balance Sheets as of the respective dates. Risk Participation Agreements The Company enters into risk participation agreements ("RPAs") for which the Company has assumed credit risk for customers' performance under interest-rate swap agreements related to the customers' commercial loan and receives fee income commensurate with the risk assumed. The RPAs and the customers' loan are secured by the same collateral. Credit Risk The Company had two active interest-rate swap institutional counterparties which were rated A and A+ by Standard & Poor's and A2 by Moody's, at June 30, 2023. When the Company has credit risk exposure, collateral is posted by counterparties. Collateral posted by counterparties is restricted and not considered an asset of the Company, therefore, it is not carried on the Company's Consolidated Balance Sheets. If the Company posts collateral, the restricted cash is carried on the Company's Consolidated Balance Sheets. At June 30, 2023, the Company had $991 thousand credit risk exposure relating to interest-rate swaps with counterparties and the cash collateral posted by counterparties amounted to $390 thousand. At December 31, 2022, the Company had credit risk exposure relating to interest-rate swaps with counterparties of $708 thousand and the cash collateral posted by counterparties amounted to $20 thousand. Credit-risk-related Contingent Features There have been no material changes to the credit-risk-related contingent provisions contained within the Company's interest-rate swaps with counterparties since December 31, 2022. As of June 30, 2023, the fair value of derivatives related to these agreements was at a net asset position of $991 thousand, which excludes any adjustment for nonperformance risk. The Company has minimum collateral posting thresholds with certain of its derivative counterparties and as of June 30, 2023, has not posted collateral related to these agreements. Other Derivative Related Activity At both June 30, 2023 and December 31, 2022, the Company had one participation loan for which the originating bank utilizes a back-to-back interest-rate swap structure and the Company has assumed a contingent liability commensurate with its participation percentage in the loan. At June 30, 2023, management considers the risk of material swap loss exposure related to this participation loan to be unlikely based on the borrower's financial and collateral strength.Interest-rate lock commitments related to the origination of mortgage loans that will be sold are considered derivative instruments. The commitments to sell loans are also considered derivative instruments. At June 30, 2023 and December 31, 2022, the estimated fair value of the Company's interest-rate lock commitments and commitments to sell these mortgage loans were deemed immaterial.
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Regulatory Capital Requirements |
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Compliance with Regulatory Capital Requirements under Banking Regulations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Regulatory Capital Requirements | Regulatory Capital Requirements As of June 30, 2023 and December 31, 2022, the Company met the definition of "well-capitalized" under the applicable regulations of the Board of Governors of the Federal Reserve System and the Bank qualified as "well-capitalized" under the prompt corrective action regulations of the FDIC and the Basel III capital guidelines. The Company's and the Bank's actual capital amounts and ratios are presented as of June 30, 2023 and December 31, 2022 in the tables below:
__________________________________________ (1)Before application of the capital conservation buffer of 2.50% as of June 30, 2023, and December 31, 2022. See discussion below. (2)For the Bank to qualify as "well-capitalized," it must maintain at least the minimum ratios listed under the regulatory prompt corrective action framework. This framework does not apply to the Company. The Company is subject to the Basel III capital ratio requirements which include a "capital conservation buffer" of 2.50% above the regulatory minimum risk-based capital adequacy requirements shown above. If a banking organization dips into its capital conservation buffer it may be restricted in its activities, including its ability to pay dividends and discretionary bonus payments to its executive officers. Both the Company's and the Bank's actual ratios, as outlined in the table above, exceeded the Basel III risk-based capital requirement with the capital conservation buffer as of June 30, 2023. At June 30, 2023, the capital conservation buffer amounted to $92.6 million for both the Company and the Bank.
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Comprehensive Income (Loss) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive Income (Loss) | Comprehensive Income (Loss) The following table presents a reconciliation of the changes in the components of other comprehensive income (loss) for the dates indicated, including the amount of income tax (expense) benefit allocated to each component of other comprehensive income (loss):
Information on the Company's accumulated other comprehensive income (loss), net of tax, is comprised of the following components as of the periods indicated:
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Stock-Based Compensation |
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Share-Based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | Stock-Based CompensationThere have been no material changes to The Enterprise Bancorp, Inc. 2016 Stock Incentive Plan (the "2016 Plan") since December 31, 2022. As of June 30, 2023, 369,178 shares of Company common stock remained available for future grants under the 2016 Plan. Total stock-based compensation expense was $629 thousand and $1.2 million for the three and six months ended June 30, 2023, compared to $637 thousand and $1.1 million for the three and six months ended June 30, 2022. Stock Option Awards The Company issued no stock options during the six months ended June 30, 2023. The table below provides a summary of the options granted, including the weighted average fair value, the fair value as a percentage of the market value of the stock at the date of grant and the average assumptions used in the model for the prior period:
Options granted during the first six months of 2022 generally vest 50% in year two and 50% in year four, on or about the anniversary date of the awards. The Company utilizes the Black-Scholes option valuation model to determine the per share grant date fair value of stock option grants. The Company recognized stock-based compensation expense related to stock option awards of $46 thousand and $96 thousand for the three and six months ended June 30, 2023, respectively, compared to $52 thousand and $100 thousand for the three and six months ended June 30, 2022, respectively. Restricted Stock Awards Restricted stock awards are granted at the market price of the Company's common stock on the date of the grant. Employee restricted stock awards generally vest over four years in equal portions beginning on or about the first anniversary date of the restricted stock award or are performance-based restricted stock awards that vest upon the Company achieving certain predefined performance objectives. Non-employee director restricted stock awards generally vest over two years in equal portions beginning on or about the first anniversary date of the restricted stock award. The table below provides a summary of restricted stock awards granted during the periods indicated:
Stock-based compensation expense recognized in association with stock awards, mainly restricted stock awards, amounted to $525 thousand and $932 thousand for the three and six months ended June 30, 2023, respectively, compared to $521 thousand and $881 thousand for the three and six months ended June 30, 2022, respectively. Stock in Lieu of Directors' Fees Non-employee members of the Company's Board of Directors (the "Board") may opt to receive newly issued shares of the Company's common stock in lieu of cash compensation for attendance at meetings of the Board and committees of the Board. Stock-based compensation expense related to these directors' fees amounted to $58 thousand and $123 thousand for the three and six months ended June 30, 2023, respectively, compared to $64 thousand and $134 thousand for the three and six months ended June 30, 2022, respectively.
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Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Earnings per Share The table below presents basic earnings per share and the increase in average shares outstanding, using the treasury stock method, for the diluted earnings per share calculation for the periods indicated:
Stock options outstanding that were determined to be anti-dilutive and therefore excluded from the calculation of dilutive shares amounted to 105,719 and 48,373 for the three and six months ended June 30, 2023, respectively, compared to 48,662 and 34,473 for the three and six months ended June 30, 2022, respectively. These stock options, which were not dilutive, may potentially dilute earnings per share in the future. Unvested participating restricted stock awards amounted to 136,939 shares and 106,658 shares as of June 30, 2023 and December 31, 2022, respectively.
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements The FASB defines the fair value of an asset or liability to be the price which a seller would receive in an orderly transaction between market participants (an exit price) and also establishes a fair value hierarchy segregating fair value measurements using three levels of inputs: (Level 1) quoted market prices in active markets for identical assets or liabilities; (Level 2) significant other observable inputs, including quoted prices for similar items in active markets, quoted prices for identical or similar items in markets that are not active, inputs such as interest rates and yield curves, volatilities, prepayment speeds, credit risks and default rates which provide a reasonable basis for fair value determination or inputs derived principally from observed market data; and (Level 3) significant unobservable inputs for situations in which there is little, if any, market activity for the asset or liability. Unobservable inputs must reflect reasonable assumptions that market participants would use in pricing the asset or liability, which are developed based on the best information available under the circumstances. The following tables summarize significant assets and liabilities carried at fair value and placement in the fair value hierarchy at the dates specified:
The Company utilizes third-party pricing vendors to provide valuations on its debt securities. The Company's equity portfolio fair value is measured based on quoted market prices for the shares; therefore, these securities are categorized as Level 1 within the fair value hierarchy. The Bank is required to purchase FHLB stock at par value in association with advances from the FHLB. The stock is issued, redeemed, repurchased and transferred by the FHLB only at their fixed par value. This stock is classified as a restricted investment and carried at FHLB par value which management believes approximates fair value; therefore, these securities are categorized as Level 2 measures. The fair values of derivative assets and liabilities, which are comprised of back-to-back swaps, fair value hedges and risk participation agreements, represent a FASB Level 2 measurement and are based on settlement values adjusted for credit risks and observable market interest-rate curves. The Company utilizes third-party vendors to provide valuations on its derivative assets and liabilities. Refer also to Note 8, "Derivatives and Hedging Activities," this Form 10-Q, contained above, for additional information on the Company's interest-rate swaps. For loans individually assessed and deemed to be collateral dependent management has estimated the value and the probable credit loss by comparing the loan's amortized cost against the expected realizable fair value of the collateral (appraised value, or internal analysis, less estimated cost to sell, adjusted as necessary for changes in relevant valuation factors subsequent to the measurement date). Certain inputs used in these assessments, and possible subsequent adjustments, are not always observable, and therefore, collateral dependent loans carried at realizable fair value are categorized as Level 3 within the fair value hierarchy. A specific reserve is assigned to the collateral dependent loan for the amount of management's estimated probable credit loss. The specific reserve assigned to individually evaluated loans that are collateral dependent amounted to $371 thousand at June 30, 2023, compared to $298 thousand at December 31, 2022. The following table presents additional quantitative information about assets measured at fair value on a non-recurring basis for which the Company utilized Level 3 inputs (significant unobservable inputs for situations in which there is little, if any, market activity for the asset or liability) to determine fair value as of June 30, 2023 and December 31, 2022:
_______________________________ (1)Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses. Estimated Fair Values of Assets and Liabilities In addition to disclosures regarding the measurement of assets and liabilities carried at fair value on the Company's Consolidated Balance Sheets, the Company is also required to disclose fair value information about financial instruments for which it is practicable to estimate that value, whether or not recognized on the Company's Consolidated Balance Sheets. Financial instruments for which the fair value is disclosed but not recognized on the Company's Consolidated Balance Sheets are summarized below. The table includes the carrying value, estimated fair value and its placement in the fair value hierarchy as follows:
Excluded from the tables above are certain financial instruments with carrying values that approximated their fair value at the dates indicated, as they were short-term in nature or payable on demand. These include cash and cash equivalents, accrued interest and non-term deposit accounts. The respective carrying values of these instruments would all be classified within Level 1 in the fair value hierarchy. Also excluded from these tables are the fair values of commitments for unused portions of lines of credit and commitments to originate loans that were short-term, at current market rates and estimated to have no significant change in fair value.
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Supplemental Cash Flow Information |
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Supplemental Cash Flow Information | Supplemental Cash Flow Information The supplemental cash flow information for the six months ended June 30, 2023 and June 30, 2022 is as follows:
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Pay vs Performance Disclosure - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
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Pay vs Performance Disclosure | ||||
Net income | $ 9,684 | $ 8,161 | $ 20,452 | $ 18,448 |
Insider Trading Arrangements |
3 Months Ended |
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Jun. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Summary of Significant Accounting Policies (Policies) |
6 Months Ended |
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Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
Organization of the Company and Basis of Presentation | Organization of the Company and Basis of Presentation The accompanying unaudited consolidated interim financial statements and these notes should be read in conjunction with the December 31, 2022 audited consolidated financial statements and notes thereto contained in the Annual Report on Form 10-K of Enterprise Bancorp, Inc. (the "Company," "Enterprise," "we," or "our") for the year ended December 31, 2022 (the "2022 Annual Report on Form 10-K") as filed with the Securities and Exchange Commission (the "SEC") on March 8, 2023. The Company has not materially changed its significant accounting policies from those disclosed in its 2022 Annual Report on Form 10-K. See Item (e), "Recent Accounting Pronouncements," below in this Note 1. The accompanying unaudited consolidated interim financial statements of the Company include the accounts of the Company and its wholly owned subsidiary, Enterprise Bank and Trust Company, commonly referred to as Enterprise Bank (the "Bank"). The Bank is a Massachusetts trust company and state chartered commercial bank organized in 1989. Substantially all of the Company's operations are conducted through the Bank and its subsidiaries. The Bank's subsidiaries include Enterprise Insurance Services, LLC and Enterprise Wealth Services, LLC, both organized under the laws of the State of Delaware, to engage in insurance sales activities and offer non-deposit investment products and services, respectively. In addition, the Bank has the following subsidiaries that are incorporated in the Commonwealth of Massachusetts and classified as security corporations in accordance with applicable Massachusetts General Laws: Enterprise Security Corporation; Enterprise Security Corporation II; and Enterprise Security Corporation III. The security corporations, which hold various types of qualifying securities, are limited to conducting investment activities that the Bank itself would be allowed to conduct under applicable laws. In February 2023, the Bank organized the EBTC NMTC Investment Fund - CHC, LLC (the "NMTC Investment Fund") under the laws of the State of Delaware, in conjunction with the Bank's investment in a qualifying New Market Tax Credit ("NMTC") project. The NMTC Investment Fund is the Company's only unconsolidated Variable Interest Entity ("VIE"). Otherwise, the services offered through the Bank and its subsidiaries are managed as one strategic unit and represent the Company's only reportable operating segment.
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Organization of the Company and Basis of Presentation - Basis of Accounting | The accompanying unaudited consolidated interim financial statements, and notes thereto, in this Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2023 (this "Form 10-Q"), have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and the SEC instructions for Quarterly Reports on Form 10-Q. In the opinion of management, the accompanying unaudited consolidated interim financial statements reflect all necessary adjustments, consisting of normal recurring accruals and elimination of intercompany balances, for a fair presentation. |
Organization of the Company and Basis of Presentation - Reclassifications | Interim results are not necessarily indicative of results to be expected for the entire year, or any future period. |
Uses of Estimates | Uses of Estimates In preparing the unaudited consolidated interim financial statements in conformity with GAAP, management is required to exercise judgment in determining many of the methodologies, assumptions and estimates to be utilized. These assumptions and estimates affect the reported values of assets and liabilities as of the balance sheet dates and income and expenses for the period then ended. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates should the assumptions and estimates used be incorrect or change over time due to changes in circumstances. Changes in those estimates resulting from continuing changes in the economic environment and other factors will be reflected in the consolidated financial statements and results of operations in future periods. As discussed in the Company's 2022 Annual Report on Form 10-K, the most significant areas in which management applies critical assumptions and estimates are: the estimates of the allowance for credit losses ("ACL") for loans, available for sale securities and reserve for unfunded commitments, and the impairment review of goodwill. Refer to Note 1, "Summary of Significant Accounting Policies," to the Company's audited consolidated financial statements included in the Company's 2022 Annual Report on Form 10-K for accounting policies related to these significant estimates.
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Unconsolidated Variable Interest Entity / Proportional Accounting | Unconsolidated Variable Interest Entity / Proportional Accounting In March 2023, the Bank made an equity contribution to the NMTC Investment Fund, a newly formed Delaware limited liability company, in order to invest in the NMTC program administered by the U.S. Department of the Treasury's Community Development Financial Institutions Fund and allocated to Community Development Entities ("CDE"). The NMTC program provides federal tax incentives for investments in distressed communities and promotes economic improvements through the development of successful businesses in these communities. The NMTCs are available to investors over a seven-year period and are subject to recapture if certain events occur during such period. The Bank invested $3.7 million in the Investment Fund and anticipates receiving $4.8 million of federal tax credits over the next seven years (5% in each of the first three years, and 6% in each of the next four years). The underlying project is structured through a qualified CDE, which in turn has made loans to a qualified active low-income business. The Bank has no unfunded commitments associated with its NMTC investment. The Company has elected to account for the tax equity investment using the proportional amortization method. Under this accounting method, the NMTC Investment Fund is not consolidated with the Company and, instead, the initial cost of the investment is amortized in proportion to the amount of tax credits and other tax benefits received over the allotment period. The investment is carried within the line "Prepaid expenses and other assets" on the Company's Consolidated Balance Sheet and the investment amortization expense and tax credits are presented on a net basis within the line "Provision for income taxes" on the Company's Consolidated Statements of Income. During the three and six months ended June 30, 2023, the related amortization expense amounted to $147 thousand and $191 thousand, respectively, and the related tax credits amounted to $153 thousand and $306 thousand, respectively.
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Income Taxes | Income TaxesDeferred income taxes are recognized based on the expected future tax consequences of differences between the financial statement and tax basis of assets and liabilities, calculated using currently enacted tax rates. Management records net deferred tax assets to the extent we believe these assets will more likely than not be realized. In making this determination, we consider all available positive and negative evidence, including recent financial operations and projected future taxable income. During the second quarter of 2023, the Company sold debt securities with an amortized cost of approximately $87.2 million realizing net losses of $2.4 million. For the majority of the realized losses, the Company had capital gains available for loss carry-back. At June 30, 2023, the Company established a $206 thousand valuation allowance against the capital loss carryforward deferred tax asset, for the amount management believes is not more-likely-than-not to be realized during the five-year capital loss carryforward period. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Accounting pronouncements adopted by the Company In March 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-02, "Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method." ASU 2023-02 permits reporting entities to elect to account for their tax equity investments, regardless of the tax credit program from which the income tax credits are received, using the proportional amortization method if certain conditions are met. The election can be made for each individual qualifying tax credit investment. Under the proportional amortization method, the initial cost of an investment is amortized in proportion to the amount of tax credits and other tax benefits received, with the amortization and tax credits recognized as a component of income tax expense. To qualify for the proportional amortization method, all of the following conditions must be met: (1) It is probable that the income tax credits allocated to the tax equity investor will be available; (2) The tax equity investor does not have the ability to exercise significant influence over the operating and financial policies of the underlying project; (3) Substantially all of the projected benefits are from income tax credits and other income tax benefits; (4) The tax equity investor's projected yield based solely on the cash flows from the income tax credits and other income tax benefits is positive; and (5) The tax equity investor is a limited liability investor in the limited liability entity for both legal and tax purposes, and the tax equity investor's liability is limited to its capital investment. Under the proportional amortization method, the investment shall be tested for impairment when events or changes in circumstances indicate that it is more likely than not that the carrying amount of the investment will not be realized. An impairment loss shall be measured as the amount by which the carrying amount of an investment exceeds its fair value. A previously recognized impairment loss shall not be reversed. ASU 2023-02 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2023. The Company has elected to early adopt ASU 2022-01 effective on January 1, 2023, applying the new guidance to a new investment in NMTC made in the first quarter of 2023, and the adoption did not have a significant impact on the financial statements. In March 2022, the FASB issued ASU 2022-01, "Derivatives and Hedging (Topic 815): Fair Value Hedging—Portfolio Layer Method." This ASU clarifies the guidance on fair value hedge accounting of interest rate risk for portfolios of financial assets. The ASU amends the guidance in ASU 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities," that, among other things, established the "last-of-layer" method for making the fair value hedge accounting for these portfolios more accessible. ASU 2022-01 renames that method the "portfolio layer" method and addresses feedback from stakeholders regarding its application. The Company adopted ASU 2022-01 effective on January 1, 2023 and the adoption did not have a significant impact on the financial statements. In March 2022, the FASB issued ASU 2022-02, "Financial Instruments—Credit Losses (Topic 326), Troubled Debt Restructurings and Vintage Disclosures." This ASU eliminates the accounting guidance for troubled debt restructurings by creditors that have adopted the current expected credit loss ("CECL") methodology for estimating allowances for credit losses and enhances the disclosure requirements for loan restructurings made with borrowers experiencing financial difficulty. In addition, the amendments require a public business entity to disclose current-period gross charge-offs for financing receivables and net investment in leases by year of origination in the vintage disclosures. The Company adopted ASU 2022-02 effective on January 1, 2023, prospectively, and the adoption did not have a significant impact on the financial statements.
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Subsequent Events | Subsequent Events The Company has evaluated subsequent events and transactions from June 30, 2023 through the date this Form 10-Q was filed with the SEC for potential recognition or disclosure as required by GAAP and determined there were no material subsequent events requiring recognition or disclosure. |
Investment Securities (Tables) |
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt Securities, Available-for-Sale Investments Reconciliation | The amortized cost and fair values of debt securities at the dates specified are summarized as follows:
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Schedule of Unrealized Loss on Debt Securities, Available-for-Sale Investments | The following tables summarize the duration of unrealized losses for debt securities at June 30, 2023 and December 31, 2022:
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Debt Securities, Available-for-Sale Investments Classified by Contractual Maturity Date | The contractual maturity distribution at June 30, 2023 of debt securities was as follows:
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Schedule of Realized Gain (Loss) on Sales of Debt Securities, Available-for-Sale Investments | Debt security sales during the three and six months ended June 30, 2023 were made in order to improve the Company's balance sheet positioning and enhance future earnings. Sales of debt securities for the three and six months ended June 30, 2023 and June 30, 2022 are summarized as follows:
_________________________________________ (1)Amortized cost of investments sold is determined on a specific identification basis and includes pending trades based on trade date, if applicable.
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Gain (Loss) on Equity Securities | Gains and losses on equity securities for the three and six months ended June 30, 2023 and June 30, 2022 are summarized as follows:
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Loans (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Loans by Loan Classification | Major classifications of loans and their amortized cost as of the dates indicated were as follows:
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Schedule of Loans Pledged as Collateral | Loans designated as qualified collateral and pledged to the FHLB for borrowing capacity as of the dates indicated are summarized below:
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ACL for Loans (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financing Receivable Credit Quality Indicators | The following tables present the amortized cost basis of the Company's loan portfolio risk ratings within portfolio classifications, by origination date, or revolving status as of the dates indicated:
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Past Due Financing Receivables | The following tables present an age analysis of past due loans by portfolio classification as of the dates indicated:
_______________________________________ (1)The loan balances in the tables above include loans designated as non-accrual according to their payment due status.
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Financing Receivable, Nonaccrual | The following tables present the amortized cost of non-accrual loans by portfolio classification as of the dates indicated:
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Impaired Financing Receivables | The following tables present the recorded investment in collateral dependent loans and the related specific allowance by portfolio allocation as of the dates indicated:
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Troubled Debt Restructurings on Financing Receivables | The following table presents the amortized cost basis of loan modifications made to borrowers experiencing financial difficulty by type of concession granted during the period indicated:
The following table presents the amortized cost basis of loan modifications made to borrowers experiencing financial difficulty by type of concession granted during the period indicated:
The following table presents the financial effect of loan modifications made to borrowers experiencing financial difficulty during the period indicated:
The following table presents the financial effect of loan modifications made to borrowers experiencing financial difficulty during the period indicated:
The following table presents the number and balance of loans modified as TDRs, by portfolio classification, during the three months indicated:
The following table presents the number and balance of loans modified as TDRs, by portfolio classification, during the six months indicated:
Payment defaults by portfolio classification, during the three months indicated, on loans modified as TDRs within the preceding twelve months are detailed below:
Payment defaults by portfolio classification, during the six months indicated, on loans modified as TDRs within the preceding twelve months are detailed below:
The following table sets forth the post modification balances of TDRs listed by type of modification for TDRs that occurred during the six-month period indicated:
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Change in Provisions for Credit Losses | The following table presents changes in the provision for credit losses on loans and unfunded commitments during the three- and six-month periods indicated:
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Allowance for Credit Losses on Financing Receivables | The following tables present changes in the ACL for loans by portfolio classification, during the three months indicated:
The following tables present changes in the ACL for loans by portfolio classification, during the six months indicated:
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Leases (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Lease Liability Maturity Table as Lessee | At June 30, 2023, the remaining undiscounted cash flows by year of these lease liabilities were as follows:
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Deposits (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Banking and Thrift, Interest [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Deposit Liabilities | Deposits are summarized as follows as of the periods indicated:
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Borrowed Funds (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Borrowed Funds Maturity | Borrowed funds at June 30, 2023 and December 31, 2022 are summarized, as follows:
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Derivatives and Hedging Activities (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Derivatives, Fair Value and Classification | The tables below present a summary of the Company's derivative financial instruments, notional amounts and fair values at the periods presented:
__________________________________________ (1) Accrued interest balances related to the Company's interest-rate swaps are not included in the fair values above and are immaterial.
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Regulatory Capital Requirements (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Compliance with Regulatory Capital Requirements under Banking Regulations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Compliance with Regulatory Capital Requirements under Banking Regulations | The Company's and the Bank's actual capital amounts and ratios are presented as of June 30, 2023 and December 31, 2022 in the tables below:
__________________________________________ (1)Before application of the capital conservation buffer of 2.50% as of June 30, 2023, and December 31, 2022. See discussion below. (2)For the Bank to qualify as "well-capitalized," it must maintain at least the minimum ratios listed under the regulatory prompt corrective action framework. This framework does not apply to the Company.
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Comprehensive Income (Loss) (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Comprehensive Income (Loss) Reconciliation of Changes | The following table presents a reconciliation of the changes in the components of other comprehensive income (loss) for the dates indicated, including the amount of income tax (expense) benefit allocated to each component of other comprehensive income (loss):
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Schedule of Accumulated Other Comprehensive Income (Loss) | Information on the Company's accumulated other comprehensive income (loss), net of tax, is comprised of the following components as of the periods indicated:
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Stock-Based Compensation (Tables) |
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | The table below provides a summary of the options granted, including the weighted average fair value, the fair value as a percentage of the market value of the stock at the date of grant and the average assumptions used in the model for the prior period:
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Schedule of Restricted Stock Awards Granted | The table below provides a summary of restricted stock awards granted during the periods indicated:
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Earnings Per Share (Tables) |
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Weighted Average Number of Shares | The table below presents basic earnings per share and the increase in average shares outstanding, using the treasury stock method, for the diluted earnings per share calculation for the periods indicated:
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Fair Value Measurements (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis | The following tables summarize significant assets and liabilities carried at fair value and placement in the fair value hierarchy at the dates specified:
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Quantitative Information About Significant Unobservable Inputs for Fair Value Measurements | The following table presents additional quantitative information about assets measured at fair value on a non-recurring basis for which the Company utilized Level 3 inputs (significant unobservable inputs for situations in which there is little, if any, market activity for the asset or liability) to determine fair value as of June 30, 2023 and December 31, 2022:
_______________________________ (1)Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses.
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Fair Value, by Balance Sheet Grouping | Financial instruments for which the fair value is disclosed but not recognized on the Company's Consolidated Balance Sheets are summarized below. The table includes the carrying value, estimated fair value and its placement in the fair value hierarchy as follows:
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Supplemental Cash Flow (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Elements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Cash Flow, Supplemental Disclosures | The supplemental cash flow information for the six months ended June 30, 2023 and June 30, 2022 is as follows:
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Summary of Significant Accounting Policies (Details) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2023
USD ($)
segment
|
Jun. 30, 2022
USD ($)
|
Jun. 30, 2023
USD ($)
|
Jun. 30, 2022
USD ($)
|
|
Tax Credit Carryforward [Line Items] | ||||
Reportable operating segments | segment | 1 | |||
Federal tax credits, first three years, percent | 5.00% | |||
Federal tax credits, next four years, percent | 6.00% | |||
Debt securities, amortized cost basis | $ 87,198 | $ 0 | $ 87,198 | $ 31,653 |
Debt securities, realized gain (loss) | (2,400) | |||
Deferred tax assets, valuation allowance | $ 206 | $ 206 | ||
Capital loss carryforward period | 5 years | |||
Consolidated Entity, Excluding Consolidated VIE | ||||
Tax Credit Carryforward [Line Items] | ||||
Period available to investors | 7 years | 7 years | ||
Amortization | $ 147 | $ 191 | ||
Investment tax credit | 153 | 306 | ||
Consolidated Entity, Excluding Consolidated VIE | NMTC Investment Fund | ||||
Tax Credit Carryforward [Line Items] | ||||
Noncontrolling Interest in Variable Interest Entity | $ 3,700 | 3,700 | ||
Federal tax credits | $ 4,800 |
Investment Securities - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
Dec. 31, 2022 |
|
Debt Securities, Available-for-sale [Line Items] | |||||
Accrued interest related to AFS debt securities | $ 3,400 | $ 3,400 | $ 4,000 | ||
Callable debt securities, fair value | 131,800 | 131,800 | |||
Sale of debt securities | 84,779 | $ 0 | 84,779 | $ 32,715 | |
Equity securities at fair value | 5,898 | 5,898 | 4,269 | ||
Collateral Pledged | |||||
Debt Securities, Available-for-sale [Line Items] | |||||
Debt securities, pledged as collateral | $ 696,800 | $ 696,800 | $ 804,200 |
Investment Securities - Debt Securities Maturities (Details) - USD ($) $ in Thousands |
Jun. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Amortized Cost | ||
Due in one year or less | $ 41,405 | |
Due after one, but within five years | 85,373 | |
Due after five, but within ten years | 274,555 | |
Due after ten years | 418,671 | |
Amortized Cost | 820,004 | $ 940,227 |
Fair Value | ||
Due in one year or less | 40,647 | |
Due after one, but within five years | 81,634 | |
Due after five, but within ten years | 233,048 | |
Due after ten years | 351,624 | |
Fair Value | $ 706,953 | $ 816,102 |
Investment Securities - Debt Securities Sales (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
|
Investments, Debt and Equity Securities [Abstract] | ||||
Amortized cost of debt securities sold | $ 87,198 | $ 0 | $ 87,198 | $ 31,653 |
Gross realized gains on sales | 0 | 0 | 0 | 1,062 |
Gross realized losses on sales | (2,419) | 0 | (2,419) | 0 |
Total proceeds from sales of debt securities | $ 84,779 | $ 0 | $ 84,779 | $ 32,715 |
Investment Securities - Equity Securities (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
|
Investments, Debt and Equity Securities [Abstract] | ||||
Net gains (losses) recognized during the period on equity securities | $ 189 | $ (429) | $ 173 | $ (495) |
Less: Net losses recognized on equity securities sold during the period | (29) | 0 | (29) | 0 |
Unrealized gains (losses) recognized during the reporting period on equity securities still held at the end of the period | $ 218 | $ (429) | $ 202 | $ (495) |
Loans - Loan Categories Narrative (Details) - USD ($) $ in Millions |
Jun. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Schedule of Loans by Loan Classification [Line Items] | ||
Loan origination fees | $ 5.4 | $ 5.2 |
Accrued interest receivable on loans | 13.5 | 13.1 |
Commercial | ||
Schedule of Loans by Loan Classification [Line Items] | ||
Participation loans amount | 107.6 | 94.8 |
Participations loans sold that are still serviced amount | 68.9 | 59.1 |
Residential mortgages | ||
Schedule of Loans by Loan Classification [Line Items] | ||
Amount of loans serviced for others | $ 8.3 | $ 8.9 |
ACL for Loans - Change In Provisions For Credits Losses (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
|
Financing Receivable, Allowance for Credit Losses [Line Items] | ||||
Provision for credit losses | $ 2,268 | $ 2,409 | $ 5,004 | $ 2,939 |
Provision for credit losses on loans | ||||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||||
Provision for credit losses | 2,043 | 2,195 | 4,361 | 3,020 |
Provision for unfunded commitments | ||||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||||
Provision for credit losses | $ 225 | $ 214 | $ 643 | $ (81) |
ACL for Loans - Other Real Estate Owned (Details) - property |
Jun. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Receivables [Abstract] | ||
OREO, Number of properties owned | 0 | 0 |
Leases - Narrative (Details) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2023
USD ($)
lease
|
Jun. 30, 2022
USD ($)
|
Jun. 30, 2023
USD ($)
lease
|
Jun. 30, 2022
USD ($)
|
|
Leases [Abstract] | ||||
Number of operating leases | lease | 16 | 16 | ||
Operating lease expense | $ | $ 397 | $ 400 | $ 801 | $ 816 |
Weighted average remaining lease term on operating leases | 29 years | 29 years 10 months 24 days | 29 years | 29 years 10 months 24 days |
Weighted average discount rate for operating leases | 3.51% | 3.45% | 3.51% | 3.45% |
Leases - Leases Maturities (Details) - USD ($) $ in Thousands |
Jun. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Lessee, Operating Lease, Liability, Payment, Due [Abstract] | ||
2023 (six remaining months) | $ 721 | |
2024 | 1,435 | |
2025 | 1,441 | |
2026 | 1,452 | |
2027 | 1,454 | |
Thereafter | 32,346 | |
Total lease payments | 38,849 | |
Less: Imputed interest | 14,701 | |
Total lease liability | $ 24,148 | $ 24,415 |
Deposits (Details) - USD ($) $ in Thousands |
Jun. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Banking and Thrift, Interest [Abstract] | ||
Non-interest checking | $ 1,273,968 | $ 1,361,588 |
Interest-bearing checking | 701,701 | 678,715 |
Savings | 310,321 | 326,666 |
Money market | 1,373,816 | 1,381,645 |
CDs $250,000 or less | 244,114 | 187,758 |
CDs greater than $250,000 | 171,678 | 99,434 |
Deposits | 4,075,598 | 4,035,806 |
Reciprocal deposits | $ 796,800 | $ 589,700 |
Borrowed Funds and Subordinated Debt - Narrative (Details) - USD ($) $ in Thousands |
Jun. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Debt Disclosure [Abstract] | ||
Subordinated debt | $ 59,340 | $ 59,182 |
Borrowed Funds and Subordinated Debt - Maturities (Details) - USD ($) $ in Thousands |
Jun. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Balance | ||
Over 5 years | $ 3,334 | $ 3,216 |
Total borrowed funds | $ 3,334 | $ 3,216 |
Rate | ||
Over 5 years | 1.52% | 1.55% |
Total borrowed funds | 1.52% | 1.55% |
Regulatory Capital Requirements - Narrative (Details) - USD ($) $ in Millions |
Jun. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Compliance with Regulatory Capital Requirements under Banking Regulations [Abstract] | ||
Basel III additional capital conservation buffer at full phase-in | 2.50% | 2.50% |
Capital conservation buffer value | $ 92.6 |
Comprehensive Income (Loss) - AOCI Rollforward (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
|
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Balance, beginning | $ 311,318 | $ 310,539 | $ 282,267 | $ 346,895 |
Total other comprehensive income (loss), net | (11,634) | (32,078) | 8,614 | (77,040) |
Balance, ending | 307,490 | 285,110 | 307,490 | 285,110 |
Unrealized Losses on Debt Securities | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Balance, beginning | (75,959) | (40,300) | (96,207) | 4,662 |
Total other comprehensive income (loss), net | (11,634) | (32,078) | 8,614 | (77,040) |
Balance, ending | (87,593) | (72,378) | (87,593) | (72,378) |
Total | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Balance, beginning | (75,959) | (40,300) | (96,207) | 4,662 |
Balance, ending | $ (87,593) | $ (72,378) | $ (87,593) | $ (72,378) |
Stock-Based Compensation - Summary Information for Options Granted (Details) - $ / shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Options granted (in shares) | 0 | 17,060 |
Stock options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Term in years | 10 years | |
Weighted average assumptions used in the fair value model: | ||
Expected volatility | 44.00% | |
Weighted average market price on date of grants (in usd per share) | $ 38.57 | |
Per share weighted average fair value (in usd per share) | $ 14.40 | |
Weighted Average | Stock options | ||
Weighted average assumptions used in the fair value model: | ||
Expected dividend yield | 3.05% | |
Expected life in years | 6 years 6 months | |
Risk-free interest-rate | 2.20% | |
Fair value as a percentage of market value at grant date | 37.00% |
Stock-Based Compensation - Restricted Stock Grants (Details) - Restricted stock - $ / shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock awards granted (in shares) | 73,904 | 53,193 |
Weighted average grant date fair value, stock awards (in usd per share) | $ 32.04 | $ 38.57 |
Non-Employee Director | Two-year vesting | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock awards granted (in shares) | 9,915 | 8,823 |
Employee | Four-year vesting | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock awards granted (in shares) | 32,719 | 22,116 |
Employee | Performance-based vesting | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock awards granted (in shares) | 31,270 | 22,254 |
Earnings Per Share - Schedule of Weighted Average Number of Shares (Details) - shares |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
|
Earnings Per Share [Abstract] | ||||
Basic weighted average common shares outstanding (in shares) | 12,228,081 | 12,107,804 | 12,191,857 | 12,082,041 |
Dilutive shares (in shares) | 16,782 | 43,908 | 26,878 | 54,569 |
Diluted weighted average common shares outstanding (in shares) | 12,244,863 | 12,151,712 | 12,218,735 | 12,136,610 |
Earnings Per Share - Narrative (Details) - shares |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
Dec. 31, 2022 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Antidilutive shares excluded from EPS (in shares) | 105,719 | 48,662 | 48,373 | 34,473 | |
Restricted stock | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Unvested participating restricted stock awards (in shares) | 136,939 | 136,939 | 106,658 |
Supplemental Cash Flow (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
|
Supplemental financial data: | ||
Cash paid for: interest | $ 16,187 | $ 2,924 |
Cash paid for: income taxes | 7,786 | 9,101 |
Cash paid for: lease liability | $ 686 | $ 682 |
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