Enterprise Bancorp Earnings 2019-09-30

EBTC 10Q Quarterly Report

Balance Sheet	Income Statement	Cash Flow

Comparables ($MM TTM)
Ticker	M Cap	Assets	Liab	Rev	G Profit	Net Inc	EBITDA	EV	G Margin	EV/EBITDA	ROA
GNTY	362	2,333	2,083	0	0	23	52	269		5.2	1%
WTBA	357	2,363	2,161	0	0	28	66	380		5.8	1%
BFST	349	2,154	1,876	4	0	20	46	285	0%	6.2	1%
MCB	348	2,961	2,679	0	0	28	69	-85		-1.2	1%
CZNC	348	1,610	1,370	0	0	20	33	308		9.4	1%
EBTC	343	3,168	2,887	0	0	31	62	156		2.5	1%
MCBC	338	1,978	1,773	0	0	30	49	380		7.7	1%
SMMF	328	2,299	2,063	0	0	30	72	272		3.8	1%
BLMT	323	3,030	2,828	0	0	23	71	179		2.5	1%
STXB	318	1,898	1,654	0	0	15	34	236		6.8	1%

10-Q 1 ebtc093019-10q.htm 10-Q Document

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019

Commission File Number: 001-33912

Enterprise Bancorp, Inc.

(Exact name of registrant as specified in its charter)



Massachusetts	04-3308902
(State or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)

222 Merrimack Street, Lowell, Massachusetts	01852
(Address of principal executive offices)	(Zip code)

(978) 459-9000

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	EBTC	NASDAQ Stock Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes o No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). x Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition for "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.



Large accelerated filer o		Accelerated filer x
Non-accelerated filer o	Smaller reporting company o	Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

o Yes x No

As of October 31, 2019, there were 11,816,492 shares of the issuer's common stock outstanding, par value $0.01 per share.

Table of Contents

ENTERPRISE BANCORP, INC.

INDEX



		Page Number
	Cover Page	1

	Index	2
	PART I - FINANCIAL INFORMATION
Item 1	Financial Statements (unaudited)	3
	Consolidated Balance Sheets - September 30, 2019 and December 31, 2018	3
	Consolidated Statements of Income - Three and nine months ended September 30, 2019 and 2018	4
	Consolidated Statements of Comprehensive Income - Three and nine months ended September 30, 2019 and 2018	5
	Consolidated Statement of Changes in Stockholders' Equity - Three and nine months ended September 30, 2019 and 2018	6
	Consolidated Statements of Cash Flows - Nine months ended September 30, 2019 and 2018	8
	Notes to Unaudited Consolidated Interim Financial Statements	9
Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	39
Item 3	Quantitative and Qualitative Disclosures About Market Risk	60
Item 4	Controls and Procedures	60

	PART II - OTHER INFORMATION

Item 1	Legal Proceedings	61
Item 1A	Risk Factors	61
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	61
Item 3	Defaults Upon Senior Securities	61
Item 4	Mine Safety Disclosures	61
Item 5	Other Information	61
Item 6	Exhibits	62
	Signature page	63

Table of Contents

PART I-FINANCIAL INFORMATION

Item 1 -
Financial Statements

ENTERPRISE BANCORP, INC.

Consolidated Balance Sheets

(Unaudited)



(Dollars in thousands, except per share data)	September 30, 2019		December 31, 2018
Assets
Cash and cash equivalents:
Cash and due from banks	$	52,927	$	43,865
Interest-earning deposits	29,482		19,255
Total cash and cash equivalents	82,409		63,120
Investments:
Debt securities at fair value	482,106		431,473
Equity securities at fair value	1,433		1,448
Total investment securities at fair value	483,539		432,921
Federal Home Loan Bank ("FHLB") stock	2,024		5,357
Loans held for sale	3,297		701
Loans, less allowance for loan losses of $33,935 at September 30, 2019 and $33,849 at December 31, 2018	2,438,195		2,353,657
Premises and equipment, net	43,519		37,588
Lease right-of-use asset	19,184		—
Accrued interest receivable	12,356		11,462
Deferred income taxes, net	8,139		11,747
Bank-owned life insurance	30,620		30,138
Prepaid income taxes	1,729		732
Prepaid expenses and other assets	8,057		11,279
Goodwill	5,656		5,656
Total assets	$	3,138,724	$	2,964,358
Liabilities and Stockholders' Equity
Liabilities
Deposits:
Customer deposits	$	2,784,393	$	2,507,999
Brokered deposits	—		56,783
Total deposits	2,784,393		2,564,782
Borrowed funds	4,177		100,492
Subordinated debt	14,869		14,860
Lease liability	18,250		—
Accrued expenses and other liabilities	25,433		27,948
Accrued interest payable	920		979
Total liabilities	2,848,042		2,709,061
Commitments and Contingencies
Stockholders' Equity
Preferred stock, $0.01 par value per share; 1,000,000 shares authorized; no shares issued	—		—
Common stock, $0.01 par value per share; 40,000,000 shares authorized; 11,816,071 shares issued and outstanding at September 30, 2019 and 11,708,218 shares issued and outstanding at December 31, 2018	118		117
Additional paid-in capital	93,459		91,281
Retained earnings	184,994		165,183
Accumulated other comprehensive income (loss)	12,111		(1,284		)
Total stockholders' equity	290,682		255,297
Total liabilities and stockholders' equity	$	3,138,724	$	2,964,358

See the accompanying notes to the unaudited consolidated interim financial statements.

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ENTERPRISE BANCORP, INC.

Consolidated Statements of Income

(Unaudited)



	Three months ended September 30,					Nine months ended September 30,
(Dollars in thousands, except per share data)	2019		2018			2019		2018
Interest and dividend income:
Loans and loans held for sale	$	30,938	$	28,109		$	90,973	$	81,786
Investment securities	3,278		2,742			9,785		7,835
Other interest-earning assets	632		497			1,688		818
Total interest and dividend income	34,848		31,348			102,446		90,439
Interest expense:
Deposits	5,158		3,697			15,156		8,770
Borrowed funds	36		6			315		332
Subordinated debt	233		233			692		692
Total interest expense	5,427		3,936			16,163		9,794
Net interest income	29,421		27,412			86,283		80,645
Provision for loan losses	1,025		750			1,580		2,650
Net interest income after provision for loan losses	28,396		26,662			84,703		77,995
Non-interest income:
Wealth management fees	1,407		1,388			4,077		4,214
Deposit and interchange fees	1,790		1,552			5,041		4,608
Income on bank-owned life insurance, net	158		167			482		505
Net gains (losses) on sales of debt securities	—		(34		)	146		(33		)
Net gains on sales of loans	139		47			244		179
Other income	655		604			2,035		1,775
Total non-interest income	4,149		3,724			12,025		11,248
Non-interest expense:
Salaries and employee benefits	14,382		13,026			41,982		38,479
Occupancy and equipment expenses	2,034		2,110			6,342		6,304
Technology and telecommunications expenses	1,863		1,568			5,290		4,760
Advertising and public relations expenses	430		530			1,927		2,284
Audit, legal and other professional fees	528		435			1,389		1,361
Deposit insurance premiums	16		418			733		1,264
Supplies and postage expenses	232		236			718		734
Other operating expenses	1,613		1,652			5,320		5,044
Total non-interest expense	21,098		19,975			63,701		60,230
Income before income taxes	11,447		10,411			33,027		29,013
Provision for income taxes	2,445		2,429			7,566		6,632
Net income	$	9,002	$	7,982		$	25,461	$	22,381

Basic earnings per share	$	0.76	$	0.68		$	2.16	$	1.92
Diluted earnings per share	$	0.76	$	0.68		$	2.15	$	1.91

Basic weighted average common shares outstanding	11,808,603		11,697,951			11,779,629		11,671,494
Diluted weighted average common shares outstanding	11,843,497		11,770,719			11,820,388		11,745,935

See the accompanying notes to the unaudited consolidated interim financial statements.

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ENTERPRISE BANCORP, INC.

Consolidated Statements of Comprehensive Income

(Unaudited)



	Three months ended September 30,						Nine months ended September 30,
(Dollars in thousands)	2019			2018			2019			2018
Net income	$	9,002		$	7,982		$	25,461		$	22,381
Other comprehensive income (loss), net of taxes:
Gross unrealized holding gains (losses) on debt securities arising during the period	2,891			(3,363		)	17,385			(12,467		)
Income tax (expense) benefit	(642		)	752			(3,876		)	2,787
Net unrealized holding gains (losses), net of tax	2,249			(2,611		)	13,509			(9,680		)
Less: reclassification adjustment for net gains (losses) included in net income
Net realized gains (losses) on sales of debt securities during the period	—			(34		)	146			(33		)
Income tax (expense) benefit	—			7			(32		)	6
Reclassification adjustment for gains (losses) realized, net of tax	—			(27		)	114			(27		)

Total other comprehensive income (loss), net	2,249			(2,584		)	13,395			(9,653		)
Comprehensive income	$	11,251		$	5,398		$	38,856		$	12,728

See the accompanying notes to the unaudited consolidated interim financial statements.

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ENTERPRISE BANCORP, INC.

Consolidated Statement of Changes in Stockholders' Equity

(Unaudited)



	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		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income/(Loss)			Total Stockholders' Equity
Balance at December 31, 2018	11,708,218		$	117	$	91,281		$	165,183		$	(1,284	)	$	255,297
Net income								8,696						8,696
Other comprehensive income, net											3,134			3,134
Common stock dividend paid ($0.16 per share)								(1,875		)				(1,875		)
Common stock issued under dividend reinvestment plan	9,341		—		298									298
Common stock issued, other	264		—		8									8
Stock-based compensation	62,523		1		598									599
Net settlement for employee taxes on restricted stock and options	(2,741	)	—		(240		)							(240		)
Stock options exercised, net	20,509		—		144									144
Balance at March 31, 2019	11,798,114		118		92,089			172,004			1,850			266,061
Net income								7,763						7,763
Other comprehensive income, net											8,012			8,012
Common stock dividend paid ($0.16 per share)								(1,887		)				(1,887		)
Common stock issued under dividend reinvestment plan	10,503		—		294									294
Common stock issued, other	946		—		28									28
Stock-based compensation	(347	)	—		457									457
Net settlement for employee taxes on restricted stock and options	(3,828	)	—		(113		)							(113		)
Stock options exercised, net	620		—		12									12
Balance at June 30, 2019	11,806,008		118		92,767			177,880			9,862			280,627
Net income								9,002						9,002
Other comprehensive income, net											2,249			2,249
Common stock dividend paid ($0.16 per share)								(1,888		)				(1,888		)
Common stock issued under dividend reinvestment plan	10,345		—		293									293
Common stock issued, other	634		—		19									19
Stock-based compensation	(139	)	—		411									411
Net settlement for employee taxes on restricted stock and options	(1,654	)	—		(49		)							(49		)
Stock options exercised, net	877		—		18									18
Balance at September 30, 2019	11,816,071		$	118	$	93,459		$	184,994		$	12,111		$	290,682

See the accompanying notes to the unaudited consolidated interim financial statements.

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ENTERPRISE BANCORP, INC.

Consolidated Statement of Changes in Stockholders' Equity (Continued)

(Unaudited)



	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		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income/(Loss)			Total Stockholders' Equity
Balance at December 31, 2017	11,609,853		$	116	$	88,205		$	143,073		$	416		$	231,810
Net income								6,825						6,825
Other comprehensive loss, net											(6,264		)	(6,264		)
Common stock dividend paid ($0.145 per share)								(1,686		)				(1,686		)
Common stock issued under dividend reinvestment plan	12,765		—		397									397
Common stock issued, other	1,138		—		38									38
Stock-based compensation	51,488		1		590									591
Net settlement for employee taxes on restricted stock and options	(7,561	)	—		(286		)							(286		)
Stock options exercised, net	15,231		—		215									215
Balance at March 31, 2018	11,682,914		117		89,159			148,212			(5,848		)	231,640
Net income								7,574						7,574
Other comprehensive loss, net											(805		)	(805		)
Common stock dividend paid ($0.145 per share)								(1,692		)				(1,692		)
Common stock issued under dividend reinvestment plan	9,885		—		396									396
Common stock issued, other	823		—		30									30
Stock-based compensation	(303	)	—		438									438
Net settlement for employee taxes on restricted stock and options	(1,611	)	—		(76		)							(76		)
Stock options exercised, net	4,496		—		72									72
Balance at June 30, 2018	11,696,204		117		90,019			154,094			(6,653		)	237,577
Net income								7,982						7,982
Other comprehensive loss, net											(2,584		)	(2,584		)
Common stock dividend paid ($0.145 per share)								(1,696		)				(1,696		)
Common stock issued under dividend reinvestment plan	7,601		—		268									268
Common stock issued, other	1,014		—		38									38
Stock-based compensation	(233	)	—		451									451
Net settlement for employee taxes on restricted stock and options	(1,910	)	—		(72		)							(72		)
Stock options exercised, net	1,198		—		21									21
Balance at September 30, 2018	11,703,874		$	117	$	90,725		$	160,380		$	(9,237	)	$	241,985

See the accompanying notes to the unaudited consolidated interim financial statements.

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ENTERPRISE BANCORP, INC.

Consolidated Statements of Cash Flows

(Unaudited)



	Nine months ended September 30,
(Dollars in thousands)	2019			2018
Cash flows from operating activities:
Net income	$	25,461		$	22,381
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	1,580			2,650
Depreciation and amortization	4,553			5,158
Stock-based compensation expense	1,405			1,386
Income on bank-owned life insurance, net	(482		)	(505		)
Net (gains) losses on sales of debt securities	(146		)	33
Mortgage loans originated for sale	(16,049		)	(8,850		)
Proceeds from mortgage loans sold	13,697			8,619
Net gains on sales of loans	(244		)	(179		)
Net gains on equity securities	(275		)	(12		)
Net gains on sales of OREO	(34		)	—
Changes in:
Increase in other assets	(2,202		)	(4,503		)
(Decrease) increase in other liabilities	(694		)	753
Net cash provided by operating activities	26,570			26,931
Cash flows from investing activities:
Proceeds from sales of debt securities	13,623			13,359
Net proceeds from sales of FHLB capital stock	3,333			2,622
Net proceeds from the sale (purchases) of equity securities	290			(1,251		)
Proceeds from maturities, calls and pay-downs of debt securities	36,150			26,664
Purchase of debt securities	(83,583		)	(90,023		)
Net increase in loans	(86,373		)	(41,619		)
Additions to premises and equipment, net	(9,368		)	(4,178		)
Proceeds from OREO sales	289			—
Net cash used in investing activities	(125,639		)	(94,426		)
Cash flows from financing activities:
Net increase in deposits	219,611			170,350
Net decrease in borrowed funds	(96,315		)	(88,503		)
Cash dividends paid	(5,650		)	(5,074		)
Proceeds from issuance of common stock	940			1,167
Net settlement for employee taxes on restricted stock and options	(402		)	(434		)
Proceeds from stock option exercises	174			308
Net cash provided by financing activities	118,358			77,814

Net increase in cash and cash equivalents	19,289			10,319
Cash and cash equivalents at beginning of period	63,120			54,806
Cash and cash equivalents at end of period	$	82,409		$	65,125

See accompanying notes to the unaudited consolidated interim financial statements.

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ENTERPRISE BANCORP, INC.

Notes to the Unaudited Consolidated Interim Financial Statements


(1)	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, 2018 audited consolidated financial statements and notes thereto contained in the 2018 Annual Report on Form 10-K of Enterprise Bancorp, Inc. as filed with the Securities and Exchange Commission (the "SEC") on March 13, 2019 (the "2018 Annual Report on Form 10-K"). The Company has not materially changed its significant accounting policies from those disclosed in its 2018 Annual Report on Form 10-K. See Item (f) "Recent Accounting Pronouncements," under the subheading "Accounting pronouncements adopted by the Company," below in this Note 1.

The accompanying unaudited consolidated interim financial statements of Enterprise Bancorp, Inc. (the "Company," "Enterprise," "we," or "our"), a Massachusetts corporation, 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, 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 securities investment activities that the Bank itself would be allowed to conduct under applicable laws.

The Company's headquarters and the Bank's main office are located at 222 Merrimack Street in Lowell, Massachusetts. At September 30, 2019, the Company had 24 full service branch banking offices serving the Greater Merrimack Valley, Nashoba Valley and North Central regions of Massachusetts and Southern New Hampshire (Southern Hillsborough and Rockingham counties). The Company also has received regulatory approval to open branches in Lexington, Massachusetts and North Andover, Massachusetts, and we anticipate that these offices will open in early 2020 and summer 2020, respectively. Through the Bank and its subsidiaries, the Company offers a range of commercial, residential and consumer loan products, deposit products and cash management services, electronic and digital banking options, and insurance services. The Company also provides a range of wealth management, wealth services and trust services delivered via two channels, Enterprise Wealth Management and Enterprise Wealth Services. 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 Federal Deposit Insurance Corporation (the "FDIC") and the Massachusetts Division of Banks (the "Division") have regulatory authority over the Bank. The Bank is also subject to certain regulatory requirements of the Board of Governors of the Federal Reserve System (the "Federal Reserve Board") and, with respect to its New Hampshire branch operations, the New Hampshire Banking Department. The business and operations of the Company are subject to the regulatory oversight of the Federal Reserve Board. The Division also retains supervisory jurisdiction over the Company.

The accompanying unaudited consolidated interim financial statements and notes thereto have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and the instructions for SEC Form 10-Q through the rules and interpretive releases of the SEC under federal securities law. In the opinion of management, the accompanying unaudited consolidated interim financial statements reflect all necessary adjustments consisting of normal recurring accruals for a fair presentation. All significant intercompany balances and transactions have been eliminated in the accompanying unaudited consolidated interim financial statements. Certain previous years' amounts in the audited consolidated financial statements, and notes thereto, have been reclassified to conform to the current year's presentation. Interim results are not necessarily indicative of results to be expected for the entire year, or any future period.

The Company has evaluated subsequent events and transactions from September 30, 2019 through the date this Quarterly Report on Form 10-Q (this "Form 10-Q") was filed with the SEC for potential recognition or disclosure as required by GAAP and determined that there were no material subsequent events requiring recognition or disclosure.



Table of Contents	ENTERPRISE BANCORP, INC. Notes to the Unaudited Consolidated Interim Financial Statements

(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 2018 Annual Report on Form 10-K, the three most significant areas in which management applies critical assumptions and estimates are: the estimates of the allowance for loan losses, impairment review of investment securities, 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 2018 Annual Report on Form 10-K for accounting policies related to these significant estimates.

Certain of the Company's derivative agreements contain provisions for collateral to be posted if the derivative exposure exceeds a threshold amount. When the Company has pledged cash as collateral for this purpose, the cash is carried as restricted cash within "Interest-earning deposits." See Note 8, "Derivatives and Hedging Activities," to the Company's unaudited consolidated interim financial statements below for more information about the Company's collateral related to its derivatives.

The Bank is also required by the Federal Reserve Bank of Boston ("FRB") to maintain in reserves certain amounts of vault cash and/or deposits with the FRB. The average daily cash balance on hand for FRB reserve requirements included in "Cash and Due from Banks" was approximately $7.5 million, based on the two-week computation period encompassing September 30, 2019.

As a member of the FHLB, the Company is required to purchase certain levels of FHLB capital stock at par value in association with outstanding advances from the FHLB. From time to time, the FHLB may initiate the repurchase, at par value, of "excess" levels of its capital stock held by member banks. This stock is classified as a restricted investment and is carried at cost, which management believes approximates fair value. FHLB stock represents the only restricted investment held by the Company.

Management regularly reviews its holdings of FHLB stock for other-than-temporary impairment ("OTTI"). Based on management's periodic review, the Company has not recorded any OTTI charges on this investment to date. If it was determined that a write-down of FHLB stock was required, impairment would be recognized through a charge to earnings.

See Note 2, "Investment Securities," to the Company's unaudited consolidated interim financial statements below for additional information on management's OTTI review.

(d) Revenue Recognition-Accounting Standard Codification ("ASC") Topic 606

While the majority of the Company's revenue is generated from contracts with customers, our primary sources of revenue, interest and dividend income (primarily loan interest income), are outside of the scope of ASC 606, "Revenue from Contracts with Customers-Topic 606," and are accounted for under other ASC topics. The core principles of this standard require an entity to recognize revenue to depict the transfer of goods and services to customers as performance obligations are satisfied.

The primary areas of income within the scope of ASC 606, wealth management fees and deposit and interchange fees, which are components of non-interest income on the Company's consolidated statements of income, are discussed below.

Wealth management fees consist of income generated through Enterprise Wealth Management and Enterprise Wealth Services. Enterprise Wealth Management income is primarily generated by managing customers' financial assets. Revenue is recognized as our performance obligation is completed each month. Enterprise Wealth Services revenue is generated through a third-party arrangement to refer, manage and service customers. For new sales and referrals along with transactional type charges, the performance obligation is based on a point in time and the payment is received and revenue is recognized in the



Table of Contents	ENTERPRISE BANCORP, INC. Notes to the Unaudited Consolidated Interim Financial Statements

same month as the revenue-generating activity. For managing and servicing customers, revenue is recognized when our performance obligation is completed each month.

Deposit and interchange fees are comprised of deposit account related charges and income generated from electronic payment interchanges. Deposit account charges consist of certain transactional analysis fees net of earning balance credits, monthly account service fees, and transactional fees such as overdraft fees. Analysis and monthly account services fees are recognized over the period the service is performed. For transactional fees, the performance obligation and the revenue are recognized at a point of time and payment is typically received as the service is rendered. Interchange income is generated primarily from retail debit card transactions processed through the card payment network. The performance obligation and the revenue are recognized when the service is performed.

The following non-interest income components are not subject to ASC 606: income on bank-owned life insurance ("BOLI"), net gains/losses on sales of investment securities, and net gains on sales of loans, and are covered under other ASC topics. The remaining revenue items in non-interest income are not material.

See also Note 1, "Summary of Significant Accounting Policies," to the Company's audited consolidated financial statements in the Company's 2018 Annual Report on Form 10-K for additional accounting policies on revenue recognition related to income generated on investments, gains and losses on debt security sales, net gains on loans held for sale, and loans.

(e) Income Taxes

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and in the states of Massachusetts and New Hampshire within the directives of the respective enacted tax legislation. The Company uses the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax expense or benefit attributable to differences between the financial statement carrying amounts and the tax basis of assets and liabilities. The deferred tax assets and liabilities are reflected at currently-enacted income tax rates applicable to the period in which the deferred tax assets or liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities will be adjusted accordingly through the provision for income taxes in the period that includes the enactment date.

The Company's policy is to classify interest resulting from underpayment of income taxes as income tax expense in the first period the interest would begin accruing according to the provisions of the relevant tax law. The Company classifies penalties resulting from underpayment of income taxes as income tax expense in the period for which the Company claims or expects to claim an uncertain tax position or in the period in which the Company's judgment changes regarding an uncertain tax position.

The income tax provisions will differ from the expense that would result from applying the federal statutory rate to income before taxes, due primarily to the impact of state tax expense, tax-exempt interest from certain investment securities, loans and BOLI and tax impact from equity compensation activity.

The Company did not have any unrecognized tax benefits accrued as income tax liabilities or receivables or as deferred tax items at September 30, 2019. The Company is subject to U.S. federal and state income tax examinations by taxing authorities for the 2015 through 2018 tax years.



Table of Contents	ENTERPRISE BANCORP, INC. Notes to the Unaudited Consolidated Interim Financial Statements

(f) Recent Accounting Pronouncements

The tables below summarize recent accounting pronouncements issued by the Financial Accounting Standards Board ("FASB") that were either recently adopted by the Company or have not yet been adopted. For pronouncements not yet adopted, the effective date listed below is in line with the required adoption date for public business entities, such as the Company, though certain accounting pronouncements may permit early adoption. For more detailed information regarding these pronouncements, refer to the FASB's Accounting Standards Updates ("ASU").



Accounting pronouncements adopted by the Company

Standard/Adoption Date	Description	Effect on Financial Statements or Other Significant Matters
ASU 2016-02, Leases (ASC Topic 842) January 1, 2019	This ASU supersedes previous leasing guidance in Topic 840, and lessees are now required to recognize lease (right-of-use or "ROU") assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months.	See Note 5, "Leases," to the Company's unaudited consolidated interim financial statements, contained below, for further information on the impact of the standard's adoption on the Company.
ASU 2017-02, Derivatives and Hedging (ASC Topic 815): Targeted Improvements to Accounting for Hedging Activities January 1, 2019	The objective of the ASU is to better align hedge accounting with an organization's risk management activities in the financial statements. In addition, the ASU simplifies the application of hedge accounting guidance in areas where practice issues exist. The amendments expand the strategies that qualify for hedge accounting, change how many hedging relationships are presented in the financial statements and simplify the application of hedge accounting in certain situations, reducing the operational complexities associated with certain existing strategies. New or modified disclosures are required, primarily for fair value and cash flow hedges.	The Company currently does not hold any instruments that meet hedge accounting requirements and therefore the adoption of this ASU in January 2019 did not have an impact on the Company's unaudited consolidated interim financial statements, results of operations or disclosures for the periods covered by the Form 10-Q, however, the Company may utilize hedging strategies in the future.
ASU No. 2018-07, Compensation-Stock-Based Compensation (ASU Topic 718): Improvements to Nonemployee Shared-Based Payment Accounting January 1, 2019	The amendments in the ASU expand the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from non-employees except for share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract. Additionally, Topic 718 has been updated for specific guidance on inputs to an option pricing model and the attribution of cost (that is, the period of time over which share-based payment awards vest and the pattern of cost recognition over that period).	The adoption of this standard in January 2019 did not have a material impact on the Company's unaudited consolidated interim financial statements, results of operations or disclosures for the periods covered by the Form 10-Q. See Note 9, "Stockholders' Equity."



Table of Contents	ENTERPRISE BANCORP, INC. Notes to the Unaudited Consolidated Interim Financial Statements



Accounting pronouncements not yet adopted by the Company

Standard/Anticipated Adoption Date	Description	Effect on Financial Statements or Other Significant Matters
ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments January 1, 2020	The amendments in this ASU require a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. Previously, when credit losses were measured under GAAP, an entity generally only considered past events and current conditions in measuring the incurred loss and generally recognition of the full amount of credit losses was delayed until the loss was probable of occurring. The amendments in this ASU eliminate the probable initial recognition threshold in current GAAP and, instead, reflect an entity's current estimate of all expected credit losses (commonly known as "CECL"). The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the report amount. An entity must use judgment in determining the relevant information and estimation methods that are appropriate in its circumstances. The income statement reflects the measurement of credit losses for newly recognized financial assets, as well as the expected increases or decreases of expected credit losses that have taken place during the period. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset. Credit losses on available-for-sale debt securities should be measured in a manner similar to current GAAP. However, the amendments in this ASU require that credit losses be presented as an allowance rather than as a write-down. Unlike current GAAP, the ASU provides for reversals of credit losses in future period net income in situations where the estimate of loss declines. An entity will apply the amendments in this ASU through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (that is, a modified-retrospective approach).	As of September 30, 2019, the Company continues to work through the implementation plan, including reviewing and validating the methodology and assumptions to be utilized, and is on target for adoption of the new credit standard on January 1, 2020. Implementation will be recorded through a cumulative effect adjustment to retained earnings⁽¹⁾. The Company is still assessing the impact of the adoption of ASU No. 2016-13 on its operations, financial results, disclosures, and controls. ⁽¹⁾In December 2018, banking regulators issued a final rule, effective April 1, 2019, that addresses the regulatory capital treatment of credit loss allowances under the CECL methodology and allows banking organizations an option to phase in the day-one regulatory capital effects of CECL adoption over three years. For regulatory capital purposes the Company will phase in the adoption adjustment over the allowable three-year phase in period.
ASU No. 2017-04, Intangibles-Goodwill and Other (ASU Topic 350)- Simplifying the Test for Goodwill Impairment January 1, 2020	The main provision in this ASU eliminated Step 2 of the goodwill impairment test and instead requires an entity to perform its annual, or interim, goodwill impairment test by comparing the fair value of the reporting unit with its carrying amount. An impairment charge would be recognized for the amount the carrying value exceeds the reporting unit's fair value as long as the amount recognized does not exceed the amount of goodwill allocated to the reporting unit.	Goodwill carried on the Company's consolidated financial statements was $5.7 million at both September 30, 2019 and December 31, 2018. This asset is related to the Company’s acquisition of two branch offices in July 2000. The Company does not expect the adoption of ASU No. 2017-04 to have a material impact on the Company's consolidated financial statements and results of operations.
ASU No. 2018-13, Fair Value Measurement (ASU Topic 820)-Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement January 1, 2020	The amendments in this ASU modify the disclosure requirements primarily related to level 3 fair value measurements of the fair value hierarchy.	The Company does not expect the adoption of ASU No. 2018-13 to have a material impact on the Company's consolidated financial statements and results of operations because this ASU primarily relates to disclosure requirements.



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Accounting pronouncements not yet adopted by the Company (continued)

Standard/Anticipated Adoption Date	Description	Effect on Financial Statements or Other Significant Matters
ASU No.2018-15, Intangibles-Goodwill and Other- Internal-Use Software (ASU Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract January 1, 2020	The major provision in the amendments in this ASU require an entity to capitalize certain implementation costs incurred in a hosting arrangement that is a service contract in accordance with current GAAP for internal-use software and expense these costs over the term of the hosting arrangement. Additionally, these capitalized implementation costs are required to be reviewed for impairment in accordance with current GAAP for internal-use software. The amendments in this ASU should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption.	The Company does not expect the adoption of ASU No. 2018-15 to have a material impact on the Company's consolidated financial statements and results of operations.
ASU No. 2018-14, Compensation-Retirement Benefits-Defined Benefit Plans-General (ASU Subtopic 715-20) - Disclosure Framework- Changes to the Disclosure Requirements for Defined Benefit Plans January 1, 2021	The amendments in this ASU modify the disclosure requirements on defined benefit plans including requiring disclosures about significant gains and losses related to changes in the benefit obligation.	The adoption of ASU No. 2018-14 will not have a material impact on the Company's consolidated financial statements and results of operations because this ASU primarily relates to disclosure requirements and the balances of the benefit plans impacted by this ASU are immaterial to the Company.

(2) Investment Securities

As of September 30, 2019 and December 31, 2018, the investment portfolio was primarily comprised of debt securities, with a small portion of the portfolio invested in equity securities.

See also item (c), "Restricted Cash and Investments," contained in Note 1, "Summary of Significant Accounting Policies," to the Company's unaudited consolidated interim financial statements, contained above, for further information regarding the Company's FHLB stock. See Note 13, "Fair Value Measurements," to the Company's unaudited consolidated interim financial statements, contained below, for further information regarding the Company's fair value measurements for investment securities.



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Debt Securities

The amortized cost and fair values of debt securities at the dates specified are summarized as follows:



	September 30, 2019
(Dollars in thousands)	Amortized cost		Unrealized gains		Unrealized losses		Fair Value
Federal agency obligations⁽¹⁾	$	999	$	5	$	—	$	1,004
Residential federal agency MBS⁽¹⁾	178,494		2,792		134		181,152
Commercial federal agency MBS⁽¹⁾	111,796		4,257		—		116,053
Municipal securities	160,825		8,153		—		168,978
Corporate bonds	13,985		479		1		14,463
Certificate of deposits⁽²⁾("CDs")	454		2		—		456
Total debt securities, at fair value	$	466,553	$	15,688	$	135	$	482,106



	December 31, 2018
(Dollars in thousands)	Amortized cost		Unrealized gains		Unrealized losses		Fair Value
Federal agency obligations⁽¹⁾	$	7,994	$	—	$	19	$	7,975
Residential federal agency MBS⁽¹⁾	174,701		633		2,608		172,726
Commercial federal agency MBS⁽¹⁾	93,800		609		430		93,979
Municipal securities	141,747		1,122		826		142,043
Corporate bonds	13,967		24		185		13,806
Certificates of deposits⁽²⁾	950		—		6		944
Total debt securities, at fair value	$	433,159	$	2,388	$	4,074	$	431,473

__________________________________________


(1)	These categories may include investments issued or guaranteed by government sponsored enterprises such as Fannie Mae ("FNMA"), Freddie Mac ("FHLMC"), Federal Farm Credit Bank ("FFCB"), or one of several Federal Home Loan Banks, as well as, investments guaranteed by Ginnie Mae ("GNMA"), a wholly-owned government entity.


(2)	CDs represent term deposits issued by banks that are subject to FDIC insurance and purchased on the open market.

Included in the residential and commercial federal agency mortgage-backed securities ("MBS") categories were collateralized mortgage obligations ("CMOs") issued by U.S. agencies with fair values totaling $272.6 million and $242.8 million at September 30, 2019 and December 31, 2018, respectively. Included in municipal securities were tax exempt municipal securities with fair values totaling $100.1 million and $107.3 million at September 30, 2019 and December 31, 2018, respectively.

As of the dates reflected in the tables above, all of the Company's debt securities were classified as available-for-sale and carried at fair value.

Net unrealized appreciation and depreciation on debt securities available-for-sale, net of applicable income taxes, are reflected as a component of accumulated other comprehensive income (loss). The net unrealized gain or loss in the Company's debt security portfolio fluctuates as market interest rates rise and fall. Due to the fixed rate nature of this portfolio, as market rates fall, the value of the portfolio rises, and as market rates rise, the value of the portfolio declines. The unrealized gains or losses on debt securities will also decline as the securities approach maturity. Unrealized losses on debt securities that are deemed OTTI are generally charged to earnings, as described further in Note 1, "Summary of Significant Accounting Policies," under Item (e), "Investments," to the Company's audited consolidated financial statements contained in the Company's 2018 Annual Report on Form 10-K. Gains or losses will be recognized in the income statement if the securities are sold.



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The following tables summarize debt securities with unrealized losses, due to the fair values having declined below the amortized costs of the individual investments, by the duration of their continuous unrealized loss positions at September 30, 2019 and December 31, 2018:



	September 30, 2019
	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
Residential federal agency MBS	$	23,095	$	63	$	5,088	$	71	$	28,183	$	134	9
Corporate bonds	—		—		1,071		1		1,071		1		6
Total temporarily impaired debt securities	$	23,095	$	63	$	6,159	$	72	$	29,254	$	135	15



	December 31, 2018
	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	$	997	$	1	$	6,978	$	18	$	7,975	$	19	3
Residential federal agency MBS	26,147		597		81,158		2,011		107,305		2,608		25
Commercial federal agency MBS	3,258		11		18,717		419		21,975		430		9
Municipal securities	15,036		108		41,265		718		56,301		826		83
Corporate bonds	5,277		36		5,653		149		10,930		185		63
CDs	—		—		944		6		944		6		4
Total temporarily impaired debt securities	$	50,715	$	753	$	154,715	$	3,321	$	205,430	$	4,074	187

During the nine months ended September 30, 2019 and 2018, the Company did not record any fair value impairment charges OTTI on its investments in debt securities. At September 30, 2019, management did not consider any debt securities to have OTTI. Management regularly reviews the portfolio for debt securities with unrealized losses that are other-than-temporarily impaired. There have been no material changes to the Company's process for assessing investments for OTTI as reported in the Company's 2018 Annual Report on Form 10-K. For more information about the Company's assessment for OTTI, see Note 2, "Investment Securities," to the Company's audited consolidated financial statements contained in the Company's 2018 Annual Report on Form 10-K.

The contractual maturity distribution at September 30, 2019 of total debt securities was as follows:



(Dollars in thousands)	Amortized Cost		Fair Value
Due in one year or less	$	5,265	$	5,287
Due after one, but within five years	70,738		72,816
Due after five, but within ten years	173,589		182,111
Due after ten years	216,961		221,892
Total debt securities	$	466,553	$	482,106

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 $87.6 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 FRB. The fair value of debt securities pledged as collateral for these purposes was $475.3 million at September 30, 2019.



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Sales of debt securities for the three and nine months ended September 30, 2019 and September 30, 2018 are summarized as follows:



	Three months ended September 30,					Nine months ended September 30,
(Dollars in thousands)	2019		2018			2019			2018
Amortized cost of debt securities sold ⁽¹⁾	$	—	$	687		$	11,621		$	1,355
Gross realized gains on sales	—		—			149			3
Gross realized losses on sales	—		(34		)	(3		)	(36		)
Total proceeds from sales of debt securities	$	—	$	653		$	11,767		$	1,322

_________________________________________


(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 $1.4 million at September 30, 2019 and December 31, 2018. These investments are accounted for under ASC Topic 321, "Investments-Equity Securities," and are recorded on the Company's consolidated balance sheet at fair value with changes in fair value recognized in the Company's consolidated income statement as a component of "Other Income." The net fair value changes of equity securities recognized as a component of "Other Income" is dependent on the amount of dollars invested in equities and the magnitude of changes in equity market values. At September 30, 2019, the equity portfolio consisted primarily of investments in a diversified group of mutual funds, with a portion of the portfolio invested in common stock of individual entities in the financial services industry.

Gains and losses on equity securities at September 30, 2019 and September 30, 2018 are summarized as follows:



	Three months ended September 30,					Nine months ended September 30,
(Dollars in thousands)	2019			2018		2019		2018
Net gains recognized during the period on equity securities	$	12		$	14	$	275	$	12
Less: Net gains realized on equity securities sold during the period	36			—		36		—
Unrealized (losses) gains recognized during the reporting period on equity securities still held in the portfolio	$	(24	)	$	14	$	239	$	12


(3)	Loans

The Company manages its loan portfolio to avoid concentration by industry, relationship size and source of repayment to lessen its credit risk exposure. For additional information on the Company's lending products, see the heading "Lending Products" under Item 1, "Business," contained in the Company's 2018 Annual Report on Form 10-K.



Table of Contents	ENTERPRISE BANCORP, INC. Notes to the Unaudited Consolidated Interim Financial Statements

Loan Portfolio Classifications

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



(Dollars in thousands)	September 30, 2019			December 31, 2018
Commercial real estate	$	1,317,999		$	1,303,879
Commercial and industrial	511,695			514,253
Commercial construction	295,448			234,430
Total commercial loans	2,125,142			2,052,562
Residential mortgages	241,157			231,501
Home equity loans and lines	98,763			96,116
Consumer	10,037			10,241
Total retail loans	349,957			337,858

Gross loans	2,475,099			2,390,420
Deferred loan origination fees, net	(2,969		)	(2,914		)
Total loans	2,472,130			2,387,506
Allowance for loan losses	(33,935		)	(33,849		)
Net loans	$	2,438,195		$	2,353,657

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 $68.0 million at September 30, 2019 and $63.5 million at December 31, 2018.

Loans serviced for others

At September 30, 2019 and December 31, 2018, the Company was servicing residential mortgage loans owned by investors amounting to $16.4 million and $17.2 million, respectively. Additionally, the Company was servicing commercial loans originated by the Company and participated out to various other institutions amounting to $77.3 million and $72.1 million at September 30, 2019 and December 31, 2018, respectively.

Loans serving as collateral

Loans designated as qualified collateral and pledged to the FHLB for borrowing capacity for the dates indicated are summarized below:



(Dollars in thousands)	September 30, 2019		December 31, 2018
Commercial real estate	$	269,379	$	311,024
Residential mortgages	228,109		220,815
Home equity lines of credit	8,078		8,382
Total loans pledged to FHLB	$	505,566	$	540,221

See also Note 4, "Allowance for Loan Losses," to the Company's unaudited consolidated interim financial statements, contained below, for information on the Company's credit risk management, non-accrual, impaired and troubled debt restructured loans and the allowance for loan losses. See Note 8, "Derivatives and Hedging Activities," to the Company's unaudited consolidated interim financial statements, contained below, for information regarding interest-rate swap agreements related to certain commercial loans, and see Note 13, "Fair Value Measurements," to the Company's unaudited consolidated interim financial statements, contained below, for further information regarding the Company's fair value measurements for loans.



Table of Contents	ENTERPRISE BANCORP, INC. Notes to the Unaudited Consolidated Interim Financial Statements

(4) Allowance for Loan Losses

Allowance for probable loan losses methodology

On a quarterly basis, management prepares an estimate of the allowance necessary to cover estimated probable credit losses. The Company uses a systematic methodology to measure the amount of estimated loan loss exposure inherent in the portfolio for purposes of establishing a sufficient allowance for loan losses. The methodology makes use of specific reserves for loans individually evaluated and deemed impaired, and general reserves for larger pools of homogeneous loans, which are collectively evaluated relying on a combination of qualitative and quantitative factors that may affect credit quality of the pool.

There have been no material changes to the Company's underwriting practices, credit risk management system, or to the allowance assessment methodology used to estimate loan loss exposure as reported in Note 4, "Allowance for Loan Losses," to the Company's audited consolidated financial statements contained in the Company's 2018 Annual Report on Form 10-K,

The balances of loans as of September 30, 2019 by portfolio classification and evaluation method are summarized as follows:



(Dollars in thousands)	Loans individually evaluated for impairment		Loans collectively evaluated for impairment		Gross Loans
Commercial real estate	$	17,737	$	1,300,262	$	1,317,999
Commercial and industrial	10,019		501,676		511,695
Commercial construction	1,732		293,716		295,448
Residential mortgages	1,239		239,918		241,157
Home equity loans and lines	423		98,340		98,763
Consumer	25		10,012		10,037
Total gross loans	$	31,175	$	2,443,924	$	2,475,099

The balances of loans as of December 31, 2018 by portfolio classification and evaluation method are summarized as follows:



(Dollars in thousands)	Loans individually evaluated for impairment		Loans collectively evaluated for impairment		Gross Loans
Commercial real estate	$	16,318	$	1,287,561	$	1,303,879
Commercial and industrial	12,053		502,200		514,253
Commercial construction	1,736		232,694		234,430
Residential mortgages	893		230,608		231,501
Home equity loans and lines	514		95,602		96,116
Consumer	16		10,225		10,241
Total gross loans	$	31,530	$	2,358,890	$	2,390,420

See "Financial Condition" in Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations," under the headings "Credit Risk" and "Allowance for Loan Losses" in this Form 10-Q for additional information about changes in the Company's credit quality indicators since December 31, 2018.

Credit quality indicators

Early detection of credit issues is critical to minimize credit losses. Accordingly, management regularly monitors internal credit quality indicators such as, among others, the risk classification of adversely classified loans, past due and non-accrual loans, impaired and restructured loans, and the level of foreclosure activity. These credit quality indicators are discussed below.

Adversely classified loans

The Company's loan risk rating system classifies loans depending on risk of loss characteristics. The classifications range



Table of Contents	ENTERPRISE BANCORP, INC. Notes to the Unaudited Consolidated Interim Financial Statements

from "substantially risk free" for the highest quality loans and loans that are secured by cash collateral, through a satisfactory range of "minimal," "moderate," "better than average," and "average" risk, to the regulatory problem-asset classifications of "criticized," for loans that may need additional monitoring, and the more severe adverse classifications of "substandard," "doubtful," and "loss" based on criteria established under banking regulations. Loans which are evaluated to be of weaker credit quality are placed on the "watch credit list" and reviewed on a more frequent basis by management.

Adversely classified loans may be accruing or in non-accrual status and may be additionally designated as impaired or restructured, or some combination thereof.

The following tables present the Company's credit risk profile for each portfolio classification by internally assigned adverse risk rating category as of the periods indicated:



	September 30, 2019
	Adversely Classified							Not Adversely
(Dollars in thousands)	Substandard		Doubtful		Loss			Classified		Gross Loans
Commercial real estate	$	16,924	$	—	$	—		$	1,301,075	$	1,317,999
Commercial and industrial	13,905		—		—			497,790		511,695
Commercial construction	2,245		—		—			293,203		295,448
Residential mortgages	1,835		—		—			239,322		241,157
Home equity loans and lines	468		—		—			98,295		98,763
Consumer	41		4		—		</

Closing Price ($)	Shares Out (MM)	Market Cap ($MM)
$0.00	12	$343

10-Q	2019-11-07	Quarter: 2019-09-30
10-Q	2019-08-07	Quarter: 2019-06-30
10-Q	2019-05-07	Quarter: 2019-03-31
10-K	2019-03-13	Annual: 2018-12-31
10-Q	2018-11-06	Quarter: 2018-09-30
10-Q	2018-08-07	Quarter: 2018-06-30
10-Q	2018-05-08	Quarter: 2018-03-31
10-K	2018-03-13	Annual: 2017-12-31
10-Q	2017-11-07	Quarter: 2017-09-30
10-Q	2017-08-07	Quarter: 2017-06-30
10-Q	2017-05-08	Quarter: 2017-03-31
10-K	2017-03-14	Annual: 2016-12-31
10-Q	2016-11-07	Quarter: 2016-09-30
10-Q	2016-08-05	Quarter: 2016-06-30
10-Q	2016-05-06	Quarter: 2016-03-31
10-K	2016-03-15	Annual: 2015-12-31
10-Q	2015-11-06	Quarter: 2015-09-30
10-Q	2015-08-07	Quarter: 2015-06-30
10-Q	2015-05-08	Quarter: 2015-03-31
10-K	2015-03-13	Annual: 2014-12-31
10-Q	2014-11-07	Quarter: 2014-09-30
10-Q	2014-08-08	Quarter: 2014-06-30
10-Q	2014-05-09	Quarter: 2014-03-31
10-K	2014-03-14	Annual: 2013-12-31
10-Q	2013-11-08	Quarter: 2013-09-30
10-Q	2013-08-09	Quarter: 2013-06-30
10-Q	2013-05-10	Quarter: 2013-03-31
10-K	2013-03-15	Annual: 2012-12-31
10-Q	2012-11-09	Quarter: 2012-09-30
10-Q	2012-08-09	Quarter: 2012-06-30
10-Q	2012-05-10	Quarter: 2012-03-31
10-K	2012-03-15	Annual: 2011-12-31
10-Q	2011-11-09	Quarter: 2011-09-30
10-Q	2011-08-09	Quarter: 2011-06-30
10-Q	2011-05-10	Quarter: 2011-03-31
10-K	2011-03-15	Annual: 2010-12-31
10-Q	2010-11-09	Quarter: 2010-09-30
10-Q	2010-08-09	Quarter: 2010-06-30
10-Q	2010-05-10	Quarter: 2010-03-31
10-K	2010-03-12	Annual: 2009-12-31

8-K	2020-01-23	Earnings, Exhibits
8-K	2019-10-17	Earnings, Exhibits
8-K	2019-10-15	Other Events, Exhibits
8-K	2019-07-18	Earnings, Exhibits
8-K	2019-07-16	Other Events, Exhibits
8-K	2019-06-18	Officers, Exhibits
8-K	2019-05-10	Shareholder Vote
8-K	2019-04-18	Earnings, Exhibits
8-K	2019-04-16	Other Events, Exhibits
8-K	2019-03-22	Officers
8-K	2019-01-24	Earnings, Exhibits
8-K	2019-01-15	Other Events, Exhibits
8-K	2018-12-11	Officers
8-K	2018-10-22	Other Events, Exhibits
8-K	2018-10-18	Earnings, Exhibits
8-K	2018-10-16	Other Events, Exhibits
8-K	2018-07-19	Earnings, Exhibits
8-K	2018-07-17	Other Events, Exhibits
8-K	2018-05-01	Shareholder Vote
8-K	2018-04-19	Earnings, Exhibits
8-K	2018-04-17	Other Events, Exhibits
8-K	2018-03-23	Officers
8-K	2018-01-25	Earnings, Exhibits
8-K	2018-01-16	Other Events, Exhibits
8-K	2018-01-05	Enter Agreement, Shareholder Rights, Amend Bylaw, Exhibits

EX-31.1	ebtc093019-ex311.htm
EX-31.2	ebtc093019-ex312.htm
EX-32	ebtc093019-ex32.htm