U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from _____________ to _______________
Commission file number 0-21021
Enterprise Bancorp, Inc.
(Exact name of small business issuer as specified in its charter)
Massachusetts 04-3308902
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
222 Merrimack Street, Lowell, Massachusetts, 01852
(Address of principal executive offices)
(508) 459-9000
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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. Yes ..X.... No......
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: July 31, 1997, Common Stock - Par
Value $0.01 1,576,192 shares outstanding
Transitional Small Business Disclosure Format (check one): Yes .......... No X
<PAGE>
ENTERPRISE BANCORP, INC.
INDEX
Page Number
Cover Page 1
Index 2
PART I - FINANCIAL INFORMATION
Item 1 Financial Statements of Enterprise Bancorp, Inc.
Consolidated Balance Sheets - June 30, 1997 and December 31, 1996 3
Consolidated Statements of Income -
Three months and six months ended June 30, 1997 and 1996 4
Consolidated Statements of Cash Flows -
Six months ended June 30, 1997 and 1996 5
Notes to Financial Statements 6
Item 2 Business Review and Management's Discussion and
Analysis of Financial Condition and Results of Operations 7
PART II - OTHER INFORMATION
Item 1 Legal Proceedings 15
Item 2 Changes in Securities 15
Item 3 Defaults upon Senior Securities 15
Item 4 Submission of Matters to a Vote of Security Holders 15
Item 5 Other Information 15
Item 6 Exhibits and Reports on Form 8-K 15
Signature Page 16
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This report contains certain "forward-looking statements" including statements
concerning plans, objectives, future events or performance and assumptions and
other statements which are other than statements of historical fact. Enterprise
Bancorp, Inc. (the "company") wishes to caution readers that the following
important factors, among others, may have affected and could in the future
affect the company's results and could cause the company's results for
subsequent periods to differ materially from those expressed in any
forward-looking statement made herein: (i) the effect of changes in laws and
regulations, including federal and state banking laws and regulations, with
which the company or its subsidiaries must comply, and the associated costs of
compliance with such laws and regulations either currently or in the future as
applicable; (ii) the effect of changes in accounting policies and practices, as
may be adopted by the regulatory agencies as well as by the Financial Accounting
Standards Board, or of changes in the company's organization, compensation and
benefit plans; (iii) the effect on the company's competitive position within its
market area of the increasing competition from larger regional and out-of-state
banking organizations as well as non-bank providers of various financial
services; (iv) the effect of unforeseen changes in interest rates; and (v) the
effect of changes in the business cycle and downturns in the local, regional or
national economies.
2
<PAGE>
<TABLE>
<CAPTION>
ENTERPRISE BANCORP, INC.
Consolidated Balance Sheets
June 30, December 31,
1997 1996
(Unaudited) (Audited)
-------------- -------------
<S> <C> <C>
Assets
Cash and cash equivalents $ 18,915,377 14,507,497
Investment securities at fair value 121,173,764 119,395,742
Loans, less allowance for loan losses of $4,077,135
at June 30, 1997 and $3,894,520 at December 31, 1996 159,267,007 140,425,093
Premises and equipment 3,120,927 3,388,736
Accrued interest receivable 3,044,197 2,699,833
Prepaid expenses and other assets 578,065 491,277
Income taxes receivable 289,577 140,396
Real estate acquired by foreclosure 189,272 82,721
Deferred income taxes, net 1,930,506 1,884,283
------------ ------------
Total assets $308,508,692 283,015,578
============ ============
Liabilities and Stockholders' Equity
Deposits $260,885,257 243,428,800
Short-term borrowings 23,248,223 16,737,249
Escrow deposits of borrowers 400,171 411,050
Accrued expenses and other liabilities 2,085,022 1,297,699
Accrued interest payable 499,970 493,276
------------ ------------
Total liabilities 287,118,643 262,368,074
------------ ------------
Stockholders' equity
Common stock $.01 par value; 5,000,000 shares
authorized 1,576,192 shares issued and out-
standing at June 30, 1997 and December 31, 1996 15,762 15,762
Preferred stock, $.01 par value; 1,000,000 shares
authorized no shares issued at June 30, 1997 -- --
Additional paid-in capital 15,476,857 15,476,857
Retained earnings 6,080,452 5,263,074
Net unrealized gain (loss) on investment
securities, net of applicable income taxes (183,022) (108,189)
------------ ------------
Total stockholders' equity 21,390,049 20,647,504
------------ ------------
Total liabilities and stockholders' equity $308,508,692 283,015,578
============ ============
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
ENTERPRISE BANCORP, INC.
Consolidated Statements of Income
Three months and six months ended June 30, 1997 and 1996
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -----------------------------
1997 1996 1997 1996
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Interest and dividend income:
Loans $3,780,197 3,030,699 7,184,989 5,929,405
Investment securities 1,928,074 1,722,293 3,802,384 3,130,389
Federal funds sold 5,094 25,969 19,843 109,660
---------- ---------- ---------- ----------
Total interest income 5,713,365 4,778,961 11,007,216 9,169,454
---------- ---------- ---------- ----------
Interest expense:
Deposits 2,084,925 1,857,284 4,071,557 3,585,223
Borrowed funds 217,851 248,841 452,743 322,722
---------- ---------- ---------- ----------
Total interest expense 2,302,776 2,106,125 4,524,300 3,907,945
---------- ---------- ---------- ----------
Net interest income 3,410,589 2,672,836 6,482,916 5,261,509
Provision for loan losses 60,000 -- 120,000 --
---------- ---------- ---------- ----------
Net interest income after provision for loan losses 3,350,589 2,672,836 6,362,916 5,261,509
Non-interest income:
Deposit service fees 221,132 154,845 438,621 309,213
Trust fees 157,783 157,319 335,304 318,229
Gain on sale of loans 4,270 11,235 23,588 44,253
Gain on sale of investments -- 1,909 -- 1,909
Other income 68,464 68,041 138,246 132,331
---------- ---------- ---------- ----------
Total non-interest income 451,649 393,349 935,759 805,935
---------- ---------- ---------- ----------
Non-interest expense:
Salaries and employee benefits 1,535,351 1,247,178 2,941,345 2,445,001
Occupancy expenses 389,566 302,762 763,903 633,431
Advertising and public relations 104,650 99,258 277,203 268,576
Office and data processing supplies 88,647 69,679 170,479 134,640
Audit, legal and other professional fees 188,957 75,629 265,012 173,856
Trust professional and custodial expenses 55,000 51,000 104,500 101,050
Postage 54,508 47,488 121,740 87,834
Other operating expenses 281,693 212,693 567,440 509,509
---------- ---------- ---------- ----------
Total non-interest expense 2,698,372 2,105,687 5,211,622 4,353,897
---------- ---------- ---------- ----------
Income before income taxes 1,103,866 960,498 2,087,053 1,713,547
Income tax expense 402,927 365,997 757,412 647,964
---------- ---------- ---------- ----------
Net income $ 700,939 594,501 1,329,641 1,065,583
========== ========== ========== ==========
Net income per average common share outstanding $ .44 .38 .84 .68
========== ========== ========== ==========
Weighted average common shares outstanding 1,576,192 1,575,950 1,576,192 1,575,925
========== ========== ========== ==========
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
ENTERPRISE BANCORP, INC.
Consolidated Statements of Cash Flows
Six months ended June 30, 1997 and 1996
Six Months Ended June 30,
------------------------------
1997 1996
(Unaudited) (Unaudited)
------------- ------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,329,641 1,065,583
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses 120,000 --
Depreciation and amortization 447,297 341,863
Gain on sale of loans (23,588) (44,253)
Gain on sale of investments -- (1,909)
Provision for deferred income taxes 8,594 3,717
(Increase)/Decrease:
Loans held for sale 97,608 613,191
Accrued interest receivable (344,364) (674,743)
Income taxes payable/receivable (149,181) (443,402)
Prepaid expenses and other assets (86,788) (60,153)
Increase/(Decrease):
Accrued expenses and other liabilities 787,323 317,877
Accrued interest payable 6,694 (65,238)
------------ ------------
Net cash provided by operating activities 2,193,236 1,052,533
------------ ------------
Cash flows from investing activities:
Proceeds from sales of investment securities -- 5,919,844
Proceeds from maturities, calls and paydowns
of investment securities 3,404,783 5,715,955
Purchase of investment securities (5,342,128) (43,065,569)
Proceeds from sales of or payments on real estate
acquired by foreclosure 61,555 27,245
Net increase in loans (19,204,040) (12,343,944)
Additions to premises and equipment, net (149,815) (122,114)
------------ ------------
Net cash used in investing activities (21,229,645) (43,868,583)
------------ ------------
Cash flows from financing activities:
Net increase in deposits, including escrow deposits 17,445,578 30,251,598
Net increase in short-term borrowings 6,510,974 6,039,979
Net proceeds from exercise of stock options -- 1,402
Cash dividends paid on common stock (512,263) (472,805)
------------ ------------
Net cash provided by financing activities 23,444,289 35,820,174
------------ ------------
Net increase(decrease) in cash and cash equivalents 4,407,880 (6,995,876)
Cash and cash equivalents at beginning of period 14,507,497 25,162,392
------------ ------------
Cash and cash equivalents at end of period $ 18,915,377 18,166,516
============ ============
Supplemental financial data:
Cash paid for:
Interest on deposits and borrowings 4,517,606 3,842,707
Income taxes 898,000 504,250
Transfers from loans to real estate acquired by foreclosure 168,106 --
</TABLE>
5
<PAGE>
ENTERPRISE BANCORP, INC.
Notes to Financial Statements
(1) Organization of Holding Company
Enterprise Bancorp, Inc. (the "company") is a Massachusetts corporation, which
was organized on February 29, 1996, at the direction of Enterprise Bank and
Trust Company, a Massachusetts trust company (the "bank"), for the purpose of
becoming the holding company for the bank. The company had no material assets or
operations prior to completion of the holding company reorganization on July 26,
1996. To the extent that the accompanying financial statements contain
information as of a date or for a period prior to July 26, 1996, such
information pertains to the bank.
(2) Basis of Presentation
The accompanying unaudited financial statements should be read in conjunction
with the company's December 31, 1996 audited financial statements and notes
thereto. Interim results are not necessarily indicative of results to be
expected for the entire year.
In preparing the financial statements, management is required to make estimates
and assumptions that affect the reported amounts of assets and liabilities as of
the date of the balance sheet and revenues and expenses for the period. Actual
results could differ from those estimates. Material estimates that are
particularly susceptible to change relate to the determination of the allowance
for loan losses and valuation of other real estate owned.
In the opinion of management, the accompanying financial statements reflect all
necessary adjustments consisting of normal recurring accruals for a fair
presentation.
(3) Reclassification
Certain fiscal 1996 information has been reclassified to conform with the 1997
presentation.
6
<PAGE>
ITEM 2 - Business Review and Management's Discussion and Analysis of Financial
Condition and Results of Operations
Capital Resources
The company's capital amounts and capital adequacy ratios are presented in the
table below. The bank's capital amounts and ratios do not differ materially from
the amounts and ratios presented.
<TABLE>
<CAPTION>
Minimum Capital
For Capital Minimum Capital To Be
Actual Adequacy Purposes Well Capitalized
------------------- --------------------- ----------------------
($ in Thousands) Amount Ratio Amount Ratio Amount Ratio
------ ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C>
As of June 30, 1997:
Total Capital
(to risk weighted assets) $25,619 14.231 $14,398 8.0% $17,998 10.0%
Tier I Capital
(to risk weighted assets) 21,542 11.977 7,199 4.0% 10,799 6.0%
Tier I Capital
(to average assets) 21,542 7.22% 11,932 4.0% 14,914 N/A*
<FN>
* For the bank to qualify as well capitalized, it must also maintain a Tier I Capital to average assets ratio of at least 5.0%.
</FN>
</TABLE>
On April 15, 1997 the board of directors declared a dividend of $.325 per share.
The dividend was paid on July 1, 1997 to shareholders of record as of the close
of business on June 13, 1997. The board of directors intends to consider the
payment of future dividends on an annual basis.
Balance Sheet
Total Assets
Total assets increased $25.5 million, or 9.0%, since December 31, 1996. The
increase is primarily attributable to an increase in gross loans of $19.0
million, an increase in investments of $1.8 million, and an increase in cash and
due from banks of $4.4 million. The increase in assets was funded by increases
in deposits and short-term borrowings of $17.5 million and $6.5 million,
respectively.
Investments
At June 30, 1997, all of the bank's investment securities were classified as
available for sale and carried at market value. The net unrealized loss at June
30, 1997, net of tax effects, is shown as a separate component of stockholders'
equity in the amount of $183,022.
Loans
Total loans, before the allowance for loan losses, were $163.3 million, or 53.0%
of total assets, at June 30, 1997, compared to $144.3 million, or 51.0% of total
assets, at December 31, 1996. The increase in loans of $19.0 million was
primarily attributable to increased loan originations in the commercial real
estate and commercial loan portfolios. The bank continues to pursue active
customer calling efforts as well as increased marketing and advertising to
identify quality lending opportunities.
Deposits and Borrowings
Total deposits, including escrow deposits of borrowers, increased $17.4 million,
or 7.2%, during the first six months of 1997 from $243.8 million at December 31,
1996, to $261.3 million at June 30, 1997. The increase was the result of
substantial increases in deposits in all of the bank's branches.
Total borrowings, consisting of securities sold under agreements to repurchase
and FHLB (Federal Home Loan Bank) borrowings, increased $6.5 million, or 38.9%,
from $16.7 million at December 31, 1996 to $23.2 million at June 30, 1997. The
increase was attributable to an increase in securities sold under agreements to
repurchase of $4.1 million, and an increase in FHLB borrowings of $2.4 million.
Management periodically takes advantage of opportunities to fund asset growth
with borrowings, but on a long-term basis the bank intends to replace the FHLB
borrowings with deposits. Management also actively uses FHLB borrowings in
managing the bank's asset/liability position. FHLB borrowings, at June 30, 1997,
were $7.3 million with the ability to borrow an additional approximately $93.4
million.
7
<PAGE>
Loan Loss Experience/Non-performing Assets
The following table summarizes the activity in the allowance for loan losses for
the periods indicated:
<TABLE>
<CAPTION>
Six months ended June 30,
----------------------------
1997 1996
----------- ------------
<S> <C> <C>
Balance at beginning of year $ 3,894,520 4,106,659
Loans charged off
Commercial 85,376 3,377
Real Estate -- 111,481
Consumer 965 8,143
Credit Card -- 5,447
----------- -----------
86,341 128,448
Recoveries on loans charged off
Commercial 5,078 1,368
Real Estate 139,358 4,892
Consumer 4,469 1,548
Credit Card 51 64
----------- -----------
148,956 7,872
Net loans (recovered)/charged off (62,615) 120,576
Provision charged to income 120,000 --
----------- -----------
Balance at June 30 $ 4,077,135 3,986,083
=========== ===========
Allowance for loan losses : Gross loans 2.50% 3.09%
=========== ===========
Annualized net charge-offs : Average loans outstanding (.08%) .20%
=========== ===========
Allowance for loan losses : Non-performing loans 172.03% 153.76%
=========== ===========
<CAPTION>
The following table sets forth non-performing assets at June 30:
1997 1996
----------- -----------
<S> <C> <C>
Loans on non accrual:
Commercial $ 614,981 449,540
Residential real estate 248,633 248,633
Commercial real estate 889,332 1,349,068
Construction 41,102 --
Consumer, including home equity 460,627 543,652
----------- -----------
Total loans on non-accrual * 2,254,675 2,590,893
Loans past due >90 days, still accruing 115,375 1,451
----------- -----------
Total non-performing loans 2,370,050 2,592,344
Other real estate owned 189,272 148,534
----------- -----------
Total non-performing loans and real estate owned $ 2,559,322 2,740,878
=========== ===========
Restructured loans $ 75,725 --
=========== ===========
Non-performing loans : Gross loans 1.45% 1.80%
=========== ===========
Non-performing loans and real estate owned : Total assets .83% .97%
=========== ===========
Delinquent loans 30-89 days past due : Gross loans 1.54% 1.24%
=========== ===========
<FN>
* Impaired loans included in non-performing loans as of June 30, 1997 and June 30, 1996 were $1,712,492 and $1,338,072,
respectively.
</FN>
</TABLE>
8
<PAGE>
Results of Operations
Six Months Ended June 30, 1997 vs. Six Months Ended June 30, 1996
The company reported net income of $1,329,641 for the six months ended June 30,
1997, versus $1,065,583 for the six months ended June 30, 1996, or an increase
of 24.8%. The company had earnings per common share of $.84 for the six months
ended June 30, 1997, compared with $.68 for the six months ended June 30, 1996.
The following table highlights changes which affected the company's earnings for
the periods indicated:
<TABLE>
<CAPTION>
Six months ended June 30,
-------------------------
1997 1996
----------- ----------
(Dollars in thousands)
<S> <C> <C>
Average assets $292,689 239,254
Average deposits and short-term borrowings 269,650 218,193
Average investment securities (1) 121,645 102,611
Average loans 151,519 119,905
Net interest income 6,483 5,262
Provision for loan losses 120 --
Tax expense 757 648
Average loans : Average deposits and borrowings 56.19% 54.95%
Non-interest expense : Average assets (2) 3.59% 3.65%
Non-interest income, exclusive of securities
gains : Average assets (2) .64% .68 %
Average tax equivalent rate earned on interest earning assets 8.23% 8.26%
Average rate paid on interest bearing deposits and
short-term borrowings 4.00% 4.20%
Net interest rate spread 4.23% 4.06%
<FN>
(1) Average investment securities are shown at average amortized cost
(2) Annualized based on number of days in the period
</FN>
</TABLE>
Net Interest Income
The company's net interest income was $6,482,916 for the six months ended June
30, 1997, an increase of $1,221,407, or 23.2% from $5,261,509 for the six months
ended June 30, 1996, primarily as a result of an increase in the bank's asset
size, specifically the bank's loans and investments, and a decrease in the
company's cost of funds. This increase in the net interest income was partially
offset by increased interest expense, due to an increase in deposit balances,
and a slight decline in the blended loan and investment yield.
The average tax equivalent yield on earning assets in the six months ended June
30, 1997, was 8.23% down 3 basis points from 8.26% in the six months ended June
30, 1996. The average rate paid on interest bearing deposits and borrowings in
the six months ended June 30, 1997, was 4.00%, a decrease of 20 basis points
from 4.20% in the six months ended June 30, 1996. The decrease in the average
rate paid was due to higher rate certificates of deposits maturing and renewing
at lower rates and a decrease in the rate paid on short term borrowings. The
resulting interest rate spread increased 17 basis points to 4.23% in the six
months ended June 30, 1997, from 4.06% in the six months ended June 30, 1996.
The following table sets forth, among other things, the extent to which changes
in interest rates and changes in the average balances of interest-earning assets
and interest-bearing liabilities have affected interest income and expense
during the six months ended June 30, 1997, and 1996. For each category of
interest-earning assets and interest-bearing liabilities, information is
provided on changes attributable to (1) changes in volume (change in average
portfolio balance multiplied by prior year average rate); (2) changes in
interest rates (change in average interest rate multiplied by prior year average
balance); and (3) changes in rate and volume (the remaining difference).
9
<PAGE>
<TABLE>
<CAPTION>
AVERAGE BALANCES, INTEREST AND AVERAGE INTEREST RATES
Six Months Ended June 30, 1997 Six Months Ended June 30, 1996 Changes due to
------------------------------ ------------------------------ ----------------------------------
Average Interest Average Interest Interest Rate/
(Dollars in thousands) Balance Interest Rates(3) Balance Interest Rates(3) Total Volume Rate Volume
-------- -------- --------- -------- -------- --------- -------- ------- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets:
Loans (1) (2) $ 151,519 $ 7,185 9.56% $ 119,905 $ 5,929 9.92% $ 1,256 $ 1,568 $ (212) $ (100)
Investment securities (3) 121,645 3,802 6.59 102,611 3,130 6.42 672 611 86 (25)
Federal funds sold 766 20 5.27 4,002 110 5.51 (90) (89) (5) 4
--------- -------- --------- -------- -------- -------- -------- -------
Total interest earnings assets 273,930 11,007 8.23% 226,518 9,169 8.26% 1,838 2,090 (131) (121)
-------- -------- -------- -------- -------- -------
Other assets (4) 18,759 12,736
--------- ---------
Total assets $ 292,689 $ 239,254
========= =========
Liabilities and stockholders' equity:
Savings, NOW and money market $ 99,398 1,121 2.27% $ 80,402 919 2.29% 202 218 (7) (9)
Certificate of deposit 109,044 2,950 5.46 93,145 2,666 5.74 284 456 (133) (39)
Short-term borrowings 19,874 453 4.60 12,838 323 5.05 130 178 (29) (19)
--------- -------- --------- -------- -------- -------- -------- -------
Total deposits and borrowings 228,316 4,524 4.00% 186,385 3,908 4.20% 616 852 (169) (67)
-------- -------- -------- -------- -------- -------
Non-interest bearing deposits 41,334 31,808
Other liabilities 1,786 1,886
--------- ---------
Total liabilities 271,436 220,079
Stockholders' equity 21,253 19,175
--------- ---------
Total liabilities and
stockholder's equity $ 292,689 $ 239,254
========= =========
Net interest rate spread 4.23% 4.06%
Net interest income $ 6,483 $ 5,262 $ 1,222 $ 1,238 $ 38 $ (54)
Net yield on average earning assets 4.90% 4.80%
<FN>
(1) Average loans include non accrual loans.
(2) Average loans are net of average deferred loan fees.
(3) Average balances are presented at average amortized cost and average interest rates are presented on a tax-equivalent basis.
(4) Other assets include cash and due from banks, accrued interest receivable, allowance for loan losses, real estate acquired by
foreclosure, deferred income taxes and other miscellaneous assets.
The bank manages its earning assets by fully using available capital resources within what management believes are prudent credit
and leverage parameters. Loans, investment securities, and short-term investments comprise the bank's earning assets.
</FN>
</TABLE>
10
<PAGE>
The provision for loan losses amounted to $120,000 and $0 for the six month
periods ended June 30, 1997 and 1996, respectively. The provision for loan
losses was reinstated in the first quarter of 1997 as a result of loan growth
over the past and current year. Loans, before the allowance for loan losses,
increased from $129.6 million at June 30, 1996, to $163.3 million at June 30,
1997 an increase of 26.1%. Although there has not been an increase in problem
assets, management recognizes the increased risk and the need for additional
reserves as the loan balances increase. The provision reflects real estate
values and economic conditions in New England and in Greater Lowell, in
particular, the level of non-accrual loans, levels of charge-offs and
recoveries, levels of outstanding loans, known and inherent risks in the nature
of the loan portfolio and management's assessment of current risk. It is a
significant factor in the bank's operating results.
Non-Interest Income
Non-interest income, exclusive of security gains, increased by $131,733 to
$935,759 for the six months ended June 30, 1997, compared to $804,026 for the
six months ended June 30, 1996. This increase was primarily caused by an
increase in deposit service fees of $129,408. The increase was partially offset
by a decrease in gains on sales of loans of $20,665 due to a decline in
originations in the first two quarters of 1997 compared to the first two
quarters of 1996.
Trust fees increased by $17,075, or 5.4%, for the six months ended June 30, 1997
compared to the same period in the prior year due to an increase in trust
assets.
Deposit fees increased by $129,408, or 41.9% for the six months ended June 30,
1997, compared to the six months ended June 30, 1996. The 1997 growth was
primarily the result of an increase in transaction deposit accounts, activity
volume and increased fees.
Other income for the six months ended June 30, 1997, was $138,246, an increase
of 4.5% from $132,331 for the six months ended June 30, 1996, due primarily to
increases in safe deposit fees and merchant assessment fees.
Non-Interest Expense
Salaries and benefits expense totaled $2,941,345 for the six months ended June
30, 1997, compared with $2,445,001 for the six months ended June 30, 1996, an
increase of $496,344 or 20.3%. This increase was primarily the result of the
addition of the Tewksbury branch in the fourth quarter of 1996, several new
positions added, and annual salary increases.
Occupancy expense was $763,903 for the six months ended June 30, 1997, compared
with $633,431 for the six months ended June 30, 1996, an increase of $130,472 or
20.6%, primarily due to the opening of the Tewksbury branch.
Office and data processing supplies expense increased by $35,839, or 26.6%, for
the six months ended June 30, 1997 compared to the same period in the prior
year, primarily due to increased volume and the addition of the Tewksbury
branch..
Audit, legal and other professional expenses increased by $91,156, or 52.4% for
the six months ended June 30, 1997 compared to the prior year period, primarily
as a result of costs in 1997 associated with the outsourcing of the internal
audit function, and consulting services related to future technology, product
and growth initiatives of the bank, not incurred in 1996.
Postage increased by $33,906 for the first six months of 1997, compared to the
same period in the prior year. The increase was due to increased direct mail
activity in the first six months of 1997 and increased courier expenses related
to the addition of the Tewksbury branch.
Other operating expenses increased by $57,931 or 11.4% for the six months ended
June 30, 1997 compared to the same period in the prior year. The increase was
primarily due to costs associated with the start of a bankwide training
department, the increase in expenses associated with the Tewksbury branch and
increases in various costs related to the overall growth of the bank.
11
<PAGE>
Results of Operations
Three Months Ended June 30, 1997 vs. Three Months Ended June 30, 1996
The company reported net income of $700,939 for the three months ended June 30,
1997, versus $594,501 for the three months ended June 30, 1996, or an increase
of 17.9%. The company had earnings per common share of $.44 for the three months
ended June 30, 1997, compared with $.38 for the three months ended June 30,
1996.
The following table highlights changes which affected the company's earnings for
the periods indicated:
<TABLE>
<CAPTION>
Three months ended June 30,
---------------------------
1997 1996
---------- ---------
(Dollars in thousands)
<S> <C> <C>
Average assets $298,898 251,857
Average deposits and short-term borrowings 275,607 230,746
Average investment securities (1) 122,654 113,014
Average loans 156,476 123,224
Net interest income 3,411 2,673
Provision for loan losses 60 --
Tax expense 403 366
Average loans : Average deposits and borrowings 56.78% 53.40%
Non-interest expense : Average assets (2) 3.62% 3.35%
Non-interest income, exclusive of securities
gains : Average assets (2) .61% .62%
Average tax equivalent rate earned on interest earning assets 8.32% 8.17%
Average rate paid on interest bearing deposits and
short-term borrowings 3.97% 4.27%
Net interest rate spread 4.35% 3.91%
<FN>
(1) Average investment securities are shown at average amortized cost
(2) Annualized based on number of days in the period
</FN>
</TABLE>
Net Interest Income
The company's net interest income was $3,410,589 for the three months ended June
30, 1997, an increase of $737,753, or 27.6% from $2,672,836 for the three months
ended June 30, 1996, primarily a result of an increase in the bank's asset size,
specifically the bank's loans and investments and a decrease in the company's
cost of funds. These increases were partially offset by increased interest
expense due to the increase in deposit balances and average borrowings.
The average tax equivalent yield on earning assets in the three months ended
June 30, 1997, was 8.32% up 15 basis points from 8.17% in the three months ended
June 30, 1996. The average rate paid on interest bearing deposits and borrowings
in the three months ended June 30, 1997, was 3.97%, a decrease of 30 basis
points from 4.27% in the three months ended June 30, 1996. The resulting
interest rate spread increased 45 basis points to 4.36% in the three months
ended June 30, 1997, from 3.91% in the three months ended June 30, 1996. The
principal reason for the increase in the bank's net interest income during the
second quarter of 1997 was the increase in average loans and investments of
$42.9 million which was primarily funded by increases in interest bearing and
non-interest bearing deposits. The increase in the net interest margin was a
result of the growth in the higher yielding average loan balances by $33.2
million compared to the slower growth in investment balances of $9.6 million as
well as a decline in the cost of certificates and deposits and short term
borrowings.
The following table sets forth, among other things, the extent to which changes
in interest rates and changes in the average balances of interest-earning assets
and interest-bearing liabilities have affected interest income and expense
during the three months ended June 30, 1997, and 1996. For each category of
interest-earning assets and interest-bearing liabilities, information is
provided on changes attributable to (1) changes in volume (change in average
portfolio balance multiplied by prior year average rate); (2) changes in
interest rates (change in average interest rate multiplied by prior year average
balance); and (3) changes in rate and volume (the remaining difference).
12
<PAGE>
<TABLE>
<CAPTION>
AVERAGE BALANCES, INTEREST AND AVERAGE INTEREST RATES
Three Months Three Months
Ended June 30, 1997 Ended June 30, 1996 Changes due to
--------------------------- ---------------------------- ----------------------------------
Average Interest Average Interest Interest Rate/
(Dollars in thousands) Balance Interest Rates(3) Balance Interest Rates(3) Total Volume Rate Volume
-------- -------- --------- -------- -------- --------- -------- ------- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets:
Loans (1) (2) $ 156,476 $ 3,780 9.69% $ 123,224 $ 3,031 9.87% $ 749 $ 820 $ (54) $ (17)
Investment securities (3) 122,654 1,928 6.59 113,014 1,722 6.40 206 154 54 (2)
Federal funds sold 367 5 5.46 2,169 26 4.81 (21) (22) 4 (3)
--------- -------- --------- -------- -------- -------- -------- -------
Total interest earnings assets 279,497 5,713 8.32% 238,407 4,779 8.17% 934 952 4 (22)
-------- -------- -------- -------- -------- -------
Other assets (4) 19,401 13,450
--------- ---------
Total assets $ 298,898 $ 251,857
========= =========
Liabilities and stockholders' equity:
Savings, NOW and money market $ 102,526 590 2.31% $ 82,550 474 2.30% 116 115 1 -
Certificate of deposit 110,898 1,494 5.40 97,329 1,383 5.70 111 193 (72) (10)
Short-term borrowings 19,380 218 4.51 17,991 249 5.55 (31) 19 (47) (3)
--------- -------- --------- -------- -------- -------- -------- -------
Total deposits and borrowings 232,804 2,302 3.97% 197,870 2,106 4.27% 196 327 (118) (13)
-------- -------- -------- -------- -------- -------
Non-interest bearing deposits 42,803 32,876
Other liabilities 1,877 1,890
--------- ---------
Total liabilities 277,484 232,636
Stockholders' equity 21,414 19,221
--------- ---------
Total liabilities and
stockholder's equity $ 298,898 $ 251,857
========= =========
Net interest rate spread 4.35% 3.91%
Net interest income $ 3,411 $ 2,673 $ 738 $ 625 $ 122 $ (9)
Net yield on average earning assets 5.02% 4.63%
<FN>
(1) Average loans include non accrual loans.
(2) Average loans are net of average deferred loan fees.
(3) Average balances are presented at average amortized cost and average interest rates are presented on a tax-equivalent basis.
(4) Other assets include cash and due from banks, accrued interest receivable, allowance for loan losses, real estate acquired by
foreclosure, deferred income taxes and other miscellaneous assets.
The bank manages its earning assets by fully using available capital resources within what management believes are prudent credit
and leverage parameters. Loans, investment securities, and short-term investments comprise the bank's earning assets.
</FN>
</TABLE>
13
<PAGE>
The provision for loan losses amounted to $60,000 and $0 in for the three month
periods ended June 30, 1997 and 1996, respectively. The provision for loan
losses was reinstated in the first quarter of 1997 as a result of loan growth
over the past year.
Non-Interest Income
Non-interest income, exclusive of security gains, increased by $60,209 to
$451,649 for the three months ended June 30, 1997, compared to $391,440 for the
three months ended June 30, 1996. This increase was primarily caused by an
increase in deposit service fees of $66,287. The increase was partially offset
by a decrease in gains on sales of loans of $6,965 due to a decline in
originations in the second quarter of 1997 compared to the second quarter of
1996.
Deposit fees increased by $66,287, or 42.8% for the three months ended June 30,
1997, compared to the three months ended June 30, 1996. The 1997 growth was
primarily the result of an increase in transaction deposit accounts, activity
volume and increased fees.
Non-Interest Expenses
Salaries and benefits expense totaled $1,535,351 for the three months ended June
30, 1997, compared with $1,247,178 for the three months ended June 30, 1996, an
increase of $288,173 or 23.1%. This increase was primarily the result of the
addition of the Tewksbury branch in the fourth quarter of 1996, several new
positions added, and annual salary increases.
Occupancy expense was $389,566 for the three months ended June 30, 1997,
compared with $302,762 for the three months ended June 30, 1996, an increase of
$86,804 or 28.7%, primarily due to the opening of the Tewksbury branch.
Office and data processing supplies expense increased by $18,968, or 27.2%, for
the three months ended June 30, 1997 compared to the same period in the prior
year, primarily due to increased volume and resulting increase in costs bankwide
as well as the addition in Tewksbury.
Audit, legal and other professional expenses increased by $113,328, or 149.8%
for the three months ended June 30, 1997 compared to the prior year period,
primarily as a result of costs associated with the outsourcing of the internal
audit function, and consulting services related to future technology, product
and other initiatives of the bank not incurred in 1996.
Postage increased by $7,020 for the three months ended June 30, 1997 compared to
the same period in the prior year. The increase was primarily due to increased
courier expenses related to the addition of the Tewksbury branch.
Other operating expenses increased by $69,000, or 32.4% for the three months
ended June 30, 1997 compared to the same period in the prior year. The increase
was primarily due to costs associated with the start of a bankwide training
department, the increase in expenses associated with the Tewksbury branch and
increases in various costs related to the overall growth of the bank.
14
<PAGE>
PART II - OTHER INFORMATION
Item 1 Legal Proceedings
Not Applicable
Item 2 Changes in Securities
Not Applicable
Item 3 Defaults upon Senior Securities
Not Applicable
Item 4 Submission of Matters to a Vote of Security Holders
Not Applicable
Item 5 Other Information
None
Item 6 Exhibits and Reports on Form 8-K
The following document is filed as an exhibit to this report:
3.1 Amended and Restated By-Laws
15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ENTERPRISE BANCORP, INC.
DATE: August 12, 1997 /s/ John P. Clancy, Jr.
John P. Clancy, Jr.
Senior Vice President, Chief Financial Officer,
Treasurer and Investment Manager
16
AS AMENDED AND RESTATED BY
THE BOARD OF DIRECTORS ON
MAY 20, 1997
AMENDED AND RESTATED BY-LAWS
of
ENTERPRISE BANCORP, INC.
ARTICLE I
ORGANIZATION
The name of this Corporation is "Enterprise Bancorp, Inc.". The main
office of the Corporation shall be located in Lowell, Massachusetts and may be
changed from time to time by the Directors of the Corporation. Other Offices
hereafter established shall be located and operated in accordance with law. The
Corporation shall have and may exercise all powers and authority, express and
implied, available to it under applicable law.
ARTICLE II
STOCKHOLDERS
SECTION l. Annual Meeting. The annual meeting of shareholders shall be held
on the first Tuesday in May at 4:00 p.m. at the main office of the Corporation
in Massachusetts, unless a different hour, date or place within Massachusetts
(or elsewhere in the United States) is fixed by the Board of Directors or the
Chairman of the Board and Chief Executive Officer. If no annual meeting has been
held on the date fixed as above provided, a special meeting in lieu thereof may
be held, and such special meeting shall be treated for all purposes as an annual
meeting.
SECTION 2. Stockholder Notice of Matters to be considered at Annual
Meeting. If the Board of Directors, or a designated committee thereof,
determines that the information provided in a stockholder's notice, given
pursuant to the requirements of Section 8 of Article VI of the Articles of
Organization, does not satisfy the informational requirements of said Section 8
of Article VI in any material respect, the Clerk of the Corporation shall
promptly notify such stockholder of the deficiency in the notice. The
stockholder shall have an opportunity to cure the deficiency by providing
additional information to the Clerk within such period of time, not to exceed
five days from the date such deficiency notice is mailed to the stockholder, as
the Board of Directors or such committee shall reasonably determine. If the
deficiency is not cured within such period, or if the Board of Directors or such
committee determines that the additional information provided by the
stockholder, together with information previously provided, does not satisfy the
requirements of Section 8 of Article IV in any material respect, then the Board
of Directors may reject such stockholder's proposal. The Clerk of the
Corporation shall notify a stockholder in writing whether his proposal has been
made
<PAGE>
-2-
in accordance with the time and informational requirements of Section 8 of
Article VI. Notwithstanding the procedure set forth in this paragraph, if
neither the Board of Directors nor such committee makes a determination as to
the validity of any stockholder proposal, the Chairman shall determine and
declare at the annual meeting whether the stockholder proposal was made in
accordance with the terms of Section 8 of Article VI of the Articles of
Organization. If the Chairman of the Board and Chief Executive Officer
determines that a stockholder proposal was made in accordance with the terms of
Section 8 of Article VI, he shall so declare at the annual meeting and ballots
shall be provided for use at the meeting with respect to any such proposal. If
the Chairman of the Board and Chief Executive Officer determines that a
stockholder proposal was not made in accordance with the terms of Section 8 of
Article VI, he shall so declare at the annual meeting and any such proposal
shall not be acted upon at the annual meeting. If there is an Interested
Stockholder, any determinations to be made by the Board of Directors or a
designated committee thereof pursuant to the provisions of this paragraph shall
also require the concurrence of a majority of the Continuing Directors then in
office.
This provision shall not prevent the consideration and approval or
disapproval at the annual meeting of reports of officers, Directors and
committees of the Board of Directors, but in connection with such reports, no
new business shall be acted upon at such annual meeting unless stated, filed and
received as herein provided.
As used in these By-Laws, the terms "Interested Stockholder", "Affiliate"
and "Continuing Director" shall have the same respective meanings assigned to
them in the Articles of Organization, as amended from time to time. Any
determination of beneficial ownership of securities under these By-Laws shall be
made in the manner specified in the Articles of Organization, as amended from
time to time.
SECTION 3. Special Meetings. Special meetings of the shareholders for any
purpose or purposes shall be called as provided for in the Articles of
Organization.
SECTION 4. Notice of Meetings; Adjournments. A written notice of all annual
and special meetings of shareholders stating the hour, date, place and purposes
of such meetings shall be given at least eleven days before the meeting to each
stockholder entitled to vote or to each stockholder who, under the Articles of
Organization or under these By-Laws, is entitled to such notice by mailing it
addressed to such stockholder at the address of such stockholder as it appears
on the stock transfer books of the Corporation. Such notice shall be given by
the Clerk or an Assistant Clerk, by any other officer or by a person designated
either by the Clerk, an Assistant Clerk, by the person or persons calling the
meeting, or by the Board of Directors. Such notice shall be deemed to be
delivered when deposited in the mail so addressed, with postage prepaid. When
any shareholders meeting, either annual or special, is adjourned for thirty days
or more, notice of the adjourned meeting shall be given as in the case of an
original meeting. It shall not be necessary to give any notice of the hour, date
or place of any meeting adjourned for less than thirty days or of the business
to be transacted thereat, other than an announcement at the meeting at which
such adjournment is taken of the hour, date and place to which the meeting is
adjourned. A written waiver of notice, executed before or after a meeting by a
stockholder or by an authorized attorney of a stockholder and filed with the
records of
<PAGE>
-3-
the meeting, shall be deemed equivalent to notice of the meeting. The Chairman
of the Board and Chief Executive Officer or in his absence, the Vice Chairman or
in his absence, the President, shall preside at all stockholder meetings and
shall have the power, among other things, to adjourn such meeting at any time
and from time to time, subject to Section 5 of this Article II.
SECTION 5. Quorum. The holders of a majority in interest of all stock
issued, outstanding and entitled to vote, represented in person or by proxy,
shall constitute a quorum at a meeting of shareholders; but if less than a
quorum is present at a meeting, a majority in interest of the shareholders
present may adjourn the meeting from time to time, and the meeting may be held
as adjourned without further notice, except as provided in Section 4 of this
Article II. At such adjourned meeting at which a quorum is present, any business
may be transacted which might have been transacted at the meeting as originally
noticed. The shareholders present at a duly constituted meeting may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum.
SECTION 6. Voting and Proxies. Stockholders, unless otherwise provided by
law, shall have such voting rights as are provided in the Articles of
Organization. Stockholders may vote either in person or by written proxy dated
not more than six months before the meeting named therein. Proxies shall be
filed with the clerk of the meeting, or of any adjournment thereof, before being
voted. Except as otherwise limited therein, proxies shall entitle the persons
authorized thereby to vote at any adjournment of such meeting, but they shall
not be valid after final adjournment of such meeting. A proxy with respect to
stock held in the name of two or more persons shall be valid if executed by or
on behalf of any one of them unless at or prior to the exercise of the proxy the
Corporation receives a specific written notice to the contrary from any one of
them. A proxy purporting to be executed by or on behalf of a stockholder shall
be deemed valid unless challenged at or prior to its exercise, and the burden of
proving invalidity shall rest on the challenger.
SECTION 7. Action at Meeting. When a quorum is present, any matter properly
before the meeting shall be decided by a vote of the holders of a majority of
the shares of stock present and voting on such matter, except where a larger
vote is required by law, by the Articles of Organization or by these By-Laws.
Any election by shareholders shall be determined by a plurality of the votes
cast, except where a larger vote is required by law, by the Articles of
Organization or by these ByLaws. No ballot shall be required for elections
provided, however, that any stockholder personally present at a meeting may
request a ballot to register the vote of such stockholder.
SECTION 8. No Stockholder Action by Written Consent. Subject to the rights
of the holders of any series of preferred stock as set forth in the Articles of
Organization to elect additional directors under specific circumstances or to
consent to specific actions taken by the Corporation, any action required or
permitted to be taken by the stockholders of the Corporation must be effected at
an annual or special meeting of stockholders of the Corporation and may not be
effected by any consent in writing by such stockholders.
<PAGE>
-4-
ARTICLE III
DIRECTORS
SECTION 1. Powers. The business and affairs of the Corporation shall be
managed by a Board of Directors who may exercise all the powers and authority of
the Corporation except as otherwise provided by law, by the Articles of
Organization or by these By-Laws.
SECTION 2. Composition and Term. The Board of Directors shall be composed
of: (a) those persons designated in the Articles of Organization of the
Corporation, such persons to serve as Directors until the respective expiration
dates of their terms as set forth therein and until their successors are elected
and qualified; and (b) such other persons who may be elected as Directors from
time to time as provided herein. Subject to the rights of the holders of any
series of preferred stock as set forth in the Articles of Organization to elect
Directors under specified circumstances, the number of Directors shall be fixed
from time to time exclusively pursuant to a resolution adopted by a majority of
the Board of Directors (provided that if at any time of such action there is an
Interested Stockholder, a majority vote of the Continuing Directors then in
office shall also be required), but shall consist of not fewer than three
individuals. The Board of Directors shall be divided into three classes, such
classes to be as nearly equal in number as practicable. One of such classes of
Directors shall be elected annually by the shareholders. Except as otherwise
provided in accordance with these By-Laws, the members of each class shall be
elected for a term of three years and until their successors are elected and
qualified. The staggered terms of office of the three classes of Directors will
result in only approximately one-third of the Directors being elected each year.
SECTION 3. Director Nominations. Nominations of candidates for election as
Directors at any annual meeting of shareholders may be made (a) by, or at the
direction of, a majority of the Board of Directors (unless there is an
Interested Stockholder, in which case the affirmative vote of a majority of the
Continuing Directors shall also be required); (b) by or at the direction of the
Chairman of the Board and Chief Executive Officer; or (c) by any stockholder
entitled to vote at such annual meeting. Only persons nominated in accordance
with the procedures set forth in this Section 3 shall be eligible for election
as Directors at an annual meeting.
Nominations, other than those made by, or at the direction of, the Board of
Directors (or by the Continuing Directors, if required) or by the Chairman of
the Board and Chief Executive Officer, shall be made pursuant to timely notice
in writing to the Clerk of the Corporation as set forth in this Section 3. To be
timely, a stockholder's notice shall be delivered to, or mailed and received at,
the principal executive offices of the Corporation not less than sixty days nor
more than one hundred and fifty days prior to the date of the scheduled annual
meeting, regardless of postponements, deferrals or adjournments of that meeting
to a later date; provided, however, that if less than seventy days notice or
prior public disclosure of the date of the scheduled annual meeting is given or
made, notice by the stockholder to be timely must be so delivered or received
not later than the close of business on the tenth day following the earlier of
the day on which such notice of the date of the scheduled annual meeting was
mailed or the day on which such public disclosure was made. Such stockholder's
notice shall set forth (a) as to each person whom the stockholder proposes to
nominate for election
<PAGE>
-5-
or re-election as a Director and as to the stockholder giving the notice (i) the
name, age, business address and residence address of such person, (ii) the
principal occupation or employment of such person, (iii) the class and number of
shares of the Corporation's capital stock which are beneficially owned by such
person on the date of such stockholder notice, and (iv) any other information
relating to such person that is required to be disclosed in solicitations of
proxies with respect to nominees for election as Directors, pursuant to
regulations promulgated by the Securities and Exchange Commission ("SEC"), or
any successor agency thereto, under the Securities Exchange Act of 1934, as
amended, including, but not limited to, such person's written consent to being
named in the proxy statement as a nominee and to serving as a director if
elected; and (b) as to the stockholder giving the notice (i) the name and
address, as they appear on the Corporation's books, of such stockholder and any
other shareholders known by such stockholder to be supporting such nominees and
(ii) the class and number of shares of the Corporation's capital stock which are
beneficially owned by such stockholder on the date of such stockholder notice
and by any other shareholders known by such stockholder to be supporting such
nominees on the date of such stockholder notice. At the request of the Board of
Directors, any person nominated by, or at the direction of, the Board of
Directors for election as a Director at an annual meeting shall furnish to the
Clerk of the Corporation that information required to be set forth in the
stockholder's notice of nomination which pertains to the nominee.
Notwithstanding the foregoing, the Board of Directors shall have the right to
conduct a due diligence investigation relating to the qualifications of any
nominee proposed for election to Board of Directors, the relationship of that
nominee to the stockholder and any relationship such person may have with any
entity other than the Corporation (i) in which such person holds an equity
interest of 2% or more; (ii) from whom such person has any indemnification or
other agreement with respect to the actions such person will take as a Director
of the Corporation; (iii) at whose instance such person has agreed to be a
nominee for election as a Director of the Corporation (a "Related Entity"), and
to require an undertaking by such person that if elected as a Director of the
Corporation, such person will abstain from voting on any matter in which any
entity described in subsections has a direct, material, pecuniary interest.
No person shall be elected as a Director of the Corporation unless
nominated in accordance with the procedures set forth in this Section 3. Ballots
bearing the names of all the persons who have been nominated for election as
Directors at an annual meeting in accordance with the procedures set forth in
this Section 3 shall be provided for use at the annual meeting.
The Board of Directors may reject any nomination by a stockholder not
timely made in accordance with the requirements of this Section 3. If the Board
of Directors, or a designated committee thereof, determines that the information
provided in a stockholder's notice does not satisfy the informational
requirements of this Section 3 in any material respect, the Clerk of the
Corporation shall promptly notify such stockholder of the deficiency in the
notice. The stockholder shall have an opportunity to cure the deficiency by
providing additional information to the Clerk within such period of time, not to
exceed five days from the date such deficiency notice is given to the
stockholder, as the Board of Directors or such committee shall reasonably
determine. If the deficiency is not cured within such period, or if the Board of
Directors or such committee reasonably determines that the additional
information provided by the stockholder, together with information previously
provided, does not satisfy the requirements of this Section 3 in any material
respect, then
<PAGE>
-6-
the Board of Directors may reject such stockholder's nomination. The Clerk of
the Corporation shall notify a stockholder in writing whether his nomination has
been made in accordance with the time and informational requirements of this
Section 3. Notwithstanding the procedure set forth in this paragraph, if neither
the Board of Directors nor such committee makes a determination as to the
validity of any nominations by a stockholder, the presiding officer of the
annual meeting shall determine and declare at the annual meeting whether a
nomination was made in accordance with the terms of this Section 3. If the
presiding officer determines that a nomination was made in accordance with the
terms of this Section 3, he shall so declare at the annual meeting and ballots
shall be provided for use at the meeting with respect to such nominee. If the
presiding officer determines that a nomination was not made in accordance with
the terms of this Section 3, he shall so declare at the annual meeting and such
nomination shall be disregarded. If there is an Interested Stockholder, any
determinations to be made by the Board of Directors or a designated committee
thereof pursuant to the provisions of this paragraph shall also require the
concurrence of a majority of the Continuing Directors then in office.
SECTION 4. Qualification. Each Director shall have such qualifications as
are required by applicable law. To the extent required by law, each Director,
when appointed or elected, shall take an oath that he will faithfully perform
the duties of his office. Any such oath shall be taken before a notary public or
justice of the peace, who is not an officer of the Corporation, and a record of
such oath shall be made a part of the records of the Corporation. Each Director
shall be a citizen and a resident of the Commonwealth of Massachusetts or the
State of New Hampshire. Three-fourths of the Board of Directors shall be
citizens and residents of the Commonwealth of Massachusetts.
SECTION 5. Resignation. Any Director may resign at any time by written
notice to the Chairman of the Board and Chief Executive Officer or the Board of
Directors. A resignation shall be effective when accepted by the Board of
Directors.
SECTION 6. Removal. Any Director may be removed from office as provided in
the Articles of Organization.
SECTION 7. Vacancies. Any vacancy occurring on the Board of Directors as a
result of resignation, removal, death or increase in the authorized number of
Directors may be filled by vote of a majority of the remaining Directors (unless
there is an Interested Stockholder, in which case the affirmative vote of a
majority of the Continuing Directors shall also be required). A Director elected
to fill such a vacancy shall be elected to serve for the remainder of the full
term of the class of Directors in which the vacancy occurred or the new
directorship was created and until such director's successor has been elected
and qualified.
SECTION 8. Compensation. The members of the Board of Directors and the
members of either standing or special committees shall receive such compensation
as the Board of Directors may determine. Directors who are also employees of the
Corporation shall not receive compensation for serving on the Board of
Directors.
<PAGE>
-7-
SECTION 9. Regular Meetings. A regular meeting of the Board of Directors
shall be held without other notice than this By-Law on the same date and at the
same place as the annual meeting of shareholders following such meeting of
shareholders. The Board of Directors may provide the hour, date and place for
the holding of regular meetings by resolution without other notice than such
resolution. The Board of Directors shall meet at least once in each calendar
quarter at a place or places fixed from time to time by the Board of Directors
or the Chairman of the Board, if one is elected.
SECTION 10. Special Meetings. Special meetings of the Board of Directors
may be called by or at the request of the Chairman of the Board or if there is
an Interested Stockholder, a majority of the Continuing Directors, or else by a
majority of the Directors. The person or persons authorized to call special
meetings of the Board of Directors may fix the hour, date and place for holding
a special meeting.
SECTION 11. Notice of Special Meetings. Notice of the hour, date and place
of all special meetings of the Board of Directors shall be given to each
Director by the Clerk or an Assistant Clerk, or in the case of the death,
absence, incapacity or refusal of such persons, by the officer or one of the
Directors calling the meeting. Notice of any special meeting of the Board of
Directors shall be given to each Director in person, by telephone, sent to his
business or home address by telegram at least twenty-four hours in advance of
the meeting or by written notice mailed to his business or home address at least
5 days in advance of such meeting. Such notice shall be deemed to be delivered
when deposited in the mail so addressed, with postage thereon prepaid if mailed,
or when delivered to the telegraph company if sent by telegram. When any Board
of Directors meeting, either regular or special, is adjourned for thirty days or
more, notice of the adjourned meeting shall be given as in the case of an
original meeting. It shall not be necessary to give any notice of the hour, date
or place of any meeting adjourned for less than thirty days or of the business
to be transacted thereat, other than an announcement at the meeting at which
such adjournment is taken of the hour, date and place to which the meeting is
adjourned. A written waiver of notice executed before or after a meeting by a
Director and filed with the records of the meeting shall be deemed to be
equivalent to notice of the meeting. The attendance of a Director at a meeting
shall constitute a waiver of notice of such meeting, except where a Director
attends a meeting for the express purpose of objecting to the transaction of any
business because such meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any meeting of the Board of
Directors need be specified in the notice or waiver of notice of such meeting.
SECTION 12. Quorum. A majority of the number of Directors then in office
shall constitute a quorum for the transaction of business at any meeting of the
Board of Directors, but if less than a quorum is present at a meeting, a
majority of the Directors present may adjourn the meeting from time to time, and
the meeting may be held as adjourned without further notice, except as provided
in Section I I of this Article III. Any business which might have been
transacted at the meeting as originally noticed may be transacted at such
adjourned meeting at which a quorum is present.
<PAGE>
-8-
SECTION 13. Action at a Meeting. The act of the majority of the Directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors, unless a greater number is prescribed by law, by the Articles of
Organization or by these By-Laws.
SECTION 14. Action by Consent. Any action required or permitted to be taken
by the Board of Directors at any meeting may be taken without a meeting if a
consent in writing, setting forth the action so taken, shall be signed by all of
the Directors. Such written consents shall be filed with the records of the
meetings of the Board of Directors and shall be treated for all purposes as a
vote at a meeting of the Board of Directors.
SECTION 15. Presumption of Assent. A director of the Corporation who is
present at a meeting of the Board of Directors at which action on any
Corporation matter is taken shall be presumed to have assented to the action
taken unless his dissent or abstention shall be entered in the minutes of the
meeting or unless he shall file a written dissent to such action with the person
acting as the Clerk of the meeting before the adjournment thereof or shall
forward such dissent by registered mail to the Clerk of the Corporation within
five days after the date a copy of the minutes of the meeting is received. Such
right to dissent shall not apply to a Director who voted in favor of such
action.
SECTION 16. Committees. The Board of Directors may, by resolution adopted
by a majority of the Board of Directors, designate one or more committees,
including without limitation an executive committee, each committee to consists
of not fewer than three members elected by the Board of Directors from among its
members. The Board of Directors may delegate to an executive committee or such
other committees some or all of its powers except those which by law, by the
Articles of Organization or by these By-Laws may not be delegated. Except as the
Board of Directors may otherwise determine, any such committee may make rules
for the conduct of its business, but unless otherwise provided by the Board of
Directors or in such rules, its business shall be conducted so far as possible
in the same manner as is provided by these By-Laws for the Board of Directors.
All members of such committees shall hold such offices at the pleasure of the
Board of Directors. The Board of Directors may abolish any such committee at any
time, subject to applicable law. Any committee to which the Board of Directors
delegates any of its powers or duties shall keep written records of its meetings
and shall report its actions to the Board of Directors. The Board of Directors
shall have power to rescind any action of any committee, but no such rescission
shall have retroactive effect.
SECTION 17. Manner of Participation. Members of the Board of Directors or
of committees elected by the Board pursuant to Section 16 of this Article III
may participate in meetings of the Board or of such committees by means of
conference telephone or similar communications equipment by which all persons
participating in the meeting can hear each other. Such participation shall
constitute presence in person but shall not constitute attendance for the
purpose of compensation pursuant to Section 8 of this Article III, unless the
Board of Directors by resolution so provides.
<PAGE>
-9-
ARTICLE IV
OFFICERS
SECTION 1. Enumeration. The officers of the Corporation shall consist of a
Chairman of the Board and Chief Executive Officer, a Vice Chairman, a President,
a Treasurer, a Clerk and such other officers, including, without limitation, one
or more Executive Vice Presidents, Senior Vice Presidents, Vice-Presidents,
Assistant Vice Presidents, Assistant Treasurers and Assistant Clerks as the
Board of Directors may determine to be necessary for the management of the
Corporation.
SECTION 2. Election. All officers shall be elected by the Board of
Directors at the meeting of the Board of Directors following the annual meeting
of the shareholders.
SECTION 3. Qualification. Any two or more offices may be held by any
person. Any officer may be required by the Board of Directors to give bond for
the faithful performance of his duties in such amount and with such sureties as
the Board of Directors may determine.
SECTION 4. Tenure. All officers shall hold office until the first meeting
of the Board of Directors following the next annual meeting of shareholders, or
for such shorter terms as the Board of Directors may fix at the time such
officers are chosen. Any officer may resign at any time by written notice to the
Chairman of the Board and Chief Executive Officer or the Board of Directors.
Such resignation shall be effective upon receipt unless the resignation
otherwise provides. Election or appointment of an officer, employee or agent
shall not of itself create contract rights. The Board of Directors may, however,
authorize the Corporation to enter into an employment contract with any officer
in accordance with law, but no such contract right shall impair the right of the
Board of Directors to remove any officer at any time in accordance with Section
5 of this Article IV.
SECTION 5. Removal. The Board of Directors may remove any officer with or
without cause by a vote of a majority of the entire number of Directors then in
office; provided, however, that if at the time of such action there is an
Interested Stockholder, such action shall in addition require a majority vote of
the Continuing Directors then in office; and further provided, that such
removal, other than for cause, shall be without prejudice to the contract
rights, if any, of the persons involved.
SECTION 6. Absence or Disability. In the event of the absence or disability
of any officer, the Board of Directors may designate another officer to act
temporarily in place of such absent or disabled officer.
SECTION 7. Vacancies. Any vacancy in any office may be filled for the
unexpired portion of the term by the Board of Directors.
SECTION 8. Chairman of the Board and Chief Executive Officer. The Chairman
of the Board and Chief Executive Officer shall, subject to the direction of the
Board of Directors, have general supervision and control of the Corporation's
business and shall preside, when present, at all meetings
<PAGE>
-10-
of the shareholders. The Chairman of the Board and Chief Executive Officer shall
preside at all meetings of the Board of Directors.
SECTION 9. Vice Chairman. If the Chairman of the Board and Chief Executive
Officer is absent, the Vice Chairman shall preside at all meetings of the Board
of Directors.
SECTION 10. The President. The President shall preside at all meetings of
the Board of Directors if the Chairman of the Board and Chief Executive Officer
and the Vice Chairman are absent. The President shall also have such powers and
perform such duties as the Chairman of the Board and Chief Executive Officer may
from time to time designate.
SECTION 11. Executive Vice Presidents, Senior Vice Presidents, Vice
Presidents, Treasurer and Other Officers. Any Executive Vice President, any
Senior Vice President, any Vice President, the Treasurer and any other Officers
whose powers and duties are not otherwise specifically provided for herein shall
have such powers and shall perform such duties as the Chairman of the Board and
Chief Executive Officer may from time to time designate.
SECTION 12. Clerk and Assistant Clerks. The Clerk or, in the absence of the
Clerk, any Assistant Clerk (if one or more is elected by the shareholders or the
Board of Directors) shall keep a record of the meetings of shareholders and a
record of the meetings of the Board of Directors. Otherwise a Temporary Clerk
designated by the person presiding at the meeting shall perform the Clerk's
duties.
ARTICLE V
CAPITAL STOCK
SECTION 1. Certificates of Stock. Unless otherwise provided by the Board of
Directors, each stockholder shall be entitled to a certificate of the capital
stock of the Corporation in such form as may from time to time be prescribed by
the Board of Directors. Such certificate shall be signed by the Chairman of the
Board and Chief Executive Officer or the President and by the Treasurer or an
Assistant Treasurer. Such signatures may be facsimile if the certificate is
signed by a transfer agent or by a registrar, other than a Director, officer or
employee of the Corporation. In case any officer who has signed or whose
facsimile signature has been placed on such certificate shall have ceased to be
such officer before such certificate is issued, it may be issued by the
Corporation with the same effect as if he were such officer at the time of its
issue. Every certificate for shares of stock which are subject to any
restriction on transfer and every certificate issued when the Corporation is
authorized to issue more than one class or series of stock shall contain such
legend with respect thereto as is required by law.
SECTION 2. Transfers. Subject to any restrictions on transfer and unless
otherwise provided by the Board of Directors, shares of stock may be transferred
on the books of the Corporation by the surrender to the Corporation or its
transfer agent of the certificate therefore properly endorsed or
<PAGE>
-11-
accompanied by a written assignment and power of attorney properly executed,
with transfer stamps (if necessary) affixed, and with such proof of the
authenticity of signature as the Corporation or its transfer agent may
reasonably require.
SECTION 3. Record Holders. Except as otherwise required by law, by the
Articles of Organization or by these By-Laws, the Corporation shall be entitled
to treat the record holder of stock as shown on its books as the owner of such
stock for all purposes, including the payment of dividends and the right to
vote, regardless of any transfer, pledge or other disposition of such stock,
until the shares have been transferred on the books of the Corporation in
accordance with the requirements of these By-Laws. It shall be the duty of each
stockholder to notify the Corporation of his post office address.
SECTION 4. Record Date. The Board of Directors may fix in advance a time of
not more than sixty days before the date of any meeting of the shareholders as
the date for the payment of any dividend or the making of any distribution to
shareholders or the last day on which the consent or dissent of shareholders may
be effectively expressed for any purpose, as the record date for determining the
shareholders having the right to notice of and to vote at such meeting, and any
adjournment thereof, or the right to receive such dividend or distribution or
the right to give such consent or dissent. In such case, only shareholders of
record on such record date shall have such right, notwithstanding any transfer
of stock on the books of the Corporation after the record date. Without fixing
such record date, the Board of Directors may for any of such purposes close the
transfer books for all or any part of such period. If no record date is fixed
and the transfer books are not closed, (a) the record date for determining
shareholders having the right to notice of or to vote at a meeting of
shareholders shall be at the close of business on the day next preceding the day
on which notice is given, and (b) the record date for determining shareholders
for any other purpose shall be at the close of business on the date on which the
Board of Directors acts with respect thereto.
SECTION 5. Replacement of Certificates. In case of the alleged loss,
destruction or mutilation of a certificate of stock, a duplicate certificate may
be issued in place thereof, upon such terms as the Board of Directors may
prescribe.
SECTION 6. Issuance of Capital Stock. Except as provided by law, the Board
of Directors shall have the authority to issue or reserve for issue from time to
time the whole or any part of the capital stock of the Corporation which may be
authorized from time to time, to such persons or organizations, for such
consideration, whether cash, property, services or expenses and on such terms as
the Board of Directors may determine, including, without limitation, the
granting of options, warrants or conversion or other rights to subscribe to said
capital stock.
SECTION 7. Dividends. Subject to applicable law, the Articles of
Organization and these ByLaws, the Board of Directors may from time to time
declare, and the Corporation may pay, dividends on shares of its capital stock
entitled to dividends.
<PAGE>
-12-
ARTICLE VI
INDEMNIFICATION
SECTION 1. Definitions. For purposes of this Article: (a) "Officer" means
any person who serves or has served as a Director of the Corporation or in any
other office filled by election or appointment by the shareholders or the Board
of Directors and any heirs or personal representatives of such person; (b)
"Non-Officer Employee" means any person who serves or has served as an employee
of the Corporation but who is not or was not an Officer and any heirs or
personal representatives of such person; (c) "Proceeding" means any action, suit
or proceeding, whether civil, criminal, derivative, administrative or
investigative, brought or threatened in or before any court, tribunal,
administrative or legislative body or agency and any claim which could be the
subject of a Proceeding; and (d) "Expenses" means any liability fixed by a
judgment, order, decree or award in a Proceeding, any amount reasonably paid in
settlement of a Proceeding and any professional fees or other disbursements
reasonably incurred in a Proceeding.
SECTION 2. Officers. Except as provided in Sections 4 and 5 of this Article
VI, each Officer of the Corporation shall be indemnified by the Corporation
against all Expenses incurred by such Officer in connection with any Proceedings
in which such Officer is involved as a result of serving or having served (a) as
an Officer or employee of the Corporation; (b) as a director, officer or
employee of any corporation, organization, partnership, joint venture, trust or
other entity the majority of the equity of which is owned by the Corporation; or
(c) in any capacity with any other corporation, organization, partnership, joint
venture, trust or other entity at the request or direction of the Board of
Directors.
SECTION 3. Non-Officer Employees. Except as provided in Sections 4 and 5 of
this Article VI, each Non-Officer Employee of the Corporation may, in the
discretion of the Board of Directors, be indemnified against any or all Expenses
incurred by such Non-Officer Employee in connection with any Proceeding in which
such Non-Officer Employee is involved as a result of serving or having served
(a) as a Non-Officer Employee of the Corporation; (b) as a director, officer or
employee of any corporation, organization, partnership, joint venture, trust or
other entity the majority of the equity of which is owned by the Corporation; or
(c) in any capacity with any other corporation, organization, partnership, joint
venture, trust or other entity at the request or direction of the Corporation.
SECTION 4. Service at the Request or Direction of the Board of Directors.
No indemnification shall be provided to an Officer or Non-Officer Employee with
respect to serving or having served in any of the capacities described in
Section 2(c) or 3(c) above unless the following two conditions are met: (a) such
service was requested or directed in each specific case by vote of the Board of
Directors prior to the occurrence of the event to which the indemnification
relates, and (b) the Corporation maintains insurance coverage for the type of
indemnification sought. In no event shall the Corporation be liable for
indemnification under Section 2(c) or 3(c) for any amount in excess of the
proceeds of insurance received with respect to such coverage as the Corporation
in its discretion may elect to carry. The Corporation may but shall not be
required to maintain insurance coverage with respect to indemnification under
Section 2(c) or 3(c) above. Notwithstanding any other provision
<PAGE>
-13-
of this Section 4, the Board of Directors may provide an Officer or Non-Officer
Employee with indemnification under Section 2(c) or 3(c) above as to a specific
Proceeding even if one or both of the two conditions specified in this Section 4
have not been met and even if the amount of the indemnification exceeds the
amount of the proceeds of any insurance which the Corporation may have elected
to carry, provided that the Board of Directors in its discretion determines it
to be in the best interests of the Corporation to do so.
SECTION 5. Good Faith. Notwithstanding the foregoing, no indemnification
shall be provided to an Officer or to a Non-Officer Employee with respect to a
matter as to which such person shall have been adjudicated in any Proceeding not
to have acted in good faith in the reasonable belief that the action of such
person was in or not opposed to the best interests of the Corporation. In the
event that a Proceeding is compromised or settled so as to impose any liability
or obligation upon an Officer or Non-Officer Employee, no indemnification shall
be provided to said Officer or Non- Officer Employee with respect to a matter if
there be a determination that with respect to such matter such person did not
act in good faith in the reasonable belief that the action of such person was in
or not opposed to the best interests of the Corporation. The determination shall
be made by a majority vote of those Directors who are not involved in such
Proceeding. However, if more than half of the Directors are involved in such
Proceeding, the determination shall be made by a majority vote of a committee of
three disinterested Directors chosen by the disinterested Directors at a regular
or special meeting. If there are less than three disinterested Directors, the
determination shall be based upon the opinion of the Corporation's regular
outside counsel.
SECTION 6. Prior to Final Disposition. To the extent authorized by the Board
of Directors, by the committee of Directors referred to in Section 5 of this
Article VI or by the opinion of the Corporation's regular outside counsel, any
indemnification provided for under this Article IX may include payment by the
Corporation of Expenses incurred in defending a Proceeding in advance of the
final disposition of such Proceeding upon receipt of an undertaking by the
Officer or Non-Officer Employee seeking indemnification to repay such payment if
such Officer or Non-Officer Employee shall be adjudicated or determined to be
not entitled to indemnification under this Article VI.
SECTION 7. Insurance. The Corporation may purchase and maintain insurance
to protect itself and any Officer or Non-Officer Employee against any liability
of any character asserted against or incurred by the Corporation or any such
Officer or Non-Officer Employee, or arising out of any such status, whether or
not the Corporation would have the power to indemnify such person against such
liability by law or under the provisions of this Article VI.
SECTION 8. Other Indemnification Rights. Nothing in this Article VI shall
limit any lawful rights to indemnification existing independently of this
Article VI.
SECTION 9. Merger or Consolidation. If the Corporation is merged into or
consolidated with another corporation and the Corporation is not the surviving
corporation, the surviving corporation shall assume the obligations of the
Corporation under this Article VI with respect to any Proceeding arising out of
or relating to any actions, transactions or facts occurring at or prior to the
date of such merger or consolidation.
<PAGE>
-14-
SECTION 10. Savings Clause. If this Article VI or any portion hereof shall
be invalidated on any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify and advance expenses to each indemnitee
as to any expenses (including reasonable attorneys' fees), judgments, fines,
liabilities, losses, and amounts paid in settlement in connection with any
action, suit, proceeding or investigation, whether civil, criminal or
administrative, including an action by or in the right of the Corporation, to
the fullest extent permitted by any applicable portion of this Article VI that
shall not have been invalidated and to the fullest extent permitted by
applicable law.
SECTION 11. Subsequent Legislation. If the Massachusetts General Laws are
amended after adoption of this Article VI to expand further the indemnification
permitted to an indemnitee, then the Corporation shall indemnify all such
persons to the fullest extent permitted by the Massachusetts General Laws, as so
amended.
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 1. Amendment of By-Laws. These By-Laws may be adopted, altered,
amended, changed or repealed as provided in the Articles of Organization.
SECTION 2. Fiscal Year. Except as otherwise determined by the Board of
Directors, the fiscal year of the Corporation shall be the twelve months ending
December 31 or on such other date as may be required by law.
SECTION 3. Seal. The Board of Directors shall have power to adopt and alter
the seal of the Corporation.
SECTION 4. Execution of Instruments. All deeds, leases, transfers,
contracts, bonds, notes and other obligations to be entered into by the
Corporation in the ordinary course of its business without Board of Directors'
action may be executed on behalf of the Corporation by the Chairman of the Board
and Chief Executive Officer, the President, the Treasurer or any other officer,
employee or agent of the Corporation as the Board of Directors or the Executive
Committee may authorize.
SECTION 5. Voting of Securities. Unless otherwise provided by the Board of
Directors, the Chairman of the Board and Chief Executive Officer, the President
or the Treasurer may waive notice of and act on behalf of the Corporation, or
appoint another person or persons to act as proxy or attorney in fact for the
Corporation with or without discretionary power and/or power of substitution, at
any meeting of shareholders of any other organization, any of whose securities
are held by the Corporation. Any person or persons authorized or otherwise
designated in the manner provided herein shall have full right, power and
authority to vote any shares of stock issued by another corporation in the name
of the Corporation.
SECTION 6. Articles of Organization. All references in these By-Laws to the
Articles of Organization shall be deemed to refer to the Articles of
Organization of the Corporation, as may be amended and/or restated and otherwise
in effect from time to time.
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the
unaudited financial statements of Enterprise Bancorp, Inc. at and for the period
ended June 30, 1997 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 18,915,377
<INT-BEARING-DEPOSITS> 213,313,135
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 121,173,764
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 164,290,320
<ALLOWANCE> 4,077,135
<TOTAL-ASSETS> 308,508,692
<DEPOSITS> 261,285,428
<SHORT-TERM> 23,248,223
<LIABILITIES-OTHER> 2,584,992
<LONG-TERM> 0
0
0
<COMMON> 15,762
<OTHER-SE> 21,374,287
<TOTAL-LIABILITIES-AND-EQUITY> 308,508,692
<INTEREST-LOAN> 7,184,989
<INTEREST-INVEST> 3,822,227
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 11,007,216
<INTEREST-DEPOSIT> 4,071,557
<INTEREST-EXPENSE> 4,524,300
<INTEREST-INCOME-NET> 6,482,916
<LOAN-LOSSES> 120,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 5,211,622
<INCOME-PRETAX> 2,087,053
<INCOME-PRE-EXTRAORDINARY> 2,087,053
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,329,641
<EPS-PRIMARY> .84
<EPS-DILUTED> .84
<YIELD-ACTUAL> 4.77
<LOANS-NON> 2,254,675
<LOANS-PAST> 115,375
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 582,396
<ALLOWANCE-OPEN> 3,894,520
<CHARGE-OFFS> 86,341
<RECOVERIES> 148,956
<ALLOWANCE-CLOSE> 4,077,135
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</TABLE>
