<PAGE> 1
==============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934 [Fee Required]
For the quarterly period ended June 30, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934 [No Fee Required]
For the transition period from to
Commission file number 333-14737
----------------
ENTERBANK HOLDINGS, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 43-1706259
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
150 NORTH MERAMEC, CLAYTON, MISSOURI 63105
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 314-725-5500
----------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 of the Securities Exchange Act of 1934
during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
-------- --------
Indicate the number of shares outstanding of each of the registrant's classes
of common stock as of July 31, 1997:
Common Stock, $.01 par value ---- 2,113,972 shares outstanding
==============================================================================
<PAGE> 2
<TABLE>
ENTERBANK HOLDINGS, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
===============================================================================
<CAPTION>
Page
----
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1:
Consolidated Balance Sheets 1
Consolidated Statements of Income 2
Consolidated Statements of Cash Flows 3
Notes to Consolidated Financial Statements 4
Item 2:
Management's Discussion and Analysis of Financial
Condition and Results of Operations 5
PART II - OTHER INFORMATION
Item 6:
Exhibits and Reports on Form 8-K 14
Signatures 15
</TABLE>
<PAGE> 3
<TABLE>
ENTERBANK HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
June 30, 1997 and December 31, 1996
<CAPTION>
=============================================================================================================
(Unaudited)
June 30, December 31,
ASSETS 1997 1996
- ------------------------------------------------------------------------------------------------------------
<C> <C>
Cash and due from banks $ 16,210,088 9,261,035
Federal funds sold 17,277,450 23,250,000
Interest bearing deposits 30,063 -
Investments in debt and equity securities:
Available for sale, at estimated fair value 19,420,622 14,005,797
Held to maturity, at amortized cost (estimated
fair value of $825,839 at June 30, 1997
and $1,239,498 at December 31, 1996) 826,617 1,240,183
- ------------------------------------------------------------------------------------------------------------
Total investments in debt and equity securities 20,247,239 15,245,980
- ------------------------------------------------------------------------------------------------------------
Loans, less unearned loan fees 176,295,990 134,133,092
Less allowance for loan losses 2,090,000 1,765,000
- ------------------------------------------------------------------------------------------------------------
Loans, net 174,205,990 132,368,092
- ------------------------------------------------------------------------------------------------------------
Other real estate owned 806,072 874,426
Office equipment and leasehold improvements 1,581,195 1,119,268
Accrued interest receivable 1,241,509 935,864
Investment in Enterprise Fund, L.P. 226,574 550,087
Prepaid expenses and other assets 1,926,338 979,361
- ------------------------------------------------------------------------------------------------------------
Total assets $233,752,518 184,584,113
=============================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
=============================================================================================================
Deposits:
Demand $ 38,926,720 31,137,649
Interest-bearing transaction accounts 18,905,475 16,648,185
Money market accounts 81,332,086 54,637,747
Savings 1,279,928 1,030,346
Certificates of deposits:
$100,000 and over 28,935,820 24,067,363
Other 41,140,732 41,439,799
- ------------------------------------------------------------------------------------------------------------
Total deposits 210,520,761 168,961,089
Notes payable - 300,000
Accounts payable and accrued expenses 711,652 565,131
- ------------------------------------------------------------------------------------------------------------
Total liabilities 211,232,413 169,826,220
- ------------------------------------------------------------------------------------------------------------
Shareholders' equity:
Common stock, $.01 par value; authorized 3,000,000 shares;
issued and outstanding 2,113,972 shares at June 30, 1997
and 1,662,360 shares at December 31, 1996 21,140 16,624
Surplus 16,447,958 9,595,956
Retained earnings 6,046,928 5,138,612
Net unrealized holding gains (losses) on
available-for-sale securities 4,079 6,701
- ------------------------------------------------------------------------------------------------------------
Total shareholders' equity 22,520,105 14,757,893
- ------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $233,752,518 184,584,113
=============================================================================================================
See accompanying notes to consolidated financial statements.
</TABLE>
1
<PAGE> 4
<TABLE>
ENTERBANK HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Statements of Income
Three months and six months ended June 30, 1997 and 1996
<CAPTION>
=======================================================================================================================
(Unaudited) (Unaudited)
Three months ended Six months ended
June 30, June 30,
----------------------- ---------------------
1997 1996 1997 1996
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans $3,863,377 2,779,006 7,169,213 5,388,195
Interest on debt securities:
Taxable 322,341 156,744 563,572 355,385
Nontaxable 7,848 8,142 17,540 17,023
Interest on federal funds sold 170,348 70,896 479,407 160,101
Interest on interest earning deposits 223 - 358 -
- -----------------------------------------------------------------------------------------------------------------------
Total interest income 4,364,137 3,014,788 8,230,090 5,920,704
- -----------------------------------------------------------------------------------------------------------------------
Interest expense:
Interest-bearing transaction accounts 95,251 81,746 190,121 175,789
Money market accounts 858,897 456,205 1,608,349 907,410
Savings 7,498 7,688 15,294 15,101
Certificates of deposit:
$100,000 and over 392,948 347,108 743,695 728,751
Other 626,572 403,787 1,264,564 763,766
Federal funds purchased - 78 - 78
Notes payable - - 2,888 -
- -----------------------------------------------------------------------------------------------------------------------
Total interest expense 1,981,166 1,296,612 3,824,911 2,590,895
- -----------------------------------------------------------------------------------------------------------------------
Net interest income 2,382,971 1,718,176 4,405,179 3,329,809
Provision for loan losses 279,183 46,141 377,757 92,897
- -----------------------------------------------------------------------------------------------------------------------
Net interest income after provision for
loan losses 2,103,788 1,672,035 4,027,422 3,236,912
- -----------------------------------------------------------------------------------------------------------------------
Noninterest income:
Service charges on deposit accounts 44,544 31,908 79,884 63,963
Other service charges and fee income 59,962 300,320 139,733 512,071
Loss on investment in Enterprise Fund, L.P. (2,212) (52,236) (4,013) (56,050)
- -----------------------------------------------------------------------------------------------------------------------
Total noninterest income 102,294 279,992 215,604 519,984
- -----------------------------------------------------------------------------------------------------------------------
Noninterest expense:
Salaries 650,293 535,974 1,256,774 973,388
Payroll taxes and employee benefits 219,997 171,232 429,674 372,799
Occupancy 98,785 73,777 194,335 145,595
FDIC insurance - 500 9,324 1,000
Data processing 52,435 64,583 113,614 114,559
Other 332,999 425,979 633,128 799,604
- -----------------------------------------------------------------------------------------------------------------------
Total noninterest expense 1,354,509 1,272,045 2,636,849 2,406,945
- -----------------------------------------------------------------------------------------------------------------------
Income before income tax expense 851,573 679,982 1,606,177 1,349,951
Income tax expense 311,757 252,714 602,729 512,945
- -----------------------------------------------------------------------------------------------------------------------
Net income $ 539,816 427,268 1,003,448 837,006
=======================================================================================================================
Earnings per share $ 0.24 0.25 0.47 0.50
Weighted average common shares and common
stock equivalents outstanding 2,236,146 1,685,240 2,123,867 1,679,992
=======================================================================================================================
See accompanying notes to consolidated financial statements.
</TABLE>
2
<PAGE> 5
<TABLE>
ENTERBANK HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Six months ended June 30, 1997 and 1996
<CAPTION>
===============================================================================================================
(Unaudited)
--------------------------------
1997 1996
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,003,448 837,006
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 143,241 102,895
Provision for loan losses 377,757 92,897
Write-downs and losses on other real estate owned (25,728) -
Net (amortization) accretion of debt securities (143,992) 17,775
Loss on investment in Enterprise Fund, L.P. 4,013 56,050
(Increase) decrease in accrued interest receivable (305,645) 88,737
Increase in prepaid expenses and other assets (946,979) (203,277)
Increase in accounts payable and accrued expenses 147,874 338,845
- ---------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities 253,989 1,330,928
- ---------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Decrease in federal funds sold 5,972,550 10,030,000
Increase in interest earning deposits (30,063) -
Purchases of available-for-sale debt securities (17,837,997) (989,794)
Purchases of available-for sale equity securities (90,500) (94,200)
Purchases of held-to-maturity debt securities - (109,004)
Proceeds from maturities of available-for-sale debt securities 12,660,000 7,440,000
Proceeds from maturities and principal paydowns on
held-to-maturity debt securities 407,256 3,434
Net increase in loans (42,121,573) (10,302,462)
Purchases of office equipment and leasehold improvements (605,168) (182,857)
(Increase) decrease in Investment in Enterprise Fund, L.P. 319,500 (520,500)
- ---------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities (41,325,995) 5,274,617
- ---------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Net increase (decrease) in demand and savings accounts 36,990,282 (6,136,456)
Net increase (decrease) in certificates of deposit 4,569,390 (764,398)
Decrease in notes payable (300,000) -
Cash dividends paid (95,131) (51,218)
Proceeds from the issuance of common stock 6,856,518 -
- ---------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 48,021,059 (6,952,072)
- ---------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and due from banks 6,949,053 (346,527)
Cash and due from banks, beginning of period 9,261,035 8,109,804
- ---------------------------------------------------------------------------------------------------------------
Cash and due from banks, end of period $16,210,088 7,763,277
===============================================================================================================
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 3,831,439 2,640,965
Income taxes 705,258 467,759
Noncash transactions:
Transfers to other real estate owned in settlement of loans 55,000 50,000
Loans made to facilitate the sale of other real estate owned 149,082 50,000
===============================================================================================================
See accompanying notes to consolidated financial statements.
</TABLE>
3
<PAGE> 6
ENTERBANK HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 1997 and December 31, 1996
==============================================================================
(1) BASIS OF PRESENTATION
The accompanying consolidated financial statements of Enterbank
Holdings, Inc. and subsidiaries (the Company) are unaudited and should
be read in conjunction with the consolidated financial statements
contained in the 1996 annual report on Form 10-K. In the opinion of
management, all adjustments, consisting of normal recurring accruals
considered necessary for a fair presentation of the results of
operations for the interim periods presented herein, have been
included. Operating results for the six month period ended June 30,
1997 are not necessarily indicative of the results that may be
expected for any other interim period or for the year ending December
31, 1997.
The consolidated financial statements include the accounts of the
Company and its subsidiaries. All significant intercompany accounts
and transactions have been eliminated.
(2) STOCK OFFERING
On February 14, 1997, the Company completed a stock offering of
451,612 shares of common stock. These shares were offered to the public
at $15.50 per share. The offering allowed for the sale of a minimum of
193,548 shares, or $3,000,000, and a maximum of 451,612 shares, or
$7,000,000 in common stock. The maximum number of shares was sold at
$15.50 per share.
4
<PAGE> 7
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
Total assets at June 30, 1997 were $234 million, an increase of $49 million,
or 26%, over total assets of $185 million at December 31, 1996. Loans and
leases were $176 million, an increase of $42 million, or 31%, over total loans
and leases of $134 million at December 31, 1996. The increase in loans and
leases is, in part, attributable to the Company's investment in additional
business development officers. Federal funds sold and investment securities
were $36 million, a decrease of $2 million, or 5%, from total federal funds
sold and investment securities of $38 million at December 31, 1996. The
decrease resulted from the increased loans in the second quarter of 1997.
Total deposits at June 30, 1997 were $211 million, an increase of $42 million,
or 25%, over total deposits of $169 million at December 31, 1996. Deposit
growth occurred primarily in money market accounts and demand deposit
accounts. Total money market accounts at June 30, 1997 were $81 million, an
increase of $26 million, or 47%, over total money market accounts of $55
million at December 31, 1996. Total demand deposits of June 30, 1997 were $39
million, an increase of $8 million, or 25%, over total demand deposits of $31
million at December 31, 1996.
Total shareholders' equity increased $7.7 million primarily due to retained
earnings of $900,000 for the six months ended June 30, 1997 and net proceeds
of $6.8 million from the sale of common stock.
On March 19, 1997, the Board of Directors of the Company approved an
investment of $510,000 in City Bancorp, a proposed Missouri bank holding
company. The investment is held in escrow pending regulatory approval of the
proposed holding company, bank charter and investment. The funds held in
escrow are included in prepaid expenses and other assets. City Bancorp is the
proposed holding company for a proposed newly-chartered Missouri state bank
which will be located in Springfield, Missouri. The Company believes this
investment will provide an opportunity to participate in the growing
Springfield market by affiliating with an organization with a philosophy
similar to its own. The management of City Bancorp consists of individuals
with whom the Company's management has worked with in the past and has a good
reputation in the banking industry.
RESULTS OF OPERATIONS
Net income was $1,003,000 for the six month period ended June 30, 1997, an
increase of 20% over net income of $837,000 for the same period in 1996. Net
income for the three month period ended June 30, 1997 was $540,000, an
increase of 26% over net income of $427,000 for the same period in 1996.
Earnings per share for the six months ended June 30, 1997 and 1996 were $0.47
and $0.50, respectively. Earnings per share for the three months ended June
30, 1997 and 1996 were $0.24 and $0.25, respectively. The $0.03 decrease in
earnings per share for the six month period primarily resulted from an
increase in weighted average common stock equivalents outstanding of 443,875
from June 30, 1996 to June 30, 1997. Weighted average common stock
equivalents increased from the issuance of 198,960 shares of common stock upon
the exercise of outstanding warrants in August 1996 and the issuance of
451,612 shares of common stock on February 14, 1997 in the Company's common
stock offering.
5
<PAGE> 8
NET INTEREST INCOME
Net interest income (presented on a tax-equivalent basis) was $4.40 million,
or 4.62% of average earning assets, for the six months ended June 30, 1997, as
compared to $3.33 million, or 5.04% of average earnings assets, for the same
period in 1996. The $1.1 million, or 32%, increase in net interest income
resulted primarily from a $59 million increase in average earning assets to
$192 million for the six months ended June 30, 1997 from $133 million during
the same period in 1996, offset by a lower average earning asset yield and
higher cost of deposits.
Net interest income (presented on a tax-equivalent basis) was $2.4 million, or
4.75% of average earning assets, for the three months ended June 30, 1997, as
compared to $1.7 million, or 5.14% of average earning assets, for the same
period in 1996. The $657,000, or 38%, increase in net interest income
resulted primarily from a $66 million increase in average earning assets to
$200 million for the three months ended June 30, 1997 from $134 million during
the same period in 1996, offset by a lower average earning asset yield and
higher cost of deposits.
The yield on average earning assets decreased from 8.97% for the six months
ended June 30, 1996 to 8.66% for the same period in 1997. The yield on
average earning assets decreased from 9.06% for the three months ended June
30, 1996 to 8.76% for the same period in 1997. The decrease during both
period comparisons is primarily the result of a change in the mix of earning
assets from higher yielding assets, such as loans, to lower yielding assets,
such as investment securities and federal funds sold, and a decrease in the
average yield on loans due to competitive market pressures.
The yield on interest-bearing deposits increased from 4.87% for the three and
six months periods ended June 30, 1996 to 5.02% for the same periods in 1997.
The increase is primarily the result of two factors:
1. An increase in the cost of money market accounts due to
modifications in the rate structure for money market accounts. At
the end of 1996, the Company changed the money market accounts
offered to customers to pay accounts with collected balances over
$300,000 a higher rate.
2. A change in the mix of interest-bearing liabilities from lower
cost deposits, such as interest-bearing transaction accounts and
savings accounts, to higher cost deposits, such as money market
accounts and certificates of deposit.
The following table sets forth, on a tax-equivalent basis, certain information
relating to the Company's average balance sheet, and reflects the average
yield earned on interest-earning assets, the average cost of interest-bearing
liabilities and the resulting net interest income for the three and six month
periods ended June 30:
6
<PAGE> 9
<TABLE>
ENTERBANK HOLDINGS, INC. AND SUBSIDIARIES
Distribution of Average Assets, Liabilities and Shareholder's Equity and Interest Rates
<CAPTION>
===========================================================================================================================
Three months ended June 30,
------------------------------------------------------------------------------
1997 1996
-------------------------------------- -------------------------------------
Percent Interest Average Percent Interest Average
Average of total income/ yield/ Average of total income/ yield/
ASSETS balance assets expense rate balance assets expense rate
- ---------------------------------------------------------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans<F1> $164,116 76.63 % $3,867 9.45 % $116,777 80.25 % $2,782 9.58 %
Taxable investments in debt securities 22,719 10.61 323 5.70 11,157 7.67 156 5.62
Non-taxable investments in debt
securities<F2> 829 0.39 13 6.29 911 0.63 14 6.18
Federal funds sold 12,609 5.89 170 5.41 5,371 3.69 71 5.32
Interest earning deposits 30 0.01 - - - - - -
- ---------------------------------------------------------------------------------------------------------------------------
Total interest-earning assets 200,303 93.53 4,373 8.76 134,216 92.24 3,023 9.06
- ---------------------------------------------------------------------------------------------------------------------------
Noninterest-earning assets:
Cash and due from banks 10,443 4.88 8,733 6.00
Office equipment and leasehold
improvements 1,349 0.63 880 0.60
Prepaid expenses and other assets 4,000 1.87 3,177 2.18
Allowance for possible loan losses (1,955) (0.91) (1,483) (1.02)
- ---------------------------------------------------------------------------------------------------------------------------
Total assets $214,140 100.00 % $145,523 100.00 %
===========================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
- ---------------------------------------------------------------------------------------------------------------------------
Interest-bearing liabilities:
Interest-bearing transaction accounts 15,905 7.43 114 2.87 13,040 8.96 92 2.84
Money market 72,778 33.99 859 4.73 41,098 28.24 456 4.46
Savings 1,214 0.57 7 2.31 1,033 0.71 8 3.11
Certificates of deposit 69,824 32.60 1,020 5.86 52,696 36.21 751 5.73
Notes payable - - - - - - - -
Federal funds purchased - - - - 5 - - -
- ---------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 159,721 74.59 2,000 5.02 107,872 74.12 1,307 4.87
Noninterest-bearing liabilities:
Demand deposits 31,317 14.62 23,791 16.35
Other liabilities 746 0.35 1,146 0.79
- ---------------------------------------------------------------------------------------------------------------------------
Total liabilities 191,784 89.56 132,809 91.26
Shareholders' equity 22,356 10.44 12,714 8.74
- ---------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $214,140 100.00 % $145,523 100.00 %
===========================================================================================================================
Net interest income $2,373 $1,716
===========================================================================================================================
Net interest margin 4.75 % 5.14 %
===========================================================================================================================
<FN>
<F1> Average balances include non-accrual loans. The income on such loans is
included in interest but is recognized only upon receipt.
Loan fees included in interest income are approximately $170,000 and
$156,000 for the three month period ended June 30, 1997 and 1996,
respectively.
Loan fees included in interest income are approximately $305,000 and
$269,000 for the six month period ended June 30, 1997 and 1996,
respectively.
<F2> Non-taxable investment income is presented on a fully tax-equivalent
basis assuming a tax rate of 34%.
<CAPTION>
===========================================================================================================================
Six months ended June 30,
------------------------------------------------------------------------------
1997 1996
-------------------------------------- -------------------------------------
Percent Interest Average Percent Interest Average
Average of total income/ yield/ Average of total income/ yield/
ASSETS balance assets expense rate balance assets expense rate
- ---------------------------------------------------------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans<F1> $152,826 74.56 $7,175 9.47 % $113,576 78.73 % $5,394 9.55 %
Taxable investments in debt securities 20,096 9.80 564 5.66 12,543 8.70 355 5.69
Non-taxable investments in debt
securities<F2> 865 0.42 27 6.29 876 0.61 26 5.97
Federal funds sold 18,174 8.87 479 5.31 6,115 4.24 160 5.26
Interest earning deposits 26 0.01 - - - - - -
- ---------------------------------------------------------------------------------------------------------------------------
Total interest-earning assets 191,987 93.66 8,245 8.66 133,110 92.28 5,935 8.97
- ---------------------------------------------------------------------------------------------------------------------------
Noninterest-earning assets:
Cash and due from banks 9,992 4.87 8,707 6.04
Office equipment and leasehold
improvements 1,269 0.62 846 0.59
Prepaid expenses and other assets 3,635 1.77 3,031 2.10
Allowance for possible loan losses (1,889) (0.92) (1,461) (1.01)
- ---------------------------------------------------------------------------------------------------------------------------
Total assets $204,994 100.00 % $144,233 100.00%
===========================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
- ---------------------------------------------------------------------------------------------------------------------------
Interest-bearing liabilities:
Interest-bearing transaction accounts 15,363 7.49 209 2.74 13,942 9.68 186 2.68
Money market 68,620 33.47 1,608 4.73 40,909 28.36 907 4.46
Savings 1,172 0.57 15 2.58 1,014 0.70 15 2.97
Certificates of deposit 69,101 33.72 2,009 5.86 51,550 35.74 1,493 5.82
Notes payable 50 0.02 3 12.10 - - - -
Federal funds purchased - - - - 3 - - -
- ---------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 154,306 75.27 3,844 5.02 107,418 74.48 2,601 4.87
Noninterest-bearing liabilities:
Demand deposits 29,335 14.31 23,125 16.03
Other liabilities 343 0.17 1,170 0.81
- ---------------------------------------------------------------------------------------------------------------------------
Total liabilities 183,984 89.75 131,713 91.32
Shareholders' equity 21,010 10.25 12,520 8.68
- ---------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $204,994 100.00 % $144,233 100.00 %
===========================================================================================================================
Net interest income $4,401 $3,334
===========================================================================================================================
Net interest margin 4.62 % 5.04 %
===========================================================================================================================
<FN>
<F1> Average balances include non-accrual loans. The income on such loans is
included in interest but is recognized only upon receipt.
Loan fees included in interest income are approximately $170,000 and
$156,000 for the three month period ended June 30, 1997 and 1996,
respectively.
Loan fees included in interest income are approximately $305,000 and
$269,000 for the six month period ended June 30, 1997 and 1996,
respectively.
<F2> Non-taxable investment income is presented on a fully tax-equivalent
basis assuming a tax rate of 34%.
</TABLE>
7
<PAGE> 10
PROVISION FOR POSSIBLE LOAN LOSSES
The provision for possible loan losses was $279,000 and $378,000 for the three
and six month periods ended June 30, 1997, respectively, compared to $46,000
and $93,000 for the same periods in 1996. The increase in provision reflects
an increase in net loan charge-offs of $53,000 from net recoveries of $7,000
for the six months ended June 30, 1997 and 1996, respectively, and loan growth
of $42 million versus $10 million during those same periods.
The following table summarizes changes in the allowance for loan losses
arising from loans charged-off and recoveries on loans previously charged-off,
by loan category, and additions to the allowance that have been charged to
expense:
<TABLE>
<CAPTION>
====================================================================================================
June 30,
-------------------------
1997 1996
- ----------------------------------------------------------------------------------------------------
(dollars in thousands)
<S> <C> <C>
Allowance at beginning of period $1,765 1,400
- ----------------------------------------------------------------------------------------------------
Loans charged off:
Commercial and industrial 24 -
Real estate:
Commercial 45 -
Construction 11 -
Residential - -
Consumer and other - -
- ----------------------------------------------------------------------------------------------------
Total loans charged off 80 -
- ----------------------------------------------------------------------------------------------------
Recoveries of loans previously charged off:
Commercial and industrial 20 -
Real estate:
Commercial 7 7
Construction - -
Residential - -
Consumer and other - -
- ----------------------------------------------------------------------------------------------------
Total recoveries of loans previously charged off 27 7
- ----------------------------------------------------------------------------------------------------
Net loans charged off (recovered) 53 (7)
- ----------------------------------------------------------------------------------------------------
Provisions charged to operations 378 93
- ----------------------------------------------------------------------------------------------------
Allowance at end of period $2,090 1,500
====================================================================================================
</TABLE>
8
<PAGE> 11
<TABLE>
<CAPTION>
===============================================================================================
<S> <C> <C>
Average loans $152,826 113,576
Total loans 176,296 120,773
Nonperforming loans 595 352
Net charge-offs (recoveries) to average loans 0.04% (0.01)%
Allowance for possible loan losses to loans 1.19 1.24
Allowance for possible loan losses to nonperforming
loans 351.26 426.14
===============================================================================================
</TABLE>
The allowance for loan losses is maintained at a level considered adequate to
provide for potential losses. The provision for loan losses is based on a
periodic analysis which considers, among other factors, current economic
conditions, loan portfolio composition, past loan loss experience, independent
appraisals, loan collateral and payment experience. In addition to the
allowance for estimated losses on identified problem loans, an overall
unallocated allowance is established to provide for unidentified credit losses
inherent in the portfolio. As adjustments to the allowance for loan losses
become necessary, they are reflected in the results of operations in the
periods in which they become known.
Management believes the allowance for loan losses is adequate to absorb losses
in the loan portfolio. While management uses available information to
recognize loan losses, future additions to the allowance may be necessary
based on changes in economic conditions. In addition, various regulatory
agencies, as an integral part of their examination process, periodically
review the allowance for loan losses. Such agencies may require the Company
to increase the allowance for loan losses based on their judgments and
interpretations about information available to them at the time of their
examinations.
While the Company has benefited from very low historical net charge-off
experience during an extended period of rapid loan growth, management remains
cognizant that historical loan loss and nonperforming asset experience may not
be indicative of future results. If the experience were to deteriorate and
additional provisions for loan losses were required, future operating results
would be negatively impacted. Both management and the Board of Directors
continually monitor changes in asset quality, market conditions, concentration
of credit and other factors which impact the credit risk associated with the
Company's loan portfolio.
9
<PAGE> 12
The following table sets forth information concerning the Company's
nonperforming assets as of the dates indicated:
<TABLE>
<CAPTION>
====================================================================================================
June 30, December 31,
1997 1996
- ----------------------------------------------------------------------------------------------------
(dollars in thousands)
<S> <C> <C>
Nonaccrual loans $ 323 131
Loans past due 90 days or more and
still accruing interest 272 30
Restructured loans - -
- ----------------------------------------------------------------------------------------------------
Total nonperforming loans 595 161
Foreclosed property 806 874
- ----------------------------------------------------------------------------------------------------
Total nonperforming assets $ 1,401 1,035
====================================================================================================
Total assets $233,753 184,584
Total loans 176,296 134,133
Total loans plus foreclosed property 177,102 135,007
Nonperforming loans to loans 0.34% 0.12%
Nonperforming assets to loans plus
foreclosed property 0.79 0.77
Nonperforming assets to total assets 0.60 0.56
====================================================================================================
</TABLE>
NONINTEREST INCOME
Noninterest income was $102,000 and $216,000 for the three and six months
periods ended June 30, 1997, respectively, as compared to $280,000 and
$520,000 for the same periods in 1996. The decrease is primarily attributed
to merchant credit card income. The Company sold its merchant credit card
portfolio in November 1996. Merchant credit card income in 1997 was $0
compared to $147,000 and $383,000 for the three and six month periods ended
June 30, 1996, respectively. Noninterest income from other sources consists
primarily of service charges and other fees related to deposit accounts.
NONINTEREST EXPENSE
Noninterest expense increased $83,000 and $230,000 to $1,355,000 and
$2,637,000 for the three and six month periods ended June 30, 1997,
respectively. The increases are primarily due to increases in salaries and
benefits expense and occupancy expense, offset by a reduction of $121,000 and
$268,000 for the three and six month periods ended June 30, 1997 in expenses
related to the previously mentioned merchant credit card operation. Increases
in salaries and benefits and occupancy expense are primarily due to the
personnel and temporary facilities for the St. Charles county banking
facility.
10
<PAGE> 13
LIQUIDITY AND INTEREST RATE SENSITIVITY
Liquidity is provided by the Company's earning assets, including short-term
investments in federal funds sold, maturities in the loan portfolio,
maturities in the investment portfolio, amortization of term loans, and by the
Company's deposit inflows, proceeds from borrowings, and retained earnings.
Since inception, the Company has experienced rapid loan and deposit growth
primarily due to an aggressive direct calling effort and sustained economic
growth in the local market served by the Company. Management has pursued
privately held businesses who desire a close working relationship with a
locally-managed, full service bank. Due to the relationship developed with
these customers, management views deposits from this source as a stable
deposit base. Additionally, the Company belongs to a national network of time
depositors (primarily credit unions) who place time deposits with the Company,
typically in increments of $99,000. The Company has used this source of
deposits for four years and considers it to be a stable source of deposits
that allows the Company to acquire funds at a cost below its alternative cost
of funds. There were $29.0 million and $31.2 million of deposits from the
national network with the Company at June 30, 1997 and December 31, 1996,
respectively.
The following table sets forth the amount and maturity of certificates of
deposit that had balances of more than $100,000 at June 30, 1997:
<TABLE>
<CAPTION>
=======================================================================================
Remaining maturity Amount
(dollars in thousands)
- ---------------------------------------------------------------------------------------
<S> <C>
Three months or less $26,323
Over three through six months 2,310
Over six through twelve months 303
Over twelve months -
- ---------------------------------------------------------------------------------------
$28,936
=======================================================================================
</TABLE>
The asset/liability management process, which involves management of the
components of the balance sheet to allow assets and liabilities to reprice at
approximately the same time, is an ever-changing process essential to
minimizing the effect of interest rate fluctuations on net interest income.
CAPITAL ADEQUACY
In April 1996, the Company obtained a $1,000,000 unsecured line of credit.
The line of credit was a one year interest only note accruing interest at the
prime rate. The outstanding principal balance on the loan as of December 31,
1996 was $300,000 which was repaid during the three-month period ended March
31, 1997 from the proceeds of the common stock offering. The line of credit
was not renewed at the maturity date in April 1997 at the request of the
Company.
11
<PAGE> 14
Risk-based capital guidelines for financial institutions were adopted by
regulatory authorities effective January 1, 1991. These guidelines were
designed to relate regulatory capital requirements to the risk profile of the
specific instructions and to provide for uniform requirements among the
various regulators. Currently, the risk-based guidelines require the Company
to meet a minimum total capital ratio of 8.0% of which at least 4.0% must
consist of Tier 1 capital. Tier 1 capital generally consists of (a) common
shareholders' equity (excluding the unrealized market value adjustments on the
available-for-sale securities), (b) qualifying perpetual preferred stock and
related surplus subject to certain limitations specified by the FDIC, and (c)
minority interests in the equity accounts of consolidated subsidiaries less
goodwill and any other intangible assets and investments in subsidiaries that
the FDIC determines should be deducted from Tier 1 capital. The FDIC also
requires a minimum leverage ratio of 3.0%, defined as the ratio of Tier 1
capital less purchased mortgage servicing rights to total assets, for banking
organizations deemed the strongest and most highly rated by banking
regulators. A higher minimum leverage ratio is required of less highly rated
banking organizations.
The following table summarizes the Company's risk-based capital and leverage
ratios at the dates indicated:
<TABLE>
<CAPTION>
========================================================================================================================
To be well
capitalized under
For capital prompt corrective
Actual adequacy purposes action privisions
---------------- ------------------- -----------------
Amount Ratio Amount Ratio Amount Ratio
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
As of June 30, 1997:
Total capital (to risk weighted assets):
Enterbank Holdings, Inc. $24,559,100 13.32% $14,746,866 8.00% $18,433,583 10.00%
Enterprise Bank 21,032,000 11.48 14,651,060 8.00 18,313,826 10.00
Tier I Capital (to risk weighted assets):
Enterbank Holdings, Inc. 22,469,100 12.19 7,373,433 4.00 11,060,150 6.00
Enterprise Bank 18,942,000 10.34 7,325,530 4.00 10,988,295 6.00
Tier I Capital (to average assets):
Enterbank Holdings, Inc. 22,469,100 10.96 8,199,760 4.00 10,249,700 5.00
Enterprise Bank 18,942,000 9.27 8,171,309 4.00 10,214,137 5.00
As of December 31, 1996:
Total capital (to risk weighted assets):
Enterbank Holdings, Inc. 16,461,861 11.53 11,424,028 8.00 14,280,035 10.00
Enterprise Bank 15,979,971 11.28 11,334,400 8.00 14,168,000 10.00
Tier I Capital (to risk weighted assets):
Enterbank Holdings, Inc. 14,696,861 10.29 5,712,014 4.00 8,568,021 6.00
Enterprise Bank 14,214,917 10.03 5,667,200 4.00 8,500,800 6.00
Tier I Capital (to average assets):
Enterbank Holdings, Inc. 14,696,861 9.62 6,108,240 4.00 7,635,300 5.00
Enterprise Bank 14,214,917 9.35 6,085,960 4.00 7,607,450 5.00
========================================================================================================================
</TABLE>
12
<PAGE> 15
Primary capital, a measure of capital adequacy, includes equity capital,
allowance for possible loan losses, and debt considered equity for regulatory
capital purposes. Tangible primary capital represents primary capital reduced
by total intangible assets included in the balance sheet. At June 30, 1997,
the Company's primary capital was $24.3 million compared to $16.5 million at
December 31, 1996. The Company's primary capital to asset ratio on a
consolidated basis was 10.41% and 8.95% at June 30, 1997 and December 31,
1996, respectively. The Company's tangible primary capital was $24.3 million
and $16.5 million at June 30, 1997 and December 31, 1996, respectively.
IMPLEMENTATION OF NEW ACCOUNTING PRONOUNCEMENTS
During February 1997, the FASB issued SFAS 128, Earnings per Share (SFAS
128). SFAS 128 establishes standards for computing and presenting earnings
per share (EPS) and applies to entities with publicly held common stock or
potential common stock. SFAS 128 replaces the presentation of primary EPS
with a presentation of basic EPS and replaces fully diluted EPS with diluted
EPS. Basic EPS excludes dilution and is computed by dividing income available
to common stockholders by the weighted-average number of common shares
outstanding for the period. Diluted EPS is computed similarly to fully
diluted EPS pursuant to Opinion 15.
SFAS 128 is effective for financial statements issued for periods ending after
December 15, 1997, including interim periods; earlier application is not
permitted. After adoption, all prior-period EPS data presented shall be
restated to conform with SFAS 128. The majority of the Company's outstanding
options are fully vested and therefore, most of the dilution from outstanding
options is already included in the current EPS calculation. The
implementation of SFAS 128 to calculate current EPS is not expected to have a
material impact on EPS presentation.
During February 1997, the FASB issued SFAS 129, Disclosure of Information
about Capital Structure (SFAS 129). SFAS 129 continues the previous
requirements to disclose certain information about an entity's capital
structure found in APB Opinions No. 10, Omnibus Opinion-1966, and No. 15,
Earnings per Share, and FASB Statement No. 47, Disclosure of Long-Term
Obligations, for entities that were subject to the requirements of those
standards.
SFAS 129 is effective for financial statements for periods ending after
December 15, 1997. It contains no change in disclosure requirements for
entities that were previously subject to the requirements of Opinions 10 and
15 and Statement 47. The implementation of SFAS 129 is not expected to have a
material impact on the Company's financial position or results of operations.
13
<PAGE> 16
EFFECT OF INFLATION
Persistent high rates of inflation can have a significant effect on the
reported financial condition and results of operations of all industries.
However, the asset and liability structure of commercial banks is
substantially different from that of an industrial company in that virtually
all assets and liabilities of commercial banks are monetary in nature.
Accordingly, changes in interest rates may have a significant impact on a
commercial bank's performance. Interest rates do not necessarily move in the
same direction or in the same magnitude as the prices of goods and services.
Inflation does have an impact on the growth of total assets in the banking
industry, often resulting in a need to increase equity capital at higher than
normal rates to maintain an appropriate equity-to-assets ratio.
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K
The exhibits are numbered in accordance with the Exhibit Table of Item 601 of
Regulation S-K.
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
11 Statement Re: Computation of Earnings Per Share
27 Financial Data Schedule
</TABLE>
The Company filed no current reports on Form 8-K during the three months ended
June 30, 1997.
14
<PAGE> 17
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Act of 1934, the
undersigned Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Clayton, State
of Missouri, on the 14th day of August, 1997.
ENTERBANK HOLDINGS, INC.
By: /s/ Fred H. Eller
---------------------
Fred H. Eller
Chief Executive Officer
By: /s/ James C. Wagner
-----------------------
James C. Wagner
Chief Financial Officer
15
<PAGE> 1
ENTERBANK HOLDINGS, INC. AND SUBSIDIARIES
Exhibit 11
Three and six months ended June 30, 1997 and 1996
<TABLE>
<CAPTION>
=====================================================================================================================
Fully diluted
EPS number EPS number Fully diluted
of shares of shares Net income EPS EPS
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Three months ended June 30, 1997 2,236,146 2,241,536 $ 539,816 0.24 0.24
Three months ended June 30, 1996 1,685,240 1,692,235 427,268 0.25 0.25
Six months ended June 30, 1997 2,123,867 2,129,257 1,003,448 0.47 0.47
Six months ended June 30, 1996 1,679,992 1,692,235 837,006 0.50 0.49
=====================================================================================================================
</TABLE>
16
<PAGE> 2
ENTERBANK HOLDINGS, INC. AND SUBSIDIARIES
Exhibit 11, Continued
<TABLE>
Three and six months ended June 30, 1997 and 1996
<CAPTION>
=======================================================================================================================
Three months ended June 30, Six months ended June 30,
------------------------------------------- ------------------------------------------
1997 1996 1997 1996
-------------------- -------------------- ------------------ -------------------
Fully Fully Fully Fully
Average diluted Average diluted Average diluted Average diluted
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Average shares outstanding 2,113,972 2,113,972 1,463,400 1,463,400 2,001,693 2,001,693 1,463,400 1,463,400
Warrants - - 199,000 199,000 - - 199,000 199,000
Options - 1 vested 122,000 122,000 122,000 122,000 122,000 122,000 122,000 122,000
Options - 2 vested 71,200 71,200 53,400 53,400 71,200 71,200 53,400 53,400
Options - 2 vested 1,200 1,200 800 800 1,200 1,200 800 800
Gross shares 2,308,372 2,308,372 1,838,600 1,838,600 2,196,093 2,196,093 1,838,600 1,838,600
Shares repurchased 72,226 66,836 153,360 146,365 72,226 66,836 158,608 146,365
Shares for EPS calculation 2,236,146 2,241,536 1,685,240 1,692,235 2,123,867 2,129,257 1,679,992 1,692,235
Warrants $ 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50
Options - 1 vested 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00
Options - 2 vested 7.00 7.00 7.00 7.00 7.00 7.00 7.00 7.00
Options - 2 vested 9.25 9.25 9.25 9.25 9.25 9.25 9.25 9.25
Warrants - - 1,094,500 1,094,500 - - 1,094,500 1,094,500
Options - 1 vested 610,000 610,000 610,000 610,000 610,000 610,000 610,000 610,000
Options - 2 vested 498,400 498,400 373,800 373,800 498,400 498,400 373,800 373,800
Options - 2 vested 11,100 11,100 7,400 7,400 11,100 11,100 7,400 7,400
Dollars for repurchase 1,119,500 1,119,500 2,085,700 2,085,700 1,119,500 1,119,500 2,085,700 2,085,700
Price 15.50 16.75 13.60 14.25 15.50 16.75 13.15 14.25
========================================================================================================================
</TABLE>
17
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the
Enterbank Holdings, Inc. quarterly report on Form 10Q for the quarterly
period ended June 30, 1997, and is qualified in its entirety by reference
to such report.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-START> Jan-01-1997
<PERIOD-END> Jun-30-1997
<CASH> 16,210,088
<INT-BEARING-DEPOSITS> 30,063
<FED-FUNDS-SOLD> 17,277,450
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 19,420,622
<INVESTMENTS-CARRYING> 826,617
<INVESTMENTS-MARKET> 825,839
<LOANS> 176,295,239
<ALLOWANCE> 2,090,000
<TOTAL-ASSETS> 233,752,518
<DEPOSITS> 210,520,761
<SHORT-TERM> 0
<LIABILITIES-OTHER> 711,652
<LONG-TERM> 0
0
0
<COMMON> 16,469,098
<OTHER-SE> 6,051,007
<TOTAL-LIABILITIES-AND-EQUITY> 233,752,518
<INTEREST-LOAN> 7,169,213
<INTEREST-INVEST> 581,112
<INTEREST-OTHER> 358
<INTEREST-TOTAL> 8,230,090
<INTEREST-DEPOSIT> 3,822,023
<INTEREST-EXPENSE> 3,824,911
<INTEREST-INCOME-NET> 4,405,179
<LOAN-LOSSES> 377,757
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 2,636,849
<INCOME-PRETAX> 1,606,177
<INCOME-PRE-EXTRAORDINARY> 1,606,177
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,003,448
<EPS-PRIMARY> 0.47
<EPS-DILUTED> 0.47
<YIELD-ACTUAL> 8.66
<LOANS-NON> 323,000
<LOANS-PAST> 272,000
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 595,000
<ALLOWANCE-OPEN> 1,765,000
<CHARGE-OFFS> 80,000
<RECOVERIES> 27,000
<ALLOWANCE-CLOSE> 2,090,000
<ALLOWANCE-DOMESTIC> 2,090,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
