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Lowell-based Enterprise Bank saw net income in the fourth quarter decrease to $7.9 million from $9.7 million in the third quarter as the cost of high-interest deposits– primarily in its money market and certificates of deposit products – offset the gains from yields in assets.
“We performed well in a challenging year for the banking industry as higher interest rates and an inverted yield curve contributed to margin compression,” Enterprise Bank CEO Jack Clancy said in a statement.
Net interest income declined to $36.5 million compared to $38.5 million in the previous quarter while net interest margin also declined to 3.29 percent in the fourth quarter from 3.46 percent.
“Net interest margin was a solid 3.29 percent for the fourth quarter, a decrease from the third quarter principally because of higher deposit costs. Margin was stable during the fourth quarter with December monthly results at 3.30 percent. Our liquidity position remains very favorable as we closed the year with wholesale funding of less than 1 percent of total assets,” Clancy said.
The bank’s total loans were up to $3.6 billion from $3.4 billion in the third quarter due to higher commercial loans. Total deposits also slightly decreased to $3.98 billion from $4.06 billion as customers pulled out funds from low-interest accounts, and put them in high-interest accounts.
Amid the bank’s increase in commercial loans, Enterprise’s non-performing loans amounted to $11.4 million consistent with $11.6 million in the third quarter but higher than $6.1 million in the fourth quarter of 2022. The increase was due to one commercial relationship downgraded in the third quarter, but was partially offset by principal pay-downs and credit upgrades, the bank said.
The bank also said that its wealth assets under management also improved 10 percent to $1.3 billion from a quarter ago.
“On January 3, we celebrated the 35th anniversary of our opening… Our numerous accomplishments include growing to $4.47 billion in total assets, $1.32 billion in wealth assets under management and administration, and 27 full-service locations. Our anniversary is a tremendous milestone built upon a history of shared values, collaborative efforts, and a steadfast commitment to all of our stakeholders,” Clancy said.
