Financial Performance - Net income for Q1 2024 was $8,507 thousand, a decline of 21.0% from $10,768 thousand in Q1 2023[14]. - Total comprehensive income for Q1 2024 was $6,396 thousand, down from $31,016 thousand in Q1 2023, reflecting a decrease of 79.5%[16]. - Net interest income after provision for credit losses decreased to $34,568 thousand, down 7.1% from $37,235 thousand in the same period last year[14]. - Net interest income for Q1 2024 was $35.2 million, down $4.8 million, or 12%, primarily due to an increase in deposit interest expense of $11.3 million[154]. - Net interest margin decreased to 3.20% in Q1 2024 from 3.76% in Q1 2023[155]. - Total non-interest income for Q1 2024 was $5.5 million, slightly down from $5.5 million in the previous quarter[143]. - Non-interest income increased by $738 thousand, or 16%, to $5.5 million in Q1 2024, driven by gains on equity securities and wealth management fees[168]. - Non-interest expense rose by $868 thousand, or 3%, to $28.9 million in Q1 2024, mainly due to higher salaries and benefits[169]. Assets and Liabilities - Total assets increased to $4,624,015 thousand as of March 31, 2024, up from $4,466,034 thousand at December 31, 2023, representing a growth of 3.5%[12]. - Cash and cash equivalents at the end of the period were $147,834 thousand, a significant increase from $56,592 thousand at the beginning of the period[23]. - Total debt securities at fair value amounted to $643.9 million as of March 31, 2024, down from $661.1 million at December 31, 2023[42]. - The Company’s total amortized cost of debt securities was $749.6 million as of March 31, 2024[42]. - The total fair value of debt securities pledged as collateral was $633.5 million at March 31, 2024, down from $650.8 million at December 31, 2023, indicating a decrease of about 2.0%[45]. - Total deposits grew to $4,106,119 thousand, an increase of 3.2% from $3,977,521 thousand at the end of 2023[12]. - Borrowed funds increased to $63,246 thousand at March 31, 2024, compared to $25,768 thousand at December 31, 2023, reflecting a strategic move to leverage funding for growth[86]. Loans and Credit Quality - Total loans reached $3.654 billion as of March 31, 2024, compared to $3.567 billion at December 31, 2023, indicating a growth of approximately 2.43%[62]. - The allowance for credit losses (ACL) for loans was $60.7 million as of March 31, 2024, compared to $59.0 million at December 31, 2023, representing an increase of about 2.9%[49]. - The ratio of non-accrual loans to total loans increased to 0.51% at March 31, 2024, up from 0.32% at December 31, 2023, primarily due to one commercial construction loan added to non-accrual[66]. - The provision for credit losses for Q1 2024 was $622 thousand, a decrease of $2.1 million compared to Q1 2023[166]. - Non-performing loans to total loans ratio rose to 0.51% at March 31, 2024, from 0.32% at December 31, 2023[139]. - The total past due loans for commercial real estate non-owner-occupied reached $4.4 million as of March 31, 2024[63]. Investments and Securities - The Company invested $3.7 million in the NMTC Investment Fund and anticipates receiving $4.8 million in federal tax credits over the next seven years[32]. - The unrealized losses on debt securities were $105.7 million as of March 31, 2024, compared to $103.1 million at December 31, 2023[42]. - The Company’s investment in federal agency CMO had an amortized cost of $386.6 million and a fair value of $322.8 million as of March 31, 2024[42]. - The fair value of equity securities held increased to $8.1 million at March 31, 2024, up from $7.1 million at December 31, 2023, indicating a growth of approximately 14.1%[47][48]. Shareholder Information - The company declared a common stock dividend of $0.24 per share, totaling $2,944 thousand[19]. - The company declared cash dividends of $2.9 million for the three months ended March 31, 2024, compared to $2.8 million for the same period in 2023, with shareholders purchasing 14,496 shares totaling $398 thousand through the dividend reinvestment plan[200]. - Basic weighted average common shares outstanding rose to 12,292,417 in Q1 2024 from 12,155,320 in Q1 2023, an increase of 1.1%[114]. - Diluted weighted average common shares outstanding increased to 12,304,203 in Q1 2024 compared to 12,193,756 in Q1 2023, reflecting a growth of 0.9%[114]. Risk Management and Compliance - The company adopted ASU 2022-02 effective January 1, 2023, which enhanced disclosure requirements for loan restructurings but did not significantly impact financial statements[71]. - The company has determined that no allowance for credit losses (ACL) for available-for-sale securities was necessary as of March 31, 2024[43]. - The reserve for unfunded commitments decreased to $5.9 million at March 31, 2024, down from $7.1 million at December 31, 2023, suggesting a tightening of credit risk management[79]. - Management believes the company has adequate liquidity to meet its obligations, despite potential economic challenges and uncertainties in the banking industry[209].

Financial Performance - Net income for Q1 2024 was $8.5 million, or $0.69 per diluted share, compared to $7.9 million, or $0.64 per diluted share in Q4 2023, and $10.8 million, or $0.88 per diluted share in Q1 2023[1]. - Net income for the first quarter of 2024 was $8,507 thousand, a decrease of 21.0% from $10,768 thousand in Q1 2023[25]. - Basic earnings per common share for Q1 2024 was $0.69, compared to $0.89 in Q1 2023, indicating a decline of 22.5%[25]. Income and Expenses - Net interest income decreased by $4.8 million, or 12%, to $35.2 million compared to Q1 2023, primarily due to an increase in deposit interest expense of $11.3 million[3]. - Net interest income after provision for credit losses was $34,568 thousand, slightly up from $34,025 thousand in the previous quarter[25]. - Non-interest income rose by $738 thousand, or 16%, to $5.5 million compared to Q1 2023, driven by gains on equity securities and wealth management fees[9]. - Total non-interest income was $5,495 thousand, slightly up from $4,757 thousand in the same quarter last year[27]. - Net interest income (tax-equivalent) for the three months ended March 31, 2024, was $35,190 thousand, a decrease from $36,518 thousand in the previous quarter[31]. Loans and Deposits - Total loans increased by 2.4% and total deposits increased by 3.2% compared to December 31, 2023[5]. - Total loans reached $3,654,322 thousand, an increase of 13.1% compared to $3,230,156 thousand in the same period last year[23]. - Total deposits rose to $4,106,119 thousand, an increase of 2.2% from $4,016,156 thousand a year ago[27]. - Total loans increased to $3,654,322 thousand as of March 31, 2024, up from $3,567,631 thousand at December 31, 2023, representing a growth of 2.4%[29]. - Total deposits rose to $4,106,119 thousand as of March 31, 2024, compared to $3,977,521 thousand at December 31, 2023, marking an increase of 3.2%[29]. Asset Management - Total assets increased by $158 million, or 4%, to $4.62 billion compared to December 31, 2023[11]. - Total assets increased to $4,624,015 thousand as of March 31, 2024, up from $4,441,896 thousand a year earlier, representing a growth of 4.1%[23]. - Wealth assets under management increased by $27.3 million, or 3%, to $1.11 billion compared to December 31, 2023[17]. - Wealth assets under management grew to $1,105,036 thousand, up from $930,714 thousand in the same quarter last year, reflecting a growth of 18.7%[27]. Credit Quality - Provision for credit losses was $622 thousand, down from $2.7 million in Q1 2023, reflecting growth in the loan portfolio and improved economic forecasts[8]. - Non-performing loans increased to $18.5 million, or 0.51% of total loans, compared to $11.4 million, or 0.32% of total loans in Q1 2023[18]. - Non-performing loans increased to $18,527 thousand, representing 0.51% of total loans, compared to 0.32% a year earlier[27]. Capital and Equity - Total shareholders' equity increased by $4.3 million, or 1%, to $333.4 million compared to December 31, 2023[15]. - The company maintained a Tier 1 capital ratio of 10.43% as of March 31, 2024, compared to 10.61% a year earlier[27]. Borrowings and Funding - Total borrowed funds rose by $37.5 million, or 145%, to $63.2 million compared to December 31, 2023[14]. - The total funding liabilities increased to $4,160,346 thousand for the three months ended March 31, 2024, compared to $4,149,705 thousand in the previous quarter, reflecting a slight increase of 0.3%[31].

LOWELL, Mass., April 23, 2024 (GLOBE NEWSWIRE) -- Enterprise Bancorp, Inc. (NASDAQ:EBTC), parent of Enterprise Bank, announced its financial results for the three months ended March 31, 2024. Net income amounted to $8.5 million, or $0.69 per diluted common share, for the three months ended March 31, 2024, compared to $7.9 million, or $0.64 per diluted share, for the three months ended December 31, 2023 and $10.8 million, or $0.88 per diluted share, for the three months ended March 31, 2023. Selected financi ...

LOWELL, Mass., April 16, 2024 (GLOBE NEWSWIRE) -- Enterprise Bancorp, Inc. (the "Company") (NASDAQ:EBTC) On April 16, 2024, the Board of Directors of Enterprise Bancorp, Inc. declared a quarterly dividend of $0.24 per share to be paid on June 3, 2024, to shareholders of record as of May 13, 2024. Enterprise Bancorp, Inc. is a Massachusetts corporation that conducts substantially all its operations through Enterprise Bank and Trust Company, commonly referred to as Enterprise Bank. Enterprise Bank is principa ...

Banking Operations - The Company operates 27 full-service branches across Massachusetts and New Hampshire, focusing on community banking services[19] - The Company offers a range of deposit products, including checking accounts, savings accounts, and term CDs, with competitive interest rates based on economic conditions and competition[44][46] - The Company specializes in commercial loans, including commercial real estate, industrial loans, and construction loans, with average repayment periods ranging from 1 to 30 years[33][34][35] - The Company offers home equity lines of credit with maximum original loan-to-value ratios generally up to 75%[41] - The Company provides cash management services to commercial banking and public sector customers, facilitating deposit processing and fund utilization[48] - The Company utilizes brokered deposits as an alternative to support asset growth beyond internally generated deposits[47] Financial Performance and Capital Management - As of December 31, 2023, the Bank's statutory lending limit to any individual borrower was approximately $93.5 million[32] - The Company believes its current capital is adequate to support ongoing operations, meeting all capital adequacy requirements under Basel III as of December 31, 2023[73] - The Company has issued fixed-to-floating rate subordinated notes as part of its capital management strategy, callable in 2025 and due in 2030[70] - As of December 31, 2023, the Company met all capital adequacy requirements under Basel III and was classified as "well-capitalized" by Federal Reserve Board regulations[134] - The Basel III minimum capital ratios include a total risk-based capital requirement of 10.50% and a Tier 1 risk-based capital requirement of 8.50%[132] - The Bank's regulatory capital ratios were above the levels required for "well-capitalized" institutions as of December 31, 2023[146] Market Strategy and Competition - The Company is focused on organic growth and strategic expansion within existing and neighboring markets to strengthen its market position[20] - The Company faces robust competition from national and regional banks, credit unions, and fintech companies, impacting its market share objectives[95][97] - The Company is focused on increasing its deposit market share and enhancing customer experience amid ongoing competition in pricing and terms of deposit products[99] - The Company plans to expand its market presence by strategically adding new branch locations to complement existing ones[100] - Advances in technology, including online and mobile banking, are expected to significantly impact the competitive landscape for financial services[101] - Compliance costs with government regulations and changes in tax legislation continue to affect competition and consolidation within the industry[102] Employee and Diversity Initiatives - The Company employs 570 full-time equivalent team members as of December 31, 2023, with 68% being women and 22% self-identified as Black, Indigenous, and persons of color[79][81] - The Company has established several Employee Resource Groups to promote diversity, equity, inclusion, and belonging within the workplace[80] Risk Management and Compliance - The Company promotes proactive risk management with clear ownership and accountability across all business lines[198] - Credit risk management is overseen by the Loan Committee of the Board, ensuring effective monitoring of credit risk[206] - Interest rate risk management is overseen by the Board of Directors, focusing on asset-liability management[207] - The Company maintains internal controls over financial reporting to ensure reasonable assurance of accurate disclosures in SEC filings[209] - The Audit Committee oversees the effectiveness of these internal controls[209] - The Company maintains a Compliance Management Program to meet regulatory and legislative requirements, ensuring effective tracking and implementation of regulatory changes[204] - The Company’s overall financial condition and ability to pay dividends could be adversely affected by these risks[212] Regulatory Environment - The Company is subject to supervision and regulation by the Federal Reserve Board and the Massachusetts Division of Banks[106] - The Dodd-Frank Act mandates that the Company act as a source of financial and managerial strength to its subsidiary banks[118] - The Company is subject to Massachusetts and federal laws that limit dividend payments, requiring sufficient net income and capital adequacy to distribute dividends[135] - The Federal Reserve Board mandates that bank holding companies should only pay dividends if net income covers the cash dividends and capital needs are met[136] - The Bank is unable to control the amount of FDIC insurance premiums it must pay, which are based on its average consolidated total assets minus average tangible equity[152] Investment and Wealth Management - The Company primarily invests in debt securities, with all debt securities classified as available-for-sale and carried at fair value[61] - The Company offers a range of wealth advisory and management services through Enterprise Wealth Management and Enterprise Wealth Services, focusing on customized investment management[53][54] - The Company’s investment management process aims to deliver superior long-term results by utilizing an open-architecture approach[54] - The Company’s investment portfolio activities are integral to its asset-liability management program, providing liquidity to support loan growth[58] Technology and Innovation - The Company utilizes various digital banking capabilities through its online website and mobile apps, enhancing customer access to account management[51] - Banks are expected to manage technology-related risks, including operational, privacy, cyber, and compliance risks, as part of their comprehensive risk management policies[180] - Financial institutions must implement a comprehensive written information security program to protect customer records and information under the Gramm-Leach-Bliley Act[181] Community Engagement - The Company has established the EBTC NMTC Investment Fund in February 2023 to invest in local projects providing federal tax incentives for distressed communities[23] - The Bank received a "High Satisfactory" rating from the Division and "Satisfactory" from the FDIC on its most recent Community Reinvestment Act examination[155] Regulatory Changes and Impact - The federal banking agencies adopted a final rule to modernize CRA regulations, effective January 1, 2026, with data reporting requirements starting January 1, 2027[156] - Small and intermediate banks are exempt from new data collection and reporting requirements that apply to banks with assets of at least $2 billion[156] - The EGRRCPA, enacted in 2018, eases regulations for banks with less than $10 billion in assets, impacting the Company's operations[164] - The CFPB oversees consumer financial protection laws, with a focus on fair lending and compliance obligations[166] - The Dodd-Frank Act mandates comprehensive additional disclosures for residential mortgage loans, affecting the Bank's reporting requirements[171] Executive Compensation and Governance - The SEC requires publicly traded companies to disclose the ratio of CEO compensation to median employee compensation[176] - The Dodd-Frank Act directs federal banking regulators to propose rules against excessive executive compensation for institutions with assets over $1 billion[177] - The SEC adopted a "pay-for-performance" rule requiring companies to disclose relationships between executive compensation and company performance[178] - The SEC adopted a final rule requiring listed companies to implement a clawback policy for excess incentive-based compensation earned by executives during the three fiscal years preceding an accounting restatement, effective October 2, 2023[179]

LOWELL, Mass., Jan. 25, 2024 (GLOBE NEWSWIRE) -- Enterprise Bancorp, Inc. (NASDAQ:EBTC), parent of Enterprise Bank, announced its financial results for the three months and year ended December 31, 2023. Net income amounted to $7.9 million, or $0.64 per diluted common share, for the three months ended December 31, 2023, compared to $12.3 million, or $1.01, for the three months ended December 31, 2022. Net income for the year ended December 31, 2023, amounted to $38.1 million, or $3.11 per diluted common shar ...

Financial Performance - Net income for the three months ended September 30, 2023, was $9,699 thousand, down 19.0% from $11,962 thousand in the prior year[11]. - Basic earnings per share decreased to $0.79 for the three months ended September 30, 2023, compared to $0.99 for the same period in 2022, a decline of 20.2%[11]. - Net income for the nine months ended September 30, 2023, was $30,151 thousand, slightly down from $30,410 thousand in the same period of 2022, representing a decrease of 0.9%[23]. - Net income for Q3 2023 was $9.7 million, a decrease of $2.3 million, or 19%, compared to Q3 2022[154]. - Net interest income for Q3 2023 was $38.5 million, down $1.3 million, or 3%, from Q3 2022, primarily due to an increase in deposit interest expense of $11.4 million[155]. - Non-interest income for the three months ended September 30, 2023, was $4.5 million, a decrease of $39 thousand, or 1%, compared to the same period in 2022[170]. - Non-interest income for the nine months ended September 30, 2023, was $12.1 million, a decrease of $2.2 million, or 15%, compared to the same period in 2022[191]. Asset and Liability Management - Total assets increased to $4,482,374 thousand as of September 30, 2023, compared to $4,438,333 thousand at December 31, 2022, reflecting a growth of 1.0%[9]. - Total liabilities increased to $4,182,675 thousand as of September 30, 2023, from $4,156,066 thousand at December 31, 2022, a growth of 0.6%[9]. - Shareholders' equity rose to $299,699 thousand as of September 30, 2023, compared to $282,267 thousand at December 31, 2022, reflecting a growth of 6.2%[9]. - Total cash and cash equivalents at the end of the period decreased to $225,421 thousand from $413,688 thousand, a decline of 45.5%[23]. - The total deposits as of September 30, 2023, were $4.06 billion, slightly up from $4.04 billion at December 31, 2022, showing a marginal increase of 0.9%[87]. - The total fair value of debt securities as of September 30, 2023, was $672.894 million, down from $816.102 million as of December 31, 2022, a decrease of 17.5%[120]. Loan and Credit Quality - Net loans rose to $3,346,109 thousand, up from $3,127,878 thousand year-over-year, representing an increase of 7.0%[9]. - The allowance for credit losses (ACL) for loans was $57.9 million as of September 30, 2023, compared to $52.6 million at December 31, 2022, reflecting an increase of 10.5%[48]. - The ratio of non-accrual loans to total loans increased to 0.34% at September 30, 2023, compared to 0.19% at December 31, 2022[64]. - Non-performing loans increased to $11.66 million, representing 0.34% of total loans as of September 30, 2023, up from 0.23% in the prior quarter[154]. - The total provision for credit losses for the three months ended September 30, 2023, was $1.75 million, compared to $1.00 million for the same period in 2022, reflecting a 75% increase[77]. - The total provision for credit losses for the nine months ended September 30, 2023, was $6.76 million, up from $3.94 million in 2022, indicating a 71.5% increase[77]. Dividends and Stock Performance - The company declared a common stock dividend of $0.230 per share for the three months ended September 30, 2023, compared to $0.205 per share in the same period of 2022[16]. - The company declared common stock dividends of $0.690 per share in 2023, compared to $0.615 per share in 2022, an increase of 12.2%[23]. - The diluted weighted average common shares outstanding for the three months ended September 30, 2023, was 12,264,778, compared to 12,156,695 for the same period in 2022, an increase of 0.9%[117]. - Book value per common share decreased to $24.45 as of September 30, 2023, from $25.11 as of June 30, 2023[154]. Capital and Regulatory Compliance - As of September 30, 2023, the Company had total capital to risk-weighted assets (RWA) of $503.6 million, representing a ratio of 13.45%[105]. - The Company maintained Tier 1 capital to RWA of $397.2 million, which is 10.61% as of September 30, 2023[105]. - The capital conservation buffer for both the Company and the Bank amounted to $93.6 million as of September 30, 2023, exceeding the Basel III requirements[107]. - The Company met the definition of "well-capitalized" under applicable regulations as of September 30, 2023[104]. Investment and Securities - The company invested $3.7 million in the NMTC Investment Fund, anticipating $4.8 million in federal tax credits over the next seven years[32]. - The fair value of the investment securities portfolio was $678.9 million at September 30, 2023, a decrease of $141.4 million, or 17%, since December 31, 2022[197]. - The company held equity securities with a fair value of $6.0 million at September 30, 2023, up from $4.3 million at December 31, 2022, marking a growth of 39.5%[46].

[Cover Page](index=1&type=section&id=Cover%20Page) Reports Enterprise Bancorp, Inc.'s Q2 2023 Form 10-Q filing, common stock details, and outstanding shares - Enterprise Bancorp, Inc. filed its Quarterly Report on Form 10-Q for the period ended June 30, 2023[1](index=1&type=chunk) Common Stock Information | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | :------------------ | :---------------- | :---------------------------------------- | | Common Stock, $0.01 par value per share | EBTC | NASDAQ Stock Market | - The registrant is an **accelerated filer**[3](index=3&type=chunk) - As of August 4, 2023, **12,242,817 shares of common stock** were outstanding[4](index=4&type=chunk) [Index](index=2&type=section&id=Index) Provides a comprehensive listing of all sections and items included within this quarterly report [PART I - FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) Contains unaudited consolidated financial statements and management's discussion and analysis of financial performance [Item 1 - Financial Statements (unaudited)](index=3&type=section&id=Item%201%20-%20Financial%20Statements%20(unaudited)) Presents unaudited consolidated interim financial statements and comprehensive notes on accounting policies and financial performance [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Details the Company's financial position, including assets, liabilities, and equity, at June 30, 2023, and December 31, 2022 | (Dollars in millions) | June 30, 2023 | December 31, 2022 | | :--------------------- | :------------ | :---------------- | | Total assets | $ 4,502.34 | $ 4,438.33 | | Total liabilities | $ 4,194.85 | $ 4,156.07 | | Total shareholders' equity | $ 307.49 | $ 282.27 | | Deposits | $ 4,075.60 | $ 4,035.81 | | Net loans | $ 3,288.77 | $ 3,127.88 | | Debt securities at fair value | $ 706.95 | $ 816.10 | [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) Reports the Company's net income and earnings per share for the three and six months ended June 30, 2023 and 2022 Consolidated Statements of Income (Three months ended June 30) | (Dollars in millions, except per share data) | 2023 | 2022 | | :------------------------------------------ | :--- | :--- | | Net income | $ 9.68 | $ 8.16 | | Basic earnings per share | $ 0.79 | $ 0.67 | | Diluted earnings per share | $ 0.79 | $ 0.67 | | Net interest income | $ 38.09 | $ 35.82 | | Total interest and dividend income | $ 48.68 | $ 37.32 | | Total interest expense | $ 10.59 | $ 1.50 | | Provision for credit losses | $ 2.27 | $ 2.41 | Consolidated Statements of Income (Six months ended June 30) | (Dollars in millions, except per share data) | 2023 | 2022 | | :------------------------------------------ | :--- | :--- | | Net income | $ 20.45 | $ 18.45 | | Basic earnings per share | $ 1.68 | $ 1.53 | | Diluted earnings per share | $ 1.67 | $ 1.52 | | Net interest income | $ 78.06 | $ 69.85 | | Total interest and dividend income | $ 95.52 | $ 72.79 | | Total interest expense | $ 17.46 | $ 2.93 | | Provision for credit losses | $ 5.00 | $ 2.94 | [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Reports the Company's comprehensive income and loss for the three and six months ended June 30, 2023 and 2022 Consolidated Statements of Comprehensive Income (Three months ended June 30) | (Dollars in millions) | 2023 | 2022 | | :--------------------- | :--- | :--- | | Net income | $ 9.68 | $ 8.16 | | Total comprehensive (loss) income, net | $ (1.95) | $ (23.92) | Consolidated Statements of Comprehensive Income (Six months ended June 30) | (Dollars in millions) | 2023 | 2022 | | :--------------------- | :--- | :--- | | Net income | $ 20.45 | $ 18.45 | | Total comprehensive (loss) income, net | $ 29.07 | $ (58.59) | [Consolidated Statements of Changes in Shareholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) Details changes in shareholders' equity, including net income, comprehensive income, and dividends, for periods ended June 30, 2023 Shareholders' Equity Changes (Three months ended June 30, 2023) | (Dollars in millions) | Balance at March 31, 2023 | Net income | Other comprehensive loss, net | Common stock dividend declared | Balance at June 30, 2023 | | :--------------------- | :------------------------ | :--------- | :---------------------------- | :----------------------------- | :----------------------- | | Total Shareholders' Equity | $ 311.32 | $ 9.68 | $ (11.63) | $ (2.81) | $ 307.49 | Shareholders' Equity Changes (Six months ended June 30, 2023) | (Dollars in millions) | Balance at December 31, 2022 | Net income | Other comprehensive income, net | Common stock dividend declared | Balance at June 30, 2023 | | :--------------------- | :--------------------------- | :--------- | :------------------------------ | :----------------------------- | :----------------------- | | Total Stockholders' Equity | $ 282.27 | $ 20.45 | $ 8.61 | $ (5.60) | $ 307.49 | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Presents the Company's cash flows from operating, investing, and financing activities for the six months ended June 30, 2023 and 2022 Consolidated Statements of Cash Flows (Six months ended June 30) | (Dollars in millions) | 2023 | 2022 | | :--------------------- | :--- | :--- | | Net cash provided by operating activities | $ 8.07 | $ 15.52 | | Net cash used in investing activities | $ (51.62) | $ (175.26) | | Net cash provided by financing activities | $ 34.79 | $ 29.62 | | Net decrease in cash and cash equivalents | $ (8.76) | $ (130.12) | | Cash and cash equivalents at end of period | $ 258.83 | $ 306.46 | [Notes to Unaudited Consolidated Interim Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Interim%20Financial%20Statements) Provides detailed explanations and disclosures supporting the unaudited consolidated interim financial statements [(1) Summary of Significant Accounting Policies](index=9&type=section&id=(1)%20Summary%20of%20Significant%20Accounting%20Policies) Outlines the Company's key accounting policies and recent accounting pronouncements, noting no material changes from the prior annual report - The Company has not materially changed its significant accounting policies from those disclosed in its 2022 Annual Report on Form 10-K[26](index=26&type=chunk) - The Company early adopted ASU 2023-02, ASU 2022-01, and ASU 2022-02 effective January 1, 2023, with **no significant impact** on the financial statements[38](index=38&type=chunk)[39](index=39&type=chunk)[40](index=40&type=chunk) - The NMTC Investment Fund, formed in February 2023, is the Company's only **unconsolidated Variable Interest Entity (VIE)**[28](index=28&type=chunk)[32](index=32&type=chunk) [(2) Investment Securities](index=12&type=section&id=(2)%20Investment%20Securities) Details the Company's investment securities portfolio, including fair values, unrealized losses, and management's assessment of credit losses Debt Securities Fair Value and Unrealized Losses | (Dollars in millions) | June 30, 2023 | December 31, 2022 | | :--------------------- | :------------ | :---------------- | | Total debt securities, at fair value | $ 706.95 | $ 816.10 | | Total unrealized losses | $ 113.16 | $ 124.25 | - Debt security sales during the three and six months ended June 30, 2023, amounted to **$87.2 million** (amortized cost), realizing net losses of **$2.4 million**, to improve balance sheet positioning and enhance future earnings[46](index=46&type=chunk) - Management concluded **no Allowance for Credit Losses (ACL)** for available-for-sale securities was necessary as of June 30, 2023, as losses were primarily due to market interest rate increases and securities are anticipated to mature or be called at par[43](index=43&type=chunk) [(3) Loans](index=14&type=section&id=(3)%20Loans) Provides a breakdown of the Company's loan portfolio by classification and highlights growth trends Loan Portfolio Classifications | (Dollars in millions) | June 30, 2023 | December 31, 2022 | | :--------------------- | :------------ | :---------------- | | Total loans | $ 3,345.67 | $ 3,180.52 | | Commercial real estate | $ 2,009.26 | $ 1,921.41 | | Commercial and industrial | $ 420.10 | $ 414.49 | | Commercial construction | $ 487.02 | $ 424.05 | | Total commercial loans | $ 2,916.38 | $ 2,759.95 | | Total retail loans | $ 429.29 | $ 420.57 | - Total loans increased by **$165.1 million (5%)** since December 31, 2022[193](index=193&type=chunk) - Commercial loans constituted **87% of total loans** at both June 30, 2023, and December 31, 2022[193](index=193&type=chunk) [(4) ACL for Loans](index=15&type=section&id=(4)%20ACL%20for%20Loans) Discusses the Allowance for Credit Losses (ACL) for loans, including changes in provision and non-accrual loan trends Allowance for Credit Losses (ACL) for Loans | (Dollars in millions) | June 30, 2023 | December 31, 2022 | | :--------------------- | :------------ | :---------------- | | ACL for loans | $ 56.90 | $ 52.64 | | ACL for loans to total loans | 1.70 % | 1.66 % | | Total non-accrual loans | $ 7.65 | $ 6.12 | | Non-accrual loans to total loans | 0.23 % | 0.19 % | - The provision for credit losses for the six months ended June 30, 2023, increased by **$2.1 million** to **$5.0 million**, primarily due to loan portfolio growth, off-balance sheet commitments, and an increased probability and severity of forecasted economic conditions[181](index=181&type=chunk) - The total amortized cost basis of adversely classified loans amounted to **$42.1 million (1.26% of total loans)** at June 30, 2023, a decrease from **$47.0 million (1.48%)** at December 31, 2022[58](index=58&type=chunk) [(5) Leases](index=25&type=section&id=(5)%20Leases) Outlines the Company's operating lease commitments, including the number of facilities and weighted average remaining lease term - The Company had **16 facilities** under non-cancelable operating leases as of June 30, 2023[84](index=84&type=chunk) - The weighted average remaining lease term for operating leases was **29.0 years** at June 30, 2023[86](index=86&type=chunk) Operating Lease Liabilities (June 30, 2023) | (Dollars in thousands) | Operating Leases | | :--------------------- | :--------------- | | Total lease payments | $ 38,849 | | Total lease liability | $ 24,148 | [(6) Deposits](index=25&type=section&id=(6)%20Deposits) Provides a breakdown of customer deposits by type, highlighting growth trends and the impact of higher-yielding products Deposit Summary | (Dollars in millions) | June 30, 2023 | December 31, 2022 | | :--------------------- | :------------ | :---------------- | | Deposits | $ 4,075.60 | $ 4,035.81 | | Non-interest checking | $ 1,273.97 | $ 1,361.59 | | Interest-bearing checking | $ 701.70 | $ 678.72 | | Savings | $ 310.32 | $ 326.67 | | Money market | $ 1,373.82 | $ 1,381.65 | | CDs $250,000 or less | $ 244.11 | $ 187.76 | | CDs greater than $250,000 | $ 171.68 | $ 99.43 | - Customer deposits increased by **$39.8 million (1%)** since December 31, 2022, with Certificates of Deposit (CDs) increasing by **$128.6 million (45%)** as customers sought higher-yielding products[205](index=205&type=chunk) - Reciprocal balances from enhanced FDIC insured products amounted to **$796.8 million** at June 30, 2023, up from **$589.7 million** at December 31, 2022[88](index=88&type=chunk) [(7) Borrowed Funds and Subordinated Debt](index=26&type=section&id=(7)%20Borrowed%20Funds%20and%20Subordinated%20Debt) Details the Company's borrowed funds, primarily FHLB advances, and subordinated debt, including their terms and purposes Borrowed Funds and Subordinated Debt | (Dollars in thousands) | June 30, 2023 | December 31, 2022 | | :--------------------- | :------------ | :---------------- | | Total borrowed funds | $ 3,334 | $ 3,216 | | Subordinated debt | $ 59,340 | $ 59,182 | - Borrowed funds are primarily **FHLB advances** for community development and affordable housing programs[89](index=89&type=chunk) - Subordinated notes are due July 15, 2030, and callable at the Company's option on or after July 15, 2025[90](index=90&type=chunk) [(8) Derivatives and Hedging Activities](index=26&type=section&id=(8)%20Derivatives%20and%20Hedging%20Activities) Describes the Company's derivative instruments and hedging strategies, including interest rate swaps and risk participation agreements - During Q2 2023, the Company entered into two pay fixed, receive float interest rate swaps with a combined **notional value of $50.0 million** and a two-year term, designated as fair value hedges[94](index=94&type=chunk)[216](index=216&type=chunk) Derivative Financial Instruments (June 30, 2023) | (Dollars in thousands) | Asset Notional Amount | Asset Derivatives | Liability Notional Amount | Liability Derivatives | | :--------------------- | :-------------------- | :---------------- | :------------------------ | :-------------------- | | Interest-rate contracts - pay fixed, receive floating (hedging) | $ 50,000 | $ 260 | $ — | $ — | | Interest-rate contracts - pay floating, receive fixed (non-hedging) | $ — | $ — | $ 7,652 | $ 753 | | Interest-rate contracts - pay fixed, receive floating (non-hedging) | $ 7,652 | $ 753 | $ — | $ — | | Risk participation agreements sold | $ — | $ — | $ 46,910 | $ 81 | - The notional value of Risk Participation Agreements (RPAs) sold increased to **$46.9 million** at June 30, 2023, from **$24.7 million** at December 31, 2022[218](index=218&type=chunk) [(9) Regulatory Capital Requirements](index=28&type=section&id=(9)%20Regulatory%20Capital%20Requirements) Assesses the Company's and the Bank's compliance with regulatory capital requirements, confirming 'well-capitalized' status - As of June 30, 2023, both the Company and the Bank met the definition of **'well-capitalized'** under applicable regulations[103](index=103&type=chunk) Regulatory Capital Ratios (June 30, 2023) | (Dollars in thousands) | Actual Amount | Actual Ratio | Minimum Capital for Capital Adequacy Purposes Ratio | | :--------------------- | :------------ | :----------- | :-------------------------------------------------- | | **The Company** | | | | | Total Capital to RWA | $ 495,246 | 13.37 % | 8.00 % | | Tier 1 Capital to RWA | $ 389,427 | 10.52 % | 6.00 % | | Tier 1 Capital to AA, Leverage Ratio | $ 389,427 | 8.62 % | 4.00 % | | Common Equity Tier 1 Capital to RWA | $ 389,427 | 10.52 % | 4.50 % | | **The Bank** | | | | | Total Capital to RWA | $ 494,658 | 13.36 % | 8.00 % | | Tier 1 Capital to RWA | $ 448,179 | 12.10 % | 6.00 % | | Tier 1 Capital to AA, Leverage Ratio | $ 448,179 | 9.92 % | 4.00 % | | Common Equity Tier 1 Capital to RWA | $ 448,179 | 12.10 % | 4.50 % | - Both the Company's and the Bank's actual ratios exceeded the Basel III risk-based capital requirement with the capital conservation buffer (**2.50%**) as of June 30, 2023[105](index=105&type=chunk) [(10) Comprehensive Income (Loss)](index=29&type=section&id=(10)%20Comprehensive%20Income%20(Loss)) Reports changes in accumulated other comprehensive loss, primarily influenced by the fair value of debt securities Accumulated Other Comprehensive Loss (Net of Tax) | (Dollars in thousands) | June 30, 2023 | December 31, 2022 | | :--------------------- | :------------ | :---------------- | | Accumulated other comprehensive loss - ending balance | $ (87,593) | $ (96,207) | - The accumulated other comprehensive loss decreased by **$8.6 million** from December 31, 2022, to June 30, 2023, primarily due to an increase in the fair value of debt securities[106](index=106&type=chunk) [(11) Stock-Based Compensation](index=29&type=section&id=(11)%20Stock-Based%20Compensation) Details stock-based compensation expense and restricted stock awards granted for the periods ended June 30, 2023 Stock-Based Compensation Expense | (Dollars in thousands) | Three months ended June 30, 2023 | Six months ended June 30, 2023 | | :--------------------- | :------------------------------- | :----------------------------- | | Total stock-based compensation expense | $ 629 | $ 1,200 | Restricted Stock Awards Granted (Six months ended June 30, 2023) | Restricted Stock Awards (number of underlying shares) | 2023 | | :------------------------------------ | :--- | | Two-year vesting | 9,915 | | Four-year vesting | 32,719 | | Performance-based vesting | 31,270 | | Total restricted stock awards granted | 73,904 | - No stock options were issued during the six months ended June 30, 2023[109](index=109&type=chunk) [(12) Earnings per Share](index=31&type=section&id=(12)%20Earnings%20per%20Share) Presents basic and diluted earnings per share, along with weighted average common shares outstanding, for the periods ended June 30, 2023 Earnings Per Share Data | | Three months ended June 30, 2023 | Six months ended June 30, 2023 | | :---------------------------------- | :------------------------------- | :----------------------------- | | Basic earnings per share | $ 0.79 | $ 1.68 | | Diluted earnings per share | $ 0.79 | $ 1.67 | | Basic weighted average common shares outstanding | 12,228,081 | 12,191,857 | | Diluted weighted average common shares outstanding | 12,244,863 | 12,218,735 | - Stock options outstanding that were anti-dilutive amounted to **105,719** for the three months and **48,373** for the six months ended June 30, 2023[114](index=114&type=chunk) [(13) Fair Value Measurements](index=31&type=section&id=(13)%20Fair%20Value%20Measurements) Explains the fair value measurement of financial instruments, categorizing them by input levels (Level 1, 2, or 3) - Debt securities, equity securities, FHLB stock, and interest-rate swaps are measured at fair value using **Level 1 or Level 2 inputs**[118](index=118&type=chunk)[119](index=119&type=chunk)[120](index=120&type=chunk)[121](index=121&type=chunk) - Individually evaluated loans deemed collateral dependent are measured at fair value using **Level 3 inputs**, with a specific reserve of **$371 thousand** at June 30, 2023[122](index=122&type=chunk)[123](index=123&type=chunk) Fair Value of Financial Instruments Not Recognized on Balance Sheet (June 30, 2023) | (Dollars in thousands) | Carrying Value | Fair Value | Fair Value Measurement Level | | :--------------------- | :------------- | :--------- | :--------------------------- | | Loans, net | $ 3,288,768 | $ 3,112,928 | Level 3 | | CDs | $ 415,792 | $ 410,528 | Level 2 | | Borrowed funds | $ 3,334 | $ 2,217 | Level 2 | | Subordinated debt | $ 59,340 | $ 53,366 | Level 2 | [(14) Supplemental Cash Flow Information](index=34&type=section&id=(14)%20Supplemental%20Cash%20Flow%20Information) Details cash payments for interest, income taxes, and lease liabilities for the six months ended June 30, 2023 Supplemental Cash Flow Information (Six months ended June 30, 2023) | (Dollars in thousands) | 2023 | | :--------------------- | :--- | | Cash paid for: interest | $ 16,187 | | Cash paid for: income taxes | $ 7,786 | | Cash paid for: lease liability | $ 686 | [Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations](index=35&type=section&id=Item%202%20-%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the Company's financial condition and operating results, highlighting performance, liquidity, asset quality, and risk management [Special Note Regarding Forward-Looking Statements](index=35&type=section&id=Special%20Note%20Regarding%20Forward-Looking%20Statements) Warns that forward-looking statements are subject to risks and uncertainties, and actual results may differ materially - The Form 10-Q contains forward-looking statements subject to substantial risks and uncertainties, including potential recession, bank failures, increased competition for deposits, and changes in market interest rates[132](index=132&type=chunk)[133](index=133&type=chunk) - The Company cautions that actual results may differ materially from forward-looking statements and undertakes no obligation to publicly update or revise them[132](index=132&type=chunk)[135](index=135&type=chunk) [Overview](index=37&type=section&id=Overview) Summarizes key financial highlights for the quarter, including net income, loan and deposit growth, and strategic actions - Net income for the three months ended June 30, 2023, amounted to **$9.7 million**, or **$0.79 per diluted common share**, an increase of **19%** compared to the prior year period[139](index=139&type=chunk) - The Company recorded **$3.4 million** in Employee Retention Credits (ERC) as a reduction to salary and benefits expense during the three months ended June 30, 2023[139](index=139&type=chunk) - Total loans increased by **4%** compared to March 31, 2023, and **9%** compared to June 30, 2022, reaching **$3.35 billion**[139](index=139&type=chunk) - Total customer deposits increased by **1%** compared to March 31, 2023, and **1%** compared to June 30, 2022, reaching **$4.08 billion**[139](index=139&type=chunk) - The Company sold **$84.8 million** in debt securities and reinvested proceeds into higher-yielding short-term investments, and entered into two interest rate swaps (**$50.0 million** notional) to increase asset sensitivity and enhance future earnings by an estimated **$2.0 million** annually[139](index=139&type=chunk) - Uninsured deposits amounted to **36% of total deposits** at June 30, 2023[139](index=139&type=chunk) - FHLB and Federal Reserve Bank of Boston secured borrowing capacity amounted to **$1.1 billion**[139](index=139&type=chunk) [Risk Management Framework](index=39&type=section&id=Risk%20Management%20Framework) Describes management's comprehensive enterprise risk management framework for identifying, assessing, and mitigating risks - Management uses a comprehensive enterprise risk management framework to identify, assess, and manage risks, ensuring consistency with strategic planning and regulations[143](index=143&type=chunk) [Accounting Policies/Critical Accounting Estimates](index=39&type=section&id=Accounting%20Policies/Critical%20Accounting%20Estimates) Identifies significant areas for critical accounting assumptions and estimates, noting no material changes from the prior annual report - Significant areas for critical assumptions and estimates include the **Allowance for Credit Losses (ACL)** for loans and available-for-sale securities, the reserve for unfunded commitments, and goodwill impairment review[146](index=146&type=chunk) - The Company has not materially changed its significant accounting and reporting policies from those disclosed in its 2022 Annual Report on Form 10-K[146](index=146&type=chunk) [Recent Accounting Pronouncements](index=39&type=section&id=Recent%20Accounting%20Pronouncements) Refers to Note 1 for information regarding recently adopted accounting standards - Refer to Note 1, Item (e), 'Recent Accounting Pronouncements,' for information regarding recently adopted accounting standards[148](index=148&type=chunk) [Results of Operations for the three months ended June 30, 2023 and June 30, 2022](index=39&type=section&id=Results%20of%20Operations%20for%20the%20three%20months%20ended%20June%2030,%202023%20and%20June%2030,%202022) Analyzes financial performance for the three months ended June 30, 2023, compared to prior year, focusing on net income and interest margins - Net income increased by **$1.5 million (19%)** to **$9.7 million** for the three months ended June 30, 2023, compared to the prior year period[150](index=150&type=chunk) - Net interest income increased by **$2.3 million (6%)** to **$38.1 million**, driven by higher loan interest income (**$9.7 million**) and other interest-earning asset income (**$1.5 million**), partially offset by a **$9.0 million** increase in deposit interest expense[151](index=151&type=chunk) - Tax-equivalent net interest margin was **3.55%** for the three months ended June 30, 2023, up from **3.45%** in the prior year period[152](index=152&type=chunk) - Non-interest income decreased by **$1.3 million (32%)** to **$2.8 million**, primarily due to **$2.4 million** in net losses on sales of debt securities[165](index=165&type=chunk) - Non-interest expense decreased by **$1.2 million (5%)** to **$25.6 million**, mainly due to the **$3.4 million** Employee Retention Credits (ERC) recorded as a reduction to salary and benefits expense[166](index=166&type=chunk) [Results of Operations for the six months ended June 30, 2023 and June 30, 2022](index=42&type=section&id=Results%20of%20Operations%20for%20the%20six%20months%20ended%20June%2030,%202023%20and%20June%2030,%202022) Analyzes financial performance for the six months ended June 30, 2023, compared to prior year, focusing on net income and interest margins - Net income increased by **$2.0 million (11%)** to **$20.5 million** for the six months ended June 30, 2023, compared to the prior year period[169](index=169&type=chunk) - Net interest income increased by **$8.2 million (12%)** to **$78.1 million**, driven by higher loan interest income (**$18.5 million**) and other interest-earning asset income (**$3.6 million**), partially offset by a **$14.4 million** increase in deposit interest expense[170](index=170&type=chunk) - Tax-equivalent net interest margin was **3.65%** for the six months ended June 30, 2023, up from **3.36%** in the prior year period[171](index=171&type=chunk) - Provision for credit losses increased by **$2.1 million** to **$5.0 million**, primarily due to loan portfolio growth and off-balance sheet commitments, and an increased probability and severity of forecasted economic conditions[181](index=181&type=chunk) - Non-interest income decreased by **$2.2 million (22%)** to **$7.6 million**, primarily due to **$2.4 million** in net losses on sales of debt securities (compared to **$1.1 million** gains in the prior year)[182](index=182&type=chunk) - Non-interest expense increased by **$1.1 million (2%)** to **$53.7 million**. Excluding **$3.6 million** in ERC, non-interest expense increased by **$4.7 million (9%)**[183](index=183&type=chunk) [Financial Condition](index=46&type=section&id=Financial%20Condition) Reviews the Company's financial position, including asset and liability trends, loan and deposit growth, asset quality, and equity - Total assets increased by **$64.0 million (1%)** to **$4.50 billion** at June 30, 2023, compared to December 31, 2022[186](index=186&type=chunk) - The fair value of the investment securities portfolio decreased by **$107.5 million (13%)** to **$712.9 million**, primarily due to sales of debt securities and principal pay-downs[188](index=188&type=chunk) - Total loans increased by **$165.1 million (5%)** since December 31, 2022, with commercial construction loans increasing by **15%** due to strong demand[193](index=193&type=chunk)[194](index=194&type=chunk) - Non-performing loans increased to **$7.6 million (0.23% of total loans)** at June 30, 2023, from **$6.1 million (0.19%)** at December 31, 2022[195](index=195&type=chunk) - The Allowance for Credit Losses (ACL) for loans to total loans was **1.70%** at June 30, 2023[195](index=195&type=chunk) - Customer deposits increased by **$39.8 million (1%)** since December 31, 2022, with Certificates of Deposit (CDs) increasing by **45%** as customers sought higher yields[205](index=205&type=chunk) - Total shareholders' equity increased by **$25.2 million (9%)** to **$307.5 million**, driven by an increase in retained earnings and a decrease in accumulated other comprehensive loss[211](index=211&type=chunk) - Wealth assets under management increased by **$117.9 million (13%)** to **$1.0 billion** at June 30, 2023[231](index=231&type=chunk) [Item 3 - Quantitative and Qualitative Disclosures About Market Risk](index=53&type=section&id=Item%203%20-%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Discusses the Company's exposure to market risk, particularly interest rate risk, through a sensitivity analysis of net interest income Net Interest Income Sensitivity Analysis (24-month period) | Changes in interest rates | June 30, 2023 Percentage Change | December 31, 2022 Percentage Change | | :------------------------ | :-------------------------------- | :---------------------------------- | | Rates Rise 400 Basis Points | 0.12 % | 1.20 % | | Rates Rise 200 Basis Points | (0.10)% | 0.45 % | | Rates Unchanged | — % | — % | | Rates Decline 200 Basis Points | (2.22)% | (5.34)% | - Net interest income was projected to be relatively flat in increasing interest rate scenarios (**200 and 400 basis points**) at June 30, 2023, compared to an increase at December 31, 2022, primarily due to a shift in deposit composition to higher interest rate sensitivity[235](index=235&type=chunk) - The percent decrease in net interest income in a **200 basis point** decreasing interest rate scenario was lower at June 30, 2023, compared to December 31, 2022, as higher deposit yields allow for greater rate declines before impacting NII[235](index=235&type=chunk) [Item 4 - Controls and Procedures](index=54&type=section&id=Item%204%20-%20Controls%20and%20Procedures) Management evaluated the effectiveness of disclosure controls and procedures, concluding they were effective with no significant changes - The Company's disclosure controls and procedures were **effective** as of June 30, 2023[238](index=238&type=chunk) - There have been **no significant changes** in the Company's internal control over financial reporting during the three months ended June 30, 2023, that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[240](index=240&type=chunk) [PART II - OTHER INFORMATION](index=54&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) Contains disclosures on legal proceedings, risk factors, equity security sales, and other miscellaneous information [Item 1 - Legal Proceedings](index=54&type=section&id=Item%201%20-%20Legal%20Proceedings) The Company is not involved in any material pending legal proceedings beyond ordinary routine litigation incidental to its business - There are **no material pending legal proceedings** to which the Company or its subsidiaries are a party[242](index=242&type=chunk) - Management does not believe resolution of any present litigation will have a **material adverse effect** on the business, consolidated financial condition or results of operations[242](index=242&type=chunk) [Item 1A - Risk Factors](index=54&type=section&id=Item%201A%20-%20Risk%20Factors) Highlights potential economic stress and recent bank failures as key risks, noting no material changes from the 2022 Annual Report - Management believes there have been **no material changes** in the Company's risk factors as reported in the 2022 Annual Report on Form 10-K, but sustained economic stress or recession could heighten existing risks[243](index=243&type=chunk) - Recent bank failures and related negative impact on customer confidence may adversely affect the Company's business, earnings, and financial condition, potentially leading to deposit withdrawals and higher funding costs[244](index=244&type=chunk) [Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds](index=56&type=section&id=Item%202%20-%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Details common stock repurchases for employee tax settlements, not part of a publicly announced repurchase plan Common Stock Repurchases (Three months ended June 30, 2023) | | Total number of shares repurchased | Average Price Paid Per Share | | :---- | :------------------------------- | :--------------------------- | | April | 1,410 | $ 28.45 | | June | 240 | $ 28.94 | | Total | 1,650 | | - Shares repurchased were primarily owned and tendered by employees as payment for taxes upon vesting of restricted stock (net settlement of shares) and were not part of a publicly announced repurchase plan or program[247](index=247&type=chunk) [Item 3 - Defaults Upon Senior Securities](index=56&type=section&id=Item%203%20-%20Defaults%20Upon%20Senior%20Securities) Not Applicable [Item 4 - Mine Safety Disclosures](index=56&type=section&id=Item%204%20-%20Mine%20Safety%20Disclosures) Not Applicable [Item 5 - Other Information](index=56&type=section&id=Item%205%20-%20Other%20Information) No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter - No directors or officers adopted or terminated a "Rule 10b5-1 trading arrangement" or a "non-Rule 10b5-1 trading arrangement" during the three months ended June 30, 2023[250](index=250&type=chunk) [Item 6 - Exhibits](index=57&type=section&id=Item%206%20-%20Exhibits) Lists exhibits filed with the Form 10-Q, including certifications from executive officers and XBRL financial statements - Exhibit 31.1 and 31.2 include Certifications of Principal Executive Officer and Principal Financial Officer under Securities Exchange Act Rule 13a-14(a)[252](index=252&type=chunk) - Exhibit 32 includes Certifications of Principal Executive Officer and Principal Financial Officer under 18 U.S.C. § 1350[252](index=252&type=chunk) - Financial statements for the quarter ended June 30, 2023, were formatted in Inline XBRL (eXtensible Business Reporting Language) as Exhibit 101[252](index=252&type=chunk) [SIGNATURES](index=58&type=section&id=SIGNATURES) Confirms the official signing of the report by the Company's Executive Vice President, Treasurer, and Chief Financial Officer - The report was signed on August 8, 2023, by **Joseph R. Lussier**, Executive Vice President, Treasurer and Chief Financial Officer of Enterprise Bancorp, Inc[256](index=256&type=chunk)

PART I - FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The unaudited consolidated interim financial statements present the financial position, results of operations, and cash flows for Q1 2023 and 2022 periods [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Total assets increased slightly to $4.44 billion at March 31, 2023, driven by net loan growth, while liabilities decreased and equity rose from reduced comprehensive loss Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Assets** | | | | Total cash and cash equivalents | $215,693 | $267,589 | | Total investment securities at fair value | $830,895 | $820,371 | | Net loans | $3,175,154 | $3,127,878 | | **Total assets** | **$4,441,896** | **$4,438,333** | | **Liabilities & Equity** | | | | Deposits | $4,016,156 | $4,035,806 | | Total liabilities | $4,130,578 | $4,156,066 | | Total shareholders' equity | $311,318 | $282,267 | | **Total liabilities and shareholders' equity** | **$4,441,896** | **$4,438,333** | [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) Net income for Q1 2023 increased to $10.8 million, primarily driven by a 17.4% rise in net interest income, despite increased expenses Consolidated Income Statement Highlights (in thousands, except per share data) | Account | Three months ended March 31, 2023 | Three months ended March 31, 2022 | | :--- | :--- | :--- | | Net interest income | $39,971 | $34,033 | | Provision for credit losses | $2,736 | $530 | | Total non-interest income | $4,757 | $5,595 | | Total non-interest expense | $28,040 | $25,757 | | **Net income** | **$10,768** | **$10,287** | | **Diluted earnings per share** | **$0.88** | **$0.85** | [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Total comprehensive income for Q1 2023 was $31.0 million, a significant turnaround from a loss in Q1 2022, driven by a positive change in debt securities' fair value Comprehensive Income (Loss) (in thousands) | Component | Three months ended March 31, 2023 | Three months ended March 31, 2022 | | :--- | :--- | :--- | | Net income | $10,768 | $10,287 | | Net change in fair value of debt securities | $20,248 | $(44,962) | | **Total comprehensive income (loss), net** | **$31,016** | **$(34,675)** | [Consolidated Statements of Changes in Shareholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Shareholders%27%20Equity) Shareholders' equity increased to $311.3 million at March 31, 2023, driven by net income and other comprehensive income, partially offset by common stock dividends - Key drivers for the change in shareholders' equity in Q1 2023 include net income of **$10.8 million**, other comprehensive income of **$20.2 million**, and common stock dividends of **$2.8 million**[16](index=16&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities was $5.7 million in Q1 2023, while investing and financing activities resulted in a $51.9 million net decrease in cash and cash equivalents Net Cash Flow Summary (in thousands) | Cash Flow Activity | Three months ended March 31, 2023 | Three months ended March 31, 2022 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $5,674 | $(3,265) | | Net cash used in investing activities | $(35,227) | $(53,039) | | Net cash (used in) provided by financing activities | $(22,343) | $49,415 | | **Net decrease in cash and cash equivalents** | **$(51,896)** | **$(6,889)** | [Notes to Unaudited Consolidated Interim Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Interim%20Financial%20Statements) The notes detail accounting policies, including early adoption of new standards, and provide breakdowns of key financial components like investments, loans, ACL, deposits, and regulatory capital - The Company early adopted ASU 2023-02 for a new NMTC investment and ASU 2022-02, which eliminated troubled debt restructuring (TDR) accounting, with neither adoption having a significant impact on financial statements[32](index=32&type=chunk)[34](index=34&type=chunk) - The investment portfolio is primarily composed of debt securities classified as available-for-sale, with unrealized losses of **$98.5 million** at March 31, 2023, attributed to higher market interest rates[36](index=36&type=chunk) - Total loans grew to **$3.23 billion**, with commercial loans (real estate, C&I, construction) comprising **87%** of the portfolio[44](index=44&type=chunk)[177](index=177&type=chunk) - The Allowance for Credit Losses (ACL) for loans increased to **$55.0 million** (**1.70%** of total loans) from **$52.6 million** at year-end 2022[72](index=72&type=chunk)[73](index=73&type=chunk) - Non-accrual loans increased to **$7.5 million** (**0.23%** of total loans) at March 31, 2023, from **$6.1 million** (**0.19%** of total loans) at year-end 2022[56](index=56&type=chunk)[57](index=57&type=chunk) - The Company and the Bank met all 'well-capitalized' requirements under regulatory frameworks as of March 31, 2023[94](index=94&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2023 financial results, highlighting a 5% net income increase driven by higher net interest income, alongside loan growth, stable liquidity, and strong capital and asset quality [Overview](index=35&type=section&id=MD%26A_Overview) Net income for Q1 2023 increased to $10.8 million, driven by higher net interest income, with loan growth, slight deposit decrease, and increased shareholders' equity from AOCL reduction - Net income increased to **$10.8 million** in Q1 2023, up **5%** from Q1 2022, driven by higher net interest income[131](index=131&type=chunk)[150](index=150&type=chunk) - Total loans increased by **1.6%** (**6%** annualized) in Q1 2023, while customer deposits decreased by **0.5%** (**2%** annualized)[132](index=132&type=chunk)[134](index=134&type=chunk) - The company maintains strong liquidity with **$1.1 billion** in secured borrowing capacity from the FHLB and FRB, and uninsured/uncollateralized deposits representing **36%** of total deposits[137](index=137&type=chunk) [Results of Operations](index=38&type=section&id=MD%26A_Results_of_Operations) Net interest income rose 17% to $40.0 million in Q1 2023, expanding net interest margin, while provision for credit losses and non-interest expense increased, and non-interest income decreased - Net interest income increased by **$5.9 million** (**17%**) YoY, driven by higher loan interest income[151](index=151&type=chunk) - Tax-equivalent net interest margin was **3.76%** for Q1 2023, up from **3.28%** for Q1 2022, benefiting from rising interest rates on assets outpacing funding costs[152](index=152&type=chunk) - The provision for credit losses increased by **$2.2 million** to **$2.7 million**, primarily due to a forecasted increase in the probability and severity of a recession in the allowance model[163](index=163&type=chunk)[172](index=172&type=chunk) - Non-interest income decreased by **$838 thousand**, largely because Q1 2022 included **$1.1 million** in net gains on sales of debt securities[165](index=165&type=chunk)[173](index=173&type=chunk) - Non-interest expense increased by **$2.3 million** (**9%**), mainly due to a **$1.7 million** rise in salaries and employee benefits to support strategic growth[166](index=166&type=chunk) [Financial Condition](index=42&type=section&id=MD%26A_Financial_Condition) Total assets remained stable at $4.44 billion at March 31, 2023, with growth in investments and loans, strong asset quality, a slight decrease in deposits, and a 10% increase in shareholders' equity - Total loans increased by **$49.6 million** (**2%**) since year-end 2022, with commercial loans making up **87%** of the portfolio[177](index=177&type=chunk) - Non-performing loans were **0.23%** of total loans at March 31, 2023, a slight increase from **0.19%** at year-end 2022 but significantly down from **0.85%** a year prior[179](index=179&type=chunk) - The ACL for loans to total loans ratio was **1.70%** at March 31, 2023, compared to **1.66%** at December 31, 2022[179](index=179&type=chunk) - Customer deposits decreased by **$19.7 million** since year-end, with a notable shift from checking accounts (**-$151.9M**) into CDs (**+$87.9M**) and money market/savings accounts (**+$44.3M**)[187](index=187&type=chunk) - Shareholders' equity increased by **$29.1 million** (**10%**) in Q1 2023, primarily due to net income and a **$20.2 million** (net of tax) reduction in accumulated other comprehensive loss (AOCL)[193](index=193&type=chunk) [Liquidity and Capital Resources](index=48&type=section&id=MD%26A_Liquidity_and_Capital_Resources) The Company maintains robust liquidity with $1.1 billion in borrowing capacity, expected to increase to $1.4 billion, and strong capital ratios exceeding 'well-capitalized' standards - At March 31, 2023, the Company had borrowing capacity of approximately **$790.0 million** from the FHLB and **$310.0 million** from the FRB Discount Window[203](index=203&type=chunk) - In April 2023, actions were taken to increase total secured borrowing capacity to approximately **$1.4 billion**[204](index=204&type=chunk) - The Company's capital ratios remain strong, with Total Capital to RWA at **13.55%** and Tier 1 Capital to RWA at **10.64%** as of March 31, 2023[209](index=209&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=50&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Net interest income sensitivity analysis at March 31, 2023, projects a decrease in net interest income in both rising and declining interest rate scenarios, a shift due to deposit mix and lower short-term liquidity Net Interest Income Sensitivity Analysis (% Change) | Scenario | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Rates Rise 400 Basis Points | (0.73)% | 1.20% | | Rates Rise 200 Basis Points | (0.48)% | 0.45% | | Rates Decline 200 Basis Points | (2.51)% | (5.34)% | - The shift to a negative sensitivity in rising rate scenarios is due to a change in deposit mix towards more rate-sensitive accounts and a lower balance of immediately repricing short-term liquidity[220](index=220&type=chunk) [Item 4. Controls and Procedures](index=51&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the Company's disclosure controls and procedures were effective as of March 31, 2023, with no significant changes to internal control over financial reporting during the quarter - The principal executive officer and principal financial officer concluded that the Company's disclosure controls and procedures were effective as of March 31, 2023[223](index=223&type=chunk) - No significant changes to internal control over financial reporting occurred during the first quarter of 2023[225](index=225&type=chunk) PART II - OTHER INFORMATION [Item 1. Legal Proceedings](index=51&type=section&id=Item%201.%20Legal%20Proceedings) The Company is not a party to any material pending legal proceedings, with current litigation considered routine and not expected to have a material adverse effect - There are no material pending legal proceedings against the Company, only routine litigation incidental to business[227](index=227&type=chunk) [Item 1A. Risk Factors](index=51&type=section&id=Item%201A.%20Risk%20Factors) A new risk factor highlights that recent bank failures could negatively impact customer confidence, potentially leading to deposit withdrawals, increased funding costs, and reduced lending capacity - A new risk factor highlights that recent bank failures and related market volatility could negatively impact customer confidence, potentially leading to deposit outflows and higher funding costs for the Company[229](index=229&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=52&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q1 2023, the Company repurchased 5,954 shares of common stock, not under a public plan, but from employees to cover taxes on restricted stock vesting Common Stock Repurchases Q1 2023 | Month | Total Shares Repurchased | Average Price Paid Per Share | | :--- | :--- | :--- | | January | 1,828 | $35.50 | | February | — | $— | | March | 4,126 | $32.39 | [Item 3. Defaults Upon Senior Securities](index=52&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) Not Applicable [Item 4. Mine Safety Disclosures](index=52&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Not Applicable [Item 5. Other Information](index=52&type=section&id=Item%205.%20Other%20Information) Not Applicable [Item 6. Exhibits](index=53&type=section&id=Item%206.%20Exhibits) The report lists several exhibits filed with the Form 10-Q, including certifications by executive officers and Inline XBRL data files

PART I This section details the Company's business operations, market presence, product offerings, and the extensive regulatory framework governing its activities [Item 1. Business](index=3&type=section&id=Item%201.%20Business) Enterprise Bancorp, Inc. operates as a bank holding company for Enterprise Bank, a community-focused commercial bank, offering a comprehensive suite of financial products and services - Enterprise Bancorp, Inc. operates as the parent holding company of Enterprise Bank and Trust Company, a community-focused commercial bank, with substantially all operations conducted through the Bank and its subsidiaries. The Company's common stock trades on the NASDAQ Global Market under the symbol '**EBTC**'[14](index=14&type=chunk)[15](index=15&type=chunk)[17](index=17&type=chunk) - The Company's primary market area spans Northern Middlesex, Northern Essex, and Northern Worcester counties of Massachusetts, and Southern Hillsborough and Southern Rockingham counties in New Hampshire, served by **27 full-service branches**[18](index=18&type=chunk) - The Company offers a range of commercial, residential, and consumer loan products, deposit products, cash management services, and wealth management. Insurance sales activities through a third-party arrangement ended on October 5, 2022, with the sale of rights to future cash flows[21](index=21&type=chunk)[23](index=23&type=chunk)[55](index=55&type=chunk)[56](index=56&type=chunk) [Item 1A. Risk Factors](index=26&type=section&id=Item%201A.%20Risk%20Factors) An investment in the Company's common stock is subject to various risks, including potential failures in risk management controls, inherent risks in lending activities, and the need for increased allowance for credit losses - The Company's loan portfolio, primarily commercial real estate, commercial and industrial, and commercial construction loans, carries a higher risk of default compared to residential mortgage or consumer loans, making it more susceptible to adverse economic conditions[215](index=215&type=chunk) - The Company's financial results are highly sensitive to changes in market interest rates, which can affect loan and deposit pricing at differing speeds, potentially impacting net interest income and demand for bank products. Persistent inflation could lead to tighter monetary policy, higher interest rates, increased borrowing costs for customers, and reduced profitability[226](index=226&type=chunk)[229](index=229&type=chunk) - The Company faces significant cybersecurity risks due to its reliance on information systems and cloud-based solutions, with potential for interruptions, data breaches, and operational disruptions that could harm reputation, increase costs, and lead to regulatory actions or litigation[236](index=236&type=chunk)[237](index=237&type=chunk) - The Company's capital levels could fall below regulatory minimums, restricting growth, increasing funding costs, impacting FDIC insurance expense, and prohibiting dividend payments. The Company relies on dividends from the Bank for substantially all its revenue, and regulatory restrictions on the Bank's ability to pay dividends could materially affect the Company's ability to service debt and pay common stock dividends[257](index=257&type=chunk)[258](index=258&type=chunk)[261](index=261&type=chunk)[262](index=262&type=chunk) [Item 1B. Unresolved Staff Comments](index=34&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The Company has no unresolved staff comments from the SEC - There are no unresolved staff comments[263](index=263&type=chunk) [Item 2. Properties](index=34&type=section&id=Item%202.%20Properties) The Company's main office and operational support are located in Lowell, Massachusetts, with a back-up operations/data facility in the Merrimack Valley, and operates 27 full-service branches - The Company's main office and operational support offices are located in Lowell, Massachusetts, consisting of four closely situated buildings, three of which are owned[264](index=264&type=chunk) - The Company owns and maintains a back-up operations/data facility in the Merrimack Valley region of Massachusetts[264](index=264&type=chunk) - As of December 31, 2022, the Company had **27 full-service branch banking offices** and was the lessee under **16 active operating real estate leases**[264](index=264&type=chunk)[265](index=265&type=chunk) [Item 3. Legal Proceedings](index=34&type=section&id=Item%203.%20Legal%20Proceedings) The Company is not currently involved in any material pending legal proceedings beyond ordinary routine litigation incidental to its business - There are no material pending legal proceedings to which the Company or its subsidiaries are a party, other than ordinary routine litigation incidental to the business[266](index=266&type=chunk) - Management does not believe resolution of any present litigation will have a material adverse effect on the business, consolidated financial condition, or results of operations[266](index=266&type=chunk) [Item 4. Mine Safety Disclosures](index=34&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the Company - Item 4. Mine Safety Disclosures is not applicable[267](index=267&type=chunk) PART II This section covers the Company's common stock market, financial performance, market risk disclosures, and audited financial statements [Item 5. Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities](index=34&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Shareholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The Company's common stock trades on the NASDAQ Global Market under 'EBTC', with 12,148,951 shares outstanding as of February 28, 2023, and a declared Q1 2023 dividend of $0.23 per share - The Company's common stock trades on the NASDAQ Global Market under the trading symbol '**EBTC**'[270](index=270&type=chunk) Common Stock and Dividends | Metric | Value | | :----------------------------------- | :-------------------- | | Shares Outstanding (Feb 28, 2023) | 12,148,951 shares | | Shareholders of Record (Feb 28, 2023) | 1,063 | | Dividends Paid Per Share (2022) | $0.82 | | Dividends Paid Per Share (2021) | $0.74 | | Q1 2023 Quarterly Dividend Announced | $0.23 per share | | Stock Options Outstanding (Dec 31, 2022) | 197,249 | | Weighted-Average Exercise Price (Dec 31, 2022) | $26.33 | | Shares Available for Future Issuance (Dec 31, 2022) | 442,051 | | Shares Repurchased (Oct 2022) | 3,413 | | Average Price Paid Per Share (Oct 2022) | $29.79 | [Item 6. Selected Financial Data](index=36&type=section&id=Item%206.%20Selected%20Financial%20Data) The information typically required by Item 6 has been omitted, as permitted by the SEC, with further financial details available in Item 7 - Information previously required by Item 6 has been intentionally omitted, as permitted by the SEC's final rules on financial disclosure requirements[283](index=283&type=chunk) - For details on the Company's financial condition and results of operations, refer to Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations"[283](index=283&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=37&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) The Company's financial performance in 2022 was significantly influenced by rising market interest rates and high inflation, leading to a slight increase in net income despite non-core operating transactions - Net income for the year ended December 31, 2022, increased by **1% to $42.7 million**, primarily driven by a **$27.4 million increase in net interest income** (excluding PPP income), partially offset by higher provision for credit losses and non-interest expense, and a **$17.1 million decrease in PPP income**[295](index=295&type=chunk) Key Financial Highlights (2022 vs. 2021) | Metric | 2022 (in thousands) | 2021 (in thousands) | Change (in thousands) | % Change | | :----------------------------------- | :------------------ | :------------------ | :-------------------- | :------- | | Net Income | $42,716 | $42,171 | $545 | 1% | | Net Interest Income | $151,798 | $141,556 | $10,242 | 7% | | Net Interest Margin | 3.54% | 3.44% | 0.10% | - | | Provision for Credit Losses | $5,800 | $1,770 | $4,030 | 228% | | Total Non-Interest Income | $18,462 | $18,107 | $355 | 2% | | Total Non-Interest Expense | $108,314 | $102,135 | $6,179 | 6% | | Total Assets | $4,438,333 | $4,447,819 | $(9,486) | (0.2)% | | Total Loans | $3,180,518 | $2,920,684 | $259,834 | 9% | | Core Loans (non-GAAP) | $3,180,518 | $2,849,182 | $331,336 | 12% | | Non-Performing Loans to Total Loans | 0.19% | 0.91% | (0.72)% | - | | Customer Deposits | $4,035,806 | $3,980,239 | $55,567 | 1% | | Total Shareholders' Equity | $282,267 | $346,895 | $(64,628) | (19)% | | Book Value Per Common Share | $23.26 | $28.82 | $(5.56) | (19.3)% | | Book Value Per Common Share (excl. AOCI, non-GAAP) | $31.19 | $28.43 | $2.76 | 9.7% | | Return on Average Shareholders' Equity | 14.47% | 12.49% | 1.98% | - | | Return on Average Shareholders' Equity (excl. AOCI, non-GAAP) | 11.74% | 13.03% | (1.29)% | - | - The Company's investment portfolio fair value declined by **$137.8 million (14%)** in 2022, primarily due to a **$130.0 million decline in debt securities** from significant market interest rate increases (**425 basis points** in the prime lending rate). Net unrealized losses on debt securities amounted to **$124.1 million** at year-end 2022, compared to net unrealized gains of **$5.9 million** in 2021[297](index=297&type=chunk)[346](index=346&type=chunk)[347](index=347&type=chunk)[348](index=348&type=chunk) - Total loans increased by **$259.8 million (9%)** in 2022, with core loans (non-GAAP) growing by **$331.3 million (12%)**. Commercial real estate loans increased by **$240.6 million (14%)**, and retail loans increased by **$74.7 million (22%)** due to retaining more residential mortgage production[297](index=297&type=chunk)[354](index=354&type=chunk)[356](index=356&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=62&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The Company's primary market risk is interest-rate risk, managed through its asset-liability management policy, with net interest income sensitivity analysis performed quarterly - The Company's primary market risk is interest-rate risk, with oversight and policy approval by the Board. Net interest income sensitivity analysis is performed quarterly[427](index=427&type=chunk)[429](index=429&type=chunk) - In 2022, the Company's net interest margin favorably impacted by significant increases in market interest rates and the prime lending rate, as asset yields increased more significantly than funding costs[319](index=319&type=chunk)[434](index=434&type=chunk) - Net interest income sensitivity decreased at December 31, 2022, compared to 2021 and 2020, primarily due to a decrease in net short-term liquidity and an increase in loans originated with slightly longer initial fixed terms[436](index=436&type=chunk) Net Interest Income Sensitivity (24-month period) | Changes in Interest Rates | December 31, 2022 Percentage Change | December 31, 2021 Percentage Change | December 31, 2020 Percentage Change | | :------------------------ | :------------------------------------ | :------------------------------------ | :------------------------------------ | | Rates Rise 400 Basis Points | 1.20 % | 9.73 % | 6.40 % | | Rates Rise 200 Basis Points | 0.45 % | 5.37 % | 3.57 % | | Rates Unchanged | — % | — % | — % | | Rates Decline 200 Basis Points | (5.34)% | (9.54)% | (7.17)% | [Item 8. Financial Statements and Supplementary Data](index=64&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the Company's audited consolidated financial statements, including balance sheets, statements of income, comprehensive income, changes in shareholders' equity, and cash flows, with an unqualified audit opinion - The consolidated financial statements include the Balance Sheets as of December 31, 2022 and 2021, and the Statements of Income, Comprehensive Income, Changes in Shareholders' Equity, and Cash Flows for the years ended December 31, 2022, 2021, and 2020[440](index=440&type=chunk) - The independent registered public accounting firm issued an unqualified opinion on the consolidated financial statements and the effectiveness of internal control over financial reporting as of December 31, 2022[756](index=756&type=chunk)[757](index=757&type=chunk)[766](index=766&type=chunk) - The Allowance for Credit Losses for Loans, particularly the qualitative component of the general reserve, was identified as a critical audit matter due to the high degree of subjectivity and judgment involved in management's estimates and economic forecasts[761](index=761&type=chunk)[762](index=762&type=chunk)[763](index=763&type=chunk) [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=119&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The Company reports no changes in or disagreements with its accountants on accounting and financial disclosure matters - There are no changes in and disagreements with accountants on accounting and financial disclosure[773](index=773&type=chunk) [Item 9A. Controls and Procedures](index=119&type=section&id=Item%209A.%20Controls%20and%20Procedures) The Company's management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2022, with no significant changes during the most recent fiscal quarter - The Company's principal executive officer and principal financial officer concluded that the Company's disclosure controls and procedures are effective as of December 31, 2022[776](index=776&type=chunk) - Management assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2022, using the COSO 2013 criteria, and concluded it is effective[779](index=779&type=chunk) - There have been no significant changes in the Company's internal control over financial reporting during the most recent fiscal quarter (three months ended December 31, 2022) that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[782](index=782&type=chunk) [Item 9B. Other Information](index=119&type=section&id=Item%209B.%20Other%20Information) The Company has no other information to report under this item - There is no other information to report[783](index=783&type=chunk) [Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=119&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the Company - Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections is not applicable[784](index=784&type=chunk) Part III This section incorporates by reference information regarding directors, executive compensation, security ownership, related transactions, and accounting fees from the Company's proxy statement [Items 10, 11, 12, 13 and 14.](index=119&type=section&id=Items%2010%2C%2011%2C%2012%2C%2013%20and%2014.) Information for Items 10, 11, 12, 13, and 14 is incorporated by reference from the Company's definitive proxy statement, expected to be filed by May 2, 2023 - Information for Items 10, 11, 12, 13, and 14 is incorporated by reference from the Company's definitive proxy statement for its annual meeting of shareholders to be held on May 2, 2023[786](index=786&type=chunk) Part IV This section lists the exhibits and financial statement schedules included in the annual report, noting the absence of a Form 10-K Summary [Item 15. Exhibits, Financial Statement Schedules](index=120&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists the documents filed as part of the annual report, including financial statements and various exhibits - The annual report includes financial statements and a list of exhibits, with financial statement schedules omitted as the information is contained within the consolidated financial statements[788](index=788&type=chunk)[790](index=790&type=chunk) - Exhibits cover a range of documents including Amended and Restated Articles of Organization, Bylaws, Renewal Rights Agreement, Indenture for Subordinated Note, and various employee and executive compensation plans[791](index=791&type=chunk)[793](index=793&type=chunk)[795](index=795&type=chunk)[797](index=797&type=chunk) [Item 16. Form 10-K Summary](index=123&type=section&id=Item%2016.%20Form%2010-K%20Summary) The Company has not provided a Form 10-K Summary - There is no Form 10-K Summary provided[798](index=798&type=chunk)