Enterprise Bank, a model for internal growth, opens 24th branch



Lowell-based Enterprise Bank recently opened its 24th branch office, at 15 Indian Rock Road in Windham, N.H. 

It’s easy to forget that Lowell’s Enterprise Bank has yet to see its 30th birthday. Steady growth will do that, and then some.

Sometime in recent days — I can’t pin it down, although I drive by nearly every day — Enterprise opened its 24th branch office. It’s at 15 Indian Rock Road in Windham, N.H. That address sounds like it might be somewhere in the proverbial sticks, but it really isn’t. It’s Route 111, a major thoroughfare connecting commuters from Nashua and Hudson to I-93 on the other side of Windham, abutting the Salem line. The road is essentially the main street of Windham, a bedroom community that in recent years has chipped away at developing a commercial center. There’s a wine shop, a 24-hour fitness center, the expected gas station/convenience store and several other small businesses. There’s a Shaw’s supermarket up the street. Plenty of traffic.

But there’s also only one other bank in the vicinity, and I say that with some degree of hesitation. A Santander Bank branch sits well off the road about a half-mile east, hidden partially behind trees and the aforementioned Shaw’s. It’s pretty easy to miss, unless you’re looking for it.

So this is (another) great opportunity for Enterprise Bank to gain market share organically, something it’s been quite adept at ever since founder George Duncan decided to start the institution from scratch in the midst of a national savings and loan scandal, in 1988.

Did you know…. that Enterprise has posted net income of more than $20 million in the 12 months ended June 30? That’s roughly $1.77 per share. Perhaps more impressively, the bank seems to announce 8-11 percent year-over year growth in categories such as loans, deposits, net income and total assets almost like clockwork.

Ask Duncan (still whistling to work each weekday, at age 77) or CEO Jack Clancy how the bank manages to do this, and you get the same canned answer(s): contributions from our dedicated team, community involvement, relationship building and a customer-focused mindset.

Sure, it sounds corny. But it’s true.

Enterprise’s growth kicked up a notch last year, and  investors noticed — the stock closed out 2016 at $37.26, about 70 percent higher than its low for the year. This brought the bank’s price-earnings ratio up to the mid-20s, which is rather rich for a bank stock.

But while the growth has continued at a high level (the second quarter brought a 17 percent gain in net income, for example), shares have stagnated. They closed Tuesday at $33.98, down nearly 9 percent on the year. The price-earnings ratio has settled to about 19 — still not cheap, but not exorbitant for a proven grower.   

Longtime observers will point out the fact that this is a stock that rewards its investors with dividend hikes each year. Enterprise currently pays 13.5 cents per share, per quarter, or 54 cents per year. The yield is modest (1.55 percent),  and so is the annual increase — 2 cents per share, per year, since 2008. But for 10 years running, and I don’t have to remind you that this period encompasses a rather nasty economic downturn, you’ve been getting that raise. And longer than 10 years ago, the annual percentage gains were higher.

Has your job been as dependable in terms of issuing raises?

Suppose you bought shares on June 30, 2008. You would have paid about $11.75 apiece. The annual dividend then was 38 cents per share, or 3.2 percent. Not too bad. Now suppose you held those shares until now. Well, in 2017 you’re getting 54 cents per share for those same shares (which have tripled in value, by the way). That’s a yield of 4.6 percent, based on the 2008 price that you paid. See? The yield only looks puny when you compare with shares bought today. If you’re a buy-and-hold investor with a steady dividend payer (and increaser), the yields look a lot better.

A year or two ago, a colleague of mine asked me if it was a good idea to add to his Enterprise holdings. They were trading at about $24 at the time. I responded that I thought the price was a bit rich, that he would likely get them for a cheaper price a few months hence.

I was wrong. Dead wrong. It wasn’t until this year that the rally ended. Actually, more like plateaued. It just goes to show (again) that just because a stock goes up, doesn’t mean it won’t go up more. If it’s a well-run company, and pays an increasing dividend each year (the two often go hand in hand), there’s rarely a bad time to get a piece of the action.

I worked in Lowell for more than 20 years. I can say I would be hard-pressed to find a public company that’s as well-run as this one.      


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