Enterprise Bancorp, Inc. Announces 2006 Year End Financial Results.

LOWELL, Mass. -- Enterprise Bancorp, Inc. (the "company") (NASDAQ:EBTC) announced net income of $9.234 million for the year ended December 31, 2006 compared to $8.414 million during the year ended December 31, 2005, an increase of 10%. Diluted earnings per share were $1.18 for the year compared to $1.09 for 2005, an increase of 8%. All prior period per-share amounts have been adjusted to reflect the two-for-one stock split paid on June 30, 2006 in the form of a stock dividend.

Net income for the fourth quarter ended December 31, 2006 amounted to $2.545 million compared to $2.329 million for the same period in 2005, an increase of 9%. Diluted earnings per share were $0.32 for the quarter ended December 31, 2006 compared to $0.30 for the same period in 2005, an increase of 7%.

The company's net income growth continues to result primarily from increases in net interest income, partially offset by increases in non-interest expense. Net interest income for the year ended December 31, 2006 amounted to $41.6 million compared to $38.1 million for the same period in 2005, an increase of 9%. The primary driver of net interest income growth over the period was loan growth, which increased 9% since December 31, 2005. Net interest margin, the spread earned between interest-earning assets and the company's funding sources, primarily deposits, was 4.78% for the year ended December 31, 2006 compared to 4.82% for the same period in 2005. From a quarterly perspective, the margin was 4.74% for the three months ended December 31, 2006 compared to 4.76% and 4.90% for the same periods ended September 30, 2006 and December 31, 2005. The decrease in margin reflects both the flat yield curve and the highly-competitive marketplace currently in existence.

Non-interest expense amounted to $32.5 million for the year ended December 31, 2006 compared to $30.2 million for the same period in 2005, an increase of 8%, and reflected the strategic and operational costs necessary to support the company's continued growth. Increases were predominantly in salary and benefits, occupancy costs and advertising and public relations, partially offset by a reduction in performance-based incentive compensation.

The year-end results also include non-interest income of $6.8 million, an increase of $381 thousand or 6% over the prior year. The growth resulted primarily from an increase of 18% in investment advisory fees and a full year of bank-owned life insurance income. The increase in non-interest income was partially offset by a reduction in net gains (losses) on sales of investment securities, which amounted to net losses of $204 thousand for the year ended 2006 compared to net gains of $191 thousand for the same period in 2005.

The provision for loan losses, which is impacted by asset quality and loan growth, amounted to $1.259 million for the year end results compared to $1.135 million in the prior year end. Asset quality remained favorable during the year with net charge-offs of 0.05% of average total loans or $369 thousand. The allowance for loan losses to total loans ratio was 1.70% at December 31, 2006 compared to 1.72% at December 31, 2005.

Key Financial Highlights

* Total loans increased 9% since December 31, 2005, amounting to $761.1 million at December 31, 2006.

* Total assets were $979.3 million at December 31, 2006 as compared to $918.5 million at December 31, 2005, an increase of 7%.

* Total deposits were $867.5 million at December 31, 2006 and $775.4 million at December 31, 2005, an increase of 12%. Included in total deposits were brokered deposits of $64.9 million and $10.0 million at those respective dates. Deposits excluding brokered deposits increased 5% over December 31, 2005. The company utilizes brokered deposits as an alternative funding source to Federal Home Loan Bank borrowings.

* Investment assets under management increased to $502.1 million at December 31, 2006 compared to $425.0 million at December 31, 2005, an increase of 18%.

* Total assets under management amounted to $1.503 billion at December 31, 2006 as compared to $1.366 billion at December 31, 2005, an increase of 10%.

George L. Duncan, Chairman of Enterprise Bancorp, Inc. summarized the 2006 results by stating, "The current interest rate environment and the highly-competitive marketplace continue to present a growth and earnings challenge for the banking industry. At Enterprise, this environment has contributed to slower loan and deposit growth and continued pressure on margin from rising funding costs. In light of these economic and industry issues, we are very pleased to report net income growth of 10% and 9% for the year end and quarter-to-date December 31 results."

John P. Clancy, Jr., Chief Executive Officer, added, "Despite the short-term challenges of the current interest rate environment, we remain focused on investing in our future and maintain our commitment to a long-term strategy of geographic expansion, commercial loan growth, and prudent expense management, delivered by a highly-skilled management team and a well-trained, service-orientated employee base."

Enterprise Bancorp, Inc. is a Massachusetts corporation that conducts substantially all of its operations through Enterprise Bank and Trust Company, commonly referred to as Enterprise Bank. The company principally is engaged in the business of attracting deposits from the general public and investing in commercial loans and investment securities. Through the bank and its subsidiaries, the company offers a range of commercial and consumer loan and deposit products as well as investment management, trust and insurance services. The company's headquarters and the bank's main office are located at 222 Merrimack Street in Lowell, Massachusetts. The company's primary market area is the Merrimack Valley, North Central region of Massachusetts and South Central New Hampshire. The company has fourteen full-service branch banking offices located in the Massachusetts cities and towns of Lowell, Andover, Billerica, Chelmsford, Dracut, Fitchburg, Leominster, Tewksbury, and Westford, and in Salem, New Hampshire, which serve those cities and towns as well as the surrounding communities. The Company has announced plans to file for regulatory approval to open a new branch facility in the city of Methuen, Massachusetts in late 2007.

The above text contains statements about future events that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of the words "believe," "expect," "anticipate," "intend," "estimate," "assume," "will," "should," and other expressions that predict or indicate future events or trends and which do not relate to historical matters. Forward-looking statements should not be relied on, because they involve known and unknown risks, uncertainties and other factors, some of which are beyond the control of the company. These risks, uncertainties and other factors may cause the actual results, performance and achievements of the company to be materially different from the anticipated future results, performance or achievements expressed or implied by the forward-looking statements. Factors that could cause such differences include, but are not limited to general economic conditions, changes in interest rates, regulatory considerations and competition. For more information about these factors, please see our most recent Annual Report on Form 10-K on file with the SEC, including the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations." Any forward-looking statements contained in this press release are made as of the date hereof, and we undertake no duty, and specifically disclaim any duty, to update or revise any such statements, whether as a result of new information, future events or otherwise.

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