Cambridge Bancorp Announces Third Quarter Results

CAMBRIDGE, Mass.--()--Cambridge Bancorp (OTCBB: CATC) today reported unaudited net income of $3,926,000 for the third quarter of 2014 compared to $3,695,000 for the same quarter in 2013. Diluted earnings per share (EPS) were $0.99 for the third quarter of 2014 versus $0.94 for the same quarter in 2013. For the nine months ending September 30, 2014, unaudited net income was $11,078,000 versus $10,501,000 for the same period in 2013. Diluted earnings per share were $2.80 for the nine month period versus $2.69 for the same period in 2013.

“We are pleased to report another solid increase in the Bank’s quarter-over-quarter performance,” notes Joseph V. Roller II, the Bank’s president and CEO. “The Bank sustained the trend of growth in loans, which have increased by $90.9 million through the third quarter of 2014. Additionally, Wealth Management continues to make a significant contribution to the Bank’s noninterest income.”

Net interest income grew to $12.1 million for the third quarter of 2014, an increase of $579,000 (5.0%) over the third quarter of 2013. For the nine months ending September 30, 2014, net interest income was $35.7 million compared to $33.5 million for the same period in 2013. The increase of $2.2 million (6.4%) in net interest income for the nine month period of 2014 versus the same period in 2013 was primarily a function of higher interest on loans of $3.8 million (14.8%), offset by a decrease of $1.8 million (20.1%) due to the Bank’s smaller investment portfolio and lower yields.

Noninterest income of $6.5 million for the September 2014 quarter was up $596,000 (10.1%) compared to the same quarter in 2013. The Bank continued to generate solid Wealth Management income, which increased by $617,000 (14.2%) compared to the third quarter of 2013. Wealth Management assets under management stood at $2.3 billion at third quarter end compared to $2.1 billion at year-end 2013.

For the third quarter of 2014, noninterest expense totaled $12.3 million, an increase of $960,000 (8.5%) compared to the same quarter in 2013. The primary factors for the increase in noninterest expense were higher salaries and benefits of $402,000 (6.1%), higher occupancy and equipment of $111,000 (5.5%), and higher other expenses of $235,000 (35.7%).

The industry-wide headwind of contracting margins continued to place a strain on the Bank’s net interest margin. Sustained lower asset yields and a limited ability to further reduce deposit rates, led to a decrease of 8 basis points in the Bank’s net interest margin for the third quarter of 2014 compared to the same quarter in 2013; and a decrease of 1 basis point for the comparable nine month period.

Total loans outstanding as of September 30, 2014 were $1.0 billion compared to $942.5 million at the end of last year and $896.4 million at September 30, 2013. The noteworthy growth in the loan portfolio during 2014 is attributable to increases in residential mortgages of $29.6 million (6.5%) and commercial mortgages of $51.3 million (14.1%). The Bank’s home equity portfolio has rebounded since the end of last year, growing by $8.6 million (18.4%) since December 31, 2013.

Non-performing loans as a percentage of total loans stood at 16 basis points on September 30, 2014, a decrease from 18 basis points at year-end 2013. Loan quality remains solid and the Allowance for Loan Losses stood at $13.7 million or 1.33% of total loans outstanding at September 30, 2014. At December 31, 2013, the Allowance for Loan Losses was $12.7 million or 1.35% of total loans outstanding. The provision for loan losses for the nine month period is primarily in response to growth in the loan portfolio.

Deposits have decreased by $100.1 million (7.1%) through the third quarter of 2014 after a run-up at year-end 2013. Total deposits at third quarter end were $1.3 billion.

Total assets as of September 30, 2014 were $1.6 billion.

About Cambridge Bancorp

Cambridge Bancorp and its subsidiary, Cambridge Trust Company, are based in Cambridge, Massachusetts, in the heart of Harvard Square. Cambridge Trust Company is a 124-year-old Massachusetts chartered commercial bank with $1.6 billion in total assets and 12 Massachusetts locations in Cambridge, Boston, Belmont, Concord, Lexington, Lincoln, and Weston, as well as an Innovation Banking Group office located in the Cambridge Innovation Center. Cambridge Trust Company is one of New England’s leaders in wealth management with $2.3 billion in client assets under management. The Wealth Management group maintains offices in Boston, Massachusetts, and Concord and Portsmouth, New Hampshire.

The accompanying unaudited condensed interim consolidated financial information should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Cambridge Bancorp 2013 Annual Report, which is posted in the investor relations section of our website at www.cambridgetrust.com. We will also post supplemental financial information for the third quarter of 2014 at the same site later this month. Interim results are not necessarily reflective of the results for the entire year.

Financial Highlights:

 
CAMBRIDGE BANCORP
QUARTERLY UNAUDITED RESULTS
September 30, 2014
Dollar amounts in thousands (except share data)
                 
 
Quarter Ended Nine Months Ended
September 30, September 30,
2014 2013 2014 2013
 
Interest Income $ 12,613 $ 12,028 $ 37,268 $ 35,208
Interest Expense   531     525     1,563     1,661  
Net Interest Income 12,082 11,503 35,705 33,547
Provision for Loan Losses 425 600 950 1,000
Non-Interest Income 6,522 5,926 18,668 17,345
Non-Interest Expense   12,306     11,346     36,965     34,274  
Income Before Taxes 5,873 5,483 16,458 15,618
Income Taxes   1,947     1,788     5,380     5,117  
Net Income $ 3,926   $ 3,695   $ 11,078   $ 10,501  
 
Data Per Common Share:
 
Basic Earnings Per Share $ 1.00 $ 0.95 $ 2.82 $ 2.71
Diluted Earnings Per Share $ 0.99 $ 0.94 $ 2.80 $ 2.69
Dividends Declared Per Share $ 0.42 $ 0.39 $ 1.26 $ 1.17
 
Avg. Common Shares Outstanding:
Basic 3,898,209 3,848,720 3,881,594 3,833,758
Diluted 3,966,138 3,911,886 3,952,837 3,902,447
 
Selected Operating Ratios:
 
Net Interest Margin 3.28 % 3.36 % 3.32 % 3.33 %
Return on Average Assets 1.02 % 1.03 % 0.98 % 1.00 %
Return on Average Equity 13.36 % 14.56 % 12.90 % 13.54 %
 
 
September 30, December 31, September 30,
2014 2013 2013
 
Total Assets $ 1,558,923 $ 1,533,710 $ 1,449,827
Total Loans 1,033,381 942,451 896,398
Non-Performing Loans 1,665 1,703 1,316
Allowance for Loan Losses 13,700 12,708 11,947
Allowance to Non-Performing Loans 822.78 % 746.11 % 907.56 %
Allowance to Total Loans 1.33 % 1.35 % 1.33 %
Total Deposits 1,308,942 1,409,047 1,257,425
Total Stockholders' Equity 118,449 109,283 103,730
 
Book Value Per Share $ 30.07 $ 28.13 $ 26.72
Tangible Book Value Per Share $ 29.88 $ 27.93 $ 26.52
 
 
CAMBRIDGE BANCORP
UNAUDITED CONSOLIDATED BALANCE SHEETS
           
September 30, December 31,
2014 2013
(In thousands)
ASSETS
 
Cash and cash equivalents

$

23,218

$

88,107

 
Investment securities:
Available for sale, at fair value 361,232 388,793
Held to maturity, at amortized cost   80,507     59,181  
Total investment securities 441,739 447,974
 
Loans held for sale, at lower of cost or fair value 173 403
 
Loans:
Residential mortgage 487,812 458,176
Commercial mortgage 414,631 363,294
Home equity 55,223 46,635
Commercial 50,553 50,758
Consumer   25,162     23,588  
Total loans 1,033,381 942,451
Allowance for loan losses   (13,700 )   (12,708 )
Net loans 1,019,681 929,743
 
Stock in FHLB of Boston, at cost 7,955 6,231
Bank owned life insurance 29,045 23,555
Banking premises and equipment, net 8,583 9,951
Accrued interest receivable 3,858 3,626
Other assets   24,671     24,120  

Total assets

$

1,558,923

 

$

1,533,710

 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
Deposits:
Demand

$

391,558

$

382,255

Interest bearing checking 298,568 335,010
Money market 77,634 78,410
Savings 421,047 489,160
Certificates of deposit   120,135     124,212  
Total deposits 1,308,942 1,409,047
 
Short-term borrowings 115,000
Long-term borrowings
Other liabilities   16,532     15,380  

Total liabilities

  1,440,474     1,424,427  
Stockholders' equity:
Common stock, par value $1.00; Authorized
10,000,000 shares; Outstanding: 3,939,405 and
3,884,851 shares, respectively 3,939 3,885
Additional paid-in capital 27,931 26,027
Retained earnings 89,184 83,479

Accumulated other comprehensive income/(loss)

  (2,605 )   (4,108 )

Total stockholders’ equity

  118,449     109,283  

Total liabilities and stockholders’ equity

$

1,558,923

 

$

1,533,710

 
 
             
CAMBRIDGE BANCORP
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
 
Quarter Ended September 30,
2014 2013
(In thousands, except per share data)
 
Interest income:
Interest on loans

$

10,306

$

9,027

Interest on taxable investment securities 1,586 2,484
Interest on tax exempt investment securities 690 507
Dividends on FHLB of Boston stock 26 5
Interest on overnight investments   5   5
Total interest income   12,613   12,028
Interest expense:
Interest on deposits 480 486
Interest on borrowed funds   51   39
Total interest expense   531   525
Net interest income 12,082 11,503
Provision for loan losses   425   600
Net interest income after provision for loan losses   11,657   10,903
Noninterest income:
Wealth management income 4,961 4,344
Deposit account fees 608 645
ATM/Debit card income 317 308
Bank owned life insurance income 185 156
Gain on disposition of investment securities 195 185
Gain on loans held for sale 36 33
Other income   220   255
Total noninterest income   6,522   5,926
Noninterest expense:
Salaries and employee benefits 6,983 6,581
Occupancy and equipment 2,133 2,022
Data processing 1,140 1,049
Professional services 428 385
Marketing 528 465
FDIC Insurance 201 186
Other expenses   893   658
Total noninterest expense   12,306   11,346
Income before income taxes 5,873 5,483
Income tax expense   1,947   1,788
Net income

$

3,926

$

3,695

 
Per share data:
Basic earnings per common share

$

1.00

$

0.95

Diluted earnings per common share

$

0.99

$

0.94

 
Average shares outstanding - basic 3,898,209 3,848,720
Average shares outstanding - diluted 3,966,138 3,911,886
 
           
CAMBRIDGE BANCORP
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
         
Quarter Ended September 30,
2014 2013
(In thousands)
 
 
Net income

 

$

3,926

 

$

3,695

Other comprehensive income/(loss), net of tax:
Defined benefit retirement plans:
Change in unfunded retirement liability (2 ) (85 )
Unrealized gains/(losses) on Available for
Sale securities:
Unrealized holding (losses)/gains arising
during the period (1,077 ) 51
Less: reclassification adjustment for gains
recognized in net income   (125 )   (119 )
Other comprehensive income/(loss)   (1,204 )   (153 )
Comprehensive income/(loss)

 

$

2,722

 

 

$

3,542

 
 
           
CAMBRIDGE BANCORP
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
         
Nine Months Ended September 30,
2014 2013
(In thousands, except per share data)
 
Interest income:
Interest on loans

 

$

29,843

 

$

26,006

Interest on taxable investment securities 5,348 7,644
Interest on tax exempt investment securities 1,973 1,518
Dividends on FHLB of Boston stock 72 15
Interest on overnight investments   32   25
Total interest income   37,268   35,208
Interest expense:
Interest on deposits 1,457 1,461
Interest on borrowed funds   106   200
Total interest expense   1,563   1,661
Net interest income 35,705 33,547
Provision for loan losses   950   1,000
Net interest income after provision for loan losses   34,755   32,547
Noninterest income:
Wealth management income 13,494 11,964
Deposit account fees 1,850 1,926
ATM/Debit card income 928 865
Bank owned life insurance income 490 498
Gain on disposition of investment securities 1,073 990
Gain on loans held for sale 93 468
Other income   740   634
Total noninterest income   18,668   17,345
Noninterest expense:
Salaries and employee benefits 21,139 19,871
Occupancy and equipment 6,398 6,085
Data processing 3,427 2,949
Professional services 1,419 1,313
Marketing 1,586 1,395
FDIC Insurance 592 548
Other expenses   2,404   2,113
Total noninterest expense   36,965   34,274
Income before income taxes 16,458 15,618
Income tax expense   5,380   5,117
Net income

 

$

11,078

 

$

10,501

 
Per share data:
Basic earnings per common share

 

$

2.82

 

$

2.71

Diluted earnings per common share

 

$

2.80

 

$

2.69

 
Average shares outstanding - basic 3,881,594 3,833,758
Average shares outstanding - diluted 3,952,837 3,902,447
 
   
CAMBRIDGE BANCORP
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
         
Nine Months Ended September 30,
2014 2013
(In thousands)
 
 
Net income

 

$11,078

 

$10,501

Other comprehensive income/(loss), net of tax:
Defined benefit retirement plans:
Change in unfunded retirement liability (6) (255)
Unrealized gains/(losses) on Available for
Sale securities:
Unrealized holding gains/(losses) arising
during the period 2,197 (7,480)
Less: reclassification adjustment for gains
recognized in net income (688) (635)
Other comprehensive income/(loss) 1,503 (8,370)
Comprehensive income/(loss)

 

$12,581

 

$2,131

 
             
CAMBRIDGE BANCORP
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
Nine Months Ended September 30,
2014 2013
(In thousands)
Cash flows provided by operating activities:
Net income

$

11,078

$

10,501

Adjustments to arrive at net cash provided by operating activities:
Provision for loan losses 950 1,000
Amortization of deferred charges/(income), net 896 678
Depreciation and amortization 1,382 1,163
Bank owned life insurance income (490 ) (498 )
Gain on disposition of investment securities (1,073 ) (990 )
Compensation expense from stock option
and restricted stock grants 1,095 299
Change in loans held for sale 230 1,684
Change in accrued interest receivable, deferred taxes,
other assets and other liabilities (445 ) 5,154
Other, net   51     54  
Net cash provided by operating activities   13,674     19,045  
Cash flows used by investing activities:
Origination of loans (203,217 ) (249,747 )
Purchase of:
Investment securities - AFS (43,741 ) (50,544 )
Investment securities - HTM (23,895 ) (1,527 )
Maturities, calls and principal payments of:
Loans 112,032 95,316
Investment securities - AFS 44,071 88,040
Investment securities - HTM 2,529 15,000
Proceeds from sale of investment securities - AFS 30,011 31,107
Purchase of bank owned life insurance (5,000 )
Decrease/(increase) in FHLB of Boston stock (1,724 ) (1,151 )
Purchase of banking premises and equipment   (14 )   (3,994 )
Net cash provided/(used) by investing activities   (88,948 )   (77,500 )
Cash flows provided by financing activities:
Net increase/(decrease) in deposits (100,105 ) (23,908 )
Net increase/(decrease) in short-term borrowings 115,000 72,000
Repayment of long-term borrowings (20,000 )
Proceeds from issuance of common stock 941 982
Repurchase of common stock (504 ) (42 )
Cash dividends paid on common stock   (4,947 )   (4,531 )
Net cash provided/(used) by financing activities   10,385     24,501  
Net increase/(decrease) in cash and cash equivalents (64,889 ) (33,954 )
Cash and cash equivalents at beginning of period   88,107     59,923  
Cash and cash equivalents at end of period

$

23,218

 

$

25,969

 
 
Supplemental disclosure of cash flow information:
Cash paid for interest

$

1,568

$

1,668

Cash paid for income taxes 5,700 1,440
Non-cash transactions:
Change in accumulated other comprehensive income, net of taxes 1,503 (8,370 )
 

Contacts

Cambridge Bancorp
Albert R. Rietheimer, 617-441-1516
Chief Financial Officer & Treasurer

Contacts

Cambridge Bancorp
Albert R. Rietheimer, 617-441-1516
Chief Financial Officer & Treasurer