Cambridge Bancorp Reports First Quarter Results

CAMBRIDGE, Mass.--()--Cambridge Bancorp (OTC QB: CATC) today reported unaudited net income of $3,878,000 for the first quarter of 2016 compared to $3,733,000 for the same quarter in 2015. The earnings increase of $145,000 (3.9%) was attributable to a combination of sustained growth in both net interest income and noninterest income offset by higher noninterest expense for the quarter ended March 31, 2016. Diluted earnings per share were $0.97 for the first quarter of 2016 versus $0.94 for the same period in 2015.

“We are pleased to report another solid quarter,” noted Denis K. Sheahan, president and CEO. “The Bank continues to gain traction in executing its business plans as market conditions remained intensely competitive.”

Net interest income for the quarter ended March 31, 2016 was $13.1 million compared to $12.5 million in the first quarter of 2015. The quarter-over-quarter net interest income increase of $634,000 (5.1%) was driven by continued loan growth in the commercial sector. Interest on loans for the first quarter of 2016 was $11.8 million, an increase of $1.0 million (9.3%) compared to the same quarter in 2015. Interest on investment securities remained flat for the comparable periods. The interest on loans increase for the quarter was offset by higher interest on deposits of $424,000 (88.0%) due to promotionally priced savings account initiatives. The Bank’s overall net interest margin decreased by eight basis points to 3.20% for the quarter compared to 3.28% for the quarter ended March 31, 2015.

Noninterest income of $6.7 million for the March 2016 quarter was up $303,000 (4.8%) compared to the same quarter in 2015. During the fourth quarter of 2015 the Bank began to offer loan level derivative contracts to assist in the management of commercial loan interest rate risk. This new activity generated $370,000 in loan related derivative income for the quarter ended March 31, 2016. Deposit account fees increased by $103,000 (19.0%) compared to the same quarter in 2015.

The Bank continued to experience net growth in Wealth Management income, although the increase was dampened due to market volatility in the first quarter of 2016. Assets under management increased to $2.4 billion at the end of the first quarter 2016 compared to $2.3 billion at year-end 2015.

The increases in noninterest income for the quarter ended March 31, 2016 were offset by a reduction in gains on disposition of investment securities of $108,000 (23.9%) and lower gains on loans held for sale of $59,000 (49.2%) compared to the same period in 2015.

The Bank sustained the trend of growth in loans during the first quarter of 2016. Total loans outstanding increased by $26.2 million to $1.2 billion since year-end 2015 and by $120.5 million in comparison to March 31, 2015. Commercial mortgages showed strong growth for the quarter, with an increase of $36.8 million (7.2%). Residential mortgages decreased $13.1 million (2.4%) since year-end 2015 as overall production decreased and the Bank sold the majority of its production to the secondary market as a component of its overall interest rate risk management strategy.

Non-performing loans as a percentage of total loans stood at 0.12% at March 31, 2016, unchanged from December 31, 2015. Loan quality remains sound and the Allowance for Loan Losses stood at $15.3 million or 1.25% of total loans outstanding at March 31, 2016. At December 31, 2015, the Allowance for Loan Losses was $15.2 million or 1.27% of total loans outstanding. The provision for loan losses was $250,000 lower than the first quarter of 2015 in response to continued strong credit quality.

Noninterest expense in the first quarter of 2016 totaled $14.0 million, an increase of $983,000 (7.6%) over the first quarter of 2015. The primary factors for the increase in noninterest expense was higher salaries and employee benefits of $621,000 (8.0%) as a result of strategic growth in the workforce and costs of benefits packages, higher occupancy and equipment of $210,000 (9.8%), and higher data processing of $75,000 (6.5%) as the Bank expands. The noninterest expense increase was offset by lower marketing expense of $125,000 (21.3%) quarter-over-quarter.

Total deposits grew by $61.1 million (3.9%) since year-end 2015. Total deposits, excluding brokered certificates, grew by $177.0 million (12.8%) since March 31, 2015.

Total assets at March 31, 2016 were $1.8 billion, an increase of $65.0 million (3.8%) from year-end 2015.

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 126-year-old Massachusetts chartered commercial bank with $1.8 billion in total assets and 12 Massachusetts locations in Cambridge, Boston, Belmont, Concord, Lexington, Lincoln, and Weston. Cambridge Trust Company is one of New England’s leaders in wealth management with $2.4 billion in client assets under management. The Wealth Management group maintains offices in Boston, Massachusetts, and Concord, Manchester, 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 2015 Annual Report, which is posted in the investor relations section of our website at www.cambridgetrust.com/annualreport. We will also post supplemental financial information for first quarter of 2016 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
March 31, 2016
Dollar amounts in thousands (except share data)
           
 
Quarter Ended
March 31,
  2016     2015  
 
Interest Income $ 14,061 $ 13,043
Interest Expense   925     541  
Net Interest Income 13,136 12,502
Provision for Loan Losses 75 325
Non-Interest Income 6,668 6,365
Non-Interest Expense   13,991     13,008  
Income Before Taxes 5,738 5,534
Income Taxes   1,860     1,801  
Net Income $ 3,878   $ 3,733  
 

Data Per Common Share:

 
Basic Earnings Per Share $ 0.97 $ 0.94
Diluted Earnings Per Share $ 0.97 $ 0.94
Dividends Declared Per Share $ 0.46 $ 0.45
 
Avg. Common Shares Outstanding:
Basic 3,963,504 3,910,304
Diluted 4,005,954 3,970,129
 

Selected Operating Ratios:

 
Net Interest Margin 3.20 % 3.28 %
Return on Average Assets 0.89 % 0.94 %
Return on Average Equity 12.18 % 12.69 %
 
 
March 31, December 31, March 31,
  2016     2015     2015  
 
Total Assets $ 1,771,191 $ 1,706,201 $ 1,610,097
Total Loans 1,218,457 1,192,214 1,097,910
Non-Performing Loans 1,463 1,481 1,367
Allowance for Loan Losses 15,259 15,191 14,562
Allowance to Total Loans 1.25 % 1.27 % 1.33 %
Total Deposits 1,618,312 1,557,224 1,384,996
Total Stockholders' Equity 129,932 125,063 119,593
 
Book Value Per Share $ 32.28 $ 31.26 $ 30.20
Tangible Book Value Per Share $ 32.06 $ 31.04 $ 30.01
 
       
CAMBRIDGE BANCORP
UNAUDITED CONSOLIDATED BALANCE SHEETS
 
March 31, December 31,
2016 2015
(In thousands)
ASSETS
 
Cash and cash equivalents $ 46,419 $ 24,645
 
Investment securities:
Available for sale, at fair value 363,262 347,173
Held to maturity, at amortized cost 84,535 83,063
Total investment securities 447,797 430,236
 
Loans held for sale, at lower of cost or fair value 1,890
 
Loans:
Residential mortgage 533,106 546,245
Commercial mortgage 547,913 511,071
Home equity 63,329 63,522
Commercial 45,145 42,384
Consumer 28,964 28,992
Total loans 1,218,457 1,192,214
Allowance for loan losses (15,259) (15,191)
Net loans 1,203,198 1,177,023
 
Stock in FHLB of Boston, at cost 4,041 6,465
Bank owned life insurance 30,060 29,887
Banking premises and equipment, net 11,590 11,371
Accrued interest receivable 4,219 4,222
Other assets 21,977 22,352
Total assets $ 1,771,191 $ 1,706,201
 

LIABILITIES AND STOCKHOLDERS' EQUITY

 
Deposits:
Demand $ 458,491 $ 436,998
Interest bearing checking 359,777 370,400
Money market 74,284 73,911
Savings 550,337 497,525
Certificates of deposit 175,423 178,390
Total deposits 1,618,312 1,557,224
 
Long-term borrowings 3,869 3,910
Other liabilities 19,078 20,004
Total liabilities 1,641,259 1,581,138
Stockholders' equity:
Common stock, par value $1.00; Authorized:
10,000,000 shares; Outstanding: 4,025,424 and
4,000,181 shares, respectively 4,025 4,000
Additional paid-in capital 30,993 30,427
Retained earnings 100,916 99,064
Accumulated other comprehensive income/(loss) (6,002) (8,428)
Total stockholders’ equity 129,932 125,063
Total liabilities and stockholders’ equity $ 1,771,191 $ 1,706,201
 
 
CAMBRIDGE BANCORP
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
         
Quarter Ended March 31,
2016 2015
(In thousands, except per share data)
 
Interest income:
Interest on loans $ 11,770 $ 10,773
Interest on taxable investment securities 1,504 1,540
Interest on tax exempt investment securities 706 689
Dividends on FHLB of Boston stock 50 35
Interest on overnight investments 31 6
Total interest income 14,061 13,043
 
Interest expense:
Interest on deposits 906 482
Interest on borrowed funds 19 59
Total interest expense 925 541
 
Net interest income 13,136 12,502
 
Provision for loan losses 75 325
 
Net interest income after provision for loan losses 13,061 12,177
 
Noninterest income:
Wealth management income 4,602 4,588
Deposit account fees 645 542
ATM/Debit card income 270 272
Bank owned life insurance income 173 183
Gain on disposition of investment securities 344 452
Gain on loans held for sale 61 120
Loan related derivative income 370
Other income 203 208
Total noninterest income 6,668 6,365
 
Noninterest expense:
Salaries and employee benefits 8,393 7,772
Occupancy and equipment 2,349 2,139
Data processing 1,234 1,159
Professional services 562 427
Marketing 463 588
FDIC Insurance 225 208
Other expenses 765 715
Total noninterest expense 13,991 13,008
 
Income before income taxes 5,738 5,534
 
Income tax expense 1,860 1,801
   
Net income $ 3,878 $ 3,733
 
Per share data:
 
Basic earnings per common share $ 0.97 $ 0.94
Diluted earnings per common share $ 0.97 $ 0.94
 
Average shares outstanding - basic 3,963,504 3,910,304
Average shares outstanding - diluted 4,005,954 3,970,129
 
 
CAMBRIDGE BANCORP
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 
Quarter Ended March 31,
2016 2015
(In thousands)
 
 
Net income $ 3,878 $ 3,733
 
Other comprehensive income/(loss), net of tax:
Defined benefit retirement plans:
Change in unfunded retirement liability 117 105
Unrealized gains/(losses) on Available for
Sale securities:

Unrealized holding gains/(losses) arising during the period

2,530 1,223
Less: reclassification adjustment for gains recognized in net income
(221) (290)
   
Other comprehensive income/(loss) 2,426 1,038
   
Comprehensive income/(loss) $ 6,304 $ 4,771
 
   
CAMBRIDGE BANCORP
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
     
Quarter Ended March 31,
2016 2015
(In thousands)
Cash flows provided by operating activities:
Net income $ 3,878 $ 3,733
Adjustments to arrive at net cash provided by operating activities:
Provision for loan losses 75 325
Amortization of deferred charges/(income), net 273 276
Depreciation and amortization 502 424
Bank owned life insurance income (173) (183)
Gain on disposition of investment securities (344) (452)
Compensation expense from stock option and restricted stock grants
170 135
Change in loans held for sale (1,890) (1,208)
Change in accrued interest receivable, deferred taxes, other assets and other liabilities
(1,691) (195)
Other, net 6 5
Net cash provided by operating activities 806 2,860
Cash flows used by investing activities:
Origination of loans (66,647) (45,659)
Purchase of:
Investment securities - AFS (64,236) (49,880)
Investment securities - HTM (3,618) (1,028)
Maturities, calls and principal payments of:
Loans 40,279 28,388
Investment securities - AFS 43,861 16,528
Investment securities - HTM 2,128 241
Proceeds from sale of investment securities - AFS 8,076 23,513
Change in FHLB of Boston stock 2,424
Purchase of banking premises and equipment (721) (728)
Net cash used by investing activities (38,454) (28,625)
Cash flows provided by financing activities:
Change in deposits 61,068 14,460
Change in short-term borrowings 19,000
Repayment of long-term borrowings (41)
Proceeds from issuance of common stock 460 486
Repurchase of common stock (213) (275)
Cash dividends paid on common stock (1,852) (1,782)
Net cash provided by financing activities 59,422 31,889
Net increase/(decrease) in cash and cash equivalents 21,774 6,124
Cash and cash equivalents at beginning of period 24,645 17,440
Cash and cash equivalents at end of period $ 46,419 $ 23,564
 
Supplemental disclosure of cash flow information:
Cash paid for interest $ 921 $ 541
Cash paid for income taxes 1,930 595
Non-cash transactions:
Change in accumulated other comprehensive income/(loss), net of taxes
2,426 1,038
 

Contacts

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

Release Summary

Cambridge Bancorp (OTC QB: CATC) today reported unaudited net income of $3,878,000 for the first quarter of 2016 compared to $3,733,000 for the same quarter in 2015.

Contacts

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