CAMBRIDGE, Mass.--(BUSINESS WIRE)--Cambridge Bancorp (OTCQB: CATC) (the “Company”), the parent of Cambridge Trust Company, today announced unaudited net income of $4,328,000 for the quarter ended March 31, 2017, representing an increase of $450,000, or 11.6%, compared to net income of $3,878,000 for the quarter ended March 31, 2016. Diluted earnings per share (EPS) were $1.06, a 9.3% increase over diluted earnings per share for the same quarter last year.
First quarter 2017 highlights as compared to the first quarter of 2016:
- Wealth Management Assets under Management now at $2.7 billion, an increase of 12.6%
- Revenue of $21,288,000, an increase of 7.5%
- Loan growth of $92,395,000, or 7.6%
- Deposit growth of $59,266,000, or 3.7%
“We are pleased to report the Company delivered solid earnings during the first quarter,” noted Denis K. Sheahan, President and CEO. “Cambridge Bancorp posted strong profitability metrics for the quarter with annualized return on average assets of 0.95% and annualized return on average stockholders’ equity of 12.93%.”
Balance Sheet
Total assets remained relatively unchanged from year-end 2016 and stood at $1.8 billion as of March 31, 2017.
Total loans outstanding decreased modestly from the prior quarter and stood at $1.3 billion as of March 31, 2017. While new loan origination activity met expectations, payoffs exceeded originations resulting in a $9.3 million decline in total loans. This follows a robust period of growth in 2016 and is reflective of the strong economy in our market and the competitive environment.
The Company’s total investment securities portfolio increased by 8.7% from $408.1 million at December 31, 2016 to $443.6 million at March 31, 2017, as excess cash flow was invested into securities due to the slower loan growth.
Core deposits, which we define as all deposits other than certificates of deposit, decreased by $7.3 million, or 0.5%, since year-end 2016 due to normal fluctuations. The cost of total deposits was 0.17% as of March 31, 2017 as compared to 0.23% as of March 31, 2016. Total deposits at March 31, 2017 were $1.7 billion.
Net Interest Income
For the quarter ended March 31, 2017, net interest income, after provision for loan losses, increased by $870 thousand or 6.7%, to $13.9 million as compared to $13.1 million for March 31, 2016. Interest on loans increased by $734 thousand, or 6.2%, driven by the impact of strong loan growth during 2016. The Company’s net interest margin, on a fully tax equivalent basis, increased two basis points to 3.26% for the current quarter compared to 3.24% for the quarter ended March 31, 2016.
Noninterest Income
Noninterest income totaled $7.3 million for the quarter ended March 31, 2017 as compared to $6.7 million for the quarter ended March 31, 2016. The Company’s Wealth Management revenue is the largest component of noninterest income and increased by $760 thousand, or 16.5%, due to new business development and market appreciation. Wealth Management revenue was $5.4 million for the current quarter as compared to $4.6 million for the quarter ended March 31, 2016. Wealth Management assets under management (AUM) increased by $108 million or 4.2%, to $2.7 billion as of March 31, 2017, as compared to $2.6 billion as of December 31, 2016.
As part of its operational strategy and overall balance sheet management, the Company sold portions of its residential mortgage production which created gains on loans held for sale during the quarter of approximately $235 thousand representing an increase of $174 thousand as compared to the quarter ended March 31, 2016.
Deposit account fee income generated $813 thousand representing an increase of $168 thousand or 26.0%, due primarily to greater commercial cash management income for the quarter ended March 31, 2017.
Noninterest income increases were partially offset by lower gains on sale of investment securities and lower loan related derivative income, of $346 thousand and $182 thousand, respectively, for the quarter ended March 31, 2017 as compared to the quarter ended March 31, 2016.
Noninterest Expense
Noninterest expense increased by $955 thousand or 6.8%, to $14.9 million for the quarter ended March 31, 2017 as compared to $14.0 million for the quarter ended March 31, 2016. The increase in salaries and benefits of $819 thousand is primarily due to annual merit increases, higher employee benefit costs related to the Company’s retirement plans, and the impact of new strategic hires to support business initiatives. The increase of $308 thousand in professional services is primarily due to higher recruitment fees.
Noninterest expense increases were partially offset by decreases in marketing expenses, lower occupancy and equipment expenses, and lower FDIC insurance costs of $193 thousand, $96 thousand and $64 thousand, respectively, for the quarter ended March 31, 2017 as compared to March 31, 2016.
Asset Quality
Loan quality remained sound with non-performing loans totaling $1.7 million, or 0.13% of total loans outstanding, and remained relatively unchanged from year end 2016. Net charge-offs for the quarter were $2 thousand as compared to $7 thousand for the first quarter of 2016. The allowance for loan losses was $15.3 million, or 1.17% of total loans outstanding at March 31, 2017 as compared to $15.3 million, or 1.16% of total loans outstanding at year end 2016.
Income Taxes
The effective tax rate was 31.4% for the quarter ended March 31, 2017 as compared to 32.4% for March 31, 2016. During the current quarter, the Company recognized $173 thousand of tax benefit resulting from the adoption of new accounting guidance for share-based payments.
About Cambridge Bancorp
Cambridge Bancorp, the parent company of Cambridge Trust Company, is based in Cambridge, Massachusetts, in the heart of Harvard Square. Cambridge Trust Company is a 127-year-old Massachusetts chartered commercial bank with 11 Massachusetts locations in Cambridge, Boston, Belmont, Concord, Lexington, and Weston. Cambridge Trust Company is one of New England’s leaders in wealth management with $2.7 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 and annual consolidated financial information should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Cambridge Bancorp 2016 Annual Report, which is posted in the investor relations section of our website at www.cambridgetrust.com.
Forward-looking Statements
Certain statements herein constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (“PSLRA”). These statements are intended to take advantage of the “safe harbor” provisions of the PSLRA. These statements are based on the beliefs and assumptions of management of the Company and its subsidiaries and on the information available to management at the time that these statements were made. Since these statements reflect the views of management concerning future events, these statements involve risks, uncertainties and assumptions. As a result, actual results may differ from those contemplated by these statements. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. Such statements may be identified by the use of words such as “believe,” “expect,” “anticipate,” “forecast”, “estimate,” “intend”, “will,” “would,” “should,” “could”, “may” or similar words. There are a number of factors, many of which are beyond the Company’s control that could cause actual conditions, events or results to differ materially from those in the forward-looking statements. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, changes in the interest rate environment, unfavorable or less than favorable changes in general economic conditions (nationally or regionally), our ability to continue to increase loans and deposit growth, increased competitive pressures among depository and other financial institutions, legislative and regulatory changes that adversely affect the businesses in which the Company is engaged, changes in the securities market, and other factors that are described in the Company's annual report. Readers should not place undue reliance on these forward-looking statements, which speak only as of the date of the date they are made. The Company disclaims any intent or obligation to update any forward-looking statements, whether in response to new information, future events or otherwise, except as may be required by law.
| CAMBRIDGE BANCORP AND SUBSIDIARIES | ||||||||||||
| QUARTERLY UNAUDITED RESULTS | ||||||||||||
| March 31, 2017 | ||||||||||||
| Dollar amounts in thousands (except share data) | ||||||||||||
|
Quarter Ended |
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|
|
||||||||||||
| 2017 | 2016 | |||||||||||
| Interest and Dividend Income | $ | 14,673 | $ | 14,061 | ||||||||
| Interest Expense | 712 | 925 | ||||||||||
| Net Interest and Dividend Income | 13,961 | 13,136 | ||||||||||
| Provision for Loan Losses | 30 | 75 | ||||||||||
| Non-Interest Income | 7,327 | 6,668 | ||||||||||
| Non-Interest Expense | 14,946 | 13,991 | ||||||||||
| Income Before Taxes | 6,312 | 5,738 | ||||||||||
| Income Taxes | 1,984 | 1,860 | ||||||||||
| Net Income | $ | 4,328 | $ | 3,878 | ||||||||
|
Data Per Common Share: |
||||||||||||
| Basic Earnings Per Share | $ | 1.07 | $ | 0.97 | ||||||||
| Diluted Earnings Per Share | $ | 1.06 | $ | 0.97 | ||||||||
| Dividends Declared Per Share | $ | 0.46 | $ | 0.46 | ||||||||
| Avg. Common Shares Outstanding: | ||||||||||||
| Basic | 4,011,925 | 3,963,504 | ||||||||||
| Diluted | 4,050,791 | 4,005,954 | ||||||||||
|
Selected Operating Ratios: |
||||||||||||
| Net Interest Margin, FTE | 3.26% | 3.24% | ||||||||||
| Cost of Funds | 0.16% | 0.22% | ||||||||||
| Cost of Interest Bearing Liabilities | 0.24% | 0.33% | ||||||||||
| Cost of Deposits | 0.17% | 0.23% | ||||||||||
| Return on Average Assets | 0.95% | 0.90% | ||||||||||
| Return on Average Equity | 12.93% | 12.24% | ||||||||||
| Efficiency Ratio | 70.21% | 70.65% | ||||||||||
| March 31, | December 31, | March 31, | ||||||||||
| 2017 | 2016 | 2016 | ||||||||||
| Total Assets | $ | 1,843,649 | $ | 1,848,999 | $ | 1,771,191 | ||||||
| Total Loans | 1,310,852 | 1,320,154 | 1,218,457 | |||||||||
| Non-Performing Loans | 1,653 | 1,676 | 1,463 | |||||||||
| Allowance for Loan Losses | 15,289 | 15,261 | 15,259 | |||||||||
| Allowance to Non-Performing Loans | ||||||||||||
| Allowance to Total Loans | 1.17% | 1.16% | 1.25% | |||||||||
| Total Deposits | 1,677,578 | 1,686,038 | 1,618,312 | |||||||||
| Total Stockholders' Equity | 138,427 | 134,671 | 129,932 | |||||||||
| Wealth Management AUM | 2,681,000 | 2,573,000 | 2,382,000 | |||||||||
| Book Value Per Share | $ | 34.00 | $ | 33.36 | $ | 32.28 | ||||||
| Tangible Book Value Per Share | $ | 33.69 | $ | 33.06 | $ | 32.06 | ||||||
| CAMBRIDGE BANCORP AND SUBSIDIARIES | |||||||||||||||
| UNAUDITED CONSOLIDATED BALANCE SHEETS | |||||||||||||||
| Dollar amounts in thousands | |||||||||||||||
| March 31, |
December 31, |
||||||||||||||
| 2017 | 2016 | ||||||||||||||
| ASSETS | |||||||||||||||
| Cash and cash equivalents | $ | 27,698 | $ | 54,050 | |||||||||||
| Investment securities: | |||||||||||||||
| Available for sale, at fair value | 279,131 | 325,641 | |||||||||||||
| Held to maturity, at amortized cost | |||||||||||||||
| (fair value $166,126 and $83,755, respectively) | 164,493 | 82,502 | |||||||||||||
| Total investment securities | 443,624 | 408,143 | |||||||||||||
| Loans held for sale, at lower of cost or fair value | 718 | 6,506 | |||||||||||||
| Loans: | |||||||||||||||
| Residential mortgage | 536,570 | 534,404 | |||||||||||||
| Commercial mortgage | 620,329 | 616,140 | |||||||||||||
| Home equity | 71,131 | 75,051 | |||||||||||||
| Commercial & industrial | 47,328 | 59,706 | |||||||||||||
| Consumer | 35,494 | 34,853 | |||||||||||||
| Total loans | 1,310,852 | 1,320,154 | |||||||||||||
| Allowance for loan losses | (15,289 | ) | (15,261 | ) | |||||||||||
| Net loans | 1,295,563 | 1,304,893 | |||||||||||||
| Stock in FHLB of Boston, at cost | 4,651 | 4,098 | |||||||||||||
| Bank owned life insurance | 30,661 | 30,499 | |||||||||||||
| Banking premises and equipment, net | 10,249 | 10,451 | |||||||||||||
| Accrued interest receivable | 4,299 | 4,627 | |||||||||||||
| Deferred tax assets | 12,706 | 13,693 | |||||||||||||
| Other assets | 13,480 | 12,039 | |||||||||||||
| Total assets | $ | 1,843,649 | $ | 1,848,999 | |||||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||||||
| Deposits: | |||||||||||||||
| Demand | $ | 455,213 | $ | 472,923 | |||||||||||
| Interest bearing checking | 427,668 | 430,706 | |||||||||||||
| Money market | 66,390 | 72,057 | |||||||||||||
| Savings | 558,275 | 539,190 | |||||||||||||
| Certificates of deposit | 170,032 | 171,162 | |||||||||||||
| Total deposits | 1,677,578 | 1,686,038 | |||||||||||||
| Short-term borrowings | — | — | |||||||||||||
| Long-term borrowings | 3,704 | 3,746 | |||||||||||||
| Other liabilities | 23,940 | 24,544 | |||||||||||||
| Total liabilities | 1,705,222 | 1,714,328 | |||||||||||||
| Stockholders' equity: | |||||||||||||||
| Common stock, par value $1.00; Authorized: | |||||||||||||||
| 10,000,000 shares; Outstanding: 4,070,927 and | |||||||||||||||
| 4,036,879 shares, respectively | 4,071 | 4,037 | |||||||||||||
| Additional paid-in capital | 34,596 | 33,253 | |||||||||||||
| Retained earnings | 109,319 | 107,262 | |||||||||||||
| Accumulated other comprehensive loss | (9,559 | ) | (9,881 | ) | |||||||||||
| Total stockholders’ equity | 138,427 | 134,671 | |||||||||||||
| Total liabilities and stockholders’ equity | $ | 1,843,649 | $ | 1,848,999 | |||||||||||
| CAMBRIDGE BANCORP AND SUBSIDIARIES | |||||||||||||
| UNAUDITED CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||
| Dollar amounts in thousands (except share data) | |||||||||||||
| Quarter Ended March 31, | |||||||||||||
| 2017 | 2016 | ||||||||||||
| Interest and dividend income: | |||||||||||||
| Interest on taxable loans | $ | 12,373 | $ | 11,689 | |||||||||
| Interest on tax exempt loans | 131 | 81 | |||||||||||
| Interest on taxable investment securities | 1,394 | 1,504 | |||||||||||
| Interest on tax exempt investment securities | 665 | 706 | |||||||||||
| Dividends on FHLB of Boston stock | 42 | 50 | |||||||||||
| Interest on overnight investments | 68 | 31 | |||||||||||
| Total interest and dividend income | 14,673 | 14,061 | |||||||||||
| Interest expense: | |||||||||||||
| Interest on deposits | 691 | 906 | |||||||||||
| Interest on borrowed funds | 21 | 19 | |||||||||||
| Total interest expense | 712 | 925 | |||||||||||
| Net interest income | 13,961 | 13,136 | |||||||||||
| Provision for loan losses | 30 | 75 | |||||||||||
| Net interest income after provision for loan losses | 13,931 | 13,061 | |||||||||||
| Noninterest income: | |||||||||||||
| Wealth management income | 5,362 | 4,602 | |||||||||||
| Deposit account fees | 813 | 645 | |||||||||||
| ATM/Debit card income | 259 | 270 | |||||||||||
| Bank owned life insurance income | 162 | 173 | |||||||||||
| (Loss) gain on disposition of investment securities | (2) | 344 | |||||||||||
| Gain on loans held for sale | 235 | 61 | |||||||||||
| Loan related derivative income | 188 | 370 | |||||||||||
| Other income | 310 | 203 | |||||||||||
| Total noninterest income | 7,327 | 6,668 | |||||||||||
| Noninterest expense: | |||||||||||||
| Salaries and employee benefits | 9,212 | 8,393 | |||||||||||
| Occupancy and equipment | 2,253 | 2,349 | |||||||||||
| Data processing | 1,323 | 1,234 | |||||||||||
| Professional services | 870 | 562 | |||||||||||
| Marketing | 270 | 463 | |||||||||||
| FDIC Insurance | 161 | 225 | |||||||||||
| Other expenses | 857 | 765 | |||||||||||
| Total noninterest expense | 14,946 | 13,991 | |||||||||||
| Income before income taxes | 6,312 | 5,738 | |||||||||||
| Income tax expense | 1,984 | 1,860 | |||||||||||
| Net income | $ | 4,328 | $ | 3,878 | |||||||||
| Per share data: | |||||||||||||
| Basic earnings per common share | $ | 1.07 | $ | 0.97 | |||||||||
| Diluted earnings per common share | $ | 1.06 | $ | 0.97 | |||||||||
| Average shares outstanding - basic | 4,011,925 | 3,963,504 | |||||||||||
| Average shares outstanding - diluted | 4,050,791 | 4,005,954 | |||||||||||
| CAMBRIDGE BANCORP AND SUBSIDIARIES | ||||||||||||||||||||||||||
| MARGIN & YIELD ANALYSIS | ||||||||||||||||||||||||||
| Dollar amounts in thousands | ||||||||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||||||||
| March 31, 2017 | March 31, 2016 | |||||||||||||||||||||||||
|
Average
|
Interest |
Rate |
Average
|
Interest |
Rate |
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| ASSETS | ||||||||||||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||||||||||
| Loans (2): | ||||||||||||||||||||||||||
| Taxable | $ | 1,302,602 | $ | 12,373 | 3.85% | $ | 1,192,748 | $ | 11,689 | 3.94% | ||||||||||||||||
| Tax-exempt | 16,796 | 202 | 4.88 | 12,160 | 125 | 4.13 | ||||||||||||||||||||
| Securities available-for-sale (5): | ||||||||||||||||||||||||||
| Taxable | 314,813 | 1,272 | 1.64 | 345,420 | 1,490 | 1.73 | ||||||||||||||||||||
| Securities held-to-maturity: | ||||||||||||||||||||||||||
| Taxable | 21,757 | 122 | 2.27 | 1,198 | 14 | 4.70 | ||||||||||||||||||||
| Tax-exempt | 82,726 | 1,023 | 5.02 | 82,629 | 1,087 | 5.29 | ||||||||||||||||||||
| Cash and due from banks | 46,427 | 68 | 0.59 | 42,251 | 31 | 0.30 | ||||||||||||||||||||
| Total interest-earning assets (6) | 1,785,121 | 15,060 | 3.42% | 1,676,406 | 14,436 | 3.46% | ||||||||||||||||||||
| Non interest-earning assets | 71,278 | 73,626 | ||||||||||||||||||||||||
| Allowance for loan losses | (15,248 | ) | (15,219 | ) | ||||||||||||||||||||||
| Total assets | $ | 1,841,151 | $ | 1,734,813 | ||||||||||||||||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||||||||||||
| Interest-bearing deposits: | ||||||||||||||||||||||||||
| Checking accounts | $ | 420,669 | $ | 17 | 0.02% | $ | 354,330 | $ | 30 | 0.03% | ||||||||||||||||
| Savings accounts | 556,686 | 294 | 0.21 | 532,433 | 474 | 0.36 | ||||||||||||||||||||
| Money market accounts | 70,444 | 26 | 0.15 | 73,466 | 37 | 0.20 | ||||||||||||||||||||
| Time deposits | 170,338 | 353 | 0.84 | 176,071 | 366 | 0.84 | ||||||||||||||||||||
| Total interest-bearing deposits | 1,218,137 | 690 | 0.23 | 1,136,300 | 907 | 0.32 | ||||||||||||||||||||
| Other borrowed funds | 4,919 | 21 | 1.73 | 4,048 | 19 | 1.89 | ||||||||||||||||||||
| Total interest-bearing liabilities | 1,223,056 | 711 | 0.24% | 1,140,348 | 926 | 0.33% | ||||||||||||||||||||
| Non-interest-bearing liabilities | ||||||||||||||||||||||||||
| Demand deposits | 457,648 | 445,760 | ||||||||||||||||||||||||
| Other liabilities | 24,708 | 21,298 | ||||||||||||||||||||||||
| Total liabilities | 1,705,412 | 1,607,406 | ||||||||||||||||||||||||
| Stockholders’ equity | 135,739 | 127,407 | ||||||||||||||||||||||||
| Total liabilities & stockholders’ equity | $ | 1,841,151 | $ | 1,734,813 | ||||||||||||||||||||||
| Net interest income on a fully taxable equivalent basis | 14,349 | 13,510 | ||||||||||||||||||||||||
| Less taxable equivalent adjustment | (429 | ) | (424 | ) | ||||||||||||||||||||||
| Net interest income | $ | 13,920 | $ | 13,086 | ||||||||||||||||||||||
| Net interest spread (3) | 3.19% | 3.14% | ||||||||||||||||||||||||
| Net interest margin (4) | 3.26% | 3.24% | ||||||||||||||||||||||||
| (1) Annualized on a fully taxable equivalent basis calculated using a federal tax rate of 35%. | ||||||||||||||||||||||||||
| (2) Nonaccrual loans are included in average amounts outstanding. | ||||||||||||||||||||||||||
| (3) Interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities. | ||||||||||||||||||||||||||
| (4) Net interest margin represents net interest income on a fully tax equivalent basis as a percentage of average interest-earning assets. | ||||||||||||||||||||||||||
| (5) Average balances of securities available-for-sale calculated utilizing amortized cost. | ||||||||||||||||||||||||||
| (6) Federal Home Loan Bank stock balance and dividend income is excluded from interest-earning assets. | ||||||||||||||||||||||||||
