Cambridge Bancorp (OTCBB: CATC) today reported unaudited net income of $3,286,000 for the third quarter compared to $3,176,000 for the same quarter in 2010. Diluted earnings per share (EPS) increased to $0.85 for the third quarter of 2011 versus $0.84 for the same quarter in 2010.

For the nine months ending September 30, 2011, unaudited net income was $9,567,000 versus $10,600,000 for the same period in 2010. Diluted earnings per share were $2.49 for the nine month period versus $2.81 for the same period in 2010. The key factor driving the decrease in net income was the sale of the Bank’s Merchant Services portfolio during the second quarter of 2010. The after tax impact on earnings of that sale was $1,591,000 or $0.42 per diluted share. Excluding that sale, unaudited net income of $9,567,000 for the 2011 nine month period compared favorably to $9,009,000 for the same period in 2010.

“Our third quarter performance was solid with a modest increase in earnings over the same period in 2010. While prevailing conditions continue to constrain overall economic growth, the Bank is well positioned to build, preserve and strengthen customer relationships,” notes Joseph V. Roller II, the Bank’s president and CEO.

Net interest income grew to $11.0 million for the third quarter of 2011, an increase of $478,000 (4.6%) over the third quarter of 2010. For the nine months ending September 30, 2011, net interest income of $32.5 million compared to $31.4 million for the same period in 2010. The increase of $1,156,000 (3.7%) in net interest income for the nine month period of 2011 versus the same period in 2010 was primarily a function of continued growth in the loan portfolio and a reduction in the cost for deposits.

The protracted low interest rate environment continues to put pressure on the Bank’s net interest margin. The Bank’s net interest margin decreased by 18 basis points to 3.94% for the third quarter of 2011 compared to the same quarter in 2010; and by 29 basis points for the comparable nine month periods.

Noninterest income of $4.7 million for the September 2011 quarter was up slightly compared to the same quarter in 2010. The Bank continued to generate solid Wealth Management income, which increased slightly by $39,000 compared to the third quarter of 2010, despite the recent decline in the equity markets. Additionally, this year’s third quarter contained a $104,000 gain on disposition of investment securities not realized in the same quarter of 2010.

Noninterest expense increased modestly by $180,000, or 1.7%, to $10.6 million for the quarter ending September 30, 2011 versus the same quarter in 2010. Salaries and employee benefits, occupancy and equipment, and data processing increases were offset by lower FDIC insurance, marketing, and professional services costs.

Total loans outstanding as of September 30, 2011 were $649.9 million compared to $568.6 million at the end of last year and $547.9 million at September 30, 2010. Since the beginning of 2011, total loans outstanding have increased $81.3 million, with the robust growth attributable to the residential and commercial mortgage loan portfolios. The demand for working capital loans continues to be anemic as companies are cautious in making new investments in the context of uncertainty in the economic recovery.

Non-performing loans as a percentage of total loans stood at 17 basis points at September 30, 2011, a slight decrease from year-end 2010. Loan quality remains solid and the Allowance for Loan Losses stood at $9.9 million or 1.53% of total loans outstanding at September 30, 2011. At December 31, 2010, the Allowance for Loan Losses was $8.9 million or 1.56% of total loans outstanding. The higher provision for loan losses for the nine month period ($750,000 in 2011 versus $500,000 in 2010) is primarily in response to the growth of the loan portfolio.

Deposits continued to grow in the third quarter. Since year-end 2010, deposits have increased $63.5 million (6.4%). Total deposits stood at $1.1 billion at period-end compared to $994 million at December 31, 2010. Total assets at period-end were $1.2 billion compared to $1.1 billion at the end of 2010.

Cambridge Bancorp and its subsidiary, Cambridge Trust Company, are based in Cambridge, Massachusetts, in the heart of Harvard Square. Cambridge Trust Company is a 121-year-old Massachusetts chartered commercial bank with $1.2 billion in total assets and 11 Massachusetts locations in Cambridge, Beacon Hill, Belmont, Concord, Lexington, Lincoln and Weston. Cambridge Trust Company is one of New England’s leaders in wealth management with $1.4 billion in client assets under management. In addition, Cambridge Trust Company of New Hampshire offers wealth management services at two New Hampshire locations, Concord and Portsmouth.

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 2010 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 2011 at the same site later this month. Interim results are not necessarily reflective of the results for the entire year.

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Financial Highlights:
 
CAMBRIDGE BANCORP
QUARTERLY UNAUDITED RESULTS
September 30, 2011
Dollar amounts in thousands (except share data)
   
 
Quarter Ended Nine Months Ended
September 30, September 30,
  2011     2010     2011     2010  
 
Interest Income $ 11,923 $ 11,632 $ 35,472 $ 35,027
Interest Expense   964     1,151     2,962     3,673  
Net Interest Income 10,959 10,481 32,510 31,354
Provision for Loan Losses 250 50 750 500
Non-Interest Income 4,659 4,554 13,829 15,472
Non-Interest Expense   10,566     10,386     31,528     30,641  
Income Before Taxes 4,802 4,599 14,061 15,685
Income Taxes   1,516     1,423     4,494     5,085  
Net Income $ 3,286   $ 3,176   $ 9,567   $ 10,600  
 

Data Per Common Share:
 
Basic Earnings Per Share $ 0.86 $ 0.84 $ 2.53 $ 2.83
Diluted Earnings Per Share $ 0.85 $ 0.84 $ 2.49 $ 2.81
Dividends Declared Per Share $ 0.35 $ 0.35 $ 1.05 $ 1.05
 
Avg. Common Shares Outstanding:
Basic 3,802,297 3,761,286 3,788,198 3,746,753
Diluted 3,849,605 3,791,682 3,834,685 3,770,596

 

Selected Operating Ratios:
 
Net Interest Margin 3.94 % 4.12 % 3.95 % 4.24 %
Return on Average Assets, after taxes 1.11 % 1.19 % 1.10 % 1.36 %
Return on Average Equity, after taxes 13.63 % 13.93 % 13.76 % 16.18 %
 
 
September 30, December 31, September 30,
  2011     2010     2010  
 
Total Assets $ 1,202,191 $ 1,130,988 $ 1,090,610
Total Loans 649,916 568,568 547,938
Non-Performing Loans 1,078 1,147 975
Allowance for Loan Losses 9,923 8,885 9,175
Allowance to Non-Performing Loans 920.48 % 774.31 % 940.57 %
Allowance to Total Loans 1.53 % 1.56 % 1.67 %
Total Deposits 1,057,343 993,808 953,609
Total Stockholders' Equity 98,019 89,218 91,328
 
Book Value Per Share $ 25.80 $ 23.73 $ 24.29
Tangible Book Value Per Share $ 25.68 $ 23.58 $ 24.11
 

 
CAMBRIDGE BANCORP
UNAUDITED CONSOLIDATED BALANCE SHEETS
 
September 30, December 31,
2011   2010  
(In thousands)
ASSETS
 
Cash and due from banks $ 35,484 $ 15,756
Overnight investments    
Total cash and cash equivalents 35,484 15,756
Investment securities:
Available for sale, at fair value 409,602 434,829
Held-to-maturity, at amortized cost 73,875   81,272  
Total investment securities 483,477 516,101
Loans:
Residential mortgage 313,294 272,928
Commercial mortgage 226,078 177,943
Home equity 62,796 66,170
Commercial 36,517 38,258
Consumer 11,231   13,269  
Total loans 649,916 568,568
Allowance for loan losses (9,923 ) (8,885 )
Net loans 639,993 559,683
 
Stock in FHLB of Boston, at cost 4,806 4,806
Bank owned life insurance 17,203 11,811
Banking premises and equipment, net 6,023 6,043
Accrued interest receivable 4,086 4,478
Other assets 11,119   12,310  
Total assets $ 1,202,191   $ 1,130,988  
 

LIABILITIES AND STOCKHOLDERS' EQUITY
 
Deposits:
Demand $ 269,661 $ 233,199
Interest bearing checking 278,308 280,060
Money market 65,801 55,026
Savings 310,070 287,784
Certificates of deposit 133,503   137,739  
Total deposits 1,057,343 993,808
 
Short-term borrowings 746 1,902
Long-term borrowings 30,000 30,000
Other liabilities 16,083   16,060  
Total liabilities 1,104,172   1,041,770  
Stockholders' equity:
Common stock, par value $1.00; Authorized5,000,000 shares; Outstanding: 3,799,148 and3,759,891 shares, respectively
 
3,799 3,760
Additional paid-in capital 22,715 21,456
Retained earnings 66,728 61,375
Accumulated other comprehensive income 4,777   2,627  
Total stockholders’ equity 98,019   89,218  
Total liabilities and stockholders’ equity $ 1,202,191   $ 1,130,988  
 
   
CAMBRIDGE BANCORP
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
 
Quarter Ended September 30,
2011 2010
(In thousands, except per share data)
 
Interest income:
Interest on loans $ 8,348 $ 7,549
Interest on taxable investment securities 3,062 3,614
Interest on tax exempt investment securities 499 461
Dividends on FHLB of Boston stock 4
Interest on overnight investments 10 8
Total interest income 11,923 11,632
 
Interest expense:
Interest on deposits 667 853
Interest on borrowed funds 297 298
Total interest expense 964 1,151
 
Net interest income 10,959 10,481
 
Provision for loan losses 250 50
 
Net interest income after provision for loan losses 10,709 10,431
 
Noninterest income:
Wealth management income 3,460 3,421
Deposit account fees 527 546
ATM/Debit card income 247 244
Bank owned life insurance income 141 88
Gain on disposition of investment securities 104
Gain on disposition of other real estate owned 33
Other income 180 222
Total noninterest income 4,659 4,554
 
Noninterest expense:
Salaries and employee benefits 6,175 5,992
Occupancy and equipment 1,852 1,648
Data processing 925 789
Professional services 376 435
Marketing 455 514
FDIC Insurance 152 320
Other expenses 631 688
Total noninterest expense 10,566 10,386
 
Income before income taxes 4,802 4,599
 
Income tax expense 1,516 1,423
   
Net income $ 3,286 $ 3,176
 
Per share data:
 
Basic earnings per common share $ 0.86 $ 0.84
Diluted earnings per common share $ 0.85 $ 0.84
 
Average shares outstanding - basic 3,802,297 3,761,286
Average shares outstanding - diluted 3,849,605 3,791,682
 
 
CAMBRIDGE BANCORP
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
 
Nine Months Ended September 30,
2011 2010  
(In thousands, except per share data)
 
Interest income:
Interest on loans $ 24,071 $ 22,459
Interest on taxable investment securities 9,881 11,171
Interest on tax exempt investment securities 1,485 1,366
Dividends on FHLB of Boston stock 11
Interest on overnight investments 24 31  
Total interest income 35,472 35,027  
 
Interest expense:
Interest on deposits 2,072 2,727
Interest on borrowed funds 890 946  
Total interest expense 2,962 3,673  
 
Net interest income 32,510 31,354
 
Provision for loan losses 750 500  
 
Net interest income after provision for loan losses 31,760 30,854  
 
Noninterest income:
Wealth management income 10,030 9,153
Deposit account fees 1,604 1,566
ATM/Debit card income 730 708
Merchant card services 267
Bank owned life insurance income 391 252
Gain on disposition of investment securities 465 146
Loss on disposition of other real estate owned (10 )
Gain on disposition of merchant services portfolio 2,842
Other income 609 548  
Total noninterest income 13,829 15,472  
 
Noninterest expense:
Salaries and employee benefits 18,200 17,612
Occupancy and equipment 5,447 4,918
Data processing 2,706 2,400
Professional services 1,312 1,354
Marketing 1,330 1,264
FDIC Insurance 597 930
Other expenses 1,936 2,163  
Total noninterest expense 31,528 30,641  
 
Income before income taxes 14,061 15,685
 
Income tax expense 4,494 5,085
   
Net income $ 9,567 $ 10,600  
 
Per share data:
 
Basic earnings per common share $ 2.53 $ 2.83
Diluted earnings per common share $ 2.49 $ 2.81
 
Average shares outstanding - basic 3,788,198 3,746,753
Average shares outstanding - diluted 3,834,685 3,770,596
 

 
CAMBRIDGE BANCORP
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
Nine Months Ended September 30,
2011   2010  
(In thousands)
Cash flows provided by operating activities:
Net income $ 9,567 $ 10,600
Adjustments to arrive at net cash provided by operating activities:
Provision for loan losses 750 500
Amortization of deferred charges/(income), net 290 450
Depreciation and amortization 1,086 1,086
Bank owned life insurance income (391 ) (252 )
Gain on disposition of investment securities (465 ) (146 )
Loss on disposition of other real estate owned 10
Gain on disposition of merchant services portfolio (2,842 )
Compensation expense from stock optionand restricted stock grants
305 257
Change in accrued interest receivable, deferredtaxes, other assets and other liabilities
245 1,183
Other, net 438   (4 )
Net cash provided by operating activities 11,825   10,842  
Cash flows used by investing activities:
Origination of loans (160,098 ) (97,568 )
Purchase of:
Investment securities - AFS (139,016 ) (194,770 )
Investment securities - HTM (1,243 ) (5,441 )
Maturities, calls and principal payments of:
Loans 78,361 87,165
Investment securities - AFS 130,726 105,852
Investment securities - HTM 8,624 9,966
Proceeds from sale of investment securities - AFS 37,458 29,002
Proceeds from sale of other real estate owned 810
Proceeds from sale of merchant services portfolio 2,842
Purchase of bank owned life insurance (5,001 )
Purchase of banking premises and equipment (1,066 ) (1,309 )
Net cash used by investing activities (51,255 ) (63,451 )
Cash flows provided by financing activities:
Net increase in deposits 63,535 80,842
Net increase/(decrease) in short-term borrowings (1,156 ) (11,203 )
Repayment of long-term borrowings (8,000 )
Proceeds from issuance of common stock 1,048 788
Repurchase of common stock (287 ) (380 )
Cash dividends paid on common stock (3,982 ) (3,937 )
Net cash provided by financing activities 59,158   58,110  
Net increase (decrease) in cash and cash equivalents 19,728 5,501
Cash and cash equivalents at beginning of period 15,756   26,174  
Cash and cash equivalents at end of period $ 35,484   $ 31,675  
 
Supplemental disclosure of cash flow information:
Cash paid for interest $ 2,978 $ 3,706
Cash paid for income taxes 5,135 5,760
Non-cash transactions:
Change in accumulated other comprehensive income, net of taxes 2,150 2,292
 

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