Cambridge Bancorp Reports Second Quarter Earnings

Cambridge Bancorp (OTCBB: CATC) today reported unaudited net income of $3,475,000 for the second quarter of 2013 compared to $3,451,000 for the same quarter in 2012. The slight increase in earnings was primarily attributable to growth in noninterest income, offset by a decrease in net interest income. Diluted earnings per share were $0.89 for the second quarter of 2013, unchanged versus for the same quarter in 2012. For the six months ended June 30, 2013, unaudited net income was $6,806,000 compared to $6,736,000 for the first half of 2012. Diluted earnings per share were $1.75 for the first six months of 2013 versus $1.74 for the same period in 2012.

“Our second quarter results this year were in line with our expectations. Despite solid loan growth, we anticipated lower net interest income compared to last year due to continued pressure on our net interest margin,” notes Joseph V. Roller II, president and CEO. “While the low interest rate environment continues to present challenges, the Bank remains focused on executing its growth strategy,” said Roller.

Net interest income of $11.1 million for the second quarter of 2013 was $451,000 (3.9%) lower than the same quarter in 2012. For the six months ended June 30, 2013, net interest income of $22.0 million was $1.0 million (4.4%) lower than the same period in 2012.

Noninterest income increased across all categories by a total of $696,000 (14.4%) to $5.5 million for the second quarter of 2013 compared to $4.8 million for the same quarter in 2012. The Bank continued to build momentum generating wealth management income, which increased by $509,000 (15.1%) compared to the same quarter in 2012. Assets under management grew to $2.0 billion at the end of the second quarter 2013 from $1.8 billion at year-end 2012. Other notable contributors to the noninterest income increase for the second quarter of 2013 were income produced from gains on loans sold of $61,000, debit card income of $36,000, and gains from the disposition of investment securities of $33,000 as compared to the same quarter in 2012.

The extended low interest environment continues to negatively impact the Bank’s net interest margin. The Bank’s net interest margin decreased by 28 basis points to 3.31% for the second quarter of 2013 compared to the same quarter in 2012. There was a decrease of 34 basis points for the comparable six month period.

For the second quarter of 2013, noninterest expense totaled $11.3 million, a modest increase of $186,000 (1.7%) compared to the same quarter in 2012. The primary factors attributed to the increase in noninterest expense were higher occupancy and equipment of $152,000 (8.2%), other expenses of $92,000 (13.8%), and marketing of $28,000 (6.4%). These expenses were partially offset by lower salaries and benefits of $114,000 (1.7%) during the second quarter of 2013.

Since year-end 2012, total loans outstanding have increased by $89.7 million (12.1%) to $831.9 million. The robust increase in loans outstanding is attributable to residential loan growth of $57.9 million (16.6%) and commercial mortgage loan growth of $29.0 million (10.5%) as low interest rates provide an attractive environment for qualified households and businesses looking to purchase or refinance properties.

Non-performing loans as a percentage of total loans stood at 0.17% at June 30, 2013, a slight decrease from 0.21% at December 31, 2012. Loan quality remains sound and the Allowance for Loan Losses stood at $11.4 million or 1.36% of total loans outstanding at June 30, 2013. At December 31, 2012, the Allowance for Loan Losses was $10.9 million or 1.47% of total loans outstanding. Primarily in response to continued loan growth, the provision for loan losses was $200,000 for the current quarter.

Total deposits decreased by $34.4 million (2.7%) since year-end 2012, yet increased by $44.0 million (3.7%) over June 30, 2012.

Total assets at second quarter 2013 end were $1.4 billion, relatively flat since year-end 2012.

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 123-year-old Massachusetts chartered commercial bank with $1.4 billion in total assets and 12 Massachusetts branch offices in Cambridge, Boston, Belmont, Concord, Lexington, Lincoln, and Weston. Cambridge Trust Company is one of New England’s leaders in wealth management with $2.0 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 2012 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 second quarter of 2013 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
June 30, 2013
Dollar amounts in thousands (except share data)
       
 
Three Months Ended Six Months Ended
June 30, June 30,
  2013   2012   2013   2012
 
Interest Income $ 11,595 $ 12,409 $ 23,180 $ 24,813
Interest Expense   513   876   1,136   1,743
Net Interest Income 11,082 11,533 22,044 23,070
Provision for Loan Losses 200 250 400 550
Non-Interest Income 5,530 4,834 11,419 9,639
Non-Interest Expense   11,259   11,073   22,928   22,336
Income Before Taxes 5,153 5,044 10,135 9,823
Income Taxes   1,678   1,593   3,329   3,087
Net Income $ 3,475 $ 3,451 $ 6,806 $ 6,736
 

Data Per Common Share:
 
Basic Earnings Per Share $ 0.90 $ 0.90 $ 1.76 $ 1.76
Diluted Earnings Per Share $ 0.89 $ 0.89 $ 1.75 $ 1.74
Dividends Declared Per Share $ 0.39 $ 0.37 $ 0.78 $ 0.74
 
Avg. Common Shares Outstanding:
Basic 3,837,776 3,842,976 3,826,454 3,830,199
Diluted 3,907,458 3,879,498 3,897,744 3,866,397
 

Selected Operating Ratios:
 
Net Interest Margin 3.31% 3.59% 3.31% 3.65%
Return on Average Assets, after taxes 0.99% 1.02% 0.98% 1.02%
Return on Average Equity, after taxes 13.23% 13.95% 13.04% 13.77%
 
 
June 30, December 31, June 30,
  2013   2012   2012
 
Total Assets $ 1,425,825 $ 1,417,986 $ 1,353,344
Total Loans 831,931 742,249 702,533
Non-Performing Loans 1,441 1,570 1,131
Allowance for Loan Losses 11,353 10,948 10,790
Allowance to Non-Performing Loans 787.76% 697.25% 953.85%
Allowance to Total Loans 1.36% 1.47% 1.54%
Total Deposits 1,246,979 1,281,333 1,202,950
Total Stockholders' Equity 101,563 104,891 100,319
 
Book Value Per Share $ 26.17 $ 27.21 $ 26.08
Tangible Book Value Per Share $ 25.96 $ 27.05 $ 25.98
 
 
CAMBRIDGE BANCORP
UNAUDITED CONSOLIDATED BALANCE SHEETS
         
June 30, December 31,
2013   2012  
(In thousands)
ASSETS
 
Cash and due from banks $ 22,854 $ 59,923
Overnight investments    
Total cash and cash equivalents 22,854 59,923
Investment securities:
Available for sale, at fair value 459,212 502,318
Held to maturity, at amortized cost 64,913   71,133  
Total investment securities 524,125 573,451
 
Loans held for sale, at lower of cost or fair value 1,684
 
Loans:
Residential mortgage 405,788 347,908
Commercial mortgage 305,455 276,428
Home equity 45,522 50,574
Commercial 50,025 47,570
Consumer 25,141   19,769  
Total loans 831,931 742,249
Allowance for loan losses (11,353 ) (10,948 )
Net loans 820,578 731,301
 
Stock in FHLB of Boston, at cost 5,406 5,010
Bank owned life insurance 23,245 22,903
Banking premises and equipment, net 8,342 6,214
Accrued interest receivable 4,007 3,877
Other assets 17,268   13,623  
Total assets $ 1,425,825   $ 1,417,986  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
Deposits:
Demand $ 352,997 $ 329,211
Interest bearing checking 326,990 363,575
Money market 58,328 60,850
Savings 376,606 393,541
Certificates of deposit 132,058   134,156  
Total deposits 1,246,979 1,281,333
 
Short-term borrowings 63,000
Long-term borrowings 20,000
Other liabilities 14,283   11,762  
Total liabilities 1,324,262   1,313,095  
Stockholders' equity:
Common stock, par value $1.00; Authorized
10,000,000 shares; Outstanding: 3,880,594 and
3,854,951 shares, respectively 3,881 3,855
Additional paid-in capital 25,530 24,421
Retained earnings 79,541 75,787
Accumulated other comprehensive income (7,389 ) 828  
Total stockholders’ equity 101,563   104,891  
Total liabilities and stockholders’ equity $ 1,425,825   $ 1,417,986  
 
 
CAMBRIDGE BANCORP
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
       
Three Months Ended June 30,
2013 2012
(In thousands, except per share data)
 
Interest income:
Interest on loans $ 8,614 $ 8,359
Interest on taxable investment securities 2,466 3,528
Interest on tax exempt investment securities 504 508
Dividends on FHLB of Boston stock 5 6
Interest on overnight investments 6 8
Total interest income 11,595 12,409
 
Interest expense:
Interest on deposits 481 561
Interest on borrowed funds 32 315
Total interest expense 513 876
 
Net interest income 11,082 11,533
 
Provision for loan losses 200 250
 
Net interest income after provision for loan losses 10,882 11,283
 
Noninterest income:
Wealth management income 3,875 3,366
Deposit account fees 633 606
ATM/Debit card income 301 265
Bank owned life insurance income 166 161
Gain on disposition of investment securities 205 172
Gain on loans held for sale 137 76
Other income 213 188
Total noninterest income 5,530 4,834
 
Noninterest expense:
Salaries and employee benefits 6,521 6,635
Occupancy and equipment 1,999 1,847
Data processing 917 904
Professional services 416 407
Marketing 465 437
FDIC Insurance 181 175
Other expenses 760 668
Total noninterest expense 11,259 11,073
 
Income before income taxes 5,153 5,044
 
Income tax expense 1,678 1,593
   
Net income $ 3,475 $ 3,451
 
Per share data:
 
Basic earnings per common share $ 0.90 $ 0.90
Diluted earnings per common share $ 0.89 $ 0.89
 
Average shares outstanding - basic 3,837,776 3,842,976
Average shares outstanding - diluted 3,907,458 3,879,498
 
 
CAMBRIDGE BANCORP
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
       
Three Months Ended June 30,
2013   2012  
(In thousands)
 
 
Net income $ 3,475 $ 3,451
 
Other comprehensive income/(loss), net of tax:
Defined benefit retirement plans:
Change in unfunded retirement liability (85 ) (96 )

Unrealized gains/(losses) on Available for Sale securities:

Unrealized holding gains/(losses) arising during the period
(5,938 ) (51 )

Less: reclassification adjustment for gains recognized in net income
(131 ) (111 )
Other comprehensive income/(loss) (6,154 ) (258 )
Comprehensive income/(loss) $ (2,679 ) $ 3,193  
 
 
CAMBRIDGE BANCORP
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
       
Six Months Ended June 30,
2013 2012
(In thousands, except per share data)
 
Interest income:
Interest on loans $ 16,979 $ 16,687
Interest on taxable investment securities 5,160 7,089
Interest on tax exempt investment securities 1,011 1,016
Dividends on FHLB of Boston stock 10 12
Interest on overnight investments 20 9
Total interest income 23,180 24,813
 
Interest expense:
Interest on deposits 975 1,113
Interest on borrowed funds 161 630
Total interest expense 1,136 1,743
 
Net interest income 22,044 23,070
 
Provision for loan losses 400 550
 
Net interest income after provision for loan losses 21,644 22,520
 
Noninterest income:
Wealth management income 7,620 6,709
Deposit account fees 1,281 1,198
ATM/Debit card income 557 504
Bank owned life insurance income 342 342
Gain on disposition of investment securities 805 429
Gain on loans held for sale 435 76
Other income 379 381
Total noninterest income 11,419 9,639
 
Noninterest expense:
Salaries and employee benefits 13,290 13,339
Occupancy and equipment 4,063 3,791
Data processing 1,900 1,791
Professional services 928 867
Marketing 930 875
FDIC Insurance 362 347
Other expenses 1,455 1,326
Total noninterest expense 22,928 22,336
 
Income before income taxes 10,135 9,823
 
Income tax expense 3,329 3,087
   
Net income $ 6,806 $ 6,736
 
Per share data:
 
Basic earnings per common share $ 1.76 $ 1.76
Diluted earnings per common share $ 1.75 $ 1.74
 
Average shares outstanding - basic 3,826,454 3,830,199
Average shares outstanding - diluted 3,897,744 3,866,397
 
 
CAMBRIDGE BANCORP
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
       
Six Months Ended June 30,
2013   2012  
(In thousands)
 
 
Net income $ 6,806 $ 6,736
 
Other comprehensive income/(loss), net of tax:
Defined benefit retirement plans:
Change in unfunded retirement liability (170 ) (191 )

Unrealized gains/(losses) on Available for Sale securities:

Unrealized holding gains/(losses) arising during the period
(7,531 ) (590 )

Less: reclassification adjustment for gains recognized in net income
(516 ) (277 )
Other comprehensive income/(loss) (8,217 ) (1,058 )
Comprehensive income/(loss) $ (1,411 ) $ 5,678  
 
 
CAMBRIDGE BANCORP
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
           
Six Months Ended June 30,
2013 2012
(In thousands)
Cash flows provided by operating activities:
Net income $ 6,806 $ 6,736
Adjustments to arrive at net cash provided by operating activities:
Provision for loan losses 400 550
Amortization of deferred charges/(income), net 608 432
Depreciation and amortization 767 715
Bank owned life insurance income (342) (342)
Gain on disposition of investment securities (805) (429)
Compensation expense from stock option
and restricted stock grants 229 228
Change in loans held for sale 1,684 (253)
Change in accrued interest receivable, deferred taxes,
other assets and other liabilities 3,200 (1,235)
Other, net 36 90
Net cash provided by operating activities 12,583 6,492
Cash flows used by investing activities:
Origination of loans (151,184) (96,734)
Purchase of:
Investment securities - AFS (50,544) (105,858)
Investment securities - HTM (498) (823)
Maturities, calls and principal payments of:
Loans 61,328 67,257
Investment securities - AFS 52,626 56,986
Investment securities - HTM 6,709 2,388
Proceeds from sale of investment securities - AFS 28,702 22,748
Purchase of bank owned life insurance (5,000)
Decrease/(increase) in FHLB of Boston stock (396) (204)
Purchase of banking premises and equipment (2,895) (311)
Net cash provided/(used) by investing activities (56,152) (59,551)
Cash flows provided by financing activities:
Net increase/(decrease) in deposits (34,354) 77,296
Net increase/(decrease) in short-term borrowings 63,000 (2,500)
Repayment of long-term borrowings (20,000)
Proceeds from issuance of common stock 913 619
Repurchase of common stock (42) (3)
Cash dividends paid on common stock (3,017) (2,836)
Net cash provided/(used) by financing activities 6,500 72,576
Net increase/(decrease) in cash and cash equivalents (37,069) 19,517
Cash and cash equivalents at beginning of period 59,923 22,512
Cash and cash equivalents at end of period $ 22,854 $ 42,029
 
Supplemental disclosure of cash flow information:
Cash paid for interest $ 1,141 $ 1,752
Cash paid for income taxes 80 2,705
Non-cash transactions:
Change in accumulated other comprehensive income, net of taxes (8,217) (1,058)

Copyright Business Wire 2010

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