Cambridge Bancorp Announces Third Quarter Results

Cambridge Bancorp (OTCBB: CATC) today reported unaudited net income of $3,695,000 for the third quarter of 2013 compared to $3,664,000 for the same quarter in 2012. Diluted earnings per share (EPS) remained unchanged at $0.94 for the third quarter of 2013 versus the same quarter in 2012. For the nine months ending September 30, 2013, unaudited net income was $10,501,000 versus $10,400,000 for the same period in 2012. Diluted earnings per share remained unchanged at $2.69 for the nine month period versus the same period in 2012.

“Our third quarter results this year were in line with our expectations. Despite continued robust loan growth in both residential and commercial real estate mortgages, the persistent low rate environment and resultant margin pressure restricted net interest income growth.” notes Joseph V. Roller II, the Bank’s president and CEO. “Our Wealth Management business continues to deliver double digit revenue growth for 2013 by attracting new client relationships, while benefitting from favorable equity markets.”

Net interest income grew to $11.5 million for the third quarter of 2013, an increase of $314,000 (2.8%) over the third quarter of 2012. For the nine months ending September 30, 2013, net interest income was $33.5 million compared to $34.3 million for the same period in 2012. The decrease of $712,000 (2.1%) in net interest income for the nine month period of 2013 versus the same period in 2012 was primarily a function of lower yields on the Bank’s loans and investments.

Noninterest income of $5.9 million for the September 2013 quarter was up $292,000 (5.2%) compared to the same quarter in 2012. The Bank continued to generate solid Wealth Management income, which increased by $496,000 (12.9%) compared to the third quarter of 2012. Wealth Management assets under management stood at $2.0 billion at third quarter end compared to $1.8 billion at year-end 2012. Gains on loans held for sale were lower by $167,000 (83.5%) in the quarter ended September 30, 2013 compared to the same quarter in 2012 due to a lack of production for secondary market loans as higher interest rates for conforming 30-year mortgages deflated demand industry-wide. Additionally, the third quarter of 2013 contained $185,000 of gains on the disposition of investment securities, a decrease of $139,000 when compared to the same quarter in 2012.

The Bank controlled noninterest expense growth, which increased by $52,000 (0.5%) to $11.3 million for the quarter ending September 30, 2013 compared to the same quarter in 2012.

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 11 basis points in the Bank’s net interest margin for the third quarter of 2013 compared to the same quarter in 2012; and a decrease of 26 basis points for the comparable nine month period.

Total loans outstanding as of September 30, 2013 were $896.4 million compared to $742.2 million at the end of last year and $724.2 million at September 30, 2012. Since the beginning of 2013, total loans outstanding have increased $154.1 million. The noteworthy growth in the loan portfolio is attributable to increases in residential mortgages of $95.3 million (27.4%), and commercial mortgages of $60.3 million (21.8%) million. The Bank’s home equity portfolio has seen run-off of $4.8 million since the end of last year as consumers refinance first mortgages in this favorable rate environment and consolidate or pay down debt.

Non-performing loans as a percentage of total loans stood at 15 basis points on September 30, 2013, a decrease from 21 basis points at year-end 2012. Loan quality remains solid and the Allowance for Loan Losses stood at $11.9 million or 1.33% of total loans outstanding at September 30, 2013. At December 31, 2012, the Allowance for Loan Losses was $10.9 million or 1.47% of total loans outstanding. The higher provision for loan losses for the nine month period ($1.0 million in 2013 versus $700,000 in 2012) is primarily in response to the significant increase in loans outstanding.

Deposits have decreased slightly by $23.9 million (1.9%) through the third quarter of 2013 after a run-up at year-end 2012. Total deposits at third quarter end were $1.3 billion.

Total assets as of September 30, 2013 were $1.4 billion.

About Cambridge BancorpCambridge 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. We will also post supplemental financial information for the third 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
September 30, 2013
Dollar amounts in thousands (except share data)
                   
 
Three Months Ended Nine Months Ended
September 30, September 30,
2013 2012 2013 2012
 
Interest Income $ 12,028 $ 11,926 $ 35,208 $ 36,739
Interest Expense   525   737   1,661   2,480
Net Interest Income 11,503 11,189 33,547 34,259
Provision for Loan Losses 600 150 1,000 700
Non-Interest Income 5,926 5,634 17,345 15,273
Non-Interest Expense   11,346   11,294   34,274   33,630
Income Before Taxes 5,483 5,379 15,618 15,202
Income Taxes   1,788   1,715   5,117   4,802
Net Income $ 3,695 $ 3,664 $ 10,501 $ 10,400
 

Data Per Common Share:
 
Basic Earnings Per Share $ 0.95 $ 0.95 $ 2.71 $ 2.71
Diluted Earnings Per Share $ 0.94 $ 0.94 $ 2.69 $ 2.69
Dividends Declared Per Share $ 0.39 $ 0.37 $ 1.17 $ 1.11
 
Avg. Common Shares Outstanding:
Basic 3,848,720 3,846,680 3,833,758 3,835,733
Diluted 3,911,886 3,883,673 3,902,447 3,872,186
 

Selected Operating Ratios:
 
Net Interest Margin 3.36% 3.47% 3.33% 3.59%
Return on Average Assets, after taxes 1.03% 1.08% 1.00% 1.04%
Return on Average Equity, after taxes 14.56% 14.49% 13.54% 14.01%
 
 
September 30, December 31, September 30,
2013 2012 2012
 
Total Assets $ 1,449,827 $ 1,417,986 $ 1,365,679
Total Loans 896,398 742,249 724,216
Non-Performing Loans 1,316 1,570 1,591
Allowance for Loan Losses 11,947 10,948 10,951
Allowance to Non-Performing Loans 907.59% 697.25% 688.26%
Allowance to Total Loans 1.33% 1.47% 1.51%
Total Deposits 1,257,425 1,281,333 1,219,215
Total Stockholders' Equity 103,730 104,891 103,888
 
Book Value Per Share $ 26.72 $ 27.21 $ 26.99
Tangible Book Value Per Share $ 26.52 $ 27.05 $ 26.88
 
 
CAMBRIDGE BANCORP

UNAUDITED CONSOLIDATED BALANCE SHEETS
         
September 30, December 31,
2013 2012
(In thousands)
ASSETS
 
Cash and due from banks $ 25,969 $ 59,923
Overnight investments

   
Total cash and cash equivalents 25,969 59,923
Investment securities:
Available for sale, at fair value 421,502 502,318
Held to maturity, at amortized cost 57,645   71,133  
Total investment securities 479,147 573,451
 
Loans:
Residential mortgage 443,228 347,908
Commercial mortgage 336,770 276,428
Home equity 45,808 50,574
Commercial 47,720 47,570
Consumer 22,872   19,769  
Total loans 896,398 742,249
Allowance for loan losses (11,947 ) (10,948 )
Net loans 884,451 731,301
 
Stock in FHLB of Boston, at cost 6,161 5,010
Bank owned life insurance 23,401 22,903
Banking premises and equipment, net 9,045 6,214
Accrued interest receivable 3,562 3,877
Other assets 18,091   13,623  
Total assets $ 1,449,827   $ 1,417,986  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
Deposits:
Demand $ 359,248 $ 329,211
Interest bearing checking 310,458 363,575
Money market 59,756 60,850
Savings 401,758 393,541
Certificates of deposit 126,205   134,156  
Total deposits 1,257,425 1,281,333
 
Short-term borrowings 72,000
Long-term borrowings 20,000
Other liabilities 16,672   11,762  
Total liabilities 1,346,097   1,313,095  
Stockholders' equity:
Common stock, par value $1.00; Authorized
10,000,000 shares; Outstanding: 3,882,094 and
3,854,951 shares, respectively 3,882 3,855
Additional paid-in capital 25,668 24,421
Retained earnings 81,722 75,787
Accumulated other comprehensive income (7,542 ) 828  
Total stockholders’ equity 103,730   104,891  
Total liabilities and stockholders’ equity $ 1,449,827   $ 1,417,986  
 
 
CAMBRIDGE BANCORP

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
         
Three Months Ended September 30,
2013 2012
(In thousands, except per share data)
 
Interest income:
Interest on loans $ 9,027 $ 8,378
Interest on taxable investment securities 2,484 3,028
Interest on tax exempt investment securities 507 507
Dividends on FHLB of Boston stock 5 6
Interest on overnight investments 5 7
Total interest income 12,028 11,926
 
Interest expense:
Interest on deposits 486 564
Interest on borrowed funds 39 173
Total interest expense 525 737
 
Net interest income 11,503 11,189
 
Provision for loan losses 600 150
 
Net interest income after provision for loan losses 10,903 11,039
 
Noninterest income:
Wealth management income 4,344 3,848
Deposit account fees 645 580
ATM/Debit card income 308 264
Bank owned life insurance income 156 202
Gain on disposition of investment securities 185 324
Gain on loans held for sale 33 200
Other income 255 216
Total noninterest income 5,926 5,634
 
Noninterest expense:
Salaries and employee benefits 6,581 6,809
Occupancy and equipment 2,022 1,902
Data processing 1,049 881
Professional services 385 396
Marketing 465 480
FDIC Insurance 186 178
Other expenses 658 648
Total noninterest expense 11,346 11,294
 
Income before income taxes 5,483 5,379
 
Income tax expense 1,788 1,715
   
Net income $ 3,695 $ 3,664
 
Per share data:
 
Basic earnings per common share $ 0.95 $ 0.95
Diluted earnings per common share $ 0.94 $ 0.94
 
Average shares outstanding - basic 3,848,720 3,846,680
Average shares outstanding - diluted 3,911,886 3,883,673
 
 
CAMBRIDGE BANCORP

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
       
Three Months Ended September 30,
2013 2012
(In thousands)
 
 
Net income $ 3,695 $ 3,664
 
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
51 1,397

Less: reclassification adjustment for gains recognized in net income
(119 ) (202 )
   
Other comprehensive income/(loss) (153 ) 1,099
   
Comprehensive income/(loss) $ 3,542   $ 4,763  
 
 
CAMBRIDGE BANCORP

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
         
Nine Months Ended September 30,
2013 2012
(In thousands, except per share data)
 
Interest income:
Interest on loans $ 26,006 $ 25,065
Interest on taxable investment securities 7,644 10,117
Interest on tax exempt investment securities 1,518 1,523
Dividends on FHLB of Boston stock 15 18
Interest on overnight investments 25 16
Total interest income 35,208 36,739
 
Interest expense:
Interest on deposits 1,461 1,677
Interest on borrowed funds 200 803
Total interest expense 1,661 2,480
 
Net interest income 33,547 34,259
 
Provision for loan losses 1,000 700
 
Net interest income after provision for loan losses 32,547 33,559
 
Noninterest income:
Wealth management income 11,964 10,557
Deposit account fees 1,926 1,778
ATM/Debit card income 865 768
Bank owned life insurance income 498 544
Gain on disposition of investment securities 990 753
Gain on loans held for sale 468 276
Other income 634 597
Total noninterest income 17,345 15,273
 
Noninterest expense:
Salaries and employee benefits 19,871 20,148
Occupancy and equipment 6,085 5,693
Data processing 2,949 2,672
Professional services 1,313 1,263
Marketing 1,395 1,355
FDIC Insurance 548 525
Other expenses 2,113 1,974
Total noninterest expense 34,274 33,630
 
Income before income taxes 15,618 15,202
 
Income tax expense 5,117 4,802
   
Net income $ 10,501 $ 10,400
 
Per share data:
 
Basic earnings per common share $ 2.71 $ 2.71
Diluted earnings per common share $ 2.69 $ 2.69
 
Average shares outstanding - basic 3,833,758 3,835,733
Average shares outstanding - diluted 3,902,447 3,872,186
 
 
CAMBRIDGE BANCORP

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
         
Nine Months Ended September 30,
2013 2012
(In thousands)
 
 
Net income $ 10,501 $ 10,400
 
Other comprehensive income/(loss), net of tax:
Defined benefit retirement plans:

Change in unfunded retirement liability
(255 ) (287 )
Unrealized gains/(losses) on Available for
Sale securities:

Unrealized holding gains/(losses) arising during the period
(7,480 ) 807

Less: reclassification adjustment for gains recognized in net income
(635 ) (479 )
   
Other comprehensive income/(loss) (8,370 ) 41
   
Comprehensive income/(loss) $ 2,131   $ 10,441  
 
 
CAMBRIDGE BANCORP

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
         
Nine Months Ended September 30,
2013 2012
(In thousands)
Cash flows provided by operating activities:
Net income $ 10,501 $ 10,400
Adjustments to arrive at net cash provided by operating activities:
Provision for loan losses 1,000 700
Amortization of deferred charges/(income), net 678 951
Depreciation and amortization 1,163 1,061
Bank owned life insurance income (498 ) (544 )
Gain on disposition of investment securities (990 ) (753 )

Compensation expense from stock option and restricted stock grants
299 344
Change in loans held for sale 1,684 (1,437 )

Change in accrued interest receivable, deferred taxes, other assets and other liabilities
5,154 1,408
Other, net 54   109  
Net cash provided by operating activities 19,045   12,239  
Cash flows used by investing activities:
Origination of loans (249,747 ) (172,479 )
Purchase of:
Investment securities - AFS (50,544 ) (166,202 )
Investment securities - HTM (1,527 ) (823 )
Maturities, calls and principal payments of:
Loans 95,316 121,231
Investment securities - AFS 88,040 98,169
Investment securities - HTM 15,000 3,181
Proceeds from sale of investment securities - AFS 31,107 30,745
Purchase of bank owned life insurance (5,000 )
Decrease/(increase) in FHLB of Boston stock (1,151 ) (204 )
Purchase of banking premises and equipment (3,994 ) (786 )
Net cash provided/(used) by investing activities (77,500 ) (92,168 )
Cash flows provided by financing activities:
Net increase/(decrease) in deposits (23,908 ) 93,561
Net increase/(decrease) in short-term borrowings 72,000 (2,500 )
Repayment of long-term borrowings (20,000 ) (10,000 )
Proceeds from issuance of common stock 982 734
Repurchase of common stock (42 ) (3 )
Cash dividends paid on common stock (4,531 ) (4,261 )
Net cash provided/(used) by financing activities 24,501   77,531  
Net increase/(decrease) in cash and cash equivalents (33,954 ) (2,398 )
Cash and cash equivalents at beginning of period 59,923   22,512  
Cash and cash equivalents at end of period $ 25,969   $ 20,114  
 
Supplemental disclosure of cash flow information:
Cash paid for interest $ 1,668 $ 2,495
Cash paid for income taxes 1,440 4,070
Non-cash transactions:
Change in accumulated other comprehensive income, net of taxes (8,370 ) 41

Copyright Business Wire 2010

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