Cambridge Bancorp (OTC BB: CATC) today reported unaudited net income of $3,331,000 for the first quarter of 2013 compared to $3,285,000 for the same quarter in 2012. The modest earnings increase of $46,000 (1.4%) was attributable to a combination of solid growth in noninterest income offset by lower net interest income and higher noninterest expense for the quarter ended March 31, 2013. Diluted earnings per share remained unchanged at $0.85 quarter-over-quarter.
“The Bank is off to a solid start in the first quarter of 2013,” noted Joseph V. Roller II, president and CEO. “It is clear the banking industry will continue to be challenged with a low interest environment and uncertain regulatory changes. Cambridge Trust continues to benefit from investments made across the Company and remains focused on executing its business plans.”
Net interest income for the quarter ended March 31, 2013 was $11.0 million compared to $11.5 million in the first quarter of 2012. The decrease was driven by a continued drag of investment security yields at historically low levels and further pressure on loan pricing. The confluence of these factors resulted in a compression of the Bank’s net interest margin by 41 basis points to 3.31% for the quarter compared to 3.72% for the quarter ended March 31, 2012.
Noninterest income of $5.9 million for the March 2013 quarter was up $1.1 million (22.6%) compared to the same quarter in 2012. The Bank continued to grow Wealth Management income, which increased $402,000 (12.0%) between the comparable periods, from new account growth and market appreciation. Assets under management grew to $1.9 billion at the end of the first quarter 2013 from $1.8 billion at year-end 2012. Other contributors to the noninterest income increase for the first quarter of 2013 were income produced from gains on loans sold of $298,000, a new source of revenue since the second quarter of 2012, and gains from the disposition of investment securities of $343,000 compared to the first quarter of 2012.
The Bank sustained the trend of growth in loans during the first quarter of 2013. Total loans outstanding increased by $31.5 million (4.2%) to $773.7 million since year-end 2012 and by $82.3 million (11.9%) in comparison to March 31, 2012. The loan growth in the first quarter of 2013 was primarily attributable to increases in residential mortgages of $22.2 million (6.4%) and commercial mortgages of $15.2 million (5.5%). Home equity loans were down by $4.1 million (8.0%) since year-end 2012 as consumers refinance debt due to favorable interest rates.
Non-performing loans as a percentage of total loans stood at 0.19% at March 31, 2013, down compared to 0.21% at December 31, 2012. Loan quality remains sound and the Allowance for Loan Losses stood at $11.1 million or 1.44% of total loans outstanding at March 31, 2013. At December 31, 2012, the Allowance for Loan Losses was $10.9 million or 1.47% of total loans outstanding. In response to continued loan growth, the provision for loan losses was $200,000 for the current quarter.
Noninterest expense in the first quarter of 2013 totaled $11.7 million, an increase of $406,000 (3.6%) over the first quarter of 2012. Salaries and employee benefits, occupancy and equipment, and data processing costs contributed to the increase for the comparable periods.
Total deposits decreased by $51.0 million (4.0%) since year-end 2012, yet increased by $73.5 million (6.4%) over March 31, 2012.
Total assets at first quarter 2013 end were $1.4 billion, unchanged from 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 locations in Cambridge, Boston, Belmont, Concord, Lexington, Lincoln, and Weston. Cambridge Trust Company is one of New England’s leaders in wealth management with $1.9 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 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 first 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 | ||||||||||||||
| March 31, 2013 | ||||||||||||||
| Dollar amounts in thousands (except share data) | ||||||||||||||
| Three Months Ended | ||||||||||||||
| March 31, | ||||||||||||||
| 2013 | 2012 | |||||||||||||
| Interest Income | $ | 11,585 | $ | 12,404 | ||||||||||
| Interest Expense | 623 | 867 | ||||||||||||
| Net Interest Income | 10,962 | 11,537 | ||||||||||||
| Provision for Loan Losses | 200 | 300 | ||||||||||||
| Non-Interest Income | 5,889 | 4,805 | ||||||||||||
| Non-Interest Expense | 11,669 | 11,263 | ||||||||||||
| Income Before Taxes | 4,982 | 4,779 | ||||||||||||
| Income Taxes | 1,651 | 1,494 | ||||||||||||
| Net Income | $ | 3,331 | $ | 3,285 | ||||||||||
| Data Per Common Share: | ||||||||||||||
| Basic Earnings Per Share | $ | 0.86 | $ | 0.86 | ||||||||||
| Diluted Earnings Per Share | $ | 0.85 | $ | 0.85 | ||||||||||
| Dividends Declared Per Share | $ | 0.39 | $ | 0.37 | ||||||||||
| Avg. Common Shares Outstanding: | ||||||||||||||
| Basic | 3,855,467 | 3,817,422 | ||||||||||||
| Diluted | 3,918,832 | 3,853,323 | ||||||||||||
| Selected Operating Ratios: | ||||||||||||||
| Net Interest Margin | 3.31 | % | 3.72 | % | ||||||||||
| Return on Average Assets, after taxes | 0.96 | % | 1.02 | % | ||||||||||
| Return on Average Equity, after taxes | 12.83 | % | 13.57 | % | ||||||||||
| March 31, | December 31, | March 31, | ||||||||||||
| 2013 | 2012 | 2012 | ||||||||||||
| Total Assets | $ | 1,365,658 | $ | 1,417,986 | $ | 1,345,473 | ||||||||
| Total Loans | 773,723 | 742,249 | 691,398 | |||||||||||
| Non-Performing Loans | 1,460 | 1,570 | 1,165 | |||||||||||
| Allowance for Loan Losses | 11,146 | 10,948 | 10,474 | |||||||||||
| Allowance to Non-Performing Loans | 763.27 | % | 697.25 | % | 898.96 | % | ||||||||
| Allowance to Total Loans | 1.44 | % | 1.47 | % | 1.51 | % | ||||||||
| Total Deposits | 1,230,304 | 1,281,333 | 1,156,822 | |||||||||||
| Total Stockholders' Equity | 104,796 | 104,891 | 97,915 | |||||||||||
| Book Value Per Share | $ | 27.18 | $ | 27.21 | $ | 25.62 | ||||||||
| Tangible Book Value Per Share | $ | 26.98 | $ | 27.05 | $ | 25.51 | ||||||||
| CAMBRIDGE BANCORP | |||||||||
| UNAUDITED CONSOLIDATED BALANCE SHEETS | |||||||||
| March 31, | December 31, | ||||||||
| 2013 | 2012 | ||||||||
| (In thousands) | |||||||||
| ASSETS | |||||||||
| Cash and due from banks | $ | 16,531 | $ | 59,923 | |||||
| Overnight investments | — | — | |||||||
| Total cash and cash equivalents | 16,531 | 59,923 | |||||||
| Investment securities: | |||||||||
| Available for sale, at fair value | 466,194 | 502,318 | |||||||
| Held to maturity, at amortized cost | 66,116 | 71,133 | |||||||
| Total investment securities | 532,310 | 573,451 | |||||||
| Loans held for sale, at lower of cost or fair value | 1,199 | 1,684 | |||||||
| Loans: | |||||||||
| Residential mortgage | 370,071 | 347,908 | |||||||
| Commercial mortgage | 291,608 | 276,428 | |||||||
| Home equity | 46,503 | 50,574 | |||||||
| Commercial | 46,369 | 47,570 | |||||||
| Consumer | 19,172 | 19,769 | |||||||
| Total loans | 773,723 | 742,249 | |||||||
| Allowance for loan losses | (11,146 | ) | (10,948 | ) | |||||
| Net loans | 762,577 | 731,301 | |||||||
| Stock in FHLB of Boston, at cost | 4,827 | 5,010 | |||||||
| Bank owned life insurance | 23,079 | 22,903 | |||||||
| Banking premises and equipment, net | 6,484 | 6,214 | |||||||
| Accrued interest receivable | 3,714 | 3,877 | |||||||
| Other assets | 14,937 | 13,623 | |||||||
| Total assets | $ | 1,365,658 | $ | 1,417,986 | |||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||
| Deposits: | |||||||||
| Demand | $ | 316,811 | $ | 329,211 | |||||
| Interest bearing checking | 329,907 | 363,575 | |||||||
| Money market | 56,181 | 60,850 | |||||||
| Savings | 392,557 | 393,541 | |||||||
| Certificates of deposit | 134,848 | 134,156 | |||||||
| Total deposits | 1,230,304 | 1,281,333 | |||||||
| Short-term borrowings | 18,000 | — | |||||||
| Long-term borrowings | — | 20,000 | |||||||
| Other liabilities | 12,558 | 11,762 | |||||||
| Total liabilities | 1,260,862 | 1,313,095 | |||||||
| Stockholders' equity: | |||||||||
| Common stock, par value $1.00; Authorized | |||||||||
| 5,000,000 shares; Outstanding: 3,855,804 and | |||||||||
| 3,854,951 shares, respectively | 3,856 | 3,855 | |||||||
| Additional paid-in capital | 24,561 | 24,421 | |||||||
| Retained earnings | 77,614 | 75,787 | |||||||
| Accumulated other comprehensive income | (1,235 | ) | 828 | ||||||
| Total stockholders’ equity | 104,796 | 104,891 | |||||||
| Total liabilities and stockholders’ equity | $ | 1,365,658 | $ | 1,417,986 | |||||
| CAMBRIDGE BANCORP | |||||||
| UNAUDITED CONSOLIDATED STATEMENTS OF INCOME | |||||||
| Three Months Ended March 31, | |||||||
| 2013 | 2012 | ||||||
| (In thousands, except per share data) | |||||||
| Interest income: | |||||||
| Interest on loans | $ | 8,365 | $ | 8,328 | |||
| Interest on taxable investment securities | 2,694 | 3,561 | |||||
| Interest on tax exempt investment securities | 507 | 508 | |||||
| Dividends on FHLB of Boston stock | 5 | 6 | |||||
| Interest on overnight investments | 14 | 1 | |||||
| Total interest income | 11,585 | 12,404 | |||||
| Interest expense: | |||||||
| Interest on deposits | 494 | 552 | |||||
| Interest on borrowed funds | 129 | 315 | |||||
| Total interest expense | 623 | 867 | |||||
| Net interest income | 10,962 | 11,537 | |||||
| Provision for loan losses | 200 | 300 | |||||
| Net interest income after provision for loan losses | 10,762 | 11,237 | |||||
| Noninterest income: | |||||||
| Wealth management income | 3,745 | 3,343 | |||||
| Deposit account fees | 648 | 592 | |||||
| ATM/Debit card income | 256 | 239 | |||||
| Bank owned life insurance income | 176 | 181 | |||||
| Gain on disposition of investment securities | 600 | 257 | |||||
| Gain on loans held for sale | 298 | — | |||||
| Other income | 166 | 193 | |||||
| Total noninterest income | 5,889 | 4,805 | |||||
| Noninterest expense: | |||||||
| Salaries and employee benefits | 6,769 | 6,704 | |||||
| Occupancy and equipment | 2,064 | 1,944 | |||||
| Data processing | 983 | 887 | |||||
| Professional services | 512 | 460 | |||||
| Marketing | 465 | 438 | |||||
| FDIC Insurance | 181 | 172 | |||||
| Other expenses | 695 | 658 | |||||
| Total noninterest expense | 11,669 | 11,263 | |||||
| Income before income taxes | 4,982 | 4,779 | |||||
| Income tax expense | 1,651 | 1,494 | |||||
| Net income | $ | 3,331 | $ | 3,285 | |||
| Per share data: | |||||||
| Basic earnings per common share | $ | 0.86 | $ | 0.86 | |||
| Diluted earnings per common share | $ | 0.85 | $ | 0.85 | |||
| Average shares outstanding - basic | 3,855,467 | 3,817,405 | |||||
| Average shares outstanding - diluted | 3,918,832 | 3,853,306 | |||||
| CAMBRIDGE BANCORP | ||||||||||
| UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||||||||
| Three Months Ended March 31, | ||||||||||
| 2013 | 2012 | |||||||||
| (In thousands) | ||||||||||
| Net income | $ | 3,331 | $ | 3,285 | ||||||
| Other comprehensive income/(loss), net of tax: | ||||||||||
| Defined benefit retirement plans: | ||||||||||
| Change in unfunded retirement liability | (85 | ) | (95 | ) | ||||||
| Unrealized gains/(losses) on Available for | ||||||||||
| Sale securities: | ||||||||||
| Unrealized holding gains/(losses) arising | ||||||||||
| during the period | (1,593 | ) | (539 | ) | ||||||
| Less: reclassification adjustment for gains | ||||||||||
| recognized in net income | (385 | ) | (166 | ) | ||||||
| Other comprehensive income/(loss) | (2,063 | ) | (800 | ) | ||||||
| Comprehensive income/(loss) | $ | 1,268 | $ | 2,485 | ||||||
| CAMBRIDGE BANCORP | |||||||
| UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
| Three Months Ended March 31, | |||||||
| 2013 | 2012 | ||||||
| (In thousands) | |||||||
| Cash flows provided by operating activities: | |||||||
| Net income | $ | 3,331 | $ | 3,285 | |||
| Adjustments to arrive at net cash provided by operating activities: | |||||||
| Provision for loan losses | 200 | 300 | |||||
| Amortization of deferred charges/(income), net | 343 | 197 | |||||
| Depreciation and amortization | 386 | 353 | |||||
| Bank owned life insurance income | (176 | ) | (181 | ) | |||
| Gain on disposition of investment securities | (600 | ) | (257 | ) | |||
| Compensation expense from stock option | |||||||
| and restricted stock grants | 114 | 109 | |||||
| Change in loans held for sale | 485 | — | |||||
| Change in accrued interest receivable, deferred taxes, | |||||||
| other assets and other liabilities | 709 | (194 | ) | ||||
| Other, net | 20 | 24 | |||||
| Net cash provided by operating activities | 4,812 | 3,636 | |||||
| Cash flows used by investing activities: | |||||||
| Origination of loans | (65,027 | ) | (47,256 | ) | |||
| Purchase of: | |||||||
| Investment securities - AFS | (21,456 | ) | (75,656 | ) | |||
| Investment securities - HTM | (497 | ) | (573 | ) | |||
| Maturities, calls and principal payments of: | |||||||
| Loans | 33,467 | 29,011 | |||||
| Investment securities - AFS | 30,659 | 33,054 | |||||
| Investment securities - HTM | 5,510 | 1,481 | |||||
| Proceeds from sale of investment securities - AFS | 24,119 | 11,601 | |||||
| Purchase of bank owned life insurance | — | (5,000 | ) | ||||
| Decrease/(increase) in FHLB of Boston stock | 183 | (150 | ) | ||||
| Purchase of banking premises and equipment | (656 | ) | (112 | ) | |||
| Net cash provided/(used) by investing activities | 6,302 | (53,600 | ) | ||||
| Cash flows provided by financing activities: | |||||||
| Net increase/(decrease) in deposits | (51,029 | ) | 31,168 | ||||
| Net increase in short-term borrowings | 18,000 | 37,500 | |||||
| Repayment of long-term borrowings | (20,000 | ) | — | ||||
| Proceeds from issuance of common stock | 27 | 105 | |||||
| Repurchase of common stock | — | (3 | ) | ||||
| Cash dividends paid on common stock | (1,504 | ) | (1,414 | ) | |||
| Net cash provided/(used) by financing activities | (54,506 | ) | 67,356 | ||||
| Net increase/(decrease) in cash and cash equivalents | (43,392 | ) | 17,392 | ||||
| Cash and cash equivalents at beginning of period | 59,923 | 22,512 | |||||
| Cash and cash equivalents at end of period | $ | 16,531 | $ | 39,904 | |||
| Supplemental disclosure of cash flow information: | |||||||
| Cash paid for interest | $ | 623 | $ | 868 | |||
| Cash paid for income taxes | 20 | 50 | |||||
| Non-cash transactions: | |||||||
| Change in accumulated other comprehensive income, net of taxes | (2,063 | ) | (800 | ) | |||
Contacts:
Albert R. Rietheimer, 617-441-1516
Chief
Financial Officer & Treasurer
