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 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. 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 |
Contacts:
Albert R. Rietheimer, 617-441-1516
Chief
Financial Officer & Treasurer