Cambridge Bancorp (OTCBB: CATC) today reported unaudited net income of $3,926,000 for the third quarter of 2014 compared to $3,695,000 for the same quarter in 2013. Diluted earnings per share (EPS) were $0.99 for the third quarter of 2014 versus $0.94 for the same quarter in 2013. For the nine months ending September 30, 2014, unaudited net income was $11,078,000 versus $10,501,000 for the same period in 2013. Diluted earnings per share were $2.80 for the nine month period versus $2.69 for the same period in 2013.
“We are pleased to report another solid increase in the Bank’s quarter-over-quarter performance,” notes Joseph V. Roller II, the Bank’s president and CEO. “The Bank sustained the trend of growth in loans, which have increased by $90.9 million through the third quarter of 2014. Additionally, Wealth Management continues to make a significant contribution to the Bank’s noninterest income.”
Net interest income grew to $12.1 million for the third quarter of 2014, an increase of $579,000 (5.0%) over the third quarter of 2013. For the nine months ending September 30, 2014, net interest income was $35.7 million compared to $33.5 million for the same period in 2013. The increase of $2.2 million (6.4%) in net interest income for the nine month period of 2014 versus the same period in 2013 was primarily a function of higher interest on loans of $3.8 million (14.8%), offset by a decrease of $1.8 million (20.1%) due to the Bank’s smaller investment portfolio and lower yields.
Noninterest income of $6.5 million for the September 2014 quarter was up $596,000 (10.1%) compared to the same quarter in 2013. The Bank continued to generate solid Wealth Management income, which increased by $617,000 (14.2%) compared to the third quarter of 2013. Wealth Management assets under management stood at $2.3 billion at third quarter end compared to $2.1 billion at year-end 2013.
For the third quarter of 2014, noninterest expense totaled $12.3 million, an increase of $960,000 (8.5%) compared to the same quarter in 2013. The primary factors for the increase in noninterest expense were higher salaries and benefits of $402,000 (6.1%), higher occupancy and equipment of $111,000 (5.5%), and higher other expenses of $235,000 (35.7%).
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 8 basis points in the Bank’s net interest margin for the third quarter of 2014 compared to the same quarter in 2013; and a decrease of 1 basis point for the comparable nine month period.
Total loans outstanding as of September 30, 2014 were $1.0 billion compared to $942.5 million at the end of last year and $896.4 million at September 30, 2013. The noteworthy growth in the loan portfolio during 2014 is attributable to increases in residential mortgages of $29.6 million (6.5%) and commercial mortgages of $51.3 million (14.1%). The Bank’s home equity portfolio has rebounded since the end of last year, growing by $8.6 million (18.4%) since December 31, 2013.
Non-performing loans as a percentage of total loans stood at 16 basis points on September 30, 2014, a decrease from 18 basis points at year-end 2013. Loan quality remains solid and the Allowance for Loan Losses stood at $13.7 million or 1.33% of total loans outstanding at September 30, 2014. At December 31, 2013, the Allowance for Loan Losses was $12.7 million or 1.35% of total loans outstanding. The provision for loan losses for the nine month period is primarily in response to growth in the loan portfolio.
Deposits have decreased by $100.1 million (7.1%) through the third quarter of 2014 after a run-up at year-end 2013. Total deposits at third quarter end were $1.3 billion.
Total assets as of September 30, 2014 were $1.6 billion.
Cambridge Bancorp and its subsidiary, Cambridge Trust Company, are based in Cambridge, Massachusetts, in the heart of Harvard Square. Cambridge Trust Company is a 124-year-old Massachusetts chartered commercial bank with $1.6 billion in total assets and 12 Massachusetts locations in Cambridge, Boston, Belmont, Concord, Lexington, Lincoln, and Weston, as well as an Innovation Banking Group office located in the Cambridge Innovation Center. Cambridge Trust Company is one of New England’s leaders in wealth management with $2.3 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 2013 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 2014 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, 2014 | |||||||||||||||||||||||
| Dollar amounts in thousands (except share data) | |||||||||||||||||||||||
| Quarter Ended | Nine Months Ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||
| Interest Income | $ | 12,613 | $ | 12,028 | $ | 37,268 | $ | 35,208 | |||||||||||||||
| Interest Expense | 531 | 525 | 1,563 | 1,661 | |||||||||||||||||||
| Net Interest Income | 12,082 | 11,503 | 35,705 | 33,547 | |||||||||||||||||||
| Provision for Loan Losses | 425 | 600 | 950 | 1,000 | |||||||||||||||||||
| Non-Interest Income | 6,522 | 5,926 | 18,668 | 17,345 | |||||||||||||||||||
| Non-Interest Expense | 12,306 | 11,346 | 36,965 | 34,274 | |||||||||||||||||||
| Income Before Taxes | 5,873 | 5,483 | 16,458 | 15,618 | |||||||||||||||||||
| Income Taxes | 1,947 | 1,788 | 5,380 | 5,117 | |||||||||||||||||||
| Net Income | $ | 3,926 | $ | 3,695 | $ | 11,078 | $ | 10,501 | |||||||||||||||
| Data Per Common Share: | |||||||||||||||||||||||
| Basic Earnings Per Share | $ | 1.00 | $ | 0.95 | $ | 2.82 | $ | 2.71 | |||||||||||||||
| Diluted Earnings Per Share | $ | 0.99 | $ | 0.94 | $ | 2.80 | $ | 2.69 | |||||||||||||||
| Dividends Declared Per Share | $ | 0.42 | $ | 0.39 | $ | 1.26 | $ | 1.17 | |||||||||||||||
| Avg. Common Shares Outstanding: | |||||||||||||||||||||||
| Basic | 3,898,209 | 3,848,720 | 3,881,594 | 3,833,758 | |||||||||||||||||||
| Diluted | 3,966,138 | 3,911,886 | 3,952,837 | 3,902,447 | |||||||||||||||||||
| Selected Operating Ratios: | |||||||||||||||||||||||
| Net Interest Margin | 3.28 | % | 3.36 | % | 3.32 | % | 3.33 | % | |||||||||||||||
| Return on Average Assets | 1.02 | % | 1.03 | % | 0.98 | % | 1.00 | % | |||||||||||||||
| Return on Average Equity | 13.36 | % | 14.56 | % | 12.90 | % | 13.54 | % | |||||||||||||||
| September 30, | December 31, | September 30, | |||||||||||||||||||||
| 2014 | 2013 | 2013 | |||||||||||||||||||||
| Total Assets | $ | 1,558,923 | $ | 1,533,710 | $ | 1,449,827 | |||||||||||||||||
| Total Loans | 1,033,381 | 942,451 | 896,398 | ||||||||||||||||||||
| Non-Performing Loans | 1,665 | 1,703 | 1,316 | ||||||||||||||||||||
| Allowance for Loan Losses | 13,700 | 12,708 | 11,947 | ||||||||||||||||||||
| Allowance to Non-Performing Loans | 822.78 | % | 746.11 | % | 907.56 | % | |||||||||||||||||
| Allowance to Total Loans | 1.33 | % | 1.35 | % | 1.33 | % | |||||||||||||||||
| Total Deposits | 1,308,942 | 1,409,047 | 1,257,425 | ||||||||||||||||||||
| Total Stockholders' Equity | 118,449 | 109,283 | 103,730 | ||||||||||||||||||||
| Book Value Per Share | $ | 30.07 | $ | 28.13 | $ | 26.72 | |||||||||||||||||
| Tangible Book Value Per Share | $ | 29.88 | $ | 27.93 | $ | 26.52 | |||||||||||||||||
| CAMBRIDGE BANCORP | ||||||||||||
| UNAUDITED CONSOLIDATED BALANCE SHEETS | ||||||||||||
| September 30, | December 31, | |||||||||||
| 2014 | 2013 | |||||||||||
| (In thousands) | ||||||||||||
| ASSETS | ||||||||||||
| Cash and cash equivalents | $ | 23,218 | $ | 88,107 | ||||||||
| Investment securities: | ||||||||||||
| Available for sale, at fair value | 361,232 | 388,793 | ||||||||||
| Held to maturity, at amortized cost | 80,507 | 59,181 | ||||||||||
| Total investment securities | 441,739 | 447,974 | ||||||||||
| Loans held for sale, at lower of cost or fair value | 173 | 403 | ||||||||||
| Loans: | ||||||||||||
| Residential mortgage | 487,812 | 458,176 | ||||||||||
| Commercial mortgage | 414,631 | 363,294 | ||||||||||
| Home equity | 55,223 | 46,635 | ||||||||||
| Commercial | 50,553 | 50,758 | ||||||||||
| Consumer | 25,162 | 23,588 | ||||||||||
| Total loans | 1,033,381 | 942,451 | ||||||||||
| Allowance for loan losses | (13,700 | ) | (12,708 | ) | ||||||||
| Net loans | 1,019,681 | 929,743 | ||||||||||
| Stock in FHLB of Boston, at cost | 7,955 | 6,231 | ||||||||||
| Bank owned life insurance | 29,045 | 23,555 | ||||||||||
| Banking premises and equipment, net | 8,583 | 9,951 | ||||||||||
| Accrued interest receivable | 3,858 | 3,626 | ||||||||||
| Other assets | 24,671 | 24,120 | ||||||||||
Total assets | $ | 1,558,923 | $ | 1,533,710 | ||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||
| Deposits: | ||||||||||||
| Demand | $ | 391,558 | $ | 382,255 | ||||||||
| Interest bearing checking | 298,568 | 335,010 | ||||||||||
| Money market | 77,634 | 78,410 | ||||||||||
| Savings | 421,047 | 489,160 | ||||||||||
| Certificates of deposit | 120,135 | 124,212 | ||||||||||
| Total deposits | 1,308,942 | 1,409,047 | ||||||||||
| Short-term borrowings | 115,000 | — | ||||||||||
| Long-term borrowings | — | — | ||||||||||
| Other liabilities | 16,532 | 15,380 | ||||||||||
Total liabilities | 1,440,474 | 1,424,427 | ||||||||||
| Stockholders' equity: | ||||||||||||
| Common stock, par value $1.00; Authorized | ||||||||||||
| 10,000,000 shares; Outstanding: 3,939,405 and | ||||||||||||
| 3,884,851 shares, respectively | 3,939 | 3,885 | ||||||||||
| Additional paid-in capital | 27,931 | 26,027 | ||||||||||
| Retained earnings | 89,184 | 83,479 | ||||||||||
Accumulated other comprehensive income/(loss) | (2,605 | ) | (4,108 | ) | ||||||||
Total stockholders’ equity | 118,449 | 109,283 | ||||||||||
Total liabilities and stockholders’ equity | $ | 1,558,923 | $ | 1,533,710 | ||||||||
| CAMBRIDGE BANCORP | |||||||||||
| UNAUDITED CONSOLIDATED STATEMENTS OF INCOME | |||||||||||
| Quarter Ended September 30, | |||||||||||
| 2014 | 2013 | ||||||||||
| (In thousands, except per share data) | |||||||||||
| Interest income: | |||||||||||
| Interest on loans | $ | 10,306 | $ | 9,027 | |||||||
| Interest on taxable investment securities | 1,586 | 2,484 | |||||||||
| Interest on tax exempt investment securities | 690 | 507 | |||||||||
| Dividends on FHLB of Boston stock | 26 | 5 | |||||||||
| Interest on overnight investments | 5 | 5 | |||||||||
| Total interest income | 12,613 | 12,028 | |||||||||
| Interest expense: | |||||||||||
| Interest on deposits | 480 | 486 | |||||||||
| Interest on borrowed funds | 51 | 39 | |||||||||
| Total interest expense | 531 | 525 | |||||||||
| Net interest income | 12,082 | 11,503 | |||||||||
| Provision for loan losses | 425 | 600 | |||||||||
| Net interest income after provision for loan losses | 11,657 | 10,903 | |||||||||
| Noninterest income: | |||||||||||
| Wealth management income | 4,961 | 4,344 | |||||||||
| Deposit account fees | 608 | 645 | |||||||||
| ATM/Debit card income | 317 | 308 | |||||||||
| Bank owned life insurance income | 185 | 156 | |||||||||
| Gain on disposition of investment securities | 195 | 185 | |||||||||
| Gain on loans held for sale | 36 | 33 | |||||||||
| Other income | 220 | 255 | |||||||||
| Total noninterest income | 6,522 | 5,926 | |||||||||
| Noninterest expense: | |||||||||||
| Salaries and employee benefits | 6,983 | 6,581 | |||||||||
| Occupancy and equipment | 2,133 | 2,022 | |||||||||
| Data processing | 1,140 | 1,049 | |||||||||
| Professional services | 428 | 385 | |||||||||
| Marketing | 528 | 465 | |||||||||
| FDIC Insurance | 201 | 186 | |||||||||
| Other expenses | 893 | 658 | |||||||||
| Total noninterest expense | 12,306 | 11,346 | |||||||||
| Income before income taxes | 5,873 | 5,483 | |||||||||
| Income tax expense | 1,947 | 1,788 | |||||||||
| Net income | $ | 3,926 | $ | 3,695 | |||||||
| Per share data: | |||||||||||
| Basic earnings per common share | $ | 1.00 | $ | 0.95 | |||||||
| Diluted earnings per common share | $ | 0.99 | $ | 0.94 | |||||||
| Average shares outstanding - basic | 3,898,209 | 3,848,720 | |||||||||
| Average shares outstanding - diluted | 3,966,138 | 3,911,886 | |||||||||
| CAMBRIDGE BANCORP | |||||||||||||||||
| UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||||||||||||||||
| Quarter Ended September 30, | |||||||||||||||||
| 2014 | 2013 | ||||||||||||||||
| (In thousands) | |||||||||||||||||
| Net income | $ | 3,926 | $ | 3,695 | |||||||||||||
| Other comprehensive income/(loss), net of tax: | |||||||||||||||||
| Defined benefit retirement plans: | |||||||||||||||||
| Change in unfunded retirement liability | (2 | ) | (85 | ) | |||||||||||||
| Unrealized gains/(losses) on Available for | |||||||||||||||||
| Sale securities: | |||||||||||||||||
| Unrealized holding (losses)/gains arising | |||||||||||||||||
| during the period | (1,077 | ) | 51 | ||||||||||||||
| Less: reclassification adjustment for gains | |||||||||||||||||
| recognized in net income | (125 | ) | (119 | ) | |||||||||||||
| Other comprehensive income/(loss) | (1,204 | ) | (153 | ) | |||||||||||||
| Comprehensive income/(loss) | $ | 2,722 | $ | 3,542 | |||||||||||||
| CAMBRIDGE BANCORP | |||||||||||||||
| UNAUDITED CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||
| Nine Months Ended September 30, | |||||||||||||||
| 2014 | 2013 | ||||||||||||||
| (In thousands, except per share data) | |||||||||||||||
| Interest income: | |||||||||||||||
| Interest on loans | $ | 29,843 | $ | 26,006 | |||||||||||
| Interest on taxable investment securities | 5,348 | 7,644 | |||||||||||||
| Interest on tax exempt investment securities | 1,973 | 1,518 | |||||||||||||
| Dividends on FHLB of Boston stock | 72 | 15 | |||||||||||||
| Interest on overnight investments | 32 | 25 | |||||||||||||
| Total interest income | 37,268 | 35,208 | |||||||||||||
| Interest expense: | |||||||||||||||
| Interest on deposits | 1,457 | 1,461 | |||||||||||||
| Interest on borrowed funds | 106 | 200 | |||||||||||||
| Total interest expense | 1,563 | 1,661 | |||||||||||||
| Net interest income | 35,705 | 33,547 | |||||||||||||
| Provision for loan losses | 950 | 1,000 | |||||||||||||
| Net interest income after provision for loan losses | 34,755 | 32,547 | |||||||||||||
| Noninterest income: | |||||||||||||||
| Wealth management income | 13,494 | 11,964 | |||||||||||||
| Deposit account fees | 1,850 | 1,926 | |||||||||||||
| ATM/Debit card income | 928 | 865 | |||||||||||||
| Bank owned life insurance income | 490 | 498 | |||||||||||||
| Gain on disposition of investment securities | 1,073 | 990 | |||||||||||||
| Gain on loans held for sale | 93 | 468 | |||||||||||||
| Other income | 740 | 634 | |||||||||||||
| Total noninterest income | 18,668 | 17,345 | |||||||||||||
| Noninterest expense: | |||||||||||||||
| Salaries and employee benefits | 21,139 | 19,871 | |||||||||||||
| Occupancy and equipment | 6,398 | 6,085 | |||||||||||||
| Data processing | 3,427 | 2,949 | |||||||||||||
| Professional services | 1,419 | 1,313 | |||||||||||||
| Marketing | 1,586 | 1,395 | |||||||||||||
| FDIC Insurance | 592 | 548 | |||||||||||||
| Other expenses | 2,404 | 2,113 | |||||||||||||
| Total noninterest expense | 36,965 | 34,274 | |||||||||||||
| Income before income taxes | 16,458 | 15,618 | |||||||||||||
| Income tax expense | 5,380 | 5,117 | |||||||||||||
| Net income | $ | 11,078 | $ | 10,501 | |||||||||||
| Per share data: | |||||||||||||||
| Basic earnings per common share | $ | 2.82 | $ | 2.71 | |||||||||||
| Diluted earnings per common share | $ | 2.80 | $ | 2.69 | |||||||||||
| Average shares outstanding - basic | 3,881,594 | 3,833,758 | |||||||||||||
| Average shares outstanding - diluted | 3,952,837 | 3,902,447 | |||||||||||||
| CAMBRIDGE BANCORP | |||||||||
| UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||||||||
| Nine Months Ended September 30, | |||||||||
| 2014 | 2013 | ||||||||
| (In thousands) | |||||||||
| Net income | $11,078 | $10,501 | |||||||
| Other comprehensive income/(loss), net of tax: | |||||||||
| Defined benefit retirement plans: | |||||||||
| Change in unfunded retirement liability | (6) | (255) | |||||||
| Unrealized gains/(losses) on Available for | |||||||||
| Sale securities: | |||||||||
| Unrealized holding gains/(losses) arising | |||||||||
| during the period | 2,197 | (7,480) | |||||||
| Less: reclassification adjustment for gains | |||||||||
| recognized in net income | (688) | (635) | |||||||
| Other comprehensive income/(loss) | 1,503 | (8,370) | |||||||
| Comprehensive income/(loss) | $12,581 | $2,131 | |||||||
| CAMBRIDGE BANCORP | |||||||||||||
| UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||
| Nine Months Ended September 30, | |||||||||||||
| 2014 | 2013 | ||||||||||||
| (In thousands) | |||||||||||||
| Cash flows provided by operating activities: | |||||||||||||
| Net income | $ | 11,078 | $ | 10,501 | |||||||||
| Adjustments to arrive at net cash provided by operating activities: | |||||||||||||
| Provision for loan losses | 950 | 1,000 | |||||||||||
| Amortization of deferred charges/(income), net | 896 | 678 | |||||||||||
| Depreciation and amortization | 1,382 | 1,163 | |||||||||||
| Bank owned life insurance income | (490 | ) | (498 | ) | |||||||||
| Gain on disposition of investment securities | (1,073 | ) | (990 | ) | |||||||||
| Compensation expense from stock option | |||||||||||||
| and restricted stock grants | 1,095 | 299 | |||||||||||
| Change in loans held for sale | 230 | 1,684 | |||||||||||
| Change in accrued interest receivable, deferred taxes, | |||||||||||||
| other assets and other liabilities | (445 | ) | 5,154 | ||||||||||
| Other, net | 51 | 54 | |||||||||||
| Net cash provided by operating activities | 13,674 | 19,045 | |||||||||||
| Cash flows used by investing activities: | |||||||||||||
| Origination of loans | (203,217 | ) | (249,747 | ) | |||||||||
| Purchase of: | |||||||||||||
| Investment securities - AFS | (43,741 | ) | (50,544 | ) | |||||||||
| Investment securities - HTM | (23,895 | ) | (1,527 | ) | |||||||||
| Maturities, calls and principal payments of: | |||||||||||||
| Loans | 112,032 | 95,316 | |||||||||||
| Investment securities - AFS | 44,071 | 88,040 | |||||||||||
| Investment securities - HTM | 2,529 | 15,000 | |||||||||||
| Proceeds from sale of investment securities - AFS | 30,011 | 31,107 | |||||||||||
| Purchase of bank owned life insurance | (5,000 | ) | — | ||||||||||
| Decrease/(increase) in FHLB of Boston stock | (1,724 | ) | (1,151 | ) | |||||||||
| Purchase of banking premises and equipment | (14 | ) | (3,994 | ) | |||||||||
| Net cash provided/(used) by investing activities | (88,948 | ) | (77,500 | ) | |||||||||
| Cash flows provided by financing activities: | |||||||||||||
| Net increase/(decrease) in deposits | (100,105 | ) | (23,908 | ) | |||||||||
| Net increase/(decrease) in short-term borrowings | 115,000 | 72,000 | |||||||||||
| Repayment of long-term borrowings | — | (20,000 | ) | ||||||||||
| Proceeds from issuance of common stock | 941 | 982 | |||||||||||
| Repurchase of common stock | (504 | ) | (42 | ) | |||||||||
| Cash dividends paid on common stock | (4,947 | ) | (4,531 | ) | |||||||||
| Net cash provided/(used) by financing activities | 10,385 | 24,501 | |||||||||||
| Net increase/(decrease) in cash and cash equivalents | (64,889 | ) | (33,954 | ) | |||||||||
| Cash and cash equivalents at beginning of period | 88,107 | 59,923 | |||||||||||
| Cash and cash equivalents at end of period | $ | 23,218 | $ | 25,969 | |||||||||
| Supplemental disclosure of cash flow information: | |||||||||||||
| Cash paid for interest | $ | 1,568 | $ | 1,668 | |||||||||
| Cash paid for income taxes | 5,700 | 1,440 | |||||||||||
| Non-cash transactions: | |||||||||||||
| Change in accumulated other comprehensive income, net of taxes | 1,503 | (8,370 | ) | ||||||||||
Contacts:
Albert R. Rietheimer, 617-441-1516
Chief
Financial Officer & Treasurer
