Cambridge Bancorp Announces Record Earnings for Full Year 2014

Cambridge Bancorp (OTCBB: CATC) today announced unaudited net income of $14,944,000 for the year ended December 31, 2014, representing an increase of $804,000, or 5.7%, compared to net income of $14,140,000 for the year ended December 31, 2013. Diluted earnings per share (EPS) were $3.78, a 4.4% increase over diluted earnings per share for the prior year.

“We are pleased to report the Bank delivered another record financial performance for the year of 2014,” noted Joseph V. Roller II, president and CEO. “We are attracting new customers and expanding existing relationships in each of the Bank’s business lines by demonstrating value to the market and executing our growth strategies.”

The Bank experienced a strong year for loan growth with an overall increase of $138.3 million, or 14.7%, for the year. At year-end 2014, the Bank’s loan portfolio was in excess of $1 billion for the first time. Both commercial and residential mortgages showed noteworthy growth for the year, with increases of $78.5 million (21.6%) and $49.0 million (10.7%), respectively. Home equity loans were up $9.9 million (21.3%) for the year ending December 31, 2014 following the introduction of a new home equity line product and a successful marketing campaign.

For the year ended December 31, 2014, net interest income increased by $2.8 million, or 6.2%, to $48.3 million compared to $45.5 million for 2013. Interest on loans increased by $4.8 million, or 13.5%, driven by the full year impact of strong loan growth in 2013. The prolonged low interest rate environment persisted in impacting margins, which have been unfavorable for the industry for some time. The Bank’s net interest margin decreased 2 basis points to 3.33% for the year compared to 3.35% for the year ended December 31, 2013.

The Bank’s loan growth outpaced deposits for the year. The Bank elected to deploy cash flows from its investment portfolio and access short-term borrowings to meet the shortfall between loan funding needs and deposit growth. The Bank’s total investment securities portfolio decreased to $419.4 million from $448.0 million at year-end 2013. The shift in the Bank’s earning asset mix coupled with the lower interest rate environment resulted in a decrease of $2.2 million in interest income on investment securities for the year. Short-term borrowings stood at $69.0 million at year-end 2014.

Noninterest income totaled $24.5 million for the year 2014 compared to $23.2 million for 2013. The Bank’s Wealth Management income accounted for the upswing in total noninterest income for the year. Wealth management income increased by $1.7 million, or 10.4%, to $18.0 million compared to $16.3 million for 2013. Since the beginning of 2014, Wealth Management assets under management (AUM) have increased $150.5 million to $2.3 billion at year-end.

Other contributors to the noninterest income increase were higher ATM/Debit card income of $65,000, higher bank owned life insurance income of $13,000 and higher other income of $64,000. The Bank experienced a continued slowdown in revenue produced by gains on loans sold as mortgage refinancing activity declined. Income from gains on loans sold ended $349,000 lower than last year. In addition, there was a decrease of $151,000 in deposit account fees and a decrease of $48,000 in gains on disposition of investment securities compared to the year ended December 31, 2013.

Noninterest expense increased by $2.9 million, or 6.3%, to $49.0 million for the year ended December 31, 2014. The increase in salaries and benefits for the year of $804,000 is the result of a combination of merit increases and new hires to support business growth, coupled with lower expenses related to our retirement plans. The increase of $347,000 in occupancy and equipment for the year is primarily the result of depreciation and amortization of leasehold improvements. The increase of $555,000 in data processing expense is attributable to increased volumes and new products. The increase of $460,000 in professional services is primarily the result of higher employment agency and legal fees. Other factors contributing to the increase in noninterest expense were higher marketing expense of $295,000, higher FDIC insurance of $54,000 and higher other expenses of $381,000.

Total loans outstanding at year-end 2014 were $1.1 billion compared to $942.5 million at year-end 2013. Loan quality remained sound across consumer and corporate customer bases with non-performing loans totaling $1.6 million at December 31, 2014, a modest decrease of $74,000 compared to the year-end 2013. The Allowance for Loan Losses was $14.3 million, or 1.32%, of total loans outstanding at year-end 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 of $1.6 million during 2014 was $50,000 more than the prior year’s provision. This increase was primarily in response to loan growth during the year.

In the fourth quarter of 2014 unaudited net income was $3,866,000, an increase of 6.2% compared to $3,639,000 for the same quarter in 2013.

“Results for the fourth quarter were highlighted by a favorable increase in net interest income of $648,000, or 5.4%, over the same quarter in 2013,” said Mr. Roller. “Our loan portfolio experienced solid growth, with credit standards holding steady. As the economy continues to improve, we are well-positioned to seize opportunities in the markets and businesses in which we compete.”

Deposit growth did not meet expectations, with total deposits down $38.5 million at year-end 2014 compared to year-end 2013. Total deposits at year-end 2014 were $1.4 billion.

Total assets at year-end 2014 were $1.6 billion versus $1.5 billion year-end 2013.

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 125-year-old Massachusetts chartered commercial bank with $1.6 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 $2.3 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 the Cambridge Bancorp 2014 Annual Report at the same site later this quarter.

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