Press Release

Cambridge Bancorp Announces Third Quarter 2017 Earnings and Declares Dividend

Company Release - 10/19/2017 8:45 AM ET

CAMBRIDGE, Mass.--(BUSINESS WIRE)-- Cambridge Bancorp (NASDAQ: CATC) (the “Company”), the parent of Cambridge Trust Company, today announced unaudited net income of $5,010,000 for the third quarter of 2017, representing an increase of $435,000, or 9.5%, compared to net income of $4,575,000 for the same quarter in 2016. Diluted earnings per share were $1.22 for the third quarter of 2017, representing an 8.0% increase over diluted earnings per share of $1.13 for the same quarter in 2016.

For the nine months ended September 30, 2017, unaudited net income was $13,852,000, an increase of $1,379,000, or 11.1%, compared to net income of $12,473,000 for the nine months ended September 30, 2016. Diluted earnings per share were $3.37 for the first nine months of 2017, representing a 9.1% increase over diluted earnings per share of $3.09 for the same period in 2016.

Third quarter 2017 highlights as compared to the third quarter of 2016:

  • Wealth Management Assets under Management and Administration now at $2.9 billion, an increase of 10.0%
  • Revenue of $22.6 million, an increase of 7.0%
  • Loan growth of $43.9 million, or 3.3%
  • Deposit growth of $52.7 million, or 3.2%

“We are pleased to report another quarter of strong earnings growth,” noted Denis K. Sheahan, CEO. “Our strategy of delivering private banking services to our clients continues to position us favorably in the greater Boston market. The Company posted strong profitability metrics for the quarter with annualized return on average assets of 1.05% and annualized return on average shareholders’ equity of 13.84%.”

Balance Sheet

Total assets increased $15.2 million, or 0.8%, from December 31, 2016 and stood at $1.9 billion as of September 30, 2017.

Total loans increased $35.8 million, or 2.7%, from December 31, 2016 and stood at $1.4 billion as of September 30, 2017. The growth in total loans is primarily due to the increase in commercial real estate loans of $15.6 million, from $616.1 million at December 31, 2016 to $631.8 million at September 30, 2017 and the increase in consumer loans of $10.0 million, from $34.9 million at December 31, 2016 to $44.9 million at September 30, 2017.

The Company’s total investment securities portfolio increased by $24.2 million, or 5.9%, from $408.1 million at December 31, 2016 to $432.3 million at September 30, 2017.

Core deposits, which we define as all deposits other than certificates of deposit, increased by $3.1 million, or 0.21%, from December 31, 2016. The cost of total deposits for the nine months ended September 30, 2017 was 0.18%, as compared to 0.21% for the nine months ended September 30, 2016. Total deposits at September 30, 2017 were $1.7 billion, as compared to $1.6 billion at September 30, 2016.

Net Interest and Dividend Income

For the quarter ended September 30, 2017, net interest and dividend income after provision for loan losses increased by $922,000, or 6.9%, to $14.3 million, as compared to $13.4 million for the quarter ended September 30, 2016. Interest on loans increased by $721,000, or 5.8%, primarily driven by the impact of loan growth. The Company’s net interest margin, on a fully tax equivalent basis, increased four basis points to 3.23% for the three months ended September 30, 2017, as compared to 3.19% for the three months ended September 30, 2016.

For the nine months ended September 30, 2017, net interest and dividend income after provision for loan losses, increased by $3.0 million, or 7.7%, to $42.5 million, as compared to $39.4 million for the nine months ended September 30, 2016. Interest on loans increased by $2.3 million, or 6.3%, primarily driven by the impact of loan growth. The Company’s net interest margin, on a fully tax equivalent basis, increased four basis points to 3.24% for the nine months ended September 30, 2017, as compared to 3.20% for the nine months ended September 30, 2016.

Noninterest Income

Total noninterest income increased by $362,000, or 4.8%, to $8.0 million for the quarter ended September 30, 2017, as compared to $7.6 million for the quarter ended September 30, 2016 primarily as a result of increased Wealth Management revenue. Noninterest income was 35.3% of total revenue for the quarter ended September 30, 2017. Wealth Management revenue increased by $650,000, or 11.9%, for the third quarter of 2017, as compared to the third quarter of 2016 due to new business development and market appreciation. Wealth Management Assets under Management increased by $254.2 million, or 9.9%, to $2.8 billion as of September 30, 2017, as compared to $2.6 billion as of December 31, 2016.

Noninterest income increases were partially offset by lower gains on loans held for sale and lower loan related derivative income of $266,000 and $108,000, respectively, for the quarter ended September 30, 2017, as compared to the quarter ended September 30, 2016.

Noninterest Expense

Total noninterest expense increased by $439,000, or 3.1%, to $14.6 million for the quarter ended September 30, 2017, as compared to $14.2 million for the quarter ended September 30, 2016. The increase in salaries and benefits of $446,000 is primarily due to the impact of additional staff to support business initiatives for the quarter ended September 30, 2017, as compared to the quarter ended September 30, 2016. The increase of $300,000 in professional services is mainly due to legal and consulting services primarily related to registration with the U.S. Securities and Exchange Commission for the quarter ended September 30, 2017, as compared to the quarter ended September 30, 2016.

Noninterest expense increases were partially offset by decreases in data processing and lower marketing costs of $168,000 and $108,000, respectively, for the quarter ended September 30, 2017, as compared to September 30, 2016.

Asset Quality

Loan quality remained sound with non-performing loans totaling $1.7 million, or 0.13% of total loans outstanding as of September 30, 2017. The allowance for loan losses was $15.6 million, or 1.15% of total loans outstanding at September 30, 2017, as compared to $15.3 million, or 1.16% of total loans outstanding at year end 2016.

Income Taxes

The effective tax rate was 35.0% for the quarter ended September 30, 2017, as compared to 33.3% for the quarter ended September 30, 2016. For the nine months ended September 30, 2017, the effective tax rate was 33.5%, as compared to 33.2% for the nine months ended September 30, 2016. During the current year, the Company recognized $219,000 of tax benefit resulting from the adoption of new accounting guidance for share-based payments.

Dividend

On October 16, 2017, the Company’s Board of Directors declared a quarterly cash dividend of $0.47 per share, which is payable on November 16, 2017 to shareholders of record as of the close of business on November 2, 2017. This represents an increase of $0.01 as compared to $0.46 declared during the fourth quarter of 2016.

About Cambridge Bancorp

Cambridge Bancorp, the parent company of Cambridge Trust Company, is based in Cambridge, Massachusetts. Cambridge Trust Company is a 127-year-old Massachusetts chartered commercial bank with $1.9 billion in assets and 11 Massachusetts locations in Cambridge, Boston, Belmont, Concord, Lexington and Weston. Cambridge Trust Company is one of New England’s leaders in wealth management with $2.9 billion in client assets under management and administration. The Wealth Management group maintains offices in Boston, Massachusetts and Concord, Manchester and Portsmouth, New Hampshire.

The accompanying unaudited condensed interim and annual consolidated financial information should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Cambridge Bancorp 2016 Annual Report, which is posted in the investor relations section of our website at www.cambridgetrust.com.

Forward-looking Statements

Certain statements herein may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (“PSLRA”). These statements are intended to take advantage of the “safe harbor” provisions of the PSLRA. These statements are based on the beliefs and assumptions of management of the Company and its subsidiaries and on the information available to management at the time that these statements were made. Since these statements reflect the views of management concerning future events, these statements involve risks, uncertainties and assumptions. As a result, actual results may differ from those contemplated by these statements. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. Such statements may be identified by the use of words such as “believe,” “expect,” “anticipate,” “forecast,” “estimate,” “intend,” “will,” “would,” “should,” “could,” “may,” or similar words. There are a number of factors, many of which are beyond the Company’s control that could cause actual conditions, events or results to differ materially from those in the forward-looking statements. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, changes in the interest rate environment, unfavorable or less than favorable changes in general economic conditions (nationally or regionally), our ability to continue to increase loans and deposit growth, increased competitive pressures among depository and other financial institutions, legislative and regulatory changes that adversely affect the businesses in which the Company is engaged, changes in the securities market, and other factors that are described in the Company’s annual report. Readers should not place undue reliance on these forward-looking statements, which speak only as of the date they are made. The Company disclaims any intent or obligation to update any forward-looking statements, whether in response to new information, future events or otherwise, except as may be required by law.

             

CAMBRIDGE BANCORP AND SUBSIDIARIES

UNAUDITED QUARTERLY RESULTS

September 30, 2017

 
Three Months Ended Nine Months Ended
September 30, September 30,
2017       2016 2017       2016
(dollar amounts in thousands, except per share data)
                 
Interest and Dividend Income $ 15,673 $ 14,315 $ 45,447 $ 42,365
Interest Expense   1,034     795   2,617   2,592
Net Interest and Dividend Income 14,639 13,520 42,830 39,773
Provision for Loan Losses 310 113 360 338
Noninterest Income 7,977 7,615 22,649 21,383
Noninterest Expense   14,602   14,163   44,280   42,155
Income Before Taxes 7,704 6,859 20,839 18,663
Income Taxes   2,694   2,284   6,987   6,190
Net Income $ 5,010 $ 4,575 $ 13,852 $ 12,473
 

Data Per Common Share:

Basic Earnings Per Share $ 1.23 $ 1.13 $ 3.40 $ 3.09
Diluted Earnings Per Share $ 1.22 $ 1.13 $ 3.37 $ 3.09
Dividends Declared Per Share $ 0.47 $ 0.46 $ 1.39 $ 1.38
 
Avg. Common Shares Outstanding:
Basic 4,037,026 3,996,687 4,027,378 3,982,696
Diluted 4,070,332 4,043,651 4,062,743 4,029,281
 

Selected Operating Ratios:

Net Interest Margin, FTE 3.23 % 3.19 % 3.24 % 3.20 %
Cost of Funds 0.22 % 0.18 % 0.19 % 0.20 %
Cost of Interest Bearing Liabilities 0.33 % 0.27 % 0.28 % 0.30 %
Cost of Deposits 0.19 % 0.19 % 0.18 % 0.21 %
Return on Average Assets 1.05 % 1.01 % 0.99 % 0.94 %
Return on Average Equity 13.84 % 13.52 % 13.25 % 12.72 %
Efficiency Ratio 64.56 % 67.01 % 67.62 % 68.93 %
 
September 30, December 31, September 30,
2017 2016 2016
 
Total Assets $ 1,864,231 $ 1,848,999 $ 1,801,055
Total Loans 1,355,908 1,320,154 1,312,021
Non-Performing Loans 1,702 1,676 1,574
Allowance for Loan Losses 15,620 15,261 15,537
Allowance to Total Loans 1.15 % 1.16 % 1.18 %
Total Deposits 1,676,918 1,686,038 1,624,264
Total Shareholders’ Equity 146,051 134,671 136,228
Wealth Management AUM $ 2,826,984 $ 2,572,760 $ 2,542,677
Wealth Management AUM & AUA $ 2,932,726 $ 2,689,103 $ 2,665,343
Book Value Per Share $ 35.78 $ 33.36 $ 33.76
 
           

CAMBRIDGE BANCORP AND SUBSIDIARIES

UNAUDITED CONSOLIDATED BALANCE SHEETS

 
September 30, 2017 December 31, 2016
(dollars in thousands, except par value)
Assets
Cash and cash equivalents $ 13,668 $ 54,050
Investment securities
Available for sale, at fair value (amortized cost $215,007 and $329,726, respectively) 212,449 325,641
Held to maturity, at amortized cost (fair value $222,251 and $83,755, respectively)   219,870     82,502  
Total investment securities 432,319 408,143
Loans held for sale, at lower of cost or fair value 560 6,506
Loans
Residential mortgage 537,425 534,404
Commercial mortgage 631,752 616,140
Home equity 76,007 75,051
Commercial & Industrial 65,861 59,706
Consumer   44,863     34,853  
Total loans 1,355,908 1,320,154
Less: allowance for loan losses   (15,620 )   (15,261 )
Net loans 1,340,288 1,304,893
Stock in FHLB of Boston, at cost 4,938 4,098
Bank owned life insurance 30,947 30,499
Banking premises and equipment, net 9,502 10,451
Deferred income taxes, net 13,392 13,693
Accrued interest receivable 4,899 4,627
Other assets   13,718     12,039  
Total assets $ 1,864,231   $ 1,848,999  
Liabilities
Deposits
Demand $ 465,970 $ 472,923
Interest bearing checking 387,343 430,706
Money market 64,232 72,057
Savings 600,475 539,190
Certificates of deposit   158,898     171,162  
Total deposits 1,676,918 1,686,038
Short-term borrowings 11,500
Long-term borrowings 3,621 3,746
Other liabilities   26,141     24,544  
Total liabilities   1,718,180     1,714,328  
Shareholders’ Equity
Common stock, par value $1.00; Authorized 10,000,000 shares; Outstanding: 4,082,188

shares and 4,036,879 shares, respectively

4,082 4,037
Additional paid-in capital 35,435 33,253
Retained earnings 115,048 107,262
Accumulated other comprehensive loss   (8,514 )   (9,881 )
Total shareholders’ equity   146,051     134,671  
Total liabilities and shareholders’ equity $ 1,864,231   $ 1,848,999  
 
             

CAMBRIDGE BANCORP AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

 

Three Months Ended
September 30,

Nine Months Ended
September 30,

2017         2016 2017       2016
(dollars in thousands, except share data)
Interest and dividend income
Interest on taxable loans $ 13,038 $ 12,322 $ 37,966 $ 35,796
Interest on tax-exempt loans 121 116 391 293
Interest on taxable investment securities 1,712 1,115 4,762 3,979
Interest on tax-exempt investment securities 641 688 1,966 2,071
Dividends on FHLB of Boston stock 107 52 192 132
Interest on overnight investments   54   22   170   94
Total interest and dividend income   15,673   14,315   45,447   42,365
Interest expense
Interest on deposits 809 769 2,183 2,526
Interest on borrowed funds   225   26   434   66
Total interest expense   1,034   795   2,617   2,592
Net interest and dividend income 14,639 13,520 42,830 39,773
Provision for loan losses   310   113   360   338
Net interest and dividend income after provision for

loan losses

  14,329   13,407   42,470   39,435
Noninterest income
Wealth management revenue 6,131 5,481 17,077 15,026
Deposit account fees 768 766 2,387 2,134
ATM/Debit card income 334 285 879 852
Bank owned life insurance income 139 149 448 474
Gain (loss) on disposition of investment securities 3 (3 ) 438
Gain on loans held for sale 39 305 324 591
Loan related derivative income 284 392 647 1,191
Other income   282   234   890   677
Total noninterest income   7,977   7,615   22,649   21,383
Noninterest expense
Salaries and employee benefits 9,066 8,620 27,211 25,431
Occupancy and equipment 2,358 2,278 6,936 7,029
Data processing 1,111 1,279 3,830 3,744
Professional services 954 654 2,650 1,857
Marketing 355 463 1,098 1,388
FDIC Insurance 154 176 466 628
Other expenses   604   693   2,089   2,078
Total noninterest expense   14,602   14,163   44,280   42,155
Income before income taxes 7,704 6,859 20,839 18,663
Income tax expense   2,694   2,284   6,987   6,190
Net income $ 5,010 $ 4,575 $ 13,852 $ 12,473
Share data
Weighted average number of shares outstanding, basic 4,037,026 3,996,687 4,027,378 3,982,696
Weighted average number of shares outstanding, diluted 4,070,332 4,043,651 4,062,743 4,029,281
Basic earnings per share $ 1.23 $ 1.13 $ 3.40 $ 3.09
Diluted earnings per share $ 1.22 $ 1.13 $ 3.37 $ 3.09
 
     

CAMBRIDGE BANCORP AND SUBSIDIARIES

MARGIN & YIELD ANALYSIS

 
Three Months Ended
September 30, 2017       September 30, 2016
Average

Balance

      Interest

Income/

Expenses (1)

      Rate

Earned/

Paid (1)

Average

Balance

      Interest

Income/

Expenses (1)

      Rate

Earned/

Paid (1)

(dollars in thousands)
ASSETS    
Interest-earning assets
Loans (2)
Taxable $ 1,330,390 $ 13,038 3.89 % $ 1,279,457 $ 12,322 3.83 %
Tax-exempt 14,950 186 4.94 18,147 179 3.92
Securities available for sale (3)
Taxable 226,164 902 1.58 322,032 1,105 1.37
Securities held to maturity
Taxable 154,129 810 2.08 900 10 4.42
Tax-exempt 80,717 986 4.85 84,235 1,058 5.00
Cash and due from banks   28,863   54   0.74   28,898   22   0.30
Total interest-earning assets (4) 1,835,213 15,976 3.45 % 1,733,669 14,696 3.37 %
Non interest-earning assets 75,753 75,204
Allowance for loan losses   (15,451 )   (15,456 )
Total assets $ 1,895,515 $ 1,793,417
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing deposits
Checking accounts $ 381,652 $ 46 0.05 % $ 365,012 $ 15 0.02 %
Savings accounts 573,332 376 0.26 543,069 346 0.25
Money market accounts 69,437 26 0.15 86,572 33 0.15
Certificates of deposit   164,547   361   0.87   176,412   375   0.85
Total interest-bearing deposits 1,188,968 809 0.27 1,171,065 769 0.26
Other borrowed funds   67,126   225   1.33   8,428   26   1.23
Total interest-bearing liabilities 1,256,094 1,034 0.33 % 1,179,493 795 0.27 %
Non-interest-bearing liabilities
Demand deposits 470,016 455,365
Other liabilities   25,775   23,924
Total liabilities   1,751,885   1,658,782
Shareholders’ equity 143,630 134,635
Total liabilities & shareholders’ equity $ 1,895,515 $ 1,793,417
Net interest income on a fully taxable equivalent basis 14,942 13,901
Less taxable equivalent adjustment   (410 )   (433 )
Net interest income $ 14,532     $ 13,468    
Net interest spread (5)   3.13 %   3.10 %
Net interest margin (6)   3.23 %   3.19 %
 

(1) Annualized on a fully taxable equivalent basis calculated using a federal tax rate of 35%.
(2) Nonaccrual loans are included in average amounts outstanding.
(3) Average balances of securities available for sale calculated utilizing amortized cost.
(4) Federal Home Loan Bank stock balance and dividend income is excluded from interest-earning assets.
(5) Interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.
(6) Net interest margin represents net interest income on a fully tax equivalent basis as a percentage of average interest-earning assets.

     

CAMBRIDGE BANCORP AND SUBSIDIARIES

MARGIN & YIELD ANALYSIS

 
Nine Months Ended
September 30, 2017       September 30, 2016
Average

Balance

      Interest

Income/

Expenses (1)

      Rate

Earned/

Paid (1)

Average

Balance

      Interest

Income/

Expenses (1)

      Rate

Earned/

Paid (1)

(dollars in thousands)
ASSETS    
Interest-earning assets
Loans (2)
Taxable $ 1,312,432 $ 37,966 3.87 % $ 1,230,571 $ 35,796 3.89 %
Tax-exempt 15,917 601 5.05 14,928 450 4.03
Securities available for sale (3)
Taxable 261,106 3,158 1.62 340,355 3,942 1.55
Securities held to maturity
Taxable 101,819 1,604 2.11 1,047 37 4.72
Tax-exempt 82,023 3,024 4.93 82,763 3,186 5.14
Cash and due from banks   35,746   170   0.64   37,514   94   0.33
Total interest-earning assets (4) 1,809,043 46,523 3.44 % 1,707,178 43,505 3.40 %
Non interest-earning assets 73,733 73,801
Allowance for loan losses   (15,352 )   (15,321 )
Total assets $ 1,867,424 $ 1,765,658
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing deposits
Checking accounts $ 395,759 $ 84 0.03 % $ 362,373 $ 66 0.02 %
Savings accounts 557,442 951 0.23 536,182 1,252 0.31
Money market accounts 71,044 79 0.15 78,584 100 0.17
Certificates of deposit   168,136   1,069   0.85   176,123   1,108   0.84
Total interest-bearing deposits 1,192,381 2,183 0.24 1,153,262 2,526 0.29
Other borrowed funds   45,970   434   1.26   6,169   66   1.43
Total interest-bearing liabilities 1,238,351 2,617 0.28 % 1,159,431 2,592 0.30 %
Non-interest-bearing liabilities
Demand deposits 464,217 453,251
Other liabilities   25,032   21,968
Total liabilities   1,727,600   1,634,650
Shareholders’ equity 139,824 131,008
Total liabilities & shareholders’ equity $ 1,867,424 $ 1,765,658
Net interest income on a fully taxable equivalent basis 43,906 40,913
Less taxable equivalent adjustment   (1,268 )   (1,272 )
Net interest income $ 42,638     $ 39,641    
Net interest spread (5)   3.16 %   3.11 %
Net interest margin (6)   3.24 %   3.20 %
 

(1) Annualized on a fully taxable equivalent basis calculated using a federal tax rate of 35%.
(2) Nonaccrual loans are included in average amounts outstanding.
(3) Average balances of securities available for sale calculated utilizing amortized cost.
(4) Federal Home Loan Bank stock balance and dividend income is excluded from interest-earning assets.
(5) Interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.
(6) Net interest margin represents net interest income on a fully tax equivalent basis as a percentage of average interest-earning assets.

Cambridge Bancorp
Michael F. Carotenuto, 617-520-5520
Chief Financial Officer

Source: Cambridge Bancorp