Press Release

Cambridge Bancorp Announces Record Operating Earnings in 2019 and Declares Increased Dividend

Company Release - 1/22/2020 8:00 AM ET

CAMBRIDGE, Mass.--(BUSINESS WIRE)-- Cambridge Bancorp (NASDAQ: CATC) (the “Company”), the parent of Cambridge Trust Company (“Cambridge Trust”), today announced net income of $25,257,000 for the year ended December 31, 2019, representing an increase of $1,376,000, or 5.8%, compared to net income of $23,881,000 for the year ended December 31, 2018. Diluted earnings per share were $5.37 for 2019, representing a 6.9% decrease over diluted earnings per share of $5.77 for 2018. Net income for 2019 included non-operating expenses of $4.7 million related to costs associated with the Company’s December common stock offering and merger related expenses resulting from the completed merger with Optima Bank & Trust Company (“Optima”) and the pending merger with Wellesley Bancorp, Inc. (“Wellesley”).

Excluding non-operating expenses, operating net income was $29,156,000 for the year ended December 31, 2019, an increase of $5,132,000, or 21.4%, as compared to operating net income of $24,024,000 for 2018. Operating diluted earnings per share were $6.20 for 2019, representing a 7% increase over operating diluted earnings per share of $5.80 for 2018.

For the quarter ended December 31, 2019, net income was $7,109,000, representing an increase of $1,803,000, or 34.0%, as compared to net income of $5,306,000 for the quarter ended December 31, 2018. Diluted earnings per share were $1.42 for the fourth quarter of 2019, representing an increase of 10.9% over diluted earnings per share of $1.28 for the fourth quarter of 2018.

Excluding non-operating expenses, operating net income was $7,922,000 for the quarter ended December 31, 2019, an increase of $2,471,000, or 45.3%, as compared to operating net income of $5,451,000 for 2018. Operating diluted earnings per share were $1.58 for the fourth quarter of 2019, representing a 19.7% increase over operating diluted earnings per share of $1.32 for the fourth quarter in 2018.

In the fourth quarter of 2019, Cambridge Bancorp and Wellesley Bancorp, Inc. (“Wellesley”) entered into a definitive agreement pursuant to which Wellesley will merge with and into the Company in an all-stock transaction that is anticipated to close during the second quarter of 2020. The merger is subject to regulatory approval, approval by the Company’s and Wellesley’s shareholders, and the completion of other customary closing conditions. Wellesley shareholders will receive 0.580 shares of the Company’s common stock for each share of Wellesley stock they own on the effective date of the merger. This strategically compelling merger is expected to enhance and expand the Company’s Greater Boston presence with the addition of Wellesley’s six full service banking offices in the Norfolk, Middlesex, and Suffolk Counties of Massachusetts.

2019 Highlights as Compared to 2018:

  • Revenue of $115.1 million, an increase of 19.2%
  • Wealth Management AUM & AUA growth of $576.2 million, or 20.0%
  • Organic loan growth of $191.6 million, or 12.3%
  • Organic core deposit growth of $172.0 million, or 10.2%

“Over the past year, Cambridge Trust has made great strides in laying the foundation for many years to come with the expansion of our markets in New Hampshire and Massachusetts following the merger with Optima and the announced merger with Wellesley, respectively,” noted Denis K. Sheahan, Chairman and CEO. “Added to these accomplishments was solid organic growth in loans, deposits, wealth assets, and operating earnings in 2019. The capital raised in December will allow the Cambridge Trust to take advantage of the growth opportunity ahead.”

Balance Sheet

Inclusive of the merger with Optima and organic growth, total assets increased $754.2 million, or 35.9%, from December 31, 2018 and were $2.9 billion as of December 31, 2019.

Cash and cash equivalents increased $42.9 million from December 31, 2018 and were $61.3 million as of December 31, 2019.

Inclusive of the merger with Optima and organic growth, total loans increased $667.0 million, or 42.8%, from December 31, 2018 and stood at $2.2 billion as of December 31, 2019.

  • Residential real estate loans increased $313.2 million from $604.3 million at December 31, 2018 to $917.6 million at December 31, 2019.
  • Commercial real estate loans increased $302.6 million, from $758.0 million at December 31, 2018 to $1.1 billion at December 31, 2019.
  • Commercial & industrial loans increased $39.5 million from $93.7 million at December 31, 2018 to $133.2 million at December 31, 2019.

A table is included accompanying this release to provide detail of organic loan and deposit growth.

Organic loan growth:

  • Commercial real estate loans increased $188.3 million, or 24.8%, from December 31, 2018.
  • Commercial and industrial loans increased $9.3 million, or 9.9%, from December 31, 2018.
  • Residential mortgage loans decreased $1.3 million from December 31, 2018. During the fourth quarter of 2019, the Company sold a pool of residential mortgages totaling $37.4 million. The Company had total loan pool sales of $74.4 million of residential mortgages in 2019. Excluding the loan pools sold, residential real estate loans had organic growth of $73.1 million.

The Company’s total investment securities portfolio decreased by $52.5 million, or 11.6%, from $451.0 million at December 31, 2018 to $398.5 million at December 31, 2019, as cash flows were used to reduce wholesale funding.

Total deposits grew by $547.5 million, or 30.2%, to $2.4 billion at December 31, 2019, from $1.8 billion at December 31, 2018, primarily driven by a combination of the impact of the Optima merger and organic core deposit growth.

  • Core deposits, which the Company defines as all deposits other than certificates of deposit, increased by $486.6 million, or 28.8%, to $2.2 billion from $1.7 billion at December 31, 2018.
  • Excluding the impact of the Optima merger, organic growth in core deposits was $172.0 million, or 10.2%, at December 31, 2019. Growth in core deposits during 2019 was attributable to successful deposit campaigns, as we strived to attract and deepen client relationships.
  • The cost of total deposits for the quarter ended December 31, 2019 was 0.68%, as compared to 0.38% for the quarter ended December 31, 2018, driven by the impact of higher deposit rates associated with the Optima merger and promotional deposit campaigns throughout the year to attract and deepen client relationships. The cost of total deposits for the year ended December 31, 2019 was 0.70%, as compared to 0.28% for the same period in 2018, driven by the impact of higher deposit rates associated with the Optima merger and the promotional deposit campaigns described above.

Certificates of deposit, which totaled $182.3 million at December 31, 2019, increased by $60.9 million from $121.4 million at December 31, 2018, primarily due to the merger with Optima. Total brokered certificates of deposit, which are included within certificates of deposit, were $7.1 million and $27.5 million at December 31, 2019 and December 31, 2018, respectively.

Short-term borrowings were $135.7 million as of December 31, 2019 representing a $45.7 million, or 50.8%, increase from $90.0 million at December 31, 2018.

Net Interest and Dividend Income

For the quarter ended December 31, 2019, net interest and dividend income before provision for loan losses increased by $5.2 million, or 31.7%, to $21.6 million, as compared to $16.4 million for the quarter ended December 31, 2018, primarily due to loan growth, both organic and as a result of the Optima merger.

  • Interest on loans increased by $7.9 million, or 50.6%, primarily due to organic and loan growth related to the Optima merger.
  • Interest on deposits increased $2.4 million, or 139.6%, due to an increase in cost of deposits combined with organic and deposit growth related to the Optima merger.

The Company’s net interest margin, on a fully taxable equivalent basis, decreased 13 basis points to 3.19% for the quarter ended December 31, 2019, as compared to 3.32% for the quarter ended December 31, 2018.

For the year ended December 31, 2019, net interest and dividend income before provision for loan losses increased by $15.1 million, or 23.8%, to $78.7 million, as compared to $63.6 million for the year ended December 31, 2018. The Company’s net interest margin, on a fully taxable equivalent basis, decreased 11 basis points to 3.22% for the year ended December 31, 2019, as compared to 3.33% for the year ended December 31, 2018.

  • Interest on loans increased by $26.7 million, or 45.7%, primarily due to organic and loan growth related to the Optima merger.
  • Interest on deposits increased $10.6 million, or 211.4%, due to an increase in cost of deposits combined with organic and merger related deposit growth.

Provision for Loan Losses

The provision for loan losses for the quarter ended December 31, 2019 was $331,000, as compared to $715,000 for the quarter ended December 31, 2018. For 2019, the provision for loan losses was $3.0 million, representing an increase of $1.5 million compared to 2018. The increase is the result of strong loan growth and a $1.2 million charge-off on an acquired commercial real estate loan during the third quarter of 2019.

Noninterest Income

Total noninterest income increased by $1.9 million, or 23.6%, to $9.9 million for the quarter ended December 31, 2019, as compared to $8.0 million for the quarter ended December 31, 2018, primarily as a result of higher Wealth Management revenue, higher gains on loans sold and higher loan prepayment income, which was partially offset by lower loan related derivative income. Noninterest income was 31.5% of total revenue for the quarter ended December 31, 2019.

  • Wealth Management revenue increased by $776,000, or 12.6%, for the fourth quarter of 2019, as compared to the fourth quarter of 2018, due to higher assets under management. Wealth management assets under management and administration increased by $576.2 million, or 20.0% to $3.5 billion as of December 31, 2019, as compared to $2.9 billion as of December 31, 2018, primarily as a result of increases in the equity markets during the year.
  • Gain on loans sold increased by $662,000, as compared to the fourth quarter of 2018, due to the sale of a residential mortgage pool of $37.4 million during the quarter.
  • Other income increased $673,000 during the fourth quarter of 2019 primarily as a result of higher loan prepayment income during the quarter.
  • Loan related derivative income decreased $328,000 for the fourth quarter of 2019, as compared to the fourth quarter of 2018, due to lower volume of loan related derivative transactions executed in the fourth quarter of 2019.

Total noninterest income increased by $3.4 million, or 10.3%, to $36.4 million for the year ended December 31, 2019, as compared to $33.0 million for the year ended December 31, 2018, primarily as a result of higher Wealth Management revenue, higher gains on loans sold and higher other income. Noninterest income was 31.6% of total revenue for year ended December 31, 2019.

  • Wealth Management revenue increased by $1.3 million, or 5.2%, for the year ended December 31, 2019, as compared to the year ended December 31, 2018, due to higher average assets under management during the period.
  • Gain on loans sold increased by $1.1 million as compared to the same period in 2018 primarily due to the sale of residential mortgage pools totaling $74.4 million during 2019.
  • Other income increased $658,000 during the year ended 2019 primarily as a result of higher loan prepayment income during the year.

Noninterest Expense

Total noninterest expense increased by $4.6 million, or 27.2%, to $21.4 million for the quarter ended December 31, 2019, as compared to $16.8 million for the quarter ended December 31, 2018, driven by an increase in non-operating expense, salaries and employee benefit expense, occupancy and equipment expense, data processing fees, and professional service fees. The increase to noninterest expense was partially offset by lower marketing, and FDIC insurance expenses.

  • Non-operating expense increases of $640,000 were primarily the result of merger expenses associated with Wellesley combined with professional service and legal expenses associated with the December 2019 equity offering.
  • Salaries and employee benefit expense increases of $2.8 million were driven by the merger with Optima, increased staffing to support business initiatives, and higher employee benefit costs.
  • Occupancy and equipment expense increases of $706,000 were due to the merger with Optima and additional office space in Boston, MA.
  • Professional services expense increases of $431,000 were primarily the result of added consulting costs and temporary staffing.
  • Data processing expense increases of $371,000 were primarily the result of the merger with Optima and investments made in technology.

Total noninterest expense increased by $14.2 million, or 22.2%, to $78.2 million for the year ended December 31, 2019, as compared to $64.0 million for the year ended December 31, 2018, primarily driven by an increase in non-operating expenses, salaries and employee benefit expense, occupancy and equipment expense, data processing fees, and professional service fees. The increase to noninterest expense was partially offset by lower marketing, and FDIC insurance expenses.

  • Non-operating expense of $4.7 million were primarily related to professional fees, compensation and severance payments, and contract termination costs associated with the Optima merger combined with expenses associated with the pending Wellesley merger and the December 2019 equity offering.
  • Salaries and employee benefit increases of $6.3 million were primarily the result of the merger with Optima, increased staffing to support business initiatives, and higher employee benefit costs.
  • Occupancy and equipment expense increases of $1.8 million were primarily due to the merger with Optima and additional office space in Boston, Massachusetts.
  • Data processing expense increases of $1.1 million were primarily due to increased transaction volume related to the merger with Optima and investments made in technology.

Asset Quality

Non-performing loans totaling $5.7 million, or 0.25% of total loans outstanding as of December 31, 2019, included $2.5 million attributed to a non-performing acquired commercial real estate loan. The allowance for loan losses was $18.2 million, or 0.82% of total loans outstanding at December 31, 2019, compared to $16.8 million, or 1.08% of total loans outstanding at year end 2018. The decrease in the allowance to loans ratio during 2019 was primarily due to the impact of loans acquired in connection with the Optima merger. During the fourth quarter of 2019, the Company recorded $185,000 in net loan charge-offs. Net loan charge-offs were $1.6 million for the year ended 2019.

Income Taxes

The Company’s effective tax rate was 27.3% for the quarter ended December 31, 2019, as compared to 23.0% for the quarter ended December 31, 2018, primarily driven by the costs associated with the pending Wellesley and the equity offering. For the year ended December 31, 2019, the effective tax rate was 25.5%, as compared to 23.2% for the year ended December 31, 2018.

Capital & Dividend

The Company’s total shareholders’ equity to total assets ratio increased 26.3%, to 10.04%, as of December 31, 2019, as compared to 7.95% as of December 31, 2018. The Company completed an equity offering during the fourth quarter of 2019 and issued 550,850 shares of common stock, and received proceeds of $38.2 million net of underwriting fees. We expect to use the net proceeds from this offering for general corporate purposes, including funding organic growth and potential acquisitions.

On January 21, 2020, the Company’s Board of Directors declared a quarterly cash dividend of $0.53 per share, which is payable on February 20, 2020 to shareholders of record as of the close of business on February 6, 2020. This represents an increase of $0.02, as compared to the $0.51 dividend paid in same quarter of 2019.

The Company’s ratio of tangible common equity to tangible assets increased 12.6%, to 8.93%, at December 31, 2019 from 7.93% at December 31, 2018, primarily due to receipt of proceeds in the capital offering, partially offset by growth and the impact of goodwill and acquisition related intangibles recorded as a result of the merger with Optima. Tangible book value per share grew by $6.09, or 15.0%, to $46.66 as of December 31, 2019, as compared to $40.57 as of December 31, 2018.

About Cambridge Bancorp

Cambridge Bancorp, the parent company of Cambridge Trust Company, is based in Cambridge, Massachusetts. Cambridge Trust Company is a 129-year-old Massachusetts chartered commercial bank with approximately $2.9 billion in assets and a total of 16 banking offices in Massachusetts and New Hampshire. Cambridge Trust Company is one of New England’s leaders in private banking and wealth management with $3.5 billion in client assets under management and administration. The Wealth Management group maintains offices in Boston, Massachusetts; 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 Company’s Annual Report on Form 10-K, which is posted in the investor relations section of the Company’s website at www.cambridgetrust.com.

Forward-looking Statements

Certain statements herein may constitute “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements about the Company and its industry involve substantial risks and uncertainties. Statements other than statements of current or historical fact, including statements regarding the Company’s future financial condition, results of operations, business plans, liquidity, cash flows, projected costs, and the impact of any laws or regulations applicable to the Company, are forward-looking statements. Words such as “anticipates,” “believes,” “estimates,” “expects,” “forecasts,” “intends,” “plans,” “projects,” “may,” “will,” “should,” and other similar expressions are intended to identify these forward-looking statements. Such statements are subject to factors that could cause actual results to differ materially from anticipated results. Such factors include, but are not limited to, the following: economic conditions being less favorable than expected, disruptions to the credit and financial markets, changes in the Company’s accounting policies or in accounting standards, weakness in the real estate market, legislative, regulatory or accounting changes that adversely affect the Company’s business and/or competitive position, the Dodd-Frank Act’s consumer protection regulations, challenges from the integration of the Company and Optima resulting in the combined business not operating as effectively as expected, disruptions in the Company’s ability to access the capital markets, the businesses of the Company and Wellesley may not be combined successfully, or such combination may take longer than expected, the cost savings of the merger with Wellesley may not be fully realized or may take longer to realize than expected, operating costs, customer loss and business disruption following the Wellesley merger, including adverse effects on relationships with employees, may be greater than expected, governmental approvals of the merger with Wellesley may not be obtained, or adverse regulatory conditions may be imposed in connection with governmental approvals of the merger, the shareholders of the Company and Wellesley may fail to approve the merger, and other factors that are described in the Company’s filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year end December 31, 2018, which the Company filed on March 18, 2019. The Company does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements. You are cautioned not to place undue reliance on these forward-looking statements.

Non-GAAP Measures

This press release contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (“GAAP”). This information includes operating net income and operating diluted earnings per share, tangible book value per share and the tangible common equity ratio, and return on average assets and return on average equity on an operating basis.

Operating net income and operating diluted earnings per share exclude items that management believes are unrelated to its core banking business such as merger and acquisition expenses, gain (loss) on sale of investment securities, and other items. The Company’s management uses operating net income and operating diluted earnings per share to measure the strength of the Company’s core banking business and to identify trends that may to some extent be obscured by such excluded gains or losses.

Management also supplements its evaluation of financial performance with analysis of tangible book value per share (which is computed by dividing stockholders’ equity less goodwill and acquisition related intangible assets, or “tangible common equity,” by common shares outstanding), the tangible common equity ratio (which is computed by dividing tangible common equity by tangible assets, defined as total assets less goodwill and acquisition related intangibles) and with analysis of return on average assets and return on average common equity on an operating basis. The Company has included information on tangible book value per share, the tangible common equity ratio, and return on average assets and return on average common equity on an operating basis because management believes that investors may find it useful to have access to the same analytical tool used by management. As a result of merger and acquisition activity, the Company has recognized goodwill and other intangible assets in conjunction with business combination accounting principles. Excluding the impact of goodwill and other intangibles in measuring asset and capital values for the ratios provided, along with other bank standard capital ratios, provides a framework to compare the capital adequacy of the Company to other companies in the financial services industry.

These non-GAAP measures should not be viewed as a substitute for operating results and other financial measures determined in accordance with GAAP. An item which management deems to be non-core and excludes when computing these non-GAAP measures can be of substantial importance to the Company’s results for any particular quarter or year. The Company’s non-GAAP performance measures, including operating net income, operating diluted earnings per share, tangible book value per share, the tangible common equity ratio, and return on average assets and return on average equity on an operating basis are not necessarily comparable to non-GAAP performance measures which may be presented by other companies.

Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are presented under “GAAP to Non-GAAP Reconciliations.”

CAMBRIDGE BANCORP AND SUBSIDIARIES

UNAUDITED QUARTERLY RESULTS

 

 

 

Three Months Ended

 

 

Twelve Months Ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

(dollars in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and Dividend Income

 

$

26,415

 

 

$

18,385

 

 

$

96,339

 

 

$

69,055

 

Interest Expense

 

 

4,807

 

 

 

1,975

 

 

 

17,643

 

 

 

5,467

 

Net Interest and Dividend Income

 

 

21,608

 

 

 

16,410

 

 

 

78,696

 

 

 

63,588

 

Provision for Loan Losses

 

 

331

 

 

 

715

 

 

 

3,004

 

 

 

1,502

 

Noninterest Income

 

 

9,933

 

 

 

8,038

 

 

 

36,401

 

 

 

32,989

 

Noninterest Expense

 

 

21,428

 

 

 

16,842

 

 

 

78,175

 

 

 

63,987

 

Income Before Income Taxes

 

 

9,782

 

 

 

6,891

 

 

 

33,918

 

 

 

31,088

 

Income Tax Expense

 

 

2,673

 

 

 

1,585

 

 

 

8,661

 

 

 

7,207

 

Net Income

 

$

7,109

 

 

$

5,306

 

 

$

25,257

 

 

$

23,881

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Net Income*

 

$

7,922

 

 

$

5,451

 

 

$

29,156

 

 

$

24,024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Data Per Common Share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic Earnings Per Share

 

$

1.43

 

 

$

1.29

 

 

$

5.41

 

 

$

5.82

 

Diluted Earnings Per Share

 

 

1.42

 

 

 

1.28

 

 

 

5.37

 

 

 

5.77

 

Operating Diluted Earnings Per Share*

 

 

1.58

 

 

 

1.32

 

 

 

6.20

 

 

 

5.80

 

Dividends Declared Per Share

 

 

0.51

 

 

 

0.50

 

 

 

2.04

 

 

 

1.96

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Avg. Common Shares Outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

4,939,973

 

 

 

4,065,681

 

 

 

4,629,255

 

 

 

4,061,529

 

Diluted

 

 

4,980,439

 

 

 

4,102,546

 

 

 

4,661,720

 

 

 

4,098,633

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selected Performance Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Interest Margin, FTE

 

 

3.19

%

 

 

3.32

%

 

 

3.22

%

 

 

3.33

%

Cost of Funds

 

 

0.71

%

 

 

0.40

%

 

 

0.72

%

 

 

0.28

%

Cost of Interest Bearing Liabilities

 

 

1.01

%

 

 

0.59

%

 

 

1.01

%

 

 

0.43

%

Cost of Deposits

 

 

0.68

%

 

 

0.38

%

 

 

0.70

%

 

 

0.28

%

Cost of Deposits excluding Wholesale Deposits

 

 

0.68

%

 

 

0.36

%

 

 

0.67

%

 

 

0.25

%

Return on Average Assets

 

 

0.98

%

 

 

1.04

%

 

 

0.97

%

 

 

1.21

%

Return on Average Earning Assets

 

 

1.05

%

 

 

1.07

%

 

 

1.03

%

 

 

1.24

%

Return on Average Equity

 

 

11.08

%

 

 

12.95

%

 

 

11.40

%

 

 

15.35

%

Efficiency Ratio

 

 

67.94

%

 

 

68.89

%

 

 

67.92

%

 

 

66.25

%

Operating Efficiency Ratio*

 

 

65.27

%

 

 

68.07

%

 

 

63.78

%

 

 

66.05

%

Operating Return on Tang Common Equity*

 

 

14.29

%

 

 

13.34

%

 

 

14.80

%

 

 

15.49

%

Operating Return on Average Assets*

 

 

1.10

%

 

 

1.06

%

 

 

1.12

%

 

 

1.21

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

 

December 31,

 

 

 

 

 

 

 

 

 

 

 

2019

 

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Assets

 

 

 

 

 

 

 

 

 

$

2,855,563

 

 

$

2,101,384

 

Total Loans

 

 

 

 

 

 

 

 

 

 

2,226,728

 

 

 

1,559,772

 

Non-Performing Loans

 

 

 

 

 

 

 

 

 

 

5,651

 

 

 

642

 

Allowance for Loan Losses

 

 

 

 

 

 

 

 

 

 

18,180

 

 

 

16,768

 

Allowance to Total Loans

 

 

 

 

 

 

 

 

 

 

0.82

%

 

 

1.08

%

Total Deposits

 

 

 

 

 

 

 

 

 

 

2,358,878

 

 

 

1,811,410

 

Total Shareholders’ Equity

 

 

 

 

 

 

 

 

 

 

286,561

 

 

 

167,026

 

Total Shareholders’ Equity to Total Assets

 

 

 

 

 

 

 

 

 

 

10.04

%

 

 

7.95

%

Wealth Management AUM

 

 

 

 

 

 

 

 

 

 

3,287,371

 

 

 

2,759,547

 

Wealth Management AUM & AUA

 

 

 

 

 

 

 

 

 

 

3,452,852

 

 

 

2,876,702

 

Book Value Per Share

 

 

 

 

 

 

 

 

 

$

53.06

 

 

$

40.67

 

Tangible Common Equity Ratio*

 

 

 

 

 

 

 

 

 

 

8.93

%

 

 

7.93

%

Tangible Book Value Per Share*

 

 

 

 

 

 

 

 

 

$

46.66

 

 

$

40.57

 

*See GAAP to Non-GAAP Reconciliations.

 

CAMBRIDGE BANCORP AND SUBSIDIARIES

UNAUDITED CONSOLIDATED BALANCE SHEETS

 

 

 

December 31, 2019

 

 

December 31, 2018

 

 

 

(dollars in thousands, except par value)

 

Assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

61,335

 

 

$

18,473

 

Investment securities

 

 

 

 

 

 

 

 

Available for sale, at fair value (amortized cost $141,109 and $172,290, respectively)

 

 

140,330

 

 

 

168,163

 

Held to maturity, at amortized cost (fair value $264,114 and $281,310, respectively)

 

 

258,172

 

 

 

282,869

 

Total investment securities

 

 

398,502

 

 

 

451,032

 

Loans held for sale, at lower of cost or fair value

 

 

1,546

 

 

 

 

Loans

 

 

 

 

 

 

 

 

Residential mortgage

 

 

917,566

 

 

 

604,331

 

Commercial mortgage

 

 

1,060,574

 

 

 

757,957

 

Home equity

 

 

80,675

 

 

 

69,336

 

Commercial & Industrial

 

 

133,236

 

 

 

93,712

 

Consumer

 

 

34,677

 

 

 

34,436

 

Total loans

 

 

2,226,728

 

 

 

1,559,772

 

Less: allowance for loan losses

 

 

(18,180

)

 

 

(16,768

)

Net loans

 

 

2,208,548

 

 

 

1,543,004

 

Federal Home Loan Bank of Boston Stock, at cost

 

 

7,854

 

 

 

6,844

 

Bank owned life insurance

 

 

37,319

 

 

 

30,933

 

Banking premises and equipment, net

 

 

14,756

 

 

 

8,578

 

Right-of-use asset operating leases

 

 

33,587

 

 

 

 

Deferred income taxes, net

 

 

8,229

 

 

 

8,717

 

Accrued interest receivable

 

 

7,052

 

 

 

5,762

 

Goodwill

 

 

31,206

 

 

 

412

 

Merger related intangibles, net

 

 

3,338

 

 

 

 

Other assets

 

 

42,291

 

 

 

27,629

 

Total assets

 

$

2,855,563

 

 

$

2,101,384

 

Liabilities

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

Demand

 

$

630,593

 

 

$

494,492

 

Interest bearing checking

 

 

450,098

 

 

 

431,702

 

Money market

 

 

181,406

 

 

 

135,585

 

Savings

 

 

914,499

 

 

 

628,212

 

Certificates of deposit

 

 

182,282

 

 

 

121,419

 

Total deposits

 

 

2,358,878

 

 

 

1,811,410

 

Short-term borrowings

 

 

135,691

 

 

 

90,000

 

Long-term borrowings

 

 

 

 

 

3,409

 

Operating lease liabilities

 

 

35,054

 

 

 

 

Other liabilities

 

 

39,379

 

 

 

29,539

 

Total liabilities

 

 

2,569,002

 

 

 

1,934,358

 

Shareholders’ Equity

 

 

 

 

 

 

 

 

Common stock, par value $1.00; Authorized: 10,000,000 shares; Outstanding: 5,400,868 shares and 4,107,051 shares, respectively

 

 

5,401

 

 

 

4,107

 

Additional paid-in capital

 

 

136,766

 

 

 

38,271

 

Retained earnings

 

 

146,875

 

 

 

131,135

 

Accumulated other comprehensive loss

 

 

(2,481

)

 

 

(6,487

)

Total shareholders’ equity

 

 

286,561

 

 

 

167,026

 

Total liabilities and shareholders’ equity

 

$

2,855,563

 

 

$

2,101,384

 

CAMBRIDGE BANCORP AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

 

 

 

Three Months Ended
December 31,

 

 

Twelve Months Ended
December 31,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

(dollars in thousands, except share data)

 

Interest and dividend income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest on taxable loans

 

$

23,463

 

 

$

15,623

 

 

$

84,382

 

 

$

57,941

 

Interest on tax-exempt loans

 

 

199

 

 

 

92

 

 

 

584

 

 

 

371

 

Interest on taxable investment securities

 

 

1,889

 

 

 

1,887

 

 

 

7,963

 

 

 

7,457

 

Interest on tax-exempt investment securities

 

 

580

 

 

 

587

 

 

 

2,289

 

 

 

2,404

 

Dividends on FHLB of Boston stock

 

 

109

 

 

 

85

 

 

 

390

 

 

 

287

 

Interest on overnight investments

 

 

175

 

 

 

111

 

 

 

731

 

 

 

595

 

Total interest and dividend income

 

 

26,415

 

 

 

18,385

 

 

 

96,339

 

 

 

69,055

 

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest on deposits

 

 

4,152

 

 

 

1,733

 

 

 

15,641

 

 

 

5,023

 

Interest on borrowed funds

 

 

655

 

 

 

242

 

 

 

2,002

 

 

 

444

 

Total interest expense

 

 

4,807

 

 

 

1,975

 

 

 

17,643

 

 

 

5,467

 

Net interest and dividend income

 

 

21,608

 

 

 

16,410

 

 

 

78,696

 

 

 

63,588

 

Provision for Loan Losses

 

 

331

 

 

 

715

 

 

 

3,004

 

 

 

1,502

 

Net interest and dividend income after provision for loan losses

 

 

21,277

 

 

 

15,695

 

 

 

75,692

 

 

 

62,086

 

Noninterest income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wealth management revenue

 

 

6,923

 

 

 

6,147

 

 

 

26,499

 

 

 

25,191

 

Deposit account fees

 

 

790

 

 

 

765

 

 

 

3,185

 

 

 

3,071

 

ATM/Debit card income

 

 

367

 

 

 

305

 

 

 

1,413

 

 

 

1,180

 

Bank owned life insurance income

 

 

158

 

 

 

133

 

 

 

612

 

 

 

526

 

Gain (loss) on disposition of investment securities

 

 

 

 

 

 

 

 

(79

)

 

 

2

 

Gain on loans sold

 

 

679

 

 

 

17

 

 

 

1,170

 

 

 

99

 

Loan related derivative income

 

 

103

 

 

 

431

 

 

 

1,674

 

 

 

1,651

 

Other income

 

 

913

 

 

 

240

 

 

 

1,927

 

 

 

1,269

 

Total noninterest income

 

 

9,933

 

 

 

8,038

 

 

 

36,401

 

 

 

32,989

 

Noninterest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

13,141

 

 

 

10,370

 

 

 

47,494

 

 

 

41,212

 

Occupancy and equipment

 

 

3,042

 

 

 

2,336

 

 

 

10,855

 

 

 

9,072

 

Data processing

 

 

1,700

 

 

 

1,329

 

 

 

6,232

 

 

 

5,177

 

Professional services

 

 

1,212

 

 

 

781

 

 

 

3,623

 

 

 

3,258

 

Marketing

 

 

585

 

 

 

860

 

 

 

1,760

 

 

 

2,229

 

FDIC insurance

 

 

(78

)

 

 

137

 

 

 

291

 

 

 

574

 

Nonoperating expenses

 

 

841

 

 

 

201

 

 

 

4,721

 

 

 

201

 

Other expenses

 

 

985

 

 

 

828

 

 

 

3,199

 

 

 

2,264

 

Total noninterest expense

 

 

21,428

 

 

 

16,842

 

 

 

78,175

 

 

 

63,987

 

Income before income taxes

 

 

9,782

 

 

 

6,891

 

 

 

33,918

 

 

 

31,088

 

Income tax expense

 

 

2,673

 

 

 

1,585

 

 

 

8,661

 

 

 

7,207

 

Net income

 

$

7,109

 

 

 

5,306

 

 

$

25,257

 

 

$

23,881

 

Share data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding, basic

 

 

4,939,973

 

 

 

4,065,681

 

 

 

4,629,255

 

 

 

4,061,529

 

Weighted average number of shares outstanding, diluted

 

 

4,980,439

 

 

 

4,102,546

 

 

 

4,661,720

 

 

 

4,098,633

 

Basic earnings per share

 

$

1.43

 

 

$

1.29

 

 

$

5.41

 

 

$

5.82

 

Diluted earnings per share

 

$

1.42

 

 

$

1.28

 

 

$

5.37

 

 

$

5.77

 

CAMBRIDGE BANCORP AND SUBSIDIARIES

MARGIN & YIELD ANALYSIS

 

 

 

Three Months Ended

 

 

 

December 31, 2019

 

 

December 31, 2018

 

 

 

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

 

$

2,201,984

 

 

$

23,463

 

 

 

4.23

%

 

$

1,477,038

 

 

$

15,623

 

 

 

4.20

%

Tax-exempt

 

 

25,344

 

 

 

253

 

 

 

3.96

 

 

 

9,799

 

 

 

116

 

 

 

4.70

 

Securities available for sale (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

147,852

 

 

 

722

 

 

 

1.94

 

 

 

177,090

 

 

 

753

 

 

 

1.69

 

Securities held to maturity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

187,584

 

 

 

1,167

 

 

 

2.47

 

 

 

194,914

 

 

 

1,134

 

 

 

2.31

 

Tax-exempt

 

 

78,172

 

 

 

734

 

 

 

3.73

 

 

 

75,509

 

 

 

743

 

 

 

3.90

 

Cash and cash equivalents

 

 

57,036

 

 

 

175

 

 

 

1.22

 

 

 

35,122

 

 

 

111

 

 

 

1.25

 

Total interest-earning assets (4)

 

 

2,697,972

 

 

 

26,514

 

 

 

3.90

%

 

 

1,969,472

 

 

 

18,480

 

 

 

3.72

%

Non interest-earning assets

 

 

188,557

 

 

 

 

 

 

 

 

 

 

 

78,638

 

 

 

 

 

 

 

 

 

Allowance for loan losses

 

 

(18,373

)

 

 

 

 

 

 

 

 

 

 

(16,318

)

 

 

 

 

 

 

 

 

Total assets

 

$

2,868,156

 

 

 

 

 

 

 

 

 

 

$

2,031,792

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Checking accounts

 

$

427,475

 

 

$

121

 

 

 

0.11

%

 

$

392,816

 

 

$

81

 

 

 

0.08

%

Savings accounts

 

 

916,575

 

 

 

2,420

 

 

 

1.05

 

 

 

637,434

 

 

 

993

 

 

 

0.62

 

Money market accounts

 

 

216,858

 

 

 

678

 

 

 

1.24

 

 

 

136,923

 

 

 

336

 

 

 

0.97

 

Certificates of deposit

 

 

204,654

 

 

 

933

 

 

 

1.81

 

 

 

117,165

 

 

 

323

 

 

 

1.09

 

Total interest-bearing deposits

 

 

1,765,562

 

 

 

4,152

 

 

 

0.93

 

 

 

1,284,338

 

 

 

1,733

 

 

 

0.54

 

Other borrowed funds

 

 

125,368

 

 

 

655

 

 

 

2.07

 

 

 

38,375

 

 

 

242

 

 

 

2.50

 

Total interest-bearing liabilities

 

 

1,890,930

 

 

 

4,807

 

 

 

1.01

%

 

 

1,322,713

 

 

 

1,975

 

 

 

0.59

%

Non-interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

 

645,807

 

 

 

 

 

 

 

 

 

 

 

521,993

 

 

 

 

 

 

 

 

 

Other liabilities

 

 

76,876

 

 

 

 

 

 

 

 

 

 

 

24,500

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

2,613,613

 

 

 

 

 

 

 

 

 

 

 

1,869,206

 

 

 

 

 

 

 

 

 

Shareholders’ equity

 

 

254,543

 

 

 

 

 

 

 

 

 

 

 

162,586

 

 

 

 

 

 

 

 

 

Total liabilities & shareholders’ equity

 

$

2,868,156

 

 

 

 

 

 

 

 

 

 

$

2,031,792

 

 

 

 

 

 

 

 

 

Net interest income on a fully taxable equivalent basis

 

 

 

 

 

 

21,707

 

 

 

 

 

 

 

 

 

 

 

16,505

 

 

 

 

 

Less taxable equivalent adjustment

 

 

 

 

 

 

(208

)

 

 

 

 

 

 

 

 

 

 

(180

)

 

 

 

 

Net interest income

 

 

 

 

 

$

21,499

 

 

 

 

 

 

 

 

 

 

$

16,325

 

 

 

 

 

Net interest spread (5)

 

 

 

 

 

 

 

 

 

 

2.89

%

 

 

 

 

 

 

 

 

 

 

3.13

%

Net interest margin (6)

 

 

 

 

 

 

 

 

 

 

3.19

%

 

 

 

 

 

 

 

 

 

 

3.32

%

  1. Annualized on a fully taxable equivalent basis calculated using a federal tax rate of 21% in 2019 and 2018.
  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

 

 

 

Year Ended

 

 

 

December 31, 2019

 

 

December 31, 2018

 

 

 

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

 

$

1,952,374

 

 

$

84,382

 

 

 

4.32

%

 

$

1,407,079

 

 

$

57,941

 

 

 

4.12

%

Tax-exempt

 

 

17,322

 

 

 

740

 

 

 

4.27

 

 

 

10,158

 

 

 

469

 

 

 

4.62

 

Securities available for sale (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

154,256

 

 

 

2,884

 

 

 

1.87

 

 

 

194,419

 

 

 

3,202

 

 

 

1.65

 

Securities held to maturity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

204,909

 

 

 

5,079

 

 

 

2.48

 

 

 

189,120

 

 

 

4,255