Market Overview

Cambridge Bancorp Announces First Quarter 2017 Earnings

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Cambridge Bancorp (OTCQB:CATC) (the "Company"), the parent of Cambridge
Trust Company, today announced unaudited net income of $4,328,000 for
the quarter ended March 31, 2017, representing an increase of $450,000,
or 11.6%, compared to net income of $3,878,000 for the quarter ended
March 31, 2016. Diluted earnings per share (EPS) were $1.06, a 9.3%
increase over diluted earnings per share for the same quarter last year.

First quarter 2017 highlights as compared to the first quarter of 2016:

  • Wealth Management Assets under Management now at $2.7 billion, an
    increase of 12.6%
  • Revenue of $21,288,000, an increase of 7.5%
  • Loan growth of $92,395,000, or 7.6%
  • Deposit growth of $59,266,000, or 3.7%

"We are pleased to report the Company delivered solid earnings during
the first quarter," noted Denis K. Sheahan, President and CEO.
"Cambridge Bancorp posted strong profitability metrics for the quarter
with annualized return on average assets of 0.95% and annualized return
on average stockholders' equity of 12.93%."

Balance Sheet

Total assets remained relatively unchanged from year-end 2016 and stood
at $1.8 billion as of March 31, 2017.

Total loans outstanding decreased modestly from the prior quarter and
stood at $1.3 billion as of March 31, 2017. While new loan origination
activity met expectations, payoffs exceeded originations resulting in a
$9.3 million decline in total loans. This follows a robust period of
growth in 2016 and is reflective of the strong economy in our market and
the competitive environment.

The Company's total investment securities portfolio increased by 8.7%
from $408.1 million at December 31, 2016 to $443.6 million at March 31,
2017, as excess cash flow was invested into securities due to the slower
loan growth.

Core deposits, which we define as all deposits other than certificates
of deposit, decreased by $7.3 million, or 0.5%, since year-end 2016 due
to normal fluctuations. The cost of total deposits was 0.17% as of March
31, 2017 as compared to 0.23% as of March 31, 2016. Total deposits at
March 31, 2017 were $1.7 billion.

Net Interest Income

For the quarter ended March 31, 2017, net interest income, after
provision for loan losses, increased by $870 thousand or 6.7%, to $13.9
million as compared to $13.1 million for March 31, 2016. Interest on
loans increased by $734 thousand, or 6.2%, driven by the impact of
strong loan growth during 2016. The Company's net interest margin, on a
fully tax equivalent basis, increased two basis points to 3.26% for the
current quarter compared to 3.24% for the quarter ended March 31, 2016.

Noninterest Income

Noninterest income totaled $7.3 million for the quarter ended March 31,
2017 as compared to $6.7 million for the quarter ended March 31, 2016.
The Company's Wealth Management revenue is the largest component of
noninterest income and increased by $760 thousand, or 16.5%, due to new
business development and market appreciation. Wealth Management revenue
was $5.4 million for the current quarter as compared to $4.6 million for
the quarter ended March 31, 2016. Wealth Management assets under
management (AUM) increased by $108 million or 4.2%, to $2.7 billion as
of March 31, 2017, as compared to $2.6 billion as of December 31, 2016.

As part of its operational strategy and overall balance sheet
management, the Company sold portions of its residential mortgage
production which created gains on loans held for sale during the quarter
of approximately $235 thousand representing an increase of $174 thousand
as compared to the quarter ended March 31, 2016.

Deposit account fee income generated $813 thousand representing an
increase of $168 thousand or 26.0%, due primarily to greater commercial
cash management income for the quarter ended March 31, 2017.

Noninterest income increases were partially offset by lower gains on
sale of investment securities and lower loan related derivative income,
of $346 thousand and $182 thousand, respectively, for the quarter ended
March 31, 2017 as compared to the quarter ended March 31, 2016.

Noninterest Expense

Noninterest expense increased by $955 thousand or 6.8%, to $14.9 million
for the quarter ended March 31, 2017 as compared to $14.0 million for
the quarter ended March 31, 2016. The increase in salaries and benefits
of $819 thousand is primarily due to annual merit increases, higher
employee benefit costs related to the Company's retirement plans, and
the impact of new strategic hires to support business initiatives. The
increase of $308 thousand in professional services is primarily due to
higher recruitment fees.

Noninterest expense increases were partially offset by decreases in
marketing expenses, lower occupancy and equipment expenses, and lower
FDIC insurance costs of $193 thousand, $96 thousand and $64 thousand,
respectively, for the quarter ended March 31, 2017 as compared to March
31, 2016.

Asset Quality

Loan quality remained sound with non-performing loans totaling $1.7
million, or 0.13% of total loans outstanding, and remained relatively
unchanged from year end 2016. Net charge-offs for the quarter were $2
thousand as compared to $7 thousand for the first quarter of 2016. The
allowance for loan losses was $15.3 million, or 1.17% of total loans
outstanding at March 31, 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 31.4% for the quarter ended March 31, 2017 as
compared to 32.4% for March 31, 2016. During the current quarter, the
Company recognized $173 thousand of tax benefit resulting from the
adoption of new accounting guidance for share-based payments.

About Cambridge Bancorp

Cambridge Bancorp, the parent company of Cambridge Trust Company, is
based in Cambridge, Massachusetts, in the heart of Harvard Square.
Cambridge Trust Company is a 127-year-old Massachusetts chartered
commercial bank with 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 $2.7 billion in
client assets under management. 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 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 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
QUARTERLY UNAUDITED RESULTS
March 31, 2017
Dollar amounts in thousands (except share data)
 
 

Quarter Ended
March 31,

 

 
2017 2016
 
Interest and Dividend Income $ 14,673 $ 14,061
Interest Expense   712   925
Net Interest and Dividend Income 13,961 13,136
Provision for Loan Losses 30 75
Non-Interest Income 7,327 6,668
Non-Interest Expense   14,946   13,991
Income Before Taxes 6,312 5,738
Income Taxes   1,984   1,860
Net Income $ 4,328 $ 3,878
 

Data Per Common Share:

 
Basic Earnings Per Share $ 1.07 $ 0.97
Diluted Earnings Per Share $ 1.06 $ 0.97
Dividends Declared Per Share $ 0.46 $ 0.46
 
Avg. Common Shares Outstanding:
Basic 4,011,925 3,963,504
Diluted 4,050,791 4,005,954
 

Selected Operating Ratios:

 
Net Interest Margin, FTE 3.26% 3.24%
Cost of Funds 0.16% 0.22%
Cost of Interest Bearing Liabilities 0.24% 0.33%
Cost of Deposits 0.17% 0.23%
Return on Average Assets 0.95% 0.90%
Return on Average Equity 12.93% 12.24%
Efficiency Ratio 70.21% 70.65%
 
 
March 31, December 31, March 31,
2017 2016 2016
 
Total Assets $ 1,843,649 $ 1,848,999 $ 1,771,191
Total Loans 1,310,852 1,320,154 1,218,457
Non-Performing Loans 1,653 1,676 1,463
Allowance for Loan Losses 15,289 15,261 15,259
Allowance to Non-Performing Loans
Allowance to Total Loans 1.17% 1.16% 1.25%
Total Deposits 1,677,578 1,686,038 1,618,312
Total Stockholders' Equity 138,427 134,671 129,932
Wealth Management AUM 2,681,000 2,573,000 2,382,000
 
Book Value Per Share $ 34.00 $ 33.36 $ 32.28
Tangible Book Value Per Share $ 33.69 $ 33.06 $ 32.06
       
CAMBRIDGE BANCORP AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
Dollar amounts in thousands
     
March 31,

December 31,

2017 2016
ASSETS
 
Cash and cash equivalents $ 27,698 $ 54,050
 
Investment securities:
Available for sale, at fair value 279,131 325,641
Held to maturity, at amortized cost
(fair value $166,126 and $83,755, respectively) 164,493   82,502  
Total investment securities 443,624 408,143
 
Loans held for sale, at lower of cost or fair value 718 6,506
 
Loans:
Residential mortgage 536,570 534,404
Commercial mortgage 620,329 616,140
Home equity 71,131 75,051
Commercial & industrial 47,328 59,706
Consumer 35,494   34,853  
Total loans 1,310,852 1,320,154
Allowance for loan losses (15,289 ) (15,261 )
Net loans 1,295,563 1,304,893
 
Stock in FHLB of Boston, at cost 4,651 4,098
Bank owned life insurance 30,661 30,499
Banking premises and equipment, net 10,249 10,451
Accrued interest receivable 4,299 4,627
Deferred tax assets 12,706 13,693
Other assets 13,480   12,039  
Total assets $ 1,843,649   $ 1,848,999  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
Deposits:
Demand $ 455,213 $ 472,923
Interest bearing checking 427,668 430,706
Money market 66,390 72,057
Savings 558,275 539,190
Certificates of deposit 170,032   171,162  
Total deposits 1,677,578 1,686,038
 
Short-term borrowings
Long-term borrowings 3,704 3,746
Other liabilities 23,940   24,544  
Total liabilities 1,705,222   1,714,328  
Stockholders' equity:
Common stock, par value $1.00; Authorized:
10,000,000 shares; Outstanding: 4,070,927 and
4,036,879 shares, respectively 4,071 4,037
Additional paid-in capital 34,596 33,253
Retained earnings 109,319 107,262
Accumulated other comprehensive loss (9,559 ) (9,881 )
Total stockholders' equity 138,427   134,671  
Total liabilities and stockholders' equity $ 1,843,649   $ 1,848,999  
       
CAMBRIDGE BANCORP AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
Dollar amounts in thousands (except share data)
         
Quarter Ended March 31,
2017 2016
Interest and dividend income:
Interest on taxable loans $ 12,373 $ 11,689
Interest on tax exempt loans 131 81
Interest on taxable investment securities 1,394 1,504
Interest on tax exempt investment securities 665 706
Dividends on FHLB of Boston stock 42 50
Interest on overnight investments 68 31
Total interest and dividend income 14,673 14,061
 
Interest expense:
Interest on deposits 691 906
Interest on borrowed funds 21 19
Total interest expense 712 925
 
Net interest income 13,961 13,136
 
Provision for loan losses 30 75
 
Net interest income after provision for loan losses 13,931 13,061
 
Noninterest income:
Wealth management income 5,362 4,602
Deposit account fees 813 645
ATM/Debit card income 259 270
Bank owned life insurance income 162 173
(Loss) gain on disposition of investment securities (2) 344
Gain on loans held for sale 235 61
Loan related derivative income 188 370
Other income 310 203
Total noninterest income 7,327 6,668
 
Noninterest expense:
Salaries and employee benefits 9,212 8,393
Occupancy and equipment 2,253 2,349
Data processing 1,323 1,234
Professional services 870 562
Marketing 270 463
FDIC Insurance 161 225
Other expenses 857 765
Total noninterest expense 14,946 13,991
 
Income before income taxes 6,312 5,738
 
Income tax expense 1,984 1,860
   
Net income $ 4,328 $ 3,878
 
Per share data:
 
Basic earnings per common share $ 1.07 $ 0.97
Diluted earnings per common share $ 1.06 $ 0.97
 
Average shares outstanding - basic 4,011,925 3,963,504
Average shares outstanding - diluted 4,050,791 4,005,954
                       
CAMBRIDGE BANCORP AND SUBSIDIARIES
MARGIN & YIELD ANALYSIS
Dollar amounts in thousands
 
Three Months Ended
March 31, 2017 March 31, 2016

Average
Balance

 

Interest
Income/
Expenses (1)

Rate
Earned/
Paid (1)

Average
Balance

 

Interest
Income/
Expenses (1)

Rate
Earned/
Paid (1)

ASSETS
Interest-earning assets:
Loans (2):
Taxable $ 1,302,602 $ 12,373 3.85% $ 1,192,748 $ 11,689 3.94%
Tax-exempt 16,796 202 4.88 12,160 125 4.13
Securities available-for-sale (5):
Taxable 314,813 1,272 1.64 345,420 1,490 1.73
Securities held-to-maturity:
Taxable 21,757 122 2.27 1,198 14 4.70
Tax-exempt 82,726 1,023 5.02 82,629 1,087 5.29
Cash and due from banks   46,427     68   0.59   42,251     31   0.30
Total interest-earning assets (6) 1,785,121 15,060 3.42% 1,676,406 14,436 3.46%
Non interest-earning assets 71,278 73,626
Allowance for loan losses   (15,248 )   (15,219 )
Total assets $ 1,841,151   $ 1,734,813  
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing deposits:
Checking accounts $ 420,669 $ 17 0.02% $ 354,330 $ 30 0.03%
Savings accounts 556,686 294 0.21 532,433 474 0.36
Money market accounts 70,444 26 0.15 73,466 37 0.20
Time deposits   170,338     353   0.84   176,071     366   0.84
Total interest-bearing deposits 1,218,137 690 0.23 1,136,300 907 0.32
Other borrowed funds   4,919     21   1.73   4,048     19   1.89
Total interest-bearing liabilities 1,223,056   711   0.24% 1,140,348   926   0.33%
Non-interest-bearing liabilities
Demand deposits 457,648 445,760
Other liabilities   24,708     21,298  
Total liabilities   1,705,412     1,607,406  
Stockholders' equity 135,739 127,407
Total liabilities & stockholders' equity $ 1,841,151   $ 1,734,813  
Net interest income on a fully taxable equivalent basis 14,349 13,510
Less taxable equivalent adjustment   (429 )   (424 )
Net interest income $ 13,920     $ 13,086    
Net interest spread (3) 3.19% 3.14%
Net interest margin (4) 3.26% 3.24%
 
(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) Interest rate spread represents the difference between the
weighted average yield on interest-earning assets and the weighted
average cost of interest-bearing liabilities.
(4) Net interest margin represents net interest income on a fully
tax equivalent basis as a percentage of average interest-earning
assets.
(5) Average balances of securities available-for-sale calculated
utilizing amortized cost.
(6) Federal Home Loan Bank stock balance and dividend income is
excluded from interest-earning assets.

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