Market Overview

Cambridge Bancorp Announces Second Quarter 2017 Earnings and Declares Increased Dividend

Share:





Cambridge Bancorp (OTCQB:CATC) (the "Company"), the parent of Cambridge
Trust Company, today announced unaudited net income of $4,514,000 for
the second quarter of 2017, representing an increase of $494,000, or
12.3%, compared to net income of $4,020,000 for the same quarter in
2016. Diluted earnings per share were $1.10 for the second quarter of
2017, representing a 10.0% increase over diluted earnings per share of
$1.00 for the same quarter in 2016.

For the six months ended June 30, 2017, unaudited net income was
$8,842,000, an increase of $944,000, or 12.0%, compared to net income of
$7,898,000 for the six months ended June 30, 2016. Diluted earnings per
share were $2.16 for the first six months of 2017, representing a 10.2%
increase over diluted earnings per share of $1.96 for the same period in
2016.

Second quarter 2017 highlights as compared to the second quarter of
2016
:

  • Wealth Management Assets under Management now at $2.8 billion, an
    increase of 11.9%
  • Revenue of $21,575,000, an increase of 6.7%
  • Loan growth of $57,130,000, or 4.5%
  • Deposit growth of $14,744,000, or 0.9%

"We are pleased to report the Company delivered robust earnings during
the second quarter despite continued intense competition within our
markets," noted Denis K. Sheahan, President and CEO. "Wealth Assets
under Management, a primary focus for the institution, continue to grow
and helped Cambridge Bancorp post strong profitability metrics for the
quarter with annualized return on average assets of 0.97% and annualized
return on average shareholders' equity of 12.94%."

Balance Sheet

Total assets increased $46.2 million, or 2.5%, from December 31, 2016
and stood at $1.9 billion as of June 30, 2017.

Total loans increased $8.3 million, or 0.6%, from December 31, 2016 and
stood at $1.3 billion as of June 30, 2017. Despite aggressive pricing
for loans and the increased cost of acquisition within our markets, new
loan originations have exceeded payoffs through the first six months of
2017.

The Company's total investment securities portfolio increased by $60.8
million, or 14.9%, from $408.1 million at December 31, 2016 to $469.0
million at June 30, 2017.

Core deposits, which we define as all deposits other than certificates
of deposit, decreased by $69.9 million, or 4.6%, from December 31, 2016
as customers utilized funds to pay down loans and to invest in their
businesses. The cost of total deposits for the six months ended June 30,
2017 was 0.17% as compared to 0.22% for the six months ended June 30,
2016. Total deposits at June 30, 2017 were $1.6 billion, and remained
relatively unchanged compared to June 30, 2016.

Short term borrowings increased to $109.0 million as of June 30, 2017
from zero at December 31, 2016. The Bank utilized short term borrowings
to fulfill our funding needs during the quarter.

Net Interest and Dividend Income

For the quarter ended June 30, 2017, net interest and dividend income
after provision for loan losses increased by $1.2 million, or 9.6%, to
$14.2 million as compared to $13.0 million for the quarter ended
June 30, 2016. Interest on loans increased by $813 thousand, or 6.8%,
driven by the impact of strong loan growth during 2016. The Company's
net interest margin, on a fully tax equivalent basis, increased eight
basis points to 3.25% for the current quarter compared to 3.17% for the
quarter ended June 30, 2016.

For the six months ended June 30, 2017, net interest and dividend income
after provision for loan losses, increased by $2.1 million, or 8.1%, to
$28.1 million as compared to $26.0 million for the six months ended
June 30, 2016. Interest on loans increased by $1.5 million, or 6.5%,
driven by the impact of strong loan growth during 2016. The Company's
net interest margin, on a fully tax equivalent basis, increased four
basis points to 3.25% for the six months ended June 30, 2017 compared to
3.21% for the six months ended June 30, 2016.

Noninterest Income

Noninterest income totaled $7.3 million for the quarter ended June 30,
2017 as compared to $7.1 million for the quarter ended June 30, 2016.
The Company's Wealth Management revenue, which totaled $5.6 million for
the current quarter, is the largest component of noninterest income.
Wealth Management revenue increased by $641 thousand, or 13.0%, for the
second quarter of 2017 as compared to the second quarter of 2016 due to
new business development and market appreciation. Wealth Management
Assets under Management increased by $178 million, or 6.9%, to $2.8
billion as of June 30, 2017, as compared to $2.6 billion as of
December 31, 2016.

Deposit account fee income was $806 thousand for the quarter ended
June 30, 2017, an increase of $83 thousand, or 11.5%, from the quarter
ended June 30, 2016, mainly due to greater commercial cash management
income.

Noninterest income increases were partially offset by lower loan related
derivative income, lower secondary market loan gain on sales and lower
gains on disposition of investment securities of $254 thousand, $175
thousand and $92 thousand respectively, for the quarter ended June 30,
2017 as compared to the quarter ended June 30, 2016.

Noninterest Expense

Noninterest expense increased by $731 thousand, or 5.2%, to $14.7
million for the quarter ended June 30, 2017 as compared to $14.0 million
for the quarter ended June 30, 2016. The increase in salaries and
benefits of $515 thousand is primarily due to annual merit increases and
the impact of new strategic hires to support business initiatives for
the quarter ended June 30, 2017 as compared to the quarter ended
June 30, 2016. The increase of $185 thousand in professional services is
primarily due to consulting services for the quarter ended June 30, 2017
as compared to the quarter ended June 30, 2016. The increase of $165
thousand in data processing is primarily due to annual increases from
our primary core processor and investments in technology, for the
quarter ended June 30, 2017 as compared to the quarter ended June 30,
2016.

Noninterest expense increases were partially offset by decreases in
occupancy and equipment expenses and lower FDIC insurance costs of $77
thousand and $76 thousand, respectively, for the quarter ended June 30,
2017 as compared to June 30, 2016.

Asset Quality

Loan quality remained sound with non-performing loans totaling $2.1
million, or 0.16%, of total loans outstanding as of June 30, 2017. Net
charge-offs for the quarter ended June 30, 2017 were $6 thousand as
compared to $2 thousand in net recoveries for the second quarter of
2016. The allowance for loan losses was $15.3 million, or 1.15%, of
total loans outstanding at June 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 33.8% for the quarter ended June 30, 2017 as
compared to 33.7% for June 30, 2016. For the six months ended June 30,
2017, the effective tax rate was 32.7% as compared to 33.1% for the six
months ended June 30, 2016. During the current year, the Company
recognized $219 thousand of tax benefit resulting from the adoption of
new accounting guidance for share-based payments.

Dividend

On July 17, 2017, the Company's Board of Directors declared a quarterly
cash dividend of $0.47 per share, which is payable on August 17, 2017 to
shareholders of record as of the close of business on August 3, 2017.
This represents an increase of $0.01 as compared to $0.46 paid during
the second quarter of 2017.

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 $2.8 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 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 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
June 30, 2017

       
Quarter Ended Six Months Ended
June 30, June 30,
2017     2016 2017     2016
(dollar amounts in thousands except share data)
 
Interest and Dividend Income $ 15,101 $ 13,989 $ 29,774 $ 28,050
Interest Expense   871   872   1,583   1,797
Net Interest and Dividend Income 14,230 13,117 28,191 26,253
Provision for Loan Losses 20 150 50 225
Noninterest Income 7,345 7,100 14,672 13,768
Noninterest Expense   14,732   14,001   29,678   27,992
Income Before Taxes 6,823 6,066 13,135 11,804
Income Taxes   2,309   2,046   4,293   3,906
Net Income $ 4,514 $ 4,020 $ 8,842 $ 7,898
 

Data Per Common Share:

Basic Earnings Per Share $ 1.11 $ 1.00 $ 2.17 $ 1.96
Diluted Earnings Per Share $ 1.10 $ 1.00 $ 2.16 $ 1.96
Dividends Declared Per Share $ 0.46 $ 0.46 $ 0.92 $ 0.92
 
Avg. Common Shares Outstanding:
Basic 4,034,397 3,987,696 4,024,877 3,975,624
Diluted 4,068,360 4,037,522 4,061,286 4,022,005
 

Selected Operating Ratios:

Net Interest Margin, FTE 3.25% 3.17% 3.25% 3.21%
Cost of Funds 0.19% 0.20% 0.18% 0.21%
Cost of Interest Bearing Liabilities 0.28% 0.30% 0.26% 0.31%
Cost of Deposits 0.17% 0.21% 0.17% 0.22%
Return on Average Assets 0.97% 0.91% 0.96% 0.91%
Return on Average Equity 12.94% 12.35% 12.93% 12.30%
Efficiency Ratio 68.29% 69.25% 69.24% 69.94%
 
June 30, December 31, June 30,
2017 2016 2016
 
Total Assets $ 1,895,219 $ 1,848,999 $ 1,773,753
Total Loans 1,328,473 1,320,154 1,271,343
Non-Performing Loans 2,129 1,676 1,481
Allowance for Loan Losses 15,303 15,261 15,411
Allowance to Total Loans 1.15% 1.16% 1.21%
Total Deposits 1,615,981 1,686,038 1,601,237
Total Shareholders' Equity 142,298 134,671 134,049
Wealth Management AUM $ 2,751,000 $ 2,573,000 $ 2,459,000
 
Book Value Per Share $ 34.88 $ 33.36 $ 33.16
Tangible Book Value Per Share $ 34.57 $ 33.06 $ 32.94
 
 

CAMBRIDGE BANCORP AND SUBSIDIARIES
UNAUDITED
CONSOLIDATED BALANCE SHEETS

       
June 30, 2017 December 31, 2016
(dollars in thousands)
Assets
Cash and cash equivalents $ 33,089 $ 54,050
Investment securities
Securities available for sale, amortized cost $231,601 and $329,726,
respectively
228,591 325,641
Securities held to maturity, fair value $242,798 and $83,755,
respectively
  240,380   82,502
Total investment securities 468,971 408,143
Loans held for sale, at lower of cost or fair value 424 6,506
Loans
Residential mortgage 539,668 534,404
Commercial mortgage 616,221 616,140
Home equity 73,250 75,051
Commercial & Industrial 57,838 59,706
Consumer   41,496   34,853
Total loans 1,328,473 1,320,154
Less: allowance for loan losses   (15,303)   (15,261)
Net loans 1,313,170 1,304,893
Stock in FHLB of Boston, at cost 8,159 4,098
Bank owned life insurance 30,808 30,499
Banking premises and equipment, net 9,952 10,451
Deferred income taxes, net 13,001 13,693
Accrued interest receivable 4,594 4,627
Other assets   13,051   12,039
Total assets $ 1,895,219 $ 1,848,999
Liabilities
Deposits
Demand $ 457,120 $ 472,923
Interest bearing checking 383,008 430,706
Money market 66,260 72,057
Savings 538,586 539,190
Certificates of deposit   171,007   171,162
Total deposits 1,615,981 1,686,038
Short-term borrowings 109,000
Long-term borrowings 3,663 3,746
Other liabilities   24,277   24,544
Total liabilities   1,752,921   1,714,328
Shareholders' Equity

Common stock, par value $1.00; Authorized 10,000,000 shares;
Outstanding: 4,079,784

shares and 4,036,879 shares, respectively 4,080 4,037
Additional paid-in capital 35,195 33,253
Retained earnings 111,956 107,262
Accumulated other comprehensive loss   (8,933)   (9,881)
Total shareholders' equity   142,298   134,671
Total liabilities and shareholders' equity $ 1,895,219 $ 1,848,999
 
 

CAMBRIDGE BANCORP AND SUBSIDIARIES
UNAUDITED
CONSOLIDATED STATEMENTS OF INCOME

       
Three Months Ended June 30, Six Months Ended June 30,
2017   2016 2017   2016
(dollars in thousands, except share data)
Interest and dividend income
Interest on taxable loans $ 12,555 $ 11,786 $ 24,928 $ 23,475
Interest on tax exempt loans 139 95 270 176
Interest on taxable investment securities 1,656 1,360 3,050 2,864
Interest on tax exempt investment securities 660 677 1,325 1,383
Dividends on FHLB of Boston stock 43 30 85 80
Interest on overnight investments   48   41   116   72
Total interest and dividend income   15,101   13,989   29,774   28,050
Interest expense
Interest on deposits 683 851 1,374 1,757
Interest on borrowed funds   188   21   209   40
Total interest expense   871   872   1,583   1,797
Net interest and dividend income 14,230 13,117 28,191 26,253
Provision for loan losses   20   150   50   225
Net interest and dividend income after provision for loan losses 14,210 12,967 28,141 26,028
Noninterest income
Wealth management income 5,584 4,943 10,946 9,545
Deposit account fees 806 723 1,619 1,368
ATM/Debit card income 286 297 545 567
Bank owned life insurance income 147 152 309 325
(Loss) gain on disposition of investment securities (1 ) 91 (3 ) 435
Gain on loans held for sale 50 225 285 286
Loan related derivative income 175 429 363 799
Other income   298   240   608   443
Total noninterest income   7,345   7,100   14,672   13,768
Noninterest expense
Salaries and employee benefits 8,933 8,418 18,145 16,811
Occupancy and equipment 2,325 2,402 4,578 4,751
Data processing 1,396 1,231 2,719 2,465
Professional services 826 641 1,696 1,203
Marketing 473 462 743 925
FDIC Insurance 151 227 312 452
Other expenses   628   620   1,485   1,385
Total noninterest expense   14,732   14,001   29,678   27,992
Income before income taxes 6,823 6,066 13,135 11,804
Income tax expense   2,309   2,046   4,293   3,906
Net income $ 4,514 $ 4,020 $ 8,842 $ 7,898
Share data
Weighted average number of shares outstanding, basic 4,034,397 3,987,696 4,024,877 3,975,624
Weighted average number of shares outstanding, diluted 4,068,360 4,037,522 4,061,286 4,022,005
Basic earnings per share $ 1.11 $ 1.00 $ 2.17 $ 1.96
Diluted earnings per share $ 1.10 $ 1.00 $ 2.16 $ 1.96
 

CAMBRIDGE BANCORP AND SUBSIDIARIES
MARGIN & YIELD
ANALYSIS

 

     
Three Months Ended
June 30, 2017       June 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 $ 1,303,998 $ 12,555 3.86 % $ 1,218,971 $ 11,786 3.89 %
Tax-exempt 16,027 213 5.33 14,442 146 4.07
Securities available for sale (3)
Taxable 243,315 984 1.62 353,813 1,348 1.53
Securities held to maturity
Taxable 128,115 672 2.10 1,045 12 4.62
Tax-exempt 82,649 1,016 4.93 81,409 1,041 5.14
Cash and due from banks   32,142   48   0.60   41,488   41   0.40
Total interest-earning assets (4) 1,806,246 15,488 3.44 % 1,711,168 14,374 3.38 %
Non interest-earning assets 73,947 72,554
Allowance for loan losses   (15,354 )   (15,285 )
Total assets $ 1,864,839 $ 1,768,437
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing deposits
Checking accounts $ 385,384 $ 20 0.02 % $ 367,747 $ 21 0.02 %
Savings accounts 542,124 281 0.21 532,968 433 0.33
Money market accounts 73,261 27 0.15 75,626 31 0.16
Time deposits   169,587   355   0.84   175,882   366   0.84
Total interest-bearing deposits 1,170,356 683 0.23 1,152,223 851 0.30
Other borrowed funds   65,183   188   1.16   6,006   21   1.41
Total interest-bearing liabilities 1,235,539 871 0.28 % 1,158,229 872 0.30 %
Non-interest-bearing liabilities
Demand deposits 464,851 458,605
Other liabilities   24,602   20,661
Total liabilities   1,724,992   1,637,495
Shareholders' equity 139,847 130,942
Total liabilities & shareholders' equity $ 1,864,839 $ 1,768,437
Net interest income on a fully taxable equivalent basis 14,617 13,502
Less taxable equivalent adjustment   (430 )   (415 )
Net interest income $ 14,187     $ 13,087    
Net interest spread (5)   3.16 %   3.08 %
Net interest margin (6)   3.25 %   3.17 %
 

(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

 

     
Six Months Ended
June 30, 2017       June 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 $ 1,303,303 $ 24,928 3.86 % $ 1,205,860 $ 23,475 3.91 %
Tax-exempt 16,409 415 5.10 13,301 271 4.10
Securities available for sale (3)
Taxable 278,867 2,256 1.63 349,616 2,838 1.63
Securities held to maturity
Taxable 75,230 794 2.13 1,121 26 4.66
Tax-exempt 82,687 2,038 4.97 82,019 2,128 5.22
Cash and due from banks   39,245   116   0.60   41,870   72   0.35
Total interest-earning assets (4) 1,795,741 30,547 3.43 % 1,693,787 28,810 3.42 %
Non interest-earning assets 72,705 73,089
Allowance for loan losses   (15,301

)

 

  (15,252 )
Total assets $ 1,853,145 $ 1,751,624
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing deposits
Checking accounts $ 402,929 $ 37 0.02 % $ 361,039 $ 51 0.03 %
Savings accounts 549,365 576 0.21 532,700 906 0.34
Money market accounts 71,860 53 0.15 74,546 68 0.18
Time deposits   169,960   708   0.84   175,976   732   0.84
Total interest-bearing deposits 1,194,114 1,374 0.23 1,144,261 1,757 0.31
Other borrowed funds   35,217   209   1.20   5,027   40   1.60
Total interest-bearing liabilities 1,229,331 1,583 0.26 % 1,149,288 1,797 0.31 %
Non-interest-bearing liabilities
Demand deposits 461,269 452,182
Other liabilities   24,655   20,979
Total liabilities   1,715,255   1,622,449
Shareholders' equity 137,890 129,175
Total liabilities & shareholders' equity $ 1,853,145 $ 1,751,624
Net interest income on a fully taxable equivalent basis 28,964 27,013
Less taxable equivalent adjustment   (858

)

 

  (840 )
Net interest income $ 28,106     $ 26,173    
Net interest spread (5)   3.17 %   3.11 %
Net interest margin (6)   3.25 %   3.21 %
 

(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.

View Comments and Join the Discussion!
 

Partner Center