Cambridge Bancorp Announces Third Quarter Results

Cambridge Bancorp Announces Third Quarter Results

CAMBRIDGE, Mass.--(BUSINESS WIRE)-- Cambridge Bancorp (OTCBB: CATC) today reported unaudited net income of $3,664,000 for the third quarter of 2012 compared to $3,286,000 for the same quarter in 2011. Diluted earnings per share (EPS) increased by 10.6% to $0.94 for the third quarter of 2012 versus $0.85 for the same quarter in 2011. For the nine months ending September 30, 2012, unaudited net income was $10,400,000 versus $9,567,000 for the same period in 2011. Diluted earnings per share increased by 8.0% to $2.69 for the nine month period versus $2.49 for the same period in 2011.

"The Bank had a strong third quarter with sustained balance sheet growth. Our noninterest income growth of 21% over the same quarter last year is especially important as net margins are under continued pressure" notes Joseph V. Roller II, the Bank's president and CEO.


Net interest income grew slightly to $11.2 million for the third quarter of 2012, an increase of $230,000 (2.1%) over the third quarter of 2011. For the nine months ending September 30, 2012, net interest income was $34.3 million compared to $32.5 million for the same period in 2011. The increase of $1,749,000 (5.4%) in net interest income for the nine month period of 2012 versus the same period in 2011 was primarily a function of continued growth in the loan portfolio and a reduction in the cost for deposits.

Noninterest income of $5.6 million for the September 2012 quarter was up $975,000 (21.0%) compared to the same quarter in 2011. The Bank continued to generate solid Wealth Management income, which increased by $388,000 (11.2%) compared to the third quarter of 2011. Gains on loans sold resulted in $200,000 of noninterest income for the quarter ended September 30, 2012. This is the second quarter the Bank sold 30-year conforming loans to the secondary market. The Bank maintains servicing rights on these loans. Additionally, the third quarter of 2012 contained a $324,000 gain on disposition of investment securities, an increase of $220,000 as compared to the same quarter in 2011.

Noninterest expense increased by $728,000 (6.9%) to $11.3 million for the quarter ending September 30, 2012 versus the same quarter in 2011. The primary factor for the increase in noninterest expense was higher salaries and employee benefits.

The industry faces a challenging trend of pressure on net interest margins. The competitive forces have narrowed margins significantly in recent months as banks respond by becoming more aggressive on loan pricing. This trend, coupled with lower investment yields and a limited ability to further reduce deposit rates, led to a decrease of 47 basis points in the Bank's net interest margin for the third quarter of 2012 compared to the same quarter in 2011; and a decrease of 36 basis points for the comparable nine month period. This headwind of contracting margins places a mounting strain on the Bank's net interest income.

Total loans outstanding as of September 30, 2012 were $724.2 million compared to $673.3 million at the end of last year and $649.9 million at September 30, 2011. Since the beginning of 2012, total loans outstanding have increased $51.0 million. The growth in the loan portfolio is attributable to increases in commercial mortgages of $35.4 million, residential mortgages of $10.8 million, and commercial and industrial loans of $4.6 million. The Bank's home equity portfolio has seen run-off of $7.6 million since the end of last year as consumers refinance first mortgages in this favorable rate environment and consolidate or pay down debt.

Non-performing loans as a percentage of total loans stood at 22 basis points at September 30, 2012, a modest increase from 18 basis points at year-end 2011. Loan quality remains solid and the Allowance for Loan Losses stood at $11.0 million or 1.51% of total loans outstanding at September 30, 2012. At December 31, 2011, the Allowance for Loan Losses was $10.2 million or 1.51% of total loans outstanding. The lower provision for loan losses for the nine month period ($700,000 in 2012 versus $750,000 in 2011) is primarily in response to a slightly improving economy.

Deposits continued to grow in the third quarter of 2012. Since year-end 2011, deposits have increased $93.6 million (8.3%). Total deposits stood at $1.2 billion at period-end compared to $1.1 billion at December 31, 2011. Total assets at period-end were $1.4 billion compared to $1.3 billion at the end of 2011.

Cambridge Bancorp and its subsidiary, Cambridge Trust Company, are based in Cambridge, Massachusetts, in the heart of Harvard Square. Cambridge Trust Company is a 122-year-old Massachusetts chartered commercial bank with $1.4 billion in total assets and 11 Massachusetts locations in Cambridge, Beacon Hill, Belmont, Concord, Lexington, Lincoln and Weston. Cambridge Trust Company is one of New England's leaders in wealth management with $1.8 billion in client assets under management. In addition, Cambridge Trust Company of New Hampshire offers wealth management services at two New Hampshire locations, Concord and Portsmouth.

The accompanying unaudited condensed interim consolidated financial information should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Cambridge Bancorp 2011 Annual Report, which is posted in the investor relations section of our website at https://www.cambridgetrust.com/AboutUs/InvestorRelations.aspx. We will also post supplemental financial information for the third quarter of 2012 at the same site later this month. Interim results are not necessarily reflective of the results for the entire year.

Financial Highlights:

CAMBRIDGE BANCORP

QUARTERLY UNAUDITED RESULTS

September 30, 2012

Dollar amounts in thousands (except share data)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2012

2011

2012

2011

Interest Income

$

11,926

$

11,923

$

36,739

$

35,472

Interest Expense

737

964

2,480

2,962

Net Interest Income

11,189

10,959

34,259

32,510

Provision for Loan Losses

150

250

700

750

Non-Interest Income

5,634

4,659

15,273

13,829

Non-Interest Expense

11,294

10,566

33,630

31,528

Income Before Taxes

5,379

4,802

15,202

14,061

Income Taxes

1,715

1,516

4,802

4,494

Net Income

$

3,664

$

3,286

$

10,400

$

9,567

Data Per Common Share:

Basic Earnings Per Share

$

0.95

$

0.86

$

2.71

$

2.53

Diluted Earnings Per Share

$

0.94

$

0.85

$

2.69

$

2.49

Dividends Declared Per Share

$

0.37

$

0.35

$

1.11

$

1.05

Avg. Common Shares Outstanding:

Basic

3,846,680

3,802,297

3,835,733

3,788,198

Diluted

3,883,673

3,849,605

3,872,186

3,834,685

Selected Operating Ratios:

Net Interest Margin

3.47

%

3.94

%

3.59

%

3.95

%

Return on Average Assets, after taxes

1.08

%

1.11

%

1.04

%

1.10

%

Return on Average Equity, after taxes

14.49

%

13.63

%

14.01

%

13.76

%

September 30,

December 31,

September 30,

2012

2011

2011

Total Assets

$

1,365,679

$

1,275,860

$

1,202,191

Total Loans

724,216

673,265

649,916

Non-Performing Loans

1,591

1,204

1,078

Allowance for Loan Losses

10,951

10,159

9,923

Allowance to Non-Performing Loans

688.26

%

844.09

%

920.50

%

Allowance to Total Loans

1.51

%

1.51

%

1.53

%

Total Deposits

1,219,215

1,125,654

1,057,343

Total Stockholders' Equity

103,888

96,633

98,019

Book Value Per Share

$

26.99

$

25.39

$

25.80

Tangible Book Value Per Share

$

26.88

$

25.28

$

25.68

CAMBRIDGE BANCORP

UNAUDITED CONSOLIDATED BALANCE SHEETS

September 30,

December 31,

2012

2011

(In thousands)

ASSETS

Cash and due from banks

$

20,114

$

22,512

Overnight investments

Total cash and cash equivalents

20,114

22,512

Investment securities:

Available for sale, at fair value

508,165

470,232

Held-to-maturity, at amortized cost

71,888

74,256

Total investment securities

580,053

544,488

Loans held for sale

1,437

Loans:

Residential mortgage

341,740

330,933

Commercial mortgage

267,010

231,595

Home equity

53,733

61,307

Commercial

42,862

38,260

Consumer

18,871

11,170

Total loans

724,216

673,265

Allowance for loan losses

(10,951

)

(10,159

)

Net loans

713,265

663,106

Stock in FHLB of Boston, at cost

5,010

4,806

Bank owned life insurance

22,734

17,331

Banking premises and equipment, net

5,941

6,216

Accrued interest receivable

4,102

4,423

Other assets

13,023

12,978

Total assets

$

1,365,679

$

1,275,860

LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits:

Demand

$

328,483

$

285,724

Interest bearing checking

306,944

316,454

Money market

64,175

58,532

Savings

379,713

328,771

Certificates of deposit

139,900

136,173

Total deposits

1,219,215

1,125,654

Short-term borrowings

2,500

Long-term borrowings

20,000

30,000

Other liabilities

22,576

21,073

Total liabilities

1,261,791

1,179,227

Stockholders' equity:

Common stock, par value $1.00; Authorized

5,000,000 shares; Outstanding: 3,848,984 and

3,805,748 shares, respectively

3,849

3,806

Additional paid-in capital

24,036

23,001

Retained earnings

74,368

68,232

Accumulated other comprehensive income

1,635

1,594

Total stockholders' equity

103,888

96,633

Total liabilities and stockholders' equity

$

1,365,679

$

1,275,860

CAMBRIDGE BANCORP

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended September 30,

2012

2011

(In thousands, except per share data)

Interest income:

Interest on loans

$

8,378

$

8,348

Interest on taxable investment securities

3,028

3,062

Interest on tax exempt investment securities

507

499

Dividends on FHLB of Boston stock