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 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:

September 30, 2012
Dollar amounts in thousands (except share data)
Three Months EndedNine Months Ended
September 30,September 30,
Interest Income$11,926$11,923$36,739$35,472
Interest Expense 737  964  2,480  2,962 
Net Interest Income11,18910,95934,25932,510
Provision for Loan Losses150250700750
Non-Interest Income5,6344,65915,27313,829
Non-Interest Expense 11,294  10,566  33,630  31,528 
Income Before Taxes5,3794,80215,20214,061
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:

Selected Operating Ratios:

Net Interest Margin3.47%3.94%3.59%3.95%
Return on Average Assets, after taxes1.08%1.11%1.04%1.10%
Return on Average Equity, after taxes14.49%13.63%14.01%13.76%
September 30,December 31,September 30,
Total Assets$1,365,679$1,275,860$1,202,191
Total Loans724,216673,265649,916
Non-Performing Loans1,5911,2041,078
Allowance for Loan Losses10,95110,1599,923
Allowance to Non-Performing Loans688.26%844.09%920.50%
Allowance to Total Loans1.51%1.51%1.53%
Total Deposits1,219,2151,125,6541,057,343
Total Stockholders' Equity103,88896,63398,019
Book Value Per Share$26.99$25.39$25.80
Tangible Book Value Per Share$26.88$25.28$25.68
September 30,December 31,
(In thousands)
Cash and due from banks$20,114$22,512
Overnight investments  
Total cash and cash equivalents20,11422,512
Investment securities:
Available for sale, at fair value508,165470,232
Held-to-maturity, at amortized cost71,888 74,256 
Total investment securities580,053544,488
Loans held for sale1,437
Residential mortgage341,740330,933
Commercial mortgage267,010231,595
Home equity53,73361,307
Consumer18,871 11,170 
Total loans724,216673,265
Allowance for loan losses(10,951)(10,159)
Net loans713,265663,106
Stock in FHLB of Boston, at cost5,0104,806
Bank owned life insurance22,73417,331
Banking premises and equipment, net5,9416,216
Accrued interest receivable4,1024,423
Other assets13,023 12,978 
Total assets$1,365,679 $1,275,860 
Interest bearing checking306,944316,454
Money market64,17558,532
Certificates of deposit139,900 136,173 
Total deposits1,219,2151,125,654
Short-term borrowings2,500
Long-term borrowings20,00030,000
Other liabilities22,576 21,073 
Total liabilities1,261,791 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, respectively3,8493,806
Additional paid-in capital24,03623,001
Retained earnings74,36868,232
Accumulated other comprehensive income1,635 1,594 
Total stockholders' equity103,888 96,633 
Total liabilities and stockholders' equity$1,365,679 $1,275,860 
Three Months Ended September 30,
(In thousands, except per share data)
Interest income:
Interest on loans$8,378$8,348
Interest on taxable investment securities3,0283,062
Interest on tax exempt investment securities507499
Dividends on FHLB of Boston stock