CAMBRIDGE, Mass.--(BUSINESS WIRE)--Cambridge Bancorp (OTCBB: CATC) today announced unaudited net income of $14,140,000 for the year ended December 31, 2013, representing an increase of $737,000, or 5.5%, compared to net income of $13,403,000 for the year ended December 31, 2012. Diluted earnings per share (EPS) were $3.62, a 4.9% increase over diluted earnings per share for the prior year.
“We are pleased to report the Bank delivered another record financial performance for the year of 2013,” noted Joseph V. Roller II, president and CEO. “The Bank continued to grow across all business lines with robust contributions from wealth management and loan growth.”
The Bank experienced a historic year for loan growth with an overall increase of $200.2 million, or 27.0%, for the year. Both residential and commercial mortgages showed exceptional growth for the year, with increases of $110.3 million (31.7%) and $86.9 million (31.4%), respectively. Home equity loans were down by $3.9 million for the year ending December 31, 2013 as many consumers continued to refinance second mortgages into first mortgages due to favorable interest rates.
Deposit growth achieved similar success with an overall increase of $127.7 million, or 10.0%, as consumers and businesses continued to place their liquid funds with sound financial institutions.
For the year ended December 31, 2013, net interest income decreased slightly by $408,000, or 0.9%, to $45.5 million compared to $45.9 million for 2012. The prolonged low interest rate environment intensified margin pressures, which have been unfavorable for the industry for some time. The Bank’s net interest margin decreased 23 basis points to 3.35% for the year compared to 3.58% for the year ended December 31, 2012.
The Bank’s record loan growth outpaced deposit growth for the year. The Bank elected to strategically deploy cash flows emanating from the investment portfolio to meet the shortfall between loan funding needs and deposit growth. The Bank’s total investment securities portfolio decreased to $448.0 million from $573.5 million at year-end 2012. The shift in the Bank’s earning asset mix coupled with the lower interest rate environment resulted in a decrease of $3.1 million in interest income on investment securities for the year. This decrease was partially offset by $1.7 million in higher interest on loans and a slight reduction in deposit costs. The higher relative yields attributed to loans over investment securities will benefit the Bank’s net interest income over time.
The Bank sustained a high level of total noninterest income for the year with several categories experiencing solid growth. Noninterest income totaled $23.2 million for the year 2013 compared to $20.5 million for 2012. The Bank’s Wealth Management income accounted for $2.2 million, or 80%, of the upswing in total noninterest income for the year. Since the beginning of 2013, Wealth Management assets under management (AUM) have increased $345 million to $2.1 billion at year-end.
Other contributors to the noninterest income increase were higher gains on disposition of investment securities of $239,000, higher ATM/Debit card income of $139,000, and higher deposit account fees of $169,000 compared to the prior year. In the second half of 2013, the Bank experienced a dramatic slowdown in revenue produced by gains on loans sold as mortgage refinancing activity declined due to rising interest rates. Income from gains on loans sold ended $73,000 lower than last year. Lastly, there was a decrease of $61,000 in bank owned life insurance income compared to the year ended December 31, 2012.
Noninterest expense increased slightly by $264,000, or 0.6%, to $46.1 million for the year ended December 31, 2013. The decrease in salaries and benefits for the year of $840,000 is primarily the result of lower expenses related to our retirement plans. The increase of $503,000 in occupancy and equipment for the year is primarily the result of the relocation of our Wealth Management group to new space in Boston during the summer of 2013, along with a full-year of expense for the Bank’s new South End branch, which opened in November of 2012. The increase of $452,000 in data processing expense is attributable to increased volumes and new products.
Total loans outstanding at year-end 2013 were $942.5 million compared to $742.2 million at year-end 2012. Loan quality remained sound across consumer and corporate customer bases with non-performing loans totaling $1.7 million at December 31, 2013, a modest increase of $133,000 compared to the year-end 2012. The Allowance for Loan Losses was $12.7 million, or 1.35%, of total loans outstanding at year-end 2013. At December 31, 2012, the Allowance for Loan Losses was $10.9 million, or 1.47%, of total loans outstanding. The provision for loan losses of $1.5 million during 2013 was $700,000 more than the prior year’s provision. This increase was primarily in response to substantial loan growth during the year.
In the fourth quarter of 2013 unaudited net income was $3,639,000, compared to $3,003,000 for the same quarter in 2012.
“Results for the fourth quarter were highlighted by a very favorable increase in noninterest income,” said Mr. Roller. “New business and favorable equity markets accounted for the strong contribution from Wealth Management income, which increased by $748,000 (21.1%) for the fourth quarter of 2013 as compared to the fourth quarter of 2012. The provision for loan losses of $500,000 during fourth quarter of 2013 was $400,000 more than the prior year’s provision. This increase was primarily in response to the aforementioned substantial loan growth. The Bank’s net interest margin decreased 14 basis points to 3.41% for the fourth quarter compared to 3.55% for the quarter ended December 31, 2012. We are encouraged by the prospects of an improving economy. We are confident in our ability to capitalize on opportunities in the markets and businesses in which we compete.”
Total deposits at year-end 2013 were $1.4 billion compared to $1.3 billion at year-end 2012.
Total assets at year-end 2013 were $1.5 billion versus $1.4 billion year-end 2012.
About Cambridge Bancorp
Cambridge Bancorp and its subsidiary, Cambridge Trust Company, are based in Cambridge, Massachusetts, in the heart of Harvard Square. Cambridge Trust Company is a 124-year-old Massachusetts chartered commercial bank with $1.5 billion in total assets and 12 Massachusetts branch offices in Cambridge, Boston, Belmont, Concord, Lexington, Lincoln, and Weston. Cambridge Trust Company is one of New England’s leaders in wealth management with $2.1 billion in client assets under management. The Wealth Management group maintains offices in Boston, Massachusetts, and Concord and Portsmouth, New Hampshire.
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 2012 Annual Report, which is posted at www.cambridgetrust.com/annualreport. We will also post the Cambridge Bancorp 2013 Annual Report at the same site later this quarter.
Financial Highlights:
CAMBRIDGE BANCORP | ||||||||||||||||||||
QUARTERLY UNAUDITED RESULTS | ||||||||||||||||||||
December 31, 2013 | ||||||||||||||||||||
Dollar amounts in thousands (except share data) | ||||||||||||||||||||
Three Months Ended | Year Ended | |||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||||||
Interest Income | $ | 12,453 | $ | 12,327 | $ | 47,661 | $ | 49,066 | ||||||||||||
Interest Expense | 533 | 711 | 2,194 | 3,191 | ||||||||||||||||
Net Interest Income | 11,920 | 11,616 | 45,467 | 45,875 | ||||||||||||||||
Provision for Loan Losses | 500 | 100 | 1,500 | 800 | ||||||||||||||||
Non-Interest Income | 5,836 | 5,216 | 23,181 | 20,489 | ||||||||||||||||
Non-Interest Expense | 11,837 | 12,217 | 46,111 | 45,847 | ||||||||||||||||
Income Before Taxes | 5,419 | 4,515 | 21,037 | 19,717 | ||||||||||||||||
Income Taxes | 1,780 | 1,512 | 6,897 | 6,314 | ||||||||||||||||
Net Income | $ | 3,639 | $ | 3,003 | $ | 14,140 | $ | 13,403 | ||||||||||||
Data Per Common Share: |
||||||||||||||||||||
Basic Earnings Per Share | $ | 0.94 | $ | 0.78 | $ | 3.65 | $ | 3.49 | ||||||||||||
Diluted Earnings Per Share | $ | 0.93 | $ | 0.77 | $ | 3.62 | $ | 3.45 | ||||||||||||
Dividends Declared Per Share | $ | 0.42 | $ | 0.39 | $ | 1.59 | $ | 1.50 | ||||||||||||
Avg. Common Shares Outstanding: | ||||||||||||||||||||
Basic | 3,852,683 | 3,851,439 | 3,839,146 | 3,839,681 | ||||||||||||||||
Diluted | 3,919,831 | 3,900,315 | 3,907,201 | 3,879,607 | ||||||||||||||||
Selected Operating Ratios: |
||||||||||||||||||||
Net Interest Margin | 3.41 | % | 3.55 | % | 3.35 | % | 3.58 | % | ||||||||||||
Return on Average Assets, after taxes | 0.99 | % | 0.87 | % | 0.99 | % | 1.00 | % | ||||||||||||
Return on Average Equity, after taxes | 13.93 | % | 11.63 | % | 13.63 | % | 13.39 | % | ||||||||||||
December 31, | December 31, | |||||||||||||||||||
2013 | 2012 | |||||||||||||||||||
Total Assets | $ | 1,533,710 | $ | 1,417,986 | ||||||||||||||||
Total Loans | 942,451 | 742,249 | ||||||||||||||||||
Non-Performing Loans | 1,703 | 1,570 | ||||||||||||||||||
Allowance for Loan Losses | 12,708 | 10,948 | ||||||||||||||||||
Allowance to Non-Performing Loans | 746.11 | % | 697.25 | % | ||||||||||||||||
Allowance to Total Loans | 1.35 | % | 1.47 | % | ||||||||||||||||
Total Deposits | 1,409,047 | 1,281,333 | ||||||||||||||||||
Total Stockholders' Equity | 109,283 | 104,891 | ||||||||||||||||||
Book Value Per Share | $ | 28.13 | $ | 27.21 | ||||||||||||||||
Tangible Book Value Per Share | $ | 27.93 | $ | 27.05 | ||||||||||||||||
CAMBRIDGE BANCORP | |||||||||||||
UNAUDITED CONSOLIDATED BALANCE SHEETS | |||||||||||||
December 31, | |||||||||||||
2013 | 2012 | ||||||||||||
(In thousands) | |||||||||||||
ASSETS | |||||||||||||
Cash and cash equivalents | $ | 88,107 | $ | 59,923 | |||||||||
Investment securities: | |||||||||||||
Available for sale, at fair value | 388,793 | 502,318 | |||||||||||
Held to maturity, at amortized cost | 59,181 | 71,133 | |||||||||||
Total investment securities | 447,974 | 573,451 | |||||||||||
Loans held for sale, at lower of cost or fair value | 403 | 1,684 | |||||||||||
Loans: | |||||||||||||
Residential mortgage | 458,176 | 347,908 | |||||||||||
Commercial mortgage | 363,294 | 276,428 | |||||||||||
Home equity | 46,635 | 50,574 | |||||||||||
Commercial | 50,758 | 47,570 | |||||||||||
Consumer | 23,588 | 19,769 | |||||||||||
Total loans | 942,451 | 742,249 | |||||||||||
Allowance for loan losses | (12,708 | ) | (10,948 | ) | |||||||||
Net loans | 929,743 | 731,301 | |||||||||||
Stock in FHLB of Boston, at cost | 6,231 | 5,010 | |||||||||||
Bank owned life insurance | 23,555 | 22,903 | |||||||||||
Banking premises and equipment, net | 9,951 | 6,214 | |||||||||||
Accrued interest receivable | 3,626 | 3,877 | |||||||||||
Other assets | 24,120 | 13,623 | |||||||||||
Total assets | $ | 1,533,710 | $ | 1,417,986 | |||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||||
Deposits: | |||||||||||||
Demand | $ | 382,255 | $ | 329,211 | |||||||||
Interest bearing checking | 335,010 | 363,575 | |||||||||||
Money market | 78,410 | 60,850 | |||||||||||
Savings | 489,160 | 393,541 | |||||||||||
Certificates of deposit | 124,212 | 134,156 | |||||||||||
Total deposits | 1,409,047 | 1,281,333 | |||||||||||
Long-term borrowings | — | 20,000 | |||||||||||
Other liabilities | 15,380 | 11,762 | |||||||||||
Total liabilities | 1,424,427 | 1,313,095 | |||||||||||
Stockholders' equity: | |||||||||||||
Common stock, par value $1.00; Authorized | |||||||||||||
10,000,000 shares; Outstanding: 3,884,851 and | |||||||||||||
3,854,951 shares, respectively | 3,885 | 3,855 | |||||||||||
Additional paid-in capital | 26,027 | 24,421 | |||||||||||
Retained earnings | 83,479 | 75,787 | |||||||||||
Accumulated other comprehensive income | (4,108 | ) | 828 | ||||||||||
Total stockholders’ equity | 109,283 | 104,891 | |||||||||||
Total liabilities and stockholders’ equity | $ | 1,533,710 | $ | 1,417,986 | |||||||||
CAMBRIDGE BANCORP | ||||||||||
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||
Three Months Ended December 31, | ||||||||||
2013 | 2012 | |||||||||
(In thousands, except per share data) | ||||||||||
Interest income: | ||||||||||
Interest on loans | $ | 9,663 | $ | 8,919 | ||||||
Interest on taxable investment securities | 2,261 | 2,886 | ||||||||
Interest on tax exempt investment securities | 510 | 506 | ||||||||
Dividends on FHLB of Boston stock | 5 | 7 | ||||||||
Interest on overnight investments | 14 | 9 | ||||||||
Total interest income | 12,453 | 12,327 | ||||||||
Interest expense: | ||||||||||
Interest on deposits | 509 | 542 | ||||||||
Interest on borrowed funds | 24 | 169 | ||||||||
Total interest expense | 533 | 711 | ||||||||
Net interest income | 11,920 | 11,616 | ||||||||
Provision for loan losses | 500 | 100 | ||||||||
Net interest income after provision for loan losses | 11,420 | 11,516 | ||||||||
Noninterest income: | ||||||||||
Wealth management income | 4,301 | 3,553 | ||||||||
Deposit account fees | 641 | 620 | ||||||||
ATM/Debit card income | 317 | 275 | ||||||||
Bank owned life insurance income | 154 | 169 | ||||||||
Gain on disposition of investment securities | 131 | 129 | ||||||||
Gain on loans held for sale | 51 | 316 | ||||||||
Other income | 241 | 154 | ||||||||
Total noninterest income | 5,836 | 5,216 | ||||||||
Noninterest expense: | ||||||||||
Salaries and employee benefits | 7,124 | 7,687 | ||||||||
Occupancy and equipment | 2,078 | 1,967 | ||||||||
Data processing | 1,063 | 888 | ||||||||
Professional services | 235 | 322 | ||||||||
Marketing | 427 | 487 | ||||||||
FDIC Insurance | 191 | 179 | ||||||||
Other expenses | 719 | 687 | ||||||||
Total noninterest expense | 11,837 | 12,217 | ||||||||
Income before income taxes | 5,419 | 4,515 | ||||||||
Income tax expense | 1,780 | 1,512 | ||||||||
Net income | $ | 3,639 | $ | 3,003 | ||||||
Per share data: | ||||||||||
Basic earnings per common share | $ | 0.94 | $ | 0.78 | ||||||
Diluted earnings per common share | $ | 0.93 | $ | 0.77 | ||||||
Average shares outstanding - basic | 3,852,683 | 3,851,439 | ||||||||
Average shares outstanding - diluted | 3,919,831 | 3,900,315 | ||||||||
CAMBRIDGE BANCORP | ||||||||||||
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||||||||||
Three Months Ended December 31, | ||||||||||||
2013 | 2012 | |||||||||||
(In thousands) | ||||||||||||
Net income | $ | 3,639 | $ | 3,003 | ||||||||
Other comprehensive income/(loss), net of tax: | ||||||||||||
Defined benefit retirement plans: | ||||||||||||
Change in unfunded retirement liability | 5,926 | 391 | ||||||||||
Unrealized gains/(losses) on Available for | ||||||||||||
Sale securities: | ||||||||||||
Unrealized holding gains/(losses) arising | ||||||||||||
during the period | (2,407 | ) | (1,109 | ) | ||||||||
Less: reclassification adjustment for gains | ||||||||||||
recognized in net income | (85 | ) | (89 | ) | ||||||||
Other comprehensive income/(loss) | 3,434 | (807 | ) | |||||||||
Comprehensive income/(loss) | $ | 7,073 | $ | 2,196 | ||||||||
CAMBRIDGE BANCORP | ||||||||||
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||
Year Ended December 31, | ||||||||||
2013 | 2012 | |||||||||
(In thousands, except per share data) | ||||||||||
Interest income: | ||||||||||
Interest on loans | $ | 35,669 | $ | 33,984 | ||||||
Interest on taxable investment securities | 9,905 | 13,003 | ||||||||
Interest on tax exempt investment securities | 2,028 | 2,029 | ||||||||
Dividends on FHLB of Boston stock | 20 | 25 | ||||||||
Interest on overnight investments | 39 | 25 | ||||||||
Total interest income | 47,661 | 49,066 | ||||||||
Interest expense: | ||||||||||
Interest on deposits | 1,970 | 2,219 | ||||||||
Interest on borrowed funds | 224 | 972 | ||||||||
Total interest expense | 2,194 | 3,191 | ||||||||
Net interest income | 45,467 | 45,875 | ||||||||
Provision for loan losses | 1,500 | 800 | ||||||||
Net interest income after provision for loan losses | 43,967 | 45,075 | ||||||||
Noninterest income: | ||||||||||
Wealth management income | 16,265 | 14,110 | ||||||||
Deposit account fees | 2,567 | 2,398 | ||||||||
ATM/Debit card income | 1,182 | 1,043 | ||||||||
Bank owned life insurance income | 652 | 713 | ||||||||
Gain on disposition of investment securities | 1,121 | 882 | ||||||||
Gain on loans held for sale | 519 | 592 | ||||||||
Other income | 875 | 751 | ||||||||
Total noninterest income | 23,181 | 20,489 | ||||||||
Noninterest expense: | ||||||||||
Salaries and employee benefits | 26,995 | 27,835 | ||||||||
Occupancy and equipment | 8,163 | 7,660 | ||||||||
Data processing | 4,012 | 3,560 | ||||||||
Professional services | 1,548 | 1,585 | ||||||||
Marketing | 1,822 | 1,842 | ||||||||
FDIC Insurance | 739 | 704 | ||||||||
Other expenses | 2,832 | 2,661 | ||||||||
Total noninterest expense | 46,111 | 45,847 | ||||||||
Income before income taxes | 21,037 | 19,717 | ||||||||
Income tax expense | 6,897 | 6,314 | ||||||||
Net income | $ | 14,140 | $ | 13,403 | ||||||
Per share data: | ||||||||||
Basic earnings per common share | $ | 3.65 | $ | 3.49 | ||||||
Diluted earnings per common share | $ | 3.62 | $ | 3.45 | ||||||
Average shares outstanding - basic | 3,839,146 | 3,839,681 | ||||||||
Average shares outstanding - diluted | 3,907,201 | 3,879,607 | ||||||||
CAMBRIDGE BANCORP | ||||||||||||
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||||||||||
Year Ended December 31, | ||||||||||||
2013 | 2012 | |||||||||||
(In thousands) | ||||||||||||
Net income | $ | 14,140 | $ | 13,403 | ||||||||
Other comprehensive income/(loss), net of tax: | ||||||||||||
Defined benefit retirement plans: | ||||||||||||
Change in unfunded retirement liability | 5,671 | 104 | ||||||||||
Unrealized gains/(losses) on Available for | ||||||||||||
Sale securities: | ||||||||||||
Unrealized holding gains/(losses) arising | ||||||||||||
during the period | (9,887 | ) | (302 | ) | ||||||||
Less: reclassification adjustment for gains | ||||||||||||
recognized in net income | (720 | ) | (568 | ) | ||||||||
Other comprehensive income/(loss) | (4,936 | ) | (766 | ) | ||||||||
Comprehensive income/(loss) | $ | 9,204 | $ | 12,637 | ||||||||
CAMBRIDGE BANCORP | ||||||||||||||
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||||
Year Ended December 31, | ||||||||||||||
2013 | 2012 | |||||||||||||
(In thousands) | ||||||||||||||
Cash flows provided by operating activities: | ||||||||||||||
Net income | $ | 14,140 | $ | 13,403 | ||||||||||
Adjustments to arrive at net cash provided by operating activities: | ||||||||||||||
Provision for loan losses | 1,500 | 800 | ||||||||||||
Amortization of deferred charges/(income), net | 720 | 1,360 | ||||||||||||
Depreciation and amortization | 1,569 | 1,430 | ||||||||||||
Bank owned life insurance income | (652 | ) | (713 | ) | ||||||||||
Gain on disposition of investment securities | (1,121 | ) | (882 | ) | ||||||||||
Compensation expense from stock option | ||||||||||||||
and restricted stock grants | 439 | 551 | ||||||||||||
Change in loans held for sale | 1,281 | (1,684 | ) | |||||||||||
Change in accrued interest receivable, deferred taxes, | ||||||||||||||
other assets and other liabilities | 4,998 | (8,655 | ) | |||||||||||
Other, net | 321 | 291 | ||||||||||||
Net cash provided by operating activities | 23,195 | 5,901 | ||||||||||||
Cash flows used by investing activities: | ||||||||||||||
Origination of loans | (333,266 | ) | (205,096 | ) | ||||||||||
Purchase of: | ||||||||||||||
Investment securities - AFS | (55,577 | ) | (201,506 | ) | ||||||||||
Investment securities - HTM | (4,427 | ) | (824 | ) | ||||||||||
Maturities, calls and principal payments of: | ||||||||||||||
Loans | 132,692 | 135,435 | ||||||||||||
Investment securities - AFS | 117,713 | 130,165 | ||||||||||||
Investment securities - HTM | 16,361 | 3,933 | ||||||||||||
Proceeds from sale of investment securities - AFS | 35,557 | 37,786 | ||||||||||||
Purchase of bank owned life insurance | — | (5,000 | ) | |||||||||||
Decrease/(increase) in FHLB of Boston stock | (1,221 | ) | (204 | ) | ||||||||||
Purchase of banking premises and equipment | (5,306 | ) | (1,428 | ) | ||||||||||
Net cash provided/(used) by investing activities | (97,474 | ) | (106,739 | ) | ||||||||||
Cash flows provided by financing activities: | ||||||||||||||
Net increase/(decrease) in deposits | 127,714 | 155,679 | ||||||||||||
Net increase/(decrease) in short-term borrowings | — | (2,500 | ) | |||||||||||
Repayment of long-term borrowings | (20,000 | ) | (10,000 | ) | ||||||||||
Proceeds from issuance of common stock | 1,255 | 937 | ||||||||||||
Repurchase of common stock | (342 | ) | (103 | ) | ||||||||||
Cash dividends paid on common stock | (6,164 | ) | (5,764 | ) | ||||||||||
Net cash provided/(used) by financing activities | 102,463 | 138,249 | ||||||||||||
Net increase/(decrease) in cash and cash equivalents | 28,184 | 37,411 | ||||||||||||
Cash and cash equivalents at beginning of period | 59,923 | 22,512 | ||||||||||||
Cash and cash equivalents at end of period | $ | 88,107 | $ | 59,923 | ||||||||||
Supplemental disclosure of cash flow information: | ||||||||||||||
Cash paid for interest | $ | 2,196 | $ | 3,205 | ||||||||||
Cash paid for income taxes | 3,610 | 6,350 | ||||||||||||
Non-cash transactions: | ||||||||||||||
Change in accumulated other comprehensive income, net of taxes | (4,936 | ) | (766 | ) | ||||||||||