Cambridge Bancorp (OTCBB: CATC) today reported unaudited net income of $3,641,000 for the second quarter of 2014 compared to $3,475,000 for the same quarter in 2013. The increase in earnings of $166,000 (4.8%) was attributable to growth in both net interest income and noninterest income, offset by an increase in noninterest expense. Diluted earnings per share were $0.92 for the second quarter of 2014 compared to $0.89 for the same quarter in 2013. For the six months ended June 30, 2014, unaudited net income was $7,152,000, an increase of $346,000 (5.1%) compared to $6,806,000 for the first half of 2013. Diluted earnings per share were $1.81 for the first six months of 2014 versus $1.75 for the same period in 2013.
“We are pleased to report favorable results in an environment characterized by continued low interest rates and intense competition,” notes Joseph V. Roller II, president and CEO. “While the pace of economic growth has been moderate, the Bank continues to build momentum across all business lines, especially Lending and Wealth Management,” said Roller.
Net interest income of $11.8 million for the second quarter of 2014 was $720,000 (6.5%) higher than the same quarter in 2013. For the six months ended June 30, 2014, net interest income of $23.6 million was $1.6 million (7.2%) higher than the same period in 2013.
Noninterest income increased by $571,000 (10.3%) to $6.1 million for the second quarter of 2014 compared to $5.5 million for the same quarter in 2013. The Bank continued to build wealth management income, which increased by $473,000 (12.2%) compared to the same quarter in 2013.
Assets under management grew to $2.3 billion at the end of the second quarter 2014 from $2.1 billion at year-end 2013. Other contributors to the noninterest income increase for the second quarter of 2014 were gains from the disposition of investment securities of $151,000, debit card income of $33,000, and other income of $68,000, as compared to the same quarter in 2013. Noninterest income gains were offset by lower income produced from gains on loans sold of $105,000, bank owned life insurance of $25,000, and deposit account fees of $24,000.
The Bank’s net interest margin stabilized after a prolonged period of decreases due to the low rate environment. The Bank’s net interest margin stood at 3.32% for the second quarter of 2014 compared to 3.31% for the same quarter in 2013. There was an increase of three basis points for the comparable six-month period.
For the second quarter of 2014, noninterest expense totaled $12.4 million, an increase of $1.1 million (10.1%) compared to the same quarter in 2013. This increase was attributable to the Bank making strategic investments in human capital, systems capabilities, and its office premises. The primary factors for the increase in noninterest expense were higher salaries and benefits of $542,000 (8.3%), data processing of $239,000 (26.1%), and occupancy and equipment of $169,000 (8.5%).
Since year-end 2013, total loans outstanding have increased by $44.6 million (4.7%) to $987.0 million. The solid increase in loans outstanding is attributable to residential mortgage and home equity loan growth of $20.2 million (4.0%) and commercial mortgage loan growth of $18.7 million (5.1%). The low interest rates provide an attractive environment for qualified households to purchase or access home equity and businesses looking to purchase or refinance properties.
Non-performing loans as a percentage of total loans stood at 0.14% at June 30, 2014, a slight decrease from 0.18% at December 31, 2013. Loan quality remains sound and the Allowance for Loan Losses stood at $13.2 million or 1.34% of total loans outstanding at June 30, 2014. At December 31, 2013, the Allowance for Loan Losses was $12.7 million or 1.35% of total loans outstanding. The provision for loan losses was $150,000 for the current quarter.
Total deposits experienced a seasonal drop of $98.7 million (7.0%) since year-end 2013, yet increased by $63.4 million (5.1%) over June 30, 2013.
Total assets at second quarter 2014 end were $1.5 billion, relatively flat since year-end 2013.
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 locations in Cambridge, Boston, Belmont, Concord,
Lexington, Lincoln, and Weston, as well as an Innovation Banking Group
office located in the Cambridge Innovation Center. Cambridge Trust
Company is one of New England’s leaders in wealth management with $2.3
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 2013 Annual Report, which is posted in the investor relations section of our website at www.cambridgetrust.com/annualreport. We will also post supplemental financial information for second quarter of 2014 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 | ||||||||||||||||
June 30, 2014 | ||||||||||||||||
Dollar amounts in thousands (except share data) | ||||||||||||||||
Quarter Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Interest Income | $ | 12,318 | $ | 11,595 | $ | 24,655 | $ | 23,180 | ||||||||
Interest Expense | 516 | 513 | 1,032 | 1,136 | ||||||||||||
Net Interest Income | 11,802 | 11,082 | 23,623 | 22,044 | ||||||||||||
Provision for Loan Losses | 150 | 200 | 525 | 400 | ||||||||||||
Non-Interest Income | 6,101 | 5,530 | 12,146 | 11,419 | ||||||||||||
Non-Interest Expense | 12,392 | 11,259 | 24,659 | 22,928 | ||||||||||||
Income Before Taxes | 5,361 | 5,153 | 10,585 | 10,135 | ||||||||||||
Income Taxes | 1,720 | 1,678 | 3,433 | 3,329 | ||||||||||||
Net Income | $ | 3,641 | $ | 3,475 | $ | 7,152 | $ | 6,806 | ||||||||
Data Per Common Share: | ||||||||||||||||
Basic Earnings Per Share | $ | 0.92 | $ | 0.90 | $ | 1.83 | $ | 1.76 | ||||||||
Diluted Earnings Per Share | $ | 0.92 | $ | 0.89 | $ | 1.81 | $ | 1.75 | ||||||||
Dividends Declared Per Share | $ | 0.42 | $ | 0.39 | $ | 0.84 | $ | 0.78 | ||||||||
Avg. Common Shares Outstanding: | ||||||||||||||||
Basic | 3,887,707 | 3,837,776 | 3,873,549 | 3,826,454 | ||||||||||||
Diluted | 3,973,372 | 3,907,458 | 3,960,288 | 3,897,744 | ||||||||||||
Selected Operating Ratios: | ||||||||||||||||
Net Interest Margin | 3.32 | % | 3.31 | % | 3.34 | % | 3.31 | % | ||||||||
Return on Average Assets | 0.97 | % | 0.99 | % | 0.96 | % | 0.98 | % | ||||||||
Return on Average Equity | 12.70 | % | 13.23 | % | 12.64 | % | 13.04 | % | ||||||||
June 30, | December 31, | June 30, | ||||||||||||||
2014 | 2013 | 2013 | ||||||||||||||
Total Assets | $ | 1,527,063 | $ | 1,533,710 | $ | 1,425,825 | ||||||||||
Total Loans | 987,038 | 942,451 | 831,930 | |||||||||||||
Non-Performing Loans | 1,386 | 1,703 | 1,441 | |||||||||||||
Allowance for Loan Losses | 13,242 | 12,708 | 11,353 | |||||||||||||
Allowance to Non-Performing Loans | 955.53 | % | 746.11 | % | 787.77 | % | ||||||||||
Allowance to Total Loans | 1.34 | % | 1.35 | % | 1.36 | % | ||||||||||
Total Deposits | 1,310,337 | 1,409,047 | 1,246,979 | |||||||||||||
Total Stockholders' Equity | 117,242 | 109,283 | 101,563 | |||||||||||||
Book Value Per Share | $ | 29.76 | $ | 28.13 | $ | 26.17 | ||||||||||
Tangible Book Value Per Share | $ | 29.57 | $ | 27.93 | $ | 25.96 | ||||||||||
CAMBRIDGE BANCORP | |||||||||||
UNAUDITED CONSOLIDATED BALANCE SHEETS | |||||||||||
June 30, | December 31, | ||||||||||
2014 | 2013 | ||||||||||
(In thousands) | |||||||||||
ASSETS | |||||||||||
Cash and cash equivalents | $ | 21,583 | $ | 88,107 | |||||||
Investment securities: | |||||||||||
Available for sale, at fair value | 379,277 | 388,793 | |||||||||
Held to maturity, at amortized cost | 79,259 | 59,181 | |||||||||
Total investment securities | 458,536 | 447,974 | |||||||||
Loans held for sale, at lower of cost or fair value | 816 | 403 | |||||||||
Loans: | |||||||||||
Residential mortgage | 475,478 | 458,176 | |||||||||
Commercial mortgage | 382,001 | 363,294 | |||||||||
Home equity | 49,568 | 46,635 | |||||||||
Commercial | 53,577 | 50,758 | |||||||||
Consumer | 26,414 | 23,588 | |||||||||
Total loans | 987,038 | 942,451 | |||||||||
Allowance for loan losses | (13,242 | ) | (12,708 | ) | |||||||
Net loans | 973,796 | 929,743 | |||||||||
Stock in FHLB of Boston, at cost | 7,465 | 6,231 | |||||||||
Bank owned life insurance | 28,860 | 23,555 | |||||||||
Banking premises and equipment, net | 8,953 | 9,951 | |||||||||
Accrued interest receivable | 3,707 | 3,626 | |||||||||
Other assets | 23,347 | 24,120 | |||||||||
Total assets | $ | 1,527,063 | $ | 1,533,710 | |||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
Deposits: | |||||||||||
Demand | $ | 401,280 | $ | 382,255 | |||||||
Interest bearing checking | 307,707 | 335,010 | |||||||||
Money market | 73,787 | 78,410 | |||||||||
Savings | 406,744 | 489,160 | |||||||||
Certificates of deposit | 120,819 | 124,212 | |||||||||
Total deposits | 1,310,337 | 1,409,047 | |||||||||
Short-term borrowings | 85,000 | — | |||||||||
Long-term borrowings | — | — | |||||||||
Other liabilities | 14,484 | 15,380 | |||||||||
Total liabilities | 1,409,821 | 1,424,427 | |||||||||
Stockholders' equity: | |||||||||||
Common stock, par value $1.00; Authorized | |||||||||||
10,000,000 shares; Outstanding: 3,939,405 and | |||||||||||
3,884,851 shares, respectively | 3,939 | 3,885 | |||||||||
Additional paid-in capital | 27,791 | 26,027 | |||||||||
Retained earnings | 86,913 | 83,479 | |||||||||
Accumulated other comprehensive income/(loss) | (1,401 | ) | (4,108 | ) | |||||||
Total stockholders’ equity | 117,242 | 109,283 | |||||||||
Total liabilities and stockholders’ equity | $ | 1,527,063 | $ | 1,533,710 | |||||||
CAMBRIDGE BANCORP | ||||||||||
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||
Quarter Ended June 30, | ||||||||||
2014 | 2013 | |||||||||
(In thousands, except per share data) | ||||||||||
Interest income: | ||||||||||
Interest on loans | $ | 9,871 | $ | 8,614 | ||||||
Interest on taxable investment securities | 1,729 | 2,466 | ||||||||
Interest on tax exempt investment securities | 681 | 504 | ||||||||
Dividends on FHLB of Boston stock | 23 | 5 | ||||||||
Interest on overnight investments | 14 | 6 | ||||||||
Total interest income | 12,318 | 11,595 | ||||||||
Interest expense: | ||||||||||
Interest on deposits | 482 | 481 | ||||||||
Interest on borrowed funds | 34 | 32 | ||||||||
Total interest expense | 516 | 513 | ||||||||
Net interest income | 11,802 | 11,082 | ||||||||
Provision for loan losses | 150 | 200 | ||||||||
Net interest income after provision for loan losses | 11,652 | 10,882 | ||||||||
Noninterest income: | ||||||||||
Wealth management income | 4,348 | 3,875 | ||||||||
Deposit account fees | 609 | 633 | ||||||||
ATM/Debit card income | 334 | 301 | ||||||||
Bank owned life insurance income | 141 | 166 | ||||||||
Gain on disposition of investment securities | 356 | 205 | ||||||||
Gain on loans held for sale | 32 | 137 | ||||||||
Other income | 281 | 213 | ||||||||
Total noninterest income | 6,101 | 5,530 | ||||||||
Noninterest expense: | ||||||||||
Salaries and employee benefits | 7,063 | 6,521 | ||||||||
Occupancy and equipment | 2,168 | 1,999 | ||||||||
Data processing | 1,156 | 917 | ||||||||
Professional services | 437 | 416 | ||||||||
Marketing | 529 | 465 | ||||||||
FDIC Insurance | 197 | 181 | ||||||||
Other expenses | 842 | 760 | ||||||||
Total noninterest expense | 12,392 | 11,259 | ||||||||
Income before income taxes | 5,361 | 5,153 | ||||||||
Income tax expense | 1,720 | 1,678 | ||||||||
Net income | $ | 3,641 | $ | 3,475 | ||||||
Per share data: | ||||||||||
Basic earnings per common share | $ | 0.92 | $ | 0.90 | ||||||
Diluted earnings per common share | $ | 0.92 | $ | 0.89 | ||||||
Average shares outstanding - basic | 3,887,707 | 3,837,776 | ||||||||
Average shares outstanding - diluted | 3,973,372 | 3,907,458 | ||||||||
CAMBRIDGE BANCORP | |||||||||||||
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||||||||||||
Quarter Ended June 30, | |||||||||||||
2014 | 2013 | ||||||||||||
(In thousands) | |||||||||||||
Net income | $ | 3,641 | $ | 3,475 | |||||||||
Other comprehensive income/(loss), net of tax: | |||||||||||||
Defined benefit retirement plans: | |||||||||||||
Change in unfunded retirement liability | (2 | ) | (85 | ) | |||||||||
Unrealized gains/(losses) on Available for | |||||||||||||
Sale securities: | |||||||||||||
Unrealized holding gains/(losses) arising | |||||||||||||
during the period | 1,948 | (5,938 | ) | ||||||||||
Less: reclassification adjustment for gains | |||||||||||||
recognized in net income | (228 | ) | (131 | ) | |||||||||
Other comprehensive income/(loss) | 1,718 | (6,154 | ) | ||||||||||
Comprehensive income/(loss) | $ | 5,359 | $ | (2,679 | ) | ||||||||
CAMBRIDGE BANCORP | |||||||||||
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME | |||||||||||
Six Months Ended June 30, | |||||||||||
2014 | 2013 | ||||||||||
(In thousands, except per share data) | |||||||||||
Interest income: | |||||||||||
Interest on loans | $ | 19,537 | $ | 16,979 | |||||||
Interest on taxable investment securities | 3,762 | 5,160 | |||||||||
Interest on tax exempt investment securities | 1,283 | 1,011 | |||||||||
Dividends on FHLB of Boston stock | 46 | 10 | |||||||||
Interest on overnight investments | 27 | 20 | |||||||||
Total interest income | 24,655 | 23,180 | |||||||||
Interest expense: | |||||||||||
Interest on deposits | 977 | 975 | |||||||||
Interest on borrowed funds | 55 | 161 | |||||||||
Total interest expense | 1,032 | 1,136 | |||||||||
Net interest income | 23,623 | 22,044 | |||||||||
Provision for loan losses | 525 | 400 | |||||||||
Net interest income after provision for loan losses | 23,098 | 21,644 | |||||||||
Noninterest income: | |||||||||||
Wealth management income | 8,533 | 7,620 | |||||||||
Deposit account fees | 1,242 | 1,281 | |||||||||
ATM/Debit card income | 611 | 557 | |||||||||
Bank owned life insurance income | 305 | 342 | |||||||||
Gain on disposition of investment securities | 878 | 805 | |||||||||
Gain on loans held for sale | 57 | 435 | |||||||||
Other income | 520 | 379 | |||||||||
Total noninterest income | 12,146 | 11,419 | |||||||||
Noninterest expense: | |||||||||||
Salaries and employee benefits | 14,156 | 13,290 | |||||||||
Occupancy and equipment | 4,265 | 4,063 | |||||||||
Data processing | 2,287 | 1,900 | |||||||||
Professional services | 991 | 928 | |||||||||
Marketing | 1,058 | 930 | |||||||||
FDIC Insurance | 391 | 362 | |||||||||
Other expenses | 1,511 | 1,455 | |||||||||
Total noninterest expense | 24,659 | 22,928 | |||||||||
Income before income taxes | 10,585 | 10,135 | |||||||||
Income tax expense | 3,433 | 3,329 | |||||||||
Net income | $ | 7,152 | $ | 6,806 | |||||||
Per share data: | |||||||||||
Basic earnings per common share | $ | 1.83 | $ | 1.76 | |||||||
Diluted earnings per common share | $ | 1.81 | $ | 1.75 | |||||||
Average shares outstanding - basic | 3,873,549 | 3,826,454 | |||||||||
Average shares outstanding - diluted | 3,960,288 | 3,897,744 | |||||||||
CAMBRIDGE BANCORP | |||||||||||||
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||||||||||||
Six Months Ended June 30, | |||||||||||||
2014 | 2013 | ||||||||||||
(In thousands) | |||||||||||||
Net income | $ | 7,152 | $ | 6,806 | |||||||||
Other comprehensive income/(loss), net of tax: | |||||||||||||
Defined benefit retirement plans: | |||||||||||||
Change in unfunded retirement liability | (4 | ) | (170 | ) | |||||||||
Unrealized gains/(losses) on Available for | |||||||||||||
Sale securities: | |||||||||||||
Unrealized holding gains/(losses) arising | |||||||||||||
during the period | 3,274 | (7,531 | ) | ||||||||||
Less: reclassification adjustment for gains | |||||||||||||
recognized in net income | (563 | ) | (516 | ) | |||||||||
Other comprehensive income/(loss) | 2,707 | (8,217 | ) | ||||||||||
Comprehensive income/(loss) | $ | 9,859 | $ | (1,411 | ) | ||||||||
CAMBRIDGE BANCORP | |||||||||||||
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||
Six Months Ended June 30, | |||||||||||||
2014 | 2013 | ||||||||||||
(In thousands) | |||||||||||||
Cash flows provided by operating activities: | |||||||||||||
Net income | $ | 7,152 | $ | 6,806 | |||||||||
Adjustments to arrive at net cash provided by operating activities: | |||||||||||||
Provision for loan losses | 525 | 400 | |||||||||||
Amortization of deferred charges/(income), net | 480 | 608 | |||||||||||
Depreciation and amortization | 922 | 767 | |||||||||||
Bank owned life insurance income | (305 | ) | (342 | ) | |||||||||
Gain on disposition of investment securities | (878 | ) | (805 | ) | |||||||||
Compensation expense from stock option | |||||||||||||
and restricted stock grants | 955 | 229 | |||||||||||
Change in loans held for sale | (413 | ) | 1,684 | ||||||||||
Change in accrued interest receivable, deferred taxes, | |||||||||||||
other assets and other liabilities | (1,671 | ) | 3,200 | ||||||||||
Other, net | 17 | 36 | |||||||||||
Net cash provided by operating activities | 6,784 | 12,583 | |||||||||||
Cash flows used by investing activities: | |||||||||||||
Origination of loans | (112,954 | ) | (151,184 | ) | |||||||||
Purchase of: | |||||||||||||
Investment securities - AFS | (38,741 | ) | (50,544 | ) | |||||||||
Investment securities - HTM | (22,370 | ) | (498 | ) | |||||||||
Maturities, calls and principal payments of: | |||||||||||||
Loans | 68,203 | 61,328 | |||||||||||
Investment securities - AFS | 25,087 | 52,626 | |||||||||||
Investment securities - HTM | 2,266 | 6,709 | |||||||||||
Proceeds from sale of investment securities - AFS | 27,924 | 28,702 | |||||||||||
Purchase of bank owned life insurance | (5,000 | ) | — | ||||||||||
Decrease/(increase) in FHLB of Boston stock | (1,234 | ) | (396 | ) | |||||||||
Purchase of banking premises and equipment | 76 | (2,895 | ) | ||||||||||
Net cash provided/(used) by investing activities | (56,743 | ) | (56,152 | ) | |||||||||
Cash flows provided by financing activities: | |||||||||||||
Net increase/(decrease) in deposits | (98,710 | ) | (34,354 | ) | |||||||||
Net increase/(decrease) in short-term borrowings | 85,000 | 63,000 | |||||||||||
Repayment of long-term borrowings | — | (20,000 | ) | ||||||||||
Proceeds from issuance of common stock | 941 | 913 | |||||||||||
Repurchase of common stock | (503 | ) | (42 | ) | |||||||||
Cash dividends paid on common stock | (3,293 | ) | (3,017 | ) | |||||||||
Net cash provided/(used) by financing activities | (16,565 | ) | 6,500 | ||||||||||
Net increase/(decrease) in cash and cash equivalents | (66,524 | ) | (37,069 | ) | |||||||||
Cash and cash equivalents at beginning of period | 88,107 | 59,923 | |||||||||||
Cash and cash equivalents at end of period | $ | 21,583 | $ | 22,854 | |||||||||
Supplemental disclosure of cash flow information: | |||||||||||||
Cash paid for interest | $ | 1,036 | $ | 1,141 | |||||||||
Cash paid for income taxes | 4,305 | 80 | |||||||||||
Non-cash transactions: | |||||||||||||
Change in accumulated other comprehensive income, net of taxes | 2,707 | (8,217 | ) |