Cambridge Bancorp (OTCBB: CATC) today announced unaudited net income of $14,944,000 for the year ended December 31, 2014, representing an increase of $804,000, or 5.7%, compared to net income of $14,140,000 for the year ended December 31, 2013. Diluted earnings per share (EPS) were $3.78, a 4.4% 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 2014,” noted Joseph V. Roller II, president and CEO. “We are attracting new customers and expanding existing relationships in each of the Bank’s business lines by demonstrating value to the market and executing our growth strategies.”

The Bank experienced a strong year for loan growth with an overall increase of $138.3 million, or 14.7%, for the year. At year-end 2014, the Bank’s loan portfolio was in excess of $1 billion for the first time. Both commercial and residential mortgages showed noteworthy growth for the year, with increases of $78.5 million (21.6%) and $49.0 million (10.7%), respectively. Home equity loans were up $9.9 million (21.3%) for the year ending December 31, 2014 following the introduction of a new home equity line product and a successful marketing campaign.

For the year ended December 31, 2014, net interest income increased by $2.8 million, or 6.2%, to $48.3 million compared to $45.5 million for 2013. Interest on loans increased by $4.8 million, or 13.5%, driven by the full year impact of strong loan growth in 2013. The prolonged low interest rate environment persisted in impacting margins, which have been unfavorable for the industry for some time. The Bank’s net interest margin decreased 2 basis points to 3.33% for the year compared to 3.35% for the year ended December 31, 2013.

The Bank’s loan growth outpaced deposits for the year. The Bank elected to deploy cash flows from its investment portfolio and access short-term borrowings to meet the shortfall between loan funding needs and deposit growth. The Bank’s total investment securities portfolio decreased to $419.4 million from $448.0 million at year-end 2013. The shift in the Bank’s earning asset mix coupled with the lower interest rate environment resulted in a decrease of $2.2 million in interest income on investment securities for the year. Short-term borrowings stood at $69.0 million at year-end 2014.

Noninterest income totaled $24.5 million for the year 2014 compared to $23.2 million for 2013. The Bank’s Wealth Management income accounted for the upswing in total noninterest income for the year. Wealth management income increased by $1.7 million, or 10.4%, to $18.0 million compared to $16.3 million for 2013. Since the beginning of 2014, Wealth Management assets under management (AUM) have increased $150.5 million to $2.3 billion at year-end.

Other contributors to the noninterest income increase were higher ATM/Debit card income of $65,000, higher bank owned life insurance income of $13,000 and higher other income of $64,000. The Bank experienced a continued slowdown in revenue produced by gains on loans sold as mortgage refinancing activity declined. Income from gains on loans sold ended $349,000 lower than last year. In addition, there was a decrease of $151,000 in deposit account fees and a decrease of $48,000 in gains on disposition of investment securities compared to the year ended December 31, 2013.

Noninterest expense increased by $2.9 million, or 6.3%, to $49.0 million for the year ended December 31, 2014. The increase in salaries and benefits for the year of $804,000 is the result of a combination of merit increases and new hires to support business growth, coupled with lower expenses related to our retirement plans. The increase of $347,000 in occupancy and equipment for the year is primarily the result of depreciation and amortization of leasehold improvements. The increase of $555,000 in data processing expense is attributable to increased volumes and new products. The increase of $460,000 in professional services is primarily the result of higher employment agency and legal fees. Other factors contributing to the increase in noninterest expense were higher marketing expense of $295,000, higher FDIC insurance of $54,000 and higher other expenses of $381,000.

Total loans outstanding at year-end 2014 were $1.1 billion compared to $942.5 million at year-end 2013. Loan quality remained sound across consumer and corporate customer bases with non-performing loans totaling $1.6 million at December 31, 2014, a modest decrease of $74,000 compared to the year-end 2013. The Allowance for Loan Losses was $14.3 million, or 1.32%, of total loans outstanding at year-end 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 of $1.6 million during 2014 was $50,000 more than the prior year’s provision. This increase was primarily in response to loan growth during the year.

In the fourth quarter of 2014 unaudited net income was $3,866,000, an increase of 6.2% compared to $3,639,000 for the same quarter in 2013.

“Results for the fourth quarter were highlighted by a favorable increase in net interest income of $648,000, or 5.4%, over the same quarter in 2013,” said Mr. Roller. “Our loan portfolio experienced solid growth, with credit standards holding steady. As the economy continues to improve, we are well-positioned to seize opportunities in the markets and businesses in which we compete.”

Deposit growth did not meet expectations, with total deposits down $38.5 million at year-end 2014 compared to year-end 2013. Total deposits at year-end 2014 were $1.4 billion.

Total assets at year-end 2014 were $1.6 billion versus $1.5 billion 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 125-year-old Massachusetts chartered commercial bank with $1.6 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 $2.3 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. We will also post the Cambridge Bancorp 2014 Annual Report at the same site later this quarter.

Financial Highlights:

               
CAMBRIDGE BANCORP
QUARTERLY UNAUDITED RESULTS
December 31, 2014
Dollar amounts in thousands (except share data)
 
 

Quarter Ended

Year Ended
December 31, December 31,
 

2014

     2013     2014     2013  
 
Interest Income $ 13,103 $ 12,453 $ 50,371 $ 47,661
Interest Expense   535     533     2,098     2,194  
Net Interest Income

12,568

 11,920 48,273 45,467
Provision for Loan Losses 600 500 1,550 1,500
Non-Interest Income 5,796 5,836 24,464 23,181
Non-Interest Expense   12,042     11,837     49,007     46,111  
Income Before Taxes 5,722 5,419 22,180 21,037
Income Taxes   1,856     1,780     7,236     6,897  
Net Income $ 3,866   $ 3,639   $ 14,944   $ 14,140  
 

Data Per Common Share:

 
Basic Earnings Per Share $ 0.98 $ 0.94 $ 3.81 $ 3.65
Diluted Earnings Per Share $ 0.97 $ 0.93 $ 3.78 $ 3.62
Dividends Declared Per Share $ 0.42 $ 0.42 $ 1.68 $ 1.59
 
Avg. Common Shares Outstanding:
Basic 3,899,213 3,852,683 3,886,692 3,839,146
Diluted 3,968,821 3,919,831 3,957,416 3,907,201
 

Selected Operating Ratios:

 
Net Interest Margin 3.37 % 3.41 % 3.33 % 3.35 %
Return on Average Assets 0.99 % 0.99 % 0.98 % 0.99 %
Return on Average Equity 12.81 % 13.93 % 12.87 % 13.63 %
 
 
December 31, December 31,
  2014     2013  
 
Total Assets $ 1,573,692 $ 1,533,710
Total Loans 1,080,766 942,451
Non-Performing Loans 1,629 1,703
Allowance for Loan Losses 14,269 12,708
Allowance to Non-Performing Loans 875.79 % 746.11 %
Allowance to Total Loans 1.32 % 1.35 %
Total Deposits 1,370,536 1,409,047
Total Stockholders' Equity 116,258 109,283
 
Book Value Per Share $ 29.50 $ 28.13
Tangible Book Value Per Share $ 29.31 $ 27.93
 
 
CAMBRIDGE BANCORP
UNAUDITED CONSOLIDATED BALANCE SHEETS
           
December 31, December 31,
  2014     2013  
(In thousands)
ASSETS
 
Cash and cash equivalents

$

17,440

$

88,107

 
Investment securities:
Available for sale, at fair value 339,791 388,793
Held to maturity, at amortized cost   79,646     59,181  
Total investment securities 419,437 447,974
 
Loans held for sale, at lower of cost or fair value 284 403
 
Loans:
Residential mortgage 507,216 458,176
Commercial mortgage 441,842 363,294
Home equity 56,579 46,635
Commercial 49,492 50,758
Consumer   25,637     23,588  
Total loans 1,080,766 942,451
Allowance for loan losses   (14,269 )   (12,708 )
Net loans 1,066,497 929,743
 
Stock in FHLB of Boston, at cost 7,955 6,231
Bank owned life insurance 29,220 23,555
Banking premises and equipment, net 8,367 9,951
Accrued interest receivable 3,925 3,626
Other assets   20,567     24,120  
Total assets

$

1,573,692

 

$

1,533,710

 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
Deposits:
Demand

$

390,286

$

382,255

Interest bearing checking 352,661 335,010
Money market 74,654 78,410
Savings 430,040 489,160
Certificates of deposit   122,895     124,212  
Total deposits 1,370,536 1,409,047
 
Short-term borrowings 69,000 —
Long-term borrowings — —
Other liabilities   17,898     15,380  
Total liabilities   1,457,434     1,424,427  
Stockholders' equity:
Common stock, par value $1.00; Authorized
10,000,000 shares; Outstanding: 3,940,536 and
3,884,851 shares, respectively 3,941 3,885
Additional paid-in capital 28,264 26,027
Retained earnings 91,098 83,479
Accumulated other comprehensive income/(loss)   (7,045 )   (4,108 )
Total stockholders’ equity   116,258     109,283  
Total liabilities and stockholders’ equity

$

1,573,692

 

$

1,533,710

 
 
 
CAMBRIDGE BANCORP
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
               
Quarter Ended December 31,
2014 2013
(In thousands, except per share data)
 
Interest income:
Interest on loans

$

10,638

$

9,663

Interest on taxable investment securities 1,737 2,261
Interest on tax exempt investment securities 691 510
Dividends on FHLB of Boston stock 29 5
Interest on overnight investments   8   14
Total interest income  

13,103

  12,453
 
Interest expense:
Interest on deposits 493 509
Interest on borrowed funds   42   24
Total interest expense   535   533
Net interest income 12,568 11,920
Provision for loan losses   600   500
Net interest income after provision for loan losses   11,968   11,420
 
Noninterest income:
Wealth management income 4,460 4,301
Deposit account fees 566 641
ATM/Debit card income 319 317
Bank owned life insurance income 175 154
Gain on disposition of investment securities — 131
Gain on loans held for sale 77 51
Other income   199   241
Total noninterest income   5,796   5,836
Noninterest expense:
Salaries and employee benefits 6,660 7,124
Occupancy and equipment 2,112 2,078
Data processing 1,140 1,063
Professional services 589 235
Marketing 531 427
FDIC Insurance 201 191
Other expenses   809   719
Total noninterest expense   12,042   11,837
Income before income taxes 5,722 5,419
Income tax expense   1,856   1,780
Net income

$

3,866

$

3,639

 
Per share data:
Basic earnings per common share

$

0.98

$

0.94

Diluted earnings per common share

$

0.97

$

0.93

 
Average shares outstanding - basic 3,899,213 3,852,683
Average shares outstanding - diluted 3,968,821 3,919,831
 
           
CAMBRIDGE BANCORP
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
         
Quarter Ended December 31,
  2014     2013  
(In thousands)
 
 
Net income

 

$

3,866

 

$

3,639

Other comprehensive income/(loss), net of tax:
Defined benefit retirement plans:
Change in unfunded retirement liability (6,216 ) 5,926
Unrealized gains/(losses) on Available for
Sale securities:
Unrealized holding gains/(losses) arising
during the period 1,776 (2,407 )
Less: reclassification adjustment for gains
recognized in net income   —     (85 )
Other comprehensive income/(loss)   (4,440 )   3,434  
Comprehensive income/(loss)

 

$

(574

)

 

$

7,073

 
 
               
CAMBRIDGE BANCORP
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
 
Year Ended December 31,
2014 2013
(In thousands, except per share data)
 
Interest income:
Interest on loans

$

40,481

$

35,669

Interest on taxable investment securities 7,085 9,905
Interest on tax exempt investment securities 2,664 2,028
Dividends on FHLB of Boston stock 101 20
Interest on overnight investments   40   39
Total interest income   50,371   47,661
Interest expense:
Interest on deposits 1,950 1,970
Interest on borrowed funds   148   224
Total interest expense   2,098   2,194
Net interest income 48,273 45,467
Provision for loan losses   1,550   1,500
Net interest income after provision for loan losses   46,723   43,967
Noninterest income:
Wealth management income 17,954 16,265
Deposit account fees 2,416 2,567
ATM/Debit card income 1,247 1,182
Bank owned life insurance income 665 652
Gain on disposition of investment securities 1,073 1,121
Gain on loans held for sale 170 519
Other income   939   875
Total noninterest income   24,464   23,181
Noninterest expense:
Salaries and employee benefits 27,799 26,995
Occupancy and equipment 8,510 8,163
Data processing 4,567 4,012
Professional services 2,008 1,548
Marketing 2,117 1,822
FDIC Insurance 793 739
Other expenses   3,213   2,832
Total noninterest expense   49,007   46,111
Income before income taxes 22,180 21,037
Income tax expense   7,236   6,897
Net income

$

14,944

$

14,140

 
Per share data:
Basic earnings per common share

$

3.81

$

3.65

Diluted earnings per common share

$

3.78

$

3.62

 
Average shares outstanding - basic 3,886,692 3,839,146
Average shares outstanding - diluted 3,957,416 3,907,201
 
               
CAMBRIDGE BANCORP
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 
Year Ended December 31,
  2014     2013  
(In thousands)
 
 
Net income

$

14,944

$

14,140

Other comprehensive income/(loss), net of tax:
Defined benefit retirement plans:
Change in unfunded retirement liability (6,222 ) 5,671
Unrealized gains/(losses) on Available for
Sale securities:
Unrealized holding gains/(losses) arising
during the period 3,973 (9,887 )
Less: reclassification adjustment for gains
recognized in net income   (688 )   (720 )
Other comprehensive income/(loss)   (2,937 )   (4,936 )
Comprehensive income/(loss)

$

12,007

 

$

9,204

 
 
                   
CAMBRIDGE BANCORP
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
Year Ended December 31,
  2014     2013  
(In thousands)
Cash flows provided by operating activities:
Net income

$

14,944

$

14,140

Adjustments to arrive at net cash provided by operating activities:
Provision for loan losses 1,550 1,500
Amortization of deferred charges/(income), net 1,060 720
Depreciation and amortization 1,817 1,569
Bank owned life insurance income (665 ) (652 )
Gain on disposition of investment securities (1,073 ) (1,121 )
Compensation expense from stock option
and restricted stock grants 509 439
Change in loans held for sale 119 1,281
Change in accrued interest receivable, deferred taxes,
other assets and other liabilities (2,216 ) 4,998
Other, net   56     321  
Net cash provided by operating activities   16,101     23,195  
Cash flows used by investing activities:
Origination of loans (301,863 ) (333,266 )
Purchase of:
Investment securities - AFS (43,741 ) (55,577 )
Investment securities - HTM (24,295 ) (4,427 )
Maturities, calls and principal payments of:
Loans 163,161 132,692
Investment securities - AFS 68,190 117,713
Investment securities - HTM 3,776 16,361
Proceeds from sale of investment securities - AFS 30,013 35,557
Purchase of bank owned life insurance (5,000 ) —
Change in FHLB of Boston stock (1,724 ) (1,221 )
Purchase of banking premises and equipment   (233 )   (5,306 )
Net cash used by investing activities   (111,716 )   (97,474 )
Cash flows provided by financing activities:
Change in deposits (38,511 ) 127,714
Change in short-term borrowings 69,000 —
Repayment of long-term borrowings — (20,000 )
Proceeds from issuance of common stock 1,925 1,255
Repurchase of common stock (864 ) (342 )
Cash dividends paid on common stock   (6,602 )   (6,164 )
Net cash provided by financing activities   24,948     102,463  
Net increase/(decrease) in cash and cash equivalents (70,667 ) 28,184
Cash and cash equivalents at beginning of period   88,107     59,923  
Cash and cash equivalents at end of period

$

17,440

 

$

88,107

 
 
Supplemental disclosure of cash flow information:
Cash paid for interest

$

2,094

$

2,196

Cash paid for income taxes 8,490 3,610
Non-cash transactions:
Change in accumulated other comprehensive income, net of taxes (2,937 ) (4,936 )