Cambridge Bancorp (OTCBB: CATC) today reported unaudited net income of $4,355,000 for the third quarter of 2015 compared to $3,926,000 for the same quarter in 2014. Diluted earnings per share (EPS) were $1.09 for the third quarter of 2015 versus $0.99 for the same quarter in 2014. For the nine months ending September 30, 2015, unaudited net income was $11,824,000 versus $11,078,000 for the same period in 2014. Diluted earnings per share were $2.97 for the nine-month period versus $2.80 for the same period in 2014.

“We are pleased to report another solid increase in the Bank’s quarter-over-quarter performance,” notes Denis K. Sheahan, the Bank’s president and CEO. “The earnings performance was driven by a sustained trend of growth in loans, which have increased by $110.5 million through the third quarter of 2015. The Bank recorded continued strong profitability metrics in the third quarter with return on average assets of 1.03% and return on average stockholders’ equity of 14.20%.”

Net interest income grew to $13.2 million for the third quarter of 2015, an increase of $1.1 million (9.2%) over the third quarter of 2014. The increase of $2.7 million (7.7%) in net interest income for the nine-month period of 2015 versus the same period in 2014 was primarily a function of growth in the loan portfolio resulting in higher interest on loans of $3.7 million (12.6%), offset by a slight decrease in interest on taxable investment securities of $946,000 (17.7%) due to the Bank’s smaller investment portfolio and lower yields.

Noninterest income of $6.5 million for the September 2015 quarter was flat compared to the same quarter in 2014. The Bank continued to generate solid Wealth Management income, which totaled $5.0 million for the third quarter of 2015. Wealth Management assets under management stood at $2.2 billion at third-quarter end, down modestly compared to $2.3 billion at year-end 2014 as the recent stock volatility dampened growth.

For the third quarter of 2015, noninterest expense totaled $13.1 million, an increase of $809,000 (6.6%) compared to the same quarter in 2014. The primary factor for the increase in noninterest expense was higher salaries and benefits of $604,000 (8.6%) as a result of growth in the workforce and cost of retirement plans. Professional services were $208,000 (48.6%) higher for the quarter, due to timing of various outside consulting services. Noninterest expenses were offset by lower other expenses of $194,000 (21.7%).

The industry-wide headwind of contracting margins continued to place a strain on the Bank’s net interest margin. Sustained lower asset yields led to a decrease of one basis point in the Bank’s net interest margin for the third quarter of 2015 compared to the same quarter in 2014 and a decrease of five basis points for the comparable nine-month period.

Total loans outstanding as of September 30, 2015 were $1.2 billion compared to $1.1 billion at the end of last year. The noteworthy growth in the loan portfolio during 2015 is attributable to increases in commercial mortgages of $62.4 million (14.1%) and residential mortgages of $43.9 million (8.7%). The Bank’s home equity portfolio has rebounded since the end of last year, growing by $6.2 million (10.9%) since December 31, 2014.

Non-performing loans as a percentage of total loans stood at 10 basis points on September 30, 2015, a decrease from 15 basis points at year-end 2014. Loan quality remains solid and the Allowance for Loan Losses stood at $15.3 million or 1.28% of total loans outstanding at September 30, 2015. At December 31, 2014, the Allowance for Loan Losses was $14.3 million or 1.32% of total loans outstanding. The provision for loan losses for the nine-month period of $1.1 million is primarily in response to growth in the loan portfolio.

Total deposits grew by $108.9 million (7.9%) since year-end 2014. Excluding brokered certificates of deposit, which amount to $56.2 million at September 30, 2015, deposits increased by $52.7 million (3.8%) since year-end 2014. Brokered certificates of deposit were used to secure term funding as a component of the Bank’s interest rate risk strategy. A particular highlight in the deposit category was the growth in demand deposits, which have increased by 11.9% since year-end and now represent 29.5% of deposits. Total deposits at third quarter end were $1.5 billion.

Total assets as of September 30, 2015 were $1.7 billion.

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 $1.7 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 $2.2 billion in client assets under management. The Wealth Management group maintains offices in Boston, Massachusetts, and Concord, Manchester, 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 2014 Annual Report, which is posted in the investor relations section of our website at www.cambridgetrust.com. We will also post supplemental financial information for the third quarter of 2015 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, 2015
Dollar amounts in thousands (except share data)
 
                       
Quarter Ended Nine Months Ended
September 30,   September 30,    
  2015     2014     2015     2014  
 
Interest Income $ 13,923 $ 12,613 $ 40,285 $ 37,268
Interest Expense   727     531     1,834     1,563  
Net Interest Income 13,196 12,082 38,451 35,705
Provision for Loan Losses 125 425 1,075 950
Non-Interest Income 6,494 6,522 19,370 18,668
Non-Interest Expense   13,115     12,306     39,211     36,965  
Income Before Taxes 6,450 5,873 17,535 16,458
Income Taxes   2,095     1,947     5,711     5,380  
Net Income $ 4,355   $ 3,926   $ 11,824   $ 11,078  
 

Data Per Common Share:

 
Basic Earnings Per Share $ 1.09 $ 1.00 $ 2.97 $ 2.82
Diluted Earnings Per Share $ 1.09 $ 0.99 $ 2.97 $ 2.80
Dividends Declared Per Share $ 0.45 $ 0.42 $ 1.35 $ 1.26
 
Avg. Common Shares Outstanding:
Basic 3,949,469 3,898,209 3,933,529 3,881,594
Diluted 3,997,145 3,966,138 3,985,902 3,952,837
 

Selected Operating Ratios:

 
Net Interest Margin 3.27 % 3.28 % 3.27 % 3.32 %
Return on Average Assets 1.03 % 1.02 % 0.96 % 0.98 %
Return on Average Equity 14.20 % 13.36 % 13.10 % 12.89 %
 
 
September 30, December 31, September 30,
  2015     2014     2014  
 
Total Assets $ 1,687,143 $ 1,573,692 $ 1,558,923
Total Loans 1,191,269 1,080,766 1,033,381
Non-Performing Loans 1,235 1,629 1,665
Allowance for Loan Losses 15,264 14,269 13,700
Allowance to Non-Performing Loans 1235.58 % 875.79 % 822.75 %
Allowance to Total Loans 1.28 % 1.32 % 1.33 %
Total Deposits 1,479,422 1,370,536 1,308,942
Total Stockholders' Equity 125,332 116,258 118,449
 
Book Value Per Share $ 31.35 $ 29.50 $ 30.07
Tangible Book Value Per Share $ 31.12 $ 29.31 $ 29.88
 
 
CAMBRIDGE BANCORP
UNAUDITED CONSOLIDATED BALANCE SHEETS
             
September 30, December 31,
2015   2014  
(In thousands)
ASSETS
 
Cash and cash equivalents $ 18,723 $ 17,440
 
Investment securities:
Available for sale, at fair value 335,730 339,791
Held to maturity, at amortized cost 82,267   79,646  
Total investment securities 417,997 419,437
 
Loans held for sale, at lower of cost or fair value 291 284
 
Loans:
Residential mortgage 551,161 507,216
Commercial mortgage 504,193 441,842
Home equity 62,745 56,579
Commercial 41,766 49,492
Consumer 31,404   25,637  
Total loans 1,191,269 1,080,766
Allowance for loan losses (15,264 ) (14,269 )
Net loans 1,176,005 1,066,497
 
Stock in FHLB of Boston, at cost 8,609 7,955
Bank owned life insurance 29,725 29,220
Banking premises and equipment, net 10,651 8,367
Accrued interest receivable 4,317 3,925
Other assets 20,825   20,567  
Total assets $ 1,687,143   $ 1,573,692  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
Deposits:
Demand $ 436,872 $ 390,286
Interest bearing checking 312,826 352,661
Money market 87,774 74,654
Savings 459,783 430,040
Certificates of deposit 182,167   122,895  
Total deposits 1,479,422 1,370,536
 
Short-term borrowings 60,000 69,000
Long-term borrowings 3,950 —
Other liabilities 18,439   17,898  
Total liabilities 1,561,811   1,457,434  
Stockholders' equity:
Common stock, par value $1.00; Authorized
10,000,000 shares; Outstanding: 3,998,162 and
3,940,536 shares, respectively 3,998 3,941
Additional paid-in capital 30,147 28,264
Retained earnings 97,197 91,098
Accumulated other comprehensive income/(loss) (6,010 ) (7,045 )
Total stockholders’ equity 125,332   116,258  
Total liabilities and stockholders’ equity $ 1,687,143   $ 1,573,692  
 
 
CAMBRIDGE BANCORP
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
 
                    Quarter Ended September 30,
2015       2014
(In thousands, except per share data)
 
Interest income:
Interest on loans $ 11,673 $ 10,306
Interest on taxable investment securities 1,456 1,586
Interest on tax exempt investment securities 688 690
Dividends on FHLB of Boston stock 99 26
Interest on overnight investments 7 5
Total interest income 13,923 12,613
 
Interest expense:
Interest on deposits 658 480
Interest on borrowed funds 69 51
Total interest expense 727 531
 
Net interest income 13,196 12,082
 
Provision for loan losses 125 425
 
Net interest income after provision for loan losses 13,071 11,657
 
Noninterest income:
Wealth management income 5,003 4,961
Deposit account fees 579 608
ATM/Debit card income 299 317
Bank owned life insurance income 160 185
Gain on disposition of investment securities 19 195
Gain on loans held for sale 200 36
Other income 234 220
Total noninterest income 6,494 6,522
 
Noninterest expense:
Salaries and employee benefits 7,587 6,983
Occupancy and equipment 2,184 2,133
Data processing 1,208 1,140
Professional services 636 428
Marketing 587 528
FDIC Insurance 214 201
Other expenses 699 893
Total noninterest expense 13,115 12,306
 
Income before income taxes 6,450 5,873
 
Income tax expense 2,095 1,947
   
Net income $ 4,355 $ 3,926
 
Per share data:
 
Basic earnings per common share $ 1.09 $ 1.00
Diluted earnings per common share $ 1.09 $ 0.99
 
Average shares outstanding - basic 3,949,469 3,898,209
Average shares outstanding - diluted 3,997,145 3,966,138
 
 
CAMBRIDGE BANCORP
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                     
Quarter Ended September 30,
2015   2014  
(In thousands)
 
 
Net income $ 4,355 $ 3,926
 
Other comprehensive income/(loss), net of tax:
Defined benefit retirement plans:
Change in unfunded retirement liability 105 (2 )
Unrealized gains/(losses) on Available for
Sale securities:
Unrealized holding gains/(losses) arising
during the period 1,100 (1,077 )
Less: reclassification adjustment for gains
recognized in net income (13 ) (125 )
   
Other comprehensive income/(loss) 1,192 (1,204 )
   
Comprehensive income/(loss) $ 5,547   $ 2,722  
 
 
CAMBRIDGE BANCORP
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
                       
Nine Months Ended September 30,
2015 2014
(In thousands, except per share data)
 
Interest income:
Interest on loans $ 33,589 $ 29,843
Interest on taxable investment securities 4,402 5,348
Interest on tax exempt investment securities 2,068 1,973
Dividends on FHLB of Boston stock 203 72
Interest on overnight investments 23 32
Total interest income 40,285 37,268
 
Interest expense:
Interest on deposits 1,635 1,457
Interest on borrowed funds 199 106
Total interest expense 1,834 1,563
 
Net interest income 38,451 35,705
 
Provision for loan losses 1,075 950
 
Net interest income after provision for loan losses 37,376 34,755
 
Noninterest income:
Wealth management income 14,387 13,494
Deposit account fees 1,716 1,850
ATM/Debit card income 888 928
Bank owned life insurance income 505 490
Gain on disposition of investment securities 690 1,073
Gain on loans held for sale 495 93
Other income 689 740
Total noninterest income 19,370 18,668
 
Noninterest expense:
Salaries and employee benefits 23,127 21,139
Occupancy and equipment 6,475 6,398
Data processing 3,549 3,427
Professional services 1,482 1,419
Marketing 1,762 1,586
FDIC Insurance 633 592
Other expenses 2,183 2,404
Total noninterest expense 39,211 36,965
 
Income before income taxes 17,535 16,458
 
Income tax expense 5,711 5,380
   
Net income $ 11,824 $ 11,078
 
Per share data:
 
Basic earnings per common share $ 2.97 $ 2.82
Diluted earnings per common share $ 2.97 $ 2.80
 
Average shares outstanding - basic 3,933,529 3,881,594
Average shares outstanding - diluted 3,985,902 3,952,837
 
 
CAMBRIDGE BANCORP
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                         
Nine Months Ended September 30,
2015   2014  
(In thousands)
 
 
Net income $ 11,824 $ 11,078
 
Other comprehensive income/(loss), net of tax:
Defined benefit retirement plans:
Change in unfunded retirement liability 315 (6 )
Unrealized gains/(losses) on Available for
Sale securities:
Unrealized holding gains/(losses) arising
during the period 1,163 2,197
Less: reclassification adjustment for gains
recognized in net income (443 ) (688 )
   
Other comprehensive income/(loss) 1,035 1,503
   
Comprehensive income/(loss) $ 12,859   $ 12,581  
 
 
CAMBRIDGE BANCORP
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
                         
Nine Months Ended September 30,
2015   2014  
(In thousands)
Cash flows provided by operating activities:
Net income $ 11,824 $ 11,078
Adjustments to arrive at net cash provided by operating activities:
Provision for loan losses 1,075 950
Amortization of deferred charges/(income), net 873 896
Depreciation and amortization 1,322 1,382
Bank owned life insurance income (505 ) (490 )
Gain on disposition of investment securities (690 ) (1,073 )
Compensation expense from stock option
and restricted stock grants 1,150 1,095
Change in loans held for sale (7 ) 230
Change in accrued interest receivable, deferred taxes,
other assets and other liabilities (190 ) (445 )
Other, net 20   51  
Net cash provided by operating activities 14,872   13,674  
Cash flows used by investing activities:
Origination of loans (214,599 ) (203,217 )
Purchase of:
Investment securities - AFS (129,973 ) (43,741 )
Investment securities - HTM (7,640 ) (23,895 )
Maturities, calls and principal payments of:
Loans 103,735 112,032
Investment securities - AFS 87,653 44,071
Investment securities - HTM 4,969 2,529
Proceeds from sale of investment securities - AFS 47,625 30,011
Purchase of bank owned life insurance — (5,000 )
Change in FHLB of Boston stock (654 ) (1,724 )
Purchase of banking premises and equipment (3,606 ) (14 )
Net cash used by investing activities (112,490 ) (88,948 )
Cash flows provided by financing activities:
Change in deposits 108,886 (100,105 )
Change in short-term borrowings (9,000 ) 115,000
Proceeds from long-term borrowings 3,950 —
Proceeds from issuance of common stock 864 941
Repurchase of common stock (422 ) (504 )
Cash dividends paid on common stock (5,377 ) (4,947 )
Net cash provided by financing activities 98,901   10,385  
Net increase/(decrease) in cash and cash equivalents 1,283 (64,889 )
Cash and cash equivalents at beginning of period 17,440   88,107  
Cash and cash equivalents at end of period $ 18,723   $ 23,218  
 
Supplemental disclosure of cash flow information:
Cash paid for interest $ 1,799 $ 1,568
Cash paid for income taxes 6,080 5,700
Non-cash transactions:
Change in accumulated other comprehensive income, net of taxes 1,035 1,503