Cambridge Bancorp (NASDAQ: CATC) (the “Company”), the parent of Cambridge Trust Company (“Cambridge Trust”), today announced net income of $23,881,000 for the year ended December 31, 2018, representing an increase of $9,065,000, or 61.2%, compared to net income of $14,816,000 for the year ended December 31, 2017. Income before income taxes was $31,088,000 for the year ended December 31, 2018, representing an increase of $2,914,000, or 10.3%, compared to $28,174,000 for the same period of last year. Diluted earnings per share were $5.77 for 2018, representing a 59.8% increase over diluted earnings per share of $3.61 for 2017. Earnings in 2017 were impacted by the Tax Cuts and Jobs Act of 2017, which is discussed in more detail below.

For the quarter ended December 31, 2018, net income was $5,306,000, representing an increase of $4,342,000, as compared to net income of $964,000 for the quarter ended December 31, 2017. Income before income taxes was $6,891,000 for the quarter ended December 31, 2018, representing a decrease of $444,000, or 6.1%, compared to $7,335,000 for the same quarter of last year. Diluted earnings per share were $1.28 for the fourth quarter of 2018, representing an increase of $1.05 over diluted earnings per share of $0.23 for the fourth quarter of 2017.

In the fourth quarter of 2018, Cambridge Bancorp, Cambridge Trust, and Optima Bank & Trust Company (“Optima”) entered into a definitive agreement pursuant to which Optima will merge with and into Cambridge Trust in a stock and cash transaction. The transaction is anticipated to close during the second quarter of 2019 and will enhance and expand the Company’s southern New Hampshire presence. Excluding merger and acquisition expenses incurred related to the pending Optima merger, net income would have been $24,026,000 for the year ended December 31, 2018 and $5,451,000 for the quarter ended December 31, 2018. Net income excluding the impact of merger expenses in 2018 and adjusted for the change in tax law in 2017 increased by $5,341,000, or 28.6%, for the year ended December 31, 2018 and $618,000, or 12.8%, for the quarter ended December 31, 2018.

As previously reported, earnings in 2017 were impacted by the Tax Cuts and Jobs Act of 2017. Effective in 2018, the change in tax law reduced the Company’s federal tax rate from 35% to 21%. The change in tax law required a one-time non-cash write-down of our net deferred tax assets of $3,869,000 in 2017 as these deferred tax assets were required to be re-measured using the new lower tax rate in 2017. Removing the impact of the charge for the change in tax law, net income would have been $18,685,000 for the year ended December 31, 2017 and $4,833,000 for the quarter ended December 31, 2017. Diluted earnings per share would have been $4.55 for the year ended December 31, 2017 and $1.17 for the quarter ended December 31, 2017.

2018 Highlights as Compared to 2017:

  • Revenue of $96.6 million, an increase of 10.0%
  • Total Assets of $2.1 billion, an increase of $151.5 million, or 7.8%
  • Loan growth of $208.9 million, or 15.5%
  • Core deposit growth of $74.4 million, or 4.6%

“We are pleased to report that the Company had a strong year of growth in 2018 as we exceeded $2 billion in assets,” noted Denis K. Sheahan, Chairman and CEO. “Cambridge Bancorp additionally posted record earnings for the year, with profitability metrics remaining strong producing a return on average assets of 1.21% and return on average shareholders’ equity of 15.35%. Our performance was driven by a continued positive trend in loan growth, which has increased $208.9 million, or 15.5%, from year end 2017, and the ability to maintain our net interest margin in a challenging rising interest rate cycle.”

Balance Sheet

Total assets increased $151.5 million, or 7.8%, from December 31, 2017 and were $2.1 billion as of December 31, 2018.

Total loans increased $208.9 million, or 15.5%, from December 31, 2017 and stood at $1.6 billion as of December 31, 2018. The growth in total loans was due to net loan growth in the commercial real estate, residential real estate, and commercial & industrial portfolios. Commercial real estate loans increased $124.3 million from $633.6 million at December 31, 2017, to $758.0 million at December 31, 2018. Residential real estate loans increased $65.4 million from $538.9 million at December 31, 2017, to $604.3 million at December 31, 2018. Commercial & industrial loans increased $28.4 million from $65.3 million at December 31, 2017, to $93.7 million at December 31, 2018.

The Company’s total investment securities portfolio increased by $13.8 million, or 3.2%, from $437.2 million at December 31, 2017 to $451.0 million at December 31, 2018.

Core deposits, which the Company defines as all deposits other than certificates of deposit, increased by $74.4 million, or 4.6% from December 31, 2017. The cost of total deposits for the quarter ended December 31, 2018 was 0.38%, as compared to 0.22% for the quarter ended December 31, 2017. The cost of total deposits for the year ended December 31, 2018 was 0.28%, as compared to 0.19% for the year ended December 31, 2017. Total deposits at December 31, 2018 were $1.8 billion.

Short-term borrowings increased from $0 at December 31, 2017 to $90.0 million at December 31, 2018, as the Company funded strong loan growth during the year.

Net Interest and Dividend Income

For the quarter ended December 31, 2018, net interest and dividend income after provision for loan losses increased by $923,000, or 6.2%, to $15.7 million, as compared to $14.8 million for the quarter ended December 31, 2017. Interest on loans increased by $2.3 million, or 17.5%, which was driven by a combination of the impact of rising rates on our loan portfolio and net loan growth. Provision for loan losses expense increased $713,000 for the quarter ended December 31, 2018 as the Company experienced strong loan growth during the period. The Company’s net interest margin, on a fully taxable equivalent basis, increased six basis points to 3.32% for the quarter ended December 31, 2018, as compared to 3.26% for the quarter ended December 31, 2017.

For the year ended December 31, 2018, net interest and dividend income after provision for loan losses increased by $4.8 million, or 8.5%, to $62.1 million, as compared to $57.2 million for the year ended December 31, 2017. Interest on loans increased by $6.6 million, or 12.7%, which was driven by a combination of the impact of rising rates on our loan portfolio and net loan growth. Provision for loan losses expense increased $1.1 million for the year ended December 31, 2018 as the Company experienced strong loan growth during the period. The Company’s net interest margin, on a fully taxable equivalent basis, increased eight basis points to 3.33% for the year ended December 31, 2018, as compared to 3.25% for the year ended December 31, 2017.

Noninterest Income

Total noninterest income increased by $463,000, or 6.1%, to $8.0 million for the quarter ended December 31, 2018, as compared to $7.6 million for the quarter ended December 31, 2017, primarily as a result of higher loan related derivative income associated with the Company’s interest rate risk strategy and higher Wealth Management revenue. Noninterest income was 32.9% of total revenue for the quarter ended December 31, 2018. Loan related derivative income increased $298,000 for the fourth quarter of 2018, as compared to the fourth quarter of 2017, due to the volume of loan related derivative transactions executed in the fourth quarter of 2018. Wealth Management revenue increased by $195,000, or 3.3%, for the fourth quarter of 2018, as compared to the fourth quarter of 2017, due to higher average assets under management. Wealth Management Assets under Management and Administration decreased by $209.0 million, or 6.8%, to $2.9 billion as of December 31, 2018, as compared to $3.1 billion as of December 31, 2017, primarily as a result of net asset outflows combined with reductions in the equity markets during the year.

Total noninterest income increased by $2.8 million, or 9.1%, to $33.0 million for the year ended December 31, 2018, as compared to $30.2 million for the year ended December 31, 2017, primarily as a result of higher Wealth Management revenue and higher loan related derivative income. Noninterest income was 34.2% of total revenue for year ended December 31, 2018. Wealth Management revenue increased by $2.2 million, or 9.4%, for the year ended December 31, 2018, as compared to the year ended December 31, 2017, due to higher average assets under management during the period. Loan related derivative income increased $871,000 for the year ended December 31, 2018, as compared to the year ended December 31, 2017, due to the volume of loan related derivative transactions executed in 2018.

Noninterest income increases were partially offset by lower gains on loans held for sale of $256,000 for the year ended December 31, 2018, as compared to the year ended December 31, 2017.

Noninterest Expense

Total noninterest expense increased by $1.8 million, or 12.2%, to $16.8 million for the quarter ended December 31, 2018, as compared to $15.0 million for the quarter ended December 31, 2017, primarily driven by higher salaries and benefits expense, marketing expense, data processing expense, and merger expenses. The increase in salaries and benefits of $942,000 was driven by the combination of increased staffing to support business initiatives, higher employee benefit costs including performance based equity compensation, and the current year adoption of accounting guidance (“ASU 2017-07”) for net periodic pension costs and net periodic postretirement benefit costs. The 2018 adoption of ASU 2017-07 required that non-service related pension expense and income items no longer be included in salaries and employee benefits in the Company’s income statement. The non-service related pension expense and income items are instead included in other expenses. Previously reported salaries and employee benefits and other expenses have been restated to reflect the retrospective adoption. The retrospective application for the quarter ended December 31, 2017 was a decrease in salaries and employee benefits and an increase in other expenses of approximately $68,000. The increase of $338,000 in marketing expense was due to the increased focus of growing brand awareness within our markets. The increase of $203,000 in data processing expense was due to investments made in technology. The merger expenses of $201,000 were professional services related to the pending acquisition of Optima.

Total noninterest expense increased by $4.7 million, or 7.9%, to $64.0 million for the year ended December 31, 2018, as compared to $59.3 million for the year ended December 31, 2017, primarily driven by increased salaries and employee benefits expense, marketing expense, data processing expense, and merger expenses. The increase in salaries and benefits expense of $4.8 million was driven by the combination of increased staffing to support business initiatives, higher employee benefit costs including performance based equity compensation, and the adoption of ASU 2017-07. The retrospective application for the twelve months ended December 31, 2017 was a decrease in salaries and employee benefits and an increase in other expenses of approximately $252,000. The increase of $609,000 in marketing was due to costs related to Cambridge Trust’s rebranding efforts, which included the development of a new brand, website, and advertising campaign. The increase of $221,000 in data processing expense was due to investments made in technology. The merger expenses of $201,000 were professional services related to the pending acquisition of Optima.

Noninterest expense increases were partially offset by lower other expenses of $880,000 resulting from the adoption of ASU 2017-07 as discussed above for the twelve months ended December 31, 2018, as compared to the twelve months ended December 31, 2017.

Asset Quality

Loan quality remained sound with non-performing loans totaling $642,000, or 0.04% of total loans outstanding as of December 31, 2018. The allowance for loan losses was $16.8 million, or 1.08% of total loans outstanding at December 31, 2018, compared to $15.3 million, or 1.13% of total loans outstanding at year end 2017. Net loan charge offs remained low at $53,000 for the year ended December 31, 2018, as compared to $303,000 for the year ended December 31, 2017.

Income Taxes

In accordance with the Tax Cuts and Jobs Act of 2017, the Company’s federal statutory corporate tax rate decreased from 35% to 21% effective January 1, 2018. The effective tax rate was 23.0% for the quarter ended December 31, 2018, as compared to 86.9% for the quarter ended December 31, 2017. For the year ended December 31, 2018, the effective tax rate was 23.2%, as compared to 47.4% for the year ended December 31, 2017. Removing the impact of the charge for the change in tax law, the effective tax rate would have been 34.1% for the quarter ended December 31, 2017 and 33.7% for the year ended December 31, 2017.

Dividend & Capital

On January 22, 2019, the Company’s Board of Directors declared an increased quarterly cash dividend of $0.51 per share, which is payable on February 21, 2019 to shareholders of record as of the close of business on February 7, 2019. This represents an increase of $0.01 as compared to the $0.50 dividend paid in the prior quarter.

The Company’s total shareholders’ equity to total assets ratio increased by 36 basis points to 7.95% as of December 31, 2018, as compared to 7.59% as of December 31, 2017. Book value per share grew by $4.43, or 12.2%, to $40.67 as of December 31, 2018, as compared to $36.24 as of December 31, 2017.

About Cambridge Bancorp

Cambridge Bancorp, the parent company of Cambridge Trust Company, is based in Cambridge, Massachusetts. Cambridge Trust Company is a 128-year-old Massachusetts chartered commercial bank with approximately $2.1 billion in assets and 10 Massachusetts locations in Cambridge, Boston, Belmont, Concord, Lexington, and Weston. Cambridge Trust Company is one of New England’s leaders in private banking and wealth management with $2.9 billion in client assets under management and administration. The Wealth Management group maintains offices in Boston, Massachusetts and Concord, Manchester, and Portsmouth, New Hampshire.

The accompanying unaudited condensed interim and annual consolidated financial information should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K, which is posted in the investor relations section of the Company’s website at www.cambridgetrust.com.

Forward-looking Statements

Certain statements herein may constitute “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements about the Company and its industry involve substantial risks and uncertainties. Statements other than statements of current or historical fact, including statements regarding the Company’s future financial condition, results of operations, business plans, liquidity, cash flows, projected costs, and the impact of any laws or regulations applicable to the Company, are forward-looking statements. Words such as “anticipates,” “believes,” “estimates,” “expects,” “forecasts,” “intends,” “plans,” “projects,” “may,” “will,” “should,” and other similar expressions are intended to identify these forward-looking statements. Such statements are subject to factors that could cause actual results to differ materially from anticipated results. Such factors include, but are not limited to, the following: economic conditions being less favorable than expected, disruptions to the credit and financial markets, weakness in the real estate market, legislative, regulatory or accounting changes that adversely affect the Company’s business and/or competitive position, the Dodd-Frank Act’s consumer protection regulations, disruptions in the Company’s ability to access the capital markets and other factors that are described in the Company’s filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year end December 31, 2017, which the Company filed on March 21, 2018. The Company does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements. You are cautioned not to place undue reliance on these forward-looking statements.

       

CAMBRIDGE BANCORP AND SUBSIDIARIES

UNAUDITED QUARTERLY RESULTS

December 31, 2018

 
Three Months Ended Twelve Months Ended
December 31, December 31,
2018   2017 2018   2017
(dollars in thousands, except per share data)
               
Interest and Dividend Income $ 18,385 $ 15,744 $ 69,055 $ 61,191
Interest Expense   1,975   970   5,467   3,587
Net Interest and Dividend Income 16,410 14,774 63,588 57,604
Provision for Loan Losses 715 2 1,502 362
Noninterest Income 8,038 7,575 32,989 30,224
Noninterest Expense   16,842   15,012   63,987   59,292
Income Before Income Taxes 6,891 7,335 31,088 28,174
Income Tax Expense   1,585   6,371   7,207   13,358
Net Income $ 5,306 $ 964 $ 23,881 $ 14,816
 

Data Per Common Share:

Basic Earnings Per Share $ 1.29 $ 0.24 $ 5.82 $ 3.64
Diluted Earnings Per Share 1.28 0.23 5.77 3.61
Dividends Declared Per Share 0.50 0.47 1.96 1.86
 
Avg. Common Shares Outstanding:
Basic 4,065,681 4,038,948 4,061,529 4,030,530
Diluted 4,102,546 4,073,707 4,098,633 4,065,754
 

Selected Operating Ratios:

Net Interest Margin, FTE 3.32 % 3.26 % 3.33 % 3.25 %
Cost of Funds 0.40 % 0.21 % 0.28 % 0.20 %
Cost of Interest Bearing Liabilities 0.59 % 0.31 % 0.43 % 0.29 %
Cost of Deposits 0.38 % 0.22 % 0.28 % 0.19 %
Return on Average Assets 1.04 % 0.20 % 1.21 % 0.79 %
Return on Average Equity 12.95 % 2.61 % 15.35 % 10.47 %
Efficiency Ratio 68.89 % 67.17 % 66.25 % 67.51 %
 
December 31, December 31,
2018 2017
 
Total Assets $ 2,101,384 $ 1,949,934
Total Loans 1,559,772 1,350,899
Non-Performing Loans 642 1,298
Allowance for Loan Losses 16,768 15,320
Allowance to Total Loans 1.08 % 1.13 %
Total Deposits 1,811,410 1,775,400
Total Shareholders’ Equity 167,026 147,957
Total Shareholders’ Equity to Total Assets 7.95 % 7.59 %
Wealth Management AUM 2,759,547 2,971,322
Wealth Management AUM & AUA 2,876,702 3,085,669
Book Value Per Share 40.67 36.24
 
       

CAMBRIDGE BANCORP AND SUBSIDIARIES

UNAUDITED CONSOLIDATED BALANCE SHEETS

 

December 31, 2018

December 31, 2017
(dollars in thousands, except par value)

Assets

Cash and cash equivalents $ 18,473 $ 103,591
Investment securities
Available for sale, at fair value (amortized cost $172,290 and $208,911, respectively) 168,163 205,017
Held to maturity, at amortized cost (fair value $281,310 and $233,554, respectively)   282,869   232,188
Total investment securities 451,032 437,205
Loans held for sale, at lower of cost or fair value — —
Loans
Residential mortgage 604,331 538,920
Commercial mortgage 757,957 633,649
Home equity 69,336 74,444
Commercial & Industrial 93,712 65,295
Consumer   34,436   38,591
Total loans 1,559,772 1,350,899
Less: allowance for loan losses   (16,768 )   (15,320 )
Net loans 1,543,004 1,335,579
Federal Home Loan Bank of Boston Stock, at cost 6,844 4,242
Bank owned life insurance 30,933 31,083
Banking premises and equipment, net 8,578 9,310
Deferred income taxes, net 8,717 8,273
Accrued interest receivable 5,762 5,128
Other assets   28,041   15,523
Total assets $ 2,101,384 $ 1,949,934
Liabilities
Deposits
Demand $ 494,492 $ 493,613
Interest bearing checking 431,702 462,957
Money market 135,585 69,259
Savings 628,212 589,741
Certificates of deposit   121,419   159,830
Total deposits 1,811,410 1,775,400
Short-term borrowings 90,000 —
Long-term borrowings 3,409 3,579
Other liabilities   29,539   22,998
Total liabilities   1,934,358   1,801,977
Shareholders’ Equity
Common stock, par value $1.00; Authorized 10,000,000 shares; Outstanding: 4,107,051

shares and 4,082,188 shares, respectively

4,107 4,082
Additional paid-in capital 38,271 35,663
Retained earnings 131,135 114,093
Accumulated other comprehensive loss   (6,487 )   (5,881 )
Total shareholders’ equity   167,026   147,957
Total liabilities and shareholders’ equity $ 2,101,384 $ 1,949,934
 
         

CAMBRIDGE BANCORP AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

 

Three Months Ended
December 31,

Twelve Months Ended
December 31,

2018     2017 2018     2017
(dollars in thousands, except share data)
Interest and dividend income
Interest on taxable loans $ 15,623 $ 13,272 $ 57,941 $ 51,238
Interest on tax-exempt loans 92 105 371 496
Interest on taxable investment securities 1,887 1,559 7,457 6,321
Interest on tax-exempt investment securities 587 634 2,404 2,600
Dividends on FHLB of Boston stock 85 53 287 245
Interest on overnight investments   111   121   595   291
Total interest and dividend income   18,385   15,744   69,055   61,191
Interest expense
Interest on deposits 1,733 942 5,023 3,125
Interest on borrowed funds   242   28   444   462
Total interest expense   1,975   970   5,467   3,587
Net interest and dividend income 16,410 14,774 63,588 57,604
Provision for Loan Losses   715   2   1,502   362
Net interest and dividend income after provision for

loan losses

  15,695   14,772   62,086   57,242
Noninterest income
Wealth management revenue 6,147 5,952 25,191 23,029
Deposit account fees 765 755 3,071 3,142
ATM/Debit card income 305 303 1,180 1,182
Bank owned life insurance income 133 136 526 584
Gain (loss) on disposition of investment securities — — 2 (3 )
Gain on loans held for sale 17 31 99 355
Loan related derivative income 431 133 1,651 780
Other income   240   265   1,269   1,155
Total noninterest income   8,038   7,575   32,989   30,224
Noninterest expense
Salaries and employee benefits 10,370 9,428 41,212 36,455
Occupancy and equipment 2,336 2,178 9,072 9,114
Data processing 1,329 1,126 5,177 4,956
Professional services 781 724 3,258 3,374
Marketing 860 522 2,229 1,620
FDIC Insurance 137 163 574 629
Merger expenses 201 — 201 —
Other expenses   828   871   2,264   3,144
Total noninterest expense   16,842   15,012   63,987   59,292
Income before income taxes 6,891 7,335 31,088 28,174
Income tax expense   1,585   6,371   7,207   13,358
Net income $ 5,306 $ 964 $ 23,881 $ 14,816
Share data:
Weighted average number of shares outstanding, basic 4,065,681 4,038,948 4,061,529 4,030,530
Weighted average number of shares outstanding, diluted 4,102,546 4,073,707 4,098,633 4,065,754
Basic earnings per share $ 1.29 $ 0.24 $ 5.82 $ 3.64
Diluted earnings per share $ 1.28 $ 0.23 $ 5.77 $ 3.61
 
     

CAMBRIDGE BANCORP AND SUBSIDIARIES

MARGIN & YIELD ANALYSIS

 
Three Months Ended
December 31, 2018   December 31, 2017

Average
Balance

  

Interest
Income/
Expenses (1)

  

Rate
Earned/
Paid (1)

Average
Balance

  

Interest
Income/
Expenses (1)

  

Rate
Earned/
Paid (1)

(dollars in thousands)
ASSETS    
Interest-earning assets
Loans (2)
Taxable $ 1,477,038 $ 15,623 4.20 % $ 1,335,652 $ 13,272 3.94 %
Tax-exempt 9,799 116 4.70 12,502 163 5.17
Securities available for sale (3)
Taxable 177,090 753 1.69 212,230 853 1.59
Securities held to maturity
Taxable 194,914 1,134 2.31 140,040 706 2.00
Tax-exempt 75,509 743 3.90 80,057 975 4.83
Cash and due from banks   35,122   111   1.25   60,111   121   0.80
Total interest-earning assets (4) 1,969,472 18,480 3.72 % 1,840,592 16,090 3.47 %
Non interest-earning assets 78,638 72,940
Allowance for loan losses   (16,318 )   (15,511 )
Total assets $ 2,031,792 $ 1,898,021
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing deposits
Checking accounts $ 392,816 $ 81 0.08 % $ 389,305 $ 47 0.05 %
Savings accounts 637,434 993 0.62 613,847 506 0.33
Money market accounts 136,923 336 0.97 62,503 24 0.15
Certificates of deposit   117,165   323   1.09   161,286   365   0.90
Total interest-bearing deposits 1,284,338 1,733 0.54 1,226,941 942 0.30
Other borrowed funds   38,375   242   2.50   6,708   28   1.66
Total interest-bearing liabilities 1,322,713 1,975 0.59 % 1,233,649 970 0.31 %
Non-interest-bearing liabilities
Demand deposits 521,993 490,618
Other liabilities   24,500   27,328
Total liabilities   1,869,206   1,751,595
Shareholders’ equity 162,586 146,426
Total liabilities & shareholders’ equity $ 2,031,792 $ 1,898,021
Net interest income on a fully taxable equivalent basis 16,505 15,120
Less taxable equivalent adjustment   (180 )   (399 )
Net interest income $ 16,325     $ 14,721    
Net interest spread (5)   3.13 %   3.16 %
Net interest margin (6)   3.32 %   3.26 %
 
(1)   Annualized on a fully taxable equivalent basis calculated using a federal tax rate of 21% in 2018 and 35% in 2017.
(2) Nonaccrual loans are included in average amounts outstanding.
(3) Average balances of securities available for sale calculated utilizing amortized cost.
(4) Federal Home Loan Bank stock balance and dividend income is excluded from interest-earning assets.
(5) Interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.
(6) Net interest margin represents net interest income on a fully tax equivalent basis as a percentage of average interest-earning assets.
     

CAMBRIDGE BANCORP AND SUBSIDIARIES

MARGIN & YIELD ANALYSIS

 

For the Year Ended

December 31, 2018   December 31, 2017

Average
Balance

  

Interest
Income/
Expenses (1)

  

Rate
Earned/
Paid (1)

Average
Balance

  

Interest
Income/
Expenses (1)

  

Rate
Earned/
Paid (1)

(dollars in thousands)
ASSETS    
Interest-earning assets
Loans (2)
Taxable $ 1,407,079 $ 57,941 4.12 % $ 1,318,284 $ 51,238 3.89 %
Tax-exempt 10,158 469 4.62 15,057 764 5.07
Securities available for sale (3)
Taxable 194,419 3,202 1.65 248,787 4,011 1.61
Securities held to maturity
Taxable 189,120 4,255 2.25 111,452 2,310 2.07
Tax-exempt 76,966 3,043 3.95 81,528 4,000 4.91
Cash and due from banks   45,365   595   1.31   41,888   291   0.69
Total interest-earning assets (4) 1,923,107 69,505 3.61 % 1,816,996 62,614 3.45 %
Non interest-earning assets 73,330 73,532
Allowance for loan losses   (15,857 )   (15,392 )
Total assets $ 1,980,580 $ 1,875,136
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing deposits
Checking accounts $ 409,178 $ 247 0.06 % $ 394,132 $ 131 0.03 %
Savings accounts 624,421 2,900 0.46 571,659 1,457 0.25
Money market accounts 93,449 597 0.64 68,891 103 0.15
Certificates of deposit   134,007   1,279   0.95   166,410   1,434   0.86
Total interest-bearing deposits 1,261,055 5,023 0.40 % 1,201,092 3,125 0.26 %
Other borrowed funds   18,671   444   2.38   36,074   462   1.28
Total interest-bearing liabilities 1,279,726 5,467 0.43 % 1,237,166 3,587 0.29 %
Non-interest-bearing liabilities
Demand deposits 521,091 470,871
Other liabilities   24,217   25,611
Total liabilities   1,825,034   1,733,648
Shareholders’ equity 155,546 141,488
Total liabilities & shareholders’ equity $ 1,980,580 $ 1,875,136
Net interest income on a fully taxable equivalent basis 64,038 59,027
Less taxable equivalent adjustment   (737 )   (1,668 )
Net interest income $ 63,301     $ 57,359    
Net interest spread (5)   3.19 %   3.16 %
Net interest margin (6)   3.33 %   3.25 %
 
(1)   Annualized on a fully taxable equivalent basis calculated using a federal tax rate of 21% in 2018 and 35% in 2017.
(2) Nonaccrual loans are included in average amounts outstanding.
(3) Average balances of securities available for sale calculated utilizing amortized cost.
(4) Federal Home Loan Bank stock balance and dividend income is excluded from interest-earning assets.
(5) Interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.
(6) Net interest margin represents net interest income on a fully tax equivalent basis as a percentage of average interest-earning assets.