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 )
 

Cambridge Bancorp
Albert R. Rietheimer, 617-441-1516
Chief Financial Officer & Treasurer