Cambridge Bancorp (OTCBB: CATC) today announced unaudited net income of $15,694,000 for the year ended December 31, 2015, representing an increase of $750,000, or 5.0%, compared to net income of $14,944,000 for the year ended December 31, 2014. Diluted earnings per share (EPS) were $3.93, a 4.0% increase over diluted earnings per share for the prior year.

“We are pleased to report the Bank delivered another record earnings year with robust core deposit and loan growth,” noted Denis K. Sheahan, president and CEO. “Cambridge Trust posted strong profitability metrics for the year with return on average assets of 0.95% and return on average stockholders’ equity of 12.91%.”

The Bank recorded strong core deposit growth in 2015. Deposits, excluding brokered certificates of deposit, grew by $130.4 million, or 9.5%, since year-end 2014. The total cost of deposits was 0.17% for 2015. Total deposits at year-end 2015 were $1.6 billion.

The Bank experienced a strong year for loan growth with an overall increase of $111.4 million, or 10.3%, for the year. At year-end 2015, the Bank’s loan portfolio stood at $1.2 billion. Both commercial and residential mortgages showed noteworthy growth for the year, with increases of $69.2 million (15.7%) and $39.0 million (7.7%), respectively. Home equity loans were up $6.9 million (12.3%) for the year ending December 31, 2015.

For the year ended December 31, 2015, net interest income increased by $3.4 million, or 7.0%, to $51.6 million compared to $48.3 million for 2014. Interest on loans increased by $4.9 million, or 12.0%, driven by the impact of strong loan growth in both 2014 and 2015. 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 six basis points to 3.27% for the year compared to 3.33% for the year ended December 31, 2014.

The Bank’s total investment securities portfolio increased slightly from $419.4 million to $430.2 million at year-end 2015. The continued lower interest rate environment resulted in a decrease of $1.1 million in interest income on investment securities for the year. Short-term borrowings of $69.0 million at year-end 2014 were largely replaced with $56.3 million of brokered certificates of deposit during 2015 to secure term funding as a component of the Bank’s overall interest rate risk management strategy. Long-term borrowings increased by $3.9 million year-over-year.

Noninterest income totaled $25.9 million for the year 2015 compared to $24.5 million for 2014. The Bank’s Wealth Management income accounted for the largest upswing in total noninterest income for the year. Wealth management income increased by $1.3 million, or 7.2%, to $19.2 million compared to $18.0 million for 2014. Wealth Management assets under management (AUM) stood at $2.3 billion at year-end.

As part of overall balance sheet management, the Bank sold more of its long-term residential mortgage production. Income from gains on loans sold ended $439,000 higher for 2015 versus 2014. During the fourth quarter of 2015 the Bank began to offer loan level derivative contracts to manage commercial loan interest rate risk. This activity generated $260,000 in loan related derivative income for the quarter.

Noninterest income increases were offset by lower gains on disposition of investment securities of $383,000, lower deposit account fees of $92,000, lower other income of $58,000, and lower ATM/Debit card fees of $55,000 for the year ended December 31, 2015.

Noninterest expense increased by $4.2 million, or 8.5%, to $53.2 million for the year ended December 31, 2015. The increase in salaries and benefits for the year of $3.0 million is primarily the result of new hires to support business growth, coupled with higher expenses related to our retirement plans. The increase of $514,000 in occupancy and equipment for the year is the result of increased cost of facilities, office closing expense, and amortization of leasehold improvements. The increase of $252,000 in professional services is primarily the result of higher consulting and legal fees. The increase of $240,000 in data processing expense is attributable to increased transaction volumes and new products. Other factors contributing to the increase in noninterest expense were higher marketing expense of $263,000 and higher FDIC insurance of $61,000. Other expenses were lower by $184,000.

Total loans outstanding at year-end 2015 were $1.2 billion compared to $1.1 billion at year-end 2014. Loan quality remained sound across consumer and commercial customer bases with non-performing loans totaling $1.5 million, or 0.12% of total loans outstanding at December 31, 2015, a modest decrease of $148,000 compared to the year-end 2014. The Allowance for Loan Losses was $15.2 million, or 1.27% of total loans outstanding at year-end 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 of $1.1 million during 2015 was primarily driven by loan growth and changes in the mix of the portfolio.

In the fourth quarter of 2015 unaudited net income was $3,870,000, flat as compared to $3,866,000 for the same quarter in 2014.

Total assets at year-end 2015 were $1.7 billion versus $1.6 billion year-end 2014.

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 126-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 $2.3 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 and annual 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 the Cambridge Bancorp 2015 Annual Report at the same site later this quarter.

Financial Highlights:

 
CAMBRIDGE BANCORP
QUARTERLY UNAUDITED RESULTS
December 31, 2015
Dollar amounts in thousands (except share data)
       
 
Quarter Ended Year Ended
December 31, December 31,
2015 2014 2015 2014
 
Interest Income $ 14,056 $ 13,103 $ 54,341 $ 50,371
Interest Expense   860     535     2,694     2,098  
Net Interest Income 13,196 12,568 51,647 48,273
Provision for Loan Losses - 600 1,075 1,550
Non-Interest Income 6,495 5,796 25,865 24,464
Non-Interest Expense   13,981     12,042     53,192     49,007  
Income Before Taxes 5,710 5,722 23,245 22,180
Income Taxes   1,840     1,856     7,551     7,236  
Net Income $ 3,870   $ 3,866   $ 15,694   $ 14,944  
 

Data Per Common Share:

 
Basic Earnings Per Share $ 0.97 $ 0.98 $ 3.94 $ 3.81
Diluted Earnings Per Share $ 0.97 $ 0.97 $ 3.93 $ 3.78
Dividends Declared Per Share $ 0.45 $ 0.42 $ 1.80 $ 1.68
 
Avg. Common Shares Outstanding:
Basic 3,951,736 3,899,213 3,938,117 3,886,692
Diluted 4,008,334 3,968,821 3,993,599 3,957,416
 

Selected Operating Ratios:

 
Net Interest Margin 3.28 % 3.37 % 3.27 % 3.33 %
Return on Average Assets 0.91 % 0.99 % 0.95 % 0.98 %
Return on Average Equity 12.36 % 12.81 % 12.91 % 12.87 %
 
 
December 31, December 31,
2015 2014
 
Total Assets $ 1,706,201 $ 1,573,692
Total Loans 1,192,214 1,080,766
Non-Performing Loans 1,481 1,629
Allowance for Loan Losses 15,191 14,269
Allowance to Non-Performing Loans 1025.77 % 875.79 %
Allowance to Total Loans 1.27 % 1.32 %
Total Deposits 1,557,224 1,370,536
Total Stockholders' Equity 125,063 116,258
 
Book Value Per Share $ 31.26 $ 29.50
Tangible Book Value Per Share $ 31.04 $ 29.31
 
   
CAMBRIDGE BANCORP
UNAUDITED CONSOLIDATED BALANCE SHEETS
   
December 31, December 31,
2015 2014
(In thousands)
ASSETS
 
Cash and cash equivalents $ 24,645 $ 17,440
 
Investment securities:
Available for sale, at fair value 347,173 339,791
Held to maturity, at amortized cost 83,063   79,646  
Total investment securities 430,236 419,437
 
Loans held for sale, at lower of cost or fair value — 284
 
Loans:
Residential mortgage 546,245 507,216
Commercial mortgage 511,071 441,842
Home equity 63,522 56,579
Commercial 42,384 49,492
Consumer 28,992   25,637  
Total loans 1,192,214 1,080,766
Allowance for loan losses (15,191 ) (14,269 )
Net loans 1,177,023 1,066,497
 
Stock in FHLB of Boston, at cost 6,465 7,955
Bank owned life insurance 29,887 29,220
Banking premises and equipment, net 11,371 8,367
Accrued interest receivable 4,222 3,925
Other assets 22,352   20,567  
Total assets $ 1,706,201   $ 1,573,692  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
Deposits:
Demand $ 436,998 $ 390,286
Interest bearing checking 370,400 352,661
Money market 73,911 74,654
Savings 497,525 430,040
Certificates of deposit 178,390   122,895  
Total deposits 1,557,224 1,370,536
 
Short-term borrowings — 69,000
Long-term borrowings 3,910 —
Other liabilities 20,004   17,898  
Total liabilities 1,581,138   1,457,434  
Stockholders' equity:
Common stock, par value $1.00; Authorized
10,000,000 shares; Outstanding: 4,000,181 and
3,940,536 shares, respectively 4,000 3,941
Additional paid-in capital 30,427 28,264
Retained earnings 99,064 91,098
Accumulated other comprehensive income/(loss) (8,428 ) (7,045 )
Total stockholders’ equity 125,063   116,258  
Total liabilities and stockholders’ equity $ 1,706,201   $ 1,573,692  
 
CAMBRIDGE BANCORP
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
           
Quarter Ended December 31,  
2015 2014
(In thousands, except per share data)
 
Interest income:
Interest on loans $ 11,769 $ 10,638
Interest on taxable investment securities 1,519 1,737
Interest on tax exempt investment securities 698 691
Dividends on FHLB of Boston stock 56 29
Interest on overnight investments 14   8  
Total interest income 14,056   13,103  
 
Interest expense:
Interest on deposits 824 493
Interest on borrowed funds 36   42  
Total interest expense 860   535  
 
Net interest income 13,196 12,568
 
Provision for loan losses —   600  
 
Net interest income after provision for loan losses 13,196   11,968  
 
Noninterest income:
Wealth management income 4,855 4,460
Deposit account fees 608 566
ATM/Debit card income 304 319
Bank owned life insurance income 162 175
Gain on disposition of investment securities — —
Gain on loans held for sale 114 77
Loan related derivative income 260 —
Other income 192   199  
Total noninterest income 6,495   5,796  
 
Noninterest expense:
Salaries and employee benefits 7,711 6,660
Occupancy and equipment 2,549 2,112
Data processing 1,258 1,140
Professional services 778 589
Marketing 618 531
FDIC Insurance 221 201
Other expenses 846   809  
Total noninterest expense 13,981   12,042  
 
Income before income taxes 5,710 5,722
 
Income tax expense 1,840 1,856
       
Net income $ 3,870   $ 3,866  
 
Per share data:
 
Basic earnings per common share $ 0.97 $ 0.98
Diluted earnings per common share $ 0.97 $ 0.97
 
Average shares outstanding - basic 3,951,736 3,899,213
Average shares outstanding - diluted 4,008,334 3,968,821
 
 
CAMBRIDGE BANCORP
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
           
Quarter Ended December 31,
2015 2014
(In thousands)
 
 
Net income $ 3,870 $ 3,866
 
Other comprehensive income/(loss), net of tax:
Defined benefit retirement plans:
Change in unfunded retirement liability (275 ) (6,216 )
Unrealized gains/(losses) on Available for
Sale securities:
Unrealized holding gains/(losses) arising
during the period (2,143 ) 1,776
Less: reclassification adjustment for gains
recognized in net income — —
   
Other comprehensive income/(loss) (2,418 ) (4,440 )
   
 
Comprehensive income/(loss) $

1,452

  $ (574 )
 
CAMBRIDGE BANCORP
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
             
Year Ended December 31,
2015 2014
(In thousands, except per share data)
 
Interest income:
Interest on loans $ 45,358 $ 40,481
Interest on taxable investment securities 5,921 7,085
Interest on tax exempt investment securities 2,766 2,664
Dividends on FHLB of Boston stock 259 101
Interest on overnight investments 37 40
Total interest income 54,341 50,371
 
Interest expense:
Interest on deposits 2,459 1,950
Interest on borrowed funds 235 148
Total interest expense 2,694 2,098
 
Net interest income 51,647 48,273
 
Provision for loan losses 1,075 1,550
 
Net interest income after provision for loan losses 50,572 46,723
 
Noninterest income:
Wealth management income 19,242 17,954
Deposit account fees 2,324 2,416
ATM/Debit card income 1,192 1,247
Bank owned life insurance income 667 665
Gain on disposition of investment securities 690 1,073
Gain on loans held for sale 609 170
Loan related derivative income 260 —
Other income 881 939
Total noninterest income 25,865 24,464
 
Noninterest expense:
Salaries and employee benefits 30,838 27,799
Occupancy and equipment 9,024 8,510
Data processing 4,807 4,567
Professional services 2,260 2,008
Marketing 2,380 2,117
FDIC Insurance 854 793
Other expenses 3,029 3,213
Total noninterest expense 53,192 49,007
 
Income before income taxes 23,245 22,180
 
Income tax expense 7,551 7,236
   
Net income $ 15,694 $ 14,944
 
Per share data:
 
Basic earnings per common share $ 3.94 $ 3.81
Diluted earnings per common share $ 3.93 $ 3.78
 
Average shares outstanding - basic 3,938,117 3,886,692
Average shares outstanding - diluted 3,993,599 3,957,416
 
 
CAMBRIDGE BANCORP
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
           
Year Ended December 31,
2015 2014
(In thousands)
 
 
Net income $ 15,694 $ 14,944
 
Other comprehensive income/(loss), net of tax:
Defined benefit retirement plans:
Change in unfunded retirement liability 40 (6,222 )
Unrealized gains/(losses) on Available for
Sale securities:
Unrealized holding gains/(losses) arising
during the period (980 ) 3,973
Less: reclassification adjustment for gains
recognized in net income (443 ) (688 )
   
Other comprehensive income/(loss) (1,383 ) (2,937 )
   
Comprehensive income/(loss) $ 14,311   $ 12,007  
 
   
CAMBRIDGE BANCORP
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
       
Year Ended December 31,
2015 2014
(In thousands)
Cash flows provided by operating activities:
Net income $ 15,694 $ 14,944
Adjustments to arrive at net cash provided by operating activities:
Provision for loan losses 1,075 1,550
Amortization of deferred charges/(income), net 1,027 1,060
Depreciation and amortization 1,935 1,817
Bank owned life insurance income (667 ) (665 )
Gain on disposition of investment securities (690 ) (1,073 )
Compensation expense from stock option
and restricted stock grants 498 509
Change in loans held for sale 284 119
Change in accrued interest receivable, deferred taxes,
other assets and other liabilities 835 (2,216 )
Other, net 25   56  
Net cash provided by operating activities 20,016   16,101  
Cash flows used by investing activities:
Origination of loans (260,020 ) (301,863 )
Purchase of:
Investment securities - AFS (225,912 ) (43,741 )
Investment securities - HTM (9,691 ) (24,295 )
Maturities, calls and principal payments of:
Loans 148,049 163,161
Investment securities - AFS 168,787 68,190
Investment securities - HTM 6,206 3,776
Proceeds from sale of investment securities - AFS 47,625 30,013
Purchase of bank owned life insurance — (5,000 )
Change in FHLB of Boston stock 1,490 (1,724 )
Purchase of banking premises and equipment (4,939 ) (233 )
Net cash used by investing activities (128,405 ) (111,716 )
Cash flows provided by financing activities:
Change in deposits 186,688 (38,511 )
Change in short-term borrowings (69,000 ) 69,000
Repayment of long-term borrowings (40 ) —
Proceeds from long-term borrowings 3,950 —
Proceeds from issuance of common stock 1,841 1,925
Repurchase of common stock (667 ) (864 )
Cash dividends paid on common stock (7,178 ) (6,602 )
Net cash provided by financing activities 115,594   24,948  
Net increase/(decrease) in cash and cash equivalents 7,205 (70,667 )
Cash and cash equivalents at beginning of period 17,440   88,107  
Cash and cash equivalents at end of period $ 24,645   $ 17,440  
 
Supplemental disclosure of cash flow information:
Cash paid for interest $ 2,644 $ 2,094
Cash paid for income taxes 8,220 8,490
Non-cash transactions:
Change in accumulated other comprehensive income, net of taxes (1,383 ) (2,937 )