EX-99.1 2 catc-ex99_1.htm EX-99.1 EX-99.1

 

Exhibit: 99.1

img209848312_0.jpg 

FOR IMMEDIATE RELEASE

 

Cambridge Bancorp Announces First Quarter 2024 Results and Declares Quarterly Dividend

 

CAMBRIDGE, MA. (April 23, 2024) - Cambridge Bancorp (NASDAQ: CATC) (the “Company”), the parent company of Cambridge Trust Company, today announced unaudited net income of $6.9 million for the three months ended March 31, 2024, a decrease of $1.1 million, or 14.3%, as compared to $8.0 million for the three months ended December 31, 2023. Diluted earnings per share were $0.87 for the three months ended March 31, 2024, representing a 14.7% decrease as compared to $1.02 for the three months ended December 31, 2023.

 

Operating net income, which excludes non-operating items, namely merger related and office consolidation charges, as detailed in the accounting principles generally accepted in the United States of America (“GAAP”) to non-GAAP reconciliations tables within this release, was $8.0 million for the three months ended March 31, 2024, a decrease of $728,000, or 8.3%, as compared to $8.7 million for the three months ended December 31, 2023. Operating diluted earnings per share were $1.02 for the three months ended March 31, 2024, representing a decrease of $0.09, or 8.1%, as compared to $1.11 for the three months ended December 31, 2023.

 

Merger with Eastern Bankshares, Inc.

 

On September 19, 2023, the Company and Eastern Bankshares, Inc. (“Eastern”) announced that they have entered into an Agreement and Plan of Merger (the “Merger Agreement”) pursuant to which the Company will merge with and into Eastern in an all-stock transaction (the “Eastern merger”). Under the terms of the Merger Agreement, each share of the Company’s common stock will be exchanged for 4.956 shares of Eastern common stock and Cambridge Bancorp Chief Executive Officer, Denis K. Sheahan, will assume the role of Chief Executive Officer of Eastern. The Company’s shareholders and Eastern’s shareholders approved the Eastern merger at their respective special shareholder meetings held on February 28, 2024. The Eastern merger remains subject to regulatory approval and the completion of other customary closing conditions.

“We are pleased with the progress on our pending merger with Eastern and look forward to introducing Cambridge Trust clients to the strengths of the combined organization,” noted Denis K. Sheahan, Chairman, President and CEO.

 

First Quarter 2024 Highlights:

 

•
Financial performance ratios for the three months ended March 31, 2024 were as follows:
o
Return on Average Assets (“ROA”) of 0.51% and Operating ROA of 0.60%.
o
Return on Average Equity of 5.19% and Operating Return on Tangible Common Shareholders’ Equity (“ROTCE”) of 6.94%.
•
Wealth Management Assets Under Management and Administration increased by $533.4 million or 12.5%, to $4.80 billion at March 31, 2024 from $4.27 billion at March 31, 2023. Wealth management revenue increased by $778,000, or 9.8%, to $8.7 million for the three months ended March 31, 2024 from $7.9 million for the three months ended March 31, 2023.
•
Asset quality ratios at March 31, 2024: non-performing loans to total loans and non-performing assets to total assets at 0.43% and 0.32%, respectively.

1

 

 

•
The common equity to assets ratio increased to 9.97% at March 31, 2024 from 9.87% at December 31, 2023. The tangible common equity to tangible assets ratio increased to 8.76% at March 31, 2024 from 8.67% at December 31, 2023.
•
Book value per share increased to $68.27 at March 31, 2024 from $68.14 at December 31, 2023.
•
Available sources of liquidity at March 31, 2024 totaled approximately $2.35 billion. This is approximately two times the amount of uninsured deposits at March 31, 2024.

 

Balance Sheet

Total assets decreased by $43.8 million, or 0.8%, from $5.42 billion at December 31, 2023 to $5.37 billion at March 31, 2024.

 

Total loans decreased by $26.8 million, or 0.7%, from $4.02 billion at December 31, 2023 to $3.99 billion at March 31, 2024.

•
Residential real estate loans decreased by $15.0 million, from $1.63 billion at December 31, 2023 to $1.61 billion at March 31, 2024.
•
Commercial real estate loans decreased by $9.2 million, from $1.93 billion at December 31, 2023 to $1.92 billion at March 31, 2024.
•
Home equity loans decreased by $5.0 million, from $95.6 million at December 31, 2023 to $90.6 million at March 31, 2024.
•
Commercial and industrial loans increased by $4.8 million, or 1.4%, from $343.7 million at December 31, 2023 to $348.5 million at March 31, 2024.
•
Consumer loans decreased by $2.4 million, from $24.4 million at December 31, 2023 to $22.0 million at March 31, 2024.

 

The Company’s total investment securities portfolio decreased by $23.3 million, or 2.1%, from $1.10 billion at December 31, 2023 to $1.07 billion at March 31, 2024, primarily due to pay-downs and amortization of $21.0 million during the quarter.

Total deposits, excluding wholesale deposits remained flat as compared to December 31, 2023 and totaled $4.02 billion at March 31, 2024. Total deposits, inclusive of wholesale deposits, decreased by $135.8 million, or 3.1%, to $4.19 billion at March 31, 2024, as compared to $4.32 billion at December 31, 2023, primarily due to lower wholesale deposit balances. The Company utilized lower cost Federal Home Loan Bank of Boston (“FHLB Boston”) funding to replace higher priced wholesale certificates of deposit.

 

•
Certificates of deposit totaled $575.0 million at March 31, 2024, representing a decrease of $99.4 million, or 14.7%, from $674.4 million at December 31, 2023, primarily driven by lower wholesale deposit balances. Total wholesale certificates of deposit, which are included within certificates of deposit, were $161.1 million and $291.7 million at March 31, 2024 and December 31, 2023, respectively.
•
The cost of total deposits was 2.18% for the three months ended March 31, 2024, as compared to 2.19% for the three months ended December 31, 2023. The cost of total deposits excluding wholesale deposits was 1.97% for the three months ended March 31, 2024, as compared to 1.89% for the three months ended December 31, 2023. At March 31, 2024, the spot cost of non-wholesale deposits was 2.00%, as compared to 1.88% at December 31, 2023.

 

Borrowings totaled $546.4 million at March 31, 2024, representing a $94.3 million increase from $452.2 million at December 31, 2023, as the Company migrated wholesale funding toward FHLB Boston borrowings during the quarter.

 

2

 

 

Net Interest and Dividend Income

 

Net interest and dividend income, before the provision for credit losses, decreased by $1.1 million, or 4.0%, to $27.0 million for the three months ended March 31, 2024, from $28.2 million for the three months ended December 31, 2023. This was primarily due to higher cost of funds, partially offset by higher yields on earning assets.

The Company’s net interest margin on a fully taxable equivalent basis decreased by four basis points to 2.10% for the three months ended March 31, 2024, as compared to 2.14% for the three months ended December 31, 2023.

 

In order to provide greater disclosure of the impact of loan related merger accounting, a reconciliation of the Company’s net interest margin, on a fully taxable equivalent basis, to an adjusted net interest margin, on a fully taxable equivalent basis, is shown below. Excluding the impact of merger related loan accretion, the adjusted net interest margin, on a fully taxable equivalent basis, for the three months ended March 31, 2024, was 2.05%, representing a five basis point decrease from the adjusted net interest margin, on a fully taxable equivalent basis, of 2.10% for the three months ended December 31, 2023.

 

 

 

Three Months Ended

 

 

 

March 31, 2024

 

 

 

Average
Balance

 

 

Interest
Income/
Expenses

 

 

Rate
Earned/
Paid

 

 

 

(dollars in thousands)

 

Total interest-earning assets (GAAP)

 

$

5,153,226

 

 

 

 

 

 

 

Net interest income on a fully taxable equivalent basis (GAAP)

 

 

 

 

$

26,856

 

 

 

 

Net interest margin on a fully taxable equivalent basis (GAAP)

 

 

 

 

 

 

 

 

2.10

%

Less: Accretion of loan fair value adjustments (GAAP)

 

 

 

 

 

(554

)

 

 

-0.05

%

Adjusted net interest margin on a fully taxable equivalent basis (non-GAAP)

 

$

5,153,226

 

 

$

26,302

 

 

 

2.05

%

 

Provision for Credit Losses

 

During the three months ended March 31, 2024, the Company recorded a provision for credit losses of $125,000, as compared to $569,000 for the three months ended December 31, 2023. The decrease in the provision is primarily due to lower average loan balances and low unemployment rate, which were partially offset by an increase in the provision for individually analyzed loans.

Noninterest Income

 

Total noninterest income increased by $169,000, or 1.6%, to $10.6 million for the three months ended March 31, 2024, as compared to $10.4 million for the three months ended December 31, 2023. This change was primarily the result of higher wealth management revenue, partially offset by lower loan related derivative income. Noninterest income was 28.2% of total revenue for the three months ended March 31, 2024.

•
Wealth management revenue increased by $237,000, or 2.8%, to $8.7 million for the three months ended March 31, 2024, as compared to $8.5 million for the three months ended December 31, 2023. Wealth Management Assets under Management and Administration were $4.80 billion at March 31, 2024, an increase of $205.6 million, or 4.5%, from $4.60 billion at December 31, 2023, primarily due to improvements in the equity and bond markets.
•
Loan related derivative income decreased by $96,000, or 84.2%, to $18,000 for the three months ended March 31, 2024, as compared to $114,000 for the three months ended December 31, 2023, primarily as a result of lower volume of loan related derivative transactions.

 

3

 

 

Noninterest Expense

 

Total noninterest expense increased by $1.4 million, or 5.0%, to $28.3 million for the three months ended March 31, 2024, as compared to $26.9 million for the three months ended December 31, 2023. During the three months ended March 31, 2024, there was an increase in non-operating expenses, salary and employee benefits expense, data processing fees, and professional fees, which were partially offset by lower FDIC insurance expense as compared to the three months ended December 31, 2023.

 

•
Non-operating expense increased by $709,000, or 101.6%, to $1.4 million for the three months ended March 31, 2024, from $698,000 for the three months ended December 31, 2023, due to merger expenses of $673,000 related to the Eastern merger and office consolidation expenses of $734,000 associated with the recent sublease of an operations center, as the Company decreased its leased office space. This will improve future run rate occupancy cost.
•
Salary and employee benefits expense increased by $260,000, or 1.5%, to $17.3 million for the three months ended March 31, 2024, from $17.1 million for the three months ended December 31, 2023, primarily due to the seasonality of higher employee benefit costs during the first quarter combined with regular merit increases. These increases were partially offset by lower head count during the quarter, which has amounted to a reduction in salaries and benefits expense of 6.3% since the same period last year.
•
Data processing fees increased by $239,000, or 9.2%, to $2.8 million for the three months ended March 31, 2024, from $2.6 million for the three months ended December 31, 2023.
•
Professional fees increased by $225,000, or 37.5%, to $825,000 for the three months ended March 31, 2024, from $600,000 for the three months ended December 31, 2023, primarily due to the timing of higher legal and consulting costs.

 

Asset Quality

 

Non-performing loans totaled $17.2 million, or 0.43% of total loans outstanding at March 31, 2024, as compared to $16.6 million, or 0.41% of total loans outstanding at December 31, 2023. The allowance for credit losses was $39.3 million, or 0.98% of total loans outstanding at March 31, 2024, as compared to $38.9 million, or 0.97% of total loans outstanding at December 31, 2023.

 

The Company recorded net loan charge-offs of $2,000, or 0.00% of total loans (annualized), for the three months ended March 31, 2024, as compared to net loan recoveries of $10,000, or 0.00% of total loans (annualized), for the three months ended December 31, 2023.

 

4

 

 

The following table shows additional and historical information regarding non-performing assets and early-stage delinquency (30-89 days delinquent):

 

 

 

Non-performing Assets

 

 

 

March 31, 2024

 

 

December 31, 2023

 

 

March 31, 2023

 

 

 

(dollars in thousands)

 

Non-performing assets

 

$

17,201

 

 

$

16,567

 

 

$

7,262

 

 

 

 

 

 

 

 

 

 

 

Non-performing loans/total loans

 

 

0.43

%

 

 

0.41

%

 

 

0.18

%

Non-performing assets/total assets

 

 

0.32

%

 

 

0.31

%

 

 

0.13

%

 

 

Additional Asset Quality Indicators

 

 

 

March 31, 2024

 

 

December 31, 2023

 

 

March 31, 2023

 

 

 

 

 

 

 

 

 

 

 

Delinquent loans 30-89 days past due/total loans

 

 

0.55

%

 

 

0.60

%

 

 

0.39

%

Quarterly net recoveries (charge-offs)/total loans (annualized)

 

 

(0.00

)%

 

 

0.00

%

 

 

0.00

%

Year to date net recoveries (charge-offs)/total loans

 

 

0.00

%

 

 

0.00

%

 

 

0.00

%

Allowance for credit losses/total loans

 

 

0.98

%

 

 

0.97

%

 

 

0.95

%

 

Income Taxes

 

The Company’s effective tax rate was 25.6% for the three months ended March 31, 2024 as compared to an effective tax rate of 27.7% for the three months ended December 31, 2023, primarily due to the impact of non-deductible merger related expenses recorded during the periods noted.

Dividend and Capital

 

On April 22, 2024, the Company’s Board of Directors (the “Board”) declared a quarterly cash dividend of $0.67 per share, which is payable on May 23, 2024, to shareholders of record as of the close of business on May 9, 2024. The Company did not repurchase any shares under its share repurchase program authorized on March 13, 2023 (the “2023 Repurchase Program”) during the three months ended March 31, 2024. The Board has not authorized a share repurchase program to replace the 2023 Repurchase Program following its expiration on March 13, 2024.

 

The Company’s common equity to assets ratio increased to 9.97% at March 31, 2024, from 9.87% at December 31, 2023. The ratio of tangible common equity to tangible assets increased to 8.76% at March 31, 2024 from 8.67% at December 31, 2023.

 

Book value per share at March 31, 2024 increased to $68.27 from $68.14 at December 31, 2023. Tangible book value per share at March 31, 2024 increased to $59.23 from $59.08 at December 31, 2023.

 

Investor Presentation:

 

An investor presentation is available on the investor relations section of the Company’s website at http://ir.cambridgetrust.com or at the hyperlink provided below. This presentation includes additional details regarding the Company’s loan portfolio, liquidity position, and other financial disclosures. Click here to download.

 

5

 

 

About Cambridge Bancorp

 

Cambridge Bancorp, the parent company of Cambridge Trust Company, is based in Cambridge, Massachusetts. Cambridge Trust Company is a 133-year-old Massachusetts chartered commercial bank with approximately $5.37 billion in assets at March 31, 2024, and a total of 22 Massachusetts and New Hampshire locations. Cambridge Trust Company is one of New England’s leaders in private banking and wealth management with $4.8 billion in client assets under management and administration at March 31, 2024. The Wealth Management group maintains offices in Boston, Massachusetts, Concord, Manchester, and Portsmouth, New Hampshire, and Southport, Connecticut.

 

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 http://ir.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. 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: the failure to complete the proposed merger of the Company and Cambridge Trust Company with Eastern, imposition of adverse regulatory conditions in connection with regulatory approval of the Eastern merger, disruption to the parties’ businesses as a result of the announcement and pendency of the Eastern merger, the inability to realize expected cost savings or to implement integration plans and other adverse consequences associated with the Eastern merger; changes to interest rates; the ability to control costs and expenses; the current global economic uncertainty and economic conditions being less favorable than expected; disruptions to the credit and financial markets; changes in the Company’s accounting policies or in accounting standards; 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; the impact of the COVID-19 pandemic and actions taken in response to the pandemic on consumer confidence and global and regional economies and economic activity; disruptions in the Company’s ability to access the capital markets; effects of changes in amounts of deposits on the Company’s funding costs and net interest margin; changes in non-performing assets; future provisions for credit losses; and other factors that are described in the Company’s filings with the Securities and Exchange Commission, including the Annual Report on Form 10-K for the year ended December 31, 2023, which the Company filed on March 12, 2024. 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.

 

Non-GAAP Measures

 

This press release contains financial information determined by methods other than in accordance with GAAP. This information includes operating net income and operating diluted earnings per share, tangible book value per

6

 

 

share and the tangible common equity ratio, operating return on average assets, operating return on tangible common equity, and operating efficiency ratio.

 

Operating net income and operating diluted earnings per share exclude items that management believes are unrelated to its core banking business such as merger and acquisition expenses, gain (loss) on disposition of investment securities, and other items. The Company’s management uses operating net income and operating diluted earnings per share to measure the strength of the Company’s core banking business and to identify trends that may to some extent be obscured by such excluded gains or losses.

 

Management also supplements its evaluation of financial performance with an analysis of tangible book value per share (which is computed by dividing shareholders’ equity less goodwill and acquisition related intangible assets, or “tangible common equity,” by common shares outstanding), the tangible common equity ratio (which is computed by dividing tangible common equity by tangible assets, defined as total assets less goodwill and acquisition related intangibles), return on average assets and return on tangible common equity on an operating basis, and the operating efficiency ratio (which is computed by dividing noninterest expense adjusted for non-operating expenses and total revenue adjusted for gain/(loss) on disposition of investment securities). The Company has included information on these non-GAAP financial measures because the Company believes that investors may find it useful to have access to the same analytical tool used by management. As a result of merger and acquisition activity, the Company has recognized goodwill and other intangible assets in accordance with generally accepted accounting principles. Excluding the impact of goodwill and other intangibles in measuring asset and capital values for the ratios provided, along with other bank standard capital ratios, provides a framework to compare the capital adequacy of the Company to other companies in the financial services industry.

 

These non-GAAP measures should not be viewed as a substitute for operating results and other financial measures determined in accordance with GAAP. An item which management deems to be non-operating and excludes when computing these non-GAAP measures can be of substantial importance to the Company’s results for any particular quarter or year. The Company’s non-GAAP performance measures are not necessarily comparable to non-GAAP performance measures which may be presented by other companies.

 

Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are presented under “GAAP to Non-GAAP Reconciliations.”

 

CONTACT:

Cambridge Bancorp

Joseph P. Sapienza

Interim Chief Financial Officer

617-520-5520

 

7

 

 

CAMBRIDGE BANCORP AND SUBSIDIARIES

QUARTERLY UNAUDITED RESULTS

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

December 31,

 

 

March 31,

 

 

 

2024

 

 

2023

 

 

2023

 

 

 

(dollars in thousands, except per share data)

 

Interest and Dividend Income

 

$

56,213

 

 

$

56,950

 

 

$

51,742

 

Interest Expense

 

 

29,181

 

 

 

28,800

 

 

 

17,494

 

  Net Interest and Dividend Income

 

 

27,032

 

 

 

28,150

 

 

 

34,248

 

Provision for Credit Losses

 

 

125

 

 

 

569

 

 

 

60

 

Noninterest Income

 

 

10,606

 

 

 

10,437

 

 

 

10,715

 

Noninterest Expense

 

 

28,259

 

 

 

26,901

 

 

 

28,328

 

Income Before Income Taxes

 

 

9,254

 

 

 

11,117

 

 

 

16,575

 

Income Tax Expense

 

 

2,366

 

 

 

3,083

 

 

 

4,159

 

  Net Income

 

$

6,888

 

 

$

8,034

 

 

$

12,416

 

 

 

 

 

 

 

 

 

 

 

Operating Net Income*

 

$

7,996

 

 

$

8,724

 

 

$

12,722

 

 

 

 

 

 

 

 

 

 

 

Data Per Common Share:

 

 

 

 

 

 

 

 

 

 Basic Earnings Per Share

 

$

0.88

 

 

$

1.02

 

 

$

1.59

 

 Diluted Earnings Per Share

 

 

0.87

 

 

 

1.02

 

 

 

1.58

 

 Operating Diluted Earnings Per Share*

 

 

1.02

 

 

 

1.11

 

 

 

1.62

 

 Dividends Declared Per Share

 

 

0.67

 

 

 

0.67

 

 

 

0.67

 

 

 

 

 

 

 

 

 

 

 

 Average Common Shares Outstanding:

 

 

 

 

 

 

 

 

 

   Basic

 

 

7,835,273

 

 

 

7,834,383

 

 

 

7,792,474

 

   Diluted

 

 

7,865,193

 

 

 

7,853,823

 

 

 

7,826,162

 

 

 

 

 

 

 

 

 

 

 

Selected Performance Ratios:

 

 

 

 

 

 

 

 

 

 Net Interest Margin, FTE

 

 

2.10

%

 

 

2.14

%

 

 

2.63

%

 Adjusted Net Interest Margin, FTE

 

 

2.05

%

 

 

2.10

%

 

 

2.58

%

 Cost of Funds

 

 

2.28

%

 

 

2.20

%

 

 

1.34

%

 Cost of Interest-Bearing Liabilities

 

 

3.13

%

 

 

3.04

%

 

 

1.96

%

 Cost of Deposits

 

 

2.18

%

 

 

2.19

%

 

 

1.36

%

 Cost of Deposits excluding Wholesale Deposits

 

 

1.97

%

 

 

1.89

%

 

 

1.01

%

 Return on Average Assets

 

 

0.51

%

 

 

0.59

%

 

 

0.91

%

 Return on Average Equity

 

 

5.19

%

 

 

6.06

%

 

 

9.68

%

 Efficiency Ratio

 

 

75.08

%

 

 

69.72

%

 

 

63.00

%

 Operating Efficiency Ratio*

 

 

71.34

%

 

 

67.91

%

 

 

62.06

%

 Operating Return on Average Assets*

 

 

0.60

%

 

 

0.64

%

 

 

0.93

%

 Operating Return on Tangible Common Equity*

 

 

6.94

%

 

 

7.61

%

 

 

11.52

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31,

 

 

December 31,

 

 

March 31,

 

 

 

2024

 

 

2023

 

 

2023

 

 

 

(dollars in thousands, except per share data)

 

Total Assets

 

$

5,373,840

 

 

$

5,417,666

 

 

$

5,528,584

 

Total Loans

 

$

3,994,749

 

 

$

4,021,544

 

 

$

4,018,082

 

Total Deposits

 

$

4,185,382

 

 

$

4,321,178

 

 

$

4,656,776

 

Allowance for Credit Losses

 

$

39,347

 

 

$

38,944

 

 

$

38,005

 

Allowance to Total Loans

 

 

0.98

%

 

 

0.97

%

 

 

0.95

%

Non-Performing Loans

 

$

17,201

 

 

$

16,567

 

 

$

7,262

 

Non-Performing Loans/Total Loans

 

 

0.43

%

 

 

0.41

%

 

 

0.18

%

QTD Net Recoveries (Charge-offs) to Total Loans (annualized)

 

 

0.00

%

 

 

0.00

%

 

 

0.00

%

Tangible Common Equity Ratio*

 

 

8.76

%

 

 

8.67

%

 

 

8.32

%

Book Value Per Share

 

$

68.27

 

 

$

68.14

 

 

$

67.14

 

Tangible Book Value Per Share*

 

$

59.23

 

 

$

59.08

 

 

$

57.98

 

Wealth Management AUM

 

$

4,501,369

 

 

$

4,326,152

 

 

 

4,005,805

 

Wealth Management AUM & AUA

 

$

4,800,772

 

 

$

4,595,209

 

 

 

4,267,343

 

* See GAAP to Non-GAAP Reconciliations

 

 

 

 

 

 

 

.

 

 

 

 

 

8

 

 

CAMBRIDGE BANCORP AND SUBSIDIARIES

UNAUDITED CONSOLIDATED BALANCE SHEETS

 

 

 

March 31, 2024

 

 

December 31, 2023

 

 

 

(dollars in thousands, except share information)

 

Assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

29,705

 

 

$

33,004

 

Investment securities

 

 

 

 

 

 

Available for sale, at fair value (amortized cost $159,483 and $163,376, respectively)

 

 

133,222

 

 

 

137,838

 

Held to maturity, at amortized cost (fair value $777,383 and $805,428, respectively)

 

 

940,618

 

 

 

959,332

 

Total investment securities

 

 

1,073,840

 

 

 

1,097,170

 

 

 

 

 

 

 

 

Loans

 

 

 

 

 

 

Residential mortgage

 

 

1,611,271

 

 

 

1,626,264

 

Commercial mortgage

 

 

1,922,278

 

 

 

1,931,473

 

Home equity

 

 

90,647

 

 

 

95,649

 

Commercial and industrial

 

 

348,549

 

 

 

343,711

 

Consumer

 

 

22,004

 

 

 

24,447

 

Total loans

 

 

3,994,749

 

 

 

4,021,544

 

Less: allowance for credit losses on loans

 

 

(39,347

)

 

 

(38,944

)

Net loans

 

 

3,955,402

 

 

 

3,982,600

 

Federal Home Loan Bank of Boston Stock, at cost

 

 

24,291

 

 

 

19,056

 

Bank owned life insurance

 

 

35,471

 

 

 

35,265

 

Banking premises and equipment, net

 

 

20,858

 

 

 

21,753

 

Right-of-use asset operating leases

 

 

21,694

 

 

 

23,233

 

Deferred income taxes, net

 

 

14,359

 

 

 

15,299

 

Accrued interest receivable

 

 

15,226

 

 

 

15,765

 

Goodwill

 

 

64,539

 

 

 

64,539

 

Merger-related intangibles, net

 

 

6,327

 

 

 

6,550

 

Other assets

 

 

112,128

 

 

 

103,432

 

Total assets

 

$

5,373,840

 

 

$

5,417,666

 

Liabilities

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

Demand- Non Interest bearing

 

$

965,090

 

 

$

1,032,413

 

Interest-bearing checking

 

 

1,202,713

 

 

 

1,132,518

 

Money market

 

 

934,958

 

 

 

983,480

 

Savings

 

 

507,640

 

 

 

498,386

 

Certificates of deposit

 

 

574,981

 

 

 

674,381

 

Total deposits

 

 

4,185,382

 

 

 

4,321,178

 

Borrowings

 

 

546,405

 

 

 

452,155

 

Operating lease liabilities

 

 

23,914

 

 

 

25,165

 

Other liabilities

 

 

82,543

 

 

 

84,595

 

Total liabilities

 

 

4,838,244

 

 

 

4,883,093

 

Shareholders’ Equity

 

 

 

 

 

 

Common stock, par value $1.00; Authorized: 10,000,000 shares; Outstanding: 7,845,598 shares and 7,845,452 shares, respectively

 

 

7,846

 

 

 

7,845

 

Additional paid-in capital

 

 

294,294

 

 

 

293,950

 

Retained earnings

 

 

252,124

 

 

 

250,492

 

Accumulated other comprehensive loss

 

 

(18,668

)

 

 

(17,714

)

Total shareholders’ equity

 

 

535,596

 

 

 

534,573

 

Total liabilities and shareholders’ equity

 

$

5,373,840

 

 

$

5,417,666

 

 

 

9

 

 

CAMBRIDGE BANCORP AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

 

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

December 31,

 

 

March 31,

 

 

 

2024

 

 

2023

 

 

2023

 

 

 

(dollars in thousands, except per share amounts)

 

Interest and dividend income

 

 

 

 

 

 

 

 

 

Interest on taxable loans

 

$

50,123

 

 

$

50,884

 

 

$

45,333

 

Interest on tax-exempt loans

 

 

399

 

 

 

399

 

 

 

376

 

Interest on taxable investment securities

 

 

4,661

 

 

 

4,745

 

 

 

5,050

 

Interest on tax-exempt investment securities

 

 

511

 

 

 

519

 

 

 

585

 

Dividends on FHLB of Boston stock

 

 

419

 

 

 

304

 

 

 

72

 

Interest on overnight investments

 

 

100

 

 

 

99

 

 

 

326

 

Total interest and dividend income

 

 

56,213

 

 

 

56,950

 

 

 

51,742

 

Interest expense

 

 

 

 

 

 

 

 

 

Interest on deposits

 

 

23,330

 

 

 

24,817

 

 

 

15,944

 

Interest on borrowed funds

 

 

5,851

 

 

 

3,983

 

 

 

1,550

 

Total interest expense

 

 

29,181

 

 

 

28,800

 

 

 

17,494

 

Net interest and dividend income

 

 

27,032

 

 

 

28,150

 

 

 

34,248

 

Provision for credit losses

 

 

125

 

 

 

569

 

 

 

60

 

Net interest and dividend income after provision for credit losses

 

 

26,907

 

 

 

27,581

 

 

 

34,188

 

Noninterest income

 

 

 

 

 

 

 

 

 

Wealth management revenue

 

 

8,715

 

 

 

8,478

 

 

 

7,937

 

Deposit account fees

 

 

811

 

 

 

746

 

 

 

869

 

ATM/Debit card income

 

 

360

 

 

 

400

 

 

 

511

 

Bank owned life insurance income

 

 

203

 

 

 

202

 

 

 

187

 

Gain on loans sold, net

 

 

15

 

 

 

16

 

 

 

13

 

Loan related derivative income

 

 

18

 

 

 

114

 

 

 

234

 

Other income

 

 

484

 

 

 

481

 

 

 

964

 

Total noninterest income

 

 

10,606

 

 

 

10,437

 

 

 

10,715

 

Noninterest expense

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

17,322

 

 

 

17,062

 

 

 

18,488

 

Occupancy and equipment

 

 

3,577

 

 

 

3,534

 

 

 

3,747

 

Data processing

 

 

2,824

 

 

 

2,585

 

 

 

2,641

 

Professional services

 

 

825

 

 

 

600

 

 

 

1,123

 

Marketing

 

 

229

 

 

 

154

 

 

 

426

 

FDIC insurance

 

 

795

 

 

 

918

 

 

 

379

 

Non-operating expenses

 

 

1,407

 

 

 

698

 

 

 

424

 

Other expenses

 

 

1,280

 

 

 

1,350

 

 

 

1,100

 

Total noninterest expense

 

 

28,259

 

 

 

26,901

 

 

 

28,328

 

Income before income taxes

 

 

9,254

 

 

 

11,117

 

 

 

16,575

 

Income tax expense

 

 

2,366

 

 

 

3,083

 

 

 

4,159

 

Net income

 

$

6,888

 

 

$

8,034

 

 

$

12,416

 

Share data:

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding, basic

 

 

7,835,273

 

 

 

7,834,383

 

 

 

7,792,474

 

Weighted average shares outstanding, diluted

 

 

7,865,193

 

 

 

7,853,823

 

 

 

7,826,162

 

Basic earnings per share

 

$

0.88

 

 

$

1.02

 

 

$

1.59

 

Diluted earnings per share

 

$

0.87

 

 

$

1.02

 

 

$

1.58

 

 

 

 

 

 

10

 

 

CAMBRIDGE BANCORP AND SUBSIDIARIES

MARGIN & YIELD ANALYSIS

 

 

 

Three Months Ended

 

 

 

March 31, 2024

 

 

December 31, 2023

 

 

March 31, 2023

 

 

 

Average
Balance

 

 

Interest
Income/
Expenses (1)

 

 

Rate
Earned/
Paid (1)

 

 

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

 

$

3,953,820

 

 

$

50,123

 

 

 

5.10

%

 

$

3,978,452

 

 

$

50,884

 

 

 

5.07

%

 

$

3,986,380

 

 

$

45,333

 

 

 

4.61

%

Tax-exempt

 

 

54,458

 

 

 

506

 

 

 

3.74

 

 

 

53,132

 

 

 

506

 

 

 

3.78

 

 

 

51,028

 

 

 

476

 

 

 

3.78

 

Securities available for
   sale (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

161,707

 

 

 

652

 

 

 

1.62

 

 

 

166,003

 

 

 

669

 

 

 

1.60

 

 

 

180,510

 

 

 

713

 

 

 

1.60

 

Securities held to maturity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

867,313

 

 

 

4,009

 

 

 

1.86

 

 

 

885,576

 

 

 

4,076

 

 

 

1.83

 

 

 

948,233

 

 

 

4,337

 

 

 

1.85

 

Tax-exempt

 

 

83,653

 

 

 

647

 

 

 

3.11

 

 

 

84,990

 

 

 

657

 

 

 

3.07

 

 

 

95,212

 

 

 

740

 

 

 

3.15

 

Cash and cash equivalents

 

 

32,275

 

 

 

100

 

 

 

1.25

 

 

 

31,768

 

 

 

99

 

 

 

1.24

 

 

 

50,831

 

 

 

326

 

 

 

2.60

 

Total interest-earning
   assets (4)

 

 

5,153,226

 

 

 

56,037

 

 

 

4.37

%

 

 

5,199,921

 

 

 

56,891

 

 

 

4.34

%

 

 

5,312,194

 

 

 

51,925

 

 

 

3.96

%

Non-interest-earning
   assets

 

 

279,422

 

 

 

 

 

 

 

 

 

285,093

 

 

 

 

 

 

 

 

 

268,670

 

 

 

 

 

 

 

Allowance for credit losses

 

 

(38,951

)

 

 

 

 

 

 

 

 

(38,226

)

 

 

 

 

 

 

 

 

(37,784

)

 

 

 

 

 

 

Total assets

 

$

5,393,697

 

 

 

 

 

 

 

 

$

5,446,788

 

 

 

 

 

 

 

 

$

5,543,080

 

 

 

 

 

 

 

LIABILITIES AND
   SHAREHOLDERS’
   EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Checking accounts

 

$

1,167,639

 

 

$

6,095

 

 

 

2.10

%

 

$

1,160,636

 

 

$

5,948

 

 

 

2.03

%

 

$

880,040

 

 

$

2,025

 

 

 

0.93

%

Savings accounts

 

 

502,793

 

 

 

1,438

 

 

 

1.15

 

 

 

540,052

 

 

 

1,561

 

 

 

1.15

 

 

 

771,219

 

 

 

1,357

 

 

 

0.71

 

Money market accounts

 

 

953,885

 

 

 

8,094

 

 

 

3.41

 

 

 

984,696

 

 

 

8,267

 

 

 

3.33

 

 

 

1,129,934

 

 

 

6,462

 

 

 

2.32

 

Certificates of deposit

 

 

678,436

 

 

 

7,703

 

 

 

4.57

 

 

 

769,384

 

 

 

9,041

 

 

 

4.66

 

 

 

692,644

 

 

 

6,100

 

 

 

3.57

 

Total interest-bearing
   deposits

 

 

3,302,753

 

 

 

23,330

 

 

 

2.84

 

 

 

3,454,768

 

 

 

24,817

 

 

 

2.85

 

 

 

3,473,837

 

 

 

15,944

 

 

 

1.86

 

Other borrowed funds

 

 

443,734

 

 

 

5,851

 

 

 

5.30

 

 

 

302,738

 

 

 

3,983

 

 

 

5.22

 

 

 

137,516

 

 

 

1,550

 

 

 

4.57

 

Total interest-bearing
   liabilities

 

 

3,746,487

 

 

 

29,181

 

 

 

3.13

%

 

 

3,757,506

 

 

 

28,800

 

 

 

3.04

%

 

 

3,611,353

 

 

 

17,494

 

 

 

1.96

%

Non-interest-bearing
   liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

 

1,001,451

 

 

 

 

 

 

 

 

 

1,035,191

 

 

 

 

 

 

 

 

 

1,290,924

 

 

 

 

 

 

 

Other liabilities

 

 

111,620

 

 

 

 

 

 

 

 

 

128,246

 

 

 

 

 

 

 

 

 

120,877

 

 

 

 

 

 

 

Total liabilities

 

 

4,859,558

 

 

 

 

 

 

 

 

 

4,920,943

 

 

 

 

 

 

 

 

 

5,023,154

 

 

 

 

 

 

 

Shareholders’ equity

 

 

534,139

 

 

 

 

 

 

 

 

 

525,845

 

 

 

 

 

 

 

 

 

519,926

 

 

 

 

 

 

 

Total liabilities &
   shareholders’
   equity

 

$

5,393,697

 

 

 

 

 

 

 

 

$

5,446,788

 

 

 

 

 

 

 

 

$

5,543,080

 

 

 

 

 

 

 

Net interest income on a
   fully taxable equivalent
   basis

 

 

 

 

 

26,856

 

 

 

 

 

 

 

 

 

28,091

 

 

 

 

 

 

 

 

 

34,431

 

 

 

 

Less taxable equivalent
   adjustment

 

 

 

 

 

(243

)

 

 

 

 

 

 

 

 

(245

)

 

 

 

 

 

 

 

 

(255

)

 

 

 

Net interest income

 

 

 

 

$

26,613

 

 

 

 

 

 

 

 

$

27,846

 

 

 

 

 

 

 

 

$

34,176

 

 

 

 

Net interest spread (5)

 

 

 

 

 

 

 

 

1.24

%

 

 

 

 

 

 

 

 

1.30

%

 

 

 

 

 

 

 

 

2.00

%

Net interest margin (6)

 

 

 

 

 

 

 

 

2.10

%

 

 

 

 

 

 

 

 

2.14

%

 

 

 

 

 

 

 

 

2.63

%
(1)
Annualized on a fully taxable equivalent basis calculated using a federal tax rate of 21% in 2024 and 2023.
(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 is excluded from interest-earning assets and associated dividend income is excluded from interest income.
(5)
Net interest spread represents the difference between the weighted average yield on interest-earning assets, inclusive of Paycheck Protection Program (“PPP”) loans outstanding during 2024 and 2023, 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, inclusive of PPP loans outstanding during 2024 and 2023.

11

 

 

GAAP to Non-GAAP Reconciliations (dollars in thousands except per share data)

 

Statement on Non-GAAP Measures: The Company believes the presentation of the following non-GAAP financial measures provides useful supplemental information that is essential to an investor’s proper understanding of the results of operations and financial condition of the Company. Management uses non-GAAP financial measures in its analysis of the Company’s performance. These non-GAAP measures should not be viewed as substitutes for the financial measures determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

 

 

 

Three Months Ended

 

Operating Net Income / Operating Diluted Earnings Per Share

 

March 31,

 

 

December 31,

 

 

March 31,

 

 

 

2024

 

 

2023

 

 

2023

 

 

 

(dollars in thousands, except share data)

 

 

 

 

 

 

 

 

 

 

 

Net Income (a GAAP measure)

 

$

6,888

 

 

$

8,034

 

 

$

12,416

 

Add: Mergers and office consolidation expenses (1)

 

 

1,407

 

 

 

698

 

 

 

424

 

Less: Tax effect of non-operating expenses (2)

 

 

(299

)

 

 

(8

)

 

 

(118

)

Operating Net Income (a non-GAAP measure)

 

$

7,996

 

 

$

8,724

 

 

$

12,722

 

Less: Dividends and Undistributed Earnings Allocated
   to Participating Securities (a non-GAAP measure)

 

 

(10

)

 

 

(13

)

 

 

(26

)

Operating Net Income Applicable to Common
   Shareholders (a non-GAAP measure)

 

$

7,986

 

 

$

8,711

 

 

$

12,696

 

Weighted Average Diluted Shares

 

 

7,865,193

 

 

 

7,853,823

 

 

 

7,826,162

 

Operating Diluted Earnings Per Share
   (a non-GAAP measure)

 

$

1.02

 

 

$

1.11

 

 

$

1.62

 

 

(1)
The Company recorded merger expenses of $673,000 associated with the Eastern merger and $734,000 associated with office consolidation expenses for the three months ended March 31, 2024.
(2)
The net tax benefit associated with non-operating items is determined by assessing whether each non-operating item is included or excluded from net taxable income and applying the Company’s combined marginal tax rate to only those items included in net taxable income.

 

 

 

March 31, 2024

 

 

December 31, 2023

 

 

March 31, 2023

 

 

 

(dollars in thousands)

 

Tangible Common Equity:

 

 

 

 

 

 

 

 

 

Shareholders' equity (GAAP)

 

$

535,596

 

 

$

534,573

 

 

$

525,949

 

Less: Goodwill and acquisition related intangibles (GAAP)

 

 

(70,866

)

 

 

(71,089

)

 

 

(71,758

)

Tangible Common Equity (a non-GAAP measure)

 

$

464,730

 

 

$

463,484

 

 

$

454,191

 

Total assets (GAAP)

 

$

5,373,840

 

 

$

5,417,666

 

 

$

5,528,584

 

Less: Goodwill and acquisition related intangibles (GAAP)

 

 

(70,866

)

 

 

(71,089

)

 

 

(71,758

)

Tangible assets (a non-GAAP measure)

 

$

5,302,974

 

 

$

5,346,577

 

 

$

5,456,826

 

Tangible Common Equity Ratio (a non-GAAP
   measure)

 

 

8.76

%

 

 

8.67

%

 

 

8.32

%

 

 

 

 

 

 

 

 

 

 

Tangible Book Value Per Share:

 

 

 

 

 

 

 

 

 

Tangible Common Equity (a non-GAAP measure)

 

$

464,730

 

 

$

463,484

 

 

$

454,191

 

Common shares outstanding

 

 

7,845,598

 

 

 

7,845,452

 

 

 

7,833,997

 

Tangible Book Value Per Share (a non-GAAP measure)

 

$

59.23

 

 

$

59.08

 

 

$

57.98

 

 

12

 

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

December 31,

 

 

March 31,

 

 

 

2024

 

 

2023

 

 

2023

 

 

 

(dollars in thousands)

 

Efficiency Ratio: (1)

 

 

 

 

 

 

 

 

 

Noninterest expense

 

$

28,259

 

 

$

26,901

 

 

$

28,328

 

Net interest and dividend income

 

$

27,032

 

 

$

28,150

 

 

$

34,248

 

Total noninterest income

 

 

10,606

 

 

 

10,437

 

 

 

10,715

 

Total revenue

 

$

37,638

 

 

$

38,587

 

 

$

44,963

 

Efficiency Ratio

 

 

75.08

%

 

 

69.72

%

 

 

63.00

%

 

 

 

 

 

 

 

 

 

 

Operating Efficiency Ratio: (2)

 

 

 

 

 

 

 

 

 

Noninterest expense

 

$

28,259

 

 

$

26,901

 

 

$

28,328

 

Mergers and office consolidation expenses (Pretax)

 

 

(1,407

)

 

 

(698

)

 

 

(424

)

Operating expense (a non-GAAP measure)

 

$

26,852

 

 

$

26,203

 

 

$

27,904

 

Operating revenue (a non-GAAP measure)

 

$

37,638

 

 

$

38,587

 

 

$

44,963

 

Operating Efficiency Ratio (a non-GAAP measure)

 

 

71.34

%

 

 

67.91

%

 

 

62.06

%

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

December 31,

 

 

March 31,

 

 

 

2024

 

 

2023

 

 

2023

 

 

 

(dollars in thousands)

 

Operating Return on Tangible Common Equity: (3)

 

 

 

 

 

 

 

 

 

Operating Net Income (a non-GAAP measure)

 

$

7,996

 

 

$

8,724

 

 

$

12,722

 

Average common equity

 

$

534,139

 

 

$

525,845

 

 

$

519,926

 

Average goodwill and merger related intangibles

 

 

(70,988

)

 

 

(71,207

)

 

 

(71,876

)

Average tangible common equity (a non-GAAP measure)

 

$

463,151

 

 

$

454,638

 

 

$

448,050

 

Operating Return on Tangible Common Equity (a non-GAAP measure)

 

 

6.94

%

 

 

7.61

%

 

 

11.52

%

 

 

 

 

 

 

 

 

 

 

Operating Return on Average Assets: (4)

 

 

 

 

 

 

 

 

 

Operating Net Income (a non-GAAP measure)

 

$

7,996

 

 

$

8,724

 

 

$

12,722

 

Average assets

 

$

5,393,697

 

 

$

5,446,788

 

 

$

5,543,080

 

Operating Return on Average Assets (a non-GAAP measure)

 

 

0.60

%

 

 

0.64

%

 

 

0.93

%

 

(1)
The efficiency ratio represents noninterest expense as a percentage of the sum of net interest and dividend income and noninterest income.
(2)
Operating efficiency ratio represents operating expense as a percentage of total revenue.
(3)
Operating return on tangible common equity represents operating net income as a percentage of average tangible common equity.
(4)
Operating return on average assets represents operating net income as a percentage of average assets.

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