Cambridge Bancorp (CATC) 8-K Cambridge Bancorp Announces Third Quarter 2017 Earnings and Declares Dividend

Exhibit 99.1

CONTACT:

Cambridge Bancorp

Michael F. Carotenuto

Chief Financial Officer

617-520-5520

FOR IMMEDIATE RELEASE

Cambridge Bancorp Announces Third Quarter 2017 Earnings and Declares Dividend

CAMBRIDGE, MA. (October 19, 2017) - Cambridge Bancorp (NASDAQ: CATC) (the “Company”), the parent of Cambridge Trust Company, today announced unaudited net income of $5,010,000 for the third quarter of 2017, representing an increase of $435,000, or 9.5%, compared to net income of $4,575,000 for the same quarter in 2016. Diluted earnings per share were $1.22 for the third quarter of 2017, representing an 8.0% increase over diluted earnings per share of $1.13 for the same quarter in 2016.

For the nine months ended September 30, 2017, unaudited net income was $13,852,000, an increase of $1,379,000, or 11.1%, compared to net income of $12,473,000 for the nine months ended September 30, 2016. Diluted earnings per share were $3.37 for the first nine months of 2017, representing a 9.1% increase over diluted earnings per share of $3.09 for the same period in 2016.

Third quarter 2017 highlights as compared to the third quarter of 2016:

• Wealth Management Assets under Management and Administration now at $2.9 billion, an increase of 10.0%

• Revenue of $22.6 million, an increase of 7.0%

• Loan growth of $43.9 million, or 3.3%

• Deposit growth of $52.7 million, or 3.2%

“We are pleased to report another quarter of strong earnings growth,” noted Denis K. Sheahan, CEO. “Our strategy of delivering private banking services to our clients continues to position us favorably in the greater Boston market. The Company posted strong profitability metrics for the quarter with annualized return on average assets of 1.05% and annualized return on average shareholders’ equity of 13.84%.”

Balance Sheet

Total assets increased $15.2 million, or 0.8%, from December 31, 2016 and stood at $1.9 billion as of September 30, 2017.

Total loans increased $35.8 million, or 2.7%, from December 31, 2016 and stood at $1.4 billion as of September 30, 2017. The growth in total loans is primarily due to the increase in commercial real estate loans of $15.6 million, from $616.1 million at December 31, 2016 to $631.8 million at September 30, 2017 and the increase in consumer loans of $10.0 million, from $34.9 million at December 31, 2016 to $44.9 million at September 30, 2017.

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The Company’s total investment securities portfolio increased by $24.2 million, or 5.9%, from $408.1 million at December 31, 2016 to $432.3 million at September 30, 2017.  

Core deposits, which we define as all deposits other than certificates of deposit, increased by $3.1 million, or 0.21%, from December 31, 2016. The cost of total deposits for the nine months ended September 30, 2017 was 0.18%, as compared to 0.21% for the nine months ended September 30, 2016. Total deposits at September 30, 2017 were $1.7 billion, as compared to $1.6 billion at September 30, 2016.

Net Interest and Dividend Income

For the quarter ended September 30, 2017, net interest and dividend income after provision for loan losses increased by $922,000, or 6.9%, to $14.3 million, as compared to $13.4 million for the quarter ended September 30, 2016. Interest on loans increased by $721,000, or 5.8%, primarily driven by the impact of loan growth. The Company’s net interest margin, on a fully tax equivalent basis, increased four basis points to 3.23% for the three months ended September 30, 2017, as compared to 3.19% for the three months ended September 30, 2016.

For the nine months ended September 30, 2017, net interest and dividend income after provision for loan losses, increased by $3.0 million, or 7.7%, to $42.5 million, as compared to $39.4 million for the nine months ended September 30, 2016. Interest on loans increased by $2.3 million, or 6.3%, primarily driven by the impact of loan growth. The Company’s net interest margin, on a fully tax equivalent basis, increased four basis points to 3.24% for the nine months ended September 30, 2017, as compared to 3.20% for the nine months ended September 30, 2016.

Noninterest Income

Total noninterest income increased by $362,000, or 4.8%, to $8.0 million for the quarter ended September 30, 2017, as compared to $7.6 million for the quarter ended September 30, 2016 primarily as a result of increased Wealth Management revenue. Noninterest income was 35.3% of total revenue for the quarter ended September 30, 2017. Wealth Management revenue increased by $650,000, or 11.9%, for the third quarter of 2017, as compared to the third quarter of 2016 due to new business development and market appreciation. Wealth Management Assets under Management increased by $254.2 million, or 9.9%, to $2.8 billion as of September 30, 2017, as compared to $2.6 billion as of December 31, 2016.

Noninterest income increases were partially offset by lower gains on loans held for sale and lower loan related derivative income of $266,000 and $108,000, respectively, for the quarter ended September 30, 2017, as compared to the quarter ended September 30, 2016.

Noninterest Expense

Total noninterest expense increased by $439,000, or 3.1%, to $14.6 million for the quarter ended September 30, 2017, as compared to $14.2 million for the quarter ended September 30, 2016. The increase in salaries and benefits of $446,000 is primarily due to the impact of additional staff to support business initiatives for the quarter ended September 30, 2017, as compared to the quarter ended September 30, 2016. The increase of $300,000 in professional services is mainly due to legal and consulting services primarily related to registration with the U.S. Securities and Exchange Commission for the quarter ended September 30, 2017, as compared to the quarter ended September 30, 2016.

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Noninterest expense increases were partially offset by decreases in data processing and lower marketing costs of $168,000 and $108,000, respectively, for the quarter ended September 30, 2017, as compared to September 30, 2016.  

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Asset Quality

Loan quality remained sound with non-performing loans totaling $1.7 million, or 0.13% of total loans outstanding as of September 30, 2017. The allowance for loan losses was $15.6 million, or 1.15% of total loans outstanding at September 30, 2017, as compared to $15.3 million, or 1.16% of total loans outstanding at year end 2016.

Income Taxes

The effective tax rate was 35.0% for the quarter ended September 30, 2017, as compared to 33.3% for the quarter ended September 30, 2016. For the nine months ended September 30, 2017, the effective tax rate was 33.5%, as compared to 33.2% for the nine months ended September 30, 2016.  During the current year, the Company recognized $219,000 of tax benefit resulting from the adoption of new accounting guidance for share-based payments.

Dividend

On October 16, 2017, the Company’s Board of Directors declared a quarterly cash dividend of $0.47 per share, which is payable on November 16, 2017 to shareholders of record as of the close of business on November 2, 2017. This represents an increase of $0.01 as compared to $0.46 declared during the fourth quarter of 2016.

About Cambridge Bancorp

Cambridge Bancorp, the parent company of Cambridge Trust Company, is based in Cambridge, Massachusetts. Cambridge Trust Company is a 127-year-old Massachusetts chartered commercial bank with $1.9 billion in assets and 11 Massachusetts locations in Cambridge, Boston, Belmont, Concord, Lexington and Weston. Cambridge Trust Company is one of New England’s leaders in 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 Cambridge Bancorp 2016 Annual Report, which is posted in the investor relations section of our website at www.cambridgetrust.com.

Forward-looking Statements

Certain statements herein may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (“PSLRA”). These statements are intended to take advantage of the “safe harbor” provisions of the PSLRA. These statements are based on the beliefs and assumptions of management of the Company and its subsidiaries and on the information available to management at the time that these statements were made. Since these statements reflect the views of management concerning future events, these statements involve risks, uncertainties and assumptions. As a result, actual results may differ from those contemplated by these statements. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. Such statements may be identified by the use of words such as “believe,” “expect,” “anticipate,” “forecast,” “estimate,” “intend,” “will,” “would,” “should,” “could,” “may,” or similar words. There are a number of factors, many of which are beyond the Company’s control that could cause actual conditions, events or results to differ materially from those in the forward-looking statements.  Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, changes in the interest rate environment, unfavorable or less than favorable

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changes in general economic conditions (nationally or regionally), our ability to continue to increase loans and deposit growth, increased competitive pressures among depository and other financial institutions, legislative and regulatory changes that adversely affect the businesses in which the Company is engaged, changes in the securities market, and other factors that are described in the Company’s annual report. Readers should not place undue reliance on these forward-looking statements, which speak only as of the date they are made. The Company disclaims any intent or obligation to update any forward-looking statements, whether in response to new information, future events or otherwise, except as may be required by law.

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CAMBRIDGE BANCORP AND SUBSIDIARIES

UNAUDITED QUARTERLY RESULTS

September 30, 2017

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2017			2016			2017			2016
	(dollar amounts in thousands, except per share data)
Interest and Dividend Income	$	15,673		$	14,315		$	45,447		$	42,365
Interest Expense		1,034			795			2,617			2,592
Net Interest and Dividend Income		14,639			13,520			42,830			39,773
Provision for Loan Losses		310			113			360			338
Noninterest Income		7,977			7,615			22,649			21,383
Noninterest Expense		14,602			14,163			44,280			42,155
Income Before Taxes		7,704			6,859			20,839			18,663
Income Taxes		2,694			2,284			6,987			6,190
Net Income	$	5,010		$	4,575		$	13,852		$	12,473
Data Per Common Share:
Basic Earnings Per Share	$	1.23		$	1.13		$	3.40		$	3.09
Diluted Earnings Per Share	$	1.22		$	1.13		$	3.37		$	3.09
Dividends Declared Per Share	$	0.47		$	0.46		$	1.39		$	1.38
Avg. Common Shares Outstanding:
Basic		4,037,026			3,996,687			4,027,378			3,982,696
Diluted		4,070,332			4,043,651			4,062,743			4,029,281
Selected Operating Ratios:
Net Interest Margin, FTE		3.23	%		3.19	%		3.24	%		3.20	%
Cost of Funds		0.22	%		0.18	%		0.19	%		0.20	%
Cost of Interest Bearing Liabilities		0.33	%		0.27	%		0.28	%		0.30	%
Cost of Deposits		0.19	%		0.19	%		0.18	%		0.21	%
Return on Average Assets		1.05	%		1.01	%		0.99	%		0.94	%
Return on Average Equity		13.84	%		13.52	%		13.25	%		12.72	%
Efficiency Ratio		64.56	%		67.01	%		67.62	%		68.93	%
				September 30,			December 31,			September 30,
				2017			2016			2016
Total Assets				$	1,864,231		$	1,848,999		$	1,801,055
Total Loans					1,355,908			1,320,154			1,312,021
Non-Performing Loans					1,702			1,676			1,574
Allowance for Loan Losses					15,620			15,261			15,537
Allowance to Total Loans					1.15	%		1.16	%		1.18	%
Total Deposits					1,676,918			1,686,038			1,624,264
Total Shareholders’ Equity					146,051			134,671			136,228
Wealth Management AUM				$	2,826,984		$	2,572,760		$	2,542,677
Wealth Management AUM & AUA				$	2,932,726		$	2,689,103		$	2,665,343
Book Value Per Share				$	35.78		$	33.36		$	33.76

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CAMBRIDGE BANCORP AND SUBSIDIARIES

UNAUDITED CONSOLIDATED BALANCE SHEETS

	September 30, 2017			December 31, 2016
	(dollars in thousands, except par value)
Assets
Cash and cash equivalents	$	13,668		$	54,050
Investment securities
Available for sale, at fair value (amortized cost $215,007 and $329,726, respectively)		212,449			325,641
Held to maturity, at amortized cost (fair value $222,251 and $83,755, respectively)		219,870			82,502
Total investment securities		432,319			408,143
Loans held for sale, at lower of cost or fair value		560			6,506
Loans
Residential mortgage		537,425			534,404
Commercial mortgage		631,752			616,140
Home equity		76,007			75,051
Commercial & Industrial		65,861			59,706
Consumer		44,863			34,853
Total loans		1,355,908			1,320,154
Less: allowance for loan losses		(15,620	)		(15,261	)
Net loans		1,340,288			1,304,893
Stock in FHLB of Boston, at cost		4,938			4,098
Bank owned life insurance		30,947			30,499
Banking premises and equipment, net		9,502			10,451
Deferred income taxes, net		13,392			13,693
Accrued interest receivable		4,899			4,627
Other assets		13,718			12,039
Total assets	$	1,864,231		$	1,848,999
Liabilities
Deposits
Demand	$	465,970		$	472,923
Interest bearing checking		387,343			430,706
Money market		64,232			72,057
Savings		600,475			539,190
Certificates of deposit		158,898			171,162
Total deposits		1,676,918			1,686,038
Short-term borrowings		11,500			—
Long-term borrowings		3,621			3,746
Other liabilities		26,141			24,544
Total liabilities		1,718,180			1,714,328
Shareholders’ Equity
Common stock, par value $1.00; Authorized 10,000,000 shares; Outstanding: 4,082,188    shares and 4,036,879 shares, respectively		4,082			4,037
Additional paid-in capital		35,435			33,253
Retained earnings		115,048			107,262
Accumulated other comprehensive loss		(8,514	)		(9,881	)
Total shareholders’ equity		146,051			134,671
Total liabilities and shareholders’ equity	$	1,864,231		$	1,848,999

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CAMBRIDGE BANCORP AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017			2016
	(dollars in thousands, except share data)
Interest and dividend income
Interest on taxable loans	$	13,038	$	12,322	$	37,966		$	35,796
Interest on tax-exempt loans		121		116		391			293
Interest on taxable investment securities		1,712		1,115		4,762			3,979
Interest on tax-exempt investment securities		641		688		1,966			2,071
Dividends on FHLB of Boston stock		107		52		192			132
Interest on overnight investments		54		22		170			94
Total interest and dividend income		15,673		14,315		45,447			42,365
Interest expense
Interest on deposits		809		769		2,183			2,526
Interest on borrowed funds		225		26		434			66
Total interest expense		1,034		795		2,617			2,592
Net interest and dividend income		14,639		13,520		42,830			39,773
Provision for loan losses		310		113		360			338
Net interest and dividend income after provision for     loan losses		14,329		13,407		42,470			39,435
Noninterest income
Wealth management revenue		6,131		5,481		17,077			15,026
Deposit account fees		768		766		2,387			2,134
ATM/Debit card income		334		285		879			852
Bank owned life insurance income		139		149		448			474
Gain (loss) on disposition of investment securities		—		3		(3	)		438
Gain on loans held for sale		39		305		324			591
Loan related derivative income		284		392		647			1,191
Other income		282		234		890			677
Total noninterest income		7,977		7,615		22,649			21,383
Noninterest expense
Salaries and employee benefits		9,066		8,620		27,211			25,431
Occupancy and equipment		2,358		2,278		6,936			7,029
Data processing		1,111		1,279		3,830			3,744
Professional services		954		654		2,650			1,857
Marketing		355		463		1,098			1,388
FDIC Insurance		154		176		466			628
Other expenses		604		693		2,089			2,078
Total noninterest expense		14,602		14,163		44,280			42,155
Income before income taxes		7,704		6,859		20,839			18,663
Income tax expense		2,694		2,284		6,987			6,190
Net income	$	5,010	$	4,575	$	13,852		$	12,473
Share data
Weighted average number of shares outstanding, basic		4,037,026		3,996,687		4,027,378			3,982,696
Weighted average number of shares outstanding, diluted		4,070,332		4,043,651		4,062,743			4,029,281
Basic earnings per share	$	1.23	$	1.13	$	3.40		$	3.09
Diluted earnings per share	$	1.22	$	1.13	$	3.37		$	3.09

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CAMBRIDGE BANCORP AND SUBSIDIARIES

MARGIN & YIELD ANALYSIS

	Three Months Ended
	September 30, 2017									September 30, 2016
	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	$	1,330,390		$	13,038			3.89	%	$	1,279,457		$	12,322			3.83	%
Tax-exempt		14,950			186			4.94			18,147			179			3.92
Securities available for sale (3)
Taxable		226,164			902			1.58			322,032			1,105			1.37
Securities held to maturity
Taxable		154,129			810			2.08			900			10			4.42
Tax-exempt		80,717			986			4.85			84,235			1,058			5.00
Cash and due from banks		28,863			54			0.74			28,898			22			0.30
Total interest-earning assets (4)		1,835,213			15,976			3.45	%		1,733,669			14,696			3.37	%
Non interest-earning assets		75,753									75,204
Allowance for loan losses		(15,451	)								(15,456	)
Total assets	$	1,895,515								$	1,793,417
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing deposits
Checking accounts	$	381,652		$	46			0.05	%	$	365,012		$	15			0.02	%
Savings accounts		573,332			376			0.26			543,069			346			0.25
Money market accounts		69,437			26			0.15			86,572			33			0.15
Certificates of deposit		164,547			361			0.87			176,412			375			0.85
Total interest-bearing deposits		1,188,968			809			0.27			1,171,065			769			0.26
Other borrowed funds		67,126			225			1.33			8,428			26			1.23
Total interest-bearing liabilities		1,256,094			1,034			0.33	%		1,179,493			795			0.27	%
Non-interest-bearing liabilities
Demand deposits		470,016									455,365
Other liabilities		25,775									23,924
Total liabilities		1,751,885									1,658,782
Shareholders’ equity		143,630									134,635
Total liabilities & shareholders’ equity	$	1,895,515								$	1,793,417
Net interest income on a fully taxable equivalent basis					14,942									13,901
Less taxable equivalent adjustment					(410	)								(433	)
Net interest income				$	14,532								$	13,468
Net interest spread (5)								3.13	%								3.10	%
Net interest margin (6)								3.23	%								3.19	%

(1) Annualized on a fully taxable equivalent basis calculated using a federal tax rate of 35%.

(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.

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CAMBRIDGE BANCORP AND SUBSIDIARIES

MARGIN & YIELD ANALYSIS

	Nine Months Ended
	September 30, 2017									September 30, 2016
	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	$	1,312,432		$	37,966			3.87	%	$	1,230,571		$	35,796			3.89	%
Tax-exempt		15,917			601			5.05			14,928			450			4.03
Securities available for sale (3)
Taxable		261,106			3,158			1.62			340,355			3,942			1.55
Securities held to maturity
Taxable		101,819			1,604			2.11			1,047			37			4.72
Tax-exempt		82,023			3,024			4.93			82,763			3,186			5.14
Cash and due from banks		35,746			170			0.64			37,514			94			0.33
Total interest-earning assets (4)		1,809,043			46,523			3.44	%		1,707,178			43,505			3.40	%
Non interest-earning assets		73,733									73,801
Allowance for loan losses		(15,352	)								(15,321	)
Total assets	$	1,867,424								$	1,765,658
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing deposits
Checking accounts	$	395,759		$	84			0.03	%	$	362,373		$	66			0.02	%
Savings accounts		557,442			951			0.23			536,182			1,252			0.31
Money market accounts		71,044			79			0.15			78,584			100			0.17
Certificates of deposit		168,136			1,069			0.85			176,123			1,108			0.84
Total interest-bearing deposits		1,192,381			2,183			0.24			1,153,262			2,526			0.29
Other borrowed funds		45,970			434			1.26			6,169			66			1.43
Total interest-bearing liabilities		1,238,351			2,617			0.28	%		1,159,431			2,592			0.30	%
Non-interest-bearing liabilities
Demand deposits		464,217									453,251
Other liabilities		25,032									21,968
Total liabilities		1,727,600									1,634,650
Shareholders’ equity		139,824									131,008
Total liabilities & shareholders’ equity	$	1,867,424								$	1,765,658
Net interest income on a fully taxable equivalent basis					43,906									40,913
Less taxable equivalent adjustment					(1,268	)								(1,272	)
Net interest income				$	42,638								$	39,641
Net interest spread (5)								3.16	%								3.11	%
Net interest margin (6)								3.24	%								3.20	%

(1) Annualized on a fully taxable equivalent basis calculated using a federal tax rate of 35%.

(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.

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