Cambridge Bancorp Announces First Quarter 2024 Results and Declares Quarterly Dividend
- Unaudited net income for Q1 2024 was $6.9 million, down by 14.3% from the previous quarter.
- Diluted earnings per share decreased by 14.7% compared to the previous quarter.
- Cambridge Bancorp is merging with Eastern Bankshares, Inc., with shareholders' approval.
- Financial ratios include a Return on Average Assets of 0.51% and Operating ROA of 0.60%.
- Wealth Management Assets Under Management and Administration increased by $533.4 million.
- Asset quality ratios remained stable, with non-performing loans at 0.43% and non-performing assets at 0.32%.
- Total assets and loans decreased slightly, while noninterest income and expenses increased.
- The Board declared a quarterly cash dividend of $0.67 per share.
- Net income and diluted earnings per share decreased in Q1 2024.
- Total assets and loans saw a slight decrease.
- Noninterest expenses increased by 5.0% in Q1 2024.
- The Company recorded a provision for credit losses of $125,000 in Q1 2024.
- The net interest margin on a fully taxable equivalent basis decreased to 2.10% in Q1 2024.
- Non-performing assets and early-stage delinquency increased slightly from the previous quarter.
Insights
The reported decrease in net income of $1.1 million, or
Reviewing the balance sheet, a slight decrease in total assets and loans may reflect a conservative approach in a potentially shifting economic environment. The drop in residential and commercial real estate loans might be indicative of a cooling property market or a strategic shift in the bank's lending practices. The increase in commercial and industrial loans could suggest a targeted growth area for the bank.
The liquidity position of the company is robust, with available sources totaling approximately $2.35 billion, which is reassuring for investor confidence in the bank's ability to manage short-term obligations.
The announcement of the pending merger with Eastern Bankshares, Inc. could be a transformative event for Cambridge Bancorp, suggesting a strategic expansion that may appeal to investors looking for growth prospects. However, regulatory approval and finalization of the merger remain as variables that could affect the timeline and final outcome of this corporate action.
Investors might also take note of the wealth management division's growth, with a
From a risk perspective, the slight uptick in non-performing loans from
It's also pertinent to consider the provision for credit losses, which decreased due to lower average loan balances and a low unemployment rate. This suggests that the bank is expecting fewer loan defaults, which may be a positive sign for investors concerned about credit risk in their portfolio.
Operating net income, which excludes non-operating items, namely merger related and office consolidation charges, as detailed in the accounting principles generally accepted in
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:
- Return on Average Assets ("ROA") of
0.51% and Operating ROA of0.60% . - Return on Average Equity of
5.19% and Operating Return on Tangible Common Shareholders' Equity ("ROTCE") of6.94% .
- Return on Average Assets ("ROA") of
- Wealth Management Assets Under Management and Administration increased by
$533.4 million 12.5% , to$4.80 billion $4.27 billion $778,000 9.8% , to$8.7 million $7.9 million - Asset quality ratios at March 31, 2024: non-performing loans to total loans and non-performing assets to total assets at
0.43% and0.32% , respectively. - The common equity to assets ratio increased to
9.97% at March 31, 2024 from9.87% at December 31, 2023. The tangible common equity to tangible assets ratio increased to8.76% at March 31, 2024 from8.67% at December 31, 2023. - Book value per share increased to
$68.27 $68.14 - Available sources of liquidity at March 31, 2024 totaled approximately
$2.35 billion
Balance Sheet
Total assets decreased by
Total loans decreased by
- Residential real estate loans decreased by
$15.0 million $1.63 billion $1.61 billion - Commercial real estate loans decreased by
$9.2 million $1.93 billion $1.92 billion - Home equity loans decreased by
$5.0 million $95.6 million $90.6 million - Commercial and industrial loans increased by
$4.8 million 1.4% , from$343.7 million $348.5 million - Consumer loans decreased by
$2.4 million $24.4 million $22.0 million
The Company's total investment securities portfolio decreased by
Total deposits, excluding wholesale deposits remained flat as compared to December 31, 2023 and totaled
- Certificates of deposit totaled
$575.0 million $99.4 million 14.7% , from$674.4 million $161.1 million $291.7 million - The cost of total deposits was
2.18% for the three months ended March 31, 2024, as compared to2.19% for the three months ended December 31, 2023. The cost of total deposits excluding wholesale deposits was1.97% for the three months ended March 31, 2024, as compared to1.89% for the three months ended December 31, 2023. At March 31, 2024, the spot cost of non-wholesale deposits was2.00% , as compared to1.88% at December 31, 2023.
Borrowings totaled
Net Interest and Dividend Income
Net interest and dividend income, before the provision for credit losses, decreased by
The Company's net interest margin on a fully taxable equivalent basis decreased by four basis points to
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
Three Months Ended | ||||||||||||
March 31, 2024 | ||||||||||||
Average | Interest | Rate | ||||||||||
(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
Noninterest Income
Total noninterest income increased by
- Wealth management revenue increased by
$237,000 2.8% , to$8.7 million $8.5 million $4.80 billion $205.6 million 4.5% , from$4.60 billion - Loan related derivative income decreased by
$96,000 84.2% , to$18,000 $114,000
Noninterest Expense
Total noninterest expense increased by
- Non-operating expense increased by
$709,000 101.6% , to$1.4 million $698,000 $673,000 $734,000 - Salary and employee benefits expense increased by
$260,000 1.5% , to$17.3 million $17.1 million 6.3% since the same period last year. - Data processing fees increased by
$239,000 9.2% , to$2.8 million $2.6 million - Professional fees increased by
$225,000 37.5% , to$825,000 $600,000
Asset Quality
Non-performing loans totaled
The Company recorded net loan charge-offs of
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
Dividend and Capital
On April 22, 2024, the Company's Board of Directors (the "Board") declared a quarterly cash dividend of
The Company's common equity to assets ratio increased to
Book value per share at March 31, 2024 increased to
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.
About Cambridge Bancorp
Cambridge Bancorp, the parent company of Cambridge Trust Company, is based in
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 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
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 | . | |||||||||||
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 | 133,222 | 137,838 | ||||||
Held to maturity, at amortized cost (fair value | 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 | 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 | ||||
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 | 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 | ||||||
MARGIN & YIELD ANALYSIS | ||||||||||||||||||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||||||||||||||||||
March 31, 2024 | December 31, 2023 | March 31, 2023 | ||||||||||||||||||||||||||||||||||
Average | Interest | Rate | Average | Interest | Rate | Average | Interest | Rate | ||||||||||||||||||||||||||||
(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 | ||||||||||||||||||||||||||||||||||||
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 | 5,153,226 | 56,037 | 4.37 | % | 5,199,921 | 56,891 | 4.34 | % | 5,312,194 | 51,925 | 3.96 | % | ||||||||||||||||||||||||
Non-interest-earning | 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 | ||||||||||||||||||||||||||||||||||||
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 | 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 | 3,746,487 | 29,181 | 3.13 | % | 3,757,506 | 28,800 | 3.04 | % | 3,611,353 | 17,494 | 1.96 | % | ||||||||||||||||||||||||
Non-interest-bearing | ||||||||||||||||||||||||||||||||||||
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 & | $ | 5,393,697 | $ | 5,446,788 | $ | 5,543,080 | ||||||||||||||||||||||||||||||
Net interest income on a | 26,856 | 28,091 | 34,431 | |||||||||||||||||||||||||||||||||
Less taxable equivalent | (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 |
(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. |
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 | (10) | (13) | (26) | |||||||||
Operating Net Income Applicable to Common | $ | 7,986 | $ | 8,711 | $ | 12,696 | ||||||
Weighted Average Diluted Shares | 7,865,193 | 7,853,823 | 7,826,162 | |||||||||
Operating Diluted Earnings Per Share | $ | 1.02 | $ | 1.11 | $ | 1.62 | ||||||
(1) | The Company recorded merger expenses of |
(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 | 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 | ||||||
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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SOURCE Cambridge Bancorp
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