Cambridge Bancorp Reports Continued Solid Earnings Performance

CAMBRIDGE, Mass.--([ BUSINESS WIRE ])--Cambridge Bancorp (OTCBB: CATC) today reported unaudited net income of $3,176,000 for the second quarter of 2011 compared to $4,678,000 for the same quarter in 2010. The key factor driving the decrease in net income was the sale of the Banka�s Merchant Services portfolio during the second quarter of 2010. The after tax impact on earnings of that sale was $1,591,000 or $0.42 per diluted share. Excluding that sale, unaudited net income of $3,176,000 for the second quarter of 2011 compared favorably to $3,087,000 for the same quarter in 2010.

Diluted earnings per share were $0.83 for the second quarter of 2011 versus $1.24 for the same quarter in 2010. Excluding the Merchant Services portfolio sale, diluted earnings per share for the same quarter in 2010 were $0.82.

For the six months ended June 30, 2011, unaudited net income was $6,281,000 compared to $7,424,000 for the first half of 2010. Diluted earnings per share were $1.64 for the first six months of 2011 versus $1.97 for the same period in 2010. Excluding the aforementioned Merchant Portfolio sale, net income for first six month of 2011 was $448,000 (7.7%) higher than the same period in 2010.

aWe are pleased to report continued solid earnings through the second quarter of the year. Our performance was driven primarily by robust growth in commercial and residential mortgage loans coupled with a healthy increase in wealth management income. Although economic growth is disappointingly slow, the Bank is positioned to capitalize on new business opportunities,a notes Joseph V. Roller II, president and CEO.

Net interest income of $11.0 million for the second quarter of 2011 was $488,000 (4.6%) higher than the same quarter in 2010. For the six months ending June 30, 2011, net interest income of $21.6 million compared to $20.9 million for same period in 2010.

The extended low interest environment continues to negatively impact the Banka�s net interest margin. The Banka�s net interest margin decreased by 28 basis points to 4.02% for the second quarter of 2011 compared to the same quarter in 2010; and by 36 basis points for the comparable six month period. Deposit growth has also moderated, with total deposits increasing by $12.1 million since year-end 2010.

Noninterest income for the second quarter of 2011 was $4.5 million compared to $6.8 million for the same quarter in 2010. Excluding the aforementioned Merchant Portfolio sale, noninterest income for the second quarter of 2011 was $572,000 (14.5%) higher than the same quarter in 2010. The Bank continued to build momentum in generating wealth management income, which improved by $455,000 (15.9%) between the comparable periods.

For the second quarter of 2011, noninterest expense totaled $10.5 million, an increase of $383,000 (3.8%) compared to the same quarter in 2010. The increase in noninterest expense was spread across multiple areas, with the primary factor attributed to salaries and benefits.

Since year-end 2010, total loans outstanding have increased $73.0 million (12.8%) to $641.6 million. The robust increase came primarily from a combination of commercial mortgage loan growth of $40.0 million (22.5%) and residential mortgage loan growth of $37.7 million (13.8%), as low interest rates provide an attractive environment for qualified businesses and individuals looking to purchase or refinance properties.

Non-performing loans as a percentage of total loans stood at 0.14% at June 30, 2011, a slight decrease from 0.20% at December 31, 2010. Loan quality remains sound and the Allowance for Loan Losses stood at $9.8 million or 1.53% of total loans outstanding at June 30, 2011. At December 31, 2010, the Allowance for Loan Losses was $8.9 million or 1.56% of total loans outstanding. In response to continued loan growth, the provision for loan losses was $250,000 for the current quarter.

Cambridge Bancorp and its subsidiary, Cambridge Trust Company, are based in Cambridge, Massachusetts, in the heart of Harvard Square. Cambridge Trust Company is a 121-year-old Massachusetts chartered commercial bank with $1.2 billion in total assets and 11 Massachusetts locations in Cambridge, Beacon Hill, Belmont, Concord, Lexington, Lincoln, and Weston. Cambridge Trust Company is one of New Englanda�s leaders in wealth management with $1.5 billion in client assets under management. In addition, Cambridge Trust Company of New Hampshire offers wealth management services at two New Hampshire locations, Concord and Exeter.

The accompanying unaudited condensed interim consolidated financial information should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Cambridge Bancorp 2010 Annual Report, which is posted in the investor relations section of our website at [ www.cambridgetrust.com/annualreport ]. We will also post supplemental financial information for second quarter of 2011 at the same site later this month. Interim results are not necessarily reflective of the results for the entire year.

Financial Highlights:


CAMBRIDGE BANCORP
QUARTERLY UNAUDITED RESULTS
June 30, 2011
Dollar amounts in thousands (except share data)


	Quarter Ended						Six Months Ended
	June 30,						June 30,
		2011			2010			2011			2010

Interest Income	$	11,948		$	11,711		$	23,549		$	23,395
Interest Expense		960			1,211			1,998			2,522
Net Interest Income		10,988			10,500			21,551			20,873
Provision for Loan Losses		250			150			500			450
Non-Interest Income		4,528			6,798			9,170			10,918
Non-Interest Expense		10,548			10,165			20,962			20,255
Income Before Taxes		4,718			6,983			9,259			11,086
Income Taxes		1,542			2,305			2,978			3,662
Net Income	$	3,176		$	4,678		$	6,281		$	7,424

Data Per Common Share:

Basic Earnings Per Share	$	0.84		$	1.25		$	1.66		$	1.99
Diluted Earnings Per Share	$	0.83		$	1.24		$	1.64		$	1.97
Dividends Declared Per Share	$	0.35		$	0.35		$	0.70		$	0.70

Avg. Common Shares Outstanding:
Basic		3,797,457			3,754,213			3,781,031			3,739,366
Diluted		3,844,931			3,784,913			3,827,097			3,759,234

Selected Operating Ratios:

Net Interest Margin		4.02	%		4.30	%		3.95	%		4.31	%
Return on Average Assets, after taxes		1.10	%		1.80	%		1.10	%		1.45	%
Return on Average Equity, after taxes		13.76	%		21.84	%		13.83	%		17.38	%


				June 30,			December 31,			June 30,
					2011			2010			2010

Total Assets				$	1,156,726		$	1,130,988		$	1,059,241
Total Loans					641,568			568,568			559,463
Non-Performing Loans					871			1,147			1,017
Allowance for Loan Losses					9,787			8,885			9,118
Allowance to Non-Performing Loans					1124.24	%		774.31	%		896.43	%
Allowance to Total Loans					1.53	%		1.56	%		1.63	%
Total Deposits					1,005,943			993,808			922,580
Total Stockholders' Equity					94,664			89,218			90,720

Book Value Per Share				$	24.89		$	23.73		$	24.13
Tangible Book Value Per Share				$	24.76		$	23.58		$	23.92


CAMBRIDGE BANCORP
UNAUDITED CONSOLIDATED BALANCE SHEETS

		June 30,			December 31,
		2011			2010
		(In thousands)
ASSETS

Cash and due from banks	$	19,861		$	15,756
Overnight investments		a"			a"
Total cash and cash equivalents		19,861			15,756
Investment securities:
Available for sale, at fair value		386,858			434,829
Held-to-maturity, at amortized cost		74,423			81,272
Total investment securities		461,281			516,101
Loans:
Residential mortgage		310,644			272,928
Commercial mortgage		217,980			177,943
Home equity		65,215			66,170
Commercial		34,661			38,258
Consumer		13,068			13,269
Total loans		641,568			568,568
Allowance for loan losses		(9,787	)		(8,885	)
Net loans		631,781			559,683

Stock in FHLB of Boston, at cost		4,806			4,806
Bank owned life insurance		17,062			11,811
Banking premises and equipment, net		5,817			6,043
Accrued interest receivable		4,391			4,478
Other assets		11,727			12,310
Total assets	$	1,156,726		$	1,130,988

LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits:
Demand	$	258,425		$	233,199
Interest bearing checking		262,941			280,060
Money market		62,046			55,026
Savings		294,724			287,784
Certificates of deposit		127,807			137,739
Total deposits		1,005,943			993,808

Short-term borrowings		10,725			1,902
Long-term borrowings		30,000			30,000
Other liabilities		15,394			16,060
Total liabilities		1,062,062			1,041,770
Stockholders' equity:
Common stock, par value $1.00; Authorized 5,000,000 shares; Outstanding: 3,803,248 and 3,759,891 shares, respectively

		3,803			3,760
Additional paid-in capital		22,587			21,456
Retained earnings		64,919			61,375
Accumulated other comprehensive income		3,355			2,627
Total stockholdersa� equity		94,664			89,218
Total liabilities and stockholdersa� equity	$	1,156,726		$	1,130,988


CAMBRIDGE BANCORP
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

		Quarter Ended June 30,
		2011		2010
		(In thousands, except per share data)

Interest income:
Interest on loans	$	8,114	$	7,543
Interest on taxable investment securities		3,324		3,692
Interest on tax exempt investment securities		495		458
Dividends on FHLB of Boston stock		4		a"
Interest on overnight investments		11		18
Total interest income		11,948		11,711

Interest expense:
Interest on deposits		662		918
Interest on borrowed funds		298		293
Total interest expense		960		1,211

Net interest income		10,988		10,500

Provision for loan losses		250		150

Net interest income after provision for loan losses		10,738		10,350

Noninterest income:
Wealth management income		3,310		2,855
Deposit account fees		539		518
ATM/Debit card income		255		246
Merchant card services		a"		129
Bank owned life insurance income		136		77
Gain on disposition of investment securities		93		8
Gain on disposition of other real estate owned		a"		(43	)
Gain on disposition of merchant services portfolio		a"		2,842
Other income		195		166
Total noninterest income		4,528		6,798

Noninterest expense:
Salaries and employee benefits		6,123		5,802
Occupancy and equipment		1,768		1,627
Data processing		886		799
Professional services		492		535
Marketing		437		375
FDIC Insurance		133		318
Other expenses		709		709
Total noninterest expense		10,548		10,165

Income before income taxes		4,718		6,983

Income tax expense		1,542		2,305

Net income	$	3,176	$	4,678

Per share data:

Basic earnings per common share	$	0.84	$	1.25
Diluted earnings per common share	$	0.83	$	1.24

Average shares outstanding - basic		3,797,457		3,754,213
Average shares outstanding - diluted		3,844,931		3,784,913


CAMBRIDGE BANCORP
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

		Six Months Ended June 30,
		2011		2010
		(In thousands, except per share data)

Interest income:
Interest on loans	$	15,723	$	14,910
Interest on taxable investment securities		6,819		7,557
Interest on tax exempt investment securities		986		905
Dividends on FHLB of Boston stock		7		a"
Interest on overnight investments		14		23
Total interest income		23,549		23,395

Interest expense:
Interest on deposits		1,405		1,874
Interest on borrowed funds		593		648
Total interest expense		1,998		2,522

Net interest income		21,551		20,873

Provision for loan losses		500		450

Net interest income after provision for loan losses		21,051		20,423

Noninterest income:
Wealth management income		6,570		5,732
Deposit account fees		1,077		1,020
ATM/Debit card income		483		464
Merchant card services		a"		267
Bank owned life insurance income		250		164
Gain on disposition of investment securities		361		146
Loss on disposition of other real estate owned		a"		(43	)
Gain on disposition of merchant services portfolio		a"		2,842
Other income		429		326
Total noninterest income		9,170		10,918

Noninterest expense:
Salaries and employee benefits		12,025		11,620
Occupancy and equipment		3,595		3,270
Data processing		1,781		1,611
Professional services		936		919
Marketing		875		750
FDIC Insurance		445		610
Other expenses		1,305		1,475
Total noninterest expense		20,962		20,255

Income before income taxes		9,259		11,086

Income tax expense		2,978		3,662

Net income	$	6,281	$	7,424

Per share data:

Basic earnings per common share	$	1.66	$	1.99
Diluted earnings per common share	$	1.64	$	1.97

Average shares outstanding - basic		3,781,031		3,739,366
Average shares outstanding - diluted		3,827,097		3,759,234


CAMBRIDGE BANCORP
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

		Six Months Ended June 30,
		2011			2010
		(In thousands)
Cash flows provided by operating activities:
Net income	$	6,281		$	7,424
Adjustments to arrive at net cash provided by operating activities:
Provision for loan losses		500			450
Amortization of deferred charges/(income), net		71			237
Depreciation and amortization		726			714
Bank owned life insurance income		(250	)		(164	)
Gain on disposition of investment securities		(361	)		(146	)
Loss on disposition of other real estate owned		a"			43
Gain on disposition of merchant services portfolio		a"			(2,842	)
Compensation expense from stock option and restricted stock grants
		196			166
Change in accrued interest receivable, deferred taxes, other assets and other liabilities
		(506	)		526
Other, net		413			(17	)
Net cash provided by operating activities		7,070			6,391
Cash flows used by investing activities:
Origination of loans		(126,365	)		(74,047	)
Purchase of:
Investment securities - AFS		(59,448	)		(119,481	)
Investment securities - HTM		(492	)		(3,576	)
Maturities, calls and principal payments of:
Loans		53,198			52,201
Investment securities - AFS		73,767			63,153
Investment securities - HTM		7,327			2,982
Proceeds from sale of investment securities - AFS		35,351			29,002
Proceeds from sale of other real estate owned		a"			315
Proceeds from sale of merchant services portfolio		a"			2,842
Purchase of bank owned life insurance		(5,001	)		a"
Purchase of banking premises and equipment		(500	)		(516	)
Net cash used by investing activities		(22,163	)		(47,125	)
Cash flows provided by financing activities:
Net increase in deposits		12,135			49,813
Net increase/(decrease) in short-term borrowings		8,823			(11,052	)
Repayment of long-term borrowings		a"			(8,000	)
Proceeds from issuance of common stock		999			765
Repurchase of common stock		(109	)		a"
Cash dividends paid on common stock		(2,650	)		(2,619	)
Net cash provided by financing activities		19,198			28,907
Net increase (decrease) in cash and cash equivalents		4,105			(11,827	)
Cash and cash equivalents at beginning of period		15,756			26,174
Cash and cash equivalents at end of period	$	19,861		$	14,347

Supplemental disclosure of cash flow information:
Cash paid for interest	$	2,016		$	2,545
Cash paid for income taxes		3,515			3,315
Non-cash transactions:
Change in accumulated other comprehensive income, net of taxes		728			3,276
Transfer of loans to other real estate owned		a"			124

Contributing Sources

Market Wire

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Cambridge Bancorp Reports Continued Solid Earnings Performance