Cambridge Bancorp Announces Steady Earnings for Full-Year 2011

CAMBRIDGE, Mass.--([ BUSINESS WIRE ])--Cambridge Bancorp (OTCBB: CATC) today announced unaudited net income of $12,477,000 for the year ended December 31, 2011, compared to net income of $13,254,000 for the year ended December 31, 2010. It should be noted the Bank sold its Merchant Services portfolio during the second quarter of 2010. The after tax impact of that sale was $1,591,000 or $0.42 per diluted share. Excluding that sale, unaudited net income of $12,477,000 for the year ended December 31, 2011 compared favorably by 7.0% to $11,663,000 for the year ended December 31, 2010.

"Results for the fourth quarter reflect the cumulative growth the Bank has achieved over the year"

Diluted earnings per share (EPS) were $3.25 for the year ended December 31, 2011 compared to $3.51 diluted earnings per share for the prior year. Excluding the Merchant Services portfolio sale, diluted earnings per share for the year ended December 31, 2010 were $3.09.

aWe are pleased to report continued core earnings growth for the full year of 2011,a noted Joseph V. Roller II, president and CEO. aOur 2011 results are evidence that we continue to execute our business plans and remain focused on providing exceptional service to our customers.a

aThe Bank experienced another historic year for deposit growth with an increase of $131.8 million (13.3%) as consumers and businesses gravitated to more community-oriented institutions. Loan growth achieved similar success with a $58.0 million (21.3%) increase in residential mortgages and a $53.7 million (30.2%) increase in commercial mortgage loans. While we expect the industry will continue to face the challenges of modest economic growth, a low interest rate environment, and increasing regulatory burden in 2012, we are confident in our ability to execute on our strategies to be the compelling choice for consumers and businesses in our markets,a added Mr. Roller.

For the year ended December 31, 2011 net interest income increased $1,982,000, or 4.7%, to $43.7 million compared to $41.8 million for 2010. The increase in net interest income for the year was driven primarily by sustained deposit and loan growth, as well as a reduction in interest paid on deposits. Lower yields earned on investment securities was the principal cause for the decrease in the Bankas net interest margin of 25 basis points to 3.90% for the year compared to 4.15% for the year ended December 31, 2010.

Noninterest income totaled $18.1 million for the year 2011 compared to $19.9 million for 2010. The strategic exit from the Merchant Services business was the primary contributor to the Bankas decrease in noninterest income and earnings, which generated $267,000 in fee income and a $2.8 million gain on the disposition of the portfolio in 2010. Excluding that sale, noninterest income of $18.1 million for the year ended December 31, 2011 compared favorably by 8.2% to $16.8 million for the year ended December 31, 2010. The noninterest income improvement for 2011 was driven by wealth management fee income, which increased by $788,000. Other contributors to the noninterest income increase were higher gains on disposition of investment securities of $318,000 and higher bank-owned life insurance income of $152,000 for the year.

Noninterest expense increased by $1.2 million, or 3.0%, to $42.7 million for the year ended December 31, 2011. The increase is primarily the result of additional investments in salaries and benefits of $1.2 million, and occupancy and equipment of $631,000. These increases were partially offset by a FDIC premium decrease of $544,000.

Total loans outstanding at year-end 2011 were $673 million compared to $569 million at year-end 2010, an increase of $104.7 million or 18.4%. Loan quality remained sound across consumer and corporate customer bases with non-performing loans totaling $1.2 million at December 31, 2011, a slight increase compared to the year-end 2010. The Allowance for Loan Losses was $10.2 million or 1.51% of total loans outstanding at year-end 2011. At December 31, 2010, the Allowance for Loan Losses was $8.9 million or 1.56% of total loans outstanding. The provision for loan losses of $1.0 million during 2011 was $450,000 higher than the prior yearas provision. This increase was primarily in response to the continued growth in the loan portfolio in conjunction with the stable levels of non-performers.

In the fourth quarter of 2011, unaudited net income was $2,910,000, compared to $2,654,000 for the same quarter in 2010.

aResults for the fourth quarter reflect the cumulative growth the Bank has achieved over the year,a said Mr. Roller. aThe solid earnings increase of $256,000 (9.6%) for the fourth quarter of 2011 as compared to the fourth quarter of 2010 was attributable to a healthy increase in net interest income of $826,000 and a decrease in our FDIC premium of $212,000. These were partially offset by higher salaries and benefits of $633,000 and an increase in the provision for loan losses of $200,000.a

Total deposits at year-end 2011 were $1.1 billion compared to $994 million at year-end 2010.

Total assets at year-end 2011 were $1.3 billion versus $1.1 billion year-end 2010.

About Cambridge Bancorp

Cambridge Bancorp and its subsidiary, Cambridge Trust Company, are based in Cambridge, Massachusetts, in the heart of Harvard Square. Cambridge Trust Company is a 122-year-old Massachusetts chartered commercial bank with $1.3 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 Englandas 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 Portsmouth.

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 ]. We will also post the Cambridge Bancorp 2011 Annual Report at the same site later this quarter.

Financial Highlights:

CAMBRIDGE BANCORP
QUARTERLY UNAUDITED RESULTS
December 31, 2011
Dollar amounts in thousands (except share data)


	Quarter Ended						Year Ended
	December 31,						December 31,
		2011			2010			2011			2010

Interest Income	$	12,191		$	11,529		$	47,663		$	46,556
Interest Expense		969			1,133			3,931			4,806
Net Interest Income		11,222			10,396			43,732			41,750
Provision for Loan Losses		250			50			1,000			550
Non-Interest Income		4,318			4,405			18,147			19,877
Non-Interest Expense		11,157			10,803			42,685			41,444
Income Before Taxes		4,133			3,948			18,194			19,633
Income Taxes		1,223			1,294			5,717			6,379
Net Income	$	2,910		$	2,654		$	12,477		$	13,254

Data Per Common Share:

Basic Earnings Per Share	$	0.77		$	0.71		$	3.29		$	3.53
Diluted Earnings Per Share	$	0.76		$	0.70		$	3.25		$	3.51
Dividends Declared Per Share	$	0.37		$	0.35		$	1.42		$	1.40

Avg. Common Shares Outstanding:
Basic		3,799,977			3,759,891			3,791,167			3,750,065
Diluted		3,836,814			3,794,988			3,834,569			3,776,787

Selected Operating Ratios:

Net Interest Margin		3.79	%		3.91	%		3.90	%		4.15	%
Return on Average Assets, after taxes		0.93	%		0.95	%		1.06	%		1.25	%
Return on Average Equity, after taxes		11.86	%		11.56	%		13.26	%		14.98	%


							December 31,			December 31,
								2011			2010

Total Assets							$	1,275,860		$	1,130,988
Total Loans								673,265			568,568
Non-Performing Loans								1,204			1,147
Allowance for Loan Losses								10,159			8,885
Allowance to Non-Performing Loans								844.09	%		774.31	%
Allowance to Total Loans								1.51	%		1.56	%
Total Deposits								1,125,654			993,808
Total Stockholders' Equity								96,633			89,218

Book Value Per Share							$	25.39		$	23.73
Tangible Book Value Per Share							$	25.28		$	23.58

CAMBRIDGE BANCORP
UNAUDITED CONSOLIDATED BALANCE SHEETS

					December 31,
					2011			2010
					(In thousands)
ASSETS

Cash and due from banks				$	22,512		$	15,756
Overnight investments					a"			a"
		Total cash and cash equivalents			22,512			15,756
Investment securities:
	Available for sale, at fair value				470,232			434,829
	Held-to-maturity, at amortized cost				74,256			81,272
		Total investment securities			544,488			516,101
Loans:
	Residential mortgage				330,933			272,928
	Commercial mortgage				231,595			177,944
	Home equity				61,307			66,169
	Commercial				38,260			38,258
	Consumer				11,170			13,269
		Total loans			673,265			568,568
	Allowance for loan losses				(10,159	)		(8,885	)
		Net loans			663,106			559,683

Stock in FHLB of Boston, at cost					4,806			4,806
Bank owned life insurance					17,331			11,811
Banking premises and equipment, net					6,216			6,043
Accrued interest receivable					4,423			4,478
Other assets					12,978			12,310
			Total assets	$	1,275,860		$	1,130,988

LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits:
	Demand			$	285,724		$	233,199
	Interest bearing checking				316,454			280,060
	Money market				58,532			55,026
	Savings				328,771			287,784
	Certificates of deposit				136,173			137,739
		Total deposits			1,125,654			993,808

Short-term borrowings					2,500			1,902
Long-term borrowings					30,000			30,000
Other liabilities					21,073			16,060
			Total liabilities		1,179,227			1,041,770
Stockholders' equity:
	Common stock, par value $1.00; Authorized
		5,000,000 shares; Outstanding: 3,805,748 and
		3,759,891 shares, respectively			3,806			3,760
	Additional paid-in capital				23,001			21,456
	Retained earnings				68,232			61,375
	Accumulated other comprehensive income				1,594			2,627
			Total stockholdersa equity		96,633			89,218
			Total liabilities and stockholdersa equity	$	1,275,860		$	1,130,988

CAMBRIDGE BANCORP
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

				Quarter Ended December 31,
				2011		2010
				(In thousands, except per share data)

Interest income:
	Interest on loans		$	8,330	$	7,466
	Interest on taxable investment securities			3,338		3,571
	Interest on tax exempt investment securities			502		477
	Dividends on FHLB of Boston stock			4		a"
	Interest on overnight investments			17		15
		Total interest income		12,191		11,529

Interest expense:
	Interest on deposits			673		837
	Interest on borrowed funds			296		296
		Total interest expense		969		1,133

		Net interest income		11,222		10,396

Provision for loan losses				250		50

		Net interest income after provision for loan losses		10,972		10,346

Noninterest income:
	Wealth management income			3,122		3,211
	Deposit account fees			575		544
	ATM/Debit card income			251		250
	Bank owned life insurance income			128		115
	Gain on disposition of investment securities			87		88
	Gain on disposition of other real estate owned			a"		a"
	Other income			155		197
		Total noninterest income		4,318		4,405

Noninterest expense:
	Salaries and employee benefits			6,916		6,283
	Occupancy and equipment			1,876		1,774
	Data processing			888		793
	Professional services			276		363
	Marketing			373		480
	FDIC Insurance			155		367
	Other expenses			673		743
		Total noninterest expense		11,157		10,803

		Income before income taxes		4,133		3,948

Income tax expense				1,223		1,294

		Net income	$	2,910	$	2,654

Per share data:

	Basic earnings per common share		$	0.77	$	0.71
	Diluted earnings per common share		$	0.76	$	0.70

	Average shares outstanding - basic			3,799,977		3,759,891
	Average shares outstanding - diluted			3,836,814		3,794,988

CAMBRIDGE BANCORP
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

				Year Ended December 31,
				2011		2010
				(In thousands, except per share data)

Interest income:
	Interest on loans		$	32,401	$	29,926
	Interest on taxable investment securities			13,219		14,742
	Interest on tax exempt investment securities			1,987		1,842
	Dividends on FHLB of Boston stock			14		a"
	Interest on overnight investments			42		46
		Total interest income		47,663		46,556

Interest expense:
	Interest on deposits			2,745		3,564
	Interest on borrowed funds			1,186		1,242
		Total interest expense		3,931		4,806

		Net interest income		43,732		41,750

Provision for loan losses				1,000		550

		Net interest income after provision for loan losses		42,732		41,200

Noninterest income:
	Wealth management income			13,152		12,364
	Deposit account fees			2,179		2,110
	ATM/Debit card income			981		958
	Merchant card services			a"		267
	Bank owned life insurance income			519		367
	Gain on disposition of investment securities			552		234
	Loss on disposition of other real estate owned			a"		(10	)
	Gain on disposition of merchant services portfolio			a"		2,842
	Other income			764		745
		Total noninterest income		18,147		19,877

Noninterest expense:
	Salaries and employee benefits			25,116		23,895
	Occupancy and equipment			7,323		6,692
	Data processing			3,594		3,194
	Professional services			1,588		1,717
	Marketing			1,703		1,744
	FDIC Insurance			752		1,296
	Other expenses			2,609		2,906
		Total noninterest expense		42,685		41,444

		Income before income taxes		18,194		19,633

Income tax expense				5,717		6,379

		Net income	$	12,477	$	13,254

Per share data:

	Basic earnings per common share		$	3.29	$	3.53
	Diluted earnings per common share		$	3.25	$	3.51

	Average shares outstanding - basic			3,791,167		3,750,065
	Average shares outstanding - diluted			3,834,569		3,776,787

CAMBRIDGE BANCORP
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

			Year Ended December 31,
			2011		2010
			(In thousands)
Cash flows provided by operating activities:
	Net income	$	12,477	$	13,254
	Adjustments to arrive at net cash provided by operating activities:
	Provision for loan losses		1,000		550
	Amortization of deferred charges/(income), net		561		622
	Depreciation and amortization		1,441		1,454
	Bank owned life insurance income		(519)		(367)
	Gain on disposition of investment securities		(552)		(234)
	Loss on disposition of other real estate owned		a"		10
	Gain on disposition of merchant services portfolio		a"		(2,842)
	Compensation expense from stock option and restricted stock grants		401		352
	Change in accrued interest receivable, deferred taxes, other assets and other liabilities		359		958
	Other, net		481		18
	Net cash provided by operating activities		15,649		13,775
Cash flows used by investing activities:
	Origination of loans		(211,667)		(142,107)
	Purchase of:
	Investment securities - AFS		(235,502)		(279,656)
	Investment securities - HTM		(2,531)		(8,958)
	Maturities, calls and principal payments of:
	Loans		106,443		110,631
	Investment securities - AFS		164,920		149,789
	Investment securities - HTM		9,526		11,651
	Proceeds from sale of investment securities - AFS		38,540		34,083
	Proceeds from sale of other real estate owned		a"		810
	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		(1,614)		(1,935)
	Net cash used by investing activities		(136,886)		(122,850)
Cash flows provided by financing activities:
	Net increase in deposits		131,846		121,041
	Net increase/(decrease) in short-term borrowings		598		(9,539)
	Repayment of long-term borrowings		a"		(8,000)
	Proceeds from issuance of common stock		1,224		788
	Repurchase of common stock		(287)		(380)
	Cash dividends paid on common stock		(5,388)		(5,253)
	Net cash provided by financing activities		127,993		98,657
Net increase (decrease) in cash and cash equivalents			6,756		(10,418)
Cash and cash equivalents at beginning of period			15,756		26,174
Cash and cash equivalents at end of period		$	22,512	$	15,756

Supplemental disclosure of cash flow information:
	Cash paid for interest	$	3,946	$	4,828
	Cash paid for income taxes		6,475		7,205
	Non-cash transactions:
	Change in accumulated other comprehensive income, net of taxes		(1,033)		(1,251)
	Transfer of loans to other real estate owned		a"		124

N@N

Cambridge Bancorp Announces Steady Earnings for Full-Year 2011