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Photo by James Sanna | Banker & Tradesman Staff
Despite changes to the economic and rate environment, Cambridge Trust expects to continue to see growth in commercial lending this year.
Chief Financial Officer Michael Carotenuto said during the bank’s first-quarter earnings call last week that Cambridge Trust has not changed its outlook for 6-8 percent growth in commercial loans in 2022.
Cambridge Trust President and CEO Denis Sheahan said the bank’s confidence in commercial lending opportunities stems from the strong economic conditions in the Greater Boston and New Hampshire markets. He added that the innovation and life sciences sectors present opportunities for growth in several areas that Cambridge Trust focuses on, including multifamily housing, light industrial, lab space and construction.
Cambridge Trust had first-quarter net income of $13.3 million, or diluted earnings per share of $1.89, compared to $13.5 million, or diluted earnings per share of $1.92, in the first quarter of 2021. Net income in the fourth quarter was $13.26, or diluted earnings per share of $1.88.
Some of the loan growth came from former clients of banks involved in recent mergers, Sheahan said.
“Recent banking consolidation provides an opportunity as we are an alternative to larger merged companies for both talent and clients,” Sheahan said.
The bank has also seen growth in the renewable energy sector. In response to an analyst’s question, Sheahan said tax incentives for developers have driven this growth, particularly in Massachusetts, Vermont, Maine, New York and New Jersey. Most of the activity has been with commercial solar projects, Sheahan said, as well as some hydropower projects.
The bank does expect to see lower noninterest income than originally forecast for 2022. In part because volatility within the equity markets will lead to lower wealth management revenue, Cambridge Trust has reduced its expectation for noninterest income from 7-9 percent growth, Carotenuto said. Instead, Carotenuto said the bank expects non-interest income to remain the same as in 2021 or grow up to 3 percent.
Cambridge Trust saw first quarter wealth management revenue decrease by $451,000, or 5 percent, to $8.6 million compared to $9 million in the fourth quarter of 2021.
The bank had wealth management assets under management and administration of $4.7 billion in the first quarter, down $193.8 million, or 4 percent, from the end of 2021.
In addition to contributing to loan growth, the mergers could provide more opportunities for growth in the wealth management business, Sheahan said in response to an analyst’s question. Cambridge Trust had hired a team from People’s United Bank in the fall of 2021, and Sheahan said additional discussions with prospective talent joining the bank could start showing up in wealth management results in the second half of 2022.
