Cambridge Bancorp saw modest increases in its net income during the third quarter this year, despite compressed margins plaguing the banking industry.
The company’s unaudited net income totaled $3.69 million, a 0.84 percent increase compared with $3.65 million for the same period last year. Diluted earnings per share remained flat at 94 cents for this year’s third quarter versus last year.
Net interest income increased 2.8 percent, or $314,000, year-over-year to $11.5 million for the third quarter. However, for the nine months ended Sept. 30, net interest income actually declined 2.1 percent, or $712,000, to $33.5 million, primarily as a result of lower yields on the bank’s investments and loans.
Noninterest income increased 5.2 percent, or $292,000, to $5.9 million, compared with last year’s third quarter.
Gains on loans held for sale declined $167,000, or 83.5 percent, in the quarter ended Sept. 30, compared with the same quarter last year due to a lack of production for secondary market loans as higher interest rates for conforming 30-year mortgages deflated demand industry-wide. Additionally, the third quarter of 2013 contained $185,000 of gains on the disposition of investment securities, a decrease of $139,000 when compared with the same quarter in 2012.
Sustained lower asset yields and a limited ability to further reduce deposit rates led to a decrease of 11 basis points in the bank’s net interest margin for the third quarter of 2013 compared with the same quarter in 2012 and a decrease of 26 basis points for the comparable nine month period.
Total loans outstanding as of Sept. 30 were $896.4 million compared with $742.2 million at the end of last year and $724.2 million at Sept. 30, 2012. Since the beginning of 2013, total loans outstanding have increased $154.1 million. The company attributed this to a $95.3 million, or 27.4 percent, increase in residential mortgages and a $60.3 million, or 21.8 percent, increase in commercial mortgages. The bank’s home equity portfolio has seen run-off of $4.8 million since the end of last year as consumers refinance first mortgages in this favorable rate environment and consolidate or pay down debt.
Nonperforming loans as a percentage of total loans stood at 15 basis points on Sept.30, a decrease from 21 basis points at year-end 2012. Allowance for loan losses totaled $11.9 million or 1.33 percent of total loans outstanding at the end of September. At the end of 2012, the allowance for loan losses was $10.9 million or 1.47 percent of total loans outstanding. The higher provision for loan losses for the nine month period is primarily in response to the significant increase in loans outstanding.
