Cambridge Trust Optimistic About Loan Growth

While the deposit surge during the pandemic has left many banks dealing with more liquidity but fewer opportunities for lending, Cambridge Trust Co. remains optimistic about loan growth and continues to seek new deposits.

“We plan to remain focused on deposit growth and are comfortable with the elevated level of balance sheet liquidity it brings in the near term,” Cambridge Trust President, CEO and Chairman Denis Sheahan said during the bank’s third quarter earnings call. “We are confident we can deploy this liquidity into loans over the medium to long term.”

Cambridge Trust saw total loans increase by 2.2 percent in the third quarter to $3.24 billion, excluding the Paycheck Protection Program. The bank had core deposit growth of $193.1 million, or 5.4 percent, in the third quarter, and total deposits have increased by $531.8 million, or 15.6 percent, to $3.93 billion since the end of 2020. Total assets have increased by 13.5 percent since the end of 2020 to $4.48 billion.

The bank’s parent company, Cambridge Bancorp, had third quarter net income of $13.3 million, or diluted earnings per share of $1.89, compared to $13.4 million, or a diluted earnings per share of $1.93, in the third quarter of 2020. The bank in the second quarter of this year had net income of $13.9 million.

For the first nine months of 2021, the bank had net income of $40.8 million, an increase of 115.2 percent compared the same period in 2020, when the bank’s net income was $18.9 million. Last year’s net income was affected by various items related to the merger with Wellesley Bancorp, the bank said in its third quarter earnings statement, as well as the effect of the COVID-19 pandemic on the allowance for credit losses.

Sheahan said during Tuesday’s conference call that economic conditions in the bank’s marketplace remain favorable for growth, noting the benefits of Massachusetts’ life sciences and innovation economies on Cambridge Trust’s lending opportunities, including multi-family housing, industrial, lab space and construction.

Michael Carotenuto, Cambridge Trust’s senior vice president and chief financial officer, said in response to an analyst’s question that the bank has had stronger loan growth than it expected at the start of 2021, adding that the year could end with double-digit loan growth.

Better than expected growth has also affected the bank’s plans for stock buybacks. Cambridge Bancorp’s board had authorized a stock repurchase program in March, but Sheahan said in response to an analyst’s question that the bank has no plans to execute the program at this time, noting the better than expected growth and the bank’s tangible common equity.

Cambridge Trust closed two branches during the third quarter in Wellesley Square in Massachusetts and Pease Tradeport in Portsmouth. Sheahan said that while the bank continues to evaluate branch performance, the bank has no near-term plans to close additional branches.

The bank is looking to hire for both its lending and wealth management divisions, and Sheahan said Cambridge Trust is having conversations with staff currently working at the banks involved in mergers and acquisitions.

“Recent bank consolidation should provide opportunity as we are an alternative to the larger merged companies for both talent and clients,” Sheahan said.