Cambridge Bancorp (CATC) Reports Decline in Annual Earnings, Plans Merger with Eastern Bankshares
Net Income: $34.1 million for 2023, down 35.5% from $52.9 million in 2022.
Diluted Earnings Per Share (EPS): $4.34 for 2023, a 40.5% decrease from $7.30 in 2022.
Quarterly Performance: Q4 net income rose to $8.0 million, a 22.8% increase from Q3 2023.
Asset Quality: Non-performing loans to total loans at 0.41% as of December 31, 2023.
Liquidity: Approximately $2.6 billion in available liquidity as of year-end 2023.
Merger Update: Merger agreement with Eastern Bankshares, Inc. progressing as planned.
Dividend: Quarterly cash dividend declared at $0.67 per share, payable on February 22, 2024.
On January 30, 2024, Cambridge Bancorp (NASDAQ:CATC) released its 8-K filing, disclosing its financial results for the year ended December 31, 2023. The bank holding company, which specializes in Wealth Management, Commercial Banking, Residential Lending, and Personal Banking, reported a significant decrease in annual net income and diluted earnings per share. Despite the downturn, the fourth quarter showed a notable increase in net income compared to the previous quarter.
Financial Performance and Challenges
Cambridge Bancorp (NASDAQ:CATC) faced a challenging financial year in 2023, with net income falling by 35.5% to $34.1 million, and diluted EPS dropping by 40.5% to $4.34. The company attributed the decline to a challenging interest rate environment impacting deposit and loan growth. However, the fourth quarter of 2023 saw an improvement, with net income increasing by 22.8% to $8.0 million compared to the third quarter. Operating net income for the year also decreased by 29.0% to $40.2 million.
Strategic Developments and Merger Progression
Amidst the financial headwinds, Cambridge Bancorp (NASDAQ:CATC) is moving forward with its strategic merger with Eastern Bankshares, Inc., which is expected to enhance capabilities and services for clients. The merger is subject to regulatory and shareholder approvals, with Cambridge Bancorp CEO Denis K. Sheahan set to become the CEO of Eastern post-merger.
Key Financial Metrics
The company's balance sheet showed a slight decrease in total assets from $5.45 billion to $5.42 billion over the quarter. Total loans remained flat at $4.02 billion, while the investment securities portfolio decreased by 1.8% to $1.10 billion. Total deposits, excluding wholesale deposits, decreased by 1.3% to $4.03 billion. The cost of total deposits increased to 2.19% for Q4 2023, up from 2.09% in Q3 2023.
"We navigated through 2023 with strong liquidity and robust capital levels, despite a challenging environment in terms of interest rates and the impact to deposit and loan growth," noted Denis K. Sheahan, Chairman, President, and CEO.
Asset Quality and Liquidity
Asset quality ratios remained stable with non-performing loans to total loans at 0.41%, and non-performing assets to total assets at 0.31%. The company maintained a strong liquidity position with available sources totaling approximately $2.6 billion, which is about twice the amount of uninsured deposits.
Dividend and Capital Ratios
The Board of Directors declared a quarterly cash dividend of $0.67 per share, reinforcing the company's commitment to shareholder returns. The common equity to assets ratio improved to 9.87%, and the tangible common equity to tangible assets ratio increased to 8.67%.
Cambridge Bancorp (NASDAQ:CATC) continues to focus on navigating the complex financial landscape while progressing with strategic initiatives such as the planned merger with Eastern Bankshares. Investors and stakeholders will be watching closely as the company moves into 2024, seeking to rebound from the challenges of the past year.
Explore the complete 8-K earnings release (here) from Cambridge Bancorp for further details.
This article first appeared on GuruFocus.
