Cambridge Bancorp (CATC) 20 Jul 212021 Q2 Earnings call transcript

Welcome to the Cambridge Bancorp Second Quarter Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mr. Denis Sheahan, Chairman, President and Chief Executive Officer. sir. ahead, go Please

and conference to call. Betsy second Cambridge quarter earnings welcome you, the everybody Bancorp Thank

our the statements of any our Before call call by future Bancorp. for today. cause Thank looking in to actual hours may let joining earnings Actual a forward-looking contain growth condition, measure. proceeding, or me Bancorp again Factors forward see just statements you mention was terrific had results joined Cambridge am Chief maybe with that whether of and that business operations that different. any to this ago. financial reports Cambridge and results information, Cambridge may results quarter Form Financial cautions earnings response statements our Cambridge Bancorp to any you from few XX-K conference you any I Trust and include events Officer, unduly disclaims press new our identified Mike Company upon our Loan strong. in earnings second update those a announcement opportunity an almost differ to and to first Hopefully, otherwise. Annual It on relying Carotenuto. against by publicly had Report intent release. forward-looking respect

XX% loan almost growth Excluding PPP loans forgiven, $XXX annualized. million, was or

We funding. deposit continue to funded, be wholesale core with negligible

and was strategy Asset at in XX.XX%. equity common with quality are of return by superb. return Core consistency on tangible excellent X.XX% These remains execution. profitability on and average assets driven solid results

fee revenue of First, and high-quality lend strategy: deposits; to on grow responsibly exceptional focus our three provide service. business core areas This client opportunity brings build diversification. core

Merger team is year. growth X. to about office generally behind effective Pipelines for us. feel are we of ahead, our Looking the the the July returned And good integration good. remainder

will the In terms there know commercial of exposure. time. office a real concerned I estate commentary, of impact We about many recognized challenges market of for be in period banking are to post-pandemic industry the you non-financial

perspective our to region Unique characteristics Cambridge on growing commercial concerned And innovation see the on overly and impact it our real not markets. thought are activity, limited what the due I and increasingly of brief and the economic day-to-day. exposure we employment, the its benefiting is However, on a we and estate and provide market. Boston economy to would

many and spin-off I technology an and process for lending clusters. and our life number quickly In is expanding trends. projects technology in with additional employment in feet. effect space One commercial example, share the FAANG square As of from income of associated XXX,XXX Cambridge, innovation benefit adding stocks highlights sector to illustrate planned and significant from benefiting real the multifamily activity, are this this beyond will we the space. estate with of are activity generally its science capacity, our housing, the the for cluster, tripling strong a household you the

feet, up Another space feet company Cambridge. square life conversions re-planned tower feet is office tower in science A science X of million to sciences construction as a new from of million year lab to square ago. occupying underway. construction buildings million XXX,XXX lab, as former Boston, XX-storey and from space, a turnpike. new under There lab construction is for construction insurance converting office a office square feet jobs life feet in is Boston in building, cluster, the Cambridge mass converting XX-storey an office global building above in construction X demand lab, re-planned And square numerous innovation hundreds further headquartered space space under presence life office the third its and XXX,XXX in to a by Cambridge. currently lab XX-storey X.X are square expanding a

I XXX,XXX Harvard of The square go could development over non-academic o. of process. of Research And Campus the commercial in Enterprise University phase feet first is

year terms $XX.X funding, amount Massachusetts annual XXXX, raised in X exceeding the of last first in total breaking months brought of in In capital venture and billion the startups records.

while this special I happening it.” Cambridge Cambridge, Trust to recent in and that Bancorp It’s “it’s and our so, Boston of concerns on convey am To in Boston executive in that’s And markets. industry Boston, there Company. specifically, from to estate seeing here. real overdoing gives hard pessimistic Greater in not a we are to than convey optimistic very Cambridge is seem estate, a are something sense understandable you more will Hampshire benefit the the the backyard difficult real regarding marketplace real and about happening of Hopefully, estate senior anyone and incredibly post-pandemic commercial Cambridge, Cambridge why commercial enthusiasm not quote this a there market forum, what like local what’s New

So I for will the call with open that, now questions.

question We will begin Fitzgibbon session. Instructions] Mark question-and-answer from comes now [Operator The Sandler. the Please go first ahead. Piper with

for this How you Mark. Hey, guys Alex actually in filling good are morning? morning. It’s Twerdahl

are How Alex. you? Hi,

wanted hoping the start the just into for sort in that I thanks. loan obviously, the back your Would to market. were lot your more maybe to expect pipelines And little good. have optimism into half comments of you that of a you elaborate could growth continuing a that Well, translate into year? of you on off bit had

XX certainly we expect mean, close pipelines, it’s what think we to – we are next the in pipelines, I of days. our very Yes. our

third while of the we quarter, into are we the So, about than closings is it that during we last good end it – obviously of loan the quarter, good feel really but growth had because lower the it’s quarter. at pretty the continued was

think the far to growth here good continued as can we where today, we feel will the But into quarter. XX-year about as prepayment. all third further see have that we create sitting obviously, certainly about has Now, gone,

thing Great. strategy grew residential And you in have is then your noticed on actually versus second putting that guys books off switched selling one that mortgage paper? the residential the about quarter, mortgages I

activity payoff quarter. by the during driven primarily reduced it’s No,

NIM purchases translate the to and etcetera And NII the dynamics, about as the Great. just loan PPP, you into maybe accretion help the understand and NIM, just guys are that help half – year? back of the growth then other could and you thinking some how of

Yes.

So externally. for that’s reduction core the margin I’d quarters given point asset pressure of there just out a few next couple in the expect earning net basis the interest

And Okay. how thinking accounting should we be next then about the quarters? purchase of couple for accretion

dependent to upon It’s it but hopefully. payoff would expect from activity, I decline here

that’s in are some client of disruption market, talent greater And poaching am are merger opportunity either for those you Boston slew has from been whole acquisition? you whether wondering the or mergers seeing I guys a Okay. anything seeing your up recent announcements in additional if area. then there just creating and

yet. about seeing are lot you haven’t through conversions. it, banks those client are think in organizations modest some We those improvement not. acquisition. with gone conversion if process thinking haven’t their doing notification of their a And hit are been this customers of convergence, Clients organizations, at stage Alex, but about for

will and most going So, organizations later. be are losses those talent of larger fit the And opportunity mergers. – recognized are job opportunity not because they larger some significant be those come there have some to in we everybody culturally. associated there certainly will acquisition, is is organizations, with There for going to

So, we conversations. having certainly are

we look free up We execute will and that. on some to talent are will hopeful that

sort and you what’s think, think And M&A about are final about are a out It’s Are And you just Wellesley what how for there today? you I closed since for a that? Great. think been do you – to year sort And how ready then question as of of guys wish additional – list guys. opportunities M&A? me, there? the you

kind There limited even I organizations our attracted we I So, you would the opportunity to there would is you opportunities. M&A. would about well. that be marketplace think to, say no, for that, culturally, our in markets know when is fewer add of And

integrated ability So, that confident middle mergers. team of our X two in a integrate one the team’s years, this am them I mergers in is in very of pandemic. to said, We ready.

have we here. degree competency high So, a of

ready. are We

there is, We the conversation. to opportunity. honest somebody – limited conversation very the wants have are willing to is have But if it’s answer

Thanks questions. taking Great. my for

Sure.

You’re welcome.

William from Please Raymond with ahead. Wallace James. The question go next comes

above in just quarter was X% extraordinarily thanks. was on this for of bounce Alright, loan kind should loan that target a NIM, that might assume quick we the – of Maybe to do from follow-up annual you back in ex-PPP, slide, I questions or in target you X%, going to growth the it the that come couple back half is we just are the like, saw? we strong, feel believe of growth guidance what

with to X%, X% had are roughly comfortable range. X% we we Wally, year-to-date. We said, had that you like So,

get we but So, could of ahead we determined. to be are it, hopeful

Okay.

that uncertainty, you number. with still pipelines it that mean, a confidence give you you could that exceed seems of doesn’t the see I So, in today, like is there what lot

You not is are comfortable, it but that confident might…?

that least before, for prospects As seeing It’s to good are out growth at the quarter. third we beyond Wally. hard Denis said for see

margin then anything run-off on consider said I the of the bond in or Mike Does think you kind compression mentioned, And from that a of of liquidity of or any for core points basis Okay. quarter of couple use interest liquidity portfolio net like you here. commentary, that?

during put quarter cash to here. lot the So, we excess second a of work the have

continue to We stay are to invested. going

levels So, to we assumes that around keep current. cash are going

bit that little did color? So, give a you

June? Yes. – interest basis was on would what a net now the margin in have you Do core you

for are the I going to don’t was X.XX. quarter the we but be During putting month of there, well, out June, think

Yes.

And second of you quarter. back had trend Okay. half just What then in expenses, from $XX know quarter? in the you at over million the wealth the think we second were investment, I on year systems the the do

continue fourth second management in during year, is that’s opportunities the think quarter wealth capitalize given remainder rate and we run externally. the of see to on a to conversion spend that online expected quarter come that I the good marketing this systems to for

very Okay. you. will That’s Thank back. I helpful. step

Thank you.

Motta with ahead. comes go Please Kelly KBW. The next question from

Hi. for Thank you so the question. much

your this to on are last think increase level the that do that wanted line? brand awareness, and higher follow-up that mentioned expect this quarter. something that past quick to be couple marketing next on Thanks. a you a to or any on initiative kind have to marketing did you that Is how quarters expenses, the color and about trying spends for of is question do of come to the marketing now just just you is in where kind in Just

a couple to represents next relates for right for quarter the around this marketing. Kelly, quarters it good us Yes. as run-rate

core Right. And the on to core follow-up just expenses, NIM.

cash not all missed excess whether or versus yields your they are, commentary does at cash hoping with NIM is includes some there? your Thanks. change reinvesting core on Sorry, on thoughts on the or for not holding improvement that and I as trending

Yes.

cash lot excess So plan the it second invested. stay of Kelly, quarter, during does. utilized we that We a to

quarter. are to So, going they where levels ended second around cash be the

grew still what sort was Is little last they there side, quarter? deposit expected quarter. that deposits out the on a bit mostly the sort all then strong or growth of flow And of Great. any are really, to occur did really that after amount transitory second of during still

deposits We the during So, other and question. and that’s as a new second quarter, growth clients. that of did expected, for was good between tax payments some existing offsetting the see, transitory but

So, in thus still invest have people PPP far. But majority may there year, optimistic seen related if are leave which deposits, we later vast is we what to retain we some their are this the going businesses. that depending of upon

on outstrip Great. help of that And Thanks. the left to for balance deposits will help in growth the year? with that expect runoff half what’s size of back would Just do sort any the sheet? of you the of kind

Sure. Yes, our desire. be would that

is deposit an core it’s unknown growth. Kelly. this bit little a of focuses But our point, of One at

Great. you. Thank

one continue strategies. is is our to Our is plan focus growth Denis key to of core for on Kelly deposit

get to we but to core going use the look what with a on or to to a there continued and will will in continue businesses, over they clients for Mike’s going liquidity deposits. in are near-term deposits our every we deposit very medium-term, But we be the sense excess base to So, here. lot point, banks grow on to is still today growth close stay in focused

back. step I’ll you. Thank Right.

turn session. remarks. question-and-answer any over the for like our I concludes closing Denis to would This conference to back

Thank you. to joining with speaking for you Betsy. you, announcement. look Thank Thank you us today. after everybody our We third forward earnings quarter

The you Thank attending conference presentation. now for today’s has concluded.

now You may disconnect.