Cambridge Bancorp (CATC) 20 Apr 222022 Q1 Earnings call transcript

Welcome to the Cambridge Bancorp First Quarter Earnings Conference Call.

We will be making forward-looking statements during this call and actual results may differ materially. We encourage you to review the disclaimer in our earnings release dealing with forward-looking information, which applies to statements made in this call.

In addition, some of our discussion may include references to non-GAAP financial measures. Information about those measures, including reconciliation to GAAP measures maybe found in our SEC filings and in our earnings release. in [Operator be will participants listen-only Instructions]. mode All being note this is event Please recorded. like conference turn would to I now the over Mr. to Chairman, Sheehan, President Chief Executive Denis Officer. and Please go ahead, sir.

pleased joining was and per $X.XX. growth the Core to growth growth Joe. brief of income be I'm $XX.X comments seen you morning residential and joined with you, million have in Financial earnings gained will my deposit conference growth as I'm growth everyone, you earnings Thank for all both in share provide solid rates today. of quarter previous Good was resulting in estimates for X% with the the good for our lending annualized. assuming report X% I'll today earnings XX% quarter again commercial particular as well who the of of earnings or commentary call diluted thank quarter release. Loan and year impact Net XX% at quarter Cambridge the Carotenuto, by remainder Bancorp. or Officer, our loan in this Mike quarter, rising Chief as another and annualized. first the nicely of regarding pipelines. from in linked always

deliver. multifamily industrial, space life in levels Recent expect calls prior feel Though lending lending inflation in we evident, rampant effect. our Looking Massachusetts Unemployment good finally, Hampshire. ahead, the in is opportunity due New growth innovation Returning both referenced and light asset superb. performance to marketplace we for are to sectors strong is both commercial lab and and dependable declined we Hampshire. New the being in respectively. stable quarter, to economy, larger but consolidation results responsive, due Wealth earnings Why? X% the reputation in lending. especially a and companies Demand housing, remains residential and to conditions market, banking Economic to proven good, and and team to the sciences about clients. to continued higher rates Massachusetts construction. low Management supply innovation has slow revenue assets housing technology our in equity market alternative for prospects ability for of are talent in remain the are X% And by and emphasize, merge an the with as a benefiting continues conditions provides for exceed I housing, quality

within opportunities business encouraging we recent the pipelines mergers marketplace. our given for However, remain our and talent new active continue discussions

to build and common Core consistency are remain space hope assets we in we with return tangible this at good While results affected wealth different a this very fee on solid gradually as equity banking negatively of credit. momentum warrant in quarter, profitability execution. kicked total driven average and and today, during recognized gains, return in a X.XX% These strategy revenue the by bank small is it while revenue category for eye with associated as an space innovation gain the in Keep an $XXX,XXX deliberate quarter, on a XX.XX%. equity way. on this

is high pleased First, with strategy, Overall, rates for to is exceptional business lend Business invest grow of good, will core strong. growth, opportunity service. core three businesses. continue to our and areas sheet responsibly are very provide focus rising we we on This and our client build deposits, fee help represents performance. balance quality momentum revenue

a regarding make I ask Mike So comments of outlook the will few for the year. Mike? with remainder this to that,

Thank you, Denis.

and both let prior the at and me to an quarter commercial pipelines But each, our provide residential see first, end, we in we commercial Given guidance. rate the update significant million At lending opportunity lending. environment, continue our change with were the to start pipelines. approximately within wanted $XX to

However, movement year of previously rates. significant give growth full with and the second in X% and that The us the interest maybe the to of this range range. for as market with challenged comfort exceed anticipated Denis current higher pipelines, the with half Residential we activity, combined level robust may mentioned, Lending of our X% year

continue deposit to the to the We full giving also of X% growth the opportunities see quarter, as comfort XX% growth by announced. evidenced deposit with year again, first range during solid core previously us

rising the full XX% of total to X.X%. deposits the attributes What by of are of expect this prior point than to our year book year-end, XX% of Moving basis X.X% environment. deposits is of adjusted more updated interest key the estimate? deposits. in X.XX% of funds of variable, interest to net were our demand, to moving would expect checking margin to the NIM guidance loan X% be we deposits a are there for XX% to net our If are XXXX, rate benefit we demand range XX X.XX% margin, in increases six fed the to better inclusive

rising franchise deposit impact beta period last last of from of the the Our Optima. and that higher quarter cycle a the and was XX% included rate cost deposit

fuel wholesale that environment, environment and reprice well at for are a positioned from rising would no in sits funding ratio benefit and XX%. Collectively, of this deposit all to these we rising rates. have our We loan to represent rate

X% will primarily and and markets growth revenue, than income. of initial corresponding Wealth X% be volatility to conforming the the full to income due estimates of equity lower sales Moving the Management Noninterest to for mortgages. within noninterest year, less

Our are flat XXXX income. for to of year plus current estimates the X% noninterest full for

to previously end and estimates from of of rest our be to on the provided, last intact. tax XX% remain quarter effective We range rate also lower XX% the expect the

now line questions. for open the will We

session We [Operator begin the Instructions]. question-and-answer will now

first The from question Mark with Piper Sandler. comes Fitzgibbon

is I a you XX% right? for, what clarify that to just rate Mike, you're couple Did looking say did effective catch tax things.

be range, to going so of end the closer to we're lower Mark. XX% XX%, the No, to on XX%

we margin? you of we'll think that Should the see guidance to turn XQ? then start the in upward margin. first the of bottoming sort on was assume And Do I the margin quarter your the heard

Yes.

curious then of banks you good it the And that's obviously, guess, distracted the from How that from? that you're coming some is are I business the bigger sort where I'm characterize coming the of growth. would seeing from mix Is guys, market, banks? in are pretty coming you it loan generating?

necessarily I -- it’s lot there's activity other one good think, Mark, larger who -- a organizations. good from are momentum. There's of comfort of in through The alternative going activity, companies don't the marketplace. client And the institutions have increasingly been acquired couple being mergers. the that find economic those were base a to the there's areas, a the then in we of

looking they're alternatives. So for

are one, there are We some others.

definitely we lending the deposit opportunities, and client side. seeing are So new both the on on

is how us, the And then curious if Denis, now and could the share portfolio banking portfolio innovation you I'm related to warrant with big it?

fees. a Mike roughly around So Mike, deposit about the But outlook business, is and feel pretty million, success the $XXX deposits. some next $XX is mostly years. We the million there can and Mark. lending is give warrants This detail we've in good on you exposure, few right that over

terms the success fees… In warrants and number of of

of in those in well. portfolio, right them, for we'd about credits XX now that have future as of look terms We Mark, and

space definitely going focus growing be be is it will an company every So cautious and us. of just the We're this area to for out part want for day, us. pointed a is learning of very and that being we We bigger forward. this deliberate

growth in curious, your bit. come been capital coming additional has I'm call the And great. little have in your growth quarters? I ratios capital plan Obviously, a guess raising does for

of our in this And profitability, the Mark. a time, With not -- capital us, very only it's sale we'll million this hit. securities very upon was No, portfolio quarter portfolio, but it's at for certainly $XXX We've quickly. back -- capital limited size back accrete limited performance, AFS very our we'll part But earnings portfolio. based accrete a for very quickly.

Chris from comes with question O'Connell next Our Instructions] KBW. [Operator

quarters? off on confident So wondering growth just C&I Growth the growth growth that seems and forward? It pretty to how or past strong the side? the are that seems there I do has guidance. of like the in driver been the highly going great guys just it comprised to six and book energy been loan couple you the side outlook. within And start what you want off guys renewable months like year, so see or was on over the has what's start

of issues for it's solar. any It where So states, in Chris, certain equity the you're certainly tax incentives course, aware been of we’ve but no I is not some all solar [solar], nationally, in have commercial know, it I of developers there's and this past. debt, commercial that consumer us, one is Northeast, investments in assume for the equity, is solar

bit solar, think there's it York, been New New those a the Maine, for England, Most tax wind continue. expect in C&I Jersey renewable a drive us us nice growth space, of in Vermont, tax and for favorable they little New but any incentives And I In down is certainly there's for all projects. development. we of -- so and incentives into hydro, Massachusetts, have there, that this these no to segment has

side. down the And it switching cash did management putting working then and the a over like to Looks job securities this into that book of good quarter. you guys

weighted? front you how it cash or the putting and of the Just those course down were wondering securities as more at the came rate quarter, over on that was back or

in the and the saw mid we yield So is it's kind weighted, Xs. of that that in mid

then ratios? buyback in utilize How down or decisions back to the of guys discussion. most bit. how what regulatory even on circling kind your a ratios focus not And you goes TCE what do And and guys the look are capital The into to you strong all do make capital you with plan the of that? as on whether terms very --

capital, ratios all and of consider for of we terms they're important consider, we in did So capital them, look all different what at reasons.

equity fine. is for a are balance look just It's long at over ratios and trend period focus risk common quality of risk do. to sheet. asset ratio our we tangible shareholders regulatory our low as deliver a our low a time. We fine, and Our of ours view This we

a in Xs, year. we’ve look of the Core of the deposits growth terms we're being In this growth kind XX%, not of TCE grew mid last burst year. huge that's expecting the

the and that TCE to will So we capital this for year, of up believe get will X%. we rest accreting closer be

but that -- believe we In We're that that change authorization market. planning moment, terms value but execute now in evaluate at have frequently. right a not stock depending to know, mean, volatility the we a we're I we the could in we places of buyback situation buyback not buyback, is our on

question [Operator from comes William Raymond Wallace Our with next James. Instructions]

I from dropped apologize I call. the was

the to kind of XXX But the that XXX compare the apologize reported? this XXX I highlight to NIM guide, question already to table, core if that So in asked. your was or does is NIM compared that XXX you

Wally, That's the margin, number. adjusted interest net the that's XXX

then me alone, on various as kind of range? XX as of in far kind are range deposit there? Or expectations, is think just vary point of that help betas And there assumptions deployment liquidity what basis about causes the based it

It loan with portfolio Wally, So of of modeling. as new asset we’re both in I the and and management does with rate it's an mentioned into my repricing And assumptions environment, securities also sensitive, our comprises repricing asset during it some liability but loan deposit consistent comments interest beta, the yields. take right? account up

deposits And we progresses? if the kind will that your assume is loans and actually X is to as should pressures XX, year X for intensify to of liquidity guide X

range, yes, deploy loans, growth asking a increasing. we to than you're yields securities faster deposits If where are based securities upon into will. environment will that our going that it grow And

And you commentary seeing. some of around are that opportunities then just lastly, kind the

disruption loan the on opportunities wealth the being the some is on side, but mentioned about You've how side. that

given in flows the acquisition like looks we Do the this net some the or year flows feel accelerate there's like an for disruption did net to new would market at Looking you be… in opportunity you have quarter. customer some

Yes, we do.

it think will of it -- the come I the half will in year. we're certainly hopeful back

institution, We and some the bring end You talking and between may they effect of joined in recall they as back effect, get to that of us. a in it's all September from materially team beginning other a with of us year. but we're of have hopeful half very We're And a not the five that will -- competitor, sort the already November, done team year talent talent. there. competitor to of we from having hired hopefully more a oriented an online hope and an

their the So that's them trade. to we in Trust clients They the part the with of is what let ply that. and they The about They marketplace, Cambridge Company. attracted joining think see relationship disruption like like talent the here. how

are half hopeful sure. that the some year the we back So loan that and of will growth accelerated for on side in result the

with next comes Polaris from Capital Our Bernard Management. question Horn

questions. two Just

of your The rates fed lot Is movements is or stimulus they related large based for still banks base liquidity that NIM And deposit could a money? to first of the or it are about that not question We've it stimulus is assumption something talking that second your how on a a of in is and much that. spend of away lot go amount on is is quite guidance, about any sense people PPP any the whether deposits. there just where from on rates, kind are? stay their as checks money and or of seen

then to fed question, you net one. And by margin first interest six adjusted to second end. want that the answer funds So bring federal assume guidance Denis, year on additional increases, reserve X% your

there whether it's our know deposit that the within or necessarily the clients Bernie, stimulus. is away. didn't kind of certainly impact business, funds of base, an right our many use consumer PPP So stimulus We of PPP

So there how of difficult much ascertain to element It's is that. of is that. it an

focus we many largely our of There There like cetera We done don't to well COVID. take there et sectors base, there. didn't a business are a clients restaurants our accommodation, affected negatively be clients step backwards that and have very and our have limited lot all. very course exposure client is that a of those also know and in at on that of tend during

from have clients sheet COVID their liquidity begin during they to our sheet. on use they fine it's Bernie, So will mean, quite honestly. that? and just say Will many borrowings. I a when built gauge, done liquidity have of to balance hard those I management growing think all perspective we no a deposits. about about deliberate the this, We're we hope have conservative But we very to funded. us fashion in balance certainly hard retain we for deposit work

times for funding be availability for an wholesale perspective. outflows structure is to Our us from it might to use there where liability there or asset

that outflows, of or economic sensitive manage growth? could enter questions use some of period recession deposit that be. a don't the asking we're there could but deliberately there reasons periods very about. fact we can during through whether the There is it. very in we growth we And So terms a know know to within stimulus our that base We for of you're be we

KBW. question a from follow-up next is O'Connell with Our Chris

want I pipelines origination just just I at on now? both are different appreciate to color the I segments size coming with the provide and yields could the follow-up. if was of in the commercial resi. across the you and line wondering

certainly the commercial moving but in side and the there's the mid-Xs, And pipelines of the with the side. into on effect lagging same are rates Xs consumer in house a

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

forward look Thank We everybody. speaking report. Thanks, after you to our you. with next

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

disconnect. now may You