Photo by James Sanna | Banker & Tradesman Staff
With several of Greater Boston’s stock banks involved in mergers this year, Cambridge Trust Co. is ready to join in on the activity. But the bank’s leader sees few opportunities ahead.
Cambridge Trust President, CEO and Chairman Denis Sheahan said Tuesday during the bank’s second quarter earnings call that after completing two acquisitions in two years, the bank’s team was ready to work on another deal. But there might not be any deals left for the bank.
“There’s limited opportunity in our marketplace for M&A,” Sheahan said in response to an analyst’s question about M&A activity. “And I would add to that, when you think about culturally the kind of organization that we would be attracted to, there’s even fewer opportunities.”
Tuesday’s call was Cambridge Trust’s first conference call with analysts to discuss quarterly earnings.
The bank’s parent company, Cambridge Bancorp, had second quarter net income of $13.94 million, or diluted earnings per share of $1.98, compared to a net loss of $1.7 million, or a diluted loss per share of $0.29, in the second quarter of 2020. The bank in the first quarter of this year had net income of nearly $13.5 million.
For the first six months of 2021, Cambridge Trust had net income was $27.44 million, an increase of 397.5 percent compared the first six months of 2020, when the bank had net income of about $5.52 million. Last year’s net income was affected by various items related to the merger with Wellesley Bancorp, the bank said in its earnings statement, as well as the effect of the COVID-19 pandemic on the allowance for credit losses.
Cambridge Trust has seen total loans increase by $127.5 million, or 4.0 percent, since the end of 2020. Total loans as of June 30 were at $3.28 billion. Excluding the Paycheck Protection Program, total loans have increased by $144.1 million since Dec. 31.
CRE Exposure Not a Concern
During Tuesday’s call, Sheahan noted concerns about commercial real estate exposure in the banking industry.
“We recognize there will be challenges in the office market for a period of time,” Sheahan said. “However, we are not overly concerned due to our limited exposure and the characteristics of our market.”
Cambridge Trust benefits from the spin-off effects of the innovation economy, Sheahan said, including technology companies, life sciences and venture capital spending.
“While there are understandable post-pandemic concerns about commercial real estate, there is something very special happening in our backyard of Cambridge and Boston that will benefit Cambridge Bancorp and Cambridge Trust Co.,” he said.
Michael Carotenuto, Cambridge Trust’s senior vice president and chief financial officer, said in the call that the bank has a strong pipeline of loans expected to close in the next 90 days.
In response to questions about Greater Boston’s bank mergers, Sheahan said Cambridge Trust has seen modest improvement in acquiring clients from other institutions, but added that more effects from the activity would come in the future.
“At this stage for those organizations, banks are doing a lot of thinking about conversions, but their customers are not,” Sheahan said. “Most of the opportunity will come later.”
He also expects opportunities to acquire talent as a result of the mergers given the large size of the banks currently involved in deals and the job losses once they go through.
Cambridge Trust acquired Wellesley Bank in June 2020 and acquired New Hampshire-based Optima Bank in 2019.
