Photo by James Sanna | Banker & Tradesman Staff
Recent retirements among Cambridge Trust Co.’s senior executives do not signal a coming strategic change, according to the bank’s CEO.
Cambridge Trust had announced in December the retirements of three executive vice presidents: Martin Millane, chief lending officer; Thomas Fontaine, the chief banking officer who had joined Cambridge Trust following the Wellesley Bank acquisition; and Jennifer Pline, who will retire in June as head of wealth management.
In response to an analyst’s question about whether these retirements signaled changes in bank strategy or focus on particular lines of business, Cambridge Trust’s CEO Denis Sheahan said during the bank’s fourth quarter earnings call on Tuesday that there was no change.
“Retirements happen,” Sheahan said. “We’re prepared for them; we’re very pleased with the succession planning we had in place in the commercial banking division.”
He added that the bank has started a search for a new head of wealth management.
“That will be an important position for us to fill in the first half of this year,” Sheahan said. “We feel optimistic about our ability to do so.”
Cambridge Trust ended 2022 with $4.06 billion in wealth assets under management and administration. This was down 16.3 percent from $4.85 billion at the end of 2021. Market performance led to a $562 million loss in wealth assets during 2022, according to the bank’s investor presentation, while the net outflow of customer money resulted in a $218 million loss.
The bank did see assets under management and administration increase from the third quarter by 5.8 percent. Michael Carotenuto, Cambridge Trust’s executive vice president and chief financial officer, said during the bank’s earnings call that the fourth quarter saw a net client loss of $17 million and a positive market impact of $230 million.
Market declines in 2022 also led to less wealth management revenue, which was down year-over-year 5.7 percent to $33 million in 2022. Fourth quarter wealth management revenues were down 1.7 percent from the third quarter to $8.1 million, which the bank attributed primarily to seasonal tax preparation fees during the third quarter.
Cambridge Trust’s net income for 2022 was $52.9 million, or diluted earnings per share of $7.30, compared to net income of $54 million, or diluted earnings per share of $7.69, in 2021.
Fourth quarter net income was $11.32 million, or diluted earnings per share of $1.44, compared to net income of $13.26 million, or diluted earnings per share of $1.88, in the fourth quarter of 2021.
The fourth quarter saw Cambridge Trust complete its acquisition of Northmark Bank. The bank said in its earnings statement that excluding the merger’s effects, fourth net income would have been $15 million. The bank expects the system conversion to take place in the second quarter.
Cambridge Trust expects loan growth in 2023 between 0-5 percent and core deposit growth of 2-5 percent. Sheahan said during the earnings call that the bank in the year ahead will look to control its cost of funds and reduce operating expenses.
“While we expect this year may bring a recession and a year of slower balance sheet growth in both loans and deposits, we are prepared for the worst,” Sheahan said. “Capital and reserve levels are very adequate, and based on our emphasis of conservative loan underwriting, we believe we are well-prepared for whatever environment we are presented with.”
