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Cambridge Bancorp Announces Another Earnings Record for Full-Year 2010

Tuesday, January 25, 2011

CAMBRIDGE, Mass. - Cambridge Bancorp (OTCBB: CATC) today announced unaudited net income of $13,254,000 for the year ended December 31, 2010, representing an increase of $2,977,000 or 29.0% compared to net income of $10,277,000 for the year ended December 31, 2009. Diluted earnings per share (EPS) were $3.51, a 27.6% increase over diluted earnings per share for the prior year.

In the fourth quarter of 2010 unaudited net income was $2,654,000, compared to $2,631,000 for the same quarter in 2009.

“Results for the fourth quarter reflect continuing pressure on net interest income along with an increase in non-interest expense,” noted Joseph V. Roller II, president and CEO. “Key factors driving a relatively flat quarter-over-quarter performance were a slight decrease in net interest income of $156,000, a non-interest expense increase of $413,000, offset by an increase in non-interest income of $307,000, which included an increase in wealth management fee income of $295,000, and a $250,000 reduction in the provision for loan losses as compared to the fourth quarter of 2009.”

“We are pleased to report sustained earnings growth for the full year of 2010,” said Mr. Roller. “Our 2010 results are evidence that we continue to build on the Cambridge Trust Company brand and operating platform that we have established through investments in people, technology, marketing, and distribution.”

“Deposit growth of $121.0 million (13.9%) exceeded our expectations as our relationship-based strategy, coupled with our eleventh branch opening in Lexington, created new opportunities for the Bank. Residential and commercial mortgage loan growth was solid with a $47.3 million (11.7%) increase for the year. The tepid demand for working capital loans resulted in a $10.0 million (20.8%) decrease in commercial loans outstanding due to decreased line usage and loan payoffs. While we expect to experience intensified margin pressure and regulatory burden in 2011, we are confident the strength of our company will allow us to execute on our strategies to attract and expand profitable consumer and business relationships,” added Mr. Roller.

For the year ended December 31, 2010 net interest income increased $2.7 million, or 7.0%, to $41.8 million compared to $39.0 million for 2009. The increase in net interest income for the year was driven primarily by sustained deposit and loan growth, as well as a reduction in interest expense on deposits and interest paid on borrowed funds. The Bank’s net interest margin decreased by 12 basis points to 4.15% for the year compared to 4.27% for the year ended December 31, 2009 which is primarily attributed to lower yields earned on the Bank’s investment securities.

Non-interest income totaled $19.9 million for the year 2010 compared to $16.6 million for 2009.  Wealth Management was a driver behind the non-interest income improvement, benefitting from new account growth and improved equity market conditions. The strategic exit from the merchant services business was also a key contributor to the Bank’s increased non-interest income and earnings, generating a $2.8 million gain on the disposition of the portfolio and an after-tax impact on earnings of $1.6 million or $0.42 per diluted share. A portion of the 2010 versus 2009 increase in non-interest income was offset by lower deposit account fees ($227,000) and merchant card services income ($373,000), and lower gains on the disposition of investment securities ($148,000).

Non-interest expense increased by $1.8 million, or 4.6%, to $41.4 million for the year ended December 31, 2010. The increase is primarily the result of additional investments in employee salaries and benefits ($1.2 million) and marketing ($398,000), in addition to professional services fees being up for the year ($324,000). These investments were somewhat muted by a FDIC premium decrease ($407,000), as there was no special assessment applied to FDIC-insured banks in the industry during 2010.

Total deposits at year-end 2010 were $994 million, an increase of 13.9% compared to $873 million at year-end 2009. The year-over-year deposit increase of $121.0 million is the largest in dollar terms in the Bank’s history.

Total loans outstanding at year-end 2010 were $569 million compared to $538 million at year-end 2009, an increase of $30.6 million or 5.7%. Loan quality remained sound across our consumer and corporate customer bases with non-performing loans totaling $1.1 million at December 31, 2010, relatively unchanged to the year-end 2009. The Allowance for Loan Losses was $8.9 million or 1.56% of total loans outstanding at year-end 2010. At December 31, 2009, the Allowance for Loan Losses was $8.7 million or 1.62% of total loans outstanding. The provision for loan losses of $550,000 during 2010 was $650,000 lower than the prior year’s provision.  This reduction was primarily in response to the slowing growth in the loan portfolio and stable levels of non-performers.

Total assets at year-end 2010 were $1.1 billion versus $1.0 billion year-end 2009.

About Cambridge Bancorp
Cambridge Bancorp and its subsidiary, Cambridge Trust Company, are based in Cambridge, Massachusetts, in the heart of Harvard Square. Cambridge Trust Company is a 121-year-old Massachusetts chartered commercial bank with $1.1 billion in total assets and 11 Massachusetts locations in Cambridge, Beacon Hill, Belmont, Concord, Lexington, Lincoln and Weston. Cambridge Trust Company is one of New England’s leaders in wealth management with $1.5 billion in client assets under management. In addition, Cambridge Trust Company of New Hampshire offers wealth management services at two New Hampshire locations, Concord and Exeter.

The accompanying unaudited condensed interim consolidated financial information should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Cambridge Bancorp 2009 Annual Report, which is posted in the investor relations section of our website at www.cambridgetrust.com. We will also post the Cambridge Bancorp 2010 Annual Report at the same site later this quarter. 
Financial Highlights

Cambridge Bancorp
Albert R. Rietheimer
Chief Financial Officer & Treasurer