CAMBRIDGE SAVINGS BANK Annual Report 2019 · Thayer & Associates, Inc. Monique D. Thompson Head of...
Transcript of CAMBRIDGE SAVINGS BANK Annual Report 2019 · Thayer & Associates, Inc. Monique D. Thompson Head of...
CAMBRIDG E SAVINGS BANK Annual Report 2019
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President’s Letter
As a mutual bank, we take the long view, which allows us to make
considerable investments in our products, our technology, and our
infrastructure so that we can better serve our customers. Last year, we
did just that by bringing together our non-branch employees that were
spread out among our Harvard Square, Alewife, and Arlington Center
locations into one core operations center located along the Route 128
corridor in Waltham where employees can work more collaboratively
for the benefit of serving our customers. Our Belmont branch location
was renovated and designed in our universal banker model so that any
branch employee can serve the needs of any customer. We launched
a new online account opening platform for consumer checking and
deposit products, which reduced the application and account funding
time to just under five minutes. And to complement that innovation, we
also analyzed new customer journey touchpoints during the application
and through to the on-boarding of that account relationship, so that
we can clearly analyze opportunities for continual improvement in the
customer experience. We have always been focused on delivering the
best experiences for our customers, but in our business, the landscape
of customer expectations and digital capabilities change rapidly, and
we need to stay abreast of such changes. To drive our strategy going
forward and to strengthen our relationship-centric approach across the
organization, we hired our first Chief Customer Officer, Katie Catlender.
Our commitment is to continue to create value and build capabilities
that enhance our customers’ financial well-being.
Our commitment to our community remains strong. Together with
our charitable foundation, and in combination with our employees,
we contributed $1.2 MM and 4,500 volunteer hours to approximately
275 non-profit organizations in 2019. We also provided classes and
seminars to approximately 4,000 participants through our financial
education programs.
In addition, at the end of last year, we announced that we entered into a
definitive merger agreement in which we will acquire Melrose Bank. This
transaction will close in the second quarter of this year. We are thrilled to
expand our presence in Middlesex County with a bank that shares similar
core values and approach to serving customers and the community.
In closing, while I know this year will be difficult, I have faith in the human
spirit as I have witnessed the resolve and creativity of our customers,
community leaders, and especially our employees, who remain true to our
core values of compassion, caring for others, and a deep commitment to
excellence. Together, we will be there for each other and come out of this
experience stronger than ever.
Sincerely,
Wayne PatenaudePresident and CEO | Cambridge Savings Bank
As I write this letter, we are working relentlessly to support our customers,
our community and our employees as a result of the COVID-19 pandemic.
While this report is meant to be a reflection of 2019 performance, I want
to acknowledge this unprecedented time. In a matter of weeks, we have
responded to the pandemic thoughtfully by protecting our customers’ and
employees’ health, providing financial relief programs for our customers,
supporting federal programs such as the CARES Act, and responding to
community needs through enhanced charitable giving. There is no playbook
for a time like this, and our team’s singular focus has been on supporting
the financial well-being of the customers and communities we serve.
It almost feels uncomfortable to review our achievements in 2019 when
the world is coping with such challenge brought on by the COVID-19
pandemic, but I believe it is important now more than ever to share them
as a reflection of our strength and vitality. Looking back on this past year,
the CSB team has a lot to be proud of — we hit our targeted earnings, we
delivered new product and service capabilities, and we remained steadfast
in our commitments to our customers and the communities we serve.
The economic landscape was a very different one last year, interest rates
reversed direction quickly in 2019 and we were faced with an inverted yield
curve for a good part of the year that resulted in a larger decline in our net
interest margin than anticipated. Even so, we surpassed our asset growth
targets through exceptional results from Commercial Real Estate lending,
increased residential originations, growth in our Commercial & Industrial
portfolio, and outstanding performance of our newest business line, Asset
Based Lending. Our net income was $38.7 million, which was consistent with
the high level of earnings achieved in 2018, despite the challenging interest
rate environment last year. Our return on assets (ROA) was 0.96% compared
to a ROA of 1.05% in 2018, and our net interest margin, which measures the
difference between our interest income and interest expense, relative to our
interest-earning assets, was 3.22%, compared to 3.33% in 2018.
collaborative, creative, and empowered to deliver a superior
customer—centric experience. Our success is driven by the
unique contributions of each person. Each individual is
important, but together, we are even better. We are committed
to doing the right things for the right reasons, being a strong
community partner through our support of organizations
that make a difference, and treating people the way they
want to be treated. We are CSB. We are committed to
you.
Cambridge Savings Bank is
CSB CORE VALUES
DEDICATED TO COLLABORATIONWe value the contributions of all and blend the skills and perspectives of individual colleagues to get a result that is greater
than the sum of the individual parts. Our success is built on relationships and our ability to work together effectively.
DEEP COMMITMENT TO EXCELLENCEWe believe that excellence is more than what we provide, it’s how we think and act. It’s more than just fixing a problem, it is having
a focus on providing a superior experience each and every time.
PASSIONATE ABOUT CREATIVITYFor us creativity is a willingness to try new approaches with vigor, energy and enthusiasm. It’s having the courage to ask
questions which push the boundaries. This value affirms our commitment to seek new approaches to service.
GROUNDED IN INTEGRITYWe are each personally accountable for the highest standards of behavior, including honesty and fairness in all aspects of our work.
We do what is right, not what is easiest or most popular. Trust, respect and integrity is at the foundation of all of our relationships.
LIMITLESS COMPASSION AND CARING FOR OTHERSWe have a predisposition to help others and the desire to identify with their experience through empathy, and consideration for their needs and values.
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Consolidated Balance Sheets | Years Ended December 31, 2019 and 2018 (In Thousands)
CAMBRIDGE FINANCIAL GROUP, INC. AND SUBSIDIARYConsolidated Statements of Net Income | Years Ended December 31, 2019 and 2018 (In Thousands)
CAMBRIDGE FINANCIAL GROUP, INC. AND SUBSIDIARY
2019 2018
Assets
Cash and due from banks $61,133 $25,196
Short-term investments 48,290 51,785
Total cash and cash equivalents 109,423 76,981
Marketable equity securities, at fair value 10,144 -
Investment securities available-for-sale, at fair value 496,688 512,775
Investment securities held-to-maturity, at amortized cost 91,930 86,948
Loans held for sale, net 3,740 1,711
Loans:
Commercial real estate loans 2,105,029 1,879,336
Residential mortgage loans 790,976 743,474
Commercial and industrial loans 402,332 324,988
Other loans 91,452 90,307
Total loans 3,389,789 3,038,105
Less - allowance for loan losses (34,102) (32,788)
Net loans 3,355,687 3,005,317
Premises and equipment, net 55,695 41,899
Deferred tax asset, net 15,548 15,827
Bank-owned life insurance 68,139 66,779
Other assets 90,295 74,904
Total assets $4,297,289 $3,883,141
Liabilities and Equity Capital
Liabilities:
Deposits $3,150,863 $2,980,204
Advances from Federal Home Loan Bank of Boston 597,125 414,891
Other borrowings and capital lease obligations 49,867 65,022
Accrued expenses and other liabilities 71,596 42,950
Total liabilities 3,869,451 3,503,067
Equity Capital:
Undistributed earnings 419,649 381,468
Accumulated other comprehensive income (loss) 8,189 (1,394)
Total equity capital 427,838 380,074
Total liabilities and equity capital $4,297,289 $3,883,141
2019 2018
Interest income:
Commercial real estate loans $91,548 $82,182
Residential mortgage loans 28,368 25,566
Commercial and industrial loans 19,626 16,201
Other loans 4,605 4,006
Investment securities and short-term investments 20,942 19,183
Total interest and dividend income 165,089 147,138
Interest expense:
Deposits 29,185 20,128
Advances from Federal Home Loan Bank of Boston 12,037 9,000
Other borrowings and capital lease obligations 624 329
Total interest expense 41,846 29,457
Net interest and dividend income 123,243 117,681
Provision for loan losses 1,625 2,775
Net interest and dividend income after provision for loan losses 121,618 114,906
Noninterest income:
Deposit account fees 5,798 5,452
Rental income 3,845 3,904
Gain on marketable equity securities, net 3,106 -
Gain on sales and calls of securities available-for-sale, net 95 1,588
Mortgage banking gains 1,889 1,101
Gain (loss) on limited partnership tax credit investments 929 (3,716)
Other 2,413 2,585
Total noninterest income 18,075 10,914
Noninterest expense:
Salaries and employee benefits 50,854 46,677
Office occupancy and equipment 17,799 14,052
FDIC deposit insurance 685 1,520
Other operating expenses 21,286 18,380
Total noninterest expense 90,624 80,629
Income before income taxes 49,069 45,191
Income tax expense 10,344 6,266
Net income $38,725 $38,925
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CFG TRUSTEES & CORPORATORS CSB DIRECTORS
Robert P. Reardon* Retired | Former Director of Assessment City of Cambridge
Michael J. Costello Retired | Former Partner PricewaterhouseCoopers LLP
Anne Adams Cushman Principal | Owner Advise & Consult
Jayne K. Donahue Retired | Former Executive Vice President and General Auditor State Street Corporation
Thomas W. Falwell, Esq. Partner | Attorney Comins & Newbury LLP
Kevin J. Fitzgerald Retired | Former Chairman and CEO Cambridge Financial Group and Cambridge Savings Bank
Neal Hesler Founder Hesler & Associates
Howard B. Hodgson, Jr. Vice Chairman of Investment Committees Cabot Properties, Inc.
Kurt V. Johnson Senior Vice President Corporate & Business Development GreatHorn, Inc.
C. Brendan Noonan III, Esq. President C. Brendan Noonan & Company, Inc.
Emily Ou Managing Director Retail Leasing Cushman & Wakefield
Charles D. Keefe, Jr. Owner Keefe Funeral Home
Ara Krafian Chairman and CEO Symmes Maini & McKee Associates
Charles R. Laverty, III General Counsel Laverty Lohnes Properties
Charles H. Lyons President Lyons Consulting, LLC
Edward L. Marsteiner, II Partner and Director of Acquisitions National Development
Alan McClennen, Jr. Planning and Development Consultant
Faith D. McDonald Retired | Former Deputy Director City of Cambridge
Daniel Mee President Dillion Capital Advisors, LLC
Robert Metafora Chairman and CEO CFE International
Amey D. Moot Management Consultant Precision Thinking
Julia McClennen Murphy Project Manager Vanasse Hangen Brustlin, Inc.
Robert W. Murray President and CEO Murray Hills, Inc.
Katherine Rafferty Director of Community Affairs Mt. Auburn Hospital
Wayne F. Patenaude President and CEO Cambridge Financial Group and Cambridge Savings Bank
Mary Ann Pesce Retired | Former President Global Personal Care Procter & Gamble
Robert J. Ramsey Principal and Owner W.T. Phelan & Co.
Harborne W. Stuart, Jr. Adjunct Professor School of Engineering and Applied Sciences Columbia University
Robert M. Wilson Retired | Former President and CEO Cambridge Financial Group and Cambridge Savings Bank
CFG TRUSTEES & CORPORATORS
Stephen J. Coukos, Esq. Executive Vice President and General Counsel Cambridge Financial Group and Cambridge Savings Bank
John P. DiGiovanni President Trinity Property Management
CFG CORPORATORS
Anthony Ackil Founder & CEO Streetlight Ventures
Mary Rose Bolton Retired | Former Senior Advisor to the Director Harvard University Art Museum
Frederick Ryan Retired | Former Chief of Police Arlington Police Department
Travis J. Snell President Concord Property Management
Joia Spooner-Fleming R&D Associate Director Procter & Gamble
Roberta G. Sydney President Sydney Associates, Inc.
Douglas Thayer President | Owner Thayer & Associates, Inc.
Monique D. Thompson Business Analyst | Interface Manager MA Department of Public Health
Pamela J. Toulopoulos Co-Owner JVT Realty
Laura Vail Wooster Business Advisor and Social Entrepreneur
Joanna Vanden Director of Operations | Administration Social Finance, Inc.
Ada H. Wong President Lexington Enterprises, Inc.
EXECUTIVE TEAM
Wayne F. Patenaude President and Chief Executive Officer
Ian M. Brandon Senior Vice President Head of Commercial Real Estate
Katie Catlender Executive Vice President Chief Customer Officer
Timothy Bowe Managing Director Evergreen Technology Consulting
J. Daniel Bowen Senior Vice President Nordblom Company
Gerald D. Cohen President SF Properties, Inc.
Allison R. Coleman Chief Executive Officer Capital Link, Inc.
Peter Daly Executive Director Homeowner’s Rehab, Inc.
Bruce J. Embry, Esq. Founder and Partner Gregg, Hunt, Ahern & Embry
Catherine Faddis President and CIO Grace Capital
Gary J. Gianino CFO Sawyer Realty Holdings, LLC
Frederick V. Gilgun, Jr., Esq. Principal | Attorney Nicholson, Sreter & Gilgun, P.C.
Allison Goodwin Director of Finance Torrington Properties, Inc.
John T. Gosselin, Esq. Managing Partner Gosselin & Kyrinkidis, P.C.
David S. Hall Development Partner The Hanover Company
Michelle D. Holmes Associate Professor of Medicine Brigham and Women’s Hospital
David P. Cedrone Senior Vice President Head of Consumer and Small Business Banking
Stephen J. Coukos, Esq. Executive Vice President and General Counsel
Michael Gilles Executive Vice President Chief Operating Officer
Linda Grace Executive Vice President Chief Human Resources Officer
Stephen Leonard Senior Vice President Head of Corporate Banking
Michael Lindgren Executive Vice President Chief Lending Officer
Dana Philbrook Senior Vice President Chief Financial Officer
Lisa Rodericks Senior Vice President Chief Marketing Officer
Carol Sexton Senior Vice President Head of Retail Banking
Michael St JeanSenior Vice President Chief Credit Officer
Mark Tracy Senior Vice President Chief Technology and Operations Officer
DIRECTORS, TRUSTEES, CORPORATORS, & EXECUTIVES
*Chairman of Cambridge Financial Group (CFG) Board of Trustees and Cambridge Savings Bank (CSB) Board of Directors
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Arlington Center 626 Massachusetts Avenue Arlington, MA 02476 617.441.4204
Arlington Heights 1300 Massachusetts Avenue Arlington, MA 02476 617.441.4205
East Arlington 188 Massachusetts Avenue Arlington, MA 02474 617.441.4203
Bedford 181 Great Road Bedford, MA 01730 617.441.4206
Belmont Center 40 Leonard Street Belmont, MA 02478 617.441.4327
Burlington–3rd Ave 140 Middlesex Turnpike Burlington, MA 01803 617.441.7045
Burlington–Cambridge Street 214 Cambridge Street Burlington, MA 01803 617.441.4207
Cambridge—Central Square 630 Massachusetts Avenue Cambridge, MA 02139 617.441.4298
Cambridge—Harvard Square 1374 Massachusetts Avenue Cambridge, MA 02138 617.441.4154
Cambridge—Inman Square 1378 Cambridge Street Cambridge, MA 02139 617.441.4287
Cambridge—Porter Square 53 White Street Cambridge, MA 02140 617.441.4270
Charlestown 1 Thompson Square Charlestown, MA 02129 617.398.5700
Concord 202 Sudbury Road Concord, MA 01742 617.441.7115
Lexington Center 1781 Massachusetts Avenue Lexington, MA 02420 781.861.1980
Newton Centre 739 Beacon Street Newton, MA 02459 617.441.7065
Watertown 54 Arsenal Street Watertown, MA 02472 617.441.7088
BRANCH LOCATIONS
Cambridge Financial Group is the mutual holding company for:
CSB Operations Center | 81 Wyman Street, Waltham, MA
1374 Massachusetts Avenue | Cambridge, MA 02138
888.418.5626 | cambridgesavings.com