PR Newswire | Jan 26, 2021 08:03AM EST

Earnings For 2020

01/26 07:00 CST

Cambridge Bancorp Declares Increased Dividend and Announces Full Year Operating Earnings For 2020 CAMBRIDGE, Mass., Jan. 26, 2021

CAMBRIDGE, Mass., Jan. 26, 2021 /PRNewswire/ -- Cambridge Bancorp (NASDAQ: CATC) (the "Company"), the parent of Cambridge Trust Company ("Cambridge Trust"), today announced net income of $31,959,000 for the year ended December 31, 2020, representing an increase of $6,702,000, or 26.5%, as compared to net income of $25,257,000 for the year ended December 31, 2019. Diluted earnings per share were $5.03 for 2020, representing a 6.3% decrease over diluted earnings per share of $5.37 for 2019.

The results for the year ended December 31, 2020, included the merger accounting impact of the current expected credit loss accounting standard ("CECL") within the provision for credit losses, merger expenses, office closures and related one-time occupancy expenses, and other non-operating items. Operating net income excluding these items was $43,870,000 for the year ended December 31, 2020, an increase of $14,714,000, or 50.5%, as compared to operating net income of $29,156,000 for 2019. Operating diluted earnings per share were $6.90 for 2020, representing an 11.3% increase over operating diluted earnings per share of $6.20 for 2019.

For the quarter ended December 31, 2020, net income was $13,014,000, representing an increase of $5,905,000, or 83.1%, as compared to net income of $7,109,000 for the quarter ended December 31, 2019. Diluted earnings per share were $1.86 for the fourth quarter of 2020, representing an increase of 31.0% over diluted earnings per share of $1.42 for the fourth quarter of 2019.

Excluding non-operating expenses, operating net income was $14,353,000 for the quarter ended December 31, 2020, an increase of $6,431,000, or 81.2%, as compared to operating net income of $7,922,000 for the quarter ended December 31, 2019. Operating diluted earnings per share were $2.05 for the fourth quarter of 2020, representing a 29.7% increase over operating diluted earnings per share of $1.58 for the fourth quarter of 2019.

During the fourth quarter of 2020, the Company closed its South End branch location and a support office location in Boston and recorded occupancy expenses of $1.2 million related to these closures within non-operating expenses. These closures are expected to generate approximately $700,000 of pre-tax annual expense savings once completed. The Company is actively reviewing its remaining physical office footprint, anticipating and planning for a general increase in remote and hybrid work over the long term.

2020 Highlights

* Asset quality remains strong with ratios of non-performing loans to total loans at 0.28% at December 31, 2020, and non-performing assets to total assets at 0.27% at December 31, 2020. * In continued support of our clients, we have deferred or adjusted payments on 0.7% of total loans outstanding at December 31, 2020, as compared to 3.2% and 5.2% of total loans outstanding at September 30, 2020 and June 30, 2020, respectively. * The allowance for credit loss ("ACL") to total loans was 1.19% at December 31, 2020, excluding loans made under the Small Business Administration's ("SBA") Paycheck Protection Program ("PPP"). * Performance ratios for the year ended December 31, 2020 were strong with Operating Return On Assets ("ROA") of 1.25%, Operating Return On Tangible Common Shareholders' Equity ("ROTCE") of 14.38%, and Operating Pre-Tax Pre-Provision ("PTPP") Return on Average Assets ("ROAA") of 1.96%. * Tangible common equity ratio of 8.91% at December 31, 2020. * Tangible book value per share of $50.07 at December 31, 2020, an increase of $3.41, or 7.3%, from $46.66 at December 31, 2019. * Client Wealth Management Assets of $4.2 billion at December 31, 2020, an increase of $715.0 million, or 20.7%, from 2019. * Organic core deposit growth of $422.9 million, or 19.4%, from December 31, 2019.

A supplemental presentation for the quarterly and full year results is available on our investor relations website: ir.cambridgetrust.com or within the hyperlink provided within this release. This presentation includes additional details regarding the loan portfolio, liquidity position, and other financial disclosures.

"2020 was a remarkable year, and not soon forgotten. While challenging for all, the Cambridge Trust team delivered with terrific energy and enthusiasm in supporting clients and our communities," noted Denis K. Sheahan, Chairman and CEO. "In addition, we enter 2021 even stronger than 2020 with a healthy balance sheet, solid capital and liquidity levels and plenty of opportunity ahead in wonderful markets."

Balance Sheet

Total assets increased $1.1 billion, or 38.3%, from $2.8 billion at December 31, 2019, inclusive of the Wellesley Bancorp, Inc. ("Wellesley") merger and were $3.9 billion at December 31, 2020.

Total loans increased $926.9 million, or 41.6%, from December 31, 2019, inclusive of the Wellesley merger, and totaled $3.2 billion as of December 31, 2020.

Inclusive of the impact of the Wellesley merger:

* Residential real estate loans increased by $381.3 million from $917.6 million at December 31, 2019 to $1.3 billion at December 31, 2020. * Commercial real estate loans increased by $298.4 million, from $1.1 billion at December 31, 2019 to $1.4 billion at December 31, 2020. * Commercial & industrial loans increased by $214.6 million from $133.2 million at December 31, 2019 to $347.9 million at December 31, 2020. * Loans under the SBA's PPP amounted to $124.2 million at December 31, 2020. PPP loans are included in commercial & industrial loans. During the fourth quarter of 2020, we received repayments on PPP loans totaling $67.5 million. Additionally, as of December 31, 2020, the Company had 76 applications totaling $25.9 million submitted to the SBA for forgiveness.

Excluding the impact of the Wellesley merger and PPP loans, total loans decreased by $35.0 million, or 1.6%, from December 31, 2019. Total loans outstanding, excluding changes in PPP loans, decreased by $63.1 million, or 1.9%, from September 30, 2020 as a result of continued payoffs and pay-downs of residential, commercial mortgage and commercial & industrial loans during the quarter due to the low interest rate environment.

The Company's total investment securities portfolio increased by $86.2 million, or 21.6%, from $398.5 million at December 31, 2019 to $484.7 million at December 31, 2020 as the Company invested excess cash.

Total deposits increased by $1.0 billion, or 44.3%, to $3.4 billion at December 31, 2020, from $2.4 billion at December 31, 2019, primarily driven by a combination of the impact of the Wellesley merger and organic deposit growth. A table accompanying this release provides detail regarding organic loan and deposit growth.

* Core deposits, which the Company defines as all deposits other than certificates of deposit, increased by $971.7 million, or 44.6%, to $3.1 billion from $2.2 billion at December 31, 2019. * Excluding the impact of the Wellesley merger, organic growth in core deposits was $422.9 million, or 19.4% from December 31, 2019. * The cost of total deposits for the quarter ended December 31, 2020 was 0.17%. The cost of total deposits for the year ended December 31, 2020 was 0.25%, as compared to 0.70% for the year ended December 31, 2019, a reduction of 45 basis points driven by a reduction of interest rates during 2020. At December 31, 2020, the spot cost of deposits was 0.18%.

Certificates of deposit totaled $254.8 million at December 31, 2020, an increase of $72.5 million from $182.3 million at December 31, 2019, primarily due to the impact of the Wellesley merger. Total brokered certificates of deposit, which are included within certificates of deposit, were $30.8 million and $7.1 million at December 31, 2020 and December 31, 2019, respectively.

Borrowings were $33.0 million at December 31, 2020, representing a $102.7 million, or 75.7%, decrease from $135.7 million at December 31, 2019, as the Company utilized excess cash to pay down borrowings. Additionally, during the fourth quarter of 2020, the Company redeemed $10.0 million in subordinated debt, bearing a 6.0% coupon, assumed as part of the Wellesley merger.

Net Interest and Dividend Income

For the quarter ended December 31, 2020, net interest and dividend income before provision for credit losses decreased by $881,000, or 2.5%, to $34.1 million, as compared to $35.0 million for the quarter ended September 30, 2020. This change was primarily due to lower yields on average earning assets and lower loan accretion associated with merger accounting partially offset by lower cost of funds and accelerated interest income of $1.2 million from PPP loans that have been forgiven. Accelerated interest income on PPP loans represents the amount of deferred income that was remaining on loans that were forgiven during the quarter.

The Company's net interest margin, on a fully taxable equivalent basis decreased by 6 basis points to 3.67% for the quarter ended December 31, 2020, as compared to 3.73% for the quarter ended September 30, 2020.

For the year ended December 31, 2020, net interest and dividend income before provision for credit losses increased by $41.5 million, or 52.8%, to $120.2 million, as compared to $78.7 million for the year ended December 31, 2019. The Company's net interest margin, on a fully taxable equivalent basis, increased 43 basis points to 3.65% for the year ended December 31, 2020, as compared to 3.22% for the year ended December 31, 2019.

In order to provide greater disclosure of the impact of loan related merger accounting, the impact of the SBA's PPP loan program and excess cash, a reconciliation of the Company's net interest margin to an adjusted net interest margin is shown below. Excluding the impact of merger-related loan accretion and the impact of PPP loans, the adjusted net interest margin for the quarter ended December 31, 2020 was 3.27%, representing a 14 basis points decrease over the adjusted net interest margin for September 30, 2020 of 3.41%. The estimated impact of excess cash during the quarter decreased the net interest margin by approximately 4 basis points as shown below.

Three Months Ended

December 31, 2020

Interest Rate Average Income/ Earned Balance / Expenses Paid

(dollars in thousands)

Total interest-earning assets (GAAP) $ 3,710,858

Net interest income on a fully taxable $ 34,266equivalent basis (GAAP)

Net interest margin (GAAP) 3.67 %

Less: Paycheck Protection Program loan (162,421) (2,240) -0.08 %impact

Less: Accretion of loan fair value (2,897) -0.32 %adjustments

Adjusted net interest margin on a fully $ 3,548,437 $ 29,129 3.27 %taxable equivalent basis

Less: Excess cash impact (54,545) (55) 0.04 %

Normalized adjusted net interest margin on a $ 3,493,892 $ 29,074 3.31 %fully taxable equivalent basis

Excluding the impact of merger-related loan accretion and the impact of PPP loans, the adjusted net interest margin for the year ended December 31, 2020, was 3.36%, representing a 14 basis points increase over the net interest margin for the year ended December 31, 2019 of 3.22%.

For the Year Ended

December 31, 2020

Interest Rate Average Income/ Earned Balance / Expenses Paid

(dollars in thousands)

Total interest-earning assets (GAAP) $ 3,305,820

Net interest income on a fully taxable $ 120,797equivalent basis (GAAP)

Net interest margin (GAAP) 3.65 %

Less: Paycheck Protection Program loan impact (120,048) (4,062) 0.01 %

Less: Accretion of loan fair value (9,791) -0.30 %adjustments

Adjusted net interest margin on a fully $ 3,185,772 $ 106,944 3.36 %taxable equivalent basis

Provision for Credit Losses

During the fourth quarter of 2020, the Company recorded a release of credit losses of $120,000 primarily due to net recoveries during the quarter and a reduction in overall loan balances. Partially offsetting the decrease were changes in assumptions associated with estimated losses as a result of the novel coronavirus ("COVID-19") pandemic both qualitatively and quantitatively given the extraordinarily uncertain duration and impact of COVID-19 on loan losses. For the year ended December 31, 2020, the Company recorded a total provision for credit losses of $18.3 million, which includes $9.4 million associated with the expected impact of the COVID-19 pandemic on future loan losses and $8.6 million for the recognition of the non-operating impact of merger related CECL accounting.

Noninterest Income

Total noninterest income decreased by $131,000, or 1.2% to $10.8 million for the quarter ended December 31, 2020, as compared to $10.9 million for the quarter ended September 30, 2020. Noninterest income was 24.1% of total revenue for the quarter ended December 31, 2020.

* Wealth Management revenue increased by $39,000, or 0.5%, to $8.1 million during the fourth quarter of 2020, as compared to $8.0 million during the quarter ended September 30, 2020. Wealth Management Assets under Management and Administration increased by $219.4 million, or 5.6% to $4.2 billion as of December 31, 2020, as compared to $3.9 billion as of September 30, 2020, primarily due to appreciation in the equity markets during the fourth quarter of 2020. * Gain on loans sold decreased by $207,000 during the fourth quarter of 2020, as compared to the quarter ended September 30, 2020, due to lower sales of residential mortgages into the secondary market.

Inclusive of the Wellesley merger, total noninterest income increased by $3.1 million, or 8.6%, to $39.5 million for the year ended December 31, 2020, as compared to $36.4 million for the year ended December 31, 2019, primarily as a result of higher wealth management revenue and increases on gains on loans sold, partially offset by lower deposit and ATM related fees, lower loan related derivative income and other fee income. Noninterest income was 24.7% of total revenue for year ended December 31, 2020.

* Wealth Management revenue increased by $3.3 million, or 12.3%, for the year ended December 31, 2020, as compared to the year ended December 31, 2019, as a result of the impact of the Wellesley merger and appreciation in the equity markets during 2020. * Gain on loans sold increased by $680,000, or 58.1%, for the year ended December 31, 2020, as compared to the year ended December 31, 2019, due to increased sales of residential mortgages given the low-rate environment and active refinance market. * Other income decreased by $201,000, or 10.4%, for the year ended December 31, 2020 primarily as a result of lower loan prepayment income during 2020. * ATM/Debit card income decreased by $105,000, or 7.4%, for the year ended December 31, 2020 primarily as a result of the pandemic's impact on transactions during 2020. * Loan related derivative income decreased by $195,000, or 11.6%, for the year ended December 31, 2020, primarily due to valuation adjustments associated with changes in interest rates on existing derivative transactions.

Noninterest Expense

Total noninterest expense increased by $1.7 million, or 6.6%, to $27.1 million for the quarter ended December 31, 2020, as compared to $25.4 million for the quarter ended September 30, 2020, primarily driven by an increase in salaries and employee benefit expense, branch and office closure related expenses, merger related expenses, and higher marketing expense.

* Non-operating expenses of $1.8 million during the quarter were primarily the result of Wellesley related merger expenses of $581,000 and branch and office closure expenses of $1.2 million associated with the two locations discussed above. * Salaries and employee benefit expense increases of $929,000, or 5.9%, were primarily driven by increases in long-term equity compensation expenses of $439,000 as a result of an increase in performance metrics as compared to peers and increases in short-term incentive expenses of $425,000 related to performance versus forecasted expectations. * Marketing expense increases of $235,000, or 56.0%, were primarily driven by the timing of the Company's marketing spend.

Noninterest expense increases during the quarter were partially offset by lower FDIC insurance expense of $131,000.

Total noninterest expense increased by $19.9 million, or 25.5%, to $98.1 million for the year ended December 31, 2020, as compared to $78.2 million for the year ended December 31, 2019. This increase was primarily driven by increases in salaries and employee benefits expense, merger and other non-operating expenses including branch and office closure related expenses, occupancy and equipment expense, and higher data processing expense resulting from our mergers with Optima in 2019 and Wellesley in 2020 as described below.

* Salaries and employee benefits expense increased by $11.5 million, or 24.2%, primarily as a result of increased staffing related to the mergers with Optima and Wellesley in 2019 and 2020, respectively, additions to support business initiatives, normal merit increases and higher employee benefit costs. * Non-operating expense increased by $2.9 million primarily due to merger expenses associated with the Wellesley merger and branch and office closure expenses of $1.2 million during the fourth quarter of 2020 as previously described. * Occupancy and equipment expense increased by $2.1 million, or 19.8%, primarily as a result of additional branches and office space as a result of the mergers with Optima and Wellesley. * Data processing expense increased by $1.4 million, or 22.9%, primarily as a result of the mergers with Optima and Wellesley.

Asset Quality

Non-performing loans totaled $9.0 million, or 0.28% of total loans outstanding, as of December 31, 2020. Net loan recoveries were $174,000, or 0.02% of total loans (annualized), for the three months ended December 31, 2020, as compared to net charge-offs of $213,000, or 0.03% of total loans (annualized), for the three months ended September 30, 2020.

Net loan charge-offs were $439,000, or 0.01% of total loans, for the year ended December 31, 2020, as compared to $1.6 million, or 0.07% of total loans, for the year ended December 31, 2019. Early stage delinquency (30-89 days delinquent) represented 0.72% of total loans outstanding as of December 31, 2020.

The following table shows additional and historical information regarding non-performing assets, early stage delinquency (30-89 days delinquent), purchased credit deteriorated ("PCD") assets, and troubled debt restructurings:

Nonperforming Assets

December 31, September December 31, 2020 30, 2020 2019

(dollars in thousands)

Total nonperforming loans $ 8,962 $ 9,189 $ 5,651

Other real estate owned 1,820 1,820 163

Total nonperforming assets $ 10,782 $ 11,009 $ 5,814

Troubled debt restructurings:

Non-performing (included in total $ 811 $ 811 $ 227non-performing loans above)

Performing - - -

Total troubled debt $ 811 $ 811 $ 227restructurings

Nonperforming loans/total loans 0.28 % 0.28 % 0.25 %

Nonperforming assets/total assets 0.27 % 0.28 % 0.20 %

TDRs/total loans 0.03 % 0.02 % 0.01 %

Additional Asset Quality Indicators

December 31, September December 31, 2020 30, 2020 2019

Purchased Credit Deteriorated 0.54 % 0.59 % -("PCD")/total loans

Delinquent loans 30-89 days past 0.72 % 0.40 % 0.50 %due/total loans

Quarterly Net (charge-offs)recoveries/total loans 0.02 % (0.03) % (0.03) %(annualized)

Year to date net (charge-offs) (0.01) % (0.02) % (0.07) %recoveries/total loans

Allowance for credit losses/ 401.88 % 390.90 % 321.71 %nonperforming loans

Allowance for credit losses/total 1.19 % 1.16 % 0.82 %loans excluding PPP

The allowance for credit losses in total was $36.0 million, or 1.19% of total loans outstanding, at December 31, 2020 excluding PPP loans, as compared to $18.2 million, or 0.82% of total loans outstanding, at December 31, 2019.

Forbearance/Modifications

The Company has instituted payment deferral programs to aid existing borrowers with payment forbearance. For commercial and consumer borrowers, the Company has endeavored to provide payment relief for borrowers who have been impacted by the COVID-19 pandemic and have requested payment assistance. Detailed information on payment deferrals is included within the supplemental earning release information that can be found within the link below or at ir.cambridgetrust.com.

Income Taxes

Inclusive of the impact of the Wellesley merger, the Company's effective tax rate was 27.2% for the quarter ended December 31, 2020, as compared to 27.3% for the quarter ended December 31, 2019. For the year ended December 31, 2020, the effective tax rate was 26.3%, as compared to 25.5% for the year ended December 31, 2019.

Dividend & Capital

On January 25, 2021, the Company's Board of Directors declared a quarterly cash dividend of $0.55 per share, which is payable on February 25, 2021 to shareholders of record as of the close of business on February 11, 2021. This represents an increase of $0.02, as compared to the $0.53 dividend paid in same quarter of 2020.

The Company's total shareholders' equity to total assets ratio increased by 13 basis points to 10.17% as of December 31, 2020, as compared to 10.04% as of December 31, 2019. Book value per share increased by $4.94, or 9.3%, to $58.00 as of December 31, 2020, as compared to $53.06 as of December 31, 2019.

The Company's ratio of tangible common equity to tangible assets was 8.91% at December 31, 2020, as compared to 8.93% at December 31, 2019. Tangible book value per share increased by $3.41, or 7.3%, to $50.07 as of December 31, 2020, as compared to $46.66 as of December 31, 2019.

Supplemental Earnings Release Information:Click here to download

About Cambridge Bancorp

Cambridge Bancorp, the parent company of Cambridge Trust Company, is based in Cambridge, Massachusetts. Cambridge Trust Company is a 130-year-old Massachusetts chartered commercial bank with approximately $3.9 billion in assets as of December 31, 2020, and a total of 21 Massachusetts and New Hampshire locations. Cambridge Trust Company is one of New England's leaders in private banking and wealth management with $4.2 billion in client assets under management and administration as of December 31, 2020. The Wealth Management group maintains offices in Boston and Wellesley, Massachusetts and Concord, Manchester, and Portsmouth, New Hampshire.

The accompanying unaudited condensed interim and annual consolidated financial information should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K, which is posted in the investor relations section of the Company's website at www.cambridgetrust.com.

Forward-looking Statements

Certain statements herein may constitute "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements about the Company and its industry involve substantial risks and uncertainties. Statements other than statements of current or historical fact, including statements regarding the Company's future financial condition, results of operations, business plans, liquidity, cash flows, projected costs, the impact of any laws or regulations applicable to the Company, and measures being taken in response to the COVID-19 pandemic and the impact of the COVID-19 pandemic on the Company's business are forward-looking statements. Words such as "anticipates," "believes," "estimates," "expects," "forecasts," "intends," "plans," "projects," "may," "will," "should," and other similar expressions are intended to identify these forward-looking statements. Such statements are subject to factors that could cause actual results to differ materially from anticipated results. Such factors include, but are not limited to, the following: the current global economic uncertainty and economic conditions being less favorable than expected, disruptions to the credit and financial markets, changes in the Company's accounting policies or in accounting standards, weakness in the real estate market, legislative, regulatory or accounting changes that adversely affect the Company's business and/or competitive position, the Dodd-Frank Act's consumer protection regulations, the duration and scope of the COVID-19 pandemic and its impact on levels of consumer confidence, actions governments, businesses and individuals take in response to the COVID-19 pandemic, the impact of the COVID-19 pandemic and actions taken in response to the pandemic on global and regional economies and economic activity, the pace of recovery when the COVID-19 pandemic subsides, challenges from the integration of the Company and Optima and Wellesley resulting in the combined business not operating as effectively as expected, disruptions in the Company's ability to access the capital markets, the cost savings of the Wellesley merger may not be fully realized or may take longer to realize than expected, operating costs, customer loss and business disruption following the Wellesley merger, including adverse effects on relationships with employees, may be greater than expected, and other factors that are described in the Company's filings with the Securities and Exchange Commission, including the Annual Report on Form 10-K for the year end December 31, 2019, which the Company filed on March 17, 2020. The Company does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements. You are cautioned not to place undue reliance on these forward-looking statements.

Non-GAAP Measures

This press release contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America ("GAAP"). This information includes operating net income and operating diluted earnings per share, tangible book value per share and the tangible common equity ratio, return on average assets, return on tangible common equity, efficiency ratio on an operating basis, operating pre-tax pre-provision income, and operating return on average assets.

Operating net income and operating diluted earnings per share exclude items that management believes are unrelated to its core banking business such as merger, acquisition, and capital raise expenses, gain (loss) on disposition of investment securities, and other items. The Company's management uses operating net income and operating diluted earnings per share to measure the strength of the Company's core banking business and to identify trends that may to some extent be obscured by such excluded gains or losses.

Management also supplements its evaluation of financial performance with analysis of tangible book value per share (which is computed by dividing shareholders' equity less goodwill and acquisition related intangible assets, or "tangible common equity," by common shares outstanding), the tangible common equity ratio (which is computed by dividing tangible common equity by tangible assets, defined as total assets less goodwill and acquisition related intangibles), analysis of return on average assets and return on tangible common equity on an operating basis, the operating efficiency ratio (which is computed by dividing noninterest expense adjusted for non-operating expenses and total revenue adjusted for gain/(loss) on disposition of investment securities), analysis of operating pre-tax pre-provision income over average assets (which is computed by dividing income before taxes adjusted by provision for (release of) credit losses, non-operating expenses, and gain/(loss) on disposition of investment securities over average assets). The Company has included information on tangible book value per share, the tangible common equity ratio, and return on average assets and return on tangible common equity on an operating basis because management believes that investors may find it useful to have access to the same analytical tool used by management. As a result of merger and acquisition activity, the Company has recognized goodwill and other intangible assets in conjunction with business combination accounting principles. Excluding the impact of goodwill and other intangibles in measuring asset and capital values for the ratios provided, along with other bank standard capital ratios, provides a framework to compare the capital adequacy of the Company to other companies in the financial services industry.

These non-GAAP measures should not be viewed as a substitute for operating results and other financial measures determined in accordance with GAAP. An item which management deems to be nonoperating and excludes when computing these non-GAAP measures can be of substantial importance to the Company's results for any particular quarter or year. The Company's non-GAAP performance measures, including operating net income, operating diluted earnings per share, tangible book value per share, the tangible common equity ratio, and return on average assets, return on average equity, and efficiency ratio on an operating basis are not necessarily comparable to non-GAAP performance measures which may be presented by other companies.

Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are presented under "GAAP to Non-GAAP Reconciliations."

CONTACT: Cambridge Bancorp Michael F. CarotenutoChief Financial Officer 617-520-5520

CAMBRIDGE BANCORP AND SUBSIDIARIES

UNAUDITED QUARTERLY RESULTS

Three Months Ended Twelve Months Ended

December 31, September December 31, December 31, 30,

2020 2020 2019 2020 2019

(dollars in thousands, except per share data)

Interest and $ 35,870 $ 36,881 $ 26,415 $ 129,378 $ 96,339Dividend Income

Interest Expense 1,789 1,919 4,807 9,145 17,643

Net Interest and 34,081 34,962 21,608 120,233 78,696Dividend Income

(Release of)Provision for (120) 2,000 331 18,310 3,004Credit Losses

Noninterest Income 10,802 10,933 9,933 39,525 36,401

Noninterest 27,127 25,445 21,428 98,085 78,175Expense

Income Before 17,876 18,450 9,782 43,363 33,918Income Taxes

Income Tax Expense 4,862 5,021 2,673 11,404 8,661

Net Income $ 13,014 $ 13,429 $ 7,109 $ 31,959 $ 25,257

Operating Net $ 14,353 $ 14,317 $ 7,922 $ 43,870 $ 29,156Income*

Data Per CommonShare:

Basic Earnings $ 1.88 $ 1.94 $ 1.43 $ 5.07 $ 5.41Per Share

Diluted Earnings 1.86 1.93 1.42 5.03 5.37Per Share

Operating DilutedEarnings Per 2.05 2.06 1.58 6.90 6.20Share*

Dividends 0.53 0.53 0.51 2.12 2.04Declared Per Share

Avg. CommonSharesOutstanding:

Basic 6,897,450 6,918,692 4,939,973 6,289,481 4,629,255

Diluted 6,970,542 6,954,324 4,980,439 6,344,409 4,661,720

SelectedPerformanceRatios:

Net Interest 3.67 % 3.73 % 3.19 % 3.65 % 3.22 %Margin, FTE

Adjusted NetInterest Margin, 3.27 % 3.41 % 3.19 % 3.36 % 3.22 %FTE

Cost of Funds 0.19 % 0.20 % 0.71 % 0.28 % 0.72 %

Cost of InterestBearing 0.29 % 0.31 % 1.01 % 0.41 % 1.01 %Liabilities

Cost of Deposits 0.17 % 0.16 % 0.68 % 0.25 % 0.70 %

Cost of Depositsexcl. Wholesale 0.15 % 0.14 % 0.68 % 0.23 % 0.67 %Deposits

Return on Average 1.31 % 1.34 % 0.98 % 0.91 % 0.97 %Assets

Return on Average 13.05 % 13.78 % 11.08 % 9.09 % 11.40 %Equity

Efficiency Ratio* 60.44 % 55.44 % 67.94 % 61.40 % 67.92 %

Operating Return 1.45 % 1.43 % 1.10 % 1.25 % 1.12 %on Average Assets*

Operating Returnon Tangible Common 16.70 % 17.12 % 14.29 % 14.38 % 14.80 %Equity*

Operating 56.37 % 52.90 % 65.27 % 56.66 % 63.78 %Efficiency Ratio*

December 31, September December 30, 31,

2020 2020 2019

Total Assets $ 3,949,297 $ 3,987,109 $ 2,855,563

Total Loans 3,153,648 3,284,286 2,226,728

Total Deposits 3,403,083 3,331,942 2,358,878

Allowance for 36,016 35,920 18,180Credit Losses

Allowance to TotalLoans (excluding 1.19 % 1.16 % 0.82 %PPP)

Non-Performing 8,962 9,189 5,651Loans

Nonperforming 0.28 % 0.28 % 0.25 %loans/total loans

QTD Net Recoveries(Charge-offs) to 0.02 % (0.03) % (0.03) %Total Loans(annualized)

Tangible Common 8.91 % 8.60 % 8.93 %Equity Ratio*

Book Value Per $ 58.00 $ 56.73 $ 53.06Share

Tangible Book $ 50.07 $ 48.80 $ 46.66Value Per Share*

Wealth Management 3,994,152 3,791,064 3,287,371AUM

Wealth Management 4,167,903 3,948,478 3,452,852AUM & AUA

* See GAAP toNon-GAAPReconciliations

CAMBRIDGE BANCORP AND SUBSIDIARIES

UNAUDITED CONSOLIDATED BALANCE SHEETS

December 31, September December 31, 2020 30, 2020 2019

(dollars in thousands, except par value)

Assets

Cash and cash equivalents $ 75,785 $ 64,520 $ 61,335

Investment securities

Available for sale, at fair value(amortized cost $234,252, and 237,030 152,105 140,330$148,635, and $141,109,respectively)

Held to maturity, at amortized cost(fair value $260,139, and $252,428, 247,672 240,015 258,172and $264,114, respectively)

Total investment securities 484,702 392,120 398,502

Loans held for sale, at lower of 6,909 7,379 1,546cost or fair value

Loans

Residential mortgage 1,298,868 1,343,815 917,566

Commercial mortgage 1,358,962 1,364,387 1,060,574

Home equity 106,194 108,343 80,675

Commercial & Industrial 347,855 428,024 133,236

Consumer 41,769 39,717 34,677

Total loans 3,153,648 3,284,286 2,226,728

Less: allowance for credit losses (36,016) (35,920) (18,180)on loans

Net loans 3,117,632 3,248,366 2,208,548

Federal Home Loan Bank of Boston 5,734 6,492 7,854Stock, at cost

Bank owned life insurance 46,169 45,948 37,319

Banking premises and equipment, net 18,158 18,255 14,756

Right-of-use asset operating leases 34,927 37,347 33,587

Deferred income taxes, net 11,639 11,514 8,229

Accrued interest receivable 9,514 9,375 7,052

Goodwill 51,912 51,912 31,206

Merger related intangibles, net 2,977 3,068 3,338

Other assets 83,239 90,813 42,291

Total assets $ 3,949,297 $ 3,987,109 $ 2,855,563

Liabilities

Deposits

Demand $ 1,006,132 $ 1,011,382 $ 630,593

Interest bearing checking 625,650 592,113 450,098

Money market 532,218 436,120 181,406

Savings 984,262 975,811 914,499

Certificates of deposit 254,821 316,516 182,282

Total deposits 3,403,083 3,331,942 2,358,878

Borrowings 32,992 135,805 135,691

Subordinated debt - 9,959 -

Operating lease liabilities 37,448 38,930 35,054

Other liabilities 74,042 77,400 39,379

Total liabilities 3,547,565 3,594,036 2,569,002

Shareholders' Equity

Common stock, par value $1.00;Authorized: 10,000,000 shares;Outstanding: 6,926,728 shares, 6,927 6,928 5,4016,928,288 shares and 5,400,868shares, respectively

Additional paid-in capital 226,967 225,361 136,766

Retained earnings 165,404 156,062 146,875

Accumulated other comprehensive 2,434 4,722 (2,481)income (loss)

Total shareholders' equity 401,732 393,073 286,561

Total liabilities and $ 3,949,297 $ 3,987,109 $ 2,855,563shareholders' equity

CAMBRIDGE BANCORP AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended Twelve Months Ended

December 31, September December 31, December 31, December 31, 2020 30, 2020 2019 2020 2019

(dollars in thousands, except share data)

Interest anddividendincome

Interest on $ 33,510 $ 34,468 $ 23,463 $ 119,447 $ 84,382taxable loans

Interest ontax-exempt 229 243 199 880 584loans

Interest ontaxable 1,399 1,404 1,889 6,048 7,963investmentsecurities

Interest ontax-exempt 658 631 580 2,485 2,289investmentsecurities

Dividends onFHLB of Boston 51 127 109 331 390stock

Interest onovernight 23 8 175 187 731investments

Total interestand dividend 35,870 36,881 26,415 129,378 96,339income

Interestexpense

Interest on 1,416 1,354 4,152 7,295 15,641deposits

Interest on 182 376 655 1,406 2,002borrowed funds

Interest onsubordinated 191 189 - 444 -debt

Total interest 1,789 1,919 4,807 9,145 17,643expense

Net interestand dividend 34,081 34,962 21,608 120,233 78,696income

(Release of)Provision for (120) 2,000 331 18,310 3,004credit losses

Net interestand dividendincome after 34,201 32,962 21,277 101,923 75,692provision forcredit losses

Noninterestincome

Wealthmanagement 8,064 8,025 6,923 29,751 26,499revenue

Deposit 506 603 790 2,595 3,185account fees

ATM/Debit card 362 349 367 1,308 1,413income

Bank ownedlife insurance 221 201 158 747 612income

Gain (loss) ondisposition of - - - 69 (79)investmentsecurities

Gain on loans 666 873 679 1,850 1,170sold

Loan relatedderivative 342 292 103 1,479 1,674income

Other income 641 590 913 1,726 1,927

Totalnoninterest 10,802 10,933 9,933 39,525 36,401income

Noninterestexpense

Salaries andemployee 16,673 15,744 13,141 58,975 47,494benefits

Occupancy and 3,583 3,676 3,042 13,004 10,855equipment

Data 2,061 2,084 1,700 7,662 6,232processing

Professional 1,081 1,151 1,212 4,190 3,623services

Marketing 655 420 585 1,818 1,760

FDIC insurance 182 313 (78) 992 291(credit)

Nonoperating 1,825 1,168 841 7,612 4,721expenses

Other expenses 1,067 889 985 3,832 3,199

Totalnoninterest 27,127 25,445 21,428 98,085 78,175expense

Income before 17,876 18,450 9,782 43,363 33,918income taxes

Income tax 4,862 5,021 2,673 11,404 8,661expense

Net income $ 13,014 13,429 7,109 $ 31,959 $ 25,257

Share data:

Weightedaverage numberof shares 6,897,450 6,918,692 4,939,973 6,289,481 4,629,255outstanding,basic

Weightedaverage numberof shares 6,970,542 6,954,324 4,980,439 6,344,409 4,661,720outstanding,diluted

Basic earnings $ 1.88 $ 1.94 $ 1.43 $ 5.07 $ 5.41per share

Dilutedearnings per $ 1.86 $ 1.93 $ 1.42 $ 5.03 $ 5.37share

CAMBRIDGE BANCORP AND SUBSIDIARIES

MARGIN & YIELD ANALYSIS

Three Months Ended

December 31, 2020 September 30, 2020 December 31, 2019

Interest Rate Interest Rate Interest Rate

Average Income/ Earned Average Income/ Earned Average Income/ Earned / / / Balance Expenses Balance Expenses Balance Expenses ^(1) Paid ^ ^(1) Paid ^ ^(1) Paid ^ (1) (1) (1)

(dollars in thousands)

ASSETS

Interest-earning assets

Loans ^(2)

Taxable $ 3,174,185 $ 33,510 4.20 % $ 3,284,623 $ 34,468 4.17 % $ 2,201,984 $ 23,463 4.23 %

Tax-exempt 26,413 290 4.37 22,621 307 5.40 25,344 253 3.96

Securities available for sale ^(3)

Taxable 167,583 596 1.41 129,957 524 1.60 147,852 722 1.94

Securities held to maturity

Taxable 135,764 803 2.35 147,771 880 2.37 187,584 1,167 2.47

Tax-exempt 100,464 833 3.30 90,698 799 3.50 78,172 734 3.73

Cash and cash equivalents 106,449 23 0.09 67,056 8 0.05 57,036 175 1.22

Total interest-earning assets ^(4) 3,710,858 36,055 3.87 % 3,742,726 36,986 3.93 % 2,697,972 26,514 3.90 %

Non interest-earning assets 272,011 281,910 188,557

Allowance for credit losses (35,828) (33,872) (18,373)

Total assets $ 3,947,041 $ 3,990,764 $ 2,868,156

LIABILITIES ANDSHAREHOLDERS' EQUITY

Interest-bearing deposits

Checking accounts $ 638,847 $ 150 0.09 % $ 577,294 $ 164 0.11 % $ 427,475 $ 121 0.11 %

Savings accounts 980,172 581 0.24 963,253 565 0.23 916,575 2,420 1.05

Money market accounts 498,483 443 0.35 435,417 245 0.22 216,858 678 1.24

Certificates of deposit 285,694 242 0.34 333,366 380 0.45 204,654 933 1.81

Total interest-bearing deposits 2,403,196 1,416 0.23 2,309,330 1,354 0.23 1,765,562 4,152 0.93

Subordinated debt 8,346 191 9.10 9,936 189 7.57 - - -

Other borrowed funds 52,106 182 1.39 177,423 376 0.84 125,368 655 2.07

Total interest-bearing liabilities 2,463,648 1,789 0.29 % 2,496,689 1,919 0.31 % 1,890,930 4,807 1.01 %

Non-interest-bearing liabilities

Demand deposits 971,837 986,590 645,807

Other liabilities 114,749 119,762 76,876

Total liabilities 3,550,234 3,603,041 2,613,613

Shareholders' equity 396,807 387,723 254,543

Total liabilities & $ 3,947,041 $ 3,990,764 $ 2,868,156shareholders' equity

Net interest income on a fully 34,266 35,067 21,707taxable equivalent basis

Less taxable equivalent adjustment (236) (232) (208)

Net interest income $ 34,030 $ 34,835 $ 21,499

Net interest spread ^(5) 3.58 % 3.63 % 2.89 %

Net interest margin ^(6) 3.67 % 3.73 % 3.19 %

(1) Annualized on a fully taxable equivalent basis calculated using afederal tax rate of 21% in 2020 and 2019.

(2) Nonaccrual loans are included in average amounts outstanding.

(3) Average balances of securities available for sale calculated utilizingamortized cost.

(4) Federal Home Loan Bank stock balance is excluded from interest-earningassets and associated dividend income is excluded from interest income.

(5) Net interest spread represents the difference between the weightedaverage yield on interest-earning assets, inclusive of PPP loans originatedduring 2020, and the weighted average cost of interest-bearing liabilities.

(6) Net interest margin represents net interest income on a fully taxequivalent basis as a percentage of average interest-earning assets, inclusiveof PPP loans originated during 2020.

CAMBRIDGE BANCORP AND SUBSIDIARIES

MARGIN & YIELD ANALYSIS

Year Ended

December 31, 2020 December 31, 2019

Interest Rate Interest Rate

Average Income/ Earned Average Income/ Earned / / Balance Expenses Balance Expenses^ ^(1) Paid ^ ^(1) Paid ^ (1) (1)

(dollars in thousands)

ASSETS

Interest-earningassets

Loans ^(2)

Taxable $ 2,832,796 $ 119,447 4.22 % $ 1,952,374 $ 84,382 4.32 %

Tax-exempt 23,835 1,115 4.68 17,322 740 4.27

Securities availablefor sale ^(3)

Taxable 136,776 2,337 1.71 154,256 2,884 1.87

Securities held tomaturity

Taxable 152,789 3,711 2.43 204,909 5,079 2.48

Tax-exempt 89,841 3,145 3.50 75,432 2,897 3.84

Cash and cash 69,783 187 0.27 50,839 731 1.44equivalents

Totalinterest-earning 3,305,820 129,942 3.93 % 2,455,132 96,713 3.94 %assets ^(4)

Non interest-earning 245,316 162,529assets

Allowance for loan (27,887) (17,345)losses

Total assets $ 3,523,249 $ 2,600,316

LIABILITIES ANDSHAREHOLDERS' EQUITY

Interest-bearingdeposits

Checking accounts $ 554,000 $ 682 0.12 % $ 417,226 $ 440 0.11 %

Savings accounts 937,247 3,378 0.36 827,279 8,708 1.05

Money market accounts 350,117 1,277 0.36 189,836 2,481 1.31

Certificates of 259,568 1,958 0.75 221,299 4,012 1.81deposit

Totalinterest-bearing 2,100,932 7,295 0.35 % 1,655,640 15,641 0.94 %deposits

Subordinated debt 5,408 444 8.21 - - -

Other borrowed funds 123,693 1,406 1.14 86,712 2,002 2.31

Totalinterest-bearing 2,230,033 9,145 0.41 % 1,742,352 17,643 1.01 %liabilities

Non-interest-bearingliabilities

Demand deposits 838,653 567,500

Other liabilities 103,086 68,847

Total liabilities 3,171,772 2,378,699

Shareholders' equity 351,477 221,617

Total liabilities & $ 3,523,249 $ 2,600,316shareholders' equity

Net interest incomeon a fully taxable 120,797 79,070equivalent basis

Less taxable (895) (764)equivalent adjustment

Net interest income $ 119,902 $ 78,306

Net interest spread ^ 3.52 % 2.93 %(5)

Net interest margin ^ 3.65 % 3.22 %(6)

(1) Annualized on a fully taxable equivalent basis calculated using afederal tax rate of 21% in 2020 and 2019.

(2) Nonaccrual loans are included in average amounts outstanding.

(3) Average balances of securities available for sale calculated utilizingamortized cost.

(4) Federal Home Loan Bank stock balance is excluded from interest-earningassets and associated dividend income is excluded from interest income.

(5) Net interest spread represents the difference between the weightedaverage yield on interest-earning assets, inclusive of PPP loans originatedduring 2020, and the weighted average cost of interest-bearing liabilities.

(6) Net interest margin represents net interest income on a fully taxequivalent basis as a percentage of average interest-earning assets, inclusiveof PPP loans originated during 2020.

Organic Loan and Deposit Growth (dollars in thousands)

December 2020 vs December 2019

Organic Organic December 31, December 31, Balance Growth/ Growth/ 2020 2019 Acquired (Decline) $ (Decline) %

Loans

Residential $ 1,298,868 $ 917,566 $ 403,855 $ (22,553) (2.5%)mortgage

Commercial 1,358,962 1,060,574 290,909 7,479 0.7%mortgage

Home equity 106,194 80,675 36,213 (10,694) (13.3%)

Commercial & 223,654 133,236 106,664 (16,246) (12.2%)Industrial

Consumer 41,769 34,677 103 6,989 20.2%

Total loansexcluding $ 3,029,447 $ 2,226,728 $ 837,744 $ (35,025) (1.6%)PPP loans

PPP Loans 124,201 - 32,289 91,912 -(1)

Total loans $ 3,153,648 $ 2,226,728 $ 870,033 $ 56,887 2.6%

Deposits

Demand $ 1,006,132 $ 630,593 175,912 $ 199,627 31.7%

Interestbearing 625,650 450,098 49,944 125,608 27.9%checking

Money market 532,218 181,406 250,226 100,586 55.4%

Savings 984,262 914,499 72,700 (2,937) (0.3%)

Core 3,148,262 2,176,596 548,782 422,884 19.4%deposits

Certificates 254,821 182,282 212,096 (139,557) (76.6%)of deposit

Total $ 3,403,083 $ 2,358,878 $ 760,878 $ 283,327 12.0%deposits

(1) PPP loans are included within Commercial & Industrial on the face ofthe Balance Sheet.

GAAP to Non-GAAP Reconciliations(dollars in thousands except per share data)

Statement on Non-GAAP Measures: The Company believes the presentation of the following non-GAAP financial measures provides useful supplemental information that is essential to an investor's proper understanding of the results of operations and financial condition of the Company. Management uses non-GAAP financial measures in its analysis of the Company's performance. These non-GAAP measures should not be viewed as substitutes for the financial measures determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

Three Months Ended Twelve Months Ended

Operating Net Income / Operating December 31, September June 30, March 31, December 31, December 31, December 31,Diluted Earnings Per Share 2020 30, 2020 2020 2020 2019 2020 2019

(in thousands, except share data)

Net (Loss) Income (a GAAP measure) $ 13,014 $ 13,429 $ (1,716) $ 7,232 $ 7,109 $ 31,959 $ 25,257

Add: Merger and Capital issuance 581 1,168 4,366 253 841 6,368 4,721expenses

Add: (Gain) Loss on disposition - - (69) - - (69) 79of investment securities

Add: Provision established for - - 8,638 - - 8,638 -acquired Wellesley loans

Add: Branch and office closure 1,244 - - - - 1,244 -expenses

Tax effect of non-operating (486) (280) (3,441) (63) (28) (4,270) (901)adjustments^(1)

Operating Net Income (a $ 14,353 $ 14,317 $ 7,778 $ 7,422 $ 7,922 43,870 29,156non-GAAP measure)

Less: Dividends and UndistributedEarnings Allocated to Participating (63) (19) (4) (16) (57) (64) (243)Securities (GAAP)

Operating Income Applicable toCommon Shareholders (a non-GAAP $ 14,290 $ 14,298 $ 7,774 $ 7,406 $ 7,865 $ 43,806 $ 28,913measure)

Weighted Average Diluted Shares 6,970,542 6,954,324 5,912,889 5,432,099 4,980,439 6,344,409 4,661,720

Operating Diluted Earnings Per $ 2.05 $ 2.06 $ 1.31 $ 1.36 $ 1.58 $ 6.90 $ 6.20Share (a non-GAAP measure)

(1) The net tax benefit associated with nonoperating items is determined byassessing whether each nonoperating item is included or excluded from nettaxable income and applying the Company's combined marginal tax rate to onlythose items included in net taxable income. The tax effect for quarters endingMarch, June, and September 2020 have been updated to reflect the final taxdeductibility for the year.

December 31, September December 31, 2020 30, 2020 2019

(in thousands, except share data)

Tangible Common Equity:

Shareholders' equity (GAAP) $ 401,732 $ 393,073 $ 286,561

Less: Goodwill and acquisition (54,889) (54,980) (34,544)related intangibles (GAAP)

Tangible Common Equity (a 346,843 338,093 252,017non-GAAP measure)

Total assets (GAAP) 3,949,297 3,987,109 2,855,563

Less: Goodwill and acquisition (54,889) (54,980) (34,544)related intangibles (GAAP)

Tangible assets (a non-GAAP $ 3,894,408 $ 3,932,129 $ 2,821,019measure)

Tangible Common Equity Ratio (a 8.91 % 8.60 % 8.93 %non-GAAP measure)

Tangible Book Value Per Share:

Tangible Common Equity (a $ 346,843 $ 338,093 $ 252,017non-GAAP measure)

Common shares outstanding 6,926,728 6,928,288 5,400,868

Tangible Book Value Per Share (a $ 50.07 $ 48.80 $ 46.66non-GAAP measure)

Three Months Ended Twelve Months Ended

December 31, September 30, December 31, December 31, December 31, 2020 2020 2019 2020 2019

(in thousands, except share data)

EfficiencyRatio: (1)

Noninterest $ 27,127 $ 25,445 $ 21,428 $ 98,085 $ 78,175expense

Net interestand dividend 34,081 34,962 21,608 120,233 78,696income

Totalnoninterest 10,802 10,933 9,933 39,525 36,401income

Total revenue $ 44,883 $ 45,895 $ 31,541 $ 159,758 $ 115,097

Efficiency 60.44 % 55.44 % 67.94 % 61.40 % 67.92 %Ratio

OperatingEfficiencyRatio: (2)

Noninterest $ 27,127 $ 25,445 $ 21,428 $ 98,085 $ 78,175expense

Merger andcapitalissuance (581) (1,168) (841) (6,368) (4,721)expenses(Pretax)

Branch andoffice (1,244) - - (1,244) -closureexpenses

Operatingexpense (a 25,302 24,277 20,587 90,473 73,454non-GAAPmeasure)

Total revenue $ 44,883 $ 45,895 $ 31,541 $ 159,758 $ 115,097

Add:(Gain) Losson - - - (69) 79dispositionof investmentsecurities

Operatingrevenue (a $ 44,883 $ 45,895 $ 31,541 $ 159,689 $ 115,176non-GAAPmeasure)

OperatingEfficiencyRatio (a 56.37 % 52.90 % 65.27 % 56.66 % 63.78 %non-GAAPmeasure)

Three Months Ended Twelve Months Ended

December 31, September June 30, March 31, December 31, December 31, December 31, 2020 30, 2020 2020 2020 2019 2020 2019

(in thousands, except share data)

OperatingReturn onTangibleCommonEquity: (3)

Operating NetIncome (a $ 14,353 $ 14,317 $ 7,778 $ 7,422 $ 7,922 $ 43,870 $ 29,156non-GAAPmeasure)

Average $ 396,807 $ 387,723 $ 328,065 $ 291,203 $ 254,543 $ 351,477 $ 221,617common equity

AverageGoodwill andmerger (54,941) (55,030) (41,240) (34,508) (34,597) (46,476) (24,577)relatedintangibles

Averagetangible $ 341,866 $ 332,693 $ 286,825 $ 256,695 $ 219,946 $ 305,001 $ 197,040common equity

OperatingReturn onTangible 16.70 % 17.12 % 10.91 % 11.63 % 14.29 % 14.38 % 14.80 %Common Equity(a non-GAAPmeasure)

OperatingReturn onAverageAssets: (4)

Operating NetIncome (a $ 14,353 $ 14,317 $ 7,778 $ 7,422 $ 7,922 $ 43,870 $ 29,156non-GAAPmeasure)

Average $ 3,947,041 $ 3,990,764 $ 3,296,082 $ 2,848,101 $ 2,868,156 $ 3,523,249 $ 2,600,316assets

OperatingReturn onAverage 1.45 % 1.43 % 0.95 % 1.05 % 1.10 % 1.25 % 1.12 %Assets (anon-GAAPmeasure)

Three Months Ended Twelve Months Ended

December 31, September December 31, December 31, December 31, 2020 30, 2020 2019 2020 2019

(in thousands) (in thousands)

OperatingPre-TaxPre-Provision(PTPP) Income(5)

Income beforeincome taxes $ 17,876 $ 18,450 $ 9,782 $ 43,363 $ 33,918(GAAP)

Add: (Releaseof) Provision (120) 2,000 331 18,310 3,004for CreditLosses (GAAP)

Add:Nonoperating 1,825 1,168 841 7,612 4,721expenses(GAAP)

Add: (Gain)Loss ondisposition - - - (69) 79of investmentsecurities(GAAP)

OperatingPTPP Income $ 19,581 $ 21,618 $ 10,954 $ 69,216 $ 41,722(a non-GAAPmeasure)

Average 3,947,041 3,990,764 2,868,156 3,523,249 2,600,316assets

OperatingPTPP Returnon Average 1.97 % 2.16 % 1.52 % 1.96 % 1.60 %Assets (anon-GAAPmeasure)

(1) The efficiency ratio represents noninterest expense as a percentage ofthe sum of net interest and dividend income and noninterest income.

(2) Operating efficiency ratio represents operating expense as a percentageof operating revenue.

(3) Operating return on tangible common equity represents operating netincome as a percentage of average tangible common equity. Operating income forthe quarters ending March, June, and September 2020 have been updated toreflect the final tax deductibility for the year.

(4) Operating return on average assets represents operating net income as apercentage of average assets. Operating income for the quarters ending March,June, and September 2020 have been updated to reflect the final taxdeductibility for the year.

(5) Operating Pre-Tax Pre-Provision (PTPP) Income represents income beforeincome taxes adjusted for (release of) provision for credit losses,nonoperating expenses, and gain/loss on disposition of investment securities asa percentage of average assets.

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SOURCE Cambridge Bancorp