PR Newswire | Apr 21, 2021 08:02AM EDT

Dividend by 11%

04/21 07:00 CDT

Cambridge Bancorp Announces First Quarter 2021 Earnings and Increases Quarterly Dividend by 11% CAMBRIDGE, Mass., April 21, 2021

CAMBRIDGE, Mass., April 21, 2021 /PRNewswire/ -- Cambridge Bancorp (NASDAQ: CATC) (the "Company"), the parent company of Cambridge Trust Company (the "Bank"), today announced unaudited net income of $13,499,000 for the quarter ended March 31, 2021, an increase of $485,000, or 3.7%, as compared to net income of $13,014,000 for the quarter ended December 31, 2020. Diluted earnings per share were $1.92 for the first quarter of 2021, representing a 3.4% increase over diluted earnings per share of $1.86 for the quarter ended December 31, 2020.

First quarter 2021 highlights

* Financial performance ratios for the quarter ended March 31, 2021 were strong with Return on Average Assets ("ROA") of 1.35% and Operating Return on Tangible Common Shareholders' Equity ("ROTCE") of 15.65%. * Core deposit growth of $352.9 million, or 11.2%, to $3.50 billion at March 31, 2021. * Asset quality remains strong with ratios of non-performing loans to total loans of 0.23% and non-performing assets to total assets of 0.22%. Early-stage delinquency (30-89 days delinquent) at March 31, 2021 was 0.21% of total loans. * Originated 557 Paycheck Protection Program ("PPP") loans, amounting to $92.9 million, through the second round of the Small Business Administration's ("SBA") program, supporting an estimated 7,612 local jobs. * Tangible book value per share was $50.70 at March 31, 2021.

"The Cambridge Trust team continued to deliver support for our clients and our communities including participating in the second round of the PPP" noted Denis K. Sheahan, Chairman and CEO. "Financial performance in the first quarter remained strong and I am pleased to see strength in deposit growth, loan asset quality, and new business pipelines. I am also pleased to report a significant increase of 11% in the Company's quarterly common stock dividend."

Balance Sheet

Total assets increased by $303.9 million, or 7.7%, from $3.95 billion at December 31, 2020 and were $4.25 billion at March 31, 2021.

Total loans increased by $26.7 million, or 0.8%, from December 31, 2020 and amounted to $3.18 billion at March 31, 2021.

* Residential real estate loans decreased by $4.5 million, from $1.30 billion at December 31, 2020 to $1.29 billion at March 31, 2021 as a result of continued payoff activity. * Commercial real estate loans increased by $12.0 million, from $1.36 billion at December 31, 2020 to $1.37 billion at March 31, 2021. * Commercial and industrial loans, excluding PPP loans, decreased by $8.4 million from $223.7 million at December 31, 2020 to $215.3 million at March 31, 2021. * Loans under the SBA's PPP amounted to $165.7 million at March 31, 2021 and are included in commercial and industrial loans on the consolidated balance sheets. Approximately 78% of first round PPP loans have been or are in the process of being forgiven. Additionally, during the first quarter of 2021, the Company originated 557 second round PPP loans totaling $92.9 million.

Excluding PPP loans, total loans were lower by $14.8 million, or 0.5%, from December 31, 2020.

The Company's total investment securities portfolio increased by $140.1 million, or 28.9%, from $484.7 million at December 31, 2020 to $624.8 million at March 31, 2021 as the Company partially invested excess cash.

Total deposits increased by $327.0 million, or 9.6%, to $3.73 billion at March 31, 2021 from $3.40 billion at December 31, 2020.

* Core deposits, which the Company defines as all deposits other than certificates of deposit, increased by $352.9 million, or 11.2%, to $3.50 billion at March 31, 2021, reflective of growth from new and existing client relationships, as well as funds deposited with the Company as part of the second round of the SBA's PPP program. * Of the $327.0 million in total deposit growth, an estimated $91.4 million was related to the PPP program. * The cost of total deposits for the quarter ended March 31, 2021 was 0.15%, as compared to 0.17% for the quarter ended December 31, 2020, a reduction of two basis points. At March 31, 2021, the spot cost of deposits was 0.13%.

Net Interest and Dividend Income

For the quarter ended March 31, 2021, net interest and dividend income before the provision for loan losses decreased by $2.7 million, or 7.8%, to $31.4 million, as compared to $34.1 million for the quarter ended December 31, 2020.

This change was primarily due to less loan accretion associated with merger accounting and a decrease in deferred PPP loan income recognized on associated PPP loans forgiven by the SBA during the quarter. These decreases were partially offset by a lower cost of funds and higher average interest earning balances during the period.

The Company's net interest margin, on a fully taxable equivalent basis, decreased 32 basis points to 3.35% for the quarter ended March 31, 2021, as compared to 3.67% for the quarter ended December 31, 2020.

In order to provide greater disclosure of the impact of loan related merger accounting and the impact of the SBA's PPP loan program, a reconciliation of the Company's net interest margin, on a fully taxable equivalent basis, to an adjusted net interest margin, on a fully taxable equivalent basis, 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 March 31, 2021 was 3.16%, representing a 11 basis points decrease over the quarter ended December 31, 2020's adjusted net interest margin of 3.27%.

Three Months Ended

March 31, 2021

Interest Rate Average Income/ Earned/ Balance Expenses Paid

(dollars in thousands)

Total interest-earning assets (GAAP) $ 3,828,884

Net interest income on a fully taxable equivalent basis (GAAP) $ 31,639

Net interest margin (GAAP) 3.35 %

Less: Paycheck Protection Program loan impact (145,066) (1,596) -0.04 %

Less: Accretion of loan fair value adjustments (1,356) -0.15 %

Adjusted net interest margin on a fully taxable equivalent basis $ 3,683,818 $ 28,687 3.16 %

Less: Excess cash impact (1) (91,899) (23) 0.08 %

Normalized adjusted net interest margin on a fully taxable equivalent basis $ 3,591,919 $ 28,664 3.24 %

(1) Excess cash represents the estimated amount of average cash on the balancesheet that is above normal levels.

Provision for Credit Losses

During the three months ended March 31, 2021, the Company decreased its allowance for credit losses by recording a $206,000 release due to lower loan balances, excluding PPP loans, and changes in assumptions associated with economic factors and qualitative factors utilized within our methodology.

Noninterest Income

Total noninterest income remained consistent at $10.8 million for both quarters ended March 31, 2021 and December 31, 2020, with increases in wealth management revenue and loan related derivative income, partially offset by lower other income. Noninterest income was 25.7% of total revenue for the quarter ended March 31, 2021.

* Wealth management revenue increased by $87,000, or 1.1%, to $8.2 million for the first quarter of 2021, as compared to $8.1 million for the quarter ended December 31, 2020. Wealth Management Assets under Management and Administration were $4.27 billion at March 31, 2021, an increase of $99.4 million, or 2.4%, from December 31, 2020, primarily due to appreciation within the equity markets during the first quarter of 2021. * Loan related derivative income increased by $329,000, or 96.2%, to $671,000 for the first quarter of 2021, as compared to $342,000 for the quarter ended December 31, 2020, due to increased loan volume and fair value adjustments. * Other income decreased by $186,000 as compared to the quarter ended December 31, 2020, primarily due to reductions in commercial loan prepayment premiums during the quarter.

Noninterest Expense

Total noninterest expense decreased by $2.9 million, or 10.7%, to $24.2 million for the quarter ended March 31, 2021, as compared to $27.1 million for the quarter ended December 31, 2020, primarily driven by decreases in nonoperating expenses, salaries and employee benefits expense, and marketing expense.

* Nonoperating expenses decreased by $1.8 million, as the Company recorded merger and branch and office closure expenses during the fourth quarter of 2020. The Company did not record any nonoperating expenses during the quarter ended March 31, 2021. * Salaries and employee benefits expense decreased $628,000 driven by lower salary expense, lower short term incentive compensation, and higher amounts of deferred loan origination costs (in accordance with Accounting Standards Codification 310-20) partially offset by merit increases. * Marketing expense decreased by $192,000 due to timing.

Asset Quality

Non-performing loans totaled $7.4 million, or 0.23% of total loans outstanding at March 31, 2021. The allowance for credit losses was $35.6 million, or 1.18% of total loans outstanding excluding PPP loans at March 31, 2021, as compared to $36.0 million, or 1.19% of total loans outstanding excluding PPP loans at December 31, 2020.

The Company currently holds $1.8 million in real estate owned property, comprised of two properties, both of which are currently under agreement to be sold.

The Company recorded net loan recoveries of $20,000 for the quarter ended March 31, 2021, as compared to net loan recoveries of $174,000, or 0.02% of total loans (annualized), for the quarter ended December 31, 2020.

The following table shows additional and historical information regarding nonperforming assets, early-stage delinquency (30-89 days delinquent), and troubled debt restructurings:

Nonperforming Assets

March 31, 2021 December 31, 2020 March 31, 2020

(dollars in thousands)

Total nonperforming loans $ 7,363 $ 8,962 $ 3,379

Other real estate owned 1,820 1,820 2,457

Total nonperforming assets $ 9,183 $ 10,782 $ 5,836

Troubled debt restructurings:

Nonperforming (included in total non-performing loans $ 796 $ 811 $ 262above)

Performing - - -

Total troubled debt restructurings $ 796 $ 811 $ 262

Nonperforming loans/total loans 0.23 % 0.28 % 0.15 %

Nonperforming assets/total assets 0.22 % 0.27 % 0.20 %

TDRs/total loans 0.03 % 0.03 % 0.01 %

Additional Asset Quality Indicators

March 31, 2021 December 31, 2020 March 31, 2020

Delinquent loans 30-89 days past due/total loans 0.21 % 0.72 % 0.76 %

Quarterly net (charge-offs) recoveries/total loans (annualized) 0.00 % 0.02 % (0.05) %

Year-to-date net (charge-offs) recoveries/total loans 0.00 % (0.01) % (0.01) %

Allowance for credit losses/nonperforming loans 484.12 % 401.88 % 596.72 %

Allowance for credit losses/total loans excluding PPP loans 1.18 % 1.19 % 0.89 %

Forbearance/Modifications

The Company instituted payment deferral programs to aid existing borrowers with payment forbearance. For commercial and consumer borrowers, we have endeavored to provide payment relief for those who have been impacted by the COVID-19 pandemic and have requested payment assistance. The Company had 45 loans totaling $37.5 million on deferral, or 1.2% of total loans outstanding at March 31, 2021.

Income Taxes

The Company's effective tax rate was 26.0% for the quarter ended March 31, 2021, as compared to 27.2% for the quarter ended December 31, 2020.

Dividend & Capital

On April 20, 2021, the Company's Board of Directors declared a quarterly cash dividend of $0.61 per share, which is payable on May 20, 2021, to shareholders of record as of the close of business on May 6, 2021. This represents an increase of $0.06 per share, or 11%, as compared to the $0.55 per share dividend paid in the first quarter of 2021.

The Company's total shareholders' equity to total assets ratio decreased by 58 basis points to 9.59% at March 31, 2021, as compared to 10.17% at December 31, 2020. Book value per share grew by $0.57, or 1.0%, to $58.57 at March 31, 2021, as compared to $58.00 at December 31, 2020.

The Company's ratio of tangible common equity to tangible assets decreased to 8.41% at March 31, 2021 from 8.91% at December 31, 2020, primarily due to balance sheet growth and fair value changes. Tangible common equity to tangible assets, excluding PPP loans, decreased to 8.75% at March 31, 2021, as compared to 9.20% at December 31, 2020. Tangible book value per share grew by $0.63, or 1.3%, to $50.70 at March 31, 2021, as compared to $50.07 at December 31, 2020.

Investor Presentation:

An investor presentation is available on our investor relations website: ir.cambridgetrust.com or within the hyperlink provided below. This presentation includes additional detail regarding the Company's loan portfolio, liquidity position, and other financial disclosures. 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 $4.25 billion in assets at March 31, 2021, 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 $4.27 billion in client assets under management and administration at March 31, 2021. The Wealth Management group maintains offices in Boston and Wellesley, Massachusetts and Concord, Manchester, and Portsmouth, New Hampshire.

The accompanying unaudited consolidated interim 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 Bank & Trust Company and Wellesley Bancorp Inc. ("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 merger with Wellesley may not be fully realized or may take longer to realize than expected, operating costs, customer loss and business disruption following the merger with Wellesley, 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, 2020, which the Company filed on March 15, 2021. 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 (including and excluding PPP loans), operating return on average assets, operating return on tangible common equity, operating efficiency ratio, and operating pre-tax pre-provision income and 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), 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 nonoperating expenses and total revenue adjusted for gain/(loss) on disposition of investment securities), operating pre-tax pre-provision income over average assets (which is computed by dividing income before taxes adjusted by provision (release) for credit losses, non-operating expenses, and gain/(loss) on disposition of investment securities over average assets). The Company has included information on these non-GAAP financial measures because the Company 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 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 BancorpMichael F. CarotenutoChief Financial Officer617-520-5520

CAMBRIDGE BANCORP AND SUBSIDIARIES

UNAUDITED QUARTERLY RESULTS

Three Months Ended

March 31, December 31, March 31,

2021 2020 2020

(dollars in thousands, except per share data)

Interest and Dividend Income $ 32,821 $ 35,870 $ 26,095

Interest Expense 1,415 1,789 3,695

Net Interest and Dividend Income 31,406 34,081 22,400

Provision (Release) for Credit Losses (206) (120) 2,000

Noninterest Income 10,849 10,802 8,818

Noninterest Expense 24,219 27,127 19,925

Income Before Income Taxes 18,242 17,876 9,293

Income Tax Expense 4,743 4,862 2,061

Net Income $ 13,499 $ 13,014 $ 7,232

Operating Net Income* $ 13,499 $ 14,353 $ 7,422

Data Per Common Share:

Basic Earnings Per Share $ 1.95 $ 1.88 $ 1.34

Diluted Earnings Per Share 1.92 1.86 1.33

Operating Diluted Earnings Per Share* 1.92 2.05 1.36

Dividends Declared Per Share 0.55 0.53 0.53

Avg. Common Shares Outstanding:

Basic 6,907,861 6,897,450 5,397,040

Diluted 6,987,216 6,970,542 5,432,099

Selected Performance Ratios:

Net Interest Margin, FTE 3.35 % 3.67 % 3.39 %

Adjusted Net Interest Margin, FTE 3.16 % 3.27 % 3.30 %

Cost of Funds 0.15 % 0.19 % 0.56 %

Cost of Interest-Bearing Liabilities 0.23 % 0.29 % 0.80 %

Cost of Deposits 0.15 % 0.17 % 0.54 %

Cost of Deposits excluding Wholesale Deposits 0.14 % 0.15 % 0.53 %

Return on Average Assets 1.35 % 1.31 % 1.02 %

Return on Average Equity 13.53 % 13.05 % 9.99 %

Efficiency Ratio* 57.32 % 60.44 % 63.83 %

Operating Return on Average Assets* 1.35 % 1.45 % 1.05 %

Operating Return on Tangible Common Equity* 15.65 % 16.70 % 11.63 %

Operating Efficiency Ratio* 57.32 % 56.37 % 63.01 %

March 31, December 31, March 31,

2021 2020 2020

Total Assets $ 4,253,173 $ 3,949,297 $ 2,852,629

Total Loans 3,180,371 3,153,648 2,255,802

Total Deposits 3,730,065 3,403,083 2,390,359

Allowance for Credit Losses 35,646 36,016 20,163

Allowance to Total Loans (excluding PPP loans) 1.18 % 1.19 % 0.89 %

Non-Performing Loans 7,363 8,962 3,379

Non-Performing Loans/Total loans 0.23 % 0.28 % 0.15 %

QTD Net Recoveries (Charge-offs) to Total Loans (annualized) 0.00 % 0.02 % (0.05) %

Tangible Common Equity Ratio* 8.41 % 8.91 % 9.34 %

Tangible Common Equity Ratio (excluding PPP loans)* 8.75 % 9.20 % 9.34 %

Book Value Per Share $ 58.57 $ 58.00 $ 54.96

Tangible Book Value Per Share* $ 50.70 $ 50.07 $ 48.60

Wealth Management AUM 4,083,811 3,994,152 2,932,393

Wealth Management AUM & AUA 4,267,326 4,167,903 3,071,266

* See GAAP to Non-GAAP Reconciliations

CAMBRIDGE BANCORP AND SUBSIDIARIES

UNAUDITED CONSOLIDATED BALANCE SHEETS

March 31, 2021 December 31, 2020

(dollars in thousands, except par value)

Assets

Cash and cash equivalents $ 226,633 $ 75,785

Investment securities

Available for sale, at fair value (amortized cost $223,597 and $234,252, 222,452 237,030respectively)

Held to maturity, at amortized cost (fair value $408,450 and $260,139, 402,358 247,672respectively)

Total investment securities 624,810 484,702

Loans held for sale, at lower of cost or fair value 3,353 6,909

Loans

Residential mortgage 1,294,366 1,298,868

Commercial mortgage 1,370,948 1,358,962

Home equity 98,740 106,194

Commercial & Industrial 380,938 347,855

Consumer 35,379 41,769

Total loans 3,180,371 3,153,648

Less: allowance for credit losses on loans (35,646) (36,016)

Net loans 3,144,725 3,117,632

Federal Home Loan Bank of Boston Stock, at cost 5,064 5,734

Bank owned life insurance 46,365 46,169

Banking premises and equipment, net 17,815 18,158

Right-of-use asset operating leases 33,386 34,927

Deferred income taxes, net 11,242 11,639

Accrued interest receivable 8,871 9,514

Goodwill 51,912 51,912

Merger related intangibles, net 2,887 2,977

Other assets 76,110 83,239

Total assets $ 4,253,173 $ 3,949,297

Liabilities

Deposits

Demand $ 1,154,869 $ 1,006,132

Interest bearing checking 675,578 625,650

Money market 687,578 532,218

Savings 983,173 984,262

Certificates of deposit 228,867 254,821

Total deposits 3,730,065 3,403,083

Borrowings 17,608 32,992

Operating lease liabilities 35,837 37,448

Other liabilities 61,990 74,042

Total liabilities 3,845,500 3,547,565

Shareholders' Equity

Common stock, par value $1.00; Authorized: 10,000,000 shares; Outstanding: 6,960 6,9276,960,194 shares and 6,926,728 shares, respectively

Additional paid-in capital 226,841 226,967

Retained earnings 175,093 165,404

Accumulated other comprehensive income (loss) (1,221) 2,434

Total shareholders' equity 407,673 401,732

Total liabilities and shareholders' equity $ 4,253,173 $ 3,949,297

CAMBRIDGE BANCORP AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended

March 31, 2021 December 31, 2020 March 31, 2020

(dollars in thousands, except share data)

Interest and dividend income

Interest on taxable loans $ 30,325 $ 33,510 $ 23,338

Interest on tax-exempt loans 222 229 198

Interest on taxable investment securities 1,585 1,399 1,723

Interest on tax-exempt investment securities 658 658 595

Dividends on FHLB of Boston stock - 51 101

Interest on overnight investments 31 23 140

Total interest and dividend income 32,821 35,870 26,095

Interest expense

Interest on deposits 1,275 1,416 3,129

Interest on borrowed funds 140 182 566

Interest on subordinated debt - 191 -

Total interest expense 1,415 1,789 3,695

Net interest and dividend income 31,406 34,081 22,400

Provision (Release) for credit losses (206) (120) 2,000

Net interest and dividend income after provision for credit 31,612 34,201 20,400losses

Noninterest income

Wealth management revenue 8,151 8,064 6,627

Deposit account fees 474 506 791

ATM/Debit card income 333 362 307

Bank owned life insurance income 196 221 160

Gain on loans sold 569 666 119

Loan related derivative income 671 342 510

Other income 455 641 304

Total noninterest income 10,849 10,802 8,818

Noninterest expense

Salaries and employee benefits 16,045 16,673 13,016

Occupancy and equipment 3,576 3,583 2,807

Data processing 2,034 2,061 1,685

Professional services 1,272 1,081 859

Marketing 463 655 256

FDIC insurance 336 182 179

Nonoperating expenses - 1,825 253

Other expenses 493 1,067 870

Total noninterest expense 24,219 27,127 19,925

Income before income taxes 18,242 17,876 9,293

Income tax expense 4,743 4,862 2,061

Net income $ 13,499 13,014 7,232

Share data:

Weighted average number of shares outstanding, basic 6,907,861 6,897,450 5,397,040

Weighted average number of shares outstanding, diluted 6,987,216 6,970,542 5,432,099

Basic earnings per share $ 1.95 $ 1.88 $ 1.34

Diluted earnings per share $ 1.92 $ 1.86 $ 1.33

CAMBRIDGE BANCORP AND SUBSIDIARIES

MARGIN & YIELD ANALYSIS

Three Months Ended

March 31, 2021 December 31, 2020 March 31, 2020

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

(dollars in thousands)

ASSETS

Interest-earning assets

Loans ^(2)

Taxable $ 3,142,319 $ 30,325 3.91 % $ 3,174,185 $ 33,510 4.20 % $ 2,204,862 $ 23,338 4.26 %

Tax-exempt 26,279 281 4.34 26,413 290 4.37 23,605 250 4.26

Securities available for sale ^(3)

Taxable 229,693 694 1.23 167,583 596 1.41 133,402 660 1.99

Securities held to maturity

Taxable 183,678 891 1.97 135,764 803 2.35 169,433 1,063 2.52

Tax-exempt 102,348 832 3.30 100,464 833 3.30 83,193 754 3.65

Cash and cash equivalents 144,567 31 0.09 106,449 23 0.09 59,845 140 0.94

Total interest-earning assets ^(4) 3,828,884 33,054 3.50 % 3,710,858 36,055 3.87 % 2,674,340 26,205 3.94 %

Non interest-earning assets 259,248 272,011 192,184

Allowance for credit losses (35,988) (35,828) (18,423)

Total assets $ 4,052,144 $ 3,947,041 $ 2,848,101

LIABILITIES ANDSHAREHOLDERS' EQUITY

Interest-bearing deposits

Checking accounts $ 632,754 $ 83 0.05 % $ 638,847 $ 150 0.09 % $ 457,189 $ 159 0.14 %

Savings accounts 977,415 272 0.11 980,172 581 0.24 888,973 1,772 0.80

Money market accounts 586,142 537 0.37 498,483 443 0.35 193,048 449 0.94

Certificates of deposit 239,356 383 0.65 285,694 242 0.34 187,318 749 1.61

Total interest-bearing 2,435,667 1,275 0.21 2,403,196 1,416 0.23 1,726,528 3,129 0.73deposits

Subordinated debt - - - 8,346 191 9.10 - - -

Other borrowed funds 22,009 140 2.58 52,106 182 1.39 127,389 566 1.79

Total interest-bearing 2,457,676 1,415 0.23 % 2,463,648 1,789 0.29 % 1,853,917 3,695 0.80 %liabilities

Non-interest-bearing liabilities

Demand deposits 1,085,048 971,837 622,892

Other liabilities 104,744 114,749 80,089

Total liabilities 3,647,468 3,550,234 2,556,898

Shareholders' equity 404,676 396,807 291,203

Total liabilities & shareholders' $ 4,052,144 $ 3,947,041 $ 2,848,101equity

Net interest income on a fully 31,639 34,266 22,510taxable equivalent basis

Less taxable equivalent adjustment (233) (236) (211)

Net interest income $ 31,406 $ 34,030 $ 22,299

Net interest spread ^(5) 3.27 % 3.58 % 3.14 %

Net interest margin ^(6) 3.35 % 3.67 % 3.39 %

(1) Annualized on a fully taxable equivalent basis calculated using a federal tax rate of 21% in 2021 and 2020.

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

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

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

Net interest spread represents the difference between the weighted average (5) yield on interest-earning assets, inclusive of PPP loans originated during 2020 and 2021, and the weighted average cost of interest-bearing liabilities.

Net interest margin represents net interest income on a fully tax (6) equivalent basis as a percentage of average interest-earning assets, inclusive of PPP loans originated during 2020 and 2021.

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

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

Three Months Ended

Operating Net Income / Operating Diluted Earnings Per Share March 31, 2021 December 31, 2020 March 31, 2020

(in thousands, except share data)

Net Income (a GAAP measure) $ 13,499 $ 13,014 $ 7,232

Add: Merger expenses - 581 253

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

Tax effect of non-operating adjustments ^(1) - (486) (63)

Operating Net Income (a non-GAAP measure) $ 13,499 $ 14,353 $ 7,422

Less: Dividends and Undistributed Earnings Allocated to ParticipatingSecurities (57) (63) (16)(GAAP)

Operating Income Applicable to Common Shareholders (a non-GAAP measure) $ 13,442 $ 14,290 $ 7,406

Weighted Average Diluted Shares 6,987,216 6,970,542 5,432,099

Operating Diluted Earnings Per Share (a non-GAAP measure) $ 1.92 $ 2.05 $ 1.36

(1) The net tax benefit associated with nonoperating items is determined byassessing whether each nonoperating item is included or excluded from net taxable income and applying the Company's combinedmarginal tax rate to only those items included in net taxable income. The tax effect for the three months ended March 31,2020 has been updated to reflect the final tax deductibility for the year.

March 31, 2021 December 31, 2020 March 31, 2020

(in thousands)

Tangible Common Equity:

Shareholders' equity (GAAP) $ 407,673 $ 401,732 $ 297,759

Less: Goodwill and acquisition related intangibles (GAAP) (54,799) (54,889) (34,454)

Tangible Common Equity (a non-GAAP measure) 352,874 346,843 263,305

Total assets (GAAP) 4,253,173 3,949,297 2,852,629

Less: Goodwill and acquisition related intangibles (GAAP) (54,799) (54,889) (34,454)

Tangible assets (a non-GAAP measure) $ 4,198,374 $ 3,894,408 $ 2,818,175

Tangible Common Equity Ratio (a non-GAAP measure) 8.41 % 8.91 % 9.34 %

Tangible Common Equity (excluding PPP loans):

Tangible Common Equity (a non-GAAP measure) $ 352,874 $ 346,843 $ 263,305

Tangible assets (a non-GAAP measure) 4,198,374 3,894,408 2,818,175

Less: PPP loans (165,679) (124,201) -

Tangible assets (excluding PPP loans) (a non-GAAP measure) $ 4,032,695 $ 3,770,207 $ 2,818,175

Tangible Common Equity Ratio (excluding PPP loans) (a 8.75 % 9.20 % 9.34 %non-GAAP measure)

Tangible Book Value Per Share:

Tangible Common Equity (a non-GAAP measure) $ 352,874 $ 346,843 $ 263,305

Common shares outstanding 6,960,194 6,926,728 5,417,983

Tangible Book Value Per Share (a non-GAAP measure) $ 50.70 $ 50.07 $ 48.60

March 31, 2021 December 31, 2020 March 31, 2020

(in thousands, except share data)

Efficiency Ratio: (1)

Noninterest expense $ 24,219 $ 27,127 $ 19,925

Net interest and dividend income 31,406 34,081 22,400

Total noninterest income 10,849 10,802 8,818

Total revenue $ 42,255 $ 44,883 $ 31,218

Efficiency Ratio 57.32 % 60.44 % 63.83 %

Operating Efficiency Ratio: (2)

Noninterest expense $ 24,219 $ 27,127 $ 19,925

Merger expenses (Pretax) - (581) (253)

Branch and office closure expenses - (1,244) -

Operating expense (a non-GAAP measure) 24,219 25,302 19,672

Total revenue $ 42,255 $ 44,883 $ 31,218

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

Operating revenue (a non-GAAP measure) $ 42,255 $ 44,883 $ 31,218

Operating Efficiency Ratio (a non-GAAP measure) 57.32 % 56.37 % 63.01 %

Three Months Ended

March 31, 2021 December 31, 2020 March 31, 2020

(in thousands, except share data)

Operating Return on Tangible Common Equity: (3)

Operating Net Income (a non-GAAP measure) $ 13,499 $ 14,353 $ 7,422

Average common equity $ 404,676 $ 396,807 $ 291,203

Average goodwill and merger related intangibles (54,847) (54,941) (34,508)

Average tangible common equity (a non-GAAP measure) $ 349,829 $ 341,866 $ 256,695

Operating Return on Tangible Common Equity (a non-GAAP 15.65 % 16.70 % 11.63 %measure)

Operating Return on Average Assets: (4)

Operating Net Income (a non-GAAP measure) $ 13,499 $ 14,353 $ 7,422

Average assets $ 4,052,144 $ 3,947,041 $ 2,848,101

Operating Return on Average Assets (a non-GAAP measure) 1.35 % 1.45 % 1.05 %

Three Months Ended

March 31, 2021 December 31, 2020 March 31, 2020

(in thousands)

Operating Pre-Tax Pre-Provision (PTPP) Income (5)

Income before income taxes (GAAP) $ 18,242 $ 17,876 $ 9,293

Add Provision (Release) for Credit Losses (GAAP) (206) (120) 2,000

Add: Nonoperating expenses (GAAP) - 1,825 253

Operating PTPP Income (a non-GAAP measure) $ 18,036 $ 19,581 $ 11,546

Average assets 4,052,133 3,947,041 2,848,101

Operating PTPP Return on Average Assets (a non-GAAP 1.81 % 1.97 % 1.63 %measure)

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

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

(3) Operating return on tangible common equity represents operating net income as a percentage of average tangible common equity.

(4) Operating return on average assets represents operating net income as a percentage of average assets.

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

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SOURCE Cambridge Bancorp