PR Newswire | Oct 19, 2021 07:01AM EDT

Declares Dividend

10/19 06:00 CDT

Cambridge Bancorp Announces Operating Results for the Third Quarter and Declares Dividend CAMBRIDGE, Mass., Oct. 19, 2021

CAMBRIDGE, Mass., Oct. 19, 2021 /PRNewswire/ -- Cambridge Bancorp (NASDAQ: CATC) (the "Company"), the parent company of Cambridge Trust Company (the "Bank"), today announced unaudited net income of $13.3 million for the quarter ended September 30, 2021, a decrease of $625,000, or 4.5%, as compared to net income of $13.9 million for the quarter ended June 30, 2021. Diluted earnings per share were $1.89 for the quarter ended September 30, 2021, representing a 4.5% decrease as compared to diluted earnings per share of $1.98 for the quarter ended June 30, 2021, primarily as result of non-operating expenses and lower loan fair value accretion between the periods.

For the nine months ended September 30, 2021, unaudited net income was $40.8 million, representing an increase of $21.8 million, or 115.2%, as compared to net income of $18.9 million for the nine months ended September 30, 2020. Diluted earnings per share were $5.80 for the nine months ended September 30, 2021, representing an 87.7% increase as compared to diluted earnings per share of $3.09 for the nine months ended September 30, 2020. Net income for the nine months ended September 30, 2020, was impacted by various items resulting from the Company's merger with Wellesley Bancorp Inc. ("Wellesley") on June 1, 2020, and the effect of the COVID-19 pandemic on the Company's allowance for credit losses.

During the third quarter of 2021, the Company closed its Wellesley Square, Massachusetts and Pease Tradeport, New Hampshire branch locations and relocated its Concord, New Hampshire wealth management location. The Company recorded $787,000 of expenses associated with the branch closures and relocation within non-operating expenses during the third quarter of 2021.

Operating net income for both quarters ended September 30, 2021, and June 30, 2021, which exclude non-operating expenses was $13.9 million. Operating diluted earnings per share were $1.97 for the quarter ended September 30, 2021, representing a 0.5% decrease as compared to operating diluted earnings per share of $1.98 for the quarter ended June 30, 2021.

Operating net income was $41.3 million for the nine months ended September 30, 2021, an increase of $11.8 million, or 40.0%, as compared to operating net income of $29.5 million for the nine months ended September 30, 2020. Operating diluted earnings per share were $5.89 for the nine months ended September 30, 2021, representing a 21.9% increase as compared to operating diluted earnings per share of $4.83 for the nine months ended September 30, 2020.

Third quarter 2021 highlights

* Financial performance ratios for the quarter ended September 30, 2021, were strong with Operating Return on Average Assets ("ROA") of 1.25% and Operating Return on Tangible Common Shareholders' Equity ("ROTCE") of 14.92%. * Total loans, excluding loans under the Small Business Administration's ("SBA") Paycheck Protection Program ("PPP"), increased by $68.6 million, or 2.2%, from June 30, 2021, to $3.24 billion at September 30, 2021. * Core deposit growth of $193.1 million, or 5.4%, from the quarter ended June 30, 2021. * Asset quality at September 30, 2021, remained excellent with ratios of non-performing loans to total loans and non-performing assets to total assets at 0.18% and 0.13%, respectively. * Tangible book value per share at September 30, 2021 has increased to $53.54.

"During the third quarter, the Company continued to capitalize on the market opportunity in front of us. We saw growth within core deposits, loans, and wealth assets while maintaining strong asset quality," noted Denis K. Sheahan, Chairman and CEO. "Financial results were solid and I am pleased to see continued strength in our new business pipelines."

Balance Sheet

Total assets increased by $534.3 million, or 13.5%, from $3.95 billion at December 31, 2020 to $4.48 billion at September 30, 2021.

Total loans increased by $147.3 million, or 4.7%, from $3.15 billion at December 31, 2020 to $3.30 billion at September 30, 2021. Excluding PPP loans, total loans increased by $212.7 million, or 7.0%, from December 31, 2020.

* Residential real estate loans increased by $82.5 million, from $1.30 billion at December 31, 2020, to $1.38 billion at September 30, 2021. * Commercial real estate loans increased by $115.7 million, from $1.36 billion at December 31, 2020, to $1.47 billion at September 30, 2021. * Commercial and industrial loans, excluding PPP loans, increased by $33.5 million, from $223.7 million at December 31, 2020, to $257.1 million at September 30, 2021. * PPP loans were $58.8 million at September 30, 2021, and are included in commercial and industrial loans on the consolidated balance sheets. Approximately 98.6% of first round and 43.8% of second round PPP loans have been or are in the process of being forgiven.

The Company's total investment securities portfolio increased by $392.6 million, or 81.0%, from $484.7 million at December 31, 2020, to $877.3 million at September 30, 2021, as the Company invested excess cash.

Total deposits increased by $531.8 million, or 15.6%, to $3.93 billion at September 30, 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 $595.5 million, or 18.9%, to $3.74 billion at September 30, 2021, as a result of growth from new and existing client relationships. * The cost of total deposits was 0.11% for both the quarters ended September 30, 2021, and June 30, 2021. The cost of total deposits for the nine months ended September 30, 2021, was 0.12%, as compared to 0.28% for the nine months ended September 30, 2020, a reduction of 16 basis points. At September 30, 2021, the spot cost of deposits was 0.13%.

Net Interest and Dividend Income

Net interest and dividend income, before the provision for (release of) credit losses, was essentially unchanged at $32.4 million for the quarters ended September 30, 2021, and June 30, 2021.

For the nine months ended September 30, 2021, net interest and dividend income before the provision for (release of) credit losses increased by $10.1 million, or 11.7%, to $96.2 million as compared to $86.2 million for the nine months ended September 30, 2020. This increase was primarily due to higher deferred PPP loan income recognized on PPP loans forgiven by the SBA during the period and a lower cost of funds, partially offset by lower loan accretion associated with merger accounting and lower yields on interest-earning assets during the period.

The Company's net interest margin on a fully taxable equivalent basis decreased by 15 basis points to 3.10% for the quarter ended September 30, 2021, as compared to 3.25% for the quarter ended June 30, 2021.

The Company's net interest margin on a fully taxable equivalent basis decreased by 42 basis points to 3.23% for the nine months ended September 30, 2021, as compared to 3.65% for nine months ended September 30, 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, on a fully taxable equivalent basis, for the quarter ended September 30, 2021, was 2.92%, representing a nine basis point decrease from the adjusted net interest margin, on a fully taxable equivalent basis, of 3.01% for the quarter ended June 30, 2021.

Three Months Ended

September 30, 2021

Average Interest Rate Balance Income/ Earned/ Expenses Paid

(dollars in thousands)

Total interest-earning assets (GAAP) $4,180,369

Net interest income on a fully taxable equivalent basis (GAAP) $32,688

Net interest margin on a fully taxable equivalent basis (GAAP) 3.10 %

Less: Paycheck Protection Program loan impact (81,880) (1,558) -0.09 %

Less: Accretion of loan fair value adjustments (1,014) -0.09 %

Adjusted net interest margin on a fully taxable equivalent basis $4,098,489$30,116 2.92 %

Less: Excess cash impact (1) (60,884) (23) 0.04 %

Normalized adjusted net interest margin on a fully taxable equivalent basis$4,037,605$30,093 2.96 %



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

Excluding the impact of merger related loan accretion and the impact of PPP loans, the adjusted net interest margin, on a fully taxable equivalent basis, for the nine months ended September 30, 2021, was 3.02%, representing a 37 basis point decrease from the adjusted net interest margin, on a fully taxable equivalent basis, of 3.39% for the nine months ended September 30, 2020.

Nine Months Ended

September 30, 2021

Average Interest Rate Balance Income/ Earned/ Expenses Paid

(dollars in thousands)

Total interest-earning assets (GAAP) $ 4,012,805

Net interest income on a fully taxable equivalent basis (GAAP) $ 96,938

Net interest margin on a fully taxable equivalent basis (GAAP) 3.23 %

Less: Paycheck Protection Program loan impact (125,006) (4,876) -0.06 %

Less: Accretion of loan fair value adjustments (4,142) -0.15 %

Adjusted net interest margin on a fully taxable equivalent basis $ 3,887,799 $ 87,920 3.02 %

Less: Excess cash impact (1) (77,594) (87) 0.06 %

Normalized adjusted net interest margin on a fully taxable equivalent $ 3,810,205 $ 87,833 3.08 % basis



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

Provision for Credit Losses

During the three months ended September 30, 2021, the Company recorded a provision for credit losses of $86,000 as a result of the Company's loan growth during the quarter, partially offset by improving forward-looking economic assumptions and the resulting decrease in loss expectations in the Company's allowance for credit losses modeling. For the nine months ended September 30, 2021, the Company recorded a release of the provision for credit losses of $1.0 million, as compared to a $18.4 million provision for credit losses for the nine months ended September 30, 2020, which included $9.3 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 increased by $209,000, or 1.9%, to $11.1 million for the quarter ended September 30, 2021, as compared to $10.9 million for the quarter ended June 30, 2021. This change was primarily the result of an increase in wealth management revenue, partially offset by a decrease in gain on loans sold and lower loan related derivative income. Noninterest income was 25.5% of total revenue for the quarter ended September 30, 2021.

* Wealth management revenue increased by $615,000, or 7.1%, to $9.2 million for the third quarter of 2021, as compared to $8.6 million for the second quarter of 2021, primarily due to the seasonal impact of $450,000 in tax preparation fees recognized for the quarter. Wealth Management Assets under Management and Administration were $4.5 billion at September 30, 2021, an increase of 1%, from June 30, 2021, primarily due to appreciation within the equity markets. * Gain on loans sold decreased by $120,000, or 72.7%, to $45,000 for the third quarter of 2021, as compared to $165,000 for the second quarter of 2021 due to decreased sales of residential mortgages. * Loan related derivative income decreased by $177,000, or 31.2%, to $390,000 for the third quarter of 2021 as compared to $567,000 for the second quarter of 2021.

Total noninterest income increased by $4.1 million, or 14.4%, to $32.9 million for the nine months ended September 30, 2021, as compared to $28.7 million for the nine months ended September 30, 2020. This change was primarily a result of increases in wealth management revenue and loan related derivative income partially offset by decreases in deposit account fees and gain on loans sold. Noninterest income was 25.5% of total revenue for the nine months ended September 30, 2021.

* Wealth management revenue increased by $4.3 million, or 19.9%, to $26.0 million for the nine months ended September 30, 2021, as compared to $21.7 million for the nine months ended September 30, 2020, primarily due to appreciation within the equity market. * Loan related derivative income increased by $491,000, or 43.2%, to $1.6 million for the nine months ended September 30, 2021, as compared to $1.1 million for the nine months ended September 30, 2020, due to increased loan volume combined with fair value adjustments. * Deposit account fees decreased by $669,000, or 32.0%, to $1.4 million for the nine months ended September 30, 2021, as compared to $2.1 million for the nine months ended September 30, 2020, primarily due to a decrease in fee revenue from commercial deposit sweep products as a result of lower interest rates. * Gain on loans sold decreased by $406,000, or 34.3%, to $779,000 for the nine months ended September 30, 2021, as compared to $1.2 million for the nine months ended September 30, 2020 due to decreased sales of residential mortgages.

Noninterest Expense

Total noninterest expense increased by $251,000, or 1.0%, to $25.5 million for the quarter ended September 30, 2021, as compared to $25.3 million for the quarter ended June 30, 2021, primarily driven by an increase in non-operating expenses, partially offset by marketing expenses.

* Non-operating expenses of $787,000 during the quarter were primarily the result of branch closures and relocation expenses associated with the locations discussed above. The Company did not record any non-operating expenses during the quarter ended June 30, 2021. * Marketing expense decreased by $345,000, or 36.2%, to $608,000 for the quarter ended September 30, 2021, as compared to $953,000 for the quarter ended June 30, 2021, primarily driven by the timing of the Company's marketing campaigns.

Total noninterest expense increased by $4.1 million, or 5.7%, to $75.0 million for the nine months ended September 30, 2021, as compared to $71.0 million for the nine months ended September 30, 2020, primarily driven by increases in salaries and employee benefits expense, occupancy and equipment expense, and professional fees, partially offset by a decrease in non-operating expenses.

* Salaries and employee benefits expense increased by $6.6 million, or 15.6%, primarily related to the merger with Wellesley in the second quarter of 2020, additions to support business initiatives, normal merit increases, and increases in employee benefit costs. * Occupancy and equipment expense increased by $961,000, or 10.2%, primarily as a result of additional branches and office space arising from the merger with Wellesley. * Professional services increased by $929,000, or 29.9%, primarily due to increased consulting fees associated with the wealth management system conversion anticipated in the fourth quarter of 2021 and employment agency costs. * Non-operating expenses decreased by $5.0 million, or 86.4% primarily due to one-time non-operating costs associated with the Wellesley merger that were incurred in 2020.

Asset Quality

Non-performing loans totaled $5.9 million, or 0.18% of total loans outstanding, at September 30, 2021. The allowance for credit losses was $35.2 million, or 1.09% of total loans outstanding excluding PPP loans, at September 30, 2021, as compared to $35.0 million, or 1.10% of total loans outstanding excluding PPP loans, at June 30, 2021.

The Company recorded net loan recoveries of $76,000, or 0.01% of total loans (annualized), for the quarter ended September 30, 2021, as compared to net loan recoveries of $46,000, or 0.01% of total loans (annualized), for the quarter ended June 30, 2021.

Net loan recoveries were $142,000, or 0.00% of total loans, for the nine months ended September 30, 2021, as compared to net charge-offs of $613,000, or 0.02% of total loans, for the nine months ended September 30, 2020.

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

Nonperforming Assets

September June 30, December September 30, 2021 31, 2020 30, 2020 2021

(dollars in thousands)

Total nonperforming loans $5,851 $5,463 $8,962 $9,189

Other real estate owned - - 1,820 1,820

Total nonperforming assets $5,851 $5,463 $10,782 $11,009

Troubled debt restructurings ("TDRs"):

Non-performing (included in total non-performing loans above) $767 $782 $811 $811

Performing - - - -

Total troubled debt restructurings $767 $782 $811 $811

Nonperforming loans/total loans 0.18 % 0.17 % 0.28 % 0.28 %

Nonperforming assets/total assets 0.13 % 0.13 % 0.27 % 0.28 %

TDRs/total loans 0.02 % 0.02 % 0.03 % 0.02 %



Additional Asset Quality Indicators

September June 30, December September 30, 2021 31, 2020 30, 2020 2021

Delinquent loans 30-89 days past due/total loans 0.54 % 0.39 % 0.72 % 0.40 %

Quarterly net recoveries (charge-offs)/total loans (annualized) 0.01 % 0.01 % 0.02 % (0.03) %

Year to date net recoveries (charge-offs)/total loans 0.00 % 0.00 % (0.01)% (0.02) %

Allowance for credit losses/nonperforming loans 602.14 % 641.21% 401.88% 390.90 %

Allowance for credit losses/total loans ex. PPP loans 1.09 % 1.10 % 1.19 % 1.16 %

Forbearance/Modifications

The Company instituted payment deferral programs to aid borrowers with payment forbearance during the pandemic. For commercial and consumer borrowers, the Company provided payment relief for those who were impacted by the COVID-19 pandemic and had requested payment assistance. The Company had four loans totaling $4.3 million on deferral, or 0.13% of total loans outstanding, at September 30, 2021.

Income Taxes

The Company's effective tax rate was 25.7% for the quarter ended September 30, 2021, as compared to 26.3% for the quarter ended June 30, 2021. For the nine months ended September 30, 2021, the Company's effective tax rate was 26.0%, as compared to 25.7% for the nine months ended September 30, 2020.

Dividend and Capital

On October 18, 2021, the Company's Board of Directors declared a quarterly cash dividend of $0.61 per share, which is payable on November 18, 2021, to shareholders of record as of the close of business on November 4, 2021. The Company did not repurchase any shares under its previously announced share repurchase program during the three and nine months ended September 30, 2021.

The Company's ratio of tangible common equity to tangible assets decreased to 8.42% at September 30, 2021, from 8.59% at June 30, 2021, primarily due to strong asset growth during the quarter ended September 30, 2021. Tangible common equity to tangible assets, excluding PPP loans, decreased to 8.53% at September 30, 2021, as compared to 8.81% at June 30, 2021. Tangible book value per share grew by $1.17, or 2.2%, to $53.54 at September 30, 2021, as compared to $52.37 at June 30, 2021.

Investor Conference Call and Investor Presentation

An investor presentation is available on the investor relations section of the Company's website: http://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.

Cambridge Bancorp will also conduct a conference call/webcast at 11:00 a.m. Eastern Time on Tuesday, October 19, 2021, to discuss the results for the quarter. Participants are encouraged to pre-register for the conference call using the following link: https://dpregister.com/sreg/10159311/ec0eae866c.

Callers who pre-register will be given dial-in instructions and a unique PIN to gain immediate access to the call. Participants may pre-register at any time prior to the call and will immediately receive simple instructions via email. Additionally, participants may reach the registration link and access the webcast by logging in through the investor section of the Company's website at http://ir.cambridgetrust.com.

Those parties who do not have Internet access, or are otherwise unable to pre-register for this event, may still participate at the above time by dialing 1-866-777-2509 and asking the operator to join the Cambridge Bancorp (CATC) earnings call. Participants are requested to dial-in a few minutes before the scheduled start of the call. The webcast will be archived for three months on our investor relations website at https://ir.cambridgetrust.com/news-market-information/presentations/default.aspx.

About Cambridge Bancorp

Cambridge Bancorp, the parent company of Cambridge Trust Company, is based in Cambridge, Massachusetts. Cambridge Trust Company is a 131-year-old Massachusetts chartered commercial bank with approximately $4.5 billion in assets at September 30, 2021, and a total of 19 Massachusetts and New Hampshire locations. Cambridge Trust Company is one of New England's leaders in private banking and wealth management with $4.5 billion in client assets under management and administration at September 30, 2021. 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 http://ir.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 that 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; a prolonged resurgence in the severity of the COVID-19 pandemic due to variants and mutations of the virus; the pace of recovery when the COVID-19 pandemic subsides; challenges from the integration of the Company 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 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 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 and acquisition 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 an 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 non-operating 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 for the 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 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 non-operating 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 QUARTERLY UNAUDITED RESULTS



Three Months Ended Nine Months Ended

September 30, June 30, September 30, September 30,

2021 2021 2020 2021 2020

(dollars in thousands, except per share data)

Interest and Dividend Income $ 33,654 $33,528 $ 36,881 $ 100,003 $93,506

Interest Expense 1,233 1,147 1,919 3,795 7,355

Net Interest and Dividend Income 32,421 32,381 34,962 96,208 86,151

Provision for (Release of) for Credit Losses 86 (901) 2,000 (1,021) 18,430

Noninterest Income 11,115 10,906 10,933 32,870 28,723

Noninterest Expense 25,524 25,273 25,445 75,016 70,958

Income Before Income Taxes 17,926 18,915 18,450 55,083 25,486

Income Tax Expense 4,607 4,971 5,021 14,321 6,542

Net Income $ 13,319 $13,944 $ 13,429 $ 40,762 $18,944



Operating Net Income* $ 13,887 $13,944 $ 14,317 $ 41,330 $29,528



Data Per Common Share:

Basic Earnings Per Share $ 1.91 $2.00 $ 1.94 $ 5.86 $3.11

Diluted Earnings Per Share 1.89 1.98 1.93 5.80 3.09

Operating Diluted Earnings Per Share* 1.97 1.98 2.06 5.89 4.83

Dividends Declared Per Share 0.61 0.61 0.53 1.77 1.59

Average Common Shares Outstanding:

Basic 6,932,882 6,930,268 6,918,692 6,924,168 6,078,586

Diluted 6,999,773 6,998,936 6,954,324 6,991,175 6,113,828



Selected Performance Ratios:

Net Interest Margin, FTE 3.10 % 3.25 % 3.73 % 3.23 % 3.65 %

Adjusted Net Interest Margin, FTE 2.92 % 3.01 % 3.41 % 3.02 % 3.39 %

Cost of Funds 0.12 % 0.11 % 0.20 % 0.13 % 0.31 %

Cost of Interest-Bearing Liabilities 0.18 % 0.18 % 0.31 % 0.20 % 0.46 %

Cost of Deposits 0.11 % 0.11 % 0.16 % 0.12 % 0.28 %

Cost of Deposits excluding Wholesale Deposits 0.11 % 0.11 % 0.14 % 0.12 % 0.26 %

Return on Average Assets 1.20 % 1.32 % 1.34 % 1.29 % 0.75 %

Return on Average Equity 12.47 % 13.57 % 13.78 % 13.17 % 7.53 %

Efficiency Ratio* 58.63 % 58.38 % 55.44 % 58.12 % 61.77 %

Operating Return on Average Assets* 1.25 % 1.32 % 1.43 % 1.31 % 1.17 %

Operating Return on Tangible Common Equity* 14.92 % 15.64 % 17.12 % 15.40 % 13.48 %

Operating Efficiency Ratio* 56.82 % 58.38 % 52.90 % 57.51 % 56.77 %



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

2021 2021 2020 2020

(dollars in thousands, except per share data)

Total Assets $ 4,483,567 $4,303,287 $ 3,949,297 $ 3,987,109

Total Loans 3,300,918 3,281,149 3,153,648 3,284,286

Total Deposits 3,934,846 3,764,558 3,403,083 3,331,942

Allowance for Credit Losses 35,231 35,029 36,016 35,920

Allowance to Total Loans (ex. PPP) 1.09 % 1.10 % 1.19 % 1.16 %

Non-Performing Loans 5,851 5,463 8,962 9,189

Non-Performing Loans/Total loans 0.18 % 0.17 % 0.28 % 0.28 %

QTD Net Recoveries (Charge-offs) to Total Loans 0.01 % 0.01 % 0.02 %(0.03) % (annualized)

Tangible Common Equity Ratio* 8.42 % 8.59 % 8.91 % 8.60 %

Tangible Common Equity Ratio (ex. PPP)* 8.53 % 8.81 % 9.20 % 9.03 %

Book Value Per Share $ 61.38 $60.23 $ 58.00 $ 56.73

Tangible Book Value Per Share* $ 53.54 $52.37 $ 50.07 $ 48.80

Wealth Management AUM $ 4,324,400 $4,282,204 $ 3,994,152 $ 3,791,064

Wealth Management AUM & AUA $ 4,506,174 $4,471,157 $ 4,167,903 $ 3,948,478

* See GAAP to Non-GAAP Reconciliations

CAMBRIDGE BANCORP AND SUBSIDIARIES UNAUDITED CONSOLIDATED BALANCE SHEETS



September 30, 2021 December 31, 2020

(dollars in thousands, except par value)

Assets

Cash and cash equivalents $ 93,477 $75,785

Investment securities

Available for sale, at fair value (amortized cost $211,900 and $234,252, 210,993 237,030 respectively)

Held to maturity, at amortized cost (fair value $668,640 and $260,139, 666,322 247,672 respectively)

Total investment securities 877,315 484,702

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

Loans

Residential mortgage 1,381,413 1,298,868

Commercial mortgage 1,474,694 1,358,962

Home equity 90,697 106,194

Commercial and industrial 315,904 347,855

Consumer 38,210 41,769

Total loans 3,300,918 3,153,648

Less: allowance for credit losses on loans (35,231) (36,016)

Net loans 3,265,687 3,117,632

Federal Home Loan Bank of Boston Stock, at cost 4,816 5,734

Bank owned life insurance 46,773 46,169

Banking premises and equipment, net 17,266 18,158

Right-of-use asset operating leases 31,639 34,927

Deferred income taxes, net 10,834 11,639

Accrued interest receivable 8,895 9,514

Goodwill 51,912 51,912

Merger-related intangibles, net 2,707 2,977

Other assets 72,246 83,239

Total assets $ 4,483,567 $3,949,297

Liabilities

Deposits

Demand $ 1,281,881 $1,006,132

Interest-bearing checking 682,675 625,650

Money market 841,641 532,218

Savings 937,565 984,262

Certificates of deposit 191,084 254,821

Total deposits 3,934,846 3,403,083

Borrowings 16,878 32,992

Operating lease liabilities 34,341 37,448

Other liabilities 69,925 74,042

Total liabilities 4,055,990 3,547,565

Shareholders' Equity

Common stock, par value $1.00; Authorized: 10,000,000 shares; Outstanding: 6,966 6,927 6,965,871 shares and 6,926,728 shares, respectively

Additional paid-in capital 228,694 226,967

Retained earnings 193,861 165,404

Accumulated other comprehensive income (loss) (1,944) 2,434

Total shareholders' equity 427,577 401,732

Total liabilities and shareholders' equity $ 4,483,567 $3,949,297

CAMBRIDGE BANCORP AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF INCOME



Three Months Ended Nine Months Ended

September 30,June 30, September 30,September 30,September 30, 2021 2020 2021 2020 2021

(dollars in thousands, except share data)

Interest and dividend income

Interest on taxable loans $30,093 $30,557 $34,468 $90,975 $85,936

Interest on tax-exempt loans 353 275 243 850 652

Interest on taxable investment securities 2,502 2,023 1,404 6,110 4,648

Interest on tax-exempt investment securities 671 633 631 1,962 1,827

Dividends on FHLB of Boston stock 7 12 127 19 280

Interest on overnight investments 28 28 8 87 163

Total interest and dividend income 33,654 33,528 36,881 100,003 93,506

Interest expense

Interest on deposits 1,086 1,006 1,354 3,367 5,879

Interest on borrowed funds 147 141 376 428 1,223

Interest on subordinated debt - - 189 - 253

Total interest expense 1,233 1,147 1,919 3,795 7,355

Net interest and dividend income 32,421 32,381 34,962 96,208 86,151

Provision for (release of) credit losses 86 (901) 2,000 (1,021) 18,430

Net interest and dividend income after provision 32,335 33,282 32,962 97,229 67,721 for (release of) credit losses

Noninterest income

Wealth management revenue 9,238 8,623 8,025 26,012 21,686

Deposit account fees 462 484 603 1,420 2,089

ATM/Debit card income 406 405 349 1,144 946

Bank owned life insurance income 199 209 201 604 526

Gain on disposition of investment securities - - - - 69

Gain on loans sold 45 165 873 779 1,185

Loan related derivative income 390 567 292 1,628 1,137

Other income 375 453 590 1,283 1,085

Total noninterest income 11,115 10,906 10,933 32,870 28,723

Noninterest expense

Salaries and employee benefits 16,404 16,462 15,744 48,912 42,302

Occupancy and equipment 3,303 3,503 3,676 10,382 9,421

Data processing 2,052 2,179 2,084 6,265 5,601

Professional services 1,468 1,297 1,151 4,037 3,108

Marketing 608 953 420 2,024 1,162

FDIC insurance 305 261 313 902 810

Non-operating expenses 787 - 1,168 787 5,787

Other expenses 597 618 889 1,707 2,767

Total noninterest expense 25,524 25,273 25,445 75,016 70,958

Income before income taxes 17,926 18,915 18,450 55,083 25,486

Income tax expense 4,607 4,971 5,021 14,321 6,542

Net income $13,319 13,944 13,429 $40,762 $18,944

Share data:

Weighted average shares outstanding, basic 6,932,882 6,930,268 6,918,692 6,924,168 6,078,586

Weighted average shares outstanding, diluted 6,999,773 6,998,936 6,954,324 6,991,175 6,113,828

Basic earnings per share $1.91 $2.00 $1.94 $5.86 $3.11

Diluted earnings per share $1.89 $1.98 $1.93 $5.80 $3.09

CAMBRIDGE BANCORP AND SUBSIDIARIES MARGIN & YIELD ANALYSIS



Three Months Ended

September 30, 2021 June 30, 2021 September 30, 2020

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

(dollars in thousands)

ASSETS

Interest-earning assets

Loans ^(2)

Taxable $3,242,476$ 30,093 3.68 %$3,195,077$ 30,557 3.84 %$3,288,304$ 34,468 4.17 %

Tax-exempt 45,228 448 3.93 33,039 348 4.22 18,940 307 6.45

Securities available for sale ^(3)

Taxable 213,542 660 1.23 218,230 651 1.20 129,957 524 1.60

Securities held to maturity

Taxable 459,940 1,842 1.59 343,380 1,372 1.60 147,771 880 2.37

Tax-exempt 105,672 850 3.19 102,650 801 3.13 90,698 799 3.50

Cash and cash equivalents 113,511 28 0.10 132,964 28 0.08 67,056 8 0.05

Total interest-earning 4,180,369 33,921 3.22 % 4,025,340 33,757 3.36 % 3,742,726 36,986 3.93 % assets ^(4)

Non-interest-earning 252,201 251,641 281,910 assets

Allowance for credit losses (35,302) (36,183) (33,872)

Total assets $4,397,268 $4,240,798 $3,990,764

LIABILITIES AND SHAREHOLDERS' EQUITY

Interest-bearing deposits

Checking accounts $685,731 $ 63 0.04 %$671,424 $ 51 0.03 %$577,294 $ 164 0.11 %

Savings accounts 949,487 198 0.08 959,606 174 0.07 963,253 565 0.23

Money market accounts 794,081 613 0.31 706,100 467 0.27 435,417 245 0.22

Certificates of deposit 201,944 212 0.42 218,738 314 0.58 333,366 380 0.45

Total interest-bearing 2,631,243 1,086 0.16 2,555,868 1,006 0.16 2,309,330 1,354 0.23 deposits

Subordinated debt - - - - - - 9,936 189 7.57

Other borrowed funds 17,005 147 3.43 18,288 141 3.09 177,423 376 0.84

Total interest-bearing 2,648,248 1,233 0.18 % 2,574,156 1,147 0.18 % 2,496,689 1,919 0.31 % liabilities

Non-interest-bearing liabilities

Demand deposits 1,219,288 1,156,854 986,590

Other liabilities 105,846 97,515 119,762

Total liabilities 3,973,382 3,828,525 3,603,041

Shareholders' equity 423,886 412,273 387,723

Total liabilities & shareholders' $4,397,268 $4,240,798 $3,990,764 equity

Net interest income on a fully taxable equivalent 32,688 32,610 35,067 basis

Less taxable equivalent (274) (241) (232) adjustment

Net interest income $ 32,414 $ 32,369 $ 34,835

Net interest spread ^(5) 3.03 % 3.18 % 3.63 %

Net interest margin ^(6) 3.10 % 3.25 % 3.73 %

(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.

CAMBRIDGE BANCORP AND SUBSIDIARIES MARGIN & YIELD ANALYSIS



Nine Months Ended

September 30, 2021 September 30, 2020

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

(dollars in thousands)

ASSETS

Interest-earning assets

Loans ^(2)

Taxable $3,193,657$ 90,975 3.81 %$2,719,965$ 85,936 4.22 %

Tax-exempt 34,918 1,077 4.12 21,175 825 5.20

Securities available for sale ^(3)

Taxable 220,429 2,004 1.22 126,433 1,742 1.84

Securities held to maturity

Taxable 330,011 4,106 1.66 158,506 2,906 2.45

Tax-exempt 103,569 2,484 3.21 86,275 2,313 3.58

Cash and cash equivalents 130,221 87 0.09 57,472 163 0.38

Total interest-earning assets ^(4) 4,012,805 100,733 3.36 % 3,169,826 93,885 3.96 %

Non-interest-earning assets 254,351 236,346

Allowance for credit losses (35,822) (25,221)

Total assets $4,231,334 $3,380,951

LIABILITIES AND SHAREHOLDERS' EQUITY

Interest-bearing deposits

Checking accounts $663,497 $ 198 0.04 %$525,511 $ 532 0.14 %

Savings accounts 962,067 644 0.09 922,835 2,797 0.40

Money market accounts 696,203 1,617 0.31 300,300 834 0.37

Certificates of deposit 219,876 908 0.55 250,796 1,716 0.91

Total interest-bearing deposits 2,541,643 3,367 0.18 % 1,999,442 5,879 0.39 %

Subordinated debt - - - 4,421 253 7.64

Other borrowed funds 19,082 428 3.00 147,730 1,223 1.11

Total interest-bearing liabilities 2,560,725 3,795 0.20 % 2,151,593 7,355 0.46 %

Non-interest-bearing liabilities

Demand deposits 1,154,222 793,934

Other liabilities 102,705 99,168

Total liabilities 3,817,652 3,044,695

Shareholders' equity 413,682 336,256

Total liabilities & shareholders' equity $4,231,334 $3,380,951

Net interest income on a fully taxable equivalent 96,938 86,530 basis

Less taxable equivalent adjustment (749) (659)

Net interest income $ 96,189 $ 85,871

Net interest spread ^(5) 3.16 % 3.50 %

Net interest margin ^(6) 3.23 % 3.65 %

(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 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 Nine Months Ended

Operating Net Income / Operating Diluted EarningsSeptember 30,June 30, September 30,September 30,September 30,Per Share 2021 2020 2021 2020 2021

(dollars in thousands, except share data)

Net Income (a GAAP measure) $13,319 $13,944 $13,429 $40,762 $18,944

Add: Merger expenses - - 1,168 - 5,787

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

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

Add: Branch and office closure expenses 787 - - 787 -

Tax effect of non-operating adjustments ^(1) (219) - (280) (219) (3,772)

Operating Net Income (a non-GAAP $13,887 $13,944 $14,317 $41,330 $29,528 measure)

Less: Dividends and Undistributed Earnings (65) (67) (19) (186) (22) Allocated to Participating Securities (GAAP)

Operating Income Applicable to Common $13,822 $13,877 $14,298 $41,144 $29,506 Shareholders (a non-GAAP measure)

Weighted Average Diluted Shares 6,999,773 6,998,936 6,954,324 6,991,175 6,113,828

Operating Diluted Earnings Per Share $1.97 $1.98 $2.06 $5.89 $4.83 (a non-GAAP measure)

The net tax benefit associated with non-operating items is determined by assessing whether each non-operating item is included or excluded from net(1) taxable income and applying the Company's combined marginal tax rate to only those items included in net taxable income. The tax effect for prior quarters may have been updated to reflect the final tax deductibility.

September 30, June 30, December 31, September 30, 2021 2020 2020 2021

(dollars in thousands)

Tangible Common Equity:

Shareholders' equity (GAAP) $ 427,577 $419,501 $ 401,732 $ 393,073

Less: Goodwill and acquisition related intangibles (GAAP) (54,619) (54,709) (54,889) (54,980)

Tangible Common Equity (a non-GAAP measure) $ 372,958 $364,792 $ 346,843 $ 338,093

Total assets (GAAP) $ 4,483,567 $4,303,287 $ 3,949,297 $ 3,987,109

Less: Goodwill and acquisition related intangibles (GAAP) (54,619) (54,709) (54,889) (54,980)

Tangible assets (a non-GAAP measure) $ 4,428,948 $4,248,578 $ 3,894,408 $ 3,932,129

Tangible Common Equity Ratio (a non-GAAP 8.42 % 8.59 % 8.91 % 8.60 % measure)



Tangible Common Equity (excluding PPP loans):

Tangible Common Equity (a non-GAAP measure) $ 372,958 $364,792 $ 346,843 $ 338,093

Tangible assets (a non-GAAP measure) $ 4,428,948 $4,248,578 $ 3,894,408 $ 3,932,129

Less: PPP loans (58,767) (107,638) (124,201) (189,916)

Tangible assets (excluding PPP Loans) (a non-GAAP $ 4,370,181 $4,140,940 $ 3,770,207 $ 3,742,213 measure)

Tangible Common Equity Ratio (excluding PPP Loans) 8.53 % 8.81 % 9.20 % 9.03 % (a non-GAAP measure)



Tangible Book Value Per Share:

Tangible Common Equity (a non-GAAP measure) $ 372,958 $364,792 $ 346,843 $ 338,093

Common shares outstanding 6,965,871 6,965,557 6,926,728 6,928,288

Tangible Book Value Per Share (a non-GAAP measure) $ 53.54 $52.37 $ 50.07 $ 48.80

Three Months Ended Nine Months Ended

September 30, June 30, September 30, September 30, September 30, 2020 2021 2020 2021 2021

(dollars in thousands)

Efficiency Ratio: (1)

Noninterest expense $ 25,524 $25,273 $ 25,445 $ 75,016 $ 70,958

Net interest and dividend income $ 32,421 $32,381 $ 34,962 $ 96,208 $ 86,151

Total noninterest income 11,115 10,906 10,933 32,870 28,723

Total revenue $ 43,536 $43,287 $ 45,895 $ 129,078 $ 114,874

Efficiency Ratio 58.63 % 58.38 % 55.44 % 58.12 % 61.77 %



Operating Efficiency Ratio: (2)

Noninterest expense $ 25,524 $25,273 $ 25,445 $ 75,016 $ 70,958

Merger expenses (Pretax) - - (1,168) - (5,787)

Branch and office closure expenses (Pretax) (787) - - (787) -

Operating expense (a non-GAAP measure) $ 24,737 $25,273 $ 24,277 $ 74,229 $ 65,171

Total revenue $ 43,536 $43,287 $ 45,895 $ 129,078 $ 114,874

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

Operating revenue (a non-GAAP measure) $ 43,536 $43,287 $ 45,895 $ 129,078 $ 114,805

Operating Efficiency Ratio (a non-GAAP 56.82 % 58.38 % 52.90 % 57.51 % 56.77 %measure)



Three Months Ended Nine Months Ended

September 30, June 30, September 30, September 30, September 30, 2020 2021 2020 2021 2021

(dollars in thousands)

Operating Return on Tangible Common Equity: (3)

Operating Net Income (a non-GAAP measure) $ 13,887 $13,944 $ 14,319 $ 41,330 $ 29,528

Average common equity $ 423,886 $412,273 $ 387,723 $ 413,682 $ 336,256

Average goodwill and merger related intangibles (54,659) (54,752) (55,030) (54,752) (43,634)

Average tangible common equity (a non-GAAP measure)$ 369,227 $357,521 $ 332,693 $ 358,930 $ 292,622

Operating Return on Tangible Common Equity 14.92 % 15.64 % 17.12 % 15.40 % 13.48 %(a non-GAAP measure)



Operating Return on Average Assets: (4)

Operating Net Income (a non-GAAP measure) $ 13,887 $13,944 $ 14,319 $ 41,330 $ 29,528

Average assets $ 4,397,268 $4,240,798 $ 3,990,764 $ 4,231,334 $ 3,380,951

Operating Return on Average Assets (a non-GAAP 1.25 % 1.32 % 1.43 % 1.31 % 1.17 %measure)

Three Months Ended Nine Months Ended

September 30, June 30, September 30, September 30, September 30, 2021 2021 2020 2021 2020

(dollars in thousands)

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

Income before income taxes (GAAP) $ 17,926 $18,915 $ 18,450 $ 55,083 $ 25,486

Add: Provision (Release) for Credit Losses (GAAP) 86 (901) 2,000 (1,021) 18,430

Add: Non-operating expenses (GAAP) 787 - 1,168 787 5,787

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

Operating PTPP Income (a non-GAAP measure) $ 18,799 $18,014 $ 21,618 $ 54,849 $ 49,634

Average assets 4,397,268 4,240,798 3,990,764 4,231,334 3,380,951

Operating PTPP Return on Average Assets (a non- 1.70 % 1.70 % 2.16 % 1.73 % 1.96 %GAAP 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 the provision for (release of) credit losses, non-operating expenses, and gain on disposition of investment securities as a percentage of average assets.

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SOURCE Cambridge Bancorp