Press Release

Cambridge Bancorp Announces Operating Results for Q2 and Declares Dividend

Net loss driven by new merger related accounting. Asset Quality remains strong

Company Release - 7/28/2020 8:00 AM ET

CAMBRIDGE, Mass., July 28, 2020 /PRNewswire/ -- Cambridge Bancorp (NASDAQ: CATC) (the "Company"), the parent company of Cambridge Trust Company (the "Bank"), today announced an unaudited net loss of $1,716,000 for the quarter ended June 30, 2020, a decrease of $5,988,000, or 140.2%, compared to net income of $4,272,000 for the quarter ended June 30, 2019. The diluted loss per share was $0.29 for the second quarter of 2020, representing a 132.2% decrease over diluted earnings per share of $0.90 for the second quarter of 2019.

Cambridge Bancorp Logo

The results for the second quarter include the merger with Wellesley Bancorp Inc. ("Wellesley") and the corresponding impact to the provision for credit losses, merger expenses, and other non-operating items. Excluding these items, operating net income was $7,788,000 for the quarter ended June 30, 2020, an increase of $833,000, or 12.0%, compared to operating net income of $6,955,000 for the quarter ended June 30, 2019. Operating diluted earnings per share were $1.32 for the second quarter of 2020, representing a 10.2% decrease over operating diluted earnings per share of $1.47 for the same quarter last year. Further discussion of the merger accounting impact of the current and expected credit loss accounting standard ("CECL") is detailed below and in the Non-GAAP Reconciliation tables at the end of this document.

For the six months ended June 30, 2020, unaudited net income was $5,516,000, representing a decrease of $4,954,000, or 47.3%, compared to net income of $10,470,000 for the six months ended June 30, 2019. Diluted earnings per share were $0.97 for the six months ended June 30, 2020, representing a 58.7% decrease over diluted earnings per share of $2.35 for the same six months ended June 30, 2019.

The results for the six months ended June 30, 2020 also include the merger accounting impact of the CECL accounting standard within the provision for credit losses, merger expenses, and other non-operating items. Excluding these items, operating net income was $15,210,000 for the six months ended June 30, 2020, an increase of $1,923,000, or 14.5%, compared to operating net income of $13,287,000 for the six months ended June 30, 2019. Operating diluted earnings per share were $2.68 for the six months ended June 30, 2020, representing a 10.4% decrease over operating diluted earnings per share of $2.99 for the six months ended June 30, 2019.

Second quarter 2020 highlights:

  • Completed the merger with Wellesley which included banking assets of $985.6 million and client wealth management assets of $339 million.
  • Asset quality remains strong with ratios of non-performing loans to total loans and non-performing assets to total assets at 0.31% and 0.30%, respectively. Early stage delinquency (30-89 days delinquent) as of June 30, 2020 represents only 0.22% of total loans.
  • Reflecting weakening economic conditions, management increased the allowance for credit loss to 1.08% of total loans, excluding loans made under the Small Business Administration's ("SBA") Paycheck Protection Program ("PPP").
  • Organic loan growth of $79.1 million, or 3.6% year to date, excluding loans originated under the SBA's PPP
  • Organic core deposit growth of $191.9 million, or 8.8% year to date.
  • Tangible common equity ratio of 8.27% at June 30, 2020.
  • Tangible book value per share of $47.34 at June 30, 2020.
  • A supplemental presentation for the quarter is available on our investor relations website: ir.cambridgetrust.com or within the hyperlink provided within this release. This presentation includes additional detail regarding the loan portfolio, liquidity position and other COVID-19 disclosures.

"Throughout this period of uncertainty, we were able to deliver for our clients not only in terms of support through the PPP program, but also for our communities in terms of outreach. I want to specifically thank my colleagues for all of their hard work and welcome our new colleagues from our merger with Wellesley," noted Denis K. Sheahan, Chairman and CEO. "Although the quarter's results include the one-time impact of the merger on our allowance for credit losses as required by CECL and a continued increase in provisioning levels associated with the COVID-19 pandemic, we delivered solid operating results with continued strength in asset quality."

Merger with Wellesley

On June 1, 2020, the Company completed its merger with Wellesley which added 6 banking offices in Massachusetts. The Company paid total consideration of $88.8 million, which consisted of 1,502,814 shares of Cambridge Bancorp common stock issued to Wellesley shareholders. The transaction included the acquisition of $870.0 million in loans and the assumption of $760.9 million in deposits, each at fair value. 

The following table provides the purchase price allocation of net assets acquired for this transaction:



At June 1, 2020




Wellesley
Book Value



Purchase Accounting
Adjustments



Net Assets
Acquired at Fair
Value




(dollars in thousands)


Total Purchase Price










$

88,766


Assets













Cash and cash equivalents


$

44,667



$



$

44,667


Investments



23,331







23,331


Gross Loans



883,659




(13,626)




870,033


Allowance for loan loss



(8,461)




8,461





Premises and equipment



2,972




1,040




4,012


Other assets



41,082




2,505




43,587


Total assets acquired



987,250




(1,620)




985,630















Liabilities













Deposits



758,976




1,902




760,878


Borrowings & Subordinated debt



132,005




477




132,482


Other liabilities



21,847




2,362




24,209


Total liabilities assumed



912,828




4,741




917,569


Net Assets Acquired


$

74,422



$

(6,361)



$

68,061


Goodwill










$

20,705


The Company recorded a gross loan fair value mark of $14.9 million or 1.7% of acquired loans on June 1, 2020. For further details on the loans and deposits acquired, see "Organic Loan and Deposit Growth" table provided near the end of the financial schedules accompanying this release.

Balance Sheet

Total assets increased $1.2 billion, or 40.9% from December 31, 2019, inclusive of the Wellesley merger, and were $4.0 billion as of June 30, 2020.

Total loans increased by $1.1 billion, or 49.7%, from December 31, 2019, inclusive of the Wellesley merger, and stood at $3.3 billion as of June 30, 2020. The increase in total loans was due to a combination of the merger with Wellesley and organic growth during 2020. A table is included accompanying this release to provide detail of organic loan and deposit growth.

Inclusive of Wellesley:

  • Residential real estate loans increased by $433.7 million from $917.6 million at December 31, 2019 to $1.4 billion at June 30, 2020.
  • Commercial real estate loans increased by $352.9 million, from $1.1 billion at December 31, 2019 to $1.4 billion at June 30, 2020.
  • Commercial & industrial loans increased by $281.0 million from $133.2 million at December 31, 2019 to $414.2 million at June 30, 2020.
  • Loans under the SBA's PPP amounted to $189.3 million at June 30, 2020. PPP loans are included in commercial and industrial loans.

Excluding Wellesley and PPP loans, total loans grew by $79.1 million, or 3.6%, from December 31, 2019.

The Company recorded goodwill of $20.7 million during the second quarter of 2020, due to the merger with Wellesley. Total goodwill as of June 30, 2020 was $51.9 million.

Other assets increased $51.5 million, or 121.8%, to $93.8 million, from $42.3 million at December 31, 2019, primarily due to valuation adjustments associated with loan level interest rate derivatives ($39.8M) due to both changes in interest rates and additional loan level derivatives acquired in connection with the Wellesley merger.

Total deposits grew by $917.0 million, or 38.9%, to $3.3 billion at June 30, 2020, primarily driven by a combination of the impact of the Wellesley merger, organic deposit growth and funds from the PPP program.

  • Core deposits, which the Company defines as all deposits other than certificates of deposit, increased by $740.6 million, or 34.0%, to $2.9 billion at June 30, 2020, inclusive of the Wellesley merger.
  • Excluding the impact of the Wellesley merger, organic growth in core deposits was $191.9 million, or 8.8%.
  • Inclusive of the Wellesley merger, the cost of total deposits for the quarter ended June 30, 2020 was 0.21%, as compared to 0.68% for the quarter ended December 31, 2019, a reduction of 47 basis points driven by reduced interest rates during 2020. The cost of total deposits for the six months ended June 30, 2020 was 0.36%, as compared to 0.67% for the six months ended June 30, 2019, a reduction of 31 basis points driven by reduced interest rates during 2020. At June 30, 2020, the spot cost of deposits was 0.27%.

Certificates of deposit totaled $358.6 million at June 30, 2020, an increase of $176.3 million from $182.3 million at December 31, 2019, primarily due to the Wellesley merger. Total brokered certificates of deposit, which are included within certificates of deposit, were $87.4 million and $7.1 million at June 30, 2020 and December 31, 2019, respectively.

Borrowings were $237.9 million as of June 30, 2020, representing a $102.2 million, or 75.3% increase from $135.7 million at December 31, 2019, primarily due to the Wellesley merger.

Net Interest and Dividend Income

For the quarter ended June 30, 2020, net interest and dividend income before the provision for credit losses increased by $9.0 million, or 45.6%, to $28.8 million, as compared to $19.8 million for the quarter ended June 30, 2019, primarily due to loan growth (both organic and as a result of the Wellesley merger), lower costs of funds, higher levels of interest earning assets, and loan accretion associated with merger accounting.

The Company's net interest margin, on a fully taxable equivalent basis, inclusive of the Wellesley merger, increased 38 basis points to 3.77% for the quarter ended June 30, 2020, as compared to 3.39% for the quarter ended March 31, 2020. This increase was a function of the Company taking steps to reduce deposit costs combined with the accretion of loan fair value adjustments associated with the Wellesley merger.

In order to provide greater disclosure of the impact of loan merger accounting and the impact of the SBA's PPP loan program, we have provided a reconciliation of the net interest margin to an adjusted net interest margin 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 June 30, 2020 was 3.46%, representing a seven basis points increase over the prior quarter net interest margin of 3.39% and a 23 basis points increase when compared to 3.23% for the second quarter of 2019. 



Three Months Ended




June 30, 2020




Average

Balance



Interest

Income/

Expenses



Rate

Earned/

Paid




(dollars in thousands)


Total interest-earning assets (GAAP)


$

3,086,114










Net interest income on a fully taxable equivalent basis (GAAP)






$

28,952






Net interest margin (GAAP)











3.77

%

Less: Paycheck Protection Program loan impact



(127,025)




(724)




0.06

%

Less: Merger related loan accretion







(2,783)




-0.37

%

Adjusted net interest margin


$

2,959,089



$

25,445




3.46

%

Provision for Credit Losses

The provision for credit losses during the quarter ended June 30, 2020 includes the impact of the merger on the Company's allowance for credit losses under CECL accounting standard. CECL requires the removal of Wellesley's prior allowance for loan loss through the balance sheet as goodwill and re-establishment of a new allowance for credit loss through the income statement within the provision for credit loss. Total provision expense for the three months ended June 30, 2020 was $14.4 million of which the impact of the CECL merger accounting on June 1, 2020 was $8.6 million, inclusive of unfunded commitments, and is considered by the Company to be a non-operating expense.

During the second quarter of 2020, the Company increased its reserve for credit loss levels by recording $5.7 million in additional provision for credit losses due to anticipated losses associated with the pandemic, as well as changes in loan balances. For the six months ended June 30, 2020, the Company has recorded a total of $6.4 million of provision for credit losses associated with the expected impact of the pandemic on future loan losses, and during the six months ended June 30, 2020, the Company recorded total provision for credit losses of $16.4 million. Additional detail on our CECL methodology can be found within the CECL section of this release.

Noninterest Income

Inclusive of the Wellesley merger, total noninterest income increased by $827,000, or 10.2%, to $9.0 million for the quarter ended June 30, 2020, as compared to $8.1 million for the quarter ended June 30, 2019, primarily as a result of increases in wealth management revenue, loan related derivative income, and higher gains on loans sold. Noninterest income was 23.8% of total revenue for the quarter ended June 30, 2020.

  • Wealth management revenue increased by $616,000, or 9.6%, to $7.0 million for the second quarter of 2020, as compared to $6.4 million for the second quarter of 2019. Wealth Management Assets under Management and Administration were $3.7 billion as of June 30, 2020, an increase of $278.4 million, or 8.1%, from December 31, 2019, primarily as a result of the Wellesley merger, partially offset by reductions within the equity markets during 2020.
  • Loan related derivative income increased by $329,000 to $334,000 for the second quarter of 2020, as compared to $5,000 for the second quarter of 2019, due to increased loan volume and the associated derivative transactions executed during the quarter.
  • Gain on loans sold increased by $178,000, to $193,000 for the second quarter of 2020, as compared to $15,000 for the second quarter of 2019, due to increased sales of residential mortgages.

Inclusive of the Wellesley merger, total noninterest income increased by $1.7 million, or 10.5%, to $17.8 million for the six months ended June 30, 2020, as compared to $16.1 million for the six months ended June 30, 2019, primarily as a result of increases in wealth management revenue, loan related derivative income, and higher gains on loans sold. Noninterest income was 25.8% of total revenue for the six months ended June 30, 2020.

  • Wealth management revenue increased by $1.1 million, or 8.9%, to $13.7 million for the six months ended June 30, 2020, as compared to $12.5 million for the six months ended June 30, 2019.
  • Loan related derivative income increased by $403,000, or 91.4%, to $844,000 for the six months ended June 30, 2020 , as compared to $441,000 for the six months ended of 2019, due to increased loan volume and the associated derivative transactions executed throughout the year.
  • Gain on loans sold increased by $281,000, to $312,000 for the six months ended June 30, 2020, as compared to $31,000 for the six months ended June 30, 2019, due to increased sales of residential mortgages.

Noninterest Expense

Total noninterest expense increased by $4.1 million, or 18.9%, to $25.6 million for the quarter ended June 30, 2020, as compared to $21.5 million for the quarter ended June 30, 2019, primarily driven by merger related expenses, increases in salaries and employee benefits expense, occupancy and equipment expense, and data processing expense.

  • Merger expenses were $4.4 million during the quarter.
  • Salaries and employee benefits expense increased $2.1 million, or 18.2%, driven by increased staffing related to the mergers with Optima Bank & Trust ("Optima") in 2019 and Wellesley in the second quarter of 2020, additions to support business initiatives, and higher employee benefit costs.
  • Occupancy and equipment expense increased $247,000, or 9.2%, primarily as a result of additional branches and office space as a result of the Wellesley merger that was not reflected within the second quarter of 2019.
  • Data processing expense increased $298,000, or 19.4%, primarily as a result of the merger with Wellesley and investments made in technology.

During the second quarter, the Company reduced the value of its other real estate loan ("REO") holdings through other expense by $486,000 primarily as a result of revaluation due to the pandemic.

Total noninterest expense increased by $7.6 million, or 20.1%, to $45.5 million for the six months ended June 30, 2020, as compared to $37.9 million for the six months ended June 30, 2019, primarily driven by merger related expenses, increases in salaries and employee benefits expense, occupancy and equipment expense, and data processing expense as a result of our mergers with Optima in 2019 and Wellesley in 2020.

  • Merger expenses were $4.6 million year to date.
  • Salaries and employee benefits expense increased $4.3 million, or 19.2%, 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.
  • Occupancy and equipment expense increased $724,000, or 14.4%, primarily as a result of additional branches and office space as a result the mergers with Optima and Wellesley.
  • Data processing expense increased $637,000, or 22.1%, primarily as a result of the mergers with Optima and Wellesley combined with investments made in technology.

Asset Quality 

Non-performing loans totaled $10.3 million, or 0.31% of total loans outstanding as of June 30, 2020. Early stage delinquency (30-89 days delinquent) represented 0.22% of total loans outstanding as of June 30, 2020.

Net loan charge-offs remained low at $135,000, or 0.02% of total loans (annualized) for the three months ended June 30, 2020, as compared to $148,000, or 0.03% of total loans (annualized) for the for the three months ended June 30, 2019. Net loan charge-offs were $400,000, or 0.02% of total loans (annualized) for the six months ended June 30, 2020, as compared to $172,000, or 0.02% of total loans (annualized) for the six months ended June 30, 2019.

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



Nonperforming Assets




June 30, 2020



March 31, 2020



December 31, 2019




(dollars in thousands)


Total nonperforming loans


$

10,251



$

3,379



$

5,651


Other real estate owned



1,970




2,457




163


Total nonperforming assets


$

12,221



$

5,836



$

5,814


Troubled debt restructurings:













Non-performing (included in total non-performing loans above)


$

262



$

262



$

227


Performing










     Total troubled debt restructurings


$

262



$

262



$

227


Nonperforming loans/total loans



0.31

%



0.15

%



0.25

%

Nonperforming assets/total assets



0.30

%



0.20

%



0.20

%

TDRs/total loans



0.01

%



0.01

%



0.01

%
















Additional Asset Quality Indicators


Purchased Credit Deteriorated "(PCD")/total loans



0.58

%







Delinquent loans 30-89 days past due/total loans



0.22

%



0.76

%



0.50

%

Net charge-offs/total loans (annualized)



0.02

%



0.05

%



0.07

%

Allowance for credit losses/nonperforming loans



331.81

%



596.72

%



321.71

%

Allowance for credit losses/total loans excluding PPP



1.08

%



0.89

%



0.82

%

CECL

The Company adopted Accounting Standard Update ("ASU") 2016-13 - Measurement of Credit Losses on Financial Instruments, in the first quarter of 2020. ASU 2016-13 or CECL requires earlier recognition of credit losses using a lifetime credit loss measurement approach for financial assets carried at amortized cost and requires consideration of a broader range of reasonable and supportable information to determine credit loss estimates including economic factors. The Company's CECL methodology has two main components; a quantitative loss estimate and a qualitative loss estimate. Loan level probability of default, loss given default, and discounted cash-flows are the primary basis for the quantitative loss estimation. The qualitative loss estimate is used to make adjustments that may not be represented within the quantitative analysis and includes adjustments for concentration risk, collateral risk, current payment performance and other internal/external factors.  Unemployment is the primary economic factor used within the quantitative methodology and the forward-looking estimates of unemployment reflect management's assessment of unemployment as derived from multiple sources.  Additionally, as previously discussed, the second quarter's Allowance for Credit Loss ("ACL") includes the impact of the merger with Wellesley which required the Company to de-recognize prior allowance for loan loss from the acquired entity and record an allowance for credit loss through the income statement for the acquired loan portfolio based on current CECL assumptions. This one-time recognition of the ACL is considered to be non-operating in nature as described above within the provision for credit loss section of this release.

For the three months ended June 30, 2020, the Company increased the allowance for credit losses by $13.9 million primarily due to the merger with Wellesley and the forecasted impact of the COVID-19 pandemic on the economic factors utilized within the CECL methodology. For the six months ended June 30, 2020, the Company increased the allowance for credit losses by $15.8 million primarily due to the merger with Wellesley and the forecasted impact of the COVID-19 pandemic on the economic factors utilized within the CECL methodology. These increases were based on the information available to the Company at each quarter end.

The allowance for credit losses in total was $34.0 million, or 1.08% of total loans outstanding at June 30, 2020 excluding PPP loans, as compared to $18.2 million, or 0.82% of total loans outstanding at year end 2019.

COVID-19 Update

During the first and second quarters of 2020, the Company announced a range of initiatives to help clients, communities, and employees navigate the many financial challenges caused by the novel corona virus ("COVID-19") pandemic.  As a result of the COVID-19 crisis, the Company has taken the following steps to provide support to any client experiencing a hardship during this uncertain time.

For Banking Clients:

  • Enhanced safety measures in all banking office lobbies and while all offices are now open services are available by appointment if requested
  • Increased telephone banking support through the Client Resource Calling Center
  • Waived penalties for early certificate of deposit withdrawals
  • Increased ATM withdrawal limits and debit card spending
  • Convenient and secure digital platforms for remote banking

For Consumer Loan Clients:

  • Postponement of residential loan foreclosures
  • Payment deferrals on mortgages and home equity loans
  • Forgiving late charges for consumer loan payments

For Business and Commercial Banking Clients:

  • Participating in the Small Business Administration ("SBA") Paycheck Protection Program lending program, the Company has processed and obtained SBA approval for 892 loan applications totaling $189.3 million as of June 30, 2020. Additional detail on these loans can be found within the financial section of this document.
  • Increased remote deposit limits
  • Implemented payment relief options for commercial loans, based on need
  • Providing assistance with access to government support and lending programs
  • Treasury management services to support business continuity
  • Secure online and mobile banking platforms

For Wealth Management Clients:

The Company's wealth management team is closely monitoring the economy and financial markets and continues to actively manage clients' portfolios through the current volatility.  We have urged clients to reach out to their Relationship Manager directly with any questions or concerns.

For Communities:

In addition to the 270 plus organizations the Company supports through its annual charitable giving, the Company donated an additional $250,000 to organizations that are providing relief to those impacted by COVID-19 and has committed to donating $100,000 to organizations committed to eradicating racism and inequities in our black communities. 

For Employees:

The Company is taking precautions to protect the health and safety of its staff, while continuing to provide uninterrupted service to clients. Efforts include:

  • Enhanced safety measures for all banking office lobbies in connection with state guidelines
  • Increased cleaning of all office locations
  • 90%+ of staff working remotely with the exception of essential banking office employees
  • Teleconferencing for meetings

Forbearance/Modifications. The Company has instituted payment deferral programs to aid existing borrowers with payment forbearance. For commercial and consumer borrowers, we have endeavored to provide payment relief for borrowers who have been impacted by the COVID-19 virus and have requested payment assistance. We expect to continue to accrue interest on these loans during the payment deferral period. Detailed information on client deferrals is included within the financial section of this document.

Income Taxes

Inclusive of the impact of the Wellesley merger, the Company's effective tax rate was a credit of 23.9% for the quarter ended June 30, 2020, as compared to 26.5% for the quarter ended June 30, 2019. For the six months ended June 30, 2020, the effective tax rate was 21.6%, as compared to 23.9% for the six months ended June 30, 2019.

Dividend & Capital

On July 27, 2020, the Company's Board of Directors declared a quarterly cash dividend of $0.53 per share, which is payable on August 27, 2020, to shareholders of record as of the close of business on August 13, 2020.  This represents an increase of $0.02 per share, as compared to the $0.51 per share dividend paid in same quarter of 2019.

Inclusive of the merger, the Company's total shareholders' equity to total assets ratio increased by 87 basis points to 9.52% as of June 30, 2020, as compared to 8.65% as of June 30, 2019. Book value per share grew by $6.41, or 13.1%, to $55.29 as of June 30, 2020, as compared to $48.88 as of June 30, 2019.

The Company's ratio of tangible common equity to tangible assets increased to 8.27%, at June 30, 2020, from 7.48% at June 30, 2019, primarily as a result of the capital offering in December of 2019, increased earnings during the period, increased valuations of interest rate derivative positions, and an increase in unrealized gains in the available for sale investments portfolio. Tangible book value per share grew by $5.62, or 13.5% to $47.34 as of June 30, 2020, as compared to $41.72 as of June 30, 2019. 

Supplemental Earnings Release Information:
Click Here to Download the PDF

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 $4.0 billion in assets as of June 30, 2020, and a total of 22 Massachusetts and New Hampshire locations. Cambridge Trust Company is one of New England's leaders in private banking and wealth management with $3.7 billion in client assets under management and administration as of June 30, 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 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 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 16, 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, and return on average assets, return on tangible common equity, and efficiency ratio on an operating basis.

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 and 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). 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 non-core 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. Carotenuto
Chief Financial Officer
617-520-5520


 

CAMBRIDGE BANCORP AND SUBSIDIARIES 

QUARTERLY UNAUDITED RESULTS




Three Months Ended



Six Months Ended




June 30,



March 31,



June 30,



June 30,




2020



2020



2019



2020



2019




(dollars in thousands, except per share data)


Interest and Dividend Income


$

30,531



$

26,095



$

24,470



$

56,626



$

43,588


Interest Expense



1,742




3,695




4,694




5,437




7,551


  Net Interest and Dividend Income



28,789




22,400




19,776




51,189




36,037


Provision for Credit Losses



14,430




2,000




596




16,430




503


Noninterest Income



8,972




8,818




8,145




17,790




16,102


Noninterest Expense



25,587




19,925




21,513




45,512




37,886


 (Loss) Income Before Income Taxes



(2,256)




9,293




5,812




7,037




13,750


Income Tax (Benefit) Expense



(540)




2,061




1,540




1,521




3,280


  Net (Loss) Income


$

(1,716)



$

7,232



$

4,272



$

5,516



$

10,470


Operating Net Income*


$

7,788



$

7,434



$

6,955



$

15,210



$

13,287























Data Per Common Share:





















 Basic (Loss) Earnings Per Share


$

(0.29)



$

1.34



$

0.91



$

0.97



$

2.37


 Diluted (Loss) Earnings Per Share



(0.29)




1.33




0.90




0.97




2.35


 Operating Diluted Earnings Per Share*



1.32




1.37




1.47




2.68




2.99


 Dividends Declared Per Share



0.53




0.53




0.51




1.06




1.02


 Avg. Common Shares Outstanding:





















   Basic



5,912,889




5,397,040




4,682,109




5,652,908




4,379,141


   Diluted



5,912,889




5,432,099




4,715,724




5,670,438




4,412,239























Selected Performance Ratios:





















 Net Interest Margin, FTE



3.77

%



3.39

%



3.23

%



3.59

%



3.24

%

 Cost of Funds



0.23

%



0.56

%



0.76

%



0.38

%



0.68

%

 Cost of Interest Bearing Liabilities



0.33

%



0.80

%



1.05

%



0.55

%



0.95

%

 Cost of Deposits



0.21

%



0.54

%



0.77

%



0.36

%



0.67

%

 Cost of Deposits excl. Wholesale Deposits



0.19

%



0.53

%



0.69

%



0.34

%



0.61

%

 Return on Average Assets



(0.21)

%



1.02

%



0.66

%



0.36

%



0.89

%

 Return on Average Equity



(2.10)

%



9.99

%



7.71

%



3.58

%



10.79

%

 Efficiency Ratio*



67.76

%



63.83

%



77.05

%



65.98

%



72.66

%

 Operating Return on Average Assets*



0.95

%



1.05

%



1.07

%



1.00

%



1.13

%

 Operating Return on Tang Common Equity*



10.92

%



11.65

%



14.37

%



11.26

%



14.78

%

 Operating Efficiency Ratio*



56.30

%



63.01

%



64.71

%



59.34

%



65.77

%



June 30,



March 31,



December 31,



June 30,








2020



2020



2019



2019



























Total Assets


$

4,022,750



$

2,852,629



$

2,855,563



$

2,741,308






Total Loans



3,332,884




2,255,802




2,226,728




2,096,550






Total Deposits



3,275,843




2,390,359




2,358,878




2,329,665






Wealth Management AUM



3,572,286




2,932,393




3,287,371




3,079,770






Wealth Management AUM & AUA



3,731,226




3,071,266




3,452,852




3,242,341






Nonperforming loans/total loans



0.31

%



0.15

%



0.25

%



0.05

%





Allowance to Total Loans (excluding PPP)



1.08

%



0.89

%



0.82

%



0.83

%





Net charge-offs to Total Loans (annualized)



0.02

%



0.05

%



0.07

%



0.03

%





Total Shareholders' Equity to Total Assets



9.52

%



10.44

%



10.04

%



8.65

%





Tangible Common Equity Ratio*



8.27

%



9.34

%



8.93

%



7.48

%





Book Value Per Share


$

55.29



$

54.96



$

53.06



$

48.88






Tangible Book Value Per Share*


$

47.34



$

48.60



$

46.66



$

41.72






* See GAAP to Non-GAAP Reconciliations


















 

CAMBRIDGE BANCORP AND SUBSIDIARIES

UNAUDITED CONSOLIDATED BALANCE SHEETS




June 30, 2020



March 31, 2020



December 31, 2019




(dollars in thousands, except par value)


Assets













Cash and cash equivalents


$

60,742



$

42,989



$

61,335


Investment securities













Available for sale, at fair value (amortized cost $130,761, $115,485, and $141,109,respectively)



134,227




117,947




140,330


Held to maturity, at amortized cost (fair value $257,121, $256,860, and $264,114, respectively)



244,551




246,906




258,172


Total investment securities



378,778




364,853




398,502


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



2,614




2,875




1,546


Loans













Residential mortgage



1,351,308




917,103




917,566


Commercial mortgage



1,413,427




1,089,796




1,060,574


Home equity



116,067




83,066




80,675


Commercial & Industrial



414,243




127,648




133,236


Consumer



37,839




38,189




34,677


Total loans



3,332,884




2,255,802




2,226,728


Less: allowance for credit losses on loans



(34,014)




(20,163)




(18,180)


Net loans



3,298,870




2,235,639




2,208,548


Federal Home Loan Bank of Boston Stock, at cost



9,262




6,268




7,854


Bank owned life insurance



45,747




37,479




37,319


Banking premises and equipment, net



18,482




14,593




14,756


Right-of-use asset operating leases



38,912




32,312




33,587


Deferred income taxes, net



11,855




3,721




8,229


Accrued interest receivable



8,631




6,872




7,052


Goodwill



51,912




31,206




31,206


Merger related intangibles, net



3,158




3,248




3,338


Other assets



93,787




70,574




42,291


Total assets


$

4,022,750



$

2,852,629



$

2,855,563


Liabilities













Deposits













Demand


$

929,846



$

608,240



$

630,593


Interest bearing checking



606,999




506,654




450,098


Money market



419,537




175,158




181,406


Savings



960,847




880,944




914,499


Certificates of deposit



358,614




219,363




182,282


Total deposits



3,275,843




2,390,359




2,358,878


Borrowings



237,897




75,147




135,691


Subordinated debt



9,920








Operating lease liabilities



40,453




33,813




35,054


Other liabilities



75,577




55,551




39,379


Total liabilities



3,639,690




2,554,870




2,569,002


Shareholders' Equity













Common stock, par value $1.00; Authorized: 10,000,000 shares; Outstanding: 6,927,699 shares, 5,417,983 shares, and 5,400,868 shares,  respectively



6,928




5,418




5,401


Additional paid-in capital



224,540




137,186




136,766


Retained earnings



146,305




150,891




146,875


Accumulated other comprehensive income (loss)



5,287




4,264




(2,481)


Total shareholders' equity



383,060




297,759




286,561


Total liabilities and shareholders' equity


$

4,022,750



$

2,852,629



$

2,855,563


 

CAMBRIDGE BANCORP AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME




Three Months Ended



Six Months Ended




June 30, 2020



March 31, 2020



June 30, 2019



June 30, 2020



June 30, 2019




(dollars in thousands, except share data)


Interest and dividend income





















Interest on taxable loans


$

28,130



$

23,338



$

21,355



$

51,468



$

37,639


Interest on tax-exempt loans



211




198




124




409




213


Interest on taxable investment securities



1,521




1,723




2,116




3,244




4,096


Interest on tax-exempt investment securities



601




595




575




1,196




1,146


Dividends on FHLB of Boston stock



52




101




81




153




157


Interest on overnight investments



16




140




219




156




337


Total interest and dividend income



30,531




26,095




24,470




56,626




43,588


Interest expense





















Interest on deposits



1,396




3,129




4,379




4,525




6,880


Interest on borrowed funds



282




566




315




848




671


Interest on subordinated debt



64




-




-




64




-


Total interest expense



1,742




3,695




4,694




5,437




7,551


Net interest and dividend income



28,789




22,400




19,776




51,189




36,037


Provision for credit losses



14,430




2,000




596




16,430




503


Net interest and dividend income after provision for credit losses



14,359




20,400




19,180




34,759




35,534


Noninterest income





















Wealth management revenue



7,035




6,627




6,419




13,662




12,543


Deposit account fees



695




791




843




1,486




1,581


ATM/Debit card income



290




307




379




597




655


Bank owned life insurance income



165




160




162




325




289


Income (loss) on disposition of investment securities



69







6




69




(81)


Gain on loans sold



193




119




15




312




31


Loan related derivative income



334




510




5




844




441


Other income



191




304




316




495




643


Total noninterest income



8,972




8,818




8,145




17,790




16,102


Noninterest expense





















Salaries and employee benefits



13,542




13,016




11,459




26,558




22,286


Occupancy and equipment



2,938




2,807




2,691




5,745




5,021


Data processing



1,832




1,685




1,534




3,517




2,880


Professional services



1,098




859




760




1,957




1,567


Marketing



486




256




508




742




912


FDIC insurance



318




179




278




497




278


Nonoperating expenses



4,366




253




3,450




4,619




3,541


Other expenses



1,007




870




833




1,877




1,401


Total noninterest expense



25,587




19,925




21,513




45,512




37,886


(Loss) income  before income taxes



(2,256)




9,293




5,812




7,037




13,750


Income tax (benefit) expense



(540)




2,061




1,540




1,521




3,280


Net (loss) income


$

(1,716)




7,232




4,272



$

5,516



$

10,470


Share data:





















Weighted average number of shares outstanding, basic



5,912,889




5,397,040




4,682,109




5,652,908




4,379,141


Weighted average number of shares outstanding, diluted



5,912,889




5,432,099




4,715,724




5,670,438




4,412,239


Basic (loss) earnings per share


$

(0.29)



$

1.34



$

0.91



$

0.97



$

2.37


Diluted (loss) earnings per share


$

(0.29)



$

1.33



$

0.90



$

0.97



$

2.35


 

CAMBRIDGE BANCORP AND SUBSIDIARIES

MARGIN & YIELD ANALYSIS




Three Months Ended




June 30, 2020



March 31, 2020



June 30, 2019




Average

Balance



Interest

Income/

Expenses (1)



Rate

Earned/

Paid (1)



Average

Balance



Interest

Income/

Expenses (1)



Rate

Earned/

Paid (1)



Average

Balance



Interest

Income/

Expenses (1)



Rate

Earned/

Paid (1)




(dollars in thousands)


ASSETS





































Interest-earning assets





































Loans (2)





































Taxable


$

2,660,482



$

28,130




4.25

%


$

2,204,862



$

23,338




4.26

%


$

1,951,133



$

21,355




4.39

%

Tax-exempt



21,004




267




5.11




23,605




250




4.26




14,567




157




4.32


Securities available for sale (3)





































Taxable



115,875




557




1.93




133,402




660




1.99




155,762




748




1.93


Securities held to maturity





































Taxable



158,431




964




2.45




169,433




1,063




2.52




218,672




1,368




2.51


Tax-exempt



84,885




760




3.60




83,193




754




3.65




75,423




728




3.87


Cash and cash equivalents



45,437




16




0.14




59,845




140




0.94




55,015




219




1.60


Total interest-earning assets (4)



3,086,114




30,694




4.00

%



2,674,340




26,205




3.94

%



2,470,572




24,575




3.99

%

Non interest-earning assets



233,240












192,184












161,855










Allowance for credit losses



(23,272)












(18,423)












(16,908)










Total assets


$

3,296,082











$

2,848,101











$

2,615,519










LIABILITIES AND SHAREHOLDERS' EQUITY





































Interest-bearing deposits





































Checking accounts


$

541,482



$

209




0.16

%


$

457,189



$

159




0.14

%


$

426,725



$

120




0.11

%

Savings accounts



915,835




462




0.20




888,973




1,772




0.80




826,726




2,212




1.07


Money market accounts



270,951




140




0.21




193,048




449




0.94




201,164




679




1.35


Certificates of deposit



230,798




585




1.02




187,318




749




1.61




282,579




1,368




1.94


Total interest-bearing deposits



1,959,066




1,396




0.29




1,726,528




3,129




0.73




1,737,194




4,379




1.01


Subordinated debt



3,266




64




7.88




-




-



-




-




-



-


Other borrowed funds



138,052




282




0.82




127,389




566




1.79




50,447




315




2.50


Total interest-bearing liabilities



2,100,384




1,742




0.33

%



1,853,917




3,695




0.80

%



1,787,641




4,694




1.05

%

Non-interest-bearing liabilities





































Demand deposits



770,202












622,892












541,380










Other liabilities



97,431












80,089












64,182










Total liabilities



2,968,017












2,556,898












2,393,203










Shareholders' equity



328,065












291,203












222,316










Total liabilities & shareholders' equity


$

3,296,082











$

2,848,101











$

2,615,519










Net interest income on a fully taxable equivalent basis







28,952












22,510












19,881






Less taxable equivalent adjustment







(215)












(211)












(186)






Net interest income






$

28,737











$

22,299











$

19,695






Net interest spread (5)











3.67

%











3.14

%











2.94

%

Net interest margin (6)











3.77

%











3.39

%











3.23

%



(1)

Annualized on a fully taxable equivalent basis calculated using a federal tax rate of 21%.

(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 and dividend income is excluded from interest-earning assets.

(5)

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

(6)

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

 


CAMBRIDGE BANCORP AND SUBSIDIARIES

MARGIN & YIELD ANALYSIS




Six Months Ended




June 30, 2020



June 30, 2019




Average

Balance



Interest

Income/

Expenses (1)



Rate

Earned/

Paid (1)



Average

Balance



Interest

Income/

Expenses (1)



Rate

Earned/

Paid (1)




(dollars in thousands)


ASSETS

























Interest-earning assets

























Loans (2)

























Taxable


$

2,432,672



$

51,468




4.25

%


$

1,748,485



$

37,639




4.34

%

Tax-exempt



22,305




518




4.67




12,168




269




4.46


Securities available for sale (3)

























Taxable



124,651




1,218




1.96




160,160




1,460




1.84


Securities held to maturity

























Taxable



163,932




2,026




2.49




214,035




2,636




2.48


Tax-exempt



84,039




1,514




3.62




74,641




1,451




3.92


Cash and cash equivalents



52,627




156




0.60




44,081




337




1.54


Total interest-earning assets (4)



2,880,226




56,900




3.97

%



2,253,570




43,792




3.92

%

Non interest-earning assets



212,712












138,310










Allowance for loan losses



(20,848)












(16,799)










Total assets


$

3,072,090











$

2,375,081










LIABILITIES AND SHAREHOLDERS' EQUITY

























Interest-bearing deposits

























Checking accounts


$

499,335



$

368




0.15

%


$

409,390



$

202




0.10

%

Savings accounts



902,404




2,232




0.50




758,219




3,697




0.98


Money market accounts



231,999




589




0.51




165,891




1,060




1.29


Certificates of deposit



209,058




1,336




1.29




218,275




1,921




1.77


Total interest-bearing deposits



1,842,796




4,525




0.49

%



1,551,775




6,880




0.89

%

Subordinated debt



1,633




64




7.88




-




-



-


Other borrowed funds



132,720




848




1.28




52,275




671




2.59


Total interest-bearing liabilities



1,977,149




5,437




0.55

%



1,604,050




7,551




0.95

%

Non-interest-bearing liabilities

























Demand deposits



696,547












512,882










Other liabilities



88,760












62,505










Total liabilities



2,762,456












2,179,437










Shareholders' equity



309,634












195,644










Total liabilities & shareholders' equity


$

3,072,090











$

2,375,081










Net interest income on a fully taxable equivalent basis







51,463












36,241






Less taxable equivalent adjustment







(427)












(361)






Net interest income






$

51,036











$

35,880






Net interest spread (5)











3.42

%











2.97

%

Net interest margin (6)











3.59

%











3.24

%



(1)

Annualized on a fully taxable equivalent basis calculated using a federal tax rate of 21%.

(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 and dividend income is excluded from interest-earning assets.

(5)

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

(6)

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

 

Organic Loan and Deposit Growth (dollars in thousands)












































June 2020 vs December 2019




June 30, 2020



March 31, 2020



December 31, 2019



Balance
Acquired



Organic
Growth/(Decline)
$



Organic
Growth/(Decline)
%


Loans

























Residential mortgage


$

1,351,308




917,103



$

917,566



$

403,855



$

29,887



3.3%


Commercial mortgage



1,413,427




1,089,796




1,060,574




290,909




61,944



5.8%


Home equity



116,067




83,066




80,675




36,213




(821)



(1.0%)


Commercial & Industrial



414,243




127,648




133,236




138,953




142,054



106.6%


Consumer



37,839




38,189




34,677




103




3,059



8.8%


Total loans


$

3,332,884



$

2,255,802



$

2,226,728



$

870,033



$

236,123



10.6%


PPP Loans



(157,017)













(157,017)





Total Loans excluding PPP*


$

3,175,867



$

2,255,802



$

2,226,728



$

870,033



$

79,106



3.6%


Deposits

























Demand


$

929,846



$

608,240



$

630,593




175,912



$

123,341



19.6%


Interest bearing checking



606,999




506,654




450,098




49,944




106,957



23.8%


Money market



419,537




175,158




181,406




250,226




(12,095)



(6.7%)


Savings



960,847




880,944




914,499




72,700




(26,352)



(2.9%)


Core deposits



2,917,229




2,170,996




2,176,596




548,782




191,851



8.8%


Certificates of deposit



358,614




219,363




182,282




212,096




(35,764)



(19.6%)


Total deposits


$

3,275,843



$

2,390,359



$

2,358,878



$

760,878



$

156,087



6.6%



*PPP loans are included within Commercial and Industrial

 

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



Six Months Ended




June 30,



June 30,



June 30,



June 30,


Operating Net Income / Operating Diluted Earnings Per Share


2020



2019



2020



2019




(in thousands, except share data)



















Net (Loss) Income (a GAAP measure)


$

(1,716)



$

4,272



$

5,516



$

10,470


   Add: Merger and Capital issuance expenses (Pretax)



4,366




3,450




4,619




3,541


   Add: (Gain) Loss on disposition of investment securities



(69)




(6)




(69)




81


Provision established for acquired Wellesley loans



8,638







8,638





Tax effect of non-operating adjustments(1)



(3,431)




(761)




(3,494)




(805)


   Operating Net Income (a non-GAAP measure)


$

7,788



$

6,955



$

15,210



$

13,287


Less: Dividends and Undistributed Earnings Allocated to Participating Securities (GAAP)



(4)




(35)




(26)




(94)


   Operating Income Applicable to Common Shareholders (a non-GAAP measure)


$

7,784



$

6,920



$

15,184



$

13,193


Weighted Average Diluted Shares



5,912,889




4,715,724




5,670,438




4,412,239


   Operating Diluted Earnings Per Share (a non-GAAP measure)


$

1.32



$

1.47



$

2.68



$

2.99





















(1)

The net tax benefit associated with noncore items is determined by assessing whether each noncore item is included or excluded from net taxable income and applying the Company's combined marginal tax rate to only those items included in net taxable income.

 



June 30, 2020



December 31, 2019



June 30, 2019




(in thousands, except share data)


Tangible Common Equity:













Shareholders' equity (GAAP)


$

383,060



$

286,561



$

237,094


Less: Goodwill and acquisition related intangibles (GAAP)



(55,070)




(34,544)




(34,725)


Tangible Common Equity (a non-GAAP measure)



327,990




252,017




202,369


Total assets (GAAP)



4,022,750




2,855,563




2,741,308


Less: Goodwill and acquisition related intangibles (GAAP)



(55,070)




(34,544)




(34,725)


Tangible assets (a non-GAAP measure)


$

3,967,680



$

2,821,019



$

2,706,583


Tangible Common Equity Ratio (a non-GAAP measure)



8.27

%



8.93

%



7.48

%

Tangible Book Value Per Share:













Tangible Common Equity (a non-GAAP measure)


$

327,990



$

252,017



$

202,369


Common shares outstanding



6,927,699




5,400,868




4,850,230


Tangible Book Value Per Share (a non-GAAP measure)


$

47.34



$

46.66



$

41.72


 




Three Months Ended



Six Months Ended




June 30, 2020



March 31, 2020



June 30, 2019



June 30, 2020



June 30, 2019




(in thousands, except share data)


Efficiency Ratio:





















Noninterest expense


$

25,587



$

19,925



$

21,513



$

45,512



$

37,886


Net interest and dividend income



28,789




22,400




19,776




51,189




36,037


Total noninterest income



8,972




8,818




8,145




17,790




16,102


Total revenue


$

37,761



$

31,218



$

27,921



$

68,979



$

52,139


Efficiency Ratio



67.76

%



63.83

%



77.05

%



65.98

%



72.66

%






















Operating Efficiency Ratio:





















Noninterest expense


$

25,587



$

19,925



$

21,513



$

45,512



$

37,886


Merger and capital issuance expenses (Pretax)



(4,366)




(253)




(3,450)




(4,619)




(3,541)


Operating expense (a non-GAAP measure)



21,221




19,672




18,063




40,893




34,345


Total revenue


$

37,761



$

31,218



$

27,921



$

68,979



$

52,139


   Add: (Gain) Loss on disposition of investment securities



(69)







(6)




(69)




81


Operating revenue (a non-GAAP measure)


$

37,692



$

31,218



$

27,915



$

68,910



$

52,220


Operating Efficiency Ratio (a non-GAAP measure)



56.30

%



63.01

%



64.71

%



59.34

%



65.77

%






















Operating Return on Tangible Common Equity:





















Operating Net Income (a non-GAAP measure)


$

7,788



$

7,434



$

6,955



$

15,210



$

13,287


Average common equity


$

328,065



$

291,203



$

222,316



$

309,634



$

195,644


Average Goodwill and merger related intangibles



(41,240)




(34,508)




(28,120)




(37,874)




(14,343)


Average tangible common equity


$

286,825



$

256,695



$

194,196



$

271,760



$

181,301


Operating Return on Tangible Common Equity (a non-GAAP measure)



10.92

%



11.65

%



14.37

%



11.26

%



14.78

%






















Operating Return on Average Assets:





















Operating Net Income (a non-GAAP measure)


$

7,788



$

7,434



$

6,955



$

15,210



$

13,287


Average assets


$

3,296,082



$

2,848,101



$

2,615,519



$

3,072,090



$

2,375,081


Operating Return on Average Assets (a non-GAAP measure)



0.95

%



1.05

%



1.07

%



1.00

%



1.13

%

 

COVID-19 Additional Disclosures




Loans with Deferred Payments as of June 30, 2020




Portfolio Total



# of loans
deferred



P&I



Interest Only



Total



% of total




(dollars in thousands)


Residential Mortgages


$

1,351,308




119



$

52,827



$



$

52,827




3.9

%

Commercial Mortgages



1,413,427




81




55,888




43,990




99,878




7.1

%

Home Equity



116,067




13




1,707







1,707




1.5

%

Commercial & Industrial



414,243




62




17,589




2,644




20,233




4.9

%

Consumer loans



37,839
















0.0

%

Total


$

3,332,884




275



$

128,011



$

46,634



$

174,645




5.2

%

 



PPP Loans as of June 30, 2020




Portfolio Total



# of loans



% of count



% of amount


Loan size:


(dollars in thousands)


Below $100k


$

19,613




476




53

%



10

%

$100k to $500k



67,040




318




36

%



35

%

$500k to $1 million



38,718




58




7

%



20

%

Above $1 million



68,392




40




4

%



35

%

Total


$

193,763




892




100

%



100

%

Unearned fees net of deferred costs



(4,457)














Total net of unearned fees



189,306














 

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SOURCE Cambridge Bancorp