Press Release

Cambridge Bancorp Announces Results for the Third Quarter and Declares Dividend

Company Release - 10/20/2020 8:00 AM ET

CAMBRIDGE, Mass., Oct. 20, 2020 /PRNewswire/ -- Cambridge Bancorp (NASDAQ: CATC) (the "Company"), the parent company of Cambridge Trust Company (the "Bank"), today announced unaudited net income of $13,429,000 for the quarter ended September 30, 2020, an increase of $5,753,000, or 74.9%, as compared to net income of $7,676,000 for the quarter ended September 30, 2019.  Diluted earnings per share were $1.93 for the third quarter of 2020, representing a 22.9% increase over diluted earnings per share of $1.57 for the third quarter of 2019.

Cambridge Bancorp Logo (PRNewsfoto/Cambridge Bancorp)

Excluding merger expenses, operating net income was $14,319,000 for the quarter ended September 30, 2020, an increase of $6,380,000, or 80.4%, as compared to operating net income of $7,939,000 for the quarter ended September 30, 2019. Operating diluted earnings per share were $2.06 for the third quarter of 2020, representing a 26.4% increase over operating diluted earnings per share of $1.63 for the same period last year.

For the nine months ended September 30, 2020, unaudited net income was $18,944,000, representing an increase of $798,000, or 4.4%, as compared to net income of $18,146,000 for the nine months ended September 30, 2019. Diluted earnings per share were $3.09 for the nine months ended September 30, 2020, representing a 21.8% decrease over diluted earnings per share of $3.95 for the nine months ended September 30, 2019.

The results for the nine months ended September 30, 2020, include the merger accounting impact of the current and expected credit loss accounting standard ("CECL") within the provision for credit losses, merger expenses, and other non-operating items. Excluding these items, operating net income was $29,528,000 for the nine months ended September 30, 2020, an increase of $8,296,000, or 39.1%, as compared to operating net income of $21,232,000 for the nine months ended September 30, 2019. Operating diluted earnings per share were $4.83 for the nine months ended September 30, 2020, representing a 4.5% increase over operating diluted earnings per share of $4.62 for the nine months ended September 30, 2019.  Further discussion of the merger accounting impacts is detailed in the Non-GAAP Reconciliation tables at the end of this document.

Third quarter 2020 highlights:

  • Asset quality remains strong with ratios of non-performing loans to total loans and non-performing assets to total assets both at 0.28%. Early stage delinquency (30-89 days delinquent) as of September 30, 2020, represents 0.40% of total loans.
  • In continued support of our clients, due to COVID-19, we have deferred or adjusted payments on 3.2% of total loans outstanding at September 30, 2020, as compared to 5.2% at June 30, 2020.
  • The allowance for credit loss to total loans is 1.16%, excluding loans made under the Small Business Administration's ("SBA") Paycheck Protection Program ("PPP").
  • Performance ratios were strong with Operating Return On Assets ("ROA") of 1.43%, Operating Return On Tangible Common Shareholders' Equity ("ROTCE") of 17.12%, and Operating Pre-Tax Pre-Provision ("PTPP") Return on Average Assets ("ROAA") of 2.16%.
  • Organic core deposit growth of $98.2 million, or 3.4%, from the quarter end June 30, 2020.
  • Tangible common equity ratio of 8.60% at September 30, 2020.
  • Tangible book value per share of $48.80 at September 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 financial disclosures.

"The Cambridge Trust team continues to support clients and our communities during this difficult period," noted Denis K. Sheahan, Chairman and CEO. "In addition to continued lending and loan forbearance, where needed, we are open and available to meet client needs and have continued our effort to support the community with charitable giving.  I am proud of the team's accomplishments and, in particular, successfully converting the Wellesley Bank systems at the beginning of October.  The Bank remains on a solid footing with strong capital, liquidity and asset quality."

Balance Sheet

Total assets increased $1.1 billion, or 39.6%, from $2.9 billion at December 31, 2019, inclusive of the Wellesley Bancorp Inc. ("Wellesley") merger, and were $4.0 billion as of September 30, 2020.

Total loans increased by $1.1 billion, or 47.5%, from December 31, 2019, inclusive of the Wellesley merger, and totaled $3.3 billion as of September 30, 2020. The increase in total loans was due to a combination of the merger with Wellesley and organic growth during 2020. A table accompanying this release provides detail regarding organic loan and deposit growth.

Inclusive of Wellesley:

  • Residential real estate loans increased by $426.2 million from $917.6 million at December 31, 2019, to $1.3 billion at September 30, 2020.
  • Commercial real estate loans increased by $303.8 million, from $1.1 billion at December 31, 2019, to $1.4 billion at September 30, 2020.
  • Commercial & industrial loans increased by $294.8 million from $133.2 million at December 31, 2019, to $428.0 million at September 30, 2020.
  • Loans under the SBA's PPP amounted to $189.9 million at September 30, 2020. PPP loans are included in commercial and industrial loans.

Excluding Wellesley and PPP loans, total loans grew by $29.9 million, or 1.3%, from December 31, 2019.

As a result of payoffs and paydowns of commercial mortgage loans during the quarter ended September 30, 2020, total loans outstanding were reduced by $48.6 million, or 1.5%, from June 30, 2020. The reduction in commercial mortgage loan balances is due to strong local market demand and the low interest rate environment.

Total deposits increased by $973.1 million, or 41.3%, to $3.3 billion at September 30, 2020 from $2.4 billion at December 31, 2019, 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 $838.8 million, or 38.5%, to $3.0 billion at September 30, 2020 from $2.2 billion at December 31, 2019, inclusive of the Wellesley merger.
  • Excluding the impact of the Wellesley merger, organic growth in core deposits was $290.0 million, or 13.3%.
  • Inclusive of the Wellesley merger, the cost of total deposits for the quarter ended September 30, 2020, was 0.16%, as compared to 0.68% for the quarter ended December 31, 2019, a reduction of 52 basis points driven by a reduction in interest rates during 2020. The cost of total deposits for the nine months ended September 30, 2020 was 0.28%, as compared to 0.71% for the nine months ended September 30, 2019, a reduction of 43 basis points driven by a reduction in interest rates during 2020. At September 30, 2020, the spot cost of deposits was 0.17%.

Certificates of deposit totaled $316.5 million at September 30, 2020, an increase of $134.2 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 $77.8 million and $7.1 million at September 30, 2020, and December 31, 2019, respectively.

Core deposits during the third quarter increased by $98.2 million, or 3.4%, from June 30, 2020. The growth in core deposits was a function of new business development efforts combined with existing client growth.

Borrowings were relatively unchanged from $135.7 million at December 31, 2019, and totaled $135.8 million as of September 30, 2020.

Net Interest and Dividend Income

For the quarter ended September 30, 2020, net interest and dividend income before the provision for credit losses increased by $13.9 million, or 66.1%, to $35.0 million, as compared to $21.1 million for the quarter ended September 30, 2019. This change was primarily due to loan growth (both organic and as a result of the Wellesley merger), lower costs of funds 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 52 basis points to 3.73% for the quarter ended September 30, 2020, as compared to 3.21% for the quarter ended September 30, 2019. 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 related merger accounting and the impact of the SBA's PPP loan program, a reconciliation of the Company's net interest margin to an adjusted net interest margin is shown below. Excluding the impact of merger-related loan accretion and the impact of PPP loans, the adjusted net interest margin for the quarter ended September 30, 2020, was 3.41%, representing a five basis points decrease over the prior quarter adjusted net interest margin of 3.46% and a 20 basis points increase as compared to the net interest margin of 3.21% for the third quarter of 2019. 

 



Three Months Ended




September 30, 2020




Average

Balance



Interest

Income/

Expenses



Rate

Earned/

Paid




           (dollars in thousands)


Total interest-earning assets (GAAP)


$

3,742,726










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






$

35,067






Net interest margin (GAAP)











3.73

%

Less: Paycheck Protection Program loan impact



(189,515)




(1,097)




0.08

%

Less: Accretion of loan fair value adjustments







(3,513)




-0.38

%

Adjusted net interest margin on a fully taxable equivalent basis


$

3,553,211



$

30,457




3.41

%

 

Provision for Credit Losses

During the third quarter of 2020, the Company increased its allowance for credit losses by recording a $2.0 million provision for credit losses due to changes in assumptions associated with estimated losses as a result of the novel coronavirus ("COVID-19") pandemic both qualitatively and quantitatively. For the nine months ended September 30, 2020, the Company recorded a total provision for credit losses of $18.4 million, which includes $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 the merger related CECL accounting.

Noninterest Income

Total noninterest income increased by $567,000, or 5.5%, to $10.9 million for the quarter ended September 30, 2020, as compared to $10.4 million for the quarter ended September 30, 2019, primarily as a result of increases in wealth management revenue and increases in gains on loans sold. Noninterest income was 23.8% of total revenue for the quarter ended September 30, 2020.

  • Wealth management revenue increased by $992,000, or 14.1%, to $8.0 million for the third quarter of 2020, as compared to $7.0 million for the third quarter of 2019. Wealth Management Assets under Management and Administration were $3.9 billion as of September 30, 2020, an increase of $495.6 million, or 14.4%, from December 31, 2019, primarily as a result of the Wellesley merger and appreciation in the equity markets during 2020.
  • Gain on loans sold increased by $413,000, to $873,000 for the third quarter of 2020, as compared to $460,000 for the third quarter of 2019, due to increased sales of residential mortgages.

Inclusive of the Wellesley merger, total noninterest income increased by $2.3 million, or 8.5%, to $28.7 million for the nine months ended September 30, 2020, as compared to $26.5 million for the nine months ended September 30, 2019, primarily as a result of increases in wealth management revenue and an increase in gain on loans sold. Noninterest income was 25.0% of total revenue for the nine months ended September 30, 2020.

  • Wealth management revenue increased by $2.1 million, or 10.8%, to $21.7 million for the nine months ended September 30, 2020, as compared to $19.6 million for the nine months ended September 30, 2019.
  • Gain on loans sold increased by $694,000, to $1.2 million for the nine months ended September 30, 2020, as compared to $491,000 for the nine months ended September 30, 2019, due to increased sales of residential mortgages.

Noninterest Expense

Total noninterest expense increased by $6.6 million, or 34.9%, to $25.4 million for the quarter ended September 30, 2020, as compared to $18.9 million for the quarter ended September 30, 2019, primarily driven by increases in salaries and employee benefits expense, occupancy and equipment expense, data processing expense, and one-time merger-related expenses as described below.

  • Salaries and employee benefits expense increased $3.7 million, or 30.5%, driven by increased staffing related to the merger with Wellesley in the second quarter of 2020, additions to support business initiatives, and higher employee benefit costs.
  • Occupancy and equipment expense increased $884,000, or 31.7%, primarily as a result of additional banking locations and office space as a result of the mergers with Optima Bank & Trust ("Optima") and Wellesley.
  • Data processing expense increased $432,000, or 26.2%, primarily as a result of the merger with Wellesley.
  • Merger expenses increased $829,000 to $1.2 million from $339,000 from the same period a year ago, primarily due to one-time non-operating costs associated with the Wellesley merger.

Total noninterest expense increased by $14.2 million, or 25.0%, to $71.0 million for the nine months ended September 30, 2020, as compared to $56.7 million for the nine months ended September 30, 2019. This increase was primarily driven by increases in salaries and employee benefits expense, merger-related expenses, occupancy and equipment expense, and data processing expense as a result of our mergers with Optima in 2019 and Wellesley in 2020 as described below.

  • Salaries and employee benefits expense increased $7.9 million, or 23.1%, 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.
  • Merger expenses increased $1.9 million to $5.8 million from $3.9 million, primarily due to one-time non-operating costs associated with the Wellesley merger.
  • Occupancy and equipment expense increased $1.6 million, or 20.6%, primarily as a result of additional branches and office space as a result of the mergers with Optima and Wellesley.
  • Data processing expense increased $1.1 million, or 23.6%, primarily as a result of the mergers with Optima and Wellesley.

Asset Quality 

Non-performing loans totaled $9.2 million, or 0.28% of total loans outstanding as of September 30, 2020. Early stage delinquency (30-89 days delinquent) represented 0.40% of total loans outstanding as of September 30, 2020.

Net loan charge-offs remained low at $213,000, or 0.03% of total loans (annualized) for the three months ended September 30, 2020, as compared to $1.2 million, or 0.23% of total loans (annualized) for the three months ended September 30, 2019.

Net loan charge-offs were $613,000 or 0.02% of total loans for the nine months ended September 30, 2020, as compared to $1.4 million, or 0.06% of total loans for the nine months ended September 30, 2019.

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



Nonperforming Assets




September 30, 2020



June 30, 2020



December 31, 2019



September 30, 2019




(dollars in thousands)


Total nonperforming loans


$

9,189



$

10,251



$

5,651



$

3,483


Other real estate owned



1,820




1,970




163




185


Total nonperforming assets


$

11,009



$

12,221



$

5,814



$

3,668


Troubled debt restructurings:

















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


$

811



$

262



$

227



$

234


Performing













     Total troubled debt restructurings


$

811



$

262



$

227



$

234


Nonperforming loans/total loans



0.28

%



0.31

%



0.25

%



0.16

%

Nonperforming assets/total assets



0.28

%



0.30

%



0.20

%



0.13

%

TDRs/total loans



0.02

%



0.01

%



0.01

%



0.01

%




















Additional Asset Quality Indicators




September 30, 2020



June 30, 2020



December 31, 2019



September 30, 2019


Purchased Credit Deteriorated ("PCD")/total loans



0.59

%



0.58

%







Delinquent loans 30-89 days past due/total loans



0.40

%



0.22

%



0.50

%



0.29

%

Quarterly Net charge-offs/total loans (annualized)



0.03

%



0.02

%



0.03

%



0.23

%

Allowance for credit losses/nonperforming loans



390.90

%



331.81

%



321.71

%



517.80

%

Allowance for credit losses/total loans excluding PPP



1.16

%



1.08

%



0.82

%



0.83

%

The allowance for credit losses in total was $35.9 million, or 1.16% of total loans outstanding at September 30, 2020 excluding PPP loans, as compared to $18.2 million, or 0.82% of total loans outstanding at December 31, 2019.

Forbearance/Modifications 

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

Income Taxes

Inclusive of the impact of the Wellesley merger, the Company's effective tax rate was 27.2% for the quarter ended September 30, 2020, as compared to 26.1% for the quarter ended September 30, 2019. For the nine months ended September 30, 2020, the Company's effective tax rate was 25.7%, as compared to 24.8% for the nine months ended September 30, 2019.

Dividend & Capital

On October 19, 2020, the Company's Board of Directors declared a quarterly cash dividend of $0.53 per share, which is payable on November 19, 2020, to shareholders of record as of the close of business on November 5, 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.

The Company's total shareholders' equity to total assets ratio increased by 130 basis points to 9.86% as of September 30, 2020, as compared to 8.56% as of September 30, 2019. Book value per share increased by $6.56, or 13.1%, to $56.73 as of September 30, 2020, as compared to $50.17 as of September 30, 2019.

The Company's ratio of tangible common equity to tangible assets increased to 8.60% at September 30, 2020, from 7.43% at September 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 increased by $5.77, or 13.4% to $48.80 as of September 30, 2020, as compared to $43.03 as of September 30, 2019. 

Supplemental Earnings Release Information:
Click here to download

About Cambridge Bancorp

Cambridge Bancorp, the parent company of Cambridge Trust Company, is based in Cambridge, Massachusetts. Cambridge Trust Company is a 130-year-old Massachusetts chartered commercial bank with approximately $4.0 billion in assets as of September 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 $3.9 billion in client assets under management and administration as of September 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 17, 2020. The Company does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements. You are cautioned not to place undue reliance on these forward-looking statements.

Non-GAAP Measures

This press release contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America ("GAAP"). This information includes operating net income and operating diluted earnings per share, tangible book value per share and the tangible common equity ratio, 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 non-operating 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 nonoperating and excludes when computing these non-GAAP measures can be of substantial importance to the Company's results for any particular quarter or year. The Company's non-GAAP performance measures, including operating net income, operating diluted earnings per share, tangible book value per share, the tangible common equity ratio, and return on average assets, return on average equity, and efficiency ratio on an operating basis are not necessarily comparable to non-GAAP performance measures which may be presented by other companies. 

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

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

 

CAMBRIDGE BANCORP AND SUBSIDIARIES
QUARTERLY UNAUDITED RESULTS




Three Months Ended



Nine Months Ended




September 30,



June 30, 2020



September 30,



September 30,




2020



2020



2019



2020



2019




(dollars in thousands, except per share data)


Interest and Dividend Income


$

36,881



$

30,531



$

26,336



$

93,506



$

69,924


Interest Expense



1,919




1,742




5,285




7,355




12,836


  Net Interest and Dividend Income



34,962




28,789




21,051




86,151




57,088


Provision for Credit Losses



2,000




14,430




2,170




18,430




2,673


Noninterest Income



10,933




8,972




10,366




28,723




26,468


Noninterest Expense



25,445




25,587




18,863




70,958




56,749


Income (Loss) Before Income Taxes



18,450




(2,256)




10,384




25,486




24,134


Income Tax Expense (Benefit)



5,021




(540)




2,708




6,542




5,988


  Net Income (Loss)


$

13,429



$

(1,716)



$

7,676



$

18,944



$

18,146


Operating Net Income*


$

14,319



$

7,788



$

7,939



$

29,528



$

21,232























Data Per Common Share:





















 Basic Earnings (Loss) Per Share


$

1.94



$

(0.29)



$

1.58



$

3.11



$

3.98


 Diluted Earnings (Loss) Per Share



1.93




(0.29)




1.57




3.09




3.95


 Operating Diluted Earnings Per Share*



2.06




1.32




1.63




4.83




4.62


 Dividends Declared Per Share



0.53




0.53




0.51




1.59




1.53


 Avg. Common Shares Outstanding:





















   Basic



6,918,692




5,912,889




4,815,020




6,078,586




4,525,178


   Diluted



6,954,324




5,912,889




4,842,965




6,113,828




4,552,092























Selected Performance Ratios:





















 Net Interest Margin, FTE



3.73

%



3.77

%



3.21

%



3.65

%



3.23

%

 Adjusted Net Interest Margin, FTE



3.41

%



3.46

%



3.21

%



3.65

%



3.23

%

 Cost of Funds



0.20

%



0.23

%



0.80

%



0.31

%



0.72

%

 Cost of Interest Bearing Liabilities



0.31

%



0.33

%



1.12

%



0.46

%



1.01

%

 Cost of Deposits



0.16

%



0.21

%



0.78

%



0.28

%



0.71

%

 Cost of Deposits excl. Wholesale Deposits



0.14

%



0.19

%



0.76

%



0.26

%



0.66

%

 Return on Average Assets



1.34

%



(0.21)

%



1.10

%



0.75

%



0.97

%

 Return on Average Equity



13.78

%



(2.10)

%



12.70

%



7.53

%



11.52

%

 Efficiency Ratio*



55.44

%



67.76

%



60.04

%



61.77

%



67.92

%

 Operating Return on Average Assets*



1.43

%



0.95

%



1.13

%



1.17

%



1.13

%

 Operating Return on Tangible Common Equity*



17.12

%



10.92

%



15.36

%



13.48

%



14.99

%

 Operating Efficiency Ratio*



52.90

%



56.30

%



58.97

%



56.77

%



63.21

%




















September 30,



June 30,



December 31,



September 30,








2020



2020



2019



2019



























Total Assets


$

3,987,109



$

4,022,750



$

2,855,563



$

2,841,868






Total Loans



3,284,286




3,332,884




2,226,728




2,179,882






Total Deposits



3,331,942




3,275,843




2,358,878




2,407,859






Allowance for Credit Losses



35,920




34,014




18,180




18,035






Allowance to Total Loans (excluding PPP)



1.16

%



1.08

%



0.82

%



0.83

%





Non-Performing Loans



9,189




10,251




5,651




3,483






Nonperforming loans/total loans



0.28

%



0.31

%



0.25

%



0.16

%





QTD Net charge-offs to Total Loans (annualized)



0.03

%



0.02

%



0.03

%



0.23

%





Tangible Common Equity Ratio*



8.60

%



8.27

%



8.93

%



7.43

%





Book Value Per Share


$

56.73



$

55.29



$

53.06



$

50.17






Tangible Book Value Per Share*


$

48.80



$

47.34



$

46.66



$

43.03






Wealth Management AUM



3,791,064




3,572,286




3,287,371




3,119,041






Wealth Management AUM & AUA



3,948,478




3,731,226




3,452,852




3,278,046






* See GAAP to Non-GAAP Reconciliations


















 

CAMBRIDGE BANCORP AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS




September 30, 2020



June 30,
2020



December 31, 2019




(dollars in thousands, except par value)


Assets













Cash and cash equivalents


$

64,520



$

60,742



$

61,335


Investment securities













Available for sale, at fair value (amortized cost $148,635, $130,761, and $141,109, respectively)



152,105




134,227




140,330


Held to maturity, at amortized cost (fair value $252,428, $257,121, and $264,114, respectively)



240,015




244,551




258,172


Total investment securities



392,120




378,778




398,502


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



7,379




2,614




1,546


Loans













Residential mortgage



1,343,815




1,351,308




917,566


Commercial mortgage



1,364,387




1,413,427




1,060,574


Home equity



108,343




116,067




80,675


Commercial & Industrial



428,024




414,243




133,236


Consumer



39,717




37,839




34,677


Total loans



3,284,286




3,332,884




2,226,728


Less: allowance for credit losses on loans



(35,920)




(34,014)




(18,180)


Net loans



3,248,366




3,298,870




2,208,548


Federal Home Loan Bank of Boston Stock, at cost



6,492




9,262




7,854


Bank owned life insurance



45,948




45,747




37,319


Banking premises and equipment, net



18,255




18,482




14,756


Right-of-use asset operating leases



37,347




38,912




33,587


Deferred income taxes, net



11,514




11,855




8,229


Accrued interest receivable



9,375




8,631




7,052


Goodwill



51,912




51,912




31,206


Merger related intangibles, net



3,068




3,158




3,338


Other assets



90,813




93,787




42,291


Total assets


$

3,987,109



$

4,022,750



$

2,855,563


Liabilities













Deposits













Demand


$

1,011,382



$

929,846



$

630,593


Interest bearing checking



592,113




606,999




450,098


Money market



436,120




419,537




181,406


Savings



975,811




960,847




914,499


Certificates of deposit



316,516




358,614




182,282


Total deposits



3,331,942




3,275,843




2,358,878


Borrowings



135,805




237,897




135,691


Subordinated debt



9,959




9,920





Operating lease liabilities



38,930




40,453




35,054


Other liabilities



77,400




75,577




39,379


Total liabilities



3,594,036




3,639,690




2,569,002


Shareholders' Equity













Common stock, par value $1.00; Authorized: 10,000,000 shares; Outstanding: 6,928,288 shares, 6,927,699 shares, and 5,400,868 shares, respectively



6,928




6,928




5,401


Additional paid-in capital



225,361




224,540




136,766


Retained earnings



156,062




146,305




146,875


Accumulated other comprehensive income (loss)



4,722




5,287




(2,481)


Total shareholders' equity



393,073




383,060




286,561


Total liabilities and shareholders' equity


$

3,987,109



$

4,022,750



$

2,855,563


 

CAMBRIDGE BANCORP AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME




Three Months Ended



Nine Months Ended




September 30, 2020



June 30,
2020



September 30, 2019



September 30, 2020



September 30, 2019




(dollars in thousands, except share data)


Interest and dividend income





















Interest on taxable loans


$

34,468



$

28,130



$

23,280



$

85,936



$

60,919


Interest on tax-exempt loans



243




211




172




652




385


Interest on taxable investment securities



1,404




1,521




1,978




4,648




6,074


Interest on tax-exempt investment securities



631




601




563




1,827




1,709


Dividends on FHLB of Boston stock



127




52




124




280




281


Interest on overnight investments



8




16




219




163




556


Total interest and dividend income



36,881




30,531




26,336




93,506




69,924


Interest expense





















Interest on deposits



1,354




1,396




4,609




5,879




11,489


Interest on borrowed funds



376




282




676




1,223




1,347


Interest on subordinated debt



189




64







253





Total interest expense



1,919




1,742




5,285




7,355




12,836


Net interest and dividend income



34,962




28,789




21,051




86,151




57,088


Provision for credit losses



2,000




14,430




2,170




18,430




2,673


Net interest and dividend income after provision for credit losses



32,962




14,359




18,881




67,721




54,415


Noninterest income





















Wealth management revenue



8,025




7,035




7,033




21,686




19,576


Deposit account fees



603




695




814




2,089




2,395


ATM/Debit card income



349




290




391




946




1,046


Bank owned life insurance income



201




165




165




526




454


Gain (loss) on disposition of investment securities






69




2




69




(79)


Gain on loans sold



873




193




460




1,185




491


Loan related derivative income



292




334




1,130




1,137




1,571


Other income



590




191




371




1,085




1,014


Total noninterest income



10,933




8,972




10,366




28,723




26,468


Noninterest expense





















Salaries and employee benefits



15,744




13,542




12,067




42,302




34,353


Occupancy and equipment



3,676




2,938




2,792




9,421




7,813


Data processing



2,084




1,832




1,652




5,601




4,532


Professional services



1,151




1,098




844




3,108




2,411


Marketing



420




486




263




1,162




1,175


FDIC insurance



313




318




91




810




369


Nonoperating expenses



1,168




4,366




339




5,787




3,880


Other expenses



889




1,007




815




2,767




2,216


Total noninterest expense



25,445




25,587




18,863




70,958




56,749


Income (loss) before income taxes



18,450




(2,256)




10,384




25,486




24,134


Income tax expense (benefit)



5,021




(540)




2,708




6,542




5,988


Net income (loss)


$

13,429




(1,716)




7,676



$

18,944



$

18,146


Share data:





















Weighted average number of shares outstanding, basic



6,918,692




5,912,889




4,815,020




6,078,586




4,525,178


Weighted average number of shares outstanding, diluted



6,954,324




5,912,889




4,842,965




6,113,828




4,552,092


Basic earnings (loss) per share


$

1.94



$

(0.29)



$

1.58



$

3.11



$

3.98


Diluted earnings (loss) per share


$

1.93



$

(0.29)



$

1.57



$

3.09



$

3.95


 

CAMBRIDGE BANCORP AND SUBSIDIARIES
MARGIN & YIELD ANALYSIS




Three Months Ended




September 30, 2020



June 30, 2020



September 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


$

3,288,304



$

34,468




4.17

%


$

2,660,482



$

28,130




4.25

%


$

2,103,892



$

23,280




4.39

%

Tax-exempt



18,940




307




6.45




21,004




267




5.11




19,441




218




4.45


Securities available for sale (3)





































Taxable



129,957




524




1.60




115,875




557




1.93




149,045




704




1.87


Securities held to maturity





































Taxable



147,771




880




2.37




158,431




964




2.45




204,279




1,274




2.47


Tax-exempt



90,698




799




3.50




84,885




760




3.60




74,246




713




3.81


Cash and cash equivalents



67,056




8




0.05




45,437




16




0.14




57,937




219




1.50


Total interest-earning assets (4)



3,742,726




36,986




3.93

%



3,086,114




30,694




4.00

%



2,608,840




26,408




4.02

%

Non interest-earning assets



281,910












233,240












184,151










Allowance for credit losses



(33,872)












(23,272)












(17,392)










Total assets


$

3,990,764











$

3,296,082











$

2,775,599










LIABILITIES AND SHAREHOLDERS' EQUITY





































Interest-bearing deposits





































Checking accounts


$

577,294



$

164




0.11

%


$

541,482



$

209




0.16

%


$

422,395



$

117




0.11

%

Savings accounts



963,253




565




0.23




915,835




462




0.20




873,853




2,591




1.18


Money market accounts



435,417




245




0.22




270,951




140




0.21




209,922




743




1.40


Certificates of deposit



333,366




380




0.45




230,798




585




1.02




243,892




1,158




1.88


Total interest-bearing deposits



2,309,330




1,354




0.23




1,959,066




1,396




0.29




1,750,062




4,609




1.04


Subordinated debt



9,936




189




7.57




3,266




64




7.88











Other borrowed funds



177,423




376




0.84




138,052




282




0.82




115,809




676




2.32


Total interest-bearing liabilities



2,496,689




1,919




0.31

%



2,100,384




1,742




0.33

%



1,865,871




5,285




1.12

%

Non-interest-bearing liabilities





































Demand deposits



986,590












770,202












596,646










Other liabilities



119,762












97,431












73,293










Total liabilities



3,603,041












2,968,017












2,535,810










Shareholders' equity



387,723












328,065












239,789










Total liabilities & shareholders' equity


$

3,990,764











$

3,296,082











$

2,775,599










Net interest income on a fully taxable equivalent basis







35,067












28,952












21,123






Less taxable equivalent adjustment







(232)












(215)












(196)






Net interest income






$

34,835











$

28,737











$

20,927






Net interest spread (5)











3.63

%











3.67

%











2.89

%

Net interest margin (6)











3.73

%











3.77

%











3.21

%



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

(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



Nine Months Ended




September 30, 2020



September 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


$

2,719,965



$

85,936




4.22

%


$

1,868,256



$

60,919




4.36

%

Tax-exempt



21,175




825




5.20




14,619




487




4.45


Securities available for sale (3)

























Taxable



126,433




1,742




1.84




156,414




2,164




1.85


Securities held to maturity

























Taxable



158,506




2,906




2.45




210,747




3,910




2.48


Tax-exempt



86,275




2,313




3.58




74,508




2,163




3.88


Cash and cash equivalents



57,472




163




0.38




48,750




556




1.52


Total interest-earning assets (4)



3,169,826




93,885




3.96

%



2,373,294




70,199




3.95

%

Non interest-earning assets



236,346












153,760










Allowance for loan losses



(25,221)












(16,999)










Total assets


$

3,380,951











$

2,510,055










LIABILITIES AND SHAREHOLDERS' EQUITY

























Interest-bearing deposits

























Checking accounts


$

525,511



$

532




0.14

%


$

413,773



$

319




0.10

%

Savings accounts



922,835




2,797




0.40




797,187




6,288




1.05


Money market accounts



300,300




834




0.37




180,729




1,803




1.33


Certificates of deposit



250,796




1,716




0.91




226,908




3,079




1.81


Total interest-bearing deposits



1,999,442




5,879




0.39

%



1,618,597




11,489




0.95

%

Subordinated debt



4,421




253




7.64











Other borrowed funds



147,730




1,223




1.11




73,686




1,347




2.44


Total interest-bearing liabilities



2,151,593




7,355




0.46

%



1,692,283




12,836




1.01

%

Non-interest-bearing liabilities

























Demand deposits



793,934












541,110










Other liabilities



99,168












66,141










Total liabilities



3,044,695












2,299,534










Shareholders' equity



336,256












210,521










Total liabilities & shareholders' equity


$

3,380,951











$

2,510,055










Net interest income on a fully taxable equivalent basis







86,530












57,363






Less taxable equivalent adjustment







(659)












(556)






Net interest income






$

85,871











$

56,807






Net interest spread (5)











3.50

%











2.94

%

Net interest margin (6)











3.65

%











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

(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)












































September 2020 vs December 2019




September 30, 2020



June 30,
2020



December 31, 2019



Balance Acquired



Organic Growth/(Decline) $



Organic Growth/(Decline) %


Loans

























Residential mortgage


$

1,343,815




1,351,308



$

917,566



$

403,855



$

22,394



2.4%


Commercial mortgage



1,364,387




1,413,427




1,060,574




290,909




12,904



1.2%


Home equity



108,343




116,067




80,675




36,213




(8,545)



(10.6%)


Commercial & Industrial



428,024




414,243




133,236




138,953




155,835



117.0%


Consumer



39,717




37,839




34,677




103




4,937



14.2%


Total loans


$

3,284,286



$

3,332,884



$

2,226,728



$

870,033



$

187,525



8.4%


PPP Loans (1)



(189,916)




(189,306)







(32,289)




(157,627)





Total Loans excluding PPP


$

3,094,370



$

3,143,578



$

2,226,728



$

837,744



$

29,898



1.3%


Deposits

























Demand


$

1,011,382



$

929,846



$

630,593




175,912



$

204,877



32.5%


Interest bearing checking



592,113




606,999




450,098




49,944




92,071



20.5%


Money market



436,120




419,537




181,406




250,226




4,488



2.5%


Savings



975,811




960,847




914,499




72,700




(11,388)



(1.2%)


Core deposits



3,015,426




2,917,229




2,176,596




548,782




290,048



13.3%


Certificates of deposit



316,516




358,614




182,282




212,096




(77,862)



(42.7%)


Total deposits


$

3,331,942



$

3,275,843



$

2,358,878



$

760,878



$

212,186



9.0%




(1)

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



Nine Months Ended




September 30,



June 30,



September 30,



September 30,



September 30,


Operating Net Income / Operating Diluted Earnings Per Share


2020



2020



2019



2020



2019




(in thousands, except share data)























Net (Loss) Income (a GAAP measure)


$

13,429



$

(1,716)



$

7,676



$

18,944



$

18,146


   Add: Merger and Capital issuance expenses



1,168




4,366




339




5,787




3,880


   Add: (Gain) Loss on disposition of investment securities






(69)




(2)




(69)




79


Add: Provision established for acquired Wellesley loans






8,638







8,638





Tax effect of non-operating adjustments(1)



(278)




(3,431)




(74)




(3,772)




(873)


   Operating Net Income (a non-GAAP measure)


$

14,319



$

7,788



$

7,939



$

29,528



$

21,232


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



(13)




(4)




(59)




(22)




(183)


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


$

14,306



$

7,784



$

7,880



$

29,506



$

21,049


Weighted Average Diluted Shares



6,954,324




5,912,889




4,842,965




6,113,828




4,552,092


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


$

2.06



$

1.32



$

1.63



$

4.83



$

4.62

























(1)

The net tax benefit associated with nonoperating items is determined by assessing whether each nonoperating 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.

 



September 30,
2020



June 30,
2020



December 31,
2019



September 30,
2019




(in thousands, except share data)


Tangible Common Equity:

















Shareholders' equity (GAAP)


$

393,073



$

383,060



$

286,561



$

243,345


Less: Goodwill and acquisition related intangibles (GAAP)



(54,980)




(55,070)




(34,544)




(34,635)


Tangible Common Equity (a non-GAAP measure)



338,093




327,990




252,017




208,710


Total assets (GAAP)



3,987,109




4,022,750




2,855,563




2,841,868


Less: Goodwill and acquisition related intangibles (GAAP)



(54,980)




(55,070)




(34,544)




(34,635)


Tangible assets (a non-GAAP measure)


$

3,932,129



$

3,967,680



$

2,821,019



$

2,807,233


Tangible Common Equity Ratio (a non-GAAP measure)



8.60

%



8.27

%



8.93

%



7.43

%

Tangible Book Value Per Share:

















Tangible Common Equity (a non-GAAP measure)


$

338,093



$

327,990



$

252,017



$

208,710


Common shares outstanding



6,928,288




6,927,699




5,400,868




4,849,988


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


$

48.80



$

47.34



$

46.66



$

43.03


 



Three Months Ended



Nine Months Ended




September 30, 2020



June 30,
2020



September 30, 2019



September 30, 2020



September 30, 2019




(in thousands, except share data)


Efficiency Ratio: (1)





















Noninterest expense


$

25,445



$

25,587



$

18,863



$

70,958



$

56,749


Net interest and dividend income



34,962




28,789




21,051




86,151




57,088


Total noninterest income



10,933




8,972




10,366




28,723




26,468


Total revenue


$

45,895



$

37,761



$

31,417



$

114,874



$

83,556


Efficiency Ratio



55.44

%



67.76

%



60.04

%



61.77

%



67.92

%






















Operating Efficiency Ratio: (2)





















Noninterest expense


$

25,445



$

25,587



$

18,863



$

70,958



$

56,749


Merger and capital issuance expenses (Pretax)



(1,168)




(4,366)




(339)




(5,787)




(3,880)


Operating expense (a non-GAAP measure)



24,277




21,221




18,524




65,171




52,869


Total revenue


$

45,895



$

37,761



$

31,417



$

114,874



$

83,556


   Add: (Gain) Loss on disposition of investment securities






(69)




(2)




(69)




79


Operating revenue (a non-GAAP measure)


$

45,895



$

37,692



$

31,415



$

114,805



$

83,635


Operating Efficiency Ratio (a non-GAAP measure)



52.90

%



56.30

%



58.97

%



56.77

%



63.21

%






















Operating Return on Tangible Common Equity: (3)





















Operating Net Income (a non-GAAP measure)


$

14,319



$

7,788



$

7,939



$

29,528



$

21,232


Average common equity


$

387,723



$

328,065



$

239,789



$

336,256



$

210,521


Average Goodwill and merger related intangibles



(55,030)




(41,240)




(34,692)




(43,634)




(21,201)


Average tangible common equity


$

332,693



$

286,825



$

205,097



$

292,622



$

189,320


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



17.12

%



10.92

%



15.36

%



13.48

%



14.99

%






















Operating Return on Average Assets: (4)





















Operating Net Income (a non-GAAP measure)


$

14,319



$

7,788



$

7,939



$

29,528



$

21,232


Average assets


$

3,990,764



$

3,296,082



$

2,775,599



$

3,380,951



$

2,510,055


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



1.43

%



0.95

%



1.13

%



1.17

%



1.13

%




Three Months Ended



Nine Months Ended




September 30, 2020



June 30,
2020



September 30, 2019



September 30, 2020



September 30, 2019




(in thousands)







(in thousands)


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





















Income (Loss) before income taxes (GAAP)


$

18,450



$

(2,256)



$

10,384



$

25,486



$

24,134


Add: Provision for Credit Losses (GAAP)



2,000




14,430




2,170




18,430




2,673


Add: Merger and Capital issuance expenses (GAAP)



1,168




4,366




339




5,787




3,880


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






(69)




(2)




(69)




79


Operating PTPP Income (a non-GAAP measure)


$

21,618



$

16,471



$

12,891



$

49,634



$

30,766


Average assets



3,990,764




3,296,082




2,775,599




3,380,951




2,510,055


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



2.16

%



2.01

%



1.84

%



1.96

%



1.64

%



(1)

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

(2)

Operating efficiency ratio represents operating expense as a percentage of operating income. 

(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.

(5)

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

 

 

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SOURCE Cambridge Bancorp