UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________________ to __________________

Commission File Number: 001-38184

CAMBRIDGE BANCORP

(Exact Name of Registrant as Specified in its Charter)

Massachusetts	04-2777442
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1336 Massachusetts Avenue Cambridge, MA	02138
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (617) 876-5500

Securities registered pursuant to Section 12(b) of the Act:

Common Stock	CATC	NASDAQ
(Title of each class)	(Trading symbol)	(Name of each exchange on which registered)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July 29, 2022 the registrant had 7,006,525 shares of common stock, $1.00 par value per share, outstanding.

Table of Contents

CAMBRIDGE BANCORP AND SUBSIDIARIES

		Page
PART I.	FINANCIAL INFORMATION	1
Item 1.	Financial Statements (Unaudited)	1
	Unaudited Consolidated Balance Sheets	1
	Unaudited Consolidated Statements of Income	2
	Unaudited Consolidated Statements of Comprehensive Income	3
	Unaudited Consolidated Statements of Changes in Shareholders’ Equity	4
	Unaudited Consolidated Statements of Cash Flows	5
	Notes to Unaudited Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	54
Item 4.	Controls and Procedures	54
PART II.	OTHER INFORMATION	55
Item 1.	Legal Proceedings	55
Item 1A.	Risk Factors	55
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	57
Item 3.	Defaults Upon Senior Securities	57
Item 4.	Mine Safety Disclosures	57
Item 5.	Other Information	57
Item 6.	Exhibits	58
Signatures		59

i

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

CAMBRIDGE BANCORP AND SUBSIDIARIES

UNAUDITED CONSOLIDATED BALANCE SHEETS

	June 30, 2022			December 31, 2021
	(dollars in thousands, except par value)
Assets
Cash and cash equivalents	$	25,023		$	180,153
Investment securities
Available for sale, at fair value (amortized cost $194,014 and $201,270, respectively)		173,952			197,803
Held to maturity, at amortized cost (fair value $990,221 and $971,092, respectively)		1,105,858			977,061
Total investment securities		1,279,810			1,174,864
Loans held for sale, at lower of cost or fair value		—			1,490
Loans
Residential mortgage		1,482,551			1,415,079
Commercial mortgage		1,636,867			1,511,002
Home equity		91,835			87,960
Commercial and industrial		268,170			269,446
Consumer		44,069			35,619
Total loans		3,523,492			3,319,106
Less: allowance for credit losses on loans		(34,124	)		(34,496	)
Net loans		3,489,368			3,284,610
Federal Home Loan Bank of Boston Stock, at cost		10,518			4,816
Bank owned life insurance		33,621			46,970
Banking premises and equipment, net		16,682			17,326
Right-of-use asset operating leases		28,235			31,273
Deferred income taxes, net		12,202			9,985
Accrued interest receivable		10,061			9,162
Goodwill		51,912			51,912
Merger-related intangibles, net		2,436			2,617
Other assets		98,067			76,366
Total assets	$	5,057,935		$	4,891,544
Liabilities
Deposits
Demand	$	1,399,141		$	1,393,935
Interest-bearing checking		710,150			763,188
Money market		1,130,848			1,104,238
Savings		898,178			907,722
Certificates of deposit		125,740			162,069
Total deposits		4,264,057			4,331,152
Borrowings		252,867			16,510
Operating lease liabilities		30,659			33,871
Other liabilities		68,301			72,174
Total liabilities		4,615,884			4,453,707
Shareholders’ Equity
Common stock, par value $1.00; Authorized: 10,000,000 shares; Outstanding: 7,007,063 shares and 6,968,192 shares, respectively		7,007			6,968
Additional paid-in capital		229,918			229,205
Retained earnings		220,907			202,874
Accumulated other comprehensive loss		(15,781	)		(1,210	)
Total shareholders’ equity		442,051			437,837
Total liabilities and shareholders’ equity	$	5,057,935		$	4,891,544

The accompanying notes are an integral part of these unaudited consolidated financial statements.

1

CAMBRIDGE BANCORP AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

	Three Months Ended					Six Months Ended
	June 30, 2022		June 30, 2021			June 30, 2022			June 30, 2021
	(dollars in thousands, except share data)
Interest and dividend income
Interest on taxable loans	$	30,235	$	30,557		$	58,639		$	60,882
Interest on tax-exempt loans		354		275			704			497
Interest on taxable investment securities		4,989		2,023			9,400			3,608
Interest on tax-exempt investment securities		627		633			1,281			1,291
Dividends on FHLB of Boston stock		32		12			57			12
Interest on overnight investments		42		28			96			59
Total interest and dividend income		36,279		33,528			70,177			66,349
Interest expense
Interest on deposits		1,844		1,006			3,740			2,281
Interest on borrowed funds		254		141			387			281
Total interest expense		2,098		1,147			4,127			2,562
Net interest and dividend income		34,181		32,381			66,050			63,787
Release of credit losses		—		(901	)		(412	)		(1,107	)
Net interest and dividend income after release of credit losses		34,181		33,282			66,462			64,894
Noninterest income
Wealth management revenue		8,122		8,623			16,696			16,774
Deposit account fees		732		484			1,238			958
ATM/Debit card income		427		405			806			738
Bank owned life insurance income		1,343		209			1,530			405
Gain on loans sold, net		4		165			98			734
Loan related derivative income		45		567			341			1,238
Other income		476		453			1,794			908
Total noninterest income		11,149		10,906			22,503			21,755
Noninterest expense
Salaries and employee benefits		17,048		16,462			34,439			32,508
Occupancy and equipment		3,613		3,503			7,155			7,079
Data processing		2,601		2,179			5,246			4,213
Professional services		1,070		1,297			2,134			2,569
Marketing		218		953			442			1,416
FDIC insurance		472		261			927			597
Non-operating expenses		246		—			246			—
Other expenses		1,029		618			1,583			1,110
Total noninterest expense		26,297		25,273			52,172			49,492
Income before income taxes		19,033		18,915			36,793			37,157
Income tax expense		5,375		4,971			9,819			9,714
Net income	$	13,658	$	13,944		$	26,974		$	27,443
Share data:
Weighted average shares outstanding, basic		6,981,907		6,930,268			6,959,856			6,918,779
Weighted average shares outstanding, diluted		7,026,807		6,998,936			7,013,538			6,993,437
Basic earnings per share	$	1.95	$	2.00		$	3.86		$	3.95
Diluted earnings per share	$	1.94	$	1.98		$	3.83		$	3.91

The accompanying notes are an integral part of these unaudited consolidated financial statements.

2

CAMBRIDGE BANCORP AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Three Months Ended						Six Months Ended
	June 30, 2022			June 30, 2021			June 30, 2022			June 30, 2021
	(dollars in thousands)
Net income	$	13,658		$	13,944		$	26,974		$	27,443
Other comprehensive income (loss), net of tax:
Available for sale securities
Unrealized holding gains (losses)		(4,137	)		1,035			(12,364	)		(1,852	)
Interest rate swaps designated as cash flow hedges
Unrealized holding gains (losses)		(257	)		3			(1,483	)		(319	)
Less: reclassification adjustment for losses realized in net    income		(283	)		(466	)		(724	)		(920	)
Total unrealized losses on interest rate swaps		(540	)		(463	)		(2,207	)		(1,239	)
Defined benefit retirement plans
Change in retirement liabilities		—			7			—			15
Other comprehensive income (loss)		(4,677	)		579			(14,571	)		(3,076	)
Comprehensive income	$	8,981		$	14,523		$	12,403		$	24,367

The accompanying notes are an integral part of these unaudited consolidated financial statements.

3

CAMBRIDGE BANCORP AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

	Three Months Ended
	Common Stock		Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Shareholders’ Equity
	(dollars in thousands, except per share data)
Balance at March 31, 2021	$	6,960	$	226,841	$	175,093		$	(1,221	)	$	407,673
Net income		—		—		13,944			—			13,944
Other comprehensive income		—		—		—			579			579
Share based compensation and other share-based activity		6		1,546		—			—			1,552
Dividends declared ($0.61 per share)		—		—		(4,247	)		—			(4,247	) </