catc-10q_20180331.htm

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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post 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.

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 April 30, 2018, the registrant had 4,099,865 shares of common stock, $1.00 par value per share, outstanding.

	March 31, 2018			December 31, 2017
	(dollars in thousands, except par value)
Assets
Cash and cash equivalents	$	56,265		$	103,591
Investment securities
Available for sale, at fair value (amortized cost $203,507 and $208,911, respectively)		197,935			205,017
Held to maturity, at amortized cost (fair value $262,432 and $233,554, respectively)		264,409			232,188
Total investment securities		462,344			437,205
Loans held for sale, at lower of cost or fair value		—			—
Loans
Residential mortgage		541,599			538,920
Commercial mortgage		656,289			633,649
Home equity		71,592			74,444
Commercial & Industrial		75,365			65,295
Consumer		36,909			38,591
Total loans		1,381,754			1,350,899
Less: allowance for loan losses		(15,732	)		(15,320	)
Net loans		1,366,022			1,335,579
Federal Home Loan Bank of Boston Stock, at cost		4,242			4,242
Bank owned life insurance		30,535			31,083
Banking premises and equipment, net		9,316			9,310
Deferred income taxes, net		7,910			8,273
Accrued interest receivable		5,059			5,128
Other assets		20,057			15,523
Total assets	$	1,961,750		$	1,949,934
Liabilities
Deposits
Demand	$	503,089		$	493,613
Interest bearing checking		436,841			462,957
Money market		63,508			69,259
Savings		632,707			589,741
Certificates of deposit		146,247			159,830
Total deposits		1,782,392			1,775,400
Short-term borrowings		—			—
Long-term borrowings		3,537			3,579
Other liabilities		24,948			22,998
Total liabilities		1,810,877			1,801,977
Shareholders’ Equity
Common stock, par value $1.00; Authorized 10,000,000 shares; Outstanding: 4,100,747 shares and 4,082,188 shares, respectively		4,101			4,082
Additional paid-in capital		36,065			35,663
Retained earnings		119,196			114,093
Accumulated other comprehensive loss		(8,489	)		(5,881	)
Total shareholders’ equity		150,873			147,957
Total liabilities and shareholders’ equity	$	1,961,750		$	1,949,934

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

	Three Months Ended March 31,
	2018		2017
	(dollars in thousands, except share data)
Interest and dividend income
Interest on taxable loans	$	13,378	$	12,373
Interest on tax-exempt loans		96		131
Interest on taxable investment securities		1,714		1,394
Interest on tax-exempt investment securities		622		665
Dividends on FHLB of Boston stock		51		42
Interest on overnight investments		271		68
Total interest and dividend income		16,132		14,673
Interest expense
Interest on deposits		962		691
Interest on borrowed funds		17		21
Total interest expense		979		712
Net interest and dividend income		15,153		13,961
Provision for loan losses		409		30
Net interest and dividend income after provision for loan losses		14,744		13,931
Noninterest income
Wealth management revenue		6,126		5,362
Deposit account fees		750		813
ATM/Debit card income		271		259
Bank owned life insurance income		128		162
(Loss) gain on disposition of investment securities		—		(2	)
Gain on loans held for sale		27		235
Loan related derivative income		472		188
Other income		404		310
Total noninterest income		8,178		7,327
Noninterest expense
Salaries and employee benefits		10,073		9,156
Occupancy and equipment		2,227		2,253
Data processing		1,230		1,323
Professional services		887		870
Marketing		438		270
FDIC Insurance		151		161
Other expenses		495		913
Total noninterest expense		15,501		14,946
Income before income taxes		7,421		6,312
Income tax expense		1,616		1,984
Net income	$	5,805	$	4,328
Share data
Weighted average number of shares outstanding, basic		4,053,355		4,011,925
Weighted average number of shares outstanding, diluted		4,071,975		4,050,791
Basic earnings per share	$	1.42	$	1.07
Diluted earnings per share	$	1.41	$	1.06

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

	Three Months Ended March 31,
	2018			2017
	(dollars in thousands)
Net income	$	5,805		$	4,328
Other comprehensive income/(loss), net of tax:
Unrealized gains/(losses) on available for sale securities
Unrealized holding gains/(losses) arising during period		(1,352	)		189
Less: reclassification adjustment for losses/(gains) included in net income		—			1
Total unrealized gains/(losses) on securities		(1,352	)		190
Defined benefit retirement plans
Change in retirement liabilities		10			132
Other comprehensive income/(loss)		(1,342	)		322
Comprehensive income	$	4,463		$	4,650

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

	Common Stock		Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive (Loss ) / Income			Total Shareholders’ Equity
	(dollars in thousands, except per share data)
Balance at December 31, 2016	$	4,037	$	33,253	$	107,262		$	(9,881	)	$	134,671
Net income		—		—		4,328			—			4,328
Other comprehensive income		—		—		—			322			322
Share based compensation		34		1,343		(403	)		—			974
Dividends declared ($0.46 per share)		—		—		(1,868	)		—			(1,868	)
Balance at March 31, 2017	$	4,071	$	34,596	$	109,319		$	(9,559	)	$	138,427

Balance at December 31, 2017	$	4,082	$	35,663	$	114,093		$	(5,881	)	$	147,957
Cumulative effect of accounting changes		—		—		1,266			(1,266	)		—
Net income		—		—		5,805			—			5,805
Other comprehensive income		—		—		—			(1,342	)		(1,342	)
Share based compensation		19		402		—			—			421
Dividends declared ($0.48 per share)		—		—		(1,968	)		—			(1,968	)
Balance at March 31, 2018	$	4,101	$	36,065	$	119,196		$	(8,489	)	$	150,873

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

	Three Months Ended March 31,
	2018			2017
	(dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	5,805		$	4,328
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		409			30
Amortization of deferred charges and fees, net		163			324
Depreciation and amortization		464			491
Bank owned life insurance income		(128	)		(162	)
Loss/(gain) on disposition of investment securities		—			2
Share based compensation		421			974
Change in accrued interest receivable		69			328
Deferred income tax expense (benefit)		770			818
Change in other assets, net		(4,944	)		(1,275	)
Change in other liabilities, net		2,371			(575	)
Change in loans held for sale		—			5,788
Net cash provided by operating activities		5,400			11,071
CASH FLOWS FROM INVESTING ACTIVITIES
Origination of loans		(131,953	)		(66,439	)
Proceeds from principal payments of loans		101,197			75,672
Proceeds from calls/maturities of securities available for sale		5,208			18,995
Proceeds from sales of securities available for sale		—			32,701
Purchase of securities available for sale		—			(5,091	)
Proceeds from calls/maturities of securities held to maturity		7,777			2,396
Purchase of securities held to maturity		(40,125	)		(84,425	)
Proceeds from settlement of bank owned life insurance policies		676			—
(Purchase) sale of FHLB of Boston stock		—			(553	)
Purchase of banking premises and equipment		(470	)		(289	)
Net cash used by investing activities		(57,690	)		(27,033	)
CASH FLOWS FROM FINANCING ACTIVITIES
Change in demand, interest bearing, money market and savings accounts		20,575			(7,330	)
Change in certificates of deposit		(13,601	)		(1,150	)
Change in short-term borrowings		—			—
Repayment of long-term borrowings		(42	)		(42	)
Cash dividends paid on common stock		(1,968	)		(1,868	)
Net cash provided by financing activities		4,964			(10,390	)
Net decrease in cash and cash equivalents		(47,326	)		(26,352	)
Cash and cash equivalents at beginning of period		103,591			54,050
Cash and cash equivalents at end of period	$	56,265		$	27,698
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest	$	975		$	709
Income taxes	$	—		$	840

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

The unaudited consolidated financial statements include the accounts of Cambridge Bancorp (the “Company”) and its wholly owned subsidiary, Cambridge Trust Company (the “Bank”), and the Bank’s wholly owned subsidiaries, Cambridge Trust Company of New Hampshire Inc., CTC Security Corporation, and CTC Security Corporation III. References to the Company herein relate to the consolidated group of companies. All significant intercompany accounts and transactions have been eliminated in preparation of the consolidated financial statements.

The Company is a state-chartered, federally registered bank holding company headquartered in Cambridge, Massachusetts and was incorporated in 1983. The Company is the sole shareholder of the Bank, a Massachusetts trust company chartered in 1890, which is a commercial bank. We are a private bank offering a full range of private banking and wealth management services to our clients. The private banking business, the Company’s only reportable operating segment is managed as a single strategic unit.

The unaudited consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) and disclosures necessary to present fairly the Company’s financial position, as of March 31, 2018 and December 31, 2017, respectively, and the results of operations and cash flows for the interim periods presented in accordance with U.S. generally accepted accounting principles (“GAAP”). Interim results are not necessarily reflective of the results of the entire year.

For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, filed with the Securities and Exchange Commission.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. The allowance for loan losses, the fair values of financial instruments, and the valuation of deferred tax assets are particularly subject to change.

Management has reviewed events occurring through May 9, 2018, the date the unaudited consolidated financial statements were available to be issued, and determined that no other subsequent events occurred requiring adjustment to or disclosure in these financial statements.

Accounting Standards Update No. 2018-02 - Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (“ASU 2018-02”). On February 14, 2018, the Financial Accounting Standards Board (the “FASB”) issued amended guidance to address certain stranded income tax effects in accumulated other comprehensive income (“AOCI”) resulting from the Tax Cuts and Jobs Act. The ASU requires the following:

The amendments in this ASU affect any organization that is required to apply the provisions of Topic 220, Income Statement—Reporting Comprehensive Income, and has items of other comprehensive income for which the related tax effects are presented in accumulated other comprehensive income, as required by GAAP. ASU 2018-02 is effective for the Company’s reporting period beginning on January 1, 2019; early adoption is permitted. The Company elected to early adopt ASU 2018-02 during the first quarter of 2018, and reclassed $1.3 million from AOCI to retained earnings in the period of adoption on the consolidated balance sheet, with zero net effect on total shareholders’ equity. This amount represents the difference in the Company’s current federal tax rate of 21% and the previous rate of 35%. The adoption of this guidance did not have an impact on our consolidated statements of income or cash flows.

Accounting Standard Update No. 2017-12 - Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities (“ASU 2017-12”). On August 28, 2017, the FASB issued a new standard that allows companies to better align their hedge accounting and risk management activities. The new standard will also reduce the cost and complexity of applying hedge accounting. The standard requires companies to change the recognition and presentation of the effects of hedge accounting by:

The standard also permits hedge accounting for strategies for which hedge accounting was not historically permitted today and includes new alternatives for measuring the hedged item for fair value hedges of interest rate risk. Furthermore, the standard eases the requirements for effectiveness testing, hedge documentation, applying the critical terms match method, and introduces new alternatives that will permit companies to reduce the risk of material error corrections if they misapply the shortcut method. The new accounting standard is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted.

The new standard requires a modified retrospective transition method in which the Company will recognize the cumulative effect of the change on the opening balance of each affected component of equity in the statement of financial position as of the date of adoption. We are currently assessing the impact the adoption of this guidance will have on our consolidated balance sheets, statements of income, and cash flows.

Accounting Standards Update No. 2017-08 - Premium Amortization on Purchased Callable Debt Securities (“ASU 2017-08”). On March 30, 2017, the FASB issued guidance to amend the amortization period for certain purchased callable debt securities held at a premium. The new guidance requires entities to amortize premium on callable debt securities to the earliest call date. Shortening the amortization period is generally expected to more closely align the interest income recognition with the expectations incorporated in the market pricing on the underlying securities. Under GAAP, entities generally amortize the premium as an adjustment of yield over the contractual life of the instrument. Debt securities held at a discount will continue to be amortized to maturity. The amended guidance is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption is permitted. This guidance should be applied using a modified retrospective basis as of the beginning of the period of adoption. Additionally, in the period of adoption, we will provide disclosures about a change in accounting principle. We are currently assessing the impact the adoption of this guidance will have on our consolidated balance sheets, statements of income, and cash flows.

Accounting Standards Update No. 2017-07 - Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (“ASU 2017-07”). On March 10, 2017, the FASB issued amended guidance primarily to improve the presentation of net periodic pension cost and net periodic postretirement benefit cost, as discussed below. The new guidance requires that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period and all other components of net periodic benefit cost in a separate line item(s) in the statement of income. The other components of net benefit cost will be required to be presented in a separate line item. The guidance also specifies that only the service cost component will be eligible for capitalization. The amendments in this ASU are effective for fiscal years beginning after December 15, 2017. The amendments in this ASU were applied retrospectively for the presentation of the service cost component and the other components of net periodic pension cost and net periodic postretirement benefit cost in the income statement. See Note 9 – Pension and Retirement Plans for the required disclosures and impact to the consolidated statements of income.

Accounting Standards Update No. 2016-18 - Restricted Cash (“ASU 2016-18”). On November 17, 2016, the FASB issued amended guidance to require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The Company adopted this standard on January 1, 2018 and it did not have an impact on our statement of cash flows.

Accounting Standards Update No. 2016-15 - Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). On August 26, 2016, the FASB issued amendments to clarify guidance on the classification of certain cash receipts and payments in the statement of cash flows. This guidance is intended to reduce existing diversity in practice in how certain cash receipts and cash payments are presented and classified on the statement of cash flows. This guidance should be applied using a retrospective transition method to each period presented. The Company adopted this standard on January 1, 2018 and it did not have a material impact on our statement of cash flows.

Accounting Standards Update No. 2016-13 - Financial Instruments - Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). On June 16, 2016, the FASB issued ASU 2016-13, which will significantly change how entities measure and recognize credit impairment for many financial assets. Under this standard, the new current expected credit loss model will require entities to immediately recognize an estimate of credit losses expected to occur over the remaining life of the financial assets that are in the scope of the standard. This new guidance also made targeted amendments to the current impairment model for available for sale debt securities. This guidance will be effective for the Company for the fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption for fiscal years and interim periods beginning after December 15, 2018 is permitted. We are in the process of evaluating this guidance and its effect on our consolidated balance sheets, statements of income, and cash flows. We are developing an implementation plan which will include assessment of processes, portfolio segmentation, model development, system requirements and the identification of data and resource needs to implement this standard. We are also evaluating third-party vendor solutions to assist us in implementing the requirements of ASU 2016-13.

Accounting Standards Update No. 2016-02 - Leases (“ASU 2016-02”). On February 25, 2016, the FASB issued guidance that requires recognition of lease assets and lease liabilities on the statement of condition and disclosure of key information about leasing arrangements. In particular, this guidance requires a lessee of operating or finance leases to recognize on the statement of condition a liability to make lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term. However, for leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election not to recognize lease assets and lease liabilities. Under previous GAAP, a lessee was not required to recognize lease assets and lease liabilities arising from operating leases on the statement of condition. The guidance becomes effective for the Company on January 1, 2019, and early adoption is permitted. We are currently assessing the impact the adoption of this guidance will have on our consolidated balance sheets, statements of income, and cash flows. We have created a project team responsible for identifying the population of leases, evaluating the required accounting changes, and developing the processes and procedures needed to implement ASU 2016-02.

Accounting Standards Update No. 2016-01 - Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). On January 5, 2016, the FASB issued amended guidance on certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. This guidance includes, but is not limited to the following:

The amendments, in general, are required to be applied by means of a cumulative-effect adjustment on the statement of condition as of the beginning of the period of adoption. The Company adopted the standard on January 1, 2018, and it did not have a material impact on our consolidated balance sheets, statements of income, or cash flows.

Accounting Standards Update No. 2014-09 – Revenue from Contracts with Customers (“ASU 2014-09”) Topic 606. On May 28, 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers,” which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The new guidance supersedes current U.S. GAAP guidance on revenue recognition and requires the use of more estimates and judgments than the current revenue standards. Topic 606 does not apply to revenue associated with financial instruments, including revenue from loans and securities. In addition, certain noninterest income streams such as fees associated with mortgage servicing rights, financial guarantees, derivatives, and certain credit card fees are also not in scope of the new guidance.

On January 1, 2018, the Company adopted ASU No. 2014-09 and all subsequent ASUs that modified Topic 606. Topic 606 is applicable to noninterest revenue streams such as trust and asset management income, deposit related fees, interchange fees, and merchant income.

The Company completed its overall assessment of revenue streams and review of related contracts potentially affected by the ASU, including trust and asset management fees, deposit related fees and other income within noninterest income.

Based on this assessment, the Company concluded that ASU 2014-09 did not materially change the method in which the Company currently recognizes revenue for these revenue streams. The Company adopted ASU 2014-09 and its related amendments utilizing the modified retrospective approach. Since there was no net income impact upon adoption of the new guidance, a cumulative effect adjustment to opening retained earnings was not deemed necessary. Noninterest income considered in-scope of Topic 606 is discussed below.

Wealth management fees are earned for providing investment management, retirement plan advisory, family office, and financial planning services to clients. The Company’s performance obligation under these contracts is satisfied over time as the wealth management services are provided. Fees are recognized monthly based on the average monthly value of the assets under management and the applicable fee rate, depending on the terms of the contract. No performance based incentives are earned on wealth management contracts. Receivables are recorded on the consolidated balance sheet in the other assets line item.

Trust fees are earned when the Company is appointed as trustee for clients. As trustee, the Company administers the client’s trust and manages the assets of the trust including investments and property. The Company’s performance obligation under these agreements is satisfied over time as the administration and management services are provided. Fees are recognized monthly based on a percentage of the market value of the account as outlined in the agreement. Receivables are recorded on the consolidated balance sheet in the other assets line item. The Company also earned fees for trust related activities. The Company’s performance obligation under these agreements is satisfied at a point in time and recognized when these services have been performed.

All of the wealth management and trust fee income on the consolidated statement of operations for the three months ended March 31, 2018 is considered in-scope of Topic 606.

The Company charges a variety of fees to its clients for services provided on the deposit and deposit management related accounts. Each fee is either transaction-based or assessed monthly. The types of fees include service charges on accounts, overdraft fees, wire transfer fees, maintenance fees, ATM fee charges, and other miscellaneous charges related to the accounts. These fees are not governed by individual contracts with clients. They are charges to clients based on disclosures presented to clients upon opening these accounts along with updated disclosures when changes are made to the fee structures. The transaction-based fees are recognized in revenue when charged to the client based on specific activity on the client’s account. Monthly service and maintenance charges are recognized in the month they are earned and are charged directly to the client’s account.

At March 31, 2018 and December 31, 2017, cash and due from banks totaled $56.3 million and $103.6 million, respectively. Of this amount, $15.4 million and $12.8 million, respectively, were maintained to satisfy the reserve requirements of the Federal Reserve Bank of Boston (“FRB Boston”). Additionally, at March 31, 2018 and December 31, 2017, the Company pledged $500,000 to the New Hampshire Banking Department relating to Cambridge Trust Company of New Hampshire, Inc.’s operations in that state.

Investment securities have been classified in the unaudited consolidated balance sheets according to management’s intent. The carrying amounts of securities and their approximate fair values were as follows:

	March 31, 2018									December 31, 2017
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(dollars in thousands)
Available for sale securities
U.S. GSE obligations	$	90,017	$	—	$	(1,594	)	$	88,423	$	90,021	$	—	$	(1,230	)	$	88,791
Mortgage-backed securities		107,874		205		(4,099	)		103,980		113,184		248		(2,806	)		110,626
Corporate debt securities		5,029		—		(84	)		4,945		5,034		12		(45	)		5,001
Mutual funds		587		—		—			587		672		—		(73	)		599
Total available for sale securities	$	203,507	$	205	$	(5,777	)	$	197,935	$	208,911	$	260	$	(4,154	)	$	205,017

Held to maturity securities
U.S. GSE obligations	$	32,572	$	—	$	(326	)	$	32,246	$	32,572	$	—	$	(166	)	$	32,406
Mortgage-backed securities		146,316		11		(2,411	)		143,916		117,155		7		(906	)		116,256
Corporate debt securities		6,966		—		(104	)		6,862		1,998		4		—			2,002
Municipal securities		78,555		1,383		(530	)		79,408		80,463		2,544		(117	)		82,890
Total held to maturity securities	$	264,409	$	1,394	$	(3,371	)	$	262,432	$	232,188	$	2,555	$	(1,189	)	$	233,554
Total	$	467,916	$	1,599	$	(9,148	)	$	460,367	$	441,099	$	2,815	$	(5,343	)	$	438,571

All of the Company’s mortgage-backed securities have been issued by, or are collateralized by securities issued by, either Government National Mortgage Association (Ginnie Mae), Federal National Mortgage Association (Fannie Mae), or Federal Home Loan Mortgage Corporation (Freddie Mac).

The following tables show the Company’s securities with gross unrealized losses aggregated by investment category and length of time that individual securities have been in a continuous loss position:

	March 31, 2018
	Less than 12 months					12 months or longer					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(dollars in thousands)
Temporarily Impaired Securities
Available for sale securities
U.S. GSE obligations	$	—	$	—		$	88,423	$	(1,594	)	$	88,423	$	(1,594	)
Mortgage-backed securities		11,765		(360	)		89,052		(3,739	)		100,817		(4,099	)
Corporate debt securities		998		(2	)		3,947		(82	)		4,945		(84	)
Total available for sale securities	$	12,763	$	(362	)	$	181,422	$

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)

Large accelerated filer	☐		Accelerated filer	☐
Non-accelerated filer	☒	(Do not check if a small reporting company)	Small reporting company	☐
			Emerging growth Company	☐

		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 (Loss)	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	30
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	46
Item 4.	Controls and Procedures	47
PART II.	OTHER INFORMATION	48
Item 1.	Legal Proceedings	48
Item 1A.	Risk Factors	48
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	48
Item 3.	Defaults Upon Senior Securities	48
Item 4.	Mine Safety Disclosures	48
Item 5.	Other Information	48
Item 6.	Exhibits	49
Signatures		50