catc-10q_20190331.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 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.

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, 2019, the registrant had 4,846,250 shares of common stock, $1.00 par value per share, outstanding.

	March 31, 2019			December 31, 2018
	(dollars in thousands, except par value)
Assets
Cash and cash equivalents	$	37,006		$	18,473
Investment securities
Available for sale, at fair value (amortized cost $147,377 and $172,290, respectively)		144,762			168,163
Held to maturity, at amortized cost (fair value $300,607 and $281,310, respectively)		298,830			282,869
Total investment securities		443,592			451,032
Loans held for sale, at lower of cost or fair value		—			—
Loans
Residential mortgage		613,254			604,331
Commercial mortgage		749,835			757,957
Home equity		68,849			69,336
Commercial & Industrial		90,172			93,712
Consumer		33,044			34,436
Total loans		1,555,154			1,559,772
Less: allowance for loan losses		(16,652	)		(16,768	)
Net loans		1,538,502			1,543,004
Federal Home Loan Bank of Boston Stock, at cost		2,672			6,844
Bank owned life insurance		31,060			30,933
Banking premises and equipment, net		8,719			8,578
Deferred income taxes, net		7,167			8,717
Accrued interest receivable		6,012			5,762
Other assets		63,818			28,041
Total assets	$	2,138,548		$	2,101,384
Liabilities
Deposits
Demand	$	490,649		$	494,492
Interest bearing checking		385,605			431,702
Money market		146,925			135,585
Savings		709,940			628,212
Certificates of deposit		169,264			121,419
Total deposits		1,902,383			1,811,410
Short-term borrowings		—			90,000
Long-term borrowings		3,366			3,409
Other liabilities		60,531			29,539
Total liabilities		1,966,280			1,934,358
Shareholders’ Equity
Common stock, par value $1.00; Authorized 10,000,000 shares; Outstanding: 4,123,618 shares and 4,107,051 shares, respectively		4,124			4,107
Additional paid-in capital		38,239			38,271
Retained earnings		135,235			131,135
Accumulated other comprehensive loss		(5,330	)		(6,487	)
Total shareholders’ equity		172,268			167,026
Total liabilities and shareholders’ equity	$	2,138,548		$	2,101,384

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

	Three Months Ended March 31,
	2019			2018
	(dollars in thousands, except share data)
Interest and dividend income
Interest on taxable loans	$	16,284		$	13,378
Interest on tax-exempt loans		89			96
Interest on taxable investment securities		1,980			1,714
Interest on tax-exempt investment securities		571			622
Dividends on FHLB of Boston stock		76			51
Interest on overnight investments		118			271
Total interest and dividend income		19,118			16,132
Interest expense
Interest on deposits		2,501			962
Interest on borrowed funds		356			17
Total interest expense		2,857			979
Net interest and dividend income		16,261			15,153
Provision for Loan Losses		(93	)		409
Net interest and dividend income after provision for loan losses		16,354			14,744
Noninterest income
Wealth management revenue		6,124			6,126
Deposit account fees		738			750
ATM/Debit card income		276			271
Bank owned life insurance income		127			128
Gain (loss) on disposition of investment securities		(87	)		—
Gain on loans held for sale		16			27
Loan related derivative income		436			472
Other income		327			404
Total noninterest income		7,957			8,178
Noninterest expense
Salaries and employee benefits		10,827			10,073
Occupancy and equipment		2,330			2,227
Data processing		1,346			1,230
Professional services		807			887
Marketing		404			438
FDIC insurance		—			151
Merger expenses		91			—
Other expenses		568			495
Total noninterest expense		16,373			15,501
Income before income taxes		7,938			7,421
Income tax expense		1,740			1,616
Net income	$	6,198		$	5,805
Share data:
Weighted average number of shares outstanding, basic		4,072,805			4,053,355
Weighted average number of shares outstanding, diluted		4,106,658			4,071,975
Basic earnings per share	$	1.51		$	1.42
Diluted earnings per share	$	1.49		$	1.41

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

	Three Months Ended March 31,
	2019			2018
	(dollars in thousands)
Net income	$	6,198		$	5,805
Other comprehensive income/(loss), net of tax:
Unrealized gains/(losses) on available for sale securities
Unrealized holding gains/(losses) arising during period		1,095			(1,352	)
Less: reclassification adjustment for losses/(gains) included in net income		66			—
Total unrealized gains/(losses) on securities		1,161			(1,352	)
Derivatives
Change in interest rate contracts		(30	)		—
Defined benefit retirement plans
Change in retirement liabilities		26			10
Other comprehensive income/(loss)		1,157			(1,342	)
Comprehensive income	$	7,355		$	4,463

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, 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 (loss)		—		—			—			(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

Balance at December 31, 2018	$	4,107	$	38,271		$	131,135		$	(6,487	)	$	167,026
Net income		—		—			6,198			—			6,198
Other comprehensive income (loss)		—		—			—			1,157			1,157
Share based compensation		17		(32	)		—			—			(15	)
Dividends declared ($0.51 per share)		—		—			(2,098	)		—			(2,098	)
Balance at March 31, 2019	$	4,124	$	38,239		$	135,235		$	(5,330	)	$	172,268

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

	Three Months Ended March 31,
	2019			2018
	(dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	6,198		$	5,805
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		(93	)		409
Amortization of deferred charges and fees, net		199			163
Depreciation and amortization		393			464
Bank owned life insurance income		(127	)		(128	)
Loss on disposition of investment securities		87			—
Share based compensation		(15	)		421
Change in accrued interest receivable		(250	)		69
Deferred income tax (benefit)/expense		1,202			770
Change in other assets, net		(35,439	)		(4,944	)
Change in other liabilities, net		30,638			2,371
Net cash provided by operating activities		2,793			5,400
CASH FLOWS FROM INVESTING ACTIVITIES
Origination of loans		(107,949	)		(131,953	)
Proceeds from principal payments of loans		112,585			101,197
Proceeds from calls/maturities of securities available for sale		8,825			5,208
Proceeds from sales of securities available for sale		15,913			—
Proceeds from calls/maturities of securities held to maturity		14,882			7,777
Purchase of securities held to maturity		(30,966	)		(40,125	)
Proceeds from settlement of bank owned life insurance policies		—			676
Sale of FHLB of Boston stock		4,172			—
Purchase of banking premises and equipment		(534	)		(470	)
Net cash provided by (used in) investing activities		16,928			(57,690	)
CASH FLOWS FROM FINANCING ACTIVITIES
Change in demand, interest bearing, money market and savings accounts		43,128			20,575
Change in certificates of deposit		47,825			(13,601	)
Change in short-term borrowings		(90,000	)		—
Repayment of long-term borrowings		(43	)		(42	)
Cash dividends paid on common stock		(2,098	)		(1,968	)
Net cash provided by (used in) financing activities		(1,188	)		4,964
Net (decrease)/increase in cash and cash equivalents		18,533			(47,326	)
Cash and cash equivalents at beginning of period		18,473			103,591
Cash and cash equivalents at end of period	$	37,006		$	56,265
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest	$	2,763		$	975
Income taxes	$	970		$	—

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, 2019 and December 31, 2018, 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, 2018, 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.

Optima Merger. The Company completed its merger with Optima Bank & Trust Company (“Optima”) on April 17, 2019. Under the terms of the Agreement and Plan of Merger (the “Merger Agreement”), each outstanding share of Optima common stock was converted into $32.00 in cash or 0.3468 shares of the Company’s common stock, with the transaction structured as 95 percent common stock and 5 percent cash. As a result of the merger, former Optima shareholders received an aggregate of approximately 722,746 shares of the Company’s common stock and an aggregate of approximately $3.5 million in cash.

Management has reviewed events occurring through May 9, 2019, 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 2018-16 - Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes (“ASU 2018-16”). On October 25, 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-16 to introduce OIS Rate based on the SOFR as an acceptable US benchmark interest for the purpose of applying hedge accounting under Topic 815. This update is effective for interim and annual reporting periods beginning after December 15, 2018 because the Company has already adopted ASU 2017-12. The Company adopted this update on January 1, 2019, and the update did not have a significant impact on the consolidated financial statements.

Accounting Standards Update 2018-15 - Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018-15”). On August 29, 2018, the FASB issued amended guidance to align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). The ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years; early adoption is permitted and should be applied either retrospectively or prospectively to all implementation costs incurred after 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 2018-14 - Changes to the Disclosure Requirements for Defined Benefit Plans (“ASU 2018-14”). On August 28, 2018, the FASB issued guidance to remove, add, and clarify certain disclosures for defined benefit plans. The ASU is effective for fiscal years ending after December 15, 2020; early adoption is permitted and should be applied using the retrospective method to all periods presented. 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 2018-13 - Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”). On August 28, 2018, the FASB issued guidance to remove, add, and clarify certain disclosures for fair value measurement. The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019; early adoption is permitted and should be applied using either retrospective method or the prospective method as specified in the ASU. 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 2018-07 - Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”). On June 20, 2018, the FASB issued ASU 2018-07 to align the accounting for share-based payment awards issued to employees and nonemployees. The new guidance also clarifies that any share-based payment awards issued to customers should be evaluated under ASC 606, Revenue from Contracts with Customers. Currently, the accounting for nonemployee share-based payments differs from that applied to employee awards, particularly with regard to the measurement date and the impact of performance conditions. Under the new guidance, the existing employee guidance will apply to nonemployee share-based transactions, with certain exceptions. The cost of nonemployee awards will continue to be recorded as if the grantor had paid cash for the goods or services. The ASU is effective for public companies for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year, and early adoption is permitted. The adoption of this guidance did not have a material impact on our consolidated balance sheets, statements of income, and 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 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 was effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years.

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. The Company early adopted the standard during the fourth quarter of 2018, using a modified retrospective transition method, and it did not have an effect on our consolidated balance sheets, statements of income, and 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 have developed an implementation plan which includes assessment of processes, portfolio segmentation, model development, system requirements, and the identification of data and resource needs to implement this standard.

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 became effective for the Company on January 1, 2019. Also in July 2018, the FASB issued Accounting Standards Update No. 2018-11, “Targeted Improvements” (“ASU 2018-11”), to allow an optional transition method in which the provisions of Topic 842 would be applied upon the adoption date and would not have to be retroactively applied to the earliest reporting period presented in the consolidated financial statements. Using the optional transition method discussed above, the Company adopted the new lease guidance on January 1, 2019 and recorded a right-of-use asset of $32.9 million and a corresponding net lease liability.

Accounting Standards Update No. 2014-09 - Revenue from Contracts with Customers (“ASU 2014-09”). 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.

The Company earns wealth management fees for providing investment management, trust administration, 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, or at a fixed annual rate, depending on the terms of the contract. No performance-based incentives are earned on wealth management contracts.

The Company earns trust fees for serving as trustee for certain clients. As trustee, the Company serves as a fiduciary, administers the client’s trust and, in some cases, manages the assets of the trust. 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, or at a fixed annual rate, as outlined in the agreement. The Company also earns 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 income 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, 2019 and December 31, 2018, cash and cash equivalents totaled $37.0 million and $18.5 million, respectively. Of this amount, $12.0 million and $12.7 million, respectively, were maintained to satisfy the reserve requirements of the Federal Reserve Bank of Boston (“FRB Boston”). Additionally, at March 31, 2019 and December 31, 2018, 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, 2019									December 31, 2018
	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	$	55,000	$	—	$	(572	)	$	54,428	$	75,004	$	—	$	(965	)	$	74,039
Mortgage-backed securities		88,367		137		(2,145	)		86,359		92,271		118		(3,121	)		89,268
Corporate debt securities		4,010		—		(35	)		3,975		5,015		—		(159	)		4,856
Total available for sale securities	$	147,377	$	137	$	(2,752	)	$	144,762	$	172,290	$	118	$	(4,245	)	$	168,163

Held to maturity securities
U.S. GSE obligations	$	27,571	$	—	$	(130	)	$	27,441	$	32,571	$	—	$	(238	)	$	32,333
Mortgage-backed securities		191,679		891		(1,122	)		191,448		168,118		134		(2,290	)		165,962
Corporate debt securities		6,974		13		(1	)		6,986		6,972		—		(107	)		6,865
Municipal securities		72,606		2,157		(31	)		74,732		75,208		1,297		(355	)		76,150
Total held to maturity securities	$	298,830	$	3,061	$	(1,284	)	$	300,607	$	282,869	$	1,431	$	(2,990	)	$	281,310
Total	$	446,207	$	3,198	$	(4,036	)	$	445,369	$	455,159	$	1,549	$	(7,235	)	$	449,473

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, 2019
	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	$	—	$	—	$	54,428	$	(572	)	$	54,428	$	(572	)
Mortgage-backed securities		—		—		83,979		(2,145	)		83,979		(2,145	)
Corporate debt securities		—		—		3,975		(35	)		3,975		(35	)
Total available for sale securities	$	—	$	—	$	142,382	$	(2,752	)	$	142,382	$	(2,752	)

Held to maturity securities
U.S. GSE obligations	$	—	$	—	$	27,441

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)

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

		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	33
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	51
Item 4.	Controls and Procedures	51
PART II.	OTHER INFORMATION	52
Item 1.	Legal Proceedings	52
Item 1A.	Risk Factors	52
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	52
Item 3.	Defaults Upon Senior Securities	52
Item 4.	Mine Safety Disclosures	52
Item 5.	Other Information	52
Item 6.	Exhibits	53
Signatures		54

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