10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

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

For the fiscal year ended December 31, 2019

OR

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

FOR THE TRANSITION PERIOD FROMTO

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)

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

None

(Title of class)

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES ☐ NO ☒

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.    YES  ☐    NO  ☒

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).    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 ☒

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant, based on the closing price of the shares of common stock on The NASDAQ Stock Market on June 30, 2019, was $361.1 million. The number of shares of Registrant’s Common Stock outstanding as of March 12, 2020 was 5,412,221.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant’s Definitive Proxy Statement relating to the Annual Meeting of Shareholders, scheduled to be held on May 18, 2020, are incorporated by reference into Part III of this Report.

Table of Contents

		Page
PART I		1
Item 1.	Business	2
Item 1A.	Risk Factors	12
Item 1B.	Unresolved Staff Comments	22
Item 2.	Properties	22
Item 3.	Legal Proceedings	22
Item 4.	Mine Safety Disclosures	23
PART II		24
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	24
Item 6.	Selected Financial Data	26
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	49
Item 8.	Financial Statements and Supplementary Data	50
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	107
Item 9A.	Controls and Procedures	107
Item 9B.	Other Information	107
PART III		108
Item 10.	Directors, Executive Officers and Corporate Governance	108
Item 11.	Executive Compensation	108
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	108
Item 13.	Certain Relationships and Related Transactions, and Director Independence	108
Item 14.	Principal Accounting Fees and Services	108
PART IV		109
Item 15.	Exhibits, Financial Statement Schedules	109
Item 16.	Form 10-K Summary	111
Signatures		112

i

PART I

Unless the context requires otherwise, all references to the “Company,” “we,” “us,” and “our,” refer to Cambridge Bancorp.

Forward-Looking Statements

This report contains 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, and the impact of any laws or regulations applicable to the Company, 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:

• national, regional and local economic conditions may be less favorable than expected, resulting in, among other things, increased charge offs of loans, higher provisions for credit losses and/or reduced demand for the Company’s services;

• disruptions to the credit and financial markets, either nationally or globally;

• weakness in the real estate market, including the secondary residential mortgage market, which can affect, among other things, the value of collateral securing mortgage loans, mortgage loan originations and delinquencies, and profits on sales of mortgage loans;

• legislative, regulatory or accounting changes, including changes resulting from the adoption and implementation of the Dodd-Frank Act, which may adversely affect our business and/or competitive position, impose additional costs on the Company or cause us to change our business practices;

• the Dodd-Frank Act’s consumer protection regulations which could adversely affect the Company’s business, financial condition or results of operations;

• disruptions in the Company’s ability to access capital markets which may adversely affect its capital resources and liquidity;

• the Company’s heavy reliance on communications and information systems to conduct its business and reliance on third parties and affiliates to provide key components of its business infrastructure, any disruptions of which could interrupt the Company's operations or increase the costs of doing business;

• that the Company’s financial reporting controls and procedures may not prevent or detect all errors or fraud;

• the Company’s dependence on the accuracy and completeness of information about clients and counterparties;

• the fiscal and monetary policies of the federal government and its agencies;

• the failure to satisfy capital adequacy and liquidity guidelines applicable to the Company;

• downgrades in the Company’s credit rating;

• changes in interest rates which could affect interest rate spreads and net interest income;

• costs and effects of litigation, regulatory investigations or similar matters;

• the inability to realize expected cost savings or implement integration plans and other adverse consequences associated with the merger with Optima Bank & Trust Company (“Optima”);

• the failure to complete the proposed merger with Wellesley Bancorp, Inc. (“Wellesley”), the imposition of adverse regulatory conditions in connection with regulatory approval of the proposed Merger (as defined below) with Wellesley, disruption to the parties’ businesses as a result of the announcement and pendency of the Merger, the inability to realize expected cost savings or to implement integration plans and other adverse consequences associated with the merger with Wellesley;

• a failure by the Company to effectively manage the risks the Company faces, including credit, operational and cyber security risks;

• increased pressures from competitors (both banks and non-banks) and/or an inability by of the Company to remain competitive in the financial services industry, particularly in the markets which the Company serves, and keep pace with technological changes;

• unpredictable natural or other disasters, which could adversely impact the Company’s customers or operations;

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• a loss of customer deposits, which could increase the Company’s funding costs;

• the disparate impact that can result from having loans concentrated by loan type, industry segment, borrower type or location of the borrower or collateral;

• changes in the creditworthiness of customers;

• increased loan losses or impairment of goodwill and other intangibles;

• negative public opinion which could damage the Company’s reputation and adversely impact business and revenues;

• the Company depends on the expertise of key personnel, and if these individuals leave or change their roles without effective replacements, operations may suffer;

• the Company may not be able to hire or retain additional qualified personnel, including those acquired in previous acquisitions, and recruiting and compensation costs may increase as a result of turnover, both of which may increase costs and reduce profitability and may adversely impact the Company’s ability to implement the Company’s business strategies; and

• changes in the Company’s accounting policies or in accounting standards which could materially affect how the Company reports financial results and condition.

Except as required by law, 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.

Item 1. Business.

The Company

Cambridge Bancorp (together with its bank subsidiary, unless the context otherwise requires, the “Company”) is a Massachusetts state-chartered, federally registered bank holding company headquartered in Cambridge, Massachusetts. The Company is a Massachusetts corporation formed in 1983 and has one bank subsidiary, Cambridge Trust Company (the “Bank”), formed in 1890. On October 18, 2017, shares of the Company’s common stock commenced trading on the NASDAQ Stock Market under the symbol CATC. Prior to this date, the Company’s shares traded on the over the counter market. As of December 31, 2019, the Company had total assets of approximately $2.9 billion. Currently, the Bank operates 16 private banking offices in Eastern Massachusetts and New Hampshire. As a private bank, we focus on four core services that center around client needs. Our core services include Wealth Management, Commercial Banking, Residential Lending, and Personal Banking. The Bank’s customers consist primarily of consumers and small- and medium-sized businesses in these communities and surrounding areas throughout Massachusetts and New Hampshire. The Company’s Wealth Management Group has five offices, two in Boston, Massachusetts and three in New Hampshire in Concord, Manchester, and Portsmouth. As of December 31, 2019, the Company had Assets under Management and Administration of approximately $3.5 billion. The Wealth Management Group offers comprehensive investment management, as well as trust administration, estate settlement, and financial planning services. Our wealth management clients value personal service and depend on the commitment and expertise of our experienced banking, investment, and fiduciary professionals.  

The Wealth Management Group customizes investment portfolios to help clients meet their long-term financial goals. Through development of an appropriate asset allocation and disciplined security selection, the Company’s in-house investment team targets long-term capital growth while seeking to minimize downside risk. Our internally developed, research-driven process is managed by our skilled team of portfolio managers and analysts. We build portfolios consisting of our best investment ideas, focusing on individual global equities, fixed income securities, exchange-traded funds, and mutual funds.

The Company offers a wide range of services to commercial enterprises, non-profit organizations, and individuals.  The Company emphasizes service to consumers and small- and medium-sized businesses in its market area. The Company makes commercial loans, commercial real estate loans, construction loans, consumer loans, and real estate loans (including one-to-four family and home equity lines of credit), and accepts savings, money market, time, and demand deposits. In addition, the Company offers a wide range of commercial and personal banking services which include cash management, online banking, mobile banking, and global payments.  

The Company’s results of operations are largely dependent on net interest income, which is the difference between the interest earned on loans and securities and interest paid on deposits and borrowings, and non-interest income largely from its wealth management services. The results of operations are affected by the level of income and fees from loans, deposits, as well as operating expenses, the provision for loan losses, the impact of federal and state income taxes, the relative levels of interest rates, and local and national economic activity.

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Through the Bank, the Company focuses on wealth management, the commercial banking business and private banking for clients, including residential lending and personal banking. Within the commercial loan portfolio, the Company has traditionally been a commercial real estate lender and in recent years has diversified commercial operations within the areas of commercial and industrial lending to include Innovation Banking, which specializes in working with primarily New England-based entrepreneurs, and asset based lending that helps companies throughout New England and New York grow by borrowing against existing assets. The Innovation Banking Group has a narrow client focus for lending and provides a local banking option for technology and entrepreneurial companies within our market area that are primarily serviced by out-of-market institutions. Personal banking focuses on providing exceptional service to clients and in deepening relationships.

Cambridge Trust Company

The Bank offers a full range of commercial and consumer banking services through its network of 16 private banking offices in Eastern Massachusetts and New Hampshire. The Bank is engaged principally in the business of attracting deposits from the public and investing those deposits. The Bank invests those funds in various types of loans, including residential and commercial real estate, and a variety of commercial and consumer loans. The Bank also invests its deposits and borrowed funds in investment securities and has two wholly-owned Massachusetts security corporations, CTC Security Corporation and CTC Security Corporation III, for this purpose. Deposits at the Bank are insured by the Federal Deposit Insurance Corporation (the “FDIC”) for the maximum amount permitted by FDIC regulations.

Investment management and trust services are offered through our two wealth management offices located in Boston and three wealth management offices located in New Hampshire. The Bank also utilizes its subsidiary and non-depository trust company, Cambridge Trust Company of New Hampshire, Inc., to provide wealth management services in New Hampshire. The assets held for wealth management customers are not assets of the Bank and, accordingly, are not reflected in the Company’s consolidated balance sheets.

The Bank is active in the communities we serve. The Bank makes contributions to various non-profits and local organizations, investments in community development lending, and investments in low-income housing all of which strive to improve the communities that our employees and customers call home.

Merger with Optima Bank & Trust Company

In the fourth quarter of 2018, the Company, the Bank, and Optima Bank & Trust Company (“Optima”) entered into a definitive agreement pursuant to which Optima merged with and into the Bank in a stock and cash transaction. The Company completed its merger with Optima on April 17, 2019. Under the terms of the Agreement and Plan of Merger, 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 consideration for the transaction structured as 95% common stock and 5% cash.  As a result of the merger with Optima, former Optima shareholders received an aggregate of 722,746 shares of the Company’s common stock and an aggregate of approximately $3.5 million in cash. The total consideration paid in the merger with Optima amounted to $64.3 million.

Merger with Wellesley Bancorp, Inc.

In the fourth quarter of 2019, the Company, the Bank, Wellesley, and Wellesley Bank, Wellesley’s subsidiary bank, entered into a definitive agreement pursuant to which Wellesley will merge with and into the Company and Wellesley Bank will merge with and into the Bank in an all-stock transaction (the “Merger”), which is anticipated to close during the second quarter of 2020. The Merger is subject to regulatory approval, approval by the Company’s and Wellesley’s shareholders, and the completion of other customary closing conditions. Under the terms of the merger agreement, Wellesley shareholders will receive 0.580 shares of the Company’s common stock for each share of Wellesley common stock they own on the effective date of the Merger. This strategically compelling transaction is expected to enhance and expand the Company’s Greater Boston presence with the addition of Wellesley’s six full-service banking offices in the Norfolk, Middlesex, and Suffolk Counties of Massachusetts.

Market Area

The Company operates in Eastern Massachusetts and Southern New Hampshire. Our primary lending market includes Middlesex and Suffolk Counties in Massachusetts. We benefit from the presence of numerous institutions of higher learning, medical care and research centers, a vibrant innovation economy in life sciences and technology, and the corporate headquarters of several significant financial service companies within the Boston area. Eastern Massachusetts also has many high technology companies employing personnel with specialized skills. These factors affect the demand for wealth management services, residential homes, multi-family apartments, office buildings, shopping centers, industrial warehouses, and other commercial properties.

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Our lending area is primarily an urban market area with a substantial number of one-to-four unit residential properties, some of which are non-owner occupied, as well as apartment buildings, condominiums, office buildings, and retail space. As a result, our loan portfolio contains a significantly greater number of multi-family and commercial real estate loans compared to institutions that operate in non-urban markets.

Our market area is located largely in the Boston-Cambridge-Quincy, Massachusetts/New Hampshire Metropolitan Statistical Area (“MSA”). The United States Census Bureau estimates that as of April 2019, the Boston metropolitan area is the 10th largest metropolitan area in the United States. Located adjacent to major transportation corridors, the Boston metropolitan area provides a highly diversified economic base, with major employment sectors ranging from services, education, manufacturing, and wholesale/retail trade, to finance, technology, and medical care. According to the United States Department of Labor, in November 2019, the Boston-Cambridge-Quincy, Massachusetts/New Hampshire MSA had an unemployment rate of 2.1% compared to the national unemployment rate of 3.5%.

Competition

The financial services industry is highly competitive. The Company experiences substantial competition with other commercial banks, savings and loan associations, securities and brokerage companies, mortgage companies, insurance companies, finance companies, money market funds, credit unions, and other non-bank financial service providers in attracting deposits, making loans, and attracting wealth management customers. The competing major commercial banks have greater resources that may provide them a competitive advantage by enabling them to maintain numerous branch offices and mount extensive advertising campaigns. The increasingly competitive environment is the result of changes in regulation, changes in technology and product delivery systems, additional financial service providers, and the accelerating pace of consolidation among financial services providers.  

The financial services industry has become even more competitive as a result of legislative, regulatory, and technological changes and continued consolidation. Banks, securities firms, and insurance companies can merge under the umbrella of a financial holding company, which can offer virtually any type of financial service, including banking, securities underwriting, insurance (both agency and underwriting), and merchant banking. Also, technology has lowered barriers to entry and made it possible for non-banks to offer products and services traditionally provided by banks, such as automatic transfer and automatic payment systems.

Some of the Company’s non-banking competitors have fewer regulatory constraints and may have lower cost structures.  In addition, some of the Company’s competitors have assets, capital and lending limits greater than that of the Company, greater access to capital markets, and offer a broader range of products and services than the Company.  These institutions may have the ability to finance wide-ranging advertising campaigns and may also be able to offer lower rates on loans and higher rates on deposits than the Company can offer.  Some of these institutions offer services, such as international banking, which the Company does not directly offer.

Various in-state market competitors and out-of-state banks continue to enter or have announced plans to enter or expand their presence in the market areas in which the Company currently operates.  With the addition of new banking presences within our market, the Company expects increased competition for loans, deposits, and other financial products and services.

The Bank is a private bank, stressing the holistic client relationship, and relies upon local promotional activities, personal relationships established by officers, directors, and employees with their customers, and specialized services tailored to meet the needs of the communities served. While the Bank’s position varies by market, management believes that it can compete effectively as a result of local market knowledge, local decision making, and awareness of customer needs.

Supervision and Regulation

General

Banking is a complex, highly regulated industry. Consequently, the performance of the Company and the Bank can be affected not only by management decisions and general and local economic conditions, but also by the statutes enacted by the U.S. Congress and state legislatures, and the regulations and policies of, various governmental regulatory authorities. These authorities include, but are not limited to, the Board of Governors of the Federal Reserve System (the “Federal Reserve”), the Massachusetts Division of Banks (the “MA DOB”), the State of New Hampshire Banking Department, and the FDIC.

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The primary goals of bank regulation are to maintain a safe and sound banking system and to facilitate the conduct of sound monetary policy. In furtherance of these goals, the U.S. Congress and the Commonwealth of Massachusetts have created largely autonomous regulatory agencies that oversee and have enacted numerous laws that govern banks, bank holding companies, and the banking industry. The system of supervision and regulation applicable to the Company and the Bank establishes a comprehensive framework for the entities’ respective operations and is intended primarily for the protection of the Bank’s depositors and the public, rather than the shareholders and creditors. The following summarizes the significant laws, rules, and regulations governing banks and bank holding companies, including the Company and the Bank, but does not purport to be a complete summary of all applicable laws, rules, and regulations governing bank holding companies and banks or the Company or the Bank. The descriptions are qualified in their entirety by reference to the specific statutes, regulations, and policies discussed. Any change in applicable laws, regulations, or regulatory policies may have a material effect on our businesses, operations and prospects. The Company is unable to predict the nature or extent of the effects that economic controls or new federal or state legislation may have on our business and earnings in the future.

Regulatory Agencies

The Company is a legal entity separate and distinct from its first tier bank subsidiary, the Bank, and its second tier subsidiaries, Cambridge Trust Company of New Hampshire, Inc., a New Hampshire state-chartered non-depository trust company, CTC Security Corporation and CTC Security Corporation III, which are used to invest the Bank’s deposits and borrowed funds in investment securities. As a bank holding company, the Company is regulated under the Bank Holding Company Act of 1956, as amended (“BHC Act”), Massachusetts laws applying to bank holding companies and Massachusetts corporations more generally. The Company is subject to inspection, examination, and supervision by the Federal Reserve and the MA DOB.

As a Massachusetts state-chartered insured depository institution, the Bank is subject to supervision, periodic examination, and regulation by the MA DOB as its chartering authority, and by the FDIC as its primary federal regulator. The prior approval of the MA DOB and the FDIC is required, among other things, for the Bank to establish or relocate any additional branch offices, assume deposits, or engage in any merger, consolidation, purchase, or sale of all or substantially all of the assets of any insured depository institution.

Cambridge Trust Company of New Hampshire, Inc. is subject to supervision, periodic examination and regulation by The State of New Hampshire Banking Department.

Bank Holding Company Regulations Applicable to the Company

The BHC Act and other federal laws and regulations subject bank holding companies to particular restrictions on the types of activities in which they may engage and to a range of supervisory requirements and activities, including regulatory enforcement actions for violations of laws and regulations. As a Massachusetts corporation and bank holding company, the Company is also subject to certain limitations and restrictions under applicable Massachusetts law.

Mergers & Acquisitions

The BHC Act, the Bank Merger Act, the laws of the Commonwealth of Massachusetts applicable to financial institutions, and other federal and state statutes regulate acquisitions of banks and their holding companies. The BHC Act generally limits acquisitions by bank holding companies to banks and companies engaged in activities that the Federal Reserve has determined to be so closely related to banking as to be a proper incident thereto. The BHC Act requires every bank holding company to obtain the prior approval of the Federal Reserve before (i) acquiring more than 5% of the voting stock of any bank or other bank holding company, (ii) acquiring all or substantially all of the assets of any bank or bank holding company, or (iii) merging or consolidating with any other bank holding company.

In reviewing applications seeking approval of merger and acquisition transactions, the bank regulatory authorities generally consider, among other things, the competitive effect and public benefits of the transactions, the financial and managerial resources and future prospects of the combined organization (including the capital position of the combined organization), the applicant’s performance record under the Community Reinvestment Act (see —Community Reinvestment Act), fair housing laws, and the effectiveness of the subject organizations in combating money laundering activities.

Non-bank Activities

Generally, bank holding companies are prohibited, under the BHC Act, from engaging in, or acquiring direct or indirect control of more than 5% of the voting shares of any company engaged in, any activity other than (i) banking or managing or controlling banks or (ii) an activity that the Federal Reserve determines to be so closely related to banking as to be a proper incident to the business of banking. The Federal Reserve has the authority to require a bank holding company to terminate an activity or terminate control of, or liquidate or divest, certain subsidiaries or affiliates when the Federal Reserve believes the activity or the control of the subsidiary or affiliate constitutes a significant risk to the financial safety, soundness, or stability of any of its bank subsidiaries.

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A bank holding company that qualifies and elects to become a financial holding company is permitted to engage in additional activities that are financial in nature or incidental or complementary to financial activity. The Company currently has no plans to make a financial holding company election.

Bank holding companies and their non-banking subsidiaries are prohibited from engaging in activities that represent unsafe and unsound banking practices. For example, under certain circumstances the Federal Reserve’s Regulation Y requires a holding company to give the Federal Reserve prior notice of any redemption or repurchase of its own equity securities if the consideration to be paid, together with the consideration paid for any other redemptions or repurchases in the preceding year, is equal to 10% or more of the bank holding company’s consolidated net worth. The Federal Reserve may oppose the transaction if it believes that the transaction would constitute an unsafe or unsound practice or would violate a regulation. As another example, a bank holding company is prohibited from impairing its subsidiary bank’s soundness by causing the bank to make funds available to non-bank subsidiaries or their customers if the Federal Reserve believes it is not prudent to do so. The Federal Reserve has the power to assess civil money penalties for knowing or reckless violations if the activities leading to a violation caused a substantial loss to a depository institution. Potential penalties can reach as high as almost $2.0 million for each day such activity continues.

Source of Strength  

In accordance with Federal Reserve policy, the Company is expected to act as a source of financial and managerial strength to the Bank. Section 616 of the Dodd-Frank Act codifies the requirement that bank holding companies serve as a source of financial strength to their subsidiary depository institutions.   Under this policy, the holding company is expected to commit resources to support its bank subsidiary, including at times when the holding company may not be in a financial position to provide it. As discussed below, the Company could be required to guarantee the capital plan of the Bank if it becomes undercapitalized for purposes of banking regulations. Any capital loans by a bank holding company to its subsidiary bank are subordinate in right of payment to deposits and to certain other indebtedness of such subsidiary bank. The BHC Act provides that, in the event of a bank holding company’s bankruptcy, any commitment by the bank holding company to a federal bank regulatory agency to maintain the capital of a bank subsidiary will be assumed by the bankruptcy trustee and entitled to priority of payment. 

Regulatory agencies have promulgated regulations to increase the capital requirements for bank holding companies to a level that matches those of banking institutions. See —Capital Adequacy and Prompt Corrective Action and Safety and Soundness.

Annual Reporting & Examinations

The Company is required to file annual and periodic reports with the Federal Reserve and such additional information as the Federal Reserve may require. The Federal Reserve may examine a bank holding company and any of its subsidiaries and charge the Company for the cost of such an examination.

Imposition of Liability for Undercapitalized Subsidiaries

Pursuant to Section 38 of the Federal Deposit Insurance Act (the “FDIA”) federal banking agencies are required to take “prompt corrective action” should an insured depository institution fail to meet certain capital adequacy standards. In the event an institution becomes “undercapitalized,” it must submit a capital restoration plan. The capital restoration plan will not be accepted by the regulators unless each company “having control of” the undercapitalized institution has “guaranteed” the subsidiary’s compliance with the capital restoration plan until it has been “adequately capitalized” on average during each of four consecutive calendar quarters. For purposes of this statute, the Company has control of the Bank. Under the FDIA, the aggregate guarantee liability of all companies controlling a particular institution is limited to the lesser of 5% of the depository institution’s total assets at the time it became undercapitalized or the amount necessary to bring the institution into compliance with applicable capital standards. The FDIA grants greater powers to the federal banking agencies in situations where an institution becomes “significantly” or “critically” undercapitalized or fails to submit a capital restoration plan. For example, a bank holding company controlling such an institution can be required to obtain prior Federal Reserve approval of proposed distributionsor might be required to consent to a merger or to divest the troubled institution or other affiliates. See — Capital Adequacy and Prompt Corrective Action and Safety and Soundness.

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Dividends

Dividends from the Bank are the Company’s principal source of cash revenues. The Company’s earnings and activities are affected by legislation, regulations, and local legislative and administrative bodies and decisions of courts in the jurisdictions in which we conduct business. These include limitations on the ability of the Bank to pay dividends to the Company and our ability to pay dividends to our shareholders. It is the policy of the Federal Reserve that bank holding companies should pay cash dividends on common stock only out of income available over the past year and only if prospective earnings retention is consistent with the organization’s expected future needs and financial condition. This policy provides that bank holding companies should not maintain a level of cash dividends that undermines the bank holding company’s ability to serve as a source of strength to its bank subsidiary. Consistent with such policy, a banking organization should have comprehensive policies on dividend payments that clearly articulate the organization’s objectives and approaches for maintaining a strong capital position and achieving the objectives of the policy statement. The Company has a comprehensive dividend policy in place.

The FDIC has the authority to use its enforcement powers to prohibit a bank from paying dividends if, in its opinion, the payment of dividends would constitute an unsafe or unsound practice. Federal law also prohibits the payment of dividends by a bank that will result in the bank failing to meet its applicable capital requirements on a pro forma basis. Under applicable Massachusetts law, the Bank’s board may declare from net profits cash dividends annually, semi-annually or quarterly, but not more frequently, and noncash dividends at any time, although no dividends may be declared, credited or paid so long as there is any impairment of capital stock. The MA DOB Commissioner’s approval is required in order to authorize the payment of a dividend, if the total dividends declared in a calendar year exceed that year’s net profits combined with retained net profits for the preceding two years, less any required transfer to surplus or a fund for the retirement of any preferred stock.

Federal Reserve System

Federal Reserve regulations require depository institutions to maintain reserves against certain types of deposits and other liabilities, including transaction accounts, such as interest-bearing and regular checking accounts. The Bank’s required reserves can be in the form of vault cash.  If vault cash does not fully satisfy the required reserves, the reserves can be in the form of a balance maintained with the Federal Reserve Bank of Boston. For 2020, the Bank’s transaction accounts up to and including $16.9 million are exempt and subject to a zero percent reserve requirement. Any amount of transaction accounts greater than $16.9 million up to and including $127.5 million have a reserve requirement of 3%, and any amount of transaction accounts greater than $127.5. million have a reserve requirement of 10%. The Federal Reserve generally makes annual adjustments to the tiered reserves. The Bank is in compliance with these reserve requirements.

Transactions with Affiliates

Transactions between a bank and its affiliates are subject to certain restrictions under Sections 23A and 23B of the Federal Reserve Act (the “FRA”) and the Federal Reserve’s implementing Regulation W. The Company is considered an “affiliate” of the Bank under these sections. Generally, Sections 23A and 23B: (1) limit the extent to which an insured depository or its subsidiaries may engage in covered transactions (a) with an affiliate (as defined in such sections) to an amount equal to 10% of such institution’s capital and surplus and (b) with all affiliates, in the aggregate, to an amount equal to 20% of such capital and surplus; and (2) require all transactions with an affiliate, whether or not covered transactions, to be on terms substantially the same, or at least as favorable to the institution or subsidiary, as the terms provided or that would be provided to a non-affiliate. The term “covered transaction” includes the making of loans to an affiliate, purchase securities issued by an affiliate, purchase of assets from an affiliate, issuance of a guarantee on behalf of an affiliate, and other similar types of transactions.

Capital Adequacy

In July 2013, the Federal Reserve, the Office of the Comptroller of the Currency (“OCC”), and the FDIC approved final rules (the “Capital Rules”) establishing a new comprehensive capital framework for U.S. banking organizations. The Capital Rules generally implement the Basel Committee on Banking Supervision’s (the “Basel Committee”) December 2010 final capital framework referred to as “Basel III” for strengthening international capital standards. The Capital Rules revise the definitions and the components of regulatory capital, as well as address other issues affecting the numerator in banking institutions’ regulatory capital ratios. The Capital Rules also address asset risk weights and other matters affecting the denominator in banking institutions’ regulatory capital ratios and replace the existing general risk-weighting approach with a more risk-sensitive approach.

The Capital Rules: (i) include “Common Equity Tier 1” (“CET1”) and related regulatory capital ratio of CET1 to risk-weighted assets; (ii) specify that Tier 1 capital consists of CET1 and “Additional Tier 1 capital” instruments meeting certain revised requirements; (iii) mandate that most deductions/adjustments to regulatory capital measures be made to CET1 and not to the other components of capital; and (iv) expand the scope of the deductions from and adjustments to capital as compared to existing regulations. Under the Capital Rules, for most banking organizations, including the Company, the most common form of Additional Tier 1 capital is non-cumulative perpetual preferred stock, and the most common forms of Tier 2 capital are subordinated notes and a portion of the allocation for loan and lease losses, in each case, subject to the Capital Rules’ specific requirements.

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Pursuant to the Capital Rules, effective January 1, 2015, the minimum capital ratios are as follows:

• 4.5% CET1 to risk-weighted assets;

• 6.0% Tier 1 capital (that is, CET1 plus Additional Tier 1 capital) to risk-weighted assets;

• 8.0% Total capital (that is, Tier 1 capital plus Tier 2 capital) to risk-weighted assets; and

• 4.0% Tier 1 capital to average consolidated assets as reported on consolidated financial statements (called “leverage ratio”).

The Capital Rules also include a “capital conservation buffer,” composed entirely of CET1, in addition to these minimum risk-weighted asset ratios. The capital conservation buffer is designed to absorb losses during periods of economic stress. Banking institutions that do not hold the requisite capital conservation buffer will face constraints on dividends, capital instrument repurchases, interest payments on capital instruments and discretionary bonus payments based on the amount of the shortfall. Thus, the capital standards applicable to the Company include an additional capital conservation buffer of 2.5% of CET1, effectively resulting in minimum ratios inclusive of the capital conservation buffer of (i) CET1 to risk-weighted assets of at least 7%, (ii) Tier 1 capital to risk-weighted assets of at least 8.5%, and (iii) total capital to risk-weighted assets of at least 10.5%.

The Capital Rules provide for a number of deductions from and adjustments to CET1. These include, for example, the requirement that mortgage servicing assets, deferred tax assets arising from temporary differences that could not be realized through net operating loss carrybacks, and significant investments in non-consolidated financial entities be deducted from CET1 to the extent that any one such category exceeds 10% of CET1 or all such items, in the aggregate, exceed 15% of CET1.  In November 2017, the Federal Reserve finalized a rule pausing the phase-in of these deductions and adjustments for non-advanced approaches institutions. In July 2019, the Office of the Comptroller of the Currency, the Federal Reserve Board and the FDIC adopted a final rule intended to simply the Capital Rules described above for non-advanced approaches institutions. Institutions may implement the provisions of the simplification rule beginning on January 1, 2020 and must implement them by April 1, 2020. The transition provisions to the Capital Rules issued by these agencies in November 2017 will cease to apply to an institution in the quarter in which it adopts the simplification rule.

In addition, under the current general risk-based capital rules, the effects of accumulated other comprehensive income or loss items included in shareholders’ equity (for example, mark-to-market of securities held in the available for sale portfolio) under U.S. generally accepted accounting principles (“GAAP”) are reversed for the purposes of determining regulatory capital ratios. Pursuant to the Capital Rules, the effects of certain of the above items are not excluded. However, banking organizations, including the Company, that are not subject to the advanced approaches rule, could make a one-time permanent election to exclude these items. The Company made the one-time permanent election to exclude these items.

The Capital Rules also preclude certain hybrid securities, such as trust preferred securities, from inclusion in bank holding companies’ Tier 1 capital, although bank holding companies that had total consolidated assets of less than $15 billion at December 31, 2009 may include trust preferred securities issued prior to May 19, 2010 as a component of Tier 1 capital.

The risk-weighting categories in the Capital Rules are standardized and include a risk-sensitive number of categories, depending on the nature of the assets, generally ranging from 0% for U.S. government and agency securities, to 1,250% for certain credit exposures, and resulting in higher risk weights for a variety of asset classes.

In September 2019, the Office of the Comptroller of the Currency, the Federal Reserve Board and the FDIC adopted a final rule that is intended to further simply the Capital Rules for depository institutions and their holding companies that have less than $10 billion in total consolidated assets, such as us, if such institutions meet certain qualifying criteria. This final rule became effective on January 1, 2020. Under this final rule, if we meet the qualifying criteria, including having a leverage ratio (equal to tier 1 capital divided by average total consolidated assets) of greater than 9 percent, we will be eligible to opt into the community bank leverage ratio framework. If we opt into this framework, we will be considered to have satisfied the generally applicable risk-based and leverage capital requirements in the Capital Rules (as modified pursuant to the simplification rule) and will be considered to have met the well-capitalized ratio requirements for PCA purposes. The Bank is currently evaluation the requirements of this framework.

The Company and the Bank are in compliance with the currently applicable capital requirements.  

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Prompt Corrective Action and Safety and Soundness

Pursuant to Section 38 of the FDIA, federal banking agencies are required to take “prompt corrective action” should a depository institution fail to meet certain capital adequacy standards.  At each successive lower capital category, an insured depository institution is subject to more restrictions and prohibitions, including restrictions on growth, restrictions on interest rates paid on deposits, restrictions or prohibitions on payment of dividends, and restrictions on the acceptance of brokered deposits. For example, “well-capitalized” institutions are permitted to accept brokered deposits, but banks that are not well-capitalized are generally restricted or prohibited from accepting such deposits.  Furthermore, if an insured depository institution is classified in one of the undercapitalized categories, it is required to submit a capital restoration plan to the appropriate federal banking agency, and the holding company must guarantee the performance of that plan. Based upon its capital levels, a bank that is classified as well-capitalized, adequately capitalized, or undercapitalized may be treated as though it were in the next lower capital category if the appropriate federal banking agency, after notice and opportunity for hearing, determines that an unsafe or unsound condition or an unsafe or unsound practice warrants such treatment.

For purposes of prompt corrective action, to be: (i) well-capitalized, a bank must have a total risk-based capital ratio of at least 10%, a Tier 1 risk-based capital ratio of at least 8%, a CET1 risk-based capital ratio of at least 6.5%, and a Tier 1 leverage ratio of at least 5%; (ii) adequately capitalized, a bank must have a total risk-based capital ratio of at least 8%, a Tier 1 risk-based capital ratio of at least 6%, a CET1 risk-based capital ratio of at least 4.5%, and a Tier 1 leverage ratio of at least 4% (but not otherwise meet all of the criteria to be considered “well-capitalized”); (iii)  undercapitalized, a bank would have a total risk-based capital ratio of less than 8%, a Tier 1 risk-based capital ratio of less than 6%, a CET1 risk-based capital ratio of less than 4.5%, or a Tier 1 leverage ratio of less than 4% (but not otherwise meet all of the criteria to be considered “significantly” or “critically” undercapitalized); (iv) significantly undercapitalized, a bank would have a total risk-based capital ratio of less than 6%, a Tier 1 risk-based capital ratio of less than 4%, a CET1 risk-based capital ratio of less than 3%, or a Tier 1 leverage ratio of less than 3% (but not otherwise meet the criterion to be considered “critically undercapitalized”); and (v) critically undercapitalized, a bank would have a ratio of tangible equity to total assets that is less than or equal to 2%.

The Bank is currently well-capitalized, under the prompt corrective action standards.

Bank holding companies and insured banks also may be subject to potential enforcement actions of varying levels of severity by the federal banking agencies for unsafe or unsound practices in conducting their business, or for violation of any law, rule, regulation, condition imposed in writing by the agency or term of a written agreement with the agency. In more serious cases, enforcement actions may include: issuances of directives to increase capital; issuances of formal and informal agreements; impositions of civil monetary penalties; issuances of a cease and desist order that can be judicially enforced; issuances of removal and prohibition orders against officers, directors, and other institution−affiliated parties; terminations of the bank’s deposit insurance; appointment of a conservator or receiver for the bank; and enforcements of such actions through injunctions or restraining orders based upon a judicial determination that the agency would be harmed if such equitable relief was not granted.

The Volcker Rule

Section 619 of the Dodd-Frank Act, commonly known as the Volcker Rule, restricts the ability of banking entities, such as the Company and the Bank, from: (i) engaging in “proprietary trading” and (ii) investing in or sponsoring certain types of funds (“Covered Funds”), subject to certain limited exceptions. Under the Volcker Rule, the term “Covered Fund” includes any issuer that would be an investment company under the Investment Company Act of 1940 (the “ICA”) but for the exemptions in section 3(c)(1) and 3(c)(7) of the ICA. Collateralized loan obligation (“CLO”) and collateralized debt obligation securities are generally considered ownership interests in Covered Funds, but the Volcker Rule provides, among other exemptions, an exemption for CLOs meeting certain requirements. The Company is in compliance with the Volcker Rule.

Deposit Insurance

The Bank’s deposit accounts are fully insured by the Deposit Insurance Fund (the “DIF”) of the FDIC up to the deposit insurance limit of $250,000 per depositor, per insured institution, per ownership category, in accordance with applicable laws and regulations.

The FDIC uses a risk-based assessment system that imposes insurance premiums based upon a risk matrix that accounts for a bank’s capital level and supervisory rating (CAMELS rating). The risk matrix uses different risk categories distinguished by capital levels and supervisory ratings. The base for deposit insurance assessments is average consolidated total assets less average tangible equity.  Assessment rates are calculated using formulas that take into account the risk of the institution being assessed.  The FDIC may increase or decrease the assessment rate schedule in order to manage the DIF to prescribed statutory target levels. An increase in the risk category for the Bank or in the assessment rates could have an adverse effect on the Bank’s, and consequently the Company’s earnings. The FDIC may terminate deposit insurance if it determines the institution involved has engaged in or is engaging in unsafe or unsound banking practices, is in an unsafe or unsound condition, or has violated applicable laws, regulations, or orders.  The Bank is not aware of any practice, condition, or violation that might lead to the termination of its deposit insurance.

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The FDIA and FDIC regulations generally limit the ability of an insured depository institution to accept, renew or roll over any brokered deposit unless the institution’s capital category is “well capitalized” or, with the FDIC’s approval, “adequately capitalized.” Depository institutions that have brokered deposits in excess of 10% of total assets are subject to increased FDIC deposit insurance premium assessments. However, for institutions that are well capitalized and have a CAMELS composite rating of 1 or 2, reciprocal deposits are deducted from brokered deposits. Section 202 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (the “Economic Growth Act”), which was enacted in 2018, amends the FDIA to exempt a capped amount of reciprocal deposits from treatment as brokered deposits for certain insured depository institutions.

Depositor Preference

The FDIA provides that, in the event of the “liquidation or other resolution” of an insured depository institution, the claims of depositors of the institution, including the claims of the FDIC as subrogee of insured depositors, and certain claims for administrative expenses of the FDIC as a receiver, will have priority over other general unsecured claims against the institution. If an insured depository institution fails, insured and uninsured depositors, along with the FDIC, will have priority in payment ahead of unsecured, non-deposit creditors, including the parent bank holding company, with respect to any extensions of credit they have made to such insured depository institution.

Consumer Financial Protection

The Company and the Bank are subject to a number of federal and state consumer protection laws that govern their relationship with customers. These laws include the Consumer Financial Protection Act of 2010, Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Truth in Lending Act, the Truth in Savings Act, the Electronic Fund Transfer Act, the Expedited Funds Availability Act, the Home Mortgage Disclosure Act, the Fair Housing Act, the Real Estate Settlement Procedures Act, the Fair Debt Collection Practices Act, the Right to Financial Privacy Act, the Servicemembers Civil Relief Act, and these laws’ respective state-law counterparts, as well as state usury laws and laws regarding unfair and deceptive acts and practices. These and other federal laws, among other things, require disclosures of the cost of credit and terms of deposit accounts, provide substantive consumer rights, prohibit discrimination in credit transactions, regulate the use of credit report information, provide financial privacy protections, prohibit unfair, deceptive and abusive practices, restrict the Bank’s ability to raise interest rates, and subject the Bank to substantial regulatory oversight. Violations of applicable consumer protection laws can result in significant potential liability from litigation brought by customers, including actual damages, restitution, and attorneys’ fees.

Further, the Consumer Financial Protection Bureau (“CFPB”) has broad rulemaking authority for a wide range of consumer financial laws that apply to all banks, including, among other things, the authority to prohibit “unfair, deceptive or abusive” acts and practices. While there are no statutory definitions for those terms, the CFPB has found an act or practice to be “unfair” when: “(i) it causes or is likely to cause substantial injury to consumers; (ii) the injury is not reasonably avoidable by consumers; and (iii) the injury is not outweighed by countervailing benefits to consumers or to competition.” “Deceptive acts or practices” occur when “(i) the act or practice misleads or is likely to mislead the consumer; (ii) the consumer’s interpretation is reasonable under the circumstances; and (iii) the misleading act or practice is material.”  Finally, an act or practice is “abusive” when it: “(i) materially interferes with the ability of a consumer to understand a term or condition of a consumer financial product or service; or (ii) takes unreasonable advantage of (a) a consumer’s lack of understanding of the material risks, costs, or conditions of the product or service; (b) a consumer’s inability to protect his or her interests in selecting or using a consumer financial product or service; or (c) a consumer’s reasonable reliance on a covered person to act in his or her interests.”

Neither the Dodd-Frank Act, nor the individual consumer financial protection laws prevent states from adopting stricter consumer protection standards.

Community Reinvestment Act

The Community Reinvestment Act of 1977 (the “CRA”), requires depository institutions to assist in meeting the credit needs of their market areas consistent with safe and sound banking practice. Under the CRA, each depository institution is required to help meet the credit needs of its market areas by, among other things, providing credit to low and moderate income individuals and communities. These factors are also considered in evaluating mergers, acquisitions and applications to open a branch or facility. The applicable federal banking agencies regularly conduct CRA examinations to assess the performance of financial institutions and assign one of four ratings to the institution’s records of meeting the credit needs of its community. The Bank received a “Satisfactory” rating during its last examination in August 2017.

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Insider Credit Transactions

Section 22(h) of the FRA and its implementing Regulation O restricts loans to directors, executive officers, and principal shareholders of a bank or its affiliates, and companies and political or campaign committees controlled by such persons (“insiders”). Under Section 22(h), a loan by a bank to any insider may not exceed, together with all other outstanding loans to such person and any company or political or campaign committee controlled by such person, the bank’s loan-to-one-borrower limit. Loans to insiders above specified amounts must receive the prior approval of the board of directors. Further, under Section 22(h) of the FRA, loans to insiders must be made on terms substantially the same as offered in comparable transactions to other persons, except that such insiders may receive preferential loans made under a benefit or compensation program that is widely available to the bank’s (or, if applicable, the bank affiliate’s) employees and does not give preference to the insider over the employees. Section 22(g) of the FRA places additional limitations on loans to executive officers. A violation of these restrictions may result in the assessment of substantial civil monetary penalties on the affected bank or any officer, director, employee, agent, or other person participating in the conduct of the affairs of that bank, the imposition of a cease and desist order, and other regulatory sanctions.

Financial Privacy

The Company is subject to federal laws, including the Gramm-Leach-Bliley Act (the “GLBA”), and certain state laws containing consumer privacy protection provisions. These provisions limit the ability of banks and other financial institutions to disclose nonpublic information about consumers to affiliated and non-affiliated third parties and limit the reuse of certain consumer information received from non-affiliated financial institutions. These provisions require notice of privacy policies to customers and, in some circumstances, allow consumers to prevent disclosure of certain nonpublic personal information to affiliates or non-affiliated third parties by means of “opt out” or “opt in” authorizations.

Financial Data Security

The GLBA requires that financial institutions implement comprehensive written information security programs that include administrative, technical, and physical safeguards to protect consumer information. Further, pursuant to interpretive guidance issued under the GLBA and certain state laws, financial institutions are required to notify customers and regulators of security breaches that result in unauthorized access to their nonpublic personal information.

Incentive Compensation

The Dodd-Frank Act requires the federal banking agencies and the Securities and Exchange Commission (the “SEC”) to establish joint regulations or guidelines prohibiting incentive-based payment arrangements at specified regulated entities, including the Company and the Bank, with at least $1 billion in total consolidated assets that encourage inappropriate risks by providing an executive officer, employee, director or principal shareholder with excessive compensation, fees, or benefits that could lead to material financial loss to the entity. The federal banking agencies and the SEC most recently proposed such regulations in 2016, but the regulations have not yet been finalized. If the regulations are adopted in the form initially proposed, they will restrict the manner in which executive compensation is structured.

The Dodd-Frank Act also requires publicly traded companies to give shareholders a non-binding vote on executive compensation and on so-called “golden parachute” payments in connection with approvals of mergers and acquisitions.

Anti-Money Laundering Initiatives and the USA PATRIOT Act

Under Title III of the USA PATRIOT Act, all financial institutions are required to take certain measures to identify their customers, prevent money laundering, monitor customer transactions, and report suspicious activity to U.S. law enforcement agencies. Financial institutions also are required to respond to requests for information from federal banking agencies and law enforcement agencies. Information sharing among financial institutions for the above purposes is encouraged by an exemption granted to complying financial institutions from the privacy provisions of the GLBA and other privacy laws. Financial institutions that hold correspondent accounts for foreign banks or provide private banking services to foreign individuals are required to take measures to avoid dealing with certain foreign individuals or entities, including foreign banks with profiles that raise money laundering concerns, and are prohibited from dealing with foreign “shell banks” and persons from jurisdictions of particular concern. The primary federal banking agencies and the Secretary of the U.S. Department of the Treasury have adopted regulations to implement several of these provisions. All financial institutions also are required to establish internal anti-money laundering programs. The effectiveness of a financial institution in combating money laundering activities is a factor to be considered in any application submitted by the financial institution under the Bank Merger Act. The Company has a Bank Secrecy Act and USA PATRIOT Act compliance program commensurate with its risk profile.

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The Fair Credit Reporting Act’s Red Flags Rule requires financial institutions with covered accounts (e.g., consumer bank accounts and loans) to develop, implement, and administer an identity theft prevention program. This program must include reasonable policies and procedures to detect suspicious patterns or practices that indicate the possibility of identity theft, such as inconsistencies in personal information or changes in account activity.

Office of Foreign Assets Control (“OFAC”) Regulation

The Office of Foreign Assets Control (“OFAC”) of the U.S. Department of the Treasury administers and enforces economic and trade sanctions based on U.S. foreign policy and national security goals against targeted foreign countries and regimes, terrorists, international narcotics traffickers, those engaged in activities related to the proliferation of weapons of mass destruction, and other threats to the national security, foreign policy, or economy of the United States. OFAC publishes lists of individuals and companies owned or controlled by, or acting for or on behalf of, targeted countries. It also lists individuals, groups, and entities, such as terrorists and narcotics traffickers, designated under programs that are not country-specific. These are typically known as the OFAC rules based on their administration by the OFAC. The OFAC-administered sanctions targeting countries take many different forms. Generally, they contain one or more of the following elements: (i) restrictions on trade with or investment in a sanctioned country, including prohibitions against direct or indirect imports from and exports to a sanctioned country and prohibitions on “U.S. persons” engaging in financial transactions relating to making investments in, or providing investment-related advice or assistance to, a sanctioned country; and (ii) a blocking of assets in which the government or specially designated nationals of the sanctioned country have an interest by prohibiting transfers of property subject to U.S. jurisdiction (including property in the possession or control of U.S. persons). Blocked assets (property and bank deposits) cannot be paid out, withdrawn, set off, or transferred in any manner without a license from OFAC. Failure to comply with these sanctions could have serious legal and reputational consequences.

Available Information

The SEC maintains an Internet website at http://www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

Our Internet website is http://www.cambridgetrust.com. You can obtain on our website, free of charge, a copy of our Annual Report on Form 10-K, our quarterly reports on Form 10-Q, our current reports on Form 8-K, and any amendments to those reports, as soon as reasonably practicable after we electronically file such reports or amendments with, or furnish them to, the SEC. Our Internet website and the information contained therein or connected thereto are not intended to be incorporated into this Annual Report on Form 10-K.

Employees

As of December 31, 2019, the Company had 312 full-time and 9 part-time employees. The Company’s employees are not represented by any collective bargaining unit. The Company believes that its employee relations are good.

Item 1A. Risk Factors.

Deterioration in local economic conditions may negatively impact our financial performance.

The Company’s success depends primarily on the general economic conditions in Eastern Massachusetts and New Hampshire and the specific local markets in which the Company operates. Unlike larger national or other regional banks that are more geographically diversified, the Company provides banking and financial services to customers primarily in Massachusetts and New Hampshire. The local economic conditions in these areas have a significant impact on the demand for the Company’s products and services as well as the ability of the Company’s customers to repay loans, the value of the collateral securing loans, and the stability of the Company’s deposit funding sources.

A downturn in our local economy may limit funds available for deposit and may negatively affect our borrowers’ ability to repay their loans on a timely basis, both of which could have an impact on our profitability.

Variations in interest rates may negatively affect our financial performance.

The Company’s earnings and financial condition are largely dependent upon net interest income, which is the difference between interest earned from loans and investments and interest paid on deposits and borrowings. The narrowing of interest rate spreads could adversely affect the Company’s earnings and financial condition. The Company cannot predict with certainty, or control, changes in interest rates. Regional and local economic conditions and the policies of regulatory authorities, including monetary policies of the Federal Reserve, affect interest income and interest expense. High interest rates could also affect the amount of loans that the Company can originate because higher rates could cause customers to apply for fewer mortgages or cause depositors to shift funds from accounts that have a comparatively lower cost to accounts with a higher cost.  The Company may also experience customer

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attrition due to competitor pricing.  If the cost of interest-bearing deposits increases at a rate greater than the yields on interest-earning assets increase, then net interest income will be negatively affected. Changes in the asset and liability mix may also affect net interest income. Similarly, lower interest rates cause higher yielding assets to prepay and floating or adjustable rate assets to reset to lower rates. If the Company is not able to reduce its funding costs sufficiently, due to either competitive factors or the maturity schedule of existing liabilities, then the Company’s net interest margin will decline.

Although management believes it has implemented effective asset and liability management strategies to mitigate the potential adverse effects of changes in interest rates on the Company’s results of operations, any substantial or unexpected change in, or prolonged change in market interest rates could have a material adverse effect on the Company’s financial condition and results of operations.

Changes in the economy or the financial markets could materially affect our financial performance.

Downturns in the United States or global economies or financial markets could adversely affect the demand for and income received from the Company’s fee-based services. Revenues from the Wealth Management Group depend in large part on the level of assets under management and administration. Market volatility that leads customers to liquidate investments, as well as lower asset values, can reduce our level of assets under management and administration and thereby decrease our investment management and administration revenues.

Our loan portfolio includes loans with a higher risk of loss.

The Bank originates commercial and industrial loans, commercial real estate loans, consumer loans, and residential mortgage loans primarily within our market area. Our lending strategy focuses on residential real estate lending, as well as servicing commercial customers, including increased emphasis on commercial and industrial lending, and commercial deposit relationships. Commercial and industrial loans, commercial real estate loans, and consumer loans may expose a lender to greater credit risk than loans secured by residential real estate because the collateral securing these loans may not be sold as easily as residential real estate. In addition, commercial real estate and commercial and industrial loans may also involve relatively large loan balances to individual borrowers or groups of borrowers. These loans also have greater credit risk than residential real estate for the following reasons:

• Commercial Real Estate Loans. Repayment is dependent on income being generated in amounts sufficient to cover operating expenses and debt service.

• Commercial and Industrial Loans. Repayment is generally dependent upon the successful operation of the borrower’s business.

• Consumer Loans. Consumer loans are collateralized, if at all, with assets that may not provide an adequate source of payment of the loan due to depreciation, damage or loss.

Any downturn in the real estate market or local economy could adversely affect the value of the properties securing the loans or revenues from the borrowers’ businesses thereby increasing the risk of non-performing loans.

We may experience losses and expenses if security interests granted for loans are not enforceable.  

When the Company makes loans it sometimes obtains liens, such as real estate mortgages or other asset pledges, to provide the Company with a security interest in collateral. If there is a loan default, the Company may seek to foreclose upon collateral and enforce the security interests to obtain repayment and eliminate or mitigate the Company’s loss. Drafting errors, recording errors, other defects or imperfections in the security interests granted to the Company and/or changes in law may render liens granted to the Company unenforceable. The Company may incur losses or expenses if security interests granted to the Company are not enforceable.

If our allowance for loan losses is not sufficient to cover actual loan losses, then our earnings will decrease.

The Bank’s loan customers may not repay their loans according to their terms and the collateral securing the payment of these loans may be insufficient to pay any remaining loan balance. The Bank therefore may experience significant loan losses, which could have a material adverse effect on our operating results. Material additions to our allowance for loan losses would materially decrease our net income, and the charge-off of loans may cause us to increase the allowance. The Bank makes various assumptions and judgments about the collectability of the loan portfolio, including the creditworthiness of our borrowers and the value of the real estate and other assets serving as collateral for the repayment of many of our loans. We rely on our loan quality reviews, our experience, and our evaluation of economic conditions, among other factors, in determining the amount of the allowance for loan losses. If our assumptions prove to be incorrect, our allowance for loan losses may not be sufficient to cover losses inherent in our loan portfolio, resulting in additions to our allowance.

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A new accounting standard may require us to increase our allowance for loan losses and may have a material adverse effect on our financial condition and results of operations.

The Financial Accounting Standards Board has issued Accounting Standards Update 2016-13, which will be effective for the Company for the first quarter of 2020. This standard, often referred to as “CECL” (reflecting a current expected credit loss model), will require companies to recognize an allowance for credit losses based on estimates of losses expected to be realized over the contractual lives of the loans. Under current U.S. GAAP, companies generally recognize credit losses only when it is probable that a loss has been incurred as of the balance sheet date. This new standard will require us to collect and review increased types and amounts of data for us to determine the appropriate level of the allowance for loan losses, and may require us to increase our allowance for loan losses.  It also could produce higher volatility in future provisions for credit losses than our current process and may adversely impact our results of operations.

Strong competition within our industry and market area could hurt our performance and slow our growth.

The Company operates in a competitive market for both attracting deposits, which is our primary source of funds, and originating loans. Historically, our most direct competition for deposits has come from savings and commercial banks. Our competition for loans comes principally from commercial banks, savings institutions, mortgage banking firms, credit unions, finance companies, mutual funds, insurance companies, and investment banking firms. We also face additional competition from internet-based institutions and brokerage firms. Competition for loan originations and deposits may limit our future growth and earnings prospects.

The Company’s ability to compete successfully depends on a number of factors, including, among other things:

• the ability to develop, maintain, and build upon long-term customer relationships based on service quality, high ethical standards and reputation;

• the ability to expand the Company’s market position;

• the scope, relevance, and pricing of products and services offered to meet customer needs and demands;

• the rate at which the Company introduces new products, services, and technologies relative to its competitors;

• customer satisfaction with the Company’s level of service;

• industry and general economic trends; and

• the ability to attract and retain talented employees.

Failure to perform in any of these areas could significantly weaken the Company’s competitive position, which could adversely affect the Company’s growth and profitability, which, in turn, could have a material adverse effect on the Company’s financial condition and results of operations.

The Company is subject to extensive government regulation and supervision, which may interfere with its ability to conduct its business and may negatively impact its financial results.

The Company, primarily through the Bank, Cambridge Trust Company of New Hampshire, Inc., and certain non-bank subsidiaries, are subject to extensive federal and state regulation and supervision. Banking regulations are primarily intended to protect depositors’ funds, the DIF and the safety and soundness of the banking system as a whole, not shareholders. These laws and regulations affect the Company’s lending practices, capital structure, investment practices, dividend policy, and growth, among other things. Congress and federal and state banking agencies continually review banking laws, regulations, and policies for possible changes. Changes to statutes, regulations, or regulatory policies, including changes in interpretation or implementation of statutes, regulations, or policies, could affect the Company in substantial and unpredictable ways. Such changes could subject the Company to additional costs, limit the types of financial services and products the Company may offer, and/or limit the pricing the Company may charge on certain banking services, among other things. Compliance personnel and resources may increase our costs of operations and adversely impact our earnings.

Failure to comply with laws, regulations, or policies could result in sanctions by regulatory agencies, civil money penalties, and/or reputation damage, which could have a material adverse effect on our business, financial condition, and results of operations. While the Company has policies and procedures designed to prevent any such violations, there can be no assurance that such violations will not occur.

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State and federal banking agencies periodically conduct examinations of our business, including for compliance with laws and regulations, and our failure to comply with any supervisory actions to which we are or become subject as a result of such examinations may adversely affect our business.

Federal and state regulatory agencies periodically conduct examinations of our business, including our compliance with laws and regulations. If, as a result of an examination, an agency were to determine that the financial, capital resources, asset quality, earnings prospects, management, liquidity, or other aspects of any of our operations had become unsatisfactory or violates any law or regulation, such agency may take certain remedial or enforcement actions it deems appropriate to correct any deficiency. Remedial or enforcement actions include the power to enjoin “unsafe or unsound” practices, to require affirmative actions to correct any conditions resulting from any violation or practice, to issue an administrative order that can be judicially enforced against a bank, to direct an increase in the bank’s capital, to restrict the bank’s growth, to assess civil monetary penalties against a bank’s officers or directors, and to remove officers and directors. In the event that the FDIC concludes that, among other things, our financial condition cannot be corrected or that there is an imminent risk of loss to our depositors, it may terminate our deposit insurance. The CFPB also has authority to take enforcement actions, including cease-and desist orders or civil monetary penalties, if it finds that we offer consumer financial products and services in violation of federal consumer financial protection laws.

If we are unable to comply with future regulatory directives, or with the terms of any future supervisory requirements to which we may become subject, then we could become subject to a variety of supervisory actions and orders, including cease and desist orders, prompt corrective actions, memoranda of understanding, and other regulatory enforcement actions. Such supervisory actions could, among other things, impose greater restrictions on our business, as well as our ability to develop any new business. The Company could also be required to raise additional capital, or dispose of certain assets and liabilities within a prescribed time period, or both. Failure to implement remedial measures as required by financial regulatory agencies could result in additional orders or penalties from federal and state regulators, which could trigger one or more of the remedial actions described above. The terms of any supervisory action and associated consequences with any failure to comply with any supervisory action could have a material negative effect on our business, operating flexibility, and overall financial condition.

The Company is subject to liquidity risk, which could adversely affect net interest income and earnings.

The purpose of the Company’s liquidity management is to meet the cash flow obligations of its customers for both deposits and loans.  The primary liquidity measurement the Company utilizes is called basic surplus, which captures the adequacy of the Company’s access to reliable sources of cash relative to the stability of its funding mix of average liabilities.  This approach recognizes the importance of balancing levels of cash flow liquidity from short- and long-term securities with the availability of dependable borrowing sources which can be accessed when necessary.  However, competitive pressure on deposit pricing could result in a decrease in the Company’s deposit base or an increase in funding costs.  In addition, liquidity will come under additional pressure if loan growth exceeds deposit growth.  These scenarios could lead to a decrease in the Company’s basic surplus measure below the minimum policy level of 5%.  To manage this risk, the Company has the ability to purchase brokered certificates of deposit, borrow against established borrowing facilities with other banks (Federal funds), and enter into repurchase agreements with investment companies.  Depending on the level of interest rates, the Company’s net interest income, and therefore earnings, could be adversely affected.

Our ability to service our debt, pay dividends, and otherwise pay our obligations as they come due is substantially dependent on capital distributions from our subsidiary.

The Company is a separate and distinct legal entity from its subsidiary, the Bank. It receives substantially all of its revenue from dividends from the Bank. These dividends are the principal source of funds to pay dividends on the Company’s common stock.  Various federal and/or state laws and regulations limit the amount of dividends that the Bank may pay to the Company. Also, the Company’s right to participate in a distribution of assets upon a subsidiary’s liquidation or reorganization is subject to the prior claims of the subsidiary’s depositors and certain other creditors. In the event the Bank is unable to pay dividends to the Company, the Company may not be able to service debt, pay obligations, or pay dividends on the Company’s common stock. The inability to receive dividends from the Bank could have a material adverse effect on the Company’s business, financial condition, and results of operations.

A breach of information security, including cyber-attacks, could disrupt our business and impact our earnings.

The Company depends upon data processing, communication, and information exchange on a variety of computing platforms and networks and over the internet.  In addition, we rely on the services of a variety of vendors to meet our data processing and communication needs.  Despite existing safeguards, we cannot be certain that all of our systems are free from vulnerability to attack or other technological difficulties or failures.  During the normal course of our business, we have experienced and we expect to continue to experience attempts to breach our systems, none of which has been material to the Company to date, and we may be unable to protect sensitive data and the integrity of our systems.  If information security is breached or difficulties or failures occur, despite the controls we and our third party vendors have instituted, information can be lost or misappropriated, resulting in financial loss or costs to us, reputational harm, or damages to others. Such costs or losses could exceed the amount of insurance coverage, if any, which would adversely affect our earnings.

15

The Company may be adversely affected by fraud.

The Company is inherently exposed to operational risk in the form of theft and other fraudulent activity by employees, customers, and other third parties targeting the Company and/or the Company’s customers or data. Such activity may take many forms, including check fraud, electronic fraud, wire fraud, phishing, social engineering, and other dishonest acts.  During the normal course of our business, we have been subjected to and we expect to continue to be subject to theft and fraudulent activity, none of which has been material to the Company to date.

The Company continually encounters technological change and the failure to understand and adapt to these changes could hurt its business.

The financial services industry is continually undergoing rapid technological change with frequent introductions of new technology-driven products and services. The effective use of technology increases efficiency and enables financial institutions to better serve customers and to reduce costs. The Company’s future success depends, in part, upon its ability to address the needs of its customers by using technology to provide products and services that will satisfy customer demands, as well as to create additional efficiencies in the Company’s operations. Many of the Company’s competitors have substantially greater resources to invest in technological improvements. The Company may not be able to effectively implement new technology-driven products and services or be successful in marketing these products and services to its customers. Failure to successfully keep pace with technological changes affecting the financial services industry could have a material adverse impact on the Company’s business and, in turn, the Company’s financial condition and results of operations.

The Company relies on third parties to provide key components of its business infrastructure.

The Company relies on third parties to provide key components for its business operations, such as data processing and storage, recording and monitoring transactions, online banking interfaces and services, internet connections, and network access. While the Company selects these third-party vendors carefully, it does not control their actions. Any problems caused by these third parties, including those resulting from breakdowns or other disruptions in communication services provided by a vendor, failure of a vendor to handle current or higher volumes, cyber-attacks and security breaches at a vendor, failure of a vendor to provide services for any reason, or poor performance of services by a vendor, could adversely affect the Company’s ability to deliver products and services to its customers and otherwise conduct its business. Financial or operational difficulties of a third-party vendor could also hurt the Company’s operations if those difficulties interfere with the vendor’s ability to serve the Company. Replacing these third-party vendors could create significant delays and expense that adversely affect the Company’s business and performance.

The possibility of the economy’s return to recessionary conditions and the possibility of further turmoil or volatility in the financial markets would likely have an adverse effect on our business, financial position, and results of operations.

The economy in the United States and globally has experienced volatility in recent years and may continue to experience such volatility for the foreseeable future. There can be no assurance that economic conditions will not worsen.  Unfavorable or uncertain economic conditions can be caused by declines in economic growth, business activity, or investor or business confidence, limitations on the availability or increases in the cost of credit and capital, increases in inflation or interest rates, the timing and impact of changing governmental policies, natural disasters, epidemics / pandemics, such as coronavirus disease 2019 (“COVID-19”), terrorist attacks, acts of war, or a combination of these or other factors. A worsening of business and economic conditions could have adverse effects on our business, including the following:

• investors may have less confidence in the equity markets in general and in financial services industry stocks in particular, which could place downward pressure on the Company’s stock price and resulting market valuation;

• economic and market developments may further affect consumer and business confidence levels and may cause declines in credit usage and adverse changes in payment patterns, causing increases in delinquencies and default rates;

• the Company’s ability to assess the creditworthiness of its customers may be impaired if the models and approaches the Company uses to select, manage, and underwrite its customers become less predictive of future behaviors;

• the Company could suffer decreases in demand for loans or other financial products and services or decreased deposits or other investments in accounts with the Company;

• customers of the Company’s Wealth Management Group may liquidate investments, which together with lower asset values, may reduce the level of assets under management and administration, and thereby decrease the Company’s investment management and administration revenues;

• competition in the financial services industry could intensify as a result of the increasing consolidation of financial services companies in connection with current market conditions or otherwise; and

• the value of loans and other assets or collateral securing loans may decrease.

16

The Company is subject to other-than-temporary impairment risk, which could negatively impact our financial performance.

The Company recognizes an impairment charge when the decline in the fair value of equity, debt securities, and cost-method investments below their cost basis are judged to be other-than-temporary. Significant judgment is used to identify events or circumstances that would likely have a significant adverse effect on the future use of the investment. The Company considers various factors in determining whether an impairment is other-than-temporary, including the severity and duration of the impairment, forecasted recovery, the financial condition and near-term prospects of the investee, whether the Company has the intent to sell and whether it is more likely than not it will be forced to sell the security in question. Information about unrealized gains and losses is subject to changing conditions. The values of securities with unrealized gains and losses will fluctuate, as will the values of securities that we identify as potentially distressed. Our current evaluation of other-than-temporary impairments reflects our intent to hold securities for a reasonable period of time sufficient for a forecasted recovery of fair value. However, our intent to hold certain of these securities may change in future periods as a result of facts and circumstances impacting a specific security. If our intent to hold a security with an unrealized loss changes and we do not expect the security to fully recover prior to the expected time of disposition, we will write down the security to its fair value in the period that our intent to hold the security changes.

The risks presented by acquisitions, such as the acquisition of Optima and the proposed merger with Wellesley, could adversely affect our financial condition and results of operations.

The business strategy of the Company may include growth through acquisition such as the acquisition of Optima and the proposed merger with Wellesley.  Any such future acquisitions will be accompanied by the risks commonly encountered in acquisitions.  These risks may include, among other things:

• our ability to realize anticipated cost savings;

• the difficulty of integrating operations and personnel, and the loss of key employees;

• the potential disruption of our or the acquired company’s ongoing business in such a way that could result in decreased revenues, the inability of our management to maximize our financial and strategic position;

• the inability to maintain uniform standards, controls, procedures, and policies; and

• the impairment of relationships with the acquired company’s employees and customers as a result of changes in ownership and management.

The Company cannot provide any assurance that we will be successful in overcoming these risks or any other problems encountered in connection with acquisitions. Our inability to overcome these risks could have an adverse effect on the achievement of our business strategy and results of operations.

The Merger with Wellesley is subject to the receipt of consents and approvals from governmental authorities that may delay the date of completion of the Merger or impose conditions that could have an adverse effect on the Company.

Before the Merger may be completed, various consents, approvals, waiver or non-objections must be obtained from state and federal governmental authorities, including the FDIC, the Federal Reserve, the Massachusetts Commissioner of Banks, the Massachusetts Housing Partnership, and the Co-Operative Central Bank. Satisfying the requirements of these governmental authorities may delay the date of completion of the Merger. In addition, these governmental authorities may include conditions on the completion of the merger, or require changes to the terms of the Merger. While the Company and Wellesley do not currently expect that any such conditions or changes would result in a material adverse effect on the Company, there can be no assurance that they will not, and such conditions or changes could have the effect of delaying completion of the Merger, or imposing additional costs on or limiting the revenues of the Company following the Merger, any of which might have a material adverse effect on the Company following the Merger. The parties are not obligated to complete the Merger should any regulatory approval contain a non-standard condition, restriction or requirement that the Company’s board of directors reasonably determines in good faith would, individually or in the aggregate, materially reduce the benefits of the Merger to such a degree that the Company would not have entered into the merger agreement had such condition, restriction or requirement been known at the date of the merger agreement.

17

Failure to complete the Merger with Wellesley could negatively impact the stock price of the Company and future businesses and financial results of the Company.

If the Merger is not completed, the ongoing businesses of the Company may be adversely affected, and the Company will be subject to several risks, including the following:

• the Company will be required to pay certain costs relating to the Merger, whether or not the Merger is completed, such as legal, accounting, financial advisor and printing fees; and

• matters relating to the Merger may require substantial commitments of time and resources by management of the Company, which could otherwise have been devoted to serving existing customers or other opportunities that may have been beneficial to the Company as an independent company.

In addition, if the Merger is not completed, the Company may experience negative reactions from the financial markets, and the Company may experience negative reactions from its customers and employees. The Company also could be subject to litigation related to any failure to complete the Merger or to enforcement proceedings commenced against the Company to perform its obligations under the merger agreement. If the Merger is not completed, the Company cannot assure shareholders that the risks described above will not materialize and will not materially affect the business, financial results and stock price of the Company.

The integration of the Company, Optima, and the proposed Merger with Wellesley will present significant challenges that may result in the combined business not operating as effectively as expected or in the failure to achieve some or all of the anticipated benefits of the transaction.

The benefits and synergies expected to result from the Merger with Wellesley will depend in part on whether the operations of Wellesley can be integrated in a timely and efficient manner with those of the Company. The Company will face challenges in consolidating its functions with those of Wellesley, and integrating the organizations, procedures and operations of the two businesses. The integration of the Company and Wellesley will be complex and time-consuming, and the management of both companies will have to dedicate substantial time and resources to it. These efforts could divert management’s focus and resources from serving existing customers or other strategic opportunities and from day-to-day operational matters during the integration process. Failure to successfully integrate the operations of the Company and Wellesley could result in the failure to achieve some of the anticipated benefits from the transaction, including cost savings and other operating efficiencies, and the Company may not be able to capitalize on the existing relationships of Wellesley to the extent anticipated, or it may take longer, or be more difficult or expensive than expected to achieve these goals. This could have an adverse effect on the business, results of operations, financial condition or prospects of the Company and/or the Bank after the transaction.

Unanticipated costs relating to the Merger with Wellesley could reduce the Company’s future earnings per share.

The Company and the Bank believe that each has reasonably estimated the likely costs of integrating the operations of the Bank and Wellesley, and the incremental costs of operating as a combined company. However, it is possible that unexpected transaction costs such as taxes, fees or professional expenses or unexpected future operating expenses such as increased personnel costs or increased taxes, as well as other types of unanticipated adverse developments, could have a material adverse effect on the results of operations and financial condition of the combined company. If unexpected costs are incurred, the Merger Wellesley could have a dilutive effect on the Company’s earnings per share. In other words, if the Merger is completed, the earnings per share of the Company’s common stock could be less than anticipated or even less than if the Merger had not been completed.

Following the Merger, the Company may not continue to pay dividends at or above the rate currently paid by the Company.

Following the Merger, the Company’s shareholders may not receive dividends at the same rate that they did prior to the merger for various reasons, including the following:

• the Company may not have enough cash to pay such dividends due to changes in its cash requirements, capital spending plans, cash flow or financial position;

• decisions on whether, when and in what amounts to make any future dividends will remain at all times entirely at the discretion of the Company’s board of directors, which reserves the right to change the Company’s dividend practices at any time and for any reason; and

• the amount of dividends that the Company’s subsidiaries may distribute to the Company may be subject to restrictions imposed by state law and restrictions imposed by the terms of any current or future indebtedness that these subsidiaries may incur.

The Company’s shareholders will have no contractual or other legal right to dividends that have not been declared by the Company’s board of directors.

18

The Company’s earnings may not grow if we are unable to successfully attractcore deposits and lending opportunities and execute opportunities to generate fee-based income. 

The Company has experienced growth, and our future business strategy is to continue to expand.  Historically, the growth of our loans and deposits has been the principal factor in our increase in net-interest income.  In the event that we are unable to execute our business strategy of continued growth in loans and deposits, our earnings could be adversely impacted.  The Company’s ability to continue to grow depends, in part, upon our ability to expand our market share, to successfully attract core deposits and identify loan and investment opportunities, as well as opportunities to generate fee-based income. Our ability to manage growth successfully will also depend on whether we can continue to efficiently fund asset growth and maintain asset quality and cost controls, as well as on factors beyond our control, such as economic conditions and interest-rate trends.

There are substantial risks and uncertainties associated with the introduction or expansion of lines of business or new products and services within existing lines of business.

From time to time, the Company may implement new lines of business or offer new products and services within existing lines of business. There are substantial risks and uncertainties associated with these efforts, particularly in instances where the markets are not fully developed. In developing and marketing new lines of business and/or new products and services, the Company may invest significant time and resources. Initial timetables for the introduction and development of new lines of business and/or new products or services may not be achieved and price and profitability targets may not prove attainable.  External factors, such as compliance with regulations, competitive alternatives, and shifting market preferences, may also impact the successful implementation of a new line of business or a new product or service. Furthermore, any new line of business and/or new product or service could have a significant impact on the effectiveness of the Company’s system of internal controls. Failure to successfully manage these risks in the development and implementation of new lines of business or new products or services could have a material adverse effect on the Company’s business, results of operations, and financial condition.

Accounting standards periodically change and the application of our accounting policies and methods may require management to make estimates about matters that are uncertain.

The regulatory bodies that establish accounting standards, including, among others, the Financial Accounting Standards Board (“FASB”) and the SEC, periodically revise or issue new financial accounting and reporting standards that govern the preparation of our consolidated financial statements. The effect of such revised or new standards on our financial statements can be difficult to predict and can materially impact how we record and report our financial condition and results of operations.

In addition, management must exercise judgment in appropriately applying many of our accounting policies and methods so they comply with generally accepted accounting principles. In some cases, management may have to select a particular accounting policy or method from two or more alternatives. In some cases, the accounting policy or method chosen might be reasonable under the circumstances and yet might result in our reporting materially different amounts than would have been reported if we had selected a different policy or method. Accounting policies are critical to fairly presenting our financial condition and results of operations and may require management to make difficult, subjective or complex judgments about matters that are uncertain.

Our controls and procedures may fail or be circumvented, which may result in a material adverse effect on our business.

Management regularly reviews and updates our internal controls, disclosure controls and procedures, and corporate governance policies. Any system of controls, however well designed and operated, is based in part on certain assumptions and can provide only reasonable, not absolute, assurances that the objectives of the system are met. Any failure or circumvention of the controls and procedures or failure to comply with regulations related to could have a material adverse effect on our business, results of operations and financial condition.

Legal proceedings to which we are subject or may become subject may have a material adverse impact on our financial position and results of operations.

Like many banks and other financial services organizations in our industry, we are from time to time involved in various legal proceedings and subject to claims and other actions related to our business activities brought by customers, employees and others.  All such legal proceedings are inherently unpredictable and, regardless of the merits of the claims, litigation is often expensive, time-consuming, disruptive to our operations and resources, and distracting to management.  If resolved against us, such legal proceedings could result in excessive verdicts and judgments, injunctive relief, equitable relief, and other adverse consequences that may affect our financial condition and how we operate our business.  Similarly, if we settle such legal proceedings, it may affect our financial condition and how we operate our business.  Future court decisions, alternative dispute resolution awards, matters arising due to business expansion, or legislative activity may increase our exposure to litigation and regulatory investigations.  In some cases, substantial non-economic remedies or punitive damages may be sought.  Although we maintain liability insurance coverage, there can be no assurance that such coverage will cover any particular verdict, judgment, or settlement that may be entered against us, that such coverage will prove to be adequate, or that such coverage will continue to remain available on acceptable terms, if at all.  Legal proceedings to which we are subject or may become subject may have a material adverse impact on our financial position and results of operations.

19

The Company is exposed to risk of environmental liabilities with respect to properties to which we obtain title.

A significant portion of our loan portfolio is secured by real estate. In the course of our business, we may foreclose and take title to real estate and could be subject to environmental liabilities with respect to these properties. The Company may be held liable to a government entity or to third parties for property damage, personal injury, investigation, and clean-up costs incurred by these parties in connection with environmental contamination or may be required to clean up hazardous or toxic substances or chemical releases at a property. The costs associated with investigation and remediation activities could be substantial. In addition, if we are the owner or former owner of a contaminated site, we may be subject to common law claims by third parties based on damages and costs resulting from environmental contamination emanating from the property. These costs and claims could adversely affect our business, results of operations, and prospects.

The Company may be adversely affected by the soundness of other financial institutions, including the FHLB of Boston.

Our ability to engage in routine funding transactions could be adversely affected by the actions and commercial soundness of other financial institutions. Financial services companies are interrelated as a result of trading, clearing, counterparty, or other relationships. The Company has exposure to different industries and counterparties, and we routinely execute transactions with counterparties in the financial services industry, including brokers and dealers, commercial banks, investment banks, mutual and hedge funds, and other institutional clients. As a result, defaults by, or even rumors or questions about, one or more financial services companies, or the financial services industry generally, have led to market-wide liquidity problems and could lead to losses or defaults by us or by other institutions. Many of these transactions expose us to credit risk in the event of default of our counterparty or client. In addition, our credit risk may be exacerbated if the collateral held by us cannot be realized or is liquidated at prices not sufficient to recover the full amount of the loan or derivative exposure due us. There is no assurance that any such losses would not materially and adversely affect our business, financial condition, or results of operations.

The Company owns common stock of FHLB of Boston in order to qualify for membership in the FHLB system, which enables it to borrow funds under the FHLB of Boston’s advance program. The carrying value and fair market value of our FHLB of Boston common stock was $7.9 million as of December 31, 2019. There are 11 branches of the FHLB, including Boston, which are jointly liable for the consolidated obligations of the FHLB system. To the extent that one FHLB branch cannot meet its obligations to pay its share of the system’s debt, other FHLB branches can be called upon to make the payment. Any adverse effects on the FHLB of Boston could adversely affect the value of our investment in its common stock and negatively impact our results of operations.

The Company’s common stock price may fluctuate significantly.

The market price of the Company’s common stock may fluctuate significantly in response to a number of factors including, but not limited to:

• the political climate and whether the proposed policies of the current presidential administration in the U.S. that have affected market prices for financial institution stocks are successfully implemented;

• changes in securities analysts’ recommendations or expectations of financial performance;

• volatility of stock market prices and volumes;

• incorrect information or speculation;

• changes in industry valuations;

• announcements regarding proposed acquisitions;

• variations in operating results from general expectations;

• actions taken against the Company by various regulatory agencies;

• changes in authoritative accounting guidance;

• changes in general domestic economic conditions such as inflation rates, tax rates, unemployment rates, labor and healthcare cost trend rates, recessions, and changing government policies, laws, and regulations; and

• severe weather, natural disasters, epidemics / pandemics such as COVID-19, acts of war or terrorism, and other external events.

20

The issuance of our common stock in the Merger will have a dilutive effect and will reduce the voting power and relative percentage interests of current common stockholders in our earnings and market value, and there may be future sales or other dilution of the Company’s equity, which may adversely affect the market price of the Company’s stock.

The consideration payable in the Merger includes up to an aggregate of 1,579,725 of our common stock, based on the maximum possible number of shares of Wellesley common stock that may be exchanged or cancelled in the Merger.  The issuances of shares of our common stock in the Merger will have a dilutive effect and will reduce the voting power and relative percentage interests of current common stockholders in our earnings and market value.  

Additionally, the Company is not restricted from issuing additional common stock, including any securities that are convertible into or exchangeable for, or that represent the right to receive, common stock.  The Company also grants shares of common stock to employees and directors under the Company’s incentive plan each year.  The issuance of any additional shares of the Company’s common stock or securities convertible into, exchangeable for or that represent the right to receive common stock, or the exercise of such securities could be substantially dilutive to shareholders of the Company’s common stock.  Holders of the Company’s common stock have no preemptive rights that entitle such holders to purchase their pro rata share of any offering of shares or any class or series.  Because the Company’s decision to issue securities in any future offering will depend on market conditions, its acquisition activity and other factors, the Company cannot predict or estimate the amount, timing, or nature of its future offerings.  Thus, the Company’s shareholders bear the risk of the Company’s future offerings reducing the market price of the Company’s common stock and diluting their stock holdings in the Company.

The Company depends on its executive officers and key personnel to continue the implementation of our long-term business strategy and could be harmed by the loss of their services.

The Company believes that its continued growth and future success will depend in large part upon the skills of our management team. The competition for qualified personnel in the financial services industry is intense, and the loss of our key personnel, or an inability to continue to attract or retain and motivate key personnel could adversely affect our business. We cannot provide any assurance that we will be able to retain our existing key personnel, attract additional qualified personnel, or effectively manage the succession of key personnel. We have change of control agreements with our actively employed named executive officers, and the loss of the services of one or more of our executive officers or key personnel could impair our ability to continue to develop our business strategy.

The Company may be subject to more stringent capital requirements.

The Bank and the Company are each subject to capital adequacy guidelines and other regulatory requirements specifying minimum amounts and types of capital which each of the Bank and the Company must maintain. From time to time, the regulators implement changes to these regulatory capital adequacy guidelines. If we fail to meet these minimum capital guidelines and other regulatory requirements, then our financial condition would be materially and adversely affected. Any changes to regulatory capital requirements could adversely affect our ability to pay dividends, or could require us to reduce business levels or to raise capital, including in ways that may adversely affect our financial condition or results of operations.

Replacement of the LIBOR benchmark interest rate could adversely affect our business, financial condition, and results of operations.

In 2017, the United Kingdom’s Financial Conduct Authority (“FCA”), which regulates the London Interbank Offered Rate (“LIBOR”), announced that the FCA intends to stop persuading or compelling banks to submit the rates required to calculate LIBOR after 2021. This announcement indicates that the continuation of LIBOR on the current basis cannot and will not be guaranteed after 2021. Consequently, at this time, it is not possible to predict whether and to what extent banks will continue to provide submissions for the calculation of LIBOR. Similarly, it is not possible to predict whether LIBOR will continue to be viewed as an acceptable market benchmark, what rate or rates may become accepted alternatives to LIBOR or what the effect of any such changes in views or alternatives may be on the markets for LIBOR-indexed financial instruments.

We have a significant number of loans, derivative contracts, borrowings and other financial instruments with attributes that are either directly or indirectly dependent on LIBOR. The transition from LIBOR, or any changes or reforms to the determination or supervision of LIBOR, could have an adverse impact on the market for or value of any LIBOR-linked securities, loans, and other financial obligations or extensions of credit held by or due to us, could create considerable costs and additional risk and could have an adverse impact on or overall financial condition or results of operations. Since proposed alternative rates are calculated differently, payments under contracts referencing new rates will differ from those referencing LIBOR. The transition will change our market risk profiles, requiring changes to risk and pricing models, valuation tools, product design and hedging strategies. Furthermore, failure to adequately manage this transition process with our customers could adversely impact our reputation. Although we are currently unable to assess what the ultimate impact of the transition from LIBOR will be, failure to adequately manage the transition could have a material adverse effect on our business, financial condition and results of operations.

21

Natural disasters, acts of war or terrorism, the impact of health epidemics and other adverse external events could detrimentally affect our financial condition and results of operations.

Natural disasters, acts of war or terrorism, and other adverse external events could have a significant negative impact on our ability to conduct business or upon third parties who perform operational services for us or our customers. Such events also could affect the stability of our deposit base, impair the ability of borrowers to repay outstanding loans, impair the value of collateral securing loans, cause significant property damage, result in lost revenue or cause us to incur additional expenses.

The recent COVID-19 outbreak could negatively impact the ability of our employees and customers to engage in banking and other financial transactions in the geographic areas in which the Company operates. The Company also could be adversely affected if key personnel or a significant number of employees were to become unavailable due to a coronavirus outbreak in our market areas. Although the Company has business continuity plans and other safeguards in place, there is no assurance that such plans and safeguards will be effective. In the event of a natural disaster, the spread of the coronavirus to our market areas or other adverse external events, our business, services, asset quality, financial condition and results of operations could be adversely affected.

The effects of widespread public health emergencies may negatively affect our local economies or disrupt our operations, which would have an adverse effect on our business or results of operations.

Widespread health emergencies, such as the recent coronavirus outbreak, can disrupt our operations through their impact on our employees, customers and their businesses, and the communities in which we operate. Disruptions to our customers could result in increased risk of delinquencies, defaults, foreclosures and losses on our loans, negatively impact regional economic conditions, result in a decline in local loan demand, loan originations and deposit availability and negatively impact the implementation of our growth strategy. Any one or more of these developments could have a material adverse effect on our business, financial condition and results of operations.

Item 1B. Unresolved Staff Comments.

None.

Item 2. Properties.

The Company conducts its business through 16 private banking offices, including its main banking office and headquarters in Cambridge, Massachusetts, its operations center in Burlington, Massachusetts, five wealth management offices and one off-site ATM.  

Item 3. Legal Proceedings.

From time to time, the Company and its subsidiaries may be parties to various claims and lawsuits arising in the ordinary course of their normal business activities. Although the ultimate outcome of these suits, if any, cannot be ascertained at this time, it is the opinion of management that none of these matters, even if it resolved adversely to the Company, will have a material adverse effect on the Company’s consolidated financial position. 

On February 25, 2020, one purported stockholder of Wellesley Bancorp, Inc. filed a putative derivative and class action lawsuit against Wellesley, the members of the Wellesley board of directors, Wellesley Bank, the Company and the Bank in the Circuit Court for Baltimore City, Maryland, on behalf of himself and similarly situated Wellesley stockholders, and derivatively on behalf of Wellesley, captioned Parshall v. Fontaine et al., Case No. 24-C-20-001127 (the “Merger Litigation”). The plaintiff generally alleges that the Wellesley board of directors breached its fiduciary obligations by approving the terms of the Agreement and Plan of Merger, dated December 5, 2019, by and among Wellesley, the Company, the Bank and Wellesley Bank, which provides for, among other things, the merger of Wellesley with and into the Company. The plaintiff further alleges inadequate merger consideration. Lastly, the plaintiff alleges that the joint proxy statement/prospectus for the Merger filed with the SEC on February 4, 2020 and first mailed to Wellesley stockholders on February 6, 2020 contained materially incomplete disclosures about the Merger. The plaintiff seeks injunctive relief, rescission of the Merger or rescissory damages, other unspecified damages, and an award of attorneys’ fees and expenses. On March 5, 2020, solely to avoid the costs, risks and uncertainties inherent in litigation, the Company and Wellesley agreed to make additional disclosures to supplement the disclosures contained in the joint proxy statement/prospectus. These additional disclosures moot plaintiff’s disclosure claims asserted in the Merger Litigation and, as a result, the plaintiff has agreed to dismiss the Merger Litigation with prejudice as to their individual claims and without prejudice to the claims of the putative members of the class.

22

Item 4. Mine Safety Disclosures.

None.

23

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market Information

On October 18, 2017, shares of the Company’s common stock commenced trading on the NASDAQ Stock Market under the symbol “CATC”. Prior to this date, the Company’s shares traded on the over the counter market.

As of February 29, 2020, there were 5,412,221 shares of the Company’s common stock outstanding held by 423 holders of record. The number of record-holders may not reflect the number of persons or entities holding stock in nominee name through banks, brokerage firms, and other nominees. The closing price of the Company’s common stock on December 31, 2019 was $80.15. The Company declared cash dividends of $2.04 and $1.96 per share in 2019 and in 2018, respectively.  

The continued payment of dividends depends upon our profitability, debt and equity structure, earnings, financial condition, need for capital and other factors, including economic conditions, regulatory restrictions, and tax considerations. We cannot guarantee the payment of dividends or that, if paid, that dividends will not be reduced or eliminated in the future.

The only funds available for the payment of dividends on our capital stock will be cash and cash equivalents held by us, dividends paid to us by the Bank, and borrowings. The Bank will be prohibited from paying cash dividends to us to the extent that any such payment would reduce the Bank’s capital below required capital levels.

The Company’s primary source of funds for dividends paid to shareholders is the receipt of dividends from the Bank. A discussion of the restrictions on the advance of funds or payments of dividends by the Bank to the Company is included in “Supervision and Regulation – Dividends.”

Stock Performance Graph

The following compares the cumulative total shareholder return on the Company’s common stock against the cumulative total return of the NASDAQ Composite Index and the SNL Bank NASDAQ Index from December 31, 2014 to December 31, 2019. The results presented assume that the value of the Company’s common stock and each index was $100.00 on December 31, 2014.  The total return assumes reinvestment of dividends.

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Source:  S&P Global Market Intelligence © 2020

This performance graph shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference into any filing by us under the Securities Act of 1933, as amended, or the Securities Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Issuer Purchase of Equity Securities

The following table sets forth the information regarding the Company’s repurchases of its common stock during the three months ended December 31, 2019:  

	Total Number of Shares Repurchased (1)		Weighted Average Price Paid Per Share
Period
October 1 to October 31, 2019		—	$	—
November 1 to November 30, 2019		260	$	79.62
December 1 to December 31, 2019		—	$	—
Total		260

(1) Shares repurchased by the Company relate to shares tendered by employees to pay their income tax liability on current period equity award vestings.

The Company does not currently have a stock repurchase program or plan in place.  

Recent Sales of Unregistered Securities

There were no unregistered sales of equity securities during the year ended December 31, 2019.

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Item 6. Selected Financial Data.

The selected consolidated financial data set forth below does not purport to be complete and should be read in conjunction with, and is qualified in its entirety by, the more detailed information including the Consolidated Financial Statements and related Notes and the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

	December 31,
	2019			2018			2017			2016			2015
	(dollars in thousands, except per share data)
Operating Data
Interest Income	$	96,339		$	69,055		$	61,191		$	57,028		$	54,341
Interest Expense		17,643			5,467			3,587			3,355			2,694
Net interest and dividend Income		78,696			63,588			57,604			53,673			51,647
Provision for Loan Losses		3,004			1,502			362			132			1,075
Noninterest Income		36,401			32,989			30,224			28,661			25,865
Noninterest Expense		78,175			63,987			59,292			56,750			53,192
Income Before Taxes		33,918			31,088			28,174			25,452			23,245
Income Taxes		8,661			7,207			13,358			8,556			7,551
Net Income (a GAAP Measure)	$	25,257		$	23,881		$	14,816		$	16,896		$	15,694
Operating Net Income (a non-GAAP measure)*	$	29,156		$	24,024		$	18,687		$	16,896			15,694
Average shares outstanding, basic		4,629,255			4,061,529			4,030,530			3,990,343			3,938,117
Average shares outstanding, diluted		4,661,720			4,098,633			4,065,754			4,028,944			3,993,599
Total shares outstanding		5,400,868			4,107,051			4,082,188			4,036,879			4,000,181
Basic Earnings Per Share	$	5.41		$	5.82		$	3.64		$	4.19		$	3.94
Diluted Earnings Per Share	$	5.37		$	5.77		$	3.61		$	4.15		$	3.93
Operating Diluted Earnings Per Share (a non-GAAP measure)*	$	6.20		$	5.80		$	4.56		$	4.15		$	3.93
Dividends Declared Per Share	$	2.04		$	1.96		$	1.86		$	1.84		$	1.80
Dividend payout ratio (1)		38	%		34	%		51	%		44	%		46	%
Financial Condition Data
Total Assets	$	2,855,563		$	2,101,384		$	1,949,934		$	1,848,999		$	1,706,201
Total Deposits		2,358,878			1,811,410			1,775,400			1,686,038			1,557,224
Total Loans		2,226,728			1,559,772			1,350,899			1,320,154			1,192,214
Shareholders' equity		286,561			167,026			147,957			134,671			125,063
Book Value Per Share		53.06			40.67			36.24			33.36			31.26
Tangible Book Value Per Share (a non-GAAP measure)*	$	46.66		$	40.57		$	36.14		$	33.26		$	31.16
Performance Ratios
Return on Average Assets		0.97	%		1.21	%		0.79	%		0.95	%		0.95	%
Operating Return on Average Assets (a non-GAAP measure)*		1.12	%		1.21	%		1.00	%		0.95	%		0.95	%
Return on Average Shareholders' equity		11.40	%		15.35	%		10.47	%		12.77	%		12.91	%
Operating Return on Tang Common Equity (a non-GAAP measure)*		14.80	%		15.49	%		13.24	%		12.81	%		12.91	%
Total Shareholders’ Equity to Total Assets		10.04	%		7.95	%		7.59	%		7.28	%		7.33	%
Interest rate spread (2)		2.93	%		3.19	%		3.16	%		3.12	%		3.24	%
Net Interest Margin, taxable equivalent (3)		3.22	%		3.33	%		3.25	%		3.21	%		3.32	%
Efficiency ratio  (4)		67.92	%		66.25	%		67.51	%		68.93	%		68.62	%
Operating Efficiency Ratio (a non-GAAP measure)*		63.78	%		66.05	%		67.51	%		68.93	%		68.62	%
Wealth Management Assets
Market Value of Assets Under Management & Administration	$	3,452,852		$	2,876,702		$	3,085,669		$	2,689,103		$	2,449,139
Asset Quality
Non-Performing Loans	$	5,651		$	642		$	1,298		$	1,676		$	1,481
Non-Performing Loans/Total Loans		0.25	%		0.04	%		0.10	%		0.13	%		0.12	%
Net (Charge-Offs)/Recoveries	$	(1,592	)	$	(54	)	$	(303	)	$	(62	)	$	(153	)
Allowance/Total Loans		0.82	%		1.08	%		1.13	%		1.16	%		1.27	%
Capital Ratios (5):
Total capital		13.61	%		13.25	%		13.75	%		13.14	%		13.05	%
Tier 1 capital		12.70	%		12.07	%		12.50	%		11.89	%		11.80	%
Common Equity Tier 1		12.70	%		12.07	%		12.50	%		11.89	%		11.80	%
Tier 1 leverage capital		8.98	%		8.49	%		8.06	%		7.95	%		7.75	%
Other Data:
Number of full service offices		16			10			11			11			12
Full time equivalent employees		303			252			239			238			228

* See GAAP to Non-GAAP reconciliations in Item 7

(1) Dividend payout ratio represents per share dividends declared divided by diluted earnings per share.

(2) The interest rate spread represents the difference between the fully taxable equivalent weighted-average yield on interest-earning assets and the weighted-average cost of interest-bearing liabilities for the period.

(3) The net interest margin represents fully taxable equivalent net interest income as a percent of average interest-earning assets for the period.

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

(5) Capital ratios are for Cambridge Bancorp.

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

OVERVIEW

Cambridge Bancorp (together with its bank subsidiary, unless the context otherwise requires, the “Company”) is a Massachusetts state-chartered, federally registered bank holding company headquartered in Cambridge, Massachusetts. The Company is a Massachusetts corporation formed in 1983 and has one banking subsidiary, Cambridge Trust Company (the “Bank”), formed in 1890.  At December 31, 2019, the Company had total assets of approximately $2.9 billion. Currently, the Bank operates 16 private banking offices in in Eastern Massachusetts and New Hampshire. The Company’s Wealth Management Group has five offices, two in Boston, Massachusetts and three in New Hampshire in Concord, Manchester, and Portsmouth. The Company’s Assets under Management and Administration as of December 31, 2019 were approximately $3.5 billion.  The Bank’s clients consist primarily of small- and medium-sized businesses and retail customers in these communities and surrounding areas throughout Massachusetts and New Hampshire.

The Company’s results of operations are largely dependent on net interest income, which is the difference between the interest earned on loans and securities and interest paid on deposits and borrowings. The results of operations are also affected by the level of income and fees from wealth management services, loans, deposits, as well as operating expenses, the provision for loan losses, the impact of federal and state income taxes, and the relative levels of interest rates and economic activity.

Critical Accounting Policies

Accounting policies involving significant judgments and assumptions by management, which have, or could have, a material impact on the carrying value of certain assets and impact income, are considered critical accounting policies.

The Company considers allowance for loan losses and income taxes to be its critical accounting policies.

Allowance for loan losses

Arriving at an appropriate level of allowance for loan losses involves a high degree of judgment. Management maintains an allowance for loan losses to absorb losses inherent in the loan portfolio. The allowance is based on assessments of the probable estimated losses inherent in the loan portfolio. Management’s methodology for assessing the appropriateness of the allowance consists of several key elements, which include the specific allowances, if appropriate, for identified problem loans, formula allowance, and possibly an unallocated allowance.

The provision for loan losses and the level of the allowance for loan losses reflects management’s estimate of probable loan losses inherent in the loan portfolio at the balance sheet date. Management uses a systematic process and methodology to establish the allowance for loan losses each quarter. To determine the total allowance for loan losses, management estimates the allowance needed for each of the following segments of the loan portfolio: (1) residential mortgage loans, (2) commercial mortgage loans, including multi-family loans and construction loans, (3) home equity loans and lines of credit, (4) commercial & industrial loans, and (5) consumer loans.

The establishment of the allowance for each portfolio segment is based on a process that evaluates the risk characteristics relevant to each portfolio segment and takes into consideration multiple internal and external factors.

Internal factors include, but are not limited to:

(a) the loss emergence period,

(b) historic levels and trends in the number and amount of loans on non-accrual and past due, charge-offs, delinquencies, risk ratings, and foreclosures,

(c) level and changes in industry, geographic, and credit concentrations,

(d) underwriting policies and adherence to such policies,

(e) the growth and vintage of the portfolios, and

(f) the experience of, and any changes in, lending and credit personnel.

External factors include, but are not limited to:

(a) conditions and trends in the local and national economy and

(b) levels and trends in national delinquent and non-performing loans.

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The Bank evaluates certain loans individually for specific impairment. A loan is considered impaired when, based on current information and events, it is probable that the Bank will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Loans are selected for evaluation based upon internal risk rating, delinquency status, or non-accrual status. A specific allowance amount is allocated to an individual loan when such loan has been deemed impaired and when the amount of the probable loss is able to be estimated. Estimates of loss may be determined by the present value of anticipated future cash flows, the loan’s observable fair market value, or the fair value of the collateral, if the loan is collateral dependent.

In addition, the adoption of Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” as amended, on January 1, 2020 will impact our methodology for estimating the allowance for loan losses. See Note 3 - Recently Issued and Adopted Accounting Standards in the notes to consolidated financial statements included in Item 8. Financial Statements and Supplementary Data elsewhere in this report.

Income Taxes

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, the Commonwealth of Massachusetts, the State of New Hampshire, and other states as required. Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are reflected at currently enacted income tax rates applicable to the period in which the deferred tax assets or liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. Deferred tax assets are reviewed quarterly and reduced by a valuation allowance if, based upon the information available, it is more likely than not that some or all of the deferred tax assets will not be realized. Interest and penalties related to unrecognized tax benefits, if incurred, are recognized as a component of income tax expense.

 Recent Accounting Developments

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 replaced the previous GAAP method of calculating credit losses. Previously, GAAP required the use of the incurred loss methodology, which used a higher threshold at which probable losses were calculated and recorded. ASU 2016-13 requires the use of an expected loss methodology, referred to as the current expected credit loss (“CECL”) methodology, which requires institutions to account for probable losses that previously would not have been part of the calculation. The CECL methodology incorporates future forecasting in addition to historical and current measures. For public entities that file with the SEC, ASU 2016-13 becomes effective for the fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.

ASU 2016-13 must be applied to held to maturity (“HTM”) debt securities, available for sale (“AFS”) debt securities, and loans held for portfolio. A modified-retrospective approach will be applied cumulatively to retained earnings. Early adoption was permitted as of the fiscal years beginning after December 15, 2018. In November 2018, FASB issued ASU 2018-19 to clarify that operating lease receivables are not in scope of the credit losses standard. The Company will adopt ASU 2016-13 on January 1, 2020. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan receivables, and HTM debt securities.

CECL also applies to off-balance sheet credit exposure not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees and other similar investment) and net investments in leases recognized by a lessor in accordance with Topic 842 on leases. In addition, ASU 2016-13 made changes to the accounting for AFS debt securities. One such change is to require credit losses to be presented as an allowance rather than as a write-down on AFS debt securities that management does not intend to sell or believes that is more likely than not they will be required to sell.

The Company assembled a cross-functional project team that met regularly to address the additional data requirements, to determine the approach for implementation and to identify new internal controls over enhanced accounting processes upon the adoption of ASU 2016-13. This included assessing the adequacy of existing loan and loss data, as well as assessing models for default and loss estimates.

The Company has completed the development of its CECL methodology. To estimate the allowance for loans and off-balance sheet credit exposures, such as unfunded loan commitments, the Company will utilize a discounted cash flow model that contains additional assumptions to calculate credit losses over the estimated life of financial assets and off-balance sheet credit exposures and will include the impact of forecasted economic conditions. The estimate will also include qualitative factors that may not be reflected in quantitatively derived results to ensure that the ACL reflects a reasonable estimate of current expected credit losses.  

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The project team completed limited “trial” runs and analytical reviews through the year ended December 31, 2019. The Company expects to complete independent model validation and to finalize its documentation of the new processes and controls in the first quarter of 2020.

Upon adoption of ASU 2016-13 on January 1, 2020, the Company currently expects to recognize a total increase in the allowance for credit loss for loans (a contra-asset) and for off-balance sheet credit exposures (a liability) in the range of $200,000 to $1.5 million, and a one-time cumulative-effect adjustment that decreases retained earnings in the range of $144,000 to $1.1 million (net of tax). The Company does not expect to record a reserve for its HTM debt securities.  The adoption of ASU 2016-13 is not expected to have a material impact on our regulatory capital ratios.

See Note 3 – Recently Issued and Adopted Accounting Standards to the Audited Consolidated Financial Statements for additional details on other recently issued and adopted accounting pronouncements and their expected impact on the Company’s financial statements.

COVID-19

In December 2019, a novel strain of coronavirus was reported in Wuhan, China. The World Health Organization has declared the outbreak to constitute a “Public Health Emergency of International Concern.” The COVID-19 outbreak is disrupting supply chains and affecting production and sales across a range of industries. The extent of the impact of COVID-19 on our operational and financial performance will depend on certain developments, including the duration and spread of the outbreak, impact on our customers, employees and vendors all of which are uncertain and cannot be predicted. At this point, the extent to which COVID-19 may impact our financial condition or results of operations is uncertain.

Results of Operations

Results of Operations for the years ended December 31, 2019 and 2018

General. Net income increased by $1.4 million, or 5.8%, to $25.3 million for the year ended December 31, 2019, from $23.9 million for the year ended December 31, 2018, primarily due to a $13.6 million increase in net interest and dividend income after the provision for loan losses and a $3.4 million increase in noninterest income . These increases were partially offset by a $14.2 million increase in noninterest expense and higher provision for income taxes of $1.5 million.  Diluted earnings per share were $5.37 for 2019, representing a 6.9% decrease over diluted earnings per share of $5.77 for 2018. Net income for 2019 included non-operating expenses of $4.7 million related to costs associated with the Company’s December common stock offering and merger related expenses resulting from the completed merger with Optima Bank & Trust Company (“Optima”) and the pending merger with Wellesley Bancorp, Inc. (“Wellesley”).

Excluding non-operating expenses, operating net income was $29.2 million for the year ended December 31, 2019, an increase of $5.1 million, or 21.4%, as compared to operating net income of $24.0 million for 2018. Operating diluted earnings per share were $6.20 for 2019, representing a 7% increase over operating diluted earnings per share of $5.80 for 2018.

Net Interest and Dividend Income. Net interest and dividend income before provision for loan losses increased by $15.1 million, or 23.8%, to $78.7 million for the year ended December 31, 2019, as compared to $63.6 million for the year ended 2018, primarily due to loan growth, both organic and as a result of the Optima merger and higher levels of interest-earning assets.

• Interest on loans increased by $26.7 million, or 45.7%, primarily due to organic loan growth and the impact of loan balances acquired related to the Optima merger.

• Interest on deposits increased $10.6 million, or 211.4%, due to an increase in cost primarily as a result of the impact of the cost of deposits acquired from our merger with Optima and growth within our higher cost savings products.

Total average interest-earning assets increased by $532.0 million, or 27.7%, to $2.5 billion for the year ended December 31, 2019 from $1.9 billion in 2018. The Company’s net interest margin, on a fully tax equivalent basis, decreased 11 basis points to 3.22% for the year ended December 31, 2019, as compared to 3.33% in 2018, and the net interest rate spread decreased 26 basis points to 2.93% for the year ended December 31, 2019, as compared to 3.19% in 2018.

Interest and Dividend Income. Total interest and dividend income increased by $27.3 million, or 39.5%, to $96.3 million for the year ended December 31, 2019, from $69.1 million in 2018, primarily due to a $26.7 million increase in interest income on loans.

Interest Expense.Interest expense increased by $12.2 million, or 222.7% to $17.6 million for the year ended December 31, 2019, from $5.5 million in 2018, primarily as a result of the impact of the cost of deposits acquired from our merger with Optima and growth within our higher cost savings products.  

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Average interest-bearing liabilities increased $462.6 million to $1.7 billion at December 31, 2019 from $1.3 billion, which contributed to a 44 basis points increase in the average cost of funds of 0.72% from 0.28%. The increase in average interest-bearing liabilities was primarily driven by higher average savings account balances of $202.9 million, higher average money market accounts of $96.4 million, higher average certificates of deposits of $87.3 million, and higher average other borrowed funds of $68.0 million.  

Provision for Loan Losses. The Company recorded a provision for loan losses of $3.0 million for the year ended December 31, 2019, compared to a provision for loan losses of $1.5 million in 2018. The increase is the result of strong loan growth and a $1.2 million charge-off on an acquired commercial real estate loan during the third quarter of 2019. The charge-off was taken upon receipt of information indicating misstatements of fact and potential borrower fraud. We believe this to be an isolated incident and do not have any additional exposure to the borrower. We recorded net charge-offs of $1.6 million for the year ended December 31, 2019, as compared to net charge-offs of $54,000 during the same period in 2018. The allowance for loan losses was $18.2 million, or 0.82% of total loans outstanding at December 31, 2019, as compared to $16.8 million, or 1.08% of total loans outstanding at year end 2018.

  Noninterest Income. Noninterest income increased by $3.4 million, or 10.3%, to $36.4 million for the year ended December 31, 2019, as compared to $33.0 million for the same period in 2018, primarily as a result of higher Wealth Management revenue, higher gains on loans sold and higher loan prepayment income. Total noninterest income was 31.6% of total revenue for the year ended December 31, 2019.

• Wealth Management revenue increased by $1.3 million, or 5.2%, for the year ended December 31, 2019, as compared to the year ended December 31, 2018, due to higher average assets under management during the period and higher average fees. Assets under Management combined with Assets under Administration were $3.5 billion at December 31, 2019, as compared to $2.9 billion at December 31, 2018.

• Gain on loans sold increased by $1.1 million as compared to the same period in 2018 primarily due to the sale of residential mortgages totaling $90.0 million during 2019.

• Other income increased $658,000 during the year ended 2019 primarily as a result of higher loan prepayment income during the year.

 The categories of Wealth Management revenues are shown in the following table:

	For the Year Ended December 31,
	2019		2018
	(dollars in thousands)
Wealth Management revenues:
Trust and investment advisory fees	$	25,544	$	24,126
Asset-based revenues		25,544		24,126
Financial planning fees and other service fees		955		1,065
Total wealth management revenues	$	26,499	$	25,191

The following table presents the changes in wealth management assets under management:

	For the Year Ended December 31,
	2019			2018
	(dollars in thousands)
Wealth Management Assets under Management
Balance at the beginning of the period	$	2,759,547		$	2,971,322
Gross client asset inflows		343,477			313,629
Gross client asset outflows		(348,938	)		(490,094	)
Net market impact		533,285			(35,310	)
Balance at the end of the period	$	3,287,371		$	2,759,547
Weighted average management fee		0.84	%		0.81	%

There were no significant changes to the average fee rates and fee structure for the year ended December 31, 2019 and 2018.

Noninterest Expense. Noninterest expense increased by $14.2 million, or 22.2%, to $78.2 million for the year ended December 31, 2019, as compared to $64.0 million for the year ended December 31, 2018, primarily driven by an increase in non-operating expenses, salaries and employee benefit expense, occupancy and equipment expense, data processing fees, and professional service fees. The increase to noninterest expense was partially offset by lower marketing, and FDIC insurance expenses.

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• Non-operating expense of $4.7 million were primarily related to professional fees, compensation and severance payments, and contract termination costs associated with the Optima merger combined with expenses associated with the pending Wellesley merger and the December 2019 common equity offering.

• Salaries and employee benefit increases of $6.3 million were primarily the result of the merger with Optima, increased staffing to support business initiatives, and higher employee benefit costs.

• Occupancy and equipment expense increases of $1.8 million were primarily due to the merger with Optima and additional office space in Boston, Massachusetts.

• Data processing expense increases of $1.1 million were primarily due to increased transaction volume related to the merger with Optima and investments made in technology.

Income Tax Expense. The Company recorded a provision for income taxes of $8.7 million for the year ended December 31, 2019, as compared to $7.2 million for the same period in 2018, reflecting effective tax rates of 25.5% and 23.2%, respectively. The increase in the effective tax rate was primarily driven by the costs associated with the Optima merger, the pending Wellesley merger and the common stock offering completed during the fourth quarter of 2019, as some of these items were nondeductible for tax purposes.

Results of Operations for the years ended December 31, 2018 and 2017  

General. Net income increased by $9.1 million, or 61.2%, to $23.9 million for the year ended December 31, 2018, from $14.8 million for the year ended December 31, 2017, primarily due to a $4.8 million increase in net interest and dividend income after the provision for loan losses, a $2.8 million increase in noninterest income, and lower income tax expense of $6.2 million. These increases were partially offset by a $4.7 million increase in noninterest expense.  The reduction in income tax expense was mainly due to the enactment of the Tax Cuts and Jobs Act of 2017, which required a one-time non-cash write-down of our net deferred tax assets of $3.9 million in 2017 and reduced the Company’s statutory federal tax rate from 35% to 21% effective in 2018.

Net Interest and Dividend Income. Net interest and dividend income after provision for loan losses increased by $4.8 million, or 8.5% to $62.1 million for the year ended December 31, 2018, from $57.2 million for the year ended 2017. The increase was driven by a combination of the impact of rising interest rates and earning asset growth. Interest on loans increased by $6.6 million, or 12.7% for the year ended December 31, 2018, as compared to the same period in 2017.  Total average interest-earning assets increased $106.1 million, or 5.8%, to $1.9 billion for the year ended December 31, 2018 from $1.8 billion in 2017. The Company’s net interest margin, on a fully tax equivalent basis, increased eight basis points to 3.33% for the year ended December 31, 2018, as compared to 3.25% in 2017, and the net interest rate spread increased three basis points to 3.19% for the year ended December 31, 2018, as compared to 3.16% in 2017.

Interest and Dividend Income. Total interest and dividend income increased by $7.9 million, or 12.9%, to $69.1 million for the year ended December 31, 2018, from $61.2 million in 2017, primarily due to a $6.6 million increase in interest income on loans and a $940,000 increase in interest income on investment securities.

Interest Expense.Interest expense increased by $1.9 million, or 52.4% to $5.5 million for the year ended December 31, 2018, from $3.6 million in 2017, primarily due to a combination of higher interest rates and higher average interest-bearing liabilities.  Average cost of funds increased eight basis points to 0.28% for the year ended December 31, 2018, from 0.20% in 2017. Average interest bearing liabilities increased $42.6 million to $1.3 billion at December 31, 2018, primarily driven by an increase in average savings account balances of $52.8 million, higher average money market accounts of $24.6 million, higher average checking accounts of $15.0 million, partially offset by lower average certificates of deposits of $32.4 million, and lower average other borrowed funds of $17.4 million. We experienced an increase in the average cost of savings and money market accounts during 2018, as the Company continues to offer competitively priced products to attract new clients and deepen existing client relationships.  

Provision for Loan Losses. The Company recorded a provision for loan losses of $1.5 million for the year ended December 31, 2018, compared to a provision for loan losses of $362,000 in 2017. The increase in the provision was primarily driven by strong loan growth during the year totaling $208.9 million. We recorded net charge-offs of $54,000 for the year ended December 31, 2018, as compared to net charge-offs of $303,000 during the same period in 2017. The allowance for loan losses was $16.8 million, or 1.08% of total loans outstanding at December 31, 2018, as compared to $15.3 million, or 1.13% of total loans outstanding at year end 2017.

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Noninterest Income.Noninterest income increased by $2.8 million, or 9.1%, to $33.0 million for the year ended December 31, 2018, as compared to $30.2 million for the same period in 2017, primarily as a result of higher wealth management revenue and higher loan related derivative income associated with the Company’s interest rate risk strategy. Noninterest income was 34.2% of total revenue for the year ended December 31, 2018. The Company’s wealth management revenue is the largest component of noninterest income and increased by $2.2 million, or 9.4%, to $25.2 million for the year ended 2018, as compared $23.0 million in 2017, due to higher average assets under management during the period. Assets under Management combined with Assets under Administration were $2.9 billion at December 31, 2018, as compared to $3.1 billion at December 31, 2017. Loan related derivative income increased $871,000 for the year ended December 31, 2018, as compared to the same period in 2017, due to the volume of loan related derivative transactions executed in 2018.

The categories of Wealth Management revenues are shown in the following table:

	For the Year Ended December 31,
	2018		2017
	(dollars in thousands)
Wealth Management revenues:
Trust and investment advisory fees	$	24,126	$	21,850
Asset-based revenues		24,126		21,850
Financial planning fees and other service fees		1,065		1,179
Total wealth management revenues	$	25,191	$	23,029

The following table presents the changes in wealth management assets under management:

	For the Year Ended December 31,
	2018			2017
	(dollars in thousands)
Wealth management assets under management
Balance at the beginning of the period	$	2,971,322		$	2,572,760
Gross client asset inflows		313,629			445,125
Gross client asset outflows		(490,094	)		(371,274	)
Net market impact		(35,310	)		324,711
Balance at the end of the period	$	2,759,547		$	2,971,322
Weighted average management fee		0.81	%		0.80	%

There were no significant changes to the average fee rates and fee structure for the year ended December 31, 2018 and 2017.

Noninterest Expense.Noninterest expense increased by $4.7 million, or 7.9%, to $64.0 million for the year ended December 31, 2018, as compared to $59.3 million in 2017, primarily driven by increases in salaries and employee benefits expense, marketing expense, data processing expense, and merger related expenses.  The increase in salaries and employee benefits expense of $4.8 million was driven by the combination of increased staffing to support business initiatives, higher employee benefit costs including performance-based equity compensation, and the adoption of ASU 2017-07 for the presentation of net periodic pension costs and net periodic postretirement benefit costs in 2018. The retrospective application of ASU 2017-07 for the twelve months ended December 31, 2017 resulted in a decrease in salaries and employee benefits and an increase in other expenses of approximately $252,000. The increase of $609,000 in marketing was due to costs related to the Bank’s rebranding efforts, which included the development of a new brand, website, and advertising campaign. The increase of $221,000 in data processing expense was due to investments made in technology. The merger expenses of $201,000 were professional services related to the pending acquisition of Optima.

Noninterest expense increases were partially offset by lower other expenses of $880,000, primarily due to the other components of net periodic pension cost, and net periodic postretirement benefit cost recorded in other expenses for the twelve months ended December 31, 2018, as compared to the twelve months ended December 31, 2017.

Income Tax Expense. In accordance with the Tax Cuts and Jobs Act of 2017, the Company’s federal statutory corporate tax rate decreased from 35% to 21% effective January 1, 2018. The Company recorded a provision for income taxes of $7.2 million for the year ended December 31, 2018, as compared to $13.4 million for the same period in 2017, reflecting effective tax rates of 23.2% and 47.4%, respectively.

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Changes in Financial Condition

Total Assets. Inclusive of the merger with Optima and organic growth, total assets increased $754.2 million, or 35.9%, from December 31, 2018 and were $2.9 billion as of December 31, 2019. The increase was primarily the result of a $667.0 million increase in total loans, a $42.9 million increase in cash and cash equivalents, right-of-use assets of $33.6 million associated with the Company’s operating leases, goodwill of $30.8 million associated with the Optima merger, partially offset by lower investment securities of $52.5 million.

Cash and Cash Equivalents. Cash and cash equivalents increased by $42.9 million to $61.3 million at December 31, 2019, from $18.5 million at December 31, 2018.

Investment Securities. The carrying value of total investment securities decreased by $52.5 million to $398.5 million at December 31, 2019, from $451.0 million at December 31, 2018, as cash flows were used to reduce wholesale funding.

Loans.Inclusive of the merger with Optima and organic growth, total loans increased by $667.0 million, or 42.8%, to $2.2 billion at December 31, 2019, from $1.6 billion at December 31, 2018.

• Residential real estate loans increased $313.2 million to $917.6 million at December 31, 2019, from $604.3 million at December 31, 2018.

• Commercial real estate loans increased $302.6 million to $1.1 billion at December 31, 2019, from $758.0 million at December 31, 2018.

• Commercial & industrial loans increased $39.5 million to $133.2 million at December 31, 2019, from $93.7 million at December 31, 2018.

Excluding the impact of the merger with Optima, organic loan growth during 2019 consisted of:

• Commercial real estate loans increased $188.3 million, or 24.8%, from December 31, 2018.

• Commercial and industrial loans increased $9.3 million, or 9.9%, from December 31, 2018.

• Residential mortgage loans decreased $1.3 million from December 31, 2018. The Company had total residential mortgage loan sales of $90.0 million of residential mortgages in 2019.

For further details, see the Organic Loan and Deposit Growth table at the end of this section.

Bank-Owned Life Insurance. The Company invests in bank-owned life insurance to help offset the costs of our employee benefit plan obligations. Bank-owned life insurance also generally provides noninterest income that is nontaxable. At December 31, 2019, our investment in bank-owned life insurance was $37.3 million, a $6.4 million increase from $30.9 million at December 31, 2018, primarily due to additional policies associated with the Optima merger.  

Goodwill and merger related intangibles.  The Company recorded additional goodwill of $30.8 million and other merger related intangibles of $3.6 million during the second quarter of 2019, due to the merger with Optima. Goodwill and merger related intangible assets were $31.2 million and $3.3 million, respectively, at December 31, 2019.

Right of use assets. At December 31, 2019, the Company had right-of-use assets related to its operating leases of $33.6 million due to the adoption of new lease accounting guidance in 2019.

Other assets. Other assets increased $14.7 million, or 53.1%, to $42.3 million at December 31, 2019, from $27.6 million at December 31, 2018, primarily due to an increase in loan related derivative assets and retirement plan assets.

Deposits. Inclusive of Optima, total deposits grew by $547.5 million, or 30.2%, to $2.4 billion at December 31, 2019, from $1.8 billion at December 31, 2018, primarily driven by a combination of the impact of the Optima merger and organic core deposit growth.  

• Core deposits, which the Company defines as all deposits other than certificates of deposit, increased by $486.6 million, or 28.8%, to $2.2 billion from $1.7 billion at December 31, 2018.

• Excluding the impact of the Optima merger, organic growth in core deposits was $172.0 million, or 10.2%, at December 31, 2019. Growth in core deposits during 2019 was attributable to successful deposit campaigns, as we strived to attract and deepen client relationships.

• The cost of total deposits for the year ended December 31, 2019 was 0.70%, as compared to 0.28% for the same period in 2018, driven by the impact of higher deposit rates associated with the Optima merger and the promotional deposit campaigns described above.

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Certificates of deposit, which totaled $182.3 million at December 31, 2019, increased by $60.9 million from $121.4 million at December 31, 2018, primarily due to the merger with Optima. Total brokered certificates of deposit, which are included within certificates of deposit, were $7.1 million and $27.5 million at December 31, 2019 and December 31, 2018, respectively.

For further details on the loans and deposits acquired, see the Organic Loan and Deposit Growth table provided at the end of this section.

Borrowings. At December 31, 2019, borrowings consisted of advances from the FHLB of Boston. Total borrowings increased $42.3 million to $135.7 million at December 31, 2019, from $93.4 million at December 31, 2018 as the Company utilized short-term borrowings to fund loan growth.

Shareholders’ Equity. Total shareholders’ equity increased $119.5 million, or 71.6%, to $286.6 million at December 31, 2019, from $167.0 million at December 31, 2018, primarily due to net income of $25.3 million, $59.4 million of equity increase as a result of the Optima merger, $38.2 million (net of underwriting fees) from the Company’s fourth quarter 2019 common stock offering, and stock-based compensation during 2019. Increases in equity were partially offset by regular dividend payments of $9.5 million paid during the year.

 The Company’s ratio of tangible common equity to tangible assets increased 12.6%, to 8.93%, at December 31, 2019 from 7.93% at December 31, 2018, primarily due to receipt of proceeds from the December 2019 equity offering, partially offset by growth and the impact of goodwill and acquisition related intangibles recorded as a result of the merger with Optima. Tangible book value per share grew by $6.09, or 15.0%, to $46.66 as of December 31, 2019, as compared to $40.57 as of December 31, 2018.  

Organic Loan and Deposit Growth (dollars in thousands)

							December 2018 vs December 2019
	December 31,		December 31,		Balance		Organic			Organic
	2019		2018		Acquired		Growth/(Loss) $			Growth/(Loss) %
Loans
Residential mortgage	$	917,566	$	604,331	$	314,552	$	(1,317	)	(0.2%)
Commercial mortgage		1,060,574		757,957		114,338		188,279		24.8%
Home equity		80,675		69,336		15,452		(4,113	)	(5.9%)
Commercial & Industrial		133,236		93,712		30,215		9,309		9.9%
Consumer		34,677		34,436		849		(608	)	(1.8%)
Total loans	$	2,226,728	$	1,559,772	$	475,406	$	191,550		12.3%
Deposits
Demand	$	630,593	$	494,492	$	58,722	$	77,379		15.6%
Interest bearing checking		450,098		431,702		49,454		(31,058	)	(7.2%)
Money market		181,406		135,585		68,183		(22,362	)	(16.5%)
Savings		914,499		628,212		138,285		148,002		23.6%
Core deposits		2,176,596		1,689,991		314,644		171,961		10.2%
Certificates of deposit		182,282		121,419		162,545		(101,682	)	(83.7%)
Total deposits	$	2,358,878	$	1,811,410	$	477,189	$	70,279		3.9%

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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.

		For the Year Ended December 31,
Operating Net Income / Operating Diluted EPS		2019			2018			2017			2016			2015
	(in thousands, except share data)
Net Income (a GAAP measure)		$	25,257		$	23,881		$	14,816		$	16,896		$	15,694
Add: Merger and Capital Raise Expenses (Pretax)			4,721			201			—			—			—
Add: (Gain)/loss on disposition of investment securities			79			(2	)		3			—			—
Tax effect of Merger and Capital Raise Expenses, and Gain (loss) on disposition of investment securities(1)			(901	)		(56	)		(1	)		—			—
Add: Impact of the tax cuts and jobs act of 2017(2)			—			—			3,869			—			—
Operating Net Income (a non-GAAP measure)		$	29,156		$	24,024		$	18,687		$	16,896		$	15,694
Less: Dividends and Undistributed Earnings Allocated to Participating Securities (GAAP)			(243	)		(239	)		(157	)		(181	)		—
Operating Income Applicable to Common Shareholders (a non-GAAP measure)		$	28,913		$	23,785		$	18,530		$	16,715		$	15,694
Weighted Average Diluted Shares			4,661,720			4,098,633			4,065,754			4,028,944			3,993,599
Operating Diluted earnings per share (a non-GAAP measure)		$	6.20		$	5.80		$	4.56		$	4.15		$	3.93

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

(2) Income tax adjustment related to the re-measurement of net deferred tax assets due to the Tax Cuts and Jobs Act.

The following tables summarize the calculation of the Company’s tangible common equity ratio and tangible book value per share for the periods indicated:

	December 31, 2019			December 31, 2018			December 31, 2017			December 31, 2016			December 31, 2015
	(in thousands, except share data)
Tangible Common Equity:
Shareholders' equity (GAAP)	$	286,561		$	167,026		$	147,957		$	134,671		$	125,063
Less: Goodwill and acquisition related intangibles (GAAP)		(34,544	)		(412	)		(412	)		(412	)		(412	)
Tangible Common Equity (a non-GAAP measure)		252,017			166,614			147,545			134,259			124,651
Total assets (GAAP)		2,855,563			2,101,384			1,949,934			1,848,999			1,706,201
Less: Goodwill and acquisition related intangibles (GAAP)		(34,544	)		(412	)		(412	)		(412	)		(412	)
Tangible assets (a non-GAAP measure)	$	2,821,019		$	2,100,972		$	1,949,522		$	1,848,587		$	1,705,789
Tangible Common Equity Ratio (a non-GAAP measure)		8.93	%		7.93	%		7.57	%		7.26	%		7.31	%
Tangible Book Value Per Share:
Tangible Common Equity (a non-GAAP measure)	$	252,017		$	166,614		$	147,545		$	134,259		$	124,651
Common shares outstanding		5,400,868			4,107,051			4,082,188			4,036,879			4,000,181
Tangible Book Value Per Share (a non-GAAP measure)	$	46.66		$	40.57		$	36.14		$	33.26		$	31.16

Investment Securities

The Company’s securities portfolio consists of securities available for sale (“AFS”) and securities held to maturity (“HTM”). The largest component of the securities portfolio is mortgage-backed securities, all of which are issued by U.S. government agencies or U.S. government-sponsored enterprises.

Securities available for sale consist of certain U.S. Government Sponsored Enterprises (“GSE”) and U.S. GSE mortgage-backed securities, corporate debt securities, and mutual funds. These securities are carried at fair value, and unrealized gains and losses net of

35

applicable income taxes are recognized as a separate component of shareholders’ equity. The fair value of securities available for sale totaled $140.3 million and included gross unrealized gains of $231,000 and gross unrealized losses of $1.0 million at December 31, 2019. At December 31, 2018, the fair value of securities available for sale totaled $168.2 million and included gross unrealized gains of $118,000 and gross unrealized losses of $4.2 million.

Securities classified as held to maturity consist of certain U.S. GSE and U.S. GSE mortgage-backed securities, corporate debt securities, and state, county, and municipal securities. Securities held to maturity as of December 31, 2019 are carried at their amortized cost of $258.2 million. At December 31, 2018, the amortized cost of securities held to maturity totaled $282.9 million.

The following table sets forth the fair value of available for sale investment securities, the amortized costs of held to maturity, and the percentage distribution at the dates indicated:

	December 31,					December 31,
	2019					2018
	Amount		Percent			Amount		Percent
	(dollars in thousands)
Available for sale securities
U.S. GSE obligations	$	37,848		27	%	$	74,039		44	%
Mortgage-backed securities		102,482		73	%		89,268		53	%
Corporate debt securities		—		0	%		4,856		3	%
Total securities available for sale	$	140,330		100	%	$	168,163		100	%
Held to maturity securities
U.S. GSE obligations	$	5,000		2	%	$	32,571		12	%
Mortgage-backed securities		161,759		63	%		168,118		59	%
Corporate debt securities		6,980		3	%		6,972		2	%
Municipal securities		84,433		32	%		75,208		27	%
Total securities held to maturity	$	258,172		100	%	$	282,869		100	%
Total	$	398,502		100	%	$	451,032		100	%

The following tables set forth the composition and maturities of investment securities. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Within One Year					After One, But Within Five Years					After Five, But Within Ten Years					After Ten Years					Total
	Amortized Cost		Weighted Average Yield (1)			Amortized Cost		Weighted Average Yield (1)			Amortized Cost		Weighted Average Yield (1)			Amortized Cost		Weighted Average Yield (1)			Amortized Cost		Weighted Average Yield (1)
At December 31, 2019	(dollars in thousands)
Available for sale securities
U.S. GSE obligations	$	5,000		1.4	%	$	20,000		1.5	%	$	5,000		2.3	%	$	8,000		2.6	%	$	38,000		1.8	%
Mortgage-backed    securities		—		—			37		5.4	%		36,393		1.9	%		66,679		2.1	%		103,109		2.0	%
Corporate debt securities		—		—			—		—			—		—			—		—			—		—
Total available for    sale securities	$	5,000		1.4	%	$	20,037		1.5	%	$	41,393		1.9	%	$	74,679		2.1	%	$	141,109		2.0	%
Held to maturity securities
U.S. GSE obligations	$	5,000		1.6	%	$	—		—		$	—		—		$	—		—		$	5,000		1.6	%
Mortgage-backed    securities		—		—			2		5.6	%		48,088		2.7	%		113,669		2.6	%		161,759		2.6	%
Corporate debt securities		—		—			6,980		2.6	%		—		—			—		—			6,980		2.6	%
Municipal securities		3,270		4.6	%		10,606		4.2	%		45,201		3.7	%		25,356		3.4	%		84,433		3.7	%
Total held to maturity    securities	$	8,270		2.8	%	$	17,588		3.6	%	$	93,289		3.2	%	$	139,025		2.8	%	$	258,172		3.0	%
Total	$	13,270		2.3	%	$	37,625		2.4	%	$	134,682		2.8	%	$	213,704		2.5	%	$	399,281		2.6	%

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	Within One Year					After One, But Within Five Years					After Five, But Within Ten Years					After Ten Years					Total
	Amortized Cost		Weighted Average Yield (1)			Amortized Cost		Weighted Average Yield (1)			Amortized Cost		Weighted Average Yield (1)			Amortized Cost		Weighted Average Yield (1)			Amortized Cost		Weighted Average Yield (1)
At December 31, 2018	(dollars in thousands)
Available for sale securities
U.S. GSE obligations	$	10,004		1.1	%	$	65,000		1.5	%	$	—		—		$	—		—		$	75,004		1.4	%
Mortgage-backed    securities		—		—			78		5.4	%		33,768		1.8	%		58,425		2.0	%		92,271		1.9	%
Corporate debt securities		2,008		1.5	%		3,007		2.5	%		—		—			—		—			5,015		2.1	%
Total available for    sale securities	$	12,012		1.1	%	$	68,085		1.5	%	$	33,768		1.8	%	$	58,425		2.0	%	$	172,290		1.7	%
Held to maturity securities
U.S. GSE obligations	$	5,001		1.4	%	$	27,570		2.5	%	$	—		—		$	—		—		$	32,571		2.4	%
Mortgage-backed    securities		50		4.2	%		—		—			34,434		2.4	%		133,634		2.9	%		168,118		2.8	%
Corporate debt securities		—		—			6,972		2.6	%		—		—			—		—			6,972		2.6	%
Municipal securities		4,630		4.8	%		13,259		4.4	%		41,390		3.8	%		15,929		3.6	%		75,208		3.9	%
Total held to maturity    securities	$	9,681		3.1	%	$	47,801		3.1	%	$	75,824		3.2	%	$	149,563		3.0	%	$	282,869		3.1	%
Total	$	21,693		2.0	%	$	115,886		2.2	%	$	109,592		2.7	%	$	207,988		2.7	%	$	455,159		2.5	%

(1) Weighted Average Yield is shown on a fully taxable equivalent basis using a federal tax rate of 21% for 2018 and 2019.

Management evaluates securities for other-than-temporary impairment on at least a quarterly basis and more frequently when economic or market conditions warrant such evaluation. Consideration is given to: (1) the length of time and the extent to which the fair value has been less than cost; (2) the financial condition and near-term prospects of the issuer; and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

As of December 31, 2019, 68 debt securities had gross unrealized losses, with an aggregate depreciation of 0.74% from the Company’s amortized cost basis. The largest unrealized loss percentage of any single security was 3.15%, or $63,000, of its amortized cost. The largest unrealized dollar loss of any single security was $96,000, or 1.93%, of its amortized cost.

As of December 31, 2018, 142 debt securities had gross unrealized losses, with an aggregate depreciation of 2.05% from the Company’s amortized cost basis. The largest unrealized loss percentage of any single security was 9.79%, or $98,000, of its amortized cost. The largest unrealized dollar loss of any single security was $189,000, or 5.34%, of its amortized cost.

Loans

The Company’s lending activities are conducted principally in Eastern Massachusetts and New Hampshire. The Company grants single- and multi-family residential loans, commercial & industrial (“C&I”), commercial real estate (“CRE”), construction loans, and a variety of consumer loans.  Most of the loans granted by the Company are secured by real estate collateral. Repayment of the Company’s residential loans are generally dependent on the health of the employment market in the borrowers’ geographic areas and that of the general economy with liquidation of the underlying real estate collateral being typically viewed as the primary source of repayment in the event of borrower default. The repayment of C&I loans depends primarily on the cash flow and credit worthiness of the borrower and secondarily on the underlying collateral provided by the borrower. As borrower cash flow may be difficult to predict, liquidation of the underlying collateral securing these loans is typically viewed as the primary source of repayment in the event of borrower default. However, collateral typically consists of equipment, inventory, accounts receivable, or other business assets that may fluctuate in value, so the liquidation of collateral in the event of default is often an insufficient source of repayment. The Company’s CRE loans are primarily made based on the cash flow from the collateral property and secondarily on the underlying collateral provided by the borrower, with liquidation of the underlying real estate collateral typically being viewed as the primary source of repayment in the event of borrower default. The Company’s construction loans are primarily made based on the borrower’s expected ability to execute and the future completed value of the collateral property, with sale of the underlying real estate collateral typically being viewed as the primary source of repayment.

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The following summary shows the composition of the loan portfolio at the dates indicated:

	December 31,
	2019			% of Total			2018			% of Total			2017			% of Total			2016		% of Total			2015		% of Total
	(dollars in thousands)
Residential mortgage
Mortgages - fixed rate	$	430,877			19	%	$	293,267			19	%	$	298,851			22	%	$	305,404		23	%	$	338,576		29	%
Mortgages - adjustable rate		467,139			21	%		309,656			20	%		239,027			18	%		228,028		17	%		206,835		17	%
Construction		17,374			1	%		—			0	%		—			0	%		—		0	%		—		0	%
Deferred costs net of unearned fees		2,176			0	%		1,408			0	%		1,042			0	%		972		0	%		834		0	%
Total residential mortgages		917,566			41	%		604,331			39	%		538,920			40	%		534,404		40	%		546,245		46	%
Commercial mortgage
Mortgages - nonowner occupied		870,047			40	%		654,394			42	%		562,203			41	%		513,578		39	%		422,923		35	%
Mortgages - owner occupied		114,095			5	%		59,335			4	%		35,343			3	%		43,932		3	%		43,265		4	%
Construction		76,288			3	%		44,146			3	%		35,904			3	%		58,406		4	%		44,624		4	%
Deferred costs net of unearned fees		144			0	%		82			0	%		199			0	%		224		0	%		259		0	%
Total commercial mortgages		1,060,574			48	%		757,957			49	%		633,649			47	%		616,140		46	%		511,071		43	%
Home equity
Home equity - lines of credit		73,880			3	%		63,421			4	%		70,326			5	%		70,883		6	%		59,676		5	%
Home equity - term loans		6,555			1	%		5,665			0	%		3,863			0	%		3,925		0	%		3,630		0	%
Deferred costs net of unearned fees		240			0	%		250			0	%		255			0	%		243		0	%		216		0	%
Total home equity		80,675			4	%		69,336			4	%		74,444			5	%		75,051		6	%		63,522		5	%
Commercial & industrial
Commercial & industrial		133,337			6	%		93,728			6	%		65,305			5	%		59,638		5	%		42,209		4	%
Deferred costs net of unearned fees		(101	)		0	%		(16	)		0	%		(10	)		0	%		68		0	%		175		0	%
Total commercial & industrial		133,236			6	%		93,712			6	%		65,295			5	%		59,706		5	%		42,384		4	%
Consumer
Secured		33,453			1	%		33,252			2	%		37,272			3	%		33,386		3	%		27,390		2	%
Unsecured		1,199			0	%		1,171			0	%		1,303			0	%		1,451		0	%		1,585		0	%
Deferred costs net of unearned fees		25			0	%		13			0	%		16			0	%		16		0	%		17		0	%
Total consumer		34,677			1	%		34,436			2	%		38,591			3	%		34,853		3	%		28,992		2	%
Total loans	$	2,226,728			100	%	$	1,559,772			100	%	$	1,350,899			100	%	$	1,320,154		100	%	$	1,192,214		100	%

Residential Mortgage.Residential real estate loans held in portfolio amounted to $917.6 million at December 31, 2019, an increase of $313.2 million, or 51.8%, from $604.3 million at December 31, 2018 and consisted of one-to-four family residential mortgage loans. The residential mortgage portfolio represented 41% and 39% of total loans at December 31, 2019 and December 31, 2018, respectively.  

The average loan balance outstanding in the residential portfolio was $390,000 and the largest individual residential mortgage loan outstanding was $9.0 million as of December 31, 2019. At December 31, 2019, this loan was performing in accordance with its original terms.

The Bank offers fixed and adjustable rate residential mortgage and construction loans with maturities up to 30 years. One-to-four family residential mortgage loans are generally underwritten according to Fannie Mae and Freddie Mac guidelines, and we refer to loans that conform to such guidelines as “conforming loans.” The Bank generally originates and purchases both fixed and adjustable rate mortgage loans in amounts up to the maximum conforming loan limits as established by the Federal Housing Finance Agency, which increased to $484,350 in 2019 from $453,100 in 2018, for one-unit properties. In addition, the Bank also offers loans above conforming lending limits typically referred to as “jumbo” loans. These loans are typically underwritten to jumbo conforming guidelines, however, the Bank may choose to hold a jumbo loan within its portfolio with underwriting criteria that does not exactly match conforming guidelines. The Bank may also, from time to time, purchase residential loans that are either jumbo, conforming, or meet our Community Reinvestment Act (“CRA”) requirements. Purchases have historically been made to satisfy CRA requirements for lending to low and moderate income borrowers within the Bank’s CRA Assessment Area.

Generally, our residential construction loans are based on complete value per plans and specifications, with loan proceeds used to construct the house for single family primary residence. Loans are provided for terms up to 12 months during the construction phase, with loan-to-values that generally do not exceed 80% on as complete basis.  The loans then convert to permanent financing at terms up to 360 months.   

The Company does not offer reverse mortgages, nor do we offer loans that provide for negative amortization of principal, such as “Option ARM” loans, where the borrower can pay less than the interest owed on the loan, resulting in an increased principal balance

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during the life of the loan. We do not offer “subprime loans” (loans that are made with low down payments to borrowers with weakened credit histories typically characterized by payment delinquencies, previous charge-offs, judgments, bankruptcies, or borrowers with questionable repayment capacity as evidenced by low credit scores or high debt-burden ratios) or Alt-A loans (defined as loans having less than full documentation).    

Residential real estate loans are originated both for sale to the secondary market, as well as for retention in the Bank’s loan portfolio. The decision to sell a loan to the secondary market or retain within the portfolio is determined based on a variety of factors including but not limited to the Bank’s asset/liability position, the current interest rate environment, and customer preference.

The Company was servicing mortgage loans sold to others without recourse of approximately $159.6 million at December 31, 2019 and $90.2 million at December 31, 2018.

The table below presents residential real estate loan origination activity for the periods indicated:

	For the Year Ended December 31,
	2019		2018		2017
	(dollars in thousands)
Originations for retention in portfolio	$	229,163	$	135,468	$	101,307
Originations for sale to the secondary market		17,537		9,431		15,663
Total	$	246,700	$	144,899	$	116,970

Loans are sold with servicing retained or released. The table below presents residential real estate loan sale activity for the periods indicated:

	For the Year Ended December 31,
	2019		2018		2017
	(dollars in thousands)
Loans sold with servicing rights retained	$	82,932	$	1,605	$	11,906
Loans sold with servicing rights released		7,006		7,826		10,338
Total	$	89,938	$	9,431	$	22,244

Loans sold with the retention of servicing typically result in the capitalization of servicing rights. Loan servicing rights are included in other assets and subsequently amortized as an offset to other income over the estimated period of servicing. The net balance of capitalized servicing rights amounted to $1.3 million, $666,000, and $793,000 at December 31, 2019, December 31, 2018, and December 31, 2017, respectively.

Commercial Mortgage.  Commercial real estate loans were $1.1 billion as of December 31, 2019, an increase of $302.6 million, or 39.9%, from $758.0 million at December 31, 2018. The commercial real estate loan portfolio represented 48% and 49% of total loans at December 31, 2019 and December 31, 2018, respectively. The average loan balance outstanding in this portfolio was $1.3 million and the largest individual commercial real estate loan outstanding was $24.0 million as of December 31, 2019. At December 31, 2019, this commercial mortgage was performing in accordance with its original terms.

Commercial real estate loans are secured by a variety of property types, with approximately 87.2% of the total at December 31, 2019  composed of multi-family dwellings, retail facilities, office buildings, commercial mixed use, lodging, and industrial and warehouse properties.

Generally, our commercial real estate loans are for terms of up to 10 years, with loan-to-values that generally do not exceed 75%.  Amortization schedules are long term, and thus, a balloon payment is generally due at maturity. Under most circumstances, the Bank will offer to rewrite or otherwise extend the loan at prevailing interest rates.

Generally, our commercial construction loans are speculative in nature, with loan proceeds used to acquire and develop real estate property for sale or rental. Loans are provided for terms up to 36 months during the construction phase, with loan-to-values that generally do not exceed 75% on both an ‘as is’ and ‘as complete and stabilized’ basis.  Construction projects are primarily for the development of residential property types, inclusive of 1-4 family and multifamily properties.

Home Equity.The home equity portfolio totaled $80.7 million and $69.3 million at December 31, 2019 and December 31, 2018, respectively. The home equity portfolio represented 4% of total loans at December 31, 2019 and December 31, 2018. At December 31, 2019, our largest home equity line of credit was a $2.0 million line of credit and had no outstanding balance at December 31, 2019. At December 31, 2019, this line of credit was performing in accordance with its original terms.

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Home equity lines of credit are extended as both first and second mortgages on owner-occupied residential and one-to-four family investment properties in the Bank’s market area. Home equity lines of credit are generally underwritten with the same criteria that we use to underwrite one-to-four family residential mortgage loans.

Our home equity lines of credit are revolving lines of credit, which generally have a term between 15 and 20 years, with draws available for the first 10 years. Our 15-year lines of credit are interest only during the first 10 years and amortize on a five-year basis thereafter. Our 20-year lines of credit are interest only during the first 10 years and amortize on a 10-year basis thereafter. We generally originate home equity lines of credit with loan-to-value ratios of up to 80% when combined with the principal balance of the existing first mortgage loan, although loan-to-value ratios may occasionally exceed 80% on a case-by-case basis. Maximum combined loan-to-values are determined based on an applicant’s loan/line amount and the estimated property value. Lines of credit above $1.0 million generally will not exceed combined loan-to-value of 75%. Rates are adjusted monthly based on changes in a designated market index. We also offer home equity term loans, which are extended as second mortgages on owner-occupied residential properties in our market area. Our home equity term loans are fixed-rate second mortgage loans, which generally have a term between 5 and 20 years.

Commercial and Industrial (C&I).  The commercial and industrial portfolio totaled $133.2 million at December 31, 2019, an increase of $39.5 million, or 42.2%, from $93.7 million at December 31, 2018. C&I loans represented 6% of total loans at December 31, 2019 and December 31, 2018. The average loan balance outstanding in this portfolio was $209,000 and the largest individual commercial and industrial loan outstanding was $10.5 million as of December 31, 2019. At December 31, 2019, this loan was performing in accordance with its original terms.  

The Company’s Innovation Banking and asset-based loans are reported within the C&I portfolio.  

• At December 31, 2019, Innovation Banking loans totaled $30.3 million and the average loan balance outstanding in this portfolio was $1.3 million.  The largest individual loan outstanding was $5.7 million and this loan was performing in accordance with its original terms.

• At December 31, 2019, asset-based loans totaled $23.2 million and the average loan balance outstanding in this portfolio was $2.3 million. The largest individual loans outstanding was $10.5 million and this loan was performing in accordance with its original terms.

The Company’s C&I loan customers represent various small- and middle-market established businesses involved in professional services, accommodation and food services, health care, wholesale trade, manufacturing, distribution, retailing, and non-profits. Most clients are privately owned with markets that range from local to national in scope. Many of the loans to this segment are secured by liens on corporate assets and the personal guarantees of the principals. The Company also makes loans to entrepreneurial and technology businesses.  The regional economic strength or weakness impacts the relative risks in this loan category. There is little concentration in any one business sector, and loan risks are generally diversified among many borrowers.

Consumer.  The consumer loan portfolio totaled $34.7 million at December 31, 2019, an increase of $241,000, or 0.7%, from $34.4 million at December 31, 2018.  Consumer loans represented 1% and 2% of the total loan portfolio at December 31, 2019 and December 31, 2018, respectively. Consumer loans include secured and unsecured loans, lines of credit, and personal installment loans. Unsecured consumer loans generally have greater risk compared to longer-term loans secured by improved, owner-occupied real estate,particularly consumer loans that are secured by rapidly depreciable assets. The secured consumer loans and lines portfolio are generally fully secured by pledged assets such as bank accounts or investments.

The following table summarizes the dollar amount of loans maturing in our portfolio based on their loan type and contractual terms to maturity at December 31, 2019. The table does not include any estimate of prepayments, which can significantly shorten the average life of all loans and may cause our actual repayment experience to differ from that shown below. Demand loans, loans having no stated repayment schedule or maturity, and overdraft loans are reported as being due in one year or less.

	December 31, 2019
	One Year or Less		One to Five Years		Over Five Years		Total
	(dollars in thousands)
Residential mortgage	$	5,441	$	12,389	$	899,736	$	917,566
Commercial mortgage		49,781		297,723		713,070		1,060,574
Home equity		265		960		79,450		80,675
Commercial & Industrial		43,761		65,292		24,183		133,236
Consumer		34,413		145		119		34,677
Total	$	133,661	$	376,509	$	1,716,558	$	2,226,728

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The following table summarizes the dollar amount of loans maturing in our portfolio based on whether the loan has a fixed or variable rate of interest at December 31, 2019:

	December 31, 2019
	Fixed		Adjustable		Floating		Total
	(dollars in thousands)
Residential mortgage	$	447,334	$	470,232	$	—	$	917,566
Commercial mortgage		404,100		287,332		369,142		1,060,574
Home equity		6,777		—		73,898		80,675
Commercial & Industrial		48,076		6,468		78,692		133,236
Consumer		788		606		33,283		34,677
Total	$	907,075	$	764,638	$	555,015	$	2,226,728

Nonperforming Loans and TROUBLED DEBT RESTRUCTURINGS (TDRs)

The composition of nonperforming loans is as follows:

	December 31,
	2019			2018			2017			2016			2015
	(dollars in thousands)
Nonaccruals	$	4,160		$	525		$	1,148		$	1,023		$	1,481
Loans past due > 90 days, but still accruing		1,264			—			—			232			—
Troubled debt restructurings		227			117			150			421			—
Total nonperforming loans	$	5,651		$	642		$	1,298		$	1,676		$	1,481
Accruing troubled debt restructured loans	$	—		$	6		$	29		$	—		$	—
Nonperforming loans as a percentage of gross loans		0.25	%		0.04	%		0.10	%		0.13	%		0.12	%
Nonperforming loans as a percentage of total assets		0.20	%		0.03	%		0.07	%		0.09	%		0.09	%

At December 31, 2019, 2018, and 2017 impaired loans had specific reserves of $87,000, $0, and $93,000 respectively.

Nonaccrual Loans.  Loans are typically placed on nonaccrual status when any payment of principal and/or interest is 90 days or more past due, unless the collateral is sufficient to cover both principal and interest and the loan is in the process of collection. The Company monitors closely the performance of its loan portfolio. In addition to the monitoring and review of loan performance internally, the Company has contracted with an independent organization to review the Company’s commercial and commercial real estate loan portfolios. This independent review was performed in each of the past five years. The status of delinquent loans, as well as situations identified as potential problems, is reviewed on a regular basis by senior management.

Troubled Debt Restructurings.Loans are considered restructured in a troubled debt restructuring when the Company has granted concessions to a borrower due to the borrower’s financial condition that it otherwise would not have considered. These concessions may include modifications of the terms of the debt such as deferral of payments, extension of maturity, reduction of principal balance, reduction of the stated interest rate other than normal market rate adjustments, or a combination of these concessions. Debt may be bifurcated with separate terms for each tranche of the restructured debt. Restructuring a loan in lieu of aggressively enforcing the collection of the loan may benefit the Company by increasing the ultimate probability of collection.

Restructured loans are classified as accruing or non-accruing based on management’s assessment of the collectability of the loan. Loans which are already on nonaccrual status at the time of the restructuring generally remain on nonaccrual status for approximately six months or longer before management considers such loans for return to accruing status. Accruing restructured loans are placed into nonaccrual status if and when the borrower fails to comply with the restructured terms and management deems it unlikely that the borrower will return to a status of compliance in the near term.

Troubled debt restructurings are classified as impaired loans. The Company identifies loss allocations for impaired loans on an individual loan basis.

Nonperforming loans increased during 2019 from 2018 primarily due to an increase in loans on nonaccrual at December 31, 2019. Nonperforming loans decreased during 2018 from 2017 primarily as a result of a decrease in loans on nonaccrual at December 31, 2018, as compared to December 31, 2017.

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The Company continues to monitor closely the portfolio of nonperforming loans for which management has concerns regarding the ability of the borrowers to perform. The majority of the loans are secured by real estate and are considered to have adequate collateral value to cover the loan balances at December 31, 2019 and December 31, 2018, although such values may fluctuate with changes in the economy and the real estate market.

Allowance for Loan Losses

The Company maintains an allowance for loan losses in an amount determined by management on the basis of the character of the loans, loan performance, financial condition of borrowers, the value of collateral securing loans, and other relevant factors. We provide for loan losses based upon the consistent application of our documented allowance for loan loss methodology. All loan losses are charged to the allowance for loan losses and all recoveries are credited to it. Additions to the allowance for loan losses are provided by charges to income based on various factors which, in our judgment, deserve current recognition in estimating probable losses. We regularly review the loan portfolio, including a review of our classified assets, and make provisions for loan losses in order to maintain the allowance for loan losses in accordance with GAAP. The allowance for loan losses consists primarily of two components:

1. specific allowances established for impaired loans, as defined by GAAP. The amount of impairment provided for as a specific allowance is measured based on the deficiency, if any, between the present value of expected future cash flows discounted at the loan’s effective interest rate at the time of impairment or, as a practical expedient, at the loan’s observable market price or the fair value of the collateral if the loan is collateral-dependent, and the carrying value of the loan; and

2. general allowances established for loan losses on a portfolio basis for loans that do not meet the definition of impaired loans. The portfolio is grouped into homogenous pools by similar risk characteristics, primarily by loan type and regulatory classification. We apply an estimated incurred loss rate to each loan group. The loss rates applied are based upon our historical loss experience over a designated look back period adjusted, as appropriate, for the quantitative, qualitative, and environmental factors discussed below. This evaluation is inherently subjective, as it requires material estimates that may be susceptible to significant revisions based upon changes in economic and real estate market conditions.

Actual loan losses may be significantly more than the allowance for loan losses we have established, which could have a material negative effect on our financial results.

The adjustments to historical loss experience are based on our evaluation of several quantitative, qualitative, and environmental factors, including:

• the loss emergence period which represents the average amount of time between when loss events occur for specific loan types and when such problem loans are identified and the related loss amounts are confirmed through charge-offs;

• changes in any concentration of credit (including, but not limited to, concentrations by geography, industry, or collateral type);

• changes in the number and amount of non-accrual loans and past due loans;

• changes in national, state, and local economic trends;

• changes in the types of loans in the loan portfolio;

• changes in the experience and ability of personnel;

• changes in lending strategies; and

• changes in lending policies and procedures.

In addition, we may establish an unallocated allowance to provide for probable losses that have been incurred as of the reporting date but are not reflected in the allocated allowance.

We evaluate the allowance for loan losses based upon the combined total of the specific and general components. Generally, when the loan portfolio increases, absent other factors, the allowance for loan loss methodology results in a higher dollar amount of estimated probable losses than would be the case without the increase. Generally, when the loan portfolio decreases, absent other factors, the allowance for loan losses methodology results in a lower dollar amount of estimated probable losses than would be the case without the decrease.  Periodically, management conducts an analysis to estimate the loss emergence period for various loan categories based on samples of historical charge-offs. Model output by loan category is reviewed to evaluate the reasonableness of the reserve levels in comparison to the estimated loss emergence period applied to historical loss experience.

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We evaluate the loan portfolio on a quarterly basis and the allowance is adjusted accordingly. While we use the best information available to make evaluations, future adjustments to the allowance may be necessary if conditions differ substantially from the information used in making the evaluations. In addition, various regulatory agencies, as an integral part of their examination process, will periodically review the allowance for loan losses. Such agencies may require us to recognize additions to the allowance based on their analysis of information available to them at the time of their examination.

The following table summarizes the changes in the Company’s allowance for loan losses for the years indicated:

	Years Ended December 31,
	2019			2018			2017			2016			2015
	(dollars in thousands)
Period-end loans outstanding (net of unearned    discount and deferred loan fees)	$	2,226,728		$	1,559,772		$	1,350,899		$	1,320,154		$	1,192,214
Average loans outstanding (net of unearned    discount and deferred loan fees)	$	1,969,696		$	1,417,237		$	1,333,341		$	1,262,497		$	1,144,965
Balance of allowance for loan losses at the    beginning of year	$	16,768		$	15,320		$	15,261		$	15,191		$	14,269
Loans charged-off:
Commercial and industrial		(338	)		(73	)		(284	)		(71	)		(124	)
Commercial mortgage		(1,270	)		—			—			—			—
Residential mortgage		—			—			—			—			(37	)
Home Equity		—			—			—			—			(1	)
Consumer		(48	)		(36	)		(39	)		(33	)		(16	)
Total loans charged-off	$	(1,656	)	$	(109	)	$	(323	)	$	(104	)	$	(178	)
Recovery of loans previously charged-off:
Commercial and industrial		53			48			13			14			4
Commercial mortgage		—			—			—			7			8
Residential mortgage		—			—			—			13			—
Home Equity		—			—			—			1			—
Consumer		11			7			7			7			13
Total recoveries of loans previously    charged-off:		64			55			20			42			25
Net loan (charge-offs) recoveries	$	(1,592	)	$	(54	)	$	(303	)	$	(62	)	$	(153	)
Provision charged to operating expense		3,004			1,502			362			132			1,075
Balance at end of period	$	18,180		$	16,768		$	15,320		$	15,261		$	15,191
Ratio of net (charge-offs) recoveries during    the year to average loans outstanding		(0.08	)%		(0.00	)%		(0.02	)%		(0.00	)%		(0.01	)%
Ratio of allowance for loan losses to loans    outstanding		0.82	%		1.08	%		1.13	%		1.16	%		1.27	%

The level of charge-offs depends on many factors, including the national and regional economy. Cyclical lagging factors may result in charge-offs being higher than historical levels. The allowance for loan losses increased primarily due to continued loan growth and changes in the portfolio composition. Although the allowance is allocated between categories, the entire allowance is available to absorb losses attributable to all loan categories. Management believes that the allowance for loan losses is adequate.

Sources of Funds

General. Deposits traditionally have been our primary source of funds for our investment and lending activities. The Company also borrows from the FHLB of Boston to supplement cash flow needs, to lengthen the maturities of liabilities for interest rate risk management purposes, and to manage our cost of funds. Our additional sources of funds are scheduled payments and prepayments of principal and interest on loans and investment securities and fee income and proceeds from the sales of loans and securities.

Deposits.  The Company accepts deposits primarily from customers in the communities in which our branches and offices are located, as well as from small- and medium-sized businesses and other customers throughout our lending area. We rely on our competitive pricing and products, convenient locations, and client service to attract and retain deposits. We offer a variety of deposit accounts with a range of interest rates and terms. Our deposit accounts consist of relationship checking for consumers and businesses, statement savings accounts, certificates of deposit, money market accounts, interest on lawyer trust accounts, commercial and regular checking accounts, and individual retirement accounts. Deposit rates and terms are based primarily on current business strategies, market interest rates, liquidity requirements, and our deposit growth goals. The Bank may also access the brokered deposit market for funding.

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At December 31, 2019, we had a total of $175.2 million in certificates of deposit, excluding brokered deposits, of which $141.3 million had remaining maturities of one year or less. Based on historical experience and our current pricing strategy, we believe the Bank will retain a large portion of these accounts upon maturity. The Bank had total brokered deposits of $7.1 million, $27.5 million and $52.7 million at December 31, 2019, 2018, and 2017, respectively.

The following table sets forth the average balances of the Bank’s deposits for the periods indicated:

	December 31,								December 31,
	2019								2018
	Average Balance		Percent			Weighted Average Rate			Average Balance		Percent			Weighted Average Rate
	(dollars in thousands)
Demand deposits (non-interest bearing)	$	567,500		25.5	%		—		$	521,091		29.2	%		—
Interest bearing checking		417,226		18.8	%		0.09	%		409,178		23.0	%		0.08	%
Money Market		189,836		8.5	%		1.06	%		93,449		5.2	%		1.14	%
Savings		827,279		37.3	%		0.97	%		624,421		35.1	%		0.78	%
Retail certificates of deposit under    $100,000		58,677		2.6	%		1.13	%		36,408		2.0	%		0.69	%
Retail certificates of deposit of    $100,000 or greater		111,018		5.0	%		1.42	%		59,226		3.3	%		1.27	%
Wholesale certificates of deposit		51,604		2.3	%		1.82	%		38,373		2.2	%		1.69	%
Total	$	2,223,140		100	%		0.61	%	$	1,782,146		100	%		0.44	%

Retail certificates of deposit of $100,000 or greater by maturity are as follows:

	December 31,
	2019		2018		2017
	(dollars in thousands)
Less than 3 months remaining	$	35,054	$	7,807	$	22,995
3 to 5 months remaining		32,245		7,361		10,535
6 to 11 months remaining		27,119		14,078		6,361
12 months or more remaining		24,178		28,446		29,202
Total	$	118,596	$	57,692	$	69,093

Retail certificates of deposit of $100,000 or greater totaled $118.6 million, $57.7 million, and, $69.1 million at December 31, 2019, 2018, and 2017, respectively.  Interest expense on retail certificates of deposit of $100,000 or greater was $2.1 million, $467,000, and, $446,000 for the years ended December 31, 2019, 2018, and 2017, respectively.  

The following table sets forth certificates of deposit classified by interest rate as of the dates indicated:

	December 31,
	2019		2018		2017
	(dollars in thousands)
Interest Rate:
Less than 1.00%	$	51,306	$	49,360	$	75,284
1.00% to 1.99%		62,986		52,888		84,546
2.00% to 2.99%		67,990		19,171		—
Total	$	182,282	$	121,419	$	159,830

Borrowings.  The Bank’s borrowings consisted primarily of FHLB of Boston advances collateralized by a blanket pledge agreement on the Bank’s FHLB of Boston stock and residential mortgages held in the Bank’s portfolios. The Bank’s borrowings with the FHLB of Boston totaled $135.7 million at December 31, 2019, an increase of $42.3 million compared to $93.4 million at December 31, 2018. The Bank’s remaining borrowing capacity at the FHLB of Boston at December 31, 2019 was approximately $345.5 million. In addition, the Bank has a $10.0 million line of credit with the FHLB of Boston. See Note 12, “Borrowings,” for a schedule, including related interest rates and other information.

Net Interest Margin

Net interest income represents the difference between interest earned, primarily on loans and investments, and interest paid on funding sources, primarily deposits and borrowings. Interest rate spread is the difference between the average rate earned on total interest-earning assets and the average rate paid on total interest-bearing liabilities. Net interest margin is the amount of net interest income, on

44

a fully taxable-equivalent basis, expressed as a percentage of average interest-earning assets. The average rate earned on earning assets is the amount of annualized taxable equivalent interest income expressed as a percentage of average earning assets. The average rate paid on interest-bearing liabilities is equal to annualized interest expense as a percentage of average interest-bearing liabilities.

The following table sets forth the distribution of the Company’s average assets, liabilities and shareholders’ equity, and average rates earned or paid on a fully taxable equivalent basis for each of the periods indicated:

	Year Ended
	December 31, 2019									December 31, 2018									December 31, 2017
	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	$	1,952,374		$	84,382			4.32	%	$	1,407,079		$	57,941			4.12	%	$	1,318,284		$	51,238			3.89	%
Tax-exempt		17,322			740			4.27			10,158			469			4.62			15,057			764			5.07
Securities available for sale (3)
Taxable		154,256			2,884			1.87			194,419			3,202			1.65			248,787			4,011			1.61
Securities held to maturity
Taxable		204,909			5,079			2.48			189,120			4,255			2.25			111,452			2,310			2.07
Tax-exempt		75,432			2,897			3.84			76,966			3,043			3.95			81,528			4,000			4.91
Cash and cash equivalents		50,839			731			1.44			45,365			595			1.31			41,888			291			0.69
Total interest-earning assets (4)		2,455,132			96,713			3.94	%		1,923,107			69,505			3.61	%		1,816,996			62,614			3.45	%
Non interest-earning assets		162,529									73,330									73,532
Allowance for loan losses		(17,345	)								(15,857	)								(15,392	)
Total assets	$	2,600,316								$	1,980,580								$	1,875,136
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing deposits
Checking accounts	$	417,226		$	440			0.11	%	$	409,178		$	247			0.06	%	$	394,132		$	131			0.03	%
Savings accounts		827,279			8,708			1.05			624,421			2,900			0.46			571,659			1,457			0.25
Money market accounts		189,836			2,481			1.31			93,449			597			0.64			68,891			103			0.15
Certificates of deposit		221,299			4,012			1.81			134,007			1,279			0.95			166,410			1,434			0.86
Total interest-bearing deposits		1,655,640			15,641			0.94	%		1,261,055			5,023			0.40	%		1,201,092			3,125			0.26	%
Other borrowed funds		86,712			2,002			2.31			18,671			444			2.38			36,074			462			1.28
Total interest-bearing liabilities		1,742,352			17,643			1.01	%		1,279,726			5,467			0.43	%		1,237,166			3,587			0.29	%
Non-interest-bearing liabilities
Demand deposits		567,500									521,091									470,871
Other liabilities		68,847									24,217									25,611
Total liabilities		2,378,699									1,825,034									1,733,648
Shareholders’ equity		221,617									155,546									141,488
Total liabilities & shareholders’ equity	$	2,600,316								$	1,980,580								$	1,875,136
Net interest income on a fully taxable equivalent basis					79,070									64,038									59,027
Less taxable equivalent adjustment					(764	)								(737	)								(1,668	)
Net interest income				$	78,306								$	63,301								$	57,359
Net interest spread (5)								2.93	%								3.19	%								3.16	%
Net interest margin (6)								3.22	%								3.33	%								3.25	%

(1) Annualized on a fully taxable equivalent basis calculated using a federal tax rate of 21% for 2019 and 2018 and 35% for 2017.

(2) Nonaccrual loans are included in average amounts outstanding.

(3) Average balances of securities available for sale calculated utilizing amortized cost.

(4) Federal Home Loan Bank stock balance and dividend income is excluded from interest-earning assets.

45

(5) Interest rate spread represents the difference between the weighted average yield on interest-earning assets 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.

Rate/Volume Analysis

The following table describes the extent to which changes in interest rates and changes in the volume of interest-earning assets and interest-bearing liabilities have affected the Company’s interest income and interest expense during the periods indicated. Information is provided in each category with respect to: (i) changes attributable to changes in volumes (changes in average balance multiplied by prior year average rate), (ii) changes attributable to changes in rate (change in average interest rate multiplied by prior year average balance), and (iii) changes attributable to the combined impact of volumes and rates have been allocated proportionately to separate volume and rate categories.

	Year Ended December 31, 2019									Year Ended December 31, 2018
	Compared with									Compared with
	Year Ended December 31, 2018									Year Ended December 31, 2017
	Increase/(Decrease) Due to Change in									Increase/(Decrease) Due to Change in
	Volume			Rate			Total			Volume			Rate			Total
	(dollars in thousands)									(dollars in thousands)
Interest income
Loans
Taxable	$	23,441		$	3,000		$	26,441		$	3,560		$	3,143		$	6,703
Tax-exempt		308			(37	)		271			(231	)		(64	)		(295	)
Securities available for sale
Taxable		(716	)		398			(318	)		(894	)		85			(809	)
Securities held to maturity
Taxable		372			452			824			1,732			213			1,945
Tax-exempt		(60	)		(86	)		(146	)		(214	)		(743	)		(957	)
Cash and due from banks		76			60			136			26			278			304
Total interest income	$	23,421		$	3,787		$	27,208		$	3,979		$	2,912		$	6,891
Interest expense
Deposits
Checking accounts		5			188			193			5			111			116
Savings accounts		1,186			4,622			5,808			146			1,297			1,443
Money market accounts		936			948			1,884			49			445			494
Certificates of deposit		1,148			1,585			2,733			(299	)		144			(155	)
Total interest-bearing deposits		3,275			7,343			10,618			(99	)		1,997			1,898
Other borrowed funds		1,571			(13	)		1,558			(292	)		274			(18	)
Total interest expense	$	4,846		$	7,330		$	12,176		$	(391	)	$	2,271		$	1,880
Change in net interest income	$	18,575		$	(3,543	)	$	15,032		$	4,370		$	641		$	5,011

Market Risk and Asset Liability Management

Market risk is the risk of loss from adverse changes in market prices and rates. The Company’s market risk arises primarily from interest rate risk inherent in its lending and deposit-taking activities. To that end, management actively monitors and manages its interest rate risk exposure.

The Company’s profitability is affected by fluctuations in interest rates. A sudden and substantial change in interest rates may adversely impact the Company’s earnings to the extent that the interest rates borne by assets and liabilities do not change at the same speed, to the same extent or on the same basis. The Company monitors the impact of changes in interest rates on its net interest income using several tools.

The Company’s primary objective in managing interest rate risk is to minimize the adverse impact of changes in interest rates on the Company’s net interest income and capital, while structuring the Company’s asset-liability structure to obtain the maximum yield-cost spread on that structure. The Company relies primarily on its asset-liability structure to control interest rate risk.

Interest Rate Sensitivity. The Company actively manages its interest rate sensitivity position. The objectives of interest rate risk management are to control exposure of net interest income to risks associated with interest rate movements and to achieve sustainable growth in net interest income. The Company’s Asset Liability Committee (“ALCO”), using policies and procedures approved by the

46

Company’s board of directors, is responsible for the management of the Company’s interest rate sensitivity position. The Company manages interest rate sensitivity by changing the mix, pricing, and re-pricing characteristics of its assets and liabilities, through the management of its investment portfolio, its offerings of loan and selected deposit terms, and through wholesale funding. Wholesale funding consists of, but is not limited to, multiple sources including borrowings with the FHLB of Boston, the Federal Reserve Bank of Boston’s discount window, and certificates of deposit from institutional brokers.  

The Company uses several tools to manage its interest rate risk including interest rate sensitivity analysis, or gap analysis, market value of portfolio equity analysis, interest rate simulations under various rate scenarios, and net interest margin reports. The results of these reports are compared to limits established by the Company’s ALCO policies and appropriate adjustments may be made if the results are outside the established limits.

The following table demonstrates the annualized result of an interest rate simulation and the estimated effect that a parallel interest rate shift, or “shock,” in the yield curve and subjective adjustments in deposit pricing might have on the Company’s projected net interest income over the next 12 months and 24 months.

As of December 31, 2019:

	Year 1	Year 2
Change in Interest Rates (in Basis Points)	Percentage Change in Net Interest Income	Percentage Change in Net Interest Income
Parallel rate shocks
+400	(6.9)	4.3
+300	(5.1)	3.3
+200	(3.4)	2.1
+100	(1.8)	0.5
–100	1.5	(6.1)

The following table demonstrates the annualized result of an interest rate simulation and the estimated effect that a gradual interest rate shift in the yield curve and subjective adjustments in deposit pricing might have on the Company’s projected net interest income over the next 12 months and 24 months.

As of December 31, 2019:

These simulations assume that there is no growth in interest-earning assets or interest-bearing liabilities over the next 12 months and 24 months. The changes to net interest income shown above are in compliance with the Company’s policy guidelines.

	Year 1	Year 2
Change in Interest Rates (in Basis Points)	Percentage Change in Net Interest Income	Percentage Change in Net Interest Income
Gradual rate shifts
+200	(2.6)	(0.7)
–100	1.7	(3.0)

Economic Value of Equity Analysis. The Company also analyzes the sensitivity of the Bank’s financial condition to changes in interest rates through our economic value of equity model. This analysis measures the difference between estimated changes in the present value of the Bank’s assets and estimated changes in the present value of the Bank’s liabilities assuming various changes in current interest rates.

The Bank’s economic value of equity analysis as of December 31, 2019 estimated that, in the event of an instantaneous 200 basis point increase in interest rates, the Bank would experience a 5.4% increase in the economic value of equity for the next 12 months, and a 11.0% increase in the economic value of equity for the next 24 months. At the same date, our analysis estimated that, in the event of an instantaneous 100 basis point decrease in interest rates, the Bank would experience a 16.7% increase in the economic value of equity over the next 12 months, and a 11.4% increase in the economic value of equity for the next 24 months. The estimates within the economic value of equity calculation are significantly impacted by management’s assumption that the value of non-maturity deposits do not fall below their stated balance as of December 31, 2019.  This assumption has the impact of increasing the Bank’s economic value of equity in the falling rate scenario as lower market rates increase the value of the loan and investment portfolios while the value of the non-maturity deposit base remains static. The Company believes retaining customer relationships is the most desirable strategy over the long term.

47

The estimates of changes in the economic value of our equity require us to make certain assumptions including loan- and mortgage-related investment prepayment speeds, reinvestment rates, and deposit maturities and decay rates. These assumptions are inherently uncertain and, as a result, we cannot precisely predict the impact of changes in interest rates on the economic value of our equity. Although our economic value of equity analysis provides an indication of our interest rate risk exposure at a particular point in time, such estimates are not intended to, and do not, provide a precise forecast of the effect of changes in market interest rates on the economic value of our equity and will differ from actual results.

LIQUIDITY AND CAPITAL RESOURCES

Impact of Inflation and Changing Prices.  Our Consolidated Financial Statements and related notes have been prepared in accordance with GAAP. GAAP generally requires the measurement of financial position and operating results in terms of historical dollars without consideration of changes in the relative purchasing power of money over time due to inflation. The impact of inflation is reflected in the increased cost of our operations. Unlike industrial companies, our assets and liabilities are primarily monetary in nature. As a result, changes in market interest rates have a greater impact on performance than the effects of inflation.

Liquidity.  Liquidity is defined as the Company’s ability to generate adequate cash to meet its needs for day-to-day operations and material long- and short-term commitments. Liquidity risk is the risk of potential loss if the Company were unable to meet its funding requirements at a reasonable cost. The Company manages its liquidity based on demand and specific events and uncertainties to meet current and future financial obligations of a short-term nature. The Company’s objective in managing liquidity is to respond to the needs of depositors and borrowers, as well as increase to earnings enhancement opportunities in a changing marketplace.

The Company’s liquidity position is managed on a daily basis as part of the daily settlement function and continuously as part of the formal asset liability management process. The Bank’s liquidity is maintained by managing its core deposits as the primary source, selling investment securities, selling loans in the secondary market, borrowing from the FHLB of Boston, and purchasing wholesale certificates of deposit as its secondary sources.

The sources of funds for dividends paid by the Company are dividends received from the Bank and liquid funds held by the Company. The Company and the Bank are regulated enterprises and their abilities to pay dividends are subject to regulatory review and restriction. Certain regulatory and statutory restrictions exist regarding dividends, loans, and advances from the Bank to the Company. Generally, the Bank has the ability to pay dividends to the Company subject to minimum regulatory capital requirements.

Quarterly, ALCO reviews the Company’s liquidity needs and reports any findings (if required) to the Board of Directors.

Capital Adequacy.  Total shareholders’ equity was $286.6 million at December 31, 2019, as compared to $167.0 million at December 31, 2018. The Company’s equity increased primarily due to net income of $25.3 million, $59.4 million of equity increase as a result of the Optima merger, $38.2 million (net of underwriting fees) from the Company’s fourth quarter 2019 common stock offering, and stock-based compensation during 2019. The ratio of total equity to total assets was 10.04% and 7.95% at December 31, 2019 and December 31, 2018, respectively.  Book value per share was $53.06 and $40.67, at December 31, 2019 and 2018, respectively.  

The Company and the Bank are subject to various regulatory capital requirements.  As of December 31, 2019, the Company and the Bank exceeded the regulatory minimum levels to be considered “well capitalized.” See Note 18 – Shareholders’ Equity to the Consolidated Financial Statements for additional discussion of regulatory capital requirements.

Contractual Obligations, Commitments, and Contingencies

The Company has entered into contractual obligations and commitments. The following tables summarize the Company’s contractual cash obligations and other commitments by maturity at December 31, 2019:

	Payments Due — By Period as of December 31, 2019
CONTRACTUAL OBLIGATIONS	Total		Less Than One Year		One to Three Years		Three to Five Years		After Five Years
	(dollars in thousands)
FHLBB advances	$	135,691	$	135,691	$	—	$	—	$	—
Retirement benefit obligations		27,728		2,375		5,022		5,465		14,866
Lease obligations		40,301		5,478		10,894		9,376		14,553
Certificates of deposit		182,282		139,565		37,894		4,823		—
Total contractual cash    obligations	$	386,002	$	283,109	$	53,810	$	19,664	$	29,419

48

	Amounts of Commitments Expiring — By Period as of December 31, 2019
OTHER COMMITMENTS	Total		Less Than One Year		One to Three Years		Three to Five Years		After Five Years
	(dollars in thousands)
Unused portion of existing lines of    credit	$	428,020	$	169,719	$	105,881	$	40,450	$	111,970
Standby letters of credit		9,150		8,527		623		—		—
Originations of new loans		24,413		24,413		—		—		—
Total commitments	$	461,583	$	202,659	$	106,504	$	40,450	$	111,970

On October 23, 2017, the Company announced its decision to freeze the accrual of benefits within the Pension Plan, effective December 31, 2017.  Further discussion regarding commitments and contingencies can be found in Note 17 – Commitments and Contingencies to the Consolidated Financial Statements.

Financial Instruments with Off-Balance-Sheet Risk

The Company is party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments primarily include commitments to originate and sell loans, standby letters of credit, unused lines of credit, and unadvanced portions of construction loans. The instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheet. The contract or notional amounts of those instruments reflect the extent of involvement the Company has in these particular classes of financial instruments.

The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for loan commitments, standby letters of credit and unadvanced portions of construction loans is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.

Off-Balance-Sheet Arrangements.  Our significant off-balance-sheet arrangements consist of the following:

• commitments to originate and sell loans,

• standby and commercial letters of credit,

• unused lines of credit,

• unadvanced portions of construction loans,

• unadvanced portions of other loans,

• loan related derivatives, and

• risk participation agreements.

Off-balance-sheet arrangements are more fully discussed in Note 16 – Financial Instruments with Off-Balance-Sheet Risk to the Consolidated Financial Statements. 

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

The information required by this item is included in Item 7 of this report under “Market Risk and Asset Liability Management.”

49

Item 8. Financial Statements and Supplementary Data.

CAMBRIDGE BANCORP AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	December 31, 2019			December 31, 2018
	(dollars in thousands, except par value)
Assets
Cash and cash equivalents	$	61,335		$	18,473
Investment securities
Available for sale, at fair value (amortized cost $141,109 and $172,290, respectively)		140,330			168,163
Held to maturity, at amortized cost (fair value $264,114 and $281,310, respectively)		258,172			282,869
Total investment securities		398,502			451,032
Loans held for sale, at lower of cost or fair value		1,546			—
Loans
Residential mortgage		917,566			604,331
Commercial mortgage		1,060,574			757,957
Home equity		80,675			69,336
Commercial & Industrial		133,236			93,712
Consumer		34,677			34,436
Total loans		2,226,728			1,559,772
Less: allowance for loan losses		(18,180	)		(16,768	)
Net loans		2,208,548			1,543,004
Federal Home Loan Bank of Boston Stock, at cost		7,854			6,844
Bank owned life insurance		37,319			30,933
Banking premises and equipment, net		14,756			8,578
Right-of-use asset operating leases		33,587			—
Deferred income taxes, net		8,229			8,717
Accrued interest receivable		7,052			5,762
Goodwill		31,206			412
Merger related intangibles, net		3,338			—
Other assets		42,291			27,629
Total assets	$	2,855,563		$	2,101,384
Liabilities
Deposits
Demand	$	630,593		$	494,492
Interest bearing checking		450,098			431,702
Money market		181,406			135,585
Savings		914,499			628,212
Certificates of deposit		182,282			121,419
Total deposits		2,358,878			1,811,410
Short-term borrowings		135,691			90,000
Long-term borrowings		—			3,409
Operating lease liabilities		35,054			—
Other liabilities		39,379			29,539
Total liabilities		2,569,002			1,934,358
Shareholders’ Equity
Common stock, par value $1.00; Authorized: 10,000,000 shares; Outstanding: 5,400,868    shares and 4,107,051 shares, respectively		5,401			4,107
Additional paid-in capital		136,766			38,271
Retained earnings		146,875			131,135
Accumulated other comprehensive loss		(2,481	)		(6,487	)
Total shareholders’ equity		286,561			167,026
Total liabilities and shareholders’ equity	$	2,855,563		$	2,101,384

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

50

CAMBRIDGE BANCORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

	For the Year Ended December 31,
	2019			2018		2017
	(dollars in thousands, except share data)
Interest and dividend income
Interest on taxable loans	$	84,382		$	57,941	$	51,238
Interest on tax-exempt loans		584			371		496
Interest on taxable investment securities		7,963			7,457		6,321
Interest on tax-exempt investment securities		2,289			2,404		2,600
Dividends on FHLB of Boston stock		390			287		245
Interest on overnight investments		731			595		291
Total interest and dividend income		96,339			69,055		61,191
Interest expense
Interest on deposits		15,641			5,023		3,125
Interest on borrowed funds		2,002			444		462
Total interest expense		17,643			5,467		3,587
Net interest and dividend income		78,696			63,588		57,604
Provision for Loan Losses		3,004			1,502		362
Net interest and dividend income after provision for    loan losses		75,692			62,086		57,242
Noninterest income
Wealth management revenue		26,499			25,191		23,029
Deposit account fees		3,185			3,071		3,142
ATM/Debit card income		1,413			1,180		1,182
Bank owned life insurance income		612			526		584
Gain (loss) on disposition of investment securities		(79	)		2		(3	)
Gain on loans sold		1,170			99		355
Loan related derivative income		1,674			1,651		780
Other income		1,927			1,269		1,155
Total noninterest income		36,401			32,989		30,224
Noninterest expense
Salaries and employee benefits		47,494			41,212		36,455
Occupancy and equipment		10,855			9,072		9,114
Data processing		6,232			5,177		4,956
Professional services		3,623			3,258		3,374
Marketing		1,760			2,229		1,620
FDIC insurance		291			574		629
Nonoperating expenses		4,721			201		—
Other expenses		3,199			2,264		3,144
Total noninterest expense		78,175			63,987		59,292
Income before income taxes		33,918			31,088		28,174
Income tax expense		8,661			7,207		13,358
Net income	$	25,257		$	23,881	$	14,816
Share data:
Weighted average number of shares outstanding, basic		4,629,255			4,061,529		4,030,530
Weighted average number of shares outstanding, diluted		4,661,720			4,098,633		4,065,754
Basic earnings per share	$	5.41		$	5.82	$	3.64
Diluted earnings per share	$	5.37		$	5.77	$	3.61

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

51

CAMBRIDGE BANCORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

	For the Year Ended December 31,
	2019		2018			2017
	(dollars in thousands)
Net income	$	25,257	$	23,881		$	14,816
Other comprehensive income/(loss), net of tax:
Unrealized gains/(losses) on available for sale securities
Unrealized holding gains/(losses) arising during period		2,500		(242	)		128
Less: reclassification adjustment for losses/(gains)   included in net income		62		(2	)		1
Total unrealized gains/(losses) on securities		2,562		(244	)		129
Derivatives
Change in interest rate contracts		821		751			—
Defined benefit retirement plans
Change in retirement liabilities		623		89			3,871
Other comprehensive income/(loss)		4,006		596			4,000
Comprehensive income	$	29,263	$	24,477		$	18,816

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

52

CAMBRIDGE BANCORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

	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		—		—		14,816			—			14,816
Other comprehensive income (loss)		—		—		—			4,000			4,000
Share based compensation		45		2,410		(403	)		—			2,052
Dividends declared ($1.86 per share)		—		—		(7,582	)		—			(7,582	)
Balance at December 31, 2017	$	4,082	$	35,663	$	114,093		$	(5,881	)	$	147,957
Balance at December 31, 2017	$	4,082	$	35,663	$	114,093		$	(5,881	)	$	147,957
Cumulative effect of accounting changes		—		—		1,202			(1,202	)		—
Net income		—		—		23,881			—			23,881
Other comprehensive income (loss)		—		—		—			596			596
Share based compensation		25		2,608		—			—			2,633
Dividends declared ($1.96 per share)		—		—		(8,041	)		—			(8,041	)
Balance at December 31, 2018	$	4,107	$	38,271	$	131,135		$	(6,487	)	$	167,026
Balance at December 31, 2018	$	4,107	$	38,271	$	131,135		$	(6,487	)	$	167,026
Net income		—		—		25,257			—			25,257
Other comprehensive income (loss)		—		—		—			4,006			4,006
Share based compensation		20		2,150		—			—			2,170
Dividends declared ($2.04 per share)		—		—		(9,517	)		—			(9,517	)
Common stock issued for merger		723		58,694		—			—			59,417
Common stock offering		551		37,651		—			—			38,202
Balance at December 31, 2019	$	5,401	$	136,766	$	146,875		$	(2,481	)	$	286,561

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

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CAMBRIDGE BANCORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Year Ended December 31,
	2019			2018			2017
	(dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	25,257		$	23,881		$	14,816
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		3,004			1,502			362
Amortization of deferred charges and fees, net		166			777			972
Net (Accretion)/Amortization of merger-related intangibles		(1,176	)		—			—
Depreciation and amortization		2,004			1,888			1,948
Bank owned life insurance income		(612	)		(526	)		(584	)
Loss/(gain) on disposition of investment securities		79			(2	)		3
Share based compensation		2,170			2,633			2,052
Change in accrued interest receivable		(162	)		(634	)		(501	)
Deferred income tax expense/(benefit)		110			(721	)		2,687
Change in other assets, net		(11,667	)		(12,231	)		(758	)
Change in other liabilities, net		11,166			7,455			2,264
Change in loans held for sale		(1,546	)		—			6,506
Net cash provided by operating activities		28,793			24,022			29,767
CASH FLOWS FROM INVESTING ACTIVITIES
Origination of loans		(790,097	)		(596,259	)		(354,657	)
Proceeds from principal payments of loans		524,907			387,537			323,632
Proceeds from principal loan pool sales		74,412			—			—
Purchase of securities available for sale		(23,450	)		—			(5,091	)
Proceeds from calls/maturities of securities available for sale		49,832			35,415			47,955
Proceeds from sales of securities available for sale and held to maturity		26,552			702			77,369
Proceeds from calls/maturities of securities held to maturity		72,655			33,064			34,488
Purchase of securities held to maturity		(48,906	)		(84,261	)		(184,505	)
Proceeds from settlement of bank owned life insurance policies		—			676			—
Redemption/(purchase) of FHLB of Boston stock		456			(2,602	)		(144	)
Purchase of banking premises and equipment		(1,896	)		(1,155	)		(807	)
Net cash acquired in business combinations		2,063			—			—
Net cash (used in) provided by investing activities		(113,472	)		(226,883	)		(61,760	)
CASH FLOWS FROM FINANCING ACTIVITIES
Change in demand, interest bearing, money market and savings accounts		171,961			74,421			100,694
Change in certificates of deposit		(101,928	)		(38,467	)		(11,411	)
Change in borrowings		28,823			89,830			(167	)
Proceeds from common stock offering (net of underwriting fees)		38,202			—			—
Cash dividends paid on common stock		(9,517	)		(8,041	)		(7,582	)
Net cash provided by (used in) financing activities		127,541			117,743			81,534
Net (decrease)/increase in cash and cash equivalents		42,862			(85,118	)		49,541
Cash and cash equivalents at beginning of period		18,473			103,591			54,050
Cash and cash equivalents at end of period	$	61,335		$	18,473		$	103,591
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest	$	17,918		$	5,457		$	3,579
Income taxes		7,770			8,330			10,100
Significant non-cash transactions
Right-of-use assets for lessee operating leases		33,587			—			—
Right-of-use liabilities for lessee operating leases		35,054			—			—
Transfer of other real estate owned		163			—			—
Common Stock issued to Optima shareholders		59,417			—			—
Fair value of assets acquired, net of cash acquired		548,801			—			—
Fair value of liabilities assumed		491,447			—			—

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

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CAMBRIDGE BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2019

1. THE BUSINESS

The accompanying 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 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, 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.

As a private bank, the Company focuses on four core services that center around client needs. The core services include Wealth Management, Commercial Banking, Residential Lending, and Personal Banking. The Bank offers a full range of commercial and consumer banking services through its network of 16 private banking offices in Massachusetts and New Hampshire. The Bank is engaged principally in the business of attracting deposits from the public and investing those deposits. The Bank invests those funds in various types of loans, including residential and commercial real estate, and a variety of commercial and consumer loans. The Bank also invests its deposits and borrowed funds in investment securities and has two wholly-owned Massachusetts security corporations, CTC Security Corporation and CTC Security Corporation III, for this purpose. Deposits at the Bank are insured by the Federal Deposit Insurance Corporation (“FDIC”) for the maximum amount permitted by FDIC Regulations.

Trust and investment management services are offered through the Bank’s private banking offices in Massachusetts and New Hampshire, and its wealth management offices located in Boston, Concord, Manchester, and Portsmouth New Hampshire. The Bank also has a non-depository trust company, Cambridge Trust Company of New Hampshire, Inc., which allows non-New Hampshire residents the opportunity to take advantage of the state’s favorable trust laws. The assets held for wealth management clients are not assets of the Bank and, accordingly, are not reflected in the accompanying consolidated balance sheets.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”).

Use of Estimates

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 and the valuation of deferred tax assets are particularly subject to change.

Reclassifications

Certain amounts in the prior year’s financial statements may have been reclassified to conform with the current year’s presentation.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash on hand, amounts due from banks, and overnight investments.

Investment Securities

Investment securities are classified as either ‘held to maturity’ or ‘available for sale’ in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) 320, “Investments – Debt and Equity Securities.” Debt securities that management has the positive intent and ability to hold to maturity are classified as held to maturity. Held to maturity securities are carried at cost and adjusted for the amortization of premiums and the accretion of discounts using the effective-yield or straight line method. U.S. Government Sponsored Enterprises (“GSE”) and U.S. Government Agency obligations represent debt securities issued by the Federal Farm Credit Bank, the Federal Home Loan Banks (“FHLB”), the Government National Mortgage

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Association (“GNMA”), the Federal National Mortgage Association (“FNMA”), or the Federal Home Loan Mortgage Corporation (“FHLMC”). Mortgage-backed securities represent Pass-Through Certificates and Collateralized Mortgage Obligations either issued by, or collateralized by securities issued by GNMA, FNMA, or FHLMC. Mortgage-backed securities are adjusted for amortization of premiums and accretion of discounts, using the effective-yield method over the estimated average lives of the investments.

Debt and equity securities not classified as held to maturity are classified as available for sale and carried at fair value with unrealized after-tax gains and losses reported net as a separate component of shareholders’ equity. The Company classifies its securities based on its intention at the time of purchase.

Declines in the fair value of investment securities below their amortized cost that are deemed to be other-than-temporary are reflected in earnings as realized losses to the extent the impairment is related to credit losses. The amount of the impairment related to other factors is recognized in other comprehensive income. In estimating other-than-temporary impairment losses, management considers: (1) the length of time and the extent to which the fair value has been less than cost; (2) the financial condition and near-term prospects of the issuer; and (3) the Company’s intent to sell the security or whether it is more likely than not that the Company will be required to sell the debt security before its anticipated recovery.

Loans and the Allowance for Loan Losses

Loans are reported at the amount of their outstanding principal, including deferred loan origination fees and costs, reduced by unearned discounts, and the allowance for loan losses. Loan origination fees, net of related direct incremental loan origination costs, are deferred and amortized as an adjustment to yield over the life of the related loans. Unearned discount is recognized as an adjustment to the loan yield, using the interest method over the contractual life of the related loan. When a loan is paid off, the unamortized portion of net fees or unearned discount is recognized as interest income.

Loans are considered delinquent when a payment of principal and/or interest becomes past due 30 days following its scheduled payment due date.

Loans on which the accrual of interest has been discontinued are designated as non-accrual loans. Accrual of interest income is discontinued when concern exists as to the collectability of principal or interest or typically when a loan becomes over 90 days delinquent. Additionally, when a loan is placed on non-accrual status, all interest previously accrued but not collected is reversed against current period income. Loans are removed from non-accrual when they become less than 90 days past due and when concern no longer exists as to the collectability of principal or interest. Interest collected on non-accruing loans is either applied against principal or reported as income according to management’s judgment as to the collectability of principal.

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Under certain circumstances, the Company may restructure the terms of a loan as a concession to a borrower. These restructured loans are generally also considered impaired loans. Impairment is measured on a loan-by-loan basis by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment.

The provision for loan losses and the level of the allowance for loan losses reflects management’s estimate of probable loan losses inherent in the loan portfolio at the balance sheet date. Management uses a systematic process and methodology to establish the allowance for loan losses each quarter. To determine the total allowance for loan losses, an estimate is made by management of the allowance needed for each of the following segments of the loan portfolio: (a) residential mortgage loans, (b) commercial mortgage loans, (c) home equity loans, (d) commercial & industrial loans, and (e) consumer loans. Portfolio segments are further disaggregated into classes of loans. The establishment of the allowance for each portfolio segment is based on a process that evaluates the risk characteristics relevant to each portfolio segment and takes into consideration multiple internal and external factors. Internal factors include, but are not limited to, (a) historic levels and trends in charge-offs, delinquencies, risk ratings, and foreclosures, (b) level and changes in industry, geographic, and credit concentrations, (c) underwriting policies and adherence to such policies, (d) the growth and vintage of the portfolios, and (e) the experience of, and any changes in, lending and credit personnel. External factors include, but are not limited to, (a) conditions and trends in the local and national economy and (b) levels and trends in national delinquent and non-performing loans.

The Bank evaluates certain loans individually for specific impairment. A loan is considered impaired when, based on current information and events, it is probable that the Bank will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Loans are selected for evaluation based upon internal risk rating, delinquency status, or non-accrual status. A specific allowance amount is allocated to an individual loan when such loan has been deemed impaired and when the amount of the probable loss is able to be estimated. Estimates of loss may be determined by the present value of anticipated future cash flows, the loan’s observable fair market value, or the fair value of the collateral, if the loan is collateral dependent.

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Risk characteristics relevant to each portfolio segment are as follows:

Residential mortgage and home equity loans – The Bank generally does not originate loans in these segments with a loan-to-value ratio greater than 80%, unless covered by private mortgage insurance, and in all cases not greater than a loan-to-value ratio of 97%. The Bank does not originate subprime loans. Loans in these segments are secured by one-to-four family residential real estate, and repayment is primarily dependent on the credit quality of the individual borrower.

Commercial mortgage loans – This includes multi-family properties and construction. The Bank generally does not originate loans in this segment with a loan-to-value ratio greater than 75%. Loans in this segment are secured by owner-occupied and nonowner-occupied commercial real estate, and repayment is primarily dependent on the cash flows of the property (if nonowner-occupied) or of the business (if owner-occupied).

Commercial loans – Loans in this segment are made to businesses and are generally secured by equipment, accounts receivable, or inventory, as well as the personal guarantees of the principal owners of the business, and repayment is primarily dependent on the cash flows generated by the business.

Consumer loans – Loans in this segment are made to individuals and can be secured or unsecured. Repayment is primarily dependent on the credit quality of the individual borrower.

The majority of the Bank’s loans are concentrated in Eastern Massachusetts and New Hampshire and therefore the overall health of the local economy, including unemployment rates, vacancy rates, and consumer spending levels, can have a material effect on the credit quality of all of these portfolio segments.

The process to determine the allowance for loan losses requires management to exercise considerable judgment regarding the risk characteristics of the loan portfolio segments and the effect of relevant internal and external factors.

The provision for loan losses charged to income is based on management’s judgment of the amount necessary to maintain the allowance at a level to provide for probable inherent loan losses as of the evaluation date. When management believes that the collectability of a loan’s principal balance, or portions thereof, is unlikely, the principal amount is charged against the allowance for loan losses. Recoveries on loans that have been previously charged off are credited to the allowance for loan losses as received. The allowance is an estimate, and ultimate losses may vary from current estimates. As adjustments become necessary, they are reported in the results of operations through the provision for loan losses in the period in which they become known.

Residential mortgage loans originated and intended for sale in the secondary market are classified as held for sale at the time of their origination and are carried at the lower of cost or fair value on an individual loan basis. Changes in fair value relating to loans held for sale below the loans cost basis are charged against gain on loans held for sale. Gains and losses on the actual sale of the residential loans are recorded in earnings as net gains (losses) on loans held for sale on the consolidated statements of income.

Bank Owned Life Insurance

Bank owned life insurance (“BOLI”) represents life insurance on the lives of certain active and former employees who have provided positive consent allowing the Bank to be the beneficiary of such policies. Since the Bank is the primary beneficiary of the insurance policies, increases in the cash value of the policies, as well as insurance proceeds received, are recorded in other noninterest income, and are not subject to income taxes. Applicable regulations generally limit our investment in bank-owned life insurance to 25% of our Tier 1 capital plus our allowance for loan losses. The Bank reviews the financial strength of the insurance carriers prior to the purchase of BOLI and at least annually thereafter.

Banking Premises and Equipment

Land is stated at cost. Buildings, leasehold improvements, and equipment are stated at cost, less accumulated depreciation and amortization, which is computed using the straight-line method over the estimated useful lives of the assets or the terms of the leases, if shorter. The cost of ordinary maintenance and repairs is charged to expense when incurred.

Leases

The Company leases office space, certain branch locations under noncancelable operating leases, and an ATM location, several of which have renewal options to extend lease terms. Upon commencement of a new lease, the Company will recognize a right of use ("ROU") asset and corresponding lease liability. The Company makes the decision on whether to renew an option to extend a lease byconsidering various factors. The Company will recognize an adjustment to its ROU asset and lease liability when lease agreements are amended and executed. The discount rate used in determining the present value of lease payments is based on the Company’s

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incremental borrowing rate for borrowings with terms similar to each lease at commencement date. The Company has lease agreements with lease and non-lease components, which are generally accounted for separately. For real estate leases, non-lease components and other non-components, such as common area maintenance charges, real estate taxes, and insurance are not included in the measurement of the lease liability since they are generally able to be segregated.

Marketing Expense

Advertising costs are expensed as incurred.

Other Real Estate Owned

Other real estate owned (“OREO”) consists of properties formerly pledged as collateral to loans, which have been acquired by the Bank through foreclosure proceedings or acceptance of a deed in lieu of foreclosure. Upon transfer of a loan to foreclosure status, an appraisal is obtained and any excess of the loan balance over the fair value, less estimated costs to sell, is charged against the allowance for loan losses. Expenses and subsequent adjustments to the fair value are treated as other operating expense.

Goodwill, Core Deposit Intangibles, and Other Intangible Assets

Goodwill represents the excess of the purchase price over the fair value of net assets acquired in a business combination. Core deposit intangible represents a premium paid to acquire the core deposits of an institution and is recorded as an intangible asset. Goodwill and intangible assets that are not amortized are tested for impairment, based on their fair values, at least annually. Identifiable intangible assets that are subject to amortization are also reviewed for impairment based on their fair value. Any impairment is recognized as a charge to earnings and the adjusted carrying amount of the intangible asset becomes its new accounting basis. The remaining useful life of an intangible asset that is being amortized is also evaluated each reporting period to determine whether events and circumstances warrant a revision to the remaining period of amortization.

Mortgage servicing assets are recognized as separate assets when rights are acquired through purchase or through sale of financial assets with servicing rights retained. The fair value of the servicing rights is determined by estimating the present value of future net cash flows, taking into consideration market loan prepayment speeds, discount rates, servicing costs, and other economic factors. For purposes of measuring impairment, the underlying loans are stratified into relatively homogeneous pools based on predominant risk characteristics which include product type (i.e., fixed or adjustable) and interest rate bands. If the aggregate carrying value of the capitalized mortgage servicing rights for a stratum exceeds its fair value, MSR impairment is recognized in earnings through a valuation allowance for the difference. As the loans are repaid and net servicing revenue is earned, the MSR asset is amortized as an offset to loan servicing income. Servicing revenues are expected to exceed this amortization expense. However, if actual prepayment experience or defaults exceed what was originally anticipated, net servicing revenues may be less than expected and mortgage servicing rights may be impaired.

Income Taxes

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, the Commonwealth of Massachusetts, the state of New Hampshire, and other states as required. For the year 2019, the Company will file taxes in Massachusetts, New Hampshire, and Maine.

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are reflected at currently enacted income tax rates applicable to the period in which the deferred tax assets or liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. Deferred tax assets are reviewed quarterly and reduced by a valuation allowance if, based upon the information available, it is more likely than not that some or all of the deferred tax assets will not be realized.

Interest and penalties related to unrecognized tax benefits, if incurred, are recognized as a component of income tax expense.

The Tax Cuts and Jobs Act of 2017 was enacted on December 22, 2017. Effective in 2018, the change in tax law reduced the Company’s statutory federal tax rate from 35% to 21%. The Company recorded a one-time non-cash write-down of net deferred tax assets of $3.9 million as these deferred tax assets were required to be re-measured using the new lower tax rate in 2017.

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Fee Revenue

Wealth management revenues include asset-based revenues (trust and investment advisory fees) that are primarily accrued as earned based upon a percentage of asset values under management, or administration.  Also included in wealth management revenues are transaction-based revenues (financial planning fees and other service fees), which are recognized as revenue to the extent that services have been completed.  Fee revenue from deposit service charges is generally recognized when earned.

Pension and Retirement Plans

The Company sponsored a defined benefit pension plan (the “Pension Plan”) and a postretirement health care plan covering substantially all employees hired before May 2, 2011. On October 23, 2017, the Company announced its decision to freeze the accrual of benefits for all participants in the Pension Plan, effective as of December 31, 2017. Benefits for the Pension Plan were based primarily on years of service and the employee’s average monthly pay during the five highest consecutive plan years of the employee’s final 10 years. Benefits for the postretirement health care plan are based on years of service. Expense for both of these plans is recognized over the employee’s service life utilizing the projected unit credit actuarial cost method. 

The Company also sponsors non-qualified retirement programs that provide supplemental retirement benefits to certain current and former executives. Prior to 2016, the Company provided individual non-qualified defined benefit supplemental executive retirement plans (“DB SERPs”) to certain executives.  The DB SERPs generally provide for an annual benefit payable in equal monthly installments following the executive’s retirement and continuing for at least the remainder of his or her lifetime, with such annual benefit generally based on the executive’s years of service and his or her highest three consecutive years of base salary and bonus. In 2016, the Company’s Board discontinued the use of DB SERPs for new entrants to the Company’s non-qualified retirement programs. Instead, new entrants are provided with individual non-qualified defined contribution supplemental executive retirement plans (“DC SERPs”). Under the DC SERPs, the Company may contribute an amount equal to 10% of the executive’s base salary and bonus to his or her account under the Company’s non-qualified deferred compensation plan, the Executive Deferred Compensation Plan.  Expense for the DB SERPs is recognized over the executive’s service life utilizing the projected unit credit actuarial cost method. Expense for the DC SERPs is recognized as incurred.

The Company maintains a Profit Sharing Plan (“PSP”) that provides for deferral of federal and state income taxes on employee contributions allowed under Section 401(k) of federal law. Beginning in 2018, the Company matched employee contributions up to 100% of the first 4% of each participant’s salary, eligible bonus, and eligible incentive, up from 3% in 2017. Each year, the Company may also make a discretionary contribution to the PSP of up to 4% salary, eligible bonus and eligible incentive. Employees are eligible to participate in the PSP on the first day of their initial date of service. In 2018, employees were eligible to participate in the discretionary contribution portion of the PSP after completing 12 months of employment, and 1,000 hours of service. The employee must be employed on the last day of the calendar year, or retire at the normal retirement age of 65 during the calendar year to receive the discretionary contribution. Effective in 2019, employees are eligible to participate in the discretionary contribution portion of the PSP on the first day of their initial date of service.

Share-Based Compensation

Share-based compensation plans provide for stock option awards, restricted stock awards, nonvested time based share units, and nonvested performance based share units.

Compensation expense for nonvested restricted stock awards is recognized over the service period based on the fair value at the date of grant. Awards of nonvested time based share units and nonvested performance share units are valued at the fair market value of the Company’s common stock as of the award date. Nonvested performance share unit compensation expense is based on the most recent performance assumption available and is adjusted as assumptions change. If the goals are not met, vesting does not occur and no compensation cost will be recognized and any recognized compensation costs will be reversed. Stock-based awards that do not require future service are expensed in the year of grant.

Derivative Instruments and Hedging Activities

Derivatives are recognized as either assets or liabilities on the balance sheet and are measured at fair value. The accounting for changes in the fair value of such derivatives depends on the intended use of the derivative and resulting designation. For derivatives not designated as hedges, changes in fair value of the derivative instruments are recognized in earnings in noninterest income.

For derivatives designated as fair value hedges, changes in the fair value of such derivatives are recognized in earnings together with the changes in the fair value of the related hedged item. The net amount, if any, represents hedge ineffectiveness and is reflected in earnings.

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For derivatives designated as cash flow hedges, the effective portion of changes in the fair value of the derivative is recorded in other comprehensive income (loss) and recognized in earnings when the hedged transaction affects earnings. The ineffective portion of changes in the fair value of cash flow hedges is recognized directly in earnings.

Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company measures the fair values of its financial instruments in accordance with accounting guidance that requires an entity to base fair value on exit price and maximize the use of observable inputs and minimize the use of unobservable inputs to determine the exit price.

ASC 820, “Fair Value Measurements and Disclosures” establishes a fair value hierarchy that gives the highest priority to quoted prices in active markets and the lowest priority to unobservable data and requires fair value measurements to be disclosed by level within the hierarchy. The three broad levels defined by the fair value hierarchy are as follows:

Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reported date. The type of financial instruments included in Level 1 are highly liquid cash instruments with quoted prices such as government or agency securities, listed equities and money market securities, as well as listed derivative instruments.

Level 2 – Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reported date. The nature of these financial instruments includes cash instruments for which quoted prices are available but traded less frequently, derivative instruments whose fair value has been derived using a model where inputs to the model are directly observable in the market, or can be derived principally from or corroborated by observable market data, and instruments that are fair valued using other financial instruments, the parameters of which can be directly observed. Instruments which are generally included in this category are corporate bonds and loans, mortgage whole loans, municipal bonds and over-the-counter derivatives.

Level 3 – Instruments that have little to no pricing observability as of the reported date. These financial instruments do not have two-way markets and are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment to estimation. Instruments that are included in this category generally include certain commercial mortgage loans, certain private equity investments, distressed debt, non-investment grade residual interests in securitizations, as well as certain highly structured over-the-counter derivative contracts.

Earnings per Common Share

Earnings per common share is computed using the two-class method prescribed under ASC Topic 260, “Earnings Per Share.” ASC Topic 260 provides that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method. We have determined that our outstanding non-vested stock awards are participating securities.

Under the two-class method, basic earnings per common share is computed by dividing net earnings allocated to common stock by the weighted-average number of common shares outstanding during the applicable period, excluding outstanding participating securities. Diluted earnings per common share is computed using the weighted-average number of shares determined for the basic earnings per common share computation plus the dilutive effect of common stock equivalents. A reconciliation of the weighted-average shares used in calculating basic earnings per common share and the weighted average common shares used in calculating diluted earnings per common share for the reported periods is provided in Note 22 - Earnings Per Share.

Subsequent Events

Management has reviewed events occurring through March 16, 2020, the date the consolidated financial statements were issued and determined that no subsequent events occurred requiring adjustment to or disclosure in these financial statements.

3. Recently Issued and Adopted Accounting Standards

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 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 - Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities. The Company adopted this update on January 1, 2019, and the update did not have a material impact on the consolidated financial statements.

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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. The Company adopted the amended guidance on January 1, 2020, and it did not have a material impact on the consolidated financial statements.

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. The adoption of this guidance is not expected to have a material impact 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”). OnAugust 28, 2017, theFASB issuedanewstandardthatallowscompaniestobetteraligntheir hedgeaccountingandriskmanagementactivities. The new standard will also reducethe costandcomplexityofapplyinghedgeaccounting. Thestandardrequires companiestochangetherecognitionandpresentation oftheeffectsofhedge accountingby:

• eliminating therequirementtoseparatelymeasureandreporthedge ineffectiveness;and

• requiringcompaniestopresentalloftheelementsofhedgeaccounting thataffectearningsinthesameincomestatementlineasthehedgeditem.

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. See note 23 – DERIVATIVE AND HEDGING ACTIVITIES.

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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. See note 17 – commitments and contingencies.

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.

Wealth Management and Trust Fees

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 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.

Other Banking Fee Income

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.      

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4. Mergers

Optima Bank & Trust Company

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, 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 consideration for the transaction structured as 95% common stock and 5% cash.  As a result of the merger with Optima, former Optima shareholders received an aggregate of 722,746 shares of the Company’s common stock and an aggregate of approximately $3.5 million in cash. The total consideration paid amounted to $64.3 million.

The Company accounted for the merger with Optima using the acquisition method pursuant to the Business Combinations Topic of the FASB’s Accounting Standards Codification (“ASC”). Accordingly, for the year ended December 31, 2019 and 2018, the Company recorded merger expenses of $3.9 million and $201,000 related to the merger with Optima.   Additionally, the acquisition method requires the acquirer to recognize the assets acquired and the liabilities assumed at their fair values as of the acquisition date. The following table summarizes the estimated fair value of the assets acquired and liabilities assumed as of the date of the acquisition:

	Net Assets Acquired
	at Fair Value
	(dollars in thousands)
Assets
Cash and cash equivalents	$	6,902
Investments		23,298
Loans		475,406
Premises and equipment		6,286
Goodwill		30,794
Core deposit and other intangibles		3,609
Other assets		9,408
Total assets acquired		555,703
Liabilities
Deposits		477,189
Borrowings		13,459
Other liabilities		799
Total liabilities assumed		491,447
Purchase price	$	64,256

Fair value adjustments to assets acquired and liabilities assumed are generally accreted/amortized using either an effective yield or straight-line basis over periods consistent with the average life, useful life, and/or contractual term of the related assets and liabilities.

Fair values of the major categories of assets acquired and liabilities assumed were determined as follows:

Cash and Cash Equivalents

The fair values of cash and cash equivalents approximate the respective carrying amounts because the instruments are payable on demand or have short-term maturities.

Investments

The fair values of securities were based on quoted market prices for identical securities received from an independent, nationally-recognized, third-party pricing service. Prices provided by the independent pricing service were based on recent trading activity and other observable information including, but not limited to, market interest rate curves, referenced credit spreads, and estimated prepayment rates where applicable.

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Loans

The loans acquired were recorded at fair value without a carryover of the allowance for loan losses. Fair value of the loans portfolio is determined using market participant assumptions in estimating the amount and timing of both principal and interest cash flows expected to be collected, as adjusted for an estimate of future credit losses and prepayments, and then applying a market-based discount rate to those cash flows. The overall discount on the loans acquired in this transaction was due to anticipated credit loss, as well as considerations for liquidity and market interest rates.

Premises and Equipment

The fair value of the premises, including buildings and improvements, was determined based upon appraisals by licensed real estate appraisers. The appraisals were based upon the best and highest use of the property with final values determined based upon an analysis of the cost, sales comparison, and income capitalization approaches for each property appraised.

Core Deposit Intangible

The fair value of the core deposit intangible is derived by comparing the interest rate and servicing costs that the financial institution pays on the core deposit liability versus the current market rate for alternative sources of financing, while factoring in estimates over the remaining life and attrition rate of the deposit accounts. The intangible asset represents the stable and relatively low cost source of funds that the deposits and accompanying relationships provide the Company, when compared to alternative funding sources.

Deposits

The fair value of acquired savings and transaction deposit accounts was assumed to approximate the carrying value as these accounts have no stated maturity and are payable on demand. The fair value of time deposits were determined based on the present value of the contractual cash flows over the remaining period to maturity using a market interest rate.

Borrowings

Federal Home Loan Bank (“FHLB”) borrowings were recorded at their carrying value which approximates fair value.

5. CASH AND CASH EQUIVALENT

At December 31, 2019 and December 31, 2018, cash and due from banks totaled $61.3 million and $18.5 million, respectively. Of this amount, $31.5 million and $12.7 million, respectively, were maintained to satisfy the reserve requirements of the Federal Reserve Bank of Boston (“FRB Boston”). Additionally, at December 31, 2019 and 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.

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6. INVESTMENT SECURITIES

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

	December 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	$	38,000	$	—	$	(152	)	$	37,848	$	75,004	$	—	$	(965	)	$	74,039
Mortgage-backed securities		103,109		231		(858	)		102,482		92,271		118		(3,121	)		89,268
Corporate debt securities		—		—		—			—		5,015		—		(159	)		4,856
Total available for sale securities	$	141,109	$	231	$	(1,010	)	$	140,330	$	172,290	$	118	$	(4,245	)	$	168,163
Held to maturity securities
U.S. GSE obligations	$	5,000	$	—		—		$	5,000	$	32,571	$	—	$	(238	)	$	32,333
Mortgage-backed securities		161,759		2,751		(111	)		164,399		168,118		134		(2,290	)		165,962
Corporate debt securities		6,980		116		—			7,096		6,972		—		(107	)		6,865
Municipal securities		84,433		3,252		(66	)		87,619		75,208		1,297		(355	)		76,150
Total held to maturity securities	$	258,172	$	6,119	$	(177	)	$	264,114	$	282,869	$	1,431	$	(2,990	)	$	281,310
Total	$	399,281	$	6,350	$	(1,187	)	$	404,444	$	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 amortized cost and fair value of debt investments, aggregated by contractual maturity, are shown below. Maturities of mortgage-backed securities do not take into consideration scheduled amortization or prepayments. Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Within One Year				After One, But Within Five Years				After Five, But Within Ten Years				After Ten Years				Total
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
At December 31, 2019	(dollars in thousands)
Available for sale securities
U.S. GSE obligations	$	5,000	$	4,997	$	20,000	$	19,939	$	5,000	$	4,934	$	8,000	$	7,978	$	38,000	$	37,848
Mortgage-backed    securities		—		—		37		38		36,393		35,997		66,679		66,447		103,109		102,482
Corporate debt securities		—		—		—		—		—		—		—		—		—		—
Total available for    sale securities	$	5,000	$	4,997	$	20,037	$	19,977	$	41,393	$	40,931	$	74,679	$	74,425	$	141,109	$	140,330
Held to maturity securities
U.S. GSE obligations	$	5,000	$	5,000	$	—	$	—	$	—	$	—	$	—	$	—	$	5,000	$	5,000
Mortgage-backed    securities		—		—		2		2		48,088		49,117		113,669		115,280		161,759		164,399
Corporate debt securities		—		—		6,980		7,096		—		—		—		—		6,980		7,096
Municipal securities		3,270		3,291		10,606		10,902		45,201		47,523		25,356		25,903		84,433		87,619
Total held to maturity    securities	$	8,270	$	8,291	$	17,588	$	18,000	$	93,289	$	96,640	$	139,025	$	141,183	$	258,172	$	264,114
Total	$	13,270	$	13,288	$	37,625	$	37,977	$	134,682	$	137,571	$	213,704	$	215,608	$	399,281	$	404,444

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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:

	December 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	$	12,912	$	(88	)	$	24,936	$	(64	)	$	37,848	$	(152	)
Mortgage-backed securities		33,381		(265	)		50,766		(593	)		84,147		(858	)
Corporate debt securities		—		—			—		—			—		—
Total available for sale securities	$	46,293	$	(353	)	$	75,702	$	(657	)	$	121,995	$	(1,010	)
Held to maturity securities
U.S. GSE obligations	$	—	$	—		$	5,000	$	—		$	5,000	$	—
Mortgage-backed securities		14,838		(27	)		12,928		(84	)		27,766		(111	)
Corporate debt securities		—		—			—		—			—		—
Municipal securities		4,934		(66	)		—		—			4,934		(66	)
Total held to maturity securities	$	19,772	$	(93	)	$	17,928	$	(84	)	$	37,700	$	(177	)
Total temporarily impaired securities	$	66,065	$	(446	)	$	93,630	$	(741	)	$	159,695	$	(1,187	)

	December 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	$	—	$	—		$	74,039	$	(965	)	$	74,039	$	(965	)
Mortgage-backed securities		—		—			86,815		(3,121	)		86,815		(3,121	)
Corporate debt securities		902		(98	)		3,954		(61	)		4,856		(159	)
Total available for sale securities	$	902	$	(98	)	$	164,808	$	(4,147	)	$	165,710	$	(4,245	)
Held to maturity securities
U.S. GSE obligations	$	4,995	$	(5	)	$	27,338	$	(233	)	$	32,333	$	(238	)
Mortgage-backed securities		30,719		(216	)		93,225		(2,074	)		123,944		(2,290	)
Corporate debt securities		6,865		(107	)		—		—			6,865		(107	)
Municipal securities		8,484		(82	)		8,313		(273	)		16,797		(355	)
Total held to maturity securities	$	51,063	$	(410	)	$	128,876	$	(2,580	)	$	179,939	$	(2,990	)
Total temporarily impaired securities	$	51,965	$	(508	)	$	293,684	$	(6,727	)	$	345,649	$	(7,235	)

Securities are evaluated by management for other-than-temporary impairment on at least a quarterly basis, and more frequently when economic or market conditions warrant such evaluation. Consideration is given to: (1) the length of time and the extent to which the fair value has been less than cost; (2) the financial condition and near-term prospects of the issuer; and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

As of December 31, 2019, 68 debt securities had gross unrealized losses, with an aggregate depreciation of 0.74% from the Company’s amortized cost basis. The largest unrealized loss percentage of any single security was 3.15%, or $63,000, of its amortized cost. The largest unrealized dollar loss of any single security was $96,000, or 1.93%, of its amortized cost.

As of December 31, 2018, 142 debt securities had gross unrealized losses, with an aggregate depreciation of 2.05% from the Company’s amortized cost basis. The largest unrealized loss percentage of any single security was 9.79%, or $98,000, of its amortized cost. The largest unrealized dollar loss of any single security was $189,000, or 5.34%, of its amortized cost.        

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The Company believes that the nature and duration of impairment on its debt security positions are primarily a function of interest rate movements and changes in investment spreads and does not consider full repayment of principal on the reported debt obligations to be at risk. Since nearly all of these securities are rated “investment grade” and a) the Company does not intend to sell these securities before recovery and b) that it is more likely than not that the Company will not be required to sell these securities before recovery, the Company does not consider these securities to be other-than-temporarily impaired as of December 31, 2019 and 2018.

The following table sets forth information regarding sales of investment securities and the resulting gains or losses from such sales:

	For the Year Ended December 31,
	2019			2018		2017
	(dollars in thousands)
Amortized cost of securities sold	$	26,631		$	700	$	77,372
Gain/(loss) realized on securities sold		(79	)		2		(3	)
Net proceeds from securities sold	$	26,552		$	702	$	77,369

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7. LOANS AND ALLOWANCE FOR LOAN LOSSES

The Company’s lending activities are conducted primarily in Eastern Massachusetts. The Company grants single- and multi-family residential loans, commercial & industrial (“C&I”), commercial real estate (“CRE”), construction loans, and a variety of consumer loans.  Most of the loans granted by the Company are secured by real estate collateral. Repayment of the Company’s residential loans are generally dependent on the health of the employment market in the borrowers’ geographic areas and that of the general economy with liquidation of the underlying real estate collateral being typically viewed as the primary source of repayment in the event of borrower default. The repayment of C&I loans depends primarily on the cash flow and credit worthiness of the borrower and secondarily on the underlying collateral provided by the borrower.  As borrower cash flow may be difficult to predict, liquidation of the underlying collateral securing these loans is typically viewed as the primary source of repayment in the event of borrower default.  However, collateral typically consists of equipment, inventory, accounts receivable, or other business assets that may fluctuate in value, so the liquidation of collateral in the event of default is often an insufficient source of repayment. The Company’s CRE loans are primarily made based on the cash flow from the collateral property and secondarily on the underlying collateral provided by the borrower, with liquidation of the underlying real estate collateral typically being viewed as the primary source of repayment in the event of borrower default. The Company’s construction loans are primarily made based on the borrower’s expected ability to execute and the future completed value of the collateral property, with sale of the underlying real estate collateral typically being viewed as the primary source of repayment.

Loans outstanding are detailed by category as follows:

	December 31, 2019			December 31, 2018
	(dollars in thousands)
Residential mortgage
Mortgages - fixed rate	$	430,877		$	293,267
Mortgages - adjustable rate		467,139			309,656
Construction		17,374			—
Deferred costs net of unearned fees		2,176			1,408
Total residential mortgages		917,566			604,331
Commercial mortgage
Mortgages - nonowner occupied		870,047			654,394
Mortgages - owner occupied		114,095			59,335
Construction		76,288			44,146
Deferred costs net of unearned fees		144			82
Total commercial mortgages		1,060,574			757,957
Home equity
Home equity - lines of credit		73,880			63,421
Home equity - term loans		6,555			5,665
Deferred costs net of unearned fees		240			250
Total home equity		80,675			69,336
Commercial & industrial
Commercial & industrial		133,337			93,728
Deferred costs (fees) net of unearned fees		(101	)		(16	)
Total commercial & industrial		133,236			93,712
Consumer
Secured		33,453			33,252
Unsecured		1,199			1,171
Deferred costs net of unearned fees		25			13
Total consumer		34,677			34,436
Total loans	$	2,226,728		$	1,559,772

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Directors and officers of the Company and their associates are customers of, and have other transactions with, the Company in the normal course of business. All loans and commitments included in such transactions were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons and do not involve more than normal risk of collection or present other unfavorable features. At December 31, 2019 and December 31, 2018, total loans outstanding to such directors and officers were $3,000 and $488,000, respectively. During the year ended December 31, 2019, $85,000 of additions and $570,000 of repayments and other adjustments were made to these loans. There were $139,000 of additions and $167,000 of repayments during the year ended December 31, 2018. At December 31, 2019 and 2018, all of the loans to directors and officers were performing according to their original terms.

The following tables set forth information regarding non-performing loans disaggregated by loan category:

	December 31, 2019
.	Residential Mortgages		Commercial Mortgages		Home Equity		Commercial & Industrial		Consumer		Total
	(dollars in thousands)
Non-performing loans:
Non-accrual loans	$	1,298	$	2,800	$	12	$	50	$	—	$	4,160
Loans past due >90 days, but still accruing		527		486		—		251		—		1,264
Troubled debt restructurings		99		—		—		128		—		227
Total	$	1,924	$	3,286	$	12	$	429	$	—	$	5,651

	December 31, 2018
	Residential Mortgages		Commercial Mortgages		Home Equity		Commercial & Industrial		Consumer		Total
	(dollars in thousands)
Non-performing loans:
Non-accrual loans	$	512	$	—	$	13	$	—	$	—	$	525
Loans past due >90 days, but still accruing		—		—		—		—		—		—
Troubled debt restructurings		111		—		—		6		—		117
Total	$	623	$	—	$	13	$	6	$	—	$	642

There were nocommitments to lend additional funds to borrowers whose loans were on nonaccrual status at December 31, 2019 and  December 31, 2018.

Troubled Debt Restructurings (“TDRs”)

Loans are considered restructured in a troubled debt restructuring when the Company has granted concessions to a borrower due to the borrower’s financial condition that it otherwise would not have considered. These concessions may include modifications of the terms of the debt such as deferral of payments, extension of maturity, reduction of principal balance, reduction of the stated interest rate other than normal market rate adjustments, or a combination of these concessions. Debt may be bifurcated with separate terms for each tranche of the restructured debt. Restructuring a loan in lieu of aggressively enforcing the collection of the loan may benefit the Company by increasing the ultimate probability of collection.

Restructured loans are classified as accruing or non-accruing based on management’s assessment of the collectability of the loan. Loans which are already on nonaccrual status at the time of the restructuring generally remain on nonaccrual status for approximately six months or longer before management considers such loans for return to accruing status. Accruing restructured loans are placed into nonaccrual status if and when the borrower fails to comply with the restructured terms and management deems it unlikely that the borrower will return to a status of compliance in the near term.

Troubled debt restructurings are classified as impaired loans. The Company identifies loss allocations for impaired loans on an individual loan basis.

During the year ended December 31, 2019, the Company modified one loan with a carrying value of $128,000. At December 31, 2019, three loans were determined to be TDRs with a total carrying value of $227,000. One TDR loan was paid off during the first quarter of 2019.   There were no TDR defaults during the year ended December 31, 2019 .  

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As of  December 31, 2018 three loans were determined to be TDRs with a total carrying value of $117,000. There were no TDR defaults during the year ended December 31, 2018.

The allowance for loan losses includes a specific reserve for these TDRs of approximately $87,000 as of December 31, 2019. There  were no specific reserves for the troubled debt restructurings at December 31, 2018 .

As of December 31, 2019 and 2018, there were no significant commitments to lend additional funds to borrowers whose loans were restructured.

Loans by Credit Quality Indicator.  The following tables contain period-end balances of loans receivable disaggregated by credit quality indicator:

	December 31, 2019
	Residential Mortgages		Home Equity		Consumer
	(dollars in thousands)
Credit risk profile based on payment activity:
Performing	$	915,642	$	80,663	$	34,677
Non-performing		1,924		12		—
Total	$	917,566	$	80,675	$	34,677
			Commercial Mortgages		Commercial & Industrial
Credit risk profile by internally assigned grade:
1-6 (Pass)			$	1,050,037	$	123,900
7 (Special Mention)				7,360		4,289
8 (Substandard)				3,177		5,047
9 (Doubtful)				—		—
10 (Loss)				—		—
Total			$	1,060,574	$	133,236

	December 31, 2018
	Residential Mortgages		Home Equity		Consumer
	(dollars in thousands)
Credit risk profile based on payment activity:
Performing	$	603,708	$	69,323	$	34,436
Non-performing		623		13		—
Total	$	604,331	$	69,336	$	34,436
			Commercial Mortgages		Commercial & Industrial
Credit risk profile by internally assigned grade:
1-6 (Pass)			$	753,338	$	85,821
7 (Special Mention)				4,619		4,186
8 (Substandard)				—		3,705
9 (Doubtful)				—		—
10 (Loss)				—		—
Total			$	757,957	$	93,712

With respect to residential real estate mortgages, home equity, and consumer loans, the Bank utilizes the following categories as indicators of credit quality:

• Performing – These loans are accruing and are considered having low to moderate risk.

• Non-performing – These loans are on non-accrual, or are past due more than 90 days but are still accruing, or are restructured. These loans may contain greater than average risk.

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With respect to commercial real estate mortgages and commercial loans, the Bank utilizes a 10 grade internal loan rating system as an indicator of credit quality. The grades are as follows:

• Loans rated 1-6 (Pass) – These loans are considered “pass” rated with low to moderate risk.

• Loans rated 7 (Special Mention) – These loans have potential weaknesses warranting close attention, which, if left uncorrected, may result in deterioration of the credit at some future date.

• Loans rated 8 (Substandard) – These loans have well-defined weaknesses that jeopardize the orderly liquidation of the debt under the original loan terms. Loss potential exists but is not identifiable in any one customer.

• Loans rated 9 (Doubtful) – These loans have pronounced weaknesses that make full collection highly questionable and improbable.

• Loans rated 10 (Loss) – These loans are considered uncollectible and continuance as a bankable asset is not warranted.

Delinquencies

The past due status of a loan is determined in accordance with its contractual repayment terms. All loan types are reported past due when one scheduled payment is due and unpaid for 30 days or more. Loan delinquencies can be attributed to many factors, such as but not limited to, a continuing weakness in, or deteriorating, economic conditions in the region in which the collateral is located, the loss of a tenant or lower lease rates for commercial borrowers, or the loss of income for consumers and the resulting liquidity impacts on the borrowers.

The following tables contain period-end balances of loans receivable disaggregated by past due status:

	December 31, 2019
	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater		Total Past Due		Current Loans		Total
	(dollars in thousands)
Residential Mortgages	$	8,710	$	1,089	$	1,047	$	10,846	$	906,720	$	917,566
Commercial Mortgages		811		—		3,161		3,972		1,056,602		1,060,574
Home Equity		57		12		—		69		80,606		80,675
Commercial & Industrial		272		226		251		749		132,487		133,236
Consumer loans		4		5		—		9		34,668		34,677
Total	$	9,854	$	1,332	$	4,459	$	15,645	$	2,211,083	$	2,226,728

	December 31, 2018
	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater		Total Past Due		Current Loans		Total
	(dollars in thousands)
Residential Mortgages	$	1,034	$	121	$	351	$	1,506	$	602,825	$	604,331
Commercial Mortgages		—		—		—		—		757,957		757,957
Home Equity		—		—		—		—		69,336		69,336
Commercial & Industrial		—		—		—		—		93,712		93,712
Consumer loans		108		—		—		108		34,328		34,436
Total	$	1,142	$	121	$	351	$	1,614	$	1,558,158	$	1,559,772

There were no significant commitments to lend additional funds to borrowers whose loans were on nonaccrual status at December 31, 2019.

Foreclosure Proceedings

Other Real Estate Owned (“OREO”)

As of  December 31, 2019, the Company recorded other real estate owned assets of $163,000. OREO consists of real estate properties, which have primarily served as collateral to secure loans that are controlled or owned by the Bank. These properties are recorded at fair value less estimated costs to sell at the date control is established, resulting in a new cost basis. The amount by which the recorded investment in the loan exceeds the fair value (net of estimated costs to sell) of the foreclosed asset is charged to the allowance for loan losses. Subsequent declines in the fair value of the foreclosed asset below the new cost basis are recorded through the use of a valuation allowance. Subsequent increases in the fair value are recorded as reductions in the valuation allowance, but not below zero. All costs incurred thereafter in maintaining the property are generally charged to noninterest expense.

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In Process of Foreclosure

As of December 31, 2019 and 2018 loans secured by   one- to four-family residential property amounting to $344,000 and $351,000, respectively, were in process of foreclosure. 

Impaired Loans

Impaired loans are loans for which it is probable that the Company will not be able to collect all amounts due according to the contractual terms of the loan agreements and loans restructured in a troubled debt restructuring. The recorded investment in impaired loans consists of unpaid principal balance, net of charge-offs, interest payments received applied to principal, and unamortized deferred loan origination fees and costs.  

The following is information pertaining to impaired loans:

	For the Year Ended December 31, 2019
	Carrying Value		Average Carrying Value		Unpaid Principal Balance		Related Allowance		Interest Income Recognized
	(dollars in thousands)
With no required reserve recorded:
Commercial and industrial	$	—	$	—	$	—	$	—	$	—
Commercial mortgage		3,161		1,385		4,376		—		35
Residential mortgage		765		691		940		—		5
Home equity		93		96		133		—		1
Total		4,019		2,172		5,449		—		41
With required reserve recorded:
Commercial and industrial		128		59		167		87		—
Commercial mortgage		—		—		—		—		—
Residential mortgage		—		—		—		—		—
Home equity		—		—		—		—		—
Total		128		59		167		87		—
Total:
Commercial and industrial		128		59		167		87		—
Commercial mortgage		3,161		1,385		4,376		—		35
Residential mortgage		765		691		940		—		5
Home equity		93		96		133		—		1
Total	$	4,147	$	2,231	$	5,616	$	87	$	41

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	For the Year Ended December 31, 2018
	Carrying Value		Average Carrying Value		Unpaid Principal Balance		Related Allowance		Interest Income Recognized
	(dollars in thousands)
With no required reserve recorded:
Commercial and industrial	$	6	$	17	$	6	$	—	$	1
Commercial mortgage		—		—		—		—		—
Residential mortgage		634		647		786		—		4
Home equity		100		104		135		—		1
Total		740		768		927		—		6
With required reserve recorded:
Commercial and industrial		—		—		—		—		—
Commercial mortgage		—		—		—		—		—
Residential mortgage		—		—		—		—		—
Home equity		—		—		—		—		—
Total		—		—		—		—		—
Total:
Commercial and industrial		6		17		6		—		1
Commercial mortgage		—		—		—		—		—
Residential mortgage		634		647		786		—		4
Home equity		100		104		135		—		1
Total	$	740	$	768	$	927	$	—	$	6

	For the Year Ended December 31, 2017
	Carrying Value		Average Carrying Value		Unpaid Principal Balance		Related Allowance		Interest Income Recognized
	(dollars in thousands)
With no required reserve recorded:
Commercial and industrial	$	29	$	36	$	29	$	—	$	2
Commercial mortgage		213		224		227		—		3
Residential mortgage		904		931		1,103		—		—
Home equity		86		91		116		—		—
Total		1,232		1,282		1,475		—		5
With required reserve recorded:
Commercial and industrial		—		—		—		—		—
Commercial mortgage		—		—		—		—		—
Residential mortgage		64		66		64		93		1
Home equity		—		—		—		—		—
Total		64		66		64		93		1
Total:
Commercial and industrial		29		36		29		—		2
Commercial mortgage		213		224		227		—		3
Residential mortgage		968		997		1,167		93		1
Home equity		86		91		116		—		—
Total	$	1,296	$	1,348	$	1,539	$	93	$	6

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Allowance for Loan Losses

The Company maintains an allowance for loan losses in an amount determined by management on the basis of the character of the loans, loan performance, financial condition of borrowers, the value of collateral securing loans, and other relevant factors. We provide for loan losses based upon the consistent application of our documented allowance for loan loss methodology. All loan losses are charged to the allowance for loan losses and all recoveries are credited to it. Additions to the allowance for loan losses are provided by charges to income based on various factors which, in our judgment, deserve current recognition in estimating probable losses. We regularly review the loan portfolio, including a review of our classified assets, and make provisions for loan losses in order to maintain the allowance for loan losses in accordance with GAAP. The allowance for loan losses consists primarily of two components:

1. Specific allowances established for impaired loans, as defined by GAAP. The amount of impairment provided for as a specific allowance is measured based on the deficiency, if any, between the present value of expected future cash flows discounted at the loan’s effective interest rate at the time of impairment or, as a practical expedient, at the loan’s observable market price, or the fair value of the collateral if the loan is collateral-dependent, and the carrying value of the loan; and

2. General allowances established for loan losses on a portfolio basis for loans that do not meet the definition of impaired loans. The portfolio is grouped into homogenous pools by similar risk characteristics, primarily by loan type and regulatory classification. We apply an estimated incurred loss rate to each loan group. The loss rates applied are based upon our historical loss experience over a designated look back period adjusted, as appropriate, for the quantitative, qualitative, and environmental factors discussed below. This evaluation is inherently subjective, as it requires material estimates that may be susceptible to significant revisions based upon changes in economic and real estate market conditions.

Actual loan losses may be significantly more than the allowance for loan losses we have established, which could have a material negative effect on our financial results.

The adjustments to historical loss experience are based on our evaluation of several quantitative, qualitative, and environmental factors, including:

• the loss emergence period, which represents the average amount of time between when loss events occur for specific loan types and when such problem loans are identified and the related loss amounts are confirmed through charge-offs;

• changes in any concentration of credit (including, but not limited to, concentrations by geography, industry, or collateral type);

• changes in the number and amount of non-accrual loans and past due loans;

• changes in national, state, and local economic trends;

• changes in the types of loans in the loan portfolio;

• changes in the experience and ability of personnel;

• changes in lending strategies; and

• changes in lending policies and procedures.

In addition, we may establish an unallocated allowance to provide for probable losses that have been incurred as of the reporting date but are not reflected in the allocated allowance.

We evaluate the allowance for loan losses based upon the combined total of the specific and general components. Generally, when the loan portfolio increases, absent other factors, the allowance for loan loss methodology results in a higher dollar amount of estimated probable losses than would be the case without the increase. Generally, when the loan portfolio decreases, absent other factors, the allowance for loan losses methodology results in a lower dollar amount of estimated probable losses than would be the case without the decrease. Periodically, management conducts an analysis to estimate the loss emergence period for various loan categories based on samples of historical charge-offs. Model output by loan category is reviewed to evaluate the reasonableness of the reserve levels in comparison to the estimated loss emergence period applied to historical loss experience.

We evaluate the loan portfolio on a quarterly basis and the allowance is adjusted accordingly. While we use the best information available to make evaluations, future adjustments to the allowance may be necessary if conditions differ substantially from the information used in making the evaluations. In addition, various regulatory agencies, as an integral part of their examination process, will periodically review the allowance for loan losses. Such agencies may require us to recognize additions to the allowance based on their analysis of information available to them at the time of their examination.

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The following tables contain changes in the allowance for loan losses disaggregated by loan type for the periods noted:

	For the Year Ended December 31, 2019
	Residential Mortgages		Commercial Mortgages			Home Equity			Commercial & Industrial			Consumer			Impaired		Total
	(dollars in thousands)
Allowance for loan losses:
Balance at December 31, 2018	$	4,946	$	9,626		$	517		$	1,415		$	264		$	—	$	16,768
Charge-offs		—		(1,270	)		—			(338	)		(48	)		—		(1,656	)
Recoveries		—		—			—			53			11			—		64
Provision for (Release of)		195		2,549			(56	)		258			(29	)		87		3,004
Balance at December 31, 2019	$	5,141	$	10,905		$	461		$	1,388		$	198		$	87	$	18,180

	For the Year Ended December 31, 2018
	Residential Mortgages			Commercial Mortgages		Home Equity			Commercial & Industrial			Consumer			Impaired			Total
	(dollars in thousands)
Allowance for loan losses:
Balance at December 31, 2017	$	5,047		$	8,289	$	630		$	946		$	315		$	93		$	15,320
Charge-offs		—			—		—			(73	)		(36	)		—			(109	)
Recoveries		—			—		—			48			7			—			55
Provision for (Release of)		(101	)		1,337		(113	)		494			(22	)		(93	)		1,502
Balance at December 31, 2018	$	4,946		$	9,626	$	517		$	1,415		$	264		$	—		$	16,768

	For the Year Ended December 31, 2017
	Residential Mortgages		Commercial Mortgages			Home Equity			Commercial & Industrial			Consumer			Impaired			Total
	(dollars in thousands)
Allowance for loan losses:
Balance at December 31, 2016	$	4,898	$	8,451		$	651		$	807		$	264		$	190		$	15,261
Charge-offs		—		—			—			(284	)		(39	)		—			(323	)
Recoveries		—		—			—			13			7			—			20
Provision for (Release of)		149		(162	)		(21	)		410			83			(97	)		362
Balance at December 31, 2017	$	5,047	$	8,289		$	630		$	946		$	315		$	93		$	15,320

The following tables contain period-end balances of the allowance for loan losses and related loans receivable disaggregated by impairment method:

	December 31, 2019
	Residential Mortgages		Commercial Mortgages		Home Equity		Commercial & Industrial		Consumer		Total
	(dollars in thousands)
Allowance for loan losses
Individually evaluated for impairment	$	—	$	—	$	—	$	87	$	—	$	87
Collectively evaluated for impairment		5,141		10,905		461		1,388		198		18,093
Total	$	5,141	$	10,905	$	461	$	1,475	$	198	$	18,180
Loans receivable
Individually evaluated for impairment	$	764	$	3,161	$	92	$	128	$	—	$	4,145
Collectively evaluated for impairment		916,802		1,057,413		80,583		133,108		34,677		2,222,583
Total	$	917,566	$	1,060,574	$	80,675	$	133,236	$	34,677	$	2,226,728

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	December 31, 2018
	Residential Mortgages		Commercial Mortgages		Home Equity		Commercial & Industrial		Consumer		Total
	(dollars in thousands)
Allowance for loan losses
Individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—
Collectively evaluated for impairment		4,946		9,626		517		1,415		264		16,768
Total	$	4,946	$	9,626	$	517	$	1,415	$	264	$	16,768
Loans receivable
Individually evaluated for impairment	$	647	$	—	$	88	$	5	$	—	$	740
Collectively evaluated for impairment		603,684		757,957		69,248		93,707		34,436		1,559,032
Total	$	604,331	$	757,957	$	69,336	$	93,712	$	34,436	$	1,559,772

As discussed in Note 2, Summary of Significant Accounting Policies, the provision for loan losses is evaluated on a periodic basis by management in order to determine the adequacy of the allowance for loan losses.

8. FEDERAL HOME LOAN BANK OF BOSTON STOCK

As a voluntary member of the FHLB of Boston, the Bank is required to invest in stock of the FHLB of Boston (which is considered a restricted equity security) in an amount based upon its outstanding advances from the FHLB of Boston. At December 31, 2019 and December 31, 2018, the Bank’s investment in FHLB of Boston stock totaled $7.9 million and $6.8 million, respectively. No market exists for shares of this stock. The Bank’s cost for FHLB of Boston stock is equal to its par value. Upon redemption of the stock, which is at the discretion of the FHLB of Boston, the Bank would receive an amount equal to the par value of the stock. At its discretion, the FHLB of Boston may also declare dividends on its stock.

The Bank’s investment in FHLB of Boston stock is reviewed for impairment at each reporting date based on the ultimate recoverability of the cost basis of the stock. As of December 31, 2019 and December 31, 2018, no impairment has been recognized.

9. BANKING PREMISES AND EQUIPMENT

A summary of the cost and accumulated depreciation and amortization of property, leasehold improvements, and equipment is presented below:

	December 31,						Estimated
	2019			2018			Useful Lives
	(dollars in thousands)
Land	$	1,116		$	1,116
Building and leasehold improvements		17,817			12,175		3-30 years
Equipment, including vaults		13,686			11,613		3-20 years
Work in process		550			84
Subtotal		33,169			24,988
Accumulated depreciation and amortization		(18,413	)		(16,410	)
Total	$	14,756		$	8,578

Total depreciation expense for the years ended December 31, 2019, 2018, and 2017 amounted to approximately $2.0 million, $1.9 million and $1.9 million, respectively, and is included in occupancy and equipment expenses in the accompanying consolidated statements of income.

10. GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill.  At December 31, 2019 and 2018, the carrying value of goodwill, which is included in other assets, totaled $31.2 million and $412,000, respectively. Goodwill is tested for impairment, based on its fair value, at least annually. As of December 31, 2019 and 2018, no goodwill impairment has been recognized.

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Core deposit intangibles.   The Company recorded an asset for the core deposit intangible (“CDI”) of $3.6 million related to the Optima merger. Amortization of CDI assets totaled $270,000for the twelve months ended December 31, 2019.  As of December 31, 2019, the carrying value of CDI assets totaled $3.3 million. The weighted-average remaining amortization period for CDI was approximately nine years at December 31, 2019.

Mortgage servicing rights.  Periodically, the Company sells certain residential mortgage loans to the secondary market. Generally, these loans are sold without recourse or other credit enhancements.

The Company sells loans and either releases or retains the servicing rights. For loans sold with servicing rights retained, we provide the servicing for the loans on a per-loan fee basis. Mortgage loans sold and servicing rights retained during the years ended December 31, 2019, 2018, and 2017 were $82.9 million, $1.6 million, and $11.9 million, respectively, with net gains recognized in gain on loan sales of $685,000, $36,000, and $182,000, respectively.

An analysis of mortgage servicing rights, which are included in other assets, follows:

	Mortgage Servicing Rights			Valuation Allowance			Total
	(dollars in thousands)
Balance at December 31, 2016	$	842		$	(30	)	$	812
Mortgage servicing rights capitalized		132			—			132
Amortization charged against servicing income		(151	)		—			(151	)
Change in impairment reserve		—			—			—
Balance at December 31, 2017	$	823		$	(30	)	$	793
Mortgage servicing rights capitalized		20			—			20
Amortization charged against servicing income		(147	)		—			(147	)
Change in impairment reserve		(30	)		30			—
Balance at December 31, 2018	$	666		$	—		$	666
Mortgage servicing rights acquired as a result of the merger		334			—			334
Mortgage servicing rights capitalized		618			—			618
Amortization charged against servicing income		(271	)		—			(271	)
Change in impairment reserve		—			(26	)		(26	)
Balance at December 31, 2019	$	1,347		$	(26	)	$	1,321

The fair value of our mortgage servicing rights (“MSR”) portfolio was $1.5 million and $1.0 million as of December 31, 2019 and 2018. The fair value of mortgage servicing rights is estimated based on the present value of expected cash flows, incorporating assumptions for discount rate, prepayment speed, and servicing cost.

The weighted-average amortization period for mortgage servicing rights portfolio was 5.2 years and 7.5 years at December 31, 2019 and December 31, 2018, respectively.  

The estimated aggregate future amortization expense for mortgage servicing rights for each of the next five years and thereafter is as follows:  

	Future Amortization Expense
	(dollars in thousands)
2020	$	202
2021		166
2022		135
2023		110
2024		89
Thereafter		619
Total	$	1,321

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11. DEPOSITS

Deposits are summarized as follows:

	December 31, 2019		December 31, 2018
	(dollars in thousands)
Demand deposits (non-interest bearing)	$	630,593	$	494,492
Interest bearing checking		450,098		431,702
Money market		181,406		135,585
Savings		914,499		628,212
Retail certificates of deposit under $100,000		56,602		36,223
Retail certificates of deposit $100,000 or greater		118,596		57,692
Wholesale certificates of deposit		7,084		27,504
Total deposits	$	2,358,878	$	1,811,410

Certificates of deposit had the following schedule of maturities:

	December 31, 2019		December 31, 2018
	(dollars in thousands)
Less than 3 months remaining	$	52,883	$	24,219
3 to 5 months remaining		47,701		17,486
6 to 11 months remaining		38,981		37,987
12 to 23 months remaining		31,501		28,529
24 to 47 months remaining		9,448		9,652
48 months or more remaining		1,768		3,546
Total certificates of deposit	$	182,282	$	121,419

Interest expense on retail certificates of deposit $100,000 or greater was $2.1 million, $467,000, and $446,000  for the years ended December 31, 2019, 2018, and 2017, respectively.

The aggregate amount of certificates of deposit in denominations that meet or exceed the FDIC insurance limit of $250,000 at December 31, 2019 and 2018 was $60.8 million and $31.8 million, respectively.

Related Party Deposits

Deposit accounts of directors, executive officers, and their respective affiliates totaled $7.2 million and $6.8 million as of December 31, 2019 and 2018, respectively.  

12. BORROWINGS

Information relating to short-term borrowings is presented below:

	For the Year Ended December 31,
	2019			2018
	(dollars in thousands)
FHLB of Boston short-term advances
Ending balance	$	135,691		$	90,000
Average daily balance		84,414			15,183
Highest month-end balance		135,691			90,000
Weighted average interest rate		2.31	%		2.47	%

Information relating to long-term borrowings is presented below:

	December 31, 2019					December 31, 2018
	Amount		Rate			Amount		Rate
	(dollars in thousands)
FHLB of Boston long-term advances
Due 09/01/2020; amortizing	$	—		0.00	%	$	3,409		1.94	%

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All short- and long-term borrowings with the FHLB of Boston are secured by the Bank’s stock in the FHLB of Boston and a blanket lien on “qualified collateral” defined principally as 95% of the market value of certain U.S. Government and GSE obligations and 75% of the carrying value of certain residential mortgage loans. Based upon collateral pledged, the Bank’s unused borrowing capacity with the FHLB of Boston at December 31, 2019 was approximately $345.5 million.

The Bank also has a line of credit with the FRB Boston. At December 31, 2019 and 2018, the Bank had pledged commercial real estate and commercial & industrial loans with aggregate principal balances of approximately $316.4 million and $291.7 million, respectively, as collateral for this line of credit. Based upon the collateral pledged, the Bank’s unused borrowing capacity with the FRB Boston at December 31, 2019 and 2018 was approximately $134.9 million and $167.5 million, respectively.

13. INCOME TAXES

In accordance with the Tax Cuts and Jobs Act of 2017, the Company’s statutory federal tax rate decreased from 35% to 21% effective January 1, 2018. The change in tax law required a one-time non-cash write down of our net deferred tax assets of $3.9 million in 2017.        

The components of income tax expense were as follows:

	For the Year Ended December 31,
	2019			2018			2017
	(dollars in thousands)
Current
Federal	$	5,954		$	5,524		$	8,446
State		2,597			2,404			2,225
		8,551			7,928			10,671
Deferred
Federal		(63	)		(490	)		2,948
State		173			(231	)		(261	)
Total deferred		110			(721	)		2,687
Total income tax expense	$	8,661		$	7,207		$	13,358

The following is a reconciliation of the total income tax provision, calculated at statutory federal income tax rates, to the income tax provision in the consolidated statements of income:

	For the Year Ended December 31,
	2019			Rate			2018			Rate			2017			Rate
	(dollars in thousands)
Provision at statutory rates	$	7,123			21.00	%	$	6,528			21.00	%	$	9,861			35.00	%
Increase/(decrease) resulting from:
State tax, net of federal tax benefit		2,188			6.45			1,717			5.52			1,277			4.53
Tax-exempt income		(599	)		(1.77	)		(580	)		(1.87	)		(1,079	)		(3.83	)
ESOP dividends		(124	)		(0.37	)		(127	)		(0.41	)		(216	)		(0.77	)
Bank owned life insurance		(129	)		(0.38	)		(140	)		(0.45	)		(205	)		(0.73	)
Benefit from stock compensation		(150	)		(0.44	)		(168	)		(0.54	)		(190	)		(0.67	)
Non-deductible Acquisition Costs		236			0.70			—			—			—			—
Impact of Tax Cuts and Jobs Act		—			—			—			—			3,870			13.74
Other		116			0.34			(23	)		(0.07	)		40			0.15
Total income tax expense	$	8,661			25.53	%	$	7,207			23.18	%	$	13,358			47.42	%

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The Company’s 2019 and 2018 net deferred tax assets were measured using a27.86% and 28.11% tax rate, respectively, and consisted of the following components:

	December 31, 2019			December 31, 2018
	(dollars in thousands)
Gross deferred tax assets
Allowance for loan losses	$	5,029		$	4,715
Accrued retirement benefits		1,592			2,082
Unrealized losses on AFS securities		171			957
Incentive compensation		1,248			1,189
Equity based compensation		1,034			849
Lease Liability		9,765			333
ESOP dividends		165			169
Loss carryforwards as a result of the Optima merger		877			—
Intangibles (merger related)		472			—
Other		252			155
Total gross deferred tax assets		20,605			10,449
Gross deferred tax liabilities
Deferred loan origination costs		(911	)		(459	)
Depreciation of premises and equipment		(1,021	)		(678	)
Right of Use Asset		(9,356	)		—
Mortgage servicing rights		(368	)		(187	)
Goodwill		(113	)		(114	)
Derivative transactions		(607	)		(294	)
Total gross deferred tax liabilities		(12,376	)		(1,732	)
Net deferred tax asset	$	8,229		$	8,717

It is management’s belief, that it is more likely than not, that the reversal of deferred tax liabilities and results of future operations will generate sufficient taxable income to realize the deferred tax assets. Therefore, no valuation allowance was required at either December 31, 2019 and 2018 for the deferred tax assets. It should be noted, however, that factors beyond management’s control, such as the general state of the economy and real estate values, can affect future levels of taxable income and that no assurance can be given that sufficient taxable income will be generated in future periods to fully absorb deductible temporary differences.

At December 31, 2019 and 2018, the Company had no unrecognized tax benefits or any uncertain tax positions. The Company does not expect the total amount of unrecognized tax benefits to significantly increase in the next 12 months.

The Company’s federal income tax returns are open and subject to examination from the 2016 tax return year and forward. The Company’s state income tax returns are open from the 2016 and later tax return years based on individual state statute of limitations.

On January 1, 2017, The Company adopted Accounting Standards Update No. 2016-09 - “Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”). ASU 2016-09 requires that excess tax benefits or tax deficiencies be recognized as income tax benefit or expense in earnings in the period that they occur. During the year ended December 31, 2019, 2018, and 2017, the Company recognized a tax benefit of $199,000, $225,000, and $221,000 respectively.

14. PENSION AND RETIREMENT PLANS

The Company has a noncontributory, defined benefit pension plan (“Pension Plan”) covering substantially all employees hired before May 2, 2011. Employees in positions requiring at least 1,000 hours of service per year were eligible to participate upon the attainment of age 21 and the completion of 12 months of service. Benefits are based primarily on years of service and the employee’s average monthly pay during the five highest consecutive plan years of the employee’s final ten years. On October 23, 2017, the Company announced its decision to freeze the accrual of benefits within the Pension Plan, effective December 31, 2017.  The Company also provides supplemental retirement benefits to certain current and former executive officers of the Company under the terms of Supplemental Executive Retirement Agreements (“Supplemental Retirement Plan”). Prior to 2016, the Company provided individual non-qualified defined benefit supplemental executive retirement plans (“DB SERPs”) to certain executives. The DB SERPs generally provide for an annual benefit payable in equal monthly installments following the executive’s retirement and continuing for at least the remainder of his or her lifetime, with such annual benefit generally based on the executive’s years of service and his or her highest three consecutive years of base salary and bonus. In 2016, the Company’s Board discontinued the use of DB SERPs for new entrants

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to the Company’s non-qualified retirement programs. Instead, new entrants are provided with individual non-qualified defined contribution supplemental executive retirement plans (“DC SERPs”). Under the DC SERPs, the Company may contribute an amount equal to 10% of the executive’s base salary and bonus to his or her account under the Company’s non-qualified deferred compensation plan, the Executive Deferred Compensation Plan. The Company also offers postretirement health care benefits for current and future retirees of the Bank. Certain employees receive a fixed monthly benefit at age 65 toward the purchase of postretirement medical coverage. The benefit received is based on the employee’s years of active service. The Company uses a December 31 measurement date each year to determine the benefit obligations for these plans.

Projected benefit obligations and funded status were as follows:

	Pension Plan						Supplemental Retirement Plan
	2019			2018			2019			2018
	(dollars in thousands)
Change in projected benefit obligation
Obligation at beginning of year	$	40,522		$	43,943		$	8,830		$	9,204
Service cost		—			—			283			354
Interest cost		1,680			1,557			349			309
Actuarial loss/(gain)		4,670			(3,659	)		770			(499	)
Benefits paid		(1,471	)		(1,319	)		(610	)		(538	)
Obligation at end of year		45,401			40,522			9,622			8,830
Change in plan assets
Fair value at beginning of year		42,648			45,247			—			—
Actual return on plan assets		8,954			(1,280	)		—			—
Employer contribution		—			—			610			538
Benefits paid		(1,471	)		(1,319	)		(610	)		(538	)
Fair value at end of year		50,131			42,648			—			—
Funded status at end of year	$	4,730		$	2,126		$	(9,622	)	$	(8,830	)

Amounts recognized in the consolidated balance sheets consisted of:

	Pension Plan				Supplemental Retirement Plan
	2019		2018		2019			2018
	(dollars in thousands)
Other assets/(liabilities)	$	4,730	$	2,126	$	(9,622	)	$	(8,830	)

Amounts recognized in accumulated other comprehensive loss consisted of:

	Pension Plan						Supplemental Retirement Plan
	2019			2018			2019		2018
	(dollars in thousands)
Net actuarial loss/(gain)	$	3,709		$	5,427		$	1,128	$	358
Prior service (benefit)		(7	)		(12	)		—		—
Total	$	3,702		$	5,415		$	1,128	$	358

Certain disaggregated information related to our retirement plans were as follows:

	Pension Plan				Supplemental Retirement Plan
	2019		2018		2019			2018
	(dollars in thousands)
Projected benefit obligation	$	45,401	$	40,522	$	9,622		$	8,830
Accumulated benefit obligation		45,401		40,522		9,207			8,567
Fair value of plan assets		50,131		42,648		—			—
Funded status at end of year		4,730		2,126		(9,622	)		(8,830	)

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The components of net periodic benefit cost and amounts recognized in other comprehensive income/ (loss) were as follows:

	Pension Plan						Supplemental Retirement Plan
	2019			2018			2019		2018
	(dollars in thousands)
Net periodic benefit cost
Service cost	$	—		$	—		$	283	$	354
Interest cost		1,680			1,557			349		309
Expected return on assets		(2,721	)		(2,891	)		—		—
Amortization of prior service credit		(4	)		(4	)		—		—
Amortization of net actuarial loss/(gain)		154			106			—		4
Net periodic benefit cost		(891	)		(1,232	)		632		667
Amounts recognized in other comprehensive income/( loss)
Net actuarial loss/(gain)		(1,563	)		512			770		(499	)
Amortization of prior service credit		4			4					(4	)
Amortization of net actuarial gain		(154	)		(106	)		—		—
Total recognized in other comprehensive income/( loss)		(1,713	)		410			770		(503	)
Total recognized in net periodic benefit cost and other    comprehensive income/( loss)	$	(2,604	)	$	(822	)	$	1,402	$	164

Weighted-average assumptions used to determine projected benefit obligations are as follows:

	Pension Plan						Supplemental Retirement Plan
	2019			2018			2019			2018
Discount rate		3.22	%		4.23	%		3.04	%		4.10	%
Rate of compensation increase	N/A			N/A				4.00	%		4.00	%

Weighted-average assumptions used to determine net periodic benefit cost are as follows:

	Pension Plan						Supplemental Retirement Plan
	2019			2018			2019			2018
Discount rate		4.23	%		3.58	%		4.10	%		3.39	%
Expected long-term return on plan assets		6.50	%		6.50	%	N/A			N/A
Rate of compensation increase	N/A			N/A				4.00	%		4.00	%

To develop the expected long-term rate of return on assets assumption for the Pension Plan, the Company considered the historical returns and the future expectations for returns for each asset class, as well as target asset allocations of the pension portfolio. Based on this analysis, the Company selected 6.50% as the long-term rate of return on asset assumption.

The Company maintains an Investment Policy for its Pension Plan. The objective of this policy is to seek a balance between capital appreciation, current income, and preservation of capital, with a longer term weighting towards equities because of the extended time horizon of the Pension Plan.

The Investment Policy guidelines suggest that the target asset allocation percentages are from 30% to 60% in domestic large cap equities, from 5% to 20% in domestic small/mid cap equities, from 0% to 20% in international equities, and from 20% to 50% in cash and fixed income.  

The Company’s Pension Plan weighted-average asset allocations by asset category were as follows:

	December 31,
	2019			2018
Equity securities		53	%		60	%
Debt securities		36			35
Other		3			1
Cash and equivalents		8			4
Total		100	%		100	%

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The three broad levels of fair values used to measure the Pension Plan assets are as follows:

• Level 1 – Quoted prices for identical assets in active markets.

• Level 2 – Quoted prices for similar assets in active markets; quoted prices for identical or similar assets in inactive markets; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.

• Level 3 – Valuations derived from techniques in which one or more significant inputs or significant value drivers are unobservable in the markets and which reflect the Company’s market assumptions.

The following table summarizes the various categories of the Pension Plan’s assets:

	Fair Value as of December 31, 2019
	Level 1		Level 2		Level 3		Total
	(dollars in thousands)
Asset category
Cash and cash equivalents	$	4,834	$	—	$	—	$	4,834
Fixed Income		—		7,197		—		7,197
Equity securities
Common Stock
Large cap core		17,180		—		—		17,180
Mid cap core		—		—		—		—
Small cap core		2,627		—		—		2,627
Mutual funds
Domestic Equity		3,931		—		—		3,931
International		3,650		—		—		3,650
Domestic Fixed Income		10,712						10,712
Preferred Stock		—		—		—		—
Total	$	42,934	$	7,197	$	—	$	50,131

	Fair Value as of December 31, 2018
	Level 1		Level 2		Level 3		Total
	(dollars in thousands)
Asset category
Cash and cash equivalents	$	3,520	$	—	$	—	$	3,520
Fixed Income		—		6,534		—		6,534
Equity securities
Common Stock
Large cap core		16,127		—		—		16,127
Mid cap core		—		—		—		—
Small cap core		2,090		—		—		2,090
Mutual funds
Domestic Equity		4,320		—		—		4,320
International		3,409		—		—		3,409
Domestic Fixed Income		6,648						6,648
Preferred Stock		—		—		—		—
Total	$	36,114	$	6,534	$	—	$	42,648

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There were no transfers between fair value levels during the years ended December 31, 2019 and 2018.

The Company offers postretirement health care benefits for current and future retirees of the Bank. Employees receive a fixed monthly benefit at age 65 toward the purchase of postretirement medical coverage. The benefit received is based on the employee’s years of active service. The Company uses a December 31 measurement date each year to determine the benefit obligation for this plan. On November 7, 2019, the Company announced its decision to freeze the accrual of benefits to new hires within the plan.

Projected benefit obligations and funded status were as follows:

	Postretirement Healthcare Plan
	2019			2018
	(dollars in thousands)
Change in projected benefit obligation
Obligation at beginning of year	$	598		$	617
Service cost		25			23
Interest cost		25			22
Actuarial loss/(gain)		76			(30	)
Benefits paid		(35	)		(34	)
Obligation at end of year		689			598
Change in plan assets
Fair value at beginning of year		—			—
Actual return on plan assets		—			—
Employer contribution		35			33
Benefits paid		(35	)		(33	)
Fair value at end of year		—			—
Funded status at end of year	$	(689	)	$	(598	)

Amounts recognized in the consolidated balance sheets consisted of:

	Postretirement Healthcare Plan
	2019			2018
	(dollars in thousands)
Other liabilities	$	(689	)	$	(598	)

Amounts recognized in accumulated other comprehensive loss consisted of:

	Postretirement Healthcare Plan
	2019			2018
	(dollars in thousands)
Net actuarial (gain)/loss	$	(34	)	$	(113	)
Prior service cost		—			—
Total	$	(34	)	$	(113	)

Information for retirement plans with an accumulated benefit obligation in excess of plan assets:

	Postretirement Healthcare Plan
	2019		2018
	(dollars in thousands)
Projected benefit obligation	$	689	$	598
Accumulated benefit obligation		689		598
Fair value of plan assets		—		—

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The components of net periodic benefit cost and amounts recognized in other comprehensive income were as follows:

	Postretirement Healthcare Plan
	2019			2018
	(dollars in thousands)
Net periodic benefit cost
Service cost	$	25		$	23
Interest cost		25			22
Expected return on assets		—			—
Amortization of prior service credit		—			—
Amortization of net actuarial gain		(3	)		—
Net periodic benefit cost		47			45
Amounts recognized in other comprehensive income/( loss)
Net actuarial (gain) loss		76			(30	)
Amortization of prior service credit		—			—
Amortization of net actuarial gain		3			—
Total recognized in other comprehensive income/( loss)		79			(30	)
Total recognized in net periodic benefit cost and    other comprehensive  income/( loss)	$	126		$	15

Weighted-average assumptions used to determine projected benefit obligations are as follows:

	Postretirement Healthcare Plan
	2019			2018
Discount rate		3.26	%		4.22	%
Rate of compensation increase	N/A			N/A

Weighted-average assumptions used to determine net periodic benefit cost are as follows:

	Postretirement Healthcare Plan
	2019			2018
Discount rate		4.22	%		3.58	%
Expected long-term return on plan assets	N/A			N/A
Rate of compensation increase	N/A			N/A

Assumed health care cost trend rates are as follows:

	Postretirement Healthcare Plan
	2019			2018
Health care cost trend rate assumed for next year		4.00	%		4.00	%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)		4.00	%		4.00	%
Year that the rate reaches the ultimate trend rate		2019			2018

Assumed health care trend rates have a significant effect on the amounts reported for the health care plans. A one-percentage-point change in assumed health care cost trend rates would have the following effects:

	One Percentage Point
	Increase		Decrease
	(dollars in thousands)
Effect on total service and interest cost	$	—	$	—
Effect on postretirement benefit obligation		2		(2	)

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Benefits expected to be paid in the next ten years are as follows:

	Pension Plan		Supplemental Retirement Plan		Postretirement Healthcare Plan		Total
	(dollars in thousands)
Year-ended December 31,
2020	$	1,751	$	594	$	30	$	2,375
2021		1,813		591		30		2,434
2022		1,948		609		31		2,588
2023		2,061		605		31		2,697
2024		2,135		602		31		2,768
2025-2029 inclusive		11,784		2,916		166		14,866
Ten year total	$	21,492	$	5,917	$	319	$	27,728

The estimated amounts that will be amortized from accumulated other comprehensive income into net periodic benefit cost during 2019 are as follows:

	Pension Plan			Supplemental Retirement Plan		Postretirement Healthcare Plan		Total
	(dollars in thousands)
Prior service cost	$	(4	)	$	—	$	—	$	(4	)
Net (gain)/loss		—			—		—		—
Total	$	(4	)	$	—	$	—	$	(4	)

Employee Profit Sharing and 401(k) Plan

The Company maintains a Profit Sharing Plan (“PSP”) that provides for deferral of federal and state income taxes on employee contributions allowed under Section 401(k) of federal law. Beginning in 2018, the Company matched employee contributions up to 100% of the first 4% of each participant’s salary, eligible bonus, and eligible incentive, up from 3% in 2017. Employees are eligible to participate in the PSP on the first day of their initial date of service. Each year, the Company may also make a discretionary contribution to the PSP. In 2018, employees were eligible to participate in the discretionary contribution portion of the PSP after completing 12 months of employment, and 1,000 hours of service. The employee must be employed on the last day of the calendar year, or retire at the normal retirement age of 65 during the calendar year to receive the discretionary contribution. Effective in 2019, employees are eligible to participate in the discretionary contribution portion of the PSP on the first day of their initial date of service.

Employee Stock Ownership Plan

The Company has an Employee Stock Ownership Plan (“ESOP”) for its eligible employees. Employees are eligible to participate upon the attainment of age 21 and the completion of 12 months of service consisting of at least 1,000 hours. Purchases of the Company’s stock by the ESOP will be funded by employer contributions or reinvestment of cash dividends.

Total expenses related to the Profit Sharing and ESOP Plans for the years ended December 31, 2019, 2018 and 2017, amounted to approximately $2.8 million, $2.6 million, and $1.5 million, respectively.

Defined Contribution SERP Plan (“DC SERP”)

For executives participating in the DC SERP plan, the Company made a discretionary contribution of 10% of each executive’s base salary and bonus to his or her account under the Company’s DC SERP, the Executive Deferred Compensation Plan. Total expenses related to the Company’s DC SERP for the years ended December 31, 2019, 2018 and 2017, amounted to approximately $167,000, $209,000, and $126,000, respectively.

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15. SHARE-BASED COMPENSATION

In 1993, the Company adopted a Stock Option Plan for key employees as an incentive for them to assist the Company in achieving long-range performance goals. During 2005, the Company’s shareholders amended the plan to permit the issuance of restricted stock, restricted stock units, and stock appreciation rights.

In 2017, the Company adopted the 2017 Equity and Cash Incentive Plan (the “2017 Plan”) and all future awards will be made under the 2017 Plan. The 2017 plan permits the issuance of restricted stock, restricted stock units (both time and performance-based), stock options, and stock appreciation rights.

Stock options time-vest over a five-year period. All options expire ten years from the date granted and have been issued at fair value at the date of grant which, in some instances, may be less than publicly traded values. There were no outstanding stock options at December 31, 2019. A summary of stock option transactions for the year ended December 31, 2018  is presented below:

	2019				2018
	Number of Options		Weighted Average Exercise Price		Number of Options			Weighted Average Exercise Price
Stock Options
Outstanding at beginning of year		—	$	—		16,377		$	29.21
Granted		—		—		—			—
Forfeited		—		—		—			—
Expired		—		—		(2,600	)		29.21
Exercised		—		—		(13,777	)		29.21
Outstanding at end of year		—	$	—		—		$	—
Exercisable at end of year		—	$	—		—		$	—

Restricted stock awards time-vest either over a three-year or five-year period and have been fair valued as of the date of grant. The holders of restricted stock awards participate fully in the rewards of stock ownership of the Company, including voting and dividend rights. A summary of restricted stock transactions for the periods of December 31, 2019 and 2018, and changes during the years ended on those dates, is presented below:

	2019					2018
	Number of Shares			Weighted Average Grant Value		Number of Shares			Weighted Average Grant Value
Restricted stock
Non-vested at beginning of year		41,311		$	65.10		43,240		$	53.13
Granted		11,330			75.67		17,373			80.43
Vested		(14,642	)		60.55		(15,760	)		50.10
Forfeited		(1,878	)		65.33		(3,542	)		60.84
Non-vested at end of year		36,121		$	70.25		41,311		$	65.10

Performance-based restricted stock units vest based upon the Company’s performance over a three-year period and have been fair valued as of the date of grant. The holders of performance-based restricted stock units do not participate in the rewards of stock ownership of the Company until vested. A summary of non-vested performance-based restricted stock units outstanding as of December 31, 2019 and 2018, and changes during the years ended on those dates, is presented below:

	2019					2018
	Number of Units			Weighted Average Grant Value		Number of Units			Weighted Average Grant Value
Performance-based restricted stock units
Non-vested at beginning of year		41,411		$	66.39		21,613		$	56.05
Granted		28,542			73.00		23,511			76.56
Vested (Performance achieved)		(12,697	)		46.00		—			—
Forfeited		—			—		(3,713	)		70.68
Expired (Performance not achieved)		—			—		—			—
Non-vested at end of year		57,256		$	72.82		41,411		$	66.39

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Time based restricted stock units vest over a three-year-period and have been fair valued as of the date of the grant. The holders of time based restricted stock units do not participate in the rewards of stock ownership of the company until vested. A summary of nonvested time based restricted stock units outstanding as of December 31, 2019 and 2018, and changes during the years ended on those dates, is presented below:

	2019					2018
	Number of Shares			Weighted Average Grant Value		Number of Shares			Weighted Average Grant Value
Time-based restricted stock units
Non-vested at beginning of year		6,777		$	76.56		—		$	—
Granted		8,132			73.00		7,839			76.56
Vested		(2,251	)		76.56		(225	)		76.56
Forfeited		—			—		(837	)		76.56
Non-vested at end of year		12,658		$	74.27		6,777		$	76.56

The following table presents the amounts recognized in the consolidated income statement for restricted stock awards, time-based restricted stock units, and performance-based restricted stock units:

	December 31,
	2019		2018		2017
	(dollars in thousands)
Share-based compensation expense	$	2,632	$	2,592	$	1,045
Related income tax benefit	$	733	$	729	$	427

The 2017 Plan allows Directors of the Company to receive their annual retainer fee in the form of stock in the Company. Total shares issued under the 2017 Plan in the years ended December 31, 2019 and 2018 were 4,484 and 4,164, respectively.

16. FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK

To meet the financing needs of its customers, the Bank is a party to financial instruments with off-balance-sheet risk in the normal course of business. These financial instruments are primarily comprised of commitments to extend credit, commitments to sell residential real estate mortgage loans, risk participation agreements, and standby letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amounts recognized in the consolidated balance sheets.

The Bank’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for loan commitments and standby letters of credit is represented by the contractual amount of those instruments assuming that the amounts are fully advanced and that collateral or other security is of no value. The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.

Off-balance-sheet financial instruments with contractual amounts that present credit risk included the following:

	December 31, 2019		December 31, 2018
	(dollars in thousands)
Financial instruments whose contractual amount    represents credit risk:
Commitments to extend credit:
Unused portion of existing lines of credit	$	428,020	$	368,410
Origination of new loans		24,413		24,505
Standby letters of credit		9,150		8,752
Financial instruments whose notional amount exceeds    the amount of credit risk:
Commitments to sell residential mortgage loans		3,909		—

Standby letters of credit are conditional commitments issued by the Bank to guarantee performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements. Most guarantees extend for one year. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The collateral supporting those commitments varies and may include real property, accounts receivable, or inventory.

88

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since some of the commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Bank evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained upon extension of the credit is based on management’s credit evaluation of the customer. Collateral held varies, but may include primary residences, accounts receivable, inventory, property, plant and equipment, and income-producing commercial real estate.

See Note 23 - Derivatives and Hedging Activities for a discussion of the Company’s derivatives and hedging activities.  

17. COMMITMENTS AND CONTINGENCIES

Lease Commitments. The Company is obligated under various lease agreements covering its main office, branch offices, and other locations. These agreements are accounted for as operating leases and their terms expire between 2019 and 2030 and, in some instances, contain options to renew for periods up to 30 years. 

The Company adopted Accounting Standards Update No. 2016-02 - Leases (“ASU 2016-02”) during the first quarter of 2019 and began recognizing its operating leases on its balance sheet by recording a lease liability, representing the Company’s legal obligation to make lease payments, and a Right-Of-Use (ROU) Asset, representing the Company’s legal right to use the leased office space and banking centers. The Company, by policy, does not include renewal options for leases as part of its right-of-use assets and lease liabilities unless they are deemed reasonably certain to exercise. The Company does not have any material sub-lease agreements.

The following table summarizes information related to the Company’s right-of-use asset and net lease liability:

	December 31, 2019
	Operating Leases		Balance Sheet Location
	(dollars in thousands)
Right-of-use asset	$	33,587	Right-of-use asset operating leases
Lease liability	$	35,054	Operating lease liabilities

Operating lease expenses are comprised of operating lease costs and variable lease costs, net of sublease income. The pattern and measurement of expense recognition of these costs were not significantly impacted by ASU 2016-02 and subsequent ASUs issued to amend this Topic.

Variable lease payments that are not dependent on an index or a rate or changes in variable payments based on an index or rate after the commencement date are excluded from the measurement of the lease liability, recognized in the period incurred and included within variable lease costs below.

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The Company determines whether a contract contains a lease based on whether a contract, or a part of a contract, conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The discount rate is determined as either the rate implicit in the lease or when a rate cannot be readily determined, the Company’s incremental borrowing rate. The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term.  

The components of operating lease cost and other related information are as follows:

		Twelve Months Ended December 31,
		2019
	(dollars in thousands)
Operating lease cost		$	5,280
Short-term lease cost			—
Variable lease cost (Cost excluded from lease payments)			2
Sublease income			(64	)
Total Operating Lease Cost		$	5,218
Other Information
Cash paid for amounts included in the measurement of lease liabilities - operating cash flows from operating leases		$	5,027
Operating Lease - Operating Cash Flows (Liability reduction)			3,868
Right-of-use assets obtained in exchange for new operating lease liabilities			37,728
Weighted average lease term - operating leases		8.15 Years
Weighted average discount rate - operating leases			3.39	%

The total minimum lease payments due in future periods under these agreements in effect at December 31, 2019 and December 31, 2018 were as follows:

Year Ended	Future Minimum
December 31, 2019	Lease Payments
	(dollars in thousands)
2020	$	5,478
2021		5,523
2022		5,371
2023		5,021
2024		4,355
Thereafter		14,553
Total minimum lease payments		40,301
Less: interest		(5,247	)
Total lease liability	$	35,054

Year Ended	Future Minimum
December 31, 2018	Lease Payments
	(dollars in thousands)
2019	$	4,448
2020		4,661
2021		4,662
2022		4,553
2023		4,455
Thereafter		17,128
Total minimum lease payments	$	39,907

Several lease agreements contain clauses calling for escalation of minimum lease payments contingent on increases in real estate taxes, gross income adjustments, percentage increases in the consumer price index, and certain ancillary maintenance costs. Total rental expense was $5.7 million, $4.7 million, and $4.7 million for the years ended December 31, 2019, 2018 and 2017, respectively.

Change in Control Agreements. The Company has entered into agreements with its Chief Executive Officer and with certain other senior officers, whereby, following the occurrence of a change in control of the Company, if employment is terminated (except because of death, retirement, disability, or for “cause” as defined in the agreements) or is voluntarily terminated for “good reason,” as defined in the agreements, said officers will be entitled to receive additional compensation, as defined in the agreements.

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18. SHAREHOLDERS’ EQUITY

Capital guidelines issued by the Federal Reserve Bank (the “FRB”) and by the FDIC require that the Company and the Bank maintain minimum capital levels for capital adequacy purposes. These regulations also require banks and their holding companies to maintain higher capital levels to be considered “well-capitalized.” Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, there are specific capital guidelines that involve quantitative measures of assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The risk-based capital rules are designed to make regulatory capital more sensitive to differences in risk profiles among bank and bank holding companies, to account for off-balance-sheet exposure, and to minimize disincentives for holding liquid assets.

In July 2013, the Federal Reserve, the Office of the Comptroller of the Currency (“OCC”), and the FDIC approved final rules (the “Capital Rules”) establishing a new comprehensive capital framework for U.S. banking organizations. The Capital Rules generally implement the Basel Committee on Banking Supervision’s (the “Basel Committee”) December 2010 final capital framework referred to as “Basel III” for strengthening international capital standards. The Capital Rules revise the definitions and the components of regulatory capital, as well as address other issues affecting the numerator in banking institutions’ regulatory capital ratios. The Capital Rules also address asset risk weights and other matters affecting the denominator in banking institutions’ regulatory capital ratios and replace the existing general risk-weighting approach with a more risk-sensitive approach.

The Capital Rules: (i) include “Common Equity Tier 1” (“CET1”) and related regulatory capital ratio of CET1 to risk-weighted assets; (ii) specify that Tier 1 capital consists of CET1 and “Additional Tier 1 capital” instruments meeting certain revised requirements; (iii) mandate that most deductions/adjustments to regulatory capital measures be made to CET1 and not to the other components of capital; and (iv) expand the scope of the deductions from and adjustments to capital as compared to existing regulations. Under the Capital Rules, for most banking organizations, including the Company, the most common form of Additional Tier 1 capital is non-cumulative perpetual preferred stock, and the most common forms of Tier 2 capital are subordinated notes and a portion of the allocation for loan and lease losses, in each case, subject to the Capital Rules’ specific requirements.

Pursuant to the Capital Rules, effective January 1, 2015, the minimum capital ratios are as follows:

• 4.5% CET1 to risk-weighted assets;

• 6.0% Tier 1 capital (that is, CET1 plus Additional Tier 1 capital) to risk-weighted assets;

• 8.0% Total capital (that is, Tier 1 capital plus Tier 2 capital) to risk-weighted assets; and

• 4.0% Tier 1 capital to average consolidated assets as reported on consolidated financial statements (called “leverage ratio”).

The Capital Rules also include a “capital conservation buffer,” composed entirely of CET1, in addition to these minimum risk-weighted asset ratios. The capital conservation buffer is designed to absorb losses during periods of economic stress. Banking institutions that do not hold the requisite capital conservation buffer will face constraints on dividends, capital instrument repurchases, interest payments on capital instruments and discretionary bonus payments based on the amount of the shortfall. Thus, the capital standards applicable to the Company include an additional capital conservation buffer of 2.5% of CET1, effectively resulting in minimum ratios inclusive of the capital conservation buffer of (i) CET1 to risk-weighted assets of at least 7%, (ii) Tier 1 capital to risk-weighted assets of at least 8.5%, and (iii) total capital to risk-weighted assets of at least 10.5%.

The Capital Rules provide for a number of deductions from and adjustments to CET1. These include, for example, the requirement that mortgage servicing assets, deferred tax assets arising from temporary differences that could not be realized through net operating loss carrybacks, and significant investments in non-consolidated financial entities be deducted from CET1 to the extent that any one such category exceeds 10% of CET1 or all such items, in the aggregate, exceed 15% of CET1.  In November 2017, the Federal Reserve finalized a rule pausing the phase-in of these deductions and adjustments for non-advanced approaches institutions. In July 2019, the OCC, the Federal Reserve Board and the FDIC adopted a final rule intended to simply the Capital Rules described above for non-advanced approaches institutions. Institutions may implement the provisions of the simplification rule beginning on January 1, 2020 and must implement them by April 1, 2020. The transition provisions to the Capital Rules issued by these agencies in November 2017 will cease to apply to an institution in the quarter in which it adopts the simplification rule.

In addition, under the current general risk-based capital rules, the effects of accumulated other comprehensive income or loss items included in shareholders’ equity (for example, mark-to-market of securities held in the available for sale portfolio) under U.S. generally accepted accounting principles (“GAAP”) are reversed for the purposes of determining regulatory capital ratios. Pursuant to the Capital Rules, the effects of certain of the above items are not excluded. However, banking organizations, including the Company, that are not subject to the advanced approaches rule, could make a one-time permanent election to exclude these items. The Company made the one-time permanent election to exclude these items.

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The Capital Rules also preclude certain hybrid securities, such as trust preferred securities, from inclusion in bank holding companies’ Tier 1 capital, although bank holding companies that had total consolidated assets of less than $15 billion at December 31, 2009 may include trust preferred securities issued prior to May 19, 2010 as a component of Tier 1 capital.

The risk-weighting categories in the Capital Rules are standardized and include a risk-sensitive number of categories, depending on the nature of the assets, generally ranging from 0% for U.S. government and agency securities, to 1,250% for certain credit exposures, and resulting in higher risk weights for a variety of asset classes.

Management believes that as of December 31, 2019 and 2018, the Company and the Bank met all applicable minimum capital requirements and were considered “well-capitalized” by both the FRB and the FDIC. There have been no events or conditions since the end of the year that management believes would have changed the Company’s or the Bank’s category. In September 2019, the OCC, the Federal Reserve Board and the FDIC adopted a final rule that is intended to further simply the Capital Rules for depository institutions and their holding companies that have less than $10 billion in total consolidated assets, such as us, if such institutions meet certain qualifying criteria. This final rule became effective on January 1, 2020. Under this final rule, if we meet the qualifying criteria, including having a leverage ratio (equal to tier 1 capital divided by average total consolidated assets) of greater than 9 percent, we will be eligible to opt into the community bank leverage ratio framework. If we opt into this framework, we will be considered to have satisfied the generally applicable risk-based and leverage capital requirements in the Capital Rules (as modified pursuant to the simplification rule) and will be considered to have met the well-capitalized ratio requirements for PCA purposes. We are currently evaluating the requirements of this rule.  

The Company’s and the Bank’s actual and required capital measures were as follows:

	Actual					Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer (1)					Minimum To Be Well-Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(dollars in thousands)
At December 31, 2019
Cambridge Bancorp:
Total capital (to risk-weighted    assets)	$	272,727		13.6	%	$	210,342		10.5	%	N/A		N/A
Tier I capital (to risk-weighted    assets)		254,497		12.7	%		170,277		8.5	%	N/A		N/A
Common equity tier I capital    (to risk-weighted assets)		254,497		12.7	%		140,228		7.0	%	N/A		N/A
Tier I capital (to average    assets)		254,497		9.0	%		113,365		4.0	%	N/A		N/A
Cambridge Trust Company:
Total capital (to risk-weighted    assets)	$	271,034		13.5	%	$	210,341		10.5	%	$	200,325		10.0	%
Tier I capital (to risk-weighted    assets)		252,804		12.6	%		170,276		8.5	%		160,260		8.0	%
Common equity tier I capital    (to risk-weighted assets)		252,804		12.6	%		140,227		7.0	%		130,211		6.5	%
Tier I capital (to average    assets)		252,804		8.9	%		113,364		4.0	%		141,705		5.0	%

(1) The 2013 Capital Rules adopted by the Federal Reserve, Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation implementing Basel III were fully phased-in effective January 1, 2019.

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	Actual					Minimum Capital Required For Capital Adequacy					Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer Basel III Phase-In Schedule					Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer Basel III Fully Phased In					Minimum To Be Well-Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio
	(dollars in thousands)
At December 31, 2018
Cambridge Bancorp:
Total capital (to risk-weighted    assets)	$	189,888		13.2	%	$	114,666		8.0	%	$	141,541		9.875	%	$	150,500		10.5	%	N/A		N/A
Tier I capital (to risk-weighted    assets)		173,070		12.1	%		86,000		6.0	%		112,875		7.875	%		121,833		8.5	%	N/A		N/A
Common equity tier I capital    (to risk-weighted assets)		173,070		12.1	%		64,500		4.5	%		91,375		6.375	%		100,333		7.0	%	N/A		N/A
Tier I capital (to average    assets)		173,070		8.5	%		81,507		4.0	%		81,507		4.000	%		81,507		4.0	%	N/A		N/A
Cambridge Trust Company:
Total capital (to risk-weighted    assets)	$	185,507		12.9	%	$	114,666		8.0	%	$	141,541		9.875	%	$	150,500		10.5	%	$	143,333		10.0	%
Tier I capital (to risk-weighted    assets)		168,689		11.8	%		86,000		6.0	%		112,875		7.875	%		121,833		8.5	%		114,666		8.0	%
Common equity tier I capital    (to risk-weighted assets)		168,689		11.8	%		64,500		4.5	%		91,375		6.375	%		100,333		7.0	%		93,166		6.5	%
Tier I capital (to average    assets)		168,689		8.3	%		81,507		4.0	%		81,507		4.000	%		81,507		4.0	%		101,884		5.0	%

19. OTHER INCOME

The components of other income were as follows:

	For the Year Ended December 31,
	2019		2018		2017
	(dollars in thousands)
Safe deposit box income	$	333	$	342	$	348
Loan fee income		1,030		358		473
Miscellaneous income		564		569		334
Total other income	$	1,927	$	1,269	$	1,155

20. OTHER OPERATING EXPENSES

The components of other operating expenses were as follows:

	For the Year Ended December 31,
	2019		2018			2017
	(dollars in thousands)
Director fees	$	527	$	724		$	576
Charitable donations & sponsorships		575		518			432
Printing and supplies		437		272			251
Travel and entertainment		579		456			339
Dues and memberships		412		293			260
Physical security		86		131			172
Postage and mailing		246		201			229
Miscellaneous expense		337		(331	)		885
Total other operating expenses	$	3,199	$	2,264		$	3,144

Miscellaneous expense in 2018 and 2017 includes the reclassification adjustment for retirement plan expenses as required upon adoption of ASU 2017-07.

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21. OTHER COMPREHENSIVE INCOME

Comprehensive income is defined as all changes to equity except investments by and distributions to shareholders. Net income is a component of comprehensive income, with all other components referred to in the aggregate as “other comprehensive income.” The Company’s other comprehensive income consists of unrealized gains or losses on securities held at year-end classified as available for sale and the component of the unfunded retirement liability computed in accordance with the requirements of ASC 715, “Compensation – Retirement Benefits.” The before-tax and after-tax amount of each of these categories, as well as the tax (expense)/benefit of each, is summarized as follows:

	For the Year Ended December 31, 2019							For the Year Ended December 31, 2018									For the Year Ended December 31, 2017
	Before Tax Amount		Tax (Expense) or Benefit			Net-of- tax Amount		Before Tax Amount			Tax (Expense) or Benefit			Net-of- tax Amount			Before Tax Amount		Tax (Expense) or Benefit			Net-of- tax Amount
								(dollars in thousands)
Unrealized (losses)/gains on available for sale     securities
Unrealized holding (losses)/gains arising     during the period	$	3,267	$	(767	)	$	2,500	$	(231	)	$	(11	)	$	(242	)	$	187	$	(59	)	$	128
Reclassification adjustment for (gains)/losses     recognized in net income		81		(19	)		62		(2	)		—			(2	)		3		(2	)		1
Derivatives
Change in interest rate contracts		1,134		(313	)		821		1,045			(294	)		751			—		—			—
Defined benefit retirement plans
Net change in retirement liability		864		(241	)		623		124			(35	)		89			6,545		(2,674	)		3,871
Total Other Comprehensive Income/(Loss)	$	5,346	$	(1,340	)	$	4,006	$	936		$	(340	)	$	596		$	6,735	$	(2,735	)	$	4,000

Reclassifications out of accumulated other comprehensive income (“AOCI”) are presented below:

	For the Year Ended December 31,
Details about Accumulated Other Comprehensive Income (Loss) Components	2019			2018		2017			Affected Line Item in the Statement where Net Income is Presented
	(dollars in thousands)
Unrealized gains and losses on available for sale securities	$	(81	)	$	2	$	(3	)	(Loss) gain on disposition of investment securities
Tax benefit or (expense)		19			—		2		Provision for income taxes
Net of tax	$	(62	)	$	2	$	(1	)	Net income

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22. EARNINGS PER SHARE

The following represents a reconciliation between basic and diluted earnings per share:

		For the Year Ended December 31,
		2019			2018			2017
	(dollars in thousands, except per share data)
Earnings per common share - basic:
Numerator:
Net income		$	25,257		$	23,881		$	14,816
Less dividends and undistributed earnings allocated    to participating securities			(210	)		(239	)		(157	)
Net income applicable to common shareholders		$	25,047		$	23,642		$	14,659
Denominator:
Weighted average common shares outstanding			4,629			4,062			4,031
Earnings per common share - basic		$	5.41		$	5.82		$	3.64
Earnings per common share - diluted:
Numerator:
Net income		$	25,257		$	23,881		$	14,816
Less dividends and undistributed earnings allocated    to participating securities			(210	)		(239	)		(157	)
Net income applicable to common shareholders		$	25,047		$	23,642		$	14,659
Denominator:
Weighted average common shares outstanding			4,629			4,062			4,031
Dilutive effect of common stock equivalents			33			37			35
Weighted average diluted common shares outstanding			4,662			4,099			4,066
Earnings per common share - diluted		$	5.37		$	5.77		$	3.61

23. DERIVATIVES and Hedging Activities

The Company utilizes interest rate swaps and floors to mitigate exposure to interest rate risk and to facilitate the needs of our customers.  The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts principally related to the Company’s assets.  

Cash Flow Hedges of Interest Rate Risk

The Company uses interest floors to manage its exposure to interest rate movements. Interest rate floors designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty if interest rates fall below the strike rate on the contract in exchange for an up-front premium. The Company executed an interest rate floor with a notional value of $150.0 million during the fourth quarter of 2018. The Company did not execute any new cash flow hedges in 2019.

For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in accumulated other comprehensive income and subsequently reclassified into interest income in the same period(s) during which the hedged transaction affects earnings. Gains and losses on the derivative representing hedge components excluded from the assessment of effectiveness are recognized over the life of the hedge on a systematic and rational basis. The earnings recognition of excluded components is presented in interest income. Amounts reported in accumulated other comprehensive income related to derivatives is reclassed to interest income as the Company receives interest payments on its variable-rate assets.  

Non-designated Hedges

Derivatives not designated as hedges are not speculative and result from a service the Company provides to certain customers. For the Company’s customers, these are interest rate swaps and risk participation agreements.

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Interest Rate Swaps. The Company enters into interest rate swap contracts to help commercial loan borrowers manage their interest rate risk. The interest rate swap contracts with commercial loan borrowers allow them to convert floating-rate loan payments to fixed-rate loan payments. When the Bank enters into an interest rate swap contract with a commercial loan borrower, it simultaneously enters into a “mirror” swap contract with a third party. The third party exchanges the client’s fixed‑rate loan payments for floating-rate loan payments. These derivatives are not designated as hedges and therefore, changes in fair value are recognized in earnings. Because these derivatives have mirror-image contractual terms, the changes in fair value substantially offset each other through earnings. Fees earned in connection with the execution of derivatives related to this program are recognized in earnings through other loan related derivative income.

The credit risk associated with swap transactions is the risk of default by the counterparty. To minimize this risk, the Company enters into interest rate agreements only with highly rated counterparties that management believes to be creditworthy. The notional amounts of these agreements do not represent amounts exchanged by the parties and, thus, are not a measure of the potential loss exposure.

Risk Participation Agreements. The Company enters into risk participation agreements (“RPAs”) with other banks participating in commercial loan arrangements. Participating banks guarantee the performance on borrower-related interest rate swap contracts. RPAs are derivative financial instruments and are recorded at fair value. These derivatives are not designated as hedges and therefore, changes in fair value are recognized in earnings with a corresponding offset within other assets or other liabilities.

Under a risk participation-out agreement, a derivative asset, the Company participates out a portion of the credit risk associated with the interest rate swap position executed with the commercial borrower, for a fee paid to the participating bank. Under a risk participation-in agreement, a derivative liability, the Company assumes, or participates in, a portion of the credit risk associated with the interest rate swap position with the commercial borrower and receives a fee from the other bank.

The following tables present the notional amount, the location, and fair values of derivative instruments in the Company’s Consolidated Balance Sheets:

	December 31, 2019
	Derivative Assets					Derivative Liabilities
	Notional Amount		Balance Sheet Location	Fair Value		Notional Amount		Balance Sheet Location	Fair Value
	(dollars in thousands)					(dollars in thousands)
Derivatives designated as hedging instruments
Interest rate contracts		150,000	Other Assets	$	2,911	$	—	Other Liabilities	$	—
Total derivatives designated as hedging instruments				$	2,911				$	—
Derivatives not designated as hedging instruments
Loan related derivative contracts
Interest rate swaps with customers		241,187	Other Assets	$	12,980		—	Other Liabilities	$	—
Mirror swaps with counterparties		—	Other Assets		—		241,187	Other Liabilities		12,980
Risk participation agreements out to counterparties		19,000	Other Assets		21		—	Other Liabilities		—
Risk participation agreements in with counterparties		—	Other Assets		—		88,489	Other Liabilities		250
Total derivatives not designated as hedging instruments				$	13,001				$	13,230

	December 31, 2018
	Derivative Assets					Derivative Liabilities
	Notional Amount		Balance Sheet Location	Fair Value		Notional Amount		Balance Sheet Location	Fair Value
	(dollars in thousands)					(dollars in thousands)
Derivatives designated as hedging instruments
Interest rate contracts		150,000	Other Assets	$	1,970	$	—	Other Liabilities	$	—
Total derivatives designated as hedging instruments				$	1,970				$	—
Derivatives not designated as hedging instruments
Loan related derivative contracts
Interest rate swaps with customers		150,489	Other Assets	$	5,782	$	—	Other Liabilities	$	—
Mirror swaps with counterparties		—	Other Assets		—		150,489	Other Liabilities		5,782
Risk participation agreements out to counterparties		19,000	Other Assets		28		—	Other Liabilities		—
Risk participation agreements in with counterparties		—	Other Assets		—		63,825	Other Liabilities		179
Total derivatives not designated as hedging instruments				$	5,810				$	5,961

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The following tables presents the effect of cash flow hedge accounting on AOCIas of the periods presented:

	Amount of Gain or (Loss) Recognized in OCI		Amount of Gain or (Loss) Recognized in OCI Included Component		Amount of Gain or (Loss) Recognized in OCI Excluded Component			Location of Gain or (Loss)	Amount of Gain or (Loss) Reclassified from AOCI into Income			Amount of Gain or (Loss) Reclassified from AOCI into Income Included Component		Amount of Gain or (Loss) Reclassified from AOCI into Income Excluded Component
	2019								2019
	(dollars in thousands)								(dollars in thousands)
Interest rate contracts	$	984	$	2,120	$	(1,136	)	Interest Income	$	(194	)	$	—	$	(194	)
Total	$	984	$	2,120	$	(1,136	)		$	(194	)	$	—	$	(194	)
	Amount of Gain or (Loss) Recognized in OCI		Amount of Gain or (Loss) Recognized in OCI Included Component		Amount of Gain or (Loss) Recognized in OCI Excluded Component			Location of Gain or (Loss)	Amount of Gain or (Loss) Reclassified from AOCI into Income			Amount of Gain or (Loss) Reclassified from AOCI into Income Included Component		Amount of Gain or (Loss) Reclassified from AOCI into Income Excluded Component
	2018								2018
	(dollars in thousands)								(dollars in thousands)
Interest rate contracts	$	1,002	$	—	$	1,002		Interest Income	$	(43	)	$	—	$	(43	)
Total	$	1,002	$	—	$	1,002			$	(43	)	$	—	$	(43	)

During 2019, the Company estimates that an additional $295,000 will be reclassified out of AOCI into earnings, as a reduction to interest income.

The following table presents the effect of the Company’s derivative financial instruments on the Income Statement as of the periods presented:  

	Year Ended December 31, 2019			Year Ended December 31, 2018
	Interest Income			Interest Income
	(dollars in thousands)			(dollars in thousands)
Total amount of income presented in the income    statement in which the effects of fair value or cash flow hedges are recorded	$	(194	)	$	(43	)
The effects of fair value and cash flow hedging:
Gain or (loss) on cash flow hedging relationships in Subtopic 815-20
Interest rate contracts
Amount of gain or (loss) reclassed from AOCI into income	$	(194	)	$	(43	)
Amount of gain or (loss) reclassed from AOCI    into income -  Included Component		—			—
Amount of gain or (loss) reclassed from AOCI    into income -  Excluded Component	$	(194	)	$	(43	)

The following table presents the effect of the Company’s derivative financial instruments that are not designated as hedging instruments on the Income Statement as of the periods presented:

		Amount of Gain or (Loss) Recognized in Income on Derivative
		Year Ended December 31		Year Ended December 31		Year Ended December 31
		2019		2018		2017
	Location of Gain or (Loss)	(dollars in thousands)
Other contracts	Other income	$	311	$	276	$	426
Total		$	311	$	276	$	426

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Credit-risk-related Contingent Features

By using derivatives, the Company is exposed to credit risk to the extent that counterparties to the derivative contracts do not perform as required. Should a counterparty fail to perform under the terms of a derivative contract, the Company’s credit exposure on interest rate swaps is limited to the net positive fair value and accrued interest of all swaps with each counterparty. The Company seeks to minimize counterparty credit risk through credit approvals, limits, monitoring procedures, and obtaining collateral, where appropriate. Institutional counterparties must have an investment grade credit rating and be approved by the Company’s Board of Directors. As such, management believes the risk of incurring credit losses on derivative contracts with institutional counterparties is remote.

The Company has agreements with its derivative counterparties that contain a provision where if the Company defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default on its derivative obligations.  In addition, the Company also has agreements with certain of its derivative counterparties that contain a provision where if the Company fails to maintain its status as a well-capitalized institution, then the counterparty could terminate the derivative position(s), and the Company would be required to settle its obligations under the agreements.

As of December 31, 2019 and December 31, 2018, the fair value of derivatives in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements was $9.6 million and $811,000, respectively.  As of December 31, 2019 and December 31, 2018, the Company has minimum collateral posting thresholds with certain of its derivative counterparties and has posted cash collateral of $10.4 million and $260,000, respectively. If the Company had breached any of these provisions at December 31, 2019 or December 31, 2018, it could have been required to settle its obligations under the agreements at their termination value of $ 9.6 million and $811,000, respectively.

Balance Sheet Offsetting

Certain financial instruments may be eligible for offset in the consolidated balance sheet and/or subject to master netting arrangements or similar agreements. The Company’s derivative transactions with institutional counterparties are generally executed under International Swaps and Derivative Association (“ISDA”) master agreements which include “right of set-off” provisions. In such cases there is generally a legally enforceable right to offset recognized amounts and there may be an intention to settle such amounts on a net basis. Generally, the Company does not offset such financial instruments for financial reporting purposes.

The following tables present the information about financial instruments that are eligible for offset in the consolidated balance sheet as December 31, 2019 and December 31, 2018:

								Gross Amounts Not Offset
		Gross Amounts of Recognized		Gross Amounts Offset		Net Amounts Recognized		Financial Instruments		Collateral Pledged (Received)			Net Amount
	December 31, 2019
	(dollars in thousands)
Offsetting of Derivative Assets
Derivative Assets		$	15,912	$	—	$	15,912	$	3,128	$	—		$	12,784
Offsetting of Derivative Liabilities
Derivative Liabilities		$	13,230	$	—	$	13,230	$	3,128	$	9,645		$	457
								Gross Amounts Not Offset
		Gross Amounts of Recognized		Gross Amounts Offset		Net Amounts Recognized		Financial Instruments		Collateral Pledged (Received)			Net Amount
	December 31, 2018
	(dollars in thousands)
Offsetting of Derivative Assets
Derivative Assets		$	7,780	$	—	$	7,780	$	3,099	$	(743	)	$	3,938
Offsetting of Derivative Liabilities
Derivative Liabilities		$	5,961	$	—	$	5,961	$	3,099	$	260		$	2,602

98

24. FAIR VALUE MEASUREMENTS

The following is a summary of the carrying values and estimated fair values of the Company’s significant financial instruments as of the dates indicated:

	December 31, 2019				December 31, 2018
	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
	(dollars in thousands)
Financial assets
Cash and cash equivalents	$	61,335	$	61,335	$	18,473	$	18,473
Securities available for sale		140,330		140,330		168,163		168,163
Securities held to maturity		258,172		264,114		282,869		281,310
Loans, net		2,208,548		2,160,087		1,543,004		1,484,905
Loans held for sale		1,546		2,051		—		—
FHLB Boston stock		7,854		7,854		6,844		6,844
Accrued interest receivable		7,052		7,052		5,762		5,762
Mortgage servicing rights		1,321		1,526		666		941
Interest rate contracts		2,911		2,911		1,970		1,970
Loan level interest rate swaps		12,980		12,980		5,782		5,782
Risk participation agreements out to counterparties		21		21		28		28
Financial liabilities
Deposits		2,358,878		2,358,089		1,811,410		1,809,051
Short-term borrowings		135,691		135,744		90,000		90,000
Long-term borrowings		—		—		3,409		3,363
Loan level interest rate swaps		12,980		12,980		5,782		5,782
Risk participation agreements in with counterparties		250		250		179		179

The Company follows ASC 820, “Fair Value Measurements and Disclosures,” for financial assets and liabilities. ASC 820 defines fair value, establishes a framework for measuring fair value, and expands disclosure requirements about fair value measurements. ASC 820, among other things, emphasizes that fair value is a market-based measurement, not an entity-specific measurement, and states that a fair value measurement should be determined based on the assumptions the market participants would use in pricing the asset or liability. In addition, ASC 820 specifies a hierarchy of valuation techniques based on whether the types of valuation information (“inputs”) are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. These two types of inputs have created the following fair value hierarchy:

• Level 1 – Quoted prices for identical assets or liabilities in active markets.

• Level 2 – Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in inactive markets; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.

• Level 3 – Valuations derived from techniques in which one or more significant inputs or significant value drivers are unobservable in the markets and which reflect the Company’s market assumptions.

Under ASC 820, fair values are based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When available, the Company uses quoted market prices to determine fair value. If quoted prices are not available, fair value is based upon valuation techniques, such as matrix pricing or other models that use, where possible, current market-based or independently sourced market parameters, such as interest rates. If observable market-based inputs are not available, the Company uses unobservable inputs to determine appropriate valuation adjustments using methodologies applied consistently over time.

Valuation techniques based on unobservable inputs are highly subjective and require judgments regarding significant matters, such as the amount and timing of future cash flows and the selection of discount rates that may appropriately reflect market and credit risks.

Changes in these judgments often have a material impact on the fair value estimates. In addition, since these estimates are as of a specific point in time, they are susceptible to material near-term changes. The fair values disclosed do not reflect any premium or discount that could result from offering significant holdings of financial instruments at bulk sale, nor do they reflect the possible tax ramifications or estimated transaction costs. Changes in economic conditions may also dramatically affect the estimated fair values.

99

The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. Securities available for sale, derivative instruments, and hedges are recorded at fair value on a recurring basis. Additionally, from time to time, the Company may be required to record at fair value other assets on a nonrecurring basis, such as collateral dependent impaired loans.  In accordance with the requirements of ASU 2016-01, the Company uses an exit price notion for its fair value disclosures.

The following tables summarize certain assets reported at fair value on a recurring basis:

	Fair Value as of December 31, 2019
	Level 1		Level 2		Level 3		Total
	(dollars in thousands)
Measured on a recurring basis
Securities available for sale
U.S. GSE obligations	$	—	$	37,848	$	—	$	37,848
Mortgage-backed securities		—		102,482		—		102,482
Corporate debt securities		—		—		—		—
Other assets
Interest rate swaps with customers		—		12,980		—		12,980
Risk participation agreements out to counterparties		—		21		—		21
Interest rate contracts		—		2,911		—		2,911
Other liabilities
Mirror swaps with counterparties		—		12,980		—		12,980
Risk participation agreements in with counterparties		—		250		—		250

	Fair Value as of December 31, 2018
	Level 1		Level 2		Level 3		Total
	(dollars in thousands)
Measured on a recurring basis
Securities available for sale
U.S. GSE obligations	$	—	$	74,039	$	—	$	74,039
Mortgage-backed securities		—		89,268		—		89,268
Corporate debt securities		—		4,856		—		4,856
Other assets
Interest rate swaps with customers		—		5,782		—		5,782
Risk participation agreements out to counterparties		—		28		—		28
Interest rate contracts		—		1,970		—		1,970
Other liabilities
Mirror swaps with counterparties		—		5,782		—		5,782
Risk participation agreements in with counterparties		—		179		—		179

The following table presents the carrying value of assets held at December 31, 2019, which were measured at fair value on a non-recurring basis:

	December 31, 2019
	Level 1		Level 2		Level 3		Total
	(dollars in thousands)
Items recorded at fair value on a non-recurring basis
Assets
Collateral dependent impaired loans	$	—	$	—	$	2,541	$	2,541
Loans held for sale		1,546		—		—		1,546
Other real estate owned		—		—		163		163
Total	$	1,546	$	—	$	2,704	$	4,250

Collateral dependent impaired loans. Collateral dependent loans are carried at the lower of cost or fair value of the collateral less estimated costs to sell which approximates fair value. The Company uses the appraisal value of the collateral and applies certain adjustments depending on the nature, quality, and type of collateral securing the loan.

100

Loans held for sale. Loans held for sale are carried at the lower of fair value or carrying value (unpaid principal and unamortized loans fees).

Other Real Estate Owned.These properties are carried at fair value less estimated costs to sell. There were no assets measured at fair value on a non-recurring basis during the year ended December 31, 2018.

There were no transfers between fair value levels for the years ended December 31, 2019 and 2018.

The following is a description of the principal valuation methodologies used by the Company to estimate the fair values of its financial instruments.

Investment Securities

For investment securities, fair values are primarily based upon valuations obtained from a national pricing service which uses matrix pricing with inputs that are observable in the market or can be derived from, or corroborated by, observable market data. When available, quoted prices in active markets for identical securities are utilized.

Loans Held for Sale

For loans held for sale, fair values are estimated using projected future cash flows, discounted at rates based upon either trades of similar loans or mortgage-backed securities, or at current rates at which similar loans would be made to borrowers with similar credit ratings and for similar remaining maturities.

Loans

For most categories of loans, fair values are estimated using projected future cash flows, discounted at rates based upon current rates at which similar loans would be made to borrowers with similar credit ratings, and for similar remaining maturities. Projected estimated cash flows are adjusted for prepayment assumptions, liquidity premium assumptions, and credit loss assumptions. Loans that are deemed to be impaired in accordance with ASC 310, “Receivables,” are valued based upon the lower of cost or fair value of the underlying collateral.

FHLB of Boston Stock

The fair value of FHLB of Boston stock equals its carrying value since such stock is only redeemable at its par value.

Deposits

The fair value of non-maturity deposit accounts is the amount payable on demand at the reporting date. This amount does not take into account the value of the Bank’s long-term relationships with core depositors. The fair value of fixed-maturity certificates of deposit is estimated using a replacement cost of funds approach and is based upon rates currently offered for deposits of similar remaining maturities.

Long-Term Borrowings

For long-term borrowings, fair values are estimated using future cash flows, discounted at rates based upon current costs for debt securities with similar terms and remaining maturities.

Other Financial Assets and Liabilities

Cash and cash equivalents, accrued interest receivable, and short-term borrowings have fair values which approximate their respective carrying values because these instruments are payable on demand or have short-term maturities and present relatively low credit risk and interest rate risk.

Derivative Instruments and Hedges

The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The Bank incorporates credit valuation adjustments to appropriately reflect nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Bank has considered the impact of netting and any applicable credit enhancements, such as collateral postings.

101

Off-Balance-Sheet Financial Instruments

In the course of originating loans and extending credit, the Bank will charge fees in exchange for its commitment. While these commitment fees have value, the Bank has not estimated their value due to the short-term nature of the underlying commitments and their immateriality.

Values Not Determined

In accordance with ASC 820, the Company has not estimated fair values for non-financial assets such as banking premises and equipment, goodwill, the intangible value of the Bank’s portfolio of loans serviced for itself, and the intangible value inherent in the Bank’s deposit relationships (i.e., core deposits), among others. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company.

25. Quarterly Results of Operations (unaudited)

2019 Quarters	Fourth		Third		Second		First
	(dollars in thousands, except share data)
Interest and Dividend Income	$	26,415	$	26,336	$	24,470	$	19,118
Interest Expense		4,807		5,285		4,694		2,857
Net Interest and Dividend Income		21,608		21,051		19,776		16,261
Provision for (Release of) Loan Losses		331		2,170		596		(93	)
Net Interest and Dividend Income after Provision for    Loan Losses		21,277		18,881		19,180		16,354
Noninterest Income		9,933		10,366		8,145		7,957
Noninterest Expense		21,428		18,863		21,513		16,373
Income Before Taxes		9,782		10,384		5,812		7,938
Income Taxes		2,673		2,708		1,540		1,740
Net Income	$	7,109	$	7,676	$	4,272	$	6,198
Share Data:
Average Shares Outstanding, Basic		4,939,973		4,815,020		4,682,109		4,072,805
Average Shares Outstanding, Diluted		4,980,439		4,842,965		4,715,724		4,106,658
Basic Earnings Per Share	$	1.43	$	1.58	$	0.91	$	1.51
Diluted Earnings Per Share	$	1.42	$	1.57	$	0.90	$	1.49

2018 Quarters	Fourth		Third		Second			First
	(dollars in thousands, except share data)
Interest and Dividend Income	$	18,385	$	17,602	$	16,936		$	16,132
Interest Expense		1,975		1,431		1,082			979
Net Interest and Dividend Income		16,410		16,171		15,854			15,153
Provision for (Release of) Loan Losses		715		457		(79	)		409
Net Interest and Dividend Income after Provision for    Loan Losses		15,695		15,714		15,933			14,744
Noninterest Income		8,038		8,929		7,844			8,178
Noninterest Expense		16,842		15,879		15,765			15,501
Income Before Taxes		6,891		8,764		8,012			7,421
Income Taxes		1,585		2,105		1,901			1,616
Net Income	$	5,306	$	6,659	$	6,111		$	5,805
Share Data:
Average Shares Outstanding, Basic		4,065,681		4,064,620		4,059,927			4,053,355
Average Shares Outstanding, Diluted		4,102,546		4,101,378		4,094,489			4,071,975
Basic Earnings Per Share	$	1.29	$	1.62	$	1.49		$	1.42
Diluted Earnings Per Share	$	1.28	$	1.61	$	1.48		$	1.41

102

26. Condensed Financial Statements of Parent Company

The condensed balance sheets of Cambridge Bancorp, the Parent Company, as of December 31, 2019and 2018 and the condensed statements of income and cash flows for each of the years in the three-year period ended December 31, 2019 are presented below. The statements of changes in shareholders’ equity are identical to the consolidated statements of changes in shareholders’ equity and are therefore not presented here.

Condensed Balance Sheet

	December 31,
	2019		2018
	(dollars in thousands)
ASSETS
Cash and cash equivalents	$	1,680	$	4,412
Other assets		13		—
Investment in subsidiary		284,868		162,614
Total assets	$	286,561	$	167,026
SHAREHOLDERS’ EQUITY
Shareholders’ equity	$	286,561	$	167,026
Total shareholders’ equity	$	286,561	$	167,026

Condensed Statements of Income

	For the Year Ended December 31,
	2019			2018			2017
	(dollars in thousands)
Income
Dividends from subsidiary	$	10,732		$	8,615		$	8,052
Total income		10,732			8,615			8,052
Expenses
Other expenses		132			116			—
Total expenses		132			116			—
Income before income taxes and equity in undistributed income of subsidiary		10,600			8,499			8,052
Income tax benefit		(36	)		(32	)		—
Income of parent company		10,636			8,531			8,052
Equity in undistributed income of subsidiary		14,621			15,350			6,764
Net income	$	25,257		$	23,881		$	14,816

103

Condensed Statements of Cash Flows

	For the Year Ended December 31,
	2019			2018			2017
	(dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	25,257		$	23,881		$	14,816
Adjustments to reconcile net income to net cash provided    by operating activities
Change in other assets, net		(13	)		—			—
Undistributed income of subsidiary		(14,621	)		(15,350	)		(6,764	)
Net cash provided by operating activities		10,623			8,531			8,052
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid in business combinations		(3,525	)		—			—
Investment in subsidiary		(38,202	)		—			—
Net cash (used in)/provided by investing activities		(41,727	)		—			—
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of common stock		38,576			761			1,522
Repurchase of common stock		(687	)		(574	)		(470	)
Cash dividends paid on common stock		(9,517	)		(8,041	)		(7,582	)
Net cash provided by/(used in) financing activities		28,372			(7,854	)		(6,530	)
Net increase (decrease) in cash		(2,732	)		677			1,522
Cash at beginning of year		4,412			3,735			2,213
Cash at end of year	$	1,680		$	4,412		$	3,735

104

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors
Cambridge Bancorp:

Opinion on the ConsolidatedFinancial Statements

We have audited the accompanying consolidated balance sheets of Cambridge Bancorp and subsidiaries (the Company) as of December 31, 2019 and 2018, the related consolidated statements of income, comprehensive income (loss), changes in shareholders’ equity, and cash flows for each of the years in the three‑year period ended December 31, 2019, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the years in the three‑year period ended December 31, 2019, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 16, 2020 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ KPMG LLP

We have served as the Company’s auditor since 2006.

Boston, Massachusetts
March 16, 2020

105

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors
Cambridge Bancorp:

Opinion on Internal Control Over Financial Reporting

We have audited Cambridge Bancorp and subsidiaries’ (the Company) internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.  

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2019 and 2018, the related consolidated statements of income, comprehensive income (loss), changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2019, and the related notes  (collectively, the consolidated financial statements), and our report dated March 16, 2020 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ KPMG LLP

Boston, Massachusetts
March 16, 2020

106

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures.

Disclosure Controls and Procedures

As required by Rules 13a-15 and 15d-15 of the Securities Exchange Act of 1934, the Company has evaluated, with the participation of management, including the Chief Executive Officer and the Chief Financial Officer, as of the end of the period covered by this report, the effectiveness of the design and operation of its disclosure controls and procedures.

Based on such evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that such disclosure controls and procedures were effective as of December 31, 2019 in ensuring that material information required to be disclosed by the Company, including its consolidated subsidiaries:

a) was made known to the certifying officers by others within the Company and its consolidated subsidiaries in the reports that it files or submits under the Exchange Act; and

b) is recorded, processed, summarized, and reported within the time periods specified in the Securities Exchange Commission rules and forms.

On a quarterly basis, the Company evaluates the disclosure controls and procedures and may, from time to time, make changes aimed at enhancing their effectiveness and to ensure that the Company’s systems evolve with its business.

Changes in Internal Controls over Financial Reporting

There have been no changes in the Company’s internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting in 2019.

Management’s Report on Internal Control Over Financial Reporting

The management of the Company is responsible for establishing and maintaining adequate internal control (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended) over financial reporting. The Company’s internal control over financial reporting is a process designed to provide reasonable assurance to the Company’s Chief Executive Officer and Chief Financial Officer regarding the reliability of financial reporting and preparation of the Company’s financial statements in accordance with accounting principles generally accepted in the U.S.

In designing and evaluating the Company’s disclosure controls and procedures, the Company and its management recognize that any controls and procedures, no matter how well designed and operated, can provide only a reasonable assurance of achieving the desired control objectives, and management was required to apply its judgment in evaluating and implementing possible controls and procedures. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation and may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2019. In making this assessment, management used the criteria set forth in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on management’s assessment, the Company believes that, as of December 31, 2019, the Company’s internal control over financial reporting is effective based on the criteria established by Internal Control—Integrated Framework (2013) issued by COSO.

KPMG LLP, an independent registered public accounting firm, has audited the Company’s consolidated financial statements included in this Annual Report on Form 10-K and, as part of its audit, has issued its report, included herein on page 105, on the effectiveness of the Company’s internal control over financial reporting.

Item 9B. Other Information.

None.

107

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

The information required by this Item is incorporated herein by reference to the captions “Proposal 1: Election of Directors,” “Committees of the Board of Directors– Audit Committee,” “Information about the Company’s Executive Officers Who are not Directors,” and “Code of Ethics” in the Company’s definitive proxy statement for the 2020 Annual Meeting of Shareholders (the “Proxy Statement”), which will be filed with the SEC no later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.    

Item 11. Executive Compensation.

The information required by this Item is incorporated herein by reference to the captions “Compensation Discussion and Analysis,” “Director Compensation,” “Executive Compensation Tables,” “Compensation Committee Interlocks and Insider Participation,” and “Compensation Committee Report” in the Company’s Proxy Statement, which are incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The information required by this Item is incorporated herein by reference to the caption “Security Ownership of Certain Beneficial Owners and Management” and “Securities Authorized for Issuance Under Equity Compensation Plans” in the Proxy Statement.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

The information required by this Item is incorporated herein by reference to the captions “Transactions with Related Persons” and “Corporate Governance – Board of Directors Independence” in the Company’s Proxy Statement.

Item 14. Principal Accounting Fees and Services.

The information required by this Item is incorporated herein by reference to the caption “Independent Registered Public Accounting Firm Fees and Services” in the Proxy Statement.

108

PART IV

Item 15. Exhibits, Financial Statement Schedules.

(a) Documents filed as a Part of this Annual Report on Form 10-K:

(1) Financial Statements—Included in Item 8 of this Annual Report on Form 10-K.

Audited Consolidated Financial Statements

Consolidated Balance Sheets as of December 31, 2019 and 2018	50
Consolidated Statements of Income for the Years Ended December 31, 2019, 2018, and 2017	51
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2019, 2018, and 2017	52
Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2019, 2018, and 2017	53
Consolidated Statements of Cash Flows for the Years Ended December 31, 2019, 2018, and 2017	54
Notes to Consolidated Financial Statements	55
Report of Independent Registered Public Accounting Firm	105

(2) Financial Statement Schedules

1. Financial Statements.  The financial statements of the Company required in response to this item are listed in response to Part II, Item 8 of this Annual Report on Form 10-K.

2. Financial Statement Schedules.  There are no financial statement schedules that are required to be filed as part of this form since they are not applicable or the information is included in the consolidated financial statements.

3. Exhibits.  The following exhibits are included as part of this Form 10-K.

(3) Index to Exhibits.

Exhibit Number	Description
2.1	Agreement and Plan of Merger, dated December 5, 2018, by and between Cambridge Bancorp, Cambridge Trust Company and Optima Bank & Trust Company (incorporated by reference to Exhibit 2.1 of the Form 8-K filed with the SEC on December 6, 2018)
2.2	Agreement and Plan of Merger, dated December 5, 2019, by and between Cambridge Bancorp, Cambridge Trust Company, Wellesley Bancorp, Inc. and Wellesley Bank (incorporated by reference to Exhibit 2.1 of the Form 8-K filed with the SEC on December 5, 2019)
3.1	Articles of Organization (incorporated by reference to Exhibit 3.1 of the Form 8-K filed with the SEC on June 19, 2018)
3.2	Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 of Amendment No. 2 of the Registration Statement File No. 1-38184 on Form 10 filed with the SEC on October 4, 2017)
4.1	Specimen stock certificate (incorporated by reference to Exhibit 4.1 of Amendment No. 2 of the Registration Statement File No. 1-38184 on Form 10 filed with the SEC on October 4, 2017)
4.2*	Description of Cambridge Bancorp Securities Registered under Section 12 of the Securities Exchange Act of 1934.
10.1**	Cambridge Bancorp Amended 1993 Stock Option Plan (incorporated by reference to Exhibit 10.1 of Amendment No. 2 of the Registration Statement File No. 1-38184 on Form 10 filed with the SEC on October 4, 2017)
10.1(a) **	Cambridge Bancorp Amended 1993 Stock Option Plan—Form of Restricted Stock Agreement (incorporated by reference to Exhibit 10.1(a) of Amendment No. 2 of the Registration Statement File No. 1-38184 on Form 10 filed with the SEC on October 4, 2017)
10.1(b) **	Cambridge Bancorp Amended 1993 Stock Option Plan—Form of Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.1(b) of Amendment No. 2 of the Registration Statement File No. 1-38184 on Form 10 filed with the SEC on October 4, 2017)

109

Exhibit Number	Description
10.1(c) **	Cambridge Bancorp Amended 1993 Stock Option Plan—Form of Nonstatutory Stock Option Agreement (incorporated by reference to Exhibit 10.1(c) of Amendment No. 2 of the Registration Statement File No. 1-38184 on Form 10 filed with the SEC on October 4, 2017)
10.1(d) **	Cambridge Bancorp Amended 1993 Stock Option Plan—Form of Incentive Stock Option Agreement (incorporated by reference to Exhibit 10.1(d) of Amendment No. 2 of the Registration Statement File No. 1-38184 on Form 10 filed with the SEC on October 4, 2017)
10.2**	Cambridge Bancorp 2017 Equity and Cash Incentive Plan (incorporated by reference to Exhibit 10.2 of Amendment No. 2 of the Registration Statement File No. 1-38184 on Form 10 filed with the SEC on October 4, 2017)
10.3**	Cambridge Bancorp Director Stock Plan, amended as of April 25, 2011 (incorporated by reference to Exhibit 10.3 of Amendment No. 2 of the Registration Statement File No. 1-38184 on Form 10 filed with the SEC on October 4, 2017)
10.4**	2016 Annual Incentive Plan (incorporated by reference to Exhibit 10.4 of Amendment No. 2 of the Registration Statement File No. 1-38184 on Form 10 filed with the SEC on October 4, 2017)
10.5**	The Executive Nonqualified Excess Plan of Cambridge Trust Company (incorporated by reference to Exhibit 10.5 of Amendment No. 2 of the Registration Statement File No. 1-38184 on Form 10 filed with the SEC on October 4, 2017)
10.6**	Cambridge Trust Company Amended and Restated Supplemental Executive Retirement Agreement for Denis K. Sheahan, dated July 7, 2017 (incorporated by reference to Exhibit 10.6 of Amendment No. 2 of the Registration Statement File No. 1-38184 on Form 10 filed with the SEC on October 4, 2017)
10.7**	Cambridge Trust Company Supplemental Executive Retirement Agreement for Lynne M. Burrow, dated February 27, 2008 (incorporated by reference to Exhibit 10.7 of Amendment No. 2 of the Registration Statement File No. 1-38184 on Form 10 filed with the SEC on October 4, 2017)
10.8**	Cambridge Trust Company Supplemental Executive Retirement Agreement for Albert R. Rietheimer, dated February 21, 2008 (incorporated by reference to Exhibit 10.8 of Amendment No. 2 of the Registration Statement File No. 1-38184 on Form 10 filed with the SEC on October 4, 2017)
10.9**	Cambridge Trust Company Supplemental Executive Retirement Agreement for Michael A. Duca, dated August 14, 2008 (incorporated by reference to Exhibit 10.9 of Amendment No. 2 of the Registration Statement File No. 1-38184 on Form 10 filed with the SEC on October 4, 2017)
10.10**	First Amendment to Cambridge Trust Company Supplemental Executive Retirement Agreement for Michael A Duca, dated December 22, 2016 (incorporated by reference to Exhibit 10.10 of Amendment No. 2 of the Registration Statement File No. 1-38184 on Form 10 filed with the SEC on October 4, 2017)
10.11**	Cambridge Trust Company Supplemental Executive Retirement Agreement for Martin B. Millane, Jr., dated January 1, 2016 (incorporated by reference to Exhibit 10.11 of Amendment No. 2 of the Registration Statement File No. 1-38184 on Form 10 filed with the SEC on October 4, 2017)
10.12**	Change in Control Agreement with Denis K. Sheahan, dated December 21, 2015 (incorporated by reference to Exhibit 10.12 of Amendment No. 2 of the Registration Statement File No. 1-38184 on Form 10 filed with the SEC on October 4, 2017)
10.13**	Change in Control Agreement with Lynne M. Burrow, dated September 16, 2008 (incorporated by reference to Exhibit 10.13 of Amendment No. 2 of the Registration Statement File No. 1-38184 on Form 10 filed with the SEC on October 4, 2017)
10.14**	Agreement with Mr. Michael Carotenuto, dated April 26, 2019 (incorporated by reference to Exhibit 10.1 of the Form 8-K filed with the SEC on April 29, 2019)
10.15**	Agreement with Mr. Martin Millane, dated April 26, 2019 (incorporated by reference to Exhibit 10.2 of the Form 8-K filed with the SEC on April 29, 2019)
10.16**	Change in Control Agreement with Mark D. Thompson, dated September 17, 2017 (incorporated by reference to Exhibit 10.1 of the Form 8-K filed with the SEC on November 30, 2017)
10.17**	Agreement with Ms. Jennifer Pline, dated April 26, 2019 (incorporated by reference to Exhibit 10.3 of the Form 8-K filed with the SEC on April 29, 2019)

110

Exhibit Number	Description
10.18**	Change in Control Agreement with Daniel R. Morrison, dated December 5, 2018 (incorporated by reference to Exhibit 10.18 of the Form 10-K filed with the SEC on March 18, 2019)
10.19**	Cambridge Trust Company Supplemental Executive Retirement Agreement for Mark D. Thompson, dated September 25, 2017 (incorporated by reference to Exhibit 99.1 of the Form 8-K filed with the SEC on November 30, 2017)
10.20**	Offer Letter for Mark D. Thompson, dated September 17, 2017 (incorporated by reference to Exhibit 10.18 of the Form 10-K filed with the SEC on March 21, 2018)
10.21**	Offer Letter for Jennifer A. Pline, dated November 7, 2016 (incorporated by reference to Exhibit 10.19 of the Form 10-K filed with the SEC on March 21, 2018)
10.22**	Cambridge Trust Company Supplemental Executive Retirement Agreement for Jennifer A. Pline, dated January 30, 2017 (incorporated by reference to Exhibit 10.22 of the Form 10-K filed with the SEC on March 18, 2019)
10.23**	Offer Letter for Daniel R. Morrison, dated December 5, 2018 (incorporated by reference to Exhibit 10.23 of the Form 10-K filed with the SEC on March 18, 2019)
10.24**	Offer Letter for Pamela A. Morrison, dated December 5, 2018 (incorporated by reference to Exhibit 10.24 of the Form 10-K filed with the SEC on March 18, 2019)
10.25**	Offer Letter for William D. Young, dated December 5, 2018 (incorporated by reference to Exhibit 10.25 of the Form 10-K filed with the SEC on March 18, 2019)
10.26**	Long-Term Incentive Plan, effective January 1, 2018 (incorporated by reference to Exhibit 10.21 of the Form 10-Q filed with the SEC on August 9, 2018)
10.27**	Short-Term Incentive Plan (effective January 1, 2019) (incorporated by reference to Exhibit 10.20 of the Form 10-Q filed with the SEC on May 9, 2019)
10.28**	Long-Term Incentive Plan (effective January 1, 2019) (incorporated by reference to Exhibit 10.21 of the Form 10-Q filed with the SEC on May 9, 2019)
21*	Subsidiaries of the Registrant
23.1*	Consent of KPMG LLP dated March 16, 2020
31.1*	Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*	Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Definition Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith.

** Management Compensatory plans or arrangements.

Item 16. Form 10-K Summary.

None.

111

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	CAMBRIDGE BANCORP
March 16, 2020	By:	/s/  Denis K. Sheahan
		Denis K. Sheahan
		Chairman, Chief Executive Officer
March 16, 2020
	By:	/s/  Michael F. Carotenuto
		Michael F. Carotenuto
		Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated.

Name	Title	Date
/s/ Denis K. Sheahan	Chairman, Chief Executive Officer	March 16, 2020
Denis K. Sheahan	(Principal Executive Officer)
/s/ Michael F. Carotenuto	Chief Financial Officer	March 16, 2020
Michael F. Carotenuto	(Principal Financial Officer and Principal Accounting Officer)
/s/ Jeanette G. Clough	Director	March 16, 2020
Jeanette G. Clough
/s/ Christine Fuchs	Director	March 16, 2020
Christine Fuchs
/s/ Sarah G. Green	Director	March 16, 2020
Sarah G. Green
/s/ Pamela A. Hamlin	Director	March 16, 2020
Pamela A. Hamlin
/s/ Edward F. Jankowski	Director	March 16, 2020
Edward F. Jankowski
/s/ Hambleton Lord	Director	March 16, 2020
Hambleton Lord
/s/ Thalia M. Meehan	Director	March 16, 2020
Thalia M. Meehan
/s/ Daniel R. Morrison	Chief Executive Officer New	March 16, 2020
Daniel R. Morrison	Hampshire Market and Director
/s/ Leon A. Palandjian	Director	March 16, 2020
Leon A. Palandjian
/s/ Laila S. Partridge	Director	March 16,2020
Laila S. Partridge
/s/ Jody A. Rose	Director	March 16, 2020
Jody A. Rose
/s/ Cathleen A. Schmidt	Director	March 16, 2020
Cathleen A. Schmidt
/s/ R. Gregg Stone	Director	March 16, 2020
R. Gregg Stone
/s/ Mark D. Thompson	President and Director	March 16, 2020
Mark D. Thompson
/s/ Linda A. Whitlock	Director	March 16, 2020
Linda A. Whitlock

112

EX-4.2

Exhibit 4.2

CAMBRIDGE BANCORP

DESCRIPTION OF SECURITIES REGISTERED UNDER

SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934

The following description is a general summary of the terms of Cambridge Bancorp’s common stock. The description below does not purport to be complete and is subject to and qualified in its entirety by reference to our articles of organization and amended and restated by-laws, copies of which are filed as exhibits to this Annual Report on Form 10-K. All references to the “Company,” “we,” “us” and “our” refer to Cambridge Bancorp.

General

Our articles of organization authorize us to issue 10,000,000 shares of common stock, par value $1.00 per share. As of February 29, 2020, there were 5,412,221 shares of common stock issued and outstanding.

Each share of our common stock has the same relative rights and is identical in all respects to each other share of our common stock.

Voting Rights

Holders of our common stock are entitled to one vote per share on each matter properly submitted to shareholders for their vote, including the election of directors. Holders of our common stock do not have the right to cumulate their votes for the election of directors. A plurality of votes cast, in person or represented by proxy, at the annual meeting and entitled to vote is required for the election of directors. Subject to certain limited exceptions, whenever any corporate action is to be taken by a vote of the shareholders, it will be authorized by the affirmative vote of a majority of the votes cast, in person or represented by proxy, at the meeting and entitled to vote thereon.

Liquidation Rights

The holders of our common stock, together with the holders of any class or series of stock entitled to participate with the holders of our common stock in the distribution of assets in the event of any liquidation, dissolution or winding-up of us, whether voluntary or involuntary, will be entitled to participate equally in the distribution of any of our assets remaining after we have paid, or provided for the payment of, all of our debts and liabilities.

Dividends

The holders of our common stock and any class or series of stock entitled to participate with the holders of our common stock are entitled to receive dividends declared by our board of directors out of any assets legally available for distribution. As a holding company, our ability to pay distributions is affected by the ability of our subsidiaries to pay dividends. The ability of our bank subsidiary, and our ability, to pay dividends in the future is, and could in the future be further, influenced by bank regulatory requirements and capital guidelines.

Miscellaneous

The holders of our common stock have no preemptive or conversion rights for any shares that may be issued. Our common stock is not subject to additional calls or assessments, and all shares of our common stock currently outstanding are fully paid and nonassessable. All shares of common stock will, when issued, be fully paid and nonassessable, which means that the full purchase price of the shares will have been paid and the holders of the shares will not be assessed any additional monies for the shares.

Certain Important Charter Provisions

Our amended and restated by-laws provide for the division of our board of directors into three classes of directors, each class as nearly as equal as possible, with each serving staggered terms. Except as otherwise provided

in the articles of organization or the amended and restated by-laws, the amended and restated by-laws may be amended, altered or repealed in whole or in part, and new by-laws may be adopted, by a vote of the holders of a majority of the shares of common stock outstanding and entitled to vote. Although the directors may also amend, alter or repeal, in whole or in part, the amended and restated by-laws, any amendment, alteration or repeal of the amended and restated by-laws that affects the voting power of shareholders, other than action with respect to the applicable law regarding control share acquisitions, requires shareholder approval.

Additionally, our amended and restated by-laws provide that certain business combinations require the affirmative vote of (i) a majority of the disinterested directors if, at the time of the vote, distinterested directors constitute at least a majority of the board of directors, or (ii) the holders of at least the sum of (x) 66% of the outstanding shares of common stock that are beneficially owned by persons other than any Substantial Stockholder (as defined in the amended and restated by-laws), plus (y) the number of shares of common stock beneficially owned by such Substantial Stockholders.

Some of the foregoing provisions may have the effect of deterring hostile takeovers or delaying changes in control or management of us.

Since the terms of our articles of organization and amended and restated by-laws may differ from the general information we are providing, you should only rely on the actual provisions of our articles of organization and amended and restated by-laws.

NASDAQ Stock Market Listing

Our common stock is traded on the NASDAQ Stock Market under the symbol “CATC.”

Transfer Agent and Registrar

The transfer agent and registrar for our common stock is American Stock Transfer & Trust Company, LLC.

EX-21

Exhibit 21

Subsidiaries

Cambridge Bancorp Subsidiary:

Name	Jurisdiction of Incorporation
Cambridge Trust Company	Massachusetts

Cambridge Trust Company Subsidiaries:

Name	Jurisdiction of Incorporation
Cambridge Trust Company of New Hampshire, Inc.	New Hampshire
CTC Security Corporation	Massachusetts
CTC Security Corporation II	Massachusetts

EX-23.1

EX: 23.1

Consent of Independent Registered Public Accounting Firm

The Board of Directors
Cambridge Bancorp:

We consent to the incorporation by reference in the registration statement (No. 333‑236017, 333-225720 and 333-234286) on Form S-4, Form S-8, and Form S-3 of Cambridge Bancorp of our reports dated March 16, 2020, with respect to the consolidated balance sheets of Cambridge Bancorp and subsidiaries as of December 31, 2019 and 2018, the related consolidated statements of income, comprehensive income (loss), changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2019, and the related notes, and the effectiveness of internal control over financial reporting as of December 31, 2019, which reports appear in the December 31, 2019 annual report on Form 10‑K of Cambridge Bancorp.

.

/s/ KPMG LLP

Boston, Massachusetts
March 16, 2020

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Denis K. Sheahan, Chief Executive Officer of Cambridge Bancorp, certify that:

1. I have reviewed this Annual Report on Form 10-K, for the period ended December 31, 2019, of Cambridge Bancorp;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

March 16, 2020	By:	/s/  Denis K. Sheahan
		Denis K. Sheahan
		Chairman, Chief Executive Officer (Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Michael F. Carotenuto, Chief Financial Officer of Cambridge Bancorp, certify that:

1. I have reviewed this Annual Report on Form 10-K, for the period ended December 31, 2019, of Cambridge Bancorp;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

March 16, 2020	By:	/s/  Michael F. Carotenuto
		Michael F. Carotenuto
		Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 10-K of Cambridge Bancorp (the “Company”) for the year ended December 31, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge on the date hereof:

(1) The Form 10-K Report fully complies with the requirements of section 13(a) or 15(d)  as applicable, of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Form 10-K Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

March 16, 2020	By:	/s/  Denis K. Sheahan
		Denis K. Sheahan
		Chairman, Chief Executive Officer (Principal Executive Officer)

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 10-K of Cambridge Bancorp (the “Company”) for the year ended December 31, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge on the date hereof:

(1) The Form 10-K Report fully complies with the requirements of section 13(a) or 15(d)  as applicable, of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Form 10-K Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

March 16, 2020	By:	/s/  Michael F. Carotenuto
		Michael F. Carotenuto
		Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

XML

Shareholders' Equity - Minimum Capital Requirements were Considered Well Capitalized by FRB and FDIC (Details) - USD ($)	Dec. 31, 2019	Sep. 30, 2019	Dec. 31, 2018	Jan. 01, 2015
Compliance With Regulatory Capital Requirements Under Banking Regulations [Line Items]
Total capital (to risk-weighted assets), Actual, Amount	$ 272,727,000		$ 189,888,000
Tier I capital (to risk-weighted assets), Actual, Amount	254,497,000		173,070,000
Common equity tier I capital (to risk-weighted assets), Actual, Amount	254,497,000		173,070,000
Tier I capital (to average assets), Actual, Amount	$ 254,497,000		$ 173,070,000
Total capital (to risk-weighted assets), Actual, Ratio	13.60%		13.20%
Tier I capital (to risk-weighted assets), Actual, Ratio	12.70%		12.10%
Common equity tier I capital (to risk-weighted assets), Actual, Ratio	12.70%		12.10%
Tier I capital (to average assets), Actual, Ratio	9.00%		8.50%
Total capital (to risk-weighted assets), Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer, Amount	$ 210,342,000		$ 114,666,000
Tier I capital (to risk-weighted assets), Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer, Amount	170,277,000		86,000,000
Common equity tier I capital (to risk-weighted assets), Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer, Amount	140,228,000		64,500,000
Tier I capital (to average assets), Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer, Amount	$ 113,365,000		$ 81,507,000
Total capital (to risk-weighted assets), Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer, Ratio	10.50%		8.00%
Tier I capital (to risk-weighted assets), Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer, Ratio	8.50%		6.00%
Common equity tier I capital (to risk-weighted assets), Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer, Ratio	7.00%		4.50%
Tier I capital (to average assets), Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer, Ratio	4.00%		4.00%
Minimum
Compliance With Regulatory Capital Requirements Under Banking Regulations [Line Items]
Total capital (to risk-weighted assets), Actual, Ratio	10.50%			8.00%
Tier I capital (to risk-weighted assets), Actual, Ratio	8.50%			6.00%
Tier I capital (to average assets), Actual, Ratio		9.00%		4.00%
Total capital (to risk-weighted assets), Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer Basel III Phase-In Schedule, Amount			$ 141,541,000
Tier I capital (to risk-weighted assets), Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer Basel III Phase-In Schedule, Amount			112,875,000
Common equity tier I capital (to risk-weighted assets), Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer Basel III Phase-In Schedule, Amount			91,375,000
Tier I capital (to average assets), Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer Basel III Phase-In Schedule, Amount			$ 81,507,000
Total capital (to risk-weighted assets), Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer Basel III Phase-In Schedule, Ratio			9.875%
Tier I capital (to risk-weighted assets), Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer Basel III Phase-In Schedule, Ratio			7.875%
Common equity tier I capital (to risk-weighted assets), Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer Basel III Phase-In Schedule, Ratio			6.375%
Tier I capital (to average assets), Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer Basel III Phase-In Schedule, Ratio			4.00%
Total capital (to risk-weighted assets), Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer Basel III Fully Phased In, Amount			$ 150,500,000
Tier I capital (to risk-weighted assets), Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer Basel III Fully Phased In, Amount			121,833,000
Common equity tier I capital (to risk-weighted assets), Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer Basel III Fully Phased In, Amount			100,333,000
Tier I capital (to average assets), Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer Basel III Fully Phased In, Amount			$ 81,507,000
Total capital (to risk-weighted assets), Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer Basel III Fully Phased In, Ratio			10.50%
Tier I capital (to risk-weighted assets), Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer Basel III Fully Phased In, Ratio			8.50%
Common equity tier I capital (to risk-weighted assets), Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer Basel III Fully Phased In, Ratio			7.00%
Tier I capital (to average assets), Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer Basel III Fully Phased In, Ratio			4.00%
Cambridge Trust Company
Compliance With Regulatory Capital Requirements Under Banking Regulations [Line Items]
Total capital (to risk-weighted assets), Actual, Amount	$ 271,034,000		$ 185,507,000
Tier I capital (to risk-weighted assets), Actual, Amount	252,804,000		168,689,000
Common equity tier I capital (to risk-weighted assets), Actual, Amount	252,804,000		168,689,000
Tier I capital (to average assets), Actual, Amount	$ 252,804,000		$ 168,689,000
Total capital (to risk-weighted assets), Actual, Ratio	13.50%		12.90%
Tier I capital (to risk-weighted assets), Actual, Ratio	12.60%		11.80%
Common equity tier I capital (to risk-weighted assets), Actual, Ratio	12.60%		11.80%
Tier I capital (to average assets), Actual, Ratio	8.90%		8.30%
Total capital (to risk-weighted assets), Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer, Amount	$ 210,341,000		$ 114,666,000
Tier I capital (to risk-weighted assets), Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer, Amount	170,276,000		86,000,000
Common equity tier I capital (to risk-weighted assets), Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer, Amount	140,227,000		64,500,000
Tier I capital (to average assets), Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer, Amount	$ 113,364,000		$ 81,507,000
Total capital (to risk-weighted assets), Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer, Ratio	10.50%		8.00%
Tier I capital (to risk-weighted assets), Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer, Ratio	8.50%		6.00%
Common equity tier I capital (to risk-weighted assets), Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer, Ratio	7.00%		4.50%
Tier I capital (to average assets), Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer, Ratio	4.00%		4.00%
Cambridge Trust Company | Minimum
Compliance With Regulatory Capital Requirements Under Banking Regulations [Line Items]
Total capital (to risk-weighted assets), Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer Basel III Phase-In Schedule, Amount			$ 141,541,000
Tier I capital (to risk-weighted assets), Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer Basel III Phase-In Schedule, Amount			112,875,000
Common equity tier I capital (to risk-weighted assets), Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer Basel III Phase-In Schedule, Amount			91,375,000
Tier I capital (to average assets), Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer Basel III Phase-In Schedule, Amount			$ 81,507,000
Total capital (to risk-weighted assets), Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer Basel III Phase-In Schedule, Ratio			9.875%
Tier I capital (to risk-weighted assets), Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer Basel III Phase-In Schedule, Ratio			7.875%
Common equity tier I capital (to risk-weighted assets), Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer Basel III Phase-In Schedule, Ratio			6.375%
Tier I capital (to average assets), Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer Basel III Phase-In Schedule, Ratio			4.00%
Total capital (to risk-weighted assets), Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer Basel III Fully Phased In, Amount			$ 150,500,000
Tier I capital (to risk-weighted assets), Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer Basel III Fully Phased In, Amount			121,833,000
Common equity tier I capital (to risk-weighted assets), Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer Basel III Fully Phased In, Amount			100,333,000
Tier I capital (to average assets), Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer Basel III Fully Phased In, Amount			$ 81,507,000
Total capital (to risk-weighted assets), Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer Basel III Fully Phased In, Ratio			10.50%
Tier I capital (to risk-weighted assets), Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer Basel III Fully Phased In, Ratio			8.50%
Common equity tier I capital (to risk-weighted assets), Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer Basel III Fully Phased In, Ratio			7.00%
Tier I capital (to average assets), Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer Basel III Fully Phased In, Ratio			4.00%
Total capital (to risk-weighted assets), Minimum To Be Well-Capitalized Under Prompt Corrective Action Provisions, Amount	$ 200,325,000		$ 143,333,000
Tier I capital (to risk-weighted assets), Minimum To Be Well-Capitalized Under Prompt Corrective Action Provisions, Amount	160,260,000		114,666,000
Common equity tier I capital (to risk-weighted assets), Minimum To Be Well-Capitalized Under Prompt Corrective Action Provisions, Amount	130,211,000		93,166,000
Tier I capital (to average assets), Minimum To Be Well-Capitalized Under Prompt Corrective Action Provisions, Amount	$ 141,705,000		$ 101,884,000
Total capital (to risk-weighted assets), Minimum To Be Well-Capitalized Under Prompt Corrective Action Provisions, Ratio	10.00%		10.00%
Tier I capital (to risk-weighted assets), Minimum To Be Well-Capitalized Under Prompt Corrective Action Provisions, Ratio	8.00%		8.00%
Common equity tier I capital (to risk-weighted assets), Minimum To Be Well-Capitalized Under Prompt Corrective Action Provisions, Ratio	6.50%		6.50%
Tier I capital (to average assets), Minimum To Be Well-Capitalized Under Prompt Corrective Action Provisions, Ratio	5.00%		5.00%

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Share-Based Compensation - Summary of Non-vested Time-Based Restricted Stock Units Outstanding (Details) - Time Based Restricted Stock Units - $ / shares	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Shares, Non-vested at beginning of year	6,777
Number of Shares, Granted	8,132	7,839
Number of Shares, Vested	(2,251)	(225)
Number of Shares, Forfeited		(837)
Number of Shares, Non-vested at end of year	12,658	6,777
Weighted Average Grant Value, Non-vested at beginning of year	$ 76.56
Weighted Average Grant Value, Granted	73.00	$ 76.56
Weighted Average Grant Value, Vested	76.56	76.56
Weighted Average Grant Value, Forfeited		76.56
Weighted Average Grant Value, Non-vested at end of year	$ 74.27	$ 76.56

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Mergers (Tables)

12 Months Ended

Dec. 31, 2019

Business Combinations [Abstract]

Summary of Estimated Fair Value of Assets Acquired and Liabilities Assumed

The following table summarizes the estimated fair value of the assets acquired and liabilities assumed as of the date of the acquisition:

	Net Assets Acquired
	at Fair Value
	(dollars in thousands)
Assets
Cash and cash equivalents	$	6,902
Investments		23,298
Loans		475,406
Premises and equipment		6,286
Goodwill		30,794
Core deposit and other intangibles		3,609
Other assets		9,408
Total assets acquired		555,703
Liabilities
Deposits		477,189
Borrowings		13,459
Other liabilities		799
Total liabilities assumed		491,447
Purchase price	$	64,256

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Commitments and Contingencies - Summary of Right-of-Use Asset and Net Lease Liability (Details) $ in Thousands	Dec. 31, 2019 USD ($)
Commitments And Contingencies Disclosure [Abstract]
Right-of-use asset	$ 33,587
Operating lease liabilities	$ 35,054

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Fair Value Measurements

12 Months Ended

Dec. 31, 2019

Fair Value Disclosures [Abstract]

Fair Value Measurements

24. FAIR VALUE MEASUREMENTS

The following is a summary of the carrying values and estimated fair values of the Company’s significant financial instruments as of the dates indicated:

	December 31, 2019				December 31, 2018
	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
	(dollars in thousands)
Financial assets
Cash and cash equivalents	$	61,335	$	61,335	$	18,473	$	18,473
Securities available for sale		140,330		140,330		168,163		168,163
Securities held to maturity		258,172		264,114		282,869		281,310
Loans, net		2,208,548		2,160,087		1,543,004		1,484,905
Loans held for sale		1,546		2,051		—		—
FHLB Boston stock		7,854		7,854		6,844		6,844
Accrued interest receivable		7,052		7,052		5,762		5,762
Mortgage servicing rights		1,321		1,526		666		941
Interest rate contracts		2,911		2,911		1,970		1,970
Loan level interest rate swaps		12,980		12,980		5,782		5,782
Risk participation agreements out to counterparties		21		21		28		28
Financial liabilities
Deposits		2,358,878		2,358,089		1,811,410		1,809,051
Short-term borrowings		135,691		135,744		90,000		90,000
Long-term borrowings		—		—		3,409		3,363
Loan level interest rate swaps		12,980		12,980		5,782		5,782
Risk participation agreements in with counterparties		250		250		179		179

The Company follows ASC 820, “Fair Value Measurements and Disclosures,” for financial assets and liabilities. ASC 820 defines fair value, establishes a framework for measuring fair value, and expands disclosure requirements about fair value measurements. ASC 820, among other things, emphasizes that fair value is a market-based measurement, not an entity-specific measurement, and states that a fair value measurement should be determined based on the assumptions the market participants would use in pricing the asset or liability. In addition, ASC 820 specifies a hierarchy of valuation techniques based on whether the types of valuation information (“inputs”) are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. These two types of inputs have created the following fair value hierarchy:

• Level 1 – Quoted prices for identical assets or liabilities in active markets.

• Level 2 – Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in inactive markets; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.

• Level 3 – Valuations derived from techniques in which one or more significant inputs or significant value drivers are unobservable in the markets and which reflect the Company’s market assumptions.

Under ASC 820, fair values are based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When available, the Company uses quoted market prices to determine fair value. If quoted prices are not available, fair value is based upon valuation techniques, such as matrix pricing or other models that use, where possible, current market-based or independently sourced market parameters, such as interest rates. If observable market-based inputs are not available, the Company uses unobservable inputs to determine appropriate valuation adjustments using methodologies applied consistently over time.

Valuation techniques based on unobservable inputs are highly subjective and require judgments regarding significant matters, such as the amount and timing of future cash flows and the selection of discount rates that may appropriately reflect market and credit risks.

Changes in these judgments often have a material impact on the fair value estimates. In addition, since these estimates are as of a specific point in time, they are susceptible to material near-term changes. The fair values disclosed do not reflect any premium or discount that could result from offering significant holdings of financial instruments at bulk sale, nor do they reflect the possible tax ramifications or estimated transaction costs. Changes in economic conditions may also dramatically affect the estimated fair values.

The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. Securities available for sale, derivative instruments, and hedges are recorded at fair value on a recurring basis. Additionally, from time to time, the Company may be required to record at fair value other assets on a nonrecurring basis, such as collateral dependent impaired loans.  In accordance with the requirements of ASU 2016-01, the Company uses an exit price notion for its fair value disclosures.

The following tables summarize certain assets reported at fair value on a recurring basis:

	Fair Value as of December 31, 2019
	Level 1		Level 2		Level 3		Total
	(dollars in thousands)
Measured on a recurring basis
Securities available for sale
U.S. GSE obligations	$	—	$	37,848	$	—	$	37,848
Mortgage-backed securities		—		102,482		—		102,482
Corporate debt securities		—		—		—		—
Other assets
Interest rate swaps with customers		—		12,980		—		12,980
Risk participation agreements out to counterparties		—		21		—		21
Interest rate contracts		—		2,911		—		2,911
Other liabilities
Mirror swaps with counterparties		—		12,980		—		12,980
Risk participation agreements in with counterparties		—		250		—		250

	Fair Value as of December 31, 2018
	Level 1		Level 2		Level 3		Total
	(dollars in thousands)
Measured on a recurring basis
Securities available for sale
U.S. GSE obligations	$	—	$	74,039	$	—	$	74,039
Mortgage-backed securities		—		89,268		—		89,268
Corporate debt securities		—		4,856		—		4,856
Other assets
Interest rate swaps with customers		—		5,782		—		5,782
Risk participation agreements out to counterparties		—		28		—		28
Interest rate contracts		—		1,970		—		1,970
Other liabilities
Mirror swaps with counterparties		—		5,782		—		5,782
Risk participation agreements in with counterparties		—		179		—		179

The following table presents the carrying value of assets held at December 31, 2019, which were measured at fair value on a non-recurring basis:

	December 31, 2019
	Level 1		Level 2		Level 3		Total
	(dollars in thousands)
Items recorded at fair value on a non-recurring basis
Assets
Collateral dependent impaired loans	$	—	$	—	$	2,541	$	2,541
Loans held for sale		1,546		—		—		1,546
Other real estate owned		—		—		163		163
Total	$	1,546	$	—	$	2,704	$	4,250

Collateral dependent impaired loans. Collateral dependent loans are carried at the lower of cost or fair value of the collateral less estimated costs to sell which approximates fair value. The Company uses the appraisal value of the collateral and applies certain adjustments depending on the nature, quality, and type of collateral securing the loan.

Loans held for sale. Loans held for sale are carried at the lower of fair value or carrying value (unpaid principal and unamortized loans fees).

Other Real Estate Owned.These properties are carried at fair value less estimated costs to sell. There were no assets measured at fair value on a non-recurring basis during the year ended December 31, 2018.

There were no transfers between fair value levels for the years ended December 31, 2019 and 2018.

The following is a description of the principal valuation methodologies used by the Company to estimate the fair values of its financial instruments.

Investment Securities

For investment securities, fair values are primarily based upon valuations obtained from a national pricing service which uses matrix pricing with inputs that are observable in the market or can be derived from, or corroborated by, observable market data. When available, quoted prices in active markets for identical securities are utilized.

Loans Held for Sale

For loans held for sale, fair values are estimated using projected future cash flows, discounted at rates based upon either trades of similar loans or mortgage-backed securities, or at current rates at which similar loans would be made to borrowers with similar credit ratings and for similar remaining maturities.

Loans

For most categories of loans, fair values are estimated using projected future cash flows, discounted at rates based upon current rates at which similar loans would be made to borrowers with similar credit ratings, and for similar remaining maturities. Projected estimated cash flows are adjusted for prepayment assumptions, liquidity premium assumptions, and credit loss assumptions. Loans that are deemed to be impaired in accordance with ASC 310, “Receivables,” are valued based upon the lower of cost or fair value of the underlying collateral.

FHLB of Boston Stock

The fair value of FHLB of Boston stock equals its carrying value since such stock is only redeemable at its par value.

Deposits

The fair value of non-maturity deposit accounts is the amount payable on demand at the reporting date. This amount does not take into account the value of the Bank’s long-term relationships with core depositors. The fair value of fixed-maturity certificates of deposit is estimated using a replacement cost of funds approach and is based upon rates currently offered for deposits of similar remaining maturities.

Long-Term Borrowings

For long-term borrowings, fair values are estimated using future cash flows, discounted at rates based upon current costs for debt securities with similar terms and remaining maturities.

Other Financial Assets and Liabilities

Cash and cash equivalents, accrued interest receivable, and short-term borrowings have fair values which approximate their respective carrying values because these instruments are payable on demand or have short-term maturities and present relatively low credit risk and interest rate risk.

Derivative Instruments and Hedges

The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The Bank incorporates credit valuation adjustments to appropriately reflect nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Bank has considered the impact of netting and any applicable credit enhancements, such as collateral postings.

Off-Balance-Sheet Financial Instruments

In the course of originating loans and extending credit, the Bank will charge fees in exchange for its commitment. While these commitment fees have value, the Bank has not estimated their value due to the short-term nature of the underlying commitments and their immateriality.

Values Not Determined

In accordance with ASC 820, the Company has not estimated fair values for non-financial assets such as banking premises and equipment, goodwill, the intangible value of the Bank’s portfolio of loans serviced for itself, and the intangible value inherent in the Bank’s deposit relationships (i.e., core deposits), among others. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company.

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Deposits

12 Months Ended

Dec. 31, 2019

Deposits [Abstract]

Deposit

11. DEPOSITS

Deposits are summarized as follows:

	December 31, 2019		December 31, 2018
	(dollars in thousands)
Demand deposits (non-interest bearing)	$	630,593	$	494,492
Interest bearing checking		450,098		431,702
Money market		181,406		135,585
Savings		914,499		628,212
Retail certificates of deposit under $100,000		56,602		36,223
Retail certificates of deposit $100,000 or greater		118,596		57,692
Wholesale certificates of deposit		7,084		27,504
Total deposits	$	2,358,878	$	1,811,410

Certificates of deposit had the following schedule of maturities:

	December 31, 2019		December 31, 2018
	(dollars in thousands)
Less than 3 months remaining	$	52,883	$	24,219
3 to 5 months remaining		47,701		17,486
6 to 11 months remaining		38,981		37,987
12 to 23 months remaining		31,501		28,529
24 to 47 months remaining		9,448		9,652
48 months or more remaining		1,768		3,546
Total certificates of deposit	$	182,282	$	121,419

Interest expense on retail certificates of deposit $100,000 or greater was $2.1 million, $467,000, and $446,000  for the years ended December 31, 2019, 2018, and 2017, respectively.

The aggregate amount of certificates of deposit in denominations that meet or exceed the FDIC insurance limit of $250,000 at December 31, 2019 and 2018 was $60.8 million and $31.8 million, respectively.

Related Party Deposits

Deposit accounts of directors, executive officers, and their respective affiliates totaled $7.2 million and $6.8 million as of December 31, 2019 and 2018, respectively.  

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Condensed Financial Statements of Parent Company - Condensed Balance Sheet (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Assets
Cash and cash equivalents	$ 61,335	$ 18,473
Other assets	42,291	27,629
Total assets	2,855,563	2,101,384
Shareholders’ Equity
Total shareholders' equity	286,561	167,026	$ 147,957	$ 134,671
Cambridge Bancorp [Member]
Assets
Cash and cash equivalents	1,680	4,412
Other assets	13
Investment in subsidiary	284,868	162,614
Total assets	286,561	167,026
Shareholders’ Equity
Total shareholders' equity	$ 286,561	$ 167,026

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Recently Issued and Adopted Accounting Standards

12 Months Ended

Dec. 31, 2019

New Accounting Pronouncements And Changes In Accounting Principles [Abstract]

Recently Issued and Adopted Accounting Standards

3. Recently Issued and Adopted Accounting Standards

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 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 - Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities. The Company adopted this update on January 1, 2019, and the update did not have a material 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. The Company adopted the amended guidance on January 1, 2020, and it did not have a material impact on the consolidated financial statements.

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. The adoption of this guidance is not expected to have a material impact 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”). OnAugust 28, 2017, theFASB issuedanewstandardthatallowscompaniestobetteraligntheir hedgeaccountingandriskmanagementactivities. The new standard will also reducethe costandcomplexityofapplyinghedgeaccounting. Thestandardrequires companiestochangetherecognitionandpresentation oftheeffectsofhedge accountingby:

• eliminating therequirementtoseparatelymeasureandreporthedge ineffectiveness;and

• requiringcompaniestopresentalloftheelementsofhedgeaccounting thataffectearningsinthesameincomestatementlineasthehedgeditem.

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. See note 23 – DERIVATIVE AND HEDGING ACTIVITIES.

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. See note 17 – commitments and contingencies.

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.

Wealth Management and Trust Fees

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 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.

Other Banking Fee Income

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.      

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Fair Value Measurements - Summary of Certain Assets Reported at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Securities available for sale	$ 140,330	$ 168,163
U.S. GSE Obligations
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Securities available for sale	37,848	74,039
Corporate Debt Securities
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Securities available for sale		4,856
Recurring Basis | U.S. GSE Obligations
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Securities available for sale	37,848	74,039
Recurring Basis | U.S. GSE Obligations | Level 2
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Securities available for sale	37,848	74,039
Recurring Basis | Mortgage Backed Securities
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Securities available for sale	102,482	89,268
Recurring Basis | Mortgage Backed Securities | Level 2
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Securities available for sale	102,482	89,268
Recurring Basis | Corporate Debt Securities
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Securities available for sale		4,856
Recurring Basis | Corporate Debt Securities | Level 2
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Securities available for sale		4,856
Recurring Basis | Interest Rate Swaps with Customers
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Other assets	12,980	5,782
Recurring Basis | Interest Rate Swaps with Customers | Level 2
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Other assets	12,980	5,782
Recurring Basis | Risk Participation Agreements Out to Counterparties
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Other assets	21	28
Recurring Basis | Risk Participation Agreements Out to Counterparties | Level 2
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Other assets	21	28
Recurring Basis | Interest Rate Contracts
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Other assets	2,911	1,970
Recurring Basis | Interest Rate Contracts | Level 2
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Other assets	2,911	1,970
Recurring Basis | Mirror Swaps with Counterparties
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Other liabilities	12,980	5,782
Recurring Basis | Mirror Swaps with Counterparties | Level 2
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Other liabilities	12,980	5,782
Recurring Basis | Risk Participation Agreements in With Counterparties
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Other liabilities	250	179
Recurring Basis | Risk Participation Agreements in With Counterparties | Level 2
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Other liabilities	$ 250	$ 179

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Loans and Allowance for Loan Losses

12 Months Ended

Dec. 31, 2019

Receivables [Abstract]

Loans and Allowance for Loan Losses

7. LOANS AND ALLOWANCE FOR LOAN LOSSES

The Company’s lending activities are conducted primarily in Eastern Massachusetts. The Company grants single- and multi-family residential loans, commercial & industrial (“C&I”), commercial real estate (“CRE”), construction loans, and a variety of consumer loans.  Most of the loans granted by the Company are secured by real estate collateral. Repayment of the Company’s residential loans are generally dependent on the health of the employment market in the borrowers’ geographic areas and that of the general economy with liquidation of the underlying real estate collateral being typically viewed as the primary source of repayment in the event of borrower default. The repayment of C&I loans depends primarily on the cash flow and credit worthiness of the borrower and secondarily on the underlying collateral provided by the borrower.  As borrower cash flow may be difficult to predict, liquidation of the underlying collateral securing these loans is typically viewed as the primary source of repayment in the event of borrower default.  However, collateral typically consists of equipment, inventory, accounts receivable, or other business assets that may fluctuate in value, so the liquidation of collateral in the event of default is often an insufficient source of repayment. The Company’s CRE loans are primarily made based on the cash flow from the collateral property and secondarily on the underlying collateral provided by the borrower, with liquidation of the underlying real estate collateral typically being viewed as the primary source of repayment in the event of borrower default. The Company’s construction loans are primarily made based on the borrower’s expected ability to execute and the future completed value of the collateral property, with sale of the underlying real estate collateral typically being viewed as the primary source of repayment.

Loans outstanding are detailed by category as follows:

	December 31, 2019			December 31, 2018
	(dollars in thousands)
Residential mortgage
Mortgages - fixed rate	$	430,877		$	293,267
Mortgages - adjustable rate		467,139			309,656
Construction		17,374			—
Deferred costs net of unearned fees		2,176			1,408
Total residential mortgages		917,566			604,331
Commercial mortgage
Mortgages - nonowner occupied		870,047			654,394
Mortgages - owner occupied		114,095			59,335
Construction		76,288			44,146
Deferred costs net of unearned fees		144			82
Total commercial mortgages		1,060,574			757,957
Home equity
Home equity - lines of credit		73,880			63,421
Home equity - term loans		6,555			5,665
Deferred costs net of unearned fees		240			250
Total home equity		80,675			69,336
Commercial & industrial
Commercial & industrial		133,337			93,728
Deferred costs (fees) net of unearned fees		(101	)		(16	)
Total commercial & industrial		133,236			93,712
Consumer
Secured		33,453			33,252
Unsecured		1,199			1,171
Deferred costs net of unearned fees		25			13
Total consumer		34,677			34,436
Total loans	$	2,226,728		$	1,559,772

Directors and officers of the Company and their associates are customers of, and have other transactions with, the Company in the normal course of business. All loans and commitments included in such transactions were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons and do not involve more than normal risk of collection or present other unfavorable features. At December 31, 2019 and December 31, 2018, total loans outstanding to such directors and officers were $3,000 and $488,000, respectively. During the year ended December 31, 2019, $85,000 of additions and $570,000 of repayments and other adjustments were made to these loans. There were $139,000 of additions and $167,000 of repayments during the year ended December 31, 2018. At December 31, 2019 and 2018, all of the loans to directors and officers were performing according to their original terms.

The following tables set forth information regarding non-performing loans disaggregated by loan category:

	December 31, 2019
.	Residential Mortgages		Commercial Mortgages		Home Equity		Commercial & Industrial		Consumer		Total
	(dollars in thousands)
Non-performing loans:
Non-accrual loans	$	1,298	$	2,800	$	12	$	50	$	—	$	4,160
Loans past due >90 days, but still accruing		527		486		—		251		—		1,264
Troubled debt restructurings		99		—		—		128		—		227
Total	$	1,924	$	3,286	$	12	$	429	$	—	$	5,651

	December 31, 2018
	Residential Mortgages		Commercial Mortgages		Home Equity		Commercial & Industrial		Consumer		Total
	(dollars in thousands)
Non-performing loans:
Non-accrual loans	$	512	$	—	$	13	$	—	$	—	$	525
Loans past due >90 days, but still accruing		—		—		—		—		—		—
Troubled debt restructurings		111		—		—		6		—		117
Total	$	623	$	—	$	13	$	6	$	—	$	642

There were nocommitments to lend additional funds to borrowers whose loans were on nonaccrual status at December 31, 2019 and  December 31, 2018.

Troubled Debt Restructurings (“TDRs”)

Loans are considered restructured in a troubled debt restructuring when the Company has granted concessions to a borrower due to the borrower’s financial condition that it otherwise would not have considered. These concessions may include modifications of the terms of the debt such as deferral of payments, extension of maturity, reduction of principal balance, reduction of the stated interest rate other than normal market rate adjustments, or a combination of these concessions. Debt may be bifurcated with separate terms for each tranche of the restructured debt. Restructuring a loan in lieu of aggressively enforcing the collection of the loan may benefit the Company by increasing the ultimate probability of collection.

Restructured loans are classified as accruing or non-accruing based on management’s assessment of the collectability of the loan. Loans which are already on nonaccrual status at the time of the restructuring generally remain on nonaccrual status for approximately six months or longer before management considers such loans for return to accruing status. Accruing restructured loans are placed into nonaccrual status if and when the borrower fails to comply with the restructured terms and management deems it unlikely that the borrower will return to a status of compliance in the near term.

Troubled debt restructurings are classified as impaired loans. The Company identifies loss allocations for impaired loans on an individual loan basis.

During the year ended December 31, 2019, the Company modified one loan with a carrying value of $128,000. At December 31, 2019, three loans were determined to be TDRs with a total carrying value of $227,000. One TDR loan was paid off during the first quarter of 2019.   There were no TDR defaults during the year ended December 31, 2019 .  

As of  December 31, 2018 three loans were determined to be TDRs with a total carrying value of $117,000.  There were no TDR defaults during the year ended December 31, 2018.

The allowance for loan losses includes a specific reserve for these TDRs of approximately $87,000 as of December 31, 2019. There  were no specific reserves for the troubled debt restructurings at December 31, 2018 .

As of December 31, 2019 and 2018, there were no significant commitments to lend additional funds to borrowers whose loans were restructured.

Loans by Credit Quality Indicator.  The following tables contain period-end balances of loans receivable disaggregated by credit quality indicator:

	December 31, 2019
	Residential Mortgages		Home Equity		Consumer
	(dollars in thousands)
Credit risk profile based on payment activity:
Performing	$	915,642	$	80,663	$	34,677
Non-performing		1,924		12		—
Total	$	917,566	$	80,675	$	34,677
			Commercial Mortgages		Commercial & Industrial
Credit risk profile by internally assigned grade:
1-6 (Pass)			$	1,050,037	$	123,900
7 (Special Mention)				7,360		4,289
8 (Substandard)				3,177		5,047
9 (Doubtful)				—		—
10 (Loss)				—		—
Total			$	1,060,574	$	133,236

	December 31, 2018
	Residential Mortgages		Home Equity		Consumer
	(dollars in thousands)
Credit risk profile based on payment activity:
Performing	$	603,708	$	69,323	$	34,436
Non-performing		623		13		—
Total	$	604,331	$	69,336	$	34,436
			Commercial Mortgages		Commercial & Industrial
Credit risk profile by internally assigned grade:
1-6 (Pass)			$	753,338	$	85,821
7 (Special Mention)				4,619		4,186
8 (Substandard)				—		3,705
9 (Doubtful)				—		—
10 (Loss)				—		—
Total			$	757,957	$	93,712

With respect to residential real estate mortgages, home equity, and consumer loans, the Bank utilizes the following categories as indicators of credit quality:

• Performing – These loans are accruing and are considered having low to moderate risk.

• Non-performing – These loans are on non-accrual, or are past due more than 90 days but are still accruing, or are restructured. These loans may contain greater than average risk.

With respect to commercial real estate mortgages and commercial loans, the Bank utilizes a 10 grade internal loan rating system as an indicator of credit quality. The grades are as follows:

• Loans rated 1-6 (Pass) – These loans are considered “pass” rated with low to moderate risk.

• Loans rated 7 (Special Mention) – These loans have potential weaknesses warranting close attention, which, if left uncorrected, may result in deterioration of the credit at some future date.

• Loans rated 8 (Substandard) – These loans have well-defined weaknesses that jeopardize the orderly liquidation of the debt under the original loan terms. Loss potential exists but is not identifiable in any one customer.

• Loans rated 9 (Doubtful) – These loans have pronounced weaknesses that make full collection highly questionable and improbable.

• Loans rated 10 (Loss) – These loans are considered uncollectible and continuance as a bankable asset is not warranted.

Delinquencies

The past due status of a loan is determined in accordance with its contractual repayment terms. All loan types are reported past due when one scheduled payment is due and unpaid for 30 days or more. Loan delinquencies can be attributed to many factors, such as but not limited to, a continuing weakness in, or deteriorating, economic conditions in the region in which the collateral is located, the loss of a tenant or lower lease rates for commercial borrowers, or the loss of income for consumers and the resulting liquidity impacts on the borrowers.

The following tables contain period-end balances of loans receivable disaggregated by past due status:

	December 31, 2019
	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater		Total Past Due		Current Loans		Total
	(dollars in thousands)
Residential Mortgages	$	8,710	$	1,089	$	1,047	$	10,846	$	906,720	$	917,566
Commercial Mortgages		811		—		3,161		3,972		1,056,602		1,060,574
Home Equity		57		12		—		69		80,606		80,675
Commercial & Industrial		272		226		251		749		132,487		133,236
Consumer loans		4		5		—		9		34,668		34,677
Total	$	9,854	$	1,332	$	4,459	$	15,645	$	2,211,083	$	2,226,728

	December 31, 2018
	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater		Total Past Due		Current Loans		Total
	(dollars in thousands)
Residential Mortgages	$	1,034	$	121	$	351	$	1,506	$	602,825	$	604,331
Commercial Mortgages		—		—		—		—		757,957		757,957
Home Equity		—		—		—		—		69,336		69,336
Commercial & Industrial		—		—		—		—		93,712		93,712
Consumer loans		108		—		—		108		34,328		34,436
Total	$	1,142	$	121	$	351	$	1,614	$	1,558,158	$	1,559,772

There were no significant commitments to lend additional funds to borrowers whose loans were on nonaccrual status at December 31, 2019.

Foreclosure Proceedings

Other Real Estate Owned (“OREO”)

As of  December 31, 2019, the Company recorded other real estate owned assets of $163,000. OREO consists of real estate properties, which have primarily served as collateral to secure loans that are controlled or owned by the Bank. These properties are recorded at fair value less estimated costs to sell at the date control is established, resulting in a new cost basis. The amount by which the recorded investment in the loan exceeds the fair value (net of estimated costs to sell) of the foreclosed asset is charged to the allowance for loan losses. Subsequent declines in the fair value of the foreclosed asset below the new cost basis are recorded through the use of a valuation allowance. Subsequent increases in the fair value are recorded as reductions in the valuation allowance, but not below zero. All costs incurred thereafter in maintaining the property are generally charged to noninterest expense.

In Process of Foreclosure

As of December 31, 2019 and 2018 loans secured by   one- to four-family residential property amounting to $344,000 and $351,000, respectively, were in process of foreclosure. 

Impaired Loans

Impaired loans are loans for which it is probable that the Company will not be able to collect all amounts due according to the contractual terms of the loan agreements and loans restructured in a troubled debt restructuring. The recorded investment in impaired loans consists of unpaid principal balance, net of charge-offs, interest payments received applied to principal, and unamortized deferred loan origination fees and costs.  

The following is information pertaining to impaired loans:

	For the Year Ended December 31, 2019
	Carrying Value		Average Carrying Value		Unpaid Principal Balance		Related Allowance		Interest Income Recognized
	(dollars in thousands)
With no required reserve recorded:
Commercial and industrial	$	—	$	—	$	—	$	—	$	—
Commercial mortgage		3,161		1,385		4,376		—		35
Residential mortgage		765		691		940		—		5
Home equity		93		96		133		—		1
Total		4,019		2,172		5,449		—		41
With required reserve recorded:
Commercial and industrial		128		59		167		87		—
Commercial mortgage		—		—		—		—		—
Residential mortgage		—		—		—		—		—
Home equity		—		—		—		—		—
Total		128		59		167		87		—
Total:
Commercial and industrial		128		59		167		87		—
Commercial mortgage		3,161		1,385		4,376		—		35
Residential mortgage		765		691		940		—		5
Home equity		93		96		133		—		1
Total	$	4,147	$	2,231	$	5,616	$	87	$	41

	For the Year Ended December 31, 2018
	Carrying Value		Average Carrying Value		Unpaid Principal Balance		Related Allowance		Interest Income Recognized
	(dollars in thousands)
With no required reserve recorded:
Commercial and industrial	$	6	$	17	$	6	$	—	$	1
Commercial mortgage		—		—		—		—		—
Residential mortgage		634		647		786		—		4
Home equity		100		104		135		—		1
Total		740		768		927		—		6
With required reserve recorded:
Commercial and industrial		—		—		—		—		—
Commercial mortgage		—		—		—		—		—
Residential mortgage		—		—		—		—		—
Home equity		—		—		—		—		—
Total		—		—		—		—		—
Total:
Commercial and industrial		6		17		6		—		1
Commercial mortgage		—		—		—		—		—
Residential mortgage		634		647		786		—		4
Home equity		100		104		135		—		1
Total	$	740	$	768	$	927	$	—	$	6

	For the Year Ended December 31, 2017
	Carrying Value		Average Carrying Value		Unpaid Principal Balance		Related Allowance		Interest Income Recognized
	(dollars in thousands)
With no required reserve recorded:
Commercial and industrial	$	29	$	36	$	29	$	—	$	2
Commercial mortgage		213		224		227		—		3
Residential mortgage		904		931		1,103		—		—
Home equity		86		91		116		—		—
Total		1,232		1,282		1,475		—		5
With required reserve recorded:
Commercial and industrial		—		—		—		—		—
Commercial mortgage		—		—		—		—		—
Residential mortgage		64		66		64		93		1
Home equity		—		—		—		—		—
Total		64		66		64		93		1
Total:
Commercial and industrial		29		36		29		—		2
Commercial mortgage		213		224		227		—		3
Residential mortgage		968		997		1,167		93		1
Home equity		86		91		116		—		—
Total	$	1,296	$	1,348	$	1,539	$	93	$	6

Allowance for Loan Losses

The Company maintains an allowance for loan losses in an amount determined by management on the basis of the character of the loans, loan performance, financial condition of borrowers, the value of collateral securing loans, and other relevant factors. We provide for loan losses based upon the consistent application of our documented allowance for loan loss methodology. All loan losses are charged to the allowance for loan losses and all recoveries are credited to it. Additions to the allowance for loan losses are provided by charges to income based on various factors which, in our judgment, deserve current recognition in estimating probable losses. We regularly review the loan portfolio, including a review of our classified assets, and make provisions for loan losses in order to maintain the allowance for loan losses in accordance with GAAP. The allowance for loan losses consists primarily of two components:

1. Specific allowances established for impaired loans, as defined by GAAP. The amount of impairment provided for as a specific allowance is measured based on the deficiency, if any, between the present value of expected future cash flows discounted at the loan’s effective interest rate at the time of impairment or, as a practical expedient, at the loan’s observable market price, or the fair value of the collateral if the loan is collateral-dependent, and the carrying value of the loan; and

2. General allowances established for loan losses on a portfolio basis for loans that do not meet the definition of impaired loans. The portfolio is grouped into homogenous pools by similar risk characteristics, primarily by loan type and regulatory classification. We apply an estimated incurred loss rate to each loan group. The loss rates applied are based upon our historical loss experience over a designated look back period adjusted, as appropriate, for the quantitative, qualitative, and environmental factors discussed below. This evaluation is inherently subjective, as it requires material estimates that may be susceptible to significant revisions based upon changes in economic and real estate market conditions.

Actual loan losses may be significantly more than the allowance for loan losses we have established, which could have a material negative effect on our financial results.

The adjustments to historical loss experience are based on our evaluation of several quantitative, qualitative, and environmental factors, including:

• the loss emergence period, which represents the average amount of time between when loss events occur for specific loan types and when such problem loans are identified and the related loss amounts are confirmed through charge-offs;

• changes in any concentration of credit (including, but not limited to, concentrations by geography, industry, or collateral type);

• changes in the number and amount of non-accrual loans and past due loans;

• changes in national, state, and local economic trends;

• changes in the types of loans in the loan portfolio;

• changes in the experience and ability of personnel;

• changes in lending strategies; and

• changes in lending policies and procedures.

In addition, we may establish an unallocated allowance to provide for probable losses that have been incurred as of the reporting date but are not reflected in the allocated allowance.

We evaluate the allowance for loan losses based upon the combined total of the specific and general components. Generally, when the loan portfolio increases, absent other factors, the allowance for loan loss methodology results in a higher dollar amount of estimated probable losses than would be the case without the increase. Generally, when the loan portfolio decreases, absent other factors, the allowance for loan losses methodology results in a lower dollar amount of estimated probable losses than would be the case without the decrease. Periodically, management conducts an analysis to estimate the loss emergence period for various loan categories based on samples of historical charge-offs. Model output by loan category is reviewed to evaluate the reasonableness of the reserve levels in comparison to the estimated loss emergence period applied to historical loss experience.

We evaluate the loan portfolio on a quarterly basis and the allowance is adjusted accordingly. While we use the best information available to make evaluations, future adjustments to the allowance may be necessary if conditions differ substantially from the information used in making the evaluations. In addition, various regulatory agencies, as an integral part of their examination process, will periodically review the allowance for loan losses. Such agencies may require us to recognize additions to the allowance based on their analysis of information available to them at the time of their examination.

The following tables contain changes in the allowance for loan losses disaggregated by loan type for the periods noted:

	For the Year Ended December 31, 2019
	Residential Mortgages		Commercial Mortgages			Home Equity			Commercial & Industrial			Consumer			Impaired		Total
	(dollars in thousands)
Allowance for loan losses:
Balance at December 31, 2018	$	4,946	$	9,626		$	517		$	1,415		$	264		$	—	$	16,768
Charge-offs		—		(1,270	)		—			(338	)		(48	)		—		(1,656	)
Recoveries		—		—			—			53			11			—		64
Provision for (Release of)		195		2,549			(56	)		258			(29	)		87		3,004
Balance at December 31, 2019	$	5,141	$	10,905		$	461		$	1,388		$	198		$	87	$	18,180

	For the Year Ended December 31, 2018
	Residential Mortgages			Commercial Mortgages		Home Equity			Commercial & Industrial			Consumer			Impaired			Total
	(dollars in thousands)
Allowance for loan losses:
Balance at December 31, 2017	$	5,047		$	8,289	$	630		$	946		$	315		$	93		$	15,320
Charge-offs		—			—		—			(73	)		(36	)		—			(109	)
Recoveries		—			—		—			48			7			—			55
Provision for (Release of)		(101	)		1,337		(113	)		494			(22	)		(93	)		1,502
Balance at December 31, 2018	$	4,946		$	9,626	$	517		$	1,415		$	264		$	—		$	16,768

	For the Year Ended December 31, 2017
	Residential Mortgages		Commercial Mortgages			Home Equity			Commercial & Industrial			Consumer			Impaired			Total
	(dollars in thousands)
Allowance for loan losses:
Balance at December 31, 2016	$	4,898	$	8,451		$	651		$	807		$	264		$	190		$	15,261
Charge-offs		—		—			—			(284	)		(39	)		—			(323	)
Recoveries		—		—			—			13			7			—			20
Provision for (Release of)		149		(162	)		(21	)		410			83			(97	)		362
Balance at December 31, 2017	$	5,047	$	8,289		$	630		$	946		$	315		$	93		$	15,320

The following tables contain period-end balances of the allowance for loan losses and related loans receivable disaggregated by impairment method:

	December 31, 2019
	Residential Mortgages		Commercial Mortgages		Home Equity		Commercial & Industrial		Consumer		Total
	(dollars in thousands)
Allowance for loan losses
Individually evaluated for impairment	$	—	$	—	$	—	$	87	$	—	$	87
Collectively evaluated for impairment		5,141		10,905		461		1,388		198		18,093
Total	$	5,141	$	10,905	$	461	$	1,475	$	198	$	18,180
Loans receivable
Individually evaluated for impairment	$	764	$	3,161	$	92	$	128	$	—	$	4,145
Collectively evaluated for impairment		916,802		1,057,413		80,583		133,108		34,677		2,222,583
Total	$	917,566	$	1,060,574	$	80,675	$	133,236	$	34,677	$	2,226,728

	December 31, 2018
	Residential Mortgages		Commercial Mortgages		Home Equity		Commercial & Industrial		Consumer		Total
	(dollars in thousands)
Allowance for loan losses
Individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—
Collectively evaluated for impairment		4,946		9,626		517		1,415		264		16,768
Total	$	4,946	$	9,626	$	517	$	1,415	$	264	$	16,768
Loans receivable
Individually evaluated for impairment	$	647	$	—	$	88	$	5	$	—	$	740
Collectively evaluated for impairment		603,684		757,957		69,248		93,707		34,436		1,559,032
Total	$	604,331	$	757,957	$	69,336	$	93,712	$	34,436	$	1,559,772

As discussed in Note 2, Summary of Significant Accounting Policies, the provision for loan losses is evaluated on a periodic basis by management in order to determine the adequacy of the allowance for loan losses.

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Loans and Allowance for Loan Losses - Summary of Changes in Allowance for Loan Losses Disaggregated by Loan Type (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, Beginning balance	$ 16,768	$ 15,320	$ 15,261
Charge-offs	(1,656)	(109)	(323)
Recoveries	64	55	20
Provision for (Release of)	3,004	1,502	362
Allowance for loan losses, Ending balance	18,180	16,768	15,320
Residential Mortgage
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, Beginning balance	4,946	5,047	4,898
Provision for (Release of)	195	(101)	149
Allowance for loan losses, Ending balance	5,141	4,946	5,047
Commercial Mortgage
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, Beginning balance	9,626	8,289	8,451
Charge-offs	(1,270)
Provision for (Release of)	2,549	1,337	(162)
Allowance for loan losses, Ending balance	10,905	9,626	8,289
Home Equity
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, Beginning balance	517	630	651
Provision for (Release of)	(56)	(113)	(21)
Allowance for loan losses, Ending balance	461	517	630
Commercial & Industrial
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, Beginning balance	1,415	946	807
Charge-offs	(338)	(73)	(284)
Recoveries	53	48	13
Provision for (Release of)	258	494	410
Allowance for loan losses, Ending balance	1,388	1,415	946
Consumer
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, Beginning balance	264	315	264
Charge-offs	(48)	(36)	(39)
Recoveries	11	7	7
Provision for (Release of)	(29)	(22)	83
Allowance for loan losses, Ending balance	198	264	315
Impaired
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, Beginning balance		93	190
Provision for (Release of)	87	$ (93)	(97)
Allowance for loan losses, Ending balance	$ 87		$ 93

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Deposits - Additional Information (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Deposits [Abstract]
Interest expense on retail certificates of deposit $100,000 or greater	$ 2,100,000	$ 467,000	$ 446,000
Certificates of deposit, at or above FDIC insurance limit of 250,000	60,800,000	31,800,000
Deposit accounts of directors, executive officers and their respective affiliates	$ 7,200,000	$ 6,800,000

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Goodwill and Other Intangible Assets - Schedule of Mortgage Servicing Rights (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Goodwill And Intangible Assets Disclosure [Abstract]
Beginning Balance, Mortgage servicing rights	$ 666	$ 823	$ 842
Mortgage servicing rights acquired as a result of the merger, Mortgage servicing rights	334
Mortgage servicing rights capitalized, Mortgage servicing rights	618	20	132
Amortization charged against servicing income, Mortgage servicing rights	(271)	(147)	(151)
Change in impairment reserve, Mortgage servicing rights		(30)
Ending Balance, Mortgage servicing rights	1,347	666	823
Beginning Balance, Valuation allowance		(30)	(30)
Change in impairment reserve, Valuation allowance	(26)	30
Ending Balance, Valudation allowance	(26)		(30)
Beginning Balance, Total	666	793	812
Mortgage servicing rights acquired as a result of the merger, Total	334
Mortgage servicing rights capitalized, Total	618	20	132
Amortization charged against servicing income, Total	(271)	(147)	(151)
Change in impairment reserve, Total	(26)
Ending Balance, Total	$ 1,321	$ 666	$ 793

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Loans and Allowance for Loan Losses - Non-performing Loans Disaggregated by Loan Category (Details) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Financing Receivable Recorded Investment Past Due [Line Items]
Troubled debt restructurings	$ 227,000	$ 117,000
Non-Performing Loans
Financing Receivable Recorded Investment Past Due [Line Items]
Non-accrual loans	4,160,000	525,000
Loans past due >90 days, but still accruing	1,264,000
Troubled debt restructurings	227,000	117,000
Total	5,651,000	642,000
Non-Performing Loans | Residential Mortgage
Financing Receivable Recorded Investment Past Due [Line Items]
Non-accrual loans	1,298,000	512,000
Loans past due >90 days, but still accruing	527,000
Troubled debt restructurings	99,000	111,000
Total	1,924,000	623,000
Non-Performing Loans | Commercial Mortgage
Financing Receivable Recorded Investment Past Due [Line Items]
Non-accrual loans	2,800,000
Loans past due >90 days, but still accruing	486,000
Total	3,286,000
Non-Performing Loans | Home Equity
Financing Receivable Recorded Investment Past Due [Line Items]
Non-accrual loans	12,000	13,000
Total	12,000	13,000
Non-Performing Loans | Commercial & Industrial
Financing Receivable Recorded Investment Past Due [Line Items]
Non-accrual loans	50,000
Loans past due >90 days, but still accruing	251,000
Troubled debt restructurings	128,000	6,000
Total	$ 429,000	$ 6,000

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Borrowings - Additional Information (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Debt Instrument [Line Items]
Percentage of market value, secured blanket lien on qualified collateral	95.00%
Percentage of carrying value, secured blanket lien on qualified collateral	75.00%
Unused borrowing capacity based upon collateral pledged	$ 345.5
Commercial Real Estate And Commercial And Industrial Loans | Line of Credit
Debt Instrument [Line Items]
Collateral pledged amount	316.4	$ 291.7
FRB Boston | Commercial Real Estate And Commercial And Industrial Loans
Debt Instrument [Line Items]
Line of credit unused borrowing capacity	$ 134.9	$ 167.5

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Banking Premises and Equipment - Additional Information (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Property Plant And Equipment [Abstract]
Depreciation expense	$ 2.0	$ 1.9	$ 1.9

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Derivative And Hedging Activities (Tables)

12 Months Ended

Dec. 31, 2019

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Summary of Fair Values of Derivative Instruments in the Company's Consolidated Balance Sheets

The following tables present the notional amount, the location, and fair values of derivative instruments in the Company’s Consolidated Balance Sheets:

	December 31, 2019
	Derivative Assets					Derivative Liabilities
	Notional Amount		Balance Sheet Location	Fair Value		Notional Amount		Balance Sheet Location	Fair Value
	(dollars in thousands)					(dollars in thousands)
Derivatives designated as hedging instruments
Interest rate contracts		150,000	Other Assets	$	2,911	$	—	Other Liabilities	$	—
Total derivatives designated as hedging instruments				$	2,911				$	—
Derivatives not designated as hedging instruments
Loan related derivative contracts
Interest rate swaps with customers		241,187	Other Assets	$	12,980		—	Other Liabilities	$	—
Mirror swaps with counterparties		—	Other Assets		—		241,187	Other Liabilities		12,980
Risk participation agreements out to counterparties		19,000	Other Assets		21		—	Other Liabilities		—
Risk participation agreements in with counterparties		—	Other Assets		—		88,489	Other Liabilities		250
Total derivatives not designated as hedging instruments				$	13,001				$	13,230

	December 31, 2018
	Derivative Assets					Derivative Liabilities
	Notional Amount		Balance Sheet Location	Fair Value		Notional Amount		Balance Sheet Location	Fair Value
	(dollars in thousands)					(dollars in thousands)
Derivatives designated as hedging instruments
Interest rate contracts		150,000	Other Assets	$	1,970	$	—	Other Liabilities	$	—
Total derivatives designated as hedging instruments				$	1,970				$	—
Derivatives not designated as hedging instruments
Loan related derivative contracts
Interest rate swaps with customers		150,489	Other Assets	$	5,782	$	—	Other Liabilities	$	—
Mirror swaps with counterparties		—	Other Assets		—		150,489	Other Liabilities		5,782
Risk participation agreements out to counterparties		19,000	Other Assets		28		—	Other Liabilities		—
Risk participation agreements in with counterparties		—	Other Assets		—		63,825	Other Liabilities		179
Total derivatives not designated as hedging instruments				$	5,810				$	5,961

Summary of Cash Flow Hedge Accounting on Accumulated Other Comprehensive Income

The following tables presents the effect of cash flow hedge accounting on AOCI as of the periods presented:

	Amount of Gain or (Loss) Recognized in OCI		Amount of Gain or (Loss) Recognized in OCI Included Component		Amount of Gain or (Loss) Recognized in OCI Excluded Component			Location of Gain or (Loss)	Amount of Gain or (Loss) Reclassified from AOCI into Income			Amount of Gain or (Loss) Reclassified from AOCI into Income Included Component		Amount of Gain or (Loss) Reclassified from AOCI into Income Excluded Component
	2019								2019
	(dollars in thousands)								(dollars in thousands)
Interest rate contracts	$	984	$	2,120	$	(1,136	)	Interest Income	$	(194	)	$	—	$	(194	)
Total	$	984	$	2,120	$	(1,136	)		$	(194	)	$	—	$	(194	)
	Amount of Gain or (Loss) Recognized in OCI		Amount of Gain or (Loss) Recognized in OCI Included Component		Amount of Gain or (Loss) Recognized in OCI Excluded Component			Location of Gain or (Loss)	Amount of Gain or (Loss) Reclassified from AOCI into Income			Amount of Gain or (Loss) Reclassified from AOCI into Income Included Component		Amount of Gain or (Loss) Reclassified from AOCI into Income Excluded Component
	2018								2018
	(dollars in thousands)								(dollars in thousands)
Interest rate contracts	$	1,002	$	—	$	1,002		Interest Income	$	(43	)	$	—	$	(43	)
Total	$	1,002	$	—	$	1,002			$	(43	)	$	—	$	(43	)

Summary of Derivative Financial Instruments Income Statement

The following table presents the effect of the Company’s derivative financial instruments on the Income Statement as of the periods presented:  

	Year Ended December 31, 2019			Year Ended December 31, 2018
	Interest Income			Interest Income
	(dollars in thousands)			(dollars in thousands)
Total amount of income presented in the income    statement in which the effects of fair value or cash flow hedges are recorded	$	(194	)	$	(43	)
The effects of fair value and cash flow hedging:
Gain or (loss) on cash flow hedging relationships in Subtopic 815-20
Interest rate contracts
Amount of gain or (loss) reclassed from AOCI into income	$	(194	)	$	(43	)
Amount of gain or (loss) reclassed from AOCI    into income -  Included Component		—			—
Amount of gain or (loss) reclassed from AOCI    into income -  Excluded Component	$	(194	)	$	(43	)

Summary of Derivative Financial Instruments Not Designated as Hedging Instruments

The following table presents the effect of the Company’s derivative financial instruments that are not designated as hedging instruments on the Income Statement as of the periods presented:

		Amount of Gain or (Loss) Recognized in Income on Derivative
		Year Ended December 31		Year Ended December 31		Year Ended December 31
		2019		2018		2017
	Location of Gain or (Loss)	(dollars in thousands)
Other contracts	Other income	$	311	$	276	$	426
Total		$	311	$	276	$	426

Schedule of Financial Instruments Eligible for Offset in Consolidated Balance Sheet

The following tables present the information about financial instruments that are eligible for offset in the consolidated balance sheet as December 31, 2019 and December 31, 2018:

								Gross Amounts Not Offset
		Gross Amounts of Recognized		Gross Amounts Offset		Net Amounts Recognized		Financial Instruments		Collateral Pledged (Received)			Net Amount
	December 31, 2019
	(dollars in thousands)
Offsetting of Derivative Assets
Derivative Assets		$	15,912	$	—	$	15,912	$	3,128	$	—		$	12,784
Offsetting of Derivative Liabilities
Derivative Liabilities		$	13,230	$	—	$	13,230	$	3,128	$	9,645		$	457
								Gross Amounts Not Offset
		Gross Amounts of Recognized		Gross Amounts Offset		Net Amounts Recognized		Financial Instruments		Collateral Pledged (Received)			Net Amount
	December 31, 2018
	(dollars in thousands)
Offsetting of Derivative Assets
Derivative Assets		$	7,780	$	—	$	7,780	$	3,099	$	(743	)	$	3,938
Offsetting of Derivative Liabilities
Derivative Liabilities		$	5,961	$	—	$	5,961	$	3,099	$	260		$	2,602

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The Business - Additional Information (Details) - Cambridge Bancorp	12 Months Ended
	Dec. 31, 2019 Service Bank Corporation
Description Of Business [Line Items]
Number of core services | Service	4
Number of wholly owned investment in corporations | Corporation	2
Massachusetts and New Hampshire
Description Of Business [Line Items]
Number of private banking office | Bank	16

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Loans and Allowance for Loan Losses - Additional Information (Details)	12 Months Ended
	Dec. 31, 2019 USD ($) Loan	Dec. 31, 2018 USD ($) Loan
Financing Receivable Modifications [Line Items]
Loans outstanding to directors and officers	$ 3,000	$ 488,000
Loans to directors and officers, additions	85,000	139,000
Loans to directors and officers, repayments	570,000	167,000
Commitments to lend additional funds to borrowers whose loans were on non-accrual status	$ 0	$ 0
Number of loans modified during the period | Loan	1
Number of loans determined to be troubled debt restructurings | Loan	3	3
Troubled debt restructuring carrying value	$ 227,000	$ 117,000
Number of TDRs defaulted during the period | Loan	0	0
Allowance for loan losses includes specific reserve for troubled deb restructurings	$ 87,000,000
Specific reserve for troubled debt restructurings		$ 0
Other real estate owned	163,000
Loans secured by one- to-four family residential properties in process of foreclosure	344,000	$ 351,000
Troubled Debt Restructurings
Financing Receivable Modifications [Line Items]
Troubled debt restructuring carrying value	$ 128,000

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Pension and Retirement Plans - Schedule of Weighted-average Assumptions Used to Determine Projected Benefit Obligations and Net Periodic Benefit Cost (Details)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Pension Plan
Defined Benefit Plan Disclosure [Line Items]
Discount rate	3.22%	4.23%
Discount rate	4.23%	3.58%
Expected long-term return on plan assets	6.50%	6.50%
Supplemental Retirement Plan
Defined Benefit Plan Disclosure [Line Items]
Discount rate	3.04%	4.10%
Rate of compensation increase	4.00%	4.00%
Discount rate	4.10%	3.39%
Rate of compensation increase	4.00%	4.00%
Postretirement Healthcare Plan
Defined Benefit Plan Disclosure [Line Items]
Discount rate	3.26%	4.22%
Discount rate	4.22%	3.58%

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Mergers - Summary of Estimated Fair Value of Assets Acquired and Liabilities Assumed (Details) - USD ($)	Dec. 31, 2019	Apr. 17, 2019	Dec. 31, 2018
Assets
Goodwill	$ 31,206,000		$ 412,000
Optima Bank And Trust Company
Assets
Cash and cash equivalents		$ 6,902,000
Investments		23,298,000
Loans		475,406,000
Premises and equipment		6,286,000
Goodwill		30,794,000
Core deposit and other intangibles		3,609,000
Other assets		9,408,000
Total assets acquired		555,703,000
Liabilities
Deposits		477,189,000
Borrowings		13,459,000
Other liabilities		799,000
Total liabilities assumed		491,447,000
Purchase price		$ 64,256,000

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Income Taxes - Reconciliation of Total Income Tax Provision, Calculated at Statutory Federal Income Tax Rates, to Income Tax Expense in Consolidated Statements of Income (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Income Tax Disclosure [Abstract]
Provision at statutory rates									$ 7,123	$ 6,528	$ 9,861
Increase/(decrease) resulting from:
State tax, net of federal tax benefit									2,188	1,717	1,277
Tax-exempt income									(599)	(580)	(1,079)
ESOP dividends									(124)	(127)	(216)
Bank owned life insurance									(129)	(140)	(205)
Benefit from stock compensation									(150)	(168)	(190)
Non-deductible Acquisition Costs									236
Impact of Tax Cuts and Jobs Act											3,870
Other									116	(23)	40
Total income tax expense	$ 2,673	$ 2,708	$ 1,540	$ 1,740	$ 1,585	$ 2,105	$ 1,901	$ 1,616	$ 8,661	$ 7,207	$ 13,358
Provision at statutory rates, Rate									21.00%	21.00%	35.00%
Increase/(decrease) resulting from: (Rate)
State tax, net of federal tax benefit, Rate									6.45%	5.52%	4.53%
Tax-exempt income, Rate									(1.77%)	(1.87%)	(3.83%)
ESOP dividends, Rate									(0.37%)	(0.41%)	(0.77%)
Bank owned life insurance, Rate									(0.38%)	(0.45%)	(0.73%)
Benefit from stock compensation, Rate									(0.44%)	(0.54%)	(0.67%)
Non-deductible Acquisition Costs, Rate									0.70%
Impact of Tax Cuts and Jobs Act, Rate											13.74%
Other, Rate									0.34%	(0.07%)	0.15%
Total income tax expense, Rate									25.53%	23.18%	47.42%

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Pension and Retirement Plans - Schedule of Amounts Recognized in Consolidated Balance Sheets (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Pension Plan
Defined Benefit Plan Disclosure [Line Items]
Other assets/(liabilities)	$ 4,730	$ 2,126
Supplemental Retirement Plan
Defined Benefit Plan Disclosure [Line Items]
Other assets/(liabilities)	(9,622)	(8,830)
Postretirement Healthcare Plan
Defined Benefit Plan Disclosure [Line Items]
Other assets/(liabilities)	$ (689)	$ (598)

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Investment Securities - Gross Unrealized Losses of Aggregated by Investment Category and Length of Time that Individual Securities have been in Continuous Loss Position (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Schedule of Available for Sale Securities and Held to Maturity Securities [Line Items]
Temporarily Impaired Securities, Available for sale securities, Fair Value, Less than 12 months	$ 46,293	$ 902
Temporarily Impaired Securities, Available for sale securities, Unrealized Losses, Less than 12 months	(353)	(98)
Temporarily Impaired Securities, Available for sale securities, Fair Value, 12 months or longer	75,702	164,808
Temporarily Impaired Securities, Available for sale securities, Unrealized Losses, 12 months or longer	(657)	(4,147)
Temporarily Impaired Securities, Available for sale securities, Fair Value	121,995	165,710
Temporarily Impaired Securities, Available for sale securities, Unrealized Losses	(1,010)	(4,245)
Temporarily Impaired Securities, Held to maturity securities, Fair Value, Less than 12 months	19,772	51,063
Temporarily Impaired Securities, Held to maturity securities, Unrealized Losses, Less than 12 months	(93)	(410)
Temporarily Impaired Securities, Held to maturity securities, Fair Value, 12 months or longer	17,928	128,876
Temporarily Impaired Securities, Held to maturity securities, Unrealized Losses, 12 months or longer	(84)	(2,580)
Temporarily Impaired Securities, Held to maturity securities, Fair Value	37,700	179,939
Temporarily Impaired Securities, Held to maturity securities, Unrealized Losses	(177)	(2,990)
Temporarily Impaired Securities, Fair Value, Less than 12 months	66,065	51,965
Temporarily Impaired Securities, Unrealized Losses, Less than 12 months	(446)	(508)
Temporarily Impaired Securities, Fair Value, 12 months or longer	93,630	293,684
Temporarily Impaired Securities, Unrealized Losses, 12 months or longer	(741)	(6,727)
Temporarily Impaired Securities, Fair Value	159,695	345,649
Temporarily Impaired Securities, Unrealized Losses	(1,187)	(7,235)
U.S. GSE Obligations
Schedule of Available for Sale Securities and Held to Maturity Securities [Line Items]
Temporarily Impaired Securities, Available for sale securities, Fair Value, Less than 12 months	12,912
Temporarily Impaired Securities, Available for sale securities, Unrealized Losses, Less than 12 months	(88)
Temporarily Impaired Securities, Available for sale securities, Fair Value, 12 months or longer	24,936	74,039
Temporarily Impaired Securities, Available for sale securities, Unrealized Losses, 12 months or longer	(64)	(965)
Temporarily Impaired Securities, Available for sale securities, Fair Value	37,848	74,039
Temporarily Impaired Securities, Available for sale securities, Unrealized Losses	(152)	(965)
Temporarily Impaired Securities, Held to maturity securities, Fair Value, Less than 12 months		4,995
Temporarily Impaired Securities, Held to maturity securities, Unrealized Losses, Less than 12 months		(5)
Temporarily Impaired Securities, Held to maturity securities, Fair Value, 12 months or longer	5,000	27,338
Temporarily Impaired Securities, Held to maturity securities, Unrealized Losses, 12 months or longer		(233)
Temporarily Impaired Securities, Held to maturity securities, Fair Value	5,000	32,333
Temporarily Impaired Securities, Held to maturity securities, Unrealized Losses		(238)
Mortgage Backed Securities
Schedule of Available for Sale Securities and Held to Maturity Securities [Line Items]
Temporarily Impaired Securities, Available for sale securities, Fair Value, Less than 12 months	33,381
Temporarily Impaired Securities, Available for sale securities, Unrealized Losses, Less than 12 months	(265)
Temporarily Impaired Securities, Available for sale securities, Fair Value, 12 months or longer	50,766	86,815
Temporarily Impaired Securities, Available for sale securities, Unrealized Losses, 12 months or longer	(593)	(3,121)
Temporarily Impaired Securities, Available for sale securities, Fair Value	84,147	86,815
Temporarily Impaired Securities, Available for sale securities, Unrealized Losses	(858)	(3,121)
Temporarily Impaired Securities, Held to maturity securities, Fair Value, Less than 12 months	14,838	30,719
Temporarily Impaired Securities, Held to maturity securities, Unrealized Losses, Less than 12 months	(27)	(216)
Temporarily Impaired Securities, Held to maturity securities, Fair Value, 12 months or longer	12,928	93,225
Temporarily Impaired Securities, Held to maturity securities, Unrealized Losses, 12 months or longer	(84)	(2,074)
Temporarily Impaired Securities, Held to maturity securities, Fair Value	27,766	123,944
Temporarily Impaired Securities, Held to maturity securities, Unrealized Losses	(111)	(2,290)
Corporate Debt Securities
Schedule of Available for Sale Securities and Held to Maturity Securities [Line Items]
Temporarily Impaired Securities, Available for sale securities, Fair Value, Less than 12 months		902
Temporarily Impaired Securities, Available for sale securities, Unrealized Losses, Less than 12 months		(98)
Temporarily Impaired Securities, Available for sale securities, Fair Value, 12 months or longer		3,954
Temporarily Impaired Securities, Available for sale securities, Unrealized Losses, 12 months or longer		(61)
Temporarily Impaired Securities, Available for sale securities, Fair Value		4,856
Temporarily Impaired Securities, Available for sale securities, Unrealized Losses		(159)
Temporarily Impaired Securities, Held to maturity securities, Fair Value, Less than 12 months		6,865
Temporarily Impaired Securities, Held to maturity securities, Unrealized Losses, Less than 12 months		(107)
Temporarily Impaired Securities, Held to maturity securities, Fair Value		6,865
Temporarily Impaired Securities, Held to maturity securities, Unrealized Losses		(107)
Municipal Securities
Schedule of Available for Sale Securities and Held to Maturity Securities [Line Items]
Temporarily Impaired Securities, Held to maturity securities, Fair Value, Less than 12 months	4,934	8,484
Temporarily Impaired Securities, Held to maturity securities, Unrealized Losses, Less than 12 months	(66)	(82)
Temporarily Impaired Securities, Held to maturity securities, Fair Value, 12 months or longer		8,313
Temporarily Impaired Securities, Held to maturity securities, Unrealized Losses, 12 months or longer		(273)
Temporarily Impaired Securities, Held to maturity securities, Fair Value	4,934	16,797
Temporarily Impaired Securities, Held to maturity securities, Unrealized Losses	$ (66)	$ (355)

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Financial Instruments with Off-Balance-Sheet Risk (Tables)

12 Months Ended

Dec. 31, 2019

Fair Value Disclosures [Abstract]

Summary of Off-Balance-Sheet Financial Instruments with Contractual Amounts Include Present Credit Risk

Off-balance-sheet financial instruments with contractual amounts that present credit risk included the following:

	December 31, 2019		December 31, 2018
	(dollars in thousands)
Financial instruments whose contractual amount    represents credit risk:
Commitments to extend credit:
Unused portion of existing lines of credit	$	428,020	$	368,410
Origination of new loans		24,413		24,505
Standby letters of credit		9,150		8,752
Financial instruments whose notional amount exceeds    the amount of credit risk:
Commitments to sell residential mortgage loans		3,909		—

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Borrowings (Tables)

12 Months Ended

Dec. 31, 2019

Debt Disclosure [Abstract]

Schedule of Information Relating to Short-term Borrowings

Information relating to short-term borrowings is presented below:

	For the Year Ended December 31,
	2019			2018
	(dollars in thousands)
FHLB of Boston short-term advances
Ending balance	$	135,691		$	90,000
Average daily balance		84,414			15,183
Highest month-end balance		135,691			90,000
Weighted average interest rate		2.31	%		2.47	%

Schedule of Information Relating to Long-term Borrowings

Information relating to long-term borrowings is presented below:

	December 31, 2019					December 31, 2018
	Amount		Rate			Amount		Rate
	(dollars in thousands)
FHLB of Boston long-term advances
Due 09/01/2020; amortizing	$	—		0.00	%	$	3,409		1.94	%

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Share-Based Compensation

12 Months Ended

Dec. 31, 2019

Share Based Compensation [Abstract]

Share-Based Compensation

15. SHARE-BASED COMPENSATION

In 1993, the Company adopted a Stock Option Plan for key employees as an incentive for them to assist the Company in achieving long-range performance goals. During 2005, the Company’s shareholders amended the plan to permit the issuance of restricted stock, restricted stock units, and stock appreciation rights.

In 2017, the Company adopted the 2017 Equity and Cash Incentive Plan (the “2017 Plan”) and all future awards will be made under the 2017 Plan. The 2017 plan permits the issuance of restricted stock, restricted stock units (both time and performance-based), stock options, and stock appreciation rights.

Stock options time-vest over a five-year period. All options expire ten years from the date granted and have been issued at fair value at the date of grant which, in some instances, may be less than publicly traded values. There were no outstanding stock options at December 31, 2019. A summary of stock option transactions for the year ended December 31, 2018  is presented below:

	2019				2018
	Number of Options		Weighted Average Exercise Price		Number of Options			Weighted Average Exercise Price
Stock Options
Outstanding at beginning of year		—	$	—		16,377		$	29.21
Granted		—		—		—			—
Forfeited		—		—		—			—
Expired		—		—		(2,600	)		29.21
Exercised		—		—		(13,777	)		29.21
Outstanding at end of year		—	$	—		—		$	—
Exercisable at end of year		—	$	—		—		$	—

Restricted stock awards time-vest either over a three-year or five-year period and have been fair valued as of the date of grant. The holders of restricted stock awards participate fully in the rewards of stock ownership of the Company, including voting and dividend rights. A summary of restricted stock transactions for the periods of December 31, 2019 and 2018, and changes during the years ended on those dates, is presented below:

	2019					2018
	Number of Shares			Weighted Average Grant Value		Number of Shares			Weighted Average Grant Value
Restricted stock
Non-vested at beginning of year		41,311		$	65.10		43,240		$	53.13
Granted		11,330			75.67		17,373			80.43
Vested		(14,642	)		60.55		(15,760	)		50.10
Forfeited		(1,878	)		65.33		(3,542	)		60.84
Non-vested at end of year		36,121		$	70.25		41,311		$	65.10

Performance-based restricted stock units vest based upon the Company’s performance over a three-year period and have been fair valued as of the date of grant. The holders of performance-based restricted stock units do not participate in the rewards of stock ownership of the Company until vested. A summary of non-vested performance-based restricted stock units outstanding as of December 31, 2019 and 2018, and changes during the years ended on those dates, is presented below:

	2019					2018
	Number of Units			Weighted Average Grant Value		Number of Units			Weighted Average Grant Value
Performance-based restricted stock units
Non-vested at beginning of year		41,411		$	66.39		21,613		$	56.05
Granted		28,542			73.00		23,511			76.56
Vested (Performance achieved)		(12,697	)		46.00		—			—
Forfeited		—			—		(3,713	)		70.68
Expired (Performance not achieved)		—			—		—			—
Non-vested at end of year		57,256		$	72.82		41,411		$	66.39

Time based restricted stock units vest over a three-year-period and have been fair valued as of the date of the grant. The holders of time based restricted stock units do not participate in the rewards of stock ownership of the company until vested. A summary of nonvested time based restricted stock units outstanding as of December 31, 2019 and 2018, and changes during the years ended on those dates, is presented below:

	2019					2018
	Number of Shares			Weighted Average Grant Value		Number of Shares			Weighted Average Grant Value
Time-based restricted stock units
Non-vested at beginning of year		6,777		$	76.56		—		$	—
Granted		8,132			73.00		7,839			76.56
Vested		(2,251	)		76.56		(225	)		76.56
Forfeited		—			—		(837	)		76.56
Non-vested at end of year		12,658		$	74.27		6,777		$	76.56

The following table presents the amounts recognized in the consolidated income statement for restricted stock awards, time-based restricted stock units, and performance-based restricted stock units:

	December 31,
	2019		2018		2017
	(dollars in thousands)
Share-based compensation expense	$	2,632	$	2,592	$	1,045
Related income tax benefit	$	733	$	729	$	427

The 2017 Plan allows Directors of the Company to receive their annual retainer fee in the form of stock in the Company. Total shares issued under the 2017 Plan in the years ended December 31, 2019 and 2018 were 4,484 and 4,164, respectively.

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Pension and Retirement Plans - Schedule of Effect on One-percentage-point Change in Assumed Health Care Cost Trend Rates (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($)
Compensation And Retirement Disclosure [Abstract]
Effect on postretirement benefit obligation, one percentage point increase	$ 2
Effect on postretirement benefit obligation, one percentage point decrease	$ (2)

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Other Income

12 Months Ended

Dec. 31, 2019

Other Income And Expenses [Abstract]

Other Income

19. OTHER INCOME

The components of other income were as follows:

	For the Year Ended December 31,
	2019		2018		2017
	(dollars in thousands)
Safe deposit box income	$	333	$	342	$	348
Loan fee income		1,030		358		473
Miscellaneous income		564		569		334
Total other income	$	1,927	$	1,269	$	1,155

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Pension and Retirement Plans - Schedule of Pension Plan Weighted-average Asset Allocations by Asset (Details)	Dec. 31, 2019	Dec. 31, 2018
Defined Benefit Plan Disclosure [Line Items]
Weighted average asset allocations percentage	100.00%	100.00%
Equity Securities
Defined Benefit Plan Disclosure [Line Items]
Weighted average asset allocations percentage	53.00%	60.00%
Debt Securities
Defined Benefit Plan Disclosure [Line Items]
Weighted average asset allocations percentage	36.00%	35.00%
Other
Defined Benefit Plan Disclosure [Line Items]
Weighted average asset allocations percentage	3.00%	1.00%
Cash and Equivalents
Defined Benefit Plan Disclosure [Line Items]
Weighted average asset allocations percentage	8.00%	4.00%

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Share-Based Compensation - Summary of Stock Options Transactions and Changes (Details)	12 Months Ended
	Dec. 31, 2018 $ / shares shares
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Number of Options, Outstanding at beginning of year	16,377
Number of Options, Expired	(2,600)
Number of Options, Exercised	(13,777)
Number of Options, Outstanding at end of year	0
Weighted Average Exercise Price, Outstanding at beginning of year | $ / shares	$ 29.21
Weighted Average Exercise Price, Expired | $ / shares	29.21
Weighted Average Exercise Price, Exercised | $ / shares	$ 29.21

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Other Comprehensive Income - Summary of Reclassifications out of Accumulated Other Comprehensive Income ("AOCI") (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items]
Unrealized gains and losses on available for sale securities									$ (79)	$ 2	$ (3)
Tax benefit or (expense)	$ (2,673)	$ (2,708)	$ (1,540)	$ (1,740)	$ (1,585)	$ (2,105)	$ (1,901)	$ (1,616)	(8,661)	(7,207)	(13,358)
Net income	$ 7,109	$ 7,676	$ 4,272	$ 6,198	$ 5,306	$ 6,659	$ 6,111	$ 5,805	25,257	23,881	14,816
Reclassifications out of Accumulated Other Comprehensive Income
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items]
Unrealized gains and losses on available for sale securities									(81)	2	(3)
Tax benefit or (expense)									19		2
Net income									$ (62)	$ 2	$ (1)

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Derivative And Hedging Activities - Summary of Cash Flow Hedge Accounting on Accumulated Other Comprehensive Income (Details) - Cash Flow Hedging - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Derivative Instruments And Hedging Activities Disclosures [Line Items]
Amount of Gain or (Loss) Recognized in OCI	$ 984	$ 1,002
Amount of Gain or (Loss) Recognized in OCI Included Component	2,120
Amount of Gain or (Loss) Recognized in OCI Excluded Component	(1,136)	1,002
Amount of Gain or (Loss) Reclassified from AOCI into Income	(194)	(43)
Amount of Gain or (Loss) Reclassified from AOCI into Income Excluded Component	(194)	(43)
Interest Income
Derivative Instruments And Hedging Activities Disclosures [Line Items]
Amount of Gain or (Loss) Reclassified from AOCI into Income	(194)	(43)
Amount of Gain or (Loss) Reclassified from AOCI into Income Excluded Component	(194)	(43)
Interest Rate Contracts
Derivative Instruments And Hedging Activities Disclosures [Line Items]
Amount of Gain or (Loss) Recognized in OCI	984	1,002
Amount of Gain or (Loss) Recognized in OCI Included Component	2,120
Amount of Gain or (Loss) Recognized in OCI Excluded Component	$ (1,136)	$ 1,002

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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) - $ / shares	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Retained Earnings
Dividends declared, per share	$ 2.04	$ 1.96	$ 1.86

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CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Statement Of Financial Position [Abstract]
Available for sale securities, amortized cost	$ 141,109	$ 172,290
Held-to-maturity securities, fair value	$ 264,114	$ 281,310
Common stock, par value	$ 1.00	$ 1.00
Common stock, shares authorized	10,000,000	10,000,000
Common stock, shares, outstanding	5,400,868	4,107,051

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Mergers - Additional Information (Details) - Optima Bank And Trust Company		12 Months Ended
	Apr. 17, 2019 USD ($) $ / shares shares	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)
Business Acquisition [Line Items]
Business combination, conversion price per share | $ / shares	$ 32.00
Business combination, share conversion ratio	0.3468
Business combination percentage of common stock transaction	95.00%
Business combination percentage of cash transaction	5.00%
Common stock issued related to merger | shares	722,746
Cash payment related to merger	$ 3,500,000
Total consideration paid	$ 64,300,000
Merger expenses		$ 3,900,000	$ 201,000

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Income Taxes - Components of Income Tax Expense (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Current
Federal									$ 5,954	$ 5,524	$ 8,446
State									2,597	2,404	2,225
Total current expense									8,551	7,928	10,671
Deferred
Federal									(63)	(490)	2,948
State									173	(231)	(261)
Total deferred									110	(721)	2,687
Total income tax expense	$ 2,673	$ 2,708	$ 1,540	$ 1,740	$ 1,585	$ 2,105	$ 1,901	$ 1,616	$ 8,661	$ 7,207	$ 13,358

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Pension and Retirement Plans - Schedule of Projected Benefit Obligations and Funded Status (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Pension Plan
Change in projected benefit obligation
Obligation at beginning of year	$ 40,522,000	$ 43,943,000
Interest cost	1,680,000	1,557,000
Actuarial loss/(gain)	4,670,000	(3,659,000)
Benefits paid	(1,471,000)	(1,319,000)
Obligation at end of year	45,401,000	40,522,000
Change in plan assets
Fair value at beginning of year	42,648,000	45,247,000
Actual return on plan assets	8,954,000	(1,280,000)
Employer contribution	0
Benefits paid	(1,471,000)	(1,319,000)
Fair value at end of year	50,131,000	42,648,000
Funded (underfunded) status at end of year	4,730,000	2,126,000
Supplemental Retirement Plan
Change in projected benefit obligation
Obligation at beginning of year	8,830,000	9,204,000
Service cost	283,000	354,000
Interest cost	349,000	309,000
Actuarial loss/(gain)	770,000	(499,000)
Benefits paid	(610,000)	(538,000)
Obligation at end of year	9,622,000	8,830,000
Change in plan assets
Employer contribution	610,000	538,000
Benefits paid	(610,000)	(538,000)
Funded (underfunded) status at end of year	(9,622,000)	(8,830,000)
Postretirement Healthcare Plan
Change in projected benefit obligation
Obligation at beginning of year	598,000	617,000
Service cost	25,000	23,000
Interest cost	25,000	22,000
Actuarial loss/(gain)	76,000	(30,000)
Benefits paid	(35,000)	(34,000)
Obligation at end of year	689,000	598,000
Change in plan assets
Employer contribution	35,000	33,000
Benefits paid	(35,000)	(33,000)
Funded (underfunded) status at end of year	$ (689,000)	$ (598,000)

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Investment Securities - Schedule of Amortized Cost and Fair Value of Debt Securities, Aggregated By Earlier of Guaranteed Call Date or Contractual Maturity (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Schedule of Available for Sale Securities and Held to Maturity Securities [Line Items]
Available for sale securities, Within One Year, Amortized Cost	$ 5,000
Available for sale securities, Within One Year, Fair Value	4,997
Available for sale securities, After One, But Within Five Years, Amortized Cost	20,037
Available for sale securities, After One, But Within Five Years, Fair Value	19,977
Available for sale securities, After Five, But Within Ten Years, Amortized Cost	41,393
Available for sale securities, After Five, But Within Ten Years, Fair Value	40,931
Available for sale securities, After Ten Years, Amortized Cost	74,679
Available for sale securities, After Ten Years, Fair Value	74,425
Available for sale securities, Total, Amortized Cost	141,109
Available for sale securities, Total, Fair Value	140,330
Held to maturity securities, Within One Year, Amortized Cost	8,270
Held to maturity securities, Within One Year, Fair Value	8,291
Held to maturity securities, After One, But Within Five Years, Amortized Cost	17,588
Held to maturity securities, After One, But Within Five Years, Fair Value	18,000
Held to maturity securities, After Five, But Within Ten Years, Amortized Cost	93,289
Held to maturity securities, After Five, But Within Ten Years, Fair Value	96,640
Held to maturity securities, After Ten Years, Amortized Cost	139,025
Held to maturity securities, After Ten Years, Fair Value	141,183
Held to maturity securities, Amortized Cost	258,172	$ 282,869
Held to maturity securities, Fair Value	264,114	281,310
Available for sale securities and Held to maturity securities, Within One Year, Amortized Cost	13,270
Available for sale securities and Held to maturity securities, Within One Year, Fair Value	13,288
Available for sale securities and Held to maturity securities, After One, But Within Five Years, Amortized Cost	37,625
Available for sale securities and Held to maturity securities, After One, But Within Five Years, Fair Value	37,977
Available for sale securities and Held to maturity securities, After Five, But Within Ten Years, Amortized Cost	134,682
Available for sale securities and Held to maturity securities, After Five, But Within Ten Years, Fair Value	137,571
Available for sale securities and Held to maturity securities, After Ten Years, Amortized Cost	213,704
Available for sale securities and Held to maturity securities, After Ten Years, Fair Value	215,608
Available for sale securities and Held to maturity securities, Total, Amortized Cost	399,281
Available for sale securities and Held to maturity securities, Total, Fair Value	404,444
U.S. GSE Obligations
Schedule of Available for Sale Securities and Held to Maturity Securities [Line Items]
Available for sale securities, Within One Year, Amortized Cost	5,000
Available for sale securities, Within One Year, Fair Value	4,997
Available for sale securities, After One, But Within Five Years, Amortized Cost	20,000
Available for sale securities, After One, But Within Five Years, Fair Value	19,939
Available for sale securities, After Five, But Within Ten Years, Amortized Cost	5,000
Available for sale securities, After Five, But Within Ten Years, Fair Value	4,934
Available for sale securities, After Ten Years, Amortized Cost	8,000
Available for sale securities, After Ten Years, Fair Value	7,978
Available for sale securities, Total, Amortized Cost	38,000
Available for sale securities, Total, Fair Value	37,848
Held to maturity securities, Within One Year, Amortized Cost	5,000
Held to maturity securities, Within One Year, Fair Value	5,000
Held to maturity securities, Amortized Cost	5,000
Held to maturity securities, Fair Value	5,000
Mortgage Backed Securities
Schedule of Available for Sale Securities and Held to Maturity Securities [Line Items]
Available for sale securities, After One, But Within Five Years, Amortized Cost	37
Available for sale securities, After One, But Within Five Years, Fair Value	38
Available for sale securities, After Five, But Within Ten Years, Amortized Cost	36,393
Available for sale securities, After Five, But Within Ten Years, Fair Value	35,997
Available for sale securities, After Ten Years, Amortized Cost	66,679
Available for sale securities, After Ten Years, Fair Value	66,447
Available for sale securities, Total, Amortized Cost	103,109
Available for sale securities, Total, Fair Value	102,482
Held to maturity securities, After One, But Within Five Years, Amortized Cost	2
Held to maturity securities, After One, But Within Five Years, Fair Value	2
Held to maturity securities, After Five, But Within Ten Years, Amortized Cost	48,088
Held to maturity securities, After Five, But Within Ten Years, Fair Value	49,117
Held to maturity securities, After Ten Years, Amortized Cost	113,669
Held to maturity securities, After Ten Years, Fair Value	115,280
Held to maturity securities, Amortized Cost	161,759
Held to maturity securities, Fair Value	164,399
Corporate Debt Securities
Schedule of Available for Sale Securities and Held to Maturity Securities [Line Items]
Held to maturity securities, After One, But Within Five Years, Amortized Cost	6,980
Held to maturity securities, After One, But Within Five Years, Fair Value	7,096
Held to maturity securities, Amortized Cost	6,980
Held to maturity securities, Fair Value	7,096
Municipal Securities
Schedule of Available for Sale Securities and Held to Maturity Securities [Line Items]
Held to maturity securities, Within One Year, Amortized Cost	3,270
Held to maturity securities, Within One Year, Fair Value	3,291
Held to maturity securities, After One, But Within Five Years, Amortized Cost	10,606
Held to maturity securities, After One, But Within Five Years, Fair Value	10,902
Held to maturity securities, After Five, But Within Ten Years, Amortized Cost	45,201
Held to maturity securities, After Five, But Within Ten Years, Fair Value	47,523
Held to maturity securities, After Ten Years, Amortized Cost	25,356
Held to maturity securities, After Ten Years, Fair Value	25,903
Held to maturity securities, Amortized Cost	84,433	75,208
Held to maturity securities, Fair Value	$ 87,619	$ 76,150

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Loans and Allowance for Loan Losses - Loans Outstanding by Category (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Loans And Leases Receivable Disclosure [Line Items]
Total loans	$ 2,226,728	$ 1,559,772
Residential Mortgage
Loans And Leases Receivable Disclosure [Line Items]
Deferred costs (fees) net of unearned fees	2,176	1,408
Total loans	917,566	604,331
Residential Mortgage | Construction
Loans And Leases Receivable Disclosure [Line Items]
Loans outstanding by category gross	17,374
Residential Mortgage | Mortgages - Fixed Rate
Loans And Leases Receivable Disclosure [Line Items]
Loans outstanding by category gross	430,877	293,267
Residential Mortgage | Mortgages - Adjustable Rate
Loans And Leases Receivable Disclosure [Line Items]
Loans outstanding by category gross	467,139	309,656
Commercial Mortgage
Loans And Leases Receivable Disclosure [Line Items]
Deferred costs (fees) net of unearned fees	144	82
Total loans	1,060,574	757,957
Commercial Mortgage | Construction
Loans And Leases Receivable Disclosure [Line Items]
Loans outstanding by category gross	76,288	44,146
Commercial Mortgage | Mortgages - Nonowner Occupied
Loans And Leases Receivable Disclosure [Line Items]
Loans outstanding by category gross	870,047	654,394
Commercial Mortgage | Mortgages - Owner Occupied
Loans And Leases Receivable Disclosure [Line Items]
Loans outstanding by category gross	114,095	59,335
Home Equity
Loans And Leases Receivable Disclosure [Line Items]
Deferred costs (fees) net of unearned fees	240	250
Total loans	80,675	69,336
Home Equity | Home Equity - Lines of Credit
Loans And Leases Receivable Disclosure [Line Items]
Loans outstanding by category gross	73,880	63,421
Home Equity | Home Equity - Term Loans
Loans And Leases Receivable Disclosure [Line Items]
Loans outstanding by category gross	6,555	5,665
Commercial & Industrial
Loans And Leases Receivable Disclosure [Line Items]
Loans outstanding by category gross	133,337	93,728
Deferred costs (fees) net of unearned fees	(101)	(16)
Total loans	133,236	93,712
Consumer
Loans And Leases Receivable Disclosure [Line Items]
Deferred costs (fees) net of unearned fees	25	13
Total loans	34,677	34,436
Consumer | Secured
Loans And Leases Receivable Disclosure [Line Items]
Loans outstanding by category gross	33,453	33,252
Consumer | Unsecured
Loans And Leases Receivable Disclosure [Line Items]
Loans outstanding by category gross	$ 1,199	$ 1,171

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Pension and Retirement Plans - Components of Net Periodic Benefit Cost and Amounts Recognized in Other Comprehensive Income/ (Loss) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Amounts recognized in other comprehensive income/( loss)
Total recognized in other comprehensive income/( loss)	$ (864)	$ (124)	$ (6,545)
Pension Plan
Net periodic benefit cost
Interest cost	1,680	1,557
Expected return on assets	(2,721)	(2,891)
Amortization of prior service credit	(4)	(4)
Amortization of net actuarial loss/(gain)	154	106
Net periodic benefit cost	(891)	(1,232)
Amounts recognized in other comprehensive income/( loss)
Net actuarial loss/(gain)	(1,563)	512
Amortization of prior service credit	4	4
Amortization of net actuarial gain	(154)	(106)
Total recognized in other comprehensive income/( loss)	(1,713)	410
Total recognized in net periodic benefit cost and other comprehensive income/( loss)	(2,604)	(822)
Supplemental Retirement Plan
Net periodic benefit cost
Service cost	283	354
Interest cost	349	309
Amortization of net actuarial loss/(gain)		4
Net periodic benefit cost	632	667
Amounts recognized in other comprehensive income/( loss)
Net actuarial loss/(gain)	770	(499)
Amortization of prior service credit		(4)
Total recognized in other comprehensive income/( loss)	770	(503)
Total recognized in net periodic benefit cost and other comprehensive income/( loss)	1,402	164
Postretirement Healthcare Plan
Net periodic benefit cost
Service cost	25	23
Interest cost	25	22
Amortization of net actuarial loss/(gain)	(3)
Net periodic benefit cost	47	45
Amounts recognized in other comprehensive income/( loss)
Net actuarial loss/(gain)	76	(30)
Amortization of net actuarial gain	3
Total recognized in other comprehensive income/( loss)	79	(30)
Total recognized in net periodic benefit cost and other comprehensive income/( loss)	$ 126	$ 15

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Commitment and Contingencies (Tables)

12 Months Ended

Dec. 31, 2019

Commitments And Contingencies Disclosure [Abstract]

Summary of Right-of-Use Asset and Net Lease Liability

The following table summarizes information related to the Company’s right-of-use asset and net lease liability:

	December 31, 2019
	Operating Leases		Balance Sheet Location
	(dollars in thousands)
Right-of-use asset	$	33,587	Right-of-use asset operating leases
Lease liability	$	35,054	Operating lease liabilities

Summary of Components of Operating Lease Cost and Other Related Information

The components of operating lease cost and other related information are as follows:

		Twelve Months Ended December 31,
		2019
	(dollars in thousands)
Operating lease cost		$	5,280
Short-term lease cost			—
Variable lease cost (Cost excluded from lease payments)			2
Sublease income			(64	)
Total Operating Lease Cost		$	5,218
Other Information
Cash paid for amounts included in the measurement of lease liabilities - operating cash flows from operating leases		$	5,027
Operating Lease - Operating Cash Flows (Liability reduction)			3,868
Right-of-use assets obtained in exchange for new operating lease liabilities			37,728
Weighted average lease term - operating leases		8.15 Years
Weighted average discount rate - operating leases			3.39	%

Schedule of Total Minimum Lease Payments Due in Future Periods under Lease Agreements

The total minimum lease payments due in future periods under these agreements in effect at December 31, 2019 and December 31, 2018 were as follows:

Year Ended	Future Minimum
December 31, 2019	Lease Payments
	(dollars in thousands)
2020	$	5,478
2021		5,523
2022		5,371
2023		5,021
2024		4,355
Thereafter		14,553
Total minimum lease payments		40,301
Less: interest		(5,247	)
Total lease liability	$	35,054

Year Ended	Future Minimum
December 31, 2018	Lease Payments
	(dollars in thousands)
2019	$	4,448
2020		4,661
2021		4,662
2022		4,553
2023		4,455
Thereafter		17,128
Total minimum lease payments	$	39,907

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Components of Income Tax Expense

The components of income tax expense were as follows:

	For the Year Ended December 31,
	2019			2018			2017
	(dollars in thousands)
Current
Federal	$	5,954		$	5,524		$	8,446
State		2,597			2,404			2,225
		8,551			7,928			10,671
Deferred
Federal		(63	)		(490	)		2,948
State		173			(231	)		(261	)
Total deferred		110			(721	)		2,687
Total income tax expense	$	8,661		$	7,207		$	13,358

Reconciliation of Total Income Tax Provision, Calculated at Statutory Federal Income Tax Expense in Consolidated Statements of Income

The following is a reconciliation of the total income tax provision, calculated at statutory federal income tax rates, to the income tax provision in the consolidated statements of income:

	For the Year Ended December 31,
	2019			Rate			2018			Rate			2017			Rate
	(dollars in thousands)
Provision at statutory rates	$	7,123			21.00	%	$	6,528			21.00	%	$	9,861			35.00	%
Increase/(decrease) resulting from:
State tax, net of federal tax benefit		2,188			6.45			1,717			5.52			1,277			4.53
Tax-exempt income		(599	)		(1.77	)		(580	)		(1.87	)		(1,079	)		(3.83	)
ESOP dividends		(124	)		(0.37	)		(127	)		(0.41	)		(216	)		(0.77	)
Bank owned life insurance		(129	)		(0.38	)		(140	)		(0.45	)		(205	)		(0.73	)
Benefit from stock compensation		(150	)		(0.44	)		(168	)		(0.54	)		(190	)		(0.67	)
Non-deductible Acquisition Costs		236			0.70			—			—			—			—
Impact of Tax Cuts and Jobs Act		—			—			—			—			3,870			13.74
Other		116			0.34			(23	)		(0.07	)		40			0.15
Total income tax expense	$	8,661			25.53	%	$	7,207			23.18	%	$	13,358			47.42	%

Summary of Net Deferred Tax Asset

The Company’s 2019 and 2018 net deferred tax assets were measured using a 27.86% and 28.11% tax rate, respectively, and consisted of the following components:

	December 31, 2019			December 31, 2018
	(dollars in thousands)
Gross deferred tax assets
Allowance for loan losses	$	5,029		$	4,715
Accrued retirement benefits		1,592			2,082
Unrealized losses on AFS securities		171			957
Incentive compensation		1,248			1,189
Equity based compensation		1,034			849
Lease Liability		9,765			333
ESOP dividends		165			169
Loss carryforwards as a result of the Optima merger		877			—
Intangibles (merger related)		472			—
Other		252			155
Total gross deferred tax assets		20,605			10,449
Gross deferred tax liabilities
Deferred loan origination costs		(911	)		(459	)
Depreciation of premises and equipment		(1,021	)		(678	)
Right of Use Asset		(9,356	)		—
Mortgage servicing rights		(368	)		(187	)
Goodwill		(113	)		(114	)
Derivative transactions		(607	)		(294	)
Total gross deferred tax liabilities		(12,376	)		(1,732	)
Net deferred tax asset	$	8,229		$	8,717

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Share-Based Compensation - Summary of Non-vested Restricted Shares Outstanding (Details) - Restricted Stock - $ / shares	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Shares, Non-vested at beginning of year	41,311	43,240
Number of Shares, Granted	11,330	17,373
Number of Shares, Vested	(14,642)	(15,760)
Number of Shares, Forfeited	(1,878)	(3,542)
Number of Shares, Non-vested at end of year	36,121	41,311
Weighted Average Grant Value, Non-vested at beginning of year	$ 65.10	$ 53.13
Weighted Average Grant Value, Granted	75.67	80.43
Weighted Average Grant Value, Vested	60.55	50.10
Weighted Average Grant Value, Forfeited	65.33	60.84
Weighted Average Grant Value, Non-vested at end of year	$ 70.25	$ 65.10

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Pension and Retirement Plans

12 Months Ended

Dec. 31, 2019

Compensation And Retirement Disclosure [Abstract]

Pension and Retirement Plans

14. PENSION AND RETIREMENT PLANS

The Company has a noncontributory, defined benefit pension plan (“Pension Plan”) covering substantially all employees hired before May 2, 2011. Employees in positions requiring at least 1,000 hours of service per year were eligible to participate upon the attainment of age 21 and the completion of 12 months of service. Benefits are based primarily on years of service and the employee’s average monthly pay during the five highest consecutive plan years of the employee’s final ten years. On October 23, 2017, the Company announced its decision to freeze the accrual of benefits within the Pension Plan, effective December 31, 2017.  The Company also provides supplemental retirement benefits to certain current and former executive officers of the Company under the terms of Supplemental Executive Retirement Agreements (“Supplemental Retirement Plan”). Prior to 2016, the Company provided individual non-qualified defined benefit supplemental executive retirement plans (“DB SERPs”) to certain executives. The DB SERPs generally provide for an annual benefit payable in equal monthly installments following the executive’s retirement and continuing for at least the remainder of his or her lifetime, with such annual benefit generally based on the executive’s years of service and his or her highest three consecutive years of base salary and bonus. In 2016, the Company’s Board discontinued the use of DB SERPs for new entrants to the Company’s non-qualified retirement programs. Instead, new entrants are provided with individual non-qualified defined contribution supplemental executive retirement plans (“DC SERPs”). Under the DC SERPs, the Company may contribute an amount equal to 10% of the executive’s base salary and bonus to his or her account under the Company’s non-qualified deferred compensation plan, the Executive Deferred Compensation Plan. The Company also offers postretirement health care benefits for current and future retirees of the Bank. Certain employees receive a fixed monthly benefit at age 65 toward the purchase of postretirement medical coverage. The benefit received is based on the employee’s years of active service. The Company uses a December 31 measurement date each year to determine the benefit obligations for these plans.

Projected benefit obligations and funded status were as follows:

	Pension Plan						Supplemental Retirement Plan
	2019			2018			2019			2018
	(dollars in thousands)
Change in projected benefit obligation
Obligation at beginning of year	$	40,522		$	43,943		$	8,830		$	9,204
Service cost		—			—			283			354
Interest cost		1,680			1,557			349			309
Actuarial loss/(gain)		4,670			(3,659	)		770			(499	)
Benefits paid		(1,471	)		(1,319	)		(610	)		(538	)
Obligation at end of year		45,401			40,522			9,622			8,830
Change in plan assets
Fair value at beginning of year		42,648			45,247			—			—
Actual return on plan assets		8,954			(1,280	)		—			—
Employer contribution		—			—			610			538
Benefits paid		(1,471	)		(1,319	)		(610	)		(538	)
Fair value at end of year		50,131			42,648			—			—
Funded status at end of year	$	4,730		$	2,126		$	(9,622	)	$	(8,830	)

Amounts recognized in the consolidated balance sheets consisted of:

	Pension Plan				Supplemental Retirement Plan
	2019		2018		2019			2018
	(dollars in thousands)
Other assets/(liabilities)	$	4,730	$	2,126	$	(9,622	)	$	(8,830	)

Amounts recognized in accumulated other comprehensive loss consisted of:

	Pension Plan						Supplemental Retirement Plan
	2019			2018			2019		2018
	(dollars in thousands)
Net actuarial loss/(gain)	$	3,709		$	5,427		$	1,128	$	358
Prior service (benefit)		(7	)		(12	)		—		—
Total	$	3,702		$	5,415		$	1,128	$	358

Certain disaggregated information related to our retirement plans were as follows:

	Pension Plan				Supplemental Retirement Plan
	2019		2018		2019			2018
	(dollars in thousands)
Projected benefit obligation	$	45,401	$	40,522	$	9,622		$	8,830
Accumulated benefit obligation		45,401		40,522		9,207			8,567
Fair value of plan assets		50,131		42,648		—			—
Funded status at end of year		4,730		2,126		(9,622	)		(8,830	)

The components of net periodic benefit cost and amounts recognized in other comprehensive income/ (loss) were as follows:

	Pension Plan						Supplemental Retirement Plan
	2019			2018			2019		2018
	(dollars in thousands)
Net periodic benefit cost
Service cost	$	—		$	—		$	283	$	354
Interest cost		1,680			1,557			349		309
Expected return on assets		(2,721	)		(2,891	)		—		—
Amortization of prior service credit		(4	)		(4	)		—		—
Amortization of net actuarial loss/(gain)		154			106			—		4
Net periodic benefit cost		(891	)		(1,232	)		632		667
Amounts recognized in other comprehensive income/( loss)
Net actuarial loss/(gain)		(1,563	)		512			770		(499	)
Amortization of prior service credit		4			4					(4	)
Amortization of net actuarial gain		(154	)		(106	)		—		—
Total recognized in other comprehensive income/( loss)		(1,713	)		410			770		(503	)
Total recognized in net periodic benefit cost and other    comprehensive income/( loss)	$	(2,604	)	$	(822	)	$	1,402	$	164

Weighted-average assumptions used to determine projected benefit obligations are as follows:

	Pension Plan						Supplemental Retirement Plan
	2019			2018			2019			2018
Discount rate		3.22	%		4.23	%		3.04	%		4.10	%
Rate of compensation increase	N/A			N/A				4.00	%		4.00	%

Weighted-average assumptions used to determine net periodic benefit cost are as follows:

	Pension Plan						Supplemental Retirement Plan
	2019			2018			2019			2018
Discount rate		4.23	%		3.58	%		4.10	%		3.39	%
Expected long-term return on plan assets		6.50	%		6.50	%	N/A			N/A
Rate of compensation increase	N/A			N/A				4.00	%		4.00	%

To develop the expected long-term rate of return on assets assumption for the Pension Plan, the Company considered the historical returns and the future expectations for returns for each asset class, as well as target asset allocations of the pension portfolio. Based on this analysis, the Company selected 6.50% as the long-term rate of return on asset assumption.

The Company maintains an Investment Policy for its Pension Plan. The objective of this policy is to seek a balance between capital appreciation, current income, and preservation of capital, with a longer term weighting towards equities because of the extended time horizon of the Pension Plan.

The Investment Policy guidelines suggest that the target asset allocation percentages are from 30% to 60% in domestic large cap equities, from 5% to 20% in domestic small/mid cap equities, from 0% to 20% in international equities, and from 20% to 50% in cash and fixed income.  

The Company’s Pension Plan weighted-average asset allocations by asset category were as follows:

	December 31,
	2019			2018
Equity securities		53	%		60	%
Debt securities		36			35
Other		3			1
Cash and equivalents		8			4
Total		100	%		100	%

The three broad levels of fair values used to measure the Pension Plan assets are as follows:

• Level 1 – Quoted prices for identical assets in active markets.

• Level 2 – Quoted prices for similar assets in active markets; quoted prices for identical or similar assets in inactive markets; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.

• Level 3 – Valuations derived from techniques in which one or more significant inputs or significant value drivers are unobservable in the markets and which reflect the Company’s market assumptions.

The following table summarizes the various categories of the Pension Plan’s assets:

	Fair Value as of December 31, 2019
	Level 1		Level 2		Level 3		Total
	(dollars in thousands)
Asset category
Cash and cash equivalents	$	4,834	$	—	$	—	$	4,834
Fixed Income		—		7,197		—		7,197
Equity securities
Common Stock
Large cap core		17,180		—		—		17,180
Mid cap core		—		—		—		—
Small cap core		2,627		—		—		2,627
Mutual funds
Domestic Equity		3,931		—		—		3,931
International		3,650		—		—		3,650
Domestic Fixed Income		10,712						10,712
Preferred Stock		—		—		—		—
Total	$	42,934	$	7,197	$	—	$	50,131

	Fair Value as of December 31, 2018
	Level 1		Level 2		Level 3		Total
	(dollars in thousands)
Asset category
Cash and cash equivalents	$	3,520	$	—	$	—	$	3,520
Fixed Income		—		6,534		—		6,534
Equity securities
Common Stock
Large cap core		16,127		—		—		16,127
Mid cap core		—		—		—		—
Small cap core		2,090		—		—		2,090
Mutual funds
Domestic Equity		4,320		—		—		4,320
International		3,409		—		—		3,409
Domestic Fixed Income		6,648						6,648
Preferred Stock		—		—		—		—
Total	$	36,114	$	6,534	$	—	$	42,648

There were no transfers between fair value levels during the years ended December 31, 2019 and 2018.

The Company offers postretirement health care benefits for current and future retirees of the Bank. Employees receive a fixed monthly benefit at age 65 toward the purchase of postretirement medical coverage. The benefit received is based on the employee’s years of active service. The Company uses a December 31 measurement date each year to determine the benefit obligation for this plan. On November 7, 2019, the Company announced its decision to freeze the accrual of benefits to new hires within the plan.

Projected benefit obligations and funded status were as follows:

	Postretirement Healthcare Plan
	2019			2018
	(dollars in thousands)
Change in projected benefit obligation
Obligation at beginning of year	$	598		$	617
Service cost		25			23
Interest cost		25			22
Actuarial loss/(gain)		76			(30	)
Benefits paid		(35	)		(34	)
Obligation at end of year		689			598
Change in plan assets
Fair value at beginning of year		—			—
Actual return on plan assets		—			—
Employer contribution		35			33
Benefits paid		(35	)		(33	)
Fair value at end of year		—			—
Funded status at end of year	$	(689	)	$	(598	)

Amounts recognized in the consolidated balance sheets consisted of:

	Postretirement Healthcare Plan
	2019			2018
	(dollars in thousands)
Other liabilities	$	(689	)	$	(598	)

Amounts recognized in accumulated other comprehensive loss consisted of:

	Postretirement Healthcare Plan
	2019			2018
	(dollars in thousands)
Net actuarial (gain)/loss	$	(34	)	$	(113	)
Prior service cost		—			—
Total	$	(34	)	$	(113	)

Information for retirement plans with an accumulated benefit obligation in excess of plan assets:

	Postretirement Healthcare Plan
	2019		2018
	(dollars in thousands)
Projected benefit obligation	$	689	$	598
Accumulated benefit obligation		689		598
Fair value of plan assets		—		—

The components of net periodic benefit cost and amounts recognized in other comprehensive income were as follows:

	Postretirement Healthcare Plan
	2019			2018
	(dollars in thousands)
Net periodic benefit cost
Service cost	$	25		$	23
Interest cost		25			22
Expected return on assets		—			—
Amortization of prior service credit		—			—
Amortization of net actuarial gain		(3	)		—
Net periodic benefit cost		47			45
Amounts recognized in other comprehensive income/( loss)
Net actuarial (gain) loss		76			(30	)
Amortization of prior service credit		—			—
Amortization of net actuarial gain		3			—
Total recognized in other comprehensive income/( loss)		79			(30	)
Total recognized in net periodic benefit cost and    other comprehensive  income/( loss)	$	126		$	15

Weighted-average assumptions used to determine projected benefit obligations are as follows:

	Postretirement Healthcare Plan
	2019			2018
Discount rate		3.26	%		4.22	%
Rate of compensation increase	N/A			N/A

Weighted-average assumptions used to determine net periodic benefit cost are as follows:

	Postretirement Healthcare Plan
	2019			2018
Discount rate		4.22	%		3.58	%
Expected long-term return on plan assets	N/A			N/A
Rate of compensation increase	N/A			N/A

Assumed health care cost trend rates are as follows:

	Postretirement Healthcare Plan
	2019			2018
Health care cost trend rate assumed for next year		4.00	%		4.00	%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)		4.00	%		4.00	%
Year that the rate reaches the ultimate trend rate		2019			2018

Assumed health care trend rates have a significant effect on the amounts reported for the health care plans. A one-percentage-point change in assumed health care cost trend rates would have the following effects:

	One Percentage Point
	Increase		Decrease
	(dollars in thousands)
Effect on total service and interest cost	$	—	$	—
Effect on postretirement benefit obligation		2		(2	)

Benefits expected to be paid in the next ten years are as follows:

	Pension Plan		Supplemental Retirement Plan		Postretirement Healthcare Plan		Total
	(dollars in thousands)
Year-ended December 31,
2020	$	1,751	$	594	$	30	$	2,375
2021		1,813		591		30		2,434
2022		1,948		609		31		2,588
2023		2,061		605		31		2,697
2024		2,135		602		31		2,768
2025-2029 inclusive		11,784		2,916		166		14,866
Ten year total	$	21,492	$	5,917	$	319	$	27,728

The estimated amounts that will be amortized from accumulated other comprehensive income into net periodic benefit cost during 2019 are as follows:

	Pension Plan			Supplemental Retirement Plan		Postretirement Healthcare Plan		Total
	(dollars in thousands)
Prior service cost	$	(4	)	$	—	$	—	$	(4	)
Net (gain)/loss		—			—		—		—
Total	$	(4	)	$	—	$	—	$	(4	)

Employee Profit Sharing and 401(k) Plan

The Company maintains a Profit Sharing Plan (“PSP”) that provides for deferral of federal and state income taxes on employee contributions allowed under Section 401(k) of federal law. Beginning in 2018, the Company matched employee contributions up to 100% of the first 4% of each participant’s salary, eligible bonus, and eligible incentive, up from 3% in 2017. Employees are eligible to participate in the PSP on the first day of their initial date of service. Each year, the Company may also make a discretionary contribution to the PSP. In 2018, employees were eligible to participate in the discretionary contribution portion of the PSP after completing 12 months of employment, and 1,000 hours of service. The employee must be employed on the last day of the calendar year, or retire at the normal retirement age of 65 during the calendar year to receive the discretionary contribution. Effective in 2019, employees are eligible to participate in the discretionary contribution portion of the PSP on the first day of their initial date of service.

Employee Stock Ownership Plan

The Company has an Employee Stock Ownership Plan (“ESOP”) for its eligible employees. Employees are eligible to participate upon the attainment of age 21 and the completion of 12 months of service consisting of at least 1,000 hours. Purchases of the Company’s stock by the ESOP will be funded by employer contributions or reinvestment of cash dividends.

Total expenses related to the Profit Sharing and ESOP Plans for the years ended December 31, 2019, 2018 and 2017, amounted to approximately $2.8 million, $2.6 million, and $1.5 million, respectively.

Defined Contribution SERP Plan (“DC SERP”)

For executives participating in the DC SERP plan, the Company made a discretionary contribution of 10% of each executive’s base salary and bonus to his or her account under the Company’s DC SERP, the Executive Deferred Compensation Plan. Total expenses related to the Company’s DC SERP for the years ended December 31, 2019, 2018 and 2017, amounted to approximately $167,000, $209,000, and $126,000, respectively.

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Pension and Retirement Plans - Schedule of Benefits Expected to be Paid in the Next Ten Years (Details) $ in Thousands	Dec. 31, 2019 USD ($)
Year-ended December 31,
2020	$ 2,375
2021	2,434
2022	2,588
2023	2,697
2024	2,768
2025-2029 inclusive	14,866
Ten year total	27,728
Pension Plan
Year-ended December 31,
2020	1,751
2021	1,813
2022	1,948
2023	2,061
2024	2,135
2025-2029 inclusive	11,784
Ten year total	21,492
Supplemental Retirement Plan
Year-ended December 31,
2020	594
2021	591
2022	609
2023	605
2024	602
2025-2029 inclusive	2,916
Ten year total	5,917
Postretirement Healthcare Plan
Year-ended December 31,
2020	30
2021	30
2022	31
2023	31
2024	31
2025-2029 inclusive	166
Ten year total	$ 319

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Shareholders' Equity

12 Months Ended

Dec. 31, 2019

Equity [Abstract]

Shareholders' Equity

18. SHAREHOLDERS’ EQUITY

Capital guidelines issued by the Federal Reserve Bank (the “FRB”) and by the FDIC require that the Company and the Bank maintain minimum capital levels for capital adequacy purposes. These regulations also require banks and their holding companies to maintain higher capital levels to be considered “well-capitalized.” Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, there are specific capital guidelines that involve quantitative measures of assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The risk-based capital rules are designed to make regulatory capital more sensitive to differences in risk profiles among bank and bank holding companies, to account for off-balance-sheet exposure, and to minimize disincentives for holding liquid assets.

In July 2013, the Federal Reserve, the Office of the Comptroller of the Currency (“OCC”), and the FDIC approved final rules (the “Capital Rules”) establishing a new comprehensive capital framework for U.S. banking organizations. The Capital Rules generally implement the Basel Committee on Banking Supervision’s (the “Basel Committee”) December 2010 final capital framework referred to as “Basel III” for strengthening international capital standards. The Capital Rules revise the definitions and the components of regulatory capital, as well as address other issues affecting the numerator in banking institutions’ regulatory capital ratios. The Capital Rules also address asset risk weights and other matters affecting the denominator in banking institutions’ regulatory capital ratios and replace the existing general risk-weighting approach with a more risk-sensitive approach.

The Capital Rules: (i) include “Common Equity Tier 1” (“CET1”) and related regulatory capital ratio of CET1 to risk-weighted assets; (ii) specify that Tier 1 capital consists of CET1 and “Additional Tier 1 capital” instruments meeting certain revised requirements; (iii) mandate that most deductions/adjustments to regulatory capital measures be made to CET1 and not to the other components of capital; and (iv) expand the scope of the deductions from and adjustments to capital as compared to existing regulations. Under the Capital Rules, for most banking organizations, including the Company, the most common form of Additional Tier 1 capital is non-cumulative perpetual preferred stock, and the most common forms of Tier 2 capital are subordinated notes and a portion of the allocation for loan and lease losses, in each case, subject to the Capital Rules’ specific requirements.

Pursuant to the Capital Rules, effective January 1, 2015, the minimum capital ratios are as follows:

• 4.5% CET1 to risk-weighted assets;

• 6.0% Tier 1 capital (that is, CET1 plus Additional Tier 1 capital) to risk-weighted assets;

• 8.0% Total capital (that is, Tier 1 capital plus Tier 2 capital) to risk-weighted assets; and

• 4.0% Tier 1 capital to average consolidated assets as reported on consolidated financial statements (called “leverage ratio”).

The Capital Rules also include a “capital conservation buffer,” composed entirely of CET1, in addition to these minimum risk-weighted asset ratios. The capital conservation buffer is designed to absorb losses during periods of economic stress. Banking institutions that do not hold the requisite capital conservation buffer will face constraints on dividends, capital instrument repurchases, interest payments on capital instruments and discretionary bonus payments based on the amount of the shortfall. Thus, the capital standards applicable to the Company include an additional capital conservation buffer of 2.5% of CET1, effectively resulting in minimum ratios inclusive of the capital conservation buffer of (i) CET1 to risk-weighted assets of at least 7%, (ii) Tier 1 capital to risk-weighted assets of at least 8.5%, and (iii) total capital to risk-weighted assets of at least 10.5%.

The Capital Rules provide for a number of deductions from and adjustments to CET1. These include, for example, the requirement that mortgage servicing assets, deferred tax assets arising from temporary differences that could not be realized through net operating loss carrybacks, and significant investments in non-consolidated financial entities be deducted from CET1 to the extent that any one such category exceeds 10% of CET1 or all such items, in the aggregate, exceed 15% of CET1.  In November 2017, the Federal Reserve finalized a rule pausing the phase-in of these deductions and adjustments for non-advanced approaches institutions. In July 2019, the OCC, the Federal Reserve Board and the FDIC adopted a final rule intended to simply the Capital Rules described above for non-advanced approaches institutions. Institutions may implement the provisions of the simplification rule beginning on January 1, 2020 and must implement them by April 1, 2020. The transition provisions to the Capital Rules issued by these agencies in November 2017 will cease to apply to an institution in the quarter in which it adopts the simplification rule.

In addition, under the current general risk-based capital rules, the effects of accumulated other comprehensive income or loss items included in shareholders’ equity (for example, mark-to-market of securities held in the available for sale portfolio) under U.S. generally accepted accounting principles (“GAAP”) are reversed for the purposes of determining regulatory capital ratios. Pursuant to the Capital Rules, the effects of certain of the above items are not excluded. However, banking organizations, including the Company, that are not subject to the advanced approaches rule, could make a one-time permanent election to exclude these items. The Company made the one-time permanent election to exclude these items.

The Capital Rules also preclude certain hybrid securities, such as trust preferred securities, from inclusion in bank holding companies’ Tier 1 capital, although bank holding companies that had total consolidated assets of less than $15 billion at December 31, 2009 may include trust preferred securities issued prior to May 19, 2010 as a component of Tier 1 capital.

The risk-weighting categories in the Capital Rules are standardized and include a risk-sensitive number of categories, depending on the nature of the assets, generally ranging from 0% for U.S. government and agency securities, to 1,250% for certain credit exposures, and resulting in higher risk weights for a variety of asset classes.

Management believes that as of December 31, 2019 and 2018, the Company and the Bank met all applicable minimum capital requirements and were considered “well-capitalized” by both the FRB and the FDIC. There have been no events or conditions since the end of the year that management believes would have changed the Company’s or the Bank’s category. In September 2019, the OCC, the Federal Reserve Board and the FDIC adopted a final rule that is intended to further simply the Capital Rules for depository institutions and their holding companies that have less than $10 billion in total consolidated assets, such as us, if such institutions meet certain qualifying criteria. This final rule became effective on January 1, 2020. Under this final rule, if we meet the qualifying criteria, including having a leverage ratio (equal to tier 1 capital divided by average total consolidated assets) of greater than 9 percent, we will be eligible to opt into the community bank leverage ratio framework. If we opt into this framework, we will be considered to have satisfied the generally applicable risk-based and leverage capital requirements in the Capital Rules (as modified pursuant to the simplification rule) and will be considered to have met the well-capitalized ratio requirements for PCA purposes. We are currently evaluating the requirements of this rule.  

The Company’s and the Bank’s actual and required capital measures were as follows:

	Actual					Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer (1)					Minimum To Be Well-Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(dollars in thousands)
At December 31, 2019
Cambridge Bancorp:
Total capital (to risk-weighted    assets)	$	272,727		13.6	%	$	210,342		10.5	%	N/A		N/A
Tier I capital (to risk-weighted    assets)		254,497		12.7	%		170,277		8.5	%	N/A		N/A
Common equity tier I capital    (to risk-weighted assets)		254,497		12.7	%		140,228		7.0	%	N/A		N/A
Tier I capital (to average    assets)		254,497		9.0	%		113,365		4.0	%	N/A		N/A
Cambridge Trust Company:
Total capital (to risk-weighted    assets)	$	271,034		13.5	%	$	210,341		10.5	%	$	200,325		10.0	%
Tier I capital (to risk-weighted    assets)		252,804		12.6	%		170,276		8.5	%		160,260		8.0	%
Common equity tier I capital    (to risk-weighted assets)		252,804		12.6	%		140,227		7.0	%		130,211		6.5	%
Tier I capital (to average    assets)		252,804		8.9	%		113,364		4.0	%		141,705		5.0	%

(1) The 2013 Capital Rules adopted by the Federal Reserve, Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation implementing Basel III were fully phased-in effective January 1, 2019.

	Actual					Minimum Capital Required For Capital Adequacy					Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer Basel III Phase-In Schedule					Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer Basel III Fully Phased In					Minimum To Be Well-Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio
	(dollars in thousands)
At December 31, 2018
Cambridge Bancorp:
Total capital (to risk-weighted    assets)	$	189,888		13.2	%	$	114,666		8.0	%	$	141,541		9.875	%	$	150,500		10.5	%	N/A		N/A
Tier I capital (to risk-weighted    assets)		173,070		12.1	%		86,000		6.0	%		112,875		7.875	%		121,833		8.5	%	N/A		N/A
Common equity tier I capital    (to risk-weighted assets)		173,070		12.1	%		64,500		4.5	%		91,375		6.375	%		100,333		7.0	%	N/A		N/A
Tier I capital (to average    assets)		173,070		8.5	%		81,507		4.0	%		81,507		4.000	%		81,507		4.0	%	N/A		N/A
Cambridge Trust Company:
Total capital (to risk-weighted    assets)	$	185,507		12.9	%	$	114,666		8.0	%	$	141,541		9.875	%	$	150,500		10.5	%	$	143,333		10.0	%
Tier I capital (to risk-weighted    assets)		168,689		11.8	%		86,000		6.0	%		112,875		7.875	%		121,833		8.5	%		114,666		8.0	%
Common equity tier I capital    (to risk-weighted assets)		168,689		11.8	%		64,500		4.5	%		91,375		6.375	%		100,333		7.0	%		93,166		6.5	%
Tier I capital (to average    assets)		168,689		8.3	%		81,507		4.0	%		81,507		4.000	%		81,507		4.0	%		101,884		5.0	%

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Pension and Retirement Plans - Summary of Various Categories of Pension Plan Assets (Details) - Pension Plan - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Defined Benefit Plan Disclosure [Line Items]
Fair value of pension plan assets	$ 50,131	$ 42,648	$ 45,247
Level 1
Defined Benefit Plan Disclosure [Line Items]
Fair value of pension plan assets	42,934	36,114
Level 2
Defined Benefit Plan Disclosure [Line Items]
Fair value of pension plan assets	7,197	6,534
Cash and Cash Equivalents
Defined Benefit Plan Disclosure [Line Items]
Fair value of pension plan assets	4,834	3,520
Cash and Cash Equivalents | Level 1
Defined Benefit Plan Disclosure [Line Items]
Fair value of pension plan assets	4,834	3,520
Fixed Income
Defined Benefit Plan Disclosure [Line Items]
Fair value of pension plan assets	7,197	6,534
Fixed Income | Level 2
Defined Benefit Plan Disclosure [Line Items]
Fair value of pension plan assets	7,197	6,534
Common Stock, Large Cap Core
Defined Benefit Plan Disclosure [Line Items]
Fair value of pension plan assets	17,180	16,127
Common Stock, Large Cap Core | Level 1
Defined Benefit Plan Disclosure [Line Items]
Fair value of pension plan assets	17,180	16,127
Common Stock, Small Cap Core
Defined Benefit Plan Disclosure [Line Items]
Fair value of pension plan assets	2,627	2,090
Common Stock, Small Cap Core | Level 1
Defined Benefit Plan Disclosure [Line Items]
Fair value of pension plan assets	2,627	2,090
Mutual Funds, Domestic Equity
Defined Benefit Plan Disclosure [Line Items]
Fair value of pension plan assets	3,931	4,320
Mutual Funds, Domestic Equity | Level 1
Defined Benefit Plan Disclosure [Line Items]
Fair value of pension plan assets	3,931	4,320
Mutual Funds, International
Defined Benefit Plan Disclosure [Line Items]
Fair value of pension plan assets	3,650	3,409
Mutual Funds, International | Level 1
Defined Benefit Plan Disclosure [Line Items]
Fair value of pension plan assets	3,650	3,409
Mutual Funds, Domestic Fixed Income
Defined Benefit Plan Disclosure [Line Items]
Fair value of pension plan assets	10,712	6,648
Mutual Funds, Domestic Fixed Income | Level 1
Defined Benefit Plan Disclosure [Line Items]
Fair value of pension plan assets	$ 10,712	$ 6,648

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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-In Capital	Retained Earnings	Accumulated Other Comprehensive (Loss) Income
Beginning balance at Dec. 31, 2016	$ 134,671	$ 4,037	$ 33,253	$ 107,262	$ (9,881)
Net income	14,816			14,816
Other comprehensive income (loss)	4,000				4,000
Share based compensation	2,052	45	2,410	(403)
Dividends declared	(7,582)			(7,582)
Ending balance at Dec. 31, 2017	147,957	4,082	35,663	114,093	(5,881)
Cumulative effect of accounting changes				1,202	(1,202)
Net income	23,881			23,881
Other comprehensive income (loss)	596				596
Share based compensation	2,633	25	2,608
Dividends declared	(8,041)			(8,041)
Ending balance at Dec. 31, 2018	167,026	4,107	38,271	131,135	(6,487)
Net income	25,257			25,257
Other comprehensive income (loss)	4,006				4,006
Share based compensation	2,170	20	2,150
Dividends declared	(9,517)			(9,517)
Common stock issued for merger	59,417	723	58,694
Common stock offering	38,202	551	37,651
Ending balance at Dec. 31, 2019	$ 286,561	$ 5,401	$ 136,766	$ 146,875	$ (2,481)

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CONSOLIDATED BALANCE SHEETS - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Assets
Cash and cash equivalents	$ 61,335,000	$ 18,473,000
Investment securities
Available for sale, at fair value (amortized cost $141,109 and $172,290, respectively)	140,330,000	168,163,000
Held to maturity, at amortized cost (fair value $264,114 and $281,310, respectively)	258,172,000	282,869,000
Total investment securities	398,502,000	451,032,000
Loans held for sale, at lower of cost or fair value	1,546,000
Loans
Total loans	2,226,728,000	1,559,772,000
Less: allowance for loan losses	(18,180,000)	(16,768,000)
Net loans	2,208,548,000	1,543,004,000
Federal Home Loan Bank of Boston Stock, at cost	7,854,000	6,844,000
Bank owned life insurance	37,319,000	30,933,000
Banking premises and equipment, net	14,756,000	8,578,000
Right-of-use asset operating leases	33,587,000
Deferred income taxes, net	8,229,000	8,717,000
Accrued interest receivable	7,052,000	5,762,000
Goodwill	31,206,000	412,000
Merger related intangibles, net	3,338,000
Other assets	42,291,000	27,629,000
Total assets	2,855,563,000	2,101,384,000
Deposits
Demand	630,593,000	494,492,000
Interest bearing checking	450,098,000	431,702,000
Money market	181,406,000	135,585,000
Savings	914,499,000	628,212,000
Certificates of deposit	182,282,000	121,419,000
Total deposits	2,358,878,000	1,811,410,000
Short-term borrowings	135,691,000	90,000,000
Long-term borrowings		3,409,000
Operating lease liabilities	35,054,000
Other liabilities	39,379,000	29,539,000
Total liabilities	2,569,002,000	1,934,358,000
Shareholders’ Equity
Common stock, par value $1.00; Authorized 10,000,000 shares; Outstanding: 4,082,188 shares and 4,036,879 shares, respectively	5,401,000	4,107,000
Additional paid-in capital	136,766,000	38,271,000
Retained earnings	146,875,000	131,135,000
Accumulated other comprehensive loss	(2,481,000)	(6,487,000)
Total shareholders’ equity	286,561,000	167,026,000
Total liabilities and shareholders’ equity	2,855,563,000	2,101,384,000
Residential Mortgage
Loans
Total loans	917,566,000	604,331,000
Commercial Mortgage
Loans
Total loans	1,060,574,000	757,957,000
Home Equity
Loans
Total loans	80,675,000	69,336,000
Commercial & Industrial
Loans
Total loans	133,236,000	93,712,000
Consumer
Loans
Total loans	$ 34,677,000	$ 34,436,000

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Other Comprehensive Income - Summary of Other Comprehensive Income (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Unrealized (losses)/gains on available for sale securities, before tax amount
Unrealized holding (losses)/gains arising during the period, before tax amount	$ 3,267	$ (231)	$ 187
Reclassification adjustment for (gains)/losses recognized in net income, before tax amount	81	(2)	3
Derivatives, before tax amount
Change in interest rate contracts, before tax amount	1,134	1,045
Defined benefit retirement plans, before tax amount
Net change in retirement liability, before tax amount	864	124	6,545
Total Other Comprehensive Income/(Loss), before tax amount	5,346	936	6,735
Unrealized (losses)/gains on available for sale securities, tax (expense) or benefit
Unrealized holding (losses)/gains arising during the period, tax (expense) or benefit	(767)	(11)	(59)
Reclassification adjustment for (gains)/losses recognized in net income, tax (expense) or benefit	(19)		(2)
Derivatives, tax (expense) or benefit
Change in interest rate contracts, tax (expense) or benefit	(313)	(294)
Defined benefit retirement plans, tax (expense) or benefit
Net change in retirement liability, tax (expense) or benefit	(241)	(35)	(2,674)
Total Other Comprehensive Income/(Loss), tax (expense) or benefit	(1,340)	(340)	(2,735)
Unrealized (losses)/gains on available for sale securities, net-of-tax amount
Unrealized holding (losses)/gains arising during the period, net-of-tax amount	2,500	(242)	128
Reclassification adjustment for (gains)/losses recognized in net income, net-of-tax amount	62	(2)	1
Derivatives, net-of-tax amount
Change in interest rate contracts, net-of-tax amount	821	751
Defined benefit retirement plans, net-of-tax amount
Net change in retirement liability, net-of-tax amount	623	89	3,871
Other comprehensive income/(loss)	$ 4,006	$ 596	$ 4,000

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Derivative And Hedging Activities - Summary of Fair Values of Derivative Instruments in the Company's Consolidated Balance Sheets (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Derivative Instruments And Hedging Activities Disclosures [Line Items]
Derivative Assets, Fair value	$ 15,912	$ 7,780
Derivative Liabilities, Fair value	13,230	5,961
Derivatives Designated as Hedging Instruments
Derivative Instruments And Hedging Activities Disclosures [Line Items]
Derivative Assets, Fair value	2,911	1,970
Derivatives Designated as Hedging Instruments | Interest Rate Contracts
Derivative Instruments And Hedging Activities Disclosures [Line Items]
Derivative Assets, Notional amount	150,000	150,000
Derivatives Designated as Hedging Instruments | Interest Rate Contracts | Other Assets
Derivative Instruments And Hedging Activities Disclosures [Line Items]
Derivative Assets, Fair value	2,911	1,970
Derivatives Not Designated as Hedging Instruments
Derivative Instruments And Hedging Activities Disclosures [Line Items]
Derivative Assets, Fair value	13,001	5,810
Derivative Liabilities, Fair value	13,230	5,961
Derivatives Not Designated as Hedging Instruments | Loan Related Derivative Contracts | Interest Rate Swaps with Customers
Derivative Instruments And Hedging Activities Disclosures [Line Items]
Derivative Assets, Notional amount	241,187	150,489
Derivatives Not Designated as Hedging Instruments | Loan Related Derivative Contracts | Interest Rate Swaps with Customers | Other Assets
Derivative Instruments And Hedging Activities Disclosures [Line Items]
Derivative Assets, Fair value	12,980	5,782
Derivatives Not Designated as Hedging Instruments | Loan Related Derivative Contracts | Mirror Swaps with Counterparties
Derivative Instruments And Hedging Activities Disclosures [Line Items]
Derivative Liabilities, Notional Amount	241,187	150,489
Derivatives Not Designated as Hedging Instruments | Loan Related Derivative Contracts | Mirror Swaps with Counterparties | Other Liabilities
Derivative Instruments And Hedging Activities Disclosures [Line Items]
Derivative Liabilities, Fair value	12,980	5,782
Derivatives Not Designated as Hedging Instruments | Loan Related Derivative Contracts | Risk Participation Agreements Out to Counterparties
Derivative Instruments And Hedging Activities Disclosures [Line Items]
Derivative Assets, Notional amount	19,000	19,000
Derivatives Not Designated as Hedging Instruments | Loan Related Derivative Contracts | Risk Participation Agreements Out to Counterparties | Other Assets
Derivative Instruments And Hedging Activities Disclosures [Line Items]
Derivative Assets, Fair value	21	28
Derivatives Not Designated as Hedging Instruments | Loan Related Derivative Contracts | Risk Participation Agreements with Counterparties
Derivative Instruments And Hedging Activities Disclosures [Line Items]
Derivative Liabilities, Notional Amount	88,489	63,825
Derivatives Not Designated as Hedging Instruments | Loan Related Derivative Contracts | Risk Participation Agreements with Counterparties | Other Liabilities
Derivative Instruments And Hedging Activities Disclosures [Line Items]
Derivative Liabilities, Fair value	$ 250	$ 179

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Share-Based Compensation - Summary of Non-vested Performance-Based Restricted Stock Units Outstanding (Details) - Performance-Based Restricted Stock Units - $ / shares	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Units, Non-vested at beginning of year	41,411	21,613
Number of Units, Granted	28,542	23,511
Number of Units, Vested (Performance achieved)	(12,697)
Number of Units, Forfeited		(3,713)
Number of Units, Non-vested at end of year	57,256	41,411
Weighted Average Grant Value, Non-vested at beginning of year	$ 66.39	$ 56.05
Weighted Average Grant Value, Granted	73.00	76.56
Weighted Average Grant Value, Vested (Performance achieved)	46.00
Weighted Average Grant Value, Forfeited		70.68
Weighted Average Grant Value, Non-vested at end of year	$ 72.82	$ 66.39

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Investment Securities (Tables)

12 Months Ended

Dec. 31, 2019

Investments Debt And Equity Securities [Abstract]

Summary of Carrying Amounts of Securities and Their Approximate Fair Values

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

	December 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	$	38,000	$	—	$	(152	)	$	37,848	$	75,004	$	—	$	(965	)	$	74,039
Mortgage-backed securities		103,109		231		(858	)		102,482		92,271		118		(3,121	)		89,268
Corporate debt securities		—		—		—			—		5,015		—		(159	)		4,856
Total available for sale securities	$	141,109	$	231	$	(1,010	)	$	140,330	$	172,290	$	118	$	(4,245	)	$	168,163
Held to maturity securities
U.S. GSE obligations	$	5,000	$	—		—		$	5,000	$	32,571	$	—	$	(238	)	$	32,333
Mortgage-backed securities		161,759		2,751		(111	)		164,399		168,118		134		(2,290	)		165,962
Corporate debt securities		6,980		116		—			7,096		6,972		—		(107	)		6,865
Municipal securities		84,433		3,252		(66	)		87,619		75,208		1,297		(355	)		76,150
Total held to maturity securities	$	258,172	$	6,119	$	(177	)	$	264,114	$	282,869	$	1,431	$	(2,990	)	$	281,310
Total	$	399,281	$	6,350	$	(1,187	)	$	404,444	$	455,159	$	1,549	$	(7,235	)	$	449,473

Schedule of Amortized Cost and Fair Value of Debt Securities, Aggregated By Earlier of Guaranteed Call Date or Contractual Maturity

The amortized cost and fair value of debt investments, aggregated by contractual maturity, are shown below. Maturities of mortgage-backed securities do not take into consideration scheduled amortization or prepayments. Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Within One Year				After One, But Within Five Years				After Five, But Within Ten Years				After Ten Years				Total
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
At December 31, 2019	(dollars in thousands)
Available for sale securities
U.S. GSE obligations	$	5,000	$	4,997	$	20,000	$	19,939	$	5,000	$	4,934	$	8,000	$	7,978	$	38,000	$	37,848
Mortgage-backed    securities		—		—		37		38		36,393		35,997		66,679		66,447		103,109		102,482
Corporate debt securities		—		—		—		—		—		—		—		—		—		—
Total available for    sale securities	$	5,000	$	4,997	$	20,037	$	19,977	$	41,393	$	40,931	$	74,679	$	74,425	$	141,109	$	140,330
Held to maturity securities
U.S. GSE obligations	$	5,000	$	5,000	$	—	$	—	$	—	$	—	$	—	$	—	$	5,000	$	5,000
Mortgage-backed    securities		—		—		2		2		48,088		49,117		113,669		115,280		161,759		164,399
Corporate debt securities		—		—		6,980		7,096		—		—		—		—		6,980		7,096
Municipal securities		3,270		3,291		10,606		10,902		45,201		47,523		25,356		25,903		84,433		87,619
Total held to maturity    securities	$	8,270	$	8,291	$	17,588	$	18,000	$	93,289	$	96,640	$	139,025	$	141,183	$	258,172	$	264,114
Total	$	13,270	$	13,288	$	37,625	$	37,977	$	134,682	$	137,571	$	213,704	$	215,608	$	399,281	$	404,444

Gross Unrealized Losses of Aggregated by Investment Category and Length of Time that Individual Securities have been in Continuous Loss Position

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:

	December 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	$	12,912	$	(88	)	$	24,936	$	(64	)	$	37,848	$	(152	)
Mortgage-backed securities		33,381		(265	)		50,766		(593	)		84,147		(858	)
Corporate debt securities		—		—			—		—			—		—
Total available for sale securities	$	46,293	$	(353	)	$	75,702	$	(657	)	$	121,995	$	(1,010	)
Held to maturity securities
U.S. GSE obligations	$	—	$	—		$	5,000	$	—		$	5,000	$	—
Mortgage-backed securities		14,838		(27	)		12,928		(84	)		27,766		(111	)
Corporate debt securities		—		—			—		—			—		—
Municipal securities		4,934		(66	)		—		—			4,934		(66	)
Total held to maturity securities	$	19,772	$	(93	)	$	17,928	$	(84	)	$	37,700	$	(177	)
Total temporarily impaired securities	$	66,065	$	(446	)	$	93,630	$	(741	)	$	159,695	$	(1,187	)

	December 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	$	—	$	—		$	74,039	$	(965	)	$	74,039	$	(965	)
Mortgage-backed securities		—		—			86,815		(3,121	)		86,815		(3,121	)
Corporate debt securities		902		(98	)		3,954		(61	)		4,856		(159	)
Total available for sale securities	$	902	$	(98	)	$	164,808	$	(4,147	)	$	165,710	$	(4,245	)
Held to maturity securities
U.S. GSE obligations	$	4,995	$	(5	)	$	27,338	$	(233	)	$	32,333	$	(238	)
Mortgage-backed securities		30,719		(216	)		93,225		(2,074	)		123,944		(2,290	)
Corporate debt securities		6,865		(107	)		—		—			6,865		(107	)
Municipal securities		8,484		(82	)		8,313		(273	)		16,797		(355	)
Total held to maturity securities	$	51,063	$	(410	)	$	128,876	$	(2,580	)	$	179,939	$	(2,990	)
Total temporarily impaired securities	$	51,965	$	(508	)	$	293,684	$	(6,727	)	$	345,649	$	(7,235	)

Summary of Gains (Losses) from Sale of Investment Securities

The following table sets forth information regarding sales of investment securities and the resulting gains or losses from such sales:

	For the Year Ended December 31,
	2019			2018		2017
	(dollars in thousands)
Amortized cost of securities sold	$	26,631		$	700	$	77,372
Gain/(loss) realized on securities sold		(79	)		2		(3	)
Net proceeds from securities sold	$	26,552		$	702	$	77,369

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Commitments and Contingencies - Additional Information (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Commitments And Contingencies Disclosure [Abstract]
Description of operating lease expiration terms	operating leases and their terms expire between 2019 and 2030 and, in some instances, contain options to renew for periods up to 30 years.
Renewal option period for operating leases	30 years
Existence of option to expire	true
Total rental expense	$ 5.7	$ 4.7	$ 4.7

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Quarterly Results of Operations (Unaudited)

12 Months Ended

Dec. 31, 2019

Quarterly Financial Information Disclosure [Abstract]

Quarterly Results of Operations (Unaudited)

25. Quarterly Results of Operations (unaudited)

2019 Quarters	Fourth		Third		Second		First
	(dollars in thousands, except share data)
Interest and Dividend Income	$	26,415	$	26,336	$	24,470	$	19,118
Interest Expense		4,807		5,285		4,694		2,857
Net Interest and Dividend Income		21,608		21,051		19,776		16,261
Provision for (Release of) Loan Losses		331		2,170		596		(93	)
Net Interest and Dividend Income after Provision for    Loan Losses		21,277		18,881		19,180		16,354
Noninterest Income		9,933		10,366		8,145		7,957
Noninterest Expense		21,428		18,863		21,513		16,373
Income Before Taxes		9,782		10,384		5,812		7,938
Income Taxes		2,673		2,708		1,540		1,740
Net Income	$	7,109	$	7,676	$	4,272	$	6,198
Share Data:
Average Shares Outstanding, Basic		4,939,973		4,815,020		4,682,109		4,072,805
Average Shares Outstanding, Diluted		4,980,439		4,842,965		4,715,724		4,106,658
Basic Earnings Per Share	$	1.43	$	1.58	$	0.91	$	1.51
Diluted Earnings Per Share	$	1.42	$	1.57	$	0.90	$	1.49

2018 Quarters	Fourth		Third		Second			First
	(dollars in thousands, except share data)
Interest and Dividend Income	$	18,385	$	17,602	$	16,936		$	16,132
Interest Expense		1,975		1,431		1,082			979
Net Interest and Dividend Income		16,410		16,171		15,854			15,153
Provision for (Release of) Loan Losses		715		457		(79	)		409
Net Interest and Dividend Income after Provision for    Loan Losses		15,695		15,714		15,933			14,744
Noninterest Income		8,038		8,929		7,844			8,178
Noninterest Expense		16,842		15,879		15,765			15,501
Income Before Taxes		6,891		8,764		8,012			7,421
Income Taxes		1,585		2,105		1,901			1,616
Net Income	$	5,306	$	6,659	$	6,111		$	5,805
Share Data:
Average Shares Outstanding, Basic		4,065,681		4,064,620		4,059,927			4,053,355
Average Shares Outstanding, Diluted		4,102,546		4,101,378		4,094,489			4,071,975
Basic Earnings Per Share	$	1.29	$	1.62	$	1.49		$	1.42
Diluted Earnings Per Share	$	1.28	$	1.61	$	1.48		$	1.41

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Shareholders' Equity - Additional Information (Details) - USD ($) $ in Billions	Dec. 31, 2019	Sep. 30, 2019	Dec. 31, 2018	Jan. 01, 2015	Dec. 31, 2009
Compliance With Regulatory Capital Requirements Under Banking Regulations [Line Items]
Tier 1 risk based capital to risk weighted assets	12.70%		12.10%
Capital to risk weighted assets	13.60%		13.20%
Tier 1 capital to average assets of leverage ratio	9.00%		8.50%
Excess tier one capital deduction category one percentage	10.00%
Excess tier one capital deduction percentage	15.00%
Minimum
Compliance With Regulatory Capital Requirements Under Banking Regulations [Line Items]
Common equity tier 1 risk based capital to risk weighted assets	7.00%			4.50%
Tier 1 risk based capital to risk weighted assets	8.50%			6.00%
Capital to risk weighted assets	10.50%			8.00%
Tier 1 capital to average assets of leverage ratio		9.00%		4.00%
Capital conservation buffer rate	2.50%
Minimum | U.S. Government and Agency Securities | Standardized Approach
Compliance With Regulatory Capital Requirements Under Banking Regulations [Line Items]
Tier 1 risk based capital to risk weighted assets	0.00%
Maximum
Compliance With Regulatory Capital Requirements Under Banking Regulations [Line Items]
Total consolidated assets		$ 10			$ 15
Maximum | U.S. Government and Agency Securities | Standardized Approach
Compliance With Regulatory Capital Requirements Under Banking Regulations [Line Items]
Tier 1 risk based capital to risk weighted assets	1250.00%

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Condensed Financial Statements of Parent Company - Condensed Statements of Income (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Interest expense
Total interest expense	$ 4,807	$ 5,285	$ 4,694	$ 2,857	$ 1,975	$ 1,431	$ 1,082	$ 979	$ 17,643	$ 5,467	$ 3,587
Income tax benefit	2,673	2,708	1,540	1,740	1,585	2,105	1,901	1,616	8,661	7,207	13,358
Income of parent company									25,257	23,881	14,816
Net income	$ 7,109	$ 7,676	$ 4,272	$ 6,198	$ 5,306	$ 6,659	$ 6,111	$ 5,805	25,257	23,881	14,816
Cambridge Bancorp [Member]
Interest and dividend income
Dividends from subsidiary									10,732	8,615	8,052
Total income									10,732	8,615	8,052
Interest expense
Other expenses									132	116
Total interest expense									132	116
Income before income taxes and equity in undistributed income of subsidiary									10,600	8,499	8,052
Income tax benefit									(36)	(32)
Income of parent company									10,636	8,531	8,052
Equity in undistributed income of subsidiary									14,621	15,350	6,764
Net income									$ 25,257	$ 23,881	$ 14,816

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Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”).

Use of Estimates

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 and the valuation of deferred tax assets are particularly subject to change.

Reclassifications

Certain amounts in the prior year’s financial statements may have been reclassified to conform with the current year’s presentation.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash on hand, amounts due from banks, and overnight investments.

Investment Securities

Investment securities are classified as either ‘held to maturity’ or ‘available for sale’ in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) 320, “Investments – Debt and Equity Securities.” Debt securities that management has the positive intent and ability to hold to maturity are classified as held to maturity. Held to maturity securities are carried at cost and adjusted for the amortization of premiums and the accretion of discounts using the effective-yield or straight line method. U.S. Government Sponsored Enterprises (“GSE”) and U.S. Government Agency obligations represent debt securities issued by the Federal Farm Credit Bank, the Federal Home Loan Banks (“FHLB”), the Government National Mortgage Association (“GNMA”), the Federal National Mortgage Association (“FNMA”), or the Federal Home Loan Mortgage Corporation (“FHLMC”). Mortgage-backed securities represent Pass-Through Certificates and Collateralized Mortgage Obligations either issued by, or collateralized by securities issued by GNMA, FNMA, or FHLMC. Mortgage-backed securities are adjusted for amortization of premiums and accretion of discounts, using the effective-yield method over the estimated average lives of the investments.

Debt and equity securities not classified as held to maturity are classified as available for sale and carried at fair value with unrealized after-tax gains and losses reported net as a separate component of shareholders’ equity. The Company classifies its securities based on its intention at the time of purchase.

Declines in the fair value of investment securities below their amortized cost that are deemed to be other-than-temporary are reflected in earnings as realized losses to the extent the impairment is related to credit losses. The amount of the impairment related to other factors is recognized in other comprehensive income. In estimating other-than-temporary impairment losses, management considers: (1) the length of time and the extent to which the fair value has been less than cost; (2) the financial condition and near-term prospects of the issuer; and (3) the Company’s intent to sell the security or whether it is more likely than not that the Company will be required to sell the debt security before its anticipated recovery.

Loans and the Allowance for Loan Losses

Loans are reported at the amount of their outstanding principal, including deferred loan origination fees and costs, reduced by unearned discounts, and the allowance for loan losses. Loan origination fees, net of related direct incremental loan origination costs, are deferred and amortized as an adjustment to yield over the life of the related loans. Unearned discount is recognized as an adjustment to the loan yield, using the interest method over the contractual life of the related loan. When a loan is paid off, the unamortized portion of net fees or unearned discount is recognized as interest income.

Loans are considered delinquent when a payment of principal and/or interest becomes past due 30 days following its scheduled payment due date.

Loans on which the accrual of interest has been discontinued are designated as non-accrual loans. Accrual of interest income is discontinued when concern exists as to the collectability of principal or interest or typically when a loan becomes over 90 days delinquent. Additionally, when a loan is placed on non-accrual status, all interest previously accrued but not collected is reversed against current period income. Loans are removed from non-accrual when they become less than 90 days past due and when concern no longer exists as to the collectability of principal or interest. Interest collected on non-accruing loans is either applied against principal or reported as income according to management’s judgment as to the collectability of principal.

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Under certain circumstances, the Company may restructure the terms of a loan as a concession to a borrower. These restructured loans are generally also considered impaired loans. Impairment is measured on a loan-by-loan basis by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment.

The provision for loan losses and the level of the allowance for loan losses reflects management’s estimate of probable loan losses inherent in the loan portfolio at the balance sheet date. Management uses a systematic process and methodology to establish the allowance for loan losses each quarter. To determine the total allowance for loan losses, an estimate is made by management of the allowance needed for each of the following segments of the loan portfolio: (a) residential mortgage loans, (b) commercial mortgage loans, (c) home equity loans, (d) commercial & industrial loans, and (e) consumer loans. Portfolio segments are further disaggregated into classes of loans. The establishment of the allowance for each portfolio segment is based on a process that evaluates the risk characteristics relevant to each portfolio segment and takes into consideration multiple internal and external factors. Internal factors include, but are not limited to, (a) historic levels and trends in charge-offs, delinquencies, risk ratings, and foreclosures, (b) level and changes in industry, geographic, and credit concentrations, (c) underwriting policies and adherence to such policies, (d) the growth and vintage of the portfolios, and (e) the experience of, and any changes in, lending and credit personnel. External factors include, but are not limited to, (a) conditions and trends in the local and national economy and (b) levels and trends in national delinquent and non-performing loans.

The Bank evaluates certain loans individually for specific impairment. A loan is considered impaired when, based on current information and events, it is probable that the Bank will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Loans are selected for evaluation based upon internal risk rating, delinquency status, or non-accrual status. A specific allowance amount is allocated to an individual loan when such loan has been deemed impaired and when the amount of the probable loss is able to be estimated. Estimates of loss may be determined by the present value of anticipated future cash flows, the loan’s observable fair market value, or the fair value of the collateral, if the loan is collateral dependent.

Risk characteristics relevant to each portfolio segment are as follows:

Residential mortgage and home equity loans – The Bank generally does not originate loans in these segments with a loan-to-value ratio greater than 80%, unless covered by private mortgage insurance, and in all cases not greater than a loan-to-value ratio of 97%. The Bank does not originate subprime loans. Loans in these segments are secured by one-to-four family residential real estate, and repayment is primarily dependent on the credit quality of the individual borrower.

Commercial mortgage loans – This includes multi-family properties and construction. The Bank generally does not originate loans in this segment with a loan-to-value ratio greater than 75%. Loans in this segment are secured by owner-occupied and nonowner-occupied commercial real estate, and repayment is primarily dependent on the cash flows of the property (if nonowner-occupied) or of the business (if owner-occupied).

Commercial loans – Loans in this segment are made to businesses and are generally secured by equipment, accounts receivable, or inventory, as well as the personal guarantees of the principal owners of the business, and repayment is primarily dependent on the cash flows generated by the business.

Consumer loans – Loans in this segment are made to individuals and can be secured or unsecured. Repayment is primarily dependent on the credit quality of the individual borrower.

The majority of the Bank’s loans are concentrated in Eastern Massachusetts and New Hampshire and therefore the overall health of the local economy, including unemployment rates, vacancy rates, and consumer spending levels, can have a material effect on the credit quality of all of these portfolio segments.

The process to determine the allowance for loan losses requires management to exercise considerable judgment regarding the risk characteristics of the loan portfolio segments and the effect of relevant internal and external factors.

The provision for loan losses charged to income is based on management’s judgment of the amount necessary to maintain the allowance at a level to provide for probable inherent loan losses as of the evaluation date. When management believes that the collectability of a loan’s principal balance, or portions thereof, is unlikely, the principal amount is charged against the allowance for loan losses. Recoveries on loans that have been previously charged off are credited to the allowance for loan losses as received. The allowance is an estimate, and ultimate losses may vary from current estimates. As adjustments become necessary, they are reported in the results of operations through the provision for loan losses in the period in which they become known.

Residential mortgage loans originated and intended for sale in the secondary market are classified as held for sale at the time of their origination and are carried at the lower of cost or fair value on an individual loan basis. Changes in fair value relating to loans held for sale below the loans cost basis are charged against gain on loans held for sale. Gains and losses on the actual sale of the residential loans are recorded in earnings as net gains (losses) on loans held for sale on the consolidated statements of income.

Bank Owned Life Insurance

Bank owned life insurance (“BOLI”) represents life insurance on the lives of certain active and former employees who have provided positive consent allowing the Bank to be the beneficiary of such policies. Since the Bank is the primary beneficiary of the insurance policies, increases in the cash value of the policies, as well as insurance proceeds received, are recorded in other noninterest income, and are not subject to income taxes. Applicable regulations generally limit our investment in bank-owned life insurance to 25% of our Tier 1 capital plus our allowance for loan losses. The Bank reviews the financial strength of the insurance carriers prior to the purchase of BOLI and at least annually thereafter.

Banking Premises and Equipment

Land is stated at cost. Buildings, leasehold improvements, and equipment are stated at cost, less accumulated depreciation and amortization, which is computed using the straight-line method over the estimated useful lives of the assets or the terms of the leases, if shorter. The cost of ordinary maintenance and repairs is charged to expense when incurred.

Leases

The Company leases office space, certain branch locations under noncancelable operating leases, and an ATM location, several of which have renewal options to extend lease terms. Upon commencement of a new lease, the Company will recognize a right of use ("ROU") asset and corresponding lease liability. The Company makes the decision on whether to renew an option to extend a lease byconsidering various factors. The Company will recognize an adjustment to its ROU asset and lease liability when lease agreements are amended and executed. The discount rate used in determining the present value of lease payments is based on the Company’s incremental borrowing rate for borrowings with terms similar to each lease at commencement date. The Company has lease agreements with lease and non-lease components, which are generally accounted for separately. For real estate leases, non-lease components and other non-components, such as common area maintenance charges, real estate taxes, and insurance are not included in the measurement of the lease liability since they are generally able to be segregated.

Marketing Expense

Advertising costs are expensed as incurred.

Other Real Estate Owned

Other real estate owned (“OREO”) consists of properties formerly pledged as collateral to loans, which have been acquired by the Bank through foreclosure proceedings or acceptance of a deed in lieu of foreclosure. Upon transfer of a loan to foreclosure status, an appraisal is obtained and any excess of the loan balance over the fair value, less estimated costs to sell, is charged against the allowance for loan losses. Expenses and subsequent adjustments to the fair value are treated as other operating expense.

Goodwill, Core Deposit Intangibles, and Other Intangible Assets

Goodwill represents the excess of the purchase price over the fair value of net assets acquired in a business combination. Core deposit intangible represents a premium paid to acquire the core deposits of an institution and is recorded as an intangible asset. Goodwill and intangible assets that are not amortized are tested for impairment, based on their fair values, at least annually. Identifiable intangible assets that are subject to amortization are also reviewed for impairment based on their fair value. Any impairment is recognized as a charge to earnings and the adjusted carrying amount of the intangible asset becomes its new accounting basis. The remaining useful life of an intangible asset that is being amortized is also evaluated each reporting period to determine whether events and circumstances warrant a revision to the remaining period of amortization.

Mortgage servicing assets are recognized as separate assets when rights are acquired through purchase or through sale of financial assets with servicing rights retained. The fair value of the servicing rights is determined by estimating the present value of future net cash flows, taking into consideration market loan prepayment speeds, discount rates, servicing costs, and other economic factors. For purposes of measuring impairment, the underlying loans are stratified into relatively homogeneous pools based on predominant risk characteristics which include product type (i.e., fixed or adjustable) and interest rate bands. If the aggregate carrying value of the capitalized mortgage servicing rights for a stratum exceeds its fair value, MSR impairment is recognized in earnings through a valuation allowance for the difference. As the loans are repaid and net servicing revenue is earned, the MSR asset is amortized as an offset to loan servicing income. Servicing revenues are expected to exceed this amortization expense. However, if actual prepayment experience or defaults exceed what was originally anticipated, net servicing revenues may be less than expected and mortgage servicing rights may be impaired.

Income Taxes

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, the Commonwealth of Massachusetts, the state of New Hampshire, and other states as required. For the year 2019, the Company will file taxes in Massachusetts, New Hampshire, and Maine.

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are reflected at currently enacted income tax rates applicable to the period in which the deferred tax assets or liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. Deferred tax assets are reviewed quarterly and reduced by a valuation allowance if, based upon the information available, it is more likely than not that some or all of the deferred tax assets will not be realized.

Interest and penalties related to unrecognized tax benefits, if incurred, are recognized as a component of income tax expense.

The Tax Cuts and Jobs Act of 2017 was enacted on December 22, 2017. Effective in 2018, the change in tax law reduced the Company’s statutory federal tax rate from 35% to 21%. The Company recorded a one-time non-cash write-down of net deferred tax assets of $3.9 million as these deferred tax assets were required to be re-measured using the new lower tax rate in 2017.

Fee Revenue

Wealth management revenues include asset-based revenues (trust and investment advisory fees) that are primarily accrued as earned based upon a percentage of asset values under management, or administration.  Also included in wealth management revenues are transaction-based revenues (financial planning fees and other service fees), which are recognized as revenue to the extent that services have been completed.  Fee revenue from deposit service charges is generally recognized when earned.

Pension and Retirement Plans

The Company sponsored a defined benefit pension plan (the “Pension Plan”) and a postretirement health care plan covering substantially all employees hired before May 2, 2011. On October 23, 2017, the Company announced its decision to freeze the accrual of benefits for all participants in the Pension Plan, effective as of December 31, 2017. Benefits for the Pension Plan were based primarily on years of service and the employee’s average monthly pay during the five highest consecutive plan years of the employee’s final 10 years. Benefits for the postretirement health care plan are based on years of service. Expense for both of these plans is recognized over the employee’s service life utilizing the projected unit credit actuarial cost method. 

The Company also sponsors non-qualified retirement programs that provide supplemental retirement benefits to certain current and former executives. Prior to 2016, the Company provided individual non-qualified defined benefit supplemental executive retirement plans (“DB SERPs”) to certain executives.  The DB SERPs generally provide for an annual benefit payable in equal monthly installments following the executive’s retirement and continuing for at least the remainder of his or her lifetime, with such annual benefit generally based on the executive’s years of service and his or her highest three consecutive years of base salary and bonus. In 2016, the Company’s Board discontinued the use of DB SERPs for new entrants to the Company’s non-qualified retirement programs. Instead, new entrants are provided with individual non-qualified defined contribution supplemental executive retirement plans (“DC SERPs”). Under the DC SERPs, the Company may contribute an amount equal to 10% of the executive’s base salary and bonus to his or her account under the Company’s non-qualified deferred compensation plan, the Executive Deferred Compensation Plan.  Expense for the DB SERPs is recognized over the executive’s service life utilizing the projected unit credit actuarial cost method. Expense for the DC SERPs is recognized as incurred.

The Company maintains a Profit Sharing Plan (“PSP”) that provides for deferral of federal and state income taxes on employee contributions allowed under Section 401(k) of federal law. Beginning in 2018, the Company matched employee contributions up to 100% of the first 4% of each participant’s salary, eligible bonus, and eligible incentive, up from 3% in 2017. Each year, the Company may also make a discretionary contribution to the PSP of up to 4% salary, eligible bonus and eligible incentive. Employees are eligible to participate in the PSP on the first day of their initial date of service. In 2018, employees were eligible to participate in the discretionary contribution portion of the PSP after completing 12 months of employment, and 1,000 hours of service. The employee must be employed on the last day of the calendar year, or retire at the normal retirement age of 65 during the calendar year to receive the discretionary contribution. Effective in 2019, employees are eligible to participate in the discretionary contribution portion of the PSP on the first day of their initial date of service.

Share-Based Compensation

Share-based compensation plans provide for stock option awards, restricted stock awards, nonvested time based share units, and nonvested performance based share units.

Compensation expense for nonvested restricted stock awards is recognized over the service period based on the fair value at the date of grant. Awards of nonvested time based share units and nonvested performance share units are valued at the fair market value of the Company’s common stock as of the award date. Nonvested performance share unit compensation expense is based on the most recent performance assumption available and is adjusted as assumptions change. If the goals are not met, vesting does not occur and no compensation cost will be recognized and any recognized compensation costs will be reversed. Stock-based awards that do not require future service are expensed in the year of grant.

Derivative Instruments and Hedging Activities

Derivatives are recognized as either assets or liabilities on the balance sheet and are measured at fair value. The accounting for changes in the fair value of such derivatives depends on the intended use of the derivative and resulting designation. For derivatives not designated as hedges, changes in fair value of the derivative instruments are recognized in earnings in noninterest income.

For derivatives designated as fair value hedges, changes in the fair value of such derivatives are recognized in earnings together with the changes in the fair value of the related hedged item. The net amount, if any, represents hedge ineffectiveness and is reflected in earnings.

For derivatives designated as cash flow hedges, the effective portion of changes in the fair value of the derivative is recorded in other comprehensive income (loss) and recognized in earnings when the hedged transaction affects earnings. The ineffective portion of changes in the fair value of cash flow hedges is recognized directly in earnings.

Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company measures the fair values of its financial instruments in accordance with accounting guidance that requires an entity to base fair value on exit price and maximize the use of observable inputs and minimize the use of unobservable inputs to determine the exit price.

ASC 820, “Fair Value Measurements and Disclosures” establishes a fair value hierarchy that gives the highest priority to quoted prices in active markets and the lowest priority to unobservable data and requires fair value measurements to be disclosed by level within the hierarchy. The three broad levels defined by the fair value hierarchy are as follows:

Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reported date. The type of financial instruments included in Level 1 are highly liquid cash instruments with quoted prices such as government or agency securities, listed equities and money market securities, as well as listed derivative instruments.

Level 2 – Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reported date. The nature of these financial instruments includes cash instruments for which quoted prices are available but traded less frequently, derivative instruments whose fair value has been derived using a model where inputs to the model are directly observable in the market, or can be derived principally from or corroborated by observable market data, and instruments that are fair valued using other financial instruments, the parameters of which can be directly observed. Instruments which are generally included in this category are corporate bonds and loans, mortgage whole loans, municipal bonds and over-the-counter derivatives.

Level 3 – Instruments that have little to no pricing observability as of the reported date. These financial instruments do not have two-way markets and are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment to estimation. Instruments that are included in this category generally include certain commercial mortgage loans, certain private equity investments, distressed debt, non-investment grade residual interests in securitizations, as well as certain highly structured over-the-counter derivative contracts.

Earnings per Common Share

Earnings per common share is computed using the two-class method prescribed under ASC Topic 260, “Earnings Per Share.” ASC Topic 260 provides that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method. We have determined that our outstanding non-vested stock awards are participating securities.

Under the two-class method, basic earnings per common share is computed by dividing net earnings allocated to common stock by the weighted-average number of common shares outstanding during the applicable period, excluding outstanding participating securities. Diluted earnings per common share is computed using the weighted-average number of shares determined for the basic earnings per common share computation plus the dilutive effect of common stock equivalents. A reconciliation of the weighted-average shares used in calculating basic earnings per common share and the weighted average common shares used in calculating diluted earnings per common share for the reported periods is provided in Note 22 - Earnings Per Share.

Subsequent Events

Management has reviewed events occurring through March 16, 2020, the date the consolidated financial statements were issued and determined that no subsequent events occurred requiring adjustment to or disclosure in these financial statements.

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Fair Value Measurements - Schedule of Carrying Value of Assets Measured at Fair Value on a Non-Recurring Basis (Details) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Assets, fair value, non-recurring basis		$ 0
Non-recurring
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Assets, fair value, non-recurring basis	$ 4,250,000
Non-recurring | Collateral Dependent Impaired Loans
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Assets, fair value, non-recurring basis	2,541,000
Non-recurring | Loans Held for Sale
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Assets, fair value, non-recurring basis	1,546,000
Non-recurring | Other Real Estate Owned
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Assets, fair value, non-recurring basis	163,000
Non-recurring | Level 1
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Assets, fair value, non-recurring basis	1,546,000
Non-recurring | Level 1 | Loans Held for Sale
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Assets, fair value, non-recurring basis	1,546,000
Non-recurring | Level 3
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Assets, fair value, non-recurring basis	2,704,000
Non-recurring | Level 3 | Collateral Dependent Impaired Loans
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Assets, fair value, non-recurring basis	2,541,000
Non-recurring | Level 3 | Other Real Estate Owned
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Assets, fair value, non-recurring basis	$ 163,000

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Investment Securities

12 Months Ended

Dec. 31, 2019

Investments Debt And Equity Securities [Abstract]

Investment Securities

6. INVESTMENT SECURITIES

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

	December 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	$	38,000	$	—	$	(152	)	$	37,848	$	75,004	$	—	$	(965	)	$	74,039
Mortgage-backed securities		103,109		231		(858	)		102,482		92,271		118		(3,121	)		89,268
Corporate debt securities		—		—		—			—		5,015		—		(159	)		4,856
Total available for sale securities	$	141,109	$	231	$	(1,010	)	$	140,330	$	172,290	$	118	$	(4,245	)	$	168,163
Held to maturity securities
U.S. GSE obligations	$	5,000	$	—		—		$	5,000	$	32,571	$	—	$	(238	)	$	32,333
Mortgage-backed securities		161,759		2,751		(111	)		164,399		168,118		134		(2,290	)		165,962
Corporate debt securities		6,980		116		—			7,096		6,972		—		(107	)		6,865
Municipal securities		84,433		3,252		(66	)		87,619		75,208		1,297		(355	)		76,150
Total held to maturity securities	$	258,172	$	6,119	$	(177	)	$	264,114	$	282,869	$	1,431	$	(2,990	)	$	281,310
Total	$	399,281	$	6,350	$	(1,187	)	$	404,444	$	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 amortized cost and fair value of debt investments, aggregated by contractual maturity, are shown below. Maturities of mortgage-backed securities do not take into consideration scheduled amortization or prepayments. Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Within One Year				After One, But Within Five Years				After Five, But Within Ten Years				After Ten Years				Total
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
At December 31, 2019	(dollars in thousands)
Available for sale securities
U.S. GSE obligations	$	5,000	$	4,997	$	20,000	$	19,939	$	5,000	$	4,934	$	8,000	$	7,978	$	38,000	$	37,848
Mortgage-backed    securities		—		—		37		38		36,393		35,997		66,679		66,447		103,109		102,482
Corporate debt securities		—		—		—		—		—		—		—		—		—		—
Total available for    sale securities	$	5,000	$	4,997	$	20,037	$	19,977	$	41,393	$	40,931	$	74,679	$	74,425	$	141,109	$	140,330
Held to maturity securities
U.S. GSE obligations	$	5,000	$	5,000	$	—	$	—	$	—	$	—	$	—	$	—	$	5,000	$	5,000
Mortgage-backed    securities		—		—		2		2		48,088		49,117		113,669		115,280		161,759		164,399
Corporate debt securities		—		—		6,980		7,096		—		—		—		—		6,980		7,096
Municipal securities		3,270		3,291		10,606		10,902		45,201		47,523		25,356		25,903		84,433		87,619
Total held to maturity    securities	$	8,270	$	8,291	$	17,588	$	18,000	$	93,289	$	96,640	$	139,025	$	141,183	$	258,172	$	264,114
Total	$	13,270	$	13,288	$	37,625	$	37,977	$	134,682	$	137,571	$	213,704	$	215,608	$	399,281	$	404,444

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:

	December 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	$	12,912	$	(88	)	$	24,936	$	(64	)	$	37,848	$	(152	)
Mortgage-backed securities		33,381		(265	)		50,766		(593	)		84,147		(858	)
Corporate debt securities		—		—			—		—			—		—
Total available for sale securities	$	46,293	$	(353	)	$	75,702	$	(657	)	$	121,995	$	(1,010	)
Held to maturity securities
U.S. GSE obligations	$	—	$	—		$	5,000	$	—		$	5,000	$	—
Mortgage-backed securities		14,838		(27	)		12,928		(84	)		27,766		(111	)
Corporate debt securities		—		—			—		—			—		—
Municipal securities		4,934		(66	)		—		—			4,934		(66	)
Total held to maturity securities	$	19,772	$	(93	)	$	17,928	$	(84	)	$	37,700	$	(177	)
Total temporarily impaired securities	$	66,065	$	(446	)	$	93,630	$	(741	)	$	159,695	$	(1,187	)

	December 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	$	—	$	—		$	74,039	$	(965	)	$	74,039	$	(965	)
Mortgage-backed securities		—		—			86,815		(3,121	)		86,815		(3,121	)
Corporate debt securities		902		(98	)		3,954		(61	)		4,856		(159	)
Total available for sale securities	$	902	$	(98	)	$	164,808	$	(4,147	)	$	165,710	$	(4,245	)
Held to maturity securities
U.S. GSE obligations	$	4,995	$	(5	)	$	27,338	$	(233	)	$	32,333	$	(238	)
Mortgage-backed securities		30,719		(216	)		93,225		(2,074	)		123,944		(2,290	)
Corporate debt securities		6,865		(107	)		—		—			6,865		(107	)
Municipal securities		8,484		(82	)		8,313		(273	)		16,797		(355	)
Total held to maturity securities	$	51,063	$	(410	)	$	128,876	$	(2,580	)	$	179,939	$	(2,990	)
Total temporarily impaired securities	$	51,965	$	(508	)	$	293,684	$	(6,727	)	$	345,649	$	(7,235	)

Securities are evaluated by management for other-than-temporary impairment on at least a quarterly basis, and more frequently when economic or market conditions warrant such evaluation. Consideration is given to: (1) the length of time and the extent to which the fair value has been less than cost; (2) the financial condition and near-term prospects of the issuer; and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

As of December 31, 2019, 68 debt securities had gross unrealized losses, with an aggregate depreciation of 0.74% from the Company’s amortized cost basis. The largest unrealized loss percentage of any single security was 3.15%, or $63,000, of its amortized cost. The largest unrealized dollar loss of any single security was $96,000, or 1.93%, of its amortized cost.

As of December 31, 2018, 142 debt securities had gross unrealized losses, with an aggregate depreciation of 2.05% from the Company’s amortized cost basis. The largest unrealized loss percentage of any single security was 9.79%, or $98,000, of its amortized cost. The largest unrealized dollar loss of any single security was $189,000, or 5.34%, of its amortized cost.        

The Company believes that the nature and duration of impairment on its debt security positions are primarily a function of interest rate movements and changes in investment spreads and does not consider full repayment of principal on the reported debt obligations to be at risk. Since nearly all of these securities are rated “investment grade” and a) the Company does not intend to sell these securities before recovery and b) that it is more likely than not that the Company will not be required to sell these securities before recovery, the Company does not consider these securities to be other-than-temporarily impaired as of December 31, 2019 and 2018.

The following table sets forth information regarding sales of investment securities and the resulting gains or losses from such sales:

	For the Year Ended December 31,
	2019			2018		2017
	(dollars in thousands)
Amortized cost of securities sold	$	26,631		$	700	$	77,372
Gain/(loss) realized on securities sold		(79	)		2		(3	)
Net proceeds from securities sold	$	26,552		$	702	$	77,369

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Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2019

Goodwill And Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

10. GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill.  At December 31, 2019 and 2018, the carrying value of goodwill, which is included in other assets, totaled $31.2 million and $412,000, respectively. Goodwill is tested for impairment, based on its fair value, at least annually. As of December 31, 2019 and 2018, no goodwill impairment has been recognized.

Core deposit intangibles.   The Company recorded an asset for the core deposit intangible (“CDI”) of $3.6 million related to the Optima merger. Amortization of CDI assets totaled $270,000    for the twelve months ended December 31, 2019.  As of December 31, 2019, the carrying value of CDI assets totaled $3.3 million . The weighted-average remaining amortization period for CDI was approximately nine years at December 31, 2019.

Mortgage servicing rights.  Periodically, the Company sells certain residential mortgage loans to the secondary market. Generally, these loans are sold without recourse or other credit enhancements.

The Company sells loans and either releases or retains the servicing rights. For loans sold with servicing rights retained, we provide the servicing for the loans on a per-loan fee basis. Mortgage loans sold and servicing rights retained during the years ended December 31, 2019, 2018, and 2017 were $82.9 million, $1.6 million, and $11.9 million, respectively, with net gains recognized in gain on loan sales of $685,000, $36,000, and $182,000, respectively.

An analysis of mortgage servicing rights, which are included in other assets, follows:

	Mortgage Servicing Rights			Valuation Allowance			Total
	(dollars in thousands)
Balance at December 31, 2016	$	842		$	(30	)	$	812
Mortgage servicing rights capitalized		132			—			132
Amortization charged against servicing income		(151	)		—			(151	)
Change in impairment reserve		—			—			—
Balance at December 31, 2017	$	823		$	(30	)	$	793
Mortgage servicing rights capitalized		20			—			20
Amortization charged against servicing income		(147	)		—			(147	)
Change in impairment reserve		(30	)		30			—
Balance at December 31, 2018	$	666		$	—		$	666
Mortgage servicing rights acquired as a result of the merger		334			—			334
Mortgage servicing rights capitalized		618			—			618
Amortization charged against servicing income		(271	)		—			(271	)
Change in impairment reserve		—			(26	)		(26	)
Balance at December 31, 2019	$	1,347		$	(26	)	$	1,321

The fair value of our mortgage servicing rights (“MSR”) portfolio was $1.5 million and $1.0 million as of December 31, 2019 and 2018. The fair value of mortgage servicing rights is estimated based on the present value of expected cash flows, incorporating assumptions for discount rate, prepayment speed, and servicing cost.

The weighted-average amortization period for mortgage servicing rights portfolio was 5.2 years and 7.5 years at December 31, 2019 and December 31, 2018, respectively.  

The estimated aggregate future amortization expense for mortgage servicing rights for each of the next five years and thereafter is as follows:  

	Future Amortization Expense
	(dollars in thousands)
2020	$	202
2021		166
2022		135
2023		110
2024		89
Thereafter		619
Total	$	1,321

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Income Taxes - Additional Information (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Income Taxes [Line Items]
Tax cuts and jobs act of 2017, one-time non-cash write-down of net deferred tax assets			$ 3,900,000
Federal tax rate	21.00%	21.00%	35.00%
Tax rate deferred tax assets were measured	27.86%	28.11%
Deferred tax assets, valuation allowance	$ 0	$ 0
Unrecognized tax benefits	0	0
Tax benefit resulting from share based compensation	733,000	729,000	$ 427,000
Accounting Standards Update 2016-09
Income Taxes [Line Items]
Tax benefit resulting from share based compensation	$ 199,000	$ 225,000	$ 221,000
Federal Income Tax | Earliest Tax Year
Income Taxes [Line Items]
Income tax returns year open and subject to examination	2016
State Income Tax | Earliest Tax Year
Income Taxes [Line Items]
Income tax returns year open and subject to examination	2016

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Goodwill and Other Intangible Assets - Additional Information (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Apr. 17, 2019
Finite Lived Intangible Assets [Line Items]
Carrying value of goodwill	$ 31,206,000	$ 412,000
Impairment of goodwill recognized	0	$ 0
Carrying value of intangible asset	$ 3,338,000
Mortgage Servicing Rights
Finite Lived Intangible Assets [Line Items]
Weighted average amortization period	5 years 2 months 12 days	7 years 6 months
Amount of mortgage loans sold and servicing rights retained	$ 82,900,000	$ 1,600,000	$ 11,900,000
Net gains recognized in gain on loans held for sale	685,000	36,000	$ 182,000
Fair value of mortgage servicing rights portfolio	1,500,000	$ 1,000,000
Optima Bank And Trust Company
Finite Lived Intangible Assets [Line Items]
Carrying value of goodwill				$ 30,794,000
Optima Bank And Trust Company | Core Deposit Intangibles
Finite Lived Intangible Assets [Line Items]
Intangible assets acquired	3,600,000
Amortization of intangible asset	270,000,000
Carrying value of intangible asset	$ 3,300,000
Weighted average amortization period	9 years

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Loans and Allowance for Loan Losses - Summary of Allowance for Loan Losses and Related Loans Receivable Disaggregated by Impairment Method (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Financing Receivable Allowance For Credit Losses [Line Items]
Individually evaluated for impairment	$ 87
Collectively evaluated for impairment	18,093	$ 16,768
Total loans	18,180	16,768
Individually evaluated for impairment	4,145	740
Collectively evaluated for impairment	2,222,583	1,559,032
Total loans	2,226,728	1,559,772
Residential Mortgage
Financing Receivable Allowance For Credit Losses [Line Items]
Collectively evaluated for impairment	5,141	4,946
Total loans	5,141	4,946
Individually evaluated for impairment	764	647
Collectively evaluated for impairment	916,802	603,684
Total loans	917,566	604,331
Commercial Mortgage
Financing Receivable Allowance For Credit Losses [Line Items]
Collectively evaluated for impairment	10,905	9,626
Total loans	10,905	9,626
Individually evaluated for impairment	3,161
Collectively evaluated for impairment	1,057,413	757,957
Total loans	1,060,574	757,957
Home Equity
Financing Receivable Allowance For Credit Losses [Line Items]
Collectively evaluated for impairment	461	517
Total loans	461	517
Individually evaluated for impairment	92	88
Collectively evaluated for impairment	80,583	69,248
Total loans	80,675	69,336
Commercial & Industrial
Financing Receivable Allowance For Credit Losses [Line Items]
Individually evaluated for impairment	87
Collectively evaluated for impairment	1,388	1,415
Total loans	1,475	1,415
Individually evaluated for impairment	128	5
Collectively evaluated for impairment	133,108	93,707
Total loans	133,236	93,712
Consumer
Financing Receivable Allowance For Credit Losses [Line Items]
Collectively evaluated for impairment	198	264
Total loans	198	264
Collectively evaluated for impairment	34,677	34,436
Total loans	$ 34,677	$ 34,436

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Borrowings - Schedule of Information Relating to Short-term Borrowings (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Advances From Federal Home Loan Banks [Abstract]
Ending balance	$ 135,691,000	$ 90,000,000
Average daily balance	84,414,000	15,183,000
Highest month-end balance	$ 135,691,000	$ 90,000,000
Weighted average interest rate	2.31%	2.47%

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Goodwill and Other Intangible Assets - Schedule of Aggregate Estimated Future Amortization Expense (Details) - Mortgage Servicing Rights $ in Thousands	Dec. 31, 2019 USD ($)
Future Amortization Expense
2020	$ 202
2021	166
2022	135
2023	110
2024	89
Thereafter	619
Total	$ 1,321

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Loans and Allowance for Loan Losses - Loans Receivable Disaggregated by Credit Quality Indicator (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Financing Receivable Recorded Investment [Line Items]
Loans receivable	$ 2,226,728	$ 1,559,772
Residential Mortgage
Financing Receivable Recorded Investment [Line Items]
Loans receivable	917,566	604,331
Residential Mortgage | Performing
Financing Receivable Recorded Investment [Line Items]
Loans receivable	915,642	603,708
Residential Mortgage | Non-Performing Loans
Financing Receivable Recorded Investment [Line Items]
Loans receivable	1,924	623
Home Equity
Financing Receivable Recorded Investment [Line Items]
Loans receivable	80,675	69,336
Home Equity | Performing
Financing Receivable Recorded Investment [Line Items]
Loans receivable	80,663	69,323
Home Equity | Non-Performing Loans
Financing Receivable Recorded Investment [Line Items]
Loans receivable	12	13
Consumer
Financing Receivable Recorded Investment [Line Items]
Loans receivable	34,677	34,436
Consumer | Performing
Financing Receivable Recorded Investment [Line Items]
Loans receivable	34,677	34,436
Commercial Mortgage
Financing Receivable Recorded Investment [Line Items]
Loans receivable	1,060,574	757,957
Commercial Mortgage | 1-6 (Pass)
Financing Receivable Recorded Investment [Line Items]
Loans receivable	1,050,037	753,338
Commercial Mortgage | 7 (Special Mention)
Financing Receivable Recorded Investment [Line Items]
Loans receivable	7,360	4,619
Commercial Mortgage | 8 (Substandard)
Financing Receivable Recorded Investment [Line Items]
Loans receivable	3,177
Commercial & Industrial
Financing Receivable Recorded Investment [Line Items]
Loans receivable	133,236	93,712
Commercial & Industrial | 1-6 (Pass)
Financing Receivable Recorded Investment [Line Items]
Loans receivable	123,900	85,821
Commercial & Industrial | 7 (Special Mention)
Financing Receivable Recorded Investment [Line Items]
Loans receivable	4,289	4,186
Commercial & Industrial | 8 (Substandard)
Financing Receivable Recorded Investment [Line Items]
Loans receivable	$ 5,047	$ 3,705

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Earnings Per Share (Tables)

12 Months Ended

Dec. 31, 2019

Earnings Per Share [Abstract]

Summary of Reconciliation Between Basic and Diluted Earnings Per Share

The following represents a reconciliation between basic and diluted earnings per share:

		For the Year Ended December 31,
		2019			2018			2017
	(dollars in thousands, except per share data)
Earnings per common share - basic:
Numerator:
Net income		$	25,257		$	23,881		$	14,816
Less dividends and undistributed earnings allocated    to participating securities			(210	)		(239	)		(157	)
Net income applicable to common shareholders		$	25,047		$	23,642		$	14,659
Denominator:
Weighted average common shares outstanding			4,629			4,062			4,031
Earnings per common share - basic		$	5.41		$	5.82		$	3.64
Earnings per common share - diluted:
Numerator:
Net income		$	25,257		$	23,881		$	14,816
Less dividends and undistributed earnings allocated    to participating securities			(210	)		(239	)		(157	)
Net income applicable to common shareholders		$	25,047		$	23,642		$	14,659
Denominator:
Weighted average common shares outstanding			4,629			4,062			4,031
Dilutive effect of common stock equivalents			33			37			35
Weighted average diluted common shares outstanding			4,662			4,099			4,066
Earnings per common share - diluted		$	5.37		$	5.77		$	3.61

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Condensed Financial Statements of Parent Company (Tables)

12 Months Ended

Dec. 31, 2019

Condensed Financial Information Of Parent Company Only Disclosure [Abstract]

Condensed Balance Sheet

Condensed Balance Sheet

	December 31,
	2019		2018
	(dollars in thousands)
ASSETS
Cash and cash equivalents	$	1,680	$	4,412
Other assets		13		—
Investment in subsidiary		284,868		162,614
Total assets	$	286,561	$	167,026
SHAREHOLDERS’ EQUITY
Shareholders’ equity	$	286,561	$	167,026
Total shareholders’ equity	$	286,561	$	167,026

Condensed Statements of Income

Condensed Statements of Income

	For the Year Ended December 31,
	2019			2018			2017
	(dollars in thousands)
Income
Dividends from subsidiary	$	10,732		$	8,615		$	8,052
Total income		10,732			8,615			8,052
Expenses
Other expenses		132			116			—
Total expenses		132			116			—
Income before income taxes and equity in undistributed income of subsidiary		10,600			8,499			8,052
Income tax benefit		(36	)		(32	)		—
Income of parent company		10,636			8,531			8,052
Equity in undistributed income of subsidiary		14,621			15,350			6,764
Net income	$	25,257		$	23,881		$	14,816

Condensed Statements of Cash Flows

Condensed Statements of Cash Flows

	For the Year Ended December 31,
	2019			2018			2017
	(dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	25,257		$	23,881		$	14,816
Adjustments to reconcile net income to net cash provided    by operating activities
Change in other assets, net		(13	)		—			—
Undistributed income of subsidiary		(14,621	)		(15,350	)		(6,764	)
Net cash provided by operating activities		10,623			8,531			8,052
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid in business combinations		(3,525	)		—			—
Investment in subsidiary		(38,202	)		—			—
Net cash (used in)/provided by investing activities		(41,727	)		—			—
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of common stock		38,576			761			1,522
Repurchase of common stock		(687	)		(574	)		(470	)
Cash dividends paid on common stock		(9,517	)		(8,041	)		(7,582	)
Net cash provided by/(used in) financing activities		28,372			(7,854	)		(6,530	)
Net increase (decrease) in cash		(2,732	)		677			1,522
Cash at beginning of year		4,412			3,735			2,213
Cash at end of year	$	1,680		$	4,412		$	3,735

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Share-Based Compensation (Tables)

12 Months Ended

Dec. 31, 2019

Summary of Stock Options Transactions and Changes

A summary of stock option transactions for the year ended December 31, 2018  is presented below:

	2019				2018
	Number of Options		Weighted Average Exercise Price		Number of Options			Weighted Average Exercise Price
Stock Options
Outstanding at beginning of year		—	$	—		16,377		$	29.21
Granted		—		—		—			—
Forfeited		—		—		—			—
Expired		—		—		(2,600	)		29.21
Exercised		—		—		(13,777	)		29.21
Outstanding at end of year		—	$	—		—		$	—
Exercisable at end of year		—	$	—		—		$	—

Summary of Non-vested Restricted Shares Outstanding

A summary of restricted stock transactions for the periods of December 31, 2019 and 2018, and changes during the years ended on those dates, is presented below

	2019					2018
	Number of Shares			Weighted Average Grant Value		Number of Shares			Weighted Average Grant Value
Restricted stock
Non-vested at beginning of year		41,311		$	65.10		43,240		$	53.13
Granted		11,330			75.67		17,373			80.43
Vested		(14,642	)		60.55		(15,760	)		50.10
Forfeited		(1,878	)		65.33		(3,542	)		60.84
Non-vested at end of year		36,121		$	70.25		41,311		$	65.10

Schedule of Amounts Recognized in Consolidated Income Statement for Restricted Stock Awards, Time Based Restricted Stock Units and Performance Based Restricted Stock Units

The following table presents the amounts recognized in the consolidated income statement for restricted stock awards, time-based restricted stock units, and performance-based restricted stock units:

	December 31,
	2019		2018		2017
	(dollars in thousands)
Share-based compensation expense	$	2,632	$	2,592	$	1,045
Related income tax benefit	$	733	$	729	$	427

Performance-Based Restricted Stock Units

Summary of Non-vested Restricted Stock Units Outstanding

A summary of non-vested performance-based restricted stock units outstanding as of December 31, 2019 and 2018, and changes during the years ended on those dates, is presented below

	2019					2018
	Number of Units			Weighted Average Grant Value		Number of Units			Weighted Average Grant Value
Performance-based restricted stock units
Non-vested at beginning of year		41,411		$	66.39		21,613		$	56.05
Granted		28,542			73.00		23,511			76.56
Vested (Performance achieved)		(12,697	)		46.00		—			—
Forfeited		—			—		(3,713	)		70.68
Expired (Performance not achieved)		—			—		—			—
Non-vested at end of year		57,256		$	72.82		41,411		$	66.39

Time Based Restricted Stock Units

Summary of Non-vested Restricted Stock Units Outstanding

A summary of nonvested time based restricted stock units outstanding as of December 31, 2019 and 2018, and changes during the years ended on those dates, is presented below:

	2019					2018
	Number of Shares			Weighted Average Grant Value		Number of Shares			Weighted Average Grant Value
Time-based restricted stock units
Non-vested at beginning of year		6,777		$	76.56		—		$	—
Granted		8,132			73.00		7,839			76.56
Vested		(2,251	)		76.56		(225	)		76.56
Forfeited		—			—		(837	)		76.56
Non-vested at end of year		12,658		$	74.27		6,777		$	76.56

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Deposits (Tables)

12 Months Ended

Dec. 31, 2019

Deposits [Abstract]

Summary of Deposits

Deposits are summarized as follows:

	December 31, 2019		December 31, 2018
	(dollars in thousands)
Demand deposits (non-interest bearing)	$	630,593	$	494,492
Interest bearing checking		450,098		431,702
Money market		181,406		135,585
Savings		914,499		628,212
Retail certificates of deposit under $100,000		56,602		36,223
Retail certificates of deposit $100,000 or greater		118,596		57,692
Wholesale certificates of deposit		7,084		27,504
Total deposits	$	2,358,878	$	1,811,410

Scheduled Maturities of Certificates of Deposits

Certificates of deposit had the following schedule of maturities:

	December 31, 2019		December 31, 2018
	(dollars in thousands)
Less than 3 months remaining	$	52,883	$	24,219
3 to 5 months remaining		47,701		17,486
6 to 11 months remaining		38,981		37,987
12 to 23 months remaining		31,501		28,529
24 to 47 months remaining		9,448		9,652
48 months or more remaining		1,768		3,546
Total certificates of deposit	$	182,282	$	121,419

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Other Income (Tables)

12 Months Ended

Dec. 31, 2019

Other Income And Expenses [Abstract]

Schedule of Components of Other Income

The components of other income were as follows:

	For the Year Ended December 31,
	2019		2018		2017
	(dollars in thousands)
Safe deposit box income	$	333	$	342	$	348
Loan fee income		1,030		358		473
Miscellaneous income		564		569		334
Total other income	$	1,927	$	1,269	$	1,155

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Cash and Cash Equivalents - Additional Information (Details) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Cash And Cash Equivalents [Line Items]
Cash and cash equivalents	$ 61,335,000	$ 18,473,000
Federal Reserve Bank of Boston
Cash And Cash Equivalents [Line Items]
Reserve balance of cash and due from banks	31,500,000	12,700,000
New Hampshire
Cash And Cash Equivalents [Line Items]
Pledged amount to federal banking department	$ 500,000	$ 500,000

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Income Taxes - Summary of Net Deferred Tax Asset (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Gross deferred tax assets
Allowance for loan losses	$ 5,029	$ 4,715
Accrued retirement benefits	1,592	2,082
Unrealized losses on AFS securities	171	957
Incentive compensation	1,248	1,189
Equity based compensation	1,034	849
Lease Liability	9,765	333
ESOP dividends	165	169
Loss carryforwards as a result of the Optima merger	877
Intangibles (merger related)	472
Other	252	155
Total gross deferred tax assets	20,605	10,449
Gross deferred tax liabilities
Deferred loan origination costs	(911)	(459)
Depreciation of premises and equipment	(1,021)	(678)
Right of Use Asset	(9,356)
Mortgage servicing rights	(368)	(187)
Goodwill	(113)	(114)
Derivative transactions	(607)	(294)
Total gross deferred tax liabilities	(12,376)	(1,732)
Net deferred tax asset	$ 8,229	$ 8,717

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Pension and Retirement Plans - Schedule of Amounts Recognized in Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Pension Plan
Defined Benefit Plan Disclosure [Line Items]
Net actuarial loss/(gain)	$ 3,709	$ 5,427
Prior service (benefit)	(7)	(12)
Total	3,702	5,415
Supplemental Retirement Plan
Defined Benefit Plan Disclosure [Line Items]
Net actuarial loss/(gain)	1,128	358
Total	1,128	358
Postretirement Healthcare Plan
Defined Benefit Plan Disclosure [Line Items]
Net actuarial loss/(gain)	(34)	(113)
Total	$ (34)	$ (113)

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Investment Securities - Additional Information (Details)	Dec. 31, 2019 USD ($) Security	Dec. 31, 2018 USD ($) Security
Schedule of Available for Sale Securities and Held to Maturity Securities [Line Items]
Number of debt securities with unrealized losses | Security	68	142
Aggregate depreciation percentage of gross unrealized losses from amortized cost	0.74%	2.05%
Maximum
Schedule of Available for Sale Securities and Held to Maturity Securities [Line Items]
Percentage of unrealized loss on amortized cost	3.15%	9.79%
Unrealized loss of amortized cost basis	$ 63,000	$ 98,000
Unrealized dollar loss of amortized cost basis	$ 96,000	$ 189,000
Percentage of unrealized dollar loss on amortized cost	1.93%	5.34%

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CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Interest and dividend income
Interest on taxable loans	$ 84,382	$ 57,941	$ 51,238
Interest on tax-exempt loans	584	371	496
Interest on taxable investment securities	7,963	7,457	6,321
Interest on tax-exempt investment securities	2,289	2,404	2,600
Dividends on FHLB of Boston stock	390	287	245
Interest on overnight investments	731	595	291
Total interest and dividend income	96,339	69,055	61,191
Interest expense
Interest on deposits	15,641	5,023	3,125
Interest on borrowed funds	2,002	444	462
Total interest expense	17,643	5,467	3,587
Net interest and dividend income	78,696	63,588	57,604
Provision for Loan Losses	3,004	1,502	362
Net interest and dividend income after provision for loan losses	75,692	62,086	57,242
Noninterest income
Bank owned life insurance income	612	526	584
Gain (loss) on disposition of investment securities	(79)	2	(3)
Gain on loans sold	1,170	99	355
Loan related derivative income	1,674	1,651	780
Other income	1,927	1,269	1,155
Total noninterest income	36,401	32,989	30,224
Noninterest expense
Salaries and employee benefits	47,494	41,212	36,455
Occupancy and equipment	10,855	9,072	9,114
Data processing	6,232	5,177	4,956
Professional services	3,623	3,258	3,374
Marketing	1,760	2,229	1,620
FDIC insurance	291	574	629
Nonoperating expenses	4,721	201
Other expenses	3,199	2,264	3,144
Total noninterest expense	78,175	63,987	59,292
Income before income taxes	33,918	31,088	28,174
Income tax expense	8,661	7,207	13,358
Net income	$ 25,257	$ 23,881	$ 14,816
Share data:
Weighted average number of shares outstanding, basic	4,629,255	4,061,529	4,030,530
Weighted average number of shares outstanding, diluted	4,661,720	4,098,633	4,065,754
Basic earnings per share	$ 5.41	$ 5.82	$ 3.64
Diluted earnings per share	$ 5.37	$ 5.77	$ 3.61
Wealth Management Revenue
Noninterest income
Noninterest income	$ 26,499	$ 25,191	$ 23,029
Deposit Account Fees
Noninterest income
Noninterest income	3,185	3,071	3,142
ATM/Debit Card Income
Noninterest income
Noninterest income	$ 1,413	$ 1,180	$ 1,182

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Derivative And Hedging Activities - Summary of Derivative Financial Instruments Income Statement (Details) - Interest Income - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Derivative Instruments And Hedging Activities Disclosures [Line Items]
Total amount of income presented in the income statement in which the effects of fair value or cash flow hedges are recorded	$ (194)	$ (43)
Interest Rate Contracts
The effects of fair value and cash flow hedging:
Amount of gain or (loss) reclassed from AOCI into income	(194)	(43)
Amount of gain or (loss) reclassed from AOCI into income - Excluded Component	$ (194)	$ (43)

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$ 25,257	$ 23,881	$ 14,816
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	3,004	1,502	362
Amortization of deferred charges and fees, net	166	777	972
Net (Accretion)/Amortization of merger-related intangibles	(1,176)
Depreciation and amortization	2,004	1,888	1,948
Bank owned life insurance income	(612)	(526)	(584)
Loss/(gain) on disposition of investment securities	79	(2)	3
Share based compensation	2,170	2,633	2,052
Change in accrued interest receivable	(162)	(634)	(501)
Deferred income tax expense/(benefit)	110	(721)	2,687
Change in other assets, net	(11,667)	(12,231)	(758)
Change in other liabilities, net	11,166	7,455	2,264
Change in loans held for sale	(1,546)		6,506
Net cash provided by operating activities	28,793	24,022	29,767
CASH FLOWS FROM INVESTING ACTIVITIES
Origination of loans	(790,097)	(596,259)	(354,657)
Proceeds from principal payments of loans	524,907	387,537	323,632
Proceeds from principal loan pool sales	74,412
Purchase of securities available for sale	(23,450)		(5,091)
Proceeds from calls/maturities of securities available for sale	49,832	35,415	47,955
Proceeds from sales of securities available for sale and held to maturity	26,552	702	77,369
Proceeds from calls/maturities of securities held to maturity	72,655	33,064	34,488
Purchase of securities held to maturity	(48,906)	(84,261)	(184,505)
Proceeds from settlement of bank owned life insurance policies		676
Redemption/(purchase) of FHLB of Boston stock	456	(2,602)	(144)
Purchase of banking premises and equipment	(1,896)	(1,155)	(807)
Net cash acquired in business combinations	2,063
Net cash (used in) provided by investing activities	(113,472)	(226,883)	(61,760)
CASH FLOWS FROM FINANCING ACTIVITIES
Change in demand, interest bearing, money market and savings accounts	171,961	74,421	100,694
Change in certificates of deposit	(101,928)	(38,467)	(11,411)
Change in borrowings	28,823	89,830	(167)
Proceeds from common stock offering (net of underwriting fees)	38,202
Cash dividends paid on common stock	(9,517)	(8,041)	(7,582)
Net cash provided by (used in) financing activities	127,541	117,743	81,534
Net (decrease)/increase in cash and cash equivalents	42,862	(85,118)	49,541
Cash and cash equivalents at beginning of period	18,473	103,591	54,050
Cash and cash equivalents at end of period	61,335	18,473	103,591
Cash paid during the period for:
Interest	17,918	5,457	3,579
Income taxes	7,770	$ 8,330	$ 10,100
Significant non-cash transactions
Right-of-use assets for lessee operating leases	33,587
Right-of-use liabilities for lessee operating leases	35,054
Transfer of other real estate owned	163
Common Stock issued to Optima shareholders	59,417
Fair value of assets acquired, net of cash acquired	548,801
Fair value of liabilities assumed	$ 491,447

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Other Income - Schedule of Components of Other Income (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Other Income And Expenses [Abstract]
Safe deposit box income	$ 333	$ 342	$ 348
Loan fee income	1,030	358	473
Miscellaneous income	564	569	334
Total other income	$ 1,927	$ 1,269	$ 1,155

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Earnings Per Share - Summary of Reconciliation Between Basic and Diluted Earnings Per Share (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Numerator:
Net income	$ 7,109	$ 7,676	$ 4,272	$ 6,198	$ 5,306	$ 6,659	$ 6,111	$ 5,805	$ 25,257	$ 23,881	$ 14,816
Less dividends and undistributed earnings allocated to participating securities									(210)	(239)	(157)
Net income applicable to common shareholders									$ 25,047	$ 23,642	$ 14,659
Denominator:
Weighted average number of shares outstanding, basic	4,939,973	4,815,020	4,682,109	4,072,805	4,065,681	4,064,620	4,059,927	4,053,355	4,629,255	4,061,529	4,030,530
Earnings per common share - basic	$ 1.43	$ 1.58	$ 0.91	$ 1.51	$ 1.29	$ 1.62	$ 1.49	$ 1.42	$ 5.41	$ 5.82	$ 3.64
Numerator:
Net income	$ 7,109	$ 7,676	$ 4,272	$ 6,198	$ 5,306	$ 6,659	$ 6,111	$ 5,805	$ 25,257	$ 23,881	$ 14,816
Less dividends and undistributed earnings allocated to participating securities									(210)	(239)	(157)
Net income applicable to common shareholders									$ 25,047	$ 23,642	$ 14,659
Denominator:
Weighted average number of shares outstanding, basic	4,939,973	4,815,020	4,682,109	4,072,805	4,065,681	4,064,620	4,059,927	4,053,355	4,629,255	4,061,529	4,030,530
Dilutive effect of common stock equivalents									33,000	37,000	35,000
Weighted average diluted common shares outstanding	4,980,439	4,842,965	4,715,724	4,106,658	4,102,546	4,101,378	4,094,489	4,071,975	4,661,720	4,098,633	4,065,754
Earnings per common share - diluted	$ 1.42	$ 1.57	$ 0.90	$ 1.49	$ 1.28	$ 1.61	$ 1.48	$ 1.41	$ 5.37	$ 5.77	$ 3.61

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Other Operating Expenses

12 Months Ended

Dec. 31, 2019

Other Income And Expenses [Abstract]

Other Operating Expenses

20. OTHER OPERATING EXPENSES

The components of other operating expenses were as follows:

	For the Year Ended December 31,
	2019		2018			2017
	(dollars in thousands)
Director fees	$	527	$	724		$	576
Charitable donations & sponsorships		575		518			432
Printing and supplies		437		272			251
Travel and entertainment		579		456			339
Dues and memberships		412		293			260
Physical security		86		131			172
Postage and mailing		246		201			229
Miscellaneous expense		337		(331	)		885
Total other operating expenses	$	3,199	$	2,264		$	3,144

Miscellaneous expense in 2018 and 2017 includes the reclassification adjustment for retirement plan expenses as required upon adoption of ASU 2017-07.

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Share-Based Compensation - Additional Information (Details) - shares	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Outstanding stock options		0	16,377
DSP Plan and 2017 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total shares issued under this plan	4,484	4,164
Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options time-vest period	5 years
Options expire period	10 years
Restricted Stock | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options time-vest period	3 years
Restricted Stock | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options time-vest period	5 years
Performance-Based Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options time-vest period	3 years
Time Based Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options time-vest period	3 years

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Borrowings

12 Months Ended

Dec. 31, 2019

Debt Disclosure [Abstract]

Borrowings

12. BORROWINGS

Information relating to short-term borrowings is presented below:

	For the Year Ended December 31,
	2019			2018
	(dollars in thousands)
FHLB of Boston short-term advances
Ending balance	$	135,691		$	90,000
Average daily balance		84,414			15,183
Highest month-end balance		135,691			90,000
Weighted average interest rate		2.31	%		2.47	%

Information relating to long-term borrowings is presented below:

	December 31, 2019					December 31, 2018
	Amount		Rate			Amount		Rate
	(dollars in thousands)
FHLB of Boston long-term advances
Due 09/01/2020; amortizing	$	—		0.00	%	$	3,409		1.94	%

All short- and long-term borrowings with the FHLB of Boston are secured by the Bank’s stock in the FHLB of Boston and a blanket lien on “qualified collateral” defined principally as 95% of the market value of certain U.S. Government and GSE obligations and 75% of the carrying value of certain residential mortgage loans. Based upon collateral pledged, the Bank’s unused borrowing capacity with the FHLB of Boston at December 31, 2019 was approximately $345.5 million.

The Bank also has a line of credit with the FRB Boston. At December 31, 2019 and 2018, the Bank had pledged commercial real estate and commercial & industrial loans with aggregate principal balances of approximately $316.4 million and $291.7 million, respectively, as collateral for this line of credit. Based upon the collateral pledged, the Bank’s unused borrowing capacity with the FRB Boston at December 31, 2019 and 2018 was approximately $134.9 million and $167.5 million, respectively.

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Pension and Retirement Plans - Schedule of Assumed Health Care Cost Trend Rates (Details) - Postretirement Healthcare Plan	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Defined Benefit Plan Disclosure [Line Items]
Health care cost trend rate assumed for next year	4.00%	4.00%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)	4.00%	4.00%
Year that the rate reaches the ultimate trend rate	2019	2018

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Financial Instruments with Off-Balance-Sheet Risk

12 Months Ended

Dec. 31, 2019

Fair Value Disclosures [Abstract]

Financial Instruments with Off-Balance-Sheet Risk

16. FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK

To meet the financing needs of its customers, the Bank is a party to financial instruments with off-balance-sheet risk in the normal course of business. These financial instruments are primarily comprised of commitments to extend credit, commitments to sell residential real estate mortgage loans, risk participation agreements, and standby letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amounts recognized in the consolidated balance sheets.

The Bank’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for loan commitments and standby letters of credit is represented by the contractual amount of those instruments assuming that the amounts are fully advanced and that collateral or other security is of no value. The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.

Off-balance-sheet financial instruments with contractual amounts that present credit risk included the following:

	December 31, 2019		December 31, 2018
	(dollars in thousands)
Financial instruments whose contractual amount    represents credit risk:
Commitments to extend credit:
Unused portion of existing lines of credit	$	428,020	$	368,410
Origination of new loans		24,413		24,505
Standby letters of credit		9,150		8,752
Financial instruments whose notional amount exceeds    the amount of credit risk:
Commitments to sell residential mortgage loans		3,909		—

Standby letters of credit are conditional commitments issued by the Bank to guarantee performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements. Most guarantees extend for one year. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The collateral supporting those commitments varies and may include real property, accounts receivable, or inventory.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since some of the commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Bank evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained upon extension of the credit is based on management’s credit evaluation of the customer. Collateral held varies, but may include primary residences, accounts receivable, inventory, property, plant and equipment, and income-producing commercial real estate.

See Note 23 - Derivatives and Hedging Activities for a discussion of the Company’s derivatives and hedging activities.  

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Mergers

12 Months Ended

Dec. 31, 2019

Business Combinations [Abstract]

Mergers

4. Mergers

Optima Bank & Trust Company

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, 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 consideration for the transaction structured as 95% common stock and 5% cash.  As a result of the merger with Optima, former Optima shareholders received an aggregate of 722,746 shares of the Company’s common stock and an aggregate of approximately $3.5 million in cash. The total consideration paid amounted to $64.3 million.

The Company accounted for the merger with Optima using the acquisition method pursuant to the Business Combinations Topic of the FASB’s Accounting Standards Codification (“ASC”). Accordingly, for the year ended December 31, 2019 and 2018, the Company recorded merger expenses of $3.9 million and $201,000 related to the merger with Optima.   Additionally, the acquisition method requires the acquirer to recognize the assets acquired and the liabilities assumed at their fair values as of the acquisition date. The following table summarizes the estimated fair value of the assets acquired and liabilities assumed as of the date of the acquisition:

	Net Assets Acquired
	at Fair Value
	(dollars in thousands)
Assets
Cash and cash equivalents	$	6,902
Investments		23,298
Loans		475,406
Premises and equipment		6,286
Goodwill		30,794
Core deposit and other intangibles		3,609
Other assets		9,408
Total assets acquired		555,703
Liabilities
Deposits		477,189
Borrowings		13,459
Other liabilities		799
Total liabilities assumed		491,447
Purchase price	$	64,256

Fair value adjustments to assets acquired and liabilities assumed are generally accreted/amortized using either an effective yield or straight-line basis over periods consistent with the average life, useful life, and/or contractual term of the related assets and liabilities.

Fair values of the major categories of assets acquired and liabilities assumed were determined as follows:

Cash and Cash Equivalents

The fair values of cash and cash equivalents approximate the respective carrying amounts because the instruments are payable on demand or have short-term maturities.

Investments

The fair values of securities were based on quoted market prices for identical securities received from an independent, nationally-recognized, third-party pricing service. Prices provided by the independent pricing service were based on recent trading activity and other observable information including, but not limited to, market interest rate curves, referenced credit spreads, and estimated prepayment rates where applicable.

Loans

The loans acquired were recorded at fair value without a carryover of the allowance for loan losses. Fair value of the loans portfolio is determined using market participant assumptions in estimating the amount and timing of both principal and interest cash flows expected to be collected, as adjusted for an estimate of future credit losses and prepayments, and then applying a market-based discount rate to those cash flows. The overall discount on the loans acquired in this transaction was due to anticipated credit loss, as well as considerations for liquidity and market interest rates.

Premises and Equipment

The fair value of the premises, including buildings and improvements, was determined based upon appraisals by licensed real estate appraisers. The appraisals were based upon the best and highest use of the property with final values determined based upon an analysis of the cost, sales comparison, and income capitalization approaches for each property appraised.

Core Deposit Intangible

The fair value of the core deposit intangible is derived by comparing the interest rate and servicing costs that the financial institution pays on the core deposit liability versus the current market rate for alternative sources of financing, while factoring in estimates over the remaining life and attrition rate of the deposit accounts. The intangible asset represents the stable and relatively low cost source of funds that the deposits and accompanying relationships provide the Company, when compared to alternative funding sources.

Deposits

The fair value of acquired savings and transaction deposit accounts was assumed to approximate the carrying value as these accounts have no stated maturity and are payable on demand. The fair value of time deposits were determined based on the present value of the contractual cash flows over the remaining period to maturity using a market interest rate.

Borrowings

Federal Home Loan Bank (“FHLB”) borrowings were recorded at their carrying value which approximates fair value.

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Quarterly Results of Operations (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Quarterly Financial Information Disclosure [Abstract]
Interest and Dividend Income	$ 26,415	$ 26,336	$ 24,470	$ 19,118	$ 18,385	$ 17,602	$ 16,936	$ 16,132	$ 96,339	$ 69,055	$ 61,191
Interest Expense	4,807	5,285	4,694	2,857	1,975	1,431	1,082	979	17,643	5,467	3,587
Net interest and dividend income	21,608	21,051	19,776	16,261	16,410	16,171	15,854	15,153	78,696	63,588	57,604
Provision for (Release of) Loan Losses	331	2,170	596	(93)	715	457	(79)	409	3,004	1,502	362
Net interest and dividend income after provision for loan losses	21,277	18,881	19,180	16,354	15,695	15,714	15,933	14,744	75,692	62,086	57,242
Noninterest Income	9,933	10,366	8,145	7,957	8,038	8,929	7,844	8,178	36,401	32,989	30,224
Noninterest Expense	21,428	18,863	21,513	16,373	16,842	15,879	15,765	15,501	78,175	63,987	59,292
Income before income taxes	9,782	10,384	5,812	7,938	6,891	8,764	8,012	7,421	33,918	31,088	28,174
Income tax expense	2,673	2,708	1,540	1,740	1,585	2,105	1,901	1,616	8,661	7,207	13,358
Net income	$ 7,109	$ 7,676	$ 4,272	$ 6,198	$ 5,306	$ 6,659	$ 6,111	$ 5,805	$ 25,257	$ 23,881	$ 14,816
Share Data:
Average Shares Outstanding, Basic	4,939,973	4,815,020	4,682,109	4,072,805	4,065,681	4,064,620	4,059,927	4,053,355	4,629,255	4,061,529	4,030,530
Average Shares Outstanding, Diluted	4,980,439	4,842,965	4,715,724	4,106,658	4,102,546	4,101,378	4,094,489	4,071,975	4,661,720	4,098,633	4,065,754
Basic Earnings Per Share	$ 1.43	$ 1.58	$ 0.91	$ 1.51	$ 1.29	$ 1.62	$ 1.49	$ 1.42	$ 5.41	$ 5.82	$ 3.64
Diluted earnings per share	$ 1.42	$ 1.57	$ 0.90	$ 1.49	$ 1.28	$ 1.61	$ 1.48	$ 1.41	$ 5.37	$ 5.77	$ 3.61

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Federal Home Loan Bank of Boston Stock

12 Months Ended

Dec. 31, 2019

Federal Home Loan Bank of Boston

Federal Home Loan Bank Stock [Line Items]

Federal Home Loan Bank of Boston Stock

8. FEDERAL HOME LOAN BANK OF BOSTON STOCK

As a voluntary member of the FHLB of Boston, the Bank is required to invest in stock of the FHLB of Boston (which is considered a restricted equity security) in an amount based upon its outstanding advances from the FHLB of Boston. At December 31, 2019 and December 31, 2018, the Bank’s investment in FHLB of Boston stock totaled $7.9 million and $6.8 million, respectively. No market exists for shares of this stock. The Bank’s cost for FHLB of Boston stock is equal to its par value. Upon redemption of the stock, which is at the discretion of the FHLB of Boston, the Bank would receive an amount equal to the par value of the stock. At its discretion, the FHLB of Boston may also declare dividends on its stock.

The Bank’s investment in FHLB of Boston stock is reviewed for impairment at each reporting date based on the ultimate recoverability of the cost basis of the stock. As of December 31, 2019 and December 31, 2018, no impairment has been recognized.

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Fair Value Measurements - Summary of Carrying Values and Estimated Fair Values of Financial Instruments (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Financial assets
Securities available for sale	$ 140,330	$ 168,163
Securities held to maturity	264,114	281,310
FHLB Boston stock	7,854	6,844
Recurring Basis | Carrying Value
Financial assets
Cash and cash equivalents	61,335	18,473
Securities available for sale	140,330	168,163
Securities held to maturity	258,172	282,869
Loans, net	2,208,548	1,543,004
Loans held for sale	1,546
FHLB Boston stock	7,854	6,844
Accrued interest receivable	7,052	5,762
Mortgage servicing rights	1,321	666
Interest rate contracts	2,911	1,970
Loan level interest rate swaps	12,980	5,782
Risk participation agreements out to counterparties	21	28
Financial liabilities
Deposits	2,358,878	1,811,410
Short-term borrowings	135,691	90,000
Long-term borrowings		3,409
Loan level interest rate swaps	12,980	5,782
Risk participation agreements in with counterparties	250	179
Recurring Basis | Estimated Fair Value
Financial assets
Cash and cash equivalents	61,335	18,473
Securities available for sale	140,330	168,163
Securities held to maturity	264,114	281,310
Loans, net	2,160,087	1,484,905
Loans held for sale	2,051
FHLB Boston stock	7,854	6,844
Accrued interest receivable	7,052	5,762
Mortgage servicing rights	1,526	941
Interest rate contracts	2,911	1,970
Loan level interest rate swaps	12,980	5,782
Risk participation agreements out to counterparties	21	28
Financial liabilities
Deposits	2,358,089	1,809,051
Short-term borrowings	135,744	90,000
Long-term borrowings		3,363
Loan level interest rate swaps	12,980	5,782
Risk participation agreements in with counterparties	$ 250	$ 179

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”).

Use of Estimates

Use of Estimates

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 and the valuation of deferred tax assets are particularly subject to change.

Reclassifications

Reclassifications

Certain amounts in the prior year’s financial statements may have been reclassified to conform with the current year’s presentation.

Cash and Cash Equivalents

Cash and Cash Equivalents

Cash and cash equivalents consist of cash on hand, amounts due from banks, and overnight investments.

Investment Securities

Investment Securities

Investment securities are classified as either ‘held to maturity’ or ‘available for sale’ in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) 320, “Investments – Debt and Equity Securities.” Debt securities that management has the positive intent and ability to hold to maturity are classified as held to maturity. Held to maturity securities are carried at cost and adjusted for the amortization of premiums and the accretion of discounts using the effective-yield or straight line method. U.S. Government Sponsored Enterprises (“GSE”) and U.S. Government Agency obligations represent debt securities issued by the Federal Farm Credit Bank, the Federal Home Loan Banks (“FHLB”), the Government National Mortgage Association (“GNMA”), the Federal National Mortgage Association (“FNMA”), or the Federal Home Loan Mortgage Corporation (“FHLMC”). Mortgage-backed securities represent Pass-Through Certificates and Collateralized Mortgage Obligations either issued by, or collateralized by securities issued by GNMA, FNMA, or FHLMC. Mortgage-backed securities are adjusted for amortization of premiums and accretion of discounts, using the effective-yield method over the estimated average lives of the investments.

Debt and equity securities not classified as held to maturity are classified as available for sale and carried at fair value with unrealized after-tax gains and losses reported net as a separate component of shareholders’ equity. The Company classifies its securities based on its intention at the time of purchase.

Declines in the fair value of investment securities below their amortized cost that are deemed to be other-than-temporary are reflected in earnings as realized losses to the extent the impairment is related to credit losses. The amount of the impairment related to other factors is recognized in other comprehensive income. In estimating other-than-temporary impairment losses, management considers: (1) the length of time and the extent to which the fair value has been less than cost; (2) the financial condition and near-term prospects of the issuer; and (3) the Company’s intent to sell the security or whether it is more likely than not that the Company will be required to sell the debt security before its anticipated recovery.

Loans and the Allowance for Loan Losses

Loans and the Allowance for Loan Losses

Loans are reported at the amount of their outstanding principal, including deferred loan origination fees and costs, reduced by unearned discounts, and the allowance for loan losses. Loan origination fees, net of related direct incremental loan origination costs, are deferred and amortized as an adjustment to yield over the life of the related loans. Unearned discount is recognized as an adjustment to the loan yield, using the interest method over the contractual life of the related loan. When a loan is paid off, the unamortized portion of net fees or unearned discount is recognized as interest income.

Loans are considered delinquent when a payment of principal and/or interest becomes past due 30 days following its scheduled payment due date.

Loans on which the accrual of interest has been discontinued are designated as non-accrual loans. Accrual of interest income is discontinued when concern exists as to the collectability of principal or interest or typically when a loan becomes over 90 days delinquent. Additionally, when a loan is placed on non-accrual status, all interest previously accrued but not collected is reversed against current period income. Loans are removed from non-accrual when they become less than 90 days past due and when concern no longer exists as to the collectability of principal or interest. Interest collected on non-accruing loans is either applied against principal or reported as income according to management’s judgment as to the collectability of principal.

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Under certain circumstances, the Company may restructure the terms of a loan as a concession to a borrower. These restructured loans are generally also considered impaired loans. Impairment is measured on a loan-by-loan basis by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment.

The provision for loan losses and the level of the allowance for loan losses reflects management’s estimate of probable loan losses inherent in the loan portfolio at the balance sheet date. Management uses a systematic process and methodology to establish the allowance for loan losses each quarter. To determine the total allowance for loan losses, an estimate is made by management of the allowance needed for each of the following segments of the loan portfolio: (a) residential mortgage loans, (b) commercial mortgage loans, (c) home equity loans, (d) commercial & industrial loans, and (e) consumer loans. Portfolio segments are further disaggregated into classes of loans. The establishment of the allowance for each portfolio segment is based on a process that evaluates the risk characteristics relevant to each portfolio segment and takes into consideration multiple internal and external factors. Internal factors include, but are not limited to, (a) historic levels and trends in charge-offs, delinquencies, risk ratings, and foreclosures, (b) level and changes in industry, geographic, and credit concentrations, (c) underwriting policies and adherence to such policies, (d) the growth and vintage of the portfolios, and (e) the experience of, and any changes in, lending and credit personnel. External factors include, but are not limited to, (a) conditions and trends in the local and national economy and (b) levels and trends in national delinquent and non-performing loans.

The Bank evaluates certain loans individually for specific impairment. A loan is considered impaired when, based on current information and events, it is probable that the Bank will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Loans are selected for evaluation based upon internal risk rating, delinquency status, or non-accrual status. A specific allowance amount is allocated to an individual loan when such loan has been deemed impaired and when the amount of the probable loss is able to be estimated. Estimates of loss may be determined by the present value of anticipated future cash flows, the loan’s observable fair market value, or the fair value of the collateral, if the loan is collateral dependent.

Risk characteristics relevant to each portfolio segment are as follows:

Residential mortgage and home equity loans – The Bank generally does not originate loans in these segments with a loan-to-value ratio greater than 80%, unless covered by private mortgage insurance, and in all cases not greater than a loan-to-value ratio of 97%. The Bank does not originate subprime loans. Loans in these segments are secured by one-to-four family residential real estate, and repayment is primarily dependent on the credit quality of the individual borrower.

Commercial mortgage loans – This includes multi-family properties and construction. The Bank generally does not originate loans in this segment with a loan-to-value ratio greater than 75%. Loans in this segment are secured by owner-occupied and nonowner-occupied commercial real estate, and repayment is primarily dependent on the cash flows of the property (if nonowner-occupied) or of the business (if owner-occupied).

Commercial loans – Loans in this segment are made to businesses and are generally secured by equipment, accounts receivable, or inventory, as well as the personal guarantees of the principal owners of the business, and repayment is primarily dependent on the cash flows generated by the business.

Consumer loans – Loans in this segment are made to individuals and can be secured or unsecured. Repayment is primarily dependent on the credit quality of the individual borrower.

The majority of the Bank’s loans are concentrated in Eastern Massachusetts and New Hampshire and therefore the overall health of the local economy, including unemployment rates, vacancy rates, and consumer spending levels, can have a material effect on the credit quality of all of these portfolio segments.

The process to determine the allowance for loan losses requires management to exercise considerable judgment regarding the risk characteristics of the loan portfolio segments and the effect of relevant internal and external factors.

The provision for loan losses charged to income is based on management’s judgment of the amount necessary to maintain the allowance at a level to provide for probable inherent loan losses as of the evaluation date. When management believes that the collectability of a loan’s principal balance, or portions thereof, is unlikely, the principal amount is charged against the allowance for loan losses. Recoveries on loans that have been previously charged off are credited to the allowance for loan losses as received. The allowance is an estimate, and ultimate losses may vary from current estimates. As adjustments become necessary, they are reported in the results of operations through the provision for loan losses in the period in which they become known.

Residential mortgage loans originated and intended for sale in the secondary market are classified as held for sale at the time of their origination and are carried at the lower of cost or fair value on an individual loan basis. Changes in fair value relating to loans held for sale below the loans cost basis are charged against gain on loans held for sale. Gains and losses on the actual sale of the residential loans are recorded in earnings as net gains (losses) on loans held for sale on the consolidated statements of income.

Bank Owned Life Insurance

Bank Owned Life Insurance

Bank owned life insurance (“BOLI”) represents life insurance on the lives of certain active and former employees who have provided positive consent allowing the Bank to be the beneficiary of such policies. Since the Bank is the primary beneficiary of the insurance policies, increases in the cash value of the policies, as well as insurance proceeds received, are recorded in other noninterest income, and are not subject to income taxes. Applicable regulations generally limit our investment in bank-owned life insurance to 25% of our Tier 1 capital plus our allowance for loan losses. The Bank reviews the financial strength of the insurance carriers prior to the purchase of BOLI and at least annually thereafter.

Banking Premises and Equipment

Banking Premises and Equipment

Land is stated at cost. Buildings, leasehold improvements, and equipment are stated at cost, less accumulated depreciation and amortization, which is computed using the straight-line method over the estimated useful lives of the assets or the terms of the leases, if shorter. The cost of ordinary maintenance and repairs is charged to expense when incurred.

Leases

Leases

The Company leases office space, certain branch locations under noncancelable operating leases, and an ATM location, several of which have renewal options to extend lease terms. Upon commencement of a new lease, the Company will recognize a right of use ("ROU") asset and corresponding lease liability. The Company makes the decision on whether to renew an option to extend a lease byconsidering various factors. The Company will recognize an adjustment to its ROU asset and lease liability when lease agreements are amended and executed. The discount rate used in determining the present value of lease payments is based on the Company’s incremental borrowing rate for borrowings with terms similar to each lease at commencement date. The Company has lease agreements with lease and non-lease components, which are generally accounted for separately. For real estate leases, non-lease components and other non-components, such as common area maintenance charges, real estate taxes, and insurance are not included in the measurement of the lease liability since they are generally able to be segregated.

Marketing Expense

Marketing Expense

Advertising costs are expensed as incurred.

Other Real Estate Owned

Other Real Estate Owned

Other real estate owned (“OREO”) consists of properties formerly pledged as collateral to loans, which have been acquired by the Bank through foreclosure proceedings or acceptance of a deed in lieu of foreclosure. Upon transfer of a loan to foreclosure status, an appraisal is obtained and any excess of the loan balance over the fair value, less estimated costs to sell, is charged against the allowance for loan losses. Expenses and subsequent adjustments to the fair value are treated as other operating expense.

Goodwill, Core Deposit Intangibles, and Other Intangible Assets

Goodwill, Core Deposit Intangibles, and Other Intangible Assets

Goodwill represents the excess of the purchase price over the fair value of net assets acquired in a business combination. Core deposit intangible represents a premium paid to acquire the core deposits of an institution and is recorded as an intangible asset. Goodwill and intangible assets that are not amortized are tested for impairment, based on their fair values, at least annually. Identifiable intangible assets that are subject to amortization are also reviewed for impairment based on their fair value. Any impairment is recognized as a charge to earnings and the adjusted carrying amount of the intangible asset becomes its new accounting basis. The remaining useful life of an intangible asset that is being amortized is also evaluated each reporting period to determine whether events and circumstances warrant a revision to the remaining period of amortization.

Mortgage servicing assets are recognized as separate assets when rights are acquired through purchase or through sale of financial assets with servicing rights retained. The fair value of the servicing rights is determined by estimating the present value of future net cash flows, taking into consideration market loan prepayment speeds, discount rates, servicing costs, and other economic factors. For purposes of measuring impairment, the underlying loans are stratified into relatively homogeneous pools based on predominant risk characteristics which include product type (i.e., fixed or adjustable) and interest rate bands. If the aggregate carrying value of the capitalized mortgage servicing rights for a stratum exceeds its fair value, MSR impairment is recognized in earnings through a valuation allowance for the difference. As the loans are repaid and net servicing revenue is earned, the MSR asset is amortized as an offset to loan servicing income. Servicing revenues are expected to exceed this amortization expense. However, if actual prepayment experience or defaults exceed what was originally anticipated, net servicing revenues may be less than expected and mortgage servicing rights may be impaired.

Income Taxes

Income Taxes

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, the Commonwealth of Massachusetts, the state of New Hampshire, and other states as required. For the year 2019, the Company will file taxes in Massachusetts, New Hampshire, and Maine.

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are reflected at currently enacted income tax rates applicable to the period in which the deferred tax assets or liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. Deferred tax assets are reviewed quarterly and reduced by a valuation allowance if, based upon the information available, it is more likely than not that some or all of the deferred tax assets will not be realized.

Interest and penalties related to unrecognized tax benefits, if incurred, are recognized as a component of income tax expense.

The Tax Cuts and Jobs Act of 2017 was enacted on December 22, 2017. Effective in 2018, the change in tax law reduced the Company’s statutory federal tax rate from 35% to 21%. The Company recorded a one-time non-cash write-down of net deferred tax assets of $3.9 million as these deferred tax assets were required to be re-measured using the new lower tax rate in 2017.

Fee Revenue

Fee Revenue

Wealth management revenues include asset-based revenues (trust and investment advisory fees) that are primarily accrued as earned based upon a percentage of asset values under management, or administration.  Also included in wealth management revenues are transaction-based revenues (financial planning fees and other service fees), which are recognized as revenue to the extent that services have been completed.  Fee revenue from deposit service charges is generally recognized when earned.

Pension and Retirement Plans

Pension and Retirement Plans

The Company sponsored a defined benefit pension plan (the “Pension Plan”) and a postretirement health care plan covering substantially all employees hired before May 2, 2011. On October 23, 2017, the Company announced its decision to freeze the accrual of benefits for all participants in the Pension Plan, effective as of December 31, 2017. Benefits for the Pension Plan were based primarily on years of service and the employee’s average monthly pay during the five highest consecutive plan years of the employee’s final 10 years. Benefits for the postretirement health care plan are based on years of service. Expense for both of these plans is recognized over the employee’s service life utilizing the projected unit credit actuarial cost method. 

The Company also sponsors non-qualified retirement programs that provide supplemental retirement benefits to certain current and former executives. Prior to 2016, the Company provided individual non-qualified defined benefit supplemental executive retirement plans (“DB SERPs”) to certain executives.  The DB SERPs generally provide for an annual benefit payable in equal monthly installments following the executive’s retirement and continuing for at least the remainder of his or her lifetime, with such annual benefit generally based on the executive’s years of service and his or her highest three consecutive years of base salary and bonus. In 2016, the Company’s Board discontinued the use of DB SERPs for new entrants to the Company’s non-qualified retirement programs. Instead, new entrants are provided with individual non-qualified defined contribution supplemental executive retirement plans (“DC SERPs”). Under the DC SERPs, the Company may contribute an amount equal to 10% of the executive’s base salary and bonus to his or her account under the Company’s non-qualified deferred compensation plan, the Executive Deferred Compensation Plan.  Expense for the DB SERPs is recognized over the executive’s service life utilizing the projected unit credit actuarial cost method. Expense for the DC SERPs is recognized as incurred.

The Company maintains a Profit Sharing Plan (“PSP”) that provides for deferral of federal and state income taxes on employee contributions allowed under Section 401(k) of federal law. Beginning in 2018, the Company matched employee contributions up to 100% of the first 4% of each participant’s salary, eligible bonus, and eligible incentive, up from 3% in 2017. Each year, the Company may also make a discretionary contribution to the PSP of up to 4% salary, eligible bonus and eligible incentive. Employees are eligible to participate in the PSP on the first day of their initial date of service. In 2018, employees were eligible to participate in the discretionary contribution portion of the PSP after completing 12 months of employment, and 1,000 hours of service. The employee must be employed on the last day of the calendar year, or retire at the normal retirement age of 65 during the calendar year to receive the discretionary contribution. Effective in 2019, employees are eligible to participate in the discretionary contribution portion of the PSP on the first day of their initial date of service.

Share-Based Compensation

Share-Based Compensation

Share-based compensation plans provide for stock option awards, restricted stock awards, nonvested time based share units, and nonvested performance based share units.

Compensation expense for nonvested restricted stock awards is recognized over the service period based on the fair value at the date of grant. Awards of nonvested time based share units and nonvested performance share units are valued at the fair market value of the Company’s common stock as of the award date. Nonvested performance share unit compensation expense is based on the most recent performance assumption available and is adjusted as assumptions change. If the goals are not met, vesting does not occur and no compensation cost will be recognized and any recognized compensation costs will be reversed. Stock-based awards that do not require future service are expensed in the year of grant.

Derivative Instruments and Hedging Activities

Derivative Instruments and Hedging Activities

Derivatives are recognized as either assets or liabilities on the balance sheet and are measured at fair value. The accounting for changes in the fair value of such derivatives depends on the intended use of the derivative and resulting designation. For derivatives not designated as hedges, changes in fair value of the derivative instruments are recognized in earnings in noninterest income.

For derivatives designated as fair value hedges, changes in the fair value of such derivatives are recognized in earnings together with the changes in the fair value of the related hedged item. The net amount, if any, represents hedge ineffectiveness and is reflected in earnings.

For derivatives designated as cash flow hedges, the effective portion of changes in the fair value of the derivative is recorded in other comprehensive income (loss) and recognized in earnings when the hedged transaction affects earnings. The ineffective portion of changes in the fair value of cash flow hedges is recognized directly in earnings.

Fair Value Measurements

Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company measures the fair values of its financial instruments in accordance with accounting guidance that requires an entity to base fair value on exit price and maximize the use of observable inputs and minimize the use of unobservable inputs to determine the exit price.

ASC 820, “Fair Value Measurements and Disclosures” establishes a fair value hierarchy that gives the highest priority to quoted prices in active markets and the lowest priority to unobservable data and requires fair value measurements to be disclosed by level within the hierarchy. The three broad levels defined by the fair value hierarchy are as follows:

Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reported date. The type of financial instruments included in Level 1 are highly liquid cash instruments with quoted prices such as government or agency securities, listed equities and money market securities, as well as listed derivative instruments.

Level 2 – Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reported date. The nature of these financial instruments includes cash instruments for which quoted prices are available but traded less frequently, derivative instruments whose fair value has been derived using a model where inputs to the model are directly observable in the market, or can be derived principally from or corroborated by observable market data, and instruments that are fair valued using other financial instruments, the parameters of which can be directly observed. Instruments which are generally included in this category are corporate bonds and loans, mortgage whole loans, municipal bonds and over-the-counter derivatives.

Level 3 – Instruments that have little to no pricing observability as of the reported date. These financial instruments do not have two-way markets and are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment to estimation. Instruments that are included in this category generally include certain commercial mortgage loans, certain private equity investments, distressed debt, non-investment grade residual interests in securitizations, as well as certain highly structured over-the-counter derivative contracts.

Earnings per Common Share

Earnings per Common Share

Earnings per common share is computed using the two-class method prescribed under ASC Topic 260, “Earnings Per Share.” ASC Topic 260 provides that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method. We have determined that our outstanding non-vested stock awards are participating securities.

Under the two-class method, basic earnings per common share is computed by dividing net earnings allocated to common stock by the weighted-average number of common shares outstanding during the applicable period, excluding outstanding participating securities. Diluted earnings per common share is computed using the weighted-average number of shares determined for the basic earnings per common share computation plus the dilutive effect of common stock equivalents. A reconciliation of the weighted-average shares used in calculating basic earnings per common share and the weighted average common shares used in calculating diluted earnings per common share for the reported periods is provided in Note 22 - Earnings Per Share.

Subsequent Events

Subsequent Events

Management has reviewed events occurring through March 16, 2020, the date the consolidated financial statements were issued and determined that no subsequent events occurred requiring adjustment to or disclosure in these financial statements.

Recently Issued and Adopted Accounting Standards

Recently Issued and Adopted Accounting Standards

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 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 - Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities. The Company adopted this update on January 1, 2019, and the update did not have a material 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. The Company adopted the amended guidance on January 1, 2020, and it did not have a material impact on the consolidated financial statements.

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. The adoption of this guidance is not expected to have a material impact 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”). OnAugust 28, 2017, theFASB issuedanewstandardthatallowscompaniestobetteraligntheir hedgeaccountingandriskmanagementactivities. The new standard will also reducethe costandcomplexityofapplyinghedgeaccounting. Thestandardrequires companiestochangetherecognitionandpresentation oftheeffectsofhedge accountingby:

• eliminating therequirementtoseparatelymeasureandreporthedge ineffectiveness;and

• requiringcompaniestopresentalloftheelementsofhedgeaccounting thataffectearningsinthesameincomestatementlineasthehedgeditem.

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. See note 23 – DERIVATIVE AND HEDGING ACTIVITIES.

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. See note 17 – commitments and contingencies.

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.

Wealth Management and Trust Fees

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 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.

Other Banking Fee Income

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.      

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Share-Based Compensation - Schedule of Amounts Recognized in Consolidated Income Statement for Restricted Stock Awards, Time Based Restricted Stock Units and Performance Based Restricted Stock Units (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Share Based Compensation [Abstract]
Share-based compensation expense	$ 2,632	$ 2,592	$ 1,045
Related income tax benefit	$ 733	$ 729	$ 427

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Derivative And Hedging Activities

12 Months Ended

Dec. 31, 2019

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Derivative And Hedging Activities

23. DERIVATIVES and Hedging Activities

The Company utilizes interest rate swaps and floors to mitigate exposure to interest rate risk and to facilitate the needs of our customers.  The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts principally related to the Company’s assets.  

Cash Flow Hedges of Interest Rate Risk

The Company uses interest floors to manage its exposure to interest rate movements. Interest rate floors designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty if interest rates fall below the strike rate on the contract in exchange for an up-front premium. The Company executed an interest rate floor with a notional value of $150.0 million during the fourth quarter of 2018. The Company did not execute any new cash flow hedges in 2019.

For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in accumulated other comprehensive income and subsequently reclassified into interest income in the same period(s) during which the hedged transaction affects earnings. Gains and losses on the derivative representing hedge components excluded from the assessment of effectiveness are recognized over the life of the hedge on a systematic and rational basis. The earnings recognition of excluded components is presented in interest income. Amounts reported in accumulated other comprehensive income related to derivatives is reclassed to interest income as the Company receives interest payments on its variable-rate assets.  

Non-designated Hedges

Derivatives not designated as hedges are not speculative and result from a service the Company provides to certain customers. For the Company’s customers, these are interest rate swaps and risk participation agreements.

Interest Rate Swaps. The Company enters into interest rate swap contracts to help commercial loan borrowers manage their interest rate risk. The interest rate swap contracts with commercial loan borrowers allow them to convert floating-rate loan payments to fixed-rate loan payments. When the Bank enters into an interest rate swap contract with a commercial loan borrower, it simultaneously enters into a “mirror” swap contract with a third party. The third party exchanges the client’s fixed‑rate loan payments for floating-rate loan payments. These derivatives are not designated as hedges and therefore, changes in fair value are recognized in earnings. Because these derivatives have mirror-image contractual terms, the changes in fair value substantially offset each other through earnings. Fees earned in connection with the execution of derivatives related to this program are recognized in earnings through other loan related derivative income.

The credit risk associated with swap transactions is the risk of default by the counterparty. To minimize this risk, the Company enters into interest rate agreements only with highly rated counterparties that management believes to be creditworthy. The notional amounts of these agreements do not represent amounts exchanged by the parties and, thus, are not a measure of the potential loss exposure.

Risk Participation Agreements. The Company enters into risk participation agreements (“RPAs”) with other banks participating in commercial loan arrangements. Participating banks guarantee the performance on borrower-related interest rate swap contracts. RPAs are derivative financial instruments and are recorded at fair value. These derivatives are not designated as hedges and therefore, changes in fair value are recognized in earnings with a corresponding offset within other assets or other liabilities.

Under a risk participation-out agreement, a derivative asset, the Company participates out a portion of the credit risk associated with the interest rate swap position executed with the commercial borrower, for a fee paid to the participating bank. Under a risk participation-in agreement, a derivative liability, the Company assumes, or participates in, a portion of the credit risk associated with the interest rate swap position with the commercial borrower and receives a fee from the other bank.

The following tables present the notional amount, the location, and fair values of derivative instruments in the Company’s Consolidated Balance Sheets:

	December 31, 2019
	Derivative Assets					Derivative Liabilities
	Notional Amount		Balance Sheet Location	Fair Value		Notional Amount		Balance Sheet Location	Fair Value
	(dollars in thousands)					(dollars in thousands)
Derivatives designated as hedging instruments
Interest rate contracts		150,000	Other Assets	$	2,911	$	—	Other Liabilities	$	—
Total derivatives designated as hedging instruments				$	2,911				$	—
Derivatives not designated as hedging instruments
Loan related derivative contracts
Interest rate swaps with customers		241,187	Other Assets	$	12,980		—	Other Liabilities	$	—
Mirror swaps with counterparties		—	Other Assets		—		241,187	Other Liabilities		12,980
Risk participation agreements out to counterparties		19,000	Other Assets		21		—	Other Liabilities		—
Risk participation agreements in with counterparties		—	Other Assets		—		88,489	Other Liabilities		250
Total derivatives not designated as hedging instruments				$	13,001				$	13,230

	December 31, 2018
	Derivative Assets					Derivative Liabilities
	Notional Amount		Balance Sheet Location	Fair Value		Notional Amount		Balance Sheet Location	Fair Value
	(dollars in thousands)					(dollars in thousands)
Derivatives designated as hedging instruments
Interest rate contracts		150,000	Other Assets	$	1,970	$	—	Other Liabilities	$	—
Total derivatives designated as hedging instruments				$	1,970				$	—
Derivatives not designated as hedging instruments
Loan related derivative contracts
Interest rate swaps with customers		150,489	Other Assets	$	5,782	$	—	Other Liabilities	$	—
Mirror swaps with counterparties		—	Other Assets		—		150,489	Other Liabilities		5,782
Risk participation agreements out to counterparties		19,000	Other Assets		28		—	Other Liabilities		—
Risk participation agreements in with counterparties		—	Other Assets		—		63,825	Other Liabilities		179
Total derivatives not designated as hedging instruments				$	5,810				$	5,961

The following tables presents the effect of cash flow hedge accounting on AOCI as of the periods presented:

	Amount of Gain or (Loss) Recognized in OCI		Amount of Gain or (Loss) Recognized in OCI Included Component		Amount of Gain or (Loss) Recognized in OCI Excluded Component			Location of Gain or (Loss)	Amount of Gain or (Loss) Reclassified from AOCI into Income			Amount of Gain or (Loss) Reclassified from AOCI into Income Included Component		Amount of Gain or (Loss) Reclassified from AOCI into Income Excluded Component
	2019								2019
	(dollars in thousands)								(dollars in thousands)
Interest rate contracts	$	984	$	2,120	$	(1,136	)	Interest Income	$	(194	)	$	—	$	(194	)
Total	$	984	$	2,120	$	(1,136	)		$	(194	)	$	—	$	(194	)
	Amount of Gain or (Loss) Recognized in OCI		Amount of Gain or (Loss) Recognized in OCI Included Component		Amount of Gain or (Loss) Recognized in OCI Excluded Component			Location of Gain or (Loss)	Amount of Gain or (Loss) Reclassified from AOCI into Income			Amount of Gain or (Loss) Reclassified from AOCI into Income Included Component		Amount of Gain or (Loss) Reclassified from AOCI into Income Excluded Component
	2018								2018
	(dollars in thousands)								(dollars in thousands)
Interest rate contracts	$	1,002	$	—	$	1,002		Interest Income	$	(43	)	$	—	$	(43	)
Total	$	1,002	$	—	$	1,002			$	(43	)	$	—	$	(43	)

During 2019, the Company estimates that an additional $295,000 will be reclassified out of AOCI into earnings, as a reduction to interest income.

The following table presents the effect of the Company’s derivative financial instruments on the Income Statement as of the periods presented:  

	Year Ended December 31, 2019			Year Ended December 31, 2018
	Interest Income			Interest Income
	(dollars in thousands)			(dollars in thousands)
Total amount of income presented in the income    statement in which the effects of fair value or cash flow hedges are recorded	$	(194	)	$	(43	)
The effects of fair value and cash flow hedging:
Gain or (loss) on cash flow hedging relationships in Subtopic 815-20
Interest rate contracts
Amount of gain or (loss) reclassed from AOCI into income	$	(194	)	$	(43	)
Amount of gain or (loss) reclassed from AOCI    into income -  Included Component		—			—
Amount of gain or (loss) reclassed from AOCI    into income -  Excluded Component	$	(194	)	$	(43	)

The following table presents the effect of the Company’s derivative financial instruments that are not designated as hedging instruments on the Income Statement as of the periods presented:

		Amount of Gain or (Loss) Recognized in Income on Derivative
		Year Ended December 31		Year Ended December 31		Year Ended December 31
		2019		2018		2017
	Location of Gain or (Loss)	(dollars in thousands)
Other contracts	Other income	$	311	$	276	$	426
Total		$	311	$	276	$	426

Credit-risk-related Contingent Features

By using derivatives, the Company is exposed to credit risk to the extent that counterparties to the derivative contracts do not perform as required. Should a counterparty fail to perform under the terms of a derivative contract, the Company’s credit exposure on interest rate swaps is limited to the net positive fair value and accrued interest of all swaps with each counterparty. The Company seeks to minimize counterparty credit risk through credit approvals, limits, monitoring procedures, and obtaining collateral, where appropriate. Institutional counterparties must have an investment grade credit rating and be approved by the Company’s Board of Directors. As such, management believes the risk of incurring credit losses on derivative contracts with institutional counterparties is remote.

The Company has agreements with its derivative counterparties that contain a provision where if the Company defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default on its derivative obligations.  In addition, the Company also has agreements with certain of its derivative counterparties that contain a provision where if the Company fails to maintain its status as a well-capitalized institution, then the counterparty could terminate the derivative position(s), and the Company would be required to settle its obligations under the agreements.

As of December 31, 2019 and December 31, 2018, the fair value of derivatives in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements was $9.6 million and $811,000, respectively.  As of December 31, 2019 and December 31, 2018, the Company has minimum collateral posting thresholds with certain of its derivative counterparties and has posted cash collateral of $10.4 million and $260,000, respectively. If the Company had breached any of these provisions at December 31, 2019 or December 31, 2018, it could have been required to settle its obligations under the agreements at their termination value of $ 9.6 million and $811,000, respectively.

Balance Sheet Offsetting

Certain financial instruments may be eligible for offset in the consolidated balance sheet and/or subject to master netting arrangements or similar agreements. The Company’s derivative transactions with institutional counterparties are generally executed under International Swaps and Derivative Association (“ISDA”) master agreements which include “right of set-off” provisions. In such cases there is generally a legally enforceable right to offset recognized amounts and there may be an intention to settle such amounts on a net basis. Generally, the Company does not offset such financial instruments for financial reporting purposes.

The following tables present the information about financial instruments that are eligible for offset in the consolidated balance sheet as December 31, 2019 and December 31, 2018:

								Gross Amounts Not Offset
		Gross Amounts of Recognized		Gross Amounts Offset		Net Amounts Recognized		Financial Instruments		Collateral Pledged (Received)			Net Amount
	December 31, 2019
	(dollars in thousands)
Offsetting of Derivative Assets
Derivative Assets		$	15,912	$	—	$	15,912	$	3,128	$	—		$	12,784
Offsetting of Derivative Liabilities
Derivative Liabilities		$	13,230	$	—	$	13,230	$	3,128	$	9,645		$	457
								Gross Amounts Not Offset
		Gross Amounts of Recognized		Gross Amounts Offset		Net Amounts Recognized		Financial Instruments		Collateral Pledged (Received)			Net Amount
	December 31, 2018
	(dollars in thousands)
Offsetting of Derivative Assets
Derivative Assets		$	7,780	$	—	$	7,780	$	3,099	$	(743	)	$	3,938
Offsetting of Derivative Liabilities
Derivative Liabilities		$	5,961	$	—	$	5,961	$	3,099	$	260		$	2,602

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Commitments and Contingencies - Summary of Components of Operating Lease Cost and Other Related Information (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($)
Commitments And Contingencies Disclosure [Abstract]
Operating lease cost	$ 5,280
Variable lease cost (Cost excluded from lease payments)	2
Sublease income	(64)
Total Operating Lease Cost	5,218
Other Information
Cash paid for amounts included in the measurement of lease liabilities - operating cash flows from operating leases	5,027
Operating Lease - Operating Cash Flows (Liability reduction)	3,868
Right-of-use assets obtained in exchange for new operating lease liabilities	$ 37,728
Weighted average lease term - operating leases	8 years 1 month 24 days
Weighted average discount rate - operating leases	3.39%

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Banking Premises and Equipment (Tables)

12 Months Ended

Dec. 31, 2019

Property Plant And Equipment [Abstract]

Summary of Cost and Accumulated Depreciation and Amortization of Property, Leasehold Improvements and Equipment

A summary of the cost and accumulated depreciation and amortization of property, leasehold improvements, and equipment is presented below:

	December 31,						Estimated
	2019			2018			Useful Lives
	(dollars in thousands)
Land	$	1,116		$	1,116
Building and leasehold improvements		17,817			12,175		3-30 years
Equipment, including vaults		13,686			11,613		3-20 years
Work in process		550			84
Subtotal		33,169			24,988
Accumulated depreciation and amortization		(18,413	)		(16,410	)
Total	$	14,756		$	8,578

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Summary of Significant Accounting Policies - Additional Information (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Summary Of Significant Accounting Policies [Line Items]
Lessee, operating lease, existence of option to extend	true
Statutory federal tax rate	21.00%	21.00%	35.00%
Tax cuts and jobs act of 2017, one-time non-cash write-down of net deferred tax assets			$ 3,900,000
Defined benefit pension highest consecutive plan period			5 years	3 years
Defined benefit pension plan employees final service period			10 years
Defined contribution plan, employer matching contribution, percent				10.00%
Compensation cost	$ 0
Profit Sharing Plan
Summary Of Significant Accounting Policies [Line Items]
Defined contribution plan, maximum employee contribution, percent		100.00%
Defined contribution plan, employer matching contribution, percent		4.00%	3.00%
Defined contribution plan, minimum number of hours of service per year required for eligibility		1000 hours
Defined contribution plan, minimum service period required for eligibility		12 months
Normal retirement age of employees		65 years
Commercial Mortgage
Summary Of Significant Accounting Policies [Line Items]
Percentage of loan to value ratio	75.00%
Minimum | Residential Mortgage and Home Equity Loans
Summary Of Significant Accounting Policies [Line Items]
Percentage of loan to value ratio	80.00%
Maximum
Summary Of Significant Accounting Policies [Line Items]
Percentage of bank-owned life insurance	25.00%
Maximum | Profit Sharing Plan
Summary Of Significant Accounting Policies [Line Items]
Defined discretionary contribution plan, employer matching contribution, percent	4.00%
Maximum | Residential Mortgage and Home Equity Loans
Summary Of Significant Accounting Policies [Line Items]
Percentage of loan to value ratio	97.00%

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Other Operating Expenses (Tables)

12 Months Ended

Dec. 31, 2019

Other Income And Expenses [Abstract]

Components of Other Operating Expenses

The components of other operating expenses were as follows:

	For the Year Ended December 31,
	2019		2018			2017
	(dollars in thousands)
Director fees	$	527	$	724		$	576
Charitable donations & sponsorships		575		518			432
Printing and supplies		437		272			251
Travel and entertainment		579		456			339
Dues and memberships		412		293			260
Physical security		86		131			172
Postage and mailing		246		201			229
Miscellaneous expense		337		(331	)		885
Total other operating expenses	$	3,199	$	2,264		$	3,144

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Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2019

Fair Value Disclosures [Abstract]

Summary of Carrying Values and Estimated Fair Values of Financial Instruments

The following is a summary of the carrying values and estimated fair values of the Company’s significant financial instruments as of the dates indicated:

	December 31, 2019				December 31, 2018
	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
	(dollars in thousands)
Financial assets
Cash and cash equivalents	$	61,335	$	61,335	$	18,473	$	18,473
Securities available for sale		140,330		140,330		168,163		168,163
Securities held to maturity		258,172		264,114		282,869		281,310
Loans, net		2,208,548		2,160,087		1,543,004		1,484,905
Loans held for sale		1,546		2,051		—		—
FHLB Boston stock		7,854		7,854		6,844		6,844
Accrued interest receivable		7,052		7,052		5,762		5,762
Mortgage servicing rights		1,321		1,526		666		941
Interest rate contracts		2,911		2,911		1,970		1,970
Loan level interest rate swaps		12,980		12,980		5,782		5,782
Risk participation agreements out to counterparties		21		21		28		28
Financial liabilities
Deposits		2,358,878		2,358,089		1,811,410		1,809,051
Short-term borrowings		135,691		135,744		90,000		90,000
Long-term borrowings		—		—		3,409		3,363
Loan level interest rate swaps		12,980		12,980		5,782		5,782
Risk participation agreements in with counterparties		250		250		179		179

Summary of Certain Assets Reported at Fair Value on a Recurring Basis

The following tables summarize certain assets reported at fair value on a recurring basis:

	Fair Value as of December 31, 2019
	Level 1		Level 2		Level 3		Total
	(dollars in thousands)
Measured on a recurring basis
Securities available for sale
U.S. GSE obligations	$	—	$	37,848	$	—	$	37,848
Mortgage-backed securities		—		102,482		—		102,482
Corporate debt securities		—		—		—		—
Other assets
Interest rate swaps with customers		—		12,980		—		12,980
Risk participation agreements out to counterparties		—		21		—		21
Interest rate contracts		—		2,911		—		2,911
Other liabilities
Mirror swaps with counterparties		—		12,980		—		12,980
Risk participation agreements in with counterparties		—		250		—		250

	Fair Value as of December 31, 2018
	Level 1		Level 2		Level 3		Total
	(dollars in thousands)
Measured on a recurring basis
Securities available for sale
U.S. GSE obligations	$	—	$	74,039	$	—	$	74,039
Mortgage-backed securities		—		89,268		—		89,268
Corporate debt securities		—		4,856		—		4,856
Other assets
Interest rate swaps with customers		—		5,782		—		5,782
Risk participation agreements out to counterparties		—		28		—		28
Interest rate contracts		—		1,970		—		1,970
Other liabilities
Mirror swaps with counterparties		—		5,782		—		5,782
Risk participation agreements in with counterparties		—		179		—		179

Schedule of Carrying Value of Assets Measured at Fair Value on a Non-Recurring Basis

The following table presents the carrying value of assets held at December 31, 2019, which were measured at fair value on a non-recurring basis:

	December 31, 2019
	Level 1		Level 2		Level 3		Total
	(dollars in thousands)
Items recorded at fair value on a non-recurring basis
Assets
Collateral dependent impaired loans	$	—	$	—	$	2,541	$	2,541
Loans held for sale		1,546		—		—		1,546
Other real estate owned		—		—		163		163
Total	$	1,546	$	—	$	2,704	$	4,250

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Banking Premises and Equipment - Summary of Cost and Accumulated Depreciation and Amortization of Property, Leasehold Improvements and Equipment (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Property Plant And Equipment [Line Items]
Banking premises and equipment, Subtotal	$ 33,169	$ 24,988
Accumulated depreciation and amortization	(18,413)	(16,410)
Total	14,756	8,578
Land
Property Plant And Equipment [Line Items]
Banking premises and equipment, Subtotal	1,116	1,116
Building and leasehold improvements
Property Plant And Equipment [Line Items]
Banking premises and equipment, Subtotal	$ 17,817	12,175
Building and leasehold improvements | Minimum
Property Plant And Equipment [Line Items]
Estimated Useful Lives	3 years
Building and leasehold improvements | Maximum
Property Plant And Equipment [Line Items]
Estimated Useful Lives	30 years
Equipment, including vaults
Property Plant And Equipment [Line Items]
Banking premises and equipment, Subtotal	$ 13,686	11,613
Equipment, including vaults | Minimum
Property Plant And Equipment [Line Items]
Estimated Useful Lives	3 years
Equipment, including vaults | Maximum
Property Plant And Equipment [Line Items]
Estimated Useful Lives	20 years
Work in process
Property Plant And Equipment [Line Items]
Banking premises and equipment, Subtotal	$ 550	$ 84

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Borrowings - Schedule of Information Relating to Long-term Borrowings (Parenthetical) (Details)	12 Months Ended
	Dec. 31, 2019
Federal Home Loan Banks [Abstract]
FHLB of long-term advances due date	Sep. 01, 2020

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Deposits - Schedule of Maturities (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Deposits [Abstract]
Less than 3 months remaining	$ 52,883	$ 24,219
3 to 5 months remaining	47,701	17,486
6 to 11 months remaining	38,981	37,987
12 to 23 months remaining	31,501	28,529
24 to 47 months remaining	9,448	9,652
48 months or more remaining	1,768	3,546
Total certificates of deposit	$ 182,282	$ 121,419

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Loans and Allowance for Loan Losses - Information Pertaining to Impaired Loans (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Financing Receivable Allowance For Credit Losses [Line Items]
With no required reserve recorded, Carrying Value	$ 4,019	$ 740	$ 1,232
With no required reserve recorded, Average Carrying Value	2,172	768	1,282
With no required reserve recorded, Unpaid Principal Balance	5,449	927	1,475
With no required reserve recorded, Interest Income Recognized	41	6	5
With required reserve recorded, Carrying Value	128		64
With required reserve recorded, Average Carrying Value	59		66
With required reserve recorded, Unpaid Principal Balance	167		64
With required reserve recorded, Related Allowance	87		93
With required reserve recorded, Interest Income Recognized			1
Carrying Value	4,147	740	1,296
Average Carrying Value	2,231	768	1,348
Unpaid Principal Balance	5,616	927	1,539
Interest Income Recognized	41	6	6
Commercial and Industrial
Financing Receivable Allowance For Credit Losses [Line Items]
With no required reserve recorded, Carrying Value		6	29
With no required reserve recorded, Average Carrying Value		17	36
With no required reserve recorded, Unpaid Principal Balance		6	29
With no required reserve recorded, Interest Income Recognized		1	2
With required reserve recorded, Carrying Value	128
With required reserve recorded, Average Carrying Value	59
With required reserve recorded, Unpaid Principal Balance	167
With required reserve recorded, Related Allowance	87
Carrying Value	128	6	29
Average Carrying Value	59	17	36
Unpaid Principal Balance	167	6	29
Interest Income Recognized		1	2
Commercial Mortgage
Financing Receivable Allowance For Credit Losses [Line Items]
With no required reserve recorded, Carrying Value	3,161		213
With no required reserve recorded, Average Carrying Value	1,385		224
With no required reserve recorded, Unpaid Principal Balance	4,376		227
With no required reserve recorded, Interest Income Recognized	35		3
Carrying Value	3,161		213
Average Carrying Value	1,385		224
Unpaid Principal Balance	4,376		227
Interest Income Recognized	35		3
Residential Mortgage
Financing Receivable Allowance For Credit Losses [Line Items]
With no required reserve recorded, Carrying Value	765	634	904
With no required reserve recorded, Average Carrying Value	691	647	931
With no required reserve recorded, Unpaid Principal Balance	940	786	1,103
With no required reserve recorded, Interest Income Recognized	5	4
With required reserve recorded, Carrying Value			64
With required reserve recorded, Average Carrying Value			66
With required reserve recorded, Unpaid Principal Balance			64
With required reserve recorded, Related Allowance			93
With required reserve recorded, Interest Income Recognized			1
Carrying Value	765	634	968
Average Carrying Value	691	647	997
Unpaid Principal Balance	940	786	1,167
Interest Income Recognized	5	4	1
Home Equity
Financing Receivable Allowance For Credit Losses [Line Items]
With no required reserve recorded, Carrying Value	93	100	86
With no required reserve recorded, Average Carrying Value	96	104	91
With no required reserve recorded, Unpaid Principal Balance	133	135	116
With no required reserve recorded, Interest Income Recognized	1	1
Carrying Value	93	100	86
Average Carrying Value	96	104	91
Unpaid Principal Balance	133	135	$ 116
Interest Income Recognized	$ 1	$ 1

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Condensed Financial Statements of Parent Company - Condensed Statements of Cash Flows (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 7,109	$ 7,676	$ 4,272	$ 6,198	$ 5,306	$ 6,659	$ 6,111	$ 5,805	$ 25,257	$ 23,881	$ 14,816
Adjustments to reconcile net income to net cash provided by operating activities:
Change in other assets, net									(11,667)	(12,231)	(758)
Net cash provided by operating activities									28,793	24,022	29,767
CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash (used in) provided by investing activities									(113,472)	(226,883)	(61,760)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of common stock									38,202
Cash dividends paid on common stock									(9,517)	(8,041)	(7,582)
Net cash provided by (used in) financing activities									127,541	117,743	81,534
Net (decrease)/increase in cash and cash equivalents									42,862	(85,118)	49,541
Cash and cash equivalents at beginning of period				18,473				103,591	18,473	103,591	54,050
Cash and cash equivalents at end of period	61,335				18,473				61,335	18,473	103,591
Cambridge Bancorp [Member]
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income									25,257	23,881	14,816
Adjustments to reconcile net income to net cash provided by operating activities:
Change in other assets, net									(13)
Undistributed income of subsidiary									(14,621)	(15,350)	(6,764)
Net cash provided by operating activities									10,623	8,531	8,052
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid in business combinations									(3,525)
Investment in subsidiary									(38,202)
Net cash (used in) provided by investing activities									(41,727)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of common stock									38,576	761	1,522
Repurchase of common stock									(687)	(574)	(470)
Cash dividends paid on common stock									(9,517)	(8,041)	(7,582)
Net cash provided by (used in) financing activities									28,372	(7,854)	(6,530)
Net (decrease)/increase in cash and cash equivalents									(2,732)	677	1,522
Cash and cash equivalents at beginning of period				$ 4,412				$ 3,735	4,412	3,735	2,213
Cash and cash equivalents at end of period	$ 1,680				$ 4,412				$ 1,680	$ 4,412	$ 3,735

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Cash and Cash Equivalents

12 Months Ended

Dec. 31, 2019

Cash And Cash Equivalents [Abstract]

Cash and Cash Equivalents

5. CASH AND CASH EQUIVALENT

At December 31, 2019 and December 31, 2018, cash and due from banks totaled $61.3 million and $18.5 million, respectively. Of this amount, $31.5 million and $12.7 million, respectively, were maintained to satisfy the reserve requirements of the Federal Reserve Bank of Boston (“FRB Boston”). Additionally, at December 31, 2019 and 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.

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Fair Value Measurements - Additional Information (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Fair Value Disclosures [Abstract]
Assets, fair value, non-recurring basis		$ 0
Transfers between levels	$ 0	$ 0

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Banking Premises and Equipment

12 Months Ended

Dec. 31, 2019

Property Plant And Equipment [Abstract]

Banking Premises and Equipment

9. BANKING PREMISES AND EQUIPMENT

A summary of the cost and accumulated depreciation and amortization of property, leasehold improvements, and equipment is presented below:

	December 31,						Estimated
	2019			2018			Useful Lives
	(dollars in thousands)
Land	$	1,116		$	1,116
Building and leasehold improvements		17,817			12,175		3-30 years
Equipment, including vaults		13,686			11,613		3-20 years
Work in process		550			84
Subtotal		33,169			24,988
Accumulated depreciation and amortization		(18,413	)		(16,410	)
Total	$	14,756		$	8,578

Total depreciation expense for the years ended December 31, 2019, 2018, and 2017 amounted to approximately $2.0 million, $1.9 million and $1.9 million, respectively, and is included in occupancy and equipment expenses in the accompanying consolidated statements of income.

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Derivative And Hedging Activities - Schedule of Financial Instruments Eligible for Offset in Consolidated Balance Sheet (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Offsetting [Abstract]
Gross Amounts of Recognized, Derivative assets	$ 15,912	$ 7,780
Net Amounts Recognized, Derivative Assets	15,912	7,780
Gross Amounts Not Offset, Financial Instruments, Derivative Assets	3,128	3,099
Gross Amounts Not Offset, Collateral Pledged (Received), Derivative Assets		(743)
Gross Amounts Not Offset, Net amount, Derivative Assets	12,784	3,938
Gross Amounts of Recognized, Derivative Liablities	13,230	5,961
Net Amounts Recognized, Derivative Liablities	13,230	5,961
Gross Amounts Not Offset, Financial Instruments, Derivative Liablities	3,128	3,099
Gross Amounts Not Offset, Collateral Pledged (Received), Derivative Liablities	9,645	260
Gross Amounts Not Offset, Net amount, Derivative Liablities	$ 457	$ 2,602

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Loans and Allowance for Loan Losses (Tables)

12 Months Ended

Dec. 31, 2019

Receivables [Abstract]

Loans Outstanding by Category

Loans outstanding are detailed by category as follows:

	December 31, 2019			December 31, 2018
	(dollars in thousands)
Residential mortgage
Mortgages - fixed rate	$	430,877		$	293,267
Mortgages - adjustable rate		467,139			309,656
Construction		17,374			—
Deferred costs net of unearned fees		2,176			1,408
Total residential mortgages		917,566			604,331
Commercial mortgage
Mortgages - nonowner occupied		870,047			654,394
Mortgages - owner occupied		114,095			59,335
Construction		76,288			44,146
Deferred costs net of unearned fees		144			82
Total commercial mortgages		1,060,574			757,957
Home equity
Home equity - lines of credit		73,880			63,421
Home equity - term loans		6,555			5,665
Deferred costs net of unearned fees		240			250
Total home equity		80,675			69,336
Commercial & industrial
Commercial & industrial		133,337			93,728
Deferred costs (fees) net of unearned fees		(101	)		(16	)
Total commercial & industrial		133,236			93,712
Consumer
Secured		33,453			33,252
Unsecured		1,199			1,171
Deferred costs net of unearned fees		25			13
Total consumer		34,677			34,436
Total loans	$	2,226,728		$	1,559,772

Non-performing Loans Disaggregated by Loan Category

The following tables set forth information regarding non-performing loans disaggregated by loan category:

	December 31, 2019
.	Residential Mortgages		Commercial Mortgages		Home Equity		Commercial & Industrial		Consumer		Total
	(dollars in thousands)
Non-performing loans:
Non-accrual loans	$	1,298	$	2,800	$	12	$	50	$	—	$	4,160
Loans past due >90 days, but still accruing		527		486		—		251		—		1,264
Troubled debt restructurings		99		—		—		128		—		227
Total	$	1,924	$	3,286	$	12	$	429	$	—	$	5,651

	December 31, 2018
	Residential Mortgages		Commercial Mortgages		Home Equity		Commercial & Industrial		Consumer		Total
	(dollars in thousands)
Non-performing loans:
Non-accrual loans	$	512	$	—	$	13	$	—	$	—	$	525
Loans past due >90 days, but still accruing		—		—		—		—		—		—
Troubled debt restructurings		111		—		—		6		—		117
Total	$	623	$	—	$	13	$	6	$	—	$	642

Loans Receivable Disaggregated by Credit Quality Indicator

The following tables contain period-end balances of loans receivable disaggregated by credit quality indicator:

	December 31, 2019
	Residential Mortgages		Home Equity		Consumer
	(dollars in thousands)
Credit risk profile based on payment activity:
Performing	$	915,642	$	80,663	$	34,677
Non-performing		1,924		12		—
Total	$	917,566	$	80,675	$	34,677
			Commercial Mortgages		Commercial & Industrial
Credit risk profile by internally assigned grade:
1-6 (Pass)			$	1,050,037	$	123,900
7 (Special Mention)				7,360		4,289
8 (Substandard)				3,177		5,047
9 (Doubtful)				—		—
10 (Loss)				—		—
Total			$	1,060,574	$	133,236

	December 31, 2018
	Residential Mortgages		Home Equity		Consumer
	(dollars in thousands)
Credit risk profile based on payment activity:
Performing	$	603,708	$	69,323	$	34,436
Non-performing		623		13		—
Total	$	604,331	$	69,336	$	34,436
			Commercial Mortgages		Commercial & Industrial
Credit risk profile by internally assigned grade:
1-6 (Pass)			$	753,338	$	85,821
7 (Special Mention)				4,619		4,186
8 (Substandard)				—		3,705
9 (Doubtful)				—		—
10 (Loss)				—		—
Total			$	757,957	$	93,712

Schedule of Loans Receivable Disaggregated by Past Due Status

The following tables contain period-end balances of loans receivable disaggregated by past due status:

	December 31, 2019
	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater		Total Past Due		Current Loans		Total
	(dollars in thousands)
Residential Mortgages	$	8,710	$	1,089	$	1,047	$	10,846	$	906,720	$	917,566
Commercial Mortgages		811		—		3,161		3,972		1,056,602		1,060,574
Home Equity		57		12		—		69		80,606		80,675
Commercial & Industrial		272		226		251		749		132,487		133,236
Consumer loans		4		5		—		9		34,668		34,677
Total	$	9,854	$	1,332	$	4,459	$	15,645	$	2,211,083	$	2,226,728

	December 31, 2018
	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater		Total Past Due		Current Loans		Total
	(dollars in thousands)
Residential Mortgages	$	1,034	$	121	$	351	$	1,506	$	602,825	$	604,331
Commercial Mortgages		—		—		—		—		757,957		757,957
Home Equity		—		—		—		—		69,336		69,336
Commercial & Industrial		—		—		—		—		93,712		93,712
Consumer loans		108		—		—		108		34,328		34,436
Total	$	1,142	$	121	$	351	$	1,614	$	1,558,158	$	1,559,772

Information Pertaining to Impaired Loans

The following is information pertaining to impaired loans:

	For the Year Ended December 31, 2019
	Carrying Value		Average Carrying Value		Unpaid Principal Balance		Related Allowance		Interest Income Recognized
	(dollars in thousands)
With no required reserve recorded:
Commercial and industrial	$	—	$	—	$	—	$	—	$	—
Commercial mortgage		3,161		1,385		4,376		—		35
Residential mortgage		765		691		940		—		5
Home equity		93		96		133		—		1
Total		4,019		2,172		5,449		—		41
With required reserve recorded:
Commercial and industrial		128		59		167		87		—
Commercial mortgage		—		—		—		—		—
Residential mortgage		—		—		—		—		—
Home equity		—		—		—		—		—
Total		128		59		167		87		—
Total:
Commercial and industrial		128		59		167		87		—
Commercial mortgage		3,161		1,385		4,376		—		35
Residential mortgage		765		691		940		—		5
Home equity		93		96		133		—		1
Total	$	4,147	$	2,231	$	5,616	$	87	$	41

	For the Year Ended December 31, 2018
	Carrying Value		Average Carrying Value		Unpaid Principal Balance		Related Allowance		Interest Income Recognized
	(dollars in thousands)
With no required reserve recorded:
Commercial and industrial	$	6	$	17	$	6	$	—	$	1
Commercial mortgage		—		—		—		—		—
Residential mortgage		634		647		786		—		4
Home equity		100		104		135		—		1
Total		740		768		927		—		6
With required reserve recorded:
Commercial and industrial		—		—		—		—		—
Commercial mortgage		—		—		—		—		—
Residential mortgage		—		—		—		—		—
Home equity		—		—		—		—		—
Total		—		—		—		—		—
Total:
Commercial and industrial		6		17		6		—		1
Commercial mortgage		—		—		—		—		—
Residential mortgage		634		647		786		—		4
Home equity		100		104		135		—		1
Total	$	740	$	768	$	927	$	—	$	6

	For the Year Ended December 31, 2017
	Carrying Value		Average Carrying Value		Unpaid Principal Balance		Related Allowance		Interest Income Recognized
	(dollars in thousands)
With no required reserve recorded:
Commercial and industrial	$	29	$	36	$	29	$	—	$	2
Commercial mortgage		213		224		227		—		3
Residential mortgage		904		931		1,103		—		—
Home equity		86		91		116		—		—
Total		1,232		1,282		1,475		—		5
With required reserve recorded:
Commercial and industrial		—		—		—		—		—
Commercial mortgage		—		—		—		—		—
Residential mortgage		64		66		64		93		1
Home equity		—		—		—		—		—
Total		64		66		64		93		1
Total:
Commercial and industrial		29		36		29		—		2
Commercial mortgage		213		224		227		—		3
Residential mortgage		968		997		1,167		93		1
Home equity		86		91		116		—		—
Total	$	1,296	$	1,348	$	1,539	$	93	$	6

Summary of Changes in Allowance for Loan Losses Disaggregated by Loan Type

The following tables contain changes in the allowance for loan losses disaggregated by loan type for the periods noted:

	For the Year Ended December 31, 2019
	Residential Mortgages		Commercial Mortgages			Home Equity			Commercial & Industrial			Consumer			Impaired		Total
	(dollars in thousands)
Allowance for loan losses:
Balance at December 31, 2018	$	4,946	$	9,626		$	517		$	1,415		$	264		$	—	$	16,768
Charge-offs		—		(1,270	)		—			(338	)		(48	)		—		(1,656	)
Recoveries		—		—			—			53			11			—		64
Provision for (Release of)		195		2,549			(56	)		258			(29	)		87		3,004
Balance at December 31, 2019	$	5,141	$	10,905		$	461		$	1,388		$	198		$	87	$	18,180

	For the Year Ended December 31, 2018
	Residential Mortgages			Commercial Mortgages		Home Equity			Commercial & Industrial			Consumer			Impaired			Total
	(dollars in thousands)
Allowance for loan losses:
Balance at December 31, 2017	$	5,047		$	8,289	$	630		$	946		$	315		$	93		$	15,320
Charge-offs		—			—		—			(73	)		(36	)		—			(109	)
Recoveries		—			—		—			48			7			—			55
Provision for (Release of)		(101	)		1,337		(113	)		494			(22	)		(93	)		1,502
Balance at December 31, 2018	$	4,946		$	9,626	$	517		$	1,415		$	264		$	—		$	16,768

	For the Year Ended December 31, 2017
	Residential Mortgages		Commercial Mortgages			Home Equity			Commercial & Industrial			Consumer			Impaired			Total
	(dollars in thousands)
Allowance for loan losses:
Balance at December 31, 2016	$	4,898	$	8,451		$	651		$	807		$	264		$	190		$	15,261
Charge-offs		—		—			—			(284	)		(39	)		—			(323	)
Recoveries		—		—			—			13			7			—			20
Provision for (Release of)		149		(162	)		(21	)		410			83			(97	)		362
Balance at December 31, 2017	$	5,047	$	8,289		$	630		$	946		$	315		$	93		$	15,320

Summary of Allowance for Loan Losses and Related Loans Receivable Disaggregated by Impairment Method

The following tables contain period-end balances of the allowance for loan losses and related loans receivable disaggregated by impairment method:

	December 31, 2019
	Residential Mortgages		Commercial Mortgages		Home Equity		Commercial & Industrial		Consumer		Total
	(dollars in thousands)
Allowance for loan losses
Individually evaluated for impairment	$	—	$	—	$	—	$	87	$	—	$	87
Collectively evaluated for impairment		5,141		10,905		461		1,388		198		18,093
Total	$	5,141	$	10,905	$	461	$	1,475	$	198	$	18,180
Loans receivable
Individually evaluated for impairment	$	764	$	3,161	$	92	$	128	$	—	$	4,145
Collectively evaluated for impairment		916,802		1,057,413		80,583		133,108		34,677		2,222,583
Total	$	917,566	$	1,060,574	$	80,675	$	133,236	$	34,677	$	2,226,728

	December 31, 2018
	Residential Mortgages		Commercial Mortgages		Home Equity		Commercial & Industrial		Consumer		Total
	(dollars in thousands)
Allowance for loan losses
Individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—
Collectively evaluated for impairment		4,946		9,626		517		1,415		264		16,768
Total	$	4,946	$	9,626	$	517	$	1,415	$	264	$	16,768
Loans receivable
Individually evaluated for impairment	$	647	$	—	$	88	$	5	$	—	$	740
Collectively evaluated for impairment		603,684		757,957		69,248		93,707		34,436		1,559,032
Total	$	604,331	$	757,957	$	69,336	$	93,712	$	34,436	$	1,559,772

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Condensed Financial Statements of Parent Company

12 Months Ended

Dec. 31, 2019

Condensed Financial Information Of Parent Company Only Disclosure [Abstract]

Condensed Financial Statements of Parent Company

26. Condensed Financial Statements of Parent Company

The condensed balance sheets of Cambridge Bancorp, the Parent Company, as of December 31, 2019and 2018 and the condensed statements of income and cash flows for each of the years in the three-year period ended December 31, 2019 are presented below. The statements of changes in shareholders’ equity are identical to the consolidated statements of changes in shareholders’ equity and are therefore not presented here.

Condensed Balance Sheet

	December 31,
	2019		2018
	(dollars in thousands)
ASSETS
Cash and cash equivalents	$	1,680	$	4,412
Other assets		13		—
Investment in subsidiary		284,868		162,614
Total assets	$	286,561	$	167,026
SHAREHOLDERS’ EQUITY
Shareholders’ equity	$	286,561	$	167,026
Total shareholders’ equity	$	286,561	$	167,026

Condensed Statements of Income

	For the Year Ended December 31,
	2019			2018			2017
	(dollars in thousands)
Income
Dividends from subsidiary	$	10,732		$	8,615		$	8,052
Total income		10,732			8,615			8,052
Expenses
Other expenses		132			116			—
Total expenses		132			116			—
Income before income taxes and equity in undistributed income of subsidiary		10,600			8,499			8,052
Income tax benefit		(36	)		(32	)		—
Income of parent company		10,636			8,531			8,052
Equity in undistributed income of subsidiary		14,621			15,350			6,764
Net income	$	25,257		$	23,881		$	14,816

Condensed Statements of Cash Flows

	For the Year Ended December 31,
	2019			2018			2017
	(dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	25,257		$	23,881		$	14,816
Adjustments to reconcile net income to net cash provided    by operating activities
Change in other assets, net		(13	)		—			—
Undistributed income of subsidiary		(14,621	)		(15,350	)		(6,764	)
Net cash provided by operating activities		10,623			8,531			8,052
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid in business combinations		(3,525	)		—			—
Investment in subsidiary		(38,202	)		—			—
Net cash (used in)/provided by investing activities		(41,727	)		—			—
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of common stock		38,576			761			1,522
Repurchase of common stock		(687	)		(574	)		(470	)
Cash dividends paid on common stock		(9,517	)		(8,041	)		(7,582	)
Net cash provided by/(used in) financing activities		28,372			(7,854	)		(6,530	)
Net increase (decrease) in cash		(2,732	)		677			1,522
Cash at beginning of year		4,412			3,735			2,213
Cash at end of year	$	1,680		$	4,412		$	3,735

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Financial Instruments with Off-Balance-Sheet Risk - Summary of Off-Balance-Sheet Financial Instruments with Contractual Amounts Include Present Credit Risk (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Standby Letters of Credit
Financial instruments whose contractual amount represents credit risk:
Financial instruments with off-balance-sheet risk	$ 9,150	$ 8,752
Unused Portion of Existing Lines of Credit
Financial instruments whose contractual amount represents credit risk:
Financial instruments with off-balance-sheet risk	428,020	368,410
Origination of New Loans
Financial instruments whose contractual amount represents credit risk:
Financial instruments with off-balance-sheet risk	24,413	$ 24,505
Commitments to Sell Residential Mortgage Loans
Financial instruments whose notional amount exceeds the amount of credit risk:
Financial instrument notional amount exceeds credit risk	$ 3,909

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Earnings Per Share

12 Months Ended

Dec. 31, 2019

Earnings Per Share [Abstract]

Earnings Per Share

22. EARNINGS PER SHARE

The following represents a reconciliation between basic and diluted earnings per share:

		For the Year Ended December 31,
		2019			2018			2017
	(dollars in thousands, except per share data)
Earnings per common share - basic:
Numerator:
Net income		$	25,257		$	23,881		$	14,816
Less dividends and undistributed earnings allocated    to participating securities			(210	)		(239	)		(157	)
Net income applicable to common shareholders		$	25,047		$	23,642		$	14,659
Denominator:
Weighted average common shares outstanding			4,629			4,062			4,031
Earnings per common share - basic		$	5.41		$	5.82		$	3.64
Earnings per common share - diluted:
Numerator:
Net income		$	25,257		$	23,881		$	14,816
Less dividends and undistributed earnings allocated    to participating securities			(210	)		(239	)		(157	)
Net income applicable to common shareholders		$	25,047		$	23,642		$	14,659
Denominator:
Weighted average common shares outstanding			4,629			4,062			4,031
Dilutive effect of common stock equivalents			33			37			35
Weighted average diluted common shares outstanding			4,662			4,099			4,066
Earnings per common share - diluted		$	5.37		$	5.77		$	3.61

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Commitments and Contingencies - Schedule of Total Minimum Lease Payments Due in Future Periods under Lease Agreements (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Operating Leases Future Minimum Payments Due [Abstract]
2020	$ 5,478
2021	5,523
2022	5,371
2023	5,021
2024	4,355
Thereafter	14,553
Total minimum lease payments	40,301
Less: interest	(5,247)
Total lease liability	$ 35,054
2019		$ 4,448
2020		4,661
2021		4,662
2022		4,553
2023		4,455
Thereafter		17,128
Total minimum lease payments		$ 39,907

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Other Comprehensive Income (Tables)

12 Months Ended

Dec. 31, 2019

Equity [Abstract]

Summary of Other Comprehensive Income

The Company’s other comprehensive income consists of unrealized gains or losses on securities held at year-end classified as available for sale and the component of the unfunded retirement liability computed in accordance with the requirements of ASC 715, “Compensation – Retirement Benefits.” The before-tax and after-tax amount of each of these categories, as well as the tax (expense)/benefit of each, is summarized as follows:

	For the Year Ended December 31, 2019							For the Year Ended December 31, 2018									For the Year Ended December 31, 2017
	Before Tax Amount		Tax (Expense) or Benefit			Net-of- tax Amount		Before Tax Amount			Tax (Expense) or Benefit			Net-of- tax Amount			Before Tax Amount		Tax (Expense) or Benefit			Net-of- tax Amount
								(dollars in thousands)
Unrealized (losses)/gains on available for sale     securities
Unrealized holding (losses)/gains arising     during the period	$	3,267	$	(767	)	$	2,500	$	(231	)	$	(11	)	$	(242	)	$	187	$	(59	)	$	128
Reclassification adjustment for (gains)/losses     recognized in net income		81		(19	)		62		(2	)		—			(2	)		3		(2	)		1
Derivatives
Change in interest rate contracts		1,134		(313	)		821		1,045			(294	)		751			—		—			—
Defined benefit retirement plans
Net change in retirement liability		864		(241	)		623		124			(35	)		89			6,545		(2,674	)		3,871
Total Other Comprehensive Income/(Loss)	$	5,346	$	(1,340	)	$	4,006	$	936		$	(340	)	$	596		$	6,735	$	(2,735	)	$	4,000

Summary of Reclassifications out of Accumulated Other Comprehensive Income ("AOCI")

Reclassifications out of accumulated other comprehensive income (“AOCI”) are presented below:

	For the Year Ended December 31,
Details about Accumulated Other Comprehensive Income (Loss) Components	2019			2018		2017			Affected Line Item in the Statement where Net Income is Presented
	(dollars in thousands)
Unrealized gains and losses on available for sale securities	$	(81	)	$	2	$	(3	)	(Loss) gain on disposition of investment securities
Tax benefit or (expense)		19			—		2		Provision for income taxes
Net of tax	$	(62	)	$	2	$	(1	)	Net income

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Quarterly Results of Operations (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2019

Quarterly Financial Information Disclosure [Abstract]

Quarterly Results of Operations (Unaudited)

2019 Quarters	Fourth		Third		Second		First
	(dollars in thousands, except share data)
Interest and Dividend Income	$	26,415	$	26,336	$	24,470	$	19,118
Interest Expense		4,807		5,285		4,694		2,857
Net Interest and Dividend Income		21,608		21,051		19,776		16,261
Provision for (Release of) Loan Losses		331		2,170		596		(93	)
Net Interest and Dividend Income after Provision for    Loan Losses		21,277		18,881		19,180		16,354
Noninterest Income		9,933		10,366		8,145		7,957
Noninterest Expense		21,428		18,863		21,513		16,373
Income Before Taxes		9,782		10,384		5,812		7,938
Income Taxes		2,673		2,708		1,540		1,740
Net Income	$	7,109	$	7,676	$	4,272	$	6,198
Share Data:
Average Shares Outstanding, Basic		4,939,973		4,815,020		4,682,109		4,072,805
Average Shares Outstanding, Diluted		4,980,439		4,842,965		4,715,724		4,106,658
Basic Earnings Per Share	$	1.43	$	1.58	$	0.91	$	1.51
Diluted Earnings Per Share	$	1.42	$	1.57	$	0.90	$	1.49

2018 Quarters	Fourth		Third		Second			First
	(dollars in thousands, except share data)
Interest and Dividend Income	$	18,385	$	17,602	$	16,936		$	16,132
Interest Expense		1,975		1,431		1,082			979
Net Interest and Dividend Income		16,410		16,171		15,854			15,153
Provision for (Release of) Loan Losses		715		457		(79	)		409
Net Interest and Dividend Income after Provision for    Loan Losses		15,695		15,714		15,933			14,744
Noninterest Income		8,038		8,929		7,844			8,178
Noninterest Expense		16,842		15,879		15,765			15,501
Income Before Taxes		6,891		8,764		8,012			7,421
Income Taxes		1,585		2,105		1,901			1,616
Net Income	$	5,306	$	6,659	$	6,111		$	5,805
Share Data:
Average Shares Outstanding, Basic		4,065,681		4,064,620		4,059,927			4,053,355
Average Shares Outstanding, Diluted		4,102,546		4,101,378		4,094,489			4,071,975
Basic Earnings Per Share	$	1.29	$	1.62	$	1.49		$	1.42
Diluted Earnings Per Share	$	1.28	$	1.61	$	1.48		$	1.41

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Recently Issued and Adopted Accounting Standards - Additional Information (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Jan. 01, 2019
New Accounting Pronouncements Or Change In Accounting Principle [Line Items]
Right-of-use asset	$ 33,587
Accounting Standards Update 2016-02
New Accounting Pronouncements Or Change In Accounting Principle [Line Items]
Right-of-use asset		$ 32,900

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Federal Home Loan Bank of Boston Stock - Additional Information (Details) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Federal Home Loan Bank Stock [Line Items]
Federal Home Loan Bank of Boston Stock, at cost	$ 7,854,000	$ 6,844,000
Federal Home Loan Bank of Boston
Federal Home Loan Bank Stock [Line Items]
Federal Home Loan Bank of Boston Stock, at cost	7,900,000	6,800,000
Impairment on investment of federal home loan bank stock	$ 0	$ 0

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Borrowings - Schedule of Information Relating to Long-term Borrowings (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Federal Home Loan Banks [Abstract]
FHLB of Boston long-term advances due amortizing, amount		$ 3,409
FHLB of Boston long-term advances due amortizing, interest rate	0.00%	1.94%

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Deposits - Summary of Deposits (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Deposits [Abstract]
Demand deposits (non-interest bearing)	$ 630,593	$ 494,492
Interest bearing checking	450,098	431,702
Money market	181,406	135,585
Savings	914,499	628,212
Retail certificates of deposit under $100,000	56,602	36,223
Retail certificates of deposit $100,000 or greater	118,596	57,692
Wholesale certificates of deposit	7,084	27,504
Total deposits	$ 2,358,878	$ 1,811,410

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Loans and Allowance for Loan Losses - Schedule of Loans Receivable Disaggregated by Past Due Status (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Financing Receivable Allowance For Credit Losses [Line Items]
Total Past Due	$ 15,645	$ 1,614
Current Loans	2,211,083	1,558,158
Total loans	2,226,728	1,559,772
30-59 Days Past Due
Financing Receivable Allowance For Credit Losses [Line Items]
Total Past Due	9,854	1,142
60-89 Days Past Due
Financing Receivable Allowance For Credit Losses [Line Items]
Total Past Due	1,332	121
90 Days or Greater
Financing Receivable Allowance For Credit Losses [Line Items]
Total Past Due	4,459	351
Residential Mortgage
Financing Receivable Allowance For Credit Losses [Line Items]
Total Past Due	10,846	1,506
Current Loans	906,720	602,825
Total loans	917,566	604,331
Residential Mortgage | 30-59 Days Past Due
Financing Receivable Allowance For Credit Losses [Line Items]
Total Past Due	8,710	1,034
Residential Mortgage | 60-89 Days Past Due
Financing Receivable Allowance For Credit Losses [Line Items]
Total Past Due	1,089	121
Residential Mortgage | 90 Days or Greater
Financing Receivable Allowance For Credit Losses [Line Items]
Total Past Due	1,047	351
Commercial Mortgage
Financing Receivable Allowance For Credit Losses [Line Items]
Total Past Due	3,972
Current Loans	1,056,602	757,957
Total loans	1,060,574	757,957
Commercial Mortgage | 30-59 Days Past Due
Financing Receivable Allowance For Credit Losses [Line Items]
Total Past Due	811
Commercial Mortgage | 90 Days or Greater
Financing Receivable Allowance For Credit Losses [Line Items]
Total Past Due	3,161
Commercial & Industrial
Financing Receivable Allowance For Credit Losses [Line Items]
Total Past Due	749
Current Loans	132,487	93,712
Total loans	133,236	93,712
Commercial & Industrial | 30-59 Days Past Due
Financing Receivable Allowance For Credit Losses [Line Items]
Total Past Due	272
Commercial & Industrial | 60-89 Days Past Due
Financing Receivable Allowance For Credit Losses [Line Items]
Total Past Due	226
Commercial & Industrial | 90 Days or Greater
Financing Receivable Allowance For Credit Losses [Line Items]
Total Past Due	251
Consumer loans
Financing Receivable Allowance For Credit Losses [Line Items]
Total Past Due	9	108
Current Loans	34,668	34,328
Total loans	34,677	34,436
Consumer loans | 30-59 Days Past Due
Financing Receivable Allowance For Credit Losses [Line Items]
Total Past Due	4	108
Consumer loans | 60-89 Days Past Due
Financing Receivable Allowance For Credit Losses [Line Items]
Total Past Due	5
Home Equity
Financing Receivable Allowance For Credit Losses [Line Items]
Total Past Due	69
Current Loans	80,606	69,336
Total loans	80,675	$ 69,336
Home Equity | 30-59 Days Past Due
Financing Receivable Allowance For Credit Losses [Line Items]
Total Past Due	57
Home Equity | 60-89 Days Past Due
Financing Receivable Allowance For Credit Losses [Line Items]
Total Past Due	$ 12

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Shareholders' Equity (Tables)

12 Months Ended

Dec. 31, 2019

Equity [Abstract]

Schedule of Minimum Capital Requirements Considered Well Capitalized by FRB and FDIC

The Company’s and the Bank’s actual and required capital measures were as follows:

	Actual					Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer (1)					Minimum To Be Well-Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(dollars in thousands)
At December 31, 2019
Cambridge Bancorp:
Total capital (to risk-weighted    assets)	$	272,727		13.6	%	$	210,342		10.5	%	N/A		N/A
Tier I capital (to risk-weighted    assets)		254,497		12.7	%		170,277		8.5	%	N/A		N/A
Common equity tier I capital    (to risk-weighted assets)		254,497		12.7	%		140,228		7.0	%	N/A		N/A
Tier I capital (to average    assets)		254,497		9.0	%		113,365		4.0	%	N/A		N/A
Cambridge Trust Company:
Total capital (to risk-weighted    assets)	$	271,034		13.5	%	$	210,341		10.5	%	$	200,325		10.0	%
Tier I capital (to risk-weighted    assets)		252,804		12.6	%		170,276		8.5	%		160,260		8.0	%
Common equity tier I capital    (to risk-weighted assets)		252,804		12.6	%		140,227		7.0	%		130,211		6.5	%
Tier I capital (to average    assets)		252,804		8.9	%		113,364		4.0	%		141,705		5.0	%

(1) The 2013 Capital Rules adopted by the Federal Reserve, Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation implementing Basel III were fully phased-in effective January 1, 2019.

	Actual					Minimum Capital Required For Capital Adequacy					Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer Basel III Phase-In Schedule					Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer Basel III Fully Phased In					Minimum To Be Well-Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio
	(dollars in thousands)
At December 31, 2018
Cambridge Bancorp:
Total capital (to risk-weighted    assets)	$	189,888		13.2	%	$	114,666		8.0	%	$	141,541		9.875	%	$	150,500		10.5	%	N/A		N/A
Tier I capital (to risk-weighted    assets)		173,070		12.1	%		86,000		6.0	%		112,875		7.875	%		121,833		8.5	%	N/A		N/A
Common equity tier I capital    (to risk-weighted assets)		173,070		12.1	%		64,500		4.5	%		91,375		6.375	%		100,333		7.0	%	N/A		N/A
Tier I capital (to average    assets)		173,070		8.5	%		81,507		4.0	%		81,507		4.000	%		81,507		4.0	%	N/A		N/A
Cambridge Trust Company:
Total capital (to risk-weighted    assets)	$	185,507		12.9	%	$	114,666		8.0	%	$	141,541		9.875	%	$	150,500		10.5	%	$	143,333		10.0	%
Tier I capital (to risk-weighted    assets)		168,689		11.8	%		86,000		6.0	%		112,875		7.875	%		121,833		8.5	%		114,666		8.0	%
Common equity tier I capital    (to risk-weighted assets)		168,689		11.8	%		64,500		4.5	%		91,375		6.375	%		100,333		7.0	%		93,166		6.5	%
Tier I capital (to average    assets)		168,689		8.3	%		81,507		4.0	%		81,507		4.000	%		81,507		4.0	%		101,884		5.0	%

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Pension and Retirement Plans (Tables)

12 Months Ended

Dec. 31, 2019

Compensation And Retirement Disclosure [Abstract]

Components of Projected Benefit Obligations and Funded Status

Projected benefit obligations and funded status were as follows:

	Pension Plan						Supplemental Retirement Plan
	2019			2018			2019			2018
	(dollars in thousands)
Change in projected benefit obligation
Obligation at beginning of year	$	40,522		$	43,943		$	8,830		$	9,204
Service cost		—			—			283			354
Interest cost		1,680			1,557			349			309
Actuarial loss/(gain)		4,670			(3,659	)		770			(499	)
Benefits paid		(1,471	)		(1,319	)		(610	)		(538	)
Obligation at end of year		45,401			40,522			9,622			8,830
Change in plan assets
Fair value at beginning of year		42,648			45,247			—			—
Actual return on plan assets		8,954			(1,280	)		—			—
Employer contribution		—			—			610			538
Benefits paid		(1,471	)		(1,319	)		(610	)		(538	)
Fair value at end of year		50,131			42,648			—			—
Funded status at end of year	$	4,730		$	2,126		$	(9,622	)	$	(8,830	)

Projected benefit obligations and funded status were as follows:

	Postretirement Healthcare Plan
	2019			2018
	(dollars in thousands)
Change in projected benefit obligation
Obligation at beginning of year	$	598		$	617
Service cost		25			23
Interest cost		25			22
Actuarial loss/(gain)		76			(30	)
Benefits paid		(35	)		(34	)
Obligation at end of year		689			598
Change in plan assets
Fair value at beginning of year		—			—
Actual return on plan assets		—			—
Employer contribution		35			33
Benefits paid		(35	)		(33	)
Fair value at end of year		—			—
Funded status at end of year	$	(689	)	$	(598	)

Schedule of Amounts Recognized in Consolidated Balance Sheets

Amounts recognized in the consolidated balance sheets consisted of:

	Pension Plan				Supplemental Retirement Plan
	2019		2018		2019			2018
	(dollars in thousands)
Other assets/(liabilities)	$	4,730	$	2,126	$	(9,622	)	$	(8,830	)

Amounts recognized in the consolidated balance sheets consisted of:

	Postretirement Healthcare Plan
	2019			2018
	(dollars in thousands)
Other liabilities	$	(689	)	$	(598	)

Schedule of Amounts Recognized in Accumulated Other Comprehensive Loss

Amounts recognized in accumulated other comprehensive loss consisted of:

	Pension Plan						Supplemental Retirement Plan
	2019			2018			2019		2018
	(dollars in thousands)
Net actuarial loss/(gain)	$	3,709		$	5,427		$	1,128	$	358
Prior service (benefit)		(7	)		(12	)		—		—
Total	$	3,702		$	5,415		$	1,128	$	358

Amounts recognized in accumulated other comprehensive loss consisted of:

	Postretirement Healthcare Plan
	2019			2018
	(dollars in thousands)
Net actuarial (gain)/loss	$	(34	)	$	(113	)
Prior service cost		—			—
Total	$	(34	)	$	(113	)

Certain Disaggregated Information to Retirement Plans

Certain disaggregated information related to our retirement plans were as follows:

	Pension Plan				Supplemental Retirement Plan
	2019		2018		2019			2018
	(dollars in thousands)
Projected benefit obligation	$	45,401	$	40,522	$	9,622		$	8,830
Accumulated benefit obligation		45,401		40,522		9,207			8,567
Fair value of plan assets		50,131		42,648		—			—
Funded status at end of year		4,730		2,126		(9,622	)		(8,830	)

Components of Net Periodic Benefit Cost and Amounts Recognized in Other Comprehensive Income/ (Loss)

The components of net periodic benefit cost and amounts recognized in other comprehensive income/ (loss) were as follows:

	Pension Plan						Supplemental Retirement Plan
	2019			2018			2019		2018
	(dollars in thousands)
Net periodic benefit cost
Service cost	$	—		$	—		$	283	$	354
Interest cost		1,680			1,557			349		309
Expected return on assets		(2,721	)		(2,891	)		—		—
Amortization of prior service credit		(4	)		(4	)		—		—
Amortization of net actuarial loss/(gain)		154			106			—		4
Net periodic benefit cost		(891	)		(1,232	)		632		667
Amounts recognized in other comprehensive income/( loss)
Net actuarial loss/(gain)		(1,563	)		512			770		(499	)
Amortization of prior service credit		4			4					(4	)
Amortization of net actuarial gain		(154	)		(106	)		—		—
Total recognized in other comprehensive income/( loss)		(1,713	)		410			770		(503	)
Total recognized in net periodic benefit cost and other    comprehensive income/( loss)	$	(2,604	)	$	(822	)	$	1,402	$	164

The components of net periodic benefit cost and amounts recognized in other comprehensive income were as follows:

	Postretirement Healthcare Plan
	2019			2018
	(dollars in thousands)
Net periodic benefit cost
Service cost	$	25		$	23
Interest cost		25			22
Expected return on assets		—			—
Amortization of prior service credit		—			—
Amortization of net actuarial gain		(3	)		—
Net periodic benefit cost		47			45
Amounts recognized in other comprehensive income/( loss)
Net actuarial (gain) loss		76			(30	)
Amortization of prior service credit		—			—
Amortization of net actuarial gain		3			—
Total recognized in other comprehensive income/( loss)		79			(30	)
Total recognized in net periodic benefit cost and    other comprehensive  income/( loss)	$	126		$	15

Schedule of Weighted-average Assumptions Used to Determine Projected Benefit Obligations and Net Periodic Benefit Cost

Weighted-average assumptions used to determine projected benefit obligations are as follows:

	Pension Plan						Supplemental Retirement Plan
	2019			2018			2019			2018
Discount rate		3.22	%		4.23	%		3.04	%		4.10	%
Rate of compensation increase	N/A			N/A				4.00	%		4.00	%

Weighted-average assumptions used to determine net periodic benefit cost are as follows:

	Pension Plan						Supplemental Retirement Plan
	2019			2018			2019			2018
Discount rate		4.23	%		3.58	%		4.10	%		3.39	%
Expected long-term return on plan assets		6.50	%		6.50	%	N/A			N/A
Rate of compensation increase	N/A			N/A				4.00	%		4.00	%

Weighted-average assumptions used to determine projected benefit obligations are as follows:

	Postretirement Healthcare Plan
	2019			2018
Discount rate		3.26	%		4.22	%
Rate of compensation increase	N/A			N/A

Weighted-average assumptions used to determine net periodic benefit cost are as follows:

	Postretirement Healthcare Plan
	2019			2018
Discount rate		4.22	%		3.58	%
Expected long-term return on plan assets	N/A			N/A
Rate of compensation increase	N/A			N/A

Schedule of Pension Plan Weighted-average Asset Allocations by Asset

The Company’s Pension Plan weighted-average asset allocations by asset category were as follows:

	December 31,
	2019			2018
Equity securities		53	%		60	%
Debt securities		36			35
Other		3			1
Cash and equivalents		8			4
Total		100	%		100	%

Summary of Various Categories of Pension Plan Assets

The following table summarizes the various categories of the Pension Plan’s assets:

	Fair Value as of December 31, 2019
	Level 1		Level 2		Level 3		Total
	(dollars in thousands)
Asset category
Cash and cash equivalents	$	4,834	$	—	$	—	$	4,834
Fixed Income		—		7,197		—		7,197
Equity securities
Common Stock
Large cap core		17,180		—		—		17,180
Mid cap core		—		—		—		—
Small cap core		2,627		—		—		2,627
Mutual funds
Domestic Equity		3,931		—		—		3,931
International		3,650		—		—		3,650
Domestic Fixed Income		10,712						10,712
Preferred Stock		—		—		—		—
Total	$	42,934	$	7,197	$	—	$	50,131

Information to Retirement Plans with Accumulated Benefit Obligation in Excess of Plan Assets

Information for retirement plans with an accumulated benefit obligation in excess of plan assets:

	Postretirement Healthcare Plan
	2019		2018
	(dollars in thousands)
Projected benefit obligation	$	689	$	598
Accumulated benefit obligation		689		598
Fair value of plan assets		—		—

Schedule of Assumed Health Care Cost Trend Rates

Assumed health care cost trend rates are as follows:

	Postretirement Healthcare Plan
	2019			2018
Health care cost trend rate assumed for next year		4.00	%		4.00	%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)		4.00	%		4.00	%
Year that the rate reaches the ultimate trend rate		2019			2018

Schedule of Effect on One-percentage-point Change in Assumed Health Care Cost Trend Rates

A one-percentage-point change in assumed health care cost trend rates would have the following effects:

	One Percentage Point
	Increase		Decrease
	(dollars in thousands)
Effect on total service and interest cost	$	—	$	—
Effect on postretirement benefit obligation		2		(2	)

Schedule of Benefits Expected to be Paid in the Next Ten Years

Benefits expected to be paid in the next ten years are as follows:

	Pension Plan		Supplemental Retirement Plan		Postretirement Healthcare Plan		Total
	(dollars in thousands)
Year-ended December 31,
2020	$	1,751	$	594	$	30	$	2,375
2021		1,813		591		30		2,434
2022		1,948		609		31		2,588
2023		2,061		605		31		2,697
2024		2,135		602		31		2,768
2025-2029 inclusive		11,784		2,916		166		14,866
Ten year total	$	21,492	$	5,917	$	319	$	27,728

Schedule of Estimated Amounts That will be Amortized from Accumulated Other Comprehensive Income into Net Periodic Benefit Cost

The estimated amounts that will be amortized from accumulated other comprehensive income into net periodic benefit cost during 2019 are as follows:

	Pension Plan			Supplemental Retirement Plan		Postretirement Healthcare Plan		Total
	(dollars in thousands)
Prior service cost	$	(4	)	$	—	$	—	$	(4	)
Net (gain)/loss		—			—		—		—
Total	$	(4	)	$	—	$	—	$	(4	)

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Goodwill and Other Intangible Assets (Tables)

12 Months Ended

Dec. 31, 2019

Schedule of Mortgage Servicing Rights

An analysis of mortgage servicing rights, which are included in other assets, follows:

	Mortgage Servicing Rights			Valuation Allowance			Total
	(dollars in thousands)
Balance at December 31, 2016	$	842		$	(30	)	$	812
Mortgage servicing rights capitalized		132			—			132
Amortization charged against servicing income		(151	)		—			(151	)
Change in impairment reserve		—			—			—
Balance at December 31, 2017	$	823		$	(30	)	$	793
Mortgage servicing rights capitalized		20			—			20
Amortization charged against servicing income		(147	)		—			(147	)
Change in impairment reserve		(30	)		30			—
Balance at December 31, 2018	$	666		$	—		$	666
Mortgage servicing rights acquired as a result of the merger		334			—			334
Mortgage servicing rights capitalized		618			—			618
Amortization charged against servicing income		(271	)		—			(271	)
Change in impairment reserve		—			(26	)		(26	)
Balance at December 31, 2019	$	1,347		$	(26	)	$	1,321

Mortgage Servicing Rights

Schedule of Aggregate Estimated Future Amortization Expense

The estimated aggregate future amortization expense for mortgage servicing rights for each of the next five years and thereafter is as follows:  

	Future Amortization Expense
	(dollars in thousands)
2020	$	202
2021		166
2022		135
2023		110
2024		89
Thereafter		619
Total	$	1,321

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Investment Securities - Summary of Carrying Amounts of Securities and Their Approximate Fair Values (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Schedule of Available for Sale Securities and Held to Maturity Securities [Line Items]
Available for sale securities, Amortized Cost	$ 141,109	$ 172,290
Available for sale securities, Gross Unrealized Gains	231	118
Available for sale securities, Gross Unrealized Losses	(1,010)	(4,245)
Available for sale securities, Fair Value	140,330	168,163
Held to maturity securities, Amortized Cost	258,172	282,869
Held to maturity securities, Gross Unrealized Gains	6,119	1,431
Held to maturity securities, Gross Unrealized Losses	(177)	(2,990)
Held to maturity securities, Fair Value	264,114	281,310
Total, Amortized Cost	399,281	455,159
Total, Gross Unrealized Gains	6,350	1,549
Total, Gross Unrealized Losses	(1,187)	(7,235)
Total, Fair Value	404,444	449,473
U.S. GSE Obligations
Schedule of Available for Sale Securities and Held to Maturity Securities [Line Items]
Available for sale securities, Amortized Cost	38,000	75,004
Available for sale securities, Gross Unrealized Losses	(152)	(965)
Available for sale securities, Fair Value	37,848	74,039
Held to maturity securities, Amortized Cost	5,000	32,571
Held to maturity securities, Gross Unrealized Losses		(238)
Held to maturity securities, Fair Value	5,000	32,333
Corporate Debt Securities
Schedule of Available for Sale Securities and Held to Maturity Securities [Line Items]
Available for sale securities, Amortized Cost		5,015
Available for sale securities, Gross Unrealized Losses		(159)
Available for sale securities, Fair Value		4,856
Held to maturity securities, Amortized Cost	6,980	6,972
Held to maturity securities, Gross Unrealized Gains	116
Held to maturity securities, Gross Unrealized Losses		(107)
Held to maturity securities, Fair Value	7,096	6,865
Mortgage Backed Securities
Schedule of Available for Sale Securities and Held to Maturity Securities [Line Items]
Available for sale securities, Amortized Cost	103,109	92,271
Available for sale securities, Gross Unrealized Gains	231	118
Available for sale securities, Gross Unrealized Losses	(858)	(3,121)
Available for sale securities, Fair Value	102,482	89,268
Held to maturity securities, Amortized Cost	161,759	168,118
Held to maturity securities, Gross Unrealized Gains	2,751	134
Held to maturity securities, Gross Unrealized Losses	(111)	(2,290)
Held to maturity securities, Fair Value	164,399	165,962
Municipal Securities
Schedule of Available for Sale Securities and Held to Maturity Securities [Line Items]
Held to maturity securities, Amortized Cost	84,433	75,208
Held to maturity securities, Gross Unrealized Gains	3,252	1,297
Held to maturity securities, Gross Unrealized Losses	(66)	(355)
Held to maturity securities, Fair Value	$ 87,619	$ 76,150

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Pension and Retirement Plans - Additional Information (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Defined Benefit Plan Disclosure [Line Items]
Defined benefit pension highest consecutive plan period			5 years	3 years
Defined contribution plan, employer matching contribution, percent				10.00%
Transfers between fair value levels	$ 0	$ 0
Minimum | Domestic Large Cap Equities
Defined Benefit Plan Disclosure [Line Items]
Target asset allocation percentages	30.00%
Minimum | Domestic Small/Mid Cap Equities
Defined Benefit Plan Disclosure [Line Items]
Target asset allocation percentages	5.00%
Minimum | International Equities
Defined Benefit Plan Disclosure [Line Items]
Target asset allocation percentages	0.00%
Minimum | Cash and Fixed Income
Defined Benefit Plan Disclosure [Line Items]
Target asset allocation percentages	20.00%
Maximum | Domestic Large Cap Equities
Defined Benefit Plan Disclosure [Line Items]
Target asset allocation percentages	60.00%
Maximum | Domestic Small/Mid Cap Equities
Defined Benefit Plan Disclosure [Line Items]
Target asset allocation percentages	20.00%
Maximum | International Equities
Defined Benefit Plan Disclosure [Line Items]
Target asset allocation percentages	20.00%
Maximum | Cash and Fixed Income
Defined Benefit Plan Disclosure [Line Items]
Target asset allocation percentages	50.00%
Pension Plan
Defined Benefit Plan Disclosure [Line Items]
Defined benefit plan, description			The Company has a noncontributory, defined benefit pension plan (“Pension Plan”) covering substantially all employees hired before May 2, 2011. Employees in positions requiring at least 1,000 hours of service per year were eligible to participate upon the attainment of age 21 and the completion of 12 months of service. Benefits are based primarily on years of service and the employee’s average monthly pay during the five highest consecutive plan years of the employee’s final ten years. On October 23, 2017, the Company announced its decision to freeze the accrual of benefits within the Pension Plan, effective December 31, 2017. The Company also provides supplemental retirement benefits to certain current and former executive officers of the Company under the terms of Supplemental Executive Retirement Agreements (“Supplemental Retirement Plan”).
Minimum number of hours of service per year required for eligibility			1000 hours
Employee eligibility age under the plan			21 years
Minimum number of years of service required for eligibility			12 months
Long-term rate of return on asset assumption	6.50%	6.50%
Contributions to pension plan	$ 0
Supplemental Retirement Plan
Defined Benefit Plan Disclosure [Line Items]
Defined benefit pension highest consecutive plan period				3 years
Defined contribution plan, employer matching contribution, percent				10.00%
Contributions to pension plan	610,000	$ 538,000
Postretirement Medical Coverage
Defined Benefit Plan Disclosure [Line Items]
Employee eligibility age under the plan			65 years
Contributions to pension plan	$ 35,000	$ 33,000
Profit Sharing Plan
Defined Benefit Plan Disclosure [Line Items]
Defined contribution plan, maximum employee contribution, percent		100.00%
Defined contribution plan, employer matching contribution, percent		4.00%	3.00%
Defined contribution plan, minimum number of hours of service per year required for eligibility		1000 hours
Defined contribution plan, minimum service period required for eligibility		12 months
Profit Sharing Plan | 401(k)
Defined Benefit Plan Disclosure [Line Items]
Defined contribution plan, maximum employee contribution, percent		100.00%
Profit Sharing Plan | Discretionary Contribution
Defined Benefit Plan Disclosure [Line Items]
Defined contribution plan, minimum number of hours of service per year required for eligibility		1000 hours
Defined contribution plan, minimum service period required for eligibility		12 months
Normal retirement age of employees		65 years
Profit Sharing Plan | Minimum | 401(k)
Defined Benefit Plan Disclosure [Line Items]
Defined contribution plan, employer matching contribution, percent			3.00%
Profit Sharing Plan | Maximum | 401(k)
Defined Benefit Plan Disclosure [Line Items]
Defined contribution plan, employer matching contribution, percent		4.00%
Employee Stock Ownership Plan (ESOP)
Defined Benefit Plan Disclosure [Line Items]
Defined contribution plan, minimum number of hours of service per year required for eligibility	1000 hours
Defined contribution plan, minimum service period required for eligibility	12 months
Employee Stock Ownership Plan (ESOP) | Minimum
Defined Benefit Plan Disclosure [Line Items]
Employee eligibility age under the plan	21 years
Profit Sharing and ESOP Plans
Defined Benefit Plan Disclosure [Line Items]
Contribution expense related to plans	$ 2,800,000	$ 2,600,000	$ 1.5
'Defined Contribution SERP Plan (“DC SERP”)
Defined Benefit Plan Disclosure [Line Items]
Defined contribution plan, employer matching contribution, percent	10.00%
Contribution expense related to plans	$ 167,000	$ 209,000	$ 126,000

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Pension and Retirement Plans - Certain Disaggregated Information to Retirement Plans (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Pension Plan
Defined Benefit Plan Disclosure [Line Items]
Projected benefit obligation	$ 45,401	$ 40,522	$ 43,943
Accumulated benefit obligation	45,401	40,522
Fair value of plan assets	50,131	42,648	45,247
Funded status at end of year	4,730	2,126
Supplemental Retirement Plan
Defined Benefit Plan Disclosure [Line Items]
Projected benefit obligation	9,622	8,830	$ 9,204
Accumulated benefit obligation	9,207	8,567
Funded status at end of year	$ (9,622)	$ (8,830)

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Investment Securities - Summary of Gains (Losses) from Sale of Investment Securities (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Investments Debt And Equity Securities [Abstract]
Amortized cost of securities sold	$ 26,631	$ 700	$ 77,372
Gain/(loss) realized on securities sold	(79)	2	(3)
Net proceeds from securities sold	$ 26,552	$ 702	$ 77,369

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The Business

12 Months Ended

Dec. 31, 2019

Organization Consolidation And Presentation Of Financial Statements [Abstract]

The Business

1. THE BUSINESS

The accompanying 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 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, 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.

As a private bank, the Company focuses on four core services that center around client needs. The core services include Wealth Management, Commercial Banking, Residential Lending, and Personal Banking. The Bank offers a full range of commercial and consumer banking services through its network of 16 private banking offices in Massachusetts and New Hampshire. The Bank is engaged principally in the business of attracting deposits from the public and investing those deposits. The Bank invests those funds in various types of loans, including residential and commercial real estate, and a variety of commercial and consumer loans. The Bank also invests its deposits and borrowed funds in investment securities and has two wholly-owned Massachusetts security corporations, CTC Security Corporation and CTC Security Corporation III, for this purpose. Deposits at the Bank are insured by the Federal Deposit Insurance Corporation (“FDIC”) for the maximum amount permitted by FDIC Regulations.

Trust and investment management services are offered through the Bank’s private banking offices in Massachusetts and New Hampshire, and its wealth management offices located in Boston, Concord, Manchester, and Portsmouth New Hampshire. The Bank also has a non-depository trust company, Cambridge Trust Company of New Hampshire, Inc., which allows non-New Hampshire residents the opportunity to take advantage of the state’s favorable trust laws. The assets held for wealth management clients are not assets of the Bank and, accordingly, are not reflected in the accompanying consolidated balance sheets.

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Other Operating Expenses - Components of Other Operating Expenses (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Director fees	$ 527	$ 724	$ 576
Charitable donations & sponsorships	575	518	432
Printing and supplies	437	272	251
Travel and entertainment	579	456	339
Physical security	86	131	172
Postage and mailing	246	201	229
Miscellaneous expense	337	(331)	885
Total other operating expenses	3,199	2,264	3,144
Membership
Dues and memberships	$ 412	$ 293	$ 260

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Derivative And Hedging Activities - Additional Information (Details) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Derivative Instruments And Hedging Activities Disclosures [Line Items]
Notional amount	$ 9,600,000	$ 811,000
Estimated amount will be reclassified out of AOCI in to earnings	295,000
Fair value of derivative liability	13,230,000	5,961,000
Minimum
Derivative Instruments And Hedging Activities Disclosures [Line Items]
Minimum collateral posting threshold of derivative counterparties	10,400,000	260,000
Accrued Interest
Derivative Instruments And Hedging Activities Disclosures [Line Items]
Fair value of derivative liability	$ 9,600,000	811,000
Interest Rate Floor
Derivative Instruments And Hedging Activities Disclosures [Line Items]
Notional amount		$ 150,000,000

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Statement Of Income And Comprehensive Income [Abstract]
Net income	$ 25,257	$ 23,881	$ 14,816
Unrealized gains/(losses) on available for sale securities
Unrealized holding gains/(losses) arising during period	2,500	(242)	128
Less: reclassification adjustment for losses/(gains) included in net income	62	(2)	1
Total unrealized gains/(losses) on securities	2,562	(244)	129
Derivatives
Change in interest rate contracts	821	751
Defined benefit retirement plans
Change in retirement liabilities	623	89	3,871
Other comprehensive income/(loss)	4,006	596	4,000
Comprehensive income	$ 29,263	$ 24,477	$ 18,816

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Document and Entity Information - USD ($)
$ in Millions

12 Months Ended

Dec. 31, 2019

Mar. 12, 2020

Jun. 30, 2019

Cover [Abstract]

Document Type

10-K

Amendment Flag

false

Document Period End Date

Dec. 31, 2019

Document Fiscal Year Focus

2019

Document Fiscal Period Focus

FY

Trading Symbol

CATC

Entity Registrant Name

CAMBRIDGE BANCORP

Entity Central Index Key

0000711772

Current Fiscal Year End Date

--12-31

Entity Filer Category

Accelerated Filer

Entity Well-known Seasoned Issuer

No

Entity Voluntary Filers

No

Entity Current Reporting Status

Yes

Entity Interactive Data Current

Yes

Entity Shell Company

false

Entity Emerging Growth Company

false

Entity Small Business

false

Title of 12(b) Security

Common Stock

Security Exchange Name

NASDAQ

Entity Public Float

$ 361.1

Entity Common Stock, Shares Outstanding

5,412,221

Entity File Number

001-38184

Entity Incorporation, State or Country Code

MA

Entity Tax Identification Number

04-2777442

Entity Address, Address Line One

1336 Massachusetts Avenue

Entity Address, City or Town

Cambridge

Entity Address, State or Province

MA

Entity Address, Postal Zip Code

02138

City Area Code

(617)

Local Phone Number

876-5500

Document Annual Report

true

Document Transition Report

false

Documents Incorporated by Reference

Portions of the Registrant’s Definitive Proxy Statement relating to the Annual Meeting of Shareholders, scheduled to be held on May 18, 2020, are incorporated by reference into Part III of this Report.

XML

Derivative And Hedging Activities - Summary of Derivative Financial Instruments Not Designated as Hedging Instruments (Details) - Derivatives Not Designated as Hedging Instruments - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Derivative Instruments And Hedging Activities Disclosures [Line Items]
Amount of Gain or (Loss) Recognized in Income on Derivative	$ 311	$ 276	$ 426
Other contracts | Other Income
Derivative Instruments And Hedging Activities Disclosures [Line Items]
Amount of Gain or (Loss) Recognized in Income on Derivative	$ 311	$ 276	$ 426

XML

Pension and Retirement Plans - Schedule of Estimated Amounts That will be Amortized from Accumulated Other Comprehensive Income into Net Periodic Benefit Cost (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($)
Defined Benefit Plan Disclosure [Line Items]
Prior service cost	$ (4)
Total	(4)
Pension Plan
Defined Benefit Plan Disclosure [Line Items]
Prior service cost	(4)
Total	$ (4)

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Income Taxes

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Income Taxes

13. INCOME TAXES

In accordance with the Tax Cuts and Jobs Act of 2017, the Company’s statutory federal tax rate decreased from 35% to 21% effective January 1, 2018. The change in tax law required a one-time non-cash write down of our net deferred tax assets of $3.9 million in 2017.        

The components of income tax expense were as follows:

	For the Year Ended December 31,
	2019			2018			2017
	(dollars in thousands)
Current
Federal	$	5,954		$	5,524		$	8,446
State		2,597			2,404			2,225
		8,551			7,928			10,671
Deferred
Federal		(63	)		(490	)		2,948
State		173			(231	)		(261	)
Total deferred		110			(721	)		2,687
Total income tax expense	$	8,661		$	7,207		$	13,358

The following is a reconciliation of the total income tax provision, calculated at statutory federal income tax rates, to the income tax provision in the consolidated statements of income:

	For the Year Ended December 31,
	2019			Rate			2018			Rate			2017			Rate
	(dollars in thousands)
Provision at statutory rates	$	7,123			21.00	%	$	6,528			21.00	%	$	9,861			35.00	%
Increase/(decrease) resulting from:
State tax, net of federal tax benefit		2,188			6.45			1,717			5.52			1,277			4.53
Tax-exempt income		(599	)		(1.77	)		(580	)		(1.87	)		(1,079	)		(3.83	)
ESOP dividends		(124	)		(0.37	)		(127	)		(0.41	)		(216	)		(0.77	)
Bank owned life insurance		(129	)		(0.38	)		(140	)		(0.45	)		(205	)		(0.73	)
Benefit from stock compensation		(150	)		(0.44	)		(168	)		(0.54	)		(190	)		(0.67	)
Non-deductible Acquisition Costs		236			0.70			—			—			—			—
Impact of Tax Cuts and Jobs Act		—			—			—			—			3,870			13.74
Other		116			0.34			(23	)		(0.07	)		40			0.15
Total income tax expense	$	8,661			25.53	%	$	7,207			23.18	%	$	13,358			47.42	%

The Company’s 2019 and 2018 net deferred tax assets were measured using a 27.86% and 28.11% tax rate, respectively, and consisted of the following components:

	December 31, 2019			December 31, 2018
	(dollars in thousands)
Gross deferred tax assets
Allowance for loan losses	$	5,029		$	4,715
Accrued retirement benefits		1,592			2,082
Unrealized losses on AFS securities		171			957
Incentive compensation		1,248			1,189
Equity based compensation		1,034			849
Lease Liability		9,765			333
ESOP dividends		165			169
Loss carryforwards as a result of the Optima merger		877			—
Intangibles (merger related)		472			—
Other		252			155
Total gross deferred tax assets		20,605			10,449
Gross deferred tax liabilities
Deferred loan origination costs		(911	)		(459	)
Depreciation of premises and equipment		(1,021	)		(678	)
Right of Use Asset		(9,356	)		—
Mortgage servicing rights		(368	)		(187	)
Goodwill		(113	)		(114	)
Derivative transactions		(607	)		(294	)
Total gross deferred tax liabilities		(12,376	)		(1,732	)
Net deferred tax asset	$	8,229		$	8,717

It is management’s belief, that it is more likely than not, that the reversal of deferred tax liabilities and results of future operations will generate sufficient taxable income to realize the deferred tax assets. Therefore, no valuation allowance was required at either December 31, 2019 and 2018 for the deferred tax assets. It should be noted, however, that factors beyond management’s control, such as the general state of the economy and real estate values, can affect future levels of taxable income and that no assurance can be given that sufficient taxable income will be generated in future periods to fully absorb deductible temporary differences.

At December 31, 2019 and 2018, the Company had no unrecognized tax benefits or any uncertain tax positions. The Company does not expect the total amount of unrecognized tax benefits to significantly increase in the next 12 months.

The Company’s federal income tax returns are open and subject to examination from the 2016 tax return year and forward. The Company’s state income tax returns are open from the 2016 and later tax return years based on individual state statute of limitations.

On January 1, 2017, The Company adopted Accounting Standards Update No. 2016-09 - “Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”). ASU 2016-09 requires that excess tax benefits or tax deficiencies be recognized as income tax benefit or expense in earnings in the period that they occur. During the year ended December 31, 2019, 2018, and 2017, the Company recognized a tax benefit of $199,000, $225,000, and $221,000 respectively.

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Pension and Retirement Plans - Information to Retirement Plans with Accumulated Benefit Obligation in Excess of Plan Assets (Details) - Postretirement Healthcare Plan - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Defined Benefit Plan Disclosure [Line Items]
Projected benefit obligation	$ 689	$ 598
Accumulated benefit obligation	$ 689	$ 598

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Commitment and Contingencies

12 Months Ended

Dec. 31, 2019

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

17. COMMITMENTS AND CONTINGENCIES

Lease Commitments. The Company is obligated under various lease agreements covering its main office, branch offices, and other locations. These agreements are accounted for as operating leases and their terms expire between 2019 and 2030 and, in some instances, contain options to renew for periods up to 30 years. 

The Company adopted Accounting Standards Update No. 2016-02 - Leases (“ASU 2016-02”) during the first quarter of 2019 and began recognizing its operating leases on its balance sheet by recording a lease liability, representing the Company’s legal obligation to make lease payments, and a Right-Of-Use (ROU) Asset, representing the Company’s legal right to use the leased office space and banking centers. The Company, by policy, does not include renewal options for leases as part of its right-of-use assets and lease liabilities unless they are deemed reasonably certain to exercise. The Company does not have any material sub-lease agreements.

The following table summarizes information related to the Company’s right-of-use asset and net lease liability:

	December 31, 2019
	Operating Leases		Balance Sheet Location
	(dollars in thousands)
Right-of-use asset	$	33,587	Right-of-use asset operating leases
Lease liability	$	35,054	Operating lease liabilities

Operating lease expenses are comprised of operating lease costs and variable lease costs, net of sublease income. The pattern and measurement of expense recognition of these costs were not significantly impacted by ASU 2016-02 and subsequent ASUs issued to amend this Topic.

Variable lease payments that are not dependent on an index or a rate or changes in variable payments based on an index or rate after the commencement date are excluded from the measurement of the lease liability, recognized in the period incurred and included within variable lease costs below.

The Company determines whether a contract contains a lease based on whether a contract, or a part of a contract, conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The discount rate is determined as either the rate implicit in the lease or when a rate cannot be readily determined, the Company’s incremental borrowing rate. The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term.  

The components of operating lease cost and other related information are as follows:

		Twelve Months Ended December 31,
		2019
	(dollars in thousands)
Operating lease cost		$	5,280
Short-term lease cost			—
Variable lease cost (Cost excluded from lease payments)			2
Sublease income			(64	)
Total Operating Lease Cost		$	5,218
Other Information
Cash paid for amounts included in the measurement of lease liabilities - operating cash flows from operating leases		$	5,027
Operating Lease - Operating Cash Flows (Liability reduction)			3,868
Right-of-use assets obtained in exchange for new operating lease liabilities			37,728
Weighted average lease term - operating leases		8.15 Years
Weighted average discount rate - operating leases			3.39	%

The total minimum lease payments due in future periods under these agreements in effect at December 31, 2019 and December 31, 2018 were as follows:

Year Ended	Future Minimum
December 31, 2019	Lease Payments
	(dollars in thousands)
2020	$	5,478
2021		5,523
2022		5,371
2023		5,021
2024		4,355
Thereafter		14,553
Total minimum lease payments		40,301
Less: interest		(5,247	)
Total lease liability	$	35,054

Year Ended	Future Minimum
December 31, 2018	Lease Payments
	(dollars in thousands)
2019	$	4,448
2020		4,661
2021		4,662
2022		4,553
2023		4,455
Thereafter		17,128
Total minimum lease payments	$	39,907

Several lease agreements contain clauses calling for escalation of minimum lease payments contingent on increases in real estate taxes, gross income adjustments, percentage increases in the consumer price index, and certain ancillary maintenance costs. Total rental expense was $5.7 million, $4.7 million, and $4.7 million for the years ended December 31, 2019, 2018 and 2017, respectively.

Change in Control Agreements. The Company has entered into agreements with its Chief Executive Officer and with certain other senior officers, whereby, following the occurrence of a change in control of the Company, if employment is terminated (except because of death, retirement, disability, or for “cause” as defined in the agreements) or is voluntarily terminated for “good reason,” as defined in the agreements, said officers will be entitled to receive additional compensation, as defined in the agreements.

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Other Comprehensive Income

12 Months Ended

Dec. 31, 2019

Equity [Abstract]

Other Comprehensive Income

21. OTHER COMPREHENSIVE INCOME

Comprehensive income is defined as all changes to equity except investments by and distributions to shareholders. Net income is a component of comprehensive income, with all other components referred to in the aggregate as “other comprehensive income.” The Company’s other comprehensive income consists of unrealized gains or losses on securities held at year-end classified as available for sale and the component of the unfunded retirement liability computed in accordance with the requirements of ASC 715, “Compensation – Retirement Benefits.” The before-tax and after-tax amount of each of these categories, as well as the tax (expense)/benefit of each, is summarized as follows:

	For the Year Ended December 31, 2019							For the Year Ended December 31, 2018									For the Year Ended December 31, 2017
	Before Tax Amount		Tax (Expense) or Benefit			Net-of- tax Amount		Before Tax Amount			Tax (Expense) or Benefit			Net-of- tax Amount			Before Tax Amount		Tax (Expense) or Benefit			Net-of- tax Amount
								(dollars in thousands)
Unrealized (losses)/gains on available for sale     securities
Unrealized holding (losses)/gains arising     during the period	$	3,267	$	(767	)	$	2,500	$	(231	)	$	(11	)	$	(242	)	$	187	$	(59	)	$	128
Reclassification adjustment for (gains)/losses     recognized in net income		81		(19	)		62		(2	)		—			(2	)		3		(2	)		1
Derivatives
Change in interest rate contracts		1,134		(313	)		821		1,045			(294	)		751			—		—			—
Defined benefit retirement plans
Net change in retirement liability		864		(241	)		623		124			(35	)		89			6,545		(2,674	)		3,871
Total Other Comprehensive Income/(Loss)	$	5,346	$	(1,340	)	$	4,006	$	936		$	(340	)	$	596		$	6,735	$	(2,735	)	$	4,000

Reclassifications out of accumulated other comprehensive income (“AOCI”) are presented below:

	For the Year Ended December 31,
Details about Accumulated Other Comprehensive Income (Loss) Components	2019			2018		2017			Affected Line Item in the Statement where Net Income is Presented
	(dollars in thousands)
Unrealized gains and losses on available for sale securities	$	(81	)	$	2	$	(3	)	(Loss) gain on disposition of investment securities
Tax benefit or (expense)		19			—		2		Provision for income taxes
Net of tax	$	(62	)	$	2	$	(1	)	Net income