UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2020

OR

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

For the transition period from _________________ to __________________

Commission File Number: 001-38184

CAMBRIDGE BANCORP

(Exact Name of Registrant as Specified in its Charter)

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

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

Securities registered pursuant in Section12(b) of the act:

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

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

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

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

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

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

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

As of July 31, 2020, the registrant had 6,927,592 shares of common stock, $1.00 par value per share, outstanding.

Table of Contents

CAMBRIDGE BANCORP AND SUBSIDIARIES

		Page
PART I.	FINANCIAL INFORMATION	1
Item 1.	Financial Statements (Unaudited)	1
	Unaudited Consolidated Balance Sheets	1
	Unaudited Consolidated Statements of Income (Loss)	2
	Unaudited Consolidated Statements of Comprehensive Income (Loss)	3
	Unaudited Consolidated Statements of Changes in Shareholders’ Equity	4
	Unaudited Consolidated Statements of Cash Flows	5
	Notes to Unaudited Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	39
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	65
Item 4.	Controls and Procedures	65
PART II.	OTHER INFORMATION	66
Item 1.	Legal Proceedings	66
Item 1A.	Risk Factors	66
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	67
Item 3.	Defaults Upon Senior Securities	67
Item 4.	Mine Safety Disclosures	67
Item 5.	Other Information	67
Item 6.	Exhibits	68
Signatures		69

i

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

CAMBRIDGE BANCORP AND SUBSIDIARIES

UNAUDITED CONSOLIDATED BALANCE SHEETS

	June 30, 2020			December 31, 2019
	(dollars in thousands, except par value)
Assets
Cash and cash equivalents	$	60,742		$	61,335
Investment securities
Available for sale, at fair value (amortized cost $130,761 and $141,109, respectively)		134,227			140,330
Held to maturity, at amortized cost (fair value $257,121 and $264,114, respectively)		244,551			258,172
Total investment securities		378,778			398,502
Loans held for sale, at lower of cost or fair value		2,614			1,546
Loans
Residential mortgage		1,351,308			917,566
Commercial mortgage		1,413,427			1,060,574
Home equity		116,067			80,675
Commercial & Industrial		414,243			133,236
Consumer		37,839			34,677
Total loans		3,332,884			2,226,728
Less: allowance for credit losses on loans		(34,014	)		(18,180	)
Net loans		3,298,870			2,208,548
Federal Home Loan Bank of Boston Stock, at cost		9,262			7,854
Bank owned life insurance		45,747			37,319
Banking premises and equipment, net		18,482			14,756
Right-of-use asset operating leases		38,912			33,587
Deferred income taxes, net		11,855			8,229
Accrued interest receivable		8,631			7,052
Goodwill		51,912			31,206
Merger related intangibles, net		3,158			3,338
Other assets		93,787			42,291
Total assets	$	4,022,750		$	2,855,563
Liabilities
Deposits
Demand	$	929,846		$	630,593
Interest bearing checking		606,999			450,098
Money market		419,537			181,406
Savings		960,847			914,499
Certificates of deposit		358,614			182,282
Total deposits		3,275,843			2,358,878
Borrowings		237,897			135,691
Subordinated debt		9,920			—
Operating lease liabilities		40,453			35,054
Other liabilities		75,577			39,379
Total liabilities		3,639,690			2,569,002
Shareholders’ Equity
Common stock, par value $1.00; Authorized: 10,000,000 shares; Outstanding: 6,927,699 shares and 5,400,868 shares, respectively		6,928			5,401
Additional paid-in capital		224,540			136,766
Retained earnings		146,305			146,875
Accumulated other comprehensive income (loss)		5,287			(2,481	)
Total shareholders’ equity		383,060			286,561
Total liabilities and shareholders’ equity	$	4,022,750		$	2,855,563

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

1

CAMBRIDGE BANCORP AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

	Three Months Ended					Six Months Ended
	June 30, 2020			June 30, 2019		June 30, 2020		June 30, 2019
	(dollars in thousands, except share data)
Interest and dividend income
Interest on taxable loans	$	28,130		$	21,355	$	51,468	$	37,639
Interest on tax-exempt loans		211			124		409		213
Interest on taxable investment securities		1,521			2,116		3,244		4,096
Interest on tax-exempt investment securities		601			575		1,196		1,146
Dividends on FHLB of Boston stock		52			81		153		157
Interest on overnight investments		16			219		156		337
Total interest and dividend income		30,531			24,470		56,626		43,588
Interest expense
Interest on deposits		1,396			4,379		4,525		6,880
Interest on borrowed funds		282			315		848		671
Interest on subordinated debt		64			—		64		—
Total interest expense		1,742			4,694		5,437		7,551
Net interest and dividend income		28,789			19,776		51,189		36,037
Provision for credit losses		14,430			596		16,430		503
Net interest and dividend income after provision for credit losses		14,359			19,180		34,759		35,534
Noninterest income
Wealth management revenue		7,035			6,419		13,662		12,543
Deposit account fees		695			843		1,486		1,581
ATM/Debit card income		290			379		597		655
Bank owned life insurance income		165			162		325		289
Gain (loss) on disposition of investment securities		69			6		69		(81	)
Gain on loans sold		193			15		312		31
Loan related derivative income		334			5		844		441
Other income		191			316		495		643
Total noninterest income		8,972			8,145		17,790		16,102
Noninterest expense
Salaries and employee benefits		13,542			11,459		26,558		22,286
Occupancy and equipment		2,938			2,691		5,745		5,021
Data processing		1,832			1,534		3,517		2,880
Professional services		1,098			760		1,957		1,567
Marketing		486			508		742		912
FDIC insurance		318			278		497		278
Nonoperating expenses		4,366			3,450		4,619		3,541
Other expenses		1,007			833		1,877		1,401
Total noninterest expense		25,587			21,513		45,512		37,886
(Loss) income before income taxes		(2,256	)		5,812		7,037		13,750
Income tax (benefit) expense		(540	)		1,540		1,521		3,280
Net (loss) income	$	(1,716	)		4,272	$	5,516	$	10,470
Share data:
Weighted average number of shares outstanding, basic		5,912,889			4,682,109		5,652,908		4,379,141
Weighted average number of shares outstanding, diluted		5,912,889			4,715,724		5,670,438		4,412,239
Basic (loss) earnings per share	$	(0.29	)	$	0.91	$	0.97	$	2.37
Diluted (loss) earnings per share	$	(0.29	)	$	0.90	$	0.97	$	2.35

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

2

CAMBRIDGE BANCORP AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
	(dollars in thousands)
Net (loss) income	$	(1,716	)	$	4,272		$	5,516		$	10,470
Other comprehensive income, net of tax:
Unrealized gains on available for sale securities
Unrealized holding gains		810			1,453			3,310			2,548
Less: reclassification adjustment for (gains) losses   included in net (loss) income		(57	)		(4	)		(57	)		62
Total unrealized gains on securities		753			1,449			3,253			2,610
Derivatives
Change in interest rate contracts		270			1,219			4,516			1,189
Defined benefit retirement plans
Change in retirement liabilities		—			26			(1	)		52
Other comprehensive income		1,023			2,694			7,768			3,851
Comprehensive (loss) income	$	(693	)	$	6,966		$	13,284		$	14,321

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

3

CAMBRIDGE BANCORP AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

	Three Months Ended June 30,
	Common Stock		Additional Paid-In Capital		Retained Earnings	Accumulated Other Comprehensive Income / (Loss)	Total Shareholders’ Equity
	(dollars in thousands, except per share data)
Balance at March 31, 2019	$	4,124	$	38,239