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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 March 31, 2021

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 Section 12(b) of the act:

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

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

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

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

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	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 April 30, 2021, the registrant had 6,960,050 shares of common stock, $1.00 par value per share, outstanding.

Table of Contents

CAMBRIDGE BANCORP AND SUBSIDIARIES

		Page
PART I.	FINANCIAL INFORMATION	1
Item 1.	Financial Statements (Unaudited)	1
	Unaudited Consolidated Balance Sheets	1
	Unaudited Consolidated Statements of Income	2
	Unaudited Consolidated Statements of Comprehensive Income	3
	Unaudited Consolidated Statements of Changes in Shareholders’ Equity	4
	Unaudited Consolidated Statements of Cash Flows	5
	Notes to Unaudited Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	52
Item 4.	Controls and Procedures	52
PART II.	OTHER INFORMATION	53
Item 1.	Legal Proceedings	53
Item 1A.	Risk Factors	53
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	54
Item 3.	Defaults Upon Senior Securities	54
Item 4.	Mine Safety Disclosures	54
Item 5.	Other Information	54
Item 6.	Exhibits	55
Signatures		56

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

CAMBRIDGE BANCORP AND SUBSIDIARIES

UNAUDITED CONSOLIDATED BALANCE SHEETS

	March 31, 2021			December 31, 2020
	(dollars in thousands, except par value)
Assets
Cash and cash equivalents	$	226,633		$	75,785
Investment securities
Available for sale, at fair value (amortized cost $223,597 and $234,252, respectively)		222,452			237,030
Held to maturity, at amortized cost (fair value $408,450 and $260,139, respectively)		402,358			247,672
Total investment securities		624,810			484,702
Loans held for sale, at lower of cost or fair value		3,353			6,909
Loans
Residential mortgage		1,294,366			1,298,868
Commercial mortgage		1,370,948			1,358,962
Home equity		98,740			106,194
Commercial & Industrial		380,938			347,855
Consumer		35,379			41,769
Total loans		3,180,371			3,153,648
Less: allowance for credit losses on loans		(35,646	)		(36,016	)
Net loans		3,144,725			3,117,632
Federal Home Loan Bank of Boston Stock, at cost		5,064			5,734
Bank owned life insurance		46,365			46,169
Banking premises and equipment, net		17,815			18,158
Right-of-use asset operating leases		33,386			34,927
Deferred income taxes, net		11,242			11,639
Accrued interest receivable		8,871			9,514
Goodwill		51,912			51,912
Merger related intangibles, net		2,887			2,977
Other assets		76,110			83,239
Total assets	$	4,253,173		$	3,949,297
Liabilities
Deposits
Demand	$	1,154,869		$	1,006,132
Interest bearing checking		675,578			625,650
Money market		687,578			532,218
Savings		983,173			984,262
Certificates of deposit		228,867			254,821
Total deposits		3,730,065			3,403,083
Borrowings		17,608			32,992
Operating lease liabilities		35,837			37,448
Other liabilities		61,990			74,042
Total liabilities		3,845,500			3,547,565
Shareholders’ Equity
Common stock, par value $1.00; Authorized: 10,000,000 shares; Outstanding: 6,960,194 shares and 6,926,728 shares, respectively		6,960			6,927
Additional paid-in capital		226,841			226,967
Retained earnings		175,093			165,404
Accumulated other comprehensive income (loss)		(1,221	)		2,434
Total shareholders’ equity		407,673			401,732
Total liabilities and shareholders’ equity	$	4,253,173		$	3,949,297

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

1

CAMBRIDGE BANCORP AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

	Three Months Ended
	March 31, 2021			March 31, 2020
	(dollars in thousands, except share data)
Interest and dividend income
Interest on taxable loans	$	30,325		$	23,338
Interest on tax-exempt loans		222			198
Interest on taxable investment securities		1,585			1,723
Interest on tax-exempt investment securities		658			595
Dividends on FHLB of Boston stock		—			101
Interest on overnight investments		31			140
Total interest and dividend income		32,821			26,095
Interest expense
Interest on deposits		1,275			3,129
Interest on borrowed funds		140			566
Total interest expense		1,415			3,695
Net interest and dividend income		31,406			22,400
Provision (release) for credit losses		(206	)		2,000
Net interest and dividend income after provision (release) for credit losses		31,612			20,400
Noninterest income
Wealth management revenue		8,151			6,627
Deposit account fees		474			791
ATM/Debit card income		333			307
Bank owned life insurance income		196			160
Gain on loans sold		569			119
Loan related derivative income		671			510
Other income		455			304
Total noninterest income		10,849			8,818
Noninterest expense
Salaries and employee benefits		16,045			13,016
Occupancy and equipment		3,576			2,807
Data processing		2,034			1,685
Professional services		1,272			859
Marketing		463			256
FDIC insurance		336			179
Nonoperating expenses		—			253
Other expenses		493			870
Total noninterest expense		24,219			19,925
Income before income taxes		18,242			9,293
Income tax expense		4,743			2,061
Net income	$	13,499		$	7,232
Share data:
Weighted average number of shares outstanding, basic		6,907,861			5,397,040
Weighted average number of shares outstanding, diluted		6,987,216			5,432,099
Basic earnings per share	$	1.95		$	1.34
Diluted earnings per share	$	1.92		$	1.33

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

2

CAMBRIDGE BANCORP AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Three Months Ended March 31,
	2021			2020
	(dollars in thousands)
Net income	$	13,499		$	7,232
Other comprehensive income (loss), net of tax:
Available for sale securities
Unrealized holding gains (losses)		(2,887	)		2,500
Interest rate swaps designated as cash flow hedges
Unrealized holding gains (losses)		(322	)		4,327
Less: reclassification adjustment for (gains) losses realized in net income		(454	)		(81	)
Defined benefit retirement plans
Change in retirement liabilities		8			(1	)
Other comprehensive (loss) income		(3,655	)		6,745
Comprehensive income	$	9,844		$	13,977

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 March 31,
	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 December 31, 2019	$	5,401	$	136,766		$	146,875		$	(2,481	)	$	286,561
Cumulative effect of accounting changes		—		—			(347	)		—			(347	)
Net income		—		—			7,232			—			7,232
Other comprehensive income		—		—			—			6,745			6,745
Share based compensation and other share-based activity		17		420			—			—			437
Dividends declared ($0.53 per share)		—		—			(2,869	)		—			(2,869	)
Balance at March 31, 2020	$	5,418	$	137,186		$	150,891		$	4,264		$	297,759
Balance at December 31, 2020	$	6,927	$	226,967		$	165,404		$	2,434		$	401,732
Net income		—		—			13,499			—			13,499
Other comprehensive loss		—		—			—			(3,655	)		(3,655	)
Share based compensation and other share-based activity		33		(126	)		—			—			(93	)
Dividends declared ($0.55 per share)		—		—			(3,810	)		—			(3,810	)
Balance at March 31, 2021	$	6,960	$	226,841		$	175,093		$	(1,221	)	$	407,673

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

4

CAMBRIDGE BANCORP AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Three Months Ended March 31,
	2021			2020
	(dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	13,499		$	7,232
Adjustments to reconcile net income to net cash provided by operating activities:
Provision (release) for credit losses		(206	)		2,000
Amortization (accretion) of deferred charges and fees, net		(382	)		51
(Accretion), depreciation, and amortization, net		(763	)		78
Bank owned life insurance income		(196	)		(160	)
Share-based compensation and other share based activity		(93	)		437
Change in accrued interest receivable		643			180
Deferred income tax (benefit)/expense		1,730			2,265
Change in other assets, net		5,777			(23,741	)
Change in other liabilities, net		(12,037	)		19,613
Change in loans held for sale		3,556			(1,329	)
Net cash provided by operating activities		11,528			6,626
CASH FLOWS FROM INVESTING ACTIVITIES
Origination of loans		(353,256	)		(158,477	)
Proceeds from principal payments of loans		328,758			127,572
Proceeds from calls/maturities of securities available for sale		10,444			25,559
Proceeds from calls/maturities of securities held to maturity		12,099			11,139
Purchase of securities		(167,019	)		—
Redemption of FHLB of Boston stock		670			1,586
Purchase of banking premises and equipment		(310	)		(364	)
Net cash provided by (used in) in investing activities		(168,614	)		7,015
CASH FLOWS FROM FINANCING ACTIVITIES
Change in demand, interest bearing, money market and savings accounts		352,936			(5,600	)
Change in certificates of deposit		(25,846	)		37,026
Change in borrowings		(15,346	)		(60,544	)
Cash dividends paid on common stock		(3,810	)		(2,869	)
Net cash provided by (used in) financing activities		307,934			(31,987	)
Net change in cash and cash equivalents