Cambridge Bancorp Announces First Quarter 2022 Earnings and Declares Quarterly Dividend
Cambridge Bancorp Announces Second Quarter 2022 Earnings and Declares Quarterly Dividend

CAMBRIDGE, Mass., July 19, 2022 /PRNewswire/ — Cambridge Bancorp (NASDAQ: CATC) (the “Company”), the parent company of Cambridge Trust Company (the “Bank”), today announced unaudited net income of $13.7 million for the quarter ended June 30, 2022. Net income for the second quarter represented an increase of $342,000, or 2.6%, as compared to net income of $13.3 million for the quarter ended March 31, 2022. Diluted earnings per share were $1.94 for the quarter ended June 30, 2022, representing a 2.6% increase as compared to diluted earnings per share of $1.89 for the quarter ended March 31, 2022.

For the six months ended June 30, 2022, unaudited net income was $27.0 million, representing a decrease of $469,000, or 1.7%, as compared to net income of $27.4 million for the six months ended June 30, 2021. Diluted earnings per share were $3.83 for the six months ended June 30, 2022, representing a 2.0% decrease as compared to diluted earnings per share of $3.91 for the six months ended June 30, 2021.

The results for the quarter ended June 30, 2022 include non-operating items as detailed in the GAAP to Non-GAAP Reconciliations later in this release. Operating net income was $13.4 million for the quarter ended June 30, 2022, as compared to $13.3 million for the quarter ended March 31, 2022.  Operating diluted earnings per share were $1.90 for the quarter ended June 30, 2022, representing a 0.5% increase as compared to operating diluted earnings per share of $1.89 for the quarter ended March 31, 2022.

Operating net income was $26.7 million for the six months ended June 30, 2022, a decrease of $707,000, or 2.6%, as compared to operating net income of $27.4 million for the six months ended June 30, 2021. Operating diluted earnings per share were $3.79 for the six months ended June 30, 2022, representing a 3.1% decrease as compared to operating diluted earnings per share of $3.91 for the six months ended June 30, 2021.

In the second quarter of 2022, the Company and Northmark Bank (“Northmark”) entered into a definitive agreement pursuant to which Northmark will merge with and into the Bank in an all-stock transaction that is anticipated to close during the fourth quarter of 2022. The merger is subject to regulatory approval, approval by Northmark’s shareholders, and the completion of other customary closing conditions. Under the terms of the agreement, each share of Northmark common stock will be exchanged for 0.9950 shares of the Company’s common stock. This merger will expand the Company’s presence in Massachusetts through the addition of Northmark’s three full-service banking offices in the attractive communities of North Andover, Andover and Winchester, Massachusetts.

Second Quarter 2022 Highlights:

  • Total loans increased by $106.3 million, or 3.1%, to $3.52 billion at June 30, 2022 from $3.42 billion at  March 31, 2022.
  • Financial performance ratios for the quarter ended June 30, 2022, were strong with Operating Return on Average Assets (“ROA”) of 1.07% and Operating Return on Tangible Common Shareholders’ Equity (“ROTCE”) of 14.08%.
  • The Adjusted Net Interest Margin increased by 14 basis points to 2.81% in the second quarter of 2022 from 2.67% at March 31, 2022.
  • Asset quality at June 30, 2022, remained excellent with ratios of non-performing loans to total loans and non-performing assets to total assets at 0.17% and 0.12%, respectively.
  • Tangible book value per share at June 30, 2022 increased to $55.33 from $54.52 at March 31, 2022.
  • Tangible common equity to tangible assets ratio increased to 7.75% at June 30, 2022 from 7.69% at March 31, 2022.

“This quarter showed a continued trend of solid loan growth, mixed with a decrease in core deposits due to tax payments and client recognition of investment opportunities, combined with weaker wealth revenue following a challenging period in the equity markets.  Loan pipelines remain strong looking ahead and we are enthusiastic about the announced merger with Northmark Bank,” noted Denis K. Sheahan, Chairman, President and CEO.

Balance Sheet

Total assets increased by $166.4 million, or 3.4%, from $4.89 billion at December 31, 2021 to $5.06 billion at June 30, 2022.

Total loans increased by $204.4 million, or 6.2%, from $3.32 billion at December 31, 2021 to $3.52 billion at June 30, 2022.

  • Residential real estate loans increased by $67.5 million, from $1.42 billion at December 31, 2021 to $1.48 billion at June 30, 2022.
  • Commercial real estate loans increased by $125.9 million, from $1.51 billion at December 31, 2021 to $1.64 billion at June 30, 2022.
  • Commercial and industrial loans totaled $268.2 million at June 30, 2022.

The Company’s total investment securities portfolio increased by $104.9 million, or 8.9%, from $1.17 billion at December 31, 2021 to $1.28 billion at June 30, 2022.

Total deposits decreased by $67.1 million, or 1.5%, to $4.26 billion at June 30, 2022 as compared to $4.33 billion  at December 31, 2021.

  • Core deposits, which the Company defines as all deposits other than certificates of deposit, decreased by $30.8 million, or 0.7%, to $4.14 billion at June 30, 2022 from $4.17 billion at December 31, 2021. Core deposits decreased during the second quarter of 2022 by $201.7 million, or 4.6%, due to tax payments, seasonal liquidity fluctuation, and client recognition of investment opportunities in the marketplace.
  • Certificates of deposit totaled $125.7 million at June 30, 2022, a decrease of $36.3 million from $162.1 million at December 31, 2021.
  • The cost of total deposits was 0.17% for both the quarters ended June 30, 2022 and March 31, 2022. At June 30, 2022, the spot cost of deposits was 0.17%.

Borrowings totaled $252.9 million at June 30, 2022, representing a $236.4 million, increase from $16.5 million at December 31, 2021, due to fluctuations in liquidity. 

Net Interest and Dividend Income

Net interest and dividend income, before the release of credit losses, increased by $2.3 million, or 7.3%, to $34.2 million for the quarter ended June 30, 2022 from $31.9 million for the quarter ended March 31, 2022. This increase was primarily due to an increase in average earning assets and higher yields on earning assets.

The Company’s net interest margin on a fully taxable equivalent basis increased by 12 basis points to 2.86% for the quarter ended June 30, 2022, as compared to 2.74% for the quarter ended March 31, 2022.

For the six months ended June 30, 2022, net interest and dividend income before the release of credit losses increased by $2.3 million, or 3.5%, to $66.1 million as compared to $63.8 million for the six months ended June 30, 2021. This increase was primarily due to an increase in average earning assets and higher asset yields, partially offset by lower loan accretion associated with merger accounting, a decrease in Paycheck Protection Program (“PPP”) loan income, and higher interest expense on deposits.

The Company’s net interest margin on a fully taxable equivalent basis decreased by 50 basis points to 2.80% for the six months ended June 30, 2022, as compared to 3.30% for the six months ended June 30, 2021, due to an extended period of low interest rates.

In order to provide greater disclosure of the impact of loan related merger accounting and the impact of the Small Business Administration’s PPP loan program, a reconciliation of the Company’s net interest margin, on a fully taxable equivalent basis, to an adjusted net interest margin, on a fully taxable equivalent basis, is shown below. Excluding the impact of merger related loan accretion and the impact of PPP loans, the adjusted net interest margin, on a fully taxable equivalent basis, for the quarter ended June 30, 2022, was 2.81%, representing a 14 basis point increase from the adjusted net interest margin, on a fully taxable equivalent basis, of 2.67% for the quarter ended March 31, 2022.



Three Months Ended




June 30, 2022




Average
Balance



Interest
Income/
Expenses



Rate
Earned/
Paid




(dollars in thousands)


Total interest-earning assets (GAAP)


$

4,817,405








Net interest income on a fully taxable equivalent basis (GAAP)





$

34,410





Net interest margin on a fully taxable equivalent basis (GAAP)









2.86

%

Less: Paycheck Protection Program loan impact



(8,951)




(297)




-0.01

%

Less: Accretion of loan fair value adjustments






(466)




-0.04

%

Adjusted net interest margin on a fully taxable equivalent basis


$

4,808,454



$

33,647




2.81

%

Excluding the impact of merger related loan accretion and the impact of PPP loans, the adjusted net interest margin, on a fully taxable equivalent basis, for the six months ended June 30, 2022, was 2.74%, representing a  34 basis point decrease from the adjusted net interest margin, on a fully taxable equivalent basis, of 3.08% for the six months ended June 30, 2021.



Six Months Ended




June 30, 2022




Average
Balance



Interest
Income/
Expenses



Rate
Earned/
Paid




(dollars in thousands)


Total interest-earning assets (GAAP)


$

4,785,797








Net interest income on a fully taxable equivalent basis (GAAP)





$

66,521





Net interest margin on a fully taxable equivalent basis (GAAP)









2.80

%

Less: Paycheck Protection Program loan impact



(13,277)




(608)




-0.02

%

Less: Accretion of loan fair value adjustments






(1,108)




-0.04

%

Adjusted net interest margin on a fully taxable equivalent basis


$

4,772,520



$

64,805




2.74

%

Release of Credit Losses

During the quarter ended June 30, 2022, the Company did not record a provision for (release of) credit losses, as compared to a release of credit losses of $412,000 for the quarter ended March 31, 2022, as the Company’s asset quality remains strong.

For the six months ended June 30, 2022, the Company recorded a release of credit losses of $412,000, as compared to a $1.1 million release of credit losses for the six months ended June 30, 2021.

Noninterest Income

Total noninterest income decreased by $205,000, or 1.8%, to $11.1 million for the quarter ended June 30, 2022, as compared to $11.4 million for the quarter ended March 31, 2022. This change was primarily the result of lower wealth management revenue, lower other income, and lower loan related derivative income, partially offset by higher bank owned life insurance (“BOLI”) income. Noninterest income was 24.6% of total revenue for the quarter ended June 30, 2022.

  • Wealth management revenue decreased by $452,000, or 5.3%, to $8.1 million for the second quarter of 2022, as compared to $8.6 million for the first quarter of 2022. Wealth Management Assets under Management and Administration were $4.0 billion at June 30, 2022, a decrease of $643.0 million, or 13.8%, from March 31, 2022, primarily due to decline in the equity and bond markets and net outflows.
  • Other income decreased by $842,000, or 63.9%, to $476,000 for the quarter ended June 30, 2022, as compared to $1.3 million for the quarter ended March 31, 2022, primarily due to equity warrant revenue and gains on a community development fund investment recognized during the quarter ended March 31, 2022.
  • Loan related derivative income decreased by $251,000, or 84.8%, to $45,000 for the quarter ended June 30, 2022, as compared to $296,000 for the quarter ended March 31, 2022, as a result of lower swapped loan volume combined with fair value adjustments.
  • BOLI income increased by $1.2 million to $1.3 million for the quarter ended June 30, 2022, as compared to $187,000 for the quarter ended March 31, 2022, due to a gain of $1.2 million related to a death benefit claim and policy surrender.

Total noninterest income increased by $748,000, or 3.4%, to $22.5 million for the six months ended June 30, 2022, as compared to $21.8 million for the six months ended June 30, 2021. This change was primarily the result of higher BOLI income and higher other income, partially offset by lower loan related derivative income and lower gains on loans sold. Noninterest income was 25.4% of total revenue for the six months ended June 30, 2022.

  • BOLI income increased by $1.1 million, or 277.8%, to $1.5 million for the six months ended June 30, 2022, as compared to $405,000 for the six months ended June 30, 2021, primarily due to a gain of $1.2 million related to a death benefit claim and policy surrender.
  • Other income increased by $886,000, or 97.6%, to $1.8 million for the six months ended June 30, 2022, as compared to $908,000 for the six months ended June 30, 2021, primarily due to equity warrant revenue associated with an Innovation Banking loan, in addition to gains recognized on a community development fund investment.
  • Loan related derivative income decreased by $897,000, or 72.5%, to $341,000 for the six months ended June 30, 2022, as compared to $1.2 million for the six months ended June 30, 2021, primarily as a result of lower swapped loan volume.
  • Gain on loans sold decreased by $636,000, or 86.6%, to $98,000 for the six months ended June 30, 2022, as compared to $734,000 for the six months ended June 30, 2021, due to lower refinance activity and the corresponding sale of residential mortgages.

Noninterest Expense

Total noninterest expense increased by $422,000, or 1.6%, to $26.3 million for the quarter ended June 30, 2022, as compared to $25.9 million for the quarter ended March 31, 2022. During the quarter ended June 30, 2022, there was an increase in non-operating expenses, partially offset by a decrease in salary expenses, as compared to the quarter ended March 31, 2022.

  • Non-operating expenses increased to $246,000, as a result of expenses incurred in the second quarter related to the Northmark merger.
  • Salary and employee benefits expense decreased by $343,000, or 2.0%, to $17.0 million for the quarter ended June 30, 2022, from $17.4 million for the quarter ended March 31, 2022, primarily due to higher deferred loan origination costs, partially offset by staffing additions to support business initiatives and lower staff vacancy.

Total noninterest expense increased by $2.7 million, or 5.4%, to $52.2 million for the six months ended June 30, 2022, as compared to $49.5 million for the six months ended June 30, 2021, primarily driven by increases in salaries and employee benefits expense, data processing, and FDIC insurance, partially offset by decreases in marketing expenses and professional services.

  • Salaries and employee benefits expense increased by $1.9 million, or 5.9%, to $34.4 million, primarily due to staffing additions to support business initiatives, normal merit increases, and increases in employee benefit costs.
  • Data processing increased by $1.0 million, or 24.5%, to $5.2 million, primarily as a result of higher data processing fees associated with the Company’s wealth management systems.
  • FDIC insurance increased by $330,000, or 55.3%, to $927,000, primarily due to balance sheet growth.
  • Marketing expense decreased by $974,000, or 68.8%, to $442,000, due to timing of marketing spend.
  • Professional services decreased by $435,000, or 16.9%, to $2.1 million, primarily due to lower recruiting and temporary help expenses as well as lower consulting fees.

Asset Quality 

Non-performing loans totaled $5.9 million, or 0.17% of total loans outstanding at June 30, 2022. The allowance for credit losses was $34.1 million, or 0.97% of total loans outstanding excluding PPP loans, at June 30, 2022, as compared to $34.1 million, or 1.00% of total loans outstanding excluding PPP loans, at March 31, 2022.

The Company recorded net loan recoveries of $14,000, or 0.00% of total loans (annualized), for the quarter ended June 30, 2022, as compared to net loan recoveries of $13,000, or 0.00% of total loans (annualized), for the quarter ended March 31, 2022.

Net loan recoveries were $27,000, or 0.00% of total loans, for the six months ended June 30, 2022, as compared to net loan recoveries of $66,000, or 0.00% of total loans, for the six months ended June 30, 2021.

The following table shows additional and historical information regarding non-performing assets, early-stage delinquency (30-89 days delinquent), and troubled debt restructurings:



Nonperforming Assets




June 30, 2022



March 31, 2022



December 31, 2021



June 30, 2021




(dollars in thousands)


Nonperforming assets


$

5,879



$

5,943



$

5,386



$

5,463


Troubled debt restructurings (“TDRs”):













Non-performing (included in total non-performing loans above)


$

741



$

737



$

758



$

782


Nonperforming loans/total loans



0.17

%



0.17

%



0.16

%



0.17

%

Nonperforming assets/total assets



0.12

%



0.12

%



0.11

%



0.13

%

TDRs/total loans



0.02

%



0.02

%



0.02

%



0.02

%



Additional Asset Quality Indicators




June 30, 2022



March 31, 2022



December 31, 2021



June 30, 2021


Delinquent loans 30-89 days past due/total loans



0.19

%



0.41

%



0.32

%



0.39

%

Quarterly net recoveries (charge-offs)/total loans (annualized)



0.00

%



0.00

%



0.00

%



0.01

%

Year to date net recoveries (charge-offs)/total loans



0.00

%



0.00

%



0.00

%



0.00

%

Allowance for credit losses/nonperforming loans



580.44

%



573.95

%



640.48

%



641.21

%

Allowance for credit losses/total loans ex. PPP loans



0.97

%



1.00

%



1.05

%



1.10

%

Income Taxes

The Company’s effective tax rate was 28.2% for the quarter ended June 30, 2022, as compared to 25.0% for the quarter ended March 31, 2022. The increase in the effective tax rate was primarily due to tax expense associated with the surrender of a BOLI policy during the quarter ended June 30, 2022. For the six months ended June 30, 2022, the Company’s effective tax rate was 26.7%, as compared to 26.1% for the six months ended June 30, 2021.

Dividend and Capital

On July 18, 2022, the Company’s Board of Directors declared a quarterly cash dividend of $0.64 per share, which is payable on August 18, 2022, to shareholders of record as of the close of business on August 4, 2022. The Company did not repurchase any shares under its previously announced share repurchase program during the three and six months ended June 30, 2022.

The Company’s ratio of tangible common equity to tangible assets increased to 7.75% at June 30, 2022 from 7.69% at March 31, 2022, primarily due to increased earnings during the three months ended June 30, 2022.

Tangible book value per share increased by $0.81, or 1.5%, to $55.33 at June 30, 2022, as compared to $54.52 at March 31, 2022, as a result of increased earnings during the three months ended June 30, 2022.

Investor Conference Call and Investor Presentation

An investor presentation is available on the investor relations section of the Company’s website: http://ir.cambridgetrust.com or within the hyperlink provided below. This presentation includes additional details regarding the Company’s loan portfolio, liquidity position, and other financial disclosures. Click here to download.

Cambridge Bancorp will also conduct a conference call/webcast at 11:00 a.m. Eastern Time on Tuesday, July 19, 2022, to discuss the results for the quarter. Participants are encouraged to pre-register for the conference call using the following link: https://dpregister.com/sreg/10166882/f2af0c6052.

Callers who pre-register will be given dial-in instructions and a unique PIN to gain immediate access to the call. Participants may pre-register at any time prior to the call and will immediately receive simple instructions via email. Additionally, participants may reach the registration link and access the webcast by logging in through the investor section of the Company’s website at http://ir.cambridgetrust.com.

Those parties who do not have Internet access or are otherwise unable to pre-register for this event may still participate at the above time by dialing 1-866-777-2509 and asking the operator to join the Cambridge Bancorp (CATC) earnings call. Participants are requested to dial-in a few minutes before the scheduled start of the call. The webcast will be archived for three months on our investor relations website at https://ir.cambridgetrust.com/news-market-information/event-calendar/default.aspx.

About Cambridge Bancorp

Cambridge Bancorp, the parent company of Cambridge Trust Company, is based in Cambridge, Massachusetts. Cambridge Trust Company is a 132-year-old Massachusetts chartered commercial bank with approximately $5.1 billion in assets at June 30, 2022, and a total of 19 Massachusetts and New Hampshire locations. Cambridge Trust Company is one of New England’s leaders in private banking and wealth management with $4.0 billion in client assets under management and administration at June 30, 2022. The Wealth Management group maintains offices in Boston and Wellesley, Massachusetts and Concord, Manchester, and Portsmouth, New Hampshire.

The accompanying unaudited condensed interim and annual consolidated financial information should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K, which is posted in the investor relations section of the Company’s website at http://ir.cambridgetrust.com.

Forward-looking Statements

Certain statements herein may constitute “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, the impact of any laws or regulations applicable to the Company, and measures being taken in response to the COVID-19 pandemic and the impact of the COVID-19 pandemic on the Company’s business 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: the businesses of Cambridge and Northmark may not be combined successfully, or such combination may take longer to accomplish than expected; the cost savings from the merger may not be fully realized or may take longer to realize than expected; operating costs, customer loss and business disruption following the merger, including adverse effects on relationships with employees, may be greater than expected; governmental approvals of the merger may not be obtained, or adverse regulatory conditions may be imposed in connection with governmental approvals of the merger; the shareholders of Northmark may fail to approve the merger; changes to interest rates; the ability to control costs and expenses; the current global economic uncertainty and economic conditions being less favorable than expected; disruptions to the credit and financial markets; changes in the Company’s accounting policies or in accounting standards; weakness in the real estate market; legislative, regulatory, or accounting changes that adversely affect the Company’s business and/or competitive position; the Dodd-Frank Act’s consumer protection regulations; the duration and scope of the COVID-19 pandemic and its impact on levels of consumer confidence; actions that governments, businesses and individuals take in response to the COVID-19 pandemic; the impact of the COVID-19 pandemic and actions taken in response to the pandemic on global and regional economies and economic activity; a prolonged resurgence in the severity of the COVID-19 pandemic due to variants and mutations of the virus; the pace of recovery when the COVID-19 pandemic subsides; disruptions in the Company’s ability to access the capital markets; and other factors that are described in the Company’s filings with the Securities and Exchange Commission, including the Annual Report on Form 10-K for the year end December 31, 2021, which the Company filed on March 14, 2022. 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.

Non-GAAP Measures

This press release contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (“GAAP”). This information includes operating net income and operating diluted earnings per share, tangible book value per share and the tangible common equity ratio, operating return on average assets, operating return on tangible common equity, and operating efficiency ratio.

Operating net income and operating diluted earnings per share exclude items that management believes are unrelated to its core banking business such as merger and acquisition expenses, gain (loss) on disposition of investment securities, and other items. The Company’s management uses operating net income and operating diluted earnings per share to measure the strength of the Company’s core banking business and to identify trends that may to some extent be obscured by such excluded gains or losses.

Management also supplements its evaluation of financial performance with an analysis of tangible book value per share (which is computed by dividing shareholders’ equity less goodwill and acquisition related intangible assets, or “tangible common equity,” by common shares outstanding), the tangible common equity ratio (which is computed by dividing tangible common equity by tangible assets, defined as total assets less goodwill and acquisition related intangibles), return on average assets and return on tangible common equity on an operating basis, and the operating efficiency ratio (which is computed by dividing noninterest expense adjusted for non-operating expenses and total revenue adjusted for gain/(loss) on disposition of investment securities). The Company has included information on these non-GAAP financial measures because the Company believes that investors may find it useful to have access to the same analytical tool used by management. As a result of merger and acquisition activity, the Company has recognized goodwill and other intangible assets in conjunction with business combination accounting principles. Excluding the impact of goodwill and other intangibles in measuring asset and capital values for the ratios provided, along with other bank standard capital ratios, provides a framework to compare the capital adequacy of the Company to other companies in the financial services industry.

These non-GAAP measures should not be viewed as a substitute for operating results and other financial measures determined in accordance with GAAP. An item which management deems to be non-operating and excludes when computing these non-GAAP measures can be of substantial importance to the Company’s results for any particular quarter or year. The Company’s non-GAAP performance measures are not necessarily comparable to non-GAAP performance measures which may be presented by other companies.

Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are presented under “GAAP to Non-GAAP Reconciliations.”

CONTACT:
Cambridge Bancorp
Michael F. Carotenuto
Chief Financial Officer
617-520-5520

CAMBRIDGE BANCORP AND SUBSIDIARIES 
QUARTERLY UNAUDITED RESULTS




Three Months Ended



Six Months Ended




June 30,



March 31,



June 30,



June 30,




2022



2022



2021



2022



2021




(dollars in thousands, except per share data)


Interest and Dividend Income


$

36,279



$

33,898



$

33,528



$

70,177



$

66,349


Interest Expense



2,098




2,029




1,147




4,127




2,562


  Net Interest and Dividend Income



34,181




31,869




32,381




66,050




63,787


Release of Credit Losses






(412)




(901)




(412)




(1,107)


Noninterest Income



11,149




11,354




10,906




22,503




21,755


Noninterest Expense



26,297




25,875




25,273




52,172




49,492


Income Before Income Taxes



19,033




17,760




18,915




36,793




37,157


Income Tax Expense



5,375




4,444




4,971




9,819




9,714


  Net Income


$

13,658



$

13,316



$

13,944



$

26,974



$

27,443


















Operating Net Income*


$

13,420



$

13,316



$

13,944



$

26,736



$

27,443


















Data Per Common Share:
















 Basic Earnings Per Share


$

1.95



$

1.91



$

2.00



$

3.86



$

3.95


 Diluted Earnings Per Share



1.94




1.89




1.98




3.83




3.91


 Operating Diluted Earnings Per Share*



1.90




1.89




1.98




3.79




3.91


 Dividends Declared Per Share



0.64




0.64




0.61




1.28




1.16


 Average Common Shares Outstanding:
















   Basic



6,981,907




6,948,040




6,930,268




6,959,856




6,918,779


   Diluted



7,026,807




7,010,983




6,998,936




7,013,538




6,993,437


















Selected Performance Ratios:
















 Net Interest Margin, FTE



2.86

%



2.74

%



3.25

%



2.80

%



3.30

%

 Adjusted Net Interest Margin, FTE



2.81

%



2.67

%



3.01

%



2.74

%



3.08

%

 Cost of Funds



0.17

%



0.17

%



0.11

%



0.17

%



0.13

%

 Cost of Interest-Bearing Liabilities



0.28

%



0.27

%



0.18

%



0.27

%



0.21

%

 Cost of Deposits



0.17

%



0.17

%



0.11

%



0.17

%



0.13

%

 Cost of Deposits excluding Wholesale Deposits



0.17

%



0.17

%



0.11

%



0.17

%



0.12

%

 Return on Average Assets



1.09

%



1.09

%



1.32

%



1.09

%



1.33

%

 Return on Average Equity



12.55

%



12.37

%



13.57

%



12.46

%



13.55

%

 Efficiency Ratio*



58.01

%



59.86

%



58.38

%



58.92

%



57.86

%

 Operating Return on Average Assets*



1.07

%



1.09

%



1.32

%



1.08

%



1.33

%

 Operating Return on Tangible Common Equity*



14.08

%



14.13

%



15.64

%



14.11

%



15.65

%

 Operating Efficiency Ratio*



58.97

%



59.86

%



58.38

%



59.41

%



57.86

%



















June 30,



March 31,



December 31,



June 30,







2022



2022



2021



2021







(dollars in thousands, except per share data)





Total Assets


$

5,057,935



$

5,018,379



$

4,891,544



$

4,303,287





Total Loans


$

3,523,492



$

3,417,213



$

3,319,106



$

3,281,149





Total Deposits


$

4,264,057



$

4,473,735



$

4,331,152



$

3,764,558





Allowance for Credit Losses


$

34,124



$

34,110



$

34,496



$

35,029





Allowance to Total Loans (ex. PPP Loans)



0.97

%



1.00

%



1.05

%



1.10

%




Non-Performing Loans


$

5,879



$

5,943



$

5,386



$

5,463





Non-Performing Loans/Total Loans



0.17

%



0.17

%



0.16

%



0.17

%




QTD Net Recoveries (Charge-offs) to Total Loans (annualized)



0.00

%



0.00

%



0.00

%



0.01

%




Tangible Common Equity Ratio*



7.75

%



7.69

%



7.92

%



8.59

%




Book Value Per Share


$

63.09



$

62.30



$

62.83



$

60.23





Tangible Book Value Per Share*


$

55.33



$

54.52



$

55.01



$

52.37





Wealth Management AUM


$

3,844,993



$

4,464,512



$

4,656,183



$

4,282,204





Wealth Management AUM & AUA


$

4,016,328



$

4,659,297



$

4,853,119



$

4,471,157





* See GAAP to Non-GAAP Reconciliations
















CAMBRIDGE BANCORP AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS




June 30, 2022



December 31, 2021




(dollars in thousands, except par value)


Assets







Cash and cash equivalents


$

25,023



$

180,153


Investment securities







Available for sale, at fair value (amortized cost $194,014 and $201,270, respectively)



173,952




197,803


Held to maturity, at amortized cost (fair value $990,221 and $971,092, respectively)



1,105,858




977,061


Total investment securities



1,279,810




1,174,864


Loans held for sale, at lower of cost or fair value






1,490


Loans







Residential mortgage



1,482,551




1,415,079


Commercial mortgage



1,636,867




1,511,002


Home equity



91,835




87,960


Commercial and industrial



268,170




269,446


Consumer



44,069




35,619


Total loans



3,523,492




3,319,106


Less: allowance for credit losses on loans



(34,124)




(34,496)


Net loans



3,489,368




3,284,610


Federal Home Loan Bank of Boston Stock, at cost



10,518




4,816


Bank owned life insurance



33,621




46,970


Banking premises and equipment, net



16,682




17,326


Right-of-use asset operating leases



28,235




31,273


Deferred income taxes, net



12,202




9,985


Accrued interest receivable



10,061




9,162


Goodwill



51,912




51,912


Merger-related intangibles, net



2,436




2,617


Other assets



98,067




76,366


Total assets


$

5,057,935



$

4,891,544


Liabilities







Deposits







Demand


$

1,399,141



$

1,393,935


Interest-bearing checking



710,150




763,188


Money market



1,130,848




1,104,238


Savings



898,178




907,722


Certificates of deposit



125,740




162,069


Total deposits



4,264,057




4,331,152


Borrowings



252,867




16,510


Operating lease liabilities



30,659




33,871


Other liabilities



68,301




72,174


Total liabilities



4,615,884




4,453,707


Shareholders’ Equity







Common stock, par value $1.00; Authorized: 10,000,000 shares; Outstanding: 7,007,063 shares and 6,968,192 shares, respectively



7,007




6,968


Additional paid-in capital



229,918




229,205


Retained earnings



220,907




202,874


Accumulated other comprehensive loss



(15,781)




(1,210)


Total shareholders’ equity



442,051




437,837


Total liabilities and shareholders’ equity


$

5,057,935



$

4,891,544


CAMBRIDGE BANCORP AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME




Three Months Ended




Six Months Ended




June 30, 2022



March 31, 2022



June 30, 2021




June 30, 2022



June 30, 2021




(dollars in thousands, except share data)


Interest and dividend income

















Interest on taxable loans


$

30,235



$

28,404



$

30,557




$

58,639



$

60,882


Interest on tax-exempt loans



354




350




275





704




497


Interest on taxable investment securities



4,989




4,411




2,023





9,400




3,608


Interest on tax-exempt investment securities



627




654




633





1,281




1,291


Dividends on FHLB of Boston stock



32




25




12





57




12


Interest on overnight investments



42




54




28





96




59


Total interest and dividend income



36,279




33,898




33,528





70,177




66,349


Interest expense

















Interest on deposits



1,844




1,896




1,006





3,740




2,281


Interest on borrowed funds



254




133




141





387




281


Total interest expense



2,098




2,029




1,147





4,127




2,562


Net interest and dividend income



34,181




31,869




32,381





66,050




63,787


Release of credit losses






(412)




(901)





(412)




(1,107)


Net interest and dividend income after release of credit losses



34,181




32,281




33,282





66,462




64,894


Noninterest income

















Wealth management revenue



8,122




8,574




8,623





16,696




16,774


Deposit account fees



732




506




484





1,238




958


ATM/Debit card income



427




379




405





806




738


Bank owned life insurance income



1,343




187




209





1,530




405


Gain on loans sold, net



4




94




165





98




734


Loan related derivative income



45




296




567





341




1,238


Other income



476




1,318




453





1,794




908


Total noninterest income



11,149




11,354




10,906





22,503




21,755


Noninterest expense

















Salaries and employee benefits



17,048




17,391




16,462





34,439




32,508


Occupancy and equipment



3,613




3,542




3,503





7,155




7,079


Data processing



2,601




2,645




2,179





5,246




4,213


Professional services



1,070




1,064




1,297





2,134




2,569


Marketing



218




224




953





442




1,416


FDIC insurance



472




455




261





927




597


Non-operating expenses



246











246





Other expenses



1,029




554




618





1,583




1,110


Total noninterest expense



26,297




25,875




25,273





52,172




49,492


Income before income taxes



19,033




17,760




18,915





36,793




37,157


Income tax expense



5,375




4,444




4,971





9,819




9,714


Net income


$

13,658



$

13,316



$

13,944




$

26,974



$

27,443


Share data:

















Weighted average shares outstanding, basic



6,981,907




6,948,040




6,930,268





6,959,856




6,918,779


Weighted average shares outstanding, diluted



7,026,807




7,010,983




6,998,936





7,013,538




6,993,437


Basic earnings per share


$

1.95



$

1.91



$

2.00




$

3.86



$

3.95


Diluted earnings per share


$

1.94



$

1.89



$

1.98




$

3.83



$

3.91


CAMBRIDGE BANCORP AND SUBSIDIARIES
MARGIN & YIELD ANALYSIS




Three Months Ended




June 30, 2022



March 31, 2022



June 30, 2021




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


$

3,409,819



$

30,235




3.56

%


$

3,314,082



$

28,404




3.48

%


$

3,195,077



$

30,557




3.84

%

Tax-exempt



46,771




448




3.84




46,702




443




3.85




33,039




348




4.22


Securities available for
   sale (3)




























Taxable



198,985




671




1.35




203,193




650




1.30




218,230




651




1.20


Securities held to maturity




























Taxable



1,012,604




4,318




1.71




937,047




3,761




1.63




343,380




1,372




1.60


Tax-exempt



101,029




794




3.15




104,837




828




3.20




102,650




801




3.13


Cash and cash equivalents



48,197




42




0.35




147,977




54




0.15




132,964




28




0.08


Total interest-earning
   assets (4)



4,817,405




36,508




3.04

%



4,753,838




34,140




2.91

%



4,025,340




33,757




3.36

%

Non-interest-earning
   assets



232,165










238,864










251,641








Allowance for credit losses



(34,368)










(34,780)










(36,183)








Total assets


$

5,015,202









$

4,957,922









$

4,240,798








LIABILITIES AND
   SHAREHOLDERS’
   EQUITY




























Interest-bearing deposits




























Checking accounts


$

743,030



$

50




0.03

%


$

764,706



$

44




0.02

%


$

671,424



$

51




0.03

%

Savings accounts



899,820




181




0.08




923,168




177




0.08




959,606




174




0.07


Money market accounts



1,203,020




1,531




0.51




1,187,173




1,570




0.54




706,100




467




0.27


Certificates of deposit



129,060




82




0.25




144,114




105




0.30




218,738




314




0.58


Total interest-bearing
   deposits



2,974,930




1,844




0.25




3,019,161




1,896




0.25




2,555,868




1,006




0.16


Other borrowed funds



56,734




254




1.80




16,369




133




3.30




18,288




141




3.09


Total interest-bearing
   liabilities



3,031,664




2,098




0.28

%



3,035,530




2,029




0.27

%



2,574,156




1,147




0.18

%

Non-interest-bearing
   liabilities




























Demand deposits



1,452,911










1,388,409










1,156,854








Other liabilities



93,966










97,373










97,515








Total liabilities



4,578,541










4,521,312










3,828,525








Shareholders’ equity



436,661










436,610










412,273








Total liabilities &
   shareholders’
   equity


$

5,015,202









$

4,957,922









$

4,240,798








Net interest income on a
   fully taxable equivalent
   basis






34,410










32,111










32,610





Less taxable equivalent
   adjustment






(261)










(267)










(241)





Net interest income





$

34,149









$

31,844









$

32,369





Net interest spread (5)









2.76

%









2.64

%









3.18

%

Net interest margin (6)









2.86

%









2.74

%









3.25

%



(1)

Annualized on a fully taxable equivalent basis calculated using a federal tax rate of 21% in 2022 and 2021

(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 is excluded from interest-earning assets and associated dividend income is excluded from interest income.

(5)

Net interest spread represents the difference between the weighted average yield on interest-earning assets, inclusive of PPP loans outstanding during 2022 and 2021, 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, inclusive of PPP loans outstanding during 2022 and 2021.

CAMBRIDGE BANCORP AND SUBSIDIARIES
MARGIN & YIELD ANALYSIS




Six Months Ended



June 30, 2022



June 30, 2021





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


$

3,362,216



$

58,639




3.52

%


$

3,168,843



$

60,882




3.87

%


Tax-exempt



46,736




891




3.84




29,678




629




4.27



Securities available for sale (3)




















Taxable



201,078




1,321




1.32




223,930




1,344




1.21



Securities held to maturity




















Taxable



975,034




8,079




1.67




263,970




2,264




1.73



Tax-exempt



102,922




1,622




3.18




102,500




1,634




3.21



Cash and cash equivalents



97,811




96




0.20




138,715




59




0.09



Total interest-earning assets (4)



4,785,797




70,648




2.98

%



3,927,636




66,812




3.43

%


Non-interest-earning assets



235,499










255,441









Allowance for credit losses



(34,573)










(36,086)









Total assets


$

4,986,723









$

4,146,991









LIABILITIES AND SHAREHOLDERS’
   EQUITY




















Interest-bearing deposits




















Checking accounts


$

753,808



$

94




0.03

%


$

652,196



$

134




0.04

%


Savings accounts



911,430




358




0.08




968,461




446




0.09



Money market accounts



1,195,141




3,101




0.52




646,453




1,004




0.31



Certificates of deposit



136,545




187




0.28




228,990




697




0.61



Total interest-bearing deposits



2,996,924




3,740




0.25

%



2,496,100




2,281




0.18

%


Other borrowed funds



36,663




387




2.13




20,138




281




2.81



Total interest-bearing liabilities



3,033,587




4,127




0.27

%



2,516,238




2,562




0.21

%


Non-interest-bearing liabilities




















Demand deposits



1,420,839










1,121,149









Other liabilities



95,661










101,109









Total liabilities



4,550,087










3,738,496









Shareholders’ equity



436,636










408,495









Total liabilities & shareholders’ equity


$

4,986,723









$

4,146,991









Net interest income on a fully taxable equivalent
   basis






66,521










64,250






Less taxable equivalent adjustment






(528)










(475)






Net interest income





$

65,993









$

63,775






Net interest spread (5)









2.70

%









3.23

%


Net interest margin (6)









2.80

%









3.30

%




(1)

Annualized on a fully taxable equivalent basis calculated using a federal tax rate of 21% in 2022 and 2021

(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 is excluded from interest-earning assets and associated dividend income is excluded from interest income.

(5)

Net interest spread represents the difference between the weighted average yield on interest-earning assets, inclusive of PPP loans outstanding during 2022 and 2021, 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, inclusive of PPP loans outstanding during 2022 and 2021.

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.



Three Months Ended



Six Months Ended


Operating Net Income / Operating Diluted Earnings Per Share


June 30, 2022



March 31, 2022



June 30, 2021



June 30, 2022



June 30, 2021




(dollars in thousands, except share data)


















Net Income (a GAAP measure)


$

13,658



$

13,316



$

13,944



$

26,974



$

27,443


Less: Death benefit on bank owned life insurance (“BOLI”) and policy surrender



(1,157)










(1,157)





Add: Non-operating expenses (GAAP)



246










246





Add: Tax effect of BOLI policy surrender (1)



736










736





Less: Tax effect of merger expenses (1)

`


(63)










(63)





Operating Net Income (a non-GAAP
   measure)


$

13,420



$

13,316



$

13,944



$

26,736



$

27,443


Less: Dividends and Undistributed Earnings
   Allocated to Participating Securities (a non-GAAP measure)



(42)




(59)




(67)




(120)




(126)


Operating Net Income Applicable to Common
   Shareholders (a non-GAAP measure)


$

13,378



$

13,257



$

13,877



$

26,616



$

27,317


Weighted Average Diluted Shares



7,026,807




7,010,983




6,998,936




7,013,538




6,993,437


Operating Diluted Earnings Per Share
   (a non-GAAP measure)


$

1.90



$

1.89



$

1.98



$

3.79



$

3.91




(1)

The net tax benefit associated with non-operating items is determined by assessing whether each non-operating 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. 



June 30, 2022



March 31, 2022



December 31, 2021



June 30, 2021




(dollars in thousands)


Tangible Common Equity:













Shareholders’ equity (GAAP)


$

442,051



$

436,165



$

437,837



$

419,501


Less: Goodwill and acquisition related intangibles (GAAP)



(54,348)




(54,438)




(54,529)




(54,709)


Tangible Common Equity (a non-GAAP measure)


$

387,703



$

381,727



$

383,308



$

364,792


Total assets (GAAP)


$

5,057,935



$

5,018,379



$

4,891,544



$

4,303,287


Less: Goodwill and acquisition related intangibles (GAAP)



(54,348)




(54,438)




(54,529)




(54,709)


Tangible assets (a non-GAAP measure)


$

5,003,587



$

4,963,941



$

4,837,015



$

4,248,578


Tangible Common Equity Ratio (a non-GAAP
   measure)



7.75

%



7.69

%



7.92

%



8.59

%














Tangible Book Value Per Share:













Tangible Common Equity (a non-GAAP measure)


$

387,703



$

381,727



$

383,308



$

364,792


Common shares outstanding



7,007,063




7,000,995




6,968,192




6,965,557


Tangible Book Value Per Share (a non-GAAP measure)


$

55.33



$

54.52



$

55.01



$

52.37




Three Months Ended



Six Months Ended




June 30, 2022



March 31, 2022



June 30, 2021



June 30, 2022



June 30, 2021




(dollars in thousands)


Efficiency Ratio: (1)
















Noninterest expense


$

26,297



$

25,875



$

25,273



$

52,172



$

49,492


Net interest and dividend income


$

34,181



$

31,869



$

32,381



$

66,050



$

63,787


Total noninterest income



11,149




11,354




10,906




22,503




21,755


Total revenue


$

45,330



$

43,223



$

43,287



$

88,553



$

85,542


Efficiency Ratio



58.01

%



59.86

%



58.38

%



58.92

%



57.86

%

















Operating Efficiency Ratio: (2)
















Noninterest expense


$

26,297



$

25,875



$

25,273



$

52,172



$

49,492


Non-operating expenses (Pretax)



(246)










(246)





Operating expense (a non-GAAP measure)


$

26,051



$

25,875



$

25,273



$

51,926



$

49,492


















Total revenue


$

45,330



$

43,223



$

43,287



$

88,553



$

85,542


Death benefit on bank owned life insurance (“BOLI”) and policy surrender



(1,157)










(1,157)





Operating revenue (a non-GAAP measure)


$

44,173



$

43,223



$

43,287



$

87,396



$

85,542


Operating Efficiency Ratio (a non-GAAP measure)



58.97

%



59.86

%



58.38

%



59.41

%



57.86

%



















Three Months Ended



Six Months Ended




June 30, 2022



March 31, 2022



June 30, 2021



June 30, 2022



June 30, 2021




(dollars in thousands)


Operating Return on Tangible Common Equity: (3)
















Operating Net Income (a non-GAAP measure)


$

13,420



$

13,316



$

13,944



$

26,736



$

27,443


Average common equity


$

436,661



$

436,610



$

412,273



$

436,636



$

408,495


Average goodwill and merger related intangibles



(54,397)




(54,483)




(54,752)




(54,440)




(54,799)


Average tangible common equity (a non-GAAP measure)


$

382,264



$

382,127



$

357,521



$

382,196



$

353,696


Operating Return on Tangible Common Equity (a non-GAAP measure)



14.08

%



14.13

%



15.64

%



14.11

%



15.65

%

















Operating Return on Average Assets: (4)
















Operating Net Income (a non-GAAP measure)


$

13,420



$

13,316



$

13,944



$

26,736



$

27,443


Average assets


$

5,015,202



$

4,957,922



$

4,240,798



$

4,986,723



$

4,146,991


Operating Return on Average Assets (a non-GAAP measure)



1.07

%



1.09

%



1.32

%



1.08

%



1.33

%



(1)

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

(2)

Operating efficiency ratio represents operating expense as a percentage of total revenue. 

(3)

Operating return on tangible common equity represents operating net income as a percentage of average tangible common equity.

(4)

Operating return on average assets represents operating net income as a percentage of average assets.

SOURCE Cambridge Bancorp

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