FOR IMMEDIATE RELEASE

Cambridge Bancorp Announces First Quarter 2019 Earnings and Declares Dividend

CAMBRIDGE, MA. (April 17, 2019) - Cambridge Bancorp (NASDAQ: CATC) (the “Company”), the parent of Cambridge Trust Company, today announced unaudited net income of $6,198,000 for the quarter ended March 31, 2019, an increase of $393,000, or 6.8%, compared to net income of $5,805,000 for the quarter ended March 31, 2018. Diluted earnings per share were $1.49 for the first quarter of 2019, representing a 5.7% increase over diluted earnings per share of $1.41 for the same quarter last year.

Excluding merger and acquisition expenses incurred during the quarter related to the pending Optima Bank & Trust Company (“Optima”) merger, operating net income was $6,285,000 for the quarter ended March 31, 2019, an increase of $480,000, or 8.3%, compared to $5,805,000 for the quarter ended March 31, 2018. Operating diluted earnings per share were $1.52 for the first quarter of 2019, representing a 7.8% increase over operating diluted earnings per share of $1.41 for the same quarter last year. The merger is anticipated to close on April 17, 2019.

First quarter 2019 highlights as compared to the first quarter of 2018 :

“We are pleased to report the Company delivered strong earnings during the first quarter of 2019,” noted Denis K. Sheahan, Chairman and CEO. “Cambridge Bancorp posted strong profitability metrics for the quarter with annualized return on average assets of 1.18% and annualized return on average shareholders’ equity of 14.90%. Loan originations remained strong in the first quarter of 2019, however, payoffs in the commercial real estate lending category dampened overall growth. In addition, deposit campaigns and business development initiatives have led to solid core deposit growth.”

Balance Sheet

Total assets increased $37.2 million, or 1.8%, from December 31, 2018 and were $2.1 billion as of March 31, 2019.

Total loans decreased $4.6 million, or 0.3%, from December 31, 2018 and stood at $1.6 billion as of March 31, 2019. The reduction in total loans was due to a decrease in commercial real estate loans of $8.1 million, from $758.0 million at December 31, 2018 to $749.8 million at March 31, 2019, and decreases in commercial and industrial loans of $3.5 million, or 3.8%, from $93.7 million at December 31, 2018 to $90.2 million at March 31, 2019. These decreases were partially offset by increases in residential mortgage loans of $8.9 million, or 1.5%, from $604.3 million at December 31, 2018 to $613.3 million at March 31, 2019. Total loan originations during the quarter were strong despite elevated levels of loan payoffs, particularly in the commercial real estate portfolio.

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The Company’s total investment securities portfolio decreased by $7.4 million, or 1.6% , from $451.0 million at December 31, 2018 to $443.6 million at March 31, 2019 . During the quarter, the Company sold $16.0 million of low-yielding bonds at a loss totaling $87,000.

Within other assets, the adoption of accounting guidance for leases (“ASU 2016-02”) in 2019 required the Company to recognize right of use lease assets and corresponding lease liabilities on the balance sheet. The increase in other assets of $35.8 million from December 31, 2018 was primarily due to the capitalization of the right of use assets in accordance with ASU 2016-02. The corresponding lease liabilities recognized in accordance with ASU 2016-02 was the primary reason for the increase in other liabilities of $31.0 million.

Core deposits, which the Company defines as all deposits other than certificates of deposit, increased by $43.1 million, or 2.6%, from $1.7 billion at December 31, 2018. Growth in core deposits during the quarter was attributable to successful savings and money market campaigns, as we strive to attract and deepen client relationships. The cost of total deposits for the quarter ended March 31, 2019 was 0.55%, as compared to 0.22% for the quarter ended March 31, 2018. Total deposits at March 31, 2019 were $1.9 billion.

Short-term borrowings were reduced to zero as of March 31, 2019 from $90.0 million at December 31, 2018 due to strong core deposit growth. Certificates of deposit, which totaled $169.3 million at March 31, 2019, increased by $47.8 million from $121.4 million at December 31, 2018, primarily due to a $45.6 million increase in brokered certificates of deposit, an alternative source of wholesale funding.

Net Interest and Dividend Income

For the quarter ended March 31, 2019, net interest and dividend income after provision for loan losses increased by $1.6 million, or 10.9%, to $16.4 million, as compared to $14.7 million for the quarter ended March 31, 2018. Interest on loans increased $2.9 million, or 21.5%, which was driven by a combination of net loan growth and the impact of rising rates on our variable rate loan portfolio. Interest on deposits increased by $1.5 million, or 160.0%, due to an increase in cost of deposits combined with strong deposit growth. The Company’s net interest margin, on a fully taxable equivalent basis, decreased two basis points to 3.26% for the quarter ended March 31, 2019, as compared to 3.28% for the quarter ended March 31, 2018.

Provision for Loan Loss

The Company released $93,000 from the allowance for loan losses due to the volume and change in mix of the loan portfolio during the quarter ended March 31, 2019. The allowance for loan losses to total loans ratio remained strong at 1.07% as of March 31, 2019.  

Noninterest Income

Total noninterest income decreased by $221,000, or 2.7%, to $8.0 million for the quarter ended March 31, 2019, as compared to $8.2 million for the quarter ended March 31, 2018. The decrease was due to a bank owned life insurance gain recorded in the quarter ended March 31, 2018 as well as losses on the sale of investment securities of $87,000 in the current quarter of 2019. Noninterest income was 32.9% of total revenue for the quarter ended March 31, 2019.

Wealth Management revenue remained consistent for the first quarter of 2019 as compared to the first quarter of 2018. Wealth Management Assets under Management and Administration increased by $222.8 million, or 7.7%, from December 31, 2018 and ended at $3.1 billion as of March 31, 2019, primarily as a result of appreciation in the equity markets during the first quarter of 2019.

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Noninterest Expense

Total noninterest expense increased by $872,000, or 5.6%, to $16.4 million for the quarter ended March 31, 2019, as compared to $15.5 million for the quarter ended March 31, 2018, primarily driven by higher salaries and benefits expense, data processing expense, occupancy and equipment expense, and merger expenses. The increase in salaries and employee benefits expense of $754,000 was driven by increased staffing to support new business development initiatives. The increase of $116,000 in data processing expense was due to investments made in technology. The increase of $103,000 in occupancy and equipment expense was due to the opening of an additional Wealth Management office in Boston, MA. Merger expenses of $91,000 were related to legal, accounting, and regulatory filing costs associated with the pending acquisition of Optima.

Noninterest expense increases were partially offset by lower FDIC insurance expense of $151,000 for the quarter ended March 31, 2019, as compared to March 31, 2018, as the Company has begun to recognize its apportioned share of credits associated with the FDIC’s Deposit Insurance Fund which has exceeded its target reserve ratio.

Asset Quality

Loan quality remained sound with non-performing loans totaling $626,000, or 0.04% of total loans outstanding as of March 31, 2019. The allowance for loan losses was $16.7 million, or 1.07% of total loans outstanding at March 31, 2019, as compared to $16.8 million, or 1.08% of total loans outstanding at year end 2018. Net loan charge offs remained minimal at $23,000 for the first quarter of 2019.

Income Taxes

The Company’s effective tax rate was 21.9% for the quarter ended March 31, 2019, as compared to 21.8% for the quarter ended March 31, 2018. Additionally, the Company recognized $186,000 of tax benefit resulting from the accounting for share-based payments during the first quarter of 2019.

Dividend & Capital

On April 16, 2019, the Company’s Board of Directors declared a quarterly cash dividend of $0.51 per share, which is payable on May 16, 2019 to shareholders of record as of the close of business on May 2, 2019.  

The Company’s total shareholders’ equity to total assets ratio increased by 11 basis points to 8.06% as of March 31, 2019, as compared to 7.95% as of December 31, 2018. Book value per share grew by $1.11, or 2.7%, to $41.78 as of March 31, 2019, as compared to $40.67 as of December 31, 2018.  

Merger Update

The Company has received all required regulatory approvals for the proposed merger between Cambridge Trust Company and Optima. The shareholders of Optima approved the transaction at a special meeting held on March 14, 2019. The anticipated closing date of the merger is April 17, 2019, effective at 11:59 p.m. Eastern Standard Time, subject to closing conditions.  The addition of Optima’s six banking offices will bring our total full service banking office count to sixteen and allow us to offer comprehensive private banking and wealth management services in New Hampshire.

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About Cambridge Bancorp

Cambridge Bancorp, the parent company of Cambridge Trust Company, is based in Cambridge, Massachusetts. Cambridge Trust Company is a 128-year-old Massachusetts chartered commercial bank with approximately $2.1 billion in assets and 10 Massachusetts locations in Cambridge, Boston, Belmont, Concord, Lexington, and Weston. Cambridge Trust Company is one of New England’s leaders in private banking and wealth management with $3.1 billion in client assets under management and administration. The Wealth Management group maintains offices in Boston, 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 www.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, 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: economic conditions being less favorable than expected, disruptions to the credit and financial markets, 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, 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 our Annual Report on Form 10-K for the year end December 31, 2018, which the Company filed on March 18, 2019. 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.

CONTACT:

Cambridge Bancorp

Michael F. Carotenuto

Chief Financial Officer

617-520-5520

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GAAP to Non-GAAP Reconciliation (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.

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