Cambridge Bancorp Announces Results for 2022 and Declares Increased Dividend

CAMBRIDGE, Mass., Jan. 24, 2023 /PRNewswire/ — Cambridge Bancorp (NASDAQ: CATC) (the “Company”), the parent company of Cambridge Trust Company (the “Bank”), today announced unaudited net income of $52.9 million for the year ended December 31, 2022, a decrease of $1.1 million, or 2.1%, as compared to net income of $54.0 million for the year ended December 31, 2021. Diluted earnings per share were $7.30 for the year ended December 31, 2022, representing a decrease of $0.39, or 5.1%, as compared to diluted earnings per share of $7.69 for the year ended December 31, 2021.

The results for the year ended December 31, 2022, include the impact of the merger with Northmark Bank (“Northmark”) and the corresponding effects to the provision for credit losses, merger expenses, and other non-operating items, as detailed in the GAAP to Non-GAAP reconciliations within this release. Excluding these items, operating net income was $56.5 million for the year ended December 31, 2022, an increase of $1.7 million, or 3.1%, as compared to operating net income of $54.8 million for the year ended December 31, 2021. Operating diluted earnings per share were $7.80 for the year ended December 31, 2022, representing a decrease of $0.01, or 0.13%, as compared to operating diluted earnings per share of $7.81 for the year ended December 31, 2021.

For the quarter ended December 31, 2022, unaudited net income was $11.3 million, representing a decrease of  $3.3 million, or 22.6%, as compared to unaudited net income of $14.6 million for the quarter ended September 30, 2022. Diluted earnings per share were $1.44 for the quarter ended December 31, 2022, representing a 30.4% decrease as compared to diluted earnings per share of $2.07 for the quarter ended September 30, 2022.

The results for the quarter ended December 31, 2022 include the impact of the merger with Northmark and the corresponding effects to the provision for credit losses, merger expenses, and other non-operating items. Excluding these items, operating net income for the quarter ended December 31, 2022 was $15.0 million, an increase of $303,000, or 2.1%, as compared to operating net income of $14.7 million for the quarter ended September 30, 2022. Operating diluted earnings per share were $1.92 for the quarter ended December 31, 2022, representing a 8.1% decrease as compared to operating diluted earnings per share of $2.09 for the quarter ended September 30, 2022.

 2022 Highlights:

• Asset quality at December 31, 2022, remained excellent with ratios of non-performing loans to total loans and non-performing assets to total assets at 0.16% and 0.12%, respectively.
• Completed a merger with Northmark Bank which provided banking assets of $429.0 million, net of fair value adjustments, and our entry into the markets of Andover, North Andover and Winchester, MA.
• Organic loan growth (excluding the impact of Northmark’s acquired balances) of $440.5 million, or 13.3%.
• Financial performance ratios for the year ended December 31, 2022, were strong with
• Return on Average Assets (“ROA”) of 1.03%, Operating Return on Average Assets of 1.10% and
• Return on Average Equity of 11.56% and Operating Return on Tangible Common Shareholders’ Equity (“ROTCE”) of 14.18%.
• Book value per share at December 31, 2022, increased to $66.38 from $63.69 at September 30, 2022. Tangible book value per share at December 31, 2022, increased to $57.15 from $55.95 at September 30, 2022.
• The common equity to assets ratio increased to 9.31% at December 31, 2022, from 8.68% at September 30, 2022. The tangible common equity to tangible assets ratio increased to 8.12% at December 31, 2022, from 7.70% at September 30, 2022.

“I am pleased with how we managed through 2022, which proved to be a challenging period of volatility in equity markets and interest rates. While we see evidence of an economic slowdown in 2023, we feel well prepared with continued strength in asset quality and capital levels. I am also pleased to announce a 5% increase to the Company’s dividend,” noted Denis K. Sheahan, Chairman, President and CEO.

Merger with Northmark

On October 1, 2022, the Company completed its merger with Northmark which added three banking offices in Massachusetts. The Company paid total consideration of $62.8 million, which consisted of 788,137 shares of Cambridge Bancorp common stock issued to Northmark shareholders. The transaction included the assumption of $303.2 million in total loans and the acquisition of $373.1 million in deposits, each at fair value.

For further details on the loans and deposits acquired, see the “Organic Loan and Deposit Growth” table provided near the end of the financial schedules accompanying this release.

Balance Sheet

Total assets increased by $668.2 million, or 13.7%, from $4.89 billion at December 31, 2021 to $5.56 billion at December 31, 2022, inclusive of the Northmark merger.

Total loans increased by $743.8 million, or 22.4%, from $3.32 billion at December 31, 2021 to $4.06 billion at December 31, 2022, inclusive of the Northmark merger.

Inclusive of the impact of the Northmark merger:

• Residential real estate loans increased by $233.8 million, from $1.42 billion at December 31, 2021 to $1.65 billion at December 31, 2022.
• Commercial real estate loans increased by $403.4 million, from $1.51 billion at December 31, 2021 to $1.91 billion at December 31, 2022.
• Commercial and industrial loans increased by $81.2 million, from $269.4 million at December 31, 2021 to $350.7 million at December 31, 2022.

Excluding the net loans acquired as a result of the Northmark merger, total loans grew by $440.5 million, or 13.3%, from  December 31, 2021. Please see the Organic Loan and Deposit table for more details.

The Company recorded goodwill of $12.6 million associated with the merger with Northmark. Total goodwill at December 31, 2022 was $64.5 million.

The Company’s total investment securities portfolio increased by $30.5 million, or 2.6%, from $1.17 billion at December 31, 2021 to $1.21 billion at December 31, 2022.

Total deposits, inclusive of the Northmark merger, increased by $484.2 million, or 11.2%, to $4.82 billion at December 31, 2022, as compared to $4.33 billion at December 31, 2021.  Excluding wholesale deposits, total deposits increased by $105.4 million, or 2.4%.

• Core deposits, which the Company defines as all deposits other than certificates of deposit, increased by $59.7 million, or 1.4%, to $4.23 billion at December 31, 2022 from $4.17 billion at December 31, 2021, due to the Northmark merger.
• Excluding the impact of the Northmark merger, organic core deposits decreased by $217.3 million, or 5.2%, as the rapidly increasing interest rate environment saw clients use funds for investment opportunities, spend down historically high balances, and seek additional return.
• Certificates of deposit totaled $586.6 million at December 31, 2022, an increase of $424.6 million from $162.1 million at December 31, 2021, primarily due to increases in wholesale certificates of deposit.
• Total wholesale certificates of deposit, which are included within certificates of deposit, were $381.6 million and $2.7 million at December 31, 2022 and December 31, 2021, respectively.
• Inclusive of the Northmark merger, the cost of total deposits was 0.66% for the quarter ended December 31, 2022, as compared to 0.26% for the quarter ended September 30, 2022. The cost of total deposits excluding wholesale deposits was 0.45% for the quarter ended December 31, 2022 and 0.24% for the quarter ended September 30, 2022. At December 31, 2022, the spot cost of non-wholesale deposits was 0.80%, as compared 0.28% at the quarter ended September 30, 2022.

Borrowings totaled $105.2 million at December 31, 2022, representing a $88.7 million increase from $16.5 million at December 31, 2021, due to fluctuations in liquidity as a result of reduced deposit funding. 

Net Interest and Dividend Income

Net interest and dividend income, before the provision for credit losses, increased by $4.6 million, or 12.7%, to $40.9 million for the quarter ended December 31, 2022, from $36.3 million for the quarter ended September 30, 2022. This was primarily due to an increase in average earning assets (both organic and as a result of the Northmark merger) and higher yields on earning assets, partially offset by higher cost of funds.

The Company’s net interest margin on a fully taxable equivalent basis, inclusive of the Northmark merger, increased by 13 basis points to 3.08% for the quarter ended December 31, 2022, as compared to 2.95% for the quarter ended September 30, 2022.

For the year ended December 31, 2022, net interest and dividend income before the provision for credit losses increased by $15.2 million, or 11.9%, to $143.2 million, as compared to $128.0 million for the year ended December 31, 2021. This increase was primarily due to an increase in average earning assets (both organic and as a result of the Northmark merger) 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 cost of funds.

The Company’s net interest margin on a fully taxable equivalent basis decreased by 20 basis points to 2.92% for the year ended December 31, 2022, as compared to 3.12% for the year ended December 31, 2021.

In order to provide greater disclosure of the impact of loan related merger accounting, 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, the adjusted net interest margin, on a fully taxable equivalent basis, for the quarter ended December 31, 2022, was 3.01%, representing an eight basis point increase from the adjusted net interest margin, on a fully taxable equivalent basis, of 2.93% for the quarter ended September 30, 2022.

 

		Three Months Ended
		December 31, 2022
		Average Balance				Interest Income/ Expenses				Rate Earned/ Paid
		(dollars in thousands)
Total interest-earning assets (GAAP)		$	5,283,205
Net interest income on a fully taxable equivalent basis (GAAP)						$	41,021
Net interest margin on a fully taxable equivalent basis (GAAP)											3.08	%
Less: Accretion of loan fair value adjustments							(915)				-0.07	%
Adjusted net interest margin on a fully taxable equivalent basis		$	5,283,205			$	40,106				3.01	%

 

Excluding the impact of merger related loan accretion, the adjusted net interest margin, on a fully taxable equivalent basis, for the year ended December 31, 2022, was 2.87%, representing a six basis point decrease from the adjusted net interest margin, on a fully taxable equivalent basis, of 2.93% for the year ended December 31, 2021.

 

		Year Ended
		December 31, 2022
		Average Balance				Interest Income/ Expenses				Rate Earned/ Paid
		(dollars in thousands)
Total interest-earning assets (GAAP)		$	4,938,595
Net interest income on a fully taxable equivalent basis (GAAP)						$	143,971
Net interest margin on a fully taxable equivalent basis (GAAP)											2.92	%
Less: Accretion of loan fair value adjustments							(2,259)				-0.05	%
Adjusted net interest margin on a fully taxable equivalent basis		$	4,938,595			$	141,712				2.87	%

 

Provision for (Release of) Credit Losses

The provision for credit losses during the quarter ended December 31, 2022 includes the impact of the Northmark merger on the Company’s allowance for credit losses under the current expected credit loss (“CECL”) accounting standard. CECL requires the removal of Northmark’s prior allowance for loan losses through the balance sheet as goodwill and re-establishment of a new allowance for credit losses through the income statement within the provision for credit losses. Total provision expense for the three months ended December 31, 2022 was $3.7 million, which included $2.2 million for the recognition of the CECL merger accounting impact, inclusive of unfunded commitments. The Company considers such expense as a non-operating expense. The Company recorded additional provision for credit losses due to loan growth and the outlook for economic conditions. The Company recorded a $612,000 provision for credit losses for the quarter ended September 30, 2022.

For the year ended December 31, 2022, the Company recorded a provision for credit losses of $3.9 million, which included $2.2 million for the recognition of the non-operating impact of merger related CECL accounting, as compared to a $1.3 million release of credit losses for the year ended December 31, 2021.

Noninterest Income

Inclusive of the Northmark merger, total noninterest income decreased by $380,000, or 3.6%, to $10.1 million for the quarter ended December 31, 2022, as compared to $10.4 million for the quarter ended September 30, 2022. This change was primarily the result of lower loan related derivative income and wealth management revenue. Noninterest income was 19.8% of total revenue for the quarter ended December 31, 2022.

• Loan related derivative income decreased by $142,000, or 66.7%, to $71,000 for the quarter ended December 31, 2022, as compared to $213,000 for the quarter ended September 30, 2022, primarily as a result of lower floating rate loan volume.
• Wealth management revenue decreased by $140,000, or 1.7%, to $8.1 million for the quarter ended December 31, 2022, as compared to $8.2 million for the quarter ended September 30, 2022, primarily due to seasonal tax preparation fees which were recognized during the third fiscal quarter, partially offset by positive returns in both the bond and stock markets. Wealth Management Assets under Management and Administration were $4.1 billion at December 31, 2022, an increase of $222.8 million, or 5.8%, from September 30, 2022, primarily due to positive returns in both the bond and stock markets.

Inclusive of the Northmark merger, total noninterest income decreased by $1.3 million, or 3.0% to $43.0 million for the twelve months ended December 31, 2022, as compared to $44.3 million for the twelve months ended December 31, 2021. This was primarily the result of lower wealth management revenue, lower loan related derivative income, and lower gains on loans sold. These items were partially offset by higher bank owned life insurance income, higher deposit account fees, and higher other income. Noninterest income was 23.1% of total revenue for the twelve months ended December 31, 2022.

• Wealth management revenue decreased by $2.0 million, or 5.7%, to $33.0 million for the twelve months ended December 31, 2022, as compared to $35.0 million for the twelve months ended December 31, 2021, primarily due to a decline in both the bond and stock markets.
• Loan related derivative income decreased by $1.5 million, or 70.6%, to $625,000 for the twelve months ended December 31, 2022, as compared to $2.1 million for the twelve months ended December 31, 2021, primarily as a result of lower floating rate loan volume.
• Gain on loans sold decreased by $734,000, or 88.2%, to $98,000 for the twelve months ended December 31, 2022, as compared to $832,000 for the twelve months ended December 31, 2021, due to lower refinance activity and the corresponding lower sales of residential mortgages.
• Bank owned life insurance (“BOLI”) income increased by $1.0 million, or 125.7%, to $1.8 million for the twelve months ended December 31, 2022, as compared to $801,000 for the twelve months ended December 31, 2021, primarily due to $1.2 million related to a death benefit claim and policy surrender.
• Deposit account fees increased by $974,000, or 50.2%, to $2.9 million for the twelve months ended December 31, 2022, as compared to $1.9 million for the twelve months ended December 31, 2021, primarily due to fee revenue from commercial deposit sweep products resulting from higher interest rates.
• Other income increased by $844,000, or 41.7%, to $2.9 million for the twelve months ended December 31, 2022, as compared to $2.0 million for the twelve months ended December 31, 2021, primarily due to equity warrant revenue and success fees associated with Innovation Banking loans, in addition to gains recognized on a community development fund investment.

Noninterest Expense

Total noninterest expense, inclusive of the Northmark merger, increased by $5.5 million, or 21.0% to $31.9 million for the quarter ended December 31, 2022, as compared to $26.3 million for the quarter ended September 30, 2022. During the quarter ended December 31, 2022, there was an increase in non-operating expenses, professional services, salaries and employee benefits expense, and marketing expense, as compared to the quarter ended September 30, 2022.

• Non-operating expenses increased by $2.5 million to $2.7 million for the quarter ended December 31, 2022, from $150,000 for the quarter ended September 30, 2022, primarily due to merger expenses and contractual termination costs.
• Professional fees increased by $1.1 million, or 146.3%, to $1.8 million for the quarter ended December 31, 2022, from $749,000 for the quarter ended September 30, 2022, primarily due to higher consulting fees associated with vendor contract negotiations and increased legal expenses associated with contract reviews and regulatory filings.
• Salary and employee benefits expense increased by $988,000, or 5.7%, to $18.3 million for the quarter ended December 31, 2022, from $17.3 million for the quarter ended September 30, 2022, primarily due to staffing additions associated with the Northmark merger.
• Marketing expense increased by $397,000, or 54.3%, to $1.1 million for the quarter ended December 31, 2022, from $731,000 for the quarter ended September 30, 2022, primarily due to the continuation of a marketing campaign that began during the third fiscal quarter of 2022.

Total noninterest expense, inclusive of the Northmark merger, increased by $9.9 million, or 9.9%, to $110.4 million for the twelve months ended December 31, 2022, as compared to $100.5 million for the twelve months ended December 31, 2021, primarily driven by increases in salaries and employee benefits expense, data processing expense, nonoperating expenses, and FDIC expense, partially offset by decreases in professional services and marketing expense.

• Salaries and employee benefits expense increased by $5.0 million, or 7.6%, to $70.1 million for the twelve months ended December 31, 2022, from $65.1 million for the twelve months ended December 31, 2021, primarily due to increased staffing related to the Northmark merger, normal merit increases, additions to support business initiatives, and increases in employee benefit costs.
• Data processing increased by $1.9 million, or 21.3%, to $10.7 million for the twelve months ended December 31, 2022, from $8.8 million for the twelve months ended December 31, 2021, primarily as a result of the full year impact of a new wealth management system and the partial year impact of higher data processing fees associated the Northmark merger.
• Nonoperating expenses increased by $1.9 million, or 173.6%, to $3.1 million for the twelve months ended December 31, 2022, from $1.1 million for the twelve months ended December 31, 2021, primarily due to merger expenses and contractual termination costs.
• FDIC insurance increased by $527,000, or 40.0%, to $1.8 million for the twelve months ended December 31, 2022, from $1.3 million for the twelve months ended December 31, 2021, primarily due to balance sheet growth.
• Professional services decreased by $663,000, or 12.3%, to $4.7 million for the twelve months ended December 31, 2022, from $5.4 million for the twelve months ended December 31, 2021, primarily due to lower recruiting and temporary help expenses as well as lower consulting fees.
• Marketing expense decreased by $235,000, or 9.3%, to $2.3 million for the twelve months ended December 31, 2022, from $2.5 million for the twelve months ended December 31, 2021.

Asset Quality 

Non-performing loans totaled $6.5 million, or 0.16% of total loans outstanding at December 31, 2022. The allowance for credit losses was $37.8 million, or 0.93% of total loans outstanding at December 31, 2022, as compared to $34.7 million, or 0.96% of total loans outstanding at September 30, 2022.

The Company recorded net loan recoveries of $16,000, or 0.00% of total loans (annualized), for the quarter ended December 31, 2022, as compared to net loan recoveries of $10,000, or 0.00% of total loans (annualized), for the quarter ended September 30, 2022.

Net loan recoveries were $53,000, or 0.00% of total loans, for the twelve months ended December 31, 2022, as compared to net loan recoveries of $154,000, or 0.00% of total loans, for the twelve months ended December 31, 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
		December 31, 2022				September 30, 2022				December 31, 2021
		(dollars in thousands)
Nonperforming assets		$	6,542			$	6,383			$	5,386
Troubled debt restructurings (“TDRs”):
Non-performing (included in total non-performing loans above)		$	703			$	726			$	758
Nonperforming loans/total loans			0.16	%			0.18	%			0.16	%
Nonperforming assets/total assets			0.12	%			0.12	%			0.11	%
TDRs/total loans			0.02	%			0.02	%			0.02	%
		Additional Asset Quality Indicators
		December 31, 2022				September 30, 2022				December 31, 2021
Delinquent loans 30-89 days past due/total loans			0.36	%			0.38	%			0.32	%
Quarterly net recoveries (charge-offs)/total loans (annualized)			0.00	%			0.00	%			0.00	%
Year to date net recoveries (charge-offs)/total loans			0.00	%			0.00	%			0.00	%
Allowance for credit losses/nonperforming loans			577.41	%			544.38	%			640.48	%
Allowance for credit losses/total loans			0.93	%			0.96	%			1.04	%

 

Income Taxes

The Company’s effective tax rate was 26.5% for the quarter ended December 31, 2022, representing an increase of 1.7%, as compared to 26.1% for the quarter ended September 30, 2022.  For the year ended December 31, 2022, the Company’s effective tax rate was 26.5%, representing an increase of 1.4%, as compared to 26.1% for the year ended December 31, 2021, primarily due to the tax effects of a BOLI policy surrender and death benefit claim during the second fiscal quarter of 2022 and the impact of non-deductible merger related expenses.

Dividend and Capital

On January 23, 2023, the Company’s Board of Directors declared a quarterly cash dividend of $0.67 per share, which is payable on February 23, 2023, to shareholders of record as of the close of business on February 9, 2023. This represents an increase of $0.03, or 5%, as compared to the $0.64 dividend paid in the fourth fiscal quarter of 2022. The Company did not repurchase any shares under its previously announced share repurchase program during the three and twelve months ended December 31, 2022.

The Company’s ratio of tangible common equity to tangible assets increased to 8.12% at December 31, 2022 from 7.70% at September 30, 2022.

Tangible book value per share increased by $1.20, or 2.1%, to $57.15 at December 31, 2022, as compared to $55.95 at September 30, 2022, primarily as a result of increased earnings during the three months ended December 31, 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.

The Company will also conduct a conference call/webcast at 11:00 a.m. Eastern Time on Tuesday, January 24, 2023, 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/10173206/f51351a4b2.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

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 $5.6 billion in assets at December 31, 2022, and a total of 22 Massachusetts and New Hampshire locations. Cambridge Trust Company is one of New England’s leaders in private banking and wealth management with $4.1 billion in client assets under management and administration at December 31, 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; 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 accordance with generally accepted 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												Twelve Months Ended
		December 31,				September 30,				December 31,				December 31,
		2022				2022				2021				2022				2021
		(dollars in thousands, except per share data)
Interest and Dividend Income		$	49,544			$	40,272			$	33,511			$	159,993			$	133,514
Interest Expense			8,657				3,994				1,738				16,778				5,533
Net Interest and Dividend Income			40,887				36,278				31,773				143,215				127,981
Provision for (Release of) Credit Losses			3,681				612				(273)				3,881				(1,294)
Noninterest Income			10,063				10,443				11,454				43,009				44,324
Noninterest Expense			31,869				26,341				25,468				110,382				100,484
Income Before Income Taxes			15,400				19,768				18,032				71,961				73,115
Income Tax Expense			4,081				5,152				4,770				19,052				19,091
Net Income		$	11,319			$	14,616			$	13,262			$	52,909			$	54,024
Operating Net Income*		$	15,045			$	14,742			$	13,501			$	56,549			$	54,828
Data Per Common Share:
Basic Earnings Per Share		$	1.45			$	2.09			$	1.90			$	7.35			$	7.76
Diluted Earnings Per Share			1.44				2.07				1.88				7.30				7.69
Operating Diluted Earnings Per Share*			1.92				2.09				1.92				7.80				7.81
Dividends Declared Per Share			0.64				0.64				0.61				2.56				2.38
Average Common Shares Outstanding:
Basic			7,761,193				6,971,583				6,934,702				7,163,223				6,926,257
Diluted			7,819,574				7,018,832				7,007,761				7,213,913				6,990,603
Selected Performance Ratios:
Net Interest Margin, FTE			3.08	%			2.95	%			2.84	%			2.92	%			3.12	%
Adjusted Net Interest Margin, FTE			3.01	%			2.93	%			2.70	%			2.87	%			2.93	%
Cost of Funds			0.65	%			0.32	%			0.15	%			0.34	%			0.13	%
Cost of Interest-Bearing Liabilities			1.02	%			0.51	%			0.24	%			0.53	%			0.21	%
Cost of Deposits			0.66	%			0.26	%			0.15	%			0.32	%			0.13	%
Cost of Deposits excluding Wholesale Deposits			0.45	%			0.24	%			0.15	%			0.26	%			0.13	%
Return on Average Assets			0.81	%			1.14	%			1.12	%			1.03	%			1.24	%
Return on Average Equity			8.79	%			13.02	%			12.24	%			11.56	%			12.93	%
Efficiency Ratio*			62.55	%			56.38	%			58.92	%			59.27	%			58.32	%
Operating Return on Average Assets*			1.08	%			1.15	%			1.15	%			1.10	%			1.26	%
Operating Return on Tangible Common Equity*			13.61	%			14.94	%			14.27	%			14.18	%			15.10	%
Operating Efficiency Ratio*			57.32	%			56.06	%			58.15	%			57.99	%			57.67	%
		December 31,				September 30,				December 31,
		2022				2022				2021
		(dollars in thousands, except per share data)
Total Assets		$	5,559,737			$	5,143,359			$	4,891,544
Total Loans		$	4,062,856			$	3,628,608			$	3,319,106
Total Deposits		$	4,815,376			$	4,281,422			$	4,331,152
Allowance for Credit Losses		$	37,774			$	34,748			$	34,496
Allowance to Total Loans			0.93	%			0.96	%			1.04	%
Non-Performing Loans		$	6,542			$	6,383			$	5,386
Non-Performing Loans/Total Loans			0.16	%			0.18	%			0.16	%
QTD Net Recoveries (Charge-offs) to Total Loans (annualized)			0.00	%			0.00	%			0.00	%
Tangible Common Equity Ratio*			8.12	%			7.70	%			7.92	%
Book Value Per Share		$	66.38			$	63.69			$	62.83
Tangible Book Value Per Share*		$	57.15			$	55.95			$	55.01
Wealth Management AUM		$	3,875,747			$	3,663,034			$	4,656,183
Wealth Management AUM & AUA		$	4,059,819			$	3,837,035			$	4,853,119
* See GAAP to Non-GAAP Reconciliations

 

CAMBRIDGE BANCORP AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
		December 31, 2022				September 30, 2022				December 31, 2021
		(dollars in thousands, except par value)
Assets
Cash and cash equivalents		$	30,719			$	31,542			$	180,153
Investment securities
Available for sale, at fair value (amortized cost $182,027, $186,938 and $201,270, respectively)			153,416				158,301				197,803
Held to maturity, at amortized cost (fair value $885,586, $904,315 and $971,092, respectively)			1,051,997				1,073,904				977,061
Total investment securities			1,205,413				1,232,205				1,174,864
Loans held for sale, at lower of cost or fair value			—				—				1,490
Loans
Residential mortgage			1,648,838				1,516,029				1,415,079
Commercial mortgage			1,914,423				1,681,053				1,511,002
Home equity			111,351				94,697				87,960
Commercial and industrial			350,650				295,893				269,446
Consumer			37,594				40,936				35,619
Total loans			4,062,856				3,628,608				3,319,106
Less: allowance for credit losses on loans			(37,774)				(34,748)				(34,496)
Net loans			4,025,082				3,593,860				3,284,610
Federal Home Loan Bank of Boston Stock, at cost			6,264				12,683				4,816
Bank owned life insurance			34,484				33,808				46,970
Banking premises and equipment, net			23,297				16,866				17,326
Right-of-use asset operating leases			25,098				26,705				31,273
Deferred income taxes, net			17,990				15,080				9,985
Accrued interest receivable			14,118				11,258				9,162
Goodwill			64,539				51,912				51,912
Merger-related intangibles, net			7,443				2,346				2,617
Other assets			105,290				115,094				76,366
Total assets		$	5,559,737			$	5,143,359			$	4,891,544
Liabilities
Deposits
Demand		$	1,366,395			$	1,444,765			$	1,393,935
Interest-bearing checking			908,961				688,862				763,188
Money market			1,162,773				1,070,758				1,104,238
Savings			790,628				859,102				907,722
Certificates of deposit			586,619				217,935				162,069
Total deposits			4,815,376				4,281,422				4,331,152
Borrowings			105,212				294,459				16,510
Operating lease liabilities			27,413				29,080				33,871
Other liabilities			94,184				92,108				72,174
Total liabilities			5,042,185				4,697,069				4,453,707
Shareholders’ Equity
Common stock, par value $1.00; Authorized: 10,000,000 shares; Outstanding: 7,796,440 shares, 7,007,113 shares and 6,968,192 shares, respectively			7,796				7,007				6,968
Additional paid-in capital			293,186				230,563				229,205
Retained earnings			237,369				231,039				202,874
Accumulated other comprehensive loss			(20,799)				(22,319)				(1,210)
Total shareholders’ equity			517,552				446,290				437,837
Total liabilities and shareholders’ equity		$	5,559,737			$	5,143,359			$	4,891,544

 

CAMBRIDGE BANCORP AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
		Three Months Ended													Twelve Months Ended
		December 31,				September 30,				December 31,					December 31,				December 31,
		2022				2022				2021					2022				2021
		(dollars in thousands, except share data)
Interest and dividend income
Interest on taxable loans		$	43,270			$	34,056			$	29,044				$	135,965			$	120,019
Interest on tax-exempt loans			376				367				355					1,447				1,205
Interest on taxable investment securities			5,054				5,101				3,354					19,555				9,464
Interest on tax-exempt investment securities			595				601				668					2,477				2,630
Dividends on FHLB of Boston stock			124				106				27					287				46
Interest on overnight investments			125				41				63					262				150
Total interest and dividend income			49,544				40,272				33,511					159,993				133,514
Interest expense
Interest on deposits			8,012				2,846				1,607					14,598				4,974
Interest on borrowed funds			645				1,148				131					2,180				559
Total interest expense			8,657				3,994				1,738					16,778				5,533
Net interest and dividend income			40,887				36,278				31,773					143,215				127,981
Provision for (Release of) credit losses			3,681				612				(273)					3,881				(1,294)
Net interest and dividend income after provision for (release of) credit losses			37,206				35,666				32,046					139,334				129,275
Noninterest income
Wealth management revenue			8,099				8,239				9,025					33,034				35,037
Deposit account fees			834				841				519					2,913				1,939
ATM/Debit card income			444				413				423					1,663				1,567
Bank owned life insurance income			134				144				197					1,808				801
Gain on loans sold, net			—				—				53					98				832
Loan related derivative income			71				213				496					625				2,124
Other income			481				593				741					2,868				2,024
Total noninterest income			10,063				10,443				11,454					43,009				44,324
Noninterest expense
Salaries and employee benefits			18,329				17,341				16,215					70,109				65,127
Occupancy and equipment			3,698				3,511				3,516					14,364				13,898
Data processing			2,868				2,592				2,564					10,706				8,829
Professional services			1,845				749				1,354					4,728				5,391
Marketing			1,128				731				512					2,301				2,536
FDIC insurance			465				453				416					1,845				1,318
Non-operating expenses			2,663				150				331					3,059				1,118
Other expenses			873				814				560					3,270				2,267
Total noninterest expense			31,869				26,341				25,468					110,382				100,484
Income before income taxes			15,400				19,768				18,032					71,961				73,115
Income tax expense			4,081				5,152				4,770					19,052				19,091
Net income		$	11,319			$	14,616			$	13,262				$	52,909			$	54,024
Share data:
Weighted average shares outstanding, basic			7,761,193				6,971,583				6,934,702					7,163,223				6,926,257
Weighted average shares outstanding, diluted			7,819,574				7,018,832				7,007,761					7,213,913				6,990,603
Basic earnings per share		$	1.45			$	2.09			$	1.90				$	7.35			$	7.76
Diluted earnings per share		$	1.44			$	2.07			$	1.88				$	7.30			$	7.69

 

CAMBRIDGE BANCORP AND SUBSIDIARIES
MARGIN & YIELD ANALYSIS
		Three Months Ended
		December 31, 2022												September 30, 2022												December 31, 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		$	3,943,279			$	43,270				4.35	%		$	3,537,808			$	34,056				3.82	%		$	3,231,227			$	29,044				3.57	%
Tax-exempt			49,777				476				3.79				48,235				464				3.82				46,152				448				3.85
Securities available for    sale (3)
Taxable			185,452				681				1.46				191,050				677				1.41				207,207				613				1.17
Securities held to maturity
Taxable			968,319				4,373				1.79				994,790				4,424				1.76				704,880				2,741				1.54
Tax-exempt			96,859				753				3.08				97,618				760				3.09				105,731				845				3.17
Cash and cash equivalents			39,519				125				1.25				25,095				41				0.65				174,088				63				0.14
Total interest-earning    assets (4)			5,283,205				49,678				3.73	%			4,894,596				40,422				3.28	%			4,469,285				33,754				3.00	%
Non-interest-earning    assets			278,799												237,087												243,647
Allowance for credit losses			(36,603)												(34,517)												(35,108)
Total assets		$	5,525,401											$	5,097,166											$	4,677,824
LIABILITIES AND    SHAREHOLDERS’    EQUITY
Interest-bearing deposits
Checking accounts		$	802,687			$	1,051				0.52	%		$	701,729			$	141				0.08	%		$	712,123			$	67				0.04	%
Savings accounts			878,786				811				0.37				887,404				385				0.17				942,118				218				0.09
Money market accounts			1,089,768				2,895				1.05				1,184,081				2,003				0.67				969,233				1,152				0.47
Certificates of deposit			527,770				3,255				2.45				157,622				317				0.80				177,960				170				0.38
Total interest-bearing    deposits			3,299,011				8,012				0.96				2,930,836				2,846				0.39				2,801,434				1,607				0.23
Other borrowed funds			76,856				645				3.33				190,543				1,148				2.39				16,636				131				3.12
Total interest-bearing    liabilities			3,375,867				8,657				1.02	%			3,121,379				3,994				0.51	%			2,818,070				1,738				0.24	%
Non-interest-bearing    liabilities
Demand deposits			1,514,810												1,429,649												1,324,162
Other liabilities			124,004												100,651												105,698
Total liabilities			5,014,681												4,651,679												4,247,930
Shareholders’ equity			510,720												445,487												429,894
Total liabilities &    shareholders’    equity		$	5,525,401											$	5,097,166											$	4,677,824
Net interest income on a    fully taxable equivalent    basis							41,021												36,428												32,016
Less taxable equivalent    adjustment							(258)												(256)												(270)
Net interest income						$	40,763											$	36,172											$	31,746
Net interest spread (5)											2.71	%											2.77	%											2.76	%
Net interest margin (6)											3.08	%											2.95	%											2.84	%

(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
		Year Ended
		December 31, 2022												December 31, 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		$	3,552,934			$	135,965				3.83	%		$	3,203,126			$	120,019				3.75	%
Tax-exempt			47,881				1,832				3.83				37,750				1,525				4.04
Securities available for sale (3)
Taxable			194,612				2,680				1.38				217,096				2,617				1.21
Securities held to maturity
Taxable			978,321				16,875				1.72				424,499				6,847				1.61
Tax-exempt			100,057				3,135				3.13				104,114				3,329				3.20
Cash and cash equivalents			64,790				262				0.40				141,278				150				0.11
Total interest-earning assets (4)			4,938,595				160,749				3.25	%			4,127,863				134,487				3.26	%
Non-interest-earning assets			246,813												251,652
Allowance for credit losses			(35,072)												(35,642)
Total assets		$	5,150,336											$	4,343,873
LIABILITIES AND SHAREHOLDERS’    EQUITY
Interest-bearing deposits
Checking accounts		$	753,001			$	1,285				0.17	%		$	675,753			$	265				0.04	%
Savings accounts			897,146				1,554				0.17				957,039				861				0.09
Money market accounts			1,165,793				7,999				0.69				765,021				2,769				0.36
Certificates of deposit			240,468				3,760				1.56				209,311				1,079				0.52
Total interest-bearing deposits			3,056,408				14,598				0.48	%			2,607,124				4,974				0.19	%
Subordinated debt			—				—				—				—				—				—
Other borrowed funds			85,580				2,180				2.55				18,466				559				3.03
Total interest-bearing liabilities			3,141,988				16,778				0.53	%			2,625,590				5,533				0.21	%
Non-interest-bearing liabilities
Demand deposits			1,446,745												1,197,056
Other liabilities			104,063												103,459
Total liabilities			4,692,796												3,926,105
Shareholders’ equity			457,540												417,768
Total liabilities & shareholders’ equity		$	5,150,336											$	4,343,873
Net interest income on a fully taxable equivalent    basis							143,971												128,954
Less taxable equivalent adjustment							(1,043)												(1,019)
Net interest income						$	142,928											$	127,935
Net interest spread (5)											2.72	%											3.05	%
Net interest margin (6)											2.92	%											3.12	%

(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.

 

Organic Loan and Deposit Growth/(Decline) (dollars in thousands)
														December 2022 vs December 2021
		December 31, 2022				December 31, 2021				Balance Acquired				Organic Growth/(Decline) $				Organic Growth/(Decline) %
Loans
Residential mortgage		$	1,648,838			$	1,415,079			$	114,775			$	118,984			8.4 %
Commercial mortgage			1,914,423				1,511,002				155,848				247,573			16.4 %
Home equity			111,351				87,960				15,466				7,925			9.0 %
Commercial & Industrial			350,650				269,446				16,122				65,082			24.2 %
Consumer			37,594				35,619				1,004				971			2.7 %
Total loans		$	4,062,856			$	3,319,106			$	303,215			$	440,535			13.3 %
Deposits
Demand		$	1,366,395			$	1,393,935			$	137,651			$	(165,191)			(11.9 %)
Interest bearing checking			908,961				763,188				17,831				127,942			16.8 %
Money market			1,162,773				1,104,238				67,942				(9,407)			(0.9 %)
Savings			790,628				907,722				53,002				(170,096)			(18.7 %)
Core deposits			4,228,757				4,169,083				276,426				(216,752)			(5.2 %)
Certificates of deposit			205,060				159,367				96,703				(51,010)			(32.0 %)
Wholesale Certificates of Deposits			381,559				2,702				—				378,857			14,023.6 %
Total Certificate of Deposits			586,619				162,069				96,703				327,847			202.3 %
Total deposits		$	4,815,376			$	4,331,152			$	373,129			$	111,095			2.6 %

 

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																				Twelve Months Ended
Operating Net Income / Operating Diluted Earnings Per Share		December 31,				September 30,				June 30,				March 31,				December 31,				December 31,				December 31,
		2022				2022				2022				2022				2021				2022				2021
		(dollars in thousands, except share data)
Net Income (a GAAP measure)		$	11,319			$	14,616			$	13,658			$	13,316			$	13,262			$	52,909			$	54,024
Add: Merger expenses			1,545				150				246				—				—				1,941				—
Add: Provision for credit losses for acquired loans			2,239				—				—				—				—				2,239				—
Add: Contractual termination expenses			1,118				—				—				—				331				1,118				1,118
Less: Tax effect of non-operating expenses (1)	`		(1,176)				(24)				(38)				—				(92)				(1,237)				(314)
Less: Death benefit on bank owned life insurance (“BOLI”) and policy surrender			—				—				(1,157)				—				—				(1,157)				—
Add: Tax effect of BOLI policy surrender			—				—				736				—				—				736				—
Operating Net Income (a non-GAAP measure)		$	15,045			$	14,742			$	13,445			$	13,316			$	13,501			$	56,549			$	54,828
Less: Dividends and Undistributed Earnings    Allocated to Participating Securities (a non-GAAP measure)			(65)				(74)				(42)				(59)				(61)				(273)				(252)
Operating Net Income Applicable to Common    Shareholders (a non-GAAP measure)		$	14,980			$	14,668			$	13,403			$	13,257			$	13,440			$	56,276			$	54,576
Weighted Average Diluted Shares			7,819,574				7,018,832				7,026,807				7,010,983				7,007,761				7,213,913				6,990,603
Operating Diluted Earnings Per Share    (a non-GAAP measure)		$	1.92			$	2.09			$	1.91			$	1.89			$	1.92			$	7.80			$	7.81

(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.  The tax effect for quarters ending June and September 2022 have been updated to reflect the final tax deductibility for the year.

 

		December 31, 2022				September 30, 2022				December 31, 2021
		(dollars in thousands)
Tangible Common Equity:
Shareholders’ equity (GAAP)		$	517,552			$	446,290			$	437,837
Less: Goodwill and acquisition related intangibles (GAAP)			(71,982)				(54,258)				(54,529)
Tangible Common Equity (a non-GAAP measure)		$	445,570			$	392,032			$	383,308
Total assets (GAAP)		$	5,559,737			$	5,143,359			$	4,891,544
Less: Goodwill and acquisition related intangibles (GAAP)			(71,982)				(54,258)				(54,529)
Tangible assets (a non-GAAP measure)		$	5,487,755			$	5,089,101			$	4,837,015
Tangible Common Equity Ratio (a non-GAAP    measure)			8.12	%			7.70	%			7.92	%
Tangible Book Value Per Share:
Tangible Common Equity (a non-GAAP measure)		$	445,570			$	392,032			$	383,308
Common shares outstanding			7,796,440				7,007,113				6,968,192
Tangible Book Value Per Share (a non-GAAP measure)		$	57.15			$	55.95			$	55.01

 

		Three Months Ended												Twelve Months Ended
		December 31,				September 30,				December 31,				December 31,				December 31,
		2022				2022				2021				2022				2021
		(dollars in thousands)
Efficiency Ratio: (1)
Noninterest expense		$	31,869			$	26,341			$	25,468			$	110,382			$	100,484
Net interest and dividend income		$	40,887			$	36,278			$	31,773			$	143,215			$	127,981
Total noninterest income			10,063				10,443				11,454				43,009				44,324
Total revenue		$	50,950			$	46,721			$	43,227			$	186,224			$	172,305
Efficiency Ratio			62.55	%			56.38	%			58.92	%			59.27	%			58.32	%
Operating Efficiency Ratio: (2)
Noninterest expense		$	31,869			$	26,341			$	25,468			$	110,382			$	100,484
Merger expenses (Pretax)			(1,545)				(150)				—				(1,941)				—
Contractual termination expenses (Pretax)			(1,118)				—				(331)				(1,118)				(1,118)
Operating expense (a non-GAAP measure)		$	29,206			$	26,191			$	25,137			$	107,323			$	99,366
Total revenue		$	50,950			$	46,721			$	43,227			$	186,224			$	172,305
Death benefit on bank owned life insurance (“BOLI”) and policy surrender (Pretax)			—				—				—				(1,157)				—
Operating revenue (a non-GAAP measure)		$	50,950			$	46,721			$	43,227			$	185,067			$	172,305
Operating Efficiency Ratio (a non-GAAP measure)			57.32	%			56.06	%			58.15	%			57.99	%			57.67	%
		Three Months Ended												Twelve Months Ended
		December 31,				September 30,				December 31,				December 31,				December 31,
		2022				2022				2021				2022				2021
		(dollars in thousands)
Operating Return on Tangible Common Equity: (3)
Operating Net Income (a non-GAAP measure)		$	15,045			$	14,742			$	13,501			$	56,549			$	54,828
Average common equity		$	510,720			$	445,487			$	429,894			$	457,540			$	417,768
Average goodwill and merger related intangibles			(72,110)				(54,304)				(54,574)				(58,859)				(54,707)
Average tangible common equity (a non-GAAP measure)		$	438,610			$	391,183			$	375,320			$	398,681			$	363,061
Operating Return on Tangible Common Equity (a non- GAAP measure)			13.61	%			14.95	%			14.27	%			14.18	%			15.10	%
Operating Return on Average Assets: (4)
Operating Net Income (a non-GAAP measure)		$	15,045			$	14,742			$	13,501			$	56,549			$	54,828
Average assets		$	5,525,401			$	5,097,166			$	4,677,824			$	5,150,336			$	4,343,873
Operating Return on Average Assets (a non-GAAP measure)			1.08	%			1.15	%			1.15	%			1.10	%			1.26	%

(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.

 

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SOURCE Cambridge Bancorp