Cambridge Bancorp Announces Third Quarter 2017 Earnings and Declares Dividend

Cambridge Bancorp CATC (the "Company"), the parent of Cambridge Trust Company, today announced unaudited net income of $5,010,000 for the third quarter of 2017, representing an increase of $435,000, or 9.5%, compared to net income of $4,575,000 for the same quarter in 2016. Diluted earnings per share were $1.22 for the third quarter of 2017, representing an 8.0% increase over diluted earnings per share of $1.13 for the same quarter in 2016.

For the nine months ended September 30, 2017, unaudited net income was $13,852,000, an increase of $1,379,000, or 11.1%, compared to net income of $12,473,000 for the nine months ended September 30, 2016. Diluted earnings per share were $3.37 for the first nine months of 2017, representing a 9.1% increase over diluted earnings per share of $3.09 for the same period in 2016.

Third quarter 2017 highlights as compared to the third quarter of 2016:

• Wealth Management Assets under Management and Administration now at $2.9 billion, an increase of 10.0%
• Revenue of $22.6 million, an increase of 7.0%
• Loan growth of $43.9 million, or 3.3%
• Deposit growth of $52.7 million, or 3.2%

"We are pleased to report another quarter of strong earnings growth," noted Denis K. Sheahan, CEO. "Our strategy of delivering private banking services to our clients continues to position us favorably in the greater Boston market. The Company posted strong profitability metrics for the quarter with annualized return on average assets of 1.05% and annualized return on average shareholders' equity of 13.84%."

Balance Sheet

Total assets increased $15.2 million, or 0.8%, from December 31, 2016 and stood at $1.9 billion as of September 30, 2017.

Total loans increased $35.8 million, or 2.7%, from December 31, 2016 and stood at $1.4 billion as of September 30, 2017. The growth in total loans is primarily due to the increase in commercial real estate loans of $15.6 million, from $616.1 million at December 31, 2016 to $631.8 million at September 30, 2017 and the increase in consumer loans of $10.0 million, from $34.9 million at December 31, 2016 to $44.9 million at September 30, 2017.

The Company's total investment securities portfolio increased by $24.2 million, or 5.9%, from $408.1 million at December 31, 2016 to $432.3 million at September 30, 2017.

Core deposits, which we define as all deposits other than certificates of deposit, increased by $3.1 million, or 0.21%, from December 31, 2016. The cost of total deposits for the nine months ended September 30, 2017 was 0.18%, as compared to 0.21% for the nine months ended September 30, 2016. Total deposits at September 30, 2017 were $1.7 billion, as compared to $1.6 billion at September 30, 2016.

Net Interest and Dividend Income

For the quarter ended September 30, 2017, net interest and dividend income after provision for loan losses increased by $922,000, or 6.9%, to $14.3 million, as compared to $13.4 million for the quarter ended September 30, 2016. Interest on loans increased by $721,000, or 5.8%, primarily driven by the impact of loan growth. The Company's net interest margin, on a fully tax equivalent basis, increased four basis points to 3.23% for the three months ended September 30, 2017, as compared to 3.19% for the three months ended September 30, 2016.

For the nine months ended September 30, 2017, net interest and dividend income after provision for loan losses, increased by $3.0 million, or 7.7%, to $42.5 million, as compared to $39.4 million for the nine months ended September 30, 2016. Interest on loans increased by $2.3 million, or 6.3%, primarily driven by the impact of loan growth. The Company's net interest margin, on a fully tax equivalent basis, increased four basis points to 3.24% for the nine months ended September 30, 2017, as compared to 3.20% for the nine months ended September 30, 2016.

Noninterest Income

Total noninterest income increased by $362,000, or 4.8%, to $8.0 million for the quarter ended September 30, 2017, as compared to $7.6 million for the quarter ended September 30, 2016 primarily as a result of increased Wealth Management revenue. Noninterest income was 35.3% of total revenue for the quarter ended September 30, 2017. Wealth Management revenue increased by $650,000, or 11.9%, for the third quarter of 2017, as compared to the third quarter of 2016 due to new business development and market appreciation. Wealth Management Assets under Management increased by $254.2 million, or 9.9%, to $2.8 billion as of September 30, 2017, as compared to $2.6 billion as of December 31, 2016.

Noninterest income increases were partially offset by lower gains on loans held for sale and lower loan related derivative income of $266,000 and $108,000, respectively, for the quarter ended September 30, 2017, as compared to the quarter ended September 30, 2016.

Noninterest Expense

Total noninterest expense increased by $439,000, or 3.1%, to $14.6 million for the quarter ended September 30, 2017, as compared to $14.2 million for the quarter ended September 30, 2016. The increase in salaries and benefits of $446,000 is primarily due to the impact of additional staff to support business initiatives for the quarter ended September 30, 2017, as compared to the quarter ended September 30, 2016. The increase of $300,000 in professional services is mainly due to legal and consulting services primarily related to registration with the U.S. Securities and Exchange Commission for the quarter ended September 30, 2017, as compared to the quarter ended September 30, 2016.

Noninterest expense increases were partially offset by decreases in data processing and lower marketing costs of $168,000 and $108,000, respectively, for the quarter ended September 30, 2017, as compared to September 30, 2016.

Asset Quality

Loan quality remained sound with non-performing loans totaling $1.7 million, or 0.13% of total loans outstanding as of September 30, 2017. The allowance for loan losses was $15.6 million, or 1.15% of total loans outstanding at September 30, 2017, as compared to $15.3 million, or 1.16% of total loans outstanding at year end 2016.

Income Taxes

The effective tax rate was 35.0% for the quarter ended September 30, 2017, as compared to 33.3% for the quarter ended September 30, 2016. For the nine months ended September 30, 2017, the effective tax rate was 33.5%, as compared to 33.2% for the nine months ended September 30, 2016. During the current year, the Company recognized $219,000 of tax benefit resulting from the adoption of new accounting guidance for share-based payments.

Dividend

On October 16, 2017, the Company's Board of Directors declared a quarterly cash dividend of $0.47 per share, which is payable on November 16, 2017 to shareholders of record as of the close of business on November 2, 2017. This represents an increase of $0.01 as compared to $0.46 declared during the fourth quarter of 2016.

About Cambridge Bancorp

Cambridge Bancorp, the parent company of Cambridge Trust Company, is based in Cambridge, Massachusetts. Cambridge Trust Company is a 127-year-old Massachusetts chartered commercial bank with $1.9 billion in assets and 11 Massachusetts locations in Cambridge, Boston, Belmont, Concord, Lexington and Weston. Cambridge Trust Company is one of New England's leaders in wealth management with $2.9 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 Cambridge Bancorp 2016 Annual Report, which is posted in the investor relations section of our website at www.cambridgetrust.com.

Forward-looking Statements

Certain statements herein may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 ("PSLRA"). These statements are intended to take advantage of the "safe harbor" provisions of the PSLRA. These statements are based on the beliefs and assumptions of management of the Company and its subsidiaries and on the information available to management at the time that these statements were made. Since these statements reflect the views of management concerning future events, these statements involve risks, uncertainties and assumptions. As a result, actual results may differ from those contemplated by these statements. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. Such statements may be identified by the use of words such as "believe," "expect," "anticipate," "forecast," "estimate," "intend," "will," "would," "should," "could," "may," or similar words. There are a number of factors, many of which are beyond the Company's control that could cause actual conditions, events or results to differ materially from those in the forward-looking statements. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, changes in the interest rate environment, unfavorable or less than favorable changes in general economic conditions (nationally or regionally), our ability to continue to increase loans and deposit growth, increased competitive pressures among depository and other financial institutions, legislative and regulatory changes that adversely affect the businesses in which the Company is engaged, changes in the securities market, and other factors that are described in the Company's annual report. Readers should not place undue reliance on these forward-looking statements, which speak only as of the date they are made. The Company disclaims any intent or obligation to update any forward-looking statements, whether in response to new information, future events or otherwise, except as may be required by law.

(1) Annualized on a fully taxable equivalent basis calculated using a federal tax rate of 35%.
(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 and dividend income is excluded from interest-earning assets.
(5) Interest rate spread represents the difference between the weighted average yield on interest-earning assets 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.

(1) Annualized on a fully taxable equivalent basis calculated using a federal tax rate of 35%.
(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 and dividend income is excluded from interest-earning assets.
(5) Interest rate spread represents the difference between the weighted average yield on interest-earning assets 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.

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