UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________________ to __________________ | --- | --- | --- | |--------------------------------------------------------------------------------------------------|- ...

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents Cambridge Bancorp's unaudited consolidated financial statements for Q1 2019, detailing balance sheets, income, and cash flows with accompanying notes [Unaudited Consolidated Balance Sheets](index=3&type=section&id=Unaudited%20Consolidated%20Balance%20Sheets) Total assets increased to **$2.14 billion** by March 31, 2019, driven by cash and lease assets, while deposits grew to **$1.90 billion** and equity rose to **$172.3 million** Consolidated Balance Sheet Highlights (in thousands) | Metric | March 31, 2019 | December 31, 2018 | | :--- | :--- | :--- | | **Total Assets** | **$2,138,548** | **$2,101,384** | | Net Loans | $1,538,502 | $1,543,004 | | Total Investment Securities | $443,592 | $451,032 | | **Total Liabilities** | **$1,966,280** | **$1,934,358** | | Total Deposits | $1,902,383 | $1,811,410 | | **Total Shareholders' Equity** | **$172,268** | **$167,026** | [Unaudited Consolidated Statements of Income](index=4&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Income) Net income for Q1 2019 increased to **$6.2 million**, driven by a **7.3%** rise in net interest income, with diluted EPS reaching **$1.49** Statement of Income Highlights (in thousands, except per share data) | Metric | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :--- | :--- | :--- | | Net Interest Income | $16,261 | $15,153 | | Provision for Loan Losses | ($93) | $409 | | Noninterest Income | $7,957 | $8,178 | | Noninterest Expense | $16,373 | $15,501 | | **Net Income** | **$6,198** | **$5,805** | | **Diluted Earnings Per Share** | **$1.49** | **$1.41** | [Unaudited Consolidated Statements of Comprehensive Income (Loss)](index=5&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Comprehensive income for Q1 2019 significantly increased to **$7.4 million**, primarily due to positive other comprehensive income from unrealized gains on available-for-sale securities Comprehensive Income Summary (in thousands) | Metric | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :--- | :--- | :--- | | Net Income | $6,198 | $5,805 | | Other Comprehensive Income/(Loss) | $1,157 | ($1,342) | | **Comprehensive Income** | **$7,355** | **$4,463** | [Unaudited Consolidated Statements of Changes in Shareholders' Equity](index=6&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) Shareholders' equity increased to **$172.3 million** by March 31, 2019, driven by net income and other comprehensive income, partially offset by dividends Q1 2019 Changes in Shareholders' Equity (in thousands) | Description | Amount | | :--- | :--- | | Balance at December 31, 2018 | $167,026 | | Net Income | $6,198 | | Other Comprehensive Income | $1,157 | | Dividends Declared ($0.51 per share) | ($2,098) | | Share Based Compensation & Other | ($15) | | **Balance at March 31, 2019** | **$172,268** | [Unaudited Consolidated Statements of Cash Flows](index=7&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Cash%20Flows) Cash and cash equivalents increased by **$18.5 million** in Q1 2019, primarily from investing activities and operating cash flow, partially offset by financing activities Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $2,793 | $5,400 | | Net Cash from Investing Activities | $16,928 | ($57,690) | | Net Cash from Financing Activities | ($1,188) | $4,964 | | **Net Increase/(Decrease) in Cash** | **$18,533** | **($47,326)** | [Notes to Unaudited Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) These notes detail accounting policies, the Optima Bank & Trust merger, adoption of new lease accounting standards, and provide breakdowns of financial instruments and capital adequacy - The company completed its merger with Optima Bank & Trust Company on April 17, 2019, with former Optima shareholders receiving approximately **722,746 shares** of common stock and **$3.5 million** in cash[29](index=29&type=chunk) - On January 1, 2019, the Company adopted new lease guidance (ASU 2016-02), recording a right-of-use asset of **$32.9 million** and a corresponding net lease liability[42](index=42&type=chunk) Loan Portfolio Composition (in thousands) | Loan Category | March 31, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Residential Mortgage | $613,254 | $604,331 | | Commercial Mortgage | $749,835 | $757,957 | | Home Equity | $68,849 | $69,336 | | Commercial & Industrial | $90,172 | $93,712 | | Consumer | $33,044 | $34,436 | | **Total Loans** | **$1,555,154** | **$1,559,772** | - As of March 31, 2019, both Cambridge Bancorp and Cambridge Trust Company met all minimum capital requirements and were considered **"well-capitalized"** by regulators, with the holding company's Total capital ratio at **13.2%** and Tier I capital ratio at **12.1%**[123](index=123&type=chunk)[124](index=124&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=36&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2019 financial results, highlighting increased net income, changes in loan portfolio and deposits, net interest margin, the Optima merger, and strong asset quality [Overview](index=37&type=section&id=Overview) Cambridge Bancorp, a private bank with **$2.1 billion** in assets, offers wealth management, commercial, residential, and personal banking services, expanding into New Hampshire via the Optima merger - The Company's core services include Wealth Management, Commercial Banking, Residential Lending, and Personal Banking, with Assets under Management and Administration of approximately **$3.1 billion** as of March 31, 2019[178](index=178&type=chunk) - The merger with Optima Bank & Trust Company was completed on April 17, 2019, adding **six banking offices** and expanding comprehensive private banking and wealth management services into New Hampshire[184](index=184&type=chunk) [Results of Operations](index=38&type=section&id=Results%20of%20Operations) Q1 2019 net income rose **6.8%** to **$6.2 million**, with diluted EPS at **$1.49**, driven by increased net interest income despite higher noninterest expenses Q1 2019 vs Q1 2018 Performance (in millions, except per share data) | Metric | Q1 2019 | Q1 2018 | % Change | | :--- | :--- | :--- | :--- | | Net Income | $6.2M | $5.8M | +6.8% | | Diluted EPS | $1.49 | $1.41 | +5.7% | | Net Interest Income | $16.4M | $14.7M | +10.9% | | Noninterest Income | $8.0M | $8.2M | -2.7% | | Noninterest Expense | $16.4M | $15.5M | +5.6% | - The net interest margin, on a fully taxable equivalent basis, decreased by **two basis points** to **3.26%** for Q1 2019 compared to **3.28%** for Q1 2018[189](index=189&type=chunk) - The company released **$93,000** from the allowance for loan losses in Q1 2019, compared to a provision of **$409,000** in Q1 2018, due to lower volume and a change in the loan portfolio mix[193](index=193&type=chunk) [Changes in Financial Condition](index=40&type=section&id=Changes%20in%20Financial%20Condition) Total assets grew to **$2.14 billion** due to lease accounting adoption, while deposits increased by **$91.0 million**, enabling a **$90.0 million** reduction in borrowings despite a slight loan decrease - Total assets increased primarily due to the adoption of lease accounting guidance (ASU 2016-02), which added a **$32.9 million** right-of-use lease asset[201](index=201&type=chunk) - Total loans decreased by **$4.6 million** (**0.3%**), mainly from reductions in commercial real estate and commercial & industrial loans, despite strong origination activity[203](index=203&type=chunk) - Core deposits (all deposits except CDs) increased by **$43.1 million**, and brokered CDs increased by **$45.6 million**, which were used to pay down higher-cost borrowings[205](index=205&type=chunk)[206](index=206&type=chunk)[207](index=207&type=chunk) [Asset Quality](index=47&type=section&id=Asset%20Quality) Asset quality remained strong with nonperforming loans at **0.04%** of gross loans and an allowance for loan losses of **$16.7 million**, with minimal net charge-offs Nonperforming Assets (in thousands) | Metric | March 31, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Total Nonperforming Loans | $626 | $642 | | Nonperforming Loans as % of Gross Loans | 0.04% | 0.04% | | Nonperforming Loans as % of Total Assets | 0.03% | 0.03% | Allowance for Loan Losses (in thousands) | Metric | March 31, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Allowance for Loan Losses | $16,652 | $16,768 | | Allowance as % of Loans Outstanding | 1.07% | 1.08% | [Liquidity and Capital Resources](index=54&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity primarily from core deposits and robust capital resources, with shareholders' equity at **$172.3 million**, exceeding "well-capitalized" regulatory requirements - The company's primary source of liquidity is core deposits, supplemented by borrowings from the FHLB of Boston and wholesale certificates of deposit[280](index=280&type=chunk) - Total shareholders' equity increased to **$172.3 million** at March 31, 2019, from **$167.0 million** at year-end 2018, with book value per share rising to **$41.78** from **$40.67**[283](index=283&type=chunk) - As of March 31, 2019, the Company and the Bank exceeded the regulatory minimum levels to be considered **"well-capitalized"**[284](index=284&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=51&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate risk, with simulation modeling projecting a **1.1%** decrease in net interest income from a **+100 basis point** rate shock Net Interest Income Sensitivity to Parallel Rate Shocks | Change in Interest Rates (bps) | Percentage Change in Net Interest Income | | :--- | :--- | | +400 | (5.8)% | | +200 | (2.6)% | | +100 | (1.1)% | | -100 | (0.5)% | | -200 | (4.6)% | - The economic value of equity analysis estimates that a **+200 basis point** rate increase would increase EVE by **6.5%**, while a **-100 basis point** decrease would reduce EVE by **8.5%**[276](index=276&type=chunk) [Controls and Procedures](index=55&type=section&id=Item%204.%20Controls%20and%20Procedures) The CEO and CFO concluded that disclosure controls and procedures were effective as of March 31, 2019, with no material changes to internal controls during the quarter - The CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of March 31, 2019[290](index=290&type=chunk) - No material changes to the Company's internal control over financial reporting occurred during the first quarter of 2019[292](index=292&type=chunk) [PART II. OTHER INFORMATION](index=56&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=56&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any pending legal proceedings, and ordinary course claims are not expected to materially affect its financial position - The Company is not currently party to any pending legal proceedings[295](index=295&type=chunk) [Risk Factors](index=56&type=section&id=Item%201A.%20Risk%20Factors) No material changes have occurred in the company's risk factors since its 2018 Annual Report on Form 10-K - No material changes have occurred in the company's risk factors since the filing of its 2018 Form 10-K[296](index=296&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=56&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) In Q1 2019, the company repurchased **7,468 shares** of common stock for tax liabilities on vested awards, without a formal repurchase program in place Share Repurchases in Q1 2019 | Period | Total Shares Repurchased | Average Price Paid Per Share | | :--- | :--- | :--- | | Jan 2019 | 3,628 | $75.67 | | Feb 2019 | 184 | $79.27 | | Mar 2019 | 3,656 | $82.63 | | **Total** | **7,468** | **N/A** | - The Company does not currently have a stock repurchase program or plan in place[298](index=298&type=chunk) [Defaults Upon Senior Securities](index=56&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities during the period - There were no defaults upon senior securities during the period[299](index=299&type=chunk) [Mine Safety Disclosures](index=56&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - This item is not applicable to the company[300](index=300&type=chunk) [Other Information](index=56&type=section&id=Item%205.%20Other%20Information) There is no other information to report for this item - There is no other information to report for this item[301](index=301&type=chunk) [Exhibits](index=57&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the report, including incentive plans, Sarbanes-Oxley certifications, and XBRL data files - Exhibits filed include: * Short-Term Incentive Plan (10.20) * Long-Term Incentive Plan (10.21) * Certifications pursuant to Sarbanes-Oxley Act Sections 302 and 906 (31.1, 31.2, 32.1, 32.2) * XBRL Instance Document and related files (101 series)[303](index=303&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2018 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO Commission File Number 001-38184 | --- | --- | |---------------------------------------------------------------------------------------------------------------- ...