CAMBRIDGE BANCORP
ANNUAL REPORT
2015
This past year marked the 125th anniversary of the Cambridge
Trust Company. This anniversary provides us with a welcome opportunity
to reflect upon the company’s past, and, just as importantly, to think about
its future.
Back in 1890, it was announced to the public that the then newly-
formed Cambridge Safety Vaults Company “offers safes to rent from ten
to one hundred dollars per year.” Patrons were invited to deposit papers,
jewelry, works of art, and other valuables in safes notable for “all of the
recent ingenious and expensive inventions and improvements in locks,”
as well as for the excellence of the metals out of which the vaults were
made. Given its investment in the best resources available at the time,
the Company was in a position to assure its prospective customers that it
could “offer as perfect security as any like institution in the state.” This
being Cambridge, the vaults were made use of from the outset by artists,
intellectuals, and, of course, students, among other diverse members of the
community.
From its beginning, then, even before the company changed its
name to the Cambridge Safe Deposit and Trust Company in 1892, its focus
upon serving the needs of its customers, its commitment to drawing upon
the most modern resources available towards that end, and its capacity to
merit trust were already in place.
Over the past one hundred and twenty-five years, that focus,
commitment, and capacity have remained consistent. But what is required
to merit trust—and to offer security—in today’s financial environment
differs greatly from what was required back in 1890. True, it was not that
1
much of a change for customers to go from trusting the company to protect
their material goods to trusting it with their financial resources. Indeed,
as amateur historian and one-time bank president George Macomber has
noted, “It was a logical step, after people had intrusted the vault company
with their securities… plate, wills, and other valuable papers, to suggest
that their money also be intrusted to the same group.” Now, however, the
company does not just keep customers’ money secure, although it certainly
does do that.
The Cambridge Trust Company of today serves as a base for
financial growth, as well as a trusted source of advice. The Bank does not
just shield customers from risk; it also manages risk in order to secure
gains. Moreover, it creates opportunities, and develops the means by
which those opportunities might yield the most benefit to our customers
and shareholders. The Bank listens to its various constituencies in order
that it might generate knowledge and, through the execution of strategy,
translate that knowledge into responsive and decisive action.
Financial Performance
In 2015, I am pleased to report that the Bank successfully secured
a number of gains. Our overall performance was robust across the board.
Net income in 2015 was $15.7 million, which represents an increase of
5.0% over 2014. Loans grew by 10.3%; at the end of 2015, they stood
at $1.2 billion. Deposits, excluding brokered certificates, grew by 9.5%
to $1.5 billion at year-end. Non-interest income, led by our Wealth
Management business, grew to 33% of revenue in 2015. Relative to prior
years, the Company’s performance metrics remained strong, with return
on average assets and return on average equity amounting to 0.95% and
12.91%, respectively.
2
Year End/Ended
2011
2012
2013
2014
2015
(Dollars in thousands, except per share data)
Total Assets ......................... $1,275,860 $1,417,986 $1,533,710 $1,573,692 $1,706,201
Total Deposits ..................... $1,125,654 $1,281,333 $1,409,047 $1,370,536 $1,557,224
Total Loans .......................... $ 673,265 $ 742,249 $ 942,451 $1,080,766 $1,192,214
Noninterest Income ............. $ 18,147 $ 20,489 $ 23,181 $ 24,464 $ 25,865
Net Income .......................... $ 12,477 $ 13,403 $ 14,140 $ 14,944 $ 15,694
Basic Earnings Per Share .... $ 3.29 $ 3.49 $ 3.65 $ 3.81 $ 3.94
Dividends Declared Per Share $ 1.42 $ 1.50 $ 1.59 $ 1.68 $ 1.80
Book Value Per Share ......... $ 25.39 $ 27.21 $ 28.13 $ 29.50 $ 31.26
Net Interest Margin ............. 3.90% 3.58% 3.35% 3.33% 3.27%
1.06% 1.00% 0.99% 0.98% 0.95%
Return/Average Assets ........
13.26% 13.39% 13.63% 12.87% 12.91%
Return/Average Equity ........
Our loan portfolio and balance sheet reflect our overall commitment
to quality. Non-performing loans totaled 0.12% of loans at the end of 2015
and capital represented 7.33% of assets.
In 2015, we modified our loan strategy to better prepare the Bank
for the inevitability of rising rates. In Commercial Banking, many of
our customers prefer long-term fixed-rate loans. This preference poses a
challenge to the Bank, due to the interest rate risk associated with the long
duration of those fixed rates. In the latter part of the year, we introduced
a new interest rate derivative product that will continue to provide our
customers with longer term financing, while providing the Bank with the
opportunity to achieve a variable rate of interest on these loans.
In Consumer Banking, we are in the process of implementing
a strategy to sell the majority of our long-term residential mortgage
production, including jumbo loans, to the secondary market. When
possible, we will look to service these loans, as we know it is important to
our clients. This approach takes into account the priorities of our customers,
while positioning the Bank better from the perspective of interest rates. It
also represents a more efficient use of capital. In this, as in other matters,
we begin with what we know, seek out new information, and make the
best possible use of our knowledge in light of changing developments, in
a manner that is consistent with our principles.
3
Taken together, the strategic adaptations that I have just described,
combined with the strength of our core deposit base, will improve upon the
Bank’s ability to weather the challenges of a rising rate environment. The
strength of that base represents our anchor. Our aim in this challenging
environment is not merely to weather the storm, but to better our own
performance, and to increase our momentum relative to that of our
competitors.
Over the past year, we again benefitted from strong growth in
revenue from our Wealth Management division. Revenue grew to $19.2
million over the course of the year, representing an increase of 7.2%.
Consumer Banking
In 2015, total deposits, excluding brokered certificates, grew
by $130.4 million, or 9.5%. I have suggested that our deposit portfolio
serves as an anchor for the Bank, which is especially important given the
potentially rough seas of a higher interest rate climate. The strength of
that anchor is a function of the trust that has been placed in us by our
customers. We are deeply sensible of what it means to guard and to grow
people’s hard-earned resources. We know that those resources support the
necessities and goods (including education, housing, and philanthropy)
that are central to our customers’ lives, as well as that of their families. Our
confidence in our capacity to protect and foster growth in this respect does
not follow exclusively from the strength of the metal or locks entailed in
our vaults but also from the commitments that we have made, and kept,
and will keep over time.
The Bank’s customers know as well that we too value deep
relationships with them—relationships marked by a willingness to listen,
to learn, and to give trusted advice. In 2015, our capacity to generate trust
in this respect was evidenced by a record year for the establishment of
new deposit Relationship Accounts. We also experienced strong growth
in business deposits as a result of highly effective collaboration between
our branch, business banking, cash management, and commercial lending
teams.
4
While many customers continue to visit our branches, the increasing
use of digital banking is here to stay. We continue to experience significant
growth in internet banking, mobile banking, and mobile deposit. In this,
as in other areas, we have shown our capacity for responsive adaptation to
change, and for an active commitment to keeping abreast of and making
the most of new technologies. Our choices reflect our emphasis on the
convenience of our customers. Toward that end, we added a new mobile
payment feature with Apple Pay™ and Touch ID™ that allows for instant
access to accounts.
Consumer
loan
originations with over $60 million in new commitments. We also generated
a record $609,000 of gains from the sale of residential loans.
lending experienced robust home equity
Much has been accomplished in consumer lending in 2015. Yet
there is still much to do as we continue to modify our strategy in response
to changing needs and opportunities. Our task is not so much to reach
a target that is standing still, but rather to spot new targets as they appear
on the horizon, and develop means to reach that target while in motion
ourselves. Becoming more agile means that we can more effectively deliver
benefits to customers. And indeed, the consumer lending origination
process has been strengthened through the addition of new technology.
Virtually all paper will be eliminated in the loan application process,
leading to an improved customer experience. We have also strengthened
our operations and lending team with the addition of experienced
professionals in both areas.
5
Commercial Banking
In 2015, commercial real estate lending again proved to be the
primary contributor of loan growth, with an increase of $69.2 million,
or 15.7%. Our originations remained solid, although net growth was
somewhat less than the two prior years, due to strong property sales within
our market as well as a competitive environment. The Bank’s sound asset
quality reflects our team’s focus on quality over quantity. Given the range
of options available to our customer, we may best set ourselves apart by
striving for our own distinctive brand of excellence. In doing so, we are as
mindful of the need for innovation and measured expansion as we are of
the meaning of the Bank’s traditions.
Year End
2011
2012
(Dollars in thousands)
2013
2014
2015
Non-Performing Loans .............
Non-Performing Loans/Total Loans 0.18% 0.21%
Net Charge-Offs/(Recoveries) ..
Allowance/Total Loans .............
$ (274)
1.51%
1.47%
$1,204
$1,570 $1,703 $1,629
$1,481
$ 11 $ (260)
0.18% 0.15% 0.12%
$ (11)
1.32% 1.27%
$ 153
1.35%
I expect that 2016 will continue to be marked by growth within
our commercial real estate lending segment. We also plan to renew and
strengthen our historical focus in commercial and industrial lending to
build greater diversification in the commercial lending portfolio. Our 2016
plans include additional investments in both commercial and industrial
lending and our Innovation Banking Group. While these asset classes
generally represent higher risk, we plan to execute these initiatives in the
Cambridge Trust way, meaning that our approach will be conservative
and focused on quality. Because our relationships are enhanced by the
constant give-and-take of communication, we know that our customers
and shareholders expect this. And we share that expectation as well.
The past year was marked by robust growth in business deposits,
at $52.8 million, or 11.5%. Total business deposits are a very strong $514.0
million. Our capabilities in this sector are a key component of the Bank’s
funding strategy. We will continue to focus on growth in this area, as we
see ample opportunity in the market.
6
Wealth Management
Cambridge Trust’s Wealth Management division had another
successful year. Now, more than ever, our strategy of quality investing
continues to yield consistent rewards. Recent market volatility places
a premium on in-depth, sector specific knowledge of the economy, and
on careful security selection that reflects seasoned judgment. Led by our
largest strategy, Total Return, our investment team had a terrific track
record in 2015 with respect to relative performance. Revenue grew to
$19.2 million, amounting to an increase of 7.2%. At the end of the year,
assets under management of $2.3 billion were largely flat relative to the
prior year-end, reflecting the volatility experienced in the latter part of
2015. That volatility has continued at the beginning of 2016, and while
it may hamper revenue growth in the short-term, we are confident in our
long-term prospects.
Year
2011
2012
2013
2014
2015
Gross Revenues
(in thousands)
$13,152
$14,110
$16,265
$17,954
$19,242
Managed Assets
(in millions)
$1,468
$1,795
$2,140
$2,290
$2,329
Our grounds for that confidence lie first, in the solidity of our
team, and the strength of its commitments to excellence and to measured
expansion. To be sure, that confidence is underpinned by a basic sense
of optimism concerning our prospects, but that optimism is tethered to
evidence and experience. Our New Hampshire team has now grown
footings to almost $700 million in assets under management. In May,
we opened a third office in Manchester. We look forward to continued
excellent growth in New Hampshire.
Our strategy for continual betterment pertains to matters of
principle as well as those of practice. The Sustainable and Responsible
Investment strategy, which began in 2014, is off to a solid start. We have
an excellent team in place, and are engaged in the process of building a
respectable track record. This is an area we have highlighted as a strong
7
contributor to our overall growth in the future. As sophisticated investors
ask why Cambridge Trust Company stands out among our competitors, we
look to our developing strategy of Sustainable and Responsible Investment
to help them answer that question.
Community
Over the past one hundred and twenty-five years, the success of
Cambridge Trust Company is rooted in our communities. We are bound
together through deep history, a shared commitment to flourishing, a
recognition of our interdependence, and our pursuit of excellence. We
aim not only to help our communities secure and enhance their existing
resources, but to foster new growth as well. In 2015, Cambridge Trust
Company was recognized by the Cambridge Chamber of Commerce as its
Corporate Citizen of the Year. This award recognizes our contribution to
many non-profits and community organizations in the City of Cambridge.
Our community partnership has many aspects. We provide
support in the form of volunteer activities, financial contributions, and in
targeted lending that supports our communities. In 2015, our community
development lending team originated more than $15 million in loans,
including an affordable housing project in the Port Landing section of
Area 4/Kendall Square in Cambridge. Housing affordability represents a
perpetual challenge in our marketplace. We are proud to be involved in
this and other initiatives that hold promise as innovative ways of making
our communities better.
* * * * * *
In 2015, we were saddened to hear of the passing of our former
director, friend and colleague, Jasper M. Evarts. Jasper was highly regarded
by his fellow directors and employees of Cambridge Trust Company for
his many contributions, including wise counsel, active participation in
board meetings, and his deep commitment to strengthening and improving
the Bank.
8
At the end of April, we bid farewell to Joseph V. Roller II on
his retirement as Chairman, President, and Chief Executive Officer of
Cambridge Bancorp and Cambridge Trust Company. Joe demonstrated
outstanding stewardship over his fourteen-year career of dedicated
service to the Bank and its communities. I would like to thank Joe for his
support and mentoring during my transition, and congratulate him on his
well-deserved retirement.
While banking has become increasingly complex, the capabilities
of our team have evolved to meet the challenges posed by that complexity.
What has made us successful over the past 125 years is our sustained
commitment to our customers, our communities, our principles, and our
consistent betterment. That commitment has not changed.
In closing, I thank the entire Cambridge Trust team, employees,
and directors, for your warm welcome, as well as for your performance,
guidance, and support. To our customers, thank you for your faith and
confidence. We are eager to be of assistance. To our shareholders, thank
you for your continued interest and support. I am optimistic about the
future of Cambridge Trust Company. Our foundation is strong and our
prospects bright.
Respectfully submitted,
Denis K. Sheahan
President and CEO
February 26, 2016
9
10
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Stockholders of Cambridge Bancorp:
Report on the Financial Statements
We have audited the accompanying consolidated financial statements of Cambridge Bancorp and its
subsidiaries, which comprise the consolidated balance sheets as of December 31, 2015 and 2014, and
the related consolidated statements of income, comprehensive income, changes in stockholders’ equity,
and cash flows for the years then ended, and the related notes to the consolidated financial statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial
statements in accordance with U.S. generally accepted accounting principles; this includes the design,
implementation, and maintenance of internal control relevant to the preparation and fair presentation of
consolidated financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our
audits. We conducted our audits in accordance with auditing standards generally accepted in the United
States of America. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the consolidated financial statements. The procedures selected depend on the auditors’ judgment,
including the assessment of the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error. In making those risk assessments, the auditor considers internal control
relevant to the entity’s preparation and fair presentation of the consolidated financial statements in
order to design audit procedures that are appropriate in the circumstances. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluating the overall presentation of the
consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion.
Opinion
In our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the financial position of Cambridge Bancorp and its subsidiaries as of December 31, 2015
and 2014, and the results of their operations and their cash flows for the years then ended in accordance
with U.S. generally accepted accounting principles.
Report on Other Legal and Regulatory Requirements
We also have examined, in accordance with attestation standards established by the American Institute
of Certified Public Accountants, Cambridge Trust Company’s internal control over financial reporting
as of December 31, 2015, based on criteria established in Internal Control – Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”)
and our report dated February 26, 2016 expressed an unqualified opinion on the effectiveness of
Cambridge Trust Company’s internal control over financial reporting.
Boston, Massachusetts
February 26, 2016
11
CAMBRIDGE BANCORP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
Cash and cash equivalents ...........................................................
Investment securities:
Available for sale, at fair value ..............................................
Held to maturity, at amortized cost ........................................
Total investment securities ...............................................
Loans held for sale, at lower of cost or fair value .......................
Loans:
Residential mortgage .............................................................
Commercial mortgage ............................................................
Home equity ...........................................................................
Commercial ............................................................................
Consumer ...............................................................................
Total loans ........................................................................
Allowance for loan losses ......................................................
Net loans ..........................................................................
Federal Home Loan Bank of Boston stock, at cost .....................
Bank owned life insurance...........................................................
Banking premises and equipment, net .........................................
Accrued interest receivable..........................................................
Other assets ..................................................................................
December 31,
2015
2014
(In thousands)
$
24,645
$
17,440
347,173
83,063
430,236
—
546,245
511,071
63,522
42,384
28,992
1,192,214
(15,191)
1,177,023
6,465
29,887
11,371
4,222
22,352
339,791
79,646
419,437
284
507,216
441,842
56,579
49,492
25,637
1,080,766
(14,269)
1,066,497
7,955
29,220
8,367
3,925
20,567
Total assets .................................................................
$ 1,706,201
$ 1,573,692
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Demand ..................................................................................
Interest bearing checking .......................................................
Money market ........................................................................
Savings ...................................................................................
Certificates of deposit ............................................................
Total deposits ...................................................................
Short-term borrowings .................................................................
Long-term borrowings .................................................................
Other liabilities ............................................................................
Total liabilities............................................................
Stockholders’ equity:
Common stock, par value $1.00; Authorized
10,000,000 shares; Outstanding: 4,000,181 and
3,940,536 shares, respectively .........................................
Additional paid-in capital ......................................................
Retained earnings ...................................................................
Accumulated other comprehensive income (loss) .................
Total stockholders’ equity ..........................................
Total liabilities and stockholders’ equity ...................
$ 436,998
370,400
73,911
497,525
178,390
1,557,224
—
3,910
20,004
1,581,138
$ 390,286
352,661
74,654
430,040
122,895
1,370,536
69,000
—
17,898
1,457,434
4,000
30,427
99,064
(8,428)
125,063
$ 1,706,201
3,941
28,264
91,098
(7,045)
116,258
$ 1,573,692
The accompanying notes are an integral part of these
consolidated financial statements.
12
CAMBRIDGE BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Year Ended December 31,
2014
2015
(In thousands,
except per share data)
Interest income:
Interest on loans .....................................................................
Interest on taxable investment securities ...............................
Interest on tax exempt investment securities .........................
Dividends on FHLB of Boston stock .....................................
Interest on overnight investments ..........................................
$
Total interest income ........................................................
Interest expense:
Interest on deposits ................................................................
Interest on borrowed funds ....................................................
Total interest expense .......................................................
Net interest income ..........................................................
Provision for loan losses ..............................................................
Net interest income after provision
45,358
5,921
2,766
259
37
54,341
2,459
235
2,694
51,647
1,075
$
40,481
7,085
2,664
101
40
50,371
1,950
148
2,098
48,273
1,550
for loan losses ............................................................
50,572
46,723
Noninterest income:
Wealth management income ..................................................
Deposit account fees ..............................................................
ATM/Debit card income ........................................................
Bank owned life insurance income ........................................
Gain on disposition of investment securities .........................
Gain on loans held for sale .....................................................
Loan related derivative income ..............................................
Other income ..........................................................................
Total noninterest income ..................................................
Noninterest expense:
Salaries and employee benefits ..............................................
Occupancy and equipment .....................................................
Data processing ......................................................................
Professional services ..............................................................
Marketing ...............................................................................
FDIC Insurance ......................................................................
Other expenses .......................................................................
Total noninterest expense .................................................
Income before income taxes ............................................
Income tax expense......................................................................
19,242
2,324
1,192
667
690
609
260
881
25,865
30,838
9,024
4,807
2,260
2,380
854
3,029
53,192
23,245
7,551
17,954
2,416
1,247
665
1,073
170
—
939
24,464
27,799
8,510
4,567
2,008
2,117
793
3,213
49,007
22,180
7,236
Net income .......................................................................
$
15,694
$
14,944
Per share data:
Basic earnings per common share ..........................................
Diluted earnings per common share ......................................
Average shares outstanding - basic ........................................
Average shares outstanding - diluted .....................................
$ 3.94
$ 3.93
3,938,117
3,993,599
$ 3.81
$ 3.78
3,886,692
3,957,416
The accompanying notes are an integral part of these
consolidated financial statements.
13
CAMBRIDGE BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net income ...................................................................................
Other comprehensive income/(loss), net of tax:
Defined benefit retirement plans:
Change in unfunded retirement liability ..........................
Unrealized gains/(losses) on Available
for Sale securities:
Unrealized holding gains/(losses) arising
Year Ended December 31,
2015
2014
(In thousands)
$
15,694
$
14,944
40
(6,222)
during the period ........................................................
(980)
3,973
Less: reclassification adjustment for gains
recognized in net income ...........................................
Other comprehensive loss ............................................................
(443)
(1,383)
(688)
(2,937)
Comprehensive income ....................................................
$
14,311
$
12,007
The accompanying notes are an integral part of these
consolidated financial statements.
14
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CAMBRIDGE BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Cash flows provided by operating activities:
Net income .............................................................................
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses ............................................
Amortization of deferred charges and fees, net .........
Depreciation and amortization ...................................
Bank owned life insurance income ............................
Gain on disposition of investment securities .............
Compensation expense from stock option
and restricted stock grants ......................................
Change in loans held for sale .....................................
Change in accrued interest receivable, deferred
taxes, other assets and other liabilities ...................
Other, net ....................................................................
Net cash provided by operating activities ..............
Year Ended December 31,
2015
2014
(In thousands)
$
15,694
$
14,944
1,075
1,027
1,935
(667)
(690)
498
284
835
25
20,016
1,550
1,060
1,817
(665)
(1,073)
509
119
(2,216)
56
16,101
Cash flows used by investing activities:
Origination of loans ...............................................................
(260,020)
(301,863)
Purchase of:
Investment securities - AFS .............................................
Investment securities - HTM ...........................................
(225,912)
(9,691)
Maturities, calls and principal payments of:
Loans ................................................................................
Investment securities - AFS .............................................
Investment securities - HTM ...........................................
Proceeds from sale of investment securities - AFS ................
Purchase of bank owned life insurance ..................................
Change in FHLB of Boston stock ..........................................
Purchase of banking premises and equipment .......................
Net cash used by investing activities ..........................
Cash flows provided by financing activities:
Net change in deposits ...........................................................
Net change in short-term borrowings ....................................
Proceeds from long-term borrowings ....................................
Repayment of long-term borrowings .....................................
Proceeds from issuance of common stock .............................
Repurchase of common stock ................................................
Cash dividends paid on common stock ..................................
Net cash provided by financing activities ...................
Net increase/(decrease) in cash and cash equivalents ..................
Cash and cash equivalents at beginning of year ..........................
Cash and cash equivalents at end of year ....................................
Supplemental disclosure of cash flow information:
Cash paid for interest .............................................................
Cash paid for income taxes ....................................................
Non-cash transactions:
148,049
168,787
6,206
47,625
—
1,490
(4,939)
(128,405)
186,688
(69,000)
3,950
(40)
1,841
(667)
(7,178)
115,594
7,205
17,440
24,645
$
$
2,644
8,220
(43,741)
(24,295)
163,161
68,190
3,776
30,013
(5,000)
(1,724)
(233)
(111,716)
(38,511)
69,000
—
—
1,925
(864)
(6,602)
24,948
(70,667)
88,107
17,440
2,094
8,490
$
$
Change in AOCI, net of taxes ..........................................
(1,383)
(2,937)
The accompanying notes are an integral part of these
consolidated financial statements.
16
CAMBRIDGE BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2015
1. THE BUSINESS
The accompanying consolidated financial statements include the accounts of Cambridge
Bancorp (the “Corporation”) and its wholly owned subsidiary, Cambridge Trust Company
(the “Bank”), and the Bank’s subsidiaries, Cambridge Trust Company of New Hampshire,
Inc., CTC Security Corporation, CTC Security Corporation II and CTC Security
Corporation III. References to the Corporation herein relate to the consolidated group of
companies. All significant intercompany accounts and transactions have been eliminated in
preparation of the consolidated financial statements.
The Corporation is a state chartered, federally registered bank holding company
headquartered in Cambridge, Massachusetts, that was incorporated in 1983. The
Corporation is closely held and has less than two thousand shareholders of record and,
accordingly, is not required to file quarterly, annual or other public reports with the
Securities and Exchange Commission (“SEC”). The Corporation is the sole stockholder of
the Bank, a Massachusetts trust company chartered in 1890 which is a community-oriented
commercial bank. The community banking business, the Corporation’s only reportable
operating segment, consists of commercial banking, consumer banking, and trust and
investment management services and is managed as a single strategic unit.
The Bank offers a full range of commercial and consumer banking services through
its network of 12 full-service banking offices in Massachusetts. The Bank is engaged
principally in the business of attracting deposits from the public and investing those
deposits. The Bank invests those funds in various types of loans, including residential and
commercial real estate, and a variety of commercial and consumer loans. The Bank also
invests its deposits and borrowed funds in investment securities and has three wholly-
owned Massachusetts Security Corporations, CTC Security Corporation, CTC Security
Corporation II and CTC Security Corporation III, for this purpose. Deposits at the Bank are
insured by the Federal Deposit Insurance Corporation (“FDIC”) for the maximum amount
permitted by FDIC Regulations.
Trust and investment management services are offered through the Bank’s full-service
branches in Massachusetts, a wealth management office located in Boston, and three
wealth management offices located in New Hampshire. The Bank also utilizes its non-
depository trust company, Cambridge Trust Company of New Hampshire, Inc., in
providing wealth management services in New Hampshire. The assets held for wealth
management customers are not assets of the Bank and, accordingly, are not reflected in
the accompanying consolidated balance sheets. Total assets managed on behalf of wealth
management clients were approximately $2,329,000,000 and $2,290,000,000 at December
31, 2015 and 2014, respectively.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The financial statements have been prepared in conformity with U.S. generally accepted
accounting principles (“GAAP”) and general practices within the banking industry.
17
Use of Estimates
In preparing the consolidated financial statements, management is required to make
estimates and assumptions that affect the reported amounts of assets and liabilities as of
the date of the balance sheet and revenues and expenses for the period. Actual results could
differ from these estimates. Material estimates that are particularly susceptible to change
relate to the determination of the allowance for loan losses and review of goodwill for
impairment.
Reclassifications
Certain amounts in the prior year’s financial statements may have been reclassified to
conform with the current year’s presentation.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash on hand, amounts due from banks and overnight
investments.
Investment Securities
Investment securities are classified as either ‘held to maturity’ or ‘available for sale’ in
accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting
Standards Codification (“ASC”) 320, “Investments – Debt and Equity Securities.”
Debt securities that management has the positive intent and ability to hold to maturity
are classified as held to maturity and are carried at cost, adjusted for the amortization
of premiums and the accretion of discounts, using the effective-yield method. U.S.
Government Sponsored Enterprise (“GSE”) obligations represent debt securities issued
by the Federal Farm Credit Bank (“FFCB”), the Federal Home Loan Banks (“FHLB”), the
Government National Mortgage Association (“GNMA”), the Federal National Mortgage
Association (“FNMA”) or the Federal Home Loan Mortgage Corporation (“FHLMC”).
Mortgage-backed securities represent Pass-Through Certificates and Collateralized
Mortgage Obligations (“CMOs”) either issued by, or collateralized by securities issued by,
GNMA, FNMA or FHLMC. Mortgage-backed securities are adjusted for amortization of
premiums and accretion of discounts, using the effective-yield method over the estimated
average lives of the investments.
Debt and equity securities not classified as held to maturity are classified as available for
sale and carried at fair value with unrealized after-tax gains and losses reported net as a
separate component of stockholders’ equity. Stockholders’ equity included net unrealized
losses of $1,571,000 and $148,000 at December 31, 2015 and 2014, respectively. These
amounts are net of deferred taxes receivable of $851,000 and $80,000, in each of the
respective years. The Corporation classifies its securities based on its intention at the time
of purchase.
Declines in the fair value of investment securities below their amortized cost that are
deemed to be other-than-temporary are reflected in earnings as realized losses to the extent
the impairment is related to credit losses. The amount of the impairment related to other
factors is recognized in other comprehensive income. In estimating other-than-temporary
impairment losses, management considers (1) the length of time and the extent to which
the fair value has been less than cost; (2) the financial condition and near-term prospects of
the issuer; and (3) the Corporation’s intent to sell the security or whether it is more likely
than not that the Corporation will be required to sell the debt security before its anticipated
recovery.
18
Loans and the Allowance for Loan Losses
Loans are reported at the amount of their outstanding principal, including deferred loan
origination fees and costs, reduced by unearned discounts and the allowance for loan losses.
Loan origination fees, net of related direct incremental loan origination costs, are deferred
and recognized as income over the contractual lives of the related loans as an adjustment
to the loan yield, using a method which approximates the interest method. Unearned
discount is recognized as an adjustment to the loan yield, using the interest method over
the contractual life of the related loan. When a loan is paid off, the unamortized portion of
net fees or unearned discount is recognized as interest income.
Loans are considered delinquent when a payment of principal and/or interest becomes past
due 30 days following its scheduled payment due date.
Loans on which the accrual of interest has been discontinued are designated non-accrual
loans. Accrual of interest income is discontinued when concern exists as to the collectability
of principal or interest, or typically when a loan becomes over 90 days delinquent.
Additionally, when a loan is placed on non-accrual status, all interest previously accrued
but not collected is reversed against current period income. Loans are removed from non-
accrual when they become less than 90 days past due and when concern no longer exists
as to the collectability of principal or interest. Interest collected on non-accruing loans is
either applied against principal or reported as income according to management’s judgment
as to the collectability of principal.
A loan is considered impaired when, based on current information and events, it is probable
that the Corporation will be unable to collect the scheduled payments of principal or
interest when due according to the contractual terms of the loan agreement. Under certain
circumstances, the Corporation may restructure the terms of a loan as a concession to
a borrower. These restructured loans are generally also considered impaired loans.
Impairment is measured on a loan-by-loan basis for commercial mortgage and commercial
loans by either the present value of expected future cash flows discounted at the loan’s
effective interest rate, the loan’s obtainable market price, or the fair value of the collateral
if the loan is collateral dependent. Large groups of smaller balance homogeneous loans are
collectively evaluated for impairment. Accordingly, the Corporation does not separately
identify individual residential mortgage, home equity or consumer loans for impairment
disclosures unless they have been modified in a troubled debt restructuring.
The provision for loan losses and the level of the allowance for loan losses reflects
management’s estimate of probable loan losses inherent in the loan portfolio at the balance
sheet date. Management uses a systematic process and methodology to establish the
allowance for loan losses each quarter. To determine the total allowance for loan losses,
an estimate is made by management of the allowance needed for each of the following
segments of the loan portfolio: (a) residential mortgage loans, (b) commercial mortgage
loans, (c) home equity loans, (d) commercial & industrial loans, and (e) consumer loans.
Portfolio segments are further disaggregated into classes of loans. The establishment
of the allowance for each portfolio segment is based on a process consistently applied
that evaluates the risk characteristics relevant to each portfolio segment and takes into
consideration multiple internal and external factors. Internal factors include (a) historic
levels and trends in charge-offs, delinquencies, risk ratings, and foreclosures, (b) level
and changes in industry, geographic and credit concentrations, (c) underwriting policies
and adherence to such policies, and (d) the experience of, and any changes in, lending and
credit personnel. External factors include (a) conditions and trends in the local and national
19
economy and (b) levels and trends in national delinquent and non-performing loans. An
additional unallocated component is maintained based on a judgmental process whereby
management considers qualitative and quantitative assessments of other environmental
factors not included above.
The Bank evaluates certain loans within the commercial & industrial, commercial mortgage
and commercial construction loan portfolios individually for specific impairment. A loan
is considered impaired when, based on current information and events, it is probable that
the Bank will be unable to collect the scheduled payments of principal or interest when due
according to the contractual terms of the loan agreement. Loans that experience insignificant
payment delays and payment shortfalls generally are not classified as impaired. Loans are
selected for evaluation based upon internal risk rating, delinquency status, or non-accrual
status. A specific allowance amount is allocated to an individual loan when such loan has
been deemed impaired and when the amount of the probable loss is able to be estimated.
Estimates of loss may be determined by the present value of anticipated future cash flows,
the loan’s observable fair market value, or the fair value of the collateral, if the loan is
collateral dependent.
Risk characteristics relevant to each portfolio segment are as follows:
Residential mortgage and home equity loans – The Bank generally does not originate loans
in these segments with a loan-to-value ratio greater than 80 percent, unless covered by
private mortgage insurance, and in all cases not greater than a loan-to-value ratio of 95
percent. The Bank does not grant subprime loans. Loans in these segments are secured
by one-to-four family residential real estate and repayment is primarily dependent on the
credit quality of the individual borrower.
Commercial mortgage loans – The Bank generally does not originate loans in this segment
with a loan-to-value ratio greater than 75 percent. Loans in this segment are secured by
owner-occupied and nonowner-occupied commercial real estate and repayment is primarily
dependent on the cash flows of the property (if nonowner-occupied) or of the business (if
owner-occupied).
Commercial loans – Loans in this segment are made to businesses and are generally
secured by equipment, accounts receivable or inventory, as well as the personal guarantees
of the principal owners of the business and repayment is primarily dependent on the cash
flows generated by the business.
Consumer loans – Loans in this segment are made to individuals and can be secured
or unsecured. Repayment is primarily dependent on the credit quality of the individual
borrower.
The majority of the Bank’s loans are concentrated in Eastern Massachusetts and therefore
the overall health of the local economy, including unemployment rates, vacancy rates, and
consumer spending levels, can have a material effect on the credit quality of all of these
portfolio segments.
The process to determine the allowance for loan losses requires management to exercise
considerable judgment regarding the risk characteristics of the loan portfolio segments and
the effect of relevant internal and external factors.
20
The provision for loan losses charged to operations is based on management’s judgment of
the amount necessary to maintain the allowance at a level adequate to provide for inherent
loan losses. When management believes that the collectability of a loan’s principal balance,
or portions thereof, is unlikely, the principal amount is charged against the allowance for
loan losses. Recoveries on loans that have been previously charged off are credited to the
allowance for loan losses as received. The allowance is an estimate, and ultimate losses
may vary from current estimates. As adjustments become necessary, they are reported in
the results of operations through the provision for loan losses in the period in which they
become known.
Residential mortgage loans originated and intended for sale in the secondary market are
classified as held for sale at the time of their origination and are carried at the lower of cost
or fair value. Changes in fair value relating to loans held for sale below the loans cost basis
are charged against earnings. Gains and losses on the actual sale of the residential loans are
recorded in earnings as net gains (losses) on loans held for sale.
Bank Owned Life Insurance
Bank owned life insurance (“BOLI”) represents life insurance on the lives of certain
employees who have provided positive consent allowing the Bank to be the beneficiary of
such policies. Since the Bank is the primary beneficiary of the insurance policies, increases
in the cash value of the policies, as well as insurance proceeds received, are recorded
in other noninterest income, and are not subject to income taxes. The cash value of the
policies is included in other assets. The Bank reviews the financial strength of the insurance
carriers prior to the purchase of BOLI and at least annually thereafter.
Banking Premises and Equipment
Land is stated at cost. Buildings, leasehold improvements and equipment are stated at cost,
less accumulated depreciation and amortization, which is computed using the straight-line
method over the estimated useful lives of the assets or the terms of the leases, if shorter.
The cost of ordinary maintenance and repairs is charged to expense when incurred.
Other Real Estate Owned
Other real estate owned (“OREO”) consists of properties formerly pledged as collateral
to loans, which have been acquired by the Bank through foreclosure proceedings or
acceptance of a deed in lieu of foreclosure. Upon transfer of a loan to foreclosure status, an
appraisal is obtained and any excess of the loan balance over the fair value, less estimated
costs to sell, is charged against the allowance for loan losses. Expenses and subsequent
adjustments to the fair value are treated as other operating expense.
Goodwill and Other Intangible Assets
Goodwill represents the excess of the purchase price over the fair value of net assets
acquired in a business combination. Goodwill and intangible assets that are not amortized
are tested for impairment, based on their fair values, at least annually. Identifiable intangible
assets that are subject to amortization are also reviewed for impairment based on their fair
value. Any impairment is recognized as a charge to earnings and the adjusted carrying
amount of the intangible asset becomes its new accounting basis. The remaining useful
life of an intangible asset that is being amortized is also evaluated each reporting period
to determine whether events and circumstances warrant a revision to the remaining period
of amortization.
21
Rights to service mortgage loans for others are recognized as an asset. The total cost of
originated loans that are sold with servicing rights retained is allocated between the loan
servicing rights and the loans without servicing rights based on their relative fair values.
Capitalized loan servicing rights are included in other assets and are amortized as an offset
to other income over the period of estimated net servicing income. They are evaluated for
impairment at each reporting date based on their fair value. Impairment is measured on an
aggregated basis according to interest rate band and period of origination. The fair value
is estimated based on the present value of expected cash flows, incorporating assumptions
for discount rate, prepayment speed and servicing cost. Any impairment is recognized as
a charge to earnings.
Income Taxes
The Corporation and its subsidiaries file income tax returns in the U.S. federal jurisdiction,
and in the state of Massachusetts and other states as required.
The Corporation uses the asset and liability method of accounting for income taxes. Deferred
tax assets and liabilities are reflected at currently enacted income tax rates applicable to the
period in which the deferred tax assets or liabilities are expected to be realized or settled.
As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted
through the provision for income taxes. Deferred tax assets are reviewed quarterly and
reduced by a valuation allowance if, based upon the information available, it is more likely
than not that some or all of the deferred tax assets will not be realized.
Interest and penalties related to unrecognized tax benefits, if incurred, are recognized as a
component of income tax expense.
Wealth Management Income
Income from investment management and fiduciary activities is recognized on the accrual
basis of accounting.
Pension and Retirement Plans
The Corporation sponsors a defined benefit pension plan and a postretirement health
care plan covering substantially all employees hired before May 2, 2011. Benefits for the
pension plan are based primarily on years of service and the employee’s average monthly
pay during the five highest consecutive plan years of the employee’s final ten years.
Benefits for the postretirement health care plan are based on years of service. Expense for
both of these plans is recognized over the employee’s service life utilizing the projected
unit credit actuarial cost method. Contributions are periodically made to the pension plan
so as to comply with the Employee Retirement Income Security Act (“ERISA”) funding
standards and the Internal Revenue Code of 1986, as amended.
The Corporation also has a non-qualified retirement plan to provide supplemental retirement
benefits to certain executives. Expense for this plan is recognized over the executive’s
service life utilizing the projected unit credit actuarial cost method.
Stock-Based Compensation
The cost of stock-based awards (stock options, restricted stock and/or restricted stock
units of the Corporation) is determined at the grant date as measured by the fair value of
the award. Stock-based awards requiring future service are recognized as compensation
expense over the relevant service period. Stock-based awards that do not require future
service are expensed immediately. The Corporation estimates expected forfeitures in
determining compensation expense.
22
Derivative Instruments and Hedging Activities
Derivatives are recognized as either assets or liabilities on the balance sheet and are
measured at fair value. The accounting for changes in the fair value of derivatives depends
on the intended use of the derivative and resulting designation.
For derivatives designated as fair value hedges, changes in the fair value of the derivative
are recognized in earnings together with the changes in the fair value of the related hedged
item. The net amount, if any, represents hedge ineffectiveness and is reflected in earnings.
For derivatives designated as cash flow hedges, the effective portion of changes in the fair
value of the derivative are recorded in other comprehensive income (loss) and recognized in
earnings when the hedged transaction affects earnings. The ineffective portion of changes
in the fair value of cash flow hedges is recognized directly in earnings.
For derivatives not designated as hedges, changes in fair value of the derivative instruments
are recognized in earnings, in noninterest income.
The accrued net settlements on derivatives that qualify for hedge accounting are recorded
in interest income or interest expense based on the item being hedged. Changes in fair value
of derivatives including accrued net settlements that do not qualify for hedge accounting
are reported in noninterest income.
Fair Value Measurements
ASC 820, “Fair Value Measurements and Disclosures” establishes a fair value hierarchy
that gives the highest priority to quoted prices in active markets and the lowest priority to
unobservable data and requires fair value measurements to be disclosed by level within the
hierarchy. The three broad levels defined by the fair value hierarchy are as follows:
Level 1 – Quoted prices are available in active markets for identical assets or liabilities
as of the reported date. The type of financial instruments included in Level 1 are highly
liquid cash instruments with quoted prices such as government or agency securities, listed
equities and money market securities, as well as listed derivative instruments.
Level 2 – Pricing inputs are other than quoted prices in active markets, which are either
directly or indirectly observable as of the reported date. The nature of these financial
instruments includes cash instruments for which quoted prices are available but traded less
frequently, derivative instruments whose fair value has been derived using a model where
inputs to the model are directly observable in the market, or can be derived principally
from or corroborated by observable market data, and instruments that are fair valued using
other financial instruments, the parameters of which can be directly observed. Instruments
which are generally included in this category are corporate bonds and loans, mortgage
whole loans, municipal bonds and over-the-counter derivatives.
Level 3 – Instruments that have little to no pricing observability as of the reported
date. These financial instruments do not have two-way markets and are measured using
management’s best estimate of fair value, where the inputs into the determination of
fair value require significant management judgment to estimation. Instruments that are
included in this category generally include certain commercial mortgage loans, certain
private equity investments, distressed debt, non-investment grade residual interests in
securitizations, as well as certain highly structured over-the-counter derivative contracts.
23
Earnings per Share
Basic earnings per share are computed by dividing net income by the weighted average
number of common shares outstanding for each period presented. Diluted earnings per
share are computed by dividing net income by the weighted average number of common
shares outstanding plus the dilutive effect of stock options outstanding.
Subsequent Events
Management has reviewed events occurring through February 26, 2016, the date the
consolidated financial statements were issued and determined that no subsequent events
occurred requiring accrual or disclosure.
3. RECENT ACCOUNTING PRONOUNCEMENTS
In May 2014, the FASB issued Accounting Standards Update No. 2014-09, “Revenue
from Contracts with Customers (Topic 606)” (“ASU 2014-09”). This issuance was part of
the joint project between the FASB and the International Accounting Standards Board to
clarify the principles of recognizing revenue and to develop a common revenue standard
for GAAP and International Financial Reporting Standards. ASU 2014-09 is effective for
annual reporting periods beginning after December 15, 2016, including interim periods
within that reporting period. Early adoption is not permitted. The impact of ASU 2014-
09 on the Corporation’s consolidated financial statements is not yet known. Additionally,
in August 2015, the FASB issued Accounting Standards Update No. 2015-14, “Revenue
from Contracts with Customers (Topic 606): Deferral of the Effective Date” (“ASU 2015-
14”) which defers adoption of ASU 2014-09 to annual reporting periods beginning after
December 15, 2017.
4. CASH AND DUE FROM BANKS
At December 31, 2015 and 2014, cash and due from banks totaled $24,645,000 and
$17,440,000, respectively. Of this amount, $10,106,000 and $9,830,000, respectively, were
maintained to satisfy the reserve requirements of the Federal Reserve Bank of Boston
(“FRB Boston”). Additionally, at both December 31, 2015 and 2014, $1,000,000 was
pledged to the New Hampshire Banking Department relating to Cambridge Trust Company
of New Hampshire, Inc.’s operations in that State.
24
5. INVESTMENT SECURITIES
Investment securities have been classified in the accompanying consolidated balance
sheets according to management’s intent. The carrying amounts of securities and their
approximate fair values were as follows:
Amortized
Cost
December 31, 2015
Unrealized
Fair
Gains
Losses Value
(In thousands)
Securities available for sale:
U.S. GSE obligations ............................ $ 140,242 $ 58 $
Mortgage-backed securities ..................
Corporate debt securities .......................
Mutual funds .........................................
207,681
1,000
672
1,061
—
—
(530) $ 139,770
205,806
985
612
(2,936)
(15)
(60)
Total securities available for sale ....
349,595
1,119
(3,541)
347,173
Securities held to maturity:
Mortgage-backed securities ..................
Municipal securities ..............................
Total securities held to maturity ......
Total investment securities .............. $ 432,658 $
1,306
81,757
83,063
50
3,464
3,514
4,633 $
—
(36)
(36)
1,356
85,185
86,541
(3,577) $ 433,714
Amortized
Cost
December 31, 2014
Unrealized
Fair
Gains
Losses Value
(In thousands)
Securities available for sale:
U.S. GSE obligations ............................ $
Mortgage-backed securities ..................
Corporate debt securities .......................
Mutual funds .........................................
91,033 $ 93 $
245,309
3,005
672
2,571
14
—
(655) $
(2,200)
(3)
(48)
90,471
245,680
3,016
624
Total securities available for sale ....
340,019
2,678
(2,906)
339,791
Securities held to maturity:
Mortgage-backed securities ..................
Municipal securities ..............................
Total securities held to maturity ......
2,176
77,470
79,646
117
3,681
3,798
—
(13)
(13)
2,293
81,138
83,431
Total investment securities .............. $ 419,665 $
6,476 $
(2,919) $ 423,222
All of the Corporation’s mortgage-backed securities have been issued by, or are collateralized by
securities issued by, either GNMA, FNMA or FHLMC.
25
The amortized cost and fair value of debt investments, aggregated by contractual maturity,
are shown below. Maturities of mortgage-backed securities do not take into consideration
scheduled amortization or prepayments. Actual maturities will differ from contractual
maturities because issuers may have the right to call or prepay obligations with or without
call or prepayment penalties.
Within One Year
After One, But
Within Five Years
After Five, But
Within Ten Years
After Ten Years
Amortized
Cost
Fair
Value Cost
Amortized
Fair
Value
Amortized Fair
Value
Cost
Amortized
Cost
Fair
Value
(In thousands)
At December 31, 2015:
Debt securities
available for sale:
U.S. GSE
obligations ............ $ — $ — $ 140,242 $ 139,770 $ — $ — $
— $
—
Mortgage-backed
securities ...............
6
6 1,169 1,218 21,931 21,793 184,575 182,789
Corporate debt
securities ...............
Total debt
securities
available
for sale ..............
Debt securities held
to maturity:
Mortgage-backed
—
—
—
— 1,000 985
—
—
6
6 141,411 140,988 22,931 22,778 184,575 182,789
securities ...............
2
2 1,234 1,281
4
4
66
69
Municipal
securities ...............
Total debt
securities held
to maturity .........
Total debt
1,136 1,150 18,176 18,615 33,500 35,223
28,945
30,197
1,138 1,152 19,410 19,896 33,504 35,227
29,011
30,266
securities ........... $ 1,144 $ 1,158 $ 160,821 $ 160,884 $ 56,435 $ 58,005 $ 213,586 $ 213,055
26
The following table shows the Corporation’s securities with gross unrealized losses,
aggregated by investment category and length of time that individual securities have been in
a continuous loss position:
Less than One Year
Fair
Value
Unrealized
Losses
One Year or Longer
Fair
Value
Unrealized
Losses
Total
Fair
Value
Unrealized
Losses
(In thousands)
At December 31, 2015:
U.S. GSE obligations ........... $ 84,726
99,190
Mortgage-backed securities .
Corporate debt securities .....
985
3,517
Municipal securities .............
$ (485)
(1,154)
(15)
(36)
$ 4,953
71,554
—
—
$
(45)
(1,782)
—
—
$ 89,679
170,744
985
3,517
Subtotal, debt securities ....
Mutual funds ........................
188,418
—
(1,690)
—
76,507
612
(1,827)
(60)
264,925
612
$
(530)
(2,936)
(15)
(36)
(3,517)
(60)
Total temporarily
impaired securities .........
$ 188,418
$ (1,690)
$ 77,119
$ (1,887)
$ 265,537
$ (3,577)
At December 31, 2014:
U.S. GSE obligations ........... $ 15,018
24,005
Mortgage-backed securities .
Corporate debt securities .....
—
1,336
Municipal securities .............
$
Subtotal, debt securities ...
Mutual funds ........................
Total temporarily
40,359
—
(26)
(103)
—
(3)
$ 44,351
121,933
2,002
836
(132)
—
169,122
624
$
(629)
(2,097)
(3)
(10)
(2,739)
(48)
$ 59,369
145,938
2,002
2,172
209,481
624
$
(655)
(2,200)
(3)
(13)
(2,871)
(48)
impaired securities ........
$ 40,359
$
(132)
$ 169,746
$ (2,787)
$ 210,105
$ (2,919)
Securities are evaluated by management for other-than-temporary impairment on at least
a quarterly basis, and more frequently when economic or market conditions warrant such
evaluation. Consideration is given to (1) the length of time and the extent to which the
fair value has been less than cost; (2) the financial condition and near-term prospects
of the issuer; and (3) the intent and ability of the Corporation to retain its investment
in the issuer for a period of time sufficient to allow for any anticipated recovery in fair
value. As of December 31, 2015, eighty-four debt securities and one equity security had
gross unrealized losses, with an aggregate depreciation of 1.33% from the Corporation’s
amortized cost basis. The largest unrealized loss percentage of any single security was
8.91% (or $60,000) of its amortized cost. The largest unrealized dollar loss of any single
security was $132,000 (or 3.18%) of its amortized cost. The Corporation believes that the
nature and duration of impairment on its debt security positions are primarily a function
of interest rate movements and changes in investment spreads, and does not consider full
repayment of principal on the reported debt obligations to be at risk. Since nearly all of
these securities are rated “investment grade” and a) the Corporation does not intend to sell
these securities before recovery, and b) that it is more likely than not that the Corporation
will not be required to sell these securities before recovery, the Corporation does not
consider these securities to be other-than-temporarily impaired as of December 31, 2015.
The following table sets forth information regarding sales of investment securities and the
resulting gains or losses from such sales.
Year Ended December 31,
2014
2015
(In thousands)
Amortized cost of securities sold ...........................................
Gain realized on securities sold .............................................
Proceeds from securities sold .................................................
$
$
46,935
690
47,625
$
$
28,940
1,073
30,013
27
6. LOANS AND ALLOWANCE FOR LOAN LOSSES
The Bank originates loans to businesses and individuals on both a collateralized and an
uncollateralized basis. The Bank’s customer base is concentrated in Eastern Massachusetts.
The Bank has diversified the risk in its commercial loan portfolio by lending to businesses
in a wide range of industries while maintaining no significant individual industry
concentration. The majority of loans to individuals are collateralized by residential real
estate, marketable securities or other assets.
Loans outstanding are detailed by category as follows:
Residential real estate:
Mortgages - fixed rate (20 & 30 year) ...................................
Mortgages - fixed rate (15 year) .............................................
Mortgages - fixed rate (10 year) .............................................
Mortgages - adjustable rate ....................................................
Deferred costs net of unearned fees .......................................
December 31,
2015
2014
(In thousands)
$ 179,245
112,925
46,406
206,835
834
$ 151,973
117,753
53,054
183,796
640
Total residential real estate ...............................................
546,245
507,216
Commercial real estate:
Mortgages - nonowner occupied ............................................
Mortgages - owner occupied ..................................................
Construction ...........................................................................
Deferred costs net of unearned fees .......................................
Total commercial real estate ............................................
Home equity:
Home equity - lines of credit .................................................
Home equity - term loans .......................................................
Deferred costs net of unearned fees .......................................
Total home equity.............................................................
Commercial:
Commercial and industrial .....................................................
Deferred costs net of unearned fees .......................................
Total commercial..............................................................
Consumer:
Secured ...................................................................................
Unsecured ..............................................................................
Deferred costs net of unearned fees .......................................
Total consumer .................................................................
422,923
43,265
44,624
259
511,071
59,676
3,630
216
63,522
42,209
175
42,384
27,390
1,585
17
28,992
370,871
46,954
23,879
138
441,842
53,492
2,934
153
56,579
49,263
229
49,492
23,749
1,873
15
25,637
Total loans ........................................................................
$ 1,192,214
$ 1,080,766
Certain directors and officers of the Corporation are customers of the Bank. Loans to these
parties are made in the ordinary course of business at the Bank’s normal credit terms,
including interest rate and collateral requirements, and do not represent more than a normal
risk of collection. At December 31, 2015 and 2014, total loans outstanding to these related
parties were $884,000 and $842,000, respectively. During 2015, $210,000 of additions and
$167,000 of repayments were made to these loans, compared to $280,000 of additions and
$167,000 of repayments made during 2014.
28
The following table sets forth information regarding non-performing loans.
December 31,
2015
2014
(In thousands)
Non-accrual loans ........................................................................
Loans past due >90 days, but still accruing .................................
Troubled debt restructurings ........................................................
$
1,481
—
—
$
1,620
9
—
Total non-performing loans ....................................................
$
1,481
$
1,629
A breakdown of non-accrual loans receivable is as follows:
Non-accrual loans:
Residential mortgage loans ....................................................
Commercial mortgage loans ..................................................
Home equity loans .................................................................
Commercial loans ..................................................................
Consumer loans ......................................................................
December 31,
2015
2014
(In thousands)
$
$
754
306
—
420
1
846
337
326
106
5
Total .................................................................................
$
1,481
$
1,620
The following table contains period-end balances of loans receivable disaggregated by
credit quality indicator:
December 31, 2015
(In thousands)
Home
Equity
Residential
Mortgages
Consumer
Credit risk profile based on payment activity:
Performing .....................................................
Non-performing .............................................
$
545,491 $
754
63,522 $
—
28,991
1
Total .........................................................
$
546,245 $
63,522 $
28,992
Credit risk profile by internally assigned grade:
Pass ................................................................
Special mention ..............................................
Substandard ....................................................
Doubtful .........................................................
Total .........................................................
Commercial
Mortgages Commercial
$
506,520 $
4,007
544
—
39,490
2,570
324
—
$
511,071 $
42,384
With respect to residential real estate, home equity and consumer loans, the Bank utilizes
the following categories as indicators of credit quality:
• Performing – These loans are accruing and are considered having low to moderate
risk.
• Non-performing – These loans either have been placed on non-accrual, or are past
due more than 90 days but are still accruing, and may contain greater than average
risk.
29
With respect to commercial real estate and commercial loans, the Bank utilizes a ten grade
internal loan rating system as an indicator of credit quality. The grades are as follows:
• Loans rated 1-6 (Pass) – These loans are considered “pass” rated with low to average
risk.
• Loans rated 7 (Special Mention) – These loans have potential weaknesses warranting
close attention which if left uncorrected may result in deterioration of the credit at
some future date.
• Loans rated 8 (Substandard) – These loans have well-defined weaknesses that
jeopardize the orderly liquidation of the debt under the original loan terms. Loss
potential exists but is not identifiable in any one customer.
• Loans rated 9 (Doubtful) – These loans have pronounced weaknesses that make full
collection highly questionable and improbable.
• Loans rated 10 (Loss) – These loans are considered uncollectible and continuance
as a bankable asset is not warranted.
The following table contains period-end balances of loans receivable disaggregated by past
due status:
December 31, 2015
Current
30 - 59
Days
60 - 89
Days
Total
90 Days
or Greater Past Due
(In thousands)
Total
Loans
Greater
Than 90
Days But
Accruing
Loans receivable:
Residential mortgage
loans ......................
Commercial mortgage
loans ......................
Home equity loans ....
Commercial loans .....
Consumer loans .........
$ 545,743 $ 502 $ — $ — $ 502 $ 546,245 $ —
815
509,950 —
—
68
63,454
364
409
41,221
886 —
28,106
306 1,121
68
—
1,163
390
886
—
511,071
63,522
42,384
28,992
—
—
—
—
Total ...................
$1,188,474 $ 1,865 $ 1,179 $
696 $ 3,740 $1,192,214 $ —
The following table contains period-end balances of the allowance for loan losses and
related loans receivable disaggregated by impairment method:
December 31, 2015
Residential
Mortgages
Commercial Home
Mortgages
Equity
Commercial Consumer
(In thousands)
Unallocated
Total
Allowance for loan losses:
Individually evaluated
for impairment ............ $
— $
— $ — $
174 $
— $
— $
174
Collectively evaluated
for impairment ...........
5,244
8,094
699
615
354
11
15,017
Total .....................
$
5,244 $
8,094 $
699 $
789 $
354 $
11 $
15,191
Loans receivable: .............
Individually evaluated
for impairment ........... $
— $
544 $
— $
515 $
—
$ 1,059
Collectively evaluated
for impairment ...........
546,245
510,527
63,522
41,869 28,992 1,191,155
Total ......................
$ 546,245 $ 511,071 $ 63,522 $
42,384 $ 28,992 $1,192,214
30
December 31, 2014
Residential
Mortgages
Commercial Home
Mortgages
Equity
Commercial Consumer Unallocated
(In thousands)
Total
Allowance for loan losses:
Individually evaluated
for impairment ........... $
Collectively evaluated
for impairment ...........
Total ......................
$
— $
— $ — $
— $
— $
— $
—
5,174
5,174 $
7,285
7,285 $
679
679 $
750
750 $
328
328 $
53
53 $
14,269
14,269
Loans receivable:
Individually evaluated
for impairment ...........
Collectively evaluated
for impairment ...........
Total ......................
$
— $
337 $ — $
157 $ —
$
494
507,216
441,505
$ 507,216 $ 441,842 $ 56,579 $
56,579
49,335 25,637 1,080,272
49,492 $ 25,637 $1,080,766
As discussed in Note 2, Summary of Significant Accounting Policies, the provision for loan
losses is evaluated on a regular basis by management in order to determine the adequacy
of the allowance for loan losses.
7. FEDERAL HOME LOAN BANK OF BOSTON STOCK
As a voluntary member of the FHLB of Boston (“FHLB Boston”), the Bank is required
to invest in stock of the FHLB Boston (which is considered a restricted equity security) in
an amount based upon its outstanding advances from the FHLB Boston. At December 31,
2015, the Bank’s investment in FHLB Boston stock exceeded its required investment by
$2,790,000. No market exists for shares of this stock. The Bank’s cost for FHLB Boston
stock is equal to its par value. Upon redemption of the stock, which is at the discretion of
the FHLB Boston, the Bank would receive an amount equal to the par value of the stock.
At its discretion, the FHLB Boston may also declare dividends on its stock.
The Bank’s investment in FHLB Boston stock is reviewed for impairment at each reporting
date based on the ultimate recoverability of the cost basis of the stock. As of December 31,
2015, no impairment has been recognized.
31
8. BANKING PREMISES AND EQUIPMENT
A summary of the cost and accumulated depreciation and amortization of property,
leasehold improvements and equipment is presented below:
December 31,
2015
2014
(In thousands)
Estimated
Useful Lives
Land ......................................................................
Building and leasehold improvements ..................
Equipment, including vaults .................................
Construction in process .........................................
Subtotal ...........................................................
Accumulated depreciation and amortization ........
$ 1,116
12,437
7,920
3,107
24,580
(13,209)
$ 1,116
12,506
9,215
290
23,127
(14,760)
Total ................................................................
$ 11,371
$ 8,367
3-30 years
3-20 years
Total depreciation expense for the years ended December 31, 2015 and 2014 amounted to
approximately $1,935,000 and $1,817,000, respectively, and is included in occupancy and
equipment expenses in the accompanying consolidated statements of income.
9. GOODWILL AND OTHER INTANGIBLE ASSETS
At December 31, 2015 and 2014, the carrying value of goodwill, which is included in other
assets, totaled $412,000. Goodwill is tested for impairment, based on its fair value, at least
annually. As of December 31, 2015, no goodwill impairment has been recognized.
An analysis of mortgage servicing rights, which are included in other assets, follows:
Mortgage
Servicing
Rights
Valuation
Allowance
(In thousands)
Total
Balance at December 31, 2013 ............................
Mortgage servicing rights capitalized ............
Amortization charged against servicing income
Change in impairment reserve .......................
$
Balance at December 31, 2014 ............................
Mortgage servicing rights capitalized ............
Amortization charged against servicing income
Change in impairment reserve .......................
396 $
63
(127)
—
332
305
(138)
—
(12) $
—
—
12
—
—
—
(8)
Balance at December 31, 2015 ............................
$
499 $
(8) $
384
63
(127)
12
332
305
(138)
(8)
491
32
10. DEPOSITS
Deposits are summarized as follows:
December 31,
2015
2014
(In thousands)
Demand deposits (non-interest bearing) ......................................
Interest bearing checking .............................................................
Money market ..............................................................................
Savings
....................................................................................
Retail certificates of deposit under $100,000 ..............................
Retail certificates of deposit $100,000 or greater ........................
Wholesale certificates of deposit .................................................
$ 436,998
370,400
73,911
497,525
46,277
75,858
56,255
$ 390,286
352,661
74,654
430,040
49,768
73,127
—
Total deposits .........................................................................
$ 1,557,224
$ 1,370,536
Certificates of deposit had the following schedule of maturities:
December 31,
2015
2014
(In thousands)
Less than 3 months remaining .....................................................
3 to 5 months remaining ..............................................................
6 to 11 months remaining ............................................................
12 to 23 months remaining ..........................................................
24 to 47 months remaining ..........................................................
48 months or more remaining ......................................................
$
39,001
17,329
21,973
33,054
56,601
10,432
$
41,987
21,661
24,607
16,533
12,515
5,592
Total certificates of deposit ....................................................
$ 178,390
$ 122,895
Interest expense on retail certificates of deposit $100,000 or greater was $482,000 and
$472,000 for the years ended December 31, 2015 and 2014, respectively.
33
11. BORROWINGS
Information relating to short-term borrowings is presented below:
FHLB Boston short-term borrowings: .........................................
Ending balance .......................................................................
Average daily balance ............................................................
Ending interest rate ................................................................
Average interest rate...............................................................
Highest month-end balance ....................................................
Year Ended December 31,
2015
(Dollars in thousands)
2014
$
$
—
81,167
NA
0.26%
$ 142,000
69,000
$
$
69,915
0.30%
0.21%
$ 117,000
Information relating to long-term borrowings is presented below:
December 31, 2015
Amount
Rate
December 31, 2014
Rate
Amount
(Dollars in thousands)
FHLB Boston long-term advances:
Due 09/01/2020; amortizing .................
$
3,910
1.94%
$
—
NA
All short- and long-term borrowings with the FHLB Boston are secured by the Bank’s
stock in the FHLB Boston and a blanket lien on “qualified collateral” defined principally
as 90% of the market value of certain U.S. Government and GSE obligations and 75% of
the carrying value of certain residential mortgage loans. Based upon collateral pledged,
the Bank’s unused borrowing capacity with the FHLB Boston at December 31, 2015 was
approximately $322,024,000.
The Bank also has a line of credit with the FRB Boston. At December 31, 2015, the Bank
had pledged commercial real estate and commercial & industrial loans with aggregate
principal balances of approximately $316,293,000 as collateral for this line of credit. Based
upon the collateral pledged, the Bank’s unused borrowing capacity with the FRB Boston at
December 31, 2015 was approximately $129,979,000.
34
12. INCOME TAXES
The components of income tax expense were as follows:
Year Ended December 31,
2015
2014
(In thousands)
Current:
Federal ....................................................................................
....................................................................................
State
$
Total current expense .......................................................
Deferred:
Federal ....................................................................................
....................................................................................
State
Total deferred benefit .......................................................
6,855
1,458
8,313
(594)
(168)
(762)
$
6,639
1,356
7,995
(592)
(167)
(759)
Total income tax expense .................................................
$
7,551
$
7,236
The following is a reconciliation of the total income tax provision, calculated at statutory
federal income tax rates, to the income tax provision in the consolidated statements of
income:
Provision at statutory rates...........................................................
Increase/(decrease) resulting from:
State tax, net of federal tax benefit .........................................
Tax-exempt income ................................................................
ESOP dividends .....................................................................
Bank owned life insurance .....................................................
Other ....................................................................................
Total income tax expense .................................................
Year Ended December 31,
2015
2014
(In thousands)
$
8,136
$
7,763
839
(1,041)
(207)
(233)
57
7,551
$
773
(938)
(189)
(233)
60
7,236
$
As of December 31, 2015 and 2014, the Corporation had no unrecognized tax assets or
liabilities.
35
The Corporation’s net deferred tax asset consisted of the following components:
Gross deferred tax assets:
Allowance for loan losses ......................................................
Accrued retirement benefits ...................................................
Unrealized losses on AFS securities ......................................
Incentive compensation .........................................................
Equity based compensation ....................................................
Rent....... .................................................................................
ESOP dividends .....................................................................
Goodwill ................................................................................
Other ....................................................................................
December 31,
2015
2014
(In thousands)
$
6,206
4,646
851
886
268
186
241
—
177
$
5,829
3,923
80
624
273
253
221
4
174
Total gross deferred tax assets .........................................
13,461
11,381
Gross deferred tax liabilities:
Deferred loan origination costs ..............................................
Depreciation of premises and equipment ...............................
Mortgage servicing rights ......................................................
Goodwill ................................................................................
(617)
(601)
(201)
(122)
Total gross deferred tax liabilities ....................................
(1,541)
(492)
(340)
(135)
—
(967)
Net deferred tax asset .......................................................
$
11,920
$
10,414
It is management’s belief, that it is more likely than not, that the reversal of deferred tax
liabilities and results of future operations will generate sufficient taxable income to realize
the deferred tax assets. In addition, the Corporation’s net deferred tax asset is supported
by recoverable income taxes. Therefore, no valuation allowance was required at either
December 31, 2015 or 2014 for the deferred tax assets. It should be noted, however, that
factors beyond management’s control, such as the general state of the economy and real
estate values, can affect future levels of taxable income and that no assurance can be given
that sufficient taxable income will be generated in future periods to fully absorb deductible
temporary differences.
At December 31, 2015 and 2014, the Corporation had no unrecognized tax benefits or any
uncertain tax positions. The Corporation does not expect the total amount of unrecognized
tax benefits to significantly increase in the next twelve months.
The Corporation’s federal income tax returns are open and subject to examination from the
2012 tax return year and forward. The Corporation’s state income tax returns are generally
open from the 2012 and later tax return years based on individual state statute of limitations.
13. PENSION AND RETIREMENT PLANS
The Corporation has a noncontributory, defined benefit pension plan (“Pension Plan”)
covering substantially all employees hired before May 2, 2011. Employees in positions
requiring at least 1,000 hours of service per year were eligible to participate upon the
attainment of age 21 and the completion of one year of service. Benefits are based primarily
on years of service and the employee’s average monthly pay during the five highest
consecutive plan years of the employee’s final ten years. The Corporation also provides
supplemental retirement benefits to certain executive officers of the Corporation under
the terms of Supplemental Executive Retirement Agreements (“Supplemental Retirement
Plan”). The Supplemental Retirement Plan became effective on October 1, 1989. Benefits to
36
be paid under the plan are contractually agreed upon and detailed in individual agreements
with the executives. The Corporation uses a December 31 measurement date each year to
determine the benefit obligations for these plans.
Projected benefit obligations and funded status were as follows:
Pension
Plan
2015
2014
Supplemental
Retirement Plan
2014
2015
(In thousands)
Change in projected benefit obligation:
Obligation at beginning of year ............ $ 40,964
1,711
1,632
(2,671)
(983)
Service cost ...........................................
Interest cost ...........................................
Actuarial loss/(gain) ..............................
Benefits paid ..........................................
$
$ 30,209
1,291
1,480
8,718
(734)
Obligation at end of year .................
40,653
40,964
$
8,211
732
328
(483)
(369)
8,419
Change in plan assets:
Fair value at beginning of year .............
Actual return on plan assets ..................
Employer contribution ..........................
Benefits paid ..........................................
40,400
(935)
—
(983)
Fair value at end of year ..................
38,482
38,639
2,495
—
(734)
40,400
—
—
369
(369)
—
6,216
527
311
1,279
(122)
8,211
—
—
122
(122)
—
Underfunded status at end of year .............. $
(2,171)
$
(564)
$
(8,419)
$
(8,211)
Amounts recognized in the consolidated balance sheets consisted of:
Pension
Plan
2015
2014
Supplemental
Retirement Plan
2014
2015
(In thousands)
Other liabilities ............................................ $
(2,171)
$
(564)
$
(8,419)
$
(8,211)
Amounts recognized in accumulated other comprehensive income (loss) consisted of:
Pension
Plan
2015
2014
Supplemental
Retirement Plan
2014
2015
(In thousands)
Net actuarial loss/(gain) .............................. $ 11,261
(25)
Prior service (benefit) ..................................
$ 10,790
(29)
$
$
428
—
Total ...................................................... $ 11,236
$ 10,761
$
428
$
935
—
935
37
Information for pension plans with an accumulated benefit obligation in excess of plan assets:
Pension
Plan
2015
2014
Supplemental
Retirement Plan
2014
2015
(In thousands)
Projected benefit obligation ........................ $ 40,653
34,705
Accumulated benefit obligation ..................
38,482
Fair value of plan assets ..............................
$ 40,964
34,572
40,400
$
$
8,419
8,419
—
8,211
8,211
—
The components of net periodic benefit cost and amounts recognized in other comprehensive
income were as follows:
Pension
Plan
2015
2014
Supplemental
Retirement Plan
2014
2015
(In thousands)
Net periodic benefit cost:
Service cost ........................................... $
Interest cost ...........................................
Expected return on assets ......................
Amortization of prior service credit ......
Amortization of net actuarial loss .........
1,711
1,632
(2,986)
(4)
778
$
1,291
1,481
(2,859)
(4)
—
$
$
732
329
—
—
24
Net periodic benefit cost .................
1,131
(91)
1,085
527
311
—
—
—
838
Amounts recognized in other comprehensive income:
Net actuarial loss/(gain) ........................
Amortization of prior service credit ......
Amortization of net acturarial loss ........
1,249
4
(778)
9,082
4
—
(483)
—
—
1,279
—
—
Total recognized in other
comprehensive income ................
Total recognized in net periodic
benefit cost and other
comprehensive income ................ $
475
9,086
(483)
1,279
1,606
$
8,995
$
602
$
2,117
Weighted-average assumptions used to determine projected benefit obligations are as follows:
Discount rate ...............................................
Rate of compensation increase ....................
Pension
Plan
2015
4.35%
4.00%
2014
4.00%
4.00%
Supplemental
Retirement Plan
2014
2015
4.00%
4.35%
NA
NA
38
Weighted-average assumptions used to determine net periodic benefit cost are as follows:
Discount rate ...............................................
Expected long-term return on plan assets ...
Rate of compensation increase ....................
Pension
Plan
2015
4.00%
7.50%
4.00%
2014
5.00%
7.50%
4.00%
Supplemental
Retirement Plan
2014
2015
5.00%
4.00%
NA
NA
NA
NA
The expected long-term rate of return has been established based on the ongoing investment
of pension plan assets in a diversified portfolio of equities and fixed income securities. The
components of the expected long-term rate of return include annual expectations for a
risk-free rate of return of approximately 3.00% per year, plus long-term annual inflation at
approximately 3.00% per year, plus a risk premium rate of return of approximately 1.50%
per year.
The Corporation maintains an Investment Policy for its defined benefit pension plan. The
objective of this policy is to seek a balance between capital appreciation, current income,
and preservation of capital, with a longer term tilt towards equities because of the extended
time horizon of the pension plan. The Investment Policy guidelines suggest that the target
asset allocation percentages are from 60% to 85% in equities, from 10% to 55% in fixed
income debt securities and cash, and from 0% to 10% in real assets. The Corporation does
not expect to make a contribution to its defined benefit pension plan in 2016.
The Corporation’s defined pension plan weighted-average asset allocations by asset
category were as follows:
Equity securities...........................................................................
Debt securities .............................................................................
Cash and equivalents ...................................................................
Total
....................................................................................
December 31,
2015
2014
70%
23
7
100%
74%
20
6
100%
The three broad levels of fair values used to measure the pension plan assets are as follows:
• Level 1 – Quoted prices for identical assets in active markets.
• Level 2 – Quoted prices for similar assets in active markets; quoted prices for
identical or similar assets in inactive markets; and model-derived valuations
in which all significant inputs and significant value drivers are observable in
active markets.
• Level 3 – Valuations derived from techniques in which one or more significant
inputs or significant value drivers are unobservable in the markets and which
reflect the Corporation’s market assumptions.
39
The following table summarizes the various categories of the pension plan’s assets:
Fair Value as of December 31, 2015
Level 1
Level 2
Level 3
Total
(In thousands)
$ 2,547
$
—
$
—
$ 2,547
Asset category:
Cash and cash equivalents .................
Equity securities:
Common stocks:
Large cap core ........................
Mid cap core ..........................
Small cap core ........................
International ...........................
Mutual funds: ...............................
Fixed income ..........................
Mid cap blend ........................
International ...........................
13,727
2,791
121
2,750
8,834
2,529
5,183
Total .................................
$ 38,482
$
—
—
—
—
—
—
—
—
$
—
—
—
—
—
—
—
—
13,727
2,791
121
2,750
8,834
2,529
5,183
$ 38,482
There were no transfers between fair value levels during the years ended December 31,
2015 and 2014.
The Corporation offers postretirement health care benefits for current and future retirees
of the Bank. Employees receive a fixed monthly benefit at age 65 toward the purchase of
postretirement medical coverage. The benefit received is based on the employee’s years
of active service. The Corporation uses a December 31 measurement date each year to
determine the benefit obligation for this plan.
Projected benefit obligations and funded status were as follows:
Postretirement
Healthcare Plan
2015
2014
(In thousands)
Change in projected benefit obligation:
Obligation at beginning of year .............................................
Service cost ............................................................................
Interest cost ............................................................................
Actuarial loss/(gain) ...............................................................
Benefits paid ...........................................................................
Obligation at end of year ..................................................
$
Change in plan assets:
Fair value at beginning of year ..............................................
Actual return on plan assets ...................................................
Employer contribution ...........................................................
Benefits paid ...........................................................................
Fair value at end of year ...................................................
$
646
18
25
(44)
(24)
621
—
—
24
(24)
—
508
12
23
129
(26)
646
—
—
26
(26)
—
Underfunded status at end of year ...............................................
$
(621)
$
(646)
40
Amounts recognized in the consolidated balance sheets consisted of:
Postretirement
Healthcare Plan
2015
2014
(In thousands)
Other liabilities ............................................................................
$
(621)
$
(646)
Amounts recognized in accumulated other comprehensive loss consisted of:
Net actuarial loss..........................................................................
Prior service cost..........................................................................
Total
....................................................................................
$
$
Postretirement
Healthcare Plan
2015
2014
(In thousands)
(69)
(4)
(73)
$
$
(25)
(12)
(37)
Information for pension plans with an accumulated benefit obligation in excess of plan assets:
Projected benefit obligation .........................................................
Accumulated benefit obligation ...................................................
Fair value of plan assets ...............................................................
$
Postretirement
Healthcare Plan
2015
2014
(In thousands)
$
621
621
—
646
646
—
The components of net periodic benefit cost and amounts recognized in other comprehensive
income were as follows:
Postretirement
Healthcare Plan
2015
2014
(In thousands)
Net periodic benefit cost:
Service cost ............................................................................
Interest cost ............................................................................
Expected return on assets .......................................................
Amortization of prior service credit .......................................
Amortization of net actuarial gain .........................................
$
Net periodic benefit cost ............................................
Amounts recognized in other comprehensive income:
Net actuarial (gain)/loss .........................................................
Amortization of prior service credit .......................................
Amortization of net actuarial gain .........................................
Total recognized in other
comprehensive income ...........................................
$
18
25
—
(8)
—
35
(44)
8
—
(36)
12
23
—
(8)
(16)
11
129
8
16
153
Total recognized in net periodic
benefit cost and other
comprehensive income ...........................................
$
(1)
$
164
41
Weighted-average assumptions used to determine projected benefit obligations are as follows:
Discount rate ................................................................................
Rate of compensation increase ....................................................
Postretirement
Healthcare Plan
2015
4.35%
NA
2014
4.00%
NA
Weighted-average assumptions used to determine net periodic benefit cost are as follows:
Discount rate ................................................................................
Expected long-term return on plan assets ....................................
Rate of compensation increase ....................................................
Assumed health care cost trend rates are as follows:
Postretirement
Healthcare Plan
2015
4.00%
NA
NA
2014
5.00%
NA
NA
December 31,
2015
2014
Health care cost trend rate assumed for
next year .................................................................................
4.00%
4.00%
Rate to which the cost trend rate is assumed
to decline (the ultimate trend rate) .........................................
4.00%
4.00%
Year that the rate reaches the ultimate
trend rate ................................................................................
2016
2015
Assumed health care trend rates have a significant effect on the amounts reported for the
health care plans. A one-percentage-point change in assumed health care cost trend rates
would have the following effects:
One Percentage Point
Increase
Decrease
Effect on total service and interest cost .......................................
Effect on postretirement benefit obligation .................................
$
Benefits expected to be paid in the next ten years are as follows:
(In thousands)
—
6
$
—
(6)
Year ended
December 31,
Pension
Plan
Supplemental
Retirement
Plan
Post-
retirement
Healthcare
Plan
(In thousands)
2016
2017
2018
2019
2020
2021-2025 inclusive
$
1,222
1,277
1,397
1,428
1,584
9,304
$
492
501
599
599
599
3,154
$
Ten year total
$ 16,212
$
5,944
$
30
30
29
29
33
183
334
Total
$
1,744
1,808
2,025
2,056
2,216
12,641
$
22,490
42
The estimated amounts that will be amortized from accumulated other comprehensive
income into net periodic benefit cost during 2015 are as follows:
Pension
Plan
Supplemental
Retirement
Plan
Post-
retirement
Healthcare
Plan
(In thousands)
Prior service cost..................
Net loss.................................
Total................................
$
$
4
790
794
$
$
—
—
—
$
$
(4)
—
(4)
Total
$
$
—
790
790
The Corporation maintains a Profit Sharing Plan (“PSP”) that provides for deferral of
federal and state income taxes on employee contributions allowed under Section 401(k)
of federal law. The Corporation matches employee contributions up to 100% of the first
3% of each participant’s salary. Each year, the Corporation may also make a discretionary
contribution to the PSP. Employees are eligible to participate in the 401(k) feature of
the PSP on the first business day of the quarter following their initial date of service and
attainment of age 21. Employees are eligible to participate in discretionary contribution
feature of the PSP on January 1 and July 1 of each year provided they have attained the age
of 21 and the completion of 12 months of service consisting of at least 1,000 hours.
The Corporation has an Employee Stock Ownership Plan (“ESOP”) for its eligible
employees. Employees are eligible to participate upon the attainment of age 21 and the
completion of 12 months of service consisting of at least 1,000 hours. It is anticipated that
the ESOP will purchase from the Corporation shares presently authorized but unissued at a
price determined by an independent appraiser and certified by a committee of the trustees
of the ESOP. Purchases of the Corporation’s stock by the ESOP will be funded solely by
employer contributions. At December 31, 2015 and 2014, the ESOP owned 327,569 shares
and 320,534 shares, respectively, of the Corporation’s common stock.
Total expenses related to the Profit Sharing and ESOP Plans for the years ended December
31, 2015 and 2014, amounted to approximately $900,000 and $900,000, respectively.
14. STOCK OPTION AND DIRECTOR STOCK PLANS
In 1993, the Corporation adopted a Stock Option Plan for key employees as an incentive
for them to assist the Corporation in achieving long-range performance goals. During
2005, the Corporation’s shareholders amended the plan to permit the issuance of restricted
stock, restricted stock units (“RSUs”) and stock appreciation rights (“SARs”).
43
Stock options time-vest over a five-year period. All options expire 10 years from the date
granted and have been issued at fair value at the date of grant which, in some instances,
may be less than publicly traded values. A summary of stock options outstanding as
of December 31, 2015 and 2014, and changes during the years ended on those dates is
presented below:
2015
2014
Weighted
Average
Exercise
Price
Number
of Options
Weighted
Average
Exercise
Price
Number
of Options
Stock options:
Outstanding at beginning of year ....
Granted ......................................
Forfeited ....................................
Expired ......................................
Exercised ...................................
$
176,997
—
—
(31,828)
(36,217)
29.61
—
—
29.88
29.06
$
248,777
—
—
(29,624)
(42,156)
Outstanding at end of year ..............
108,952
29.72
176,997
29.71
—
—
30.79
29.38
29.61
Exercisable at end of year ...............
108,952
$
29.72
176,997
$
29.61
The following table summarizes information about stock options outstanding at December
31, 2015:
Range of
Exercise Price
$25.00 - $29.99
$30.00 - $34.99
Options Outstanding
Number
Outstanding
at 12/31/15 Contractual Life
Weighted
Average
Remaining
79,794
29,158
108,952
1.4 years
1.1 years
1.3 years
Weighted
Average
Exercise
Price
$ 28.57
32.87
Options Exercisable
Weighted
Average
Exercisable Exercise
Price
at 12/31/15
Number
79,794 $
29,158
28.57
32.87
29.72
29.72
108,952
Restricted stock awards time-vest over a five-year period and have been fair valued as of
the date of grant. The holders of restricted stock awards participate fully in the rewards of
stock ownership of the Corporation, including voting and dividend rights. A summary of
non-vested restricted shares outstanding as of December 31, 2015 and 2014, and changes
during the years ended on those dates is presented below:
2015
2014
Weighted
Average
Grant
Value
Number
of Shares
Weighted
Average
Grant
Value
Number
of Shares
Restricted stock:
Non-vested at beginning of year .....
Granted ......................................
Vested ........................................
Forfeited ....................................
Non-vested at end of year ...............
$
39,086
26,376
(13,212)
(4,442)
47,808
37.84
44.82
35.85
39.60
42.08
$
31,752
19,368
(10,742)
(1,292)
39,086
33.85
41.88
33.85
33.62
37.84
44
Restricted stock unit awards vest based upon the Corporation’sperformance over a three-
year period and have been fair valued as of the date of grant. The holders of performance-
based RSU awards do not participate in the rewards of stock ownership of the Corporation
until vested. A summary of non-vested restricted stock units outstanding as of December
31, 2015 and 2014, and changes during the years ended on those dates is presented below:
2015
2014
Weighted
Average
Grant
Value
Number
of Shares
Weighted
Average
Grant
Value
Number
of Shares
Restricted stock units:
Non-vested at beginning of year .....
Granted ......................................
Vested (Performance achieved) .....
Forfeited ....................................
Expired (Performance not achieved)
Non-vested at end of year ...............
$
26,588
6,976
—
(5,045)
(8,370)
20,149
39.85
44.46
—
42.51
34.39
43.05
$
27,215
9,118
—
(1,420)
(8,325)
26,588
36.73
44.02
—
37.86
34.44
39.85
Total expense related to the Stock Option Plan for the years ended December 31, 2015 and
2014, amounted to approximately $520,000 and $525,000, respectively.
In 1993, the Corporation initiated a Director Stock Plan (“DSP”). The DSP provides that
Directors of the Corporation receive their annual retainer fee in the form of stock in the
Corporation. Total shares issued under the DSP in the years ending December 31, 2015 and
2014 were 5,837 and 4,392, respectively.
15. FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
To meet the financing needs of its customers, the Bank is a party to financial instruments
with off-balance-sheet risk in the normal course of business. These financial instruments
are primarily comprised of commitments to extend credit and standby letters of credit.
Those instruments involve, to varying degrees, elements of credit and interest rate risk in
excess of the amounts recognized in the consolidated balance sheets.
The Bank’s exposure to credit loss in the event of nonperformance by the other party to the
financial instrument for loan commitments and standby letters of credit is represented by
the contractual amount of those instruments assuming that the amounts are fully advanced
and that collateral or other security is of no value. The Bank uses the same credit policies
in making commitments and conditional obligations as it does for on-balance-sheet
instruments.
45
Off-balance-sheet financial instruments with contractual amounts that present credit risk
included the following:
Standby letters of credit ...............................................................
Commitments to extend credit:
Unused portion of existing lines of credit ..............................
Origination of new loans ........................................................
Commitments to sell loans...........................................................
Liabilities associated with letters of credit ..................................
December 31,
2015
2014
(In thousands)
$
10,033
$
14,989
245,446
47,598
—
36
206,074
58,418
—
105
Standby letters of credit are conditional commitments issued by the Bank to guarantee
performance of a customer to a third party. Those guarantees are primarily issued to
support public and private borrowing arrangements. Most guarantees extend for one year.
The credit risk involved in issuing letters of credit is essentially the same as that involved in
extending loan facilities to customers. The collateral supporting those commitments varies
and may include real property, accounts receivable or inventory. Commitments to extend
credit are agreements to lend to a customer as long as there is no violation of any condition
established in the contract. Commitments generally have fixed expiration dates or other
termination clauses and may require payment of a fee. Since some of the commitments
may expire without being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements. The Bank evaluates each customer’s creditworthiness
on a case-by-case basis. The amount of collateral obtained upon extension of the credit is
based on management’s credit evaluation of the customer. Collateral held varies, but may
include primary residences, accounts receivable, inventory, property, plant and equipment,
and income-producing commercial real estate.
16. COMMITMENTS AND CONTINGENCIES
The Corporation is obligated under various lease agreements covering its main office,
branch offices and other locations. These agreements are accounted for as operating leases
and their terms expire between 2016 and 2030 and, in some instances, contain options to
renew for periods up to twenty-five years. The total minimum rentals due in future periods
under these agreements in effect at December 31, 2015 were as follows:
Year Ended
December 31,
2016
2017
2018
2019
2020
Thereafter
Total minimum lease payments
Future Minimum
Lease Payments
(In thousands)
$
$
4,193
4,156
4,006
3,557
3,067
18,242
37,221
Several lease agreements contain clauses calling for escalation of minimum lease payments
contingent on increases in real estate taxes, gross income adjustments, percentage increases
in the consumer price index and certain ancillary maintenance costs. Total rental expense
46
amounted to approximately $4,229,000 and $3,998,000 for the years ended December 31,
2015 and 2014, respectively.
Under the terms of a sublease agreement, the Corporation will receive minimum annual
rental payments of approximately $29,000 through July 31, 2019. Total rental income
amounted to approximately $33,000 and $33,000 for the years ended December 31, 2015
and 2014, respectively.
The Bank is involved in various legal actions arising in the normal course of business.
Although the ultimate outcome of these actions cannot be ascertained at this time, it is
the opinion of management, after consultation with counsel, that the resolution of such
actions will not have a material adverse effect on the consolidated financial condition of
the Corporation.
The Corporation has entered into agreements with its President and with certain other senior
officers, whereby, following the occurrence of a change in control of the Corporation, if
employment is terminated (except because of death, retirement, disability or for “cause”
as defined in the agreements) or is voluntarily terminated for “good reason,” as defined in
the agreements, said officers will be entitled to receive additional compensation, as defined
in the agreements.
17. STOCKHOLDERS’ EQUITY
Capital guidelines issued by the Federal Reserve Board (“FRB”) and by the FDIC
require that the Corporation and the Bank maintain minimum capital levels for capital
adequacy purposes. These regulations also require banks and their holding companies
to maintain higher capital levels to be considered “well-capitalized”. Failure to meet
minimum capital requirements can initiate certain mandatory, and possibly additional
discretionary actions by regulators that, if undertaken, could have a direct material effect
on the Corporation’s financial statements. Under capital adequacy guidelines and the
regulatory framework for prompt corrective action, there are specific capital guidelines that
involve quantitative measures of assets, liabilities and certain off-balance-sheet items as
calculated under regulatory accounting practices. The risk-based capital rules are designed
to make regulatory capital more sensitive to differences in risk profiles among bank and
bank holding companies, to account for off-balance-sheet exposure and to minimize
disincentives for holding liquid assets. Management believes that as of December 31, 2015
and 2014, the Corporation and the Bank met all applicable minimum capital requirements
and were considered “well-capitalized” by both the FRB and the FDIC. There have been
no events or conditions since the end of the year that management believes would have
changed the Corporation’s or the Bank’s category.
47
The Corporation’s and the Bank’s actual and required capital measures were as follows:
Actual
Amount
Ratio
Minimum To Be
Well-Capitalized Under
Prompt Corrective
Action Provisions
Amount
Ratio
Minimum For Capital
Adequacy Purposes
Ratio
Amount
(Dollars in thousands)
At December 31, 2015:
Cambridge Bancorp:
Total capital
(to risk-weighted assets) .. $ 143,044
Tier I capital
(to risk-weighted assets) .. 128,943
Common equity
tier I capital
12.7%
$ 90,159
8.0%
$ 112,699
10.0%
11.4%
67,620
6.0%
90,159
8.0%
(to risk-weighted assets) ..
Tier I capital
(to average assets) ............
Cambridge Trust Company:
128,943
11.4%
50,715
4.5%
73,255
6.5%
128,943
7.5%
68,619
4.0%
85,774
5.0%
Total capital
(to risk-weighted assets) .. $ 141,341
Tier I capital
(to risk-weighted assets) .. 127,240
Common equity
tier I capital
12.5%
$ 90,159
8.0%
$ 112,700
10.0%
11.3%
67,620
6.0%
90,159
8.0%
(to risk-weighted assets) ..
Tier I capital
(to average assets) ............
At December 31, 2014:
Cambridge Bancorp:
127,240
11.3%
50,715
4.5%
73,255
6.5%
127,240
7.5%
67,783
4.0%
84,729
5.0%
Total capital
(to risk-weighted assets) .. $ 135,696
Tier I capital
(to risk-weighted assets) ..
Tier I capital
(to average assets) ............
122,808
122,808
Cambridge Trust Company:
Total capital
(to risk-weighted assets) .. $ 131,704
Tier I capital
(to risk-weighted assets) .. 118,816
Tier I capital
(to average assets) ............
118,816
18. OTHER INCOME
13.2%
$ 82,374
8.0%
$ 102,967
10.0%
11.9%
41,187
4.0%
61,780
6.0%
7.8%
63,358
4.0%
79,198
5.0%
12.8%
$ 82,374
8.0%
$ 102,967
10.0%
11.5%
41,187
4.0%
61,780
6.0%
7.6%
62,686
4.0%
78,358
5.0%
The components of other income were as follows:
Year Ended December 31,
2015
2014
Safe deposit box income ..............................................................
Loan fee income ..........................................................................
Miscellaneous income .................................................................
$
Total other income .................................................................
$
(In thousands)
342
248
291
881
$
$
337
312
290
939
48
19. OTHER OPERATING EXPENSES
The components of other operating expenses were as follows:
Year Ended December 31,
2015
2014
(In thousands)
Director fees.................................................................................
Contributions / Public relations ...................................................
Printing and supplies....................................................................
Travel and entertainment .............................................................
Dues and memberships ................................................................
....................................................................................
Security
Postage
....................................................................................
Other losses ..................................................................................
Miscellaneous expense ................................................................
$
$
561
517
341
302
286
282
264
205
271
529
547
286
294
294
266
282
455
260
Total other operating expenses ...............................................
$
3,029
$
3,213
20. OTHER COMPREHENSIVE INCOME
Comprehensive income is defined as all changes to equity except investments by and
distributions to stockholders. Net income is a component of comprehensive income,
with all other components referred to in the aggregate as “other comprehensive income”.
The Corporation’s other comprehensive income consists of unrealized gains or losses
on securities held at year-end classified as available-for-sale and the component of the
unfunded retirement liability computed in accordance with the requirements of ASC 715,
“Compensation – Retirement Benefits”. The before-tax and after-tax amount of each of
these categories, as well as the tax (expense)/benefit of each, is summarized as follows:
Year Ended December 31, 2015
Tax
(Expense)
or Benefit
(In thousands)
Net-of-tax
Amount
Before Tax
Amount
Defined benefit retirement plans:
Change in unfunded retirement liability .....
Unrealized gains/(losses) on AFS securities:
Unrealized holding gains/(losses) arising
$
67
$
(27)
$
40
during the period ...................................
(1,504)
Reclassification adjustment for gains
recognized in net income ......................
(690)
$
(2,127)
$
524
247
744
(980)
(443)
$
(1,383)
49
Year Ended December 31, 2015
Tax
(Expense)
or Benefit
(In thousands)
Net-of-tax
Amount
Before Tax
Amount
Defined benefit retirement plans:
Change in unfunded retirement liability .....
Unrealized (losses)/gains on AFS securities:
Unrealized holding (losses)/gains arising
$
(10,517)
$
4,295
$
(6,222)
during the period ...................................
6,124
(2,151)
3,973
Reclassification adjustment for gains
recognized in net income ......................
(1,073)
385
(688)
$
(5,466)
$
2,529
$
(2,937)
Reclassifications out of Accumulated Other Comprehensive Income (“AOCI”) are presented below:
Details about
AOCI
Components
Year Ended December 31, 2015
Amount
Reclassified
from AOCI
(In thousands)
Affected Line Item
on the
Statement of Income
Unrealized gains/(losses) on AFS securities:
$
$
690
(247)
443
Gain on disposition of
investment securities
Income tax expense
Net income
21. EARNINGS PER SHARE
The following represents a reconciliation between basic and diluted earnings per share:
Year Ended December 31, 2015
Diluted
Basic
EPS
EPS
Numerator:
Net income .......................................................................
$ 15,512,000
$ 15,694,000
Denominator:
Weighted average common shares outstanding ...............
Dilutive effect of stock options ........................................
3,938,117
—
Total shares ................................................................
3,938,117
3,938,117
55,482
3,993,599
Earnings per share ..................................................................
$
3.94
$
3.93
Year Ended December 31, 2014
Diluted
Basic
EPS
EPS
Numerator:
Net income .......................................................................
$ 14,793,000
$ 14,944,000
Denominator: .........................................................................
Weighted average common shares outstanding ...............
Dilutive effect of stock options ........................................
3,886,692
—
Total shares ................................................................
3,886,692
3,886,692
70,724
3,957,416
Earnings per share ..................................................................
$
3.81
$
3.78
50
22. CUSTOMER RELATED DERIVATIVE CONTRACTS
The Bank has entered into interest rate swap contracts to help commercial loan borrowers
manage their interest rate risk. The interest rate swap contracts with commercial loan
borrowers allow them to convert floating-rate loan payments to fixed-rate loan payments.
When the Bank enters into an interest rate swap contract with a commercial loan borrower,
it simultaneously enters into a “mirror” swap contract with a third party. The third party
exchanges the client’s fixed rate loan payments for floating-rate loan payments. As of
December 31, 2015 and 2014, the Bank had interest rate swap contracts with commercial
loan borrowers with notional amounts of $11.6 million and $0.0 million, respectively, and
equal amounts of “mirror” swap contracts with third-party financial institutions. These
derivatives are not designated as hedges and therefore, changes in fair value are recognized
in earnings. Because these derivatives have mirror-image contractual terms, the changes in
fair value substantially offset each other through earnings. Fees earned in connection with
the execution of derivatives related to this program are recognized in earnings through
other income.
The credit risk associated with swap transactions is the risk of default by the counterparty.
To minimize this risk, the Corporation enters into interest rate agreements only with highly
rated counterparties that management believes to be creditworthy. The notional amounts
of these agreements do not represent amounts exchanged by the parties and, thus, are not a
measure of the potential loss exposure.
23. FAIR VALUES OF FINANCIAL INSTRUMENTS
The following is a summary of the carrying values and estimated fair values of the
Corporation’s significant financial instruments as of the dates indicated.
December 31, 2015
Carrying Estimated
Fair Value
Value
December 31, 2014
Carrying Estimated
Fair Value
Value
(In thousands)
Financial assets:
Cash and cash equivalents .................
Securities - available for sale .............
Securities - held to maturity ...............
Loans held for sale .............................
Loans, net ...........................................
FHLB Boston stock............................
Accrued interest receivable ................
Mortgage servicing rights ..................
Loan level interest rate swaps ............
$
24,645 $
347,173
83,063
—
1,177,023
6,465
4,222
491
315
24,645 $
347,173
86,541
—
1,176,648
6,465
4,222
647
315
17,440 $
339,791
79,646
284
1,066,497
7,955
3,925
332
—
17,440
339,791
83,431
284
1,073,244
7,955
3,925
453
—
Financial liabilities:
Deposits..............................................
Short-term borrowings .......................
Long-term borrowings .......................
Loan level interest rate swaps ............
1,557,224
—
3,910
315
1,555,542
—
3,905
315
51
1,370,536
69,000
1,369,307
69,000
—
—
—
—
The Corporation follows ASC 820, “Fair Value Measurements and Disclosures” for
financial assets and liabilities. ASC 820 defines fair value, establishes a framework for
measuring fair value and expands disclosure requirements about fair value measurements.
ASC 820, among other things, emphasizes that fair value is a market-based measurement,
not an entity-specific measurement, and states that a fair value measurement should be
determined based on the assumptions the market participants would use in pricing the
asset or liability. In addition, ASC 820 specifies a hierarchy of valuations techniques based
on whether the types of valuation information (“inputs”) are observable or unobservable.
Observable inputs reflect market data obtained from independent sources, while
unobservable inputs reflect the Corporation’s market assumptions. These two types of
inputs have created the following fair value hierarchy:
• Level 1 – Quoted prices for identical assets or liabilities in active markets.
• Level 2 – Quoted prices for similar assets or liabilities in active markets; quoted prices
for identical or similar assets or liabilities in inactive markets; and model-derived
valuations in which all significant inputs and significant value drivers are observable
in active markets.
• Level 3 – Valuations derived from techniques in which one or more significant
inputs or significant value drivers are unobservable in the markets and which reflect
the Corporation’s market assumptions.
Under ASC 820, fair values are based on the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between market participants at the
measurement date. When available, the Corporation uses quoted market prices to determine
fair value. If quoted prices are not available, fair value is based upon valuation techniques
such as matrix pricing or other models that use, where possible, current market-based or
independently sourced market parameters, such as interest rates. If observable market-based
inputs are not available, the Corporation uses unobservable inputs to determine appropriate
valuation adjustments using methodologies applied consistently over time.
Valuation techniques based on unobservable inputs are highly subjective and require
judgments regarding significant matters such as the amount and timing of future cash
flows and the selection of discount rates that may appropriately reflect market and credit
risks. Changes in these judgments often have a material impact on the fair value estimates.
In addition, since these estimates are as of a specific point in time, they are susceptible
to material near-term changes. The fair values disclosed do not reflect any premium or
discount that could result from offering significant holdings of financial instruments at
bulk sale, nor do they reflect the possible tax ramifications or estimated transaction costs.
Changes in economic conditions may also dramatically affect the estimated fair values.
The Corporation uses fair value measurements to record fair value adjustments to certain
assets and to determine fair value disclosures. Securities available for sale, and derivative
instruments and hedges are recorded at fair value on a recurring basis. Additionally, from
time to time, the Corporation may be required to record at fair value other assets on a
nonrecurring basis, such as collateral dependent impaired loans.
52
The following table summarizes certain assets reported at fair value:
Measured on a recurring basis:
Securities available for sale:
U.S. GSE obligations ...................
Mortgage-backed securities .........
Corporate debt securities ..............
Mutual funds ................................
Other assets:
Interest rate swaps with customers
Other liabilities:
Mirror swaps with counterparties
Measured on a recurring basis:
Securities available for sale:
U.S. GSE obligations ...................
Mortgage-backed securities .........
Corporate debt securities ..............
Mutual funds ................................
Fair Value as of December 31, 2015
Level 1
Level 2
Level 3
Total
(In thousands)
$
— $ 139,770 $
—
—
612
205,806
985
—
—
—
315
315
— $ 139,770
205,806
—
985
—
612
—
—
—
315
315
Fair Value as of December 31, 2014
Level 1
Level 2
Level 3
Total
(In thousands)
$
— $
—
—
624
90,471 $
245,680
3,016
—
— $
—
—
—
90,471
245,680
3,016
624
The following is a description of the principal valuation methodologies used by the
Corporation to estimate the fair values of its financial instruments.
Investment Securities
For investment securities, fair values are primarily based upon valuations obtained from
a national pricing service which uses matrix pricing with inputs that are observable in
the market or can be derived from, or corroborated by, observable market data. When
available, quoted prices in active markets for identical securities are utilized.
Loans Held for Sale
For loans held for sale, fair values are estimated using projected future cash flows, discounted
at rates based upon either trades of similar loans or mortgage-backed securities, or at current
rates at which similar loans would be made to borrowers with similar credit ratings and for
similar remaining maturities.
Loans
For most categories of loans, fair values are estimated using projected future cash flows,
discounted at rates based upon either trades of similar loans or mortgage-backed securities,
or at current rates at which similar loans would be made to borrowers with similar credit
ratings and for similar remaining maturities. Loans that are deemed to be impaired in
accordance with ASC 310, “Receivables”, are valued based upon the lower of cost or fair
value of the underlying collateral.
FHLB Boston Stock
The fair value of FHLB Boston stock equals its carrying value since such stock is only
redeemable at its par value.
53
Mortgage Servicing Rights
The fair value of mortgage servicing rights is estimated based on the present value of
expected cash flows, incorporating assumptions for discount rate, prepayment speed and
servicing cost.
Deposits
The fair value of non-maturity deposit accounts is the amount payable on demand at the
reporting date. This amount does not take into account the value of the Bank’s long-term
relationships with core depositors. The fair value of fixed-maturity certificates of deposit
is estimated using a replacement cost of funds approach and is based upon rates currently
offered for deposits of similar remaining maturities.
Long-Term Borrowings
For long-term borrowings, fair values are estimated using future cash flows, discounted
at rates based upon current costs for debt securities with similar terms and remaining
maturities.
Other Financial Assets and Liabilities
Cash and cash equivalents, accrued interest receivable and short-term borrowings have fair
values which approximate their respective carrying values because these instruments are
payable on demand or have short-term maturities and present relatively low credit risk and
interest rate risk.
Derivative Instruments and Hedges
The valuation of these instruments is determined using widely accepted valuation
techniques including discounted cash flow analysis on the expected cash flows of each
derivative. This analysis reflects the contractual terms of the derivatives, including the
period to maturity, and uses observable market-based inputs, including interest rate
curves and implied volatilities. The Bank incorporates credit valuation adjustments to
appropriately reflect nonperformance risk in the fair value measurements. In adjusting the
fair value of its derivative contracts for the effect of nonperformance risk, the Bank has
considered the impact of netting and any applicable credit enhancements, such as collateral
postings.
Off-Balance-Sheet Financial Instruments
In the course of originating loans and extending credit, the Bank will charge fees in
exchange for its commitment. While these commitment fees have value, the Bank has not
estimated their value due to the short-term nature of the underlying commitments and their
immateriality.
Values Not Determined
In accordance with ASC 820, the Corporation has not estimated fair values for non-
financial assets such as banking premises and equipment, goodwill, the intangible value
of the Bank’s portfolio of loans serviced for itself and the intangible value inherent in the
Bank’s deposit relationships (i.e., core deposits), among others. Accordingly, the aggregate
fair value amounts presented do not represent the underlying value of the Corporation.
54
55
ROBERT J. BETTACCHI
DONALD T. BRIGGS
DIRECTORS
Principal/Owner
RJB Consulting
Retired Senior Vice President of
W.R. Grace & Company and
President of Grace Performance Chemicals
President
Federal Realty Boston
Executive Vice President – Development
Federal Realty Investment Trust
JEANETTE G. CLOUGH
President and Chief Executive Officer
Mount Auburn Hospital
SARAH G. GREEN
Retired First Vice President and Chief Operating Officer
Federal Reserve Bank of Richmond
HAMBLETON LORD
Managing Director
Launchpad Venture Group
LEON A. PALANDJIAN
Lead Director
Cambridge Bancorp and Cambridge Trust Company
Managing Member
Intercontinental Capital Management, LLC
Portfolio Manager
Techari Global Healthcare Fund
ROBERT S. PETERKIN
Professor of Practice Emeritus
Harvard Graduate School of Education
Principal
Peterkin Consulting Group
DENIS K. SHEAHAN
Chairman, President and Chief Executive Officer
Cambridge Bancorp and Cambridge Trust Company
R. GREGG STONE
ANNE M. THOMAS
DAVID C. WARNER
LINDA WHITLOCK
Manager
Kestrel Management, LLC
Retired Special Counsel
City of Somerville
Partner
J. M. Forbes & Co. LLP
Principal
The Whitlock Group
KATHRYN A. WILLMORE
Retired Vice President and Secretary of the Corporation
Massachusetts Institute of Technology
BYRON E. WOODMAN, JR. President
Monument Group Wealth Advisors, LLC
Monument Group Tax Advisors, LLC
Woodman & Eaton, P.C.
56
CAMBRIDGE TRUST COMPANY - OFFICERS
Denis K. Sheahan . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chairman, President & Chief Executive Officer
Lynne M. Burrow . . . . . . . . . . . . . . . . . . . . . . . Executive Vice President & Chief Information Officer
Michael A. Duca . . . . . . . . . . . . . . . . . . . . Executive Vice President & Head of Wealth Management
Thomas A. Johnson . . . . . . . . . . Executive Vice President, Consumer Banking Director & Secretary
Martin B. Millane, Jr. . . . . . . . . . . . . . . . . . . . . . . .Executive Vice President & Chief Lending Officer
Albert R. Rietheimer . . . . . . . . . . . . . Executive Vice President, Chief Financial Officer & Treasurer
Noreen A. Briand . . . . . . . . . . . . . . . . . . . . . . . . Senior Vice President & Human Resources Director
Robert N. Siegrist . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Senior Vice President & Marketing Director
James F. Spencer . . . . . . . . . . . . . . . . . . . . . . . . . . Senior Vice President & Chief Investment Officer
Stephen A. Caputo . . . . . . . . . . . . . . . . . . . Senior Vice President, Business Banking Group Manager
Scott J. Chamberlin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Senior Vice President, Innovation Banking
Peter J. Halberstadt . . . . . . . . . . . . . . . . . . . . . . . . . . . Senior Vice President & Credit Risk Manager
John A. Haley . . . . . . . . . Senior Vice President & Director of Wealth Management Support Services
Eric C. Jussaume . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Senior Vice President & Investment Officer
Frank Pasciuto . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Senior Vice President & Operations Manager
David G. Strachan, Jr. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Senior Vice President & Trust Officer
David E. Walker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Senior Vice President & Investment Officer
Julie A. Alix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Vice President & Trust Officer
Elaine M. Arseneault . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vice President
Carol J. Bartalussi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vice President
Jo-Ann E. Bussiere . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vice President
Joseph D. Cardarelli . . . . . . . . . . . . . . . . . . . . . . . Vice President & Information Technology Manager
Kathleen E. Carlson . . . . . . . . . . . . . . . . . . . . . . . . . Vice President & Business Development Officer
Susan I. Chiappisi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Vice President & Trust Officer
Jeffrey B. Churchill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vice President
Erin J. Cooper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vice President & Business Development Officer
Maribeth Darrow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vice President & Director of Training
Jason R. DeMello . . . . . . . . . . . . . . . . . . . . . . . . . . . Vice President & Business Development Officer
Vidalia M. DiVito . . . . . . . . . . . . . . . . . . . . . . . Vice President, Senior Residential Real Estate Officer
Martin A. Fenton . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vice President, Commercial Real Estate
Edward F. Fitzgerald, Jr. . . . . . . . . . . . . . . . . . . . . . Vice President & Business Development Officer
Alice J. Flanagan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Vice President & Trust Officer
Aimee B. Forsythe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vice President & Investment Officer
Ana Maria Foster . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vice President, Risk & Compliance Manager
Ryan M. Hanna . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vice President & Investment Officer
Kathryn L. Hersey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vice President & Investment Officer
Peter Huntington . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vice President, Commercial Lender
Brian A. Kelley . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vice President, Commercial Lender
57
CAMBRIDGE TRUST COMPANY OFFICERS (continued)
Matthew S. Lieber . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Vice President & Trust Officer
M. Lynne Linnehan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vice President
Andrew J. Mahoney, Jr. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vice President, Commercial Lender
Robert P. Maloof . . . . . . . . . . . . . . . . . . .Vice President & Manager, Commercial Credit Department
Jane E. Mason . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Vice President, Relationship Manager
Roma A. Mayur . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vice President, Commercial Lender
Laura C. McGregor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Vice President & Trust Officer
Stuart J. McGuirk . . . . . . . . . . . . . . . . . . . . . Vice President, Business Analyst & Compliance Officer
Steven J. Mead . . . . . . . . . . . . . . . . . . . . . . . Vice President, Commercial Real Estate Group Manager
Ana M. Mojica . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vice President
Maria Montgomery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vice President
Stephen J. Morrison . . . . . . . . . . . . . . . . . . Vice President & Director of Sales - Residential Lending
Patricia J. Mullin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vice President
Robert C. Pasciuto, Esq. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Vice President & Trust Officer
Steven G. Pisan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vice President
John J. Quintal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vice President, Commercial Real Estate
Salvatore M. Sagarese . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vice President
Joseph P. Sapienza . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Vice President & Controller
Dina M. Scianna . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vice President, Business Development Manager
Stacy Sheehan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vice President
Brian J. Sokolowski . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vice President & Investment Officer
David S. Tait . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vice President, Commercial Real Estate
Eric G. Warasta . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vice President & Investment Officer
John M. Winslow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vice President & Director of Internal Audit
William M. Yates . . . . . . . . . . . . . . . . . . . . . . . . . . . Vice President & Business Development Officer
James J. Zurn . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vice President & Retail Administrator
Julia M. Cawley . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Assistant Vice President & Operations Officer
John H. Chambers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Assistant Vice President
Andrea E. Cope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Assistant Vice President
Justin H. Drolsbaugh . . . . . . . . . . . . . . . . . . . . . . . Assistant Vice President, Commercial Real Estate
Christopher E. Durning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Assistant Vice President
Laura C. Ganat . . . . . . . . . . . . . . . . . . . . . . . . . . . .Assistant Vice President & Loan Servicing Officer
Stephen W. Hall . . . . . . . . . . . . . . . . . . . . . . . Assistant Vice President & GLBA Compliance Officer
Patricia E. Hartnett . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Assistant Vice President
Leslie L. Hartwell . . . . . . . . . . . . . . . . . . .Assistant Vice President & Business Development Officer
Eugene K. Kalaw . . . . . . . . . . . . . . . . . . . .Assistant Vice President & Business Development Officer
Joseph D. Lombardi . . . . . . . . . . . . . . . . . . . . . . . . . . Assistant Vice President & Assistant Controller
Walter J. McIrney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Assistant Vice President & Security Officer
58
CAMBRIDGE TRUST COMPANY OFFICERS (continued)
Richard A. Moquin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Assistant Vice President & Tax Officer
Mary Colt Navins . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Assistant Vice President
Susan A. O’Keefe . . . . . . . . . . . . . Assistant Vice President & Treasury Management Analyst Officer
Barbara E. Piacentino . . . . . . . . . . . . . . . . . . . . . . . . . . Assistant Vice President & Operations Officer
Karina Q. Pinella . . . . . . . . . . . . . . . . . . . . .Assistant Vice President & Senior Credit Analyst Officer
Stephen I. Sall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Assistant Vice President & Loan Review Officer
Angela L. Vitagliano . . . . . . . . . . . . . . . . . . . . . . . . . . Assistant Vice President & Operations Officer
Marya N. Wall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Assistant Vice President & BSA Officer
Basharat H. Sheikh . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Assistant Treasurer
Clinton D. Williams . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Assistant Treasurer
Ping H. Wong . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Assistant Treasurer
Donna P. Ambrifi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consumer Loan Operations Officer
Pooja Bhandary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Assistant Operations Officer
Lindsey M. Bickford . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Secondary Market Officer
Alan M. Collopy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Operations Officer
Renée L. Daniell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Assistant Operations Officer
Mark J. Earnest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Commercial Officer, Portfolio Manager
David M. Frost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Digital Products Officer
Medard H. Kadima . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Information Security Officer
Kenny Khong . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Senior Credit Analyst Officer
Ann C. Kuske . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Operations Officer
Alan G. O’Rourke . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Commercial Lending Administration Officer
Leah Siporin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Digital Marketing Officer
Jason R. Stone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Information Security Officer
Peter C. Stoneman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consumer Loan Officer
Linda G. Sullivan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Human Resources Officer
Christopher A. Vedro . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Portfolio Manager
Christopher M. Yemma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Compliance Officer
CAMBRIDGE TRUST COMPANY OF NEW HAMPSHIRE - OFFICERS
Susan Martore-Baker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .President
Brian A. Bickford . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Senior Vice President & Investment Officer
Judith V. Goodnow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Senior Vice President & Trust Officer
Maureen Kelliher . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Senior Vice President & Investment Officer
Judith K. Noel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Senior Vice President & Trust Officer
Michael P. Panebianco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Vice President & Trust Officer
59
CAMBRIDGE TRUST COMPANY – EMPLOYEES
Bailey, Adrienne
Basnyat, Nivedita
Beattie, Adam
Bober, Jeffrey
Buonopane, Marion
Burke, Sandra
Carnazzo, Gail
Caruso, Judy
Catanzano, Joseph
Cedrone, Jeffrey
Cole, Jeffrey
Costello, Laura
Cronburg, Wendy
Crowley, John
Curtin, Stephen
Dalomba, Christian
Dean-Arnold, Shellie
DeAngelis, Maryellen
DeDominicis, Catherine
DeSimone, Kevin
Dillon, Janice
Diloyan, Anahit
Djatsa, Viviane
Dodge, Jeanne
Donovan, Lindsey
Dutt, Anita
Fenlon, Jennifer
Fin, Bernadette
Flanagan, Ryan
Flores, Cynthia
Frawley, Matthew
Frederique, Jude
Genes, Justina
Gentle, Nerissa
Gielczyk, Michael
Gilkes, Yvette
Gilpin, Kaitlyn
Greco, Randi
Greene, Mary
Hamblen, Sally
Hamilton, Elizabeth
Harris, Isabella
Howard, Margaret
Hutchinson, Beverly
Islam, Khondaker
Jorge, Adelaide
Kantor, Jasmine
Kaufman, Theresa
Keenan, Robert
Kier, Robert
Kingsford, Alessandra
Kirwin, Marie
Kumari, Anita
Kuzmich, Katherine
Kvitman, Marina
LaMorticelli, René
Leonard, Sean
Lettieri, Robyn
Levine, Patricia
Lim, Raymond
Liu, Rose
Lombardo, Joseph
Lozano, Aidee
Lucas, Nicole
Manessis, Demetrios
Martynova, Olga
McWilliams, Katherine
Medeiros, Linda
Membrino, Patricia
Mesina, Rosita
Messenger, Kara
Miranda, Ana Paula
Mui, Donna
Mulcahy, Deborah
Murphy, Barbara
Napoli, Robert
Nay, Thomas
Nichols, Pamela
O’Leary, Brendan
Palacios, Maria Del Mar
Park, David
Perry Durkee, Christina
Phillips, Stephen
Phuyal, Puja
Piazzarolo, Ezio
Prager, Robert
Quigley, Maria
Reed, Michael
Ricker, Kelly
Salimi, Sepehr
Sands, Janet
Sawisch, Jane
Serio, Linda
Shahi, Bala
Shay, Debbie
Small, Jasmine
Solares, Yolany
Sottile, Charlotte
Soul, Jr., Harwood
Sprague, Cynthia
Squitieri, Angela
Stephano, Susan
Tamasi, Joanne
Thain, Lina
Tiwari, Salu
Trebicka, Daniela
Truesdale, Stacey
Truong, Andrew
Usova, Victoria
Vallejo, Ivan
Vaudo Tobin, Rita
Vitale, Louis
Vo, Lana
White, Kristen
Whittaker, Matthew
Wu, Qihui
Yearwood, Carol
Zaring, Victoria
Zelman, Carol Jean
CAMBRIDGE TRUST COMPANY OF NEW HAMPSHIRE - EMPLOYEES
Bythrow, Carrie
Cannon, Susan
Schwechheimer, Brenda
Talbot, Michele
Travers, Janelle
60
Corporate Headquarters
1336 Massachusetts Avenue • Cambridge, MA 02138
617-876-5500
Operations Center
78 Blanchard Road • Burlington, MA 01803
Branch Offices
Harvard Square • 1336 Massachusetts Avenue • Cambridge, MA 02138
Huron Village • 353 Huron Avenue • Cambridge, MA 02138
Kendall Square • 326 Main Street • Cambridge, MA 02142
Porter Square • 1720 Massachusetts Avenue • Cambridge, MA 02138
University Park at MIT • 350 Massachusetts Avenue • Cambridge, MA 02139
Beacon Hill • 65 Beacon Street • Boston, MA 02108
South End • 565 Tremont Street • Boston, MA 02118
361 Trapelo Road • Belmont, MA 02478
75 Main Street • Concord, MA 01742
1690 Massachusetts Avenue • Lexington, MA 02420
152 Lincoln Road • Lincoln, MA 01773
494 Boston Post Road • Weston, MA 02493
Wealth Management Offices
75 State Street • Boston, MA 02109
49 South Main Street • Concord, NH 03301
1000 Elm Street • Manchester, NH 03101
One Harbour Place • Portsmouth, NH 03801
Innovation Banking Office
Cambridge Innovation Center • One Broadway • Cambridge, MA 02142
Website
www.cambridgetrust.com