Executive Summary

Q3 2023 EPS was $0.83, down 8.8% QoQ (Q2: $0.91) on higher funding costs; operating EPS was $1.15 (ex-merger charges) vs $1.23 in Q2, reflecting persistent NIM compression and elevated deposit costs .
Total revenue was $39.196M, essentially flat vs Q2 ($39.790M) but down vs Q3 2022 ($46.721M), as net interest and dividend income declined QoQ to $28.647M while noninterest income improved to $10.549M on stronger wealth management fees .
Cost of deposits rose to 2.09% (non‑wholesale 1.74%); adjusted NIM FTE fell to 2.13% from 2.21% in Q2; ROA was 0.48% and the efficiency ratio deteriorated to 75.64% (operating 69.09%) .
Strategic catalyst: announced all‑stock merger with Eastern Bankshares (exchange ratio 4.956x EBC), expected to close in Q1 2024; Denis Sheahan to become CEO of Eastern, with combined franchise ~$27B assets post‑close .

What Went Well and What Went Wrong

What Went Well

Wealth management revenue rose 5.4% QoQ to $8.513M, aided by seasonal tax prep fees; AUM/AUA remained sizable at $4.27B despite market declines, with net inflows cited .
Wholesale funding replaced higher-cost borrowings: borrowings fell $175.0M QoQ to $233.9M as the company utilized lower-cost funding sources; available liquidity totaled ~$2.6B, ~2x uninsured deposits .
Asset quality remained excellent: NPL ratio stable at 0.19%; ACL/loans at 0.95%; minimal net charge-offs ($74k, 0.01% annualized) .
“We are pleased to announce our plans to merge with Eastern Bank… the opportunity this combination brings for the employees and shareholders of both companies,” — Denis K. Sheahan .

What Went Wrong

Funding costs climbed: cost of total deposits rose to 2.09% (non‑wholesale 1.74%); adjusted NIM FTE compressed to 2.13% from 2.21% QoQ, pressuring core earnings .
Operating efficiency worsened: GAAP efficiency ratio of 75.64% vs 76.26% in Q2 (still elevated vs prior year); operating efficiency ratio rose to 69.09% from 67.49% QoQ .
Elevated non‑operating expenses tied to M&A: $2.567M merger‑related charges (Eastern) recorded in Q3, increasing the effective tax rate to 30% and weighing on GAAP EPS .

Financial Results

Income Statement Summary and EPS

Metric	Q3 2022	Q1 2023	Q2 2023	Q3 2023
Net Interest & Dividend Income ($M)	$36.278	$34.248	$29.761	$28.647
Noninterest Income ($M)	$10.443	$10.715	$10.029	$10.549
Total Revenue ($M)	$46.721	$44.963	$39.790	$39.196
Provision for Credit Losses ($M)	$0.612	$0.060	$0.080	$0.195
Diluted EPS ($)	$2.07	$1.58	$0.91	$0.83
Operating Diluted EPS ($)	$2.09	$1.62	$1.23	$1.15

Margins and Efficiency

Metric	Q3 2022	Q1 2023	Q2 2023	Q3 2023
NIM FTE (%)	2.95%	2.63%	2.26%	2.18%
Adjusted NIM FTE (%)	2.93%	2.58%	2.21%	2.13%
Cost of Deposits (%)	0.26%	1.36%	1.78%	2.09%
ROA (%)	1.14%	0.91%	0.52%	0.48%
Efficiency Ratio (GAAP) (%)	56.38%	63.00%	76.26%	75.64%
Operating Efficiency Ratio (%)	56.06%	62.06%	67.49%	69.09%

Noninterest Income Mix

Metric ($M)	Q3 2022	Q2 2023	Q3 2023
Wealth Management Revenue	$8.239	$8.076	$8.513
Deposit Account Fees	$0.841	$0.878	$0.852
ATM/Debit Card Income	$0.413	$0.414	$0.403
BOLI Income	$0.144	$0.192	$0.197
Other Income	$0.593	$0.476	$0.499

Balance Sheet and KPIs

Metric	Q3 2022	Q2 2023	Q3 2023
Total Assets ($B)	$5.143	$5.490	$5.452
Total Loans ($B)	$3.629	$4.025	$4.028
Total Deposits ($B)	$4.281	$4.443	$4.566
NPLs ($M)	$6.383	$7.199	$7.778
NPLs / Total Loans (%)	0.18%	0.18%	0.19%
ACL / Loans (%)	0.96%	0.95%	0.95%
Wealth Mgmt AUM ($M)	$3,663.034	$4,099.169	$4,010.956
AUM & AUA ($M)	$3,837.035	$4,359.335	$4,268.394

Loan and Deposit Composition (Q3 2023 vs Q2 2023)

Category ($M)	Q2 2023	Q3 2023
Residential Mortgage Loans	$1,617.194	$1,627.460
Commercial Mortgage Loans	$1,916.159	$1,922.455
Home Equity Loans	$95.975	$93.364
Commercial & Industrial Loans	$367.403	$355.796
Consumer Loans	$28.495	$28.892
Demand Deposits	$1,059.563	$1,036.849
Interest‑bearing Checking	$1,171.164	$1,134.270
Money Market	$981.304	$1,005.820
Savings	$593.210	$560.597
Certificates of Deposit	$637.349	$828.390

Estimates vs Actuals

Metric	Q3 2023 Consensus	Actual Q3 2023	Surprise
Diluted EPS ($)	N/A (SPGI unavailable)*	$0.83	N/A
Total Revenue ($M)	N/A (SPGI unavailable)*	$39.196	N/A

*Values retrieved from S&P Global were unavailable due to a CIQ mapping issue for CATC.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Quarterly Dividend ($/share)	Q4 2023 pay Nov 16, 2023	$0.67 (prior quarter)	$0.67 declared Oct 16, 2023	Maintained
Eastern Merger Timing	Closing timeline	Announced Sept 19, 2023 – expected Q1 2024	Reiterated in Q3 release – anticipated Q1 2024	Maintained
Tax Rate (effective)	Q3 2023	24.0% in Q2	30.0% (non‑deductible merger costs)	Raised (one‑off)

No revenue/margin/OpEx formal guidance was provided in company materials for Q3 2023 .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2 2023)	Current Period (Q3 2023)	Trend
Funding Costs & NIM	Rapid rise in deposit costs; NIM FTE fell from 2.63% (Q1) to 2.26% (Q2)	Cost of deposits 2.09%; adjusted NIM FTE 2.13%	Continued pressure
Deposits & Liquidity	Non‑wholesale deposits declined in Q1; liquidity ~$2.7B; Q2 deposits down with wholesale mix shifts	Total deposits up QoQ to $4.566B, driven by wholesale CDs; liquidity ~$2.6B (~2x uninsured)	Stabilizing but wholesale‑heavy
Asset Quality	NPLs ~0.18% in Q1/Q2; ACL ~0.95%	NPLs 0.19%; ACL 0.95%; minimal charge‑offs	Stable/strong
Wealth Management	Q1 AUM/AUA up on market; Q2 AUM/AUA up QoQ	AUM/AUA dipped QoQ on markets, but revenue up on seasonal fees	Mixed (fees up; assets slightly down)
M&A/Strategic	Northmark systems conversion costs in Q2	Eastern merger announced; substantial non‑operating expenses	Transformational
Management & Talent	Hired relationship bankers; new WM head in Q2	Leadership continuity; merger leadership plans announced	Building for integration

Note: A Q3 2023 earnings call transcript was not available in the document catalog; themes sourced from press releases and 8‑K materials .

Management Commentary

“We are pleased to announce our plans to merge with Eastern Bank given our shared focus on delivering exceptional service to clients and the opportunity this combination brings for the employees and shareholders of both companies.” — Denis K. Sheahan, Chairman, President & CEO .
“Following the industry turmoil earlier this year, we are now focused on benefiting from the disruption in the markets by acquiring new clients and talent. Specifically, we have hired four skilled relationship bankers to focus on acquiring deposits…” — Denis K. Sheahan (Q2 release) .
On wealth management leadership: “I am pleased to welcome Jeffrey Smith… to lead the Wealth Management division of Cambridge Trust.” — Denis K. Sheahan (Q2 release) .
Merger positioning: “Each share of Cambridge common stock will be exchanged for 4.956 shares of Eastern common stock… creating a $27 billion combined franchise…” (press release) .

Q&A Highlights

No Q3 2023 earnings call transcript was found; therefore, Q&A highlights and any live guidance clarifications are unavailable from primary sources [ListDocuments returned 0 for earnings-call-transcript in Oct–Nov 2023].

Estimates Context

S&P Global consensus EPS and revenue estimates for CATC Q3 2023 were unavailable due to a CIQ mapping issue; as a result, we cannot quantify beats/misses vs consensus for EPS or total revenue (values retrieved from S&P Global unavailable).
Directionally, continued NIM compression and higher deposit costs suggest consensus for NIM‑sensitive earnings may need downward recalibration absent merger synergies; operating EPS held better than GAAP due to exclusion of merger charges .

Key Takeaways for Investors

Core margin pressure persists: adjusted NIM FTE fell to 2.13% as deposit costs rose to 2.09% (non‑wholesale 1.74%); monitor deposit mix and pricing strategy for signs of stabilization .
Revenue mix resilience: noninterest income contributed 26.9% of total revenue, with wealth management fees up QoQ despite AUM/AUA market headwinds; seasonal fee effects boosted Q3 .
Strong credit quality limits downside risk: NPLs at 0.19%, ACL/loans at 0.95%, and negligible net charge‑offs underscore conservative underwriting .
Balance sheet funding pivot: borrowings cut by $175.0M QoQ as wholesale CDs expanded; wholesale exposure raises cost sensitivity but supports liquidity (~$2.6B) .
Merger catalyst: Eastern transaction (4.956x exchange ratio) is the near‑term driver; integration, synergy realization, and leadership transition (Sheahan to CEO of Eastern) will shape medium‑term returns .
Tax and non‑operating noise: Q3 effective tax rate rose to 30.0% on non‑deductible merger costs; use operating EPS ($1.15) to gauge underlying earnings power .
Trading lens: absent consensus benchmarks, focus on NIM trajectory, deposit cost path, and merger milestones; any acceleration in deposit repricing benefits or synergy disclosures could be stock catalysts .

CAMBRIDGE BANCORP (CATC)·Q3 2023 Earnings Summary