10-12B

As filed with the Securities and Exchange Commission on August 9, 2017

File No.                         

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10

GENERAL FORM FOR REGISTRATION OF SECURITIES

PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES

EXCHANGE ACT OF 1934

CAMBRIDGE BANCORP

(Exact name of registrant as specified in its charter)

Massachusetts	04-2777442
(State or Other Jurisdiction of	(I.R.S. Employer Identification No.)
Incorporation or Organization)

1336 Massachusetts Avenue Cambridge, MA	02138
(Address of Principal Executive Offices)	(Zip Code)

Issuer’s telephone number: (617) 876-5500 

Securities to be registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which
to be so registered	each class is to be registered
Common Stock, $1.00 par value per share	NASDAQ Capital Market

Securities to be registered pursuant to Section 12(g) of the Act:

None

(Title of Class)

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Explanatory Note

Cambridge Bancorp (the “Company”) is filing this General Form for Registration of Securities on Form 10 to register Cambridge Bancorp’s Common Stock, par value $1.00 per share pursuant to Section 12(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Once this registration statement is deemed effective, Cambridge Bancorp will be required to file annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K, and to comply with all other obligations of the Exchange Act applicable to issuers filing registration statements pursuant to Section 12(b) of the Exchange Act.

Forward-Looking Statements

This Registration Statement contains forward-looking statements about the Company and its industry that involve substantial risks and uncertainties. Statements other than statements of current or historical fact, including statements regarding the Company’s future financial condition, results of operations, business plans, liquidity, cash flows, projected costs, and the impact of any laws or regulations applicable to the Company, are forward-looking statements. Words such as “anticipates,” “believes,” “estimates,” “expects,” “forecasts,” “intends,” “plans,” “projects,” “may,” “will,” “should,” and other similar expressions are intended to identify these forward-looking statements. Such statements are subject to factors that could cause actual results to differ materially from anticipated results. Such factors include, but are not limited to, the following:

• national, regional and local economic conditions may be less favorable than expected, resulting in, among other things, increased charge offs of loans, higher provisions for credit losses and/or reduced demand for the Company’s services;

• disruptions to the credit and financial markets, either nationally or globally;

• weakness in the real estate market, including the secondary residential mortgage market, which can affect, among other things, the value of collateral securing mortgage loans, mortgage loan originations and delinquencies, and profits on sales of mortgage loans;

• legislative, regulatory or accounting changes, including changes resulting from the adoption and implementation of the Dodd-Frank Act, which may adversely affect our business and/or competitive position, impose additional costs on the Company or cause us to change our business practices;

• the Dodd-Frank Act’s consumer protection regulations which could adversely affect the Company’s business, financial condition or results of operations;

• disruptions in the Company’s ability to access capital markets which may adversely affect its capital resources and liquidity;

• the Company’s heavy reliance on communications and information systems to conduct its business and reliance on third parties and affiliates to provide key components of its business infrastructure, any disruptions of which could interrupt the Company's operations or increase the costs of doing business;

• that the Company’s financial reporting controls and procedures may not prevent or detect all errors or fraud;

• the Company’s dependence on the accuracy and completeness of information about clients and counterparties;

• the fiscal and monetary policies of the federal government and its agencies;

• the failure to satisfy capital adequacy and liquidity guidelines applicable to the Company;

• downgrades in the Company’s credit rating;

• changes in interest rates which could affect interest rate spreads and net interest income;

• costs and effects of litigation, regulatory investigations or similar matters;

• a failure by the Company to effectively manage the risks the Company faces, including credit, operational and cyber security risks;

• increased pressures from competitors (both banks and non-banks) and/or an inability by the Company to remain competitive in the financial services industry, particularly in the markets which the Company serves, and keep pace with technological changes;

• unpredictable natural or other disasters, which could impact the Company’s customers or operations;

• a loss of customer deposits, which could increase the Company’s funding costs;

• the disparate impact that can result from having loans concentrated by loan type, industry segment, borrower type or location of the borrower or collateral;

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• changes in the creditworthiness of customers;

• increased loan losses or impairment of goodwill and other intangibles;

• negative public opinion which could damage the Company’s reputation and adversely impact business and revenues;

• the Company depends on the expertise of key personnel, and if these individuals leave or change their roles without effective replacements, operations may suffer;

• the Company may not be able to hire or retain additional qualified personnel and recruiting and compensation costs may increase as a result of turnover, both of which may increase costs and reduce profitability and may adversely impact the Company’s ability to implement the Company’s business strategies; and

• changes in the Company’s accounting policies or in accounting standards which could materially affect how the Company reports financial results and condition.

The Company does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.

Further Information about the Company

The public may read and copy this Registration Statement, including the exhibits and schedules thereto, as well as any other materials the Company files with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Additionally, the SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers, like the Company, that file electronically with the SEC. The address of the SEC's website is www.sec.gov.

Upon the effectiveness of this Registration Statement, the Company will become subject to the reporting and information requirements of the Exchange Act, and as a result will file periodic reports and other information with the SEC. These periodic reports and other information will be available for inspection and copying at the SEC’s public reference room and the website of the SEC referred to above, as well as on the Company’s website at no cost, www.cambridgetrust.com. This reference to the Company’s website is an inactive textual reference only, and is not a hyperlink. The contents of the Company’s website shall not be deemed to be incorporated by reference into this Registration Statement.

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TABLE OF CONTENTS

		PAGE
Item 1.	Business		1
Item 1A.	Risk Factors		10
Item 2.	Financial Information		18
Item 3.	Properties		43
Item 4.	Security Ownership of Certain Beneficial Owners and Management		44
Item 5.	Directors and Executive Officers		46
Item 6.	Executive Compensation		50
Item 7.	Certain Relationships and Related Transactions		70
Item 8.	Legal Proceedings		71
Item 9.	Market Price of and Dividends on the Registrant’s Common Equity and Related Matters		71
Item 10.	Recent Sales of Unregistered Securities		72
Item 11.	Description of Securities To Be Registered		72
Item 12.	Indemnification of Directors and Officers		74
Item 13.	Financial Statements and Supplementary Data		75
Item 14.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosures		153
Item 15.	Financial Statements and Exhibits		154
	Signatures		156

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ITEM 1. BUSINESS

Unless the context requires otherwise, all references to the “Company,” “we,” “us” and “our” refer to Cambridge Bancorp.

The Company

Cambridge Bancorp (together with its bank subsidiary, unless the context otherwise requires, the “Company”) is a Massachusetts state-chartered, federally registered bank holding company headquartered in Cambridge, Massachusetts. The Company is a Massachusetts corporation formed in 1983 and has one banking subsidiary (the “Bank”): Cambridge Trust Company formed in 1890.  As of June 30, 2017, the Company had total assets of $1.9 billion. Currently, the Bank operates 11 full-service banking offices in six cities and towns in Eastern Massachusetts. The Bank’s customers consist primarily of consumers and small and medium-sized businesses in these communities and surrounding areas throughout Massachusetts and New Hampshire. The Company’s Wealth Management Group has four offices, one in Boston, Massachusetts, and three in New Hampshire in Concord, Manchester and Portsmouth. As of June 30, 2017, the Company had Assets under Management of $2.8 billion.  The Wealth Management Group offers comprehensive investment management, as well as trust administration, estate settlement, and financial planning services. Our wealth management clients value personal service and depend on the commitment and expertise of our experienced banking, investment and fiduciary professionals.  

The Wealth Management Group customizes its investment portfolios to help its clients meet their long-term financial goals while moderating short-term stock market volatility. Through careful monitoring of asset allocation and disciplined security selection, Cambridge Trust’s in-house investment team provides clients with long-term capital growth while minimizing risk.  Our internally developed, research-driven process is managed by our team of portfolio managers and analysts. We build discretionary portfolios consisting of our best investment ideas, focusing on individual global equities, fixed income securities, exchange-traded funds and mutual funds. Our team-oriented approach fosters spirited discussion and rigorous evaluation of investments.

The Company offers a wide range of services to commercial enterprises, non-profit organizations and individuals.  The Company emphasizes service to small and medium-sized businesses in its market area. The Company makes commercial loans, construction loans, consumer loans and real estate loans (including one-to-four family and home equity lines of credit), and accepts savings, time, and demand deposits. In addition, the Company offers a wide range of commercial and retail banking services which include cash management, online banking, mobile banking and global payments.  The Company has one trademark, “Thought Series.”

The Company’s results of operations are largely dependent on net interest income, which is the difference between the interest earned on loans and securities and interest paid on deposits and borrowings, and non-interest income largely from its wealth management services. The results of operations are affected by the level of income and fees from loans, deposits, as well as operating expenses, the provision for loan losses, the impact of federal and state income taxes and the relative levels of interest rates and local and national economic activity.

Through Cambridge Trust, its banking subsidiary, the Company focuses on wealth management, the commercial banking business and the consumer banking business. The Company has traditionally been a commercial real estate lender, and in recent years has diversified commercial operations within the areas of commercial and industrial lending to include Innovation Banking, which specializes in working with New England-based entrepreneurs, and asset based lending that helps companies throughout New England and New York grow by borrowing against existing assets. The Innovation Banking group has a narrow client focus for lending and provides a local banking option for technology and life sciences companies within our market area that are primarily serviced by out-of-market institutions. The consumer banking operation utilizes the “Trusted Advisor” model to provide exceptional service and deepen our consumer relationships. The Trusted Advisor model attracts and retains clients by utilizing qualified professionals who provide sound advice to our clients throughout various stages of their lives.

Cambridge Trust Company

The Bank offers a full range of commercial and consumer banking services through its network of 11 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 two wholly-owned Massachusetts security corporations, CTC Security Corporation and CTC Security Corporation III, for this purpose. Deposits at the Bank are insured by the Federal Deposit Insurance Corporation (the “FDIC”) for the maximum amount permitted by FDIC Regulations.

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Investment management and trust services are offered through our wealth management office located in Boston and three wealth management offices located in New Hampshire. The Bank also utilizes its subsidiary and 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 Company’s consolidated balance sheets.

Cambridge Trust Company is active in the communities we serve. The Bank makes contributions to various non-profits and local organizations, investments in community development lending and investments in low-income housing all of which strive to improve the communities that our employees and customers call home.

Market Area

The Company operates in Eastern Massachusetts and Southern New Hampshire. Our primary lending market includes, Middlesex and Suffolk Counties in Massachusetts. We benefit from the presence of numerous institutions of higher learning, medical care and research centers, an innovation economy, and the corporate headquarters of several significant financial service companies within the Boston area. Eastern Massachusetts also has many high technology companies employing personnel with specialized skills. These factors affect the demand for residential homes, multi-family apartments, office buildings, shopping centers, industrial warehouses and other commercial properties.

Our lending area is primarily an urban market area with a substantial number of one to four unit residential properties, some of which are non-owner occupied, as well as apartment buildings, condominiums, office buildings and retail space. As a result, our loan portfolio contains a significantly greater number of multi-family and commercial real estate loans compared to institutions that operate in non-urban markets.

Our market area is located largely in the Boston-Cambridge-Quincy, Massachusetts/New Hampshire Metropolitan Statistical Area (“MSA”). The United States Census Bureau estimates that as of July 1, 2015, the Boston metropolitan area is the 10th largest metropolitan area in the United States. Located adjacent to major transportation corridors, the Boston metropolitan area provides a highly diversified economic base, with major employment sectors ranging from services, education, manufacturing and wholesale/retail trade, to finance, technology and medical care. According to the United States Department of Labor, in December 2016, the Boston-Cambridge-Quincy, Massachusetts/New Hampshire MSA had an unemployment rate of 2.5% compared to the national unemployment rate of 4.7%.

Competition

The financial services industry is highly competitive. The Company experiences substantial competition with other commercial banks, savings and loan associations, securities and brokerage companies, mortgage companies, insurance companies, finance companies, money market funds, credit unions, and other non-bank financial service providers in attracting deposits, making loans and attracting wealth management customers. The competing major commercial banks have greater resources that may provide them a competitive advantage by enabling them to maintain numerous branch offices and mount extensive advertising campaigns. The increasingly competitive environment is the result of changes in regulation, changes in technology and product delivery systems, additional financial service providers, and the accelerating pace of consolidation among financial services providers.  

The financial services industry could become even more competitive as a result of legislative, regulatory and technological changes and continued consolidation. Banks, securities firms and insurance companies can merge under the umbrella of a financial holding company, which can offer virtually any type of financial service, including banking, securities underwriting, insurance (both agency and underwriting) and merchant banking. Also, technology has lowered barriers to entry and made it possible for non-banks to offer products and services traditionally provided by banks, such as automatic transfer and automatic payment systems.

Some of the Company’s non-banking competitors have fewer regulatory constraints and may have lower cost structures.  In addition, some of the Company’s competitors have assets, capital and lending limits greater than that of the Company, have greater access to capital markets and offer a broader range of products and services than the Company.  These institutions may have the ability to finance wide-ranging advertising campaigns and may also be able to offer lower rates on loans and higher rates on deposits than the Company can offer.  Some of these institutions offer services, such as international banking, which the Company does not directly offer.

Various in-state market competitors and out-of-state banks continue to enter or have announced plans to enter or expand their presence in the market areas in which the Company currently operates.  With the addition of new banking presences within our market, the Company expects increased competition for loans, deposits, and other financial products and services.

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In order to compete with other financial services providers, the Company stresses the community nature of its banking operations and principally relies upon local promotional activities, personal relationships established by officers, directors, and employees with their customers, and specialized services tailored to meet the needs of the communities served.  The Company also offers certain customer services that many of our community banking competitors do not offer such as asset based lending and loans to target companies across a wide range of industries including software, digital media, telecommunications, electronics, mobile, advertising, clean technology, medical device, consumer products and other industries that are venture capital, private equity, angel or alternative investment backed (entrepreneurial companies).  While the Company’s position varies by market, the Company’s management believes that it can compete effectively as a result of local market knowledge, local decision making, and awareness of customer needs.

Supervision and Regulation

General

Banking is a complex, highly regulated industry. Consequently, the performance of the Company and the Bank can be affected not only by management decisions and general and local economic conditions, but also by the statutes enacted by, and the regulations and policies of, various governmental regulatory authorities. These authorities include, but are not limited to, the Board of Governors of the Federal Reserve System (the “Federal Reserve”), the Massachusetts Division of Banks (“MDB”), the New Hampshire Division of Banks, and the FDIC. The effect of these statutes, regulations and policies and any changes to any of them can be significant and cannot be predicted.

The primary goals of the bank regulatory scheme are to maintain a safe and sound banking system and to facilitate the conduct of sound monetary policy. In furtherance of these goals, the U.S. Congress and the Commonwealth of Massachusetts have created largely autonomous regulatory agencies that oversee, and have enacted numerous laws that govern, banks, bank holding companies and the banking industry. The system of supervision and regulation applicable to the Company and the Bank establishes a comprehensive framework for the entities’ respective operations and is intended primarily for the protection of the Bank’s depositors and the public, rather than the shareholders and creditors. The following summarizes the significant laws, rules and regulations governing banks and bank holding companies, including the Company and the Bank, but does not purport to be a complete summary of all applicable laws, rules and regulations governing banks and bank holding companies or the Company or the Bank. The descriptions are qualified in their entirety by reference to the specific statutes, regulations and policies discussed. Any change in applicable laws, regulations or regulatory policies may have a material effect on our businesses, operations and prospects. The Company is unable to predict the nature or extent of the effects that economic controls or new federal or state legislation may have on our business and earnings in the future.

Regulatory Agencies

Cambridge Bancorp is a legal entity separate and distinct from its first tier bank subsidiary, Cambridge Trust Company, and its second tier subsidiaries, Cambridge Trust Company of New Hampshire, Inc., a New Hampshire-chartered non-depository trust company, CTC Security Corporation and CTC Security Corporation III, which are used to invest the Bank’s deposits and borrowed funds in investment securities. As a bank holding company, the Company is regulated under the Bank Holding Company Act (“BHC Act”) and is subject to inspection, examination and supervision by the Federal Reserve Board.

As a Massachusetts-chartered insured depository institution, Cambridge Trust Company is subject to supervision, periodic examination, and regulation by the MDB as its chartering authority, by the FDIC as its primary federal regulator and the New Hampshire Division of Banks. The prior approval of the MDB and the FDIC is required, among other things, for the Bank to establish or relocate an additional branch office, assume deposits, or engage in any merger, consolidation, purchase or sale of all or substantially all of the assets of any bank.

Bank Holding Company Regulations Applicable to the Company

The BHC Act and other federal laws subject bank holding companies to particular restrictions on the types of activities in which they may engage, and to a range of supervisory requirements and activities, including regulatory enforcement actions for violations of laws and regulations. As a Massachusetts corporation, the holding company is subject to certain limitations and restrictions under applicable Massachusetts corporate law.

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Mergers & Acquisitions.   The BHC Act, the Bank Merger Act, the laws of the Commonwealth of Massachusetts applicable to financial institutions and other federal and state statutes regulate acquisitions of banks and their holding companies. The BHC Act generally limits acquisitions by bank holding companies to banks and companies engaged in activities that the Federal Reserve Board has determined to be so closely related to banking as to be a proper incident thereto. The BHC Act requires every bank holding company to obtain the prior approval of the Federal Reserve before (i) acquiring more than 5% of the voting stock of any bank or other bank holding company, (ii) acquiring all or substantially all of the assets of any bank or bank holding company, or (iii) merging or consolidating with any other bank holding company.

In reviewing applications seeking approval of merger and acquisition transactions, the bank regulatory authorities generally consider, among other things, the competitive effect and public benefits of the transactions, the financial and managerial resources and future prospects of the combined organization (including the capital position of the combined organization), the applicant’s performance record under the Community Reinvestment Act (see —Community Reinvestment Act), fair housing laws and the effectiveness of the subject organizations in combating money laundering activities.

Non-bank Activities.   Generally, bank holding companies are prohibited under the BHC Act from engaging in or acquiring direct or indirect control of more than 5% of the voting shares of any company engaged in any activity other than (i) banking or managing or controlling banks or (ii) an activity that the Federal Reserve determines to be so closely related to banking as to be a proper incident to the business of banking. The Federal Reserve has the authority to require a bank holding company to terminate an activity or terminate control of or liquidate or divest certain subsidiaries or affiliates when the Federal Reserve believes the activity or the control of the subsidiary or affiliate constitutes a significant risk to the financial safety, soundness or stability of any of its banking subsidiaries.

A bank holding company that qualifies and elects to become a financial holding company is permitted to engage in additional activities that are financial in nature or incidental or complementary to financial activity. The Company currently has no plans to make a financial holding company election.

Bank holding companies and their non-banking subsidiaries are prohibited from engaging in activities that represent unsafe and unsound banking practices. For example, under certain circumstances the Federal Reserve’s Regulation Y requires a holding company to give the Federal Reserve prior notice of any redemption or repurchase of its own equity securities if the consideration to be paid, together with the consideration paid for any repurchases in the preceding year, is equal to 10% or more of the company’s consolidated net worth. The Federal Reserve may oppose the transaction if it believes that the transaction would constitute an unsafe or unsound practice or would violate a regulation. As another example, a holding company is prohibited from impairing its subsidiary bank’s soundness by causing the bank to make funds available to non-banking subsidiaries or their customers if the Federal Reserve Board believes it not prudent to do so. The Federal Reserve has the power to assess civil money penalties for knowing or reckless violations, if the activities leading to a violation caused a substantial loss to a depository institution. Potential penalties are as high as $1,000,000 for each day such activity continues.

Source of Strength.   In accordance with Federal Reserve policy, the holding company is expected to act as a source of financial and managerial strength to the Bank. Section 616 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) codifies the requirement that bank holding companies serve as a source of financial strength to their subsidiary depository institutions.   Under this policy, the holding company is expected to commit resources to support its bank subsidiary, including at times when the holding company may not be in a financial position to provide it. As discussed below, the holding company could be required to guarantee the capital plan of the Bank if it becomes undercapitalized for purposes of banking regulations. Any capital loans by a bank holding company to its subsidiary bank are subordinate in right of payment to deposits and to certain other indebtedness of such subsidiary bank. The BHC Act provides that, in the event of a bank holding company’s bankruptcy, any commitment by the bank holding company to a federal bank regulatory agency to maintain the capital of a bank subsidiary will be assumed by the bankruptcy trustee and entitled to priority of payment. 

Regulatory agencies have promulgated regulations to increase the capital requirements for bank holding companies to a level that matches those of banking institutions. See —Capital Adequacy and Prompt Corrective Action and Safety and Soundness.

Annual Reporting & Examinations.   The Company is required to file annual and periodic reports with the Federal Reserve, and such additional information as the Federal Reserve may require. The Federal Reserve may examine a bank holding company and any of its subsidiaries, and charge the Company for the cost of such an examination.

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Imposition of Liability for Undercapitalized Subsidiaries.   Pursuant to Section 38 of the Federal Deposit Insurance Act (the “FDIA”) federal banking agencies are required to take “prompt corrective action” should an insured depository institution fail to meet certain capital adequacy standards. In the event an institution becomes “undercapitalized,” it must submit a capital restoration plan. The capital restoration plan will not be accepted by the regulators unless each company “having control of” the undercapitalized institution “guarantees” the subsidiary’s compliance with the capital restoration plan until it becomes “adequately capitalized.” For purposes of this statute, the holding company has control of the Bank. Under the FDIA, the aggregate liability of all companies controlling a particular institution is limited to the lesser of 5% of the depository institution’s total assets at the time it became undercapitalized or the amount necessary to bring the institution into compliance with applicable capital standards. FDIA grants greater powers to bank regulators in situations where an institution becomes “significantly” or “critically” undercapitalized or fails to submit a capital restoration plan. For example, a bank holding company controlling such an institution can be required to obtain prior Federal Reserve Board approval of proposed distributions,or might be required to consent to a merger or to divest the troubled institution or other affiliates. See — Capital Adequacy and Prompt Corrective Action and Safety and Soundness.

Dividends

Dividends from the Bank are the Company’s principal source of cash revenues. The Company’s earnings and activities are affected by legislation, by regulations and by local legislative and administrative bodies and decisions of courts in the jurisdictions in which we conduct business. These include limitations on the ability of the Bank to pay dividends to the holding company and our ability to pay dividends to our shareholders. It is the policy of the Federal Reserve that bank holding companies should pay cash dividends on common stock only out of income available over the past year and only if prospective earnings retention is consistent with the organization’s expected future needs and financial condition. The policy provides that bank holding companies should not maintain a level of cash dividends that undermines the bank holding company’s ability to serve as a source of strength to its banking subsidiary. Consistent with such policy, a banking organization should have comprehensive policies on dividend payments that clearly articulate the organization’s objectives and approaches for maintaining a strong capital position and achieving the objectives of the policy statement.  The Company has a comprehensive dividend policy in place.

The FDIC has the authority to use its enforcement powers to prohibit a bank from paying dividends if, in its opinion, the payment of dividends would constitute an unsafe or unsound practice. Federal law also prohibits the payment of dividends by a bank that will result in the bank failing to meet its applicable capital requirements on a pro forma basis. Under Massachusetts General Laws chapter 172, section 28, the MDB Commissioner’s approval is required in order to authorize the payment of a dividend, if the total dividends declared in a calendar year exceed that year’s net profits combined with retained net profits for the preceding two years, less any required transfer to surplus or a fund for the retirement of any preferred stock.

Federal Reserve System

Federal Reserve regulations require depository institutions to maintain reserves against transaction accounts, primarily interest-bearing and regular checking accounts. The Bank’s required reserves can be in the form of vault cash.  If vault cash does not fully satisfy the required reserves, the reserves can be in the form of a balance maintained with the Federal Reserve Bank of Boston. Federal Reserve regulations required for 2016 that reserves be maintained against aggregate transaction accounts except for transaction accounts which are exempt up to $15.2 million. Transaction accounts greater than $15.2 million up to and including $110.2 million have a reserve requirement of 3%.  A 10% reserve ratio will be assessed on transaction accounts in excess of $110.2 million. The Federal Reserve generally makes annual adjustments to the tiered reserves. The Bank is in compliance with these reserve requirements.

Under the Federal Deposit Insurance Corporation Improvement Act, banks may be restricted in their ability to accept brokered deposits, depending on their classification. “Well-capitalized” institutions are permitted to accept brokered deposits, but all banks that are not well-capitalized could be restricted from accepting such deposits.  The Bank is currently well-capitalized and not restricted from accepting brokered deposits.

Transactions with Affiliates

The Company and the Bank are considered “affiliates” of each other under the Federal Reserve Act (the “FRA”), and transactions between a bank and its affiliates are subject to certain restrictions, under Sections 23A and 23B of the FRA and the Federal Reserve’s implementing Regulation W. Generally, Sections 23A and 23B: (1) limit the extent to which an insured depository or its subsidiaries may engage in covered transactions (a) with an affiliate (as defined in such sections) to an amount equal to 10% of such institution’s capital and surplus, and (b) with all affiliates, in the aggregate to an amount equal to 20% of such capital and surplus; and (2) require all transactions with an affiliate, whether or not covered transactions, to be on terms substantially the same, or at least as favorable to the institution or subsidiary, as the terms provided or that would be provided to a non-affiliate. The term “covered transaction” includes the making of loans, purchase of assets, issuance of a guarantee and other similar types of transactions.

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Capital Adequacy

In July 2013, the Federal Reserve, the Office of the Comptroller of the Currency (“OCC”), and the FDIC approved final rules (the “Capital Rules”) establishing a new comprehensive capital framework for U.S. banking organizations. The Capital Rules generally implement the Basel Committee on Banking Supervision’s (the “Basel Committee”) December 2010 final capital framework referred to as “Basel III” for strengthening international capital standards. The Capital Rules revise the definitions and the components of regulatory capital, as well as address other issues affecting the numerator in banking institutions’ regulatory capital ratios. The Capital Rules also address asset risk weights and other matters affecting the denominator in banking institutions’ regulatory capital ratios and replace the existing general risk-weighting approach with a more risk-sensitive approach.

The Capital Rules: (i) include “Common Equity Tier 1” (“CET1”) and related regulatory capital ratio of CET1 to risk-weighted assets; (ii) specify that Tier 1 capital consists of CET1 and “Additional Tier 1 capital” instruments meeting certain revised requirements; (iii) mandate that most deductions/adjustments to regulatory capital measures be made to CET1 and not to the other components of capital; and (iv) expand the scope of the deductions from and adjustments to capital as compared to existing regulations. Under the Capital Rules, for most banking organizations, including the Company, the most common form of Additional Tier 1 capital is non-cumulative perpetual preferred stock, and the most common forms of Tier 2 capital are subordinated notes and a portion of the allocation for loan and lease losses, in each case, subject to the Capital Rules’ specific requirements.

Pursuant to the Capital Rules, effective January 1, 2015, the minimum capital ratios are as follows:

• 4.5% CET1 to risk-weighted assets;

• 6.0% Tier 1 capital (that is, CET1 plus Additional Tier 1 capital) to risk-weighted assets;

• 8.0% Total capital (that is, Tier 1 capital plus Tier 2 capital) to risk-weighted assets; and

• 4.0% Tier 1 capital to average consolidated assets as reported on consolidated financial statements (called “leverage ratio”).

The Capital Rules also include a “capital conservation buffer,” composed entirely of CET1, in addition to these minimum risk-weighted asset ratios. The capital conservation buffer is designed to absorb losses during periods of economic stress. Banking institutions with a ratio of CET1 to risk-weighted assets above the minimum but below the capital conservation buffer will face constraints on dividends, equity, and other capital instrument repurchases and compensation based on the amount of the shortfall. Thus, when fully phased-in on January 1, 2019, the capital standards applicable to the Company will include an additional capital conservation buffer of 2.5% of CET1, effectively resulting in minimum ratios inclusive of the capital conservation buffer of (i) CET1 to risk-weighted assets of at least 7%, (ii) Tier 1 capital to risk-weighted assets of at least 8.5%, and (iii) total capital to risk-weighted assets of at least 10.5%.

The Capital Rules provide for a number of deductions from and adjustments to CET1. These include, for example, the requirement that mortgage servicing assets, deferred tax assets arising from temporary differences that could not be realized through net operating loss carrybacks, and significant investments in non-consolidated financial entities be deducted from CET1 to the extent that any one such category exceeds 10% of CET1 or all such items, in the aggregate, exceed 15% of CET1.  Since January 1, 2015, and continuing until January 1, 2019, the deductions and adjustments are being incrementally phased in.  

In addition, under the current general risk-based capital rules, the effects of accumulated other comprehensive income or loss items included in shareholders’ equity (for example, mark-to-market of securities held in the available for sale portfolio) under GAAP are reversed for the purposes of determining regulatory capital ratios. Pursuant to the Capital Rules, the effects of certain of these items are not excluded; however, non-advanced approaches banking organizations, including the Company, may make a one-time permanent election to continue to exclude these items. The Company made the one-time permanent election to exclude these items.

The Capital Rules also preclude certain hybrid securities, such as trust preferred securities, issued on or after May 19, 2010 from inclusion in bank holding companies’ Tier 1 capital.

As noted, implementation of the deductions and other adjustments to CET1 began on January 1, 2015 and are being phased in over a 4-year period (beginning at 40% on January 1, 2015 and an additional 20% per year thereafter). The implementation of the capital conservation buffer began on January 1, 2016 at the 0.625% level and increases by 0.625% on each subsequent January 1, until it reaches 2.5% on January 1, 2019. The risk-weighting categories in the Capital Rules are standardized and include a risk-sensitive number of categories, depending on the nature of the assets, generally ranging from 0% for U.S. government and agency securities, to 1,250% for certain credit exposures, and resulting in higher risk weights for a variety of asset classes.

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Management believes the Company is in compliance, and will continue to be in compliance, with the targeted capital ratios as such requirements are phased in.

Prompt Corrective Action and Safety and Soundness

Pursuant to Section 38 of the FDIA, federal banking agencies are required to take “prompt corrective action” should a depository institution fail to meet certain capital adequacy standards.  At each successive lower capital category, an insured depository institution is subject to more restrictions and prohibitions, including restrictions on growth, restrictions on interest rates paid on deposits, restrictions or prohibitions on payment of dividends and restrictions on the acceptance of brokered deposits. Furthermore, if an insured depository institution is classified in one of the undercapitalized categories, it is required to submit a capital restoration plan to the appropriate federal banking agency, and the holding company must guarantee the performance of that plan. Based upon its capital levels, a bank that is classified as well-capitalized, adequately capitalized, or undercapitalized may be treated as though it were in the next lower capital category if the appropriate federal banking agency, after notice and opportunity for hearing, determines that an unsafe or unsound condition, or an unsafe or unsound practice, warrants such treatment.

For purposes of prompt corrective action, to be: (i) well-capitalized, a bank must have a total risk-based capital ratio of at least 10%, a Tier 1 risk-based capital ratio of at least 8%, a CET1 risk-based capital ratio of at least 6.5%, and a Tier 1 leverage ratio of at least 5%; (ii) adequately capitalized, a bank must have a total risk-based capital ratio of at least 8%, a Tier 1 risk-based capital ratio of at least 6%, a CET1 risk-based capital ratio of at least 4.5%, and a Tier 1 leverage ratio of at least 4%; (iii)  undercapitalized, a bank would have a total risk-based capital ratio of less than 8%, a Tier 1 risk-based capital ratio of less than 6%, a CET1 risk-based capital ratio of less than 4.5%, and a Tier 1 leverage ratio of less than 4%; (iv) significantly undercapitalized, a bank would have a total risk-based capital ratio of less than 6%, a Tier 1 risk-based capital ratio of less than 4%, a CET1 risk-based capital ratio of less than 3%, and a Tier 1 leverage ratio of less than 3%; and (v) critically undercapitalized, a bank would have a ratio of tangible equity to total assets that is less than or equal to 2%.

Bank holding companies and insured banks also may be subject to potential enforcement actions of varying levels of severity by the federal regulators for unsafe or unsound practices in conducting their business, or for violation of any law, rule, regulation, condition imposed in writing by the agency or term of a written agreement with the agency. In more serious cases, enforcement actions may include:  issuances of directives to increase capital; issuances of formal and informal agreements; impositions of civil monetary penalties; issuances of a cease and desist order that can be judicially enforced; issuances of removal and prohibition orders against officers, directors, and other institution−affiliated parties; terminations of the bank’s deposit insurance; appointment of a conservator or receiver for the bank; and enforcements of such actions through injunctions or restraining orders based upon a judicial determination that the agency would be harmed if such equitable relief was not granted.

The Volcker Rule

Section 619 of the Dodd-Frank Act, commonly known as the Volcker Rule, restricts the ability of banking entities, such as the Company and the Bank, from: (i) engaging in “proprietary trading” and (ii) investing in or sponsoring certain types of funds (“Covered Funds”), subject to certain limited exceptions. Under the Volcker Rule, a Covered Fund is any issuer that would be an investment company under the Investment Company Act (the “ICA”) but for the exemptions in section 3(c)(1) and 3(c)(7) of the ICA, which includes collateralized loan obligation (“CLO”) and collateralized debt obligation securities. The regulation also provides, among other exemptions, an exemption for CLOs meeting certain requirements.  Compliance with the Volcker Rule is generally required by July 21, 2017.  The Company is in compliance with the Volcker Rule.

Deposit Insurance

The Bank’s deposit accounts are fully insured by the Deposit Insurance Fund (the “DIF”) of the FDIC up to the deposit insurance limit of $250,000 per depositor, per insured institution, in accordance with applicable laws and regulations.

The FDIC uses a risk-based assessment system that imposes insurance premiums based upon a risk matrix that accounts for a bank’s capital level and supervisory rating (CAMELS rating). The risk matrix uses different risk categories distinguished by capital levels and supervisory ratings. The base for deposit insurance assessments is consolidated average assets less average tangible equity.  Assessment rates are calculated using formulas that take into account the risk of the institution being assessed.  The FDIC may increase or decrease the assessment rate schedule in order to manage the DIF to prescribed statutory target levels. An increase in the risk category for the Bank or in the assessment rates could have an adverse effect on the Bank’s and consequently the Company’s earnings. The FDIC may terminate deposit insurance if it determines the institution involved has engaged in or is engaging in unsafe or unsound banking practices, is in an unsafe or unsound condition, or has violated applicable laws, regulations or orders.  The Bank is not aware of any practice, condition, or violation that might lead to the termination of its deposit insurance.

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In addition to deposit insurance assessments, the FDIA provides for additional assessments to be imposed on insured depository institutions to pay for the cost of Financing Corporation (“FICO”) funding. FICO is a mixed-ownership government corporation established by the Competitive Equality Banking Act of 1987, whose sole purpose was to function as a financing vehicle for the now defunct Federal Savings & Loan Insurance Corporation. FICO assessments are adjusted quarterly to reflect changes in the assessment base of the DIF and do not vary depending upon a depository institution’s capitalization or supervisory evaluation. The current annualized assessment rate is approximately three basis points and the rate is adjusted quarterly. These assessments will continue until FICO bonds mature in 2019.  

Depositor Preference

The FDIA provides that, in the event of the “liquidation or other resolution” of an insured depository institution, the claims of depositors of the institution, including the claims of the FDIC as subrogee of insured depositors, and certain claims for administrative expenses of the FDIC as a receiver, will have priority over other general unsecured claims against the institution. If an insured depository institution fails, insured and uninsured depositors, along with the FDIC, will have priority in payment ahead of unsecured, non-deposit creditors, including the parent bank holding company, with respect to any extensions of credit they have made to such insured depository institution.

Consumer Financial Protection

The Company and Bank are subject to a number of federal and state consumer protection laws that govern its relationship with its customers. These laws include the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Truth in Lending Act, the Truth in Savings Act, the Electronic Fund Transfer Act, the Expedited Funds Availability Act, the Home Mortgage Disclosure Act, the Fair Housing Act, the Real Estate Settlement Procedures Act, the Fair Debt Collection Practices Act, the Right to Financial Privacy Act, the Service Members Civil Relief Act and these laws’ respective state-law counterparts, as well as state usury laws and laws regarding unfair and deceptive acts and practices. These and other federal laws, among other things, require disclosures of the cost of credit and terms of deposit accounts, provide substantive consumer rights, prohibit discrimination in credit transactions, regulate the use of credit report information, provide financial privacy protections, prohibit unfair, deceptive and abusive practices, restrict the Bank’s ability to raise interest rates and subject the Bank to substantial regulatory oversight. Violations of applicable consumer protection laws can result in significant potential liability from litigation brought by customers, including actual damages, restitution and attorneys’ fees.

Further, the Consumer Financial Protection Bureau (“CFPB”) has broad rulemaking authority for a wide range of consumer financial laws that apply to all banks, including, among other things, the authority to prohibit “unfair, deceptive or abusive” acts and practices. Abusive acts or practices are defined as those that materially interfere with a consumer’s ability to understand a term or condition of a consumer financial product or service or take unreasonable advantage of a consumer’s: (i) lack of financial savvy, (ii) inability to protect himself in the selection or use of consumer financial products or services, or (iii) reasonable reliance on a covered entity to act in the consumer’s interests.

Neither the Dodd-Frank Act nor the individual consumer financial protection laws prevent states from adopting stricter consumer protection standards.

Community Reinvestment Act

The Community Reinvestment Act of 1977 (the “CRA”), requires depository institutions to assist in meeting the credit needs of their market areas consistent with safe and sound banking practice. Under the CRA, each depository institution is required to help meet the credit needs of its market areas by, among other things, providing credit to low and moderate income individuals and communities. These factors are also considered in evaluating mergers, acquisitions and applications to open a branch or facility. The applicable federal regulators regularly conduct CRA examinations to assess the performance of financial institutions and assign one of four ratings to the institution’s records of meeting the credit needs of its community. The Bank received a “Satisfactory” rating during its last examination.

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Insider Credit Transactions

Section 22(h) of the FRA and its implementing Regulation O restricts loans to directors, executive officers, and principal shareholders (“insiders”). Under Section 22(h), loans to insiders and their related interests may not exceed, together with all other outstanding loans to such persons and affiliated entities, the institution’s total capital and surplus. Loans to insiders above specified amounts must receive the prior approval of the board of directors. Further, under Section 22(h) of the FRA, loans to directors, executive officers and principal shareholders must be made on terms substantially the same as offered in comparable transactions to other persons, except that such insiders may receive preferential loans made under a benefit or compensation program that is widely available to the bank’s employees and does not give preference to the insider over the employees. Section 22(g) of the FRA places additional limitations on loans to executive officers.  A violation of these restrictions may result in the assessment of substantial civil monetary penalties on the affected bank or any officer, director, employee, agent or other person participating in the conduct of the affairs of that bank, the imposition of a cease and desist order, and other regulatory sanctions.

Financial Privacy

The Company is subject to federal laws, including the Gramm-Leach-Bliley Act (the “GLBA”), and certain state laws containing consumer privacy protection provisions. These provisions limit the ability of banks and other financial institutions to disclose nonpublic information about consumers to affiliated and non-affiliated third parties and limit the reuse of certain consumer information received from non-affiliated financial institutions. These provisions require notice of privacy policies to clients and, in some circumstances, allow consumers to prevent disclosure of certain nonpublic personal information to affiliates or non-affiliated third parties by means of “opt out” or “opt in” authorizations.

Financial Data Security

The GLBA requires that financial institutions implement comprehensive written information security programs that include administrative, technical, and physical safeguards to protect consumer information. Further, pursuant to interpretive guidance issued under the GLBA and certain state laws, financial institutions are required to notify clients of security breaches resulting in unauthorized access to their personal information.

Incentive Compensation

The Dodd-Frank Act requires the federal banking agencies and the Securities and Exchange Commission to establish joint regulations or guidelines prohibiting incentive-based payment arrangements at covered financial institutions, including the Company and the Bank, with at least $1 billion in average total consolidated assets that encourage inappropriate risks by providing an executive officer, employee, director or principal shareholder with excessive compensation, fees, or benefits that could lead to material financial loss to the covered financial institution. The federal banking agencies and the SEC most recently proposed such regulations in 2016, but the regulations have not yet been finalized. If the regulations are adopted in the form initially proposed, they will restrict the manner in which incentive compensation is structured.

Anti-Money Laundering Initiatives and the USA PATRIOT Act

Under Title III of the USA PATRIOT Act, all financial institutions are required to take certain measures to identify their customers, prevent money laundering, monitor customer transactions, and report suspicious activity to U.S. law enforcement agencies. Financial institutions also are required to respond to requests for information from federal banking regulatory authorities and law enforcement agencies. Information sharing among financial institutions for the above purposes is encouraged by an exemption granted to complying financial institutions from the privacy provisions of the GLBA and other privacy laws. Financial institutions that hold correspondent accounts for foreign banks or provide private banking services to foreign individuals are required to take measures to avoid dealing with certain foreign individuals or entities, including foreign banks with profiles that raise money laundering concerns, and are prohibited from dealing with foreign “shell banks” and persons from jurisdictions of particular concern. The primary federal banking regulators and the Secretary of the U.S. Department of the Treasury have adopted regulations to implement several of these provisions. All financial institutions also are required to establish internal anti-money laundering programs. The effectiveness of a financial institution in combating money laundering activities is a factor to be considered in any application submitted by the financial institution under the Bank Merger Act. The Company has in place a Bank Secrecy Act and USA PATRIOT Act compliance program commensurate with its risk profile.

The Fair Credit Reporting Act’s Red Flags Rule requires financial institutions with covered accounts (e.g., consumer bank accounts and loans) to develop, implement, and administer an identity theft prevention program. This program must include reasonable policies and procedures to detect suspicious patterns or practices that indicate the possibility of identity theft, such as inconsistencies in personal information or changes in account activity.

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Office of Foreign Assets Control (“OFAC”) Regulation

The United States has imposed economic sanctions that affect transactions with designated foreign countries, nationals, and others. These are typically known as the OFAC rules based on their administration by the OFAC. The OFAC-administered sanctions targeting countries take many different forms. Generally, they contain one or more of the following elements: (i) restrictions on trade with or investment in a sanctioned country, including prohibitions against direct or indirect imports from and exports to a sanctioned country and prohibitions on “U.S. persons” engaging in financial transactions relating to making investments in, or providing investment-related advice or assistance to, a sanctioned country; and (ii) a blocking of assets in which the government or specially designated nationals of the sanctioned country have an interest, by prohibiting transfers of property subject to U.S. jurisdiction (including property in the possession or control of U.S. persons). Blocked assets (property and bank deposits) cannot be paid out, withdrawn, set off, or transferred in any manner without a license from OFAC. Failure to comply with these sanctions could have serious legal and reputational consequences.

Employees

As of July 31, 2017, the Company had 233 full-time and 14 part-time employees. The Company’s employees are not represented by any collective bargaining unit. The Company believes that its employee relations are good.

ITEM 1A. RISK FACTORS

Deterioration in local economic conditions may negatively impact our financial performance.

The Company’s success depends primarily on the general economic conditions in Eastern Massachusetts, and the specific local markets in which the Company operates. Unlike larger national or other regional banks that are more geographically diversified, the Company provides banking and financial services to customers primarily in Massachusetts and New Hampshire.  The local economic conditions in these areas have a significant impact on the demand for the Company’s products and services as well as the ability of the Company’s customers to repay loans, the value of the collateral securing loans and the stability of the Company’s deposit funding sources.

A downturn in our local economy may limit funds available for deposit and may negatively affect our borrowers’ ability to repay their loans on a timely basis, both of which could have an impact on our profitability.

Variations in interest rates may negatively affect our financial performance.

The Company’s earnings and financial condition are largely dependent upon net interest income, which is the difference between interest earned from loans and investments and interest paid on deposits and borrowings. The narrowing of interest rate spreads could adversely affect the Company’s earnings and financial condition. The Company cannot predict with certainty, or control, changes in interest rates. Regional and local economic conditions and the policies of regulatory authorities, including monetary policies of the Federal Reserve, affect interest income and interest expense. High interest rates could also affect the amount of loans that the Company can originate because higher rates could cause customers to apply for fewer mortgages or cause depositors to shift funds from accounts that have a comparatively lower cost to accounts with a higher cost.  The Company may also experience customer attrition due to competitor pricing.  If the cost of interest-bearing deposits increases at a rate greater than the yields on interest-earning assets increase, net interest income will be negatively affected. Changes in the asset and liability mix may also affect net interest income. Similarly, lower interest rates cause higher yielding assets to prepay and floating or adjustable rate assets to reset to lower rates. If the Company is not able to reduce its funding costs sufficiently, due to either competitive factors or the maturity schedule of existing liabilities, then the Company’s net interest margin will decline.

Although management believes it has implemented effective asset and liability management strategies to mitigate the potential adverse effects of changes in interest rates on the Company’s results of operations, any substantial or unexpected change in, or prolonged change in market interest rates could have a material adverse effect on the Company’s financial condition and results of operations.

Changes in the economy or the financial markets could materially affect our financial performance.

Downturns in the United States or global economies or financial markets could adversely affect the demand for and income received from the Company's fee-based services. Revenues from the Wealth Management Group depends in large part on the level of assets under management and administration.  Market volatility that leads customers to liquidate investments, as well as lower asset values, can reduce our level of assets under management and administration and thereby decrease our investment management and administration revenues.

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Our loan portfolio includes loans with a higher risk of loss.

The Bank originates commercial and industrial loans, commercial real estate loans, consumer loans, and residential mortgage loans primarily within our market area. We have developed and implemented a lending strategy that focuses on residential real estate lending as well as servicing commercial customers, including increased emphasis on commercial and industrial lending, and commercial deposit relationships. Commercial and industrial loans, commercial real estate loans, and consumer loans may expose a lender to greater credit risk than loans secured by residential real estate because the collateral securing these loans may not be sold as easily as residential real estate. In addition, commercial real estate and commercial and industrial loans may also involve relatively large loan balances to individual borrowers or groups of borrowers. These loans also have greater credit risk than residential real estate for the following reasons:

• Commercial Real Estate Loans. Repayment is dependent on income being generated in amounts sufficient to cover operating expenses and debt service.

• Commercial and Industrial Loans. Repayment is generally dependent upon the successful operation of the borrower’s business.

• Consumer Loans. Consumer loans are collateralized, if at all, with assets that may not provide an adequate source of payment of the loan due to depreciation, damage or loss.

Any downturn in the real estate market or local economy could adversely affect the value of the properties securing the loans or revenues from the borrowers’ businesses thereby increasing the risk of non-performing loans.

If our allowance for loan losses is not sufficient to cover actual loan losses, our earnings will decrease.

The Bank’s loan customers may not repay their loans according to their terms and the collateral securing the payment of these loans may be insufficient to pay any remaining loan balance. The Bank therefore may experience significant loan losses, which could have a material adverse effect on our operating results. Material additions to our allowance for loan losses also would materially decrease our net income, and the charge-off of loans may cause us to increase the allowance. The Bank makes various assumptions and judgments about the collectability of the loan portfolio, including the creditworthiness of our borrowers and the value of the real estate and other assets serving as collateral for the repayment of many of our loans. We rely on our loan quality reviews, our experience and our evaluation of economic conditions, among other factors, in determining the amount of the allowance for loan losses. If our assumptions prove to be incorrect, our allowance for loan losses may not be sufficient to cover losses inherent in our loan portfolio, resulting in additions to our allowance.

Strong competition within our industry and market area could hurt our performance and slow our growth.

The Company operates in a competitive market for both attracting deposits, which is our primary source of funds, and originating loans. Historically, our most direct competition for deposits has come from savings and commercial banks. Our competition for loans comes principally from commercial banks, savings institutions, mortgage banking firms, credit unions, finance companies, mutual funds, insurance companies and investment banking firms. We also face additional competition from internet-based institutions, and brokerage firms. Competition for loan originations and deposits may limit our future growth and earnings prospects.

The Company’s ability to compete successfully depends on a number of factors, including, among other things:

• the ability to develop, maintain and build upon long-term customer relationships based on service quality, high ethical standards and reputation;

• the ability to expand the Company’s market position;

• the scope, relevance and pricing of products and services offered to meet customer needs and demands;

• the rate at which the Company introduces new products, services and technologies relative to its competitors;

• customer satisfaction with the Company’s level of service;

• industry and general economic trends; and

• the ability to attract and retain talented employees.

Failure to perform in any of these areas could significantly weaken the Company’s competitive position, which could adversely affect the Company’s growth and profitability, which, in turn, could have a material adverse effect on the Company’s financial condition and results of operations.

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The Company is subject to extensive government regulation and supervision, which may interfere with our ability to conduct our business and may negatively impact our financial results.

The Company, primarily through the Bank and certain non-bank subsidiaries, are subject to extensive federal and state regulation and supervision. Banking regulations are primarily intended to protect depositors’ funds, the DIF and the safety and soundness of the banking system as a whole, not shareholders. These regulations affect the Company’s lending practices, capital structure, investment practices, dividend policy and growth, among other things. Congress and federal regulatory agencies continually review banking laws, regulations and policies for possible changes. Changes to statutes, regulations or regulatory policies, including changes in interpretation or implementation of statutes, regulations or policies, could affect the Company in substantial and unpredictable ways. Such changes could subject the Company to additional costs, limit the types of financial services and products the Company may offer, and/or limit the pricing the Company may charge on certain banking services, among other things. Compliance personnel and resources may increase our costs of operations and adversely impact our earnings.

Failure to comply with laws, regulations or policies could result in sanctions by regulatory agencies, civil money penalties and/or reputation damage, which could have a material adverse effect on our business, financial condition and results of operations. While the Company has policies and procedures designed to prevent any such violations, there can be no assurance that such violations will not occur. See — Supervision and Regulation.

State and federal regulatory agencies periodically conduct examinations of our business, including for compliance with laws and regulations, and our failure to comply with any supervisory actions to which we are or become subject as a result of such examinations may adversely affect our business.

Federal and state regulatory agencies periodically conduct examinations of our business, including our compliance with laws and regulations. If, as a result of an examination, an agency were to determine that the financial, capital resources, asset quality, earnings prospects, management, liquidity, or other aspects of any of our operations had become unsatisfactory, or violates any law or regulation, such agency may take certain remedial or enforcement actions it deems appropriate to correct any deficiency. Remedial or enforcement actions include the power to enjoin “unsafe or unsound” practices, to require affirmative actions to correct any conditions resulting from any violation or practice, to issue an administrative order that can be judicially enforced against a bank, to direct an increase in the bank’s capital, to restrict the bank’s growth, to assess civil monetary penalties against a bank’s officers or directors, and to remove officers and directors. In the event that the FDIC concludes that, among other things, our financial conditions cannot be corrected or that there is an imminent risk of loss to our depositors, it may terminate our deposit insurance. The CFPB also has authority to take enforcement actions, including cease-and desist orders or civil monetary penalties, if it finds that we offer consumer financial products and services in violation of federal consumer financial protection laws.

If we were unable to comply with future regulatory directives, or if we were unable to comply with the terms of any future supervisory requirements to which we may become subject, then we could become subject to a variety of supervisory actions and orders, including cease and desist orders, prompt corrective actions, Memorandum of Understanding and other regulatory enforcement actions. Such supervisory actions could, among other things, impose greater restrictions on our business, as well as our ability to develop any new business. The Company could also be required to raise additional capital, or dispose of certain assets and liabilities within a prescribed time period, or both. Failure to implement remedial measures as required by financial regulatory agencies could result in additional orders or penalties from federal and state regulators, which could trigger one or more of the remedial actions described above. The terms of any supervisory action and associated consequences with any failure to comply with any supervisory action could have a material negative effect on our business, operating flexibility and overall financial condition.

The Company is subject to liquidity risk which could adversely affect net interest income and earnings.

The purpose of the Company’s liquidity management is to meet the cash flow obligations of its customers for both deposits and loans.  The primary liquidity measurement the Company utilizes is called basic surplus, which captures the adequacy of the Company’s access to reliable sources of cash relative to the stability of its funding mix of average liabilities.  This approach recognizes the importance of balancing levels of cash flow liquidity from short- and long-term securities with the availability of dependable borrowing sources which can be accessed when necessary.  However, competitive pressure on deposit pricing could result in a decrease in the Company’s deposit base or an increase in funding costs.  In addition, liquidity will come under additional pressure if loan growth exceeds deposit growth.  These scenarios could lead to a decrease in the Company’s basic surplus measure below the minimum policy level of 5%.  To manage this risk, the Company has the ability to purchase brokered certificates of deposit, borrow against established borrowing facilities with other banks (Federal funds) and enter into repurchase agreements with investment companies.  Depending on the level of interest rates, the Company’s net interest income, and therefore earnings, could be adversely affected. See — Liquidity Risk and Capital Resources.

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Our ability to service our debt, pay dividends and otherwise pay our obligations as they come due is substantially dependent on capital distributions from our subsidiary.

The holding company is a separate and distinct legal entity from its subsidiary. It receives substantially all of its revenue from dividends from its subsidiary, Cambridge Trust Company. These dividends are the principal source of funds to pay dividends on the Company’s common stock.  Various federal and/or state laws and regulations limit the amount of dividends that the Bank may pay to the Company. Also, the Company’s right to participate in a distribution of assets upon a subsidiary’s liquidation or reorganization is subject to the prior claims of the subsidiary’s creditors. In the event the Bank is unable to pay dividends to the Company, the Company may not be able to service debt, pay obligations or pay dividends on the Company’s common stock. The inability to receive dividends from the Bank could have a material adverse effect on the Company’s business, financial condition and results of operations.

A breach of information security, including cyber-attacks, could disrupt our business and impact our earnings.

The Company depends upon data processing, communication and information exchange on a variety of computing platforms and networks and over the internet.  In addition, we rely on the services of a variety of vendors to meet our data processing and communication needs.  Despite existing safeguards, we cannot be certain that all of our systems are free from vulnerability to attack or other technological difficulties or failures.  If information security is breached or difficulties or failures occur, despite the controls we and our third party vendors have instituted, information can be lost or misappropriated, resulting in financial loss or costs to us, reputational harm or damages to others. Such costs or losses could exceed the amount of insurance coverage, if any, which would adversely affect our earnings.

The Company may be adversely affected by fraud.

The Company is inherently exposed to operational risk in the form of theft and other fraudulent activity by employees, customers, and other third parties targeting the Company and/or the Company’s customers or data. Such activity may take many forms, including check fraud, electronic fraud, wire fraud, phishing, social engineering and other dishonest acts.

Although the Company devotes substantial resources to maintaining effective policies and internal controls to identify and prevent such incidents, given the increasing sophistication of possible perpetrators, the Company may experience financial losses or reputational harm as a result of fraud.

The Company continually encounters technological change and the failure to understand and adapt to these changes could hurt our business.

The financial services industry is continually undergoing rapid technological change with frequent introductions of new technology-driven products and services. The effective use of technology increases efficiency and enables financial institutions to better serve customers and to reduce costs. The Company’s future success depends, in part, upon its ability to address the needs of its customers by using technology to provide products and services that will satisfy customer demands, as well as to create additional efficiencies in the Company’s operations. Many of the Company’s competitors have substantially greater resources to invest in technological improvements. The Company may not be able to effectively implement new technology-driven products and services or be successful in marketing these products and services to its customers. Failure to successfully keep pace with technological changes affecting the financial services industry could have a material adverse impact on the Company’s business and, in turn, the Company’s financial condition and results of operations.

The Company relies on third parties to provide key components of its business infrastructure.

The Company relies on third parties to provide key components for its business operations, such as data processing and storage, recording and monitoring transactions, online banking interfaces and services, internet connections, and network access. While the Company selects these third-party vendors carefully, it does not control their actions. Any problems caused by these third parties, including those resulting from breakdowns or other disruptions in communication services provided by a vendor, failure of a vendor to handle current or higher volumes, cyber-attacks and security breaches at a vendor, failure of a vendor to provide services for any reason, or poor performance of services by a vendor, could adversely affect the Company’s ability to deliver products and services to its customers and otherwise conduct its business. Financial or operational difficulties of a third-party vendor could also hurt the Company’s operations if those difficulties interfere with the vendor's ability to serve the Company. Replacing these third party vendors could create significant delays and expense that adversely affect the Company’s business and performance.

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The possibility of the economy’s return to recessionary conditions and the possibility of further turmoil or volatility in the financial markets would likely have an adverse effect on our business, financial position and results of operations.

The economy in the United States and globally has experienced volatility in recent years and may continue to do so for the foreseeable future. There can be no assurance that economic conditions will not worsen.  Unfavorable or uncertain economic conditions can be caused by declines in economic growth, business activity or investor or business confidence, limitations on the availability or increases in the cost of credit and capital, increases in inflation or interest rates, the timing and impact of changing governmental policies, natural disasters, terrorist attacks, acts of war or a combination of these or other factors. A worsening of business and economic conditions could have adverse effects on our business, including the following:

• investors may have less confidence in the equity markets in general and in financial services industry stocks in particular, which could place downward pressure on the Company’s stock price and resulting market valuation;

• economic and market developments may further affect consumer and business confidence levels and may cause declines in credit usage and adverse changes in payment patterns, causing increases in delinquencies and default rates;

• the Company’s ability to assess the creditworthiness of its customers may be impaired if the models and approaches the Company uses to select, manage and underwrite its customers become less predictive of future behaviors;

• the Company could suffer decreases in demand for loans or other financial products and services or decreased deposits or other investments in accounts with the Company;

• customers of the Company’s Wealth Management Group may liquidate investments, which together with lower asset values, may reduce the level of assets under management and administration and thereby decrease the Company’s investment management and administration revenues;

• competition in the financial services industry could intensify as a result of the increasing consolidation of financial services companies in connection with current market conditions or otherwise; and

• the value of loans and other assets or collateral securing loans may decrease.

The Company is subject to other-than-temporary impairment risk which could negatively impact our financial performance.

The Company recognizes an impairment charge when the decline in the fair value of equity, debt securities and cost-method investments below their cost basis are judged to be other-than-temporary. Significant judgment is used to identify events or circumstances that would likely have a significant adverse effect on the future use of the investment. The Company considers various factors in determining whether an impairment is other-than-temporary, including the severity and duration of the impairment, forecasted recovery, the financial condition and near-term prospects of the investee, whether the Company has the intent to sell and whether it is more likely than not it will be forced to sell the security in question. Information about unrealized gains and losses is subject to changing conditions. The values of securities with unrealized gains and losses will fluctuate, as will the values of securities that we identify as potentially distressed. Our current evaluation of other-than-temporary impairments reflects our intent to hold securities for a reasonable period of time sufficient for a forecasted recovery of fair value. However, our intent to hold certain of these securities may change in future periods as a result of facts and circumstances impacting a specific security. If our intent to hold a security with an unrealized loss changes and we do not expect the security to fully recover prior to the expected time of disposition, we will write down the security to its fair value in the period that our intent to hold the security changes.

The risks presented by acquisitions could adversely affect our financial condition and results of operations.

The business strategy of the Company may include growth through acquisition.  Any future acquisitions will be accompanied by the risks commonly encountered in acquisitions.  These risks may include, among other things:

• our ability to realize anticipated cost savings;

• the difficulty of integrating operations and personnel, the loss of key employees;

• the potential disruption of our or the acquired company’s ongoing business in such a way that could result in decreased revenues, the inability of our management to maximize our financial and strategic position;

• the inability to maintain uniform standards, controls, procedures and policies; and

• the impairment of relationships with the acquired company’s employees and customers as a result of changes in ownership and management.

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The Company cannot provide any assurance that we will be successful in overcoming these risks or any other problems encountered in connection with acquisitions. Our inability to overcome these risks could have an adverse effect on the achievement of our business strategy and results of operations.

There are substantial risks and uncertainties associated with the introduction or expansion of lines of business or new products and services within existing lines of business.

From time to time, the Company may implement new lines of business or offer new products and services within existing lines of business. There are substantial risks and uncertainties associated with these efforts, particularly in instances where the markets are not fully developed. In developing and marketing new lines of business and/or new products and services, the Company may invest significant time and resources. Initial timetables for the introduction and development of new lines of business and/or new products or services may not be achieved and price and profitability targets may not prove attainable.  External factors, such as compliance with regulations, competitive alternatives, and shifting market preferences, may also impact the successful implementation of a new line of business or a new product or service. Furthermore, any new line of business and/or new product or service could have a significant impact on the effectiveness of the Company’s system of internal controls. Failure to successfully manage these risks in the development and implementation of new lines of business or new products or services could have a material adverse effect on the Company’s business, results of operations, and financial condition.

Our controls and procedures may fail or be circumvented, which may result in a material adverse effect on our business.

Management regularly reviews and updates our internal controls, disclosure controls and procedures and corporate governance policies. Any system of controls, however well designed and operated, is based in part on certain assumptions and can provide only reasonable, not absolute, assurances that the objectives of the system are met. Any failure or circumvention of the controls and procedures or failure to comply with regulations related to controls and procedures could have a material adverse effect on our business, results of operations and financial condition.

The Company is exposed to risk of environmental liabilities with respect to properties to which we obtain title.

A significant portion of our loan portfolio is secured by real estate. In the course of our business, we may foreclose and take title to real estate and could be subject to environmental liabilities with respect to these properties. The Company may be held liable to a government entity or to third parties for property damage, personal injury, investigation and clean-up costs incurred by these parties in connection with environmental contamination, or may be required to clean up hazardous or toxic substances, or chemical releases at a property. The costs associated with investigation and remediation activities could be substantial. In addition, if we are the owner or former owner of a contaminated site, we may be subject to common law claims by third parties based on damages and costs resulting from environmental contamination emanating from the property. These costs and claims could adversely affect our business, results of operations and prospects.

The Company may be adversely affected by the soundness of other financial institutions including the FHLB of Boston.

Our ability to engage in routine funding transactions could be adversely affected by the actions and commercial soundness of other financial institutions. Financial services companies are interrelated as a result of trading, clearing, counterparty or other relationships. The Company has exposure to different industries and counterparties, and we routinely execute transactions with counterparties in the financial services industry, including brokers and dealers, commercial banks, investment banks, mutual and hedge funds and other institutional clients. As a result, defaults by, or even rumors or questions about, one or more financial services companies, or the financial services industry generally, have led to market-wide liquidity problems and could lead to losses or defaults by us or by other institutions. Many of these transactions expose us to credit risk in the event of default of our counterparty or client. In addition, our credit risk may be exacerbated if the collateral held by us cannot be realized or is liquidated at prices not sufficient to recover the full amount of the loan or derivative exposure due us. There is no assurance that any such losses would not materially and adversely affect our business, financial condition or results of operations.

The Company owns common stock of FHLB of Boston in order to qualify for membership in the FHLB system, which enables it to borrow funds under the FHLB of Boston’s advance program.  The carrying value and fair market value of our FHLB of Boston common stock was $8.2 million as of June 30, 2017.  There are 11 branches of the FHLB, including Boston, which are jointly liable for the consolidated obligations of the FHLB system.  To the extent that one FHLB branch cannot meet its obligations to pay its share of the system’s debt, other FHLB branches can be called upon to make the payment.  Any adverse effects on the FHLB of Boston could adversely affect the value of our investment in its common stock and negatively impact our results of operations.

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The Company’s common stock price may fluctuate significantly.

The market price of the Company’s common stock may fluctuate significantly in response to a number of factors including, but not limited to:

• the political climate and whether the proposed policies of the current Presidential administration in the U.S. that have affected market prices for financial institution stocks are successfully implemented;

• changes in securities analysts’ recommendations or expectations of financial performance;

• volatility of stock market prices and volumes;

• incorrect information or speculation;

• changes in industry valuations;

• variations in operating results from general expectations;

• actions taken against the Company by various regulatory agencies;

• changes in authoritative accounting guidance;

• changes in general domestic economic conditions such as inflation rates, tax rates, unemployment rates, labor and healthcare cost trend rates, recessions and changing government policies, laws and regulations; and

• severe weather, natural disasters, acts of war or terrorism and other external events.

There may be future sales or other dilution of the Company’s equity, which may adversely affect the market price of the Company’s stock.

The Company is not restricted from issuing additional common stock, including any securities that are convertible into or exchangeable for, or that represent the right to receive, common stock.  The Company also grants shares of common stock to employees and directors under the Company’s incentive plan each year.  The issuance of any additional shares of the Company’s common stock or securities convertible into, exchangeable for or that represent the right to receive common stock, or the exercise of such securities could be substantially dilutive to shareholders of the Company’s common stock.  Holders of the Company’s common stock have no preemptive rights that entitle such holders to purchase their pro rata share of any offering of shares or any class or series.  Because the Company’s decision to issue securities in any future offering will depend on market conditions, its acquisition activity and other factors, the Company cannot predict or estimate the amount, timing or nature of its future offerings.  Thus, the Company’s shareholders bear the risk of the Company’s future offerings reducing the market price of the Company’s common stock and diluting their stock holdings in the Company.

The Company depends on our executive officers and key personnel to continue the implementation of our long-term business strategy and could be harmed by the loss of their services.

The Company believes that our continued growth and future success will depend in large part upon the skills of our management team. The competition for qualified personnel in the financial services industry is intense, and the loss of our key personnel, an inability to continue to attract or retain and motivate key personnel could adversely affect our business. We cannot assure that we will be able to retain our existing key personnel, attract additional qualified personnel, or effectively manage the succession of key personnel. We have change of control agreements with our actively employed named executive officers, and the loss of the services of one or more of our executive officers and key personnel could impair our ability to continue to develop our business strategy.

Any future action by the U.S. Congress lowering the federal corporate income tax rate and/or eliminating the federal corporate alternative minimum tax could result in the reduction of the net deferred tax asset and a corresponding charge against earnings.

The net deferred tax asset reported on the Company’s balance sheet represents the net amount of income taxes expected to be received upon the reversal of temporary differences between the bases of assets and liabilities as measured by enacted tax laws, and their bases as reported in the financial statements. As of December 31, 2016, the Company’s net deferred tax asset was computed using the federal statutory rate of 35%. The President of the United States and members of Congress have announced plans to lower the federal corporate income tax rate from its current level of 35% and to eliminate the corporate alternative minimum tax. If these plans ultimately result in the enactment of new laws lowering the corporate income tax rate and/or eliminating the corporate alternative minimum tax, then the Company’s net deferred tax asset would be re-measured. This would result in a reduction of the deferred tax asset in the period of the law change and a corresponding charge against earnings.

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The Company may be subject to more stringent capital requirements.

The Bank and the Company are each subject to capital adequacy guidelines and other regulatory requirements specifying minimum amounts and types of capital which each of the Bank and the Company must maintain. From time to time, the regulators implement changes to these regulatory capital adequacy guidelines. If we fail to meet these minimum capital guidelines and other regulatory requirements, our financial condition would be materially and adversely affected. In light of proposed changes to regulatory capital requirements contained in the Dodd-Frank Act and the regulatory accords on international banking institutions formulated by the Basel Committee and implemented by the Federal Reserve and the OCC, we may be required to satisfy additional, more stringent, capital adequacy standards. The ultimate impact of the revised capital and liquidity standards on us cannot be determined at this time and will depend on a number of factors, including the treatment and implementation by the U.S. banking regulators. These requirements, however, and any other new regulations, could adversely affect our ability to pay dividends, or could require us to reduce business levels or to raise capital, including in ways that may adversely affect our financial condition or results of operations.

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ITEM 2. FINANCIAL INFORMATION

Selected Financial Data

The following table sets forth summarized historical consolidated financial information for each of the periods indicated. This information should be read together with Management’s Discussion and Analysis of Financial Condition and Results of Operations below and with the accompanying consolidated financial statements included in this Registration Statement. The historical information indicated as of and for the six months ended June 30, 2017 and 2016, has been derived from the unaudited consolidated financial statements for the six months ended June 30, 2017 and 2016. The historical information indicated as of and for the years ended December 31, 2012 through December 31, 2016, has been derived from the Company’s audited consolidated financial statements for the years ended December 31, 2012 through December 31, 2016. Historical results set forth below and elsewhere in this Registration Statement are not necessarily indicative of future performance.

	Six Months Ended June 30,						December 31,
	2017			2016			2016			2015			2014			2013			2012
	(dollars in thousands, except per share and other data)
Operating Data
Interest Income	$	29,774		$	28,050		$	57,028		$	54,341		$	50,371		$	47,661		$	49,066
Interest Expense		1,583			1,797			3,355			2,694			2,098			2,194			3,191
Net interest and dividend Income		28,191			26,253			53,673			51,647			48,273			45,467			45,875
Provision for Loan Losses		50			225			132			1,075			1,550			1,500			800
Non-Interest Income		14,672			13,768			28,661			25,865			24,464			23,181			20,489
Non-Interest Expense		29,678			27,992			56,750			53,192			49,007			46,111			45,847
Income Before Taxes		13,135			11,804			25,452			23,245			22,180			21,037			19,717
Income Taxes		4,293			3,906			8,556			7,551			7,236			6,897			6,314
Net Income	$	8,842		$	7,898		$	16,896		$	15,694		$	14,944		$	14,140		$	13,403
Average shares outstanding, basic		4,024,877			3,975,624			3,990,343			3,938,117			3,886,692			3,839,146			3,839,681
Average shares outstanding, diluted		4,061,286			4,022,005			4,028,944			3,993,599			3,957,416			3,907,201			3,879,607
Total shares outstanding		4,079,784			4,042,371			4,036,879			4,000,181			3,940,536			3,884,851			3,854,951
Basic Earnings per share	$	2.17		$	1.96		$	4.19		$	3.94		$	3.81		$	3.65		$	3.49
Diluted Earnings Per Share	$	2.16		$	1.96		$	4.15		$	3.93		$	3.78		$	3.62		$	3.45
Dividends Declared Per Share	$	0.92		$	0.92		$	1.84		$	1.80		$	1.68		$	1.59		$	1.50
Dividend payout ratio (1)		43	%		47	%		44	%		46	%		44	%		44	%		43	%
Financial Condition Data
Total Assets	$	1,895,219		$	1,773,753		$	1,848,999		$	1,706,201		$	1,573,692		$	1,533,710		$	1,417,986
Total Deposits		1,615,981			1,601,237			1,686,038			1,557,224			1,370,536			1,409,047			1,281,333
Total Loans		1,328,473			1,271,343			1,320,154			1,192,214			1,080,766			942,451			742,249
Shareholders' equity		142,298			134,049			134,671			125,063			116,258			109,283			104,891
Book Value Per Share	$	34.88		$	33.16		$	33.36		$	31.26		$	29.50		$	28.13		$	27.21
Performance Ratios
Return on Average Assets		0.96	%		0.91	%		0.95	%		0.95	%		0.98	%		0.99	%		1.00	%
Return on Average Shareholders' equity		12.93	%		12.30	%		12.77	%		12.91	%		12.87	%		13.63	%		13.39	%
Equity to assets		7.44	%		7.37	%		7.44	%		7.36	%		7.62	%		7.28	%		7.45	%
Interest rate spread (2)		3.17	%		3.11	%		3.12	%		3.24	%		3.31	%		3.31	%		3.53	%
Net Interest Margin, taxable equivalent (3)		3.25	%		3.21	%		3.21	%		3.32	%		3.37	%		3.38	%		3.63	%
Efficiency ratio  (4)		69.24	%		69.94	%		68.93	%		68.62	%		67.38	%		67.17	%		69.08	%
Wealth Management Assets
Market value of Assets under Management	$	2,751,182		$	2,458,854		$	2,572,760		$	2,329,208		$	2,290,227		$	2,139,752		$	1,794,646
Asset Quality
Non-Performing Loans	$	2,129		$	1,481		$	1,676		$	1,481		$	1,629		$	1,703		$	1,570
Non-Performing Loans/Total Loans		0.16	%		0.12	%		0.13	%		0.12	%		0.15	%		0.18	%		0.21	%
Net (Recoveries)/Charge-Offs	$	(8	)	$	5		$	62		$	153		$	(11	)	$	(260	)	$	11
Allowance/Total Loans		1.15	%		1.21	%		1.16	%		1.27	%		1.32	%		1.35	%		1.47	%
Capital Ratios (5):
Total capital		13.80	%		12.63	%		13.14	%		13.05	%		13.18	%		13.38	%		15.19	%
Tier 1 capital		12.54	%		11.38	%		11.89	%		11.80	%		11.93	%		12.18	%		13.93	%
Common Equity Tier 1		12.54	%		11.38	%		11.89	%		11.80	%	N/A			N/A			N/A
Tier 1 leverage capital		8.07	%		7.85	%		7.95	%		7.75	%		7.75	%		7.63	%		7.53	%

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Other Data:
Number of full service offices	11	11	11	12	12	12	12
Full time equivalent employees	243	236	238	228	225	225	220

(1) Dividend payout ratio represents per share dividends declared divided by diluted earnings per share.

(2) The interest rate spread represents the difference between the fully taxable equivalent weighted-average yield on interest-earning assets and the weighted-average cost of interest-bearing liabilities for the period.

(3) The net interest margin represents fully taxable equivalent net interest income as a percent of average interest-earning assets for the period.

(4) The efficiency ratio represents noninterest expense as a percentage of the sum of net interest income and noninterest income.

(5) Capital ratios are for Cambridge Bancorp.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

Cambridge Bancorp (together with its bank subsidiary, unless the context otherwise requires, the “Company”) is a Massachusetts state-chartered, federally registered bank holding company headquartered in Cambridge, Massachusetts. The Company is a Massachusetts corporation formed in 1983 and has one banking subsidiary (the “Bank”): Cambridge Trust Company formed in 1890.  At June 30, 2017, the Company had total assets of $1.9 billion. Currently, the Bank operates 11 full-service banking offices in six cities and towns in Eastern Massachusetts. The Company’s Wealth Management Group has four offices, one in Boston, Massachusetts, and three in New Hampshire in Concord, Manchester and Portsmouth.  The Company’s Assets under Management as of June 30, 2017, were $2.8 billion.  The Bank’s customers consist primarily of small- and medium-sized businesses and retail customers in these communities and surrounding areas throughout Massachusetts and New Hampshire.

The Company’s results of operations are largely dependent on net interest income, which is the difference between the interest earned on loans and securities and interest paid on deposits and borrowings. The results of operations are also affected by the level of income and fees from wealth management services, loans, deposits, as well as operating expenses, the provision for loan losses, the impact of federal and state income taxes and the relative levels of interest rates and economic activity.

Critical Accounting Policies

Accounting policies involving significant judgments and assumptions by management, which have, or could have, a material impact on the carrying value of certain assets and impact income, are considered critical accounting policies.

The Company considers allowance for loan losses, impairment of investment securities and income taxes to be its critical accounting policies.

Allowance for loan losses

Arriving at an appropriate level of allowance for loan losses involves a high degree of judgment. Management maintains an allowance for loan losses to absorb losses inherent in the loan portfolio. The allowance is based on assessments of the probable estimated losses inherent in the loan portfolio. Management’s methodology for assessing the appropriateness of the allowance consists of several key elements, which include the specific allowances, if appropriate, for identified problem loans, formula allowance, and possibly an unallocated allowance.

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, management estimates the allowance needed for each of the following segments of the loan portfolio: (a) residential mortgage loans, (b) commercial mortgage loans, including multifamily loans, (c) home equity loans, (d) commercial & industrial loans, and (e) consumer loans. The establishment of the allowance for each portfolio segment is based on a process that evaluates the risk characteristics relevant to each portfolio segment and takes into consideration multiple internal and external factors. Internal factors include, but are not limited to, (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, (d) the growth and vintage of the portfolios and (e) the experience of, and any changes in, lending and credit personnel. External factors include, but are not limited to, (a) conditions and trends in the local and national economy and (b) levels and trends in national delinquent and non-performing loans.

The Bank evaluates certain loans 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

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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.

Impaired Investment Securities

Management evaluates securities for other-than-temporary impairment (“OTTI”) on a periodic basis. Factors considered in determining whether an impairment is OTTI include, but are not limited to, (1) the length of time and the extent to which the fair value has been less than amortized cost, (2) projected future cash flows, (3) the financial condition and near-term prospects of the issuers and (4) the intent and ability of the Company to hold the investment for a period of time sufficient to allow for any anticipated recovery in fair value. The Company records an OTTI loss in an amount equal to the entire difference between the fair value and amortized cost if (1) the Company intends to sell an impaired investment security, (2) it is more likely than not that the Company will be required to sell the investment security before its recovery or (3) for debt securities, the present value of expected future cash flows is not sufficient to recover the entire amortized cost basis. If an investment security is determined to be OTTI but the Company does not intend to sell the investment security, only the credit portion of the estimated loss is recognized in earnings, with the non-credit portion of the loss recognized in other comprehensive income.

Income Taxes

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, and in the Commonwealth of Massachusetts and other states as required. In 2016, the Company filed returns in Massachusetts and New Hampshire. The Company uses the liability (or balance sheet) method for 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.

Recent Accounting Developments

Accounting Standards Update No. 2017-08 - Premium Amortization on Purchased Callable Debt Securities (“ASU 2017-08”). On March 30, 2017, the Financial Accounting Standards Board (the “FASB”) issued guidance to amend the amortization period for certain purchased callable debt securities held at a premium. The new guidance requires entities to amortize premium on callable debt securities to the earliest call date.  Shortening the amortization period is generally expected to more closely align the interest income recognition with the expectations incorporated in the market pricing on the underlying securities. Under current U.S. generally accepted accounting principles (“GAAP”), entities generally amortize the premium as an adjustment of yield over the contractual life of the instrument. Debt securities held at a discount will continue to be amortized to maturity. The amended guidance is effective on January 1, 2020 for the Company and early adoption is permitted.  This guidance should be applied using a modified retrospective transition method.  Additionally, in the period of adoption, we will provide disclosures about a change in accounting principle. We are currently assessing the impact the adoption of this guidance will have on our consolidated balance sheets, statements of income, and cash flows.

Accounting Standards Update No. 2017-07 - Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (“ASU 2017-07”). On March 10, 2017, the FASB issued amended guidance primarily to improve the presentation of net periodic pension cost and net periodic postretirement benefit cost, as discussed below. The new guidance will require that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The amended guidance is effective on January 1, 2020 for the Company. This guidance should be applied using a modified retrospective transition method. We are currently assessing the impact the adoption of this guidance will have on our consolidated balance sheets, statements of income, and cash flows.

Accounting Standards Update No. 2016-18 - Restricted Cash (“ASU 2016-18”).  On November 17, 2016, the FASB issued amended guidance to require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The guidance is effective on January 1, 2018 for the Company, and early adoption is permitted. This guidance should be applied using a retrospective transition method to each period presented. The

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adoption of this new guidance is not expected to have a material impact on our consolidated balance sheets, statements of income, and cash flows.

Accounting Standards Update No. 2016-15 - Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”).On August 26, 2016, the FASB issued amendments to clarify guidance on the classification of certain cash receipts and payments in the statement of cash flows. This guidance is intended to reduce existing diversity in practice in how certain cash receipts and cash payments are presented and classified on the statement of cash flows. This guidance is effective for the Company for interim and annual periods beginning on January 1, 2018, and early adoption is permitted. This guidance should be applied using a retrospective transition method to each period presented. We are currently assessing the impact the adoption of this guidance will have on our consolidated balance sheets, statements of income, and cash flows.

Accounting Standards Update No. 2016-13 - Financial Instruments - Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). On June 16, 2016 the FASB issued ASU 2016-13, which will significantly change how entities measure and recognize credit impairment for many financial assets. Under this standard, the new current expected credit loss model will require entities to immediately recognize an estimate of credit losses expected to occur over the remaining life of the financial assets that are in the scope of the standard. This new guidance also made targeted amendments to the current impairment model for available for sale debt securities. ASU 2016-13 will be effective for the Company for the fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. Early adoption for fiscal years and interim periods beginning after December 15, 2018 is permitted. We are in the process of evaluating this guidance, and its effect on our consolidated balance sheets, statements of income, and cash flows.

Accounting Standards Update No. 2016-09 - Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). On March 30, 2016 the FASB issued ASU 2016-09 as part of the initiative to reduce the complexity in accounting standards. The updated guidance addresses several areas for simplification including accounting for employee share-based payment transactions and the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The Company adopted the guidance on January 1, 2017 using the prospective method, and recorded a tax benefit of $219,000 for the six months ended June 30, 2017.

Accounting Standards Update No. 2016-02 - Leases (“ASU 2016-02”). On February 25, 2016, the FASB issued guidance that requires recognition of lease assets and lease liabilities on the statement of condition and disclosure of key information about leasing arrangements. In particular, this guidance requires a lessee of operating or finance leases to recognize on the statement of condition a liability to make lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term. However, for leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election not to recognize lease assets and lease liabilities. Under previous GAAP, a lessee was not required to recognize lease assets and lease liabilities arising from operating leases on the statement of condition. The guidance becomes effective for the Company for the interim and annual periods beginning on January 1, 2019, and early application is permitted. We are currently assessing the impact the adoption of this guidance will have on our consolidated balance sheets, statements of income, and cash flows.

Accounting Standards Update No. 2016-01 - Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). On January 5, 2016, the FASB issued amended guidance on certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. This guidance includes, but is not limited to, the following:

• Requires equity investments (with certain exceptions) to be measured at fair value with changes in fair value recognized in net income.

• Requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments.

• Requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the statement of condition or the accompanying notes to the financial statements.

• Clarifies that an entity must assess valuation allowances on a deferred tax asset related to available for sale debt securities in combination with its other deferred tax assets.

• Eliminates the requirement for public entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the statement of condition.

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This guidance becomes effective for the Company for the interim and annual periods beginning on January 1, 2018, and early adoption is only permitted for certain provisions. The amendments, in general, are required to be applied by means of a cumulative-effect adjustment on the statement of condition as of the beginning of the period of adoption. We are in the process of evaluating this guidance, and its effect on our consolidated balance sheets, statements of income, and cash flows.

Accounting Standards Update No. 2014-09 - Revenue from Contracts with Customers (“ASU 2014-09”). In May 2014, the FASB issued 2014-09 as a joint project between the FASB and the International Accounting Standards Board (“IASB”) to clarify the principles of recognizing revenue and to develop a common revenue standard for GAAP and International Financial Reporting Standards (“IFRS”). 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.

Additionally, in August 2015, the FASB issued Accounting Standards Update No. 2015-14 to defer the effective date of ASU 2014-09 to annual reporting periods beginning after December 15, 2017.  We are in the process of evaluating this guidance and at this time do not expect its adoption will have a material impact on our consolidated balance sheets, statements of income, and cash flows.

Results of Operations

Results of Operations for the six months ended June 30, 2017 and June 30, 2016

General. Net income increased $944,000 to $8.8 million for the six months ended June 30, 2017, compared to net income of $7.9 million for the same period in 2016. The increase was primarily due to a $2.1 million increase in net interest and dividend income after the provision for loan losses and a $904,000 increase in non-interest income, which was partially offset by a $1.7 million increase in noninterest expense.

Net Interest and Dividend Income. Net interest and dividend income after the provision for loan losses increased by $2.1 million to $28.1 million for the six months ended June 30, 2017, compared to $26.0 million for June 30, 2016. The increase in net interest and dividend income after the provision for loan losses was primarily due to an increase in our interest-earning assets and the ability to keep the cost of core deposits low. Average interest-earning assets increased by $102.0 million, or 6.0%, to $1.8 billion for the six months ended June 30, 2017 compared to $1.7 billion for the same period in 2016. Interest on loans increased by $1.5 million, or 6.5%, driven by the impact of strong loan growth during 2016. The Company’s net interest margin, on a fully tax equivalent basis, increased four basis points to 3.25% for the six months ended June 30, 2017 compared to 3.21% for the six months ended June 30, 2016, and our net interest rate spread increased six basis points to 3.17% for the six months ended June 30, 2017, compared to 3.11% for the same period in 2016.

Interest and Dividend Income. Total interest and dividend income increased $1.7 million, or 6.1%, to $29.8 million for the six months ended June 30, 2017 from $28.1 million for the same period in 2016. The increase in interest and dividend income was primarily due to a $1.5 million increase in interest income on loans resulting primarily from a $100.6 million increase in the average balance of loans.

Interest Expense.Interest expense decreased $214,000, or 11.9%, to $1.6 million for the six months ended June 30, 2017 compared to $1.8 million for the same period in 2016. The decrease was driven by a five basis points decrease in the average cost of funds to 0.26% from 0.31%.

Interest expense on interest-bearing deposits decreased by $383,000 to $1.4 million for the six months ended June 30, 2017, compared to $1.8 million for the same period in 2016. The decrease was driven by an eight basis point decrease in average interest bearing deposits to 0.23% from 0.31% for the same period in 2016.

Provision for Loan Losses. The Company recorded a provision for loan losses of $50,000 for the six months ended June 30, 2017 compared to $225,000 for the same period in 2016. We recorded net charge offs of $8,000 for the six months ended June 30, 2017, compared to $5,000 for the same period in 2016.  The allowance for loan losses was $15.3 million, or 1.15% of total loans, at June 30, 2017 compared to $15.4 million, or 1.21% of total loans at June 30, 2016.  

Noninterest Income. Noninterest income increased $904,000 to $14.7 million for the six months ended June 30, 2017 compared $13.8 million for the same period in 2016. The Company’s wealth management revenue is the largest component of noninterest income and increased by $1.4 million, or 14.7%, to $10.9 million compared to $9.5 million for the same period in 2016 due to new business development and market appreciation. Wealth Management Assets under Management combined with Assets under Administration increased by $275.3 million, or 10.7%, to $2.9 billion as of June 30, 2017 compared to $2.6 billion as of June 30, 2016.

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Deposit account fee income was $1.6 million for the six months ended June 30, 2017, an increase of $251,000, or 18.4%, from $1.4 million for the six months ended June 30, 2016, primarily due to greater commercial cash management income.

Noninterest income increases were partially offset by lower gains on disposition of investment securities and lower loan related derivative income of $438,000 and $436,000, respectively, for the six months ended June 30, 2017 as compared to the same period in 2016.

Noninterest Expense.Noninterest expense increased $1.7 million to $29.7 million for the six months ended June 30, 2017 compared to $28.0 million for the same period in 2016. The increase in salaries and benefits of $1.3 million is primarily due to annual merit increases and the impact of new strategic hires to support business initiatives for the six months ended June 30, 2017 as compared to the six months ended June 30, 2016. The increase of $254,000 in data processing is primarily due to annual increases from our primary core processor and investments in technology for the six months ended June 30, 2017 as compared to the six months ended June 30, 2016.  The increase of $493,000 in professional services is primarily due to consulting services for the six months June 30, 2017 as compared to the six months June 30, 2016. Increases in noninterest expense were partially offset by lower marketing expense, lower occupancy and equipment expense and lower FDIC insurance of $182,000, $173,000 and $140,000, respectively.

Income Tax Expense. The Company recorded a provision for income taxes of $4.3 million for the six months ended June 30, 2017 compared to a provision for income taxes of $3.9 million for the six months ended June 30, 2016, reflecting effective tax rates of 32.69% and 33.08%, respectively. The effective tax rate was reduced from the statutory federal income tax rate of 35% largely as a result of the benefits of tax-exempt income and the adoption of the new accounting guidance for stock based compensation, partially offset by state income tax expense. The effective tax rate for the six months ended June 30, 2017 as compared to the effective tax rate for the six months ended June 30, 2016 was reduced primarily as a result of the adoption of the new accounting guidance for stock based compensation.

Results of Operations for the years ended December 31, 2016 and 2015

General. Net income increased $1.2 million, or 7.7%, to $16.9 million for the year ended December 31, 2016, from $15.7 million for the year ended December 31, 2015. The increase was primarily due to a $3.0 million increase in net interest and dividend income after the provision for loan losses, a $2.8 million increase in noninterest income, partially offset by a $3.6 million increase in noninterest expense, and a $1.0 million increase in income tax expense.

Net Interest and Dividend Income. Net interest and dividend income after provision for loan losses increased by $3.0 million to $53.5 million for the year ended December 31, 2016, from $50.6 million for the year ended December 31, 2015. The increase in net interest and dividend income after provision for loan losses was primarily due to strong loan growth in both 2016 and 2015.  Interest income on loans increased by $3.4 million, or 7.5%.  Total average interest-earning assets increased to $1.7 billion for the year ended December 31, 2016 from $1.6 billion for the year ended December 31, 2015. The Company’s net interest margin, on a fully taxable basis, decreased 11 basis points to 3.21% for the year ended December 31, 2016, compared to 3.32% for the year ended December 31, 2015, and our net interest rate spread decreased 12 basis point to 3.12% for the year ended December 31, 2016, compared to 3.24% for the year ended December 31, 2015.

Interest and Dividend Income. Total interest and dividend income increased $2.7 million, or 4.9%, to $57.0 million for the year ended December 31, 2016, from $54.3 million for the year ended December 31, 2015. The increase in interest and dividend income was primarily due to a $3.4 million increase in interest income on loans offset by a $720,000 decrease in interest income on investment securities. The increase in interest income on loans resulted primarily from a $119.2 million increase in the average balance of loans.

Interest Expense.Interest expense increased $661,000, or 24.5%, to $3.4 million for the year ended December 31, 2016, from $2.7 million for the year ended December 31, 2015. The increase was driven by a $76.8 million increase in the average balance of interest-bearing liabilities as well an increase in the average cost of interest bearing liabilities of four basis points to 0.29% from 0.25%.

Interest expense on interest-bearing deposits increased by $801,000 to $3.3 million for the year ended December 31, 2016, from $2.5 million for the year ended December 31, 2015. This increase was primarily due to an increase of $151.9 million in the average balance of interest-bearing deposits to $1.2 billion at December 31, 2016 from $1.0 billion at December 31, 2015. The average cost of interest-bearing deposits remained low at 0.28% for the year ended December 31, 2016, compared to 0.24% for the year ended December 31, 2015. The average cost of certificates of deposits increased slightly during the year ended December 31, 2016 as compared to the year ended December 31, 2015 and we experienced an increase in the average cost of savings accounts for the year

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ended December 31, 2016 as compared to the year ended December 31, 2015 as the Bank has been able to grow these products and attract new relationships.

Provision for Loan Losses. The Company recorded a provision for loan losses of $132,000 for the year ended December 31, 2016, compared to a provision for loan losses of $1.1 million for the year ended December 31, 2015. The decrease in provision expense is primarily due to the change in the allowance methodology that occurred during 2016. We recorded net charge offs of $62,000 for the year ended December 31, 2016 compared to net charge offs of $153,000 during the year ended December 31, 2015. The allowance for loan losses was $15.3 million, or 1.16% of total loans, at December 31, 2016, compared to $15.2 million, or 1.27% of total loans, at December 31, 2015.

Noninterest Income.  Noninterest income increased $2.8 million to $28.7 million in 2016 compared to $25.9 million in 2015. The Company’s wealth management revenue is the largest component of noninterest income and increased by $1.1 million, or 6.0%, to $20.4 million compared to $19.2 million for 2015. Assets under Management combined with Assets under Administration were $2.7 billion at year-end 2016 compared to $2.4 billion at year-end 2015.

Noninterest Expense.Noninterest expense increased $3.6 million to $56.8 million for the year ended December 31, 2016, from $53.2 million for the year ended December 31, 2015. This increase was primarily the result of strategic new hires to support business growth, coupled with higher expenses related to long-term equity compensation and health care benefits.  The increase of $307,000 in occupancy and equipment for the year is the result of increased cost of facilities and amortization of leasehold improvements. The increase of $217,000 in data processing expense is attributable to increased transaction volumes and new products. The increase of $134,000 in professional services is primarily the result of higher consulting fees. The increases in noninterest expense categories were partially offset by lower marketing expenses of $674,000 for 2016.

Income Tax Expense. The Company recorded a provision for income taxes of $8.6 million for the year ended December 31, 2016, compared to a provision for income taxes of $7.6 million for the year ended December 31, 2015, reflecting effective tax rates of 33.62% and 32.49%, respectively. The effective tax rate was reduced from the statutory federal income tax rate of 35% largely as a result of the benefits of tax-exempt income, partially offset by state income tax expense. The effective tax rate for the twelve months ended December 31, 2016 as compared to the effective tax rate for the twelve months ended December 31, 2015 increased primarily as a result of higher state income tax expense.

Changes in Financial Condition

Total Assets. Total assets increased $46.2 million, or 2.5%, to $1.9 billion at June 30, 2017, from $1.8 billion at December 31, 2016. The increase was primarily the result of a $60.8 million, or 14.9%, increase in investment securities partially offset by a decrease in cash and cash equivalents of $21.0 million, or 38.8%.

Cash and Cash Equivalents. Cash and cash equivalents decreased by $21.0 million to $33.1 million at June 30, 2017 from $54.1 million at December 31, 2016.

Investment Securities. The carrying value of total investment securities increased by $60.8 million to $469.0 million at June 30, 2017, from $408.1 million at December 31, 2016. The increase in investment securities was driven by an increase of $157.9 million, or 191.4%, in held to maturity investment securities, partially offset by a decrease of $97.1 million, or 29.8%, in available for sale investment securities.

Loans Held for Sale. Loans held for sale decreased by $6.1 million to $424,000 at June 30, 2017 from $6.5 million at December 31, 2016. The balance of loans held for sale usually relates to the timing and volume of residential loans originated for sale and the ultimate sale transaction which is typically executed within a short-time following the loan origination.

Loans. Net loans increased by $8.3 million to $1.3 billion at June 30, 2017 from $1.3 billion at December 31, 2016. The increase in net loans was primarily due to increases of $6.6 million, or 19.1%, in consumer loans, $5.3 million, or 1.0%, in residential loans, partially offset by a decrease of $1.9 million, or 3.1%, in commercial and industrial loans and $1.8 million, or 2.4%, in home equity loans.

Bank-Owned Life Insurance. The Company invests in bank-owned life insurance to help offset the costs of our employee benefit plan obligations. Bank-owned life insurance also generally provides noninterest income that is nontaxable. At June 30, 2017, our investment in bank-owned life insurance was $30.8 million, an increase of $309,000 from $30.5 million at December 31, 2016, primarily due to increases in the cash surrender value of the policies.

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Deposits. Deposits decreased $70.1 million, or 4.2%, to $1.6 billion at June 30, 2017 from $1.7 billion at December 31, 2016. The decrease in deposits was primarily due to a decrease of $15.8 million, or 3.3%, in demand deposit accounts and a decrease of $47.7 million, or 11.1%, in interest bearing checking accounts. The decrease in deposits is a result of customers utilizing funds to pay down loans and to invest in their businesses.  

Borrowings. At June 30, 2017, borrowings consisted of advances from the FHLB of Boston. Total borrowings increased $108.9 million to $112.7 million at June 30, 2017, from $3.7 million at December 31, 2016. During the six months ended June 30, 2017, the Company utilized short-term borrowings to fulfill its funding needs.

Shareholders’ Equity. Total shareholders’ equity increased $7.6 million, or 5.7%, to $142.3 million at June 30, 2017, from $134.7 million at December 31, 2016. This increase is primarily the result of earnings of $8.8 million and an increase of $1.9 million in Additional Paid-in Capital related to stock based compensation, partially offset by dividends paid of $3.7 million.  

Investment Securities

The Company’s securities portfolio consists of securities available for sale (“AFS”) and securities held to maturity (“HTM”). The largest component of the securities portfolio is mortgage-backed securities, all of which are issued by U.S. government agencies or U.S. government-sponsored enterprises.

Securities available for sale consist of certain U.S. Treasury, U.S. Government Sponsored Enterprises (“GSE”) and U.S. GSE mortgage-backed securities; corporate debt securities; and mutual funds. These securities are carried at fair value, and unrealized gains and losses, net of applicable income taxes, are recognized as a separate component of shareholders’ equity. The fair value of securities available for sale totaled $228.6 million and included gross unrealized gains of $348,000 and gross unrealized losses of $3.4 million at June 30, 2017.  At December, 31, 2016, the fair value of securities available for sale totaled $325.6 million and included gross unrealized gains of $515,000 and gross unrealized losses of $4.6 million.

Securities classified as held to maturity consist of certain U.S. Treasury, U.S. GSE and U.S. GSE mortgage-backed securities; and state, county and municipal securities. Securities held to maturity as of June 30, 2017 are carried at their amortized cost of $240.4 million. At December, 31, 2016, securities held to maturity totaled $82.5 million.

The Company recognized a loss on sale of investment securities of $3,000 for the six-month ended June 30, 2017 and gains on sale of investment securities of $438,000, $690,000 and $1,073,000 for the years ended December 31, 2016, 2015 and 2014 respectively.

The following table sets forth the fair value of available for sale investment securities, the amortized costs of held to maturity and the percentage distribution at the dates indicated:

	June 30,					December 31,
	2017					2016					2015					2014
	Amount		Percent			Amount		Percent			Amount		Percent			Amount		Percent
	(dollars in thousands)
Available for sale securities
U.S. GSE obligations	$	99,017		43	%	$	138,709		43	%	$	139,770		40	%	$	90,471		27	%
Mortgage-backed securities		123,924		54	%		181,299		56	%		205,806		59	%		245,680		72	%
Corporate debt securities		5,047		2	%		5,029		1	%		985		1	%		3,016		1	%
Mutual funds		603		1	%		604		0	%		612		0	%		624		0	%
Total securities available for sale	$	228,591		100	%	$	325,641		100	%	$	347,173		100	%	$	339,791		100	%
Held to maturity securities
U.S. GSE obligations	$	44,991		19	%	$	—		—		$	—		—		$	—		—
Mortgage-backed securities		111,727		46	%		696		1	%		1,306		2	%		2,176		3	%
Corporate debt securities		1,997		1	%		—		0	%		—		0	%		—		0	%
Municipal securities		81,665		34	%		81,806		99	%		81,757		98	%		77,470		97	%
Total securities held to maturity	$	240,380		100	%	$	82,502		100	%	$	83,063		100	%	$	79,646		100	%
Total	$	468,971		100	%	$	408,143		100	%	$	430,236		100	%	$	419,437		100	%

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The following tables set forth the composition and maturities of investment securities. Actual maturities may differ from contractual maturities because borrowers 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					Total
	Amortized Cost		Weighted Average Yield (1)			Amortized Cost		Weighted Average Yield (1)			Amortized Cost		Weighted Average Yield (1)			Amortized Cost		Weighted Average Yield (1)			Amortized Cost		Weighted Average Yield (1)
At June 30, 2017	(dollars in thousands)
Available for sale securities
U.S. GSE obligations	$	—		—		$	100,027		1.3	%	$	—		—		$	—		—		$	100,027		1.3	%
Mortgage-backed securities		131		4.9	%		262		5.1	%		18,573		1.8	%		106,892		1.9	%		125,858		1.9	%
Corporate debt securities		—		—			4,044		1.7	%		1,000		2.3	%		—		—			5,044		1.8	%
Total available for sale securities	$	131		4.9	%	$	104,333		1.3	%	$	19,573		1.8	%	$	106,892		1.9	%	$	230,929		1.6	%
Held to maturity securities
U.S. GSE obligations	$	—		—		$	44,991		2.2	%	$	—		—		$	—		—		$	44,991		2.2	%
Mortgage-backed securities		46		4.5	%		399		4.5	%		19,489		2.1	%		91,793		2.3	%		111,727		2.2	%
Corporate debt securities		—		—			1,997		2.5	%		—		—			—		—			1,997		2.5	%
Municipal securities		4,510		6.1	%		14,440		5.8	%		28,540		4.7	%		34,175		4.6	%		81,665		4.9	%
Total held to maturity securities	$	4,556		6.1	%	$	61,827		3.0	%	$	48,029		3.7	%	$	125,968		2.9	%	$	240,380		3.1	%
Total	$	4,687		6.0	%	$	166,160		2.0	%	$	67,602		3.1	%	$	232,860		2.4	%	$	471,309		2.4	%

	Within One Year					After One, But Within Five Years					After Five, But Within Ten Years					After Ten Years					Total
	Amortized Cost		Weighted Average Yield (1)			Amortized Cost		Weighted Average Yield (1)			Amortized Cost		Weighted Average Yield (1)			Amortized Cost		Weighted Average Yield (1)			Amortized Cost		Weighted Average Yield (1)
December 31, 2016	(dollars in thousands)
Available for sale securities
U.S. GSE obligations	$	15,016		1.1	%	$	125,010		1.3	%	$	—		—		$	—		—		$	140,026		1.3	%
Mortgage-backed securities		17		4.8	%		789		5.2	%		28,693		1.8	%		154,475		1.8	%		183,974		1.8	%
Corporate debt securities		—		—			4,054		1.7	%		1,000		2.0	%		—		—			5,054		1.7	%
Total available for sale securities	$	15,033		1.1	%	$	129,853		1.3	%	$	29,693		1.8	%	$	154,475		1.8	%	$	329,054		1.6	%
Held to maturity securities
Mortgage-backed securities	$	1		6.1	%	$	630		4.5	%	$	3		4.8	%	$	62		7.1	%	$	696		4.7	%
Municipal securities		1,605		6.3	%		15,996		5.9	%		29,563		4.7	%		34,642		4.3	%		81,806		4.8	%
Total held to maturity securities	$	1,606		6.3	%	$	16,626		5.8	%	$	29,566		4.7	%	$	34,704		4.3	%	$	82,502		4.8	%
Total	$	16,639		1.6	%	$	146,479		1.9	%	$	59,259		3.2	%	$	189,179		2.3	%	$	411,556		2.2	%

(1) Weighted Average Yield is shown on a fully taxable equivalent basis using a federal tax rate of 35%.

Management evaluates securities 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 Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

As of June 30, 2017, 108 debt securities and one equity security had gross unrealized losses, with an aggregate depreciation of 1.11% from the Company’s amortized cost basis. The largest unrealized loss percentage of any single security was 10.31% (or $69,000) of its amortized cost. The largest unrealized dollar loss of any single security was $162,000 (or 3.23%) of its amortized cost.

As of December 31, 2016, 132 debt securities and one equity security had gross unrealized losses, with an aggregate depreciation of 1.69% from the Company’s amortized cost basis. The largest unrealized loss percentage of any single security was 10.16% (or $51,000) of its amortized cost. The largest unrealized dollar loss of any single security was $189,000 (or 3.79%) of its amortized cost.

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Loans

The Company’s lending activities are conducted principally in Eastern Massachusetts. The Company grants single-family and multi-family residential loans, commercial, commercial real estate, construction loans and a variety of consumer loans.  Most loans granted by the Company are secured by real estate collateral. The Company’s commercial business loans are primarily made based on the cash flow of the borrower and secondarily on the underlying collateral provided by the borrower, with liquidation of the underlying real estate collateral typically being viewed as the primary source of repayment in the event of borrower default. The borrowers’ cash flow may be difficult to predict, and collateral securing these loans may fluctuate in value. The repayment of commercial business loans depends primarily on the cash flow and credit worthiness of the borrower and secondarily on the underlying collateral provided by the borrower. Although commercial business loans are often collateralized by equipment, inventory, accounts receivable, or other business assets, the liquidation of collateral in the event of default is often an insufficient source of repayment. Repayment of the Company’s residential loans are generally dependent on the health of the employment market in the borrowers’ geographic areas and that of the general economy with liquidation of the underlying real estate collateral being typically viewed as the primary source of repayment in the event of borrower default.

The following summary shows the composition of the loan portfolio at the dates indicated:

	June 30,				December 31,
	2017		% of Total		2016		% of Total		2015		% of Total		2014		% of Total		2013		% of Total		2012		% of Total
	(dollars in thousands)
Residential mortgage
Mortgages - fixed rate	$	302,010		23%	$	305,404		23%	$	338,576		29%	$	322,780		30%	$	314,551		33%	$	286,043		39%
Mortgages - adjustable rate		236,664		18%		228,028		17%		206,835		17%		183,796		17%		143,159		15%		61,736		8%
Deferred costs net of unearned fees		994		0%		972		0%		834		0%		640		0%		466		0%		129		0%
Total residential mortgages		539,668		41%		534,404		40%		546,245		46%		507,216		47%		458,176		48%		347,908		47%
Commercial mortgage
Mortgages - nonowner occupied		540,872		41%		513,578		39%		422,923		35%		370,871		35%		304,509		33%		216,643		29%
Mortgages - owner occupied		42,124		3%		43,932		3%		43,265		4%		46,954		4%		44,999		5%		51,665		7%
Construction		33,072		2%		58,406		4%		44,624		4%		23,879		2%		13,584		1%		7,886		1%
Deferred costs net of unearned fees		153		0%		224		0%		259		0%		138		0%		202		0%		234		0%
Total commercial mortgages		616,221		46%		616,140		46%		511,071		43%		441,842		41%		363,294		39%		276,428		37%
Home equity
Home equity - lines of credit		68,873		6%		70,883		6%		59,676		5%		53,492		5%		43,521		5%		47,359		7%
Home equity - term loans		4,125		0%		3,925		0%		3,630		0%		2,934		0%		2,985		0%		3,090		0%
Deferred costs net of unearned fees		252		0%		243		0%		216		0%		153		0%		129		0%		125		0%
Total home equity		73,250		6%		75,051		6%		63,522		5%		56,579		5%		46,635		5%		50,574		7%
Commercial & industrial
Commercial & industrial		57,769		4%		59,638		5%		42,209		4%		49,263		5%		50,513		5%		47,265		6%
Deferred costs net of unearned fees		69		0%		68		0%		175		0%		229		0%		245		0%		305		0%
Total commercial & industrial		57,838		4%		59,706		5%		42,384		4%		49,492		5%		50,758		5%		47,570		6%
Consumer
Secured		40,047		3%		33,386		3%		27,390		2%		23,749		2%		20,931		3%		16,879		2%
Unsecured		1,432		0%		1,451		0%		1,585		0%		1,873		0%		2,643		0%		2,870		1%
Deferred costs net of unearned fees		17		0%		16		0%		17		0%		15		0%		14		0%		20		0%
Total consumer		41,496		3%		34,853		3%		28,992		2%		25,637		2%		23,588		3%		19,769		3%
Total loans	$	1,328,473		100%	$	1,320,154		100%	$	1,192,214		100%	$	1,080,766		100%	$	942,451		100%	$	742,249		100%

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Directors and officers of the Company and their associates are customers of, and have other transactions with, the Company in the normal course of business. All loans and commitments included in such transactions were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons and do not involve more than normal risk of collection or present other unfavorable features. At June 30, 2017 and December 31, 2016, total loans outstanding to such directors and officers were $643,000 and $690,000, respectively.  During the six months ended June 30, 2017, $83,000 of additions and $130,000 of repayments were made to these loans, compared to $355,000 of additions and $406,000 of repayments during the year ended December 31, 2016. At June 30, 2017 and December 31, 2016, all of the loans to directors and officers were performing according to their original terms.

Residential Mortgage.Residential real estate loans held in portfolio amounted to $539.7 million at June 30, 2017, an increase of $5.3 million, or 1.0%, from December 31, 2016 and consisted of one-to-four family residential mortgage loans. The residential mortgage portfolio represented 41% and 40% of total loans at June 30, 2017 and December 31, 2016, respectively.

The Bank offers fixed and adjustable rate residential mortgage loans with maturities up to 30 years. One-to-four family residential mortgage loans are generally underwritten according to Freddie Mac guidelines, and we refer to loans that conform to such guidelines as “conforming loans.” The Bank generally originates and purchases both fixed and adjustable rate mortgage loans in amounts up to the maximum conforming loan limits as established by the Federal Housing Finance Agency, which is generally $417,000 (increased to $424,100 in 2017) for one-unit properties. In addition, the Bank also offers loans above conforming lending limits typically referred to as “jumbo” loans. These loans are typically underwritten to the same guidelines as conforming loans; however, the Bank may choose to hold a jumbo loan within its portfolio with underwriting criteria that does not exactly match conforming guidelines. The Bank may also from time to time, purchase residential loans that are either jumbo, conforming or meet our Community Reinvestment Act requirements. Purchases have historically been utilized for low and moderate income loans within our Community Reinvestment Act assessment area.

The Company does not offer reverse mortgages nor do we offer loans that provide for negative amortization of principal, such as “Option ARM” loans, where the borrower can pay less than the interest owed on his loan, resulting in an increased principal balance during the life of the loan. We do not offer “subprime loans” (loans that are made with low down payments to borrowers with weakened credit histories typically characterized by payment delinquencies, previous charge-offs, judgments, bankruptcies, or borrowers with questionable repayment capacity as evidenced by low credit scores or high debt-burden ratios) or Alt-A loans (defined as loans having less than full documentation).    

Residential real estate loans are originated both for sale to the secondary market as well as for retention in the Bank’s loan portfolio. The decision to sell a loan to the secondary market or retain within the portfolio is determined based on a variety of factors including but not limited to the Bank’s asset/liability position, the current interest rate environment, and customer preference.

The Company was servicing mortgage loans sold to others without recourse of approximately $101.1 million at June 30, 2017 and $95.7 million, $55.0 million, $33.4 million, $32.2 million and $17.0 million at December 31, 2016, 2015, 2014, 2013, and 2012, respectively.

The table below presents residential real estate loan origination activity for the periods indicated:

	Six Months Ended June 30,		December 31,
	2017		2016		2015
	(dollars in thousands)
Originations for retention in portfolio	$	45,439	$	78,787	$	116,783
Originations for sale to the secondary market		9,871		65,283		23,601
Total	$	55,310	$	144,070	$	140,384

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Loans are sold with servicing retained or released.  The table below presents residential real estate loan sale activity for the periods indicated:

	Six Months Ended June 30,		December 31,
	2017		2016		2015
	(dollars in thousands)
Loans sold with servicing rights retained	$	9,311	$	50,022	$	24,843
Loans sold with servicing rights released		6,717		8,646		617
Total	$	16,028	$	58,668	$	25,460

Loans sold with the retention of servicing typically result in the capitalization of servicing rights. Loan servicing rights are included in other assets and are subsequently amortized as an offset to other income over the estimated period of servicing. The net balance of capitalized servicing rights amounted to $835,000, $812,000 and $491,000 as of June 30, 2017, December 31, 2016 and December 31, 2015, respectively.

Commercial Mortgage.  The commercial real estate loans portfolio represented 46% of total loans at June 30, 2017 and December 31, 2016.

Commercial real estate loans were $616.2 million as of June 30, 2017 and remained relatively unchanged from $616.1 million at December 31, 2016.

Commercial real estate loans are secured by a variety of property types, with approximately 89.2% of the total at June 30, 2017 composed of multi-family dwellings, retail facilities, office buildings, commercial mixed use, lodging and industrial and warehouse properties. The average loan balance outstanding in this portfolio was $1.5 million and the largest individual commercial real estate loan outstanding was $15.8 million as of June 30, 2017. At June 30, 2017, this commercial mortgage was performing in accordance with its original terms.

Our commercial real estate loans are generally for terms up to ten years, with loan-to-values that generally do not exceed 75%.  Amortization schedules are long term and thus a balloon payment is generally due at maturity. Under most circumstances, the Bank will offer to rewrite or otherwise extend the loan at prevailing interest rates.

Home Equity.The home equity portfolio totaled $73.3 million and $75.1 million at June 30, 2017 and December 31, 2016 respectively.  The home equity portfolio represented 6% of total loans at June 30, 2017 and December 31, 2016.

Home equity lines of credit are extended as both first and second mortgages on owner-occupied residential and one-to-four family investment properties in the Bank’s market area. Home equity lines of credit are generally underwritten with the same criteria that we use to underwrite one-to-four family residential mortgage loans.

Our home equity lines of credit are revolving lines of credit which generally have a term between fifteen and twenty years, with draws available for the first ten years. Our fifteen year lines of credit are interest only during the first ten years, and amortize on a five year basis thereafter. Our twenty year lines of credit are interest only during the first ten years, and amortize on a ten year basis thereafter. We generally originate home equity lines of credit with loan-to-value ratios of up to 80% when combined with the principal balance of the existing first mortgage loan, although loan-to-value ratios may occasionally exceed 80% on a case by case basis. Maximum combined loan-to-values are determined based on an applicant’s loan/line amount and the estimated property value. Lines of credit above $1 million generally will not exceed a combined loan-to-values of 75%. Rates are adjusted monthly based on changes in a designated market index. At June 30, 2017, our largest home equity line of credit was a $2.0 million line of credit and had an outstanding balance of $1.2 million. At June 30, 2017, this line of credit was performing in accordance with its original terms.

We also offer home equity term loans which are extended as second mortgages on owner-occupied residential properties in our market area. Our home equity term loans are fixed-rate second mortgage loans which generally have a term between five and twenty years.

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Commercial and Industrial (C&I).  The commercial and industrial portfolio totaled $57.8 million and $59.7 million at June 30, 2017 and December 31, 2016, respectively, and represented 4% and 5% of total loans at June 30, 2017 and December 31, 2016, respectively.

The Company’s C&I loan customers represent various small and middle-market established businesses involved in professional services, accommodation and food services, health care, wholesale trade, manufacturing, distribution, retailing and non-profits. Most clients are privately owned with markets that range from local to national in scope. Many of the loans to this segment are secured by liens on corporate assets and the personal guarantees of the principals. The Company also makes loans to entrepreneurial and technology businesses.  The regional economic strength or weakness impacts the relative risks in this loan category. There is little concentration in any one business sector, and loan risks are generally diversified among many borrowers.

Consumer Loans.  The consumer loan portfolio totaled $41.5 million at June 30, 2017, an increase of $6.6 million, or 19.1%, from December 31, 2016.   Consumer loans represented 3% of the total loans portfolio at June 30, 2017 and December 31, 2016.  Consumer loans include secured and unsecured loans, lines of credit and personal installment loans.

Consumer loans generally have greater risk compared to longer-term loans secured by improved, owner-occupied real estate, particularly consumer loans that are secured by rapidly depreciable assets. In these cases, any repossessed collateral for a defaulted loan may not provide an adequate source of repayment of the outstanding loan balance. As a result, consumer loan repayments are dependent on the borrower’s continuing financial stability and thus are more likely to be adversely affected by job loss, divorce, illness or personal bankruptcy.

Loan Portfolio Maturities. The following table summarizes the dollar amount of loans maturing in our portfolio based on their loan type and contractual terms to maturity at June 30, 2017. The table does not include any estimate of prepayments, which can significantly shorten the average life of all loans and may cause our actual repayment experience to differ from that shown below. Demand loans, loans having no stated repayment schedule or maturity, and overdraft loans are reported as being due in one year or less.

	One Year or Less		One to Five Years		Over Five Years		Total
	(dollars in thousands)
Residential mortgage	$	1,128	$	12,722	$	525,818	$	539,668
Commercial mortgage		30,373		166,969		418,879		616,221
Home equity		275		2,916		70,059		73,250
Commercial & Industrial		21,942		30,822		5,074		57,838
Consumer		41,420		76		—		41,496
Total	$	95,138	$	213,505	$	1,019,830	$	1,328,473

The following table summarizes the dollar amount of loans maturing in our portfolio based on whether the loan has a fixed or variable rate of interest and their contractual terms to maturity at June 30, 2017. The table does not include any estimate of prepayments, which can significantly shorten the average life of all loans and may cause our actual repayment experience to differ from that shown below. Demand loans, loans having no stated repayment schedule or maturity, and overdraft loans are reported as being due in one year or less.

	One Year or Less		One to Five Years		Over Five Years		Total
	(dollars in thousands)
Predetermined interest rates	$	31,850	$	144,767	$	500,106	$	676,723
Floating or adjustable interest rates		63,288		68,738		519,724		651,750
Total	$	95,138	$	213,505	$	1,019,830	$	1,328,473

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Nonperforming Loans and TROUBLED DEBT RESTRUCTURINGS (TDRs)

The composition of nonperforming assets is as follows:

	June 30,			December31
	2017			2016			2015			2014			2013			2012
	(dollars in thousands)
Nonaccruals	$	1,581		$	1,023		$	1,481		$	1,620		$	1,582		$	1,570
Loans past due > 90 days, but still accruing		99			232			—			9			121			—
Troubled debt restructurings		449			421			—			—			—			—
Total nonperforming loans	$	2,129		$	1,676		$	1,481		$	1,629		$	1,703		$	1,570
Accruing troubled debt restructured loans	$	44		$	—		$	—		$	—		$	—		$	—
Nonperforming loans as a percent of gross loans		0.16	%		0.13	%		0.12	%		0.15	%		0.18	%		0.21	%
Nonperforming loans as a percent of total assets		0.11	%		0.09	%		0.09	%		0.10	%		0.11	%		0.11	%

At June 30, 2017, impaired loans had specific reserves of $357,000. At December 31, 2016 and 2015, impaired loans had specific reserves of $190,000 and $174,000, respectively.  There were no specific reserves for impaired loans as of December 31, 2014, 2013 and 2012.

Nonaccrual Loans.  Loans are typically placed on nonaccrual status when any payment of principal and/or interest is 90 days or more past due, unless the collateral is sufficient to cover both principal and interest and the loan is in the process of collection. The Company monitors closely the performance of its loan portfolio. In addition to the monitoring and review of loan performance internally, the Company has contracted with an independent organization to review the Company’s commercial and commercial real estate loan portfolios. This independent review was performed in each of the past five years. The status of delinquent loans, as well as situations identified as potential problems, is reviewed on a regular basis by senior management.

Troubled Debt Restructurings.Loans are considered restructured in a troubled debt restructuring when the Company has granted concessions to a borrower due to the borrower’s financial condition that it otherwise would not have considered. These concessions may include modifications of the terms of the debt such as deferral of payments, extension of maturity, reduction of principal balance, reduction of the stated interest rate other than normal market rate adjustments, or a combination of these concessions. Debt may be bifurcated with separate terms for each tranche of the restructured debt. Restructuring a loan in lieu of aggressively enforcing the collection of the loan may benefit the Company by increasing the ultimate probability of collection.

Restructured loans are classified as accruing or non-accruing based on management’s assessment of the collectability of the loan. Loans which are already on nonaccrual status at the time of the restructuring generally remain on nonaccrual status for approximately six months or longer before management considers such loans for return to accruing status. Accruing restructured loans are placed into nonaccrual status if and when the borrower fails to comply with the restructured terms and management deems it unlikely that the borrower will return to a status of compliance in the near term.

Troubled debt restructurings are classified as impaired loans. The Company identifies loss allocations for impaired loans on an individual loan basis.

Nonperforming loans increased for the six months ended June 30, 2017 primarily due to an increase in residential and commercial mortgage nonaccrual loans. Nonperforming loans increased during 2016 from 2015 primarily as a result of increases in troubled debt restructurings.  Nonaccrual loans decreased during 2016, primarily as a result of a decrease in nonperforming commercial mortgage and commercial and industrial loans.

The Company continues to monitor closely the portfolio of nonperforming loans for which management has concerns regarding the ability of the borrowers to perform. The majority of the loans are secured by real estate and are considered to have adequate collateral value to cover the loan balances at June 30, 2017 and December 31, 2016, although such values may fluctuate with changes in the economy and the real estate market.

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Allowance for Loan Losses

The Company maintains an allowance for loan losses in an amount determined by management on the basis of the character of the loans, loan performance, financial condition of borrowers, the value of collateral securing loans and other relevant factors. We provide for loan losses based upon the consistent application of our documented allowance for loan loss methodology. All loan losses are charged to the allowance for loan losses and all recoveries are credited to it. Additions to the allowance for loan losses are provided by charges to income based on various factors which, in our judgment, deserve current recognition in estimating probable losses. We regularly review the loan portfolio, including a review of our classified assets, and make provisions for loan losses in order to maintain the allowance for loan losses in accordance with GAAP. The allowance for loan losses consists primarily of two components:

1. specific allowances established for impaired loans (as defined by GAAP). The amount of impairment provided for as a specific allowance is measured based on the deficiency, if any, between the present value of expected future cash flows discounted at the loan’s effective interest rate at the time of impairment or, as a practical expedient, at the loan’s observable market price or the fair value of the collateral if the loan is collateral-dependent, and the carrying value of the loan; and

2. general allowances established for loan losses on a portfolio basis for loans that do not meet the definition of impaired loans. The portfolio is grouped into homogenous pools by similar risk characteristics, primarily by loan type and regulatory classification. We apply an estimated incurred loss rate to each loan group. The loss rates applied are based upon our historical loss experience over a designated look back period adjusted, as appropriate, for the quantitative, qualitative and environmental factors discussed below. This evaluation is inherently subjective, as it requires material estimates that may be susceptible to significant revisions based upon changes in economic and real estate market conditions.

Actual loan losses may be significantly more than the allowance for loan losses we have established, which could have a material negative effect on our financial results.

The adjustments to historical loss experience are based on our evaluation of several quantitative, qualitative and environmental factors, including:

• the loss emergence period which represents the average amount of time between when loss events occur for specific loan types and when such problem loans are identified and the related loss amounts are confirmed through charge-offs;

• changes in any concentration of credit (including, but not limited to, concentrations by geography, industry or collateral type);

• changes in the number and amount of non-accrual loans and past due loans;

• changes in national, state and local economic trends;

• changes in the types of loans in the loan portfolio;

• changes in the experience and ability of personnel;

• changes in lending strategies; and

• changes in lending policies and procedures.

In addition, we may establish an unallocated allowance to provide for probable losses that have been incurred as of the reporting date but are not reflected in the allocated allowance.

We evaluate the allowance for loan losses based upon the combined total of the specific and general components. Generally when the loan portfolio increases, absent other factors, the allowance for loan loss methodology results in a higher dollar amount of estimated probable losses than would be the case without the increase. Generally when the loan portfolio decreases, absent other factors, the allowance for loan losses methodology results in a lower dollar amount of estimated probable losses than would be the case without the decrease.  Periodically, management conducts an analysis to estimate the loss emergence period for various loan categories based on samples of historical charge-offs. Model output by loan category is reviewed to evaluate the reasonableness of the reserve levels in comparison to the estimated loss emergence period applied to historical loss experience.

We evaluate the loan portfolio on a quarterly basis and the allowance is adjusted accordingly. While we use the best information available to make evaluations, future adjustments to the allowance may be necessary if conditions differ substantially from the information used in making the evaluations. In addition, various regulatory agencies, as an integral part of their examination process,

32

will periodically review the allowance for loan losses. Such agencies may require us to recognize additions to the allowance based on their analysis of information available to them at the time of their examination.

The following table summarizes the changes in the Company’s allowance for loan losses for the years indicated:

	Sixmonths ended June 30,			Year ended December 31,
	2017			2016			2015			2014			2013			2012
	(dollars in thousands)
Period-end loans outstanding (net of unearned    discount and deferred loan fees)	$	1,328,473		$	1,320,154		$	1,192,214		$	1,080,766		$	942,451		$	742,249
Average loans outstanding (net of unearned    discount and deferred loan fees)	$	1,318,282		$	1,262,497		$	1,144,965		$	993,162		$	836,427		$	702,781
Balance of allowance for loan losses at the    beginning of year	$	15,261		$	15,191		$	14,269		$	12,708		$	10,948		$	10,159
Loans charged-off:
Commercial and industrial		1			71			124			20			25			282
Commercial mortgage		—			—			—			—			—			—
Residential mortgage		—			—			37			13			—			—
Home Equity		—			—			1			—			15			—
Consumer		13			33			16			12			21			20
Total loans charged-off	$	14		$	104		$	178		$	45		$	61		$	302
Recovery of loans previously charged-off:
Commercial and industrial		3			14			4			2			237			84
Commercial mortgage		—			7			8			9			8			3
Residential mortgage		—			13			—			—			59			173
Home Equity		—			1			—			—			—			—
Consumer		3			7			13			45			17			31
Total recoveries of loans previously    charged-off:		6			42			25			56			321			291
Net loan charge-offs (recoveries)	$	8		$	62		$	153		$	(11	)	$	(260	)	$	11
Provision charged to operating expense		50			132			1,075			1,550			1,500			800
Balance at end of period	$	15,303		$	15,261		$	15,191		$	14,269		$	12,708		$	10,948
Ratio of net charge-offs (recoveries) during    the year to average loans outstanding		0.00	%		0.00	%		0.01	%		0.00	%		(0.03	)%		0.00	%
Ratio of allowance for loan losses to loans    outstanding		1.15	%		1.16	%		1.27	%		1.32	%		1.35	%		1.47	%

The level of charge-offs depends on many factors, including the national and regional economy. Cyclical lagging factors may result in charge-offs being higher than historical levels.  The dollar amount of the allowance for loan losses increased primarily as a result of loan growth and changes in the portfolio composition.  Although the allowance is allocated between categories, the entire allowance is available to absorb losses attributable to all loan categories. Management believes that the allowance for loan losses is adequate.

Sources of Funds

General. Deposits traditionally have been our primary source of funds for our investment and lending activities. The Company also borrows from the FHLB of Boston to supplement cash flow needs, to lengthen the maturities of liabilities for interest rate risk management purposes and to manage our cost of funds. Our additional sources of funds are scheduled payments and prepayments of principal and interest on loans and investment securities and fee income and proceeds from the sales of loans and securities.

Deposits.  The Company accepts deposits primarily from customers in the communities in which our branches and offices are located, as well as from small businesses and other customers throughout our lending area. We rely on our competitive pricing and products, convenient locations and quality customer service to attract and retain deposits. We offer a variety of deposit accounts with a range of interest rates and terms. Our deposit accounts consist of relationship checking for consumers and businesses, statement savings accounts, certificates of deposit, money market accounts, interest on lawyer trust accounts, commercial and regular checking accounts, and individual retirement accounts. Deposit rates and terms are based primarily on current business strategies, market interest rates, liquidity requirements and our deposit growth goals. The Bank may access the brokered deposit market for funding.

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At June 30, 2017, we had a total of $114.9 million in certificates of deposit, excluding brokered deposits, of which $70.6 million had remaining maturities of one year or less. Based on historical experience and our current pricing strategy, we believe we will retain a large portion of these accounts upon maturity. As of June 30, 2017, we had a total of $56.1 million of brokered deposits and $56.3 million and $56.3 million of brokered deposits at December 31, 2016 and December 31, 2015.

The following tables set forth the average balances of the Bank’s deposits for the periods indicated:

	June 30,						December 31,
	2017						2016
	Amount		Percent		Weightedaverage rate		Amount		Percent		Weighted average rate
	(dollars in thousands)
Demand deposits (non-interest bearing)	$	461,269		27.9%		—	$	454,977		28.2%		—
Interest bearing checking		402,929		24.3%		0.05%		365,946		22.7%		0.02%
Money Market		71,860		4.3%		0.15%		79,409		4.9%		0.15%
Savings		549,365		33.2%		0.21%		538,297		33.3%		0.23%
Retail certificates of deposit under $100,000		33,368		2.0%		0.49%		44,394		2.7%		0.51%
Retail certificates of deposit of $100,000 or greater		80,297		4.9%		0.63%		75,861		4.7%		0.63%
Wholesale certificates of deposit		56,295		3.4%		1.38%		56,295		3.5%		1.38%
Total	$	1,655,383		100%			$	1,615,179		100%

	December 31,						December 31,
	2015						2014
	Amount		Percent		Weighted average rate		Amount		Percent		Weighted average rate
	(dollars in thousands)
Demand deposits (non-interest bearing)	$	421,886		29.5%		—	$	385,784		29.2%		—
Interest bearing checking		326,454		22.8%		0.03%		314,096		23.7%		0.03%
Money Market		82,365		5.8%		0.20%		80,153		6.1%		0.20%
Savings		449,497		31.4%		0.32%		421,251		31.8%		0.21%
Retail certificates of deposit under $100,000		48,097		3.4%		0.54%		51,016		3.9%		0.57%
Retail certificates of deposit of $100,000 or greater		77,468		5.4%		0.61%		70,418		5.3%		0.65%
Wholesale certificates of deposit		24,449		1.7%		1.38%		—		0.0%		—
Total	$	1,430,216		100%			$	1,322,718		100%

Certificates of deposit of $100,000 or greater by maturity are as follows:

	June 30,		December 31,
	2017		2016		2015		2014
	(dollars in thousands)
Less than 3 months remaining	$	24,467	$	20,363	$	26,050	$	26,899
3 to 5 months remaining		6,869		9,751		9,362		11,680
6 to 11 months remaining		12,811		8,583		10,698		13,293
12 months or more remaining		30,073		33,658		29,748		21,255
Total	$	74,220	$	72,355	$	75,858	$	73,127

Retail certificates of deposit of $100,000 or greater totaled $74.2 million and $72.4 million at June 30, 2017 and December 31, 2016, respectively.  Interest expense on retail certificates of deposit of $100,000 or greater was $223,000 for the six months ended June 30, 2017, and $475,000, $482,000 and $472,000 for the years ended December 31, 2016, 2015 and 2014, respectively.  

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The following table sets forth certificates of deposit classified by interest rate as of the dates indicated:

	June 30,		December 31,
	2017		2016		2015		2014
	(Dollars in thousands)
Interest Rate:
Less than 1.00%	$	82,025	$	84,971	$	100,302	$	98,912
1.00% to 1.99%		88,982		86,191		78,088		18,816
2.00% to 2.99%		—		—		—		5,167
Total	$	171,007	$	171,162	$	178,390	$	122,895

Borrowings.  The Bank’s borrowings consisted primarily of FHLB of Boston advances collateralized by a blanket pledge agreement on the Bank’s FHLB of Boston stock and residential mortgages held in the Bank’s portfolios. The Bank’s borrowings with the FHLB of Boston totaled $112.7 million at June 30, 2017, an increase of $108.9 million compared to $3.7 million at December 31, 2016. The Bank’s remaining borrowing capacity at the FHLB of Boston at June 30, 2017 was approximately $196.3 million. In addition, the Bank has a $10.0 million line of credit with the FHLB of Boston. See Note 11, “Borrowings” for a schedule, including related interest rates and other information.

Net Interest Margin

Net interest income represents the difference between interest earned, primarily on loans and investments, and interest paid on funding sources, primarily deposits and borrowings. Interest rate spread is the difference between the average rate earned on total interest-earning assets and the average rate paid on total interest-bearing liabilities. Net interest margin is the amount of net interest income, on a fully taxable-equivalent basis, expressed as a percentage of average interest-earning assets. The average rate earned on earning assets is the amount of annualized taxable equivalent interest income expressed as a percentage of average earning assets. The average rate paid on interest-bearing liabilities is equal to annualized interest expense as a percentage of average interest-bearing liabilities.

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The following tables set forth the distribution of the Company’s average assets, liabilities and shareholders’ equity, and average rates earned or paid on a fully taxable equivalent basis for each of the periods indicated:

	Six Months Ended
	June 30, 2017									June 30, 2016
	Average Balance			Interest Income/ Expenses (1)			Rate Earned/ Paid (1)			Average Balance			Interest Income/ Expenses (1)			Rate Earned/ Paid (1)
	(dollars in thousands)
ASSETS
Interest-earning assets
Loans (2)
Taxable	$	1,303,303		$	24,928			3.86	%	$	1,205,860		$	23,475			3.91	%
Tax-exempt		16,409			415			5.10			13,301			271			4.10
Securities available for sale (3)
Taxable		278,867			2,256			1.63			349,616			2,838			1.63
Securities held to maturity
Taxable		75,230			794			2.13			1,121			26			4.66
Tax-exempt		82,687			2,038			4.97			82,019			2,128			5.22
Cash and due from banks		39,245			116			0.60			41,870			72			0.35
Total interest-earning assets (4)		1,795,741			30,547			3.43	%		1,693,787			28,810			3.42	%
Non interest-earning assets		72,705									73,089
Allowance for loan losses		(15,301	)								(15,252	)
Total assets	$	1,853,145								$	1,751,624
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing deposits
Checking accounts	$	402,929		$	37			0.02	%	$	361,039		$	51			0.03	%
Savings accounts		549,365			576			0.21			532,700			906			0.34
Money market accounts		71,860			53			0.15			74,546			68			0.18
Certificates of deposit		169,960			708			0.84			175,976			732			0.84
Total interest-bearing deposits		1,194,114			1,374			0.23			1,144,261			1,757			0.31
Other borrowed funds		35,217			209			1.20			5,027			40			1.60
Total interest-bearing liabilities		1,229,331			1,583			0.26	%		1,149,288			1,797			0.31	%
Non-interest-bearing liabilities
Demand deposits		461,269									452,182
Other liabilities		24,655									20,979
Total liabilities		1,715,255									1,622,449
Shareholders’ equity		137,890									129,175
Total liabilities & shareholders’ equity	$	1,853,145								$	1,751,624
Net interest income on a fully taxable equivalent basis					28,964									27,013
Less taxable equivalent adjustment					(858	)								(840	)
Net interest income				$	28,106								$	26,173
Net interest spread (5)								3.17	%								3.11	%
Net interest margin (6)								3.25	%								3.21	%

(1) Annualized on a fully taxable equivalent basis calculated using a federal tax rate of 35%.

(2) Nonaccrual loans are included in average amounts outstanding.

(3) Average balances of securities available for sale calculated utilizing amortized cost.

(4) Federal Home Loan Bank stock balance and dividend income is excluded from interest-earning assets.

(5) Interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.

(6) Net interest margin represents net interest income on a fully tax equivalent basis as a percentage of average interest-earning assets.

36

	For the Year Ended December 31,
	2016									2015									2014
	Average Balance			Interest Income/ Expenses (1)			Rate Earned/ Paid (1)			Average Balance			Interest Income/ Expenses (1)			Rate Earned/ Paid (1)			Average Balance			Interest Income/ Expenses (1)			Rate Earned/ Paid (1)
	(dollars in thousands)
ASSETS
Interest-earning assets
Loans (2)
Taxable	$	1,249,205		$	48,353			3.87	%	$	1,137,992		$	45,149			3.97	%	$	992,803		$	40,466			4.08	%
Tax-exempt		15,973			638			3.99			7,990			322			4.03			595			23			3.87
Securities available for sale (3)
Taxable		334,292			5,184			1.55			343,589			5,841			1.70			372,153			6,961			1.87
Securities held to maturity
Taxable		979			46			4.70			1,754			80			4.56			2,717			124			4.56
Tax-exempt		82,797			4,211			5.09			79,238			4,256			5.37			74,245			4,099			5.52
Cash and due from banks		35,895			114			0.32			26,062			37			0.14			27,739			40			0.14
Total interest-earning assets (4)		1,719,141			58,546			3.41	%		1,596,625			55,685			3.49	%		1,470,252			51,713			3.52	%
Non interest-earning assets		73,559									71,490									68,409
Allowance for loan losses		(15,371	)								(14,910	)								(13,361	)
Total assets	$	1,777,329								$	1,653,205								$	1,525,300
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing deposits
Checking accounts	$	365,946		$	82			0.02	%	$	326,454		$	106			0.03	%	$	314,096		$	98			0.03	%
Savings accounts		538,297			1,567			0.29			449,497			1,118			0.25			421,251			936			0.22
Money market accounts		79,409			131			0.16			82,365			164			0.20			80,153			159			0.20
Certificates of deposit		176,550			1,480			0.84			150,014			1,071			0.71			121,434			757			0.62
Total interest-bearing deposits		1,160,202			3,260			0.28	%		1,008,330			2,459			0.24	%		936,934			1,950			0.21	%
Other borrowed funds		7,489			95			1.27			82,557			235			0.28			69,915			148			0.21
Total interest-bearing liabilities		1,167,691			3,355			0.29	%		1,090,887			2,694			0.25	%		1,006,849			2,098			0.21	%
Non-interest-bearing liabilities
Demand deposits		454,977									421,886									385,784
Other liabilities		22,394									18,828									16,515
Total liabilities		1,645,062									1,531,601									1,409,148
Shareholders’ equity		132,267									121,604									116,152
Total liabilities & shareholders’ equity	$	1,777,329								$	1,653,205								$	1,525,300
Net interest income on a fully taxable equivalent    basis					55,191									52,991									49,615
Less taxable equivalent adjustment					(1,697	)								(1,603	)								(1,443	)
Net interest income				$	53,494								$	51,388								$	48,172
Net interest spread (5)								3.12	%								3.24	%								3.31	%
Net interest margin (6)								3.21	%								3.32	%								3.37	%

(1) Annualized on a fully taxable equivalent basis calculated using a federal tax rate of 35%.

(2) Nonaccrual loans are included in average amounts outstanding.

(3) Average balances of securities available for sale calculated utilizing amortized cost.

(4) Federal Home Loan Bank stock balance and dividend income is excluded from interest-earning assets.

(5) Interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.

(6) Net interest margin represents net interest income on a fully tax equivalent basis as a percentage of average interest-earning assets.

37

Rate/Volume Analysis

The following tables describe the extent to which changes in interest rates and changes in the volume of interest-earning assets and interest-bearing liabilities have affected the Company’s interest income and interest expense during the periods indicated. Information is provided in each category with respect to: (i) changes attributable to changes in volumes (changes in average balance multiplied by prior year average rate) and (ii) changes attributable to changes in rate (change in average interest rate multiplied by prior year average balance), while (iii) changes attributable to the combined impact of volumes and rates have been allocated proportionately to separate volume and rate categories.

	Six Months Ended June 30, 2017 Compared with Six Months Ended June 30, 2016
	Increase/(Decrease) Due to Change in
	Volume			Rate			Total
	(dollars in thousands)
Interest income
Loans
Taxable	$	2,349		$	(896	)	$	1,453
Tax-exempt		27			117			144
Securities available for sale
Taxable		(570	)		(12	)		(582	)
Securities held to maturity
Taxable		433			335			768
Tax-exempt		174			(264	)		(90	)
Cash and due from banks		3			41			44
Total interest income	$	2,416		$	(679	)	$	1,737
Interest expense
Deposits
Checking accounts	$	10		$	(24	)	$	(14	)
Savings accounts		161			(491	)		(330	)
Money market accounts		9			(24	)		(15	)
Certificates of deposit		(23	)		(1	)		(24	)
Total interest-bearing deposits		157			(540	)		(383	)
Other borrowed funds		93			76			169
Total interest expense		250			(464	)		(214	)
Change in net interest income	$	2,166		$	(215	)	$	1,951

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	Twelve Months Ended December 31, 2016 Compared with Twelve Months Ended December 31, 2015									Twelve Months Ended December 31, 2015 Compared with Twelve Months Ended December 31, 2014
	Increase/(Decrease) Due to Change in									Increase/(Decrease) Due to Change in
	Volume			Rate			Total			Volume			Rate			Total
	(dollars in thousands)
Interest income
Loans
Taxable	$	4,188		$	(984	)	$	3,204		$	5,352		$	(669	)	$	4,683
Tax-exempt		291			25			316			194			105			299
Securities available-for-sale
Taxable		153			(810	)		(657	)		24			(1,144	)		(1,120	)
Securities held-to-maturity
Taxable		(24	)		(10	)		(34	)		(44	)		—			(44	)
Tax-exempt		245			(290	)		(45	)		294			(137	)		157
Cash and due from banks		4			73			77			(2	)		(1	)		(3	)
Total interest income	$	4,857		$	(1,996	)	$	2,861		$	5,818		$	(1,846	)	$	3,972
Interest expense
Deposits
Checking accounts	$	9		$	(33	)	$	(24	)	$	5		$	3		$	8
Savings accounts		125			324			449			71			111			182
Money market accounts		6			(39	)		(33	)		5			—			5
Certificates of deposit		112			297			409			109			205			314
Total interest-bearing deposits		252			549			801			190			319			509
Other borrowed funds		(3	)		(137	)		(140	)		16			71			87
Total interest expense		249			412			661			206			390			596
Change in net interest income	$	4,608		$	(2,408	)	$	2,200		$	5,612		$	(2,236	)	$	3,376

Market Risk and Asset Liability Management

Market risk is the risk of loss from adverse changes in market prices and rates. The Company’s market risk arises primarily from interest rate risk inherent in its lending and deposit-taking activities. To that end, management actively monitors and manages its interest rate risk exposure.

The Company’s profitability is affected by fluctuations in interest rates. A sudden and substantial change in interest rates may adversely impact the Company’s earnings to the extent that the interest rates borne by assets and liabilities do not change at the same speed, to the same extent or on the same basis. The Company monitors the impact of changes in interest rates on its net interest income using several tools.

The Company’s primary objective in managing interest rate risk is to minimize the adverse impact of changes in interest rates on the Company’s net interest income and capital, while structuring the Company’s asset-liability structure to obtain the maximum yield-cost spread on that structure. The Company relies primarily on its asset-liability structure to control interest rate risk.

Interest Rate Sensitivity. The Company actively manages its interest rate sensitivity position. The objectives of interest rate risk management are to control exposure of net interest income to risks associated with interest rate movements and to achieve sustainable growth in net interest income. The Company’s Asset Liability Committee (“ALCO”), using policies and procedures approved by the Company’s board of directors, is responsible for the management of the Company’s interest rate sensitivity position. The Company manages interest rate sensitivity by changing the mix, pricing and re-pricing characteristics of its assets and liabilities, through the management of its investment portfolio, its offerings of loan and selected deposit terms and through wholesale funding. Wholesale funding consists of, but is not limited to, multiple sources including borrowings with the FHLB of Boston, the Federal Reserve Bank of Boston’s discount window and certificates of deposit from institutional brokers.

The Company uses several tools to manage its interest rate risk including interest rate sensitivity analysis, or gap analysis, market value of portfolio equity analysis, interest rate simulations under various rate scenarios and net interest margin reports. The results of these reports are compared to limits established by the Company’s ALCO policies and appropriate adjustments are made if the results are outside the established limits.

39

The following tables demonstrate the annualized result of an interest rate simulation and the estimated effect that a parallel interest rate shift, or “shock,” in the yield curve and subjective adjustments in deposit pricing might have on the Company’s projected net interest income over the next 12 months.

This simulation assumes that there is no growth in interest-earning assets or interest-bearing liabilities over the next 12 months. The changes to net interest income shown below are in compliance with the Company’s policy guidelines.

As of June 30, 2017:

Change in Interest Rates (in Basis Points)	Percentage Change in Net Interest Income
+400	(5.4)
+300	(3.5)
+200	(1.7)
+100	(0.7)
–100	(7.1)

As of December 31, 2016:

Change in Interest Rates (in Basis Points)	Percentage Change in Net Interest Income
+400	1.0
+300	1.1
+200	1.2
+100	0.7
–100	(6.8)

Economic Value of Equity Analysis. The Company also analyzes the sensitivity of the Bank’s financial condition to changes in interest rates through our economic value of equity model. This analysis measures the difference between estimated changes in the present value of the Bank’s assets and estimated changes in the present value of the Bank’s liabilities assuming various changes in current interest rates. The Bank’s economic value of equity analysis as of June 30, 2017 estimated that, in the event of an instantaneous 200 basis point increase in interest rates, the Bank would experience a 7.2% increase in the economic value of equity. At the same date, our analysis estimated that, in the event of an instantaneous 100 basis point decrease in interest rates, the Bank would experience a 22.2% decrease in the economic value of equity. The estimates of changes in the economic value of our equity require us to make certain assumptions including loan and mortgage-related investment prepayment speeds, reinvestment rates, and deposit maturities and decay rates. These assumptions are inherently uncertain and, as a result, we cannot precisely predict the impact of changes in interest rates on the economic value of our equity. Although our economic value of equity analysis provides an indication of our interest rate risk exposure at a particular point in time, such estimates are not intended to, and do not, provide a precise forecast of the effect of changes in market interest rates on the economic value of our equity and will differ from actual results.

LIQUIDITY AND CAPITAL RESOURCES

Impact of Inflation and Changing Prices.  Our Consolidated Financial Statements and related notes have been prepared in accordance with GAAP. GAAP generally requires the measurement of financial position and operating results in terms of historical dollars without consideration of changes in the relative purchasing power of money over time due to inflation. The impact of inflation is reflected in the increased cost of our operations. Unlike industrial companies, our assets and liabilities are primarily monetary in nature. As a result, changes in market interest rates have a greater impact on performance than the effects of inflation.

Liquidity.  Liquidity is defined as the Company’s ability to generate adequate cash to meet its needs for day-to-day operations and material long and short-term commitments. Liquidity risk is the risk of potential loss if the Company were unable to meet its funding requirements at a reasonable cost. The Company manages its liquidity based on demand and specific events and uncertainties to meet current and future financial obligations of a short-term nature. The Company’s objective in managing liquidity is to respond to the needs of depositors and borrowers as well as increase to earnings enhancement opportunities in a changing marketplace.

40

The Company’s liquidity position is managed on a daily basis as part of the daily settlement function and continuously as part of the formal asset liability management process. The Bank’s liquidity is maintained by managing its core deposits as the primary source, purchasing investment securities, selling loans in the secondary market, borrowing from the FHLB of Boston and purchasing wholesale certificates of deposit as its secondary sources.

The sources of funds for dividends paid by the Company are dividends received from the Bank and liquid funds held by the Company. The Company and the Bank are regulated enterprises and their abilities to pay dividends are subject to regulatory review and restriction. Certain regulatory and statutory restrictions exist regarding dividends, loans and advances from the Bank to the Company. Generally, the Bank has the ability to pay dividends to the Company subject to minimum regulatory capital requirements.

Quarterly, the ALCO reviews the Company’s liquidity needs and reports any findings (if required) to the board of directors.

Capital Adequacy.  Total shareholders’ equity was $142.3 million at June 30, 2017, compared to $134.7 million at December 31, 2016, and $125.1 million at December 31, 2015. The Company’s equity increased primarily as a result of an increase in earnings.

Federal banking regulators have issued risk-based capital guidelines, which assign risk factors to asset categories and off-balance-sheet items. The following table reflects capital ratios computed utilizing the recently implemented Basel III regulatory capital framework:

	Actual					Minimum Capital Required For Capital Adequacy					Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer Basel III Phase-In Schedule					Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer Basel III Fully Phased In					Minimum To Be Well-Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio
	(dollars in thousands)
At June 30, 2017
Cambridge Bancorp:
Total capital (to risk-weighted assets)	$	165,699		13.8	%	$	96,091		8.0	%	$	111,105		9.25	%	$	126,119		10.5	%	N/A		N/A
Tier I capital (to risk-weighted    assets)		150,681		12.5	%		72,068		6.0	%		87,082		7.25	%		102,097		8.5	%	N/A		N/A
Common equity tier I capital (to    risk-weighted assets)		150,681		12.5	%		54,051		4.5	%		69,065		5.75	%		84,080		7.0	%	N/A		N/A
Tier I capital (to average assets)		150,681		8.1	%		74,690		4.0	%		74,690		4.00	%		74,690		4.0	%	N/A		N/A
Cambridge Trust Company:
Total capital (to risk-weighted assets)	$	161,963		13.5	%	$	96,091		8.0	%	$	111,105		9.25	%	$	126,119		10.5	%	$	120,114		10.0	%
Tier I capital (to risk-weighted    assets)		146,945		12.2	%		72,068		6.0	%		87,082		7.25	%		102,097		8.5	%		96,091		8.0	%
Common equity tier I capital (to    risk-weighted assets)		146,945		12.2	%		54,051		4.5	%		69,065		5.75	%		84,080		7.0	%		78,074		6.5	%
Tier I capital (to average assets)		146,945		7.9	%		74,696		4.0	%		74,696		4.00	%		74,696		4.0	%		93,371		5.0	%
At December 31, 2016
Cambridge Bancorp:
Total capital (to risk-weighted assets)	$	159,141		13.1	%	$	96,873		8.0	%	$	104,441		8.625	%	$	127,145		10.5	%	N/A		N/A
Tier I capital (to risk-weighted    assets)		144,003		11.9	%		72,654		6.0	%		80,223		6.625	%		102,927		8.5	%	N/A		N/A
Common equity tier I capital (to    risk-weighted assets)		144,003		11.9	%		54,491		4.5	%		62,059		5.125	%		84,763		7.0	%	N/A		N/A
Tier I capital (to average assets)		144,003		7.9	%		72,488		4.0	%		72,488		4.000	%		72,488		4.0	%	N/A		N/A
Cambridge Trust Company:
Total capital (to risk-weighted assets)	$	156,928		13.0	%	$	96,873		8.0	%	$	104,441		8.625	%	$	127,145		10.5	%	$	121,091		10.0	%
Tier I capital (to risk-weighted    assets)		141,790		11.7	%		72,654		6.0	%		80,223		6.625	%		102,927		8.5	%		96,873		8.0	%
Common equity tier I capital (to    risk-weighted assets)		141,790		11.7	%		54,491		4.5	%		62,059		5.125	%		84,763		7.0	%		78,709		6.5	%
Tier I capital (to average assets)		141,790		7.8	%		72,488		4.0	%		72,488		4.000	%		72,488		4.0	%		90,610		5.0	%

41

Contractual Obligations, Commitments, and Contingencies

The Company has entered into contractual obligations and commitments. The following tables summarize the Company’s contractual cash obligations and other commitments by maturity at December 31, 2016:

	Payments Due — By Period as of December 31, 2016
CONTRACTUAL OBLIGATIONS	Total		Less Than One Year		One to Three Years		Three to Five Years		After Five Years
	(dollars in thousands)
FHLBB advances	$	3,746	$	167	$	344	$	3,235	$	—
Retirement benefit obligations		24,061		1,848		4,158		4,581		13,474
Lease obligations		33,148		4,159		7,557		5,797		15,635
Certificates of deposit		171,162		86,283		64,865		20,014		—
Total contractual cash obligations	$	232,117	$	92,457	$	76,924	$	33,627	$	29,109

	Amounts of Commitments Expiring — By Period as of December 31, 2016
OTHER COMMITMENTS	Total		Less Than One Year		One to Three Years		Three to Five Years		After Five Years
	(dollars in thousands)
Unused portion of existing lines of credit	$	256,767	$	123,422	$	47,609	$	16,120	$	69,616
Standby letters of credit		7,763		7,763		—		—		—
Originations of new loans		26,024		26,024		—		—		—
Total commitments	$	290,554	$	157,209	$	47,609	$	16,120	$	69,616

Further discussion regarding commitments and contingencies can be found within Item 13 — Financial Statements and Supplementary Data — Notes to the Financial Statements — Note 16 — Commitments and Contingencies.

Financial Instruments with Off-Balance-Sheet Risk

The Company is party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments primarily include commitments to originate and sell loans, standby letters of credit, unused lines of credit and unadvanced portions of construction loans. The instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheet. The contract or notional amounts of those instruments reflect the extent of involvement the Company has in these particular classes of financial instruments.

The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for loan commitments, standby letters of credit and unadvanced portions of construction loans is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.

Off-Balance-Sheet Arrangements.  Our significant off-balance-sheet arrangements consist of the following:

• Commitments to originate 1–4 family mortgages

• Standby and commercial letters of credit

• Unused lines of credit

• Unadvanced portions of construction loans

• Unadvanced portions of other loans

• Loan related derivatives

• Risk participation agreements

42

Off-balance-sheet arrangements are more fully discussed in Item 13 — Financial Statements and Supplementary Data — Notes to the Unaudited and Audited Financial Statements — Note 15 — Financial Instruments with Off Balance Sheet Risk.

ITEM 3. PROPERTIES

The Company conducts its business through 11 full-service banking offices, including its main banking office and headquarters in Cambridge, Massachusetts, its operations center in Burlington, Massachusetts, four wealth management offices and one off-site ATM.  The following table sets forth certain information regarding our properties as of July 31, 2017:

Location	Ownership	Year Opened	Year of Lease or LicenseExpiration
Headquarters(1):	Leased	1890	2021(5)
1336 Massachusetts Avenue
Cambridge, MA 02138
Operations Center(2):	Leased	1996	2030(8)
78 Blanchard Road
Burlington, MA 01803
Branch Offices:
361 Trapelo Road	Leased	2008	2018(6)
Belmont, MA 02478
65 Beacon Street	Leased	1998	2018(8)
Boston, MA 02108
565 Tremont Street	Leased	2012	2022(8)
Boston, MA 02118
353 Huron Avenue	Owned	1974	NA
Cambridge, MA 02138
415 Main Street(3)	Leased	1969	2028(7)
Cambridge, MA 02142
1720 Massachusetts Avenue	Leased	1989	2019(8)
Cambridge, MA 02138
350 Massachusetts Avenue	Leased	1998	2018
Cambridge, MA 02139
75 Main Street	Owned	1990	NA
Concord, MA 01742
1690 Massachusetts Avenue	Leased	2010	2020(8)
Lexington, MA 02420
494 Boston Post Road	Owned	1982	NA
Weston, MA 02493
Wealth Management Offices:
75 State Street, 18th Floor	Leased	2013	2019(9)
Boston, MA 02109
49 South Main Street, Suite 203(4)	Leased	1996	2025(7)
Concord, NH 03301
1000 Elm Street, Suite 201	Leased	2015	2025(7)
Manchester, NH 03101
One Harbour Place, Suite 240	Leased	2011	2021(7)
Portsmouth, NH 03801

(1) Provides full service banking services. Location of this facility moved to its current address in 1964.

(2) Location of this facility moved to its current address in 2015.

(3) Location of this branch moved to its current address in 2017.

(4) Location of this office moved to its current address in 2015.

(5) With five options (each at the Company’s choice) to extend the lease for five additional five year periods.

(6) With four options (each at the Company’s choice) to extend the lease for four additional five year periods.

(7) With three options (each at the Company’s choice) to extend the lease for three additional five year periods.

(8) With two options (each at the Company’s choice) to extend the lease for two additional five year periods.

(9) With one option (at the Company’s choice) to extend the lease for one additional five year period.

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ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Under SEC rules, beneficial ownership includes any shares of common stock which a person has sole or shared voting power or investment power and any shares of common stock which the person has the right to acquire within 60 days through the exercise of any option, warrant or right, through conversion of any security or pursuant to the automatic termination of a power of attorney or revocation of a trust, discretionary account or similar arrangement.  The following tables set forth certain information as to the number and percentage of shares of Common Stock beneficially owned as of July 31, 2017, (i) by each person known by the Company to own beneficially more than 5% of the Company’s outstanding shares of Common Stock, (ii) by each of the Company’s directors and executive officers, and (iii) by all directors and executive officers as a group. As of July 31, 2017, there were 4,080,910 shares of Common Stock outstanding and percentages are based on such total of shares outstanding.

Name of Beneficial Owner	Amount and Nature of Beneficial Ownership (1)		Percent of Shares Outstanding
Cambridge Bancorp ESOP 1336 Massachusetts Avenue Cambridge, MA  02138		332,962		8.16%
BancFunds Co. LLC 20 North Wacker Drive, Suite 3300 Chicago, IL  60606		277,544		6.80%
City of Cambridge Retirement System 100 Cambridge Park Drive, Suite 101 Cambridge, MA  02140		255,944		6.27%

(1) The information contained herein is based on information provided by the respective individuals and publically available information as of July 31, 2017.  Shares are deemed to be beneficially owned by a person if such person directly or indirectly has, or shares (i) voting power, which includes the power to vote or to direct the voting of the shares, or (ii) investment power, which includes the power to dispose or to direct the disposition of the shares.

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Securities Ownership of Officers and Directors

Name	Number of Shares Owned (1)(2)(3)		Percent of Common Stock Outstanding
Directors:
Donald T. Briggs		1,965	**
Jeanette G. Clough		3,906	**
Sarah G. Green		1,496	**
Denis K. Sheahan		19,512	**
Edward F. Jankowski		935	**
Hambleton Lord		2,450	**
Leon A. Palandjian		4,584	**
Cathleen A. Schmidt		1,535	**
R. Gregg Stone		7,244	**
Anne M. Thomas		4,189	**
David C. Warner		5,069	**
Linda Whitlock		5,657	**
Susan R. Windham-Bannister		735	**
Executive Officers other than Directors:
Lynne M. Burrow		34,964	**
Michael F. Carotenuto		1,835	**
Thomas A. Johnson		17,309	**
Martin B. Millane Jr.		16,949	**
Jennifer A. Pline		2,387	**
Pilar Pueyo		946	**
Directors and executive officers as a group (19 individuals)		133,667		3.28	%

** less than one percent

(1) Unless otherwise indicated, all shares are beneficially owned by the respective individuals.  Shares of Common Stock which are subject to stock options exercisable within 60 days of July 31, 2017 are deemed to be outstanding for the purpose of computing the amount and percentage of outstanding common stock owned by such person.

(2) This amount reflects shares underlying options which are exercisable within 60 days of July 31, 2017.  The shares underlying options which are exercisable within 60 days of July 31, 2017 are as follows: 1,877; 1,300 and 3,000 for Ms. Burrow, Mr. Johnson and Mr. Millane, respectively.

(3) This amount reflects shares allocated to participant accounts within the ESOP.  The shares allocated to participant accounts within the ESOP as of July 31, 2017 are as follows:  12; 4,161; 1,421 and 1,138 for Mr. Sheahan, Ms. Burrow, Mr. Johnson and Mr. Millane, respectively.

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ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS

Directors and Executive Officers

The name, age, and position of the director/executive officer of the Company are set forth below. The directors serve until their respective three-year term expires or until their successors are duly elected and have qualified. See —Board Classification; Non-Cumulative Voting. Certain officers are elected by the board each year at the directors’ annual meeting.

Name	Age	Position	Current Term Ends
Donald T. Briggs	49	Director, Cambridge Bancorp and Cambridge Trust Company	2018
Jeanette G. Clough	63	Director, Cambridge Bancorp and Cambridge Trust Company	2018
Sarah G. Green	70	Director, Cambridge Bancorp and Cambridge Trust Company	2020
Edward F. Jankowski	67	Director, Cambridge Bancorp and Cambridge Trust Company	2020
Hambleton Lord	56	Director, Cambridge Bancorp and Cambridge Trust Company	2018
Leon A. Palandjian	48	Director, Cambridge Bancorp and Cambridge Trust Company	2020
Cathleen A. Schmidt	58	Director, Cambridge Bancorp and Cambridge Trust Company	2019
Denis K. Sheahan	52	Director, Cambridge Bancorp and Cambridge Trust Company; Chairman; President & Chief Executive Officer	2019
R. Gregg Stone	64	Director, Cambridge Bancorp and Cambridge Trust Company	2018
Anne M. Thomas	71	Director, Cambridge Bancorp and Cambridge Trust Company	2019
David C. Warner	71	Lead Director, Cambridge Bancorp and Cambridge Trust Company	2019
Linda Whitlock	69	Director, Cambridge Bancorp and Cambridge Trust Company	2020
Susan R. Windham-Bannister	66	Director, Cambridge Bancorp and Cambridge Trust Company	2018

DIRECTORS

The principal occupation and business experience for each of the current directors:

Denis K. Sheahan, Chairman, President & Chief Executive Officer, Age 52.  Mr. Sheahan serves as President and CEO of the Company and of Cambridge Trust.  Prior to joining the Company in 2015, Mr. Sheahan spent 19 years at Independent Bank Corp. and Rockland Trust in various capacities including Chief Operating Officer, Chief Financial Officer, and Controller.  He has served as a Director of the Company and of Cambridge Trust since 2015.  The Board has determined that Mr. Sheahan is qualified to serve as a Director based upon his prior service as a Director of the Company and of Cambridge Trust and his extensive experience in many areas of banking and financial services.  Mr. Sheahan has experience in positions of executive leadership at publicly traded companies and knowledge of the communities that the Company serves.

Donald T. Briggs, Age 49.  Mr. Briggs is the President of Federal Realty Investment Trust (the “Trust”), a publicly traded real estate investment trust, a position he has held since 2009.  In this capacity, Mr. Briggs is responsible for managing the Trust’s national pipeline of large scale development and leading the Trust’s office in New England.  Mr. Briggs also serves as a member of the Trust’s Investment and Executive Committees.  Mr. Briggs has served as a Director of the Company and of Cambridge Trust since 2013.  The Board has determined that Mr. Briggs is qualified to serve as a Director based upon his prior service as a Director of the Company and of Cambridge Trust including his service on numerous Board Committees, his experience as a member of the executive management team of a publicly traded company, his knowledge of the real estate industry, and his familiarity with the communities that the Company serves.

Jeanette G. Clough, Age 63.  Since November 1998, Ms. Clough has served as the Chief Executive Officer and President of Mount Auburn Hospital.  Ms. Clough has served as a Director of the Company and of Cambridge Trust since 2008.  The Board has determined that Ms. Clough is qualified to serve as a Director based upon her prior service as a Director of the Company and of Cambridge Trust including her service on numerous Board Committees, her experience as Chief Executive Officer of a large healthcare organization, and her knowledge of the communities in the Company’s market area.

Sarah G. Green, Age 70.  Before her retirement in 2013, Ms. Green was the Chief Operating Officer at the Federal Reserve Bank of Richmond for seven years.  Prior to that, Ms. Green was an Executive Officer at the Federal Reserve Bank of Boston for 28 years.  Ms. Green has served as a Director of the Company and of Cambridge Trust since 2014, and she is currently Chair of the Audit Committee.  The Board has determined that Ms. Green is qualified to serve as a Director based upon her prior service as a Director of the Company and of Cambridge Trust including her service on numerous Board Committees and her leadership of director education activities, her experience as an executive at the Federal Reserve System, her knowledge of payments systems, and her broad experience in serving on non-profit boards.

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Edward F. Jankowski, Age 67.  Before his retirement in 2015, Mr. Jankowski held many roles during his 16 years at Independent Bank Corp. and Rockland Trust, a Massachusetts commercial bank, including Senior Vice President, Residential Lending and Corporate Compliance, Chief Technology and Operations Officer, Chief Risk Officer and Chief Internal Auditor.  Before joining Rockland Trust Mr. Jankowski served as SVP of North Shore Bank, and SVP at Multibank Service Corp., a subsidiary of Multibank Financial Corp.  Mr. Jankowski is a Certified Public Accountant.  Mr. Jankowski has served as a Director of the Company and of Cambridge Trust since 2016.  The Board believes that Mr. Jankowski is qualified to serve as a Director based upon his prior service as a Director of the Company and of Cambridge Trust including his service on numerous Board Committees, his knowledge of banking regulation and risk management, his training as a CPA, and his experience as an executive of a publicly traded organization in the banking and finance industry.

Hambleton Lord, Age 56.  Mr. Lord has over 30 years’ experience in the software industry founding and building industry leading companies.  Since 2002, he has been the Managing Director of Launchpad Venture Group, a Boston-based angel investor group that focuses on seed stage technology companies.  He manages the group’s deal flow, due diligence, and investing activities.  He is also the Co-Founder of Seraf, a software company that develops professional portfolio management tools for investors in early stage companies.  Mr. Lord has served as a Director of the Company and of Cambridge Trust since 2012 and currently serves as Chair of the Compensation Committee.  The Board has determined that Mr. Lord is qualified to serve as a Director based upon his prior service as a Director of the Company and of Cambridge Trust including his service on numerous Board Committees, his experience as an angel investor, his knowledge of the software industry and innovation economy in Massachusetts, and his knowledge of the business communities in the Company’s market area.

Leon A. Palandjian, MD, CFA, Age 48.  Dr. Palandjian is the Chief Risk Officer of Intercontinental Real Estate Corporation, a national real estate investment, development, and management firm headquartered in Boston, MA. His investment experience spans venture capital, private and public equity, in the life science and real estate sectors. Dr. Palandjian has served as a Director of the Company and of Cambridge Trust since 2006 and was Lead Director from 2014 until January 2017. The Board has determined that Dr. Palandjian is qualified to serve as a Director based upon his prior service as a Director of the Company and of Cambridge Trust including his service on numerous Board Committees, his extensive experience in equity investment and finance, his CFA qualification, and his knowledge of the communities in the Company’s market area.  

Cathleen A. Schmidt, Age 58.  Since 2013, Ms. Schmidt has served as Executive Director and CEO at McLane Middleton Professional Association, a full service law firm with headquarters in Manchester, New Hampshire.  Prior to that she spent six years as President and CEO of Citizen’s Bank New Hampshire/Vermont.  She has served as a Director of the Company and of Cambridge Trust since 2016.  The Board has determined that Ms. Schmidt is qualified to serve as a Director based upon her prior service as a Director of the Company and of Cambridge Trust including her service on numerous Board Committees.  In addition, Ms. Schmidt brings to the Board her experience in executive management of a large regional bank, expertise in retail banking, and knowledge of the New Hampshire market.

R. Gregg Stone, Age 64.  Mr. Stone serves as Manager of Kestrel Management, LLC, through which he manages venture capital and family investments.  He has worked in the investment industry since 1986 when he joined Pell, Rudman & Co., Inc. as a Vice President from the law firm Hemenway & Barnes.  Mr. Stone has served on the boards of a number of private companies and charities.  Mr. Stone has served as Director of the Company and of Cambridge Trust since 2009.  The Board has determined that Mr. Stone is qualified to serve as a Director based upon his prior service as a Director of the Company and of Cambridge Trust including his service on numerous Board Committees, and his strong background in investment management and venture capital.

Anne M. Thomas, Age 71.  Before her retirement in 2012, Ms. Thomas was Special Counsel for the City of Somerville for 19 years.  Prior to that, Ms. Thomas had a private law practice which originated in Harvard Square in 1975 and included representation of numerous Cambridge businesses and nonprofit organizations.  Ms. Thomas has served as a Director of the Company and of Cambridge Trust since 1979, including as Chair or member of most of the Board Committees.  The Board has determined that Ms. Thomas is qualified to serve as a Director based upon her prior service as a Director of the Company and of Cambridge Trust including her service on numerous Board Committees, her mature business judgment, her inquisitive and objective perspective, her legal experience, and her familiarity with the communities that the Company serves.

David C. Warner, Lead Director, Age 71.  Mr. Warner has been a partner of J.M. Forbes & Co., a private investment advisory and trust office located in Boston, since 1989.  Mr. Warner leads investment activity at the firm.  Mr. Warner has served as a Director of the Company and of Cambridge Trust since 1999, and he currently serves as Lead Director.  The Board determined that Mr. Warner is qualified to serve as a Director based upon his prior service as a Director of the Company and of Cambridge Trust including his service on numerous Board Committees, and his knowledge and experience as an executive in the investment management industry and banking.

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Linda Whitlock, Age 69.  Ms. Whitlock founded (in 2010) and is a Principal of The Whitlock Group, a management and strategy consulting firm.  Previously, Ms. Whitlock was President and Chief Executive Officer of Boys & Girls Clubs of Boston from 1999 to 2008.  Ms. Whitlock has served as a Director of the Company and of Cambridge Trust since 2002, and was the Company’s first Lead Director from 2011 until 2014.  She chaired the recent search for a new chief executive of the Company, and is currently Chair of the Governance Committee.  The Board believes that Ms. Whitlock is qualified to serve as a Director based upon her prior service as a Director of the Company and of Cambridge Trust including her service on numerous Board Committees, her experience as a Chief Executive Officer, and her extensive governance experience on the boards of public and private companies and charitable organizations based in the Company’s market area.

Susan R. Windham-Bannister, Ph.D., Age 66.  Dr. Windham-Bannister is Managing Partner of Biomedical Innovation Advisors LLC and President and CEO of Biomedical Growth Strategies LLC, where she has served since May 2015.  Prior to that she had served as the founding President and CEO of the Massachusetts Life Sciences Center since July 2008, overseeing a $1 billion investment to accelerate the pace of growth in pharmaceuticals, biotechnology, medical devices, medical diagnostics, and bioinformatics industries in Massachusetts.  Dr. Windham-Bannister has served as a Director of the Company and of Cambridge Trust since 2016.  The Board has determined that Dr. Windham-Bannister is qualified to serve as a Director based upon her prior service as a Director of the Company and of Cambridge Trust including her service on numerous boards and because she has extensive experience as a leader in the innovation economy.

Board Leadership Structure

Since Mr. Sheahan, the Company’s Chief Executive Officer, also serves as Chairman of the Board, the Board has elected an independent Director, Mr. Warner, to serve as a Lead Director.  The Lead Director coordinates the activities of the other independent directors, acts as a liaison between the Board and the Chief Executive Officer, leading their executive sessions, and performing such other duties as the Board requests.  The Board provides oversight of the Chief Executive Officer and other management of the Company and Cambridge Trust to ensure that the long-term interests of Shareholders are being served.  The Board typically will have nine regularly scheduled meetings a year, and additional meetings when necessary or advisable, at which reports on the management and performance of the Company and Cambridge Trust are reviewed.  The Board has also established the Board Committees as described in the following pages which regularly meet and report back to the Board on the responsibilities delegated to them.  In addition to its general oversight role, the Board also:  selects, evaluates, and compensates the Chief Executive Officer and oversees Chief Executive Officer succession planning; reviews, monitors, and, when necessary or appropriate, approves fundamental financial and business strategies and major corporate actions; assesses major risks facing the Company or Cambridge Trust and options for their mitigation; and seeks to maintain the integrity of financial statements and the integrity of compliance with law and ethics of the Company and Cambridge Trust.

EXECUTIVE OFFICER INFORMATION

The following individuals are the current executive officers of the Company and/or Cambridge Trust who are not directors.

Lynne M. Burrow.  Age 64.  Ms. Burrow joined Cambridge Trust in 1998 as Senior Vice President and Chief Information Officer. In 2006, Ms. Burrow was promoted to Executive Vice President and Chief Information Officer. In 2016, Director of Strategy and Planning was added to her responsibilities. Prior to joining the Bank, Ms. Burrow spent 20 years at Fleet/Shawmut National/Connecticut National/Shawmut/Fidelity Trust where she was responsible for Information Technology and Bank Operations.

Michael F. Carotenuto.  Age 31.  Mr. Carotenuto has been the Chief Financial Officer and Treasurer of Cambridge Trust since November 2016.  Mr. Carotenuto most recently served as Senior Vice President, Director of Treasury and Internal Reporting at Belmont Savings Bank since 2011.  Prior to that he worked at People’s United Financial, Inc. as an Accounting Policies Advisor and was on the Risk Advisory Services staff at Ernst & Young, LLP.  Mr. Carotenuto is a Certified Public Accountant and he also serves as Secretary of the Company and of Cambridge Trust.  

Thomas A. Johnson.  Age 59.  Mr. Johnson joined Cambridge Trust in 2001 as Branch Administrator.  In 2006 Mr. Johnson was promoted to Senior Vice President, Consumer Banking Director and became Executive Vice President in 2014.  Prior to joining Cambridge Trust, Mr. Johnson spent 19 years at BayBank/BankBoston/Fleet, responsible for retail banking, consumer lending, and facilities.

Martin B. Millane, Jr.  Age 61.  Mr. Millane joined Cambridge Trust in 2004 as Senior Vice President, Commercial Real Estate.  In 2010 he became Senior Vice President, Senior Lending Officer and was promoted to his current role of Executive Vice President, Chief Lending Officer in 2014.  Prior to joining Cambridge Trust, Mr. Millane was a Senior Vice President in Commercial Lending at Century Bank.

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Jennifer A. Pline.  Age 57.  Ms. Pline joined Cambridge Trust in 2017 and serves as Executive Vice President, and Head of the Company’s Wealth Management Group.  Prior to joining Cambridge Trust Ms. Pline worked as Managing Director, Chief Trusts & Gifts Officer at Harvard Management Company since 2005.  Prior to that she worked at Standish Mellon Asset Management as the Director of Client Service and was a vice president at Standish, Ayer & Wood, Inc.  Ms. Pline is a Chartered Financial Analyst.  

Pilar Pueyo.  Age 55.  Ms. Pueyo joined Cambridge Trust in 2016 as Senior Vice President, and Director of Human Resources.  Prior to joining Cambridge Trust, Ms. Pueyo spent 17 years at Boston Private Bank and Trust Company where she was responsible for the delivery and execution of Human Resources strategy, programs, and services to support its business strategy.

Committees of the Board and Code of Ethics

The Board has established an Audit Committee, a Compensation Committee and a Corporate Governance Committee along with other various committees. The Board has adopted a charter for the Audit Committee, the Compensation Committee, and Corporate Governance Committee, as well as qualification guidelines for board members.  The Board has also adopted a code of business conduct and ethics (the “Code of Ethics”) that applies to all employees, officers and directors. Each employee, officer and director participates in an annual training session that focuses on topics covered by the Company’s Code of Ethics. The training reinforces the Company’s core values and commitment to full compliance with applicable laws and regulations. You can find links to the Code of Ethics on the Company’s website at: www.cambridgetrust.com.

You can also obtain a printed copy of the Committee charters and the Code of Ethics referred to above, without charge, by contacting us at the following address:

Cambridge Bancorp

1336 Massachusetts Avenue

Cambridge, MA 02138

ATTN: Corporate Secretary

Audit Committee

The Board has appointed an Audit Committee that oversees the Company’s accounting and financial reporting processes, including its internal audit function, risk management oversight, the external and internal audits of the company’s financial statements, the integrity of the financial statements of the Company, the qualifications, independence and performance of the independent auditor engaged by the Company and compliance with applicable legal and regulatory requirements. A copy of the Audit Committee’s charter is available on the Company’s website at: www.cambridgetrust.com. During 2016, the Audit Committee held six meetings, and as of June 30, 2017, the Audit Committee has held four meetings. The members of the Audit Committee currently are Mses. Clough, Green (Chair) and Windham-Bannister and Messrs. Briggs, Jankowski, Lord and Stone.  Each of the members of the Audit Committee meets the independence requirements of the rules of NASDAQ and applicable rules and regulations of the SEC. The Board has determined that each member of the Audit Committee is financially literate and that Ms. Clough and Mr. Jankowski qualify as “audit committee financial experts,” as that term is defined in Item 407(d)(5) of Regulation S-K.

Compensation Committee

The Board has appointed a Compensation Committee that is chartered to fulfill the requirements of applicable law and stock exchange listing standards regarding the compensation of the executive officers of the Company and evaluate and approve the benefit, bonus, incentive compensation, severance, equity-based, or other compensation plans, policies, and programs of the Company and its subsidiaries, all of which are intended to function as the basis of fostering alignment of executive compensation with the interests of shareholders. During 2016, the Compensation Committee held six meetings, and as of June 30, 2017, the Compensation Committee has held two meetings. Compensation Committee meetings are attended by the Company’s President and Chief Executive Officer, other than while his compensation and benefits are discussed. For a description of the role of the Company’s President and Chief Executive Officer in determining or recommending the amount of compensation paid to our named executive officers during 2016, see “Compensation Discussion and Analysis.” The members of the Compensation Committee currently are Messrs. Lord (Chair), Briggs, Palandjian, Stone and Warner and Mses. Green and Whitlock. Each of the members of the Compensation Committee meets the independence requirements of the rules of NASDAQ, and also serve on the Compensation Committee of the Company’s subsidiary, Cambridge Trust Company. A copy of the Compensation Committee’s charter is available on the Company’s website at: www.cambridgetrust.com. The Compensation Committee may delegate to its chairperson or any other Compensation Committee member such power and authority as the Compensation Committee deems appropriate, except such powers and authorities required by law to be exercised by the whole Compensation Committee or subcommittee thereof. For information on the role of compensation consultants determining or recommending the amount or form of executive or director compensation, see “Compensation Discussion and Analysis – Role of the Compensation Consultant.”

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Governance Committee

The Board has appointed a Corporate Governance Committee that has overall responsibility for recommending corporate governance policies and procedures and board operations for the Company. The Corporate Governance Committee provides recommendations for action by the Board related to the appropriate size, composition, function, needs and effectiveness of the Board and its committees, develops and implements corporate governance principles and practices for the Company and oversees implementation of the Company’s Code of Ethics, including reviewing Company transactions involving related parties and other potential conflicts of interest.  The Corporate Governance Committee identifies director candidates, reviews the qualifications and experience of each person considered as a nominee for election or reelection as a director, recommends director nominees to fill vacancies on the Board and for approval by the Board and the shareholders. A copy of the Corporate Governance Committee’s charter is available on the Company’s website at: www.cambridgetrust.com. During 2016, the Corporate Governance Committee held five meetings, and as of June 30, 2017, the Governance Committee has held two meetings. The members of the Corporate Governance Committee are Mses. Green, Thomas and Whitlock (Chair) and Messrs. Palandjian, Stone and Warner. Each member of the Corporate Governance Committee meets the independence requirements of the rules of NASDAQ.

Director Nominations

The Board or the Corporate Governance Committee select director nominees to be presented for shareholder approval at the Annual Meeting of Shareholders, including the nomination of incumbent directors for reelection and the consideration of any director nominations submitted by shareholders.

In evaluating the qualifications of potential new directors, the Board considers the following set of recruitment criteria:

• Directors should, as a result of their occupation, background, and/or experience, possess a mature business judgment that enables them to make a positive contribution to the Board.  Directors are expected to bring an inquisitive and objective perspective to their duties.  Directors should possess, and demonstrate through their actions on the Board, exemplary ethics, integrity, and values.

• Each candidate’s leadership experience, business experience and acumen, familiarity with relevant industry issues, and such other relevant skills and experience as may contribute to the Board’s effectiveness and the Company’s success.

• Based upon the characteristics of the then current Board, the Corporate Governance Committee takes Board diversity into account with respect to personal attributes and characteristics, including with respect to race, ethnicity, gender, age, cultural backgrounds, professional experience, skills, and other qualifications.

• While familiarity with the communities that Cambridge Trust serves is one factor to be considered in determining if an individual is qualified to serve as a director, it is not a controlling factor.  The Board believes that a significant portion of the directors should be, and are, drawn from the communities that the Company serves.

Directors must be willing to devote sufficient time to carrying out their duties and responsibilities effectively, and should be committed to serve on the Board for an extended period of time.  Directors are expected to offer their resignation in the event of any significant change in circumstances that renders them incapable of performing their duties.  Directors who attain the age of 72 during their elected term as a director will retire from the Board as of the next Annual Meeting of Shareholders.

ITEM 6. EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

This section describes the compensation packages of the Company’s chief executive officer, current and former chief financial officers, and the three other most highly compensated executive officers who were employed by the Company on December 31, 2016 (collectively, the “named executive officers”). The named executive officers and their positions are identified below:

• Denis K. Sheahan – President and Chief Executive Officer

• Michael F. Carotenuto – Chief Financial Officer

• Lynne M. Burrow – Executive Vice President, Chief Information Officer

• Martin B. Millane, Jr. – Executive Vice President, Chief Lending Officer

• Albert R. Rietheimer – Former Chief Financial Officer

• Michael A. Duca – Former Executive Vice President and Head of Wealth Management

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Executive Compensation Philosophy

The Company’s executive compensation philosophy is intended to provide a total compensation package that is competitive with market practice while varying awards to recognize Company and individual performance.  Our objective is to provide competitive pay for achieving performance goals consistent with the Company’s business objectives and its performance compared to the performance of other companies in its industry.  Our philosophy is that actual compensation should exceed market when superior performance is achieved and be lower than market when performance falls below expectations.

The following list identifies the specific objectives of the Company’s executive compensation program:

• Attract and retain talented members of senior management;

• Provide a competitive total compensation and benefits package;

• Reward superior performance (appropriately balancing short-term and long-term objectives); and

• Align management interests with those of our shareholders.

The Company’s executive compensation program consists of multiple components, each of which serves a different purpose.  The combination of these components provides a balanced and integrated program that helps the Company achieve its objectives.  The program consists of four core components.

• Base Salaries –Base salaries represent the “fixed” amount of compensation that executives receive in exchange for performing their role.  We target base salaries that are competitive with market median (that is, the 50^th percentile) for comparable roles in similar organizations.  Actual salaries reflect each individual’s experience, tenure, performance, and contribution to the Company.

• Short-Term Incentives – The Company’s short-term incentive program represents a “variable” amount of compensation that rewards achievement of the annual performance goals of the Company (including goals based on internal and relative metrics) and the individual goals applicable to each executive.  The Company designates an annual target short-term cash incentive opportunity (as a percentage of base salary) for each executive that is aligned with market and industry practice.  Because our short-term incentive compensation is not guaranteed, actual awards reflect performance relative to annual Company and individual performance goals.  As a result, awards are higher than target in years when the Company and the executive achieve superior performance and lower than target (or not paid at all) in years when performance does not meet expectations.

• Long-Term Incentives – The Company’s long-term incentive program also represents a “variable” amount of compensation that rewards long-term, sustained performance and further aligns the interests of executives with those of our shareholders through the use of equity awards that vest based on average achievement of specified metrics on a relative basis over a three-year period.  Performance-based equity awards create a strong ownership culture by allowing executives the opportunity to earn a significant ownership stake in the Company through their sustained focus on the Company’s performance over an extended period of time.  Awards with multi-year vesting schedules based on relative (rather than absolute) performance also help the Company retain its executives by requiring them to continue working through the close of the relevant performance period but also accounting for overall industry and market trends.  With these awards, the Company’s goal is to place a greater focus on rewarding long-term, sustained performance.  Like short-term incentives, the Company’s long-term incentives target opportunities (as a percentage of base salary) are set based on market and industry practice.  The Company reviews the balance between short-term and long-term incentives regularly to ensure that its overall goals are being achieved.  Ultimately, the Company believes that its total compensation (cash plus equity) reflects the long-term value and growth of the Company.

• Benefits and Perquisites – The Company’s benefits and perquisites program is designed to be competitive with the programs offered by our industry peers and to help the Company attract and retain key talent by providing a core set of benefits and perquisites that support executives’ performance.  The Company strives to provide competitive benefits that help the Company attract and retain the quality executives that the Company needs to be successful.

Since a significant portion of the Company’s total compensation is performance-based (short-term and long-term incentives), the Company expects its compensation will vary on an annual basis, but reflect the Company’s performance over the long-term.  In the aggregate, the Company believes its total compensation program provides appropriate balance that enables the Company to ensure proper pay-performance alignment and reduces the potential that its plans might motivate inappropriate risk-taking.  The Company’s program balances:

• Short-term and long-term performance;

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• Company and individual performance;

• Quantitative and qualitative performance measures; and

• Absolute performance of the Company and relative performance of the Company compared to industry peers.

Risk Assessment of Compensation Programs

The Compensation Committee has reviewed the potential effects of the various components of the Company’s compensation programs on individual and collective behavior and, ultimately, on its risk profile and overall approach to risk management. During its review, the Compensation Committee focused on the Company’s short-term incentives, long-term incentives, and change in control benefits (discussed below) as having the greatest potential to create incentives for individual or collective risk taking. Following a thorough review of these and the other components of the Company’s compensation programs, the Compensation Committee has determined that the programs do not create any incentives with respect to individual or collective behavior that are likely to have a material adverse effect upon either the Company’s risk profile or its overall approach to risk management.

Role of the Compensation Consultant

The Compensation Committee has the sole authority to retain and terminate a compensation consultant and to approve the consultant’s fees and all other terms of the engagement.  The Compensation Committee has direct access to outside advisors and consultants throughout the year on matters relating to executive compensation.  The Compensation Committee has direct access to and meets periodically with the compensation consultant independently of management.

During 2016, the Compensation Committee retained the services of Pearl Meyer, an independent outside consulting firm specializing in executive and board compensation, to assist the Compensation Committee.  Pearl Meyer reported directly to the Compensation Committee and carried out its responsibilities to the Compensation Committee in coordination with both the Chief Executive Officer and the Senior Vice President, and Director of Human Resources.  Pearl Meyer’s services included conducting benchmarking studies, establishing compensation guidelines, designing incentive programs, assisting with the annual proxy disclosure, and providing insight on emerging regulations and best practices.

The Compensation Committee regularly reviews the services provided by its outside consultants and believes that Pearl Meyer was independent in providing executive compensation consulting services.

Role of Management

Although the Compensation Committee makes independent recommendations to the Board on all matters related to compensation of the named executive officers, certain members of management are requested to attend and provide input to the Compensation Committee throughout the year.  Input may be sought from the Chief Executive Officer, Chief Financial Officer, the Senior Vice President, and Director of Human Resources, and others as needed to ensure that the Compensation Committee has the information and perspective it needs to carry out its duties.

The Compensation Committee meets with the Chief Executive Officer to discuss his performance and compensation package. However, decisions regarding his compensation package are made based upon the Compensation Committee’s deliberations, as recommended and approved by the Board, as well as input from the compensation consultant, as requested.  The Compensation Committee considers recommendations from the Chief Executive Officer, as well as input from the compensation consultant as requested, to make compensation package decisions for other executives.

Use of Peer Groups and Survey Information

The Compensation Committee typically engages a compensation consultant to conduct a competitive review of the Company’s executive compensation program every two years.  A primary data source used in setting market-competitive guidelines for the named executive officers is the information publicly disclosed by a peer group of other publicly traded banks which the Compensation Committee uses only as a competitive reference point and not as a determinative factor when making executive compensation decisions.

The Compensation Committee engaged Pearl Meyer to assess the relevance of the companies within the peer group and makes changes when appropriate during 2016.  Banks selected as peers for executive compensation purposes are public and actively traded banks which align with the following criteria:

• Asset sizes between $1 billion and $9 billion;

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• Located in the Northeast or Mid-Atlantic region;

• Fee/revenue mix is greater than 20%; and

• With wealth management operations.

Based on these criteria, the following companies were included in the Company’s peer group:

Arrow Financial Corporation	Independent Bank Corp.
Bryn Mawr Bank Corporation	NBT Bancorp Inc.
Camden National Corporation	Orrstown Financial Services, Inc.
Chemung Financial Corporation	Peapack-Gladstone Financial Corporation
Citizens & Northern Corporation	Univest Corporation of Pennsylvania
First Bancorp, Inc.	Washington Trust Bancorp, Inc.
Franklin Financial Services Corporation

In addition to reviewing information from the peer group, the Compensation Committee evaluates executive compensation by reviewing national and regional surveys that cover a broader group of companies.

Compensation Program Elements

Base Salary

The Compensation Committee utilized market data from a competitive market study completed by Pearl Meyer in late 2015 in establishing 2016 salary ranges and midpoints for the Company’s executives.  Pearl Meyer conducted market analyses of total compensation within the banking industry to recommend salary midpoints and ranges that reflect competitive factors and maintain internal equity.

In early 2016, performance evaluations of Mr. Sheahan and the other named executive officers were completed with respect to their 2015 performance.  The Board approved base salary increases for all executive officers based upon the recommendations of the Compensation Committee, which were derived from, in the case of the named executive officers other than Mr. Sheahan, the evaluation of their performance by Mr. Sheahan and, in the case of Mr. Sheahan, the Board’s performance evaluation of Mr. Sheahan.

Short-Term Incentives

Overview of the 2016 Short-Term Incentive Plan.  The Compensation Committee approved an executive officer annual incentive plan for use in 2016 (the “2016 Incentive Plan”).  All determinations regarding the achievement of any performance goals, the achievement of individual performance goals and objectives, and the amounts awarded under the 2016 Incentive Plan were made by the Compensation Committee.  The 2016 Incentive Plan expressly reserved the Compensation Committee’s right, in its sole and absolute discretion, to reduce, including a reduction to zero, any award otherwise payable.

As explained further below, the 2016 Incentive Plan created a cash incentive program based upon the Company’s financial performance, with awards determined by multiplying the participant’s Target Award (as defined below) by the combined Bank and Individual Performance Adjustment Factors, subject to adjustment in accordance with the terms of the 2016 Incentive Plan.

The award payable to any participant could have been less than or more than the Target Award, depending upon the Company’s performance against the criteria used to determine the Bank and the Individual Performance Adjustment Factors and any exercise of Compensation Committee discretion to make adjustments in accordance with the 2016 Incentive Plan.

The 2016 Incentive Plan defines a “Target Award” as a specified percentage of a named executive officer’s base salary and provides a range of earning opportunities around the Target Award referred to as “threshold” (50% of the Target Award) and “stretch” (150% of the Target Award).  If performance is below threshold, the named executive officer is not entitled to a short-term incentive award.

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The following table includes each named executive officer’s Target Award, threshold and stretch payout percentages (each as a percentage of base salary):

Potential Payouts Under the 2016 Incentive Plan
Name(1)	Below Threshold		Threshold (50% of Target Award)		Target (100% of Target Award)		Stretch (150% of Target Award)
Denis K. Sheahan		0%		30%		60%		90%
Albert R. Rietheimer		0%		17.5%		35%		52.5%
Martin B. Millane, Jr.		0%		17.5%		35%		52.5%
Lynne M. Burrow		0%		20%		40%		60%
Michael A. Duca		0%		25%		50%		75%

(1) Mr. Carotenuto was not included in the above table or the following discussion. Mr. Carotenuto joined the Company on November 14, 2016, and, as a result, was not eligible to participate in the 2016 Incentive Plan.

Each participant in the 2016 Incentive Plan had predefined performance goals with weightings that determined the actual annual incentive award payout.  Under the 2016 Incentive Plan, there were two performance categories – “Bank Performance” and “Individual Performance,” as shown in the table below. Weightings varied based upon the named executive officer’s role at the Bank.

Name	Bank Performance Weighting		Individual Performance Weighting
Denis K. Sheahan		75%		25%
Albert R. Rietheimer		60%		40%
Lynne M. Burrow		70%		30%
Martin B. Millane, Jr.		40%		60%
Michael A. Duca		25%		75%

As mentioned above, to determine each named executive officer’s actual annual award payout, the Target Award is multiplied by the average of the Bank and Individual Performance Adjustment Factors, with such average calculated by combining the Bank and Individual Performance Adjustment Factors and dividing the sum by two.

Bank Performance Measures and Goals.  The 2016 Incentive Plan determines the Bank Performance Adjustment Factor based upon a combination of the Company’s Return on Equity performance measured against a peer index and Operating Income measured against our budgeted Operating Income within specified ranges set forth in the 2016 Incentive Plan which correspond to threshold, target, and stretch performance levels, as set forth in the chart below.  The 2016 Incentive Plan defines Operating Income to exclude security gains and losses, taxes and other material non-recurring items as determined by the Compensation Committee.  

The range of the Bank Performance Adjustment Factor set forth in the 2016 Incentive Plan is as follows:

Bank Performance Measures	2016 Performance Goals
	Threshold	Target	Stretch
Return on Equity (after tax)	80% of 75th Percentile of Peer Index Performance	75th Percentile of Peer Index Performance	120% of 75th Percentile of Peer Index Performance
Operating Income (before security gains/losses, taxes, and other material non-recurring items)	80% of Budgeted Operating Income	Operating Income Per Budget	120% of Budgeted Operating Income

The 2016 Incentive Plan determines the Company’s performance compared to its peer banks as measured against a peer index, referred to as the Peer Performance Adjustment Factor, consisting of approximately 60 Commercial Banks with assets ranging from $500 million to $5 billion, located in the Northeast and Mid-Atlantic regions (Connecticut, Massachusetts, Maine, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island and Vermont) and traded on the NYSE, NASDAQ, or OTCQB exchanges, the “Commercial Bank Peer Group.”

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The Compensation Committee’s determinations under the 2016 Incentive Plan were not required to be uniform and could be made selectively among persons who received, or who were eligible to receive, a cash award.  While the Compensation Committee had the authority, in its sole and absolute discretion, to make adjustments to the Bank Performance Adjustment Factor within the defined parameters set forth in the 2016 Incentive Plan based upon one-time, non-recurring, or extraordinary events or any other reason that the Committee deemed appropriate; adjust any awards by considering factors such as regulatory compliance and credit quality; and to reduce, including a reduction to zero, any cash award otherwise payable, it did not exercise this authority during the 2016 plan year.

Individual Performance Measures and Goals.  In addition to the Bank performance goals, the named executive officers had individual goals that focused on department or team performance (such as lending growth or deposit growth), individual performance, or a combination of both.  The mix of these goals varied by role.  Performance targets and ranges for each measure were set at the beginning of 2016.

After the close of the plan year, each named executive officer’s individual performance goal attainment for 2016 was measured according to the following table:

Individual Performance	Did not Achieve	Partially Achieved	Fully Achieved	Clearly Achieved
Award as % of Target	0% to 25%	25% to 90%	90% to 110%	115% to 150%

If performance-to-goal could not be quantified due to the nature of the individual performance goal, the Compensation Committee used its discretion to evaluate goal attainment.

2016 Earned Awards.  On January 23, 2017, the Board upon recommendation by the Compensation Committee approved payments to the CEO and the other named executive officers pursuant to the 2016 Incentive Plan.  The amounts awarded to the named executive officers pursuant to the 2016 Incentive Plan are set forth below in the “Non-Equity Incentive Plan Compensation” column of the “Summary Compensation Table.”  The Board used a combined Bank Performance Adjustment Factor of 127%, which was comprised of a 150% performance weighting in relation to the Return on Equity (after tax) measure and a 104.21% performance weighting on the Operating Income (before security gains/losses, taxes, and other material non-recurring items) measure.  Individual Performance Adjustment Factors were within the range from 0% to 150% based upon an evaluation of the executive officer’s individual performance with respect to attainment of major business objectives for the year and other contributions to achievement of Company-wide objectives.

Long-Term Incentives

Equity compensation and stock ownership serve to link the net worth of our named executive officers to the performance of the Company’s common stock and, therefore, provide an incentive to accomplish the strategic, long-term objectives established by the Company to maximize long-term shareholder returns.  Long-term equity compensation grants are also designed to be a retention tool for the individuals to whom they are awarded and are made based on competitive factors, such as equity compensation awarded by peers and amounts that are determined to be appropriate in order to retain key personnel.

Acting on the recommendation of the Compensation Committee, in 2016 the Company granted the named executive officers performance-based restricted stock unit (“PRSU”) awards with a three-year performance period under the 2016 Long Term Incentive Plan (“2016 LTI”).  Prior to 2016, the Company granted a combination of time-based and performance-based awards.

Our compensation consultant conducts a review of the Company’s pay opportunity relative to market and industry practice and provides recommendations with respect to target long-term incentive opportunities.  In 2016, upon review of the competitive market, and based on general banking industry trends for banks of a similar size as the Company, Pearl Meyer provided a range of target long-term incentive opportunities for the Compensation Committee’s consideration.

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The 2016 PRSU award levels are set forth in the table below with the range of potential payouts represented as a percentage of each named executive officer’s base salary at the time of grant. Both the Compensation Committee and the Company believe such target ranges are reasonable and within the guidance of Pearl Meyer’s recommended long-term incentive target ranges:

Potential Payouts Under the 2016 LTI (1)
Name (2)	Below Threshold		Threshold (25th Percentile)		Target (50th Percentile)		Stretch (90th Percentile)
Denis K. Sheahan		0%		8.75%		35%		70%
Martin B. Millane, Jr.		0%		6.25%		25%		50%
Lynne M. Burrow		0%		6.25%		25%		50%
Michael A. Duca		0%		6.25%		25%		50%
Albert R. Rietheimer		0%		6.25%		25%		50%

(1) The grant date fair value of PRSU awards was calculated, in accordance with the methodology approved by the Board on December 17, 2001, as the average of (i) the closing bid and asked prices on the last trading day before the determination date (the “Last Trading Day”) and (ii) the closing bid and asked prices on the last three dates occurring before the Last Trading Day on which trading occurred, but not on any date earlier than 45 days before the Last Trading Day.

(2) Mr. Carotenuto was not included in the above table because he joined the Company on November 14, 2016, and, as a result, did not receive a 2016 LTI award.

The number of PRSUs actually earned will be determined based upon achievement of specified levels of Return on Assets (“ROA”) and diluted Earnings Per Share (“EPS”) growth (equally weighted so that each metric will account for 50% of the total performance opportunity) averaged over a three-year period (2016-2018) measured relative to the Commercial Bank Peer Group (the same peer group used for purposes of the 2016 Incentive Plan). Payouts between the threshold and stretch performance levels will be interpolated based on a linear slope with any fractional units rounded up to the nearest whole unit, but threshold performance must be met with respect to at least one of the metrics before the named executive officers may receive any portion of the award.

The range of performance adjustment factors and the corresponding payout percentages are shown in the table below:

	Threshold	Target	Stretch
Relative 3-year average ROA and 3-year average diluted EPS growth performance	25th percentile	50th percentile	90th percentile
Payout	25% of award	100% of award	200% of award

Retirement Benefits

Nonqualified Retirement Plans.  The Company maintains several nonqualified retirement programs for executive officers.  Historically, the Board provided a nonqualified defined benefit supplemental executive retirement plan (a “DB SERP”) to help accomplish the objectives of its nonqualified executive officer retirement program.  In 2016, the Board approved, at the recommendation of the Compensation Committee, a change to this program.  New entrants to the Company’s nonqualified deferred compensation program for executives are now provided a nonqualified defined contribution supplemental executive retirement plan (a “DC SERP”).  As of December 31, 2016, Mr. Sheahan, Mr. Rietheimer, Mr. Duca and Ms. Burrow each had a DB SERP.  Mr. Millane currently participates in a DC SERP. Mr. Carotenuto currently does not participate in any nonqualified retirement programs. For detailed descriptions of the DB SERPs and DC SERPs, please refer to the sections entitled “Executive Compensation Tables – Pension Benefits” and “Executive Compensation Tables – Nonqualified Deferred Compensation,” respectively.

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The Company also maintains the Cambridge Trust Company Executive Deferred Compensation Plan (the “EDCP”).  The EDCP permits certain highly compensated employees of the Company or the Bank to defer up to 50% of their base salaries and up to 100% of all performance-based compensation.  The Compensation Committee administers the EDCP and annually selects the employees who are eligible to participate.  Each participant is 100% vested in his or her account and has the right to direct the investment of his or her account balance by choosing from among investment alternatives made available by the Compensation Committee.  Each account is credited with earnings or losses arising from the performance of the investments selected by the participant and no participant receives above-market or preferential returns pursuant to the terms of the EDCP.  A participant’s account balance will be paid out, subject to the terms of the EDCP, upon a separation from service, or upon death or disability, in a lump sum payment, unless the participant has elected annual installment payments (when available).  Participants may also elect to receive an in-service distribution and distribution in the event of an unforeseeable emergency is available.

Qualified Retirement Plans.The Company sponsors the Cambridge Bancorp Employee Retirement Plan, a tax-qualified, non-contributory defined benefit pension plan (the “DB Plan”) covering substantially all employees hired before May 2, 2011.  The plan was frozen to new employees hired after that date.  The actuarially determined present values of the named executive officers’ retirement benefits as of the end of last year are reported in the section entitled “Executive Compensation Tables – Pension Benefits.”

The Company also maintains a tax-qualified defined contribution plan (the “Profit Sharing Plan” or “401(k) Plan”) that provides for deferral of federal and state income taxes on employee contributions allowed under Section 401(k) of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). The Company matches employee contributions up to 100% of the first 3% of each participant’s salary. Each year, the Company may also make discretionary contributions to the Profit Sharing Plan.  Employees, including our actively employed named executive officers, are eligible to participate in the 401(k) feature of the Profit Sharing Plan on the first business day of the quarter following their initial date of service after attainment of age 21.  Employees, including our actively employed named executive officers, are eligible to participate in the discretionary contribution feature of the Profit Sharing Plan on either January 1 or July 1 of each year, whichever date occurs soonest after the employee has attained the age of 21 and completed 12 months of service consisting of at least 1,000 hours of service.

In addition to the DB Plan and the Profit Sharing Plan, the Company maintains an employee stock ownership plan (“ESOP”). The ESOP is a tax-qualified defined contribution plan in which our employees, including our actively employed named executive officers, are eligible to participate on either January 1 or July 1 of each year, whichever date occurs soonest after the employee has attained the age of 21 and completed 12 months of service consisting of at least 1,000 hours of service.  In general, pursuant to the terms of the ESOP, the Company contributes funds to the ESOP trust fund, the contributed funds are allocated among all the participants’ accounts according to their relative levels of compensation (subject to IRS limits) and contributed funds are used to purchase shares of our common stock presently authorized but unissued at a price determined by an independent appraiser and certified by the committee of trustees of the ESOP. Shares purchased from the Company by the ESOP trust are then held in each participant’s account, which is subject to vesting requirements.

Change in Control Agreements and Other Termination Arrangements

The Company has entered into change in control agreements with certain key employees, including the actively employed named executive officers.  The change in control agreements are designed to promote stability and continuity of senior leadership.  The Compensation Committee believes that the interests of shareholders will be best served if the interests of management are aligned with them.  The Compensation Committee further believes that providing change in control benefits should eliminate, or at least reduce, the reluctance of management to pursue potential change in control transactions that may be in the best interests of shareholders.  The Company also provided certain benefits to Messrs. Duca and Rietheimer in connection with their early retirement. These arrangements are described in detail under “Executive Compensation Tables – Potential Payments Upon Termination or Change in Control” below.

Tax and Accounting Considerations

Deduction Limitation. Generally, Section 162(m) of the Internal Revenue Code prevents a publicly held company from receiving a federal income tax deduction for compensation paid to the chief executive officer and the next three most highly compensated officers (other than the chief financial officer) in excess of $1 million for any year, unless that compensation is performance-based. The Company was not subject to Section 162(m) of the Internal Revenue Code during 2016 and accordingly our executive compensation programs were not designed with the goal of qualifying as performance-based compensation under the regulation.  If the Company becomes subject to Section 162(m) of the Internal Revenue Code, then, to the extent practicable, the Company intends to preserve deductibility but may choose to provide compensation that is not deductible if necessary to attract, retain and reward high-performing executives.

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Taxation of “Parachute” Payments.Sections 280G and 4999 of the Internal Revenue Code provide that certain individuals who hold significant equity interests in the Company and certain executive officers and other service providers may be subject to significant additional taxes if they receive payments or benefits in connection with a change in control of the Company that exceed certain prescribed limits, and that we (or our successor) may forfeit a deduction on the amounts subject to this additional tax. We did not provide any executive officer, including any of the named executive officers, with a “gross-up” or other reimbursement payment for any tax liability that the executive officer might owe as a result of the application of Sections 280G or 4999 of the Internal Revenue Code, and we have not agreed, and are not otherwise obligated, to provide any executive officer with such a “gross-up” or other reimbursement.

Accounting for Stock-Based Compensation.  The Company follows Financial Accounting Standards Board Accounting Standards Codification Topic 718, or ASC 718, for our stock-based compensation awards. ASC 718 requires companies to measure the compensation expense for all share-based payment awards made to employees based on the grant date fair value of these awards. This calculation is performed for accounting purposes and reported in the compensation tables below, even though our executive officers may never realize any value from their awards.

Executive Compensation Tables:

The following tables, narratives and footnotes provide compensation information for our named executive officers during 2016:

2016 SUMMARY COMPENSATION TABLE

Name and Principal Position	Year	Salary		Bonus (5)		Stock Awards (6)		Option Awards		Non-Equity Incentive Plan Compensation (7)		Change in Pension Value and Nonqualified Deferred Compensation Earnings (8)		All Other Compensation (9)		Total
(a)	(b)	(c)		(d)		(e)		(f)		(g)		(h)		(i)		(j)
Denis K. Sheahan, CEO	2016	$	465,000	$	2,500	$	162,748	$	—	$	375,000	$	7,686	$	101,396	$	1,114,330
Michael F. Carotenuto, CFO(1)	2016	$	29,856	$	299	$	—	$	—	$	—	$	—	$	—	$	30,155
Lynne M. Burrow, EVP, CIO	2016	$	272,650	$	2,500	$	68,172	$	—	$	140,000	$	177,256	$	13,800	$	674,378
Michael A. Duca, Former Head of WM(2)	2016	$	363,363	$	2,500	$	90,850	$	—	$	220,000	$	407,381	$	153,576	$	1,237,670
Martin B. Millane, Jr., EVP CLO(3)	2016	$	264,753	$	2,500	$	62,560	$	—	$	135,435	$	69,583	$	48,210	$	583,041
Albert R. Rietheimer, Former CFO(4)	2016	$	268,550	$	2,500	$	67,160	$	—	$	120,000	$	102,318	$	41,232	$	601,760

(1) Michael F. Carotenuto joined the Company on November 14, 2016.  Mr. Carotenuto’s annual salary is $225,000. Mr. Carotenuto was not eligible for an award under the 2016 Incentive Plan or the 2016 LTI.

(2) Mr. Duca left the Company on February 28, 2017.

(3) Amounts listed in columns (c) and (g) include amounts deferred at Mr. Millane’s election under the EDCP. The EDCP is described in detail above in our “Compensation Discussion and Analysis” and additional information is available below under “Nonqualified Deferred Compensation.”

(4) Mr. Rietheimer left the Company on January 10, 2017.

(5) Amount listed in column (d) reflects a discretionary cash bonus paid to the named executive officer in 2016.

(6) Assumptions used in the calculation of these amounts are included in Note 14 – Stock Option and Director Stock Plans to our fiscal year 2016 consolidated financial statements, which are included in this Form 10. Amounts listed in column (e) are not an actual dollar amounts received by our named executive officers in 2016, but instead represent the aggregate grant date fair value of the PRSUs granted pursuant to the 2016 LTI calculated in accordance with ASC 718, assuming the probable outcome of the 50th percentile.  The maximum value of these awards assuming performance at the highest level for Messrs. Sheahan, Duca, Rietheimer, Millane and Ms. Burrow is $325,496, $181,700, $134,320, $125,120, and $136,344, respectively.

(7) Amounts listed in column (g) represent the cash payments which were approved for performance under the 2016 Incentive Plan. The 2016 Incentive Plan is described in detail above in our “Compensation Discussion and Analysis.”

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(8) Amounts listed in column (h) represent the aggregate change in the actuarial present value of the named executive officer’s accumulated benefits under the DB Plan and under the DB SERPs. The DB Plan and DB SERPs are described in detail above in our “Compensation Discussion and Analysis” and below under “Pension Benefits.”

(9) The following table shows the components of column (i) for 2016:

	Dividends on Unvested Restricted Stock Awards(1)		Restricted Stock Award Acceleration(2)		401(k) Plan Company Contributions(3)		ESOP Company Contributions(4)		Company Contributions to DC SERP(5)		Personal Expense Reimbursements(6)		Total
Denis K. Sheahan	$	13,111	$	—	$	7,950	$	4,514	$	—	$	75,821	$	101,396
Michael F. Carotenuto	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Lynne M. Burrow	$	3,151	$	—	$	6,135	$	4,514	$	—	$	—	$	13,800
Michael A. Duca	$	4,506	$	136,606	$	7,950	$	4,514	$	—	$	—	$	153,576
Martin B. Millane, Jr.	$	2,700	$	—	$	5,879	$	4,514	$	35,117	$	—	$	48,210
Albert R. Rietheimer	$	2,653	$	28,023	$	6,042	$	4,514	$	—	$	—	$	41,232

(1) With respect to restricted stock awards, named executive officers are entitled to all dividends paid on such awards during the applicable restricted period.

(2) Amounts reflect the fair value of the accelerated portion of each named executive officer’s restricted stock awards.  In 2016, the Company accelerated certain outstanding, unvested restricted stock awards held by Messrs. Duca and Rietheimer in connection with their departures in early 2017. For additional information, please see “Potential Payments Upon Termination or Change in Control” below.

(3) Amounts reflect the Company’s matching contributions to the accounts of the named executive officers under the 401(k) Plan. Pursuant to the terms of the 401(k) Plan, the Company matches employee contributions up to 100% of the first 3% of each participant’s salary. The 401(k) Plan is described in detail above in our “Compensation Discussion and Analysis.”

(4) Amounts reflect Company contributions to the accounts of the named executive officers. The ESOP is described in detail above in our “Compensation Discussion and Analysis.”

(5) Mr. Millane’s DC SERP, is described in detail below under “Nonqualified Deferred Compensation.”

(6) The Company reimburses Mr. Sheahan in an amount of up to $85,000 per year for expenses incurred in connection with maintaining housing near our Harvard Square office, as a car allowance or for country club dues, plus the income taxes resulting from such reimbursements.  In 2016, the Company reimbursed Mr. Sheahan for housing and car expenses in the amount of $44,181 and for the income taxes resulting from such reimbursements in the amount of $31,640.  The Company did not reimburse Mr. Sheahan for any country club dues in 2016.

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2016 GRANTS OF PLAN-BASED AWARDS

			Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1)						Estimated Future Payout Under Equity Incentives Plan Awards (2)						All Other Stock Awards: Number of Shares of Stock or Units		All Other Option Awards: Number of Securities Underlying Options		Exercise or Base Price of Option Awards		Grant Date Fair Value of Equity Based Awards (3)
Name	Grant Date		Threshold		Target		Maximum		Threshold (#)		Target (#)		Maximum (#)		(#)		(#)		($/SH)
(a)	(b)		(c)		(d)		(e)		(f)		(g)		(h)		(i)		(j)		(k)		(l)
Denis K. Sheahan	2/22/2016		$	139,500	$	279,000	$	418,500
	2/9/2016									885		3,538		7,076		—		—		—	$	162,748
Michael F. Carotenuto		—	$	—	$	—	$	—		—		—		—		—		—		—	$	—
Lynne M. Burrow	2/22/2016		$	54,530	$	109,060	$	163,590
	2/9/2016									371		1,482		2,964		—		—		—	$	68,172
Michael A. Duca	2/22/2016		$	90,841	$	181,682	$	272,522
	2/9/2016									494		1,975		3,950		—		—		—	$	90,850
Martin B. Millane, Jr.	2/22/2016		$	48,155	$	96,310	$	144,464
	2/9/2016									340		1,360		2,720		—		—		—	$	62,560
Albert R. Rietheimer	2/22/2016		$	46,996	$	93,993	$	140,989
	2/9/2016									365		1,460		2,920		—		—		—	$	67,160

(1) Reflects the potential incentive award payout that each named executive officer would receive based on achievement at threshold, target, and maximum performance levels for the incentive awards granted under the 2016 Incentive Plan.  Payouts under the 2016 Incentive Plan are based upon achievement of both Bank and individual goals.  Threshold payout assumes Bank performance at 80% of target levels (resulting in a 50% payout on the Bank performance component) and individual performance at 50%.  Target payout assumes Bank performance at 100% of target levels (resulting in a 100% payout on the Bank performance component) and individual performance at 100%.  Maximum payout assumes Bank performance at 120% of target levels (resulting in a 150% payout on the Bank performance component) and individual performance at 150%.  Actual awards are reflected in the Summary Compensation Table.  The grant date represents the date that the awards were approved by the Board for the 2016 awards. The 2016 Incentive Plan is described in detail above in our “Compensation Discussion and Analysis.”

(2) Reflects the number of shares of our common stock that each named executive officer would receive based on achievement at threshold, target, and maximum performance levels for the PRSUs granted under the 2016 LTI.  Vesting of the PRSUs based upon the Bank’s average three-year performance relative to the Commercial Bank Peer Group for average ROA and diluted EPS growth.  Threshold vesting assumes Bank performance at the 25th percentile of the Commercial Bank Peer Group performance (resulting in a 25% of the target number of shares vesting).  Target vesting assumes Bank performance at the 50th percentile of the Commercial Bank Peer Group performance (resulting in a 100% of the target number of shares vesting).  Maximum vesting assumes Bank performance at the 90th percentile of the Commercial Bank Peer Group performance (resulting in a 200% of the target number of shares vesting).  The PRSUs are described in detail above in our “Compensation Discussion and Analysis.”

(3) Amounts are not an actual dollar amount received by our named executive officers in 2016, but instead represent the aggregate grant date fair value of PRSUs calculated in accordance with ASC 718, assuming the probable outcome of the 50th percentile.

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2016 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

The table set forth below contains individual equity awards that were outstanding as of December 31, 2016, for the named executive officers, with market values determined by multiplying the number of shares of stock or units, as applicable, by $62.29, the last reported sales price of the Company’s common stock on the OTC on December 30, 2016, the last trading day of the year:

	Option Awards										Stock Awards
Name (a)	Number of Securities Underlying Unexercised Options Exercisable (b)		Number of Securities Underlying Unexercised Options Unexercisable (c)		Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (d)		Option Exercise Price ($/SH) (e)		Option Expiration Date (f)		Number of Shares or Units of Stock That Have Not Vested (g)			Market Value of Shares or Units of Stock That Have Not Vested (h)		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (i)			Equity Incentive Plan Awards:  Market or Payout Value or Unearned Shares, Units or Other Rights That Have Not Vested (j)
Denis K. Sheahan		—		—		—		—		—		6,334	(1)	$	394,545		—			—
																	7,076	(5)	$	440,764
Michael F. Carotenuto		—		—		—		—		—		—			—		—			—
Lynne M. Burrow		5,300		—		—	$	29.21	1/16/2018			192	(2)	$	11,960		—			—
												591	(3)	$	36,813		—			—
												744	(4)	$	46,344		—			—
																	2,964	(5)	$	184,628
																	465	(6)	$	28,965
																	493	(7)	$	30,709
Michael A. Duca		7,000		—		—	$	32.87	2/19/2017			—			—		—			—
		7,600		—		—	$	29.21	1/16/2018			—			—		—			—
																	3,950	(5)	$	246,046
																	707	(6)	$	44,039
																	700	(7)	$	43,603
Martin B. Millane, Jr.		1,450		—		—	$	32.87	2/19/2017			—			—		—			—
		3,000		—		—	$	29.21	1/16/2018			—			—		—			—
												112	(2)	$	6,976		—			—
												473	(3)	$	29,463		—			—
												744	(4)	$	46,344		—			—
																	2,720	(5)	$	169,429
																	465	(6)	$	28,965
																	394	(7)	$	24,542
Albert R. Rietheimer		1,750		—		—	$	32.87	2/19/2017			—			—		—			—
		977		—		—	$	29.21	1/16/2018			—			—		—			—
												300	(3)	$	18,687		—			—
												537	(4)	$	33,450		—			—
																	2,920	(5)	$	181,887
																	448	(6)	$	27,906
																	375	(7)	$	23,359

(1) This restricted stock award was originally granted on April 1, 2015.  These remaining unvested shares will vest evenly on each of April 1, 2017 and 2018.

(2) This restricted stock award was originally granted on April 18, 2012.  These remaining unvested shares will vest on April 28, 2017.

(3) This restricted stock award was originally granted on April 28, 2014.  These remaining unvested shares will vest evenly on each of April 28, 2017, 2018, and 2019.

(4) This restricted stock award was originally granted on April 27, 2015.  These remaining unvested shares will vest evenly on each of April 27, 2017, 2018, 2019, and 2020.

(5) This PRSU award will vest based upon the Bank’s average three-year performance relative to the Commercial Bank Peer Group for ROA and diluted EPS growth for the period ending December 31, 2018.  Any shares earned will vest upon Compensation

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Committee certification of performance achievement following completion of the performance period.  Amounts reflect vesting at maximum (that is, 200% of the target number of shares subject to the PRSU award), but the Company estimates relative performance at the respective percentile rankings of 71.0 and 50.0, which would result in a 126.3% of the target number of shares vesting.

(6) This PRSU award will vest based upon the Bank’s average three-year performance relative to the Commercial Bank Peer Group for ROA and diluted EPS growth for the period ending December 31, 2017.  The Bank’s threshold performance for both measures must be at least at the 51^st percentile for this award to vest.  Any shares earned will vest upon Compensation Committee certification of performance achievement following completion of the performance period.  Amounts reflect vesting at threshold (that is, 50% of the target number of shares subject to the PRSU award), but the Company estimates relative performance at the respective percentile rankings of 69.0 and 49.6, which would result in no award.

(7) This PRSU award will vest based upon the Bank’s average three-year performance relative to the Commercial Bank Peer Group for ROA and diluted EPS growth for the period ending December 31, 2016.  The Bank’s threshold performance for both measures must be at least at the 51^st percentile for this award to vest.  Any shares earned will vest upon Compensation Committee certification of performance achievement following completion of the performance period.  Amounts reflect vesting at threshold (that is, 50% of the target number of shares subject to the PRSU award), but the Company estimates relative performance at the respective percentile rankings of 67.3 and 46.1, which would result in no award.

2016 OPTION EXERCISES AND STOCK VESTED

The following table sets forth information with respect to the aggregate number of options exercised and stock awards vesting during the last fiscal year and the value realized:

	Option Awards				Stock Awards
Name (a)	Number of Shares Acquired on Exercise (b)		Value Realized Upon Exercise (c)		Number of Shares Acquired on Vesting (b)		Value Realized on Vesting (e)
Denis K. Sheahan		—	$	—		3,167	$	146,885
Michael F. Carotenuto		—	$	—		—	$	—
Lynne M. Burrow		2,500	$	50,075		741	$	34,845
Michael A. Duca		5,000	$	94,700		3,202	$	183,759
Martin B. Millane, Jr.		—	$	—		553	$	26,021
Albert R. Rietheimer		3,340	$	66,708		1,048	$	55,777

Pension Benefits

The defined benefit supplemental executive retirement plan (“DB SERP”) for Mr. Sheahan provides for an annual benefit generally payable in equal monthly installments commencing on the first day of the month following Mr. Sheahan’s termination of employment on or after attaining age 65 and continuing for the greater of Mr. Sheahan’s lifetime or 20 years, subject Mr. Sheahan’s execution and delivery of an effective release of claims and compliance with the non-competition covenants in his DB SERP.  Mr. Sheahan’s annual benefit is an amount equal to his final average compensation (generally, an amount equal to the highest three consecutive years of his annual base salary and cash bonus) multiplied by two percent for every year from the date that he was hired to the date of his termination of employment (not to exceed 60%), less certain amounts payable under the U.S. Social Security Act. In general, should Mr. Sheahan voluntarily terminate employment prior to age 65, the benefit is prorated based on his years of service through his termination date.

The DB SERPs for Ms. Burrow, Mr. Duca and Mr. Rietheimer are generally the same as Mr. Sheahan’s DB SERP, except the annual benefit continues for the greater of the executive’s lifetime or 15 years and does not require a release of claims in order for the executive to receive distributions.

The Company also maintains the DB Plan covering substantially all employees hired before May 2, 2011.  The plan was frozen to new entrants following that date.  In general, participants in the DB Plan who retire upon attaining the plan’s normal retirement age of 65 are entitled to a monthly payment equal to one-twelfth of the product of (a) the sum of (i) 0.90% of the participant’s “final average compensation” (generally the participant’s average annual compensation during the five consecutive plan years in the last ten plan years of his or her employment with the Company affording the participant the highest average annual compensation), plus (ii) 0.55% of the participant’s average final compensation in excess of the average Social Security wage base for the 35-year period ending in the year in which the participant attains his or her Social Security retirement age multiplied by (b) the participant’s number of years of credited service (not in excess of 35 years). Participants who have reached age 55 and completed five years of credited service are

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generally eligible to retire and elect to receive an early retirement benefit equal to the actuarial equivalent of the monthly benefit described above. The following table provides details of the present value of the accumulated benefit and years of credited service for the named executive officers under the DB Plan and each DB SERP as of December 31, 2016. The accumulated benefit shown in the table has been calculated assuming each executive terminated employment as of December 31, 2016. The present value of the accumulated benefit was then calculated assuming the executive will start receiving his or her pension at age 65. The assumptions used for the DB Plan and DB SERPs are discussed in Note 13 – Pension and Retirement Plans to our fiscal year 2016 consolidated financial statements, which are included in this Form 10.

For additional information about the Company’s pension benefits, please refer our “Compensation Discussion and Analysis.”

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2016 PENSION BENEFITS

Name (a)	Plan (b)	Number of Years Credited Service (c)		Present Valueof Accumulated Benefit (d)		Payments During Last Fiscal Year (e)
Denis K. Sheahan (1)	DB Plan		0	$	—	$	—
	DB SERP		2	$	7,686	$	—
Michael F. Carotenuto (1)(2)	DB Plan		0	$	—	$	—
	DB SERP		0	$	—	$	—
Lynne M. Burrow	DB Plan		19	$	878,618	$	—
	DB SERP		18	$	518,489	$	—
Michael A. Duca	DB Plan		10	$	445,673	$	—
	DB SERP		10	$	642,381	$	—
Martin B. Millane, Jr. (2)	DB Plan		13	$	481,584	$	—
	DB SERP		0	$	—	$	—
Albert R. Rietheimer	DB Plan		11	$	407,494	$	—
	DB SERP		11	$	252,179	$	—

(1) Messrs. Sheahan and Carotenuto are not eligible for participation in the DB Plan as this plan was frozen to new entrants on May 2, 2011, and each individual joined the Company after that date.

(2) Messrs. Carotenuto and Millane do not participate in a DB SERP.

Nonqualified Deferred Compensation

Each plan year, under the terms of Mr. Millane’s defined contribution supplemental executive retirement plan (“DC SERP”), the Company must contribute an amount equal to 10% of Mr. Millane’s base salary and bonus to his EDCP account. Accordingly, Mr. Millane’s DC SERP is administered under the EDCP. Like other participants in the EDCP, Mr. Millane has the right to direct the investment of his account balance (including amounts contributed pursuant to his DC SERP) by choosing from among the available investment alternatives, and his account is credited with earnings or losses arising from investment performance.  Mr. Millane’s account balance will be paid out, subject to the terms of the EDCP, upon a separation from service, or upon death or disability, in a lump sum cash payment, unless he has elected to receive annual installment payments. Mr. Millane may also elect to receive an in-service distribution and distribution in the event of an unforeseeable emergency. For additional information about the Company’s nonqualified deferred compensation plans, please refer our “Compensation Discussion and Analysis.”

The following table provides details regarding the Company’s named executive officers’ participation in the Company’s various nonqualified deferred compensation plans as of December 31, 2016:

2016 Nonqualified Deferred Compensation

		Executive Contributions in Last FY		Company Contributions in Last FY		Aggregate Earnings in Last FY		Aggregate Withdrawals/		Aggregate Balance at Last FY
	Plan	(c)		(d)		(e)		Distributions		(g)
Name (a)	(b)	(1)		(1)		(2)		(f)		(2)
Denis K. Sheahan	EDCP		—		—		—		—		—
Michael F. Carotenuto	EDCP		—		—		—		—		—
Lynne M. Burrow	EDCP		—		—		—		—		—
Michael A. Duca	EDCP		—		—		—		—		—
Martin B. Millane, Jr.	DC SERP		—	$	35,117	$	677		—	$	35,794
	EDCP	$	37,536		—	$	1,869		—	$	39,405
Albert R. Rietheimer	EDCP		—		—		—		—		—

(1) Amounts reported in columns (c) and (d) have been reported as compensation in the Summary Compensation Table.

(2) Amounts reported in column (e) and (g) have not been reported as compensation in the Summary Compensation Table.

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Potential Payments Upon Termination or Change in Control

The following table shows the estimated benefits payable to our named executive officers in the event of the named executive officer’s termination of employment under various scenarios or upon a change in control of the Company. The amounts shown assume a termination of employment or change in control on December 31, 2016. The amounts shown do not include payments or benefits provided under insurance or other plans that are generally available to all salaried employees and do not account for potential reductions pursuant to the “best net” provisions described below under “Change in Control Agreements.”  The actual amounts to be paid can only be determined at the time of the named executive officer’s separation from the Company or upon the occurrence of a change in control.

Potential Payments Upon Termination or Change in Control (1)
Name and Benefit	Involuntary Termination (2)		Change in Control		Involuntary Termination and Change in Control		Disability		Death		Cause
Denis K. Sheahan
Severance Payment	—		—		$	2,216,250	—		—		—
Welfare Benefit Continuation (3)	—		—		—		—		—		—
DB SERP Enhancement (4)	—		—		$	816,998	$	7,915	$	621,950	—
Equity Award Vesting (5)	$	73,461	$	835,309	$	835,309	$	614,927	$	614,927	—
Total Amount	$	73,461	$	835,309	$	3,868,557	$	622,842	$	1,236,877	—
Michael F. Carotenuto
Severance Payment	—		—		$	225,000	—		—		—
Welfare Benefit Continuation (3)	—		—		—		—		—		—
Equity Award Vesting	—		—		—		—		—		—
Total Amount	—		—		$	225,000	—		—		—
Lynne M. Burrow
Severance Payment	—		—		$	395,883	—		—		—
Additional Severance Payment (6)	—		—		$	54,193	—		—		—
Equity Award Vesting (5)	$	130,705	$	458,579	$	458,579	$	306,654	$	306,654	—
DB SERP Enhancement (4)	—		—		$	58,711	$	7,817	—		—
Total Amount	$	130,705	$	458,579	$	967,366	$	314,471	$	306,654	—
Martin B. Millane, Jr.
Severance Payment (6)	—		—		$	353,118	—		—		—
Welfare Benefit Continuation (3)	—		—		—		—		—		—
Equity Award Vesting (5)	$	115,901	$	412,640	$	412,640	$	274,450	$	274,450	—
Prorated DC SERP (7)	$	35,117	$	35,117	$	35,117	$	35,117	$	35,117	—
Total Amount	$	151,018	$	447,757	$	800,875	$	309,567	$	309,567	—

(1) Mr. Rietheimer left the Company on January 10, 2017, and Mr. Duca left the Company on February 28, 2017.  As a result, they are not included in this table. Instead, the actual payments and/or benefits that Messrs. Rietheimer and Duca received from the Company in connection with their terminations of employment are summarized and quantified in the narrative section below.

(2) For purposes of this table, an “involuntary termination” means a termination of the named executive officer by the Company without cause (as defined in the applicable agreement) or, to the extent applicable, a resignation by the named executive officer for good reason (as defined in the applicable agreement).  The material terms of each of the applicable agreements are summarized in the narrative section below.

(3) Amount reflects that, under the terms of the change in control agreements, each named executive officer will bear the full cost of any welfare benefit continuation. The material terms and conditions of the named executive officer’s change in control agreements are summarized in the narrative section below.

(4) Amount equals the actuarial present value of the annual benefit enhancement under the terms of DB SERPs for Mr. Sheahan and Ms. Burrow beyond the amount payable in connection with a separation from service after he or she attains normal retirement age. The actuarial present value of each amount is calculated using a discount rate of 4.25%, which is the consistent discount rate used by the Company to calculate its unfunded retirement liability and in accordance with the requirements of ASC 715.  For the actuarial present value of amounts payable under the DB SERPs upon a separation from service after attaining normal retirement age, see the “Pension Benefits” table above.  The material terms and conditions of DB SERPs for Mr. Sheahan’s and Ms. Burrow are summarized in the narrative section below.

(5) For the “Involuntary Termination” column, amount equals the market value of a prorated portion of the named executive officer’s outstanding, unvested PRSU awards, based on the number of completed months during the applicable performance period and assuming target level of performance. For the “Change in Control” and “Involuntary Termination and Change in Control” columns, amounts equal the market value of the named executive officers outstanding, unvested equity awards, assuming the Compensation Committee exercised its discretion to vest all PRSU awards at the maximum number of units provided in the applicable award agreement. For the “Disability” and “Death” columns, amounts equal the market value of the named executive officer outstanding, unvested equity awards, with all PRSU awards vesting at target level of performance

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pursuant to the their terms. Market values were determined by multiplying the applicable number of shares of stock or units by $62.29, the last reported sales price of the Company’s common stock on the OTC on December 30, 2016, the last trading day of the year. The material terms and conditions the named executive officers’ equity awards are summarized in the narrative section below.

(6) Amount equals the actuarial present value of the additional severance amount payable under Ms. Burrow’s change in control agreement (summarized in the narrative section below). For purposes of calculating present value, the Company used an assumed interest rate of 4.25%, which is consistent discount rate used by the Company to calculate its unfunded retirement liability and  in accordance with the requirements of ASC 715.

(7) Due to the assumed date of termination of December 31, 2016, Mr. Millane would be entitled to the full amount of his annual DC SERP contribution for 2016.  This amount is also reported in the “Summary Compensation Table” and “Nonqualified Deferred Compensation” table above.

Equity Awards.Our named executive officers hold two types of unvested equity awards—restricted stock awards and PRSUs.  In the event the named executive officers experience a termination of employment or there is a change in control of the Company, the unvested equity awards would be vested or forfeited, as described below.

Upon a termination of employment for any reason other than death or “disability” (as defined in the applicable award agreement), all unvested restricted stock awards then-held by our named executive officers would be forfeited automatically. For PRSUs, upon a termination of employment for any reason other than death, disability or “cause” (each, as defined in the applicable award agreement), the target number of units would be prorated based the number of completed months in the applicable performance period and the named executive officers would remain eligible to earn this prorated award based on the Company’s actual performance through the end of the applicable performance period. Upon a termination of employment due to death or disability, our named executive officers would be entitled to (a) full vesting of their unvested restricted stock awards and (b) vesting at target level for their unvested PRSUs.

Upon a change in control, (a) all unvested restricted stock awards held by our named executive officers would fully vest and (b) PRSUs would be deemed vested with respect to such number of units (not greater than the maximum number provided for in the applicable award agreement) as is determined by the Compensation Committee in its discretion to be equitable under the circumstances. For the PRSUs granted in 2016, the maximum number units that may vest equals 200% of the target number of units provided for in the applicable award agreement.  For PRSUs granted prior to 2016, the maximum number of units that may vest equals 150% of the target number of units provided for in the applicable award agreement.

Change in Control Agreements.The Company has entered into change in control agreements with Messrs. Sheahan, Carotenuto, Millane, and Ms. Burrow.  Except as otherwise noted below, the change in control agreements contain substantially the same terms and conditions.  In the event of a change in control (as defined below) and a qualifying termination of employment (as described below), each of these named executive officers would be eligible for:  (1) a severance payment equal to a multiple of his or her average compensation over a period of years (generally the highest three consecutive years of annual base salary and bonus or, for Ms. Burrow, the average of the total annual compensation paid for income tax purposes for the five years preceding the change in control), as determined at the time of termination and (2) other than for Ms. Burrow, welfare benefit continuation (at the named executive officer’s cost) for a specified period following the named executive officer’s termination date (or, if shorter, until comparable benefits are received from another source), in each case as set forth in the applicable agreement.  The severance multiples and welfare benefit continuation period for each named executive officer are set forth in the following table:

	Severance Multiple	Welfare Benefit Continuation Period
Sheahan	3x	36 Months
Carotenuto, Millane and Burrow (1)	1x	12 Months

(1) Ms. Burrow’s change in control agreement does not provide for a welfare benefit continuation period.

Payments under the change in control agreements would be triggered in the event of a change in control of the Company or the Bank where, within 12 months (or, for Ms. Burrow, 24 months) after the change in control (1) the Company or the Bank terminates the named executive officer for reasons other than for “cause” or “disability” (each, as defined in the change in control agreements) or (2) the named executive officer resigns for “good reason” (as defined in the change in control agreements but generally including a material reduction in the nature or scope of the named executive officer’s responsibilities, authorities or duties, a material reduction in the named executive officer’s base salary or a relocation of the named executive officer’s principal place of business of more than 40 miles from the current principal executive office).  Benefits may also be payable in the circumstances described above in the event of a potential change in control, in which case the named executive officer must agree not to voluntarily terminate until the earlier of:  12

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months from the occurrence of the potential change in control, disability or retirement (each as defined in the Change in Control Agreement); the change in control; or a determination by the Board that a potential change in control no longer exists.

In addition to the severance payment described above, Ms. Burrow is entitled to a lump sum cash payment by the Company in an amount equal to the actuarial equivalent of the excess of (i) the retirement benefit to which she would have been entitled under the terms of the DB Plan and Profit Sharing Plan (without regard to any offsets for severance or certain adverse amendments made in connection with a change in control), determined as if she (a) were fully vested thereunder, (b) accumulated one additional year of service at her highest rate of earnings during the 12 months immediately preceding her termination date and (c) had been credited with a contribution to the Profit Sharing Plan at the highest annual rate of contribution by the Company during the three years preceding the year of her termination of employment over (ii) the retirement benefit to which she is entitled pursuant to the provisions of the DB Plan and Profit Sharing Plan. The Company is also required to pay all legal fees and expenses incurred by Ms. Burrow as a result of her termination of employment, including all fees and expenses incurred in contesting or disputing such termination or to enforce the terms of her change in control agreement.

In the event any payments or benefits provided under the change in control agreements, together with any other payments or benefits, would constitute “parachute payments” under Section 280G of the Internal Revenue Code and would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code, the change in control agreements provide for a “best net” approach that reduces the payments and benefits otherwise provided to the applicable named executive officer in connection with a change in control so that no portion of such payments or benefits would be subject to the excise tax if such reduction would result in the applicable named executive officer receiving a greater amount of payments and benefits on an after-tax basis.

A “change in control” (as defined in the change in control agreements) includes a change that would be required to be reported by the Company or the Bank under the Exchange Act and an acquisition of control as defined in the Bank Holding Company Act of 1956, as amended, or the Bank Control Act of 1978, as amended.  A “potential change in control” (as defined in the change in control agreements) would exist if the Company and/or the Bank enter into an agreement to consummate a transaction involving a change in control, any person (including the Company) publicly announces an intention to take or consider taking actions that would constitute a change in control, any person acquires a 20% or more of the voting power of the Company or the Board of the Company or the Bank adopt a resolution to the effect that a potential change in control has occurred.

The change in control agreements include a 12-month noncompetition covenant and, in certain circumstances, provide an opportunity for the Company and the Bank to remedy a good-reason-triggering event.  The change in control agreements also provide for a six-month delay in payments to a “specified employee” within the meaning of Section 409A of the Internal Revenue Code, if required.

Mr. Sheahan’s DB SERP.  Under the terms of Mr. Sheahan’s DB SERP, if Mr. Sheahan (a) becomes entitled to benefits under his change in control agreement or (b) experiences a termination of employment due to his death, the annual benefit under his DB SERP will be calculated and paid as described above under “Pension Benefits,” except that he will be deemed to have been employed for an additional three plan years (up to a maximum of 30 plan years) and the installment payments from the Company will begin the month following his termination of employment, regardless of his age, and continue for his lifetime (or, in the case of his death, for 20 years).  In addition, if Mr. Sheahan becomes entitled to benefits under his change in control agreement, the non-competition covenant of his DB SERP will terminate. If Mr. Sheahan experiences termination of employment due to his “disability” (as defined in his DB SERP) prior to his attainment of normal retirement age, the annual benefit under his DB SERP will be calculated and paid as described above under “Pension Benefits,” except that the installment payments from the Company will begin the month following his termination of employment due to disability.

Ms. Burrow’s DB SERP.  Under the terms of Ms. Burrow’s DB SERP, if Ms. Burrow becomes entitled to benefits under her change in control agreement, she will be entitled to an annual benefit equal to $39,318, regardless of her years of service or final average compensation at the time of such termination of employment, and the installment payments from the Company will begin the month following her attainment of normal retirement age and continue for the greater of her lifetime or 15 years. If Ms. Burrow experiences a “disability” (as defined in her DB SERP) prior to her attainment of normal retirement age, the annual benefit under her DB SERP will be calculated and paid as described above under “Pension Benefits,” except that the (a) the amount of the annual benefit will equal the amount Ms. Burrow would have been entitled to as of the end of the plan year preceding the year of her disability and (b) the installment payments from the Company will begin the month following the determination of her disability.

Mr. Millane’s DC SERP.  With respect to the year of Mr. Millane’s termination of employment for any reason other than “cause” (as defined in his DC SERP), Mr. Millane is entitled to receive a prorated portion of the annual benefit under his DC SERP based on the number of completed months during the applicable plan year prior to his termination date, subject to his execution and delivery of an effective release of claims in favor of the Company and his continued compliance with the non-competition covenants of his DC SERP.

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Partial Acceleration of Mr. Rietheimer’s Restricted Stock Awards.  Prior to his early retirement on January 10, 2017, the Company provided partial acceleration of Mr. Rietheimer’s outstanding, unvested restricted stock awards ($28,023 aggregate fair value as of the date of acceleration) that would have vested in early 2017.  Other than accelerated vesting of a portion of his restricted stock awards, Mr. Rietheimer did not receive any additional payments or enhanced benefits in connection with his early retirement.

Early Retirement Arrangements with Mr. Duca.  In connection with his early retirement on February 28, 2017, the Company provided the following payments and benefits to Mr. Duca: (a) a lump sum cash payment in the amount of $196,948, for amounts estimated to be received through his assumed retirement date of November 1^st 2017 (he will achieve age 65 in late October 2017) that is payable in the first payroll processed following the six-month anniversary of his early retirement; (b) acceleration of his outstanding, unvested restricted stock awards ($136,606 aggregate fair value as of the date of acceleration); (c) 100% of the cost of continued health and dental coverage for Mr. Duca and his spouse until he and his spouse become Medicare eligible (estimated value of $16,400 based on their current elections and ages); and (d) retirement benefits under his DB SERP that will commence as of November 1, 2017, as if he had retired upon attaining age 65 (estimated monthly value of $3,762 for Mr. Duca’s life, with 15 years guaranteed). As a condition to the early retirement payment and benefits provided to Mr. Duca, he agreed to provide a release of claims against the Company and remains subject to the non-competition provisions set forth in his DB SERP.

Director Compensation

Non-employee Directors of the Company and Cambridge Trust receive both cash and equity compensation as described below.  Board compensation is reviewed by comparison to peer institutions using publicly available information.  Director compensation is designed to attract and retain persons who are well qualified to serve as directors of the Company and Cambridge Trust.

Non-employee Directors of the Company and Cambridge Trust receive cash compensation in the form of fees for attending Board and Committee meetings.  Directors receive additional compensation for service as Chair of a Committee.

Annual fees for the non-employee directors serving as Lead Director and Committee Chairs of the Company and of Cambridge Trust during 2016 were paid in cash and were as follows:

Position	Annual Fee
Lead Director	$	10,000
Chairman Audit Committee	$	8,500
Chairman Compensation Committee	$	7,500
Chairman Governance Committee	$	7,500

Board meeting fees during 2016 were $800 per meeting.  Committee meeting fees during 2016 were $600 per meeting, with the exception of Audit Committee meeting fees, which were $700 per meeting. Committees for which directors receive meeting fees other than the Audit, Governance and Compensation are the Trust Committee, Pension Committee, CRA Committee, Executive Committee and ALCO Committee.

In December of 2016, based upon an analysis of data relating to the Company’s peer group identified under the heading “Use of Peer Groups and Survey Information” in the Compensation Discussion and Analysis (referred to as the Company’s “peer group”), the Board voted to increase the Board meeting fees to $900 per meeting effective with the first Board meeting in 2017.  Committee meeting fees are unchanged.  Annual fees for non-employee directors serving as Lead Director and/or Committee Chairs of the Company are not changed from the 2016 amounts.

Directors are also paid an annual retainer in the amount of $20,000 as a fully vested Common Stock award to align their interests with those of the Shareholders.   In 2016, such awards were for approximately 429 shares of Common Stock, determined under a market-based formula.  In December of 2016, consistent with the aforementioned peer group study, the Board voted to add a $5,000 annual cash retainer beginning in 2017.

No annual retainer or meeting fees are paid to any Director who is an employee of the Company or Cambridge Trust.

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The following table summarizes the compensation paid to our directors for the year ended December 31, 2016, other than Denis K. Sheahan, whose compensation is fully reflected in the Summary Compensation Table above:

2016 DIRECTOR COMPENSATION
Name (a)	Fees Earned or Paid In Cash (b)(2)		Stock Awards (c)(3)		Option Awards (d)		Non-Equity Incentive Plan Compensation (e)		Change in Pension Value and Nonqualified Deferred Compensation Earnings (f)		All Other Compensation (g)(4)		Total (h)
Donald T. Briggs	$	11,559	$	20,000		—		—		—	$	592	$	32,151
Jeanette G. Clough	$	10,809	$	20,000		—		—		—	$	592	$	31,401
Sarah G. Green	$	26,109	$	20,000		—		—		—	$	592	$	46,701
Edward F. Jankowski	$	11,209	$	20,000		—		—		—	$	592	$	31,801
Hambleton Lord	$	29,509	$	20,000		—		—		—	$	592	$	50,101
Leon A. Palandjian	$	31,109	$	20,000		—		—		—	$	592	$	51,701
Robert S. Peterkin(1)	$	18,109	$	20,000		—		—		—	$	592	$	38,701
Cathleen A. Schmidt	$	9,809	$	20,000		—		—		—	$	592	$	30,401
R. Gregg Stone	$	20,809	$	20,000		—		—		—	$	592	$	41,401
Anne M. Thomas	$	12,309	$	20,000		—		—		—	$	592	$	32,901
David C. Warner	$	20,009	$	20,000		—		—		—	$	592	$	40,601
Linda Whitlock	$	27,409	$	20,000		—		—		—	$	592	$	48,001
Susan R. Windham-Bannister	$	7,259	$	20,000		—		—		—	$	592	$	27,851

(1) Mr. Peterkin retired from the Board effective April 24, 2017.

(2) This column reflects the total fees earned or paid in cash for directors.

(3) The amount in this column represents the Director’s annual retainer paid in the form of a fully vested Common Stock.

(4) This amount represents the dividends paid on the fully vested Common Stock.

Compensation Committee Interlocks and Insider Participation

In 2016, the Compensation Committee was comprised entirely of six independent directors, Messrs. Lord (Chair), Palandjian, Peterkin, Stone and Warner and Ms. Whitlock. No member of the Compensation Committee is a current, or during 2016 was a former, executive officer or employee of the Company or any of its subsidiaries. During 2016, no member of the Compensation Committee had a relationship that must be described under the SEC rules relating to disclosure of related person transactions. In 2016, none of our executive officers served on the board of directors or compensation committee of any entity that had one or more of its executive officers serving on the Board or the Compensation Committee of the Company.

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ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Certain directors and officers of the Company and Bank and members of their immediate family are at present, as in the past, customers of the Bank and have transactions with the Bank in the ordinary course of business. In addition, certain of the directors are at present, as in the past, also directors, officers or shareholders of corporations or members of partnerships that are customers of the Bank and have transactions with the Bank in the ordinary course of business. Such transactions with directors and officers of the Company and the Bank and their families and with such corporations and partnerships were made in the ordinary course of business, were made on substantially the same terms, including interest rates and collateral on loans, as those prevailing at the time for comparable transactions with other persons, and did not involve more than the normal risk of collectability or present other features unfavorable to the Bank. The directors annually approve amounts to be paid to related parties for services rendered. The Company reviews related party transactions periodically.  During 2016, one of the Company’s directors, Mr. Warner, purchased research subscription services from the Company’s Wealth Management division for an aggregate value of approximately $150,000.  Such purchase was approved by the Board pursuant to the policies and procedures described herein.

NASDAQ rules, and our governance principles, require that at least a majority of our Board be composed of “independent” directors. All of our directors other than Denis K. Sheahan are “independent” within the meaning of both the NASDAQ rules and our own corporate governance principles.

Pursuant to regulatory requirements and other applicable law, the Boards of the Company and/or Cambridge Trust must approve certain extensions of credit, contracts, and other transactions between the Company and/or Cambridge Trust and any Director or executive officer or their immediate family members and affiliates.  The Company requires that any transaction between the Company and/or Cambridge Trust and any Director or executive officer, or any of their immediate family members or affiliates, must be made on terms comparable to those that would apply to a similar transaction with an unrelated, similarly situated third-party and must be approved in advance.  The Governance Committee, as noted in its charter, is responsible for oversight and implementation of the procedures for review of related party transactions, which are most commonly applied to extensions of credit by Cambridge Trust.

Director Independence

Rule 5605 of the NASDAQ Listing Rules requires that independent directors compose a majority of a listed company’s board of directors. In addition, the NASDAQ Listing Rules require that, subject to specified exceptions, each member of a listed company’s audit, compensation, and corporate governance committees be independent and that audit committee members also satisfy independence criteria set forth in Rule 10A-3 under the Exchange Act. Under Rule 5605(a)(2) of the NASDAQ Listing Rules, a director will only qualify as an “independent director” if, in the opinion of our Board, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In order to be considered independent for purposes of Rule 10A-3 under the Exchange Act, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of the audit committee, the board of directors or any other board committee: (i) accept, directly or indirectly, any consulting, advisory or other compensatory fee from the listed company or any of its subsidiaries; or (ii) be an affiliated person of the listed company or any of its subsidiaries. In addition to satisfying general independence requirements under the NASDAQ Listing Rules, members of a compensation committee must also satisfy independence requirements set forth in Rule 10C-1 under the Exchange Act and NASDAQ Listing Rule 5605(d)(2). Pursuant to Rule 10C-1 under the Exchange Act and NASDAQ Listing Rule 5605(d)(2), in affirmatively determining the independence of a member of a compensation committee of a listed company, the board of directors must consider all factors specifically relevant to determining whether that member has a relationship with the company which is material to that member’s ability to be independent from management in connection with the duties of a compensation committee member, including: (a) the source of compensation of such member, including any consulting, advisory or other compensatory fee paid by the company to such member; and (b) whether such member is affiliated with the company, a subsidiary of the company or an affiliate of a subsidiary of the company.

The Board consults with our legal counsel to ensure that their determinations are consistent with relevant securities and other laws and regulations regarding the definition of “independent,” including those set forth in pertinent NASDAQ Listing Rules, as in effect from time to time.

Consistent with these considerations, the Board has affirmatively determined that all of its directors, satisfy general independence requirements under the NASDAQ Listing Rules, other than Mr. Sheahan. In making this determination, the Board found that none of the directors, other than Mr. Sheahan, had a material or other disqualifying relationship with us that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director, and that each director, other than Mr. Sheahan, is “independent” as that term is defined under Rule 5605(a)(2) of the NASDAQ Listing Rules. The Board determined that Mr. Sheahan, our President and Chief Executive Officer, is not an independent director by virtue of his current employment with us. The Board also determined that each member of the Audit, Corporate Governance and Compensation Committees satisfies the independence standards for such committees established by the SEC and the NASDAQ Listing Rules, as applicable. 

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ITEM 8. LEGAL PROCEEDINGS

The Company and its subsidiaries are parties to various claims and lawsuits arising in the course of their normal business activities. Although the ultimate outcome of these suits cannot be ascertained at this time, it is the opinion of management that none of these matters, even if it resolved adversely to the Company, will have a material adverse effect on the Company’s consolidated financial position. 

ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT’S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

Market Information; Holders of Record

Our common stock has been quoted on the OTC Markets Group under the symbol “CATC” and upon effectiveness of this Registration Statement, our common stock will be traded on NASDAQ. The range of high and low bid information for each fiscal quarter during the two most recent fiscal years are set forth below:

	High		Low
Year ended December 31, 2017
First Quarter	$	67.00	$	61.50
Second Quarter	$	70.00	$	64.90
Year ended December 31, 2016
First Quarter	$	47.65	$	45.30
Second Quarter	$	49.90	$	46.15
Third Quarter	$	50.45	$	46.45
Fourth Quarter	$	62.90	$	50.05
Year ended December 31, 2015
First Quarter	$	46.50	$	44.10
Second Quarter	$	48.00	$	43.00
Third Quarter	$	50.00	$	45.25
Fourth Quarter	$	52.40	$	45.80

As of July 31, 2017, the Company’s common stock was quoted at $65.45, there were 4,080,910 shares of common stock issued and outstanding, 313 shareholders of record and 6,177 shares subject to outstanding options or warrants to purchase, or securities convertible into, the Company’s common stock. No shares of the Company’s common stock can be sold pursuant to Rule 144 under the Securities Act and the Company has not agreed to register any such shares under the Securities Act for sale by security holders.

Dividends

The Company has historically paid dividends.  The continued payment of dividends depends upon our debt and equity structure, earnings, financial condition, need for capital in connection with possible future acquisitions and other factors, including economic conditions, regulatory restrictions and tax considerations. The Company cannot guarantee the payment of dividends or that, if paid, that dividends will not be reduced or eliminated in the future.

The only funds available for the payment of dividends on our capital stock will be cash and cash equivalents held by us, dividends paid to us by the Bank, and borrowings. The Bank will be prohibited from paying cash dividends to us to the extent that any such payment would reduce the Bank’s capital below required capital levels or would impair the liquidation account to be established for the benefit of the Bank’s eligible account holders and supplemental eligible account holders at the time of the reorganization and stock offering.

71

Securities Authorized for Issuance under Equity Compensation Plans

Since 1993 the Company has maintained the Cambridge Bancorp Amended 1993 Stock Option Plan and the 1993 Director Stock Plan under which options to acquire our common stock or bonus stock are granted to employees, directors and officers, or other individuals who contributed to our success that were not employees. On April 24, 2017, shareholders of the Company approved the Cambridge Bancorp 2017 Equity and Cash Incentive Plan. The following table sets forth the aggregate information of our equity compensation plans in effect as of December 31, 2016:

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
	(a)		(b)		(c)
Equity compensation plans approved    by shareholders		45,612	$	30.23		296,943
Equity compensation plans not approved    by shareholders		—		—		—
Total		45,612	$	30.23		296,943

ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES

The Company issues from time to time, (i) shares of common stock under the Company’s employee stock ownership plan (“ESOP”) to our officers and employees, (ii) restricted stock units (RSU)⁽¹⁾ that are settled in shares of common stock under our 1993 Stock Option Plan and 2017 Equity and Cash Incentive Plan to our officers and employees, (iii) restricted stock awards (RSA) in the form of fully vested shares under our 1993 Stock Option Plan and 2017 Equity and Cash Incentive Plan to our officers and employees and (iv) shares of our common stock to our directors as part of their annual retainer.  The following table shows the securities issued by the Company in the foregoing four categories for the years 2014, 2015, 2016 and 2017:

	2014		2015		2016		2017 through July 30, 2017 (1)
Common Stock under the ESOP		10,480		9,942		10,308		8,795
RSUs under the 1993 Plan and 2017 Equity and Cash Incentive Plan(2)		9,118		6,976		14,305		8,182
RSAs under the 1993 Plan and 2017 Equity and Cash Incentive Plan(2)		19,368		26,376		16,346		15,182
Common Stock under the Director Stock Plan and 2017 Equity and Cash Incentive Plan(2)		4,392		5,837		5,577		3,672

(1) RSUs do not vest until the three year performance period is complete.  Holders of RSUs do not have any voting rights until such RSUs are fully vested.

(2) Issuances made in 2014, 2015 and 2016 were only made pursuant to the 1993 Plan. Issuances made in 2017 were only made pursuant to the 2017 Equity and Cash Incentive Plan.

Shares granted under the ESOP were acquired by the ESOP for cash from the Company pursuant to transactions consummated on April 16, 2014 (10,480 shares), on April 17, 2015 (9,942 shares), May 2, 2016 (10,308 shares) and March 27, 2017 (8,795 shares).  All transactions disclosed in this Item 10 were exempt from registration in reliance on Rule 701.

ITEM 11. DESCRIPTION OF SECURITIES TO BE REGISTERED

The Company is incorporated in the Commonwealth of Massachusetts. The rights of the Company’s shareholders are generally covered by Massachusetts law and the Company’s articles of organization and bylaws (the “Bylaws”). The terms of the Company’s capital stock are therefore subject to Massachusetts law, including the Massachusetts Business Corporation Act, and the common and constitutional law of Massachusetts. The Company’s articles of organization and Bylaws will be filed with the SEC as Exhibit 3.1 and Exhibit 3.2 to this Registration Statement.

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The Company’s authorized capital stock consists of 10,000,000 shares of common stock, par value $1.00 per share. As of July 31, 2017, the Company had 4,080,910 outstanding shares of common stock. All of the shares outstanding at that date were fully paid and nonassessable.

Common Stock

The holders of the common stock:

(a) have equal ratable rights to dividends from funds legally available therefore, when, as, and if declared by the board of directors of the Company;

(b) are entitled to share ratably in all of the assets of the Company available for distribution upon winding up of the affairs of the Company;

(c) are entitled to one non-cumulative vote per share on all matters on which shareholders may vote at all meetings of shareholders;

(d) must approve any amendment, alteration or repeal of the Bylaws that affects the voting power of shareholders, other than action with respect to the applicable law regarding control share acquisitions, and the Bylaws may otherwise be amended, altered or repealed upon a vote of a majority of shares of common stock outstanding and entitled to vote.

These securities do not have any of the following rights:

(a) preemptive rights to purchase in new issues of shares;

(b) preference as to dividends or interest;

(d) preference upon liquidation; or

(d) any other special rights or preferences. In addition, the shares are not convertible into any other security.

There are no restrictions on dividends under any loan or other financing arrangements or otherwise.

The Company’s authorized but unissued common stock currently consists of 5,919,090 shares. One effect of the existence of authorized but unissued capital stock may be to enable the board of directors  to render more difficult or to discourage an attempt to obtain control of the Company by means of a merger, tender offer, proxy contest, or otherwise, and thereby to protect the continuity of our management. If, in the due exercise of its fiduciary obligations, for example, the board of directors were to determine that a takeover proposal was not in our best interests, such shares could be issued by the board of directors without shareholder approval in one or more private placements or other transactions that might prevent, or render more difficult or costly, completion of the takeover transaction by diluting the voting or other rights of the proposed acquirer or insurgent shareholder or shareholder group, by creating a substantial voting block of common stock in institutional or other hands that might undertake to support the position of the incumbent board of directors, by effecting an acquisition that might complicate or preclude the takeover, or otherwise.

Board Classification; Non-Cumulative Voting

The Board is divided into three classes as nearly equal in number as possible.  One class of directors is elected annually for a term of three years.  The holders of shares of common stock of the Company will not have cumulative voting rights.  Directors are elected by a plurality of the votes cast at the Company’s annual meeting by the holders of shares present, or represented by proxy and entitled to vote on the election of directors. Plurality means that the individuals who receive the largest number of “FOR” votes will be elected as directors. If, at the annual meeting, a shareholder does not vote for a nominee, or indicates “WITHHOLD” for any nominee on his, her or its proxy card, such vote will not count “FOR” the nominee.

Transfer Agent

The Company has engaged the services of American Stock Transfer & Trust Company, LLC Operations Center, 6201 15th Avenue, Brooklyn, NY 11219 to act as transfer agent and registrar for the Company.

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ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The following is a summary of the effect of the relevant provisions in our articles of organization, as amended, Bylaws, and Massachusetts law with regard to limitation of liability and indemnification of officers, directors and employees of the Company.

The Company’s Bylaws provide that the Company shall indemnify, to the fullest extent permitted by applicable law, and subject to the next paragraph, each person who may serve or who has served at any time as a director or officer of the corporation or of any of its subsidiaries, or who at the request of the corporation may serve or at any time has served as a director, officer or trustee of, or in a similar capacity with, another organization or an employee benefit plan, against all expenses and liabilities (including court costs, witness fees, counsel fees, judgments, fines, excise taxes, penalties and amounts payable in settlements) reasonably incurred by or imposed upon such person in connection with any threatened, pending or completed action, suit or other proceeding, whether civil, criminal, administrative or investigative, in which he or she may become involved by reason of serving or having served in such capacity; provided that no such indemnification shall be provided (a) with respect to a proceeding voluntarily initiated by such person unless he or she is successful on the merits, the proceeding was authorized by the corporation, or the proceeding seeks a declaratory judgment regarding his or her own conduct or (b) with respect to a compromise payment made to dispose of a matter, pursuant to a consent decree or otherwise, unless the payment and indemnification thereof have been approved by the corporation, which approval shall not unreasonably be withheld, or a court of competent jurisdiction.  The Massachusetts Business Corporation Act provides that the Company shall indemnify a director who was wholly successful, on the merits or otherwise, in the defense of any proceeding to which he or she was a party because he or she was a director of the corporation against reasonable expenses incurred by him in connection with the proceeding.

The Company will not indemnify any such person with respect to any matter as to which he or she shall have been finally adjudicated (a) not to have acted in good faith in the reasonable belief that his or her action was in, or at least not opposed to, the best interests of the corporation (or, to the extent such matter relates to service with respect to any employee benefit plan, in the best interests of the participants or beneficiaries of such employee benefit plan) and (b) in the case of a criminal proceeding, to have had reasonable cause to believe his or her conduct was unlawful.

Indemnification by the Company includes payment by the Company of expenses incurred in defending a civil or criminal action or proceeding in advance of the final disposition of such action or proceeding upon receipt from the person to be indemnified of (i) a written affirmation of his or her good faith belief that he or she has met the relevant standard of conduct described in the preceding sentence and (ii) a written undertaking to repay such payment if such person shall be adjudicated to be not entitled to indemnification, which undertaking may be accepted without regard to the financial ability of such person to make repayment. A person entitled to indemnification hereunder whose duties include service or responsibilities as a fiduciary with respect to a subsidiary or other organization shall be deemed to have met the standard of conduct of clause (a) of the preceding paragraph if he or she acted in good faith in the reasonable belief that his or her action was in, or at least not opposed to, the best interests of such subsidiary or organization or of the participants or beneficiaries of, or other persons with interests in, such subsidiary or organization to whom such person had a fiduciary duty.

If indemnification pursuant to the Bylaws requires authorization or approval by the Company, such authorization or approval is deemed to have been obtained, and in any case where a director approves the payment of indemnification, such director shall be wholly protected, if:  (i) the payment has been approved or ratified (1) by a majority vote of a quorum of the directors consisting of persons who are not at that time parties to the proceeding, (2) by a majority vote of a committee of two or more directors who are not at that time parties to the proceeding and are selected for this purpose by the full board (in which selection directors who are parties may participate), or (3) by a majority vote of a quorum of the outstanding shares of stock entitled to vote for directors, which quorum shall consist of shareholders who are not at that time parties to the proceeding; or (ii) the action is taken in reliance upon the opinion of independent legal counsel (who may be counsel to the corporation) appointed for the purpose by vote of the directors or in the manner specified in clauses (1), (2) or (3) of section (i); or (iii) the payment is approved by a court of competent jurisdiction; or (iv) the directors have otherwise acted in accordance with the standard of conduct set forth in the Massachusetts Business Corporation Act.

The rights to indemnification and advancement of expenses is not exclusive of any other right provided by law or otherwise.

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ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Unaudited Consolidated Financial Statements

Unaudited Consolidated Balance Sheets as of June 30, 2017 and December 31, 2016	76
Unaudited Consolidated Statements of Income for the Six Months Ended June 30, 2017 and 2016	77
Unaudited Consolidated Statements of Comprehensive Income for the Six Months Ended June 30, 2017 and 2016	78
Unaudited Consolidated Statements of Shareholders’ Equity for the Six Months Ended June 30, 2017 and 2016	79
Unaudited Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2017 and 2016	80
Notes to Unaudited Consolidated Financial Statements	81

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CAMBRIDGE BANCORP AND SUBSIDIARIES

UNAUDITED CONSOLIDATED BALANCE SHEETS

	June 30, 2017			December 31, 2016
	(dollars in thousands)
Assets
Cash and cash equivalents	$	33,089		$	54,050
Investment securities
Securities available for sale, amortized cost $231,601 and $329,726, respectively		228,591			325,641
Securities held to maturity, fair value $242,798 and $83,755, respectively		240,380			82,502
Total investment securities		468,971			408,143
Loans held for sale, at lower of cost or fair value		424			6,506
Loans
Residential mortgage		539,668			534,404
Commercial mortgage		616,221			616,140
Home equity		73,250			75,051
Commercial & Industrial		57,838			59,706
Consumer		41,496			34,853
Total loans		1,328,473			1,320,154
Less: allowance for loan losses		(15,303	)		(15,261	)
Net loans		1,313,170			1,304,893
Stock in FHLB of Boston, at cost		8,159			4,098
Bank owned life insurance		30,808			30,499
Banking premises and equipment, net		9,952			10,451
Deferred income taxes, net		13,001			13,693
Accrued interest receivable		4,594			4,627
Other assets		13,051			12,039
Total assets	$	1,895,219		$	1,848,999
Liabilities
Deposits
Demand	$	457,120		$	472,923
Interest bearing checking		383,008			430,706
Money market		66,260			72,057
Savings		538,586			539,190
Certificates of deposit		171,007			171,162
Total deposits		1,615,981			1,686,038
Short-term borrowings		109,000			—
Long-term borrowings		3,663			3,746
Other liabilities		24,277			24,544
Total liabilities		1,752,921			1,714,328
Shareholders’ Equity
Common stock, par value $1.00; Authorized 10,000,000 shares; Outstanding: 4,079,784    shares and 4,036,879 shares, respectively		4,080			4,037
Additional paid-in capital		35,195			33,253
Retained earnings		111,956			107,262
Accumulated other comprehensive loss		(8,933	)		(9,881	)
Total shareholders’ equity		142,298			134,671
Total liabilities and shareholders’ equity	$	1,895,219		$	1,848,999

The accompanying notes are an integral part of these unaudited consolidated financial statements.

76

CAMBRIDGE BANCORP AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

	Six Months Ended June 30,
	2017			2016
	(dollars in thousands, except share data)
Interest and dividend income
Interest on taxable loans	$	24,928		$	23,475
Interest on tax exempt loans		270			176
Interest on taxable investment securities		3,050			2,864
Interest on tax exempt investment securities		1,325			1,383
Dividends on FHLB of Boston stock		85			80
Interest on overnight investments		116			72
Total interest and dividend income		29,774			28,050
Interest expense
Interest on deposits		1,374			1,757
Interest on borrowed funds		209			40
Total interest expense		1,583			1,797
Net interest and dividend income		28,191			26,253
Provision for loan losses		50			225
Net interest and dividend income after provision for loan losses		28,141			26,028
Noninterest income
Wealth management income		10,946			9,545
Deposit account fees		1,619			1,368
ATM/Debit card income		545			567
Bank owned life insurance income		309			325
(Loss) gain on disposition of investment securities		(3	)		435
Gain on loans held for sale		285			286
Loan related derivative income		363			799
Other income		608			443
Total noninterest income		14,672			13,768
Noninterest expense
Salaries and employee benefits		18,145			16,811
Occupancy and equipment		4,578			4,751
Data processing		2,719			2,465
Professional services		1,696			1,203
Marketing		743			925
FDIC Insurance		312			452
Other expenses		1,485			1,385
Total noninterest expense		29,678			27,992
Income before income taxes		13,135			11,804
Income tax expense		4,293			3,906
Net income	$	8,842		$	7,898
Share data
Weighted average number of shares outstanding, basic		4,024,877			3,975,624
Weighted average number of shares outstanding, diluted		4,061,286			4,022,005
Basic earnings per share	$	2.17		$	1.96
Diluted earnings per share	$	2.16		$	1.96

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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CAMBRIDGE BANCORP AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Six Months Ended June 30,
	2017		2016
	(dollars in thousands)
Net income	$	8,842	$	7,898
Other comprehensive income, net of tax:
Unrealized gains (losses) on available for sale securities
Unrealized holding gains arising during period		682		3,393
Less: reclassification adjustment for losses (gains) included in net income		1		(279	)
Total unrealized gains on securities		683		3,114
Defined benefit retirement plans
Change in unfunded retirement liability		265		234
Other comprehensive income		948		3,348
Comprehensive income	$	9,790	$	11,246

The accompanying notes are an integral part of these unaudited consolidated financial statements.

78

CAMBRIDGE BANCORP AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

	Common Stock			Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity
	(dollars in thousands)
Balance at December 31, 2015	$	4,000		$	30,427		$	99,064		$	(8,428	)	$	125,063
Net income		—			—			7,898			—			7,898
Other comprehensive income		—			—			—			3,348			3,348
Stock based compensation		14			411			—			—			425
Exercise of stock options		19			570			—			—			589
Stock issued to ESOP and DSP		16			762			—			—			778
Dividends declared ($0.92 per share)		—			—			(3,711	)		—			(3,711	)
Stock repurchased		(7	)		(55	)		(279	)		—			(341	)
Balance at June 30, 2016	$	4,042		$	32,115		$	102,972		$	(5,080	)	$	134,049
Balance at December 31, 2016	$	4,037		$	33,253		$	107,262		$	(9,881	)	$	134,671
Net income		—			—			8,842			—			8,842
Other comprehensive income		—			—			—			948			948
Stock based compensation		13			517			—			—			530
Exercise of stock options		25			740			—			—			765
Stock issued to ESOP and DSP		12			745			—			—			757
Dividends declared ($0.92 per share)		—			—			(3,745	)		—			(3,745	)
Stock repurchased		(7	)		(60	)		(403	)		—			(470	)
Balance at June 30, 2017	$	4,080		$	35,195		$	111,956		$	(8,933	)	$	142,298

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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CAMBRIDGE BANCORP AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Six Months Ended June 30,
	2017			2016
	(dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	8,842		$	7,898
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		50			225
Amortization of deferred charges and fees, net		529			695
Depreciation and amortization		999			1,033
Bank owned life insurance income		(309	)		(325	)
Loss/(gain) on disposition of investment securities		3			(435	)
Compensation expense from stock option and restricted stock grants		530			425
Change in accrued interest receivable		33			(86	)
Change in deferred tax assets		692			1,799
Change in unrealized (gain) loss of securities available for sale, net of taxes		(392	)		(1,714	)
Change in unfunded pension liability		265			234
Change in other assets		(1,012	)		(2,606	)
Change in other liabilities		(267	)		1,635
Change in loans held for sale		6,082			(1,509	)
Other, net		(7	)		22
Net cash provided by operating activities		16,038			7,291
CASH FLOWS FROM INVESTING ACTIVITIES
Origination of loans		(150,667	)		(151,860	)
Proceeds from principal payments of loans		142,317			72,472
Proceeds from calls/maturities of securities available for sale		25,514			93,872
Proceeds from sales of securities available for sale and held to maturity		77,369			17,817
Purchase of securities available for sale		(5,091	)		(94,485	)
Proceeds from calls/maturities of securities held to maturity		6,678			7,561
Purchase of securities held to maturity		(164,684	)		(8,136	)
(Purchase) sale of FHLB of Boston stock		(4,061	)		2,017
Purchase of banking premises and equipment		(500	)		(1,042	)
Net cash used by investing activities		(73,125	)		(61,784	)
CASH FLOWS FROM FINANCING ACTIVITIES
Change in demand, interest bearing, money market and savings accounts		(69,902	)		48,283
Change in certificates of deposit		(196	)		(4,310	)
Change in short-term borrowings		109,000			13,000
Repayment of long-term borrowings		(83	)		(82	)
Cash dividends paid on common stock		(3,745	)		(3,711	)
Repurchase of common stock		(470	)		(341	)
Proceeds from issuance of common stock		1,522			1,367
Net cash provided by financing activities		36,126			54,206
Net decrease in cash and cash equivalents		(20,961	)		(287	)
Cash and cash equivalents at beginning of period		54,050			24,645
Cash and cash equivalents at end of period	$	33,089		$	24,358
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest	$	1,586		$	1,810
Income taxes	$	4,245		$	3,970

The accompanying notes are an integral part of these unaudited consolidated financial statements.

80

CAMBRIDGE BANCORP AND SUBSIDIARIES

Notes to unaudited consolidated financial statements

1. Basis of Presentation

The unaudited consolidated financial statements include the accounts of Cambridge Bancorp (the “Company”) and its wholly owned subsidiary, Cambridge Trust Company (the “Bank”), and the Bank’s wholly owned subsidiaries, Cambridge Trust Company of New Hampshire Inc., CTC Security Corporation and CTC Security Corporation III. References to the Company 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 Company is a state chartered, federally registered bank holding company headquartered in Cambridge, Massachusetts, that was incorporated in 1983. The Company is the sole shareholder of the Bank, a Massachusetts trust company chartered in 1890 which is a community-oriented commercial bank. The Company’s lines of business consisting of wealth management services, commercial banking and consumer banking are managed as a single strategic unit.

The unaudited consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) and disclosures necessary to present fairly the Company’s financial position as of June 30, 2017 and December 31, 2016, respectively, and the results of operations and cash flows for the interim periods presented in accordance with U.S. generally accepted accounting principles (“GAAP”). Interim results are not necessarily reflective of the results of the entire year.

2. Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. The allowance for loan losses, the fair values of financial instruments and the valuation of deferred tax assets are particularly subject to change.

3. Subsequent Events

Management has reviewed events occurring through August 8, 2017, the date the unaudited consolidated financial statements were issued and determined that no subsequent events occurred requiring adjustment to or disclosure in these financial statements.

4. Recently Issued and Adopted Accounting Guidance

Accounting Standards Update No. 2017-08 - Premium Amortization on Purchased Callable Debt Securities (“ASU 2017-08”). On March 30, 2017, the Financial Accounting Standards Board (the “FASB”) issued guidance to amend the amortization period for certain purchased callable debt securities held at a premium. The new guidance requires entities to amortize premium on callable debt securities to the earliest call date.  Shortening the amortization period is generally expected to more closely align the interest income recognition with the expectations incorporated in the market pricing on the underlying securities. Under GAAP, entities generally amortize the premium as an adjustment of yield over the contractual life of the instrument. Debt securities held at a discount will continue to be amortized to maturity. The amended guidance is effective on January 1, 2020 for the Company and early adoption is permitted.  This guidance should be applied using a modified retrospective transition method.  Additionally, in the period of adoption, we will provide disclosures about a change in accounting principle. We are currently assessing the impact the adoption of this guidance will have on our consolidated balance sheets, statements of income, and cash flows.

Accounting Standards Update No. 2017-07 - Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (“ASU 2017-07”). On March 10, 2017, the FASB issued amended guidance primarily to improve the presentation of net periodic pension cost and net periodic postretirement benefit cost, as discussed below. The new guidance will require that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The amended guidance is effective on January 1, 2020 for the Company. This guidance should be applied using a modified retrospective transition method. We are currently assessing the impact the adoption of this guidance will have on our consolidated balance sheets, statements of income, and cash flows.

Accounting Standards Update No. 2016-18 - Restricted Cash (“ASU 2016-18”).  On November 17, 2016, the FASB issued amended guidance to require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The guidance is effective on January 1, 2018, for the Company, and early adoption is permitted. This guidance should be applied using a retrospective transition method to each period presented. The adoption of this new guidance is not expected to have a material impact on our consolidated balance sheets, statements of income, and cash flows.

81

Accounting Standards Update No. 2016-15 - Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”).On August 26, 2016, the FASB issued amendments to clarify guidance on the classification of certain cash receipts and payments in the statement of cash flows. This guidance is intended to reduce existing diversity in practice in how certain cash receipts and cash payments are presented and classified on the statement of cash flows. This guidance is effective for the Company for interim and annual periods beginning on January 1, 2018, and early adoption is permitted. This guidance should be applied using a retrospective transition method to each period presented. We are currently assessing the impact the adoption of this guidance will have on our consolidated balance sheets, statements of income, and cash flows.

Accounting Standards Update No. 2016-13 - Financial Instruments - Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). On June 16, 2016, the FASB issued ASU 2016-13, which will significantly change how entities measure and recognize credit impairment for many financial assets. Under this standard, the new current expected credit loss model will require entities to immediately recognize an estimate of credit losses expected to occur over the remaining life of the financial assets that are in the scope of the standard. This new guidance also made targeted amendments to the current impairment model for available for sale debt securities. ASU 2016-13 will be effective for the Company for the fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. Early adoption for fiscal years and interim periods beginning after December 15, 2018 is permitted. We are in the process of evaluating this guidance and its effect on our consolidated balance sheets, statements of income, and cash flows.

Accounting Standards Update No. 2016-09 - Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). On March 30, 2016, the FASB issued ASU 2016-09 as part of the initiative to reduce the complexity in accounting standards. The updated guidance addresses several areas for simplification including accounting for employee share-based payment transactions and the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The Company adopted the guidance on January 1, 2017 using the prospective method and recorded a tax benefit of $219,000 for the six months ended June 30, 2017.

Accounting Standards Update No. 2016-02 - Leases (“ASU 2016-02”). On February 25, 2016, the FASB issued guidance that requires recognition of lease assets and lease liabilities on the statement of condition and disclosure of key information about leasing arrangements. In particular, this guidance requires a lessee of operating or finance leases to recognize on the statement of condition a liability to make lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term. However, for leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election not to recognize lease assets and lease liabilities. Under previous GAAP, a lessee was not required to recognize lease assets and lease liabilities arising from operating leases on the statement of condition. The guidance becomes effective for the Company for the interim and annual periods beginning on January 1, 2019, and early application is permitted. We are currently assessing the impact the adoption of this guidance will have on our consolidated balance sheets, statements of income, and cash flows.

Accounting Standards Update No. 2016-01 - Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). On January 5, 2016, the FASB issued amended guidance on certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. This guidance includes, but is not limited to, the following:

• Requires equity investments (with certain exceptions) to be measured at fair value with changes in fair value recognized in net income.

• Requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments.

• Requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the statement of condition or the accompanying notes to the financial statements.

• Clarifies that an entity must assess valuation allowances on a deferred tax asset related to available for sale debt securities in combination with its other deferred tax assets.

• Eliminates the requirement for public entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the statement of condition.

This guidance becomes effective for the Company for the interim and annual periods beginning on January 1, 2018, and early adoption is only permitted for certain provisions. The amendments, in general, are required to be applied by means of a cumulative-effect adjustment on the statement of condition as of the beginning of the period of adoption. We are in the process of evaluating this guidance, and its effect on our consolidated balance sheets, statements of income, and cash flows.

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Accounting Standards Update No. 2014-09 - Revenue from Contracts with Customers (“ASU 2014-09”). In May 2014, the FASB issued 2014-09 as a 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.

Additionally, in August 2015, the FASB issued Accounting Standards Update No. 2015-14 to defer the effective date of ASU 2014-09 to annual reporting periods beginning after December 15, 2017.  We are in the process of evaluating this guidance, and at this time do not expect its adoption will have a material impact on our consolidated balance sheets, statements of income, and cash flows.

5. Cash and Due from Banks

At June 30, 2017 and December 31, 2016, cash and due from banks totaled $33.1 million and $54.1 million, respectively. Of this amount, $11.6 million and $11.2 million, respectively, were maintained to satisfy the reserve requirements of the Federal Reserve Bank of Boston (“FRB Boston”). Additionally, at June 30, 2017 and December 31, 2016, the Company pledged $500,000 and $500,000, respectively, to the New Hampshire Banking Department relating to Cambridge Trust Company of New Hampshire, Inc.’s operations in that State.

6. Investment Securities

Investment securities have been classified in the unaudited consolidated balance sheets according to management’s intent. The carrying amounts of securities and their approximate fair values were as follows:

	June 30, 2017									December 31, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(dollars in thousands)
Available for sale securities
U.S. GSE obligations	$	100,027	$	—	$	(1,010	)	$	99,017	$	140,026	$	23	$	(1,340	)	$	138,709
Mortgage-backed securities		125,858		320		(2,254	)		123,924		183,974		479		(3,154	)		181,299
Corporate debt securities		5,044		28		(25	)		5,047		5,054		13		(38	)		5,029
Mutual funds		672		—		(69	)		603		672		—		(68	)		604
Total available for sale securities	$	231,601	$	348	$	(3,358	)	$	228,591	$	329,726	$	515	$	(4,600	)	$	325,641
Held to maturity securities
U.S. GSE obligations	$	44,991	$	5	$	(43	)	$	44,953	$	—	$	—	$	—		$	—
Mortgage-backed securities		111,727		114		(209	)		111,632		696		23		—			719
Corporate debt securities		1,997		20		—			2,017		—		—		—			—
Municipal securities		81,665		2,750		(219	)		84,196		81,806		1,894		(664	)		83,036
Total held to maturity securities	$	240,380	$	2,889	$	(471	)	$	242,798	$	82,502	$	1,917	$	(664	)	$	83,755
Total	$	471,981	$	3,237	$	(3,829	)	$	471,389	$	412,228	$	2,432	$	(5,264	)	$	409,396

All of the Company’s mortgage-backed securities have been issued by, or are collateralized by securities issued by, either Government National Mortgage Association (Ginnie Mae), Federal National Mortgage Association (Fannie Mae), or Federal Home Loan Mortgage Corporation (Freddie Mac).

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The following tables show the Company’s securities with gross unrealized losses, aggregated by investment category and length of time that individual securities have been in a continuous loss position:

	June 30, 2017
	Less than 12 months					12 months or longer					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(dollars in thousands)
Temporarily Impaired Securities
Available for sale securities
U.S. GSE obligations	$	99,017	$	(1,010	)	$	—	$	—		$	99,017	$	(1,010	)
Mortgage-backed securities		107,563		(1,989	)		12,321		(265	)		119,884		(2,254	)
Corporate debt securities		4,019		(25	)		—		—			4,019		(25	)
Mutual funds		—		—			603		(69	)		603		(69	)
Total available for sale securities	$	210,599	$	(3,024	)	$	12,924	$	(334	)	$	223,523	$	(3,358	)
Held to maturity securities
U.S. GSE obligations	$	34,948	$	(43	)	$	—	$	—		$	34,948	$	(43	)
Mortgage-backed securities		71,919		(209	)		3		—			71,922		(209	)
Corporate debt securities		—		—			—		—			—		—
Municipal securities		9,895		(219	)		—		—			9,895		(219	)
Total held to maturity securities	$	116,762	$	(471	)	$	3	$	—		$	116,765	$	(471	)
Total temporarily impaired securities	$	327,361	$	(3,495	)	$	12,927	$	(334	)	$	340,288	$	(3,829	)

	December 31, 2016
	Less than 12 months					12 months or longer					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(dollars in thousands)
Temporarily Impaired Securities
Available for sale securities
U.S. GSE obligations	$	118,686	$	(1,340	)	$	—	$	—		$	118,686	$	(1,340	)
Mortgage-backed securities		149,859		(2,795	)		14,422		(359	)		164,281		(3,154	)
Corporate debt securities		4,016		(38	)		—		—			4,016		(38	)
Mutual funds		—		—			604		(68	)		604		(68	)
Total available for sale securities	$	272,561	$	(4,173	)	$	15,026	$	(427	)	$	287,587	$	(4,600	)
Held to maturity securities
Mortgage-backed securities	$	1	$	—		$	3	$	—		$	4	$	—
Municipal securities		18,626		(664	)		—		—			18,626		(664	)
Total held to maturity securities	$	18,627	$	(664	)	$	3	$	—		$	18,630	$	(664	)
Total temporarily impaired securities	$	291,188	$	(4,837	)	$	15,029	$	(427	)	$	306,217	$	(5,264	)

Management evaluates securities 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 Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

As of June 30, 2017, 108 debt securities and one equity security had gross unrealized losses, with an aggregate depreciation of 1.11% from the Company’s amortized cost basis. The largest unrealized loss percentage of any single security was 10.31% (or $69,000) of its amortized cost. The largest unrealized dollar loss of any single security was $162,000 (or 3.23%) of its amortized cost.

As of December 31, 2016, 132 debt securities and one equity security had gross unrealized losses, with an aggregate depreciation of 1.69% from the Company’s amortized cost basis. The largest unrealized loss percentage of any single security was 10.16% (or $51,000) of its amortized cost. The largest unrealized dollar loss of any single security was $189,000 (or 3.79%) of its amortized cost.

84

The Company 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 Company does not intend to sell these securities before recovery, and (b) that it is more likely than not that the Company will not be required to sell these securities before recovery, the Company does not consider these securities to be other-than-temporarily impaired as of June 30, 2017 and December 31, 2016.

The amortized cost and fair value of debt securities, aggregated by the earlier of guaranteed call date or contractual maturity, are shown below. Maturities of mortgage-backed securities do not take into consideration scheduled amortization or prepayments. Actual maturities may 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					Total
	Amortized Cost		Fair Value		Amortized Cost		Fair Value			Amortized Cost		Fair Value			Amortized Cost		Fair Value			Amortized Cost		Fair Value
At June 30, 2017	(dollars in thousands)
Available for sale securities
U.S. GSE obligations	$	—	$	—	$	100,027	$	99,017		$	—	$	—		$	—	$	—		$	100,027	$	99,017
Mortgage-backed securities		131		134		262		271			18,573		18,438			106,892		105,081			125,858		123,924
Corporate debt securities		—		—		4,044		4,019			1,000		1,028			—		—			5,044		5,047
Total available for sale securities	$	131	$	134	$	104,333	$	103,307		$	19,573	$	19,466		$	106,892	$	105,081		$	230,929	$	227,988
Held to maturity securities
U.S. GSE obligations	$	—	$	—	$	44,991	$	44,953		$	—	$	—		$	—	$	—		$	44,991	$	44,953
Mortgage-backed securities		46		47		399		411			19,489		19,427			91,793		91,747			111,727		111,632
Corporate debt securities		—		—		1,997		2,017			—		—			—		—			1,997		2,017
Municipal securities		4,510		4,542		14,440		14,850			28,540		29,846			34,175		34,958			81,665		84,196
Total held to maturity securities	$	4,556	$	4,589	$	61,827	$	62,231		$	48,029	$	49,273		$	125,968	$	126,705		$	240,380	$	242,798
Total	$	4,687	$	4,723	$	166,160	$	165,538		$	67,602	$	68,739		$	232,860	$	231,786		$	471,309	$	470,786

The following table sets forth information regarding sales of investment securities and the resulting (losses) gains from such sales:

	Six Months Ended June 30,
	2017			2016
	(dollars in thousands)
Amortized cost of securities sold	$	77,372		$	17,382
(Loss)/gain realized on securities sold		(3	)		435
Net proceeds from securities sold	$	77,369		$	17,817

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7. Loans and the Allowance for Loan Losses

The Company’s lending activities are conducted principally in Eastern Massachusetts. The Company grants single-family and multi-family residential loans, commercial, commercial real estate, construction loans and a variety of consumer loans.  Most loans granted by the Company are secured by real estate collateral. The Company’s commercial business loans are primarily made based on the cash flow of the borrower and secondarily on the underlying collateral provided by the borrower, with liquidation of the underlying real estate collateral typically being viewed as the primary source of repayment in the event of borrower default. The borrowers’ cash flow may be difficult to predict, and collateral securing these loans may fluctuate in value. The repayment of commercial business loans depends primarily on the cash flow and credit worthiness of the borrower and secondarily on the underlying collateral provided by the borrower. Although commercial business loans are often collateralized by equipment, inventory, accounts receivable, or other business assets, the liquidation of collateral in the event of default is often an insufficient source of repayment. Repayment of the Company’s residential loans are generally dependent on the health of the employment market in the borrowers’ geographic areas and that of the general economy with liquidation of the underlying real estate collateral being typically viewed as the primary source of repayment in the event of borrower default.

Loans outstanding are detailed by category as follows:

	June 30, 2017		December 31, 2016
	(dollars in thousands)
Residential mortgage
Mortgages - fixed rate	$	302,010	$	305,403
Mortgages - adjustable rate		236,664		228,028
Deferred costs net of unearned fees		994		973
Total residential mortgages		539,668		534,404
Commercial mortgage
Mortgages - nonowner occupied		540,872		513,578
Mortgages - owner occupied		42,124		43,932
Construction		33,072		58,406
Deferred costs net of unearned fees		153		224
Total commercial mortgages		616,221		616,140
Home equity
Home equity - lines of credit		68,873		70,883
Home equity - term loans		4,125		3,925
Deferred costs net of unearned fees		252		243
Total home equity		73,250		75,051
Commercial & industrial
Commercial & industrial		57,769		59,638
Deferred costs net of unearned fees		69		68
Total commercial & industrial		57,838		59,706
Consumer
Secured		40,047		33,386
Unsecured		1,432		1,451
Deferred costs net of unearned fees		17		16
Total consumer		41,496		34,853
Total loans	$	1,328,473	$	1,320,154

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Directors and officers of the Company and their associates are customers of, and have other transactions with, the Company in the normal course of business. All loans and commitments included in such transactions were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons and do not involve more than normal risk of collection or present other unfavorable features. At June 30, 2017 and December 31, 2016, total loans outstanding to such directors and officers were $643,000 and $690,000, respectively.  During the six months ended June 30, 2017, $83,000 of additions and $130,000 of repayments were made to these loans, compared to $355,000 of additions and $406,000 of repayments during the year ended December 31, 2016. At June 30, 2017 and December 31, 2016, all of the loans to directors and officers were performing according to their original terms.

The following tables set forth information regarding non-performing loans disaggregated by loan category:

	June 30, 2017
	Residential Mortgages		Commercial Mortgages		Home Equity		Commercial & Industrial		Consumer		Total
	(dollars in thousands)
Non-performing loans:
Non-accrual loans	$	1,246	$	224	$	90	$	21	$	—	$	1,581
Loans past due >90 days, but still accruing		—		—		—		99		—		99
Troubled debt restructurings		127		—		—		322		—		449
Total	$	1,373	$	224	$	90	$	442	$	—	$	2,129

	December 31, 2016
	Residential Mortgages		Commercial Mortgages		Home Equity		Commercial & Industrial		Consumer		Total
	(dollars in thousands)
Non-performing loans:
Non-accrual loans	$	998	$	—	$	—	$	24	$	1	$	1,023
Loans past due >90 days, but still accruing		—		232		—		—		—		232
Troubled debt restructurings		132		—		—		289		—		421
Total	$	1,130	$	232	$	—	$	313	$	1	$	1,676

Troubled Debt Restructurings.  Loans are considered restructured in a troubled debt restructuring (“TDR”) when the Company has granted concessions to a borrower due to the borrower’s financial condition that it otherwise would not have considered. These concessions may include modifications of the terms of the debt such as deferral of payments, extension of maturity, reduction of principal balance, reduction of the stated interest rate other than normal market rate adjustments, or a combination of these concessions. Debt may be bifurcated with separate terms for each tranche of the restructured debt. Restructuring a loan in lieu of aggressively enforcing the collection of the loan may benefit the Company by increasing the ultimate probability of collection.

Restructured loans are classified as accruing or non-accruing based on management’s assessment of the collectability of the loan. Loans which are already on nonaccrual status at the time of the restructuring generally remain on nonaccrual status for approximately six months or longer before management considers such loans for return to accruing status. Accruing restructured loans are placed into nonaccrual status if and when the borrower fails to comply with the restructured terms and management deems it unlikely that the borrower will return to a status of compliance in the near term.

TDRs are classified as impaired loans. The Company identifies loss allocations for impaired loans on an individual loan basis. During the six months ended June 30, 2017, the Company modified one loan with a pre-modification carrying value (which consists of the unpaid principal balance, net of charge-offs and unamortized deferred loan origination fees and costs, at the time of the restructuring) of $65,000 and a post-modification carrying value of $48,000. During the six months ended June 30, 2017, five loans were determined to be TDRs with a total carrying value of $449,000. There were no TDRs that defaulted during the six months ended June 30, 2017.

During the twelve months ended December 31, 2016, the Company modified four loans with a pre-modification carrying value of $445,000 and a post-modification carrying value of $444,000. At December 31, 2016, these loans had a carrying value of $421,000. There were no TDR defaults during the year ended December 31, 2016.

The allowance for loan losses includes a specific reserve for these TDRs of approximately $268,000 and $117,000 as of June 30, 2017 and December 31, 2016, respectively.

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As of June 30, 2017, there were no significant commitments to lend additional funds to borrowers whose loans were restructured.

Loans by Credit Quality Indicator.  The following tables contain period-end balances of loans receivable disaggregated by credit quality indicator:

	June 30, 2017
	(dollars in thousands)
	Residential Mortgages		Home Equity		Consumer
Credit risk profile based on payment activity:
Performing	$	538,295	$	73,160	$	41,496
Non-performing		1,373		90		—
Total	$	539,668	$	73,250	$	41,496
			Commercial Mortgages		Commercial & Industrial
Credit risk profile by internally assigned grade:
1-6 (Pass)			$	605,287	$	56,389
7 (Special Mention)				10,309		804
8 (Substandard)				625		645
9 (Doubtful)				—		—
10 (Loss)				—		—
Total			$	616,221	$	57,838

	December 31, 2016
	(dollars in thousands)
	Residential Mortgages		Home Equity		Consumer
Credit risk profile based on payment activity:
Performing	$	533,273	$	75,051	$	34,852
Non-performing		1,131		—		1
Total	$	534,404	$	75,051	$	34,853
			Commercial Mortgages		Commercial & Industrial
Credit risk profile by internally assigned grade:
1-6 (Pass)			$	612,636	$	56,310
7 (Special Mention)				2,861		1,431
8 (Substandard)				643		1,965
9 (Doubtful)				—		—
10 (Loss)				—		—
Total			$	616,140	$	59,706

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.

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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.

Delinquencies.  The past due status of a loan is determined in accordance with its contractual repayment terms. All loan types are reported past due when one scheduled payment is due and unpaid for 30 days or more. Loan delinquencies can be attributed to many factors, such as but not limited to a continuing weakness in, or deteriorating, economic conditions in the region in which the collateral is located, the loss of a tenant or lower lease rates for commercial borrowers, or the loss of income for consumers and the resulting liquidity impacts on the borrowers.

The following tables contain period-end balances of loans receivable disaggregated by past due status:

	June 30, 2017
	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater		Total Past Due		Current Loans		Total
	(dollars in thousands)
Residential Mortgages	$	1,438	$	292	$	714	$	2,444	$	537,224	$	539,668
Commercial Mortgages		—		—		—		—		616,221		616,221
Home Equity		—		87		4		91		73,159		73,250
Commercial & Industrial		—		—		99		99		57,739		57,838
Consumer loans		35		—		—		35		41,461		41,496
Total	$	1,473	$	379	$	817	$	2,669	$	1,325,804	$	1,328,473

	December 31, 2016
	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater		Total Past Due		Current Loans		Total
	(dollars in thousands)
Residential Mortgages	$	698	$	179	$	602	$	1,479	$	532,925	$	534,404
Commercial Mortgages		—		250		232		482		615,658		616,140
Home Equity		4		—		—		4		75,047		75,051
Commercial & Industrial		173		—		1		174		59,532		59,706
Consumer loans		6		5		—		11		34,842		34,853
Total	$	881	$	434	$	835	$	2,150	$	1,318,004	$	1,320,154

Allowance for Loan Losses.  The Company maintains an allowance for loan losses in an amount determined by management on the basis of the character of the loans, loan performance, financial condition of borrowers, the value of collateral securing loans and other relevant factors. We provide for loan losses based upon the consistent application of our documented allowance for loan loss methodology. All loan losses are charged to the allowance for loan losses and all recoveries are credited to it. Additions to the allowance for loan losses are provided by charges to income based on various factors which, in our judgment, deserve current recognition in estimating probable losses. We regularly review the loan portfolio, including a review of our classified assets, and make provisions for loan losses in order to maintain the allowance for loan losses in accordance with GAAP. The allowance for loan losses consists primarily of two components:

1. specific allowances established for impaired loans (as defined by GAAP). The amount of impairment provided for as a specific allowance is measured based on the deficiency, if any, between the present value of expected future cash flows discounted at the loan’s effective interest rate at the time of impairment or, as a practical expedient, at the loan’s observable market price or the fair value of the collateral if the loan is collateral-dependent, and the carrying value of the loan; and

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2. general allowances established for loan losses on a portfolio basis for loans that do not meet the definition of impaired loans. The portfolio is grouped into homogenous pools by similar risk characteristics, primarily by loan type and regulatory classification. We apply an estimated incurred loss rate to each loan group. The loss rates applied are based upon our historical loss experience over a designated look back period adjusted, as appropriate, for the quantitative, qualitative and environmental factors discussed below. This evaluation is inherently subjective, as it requires material estimates that may be susceptible to significant revisions based upon changes in economic and real estate market conditions.

Actual loan losses may be significantly more than the allowance for loan losses we have established, which could have a material negative effect on our financial results.

The adjustments to historical loss experience are based on our evaluation of several quantitative, qualitative and environmental factors, including:

• the loss emergence period which represents the average amount of time between when loss events occur for specific loan types and when such problem loans are identified and the related loss amounts are confirmed through charge-offs;

• changes in any concentration of credit (including, but not limited to, concentrations by geography, industry or collateral type);

• changes in the number and amount of non-accrual loans and past due loans;

• changes in national, state and local economic trends;

• changes in the types of loans in the loan portfolio;

• changes in the experience and ability of personnel;

• changes in lending strategies; and

• changes in lending policies and procedures.

In addition, we may establish an unallocated allowance to provide for probable losses that have been incurred as of the reporting date but are not reflected in the allocated allowance.

We evaluate the allowance for loan losses based upon the combined total of the specific and general components. Generally when the loan portfolio increases, absent other factors, the allowance for loan loss methodology results in a higher dollar amount of estimated probable losses than would be the case without the increase. Generally when the loan portfolio decreases, absent other factors, the allowance for loan losses methodology results in a lower dollar amount of estimated probable losses than would be the case without the decrease.  Periodically, management conducts an analysis to estimate the loss emergence period for various loan categories based on samples of historical charge-offs. Model output by loan category is reviewed to evaluate the reasonableness of the reserve levels in comparison to the estimated loss emergence period applied to historical loss experience.

We evaluate the loan portfolio on a quarterly basis and the allowance is adjusted accordingly. While we use the best information available to make evaluations, future adjustments to the allowance may be necessary if conditions differ substantially from the information used in making the evaluations. In addition, various regulatory agencies, as an integral part of their examination process, will periodically review the allowance for loan losses. Such agencies may require us to recognize additions to the allowance based on their analysis of information available to them at the time of their examination.

The following tables contain changes in the allowance for loan losses disaggregated by loan category:

	For the Six Months Ended June 30,
	Residential Mortgages			Commercial Mortgages			Home Equity			Commercial & Industrial			Consumer			Unallocated		Impaired		Total
	(dollars in thousands)
Allowance for loan losses:
Balance at December 31, 2016	$	4,898		$	8,451		$	651		$	807		$	264		$	—	$	190	$	15,261
Charge-offs		—			—			—			(1	)		(13	)		—		—		(14	)
Recoveries		—			—			—			3			3			—		—		6
Provision		(115	)		(2	)		(19	)		(51	)		70			—		167		50
Balance at June 30, 2017	$	4,783		$	8,449		$	632		$	758		$	324		$	—	$	357	$	15,303

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	For the Six Months Ended June 30,
	Residential Mortgages			Commercial Mortgages		Home Equity		Commercial & Industrial			Consumer			Unallocated			Impaired		Total
	(dollars in thousands)
Allowance for loan losses:
Balance at December 31, 2015	$	5,244		$	8,094	$	699	$	615		$	354		$	11		$	174	$	15,191
Charge-offs		—			—		—		(13	)		(14	)		—			—		(27	)
Recoveries		—			5		1		11			5			—			—		22
Provision		(471	)		463		53		153			31			(4	)		—		225
Balance at June 30, 2016	$	4,773		$	8,562	$	753	$	766		$	376		$	7		$	174	$	15,411

The following tables contain period-end balances of the allowance for loan losses and related loans receivable disaggregated by impairment method:

	June 30, 2017
	Residential Mortgages		Commercial Mortgages		Home Equity		Commercial & Industrial		Consumer		Total
	(dollars in thousands)
Allowance for loan losses
Individually evaluated for impairment	$	90	$	—	$	—	$	267	$	—	$	357
Collectively evaluated for impairment		4,783		8,449		632		758		324		14,946
Total	$	4,873	$	8,449	$	632	$	1,025	$	324	$	15,303
Loans receivable
Individually evaluated for impairment	$	1,273	$	224	$	187	$	321	$	—	$	2,005
Collectively evaluated for impairment		538,395		615,997		73,063		57,517		41,496		1,326,468
Total	$	539,668	$	616,221	$	73,250	$	57,838	$	41,496	$	1,328,473

	December 31, 2016
	Residential Mortgages		Commercial Mortgages		Home Equity		Commercial & Industrial		Consumer		Total
	(dollars in thousands)
Allowance for loan losses
Individually evaluated for impairment	$	69	$	—	$	7	$	114	$	—	$	190
Collectively evaluated for impairment		4,898		8,452		650		807		264		15,071
Total	$	4,967	$	8,452	$	657	$	921	$	264	$	15,261
Loans receivable
Individually evaluated for impairment	$	1,027	$	—	$	102	$	289	$	—	$	1,418
Collectively evaluated for impairment		533,377		616,140		74,949		59,417		34,853		1,318,736
Total	$	534,404	$	616,140	$	75,051	$	59,706	$	34,853	$	1,320,154

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The following tables present information pertaining to impaired loans:

	June 30, 2017
	Carrying Value		Average Carrying Value		Unpaid Principal Balance		Related Allowance		Interest Income Recognized
	(dollars in thousands)
With no required reserve recorded:
Commercial and industrial	$	43	$	37	$	43	$	—	$	1
Commercial real estate		224		230		231		—		2
Residential real estate		722		730		890		—		4
Consumer		—		—		—		—		—
Home equity		187		190		215		—		2
Total		1,176		1,187		1,379		—		9
With required reserve recorded:
Commercial and industrial		278		282		287		268		—
Commercial real estate		—		—		—		—		—
Residential real estate		551		558		569		89		1
Consumer		—		—		—		—		—
Home equity		—		—		—		—		—
Total		829		840		856		357		1
Total:
Commercial and industrial		321		319		330		268		1
Commercial real estate		224		230		231		—		2
Residential real estate		1,273		1,288		1,459		89		5
Consumer		—		—		—		—		—
Home equity		187		190		215		—		2
Total	$	2,005	$	2,027	$	2,235	$	357	$	10

	December 31, 2016
	Carrying Value		Average Carrying Value		Unpaid Principal Balance		Related Allowance		Interest Income Recognized
	(dollars in thousands)
With no required reserve recorded:
Commercial and industrial	$	—	$	—	$	—	$	—	$	—
Commercial real estate		—		—		—		—		—
Residential real estate		528		542		687		—		—
Consumer		—		—		—		—		—
Home equity		102		105		126		—		1
Total		630		647		813		—		1
With required reserve recorded:
Commercial and industrial		289		297		295		114		2
Commercial real estate		—		—		—		—		—
Residential real estate		499		505		509		76		21
Consumer		—		—		—		—		—
Home equity		—		—		—		—		—
Total		788		802		804		190		23
Total:
Commercial and industrial		289		297		295		114		2
Commercial real estate		—		—		—		—		—
Residential real estate		1,027		1,047		1,196		76		21
Consumer		—		—		—		—		—
Home equity		102		105		126		—		1
Total	$	1,418	$	1,449	$	1,617	$	190	$	24

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8. Federal Home Loan Bank of Boston Stock

As a voluntary member of the Federal Home Loan Bank (“FHLB”) of Boston, the Bank is required to invest in stock of the FHLB of Boston (which is considered a restricted equity security) in an amount based upon its outstanding advances from the FHLB of Boston. At June 30, 2017, and December 31, 2016, the Bank’s investment in FHLB of Boston stock totaled $8.2 million and $4.1 million, respectively. No market exists for shares of this stock. The Bank’s cost for FHLB of Boston stock is equal to its par value. Upon redemption of the stock, which is at the discretion of the FHLB of Boston, the Bank would receive an amount equal to the par value of the stock. At its discretion, the FHLB of Boston may also declare dividends on its stock.

The Bank’s investment in FHLB of Boston stock is reviewed for impairment at each reporting date based on the ultimate recoverability of the cost basis of the stock. As of June 30, 2017 and December 31, 2016, no impairment has been recognized.

9. Goodwill and Other Intangible Assets

Goodwill.  At June 30, 2017 and December 31, 2016, the carrying value of goodwill, which is included in other assets, totaled $412,000 and $412,000, respectively. Goodwill is tested for impairment, based on its fair value, at least annually. As of June 30, 2017 and December 31, 2016, no goodwill impairment has been recognized.

Mortgage servicing rights.  Certain residential mortgage loans are periodically sold by the Company to the secondary market. Generally, these loans are sold without recourse or other credit enhancements. The Company sells loans and either releases or retains the servicing rights. For loans sold with servicing rights retained, we provide the servicing for the loans on a per-loan fee basis. Mortgage loans sold and servicing rights retained during the six months ended June 30, 2017 and June 30, 2016 were $9.3 million and $10.0 million, respectively, with net gains recognized in gain on loans held for sale of $125,000 and $346,000, respectively.

The fair value of our mortgage servicing rights (“MSR”) portfolio was $1.0 million and $1.0 million at June 30, 2017 and December 31, 2016, respectively. 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.

An analysis of mortgage servicing rights, which are included in other assets, follows:

	Mortgage Servicing Rights			Valuation Allowance			Total
	(dollars in thousands)
Balance at December 31, 2015	$	499		$	(8	)	$	491
Mortgage servicing rights capitalized		134			—			134
Amortization charged against servicing income		(87	)		—			(87	)
Change in impairment reserve		—			(42	)		(42	)
Balance at June 30, 2016	$	546		$	(50	)	$	496
Balance at December 31, 2016	$	842		$	(30	)	$	812
Mortgage servicing rights capitalized		101			—			101
Amortization charged against servicing income		(78	)		—			(78	)
Change in impairment reserve		—			—			—
Balance at June 30, 2017	$	865		$	(30	)	$	835

The weighted-average amortization period for mortgage servicing rights portfolio was two years at June 30, 2017.  

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10. Deposits

Deposits are summarized as follows:

	June 30, 2017		December 31, 2016
	(dollars in thousands)
Demand deposits (non-interest bearing)	$	457,120	$	472,923
Interest bearing checking		383,008		430,706
Money market		66,260		72,057
Savings		538,586		539,190
Retail certificates of deposit under $100,000		40,656		42,471
Retail certificates of deposit $100,000 or greater		74,220		72,355
Wholesale certificates of deposit		56,131		56,336
Total deposits	$	1,615,981	$	1,686,038

Certificates of deposit had the following schedule of maturities:

	June 30, 2017		December 31, 2016
	(dollars in thousands)
Less than 3 months remaining	$	49,889	$	32,268
3 to 5 months remaining		17,013		17,558
6 to 11 months remaining		32,241		36,240
12 to 23 months remaining		40,683		44,467
24 to 47 months remaining		20,435		29,826
48 months or more remaining		10,746		10,803
Total certificates of deposit	$	171,007	$	171,162

Interest expense on retail certificates of deposit $100,000 or greater was $223,000 and $222,000 for the six months ended June 30, 2017 and June 30, 2016, respectively.

The aggregate amount of certificates of deposit in denominations that meet or exceed the Federal Deposit Insurance Corporation (the “FDIC”) insurance limit of $250,000 at June 30, 2017 and December 31, 2016 was $48.4 million and $46.0 million, respectively.

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Related Party Deposits

Deposit accounts of directors, executive officers and their respective affiliates totaled $6.1 million and $7.2 million as of June 30, 2017 and December 31, 2016, respectively.

11. Borrowings

Information relating to short-term borrowings is presented below:

	For the Six Months Ended June 30, 2017			For the Year Ended December 31, 2016
	(dollars in thousands)
FHLB of Boston short-term advances
Ending balance	$	109,000		$	—
Average daily balance		31,519			3,668
Highest month-end balance		110,000			21,000
Weighted average interest rate		1.27	%		0.54	%

Information relating to long-term borrowings is presented below:

	June 30, 2017					December 31, 2016
	Amount		Rate			Amount		Rate
	(dollars in thousands)
FHLB of Boston long-term advances
Due 09/01/2020; amortizing	$	3,663		1.94	%	$	3,746		1.94	%

All short- and long-term borrowings with the FHLB of Boston are secured by the Bank’s stock in the FHLB of 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 of Boston at June 30, 2017 and December 31, 2016 was approximately $196.3 million and $306.8 million, respectively.  

The Bank also has a line of credit with the FRB Boston. At June 30, 2017, the Bank had pledged commercial real estate and commercial & industrial loans with aggregate principal balances of approximately $305.6 million as collateral for this line of credit. Based upon the collateral pledged, the Bank’s unused borrowing capacity with the FRB Boston at June 30, 2017, was $138.6 million and $159.6 million as of December 31, 2016.

12. Income Taxes

The components of income tax expense were as follows:

	Six Months Ended June 30,
	2017		2016
	(dollars in thousands)
Current
Federal	$	3,314	$	3,297
State		862		686
Total current expense		4,176		3,983
Deferred
Federal		91		(60	)
State		26		(17	)
Total deferred		117		(77	)
Total income tax expense	$	4,293	$	3,906

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The following is a reconciliation of the total income tax provision, calculated at statutory federal income tax rates, to the income tax expense in the consolidated statements of income:

	Six Months Ended June 30,
	2017			Rate			2016			Rate
	(dollars in thousands)
Provision at statutory rates	$	4,597			35.00	%	$	4,131			35.00	%
Increase/(decrease) resulting from:
State tax, net of federal tax benefit		577			4.39			435			3.69
Tax-exempt income		(556	)		(4.23	)		(546	)		(4.63	)
ESOP dividends		(93	)		(0.71	)		(105	)		(0.89	)
Bank owned life insurance		(108	)		(0.82	)		(114	)		(0.97	)
Benefit from stock compensation		(188	)		(1.43	)		—			—
Other		64			0.49			105			0.88
Total income tax expense	$	4,293			32.69	%	$	3,906			33.08	%

The Company’s net deferred tax asset consisted of the following components:

	June 30, 2017			December 31, 2016
	(dollars in thousands)
Gross deferred tax assets
Allowance for loan losses	$	6,251		$	6,234
Accrued retirement benefits		5,737			5,595
Unrealized losses on AFS securities		1,104			1,496
Incentive compensation		793			1,413
Equity based compensation		319			333
Rent		342			299
ESOP dividends		253			249
Other		364			295
Total gross deferred tax assets		15,163			15,914
Gross deferred tax liabilities
Deferred loan origination costs		(557	)		(625	)
Depreciation of premises and equipment		(1,100	)		(1,100	)
Mortgage servicing rights		(341	)		(332	)
Goodwill		(164	)		(164	)
Total gross deferred tax liabilities		(2,162	)		(2,221	)
Net deferred tax asset	$	13,001		$	13,693

The effective tax rate for the six months ended June 30, 2017 and June 30, 2016 was 32.69% and 33.08%, respectively.

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 Company’s net deferred tax asset is supported by recoverable income taxes. Therefore, no valuation allowance was required at either June 30, 2017 or December 31, 2016 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 June 30, 2017 and December 31, 2016, the Company had no unrecognized tax benefits or any uncertain tax positions. The Company does not expect the total amount of unrecognized tax benefits to significantly increase in the next twelve months.

We did not record any interest or penalties for the six months ended June 30, 2017 and June 30, 2016.

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The Company’s federal income tax returns are open and subject to examination from the 2013 tax return year and forward. The Company’s state income tax returns are generally open from the 2013 and later tax return years based on individual state statute of limitations.

On January 1, 2017, we adopted Accounting Standards Update No. 2016-09 - “Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”). ASU 2016-09 requires that excess tax benefits or tax deficiencies be recognized as income tax benefit or expense in earnings in the period that they occur. The Company recognized $219,000 of tax benefit resulting from share based exercises and vestings during the first six months of 2017.

13. Pension and Retirement Plans

The Company 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 Company also provides supplemental retirement benefits to certain executive officers of the Company under the terms of Supplemental Executive Retirement Agreements (“Supplemental Retirement Plan”). The Supplemental Retirement Plan became effective on October 1, 1989. Benefits to be paid under the plan are contractually agreed upon and detailed in individual agreements with the executives. The Company also 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 Company uses a December 31 measurement date each year to determine the benefit obligations for these plans.

The components of net periodic benefit cost was as follows:

	Six Months Ended June 30,
	Pension Plan						Supplemental Retirement Plan				Retirement Healthcare Plan
	2017			2016			2017		2016		2017			2016
	(dollars in thousands)
Net periodic benefit cost
Service cost	$	823		$	765		$	134	$	152	$	8		$	12
Interest cost		1,001			867			182		198		10			17
Expected return on assets		(1,503	)		(1,390	)		—		—		—			—
Amortization of prior service credit		(2	)		(2	)		—		32		—			(3	)
Amortization of net actuarial loss		435			437			—		—		(4	)		(6	)
Net periodic benefit cost	$	754		$	677		$	316	$	382	$	14		$	20

The Company does not intend to contribute to the Pension Plan in 2017.

Employee Profit Sharing Plan

The Company 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 Company matches employee contributions up to 100% of the first 3% of each participant’s salary. Each year, the Company 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.

Employee Stock Ownership Plan

The Company 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. Historically the ESOP would purchase from the Company 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 Company’s stock by the ESOP will be funded by employer contributions to the plan and proceeds from dividends paid to the plan participants.

Total expenses related to the Employee Profit Sharing and ESOP Plans for the six months ended June 30, 2017 and June 30, 2016 amounted to $475,000 and $475,000, respectively.

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14. Stock Based Compensation

The following table presents the pre-tax expense associated with non-vested restricted stock awards and non-vested performance based restricted stock units (share-based compensation) and the related tax benefits recognized:

	Six Months Ended June 30,
	2017		2016
	(dollars in thousands)
Share-based compensation expense	$	552	$	437
Related tax benefits	$	226	$	179

15. Financial Instruments with Off-Balance-Sheet Risk

To meet the financing needs of its customers, the Company 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, commitments to sell residential real estate mortgage loans, risk participation agreements 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 Company’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 Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.

Off-balance-sheet financial instruments with contractual amounts that present credit risk included the following:

	June 30, 2017		December 31, 2016
	(dollars in thousands)
Financial instruments whose contractual amount    represents credit risk:
Commitments to extend credit:
Unused portion of existing lines of credit	$	285,301	$	256,767
Origination of new loans		45,273		26,024
Standby letters of credit		8,276		7,763
Financial instruments whose notional amount exceeds    the amount of credit risk:
Commitments to sell residential mortgage loans		2,881		9,622
Customer related derivative contracts:
Interest rate swaps with customers		83,547		68,372
Mirror swaps with counterparties		83,547		68,372
Risk participation agreements with counterparties		16,237		16,378

16. Shareholders’ Equity

Capital guidelines issued by the Federal Reserve Bank (the “FRB”) and by the FDIC require that the Company 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 Company’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.

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On July 2, 2013, the FRB approved the final rules implementing the Basel Committee on Banking Supervision’s capital guidelines for U.S. banks (“Basel III Capital Rules”). On July 9, 2013, the FDIC also approved, as an interim final rule, the regulatory capital requirements for U.S. banks, following the actions of the FRB. On April 8, 2014, the FDIC adopted as final its interim final rule, which is identical in substance to the final rules issued by the FRB in July 2013. Under the final rules, minimum requirements increased for both the quantity and quality of capital held by the Bank. The rules include a new common equity Tier 1 capital risk-weighted assets minimum ratio of 4.5%, raise the minimum ratio of Tier 1 capital to risk-weighted assets from 4.0% to 6.0%, require a minimum ratio of Total capital to risk-weighted assets of 8.0%, and require a minimum Tier 1 leverage ratio of 4.0%.

The Basel III Capital Rules became effective for the Company and the Bank on January 1, 2015 (subject to a phase-in period for the capital conservation buffer discussed below). Quantitative measures established by the Basel III Capital Rules to ensure capital adequacy require the maintenance of minimum amounts and ratios (set forth in the table below) of Common Equity Tier 1 capital, Tier 1 capital and Total capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital to adjusted quarterly average assets (as defined).

When fully phased in on January 1, 2019, the Basel III Capital Rules will require the Company and the Bank to maintain (i) a minimum ratio of Common Equity Tier 1 capital to risk-weighted assets of at least 4.5%, plus a 2.5% “capital conservation buffer” (which is added to the 4.5% Common Equity Tier 1 capital ratio as that buffer is phased in, effectively resulting in a minimum ratio of Common Equity Tier 1 capital to risk-weighted assets of at least 7.0% upon full implementation), (ii) a minimum ratio of Tier 1 capital to risk-weighted assets of at least 6.0%, plus the capital conservation buffer (which is added to the 6.0% Tier 1 capital ratio as that buffer is phased in, effectively resulting in a minimum Tier 1 capital ratio of 8.5% upon full implementation), (iii) a minimum ratio of Total capital (that is, Tier 1 plus Tier 2) to risk-weighted assets of at least 8.0%, plus the capital conservation buffer (which is added to the 8.0% total capital ratio as that buffer is phased in, effectively resulting in a minimum total capital ratio of 10.5% upon full implementation) and (iv) a minimum leverage ratio of 4.0%, calculated as the ratio of Tier 1 capital to average quarterly assets.

The implementation of the capital conservation buffer began on January 1, 2016 at the 0.625% level and will be phased in over a four-year period (increasing by that amount on each subsequent January 1, until it reaches 2.5% on January 1, 2019). The capital conservation buffer is designed to absorb losses during periods of economic stress and, as detailed above, effectively increases the minimum required risk-weighted capital ratios. Banking institutions with a ratio of Common Equity Tier 1 capital to risk-weighted assets below the effective minimum (4.5% plus the capital conservation buffer) will face constraints on dividends, equity repurchases and compensation based on the amount of the shortfall.

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Management believes that as of June 30, 2017 and December 31, 2016, the Company and the Bank met all applicable minimum capital requirements and were considered “well-capitalized” by both the FRB and the FDIC.  

	Actual				Minimum Capital Required For Capital Adequacy				Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer Basel III Phase-In Schedule				Minimum Capital Required For Capital Adequacy Plus Capital Conservation Buffer Basel III Fully Phased In				Minimum To Be Well-Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
	(dollars in thousands)
At June 30, 2017
Cambridge Bancorp:
Total capital (to risk-weighted assets)	$	165,699		13.8%	$	96,091		8.0%	$	111,105		9.25%	$	126,119		10.5%	N/A		N/A
Tier I capital (to risk-weighted    assets)		150,681		12.5%		72,068		6.0%		87,082		7.25%		102,097		8.5%	N/A		N/A
Common equity tier I capital (to    risk-weighted assets)		150,681		12.5%		54,051		4.5%		69,065		5.75%		84,080		7.0%	N/A		N/A
Tier I capital (to average assets)		150,681		8.1%		74,690		4.0%		74,690		4.00%		74,690		4.0%	N/A		N/A
Cambridge Trust Company:
Total capital (to risk-weighted assets)	$	161,963		13.5%	$	96,091		8.0%	$	111,105		9.25%	$	126,119		10.5%	$	120,114		10.0%
Tier I capital (to risk-weighted    assets)		146,945		12.2%		72,068		6.0%		87,082		7.25%		102,097		8.5%		96,091		8.0%
Common equity tier I capital (to    risk-weighted assets)		146,945		12.2%		54,051		4.5%		69,065		5.75%		84,080		7.0%		78,074		6.5%
Tier I capital (to average assets)		146,945		7.9%		74,696		4.0%		74,696		4.00%		74,696		4.0%		93,371		5.0%
At December 31, 2016
Cambridge Bancorp:
Total capital (to risk-weighted assets)	$	159,141		13.1%	$	96,873		8.0%	$	104,441		8.625%	$	127,145		10.5%	N/A		N/A
Tier I capital (to risk-weighted    assets)		144,003		11.9%		72,654		6.0%		80,223		6.625%		102,927		8.5%	N/A		N/A
Common equity tier I capital (to    risk-weighted assets)		144,003		11.9%		54,491		4.5%		62,059		5.125%		84,763		7.0%	N/A		N/A
Tier I capital (to average assets)		144,003		7.9%		72,488		4.0%		72,488		4.000%		72,488		4.0%	N/A		N/A
Cambridge Trust Company:
Total capital (to risk-weighted assets)	$	156,928		13.0%	$	96,873		8.0%	$	104,441		8.625%	$	127,145		10.5%	$	121,091		10.0%
Tier I capital (to risk-weighted    assets)		141,790		11.7%		72,654		6.0%		80,223		6.625%		102,927		8.5%		96,873		8.0%
Common equity tier I capital (to    risk-weighted assets)		141,790		11.7%		54,491		4.5%		62,059		5.125%		84,763		7.0%		78,709		6.5%
Tier I capital (to average assets)		141,790		7.8%		72,488		4.0%		72,488		4.000%		72,488		4.0%		90,610		5.0%

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17. Other Comprehensive Income

Comprehensive income is defined as all changes to equity except investments by and distributions to shareholders. Net income is a component of comprehensive income, with all other components referred to in the aggregate as ‘other comprehensive income’. The Company’s other comprehensive income consists of unrealized gains or losses on securities 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:

	Six Months Ended June 30, 2017							Six Months Ended June 30, 2016
	Before Tax Amount		Tax (Expense) or Benefit			Net-of-tax Amount		Before Tax Amount			Tax (Expense) or Benefit			Net-of-tax Amount
	(dollars in thousands)							(dollars in thousands)
Unrealized gains (losses) on available for sale securities
Unrealized holding gains (losses) arising during period	$	1,072	$	(390	)	$	682	$	5,263		$	(1,870	)	$	3,393
Reclassification adjustment for losses (gains) recognized in net income		3		(2	)		1		(435	)		156			(279	)
Defined benefit retirement plans
Change in unfunded retirement liability		448		(183	)		265		395			(161	)		234
Total Other Comprehensive Income	$	1,523	$	(575	)	$	948	$	5,223		$	(1,875	)	$	3,348

Reclassifications out of Accumulated Other Comprehensive Income (“AOCI”) are presented below:

Six Months Ended June 30,
Details about Accumulated Other Comprehensive Income Components	2017			2016			Affected Line Item in the Statement where Net Income is Presented
	(dollars in thousands)
Unrealized gains and losses on available    for sale securities	$	(3	)	$	435		(Loss) gain on disposition of investment    securities
Tax benefit or (expense)		2			(156	)	Provision for income taxes
Net of tax	$	(1	)	$	279		Net income

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18. Earnings per Share

The following represents a reconciliation between basic and diluted earnings per share:

	Six Months Ended June 30,
	2017			2016
	(dollars in thousands except per share data)
Earnings per common share - basic:
Numerator:
Net income	$	8,842		$	7,898
Less dividends and undistributed earnings allocated to participating securities		(89	)		(101	)
Net income applicable to common shareholders	$	8,753		$	7,797
Denominator:
Weighted average common shares outstanding		4,025			3,976
Earnings per common share - basic	$	2.17		$	1.96
Earnings per common share - diluted:
Numerator:
Net income	$	8,842		$	7,898
Less dividends and undistributed earnings allocated to participating securities		(89	)		—
Net income applicable to common shareholders	$	8,753		$	7,898
Denominator:
Weighted average common shares outstanding		4,025			3,976
Dilutive effect of common stock equivalents		36			46
Weighted average diluted common shares outstanding		4,061			4,022
Earnings per common share - diluted	$	2.16		$	1.96

19. Derivative Financial Instruments

The Company enters into interest rate derivatives to accommodate the business requirements of its customers. Derivatives are recognized as either assets or liabilities and reported in other assets or other 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.

Interest Rate Swaps

The Company 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 June 30, 2017 and December 31, 2016, the Bank had interest rate swap contracts with commercial loan borrowers with notional amounts of $83.5 million and $68.4 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 loan related derivative income.

The credit risk associated with swap transactions is the risk of default by the counterparty. To minimize this risk, the Company 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.

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Risk Participation Agreements

The Company has entered into risk participation agreements (“RPAs”) with other banks participating in commercial loan arrangements. Participating banks guarantee the performance on borrower-related interest rate swap contracts. RPAs are derivative financial instruments and are recorded at fair value and reported in other assets or other liabilities. These derivatives are not designated as hedges and therefore, changes in fair value are recognized in earnings with a corresponding offset within other liabilities.

Under a risk participation-out agreement, a derivative asset, the Company participates out a portion of the credit risk associated with the interest rate swap position executed with the commercial borrower, for a fee paid to the participating bank. Under a risk participation-in agreement, a derivative liability, the Company assumes, or participates in, a portion of the credit risk associated with the interest rate swap position with the commercial borrower, for a fee received from the other bank.

As of June 30, 2017, the notional amounts of the risk participation-in agreements and risk participation-out agreements were $16.2 million and $0, respectively.  

The following table presents the fair values of derivative instruments in the Company’s unaudited consolidated balance sheets:

		Fair Value					Fair Value
	Balance Sheet Location	June 30, 2017		December 31, 2016		Balance Sheet Location	June 30, 2017		December 31, 2016
		(dollars in thousands)					(dollars in thousands)
Derivatives not Designated as Hedging Instruments
Loan related derivative contracts
Interest rate swaps with customers	Other Assets	$	1,879	$	1,632	Other Liabilities	$	—	$	—
Mirror swaps with counterparties	Other Assets		—		—	Other Liabilities		1,879		1,632
Risk participation agreements	Other Assets		—		—	Other Liabilities		10		12
Total		$	1,879	$	1,632		$	1,889	$	1,644

For the six months ended June 30, 2017 and June 30, 2016, the Company recorded $363,000 and $799,000, respectively, of gains on hedging activities in loan related derivative income.

20. Fair Value Measurements

The Company 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 Company’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 Company’s market assumptions.

The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities 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 Company may be required to record at fair value other assets on a nonrecurring basis, such as collateral dependent impaired loans.

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The following is a summary of the carrying values and estimated fair values of the Company’s significant financial instruments as of the dates indicated:

	June 30, 2017				December 31, 2016
	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
	(dollars in thousands)
Financial assets
Cash and cash equivalents	$	33,089	$	33,089	$	54,050	$	54,050
Securities - available for sale		228,591		228,591		325,641		325,641
Securities - held to maturity		240,380		242,798		82,502		83,755
Loans excluding loans held for sale, net		1,313,170		1,294,990		1,304,893		1,286,497
Loans held for sale		424		424		6,506		6,506
FHLB Boston stock		8,159		8,159		4,098		4,098
Accrued interest receivable		4,594		4,594		4,627		4,627
Loan level interest rate swaps		1,879		1,879		1,632		1,632
Financial liabilities
Deposits		1,615,981		1,543,783		1,686,038		1,684,065
Short-term borrowings		109,000		109,001		—		—
Long-term borrowings		3,663		3,681		3,746		3,745
Loan level interest rate swaps		1,879		1,879		1,632		1,632
Risk participation agreements		10		10		12		12

The following tables summarize certain assets reported at fair value on a recurring basis:

	Fair Value as of June 30, 2017
	Level 1		Level 2		Level 3		Total
	(dollars in thousands)
Measured on a recurring basis
Securities available for sale
U.S. GSE obligations	$	—	$	99,017	$	—	$	99,017
Mortgage-backed securities		—		123,924		—		123,924
Corporate debt securities		—		5,047		—		5,047
Mutual funds		603		—		—		603
Other assets
Interest rate swaps with customers		—		1,879		—		1,879
Other liabilities
Mirror swaps with counterparties		—		1,879		—		1,879
Risk participation agreements		—		10		—		10

	Fair Value as of December 31, 2016
	Level 1		Level 2		Level 3		Total
	(dollars in thousands)
Measured on a recurring basis
Securities available for sale
U.S. GSE obligations	$	—	$	138,709	$	—	$	138,709
Mortgage-backed securities		—		181,299		—		181,299
Corporate debt securities		—		5,029		—		5,029
Mutual funds		604		—		—		604
Other assets
Interest rate swaps with customers		—		1,632		—		1,632
Other liabilities
Mirror swaps with counterparties		—		1,632		—		1,632
Risk participation agreements		—		12		—		12

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The following tables present the carrying value of assets measured at fair value on a non-recurring basis:

	Fair Value as of June 30, 2017
	Level 1		Level 2		Level 3		Total
	(dollars in thousands)
Items recorded at fair value on a nonrecurring basis
Assets
Collateral dependent impaired loans	$	—	$	—	$	1,962	$	1,962
Loans held for sale		—		—		424		424
Total assets at fair value on a nonrecurring basis	$	—	$	—	$	2,386	$	2,386

	Fair Value as of December 31, 2016
	Level 1		Level 2		Level 3		Total
	(dollars in thousands)
Items recorded at fair value on a nonrecurring basis
Assets
Collateral dependent impaired loans	$	—	$	—	$	654	$	654
Loans held for sale		—		—		6,506		6,506
Total assets at fair value on a nonrecurring basis	$	—	$	—	$	7,160	$	7,160

There were no transfers between levels for the six months ended June 30, 2017 and the twelve months ended December 31, 2016.

The following is a description of the principal valuation methodologies used by the Company 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 of Boston Stock

The fair value of FHLB of Boston stock equals its carrying value since such stock is only redeemable at its par value.

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.

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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 Company 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 Company.

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Audited Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm	108
Consolidated Balance Sheets as of December 31, 2016 and 2015	109
Consolidated Statements of Income for the Years Ended December 31, 2016, 2015 and 2014	110
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2016, 2015 and 2014	111
Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2016, 2015 and 2014	112
Consolidated Statements of Cash Flows for the Years Ended December 31, 2016, 2015 and 2014	113
Notes to Consolidated Financial Statements	114

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Report of Independent Registered Public Accounting Firm

The Board of Directors

Cambridge Bancorp:

We have audited the accompanying consolidated balance sheets of Cambridge Bancorpand its subsidiariesas of December 31, 2016 and 2015, and the related consolidated statements of income, comprehensive income, changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2016. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States) and 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 financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our 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, 2016 and 2015, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2016 in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

Boston, Massachusetts

August 9, 2017

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CAMBRIDGE BANCORP AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	December 31,
	2016			2015
	(dollars in thousands)
Assets
Cash and cash equivalents	$	54,050		$	24,645
Investment securities
Securities available for sale, amortized cost $329,726 and $349,595, respectively		325,641			347,173
Securities held to maturity, fair value $83,755 and $86,541, respectively		82,502			83,063
Total investment securities		408,143			430,236
Loans held for sale, at lower of cost or fair value		6,506			—
Loans
Residential mortgage		534,404			546,245
Commercial mortgage		616,140			511,071
Home equity		75,051			63,522
Commercial & Industrial		59,706			42,384
Consumer		34,853			28,992
Total loans		1,320,154			1,192,214
Less: allowance for loan losses		(15,261	)		(15,191	)
Net loans		1,304,893			1,177,023
Stock in FHLB of Boston, at cost		4,098			6,465
Bank owned life insurance		30,499			29,887
Banking premises and equipment, net		10,451			11,371
Net deferred tax assets		13,693			11,919
Accrued interest receivable		4,627			4,222
Other assets		12,039			10,433
Total assets	$	1,848,999		$	1,706,201
Liabilities
Deposits
Demand	$	472,923		$	436,998
Interest bearing checking		430,706			370,400
Money market		72,057			73,911
Savings		539,190			497,525
Certificates of deposit		171,162			178,390
Total deposits		1,686,038			1,557,224
Short-term borrowings		—			—
Long-term borrowings		3,746			3,910
Other liabilities		24,544			20,004
Total liabilities		1,714,328			1,581,138
Shareholders’ Equity
Common stock, par value $1.00; Authorized 10,000,000 shares; Outstanding: 4,036,879     shares and 4,000,181 shares, respectively		4,037			4,000
Additional paid-in capital		33,253			30,427
Retained earnings		107,262			99,064
Accumulated other comprehensive loss		(9,881	)		(8,428	)
Total shareholders’ equity		134,671			125,063
Total liabilities and shareholders’ equity	$	1,848,999		$	1,706,201

The accompanying notes are an integral part of these consolidated financial statements.

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CAMBRIDGE BANCORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

	For the Year Ended December 31,
	2016		2015		2014
	(dollars in thousands, except share data)
Interest and dividend income
Interest on taxable loans	$	48,353	$	45,149	$	40,466
Interest on tax exempt loans		415		209		15
Interest on taxable investment securities		5,230		5,921		7,085
Interest on tax exempt investment securities		2,737		2,766		2,664
Dividends on FHLB of Boston stock		179		259		101
Interest on overnight investments		114		37		40
Total interest and dividend income		57,028		54,341		50,371
Interest expense
Interest on deposits		3,260		2,459		1,950
Interest on borrowed funds		95		235		148
Total interest expense		3,355		2,694		2,098
Net interest and dividend income		53,673		51,647		48,273
Provision for loan losses		132		1,075		1,550
Net interest and dividend income after provision for    loan losses		53,541		50,572		46,723
Noninterest income
Wealth management income		20,389		19,242		17,954
Deposit account fees		2,922		2,324		2,416
ATM/Debit card income		1,140		1,192		1,247
Bank owned life insurance income		612		667		665
Gain on disposition of investment securities		438		690		1,073
Gain on loans held for sale		916		609		170
Loan related derivative income		1,323		260		—
Other income		921		881		939
Total noninterest income		28,661		25,865		24,464
Noninterest expense
Salaries and employee benefits		34,529		30,838		27,799
Occupancy and equipment		9,331		9,024		8,510
Data processing		5,024		4,807		4,567
Professional services		2,394		2,260		2,008
Marketing		1,706		2,380		2,117
FDIC Insurance		834		854		793
Other expenses		2,932		3,029		3,213
Total noninterest expense		56,750		53,192		49,007
Income before income taxes		25,452		23,245		22,180
Income tax expense		8,556		7,551		7,236
Net income	$	16,896	$	15,694	$	14,944
Share data
Weighted average number of shares outstanding, basic		3,990,343		3,938,117		3,886,692
Weighted average number of shares outstanding, diluted		4,028,944		3,993,599		3,957,416
Basic earnings per share	$	4.19	$	3.94	$	3.81
Diluted earnings per share	$	4.15	$	3.93	$	3.78

The accompanying notes are an integral part of these consolidated financial statements.

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CAMBRIDGE BANCORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	For the Year Ended December 31,
	2016			2015			2014
	(dollars in thousands)
Net income	$	16,896		$	15,694		$	14,944
Other comprehensive income (loss), net of tax
Unrealized (losses) gains on available for sale securities
Unrealized holding (losses) gains arising during period		(735	)		(980	)		3,973
Less: reclassification adjustment for gains included in net income		(281	)		(443	)		(688	)
Total unrealized (losses) gains on securities		(1,016	)		(1,423	)		3,285
Defined benefit retirement plans
Change in unfunded retirement liability		(437	)		40			(6,222	)
Other comprehensive loss		(1,453	)		(1,383	)		(2,937	)
Comprehensive income	$	15,443		$	14,311		$	12,007

The accompanying notes are an integral part of these consolidated financial statements.

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CAMBRIDGE BANCORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

	Common Stock			Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity
	(dollars in thousands)
Balance at December 31, 2013	$	3,885		$	26,027		$	83,479		$	(4,108	)	$	109,283
Net income		—			—			14,944			—			14,944
Other comprehensive income		—			—			—			(2,937	)		(2,937	)
Stock based compensation		18			491			—			—			509
Exercise of stock options		42			1,254			—			—			1,296
Stock issued to ESOP and DSP		15			614			—			—			629
Dividends declared ($1.68 per share)		—			—			(6,602	)		—			(6,602	)
Stock repurchased		(19	)		(122	)		(723	)		—			(864	)
Balance at December 31, 2014		3,941			28,264			91,098			(7,045	)		116,258
Net income		—			—			15,694			—			15,694
Other comprehensive income		—			—			—			(1,383	)		(1,383	)
Stock based compensation		22			476			—			—			498
Exercise of stock options		36			1,080			—			—			1,116
Stock issued to ESOP and DSP		15			710			—			—			725
Dividends declared ($1.80 per share)		—			—			(7,178	)		—			(7,178	)
Stock repurchased		(14	)		(103	)		(550	)		—			(667	)
Balance at December 31, 2015		4,000			30,427			99,064			(8,428	)		125,063
Net income		—			—			16,896			—			16,896
Other comprehensive income		—			—			—			(1,453	)		(1,453	)
Stock based compensation		12			956			—			—			968
Exercise of stock options		41			1,367			—			—			1,408
Stock issued to ESOP and DSP		16			761			—			—			777
Dividends declared ($1.84 per share)		—			—			(7,428	)		—			(7,428	)
Stock repurchased		(32	)		(258	)		(1,270	)		—			(1,560	)
Balance at December 31, 2016	$	4,037		$	33,253		$	107,262		$	(9,881	)	$	134,671

The accompanying notes are an integral part of these consolidated financial statements.

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CAMBRIDGE BANCORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Year Ended December 31,
	2016			2015			2014
	(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	16,896		$	15,694		$	14,944
Adjustments to reconcile net income to net cash provided by    operating activities:
Provision for loan losses		132			1,075			1,550
Amortization of deferred charges and fees, net		1,655			1,027			1,060
Depreciation and amortization		2,107			1,935			1,817
Bank owned life insurance income		(612	)		(667	)		(665	)
Gain on disposition of investment securities		(438	)		(690	)		(1,073	)
Compensation expense from stock option and restricted stock grants		968			498			509
Change in loans held for sale		(6,506	)		284			119
Change in accrued interest receivable, deferred taxes, other assets and    other liabilities		963			835			(2,216	)
Other, net		43			25			56
Net cash provided by operating activities		15,208			20,016			16,101
CASH FLOWS FROM INVESTING ACTIVITIES
Origination of loans		(275,866	)		(260,020	)		(301,863	)
Proceeds from principal payments of loans		147,282			148,049			163,161
Proceeds from calls/maturities of securities available for sale		156,272			168,787			68,190
Proceeds from sales of securities available for sale and held to maturity		18,070			47,625			30,013
Purchase of securities available for sale		(154,719	)		(225,912	)		(43,741	)
Proceeds from calls/maturities of securities held to maturity		11,450			6,206			3,776
Purchase of securities held to maturity		(11,238	)		(9,691	)		(24,295	)
Purchase of bank owned life insurance		—			—			(5,000	)
Sale (purchase) of FHLB of Boston stock		2,367			1,490			(1,724	)
Purchase of banking premises and equipment		(1,187	)		(4,939	)		(233	)
Net cash used by investing activities		(107,569	)		(128,405	)		(111,716	)
CASH FLOWS FROM FINANCING ACTIVITIES
Change in deposits		128,733			186,688			(38,511	)
Cash dividends paid on common stock		(7,428	)		(7,178	)		(6,602	)
Repurchase of common stock		(1,560	)		(667	)		(864	)
Proceeds from issuance of common stock		2,185			1,841			1,925
Change in short-term borrowings		—			(69,000	)		69,000
Proceeds from long-term borrowings		—			3,950			—
Repayment of long-term borrowings		(164	)		(40	)		—
Net cash provided by financing activities		121,766			115,594			24,948
Net decrease in cash and cash equivalents		29,405			7,205			(70,667	)
Cash and cash equivalents at beginning of period		24,645			17,440			88,107
Cash and cash equivalents at end of period	$	54,050		$	24,645		$	17,440
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest	$	3,371		$	2,644		$	2,094
Income taxes	$	9,205		$	8,220		$	8,490

The accompanying notes are an integral part of these consolidated financial statements.

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CAMBRIDGE BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2016

1. THE BUSINESS

The accompanying consolidated financial statements include the accounts of Cambridge Bancorp (the “Company”) 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 Company herein relate to the consolidated group of companies. During 2016, the Company closed CTC Security Corporation II. All significant intercompany accounts and transactions have been eliminated in preparation of the consolidated financial statements.

The Company is a state chartered, federally registered bank holding company headquartered in Cambridge, Massachusetts, that was incorporated in 1983. The Company is the sole shareholder of the Bank, a Massachusetts trust company chartered in 1890 which is a community-oriented commercial bank. The community banking business, the Company’s only reportable operating segment, consisting of wealth management services, commercial banking and consumer banking is managed as a single strategic unit.

The Bank offers a full range of commercial and consumer banking services through its network of 11 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 two wholly-owned Massachusetts security corporations, CTC Security Corporation 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 $2.6 billion and $2.3 billion at December 31, 2016 and 2015, 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 financial services industry.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. The allowance for loan losses, the fair values of financial instruments and the valuation of deferred tax assets are particularly subject to change.

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. GSE and U.S.

114

Government Agency obligations represent debt securities issued by the Federal Farm Credit Bank, 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 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 shareholders’ equity. Shareholders’ equity included net unrealized losses of $2.6 million and $1.6 million at December 31, 2016 and 2015, respectively. These amounts are net of deferred taxes receivable of $1.5 million and $851,000, in each of the respective years. The Company 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 Company’s intent to sell the security or whether it is more likely than not that the Company will be required to sell the debt security before its anticipated recovery.

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 amortized as an adjustment to yield over the life of the related loans. 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 Company 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 Company 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 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.

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 that evaluates the risk characteristics relevant to each portfolio segment and takes into consideration multiple internal and external factors. Internal factors include, but are not limited to, (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, (d) the growth and vintage of the portfolios and (e) the experience of, and any changes in, lending and credit personnel. External factors include, but are not limited to, (a) conditions and trends in the local and national economy and (b) levels and trends in national delinquent and non-performing loans.

115

The Bank evaluates certain loans 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 – This includes multifamily properties. 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.

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 to provide for probable 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 on an individual loan basis. Changes in fair value relating to loans held for sale below the loans cost basis are charged against gain on loans held for sale. Gains and losses on the actual sale of the residential loans are recorded in earnings as net gains (losses) on loans held for sale on the consolidated statements of income.

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. Applicable regulations generally limit our investment in bank-owned life insurance to 25% of our Tier 1 capital plus our allowance for loan losses. The Bank reviews the financial strength of the insurance carriers prior to the purchase of BOLI and at least annually thereafter.

116

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.

Advertising Costs

Advertising costs are expensed as 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.

Mortgage servicing assets are recognized as separate assets when rights are acquired through purchase or through sale of financial assets with servicing rights retained. The fair value of the servicing rights is determined by estimating the present value of future net cash flows, taking into consideration market loan prepayment speeds, discount rates, servicing costs and other economic factors. For purposes of measuring impairment, the underlying loans are stratified into relatively homogeneous pools based on predominant risk characteristics which include product type (i.e., fixed or adjustable) and interest rate bands. If the aggregate carrying value of the capitalized mortgage servicing rights for a stratum exceeds its fair value, MSR impairment is recognized in earnings through a valuation allowance for the difference. As the loans are repaid and net servicing revenue is earned, the MSR asset is amortized as an offset to loan servicing income. Servicing revenues are expected to exceed this amortization expense. However, if actual prepayment experience or defaults exceed what was originally anticipated, net servicing revenues may be less than expected and mortgage servicing rights may be impaired.

Income Taxes

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, and in the Commonwealth of Massachusetts and other states as required.  For the year 2016, the Company filed taxes in Massachusetts and New Hampshire.

The Company uses the liability (or balance sheet) method for 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.

Fee Revenue

Wealth management revenues include asset based revenues (trust and investment advisory fees) that are primarily accrued as earned based upon a percentage of asset values under administration.  Also included in wealth management revenues are transaction-based revenues (financial planning fees and other service fees), which are recognized as revenue to the extent that services have been completed.  Fee revenue from deposit service charges is generally recognized when earned.

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Pension and Retirement Plans

The Company 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 Company 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

Stock-based compensation plans provide for awards of stock options and other equity incentives, including nonvested share units and nonvested performance share units.

Compensation expense for awards is recognized over the service period based on the fair value at the date of grant. Awards of nonvested share units and nonvested performance share units are valued at the fair market value of the Company’s common stock as of the award date. Nonvested performance share unit compensation expense is based on the most recent performance assumption available and is adjusted as assumptions change. If the goals are not met, vesting does not occur and no compensation cost will be recognized and any recognized compensation costs will be reversed. Stock-based awards that do not require future service are expensed immediately. The Company estimates expected forfeitures in determining compensation expense.

Derivative Instruments and Hedging Activities

Derivative instruments related to commercial loan swaps, mirror swaps with counterparties and risk participation agreements are considered “derivatives.”

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 such 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 such derivatives 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 is 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 such derivatives including accrued net settlements that do not qualify for hedge accounting are reported in noninterest income.

Fair Value Measurements

Fair value is defined as 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. The Company measures the fair values of its financial instruments in accordance with accounting guidance that requires an entity to base fair value on exit price, and maximize the use of observable inputs and minimize the use of unobservable inputs to determine the exit price.

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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.

Earnings per Common Share

Earnings per common share is computed using the two-class method prescribed under ASC Topic 260, “Earnings Per Share.” ASC Topic 260 provides that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method. We have determined that our outstanding non-vested stock awards are participating securities.

Under the two-class method, basic earnings per common share is computed by dividing net earnings allocated to common stock by the weighted-average number of common shares outstanding during the applicable period, excluding outstanding participating securities. Diluted earnings per common share is computed using the weighted-average number of shares determined for the basic earnings per common share computation plus the dilutive effect of common stock equivalents. A reconciliation of the weighted-average shares used in calculating basic earnings per common share and the weighted average common shares used in calculating diluted earnings per common share for the reported periods is provided in Note 21 - Earnings Per Common Share.

Subsequent Events

Management has reviewed events occurring through February 27, 2017, the date the consolidated financial statements were issued and determined that no subsequent events occurred requiring adjustment to or disclosure in these financial statements.

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 Company’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.

Accounting Standards Update No. 2016-01 - “Recognition and Measurement of Financial Assets and Financial Liabilities” (“ASU 2016-01”), was issued in January 2016 and provides revised guidance related to the accounting for and reporting of financial instruments. Some of the main provisions include: requiring most equity securities to be reported at fair value with unrealized gains and losses reported in the income statement; requiring separate presentation of financial assets and liabilities by measurement category and form (i.e. securities or loans); clarifying that entities must assess valuation allowances on a deferred tax asset related to available for sale debt securities in combination with their other deferred tax assets; and eliminating the requirement to disclose the method and significant assumptions used to estimate fair value for financial instruments measured at amortized cost on the balance sheet. ASU 2016-01 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. The Company has not yet determined the effect of ASU 2016-01 on its ongoing financial reporting.

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Accounting Standards Update No. 2016-02 - “Leases” (“ASU 2016-02”), was issued in February 2016 and provides revised guidance related to the accounting and reporting of leases. ASU 2016-02 requires lessees to recognize most leases on the balance sheet. The recognition, measurement and presentation of expenses and cash flows arising from a lease by a lessee will depend on its classification as a finance or operating lease. ASU 2016-02 requires a modified retrospective transition, with a number of practical expedients that entities may elect to apply. ASU 2016-02 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2018. Early adoption is permitted. The Company has not yet determined the effect of ASU 2016-02 on its ongoing financial reporting.

Accounting Standards Update No. 2016-09 - “Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”) was issued in March 2016. ASU 2016-09 was issued as part of the FASB Simplification Initiative which intends to reduce the complexity of GAAP while improving usefulness to users. There are eight main items in this ASU that contribute to the simplification of share-based accounting. ASU 2016-09 will be effective for public business entities for the fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. For all other entities the ASU will be effective for the fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently assessing the impact the adoption of ASU 2016-09 will have on its consolidated financial statements.

Accounting Standards Update No. 2016-13 - “Financial Instruments – Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”) was issued in June 2016. ASU 2016-13 will significantly change how entities measure and recognize credit impairment for many financial assets. Under this standard, the new current expected credit loss model will require entities to immediately recognize an estimate of credit losses expected to occur over the remaining life of the financial assets that are in the scope of the standard. This new guidance also made targeted amendments to the current impairment model for available for sale debt securities. ASU 2016-13 will be effective for public business entities for fiscal years beginning after December 15, 2019, including interim periods within that reporting period. For all other entities the ASU will be effective for the fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. Early adoption for fiscal years and interim periods beginning after December 15, 2018 is permitted. The Company is currently assessing the impact the adoption of ASU 2016-13 will have on its consolidated financial statements.

4. CASH AND DUE FROM BANKS

At December 31, 2016 and 2015, cash and due from banks totaled $54.1 million and $24.6 million, respectively. Of this amount, $11.2 million and $10.1 million, respectively, were maintained to satisfy the reserve requirements of the Federal Reserve Bank of Boston (“FRB Boston”). Additionally, $500,000 and $1.0 million, respectively, were pledged to the New Hampshire Banking Department relating to Cambridge Trust Company of New Hampshire, Inc.’s operations in that State.

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:

	December 31, 2016									December 31, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(dollars in thousands)
Available for sale securities
U.S. GSE obligations	$	140,026	$	23	$	(1,340	)	$	138,709	$	140,242	$	58	$	(530	)	$	139,770
Mortgage-backed securities		183,974		479		(3,154	)		181,299		207,681		1,061		(2,936	)		205,806
Corporate debt securities		5,054		13		(38	)		5,029		1,000		—		(15	)		985
Mutual funds		672		—		(68	)		604		672		—		(60	)		612
Total available for sale securities	$	329,726	$	515	$	(4,600	)	$	325,641	$	349,595	$	1,119	$	(3,541	)	$	347,173
Held to maturity securities
Mortgage-backed securities	$	696	$	23	$	—		$	719	$	1,306	$	50	$	—		$	1,356
Municipal securities		81,806		1,894		(664	)		83,036		81,757		3,464		(36	)		85,185
Total held to maturity securities	$	82,502	$	1,917	$	(664	)	$	83,755	$	83,063	$	3,514	$	(36	)	$	86,541
Total	$	412,228	$	2,432	$	(5,264	)	$	409,396	$	432,658	$	4,633	$	(3,577	)	$	433,714

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All of the Company’s mortgage-backed securities have been issued by, or are collateralized by securities issued by, either Government National Mortgage Association (Ginnie Mae), Federal National Mortgage Association (Fannie Mae), or Federal Home Loan Mortgage Corporation (Freddie Mac).

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 may 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				Total
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
At December 31, 2016	(dollars in thousands)
Available for sale securities
U.S. GSE obligations	$	15,016	$	15,029	$	125,010	$	123,680	$	—	$	—	$	—	$	—	$	140,026	$	138,709
Mortgage-backed securities		17		17		789		822		28,693		28,566		154,475		151,894		183,974		181,299
Corporate debt securities		—		—		4,054		4,016		1,000		1,013		—		—		5,054		5,029
Total available for sale    securities	$	15,033	$	15,046	$	129,853	$	128,518	$	29,693	$	29,579	$	154,475	$	151,894	$	329,054	$	325,037
Held to maturity securities
Mortgage-backed securities	$	1	$	1	$	630	$	650	$	3	$	3	$	62	$	65	$	696	$	719
Municipal securities		1,605		1,608		15,996		16,344		29,563		30,414		34,642		34,670		81,806		83,036
Total held to maturity    securities	$	1,606	$	1,609	$	16,626	$	16,994	$	29,566	$	30,417	$	34,704	$	34,735	$	82,502	$	83,755
Total	$	16,639	$	16,655	$	146,479	$	145,512	$	59,259	$	59,996	$	189,179	$	186,629	$	411,556	$	408,792

The following tables show the Company’s securities with gross unrealized losses, aggregated by investment category and length of time that individual securities have been in a continuous loss position:

	December 31, 2016
	Less than 12 months					12 months or longer					Total
Temporarily Impaired Securities	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(dollars in thousands)
U.S. GSE obligations	$	118,686	$	(1,340	)	$	—	$	—		$	118,686	$	(1,340	)
Mortgage-backed securities		149,860		(2,795	)		14,425		(359	)		164,285		(3,154	)
Corporate debt securities		4,016		(38	)		—		—			4,016		(38	)
Municipal securities		18,626		(664	)		—		—			18,626		(664	)
Mutual funds		—		—			604		(68	)		604		(68	)
Total temporarily impaired securities	$	291,188	$	(4,837	)	$	15,029	$	(427	)	$	306,217	$	(5,264	)

	December 31, 2015
	Less than 12 months					12 months or longer					Total
Temporarily Impaired Securities	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(dollars in thousands)
U.S. GSE obligations	$	84,726	$	(485	)	$	4,953	$	(45	)	$	89,679	$	(530	)
Mortgage-backed securities		99,190		(1,154	)		71,554		(1,782	)		170,744		(2,936	)
Corporate debt securities		985		(15	)		—		—			985		(15	)
Municipal securities		3,517		(36	)		—		—			3,517		(36	)
Mutual funds		—		—			612		(60	)		612		(60	)
Total temporarily impaired securities	$	188,418	$	(1,690	)	$	77,119	$	(1,887	)	$	265,537	$	(3,577	)

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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 Company 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, 2016, 132 debt securities and one equity security had gross unrealized losses, with an aggregate depreciation of 1.69% from the Company’s amortized cost basis. The largest unrealized loss percentage of any single security was 10.16% (or $51,000) of its amortized cost. The largest unrealized dollar loss of any single security was $189,000 (or 3.79%) of its amortized cost. The Company 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 Company does not intend to sell these securities before recovery, and b) that it is more likely than not that the Company will not be required to sell these securities before recovery, the Company does not consider these securities to be other-than-temporarily impaired as of December 31, 2016.

The following table sets forth information regarding sales of investment securities and the resulting gains or losses from such sales:

		For the Year Ended December 31,
		2016		2015		2014
	(dollars in thousands)
Amortized cost of securities sold		$	17,632	$	46,935	$	28,940
Gain realized on securities sold			438		690		1,073
Net proceeds from securities sold		$	18,070	$	47,625	$	30,013

6. LOANS AND ALLOWANCE FOR LOAN LOSSES

The Company’s lending activities are conducted principally in Eastern Massachusetts. The Company grants single-family and multi-family residential loans, commercial, commercial real estate, construction loans and a variety of consumer loans.  Most loans granted by the Company are secured by real estate collateral. The Company’s commercial business loans are primarily made based on the cash flow of the borrower and secondarily on the underlying collateral provided by the borrower, with liquidation of the underlying real estate collateral typically being viewed as the primary source of repayment in the event of borrower default. The borrowers’ cash flow may be difficult to predict, and collateral securing these loans may fluctuate in value. The repayment of commercial business loans depends primarily on the cash flow and credit worthiness of the borrower and secondarily on the underlying collateral provided by the borrower. Although commercial business loans are often collateralized by equipment, inventory, accounts receivable, or other business assets, the liquidation of collateral in the event of default is often an insufficient source of repayment. Repayment of the Company’s residential loans are generally dependent on the health of the employment market in the borrowers’ geographic areas and that of the general economy with liquidation of the underlying real estate collateral being typically viewed as the primary source of repayment in the event of borrower default.

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Loans outstanding are detailed by category as follows:

	December 31,
	2016		2015
	(dollars in thousands)
Residential mortgage
Mortgages - fixed rate	$	305,404	$	338,576
Mortgages - adjustable rate		228,028		206,835
Deferred costs net of unearned fees		972		834
Total Residential mortgages		534,404		546,245
Commercial mortgage
Mortgages - nonowner occupied		513,578		422,923
Mortgages - owner occupied		43,932		43,265
Construction		58,406		44,624
Deferred costs net of unearned fees		224		259
Total Commercial mortgages		616,140		511,071
Home equity
Home equity - lines of credit		70,883		59,676
Home equity - term loans		3,925		3,630
Deferred costs net of unearned fees		243		216
Total Home equity		75,051		63,522
Commercial & industrial
Commercial & industrial		59,638		42,209
Deferred costs net of unearned fees		68		175
Total Commercial &Industrial		59,706		42,384
Consumer
Secured		33,386		27,390
Unsecured		1,451		1,585
Deferred costs net of unearned fees		16		17
Total Consumer		34,853		28,992
Total loans	$	1,320,154	$	1,192,214

Certain directors and officers of the Company 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, 2016 and 2015, total loans outstanding to such directors and officers were $690,000 and $884,000, respectively. During 2016, $355,000 of additions and $406,000 of repayments were made to these loans, compared to $210,000 of additions and $167,000 of repayments made during 2015.

The following tables set forth the recorded investment for non-performing loans:

	December 31, 2016
	Residential Mortgages		Commercial Mortgages		Home Equity		Commercial & Industrial		Consumer		Total
	(dollars in thousands)
Non-performing loans:
Non-accrual loans	$	998	$	—	$	—	$	24	$	1	$	1,023
Loans past due >90 days, but still accruing		—		232		—		—		—		232
Troubled debt restructurings		132		—		—		289		—		421
Total	$	1,130	$	232	$	—	$	313	$	1	$	1,676

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	December 31, 2015
	Residential Mortgages		Commercial Mortgages		Home Equity		Commercial & Industrial		Consumer		Total
	(dollars in thousands)
Non-performing loans:
Non-accrual loans	$	754	$	306	$	—	$	420	$	1	$	1,481
Loans past due >90 days, but still accruing		—		—		—		—		—		—
Troubled debt restructurings		—		—		—		—		—		—
Total	$	754	$	306	$	—	$	420	$	1	$	1,481

Troubled Debt Restructurings (“TDRs”)

Loans are considered restructured in a troubled debt restructuring when the Company has granted concessions to a borrower due to the borrower’s financial condition that it otherwise would not have considered. These concessions may include modifications of the terms of the debt such as deferral of payments, extension of maturity, reduction of principal balance, reduction of the stated interest rate other than normal market rate adjustments, or a combination of these concessions. Debt may be bifurcated with separate terms for each tranche of the restructured debt. Restructuring a loan in lieu of aggressively enforcing the collection of the loan may benefit the Company by increasing the ultimate probability of collection.

Restructured loans are classified as accruing or non-accruing based on management’s assessment of the collectability of the loan. Loans which are already on nonaccrual status at the time of the restructuring generally remain on nonaccrual status for approximately six months or longer before management considers such loans for return to accruing status. Accruing restructured loans are placed into nonaccrual status if and when the borrower fails to comply with the restructured terms and management deems it unlikely that the borrower will return to a status of compliance in the near term.

Troubled debt restructurings are classified as impaired loans. The Company identifies loss allocations for impaired loans on an individual loan basis. During the twelve months ended December 31, 2016, the Company modified four loans with a pre-modification carrying value (which consists of the unpaid principal balance, net of charge-offs and unamortized deferred loan origination fees and costs, at the time of the restructuring) of $445,000 and a post-modification carrying value of $444,000. At December 31, 2016, these loans had a carrying value of $421,000. There were no TDR defaults during the year ended December 31, 2016. There were no TDRs during the twelve months ended December 31, 2015.

The allowance for loan losses included specific reserves for these troubled debt restructurings of approximately $117,000 and $0, respectively, at December 31, 2016 and 2015.  

As of December 31, 2016, there were no significant commitments to lend additional funds to borrowers whose loans were restructured.

Impaired Loans

Impaired loans are loans for which it is probable that the Company will not be able to collect all amounts due according to the contractual terms of the loan agreements and loans restructured in a troubled debt restructuring. In 2016, the Company had twelve loans considered impaired with a recorded investment of $1.4 million as compared to 2015 where the Company had eight loans considered impaired with a recorded investment of $1.1 million. The interest income recognized associated with these loans was not significant to the results of operations.  The recorded investment in impaired loans consists of unpaid principal balance, net of charge-offs, interest payments received applied to principal and unamortized deferred loan origination fees and costs.  

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The following tables contain period-end balances of loans receivable disaggregated by credit quality indicator:

	December 31, 2016
	(dollars in thousands)
	Residential Mortgages		Home Equity		Consumer
Credit risk profile based on payment activity:
Performing	$	533,273	$	75,051	$	34,852
Non-performing		1,131		—		1
Total	$	534,404	$	75,051	$	34,853
			Commercial Mortgages		Commercial & Industrial
Credit risk profile by internally assigned grade:
1-6 (Pass)			$	612,636	$	56,310
7 (Special Mention)				2,861		1,431
8 (Substandard)				643		1,965
9 (Doubtful)				—		—
10 (Loss)				—		—
Total			$	616,140	$	59,706

	December 31, 2015
	(dollars in thousands)
	Residential Mortgages		Home Equity		Consumer
Credit risk profile based on payment activity:
Performing	$	545,491	$	63,522	$	28,991
Non-performing		754		—		1
Total	$	546,245	$	63,522	$	28,992
			Commercial Mortgages		Commercial & Industrial
Credit risk profile by internally assigned grade:
1-6 (Pass)			$	506,520	$	39,490
7 (Special Mention)				4,007		2,570
8 (Substandard)				544		324
9 (Doubtful)				—		—
10 (Loss)				—		—
Total			$	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.

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.

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• 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.

Delinquencies.

The past due status of a loan is determined in accordance with its contractual repayment terms. All loan types are reported past due when one scheduled payment is due and unpaid for 30 days or more. Loan delinquencies can be attributed to many factors, such as but not limited to a continuing weakness in, or deteriorating, economic conditions in the region in which the collateral is located, the loss of a tenant or lower lease rates for commercial borrowers, or the loss of income for consumers and the resulting liquidity impacts on the borrowers.

The following tables contain period-end balances of loans receivable disaggregated by past due status:

	December 31, 2016
	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater		Total Past Due		Current Loans		Total
	(dollars in thousands)
Residential Mortgages	$	698	$	179	$	602	$	1,479	$	532,925	$	534,404
Commercial Mortgages		—		250		232		482		615,658		616,140
Home Equity		4		—		—		4		75,047		75,051
Commercial & Industrial		173		—		1		174		59,532		59,706
Consumer loans		6		5		—		11		34,842		34,853
Total	$	881	$	434	$	835	$	2,150	$	1,318,004	$	1,320,154

	December 31, 2015
	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater		Total Past Due		Current Loans		Total
	(dollars in thousands)
Residential Mortgages	$	502	$	—	$	—	$	502	$	545,743	$	546,245
Commercial Mortgages		—		815		306		1,121		509,950		511,071
Home Equity		68		—		—		68		63,454		63,522
Commercial & Industrial		409		364		390		1,163		41,221		42,384
Consumer loans		886		—		—		886		28,106		28,992
Total	$	1,865	$	1,179	$	696	$	3,740	$	1,188,474	$	1,192,214

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The following is information pertaining to impaired loans:

	December 31, 2016
	Carrying Value		Average Carrying Value		Unpaid Principal Balance		Related Allowance		Interest Income Recognized
	(dollars in thousands)
With no required reserve recorded:
Commercial and industrial	$	—	$	—	$	—	$	—	$	—
Commercial real estate		—		—		—		—		—
Residential real estate		528		542		687		—		—
Consumer		—		—		—		—		—
Home equity		102		105		126		—		1
Total		630		647		813		—		1
With required reserve recorded:
Commercial and industrial		289		297		295		114		2
Commercial real estate		—		—		—		—		—
Residential real estate		499		505		509		76		21
Consumer		—		—		—		—		—
Home equity		—		—		—		—		—
Total		788		802		804		190		23
Total:
Commercial and industrial		289		297		295		114		2
Commercial real estate		—		—		—		—		—
Residential real estate		1,027		1,047		1,196		76		21
Consumer		—		—		—		—		—
Home equity		102		105		126		—		1
Total	$	1,418	$	1,449	$	1,617	$	190	$	24

	December 31, 2015
	Carrying Value		Average Carrying Value		Unpaid Principal Balance		RelatedAllowance		Interest Income Recognized
	(dollars in thousands)
With no required reserve recorded:
Commercial and industrial	$	—	$	—	$	—	$	—	$	—
Commercial real estate		543		558		628		—		16
Residential real estate		—		—		—		—		—
Consumer		—		—		—		—		—
Home equity		—		—		—		—		—
Total		543		558		628		—		16
With required reserve recorded:
Commercial and industrial		513		518		514		174		20
Commercial real estate		—		—		—		—		—
Residential real estate		—		—		—		—		—
Consumer		—		—		—		—		—
Home equity		—		—		—		—		—
Total		513		518		514		174		20
Total:
Commercial and industrial		513		518		514		174		20
Commercial real estate		543		558		628		—		16
Residential real estate		—		—		—		—		—
Consumer		—		—		—		—		—
Home equity		—		—		—		—		—
Total	$	1,056	$	1,076	$	1,142	$	174	$	36

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Allowance for loan losses

The Company maintains an allowance for loan losses in an amount determined by management on the basis of the character of the loans, loan performance, financial condition of borrowers, the value of collateral securing loans and other relevant factors. Management evaluates the allowance for loan losses on periodic basis in order to determine its adequacy.

The following table summarizes the changes in the allowance for loan losses for the years indicated:

	For the Year Ended December 31,
	2016			2015
	(dollars in thousands)
Allowance for loan losses, beginning of period	$	15,191		$	14,269
Loans charged off		(104	)		(178	)
Recoveries on loans previously charged-off		42			25
Net recoveries (charge-offs)	$	(62	)	$	(153	)
Provision charged to expense		132			1,075
Allowance for loan losses, end of period	$	15,261		$	15,191

The following tables contain period-end balances of the allowance for loan losses and related loans receivable disaggregated by impairment method:

	December 31, 2016
	Residential Mortgages		Commercial Mortgages		Home Equity		Commercial & Industrial		Consumer		Unallocated		Total
	(dollars in thousands)
Allowance for loan losses
Individually evaluated for impairment	$	69	$	—	$	7	$	114	$	—	$	—	$	190
Collectively evaluated for impairment		4,898		8,452		650		807		264		—		15,071
Total	$	4,967	$	8,452	$	657	$	921	$	264	$	—	$	15,261
Loans receivable
Individually evaluated for impairment	$	1,027	$	—	$	102	$	289	$	—	$	—	$	1,418
Collectively evaluated for impairment		533,377		616,140		74,949		59,417		34,853		—		1,318,736
Total	$	534,404	$	616,140	$	75,051	$	59,706	$	34,853	$	—	$	1,320,154

	December 31, 2015
	Residential Mortgages		Commercial Mortgages		Home Equity		Commercial & Industrial		Consumer		Unallocated		Total
	(dollars in thousands)
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

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The following tables contain changes in the allowance for loan losses disaggregated by loan type:

	For the Year Ended December 31, 2016
	Residential Mortgages			Commercial Mortgages			Home Equity			Commercial & Industrial			Consumer			Unallocated			Impaired		Total
	(dollars in thousands)
Allowance for loan losses:
Balance at beginning of year	$	5,244		$	8,094		$	699		$	615		$	354		$	11		$	174	$	15,191
Change in methodology		336			(377	)		(3	)		136			(92	)		—			—		—
Charge-offs		—			—			—			(71	)		(33	)		—			—		(104	)
Recoveries		13			7			1			14			7			—			—		42
Provision		(695	)		727			(46	)		113			28			(11	)		16		132
Balance at end of year	$	4,898		$	8,451		$	651		$	807		$	264		$	—		$	190	$	15,261

	For the Year Ended December 31, 2015
	Residential Mortgages			Commercial Mortgages		Home Equity			Commercial & Industrial			Consumer			Unallocated			Impaired		Total
	(dollars in thousands)
Allowance for loan losses:
Balance at beginning of year	$	5,174		$	7,285	$	679		$	750		$	328		$	53		$	—	$	14,269
Charge-offs		(37	)		—		(1	)		(124	)		(16	)		—			—		(178	)
Recoveries		—			8		—			4			13			—			—		25
Provision		107			801		21			(15	)		29			(42	)		174		1,075
Balance at end of year	$	5,244		$	8,094	$	699		$	615		$	354		$	11		$	174	$	15,191

As discussed in Note 2, Summary of Significant Accounting Policies, the provision for loan losses is evaluated on a periodic basis by management in order to determine the adequacy of the allowance for loan losses.

In 2016, the Company updated its methodology for determining its allowance for loan losses to better reflect changes in the risk profile of its loan portfolio including greater disaggregation of environmental factors, an update to assigned risk allocations for qualitative factors, and an update to the historical loss experience look-back period.  The updates did not significantly impact the individual loan portfolios or the total allowance.

7. FEDERAL HOME LOAN BANK OF BOSTON STOCK

As a voluntary member of the FHLB of Boston, the Bank is required to invest in stock of the FHLB of Boston (which is considered a restricted equity security) in an amount based upon its outstanding advances from the FHLB of Boston. At December 31, 2016, and December 31, 2015, the Bank’s investment in FHLB of Boston stock totaled $4.1 million and $6.5 million, respectively. No market exists for shares of this stock. The Bank’s cost for FHLB of Boston stock is equal to its par value. Upon redemption of the stock, which is at the discretion of the FHLB of Boston, the Bank would receive an amount equal to the par value of the stock. At its discretion, the FHLB of Boston may also declare dividends on its stock.

The Bank’s investment in FHLB of 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, 2016 and December 31, 2015, no impairment has been recognized.

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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,						Estimated
	2016			2015			Useful Lives
	(dollars in thousands)
Land	$	1,116		$	1,116
Building and leasehold improvements		12,801			12,437		3-30 years
Equipment, including vaults		10,506			7,920		3-20 years
Construction in process		25			3,107
Subtotal		24,448			24,580
Accumulated depreciation and amortization		(13,997	)		(13,209	)
Total	$	10,451		$	11,371

Total depreciation expense for the years ended December 31, 2016 and 2015 amounted to approximately $2.1 million and $1.9 million, respectively, and is included in occupancy and equipment expenses in the accompanying consolidated statements of income.

9. GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill. At December 31, 2016 and 2015, the carrying value of goodwill, which is included in other assets, totaled $412,000 and $412,000, respectively. Goodwill is tested for impairment, based on its fair value, at least annually. As of December 31, 2016, no goodwill impairment has been recognized.

Mortgage servicing rights.  Certain residential mortgage loans are periodically sold by the Company to the secondary market. Generally, these loans are sold without recourse or other credit enhancements. The Company sells loans and either releases or retains the servicing rights. For loans sold with servicing rights retained, we provide the servicing for the loans on a per-loan fee basis. Mortgage loans sold and servicing rights retained during the years ended December 31, 2016, 2015 and 2014 were $50.0 million, $24.8 million and $4.7 million, respectively, with net gains recognized in gain on loans held for sale of $998,000, $622,000 and $155,000, respectively.

An analysis of mortgage servicing rights, which are included in other assets, follows:

	Mortgage Servicing Rights			Valuation Allowance			Total
	(dollars in thousands)
Balance at December 31, 2014	$	332		$	—		$	332
Mortgage servicing rights capitalized		305			—			305
Amortization charged against servicing income		(138	)		—			(138	)
Change in impairment reserve		—			(8	)		(8	)
Balance at December 31, 2015		499			(8	)		491
Mortgage servicing rights capitalized		545			—			545
Amortization charged against servicing income		(202	)		—			(202	)
Change in impairment reserve		—			(22	)		(22	)
Balance at December 31, 2016	$	842		$	(30	)	$	812

The fair value of our mortgage servicing rights portfolio was $1.0 million and $647,000 as of December 31, 2016 and 2015, respectively. 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.

The weighted-average amortization period for the mortgage servicing rights portfolio was 19 months at December 31, 2016.

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The estimated aggregate future amortization expense for mortgage servicing rights for each of the next five years and thereafter is as follows:  

Year ended December 31:	Future Amortization Expense
	(dollars in thousands)
2017	$	101
2018		91
2019		82
2020		73
2021		64
Thereafter		401
Total	$	812

10. DEPOSITS

Deposits are summarized as follows:

	December 31,
	2016		2015
	(dollars in thousands)
Demand deposits (non-interest bearing)	$	472,923	$	436,998
Interest bearing checking		430,706		370,400
Money market		72,057		73,911
Savings		539,190		497,525
Retail certificates of deposit under $100,000		42,471		46,277
Retail certificates of deposit $100,000 or greater		72,355		75,858
Wholesale certificates of deposit		56,336		56,255
Total deposits	$	1,686,038	$	1,557,224

Certificates of deposit had the following schedule of maturities:

	December 31,
	2016		2015
	(dollars in thousands)
Less than 3 months remaining	$	32,268	$	39,001
3 to 5 months remaining		17,558		17,329
6 to 11 months remaining		36,240		21,973
12 to 23 months remaining		44,467		33,054
24 to 47 months remaining		29,826		56,601
48 months or more remaining		10,803		10,432
Total certificates of deposit	$	171,162	$	178,390

Interest expense on retail certificates of deposit $100,000 or greater was $475,000 and $482,000 for the years ended December 31, 2016 and 2015, respectively.

The aggregate amount of certificates of deposit in denominations that meet or exceed the FDIC insurance limit of $250,000 at December 31, 2016 and 2015 was $46.0 million and $47.5 million, respectively.

Related Party Deposits

Deposit accounts of directors, executive officers and their respective affiliates totaled $7.2 million and $7.1 million as of December 31, 2016 and 2015, respectively.

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11. BORROWINGS

Information relating to short-term borrowings is presented below:

	For the Year Ended December 31,
	2016			2015
	(dollars in thousands)
FHLB of Boston short-term advances
Ending balance	$	—		$	—
Average daily balance	$	3,668		$	81,167
Highest month-end balance	$	21,000		$	142,000
Ending interest rate	NA			NA
Weighted average interest rate		0.54	%		0.26	%

Information relating to long-term borrowings is presented below:

	December 31, 2016					December 31, 2015
	Amount		Rate			Amount		Rate
	(dollars in thousands)					(dollars in thousands)
FHLB of Boston long-term advances
Due 09/01/2020; amortizing	$	3,746		1.94	%	$	3,910		1.94	%

All short- and long-term borrowings with the FHLB of Boston are secured by the Bank’s stock in the FHLB of 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 of Boston at December 31, 2016 was approximately $306.8 million.  

The Bank also has a line of credit with the FRB Boston. At December 31, 2016, the Bank had pledged commercial real estate and commercial & industrial loans with aggregate principal balances of approximately $306.8 million 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, 2016 was approximately $159.6 million.

12. INCOME TAXES

The components of income tax expense were as follows:

	For the Year Ended December 31,
	2016			2015			2014
	(dollars in thousands)
Current
Federal	$	7,551		$	6,855		$	6,639
State		1,833			1,458			1,356
Total current expense		9,384			8,313			7,995
Deferred
Federal		(645	)		(594	)		(592	)
State		(183	)		(168	)		(167	)
Total deferred		(828	)		(762	)		(759	)
Total income tax expense	$	8,556		$	7,551		$	7,236

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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:

	For the Year Ended December 31,
	2016			Rate			2015			Rate			2014			Rate
	(dollars in thousands)
Provision at statutory rates	$	8,908			35.00	%	$	8,136			35.00	%	$	7,763			35.00	%
Increase/(decrease) resulting from:
State tax, net of federal tax benefit		1,073			4.22			839			3.61			773			3.49
Tax-exempt income		(1,099	)		(4.32	)		(1,041	)		(4.48	)		(938	)		(4.23	)
ESOP dividends		(214	)		(0.84	)		(207	)		(0.89	)		(189	)		(0.85	)
Bank owned life insurance		(214	)		(0.84	)		(233	)		(1.00	)		(233	)		(1.05	)
Other		102			0.40			57			0.25			60			0.27
Total income tax expense	$	8,556			33.62	%	$	7,551			32.49	%	$	7,236			32.63	%

The Company’s net deferred tax asset consisted of the following components:

	December 31,
	2016			2015
	(dollars in thousands)
Gross deferred tax assets
Allowance for loan losses	$	6,234		$	6,206
Accrued retirement benefits		5,595			4,646
Unrealized losses on AFS securities		1,496			851
Incentive compensation		1,413			886
Equity based compensation		333			268
Rent		299			186
ESOP dividends		249			241
Other		296			176
Total gross deferred tax assets		15,915			13,460
Gross deferred tax liabilities
Deferred loan origination costs		(625	)		(617	)
Depreciation of premises and equipment		(1,100	)		(601	)
Mortgage servicing rights		(332	)		(201	)
Goodwill		(165	)		(122	)
Total gross deferred tax liabilities		(2,222	)		(1,541	)
Net deferred tax asset	$	13,693		$	11,919

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 Company’s net deferred tax asset is supported by recoverable income taxes. Therefore, no valuation allowance was required at either December 31, 2016 or 2015 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, 2016 and 2015, the Company had no unrecognized tax benefits or any uncertain tax positions. The Company does not expect the total amount of unrecognized tax benefits to significantly increase in the next twelve months.

The Company’s federal income tax returns are open and subject to examination from the 2013 tax return year and forward. The Company’s state income tax returns are generally open from the 2013 and later tax return years based on individual state statute of limitations.

13. PENSION AND RETIREMENT PLANS

The Company 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

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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 Company also provides supplemental retirement benefits to certain executive officers of the Company under the terms of Supplemental Executive Retirement Agreements (“Supplemental Retirement Plan”). The Supplemental Retirement Plan became effective on October 1, 1989. Benefits to be paid under the plan are contractually agreed upon and detailed in individual agreements with the executives. The Company 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						Supplemental Retirement Plan
	2016			2015			2016			2015
	(dollars in thousands)
Change in projected benefit obligation
Obligation at beginning of year	$	40,653		$	40,964		$	8,419		$	8,211
Service cost		1,561			1,711			282			732
Interest cost		1,771			1,632			366			328
Actuarial loss/(gain)		1,044			(2,671	)		316			(483	)
Benefits paid		(1,114	)		(983	)		(492	)		(369	)
Obligation at end of year		43,915			40,653			8,891			8,419
Change in plan assets
Fair value at beginning of year		38,482			40,400			—			—
Actual return on plan assets		2,453			(935	)		—			—
Employer contribution		—			—			492			369
Benefits paid		(1,114	)		(983	)		(492	)		(369	)
Fair value at end of year		39,821			38,482			—			—
Underfunded status at end of year	$	(4,094	)	$	(2,171	)	$	(8,891	)	$	(8,419	)

Amounts recognized in the consolidated balance sheets consisted of:

	Pension Plan						Supplemental Retirement Plan
	2016			2015			2016			2015
	(dollars in thousands)
Other (liabilities)/assets	$	(4,094	)	$	(2,171	)	$	(8,891	)	$	(8,419	)

Amounts recognized in accumulated other comprehensive income (loss) consisted of:

	Pension Plan						Supplemental Retirement Plan
	2016			2015			2016		2015
	(dollars in thousands)
Net actuarial loss/(gain)	$	11,798		$	11,261		$	679	$	428
Prior service (benefit)		(20	)		(25	)		—		—
Total	$	11,778		$	11,236		$	679	$	428

Information for pension plans with an accumulated benefit obligation in excess of plan assets:

	Pension Plan				Supplemental Retirement Plan
	2016		2015		2016		2015
	(dollars in thousands)
Projected benefit obligation	$	43,915	$	40,653	$	8,891	$	8,419
Accumulated benefit obligation		37,473		34,705		8,891		8,419
Fair value of plan assets		39,821		38,482		—		—

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The components of net periodic benefit cost and amounts recognized in other comprehensive income were as follows:

	Pension Plan						Supplemental Retirement Plan
	2016			2015			2016		2015
	(dollars in thousands)
Net periodic benefit cost
Service cost	$	1,561		$	1,711		$	282	$	732
Interest cost		1,771			1,632			366		328
Expected return on assets		(2,837	)		(2,986	)		—		—
Amortization of prior service credit		(4	)		(4	)		64		—
Amortization of net actuarial loss		891			778			—		24
Net periodic benefit cost		1,382			1,131			712		1,084
Amounts recognized in other comprehensive income
Net actuarial loss/(gain)		1,429			1,249			251		(483	)
Amortization of prior service credit		4			4			—		—
Amortization of net actuarial loss		(891	)		(778	)		—		—
Total recognized in other comprehensive income		542			475			251		(483	)
Total recognized in net periodic benefit cost and other    comprehensive income	$	1,924		$	1,606		$	963	$	601

Weighted-average assumptions used to determine projected benefit obligations are as follows:

	Pension Plan						Supplemental Retirement Plan
	2016			2015			2016			2015
Discount rate		4.25	%		4.35	%		4.25	%		4.35	%
Rate of compensation increase		4.00	%		4.00	%	NA			NA

Weighted-average assumptions used to determine net periodic benefit cost are as follows:

	Pension Plan						Supplemental Retirement Plan
	2016			2015			2016			2015
Discount rate		4.35	%		4.00	%		4.35	%		4.00	%
Expected long-term return of plan assets		7.50	%		7.50	%	NA			NA
Rate of compensation increase		4.00	%		4.00	%	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 Company 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 30% to 60% in domestic large cap equities, from 5% to 20% in domestic small/mid cap equities, from 0% to 20% in international equities and from 20% to 50% in cash and fixed income. The Company does not expect to make a contribution to its defined benefit pension plan in 2017.

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The Company’s defined pension plan weighted-average asset allocations by asset category were as follows:

	December 31,
	2016			2015
Equity securities		67	%		70	%
Debt securities		28			23
Cash and equivalents		5			7
Total		100	%		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 Company’s market assumptions.

The following table summarizes the various categories of the pension plan’s assets:

	Fair Value as of December 31, 2016
	Level 1		Level 2		Level 3		Total
	(dollars in thousands)
Asset category
Cash and cash equivalents	$	2,112	$	—	$	—	$	2,112
Fixed Income		11,186		—		—		11,186
Equity securities
Common stocks
Large cap core		10,905		—		—		10,905
Mid cap core		4,380		—		—		4,380
Small cap core		2,338		—		—		2,338
Mutual funds
Domestic Equity		4,472		—		—		4,472
International		4,327		—		—		4,327
Preferred Stock		101		—		—		101
Total	$	39,821	$	—	$	—	$	39,821

There were no transfers between fair value levels during the years ended December 31, 2016 and 2015.

The Company 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 Company uses a December 31 measurement date each year to determine the benefit obligation for this plan.

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Projected benefit obligations and funded status were as follows:

	Postretirement Healthcare Plan
	2016			2015
	(dollars in thousands)
Change in projected benefit obligation
Obligation at beginning of year	$	621		$	646
Service cost		17			18
Interest cost		24			25
Actuarial loss/(gain)		(68	)		(44	)
Benefits paid		(26	)		(24	)
Obligation at end of year		568			621
Change in plan assets
Fair value at beginning of year		—			—
Actual return on plan assets		—			—
Employer contribution		26			24
Benefits paid		(26	)		(24	)
Fair value at end of year		—			—
Underfunded status at end of year	$	(568	)	$	(621	)

Amounts recognized in the consolidated balance sheets consisted of:

	Postretirement Healthcare Plan
	2016			2015
	(dollars in thousands)
Other liabilities	$	(568	)	$	(621	)

Amounts recognized in accumulated other comprehensive loss consisted of:

	Postretirement Healthcare Plan
	2016			2015
	(dollars in thousands)
Net actuarial (gain)/loss	$	(128	)	$	(69	)
Prior service cost		—			(4	)
Total	$	(128	)	$	(73	)

Information for pension plans with an accumulated benefit obligation in excess of plan assets:

	Postretirement Healthcare Plan
	2016		2015
	(dollars in thousands)
Projected benefit obligation	$	568	$	621
Accumulated benefit obligation		568		621
Fair value of plan assets		—		—

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The components of net periodic benefit cost and amounts recognized in other comprehensive income were as follows:

	Postretirement Healthcare Plan
	2016			2015
	(dollars in thousands)
Net periodic benefit cost
Service cost	$	17		$	18
Interest cost		24			25
Expected return on assets		—			—
Amortization of prior service credit		(4	)		(8	)
Amortization of net actuarial gain		(9	)		—
Net periodic benefit cost		28			35
Amounts recognized in other comprehensive income
Net actuarial gain		(68	)		(44	)
Amortization of prior service credit		4			8
Amortization of net actuarial gain		9			—
Total recognized in other comprehensive income		(55	)		(36	)
Total recognized in net periodic benefit cost and    other comprehensive income	$	(27	)	$	(1	)

Weighted-average assumptions used to determine projected benefit obligations are as follows:

	Postretirement Healthcare Plan
	2016			2015
Discount rate		4.25	%		4.35	%
Rate of compensation increase	NA			NA

Weighted-average assumptions used to determine net periodic benefit cost are as follows:

	Postretirement Healthcare Plan
	2016			2015
Discount rate		4.35	%		4.00	%
Expected long-term return of plan assets	NA			NA
Rate of compensation increase	NA			NA

Assumed health care cost trend rates are as follows:

	December 31,
	2016			2015
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	2017			2016

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
	(dollars in thousands)
Effect on total service and interest cost	$	—	$	—
Effect on postretirement benefit obligation		5		(5	)

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Benefits expected to be paid in the next ten years are as follows:

	Pension Plan		Supplemental Retirement Plan		Postretirement Healthcare Plan		Total
	(dollars in thousands)
Year-ended December 31,
2017	$	1,319	$	500	$	29	$	1,848
2018		1,445		592		29		2,066
2019		1,475		589		28		2,092
2020		1,640		586		33		2,259
2021		1,699		590		33		2,322
2022-2026 inclusive		10,315		2,960		199		13,474
Ten year total	$	17,893	$	5,817	$	351	$	24,061

The estimated amounts that will be amortized from accumulated other comprehensive income into net periodic benefit cost during 2017 are as follows:

	Pension Plan		Supplemental Retirement Plan		Postretirement Healthcare Plan			Total
	(dollars in thousands)
Prior service cost	$	4	$	—	$	—		$	4
Net (gain)/loss		900		—		(7	)		893
Total	$	904	$	—	$	(7	)	$	897

Employee Profit Sharing Plan

The Company 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 Company matches employee contributions up to 100% of the first 3% of each participant’s salary. Each year, the Company 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.

Employee Stock Ownership Plan

The Company 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. Historically, the ESOP would purchase from the Company 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 Company’s stock by the ESOP will be funded solely by employer contributions.

Total expenses related to the Profit Sharing and ESOP Plans for the years ended December 31, 2016 and 2015, amounted to approximately $949,000 and $900,000, respectively.

14. STOCK OPTION AND DIRECTOR STOCK PLANS

In 1993, the Company adopted a Stock Option Plan for key employees as an incentive for them to assist the Company in achieving long-range performance goals. During 2005, the Company’s shareholders amended the plan to permit the issuance of restricted stock, restricted stock units (“RSUs”) and stock appreciation rights (“SARs”).

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Stock options time-vest over a five-year period. All options expire ten 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, 2016 and 2015, and changes during the years ended on those dates is presented below:

	2016					2015
	Number of Options			Weighted Average Exercise Price		Number of Options			Weighted Average Exercise Price
Stock Options
Outstanding at beginning of year		108,952		$	29.72		176,997		$	29.61
Granted		—			—		—			—
Forfeited		—			—		—			—
Expired		(21,900	)		28.11		(31,828	)		29.88
Exercised		(41,440	)		30.01		(36,217	)		29.06
Outstanding at end of year		45,612			30.23		108,952			29.72
Exercisable at end of year		45,612		$	30.23		108,952		$	29.72

The following table summarizes information about stock options outstanding at December 31, 2016:

	Options Outstanding					Options Exercisable
Range of Exercisable Price	Number Outstanding at 12/31/2016		Weighted Average Remaining Contractual Life	Weighted Average Exercise Price		Number Exercisable at 12/31/2016		Weighted Average Exercise Price
$25.00 - $29.99		32,004	0.79 years	$	29.11		32,004	$	29.11
$30.00 - $34.99		13,608	0.14 years		32.87		13,608		32.87
		45,612	0.59 years	$	30.23		45,612	$	30.23

Restricted stock awards time-vest either over a three-year or 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 Company, including voting and dividend rights. A summary of non-vested restricted shares outstanding as of December 31, 2016 and 2015, and changes during the years ended on those dates is presented below:

	2016					2015
	Number of Shares			Weighted Average Grant Value		Number of Shares			Weighted Average Grant Value
Restricted stock
Non-vested at beginning of year		47,808		$	42.08		39,086		$	37.84
Granted		16,346			46.35		26,376			44.82
Vested		(18,050	)		40.86		(13,212	)		35.85
Forfeited		(4,147	)		43.00		(4,442	)		39.60
Non-vested at end of year		41,957		$	44.17		47,808		$	42.08

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Restricted stock unit awards vest based upon the Company’s performance 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 Company until vested. A summary of non-vested restricted stock units outstanding as of December 31, 2016 and 2015, and changes during the years ended on those dates is presented below:

	2016					2015
	Number of Shares			Weighted Average Grant Value		Number of Shares			Weighted Average Grant Value
Restricted stock units
Non-vested at beginning of year		20,149		$	43.05		26,588		$	39.85
Granted		14,305			46.00		6,976			44.46
Vested (Performance achieved)		—			—		—			—
Forfeited		(1,713	)		44.94		(5,045	)		42.51
Expired (Performance not achieved)		(6,800	)		40.70		(8,370	)		34.39
Non-vested at end of year		25,941		$	45.17		20,149		$	43.05

In 1993, the Company initiated a Director Stock Plan (“DSP”). The DSP provides that Directors of the Company receive their annual retainer fee in the form of stock in the Company. Total shares issued under the DSP in the years ending December 31, 2016 and 2015 were 5,577 and 5,837, respectively.

The following table presents the amounts recognized in the consolidated financial statements for stock options, nonvested share awards and nonvested performance shares:

	December 31,
	2016		2015
	(dollars in thousands)
Share-based compensation expense	$	997	$	520
Related income tax benefit	$	407	$	212

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, commitments to sell residential real estate mortgage loans, risk participation agreements 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.

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Off-balance-sheet financial instruments with contractual amounts that present credit risk included the following:

	December 31,
	2016		2015
	(dollars in thousands)
Financial instruments whose contractual amount represents    credit risk:
Commitments to extend credit:
Unused portion of existing lines of credit	$	256,767	$	245,446
Origination of new loans		26,024		47,598
Standby letters of credit		7,763		10,033
Liabilities associated with letters of credit		—		36
Financial instruments whose notional amount exceeds the    amount of credit risk:
Commitments to sell residential mortgage loans		9,622		—
Customer related derivative contracts:
Interest rate swaps with customers		68,372		11,625
Mirror swaps with counterparties		68,372		11,625
Risk participation agreements with counterparties		16,378		—

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 Company 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 2017 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, 2016 were as follows:

Year Ended	Future Minimum
December 31,	Lease Payments
	(dollars in thousands)
2017	$	4,159
2018		4,003
2019		3,554
2020		3,064
2021		2,733
Thereafter		15,635
Total minimum lease payments	$	33,148

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 amounted to approximately $4.6 million and $4.2 million for the years ended December 31, 2016 and 2015, respectively.

Under the terms of a sublease agreement, the Company will receive minimum annual rental payments of approximately $29,000 through July 31, 2019. Total rental income amounted to approximately $76,000 and $33,000 for the years ended December 31, 2016 and 2015, respectively.

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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 Company.

The Company has entered into agreements with its President and with certain other senior officers, whereby, following the occurrence of a change in control of the Company, 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. SHAREHOLDERS’ EQUITY

Capital guidelines issued by the Federal Reserve Bank (the “FRB”) and by the FDIC require that the Company 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 Company’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.

On July 2, 2013, the Federal Reserve Bank approved the final rules implementing the Basel Committee on Banking Supervision’s capital guidelines for U.S. banks (“Basel III Capital Rules”). On July 9, 2013, the FDIC also approved, as an interim final rule, the regulatory capital requirements for U.S. banks, following the actions of the FRB. On April 8, 2014, the FDIC adopted as final its interim final rule, which is identical in substance to the final rules issued by the FRB in July 2013. Under the final rules, minimum requirements increased for both the quantity and quality of capital held by the Bank. The rules include a new common equity Tier 1 capital risk-weighted assets minimum ratio of 4.5%, raise the minimum ratio of Tier 1 capital to risk-weighted assets from 4.0% to 6.0%, require a minimum ratio of Total capital to risk-weighted assets of 8.0%, and require a minimum Tier 1 leverage ratio of 4.0%.

The Basel III Capital Rules became effective for the Company and the Bank on January 1, 2015 (subject to a phase-in period for the capital conservation buffer discussed below). Quantitative measures established by the Basel III Capital Rules to ensure capital adequacy require the maintenance of minimum amounts and ratios (set forth in the table below) of Common Equity Tier 1 capital, Tier 1 capital and Total capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital to adjusted quarterly average assets (as defined).

When fully phased in on January 1, 2019, the Basel III Capital Rules will require the Company and the Bank to maintain (i) a minimum ratio of Common Equity Tier 1 capital to risk-weighted assets of at least 4.5%, plus a 2.5% “capital conservation buffer” (which is added to the 4.5% Common Equity Tier 1 capital ratio as that buffer is phased in, effectively resulting in a minimum ratio of Common Equity Tier 1 capital to risk-weighted assets of at least 7.0% upon full implementation), (ii) a minimum ratio of Tier 1 capital to risk-weighted assets of at least 6.0%, plus the capital conservation buffer (which is added to the 6.0% Tier 1 capital ratio as that buffer is phased in, effectively resulting in a minimum Tier 1 capital ratio of 8.5% upon full implementation), (iii) a minimum ratio of Total capital (that is, Tier 1 plus Tier 2) to risk-weighted assets of at least 8.0%, plus the capital conservation buffer (which is added to the 8.0% total capital ratio as that buffer is phased in, effectively resulting in a minimum total capital ratio of 10.5% upon full implementation) and (iv) a minimum leverage ratio of 4.0%, calculated as the ratio of Tier 1 capital to average quarterly assets.

The implementation of the capital conservation buffer began on January 1, 2016 at the 0.625% level and will be phased in over a four-year period (increasing by that amount on each subsequent January 1, until it reaches 2.5% on January 1, 2019). The capital conservation buffer is designed to absorb losses during periods of economic stress and, as detailed above, effectively increases the minimum required risk-weighted capital ratios. Banking institutions with a ratio of Common Equity Tier 1 capital to risk-weighted assets below the effective minimum (4.5% plus the capital conservation buffer) will face constraints on dividends, equity repurchases and compensation based on the amount of the shortfall.

Management believes that as of December 31, 2016 and 2015, the Company 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 Company’s or the Bank’s category.

143

The Company’s and the Bank’s actual and required capital measures were as follows:

																							Minimum Capital Required											Minimum Capital Required
																							For Capital Adequacy Plus											For Capital Adequacy Plus								Minimum To Be
												Minimum Capital											Capital Conservation Buffer											Capital Conservation Buffer								Well-Capitalized Under
	Actual											Required For Capital Adequacy											Basel III Phase-In Schedule											Basel III Fully Phased In								Prompt Corrective Action Provisions
	Amount					Ratio						Amount					Ratio						Amount						Ratio					Amount		Ratio						Amount					Ratio
	(dollars in thousands)
At December 31, 2016
Cambridge Bancorp:
Total capital (to risk-weighted    assets)	$			159,141				13.1		%		$			96,873				8.0		%		$			104,441					8.625		%	$	127,145			10.5		%		N/A					N/A
Tier I capital (to risk-weighted    assets)				144,003				11.9		%					72,654				6.0		%					80,223					6.625		%		102,927			8.5		%		N/A					N/A
Common equity tier I capital    (to risk-weighted assets)				144,003				11.9		%					54,491				4.5		%					62,059					5.125		%		84,763			7.0		%		N/A					N/A
Tier I capital (to average assets)				144,003				7.9		%					72,488				4.0		%					72,488					4.000		%		72,488			4.0		%		N/A					N/A
Cambridge Trust Company:
Total capital (to risk-weighted    assets)	$			156,928				13.0		%		$			96,873				8.0		%		$			104,441					8.625		%	$	127,145			10.5		%		$			121,091				10.0		%
Tier I capital (to risk-weighted    assets)				141,790				11.7		%					72,654				6.0		%					80,223					6.625		%		102,927			8.5		%					96,873				8.0		%
Common equity tier I capital    (to risk-weighted assets)				141,790				11.7		%					54,491				4.5		%					62,059					5.125		%		84,763			7.0		%					78,709				6.5		%
Tier I capital (to average assets)				141,790				7.8		%					72,488				4.0		%					72,488					4.000		%		72,488			4.0		%					90,610				5.0		%
																								Minimum Capital Required										Minimum Capital Required
																								For Capital Adequacy Plus										For Capital Adequacy Plus									Minimum To Be
													Minimum Capital											Capital Conservation Buffer										Capital Conservation Buffer									Well-Capitalized Under
		Actual											Required For Capital Adequacy											Basel III Phase-In Schedule										Basel III Fully Phased In									Prompt Corrective Action Provisions
			Amount				Ratio							Amount				Ratio							Amount			Ratio						Amount			Ratio							Amount				Ratio
			(dollars in thousands)
At December 31, 2015
Cambridge Bancorp:
Total capital (to risk-weighted    assets)			$		147,110				13.1		%			$		90,159				8.0		%			$		90,159			8.0		%		$	118,334				10.5		%			N/A				N/A
Tier I capital (to risk-weighted    assets)					133,009				11.8		%					67,620				6.0		%					67,620			6.0		%			95,794				8.5		%			N/A				N/A
Common equity tier I capital    (to risk-weighted assets)					133,009				11.8		%					50,715				4.5		%					50,715			4.5		%			78,890				7.0		%			N/A				N/A
Tier I capital (to average assets)					133,009				7.8		%					68,619				4.0		%					68,619			4.0		%			68,619				4.0		%			N/A				N/A
Cambridge Trust Company:
Total capital (to risk-weighted    assets)			$		141,341				12.5		%			$		90,159				8.0		%			$		90,159			8.0		%		$	118,334				10.5		%			$		112,699				10.0	%
Tier I capital (to risk-weighted    assets)					127,240				11.3		%					67,620				6.0		%					67,620			6.0		%			95,794				8.5		%					90,159				8.0	%
Common equity tier I capital    (to risk-weighted assets)					127,240				11.3		%					50,715				4.5		%					50,715			4.5		%			78,890				7.0		%					73,255				6.5	%
Tier I capital (to average assets)					127,240				7.5		%					67,783				4.0		%					67,783			4.0		%			67,783				4.0		%					84,729				5.0	%

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18. OTHER INCOME

The components of other income were as follows:

	For the Year Ended December 31,
	2016		2015		2014
	(dollars in thousands)
Safe deposit box income	$	366	$	342	$	337
Loan fee income		229		248		312
Miscellaneous income		326		291		290
Total other income	$	921	$	881	$	939

19. OTHER OPERATING EXPENSES

The components of other operating expenses were as follows:

	For the Year Ended December 31,
	2016		2015		2014
	(dollars in thousands)
Director fees	$	513	$	561	$	529
Contributions / Public relations		434		517		547
Printing and supplies		291		341		286
Travel and entertainment		331		302		294
Dues and memberships		276		286		294
Security		233		282		266
Postage		241		264		282
Other losses		227		205		455
Miscellaneous expense		386		271		260
Total other operating expenses	$	2,932	$	3,029	$	3,213

20. OTHER COMPREHENSIVE INCOME

Comprehensive income is defined as all changes to equity except investments by and distributions to shareholders. Net income is a component of comprehensive income, with all other components referred to in the aggregate as “other comprehensive income.” The Company’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:

	For the Year Ended December 31, 2016								For the Year Ended December 31, 2015									For the Year Ended December 31, 2014
	Before Tax Amount			Tax (Expense) or Benefit		Net-of-tax Amount			Before Tax Amount			Tax (Expense) or Benefit			Net-of-tax Amount			Before Tax Amount			Tax (Expense) or Benefit			Net-of-tax Amount
	(dollars in thousands)
Unrealized (losses) gains on AFS    securities
Unrealized holding (losses) gains    arising during period	$	(1,224	)	$	489	$	(735	)	$	(1,504	)	$	524		$	(980	)	$	6,125		$	(2,152	)	$	3,973
Reclassification adjustment for    gains recognized in net income		(438	)		157		(281	)		(690	)		247			(443	)		(1,073	)		385			(688	)
Defined benefit retirement plans
Change in unfunded retirement    liability		(738	)		301		(437	)		67			(27	)		40			(10,518	)		4,296			(6,222	)
Total Other Comprehensive Income	$	(2,400	)	$	947	$	(1,453	)	$	(2,127	)	$	744		$	(1,383	)	$	(5,466	)	$	2,529		$	(2,937	)

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Reclassifications out of Accumulated Other Comprehensive Income (“AOCI”) are presented below:

	For the Year Ended December 31,
Details about Accumulated Other Comprehensive Income Components	2016			2015			2014			Affected Line Item in the Statement where Net Income is Presented
	(dollars in thousands)
Unrealized gains and losses on available    for sale securities	$	438		$	690		$	1,073		Gain on disposition of investment    securities
Tax (expense) or benefit		(157	)		(247	)		(385	)	Provision for income taxes
Net of tax	$	281		$	443		$	688		Net income

21. EARNINGS PER SHARE

The following represents a reconciliation between basic and diluted earnings per share:

	For the Year Ended December 31,
	2016			2015
	(dollars in thousands except per share data)
Earnings per common share - basic:
Numerator:
Net income	$	16,896		$	15,694
Less dividends and undistributed earnings allocated to    participating securities		(182	)		(182	)
Net income applicable to common shareholders	$	16,714		$	15,512
Denominator:
Weighted average common shares outstanding		3,990			3,938
Earnings per common share - basic	$	4.19		$	3.94
Earnings per common share - diluted:
Numerator:
Net income	$	16,896		$	15,694
Less dividends and undistributed earnings allocated to    participating securities		(181	)		—
Net income applicable to common shareholders	$	16,715		$	15,694
Denominator:
Weighted average common shares outstanding		3,990			3,938
Dilutive effect of common stock equivalents		39			55
Weighted average diluted common shares outstanding		4,029			3,993
Earnings per common share - diluted	$	4.15		$	3.93

22. DERIVATIVE FINANCIAL INSTRUMENTS

The Company enters into interest rate derivatives to accommodate the business requirements of its customers. 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.

146

Interest Rate Swaps

The Company 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, 2016 and 2015, The Bank had interest rate swap contracts with commercial loan borrowers with notional amounts of $68.4 million and $11.6 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 loan related derivative income.

The credit risk associated with swap transactions is the risk of default by the counterparty. To minimize this risk, the Company 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.

Risk Participation Agreements

The Company has entered into risk participation agreements (“RPAs”) with other banks participating in commercial loan arrangements. Participating banks guarantee the performance on borrower-related interest rate swap contracts. RPAs are derivative financial instruments and are recorded at fair value. These derivatives are not designated as hedges and therefore, changes in fair value are recognized in earnings with a corresponding offset within other liabilities.

Under a risk participation-out agreement, a derivative asset, the Company participates out a portion of the credit risk associated with the interest rate swap position executed with the commercial borrower, for a fee paid to the participating bank. Under a risk participation-in agreement, a derivative liability, the Company assumes, or participates in, a portion of the credit risk associated with the interest rate swap position with the commercial borrower, for a fee received from the other bank.

As of December 31, 2016, the notional amounts of the risk participation-in agreements and risk participation-out agreements were $16.4 million and $0, respectively.

The following table presents the fair values of derivative instruments in the Company’s Consolidated Balance Sheets:

	Derivative Assets					Derivative Liabilities
		Fair Value					Fair Value
	Balance Sheet Location	December 31, 2016		December 31, 2015		Balance Sheet Location	December 31, 2016		December 31, 2015
		(dollars in thousands)					(dollars in thousands)
Derivatives not Designated as Hedging Instruments
Loan related derivative contracts
Interest rate swaps with customers	Other Assets	$	165	$	315	Other Liabilities	$	1,467	$	—
Mirror swaps with counterparties	Other Assets		1,467		—	Other Liabilities		165		315
Risk participation agreements	Other Assets		—		—	Other Liabilities		12		—
Total		$	1,632	$	315		$	1,644	$	315

147

23.FAIR VALUE MEASUREMENTS

The following is a summary of the carrying values and estimated fair values of the Company’s significant financial instruments as of the dates indicated:

	December 31, 2016				December 31, 2015
	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
	(dollars in thousands)
Financial assets
Cash and cash equivalents	$	54,050	$	54,050	$	24,645	$	24,645
Securities - available for sale		325,641		325,641		347,173		347,173
Securities - held to maturity		82,502		83,755		83,063		86,541
Loans excluding HFS, net		1,304,893		1,286,497		1,177,023		1,176,648
FHLB Boston stock		4,098		4,098		6,465		6,465
Accrued interest receivable		4,627		4,627		4,222		4,222
Loan level interest rate swaps		1,632		1,632		315		315
Financial liabilities
Deposits		1,686,038		1,684,065		1,557,224		1,555,542
Short-term borrowings		—		—		—		—
Long-term borrowings		3,746		3,745		3,910		3,905
Loan level interest rate swaps		1,632		1,632		315		315
Risk Participation Agreements		12		12		—		—

The Company 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 Company’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 Company’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 Company 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 Company 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.

148

The Company 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 Company may be required to record at fair value other assets on a nonrecurring basis, such as collateral dependent impaired loans.

The following tables summarize certain assets reported at fair value on a recurring basis:

	Fair Value as of December 31, 2016
	Level 1		Level 2		Level 3		Total
	(dollars in thousands)
Measured on a recurring basis
Securities available for sale
U.S. GSE obligations	$	—	$	138,709	$	—	$	138,709
Mortgage-backed securities		—		181,299		—		181,299
Corporate debt securities		—		5,029		—		5,029
Mutual funds		604		—		—		604
Other assets
Interest rate swaps with customers		—		1,632		—		1,632
Other liabilities
Mirror swaps with counterparties		—		1,632		—		1,632
Risk participation agreements		—		12		—		12

	Fair Value as of December 31, 2015
	Level 1		Level 2		Level 3		Total
	(dollars in thousands)
Measured on a recurring basis
Securities available for sale
U.S. GSE obligations	$	—	$	139,770	$	—	$	139,770
Mortgage-backed securities		—		205,806		—		205,806
Corporate debt securities		—		985		—		985
Mutual funds		612		—		—		612
Other assets
Interest rate swaps with customers		—		315		—		315
Other liabilities
Mirror swaps with counterparties		—		315		—		315
Risk participation agreements		—		—		—		—

The following table presents the carrying value of assets held at December 31, 2016, which were measured at fair value on a non-recurring basis during the year ended December 31, 2016:

	Fair Value as of December 31, 2016
	Level 1		Level 2		Level 3		Total
	(dollars in thousands)
Items recorded at fair value on a nonrecurring basis
Assets
Collateral dependent impaired loans	$	—	$	—	$	654	$	654
Loans held for sale		—		—		6,506		6,506
Total assets at fair value on a nonrecurring basis	$	—	$	—	$	7,160	$	7,160

There were no transfers between levels for the twelve months ended December 31, 2016.

149

The following is a description of the principal valuation methodologies used by the Company 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 of Boston Stock

The fair value of FHLB of Boston stock equals its carrying value since such stock is only redeemable at its par value.

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.

150

Values Not Determined

In accordance with ASC 820, the Company 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 Company.

24. Quarterly Results of Operations (unaudited)

2016 Quarters	Fourth			Third		Second		First
	(dollars in thousands, except share data)
Interest income	$	14,663		$	14,315	$	13,989	$	14,061
Interest expense		763			795		872		925
Net interest and dividend income		13,900			13,520		13,117		13,136
Provision for (Release of) loan losses		(206	)		113		150		75
Net interest and dividend income after provision for loan    losses		14,106			13,407		12,967		13,061
Non-Interest Income		7,278			7,615		7,100		6,668
Non-Interest Expense		14,595			14,163		14,001		13,991
Income before income taxes		6,789			6,859		6,066		5,738
Provision for income taxes		2,366			2,284		2,046		1,860
Net income	$	4,423		$	4,575	$	4,020	$	3,878
Share data:
Average shares outstanding, basic		3,995,495			3,996,687		3,987,696		3,963,504
Average shares outstanding, diluted		3,034,687			4,043,651		4,037,522		4,005,954
Earnings per share, basic	$	1.10		$	1.13	$	1.00	$	0.97
Earnings per share, diluted	$	1.08		$	1.13	$	1.00	$	0.97

2015 Quarters	Fourth		Third		Second		First
	(dollars in thousands, except share data)
Interest income	$	14,056	$	13,923	$	13,319	$	13,043
Interest expense		860		727		566		541
Net interest and dividend income		13,196		13,196		12,753		12,502
Provision for loan losses		—		125		625		325
Net interest and dividend income after provision for loan    losses		13,196		13,071		12,128		12,177
Non-Interest Income		6,495		6,494		6,511		6,365
Non-Interest Expense		13,981		13,115		13,088		13,008
Income before income taxes		5,710		6,450		5,551		5,534
Provision for income taxes		1,840		2,095		1,815		1,801
Net income	$	3,870	$	4,355	$	3,736	$	3,733
Share data:
Average shares outstanding, basic		3,951,736		3,949,469		3,936,081		3,910,304
Average shares outstanding, diluted		4,008,334		3,997,145		3,988,979		3,970,129
Earnings per share, basic	$	0.97	$	1.09	$	0.94	$	0.94
Earnings per share, diluted	$	0.97	$	1.09	$	0.94	$	0.94

151

25. Condensed Financial Statements of Parent Company

The condensed balance sheets of Cambridge Bancorp (“Parent Company”) as of December 31, 2016 and 2015 and the condensed statements of income and cash flows for each of the years in the three-year period ended December 31, 2016, are presented below. The statements of changes in shareholders’ equity are identical to the consolidated statements of changes in shareholders’ equity and are therefore not presented here.

Condensed Balance Sheet

	December 31,
	2016		2015
	(dollars in thousands)
ASSETS
Cash	$	2,213	$	5,769
Investment in subsidiary, at equity		132,458		119,294
Total assets	$	134,671	$	125,063
SHAREHOLDERS’ EQUITY
Shareholders’ equity	$	134,671	$	125,063
Total shareholders’ equity	$	134,671	$	125,063

Condensed Statements of Income

	For the Year Ended December 31,
	2016		2015		2014
	(dollars in thousands)
Income
Dividends from subsidiary	$	3,412	$	7,845	$	7,467
Total income		3,412		7,845		7,467
Income before equity in undistributed income    of subsidiary		3,412		7,845		7,467
Equity in undistributed income of subsidiary		13,484		7,849		7,477
Net income	$	16,896	$	15,694	$	14,944

Condensed Statements of Cash Flows

	For the Year Ended December 31,
	2016			2015			2014
	(dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	16,896		$	15,694		$	14,944
Adjustments to reconcile net income to net cash provided    by operating activities
Undistributed income of subsidiary		(13,484	)		(7,849	)		(7,477	)
Net cash provided by operating activities		3,412			7,845			7,467
CASH FLOWS FROM BY FINANCING ACTIVITIES:
Proceeds from the issuance of common stock		2,020			1,777			1,868
Repurchase of common stock		(1,560	)		(667	)		(864	)
Cash dividends paid on common stock		(7,428	)		(7,178	)		(6,602	)
Net cash used in financing activities		(6,968	)		(6,068	)		(5,598	)
Net (decrease) increase in cash		(3,556	)		1,777			1,869
Cash at beginning of year		5,769			3,992			2,123
Cash at end of year	$	2,213		$	5,769		$	3,992

152

ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES

The Company does not and has not had any disagreements with its registered public accounting firm.

153

ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS

(a) FINANCIAL STATEMENTS. The following financial statements are included in this report:

Title of Document

(1)Unaudited Consolidated Financial Statements:

(2)Audited Consolidated Financial Statements

154

(b) EXHIBITS. The following exhibits are included as part of this report:

Exhibit No.	Description
3.1	Articles of Organization
3.2	Bylaws
4.1	Specimen stock certificate
10.1*	Cambridge Bancorp Amended 1993 Stock Option Plan
10.1(a)*	Cambridge Bancorp Amended 1993 Stock Option Plan—Form of Restricted Stock Agreement
10.1(b)*	Cambridge Bancorp Amended 1993 Stock Option Plan—Form of Restricted Stock Unit Agreement
10.1(c)*	Cambridge Bancorp Amended 1993 Stock Option Plan—Form of Nonstatutory Stock Option Agreement
10.1(d)*	Cambridge Bancorp Amended 1993 Stock Option Plan—Form of Incentive Stock Option Agreement
10.2*	Cambridge Bancorp 2017 Equity and Cash Incentive Plan
10.3*	Cambridge Bancorp Director Stock Plan, amended as of April 25, 2011
10.4*	2016 Annual Incentive Plan
10.5*	The Executive Nonqualified Excess Plan of Cambridge Trust Company
10.6*	Cambridge Trust Company Amended and Restated Supplemental Executive Retirement Agreement for Denis K. Sheahan, dated July 7, 2017
10.7*	Cambridge Trust Company Supplemental Executive Retirement Agreement for Lynne M. Burrow, dated February 27, 2008
10.8*	Cambridge Trust Company Supplemental Executive Retirement Agreement for Albert R. Rietheimer, dated February 21, 2008
10.9*	Cambridge Trust Company Supplemental Executive Retirement Agreement for Michael A. Duca, dated August 14, 2008
10.10*	First Amendment to Cambridge Trust Company Supplemental Executive Retirement Agreement for Michael A Duca, dated December 22, 2016
10.11*	Cambridge Trust Company Supplemental Executive Retirement Agreement for Martin B. Millane, Jr., dated January 1, 2016
10.12*	Change in Control Agreement with Denis K. Sheahan, dated December 21, 2015
10.13*	Change in Control Agreement with Lynne M. Burrow, dated September 16, 2008
10.14*	Change in Control Agreement with Michael F. Carotenuto, dated October 12, 2016
10.15*	Change in Control Agreement with Martin B. Millane, Jr., dated May 18, 2016
21.1	Subsidiaries of Cambridge Bancorp

* Management Compensatory plans or arrangements

155

SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this Registration Statement on Form 10 to be signed on its behalf by the undersigned, thereunto duly authorized.

	CAMBRIDGE BANCORP
August 9, 2017	By:	/s/  Denis K. Sheahan
		Denis K. Sheahan
		Chairman, President and Chief Executive Officer (Principal Executive Officer)
August 9, 2017
	By	/s/  Michael F. Carotenuto
		Michael F. Carotenuto
		Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

156

EX-3

Exhibit 3.1

100M-C. D. ARO-3 Rev. 12-80: 160411

The Commonwealth of Massachusetts

OFFICE OF THE MASSACHUSETTS SECRETARY OF STATE

MICHAEL JOSEPH CONNOLLY, Secretary

ONE ASHBURTON PLACE, BOSTON, MASS. 02108

ARTICLES OF ORGANIZATION

(Under G.L. Ch. 156B)

Incorporators

NAME POST OFFICE ADDRESS

Include given name in full in case of natural persons; in case of a corporation, give state of incorporation.

Peter Karl Wirth	One Beacon Street Boston, Massachusetts 02108
	107633

The above-namedincorporator(s)dohereby associate(themselves)withtheintention offorming acorporationunderthe provisions ofGeneralLaws, Chapter 156Band hereby state(s):

1. The name by which the corporation shall be known is:

Cambridge Bancorp

2. The purpose for which the corporation is formed is as follows:

To acquire, own, control, hold with power to vote, deal in and with, and dispose of, in any manner, interests in financial institutions, including, without limitation, banks, trust companies, savings banks, national banking associations, savings and loan associations, industrial banks, investment banks, service banks, safe deposit companies, credit unions, and mutual trust investment companies, located within or without the Commonwealth of Massachusetts, and to acquire, own, control, hold with power to vote, deal in and with, and dispose of, in any manner, interests in any other companies, corporations, partnerships, trusts, unincorporated associations, joint stock associations and other entities which are engaged in activities related to the business of banking.

To engage in, carry on, conduct, and participate in activities, enterprises and businesses permitted to be engaged in, carried on, conducted and participated in by bank holding companies under applicable provisions of law.

To engage generally in any business which may lawfully be carried on by a corporation formed under Chapter 156B of the General Laws of Massachusetts.

82-357031

Note: If the space provided under any article or item on this form is insufficient, additions shall be set forth on separate 8 1/2 x 11 sheets of paper leaving a left hand margin of at least 1 inch for binding. Additions to more than one article may be continued on a single sheet so long as each article requiring each such addition is clearly indicated.

3. The total number of shares and the par value, if any, of each class of stock within the corporation is authorized as follows:

CLASSOFSTOCK	WITHOUT PARVALUE	WITH PARVALUE
	NUMBER OFSHARES	NUMBER OFSHARES	PAR VALUE		AMOUNT
Preferred					$
Common		1,000,000	$	1.00	$	1,000,000

*4. If more than one class is authorized, a description of each of the different classes of stock with, if any, the preferences, voting powers, qualifications, special or relative rights or privileges as to each class thereof and any series now established:

None

*5. The restrictions, if any, imposed by the Articles of Organization upon the transfer of shares of stock of any class are as follows:

None

*6. Other lawful provisions, if any, for the conduct and regulation of business and affairs of the corporation, for its voluntary dissolution, or for limiting, defining, or regulating the powers of the corporation, or of its directors or stockholders, or of any class of stockholders:

See Continuation Sheet 2-A

* If there are noprovisionsstate"None".

Continuation Sheet 2-A

Other lawful provisions, if any, for the conduct and regulation of the business and affairs of the corporation, for its voluntary dissolution, or for limiting, defining, or regulating the powers of the corporation, or of its directors or stockholders, or of any class of stockholders:

(a) Meetings of the stockholders may be held anywhere within the United States.

(b) No contract or other transaction of this corporation with any other person, corporation, association, or partnership shall be affected or invalidated by the fact that (i) this corporation is a stockholder in such other corporation, association or partnership, or (ii) any one or more of the officers or directors of this corporation is an officer, director or partner of such other corporation, association or partnership, or (iii) any officer or director of this corporation, individually or jointly with others, is a party to or is interested in such contract or transaction. Any director of this corporation may be counted in determining the existence of a quorum at any meeting of the board of directors for the purpose of authorizing or ratifying any such contract or transaction, and may vote thereon, with like force and effect as if he were not so interested or were not an officer, director or partner of such other corporation, association or partnership.

(c) The corporation may be a partner in any business enterprise which it would have power to conduct itself.

(d) The by-laws may provide that the directors may make, amend or repeal the by-laws in whole or in part, except with respect to any provision thereof which by law, these articles of organization or the by-laws requires action by the stockholders.

7. By-laws of the corporation have been duly adopted and the initial directors, president, treasurer and clerk, whose names are set out below, have been duly elected.

8. The effective date of organization of the corporation shall be the date of filing with the Secretary of the Commonwealth or if later date is desired, specify date, (not more than 30 days after the date of filing.)

9. The following information shall not for any purpose be treated as a permanent part of the Articles of Organization of the corporation.

a. The post office address of the initial principal office of the corporation of Massachusetts is:

1336 Massachusetts Avenue, Cambridge, Massachusetts 02138

b. The name, residence, and post office address of each of the initial directors and following officers of the corporation are as follows:

NAME	RESIDENCE	POST OFFICE ADDRESS
President: Lewis H. Clark		1336 Massachusetts Avenue Cambridge, MA 02138
Treasurer: Robert F. Doyle		1336 Massachusetts Avenue Cambridge, MA 02138
Clerk: James F. Dwinell III		1336 Massachusetts Avenue Cambridge, MA 02138
Directors: Lewis H. Clark		1336 Massachusetts Avenue Cambridge, MA 02138
Paul D. Littlefield		1336 Massachusetts Avenue Cambridge, MA 02138
David B. Wray		1336 Massachusetts Avenue Cambridge, MA 02138

c. The date initially adopted on which the corporation's fiscal year ends is:

December 31

d. The date initially fixed in the by-laws for the annual meeting of stockholders of the corporation is:

Second Monday in April

e. The name and business address of the resident agent. if any, of the corporation is:

IN WITNESS WHEREOF and under the penalties of perjury the INCORPORATOR(S) sign(s) these Articles of Organization this twentieth day of December 1982

/s/ Peter Karl Wirth

Peter Karl Wirth

Thesignature of each incorporator which is not a natural person must be an individual who shall show the capacity in which he acts and by signing shall represent under the penalties of perjurythatheisdulyauthorized onitsbehalftosigntheseArticlesof Organization.

The Commonwealth of Massachusetts

OFFICE OF THE MASSACHUSETTS SECREATRY OF STATE

MICHAEL JOSEPH CONNOLLY, Secretary

ONE ASHBURTON PLACE, BOSTON, MASS. 02108

ARTICLES OF ORGANIZATION

(Under G. L. Ch. 156B)

Incorporators

NAME POST OFFICE ADDRESS

Include given name in full in case of natural persons; in case of a corporation, give state of incorporation.

Peter Karl Wirth One Beacon Street Boston, Massachusetts 02108

The above-namedincorporator(s)dohereby associate(themselves)withtheintention offorming acorporationunderthe provisions ofGeneralLaws. Chapter156Band hereby state(s):

1. Thename by which the corporation shall be known is:

Cambridge Bancorp

2. The purpose for which the corporation is formed is as follows:

To acquire, own, control, hold with power to vote, deal in and with, and dispose of, in any manner, interests in financial institutions, including, without limitation, banks, trust companies, savings banks, national banking associations, savings and loan associations, industrial banks, investment banks, service banks, safe deposit companies, credit unions, and mutual trust investment companies, located within or without the Commonwealth of Massachusetts, and to acquire, own, control, hold with power to vote, deal in and with, and dispose of, in any manner, interests in any other companies, corporations, partnerships, trusts, unincorporated associations, joint stock associations and other entities which are engaged in activities related to the business of banking.

To engage in, carry on, conduct, and participate in activities, enterprises and businesses permitted to be engaged in, carried on, conducted and participated in by bank holding companies under applicable provisions of law.

To engage generally in any business which may lawfully be carried on by a corporation formed under Chapter 156B of the General Laws of Massachusetts.

Note: If the space provided under any article or item on this form is insufficient, additions shall be set forth on separate 8 1/2 x 11 sheets of paper leaving a left hand margin of at least 1 inch for binding. Additions to more than one article may be continued on a single sheet so long as each article requiring each such addition is clearly indicated.

3. The total number of shares and the par value, if any, of each class of stock within the corporation is authorized as follows:

CLASSOFSTOCK	WITHOUT PARVALUE	WITH PARVALUE
	NUMBER OFSHARES	NUMBER OFSHARES	PAR VALUE		AMOUNT
Preferred					$
Common		1,000,000	$	1.00	$	1,000,000

*4. If more than one class is authorized, a description of each of the different classes of stock with, if any, the preferences, voting powers, qualifications, special or relative rights or privileges as to each class thereof and any series now established:

None

*5. The restrictions, if any, imposed by the Articles of Organization upon the transfer of shares of stock of any class are as follows:

None

*6. Other lawful provisions, if any, for the conduct and regulation of business and affairs of the corporation, for its voluntary dissolution, or for limiting, defining, or regulating the powers of the corporation, or of its directors or stockholders, or of any class of stockholders:

See Continuation Sheet 2-A

*If there are noprovisionsstate"None".

Continuation Sheet 2-A

Other lawful provisions, if any, for the conduct and regulation of the business and affairs of the corporation, for its voluntary dissolution, or for limiting, defining, or regulating the powers of the corporation, or of its directors or stockholders, or of any class of stockholders:

(a) Meetings of the stockholders may be held anywhere within the United States.

(b) No contract or other transaction of this corporation with any other person, corporation, association, or partnership shall be affected or invalidated by the fact that (i) this corporation is a stockholder in such other corporation, association or partnership, or (ii) any one or more of the officers or directors of this corporation is an officer, director or partner of such other corporation, association or partnership, or (iii) any officer or director of this corporation, individually or jointly with others, is a party to or is interested in such contract or transaction.Any director of this corporation may be counted in determining the existence of a quorum at any meeting of the board of directors for the purpose of authorizing or ratifying any such contract or transaction, and may vote thereon, with like force and effect as if he were not so interested or were not an officer, director or partner of such other corporation, association or partnership.

(c) The corporation may be a partner in any business enterprise which it would have power to conduct itself.

(d) The by-laws may provide that the directors may make, amend or repeal the by-laws in whole or in part, except with respect to any provision thereof which by law, these articles of organization or the by-laws requires action by the stockholders.

7. By-laws of the corporation have been duly adopted and the initial directors, president, treasurer and clerk, whose names are set out below, have been duly elected.

8. The effective date of organization of the corporation shall be the date of filing with the Secretary of the Commonwealth or if later date is desired, specify date, (not more than 30 days after the date of filing.)

9. The following information shall not for any purpose be treated as a permanent part of the Articles of Organization of the corporation.

a. The post office address of the initial principal office of the corporation of Massachusetts is:

1336 Massachusetts Avenue, Cambridge, Massachusetts 02138

b. The name, residence, and post office address of each of the initial directors and following officers of the corporation are as follows:

NAME	RESIDENCE	POST OFFICE ADDRESS
President: Lewis H. Clark		1336 Massachusetts Avenue Cambridge, MA 02138
Treasurer: Robert F. Doyle		1336 Massachusetts Avenue Cambridge, MA 02138
Clerk: James F. Dwinell III		336 Massachusetts Avenue Cambridge, MA 02138
Directors: Lewis H. Clark		1336 Massachusetts Avenue Cambridge, MA 02138
Paul D. Littlefield		1336 Massachusetts Avenue Cambridge, MA 02138
David B. Wray		1336 Massachusetts Avenue Cambridge, MA 02138

c. The date initially adopted on which the corporation's fiscal year ends is:

December 31

d. The date initially fixed in the by-laws for the annual meeting of stockholders of the corporation is:

Second Monday in April

e. The name and business address of the resident agent, if any, of the corporation is:

IN WITNESS WHEREOF and under the penalties of perjury the INCORPORATOR(S) sign(s) these Articles of Organization this twentieth day of December 1982

/s/ Peter Karl Wirth

Peter Karl Wirth

Thesignature of each incorporator which is not a natural person must be an individual who shall show the capacity in which he acts and by signing shall represent under the penalties of perjurythatheisdulyauthorized onitsbehalftosigntheseArticlesof Organization.

THE COMMONWEALTH OF MASSACHUSETTS

ARTICLES OF ORGANIZATION

GENERAL LAWS, CHAPTER 156B, SECTION 12

I hereby certify that, upon an examination of the within-written articles of organization, duly submitted to me, it appears that the provisions of the General Laws relative to the organization of corporations have been complied with, and I hereby approve said articles: and the filing fee in the amount of $          having been paid, said articles are deemed to have been filed with me this              day of           19

Effective date

MICHAEL JOSEPH CONNOLLY

Secretary of State

PHOTO COPY OF ARTICLES OF ORGANIZATION TO BE SENT

TO BE FILLED IN BY CORPORATION

TO:	Peter Karl Wirth, Esquire Palmer & Dodge
	One Beacon Street
	Boston, Massachusetts 02108
Telephone (617) 227-4400

FILING FEE: 1/20 of 1% of the total amount of the authorized capital stock with par value, and one cent a share for all authorized shares without par value, but not less than $125. General Laws. Chapter 156B. Shares of stock with a par value less than one dollar shall be deemed to have par value of one dollar per share.

Copy Mailed

EX-3

Exhibit 3.2

As Amended through December 17, 2007

BY-LAWS

of

CAMBRIDGE BANCORP

ARTICLE I

Seal and Fiscal Year

The seal shall be circular with the name of the corporation around the periphery and the words and figures "Incorporated 1982 Massachusetts" within. The fiscal year shall commence on January 1 of each year.

ARTICLE II

Meetings of Stockholders

Section 1.Place. Meetings of the stockholders shall be held at the principal office of the corporation in Massachusetts or at such other place as may be named in the call.

Section 2.Annual Meetings. The annual meeting of the stockholders shall be held on the fourth Monday in April if that is not a legal holiday or, if a legal holiday, then on the next preceding Monday not a legal holiday, or on such other date as the directors or an officer designated by the directors shall determine, and at such hour as may be named in the call. In the event the annual meeting is not held on the date specified or on a date so determined, a special meeting in lieu of the annual meeting may be held with all of the force and effect of an annual meeting.

Section 3.Special Meetings. Special meetings of the stockholders may be called by the president or by the directors, and shall be called by the secretary or, in case of the death, absence, incapacity or refusal of the secretary, by any other officer, upon written application of one or more stockholders who hold at least one-tenth part in interest of the capital stock entitled to vote thereat.

Section 4.Notice; Waiver; Public Disclosure. A written notice of the date, place and hour of each meeting of stockholders stating the purposes of the meeting shall be given by the secretary or an assistant secretary (or by any other officer who is entitled to call such a meeting) at least seven and not more than sixty days before the meeting to each stockholder entitled to vote thereat and to each stockholder who is entitled to such notice, by leaving such notice with him or her or at his or her residence or usual place of business, or by mailing it postage prepaid and addressed to such stockholder at his or her address as it appears in the records of the corporation. Notwithstanding the foregoing, in the case of any special meeting called upon the written application of one or more stockholders, such meeting shall be called not fewer than sixty days nor more than ninety days after such application is received by the corporation, and written notice thereof shall be given in accordance with the preceding sentence at least twenty days

- 15 -

before the meeting. Whenever notice of a meeting is required to be given a stockholder under applicable law, the articles of organization, or these by-laws, a written waiver thereof, executed before or after the meeting by such stockholder or his or her attorney thereunto authorized and filed with the records of the meeting, shall be deemed equivalent to such notice. Attendance of a person at a meeting of stockholders shall constitute a waiver of notice of such meeting, except when the person attends solely for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. For the purposes of these by-laws, public disclosure of the date of a meeting of stockholders shall be deemed to have been made on the first date on which any one of the following occurs: (1) the corporation issues a press release stating the date of the meeting and releases it in the normal manner in which it releases its quarterly financial results, (2) the corporation mails notice of the date of the meeting to the stockholders, or (3) the corporation takes any other action reasonably intended to result in public disclosure of the date of the meeting.

Section 5.Quorum, Adjournment, Cancellation. A majority in interest of all stock issued, outstanding and entitled to vote at a meeting shall constitute a quorum. The chairman of the meeting or a majority of the shares present or represented may adjourn the meeting from time to time or dissolve the meeting whether or not there is a quorum. No notice of the time and place of adjourned meetings need be given except as required by law. Any previously scheduled meeting of the stockholders may be postponed, and any special meeting of the stockholders called by the President or by the Directors may be cancelled, by resolution of the Board of Directors, upon public notice given prior to the time previously scheduled for such meeting of stockholders.

Section 6.Voting. Stockholders entitled to vote shall have one vote for each share of stock owned by them and a proportionate vote for each fractional share; provided that the corporation shall not directly or indirectly vote any share of its own stock (other than any shares that are held, directly or indirectly, in a fiduciary capacity), and provided further that stock shall not be voted if any installment of the subscription therefor has been duly demanded and is overdue and unpaid. Stockholders may vote in person or by proxy.

Section 7.Action by Consent. Any action required or permitted to be taken at any meeting of the stockholders may be taken without a meeting if all stockholders entitled to vote on the matter consent to the action in writing and the written consents are filed with the records of the meetings of stockholders. Such consents shall be treated for all purposes as a vote at a meeting.

Section 8.Notification of Proposed Business. Notwithstanding anything in these by-laws to the contrary, only such business shall be conducted at any meeting of the stockholders as shall have been specified in the notice of meeting (or any supplement thereto) either (a) by or at the direction of the president or the Board of Directors or (b) at the request of a stockholder of record, who shall, in addition to meeting any other applicable requirements for business to be properly brought before a meeting by a stockholder, have given notice thereof in a writing received by the secretary at the principal executive offices of the corporation not fewer than fifty days nor more than seventy days before the meeting; provided, however, that (except as to an annual meeting held on the date specified on these by-laws, such date not having been changed

since the last annual meeting), if less than sixty days' prior public disclosure of the date of the meeting is made, notice by the stockholder must be so received not later than the close of business on the earlier of the tenth day following the day on which such public disclosure was made or the day before the meeting. A stockholder's notice shall set forth the name and record address of such stockholder, the class and number of shares of capital stock of the corporation beneficially owned by such stockholder, and, as to each matter the stockholder proposes to bring before the meeting: a brief description of the proposal and any material interest of such stockholder in the proposal. The chairman of the meeting may determine whether any business was properly brought before the meeting in accordance with the provisions of this Section, and any business not properly brought before the meeting shall not be transacted.

ARTICLE III

Officers and Directors

Section 1.Directors: Enumeration, Election, Removal, Vacancies. The total number of directors of the corporation shall be not fewer than three (3) nor more than twenty-five (25), the exact number of directors to be fixed from time to time by resolution of the Board of Directors. Stockholders shall not have the power to fix the number of directors. The Board of Directors shall be divided into three classes: Class I, Class II and Class III, which shall be as nearly equal in number as possible. At each annual meeting of stockholders, successors to the class of directors whose term expires at such annual meeting shall be elected to hold office for a three-year term. If the number of directors is changed, any increase or decrease shall be apportioned among the classes so as to maintain the number of directors in each class as nearly equal as possible, and any additional director of any class elected by the stockholders shall hold office for a term that shall coincide with the remaining term of that class, but in no case shall a decrease in the number of directors shorten the term of any incumbent director. A director shall hold office until the annual meeting for the year in which such director's term expires and until such director's successor shall be elected and shall qualify, or until such director's death, resignation or removal as provided in these by-laws.

Continuing directors may act despite a vacancy or vacancies in the Board of Directors and shall for this purpose be deemed to constitute the full board. Vacancies and newly created directorships resulting from an increase in the authorized number of directors may be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director. Any director elected to fill a vacancy created by the death, resignation or removal of another director shall serve for a term coinciding with the remaining term of his or her predecessor. Any director elected to fill a vacancy created by an increase in the number of directors shall serve until the next meeting of stockholders at which directors are elected.

A director may be removed only for cause by the affirmative vote of at least 80% of the shares of capital stock entitled to vote at any special meeting called for the purpose of considering such removal. In addition, any director may be removed for cause by the affirmative vote of a majority of the other directors then in office. Any vacancy in the Board of Directors created pursuant to this paragraph may be filled by the remaining directors as provided above. Directors may not be removed without cause.

Notwithstanding the provisions of Article VIII hereof, any amendment, alteration or repeal of the first four paragraphs of this Section 1 of Article III, or any other amendment alteration or repeal of these by-laws which will have the effect of modifying or permitting circumvention of the first four paragraphs of this Section 1 of Article III, shall require the affirmative vote of the holders of not less than 80% of all shares of outstanding capital stock of the corporation.

Section 2.Nominations. Subject to the rights of holders of any class or series of stock having a preference over the common stock as to dividends or upon liquidation to elect directors in specified circumstances, no person may be elected a director of the corporation at any meeting of stockholders who has not first been nominated by or at the direction of the Board of Directors or by any stockholder of record entitled to vote for the election of directors at the meeting who gives notice in a writing received by the secretary at the principal executive offices of the corporation not fewer than fifty days nor more than seventy days before the meeting; provided, however, that (except as to an annual meeting held on the date specified in these by-laws, such date not having been changed since the last annual meeting), if less than sixty days' prior public disclosure of the date of the meeting is made, notice by the stockholder must be so received not later than the close of business on the earlier of the tenth day following the day on which such public disclosure was made or the day before the meeting. Such stockholder's notice shall set forth (1) the name and address of such stockholder and of each person to be nominated, (ii) the class and number of shares of capital stock of the corporation beneficially owned by such stockholder and by each person to be nominated, (iii) a representation that such stockholder intends to appear in person or by proxy at the meeting to nominate such person(s), (iv) a description of all arrangements between such stockholder and each person to be nominated pursuant to which the nomination or nominations are to be made by such stockholder, (v) such other information regarding each nominee proposed in the notice as would be required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission, and (vi) the consent of each nominee to serve as a director of the corporation if elected. The chairman of the meeting may refuse to acknowledge the nomination of any person not made in accordance with the foregoing procedure.

Section 3.Officers: Enumeration, Election, Removal, Vacancies. The officers of the corporation shall be a president, one or more vice presidents, a treasurer, a secretary and such other officers including a chairman of the board, as the directors may from time to time appoint. The directors at their annual meeting in each year shall elect a president, a treasurer and a secretary, and may at any time elect such other officers as they shall determine. Except as hereinafter provided, the president, the treasurer, the secretary and the chairman of the board, if there be one, shall hold office until the date fixed in these by-laws for the next annual meeting of directors and until their respective successors are elected and qualified. Other officers shall serve at the pleasure of the directors. Officers elected or appointed by the directors may be removed from their respective offices with or without cause by vote of a majority of the directors then in office. An officer may be removed for cause only after a reasonable notice and opportunity to be heard before the directors. Vacancies in any office may be filled by the directors.

Section 4.Qualifications. Directors and officers need not be stockholders. No officer need be a director. Two or more offices may be held by the same person.

Section 5.Resignation. Resignations by officers or directors shall be given in writing to the president, treasurer, secretary or directors.

Section 6. Employment Contracts. The corporation may enter into employment contracts authorized by the directors and the provisions of such contracts shall be valid in accordance with their terms despite any inconsistent provision of these by-laws relating to terms of officers and removal of officers with or without cause.

ARTICLE IV

Powers and Duties of Directors and Officers

Section 1.Directors. The business of the corporation shall be managed by the Board of Directors, which may exercise all such powers of the corporation as are not by law, by the articles of organization or by the by-laws required to be otherwise exercised. The directors may from time to time to the extent permitted by law delegate any of their powers to committees, officers, attorneys or agents of the corporation, subject to such limitations as the directors may impose.

Section 2.Chairman of the Board. The chairman of the board, if there be one, shall be elected annually by and from the Board of Directors, and shall preside at all meetings of the directors at which he or she is present. If so designated by the Board of Directors, he or she shall be the chief executive officer of the corporation, and as such shall have charge of the corporation subject to the supervision of the directors and shall preside at all meetings of the stockholders at which he or she is present.

Section 3.President. Unless the Board of Directors shall have designated the chairman of the board as the chief executive officer of the corporation, the president shall be the chief executive officer of the corporation and as such shall have charge of the corporation subject to the supervision of the directors and shall preside at all meetings of the stockholders at which he or she is present. In the absence of a chairman of the board, the president shall preside at all meetings of the directors at which he or she is present. The president shall also have such other powers and duties as customarily belong to the office of president or as may be designated from time to time by the directors.

Section 4.Vice Presidents. The vice presidents, if any, shall have such powers and duties as may be designated from time to time by the directors or by the president.

Section 5.Treasurer. The treasurer shall be the chief financial officer of the corporation. He or she shall also have such powers and duties as customarily belong to the office of treasurer or as may be designated from time to time by the directors or by the president.

Section 6.Secretary. The secretary shall record all proceedings of the stockholders and directors in a book or books to be kept therefor and shall have custody of the seal of the corporation.

Section 7.Other Officers. Other officers shall have such powers as may be designated from time to time by the directors.

ARTICLE V

Meetings of the Directors

Section 1.Regular Meetings. Regular meetings may be held at such times and places within or without the Commonwealth of Massachusetts as the directors may fix. An annual meeting shall be held in each year immediately after and at the place of the meeting at which the Board is elected.

Section 2.Special Meetings. Special meetings may be held at such times and places within or without the Commonwealth of Massachusetts asmay be determined by the directors or by the president.

Section 3.Notice. No notice need be given for a regular or annual meeting. Forty- eight hours' notice by mail, telegraph, telephone or word of mouth shall be given for a special meeting unless shorter notice is adequate under the circumstances. A notice or waiver of notice need not specify the purpose of any special meeting. Notice of a meeting need not be given to any director if a written waiver of notice, executed by him or her before or after the meeting, is filed with the records of the meeting, or to any director who attends the meeting without protesting prior thereto or at its commencement the lack of notice to him or her.

Section 4.Quorum. A majority of the directors then in office shall constitute a quorum, but a smaller number may adjourn finally or from time to time without further notice until a quorum is secured. If a quorum is present, a majority of the directors present may take any action on behalf of the board except to the extent that a larger number is required by law or the articles of organization or the by-laws.

Section 5.Telephone Meetings. Directors or members of any committee of the Board may participate in a meeting of the directors or such committee by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other and participation by such means shall constitute presence in person at a meeting.

Section 6.Action by Consent. Any action required or permitted to be taken at any meeting of the directors may be taken without a meeting if all the directors consent to the action in writing, signed or delivered to the corporation by electronic transmission, and the written consents are filed with the records of the meetings of directors. Such consents shall be treated for all purposes asa vote at a meeting.

ARTICLE VI

Stock and Transfer Books

The corporation shall keep in the Commonwealth of Massachusetts at its principal office (or at an office of its transfer agent or of its secretary or of its resident agent) stock and transfer records, which shall contain the names of all stockholders and the record address and the amount of stock held by each. The corporation for all purposes may conclusively presume that the registered holder of a stock certificate is the absolute owner of the shares represented thereby and

that his or her record address is his or her proper address. The directors may fix in advance a time, which shall not be more than seventy days before the date of any meeting of stockholders or the date for the payment of any dividend or the making of any distribution to stockholders or the last day on which the consent or dissent of stockholders may be effectively expressed for any purpose, as the record date for determining the stockholders having the right to notice of and to vote at such meeting and any adjournment thereof or the right to receive such dividend or distribution or the right to give such consent or dissent, and in such case only stockholders of record on such record date shall have such right, notwithstanding any transfer of stock on the books of the corporation after the record date; or without fixing such record date the directors may for any of such purposes close the transfer books for all or any part of such period.

If no record date is fixed and the transfer books are not closed:

(1)The record date for determining stockholders having the right to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given.

(2)The record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors acts with respect thereto.

ARTICLE VII

Signature of Checks

All checks drawn on bank accounts of the corporation may be signed on its behalf as authorized from time to time by the directors.

ARTICLE VIII

Amendment of By-Laws

Except as otherwise provided herein or in the articles of organization, these by-laws may be amended, altered or repealed in whole or in part, and new by-laws may be adopted, by vote of the holders of a majority of the shares of common stock outstanding and entitled to vote. The directors may also make, amend or repeal these by-laws in whole or in part, except with respect to any provision thereof which by law, the articles of organization or these by-laws requires action by the stockholders. Any amendment, alteration or repeal of these by-laws that affects the voting power of stockholders, other than action with respect to the application of Chapter 110D of the Massachusetts General Laws, Regulation of Control Share Acquisitions, as amended, to control share acquisitions of this corporation, shall require approval of the stockholders. Not later than the time of giving notice of the meeting of stockholders next following the making, amending or repealing by the directors of any by-law, notice thereof stating the substance of such change shall be given to all stockholders entitled to vote on amending the by-laws. Any action taken with respect to the by-laws by the directors may be amended or repealed by the stockholders.

ARTICLE IX

Indemnification of Directors and Officers

The corporation shall, to the extent legally permissible but subject to the following sentence, indemnify each person who may serve or who has served at any time as a director or officer of the corporation or of any of its subsidiaries, or who at the request of the corporation may serve or at any time has served as a director, officer or trustee of, or in a similar capacity with, another organization or an employee benefit plan, against all expenses and liabilities (including court costs, witness fees, counsel fees, judgments, fines, excise taxes, penalties and amounts payable in settlements) reasonably incurred by or imposed upon such person in connection with any threatened, pending or completed action, suit or other proceeding, whether civil, criminal, administrative or investigative, in which he or she may become involved by reason of serving or having served in such capacity; provided that no such indemnification shall be provided (a) with respect to a proceeding voluntarily initiated by such person unless he or she is successful on the merits, the proceeding was authorized by the corporation, or the proceeding seeks a declaratory judgment regarding his or her own conduct or (b) with respect to a compromise payment made to dispose of a matter, pursuant to a consent decree or otherwise, unless the payment and indemnification thereof have been approved by the corporation, which approval shall not unreasonably be withheld, or a court of competent jurisdiction.

No indemnification shall be provided for any such person with respect to any matter as to which he or she shall have been finally adjudicated (a) not to have acted in good faith in the reasonable belief that his or her action was in, or at least not opposed to, the best interests of the corporation (or, to the extent such matter relates to service with respect to any employee benefit plan, in the best interests of the participants or beneficiaries of such employee benefit plan) and (b) in the case of a criminal proceeding, to have had reasonable cause to believe his or her conduct was unlawful.

Such indemnification shall include payment by the corporation of expenses incurred in defending a civil or criminal action or proceeding in advance of the final disposition of such action or proceeding upon receipt from the person to be indemnified of (i) a written affirmation of his or her good faith belief that he or she has met the relevant standard of conduct described in the preceding sentence and (ii) a written undertaking to repay such payment if such person shall be adjudicated to be not entitled to indemnification, which undertaking may be accepted without regard to the financial ability of such person to make repayment. A person entitled to indemnification hereunder whose duties include service or responsibilities as a fiduciary with respect to a subsidiary or other organization shall be deemed to have met the standard of conduct of clause (a) of the preceding paragraph if he or she acted in good faith in the reasonable belief that his or her action was in, or at least not opposed to, the best interests of such subsidiary or organization or of the participants or beneficiaries of, or other persons with interests in, such subsidiary or organization to whom such person had a fiduciary duty.

Where indemnification hereunder requires authorization or approval by the corporation, such authorization or approval shall be conclusively deemed to have been obtained, and in any case where a director of the corporation approves the payment of indemnification, such director shall be wholly protected, if:

(i)the payment has been approved or ratified (1) by a majority vote of a quorum of the directors consisting of persons who are not at that time parties to the proceeding, (2) by a majority vote of a committee of two or more directors who are not at that time parties to the proceeding and are selected for this purpose by the full board (in which selection directors who are parties may participate), or (3) by a majority vote of a quorum of the outstanding shares of stock entitled to vote for directors, which quorum shall consist of stockholders who are not at that time parties to the proceeding; or

(ii)the action is taken in reliance upon the opinion of independent legal counsel (who may be counsel to the corporation) appointed for the purpose by vote of the directors or in the manner specified in clauses (1), (2) or (3) of subparagraph (i); or

(iii)the payment is approved by a court of competent jurisdiction; or

(iv)the directors have otherwise acted in accordance with the standard of conduct set forth in the Massachusetts Business Corporation Act.

Any indemnification or advance of expenses under this article shall be paid promptly, and in any event within 30 days, after the receipt by the corporation of a written request therefor from the person to be indemnified, unless with respect to a claim for indemnification the corporation shall have determined that the person is not entitled to indemnification. If the corporation denies the request or if payment is not made within such 30 day period, the person seeking to be indemnified may at any time thereafter seek to enforce his or her rights hereunder in a court of competent jurisdiction and, if successful in whole or in part, he or she shall be entitled also to indemnification for the expenses of prosecuting such action. Unless otherwise provided by law, the burden of proving that the person is not entitled to indemnification shall be on the corporation.

The right of indemnification under this article shall be a contract right inuring to the benefit of the directors, officers and other persons entitled to be indemnified hereunder and no amendment or repeal of this article shall adversely affect any right of such director, officer or other person existing at the time of such amendment or repeal. The indemnification provided hereunder shall inure to the benefit of the heirs, executors and administrators of a director, officer or other person entitled to indemnification hereunder.

The indemnification provided hereunder may, to the extent authorized by the corporation, apply to the directors, officers and other persons associated with constituent corporations that have been merged into or consolidated with the corporation who would have been entitled to indemnification hereunder had they served in such capacity with or at the request of the corporation.

The right of indemnification under this article shall be in addition to and not exclusive of all other rights to which such director or officer or other persons may be entitled. Nothing contained in this article shall affect any rights to indemnification to which corporation employees or agents other than directors and officers and other persons entitled to indemnification hereunder may be entitled by contract or otherwise under law.

ARTICLE X

Issue of Authorized Stock

Any unissued capital stock from time to time authorized under the articles of organization may be issued by vote of the directors.

ARTICLE XI

Right to Redeem Control Shares

If the provisions of Chapter 110D of the Massachusetts General Laws, Regulation of Control Share Acquisitions, apply to control share acquisitions of the corporation, the corporation shall be authorized to redeem, at its option but without requiring the agreement of the person who has made a control share acquisition, all but not less than all shares acquired in such control share acquisition under the circumstances and pursuant to the provisions set forth in section 6 of said chapter 110D, as amended from time to time.

ARTICLE XII

Fair Price Protection and Other Safeguards

Section 1. Vote Required for Certain Business Combinations.

(a)In addition to such affirmative vote, if any as required by law or the Articles of Organization, as amended, or by-laws of the corporation or in any agreement with any national securities exchange or otherwise, and except as otherwise expressly provided in Section 2 below:

(i) any merger or consolidation of the corporation or any Subsidiary (as hereinafter defined) with (A) any Substantial Stockholder (as hereinafter defined) or (B) any other corporation (whether or not itself a Substantial Stockholder) which is or after such merger or consolidation would be an Affiliate or Associate (as hereinafter defined) of a Substantial Stockholder; or

(ii) any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions) to or with any Substantial Stockholder or any Affiliate or Associate of any Substantial Stockholder of any assets of the corporation or any Subsidiary having an aggregate Fair Market Value (as hereinafter defined), as determined by a majority of the Disinterested Directors (as hereinafter defined), equal to ten percent (10%) or more of the total stockholders' equity of the corporation as of the end of its most recent fiscal year ended prior to the determination being made; or

(iii) the issuance or transfer by the corporation or any subsidiary (in one transaction or a series of transactions) of any securities of the corporation or any subsidiary to any Substantial Stockholder or any Affiliate or Associate of any Substantial Stockholder having an aggregate Fair Market

Value equal to ten percent (10%) or more of the total stockholders' equity of the corporation as of the end of its most recent fiscal year ended prior to the determination being made; or

(iv) the adoption of any plan or proposal for the liquidation or dissolution of the corporation proposed by or on behalf of a Substantial Stockholder or any Affiliate or Associate of any Substantial stockholder; or

(v) any reclassification of securities (including any reverse stock split), or recapitalization of the corporation, or any merger or consolidation of the corporation with any of its Subsidiaries or any other transaction (whether or not with or otherwise involving a Substantial Stockholder) that has the effect, directly or indirectly, of increasing the proportionate share of any class of equity or convertible securities of the corporation or any subsidiary that is directly or indirectly beneficially owned by any Substantial Stockholder or any Affiliate or Associate of any Substantial Stockholder; or

(vi) any agreement, contract, or other arrangement providing for anyone or more of the actions specified in clauses (i) through (v) of this subsection (a); or

(vii) any transaction other than one covered by the provisions of clauses (i) through (vi) of this subsection (a) between the corporation and a Substantial Stockholder or an Affiliate or Associate of a Substantial Stockholder shall require the affirmative vote of (A) a majority of the Disinterested Directors if, at the time of the vote, Disinterested Directors constitute at least a majority of the entire Board of Directors of the corporation or (B) the holders of at least the sum of (x) two-thirds of the Voting Stock (as hereinafter defined) which is beneficially owned by persons other than any Substantial Stockholder, voting together as a single class, plus (y) the number of shares of Voting Stock which is beneficially owned by Substantial Stockholders.

(b)The term "Business Combination" as used in Sections 1 through 6 hereof shall mean any transaction that is referred to in anyone or more of clauses (i) through (vi) of subsection (a) of Section 1. The term "series of transactions" shall be deemed to include not only a series of transactions with the same Substantial Stockholder, but also a series of separate transactions with a Substantial Stockholder or any Affiliate or Associate of such Substantial Stockholder.

Section 2.Equal Price. The provisions of Section 1 above shall not be applicable to a Business Combination if all of the following conditions are met:

(a)The aggregate amount of (i) cash plus (ii) the Fair Market Value as of the date of the consummation of the Business Combination of consideration other than cash to be received per share by holders of common stock in such Business Combination shall be at least equal to the highest per share price (including any brokerage commissions, transfer taxes and soliciting

dealers' fees) paid by or on behalf of the Substantial Stockholder for any share of common stock in connection with the acquisition by the Substantial Stockholder of beneficial ownership of any such shares (i) within the two-year period immediately prior to the first public announcement of the proposal of the Business Combination (the "Announcement Date") or (ii) in the transaction in which it became a Substantial Stockholder, whichever is higher.

(b)The aggregate amount of (i) cash plus (ii) the Fair Market Value as of the consummation of the Business Combination of consideration other than cash to be received per share by holders of shares of any class or, if there be more than one series in a class, any series of outstanding Preference Stock (as hereinafter defined), shall be at least equal to the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers' fees) paid by or on behalf of the Substantial Stockholder for any share of such class or, if there be more than one series in a class, such series of Preference Stock in connection with the acquisition by the Substantial Stockholder of beneficial ownership of any such shares (i) within the two-year period immediately prior to the Announcement Date or (ii) in the transaction in which it became a Substantial Stockholder, whichever is higher.

(c)The consideration to be received by holders of a particular class or series of outstanding Capital Stock (as hereinafter defined) shall be in cash or in the same form as previously has been paid by or on behalf of the Substantial Stockholder in connection with its direct or indirect acquisition of beneficial ownership of shares of such class or series of Capital Stock. If the consideration so paid for shares of any class or series of Capital Stock varied as to form, the form of consideration for such class or series of Capital Stock shall be either cash or the form used to acquire beneficial ownership of the largest number of shares of such class or series of Capital Stock previously acquired by the Substantial Stockholder.

(d)After such Substantial Stockholder has become a Substantial Stockholder and prior to the consummation of such Business Combination: (i) except as approved by a majority of the Disinterested Directors, there shall have been no failure to declare and pay at the regular date therefor any full quarterly dividends (whether or not cumulative) on any outstanding Preference Stock; (ii) there shall have been (A) no reduction in the annual rate of dividends paid on the common stock (except as necessary to reflect any subdivision of the common stock), except as approved by a majority of the Disinterested Directors, and (B) an increase in such annual rate of dividends as necessary to reflect any reclassification (including any reverse stock split), recapitalization, reorganization or any similar transaction that has the effect of reducing the number of outstanding shares of the common stock, unless the failure so to increase such annual rate is approved by a majority of the Disinterested Directors; and (iii) such Substantial Stockholder shall not have become the beneficial owner of any additional shares of Capital Stock except as part of the transaction that results in such Substantial Stockholder becoming a Substantial Stockholder and except in a transaction that, after giving effect thereto, would not result in any increase in the Substantial Stockholder's percentage beneficial ownership of any class of Capital Stock.

(e)After such Substantial Stockholder has become a Substantial Stockholder, such Substantial Stockholder shall not have received the benefit, directly or indirectly (except proportionately as a stockholder of the corporation), of any loans, advances, guarantees, pledges or other financial assistance or any tax credits or other tax advantages provided by the corporation, whether in anticipation of or in connection with such Business Combination or otherwise.

(f)A proxy or information statement describing the proposed Business Combination and complying with the requirements of the Securities Exchange Act of 1934 and the rules and regulations thereunder (the "Act") (or any subsequent provisions replacing such Act, rules or regulations) shall be mailed to all stockholders of the corporation at least 30 days prior to the consummation of such Business Combination  (whether or not such proxy or information statement is required to be mailed pursuant to such Act or subsequent provisions). The proxy statement shall contain on the first page thereof, in a prominent place, any recommendation as to the advisability (or inadvisability) of the Business Combination that the Disinterested Directors, or any of them, may choose to state and, if deemed advisable by a majority of the Disinterested Directors, the opinion of an investment banking firm selected by a majority of the Disinterested Directors, as to the fairness (or not) of the terms of the Business Combination, from a financial point of view, to the holders of the outstanding shares of Capital Stock of the corporation other than the Substantial Stockholder and its Affiliates or Associates (such investment banking firm to be paid a reasonable fee, for its services by the corporation).

(g)Such Substantial Stockholder shall not have made any major change in the corporation's business or equity capital structure without the approval of the majority of the Disinterested Directors.

Section 3.Certain Definitions. For the purposes of Sections 1 through 7 hereof:

(a)The term "Capital Stock" shall mean all capital stock of the corporation authorized under the Articles of Organization, as amended, of the corporation from time to time.

(b)The term "Voting Stock" shall mean the then outstanding shares of Capital Stock entitled to vote generally in the election of directors.

(c)The term "person" shall mean any individual, corporation, partnership, trust, association or other organization or entity and shall include any group composed of any person and any other person with whom such person or any Affiliate or Associate of such person has any agreement, arrangement or understanding, directly or indirectly, for the purpose of acquiring, holding, voting or disposing of Capital Stock of the corporation.

(d)The term "Substantial Stockholder" shall mean any person (other than the corporation or any Subsidiary and other than any profit-sharing, employee stock ownership or other employee benefit plan of the corporation or any Subsidiary or any trustee of or fiduciary with respect to any such plan when acting in such capacity) who:

(i) is the beneficial owner (as hereinafter defined), directly or indirectly, of ten percent (10%) or more of the Voting Stock; or

(ii) is an Affiliate or Associate (as hereinafter defined) of the corporation and at any time within the two-year period immediately prior to the date in question was the beneficial owner of ten percent (10%) or more of the Voting Stock. Any person who is the beneficial owner, directly or indirectly, often percent (10%) or more of the Voting Stock on April 25, 1988 shall be deemed to have become a Substantial Stockholder on such date.

(e)A person shall be a "beneficial owner" of any Capital Stock:

(i) which such person or any of its Affiliates or Associates beneficially owns, directly or indirectly, within the meaning of Rule 13d-3 under the Act, as in effect on April 11, 1988;

(ii) which such person or any of its Affiliates or Associates has, directly or indirectly, (A) the right to acquire (whether such right is exercisable immediately or only after the passage of time), pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise or (B) the right to vote pursuant to any agreement, arrangement or understanding; or

(iii) which is beneficially owned, directly or indirectly, by any other person with which such person or any of its Affiliates or Associates has any agreement, arrangement or understanding for the purpose of acquiring; holding, voting or disposing of any shares of Capital stock.

(f)For the purpose of determining whether a person is a Substantial Stockholder pursuant to subsection (d) of this Section 3, the number of shares of Capital Stock deemed to be outstanding shall include shares deemed owned through application of subsection (e) of this Section 3, but shall not include any other shares of Capital Stock that may be issuable pursuant to any agreement, arrangement or understanding or upon exercise of conversion rights, warrants or options, or otherwise.

(g)The terms "Affiliate" or "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 under the Act, as in effect on April 25, 1988.

(h)The term "Subsidiary" means any corporation of which a majority of any class of equity security is owned, directly or indirectly, by the corporation; provided, however, that for the purposes of the definition of Substantial Stockholder set forth in subsection (d) of this Section 3, the term "Subsidiary" shall mean only a corporation of which a majority of each class of equity security is owned, directly or indirectly, by the corporation.

(i)The term "Disinterested Director" means a director who was either a member of the Board of Directors of the corporation prior to the time that a Substantial Stockholder became such or who subsequently became a director of the corporation and whose election, or nomination for election, was approved by the vote of a majority of the Disinterested Directors; provided, that all directors in office as of April 25, 1988, including those elected directors at the Special Meeting in lieu of the Annual Meeting of stockholders of the corporation on that date, shall be deemed to be Disinterested Directors.

(j)The term "Fair Market Value" means (i) in the case of stock, the highest closing sale price during the 30-day period immediately preceding the date in question of a share of such stock on the Composite Tape for New York Stock Exchange Listed Stocks, or, if such stock is not quoted on the Composite Tape, on the New York Stock Exchange, or, if such stock is not listed on such Exchange, on the principal United States securities exchange registered under the Act on which such stock is listed, or, if such stock is not listed on any such exchange, the highest

closing bid quotation with respect to a share of such stock during the 30-day period preceding the date in question on the National Association of Securities Dealers, Inc. Automated Quotations System or any system then in use or if no such quotations are available, the fair market value on the date in question of a share of such stock as determined in good faith by a majority of the Disinterested Directors; and (ii) in the case of property other than cash or stock, the fair market value of such property on the date in question as determined in good faith by a majority of the Disinterested Directors.

(k)The term "Preference Stock" shall mean preferred stock and any other class of stock that has a preference as to dividends and/or upon liquidation that may from time to time be authorized in or by the Articles of Organization, as amended, of the corporation.

(l)In the event of any Business Combination in which the corporation survives, the phrase "other consideration to be received" as used in subsections (a) and (b) of Section 2 above shall include the shares of common stock and/or the shares of any class or series of Preference Stock retained by the holders of such shares.

Section 4.Powers of the Disinterested Directors. A majority of the Disinterested Directors shall have the power and duty to determine for the purposes of Sections 1 through 6 hereof, on the basis of information known to it after reasonable inquiry, (a) whether a person is a Substantial Stockholder, (b) the number of shares of Capital Stock beneficially owned by any person, (c) whether a person is an Affiliate or Associate of another, (d) whether any person has an agreement, contract or other arrangement with another, (e) whether two or more transactions constitute a "series of transactions", and (f) whether the assets or securities that are the subject of any Business Combination have a Fair Market Value equal to ten percent (10%) or more of the total stockholders' equity of the corporation as of the end of its most recent fiscal year ended prior to the determination being made. Any such determination made in good faith shall be binding and conclusive on all parties.

Section 5.No Effect on Fiduciary Obligations of Interested Stockholders. Nothing contained in Sections 1 through 6 hereof shall be construed to relieve any Substantial Stockholder from any fiduciary obligation imposed by law.

Section 6.Amendment, Repeal, etc. Notwithstanding any other provisions of the Articles of Organization, as amended, or the by-laws of the corporation (and notwithstanding the fact that a lesser percentage may be specified by law, the Articles of Organization, as amended, or the by-laws of the corporation), the affirmative vote of the holders of at least (a) the sum of (i) two-thirds of the Voting Stock which is beneficially owned by persons other than any Substantial Stockholder, voting together as a single class, plus (ii) the number of shares of Voting Stock which is beneficially owned by Substantial Stockholders, and (b) two-thirds of the Voting Stock, voting together as a single class, shall be required to amend or repeal, or adopt any provisions inconsistent with, sections 1 through 5 hereof and this Section 6.

EX-4

Exhibit 4.1

Capital Stock Number 6967 Cambridge Bancorp Cambridge Mass Capital Stock Shares Organized under the laws of the commonwealth of Massachusetts See reverse for certain conditions CUSIP 132152 10 9  This certifies that is the owner of FULLY PAID AND NON-ASSESSABLE SHARES OF THIE CAPITAL STOCK, PAR VALUE $1.00 PER SHARE,OF. transferable on the books of the Company in person or by duly authorized attorney, upon  surrender of this  Certificate properly endorsed. This Certificate is not valid until countersigned and registered by the transfer agent  and registrar. WITNESS the facsimile seal of the corporation and the facsimile  signatures of its duly authorized officers. Dated: Countersigned and Registered American Stock Transfer Company, LLC. (Brooklyn, NY) By: Transfer Agent and Registrar Authorized Signature.  President and Chief Executive Officer.  Chief Financial Officer. American Bank Note company

The following abbreviations, when used in the inscription on the face of this Certificate, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM TEN ENT JT TEN as tenants in common - as tenants by the entireties - as joint tenants with right of survivorship and not as tenants in common UNIF GIFT MIN ACT -Custodian (Cust) (Minor) under Uniform Gifts to Minors Act (State} Additional abbreviations may also be used though not in the above list. For value received, hereby sell, assign and transfer unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE Shares

of the Capital Stock represented by the within Certificate, and do hereby irrevocably. Attorney to transfer the said stock on the books of the within-named Company with full power of substitution in the premises. SPECIMEN. Dated, SIGNATURE(S) GUARANTEED: NOTICE: THE SIGNATURE(S) MUST BE GUARANTEED BY AN EUGIBLE GUARANTOR INSTITUTION (BANKS. STOCKBROKERS .SAVINGS AND LOAN ASSOCIAT ONS AND CREDIT UNIONS WITH  MEMBERSHIP IN AN  APPROVED S GNATURE GUARANTEE MEDALLION PROGRAM).PURSUANT TO S.E.C. RULE 17Ad-15. The signature to this assignment must correspond with the name as written upon the face of the certificate in every particular, without alteration or enlargement, or any change whatever

EX-10

Exhibit 10.1

CAMBRIDGE BANCORP

AMENDED 1993 STOCK OPTION PLAN

Section 1.Purpose

The purpose of the Cambridge Bancorp Amended 1993 Stock Option Plan (the "Plan") is to attract and retain key employees, to provide an incentive for them to assist the Company to achieve long-range performance goals and to enable them to participate in the long-term growth of the Company.

Section 2.Definitions

"Affiliate" means any business entity in which the Company owns directly or indirectly 50% or more of the total combined voting power or has a significant financial interest as determined by the Committee.

"Award" means any Option, Stock Appreciation Right, Restricted Stock or Restricted Stock Unit awarded under the Plan.

"Board" means the Board of Directors of the Company.

"Code" means the Internal Revenue Code of 1986, as amended from time to time.

"Committee" means the Compensation Committee of the Board or another Committee of not less than two members of the Board appointed by the Board to administer the Plan.

"Common Stock" or "Stock'' means the Common Stock, $1.00 par value, of the Company.

"Company" means Cambridge Bancorp.

"Designated Beneficiary" means the beneficiary designated by a Participant, in a manner determined by the Committee, to exercise rights of the Participant under the Plan in the event of the Participant's death. In the absence of an effective designation by a Participant, Designated Beneficiary shall mean the Participant's estate.

“Fair Market Value" with respect to Common Stock means the fair market value of the Common Stock as determined by the Committee in good faith.

"Incentive Stock Option" means an option to purchase shares of Common Stock that is intended to meet the requirements of Section 422 of the Code or any successor provision.

“Nonstatutory Stock Option" means an option to purchase shares of Common Stock that is not intended to be an Incentive Stock Option.

"Option" means an Incentive Stock Option or a Nonstatutory Stock Option.

"Participant" means a person selected by the Committee to receive an Award under the Plan.

''Restricted Period' means the period of time during which an Award may be forfeited or repurchased by the Company pursuant to the terms and conditions of such Award.

"Restricted Stock" means one or more shares of Common Stock subject to forfeiture, or to the Company's right to repurchase such share(s).

"Restricted Stock Unit" means the unfunded and unsecured right, subject to forfeiture, to receive in the future a share of Common Stock.

"Stock Appreciation Right" or "SAR" means a right to receive any excess in value of shares of Common

Stock over the exercise price awarded to a Participant under Section 7.

Section 3.Administration

The Plan shall be administered by the Committee; provided, that the Board may in any instance perform any of the functions of the Committee hereunder. The Committee shall have authority to adopt, alter and repeal such administrative rules, guidelines and practices governing the operation of the Plan as it shall from time to time consider advisable and to interpret the provisions of the Plan. The Committee's decisions shall be final and binding.

Section 4.Eligibility

All employees of the Company or any Affiliate capable of contributing significantly to the successful performance of the Company are eligible to be Participants in the Plan.

Section 5.Stock Available for Awards

(a)Subject to adjustment under subsection (b), Awards may be granted under the Plan for up to 200,000 shares of Common Stock. If any Award expires or is terminated unexercised, the shares subject to such Award, to the extent of such expiration or termination, shall again be available for grant under the Plan. Shares issued under the Plan may consist in whole or in part of authorized but unissued shares or treasury shares.

(b)In the event that the Committee determines that any stock dividend, split-up, combination or reclassification of shares, recapitalization or other similar capital change affects the Common Stock such that an adjustment is required in order to preserve the benefits or potential benefits intended to be made available under the Plan, then the Committee., subject in the case of Incentive Stock Options to any limitation required under the Code, shall equitably adjust any or all of (i) the number and kind of shares in respect of which Awards may be granted under the Plan. (ii) the number and kind of shares subject to outstanding Awards and (iii) the exercise price with respect to any of the foregoing, provided that the number of shares subject to any Award shall always be a whole number.

Section 6.Grant of Options

(a)Subject to the provisions of the Plan, the Committee may grant Incentive Stock Options and Nonstatutory Stock Options and determine the number of shares to be covered by each Option, the option price therefor and the conditions and limitations applicable to the exercise of the Option. The terms and conditions of Incentive Stock Options shall be subject to and comply with Section 422 of the Code, or any successor provision, and any regulations thereunder.

(b)The Committee shall establish the option price at the time each Option is awarded, which price shall not be less than 100% of the Fair Market Value of the Common Stock on the date of grant in the case of Incentive Stock Options.

(c)Each Option shall be exercisable at such times and subject to such terms and conditions as the Committee may specify in the applicable Award. The Committee may impose such conditions with respect to the exercise of Options, including conditions relating to applicable federal or state securities laws, as it considers necessary or advisable.

(d)No shares shall be delivered pursuant to any exercise of an Option until payment in full of the option price therefor is received by the Company. Such payment may be made in whole or in part in cash or, to the extent permitted by the Committee at or after the grant of the Option., by delivery of shares of Common Stock owned by the optionee valued at their Fair Market Value on the date of delivery, or such other lawful consideration as the Committee may determine.

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Section 7.Stock Appreciation Rights

(a)Subject to the provisions of the Plan, the Committee may award SARs in tandem with an Option (at or after the award of the Option), or alone and unrelated to an Option. SARs in tandem with an Option shall terminate to the extent that the related Option is exercised, and the related Option shall terminate to the extent that the tandem SARs are exercised. SARs shall have an exercise price of not less than 100% of the Fair Market Value of the Common Stock on the date of award, or in the case of SARs in tandem with Options, the exercise price of the related Option.

(b)An SAR related to an Option that can only be exercised during limited periods following a change in control of the Company may entitle the Participant to receive an amount based upon the highest price paid or offered for CommonStock in any transaction relating to the change in control or paid during the thirty-day period immediately preceding the occurrence of the change in control in any transaction reported in the stock market in which the Common Stock is normally traded.

Section 8.Restricted Stock; Restricted Stock Units

(a)Subject to the provisions of the Plan, the Committee may grant shares of Restricted Stock and Restricted Stock Units and determine the duration of the Restricted Period applicable to such shares or Units, the price (if any) at which, and the other conditions under which, the shares or Units may be forfeited or repurchased by the Company and the other terms and conditions of such grants. Such Awards may be issued for no cash consideration or such minimun1 consideration as may be required by applicable law. Restricted Stock Units may he settled in shares of Common Stock or cash as determined by the Committee at the time of grant or thereafter.

(b)Shares of Restricted Stock and Restricted Stock Units may not be sold, assigned transferred, pledged or otherwise encumbered, except as permitted by the Committee, during the Restricted Period. Any certificates issued in respect of shares of Restricted Stock shall be registered in the name of the Participant, shall contain such legend as the Committee may require with respect to the restrictions on transfer and, if required by the Committee, shall be deposited by the Participant together with a stock power endorsed in blank, with the Company. At the expiration of the Restricted Period for any shares of Restricted Stock, or at the distribution date for any Restricted Stock Units, the Company shall deliver a certificate for the respective shares, without a legend referring to the Plans restrictions on transfer, to the Participant or, if the Participant has died, to the Participant's Designated Beneficiary or legal representative.

Section 9.General Provisions

(a)Documentation. Each Award shall he evidenced by an agreement or other writing delivered to and, if the Committee specifics, executed by the Participant specifying the terms and conditions thereof and containing such other terms and conditions not inconsistent with the provisions of the Plan as the Committee considers necessary or advisable to achieve the purposes of the Plan or comply with applicable tax and regulatory laws and accounting principles. The form of such document may vary among Participants. An Award document may be amended in any respect by the Committee without the consent of the respective Participant; provided that the consent of the Participant shall he required for any amendment, other than an amendment made in order to conform the Award or the Plan to restrictions imposed by securities or tax laws or regulations or accounting requirements, that would materially and adversely affect the Participant.

(b)Committee Discretion. Each type of Award may be made alone or in addition to or in relation to any other type of Award. The terms of each Award need not be identical, and the Committee need not treat Participants uniformly. Except as otherwise provided by the Plan or a particular Award, any determination with respect to an Award may be made by the Committee at the time of grant or at any time thereafter.

(c)Settlement. The Committee shall determine whether Awards are settled in whole or in part in cash, Common Stock, other securities of the Company, Awards or other property. The Committee may permit a Participant to defer all or any portion of a payment under the Plan.

(d)Cash Awards. In the discretion of the Committee, any Award may provide the Participant with cash payments in lieu of or in addition to the Award.

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(e)Termination of Employment. The Committee shall determine the effect on an Award of the disability, death, retirement or other termination of employment of a Participant and the extent to which, and the period during which, the Participant's legal representative., guardian or Designated Beneficiary may exercise rights thereunder.

(f)Compliance with Securities Laws. It shall be a condition to a Participant's right to receive or vest in any Award that the Company may, in its discretion, require (i) that the shares of Common Stock reserved for issue under such Award shall have been duly listed upon any securities exchange or automated quotation system on which the Company's Common Stock may then he listed or quoted, (ii) that either (A) a registration statement under the Securities Act of 1933 with respect to the shares shall be in effect or (B) in the opinion of counsel for the Company, the proposed Award shall be exempt from registration under that Act and the Participant shall have made such undertakings and agreements with the Company as the Company may reasonably require, and (iii) that such other steps, if any, as the Company shall consider necessary to comply with any law applicable to the issue of such shares by the Company shall have been taken by the Company or the Participant or both. The certificates representing the shares received under any Award may contain such legends as the Company shall consider necessary to comply with any applicable law.

(g)Change in Control. In order to preserve a Participant's rights under an Award in the event of a change in control of the Company, the Committee in its discretion may, at the time an award is made or at any time thereafter, take one or more of the following actions: (i) provide for the acceleration of any time period relating to the exercise, realization or vesting of the Award, (ii) provide for the purchase of the Award upon the Participant's request for an amount of cash or other property that could have been received upon the exercise, realization or vesting of the Award had the Award been currently exercisable, payable or vested, (iii) adjust the terms of the Award in a manner determined by the Committee to reflect the change in control, (iv) cause the Award to be assumed, or new rights substituted therefor, by another entity, or (v) make such other provision as the Committee may consider equitable and in the best interests of the Company.

(h)Withholding. The Participant shall pay to the Company, or make provision satisfactory to the Committee for payment of, any taxes required by law to be withheld in respect of Awards under the Plan no later than the date of the event creating the tax• liability. In the Committee's discretion, such tax obligations may be paid in whole or in part in shares of Common Stock, including shares retained from the Award creating the tax obligation, valued at their Fair Market Value on the date of delivery. The Company and its Affiliates may, to the extent permitted by law, deduct any such tax obligations from any payment of any kind otherwise due to the Participant.

Section 10.Miscellaneous

(a)No Right To Employment. No person shall have any claim or right to be granted an Award, and the grant of an Award shall not be construed as giving a Participant the right to continued employment. The Company expressly reserves the right at any time to dismiss a Participant free from any liability or claim under the Plan, except as expressly provided in the applicable Award.

(b)No Rights As Shareholder. No Participant or Designated Beneficiary shall have any rights as a shareholder with respect to any shares of Common Stock subject to an Award until he or she becomes the holder of such shares.

(c)Effective Date. Subject to the approval of the shareholders of the Company. the Plan shall be effective on April 25, 2005 Awards may be made under the Plan before, but expressly subject to, such approval.

(d)Amendment Plan. The Board may amend, suspend or terminate the Plan or any portion thereof at any time.

(e)Governing Law. The provisions of the Plan shall be governed by and interpreted in accordance with the laws of Massachusetts.

*****************

Adopted by the Board of Directors on April 25, 2005

Approved by the shareholders on April 25, 2005

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EX-10

Exhibit 10.1(a)

Cambridge Bancorp

Amended 1993 Stock Option Plan

Restricted Stock Agreement

Grantee: Date:

Number of Shares of Restricted Stock:

Vesting Criteria:

This Agreement is made as of the date set forth above between Cambridge Bancorp, a Massachusetts corporation (the “Company”), and the undersigned individual (the “Grantee”) pursuant to the Company’s Amended 1993 Stock Option Plan (the “Plan”), which is incorporated herein by reference and receipt of a copy of which is hereby acknowledged by the Grantee. Capitalized terms used and not otherwise defined in this Agreement have the meanings given to them in the Plan.

The Grantee is an employee or consultant of the Company or one of its Affiliates, and the Company desires to reward the Grantee and/or provide an incentive for his or her services to the Company or such Affiliate by affording him or her the opportunity to acquire stock ownership in the Company. In consideration of the premises and the covenants contained herein, the parties agree as follows:

1. Grant of Restricted Stock. Subject to the terms and conditions of this Agreement, the Company grants to the Grantee and the Grantee accepts the number of shares of Common Stock, $1.00 par value, of the Company set forth above. Such shares, together with any additional shares of stock of the Company issued on account of such shares by reason of stock dividends, stock splits or recapitalizations (whether by way of mergers, consolidations, combinations or exchanges of shares or the like), are referred to in this Agreement as the (“Restricted Stock”).

2. Restrictions on Stock.

(a) Until the termination of restrictions as provided hereinafter, the Restricted Stock may not be sold, assigned, transferred, pledged or otherwise encumbered except as provided in this Agreement.

(b) The restrictions set forth in Section 2(a) shall terminate as to the Restricted Stock or any portion thereof, as applicable, upon the earliest of (i) the satisfaction of the Vesting Criteria set forth above (with any fractional share resulting being added to the next part to vest), so that the restrictions on all such shares shall have terminated when all Vesting Criteria have been met, if at all, (ii) termination of the Grantee’s employment with the Company or an Affiliate by the Grantee’s death or disability as defined in section 22(e)(3) of the Code (“Disability”), and (iii) as otherwise provided hereinafter. The achievement of any of the Vesting Criteria (other than the passage of time) shall be as determined by the Committee in its sole discretion.

3. Forfeiture of Restricted Stock. Upon termination of the Grantee’s employment with the Company or an Affiliate for any reason other the Grantee’s death or Disability, all shares of Restricted Stock that remain subject to the restrictions imposed by Section 2(a) shall automatically be forfeited and returned to the Company unless the Board or the Committee in its discretion shall otherwise determine.

4. Rights as Stockholder. Except for the restrictions and other limitations and conditions provided in this Agreement, the Grantee as owner of the Restricted Stock shall have all the rights of a stockholder, including but not limited to the right to receive all dividends paid on such Restricted Stock and the right to vote such Restricted Stock.

5. Stock Certificates. Each certificate issued for shares of Restricted Stock shall be registered in the name of the Grantee and deposited by the Grantee, together with a stock power endorsed in blank, with the Company and shall bear the following (or a similar) legend:

“The transferability of this certificate and the shares of stock represented hereby are subject to the terms, conditions and restrictions (including forfeiture) contained in a Plan and an Agreement between the registered owner and the issuer. A copy of such Plan and Agreement will be furnished to the holder of this certificate by the issuer without charge upon written request.”

Upon the termination of the restrictions imposed by this Agreement as to any shares of Restricted Stock, the Company shall return to the Grantee (or to such Grantee's legal representative) certificates without a legend for the shares of Common Stock as to which the restrictions have been terminated.

6. Tax Withholding. The Grantee shall pay to the Company, or make provision satisfactory to the Committee for payment of, any taxes required by law to be withheld with respect to the Restricted Stock no later than the date of the event creating the tax liability. The Company and its Affiliates may, to the extent permitted by law, deduct any such tax obligations from any payment of any kind due to the Grantee. In the Committee’s discretion, the minimum tax obligations required by law to be withheld with respect to the Restricted Stock may be paid in whole or in part with shares of Common Stock, including shares retained from those as to which the restrictions hereunder have terminated, valued at their Fair Market Value on the date of retention or delivery.

7. Adjustment in Provisions. Upon any change from time to time in the outstanding Common Stock of the Company by reason of stock dividend, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, exchange of shares or other such transaction affecting the Company’s Common Stock, the divisions of shares of Restricted Stock into portions, the provisions for termination of restrictions on portions of the Restricted Stock, and any other relevant parts of this Agreement shall be appropriately adjusted by the Committee, if necessary, to reflect equitably such change.

8. Change in Control. In order to preserve the Grantee’s rights under this Agreement, notwithstanding any other provision of this Agreement, upon a Change in Control of the Company, the restrictions imposed by Section 2(a) on all shares of Restricted Stock shall terminate. For this purpose, a “Change in Control” of the Company means either of the following:

(a) a change in control of a nature that would be required to be reported by the Company or Cambridge Trust Company (the “Bank”) in response to item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended (“Exchange Act”), whether or not the Company or the Bank in fact is required to comply with Regulation 14A thereunder; or

(b) the acquisition of “control” as defined in the Bank Holding Company Act of 1956, as amended or the regulations thereunder, or as defined in the Change in Bank Control Act 1978 or the regulations thereunder, of the Company or the Bank by any person, company or other entity; provided that, without limitation, a Change in Control shall be deemed to have occurred if (1) any “person” (as such term is used in Section 13(d) and 14(d) of the Exchange Act) other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or the Bank or a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of the Company’s then outstanding securities; or (2) during any period of two consecutive years (not including any period prior to the execution of this Agreement), individuals who at the beginning of such period constitute the Board and any new director (other than a director designated by a person who has entered into an agreement with Cambridge Bancorp to effect a transaction described in clauses (1) or (3) of this Subsection) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously as approved, cease for any reason to constitute a majority thereof; or (3) there is consummated a merger or consolidation of the Company with any other corporation, or the sale or disposition by the Company of all or substantially all the Company’s assets, other than (i) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent, directly or indirectly through one or more subsidiaries (either by remaining outstanding or by being converted into voting securities of the surviving entity), at least two-thirds (2/3) of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or (ii) a sale or other disposition of assets to an entity the voting securities of which are held as described in clause (i); or (4) the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company.

9. Notice of Election Under Section 83(b). If the Grantee makes an election under Section 83(b) of the Code, and the regulations and rulings promulgated thereunder, or under comparable provisions of other laws, he or she will provide a copy thereof to the Company within thirty days of the filing of such election with the Internal Revenue Service or other authority.

10. Amendments. The Committee may amend, modify or terminate this Agreement, including substituting therefor another Award of the same or a different type, provided that the Grantee’s consent to such action shall be required unless the Committee determines that the action, taking into account any related action, would not materially and adversely affect the Grantee.

11. Employment. Neither the adoption, maintenance, nor operation of the Plan nor this Agreement shall confer upon the Grantee any right with respect to the continuance of his or her employment by the Company or any Affiliate, nor shall they interfere with all rights of the Company or Affiliate to terminate the Grantee at any time or otherwise change the terms of his or her employment free of any liability or claim hereunder, including, without limitation, the right to promote, demote or otherwise re-assign Grantee from one position to another within the Company or any Affiliate.

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12. Assignment. No rights or interests of the Grantee under this Agreement or under the Plan may be assigned, encumbered or transferred except by will or the laws of descent and distribution. The Company’s rights hereunder shall be assigned to and inure to the benefit of any corporation the shares of which are substituted or exchanged for shares of Restricted Stock in any merger, consolidation or share exchange involving the company.

13. Decisions by Committee. Any dispute or disagreement that shall arise under, or as a result of, or pursuant to this Agreement shall be resolved by the Committee in its sole and absolute discretion, and any such resolution or any other determination by the Committee under, or pursuant to, this Agreement and any interpretation by the Committee of the terms of this Agreement or the Plan shall be final, binding, and conclusive on all persons affected thereby.

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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer, and the Grantee has hereunto set his or her hand, all as of the day and year first above written.

CAMBRIDGE BANCORP
By
	Title:
THE GRANTEE
Name:
Address:

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EX-10

Exhibit 10.1(b)

Cambridge Bancorp

Amended 1993 Stock Option Plan

Restricted Stock Unit Agreement

Cambridge Bancorp, a Massachusetts corporation (the “Company”), hereby grants to the Grantee (as defined below), and the Grantee accepts, restricted stock units (“RSUs”) representing the unfunded and unsecured right, subject to forfeiture, to receive shares of the Company’s Common Stock, $1.00 par value, in accordance with the terms of this Restricted Stock Unit Agreement (the “Agreement”).

Name of Grantee:

Target Number of Restricted Stock Units:

Date of Grant: January 23, 2017

Performance Period: January 1, 2016-December 31, 2018

Long-Term Incentive Instrument

To reward future performance and align management’s interests with those of shareholders, the Committee hereby awards the Target Number of Restricted Stock Units specified above, as adjusted based on the provisions of this Agreement. Vesting will be based on 3-year performance as measured by both the Company’s 3-year average return on assets (“ROA”) and 3-year average diluted earnings per share (“EPS”) growth. Both metrics will be based on performance relative to an “Industry Index.”

RSUs will vest and settle (“payout”) in shares of Common Stock on the Determination Date following the end of the 3-year Performance Period specified above based on actual performance of each of the ROA and EPS metrics. The final number of RSUs available pursuant to this Agreement can range between 0% (if the minimum threshold of neither performance metric is achieved) and 200% (but not more than 200%) of the Target Number of Restricted Stock Units. The Committee, in its discretion, shall determine the extent to which any performance metrics are satisfied.

Performance RSU Metrics

The table below summarizes the performance metrics and payout ranges. Payouts in-between threshold and stretch will be interpolated based on a linear slope.

Each of the 2 performance metrics – 3-year average ROA and 3-year average diluted EPS growth – will be equally weighted, so that each will account for 50% of the total performance opportunity. In addition, the threshold level of performance must be met with respect to at least one of the metrics in order to receive a payout.

The final number of vested RSUs available pursuant to this Agreement is calculated by the Committee on the basis of each individual metric, and then averaged to calculate the final award payout. Any resulting fractional unit is rounded up to the nearest whole share.

	Threshold	Target	Stretch
Relative 3-year average	25th percentile	50th percentile	90th percentile
ROA and 3-year average diluted EPS growth (incentive opportunity goal)
Payout	25% of award	100% of award	200% of award

IN WITNESS WHEREOF, the Company has caused this Agreement (including the terms and conditions in Exhibit A hereto) to be executed by its duly authorized officer, and the Grantee has hereunto set his or her hand, accepting and agreeing to be bound by the terms and conditions of this Agreement and the Cambridge Bancorp Amended 1993 Stock Option Plan.

CAMBRIDGE BANCORP		THE GRANTEE
By:
		Signature:
Title:	SVP, Director of Human Resources	Date:

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Exhibit A

Terms and Conditions of Restricted Stock Unit Award

1. Plan Incorporated by Reference. This Agreement is issued pursuant to the Company’s Amended 1993 Stock Option Plan, as amended and in effect from time to time (the “Plan”). This Agreement does not set forth all of the terms and conditions of the Plan, which are incorporated herein by reference. Copies of the Plan may be obtained upon request without charge from the Company.

2. Certain Provisions. As used in this Agreement, the following terms shall have the following meanings. Capitalized terms not defined in this Section 2 are defined elsewhere in this Agreement or in the Plan.

(a) “Industry Index” means an index selected by the Committee consisting of all the bank- and thrift-holding companies (and any bank or thrift whose financial statements are not consolidated with those of a holding company) that, as of the end of the Performance Period, (i) are headquartered in one of the New England states or the states of Pennsylvania, New Jersey and New York, (ii) have a class of shares traded on a national stock exchange or the OTC Bulletin Board, (iii) have total assets between $500 million and $5 billion and (iv) have published audited financial statements for each of the 3 consecutive fiscal years ending on a date within the last year of the Performance Period; provided that the Committee may make such adjustments to the composition of the index as it deems appropriate to account for unforeseen circumstances involving the constituent institutions.

(b) The 3-year average ROA and 3-year average diluted EPS growth achieved by the Company over the Performance Period and the Company’s percentiles relative to the Industry Index shall be as determined by the Committee consistent with the accounting methods used by the Company in preparing its audited financial statements for the fiscal years within the Performance Period.

(c) “Determination Date” means the date on which the Committee has completed the determinations described in Section 2(b) during the calendar year immediately following the end of the Performance Period.

(d) “Cause” means termination by the Company or an Affiliate upon:

(i) The willful failure by Grantee to substantially perform his or her duties with Cambridge Trust Company (the “Bank”) (other than any such failure resulting from his or her incapacity due to physical or mental illness), within 10 days after a demand for substantial performance is delivered to Grantee by the Board that specifically identifies the manner in which the Board believes that Grantee has not substantially performed his or her duties;

(ii) The willful engagement by Grantee in misconduct that is or foreseeably will be materially injurious to the Company or an Affiliate, monetarily or otherwise; or

(iii) A breach of a fiduciary duty, fraud or dishonesty relating to the Company or an Affiliate, or conviction of (or plea of nolo contendere to) a crime.

For purposes of this Agreement, no act or failure to act, on Grantee’s part shall be considered “willful” unless done, or omitted to be done, by Grantee not in good faith and without reasonable belief that his or her action or omission was in the best interest of the Company and its Affiliates.

Notwithstanding the foregoing, Grantee shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to Grantee a copy of a resolution duly adopted by the affirmative vote of not less than 75% of the entire membership of the Board (with Grantee not voting if a director) at a meeting of the Board called and held for the purpose (after reasonable notice to Grantee and an opportunity for Grantee, together with Grantee’s counsel, to be heard before the Board) finding that in the good faith opinion of the Board Grantee engaged in the conduct set forth above and specifying the particulars thereof in detail.

3. Delivery of Shares in Settlement of RSUs. With respect to any RSUs that become vested as provided herein, the Company shall issue and deliver to the Grantee the number of shares of Common Stock equal to the number of vested RSUs. Delivery shall be made to the Grantee as soon as practicable following the Determination Date but no later than the end of the year following the final year of the Performance Period (the “Distribution Date”).

Any shares of Common Stock issued pursuant to this Restricted Stock Unit Agreement shall be issued, without issue or transfer tax, by (a) delivering a stock certificate or certificates for such shares out of theretofore authorized but unissued shares or treasury shares of its Common Stock as the Company may elect or (b) issuance of shares of its Common Stock in book entry form; provided, however, that the time of such delivery may be postponed by the Company for such period as may be required for it with reasonable diligence to comply with any applicable requirements of law. If the Grantee fails to pay for or accept delivery of all of the shares, the right to shares of Common Stock provided pursuant to this RSU may be terminated by the Company.

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4. Grantee’s Death or Disability. Notwithstanding any provision of the Plan or this Agreement to the contrary, the RSUs granted hereby shall be deemed vested in an amount equal to the Target Number of Restricted Stock Units in the event of the termination of the Grantee’s employment with the Company or an Affiliate before the end of the Performance Period as a result of the Grantee’s death or disability (as defined in Section 22(e)(3) of the Code (“Disability”)), and the Company shall issue, in accordance with the otherwise applicable provisions of Section 3, shares of Common Stock in settlement of the vested RSUs as soon as reasonably practical following death or Disability.

5. Forfeiture of Restricted Stock Units. Upon termination of the Grantee’s employment with the Company or an Affiliate before the end of the Performance Period for any reason other than for Cause or the Grantee’s death or Disability, the Grantee shall be permitted to retain a number of RSUs equal to the Target Number of Restricted Stock Units multiplied by the full number of months completed in the Performance Period divided by the number of months in the entire Performance Period. All remaining RSUs shall be irrevocably forfeited and no shares of Common Stock shall be issuable with respect to the forfeited RSUs.

The adjusted Target Number of Restricted Stock Units shall remain subject to the performance metrics and Common Shares representing vested RSUs shall not be delivered earlier than the date otherwise provided in Section 3.

6. Change in Control. In order to preserve the Grantee’s rights under this Agreement, notwithstanding any other provision of this Agreement, upon a Change in Control of the Company that occurs before the end of the Performance Period, the RSUs shall be deemed vested with respect to such number of units (not greater than the maximum number provided for herein) as is determined by the Committee in its discretion to be equitable in the circumstances, and the Company shall issue the Grantee shares of Common Stock in settlement of the vested units, effective upon (but conditioned on) the Change in Control. For purposes of this Agreement, a “Change in Control” of the Company means either of the following:

(a) A change in control of a nature that would be required to be reported by the Company or Bank in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), whether or not the Company or the Bank in fact is required to comply with Regulation 14A thereunder; or

(b) The acquisition of “control” as defined in the Bank Holding Company Act of 1956, as amended, or the regulations thereunder, or as defined in the Change in Bank Control Act of 1978, as amended, or the regulations or guidance thereunder, of the Company or the Bank by any person, company or other entity; provided that, without limitation, a Change in Control shall be deemed to have occurred if:

(i) Any “person” (as such term is used in Section 13(d) and 14(d) of the Exchange Act) other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or the Bank or a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of the Company’s then outstanding securities; or

(ii) During any period of 2 consecutive years (not including any period prior to the execution of this Agreement), individuals who at the beginning of such period constitute the Board and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in clauses (i) or (iii) of this Subsection) whose election by the Board or nomination for election by the Company’s or Bank’s stockholders was approved by a vote of at least ⅔rds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof; or

(iii) The stockholders of Company or Bank approve a merger or consolidation of Company or Bank with any other corporation, other than amerger or consolidation that would result in the voting securities of Company or Bank outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least ⅔rds of the combined voting power of the voting securities of Company or Bank or such surviving entity outstanding immediately after such merger or consolidation; or

(iv) The stockholders of Company or Bank approve a plan of complete liquidation of Company or Bank or an agreement for the sale or disposition by Company or Bank of all or substantially all Company’s or Bank’s assets.

Notwithstanding anything to the contrary contained in this Agreement, the acquisition by a person (or persons acting in concert) of less than 25% of the voting securities of Company, under circumstances where the Federal Reserve Board (under regulations

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or guidance pursuant to the Change in Bank Control Act of 1978, as amended) presumes that such acquisition constitutes the acquisition of control of Company, shall not be deemed a “Change in Control” for any purpose under this Agreement.

7. No Rights as Stockholder. The Grantee shall have no right in, to or with respect to any shares of Common Stock (including voting rights or rights with respect to dividends paid on the Common Stock) issuable under this Agreement unless and until shares of Common Stock have been issued in settlement of vested RSUs.

8. Tax Withholding. It shall be a condition to the issuance of shares of Common Stock in settlement of any vested RSUs that the Grantee shall pay to the Company, or make provision satisfactory to the Committee for payment of, any taxes required by law to be withheld in connection with this Agreement no later than the Distribution Date. The Company and its Affiliates may, to the extent permitted by law, deduct any such tax obligations from any payment of any kind due to the Grantee. The Committee may, in its discretion, cause the Company to withhold from the shares of Common Stock delivered to the Grantee on the Distribution Date such number of shares as the Committee determines is necessary to satisfy the minimum tax obligations required by law to be withheld, valued at their Fair Market Value on the Distribution Date, or such other amount as would not result in adverse accounting treatment.

9. Settlement. The Company hereby disclaims the right to settle this Agreement in cash pursuant to Section 8(a) of the Plan.

10. Employment. Neither the adoption, maintenance nor operation of the Plan nor this Agreement shall confer upon the Grantee any right with respect to the continuance of his or her employment by the Company or any Affiliate, nor shall they interfere with all rights of the Company or Affiliate to terminate the Grantee at any time or otherwise change the terms of his or her employment free of any liability or claim hereunder, including, without limitation, the right to promote, demote or otherwise re-assign Grantee from one position to another within the Company or any Affiliate.

11. Assignment. No RSUs or other rights or interests of the Grantee under this Agreement or under the Plan may be assigned, encumbered or transferred except by will or the laws of descent and distribution. The Company’s rights hereunder shall be assigned to and inure to the benefit of any corporation the shares of which are substituted or exchanged for shares of Common Stock in any merger, consolidation or share exchange involving the Company.

12. Section 409A of the Code. The RSUs granted hereunder are intended to avoid the potential adverse tax consequences to the Grantee of Section 409A of the Code, and the Committee may make such modifications to this Restricted Stock Unit Agreement as it deems necessary or advisable to avoid such adverse tax consequences.

13. Clawback. Notwithstanding anything in the Agreement to the contrary, all RSUs granted under this Agreement, any shares issued in settlement of RSUs under this Agreement and any gains realized upon settlement of RSUs or the sale of shares issued in settlement of RSUs shall be subject to clawback or recoupment as permitted or mandated by applicable law, rules, regulations or any Company policy as enacted, adopted or modified from time to time.

14. Decisions by Committee. The Committee administers the Plan. Any dispute or disagreement that shall arise under, or as a result of, or pursuant to this Agreement shall be resolved by the Committee in its sole and absolute discretion, and any such resolution or any other determination by the Committee under, or pursuant to, this Agreement and any interpretation by the Committee of the terms of this Agreement or the Plan shall be final, binding, and conclusive on all persons affected thereby.

15. Amendment; Termination. The Committee may amend, modify or terminate this Agreement, including substituting therefor another award of the same or a different type, provided that the Grantee’s consent to such action shall be required unless the Committee determines that the action, taking into account any related action, would not materially and adversely affect the Grantee.

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EX-10

Exhibit 10.1(c)

CAMBRIDGE BANCORP

STOCK OPTION PLAN

Nonstatutory Stock Option Agreement

Cambridge Bancorp (the “Company”), a Massachusetts corporation, hereby grants to the person named below an option to purchase shares of Common Stock, $1.00 par value, of the Company under and subject to the Company’s Stock Option Plan (the “Plan”) exercisable on the terms and conditions set forth below and hereafter in this Agreement:

Name of Optionholder:

Number of Shares:

Option Price:

Type of Option:

Date of Grant:

This Option is not intended to be an Incentive Stock Option under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).

1. Option Price. The price to be paid for each share of Common Stock upon exercise of the whole or any part of this Option shall be the Option Price specified above, which is not less than 100% of the fair market value of a share of Common Stock of the Company on the Date of Grant.

2. Expiration of Option. This Option may not be exercised as to any shares after the expiration of 10 years from the Date of Grant.

3. Exercise of Option. This option may be exercised at any time and from time to time, on or after                                  (subject to Sections 7 and 8 hereof), up to the aggregate number of shares specified herein, but in no event for the purchase of other than full shares. Written notice of exercise shall be delivered to the Company specifying the number of shares with respect to which the Option is being exercised accompanied by payment of the Option Price in cash, by certified check or in such other form, including shares of Common Stock of the Company (that have been held by the Optionholder for at least six months free of restrictions imposed by the Company) valued at their Fair Market Value on the date of delivery, as the Salary Committee may at the time of exercise approve in its discretion. Following such notice and payment, the Company will deliver to the Optionholder a certificate for the number of shares with respect to which the Option is being exercised.

4. Rights as a Stockholder or Employee. The Optionee shall not earn the right to exercise or obtain the value of any portion of this Option except as provided in Section 3 and until such time as all the conditions set forth herein and in the Plan that are required to be met in order to exercise this Option have been fully satisfied. No portion of this Option shall be deemed compensation for past services before it has become exercisable in accordance with Section 3. The Optionholder shall not be deemed for any purpose to have any rights whatever in respect of shares to which the Option shall not have been exercised and payment made as provided herein. The Optionholder shall not be deemed to have any rights to continued employment by the Company by virtue of the grant of this Option.

5. Recapitalizations, Mergers, Etc. In the event the Committee determines that any stock dividend, split-up or combination of shares, or other equity restructuring affects the Common Stock such that an adjustment is required in order to preserve the benefits of this Option, the Committee shall equitably adjust the number and/or kind of shares subject to this Option and/or the exercise price hereunder. In the event of a merger or other corporate transaction not constituting an equity restructuring, the Committee may in its discretion take certain actions affecting this Option and the Optionholder’s rights hereunder, including without limitation providing for a cash payment, making other adjustments in the terms hereof, causing this Option to be assumed by another entity, terminating this Option, or making such other provision as the Committee considers equitable and in the best interest of the Company. Any such action shall be in accordance with and subject to the terms of the Plan.

6. Option Not Transferable. This Option is not transferable by the Optionholder otherwise than by will or the laws of descent and distribution, and is exercisable, during the Optionholder’s lifetime, only by him.

7. Exercise of Option After Termination of Employment. If the Optionholder’s employment with the Company (or a parent or subsidiary corporation of the Company or a corporation (or parent or subsidiary corporation of such corporation) issuing or assuming a stock option in a transaction to which section 424(a) of the Code applies) terminates, his rights hereunder shall be as follows:

(a) If the Optionholder’s employment is terminated (i) voluntarily by the Optionholder before age 62 or (ii) by the Company for any reason other than Cause (as defined below) or the Optionholder’s disability within the meaning of Section 22(e)(3) of the Code (“Disability”), he may exercise only the rights that were exercisable at the time of such termination and only within 30 days after such termination.

(b) If the Optionholder’s employment is terminated by the Company for Cause, this Option shall thereupon terminate and shall not be exercisable for any shares.

(c) If the Optionholder’s employment terminates due to death, Disability or retirement at or after age 62, the Option will thereupon become exercisable in full and he or his Designated Beneficiary may exercise the Option in whole or in part at any time within two years after such termination of employment. Notwithstanding the foregoing, no rights under this Option may be exercised after the expiration of 10 years from the Date of Grant.

For purposes of this section, “Cause” means: (i) the Optionholder has been formally charged with engaging in a felony or in any other criminal offense that involves a violation of banking or securities laws, embezzlement, fraud, misappropriation of property, or any other crime involving dishonesty; (ii) the Optionholder’s willful failure to perform a substantial portion of the Optionholder’s responsibilities of employment, which failure continues, in the reasonable judgment of the Company, after written notice to the Optionholder; (iii) the Optionholder’s gross negligence or willful misconduct to the detriment of the Company; or (iv) a material breach by the Optionholder of any of his obligations under any agreement with the Company.

8. Change in Control.

(a) Upon a Change in Control during the Optionholder’s employment, the total number of shares subject to this Option will become immediately exercisable.

(b) For purposes of the Option, a “Change in Control” means either of the following:

(i) a change in control of a nature that would be required to be reported by the Company or Cambridge Trust Company (the “Bank”) in response to item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended (“Exchange Act”), whether or not the Company or the Bank in fact is required to comply with Regulation 14A thereunder; or

(ii) the acquisition of “control” as defined in the Bank Holding Company Act of 1956, as amended or the regulations thereunder, or as defined in the Change in Bank Control Act 1978 or the regulations thereunder, of the Company or the Bank by any person, company or other entity; provided that, without limitation, a Change in Control shall be deemed to have occurred if (1) any “person” (as such term is used in Section 13(d) and 14(d) of the Exchange Act) other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or the Bank or a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of the Company’s then outstanding securities; or (2) during any period of two consecutive years (not including any period prior to the execution of this Agreement), individuals who at the beginning of such period constitute the Board and any new director ( other than a director designated by a person who has entered into an agreement with Cambridge Bancorp to effect a transaction described in clauses (1) or (3) of this Subsection) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously as approved, cease for any reason to constitute a majority thereof; or (3) there is consummated a merger or consolidation of the Company with any other corporation, or the sale or disposition by the Company of all or substantially all the Company’s assets, other than (i) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent, directly or indirectly through one or more subsidiaries (either by remaining outstanding or by being converted into voting securities of the surviving entity), at least two-thirds (2/3) of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or (ii) a sale or other disposition of assets to an entity the voting securities of which are held as described in clause (i); or (4) the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company.

9. Compliance with Securities Laws. It shall be a condition to the Optionholder’s right to purchase shares of Common Stock hereunder that the Company may, in its discretion, require (a) that the shares of Common Stock reserved for issue upon the exercise of this Option shall have been duly listed, upon official notice of issuance, upon any national securities exchange on which the Company’s Common Stock may then be listed, (b) that either (i) a registration statement under the Securities Act of 1993, as amended, with respect to said shares shall be in effect, or (ii) in the opinion of counsel for the Company the proposed purchase shall be exempt from registration under said Act and the Optionholder shall have made such undertakings and agreements with the Company as the Company may reasonably require, and (c) that such other steps, if any, as counsel for the Company shall deem

necessary to comply with any law, rule or regulation applicable to the issue of such shares by the Company shall have been taken by the Company or the Optionholder, or both. The certificates representing the shares purchased under this Option may contain such legends as counsel for the Company shall deem necessary to comply with any applicable law, rule or regulation.

10. Payment of Taxes. Any exercise of this Option is conditioned upon the payment by the Optionholder of all state and federal taxes imposed upon the exercise of this Option and the issue to the Optionholder of the shares of Common Stock covered hereby. In the Committee’s discretion, such tax obligations may be paid in whole or in part in shares of Common Stock, including retention of shares being purchased by the Optionholder, valued at their Fair Market Value on the date of delivery. The Company may to the extent permitted by the law deduct any such tax obligations from any payment of any kind otherwise due to the Optionholder.

11. Transfer Restrictions. (i) Subject to the exceptions stated below, no shares acquired upon exercise of this Option may be sold, exchanged, given, pledged, encumbered, alienated, attached, or otherwise disposed of or transferred without the holder thereof offering the Company a right of first refusal to purchase such shares at the same price and otherwise on the same terms as the holder has been offered by a prospective buyer making a good faith offer; provided that the Company shall have the right to purchase such shares for cash irrespective of the form of consideration offered by such prospective buyer. If the Company declines or fails to exercise its right of first refusal, the Trustees of the Cambridge Bancorp Employee Stock Ownership Plan (“ESOP”) shall have a right of first refusal on the same terms. The right of first refusal shall lapse if not exercised within fourteen days after receipt by the Company and the Trustees of written notice that the holder has received a bona fide offer from a third party to purchase the Stock; provided that the Company and the Trustees shall again have a right of first refusal to purchase such shares if the holder does not sell them to the person and on the terms described in the holder’s original notice within ninety days after such original notice.
(ii) The right of first refusal shall not apply (A) after the death of the Optionholder, (B) at any time when the Company is subject with respect to the Stock to the reporting requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934, or (C) with respect to a gift or similar transfer of Stock to a member of the Optionholder’s immediate family or in trust for the benefit of the Optionholder or a member of his immediate family, provided that the transferee shall take the Stock subject to the right of first refusal with respect to subsequent transfers.
(iii) Any Stock issued upon exercise of this Option will bear an appropriate legend referring to the restrictions imposed under this section. Except for the restrictions imposed by this section, upon exercise of this Option the Optionholder as owner of the Stock will have the rights of a stockholder, including but not limited to the right to receive all dividends paid on such Stock and the right to vote such Stock.

12. Plan Incorporated by Reference. This Option is issued pursuant to the terms of the Plan. This Agreement does not set forth all of the terms and conditions of the Plan, which are incorporated herein by reference. Capitalized terms used and not otherwise defined herein have the meanings given to them in the Plan. Copies of the Plan may be obtained upon written request without charge from the Company.

By signing this Agreement and returning one signed copy to the Company, the Optionholder accepts this Option on the terms and conditions set forth herein and in the Plan.

CAMBRIDGE BANCORP	Accepted and agreed to:
By:
Title:	Optionholder

EX-10

Exhibit 10.1(d)

CAMBRIDGE BANCORP

STOCK OPTION PLAN

Incentive Stock Option Agreement

Cambridge Bancorp (the “Company”), a Massachusetts corporation, hereby grants to the person named below an option to purchase shares of Common Stock, $1.00 par value, of the Company under and subject to the Company’s Stock Option Plan (the “Plan”) exercisable on the terms and conditions set forth below and hereafter in this Agreement:

Name of Optionholder:

Number of Shares:

Option Price:

Type of Option:

Date of Grant:

This Option is intended to be an Incentive Stock Option under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).

1. Option Price.  The price to be paid for each share of Common Stock upon exercise of the whole or any part of this Option shall be the Option Price specified above, which is not less than 100% of the fair market value of a share of Common Stock of the Company on the Date of Grant.

2. Expiration of Option.  This Option may not be exercised as to any shares after the expiration of 10 years from the Date of Grant.

3. Exercise of Option.  This option may be exercised at any time and from time to time on or after subject to Section 7 hereof), up to the aggregate number of shares specified herein, but in no event for the purchase of other than full shares.  Written notice of exercise shall be delivered to the Company specifying the number of shares with respect to which the Option is being exercised accompanied by payment of the Option Price in cash, by certified check or in such other form, including shares of Common Stock of the Company (that have been held by the Optionholder for at least six months free of restrictions imposed by the Company) valued at their Fair Market Value on the date of delivery, as the Compensation Committee may at the time of exercise approve in its discretion.  Following such notice and payment, the Company will deliver to the Optionholder a certificate for the number of shares with respect to which the Option is being exercised.

4. Rights as a Stockholder or Employee.  The Optionee shall not earn the right to exercise or obtain the value of any portion of this Option except as provided in Section 3 and until such time as all the conditions set forth herein and in the Plan that are required to be met in order to exercise this Option have been fully satisfied.  No portion of this Option shall be deemed compensation for past services before it has become exercisable in accordance with Section 3.  The Optionholder shall not be deemed for any purpose to have any rights whatever in respect of shares to which the Option shall not have been exercised and payment made as provided herein.  The Optionholder shall not be deemed to have any rights to continued employment by the Company by virtue of the grant of this Option.

5. Recapitalizations, Mergers, Etc.  In the event the Committee determines that any stock dividend, split-up or combination of shares, or other equity restructuring affects the Common Stock such that an adjustment is required in order to preserve the benefits of this Option, the Committee

shall equitably adjust the number and/or kind of shares subject to this Option and/or the exercise price hereunder.  In the event of a merger or other corporate transaction not constituting an equity restructuring, the Committee may in its discretion take certain actions affecting this Option and the Optionholder’s rights hereunder, including without limitation providing for a cash payment, making other adjustments in the terms hereof, causing this Option to be assumed by another entity, terminating this Option, or making such other provision as the Committee considers equitable and in the best interests of the Company.  Any such action shall be in accordance with and subject to the terms of the Plan.

6. Option Not Transferable.  This Option is not transferable by the Optionholder otherwise than by will or the laws of descent and distribution, and is exercisable, during the Optionholder’s lifetime, only by him.

7. Exercise of Option After Termination of Employment.  If the Optionholder’s employment with the Company (or a parent or subsidiary corporation of the Company or a corporation (or parent or subsidiary corporation of such corporation) issuing or assuming a stock option in a transaction to which section 424(a) of the Code applies) terminates, his rights hereunder shall be as follows:

(a) If the Optionholder’s employment is terminated (i) voluntarily by the Optionholder before age 62 or (ii) by the Company for any reason other than Cause (as defined below) or the Optionholder’s disability within the meaning of Section 22(e)(3) of the Code (“Disability”), he may exercise only the rights that were exercisable at the time of such termination and only within 30 days after such termination.

(b) If the Optionholder’s employment is terminated by the Company for Cause, this Option shall thereupon terminate and shall not be exercisable for any shares.

(c) If the Optionholder’s employment terminates due to death, Disability or retirement at or after age 62, the Option will thereupon become exercisable in full and he or his Designated Beneficiary may exercise the Option in whole or in part at any time within two years after such termination of employment.

Notwithstanding the foregoing, no rights under this Option may be exercised after the expiration of 10 years from the Date of Grant.

For purposes of this section, “Cause” means: (i) the Optionholder has been formally charged with engaging in a felony or in any other criminal offense that involves a violation of banking or securities laws, embezzlement, fraud, misappropriation of property, or any other crime involving dishonesty; (ii) the Optionholder’s willful failure to perform a substantial portion of the Optionholder’s responsibilities of employment, which failure continues, in the reasonable judgment of the Company, after written notice to the Optionholder; (iii) the Optionholder’s gross negligence or willful misconduct to the detriment of the Company; or (iv) a material breach by the Optionholder of any of his obligations under any agreement with the Company.

8. Change in Control.

(a) Upon a Change in Control during the Optionholder’s employment, the total number of shares subject to this Option will become immediately exercisable.

(b) For purposes of the Option, a “Change in Control” means either of the following:

(i) a change in control of a nature that would be required to be reported by the

Company or Cambridge Trust Company (the “Bank”) in response to item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended (“Exchange Act”), whether or not the Company or the Bank in fact is required to comply with Regulation 14A thereunder; or

(ii) the acquisition of “control” as defined in the Bank Holding Company Act of 1956, as amended or the regulations thereunder, or as defined in the Change in Bank Control Act 1978 or the regulations thereunder, of the Company or the Bank by any person, company or other entity; provided that, without limitation, a Change in Control shall be deemed to have occurred if (1) any “person” (as such term is used in Section 13(d) and 14(d) of the Exchange Act) other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or the Bank or a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of the Company’s then outstanding securities; or (2) during any period of two consecutive years (not including any period prior to the execution of this Agreement), individuals who at the beginning of such period constitute the Board and any new director ( other than a director designated by a person who has entered into an agreement with Cambridge Bancorp to effect a transaction described in clauses (1) or (3) of this Subsection) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously as approved, cease for any reason to constitute a majority thereof; or (3) there is consummated a merger or consolidation of the Company with any other corporation, or the sale or disposition by the Company of all or substantially all the Company’s assets, other than (i) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent, directly or indirectly through one or more subsidiaries (either by remaining outstanding or by being converted into voting securities of the surviving entity), at least two-thirds (2/3) of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or (ii) a sale or other disposition of assets to an entity the voting securities of which are held as described in clause (i); or (4) the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company.

9. Compliance with Securities Laws.  It shall be a condition to the Optionholder’s right to purchase shares of Common Stock hereunder that the Company may, in its discretion, require (a) that the shares of Common Stock reserved for issue upon the exercise of this Option shall have been duly listed, upon official notice of issuance, upon any national securities exchange on which the Company’s Common Stock may then be listed, (b) that either (i) a registration statement under the Securities Act of 1993, as amended, with respect to said shares shall be in effect, or (ii) in the opinion of counsel for the Company the proposed purchase shall be exempt from registration under said Act and the Optionholder shall have made such undertakings and agreements with the Company as the Company may reasonably require, and (c) that such other steps, if any, as counsel for the Company shall deem necessary to comply with any law, rule or regulation applicable to the issue of such shares by the Company shall have been taken by the Company or the Optionholder, or both.  The certificates representing the shares purchased under this Option may contain such legends as counsel for the Company shall deem necessary to comply with any applicable law, rule or regulation.

10. Notice of Sale of Shares Required.  The Optionholder agrees to notify the Company in writing within thirty (30) days of the disposition of one or more shares of stock which were transferred to him pursuant to his exercise of this Option if such disposition occurs within two years

of the Date of Grant or within one year after his exercise.

11. Transfer Restrictions.  (i) Subject to the exceptions stated below, no shares acquired upon exercise of this Option may be sold, exchanged, given, pledged, encumbered, alienated, attached, or otherwise disposed of or transferred without the holder thereof offering the Company a right of first refusal to purchase such shares at the same price and otherwise on the same terms as the holder has been offered by a prospective buyer making a good faith offer; provided that the Company shall have the right to purchase such shares for cash irrespective of the form of consideration offered by such prospective buyer.  If the Company declines or fails to exercise its right of first refusal, the Trustees of the Cambridge Bancorp Employee Stock Ownership Plan (“ESOP”) shall have a right of first refusal on the same terms.  The right of first refusal shall lapse if not exercised within fourteen days after receipt by the Company and the Trustees of written notice that the holder has received a bona fide offer from a third party to purchase the Stock; provided that the Company and the Trustees shall again have a right of first refusal to purchase such shares if the holder does not sell them to the person and on the terms described in the holder’s original notice within ninety days after such original notice.

(ii) The right of first refusal shall not apply (A) after the death of the Optionholder, (B) at any time when the Company is subject with respect to the Stock to the reporting requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934, or (C) with respect to a gift or similar transfer of Stock to a member of the Optionholder’s immediate family or in trust for the benefit of the Optionholder or a member of his immediate family, provided that the transferee shall take the Stock subject to the right of first refusal with respect to subsequent transfers.

(iii)  Any Stock issued upon exercise of this Option will bear an appropriate legend referring to the restrictions imposed under this section.  Except for the restrictions imposed by this section, upon exercise of this Option the Optionholder as owner of the Stock will have the rights of a stockholder, including but not limited to the right to receive all dividends paid on such Stock and the right to vote such Stock.

12. Optionholder’s Tax Treatment.  This Option is intended to be treated as an incentive stock option under section 422 of the Code. However, incentive stock option treatment requires compliance with a variety of factors, and the Company can give no assurance that the Option will, in fact, be treated as an incentive stock option.  Among other things, in order for the Optionholder to obtain any special tax treatment available for incentive stock options under the Code, the option must be exercised within the time provided in the Code (currently, three months after termination of employment for any reason other than death or Disability and one year after termination for death or Disability).

13. Plan Incorporated by Reference.  This Option is issued pursuant to the terms of the Plan.  This Agreement does not set forth all of the terms and conditions of the Plan, which are incorporated herein by reference.  Capitalized terms used and not otherwise defined herein have the meanings given to them in the Plan.  Copies of the Plan may be obtained upon written request without charge from the Company.

By signing this Agreement and returning one signed copy to the Company, the Optionholder accepts this Option on the terms and conditions set forth herein and in the Plan.

CAMBRIDGE BANCORP	Accepted and agreed to:
By:
Title:	Optionholder

EX-10

Exhibit 10.2

CAMBRIDGE BANCORP

2017 EQUITY AND CASH INCENTIVE PLAN

1. PURPOSE

The purpose of this 2017 Equity and Cash Incentive Plan (the “Plan”) is to encourage key employees, Directors, and consultants of Cambridge Bancorp (the “Company”) and its Subsidiaries (as defined below) to continue their association with the Company by providing favorable opportunities for them to participate in the ownership of the Company and its Subsidiaries and in its future growth through the granting of equity ownership opportunities and incentives based on the Company’s Common Stock (as defined below) that are intended to align their interests with those of the Company’s Shareholders (“Awards”). Each person who is granted an Award under the Plan is deemed a “Participant.”

The term “Subsidiary” as used in the Plan means a corporation, company, partnership or other form of business organization of which the Company owns, directly or indirectly through an unbroken chain of ownership, fifty percent or more of the total combined voting power of all classes of stock or other form of equity ownership or has a significant financial interest, as determined by the Committee (as defined below).

2. ADMINISTRATION OF THE PLAN

The Plan shall be administered by the Board of Directors of the Company (the “Board”) or, in the discretion of the Board, a committee or subcommittee of the Board (the “Committee”), appointed by the Board and composed of at least two members of the Board. All references in the Plan to the “Committee” shall be understood to refer to the Committee or the Board, whoever shall administer the Plan.

For so long as Section 16 of the Securities Exchange Act of 1934, as amended and in effect from time to time (the “Exchange Act”), is applicable to the Company, each member of the Committee shall be a “non-employee director,” or the equivalent within the meaning of Rule 16b-3 under the Exchange Act, and for so long as Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), is applicable to the Company an “outside director” within the meaning of Section 162 of the Code, and the regulations thereunder.

The Committee shall have the authority to adopt, amend, and rescind such rules and regulations as, in its opinion, may be advisable in the administration of the Plan. All questions of interpretation and application of such rules and regulations of the Plan and of Awards granted hereunder shall be subject to the determination of the Committee, which shall be final and binding.

The Committee shall select Participants and determine the terms and conditions of all Awards; provided, however, that the Committee shall have no discretion with respect to the recipients of a Stock Award, or the timing of a Stock Award, pursuant to Section 9 of the Plan. The terms of each Award need not be identical, and the Committee need not treat Participants uniformly.

With respect to persons subject to Section 16 of the Exchange Act (“Insiders”), transactions under the Plan are intended to comply with all applicable conditions of Rule 16b-3 or its successor under the Exchange Act. To the extent any provision of the Plan or action by the Committee fails to so comply, it shall be deemed to be modified so as to be in compliance with such Rule or, if such modification is not possible, it shall be deemed to be null and void, to the extent permitted by law and deemed advisable by the Committee.

The Plan shall be administered in such a manner as to permit those options to acquire Common Stock (“Options”) granted hereunder and specially designated under Section 5 as incentive stock options as described in Section 422 (“ISOs”) of the Code to qualify as such but the Company shall have no liability to a Participant, or any other party, if an Option (or any part thereof) that is intended to be an ISO is not an ISO or if the Company converts an ISO to a nonstatutory (or nonqualified) stock option (an “NSO”).

3. STOCK SUBJECT TO THE PLAN; VALUATION

(a)Number of Shares. The total number of shares of the Company’s outstanding Common Stock, $1.00 par value per share (“Common Stock”), that may be subject to an Award under the Plan shall be 500,000, from authorized but unissued shares. Shares of Common Stock underlying Awards that fail to settle, vest or be fully exercised prior to expiration or other termination shall again become available for grant under the terms of the Plan.

(b)Participant Limit. The total amount of Common Stock with respect to which Awards may be granted to any single person under the Plan shall not exceed in any year in the aggregate 50,000 shares. The maximum dollar amount of any Award that may be granted to any single person under the Plan shall not exceed in any year $500,000; provided, however, that the foregoing dollar limit shall, in the case of a Performance Period (as defined below) longer than one calendar year shall be based on such amount multiplied by the number of full calendar years in the Performance Period. The per-Participant limits set forth in this Section 3(b) shall be construed and applied consistently with Section 162(m) of the Code.

(c)Adjustment Provisions. Each reference to a number of shares of Common Stock in this Section 3 shall be subject to adjustment in accordance with the provisions of Section 12.

(d)Fair Market Value of Common Stock for Plan Purposes. For purposes of the Plan and except as may be otherwise explicitly provided in the Plan or in any Award agreement, the “Fair Market Value” of a share of Common Stock at any particular date shall be determined according to the following rules.

(i)If Common Stock is at the time listed or admitted to trading on any national securities exchange or the OTC Market Group Inc.’s OTCQB, then Fair Market Value shall mean the Closing Price for the Common Stock on such date. The “Closing Price” on any date shall mean the last sale price for the Common Stock, regular way, or, in case no such sale takes place on that day, the average of the closing bid and asked prices, regular way, for the Common Stock, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the national securities exchange or the OTCQB.

(ii)If the Common Stock is not at the time listed or admitted to trading on any national securities exchange or the OTCQB, then Fair Market Value shall be determined in good faith by the Board, which may take into consideration (1) the price paid for the Common Stock in the most recent trade of a substantial number of shares known to the Board to have occurred at arm’s length between willing and knowledgeable investors, (2) an appraisal by an independent party or (3) any other method of valuation undertaken in good faith by the Board, or some or all of the above as the Board shall in its discretion elect.

4. ELIGIBILITY

The persons who shall be eligible for Awards under the Plan shall be employees capable of contributing significantly to the successful performance of the Company or a Subsidiary, Directors of the Company or a Subsidiary, and other persons who render services of special importance to the management, operation or development of the Company or a Subsidiary, and who have contributed or may be expected to contribute significantly to the success of the Company or a Subsidiary. ISOs shall not be granted to any person who is not an employee of the Company or a Subsidiary described in Section 424(e) or Section 424(f) of the Code (an “ISO Subsidiary”).

5. TERMS AND CONDITIONS OF OPTIONS

(a)In General. The Committee may grant Awards in the form of Options. Every Option shall be evidenced by an Option agreement in such form as the Committee shall approve from time to time, specifying the number of shares of Common Stock that may be purchased pursuant to the Option, the time or times at which the Option shall become exercisable in whole or in part, whether the Option is intended to be an ISO or an NSO, and such other terms and conditions as the Committee shall approve, and containing or incorporating by reference the terms and conditions set forth in this Section 5.

(b)Duration. The duration of each Option shall be as specified by the Committee in its discretion; provided, however, that no Option shall expire later than ten years from its date of grant; and provided, further, and no ISO granted to an employee who owns (directly or under the attribution rules of Section 424(d) of the Code) stock possessing more than ten percent of the total combined voting power of all classes of stock of the Company or any ISO Subsidiary shall expire later than five years from its date of grant.

(c)Exercise Price. The exercise price of each Option shall be not less than the Fair Market Value (as defined below) of Common Stock on the date the Option is granted; provided, however, that the exercise price with respect to an ISO granted to an employee who at the time of grant owns (directly or under the attribution

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rules of Section 424(d) of the Code) stock representing more than ten percent of the voting power of all classes of stock of the Company or any ISO Subsidiary shall be at least 110 percent of the Fair Market Value of the Common Stock on the date of grant of the ISO.

(d)Method of Exercise. Options may be exercised by delivery to the Company of a notice of exercise in a form, which may be electronic, approved by the Committee, together with payment in full in the manner specified in Section 5(e) of the exercise price for the number of shares for which the Option is exercised. Shares of Common Stock subject to the Option will be delivered by the Company as soon as practicable following exercise and payment of the exercise price. If the Participant fails to pay for or to accept delivery of all or any part of the number of shares specified in the notice upon tender of delivery thereof, the right to exercise the Option with respect to those shares shall be terminated, unless the Committee otherwise agrees.

(e)Payment Upon Exercise. Unless the Committee provides otherwise in the applicable Option agreement, Common Stock purchased upon the exercise of an Option granted under the Plan shall be paid for as follows:

(i)In cash or by check, payable to the order of the Company;

(ii)By payment in cash or by check, payable to the order of the Company, of the par value of the Common Stock to be acquired and by payment of the balance of the exercise price in whole or in part by delivery of the Participant’s recourse promissory note, in a form specified by the Committee and to the extent consistent with applicable law, secured by the Common Stock acquired upon exercise of the Option and such other security as the Committee may require;

(iii)Except as may otherwise be provided in the applicable Option agreement or approved by the Committee, in its sole discretion, by (1) delivery of an irrevocable and unconditional undertaking by a creditworthy broker to deliver promptly to the Company sufficient funds to pay the exercise price and any required tax withholding or (2) delivery by the Participant to the Company of a copy of irrevocable and unconditional instructions to a creditworthy broker to deliver promptly to the Company cash or a check sufficient to pay the exercise price and any required tax withholding;

(iv)By delivery (either by actual delivery or attestation) of shares of Common Stock owned by the Participant valued at their Fair Market Value, provided (1) the method of payment is then permitted under applicable law, (2) the Common Stock, if acquired directly from the Company, was owned by the Participant for a minimum period of time, if any, as may be established by the Committee in its sole discretion, and (3) the Common Stock is not subject to any repurchase, forfeiture, unfulfilled vesting or other similar requirements;

(v)In the case of an NSO, by delivery of a notice of “net exercise” to the Company, as a result of which the Participant would receive (1) the number of shares underlying the portion of the Option being exercised less (2) such number of shares as is equal to (A) the aggregate exercise price for the portion of the Option being exercised divided by (B) the value of the Common Stock on the date of exercise and, at the election of the Participant, less (3) such number of shares as is equal in value to the withholding obligation (if any) provided in Section 14(e);

(vi)To the extent permitted by applicable law and provided for in the applicable Option agreement or approved by the Committee in its sole discretion, by payment of such other lawful consideration as the Committee may determine; or

(vii)By any combination of the above permitted forms of payment.

(f)Vesting. An Option may be exercised so long as it is vested and outstanding from time to time, in whole or in part, in the manner and subject to the conditions that the Committee in its discretion may provide in the Option agreement.

(g)Notice of ISO Stock Disposition. The Participant must notify the Company promptly in the event that he sells, transfers, exchanges or otherwise disposes of any shares of Common Stock issued upon exercise of an ISO before the later of (i) the second anniversary of the date of grant of the ISO and (ii) the first anniversary of the date the shares were issued upon his exercise of the ISO.

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(h)Effect of Cessation of Employment or Service Relationship. The Committee shall determine in its discretion and specify in each Option agreement the effect, if any, of the termination of the Participant’s employment or other service relationship upon the exercisability of the Option.

(i)Transferability of Options. An Option shall not be assignable or transferable by the Participant except by will or by the laws of descent and distribution. During the life of the Participant, an Option shall be exercisable only by him, by a conservator or guardian duly appointed for him by reason of his incapacity or by the person appointed by the Participant in a durable power of attorney acceptable to the Company’s counsel.

(j)No Rights as Shareholder. A Participant shall have no rights as a Shareholder with respect to any shares covered by an Option until becoming the record holder of the shares. No adjustment shall be made for dividends or other rights for which the record date is earlier than the date the certificate is issued, other than as required or permitted pursuant to Section 12.

(k)Limitation on Repricing. Except in connection with a corporate transaction involving the Company (including, without limitation, any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination or exchange of shares), the terms of outstanding awards may not be amended to reduce the exercise price of outstanding Options or cancel outstanding Options in exchange for cash, other awards or Options with an exercise price that is less than the exercise price of the original Options without Shareholder approval.

6. STOCK APPRECIATION RIGHTS

(a)In General. The Committee may grant Awards in the form of SARs, separately or in combination with Options. Every SAR shall be evidenced by an SAR agreement in such form as the Committee shall approve from time to time, specifying the number of shares of Common Stock to which the SAR relates, the time or times at which the SAR shall become exercisable in whole or in part, and such other terms and conditions as the Committee shall approve, and containing or incorporating by reference the terms and conditions set forth in this Section 6.

Upon exercise of a SAR, the Participant shall be entitled to receive from the Company an amount equal to the excess of the Fair Market Value, on the exercise date, of the number of shares of Common Stock as to which the SAR is exercised over the exercise price for those shares under a related Option, or if there is no related Option, over the measurement price stated in the SAR agreement. The amount payable by the Company upon exercise of a SAR shall be paid in the form of cash or other property (including Common Stock of the Company), as provided in the SAR agreement.

(b)Duration. The duration of a SAR shall be as specified by the Committee in its discretion; provided, however, that no SAR will be granted with a term in excess of ten years.

(c)Measurement Price. The measurement price of each SAR shall be not less than the Fair Market Value of Common Stock on the date the SAR is granted.

(d)Method of Exercise. SARs may be exercised by delivery to the Company of a notice of exercise in a form, which may be electronic, approved by the Committee, together with payment in full in the manner specified in Section 5(e) of the measurement price for the number of shares for which the SAR is exercised. Settlement of the SAR shall be made as soon as practicable following exercise and payment of the measurement price. If the Participant fails to pay for or to accept delivery of all or any part of the number of shares specified in the notice upon tender of delivery thereof, the right to exercise the SAR with respect to those shares shall be terminated, unless the Committee otherwise agrees.

(e)Limitation on Repricing. Except in connection with a corporate transaction involving the Company (including, without limitation, any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination or exchange of shares), the terms of outstanding awards may not be amended to reduce the exercise or measurement price of outstanding SARs or cancel outstanding SARs in exchange for cash, other awards or SARs with an exercise price that is less than the exercise price of the original SARs without Shareholder approval.

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7. STOCK AWARDS

(a)Types of Stock Awards.

(i)Restricted Stock and Restricted Stock Units. The Committee may grant Awards in the form of shares of Common Stock, with or without restrictions (with restrictions, “Restricted Stock”), and/or Restricted Stock Units (together, and including Performance Shares and Performance Share Units, each as defined below, “Stock Awards”). Restricted Stock Units are a right to receive shares of Common Stock (or their then Fair Market Value) at a specified future time. Restrictions on Restricted Stock may include the right of the Company to repurchase all or part of the shares at their issue price or other stated or formula price (or to require forfeiture of the shares if issued at no cost) from the Participant in the event that conditions specified by the Committee in the applicable Award agreement are not satisfied prior to the end of the applicable restriction period or periods established by the Committee for the Stock Award.

(ii)Performance Stock and Performance Share Units. The Committee may grant or award shares of Common Stock in the form of Performance Shares and/or Performance Share Units. A Performance Share is an award of shares of Restricted Stock, the vesting of which is based on the satisfaction of applicable Performance Goals (as defined below). A Performance Share Unit is a right to receive shares of Common Stock (or their then Fair Market Value) at a specified future time and based on the satisfaction of applicable Performance Goals.

(iii)Form of Payment. Restricted Stock Units and Performance Share Units shall be paid in cash, shares of Common Stock or a combination of cash and shares of Common Stock as the Committee, in its sole discretion, shall determine at the grant date and as shall be set forth in the applicable Award agreement.

(b)Procedures Relating to Stock Awards. A Restricted Stock agreement, Restricted Stock Unit agreement, Performance Share agreement or Performance Share Unit agreement shall evidence the applicable Award and shall contain such terms and conditions as the Committee shall provide.

A holder of a Stock Award without restrictions, Restricted Stock or Performance Shares shall, subject to the terms of any applicable agreement, have all of the rights of a Shareholder of the Company, including the right to vote the shares and (except as provided below) the right to receive any dividends. Certificates representing Restricted Stock or Performance Shares shall be imprinted with a legend to the effect that the shares represented may not be sold, exchanged, transferred, pledged, hypothecated or otherwise disposed of except in accordance with the terms of the applicable agreement. (If shares of Restricted Stock or Performance Shares are held in book entry form, statements evidencing those shares shall include a similar legend.) The Participant shall be required to deposit any stock certificates with an escrow agent designated by the Committee, together with a stock power or other instrument of transfer appropriately endorsed in blank. The Committee shall provide that dividends will not be paid with respect to unvested Performance Shares until the time (if at all) the Performance Shares vest, and the Company will retain such dividends and pay them to the Participant upon vesting.

Except as otherwise provided in this Section 7, Restricted Stock and Performance Shares shall become freely transferable by the Participant after all conditions and restrictions applicable to the shares have been satisfied or lapse (including satisfaction of any applicable tax withholding obligations).

(c)Additional Matters Relating to Restricted Stock Units and Performance Share Units.

(i)Delivery. Provided the Participant’s employment or service relationship has not terminated as of the end of the applicable Performance Period (as defined below) or at a later date determined by the Committee at the time of grant and set forth in the applicable agreement, a delivery of shares of Common Stock or payment of cash as settlement of a Restricted Stock Unit or Performance Share Unit Award shall occur as soon as administratively practicable following the written determination of the Committee of the satisfaction of the applicable Performance Goals, but in no event later than the fifteenth day of the third month following the close of the year in which the Performance Period ends or, if later, the close of the year specified by the Committee in the applicable agreement. The Committee may, in its sole discretion and at the time of grant, provide for the further deferral of payment in an applicable agreement.

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In the case of an Award of Restricted Stock Units not subject to Performance Goals, a delivery of shares of Common Stock or payment of cash as settlement of the Restricted Stock Unit shall occur as of the date specified in the applicable agreement, but in no event later than the fifteenth day of the third month following the close of the year in which vesting under the applicable agreement occurs.

(ii)Dividend Equivalents for Restricted Stock Units and Performance Share Units. With respect to each Restricted Stock Unit and Performance Share Unit, the Committee may grant a Dividend Equivalent Unit to any Participant upon such terms and conditions as it may establish. Each Dividend Equivalent Unit will entitle the Participant, at the time of the settlement of the Award, to an additional payment equal to the dividends the Participant would have received if the Participant had been the actual record owner of the underlying Common Stock on each dividend record date prior to settlement. The Dividend Equivalent Unit may be settled in cash, additional shares of Common Stock or a combination thereof.

(d)Restrictions Relating to Stock Awards.

(i)In General. The Committee may, in its sole discretion, impose such conditions and/or restrictions on any Stock Award pursuant to this Section 7 as it may deem advisable including, without limitation, a requirement that a Participant pay a stipulated purchase price for each share of Common Stock awarded or underlying a Stock Award, restrictions based upon the achievement of specific Performance Goals, time-based restrictions on vesting, either in lieu of or following the attainment of any Performance Goals, or holding requirements or sale restrictions placed on the Common Stock upon vesting of any Stock Award.

(ii)Satisfaction of Performance Goals. After the applicable period (the “Performance Period”) during which the Performance Goals must be met in order to determine the payout and/or vesting of Performance Shares or Performance Share Units has ended, restrictions on Performance Shares will lapse and delivery or payment with respect to Performance Share Units shall be made, in each case based on the partial or full satisfaction of the Performance Goals and any other applicable requirements of the Award. The Committee may, at the time the Performance Shares or Performance Share Units are granted, provide that additional Performance Shares or Performance Share Units may be awarded in the event the applicable Performance Goals are exceeded. The minimum duration of a Performance Period shall be one year, but may be longer, as determined by the Committee at the time the Stock Award is granted.

(iii)Committee Determination. The extent to which Performance Goals are met will be determined solely by the Committee, which determination will establish the amount of Performance Shares and/or Performance Share Units that will be paid out to the Participant and the extent to which any restrictions will lapse; provided, however, that the conditions on the lapse of any restriction will not be structured in a manner that will cause the Stock Award to fail to satisfy the “performance-based compensation” exception requirements of Section 162(m) of the Code.

(e)Definition of Performance Goals. Before twenty-five percent of the Performance Period has elapsed (or within ninety days of a grant date, if earlier), the Committee shall establish the criteria for Performance Goals. Such criteria may be based on any one or more business criteria measured in the aggregate or on a per share basis (if appropriate): earnings before interest, taxes, depreciation, and amortization; net income (loss) (either before or after interest, taxes, depreciation and/or amortization); operating loss containment; capital ratios; pre-tax margin; operating leverage; efficiency ratio; assets under management; balance sheet assets; total Shareholder return; credit quality; risk management; changes in the market price of Common Stock; economic value-added; funds from operations or similar measure; deposit and or loan growth; sales or revenue; acquisitions or strategic transactions; operating income (loss); earnings (loss) per share; cash earnings per share; cash flow (including, but not limited to, operating cash flow and free cash flow); return on capital, assets, equity, invested capital, invested capital net of weighted average cost of capital or investment; return on sales; gross or net profit levels, productivity, expense, margins, operating efficiency, customer and/or employee satisfaction, working capital, sales or market shares; and number of customers. Any such criteria, whether alone or in combination, may be applied on the basis of Cambridge Bancorp and its Subsidiaries as a whole or any business unit and may be measured directly, as a growth rate or by comparing

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the result to: (1) the performance of a group of competitor companies; (2) a published or special index determined by the Committee; or (3) other benchmarks determined by the Committee.

The Committee shall make any adjustments necessary to eliminate the effect on the stated Performance Goals of unplanned acquisitions or dispositions, changes in foreign exchange rates, discrete tax items identified by the Committee, changes in accounting standards, variances to planned annual incentive compensation expense and expenses associated with unusual or extraordinary items that could not be reasonably anticipated; provided, however, that such items or changes are material to the performance measure.

If the Performance Goals are not fully achieved, the Committee may provide in the applicable agreement that less than 100 percent of an Award may be payable but in no event shall the amount of any such Award be increased after it has been established and after twenty-five percent of the Performance Period has elapsed (or more than ninety days from the grant date, if earlier).

Notwithstanding the requirements of this Section 7, the Committee may make a Stock Award that is not intended to satisfy the performance-based compensation requirements of Section 162(m) of the Code and base performance or vesting on criteria other than those set forth in this Section 7(e). Further, in the event that applicable tax laws change and give the Committee the sole discretion to alter the Performance Goals without obtaining Shareholder approval for purposes of complying with the performance-based compensation exception to Section 162(m) of the Code, the Committee may make any such changes without obtaining Shareholder approval.

(f)Effect of Cessation of Employment or Service Relationship. Each agreement underlying a Stock Award shall set forth the extent to which the Participant shall have the right to retain the Award following termination of the Participant’s employment or other service relationship with the Company. Whether any such right shall apply to a particular Award shall be determined in the sole discretion of the Committee; provided, however, that the Committee may provide in an Award that accelerated vesting is precluded in order to satisfy the requirements of the performance-based exemption in Section 162(m) of the Code.

8. CASH-BASED AND OTHER STOCK-BASED AWARDS

(a)In General. The Committee may grant cash-based awards or other types of equity-based or equity-related awards not otherwise described by the terms of this Plan to Participants in such amounts and upon such terms as the Committee may determine (“Other Awards”). Other Awards may involve the transfer of actual shares of Common Stock to Participants, a payment in cash or a combination of shares and cash.

(b)Procedures Relating to Other Awards. Each Other Award pursuant to this Section 8 shall provide for the payment of a specific amount or range of cash or shares of Common Stock, as determined by the Committee. The Committee may, in its sole discretion, provide that an Other Award pursuant to this Section 8 shall be contingent on the satisfaction of Performance Goals, as provided for in Section 7(e) and subject to the limit set forth in Section 4(b). If the Committee exercises its sole discretion to establish Performance Goals, the number and/or value of Other Awards issued pursuant to this Section 8 will be paid out to the Participant based on the extent to which the Performance Goals are met, all in accordance with Section 7(e).

The Committee shall determine whether an agreement is necessary to evidence an Other Award and any Other Award agreement shall contain such terms and conditions as the Committee shall provide in its sole discretion including, without limitation, a requirement that a Participant pay a stipulated purchase price for each share of Common Stock awarded or underlying an Other Award, restrictions based upon the achievement of specific Performance Goals, time-based restrictions on vesting, either in lieu of or following the attainment of any Performance Goals, or holding requirements or sale restrictions placed on the Common Stock upon vesting of an Other Award.

(c)Delivery of Awards. Provided the Participant’s employment or service relationship has not terminated as of the end of the applicable Performance Period, or at a later date as determined by the Committee at the time of grant and set forth in the applicable agreement, a delivery of shares of Common Stock or payment of cash as settlement of an Award pursuant to this Section 8 shall occur upon the written determination of the Committee of the satisfaction of the applicable Performance Goals, but in no event later

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than the fifteenth day of the third month following the close of the year in which the Performance Period ends or, if later, the close of the year specified by the Committee in the applicable agreement. The Committee may, in its sole discretion and at the time of grant, provide for the further deferral of payment in an applicable agreement.

(d)Effect of Cessation of Employment or Service Relationship. Each Agreement underlying an Other Award pursuant to this Section 8 shall set forth the extent to which the Participant shall have the right to retain the Other Award following termination of the Participant’s employment or other service relationship with the Company. Whether any such right shall apply to a particular Other Award shall be determined in the sole discretion of the Committee; provided, however, that the Committee may provide in an Other Award that accelerated vesting is precluded in order to satisfy the requirements of the performance-based exemption in Section 162(m) of the Code.

9. DIRECTOR STOCK AWARDS

(a)Eligibility. A Stock Award under the Plan shall be automatic as provided in this Section 9 to each non-employee director of the Company other than honorary Directors.

(b)Automatic Grant. Each non-employee director whose term in office continues after the date of the annual meeting of Shareholders in each year shall receive a Stock Award in lieu of cash in payment of the annual non-cash retainer fee for that year. The number of shares of Common Stock issuable to a director in lieu of the annual non-cash retainer fee will equal the whole number of shares determined by dividing the annual non-cash retainer fee by the Fair Market Value of a share of Common Stock as of the date of such annual meeting (the “Issue Date”). Fractional shares will be disregarded. This Stock Award will be issued as of the Issue Date. Any additional fees to which the director may be entitled, such as additional fees for committee meetings, will not be affected by the issuance of Common Stock in lieu of the annual non-cash retainer fee.

10. AWARDS VOIDABLE

If a person to whom an Award under the Plan has been made fails to execute and deliver to the Committee a related Award agreement within sixty days after it is submitted to him or her, the Award shall be voidable by the Committee at its election, without further notice to the Participant.

11. REQUIREMENTS OF LAW

The Company shall not be required to transfer any Common Stock or to sell or issue any shares upon the exercise or settlement of any Award if the issuance of the shares will result in a violation by the Participant or the Company of any provisions of any law, statute or regulation of any governmental authority. Specifically, in connection with the Securities Act of 1933, as amended (the “Securities Act”), upon the transfer of Common Stock or the exercise of any Option or SAR the Company shall not be required to issue shares unless the Board has received evidence satisfactory to it to the effect that the Participant will not transfer the shares except pursuant to a registration statement in effect under the Securities Act or unless an opinion of counsel satisfactory to the Company has been received by the Company to the effect that such registration is not required. Any determination in this connection by the Board shall be conclusive. The Company shall not be obligated to take any other affirmative action in order to cause the transfer of Common Stock or to sell or issue any shares upon the exercise or settlement of any Award to comply with any law or regulations of any governmental authority, including, without limitation, the Securities Act or applicable state securities laws.

12. CHANGES IN CAPITAL STRUCTURE AND CERTAIN OTHER EVENTS

(a)Changes in Capitalization. In the event of any stock split, reverse stock split, stock dividend, recapitalization, combination of shares, reclassification of shares, spin-off or other similar change in capitalization or event, or any dividend or distribution to holders of Common Stock other than an ordinary cash dividend, (i) the number and class of securities available under the Plan, (ii) the share counting rules set forth in Section 3, (iii) the number and class of securities and exercise price per share of each outstanding Option, (iv) the share and per-share provisions and the measurement price of each outstanding SAR, (v) the number of shares subject to and the repurchase price per share (if any) subject to each outstanding Stock Award, and (vi) the share and per-share-related provisions and the purchase price, if any, of each outstanding

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Other Award, shall be equitably adjusted (or substituted Awards may be made, if applicable) as the Committee, in its sole discretion, deems appropriate. Without limiting the generality of the foregoing, in the event the Company effects a split of the Common Stock by means of a stock dividend or effects another stock dividend for which an adjustment is made pursuant to this Section 12, and the exercise price of and the number of shares subject to an outstanding Option or SAR are adjusted as of the date of the distribution of the dividend (rather than as of the record date for such dividend), then a Participant who exercises an Option or SAR between the record date and the distribution date for the stock dividend shall be entitled to receive, on the distribution date, the stock dividend with respect to the shares of Common Stock acquired upon the Option or SAR exercise, notwithstanding the fact that such shares were not outstanding as of the close of business on the record date for such stock dividend. Any such adjustment pursuant to this Section 12(a) made by the Committee shall be conclusive and binding upon all affected persons, including the Company and all Participants.

If while Options, SARs or Stock Awards remain outstanding under the Plan, the Company merges or consolidates with a wholly-owned subsidiary for the purpose of reincorporating itself under the laws of another jurisdiction or for any other reason, the Participants will be entitled to acquire shares of Common Stock of the surviving company upon the same terms and conditions as were in effect immediately prior to such merger or consolidation (unless such merger or consolidation involves a change in the number of shares or the capitalization of the Company, in which case proportional adjustments shall be made as provided above) and the Plan, unless otherwise rescinded by the Board, will remain the Plan of the surviving company.

(b)Reorganization Events.

(i)Definition. A “Reorganization Event” shall mean: (1) any merger or consolidation of the Company with or into another entity as a result of which all of the Common Stock of the Company is converted into or exchanged for the right to receive cash, securities or other property or is cancelled; (2) any transfer or disposition of all of the Common Stock of the Company for cash, securities or other property pursuant to a share exchange or other transaction; (3) any sale or disposition of all or substantially all of the assets of the Company; or (4) any liquidation or dissolution of the Company.

(ii)Consequences of a Reorganization Event on Awards Other than Restricted Stock or Performance Shares.

(1)In connection with a Reorganization Event, the Committee may take any one or more of the following actions as to all or any (or any portion of) outstanding Awards other than Restricted Stock or Performance Shares on such terms as the Committee determines (except to the extent specifically provided otherwise in an applicable Award agreement or another agreement between the Company and the Participant): (A) provide that the Awards shall be assumed, or substantially equivalent Awards shall be substituted, by the acquiring or succeeding entity or an affiliate thereof; (B) upon notice to a Participant, provide that all of the Participant’s unvested and/or unexercised Awards will terminate immediately prior to the consummation of the Reorganization Event unless exercised by the Participant (to the extent then exercisable) within a specified period following the date of such notice; (C) provide that outstanding Awards shall become exercisable, realizable or deliverable, or restrictions applicable to an Award shall lapse, in whole or in part prior to or upon the Reorganization Event; (D) in the event of a Reorganization Event under the terms of which holders of Common Stock will receive upon consummation thereof a cash payment for each share surrendered in the Reorganization Event (the “Acquisition Price”), make or provide for a cash payment to Participants with respect to each Award held by a Participant equal to (I) the number of shares of Common Stock subject to the vested portion of the Award (after giving effect to any acceleration of vesting that occurs upon or immediately prior to such Reorganization Event) multiplied by (II) the excess, if any, of (Y) the Acquisition Price over (Z) the exercise, measurement or purchase price of the Award and any applicable tax withholdings, in exchange for the termination of such Award; (E) provide that, in connection with a liquidation or dissolution of the Company, Awards shall convert into 10 the right to receive liquidation proceeds (if applicable, net of the exercise, measurement or purchase price thereof and any applicable tax withholdings); and (F) any combination of the foregoing. In taking any of the actions permitted under this Section 12(b)(2), the Committee shall not be obligated by the Plan to

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treat all Awards, all Awards held by a Participant or all Awards of the same type identically and any adjustment pursuant to this Section 12(b) made by the Committee shall be conclusive and binding upon all affected persons, including the Company and all Participants.

(2)Notwithstanding the terms of Section 12(b)(ii)(1), in the case of outstanding Restricted Stock Units or Performance Share Units that are subject to Section 409A of the Code: (A) if the applicable agreement provides that the Restricted Stock Units or Performance Share Units shall be settled upon a change in control event within the meaning of Treasury Regulation Section 1.409A-3(i)(5), and the Reorganization Event constitutes such a change in control event, then no assumption or substitution shall be permitted pursuant to Section 12(b)(ii)(1)(A) and the Restricted Stock Units or Performance Share Units shall instead be settled in accordance with the terms of the applicable agreement; and (B) the Committee may only undertake the actions set forth in clauses (C), (D) or (E) of Section 12(b)(ii)(1) if the action is permitted or required by Section 409A of the Code and if the Reorganization Event is not a change in control event as so defined or such action is not permitted or required by Section 409A of the Code, and the acquiring or succeeding entity or an affiliate thereof does not assume or substitute the Restricted Stock Units or Performance Share Units pursuant to clause (A) of Section 12(b)(ii)(1), then the unvested Restricted Stock Units or Performance Share Units shall terminate immediately prior to the consummation of the Reorganization Event without any payment in exchange therefor.

(3)For purposes of Section 12(b)(ii)(1)(A), an Award (other than Restricted Stock or Performance Shares) shall be considered assumed if, following consummation of the Reorganization Event, the Award confers the right to purchase or receive pursuant to the terms of the Award, for each share of Common Stock subject to the Award immediately prior to the consummation of the Reorganization Event, the consideration (whether cash, securities or other property) received as a result of the Reorganization Event by holders of Common Stock for each share of Common Stock held immediately prior to the consummation of the Reorganization Event (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares of Common Stock); provided, however, that if the consideration received as a result of the Reorganization Event is not solely common stock of the acquiring or succeeding entity or an affiliate thereof, the Company may, with the consent of the acquiring or succeeding entity or an affiliate thereof, provide for the consideration to be received upon the exercise or settlement of the Award to consist solely of the number of shares of common stock of the acquiring or succeeding entity or an affiliate thereof that the Committee determined to be equivalent in value (as of the date of such determination or another date specified by the Committee) to the per share consideration received by holders of outstanding shares of Common Stock as a result of the Reorganization Event.

(c)Consequences of a Reorganization Event on Restricted Stock or Performance Shares. Upon the occurrence of a Reorganization Event other than a liquidation or dissolution of the Company, the repurchase and other rights of the Company with respect to outstanding Restricted Stock or Performance Shares shall inure to the benefit of the Company’s successor and shall, unless the Committee determines otherwise, apply to the cash, securities or other property that the Common Stock was converted into or exchanged for pursuant to such Reorganization Event in the same manner and to the same extent as they applied to the Restricted Stock or Performance Shares; provided, however, that the Committee may provide for termination or deemed satisfaction of repurchase or other rights under the agreement evidencing any Restricted Stock, Performance Shares or any other agreement between a Participant and the Company, either initially or by amendment. Upon the occurrence of a Reorganization Event involving the liquidation or dissolution of the Company, except to the extent specifically provided to the contrary in the instrument evidencing any Restricted Stock, Performance Shares or any other agreement between a Participant and the Company, all restrictions and conditions on all Restricted Stock then outstanding shall automatically be deemed terminated or satisfied.

13. FORFEITURE FOR DISHONESTY

Notwithstanding anything to the contrary in the Plan, if the Board determines, either before or after the end of the employment or service relationship and after full consideration of the facts presented on behalf of the Participant, that the Participant has been engaged in fraud, embezzlement, theft, commission of a felony or

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dishonesty in the course of his or her employment or other service relationship with the Company or any of its Subsidiaries that damaged the Company or any of its Subsidiaries, or has disclosed trade secrets or other proprietary information of the Company or any of its Subsidiaries:

(a)The Participant shall forfeit all unexercised Awards and all exercised Awards to the extent that stock certificates, cash or other property, as applicable, have not yet been delivered; and

(b)The Company shall have the right to repurchase all or any part of the shares of Common Stock acquired by the Participant upon the earlier exercise of any Award at a price equal to the amount paid to the Company upon exercise, increased by an amount equal to the interest that would have accrued in the period between the date of exercise and the date of such repurchase upon a debt in the amount of the exercise price, at the prime rate(s) announced from time to time during such period in the Federal Reserve Statistical Release Selected Interest Rates and decreased by any cash dividends received.

The decision of the Board as to the cause of a Participant’s discharge and the damage done to the Company or any of its Subsidiaries shall be final, binding and conclusive. No decision of the Board, however, shall affect in any manner the finality of the discharge of a Participant by the Company or its Subsidiary.

14. MISCELLANEOUS

(a)Transferability of Awards. Awards shall not be sold, assigned, transferred, pledged or otherwise encumbered by the person to whom they are granted, either voluntarily or by operation of law, except by will or the laws of descent and distribution or, other than in the case of an Incentive Stock Option, pursuant to a qualified domestic relations order, and, during the life of the Participant, rights with respect to an Award shall be exercisable only by the Participant; provided, however, that the Committee may permit or provide in an Award for the gratuitous transfer of the Award by the Participant to or for the benefit of any immediate family member, family trust or other entity established for the benefit of the Participant and/or an immediate family member thereof if the Company would be eligible to use a Registration Statement on Form S-8 under the Securities Act for the registration of the sale of the Common Stock subject to such Award to such proposed transferee; and provided, further, that the Company shall not be required to recognize any such permitted transfer until the time that permitted transferee shall, as a condition to transfer, deliver to the Company an instrument in form and substance satisfactory to the Company confirming that the transferee shall be bound by all of the terms and conditions of the Award. References to a Participant, to the extent relevant in the context, shall include references to authorized transferees. For the avoidance of doubt, nothing contained in this Section 14(a) shall be deemed to restrict a transfer to the Company.

(b)Documentation. Each Award shall be evidenced in such form (written, electronic or otherwise) as the Committee shall determine. Each Award may contain terms and conditions in addition to those set forth in the Plan.

(c)No Guarantee of Employment or Continuation of Service Relationship. Neither the Plan nor any Award agreement shall give an employee or other service provider the right to continue in the employment of or to continue to provide services to the Company or a Subsidiary, or give the Company or a Subsidiary the right to require continued employment or services.

(d)Rounding Conventions. The Committee may, in its sole discretion and taking into account any requirements of the Code, including without limitations Sections 422 through 424 and 409A of the Code, determine the effect of vesting, stock dividend, and any other adjustments on shares and any cash amount payable hereunder, and may provide that no fractional shares will be issued (rounding up or down as determined by the Committee) and that cash amounts be rounded down to the nearest whole cent.

(e)Tax Withholding. To the extent required by law, the Company (or a Subsidiary) shall withhold or cause to be withheld income and other taxes with respect to any income recognized by a Participant by reason of the exercise, vesting or settlement of an Award, and as a condition to the receipt of any Award the Participant shall agree that if the amount payable to him or her by the Company and any Subsidiary in the ordinary course is insufficient to pay such taxes, then he or she shall upon the request of the Company pay to the Company an amount sufficient to satisfy its tax withholding obligations.

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Without limiting the foregoing, the Committee may in its discretion permit any Participant’s withholding obligation to be paid in whole or in part in the form of shares of Common Stock by withholding from the shares to be issued or by accepting delivery from the Participant of shares already owned by him or her; provided, however, that payment of withholding obligation in the form of shares shall not be made with respect to an amount in excess of the minimum required withholding. If payment of withholding taxes is made in whole or in part in shares of Common Stock, the Participant shall deliver to the Company certificates registered in his or her name representing shares of Common Stock legally and beneficially owned by him or her, fully vested and free of all liens, claims, and encumbrances of every kind, duly endorsed or accompanied by stock powers duly endorsed by the record holder of the shares represented by such certificates.

If the Participant is subject to Section 16(a) of the Exchange Act, his or her ability to pay any withholding obligation in the form of shares of Common Stock shall be subject to any additional restrictions as may be necessary to avoid any transaction that might give rise to liability under Section 16(b) of the Exchange Act.

(f)Use of Proceeds. The proceeds from the sale of Common Stock pursuant to Awards shall constitute general funds of the Company.

(g)Governing Law. The granting of Awards and the issuance of Common Stock under the Plan shall be subject to all applicable laws and regulations and to such approvals by any governmental agency or national securities exchanges as may be required. To the extent not preempted by Federal law, the Plan and all agreements hereunder shall be construed in accordance with and governed by the laws of the Commonwealth of Massachusetts, without regard to the principles of conflicts of law.

(h)Compliance with Section 409A. It is the intention of the Company that no payment or entitlement pursuant to this Plan will give rise to any adverse tax consequences to any person pursuant to Section 409A of the Code. The Committee shall interpret and apply the Plan to that end, and shall not give effect to any provision therein in a manner that reasonably could be expected to give rise to adverse tax consequences under Section 409A.

15. EFFECTIVE DATE, DURATION, AMENDMENT AND TERMINATION OF PLAN

The Plan shall be effective as of April 24th, 2017 if, and only if, the holders of a majority of the outstanding shares of capital stock present, or represented, and entitled to vote thereon (voting as a single class) at a duly held meeting of the Shareholders of the Company approve the Plan within twelve months on, before or after such date. If so approved by the Shareholders, the Committee may grant Awards under the Plan from time to time until the close of business on April 24th, 2027. The Board may at any time amend the Plan; provided, however, that without approval of the Company’s Shareholders there shall be no: (a) increase in the total number of shares covered by the Plan, except by operation of the provisions of Section 12, or the aggregate number of shares of Common Stock that may be issued to any single person; (b) change in the class of persons eligible to receive Awards under the Plan; or (c) other change in the Plan that requires Shareholder approval under applicable law. Except as otherwise provided in the Plan or an Award agreement, no amendment shall adversely affect outstanding Awards without the consent of the Participant. The Plan may be terminated at any time by action of the Board, but any such termination will not terminate Awards then outstanding, without the consent of the Participant.

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EX-10

Exhibit 10.3

AmendedasofApril25,2011

CAMBRIDGEBANCORP

DIRECTORSTOCKPLAN

Section1.Purpose

The purpose of the Cambridge Bancorp Director Stock Plan (the “Plan”) is to provide for the issuance to the non-employee directors of Cambridge Bancorp (the “Company”) of their annual retainer fee in the form of Common Stock, $1.00 par value, of the Company(the “Common Stock” or the “Stock”) and thereby permit them to participate in the long-term growth of the Company.

Section2.Administration

IssuanceofStockunderthePlanshallbe automaticasprovidedinSection5. All questionsofinterpretationofthePlanshallbedeterminedbytheCompensationCommitteeof theBoardofDirectorsoftheCompany(the“Board”)orby anothercommitteeofnotlessthan twomembersoftheBoardappointedbytheBoardtoadministerthePlan(the“Committee”), providedthattheCommitteeshallhavenodiscretionwithrespecttotherecipientsofStock hereunderorthetimingofStockissuance. TheCommitteeshallhaveauthoritytoadopt,alter andrepealsuchadministrativerules,guidelinesandpracticesgoverningtheoperationof thePlan asitshallfromtimetotimeconsideradvisableandtointerprettheprovisionsofthePlan. The Committee’sdecisionsshallbefinalandbinding.

Section3.Eligibility

Allnon-employee directorsoftheCompanyotherthanhonorarydirectorsshallreceive StockunderthePlan.

Section4.StockAvailableunderPlan

Subjecttoadjustmentasfollows,upto120,000sharesofCommonStockmaybeissued underthePlan. IntheeventthattheCommitteedeterminesthatanystockdividend,split-up, combinationorreclassification ofshares,recapitalization orothersimilarcapitalchangeaffects theCommonStocksuchthatanadjustmentisrequiredinordertopreservethebenefitsor potentialbenefitsintendedtobemadeavailableunderthePlan,thentheCommitteeshall equitably adjustanyorallofthenumberandkindofshareswhichmaybegrantedunderthe Plan,providedthatthenumberofsharesshallalwaysbeawholenumber.

Section5.GrantofStock

Eachnon-employee directorwhoseterminofficecontinuesafterthedateoftheannual meetingofstockholdersineachyearshallreceiveStockinlieuofcashinpaymentoftheannual retainerfeeforthatyear. Thenumberofsharesofstockissuabletoadirectorinlieuofthe annualretainerfeewillequalthewholenumberofsharesdeterminedbydividingtheannual retainerfeebythefairmarketvalueofashareofCommonStockasdetermined bytheBoardof

Directorsasofthedateofsuchannualmeeting(the“IssueDate”). Fractionalshareswillbe disregarded. SuchStockwillbeissuedasof theIssueDate. Anyadditionalfeestowhichthe directormaybeentitled,suchasadditionalfeesforcommitteemeetings,willnotbeaffectedby theissuanceofStockinlieuoftheannualretainerfee.

Section6.RestrictionsonStock

(a)TransferRestriction. UnlessotherwiseagreedtobytheBoard,Stock acquiredunderthisPlanmaynotbesold,exchanged,given,pledged,encumbered,alienated, attached,orotherwisedisposedofortransferreduntilthedirectorceasestobeeligibleto participateinthePlanunderSection3,oruntilthefifthanniversaryoftheIssueDateif earlier.

(b)RightofFirstRefusal.

(i)NotwithstandingthelapseoftherestrictionunderSection6(a)but subjecttotheexceptionsstatedbelow,noStockissuedunderthePlanmaybesold,exchanged, given,pledged,encumbered,alienated,attached,orotherwisedisposedofortransferredwithout thedirectorfirstofferingtheCompanyarightoffirstrefusaltopurchasesuchsharesatthe same priceandotherwiseonthesametermsasthedirectorhasbeenofferedbyaprospectivebuyer makingagoodfaithoffer;providedthattheCompanyshallhavetherighttopurchasesuch sharesforcashirrespectiveoftheformofconsiderationofferedbysuchprospectivebuyer. If theCompanydeclinesorfailstoexerciseitsrightoffirstrefusal,theTrusteesoftheCambridge BancorpEmployeeStockOwnershipPlan(“ESOP”)shallhavearightoffirstrefusalonthe sameterms. Therightoffirstrefusalshalllapseifnotexercisedwithinfourteendaysafter receiptbytheCompanyandtheTrusteesofwrittennoticethatthedirectorhasreceivedabona fideofferfromathirdpartytopurchasetheStock;providedthattheCompanyandtheTrustees shallagainhavearightoffirstrefusaltopurchasesuchsharesifthedirectordoesnotsellthem tothepersonandonthetermsdescribedinthedirector’s originalnoticewithinninetydaysafter suchoriginalnotice.

(ii)The right of first refusal shall not apply (A) after the death of the director to whom the Stock was first issued, (B) at any time when the Company is subject with respect to the Stock to the reporting requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934, or (C) with respect to a gift or similar transfer of Stock to a member of the director’s immediate family or in trust for the benefit of the director or a member of his immediate family, provided that the transferee shall take the Stock subject to the right of first refusal with respect to subsequent transfers.

(c)Compliance with Securities Laws.  It shall be a condition of sale of any shares of Common Stock acquired under the Plan that the Company may, in its discretion, require (i) that the shares of Common Stock shall have been duly listed, upon official notice of issuance, upon any national securities exchange on which the Company’s Common Stock may then be listed, (ii) that either (A) a registration statement under the Securities Act of 1933, as amended, with respect to said shares shall be in effect, or (B) in the opinion of counsel for the Company the proposed sale shall be exempt from registration under said Act and the director shall have made such undertakings and agreements with the Company as the Company may reasonably require, and (iii) that such other steps, if any, as counsel for the Company shall deem

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necessary to comply with any law, rule or regulation applicable to the sale of such shares shall have been taken by the Company or the director, or both.

(d)Stock Legend.  The certificates representing the shares issued under this Plan may contain such legends as counsel for the Company shall deem necessary to reflect the restrictions imposed under this section or to comply with any applicable law, rule or regulation.

(e)Rights as Stockholder.  Except for the restrictions imposed by this section, the director as owner of the Stock will have all the rights of a stockholder, including but not limited to the right to receive all dividends paid on such Stock and the right to vote such Stock.

Section7.Miscellaneous

(a)Amendment of Plan.  The Board may amend, suspend or terminate the Plan or any portion thereof at any time.

(b)Governing Law.  The provisions of the Plan shall be governed by and interpreted in accordance with the laws of Massachusetts.

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EX-10

Exhibit 10.4

2016 Annual Incentive Plan

Plan Summary

Annual Incentive Plan

Introduction and Objective

Cambridge Trust’s Annual Incentive Plan is designed to recognize and reward management for their collective contributions to the Bank’s success.   The Plan focuses on financial measures that are critical to the Bank’s growth and profitability. Individually and collectively, we all have the ability to influence and drive our success.   When Cambridge Trust succeeds, our employees will succeed. This document summarizes the elements and features of the Plan.

In short, the objectives of the Incentive Plan are to:

• Focus executive attention on key business metrics.

• Align pay with organizational and individual performance.

• Encourage  teamwork  and  collaboration  across  all  areas  of  the  Bank.  Our  collective contributions will drive improved business results.

• Motivate and reward the achievement of specific and measurable performance objectives.

• Provide competitive total cash compensation.

• Provide significant reward for achieving and exceeding performance results.

• Enable the Bank to attract and retain the talent needed to drive success.

Eligibility

• Eligibility will be limited to positions that have a significant impact on the success of the organization.

• Employees must be employed by July 1 of the plan year in order to be eligible for that year’s incentive. New employees hired after July 1 will receive pro-rated awards based on their date of hire.

• Participants must be an active employee as of the last day of the measurement period to receive an award, unless they terminate due to death or disability (as determined by the company).  Individuals who terminate for these reasons during the plan year will receive a pro- rated award as further explained in the Terms and Conditions of this plan.

Performance Period

The performance period and plan operates on a calendar year basis (January 1 – December 31). Actual payout awards are made in cash following year-end after Cambridge Trust’s financial results and performance are known.

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Incentive Payout Opportunity

Each participant will have a target incentive opportunity based on his/her role.  The target incentive will  reflect  a  percentage  of  base  salary  and  be  determined  consistent  with  competitive  market practices. Actual awards will vary based on achievement of specific goals.  The opportunity reflects a range of potential awards.  Actual awards may range from 0% of target (for not achieving threshold performance) to 150% of target (for stretch performance).

The table below summarizes the incentive ranges for the 2016 Plan year.

2016 Short - Term Incentive Targets
Role	Below Threshold	Threshold (50% of Target)	Target (100%)	Stretch (150% of Target)
President & Chief Executive Officer	0%	30%	60%	90%
EVP, Wealth Management	0%	25%	50%	75%
EVP, Chief Information Officer	0%	20%	40%	60%
EVP, Chief Financial Officer EVP, Chief Lending Officer EVP, Consumer Banking Director SVP, Chief Investment Officer	0%	17.5%	35%	52.5%
SVP, Human Resources SVP, Marketing	0%	15%	30%	45%

Incentive Plan Measures

Each participant will have predefined performance goals that will determine his/her annual incentive award.  There are two performance categories:  Bank and Individual.  The table below provides guidelines for the allocation of participant’s incentives for each performance component.   The specific allocation of goals will be weighted to reflect the focus and contribution for each role/level in the Bank. Weightings for each performance goal will be determined for each participant at the beginning of each plan year.

Position	Bank Performance	Individual Performance
CEO / President – Sheahan	75%	25%
EVP, Wealth Management - Duca	25%	75%
EVP, CIO - Burrow	70%	30%
EVP / SVP’s  - Millane, Johnson, Spencer	40%	60%
EVP/ SVPs – Staff (Briand, Rietheimer, Siegrist)	60%	40%

Plan Trigger:   In order for the Annual Incentive Plan to ‘activate’, Cambridge Trust must achieve at least 50% of its targeted operating income before securities gains and losses.  If the Bank does not meet this level, the plan will only pay awards at the Committee’s discretion.

Bank Performance

The Bank performance goals for 2016 are Return on Equity and Pre-tax Operating Income.  Return on equity (after tax) will be assessed relative to Cambridge Trust’s performance as compared to the 75th percentile performance of its peer index at the end of the plan year. The peer index is defined as Commercial Banks with assets $500M - $5B, located in the Northeast (CT, MA, ME, NH, NJ, NY, PA,

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RI and VT) and traded on NYSE, NASDAQ, and OTCBB. The operating income goal will be tied to Cambridge Trust’s fiscal year budget and reflects operating income prior to security gains/losses and taxes.

The table below shows the specific performance goal at threshold, budget and stretch for 2016. A minimum achievement of threshold level performance is required for the plan to pay for each component.

Bank Performance	2016 Performance Goals
Measures	Threshold	Target	Stretch
Return on Equity (after tax)	80% of 75th Percentile of Peer Index Performance	75thPercentile of Peer Index Performance	120% of 75thPercentile of Peer Index Performance
Operating Income (before security gains/ losses and taxes)	TBD	Per Budget	TBD

Individual Performance

In addition to the Bank performance, participants will have individual goals (up to 5 key objectives) that will focus on either department/team performance (e.g. lending growth, deposit growth) and/or individual performance. The mix of these goals will vary by role.     Where possible, performance targets and ranges for each measure will be set at the beginning of the plan year.  If performance-to-goal cannot be quantified, Committee discretion will be used to evaluate goal attainment as follows:

Performance	Did not Achieve	Partially Achieved	Fully Achieved	Clearly Exceeded
Award as % of Target	0% to 25%	25% to 90%	90% to 110%	115% to 150%

Discretion within performance zones will allow for the quality of the result and the impact of external circumstances on performance.  For example, if the CEO made great progress toward goal attainment under difficult circumstances, he might receive an award of 85%, even though the goal was not reached.  The same CEO progress toward goal attainment reached under favorable circumstances might only result in a 30% award.

Payouts

Payouts will be made in cash as soon as possible after the closing of Bank financials each year. Awards are calculated based on actual performance relative to target. For Bank goals, achieving threshold performance will pay out at 50% of target incentive, target performance will pay out 100% of target, and stretch performance will pay out at 150% of target incentive. Performance below threshold will result in a 0% payout. Actual payouts for each performance goal will be pro-rated betweenthreshold, target and stretch levels to reward incremental improvement. Payouts are assessed by component such that one goal may achieve stretch and another may achieve only threshold for individual goals, the range of payout will be 0% - 150% in accordance with the payout grid above.  .

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Illustration

The table below is an illustration of a simple plan design for a SVP (Tier 4) with a base salary of $150,000 and an incentive target of 30% of base salary ($45,000). Goals and weightings are for illustration purposes only. This example assumes that Cambridge Trust’s Peer Index performance at the 75th percentile (i.e. target performance goal) was 11%.

Participant Goals				Performance and Payout
Performance Measure	Performance Goal threshold/target/stretch	Weight	$	Actual Performance	Payout Allocation (0% - 150%)	Payout ($)
ROE (after tax)	8.8% / 11% / 13.2%	25%	$11,250	8.8%	50%	$5,625
Operating Income	$13.3M / $16.6M / $19.9M	25%	$11,250	$16.6M	100%	$11,250
Individual performance goal #1	TBD	35%	$15,750	Stretch	150%	$23,625
Individual Performance goals #2	TBD	15%	$6,750	Below Threshold	0%	$0
TOTAL		100%	$45,000	90% payout		$40,500

This participant’s payout of $40,500 is 90% of target. The payout reflects Cambridge Trust’s ROE performance at “threshold”, Operating Income at target and one Individual goal at stretch and another that was not achieved.

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Terms and Conditions

Effective Date

This Program is effective January 1, 2016 to reflect plan year January 1, 2016 to December 31, 2016. The Plan is reviewed annually by the Bank’s Compensation Committee and Executive Management to ensure proper alignment with the Bank’s business objectives. Cambridge Trust retains the rights as described below to amend, modify or discontinue the Plan at any time during the specified period. The Incentive Plan will remain in effect until December 31, 2016.

Program Administration

The Plan is authorized by the Compensation Committee, which reports to the Board of Directors.  The Compensation Committee has the sole authority to interpret the Plan and to make or nullify any rules and procedures, as necessary, for proper administration. Any determination by the Committee will be final and binding on all participants.

Program Changes or Discontinuance

Cambridge  Trust  has  developed  the  plan  based  on  existing  business,  market  and  economic conditions. If substantial changes occur that affect these conditions, Cambridge Trust may add to, amend, modify or discontinue any of the terms or conditions of the plan at any time.

The Compensation Committee and Board of Director also have the ability to adjust/modify or cancel plan payouts to reflect results from regulatory and/or safety and soundness exams.

The Compensation Committee may, at its sole discretion, waive, change or amend the Plan, as it deems appropriate.

Incentive Award Payments

Awards will be paid as a cash bonus before the end of the first quarter following the Plan year. Awards will be paid out as a percentage of a participant’s base salary earned during the year as of December 31 for a given calendar year. Incentive awards will be considered taxable income to participants in the year paid and will be subject to withholding for required income and other applicable taxes.

Any rights accruing to a participant or his/her beneficiary under the Plan shall be solely those of an unsecured general creditor of Cambridge Trust. Nothing contained in the Plan, and no action taken pursuant to the provisions hereof, will create or be construed to create a trust of any kind, or a pledge, or a fiduciary relationship between Cambridge Trust or the CEO and the participant or any other person. Nothing herein will be construed to require Cambridge Trust or the CEO to maintain any fund or to segregate any amount for a participant’s benefit.

New Hires, Promotions, and Transfers

Participants who are not employed by Cambridge Trust as of July 1 of the Plan year will receive a pro rata incentive award based on their length of employment during a given year.

A participant whose work schedule changes during the Plan year will be eligible for prorated treatment that reflects his/her time in the different schedules.

If a participant changes his/her role or is promoted during the Plan year, he/she will be eligible for the new role’s target incentive award on a pro rata basis (i.e. the award will be prorated based on the number of months employed in the respective positions.)

Termination of Employment

If a Plan participant is terminated by the Bank prior to award payouts, no incentive award will be paid. To encourage employees to remain in the employment of Cambridge Trust, a participant must be an active employee of the Bank at the time of the award. (See exceptions for death and disability.)

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Retirement, Disability and Death

Individuals who will be retiring must be an active employee as of December 31 of the plan year in order to receive a payout. If an employee retires prior to this date, the individual will not receive an award. For the purposes of this plan, retirement is defined as age 65; consistent with guidelines established in Cambridge Trust’s existing retirement plan(s).

If a participant is disabled by an accident or illness, and is disabled long enough to be placed on long- term disability, his/her bonus award for the Plan period shall be prorated so that no award will be earned during the period of long-term disability.

In the event of death, Cambridge Trust will pay to the participant’s estate the pro rata portion of the award that had been earned by the participant.

Ethics and Interpretation

If there is any ambiguity as to the meaning of any terms or provisions of this plan or any questions as to the correct interpretation of any information contained therein, the Bank’s interpretation expressed by the Board of Directors will be final and binding.

The altering, inflating, and/or inappropriate manipulation of performance/financial results or any other infraction of recognized ethical business standards will subject the employee to disciplinary action up to and including termination of employment.  In addition, any incentive compensation as provided by the plan to which the employee would otherwise be entitled will be revoked.

Participants who have willfully engaged in any activity, injurious to the Bank, will upon termination of employment, death, or retirement, forfeit any incentive award earned during the award period in which the termination occurred.

Clawback

In  the  event  that  Cambridge  Trust  is  required  to  prepare  an  accounting  restatement  due  to  a significant error, omission or fraud (as determined by the members of the Board of Trustees), each executive officer who is considered a member of “Senior Management” shall reimburse the Bank for part or the entire incentive award made to such executive officer on the basis of having met or exceeded specific targets for performance periods. For purposes of this policy, (i) the term “incentive awards” means awards under the Bank’s Annual Incentive Plan (AIP), the amount of which is determined in whole or in part upon specific performance targets relating to the financial results of the Bank; and (ii) the term “Senior Management” means employees in SVP roles and above who are eligible to participate in the Bank’s Annual Incentive Plan (AIP). The Bank may seek to reclaim incentives within a three-year period of the incentive payout, even if the participant has terminated.

Miscellaneous

The Plan will not  be deemed to give any participant the right to be retained in the employ of Cambridge Trust, nor will the Plan interfere with the right of Cambridge Trust to discharge any participant at any time.

In the absence of an authorized, written employment contract, the relationship between employees and Cambridge Trust is one of at-will employment. The Plan does not alter the relationship.

This incentive plan and the transactions and payments hereunder shall, in all respect, be governed by, and construed and enforced in accordance with the laws of the state of Massachusetts.

Each provision in this Plan is severable, and if any provision is held to be invalid, illegal, or unenforceable, the validity, legality and enforceability of the remaining provisions shall not, in any way, be affected or impaired thereby.

This plan is proprietary and confidential to Cambridge Trust and its employees and should not be shared outside the organization.

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EX-10

Exhibit 10.5

THE EXECUTIVE NONQUALIFIED EXCESS PLAN

PLAN DOCUMENT

THE EXECUTIVE NONQUALIFIED EXCESS PLAN

Section 1.Purpose:

By execution of the Adoption Agreement, the Employer has adopted the Plan set forth herein, and in the Adoption Agreement, to provide a means by which certain management Employees or Independent Contractors of the Employer may elect to defer receipt of current Compensation from the Employer in order to provide retirement and other benefits on behalf of such Employees or Independent Contractors of the Employer, as selected in the Adoption Agreement. The Plan is intended to be a nonqualified deferred compensation plan that complies with the provisions of Section 409A of the Internal Revenue Code (the “Code”). The Plan is also intended to be an unfunded plan maintained primarily for the purpose of providing deferred compensation benefits for a select group of management or highly compensated employees under Sections 201 (2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act of 1974 (“ERISA”) and independent contractors. Notwithstanding any other provision of this Plan, this Plan shall be interpreted, operated and administered in a manner consistent with these intentions.

Section 2.Definitions:

As used in the Plan, including this Section 2, references to one gender shall include the other, unless otherwise indicated by the context:

2.1“Active Participant” means, with respect to any day or date, a Participant who is in Service on such day or date; provided, that a Participant shall cease to be an Active Participant (i) immediately upon a determination by the Committee that the Participant has ceased to be an Employee or Independent Contractor, or (ii) at the end

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of the Plan Year that the Committee determines the Participant no longer meets the eligibility requirements of the Plan.

2.2“Adoption Agreement” means the written agreement pursuant to which the Employer adopts the Plan. The Adoption Agreement is a part of the Plan as applied to the Employer.

2.3“Beneficiary” means the person, persons, entity or entities designated or determined pursuant to the provisions of Section 13 of the Plan.

2.4“Board” means the Board of Directors of the Company, if the Company is a corporation. If the Company is not a corporation, “Board” shall mean the Company.

2.5“Change in Control Event” means an event described in Section 409A(a)(2)(A)(v) of the Code (or any successor provision thereto) and the regulations thereunder.

2.6“Committee” means the persons or entity designated in the Adoption Agreement to administer the Plan. If the Committee designated in the Adoption Agreement is unable to serve, the Employer shall satisfy the duties of the Committee provided for in Section 9.

2.7“Company” means the company designated in the Adoption Agreement as such.

2.8“Compensation” shall have the meaning designated in the Adoption Agreement.

2.9“Crediting Date” means the date designated in the Adoption Agreement for crediting the amount of any Participant Deferral Credits to the Deferred Compensation Account of a Participant. Employer Credits may be credited to the

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Deferred Compensation Account of a Participant on any day that securities are traded on a national securities exchange.

2.10“Deferred Compensation Account” means the account maintained with respect to each Participant under the Plan. The Deferred Compensation Account shall be credited with Participant Deferral Credits and Employer Credits, credited or debited for deemed investment gains or losses, and adjusted for payments in accordance with the rules and elections in effect under Section 8. The Deferred Compensation Account of a Participant shall include any In-Service or Education Account of the Participant, if applicable.

2.11“Disabled” means Disabled within the meaning of Section 409A of the Code and the regulations thereunder. Generally, this means that the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering Employees of the Employer.

2.12“Education Account” is an In-Service Account which will be used by the Participant for educational purposes.

2.13“Effective Date” shall be the date designated in the Adoption Agreement

2.14“Employee” means an individual in the Service of the Employer if the relationship between the individual and the Employer is the legal relationship of

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employer and employee. An individual shall cease to be an Employee upon theEmployee’s separation from Service.

2.15“Employer” means the Company, as identified in the Adoption Agreement, and any Participating Employer which adopts this Plan. An Employer may be a corporation, a limited liability company, a partnership or sole proprietorship.

2.16“Employer Credits” means the amounts credited to the Participant’s Deferred Compensation Account by the Employer pursuant to the provisions of Section 4.2.

2.17“Grandfathered Amounts” means, if applicable, the amounts that were deferred under the Plan and were earned and vested within the meaning of Section 409A of the Code and regulations thereunder as of December 31, 2004. Grandfathered Amounts shall be subject to the terms designated in the Adoption Agreement.

2.18“Independent Contractor” means an individual in the Service of the Employer if the relationship between the individual and the Employer is not the legal relationship of employer and employee. An individual shall cease to be an Independent Contractor upon the termination of the Independent Contractor’s Service. An Independent Contractor shall include a director of the Employer who is not an Employee.

2.19“In-Service Account” means a separate account to be kept for each Participant that has elected to take in-service distributions as described in Section 5.4. The In-Service Account shall be adjusted in the same manner and at the same time as the Deferred Compensation Account under Section 8 and in accordance with the rules and elections in effect under Section 8.

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2.20“Normal Retirement Age” of a Participant means the age designated in the Adoption Agreement.

2.21“Participant” means with respect to any Plan Year an Employee or Independent Contractor who has been designated by the Committee as a Participant and who has entered the Plan or who has a Deferred Compensation Account under the Plan; provided that if the Participant is an Employee, the individual must be a highly compensated or management employee of the Employer within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA.

2.22“Participant Deferral Credits” means the amounts credited to the Participant’s Deferred Compensation Account by the Employer pursuant to the provisions of Section 4.1.

2.23“Participating Employer” means any trade or business (whether or not incorporated) which adopts this Plan with the consent of the Company identified in the Adoption Agreement.

2.24“Participation Agreement” means a written agreement entered into between a Participant and the Employer pursuant to the provisions of Section 4.1

2.25“Performance-Based Compensation” means compensation where the amount of, or entitlement to, the compensation is contingent on the satisfaction of preestablished organizational or individual performance criteria relating to a performance period of at least twelve months. Organizational or individual performance criteria are considered preestablished if established in writing within 90 days after the commencement of the period of service to which the criteria relates, provided that the outcome is substantially uncertain at the time the criteria are established. Performance-

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based compensation may include paymentsbased upon subjective performance criteria as provided in regulations and administrative guidance promulgated under Section 409A of the Code.

2.26“Plan” means The Executive Nonqualified Excess Plan, as herein set out and as set out in the Adoption Agreement, or as duly amended. The name of the Plan as applied to the Employer shall be designated in the Adoption Agreement.

2.27“Plan-Approved Domestic Relations Order” shall mean a judgment, decree, or order (including the approval of a settlement agreement) which is:

2.27.1Issued pursuant to a State’s domestic relations law;

2.27.2Relates to the provision of child support, alimony payments or marital property rights to a Spouse, former Spouse, child or other dependent of the Participant;

2.27.3Creates or recognizes the right of a Spouse, former Spouse, child or other dependent of the Participant to receive all or a portion of the Participant’s benefits under the Plan;

2.27.4Requires payment to such person of their interest in the Participant’s benefits in an immediate lump payment; and

2.27.5Meets such other requirements established by the Committee.

2.28“Plan Year” means the twelve-month period ending on the last day of the month designated in the Adoption Agreement; provided that the initial Plan Year may have fewer than twelve months.

2.29“Qualifying Distribution Event” means (i) the Separation from Service of the Participant, (ii) the date the Participant becomes Disabled, (iii) the death of the Participant, (iv) the time specified by the Participant for an In-Service or Education Distribution, (v) a Change in Control Event, or (vi) an Unforeseeable Emergency, each to the extent provided in Section 5.

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2.30“Seniority Date”shall have the meaning designated in the AdoptionAgreement.

2.31“Separation from Service” or “Separates from Service” means a “separation from service” within the meaning of Section 409A of the Code.

2.32“Service” means employment by the Employer as an Employee. For purposes of the Plan, the employment relationship is treated as continuing intact while the Employee is on military leave, sick leave, or other bona fide leave of absence if the period of such leave does not exceed six months, or if longer, so long as the Employee’s right to reemployment is provided either by statute or contract. If the Participant is an Independent Contractor, “Service” shall mean the period during which the contractual relationship exists between the Employer and the Participant. The contractual relationship is not terminated if the Participant anticipates a renewal of the contract or becomes an Employee.

2.33“Service Bonus” means any bonus paid to a Participant by the Employer which is not Performance-Based Compensation.

2.34“Specified Employee” means an employee who meets the requirements for key employee treatment under Section 416(i)(l)(A)(i), (ii) or (iii) of the Code (applied in accordance with the regulations thereunder and without regard to Section 4l6(i)(5) of the Code) at any time during the twelve month period ending on December 31 of each year (the “identification date”). Unless binding corporate action is taken to establish different rules for determining Specified Employees for all plans of the Company and its controlled group members that are subject to Section 409A of the Code, the foregoing rules and the other default rules under the regulations of Section 409A of the Code shall

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apply. Ifthe person is a key employee as of any identification date, the person is treated as a Specified Employee forthe twelve-month period beginning on the first day of the fourth month following the identification date.

2.35“Spouse” or “Surviving Spouse” means, except as otherwise provided in the Plan, a person who is the legally married spouse or surviving spouse of a Participant.

2.36“Unforeseeable Emergency” means an “unforeseeable emergency” within the meaning of Section 409A of the Code.

2.37“Years of Service” means each Plan Year of Service completed by the Participant. For vesting purposes, Years of Service shall be calculated from the date designated in the Adoption Agreement and Service shall be based on service with the Company and all Participating Employers.

Section 3.Participation:

The Committee in its discretion shall designate each Employee or Independent Contractor who is eligible to participate in the Plan. A Participant who separates from Service with the Employer and who later returns to Service will not be an Active Participant under the Plan except upon satisfaction of such terms and conditions as the Committee shall establish upon the Participant’s return to Service, whether or not the Participant shall have a balance remaining in the Deferred Compensation Account under the Plan on the date of the return to Service.

Section 4.Credits to Deferred Compensation Account:

4.1Participant Deferral Credits. To the extent provided in the Adoption Agreement, each Active Participant may elect, by entering into a Participation Agreement with the Employer, to defer the receipt of Compensation from the Employer by a dollar

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amount or percentage specified in the Participation Agreement. The amount of Compensation the Participant elects to defer, the Participant Deferral Credit, shall be credited by the Employer to the Deferred Compensation Account maintained for the Participant pursuant to Section 8. The following special provisions shall apply with respect to the Participant Deferral Credits of a Participant:

4.1.1The Employer shall credit to the Participant’s Deferred Compensation Account on each Crediting Date an amount equal to the total Participant Deferral Credit for the period ending on such Crediting Date.

4.1.2An election pursuant to this Section 4.1 shall be made by the Participant by executing and delivering a Participation Agreement to the Committee. Except as otherwise provided in this Section 4.1, the Participation Agreement shall become effective with respect to such Participant as of the first day of January following the date such Participation Agreement is received by the Committee. A Participant’s election may be changed at any time prior to the last permissible date for making the election as permitted in this Section 4.1, and shall thereafter be irrevocable. The election of a Participant shall continue in effect for subsequent years until modified by the Participant as permitted in this Section 4.1.

4.1.3A Participant may execute and deliver a Participation Agreement to the Committee within 30 days after the date the Participant first becomes eligible to participate in the Plan to be effective as of the first payroll period next following the date the Participation Agreement is fully executed. Whether a Participant is treated as newly eligible for participation under this Section shall be determined in accordance with Section 409A of the Code and the regulations thereunder, including (i) rules that treat all elective deferral account balance plans as one plan, and (ii) rules that treat a previously eligible employee as newly eligible if his benefits had been previously distributed or if he has been ineligible for 24 months. For Compensation that is earned based upon a specified performance period (for example, an annual bonus), where a deferral election is made under this Section but after the beginning of the performance period, the election will only apply to the portion of the Compensation equal to the total amount of the Compensation for the service period multiplied by the ratio of the number of days remaining in the performance period after the election over the total number of days in the performance period.

4.1.4A Participant may unilaterally modify a Participation Agreement (either to terminate, increase or decrease the portion of his future Compensation which is subject to deferral within the percentage limits set forth in Section 4.1 of the Adoption Agreement) by providing a written modification of the Participation Agreement to the Committee. The modification shall become effective as of the first day of January following the date such written modification is received by the Committee.

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4.1.5Ifthe Participant performed services continuously from the later of the beginning of the performance period or the date upon which the performance criteria are established through the date upon which the Participant makes an initial deferral election, a Participation Agreement relating to the deferral of Performance-Based Compensation may be executed and delivered to the Committee no later than the date which is 6 months prior to the end of the performance period, provided that in no event may an election to defer Performance-Based Compensation be made after such Compensation has become readily ascertainable.

4.1.6If the Employer has a fiscal year other than the calendar year, Compensation relating to Service in the fiscal year of the Employer (such as a bonus based on the fiscal year of the Employer), of which no amount is paid or payable during the fiscal year, may be deferred at the Participant’s election if the election to defer is made not later than the close of the Employer’s fiscal year next preceding the first fiscal year in which the Participant performs any services for which such Compensation is payable.

4.1.7Compensation payable after the last day of the Participant’s taxable year solely for services provided during the final payroll period containing the last day of the Participant’s taxable year (i.e., December 31) is treated for purposes of this Section 4.1 as Compensation for services performed in the subsequent taxable year.

4.1.8The Committee may from time to time establish policies or rules consistent with the requirements of Section 409A of the Code to govern the manner in which Participant Deferral Credits may be made.

4.1.9If a Participant becomes Disabled or applies for and is eligible for a distribution on account of an Unforeseeable Emergency during a Plan Year, his deferral election for such Plan Year shall be cancelled.

4.2Employer Credits. If designated by the Employer in the Adoption Agreement, the Employer shall cause the Committee to credit to the Deferred Compensation Account of each Active Participant an Employer Credit as determined in accordance with the Adoption Agreement. A Participant must make distribution elections with respect to any Employer Credits credited to his Deferred Compensation Account by the deadline that would apply under Section 4.1 for distribution elections with respect to Participant Deferral Credits credited at the same time, on a Participation

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Agreement that is timely executed and delivered to the Committee pursuant to Section4.1.

4.3Deferred Compensation Account. All Participant Deferral Credits and Employer Credits shall be credited to the Deferred Compensation Account of the Participant as provided in Section 8.

Section 5.Qualifying Distribution Events:

5.1Separation from Service. If the Participant Separates from Service with the Employer, the vested balance in the Deferred Compensation Account shall be paid to the Participant by the Employer as provided in Section 7. Notwithstanding the foregoing, no distribution shall be made earlier than six months after the date of Separation from Service (or, if earlier, the date of death) with respect to a Participant who as of the date of Separation from Service is a Specified Employee of a corporation the stock in which is traded on an established securities market or otherwise. Any payments to which such Specified Employee would be entitled during the first six months following the date of Separation from Service shall be accumulated and paid on the first day of the seventh month following the date of Separation from Service.

5.2Disability. If the Employer designates in the Adoption Agreement that distributions are permitted under the Plan when a Participant becomes Disabled, and the Participant becomes Disabled while in Service, the vested balance in the Deferred Compensation Account shall be paid to the Participant by the Employer as provided in Section 7.

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5.3Death. If the Participant dies while in Service, the Employer shall pay a benefit to the Participant’s Beneficiary in the amount designated in the Adoption Agreement. Payment of such benefit shall be made by the Employer as provided in Section 7.

5.4In-Service or Education Distributions. If the Employer designates in the Adoption Agreement that in-service or education distributions are permitted under the Plan, a Participant may designate in the Participation Agreement to have a specified amount credited to the Participant’s In-Service or Education Account for in-service or education distributions at the date specified by the Participant. In no event may an in­ service or education distribution of an amount be made before the date that is two years after the first day of the year in which such amount was credited to the In-Service or Education Account. Notwithstanding the foregoing, if a Participant incurs a Qualifying Distribution Event prior to the date on which the entire balance in the In-Service or Education Account has been distributed, then the balance in the In-Service or Education Account on the date of the Qualifying Distribution Event shall be paid as provided under Section 7.I for payments on such Qualifying Distribution Event.

5.5Change in Control Event. If the Employer designates in the Adoption Agreement that distributions are permitted under the Plan upon the occurrence of a Change in Control Event, the Participant may designate in the Participation Agreement to have the vested balance in the Deferred Compensation Account paid to the Participant upon a Change in Control Event by the Employer as provided in Section 7.

5.6Unforeseeable Emergency. If the Employer designates in the Adoption Agreement that distributions are permitted under the Plan upon the occurrence of an

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Unforeseeable Emergency event, a distribution from the Deferred Compensation Account may be made to a Participant in the event of anUnforeseeable Emergency, subject to the following provisions:

5.6.1A Participant may, at any time prior to his Separation from Service for any reason, make application to the Committee to receive a distribution in a lump sum of all or a portion of the vested balance in the Deferred Compensation Account (determined as of the date the distribution, if any, is made under this Section 5.6) because of an Unforeseeable Emergency. A distribution because of an Unforeseeable Emergency shall not exceed the amount required to satisfy the Unforeseeable Emergency plus amounts necessary to pay taxes reasonably anticipated as a result of such distribution, after taking into account the extent to which the Unforeseeable Emergency may be relieved through reimbursement or compensation by insurance or otherwise or by liquidation of the Participant’s assets (to the extent the liquidation of such assets would not itself cause severe financial hardship) or by stopping current deferrals under the Plan pursuant to Section 4.1.9.

5.6.2The Participant’s request for a distribution on account of Unforeseeable Emergency must be made in writing to the Committee. The request must specify the nature of the financial hardship, the total amount requested to be distributed from the Deferred Compensation Account, and the total amount of the actual expense incurred or to be incurred on account of the Unforeseeable Emergency.

5.6.3If a distribution under this Section 5.6 is approved by the Committee, such distribution will be made as soon as practicable following the date it is approved. The processing of the request shall be completed as soon as practicable from the date on which the Committee receives the properly completed written request for a distribution on account of an Unforeseeable Emergency. If a Participant’s Separation from Service occurs after a request is approved in accordance with this Section 5.6.3, but prior to distribution of the full amount approved, the approval of the request shall be automatically null and void and the benefits which the Participant is entitled to receive under the Plan shall be distributed in accordance with the applicable distribution provisions of the Plan.

5.6.4The Committee may from time to time adopt additional policies or rules consistent with the requirements of Section 409A of the Code to govern the manner in which such distributions may be made so that the Plan may be conveniently administered.

Section 6.Vesting:

A Participant shall be fully vested in the portion of his Deferred Compensation

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Account attributable to Participant Deferral Credits, and all income, gains and losses attributable thereto. A Participant shall become fully vested in the portion of his Deferred Compensation Account attributable to Employer Credits, and income, gains and losses attributable thereto, in accordance with the vesting schedule and provisions designated by the Employer in the Adoption Agreement. If a Participant’s Deferred Compensation Account is not fully vested upon Separation from Service, the portion of the Deferred Compensation Account that is not fully vested shall thereupon be forfeited.

Section 7.Distribution Rules:

7.1Payment Options. The Employer shall designate in the Adoption Agreement the payment options which may be elected by the Participant (lump sum, annual installments, or a combination of both). Different payment options may be made available for each Qualifying Distribution Event, and different payment options may be available for different types of Separations from Service, all as designated in the Adoption Agreement. The Participant shall elect in the Participation Agreement the method under which the vested balance in the Deferred Compensation Account will be distributed from among the designated payment options. The Participant may at such time elect a different method of payment for each Qualifying Distribution Event as specified in the Adoption Agreement. If the Participant is permitted by the Employer in the Adoption Agreement to elect different payment options and does not make a valid election, the vested balance in the Deferred Compensation Account will be distributed as a lump sum.

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Notwithstanding the foregoing, if certain Qualifying Distribution Events occur prior to the date on which the vested balance of a Participant’s Deferred Compensation Account is completely paid pursuant to this Section 7.I following the occurrence of certain initial Qualifying Distribution Events, the following rules apply:

7.1.1If the initial Qualifying Distribution Event is a Separation from Service or Disability, and the Participant subsequently dies, the remaining unpaid vested balance of a Participant’s Deferred Compensation Account shall be paid as a lump sum.

7.1.2If the initial Qualifying Distribution Event is a Change in Control Event, and any subsequent Qualifying Distribution Event occurs (except an In-Service or Education Distribution described in Section 2.29(iv)), the remaining unpaid vested balance of a Participant’s Deferred Compensation Account shall be paid as provided under Section 7.I for payments on such subsequent Qualifying Distribution Event.

7.2Timing of Payments. Payment shall be made in the manner elected by the Participant and shall commence as soon as practicable after (but no later than 60 days after) the distribution date elected for the Qualifying Distribution Event. In the event the Participant fails to make a valid election of the payment method, the distribution will be made in a single lump sum payment as soon as practicable after (but no later than 60 days after) the Qualifying Distribution Event. A payment may be further delayed to the extent permitted in accordance with regulations and guidance under Section 409A of the Code.

7.3Installment Payments. If the Participant elects to receive installment payments upon a Qualifying Distribution Event, the payment of each annual installment shall be made on the anniversary of the date of the first installment payment, and the amount of the annual installment shall be adjusted on such anniversary for credits or debits to the Participant’s account pursuant to Section 8 of the Plan. Such adjustment shall be made by dividing the balance in the Deferred Compensation Account on such date by the number of annual installments remaining to be paid hereunder; provided that the last

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annual installment due under the Plan shall be the entire amount credited to the Participant’s account on the date of payment.

7.4De Minimis Amounts. Notwithstanding any payment election made by the Participant, if the Employer designates a pre-determined de minimis amount in the Adoption Agreement, the vested balance in the Deferred Compensation Account of the Participant will be distributed in a single lump sum payment if at the time of a permitted Qualifying Distribution Event the vested balance does not exceed such pre-determined de minimis amount; provided, however, that such distribution will be made only where the Qualifying Distribution Event is a Separation from Service, death, Disability (if applicable) or Change in Control Event (if applicable). Such payment shall be made on or before the later of (i) December 31 of the calendar year in which the Qualifying Distribution Event occurs, or (ii) the date that is 2-1/2 months after the Qualifying Distribution Event occurs. In addition, the Employer may distribute a Participant’s vested balance at any time if the balance does not exceed the limit in Section 402(g)(l)(B) of the Code and results in the termination of the Participant’s entire interest in the Plan as provided under Section 409A of the Code.

7.5Subsequent Elections. With the consent of the Committee, a Participant may delay or change the method of payment of the Deferred Compensation Account subject to the following requirements:

7.5.1The new election may not take effect until at least 12 months after the date on which the new election is made.

7.5.2If the new election relates to a payment for a Qualifying Distribution Event other than the death of the Participant, the Participant becoming Disabled, or an Unforeseeable Emergency, the new election must provide for the deferral of the payment for a period of at least five years from the date such payment would otherwise have been made.

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7.5.3If the new election relates to a payment from the In-Service or Education Account, the new election must be made at least 12 months prior to the date of the first scheduled payment from such account.

For purposes of this Section 7.5 and Section 7.6, a payment is each separately identified amount to which the Participant is entitled under the Plan; provided, that entitlement to a series of installment payments is treated as the entitlement to a single payment.

7.6Acceleration Prohibited. The acceleration of the time or schedule of any payment due under the Plan is prohibited except as expressly provided in regulations and administrative guidance promulgated under Section 409A of the Code (such as accelerations for domestic relations orders and employment taxes). It is not an acceleration of the time or schedule of payment if the Employer waives or accelerates the vesting requirements applicable to a benefit under the Plan.

Section 8.Accounts; Deemed Investment; Adjustments to Account:

8.1Accounts. The Committee shall establish a book reserve account, entitled the “Deferred Compensation Account,” on behalf of each Participant. The Committee shall also establish an In-Service or Education Account as a part of the Deferred Compensation Account of each Participant, if applicable. The amount credited to the Deferred Compensation Account shall be adjusted pursuant to the provisions of Section 8.3.

8.2Deemed Investments. The Deferred Compensation Account of a Participant shall be credited with an investment return determined as if the account were invested in one or more investment funds made available by the Committee. The Participant shall elect the investment funds in which his Deferred Compensation Account shall be deemed to be invested. Such election shall be made in the manner prescribed by

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the Committee and shall take effect upon the entry of the Participant into the Plan. The investment election of the Participant shall remain in effect until a new election is made by the Participant. In the event the Participant fails for any reason to make an effective election of the investment return to be credited to his account, the investment return shall be determined by the Committee.

8.3Adjustments to Deferred Compensation Account. With respect to each Participant who has a Deferred Compensation Account under the Plan, the amount credited to such account shall be adjusted by the following debits and credits, at the times and in the order stated:

8.3.1The Deferred Compensation Account shall be debited each business day with the total amount of any payments made from such account since the last preceding business day to him or for his benefit.

8.3.2The Deferred Compensation Account shall be credited on each Crediting Date with the total amount of any Participant Deferral Credits and Employer Credits to such account since the last preceding Crediting Date.

8.3.3The Deferred Compensation Account shall be credited or debited on each day securities are traded on a national stock exchange with the amount of deemed investment gain or loss resulting from the performance of the investment funds elected by the Participant in accordance with Section 8.2. The amount of such deemed investment gain or loss shall be determined by the Committee and such determination shall be final and conclusive upon all concerned.

Section 9.Administration by Committee:

9.1Membership of Committee. If the Committee consists of individuals appointed by the Board, they will serve at the pleasure of the Board. Any member of the Committee may resign, and his successor, if any, shall be appointed by the Board.

9.2General Administration. The Committee shall be responsible for the operation and administration of the Plan and for carrying out its provisions. The Committee shall have the full authority and discretion to make, amend, interpret, and

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enforce all appropriate rules and regulations for the administration of this Plan and decide or resolve any and all questions, including interpretations of this Plan, as may arise in connection with this Plan. Any such action taken by the Committee shall be final and conclusive on any party. To the extent the Committee has been granted discretionary authority under the Plan, the Committee’s prior exercise of such authority shall not obligate it to exercise its authority in a like fashion thereafter. The Committee shall be entitled to rely conclusively upon all tables, valuations, certificates, opinions and reports furnished by any actuary, accountant, controller, counsel or other person employed or engaged by the Employer with respect to the Plan. The Committee may, from time to time, employ agents and delegate to such agents, including employees of the Employer, such administrative or other duties as it sees fit.

9.3Indemnification. To the extent not covered by insurance, the Employer shall indemnify the Committee, each employee, officer, director, and agent of the Employer, and all persons formerly serving in such capacities, against any and all liabilities or expenses, including all legal fees relating thereto, arising in connection with the exercise of their duties and responsibilities with respect to the Plan, provided however that the Employer shall not indemnify any person for liabilities or expenses due to that person’s own gross negligence or willful misconduct

Section 10.Contractual Liability:

10.1Contractual Liability. Unless otherwise elected in the Adoption Agreement, the Company shall be obligated to make all payments hereunder. This obligation shall constitute a contractual liability of the Company to the Participants, and such payments shall be made from the general funds of the Company. The Company

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shall not be required to establish or maintain any special or separate fund, or otherwise to segregate assets to assure that such payments shall be made, and the Participants shall not have any interest in any particular assets of the Company by reason of its obligations hereunder. To the extent that any person acquires a right to receive payment from the Company, such right shall be no greater than the right of an unsecured creditor of the Company.

10.2Trust. The Employer may establish a trust to assist it in meeting its obligations under the Plan. Any such trust shall conform to the requirements of a grantor trust under Revenue Procedures 92-64 and 92-65 and at all times during the continuance of the trust the principal and income of the trust shall be subject to claims of general creditors of the Employer under federal and state law. The establishment of such a trust would not be intended to cause Participants to realize current income on amounts contributed thereto, and the trust would be so interpreted and administered.

Section 11.Allocation of Responsibilities:

The persons responsible for the Plan and the duties and responsibilities allocated to each are as follows:

11.1Board.

(i) To amend the Plan;

(ii) To appoint and remove members of the Committee; and

(iii) To terminate the Plan as permitted in Section 14.

11.2Committee.

(i) To designate Participants;

(ii) To interpret the provisions of the Plan and to determine the rights of the Participants under the Plan, except to the extent otherwise provided in Section 16 relating to claims procedure;

(iii) To administer the Plan in accordance with its terms, except to the

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extent powers to administer the Plan are specifically delegated to another person or persons as provided in the Plan;

(iv) To account for the amount credited to the Deferred Compensation Account of a Participant;

(v) To direct the Employer in the payment of benefits;

(vi) To file such reports as may be required with the United States Department of Labor, the Internal Revenue Service and any other government agency to which reports may be required to be submitted from time to time; and

(vii) To administer the claims procedure to the extent provided in Section 16.

Section 12.Benefits Not Assignable; Facility of Payments:

12.1Benefits Not Assignable. No portion of any benefit credited or paid under the Plan with respect to any Participant shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge, and any attempt so to anticipate, alienate, sell, transfer, assign, pledge, encumber or charge the same shall be void, nor shall any portion of such benefit be in any manner payable to any assignee, receiver or any one trustee, or be liable for his debts, contracts, liabilities, engagements or torts. Notwithstanding the foregoing, in the event that all or any portion of the benefit of a Participant is transferred to the former Spouse of the Participant incident to a divorce, the Committee shall maintain such amount for the benefit of the former Spouse until distributed in the manner required by an order of any court having jurisdiction over the divorce, and the former Spouse shall be entitled to the same rights as the Participant with respect to such benefit.

12.2Plan-Approved Domestic Relations Orders. The Committee shall establish procedures for determining whether an order directed to the Plan is a Plan- Approved Domestic Relations Order. If the Committee determines that an order is a

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Plan-Approved Domestic Relations Order, the Committee shall cause the payment of amounts pursuant to or segregate a separate account as provided by (and to prevent any payment or act which might be inconsistent with) the Plan-Approved Domestic Relations Order.

12.3Payments to Minors and Others. If any individual entitled to receive a payment under the Plan shall be physically, mentally or legally incapable of receiving or acknowledging receipt of such payment, the Committee, upon the receipt of satisfactory evidence of his incapacity and satisfactory evidence that another person or institution is maintaining him and that no guardian or committee has been appointed for him, may cause any payment otherwise payable to him to be made to such person or institution so maintaining him. Payment to such person or institution shall be in full satisfaction of all claims by or through the Participant to the extent of the amount thereof.

Section 13.Beneficiary:

The Participant’s beneficiary shall be the person, persons, entity or entities designated by the Participant on the beneficiary designation form provided by and filed with the Committee or its designee. If the Participant does not designate a beneficiary, the beneficiary shall be his Surviving Spouse. If the Participant does not designate a beneficiary and has no Surviving Spouse, the beneficiary shall be the Participant’s estate. The designation of a beneficiary may be changed or revoked only by filing a new beneficiary designation form with the Committee or its designee. If a beneficiary (the “primary beneficiary”) is receiving or is entitled to receive payments under the Plan and dies before receiving all of the payments due him, the balance to which he is entitled shall be paid to the contingent beneficiary, if any, named in the Participant’s current

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beneficiary designation form. If there is no contingent beneficiary, the balance shall be paid to the estate of the primary beneficiary. Any beneficiary may disclaim all or any part of any benefit to which such beneficiary shall be entitled hereunder by filing a written disclaimer with the Committee before payment of such benefit is to be made. Such a disclaimer shall be made in a form satisfactory to the Committee and shall be irrevocable when filed. Any benefit disclaimed shall be payable from the Plan in the same manner as if the beneficiary who filed the disclaimer had predeceased the Participant.

Section 14.Amendment and Termination of Plan:

The Company may amend any provision of the Plan or terminate the Plan at any time; provided, that in no event shall such amendment or termination reduce the balance in any Participant’s Deferred Compensation Account as of the date of such amendment or termination, nor shall any such amendment affect the terms of the Plan relating to the payment of such Deferred Compensation Account. Notwithstanding the foregoing, the following special provisions shall apply:

14.1Termination in the Discretion of the Employer. Except as otherwise provided in Sections 14.2, the Company in its discretion may terminate the Plan and distribute benefits to Participants subject to the following requirements and any others specified under Section 409A of the Code:

14.1.1All arrangements sponsored by the Employer that would be aggregated with the Plan under Section 1.409A-l(c) of the Treasury Regulations are terminated.

14.1.2No payments other than payments that would be payable under the terms of the Plan if the termination had not occurred are made within 12 months of the termination date.

14.1.3All benefits under the Plan are paid within 24 months of the termination date.

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14.1.4The Employer does not adopt a new arrangement that would be aggregated with the Plan under Section 1.409A-l(c) of the Treasury Regulations providing for the deferral of compensation at any time within 3 years following the date of termination of the Plan.

14.1.5The termination does not occur proximate to a downturn in the financial health of the Employer.

14.2Termination Upon Change in Control Event. If the Company terminates the Plan within thirty days preceding or twelve months following a Change in Control Event, the Deferred Compensation Account of each Participant shall become fully vested and payable to the Participant in a lump sum within twelve months following the date of termination, subject to the requirements of Section 409A of the Code.

Section 15.Communication to Participants:

The Employer shall make a copy of the Plan available for inspection by Participants and their beneficiaries during reasonable hours at the principal office of the Employer.

Section 16.Claims Procedure:

The following claims procedure shall apply with respect to the Plan:

16.1Filing of a Claim for Benefits. If a Participant or Beneficiary (the “claimant”) believes that he is entitled to benefits under the Plan which are not being paid to him or which are not being accrued for his benefit, he shall file a written claim therefore with the Committee.

16.2Notification to Claimant of Decision. Within 90 days after receipt of a claim by the Committee (or within 180 days if special circumstances require an extension of time), the Committee shall notify the claimant of the decision with regard to the claim. In the event of such special circumstances requiring an extension of time, there shall be

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furnished to the claimant prior to expiration of the initial 90-day period written notice of the extension, which notice shall set forth the special circumstances and the date by which the decision shall be furnished. If such claim shall be wholly or partially denied, notice thereof shall be in writing and worded in a manner calculated to be understood by the claimant, and shall set forth: (i) the specific reason or reasons for the denial; (ii) specific reference to pertinent provisions of the Plan on which the denial is based; (iii) adescription of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary; and (iv)an explanation of the procedure for review of the denial and the time limits applicable to such procedures, including a statement of the claimant’s right to bring a civil action under ERISA following an adverse benefit determination on review. Notwithstanding the foregoing, if the claim relates to a disability determination, the Committee shall notify the claimant of the decision within 45 days (which may be extended for an additional 30 days if required by special circumstances).

16.3Procedure for Review. Within 60 days following receipt by the claimant of notice denying his claim, in whole or in part, or, if such notice shall not be given, within 60 days following the latest date on which such notice could have been timely given, the claimant may appeal denial of the claim by filing a written application for review with the Committee. Following such request for review, the Committee shall fully and fairly review the decision denying the claim. Prior to the decision of the Committee, the claimant shall be given an opportunity to review pertinent documents and to submit issues and comments in writing.

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16.4Decision on Review. The decision on review of a claim denied in whole or in part by the Committee shall be made in the following manner:

16.4.1Within 60 days following receipt by the Committee of the request for review (or within 120 days if special circumstances require an extension of time), the Committee shall notify the claimant in writing of its decision with regard to the claim. In the event of such special circumstances requiring an extension of time, written notice of the extension shall be furnished to the claimant prior to the commencement of the extension. Notwithstanding the foregoing, if the claim relates to a disability determination, the Committee shall notify the claimant of the decision within 45 days (which may be extended for an additional 45 days if required by special circumstances).

16.4.2With respect to a claim that is denied in whole or in part, the decision on review shall set forth specific reasons for the decision, shall be written in a manner calculated to be understood by the claimant, and shall set forth:

(i) the specific reason or reasons for the adverse determination;

(ii) specific reference to pertinent Plan provisions on which the adverse determination is based;

(iii) a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claimant’s claim for benefits; and

(iv) a statement describing any voluntary appeal procedures offered by the Plan and the claimant’s right to obtain the information about such procedures, as well as a statement of the claimant’s right to bring an action under ERISA section 502(a).

16.4.3The decision of the Committee shall be final and conclusive.

16.5Action by Authorized Representative of Claimant. All actions set forth in this Section 16 to be taken by the claimant may likewise be taken by a representative of the claimant duly authorized by him to act in his behalf on such matters. The Committee may require such evidence as either may reasonably deem necessary or advisable of the authority to act of any such representative.

Section 17.Miscellaneous Provisions:

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17.1Set off. Notwithstanding any other provision of this Plan, the Employer may reduce the amount of any payment otherwise payable to or on behalf of a Participant hereunder (net of any required withholdings) at the time payment is due by the amount of any loan, cash advance, extension of credit or other obligation of the Participant to the Employer that is then due and payable, and the Participant shall be deemed to have consented to such reduction. In addition, the Employer may at any time offset a Participant’s Deferral Compensation Account by an amount up to $5,000 to collect any such amount in accordance with the requirements of Section 409A of the Code.

17.2Notices. Each Participant who is not in Service and each Beneficiary shall be responsible for furnishing the Committee or its designee with his current address for the mailing of notices and benefit payments. Any notice required or permitted to be given to such Participant or Beneficiary shall be deemed given if directed to such address and mailed by regular United States mail, first class, postage prepaid. If any check mailed to such address is returned as undeliverable to the addressee, mailing of checks will be suspended until the Participant or Beneficiary furnishes the proper address. This provision shall not be construed as requiring the mailing of any notice or notification otherwise permitted to be given by posting or by other publication.

17.3Lost Distributees. A benefit shall be deemed forfeited if the Committee is unable to locate the Participant or Beneficiary to whom payment is due on or before the fifth anniversary of the date payment is to be made or commence; provided, that the deemed investment rate of return pursuant to Section 8.2 shall cease to be applied to the Participant’s account following the first anniversary of such date; provided further,

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however, that such benefit shall be reinstated if a valid claim is made by or on behalf of the Participant or Beneficiary for all or part of the forfeited benefit.

17.4Reliance on Data. The Employer and the Committee shall have the right to rely on any data provided by the Participant or by any Beneficiary. Representations of such data shall be binding upon any party seeking to claim a benefit through a Participant, and the Employer and the Committee shall have no obligation to inquire into the accuracy of any representation made at any time by a Participant or Beneficiary.

17.5Receipt and Release for Payments. Subject to the provisions of Section 17.1, any payment made from the Plan to or with respect to any Participant or Beneficiary, or pursuant to a disclaimer by a Beneficiary, shall, to the extent thereof, be in full satisfaction of all claims hereunder against the Plan and the Employer with respect to the Plan. The recipient of any payment from the Plan may be required by the Committee, as a condition precedent to such payment, to execute a receipt and release with respect thereto in such form as shall be acceptable to the Committee.

17.6Headings. The headings and subheadings of the Plan have been inserted for convenience of reference and are to be ignored in any construction of the provisions hereof.

17.7Continuation of Employment. The establishment of the Plan shall not be construed as conferring any legal or other rights upon any Employee or any persons for continuation of employment, nor shall it interfere with the right of the Employer to discharge any Employee or to deal with him without regard to the effect thereof under the Plan.

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17.8Merger or Consolidation; Assumption of Plan. No Employer shall consolidate or merge into or with another corporation or entity, or transfer all or substantially all of its assets to another corporation, partnership, trust or other entity (a “Successor Entity”) unless such Successor Entity shall assume the rights, obligations and liabilities of the Employer under the Plan and upon such assumption, the Successor Entity shall become obligated to perform the terms and conditions of the Plan. Nothing herein shall prohibit the assumption of the obligations and liabilities of the Employer under the Plan by any Successor Entity.

17.9Construction. The Employer shall designate in the Adoption Agreement the state according to whose laws the provisions of the Plan shall be construed and enforced, except to the extent that such laws are superseded by ERISA and the applicable requirements of the Code.

17.10Taxes. The Employer or other payor may withhold a benefit payment under the Plan or a Participant’s wages, or the Employer may reduce a Participant’s Account balance, in order to meet any federal, state, or local or employment tax withholding obligations with respect to Plan benefits, as permitted under Section 409A of the Code. The Employer or other payor shall report Plan payments and other Plan-related information to the appropriate governmental agencies as required under applicable laws.

Section 18.Transition Rules:

This Section 18 does not apply to plans newly established on or after January 1, 2009.

18.12005 Election Termination. Notwithstanding Section 4.1.4, at any time during 2005, a Participant may terminate a Participation Agreement, or modify a Participation Agreement to reduce the amount of Compensation subject to the deferral election, so long as the Compensation subject to the terminated or modified Participation

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Agreement is includible in the income of the Participant in 2005 or, if later, in the taxable year in which the amounts are earned and vested.

18.22005 Deferral Election. The requirements of Section 4.1.2 relating to the timing of the Participation Agreement shall not apply to any deferral elections made on or before March 15,2005, provided that (a) the amounts to which the deferral election relate have not been paid or become payable at the time of the election, (b) the Plan was in existence on or before December 31, 2004, (c) the election to defer compensation is made in accordance with the terms of the Plan as in effect on December 31,2005 (other than a requirement to make a deferral election after March 15, 2005), and (d) the Plan is otherwise operated in accordance with the requirements of Section 409A of the Code.

18.32005 Termination of Participation; Distribution. Notwithstanding anything in this Plan to the contrary, at any time during 2005, a Participant may terminate his or her participation in the Plan and receive a distribution of his Deferred Compensation Account balance on account of that termination, so long as the full amount of such distribution is includible in the Participant’s income in 2005 or, if later, in the taxable year of the Participant in which the amount is earned and vested.

18.4Payment Elections. Notwithstanding the provisions of Sections 7.1 or 7.5 of the Plan, a Participant may elect on or before December 31, 2008, the time or form of payment of amounts subject to Section 409A of the Code provided that such election applies only to amounts that would not otherwise be payable in the year of the election and does not cause an amount to paid in the year of the election that would not otherwise be payable in such year.

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EX-10

Exhibit 10.6

CAMBRIDGE TRUST COMPANY

AMENDED AND RESTATED

SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT

THIS AMENDED AND RESTATED SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT (the “Agreement”) is adopted as of the    7   day of   July     , 2017 by and between CAMBRIDGE TRUST COMPANY, a Massachusetts corporation located in Cambridge, Massachusetts  (the “Bank”), and Denis K. Sheahan (the “Executive”).  The Bank and the Executive previously entered into a Supplemental Executive Retirement Agreement, dated December 21, 2015 (the “Prior Agreement”), and the parties desire to amend and restate the Prior Agreement on the terms and conditions set forth herein.

The purpose of this Agreement is to provide specified benefits to the Executive, a member of a select group of management or highly compensated employees who contribute materially to the continued growth, development, and future business success of the Bank.  This Agreement shall be unfunded for tax purposes and for purposes of Title I of the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended from time to time.

Article 1

Distributions During Lifetime

1.1 Normal Retirement Benefit.  Upon the Executive’s Separation from Service on or after Normal Retirement Age, the Bank shall distribute to the Executive the benefit described in this Section 1.1 in lieu of any other benefit under this Article.

1.1.1 Amount of Benefit.  The annual benefit under this Section 1.1 is an amount equal to Final Average Compensation multiplied by two percent (2%) for every Plan Year from the Executive’s Date of Hire to the Executive’s Separation from Service, not to exceed sixty percent (60%), less:

(a) Social Security Benefits.  One hundred percent (100%) of the amount of annual unreduced primary (not family) retirement benefits under the United States Social Security Act, but only if the Executive would be eligible for Social Security Benefits if application were made as of the Executive’s Normal Retirement Age, assuming that the Executive had earnings at or above the maximum contribution and benefit base under Section 230 of the United States Social Security Act for the Executive’s working career; and

(b) Parent Pension Benefit.  The annual life-only annuity benefit the Executive would be entitled to receive from the Cambridge Bancorp Employee Retirement Plan, measured as of the Executive’s Normal Retirement Age.

1.1.2 Distribution of Benefit.  The Bank shall distribute the annual benefit to the Executive in twelve (12) equal monthly installments commencing on the first day

of the month following the Executive’s Separation from Service on or after Normal Retirement Age, and continuing for the greater of the Executive’s lifetime or twenty (20) years.

1.2 Early Termination Benefit. IfEarlyTerminationoccurs,theBankshalldistributetothe ExecutivethebenefitdescribedinthisSection1.2inlieuofanyotherbenefitunderthis Article.

1.2.1 AmountofBenefit. Theannualbenefit underthisSection1.2istheamount calculatedusingtheformulasetforthinSection1.1.1.

1.2.2 DistributionofBenefit. TheBankshalldistributetheannualbenefittothe Executiveintwelve(12)equalmonthlyinstallmentscommencingonthefirstday ofthemonthfollowingtheExecutive’sNormalRetirementAge,andcontinuing forthegreateroftheExecutive’slifetimeortwenty(20)years.

1.3 DisabilityBenefit. IftheExecutive’sDisabilityresultsinSeparationfromServiceprior toNormalRetirementAge,theBankshalldistributetotheExecutivethebenefit describedinthisSection1.3inlieuofanyotherbenefitunderthisArticle.

1.3.1 AmountofBenefit. TheannualbenefitunderthisSection1.3istheamount calculatedusingtheformulasetforthinSection1.1.1.

1.3.2 Distribution of Benefit.  The Bank shall distribute the annual benefit to the Executive in twelve (12) equal monthly installments commencing on the first day of the month following the Executive’s Separation of Service due to Disability, and continuing for the greater of the Executive’s lifetime or twenty (20) years.

1.4 Change in Control Benefit.  Upon the Executive’s Separation from Service (for any reason other than death or Disability) following a Change in Control or Potential Change in Control under circumstances whereby the Executive is entitled to benefits provided in the Change in Control Agreement, the Bank shall distribute to the Executive the benefit described in this Section 1.4 in lieu of any other benefit under this Article.

1.4.1 AmountofBenefit. Theannualbenefit underthisSection1.4istheamount calculatedusingtheformulasetforthinSection1.1.1;provided,however,that Executiveshallbetreatedashavingbeenemployedforanadditionalthree(3) PlanYearsincalculatingthebenefit;andprovided,further,thatinnoeventshall Executivebecreditedwithmorethanthirty(30)PlanYearsincalculatingthe benefit.

1.4.2 DistributionofBenefit. TheBankshalldistributetheannualbenefittothe Executiveintwelve(12)equalmonthlyinstallmentscommencingonthefirstday ofthemonthfollowingtheExecutive’sSeparationfromServiceandcontinuing fortheExecutive’s lifetime.

1.5 RestrictiononTimingofDistribution. NotwithstandinganyprovisionofthisAgreement tothecontrary,iftheExecutiveis consideredaSpecifiedEmployee,benefitdistributions thatwouldotherwisebemadetotheExecutiveduetoSeparationfromServiceshallnot

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bemadeduringthefirstsix(6)monthsfollowing SeparationfromService. Rather,any distributionthatwouldotherwisebepaidtotheExecutive duringsuchperiod shallbe accumulatedandpaidtotheExecutive inalumpsumonthefirstdayoftheseventh(7^th) monthfollowingSeparationfromService. Allsubsequentdistributionsshallbepaidin themannerspecified.

1.6 Distributions Upon Taxation of Amounts Deferred.  If, pursuant to Code Section 409A, the Federal Insurance Contributions Act or other state, local or foreign tax, the Executive becomes subject to tax on the amounts deferred hereunder, then, the Bank may make a limited distribution to the Executive in accordance with the provisions of Treas. Reg. § 1.409A-3(j)(4)(vi), (vii), and (xi).  Any such distribution will be subtracted from the first payment or payments to the Executive or the Executive’s Beneficiary hereunder.

1.7 Change in Form or Timing of Distributions. For distribution of benefits under this Article 1, the Executive and the Bank may, subject to the terms of Section 7.1, amend the Agreement to delay the timing or change the form of distributions. Any such amendment:

1.7.1 may not accelerate the time or schedule of any distribution, except as provided in Code Section 409A and the regulations thereunder;

1.7.2 must, to the extent required by Code Section 409A and applicable regulations, be made at least twelve (12) months prior to the first scheduled distribution;

1.7.3 must, to the extent required by Code Section 409A and applicable regulations, delay the commencement of distributions for a minimum of five (5) years from the date the first distribution was originally scheduled to be made; and

1.7.4 must, to the extent required by Code Section 409A and applicable regulations, take effect not less than twelve (12) months after the amendment is made.

Each payment made under this Agreement shall be treated as a separate payment, and the right to a series of installment payments under this Agreement (other than any annuity form of payment) shall be treated as a right to a series of separate payments.

1.8 Release.   No benefit on Separation from Service shall be payable hereunder unless a Release Agreement has been duly executed by Executive and delivered to Bank and any applicable revocation period has expired within a sixty (60) day period following Separation from Service.  To the extent Code Section 409A applies to a payment, such payment will not be made prior to the sixtieth (60^th) day following Separation from Service.

Article2

DistributionatDeath

2.1 Death During Active Service.  If the Executive dies prior to Separation from Service, the Bank shall distribute to the Beneficiary the benefit described in this Section 2.1. This benefit shall be distributed in lieu of any benefits under Article 1.

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2.1.1 Amount of Benefit.  The annual benefit under this Section 2.1 is the amount calculated using the formula set forth in Section 1.1.1; provided, however, that Executive shall be treated as having been employed for an additional three (3) Plan Years in calculating the benefit; and provided, further, that in no event shall Executive be credited with more than thirty (30) Plan Years in calculating the benefit.

2.1.2 Distribution of Benefit.  The Bank shall distribute the annual benefit to the Beneficiary in twelve (12) equal monthly installments commencing on the ninetieth (90^th) day following the Executive’s death and continuing for twenty (20) years.

2.2 Death During Distribution of a Benefit.  If the Executive dies after any benefit distributions have commenced under this Agreement but before receiving all such distributions, the Bank shall distribute to the Beneficiary the remaining benefits at the same time and in the same amounts they would have been distributed to the Executive pursuant to the terms of this Agreement.

2.3 Death After Separation from Service But Before Benefit Distributions Commence.  If the Executive is entitled to benefit distributions under this Agreement, but dies prior to the commencement of benefit distributions, the Bank shall distribute to the Beneficiary the same benefits that the Executive was entitled to prior to death, except that the benefit distributions shall commence on the ninetieth (90^th) day following the Executive’s death.

Article3

Beneficiaries

3.1 In General.  The Executive shall have the right, at any time, to designate a Beneficiary(ies) to receive any benefit distributions under this Agreement upon the death of the Executive.  The Beneficiary(ies) designated under this Agreement may be the same as or different from the beneficiary(ies) designated under any other plan of the Bank in which the Executive participates.

3.2 Beneficiary Designation.  The Executive shall designate a Beneficiary by completing and signing the Beneficiary Designation Form, and delivering it to the Plan Administrator or its designated agent.  The Executive’s beneficiary designation shall be deemed automatically revoked if the Beneficiary predeceases the Executive or if the Executive names a spouse as Beneficiary and the marriage is subsequently dissolved.  The Executive shall have the right to change a Beneficiary by completing, signing, and otherwise complying with the terms of the Beneficiary Designation Form and the Plan Administrator’s rules and procedures, as in effect from time to time.  Upon the acceptance by the Plan Administrator of a new Beneficiary Designation Form, all Beneficiary designations previously filed shall be cancelled.  The Plan Administrator shall be entitled to rely on the last Beneficiary Designation Form filed by the Executive and accepted by the Plan Administrator prior to the Executive’s death.

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3.3 Acknowledgment.   No designation or change in designation of a Beneficiary shall be effective until received, accepted, and acknowledged in writing by the Plan Administrator or its designated agent.

3.4 No Beneficiary Designation; Death of Beneficiary.  If the Executive dies without a valid beneficiary designation, or if all designated Beneficiaries predecease the Executive, then the Executive’s spouse shall be the designated Beneficiary.  If the Executive has no surviving spouse, any benefits shall be paid to the personal representative of the Executive’s estate.

3.5 Facility of Distribution.  If the Plan Administrator determines in its discretion that a benefit is to be distributed to a minor, to a person declared incompetent or to a person incapable of handling the disposition of that person’s property, the Plan Administrator may direct distribution of such benefit to the guardian, legal representative or person having the care or custody of such minor, incompetent person or incapable person.  The Plan Administrator may require proof of incompetence, minority or guardianship as it may deem appropriate prior to distribution of the benefit.  Any distribution of a benefit shall be a distribution for the account of the Executive and the Executive’s Beneficiary, as the case may be, and shall completely discharge any liability under the Agreement for such distribution amount.

Article 4

GeneralLimitations

4.1 Termination for Cause.  Notwithstanding any provision of this Agreement to the contrary, the Bank shall not distribute any benefit under this Agreement if Executive’s service is terminated by the Board for Cause.

4.2 Removal.  Notwithstanding any provision of this Agreement to the contrary, the Bank shall not be legally obligated to distribute any benefit under this Agreement if at the time such distribution is due, the Executive is subject to a final removal or prohibition order issued by an appropriate federal banking agency pursuant to Section 8(e) of the Federal Deposit Insurance Act.

4.3 Non-compete Provision.

4.3.1 In General.  The Executive shall forfeit any non-distributed benefits under this Agreement if during the term of this Agreement and within twenty-four (24) months following a Separation from Service, the Executive, directly or indirectly, either as an individual or as a proprietor, stockholder, partner, officer, director, employee, agent, consultant or independent contractor of any individual, partnership, corporation or other entity (excluding an ownership interest of three percent (3%) or less in the stock of a publicly-traded company), without the prior written consent of the Board:

(a) Becomes employed by, participates in or becomes connected in any manner with the ownership, management, operation or control of any bank, savings and loan or other similar financial institution if the

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Executive’s responsibilities will include providing banking or other financial services within twenty-five (25) miles of any office (sites solely with an ATM not being deemed to be an office for this purpose) maintained by the Bank as of the date of the termination of the Executive’s employment;

(b) Participates in any way in hiring or otherwise engaging, or assisting any other person or entity in hiring or otherwise engaging, on a temporary, part-time or permanent basis, any individual who was employed by the Bank as of the date of termination of the Executive’s employment;

(c) Assists, advises or serves in any capacity, representative or otherwise, any third party in any legal action against the Bank;

(d) Sells, offers to sell, provides banking or other financial services, assists any other person in selling or providing banking or other financial services, or solicits or otherwise competes for, either directly or indirectly, any orders, contract or accounts for services of a kind or nature like or substantially similar to the financial services performed or financial products sold by the Bank (the preceding hereinafter referred to as “Services”), to or from any person or entity from whom the Executive or the Bank, to the knowledge of the Executive, provided banking or other financial services, sold, offered to sell or solicited orders, contracts or accounts for Services during the three (3) year period immediately prior to the termination of the Executive’s employment; or

(e) Divulges, discloses or communicates to others in any manner whatsoever, any confidential information of the Bank, including, but not limited to, the names and addresses of customers or prospective customers, of the Bank, as they may have existed from time to time, of work performed or services rendered for any customer, any method and/or procedures relating to projects or other work developed for the Bank, earnings or other information concerning the Bank.  The restrictions contained in this Section 4.3.1(e) apply to all confidential information regarding the Bank, regardless of the source who provided or compiled such information. Notwithstanding anything to the contrary, all confidential information referred to herein may be disclosed to the extent it becomes known to the general public from sources other than the Executive.

4.3.2 Judicial Remedies.  In the event of a breach or threatened breach by the Executive of any provision of the restrictions set forth in this Section 4.3, the Executive recognizes the substantial and immediate harm that a breach or threatened breach will impose upon the Bank, and further recognizes that in such event monetary damages may be inadequate to fully protect the Bank.  Accordingly, in the event of a breach or threatened breach of these restrictions, the Executive agrees that the Bank may obtain preliminary, interlocutory, temporary or permanent injunctive or any other equitable relief protecting and fully enforcing the Bank’s rights

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hereunder and preventing the Executive from further breaching any of his or her obligations set forth herein.  Nothing herein shall be construed as prohibiting the Bank from pursuing any other remedies available to the Bank at law or in equity for such breach or threatened breach, including the recovery of damages from the Executive.  The Executive expressly acknowledges and agrees that:  (a) the restrictions set forth in this Section 4.3 are reasonable, in terms of scope, duration, geographic area, and otherwise; (b) the protections afforded the Bank in Section 4.3.1 are necessary to protect its legitimate business interest; (c) the restrictions set forth in this Section 4.3 will not be materially adverse to the Executive’s employment with the Bank; and (d) his or her agreement to observe such restrictions forms a material part of the consideration for this Agreement.

4.3.3 Overbreadth of Restrictive Covenant. It is the intention of the parties that if any restrictive covenant in this Agreement is determined by a court of competent jurisdiction to be overly broad, then the court should enforce such restrictive covenant to the maximum extent permitted under the law as to area, breadth, and duration.

4.3.4 Change in Control.  The provisions of Section 4.3 hereof shall terminate and shall thereafter have no further force or effect if, following a Change in Control, Executive shall be entitled to receive a Severance Payment pursuant to the Change in Control Agreement.

4.3.5 Definition of Bank.  For purposes of this Section 4.3, references to “Bank” shall include both Bank and Parent.

Article5

AdministrationofAgreement

5.1 Plan Administrator; Duties.  This Agreement shall be administered by a Plan Administrator that shall consist of the Board, or such committee or person(s) as the Board shall appoint.

The Plan Administrator shall administer this Agreement according to its express terms and shall also have the discretion and authority to (a) make, amend, interpret, and enforce all appropriate rules and regulations for the administration of this Agreement and (b) decide or resolve any and all questions, including interpretations of this Agreement, as may arise in connection with the Agreement to the extent the exercise of such discretion and authority would not result in adverse tax consequences to the Executive under Code Section 409A.

Any decision or action of the Plan Administrator with respect to any question arising out of or in connection with the administration, interpretation, and application of the Agreement and the rules and regulations promulgated hereunder shall be final and conclusive and binding upon all persons having any interest in the Agreement.

5.2 Agents.  In the administration of this Agreement, the Plan Administrator may employ agents and delegate to them such administrative duties as it sees fit (including acting

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through a duly appointed representative), and may from time to time consult with counsel who may be counsel to the Bank.

5.3 Indemnity of Plan Administrator.  The Bank shall indemnify and hold harmless the members of the Plan Administrator against any and all claims, losses, damages, expenses or liabilities arising from any action or failure to act with respect to this Agreement, except in the case of willful misconduct by the Plan Administrator (or any of its members if a committee).

5.4 Bank Information.  To enable the Plan Administrator to perform its functions, the Bank shall supply full and timely information to the Plan Administrator on all matters relating to the date and circumstances of the retirement, Disability, death or Separation from Service of the Executive, and such other pertinent information as the Plan Administrator may reasonably require.

Article6

ClaimsandReviewProcedures

6.1 Claims Procedure.  If Executive or a Beneficiary (“Claimant”) has not received benefits under the Agreement that he or she believes should be distributed, he or she shall make a claim for such benefits as follows.

6.1.1 Initiation – Written Claim.  The Claimant initiates a claim by submitting to the Plan Administrator a written claim for the benefits.  If a claim relates to the contents of a notice received by the Claimant, the claim must be made within sixty (60) days after the notice was received by the Claimant.  All other claims must be made within one hundred eighty (180) days of the date on which the event that caused the claim to arise occurred.  The claim must state with particularity the determination desired by the Claimant.

6.1.2 Timing of Plan Administrator Response.  The Plan Administrator shall respond to the Claimant within ninety (90) days after receiving the claim.  If the Plan Administrator determines that special circumstances require additional time for processing the claim, the Plan Administrator can extend the response period by an additional ninety (90) days by notifying the Claimant in writing, prior to the end of the initial ninety (90) day period, that an additional period is required.  The notice of extension must set forth the special circumstances and the date by which the PlanAdministratorexpectstorenderitsdecision.

6.1.3 Notice of Decision.  If the Plan Administrator denies part or all of the claim, the Plan Administrator shall notify the Claimant in writing of such denial.  The Plan Administrator shall write the notification in a manner calculated to be understood by the Claimant.  The notification shall set forth:

(a) The specific reasons for the denial;

(b) A reference to the specific provisions of the Agreement on which the denial is based;

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(c) A description of any additional information or material necessary for the Claimant to perfect the claim and an explanation of why it is needed;

(d) An explanation of the Agreement’s review procedures and the time limits applicable to such procedures; and

(e) A statement of the Claimant’s right to bring a civil action under ERISA Section 502(a) following an adverse benefit determination on review.

6.2 Review Procedure.  If the Plan Administrator denies part or all of the claim, the Claimant shall have the opportunity for a full and fair review by the Plan Administrator of the denial as follows.

6.2.1 Initiation – Written Request.  To initiate the review, the Claimant, within sixty (60) days after receiving the Plan Administrator’s notice of denial, must file with the Plan Administrator a written request for review.

6.2.2 Additional Submissions – Information Access.  The Claimant shall then have the opportunity to submit written comments, documents, records, and other information relating to the claim.  The Plan Administrator shall also provide the Claimant, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant (as defined in applicable ERISA regulations) to the Claimant’s claim for benefits.

6.2.3 Considerations on Review.  In considering the review, the Plan Administrator shalltakeintoaccountallmaterialsandinformationtheClaimantsubmitsrelating totheclaim,withoutregardtowhethersuchinformationwassubmittedor consideredintheinitialbenefitdetermination.

6.2.4 Timing of Plan Administrator Response.  The Plan Administrator shall respond in writing to such Claimant within sixty (60) days after receiving the request for review.  If the Plan Administrator determines that special circumstances require additional time for processing the claim, the Plan Administrator can extend the response period by an additional sixty (60) days by notifying the Claimant in writing, prior to the end of the initial sixty (60)-day period, that an additional period is required.  The notice of extension must set forth the special circumstances and the date by which the Plan Administrator expects to render its decision.

6.2.5 Notice of Decision.  The Plan Administrator shall notify the Claimant in writing of its decision on review.  The Plan Administrator shall write the notification in a manner calculated to be understood by the Claimant.  The notification shall set forth:

(a) The specific reasons for the denial;

(b) A reference to the specific provisions of the Agreement on which the denial is based;

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(c) A statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant (as defined in applicable ERISA regulations) to the Claimant’s claim for benefits; and

(d) A statement of the Claimant’s right to bring a civil action under ERISA Section 502(a).

Article7

AmendmentsandTermination

7.1 This Agreement may be amended or terminated only by a written agreement signed by the Bank and the Executive; provided, however, that if the Board determines in good faith that the Executive, while still employed by the Bank, is no longer a member of a select group of management or highly compensated employees, as that phrase applies to ERISA, the Bank may terminate this Agreement.  The benefit available at such termination of the Agreement shall be calculated using the formula set forth in Section 1.1.1, using the number of Plan Years and Final Average Compensation at termination of the Agreement, and shall be distributed to the Executive or his or her Beneficiary in a lump sum on the sixtieth (60^th) day following Separation from Service as long as the requirements of Section 1.8 and 4.3 have been satisfied.  Additionally, the Bank may amend this Agreement, if necessary to conform with written directives to the Bank from its banking regulators, provided that any such amendment shall preserve to the maximum extent permissible the benefits provided to the Executive hereunder.

Article8

Miscellaneous

8.1 Binding Effect.  This Agreement shall be binding on and inure to the benefit of the Executive and the Bank, and their respective beneficiaries, survivors, executors, administrators, successors, assigns, and transferees.

8.2 No Guarantee of Employment.  This Agreement is not a contract for employment.  It does not give the Executive the right to remain as an employee of the Bank, nor does it interfere with the Bank’s right to discharge the Executive.  It also does not require the Executive to remain an employee nor interfere with the Executive’s right to terminate employment at any time.

8.3 Non-Transferability.  Benefits under this Agreement cannot be sold, transferred, assigned, pledged, attached or encumbered in any manner.

8.4 Tax Withholding.  The Bank shall withhold any taxes that are required to be withheld, including but not limited to taxes owed as a result of the application of Code Section 409A, from the benefits provided under this Agreement.  The Executive acknowledges that the Bank’s sole liability regarding taxes is to forward any amounts withheld to the appropriate taxing authority(ies) and to satisfy all applicable reporting requirements, including those under Code Section 409A.

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8.5 Applicable Law. The Agreement and all rights hereunder shall be governed by the laws of the Commonwealth of Massachusetts, except to the extent preempted by the laws of the United States of America.

8.6 Unfunded Arrangement. The Executive and Beneficiary are general unsecured creditors of the Bank for the distribution of benefits under this Agreement.  The benefits represent the mere promise by the Bank to distribute such benefits.  The rights to benefits are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or garnishment by creditors.  Any insurance on the Executive’s life or other informal fund asset is a general asset of the Bank to which the Executive and Beneficiary have no preferred or secured claim.

8.7 Reorganization.   The Bank shall not merge or consolidate into or with another bank, or reorganize, or sell substantially all of its assets to another bank, firm or person unless such succeeding or continuing bank, firm or person agrees to assume and discharge the obligations of the Bank under this Agreement.  Upon the occurrence of such event, the term “Bank” as used in this Agreement shall be deemed to refer to the successor or survivor bank.

8.8 Entire Agreement.  This Agreement constitutes the entire agreement between the Bank and the Executive as to the subject matter hereof.  No rights are granted to the Executive by virtue of this Agreement other than those specifically set forth herein.

8.9 Interpretation.  Wherever the fulfillment of the intent and purpose of this Agreement requires, and the context will permit, the use of the masculine gender includes the feminine and use of the singular includes the plural.

8.10 Alternative Action.  In the event it shall become impossible for the Bank or the Plan Administrator to perform any act required by this Agreement due to regulatory or other constraints, the Bank or Plan Administrator may perform such alternative act as most nearly carries out the intent and purpose of this Agreement, is in the best interests of the Bank, and is consistent with Code Section 409A.

8.11 Headings.  Article and section headings are for convenient reference only and shall not control or affect the meaning or construction of any of its provisions.

8.12 Validity.  In case any provision of this Agreement shall be illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but this Agreement shall be construed and enforced as if such illegal and invalid provision has never been inserted herein.

8.13 Notice.  Any notice or filing required or permitted to be given to the Bank or Plan Administrator under this Agreement shall be sufficient if in writing and hand-delivered, or sent by registered or certified mail, to the address below:

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CambridgeTrustCompany

1336MassachusettsAvenue

Cambridge,MA02138

Attention:PersonnelOfficer

Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification.

Any notice or filing requires or permitted to be given to the Executive under this Agreement shall be sufficient if in writing and hand-delivered, or sent by mail, to the last known address of the Executive on the records of the Bank.

8.14 Deduction Limitation on Benefit Payments.  If the Bank reasonably anticipates that the Bank’s deduction with respect to any distribution under this Agreement would be limited or eliminated by application of Code Section 162(m), then to the extent deemed necessary by the Bank to ensure that the entire amount of any distribution from this Agreement is deductible, the Bank may delay payment of any amount that would otherwise be distributed under this Agreement.  The delayed amounts shall be distributed to the Executive (or the Beneficiary in the event of the Executive’s death) at the earliest date the Bank reasonably anticipates that the deduction of the payment of the amount will not be limited or eliminated by application of Code Section 162(m) and subject to the requirements of Treas. Reg. § 1.409A-2(b)(7)(i).

8.15 Code Section 409A.  It is the intention of the Bank and Executive that this Agreement and all amounts payable hereunder meet the requirements of Code Section 409A, to the extent applicable to the Agreement and such payments.  To the extent applicable, this Agreement shall be interpreted in accordance with Code Section 409A and regulations and other interpretive guidance issued thereunder.  If any compensation or benefits payable under this Agreement do not comply with Code Section 409A and related guidance, the Bank and Executive agree to amend this Agreement or take such actions as the Bank deems necessary or appropriate to comply with the requirements of Code Section 409A while preserving, as nearly as possible, the same economic effect as under this Agreement.

IN WITNESS WHEREOF, the Executive and a duly authorized representative of the Bank have signed this Agreement as of the day and year first above written.

EXECUTIVE	CAMBRIDGE TRUST COMPANY
/s/ Denis K. Sheahan	By:	/s/ Pilar Pueyo
Denis K. Sheahan		Its: SVP, Human Resources Director

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SCHEDULEA

DEFINITIONS

1.1 “BaseSalary”meanstheannualcashcompensationfromtheBankrelatingtoservices performedduringanycalendaryear,excludingdistributionsfromnonqualifieddeferred compensationplans,bonuses,commissions,overtime,fringebenefits,stockoptions, relocationexpenses,incentivepayments,non-monetaryawardsandotherfees,and automobileandotherallowancespaidtotheExecutiveforservicesrendered(whetheror notsuchallowancesareincludedintheExecutive’sgrossincome).BaseSalaryshallbe calculatedbeforereductionforcompensationvoluntarilydeferredorcontributed bythe Executivepursuanttoallqualifiedornon-qualifiedplansoftheBankandshallbe calculatedtoincludeamountsnototherwiseincludedintheExecutive’sgrossincome underCodeSections125,132(f),402(e)(3),402(h)or403(b)pursuanttoplans establishedbytheBank;provided,however,thatallsuchamountswillbeincludedin compensationonlytotheextentthathadtherebeennosuchplan,theamountwouldhave beenpayableincashtotheExecutive.

1.2 “Beneficiary”meanseachpersondesignated,pursuanttoArticle3,asbeingentitledto benefits,ifany,uponthedeathoftheExecutive.

1.3 “Beneficiary Designation Form” means the form established from time to time by the Plan Administrator that the Executive completes, signs, and returns to the Plan Administrator to designate one or more Beneficiaries.

1.4 “Board” means the Board of Directors of the Bank, as from time to time constituted.

1.5 “Bonus” means the cash bonus, if any, awarded to the Executive for services performed during the Plan Year from the Bank.

1.6 “Cause” means termination by the Bank upon:

(a) The willful failure by Executive to substantially perform his duties with the Bank (other than any such failure resulting from his incapacity due to physical or mental illness or any such actual or anticipated failure resulting from his resignation for Good Reason), within ten (10) days after a demand for substantial performance is delivered to Executive by the Board that specifically identifies the manner in which the Board believes that Executive has not substantially performed his duties;

(b) The willful engagement by Executive in misconduct that is or foreseeably will be materially injurious to the Bank, monetarily or otherwise; or

(c) A breach of a fiduciary duty, fraud or dishonesty relating to the Bank, or conviction of (or plea of nolo contendere to) a crime.

For purposes of this Schedule A, Section 1.6, no act or failure to act, on Executive’s part shall be considered “willful” unless done, or omitted to be done, by Executive not in

good faith and without reasonable belief that his action or omission was in the best interest of the Bank

Notwithstanding the foregoing, Executive shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters(¾) of the entire membership of the Board (with Executive not voting) at a meeting of the Board called and held for the purpose (after reasonable notice to Executive and an opportunity for Executive, together with Executive’s counsel, to be heard before the Board) finding that in the good faith opinion of the Board Executive engaged in the conduct set forth above in this Schedule A, Section 1.6 and specifying the particulars thereof in detail.

1.7 “Change in Control” means either of the following:

(a) A change in control of a nature that would be required to be reported by Parent or Bank in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), whether or not Parent or Bank in fact is required to comply with Regulation 14A thereunder; or

(b) The acquisition of “control” as defined in the Bank Holding Company Act of 1956, as amended, or the regulations thereunder, or as defined in the Change in Bank Control Act of 1978, as amended, or the regulations or guidance thereunder, of Parent or Bank by any person, company or other entity other than Parent; provided that, without limitation, such a Change in Control shall be deemed to have occurred if:

(i) Any “person” (as that term is used in Section 13(d) and 14(d) of the Exchange Act) other than a trustee or other fiduciary holding securities under an employee benefit plan of Parent or Bank or a corporation owned, directly or indirectly, by the stockholders of Parent in substantially the same proportions as their ownership of stock of Parent, is or becomes the “beneficial  owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of Parent representing twenty-five percent (25%) or more of the combined voting power of Parent’s then outstanding securities; or

(ii) During any period of two (2) consecutive years (not including any period prior to the execution of this Agreement), individuals who at the beginning of such period constitute the Board and any new director (other than a director designated by a person who has entered into an agreement with Parent to effect a transaction described in this Schedule A, Section 1.7(b)(i) or with Parent or Bank to effect a transaction described in Schedule A, Section 1.7(b)(ii) whose election by the Board or nomination for election by Parent’s or Bank’s stockholders was approved by a vote of at least two-thirds (⅔) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination

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for election was previously so approved, cease for any reason to constitute a majority thereof; or

(iii) The stockholders of Parent or Bank approve a merger or consolidation of Parent or Bank with any other corporation, other than a merger or consolidation that would result in the voting securities of Parent or Bank outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least two-thirds(⅔) of the combined voting power of the voting securities of Parent or Bank or such surviving entity outstanding immediately after such merger or consolidation, or the stockholders of Parent or Bank approve a plan of complete liquidation of Parent or Bank or an agreement for the sale or disposition by Parent or Bank of all or substantially all Parent’s or Bank’s assets. Notwithstanding anything to the contrary contained in this Agreement, the acquisition by a person (or persons acting in concert) of less than twenty-five percent (25%) of the voting securities of Parent, under circumstances where the Federal Reserve Board (under regulations or guidance pursuant to the Change in Bank Control Act of 1978, as amended) presumes that such acquisition constitutes the acquisition of control of Parent, shall not be deemed a “Change in Control” for any purpose under this Agreement.

1.8 “Change in Control Agreement” means the Change in Control Agreement between Cambridge Bancorp and the Executive dated December 21, 2015.

1.9 “Claimant” has the meaning defined in Section 6.1.

1.10 “Code” means the Internal Revenue Code of 1986, as amended, and all regulations and guidance thereunder, including such regulations and guidance as may be promulgated after the Effective Date of this Agreement.

1.11 “Date of Hire” means April 1, 2015.

1.12 “Disability” means termination because of Executive’s inability, as a result of incapacity due to physical or mental illness, to perform the services required of Executive as an employee for a period aggregating six (6) months or more within any twelve (12) month period, unless within thirty (30) days after notice of termination is given Executive by the Bank shall have returned to the full time performance of his duties.

1.13 “Early Termination” means the Executive’s Separation from Service before Normal Retirement Age for reasons other than death, Disability, Termination for Cause or Good Reason.

1.14 “Effective Date” means December 21, 2015.

1.15 “Final Average Compensation” means the average of the Executive’s highest three (3) consecutive calendar years of annual Base Salary and Bonus.  For purposes of calculating the average of the Executive’s highest three (3) consecutive calendar years of Base Salary and Bonus, (a) Base Salary

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and Bonus for the calendar year in which the Executive experiences a Separation from Service shall be annualized, (b) Base Salary and Bonus for other calendar years shall not be annualized, and (c) if the Executive has been employed less than three (3) full calendar years (counting the final year of employment as an annualized full calendar year), the Executive’s Final Average Compensation shall be based on the number of full calendar years in which the Executive was an employee of the Bank (again counting the final year of employment as an annualized full calendar year).

1.16 “Good Reason” means:

(a) In the case of a Change in Control described in Schedule A, Section 1.7(b)(i) when fifty percent (50%) is substituted for twenty-five percent (25%) or following consummation of a Change in Control described in Schedule A, Section 1.7(b)(iii) when one-half(½) is substituted for two-thirds(⅔), termination by Executive for any reason or for no reason during the period beginning six (6) months and ending twelve (12) months following such event; or

(b) Without Executive’s prior consent, the occurrence after a Change in Control of any of the following circumstances:

(i) A material diminution in the nature or status of his responsibilities, authority or duties (provided that his entitlement to terminate employment for this reason following a Change in Control shall only be effective during the period beginning six (6) months and ending twelve (12) months after the Change in Control);

(ii) A material diminution in Executive’s base salary; or

(iii) A relocation of Executive’s principal place of employment to a location that is more than forty (40) miles from the Bank’s current principal executive office;

; provided, however, that the Bank shall have a thirty (30) day period to cure any such cause for “Good Reason” after being notified by Executive in writing.

Executive’srighttoterminateemploymentforGoodReasonshallnotbeaffected byhisincapacityduetophysicalormentalillness. Executive’s continued employmentshallnotconstituteconsentto,orawaiverofrightswithrespectto, anycircumstanceconstitutingGoodReasonhereunder.

1.17 “Normal Retirement Age” means the Executive attaining age sixty-five (65).

1.18 “Parent” means Cambridge Bancorp.

1.19 “Plan Administrator” means the plan administrator described in Article 5.

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1.20 “Plan Year” means each twelve (12)-month period commencing on the Date of Hire and each anniversary of such date thereafter.

1.21 “Potential Change in Control” means:

(a) Parent or Bank enters into an agreement, the consummation of which would result in the occurrence of a Change in Control;

(b) Any person (including Parent) publicly announces an intention to take or to consider taking actions that if consummated, would constitute a Change in Control;

(c) Any person, other than a trustee or other fiduciary holding securities under an employee benefit plan of Parent or Bank or a corporation owned, directly or indirectly, by the stockholders of Parent in substantially the same proportions as their ownership of stock of Parent, is or becomes the beneficial owner, directly or indirectly, of securities of parent representing twenty percent (20%) or more of the combined voting power of Parent’s then outstanding securities; or

(d) The Board of Directors of Parent or Bank adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change in Control of Parent has occurred.

1.22 “Release Agreement” means an agreement and general release, in a form satisfactory to Bank, that releases and forever discharges Bank, Parent and their affiliates, officers, employees, and directors from all claims and damages that Executive may have in connection with or arising out of his or her employment or the termination of employment with Bank or Parent.

1.23 “Separation from Service” means ceasing to be an employee of the Bank and of any affiliate for any reason, all within the meaning of Treas. Reg. § 1.409A-1(h), or any successor thereto.  Whether a Separation from Service has occurred is determined  based on whether the facts and circumstances indicate that the Bank and Executive reasonably anticipated that no further services would be performed after a certain date or that the level of bona fide services the Executive would perform after such date (whether as an employee or as an independent contractor) would permanently decrease to no more than twenty percent (20%) of the average level of bona fide services performed (whether as an employee or an independent contractor) over the immediately preceding thirty-six (36) month period (or the full period of services to the Bank if the Executive has been providing services to the Bank less than thirty-six (36) months).

1.24 “Specified Employee” means an employee who at the time of Separation from Service is a “key employee” of Bank or Parent, if any stock of Bank or Parent is publicly traded on an established securities market or otherwise.  For purposes of this Agreement, an employee is a “key employee” if the employee meets the requirements of Code Section 416(i)(1)(A)(i), (ii) or (iii) (applied in accordance with the regulations thereunder and disregarding Code Section 416(i)(5)) at any time during the twelve (12)-month period ending on a specified employee identification date.

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EX-10

Exhibit 10.7

CAMBRIDGETRUSTCOMPANY

SUPPLEMENTALEXECUTIVERETIREMENTAGREEMENT

THISSUPPLEMENTALEXECUTIVERETIREMENTAGREEMENT(the“Agreement”) isadopted this27thdayof February, 2008,byandbetweenCambridge Trust Company,astate-charteredcommercialbank located inCambridge,Massachusetts(the“Bank”), andLynneBurrow(the“Executive”).ThepurposeofthisAgreement istoprovidespecified benefitstotheExecutive,amemberofaselectgroupofmanagementorhighlycompensated employeeswhocontributemateriallytothecontinued growth,development,andfuturebusiness successoftheBank.ThisAgreementshall beunfundedfortax purposesandforpurposesofTitle IoftheEmployeeRetirementIncomeSecurityActof1974(“ERISA”),asamendedfromtimeto time.

Article1Definitions

WheneverusedinthisAgreement,thefollowingwordsandphrasesshallhavethemeanings specified:

1.1 “AccountValue”meanstheamountshownonScheduleA,undertheheadingAccount Value.ThepartiesexpresslyacknowledgethattheAccountValueatanygiventimemay bedifferentfromtheliabilitythatshouldbethenaccruedbytheBank,underGenerally AcceptedAccountingPrinciples(“GAAP”),fortheBank'sobligationtotheExecutive underSection 2.1ofthisAgreement.TheAccountValueonanydateotherthantheendof aPlanYear shallbedeterminedby addingtheproratedincrease,calculatedonaperdiem basisanda365-dayyear,attributabletothecurrentPlanYeartotheAccountValueasof theendofthepreviousPlanYear.

1.2 “BaseSalary”meanstheannualcashcompensationrelatingtoservicesperformedduring anycalendaryear,excluding distributionsfromnonqualifieddeferredcompensationplans, bonuses,commissions,overtime,fringebenefits, stockoptions,relocationexpenses, incentivepayments,non-monetary awards,andotherfees,andautomobileandother allowancespaidtotheExecutiveforservicesrendered(whetheror notsuchallowancesare included in the Executive's gross income). Base Salary shall be calculated before reductionforcompensationvoluntarilydeferredorcontributedbytheExecutivepursuant toall qualifiedornon-qualifiedplansoftheBankandshallbecalculatedtoinclude amountsnototherwiseincludedintheExecutive'sgross incomeunderCodeSections125, 402(e)(3), 402(h), or 403(b) pursuant to plans established by the Bank; provided, however, that all such amounts will be included in compensation only to the extent that had there been no such plan, the amount would have been payable in cash to the Executive.

1.3 “Beneficiary”meanseach designatedpersonorentity,ortheestateofthe deceased Executive,entitledtoanybenefitsuponthedeathoftheExecutivepursuanttoArticle4.

1.4 “BeneficiaryDesignationForm”meanstheformestablishedfromtimetotimebythePlan AdministratorthattheExecutivecompletes,signsandreturnstothePlanAdministratorto designateoneormore Beneficiaries.

1.5 “Board”meansthe BoardofDirectorsoftheBankasfromtimetotimeconstituted.

1.6 “Bonus”meansthecashbonus,ifany,awardedtotheExecutiveforservicesperformed duringthePlanYear.

1.7 “Change in Control”shallhavesuch meaningasdefinedintheChange inControl AgreementbetweenCambridgeBancorpandthe ExecutivedatedDecember1,1999.

1.8 “Code”meanstheInternalRevenueCodeof1986,asamended,andallregulationsand guidancethereunder,includingsuchregulationsandguidanceasmay bepromulgated after theEffectiveDateofthisAgreement.

1.9 “DateofHire”meanstheday,monthandyearthe ExecutivebeganservicetotheBank.

1.10 “Disability”meanstheExecutive:(i)isunabletoengageinanysubstantialgainful activity byreasonofanymedicallydeterminablephysicalormentalimpairmentwhichcanbe expectedtoresultindeathorcanbeexpectedtolastforacontinuousperiodofnot lessthan twelve(12)months;or(ii)is,byreasonofanymedicallydeterminablephysicalormental impairmentwhichcanbeexpected toresultindeathorcanbeexpectedtolastfora continuousperiodofnotlessthantwelve(12)months, receivingincomereplacement benefitsforaperiodofnotlessthanthree(3)monthsunderanaccidentandhealthplan coveringemployeesoftheBank.MedicaldeterminationofDisabilitymaybemadeby eithertheSocialSecurityAdministrationorbytheproviderofanaccidentorhealthplan coveringemployeesordirectorsoftheBankprovidedthatthedefinitionof“disability” appliedundersuchinsuranceprogramcomplieswiththerequirementsofthepreceding sentence. UpontherequestofthePlanAdministrator,theExecutivemustsubmitproofto thePlanAdministratoroftheSocialSecurityAdministration's ortheprovider's determination.

1.11 “EarlyTermination”meansSeparationfromServicebeforeNormalRetirementAgefor reasonsotherthandeath,Disability,TerminationforCauseor GoodReason.

1.12 “EffectiveDate”meansJanuary1,2007.

1.13 “FinalAverageCompensation”theaverageoftheExecutive'shighestthreecalendaryears ofannual BaseSalaryandBonus.Forpurposesofcalculatingtheaverageofthe Executive'shighestthreecalendaryearsofannualbasesalaryandbonus,(i)BaseSalary andBonusforthecalendaryearinwhichtheExecutiveexperiencesaSeparationfrom Serviceshallbeannualized,(ii)BaseSalaryandBonusforothercalendaryearsshallnotbe annualized,and(iii)iftheExecutivehasbeenemployedlessthanthreefullcalendaryears (countingthefinalyearofemployment as an annualizedfullcalendaryear),theExecutive’s

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FinalAverageCompensationshallbebasedonthenumberoffullcalendaryearsinwhich theExecutivewasanemployeeoftheBank(againcountingthefinalyearofemployment asanannualizedfullcalendaryear).

1.14 “Good Reason”shallhavesuchmeaningasdefinedintheChangeinControlAgreement betweenCambridge Bancorp andtheExecutivedatedDecember 1, 1999 (“Changein ControlAgreement”).

1.15 “NormalRetirementAge”meanstheExecutiveattainingagesixty-five(65).

1.16 “Plan Administrator”meanstheBoardorsuchcommittee orpersonastheBoardshall appoint.

1.17 “PlanYear”meanseachtwelve(12)monthperiodcommencingonJanuary1andending onDecember31ofeachyear.

1.18 “Potential Change inControl” shallhavesuchmeaningas definedin theChange in ControlAgreement.

1.19 “Schedule A”means theschedule attached tothis Agreementandmadea part hereof ScheduleAshallbeupdateduponachangeinanyofthebenefitsunderArticles2or3.

1.20 “Separation from Service”means termination of the Executive's employment with the Bankforreasonsotherthandeath.Whethera SeparationfromServicehasoccurredis determinedbasedon whetherthefacts andcircumstances indicate that the Bank and Executivereasonably anticipated thatno further services would be performed after a certaindateorthatthelevelofbonafideservicestheExecutivewouldperformaftersuch date (whether asanemployeeorasanindependent contractor) would permanently decreasetonomorethantwentypercent(20%)oftheaveragelevelofbonafideservices performed(whetherasanemployeeor anindependentcontractor)overtheimmediately precedingthirty-six(36)monthperiod (orthefullperiodofservicestotheBankifthe ExecutivehasbeenprovidingservicestotheBanklessthanthirty-six(36)months).

1.21 “Specified Employee”meansanemployeewhoatthetimeofSeparationfromServiceisa keyemployee oftheBank,ifanystockoftheBankispubliclytradedonanestablished securitiesmarketorotherwise. For purposesofthisAgreement,anemployeeisakey employeeiftheemployee meetstherequirementsofCodeSection416(i)(1)(A)(i),(ii),or (iii) (applied in accordance with the regulations thereunder and disregarding section 416(i)(5))atanytimeduringthetwelve(12)monthperiodendingonaspecifiedemployee identificationdate.

1.22 “Termination forCause”hasthatmeaningsetforthinArticle5.

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Article2

DistributionsDuringLifetime

2.1 NormalRetirementBenefit. UpontheExecutive'sSeparationfromServiceonorafter NormalRetirementAge,theBankshalldistributetotheExecutivethebenefitdescribedin thisSection2.1inlieuofanyotherbenefitunderthisArticle.

2.1.1 AmountofBenefit. The annualbenefitunderthisSection2.1isanamountequal toFinal Average Compensationmultipliedbytwopercent(2%)foreverycomplete PlanYearfromtheExecutive'sDateofHiretotheExecutive'sSeparationfrom Service,nottoexceedsixtypercent(60%),less:

(a) SocialSecurityBenefits. Onehundredpercent(100%)oftheamountof annualunreducedprimary(notfamily)retirementbenefitsundertheUnited StatesSocialSecurity Act,butonlyiftheExecutivewouldbeeligiblefor SocialSecurityBenefitsifapplication weremadeasoftheExecutive's NormalRetirementAge,assumingthattheExecutivehadearningsator abovethemaximumcontributionandbenefit baseunderSection230ofthe UnitedStatesSocialSecurityActfortheExecutive'sworkingcareer;and

(b) Company Pension Benefits. The annual life-onlyannuity benefit the ExecutivewouldbeentitledtoreceivefromtheBank'scontributions tothe Executive'spension,measuredasoftheExecutive'sNormalRetirement Age.

2.1.2 Distributionof Benefit. The Bankshall distributethe annualbenefit to the Executiveintwelve(12)equalmonthlyinstallmentscommencingonthefirstday ofthemonthfollowingthe Executive'sSeparationfromService,andcontinuingfor thegreateroftheExecutive'slifetimeorfifteen(15)years.

2.2 EarlyTerminationBenefit. IfEarlyTerminationoccurs,theBankshalldistributetothe ExecutivethebenefitdescribedinthisSection 2.2inlieuofanyotherbenefitunderthis Article.

2.2.1 AmountofBenefit. Thebenefit underthisSection2.2istheamountsetforthon ScheduleAdeterminedasoftheendofthePlanYearprecedingSeparationfrom Service.

2.2.2 Distribution of Benefit. The Bankshall distributethe annual benefit to the Executiveintwelve(12)equalmonthlyinstallmentscommencingonthefirstday ofthemonthfollowingtheExecutive'sNormalRetirementAge,andcontinuingfor thegreaterofthe Executive'slifetimeorfifteen(15)years.

2.3 DisabilityBenefit. IftheExecutiveexperiences aDisabilitypriortoNormalRetirement Age,theBankshalldistributetotheExecutivethebenefitdescribedinthisSection2.3in

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lieuofanyotherbenefitunderthisArticle.

2.3.1 AmountofBenefit. Thebenefit underthisSection2.3istheamountsetforthon ScheduleAdeterminedasoftheendofthePlanYearprecedingDisability.

2.3.2 Distribution of Benefit. The Bank shall distribute the annual benefit to the Executiveintwelve (12) equal monthly installments commencing on the first day of the month following the determination of the Executive's Disability, and continuing for the greater of the Executive's lifetime or fifteen (15) years.

2.4 ChangeinControlBenefit. UpontheExecutive'sSeparationfromServicefollowinga ChangeinControlorPotentialChangeinControlunder circumstanceswherebythe Executiveisentitledtobenefitsprovided inSection4(iii)oftheChangeinControl Agreement,theBankshalldistributetotheExecutivethebenefitdescribedinthisSection 2.4inlieuof anyotherbenefitunderthisArticle.

2.4.1 Amountof Benefit. TheannualbenefitunderthisSection2.4isThirtyNine ThousandThree HundredEighteenDollars($39,318).

2.4.2 Distribution of Benefit. The Bank shall distributethe annual benefit to the Executiveinequalmonthlyinstallmentscommencingonthefirstdayofthemonth followingtheExecutive'sNormalRetirementAge,andcontinuingforthegreaterof the Executive'slifetimeorfifteen(15)years.

2.5 RestrictiononTimingofDistribution.Notwithstanding anyprovisionofthisAgreementto thecontrary,iftheExecutiveisconsideredaSpecifiedEmployee,theprovisionsofthis Section2.5shallgovernalldistributionshereunder. Ifbenefitdistributionswhichwould otherwisebemadetotheExecutiveduetoSeparationfromServicearedelayedbecausethe ExecutiveisaSpecifiedEmployee,thensuchdistributionsshallnotbemadeduringthe firstsix(6)monthsfollowingSeparationfromService. Rather,anydistributionwhich wouldotherwisebepaidtothe Executiveduringsuchperiodshall beaccumulatedandpaid totheExecutiveinalumpsumonthefirstdayoftheseventhmonthfollowingSeparation fromService.Allsubsequentdistributionsshallbepaidinthemannerspecified.

2.6 DistributionsUponTaxationofAmountsDeferred.If,pursuanttoCodeSection409A,the FederalInsuranceContributions Actorotherstate,localorforeigntax,theExecutive becomessubjecttotaxontheamountsdeferredhereunder,then,theBankmaymakea limiteddistributiontotheExecutive inaccordancewiththeprovisionsofTreasury RegulationsSection1.409A-3(j)(vi),(vii)and(xi).Anysuchdistributionwillbesubtracted fromthefirstpaymentorpaymentstotheExecutive ortheExecutive'sBeneficiary hereunder.

2.7 ChangeinFormorTimingofDistributions.FordistributionofbenefitsunderthisArticle 2,the Executive and the Bankmay,subjectto thetermsofSection8.1, amendthe Agreementtodelaythetimingor changetheformof distributions.Anysuchamendment:

(a) may not accelerate the time or schedule of any distribution, except as

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provided in Code Section 409A and the regulations thereunder;

(b) must,for benefitsdistributableunderSections2.2and 2.4, be madeat leasttwelve(12)monthspriortothefirstscheduleddistribution;

(c) must, for benefits distributable under Article 2, delay the commencement of distributions for a minimum of five (5) years from the date the first distribution was originally scheduled to be made; and

(d) musttakeeffectnotlessthantwelve(12)monthsaftertheamendmentis made.

Article3

DistributionatDeath

3.1 DeathDuringActiveService. IftheExecutivediespriortoSeparationfromService,the BankshalldistributetotheBeneficiarythebenefitdescribedinthisSection3.1 This benefitshallbedistributedinlieuofanybenefitsunderArticle2.

3.1.1 Amountof Benefit. TheannualbenefitunderthisSection3.1 isThirtyNine ThousandThree HundredEighteenDollars($39,318).

3.1.2 DistributionofBenefit. TheBankshalldistributethe annualbenefittothe Beneficiaryintwelveequalmonthlyinstallmentscommencingwithinninety(90) daysfollowingtheExecutive'sdeath.Theannualbenefitshallbedistributedtothe Beneficiaryfora periodoffifteen(15)years.

3.2 DeathDuringDistributionofaBenefit.IftheExecutivediesafteranybenefitdistributions havecommencedunderthisAgreementbutbeforereceivingallsuchdistributions,the BankshalldistributetotheBeneficiarytheremainingbenefitsatthe sametimeandinthe sameamountstheywouldhavebeendistributed totheExecutivehadtheExecutive survived.

3.3 DeathAfterSeparationfromServiceButBeforeBenefitDistributionsCommence. Ifthe Executiveisentitled to benefit distributions under this Agreement but dies prior to the commencement of said benefit distributions, the Bank shall distribute to the Beneficiary the same benefits to which the Executive was entitled prior to death, except that the benefit distributions shall commence within ninety (90) days following the Executive's death.

Article4

Beneficiaries

4.1 InGeneral. TheExecutiveshallhavetheright,atanytime,todesignate aBeneficiaryto receiveanybenefitdistributionsunderthisAgreementuponthedeathoftheExecutive. TheBeneficiarydesignatedunderthisAgreementmaybethesameasordifferentfromthe beneficiary designated under any other plan of the Bank in which the Executive participates.

4.2 Designation. TheExecutiveshalldesignateaBeneficiarybycompletingandsigningthe BeneficiaryDesignationFormanddeliveringittothePlanAdministrator.IftheExecutive

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namessomeoneotherthantheExecutive'sspouseasaBeneficiary,thePlanAdministrator may,initssolediscretion,determinethatspousalconsentisrequiredtobeprovidedina form designated by the Plan Administrator,executed by the Executive'sspouse and returnedtothePlanAdministrator. TheExecutive'sbeneficiary designationshallbe deemedautomaticallyrevokediftheBeneficiarypredeceases theExecutiveorifthe ExecutivenamesaspouseasBeneficiaryandthemarriageissubsequentlydissolved. The Executive shall have the right to changea Beneficiaryby completing,signing and otherwisecomplyingwiththetermsoftheBeneficiaryDesignationFormandthePlan Administrator'srulesandprocedures.Upontheacceptance bythePlan Administratorofa newBeneficiaryDesignationForm,allBeneficiarydesignationspreviously filedshallbe cancelled. ThePlanAdministrator shallbeentitledtorelyonthelastBeneficiary DesignationFormfiledbytheExecutiveandacceptedbythePlanAdministratorpriorto theExecutive'sdeath.

4.3 Acknowledgment. NodesignationorchangeindesignationofaBeneficiaryshallbe effectiveuntilreceived,acceptedandacknowledgedinwritingbythePlanAdministrator oritsdesignatedagent.

4.4 NoBeneficiaryDesignation.If the Executive dies without a valid beneficiary designation, or if all designated Beneficiaries predecease the Executive, then the Executive's spouse shall be the designated Beneficiary. If the Executive has no surviving spouse, any benefits shall be paid to the personal representative of the Executive's estate.

4.5 FacilityofDistribution.If the Plan Administrator determines in its discretion that a benefit is to be distributed to a minor, to a person declared incompetent, or to a person incapable of handling the disposition of that person's property, the Plan Administrator may direct distribution of such benefit to the guardian, legal representative or person having the care or custody of such minor, incompetent person or incapable person. The Plan Administrator may require proof of incompetence, minority or guardianship as it may deem appropriate prior to distribution of the benefit. Any distribution of a benefit shall be a distribution for the account of the Executive and the Beneficiary, as the case may be, and shall be completely discharge of any liability under the Agreement for such distribution amount.

Article5

GeneralLimitations

5.1 TerminationforCause. Notwithstanding any provision of this Agreement to the contrary, the Bank shall not distribute any benefit under this Agreement if Executive's service is terminated by the Bank for any of the following reasons (a “Termination for Cause”):

(a) ThewillfulandcontinuedfailurebytheExecutivetosubstantiallyperformhisor herdutieswiththe Bank(otherthananysuchfailureresultingfromtheExecutive's incapacitydueto physicalormentalillnessoranysuchactualoranticipatedfailure resultingfromtheExecutive's terminationforGoodReason),afterawritten demandforsubstantialperformanceisdeliveredtotheExecutivebytheBank whichspecificallyidentifies themannerinwhichtheBankbelievesthatthe Executivehasnotsubstantiallyperformedhisorherduties;or

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(b) ThewillfulengagingbytheExecutiveinmisconductwhichisdemonstrablyand materiallyinjurioustothe Bank,monetarilyorotherwise.

ForpurposesofthisSubsection,noactorfailuretoactontheExecutive'spartshallbe considered “willful”whetherdoneatthedirectionoftheBoard,or otherwiseunlessdone,or omittedtobedone,bytheExecutivenotingoodfaithandwithoutreasonablebeliefthat hisorheractionoromissionwasinthebestinterestoftheBank. Notwithstandingthe foregoing,theExecutiveshallnotbedeemedtohave beenterminatedforCauseunlessand untilthereshallhavebeendeliveredtotheExecutiveacopyofaresolutiondulyadopted bytheaffirmativevoteofnotlessthanthree-quarters(3/4)oftheentiremembershipofthe Board atameetingoftheBoardcalledandheldforthepurpose(afterreasonablenoticeto theExecutiveandanopportunityforthe Executive,togetherwithhisorhercounsel,tobe heard beforetheBoard)findingthatinthegoodfaithopinionoftheBoard,theExecutive wasguiltyofconductsetforthaboveinclauses(a)or(b)nottimelycuredbytheExecutive andspecifyingtheparticularsthereofindetail.

5.2 Removal. NotwithstandinganyprovisionofthisAgreementtothecontrary,theBank shallnotbelegallyobligated todistributeanybenefitunderthisAgreementifatthetime suchdistributionisdue,theExecutiveissubjecttoafinalremovalorprohibitionorder issuedbyanappropriatefederalbankingagencypursuanttoSection8(e)oftheFederal DepositInsuranceAct.

5.3 Non-competeProvision. TheExecutiveshallforfeitanynon-distributedbenefitsunder thisAgreementifduringthetermofthisAgreementandwithintwenty-four(24)months followingaSeparationfromService,theExecutive,directlyorindirectly,eitherasan individualorasaproprietor,stockholder, partner,officer,director,employee,agent, consultantorindependentcontractorofanyindividual,partnership,corporationorother entity(excludinganownershipinterestofthreepercent(3%)orlessinthestockofa publicly-tradedcompany),withoutthepriorwrittenconsentoftheBank:

(a) becomesemployedby,participatesin,orbecomesconnectedinanymannerwiththe ownership,management,operationorcontrolofanybank,savingsandloanorother similarfinancialinstitutioniftheExecutive's responsibilitieswillincludeproviding bankingorotherfinancialserviceswithintwenty-five(25)milesofany office(sitessolely withanATMnotbeingdeemedtobeanofficeforthispurpose)maintained bytheBank asofthedateoftheterminationoftheExecutive'semployment;

(b) participatesinanywayinhiringorotherwiseengaging,orassistinganyotherpersonor entityinhiringorotherwiseengaging,onatemporary,part-time orpermanentbasis,any individualwhowasemployedbytheBankasofthedateofterminationoftheExecutive's employment;

(c) assists,advises,orservesinany capacity,representativeor otherwise,anythirdpartyin anylegalactionagainstthe Bank;

(d) sells,offerstosell,providesbankingorotherfinancialservices,assistsany otherpersonin

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sellingorprovidingbankingorotherfinancialservices,orsolicitsorotherwisecompetes for,eitherdirectlyorindirectly,anyorders,contract,oraccountsforservicesofakindor naturelikeorsubstantiallysimilartothefinancialservicesperformedorfinancialproducts sold bythe Bank(the precedinghereinafter referred toas“Services”), to or from any personorentityfromwhomtheExecutiveortheBank,totheknowledgeoftheExecutive, provided banking or other financial services, sold, offered to sell or solicited orders, contractsoraccountsforServicesduringthethree(3)yearperiodimmediatelypriortothe terminationoftheExecutive'semployment;

(e) divulges,discloses,orcommunicatestoothersinanymannerwhatsoever,anyconfidential information of the Bank, including, but not limited to, the names and addresses of customersorprospective customers,oftheBank,astheymayhaveexistedfromtimeto time, of work performed or services rendered for any customer, any method and/or proceduresrelatingtoprojectsorotherworkdevelopedfortheBank, earningsorother information concerning the Bank. The restrictions contained inthissubparagraph (e) apply toallconfidential information regardingtheBank,regardless ofthesource who providedorcompiledsuchinformation.Notwithstandinganythingto thecontrary,all confidential information referred toherein may bedisclosed tothe extent it becomes knowntothegeneralpublicfromsourcesotherthantheExecutive.

5.3.1 JudicialRemedies. IntheeventofabreachorthreatenedbreachbytheExecutive ofanyprovisionoftherestrictionssetforthin thisSection5.3,theExecutive recognizesthesubstantialandimmediateharmthatabreachorthreatened breach willimposeupontheBank,and furtherrecognizesthatinsucheventmonetary damagesmaybeinadequatetofullyprotecttheBank. Accordingly,intheevent ofabreachorthreatenedbreachoftheserestrictions,theExecutiveagreesthatthe Bankmayobtainpreliminary,interlocutory,temporaryorpermanentinjunctive,or any other equitable relief, protecting and fully enforcing the Bank's rights hereunderandpreventingtheExecutive fromfurtherbreachingany ofhisor her obligations setforthherein. Nothinghereinshallbeconstruedasprohibitingthe BankfrompursuinganyotherremediesavailabletotheBankatlaworinequity forsuchbreachorthreatenedbreach,includingtherecoveryofdamagesfromthe Executive.The Executive expressly acknowledges and agrees that: (i) the restrictions set forth in Section 5.3 hereof are reasonable, in terms of scope, duration,geographicarea,andotherwise,(ii)theprotectionsaffordedtheBankin thisSection 5.3.1hereofarenecessarytoprotectitslegitimatebusinessinterest, (iii)therestrictionssetforthinSection5.3hereofwillnotbemateriallyadverseto the Executive's employment with the Bank, and (iv) his or her agreement to observe such restrictions forms a material part of the consideration for this Agreement.

5.3.2 OverbreadthofRestrictiveCovenant. Itistheintentionofthepartiesthatif anyrestrictivecovenantinthisAgreementis determinedbyacourtof competent jurisdiction tobeoverlybroad,then thecourtshould enforce suchrestrictivecovenanttothemaximumextentpermittedunderthelawas toarea,breadthandduration.

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5.3.3 ChangeinControl. Theprovisions ofSection5.3hereofshallterminate andshall thereafterhavenofurtherforceoreffect if,followingaChangein Control,Executive shallbeentitledtoreceiveaSeverancePayment pursuanttotheChangeinControlAgreement.

Article6

AdministrationofAgreement

6.1 Plan Administrator Duties. The PlanAdministratorshall administerthis Agreement accordingtoitsexpresstermsandshallalsohavethediscretionandauthorityto(i)make, amend,interpretandenforceallappropriaterulesandregulationsfortheadministrationof thisAgreementand(ii)decideorresolveanyandallquestions,includinginterpretationsof thisAgreement,asmayarise inconnectionwiththeAgreementtotheextenttheexerciseof such discretion and authority would not cause taxation of the Executive's benefits hereundertobeacceleratedunderCodeSection409A.

6.2 Agents.IntheadministrationofthisAgreement,thePlanAdministratormayemploy agentsanddelegatetothemsuchadministrativedutiesasitseesfit,includingacting throughadulyappointedrepresentative,andmayfromtimetotimeconsultwithcounsel whomaybecounseltotheBank.

6.3 BindingEffectofDecisions. Anydecisionor actionofthePlanAdministratorwithrespect toanyquestionarisingoutoforinconnectionwiththeadministration, interpretationand applicationoftheAgreementandtherulesandregulationspromulgatedhereundershallbe finalandconclusiveandbindinguponallpersonshavinganyinterestintheAgreement.

6.4 Indemnity of Plan Administrator. The Bankshall indemnifyand hold harmlessthe membersofthePlanAdministratoragainstanyandallclaims,losses,damages,expensesor liabilitiesarisingfromany actionorfailuretoactwithrespecttothisAgreement,exceptin thecaseofwillful misconductbythePlanAdministrator oranyof itsmembers.

6.5 BankInformation. ToenablethePlanAdministratortoperformitsfunctions,theBank shallsupplyfullandtimelyinformationtothePlanAdministratoronallmattersrelatingto thedateandcircumstancesofthedeath,DisabilityorSeparationfrom Serviceofthe Executive,andsuchotherpertinentinformationasthePlanAdministratormayreasonably require.

6.6 AnnualStatement.ThePlanAdministratorshallprovidetotheExecutive,withinone hundredtwenty(120)daysaftertheendofeachPlanYear,astatementsettingforththe benefitstobedistributedunderthisAgreement.

Article7

ClaimsAndReviewProcedures

7.1 ClaimsProcedure.AnExecutiveorBeneficiary(“claimant”)whohasnotreceivedbenefits undertheAgreementthatheorshebelievesshouldbedistributedshallmakeaclaimfor

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suchbenefitsasfollows:

7.1.1 Initiation-WrittenClaim. TheclaimantinitiatesaclaimbysubmittingtothePlan Administratorawrittenclaimforthebenefits. Ifsuchaclaimrelatestothecontents ofanoticereceivedbytheclaimant,theclaimmustbemadewithinsixty(60)days aftersuch notice wasreceived bytheclaimant. Allotherclaims mustbemade withinonehundredeighty(180)daysofthedateonwhichtheeventthatcausedthe claimtoariseoccurred.The claimmuststatewithparticularitythedetermination desiredbytheclaimant.

7.1.2 TimingofPlanAdministratorResponse. ThePlanAdministratorshallrespondto such claimant within ninety (90) days after receiving the claim. If the Plan Administratordeterminesthatspecialcircumstancesrequire additionaltimefor processingtheclaim,thePlanAdministratorcanextendtheresponseperiodbyan additional ninety(90)daysbynotifyingtheclaimantinwriting,priortotheendof theinitialninety(90)dayperiod thatanadditionalperiodisrequired. Thenoticeof extension mustsetforththespecialcircumstancesandthedatebywhichthePlan Administratorexpectstorenderitsdecision.

7.1.3 NoticeofDecision. IfthePlanAdministratordeniespartortheentireclaim,the PlanAdministratorshallnotify the claimantinwritingofsuchdenial. ThePlan Administrator shallwritethenotificationinamannercalculatedtobeunderstood bytheclaimant. Thenotificationshallsetforth:

(a) Thespecificreasonsforthedenial;

(b) AreferencetothespecificprovisionsoftheAgreementonwhichthe denialisbased;

(c) Adescriptionofanyadditionalinformationormaterialnecessaryforthe claimanttoperfecttheclaimandanexplanationofwhyitisneeded;

(d) AnexplanationoftheAgreement'sreviewproceduresandthetimelimits applicabletosuchprocedures;and

(e) Astatementoftheclaimant'srighttobringacivilactionunderERISA Section502(a)followinganadversebenefitdeterminationonreview.

7.2 ReviewProcedure.IfthePlanAdministratordeniespartoralloftheclaim,theclaimant shall have the opportunity for afullandfair review of thedenial byan independent fiduciaryappointedbythePlanAdministratorasfollows:

7.2.1 Initiation -WrittenRequest. Toinitiatethereview,theclaimant,withinsixty(60) daysafterreceivingthePlanAdministrator'snoticeofdenial,mustfilewiththe PlanAdministratorawrittenrequestforreview.

7.2.2 Additional Submissions — Information Access. Theclaimantshallthenhavethe opportunitytosubmitwrittencomments,documents,recordsandotherinformation

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relatingtotheclaim. ThePlanAdministratorshallalsoprovidetheclaimant,upon requestandfreeofcharge,reasonableaccessto,andcopiesof,alldocuments, recordsandotherinformationrelevant(as defined in applicable ERISA regulations)totheclaimant'sclaimforbenefits.

7.2.3 ConsiderationsonReview. Inconsideringthereview,theindependentfiduciary shalltakeintoaccountallmaterialsandinformationtheclaimantsubmitsrelating totheclaim,withoutregardtowhethersuchinformation wassubmittedor consideredintheinitialbenefitdetermination.

7.2.4 TimingofPlanAdministratorResponse.ThePlanAdministratorshallrespondin writingtosuchclaimantwithinsixty (60)daysafterreceivingtherequestfor review. IfthePlanAdministratordeterminesthatspecialcircumstancesrequire additionaltimeforprocessingtheclaim,thePlanAdministratorcanextendthe responseperiodbyanadditionalsixty (60)daysbynotifyingtheclaimantin writing, prior totheendoftheinitialsixty(60)dayperiodthatan additionalperiod isrequired. Thenoticeofextensionmustsetforththespecialcircumstancesand thedatebywhichthePlanAdministrator expectstorenderitsdecision.

7.2.5 NoticeofDecision. ThePlanAdministrator shall notifytheclaimantinwriting of thedecisionoftheindependentfiduciary. ThePlanAdministratorshallwritethe notificationinamannercalculated tobeunderstoodbytheclaimant. The notificationshallsetforth:

(a) Thespecificreasonsforthedenial;

(b) AreferencetothespecificprovisionsoftheAgreementonwhichthe denialisbased;

(c) Astatementthattheclaimantisentitledtoreceive,uponrequestandfreeof charge,reasonableaccessto,andcopiesof,alldocuments,recordsand otherinformationrelevant(asdefinedinapplicableERISAregulations)to theclaimant'sclaimforbenefits;and

(d) Astatementoftheclaimant'srighttobringacivilactionunderERISA Section 502(a).

Article 8

AmendmentsandTermination

8.1 Amendments. ThisAgreementmaybeamendedonlybyawrittenagreementsignedby theBankandtheExecutive. However,theBankmayunilaterallyamendthisAgreement toconformwithwrittendirectivestotheBankfromitsauditorsorbankingregulatorsorto complywithlegislativeortaxlaw,includingwithoutlimitationCodeSection409Aofthe Codeandanyandallregulationsandguidancepromulgated thereunder,providedthat any suchamendmentshallpreservetothemaximumextentpermissiblethebenefitsprovided tothe Executivehereunder.

8.2 TerminationGenerally. This Agreement may be terminated only by a written agreement signed by the Bank and the Executive. Provided, however, if the Bank's Board of Directors

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determines in good faith that the Executive, while still employed by the Bank, is no longer a member of “a select group of management or highly compensated employees”, as that phrase if used in Section 201 of ERISA, the Bank may terminate this Agreement. Upon such termination, the Executive shall be one hundred percent (100%) vested in the Account Value. Except as provided in Section 8.3, the termination of this Agreement shall not cause a distribution of benefits under this Agreement. Rather, upon such termination benefit distributions will be made at the earliest distribution event permitted under Article

2 or Article 3.

8.3 TerminationDistributionsUnderCodeSection409A. Notwithstandinganythingtothe contraryinSection8.2,iftheBankterminatesthisAgreement inthefollowing circumstances:

(a) Withinthirty(30)daysbeforeortwelve(12)monthsafteratransactiondescribed inCodeSection409A(2)(A)(v)andRegulations Section1.409A-3(i)(5),i.e.,a changeintheownership oreffectivecontroloftheBank,orintheownershipofa substantialportionoftheBank'sassets,providedthatalldistributionsaremadeno laterthantwelve(12)monthsfollowingsuchterminationoftheAgreementand furtherprovidedthatalltheBank'sagreements, methods,programsandother arrangementsimmediately aftersuchtransactionoccurswithrespecttowhich deferralsofcompensationaretreated ashavingbeendeferredunderasingleplan underRegulationsSection1.409A-1(c) areterminatedsotheExecutiveandall participantsinthesimilararrangementsarerequiredtoreceiveallamountsof compensationdeferredunder theterminatedarrangementswithintwelve(12) monthsofsuchterminations;

(b) UpontheBank'sdissolutionunderCodeSection331orwiththeapprovalofa bankruptcycourtprovided thattheamountsdeferredundertheAgreementare includedintheExecutive'sgrossincomeinthelatestof(i)thecalendaryearin whichtheAgreementterminates;(ii)thecalendaryearinwhichtheamountisno longersubjecttoasubstantialriskofforfeiture;or(iii)thefirstcalendaryearin whichthedistributionisadministrativelypractical;or

(c) UpontheBank'sterminationofthisandallotherarrangementsthat wouldbe aggregatedwiththisAgreementpursuanttoRegulations Section1.409A-1(c)ifthe Executiveparticipatedinsucharrangements(“SimilarArrangements”),provided that(i)theterminationandliquidationdoesnotoccurproximatetoadownturnin thefinancialhealthoftheBank,(ii) allterminationdistributionsaremadenoearlier thantwelve(12)monthsandnolaterthantwenty-four(24)monthsfollowingsuch termination,and (iii)the Bankdoesnot adoptany newarrangementthatwouldbea SimilarArrangementforaminimumofthree(3)yearsfollowingthedatetheBank takesallnecessaryactionto irrevocably terminateandliquidatetheAgreement;

theBankmaydistributetheAccountValuetotheExecutiveinalumpsumsubjecttothe aboveterms.

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Article9

Miscellaneous

9.1 BindingEffect. ThisAgreementshallbindtheExecutive andtheBank,andtheir beneficiaries,survivors,executors,administratorsandtransferees.

9.2 NoGuaranteeofEmployment. ThisAgreementisnotacontractforemployment.Itdoes notgivetheExecutivetherighttoremainasanemployeeoftheBank,norinterferewith theBank'srighttodischargetheExecutive.ItdoesnotrequiretheExecutivetoremainan employeenorinterferewiththeExecutive'srighttoterminateemploymentatanytime.

9.3 Non-Transferability. BenefitsunderthisAgreementcannotbesold,transferred,assigned, pledged,attachedorencumberedinanymanner.

9.4 TaxWithholdingandReporting.TheBankshallwithholdanytaxesthat arerequiredtobe withheld,includingbutnotlimitedtotaxes owedunderCodeSection409Afromthe benefitsprovidedunderthisAgreement.TheExecutiveacknowledgesthattheBank'ssole liabilityregardingtaxesistoforward anyamountswithheldtotheappropriatetaxing authorities. TheBankshallsatisfyallapplicablereportingrequirements,includingthose underCodeSection409A.

9.5 Applicable Law. TheAgreementandallrightshereundershallbegovernedbythelawsof theCommonwealthofMassachusettsexcepttotheextentpreemptedbythelawsofthe UnitedStatesofAmerica.

9.6 Unfunded Arrangement. The Executiveand the Beneficiaryare general unsecured creditorsoftheBankforthedistributionofbenefitsunderthisAgreement. Thebenefits representthemerepromisebytheBanktodistributesuchbenefits.Therightstobenefits arenotsubjectinanymannertoanticipation, alienation,sale,transfer,assignment,pledge, encumbrance,attachmentorgarnishmentbycreditors. AnyinsuranceontheExecutive's lifeorotherinformalfundingassetisageneralassetoftheBanktowhichtheExecutive andBeneficiaryhavenopreferred orsecuredclaim.

9.7 Reorganization.TheBankshallnotmergeorconsolidateintoorwithanotherbank,or reorganize,orsellsubstantiallyallofitsassetstoanother bank,firmorpersonunlesssuch succeedingorcontinuingbank, firmorpersonagreestoassumeanddischargethe obligationsoftheBankunderthisAgreement.Upontheoccurrenceofsuchanevent,the term“Bank”asusedinthisAgreementshallbedeemedtorefertothesuccessoror survivorentity.

9.8 EntireAgreement.ThisAgreement constitutestheentire agreementbetweentheBankand theExecutiveastothesubjectmatterhereof. NorightsaregrantedtotheExecutiveby virtueofthisAgreementotherthanthosespecificallysetforthherein.

9.9 Interpretation. WhereverthefulfillmentoftheintentandpurposeofthisAgreement requiresandthecontextwillpermit,theuseofthemasculinegenderincludesthefeminine anduseofthesingularincludestheplural.

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9.10 AlternativeAction.IntheeventitshallbecomeimpossiblefortheBankorthePlan AdministratortoperformanyactrequiredbythisAgreementduetoregulatoryorother constraints,theBankorPlanAdministratormayperformsuchalternativeactasmost nearly carriesouttheintentandpurpose ofthisAgreement,isinthebestinterestsofthe Bankandis consistentwiththedeferralof incomeunderCodeSection409A.

9.11 Headings. Articleandsectionheadingsareforconvenientreferenceonlyandshallnot controloraffectthemeaning or construction of any provision herein.

9.12 Validity.If anyprovisionofthis Agreement shall be illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but this Agreement shall be construed and enforced as if such illegal or invalid provision had never been inserted herein.

9.13 Notice. Anynotice or filing required or permitted to be given to the Bank or Plan Administrator under this Agreement shall be sufficient if in writing and hand-delivered or sent by registered or certified mail to the address below:

Cambridge Trust Company

1336 Massachusetts Avenue

Cambridge, MA 02138

Attention: Personnel Officer

Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification.

Any notice or filing required or permitted to be given to the Executive under this Agreement shall be sufficient if in writing and hand-delivered or sent by mail to the last known address of the Executive.

9.14 DeductionLimitationonBenefitPayments. IftheBankreasonablyanticipatesthatthe Bank'sdeductionwithrespecttoanydistributionunderthisAgreementwouldbelimited oreliminatedbyapplicationofCodeSection162(m),thentotheextentdeemednecessary bytheBanktoensurethattheentireamountofanydistributionfromthisAgreementis deductible,theBankmaydelaypayment ofanyamountthatwouldotherwisebe distributedunderthisAgreement. Thedelayed amountsshallbedistributedtothe Executive(ortheBeneficiaryintheeventoftheExecutive'sdeath)attheearliestdatethe Bankreasonablyanticipatesthatthedeductionofthepaymentoftheamountwillnotbe limitedoreliminatedbyapplicationofCodeSection162(m).

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IN WITNESS WHEREOF, the Executive and a duly authorized representative of the Bank have signed this Agreement.

Executive:		CAMBRIDGE TRUST COMPANY
/s/ Lynne Burrow	By:	/s/ Joseph V. Roller II
Lynne Burrow	Title:	President + CEO

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EX-10

Exhibit 10.8

CAMBRIDGE TRUST COMPANY

SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT

THIS SUPPLEMENTAL EXCUTIVE RETIREMENT AGREEMENT (the “Agreement”) is adopted this 21 day ofFebruary, 2008, by and between Cambridge Trust Company, a state-chartered commercial bank located in Cambridge, Massachusetts (the “Bank”), and Albert Rietheimer (the “Executive”). The purpose of this Agreement is to provide specified benefits to the Executive, a member of a select group of management or highly compensated employees who contribute materially to the continued growth, development, and future business success of the Bank. This Agreement shall be unfunded for tax purposes and for purposes of Title I of the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended from time to time.

Article 1 Definitions

Whenever used in this Agreement, the following words and phrases shall have the meanings specified:

1.1 “Account Value” means the amount shown on Schedule A, under the heading Account Value. The parties expressly acknowledge that the Account Value at any given time may be different from the liability that should be then accrued by the Bank, under Generally Accepted Accounting Principles (“GAAP”), for the Bank’s obligation to the Executive under Section 2.1 of this Agreement. The Account Value on any date other than the end of a Plan Year shall be determined by adding the prorated increase, calculated on a per diem basis and a 365-day year, attributable to the current Plan Year to the Account Value as of the end of the previous Plan Year.

1.2 “Base Salary” means the annual cash compensation relating to services performed during any calendar year, excluding distributions from nonqualified deferred compensation plans, bonuses, commissions, overtime, fringe benefits, stock options, relocation expenses, incentive payments, non-monetary awards, and other fees, and automobile and other allowances paid to the Executive for services rendered (whether or not such allowances are included in the Executive’s gross income). Base Salary shall be calculated before reduction for compensation voluntarily deferred or contributed by the Executive pursuant to all qualified or non-qualified plans of the Bank and shall be calculated to include amounts not otherwise included in the Executive’s gross income under Code Sections 125, 402(e)(3), 402(h), or 403(b) pursuant to plans established by the Bank; provided, however, that all such amounts will be included in compensation only to the extent that had there been no such plan, the amount would have been payable in cash to the Executive.

1.3 “Beneficiary” means each designated person or entity, or the estate of the deceased Executive, entitled to any benefits upon the death of the Executive pursuant to Article 4.

1.4 “Beneficiary Designation Form” means the form established from time to time by the Plan Administrator that the Executive completes, signs and returns to the Plan Administrator to designate one or more Beneficiaries.

1.5 “Board” means the Board of Directors of the Bank as from time to time constituted.

1.6 “Bonus” means the cash bonus, if any, awarded to the Executive for services performed during the Plan Year.

1.7 “Change in Control” shall have such meaning as defined in the Change in Control Agreement between Cambridge Bancorp and the Executive dated November 30, 2005.

1.8 “Code” means the Internal Revenue Code of 1986, as amended, and all regulations and guidance thereunder, including such regulations and guidance as may be promulgated after the Effective Date of this Agreement.

1.9 “Date of Hire” means the day, month and year the Executive began service to the Bank.

1.10 “Disability” means the Executive: (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months; or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees of the Bank. Medical determination of Disability may be made by either the Social Security Administration or by the provider of an accident or health plan covering employees or directors of the Bank provided that the definition of “disability” applied under such insurance program complies with the requirements of the preceding sentence. Upon the request of the Plan Administrator, the Executive must submit proof to the Plan Administrator of the Social Security Administration’s or the provider’s determination.

1.11 “Early Termination” means Separation from Service before Normal Retirement Age for reasons other than death, Disability, Termination for Cause or Good Reason.

1.12 “Effective Date” means January 1, 2007.

1.13 “Final Average Compensation” the average of the Executive’s highest three calendar years of annual Base Salary and Bonus. For purposes of calculating the average of the Executive’s highest three calendar years of annual base salary and bonus, (i) Base Salary and Bonus for the calendar year in which the Executive experiences a Separation from Service shall be annualized, (ii) Base Salary and Bonus for other calendar years shall not be annualized, and (iii) if the Executive has been employed less than three full calendar years (counting the final year of employment as an annualized full calendar year), the Executive’s

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Final Average Compensation shall be based on the number of full calendar years in which the Executive was an employee of the Bank (again counting the final year of employment as an annualized full calendar year).

1.14 “Good Reason” shall have such meaning as defined in the Change in Control Agreement between Cambridge Bancorp and the Executive dated November 30, 2005 (“Change in Control Agreement”).

1.15 “Normal Retirement Age” means the Executive attaining age sixty-five (65).

1.16 “Plan Administrator” means the Board or such committee or person as the Board shall appoint.

1.17 “Plan Year” means each twelve (12) month period commencing on January 1 and ending on December 31 of each year.

1.18 “Potential Change in Control” shall have such meaning as defined in the Change in Control Agreement.

1.19 “Schedule A” means the schedule attached to this Agreement and made a part hereof Schedule A shall be updated upon a change in any of the benefits under Articles 2 or 3.

1.20 “Separation from Service means termination of the Executive’s employment with the Bank for reasons other than death. Whether a Separation from Service has occurred is determined based on whether the facts and circumstances indicate that the Bank and Executive reasonably anticipated that no further services would be performed after a certain date or that the level of bona fide services the Executive would perform after such date (whether as an employee or as an independent contractor) would permanently decrease to no more than twenty percent (20%) of the average level of bona fide services performed (whether as an employee or an independent contractor) over the immediately preceding thirty-six (36) month period (or the full period of services to the Bank if the Executive has been providing services to the Bank less than thirty-six (36) months).

1.21 “Specified Employee” means an employee who at the time of Separation from Service is a key employee of the Bank, if any stock of the Bank is publicly traded on an established securities market or otherwise. For purposes of this Agreement, an employee is a key employee if the employee meets the requirements of Code Section 416(i)(1)(A)(i), (ii), or (iii) (applied in accordance with the regulations thereunder and disregarding section 416(i)(5)) at any time during the twelve (12) month period ending on a specified employee identification date.

1.22 “Termination for Cause” has that meaning set forth in Article 5.

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Article 2

Distributions During Lifetime

2.1 Normal Retirement Benefit. Upon the Executive’s Separation from Service on or after Normal Retirement Age, the Bank shall distribute to the Executive the benefit described in this Section 2.1 in lieu of any other benefit under this Article.

2.1.1 Amount of Benefit. The annual benefit under this Section 2.1 is an amount equal to Final Average Compensation multiplied by two percent (2%) for every complete Plan Year from the Executive’s Date of Hire to the Executive’s Separation from Service, not to exceed sixty percent (60%), less:

(a) Social Security Benefits. One hundred percent (100%) of the amount of annual unreduced primary (not family) retirement benefits under the United States Social Security Act, but only if the Executive would be eligible for Social Security Benefits if application were made as of the Executive’s Normal Retirement Age, assuming that the Executive had earnings at or above the maximum contribution and benefit base under Section 230 of the United States Social Security Act for the Executive’s working career; and

(b) Company Pension Benefits. The annual life-only annuity benefit the Executive would be entitled to receive from the Bank’s contributions to the Executive’s pension, measured as of the Executive’s Normal Retirement Age.

2.1.2 Distribution of Benefit. The Bank shall distribute the annual benefit to the Executive in twelve (12) equal monthly installments commencing on the first day of the month following the Executive’s Separation from Service, and continuing for the greater of the Executive’s lifetime or fifteen (15) years.

2.2 Early Termination Benefit. If Early Termination occurs, the Bank shall distribute to the Executive the benefit described in this Section 2.2 in lieu of any other benefit under this Article.

2.2.1 Amount of Benefit. The benefit under this Section 2.2 is the amount set forth on Schedule A determined as of the end of the Plan Year preceding Separation from Service.

2.2.2 Distribution of Benefit. The Bank shall distribute the annual benefit to the Executive in twelve (12) equal monthly installments commencing on the first day of the month following the Executive’s Normal Retirement Age, and continuing for the greater of the Executive’s lifetime or fifteen (15) years.

2.3 Disability Benefit. If the Executive experiences a Disability prior to Normal Retirement Age, the Bank shall distribute to the Executive the benefit described in this Section 2.3 in

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lieu of any other benefit under this Article.

2.3.1 Amount of Benefit. The benefit under this Section 2.3 is the amount set forth on Schedule A determined as of the end of the Plan Year preceding Disability.

2.3.2 Distribution of Benefit. The Bank shall distribute the annual benefit to the Executive in twelve (12) equal monthly installments commencing on the first day of the month following the determination of the Executive’s Disability, and continuing for the greater of the Executive’s lifetime or fifteen (15) years.

2.4 Change in Control Benefit. Upon the Executive’s Separation from Service following a Change in Control or Potential Change in Control under circumstances whereby the Executive is entitled to benefits provided in Section 4 (iii) of the Change in Control Agreement, the Bank shall distribute to the Executive the benefit described in this Section 2.4 in lieu of any other benefit under this Article.

2.4.1 Amount of Benefit. The annual benefit under this Section 2.4 is Thirty Two Thousand Four Hundred Eighty Dollars ($32,480).

2.4.2 Distribution of Benefit. The Bank shall distribute the annual benefit to the Executive in equal monthly installments commencing on the first day of the month following the Executive’s Normal Retirement Age, and continuing for the greater of the Executive’s lifetime or fifteen (15) years.

2.5 Restriction on Timing of Distribution. Notwithstanding any provision of this Agreement to the contrary, if the Executive is considered a Specified Employee, the provisions of this Section 2.5 shall govern all distributions hereunder. If benefit distributions which would otherwise be made to the Executive due to Separation from Service are delayed because the Executive is a Specified Employee, then such distributions shall not be made during the first six (6) months following Separation from Service. Rather, any distribution which would otherwise be paid to the Executive during such period shall be accumulated and paid to the Executive in a lump sum on the first day of the seventh month following Separation from Service. All subsequent distributions shall be paid in the manner specified.

2.6 Distributions Upon Taxation of Amounts Deferred. If, pursuant to Code Section 409A, the Federal Insurance Contributions Act or other state, local or foreign tax, the Executive becomes subject to tax on the amounts deferred hereunder, then, the Bank may make a limited distribution to the Executive in accordance with the provisions of Treasury Regulations Section 1.409A-3(j)(vi), (vii) and (xi). Any such distribution will be subtracted from the first payment or payments to the Executive or the Executive’s Beneficiary hereunder.

2.7 Change in Farm or Timing of Distributions. For distribution of benefits under this Article 2, the Executive and the Bank may, subject to the terms of Section 8.1, amend the Agreement to delay the timing or change the form of distributions. Any such amendment:

(a) may not accelerate the time or schedule of any distribution, except as

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provided in Code Section 409A and the regulations thereunder;

(b) must, for benefits distributable under Sections 2.2 and 2.4, be made at least twelve (12) months prior to the first scheduled distribution;

(c) must, for benefits distributable under Article 2, delay the commencement of distributions for a minimum of five (5) years from the date the first distribution was originally scheduled to be made; and

(d) must take effect not less than twelve (12) months after the amendment is made.

Article 3

Distribution at Death

3.1 Death During Active Service. If the Executive dies prior to Separation from Service, the Bank shall distribute to the Beneficiary the benefit described in this Section 3.1. This benefit shall be distributed in lieu of any benefits under Article 2.

3.1.1 Amount of Benefit.The annual benefit under this Section 3.1 is Thirty Two Thousand Four Hundred Eighty Dollars ($32,480).

3.1.2 Distribution of Benefit. The Bank shall distribute the annual benefit to the Beneficiary in twelve equal monthly installments commencing within ninety (90) days following the Executive’s death. The annual benefit shall be distributed to the Beneficiary for a period of fifteen (15) years.

3.2 Death During Distribution of a Benefit. If the Executive dies after any benefit distributions have commenced under this Agreement but before receiving all such distributions, the Bank shall distribute to the Beneficiary the remaining benefits at the same time and in the same amounts they would have been distributed to the Executive had the Executive survived.

3.3 Death After Separation from Service But Before Benefit Distributions Commence. If the Executive is entitled to benefit distributions under this Agreement but dies prior to the commencement of said benefit distributions, the Bank shall distribute to the Beneficiary the same benefits to which the Executive was entitled prior to death, except that the benefit distributions shall commence within ninety (90) days following the Executive’s death.

Article 4

Beneficiaries

4.1 In General. The Executive shall have the right, at any time, to designate a Beneficiary to receive any benefit distributions under this Agreement upon the death of the Executive. The Beneficiary designated under this Agreement may be the same as or different from the beneficiary designated under any other plan of the Bank in which the Executive participates.

4.2 Designation. The Executive shall designate a Beneficiary by completing and signing the Beneficiary Designation Form and delivering it to the Plan Administrator. If the Executive

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names someone other than the Executive’s spouse as a Beneficiary, the Plan Administrator may, in its sole discretion, determine that spousal consent is required to be provided in a formdesignatedbythePlanAdministrator, executedbytheExecutive’sspouseand returned to the Plan Administrator.The Executive’s beneficiary designation shall be deemed automatically revoked if the Beneficiary predeceases the Executive or if the Executive names a spouse as Beneficiary and the marriage is subsequently dissolved.The ExecutiveshallhavetherighttochangeaBeneficiary bycompleting,signingand otherwise complying with the terms of the Beneficiary Designation Form and the Plan Administrator’s rules and procedures. Upon the acceptance by the Plan Administrator of a new Beneficiary Designation Form, all Beneficiary designations previously filed shall be cancelled.The Plan Administrator shall be entitled to rely on the last Beneficiary Designation Form filed by the Executive and accepted by the Plan Administrator prior to the Executive’s death.

4.3 Acknowledgment. No designation or change in designation of a Beneficiary shall be effective until received, accepted and acknowledged in writing by the Plan Administrator or its designated agent.

4.4 No Beneficiary Designation. If the Executive dies without a valid beneficiary designation, or if all designated Beneficiaries predecease the Executive, then the Executive’s spouse shall be the designated Beneficiary. If the Executive has no surviving spouse, any benefits shall be paid to the personal representative of the Executive’s estate.

4.5 Facility of Distribution. If the Plan Administrator determines in its discretion that a benefit is to be distributed to a minor, to a person declared incompetent, or to a person incapable of handling the disposition of that person’s property, the Plan Administrator may direct distribution of such benefit to the guardian, legal representative or person having the care or custody of such minor, incompetent person or incapable person. The Plan Administrator may require proof of incompetence, minority or guardianship as it may deem appropriate prior to distribution of the benefit. Any distribution of a benefit shall be a distribution for the account of the Executive and the Beneficiary, as the case may be, and shall be completely discharge of any liability under the Agreement for such distribution amount.

Article 5

General Limitations

5.1 Termination for Cause. Notwithstanding any provision of this Agreement to the contrary, the Bank shall not distribute any benefit under this Agreement if Executive’s service is terminated by the Bank for any of the following reasons (a “Termination for Cause”):

(a) The willful and continued failure by the Executive to substantially perform his or her duties with the Bank (other than any such failure resulting from the Executive’s incapacity due to physical or mental illness or any such actual or anticipated failure resulting from the Executive’s termination for Good Reason), after a written demand for substantial performance is delivered to the Executive by the Bank which specifically identifies the manner in which the Bank believes that the Executive has not substantially performed his or her duties; or

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(b) The willful engaging by the Executive in misconduct which is demonstrably and materially injurious to the Bank, monetarily or otherwise.

For purposes of this Subsection, no act or failure to act on the Executive’s part shall be considered “willful” whether done at the direction of the Board, or otherwise unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that his or her action or omission was in the best interest of the Bank. Notwithstanding the foregoing, the Executive shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (3/4) of the entire membership of the Board at a meeting of the Board called and held for the purpose (after reasonable notice to the Executive and an opportunity for the Executive, together with his or her counsel, to be heard before the Board) finding that in the good faith opinion of the Board, the Executive was guilty of conduct set forth above in clauses (a) or (b) not timely cured by the Executive and specifying the particulars thereof in detail.

5.2 Removal. Notwithstanding any provision of this Agreement to the contrary, the Bank shall not be legally obligated to distribute any benefit under this Agreement if at the time such distribution is due, the Executive is subject to a final removal or prohibition order issued by an appropriate federal banking agency pursuant to Section 8(e) of the Federal Deposit Insurance Act.

5.3 Non-compete Provision. The Executive shall forfeit any non-distributed benefits under this Agreement if during the term of this Agreement and within twenty-four (24) months following a Separation from Service, the Executive, directly or indirectly, either as an individual or as a proprietor, stockholder, partner, officer, director, employee, agent, consultant or independent contractor of any individual, partnership, corporation or other entity (excluding an ownership interest of three percent (3%) or less in the stock of a publicly-traded company), without the prior written consent of the Bank:

(a) becomes employed by, participates in, or becomes connected in any manner with the ownership, management, operation or control of any bank, savings and loan or other similar financial institution if the Executive’s responsibilities will include providing banking or other financial services within twenty-five (25) miles of any office (sites solely with an ATM not being deemed to be an office for this purpose) maintained by the Bank as of the date of the termination of the Executive’s employment;

(b) participates in any way in hiring or otherwise engaging, or assisting any other person or entity in hiring or otherwise engaging, on a temporary, part-time or permanent basis, any individual who was employed by the Bank as of the date of termination of the Executive’s employment;

(c) assists, advises, or serves in any capacity, representative or otherwise, any third party in any legal action against the Bank;

(d) sells, offers to sell, provides banking or other financial services, assists any other person in

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selling or providing banking or other financial services, or solicits or otherwise competes for, either directly or indirectly, any orders, contract, or accounts for services of a kind or nature like or substantially similar to the financial services performed or financial products sold by the Bank (the preceding hereinafter referred to as “Services”), to or from any person or entity from whom the Executive or the Bank, to the knowledge of the Executive, provided banking or other financial services, sold, offered to sell or solicited orders, contracts or accounts for Services during the three (3) year period immediately prior to the termination of the Executive’s employment;

(e) divulges, discloses, or communicates to others in any manner whatsoever, any confidential information of the Bank, including, but not limited to, the names and addresses of customers or prospective customers, of the Bank, as they may have existed from time to time, of work performed or services rendered for any customer, any method and/or procedures relating to projects or other work developed for the Bank, earnings or other information concerning the Bank. The restrictions contained in this subparagraph (e) apply to all confidential information regarding the Bank, regardless of the source who provided or compiled such information. Notwithstanding anything to the contrary, all confidential information referred to herein may be disclosed to the extent it becomes known to the general public from sources other than the Executive.

5.3.1 Judicial Remedies. In the event of a breach or threatened breach by the Executive of any provision of the restrictions set forth in this Section 5.3, the Executive recognizes the substantial and immediate harm that a breach or threatened breach will impose upon the Bank, and further recognizes that in such event monetary damages may be inadequate to fully protect the Bank. Accordingly, in the event of a breach or threatened breach of these restrictions, the Executive agrees that the Bank may obtain preliminary, interlocutory, temporary or permanent injunctive, or any other equitable relief, protecting and fully enforcing the Bank’s rights hereunder and preventing the Executive from further breaching any of his or her obligations set forth herein. Nothing herein shall be construed as prohibiting the Bank from pursuing any other remedies available to the Bank at law or in equity for such breach or threatened breach, including the recovery of damages from the Executive. The Executive expressly acknowledges and agrees that: (i) the restrictions set forth in Section 5.3 hereof are reasonable, in terms of scope, duration, geographic area, and otherwise, (ii) the protections afforded the Bank in this Section 5.3.I hereof are necessary to protect its legitimate business interest, (iii) the restrictions set forth in Section 5.3 hereof will not be materially adverse to the Executive’s employment with the Bank, and (iv) his or her agreement to observe such restrictions forms a material part of the consideration for this Agreement.

5.3.2 Overbreadth of Restrictive Covenant. It is the intention of the parties that if any restrictive covenant in this Agreement is determined by a court of competent jurisdiction to be overly broad, then the court should enforce such restrictive covenant to the maximum extent permitted under the law as to area, breadth and duration.

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5.3.3 Changein Control.The provisions of Section 5.3 hereof shall terminate and shall thereafter have no further force or effect if, following a Change in Control,ExecutiveshallbeentitledtoreceiveaSeverancePayment pursuant to the Change in Control Agreement.

Article 6

Administration of Agreement

6.1 Plan Administrator Duties. The Plan Administrator shall administer this Agreement according to its express terms and shall also have the discretion and authority to (i) make, amend, interpret and enforce all appropriate rules and regulations for the administration of this Agreement and (ii) decide or resolve any and all questions, including interpretations of this Agreement, as may arise in connection with the Agreement to the extent the exercise of such discretion and authority would not cause taxation of the Executive’s benefits hereunder to be accelerated under Code Section 409A.

6.2 Agents. In the administration of this Agreement, the Plan Administrator may employ agents and delegate to them such administrative duties as it sees fit, including acting through a duly appointed representative, and may from time to time consult with counsel who may be counsel to the Bank.

6.3 Binding Effect of Decisions. Any decision or action of the Plan Administrator with respect to any question arising out of or in connection with the administration, interpretation and application of the Agreement and the rules and regulations promulgated hereunder shall be final and conclusive and binding upon all persons having any interest in the Agreement.

6.4 Indemnity of Plan Administrator. The Bank shall indemnify and hold harmless the members of the Plan Administrator against any and all claims, losses, damages, expenses or liabilities arising from any action or failure to act with respect to this Agreement, except in the case of willful misconduct by the Plan Administrator or any of its members.

6.5 Bank Information. To enable the Plan Administrator to perform its functions, the Bank shall supply full and timely information to the Plan Administrator on all matters relating to the date and circumstances of the death, Disability or Separation from Service of the Executive, and such other pertinent information as the Plan Administrator may reasonably require.

6.6 Annual Statement. The Plan Administrator shall provide to the Executive, within one hundred twenty (120) days after the end of each Plan Year, a statement setting forth the benefits to be distributed under this Agreement.

Article 7

Claims And Review Procedures

7.1 Claims Procedure. An Executive or Beneficiary (“claimant”) who has not received benefits under the Agreement that he or she believes should be distributed shall make a claim for

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such benefits as follows:

7.1.1 Initiation- Written Claim. The claimant initiates a claim by submitting to the Plan Administrator a written claim for the benefits. If such a claim relates to the contents of a notice received by the claimant, the claim must be made within sixty (60) days after such notice was received by the claimant. All other claims must be made within one hundred eighty (180) days of the date on which the event that caused the claim to arise occurred. The claim must state with particularity the determination desired by the claimant.

7.1.2 Timing of Plan Administrator Response. The Plan Administrator shall respond to such claimant within ninety (90) days after receiving the claim. If the Plan Administrator determines that special circumstances require additional time for processing the claim, the Plan Administrator can extend the response period by an additional ninety (90) days by notifying the claimant in writing, prior to the end of the initial ninety (90) day period that an additional period is required. The notice of extension must set forth the special circumstances and the date by which the Plan Administrator expects to render its decision.

7.1.3 Notice of Decision. If the Plan Administrator denies part or the entire claim, the Plan Administrator shall notify the claimant in writing of such denial. The Plan Administrator shall write the notification in a manner calculated to be understood by the claimant. The notification shall set forth:

(a) The specific reasons for the denial;

(b) A reference to the specific provisions of the Agreement on which the denial is based;

(c) A description of any additional information or material necessary for the claimant to perfect the claim and an explanation of why it is needed;

(d) An explanation of the Agreement’s review procedures and the time limits applicable to such procedures; and

(e) A statement of the claimant’s right to bring a civil action under ERISA Section 502(a) following an adverse benefit determination on review.

7.2 Review Procedure. If the Plan Administrator denies part or all of the claim, the claimant shall have the opportunity for a full and fair review of the denial by an independent fiduciary appointed by the Plan Administrator as follows:

7.2.1 Initiation- Written Request. To initiate the review, the claimant, within sixty (60) days after receiving the Plan Administrator’s notice of denial, must file with the Plan Administrator a written request for review.

7.2.2 Additional Submissions — Information Access. The claimant shall then have the opportunity to submit written comments, documents, records and other information

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relating to the claim. The Plan Administrator shall also provide the claimant, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to the claimant’s claim for benefits.

7.2.3 Considerations on Review. In considering the review, the independent fiduciary shall take into account all materials and information the claimant submits relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.

7.2.4 Timing of Plan Administrator Response. The Plan Administrator shall respond in writing to such claimant within sixty (60) days after receiving the request for review.If the Plan Administrator determines that special circumstances require additional time for processing the claim, the Plan Administrator can extend the response period by an additional sixty (60) days by notifying the claimant in writing, prior to the end of the initial sixty (60) day period that an additional period is required. The notice of extension must set forth the special circumstances and the date by which the Plan Administrator expects to render its decision.

7.2.5 Notice of Decision. The Plan Administrator shall notify the claimant in writing of the decision of the independent fiduciary. The Plan Administrator shall write the notification in a manner calculated to be understood by the claimant. The notification shall set forth:

(a) The specific reasons for the denial;

(b) A reference to the specific provisions of the Agreement on which the denial is based;

(c) A statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to the claimant’s claim for benefits; and

(d) A statement of the claimant’s right to bring a civil action under ERISA Section 502(a).

Article 8

Amendments and Termination

8.1 Amendments. This Agreement may be amended only by a written agreement signed by the Bank and the Executive. However, the Bank may unilaterally amend this Agreement to conform with written directives to the Bank from its auditors or banking regulators or to comply with legislative or tax law, including without limitation Code Section 409A of the Code and any and all regulations and guidance promulgated thereunder, provided that any such amendment shall preserve to the maximum extent permissible the benefits provided to the Executive hereunder.

8.2 Termination Generally. This Agreement may be terminated only by a written agreement signed by the Bank and the Executive. Provided, however, if the Bank’s Board of Directors

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determines in good faith that the Executive, while still employed by the Bank, is no longer a member of “a selectgroup of management or highly compensatedemployees”,as that phrase if used in Section 201 of ERISA, the Bank may terminate this Agreement.Upon suchtermination,theExecutiveshallbeonehundredpercent(100%)vestedinthe Account Value.Except as provided in Section 8.3, the termination of this Agreement shall not cause a distributionof benefits under this Agreement.Rather, upon such termination benefit distributionswill be made at the earliest distribution event permitted under Article

2 or Article 3.

8.3 Termination Distributions Under Code Section 409A. Notwithstanding anything to the contrary in Section 8.2, if the Bank terminates this Agreement in the following circumstances:

(a) Within thirty (30) days before or twelve (12) months after a transaction described in Code Section 409A(2)(A)(v) and Regulations Section 1.409A-3(i)(5), i.e., a change in the ownership or effective control of the Bank, or in the ownership of a substantial portion of the Bank’s assets, provided that all distributions are made no later than twelve (12) months following such termination of the Agreement and further provided that all the Bank’s agreements, methods, programs and other arrangements immediately after such transaction occurs with respect to which deferrals of compensation are treated as having been deferred under a single plan under Regulations Section 1.409A-1(c) are terminated so the Executive and all participants in the similar arrangements are required to receive all amounts of compensation deferred under the terminated arrangements within twelve (12) months of such terminations;

(b) Upon the Bank’s dissolution under Code Section 331 or with the approval of a bankruptcy court provided that the amounts deferred under the Agreement are included in the Executive’s gross income in the latest of (i) the calendar year in which the Agreement terminates; (ii) the calendar year in which the amount is no longer subject to a substantial risk of forfeiture; or (iii) the first calendar year in which the distribution is administratively practical; or

(c) Upon the Bank’s termination of this and all other arrangements that would be aggregated with this Agreement pursuant to Regulations Section 1.409A-1(c) if the Executive participated in such arrangements (“Similar Arrangements”), provided that (i) the termination and liquidation does not occur proximate to a downturn in the financial health of the Bank, (ii) all termination distributions are made no earlier than twelve (12) months and no later than twenty-four (24) months following such termination, and (iii) the Bank does not adopt any new arrangement that would be a Similar Arrangement for a minimum of three (3) years following the date the Bank takes all necessary action to irrevocably terminate and liquidate the Agreement;

the Bank may distribute the Account Value to the Executive in a lump sum subject to the above terms.

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Article 9

Miscellaneous

9.1 Binding Effect. This Agreement shall bind the Executive and the Bank, and their beneficiaries, survivors, executors, administrators and transferees.

9.2 No Guarantee of Employment. This Agreement is not a contract for employment. It does not give the Executive the right to remain as an employee of the Bank, nor interfere with the Bank’s right to discharge the Executive. It does not require the Executive to remain an employee nor interfere with the Executive’s right to terminate employment at any time.

9.3 Non-Transferability. Benefits under this Agreement cannot be sold, transferred, assigned, pledged, attached or encumbered in any manner.

9.4 Tax Withholding and Reporting. The Bank shall withhold any taxes that are required to be withheld, including but not limited to taxes owed under Code Section 409A from the benefits provided under this Agreement. The Executive acknowledges that the Bank’s sole liability regarding taxes is to forward any amounts withheld to the appropriate taxing authorities. The Bank shall satisfy all applicable reporting requirements, including those under Code Section 409A.

9.5 Applicable Law. The Agreement and all rights hereunder shall be governed by the laws of the Commonwealth of Massachusetts except to the extent preempted by the laws of the United States of America.

9.6 Unfunded Arrangement. The Executive and the Beneficiary are general unsecured creditors of the Bank for the distribution of benefits under this Agreement. The benefits represent the mere promise by the Bank to distribute such benefits. The rights to benefits are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or garnishment by creditors. Any insurance on the Executive’s life or other informal funding asset is a general asset of the Bank to which the Executive and Beneficiary have no preferred or secured claim.

9.7 Reorganization. The Bank shall not merge or consolidate into or with another bank, or reorganize, or sell substantially all of its assets to another bank, firm or person unless such succeeding or continuing bank, firm or person agrees to assume and discharge the obligations of the Bank under this Agreement. Upon the occurrence of such an event, the term “Bank” as used in this Agreement shall be deemed to refer to the successor or survivor entity.

9.8 Entire Agreement. This Agreement constitutes the entire agreement between the Bank and the Executive as to the subject matter hereof. No rights are granted to the Executive by virtue of this Agreement other than those specifically set forth herein.

9.9 Interpretation. Wherever the fulfillment of the intent and purpose of this Agreement requires and the context will permit, the use of the masculine gender includes the feminine and use of the singular includes the plural.

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9.10 Alternative Action.In the event it shall become impossible for the Bank or the Plan Administrator to perform any act required by this Agreement due to regulatory or other constraints, the Bank or Plan Administrator may perform such alternative act as most nearly carries out the intent and purpose of this Agreement, is in the best interests of the Bank and is consistent with the deferral of income under Code Section 409A.

9.11 Headings. Article and section headings are for convenient reference only and shall not control or affect the meaning or construction of any provision herein.

9.12 Validity. If any provision of this Agreement shall be illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but this Agreement shall be construed and enforced as if such illegal or invalid provision had never been inserted herein.

9.13 Notice. Any notice or filing required or permitted to be given to the Bank or Plan Administrator under this Agreement shall be sufficient if in writing and hand-delivered or sent by registered or certified mail to the address below:

Cambridge Trust Company

1336 Massachusetts Avenue

Cambridge, MA 02138

Attention: Personnel Officer

Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification.

Any notice or filing required or permitted to be given to the Executive under this Agreement shall be sufficient if in writing and hand-delivered or sent by mail to the last known address of the Executive.

9.14 Deduction Limitation on Benefit Payments. If the Bank reasonably anticipates that the Bank’s deduction with respect to any distribution under this Agreement would be limited or eliminated by application of Code Section 162(m), then to the extent deemed necessary by the Bank to ensure that the entire amount of any distribution from this Agreement is deductible, the Bank may delay payment of any amount that would otherwise be distributed under this Agreement. The delayed amounts shall be distributed to the Executive (or the Beneficiary in the event of the Executive’s death) at the earliest date the Bank reasonably anticipates that the deduction of the payment of the amount will not be limited or eliminated by application of Code Section 162(m).

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IN WITNESS WHEREOF, the Executive and a duly authorized representative of the Bank have signed this Agreement.

Executive:	CAMBRIDGE TRUST COMPANY
/s/ Albert Rietheimer	By:	/s/ Joseph V. Roller, II
Albert Rietheimer	Title:	President + CEO

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EX-10

Exhibit 10.9

CAMBRIDGETRUSTCOMPANY

SUPPLEMENTALEXECUTIVERETIREMENTAGREEMENT

THIS SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT (the “Agreement”) is adopted this 14^th day of august, 2008, by and between Cambridge Trust Company, a state-chartered commercial bank located in Cambridge, Massachusetts (the “Bank”), and Michael Duca (the “Executive”). The purpose of this Agreement is to provide specified benefits to the Executive, a member of a select group of management or highly compensated employees who contribute materially to the continued growth, development, and future business success of the Bank. This Agreement shall be unfunded for tax purposes and for purposes of Title I of the Employee Retirement Income Security Act of 1974 (“ERISA”), asamendedfromtimeto time.

Article 1Definitions

Whenever used in this Agreement, the following words and phrases shall have the meanings specified:

1.1 “Account Value” means the amount shown on Schedule A, under the heading Account Value. The parties expressly acknowledge that the Account Value at any given time may be different from the liability that should be then accrued by the Bank, under Generally Accepted Accounting Principles (“GAAP”), for the Bank’s obligation to the Executive under Section 2.1 of this Agreement. The Account Value on any date other than the end of a Plan Year shall be determined by adding the prorated increase, calculated on a per diem basis and a 365-day year, attributable to the current Plan Year to the Account Value as of the end of the previous Plan Year.

1.2 “Base Salary” means the annual cash compensation relating to services performed during any calendar year, excluding distributions from nonqualified deferred compensation plans, bonuses, commissions, overtime, fringe benefits, stock options, relocation expenses, incentive payments, non-monetary awards, and other fees, and automobile and other allowances paid to the Executive for services rendered (whether or not such allowances are included in the Executive’s gross income). Base Salary shall be calculated before reduction for compensation voluntarily deferred or contributed by the Executive pursuant to all qualified or non-qualified plans of the Bank and shall be calculated to include amounts not otherwise included in the Executive’s gross income under Code Sections 125, 402(e)(3), 402(h), or 403(b) pursuant to plans established by the Bank; provided, however, that all such amounts will be included in compensation only to the extent that had there been no such plan, the amount would have been payableincashtotheExecutive.

1.3 “Beneficiary”meanseachdesignatedpersonorentity,ortheestate ofthedeceased Executive,entitledtoanybenefitsuponthedeathoftheExecutivepursuanttoArticle4.

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1.4 “BeneficiaryDesignationForm”meanstheformestablishedfromtimetotimebythePlan AdministratorthattheExecutivecompletes,signsandreturnstothePlanAdministratorto designateoneormoreBeneficiaries.

1.5 “Board”meanstheBoardofDirectorsoftheBankasfromtimetotimeconstituted.

1.6 “Bonus”meansthecashbonus,ifany,awardedtotheExecutiveforservicesperformed duringthePlan Year.

1.7 “Change inControl”shall havesuch meaningas defined in the Change in Control AgreementbetweenCambridgeBancorpandtheExecutivedatedAugust14,2008.

1.8 “Code”meanstheInternalRevenueCodeof1986,asamended,andallregulationsand guidancethereunder,includingsuchregulationsandguidanceasmaybepromulgatedafter theEffectiveDateofthisAgreement.

1.9 “DateofHire”meanstheday,monthandyeartheExecutivebeganservicetotheBank.

1.10 “Disability”meanstheExecutive:(i)isunabletoengageinanysubstantialgainful activity byreasonofanymedicallydeterminablephysicalormentalimpairmentwhichcanbe expectedtoresultindeathor canbeexpectedtolastforacontinuousperiodofnotlessthan twelve(12)months;or(ii)is,byreasonofanymedicallydeterminablephysicalormental impairmentwhichcanbeexpected toresult indeathorcanbeexpectedtolastfora continuousperiod ofnotlessthantwelve(12)months,receivingincomereplacement benefitsforaperiodofnotlessthanthree(3)monthsunderanaccidentandhealthplan coveringemployeesoftheBank.MedicaldeterminationofDisabilitymaybemadeby eithertheSocialSecurityAdministrationorbytheproviderofanaccidentorhealthplan coveringemployeesordirectorsoftheBankprovidedthatthedefinitionof“disability” appliedundersuchinsuranceprogramcomplieswiththerequirementsofthepreceding sentence. UpontherequestofthePlanAdministrator,theExecutivemustsubmitproofto thePlanAdministratoroftheSocialSecurity Administration’sortheprovider’s determination.

1.11 “EarlyTermination”meansSeparationfromServicebeforeNormalRetirementAgefor reasonsotherthandeath,Disability,TerminationforCauseorGoodReason.

1.12 “EffectiveDate”meansJanuary 1,2007.

1.13 “Final Average Compensation” the average of the Executive’s highest three calendar years of annual Base Salary and Bonus. For purposes of calculating the average of the Executive’s highest three calendar years of annual base salary and bonus, (i) Base Salary and Bonus for the calendar year in which the Executive experiences a Separation from Service shall be annualized, (ii) Base Salary and Bonus for other calendar years shall not be annualized, and (iii) if the Executive has been employed less than three full calendar years (counting the final year of employment as an annualized full calendar year), the Executive’s Final Average Compensation shall be based on the number of full calendar years in which the Executive was an employee of the Bank (again counting the final year of employment as an annualized full calendar year).

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1.14 “GoodReason”shallhavesuchmeaningasdefinedintheChangeinControlAgreement betweenCambridge BancorpandtheExecutivedatedAugust14, 2008 (“Changein ControlAgreement”).

1.15 “NormalRetirementAge”meanstheExecutiveattainingagesixty-five(65).

1.16 “PlanAdministrator”meanstheBoardorsuchcommitteeorpersonastheBoardshall appoint.

1.17 “PlanYear”meanseachtwelve(12)monthperiodcommencingonJanuary1andending onDecember31ofeachyear.

1.18 “Potential ChangeinControl”shallhavesuchmeaningasdefined intheChangein

ControlAgreement.

1.19 “Schedule A”meansthescheduleattachedtothisAgreementandmadeaparthereof

ScheduleAshallbeupdateduponachangeinanyofthebenefitsunderArticles2or3.

1.20 “Separation from Service” means termination of the Executive’s employment with the Bank for reasons other than death. Whether a Separation from Service has occurred is determined based on whether the facts and circumstances indicate that the Bank and Executive reasonably anticipated that no further services would be performed after a certain date or that the level of bona fide services the Executive would perform after such date (whether as an employee or as an independent contractor) would permanently decrease to no more than twenty percent (20%) of the average level of bona fide services performed (whether as an employee or an independent contractor) over the immediately preceding thirty-six (36) month period (or the full period of services to the Bank if the Executive has been providing services to the Bank less than thirty-six (36) months).

1.21 “SpecifiedEmployee”meansanemployeewhoatthetimeofSeparationfromServiceisa keyemployeeoftheBank,ifanystockoftheBankispubliclytradedonanestablished securitiesmarketorotherwise. ForpurposesofthisAgreement,anemployeeisakey employeeiftheemployeemeetstherequirementsofCodeSection416(i)(1)(A)(i),(ii),or (iii)(applied in accordancewiththe regulationsthereunderand disregarding section 416(i)(5)) at any time during the twelve (12) month period ending on a specified employee identification date.

1.22 “TerminationforCause”has that meaning set forth in Article 5.

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Article2

DistributionsDuringLifetime

2.1 Normal Retirement Benefit. Upon the Executive’s Separation from Service on or after Normal Retirement Age, the Bank shall distribute to the Executive the benefit described in this Section 2.1 in lieu of any other benefit under this Article.

2.1.1 Amount of Benefit. The annual benefit under this Section 2.1 is an amount equal to Final Average Compensation multiplied by two percent (2%) for every complete Plan Year from the Executive’s Date of Hire to the Executive’s Separation from Service, not to exceed sixty percent (60%), less:

(a) SocialSecurityBenefits. Onehundredpercent(100%)oftheamountof annualunreducedprimary(notfamily)retirementbenefitsundertheUnited StatesSocialSecurity Act,butonlyiftheExecutivewouldbeeligiblefor SocialSecurityBenefitsifapplicationweremadeasoftheExecutive’s NormalRetirementAge,assumingthattheExecutivehadearningsator abovethe maximum contributionandbenefitbaseunderSection230ofthe UnitedStatesSocialSecurityActforthe Executive’sworkingcareer;and

(b) CompanyPensionBenefits. Theannuallife-onlyannuitybenefit the ExecutivewouldbeentitledtoreceivefromtheBank’scontributionstothe Executive’spension,measuredasoftheExecutive’sNormalRetirement Age.

2.1.2 Distribution of Benefit. The Bank shall distribute the annual benefit to the Executive in twelve (12) equal monthly installments commencing on the first day of the month following the Executive’s Separation from Service, and continuing for the greater of the Executive’s lifetime or fifteen (15) years.

2.2 EarlyTerminationBenefit. IfEarlyTerminationoccurs, theBankshalldistributetothe ExecutivethebenefitdescribedinthisSection 2.2inlieuofanyotherbenefitunderthis Article.

2.2.1 AmountofBenefit. ThebenefitunderthisSection2.2istheamountsetforthon ScheduleAdeterminedasoftheendofthePlanYearprecedingSeparationfrom Service.

2.2.2 Distribution of Benefit. The Bank shall distribute the annual benefit to the Executive in twelve (12) equal monthly installments commencing on the first day of the month following the Executive’s Normal Retirement Age, and continuing for the greater of the Executive’s lifetime or fifteen (15) years.

2.3 Disability Benefit. If the Executive experiences a Disability prior to Normal Retirement Age, the Bank shall distribute to the Executive the benefit described in this Section 2.3 in lieu of any other benefit under this Article.

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2.3.1 Amount of Benefit. The benefit under this Section 2.3 is the amount set forth on Schedule A determined as of the end of the Plan Year preceding Disability.

2.3.2 Distribution of Benefit. The Bank shall distribute the annual benefit to the Executive in twelve (12) equal monthly installments commencing on the first day of the month following the determination of the Executive’s Disability, and continuing for the greater of the Executive’s lifetime or fifteen (15) years.

2.4 Change in Control Benefit. Upon the Executive’s Separation from Service following a Change in Control or Potential Change in Control under circumstances whereby the Executive is entitled to benefits provided in Section 4 (iii) of the Change in Control Agreement, the Bank shall distribute to the Executive the benefit described in this Section 2.4inlieuofanyotherbenefit underthisArticle.

2.4.1 Amount of Benefit. The annual benefit under this Section 2.4 is Twenty Seven Thousand Eight Hundred Dollars ($27,800).

2.4.2 Distribution of Benefit. The Bank shall distribute the annual benefit to the Executive in equal monthly installments commencing on the first day of the month following the Executive’s Normal Retirement Age, and continuing for the greater of the Executive’s lifetime or fifteen (15) years.

2.5 Restriction on Timing of Distribution. Notwithstanding any provision of this Agreement to the contrary, if the Executive is considered a Specified Employee, the provisions of this Section 2.5 shall govern all distributions hereunder. If benefit distributions which would otherwise be made to the Executive due to Separation from Service are delayed because the Executive is a Specified Employee, then such distributions shall not be made during the first six (6) months following Separation from Service. Rather, any distribution which would otherwise be paid to the Executive during such period shall be accumulated and paid to the Executive in a lump sum on the first day of the seventh month following Separation from Service. All subsequent distributions shall be paid in the manner specified.

2.6 Distributions Upon Taxation of Amounts Deferred. If, pursuant to Code Section 409A, the Federal Insurance Contributions Act or other state, local or foreign tax, the Executive becomes subject to tax on the amounts deferred hereunder, then, the Bank may make a limited distribution to the Executive in accordance with the provisions of Treasury Regulations Section 1.409A-3(j)(vi), (vii) and (xi). Any such distribution will be subtracted from the first payment or payments to the Executive or the Executive’s Beneficiary hereunder.

2.7 Change in Form or Timing of Distributions. For distribution of benefits under this Article 2, the Executive and the Bank may, subject to the terms of Section 8.1, amend the Agreement to delay the timing or change the form of distributions. Any such amendment:

(a) may not accelerate the time or schedule of any distribution, except as provided in Code Section 409A and the regulations thereunder;

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(b) must, for benefits distributable under Sections 2.2 and 2.4, be made at least twelve (12) months prior to the first scheduled distribution;

(c) must, for benefits distributable under Article 2, delay the commencement of distributions for a minimum of five (5) years from the date the first distribution was originally scheduled to be made; and

(d) must take effect not less than twelve (12) months after the amendment is made.

Article3

DistributionatDeath

3.1 Death During Active Service. If the Executive dies prior to Separation from Service, the Bank shall distribute to the Beneficiary the benefit described in this Section 3.1. This benefit shall be distributed in lieu of any benefits under Article 2.

3.1.1 Amount of Benefit. The annual benefit under this Section 3.1 is Twenty Seven Thousand Eight Hundred Dollars ($27,800).

3.1.2 Distribution of Benefit. The Bank shall distribute the annual benefit to the Beneficiary in twelve equal monthly installments commencing within ninety (90) days following the Executive’s death. The annual benefit shall be distributed to the Beneficiary for a period of fifteen (15) years.

3.2 Death During Distribution of a Benefit. If the Executive dies after any benefit distributions have commenced under this Agreement but before receiving all such distributions, the Bank shall distribute to the Beneficiary the remaining benefits at the same time and in the same amounts they would have been distributed to the Executive had the Executive survived.

3.3 Death After Separation from Service But Before Benefit Distributions Commence. If the Executive is entitled to benefit distributions under this Agreement but dies prior to the commencement of said benefit distributions, the Bank shall distribute to the Beneficiary the same benefits to which the Executive was entitled prior to death, except that the benefit distributions shall commence within ninety (90) days following the Executive’s death.

Article4

Beneficiaries

4.1 In General. The Executive shall have the right, at any time, to designate a Beneficiary to receive any benefit distributions under this Agreement upon the death of the Executive. The Beneficiary designated under this Agreement may be the same as or different from the beneficiary designated under any other plan of the Bank in which the Executive participates.

4.2 Designation. The Executive shall designate a Beneficiary by completing and signing the Beneficiary Designation Form and delivering it to the Plan Administrator. If the Executive names someone other than the Executive’s spouse as a Beneficiary, the Plan Administrator may, in its sole discretion, determine that spousal consent is required to be provided in a form designated by the Plan Administrator, executed by the Executive’s spouse and returned to the Plan Administrator. The Executive’s beneficiary designation shall be deemed automatically revoked if the Beneficiary predeceases the Executive or if the Executive names a spouse as Beneficiary and the marriage is subsequently dissolved. The Executive shall have the right to change a Beneficiary by completing, signing and otherwise complying with the terms of the Beneficiary Designation Form and the Plan Administrator’s rules and procedures. Upon the acceptance by the Plan Administrator of a new Beneficiary Designation Form, all Beneficiary designations previously filed shall be cancelled. The Plan Administrator shall be entitled to rely on the last Beneficiary Designation Form filed by the Executive and accepted by the Plan Administrator prior to the Executive’s death.

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4.3 Acknowledgment. No designation or change in designation of a Beneficiary shall be effective until received, accepted and acknowledged in writing by the Plan Administrator or its designated agent.

4.4 No Beneficiary Designation. If the Executive dies without a valid beneficiary designation, or if all designated Beneficiaries predecease the Executive, then the Executive’s spouse shall be the designated Beneficiary. If the Executive has no surviving spouse, any benefits shall be paid to the personal representative of the Executive’s estate.

4.5 Facility of Distribution. If the Plan Administrator determines in its discretion that a benefit is to be distributed to a minor, to a person declared incompetent, or to a person incapable of handling the disposition of that person’s property, the Plan Administrator may direct distribution of such benefit to the guardian, legal representative or person having the care or custody of such minor, incompetent person or incapable person. The Plan Administrator may require proof of incompetence, minority or guardianship as it may deem appropriate prior to distribution of the benefit. Any distribution of a benefit shall be a distribution for the account of the Executive and the Beneficiary, as the case may be, and shall be completely discharge of any liability under the Agreement for such distribution amount.

Article5

GeneralLimitations

5.1 Termination for Cause. Notwithstanding any provision of this Agreement to the contrary, the Bank shall not distribute any benefit under this Agreement if Executive’s service is terminated by the Bank for any of the following reasons (a “Termination for Cause”):

(a) The willful and continued failure by the Executive to substantially perform his or her duties with the Bank (other than any such failure resulting from the Executive’s incapacity due to physical or mental illness or any such actual or anticipated failure resulting from the Executive’s termination for Good Reason), after a written demand for substantial performance is delivered to the Executive by the Bank which specifically identifies the manner in which the Bank believes that the Executive has not substantially performed his or her duties; or

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(b) The willful engaging by the Executive in misconduct which is demonstrably and materially injurious to the Bank, monetarily or otherwise.

For purposes of this Subsection, no act or failure to act on the Executive’s part shall be considered “willful” whether done at the direction of the Board, or otherwise unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that his or her action or omission was in the best interest of the Bank. Notwithstanding the foregoing, the Executive shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (3/4) of the entire membership of the Board at a meeting of the Board called and held for the purpose (after reasonable notice to the Executive and an opportunity for the Executive, together with his or her counsel, to be heard before the Board) finding that in the good faith opinion of the Board, the Executive was guilty of conduct set forth above in clauses (a) or (b) not timely cured by the Executive and specifying the particulars thereof in detail.

5.2 Removal. NotwithstandinganyprovisionofthisAgreementtothecontrary,theBank shallnotbelegallyobligatedtodistributeanybenefitunderthisAgreementifatthetime suchdistributionisdue,theExecutiveissubjecttoafinalremovalorprohibitionorder issuedbyanappropriatefederalbankingagencypursuanttoSection8(e)oftheFederal DepositInsuranceAct.

5.3 Non-compete Provision. The Executive shall forfeit any non-distributed benefits under this Agreement if during the term of this Agreement and within twenty-four (24) months following a Separation from Service, the Executive, directly or indirectly, either as an individual or as a proprietor, stockholder, partner, officer, director, employee, agent, consultant or independent contractor of any individual, partnership, corporation or other entity (excluding an ownership interest of three percent (3%) or less in the stock of a publicly-traded company), without the prior written consent of the Bank:

(a) becomes employed by, participates in, or becomes connected in any manner with the ownership, management, operation or control of any bank, savings and loan or other similar financial institution if the Executive’s responsibilities will include providing banking or other financial services within twenty-five (25) miles of any office (sites solely with an ATM not being deemed to be an office for this purpose) maintained by the Bank as of the date of the termination of the Executive’s employment;

(b) participates in any way in hiring or otherwise engaging, or assisting any other person or entity in hiring or otherwise engaging, on a temporary, part-time or permanent basis, any individual who was employed by the Bank as of the date of termination of the Executive’s employment;

(c) assists, advises, or serves in any capacity, representative or otherwise, any third party in any legal action against the Bank;

(d) sells, offers to sell, provides banking or other financial services, assists any other person in selling or providing banking or other financial services, or solicits or otherwise competes for, either directly or indirectly, any orders, contract, or accounts for services of a kind or nature like or substantially similar to the financial services performed or financial products sold by the Bank (the preceding hereinafter referred to as “Services”), to or from any person or entity from whom the Executive or the Bank, to the knowledge of the Executive, provided banking or other financial services, sold, offered to sell or solicited orders, contracts or accounts for Services during the three (3) year period immediately prior to the termination of the Executive’s employment;

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(e) divulges, discloses, or communicates to others in any manner whatsoever, any confidential information of the Bank, including, but not limited to, the names and addresses of customers or prospective customers, of the Bank, as they may have existed from time to time, of work performed or services rendered for any customer, any method and/or procedures relating to projects or other work developed for the Bank, earnings or other information concerning the Bank. The restrictions contained in this subparagraph (e) apply to all confidential information regarding the Bank, regardless of the source who provided or compiled such information. Notwithstanding anything to the contrary, all confidential information referred to herein may be disclosed to the extent it becomes known to the general public from sources other than the Executive.

5.3.1 Judicial Remedies. In the event of a breach or threatened breach by the Executive of any provision of the restrictions set forth in this Section 5.3, the Executive recognizes the substantial and immediate harm that a breach or threatened breach will impose upon the Bank, and further recognizes that in such event monetary damages may be inadequate to fully protect the Bank. Accordingly, in the event of a breach or threatened breach of these restrictions, the Executive agrees that the Bank may obtain preliminary, interlocutory, temporary or permanent injunctive, or any other equitable relief, protecting and fully enforcing the Bank’s rights hereunder and preventing the Executive from further breaching any of his or her obligations set forth herein. Nothing herein shall be construed as prohibiting the Bank from pursuing any other remedies available to the Bank at law or in equity for such breach or threatened breach, including the recovery of damages from the Executive. The Executive expressly acknowledges and agrees that: (i) the restrictions set forth in Section 5.3 hereof are reasonable, in terms of scope, duration, geographic area, and otherwise, (ii) the protections afforded the Bank in this Section 5.3.1 hereof are necessary to protect its legitimate business interest, (iii) the restrictions set forth in Section 5.3 hereof will not be materially adverse to the Executive’s employment with the Bank, and (iv) his or her agreement to observe such restrictions forms a material part of the consideration for this Agreement.

5.3.2 Overbreadth of Restrictive Covenant. It is the intention of the parties that if any restrictive covenant in this Agreement is determined by a court of competent jurisdiction to be overly broad, then the court should enforce such restrictive covenant to the maximum extent permitted under the law as to area, breadth and duration.

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5.3.3 Change in Control. The provisions of Section 5.3 hereof shall terminate and shall thereafter have no further force or effect if, following a Change in Control, Executive shall be entitled to receive a Severance Payment pursuant to the Change in Control Agreement.

Article6

Administration ofAgreement

6.1 Plan Administrator Duties. The Plan Administrator shall administer this Agreement according to its express terms and shall also have the discretion and authority to (i) make, amend, interpret and enforce all appropriate rules and regulations for the administration of this Agreement and (ii) decide or resolve any and all questions, including interpretations of this Agreement, as may arise in connection with the Agreement to the extent the exercise of such discretion and authority would not cause taxation of the Executive’s benefits hereunder to be accelerated under Code Section 409A.

6.2 Agents. In the administration of this Agreement, the Plan Administrator may employ agents and delegate to them such administrative duties as it sees fit, including acting through a duly appointed representative, and may from time to time consult with counsel who may be counsel to the Bank.

6.3 Binding Effect of Decisions. Any decision or action of the Plan Administrator with respect to any question arising out of or in connection with the administration, interpretation and application of the Agreement and the rules and regulations promulgated hereunder shall be final and conclusive and binding upon all persons having any interest in the Agreement.

6.4 Indemnity of Plan Administrator. The Bank shall indemnify and hold harmless the members of the Plan Administrator against any and all claims, losses, damages, expenses or liabilities arising from any action or failure to act with respect to this Agreement, except in the case of willful misconduct by the Plan Administrator or any of its members.

6.5 Bank Information. To enable the Plan Administrator to perform its functions, the Bank shall supply full and timely information to the Plan Administrator on all matters relating to the date and circumstances of the death, Disability or Separation from Service of the Executive, and such other pertinent information as the Plan Administrator may reasonably require.

6.6 Annual Statement. The Plan Administrator shall provide to the Executive, within one hundred twenty (120) days after the end of each Plan Year, a statement setting forth the benefits to be distributed under this Agreement.

Article 7

ClaimsAndReviewProcedures

7.1 Claims Procedure. An Executive or Beneficiary (“claimant”) who has not received benefits under the Agreement that he or she believes should be distributed shall make a claim for such benefits as follows:

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7.1.1 Initiation - Written Claim. The claimant initiates a claim by submitting to the Plan Administrator a written claim for the benefits. If such a claim relates to the contents of a notice received by the claimant, the claim must be made within sixty (60) days after such notice was received by the claimant. All other claims must be made within one hundred eighty (180) days of the date on which the event that caused the claim to arise occurred. The claim must state with particularity the determination desired by the claimant.

7.1.2 Timing of Plan Administrator Response. The Plan Administrator shall respond to such claimant within ninety (90) days after receiving the claim. If the Plan Administrator determines that special circumstances require additional time for processing the claim, the Plan Administrator can extend the response period by an additional ninety (90) days by notifying the claimant in writing, prior to the end of the initial ninety (90) day period that an additional period is required. The notice of extension must set forth the special circumstances and the date by which the Plan Administrator expects to render its decision.

7.1.3 Notice of Decision. If the Plan Administrator denies part or the entire claim, the Plan Administrator shall notify the claimant in writing of such denial. The Plan Administrator shall write the notification in a manner calculated to be understood by the claimant. The notification shall set forth:

(a) The specific reasons for the denial;

(b) Areference to the specific provisions of the Agreement on which the denial is based;

(c) A description of any additional information or material necessary for the claimant to perfect the claim and an explanation of why it is needed;

(d) An explanation of the Agreement’s review procedures and the time limits applicable to such procedures; and

(e) A statement of the claimant’s right to bring a civil action under ERISA Section 502(a) following an adverse benefit determination on review.

7.2 Review Procedure. If the Plan Administrator denies part or all of the claim, the claimant shall have the opportunity for a full and fair review of the denial by an independent fiduciary appointed by the Plan Administrator as follows:

7.2.1 Initiation - Written Request. To initiate the review, the claimant, within sixty (60) days after receiving the Plan Administrator’s notice of denial, must file with the Plan Administrator a written request for review.

7.2.2 Additional Submissions — Information Access. The claimant shall then have the opportunity to submit written comments, documents, records and other information relating to the claim. The Plan Administrator shall also provide the claimant, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to the claimant’s claim for benefits.

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7.2.3 Considerations on Review. In considering the review, the independent fiduciary shall take into account all materials and information the claimant submits relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.

7.2.4 Timing of Plan Administrator Response. The Plan Administrator shall respond in writing to such claimant within sixty (60) days after receiving the request for review. If the Plan Administrator determines that special circumstances require additional time for processing the claim, the Plan Administrator can extend the response period by an additional sixty (60) days by notifying the claimant in writing, prior to the end of the initial sixty (60) day period that an additional period is required. The notice of extension must set forth the special circumstances and the date by which the Plan Administrator expects to render its decision.

7.2.5 Notice of Decision. The Plan Administrator shall notify the claimant in writing of the decision of the independent fiduciary. The Plan Administrator shall write the notification in a manner calculated to be understood by the claimant. The notification shall set forth:

(a) The specific reasons for the denial;

(b) A reference to the specific provisions of the Agreement on which the denial is based;

(c) A statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to the claimant’s claim for benefits; and

(d) A statement of the claimant’s right to bring a civil action under ERISA Section 502(a).

Article 8

AmendmentsandTermination

8.1 Amendments. This Agreement may be amended only by a written agreement signed by the Bank and the Executive. However, the Bank may unilaterally amend this Agreement to conform with written directives to the Bank from its auditors or banking regulators or to comply with legislative or tax law, including without limitation Code Section 409A of the Code and any and all regulations and guidance promulgated thereunder, provided that any such amendment shall preserve to the maximum extent permissible the benefits provided to the Executive hereunder.

8.2 Termination Generally. This Agreement may be terminated only by a written agreement signed by the Bank and the Executive. Provided, however, if the Bank’s Board of Directors determines in good faith that the Executive, while still employed by the Bank, is no longer a member of “a select group of management or highly compensated employees”, as that phrase if used in Section 201 of ERISA, the Bank may terminate this Agreement. Upon such termination, the Executive shall be one hundred percent (100%) vested in the Account Value. Except as provided in Section 8.3, the termination of this Agreement shall not cause a distribution of benefits under this Agreement. Rather, upon such termination benefit distributions will be made at the earliest distribution event permitted under Article 2 or Article 3.

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8.3 Termination Distributions Under Code Section 409A. Notwithstanding anything to the contrary in Section 8.2, if the Bank terminates this Agreement in the following circumstances:

(a) Within thirty (30) days before or twelve (12) months after a transaction described in Code Section 409A(2)(A)(v) and Regulations Section 1.409A-3(i)(5), i.e., a change in the ownership or effective control of the Bank, or in the ownership of a substantial portion of the Bank’s assets, provided that all distributions are made no later than twelve (12) months following such termination of the Agreement and further provided that all the Bank’s agreements, methods, programs and other arrangements immediately after such transaction occurs with respect to which deferrals of compensation are treated as having been deferred under a single plan under Regulations Section 1.409A-1(c) are terminated so the Executive and all participants in the similar arrangements are required to receive all amounts of compensation deferred under the terminated arrangements within twelve (12) months of such terminations;

(b) Upon the Bank’s dissolution under Code Section 331 or with the approval of a bankruptcy court provided that the amounts deferred under the Agreement are included in the Executive’s gross income in the latest of (i) the calendar year in which the Agreement terminates; (ii) the calendar year in which the amount is no longer subject to a substantial risk of forfeiture; or (iii) the first calendar year in which the distribution is administratively practical; or

(c) Upon the Bank’s termination of this and all other arrangements that would be aggregated with this Agreement pursuant to Regulations Section 1.409A-1(c) if the Executive participated in such arrangements (“Similar Arrangements”), provided that (i) the termination and liquidation does not occur proximate to a downturn in the financial health of the Bank, (ii) all termination distributions are made no earlier than twelve (12) months and no later than twenty-four (24) months following such termination, and (iii) the Bank does not adopt any new arrangement that would be a Similar Arrangement for a minimum of three (3) years following the date the Bank takes all necessary action to irrevocably terminate and liquidate the Agreement;

the Bank may distribute the Account Value to the Executive in a lump sum subject to the above terms.

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Article9

Miscellaneous

9.1 Binding Effect. This Agreement shall bind the Executive and the Bank, and their beneficiaries, survivors, executors, administrators and transferees.

9.2 No Guarantee of Employment. This Agreement is not a contract for employment. It does not give the Executive the right to remain as an employee of the Bank, nor interfere with the Bank’s right to discharge the Executive. It does not require the Executive to remain an employee nor interfere with the Executive’s right to terminate employment at any time.

9.3 Non-Transferability. Benefits under this Agreement cannot be sold, transferred, assigned, pledged, attached or encumbered in any manner.

9.4 Tax Withholding and Reporting. The Bank shall withhold any taxes that are required to be withheld, including but not limited to taxes owed under Code Section 409A from the benefits provided under this Agreement. The Executive acknowledges that the Bank’s sole liability regarding taxes is to forward any amounts withheld to the appropriate taxing authorities. The Bank shall satisfy all applicable reporting requirements, including those under Code Section 409A.

9.5 Applicable Law. The Agreement and all rights hereunder shall be governed by the laws of the Commonwealth of Massachusetts except to the extent preempted by the laws of the United States of America.

9.6 Unfunded Arrangement. The Executive and the Beneficiary are general unsecured creditors of the Bank for the distribution of benefits under this Agreement. The benefits represent the mere promise by the Bank to distribute such benefits. The rights to benefits are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or garnishment by creditors. Any insurance on the Executive’s life or other informal funding asset is a general asset of the Bank to which the Executive and Beneficiary have no preferred or secured claim.

9.7 Reorganization. The Bank shall not merge or consolidate into or with another bank, or reorganize, or sell substantially all of its assets to another bank, firm or person unless such succeeding or continuing bank, firm or person agrees to assume and discharge the obligations of the Bank under this Agreement. Upon the occurrence of such an event, the term “Bank” as used in this Agreement shall be deemed to refer to the successor or survivor entity.

9.8 Entire Agreement. This Agreement constitutes the entire agreement between the Bank and the Executive as to the subject matter hereof. No rights are granted to the Executive by virtue of this Agreement other than those specifically set forth herein.

9.9 Interpretation. Wherever the fulfillment of the intent and purpose of this Agreement requires and the context will permit, the use of the masculine gender includes the feminine and use of the singular includes the plural.

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9.10 Alternative Action. In the event it shall become impossible for the Bank or the Plan Administrator to perform any act required by this Agreement due to regulatory or other constraints, the Bank or Plan Administrator may perform such alternative act as most nearly carries out the intent and purpose of this Agreement, is in the best interests of the Bank and is consistent with the deferral of income under Code Section 409A.

9.11 Headings. Article and section headings are for convenient reference only and shall not control or affect the meaning or construction of any provision herein.

9.12 Validity. If any provision of this Agreement shall be illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but this Agreement shall be construed and enforced as if such illegal or invalid provision had never been inserted herein.

9.13 Notice. Any notice or filing required or permitted to be given to the Bank or Plan Administrator under this Agreement shall be sufficient if in writing and hand-delivered or sent by registered or certified mail to the address below:

Cambridge Trust Company

1336 Massachusetts Avenue

Cambridge, MA 02138

Attention: Personnel Officer

Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification.

Any notice or filing required or permitted to be given to the Executive under this Agreement shall be sufficient if in writing and hand-delivered or sent by mail to the last known address of the Executive.

9.14 Deduction Limitation on Benefit Payments. If the Bank reasonably anticipates that the Bank’s deduction with respect to any distribution under this Agreement would be limited or eliminated by application of Code Section 162(m), then to the extent deemed necessary by the Bank to ensure that the entire amount of any distribution from this Agreement is deductible, the Bank may delay payment of any amount that would otherwise be distributed under this Agreement. The delayed amounts shall be distributed to the Executive (or the Beneficiary in the event of the Executive’s death) at the earliest date the Bank reasonably anticipates that the deduction of the payment of the amount will not be limited or eliminated by application of Code Section 162(m).

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INWITNESSWHEREOF,theExecutiveandadulyauthorizedrepresentativeoftheBank havesignedthisAgreement.

Executive:	CAMBRIDGETRUSTCOMPANY
/s/ MichaelDuca	By:	/s/ Noreen A. Briand
MichaelDuca	Title:	SVP Human Resources

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EX-10

Exhibit 10.10

CAMBRIDGETRUSTCOMPANY

SUPPLEMENTAL EXECUTIVE RETIREMENTAGREEMENT

For Michael A. Duca

FIRSTAMENDMENT

Cambridge Trust Company (the “Bank”) and Michael Duca (the “Executive”), having reserved in Section 8.1 the power to amend the Cambridge Trust Company  Supplemental Executive Retirement Agreement, adopted as of August 14, 2008 (the “Agreement”), hereby amend the Agreement as set forth  below effective  immediately.

*  *  *  *  *

1.      Amount of Early Termination Benefit. Section 2.2.1 of the Agreement shall be amended in its entirety  as follows.

2.2.1 Amount of Benefit. Provided the Executive has a Separation from Service on or about February 28, 2017, the benefit under this Section  2.2 shall be the benefit  determined under Section 2.1.1 based on an assumed Separation from Service at Executive's Normal Retirement Age (October 26, 2017).

*  *  *  *  *

2.      Except as hereinabove specifically  amended, all provisions  of the Agreement shall continue in full force and effect; provided, however, that the Bank and Executive hereby reserve  the power from time to time to further amend the Agreement as provided  in Section 8.1 therein.

*  *  *  *  *

IN WITNESS WHEREOF, the Bank and Executive have caused this First Amendment of the Agreement to be executed this 22^nd day of December, 2016.

EXECUTIVE	CAMBRIDGE TRUST COMPANY
/s/ Michael A. Duca	/s/ Pilar Pueyo
Michael A. Duca	Pilar Pueyo, SVP, Director of Human Resources

EX-10

Exhibit 10.11

CAMBRIDGETRUSTCOMPANY

SUPPLEMENTALEXECUTIVERETIREMENTAGREEMENT

THISSUPPLEMENTAL EXECUTIVERETIREMENTAGREEMENT (the“Agreement”)isadoptedasofJanuary1, 2016byandbetweenCAMBRIDGETRUST COMPANY,aMassachusettscorporationlocatedinCambridge,Massachusetts(the“Bank”), andMartinB.Millane,Jr.(the “Executive”). ThepurposeofthisAgreementistoprovide specifiedbenefitstotheExecutive,amemberofaselectgroupofmanagementorhighly compensatedemployeeswhocontributemateriallytothecontinuedgrowth,development,and futurebusinesssuccessoftheBank.

ThisAgreementshallbe readin conjunctionwiththeCambridgeTrustCompany ExecutiveDeferredCompensationPlan,asamendedandineffectfromtimetotime(the “EDCP”),therecordkeeperforwhichiscurrentlyPrincipalFinancialGroup. Thetermsand conditionsoftheEDCP,includingwithoutlimitation,provisionsgoverninginvestments, distributions,deathbenefits,andclaims,shallapplytothebenefitprovidedhereunder,exceptto theextentthisAgreementexplicitlyprovidesotherwise. Capitalizedtermsnotdefinedherein shallhavethemeaningsetforthintheEDCP.

ThisAgreementshallbeunfundedfortaxpurposesandforpurposesofTitleIofthe EmployeeRetirementIncomeSecurityActof1974(“ERISA”),asamendedfromtimetotime.

Article1

Contributions

1.1 BankContribution. ExcepttotheextentSection1.3applies,foreachPlanYear beginningonorafterJanuary1, 2016,theBankshallcredit,consistentwithSection 4.2(a)oftheEDCPAdoptionAgreement,theExecutive's DeferredCompensation Accountwiththefollowingamount:

(a) Tenpercent(10%)oftheExecutive’s BaseSalary,asineffectasofthe beginningofthePlanYear;and

(b) Tenpercent(10%)oftheExecutive’sBonus.

1.2 TimingofContribution. Fiftypercent(50%)oftheamountdeterminedforaPlanYear pursuantto Section 1.1(a)(afteranyadjustmentpursuanttoSection1.3)shallbecredited inarrears,andfiftypercent(50%)oftheamountdeterminedforaPlanYearpursuantto Section 1.1(b)shallbecredited,aspartofthefirstpayrollfollowingeachJune30and December31.

1.3 AdjustmenttoContributionandTimingintheEventofTermination. Withrespecttothe yearinwhichtheExecutive's employmentwiththeBankandanyofitsaffiliates terminates:

(a) TheamountdeterminedinSection 1.l(a)shallbeadjustedtoreflectthe completednumberofmonthsofemploymentduringthePlanYearpriorto termination;and

(b) Anyremainingamounttobecontributed(aftertakingintotheaccountthe adjustmentpursuanttoSection1.3(a)andcontributionsmadepursuantto Section1.2)shallbeincludedinthenextpayrollprocessedfollowing termination.

Article2

GeneralLimitations

2.1 TerminationforCause. NotwithstandinganyprovisionofthisAgreementtothecontrary, thebenefitprovidedunderthisAgreementviatheEmployerCreditintheEDCP(the “SERPBenefit”)shallbeforfeitediftheExecutive’s serviceisterminatedbytheBoard for Cause.

2.2 Removal. Notwithstandinganyprovisionof thisAgreementtothecontrary,theBank shallnotbelegallyobligatedtoprovidetheSERPBenefitifatthetimesuchdistribution isdue,theExecutiveissubjectto afinalremovalorprohibitionorderissuedbyan appropriatefederalbankingagencypursuanttoSection 8(e)oftheFederalDeposit InsuranceAct.

2.3 Non-competeProvision.

2.3.1 InGeneral. TheExecutiveshallforfeitanynon-distributedSERPBenefitif duringthetermofthisAgreementandwithintwenty-four(24)monthsfollowing aSeparationfromService,theExecutive,directlyorindirectly,eitherasan individualorasaproprietor,stockholder,partner,officer,director,employee, agent,consultantorindependentcontractorofanyindividual,partnership, corporationorotherentity(excludingan ownershipinterestofthreepercent(3%) orlessinthestockofapublicly-tradedcompany), withoutthepriorwritten consentoftheBoard:

(a) Becomesemployedby,participatesinorbecomesconnectedinany mannerwiththeownership,management,operationorcontrolofany bank,savingsandloanorothersimilarfinancialinstitutionifthe Executive’s responsibilitieswillincludeprovidingbankingorother financialserviceswithintwenty-five(25)milesofanyoffice(sitessolely withanATMnotbeingdeemedtobeanofficeforthispurpose) maintainedbytheBankasofthedateofthetermination ofthe Executive’semployment;

(b) Participatesinanywayinhiringorotherwiseengaging,orassistingany otherpersonorentityinhiringorotherwiseengaging,onatemporary, part-timeorpermanent basis,anyindividualwhowasemployedbythe BankasofthedateofterminationoftheExecutive'semployment;

(c) Assists,advisesorservesinanycapacity,representative orotherwise,any thirdpartyinanylegalactionagainsttheBank;

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(d) Sells,offerstosell,providesbankingorotherfinancialservices,assists anyotherpersoninsellingorprovidingbankingorotherfinancialservices,orsolicitsorotherwisecompetesfor,eitherdirectlyorindirectly, anyorders,contractoraccountsforservicesofakindornaturelikeor substantiallysimilartothefinancialservicesperformedorfinancial productssoldbytheBank (theprecedinghereinafterreferredtoas “Services”),toorfromanypersonorentityfromwhomtheExecutiveor theBank,totheknowledgeoftheExecutive,providedbankingorother financialservices,sold,offeredtosellorsolicitedorders,contractsor accountsforServicesduringthethree(3)yearperiodimmediatelypriorto theterminationoftheExecutive’semployment;or

(e) Divulges,disclosesorcommunicatestoothersinanymannerwhatsoever, anyconfidentialinformationoftheBank,including,butnotlimitedto,the namesandaddressesofcustomersorprospectivecustomers,oftheBank, astheymayhaveexistedfromtimetotime,ofworkperformedorservices renderedforanycustomer,anymethodand/orproceduresrelatingto projectsorotherworkdevelopedfortheBank,earningsorother informationconcerningtheBank. Therestrictionscontainedinthis Section2.3.1(e)applytoallconfidentialinformationregardingtheBank, regardlessofthesourcewhoprovidedorcompiledsuchinformation. Notwithstandinganythingtothe contrary,allconfidential information referredtohereinmaybedisclosedtotheextentitbecomesknowntothe generalpublicfromsourcesotherthantheExecutive.

2.3.2 JudicialRemedies. IntheeventofabreachorthreatenedbreachbytheExecutive ofanyprovisionoftherestrictionssetforthinthisSection2.3,theExecutive recognizesthesubstantialandimmediateharmthatabreachorthreatenedbreach willimposeupontheBank,andfurtherrecognizesthatinsucheventmonetary damagesmaybeinadequatetofullyprotecttheBank. Accordingly, intheevent ofabreachorthreatenedbreachoftheserestrictions,theExecutiveagreesthatthe Bankmayobtainpreliminary,interlocutory,temporaryorpermanentinjunctiveor anyotherequitablereliefprotectingandfullyenforcingtheBank’s rights hereunder andpreventingtheExecutivefromfurtherbreachinganyofhis obligationssetforthherein. Nothinghereinshallbeconstruedasprohibitingthe BankfrompursuinganyotherremediesavailabletotheBankatlaworinequity forsuchbreachorthreatenedbreach,includingtherecoveryofdamagesfromthe Executive. TheExecutiveexpresslyacknowledgesandagreesthat: (a)the restrictionssetforthinthisSection2.3arereasonable,intermsofscope,duration, geographicarea,andotherwise;(b)theprotectionsaffordedtheBankinSection 2.3.1arenecessarytoprotectitslegitimatebusinessinterest;(c)therestrictions setforthinthisSection2.3willnotbemateriallyadversetotheExecutive’s employmentwiththeBank;and(d)hisagreementtoobservesuchrestrictions formsamaterialpartof theconsiderationforthisAgreement.

2.3.3 OverbreadthofRestrictiveCovenant. Itistheintentionofthepartiesthatifany restrictivecovenantinthisAgreementisdeterminedbyacourtofcompetent

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jurisdictiontobeoverlybroad, thenthecourt shouldenforcesuchrestrictive covenanttothemaximumextentpermittedunderthelawastoarea,breadth,and duration.

2.3.4 ChangeinControl. TheprovisionsofSection2.3hereofshallterminateandshall thereafterhavenofurtherforceoreffectif,followingaChangeinControl, ExecutiveshallbeentitledtoreceivebenefitspursuanttoanyChangeinControl Agreement.

2.3.5 DefinitionofBank. ForpurposesofthisSection2.3,referencesto“Bank”shall includebothBankanditsParent.

2.4 Release. No SERP Benefit on Separation from Service shall be payable hereunder unless a Release Agreement has been duly executed by Executive and delivered to Bank and any applicable revocation period has expired within a sixty (60) day period following Separation from Service. Such payment will not be made prior to the sixtieth (60^th) day following Separation from Service.

Article3

AdministrationofAgreement

TheCommittee,whichshallserveastheAdministratorofthisAgreement,shall administerthisAgreementaccordingtoitsexpresstermsandshallalsohavethediscretionand authorityto(a)make,amend,interpret,andenforceallappropriaterulesandregulationsforthe administrationofthisAgreementand(b)decideorresolveanyandallquestions,including interpretationsofthisAgreement,asmayariseinconnectionwiththeAgreementtotheextent theexerciseofsuchdiscretionandauthoritywouldnot resultinadversetaxconsequencestothe ExecutiveunderCodeSection409A.

AnydecisionoractionoftheCommitteewithrespecttoanyquestionarisingoutoforin connectionwiththeadministration,interpretation,andapplicationoftheAgreementandthe rulesandregulationspromulgatedhereundershallbefinalandconclusiveandbindinguponall personshavinganyinterestintheAgreement.

Article4

AmendmentsandTermination

ThisAgreementmaybeamendedorterminatedonlybyawrittenagreementsignedby theBankandtheExecutive;provided,however,thatif theBoarddeterminesingoodfaiththat theExecutive,whilestillemployedbytheBank,isnolongeramemberofaselectgroupof managementorhighlycompensatedemployees,asthatphraseappliestoERISA,theBankmay terminatethisAgreementandupontermination,nofurthercontributionspursuanttoArticle 1 shallbecredited. Additionally,theBankmayamendthisAgreement,ifnecessarytoconform withwrittendirectivestotheBankfromitsbankingregulators,providedthatanysuch amendmentshallpreservetothemaximumextentpermissiblethebenefitsprovidedtothe Executivehereunder.

Article5

Miscellaneous

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5.1 BindingEffect.ThisAgreementshallbebindingonandinuretothebenefitofthe ExecutiveandtheBank,andtheirrespectivebeneficiaries,survivors,executors, administrators,successors,assigns,andtransferees.

5.2 NoGuaranteeofEmployment. ThisAgreementisnotacontractforemployment. It doesnotgivetheExecutivetherighttoremainasanemployeeoftheBank,nordoesit interferewiththeBank’srighttodischargetheExecutive. Italsodoesnotrequirethe ExecutivetoremainanemployeenorinterferewiththeExecutive’srighttoterminate employmentatanytime.

5.3 Non-Transferability. BenefitsunderthisAgreementcannotbesold,transferred, assigned,pledged,attachedorencumberedinanymanner.

5.4 TaxWithholding. TheBankshallwithholdanytaxesthatarerequiredtobewithheld, includingbutnotlimitedtotaxesowedasaresultoftheapplicationofCodeSection 409A,fromthebenefitsprovidedunderthisAgreement. TheExecutiveacknowledges thattheBank’s soleliabilityregardingtaxesis toforwardanyamountswithheldtothe appropriatetaxingauthority(ies)andtosatisfyallapplicablereportingrequirements, includingthoseunderCodeSection409A.

5.5 ApplicableLaw. TheAgreementandallrightshereundershallbegovernedbythelaws oftheCommonwealthofMassachusetts,excepttotheextentpreemptedbythelawsof theUnitedStatesofAmerica.

5.6 UnfundedArrangement. TheExecutive(andanyBeneficiary)isageneralunsecured creditoroftheBankforthedistributionofbenefitsunderthisAgreement. Thebenefits representthemerepromisebytheBank todistributesuchbenefits. Anyinsuranceonthe Executive’slifeorotherinformalfundassetisageneralassetoftheBanktowhichthe Executive(andanyBeneficiary)hasnopreferredorsecuredclaim.

5.7 Reorganization. TheBankshallnotmergeorconsolidateintoorwithanotherbank,or reorganize,orsellsubstantiallyallofitsassetstoanotherbank,firmorpersonunless suchsucceedingorcontinuingbank,firmorpersonagreestoassumeanddischargethe obligationsoftheBankunderthisAgreement. Upontheoccurrenceofsuchevent,the term“Bank”asusedinthisAgreementshallbedeemedtorefertothesuccessoror survivorbank.

5.8 EntireAgreement. ThisAgreement,andtheEDCP,constitutetheentireagreement betweentheBankandtheExecutiveastothesubjectmatterhereof. Norightsare grantedtotheExecutivebyvirtueofthisAgreementotherthanthosespecificallyset forthhereinorintheEDCP.

5.9 Interpretation. Whereverthefulfillmentoftheintentandpurposeof thisAgreement requires,andthecontextwillpermit,theuseofthemasculinegenderincludesthe feminineanduseofthesingularincludestheplural.

5.10 AlternativeAction. IntheeventitshallbecomeimpossiblefortheBankorthe CommitteetoperformanyactrequiredbythisAgreementduetoregulatoryorother

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constraints,theBankorCommitteemayperformsuchalternativeactasmostnearly carriesouttheintentandpurposeofthisAgreement,isinthebestinterestsoftheBank, andisconsistentwithCodeSection409A.

5.11 Headings. Articleandsectionheadingsareforconvenientreferenceonlyandshallnot controloraffectthemeaningorconstructionofanyofitsprovisions.

5.12 Validity. IncaseanyprovisionofthisAgreementshallbeillegalorinvalidforany reason,saidillegalityorinvalidityshallnotaffecttheremainingpartshereof,butthis Agreementshallbeconstruedandenforcedasifsuchillegalandinvalidprovisionhas neverbeeninsertedherein.

5.13 Notice. AnynoticeorfilingrequiredorpermittedtobegiventotheBankorCommittee underthisAgreementshallbesufficientifinwritingandhand-delivered, orsentby registeredorcertifiedmail,totheaddressbelow:

CambridgeTrustCompany

1336MassachusettsAvenue

Cambridge,MA02138

Attention:SVP,HumanResources

Suchnoticeshallbedeemedgivenasofthedateofdeliveryor,ifdeliveryismadeby mail,asofthedateshownonthepostmarkonthereceiptforregistration orcertification.

AnynoticeorfilingrequiresorpermittedtobegiventotheExecutiveunderthis Agreementshallbesufficientifinwritingandhand-delivered,orsentbymail,tothelast knownaddressoftheExecutiveontherecordsoftheBank.

5.14 DeductionLimitationonBenefitPayments. IftheBankreasonablyanticipatesthatthe Bank’sdeductionwithrespecttoanydistributionunderthisAgreementwouldbelimited oreliminatedbyapplicationofCodeSection162(m),thentotheextentdeemed necessarybytheBanktoensurethattheentireamountofanydistribution fromthis Agreementisdeductible,theBankmaydelaypaymentofanyamountthatwould otherwisebedistributedunderthisAgreement. Thedelayedamountsshallbedistributed totheExecutive(ortheBeneficiaryintheeventoftheExecutive’sdeath)attheearliest datetheBankreasonablyanticipatesthatthedeductionofthepaymentoftheamountwill notbelimitedoreliminatedbyapplicationofCodeSection162(m)andsubjecttothe requirementsof Treas.Reg.§1.409A-2(b)(7)(i).

5.15 CodeSection409A. ItistheintentionoftheBankandExecutivethatthisAgreement andallamountspayablehereundermeettherequirementsofCodeSection409A,tothe extentapplicabletotheAgreementandsuchpayments. Totheextentapplicable,this AgreementshallbeinterpretedinaccordancewithCodeSection409Aandregulations andotherinterpretiveguidanceissuedthereunder. Ifanycompensation orbenefits payableunderthisAgreementdonotcomplywithCodeSection409Aandrelated guidance,theBankandExecutiveagreetoamendthisAgreementortakesuchactionsas theBankdeemsnecessaryorappropriatetocomplywiththerequirementsofCode

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Section409Awhilepreserving,asnearlyaspossible,thesameeconomiceffectasunder thisAgreement.

Notwithstanding any provision of this Agreement to the contrary, if the Executive is considered a Specified Employee, benefit distributions that would otherwise be made to the Executive due to Separation from Service hereunder shall not be made during the first six (6) months following Separation from Service. Rather, any distribution that would otherwise be paid to the Executive during such period shall be accumulated and paid to the Executive in a lump sum on the first day of the seventh (7^th) month following Separation from Service. All subsequent distributions shall be paid in the manner specified herein and in the EDCP.

INWITNESSWHEREOF,theExecutiveandadulyauthorizedrepresentativeofthe BankhavesignedthisAgreementasof thedayandyearfirstabovewritten.

EXECUTIVE	CAMBRIDGE TRUST COMPANY
/s/ Martin B. Millane, Jr.	By:	/s/ Noreen A. Briand
Martin B. Millane, Jr.		Its: SVP, Human Resources Director

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SCHEDULEA

DEFINITIONS

1.1 “BaseSalary”meanstheannualcashcompensationfromtheBankrelatingtoservices performed(ortobeperformed)duringanycalendaryear,excludingdistributionsfrom nonqualifieddeferredcompensationplans,bonuses,commissions,overtime,fringe benefits,stockoptions,relocationexpenses,incentivepayments,non-monetaryawards and otherfees,andautomobileandotherallowancespaidtotheExecutiveforservices rendered(whetherornotsuchallowancesareincludedintheExecutive’s grossincome). BaseSalaryshallbecalculatedbeforereductionforcompensationvoluntarilydeferredor contributedbytheExecutivepursuanttoallqualifiedornon-qualifiedplansoftheBank andshallbecalculatedtoincludeamountsnototherwiseincludedintheExecutive’s grossincomeunderCodeSections125,132(f),402(e)(3),402(h)or403(b)pursuantto plansestablishedbytheBank;provided,however,thatallsuchamountswillbeincluded incompensationonlytotheextentthathadtherebeennosuchplan,theamountwould havebeenpayableincashtotheExecutive.

1.2 “Bonus”meanstheshort-termincentivecashbonus,ifany,awardedtotheExecutive (generallyduringthefirstquarterofthePlanYear)forservicesperformedduringthe precedingPlanYearfromtheBank.

1.3 “Cause”meansterminationbytheBankupon:

(a) ThewillfulfailurebyExecutivetosubstantiallyperformhisdutieswiththeBank (otherthananysuchfailureresultingfromhisincapacityduetophysicalor mentalillnessoranysuchactualoranticipatedfailureresultingfromhis resignationforGoodReason),withinten(10)daysafterademandforsubstantial performanceisdeliveredtoExecutivebytheBoardthatspecificallyidentifiesthe mannerinwhichtheBoardbelievesthatExecutivehasnotsubstantially performedhisduties;

(b) ThewillfulengagementbyExecutiveinmisconductthatisorforeseeablywillbe materiallyinjurioustotheBank, monetarilyorotherwise;or

(c) Abreachofafiduciaryduty,fraudordishonestyrelatingtotheBank,or convictionof(orpleaofnolocontendereto)acrime.

ForpurposesofthisScheduleA,Section1.3,no actorfailuretoact,onExecutive’spart shallbeconsidered“willful”unlessdone,oromittedtobedone,byExecutivenotin goodfaithandwithoutreasonablebeliefthathisactionoromissionwasinthebest interestoftheBank.

Notwithstandingtheforegoing,Executiveshallnotbedeemedtohavebeenterminated forCauseunlessanduntilthereshallhavebeen deliveredtoExecutiveacopyofa resolutiondulyadoptedbytheaffirmativevoteofnotlessthanthree-quarters (³/₄)ofthe entiremembershipoftheBoard(withExecutivenotvoting)atameetingoftheBoard calledandheldforthepurpose(afterreasonablenoticetoExecutiveandanopportunity

forExecutive,togetherwithExecutive’scounsel,tobeheardbeforetheBoard)finding thatinthegoodfaithopinionoftheBoardExecutiveengagedintheconductsetforth aboveinthisScheduleA,Section1.3andspecifyingtheparticularsthereofindetail.

1.4 “ChangeinControl”meanseitherofthefollowing:

(a) A change in control of a nature that would be required to be reported by Parent or Bank in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), whether or not Parent or Bank in fact is required to comply with Regulation 14A thereunder; or

(b) The acquisition of “control” as defined in the Bank Holding Company Act of 1956, as amended, or the regulations thereunder, or as defined in the Change in Bank Control Act of 1978, as amended, or the regulations or guidance thereunder, of Parent or Bank by any person, company or other entity other than Parent; provided that, without limitation, such a Change in Control shall be deemed to have occurred if:

(i) Any“person”(asthattermisusedinSection13(d)and14(d)ofthe ExchangeAct)otherthanatrusteeorotherfiduciaryholdingsecurities underanemployeebenefitplanofParentorBankoracorporationowned, directlyorindirectly,bythestockholdersofParentinsubstantiallythe sameproportionsastheirownershipofstockofParent,isorbecomesthe “beneficialowner”(asdefinedinRule13d-3undertheExchangeAct), directlyorindirectly,ofsecuritiesofParentrepresentingtwenty-five percent(25%)ormoreofthecombinedvotingpowerofParent’s then outstandingsecurities;or

(ii) Duringanyperiodoftwo(2)consecutiveyears(notincludinganyperiod priortotheexecutionofthisAgreement),individualswhoatthebeginning ofsuchperiodconstitutetheBoardandanynewdirector(otherthana directordesignatedby apersonwhohasenteredintoanagreementwith ParenttoeffectatransactiondescribedinthisScheduleA,Section 1.4(b)(i)orwithParentorBanktoeffectatransactiondescribedin ScheduleA,Section1.4(b)(ii)whoseelectionbytheBoardornomination forelectionbyParent’sorBank’sstockholderswasapprovedbyavoteof atleasttwo-thirds(²/₃)ofthedirectorsthenstillinofficewhoeitherwere directorsatthebeginningoftheperiodorwhoseelectionornomination forelectionwaspreviouslysoapproved,ceaseforanyreasontoconstitute amajoritythereof;or

(iii) ThestockholdersofParentorBankapproveamergerorconsolidationof ParentorBankwithanyothercorporation,otherthanamergeror consolidationthatwouldresultinthevotingsecuritiesofParentorBank outstandingimmediatelypriortheretocontinuingtorepresent(eitherby remainingoutstandingorbybeingconvertedintovotingsecuritiesofthe

2

survivingentity)atleasttwo-thirds(²/₃)ofthecombinedvotingpowerof thevotingsecuritiesofParentorBankorsuchsurvivingentity outstandingimmediatelyaftersuchmergerorconsolidation,orthe stockholdersofParentorBankapproveaplanofcompleteliquidationof ParentorBankoranagreementforthesaleordispositionbyParentorBankofallorsubstantiallyallParent’sorBank’sassets.Notwithstanding anythingtothecontrarycontainedinthisAgreement,theacquisitionbya person(orpersonsactinginconcert)oflessthantwenty-fivepercent (25%)ofthevotingsecuritiesofParent,undercircumstanceswherethe FederalReserveBoard(underregulationsorguidancepursuanttothe ChangeinBankControlActof1978,asamended)presumesthatsuch acquisitionconstitutestheacquisitionofcontrolofParent,shallnotbe deemeda“ChangeinControl”foranypurposeunderthisAgreement.

1.5 “Change in Control Agreement” means any Change in Control Agreement in effect from time to time between Parent and the Executive.

1.6 “Good Reason” means:

(a) In the case of a Change in Control described in Schedule A, Section 1.4(b)(i) when fifty percent (50%) is substituted for twenty-five percent (25%) or following consummation of a Change in Control described in Schedule A, Section 1.4(b)(iii) when one-half (¹/₂) is substituted for two-thirds (²/₃), termination by Executive for any reason or for no reason during the period beginning six (6) months and ending twelve (12) months following such event; or

(b) Without Executive’s prior consent, the occurrence after a Change in Control of any of the following circumstances:

(i) A material diminution in the nature or status of his responsibilities, authority or duties (provided that his entitlement to terminate employment for this reason following a Change in Control shall only be effective during the period beginning six (6) months and ending twelve (12) months after the Change in Control);

(ii) A material diminution in Executive’s base salary; or

(iii) A relocation of Executive’s principal place of employment to a location that is more than forty (40) miles from the Bank’s current principal executive office;

; provided, however, that the Bank shall have a thirty (30) day period to cure any such cause for “Good Reason” after being notified by Executive in writing.

Executive’s right to terminate employment for Good Reason shall not be affected by his incapacity due to physical or mental illness. Executive’s continued

3

employment shall not constitute consent to, or a waiver of rights with respect to, any circumstance constituting Good Reason hereunder.

1.7 “Parent” means Cambridge Bancorp.

1.8 “Release Agreement” means an agreement and general release, in a form satisfactory to Bank, that releases and forever discharges Bank, Parent and their affiliates, officers, employees, and directors from all claims and damages that Executive may have in connection with or arising out of his employment or the termination of employment with Bank or Parent.

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EX-10

Exhibit 10.12

Cambridge Bancorp

1336 Massachusetts Avenue

Cambridge. Massachusetts 02138

December 21, 2015

Denis K. Sheahan

Dear Denis:

Cambridge Bancorp (the “Company”) considers it essential to the best interest of its stockholders to foster the continuous employment of key management personnel of the Company and its subsidiary, Cambridge Trust Company (the “Bank”). The Board of Directors of the Company (the “Board”) recognizes that, as is the case with many publicly held corporations, the possibility of a change in control of the Company may exist and that such possibility, and the uncertainty and questions that it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company and its stockholders.

The Board has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Company's and the Bank's management, including yourself, to their assigned duties in the face of the potentially disturbing circumstances arising from the possibility of a change in control of the Company.

In order to induce you to remain in the employ of the Bank and in consideration of your agreement set forth in Section 2 hereof. this Agreement sets forth the severance benefits that the Company agrees will be provided to you in the event your employment with the Bank is terminated under the circumstances described below.

Whenever used in this Agreement. additional capitalized words and phrases have the meanings set forth in Section 15 below.

l.Term of Agreement. This Agreement shall commence on the date hereof and shall continue in effect through December 31, 2015: provided, however, that commencing on January 1, 2016 and each January l thereafter. the term of this Agreement shall automatically be extended for one (1) additional year unless not later than September 30 of the preceding year the Company shall have given notice that it does not wish to extend this Agreement. However, if a Change in Control or Potential Change in Control of the Company, as applicable, shall have occurred during the original or any extended term of this Agreement. This Agreement shall continue in effect for a period of twelve (12) months beyond the month in which the Change in Control or Potential Change in Control, as applicable, occurred notwithstanding notice from the Company that it does not wish to extend the Agreement.

Denis K. Sheahan

December 21, 2015

Page 2

2.Potential Change in Control. You agree that, subject to the terms and conditions of this Agreement, in the event of a Potential Change in Control you will not voluntarily terminate your employment with the Bank until the earliest of:

(i)The date that is twelve (12) months from the occurrence of the Potential Change in Control;

(ii)The termination by you of your employment by reason of death, Disability or Retirement;

(iii)The occurrence of a Change in Control; or

(iv)The date the Board adopts a resolution to the effect that, for purposes of this Agreement, the basis upon which the Board concluded that a Potential Change in Contro1 had occurred no longer exists.

3.Termination Following a Change in Control or a Potential Change in Control. If a Change in Control or a Potential Change in Control shall have occurred, you shall be entitled to the benefits provided in Section 4 hereof upon your Separation from Service within twelve (12) months after a Change in Control, or within the period described in Section 2 hereof after a Potential Change in Control, unless such Separation from Service is (i) because of your death, (ii) by the Bank for Cause or Disability or (iii) by you other than for Good Reason.

4.Compensation Upon Termination. Following a Change in Control or a Potential Change in Control, upon Separation from Service you shall be entitled to the following benefits.

(i)If your employment shall be terminated for Cause or your death, the Company shall pay you your full base salary through the Date of Termination as the rate in effect at the time Notice of Termination is given, plus all other amounts to which you are entitled under any compensation plan at the time such payments are due. and the Company shall have no further obligations to you under this Agreement.

(ii)If your employment by the Bank shall be terminated (1) by the Bank other than for Cause or Disability or (2) by you for Good Reason, then you shall be entitled to the benefits provided below:

(A)The Company shall pay you your full base salary through the Date of Termination at the rate in effect at the time Notice of Termination is given, plus all other amounts to which you are entitled under any compensation plan at the time such payments are due.

(B)The Company shall pay you, in lieu of any further salary or bonus payments to you for periods subsequent to the Date of Termination, a lump sum severance payment (the “Severance Payment”) equal to the product of (I) your Final Average Compensation multiplied by (II) three (3).

Denis K. Sheahan

December 21, 2015

Page 3

(C)Any Severance Payment shall be made not later than the fifth (5^th) day following the Date of Termination; provided, however, that notwithstanding anything contained herein to the contrary, if you are a Specified Employee at the time of your Separation from Service, the Bank shall pay you the Severance Payment in a lump sum on the earlier of (I) the first (1^st) business day that is six (6) months and one (1) day following the date of your Separation from Service or (II) the date of your death, but only to the extent such delayed commencement is otherwise required in order to avoid a prohibited distribution under Code Section 409A(a)(2).

(iii)Unless you are terminated for Cause or you terminate your employment other than for Good Reason, the Company shall cause the Bank to maintain in full force and effect for your continued benefit for a period of up to three (3) years all employee welfare benefit plans and programs or arrangements in which you are entitled to participate at any time within the six (6) months immediately prior to the Notice of Termination, provided that your continued participation is possible under the general terms and provisions of such plans and programs and that such continuation does not cause the Bank's group health or dental coverage to violate any applicable non-discrimination laws. Benefits continued under this Section 4(iii) shall be paid by you. Benefits otherwise receivable by you pursuant to this Section 4(iii) shall be reduced to the extent comparable benefits are actually received by you from sources other than the Company or the Bank during the three (3)-year period following your termination, and any such benefits actually received by you shall be reported to the Company.

(iv)You shall not be required to mitigate the amount of any payment provided for in this Section 4 by seeking other employment or otherwise, nor shall the amount of any payment provided for in this Section 4 be reduced by any compensation earned by you as the result of employment by another employer after the Date of Termination, or otherwise except as specifically provided in this Section 4.

5.Golden Parachute.  If any of the payments provided for in this Agreement, together with any other payments or benefits that you have the right to receive from the Company, Bank or any member of an affiliated group of corporations (as defined in Code Section 1504, without regard to Code Section 1504(b)) of which either Company or Bank is a member (together, the “Payments”) would constitute a parachute payment (as defined in Code Section 280G(b)(2)) that is subject to the excise tax imposed by Code Section 4999 (the “'Excise Tax”), Company will cause to be determined, before any Payments are made, which of the following two alternatives would maximize your after-tax proceeds: (i) payment in full of the entire amount of the Payments; or (ii) payment of only a part of the Payments, reduced to the minimum extent necessary so that you receive the largest Payments possible without the imposition of the Excise Tax (“Reduced Payments”). If it is determined that Reduced Payments will maximize your after-tax benefit, then (1) cash compensation subject to the six-monthdelayruleinCodeSection409A(a)(2)(B)(i)shallbereducedfirst,thencashpayments that are not so subject shall be reduced, (2) the Payments shall be paid only to the extent permitted under the Reduced Payments alternative, and (3) you will have no rights to any additional payments and/or benefits constituting the Payments. Unless you and the Company otherwise agree in writing, any determination required under this Section 5 shall be made in writing by independent public accountants agreed to by you and the Company (the “Accountants”), who shall be paid solely by the Company and whose determination shall be conclusive and binding upon you and the Company for all purposes. For purposes of making the calculations required by this Section 5, the Accountants may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code.  You and the Company shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to

Denis K. Sheahan

December 21, 2015

Page 4

make the required determinations.

6.Non-Competition.  In the event your employment terminates and you are entitled to receive a Severance Payment hereunder, for a period of one (l) year following the Date of Termination (the “Non-Compete Term”) you shall not, directly or indirectly, as an executive of any person or entity (whether or not engaged in business for profit), individual proprietor, partner, stockholder, director, officer, joint venturer, investor, lender or in any other capacity whatever (otherwise than as holder of less than ten percent (10%) of any securities publicly traded in the market) compete with the Company and any subsidiary or affiliate of the Company in any city or town in which the Company or such subsidiary or affiliate operates at any time during the term of this Agreement, and any contiguous city or town.

7.Successors; Binding Agreement.

(i)The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by agreement in form and substance satisfactory to you, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle you to compensation from the Company in the same amount and on the same terms as you would be entitled hereunder if you terminated your employment for Good Reason, except that for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination. As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business, and/or assets, as aforesaid that executes and delivers the agreement provided for in this Section 7 or that otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.

(ii)This Agreement shall inure to the benefit of and be enforceable by your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If you should die while any amount would still be payable to you hereunder if you had continued to live, all such amounts, unless otherwise provided herein,shallbepaidinaccordance withthetermsofthisAgreement to your devisee, legatee or other designee or, if there be no such designee, to your estate.

Denis K. Sheahan

December 21, 2015

Page 5

8.Notices. All notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States certified mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth on the first page of this Agreement; provided, however, that all notices to the Company shall be directed to the attention of the Board with a copy to the Clerk of the Company, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt.

9.Miscellaneous. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by you and such officers as may be specifically designated by the Board.  No waiver by either party hereto at any time of any breach by the other party hereto, or of failure to comply with any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.  No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party that are not expressly set forth in this Agreement. The obligations of the Company under Section 4 shall survive the expiration of the term of this Agreement.  All reference to sections of any statute, including the Code, shall be deemed also to refer to any successor provisions thereof.  The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the Commonwealth of Massachusetts. This Agreement is made under seal.

10.Tax Withholding.  The Bank shall withhold any taxes that are required to be withheld from the benefits provided under this Agreement.  You acknowledge that the Bank's sole liability regarding taxes is to forward any amounts withheld to the appropriate taxing authority(ies) and to satisfy all applicable reporting requirements.

11.Validity.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

12.Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

13.Section 409A. It is the intention of the Company and you that the Agreement and all amounts payable to you under the Agreement that are subject thereto meet the requirements of Code Section 409A, to the extent applicable to the Agreement and such payments.  To the extent applicable, this Agreement shall be interpreted in accordance with Code Section 409A and regulations and other interpretive guidance issued thereunder. If any compensation or benefits payable under this Agreement do not comply with Code Section 409A and related guidance, the Company and you agree to amend this Agreement or take such actions as the Company deems necessary or appropriate to comply with the requirements of Code Section 409A while preserving, as nearly as possible, the same economic effect as under this Agreement.

Denis K. Sheahan

December 21, 2015

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14.Entire Agreement. This Agreement constitutes the entire agreement and understanding between the parties hereto in respect of the subject matter hereof and supersedes any prior or contemporaneous agreement or understanding between the parties, written or oral, which relates to the subject matter hereof, including the letter agreement between you and the Company dated February 23, 2015.

15.Definitions.

(i)“Board” has the meaning set forth in the SERP.

(ii)“Cause” has the meaning set forth in the SERP.

(iii)“Change in Control has the meaning set forth in the SERP.

(iv)“Code” means the Internal Revenue Code of 1986, as amended.

(v)“Date of Termination” means:

(1)If your employment is terminated for Disability, thirty (30) days after Notice of Termination is given (provided that you shall not have returned to the performance of your duties on a full-time basis during such thirty (30) day period);

(2)If your employment is terminated for Cause, the date specified in the Notice of Termination; and

(3)If your employment is terminated by Bank for any other reason, or by you for Good Reason, the date on which a Notice of Termination is given.

(vi)“Disability” has the meaning set forth in the SERP.

(vii)“Final Average Compensation” has the meaning set forth in the SERP.

(viii)“Good Reason” has the meaning set forth in the SERP.

(ix)“'Potential Change in Control” has the meaning set forth in the SERP.

(x)“Retirement” means the termination of your employment in accordance with the Bank's retirement policy, including (at your sole election, as set forth in writing) early retirement, generally applicable to its salaried employees or in accordance with any retirement arrangement established with your consent with respect to you.

Denis K. Sheahan

December 21, 2015

Page 7

(xi)“Specified Employee” has the meaning set forth in the SERP.

(xii)“SERP” means the Cambridge Trust Company Supplemental Executive Retirement Agreement between Bank and you dated December 21, 2015.

*   *   *   *   *

If this letter correctly sets forth our agreement on the subject matter hereof, kindly sign and return to the Company the enclosed copy of this letter, which will then constitute our agreement on this subject.

	CAMBRIDGE BANCORP
	By	/s/ Robert S. Peterkin
		Its: Compensation Chair
Agreed:
/s/ Denis K. Sheahan
Denis K. Sheahan

EX-10

Exhibit 10.13

Cambridge Bancorp

1336 Massachusetts Avenue

Cambridge, Massachusetts 02138

September 16, 2008

Lynne M. Burrow

Executive Vice President & Chief Information Officer

c/o Cambridge trust Company

Dear Ms. Burrow:

Cambridge Bancorp (the “Company”) considers it essential to the best interest of its stockholders to foster the continuous employment of key management personnel of the Company and its subsidiary, Cambridge Trust Company (the “Bank”). The Board of Directors of the Company (the “Board”) recognizes that, as is the case with many publicly held corporations, the possibility of a change in control of the Company may exist and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company and its stockholders.

The Board has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Company’s and the Bank’s management, including yourself, to their assigned duties in the face of the potentially disturbing circumstances arising from the possibility of a change in control of the Company. The continued performance of your duties as an officer of the Bank may require your strenuous opposition to such a threatened change in control of the Company which, in the judgment of the Board, may not be in the best interests of the Company and its stockholders, and your opposition to a threatened change of control could prevent or inhibit you from effectively continuing your duties as an officer of the Bank should such a change of control occur.

In order to induce you to remain in the employ of the Bank and in consideration of your agreement set forth in Subsection 2(iii) hereof, this Agreement sets forth the severance benefits which the Company agrees will be provided to you in the event, your employment with the Bank is terminated under the circumstances described below.

1.Term of Agreement. This Agreement shall commence on the date hereof and shall continue in effect through December 31, 2008; provided, however, that commencing on January 1, 2009 and each January 1 thereafter, the term of this Agreement shall automatically be extended for one additional year unless not later than September 30 of the preceding year the Company shall have given notice that it does not wish to extend this Agreement. However, if a Change in Control of the Company shall have occurred during the original or any extended term of this Agreement, this Agreement shall continue in effect for a period of twenty-four (24) months beyond the month in which such Change in Control occurred notwithstanding notice from the Company that is does not wish to extend the Agreement. In addition, if a Potential Change in Control of the Company shall have occurred during the original or any extended term of this Agreement, this Agreement shall continue in effect for a period of twelve (12) months beyond the

month in which said Potential Change in Control occurred notwithstanding notice from the Company that it does not wish to extend the Agreement.

2.Change in Control.

(i)For purposes of this Agreement, a “Change in Control” of the Company shall mean either of the following: (A) a change in control of a nature that would be required to be reported by the Company or the Bank in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended (“Exchange Act”), whether or not the Company or the Bank in fact is required to comply with Regulation 14A thereunder, or (B) the acquisition of “control” as defined in the Bank Holding Company Act of 1956, as amended or the regulations thereunder, or as defined in the Change in Bank Control Act of 1978 or the regulations thereunder, of the Company or the Bank by any person, company or other entity other than the Company; provided that, without limitation, such a Change in Control shall be deemed to have occurred if (1) any “person” (as such term is used in Section 13(d) and 14(d) of the Exchange Act) other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or the Bank or a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of the Company’s then outstanding securities; or (2) during any period of two consecutive years (not including any period prior to the execution of this Agreement), individuals who at the beginning of such period constitute the Board and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in clauses (1) or (3) of this Subsection) whose election by the Board or nomination for election by the Company's stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof; or (3) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least two-thirds (2/3) of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all the Company’s assets. Notwithstanding anything to the contrary contained in this Agreement the acquisition by a person (or persons acting in concert) of less than 25% of the voting securities of the Company, under circumstances where the Federal Reserve Board (under regulations pursuant to the Change in Bank Control Act of 1978) presumes that such acquisition constitutes the acquisition of control of the Company, shall not be deemed a “Change in Control” for any purpose under this Agreement.

(ii)For purposes of this Agreement, a “Potential Change in Control” of the Company shall have occurred if (A) the Company enters into an agreement, the consummation of

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which would result in the occurrence of a Change in Control of the Company, (B) any person (including the Company) publicly announces an intention to take or to consider taking actions which if consummated would constitute a Change in Control of the Company; (C) any person, other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, is or becomes the beneficial owner, directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company’s then outstanding securities; or (D) the Board adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change in Control of the Company has occurred

(iii)You agree that, subject to the terms and conditions of this Agreement, in the event of a Potential Change in Control of the Company, you will remain in the employ of the Bank until the earliest of (i) the date which is twelve (12) months from the occurrence of such Potential Change in Control of the Company, (ii) the termination by you of your employment by reason of death, Disability or Retirement, as defined in Subsection 3(i), (iii) the occurrence of a Change in Control of the Company; or (iv) the date the Board adopts a resolution to the effect that, for purposes of this Agreement, the basis upon which the Board concluded that a Potential Change in Control had occurred no longer exists.

3.Termination Following a Change in Control or a Potential Change in Control. If any of the events described in Subsection 2 hereof constituting a Change in Control or a Potential Change in Control shall have occurred, you shall be entitled to the benefits provided in Section 4 hereof upon the termination of your employment by the Bank or by you for Good Reason within twenty-four (24) months after a Change in Control, or within the period described in Section 2(iii) hereof after a Potential Change in Control, unless such termination is (a) because of your death, (b) by the Bank for Cause or Disability (as hereafter defined) or (c) by you other than for Good Reason.

(i)Retirement; Disability. (A) Termination by you of your employment based on “Retirement” shall mean the termination of your employment in accordance with the Bank’s retirement policy, including (at your sole election, as set forth in writing) early retirement, generally applicable to its salaried employees or in accordance with any retirement arrangement established with your consent with respect to you.

(B)Termination by the Bank of your employment based on “Disability” shall mean termination because of your inability, as a result of your incapacity due to physical or mental illness, to perform the services required of you as an employee for a period aggregating six months or more within any 12-month period, unless within thirty (30) days after Notice of Termination (as hereinafter defined) is given you shall have returned to the full time performance of your duties.

(ii)Cause. Termination by the Bank of your employment for “Cause” shall mean termination upon (A) the willful and continued failure by you to substantially perform your duties with the Bank (other than any such failure resulting from your incapacity due to physical or mental illness or any such actual or anticipated failure resulting from your termination for Good

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Reason as hereafter defined), after a demand for substantial performance is delivered toyou by the

Board of Directors of the Bank (“Bank Board”) which specifically identifies the manner in which the Bank Board believes that you have not substantially performed your duties, or (B) the willful engaging by you in misconduct which is demonstrably and materially injurious to the Bank, monetarily or otherwise. For purposes of this Subsection, no act or failure to act, on your part shall be considered “willful” unless done, or omitted to be done, by you not in good faith and without reasonable belief that your action or omission was in the best interest of the Bank. Notwithstanding the foregoing, you shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to you a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (3/4) of the entire membership of the Bank Board at a meeting of the Bank Board called and held for the purpose (after reasonable notice to you and an opportunity for you, together with your counsel, to be heard before the Bank Board) finding that in the good faith opinion of the Bank Board you were guilty of conduct set forth above in clauses (A) or (B) of the first sentence of this Subsection, and specifying the particulars thereof in detail.

(iii)Good Reason. You shall be entitled to terminate your employment with the Bank for Good Reason. For purposes of this Agreement, “Good Reason” shall mean without your express written consent, the occurrence within twenty-four (24) months after a Change in Control of the Company, or within twelve (12) months after a Potential Change in Control of the Company, of any of the following circumstances unless, in the case of paragraphs (A), (B), or (D), such circumstances are fully corrected retroactive to the original effective date of such circumstances prior, to the Date of Termination specified in the Notice of Termination defined in Subsections 3(v) and 3(iv), respectively, given in respect thereof:

(A)the material adverse change in the nature or status of your responsibilities, authority or duties from those in effect immediately prior to the Potential Change in Control of the Company;

(B)a material reduction by the Bank in your annual base salary as in effect immediately prior to the Potential Change in Control of the Company or as the same may be increased from time to time;

(C)the relocation of the office where the Bank requires you to be based to a location more than forty (40) miles from its present headquarters in Harvard Square, Cambridge, Massachusetts, except for required travel on the Bank's business to an extent substantially consistent with your present business travel obligations; or

(D)the failure of the Company to obtain a satisfactory agreement from any successor to assume and agree to perform this Agreement, as contemplated in Section 5 hereof.

Your right to terminate your employment pursuant to this Subsection shall not be affected by your incapacity due to physical or mental illness. Your continued employment shall not

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constitute consent to, or a waiver of rights with respect to, any circumstance constituting Good Reason hereunder. To constitute a termination for Good Reason (i) you must provide written notice to the Company and the Bank within ninety (90) days of the initial existence of the event constituting Good Reason and (ii) the Company and the Bank shall have thirty (30) days toremedy

the event constituting Good Reason.

(iv)Notice of Termination. Any purported termination of your employment by the Bank or by you shall be communicated by written Notice of Termination to the other party hereto in accordance with Section 6 hereof. For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of your employment under the provision so indicated.

(v)Date of Termination.  “Date of Termination” shall mean (A) if your employment is terminated for Disability, thirty (30) days after Notice of Termination is given (provided that you shall not have returned to the performance of your duties on a full-time basis during such thirty (30) day period), (B) if your employment is terminated pursuant to Subsection (ii) of this Section 3, the date specified in the Notice of Termination, and (C) if your employment is terminated pursuant to Subsection (iii) of this Section 3 or for any other reason, the date on which a Notice of Termination is given; provided that if within fifteen (15) days after any Notice of Termination is given the party receiving such Notice of Termination notifies the other party that a dispute exists concerning the termination, the Date of Termination shall be the date on which the dispute is finally determined, either by mutual written agreement of the parties, by a binding and final arbitration award or by a final judgment, order or decree of a court of competent jurisdiction (the time for appeal therefrom having expired and no appeal having been perfected). Any such dispute shall extend the time period for termination following a Change in Control or a Potential Change in Control set forth in the first sentence of this Section 3.

4.Compensation Upon Termination or During Disability. Following a Change in Control or a Potential Change in Control of the Company, upon termination of your employment or during a period of disability you shall be entitled to the following benefits:

(i)During any period that you fail to perform your duties as an employee of the Bank hereunder as a result of incapacity due to physical or mental illness, you shall continue to receive your full base salary from the Bank at the rate then in effect until this Agreement is terminated pursuant to Section 3(i) hereof. Thereafter, your benefits shall be determined in accordance with the Bank’s long-term disability plan then in effect; provided that the benefits payable thereunder shall be no less favorable than those payable under the plan as currently in effect.

(ii)If your employment shall be terminated for Cause, the Company shall pay you your full base salary through the Date of Termination at the rate in effect at the time Notice of Termination is given, plus all other amounts to which you are entitled under any compensation plan at the time such payments are due and the Company shall have no further obligations to you under this Agreement.

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(iii)If your employment by the Bank shall be terminated (a) by the Bank other than for Cause or Disability or (b) by you for Good Reason, then you shall be entitled to the benefits provided below:

(A)The Company shall pay you your full base salary through the Date of Termination at the rate in effect at the time Notice of Termination is given plus all other amounts to which you are entitled under any compensation plan, at the time such payments are due, except as otherwise provided below.

(B)The Company shall pay you, in lieu of any further salary or bonus payments to you for periods subsequent to the Date of Termination, a lump sum severance payment (the “Severance Payment”) equal to your Average Annual Base Compensation. For purposes of this Agreement, Average Annual Base Compensation shall be the average of the total annual compensation paid: or deemed paid for Federal income tax purposes to you by the Company and including such other adjustments as may be required or allowed by the Regulations promulgated under Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), for the five years preceding a Change in Control or for such fewer number of years as you have been employed by the Company. Notwithstanding the foregoing, if any payment or benefit received or to be received by you in connection with a Change in Control of the Company or the termination of your employment (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company or the Bank, any person whose actions result in a Change in Control or any person affiliated with the Company, the Bank or such person) (collectively, “Total Payments”), would not be deductible (in whole or part) under Section 2800 of the Code by the Company, the Ban affiliate or other person making such payment or providing such benefit, the Severance Payment shall be reduced until no portion of the Total Payments is not deductible, or the Severance Payment is reduced to zero. For purposes of this limitation (1) no portion of the Total Payments the receipt or enjoyment of which you shall have effectively waived in writing prior to the date of payment of the Severance Payment shall be taken into account, (2) no portion of the Total Payments shall be taken into account which in the opinion of tax counsel selected by the Company's independent auditors and acceptable to you does not constitute a “parachute payment” within the meaning of Section 280G(b)(2) of the Code, (3) the Severance Payment shall be reduced only to the extent necessary so that the Total Payments (other than those referred to in clauses (1) or (2)) in their entirety constitute reasonable compensation for services actually rendered within the meaning of Section 280G(b)(4) of the Code or are otherwise not subject to disallowance as deductions, in the opinion of the tax counsel referred to in clause (2), and (4) the value of any non-cash benefit or any deferred payment or benefit included in the Total Payments shall be determined by the Company’s independent auditors in accordance with the principles of Sections 280G(d)(3) and (4) of the Code.

(C)In addition to the retirement benefits to which you are entitled under the Company’s Employee Retirement Plan and its Profit Sharing Plan (the “Plans”), or any successor plans thereto, the Company shall pay you in one sum in cash an amount (hereinafter the “Additional Cash Payment”) equal to the actuarial equivalent of the excess of(a) over (b), where (a) equals the retirement benefit (determined as a straight life annuity) to which you would have been entitled under the terms of the Plans, (without regard to either, (i) any offset thereunder for severance allowances payable hereunder or, (ii) any amendment to the Plans made subsequent to a Change in Control, or a Potential Change in Control, of the Company and on or prior to the Date

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of Termination, which amendment adversely affects in any manner the computation of retirement benefits under the Plans other than amendments that are made as a result of a change in applicable Federal or state law), determined as if you were fully vested thereunder, and, after any termination pursuant to Section 3 hereof, you had (y) accumulated one additional year ofcontinuous service thereunder at your highest rate of earnings (salary plus bonus) paid by the Bank during the 12 months immediately preceding the Date of Termination, and (z) been credited with a contribution to the Profit Sharing Plan at the highest annual rate of contribution by the Company during the 3 years preceding the year in which your employment is terminated; and where (b) equals the retirement benefit (determined as a straight life annuity) to which you are entitled pursuant to the provisions of the Plans; and for purposes of this subparagraph (C), “actuarial equivalent” hall be determined using the same methods and assumptions utilized under the Plans immediately prior to the Potential Change in Control. Notwithstanding the foregoing, to the extent that, after making allowance for any reduction of the Severance Payment as provided in Paragraph (B) above, there is still some amount of the Total Payments that would not be deductible (in whole or part) under Section 2800 of the Code, then, the Additional Cash Payment shall be reduced until no portion of the Total Payments is not deductible, or the Additional Cash Payment is reduced to zero.

(D)The Company shall also pay you all legal fees and expenses incurred by you as a result of such termination (including all such fees and expenses, if any, incurred in contesting or disputing any such termination or in seeking to obtain or enforce any right or benefit provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of Section 4999 of the Code to any payment or benefit provided hereunder) except to the extent that the payment of such fees and expenses would not be, or would cause any other portion of the Total Payments not to be, deductible by reason of Section 2800 of the Code. Such payments shall be made at the later of the times specified in paragraph (E) below, or within five (5) days after your request for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require; provided, however, that the amount reimbursable in any one calendar year shall not affect the amount reimbursable in any other calendar year, and the reimbursement of an eligible expense or fee must be made no later than December 31 of the year after the year in which the expense or fee was incurred. Your rights pursuant to this paragraph (D) shall expire on your death and shall not be subject to liquidation or exchange for another benefit.

(E)The payments provided for in paragraphs (B) and (C) above shall be made not later than the fifth day following the Date of Termination; provided, however, that if the amounts of such payments, and the limitation on such payments set forth in paragraph (B), cannot be finally determined on or before such day, the Company shall pay to you on such day an estimate, as determined in good faith by the Company, of the minimum amount of such payments and shall pay the remainder of such payments (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to you, payable on the fifth day after demand by the Company (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code). Any payments provided for under this Agreement shall be paid net of any applicable withholding required under federal, state or local law.

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(iv)You shall not be required to mitigate the amount of any payment provided for in this Section 4 by seeking other employment or otherwise, nor shall the amount of any payment provided for in this Section 4 be reduced by any compensation earned by you as theresult of employment by another employer after the Date of Termination, or otherwise except as specifically provided in this Section 4.

(v)Notwithstanding anything to the contrary in this Agreement, if you are a “specified employee” within the meaning of Code Section 409A(a)(2)(B)(i) at the time of your separation from service with the Bank and if any payment or benefit to which you become entitled under this Agreement would be considered deferred compensation subject to interest and additional tax imposed as a result of the application of Code Section 409A(a)(2)(B)(i), no such payment or benefit will be paid or provided to you prior to the earlier of (i) the expiration of the six (6) month period following the date of the your “separation from service” (as such term is defined by Code Section 409A and the regulations promulgated thereunder), or (ii) the date of the your death, but only to the extent such delayed commencement is otherwise required in order to avoid a prohibited distribution under Code Section 409A(a)(2). The payments and benefits to which you would otherwise be entitled during the six (6) month period following your separation from service will be accumulated and paid or provided, as applicable, in a lump sum, on the date that is six (6) months and one day following your separation from service (or if such date does not fall on a business day of the Company, the next following business day) and any remaining payments or benefits will be paid in accordance with the normal payment dates specified for them herein.

5.Successors; Binding Agreement.

(i)The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by agreement in form and substance satisfactory to you, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle you to compensation from the Company in the same amount and on the same terms as you would be entitled hereunder if you terminated your employment for Good Reason, except that for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination. As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business, and/or assets, as aforesaid which executes and delivers the agreement provided for in this Section 5 or which otherwise become bound by all the terms and provisions of this Agreement by operation of law.

(ii)This Agreement shall inure to the benefit of and be enforceable by your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If you should die while any amount would still be payable to you hereunder if you had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to your devisee, legatee or other designee or, if there be no such designee, to your estate.

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6.Notices. All notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United . States registered mail, return receipt requested, postage prepaid, addressed to therespective addresses set forth on the first page of this Agreement, provided that all notices to the Company shall be directed to the attention of the Board with a copy to the. Clerk of the Company, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt.

7.Miscellaneous.  No provision of this Agreement may be modified waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by you and such officers as may be specifically designated by the Board. No waiver by either party hereto at any time of any breach by the other party hereto, or of failure to comply with any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement. The obligations of the Company under Section 4 shall survive the expiration of the term of this Agreement All reference to sections of any statute, including the Code, shall be deemed also to refer to any successor provisions thereof. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the Commonwealth of Massachusetts. This Agreement is made under seal.

8.Validity.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

9.Counterparts.  This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument

10.Arbitration.  Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in Boston, Massachusetts in accordance with the rules of American Arbitration Association then in effect Notwithstanding the pendency of any such dispute or controversy, the Company will cause the Bank to continue to pay, or will itself pay, your full compensation in effect when the notice giving rise to the dispute was given (including, but not limited to, base salary) and continue you as a participant in all compensation, benefit and insurance plans in which you were participating when the notice giving rise to the dispute was given, until the dispute is finally resolved in accordance with Section 3(v) hereof. Amounts paid under this Section 10 are in addition to all other amounts due under this. Agreement and shall not be offset against or reduce any other amounts due under this Agreement except to the extent otherwise provided in paragraph (B) of Subsection 4(iii). Judgment may be entered on the arbitrator's award in any court having jurisdiction; provided, however, that you shall be entitled to seek specific performance of your right to be paid until the Date of Termination during the pendency of any dispute or controversy arising under or in connection with this Agreement.

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11.Section 409A.  To the extent applicable, this Agreement shall be interpreted in accordance with Code Section 409A and regulations and other interpretive guidance issued thereunder. If the Company determines that any compensation or benefits payable under this Agreement do not comply with Code Section 409A and related guidance, the Company and you agree to amend this Agreement or take such actions as the Company deems necessary or appropriate to comply with the requirements of Code Section 409A while preserving, as nearly as possible, the same economic effect as under this Agreement.

12.Entire Agreement.  This Agreement constitutes the entire agreement and understanding between the parties hereto in respect of the subject matter hereof and supersedes any prior or contemporaneous agreement or understanding between the parties, written or oral, which relates to the subject matter hereof, including the letter agreement between you and the Company dated December 1, 1999.

If this letter correctly sets forth our agreement on the subject matter hereof, kindly sign and return to the Company the enclosed copy of this letter which will then constitute our agreement on this subject.

CAMBRIDGE BANCORP
By:	/s/ Joseph V. Roller II
	Joseph V. Roller II, President

Agreed

/s/ Lynne M. Burrow

Lynne M. Burrow

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EX-10

Exhibit 10.14

CambridgeBancorp

1336MassachusettsAvenue

Cambridge,Massachusetts02138

October12, 2016

MichaelF.Carotenuto

DearMike:

Cambridge Bancorp (the “Company”) considers it essential to the best interest of its stockholders to foster the continuous employment of key management personnel of the Company and its subsidiary, Cambridge Trust Company (the “Bank”).  The Board of Directors of the Company (the “Board”) recognizes that, as is the case with many publicly held corporations, the possibility of a change in control of the Company may exist and that such possibility, and the uncertainty and questions that it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company and its stockholders.

The Board has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Company’s and the Bank’s management, including yourself, to their assigned duties in the face of the potentially disturbing circumstances arising from the possibility of a change in control of the Company.

In order to induce you to remain in the employ of the Bank and in consideration of your agreement set forth in Section 2 hereof, this Agreement sets forth the severance benefits that the Company agrees will be provided to you in the event your employment with the Bank is terminated under the circumstances described below.

Whenever used in this Agreement, additional capitalized words and phrases have the meanings set forth in Section 15 below.

1.TermofAgreement. ThisAgreementshallcommenceonthedatehereofand shallcontinueineffectthroughDecember31,2016;provided,however,thatcommencingon January1,2017andeachJanuary1thereafter,thetermofthisAgreementshallautomatically be extendedforone(1)additionalyearunlessnotlaterthanSeptember30oftheprecedingyearthe CompanyshallhavegivennoticethatitdoesnotwishtoextendthisAgreement. However,if a ChangeinControlorPotentialChangeinControlof theCompany,asapplicable,shallhave occurredduringtheoriginaloranyextendedtermofthisAgreement,thisAgreementshall continueineffectforaperiodoftwelve(12)monthsbeyondthemonthinwhichtheChangein ControlorPotentialChangeinControl,asapplicable,occurrednotwithstandingnoticefromthe CompanythatitdoesnotwishtoextendtheAgreement.

2.PotentialChangeinControl. Youagreethat,subjecttothetermsandconditions ofthisAgreement,intheeventofaPotentialChangeinControlyouwillnotvoluntarily terminateyouremploymentwiththeBankuntiltheearliestof:

MichaelF.Carotenuto

October12, 2016

Page2

(i)The date that is twelve (12) months from the occurrence of the Potential Change in Control;

(ii)Theterminationbyyouofyouremploymentbyreasonofdeath,Disability orRetirement;

(iii)TheoccurrenceofaChangeinControl;or

(iv)ThedatetheBoardadoptsaresolutiontotheeffectthat,forpurposesof thisAgreement,thebasisuponwhichtheBoardconcludedthataPotentialChangein Controlhadoccurrednolongerexists.

3.TerminationFollowingaChangeinControloraPotentialChangeinControl. Ifa ChangeinControloraPotentialChangeinControlshallhaveoccurred,youshallbeentitledto thebenefitsprovidedinSection4hereofuponyourSeparationfromServicewithintwelve(12) monthsafteraChangeinControl,orwithintheperioddescribedinSection2hereofaftera PotentialChangeinControl,unlesssuchSeparationfromServiceis(i)becauseofyourdeath, (ii)bytheBankforCauseorDisabilityor(iii)byyouotherthanforGoodReason.

4.CompensationUponTermination. FollowingaChangeinControloraPotential ChangeinControl,uponSeparationfromServiceyoushallbeentitledtothefollowingbenefits.

(i)IfyouremploymentshallbeterminatedforCauseoryourdeath,the CompanyshallpayyouyourfullBaseSalarythroughtheDateofTermination astherate ineffectatthetimeNoticeofTerminationisgiven,plusallotheramountstowhichyou areentitledunderanycompensationplanatthetimesuchpaymentsaredue,andthe CompanyshallhavenofurtherobligationstoyouunderthisAgreement.

(ii)IfyouremploymentbytheBankshallbeterminated(1) bytheBankother thanforCauseorDisabilityor(2)byyouforGoodReason,thenyoushallbeentitledto thebenefitsprovidedbelow:

(A)TheCompanyshallpayyouyourfullBaseSalarythroughtheDate ofTerminationattherateineffectatthetimeNoticeofTerminationisgiven,plus allotheramountstowhichyouareentitledunderanycompensationplanatthe timesuchpaymentsaredue.

(B)TheCompanyshallpayyou,inlieuofanyfurthersalaryorbonus paymentstoyouforperiodssubsequenttotheDateofTermination,alumpsum severancepayment(the“SeverancePayment”)equaltotheproductof(I)your FinalAverageCompensationmultipliedby(II)one(1).

(C)Any Severance Payment shall be made not later than the fifth (5^th)day following the Date of Termination; provided, however, that notwithstanding anything contained herein to the contrary, if you are a Specified Employee at the time of your Separation from Service, the Bank shall pay you the Severance Payment in a lump sum on the earlier of (I) the first (1^st) business day that is six (6) months and one (1) day following the date of your Separation from Service or

MichaelF.Carotenuto

October12, 2016

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(II)thedateofyourdeath,butonlyto theextentsuchdelayedcommencementis otherwiserequiredinordertoavoidaprohibiteddistributionunderCodeSection 409A(a)(2).

(iii)UnlessyouareterminatedforCauseoryouterminateyouremployment otherthanforGoodReason,theCompanyshallcausetheBanktomaintaininfullforce andeffectforyourcontinuedbenefitforaperiodofuptoone(1)yearallemployee welfarebenefitplansandprogramsorarrangementsinwhichyouareentitledto participateatanytimewithinthesix(6)monthsimmediatelypriortotheNoticeof Termination,providedthatyourcontinuedparticipationispossibleunderthegeneral termsandprovisionsofsuchplansandprogramsandthatsuchcontinuationdoesnot causetheBank’s grouphealthordentalcoveragetoviolateanyapplicablenon­discriminationlaws. Benefitscontinuedunder thisSection4(iii)shallbepaidbyyou. Benefitsotherwisereceivablebyyou pursuanttothisSection4(iii)shallbereducedtothe extentcomparablebenefitsareactuallyreceivedbyyoufromsourcesotherthanthe CompanyortheBankduringtheone(I)-yearperiodfollowingyourtermination,andany suchbenefitsactuallyreceivedbyyoushallbereportedtotheCompany.

(iv)Youshallnotberequiredtomitigatetheamountofanypaymentprovided forinthisSection4byseekingotheremploymentorotherwise,norshalltheamountof anypaymentprovidedforinthisSection4bereducedbyanycompensationearnedby youastheresultofemploymentbyanotheremployeraftertheDateofTermination,or otherwiseexceptasspecificallyprovidedinthisSection4.

5.GoldenParachute. IfanyofthepaymentsprovidedforinthisAgreement, togetherwithanyotherpaymentsorbenefitsthatyouhavetherighttoreceivefromthe Company,Bankoranymemberofanaffiliatedgroupofcorporations(asdefinedinCode Section 1504,withoutregardtoCodeSection1504(b))ofwhicheitherCompanyorBankisa member(together,the“Payments”)wouldconstituteaparachutepayment(asdefinedinCode Section280G(b)(2))thatissubjecttotheexcisetaximposedbyCodeSection4999(the“Excise Tax”),Companywillcausetobedetermined,beforeanyPaymentsaremade,whichofthe followingtwo(2)alternativeswouldmaximizeyourafter-taxproceeds: (i)paymentinfullof theentireamountofthePayments;or(ii)paymentofonlyapartofthePayments,reducedtothe minimumextentnecessarysothatyoureceivethelargestPaymentspossiblewithoutthe impositionoftheExciseTax(“ReducedPayments”). IfitisdeterminedthatReducedPayments willmaximizeyourafter-taxbenefit,then(1)cashcompensationsubjecttothesix(6)-month delayruleinCodeSection409A(a)(2)(B)(i)shallbereducedfirst,thencashpaymentsthatare notsosubjectshallbereduced,(2)thePaymentsshallbepaidonlyto theextentpermittedunder theReducedPaymentsalternative,and(3)youwillhavenorightstoanyadditionalpayments and/orbenefitsconstitutingthePayments. UnlessyouandtheCompanyotherwiseagreein writing,anydeterminationrequiredunderthisSection5 shallbe madeinwritingbyindependent publicaccountantsagreedtobyyouandtheCompany(the “Accountants”),whoshallbepaid solelybytheCompanyandwhosedeterminationshallbeconclusiveandbindinguponyouand theCompanyforallpurposes. ForpurposesofmakingthecalculationsrequiredbythisSection 5,theAccountantsmayrelyonreasonable,goodfaithinterpretationsconcerningtheapplication ofSections280Gand4999oftheCode. YouandtheCompanyshallfurnishtotheAccountants suchinformationanddocumentsastheAccountantsmay reasonablyrequestinordertomakethe requireddeterminations.

MichaelF.Carotenuto

October12, 2016

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6.Non-Competition. Intheeventyour employmentterminatesandyouareentitled toreceiveaSeverancePaymenthereunder,foraperiodofone(1)yearfollowingtheDateof Termination(the“Non-CompeteTerm”)youshallnot,directlyorindirectly,asanexecutiveof anypersonorentity(whetherornotengagedinbusinessforprofit),individualproprietor, partner,stockholder,director,officer,jointventurer,investor,lenderorinanyothercapacity whatever(otherwisethanasholderoflessthan tenpercent(10%)ofanysecuritiespublicly tradedinthemarket)competewiththeCompanyandanysubsidiaryoraffiliateoftheCompany inanycityortowninwhichtheCompanyorsuchsubsidiaryoraffiliateoperatesatanytime duringthetermofthisAgreement,andanycontiguouscityortown.

7.Successors:BindingAgreement.

(i)TheCompanywillrequireanysuccessor(whetherdirectorindirect,by purchase,merger,consolidationorotherwise)toallorsubstantiallyallofthebusiness and/orassetsoftheCompany,byagreementinformandsubstancesatisfactorytoyou,to expresslyassumeandagreetoperformthisAgreementinthesamemannerandtothe sameextentthattheCompanywouldberequiredtoperformitifnosuchsuccessionhad takenplace. FailureoftheCompanytoobtainsuchagreementpriortotheeffectiveness ofanysuchsuccessionshallbeabreachofthisAgreementandshallentitleyouto compensationfromtheCompanyinthesameamountandonthesametermsasyou wouldbeentitledhereunderifyouterminatedyouremploymentforGoodReason,except thatforpurposesofimplementingtheforegoing,thedateonwhichanysuchsuccession becomeseffectiveshallbedeemedtheDateofTermination. AsusedinthisAgreement, “Company”shallmeantheCompanyashereinbeforedefinedandanysuccessortoits business,and/orassets,asaforesaidthatexecutesanddeliverstheagreementprovidedfor inthisSection7orthatotherwisebecomesboundbyallthetermsandprovisionsofthis Agreementbyoperationof law.

(ii)ThisAgreementshallinureto thebenefitofandbeenforceablebyyour personalorlegalrepresentatives,executors,administrators,successors,heirs,distributees, deviseesandlegatees. Ifyoushoulddiewhileanyamountwouldstillbepayabletoyou hereunderifyouhadcontinuedtolive,allsuchamounts,unlessotherwiseprovided herein,shallbepaidinaccordancewiththe termsofthisAgreementtoyourdevisee, legateeorotherdesigneeor,if there benosuchdesignee,toyourestate.

8.Notices. AllnoticesandallothercommunicationsprovidedforinthisAgreement shallbeinwritingandshallbedeemedtohavebeendulygivenwhendeliveredormailedby UnitedStatescertifiedmail,returnreceiptrequested,postageprepaid,addressedtotherespective addressessetforthonthefirstpageofthisAgreement;provided,however,thatallnoticestothe CompanyshallbedirectedtotheattentionoftheBoardwithacopytotheClerkofthe Company,ortosuchotheraddressaseitherpartymayhavefurnishedtotheotherinwritingin accordanceherewith,exceptthatnoticeofchangeofaddressshallbeeffectiveonlyuponreceipt.

MichaelF.Carotenuto

October12, 2016

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9.Miscellaneous. NoprovisionofthisAgreementmaybe modified,waivedor dischargedunlesssuchwaiver,modificationordischargeisagreedtoinwritingsignedbyyou andsuchofficersasmaybespecificallydesignatedbytheBoard. Nowaiverbyeitherparty heretoatanytimeofanybreachbytheotherpartyhereto,oroffailuretocomplywithany conditionorprovisionofthisAgreementtobeperformedbysuchotherpartyshallbedeemeda waiverofsimilarordissimilarprovisionsorconditionsatthesameoratanypriororsubsequent time. Noagreementsorrepresentations,oralorotherwise,expressorimplied,withrespecttothe subjectmatterhereofhavebeenmadebyeitherpartythatarenotexpresslysetforthinthis Agreement. TheobligationsoftheCompanyunderSection4shallsurvivetheexpirationofthe termofthisAgreement. Allreferencetosectionsofanystatute,includingtheCode,shallbe deemedalsotorefertoanysuccessorprovisionsthereof. Thevalidity,interpretation, constructionandperformanceofthisAgreementshallbegovernedbythelawsofthe CommonwealthofMassachusetts. ThisAgreementis madeunderseal.

10.Tax Withholding.  The Bank shall withhold any taxes that are required to be withheld from the benefits provided under this Agreement.  You acknowledge that the Bank’s sole liability regarding taxes is to forward any amounts withheld to the appropriate taxing authority(ies) and to satisfy all applicable reporting requirements.

11.Validity.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

12.Counterparts. ThisAgreementmaybeexecutedinseveralcounterparts,eachof whichshallbedeemedtobeanoriginalbutallofwhichtogetherwillconstituteoneandthe sameinstrument.

13.Section409A. ItistheintentionoftheCompanyandyouthattheAgreementand allamountspayabletoyouundertheAgreementthataresubjecttheretomeettherequirements ofCodeSection409A,totheextentapplicabletotheAgreementandsuchpayments. Tothe extentapplicable,thisAgreementshallbeinterpretedinaccordancewithCodeSection409Aand regulationsandotherinterpretiveguidanceissuedthereunder. Ifanycompensationorbenefits payableunderthis AgreementdonotcomplywithCodeSection409Aandrelatedguidance,the CompanyandyouagreetoamendthisAgreementortakesuchactionsastheCompanydeems necessaryorappropriatetocomplywiththerequirementsofCodeSection409Awhile preserving, asnearlyaspossible,thesameeconomiceffectasunderthisAgreement.

14.EntireAgreement. ThisAgreementconstitutestheentireagreementand understandingbetweenthepartiesheretoinrespectofthesubjectmatterhereofandsupersedes anypriororcontemporaneous agreementorunderstandingbetweentheparties,writtenororal, whichrelatestothesubjectmatterhereof.

15.Definitions. CapitalizedtermsnotdefinedinthisAgreementshallhavethe meaningsetforthinyourSupplementalExecutiveRetirementAgreement(the “SERP”),ifany, ortheCambridgeTrustCompanyExecutiveDeferredCompensationPlan(the“EDCP”), as applicable.

MichaelF.Carotenuto

October12, 2016

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(i)“BaseSalary”meanstheannualcashcompensationfromtheBankrelating toservicesperformed(ortobeperformed)duringanycalendaryear,excluding distributionsfromnonqualifieddeferredcompensationplans,bonuses,commissions, overtime,fringebenefits,stockoptions,relocationexpenses,incentivepayments,non­ monetaryawardsandotherfees,andautomobileandotherallowancespaidtoyoufor servicesrendered(whetherornotsuchallowancesareincludedinyourgrossincome). Base Salaryshallbecalculatedbeforereductionforcompensationvoluntarilydeferredor contributedbyyoupursuanttoallqualifiedornon-qualifiedplansoftheBankandshall becalculatedtoincludeamountsnototherwiseincludedinyourgrossincomeunder Code Sections125,132(f),402(e)(3),402(h)or403(b)pursuanttoplansestablishedby theBank;provided,however,thatallsuchamountswillbeincludedincompensation onlytotheextentthathadtherebeennosuchplan,theamountwouldhavebeenpayable incashtoyou.

(ii)“Bonus” means the short-term incentive cash bonus, if any, awarded to you (generally during the first quarter of the Plan Year) for services performed during the preceding Plan Year from the Bank.

(iii)“Cause”meansterminationbytheBankupon:

(A)The willful failure by you to substantially perform your duties with the Bank (other than any such failure resulting from your incapacity due to physical or mental illness or any such actual or anticipated failure resulting from your resignation for Good Reason), within ten (10) days after a demand for substantial performance is delivered to you by the Board that specifically identifies the manner in which the Board believes that you have not substantially performed your duties;

(B)Thewillfulengagementbyyouinmisconductthatisor foreseeablywillbe materiallyinjurioustotheBank,monetarilyorotherwise;or

(C)Abreachofafiduciaryduty,fraudordishonestyrelatingtothe Bank,orconvictionof(orpleaofnolocontendereto)acrime.

ForpurposesofthisSectionl5(iii),noactorfailuretoact,onyourpartshallbe considered“willful”unlessdone,oromittedtobedone,byyounotingoodfaith andwithoutreasonablebeliefthatyouractionoromissionwasinthebestinterest oftheBank.

Notwithstanding  the foregoing, you shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to you a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (³/₄) of the entire membership of the Board (with you not voting if you are a member) at a meeting of the Board called and held for the purpose (after reasonable notice to you and an opportunity for you, together with your counsel, to be heard before the Board) finding that in the good faith opinion of the Board you engaged in the conduct set forth above in this Section 15(iii) and specifying the particulars thereof in detail.

MichaelF.Carotenuto

October12, 2016

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(iv)“ChangeinControl”meanseitherofthefollowing:

(A)Achangeincontrolofanaturethatwouldberequiredtobe reportedbyCompanyorBankinresponsetoItem6(e)ofSchedule14Aof Regulation14ApromulgatedundertheSecuritiesExchangeActof1934,as amended(the“ExchangeAct”),whetherornotCompanyorBankinfactis requiredtocomplywithRegulation14Athereunder;or

(B)Theacquisitionof“control”asdefinedintheBankHolding CompanyActof1956,asamended,ortheregulationsthereunder,orasdefinedin theChangeinBankControlActof1978,asamended,ortheregulationsor guidancethereunder,ofCompanyorBankbyanyperson,companyorotherentity otherthanCompany;providedthat,withoutlimitation,suchaChangeinControl shallbedeemedtohaveoccurredif:

(1)Any“person”(asthattermisusedinSection13(d)and 14(d)oftheExchangeAct)otherthanatrusteeorotherfiduciaryholding securitiesunderanemployeebenefitplanofCompanyorBankora corporationowned,directlyorindirectly,bythestockholdersofCompany insubstantiallythesameproportionsastheirownershipofstockof Company,isorbecomesthe“beneficialowner”(asdefinedinRule13d-3 undertheExchangeAct),directlyorindirectly,ofsecuritiesofCompany representingtwenty-fivepercent(25%)ormoreofthecombinedvoting powerofCompany’s thenoutstandingsecurities;or

(2)Duringanyperiodoftwo(2)consecutiveyears(not includinganyperiodpriortotheexecutionofthisAgreement),individuals whoatthebeginningofsuchperiodconstitutetheBoardandanynew director(otherthanadirectordesignatedbyapersonwhohasenteredinto anagreementwithCompanytoeffectatransactiondescribedinthis Section15(iv)(B)(l)orwithCompanyorBanktoeffectatransaction describedinSection15(iv)(B)(3)whoseelectionbytheBoardor nominationforelectionbyCompany’sorBank’sstockholderswas approvedbyavoteofatleasttwo-thirds(²/₃)ofthedirectorsthenstillin officewhoeitherweredirectorsatthebeginningoftheperiodorwhose electionornominationforelectionwaspreviouslysoapproved,ceasefor anyreasontoconstituteamajoritythereof;or

(3)The stockholders of Company or Bank approve a merger or consolidation of Company or Bank with any other corporation, other than a merger or consolidation that would result in the voting securities of Company or Bank outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least two-thirds (²/₃) of the combined voting power of the voting securities of Company or Bank or such surviving entity outstanding immediately after such merger or consolidation, or the stockholders of Company or Bank approve a plan of complete liquidation of Company or Bank or an agreement for the sale or disposition by Company or Bank of all or substantially all Company’s or Bank’s  assets.  Notwithstanding anything to the contrary contained in this Agreement, the acquisition by a person (or persons acting in concert) of less than twenty-five percent (25%) of the voting securities of Company, under circumstances where the Federal Reserve Board (under regulations or guidance pursuant to the Change in Bank Control Act of 1978, as amended) presumes that such acquisition constitutes the acquisition of control of Company, shall not be deemed a “Change in Control” for any purpose under this Agreement.

MichaelF.Carotenuto

October12, 2016

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(v)“DateofTermination”means:

(A)Ifyouremploymentis terminatedforDisability,thirty(30)days afterNoticeofTerminationisgiven(providedthatyoushallnothavereturnedto theperformanceofyourdutiesonafull-timebasisduringsuchthirty(30)day period);

(B)IfyouremploymentisterminatedforCause,thedatespecifiedin theNoticeofTermination;and

(C)IfyouremploymentisterminatedbyBankforanyotherreason,or byyouforGoodReason,thedateonwhichaNoticeofTerminationisgiven.

(vi)“Disability” means termination because of your inability, as a result of incapacity due to physical or mental illness, to perform the services required of you as an employee for a period aggregating six (6) months or more within any twelve (12) month period, unless within thirty (30) days after notice of termination is given by the Bank you shall have returned to the full time performance of you duties.

(vii)“Final Average Compensation” means the average of your highest three (3) consecutive calendar years of annual Base Salary and Bonus.  For purposes of calculating the average of your highest three (3) consecutive calendar years of Base Salary and Bonus, (a) Base Salary and Bonus for the calendar year in which you experience a Separation from Service shall be annualized, (b) Base Salary and Bonus for other calendar years shall not be annualized, and (c) if you have been employed less than three (3) full calendar years (counting the final year of employment as an annualized full calendar year), your Final Average Compensation shall be based on the number of full calendar years in which you were an employee of the Bank (again counting the final year of employment as an annualized full calendar year).

MichaelF.Carotenuto

October12, 2016

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(viii)“GoodReason”means:

(A)InthecaseofaChangeinControldescribedinSection 15(iv)(B)(l)whenfiftypercent(50%)issubstitutedfortwenty-fivepercent(25%)orfollowingconsummationofaChangeinControldescribedinSection15(iv)(B)(3)whenone-half(¹/₂)issubstitutedfortwo-thirds(²/₃), termination by youforanyreasonorfornoreasonduringtheperiodbeginningsix(6)months andendingtwelve(12)monthsfollowingsuchevent;or

(B)Withoutyourpriorconsent,theoccurrenceafteraChangein

Controlofanyofthefollowingcircumstances:

(1)A material diminution in the nature or status of your responsibilities, authority or duties (provided that your entitlement to terminate employment for this reason following a Change in Control shall only be effective during the period beginning six (6) months and ending twelve (12) months after the Change in Control);

(2)Amaterialdiminutioninyourbasesalary;or

(3)Arelocationofyourprincipalplaceofemploymenttoa locationthatis morethanforty(40)milesfromtheBank’s current principalexecutiveoffice;provided,however,thattheBankshallhaveathirty(30)dayperiodto cureanysuchcausefor“GoodReason”afterbeingnotifiedbyyouin writing.

YourrighttoterminateemploymentforGoodReasonshallnotbeaffectedby yourincapacityduetophysicalormentalillness. Yourcontinuedemployment shallnotconstituteconsentto,orawaiverofrightswithrespectto,any circumstance constitutingGoodReasonhereunder.

(ix)“Notice of Termination” means a notice that indicates the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination  of your employment under the provision so indicated.

(x)“Potential ChangeinControl”means:

(A)CompanyorBankentersintoanagreement,theconsummation of whichwouldresultintheoccurrenceofaChangeinControl;

(B)Anyperson(includingCompany)publiclyannouncesanintention totakeortoconsidertakingactionsthatifconsummated,wouldconstitutea ChangeinControl;

MichaelF.Carotenuto

October12, 2016

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(C)Anyperson,otherthanatrusteeorotherfiduciaryholding securitiesunderanemployeebenefitplanofCompanyorBankoracorporation owned,directlyorindirectly,bythestockholdersofCompanyinsubstantiallythe sameproportionsastheirownershipofstockofCompany,isorbecomesthe beneficialowner,directlyorindirectly,ofsecuritiesofparentrepresentingtwenty percent(20%)ormore ofthecombinedvotingpowerofCompany’sthen outstandingsecurities;or

(D)The Board of Directors of Company or Bank adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change in Control of Company has occurred.

(xi)“Retirement”meanstheterminationofyour employmentinaccordance withtheBank’sretirementpolicy,including(atyoursoleelection,assetforthinwriting) earlyretirement,generallyapplicabletoitssalariedemployeesorinaccordancewithany retirementarrangementestablishedwithyourconsentwithrespecttoyou.

* * * * *

Ifthis lettercorrectlysetsforthouragreementonthesubjectmatterhereof,kindlysign andreturntotheCompanytheenclosedcopyofthisletter,whichwillthenconstituteour agreementonthissubject.

	CAMBRIDGEBANCORP
	By:	/s/ Michael Carotenuto
Agreed:		Its:	CFO
/s/ Pilar Pueyo			Michael Carotenuto
Pilar Pueyo

EX-10

Exhibit 10.15

Cambridge Bancorp

1336 Massachusetts Avenue

Cambridge, Massachusetts 02138

May 18, 2016

Dear Martin:

Cambridge Bancorp (the “Company”) considers it essential to the best interest of its stockholders to foster the continuous employment of key management personnel of the Company and its subsidiary, Cambridge Trust Company (the “Bank”). The Board of Directors of the Company (the “Board”) recognizes that, as is the case with many publicly held corporations, the possibility of a change in control of the Company may exist and that such possibility, and the uncertainty and questions that it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company and its stockholders.

The Board has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Company’s and the Bank’s management, including yourself, to their assigned duties in the face of the potentially disturbing circumstances arising from the possibility of a change in control of the Company.

In order to induce you to remain in the employ of the Bank and in consideration of your agreement set forth in Section 2 hereof, this Agreement sets forth the severance benefits that the Company agrees will be provided to you in the event your employment with the Bank is terminated under the circumstances described below.

Whenever used in this Agreement, additional capitalized words and phrases have the meanings set forth in Section 15 below.

1.Term of Agreement. This Agreement shall commence on the date hereof and shall continue in effect through December 31, 2016; provided, however, that commencing on January 1, 2017 and each January 1 thereafter, the term of this Agreement shall automatically be extended for one (1) additional year unless not later than September 30 of the preceding year the Company shall have given notice that it does not wish to extend this Agreement. However, if a Change in Control or Potential Change in Control of the Company, as applicable, shall have occurred during the original or any extended term of this Agreement, this Agreement shall continue in effect for a period of twelve (12) months beyond the month in which the Change in Control or Potential Change in Control, as applicable, occurred notwithstanding notice from the Company that it does not wish to extend the Agreement.

MartinB.Millane,Jr.

May18, 2016

Page 2

2.Potential Change in Control. You agree that, subject to the terms and conditions of this Agreement, in the event of a Potential Change in Control you will not voluntarily terminate your employment with the Bank until the earliest of:

(i)The date that is twelve (12) months from the occurrence of the Potential Change in Control;

(ii)The termination by you of your employment by reason of death, Disability or Retirement;

(iii)The occurrence of a Change in Control; or

(iv)The date the Board adopts a resolution to the effect that, for purposes of this Agreement, the basis upon which the Board concluded that a Potential Change in Control had occurred no longer exists.

3.Termination Following a Change in Control or a Potential Change in Control. If a Change in Control or a Potential Change in Control shall have occurred, you shall be entitled to the benefits provided in Section 4 hereof upon your Separation from Service within twelve (12) months after a Change in Control, or within the period described in Section 2 hereof after a Potential Change in Control, unless such Separation from Service is (i) because of your death, (ii) by the Bank for Cause or Disability or (iii) by you other than for Good Reason.

4.Compensation Upon Termination. Following a Change in Control or a Potential Change in Control, upon Separation from Service you shall be entitled to the following benefits.

(i)If your employment shall be terminated for Cause or your death, the Company shall pay you your full Base Salary through the Date of Termination as the rate in effect at the time Notice of Termination is given, plus all other amounts to which you are entitled under any compensation plan at the time such payments are due, and the Company shall have no further obligations to you under this Agreement.

(ii)If your employment by the Bank shall be terminated (1) by the Bank other than for Cause or Disability or (2) by you for Good Reason, then you shall be entitled to the benefits provided below:

(A)The Company shall pay you your full Base Salary through the Date of Termination at the rate in effect at the time Notice of Termination is given, plus all other amounts to which you are entitled under any compensation plan at the time such payments are due.

(B)The Company shall pay you, in lieu of any further salary or bonus payments to you for periods subsequent to the Date of Termination, a lump sum severance payment (the “Severance Payment’’) equal to the product of (I) your Final Average Compensation multiplied by (II) one (1).

MartinB.Millane,Jr.

May18, 2016

Page 3

(C)Any Severance Payment shall be made not later than the fifth (5^th)day following the Date of Termination; provided, however, that notwithstanding anything contained herein to the contrary, if you are a Specified Employee at the time of your Separation from Service, the Bank shall pay you the Severance Payment in a lump sum on the earlier of (I) the first (1^st) business day that is six (6) months and one (1) day following the date of your Separation from Service or (II) the date of your death, but only to the extent such delayed commencement is otherwise required in order to avoid a prohibited distribution under Code Section 409A(a)(2).

(iii)Unless you are terminated for Cause or you terminate your employment other than for Good Reason, the Company shall cause the Bank to maintain in full force and effect for your continued benefit for a period of up to one (1) year all employee welfare benefit plans and programs or arrangements in which you are entitled to participate at any time within the six (6) months immediately prior to the Notice of Termination, provided that your continued participation is possible under the general terms and provisions of such plans and programs and that such continuation does not cause the Bank’s group health or dental coverage to violate any applicable non­discrimination laws. Benefits continued under this Section 4(iii) shall be paid by you. Benefits otherwise receivable by you pursuant to this Section 4(iii) shall be reduced to the extent comparable benefits are actually received by you from sources other than the Company or the Bank during the one (1)-year period following your termination, and any such benefits actually received by you shall be reported to the Company.

(iv)You shall not be required to mitigate the amount of any payment provided for in this Section 4 by seeking other employment or otherwise, nor shall the amount of any payment provided for in this Section 4 be reduced by any compensation earned by you as the result of employment by another employer after the Date of Termination, or otherwise except as specifically provided in this Section 4.

5.Golden Parachute. If any of the payments provided for in this Agreement, together with any other payments or benefits that you have the right to receive from the Company, Bank or any member of an affiliated group of corporations (as defined in Code Section 1504, without regard to Code Section 1504(b)) of which either Company or Bank is a member (together, the “Payments”) would constitute a parachute payment (as defined in Code Section 280G(b)(2)) that is subject to the excise tax imposed by Code Section 4999 (the “Excise Tax”), Company will cause to be determined, before any Payments are made, which of the following two (2) alternatives would maximize your after-tax proceeds: (i) payment in full of the entire amount of the Payments; or (ii) payment of only a part of the Payments, reduced to the minimum extent necessary so that you receive the largest Payments possible without the imposition of the Excise Tax (“Reduced Payments”). If it is determined that Reduced Payments will maximize your after-tax benefit, then (1) cash compensation subject to the six (6)-month delay rule in Code Section 409A(a)(2)(B)(i) shall be reduced first, then cash payments that are not so subject shall be reduced, (2) the Payments shall be paid only to the extent permitted under the Reduced Payments alternative, and (3) you will have no rights to any additional payments

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May18, 2016

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and/or benefits constituting the Payments. Unless you and the Company otherwise agree in writing, any determination required under this Section 5 shall be made in writing by independent public accountants agreed to by you and the Company (the “Accountants”), who shall be paid solely by the Company and whose determination shall be conclusive and binding upon you and the Company for all purposes. For purposes of making the calculations required by this Section 5, the Accountants may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code. You and the Company shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make the required determinations.

6.Non-Competition. In the event your employment terminates and you are entitled to receive a Severance Payment hereunder, for a period of one (1) year following the Date of Termination (the “Non-Compete Term”) you shall not, directly or indirectly, as an executive of any person or entity (whether or not engaged in business for profit), individual proprietor, partner, stockholder, director, officer, joint venturer, investor, lender or in any other capacity whatever (otherwise than as holder of less than ten percent (10%) of any securities publicly traded in the market) compete with the Company and any subsidiary or affiliate of the Company in any city or town in which the Company or such subsidiary or affiliate operates at any time during the term of this Agreement, and any contiguous city or town.

7.Successors; Binding Agreement.

(i)The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by agreement in form and substance satisfactory to you, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle you to compensation from the Company in the same amount and on the same terms as you would be entitled hereunder if you terminated your employment for Good Reason, except that for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination. As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business, and/or assets, as aforesaid that executes and delivers the agreement provided for in this Section 7 or that otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.

(ii)This Agreement shall inure to the benefit of and be enforceable by your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If you should die while any amount would still be payable to you hereunder if you had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to your devisee, legatee or other designee or, if there be no such designee, to your estate.

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8.Notices. All notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States certified mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth on the first page of this Agreement; provided, however, that all notices to the Company shall be directed to the attention of the Board with a copy to the Clerk of the Company, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt.

9.Miscellaneous. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by you and such officers as may be specifically designated by the Board. No waiver by either party hereto at any time of any breach by the other party hereto, or of failure to comply with any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party that are not expressly set forth in this Agreement. The obligations of the Company under Section 4 shall survive the expiration of the term of this Agreement. All reference to sections of any statute, including the Code, shall be deemed also to refer to any successor provisions thereof. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the Commonwealth of Massachusetts. This Agreement is made under seal.

10.Tax Withholding. The Bank shall withhold any taxes that are required to be withheld from the benefits provided under this Agreement. You acknowledge that the Bank’s sole liability regarding taxes is to forward any amounts withheld to the appropriate taxing authority(ies) and to satisfy all applicable reporting requirements.

11.Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

12.Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

13.Section 409A. It is the intention of the Company and you that the Agreement and all amounts payable to you under the Agreement that are subject thereto meet the requirements of Code Section 409A, to the extent applicable to the Agreement and such payments. To the extent applicable, this Agreement shall be interpreted in accordance with Code Section 409A and regulations and other interpretive guidance issued thereunder. If any compensation or benefits payable under this Agreement do not comply with Code Section 409A and related guidance, the Company and you agree to amend this Agreement or take such actions as the Company deems necessary or appropriate to comply with the requirements of Code Section 409A while preserving, as nearly as possible, the same economic effect as under this Agreement.

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May18, 2016

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14.Entire Agreement. This Agreement constitutes the entire agreement and understanding between the parties hereto in respect of the subject matter hereof and supersedes any prior or contemporaneous agreement or understanding between the parties, written or oral, which relates to the subject matter hereof.

15.Definitions. Capitalized terms not defined in this Agreement shall have the meaning set forth in your Supplemental Executive Retirement Agreement (the “SERP”) or the Cambridge Trust Company Executive Deferred Compensation Plan (the “EDCP”), as applicable.

(i)“Date of Termination” means:

(1)If your employment is terminated for Disability, thirty (30) days after Notice of Termination is given (provided that you shall not have returned to the performance of your duties on a full-time basis during such thirty (30) day period);

(2)If your employment is terminated for Cause, the date specified in the Notice of Termination; and

(3)If your employment is terminated by Bank for any other reason, or by you for Good Reason, the date on which a Notice of Termination is given.

(ii)“Disability” means termination because of your inability, as a result of incapacity due to physical or mental illness, to perform the services required of you as an employee for a period aggregating six (6) months or more within any twelve (12) month period, unless within thirty (30) days after notice of termination is given by the Bank you shall have returned to the full time performance of you duties.

(iii)“Final Average Compensation” means the average of your highest three (3) consecutive calendar years of annual Base Salary and Bonus. For purposes of calculating the average of your highest three (3) consecutive calendar years of Base Salary and Bonus, (a) Base Salary and Bonus for the calendar year in which you experience a Separation from Service shall be annualized, (b) Base Salary and Bonus for other calendar years shall not be annualized, and (c) if you have been employed less than three (3) full calendar years (counting the final year of employment as an annualized full calendar year), your Final Average Compensation shall be based on the number of full calendar years in which you were an employee of the Bank (again counting the final year of employment as an annualized full calendar year).

(iv)“Notice of Termination” means a notice that indicates the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of your employment under the provision so indicated.

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(v)“Potential Change in Control” means:

(1)Company or Bank enters into an agreement, the consummation of which would result in the occurrence of a Change in Control;

(2)Any person (including Company) publicly announces an intention to take or to consider taking actions that if consummated, would constitute a Change in Control;

(3)Any person, other than a trustee or other fiduciary holding securities under an employee benefit plan of Company or Bank or a corporation owned, directly or indirectly, by the stockholders of Company in substantially the same proportions as their ownership of stock of Company, is or becomes the beneficial owner, directly or indirectly, of securities of parent representing twenty percent (20%) or more of the combined voting power of Company’s then outstanding securities; or

(4)The Board of Directors of Company or Bank adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change in Control of Company has occurred.

(vi)“Retirement” means the termination of your employment in accordance with the Bank’s retirement policy, including (at your sole election, as set forth in writing) early retirement, generally applicable to its salaried employees or in accordance with any retirement arrangement established with your consent with respect to you.

* * * * *

If this letter correctly sets forth our agreement on the subject matter hereof, kindly sign and return to the Company the enclosed copy of this letter, which will then constitute our agreement on this subject.

CAMBRIDGE BANCORP
By:	/s/ Noreen A. Briand
	Its: SVP, Human Resources Director

Agreed:

/s/ Martin B. Millane, Jr.

Martin B. Millane, Jr.

EX-21

Exhibit 21.1

Subsidiaries

Cambridge Bancorp Subsidiary:

Name	Jurisdiction of Incorporation
Cambridge Trust Company	Massachusetts

Cambridge Trust Company Subsidiaries:

Name	Jurisdiction of Incorporation
Cambridge Trust Company of New Hampshire, Inc.	New Hampshire
CTC Security Corporation	Massachusetts
CTC Security Corporation II	Massachusetts