KBRA Affirms Ratings for Cambridge Financial Group, Inc.; Revises Outlook to Stable

KBRA affirms the senior unsecured debt rating of BBB, the subordinated debt rating of BBB-, and the short-term debt rating of K3 for Cambridge, Massachusetts-based Cambridge Financial Group, Inc. (“Cambridge” or “the company”). In addition, KBRA affirms the deposit and senior unsecured debt ratings of BBB+, the subordinated debt rating of BBB, and the short-term deposit and debt ratings of K2 for the subsidiary, Cambridge Savings Bank. The Outlook for all long-term ratings is revised to Stable from Negative.

Key Credit Considerations

The revision to a Stable Outlook reflects management’s progress in strengthening both bank level and consolidated capital ratios to levels more consistent with rated peers following a period of rapid asset growth in 2021–2022 that pressured capital metrics. KBRA also favorably views management’s efforts to reduce the investor CRE concentration (359% in 2025, down from levels exceeding 400% in prior years) and to reposition the investment portfolio with a primary focus on liquidity.

In 3Q25, the company sold bank premises, generating a gain of approximately $28 million, net of taxes. The after-tax gain contributed roughly 37 basis points to FY25 ROAA and approximately 67 basis points to the consolidated CET1 ratio at the time of the sale. Disciplined balance sheet growth is expected to support capital ratios within current ranges.

The positive trend in earnings performance has been driven primarily by reduced deposit and other funding costs, broadly consistent with industry trends. While lower funding costs have supported NIM and bottom line results, funding costs remain elevated relative to rated peers. Additionally, the company’s noninterest income profile remains more limited than that of peers.

Credit quality metrics remained generally in line with peer averages. Charge-offs and NPA activity during 2025 were concentrated in certain property types that, based on KBRA’s understanding, are experiencing stress in the Greater Boston market, where the company maintains only modest aggregate exposure. Negative migration within the internal watch list appears broadly consistent with industry trends.

Rating Sensitivities

Following the return to a Stable Outlook, an upgrade is unlikely in the intermediate term absent a material exogenous event. Conversely, meaningful deterioration in loan quality with the potential to impair annual earnings could prompt a reassessment of the ratings. Additionally, failure to maintain capital ratios in line with peers would also likely result in review of the ratings.

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