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Century Bancorp, Inc. Announces Increased Earnings For Q2 2019; Record YTD Earnings, up 13%; Asset Growth To $5.2 BB; Regular Dividend Declared

Company Release - 7/9/2019 4:45 PM ET

MEDFORD, Mass.--(BUSINESS WIRE)-- Century Bancorp, Inc. (NASDAQ:CNBKA) (www.centurybank.com) (“the Company”) today announced net income of $18,884,000 for the six months ended June 30, 2019, or $3.39 per Class A share diluted, an increase of 13.0% compared to net income of $16,707,000, or $3.00 per Class A share diluted, for the same period a year ago. Total assets increased 0.7% from $5.16 billion at December 31, 2018 to $5.20 billion at June 30, 2019. For the quarter ended June 30, 2019, net income totaled $9,466,000 or $1.70 per Class A share diluted, an increase of 5.2% compared to net income of $8,998,000, or $1.62 per Class A share diluted, for the same period a year ago.

Net interest income totaled $46.7 million for the six months ended June 30, 2019 compared to $45.7 million for the same period in 2018. The 2.2% increase in net interest income for the period is primarily due to an increase in average earning assets. The net interest margin decreased from 2.19% on a fully taxable equivalent basis in 2018 to 2.09% for the same period in 2019. This was primarily the result of increased rates paid on deposits. The average balances of earning assets increased by 8.1% combined with an average yield increase of 0.36%, resulting in an increase in interest income of $13.9 million. The average balance of interest bearing liabilities increased 7.6% combined with an average cost of funds increase of 0.57%, resulting in an increase in interest expense of $12.9 million.

The Company’s effective tax rate decreased from 4.7% for the first six months of 2018 to 0.8% for the same period in 2019. This was primarily as a result of a reduction in tax accruals related to sequestration of the refundable portion of our alternative minimum tax (AMT) credit carryforward. On January 14, 2019, the IRS updated its announcement “Effect of Sequestration on the Alternative Minimum Tax Credit for Corporations” to clarify that refundable AMT credits under Section 53(e) of the Internal Revenue Code are not subject to sequestration for taxable years beginning after December 31, 2017. Therefore, the full amount of the AMT credit carryover will be refunded to the Company.

At June 30, 2019, total equity was $318.9 million compared to $300.4 million at December 31, 2018. The Company’s equity increased primarily as a result of earnings, offset somewhat by dividends paid.

The Company’s leverage ratio stood at 7.07% at June 30, 2019, compared to 6.91% at December 31, 2018. The increase in the leverage ratio was due to an increase in stockholders’ equity, offset somewhat by an increase in quarterly average assets. Book value as of June 30, 2019 was $57.28 per share compared to $53.96 at December 31, 2018.

The Company’s allowance for loan losses was $29.1 million or 1.26% of loans outstanding at June 30, 2019 compared to $28.5 million or 1.25% of loans outstanding at December 31, 2018, and $27.1 million or 1.22% of loans outstanding at June 30, 2018. The ratio of the allowance for loan losses to loans outstanding has increased from the same period last year, primarily as a result of changes in qualitative factors related to general economic factors pertaining to certain industries. Non-performing assets totaled $5.0 million at June 30, 2019, compared to $3.5 million at December 31, 2018, and $1.5 million at June 30, 2018. Nonperforming assets increased from the same period last year, mainly as a result of one residential real estate property classified as other real estate owned.

The Company's Board of Directors voted a regular quarterly dividend of 12.00 cents ($0.12) per share on the Company's Class A common stock, and 6.00 cents ($0.06) per share on the Company's Class B common stock. The dividends were declared payable August 15, 2019 to stockholders of record on August 1, 2019.

The Company, through its subsidiary bank, Century Bank and Trust Company, a state chartered full service commercial bank, operating twenty-seven full-service branches in the Greater Boston area, offers a full range of Business, Personal and Institutional Services.

Century Bank and Trust Company is a member of the FDIC and is an Equal Housing Lender.

This press release contains certain “forward-looking statements” with respect to the financial condition, results of operations and business of the Company. Actual results may differ from those contemplated by these statements. The Company wishes to caution readers not to place undue reliance on any forward-looking statements. The Company disclaims any intent or obligation to update publicly any such forward-looking statements, whether in response to new information, future events or otherwise.

 
Century Bancorp, Inc. and Subsidiaries
Consolidated Comparative Statements of Condition (unaudited)  
(in thousands)
Assets June 30,
2019
December 31,
2018
Cash and Due From Banks

$

69,317

$

89,540

Federal Funds Sold and Interest-bearing Deposits In Other Banks  

 

181,409

 

252,963

 
Securities Available-for-Sale (AFS)

 

293,051

 

338,327

 
Securities Held-to-Maturity

 

2,178,568

 

2,046,647

 
Federal Home Loan Bank of Boston stock, at cost

 

21,139

 

17,974

 
Loans:
Commercial & Industrial

 

764,492

 

761,775

Municipal

 

95,682

 

97,140

Construction & Land Development

 

13,751

 

13,628

Commercial Real Estate

 

758,242

 

750,362

Residential Real Estate

 

346,585

 

348,250

Consumer and Other

 

22,609

 

22,083

Home Equity

 

311,210

 

292,340

 
Total Loans

 

2,312,571

 

2,285,578

Less: Allowance for Loan Losses

 

29,070

 

28,543

 
Net Loans

 

2,283,501

 

2,257,035

 
Bank Premises and Equipment, net

 

25,296

 

23,921

Accrued Interest Receivable

 

14,655

 

14,406

Goodwill

 

2,714

 

2,714

Other Assets

 

130,851

 

120,408

 
Total Assets

$

5,200,501

$

5,163,935

 
Liabilities
Demand Deposits

$

765,127

$

813,478

 
Interest Bearing Deposits:
Savings and NOW Deposits

 

1,668,802

 

1,707,019

Money Market Accounts

 

1,172,283

 

1,325,888

Time Deposits

 

489,948

 

560,579

 
Total Interest Bearing Deposits

 

3,331,033

 

3,593,486

 
Total Deposits

 

4,096,160

 

4,406,964

 
Borrowed Funds:
Securities Sold Under Agreements to Repurchase

 

219,510

 

154,240

Other Borrowed Funds

 

451,419

 

202,378

 
Total Borrowed Funds

 

670,929

 

356,618

 
Other Liabilities

 

78,392

 

63,831

Subordinated Debentures

 

36,083

 

36,083

 
Total Liabilities

 

4,881,564

 

4,863,496

 
Total Stockholders' Equity

 

318,937

 

300,439

 
Total Liabilities & Stockholders' Equity

$

5,200,501

$

5,163,935

 
Century Bancorp, Inc. and Subsidiaries      
Consolidated Comparative Statements of Income (unaudited)      
For the quarter and six months ended June 30, 2019 and 2018      
(in thousands)      
   

Quarter ended June 30,

 

Six months ended June 30,

   

2019

2018

 

2019

2018

       
Interest Income:      
Loans    

$

21,680

$

19,179

 

$

42,989

$

37,446

Securities Held-to-Maturity    

 

14,595

 

11,135

 

 

28,383

 

21,423

Securities Available-for-Sale    

 

2,490

 

2,329

 

 

5,121

 

4,321

Federal Funds Sold and Interest-bearing Deposits In Other Banks    

 

927

 

765

 

 

2,276

 

1,648

       
Total Interest Income    

 

39,692

 

33,408

 

 

78,769

 

64,838

       
Interest Expense:      
Savings and NOW Deposits    

 

5,877

 

2,583

 

 

11,343

 

4,806

Money Market Accounts    

 

5,412

 

2,934

 

 

10,755

 

5,387

Time Deposits    

 

2,893

 

2,531

 

 

5,686

 

4,894

Securities Sold Under Agreements to Repurchase    

 

490

 

188

 

 

875

 

369

Other Borrowed Funds and Subordinated Debentures    

 

1,770

 

1,973

 

 

3,422

 

3,715

       
Total Interest Expense    

 

16,442

 

10,209

 

 

32,081

 

19,171

       
Net Interest Income    

 

23,250

 

23,199

 

 

46,688

 

45,667

       
Provision For Loan Losses    

 

250

 

450

 

 

625

 

900

       
Net Interest Income After      
Provision for Loan Losses    

 

23,000

 

22,749

 

 

46,063

 

44,767

       
Other Operating Income      
Service Charges on Deposit Accounts    

 

2,282

 

2,064

 

 

4,491

 

4,131

Lockbox Fees    

 

992

 

621

 

 

2,081

 

1,412

Net Gain on Sales of Loans    

 

139

 

-

 

 

154

 

-

Net Gain on Sales of Securities    

 

-

 

-

 

 

-

 

197

Other Income    

 

1,584

 

1,037

 

 

2,698

 

2,175

       
Total Other Operating Income    

 

4,997

 

3,722

 

 

9,424

 

7,915

       
Operating Expenses      
Salaries and Employee Benefits    

 

10,916

 

10,536

 

 

21,951

 

21,761

Occupancy    

 

1,522

 

1,461

 

 

3,223

 

3,098

Equipment    

 

795

 

780

 

 

1,578

 

1,574

FDIC Assessment    

 

349

 

359

 

 

722

 

742

Other    

 

4,682

 

4,023

 

 

8,980

 

7,985

       
Total Operating Expenses    

 

18,264

 

17,159

 

 

36,454

 

35,160

       
Income Before Income Taxes    

 

9,733

 

9,312

 

 

19,033

 

17,522

       
Income Tax Expense    

 

267

 

314

 

 

149

 

815

       
Net Income    

$

9,466

$

8,998

 

$

18,884

$

16,707

 
Century Bancorp, Inc. and Subsidiaries    
Consolidated Year-to-Date Average Comparative Statements of Condition (unaudited)      
(in thousands)    
Assets

June 30,
2019

June 30,
2018

Cash and Due From Banks    

$

74,948

 

$

71,146

 

Federal Funds Sold and Interest-Bearing Deposits in Other Banks    

 

189,568

 

 

199,454

 

     
Securities Available-For-Sale (AFS)    

 

340,664

 

 

404,032

 

Securities Held-to-Maturity (HTM)    

 

2,121,043

 

 

1,795,422

 

     
Total Loans    

 

2,306,165

 

 

2,189,044

 

Less: Allowance for Loan Losses    

 

28,864

 

 

26,743

 

     
Net Loans    

 

2,277,301

 

 

2,162,301

 

     
Unrealized (Loss)Gain on Securities AFS and HTM Transfers    

 

(3,560

)

 

(4,369

)

Bank Premises and Equipment    

 

24,483

 

 

23,290

 

Accrued Interest Receivable    

 

14,167

 

 

11,189

 

Goodwill    

 

2,714

 

 

2,714

 

Other Assets    

 

134,524

 

 

123,101

 

     
Total Assets    

$

5,175,852

 

$

4,788,280

 

     
Liabilities    
Demand Deposits    

$

759,653

 

$

708,858

 

     
Interest Bearing Deposits:    
Savings and NOW Deposits    

 

1,834,278

 

 

1,506,828

 

Money Market Accounts    

 

1,270,952

 

 

1,196,783

 

Time Deposits    

 

509,710

 

 

601,207

 

Total Interest Bearing Deposits    

 

3,614,940

 

 

3,304,818

 

     
Total Deposits    

 

4,374,593

 

 

4,013,676

 

     
Borrowed Funds:    
Securities Sold Under Agreements to Repurchase    

 

181,252

 

 

149,139

 

Other Borrowed Funds    

 

195,318

 

 

252,054

 

     
Total Borrowed Funds    

 

376,570

 

 

401,193

 

     
Other Liabilities    

 

79,440

 

 

69,242

 

Subordinated Debentures    

 

36,083

 

 

36,083

 

     
Total Liabilities    

 

4,866,686

 

 

4,520,194

 

     
Total Stockholders' Equity    

 

309,166

 

 

268,086

 

     
Total Liabilities & Stockholders' Equity    

$

5,175,852

 

$

4,788,280

 

     
Total Average Earning Assets - QTD    

$

4,965,815

 

$

4,622,577

 

     
Total Average Earning Assets - YTD    

$

4,957,440

 

$

4,587,952

 

 
Century Bancorp, Inc. and Subsidiaries  
Consolidated Selected Key Financial Information (unaudited)    
(in thousands, except share data)  

June 30,
2019

June 30,
2018

   
Performance Measures:  
   
Earnings per average Class A share, diluted, quarter    

$

1.70

 

$

1.62

 

Earnings per average Class A share, diluted, year-to-date    

$

3.39

 

$

3.00

 

Return on average assets, year-to-date  

 

0.74

%

 

0.70

%

Return on average stockholders' equity, year-to-date    

 

12.32

%

 

12.57

%

Net interest margin (taxable equivalent), quarter  

 

2.06

%

 

2.20

%

Net interest margin (taxable equivalent), year-to-date    

 

2.09

%

 

2.19

%

Efficiency ratio, quarter- Non-GAAP (1)  

 

59.8

%

 

60.8

%

Book value per share  

$

57.28

 

$

49.84

 

Tangible book value per share - Non-GAAP (1)  

$

56.79

 

$

49.35

 

Capital / assets  

 

6.13

%

 

5.67

%

Tangible capital / tangible assets - Non-GAAP (1)  

 

6.08

%

 

5.61

%

   
   
Common Share Data:  
Average Class A shares outstanding, diluted, quarter and year-to-date    

 

5,567,909

 

 

5,567,909

 

   
Shares outstanding Class A  

 

3,620,449

 

 

3,608,029

 

Shares outstanding Class B  

 

1,947,460

 

 

1,959,880

 

Total shares outstanding at period end  

 

5,567,909

 

 

5,567,909

 

   
   
Asset Quality and Other Data:  
   
Allowance for loan losses / loans  

 

1.26

%

 

1.22

%

Nonaccrual loans  

$

2,899

 

$

1,456

 

Nonperforming assets  

$

4,999

 

$

1,456

 

Loans 90 days past due and still accruing  

$

-

 

$

-

 

Accruing troubled debt restructures  

$

2,520

 

$

5,295

 

Net charge-offs(recoveries), year-to-date  

$

98

 

$

11

 

   
Leverage ratio  

 

7.07

%

 

6.85

%

Common equity tier 1 risk weighted capital ratio  

 

11.79

%

 

10.90

%

Tier 1 risk weighted capital ratio  

 

13.03

%

 

12.19

%

Total risk weighted capital ratio  

 

14.06

%

 

13.19

%

Total risk weighted assets  

$

2,813,302

 

$

2,709,841

 

   
   
(1) Non-GAAP Financial Measures are reconciled in the following tables:      
   
Calculation of Efficiency ratio:  
   
Total operating expenses(numerator)  

$

36,296

 

$

35,160

 

   
Net interest income  

$

46,688

 

$

45,667

 

Total other operating income  

 

9,424

 

 

7,915

 

Tax equivalent adjustment  

 

4,576

 

 

4,249

 

Total income(denominator)  

$

60,688

 

$

57,831

 

   
Efficiency ratio, quarter - Non-GAAP  

 

59.8

%

 

60.8

%

   
Calculation of tangible book value per share:  
   
Total stockholders' equity  

$

318,937

 

$

277,481

 

Less: goodwill  

 

2,714

 

 

2,714

 

Tangible stockholders' equity(numerator)  

$

316,223

 

$

274,767

 

   
Total shares outstanding at period end(denominator)    

 

5,567,909

 

 

5,567,909

 

   
Tangible book value per share - Non-GAAP  

$

56.79

 

$

49.35

 

Book value per share - GAAP  

$

57.28

 

$

49.84

 

   
Calculation of tangible capital / tangible assets:    
   
Total stockholders' equity  

$

318,937

 

$

277,481

 

Less: goodwill  

 

2,714

 

 

2,714

 

Tangible stockholders' equity(numerator)  

$

316,223

 

$

274,767

 

   
Total assets  

$

5,200,501

 

$

4,898,099

 

Less: goodwill  

 

2,714

 

 

2,714

 

Tangible assets(denominator)  

$

5,197,787

 

$

4,895,385

 

   
Tangible capital / tangible assets - Non-GAAP  

 

6.08

%

 

5.61

%

Capital / assets - GAAP  

 

6.13

%

 

5.67

%

 

William P. Hornby
whornby@centurybank.com
Phone: 781-393-4630
Fax: 781-393-4071

Source: Century Bancorp, Inc.