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Century Bancorp, Inc. Announces Increased Earnings for Q2 2020, up 6.2%; Asset Growth to Record $5.9 BB; Increase in Quarterly Dividend Declared

Company Release - 7/14/2020 4:45 PM ET

MEDFORD, Mass.--(BUSINESS WIRE)-- Century Bancorp, Inc. (NASDAQ:CNBKA) (www.centurybank.com) (“the Company”) today announced net income of $19,722,000 for the six months ended June 30, 2020, or $3.54 per Class A share diluted, an increase of 4.4% compared to net income of $18,884,000, or $3.39 per Class A share diluted, for the same period a year ago. Total assets increased 8.3% from $5.49 billion at December 31, 2019 to $5.95 billion at June 30, 2020. For the quarter ended June 30, 2020, net income totaled $10,056,000 or $1.81 per Class A share diluted, an increase of 6.2% compared to net income of $9,466,000, or $1.70 per Class A share diluted, for the same period a year ago.

The Company's Board of Directors voted to increase its regular quarterly dividend from 12.00 cents ($0.12) per share to 14.00 cents ($0.14) per share on the Company's Class A common stock, and from 6.00 cents ($0.06) per share to 7.00 cents ($0.07) per share on the Company's Class B common stock. The dividends were declared payable August 17, 2020 to stockholders of record on August 3, 2020. This represents the first dividend increase since 2003.

Net interest income totaled $51.0 million for the six months ended June 30, 2020 compared to $46.7 million for the same period in 2019. The 9.3% increase in net interest income for the period is primarily due to a decrease in interest expense as a result of falling interest rates. Prepayment penalties collected amounted to approximately $874,000 for the first six months of 2020 compared to $13,000 for the same period last year. The net interest margin decreased from 2.09% on a fully tax-equivalent basis for the first six months of 2019 to 2.04% for the same period in 2020. This was primarily the result of increased margin pressure during the recent decrease in interest rates across the yield curve. The average balances of earning assets increased for the first six months of 2020 compared to the same period last year, by $456.9 million or 9.2%, combined with an average yield decrease of 0.42%, resulting in a decrease in interest income of $2.9 million. The average balance of interest-bearing liabilities increased for the first six months of 2020 compared to the same period last year, by $373.1 million or 9.3%, combined with an average interest-bearing liabilities interest cost decrease of 0.47%, resulting in a decrease in interest expense of $7.2 million.

The provision for loan losses increased by $2,150,000 from $625,000 for the six months ended June 30, 2019 to $2,775,000 for the same period in 2020, primarily as a result of the economic uncertainties associated with the novel coronavirus disease (COVID–19) pandemic and increased loan balances.

The Company’s effective tax rate increased from 0.8% for the six months ended June 30, 2019 to 7.8% for the same period in 2020. This was primarily as a result of an increase in taxable income relative to total income and a reduction in tax accruals, during 2019, 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. On March 27, 2020, the Coronavirus, Aid, Relief and Economic Security (CARES) Act was signed into law. As a result of the CARES Act, the full balance of the AMT credit will be refunded in 2020.

At June 30, 2020, total equity was $352.2 million compared to $332.6 million at December 31, 2019. The Company’s equity increased primarily as a result of earnings, offset somewhat by dividends paid.

The Company’s leverage ratio stood at 6.92% at June 30, 2020, compared to 7.25% at December 31, 2019. The decrease in the leverage ratio was due to an increase in quarterly average assets, offset somewhat by an increase in stockholders’ equity. Book value as of June 30, 2020 was $63.26 per share compared to $59.73 at December 31, 2019.

The Company’s allowance for loan losses was $32.5 million or 1.16% of loans outstanding at June 30, 2020 compared to $29.6 million or 1.22% of loans outstanding at December 31, 2019, and $29.1 million or 1.26% of loans outstanding at June 30, 2019. The ratio of the allowance for loan losses to loans outstanding has decreased from December 31, 2019, primarily from approximately $230 million of Payroll Protection Program (PPP) loans that are guaranteed by the U.S. Small Business Administration (SBA), which require no allowance for loan losses. This was offset, somewhat, by increased allocations for economic factors associated with the COVID-19 pandemic. Nonperforming assets totaled $1.5 million at June 30, 2020, compared to $2.0 million at December 31, 2019, and $5.0 million at June 30, 2019. Nonperforming assets decreased from the same period last year, mainly as a result of the resolution of one residential real estate property during the third quarter of 2019.

The CARES Act also allows companies to delay Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2016-13, Measurement of Credit Losses on Financial Instruments (CECL), including the current expected credit losses methodology for estimating allowances for credit losses. The Company has elected to delay FASB ASU 2016-13. This ASU will be delayed until the earlier of the date on which the national emergency concerning the COVID–19 outbreak declared by the President on March 15, 2020 terminates or December 31, 2020, with an effective retrospective implementation date of January 1, 2020.

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) 

June 30,

 

December 31,

Assets

2020

 

2019

Cash and Due From Banks

$

78,159

 

 

$

44,420

 

Federal Funds Sold and Interest-bearing Deposits In Other Banks

 

150,139

 

 

 

214,273

 

  
Securities Available-for-Sale (AFS)

 

302,882

 

 

 

262,190

 

  
Securities Held-to-Maturity

 

2,427,422

 

 

 

2,351,120

 

  
Federal Home Loan Bank of Boston stock, at cost

 

13,371

 

 

 

19,471

 

  
Loans: 
Commercial & Industrial

 

1,155,592

 

 

 

812,417

 

Municipal

 

153,017

 

 

 

120,455

 

Construction & Land Development

 

6,513

 

 

 

8,992

 

Commercial Real Estate

 

764,886

 

 

 

786,102

 

Residential Real Estate

 

400,867

 

 

 

371,897

 

Consumer and Other

 

19,857

 

 

 

21,893

 

Home Equity

 

297,355

 

 

 

304,363

 

  
Total Loans

 

2,798,087

 

 

 

2,426,119

 

Less: Allowance for Loan Losses

 

32,516

 

 

 

29,585

 

  
Net Loans

 

2,765,571

 

 

 

2,396,534

 

  
Bank Premises and Equipment, net

 

36,290

 

 

 

33,952

 

Accrued Interest Receivable

 

12,090

 

 

 

13,110

 

Goodwill

 

2,714

 

 

 

2,714

 

Other Assets

 

158,356

 

 

 

154,640

 

  
Total Assets

$

5,946,994

 

 

$

5,492,424

 

  
Liabilities 
Demand Deposits

$

985,491

 

 

$

712,842

 

  
Interest Bearing Deposits: 
Savings and NOW Deposits

 

1,967,783

 

 

 

1,678,250

 

Money Market Accounts

 

1,548,198

 

 

 

1,453,572

 

Time Deposits

 

610,496

 

 

 

555,447

 

  
Total Interest Bearing Deposits

 

4,126,477

 

 

 

3,687,269

 

  
Total Deposits

 

5,111,968

 

 

 

4,400,111

 

  
Borrowed Funds: 
Securities Sold Under Agreements to Repurchase

 

204,972

 

 

 

266,045

 

Other Borrowed Funds

 

152,485

 

 

 

370,955

 

  
Total Borrowed Funds

 

357,457

 

 

 

637,000

 

  
Other Liabilities

 

89,284

 

 

 

86,649

 

Subordinated Debentures

 

36,083

 

 

 

36,083

 

  
Total Liabilities

 

5,594,792

 

 

 

5,159,843

 

  
Total Stockholders' Equity

 

352,202

 

 

 

332,581

 

  
Total Liabilities & Stockholders' Equity

$

5,946,994

 

 

$

5,492,424

 

Century Bancorp, Inc. and Subsidiaries
Consolidated Comparative Statements of Income (unaudited)
For the quarter and six months ended June 30, 2020 and 2019
(in thousands)
 

Quarter ended June 30,

 

Six months ended June 30,

2020

 

2019

 

2020

 

2019

 
Interest Income:
Loans

$

19,848

$

21,680

$

42,047

$

42,989

Securities Held-to-Maturity

 

15,222

 

14,595

 

30,515

 

28,383

Securities Available-for-Sale

 

982

 

2,490

 

2,675

 

5,121

Federal Funds Sold and Interest-bearing Deposits In Other Banks

 

68

 

927

 

678

 

2,276

 
Total Interest Income

 

36,120

 

39,692

 

75,915

 

78,769

 
Interest Expense:
Savings and NOW Deposits

 

2,118

 

5,877

 

5,843

 

11,343

Money Market Accounts

 

3,462

 

5,412

 

9,034

 

10,755

Time Deposits

 

3,111

 

2,893

 

6,283

 

5,686

Securities Sold Under Agreements to Repurchase

 

309

 

490

 

935

 

875

Other Borrowed Funds and Subordinated Debentures

 

1,302

 

1,770

 

2,801

 

3,422

 
Total Interest Expense

 

10,302

 

16,442

 

24,896

 

32,081

 
Net Interest Income

 

25,818

 

23,250

 

51,019

 

46,688

 
Provision For Loan Losses

 

1,700

 

250

 

2,775

 

625

 
Net Interest Income After
Provision for Loan Losses

 

24,118

 

23,000

 

48,244

 

46,063

 
Other Operating Income:
Service Charges on Deposit Accounts

 

2,023

 

2,282

 

4,319

 

4,491

Lockbox Fees

 

924

 

992

 

1,854

 

2,081

Net Gain on Sales of Loans

 

-

 

139

 

-

 

154

Other Income

 

1,094

 

1,584

 

2,178

 

2,698

 
Total Other Operating Income

 

4,041

 

4,997

 

8,351

 

9,424

 
Operating Expenses:
Salaries and Employee Benefits

 

10,287

 

10,916

 

21,658

 

21,951

Occupancy

 

1,456

 

1,522

 

2,971

 

3,223

Equipment

 

962

 

795

 

1,799

 

1,578

Other

 

4,337

 

5,031

 

8,787

 

9,702

 
Total Operating Expenses

 

17,042

 

18,264

 

35,215

 

36,454

 
Income Before Income Taxes

 

11,117

 

9,733

 

21,380

 

19,033

 
Income Tax Expense

 

1,061

 

267

 

1,658

 

149

 
Net Income

$

10,056

$

9,466

$

19,722

$

18,884

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

June 30,

 

June 30,

Assets

2020

 

2019

Cash and Due From Banks

$

76,264

 

$

74,948

 

Federal Funds Sold and Interest-Bearing Deposits in Other Banks

 

220,008

 

 

189,568

 

 
Securities Available-For-Sale (AFS)

 

282,092

 

 

340,664

 

Securities Held-to-Maturity (HTM)

 

2,335,136

 

 

2,121,043

 

 
Total Loans

 

2,577,120

 

 

2,306,165

 

Less: Allowance for Loan Losses

 

30,621

 

 

28,864

 

 
Net Loans

 

2,546,499

 

 

2,277,301

 

 
Unrealized (Loss)Gain on Securities AFS and HTM Transfers

 

(3,248

)

 

(3,560

)

Bank Premises and Equipment

 

35,895

 

 

24,483

 

Accrued Interest Receivable

 

12,653

 

 

14,167

 

Goodwill

 

2,714

 

 

2,714

 

Other Assets

 

163,547

 

 

134,524

 

 
Total Assets

$

5,671,560

 

$

5,175,852

 

 
Liabilities
Demand Deposits

$

841,339

 

$

759,653

 

 
Interest Bearing Deposits:
Savings and NOW Deposits

 

1,839,771

 

 

1,834,278

 

Money Market Accounts

 

1,530,442

 

 

1,270,952

 

Time Deposits

 

598,669

 

 

509,710

 

Total Interest Bearing Deposits

 

3,968,882

 

 

3,614,940

 

 
Total Deposits

 

4,810,221

 

 

4,374,593

 

 
Borrowed Funds:
Securities Sold Under Agreements to Repurchase

 

226,518

 

 

181,252

 

Other Borrowed Funds

 

169,258

 

 

195,318

 

 
Total Borrowed Funds

 

395,776

 

 

376,570

 

 
Other Liabilities

 

87,589

 

 

79,440

 

Subordinated Debentures

 

36,083

 

 

36,083

 

 
Total Liabilities

 

5,329,669

 

 

4,866,686

 

 
Total Stockholders' Equity

 

341,891

 

 

309,166

 

 
Total Liabilities & Stockholders' Equity

$

5,671,560

 

$

5,175,852

 

 
Total Average Earning Assets - QTD

$

5,635,101

 

$

4,965,815

 

 
Total Average Earning Assets - YTD

$

5,414,356

 

$

4,957,440

 

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

June 30,

 

June 30,

2020

 

2019

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

$

1.81

 

$

1.70

 

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

$

3.54

 

$

3.39

 

Return on average assets, year-to-date

 

0.70

%

 

0.74

%

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

 

11.60

%

 

12.32

%

Net interest margin (taxable equivalent), quarter

 

1.97

%

 

2.06

%

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

 

2.04

%

 

2.09

%

Efficiency ratio, Non-GAAP (1)

 

55.7

%

 

59.8

%

Book value per share

$

63.26

 

$

57.28

 

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

$

62.77

 

$

56.79

 

Capital / assets

 

5.92

%

 

6.13

%

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

 

5.88

%

 

6.08

%

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

 

5,567,909

 

 

5,567,909

 

 
Shares outstanding Class A

 

3,652,469

 

 

3,620,449

 

Shares outstanding Class B

 

1,915,440

 

 

1,947,460

 

Total shares outstanding at period end

 

5,567,909

 

 

5,567,909

 

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

 

1.16

%

 

1.26

%

Nonaccrual loans

$

1,538

 

$

2,899

 

Nonperforming assets

$

1,538

 

$

4,999

 

Loans 90 days past due and still accruing

$

-

 

$

-

 

Accruing troubled debt restructures

$

2,271

 

$

2,520

 

Net charge-offs (recoveries), quarter

$

(156

)

$

98

 

 
Leverage ratio

 

6.92

%

 

7.07

%

Common equity tier 1 risk weighted capital ratio

 

11.66

%

 

11.79

%

Tier 1 risk weighted capital ratio

 

12.76

%

 

13.03

%

Total risk weighted capital ratio

 

13.77

%

 

14.06

%

Total risk weighted assets

$

3,196,338

 

$

2,813,302

 

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

$

35,215

 

$

36,296

 

 
Net interest income

$

51,019

 

$

46,688

 

Total other operating income

 

8,351

 

 

9,424

 

Tax equivalent adjustment

 

3,904

 

 

4,576

 

Total income(denominator)

$

63,274

 

$

60,688

 

 
Efficiency ratio - Non-GAAP

 

55.7

%

 

59.8

%

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

$

352,202

 

$

318,937

 

Less: goodwill

 

2,714

 

 

2,714

 

Tangible stockholders' equity(numerator)

$

349,488

 

$

316,223

 

 
Total shares outstanding at period end(denominator)

 

5,567,909

 

 

5,567,909

 

 
Tangible book value per share - Non-GAAP

$

62.77

 

$

56.79

 

Book value per share - GAAP

$

63.26

 

$

57.28

 

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

$

352,202

 

$

318,937

 

Less: goodwill

 

2,714

 

 

2,714

 

Tangible stockholders' equity(numerator)

$

349,488

 

$

316,223

 

 
Total assets

$

5,946,994

 

$

5,200,501

 

Less: goodwill

 

2,714

 

 

2,714

 

Tangible assets(denominator)

$

5,944,280

 

$

5,197,787

 

 
Tangible capital / tangible assets - Non-GAAP

 

5.88

%

 

6.08

%

Capital / assets - GAAP

 

5.92

%

 

6.13

%

 

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

Source: Century Bancorp, Inc.