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Century Bancorp, Inc. Announces Record Earnings for Q3 2020, Up 8%; Record Assets, Loans, and Deposits; Increase in Quarterly Dividend Declared

Company Release - 10/13/2020 4:45 PM ET

MEDFORD, Mass.--(BUSINESS WIRE)-- Century Bancorp, Inc. (NASDAQ:CNBKA) (www.centurybank.com) (“the Company”) today announced net income of $30,609,000 for the nine months ended September 30, 2020, or $5.50 per Class A share diluted, an increase of 5.7% compared to net income of $28,967,000, or $5.20 per Class A share diluted, for the same period a year ago. Total assets increased 14.6% from $5.49 billion at December 31, 2019 to $6.3 billion at September 30, 2020. For the quarter ended September 30, 2020, net income totaled $10,887,000 or $1.96 per Class A share diluted, an increase of 8.0% compared to net income of $10,084,000, or $1.81 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 14.00 cents ($0.14) per share to 16.00 cents ($0.16) per share on the Company's Class A common stock, and from 7.00 cents ($0.07) per share to 8.00 cents ($0.08) per share on the Company's Class B common stock. The dividends were declared payable November 16, 2020 to stockholders of record on November 2, 2020.

Net interest income totaled $78.4 million for the nine months ended September 30, 2020 compared to $70.5 million for the same period in 2019. The 11.2% 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 $946,000 for the first nine months of 2020 compared to $18,000 for the same period last year. The net interest margin decreased from 2.08% on a fully tax-equivalent basis for the first nine months of 2019 to 2.01% 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 nine months of 2020 compared to the same period last year, by $609.0 million or 12.3%, combined with an average yield decrease of 0.55%, resulting in a decrease in interest income of $6.2 million. The average balance of interest-bearing liabilities increased for the first nine months of 2020 compared to the same period last year, by $486.9 million or 12.1%, combined with an average interest-bearing liabilities interest cost decrease of 0.59%, resulting in a decrease in interest expense of $14.1 million.

The provision for loan losses increased by $2,975,000 from $700,000 for the nine months ended September 30, 2019 to $3,675,000 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 2.0% for the nine months ended September 30, 2019 to 9.5% 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 was refunded in 2020.

At September 30, 2020, total equity was $363.4 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 6.79% at September 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 September 30, 2020 was $65.27 per share compared to $59.73 at December 31, 2019.

The Company’s allowance for loan losses was $33.4 million or 1.12% of loans outstanding at September 30, 2020 compared to $29.6 million or 1.22% of loans outstanding at December 31, 2019, and $29.1 million or 1.22% of loans outstanding at September 30, 2019. The ratio of the allowance for loan losses to loans outstanding has decreased from December 31, 2019, primarily from approximately $232 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. Nonperforming assets totaled $1.4 million at September 30, 2020, compared to $2.0 million at December 31, 2019, and $1.1 million at September 30, 2019.

As of September 30, 2020, the Company has COVID-19 modifications of 33 loans aggregating $37,987,000, primarily consisting of short-term payment deferrals. Of these modifications, $37,987,000, or 100%, were performing in accordance with their modified terms.

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)
September 30,December 31,
Assets

2020

2019

Cash and Due From Banks

$

101,679

$

44,420

Federal Funds Sold and Interest-bearing Deposits In Other Banks

 

310,901

 

214,273

 
Securities Available-for-Sale (AFS)

 

293,277

 

262,190

 
Securities Held-to-Maturity

 

2,407,176

 

2,351,120

 
Federal Home Loan Bank of Boston stock, at cost

 

13,361

 

19,471

 
Loans:
Commercial & Industrial

 

1,315,407

 

812,417

Municipal

 

130,047

 

120,455

Construction & Land Development

 

9,116

 

8,992

Commercial Real Estate

 

784,895

 

786,102

Residential Real Estate

 

443,703

 

371,897

Consumer and Other

 

19,866

 

21,893

Home Equity

 

287,099

 

304,363

 
Total Loans

 

2,990,133

 

2,426,119

Less: Allowance for Loan Losses

 

33,394

 

29,585

 
Net Loans

 

2,956,739

 

2,396,534

 
Bank Premises and Equipment, net

 

37,340

 

33,952

Accrued Interest Receivable

 

13,223

 

13,110

Goodwill

 

2,714

 

2,714

Other Assets

 

159,016

 

154,640

 
Total Assets

$

6,295,426

$

5,492,424

 
Liabilities
Demand Deposits

$

991,590

$

712,842

 
Interest Bearing Deposits:
Savings and NOW Deposits

 

1,932,339

 

1,678,250

Money Market Accounts

 

1,906,676

 

1,453,572

Time Deposits

 

581,866

 

555,447

 
Total Interest Bearing Deposits

 

4,420,881

 

3,687,269

 
Total Deposits

 

5,412,471

 

4,400,111

 
Borrowed Funds:
Securities Sold Under Agreements to Repurchase

 

231,030

 

266,045

Other Borrowed Funds

 

152,248

 

370,955

 
Total Borrowed Funds

 

383,278

 

637,000

 
Other Liabilities

 

100,160

 

86,649

Subordinated Debentures

 

36,083

 

36,083

 
Total Liabilities

 

5,931,992

 

5,159,843

 
Total Stockholders' Equity

 

363,434

 

332,581

 
Total Liabilities & Stockholders' Equity

$

6,295,426

$

5,492,424

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

2020

2019

2020

2019

 
Interest Income:
Loans

$

21,431

$

22,117

$

63,478

$

65,106

Securities Held-to-Maturity

 

14,186

 

14,623

 

44,701

 

43,006

Securities Available-for-Sale

 

818

 

2,184

 

3,493

 

7,305

Federal Funds Sold and Interest-bearing Deposits In Other Banks

 

69

 

928

 

747

 

3,204

 
Total Interest Income

 

36,504

 

39,852

 

112,419

 

118,621

 
Interest Expense:
Savings and NOW Deposits

 

1,726

 

5,445

 

7,569

 

16,788

Money Market Accounts

 

3,056

 

5,050

 

12,090

 

15,805

Time Deposits

 

2,858

 

3,038

 

9,141

 

8,724

Securities Sold Under Agreements to Repurchase

 

241

 

697

 

1,176

 

1,572

Other Borrowed Funds and Subordinated Debentures

 

1,292

 

1,852

 

4,093

 

5,274

 
Total Interest Expense

 

9,173

 

16,082

 

34,069

 

48,163

 
Net Interest Income

 

27,331

 

23,770

 

78,350

 

70,458

 
Provision For Loan Losses

 

900

 

75

 

3,675

 

700

 
Net Interest Income After
Provision for Loan Losses

 

26,431

 

23,695

 

74,675

 

69,758

 
Other Operating Income:
Service Charges on Deposit Accounts

 

2,239

 

2,310

 

6,558

 

6,801

Lockbox Fees

 

996

 

937

 

2,850

 

3,018

Net Gain on Sales of Loans

 

-

 

-

 

-

 

154

Other Income

 

934

 

1,039

 

3,112

 

3,737

 
Total Other Operating Income

 

4,169

 

4,286

 

12,520

 

13,710

 
Operating Expenses:
Salaries and Employee Benefits

 

11,362

 

10,670

 

33,020

 

32,621

Occupancy

 

1,477

 

1,463

 

4,448

 

4,686

Equipment

 

809

 

862

 

2,608

 

2,440

Other

 

4,519

 

4,467

 

13,306

 

14,170

 
Total Operating Expenses

 

18,167

 

17,462

 

53,382

 

53,917

 
Income Before Income Taxes

 

12,433

 

10,519

 

33,813

 

29,551

 
Income Tax Expense

 

1,546

 

435

 

3,204

 

584

 
Net Income

$

10,887

$

10,084

$

30,609

$

28,967

Century Bancorp, Inc. and Subsidiaries
Consolidated Year-to-Date Average Comparative Statements of Condition (unaudited)
(in thousands)
September 30,September 30,
Assets

2020

2019

Cash and Due From Banks

$

80,686

 

$

74,413

 

Federal Funds Sold and Interest-Bearing Deposits in Other Banks

 

238,525

 

 

184,035

 

 
Securities Available-For-Sale (AFS)

 

293,301

 

 

325,036

 

Securities Held-to-Maturity (HTM)

 

2,346,502

 

 

2,128,082

 

 
Total Loans

 

2,693,000

 

 

2,325,136

 

Less: Allowance for Loan Losses

 

31,359

 

 

28,936

 

 
Net Loans

 

2,661,641

 

 

2,296,200

 

 
Unrealized (Loss)Gain on Securities AFS and HTM Transfers

 

(2,861

)

 

(3,352

)

Bank Premises and Equipment

 

36,253

 

 

26,273

 

Accrued Interest Receivable

 

12,630

 

 

13,942

 

Goodwill

 

2,714

 

 

2,714

 

Other Assets

 

164,804

 

 

133,754

 

 
Total Assets

$

5,834,195

 

$

5,181,097

 

 
Liabilities
Demand Deposits

$

889,237

 

$

764,852

 

 
Interest Bearing Deposits:
Savings and NOW Deposits

 

1,881,897

 

 

1,818,017

 

Money Market Accounts

 

1,603,367

 

 

1,249,531

 

Time Deposits

 

597,589

 

 

512,228

 

Total Interest Bearing Deposits

 

4,082,853

 

 

3,579,776

 

 
Total Deposits

 

4,972,090

 

 

4,344,628

 

 
Borrowed Funds:
Securities Sold Under Agreements to Repurchase

 

220,796

 

 

205,185

 

Other Borrowed Funds

 

169,972

 

 

201,804

 

 
Total Borrowed Funds

 

390,768

 

 

406,989

 

 
Other Liabilities

 

88,028

 

 

79,327

 

Subordinated Debentures

 

36,083

 

 

36,083

 

 
Total Liabilities

 

5,486,969

 

 

4,867,027

 

 
Total Stockholders' Equity

 

347,226

 

 

314,070

 

 
Total Liabilities & Stockholders' Equity

$

5,834,195

 

$

5,181,097

 

 
Total Average Earning Assets - QTD

$

5,881,860

 

$

4,971,831

 

 
Total Average Earning Assets - YTD

$

5,571,328

 

$

4,962,289

 

Century Bancorp, Inc. and Subsidiaries
Consolidated Selected Key Financial Information (unaudited)
(in thousands, except share data)September 30,September 30,

2020

2019

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

$

1.96

 

$

1.81

 

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

$

5.50

 

$

5.20

 

Return on average assets, year-to-date

 

0.70

%

 

0.75

%

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

 

11.78

%

 

12.33

%

Net interest margin (taxable equivalent), quarter

 

1.96

%

 

2.08

%

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

 

2.01

%

 

2.08

%

Efficiency ratio, Non-GAAP (1)

 

55.4

%

 

59.1

%

Book value per share

$

65.27

 

$

59.08

 

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

$

64.79

 

$

58.59

 

Capital / assets

 

5.77

%

 

6.21

%

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

 

5.73

%

 

6.16

%

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

 

5,567,909

 

 

5,567,909

 

 
Shares outstanding Class A

 

3,655,469

 

 

3,650,449

 

Shares outstanding Class B

 

1,912,440

 

 

1,917,460

 

Total shares outstanding at period end

 

5,567,909

 

 

5,567,909

 

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

 

1.12

%

 

1.22

%

Nonaccrual loans

$

1,419

 

$

1,066

 

Nonperforming assets

$

1,419

 

$

1,066

 

Loans 90 days past due and still accruing

$

49

 

$

-

 

Accruing troubled debt restructures

$

2,240

 

$

2,404

 

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

$

(134

)

$

146

 

 
Leverage ratio

 

6.79

%

 

7.25

%

Common equity tier 1 risk weighted capital ratio

 

11.36

%

 

11.90

%

Tier 1 risk weighted capital ratio

 

12.40

%

 

13.12

%

Total risk weighted capital ratio

 

13.39

%

 

14.13

%

Total risk weighted assets

$

3,370,541

 

$

2,867,422

 

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

$

53,382

 

$

53,917

 

Less: other real estate owned expenses

 

-

 

 

(139

)

Total adjusted operating expenses(numerator)

$

53,382

 

$

53,778

 

 
Net interest income

$

78,350

 

$

70,458

 

Total other operating income

 

12,520

 

 

13,710

 

Tax equivalent adjustment

 

5,558

 

 

6,875

 

Total income(denominator)

$

96,428

 

$

91,043

 

 
Efficiency ratio - Non-GAAP

 

55.4

%

 

59.1

%

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

$

363,434

 

$

328,960

 

Less: goodwill

 

2,714

 

 

2,714

 

Tangible stockholders' equity(numerator)

$

360,720

 

$

326,246

 

 
Total shares outstanding at period end(denominator)

 

5,567,909

 

 

5,567,909

 

 
Tangible book value per share - Non-GAAP

$

64.79

 

$

58.59

 

Book value per share - GAAP

$

65.27

 

$

59.08

 

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

$

363,434

 

$

328,960

 

Less: goodwill

 

2,714

 

 

2,714

 

Tangible stockholders' equity(numerator)

$

360,720

 

$

326,246

 

 
Total assets

$

6,295,426

 

$

5,299,181

 

Less: goodwill

 

2,714

 

 

2,714

 

Tangible assets(denominator)

$

6,292,712

 

$

5,296,467

 

 
Tangible capital / tangible assets - Non-GAAP

 

5.73

%

 

6.16

%

Capital / assets - GAAP

 

5.77

%

 

6.21

%

 

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

Source: Century Bancorp, Inc.