CNBKA Century BanCorp Inc

Century Bancorp, Inc. (NASDAQ:CNBKA) (www.centurybank.com) (“the Company”) today announced net income of $22.3 million for the year ended December 31, 2017, or $4.01 per Class A share diluted, a decrease of 9.1% compared to net income of $24.5 million, or $4.41 per Class A share diluted, for the same period a year ago. The Company’s core earnings(1) increased by $6.2 million or 25.3% from $24.5 in 2016 to a record $30.7 million in 2017.

On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was enacted, which lowered the Company’s federal tax rate from 34% to 21%. As a result of the rate reduction, the Company recorded a reduction in the value of its net deferred tax asset resulting in a charge of $8.4 million to income tax expense.

Total assets increased 7.2% from $4.46 billion at December 31, 2016 to $4.79 billion at December 31, 2017. For the quarter ended December 31, 2017, net income totaled $25,000 or $0.00 per Class A share diluted, a decrease of 99.6% compared to net income of $6,500,000, or $1.17 per Class A share diluted, for the same period a year ago.

Net interest income totaled $85.6 million for the year ended December 31, 2017 compared to $74.1 million for the same period in 2016. The 15.6% increase in net interest income for the period is primarily due to an increase in average earning assets and an increase in the net interest margin. The net interest margin increased from 2.12% on a fully taxable equivalent basis in 2016 to 2.25% for the same period in 2017. This was primarily the result of an increase in rates on earning assets and prepayment penalties collected. The average balances of earning assets increased by 8.1% combined with a similar increase in average deposits. Also, interest expense increased 23.0% primarily as a result of an increase in rates and an increase in deposit balances.

The provision for loan losses increased by $415,000 from $1.4 million for the year ended December 31, 2016 to $1.8 million for the same period in 2017, primarily as a result of an increase in loan growth offset, somewhat, by changes in historical loss factors.

The Company’s effective tax rate increased from (1.5%) for 2016 to 32.9% for the same period in 2017. This was primarily as a result of a reduction in the value of its net deferred tax asset resulting in a charge of $8.4 million to income tax expense as a result of the Tax Act as previously discussed. An increase in taxable income also contributed to the increase in the effective tax rate for 2017.

At December 31, 2017, total equity was $260.3 million compared to $240.0 million at December 31, 2016. The Company’s equity increased primarily as a result of earnings and a decrease in other comprehensive loss, net of taxes, offset somewhat by dividends paid. Other comprehensive loss, net of taxes, decreased primarily as a result of a decrease in unrealized losses on securities transferred from available-for-sale to held-to-maturity and a decrease in unrealized losses on securities available-for-sale. The reduction in the value of the Company’s deferred tax asset of $8.4 million impacted the Company’s total equity as a reduction to retained earnings.

The Company’s leverage ratio stood at 6.70% at December 31, 2017, compared to 6.28% at December 31, 2016. 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 December 31, 2017 was $46.75 per share compared to $43.11 at December 31, 2016.

The Company’s allowance for loan losses was $26.3 million or 1.21% of loans outstanding at December 31, 2017, compared to $24.4 million or 1.27% of loans outstanding at December 31, 2016. The change in the ratio of the allowance for loan losses to loans outstanding, when compared to December 31, 2016, was primarily due to changes in portfolio composition, lower historical loss rates, and qualitative factor adjustments. Non-performing assets totaled $1.7 million at December 31, 2017, compared to $1.1 million at December 31, 2016.

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 February 15, 2018 to stockholders of record on February 1, 2018.

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)         December 31,       December 31,

Assets

2017 2016 Cash and Due From Banks $ 77,199 $ 62,400 Federal Funds Sold and Interest-bearing Deposits In Other Banks 279,231 173,751   Short-term Investments - 3,183   Securities Available-for-Sale (AFS) 397,475 499,297   Securities Held-to-Maturity 1,701,233 1,653,986   Federal Home Loan Bank of Boston stock, at cost 21,779 21,042   Loans: Commercial & Industrial 763,807 612,503 Municipal 106,599 135,418 Construction & Land Development 18,931 14,928 Commercial Real Estate 732,491 696,173 Residential Real Estate 287,731 241,357 Consumer and Other 19,040 11,697 Home Equity   247,345   211,857   Total Loans 2,175,944 1,923,933 Less: Allowance for Loan Losses   26,255   24,406   Net Loans 2,149,689 1,899,527   Bank Premises and Equipment, net 23,527 23,417 Accrued Interest Receivable 11,179 9,645 Goodwill 2,714 2,714 Other Assets   121,546   113,646   Total Assets $ 4,785,572 $ 4,462,608  

Liabilities

Demand Deposits $ 736,020 $ 689,286   Interest Bearing Deposits: Savings and NOW Deposits 1,367,358 1,304,394 Money Market Accounts 1,188,228 1,181,179 Time Deposits   625,361   478,359   Total Interest Bearing Deposits   3,180,947   2,963,932   Total Deposits 3,916,967 3,653,218   Borrowed Funds: Securities Sold Under Agreements to Repurchase 158,990 182,280 Other Borrowed Funds   347,778   293,000   Total Borrowed Funds 506,768 475,280   Other Liabilities 65,457 57,986 Subordinated Debentures   36,083   36,083   Total Liabilities 4,525,275 4,222,567   Total Stockholders' Equity   260,297   240,041   Total Liabilities & Stockholders' Equity $ 4,785,572 $ 4,462,608     Century Bancorp, Inc. and Subsidiaries Consolidated Comparative Statements of Income (unaudited) For the quarter and year ended December 31, 2017 and 2016 (in thousands)                         Quarter ended December 31,   Year ended December 31, 2017 2016 2017 2016   Interest Income: Loans $ 17,345 $ 14,384 $ 66,013 $ 57,764 Securities Held-to-Maturity 9,542 8,501 38,348 32,679 Securities Available-for-Sale 1,835 1,474 6,978 5,020 Federal Funds Sold and Interest-bearing Deposits In Other Banks   748   330     2,097   1,236     Total Interest Income 29,470 24,689 113,436 96,699   Interest Expense: Savings and NOW Deposits 1,842 1,161 6,296 4,020 Money Market Accounts 1,723 1,057 5,626 3,542 Time Deposits 2,271 1,490 7,919 5,706 Securities Sold Under Agreements to Repurchase 144 109 496 472 Other Borrowed Funds and Subordinated Debentures   1,788   2,110     7,483   8,877     Total Interest Expense   7,768   5,927     27,820   22,617     Net Interest Income 21,702 18,762 85,616 74,082   Provision For Loan Losses   450   200     1,790   1,375     Net Interest Income After Provision for Loan Losses 21,252 18,562 83,826 72,707   Other Operating Income Service Charges on Deposit Accounts 2,407 2,025 8,586 7,907 Lockbox Fees 923 733 3,290 3,164 Net Gain on Sales of Loans - - 370 1,331 Other Income   1,080   942     4,306   3,820     Total Other Operating Income 4,410 3,700 16,552 16,222   Operating Expenses Salaries and Employee Benefits 9,769 9,688 41,913 40,048 Occupancy 1,477 1,508 6,140 6,147 Equipment 647 758 2,892 2,845 FDIC Assessment 363 399 1,581 1,902 Other   3,736   3,803     14,593   13,815     Total Operating Expenses   15,992   16,156     67,119   64,757     Income Before Income Taxes 9,670 6,106 33,259 24,172   Income Tax (Benefit) Expense   9,645   (394 )   10,958   (362 )   Net Income $ 25 $ 6,500   $ 22,301 $ 24,534                 Consolidated Year-to-Date Average Comparative Statements of Condition (unaudited) (in thousands)   December 31, December 31,

Assets

2017 2016 Cash and Due From Banks $ 72,455 $ 71,023 Federal Funds Sold and Interest-Bearing Deposits in Other Banks 189,193 235,339   Securities Available-For-Sale (AFS) 461,635 498,654 Securities Held-to-Maturity (HTM) 1,725,281 1,533,032   Total Loans 2,059,797 1,838,136 Less: Allowance for Loan Losses   25,329     23,872     Net Loans 2,034,468 1,814,264   Unrealized (Loss)Gain on Securities AFS and HTM Transfers (6,394 ) (9,504 ) Bank Premises and Equipment 23,504 23,656 Accrued Interest Receivable 10,300 8,390 Goodwill 2,714 2,714 Other Assets   119,048     113,924     Total Assets $ 4,632,204   $ 4,291,492    

Liabilities

Demand Deposits $ 687,853 $ 609,159   Interest Bearing Deposits: Savings and NOW Deposits 1,457,872 1,322,714 Money Market Accounts 1,105,072 1,041,404 Time Deposits   566,940     452,562   Total Interest Bearing Deposits   3,129,884     2,816,680     Total Deposits 3,817,737 3,425,839   Borrowed Funds: Securities Sold Under Agreements to Repurchase 189,684 222,956 Other Borrowed Funds   273,019     321,891     Total Borrowed Funds 462,703 544,847   Other Liabilities 60,925 57,602 Subordinated Debentures   36,083     36,083     Total Liabilities 4,377,448 4,064,371   Total Stockholders' Equity   254,756     227,121     Total Liabilities & Stockholders' Equity $ 4,632,204   $ 4,291,492     Total Average Earning Assets - QTD $ 4,441,053   $ 4,287,001     Total Average Earning Assets - YTD $ 4,435,906   $ 4,105,161       Century Bancorp, Inc. and Subsidiaries Consolidated Selected Key Financial Information (unaudited) (in thousands, except share data)       December 31,       December 31, 2017 2016  

Performance Measures:

  Earnings per average Class A share, diluted, quarter $

0.00

$ 1.17 Earnings per average Class A share, diluted, year $ 4.01 $ 4.41 Return on average assets, year 0.48 % 0.57 % Return on average stockholders' equity, year 8.75 % 10.80 % Net interest margin (taxable equivalent), quarter 2.26 % 2.04 % Net interest margin (taxable equivalent), year 2.25 % 2.12 % Efficiency ratio, year-to-date - Non-GAAP (1) 57.8 % 62.7 % Book value per share $ 46.75 $ 43.11 Tangible book value per share - Non-GAAP (1) $ 46.26 $ 42.62 Capital / assets 5.44 % 5.38 % Tangible capital / tangible assets - Non-GAAP (1) 5.39 % 5.32 %     Common Share Data: Average Class A shares outstanding, diluted, quarter & year 5,567,909 5,567,909   Shares outstanding Class A 3,605,829 3,600,729 Shares outstanding Class B   1,962,080     1,967,180   Total shares outstanding at period end   5,567,909     5,567,909      

Asset Quality and Other Data:

  Allowance for loan losses / loans 1.21 % 1.27 % Nonaccrual loans $ 1,684 $ 1,084 Nonperforming assets $ 1,684 $ 1,084 Loans 90 days past due and still accruing $ - $ - Accruing troubled debt restructures $ 2,749 $ 3,526 Net (recoveries)charge-offs, year $ (59 ) $ (45 )   Leverage ratio 6.70 % 6.28 % Common equity tier 1 risk weighted capital ratio 10.56 % 10.41 % Tier 1 risk weighted capital ratio 11.90 % 11.70 % Total risk weighted capital ratio 12.91 % 12.72 % Total risk weighted assets $ 2,613,116 $ 2,398,796     (1) Non-GAAP Financial Measures are reconciled in the following tables:     Calculation of Efficiency ratio:   Total operating expenses(numerator) $ 67,119   $ 64,757     Net interest income $ 85,616 $ 74,082 Total other operating income 16,552 16,222 Tax equivalent adjustment   13,979     12,917   Total income(denominator) $ 116,147   $ 103,221     Efficiency ratio, year - Non-GAAP         57.8 %         62.7 %   Calculation of tangible book value per share:   Total stockholders' equity $ 260,297 $ 240,041 Less: goodwill   2,714     2,714   Tangible stockholders' equity(numerator) $ 257,583   $ 237,327     Total shares outstanding at period end(denominator) 5,567,909 5,567,909   Tangible book value per share - Non-GAAP       $ 46.26         $ 42.62   Book value per share - GAAP       $ 46.75         $ 43.11     Calculation of tangible capital / tangible assets:   Total stockholders' equity $ 260,297 $ 240,041 Less: goodwill   2,714     2,714   Tangible stockholders' equity(numerator) $ 257,583   $ 237,327     Total assets $ 4,785,572 $ 4,462,608 Less: goodwill   2,714     2,714   Tangible assets(denominator) $ 4,782,858   $ 4,459,894     Tangible capital / tangible assets - Non-GAAP         5.39 %         5.32 % Capital / assets - GAAP           5.44 %         5.38 %   Calculation of core earnings:   Net income $ 22,301 $ 24,534 Add: deferred tax remeasurement charge   8,448     -   Core earnings         $ 30,749         $ 24,534    

View source version on businesswire.com: http://www.businesswire.com/news/home/20180116006773/en/

Century Bancorp, Inc.William P. Hornby, CPA, 781-393-4630whornby@centurybank.comFax: 781-393-4071