CNBKA Century BanCorp Inc

Century Bancorp, Inc. (NASDAQ:CNBKA) (www.centurybank.com) (“the Company”) today announced net income of $26,288,000 for the nine months ended September 30, 2018, or $4.72 per Class A share diluted, an increase of 18.0% compared to net income of $22,276,000, or $4.00 per Class A share diluted, for the same period a year ago. Total assets increased 1.8% from $4.79 billion at December 31, 2017 to $4.87 billion at September 30, 2018. For the quarter ended September 30, 2018, net income totaled $9,581,000 or $1.72 per Class A share diluted, an increase of 19.4% compared to net income of $8,023,000, or $1.44 per Class A share diluted, for the same period a year ago.

Net interest income totaled $68.9 million for the nine months ended September 30, 2018 compared to $63.9 million for the same period in 2017. The 7.8% increase in net interest income for the period is primarily due to an increase in average earning assets. The net interest margin decreased from 2.24% on a fully taxable equivalent basis in 2017 to 2.19% for the same period in 2018. This was primarily the result of a decrease in the federal corporate tax rate from 34% to 21% as well as prepayment penalties collected during the second quarter of 2017. The decrease in the tax rate results in a lower tax equivalent yield on tax-exempt assets. The average balances of earning assets increased by 3.8% combined with an average yield increase of 0.24%, resulting in an increase in interest income of $15.6 million. The average balance of interest bearing liabilities increased 2.7% combined with an average yield increase of 0.36%, resulting in an increase in interest expense of $10.7 million.

The provision for loan losses decreased by $440,000 from $1,340,000 for the nine months ended September 30, 2017 to $900,000 for the same period in 2018, primarily as a result of net recoveries of $1.4 million offset by changes in qualitative factors.

The Company’s effective tax rate decreased from 5.6% for the first nine months of 2017 to 4.6% for the same period in 2018. This was primarily the result of a decrease in the federal tax rate from 34% to 21% as a result of the Tax Cuts and Jobs Act, offset somewhat by an increase in taxable income.

At September 30, 2018, total equity was $286.9 million compared to $260.3 million at December 31, 2017. The Company’s equity increased primarily as a result of earnings, offset somewhat by dividends paid.

The Company’s leverage ratio stood at 7.03% at September 30, 2018, compared to 6.70% at December 31, 2017. 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 September 30, 2018 was $51.52 per share compared to $46.75 at December 31, 2017.

The Company’s allowance for loan losses was $28.5 million or 1.26% of loans outstanding at September 30, 2018, compared to $26.3 million or 1.21% of loans outstanding at December 31, 2017, and $25.7 million or 1.22% of loans outstanding at September 30, 2017. The ratio of the allowance for loan losses to loans outstanding has increased, during the third quarter of 2018, primarily as a result of changes in qualitative factors related to general economic factors pertaining to certain industries. Non-performing assets totaled $3.7 million at September 30, 2018, compared to $1.7 million at December 31, 2017 and $1.6 million at September 30, 2017. Nonperforming loans increased mainly as a result of one residential real estate loan.

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 November 15, 2018 to stockholders of record on November 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 SubsidiariesConsolidated Comparative Statements of Condition (unaudited)(in thousands)

Assets

   

September 30,2018

   

December 31,2017

Cash and Due From Banks $ 68,945 $ 77,199 Federal Funds Sold and Interest-bearing Deposits In Other Banks 142,345 279,231   Securities Available-for-Sale (AFS) 368,119 397,475   Securities Held-to-Maturity 1,875,752 1,701,233   Federal Home Loan Bank of Boston stock, at cost 22,743 21,779   Loans: Commercial & Industrial 783,960 763,807 Municipal 94,532 106,599 Construction & Land Development 12,434 18,931 Commercial Real Estate 730,265 732,491 Residential Real Estate 335,114 287,731 Consumer and Other 21,216 19,040 Home Equity   283,818   247,345   Total Loans 2,261,339 2,175,944 Less: Allowance for Loan Losses   28,545   26,255   Net Loans 2,232,794 2,149,689   Bank Premises and Equipment, net 24,023 23,527 Accrued Interest Receivable 12,878 11,179 Goodwill 2,714 2,714 Other Assets   120,110   121,546   Total Assets $ 4,870,423 $ 4,785,572  

Liabilities

Demand Deposits $ 731,095 $ 736,020   Interest Bearing Deposits: Savings and NOW Deposits 1,359,334 1,367,358 Money Market Accounts 1,294,092 1,188,228 Time Deposits   579,886   625,361   Total Interest Bearing Deposits   3,233,312   3,180,947   Total Deposits 3,964,407 3,916,967   Borrowed Funds: Securities Sold Under Agreements to Repurchase 140,490 158,990 Other Borrowed Funds   372,606   347,778   Total Borrowed Funds 513,096 506,768   Other Liabilities 69,960 65,457 Subordinated Debentures   36,083   36,083   Total Liabilities 4,583,546 4,525,275   Total Stockholders' Equity   286,877   260,297   Total Liabilities & Stockholders' Equity $ 4,870,423 $ 4,785,572               Century Bancorp, Inc. and Subsidiaries Consolidated Comparative Statements of Income (unaudited) For the quarter and nine months ended September 30, 2018 and 2017 (in thousands)   Quarter ended September 30, Nine-months ended September 30, 2018   2017 2018   2017   Interest Income: Loans $ 20,167 $ 16,658 $ 57,613 $ 48,668 Securities Held-to-Maturity 11,507 9,447 32,930 28,806 Securities Available-for-Sale 2,500 1,809 6,821 5,143 Federal Funds Sold and Interest-bearing Deposits In Other Banks   591   607   2,239   1,349   Total Interest Income 34,765 28,521 99,603 83,966   Interest Expense: Savings and NOW Deposits 2,972 1,727 7,778 4,454 Money Market Accounts 3,652 1,395 9,039 3,903 Time Deposits 2,571 2,095 7,465 5,648 Securities Sold Under Agreements to Repurchase 288 129 657 352 Other Borrowed Funds and Subordinated Debentures   2,078   1,822   5,793   5,695   Total Interest Expense   11,561   7,168   30,732   20,052   Net Interest Income 23,204 21,353 68,871 63,914   Provision For Loan Losses   -   450   900   1,340   Net Interest Income After Provision for Loan Losses 23,204 20,903 67,971 62,574   Other Operating Income Service Charges on Deposit Accounts 2,137 2,089 6,268 6,179 Lockbox Fees 892 735 2,304 2,367 Net Gain on Sales of Loans - - - 370 Net Gain on Sales of Securities 105 47 302 47 Other Income   1,035   1,071   3,210   3,179   Total Other Operating Income 4,169 3,942 12,084 12,142   Operating Expenses Salaries and Employee Benefits 10,570 9,933 32,331 31,097 Occupancy 1,481 1,427 4,579 4,663 Equipment 781 782 2,355 2,245 FDIC Assessment 368 340 1,110 1,218 Other   4,148   3,723   12,133   11,904   Total Operating Expenses   17,348   16,205   52,508   51,127   Income Before Income Taxes 10,025 8,640 27,547 23,589   Income Tax Expense   444   617   1,259   1,313   Net Income $ 9,581 $ 8,023 $ 26,288 $ 22,276         Century Bancorp, Inc. and Subsidiaries Consolidated Year-to-Date Average Comparative Statements of Condition (unaudited) (in thousands)

Assets

September 30,2018 September 30,2017 Cash and Due From Banks $ 71,034 $ 72,206 Federal Funds Sold and Interest-Bearing Deposits in Other Banks 171,773 177,233   Securities Available-For-Sale (AFS) 406,022 481,550 Securities Held-to-Maturity (HTM) 1,816,745 1,739,189   Total Loans 2,206,194 2,036,198 Less: Allowance for Loan Losses   27,235     25,089     Net Loans 2,178,959 2,011,109   Unrealized (Loss)Gain on Securities AFS and HTM Transfers (4,154 ) (6,750 ) Bank Premises and Equipment 23,481 23,404 Accrued Interest Receivable 11,608 10,261 Goodwill 2,714 2,714 Other Assets   122,502     118,359     Total Assets $ 4,800,684   $ 4,629,275    

Liabilities

Demand Deposits $ 718,215 $ 676,655   Interest Bearing Deposits: Savings and NOW Deposits 1,495,464 1,479,433 Money Market Accounts 1,208,547 1,100,304 Time Deposits   587,742     550,996   Total Interest Bearing Deposits   3,291,753     3,130,733     Total Deposits 4,009,968 3,807,388   Borrowed Funds: Securities Sold Under Agreements to Repurchase 149,970 193,519 Other Borrowed Funds   262,397     281,097     Total Borrowed Funds 412,367 474,616   Other Liabilities 69,404 60,274 Subordinated Debentures   36,083     36,083     Total Liabilities 4,527,822 4,378,361   Total Stockholders' Equity   272,862     250,914     Total Liabilities & Stockholders' Equity $ 4,800,684   $ 4,629,275     Total Average Earning Assets - QTD $ 4,625,880   $ 4,378,433     Total Average Earning Assets - YTD $ 4,600,734   $ 4,434,170           Century Bancorp, Inc. and SubsidiariesConsolidated Selected Key Financial Information (unaudited)(in thousands, except share data)

 

 

September 30,2018

September 30,2017

 

Performance Measures:

  Earnings per average Class A share, diluted, quarter $ 1.72 $ 1.44 Earnings per average Class A share, diluted, year-to-date $ 4.72 $ 4.00 Return on average assets, year-to-date 0.73 % 0.64 % Return on average stockholders' equity, year-to-date 12.88 % 11.87 % Net interest margin (taxable equivalent), quarter 2.19 % 2.26 % Net interest margin (taxable equivalent), year-to-date 2.19 % 2.24 % Efficiency ratio, year-to-date - Non-GAAP (1) 60.0 % 59.1 % Book value per share $ 51.52 $ 47.17 Tangible book value per share - Non-GAAP (1) $ 51.04 $ 46.68 Capital / assets 5.89 % 5.76 % Tangible capital / tangible assets - Non-GAAP (1) 5.84 % 5.71 %     Common Share Data: Average Class A shares outstanding, diluted, quarter and year-to-date 5,567,909 5,567,909   Shares outstanding Class A 3,608,329 3,605,829 Shares outstanding Class B   1,959,580     1,962,080   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 $ 3,729 $ 1,598 Nonperforming assets $ 3,729 $ 1,598 Loans 90 days past due and still accruing $ 471 $ - Accruing troubled debt restructures $ 2,598 $ 2,843 Net charge-offs(recoveries), year-to-date $ (1,390 ) $ 48   Leverage ratio 7.03 % 6.56 % Common equity tier 1 risk weighted capital ratio 11.14 % 10.53 % Tier 1 risk weighted capital ratio 12.42 % 11.81 % Total risk weighted capital ratio 13.46 % 12.83 % Total risk weighted assets $ 2,733,491 $ 2,534,210     (1) Non-GAAP Financial Measures are reconciled in the following tables:             Calculation of Efficiency ratio:   Total operating expenses(numerator) $ 52,508   $ 51,127     Net interest income $ 68,871 $ 63,914 Total other operating income 12,084 12,142 Tax equivalent adjustment   6,547     10,383   Total income(denominator) $ 87,502   $ 86,439     Efficiency ratio, year - Non-GAAP       60.0 %     59.1 %   Calculation of tangible book value per share:   Total stockholders' equity $ 286,877 $ 262,648 Less: goodwill   2,714     2,714   Tangible stockholders' equity(numerator) $ 284,163   $ 259,934     Total shares outstanding at period end(denominator) 5,567,909 5,567,909   Tangible book value per share - Non-GAAP     $ 51.04     $ 46.68   Book value per share - GAAP     $ 51.52     $ 47.17     Calculation of tangible capital / tangible assets:   Total stockholders' equity $ 286,877 $ 262,648 Less: goodwill   2,714     2,714   Tangible stockholders' equity(numerator) $ 284,163   $ 259,934     Total assets $ 4,870,423 $ 4,558,072 Less: goodwill   2,714     2,714   Tangible assets(denominator) $ 4,867,709   $ 4,555,358     Tangible capital / tangible assets - Non-GAAP       5.84 %     5.71 % Capital / assets - GAAP       5.89 %     5.76 %  

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