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 Subsidiaries
Consolidated 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 Subsidiaries
Consolidated 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 %