Century Bancorp, Inc. Announces Increased Earnings for Q1 2020, up 2.6%; Asset Growth to Record $5.6 BB; Regular Dividend Declared

MEDFORD, Mass.--()--Century Bancorp, Inc. (NASDAQ:CNBKA) (www.centurybank.com) (“the Company”) today announced net income of $9,666,000 for the quarter ended March 31, 2020, or $1.74 per Class A share diluted, an increase of 2.6% compared to net income of $9,418,000, or $1.69 per Class A share diluted, for the same period a year ago. Total assets increased 1.3% from $5.49 billion at December 31, 2019 to $5.56 billion at March 31, 2020.

Net interest income totaled $25.2 million for the quarter ended March 31, 2020 compared to $23.4 million for the same period in 2019. The 7.5% increase in net interest income for the period is primarily due to an increase in average earning assets and prepayment penalties collected. Prepayment penalties collected amounted to approximately $874,000 for the first quarter of 2020 compared to $12,000 for the same period last year. The net interest margin remained stable at 2.11% on a fully taxable equivalent basis in 2019 and 2020. The average balances of earning assets increased by $244.6 million or 4.9%, combined with an average yield decrease of 0.14%, resulting in an increase in interest income of $718,000. The average balance of interest-bearing liabilities increased by $265.8 million or 6.6%, combined with an average interest-bearing liabilities interest cost decrease of 0.21%, resulting in a decrease in interest expense of $1.0 million.

The provision for loan losses increased by $700,000 from $375,000 for the quarter ended March 31, 2019 to $1,075,000 for the same period in 2020, primarily as a result of the economic uncertainties associated with the novel coronavirus disease (COVID–19) pandemic.

The Company’s effective tax rate increased from (1.3%) for the quarter ended March 31, 2019 to 5.8% for the same period in 2020. This was primarily as a result of 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 March 31, 2020, total equity was $340.7 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 7.26% at March 31, 2020, compared to 7.25% at December 31, 2019. 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 March 31, 2020 was $61.19 per share compared to $59.73 at December 31, 2019.

The Company’s allowance for loan losses was $30.8 million or 1.23% of loans outstanding at March 31, 2020 compared to $29.6 million or 1.22% of loans outstanding at December 31, 2019, and $28.8 million or 1.25% of loans outstanding at March 31, 2019. The ratio of the allowance for loan losses to loans outstanding has increased from the December 31, 2019, primarily from increased allocations for economic factors associated with the COVID-19 pandemic. Non-performing assets totaled $1.7 million at March 31, 2020, compared to $2.0 million at December 31, 2019, and $3.7 million at March 31, 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 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'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 May 15, 2020 to stockholders of record on May 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)  

March 31,

 

December 31,

Assets

2020

 

2019

Cash and Due From Banks

$

64,523

 

$

44,420

Federal Funds Sold and Interest-bearing Deposits In Other Banks

 

218,488

 

 

214,273

   
Securities Available-for-Sale (AFS)

 

279,628

 

 

262,190

   
Securities Held-to-Maturity

 

2,304,074

 

 

2,351,120

   
Federal Home Loan Bank of Boston stock, at cost

 

17,241

 

 

19,471

   
Loans:  
Commercial & Industrial

 

867,599

 

 

812,417

Municipal

 

141,588

 

 

120,455

Construction & Land Development

 

6,493

 

 

8,992

Commercial Real Estate

 

761,464

 

 

786,102

Residential Real Estate

 

393,338

 

 

371,897

Consumer and Other

 

21,039

 

 

21,893

Home Equity

 

307,373

 

 

304,363

   
Total Loans

 

2,498,894

 

 

2,426,119

Less: Allowance for Loan Losses

 

30,804

 

 

29,585

   
Net Loans

 

2,468,090

 

 

2,396,534

   
Bank Premises and Equipment, net

 

36,238

 

 

33,952

Accrued Interest Receivable

 

12,998

 

 

13,110

Goodwill

 

2,714

 

 

2,714

Other Assets

 

158,292

 

 

154,640

   
Total Assets

$

5,562,286

 

$

5,492,424

   
Liabilities  
Demand Deposits

$

797,570

 

$

712,842

   
Interest Bearing Deposits:  
Savings and NOW Deposits

 

1,662,414

 

 

1,678,250

Money Market Accounts

 

1,489,679

 

 

1,453,572

Time Deposits

 

612,849

 

 

555,447

   
Total Interest Bearing Deposits

 

3,764,942

 

 

3,687,269

   
Total Deposits

 

4,562,512

 

 

4,400,111

   
Borrowed Funds:  
Securities Sold Under Agreements to Repurchase

 

219,995

 

 

266,045

Other Borrowed Funds

 

312,120

 

 

370,955

   
Total Borrowed Funds

 

532,115

 

 

637,000

   
Other Liabilities

 

90,889

 

 

86,649

Subordinated Debentures

 

36,083

 

 

36,083

   
Total Liabilities

 

5,221,599

 

 

5,159,843

   
Total Stockholders' Equity

 

340,687

 

 

332,581

   
Total Liabilities & Stockholders' Equity

$

5,562,286

 

$

5,492,424

Century Bancorp, Inc. and Subsidiaries
Consolidated Comparative Statements of Income (unaudited)
For the quarter ended March 31, 2020 and 2019
(in thousands)
 

Quarter ended March 31,

2020

2019

 
Interest Income:
Loans

$

22,199

 

$

21,309

 

Securities Held-to-Maturity

 

15,293

 

 

13,788

 

Securities Available-for-Sale

 

1,693

 

 

2,631

 

Federal Funds Sold and Interest-bearing Deposits In Other Banks

 

610

 

 

1,349

 

 
Total Interest Income

 

39,795

 

 

39,077

 

 
Interest Expense:
Savings and NOW Deposits

 

3,725

 

 

5,466

 

Money Market Accounts

 

5,572

 

 

5,343

 

Time Deposits

 

3,172

 

 

2,793

 

Securities Sold Under Agreements to Repurchase

 

626

 

 

385

 

Other Borrowed Funds and Subordinated Debentures

 

1,499

 

 

1,652

 

 
Total Interest Expense

 

14,594

 

 

15,639

 

 
Net Interest Income

 

25,201

 

 

23,438

 

 
Provision For Loan Losses

 

1,075

 

 

375

 

 
Net Interest Income After
Provision for Loan Losses

 

24,126

 

 

23,063

 

 
Other Operating Income:
Service Charges on Deposit Accounts

 

2,296

 

 

2,209

 

Lockbox Fees

 

930

 

 

1,089

 

Net Gain on Sales of Loans

 

-

 

 

15

 

Other Income

 

1,084

 

 

1,114

 

 
Total Other Operating Income

 

4,310

 

 

4,427

 

 
Operating Expenses:
Salaries and Employee Benefits

 

11,371

 

 

11,035

 

Occupancy

 

1,515

 

 

1,701

 

Equipment

 

837

 

 

783

 

Other

 

4,450

 

 

4,671

 

 
Total Operating Expenses

 

18,173

 

 

18,190

 

 
Income Before Income Taxes

 

10,263

 

 

9,300

 

 
Income Tax Expense

 

597

 

 

(118

)

 
Net Income

$

9,666

 

$

9,418

 

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

March 31,

 

March 31,

Assets

2020

 

2019

Cash and Due From Banks

$

77,723

 

$

74,836

 

Federal Funds Sold and Interest-Bearing Deposits in Other Banks

 

173,928

 

 

225,870

 

 
Securities Available-For-Sale (AFS)

 

271,972

 

 

351,869

 

Securities Held-to-Maturity (HTM)

 

2,299,750

 

 

2,078,626

 

 
Total Loans

 

2,447,962

 

 

2,292,606

 

Less: Allowance for Loan Losses

 

29,765

 

 

28,708

 

 
Net Loans

 

2,418,197

 

 

2,263,898

 

 
Unrealized (Loss)Gain on Securities AFS and HTM Transfers

 

(3,152

)

 

(3,562

)

Bank Premises and Equipment

 

35,445

 

 

24,164

 

Accrued Interest Receivable

 

12,639

 

 

14,147

 

Goodwill

 

2,714

 

 

2,714

 

Other Assets

 

160,053

 

 

134,962

 

 
Total Assets

$

5,449,269

 

$

5,167,524

 

 
Liabilities
Demand Deposits

$

758,173

 

$

782,794

 

 
Interest Bearing Deposits:
Savings and NOW Deposits

 

1,732,835

 

 

1,812,119

 

Money Market Accounts

 

1,480,399

 

 

1,271,707

 

Time Deposits

 

589,396

 

 

516,781

 

Total Interest Bearing Deposits

 

3,802,630

 

 

3,600,607

 

 
Total Deposits

 

4,560,803

 

 

4,383,401

 

 
Borrowed Funds:
Securities Sold Under Agreements to Repurchase

 

246,272

 

 

168,447

 

Other Borrowed Funds

 

181,756

 

 

195,837

 

 
Total Borrowed Funds

 

428,028

 

 

364,284

 

 
Other Liabilities

 

87,423

 

 

79,156

 

Subordinated Debentures

 

36,083

 

 

36,083

 

 
Total Liabilities

 

5,112,337

 

 

4,862,924

 

 
Total Stockholders' Equity

 

336,932

 

 

304,600

 

 
Total Liabilities & Stockholders' Equity

$

5,449,269

 

$

5,167,524

 

 
Total Average Earning Assets - QTD

$

5,193,612

 

$

4,948,971

 

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

March 31,

 

March 31,

2020

 

2019

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

$

1.74

 

 

$

1.69

 

Return on average assets, quarter

 

0.71

%

 

 

0.74

%

Return on average stockholders' equity, quarter

 

11.54

%

 

 

12.54

%

Net interest margin (taxable equivalent), quarter

 

2.11

%

 

 

2.11

%

Efficiency ratio, Non-GAAP (1)

 

57.5

%

 

 

60.3

%

Book value per share

$

61.19

 

 

$

55.55

 

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

$

60.70

 

 

$

55.07

 

Capital / assets

 

6.12

%

 

 

5.83

%

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

 

6.08

%

 

 

5.78

%

   
Common Share Data:  
Average Class A shares outstanding, diluted, quarter

 

5,567,909

 

 

 

5,567,909

 

   
Shares outstanding Class A

 

3,652,349

 

 

 

3,610,329

 

Shares outstanding Class B

 

1,915,560

 

 

 

1,957,580

 

Total shares outstanding at period end

 

5,567,909

 

 

 

5,567,909

 

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

 

1.23

%

 

 

1.25

%

Nonaccrual loans

$

1,701

 

 

$

1,502

 

Nonperforming assets

$

1,701

 

 

$

3,727

 

Loans 90 days past due and still accruing

$

-

 

 

$

-

 

Accruing troubled debt restructures

$

2,337

 

 

$

2,542

 

Net charge-offs (recoveries), quarter

$

(144

)

 

$

70

 

   
Leverage ratio

 

7.26

%

 

 

6.92

%

Common equity tier 1 risk weighted capital ratio

 

11.87

%

 

 

11.49

%

Tier 1 risk weighted capital ratio

 

13.02

%

 

 

12.74

%

Total risk weighted capital ratio

 

14.04

%

 

 

13.76

%

Total risk weighted assets

$

3,036,664

 

 

$

2,808,321

 

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

$

18,173

 

 

$

18,190

 

   
Net interest income

$

25,201

 

 

$

23,438

 

Total other operating income

 

4,310

 

 

 

4,427

 

Tax equivalent adjustment

 

2,098

 

 

 

2,294

 

Total income(denominator)

$

31,609

 

 

$

30,159

 

   
Efficiency ratio - Non-GAAP

 

57.5

%

 

 

60.3

%

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

$

340,687

 

 

$

309,324

 

Less: goodwill

 

2,714

 

 

 

2,714

 

Tangible stockholders' equity(numerator)

$

337,973

 

 

$

306,610

 

   
Total shares outstanding at period end(denominator)

 

5,567,909

 

 

 

5,567,909

 

   
Tangible book value per share - Non-GAAP

$

60.70

 

 

$

55.07

 

Book value per share - GAAP

$

61.19

 

 

$

55.55

 

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

$

340,687

 

 

$

309,324

 

Less: goodwill

 

2,714

 

 

 

2,714

 

Tangible stockholders' equity(numerator)

$

337,973

 

 

$

306,610

 

   
Total assets

$

5,562,286

 

 

$

5,306,066

 

Less: goodwill

 

2,714

 

 

 

2,714

 

Tangible assets(denominator)

$

5,559,572

 

 

$

5,303,352

 

   
Tangible capital / tangible assets - Non-GAAP

 

6.08

%

 

 

5.78

%

Capital / assets - GAAP

 

6.12

%

 

 

5.83

%

 

Contacts

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

Contacts

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