Business Wire | Jan 19, 2021 04:46PM EST

Century Bancorp, Inc. Announces Record Earnings for 2020, Up 6.3%; Record Assets, Loans, and Deposits; Increase in Quarterly Dividend Declared

Jan. 19, 2021

MEDFORD, Mass.--(BUSINESS WIRE)--Jan. 19, 2021--Century Bancorp, Inc. (NASDAQ:CNBKA) (www.centurybank.com) ("the Company") today announced net income of $42,209,000 for the year ended December 31, 2020, or $7.58 per Class A share diluted, an increase of 6.3% compared to net income of $39,699,000, or $7.13 per Class A share diluted, for the same period a year ago. Total assets increased 15.8% from $5.49 billion at December 31, 2019 to $6.36 billion at December 31, 2020. For the quarter ended December 31, 2020, net income totaled $11,600,000 or $2.08 per Class A share diluted, an increase of 8.1% compared to net income of $10,732,000, or $1.93 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 16.00 cents ($0.16) per share to 18.00 cents ($0.18) per share on the Company's Class A common stock, and from 8.00 cents ($0.08) per share to 9.00 cents ($0.09) per share on the Company's Class B common stock. The dividends were declared payable February 16, 2021 to stockholders of record on February 1, 2021.

Net interest income totaled $106.8 million for the year ended December 31, 2020 compared to $95.8 million for the same period in 2019. The 11.5% increase in net interest income for the period is primarily due to a decrease in interest expense as a result of falling interest rates. The net interest margin decreased from 2.10% on a fully tax-equivalent basis for 2019 to 2.00% for 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 2020 compared to the same period last year, by $719.9 million or 14.4%, combined with an average yield decrease of 0.63%, resulting in a decrease in interest income of $10.1 million. The average balance of interest-bearing liabilities increased for 2020 compared to the same period last year, by $568.3 million or 14.0%, combined with an average interest-bearing liabilities interest cost decrease of 0.65%, resulting in a decrease in interest expense of $21.1 million.

The provision for loan losses increased by $4,575,000 from $1,250,000 for the year ended December 31, 2019 to $5,825,000 for 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 2.7% for the year ended December 31, 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, offset by an increase in life insurance proceeds received. 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 December 31, 2020, total equity was $370.4 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 and an increase in total accumulated other comprehensive loss.

The Company's leverage ratio stood at 6.64% at December 31, 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 December 31, 2020 was $66.53 per share compared to $59.73 at December 31, 2019.

The Company's allowance for loan losses was $35.5 million or 1.18% of loans outstanding at December 31, 2020 compared to $29.6 million or 1.22% of loans outstanding at December 31, 2019. The ratio of the allowance for loan losses to loans outstanding has decreased from December 31, 2019, primarily from approximately $196 million of qualifying 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 $4.0 million at December 31, 2020, compared to $2.0 million at December 31, 2019.

As of December 31, 2020, the Company has COVID-19 modifications of 20 loans aggregating $25,022,000, primarily consisting of short-term payment deferrals. Of these modifications, $25,022,000, 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 elected to delay FASB ASU 2016-13. This ASU was 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. On December 27, 2020, the Coronavirus Response and Relief Supplemental Appropriations Act of 2021 was signed into law. The law changed the delayed implementation date to the earlier of the first day of the Company's fiscal year that begins after the date on which the national emergency terminates or January 1, 2022.

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) December December 31, 31,

Assets 2020 2019

Cash and Due From Banks $ 136,735 $ 44,420

Federal Funds Sold and Interest-bearing Deposits In 237,265 214,273Other Banks Securities Available-for-Sale (AFS) 284,116 262,190

Securities Held-to-Maturity 2,509,088 2,351,120

Federal Home Loan Bank of Boston stock, at cost 13,361 19,471

Loans:Commercial & Industrial 1,314,245 812,417

Municipal 137,607 120,455

Construction & Land Development 10,909 8,992

Commercial Real Estate 789,836 786,102

Residential Real Estate 448,436 371,897

Consumer and Other 20,439 21,893

Home Equity 274,357 304,363

Total Loans 2,995,829 2,426,119

Less: Allowance for Loan Losses 35,486 29,585

Net Loans 2,960,343 2,396,534

Bank Premises and Equipment, net 39,062 33,952

Accrued Interest Receivable 13,283 13,110

Goodwill 2,714 2,714

Other Assets 162,867 154,640

Total Assets $ 6,358,834 $ 5,492,424

LiabilitiesDemand Deposits $ 1,103,878 $ 712,842

Interest Bearing Deposits:Savings and NOW Deposits 1,728,092 1,678,250

Money Market Accounts 2,074,108 1,453,572

Time Deposits 546,143 555,447

Total Interest Bearing Deposits 4,348,343 3,687,269

Total Deposits 5,452,221 4,400,111

Borrowed Funds:Securities Sold Under Agreements to Repurchase 232,090 266,045

Other Borrowed Funds 177,009 370,955

Total Borrowed Funds 409,099 637,000

Other Liabilities 91,022 86,649

Subordinated Debentures 36,083 36,083

Total Liabilities 5,988,425 5,159,843

Total Stockholders' Equity 370,409 332,581

Total Liabilities & Stockholders' Equity $ 6,358,834 $ 5,492,424

Century Bancorp, Inc. and SubsidiariesConsolidated Comparative Statements of Income (unaudited)For the quarter and year ended December 31, 2020 and 2019(in thousands)Quarter ended December 31,Year ended December 31,2020

2019

2020

2019

Interest Income:Loans$

22,405

$

22,781

$

85,883

$

87,887

Securities Held-to-Maturity13,371

15,030

58,072

58,036

Securities Available-for-Sale745

1,860

4,238

9,165

Federal Funds Sold and Interest-bearing Deposits In Other Banks96

847

843

4,051

Total Interest Income36,617

40,518

149,036

159,139

Interest Expense:Savings and NOW Deposits1,311

4,395

8,880

21,183

Money Market Accounts2,922

5,365

15,012

21,170

Time Deposits2,432

3,080

11,573

11,804

Securities Sold Under Agreements to Repurchase200

775

1,376

2,347

Other Borrowed Funds and Subordinated Debentures1,273

1,572

5,366

6,846

Total Interest Expense8,138

15,187

42,207

63,350

Net Interest Income28,479

25,331

106,829

95,789

Provision For Loan Losses2,150

550

5,825

1,250

Net Interest Income AfterProvision for Loan Losses26,329

24,781

101,004

94,539

Other Operating Income:Service Charges on Deposit Accounts2,260

2,419

8,818

9,220

Lockbox Fees895

955

3,745

3,973

Net Gain on Sales of Loans-

258

-

412

Other Income3,425

1,057

6,537

4,794

Total Other Operating Income6,580

4,689

19,100

18,399

Operating Expenses:Salaries and Employee Benefits12,283

11,393

45,303

44,014

Occupancy1,592

1,560

6,040

6,246

Equipment887

798

3,495

3,238

Other5,344

4,461

18,650

18,631

Total Operating Expenses20,106

18,212

73,488

72,129

Income Before Income Taxes12,803

11,258

46,616

40,809

Income Tax Expense1,203

526

4,407

1,110

Net Income$

11,600

$

10,732

$

42,209

$

39,699

Century Bancorp, Inc. and SubsidiariesConsolidated Comparative Statements ofIncome (unaudited)For the quarter and year endedDecember 31, 2020 and 2019(in thousands) Quarter ended Year ended December December 31, 31, 2020 2019 2020 2019

Interest Income:Loans $ 22,405 $ 22,781 $ 85,883 $ 87,887

Securities Held-to-Maturity 13,371 15,030 58,072 58,036

Securities Available-for-Sale 745 1,860 4,238 9,165

Federal Funds Sold and 96 847 843 4,051Interest-bearing Deposits In OtherBanks Total Interest Income 36,617 40,518 149,036 159,139

Interest Expense:Savings and NOW Deposits 1,311 4,395 8,880 21,183

Money Market Accounts 2,922 5,365 15,012 21,170

Time Deposits 2,432 3,080 11,573 11,804

Securities Sold Under Agreements to 200 775 1,376 2,347RepurchaseOther Borrowed Funds and Subordinated 1,273 1,572 5,366 6,846Debentures Total Interest Expense 8,138 15,187 42,207 63,350

Net Interest Income 28,479 25,331 106,829 95,789

Provision For Loan Losses 2,150 550 5,825 1,250

Net Interest Income AfterProvision for Loan Losses 26,329 24,781 101,004 94,539

Other Operating Income:Service Charges on Deposit Accounts 2,260 2,419 8,818 9,220

Lockbox Fees 895 955 3,745 3,973

Net Gain on Sales of Loans - 258 - 412

Other Income 3,425 1,057 6,537 4,794

Total Other Operating Income 6,580 4,689 19,100 18,399

Operating Expenses:Salaries and Employee Benefits 12,283 11,393 45,303 44,014

Occupancy 1,592 1,560 6,040 6,246

Equipment 887 798 3,495 3,238

Other 5,344 4,461 18,650 18,631

Total Operating Expenses 20,106 18,212 73,488 72,129

Income Before Income Taxes 12,803 11,258 46,616 40,809

Income Tax Expense 1,203 526 4,407 1,110

Net Income $ 11,600 $ 10,732 $ 42,209 $ 39,699

Century Bancorp, Inc. and SubsidiariesConsolidated Year-to-Date Average Comparative Statements of Condition (unaudited)(in thousands)December 31,December 31,Assets2020

2019

Cash and Due From Banks$

91,121

$

75,025

Federal Funds Sold and Interest-Bearing Deposits in Other Banks274,901

189,710

Securities Available-For-Sale (AFS)295,474

313,604

Securities Held-to-Maturity (HTM)2,372,491

2,152,580

Total Loans2,774,069

2,341,190

Less: Allowance for Loan Losses31,951

29,004

Net Loans2,742,118

2,312,186

Unrealized (Loss)Gain on Securities AFS and HTM Transfers(2,528

)

(3,198

)

Bank Premises and Equipment36,735

27,867

Accrued Interest Receivable12,863

13,752

Goodwill2,714

2,714

Other Assets166,097

134,704

Total Assets$

5,991,986

$

5,218,944

Liabilities Demand Deposits$

921,718

$

760,420

Interest Bearing Deposits:Savings and NOW Deposits1,900,406

1,810,481

Money Market Accounts1,708,674

1,273,389

Time Deposits595,864

519,761

Total Interest Bearing Deposits4,204,944

3,603,631

Total Deposits5,126,662

4,364,051

Borrowed Funds:Securities Sold Under Agreements to Repurchase221,609

224,361

Other Borrowed Funds165,573

195,843

Total Borrowed Funds387,182

420,204

Other Liabilities89,147

79,437

Subordinated Debentures36,083

36,083

Total Liabilities5,639,074

4,899,775

Total Stockholders' Equity352,912

319,169

Total Liabilities & Stockholders' Equity$

5,991,986

$

5,218,944

Total Average Earning Assets - QTD$

6,150,592

$

5,100,333

Total Average Earning Assets - YTD$

5,716,935

$

4,997,084

Century Bancorp, Inc. and SubsidiariesConsolidated Year-to-Date Average ComparativeStatements of Condition (unaudited)(in thousands) December 31, December 31,Assets 2020 2019

Cash and Due From Banks $ 91,121 $ 75,025

Federal Funds Sold and Interest-Bearing Deposits 274,901 189,710 in Other Banks Securities Available-For-Sale (AFS) 295,474 313,604

Securities Held-to-Maturity (HTM) 2,372,491 2,152,580

Total Loans 2,774,069 2,341,190

Less: Allowance for Loan Losses 31,951 29,004

Net Loans 2,742,118 2,312,186

Unrealized (Loss)Gain on Securities AFS and HTM (2,528 ) (3,198 )TransfersBank Premises and Equipment 36,735 27,867

Accrued Interest Receivable 12,863 13,752

Goodwill 2,714 2,714

Other Assets 166,097 134,704

Total Assets $ 5,991,986 $ 5,218,944

LiabilitiesDemand Deposits $ 921,718 $ 760,420

Interest Bearing Deposits:Savings and NOW Deposits 1,900,406 1,810,481

Money Market Accounts 1,708,674 1,273,389

Time Deposits 595,864 519,761

Total Interest Bearing Deposits 4,204,944 3,603,631

Total Deposits 5,126,662 4,364,051

Borrowed Funds:Securities Sold Under Agreements to Repurchase 221,609 224,361

Other Borrowed Funds 165,573 195,843

Total Borrowed Funds 387,182 420,204

Other Liabilities 89,147 79,437

Subordinated Debentures 36,083 36,083

Total Liabilities 5,639,074 4,899,775

Total Stockholders' Equity 352,912 319,169

Total Liabilities & Stockholders' Equity $ 5,991,986 $ 5,218,944

Total Average Earning Assets - QTD $ 6,150,592 $ 5,100,333

Total Average Earning Assets - YTD $ 5,716,935 $ 4,997,084

Century Bancorp, Inc. and SubsidiariesConsolidated Selected Key Financial Information (unaudited)(in thousands, except share data)December 31,December 31,2020

2019

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

2.08

$

1.93

Earnings per average Class A share, diluted, year$

7.58

$

7.13

Return on average assets, year0.70

%

0.76

%

Return on average stockholders' equity, year11.96

%

12.44

%

Net interest margin (taxable equivalent), quarter1.95

%

2.14

%

Net interest margin (taxable equivalent), year2.00

%

2.10

%

Efficiency ratio, Non-GAAP (1)55.2

%

58.4

%

Book value per share$

66.53

$

59.73

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

66.04

$

59.24

Capital / assets5.83

%

6.06

%

Tangible capital / tangible assets - Non-GAAP (1)5.78

%

6.01

%

Common Share Data:Average Class A shares outstanding, diluted, quarter and year5,567,909

5,567,909

Shares outstanding Class A3,655,469

3,650,949

Shares outstanding Class B1,912,440

1,916,960

Total shares outstanding at period end5,567,909

5,567,909

Asset Quality and Other Data:Allowance for loan losses / loans1.18

%

1.22

%

Nonaccrual loans$

3,996

$

2,014

Nonperforming assets$

3,996

$

2,014

Loans 90 days past due and still accruing$

90

$

-

Accruing troubled debt restructures$

2,202

$

2,361

Net charge-offs (recoveries), year$

(76

)

$

208

Leverage ratio6.64

%

7.25

%

Common equity tier 1 risk weighted capital ratio11.39

%

11.80

%

Tier 1 risk weighted capital ratio12.40

%

12.98

%

Total risk weighted capital ratio13.43

%

13.97

%

Total risk weighted assets$

3,458,416

$

2,976,650

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

73,488

$

72,129

Less: other real estate owned expenses-

134

Total adjusted operating expenses(numerator)$

73,488

$

71,995

Net interest income$

106,829

$

95,789

Total other operating income19,100

18,399

Tax equivalent adjustment7,280

9,068

Total income(denominator)$

133,209

$

123,256

Efficiency ratio - Non-GAAP55.2

%

58.4

%

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

370,409

$

332,581

Less: goodwill2,714

2,714

Tangible stockholders' equity(numerator)$

367,695

$

329,867

Total shares outstanding at period end(denominator)5,567,909

5,567,909

Tangible book value per share - Non-GAAP$

66.04

$

59.24

Book value per share - GAAP$

66.53

$

59.73

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

370,409

$

332,581

Less: goodwill2,714

2,714

Tangible stockholders' equity(numerator)$

367,695

$

329,867

Total assets$

6,358,834

$

5,492,424

Less: goodwill2,714

2,714

Tangible assets(denominator)$

6,356,120

$

5,489,710

Tangible capital / tangible assets - Non-GAAP5.78

%

6.01

%

Capital / assets - GAAP5.83

%

6.06

%

View source version on businesswire.com: https://www.businesswire.com/news/home/20210119005983/en/

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