Business Wire | Jul 14, 2020 04:45PM EDT

Century Bancorp, Inc. Announces Increased Earnings for Q2 2020, up 6.2%; Asset Growth to Record $5.9 BB; Increase in Quarterly Dividend Declared

Jul. 14, 2020

MEDFORD, Mass.--(BUSINESS WIRE)--Jul. 14, 2020--Century Bancorp, Inc. (NASDAQ:CNBKA) (www.centurybank.com) ("the Company") today announced net income of $19,722,000 for the six months ended June 30, 2020, or $3.54 per Class A share diluted, an increase of 4.4% compared to net income of $18,884,000, or $3.39 per Class A share diluted, for the same period a year ago. Total assets increased 8.3% from $5.49 billion at December 31, 2019 to $5.95 billion at June 30, 2020. For the quarter ended June 30, 2020, net income totaled $10,056,000 or $1.81 per Class A share diluted, an increase of 6.2% compared to net income of $9,466,000, or $1.70 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 12.00 cents ($0.12) per share to 14.00 cents ($0.14) per share on the Company's Class A common stock, and from 6.00 cents ($0.06) per share to 7.00 cents ($0.07) per share on the Company's Class B common stock. The dividends were declared payable August 17, 2020 to stockholders of record on August 3, 2020. This represents the first dividend increase since 2003.

Net interest income totaled $51.0 million for the six months ended June 30, 2020 compared to $46.7 million for the same period in 2019. The 9.3% increase in net interest income for the period is primarily due to a decrease in interest expense as a result of falling interest rates. Prepayment penalties collected amounted to approximately $874,000 for the first six months of 2020 compared to $13,000 for the same period last year. The net interest margin decreased from 2.09% on a fully tax-equivalent basis for the first six months of 2019 to 2.04% for the same period in 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 the first six months of 2020 compared to the same period last year, by $456.9 million or 9.2%, combined with an average yield decrease of 0.42%, resulting in a decrease in interest income of $2.9 million. The average balance of interest-bearing liabilities increased for the first six months of 2020 compared to the same period last year, by $373.1 million or 9.3%, combined with an average interest-bearing liabilities interest cost decrease of 0.47%, resulting in a decrease in interest expense of $7.2 million.

The provision for loan losses increased by $2,150,000 from $625,000 for the six months ended June 30, 2019 to $2,775,000 for the same period in 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 0.8% for the six months ended June 30, 2019 to 7.8% 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. 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 June 30, 2020, total equity was $352.2 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 6.92% at June 30, 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 June 30, 2020 was $63.26 per share compared to $59.73 at December 31, 2019.

The Company's allowance for loan losses was $32.5 million or 1.16% of loans outstanding at June 30, 2020 compared to $29.6 million or 1.22% of loans outstanding at December 31, 2019, and $29.1 million or 1.26% of loans outstanding at June 30, 2019. The ratio of the allowance for loan losses to loans outstanding has decreased from December 31, 2019, primarily from approximately $230 million of Payroll Protection Program (PPP) loans that are guaranteed by the U.S. Small Business Administration (SBA), which require no allowance for loan losses. This was offset, somewhat, by increased allocations for economic factors associated with the COVID-19 pandemic. Nonperforming assets totaled $1.5 million at June 30, 2020, compared to $2.0 million at December 31, 2019, and $5.0 million at June 30, 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 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.

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) June 30, December 31,

Assets 2020 2019

Cash and Due From Banks $ 78,159 $ 44,420

Federal Funds Sold and Interest-bearing Deposits 150,139 214,273 In Other Banks Securities Available-for-Sale (AFS) 302,882 262,190

Securities Held-to-Maturity 2,427,422 2,351,120

Federal Home Loan Bank of Boston stock, at cost 13,371 19,471

Loans: Commercial & Industrial 1,155,592 812,417

Municipal 153,017 120,455

Construction & Land Development 6,513 8,992

Commercial Real Estate 764,886 786,102

Residential Real Estate 400,867 371,897

Consumer and Other 19,857 21,893

Home Equity 297,355 304,363

Total Loans 2,798,087 2,426,119

Less: Allowance for Loan Losses 32,516 29,585

Net Loans 2,765,571 2,396,534

Bank Premises and Equipment, net 36,290 33,952

Accrued Interest Receivable 12,090 13,110

Goodwill 2,714 2,714

Other Assets 158,356 154,640

Total Assets $ 5,946,994 $ 5,492,424

Liabilities Demand Deposits $ 985,491 $ 712,842

Interest Bearing Deposits: Savings and NOW Deposits 1,967,783 1,678,250

Money Market Accounts 1,548,198 1,453,572

Time Deposits 610,496 555,447

Total Interest Bearing Deposits 4,126,477 3,687,269

Total Deposits 5,111,968 4,400,111

Borrowed Funds: Securities Sold Under Agreements to Repurchase 204,972 266,045

Other Borrowed Funds 152,485 370,955

Total Borrowed Funds 357,457 637,000

Other Liabilities 89,284 86,649

Subordinated Debentures 36,083 36,083

Total Liabilities 5,594,792 5,159,843

Total Stockholders' Equity 352,202 332,581

Total Liabilities & Stockholders' Equity $ 5,946,994 $ 5,492,424

Century Bancorp, Inc. andSubsidiariesConsolidated Comparative Statementsof Income (unaudited)For the quarter and six months endedJune 30, 2020 and 2019(in thousands) Quarter ended June Six months ended 30, June 30,

2020 2019 2020 2019

Interest Income:Loans $ 19,848 $ 21,680 $ 42,047 $ 42,989

Securities Held-to-Maturity 15,222 14,595 30,515 28,383

Securities Available-for-Sale 982 2,490 2,675 5,121

Federal Funds Sold and 68 927 678 2,276Interest-bearing Deposits In OtherBanks Total Interest Income 36,120 39,692 75,915 78,769

Interest Expense:Savings and NOW Deposits 2,118 5,877 5,843 11,343

Money Market Accounts 3,462 5,412 9,034 10,755

Time Deposits 3,111 2,893 6,283 5,686

Securities Sold Under Agreements to 309 490 935 875RepurchaseOther Borrowed Funds and Subordinated 1,302 1,770 2,801 3,422Debentures Total Interest Expense 10,302 16,442 24,896 32,081

Net Interest Income 25,818 23,250 51,019 46,688

Provision For Loan Losses 1,700 250 2,775 625

Net Interest Income AfterProvision for Loan Losses 24,118 23,000 48,244 46,063

Other Operating Income:Service Charges on Deposit Accounts 2,023 2,282 4,319 4,491

Lockbox Fees 924 992 1,854 2,081

Net Gain on Sales of Loans - 139 - 154

Other Income 1,094 1,584 2,178 2,698

Total Other Operating Income 4,041 4,997 8,351 9,424

Operating Expenses:Salaries and Employee Benefits 10,287 10,916 21,658 21,951

Occupancy 1,456 1,522 2,971 3,223

Equipment 962 795 1,799 1,578

Other 4,337 5,031 8,787 9,702

Total Operating Expenses 17,042 18,264 35,215 36,454

Income Before Income Taxes 11,117 9,733 21,380 19,033

Income Tax Expense 1,061 267 1,658 149

Net Income $ 10,056 $ 9,466 $ 19,722 $ 18,884

Century Bancorp, Inc. and SubsidiariesConsolidated Year-to-Date Average Comparative Statements ofCondition (unaudited)(in thousands) June 30, June 30,

Assets 2020 2019

Cash and Due From Banks $ 76,264 $ 74,948

Federal Funds Sold and Interest-Bearing Deposits 220,008 189,568 in Other Banks Securities Available-For-Sale (AFS) 282,092 340,664

Securities Held-to-Maturity (HTM) 2,335,136 2,121,043

Total Loans 2,577,120 2,306,165

Less: Allowance for Loan Losses 30,621 28,864

Net Loans 2,546,499 2,277,301

Unrealized (Loss)Gain on Securities AFS and HTM (3,248 ) (3,560 )TransfersBank Premises and Equipment 35,895 24,483

Accrued Interest Receivable 12,653 14,167

Goodwill 2,714 2,714

Other Assets 163,547 134,524

Total Assets $ 5,671,560 $ 5,175,852

LiabilitiesDemand Deposits $ 841,339 $ 759,653

Interest Bearing Deposits:Savings and NOW Deposits 1,839,771 1,834,278

Money Market Accounts 1,530,442 1,270,952

Time Deposits 598,669 509,710

Total Interest Bearing Deposits 3,968,882 3,614,940

Total Deposits 4,810,221 4,374,593

Borrowed Funds:Securities Sold Under Agreements to Repurchase 226,518 181,252

Other Borrowed Funds 169,258 195,318

Total Borrowed Funds 395,776 376,570

Other Liabilities 87,589 79,440

Subordinated Debentures 36,083 36,083

Total Liabilities 5,329,669 4,866,686

Total Stockholders' Equity 341,891 309,166

Total Liabilities & Stockholders' Equity $ 5,671,560 $ 5,175,852

Total Average Earning Assets - QTD $ 5,635,101 $ 4,965,815

Total Average Earning Assets - YTD $ 5,414,356 $ 4,957,440

Century Bancorp, Inc. and SubsidiariesConsolidated Selected Key Financial Information(unaudited)(in thousands, except share data) June 30, June 30,

2020 2019

Performance Measures: Earnings per average Class A share, diluted, $ 1.81 $ 1.70 quarterEarnings per average Class A share, diluted, $ 3.54 $ 3.39 year-to-dateReturn on average assets, year-to-date 0.70 % 0.74 %

Return on average stockholders' equity, 11.60 % 12.32 %year-to-dateNet interest margin (taxable equivalent), quarter 1.97 % 2.06 %

Net interest margin (taxable equivalent), 2.04 % 2.09 %year-to-dateEfficiency ratio, Non-GAAP (1) 55.7 % 59.8 %

Book value per share $ 63.26 $ 57.28

Tangible book value per share - Non-GAAP (1) $ 62.77 $ 56.79

Capital / assets 5.92 % 6.13 %

Tangible capital / tangible assets - Non-GAAP (1) 5.88 % 6.08 %

Common Share Data:Average Class A shares outstanding, diluted, 5,567,909 5,567,909 quarter and year-to-date Shares outstanding Class A 3,652,469 3,620,449

Shares outstanding Class B 1,915,440 1,947,460

Total shares outstanding at period end 5,567,909 5,567,909

Asset Quality and Other Data: Allowance for loan losses / loans 1.16 % 1.26 %

Nonaccrual loans $ 1,538 $ 2,899

Nonperforming assets $ 1,538 $ 4,999

Loans 90 days past due and still accruing $ - $ -

Accruing troubled debt restructures $ 2,271 $ 2,520

Net charge-offs (recoveries), quarter $ (156 ) $ 98

Leverage ratio 6.92 % 7.07 %

Common equity tier 1 risk weighted capital ratio 11.66 % 11.79 %

Tier 1 risk weighted capital ratio 12.76 % 13.03 %

Total risk weighted capital ratio 13.77 % 14.06 %

Total risk weighted assets $ 3,196,338 $ 2,813,302

(1) Non-GAAP Financial Measures are reconciled inthe following tables: Calculation of Efficiency ratio: Total operating expenses(numerator) $ 35,215 $ 36,296

Net interest income $ 51,019 $ 46,688

Total other operating income 8,351 9,424

Tax equivalent adjustment 3,904 4,576

Total income(denominator) $ 63,274 $ 60,688

Efficiency ratio - Non-GAAP 55.7 % 59.8 %

Calculation of tangible book value per share: Total stockholders' equity $ 352,202 $ 318,937

Less: goodwill 2,714 2,714

Tangible stockholders' equity(numerator) $ 349,488 $ 316,223

Total shares outstanding at period end 5,567,909 5,567,909 (denominator) Tangible book value per share - Non-GAAP $ 62.77 $ 56.79

Book value per share - GAAP $ 63.26 $ 57.28

Calculation of tangible capital / tangible assets: Total stockholders' equity $ 352,202 $ 318,937

Less: goodwill 2,714 2,714

Tangible stockholders' equity(numerator) $ 349,488 $ 316,223

Total assets $ 5,946,994 $ 5,200,501

Less: goodwill 2,714 2,714

Tangible assets(denominator) $ 5,944,280 $ 5,197,787

Tangible capital / tangible assets - Non-GAAP 5.88 % 6.08 %

Capital / assets - GAAP 5.92 % 6.13 %

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