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Century Bancorp, Inc. Announces Record Earnings for Q3 2020, Up 8%; Record Assets, Loans, and Deposits; Increase in Quarterly Dividend Declared

·13 mins read

Century Bancorp, Inc. (NASDAQ:CNBKA) (www.centurybank.com) ("the Company") today announced net income of $30,609,000 for the nine months ended September 30, 2020, or $5.50 per Class A share diluted, an increase of 5.7% compared to net income of $28,967,000, or $5.20 per Class A share diluted, for the same period a year ago. Total assets increased 14.6% from $5.49 billion at December 31, 2019 to $6.3 billion at September 30, 2020. For the quarter ended September 30, 2020, net income totaled $10,887,000 or $1.96 per Class A share diluted, an increase of 8.0% compared to net income of $10,084,000, or $1.81 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 14.00 cents ($0.14) per share to 16.00 cents ($0.16) per share on the Company's Class A common stock, and from 7.00 cents ($0.07) per share to 8.00 cents ($0.08) per share on the Company's Class B common stock. The dividends were declared payable November 16, 2020 to stockholders of record on November 2, 2020.

Net interest income totaled $78.4 million for the nine months ended September 30, 2020 compared to $70.5 million for the same period in 2019. The 11.2% 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 $946,000 for the first nine months of 2020 compared to $18,000 for the same period last year. The net interest margin decreased from 2.08% on a fully tax-equivalent basis for the first nine months of 2019 to 2.01% 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 nine months of 2020 compared to the same period last year, by $609.0 million or 12.3%, combined with an average yield decrease of 0.55%, resulting in a decrease in interest income of $6.2 million. The average balance of interest-bearing liabilities increased for the first nine months of 2020 compared to the same period last year, by $486.9 million or 12.1%, combined with an average interest-bearing liabilities interest cost decrease of 0.59%, resulting in a decrease in interest expense of $14.1 million.

The provision for loan losses increased by $2,975,000 from $700,000 for the nine months ended September 30, 2019 to $3,675,000 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 2.0% for the nine months ended September 30, 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. 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 September 30, 2020, total equity was $363.4 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.

The Company’s leverage ratio stood at 6.79% at September 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 September 30, 2020 was $65.27 per share compared to $59.73 at December 31, 2019.

The Company’s allowance for loan losses was $33.4 million or 1.12% of loans outstanding at September 30, 2020 compared to $29.6 million or 1.22% of loans outstanding at December 31, 2019, and $29.1 million or 1.22% of loans outstanding at September 30, 2019. The ratio of the allowance for loan losses to loans outstanding has decreased from December 31, 2019, primarily from approximately $232 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. Nonperforming assets totaled $1.4 million at September 30, 2020, compared to $2.0 million at December 31, 2019, and $1.1 million at September 30, 2019.

As of September 30, 2020, the Company has COVID-19 modifications of 33 loans aggregating $37,987,000, primarily consisting of short-term payment deferrals. Of these modifications, $37,987,000, 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 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)

September 30,

December 31,

Assets

2020

2019

Cash and Due From Banks

$

101,679

$

44,420

Federal Funds Sold and Interest-bearing Deposits In Other Banks

310,901

214,273

Securities Available-for-Sale (AFS)

293,277

262,190

Securities Held-to-Maturity

2,407,176

2,351,120

Federal Home Loan Bank of Boston stock, at cost

13,361

19,471

Loans:

Commercial & Industrial

1,315,407

812,417

Municipal

130,047

120,455

Construction & Land Development

9,116

8,992

Commercial Real Estate

784,895

786,102

Residential Real Estate

443,703

371,897

Consumer and Other

19,866

21,893

Home Equity

287,099

304,363

Total Loans

2,990,133

2,426,119

Less: Allowance for Loan Losses

33,394

29,585

Net Loans

2,956,739

2,396,534

Bank Premises and Equipment, net

37,340

33,952

Accrued Interest Receivable

13,223

13,110

Goodwill

2,714

2,714

Other Assets

159,016

154,640

Total Assets

$

6,295,426

$

5,492,424

Liabilities

Demand Deposits

$

991,590

$

712,842

Interest Bearing Deposits:

Savings and NOW Deposits

1,932,339

1,678,250

Money Market Accounts

1,906,676

1,453,572

Time Deposits

581,866

555,447

Total Interest Bearing Deposits

4,420,881

3,687,269

Total Deposits

5,412,471

4,400,111

Borrowed Funds:

Securities Sold Under Agreements to Repurchase

231,030

266,045

Other Borrowed Funds

152,248

370,955

Total Borrowed Funds

383,278

637,000

Other Liabilities

100,160

86,649

Subordinated Debentures

36,083

36,083

Total Liabilities

5,931,992

5,159,843

Total Stockholders' Equity

363,434

332,581

Total Liabilities & Stockholders' Equity

$

6,295,426

$

5,492,424

Century Bancorp, Inc. and Subsidiaries

Consolidated Comparative Statements of Income (unaudited)

For the quarter and nine months ended September 30, 2020 and 2019

(in thousands)

Quarter ended September 30,

Nine months ended September 30,

2020

2019

2020

2019

Interest Income:

Loans

$

21,431

$

22,117

$

63,478

$

65,106

Securities Held-to-Maturity

14,186

14,623

44,701

43,006

Securities Available-for-Sale

818

2,184

3,493

7,305

Federal Funds Sold and Interest-bearing Deposits In Other Banks

69

928

747

3,204

Total Interest Income

36,504

39,852

112,419

118,621

Interest Expense:

Savings and NOW Deposits

1,726

5,445

7,569

16,788

Money Market Accounts

3,056

5,050

12,090

15,805

Time Deposits

2,858

3,038

9,141

8,724

Securities Sold Under Agreements to Repurchase

241

697

1,176

1,572

Other Borrowed Funds and Subordinated Debentures

1,292

1,852

4,093

5,274

Total Interest Expense

9,173

16,082

34,069

48,163

Net Interest Income

27,331

23,770

78,350

70,458

Provision For Loan Losses

900

75

3,675

700

Net Interest Income After

Provision for Loan Losses

26,431

23,695

74,675

69,758

Other Operating Income:

Service Charges on Deposit Accounts

2,239

2,310

6,558

6,801

Lockbox Fees

996

937

2,850

3,018

Net Gain on Sales of Loans

-

-

-

154

Other Income

934

1,039

3,112

3,737

Total Other Operating Income

4,169

4,286

12,520

13,710

Operating Expenses:

Salaries and Employee Benefits

11,362

10,670

33,020

32,621

Occupancy

1,477

1,463

4,448

4,686

Equipment

809

862

2,608

2,440

Other

4,519

4,467

13,306

14,170

Total Operating Expenses

18,167

17,462

53,382

53,917

Income Before Income Taxes

12,433

10,519

33,813

29,551

Income Tax Expense

1,546

435

3,204

584

Net Income

$

10,887

$

10,084

$

30,609

$

28,967

Century Bancorp, Inc. and Subsidiaries

Consolidated Year-to-Date Average Comparative Statements of Condition (unaudited)

(in thousands)

September 30,

September 30,

Assets

2020

2019

Cash and Due From Banks

$

80,686

$

74,413

Federal Funds Sold and Interest-Bearing Deposits in Other Banks

238,525

184,035

Securities Available-For-Sale (AFS)

293,301

325,036

Securities Held-to-Maturity (HTM)

2,346,502

2,128,082

Total Loans

2,693,000

2,325,136

Less: Allowance for Loan Losses

31,359

28,936

Net Loans

2,661,641

2,296,200

Unrealized (Loss)Gain on Securities AFS and HTM Transfers

(2,861

)

(3,352

)

Bank Premises and Equipment

36,253

26,273

Accrued Interest Receivable

12,630

13,942

Goodwill

2,714

2,714

Other Assets

164,804

133,754

Total Assets

$

5,834,195

$

5,181,097

Liabilities

Demand Deposits

$

889,237

$

764,852

Interest Bearing Deposits:

Savings and NOW Deposits

1,881,897

1,818,017

Money Market Accounts

1,603,367

1,249,531

Time Deposits

597,589

512,228

Total Interest Bearing Deposits

4,082,853

3,579,776

Total Deposits

4,972,090

4,344,628

Borrowed Funds:

Securities Sold Under Agreements to Repurchase

220,796

205,185

Other Borrowed Funds

169,972

201,804

Total Borrowed Funds

390,768

406,989

Other Liabilities

88,028

79,327

Subordinated Debentures

36,083

36,083

Total Liabilities

5,486,969

4,867,027

Total Stockholders' Equity

347,226

314,070

Total Liabilities & Stockholders' Equity

$

5,834,195

$

5,181,097

Total Average Earning Assets - QTD

$

5,881,860

$

4,971,831

Total Average Earning Assets - YTD

$

5,571,328

$

4,962,289

Century Bancorp, Inc. and Subsidiaries

Consolidated Selected Key Financial Information (unaudited)

(in thousands, except share data)

September 30,

September 30,

2020

2019

Performance Measures:

Earnings per average Class A share, diluted, quarter

$

1.96

$

1.81

Earnings per average Class A share, diluted, year-to-date

$

5.50

$

5.20

Return on average assets, year-to-date

0.70

%

0.75

%

Return on average stockholders' equity, year-to-date

11.78

%

12.33

%

Net interest margin (taxable equivalent), quarter

1.96

%

2.08

%

Net interest margin (taxable equivalent), year-to-date

2.01

%

2.08

%

Efficiency ratio, Non-GAAP (1)

55.4

%

59.1

%

Book value per share

$

65.27

$

59.08

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

$

64.79

$

58.59

Capital / assets

5.77

%

6.21

%

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

5.73

%

6.16

%

Common Share Data:

Average Class A shares outstanding, diluted, quarter and year-to-date

5,567,909

5,567,909

Shares outstanding Class A

3,655,469

3,650,449

Shares outstanding Class B

1,912,440

1,917,460

Total shares outstanding at period end

5,567,909

5,567,909

Asset Quality and Other Data:

Allowance for loan losses / loans

1.12

%

1.22

%

Nonaccrual loans

$

1,419

$

1,066

Nonperforming assets

$

1,419

$

1,066

Loans 90 days past due and still accruing

$

49

$

-

Accruing troubled debt restructures

$

2,240

$

2,404

Net charge-offs (recoveries), year-to-date

$

(134

)

$

146

Leverage ratio

6.79

%

7.25

%

Common equity tier 1 risk weighted capital ratio

11.36

%

11.90

%

Tier 1 risk weighted capital ratio

12.40

%

13.12

%

Total risk weighted capital ratio

13.39

%

14.13

%

Total risk weighted assets

$

3,370,541

$

2,867,422

(1) Non-GAAP Financial Measures are reconciled in the following tables:

Calculation of Efficiency ratio:

Total operating expenses(numerator)

$

53,382

$

53,917

Less: other real estate owned expenses

-

(139

)

Total adjusted operating expenses(numerator)

$

53,382

$

53,778

Net interest income

$

78,350

$

70,458

Total other operating income

12,520

13,710

Tax equivalent adjustment

5,558

6,875

Total income(denominator)

$

96,428

$

91,043

Efficiency ratio - Non-GAAP

55.4

%

59.1

%

Calculation of tangible book value per share:

Total stockholders' equity

$

363,434

$

328,960

Less: goodwill

2,714

2,714

Tangible stockholders' equity(numerator)

$

360,720

$

326,246

Total shares outstanding at period end(denominator)

5,567,909

5,567,909

Tangible book value per share - Non-GAAP

$

64.79

$

58.59

Book value per share - GAAP

$

65.27

$

59.08

Calculation of tangible capital / tangible assets:

Total stockholders' equity

$

363,434

$

328,960

Less: goodwill

2,714

2,714

Tangible stockholders' equity(numerator)

$

360,720

$

326,246

Total assets

$

6,295,426

$

5,299,181

Less: goodwill

2,714

2,714

Tangible assets(denominator)

$

6,292,712

$

5,296,467

Tangible capital / tangible assets - Non-GAAP

5.73

%

6.16

%

Capital / assets - GAAP

5.77

%

6.21

%

View source version on businesswire.com: https://www.businesswire.com/news/home/20201013006077/en/

Contacts

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