Century Bancorp, Inc. Announces Earnings for Q3 2017, up 23.7%; Asset Growth to $4.6 BB; Regular Dividend Declared

MEDFORD, Mass.--()--Century Bancorp, Inc. (NASDAQ:CNBKA) (www.centurybank.com) (“the Company”) today announced net income of $22,276,000 for the nine months ended September 30, 2017, or $4.00 per Class A share diluted, an increase of 23.5% compared to net income of $18,034,000, or $3.24 per Class A share diluted, for the same period a year ago. Total assets increased 2.1% from $4.46 billion at December 31, 2016 to $4.56 billion at September 30, 2017. For the quarter ended September 30, 2017, net income totaled $8,023,000 or $1.44 per Class A share diluted, an increase of 23.7% compared to net income of $6,486,000, or $1.16 per Class A share diluted, for the same period a year ago.

Net interest income totaled $63.9 million for the nine months ended September 30, 2017 compared to $55.3 million for the same period in 2016. The 15.5% increase in net interest income for the period is primarily due to an increase in average earning assets and an increase in the net interest margin. The net interest margin increased from 2.15% on a fully taxable equivalent basis in 2016 to 2.24% for the same period in 2017. This was primarily the result of an increase in rates on earning assets and prepayment penalties collected. The average balances of earning assets increased by 9.6% combined with a similar increase in average deposits. Also, interest expense increased 20.1% primarily as a result of an increase in rates and an increase in deposit balances.

The provision for loan losses increased by $165,000 from $1,175,000 for the nine months ended September 30, 2016 to $1,340,000 for the same period in 2017, primarily as a result of an increase in loan growth offset, somewhat, by changes in historical loss factors. The Company’s effective tax rate increased from 0.2% for the first nine months of 2016 to 5.6% for the same period in 2017 primarily as a result of an increase in taxable income.

At September 30, 2017, total equity was $262.6 million compared to $240.0 million at December 31, 2016. The Company’s equity increased primarily as a result of earnings and a decrease in other comprehensive loss, net of taxes, offset somewhat by dividends paid. Other comprehensive loss, net of taxes, decreased primarily as a result of a decrease in unrealized losses on securities transferred from available-for-sale to held-to-maturity, a decrease in unrealized losses on securities available-for-sale, and amortization of the pension liability.

The Company’s leverage ratio stood at 6.56% at September 30, 2017, compared to 6.28% at December 31, 2016. 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, 2017 was $47.17 per share compared to $43.11 at December 31, 2016.

The Company’s allowance for loan losses was $25.7 million or 1.22% of loans outstanding at September 30, 2017, compared to $24.4 million or 1.27% of loans outstanding at December 31, 2016. The change in the ratio of the allowance for loan losses to loans outstanding, when compared to December 31, 2016, was primarily due to changes in portfolio composition, lower historical loss rates, and qualitative factor adjustments. Non-performing assets totaled $1.6 million at September 30, 2017, compared to $1.1 million at December 31, 2016.

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, 2017 to stockholders of record on November 1, 2017.

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

2017 2016
Cash and Due From Banks $ 57,921 $ 62,400
Federal Funds Sold and Interest-bearing Deposits In Other Banks 195,212 173,751
 
Short-term Investments - 3,183
 
Securities Available-for-Sale (AFS) 387,790 499,297
 
Securities Held-to-Maturity 1,654,908 1,653,986
 
Federal Home Loan Bank of Boston stock, at cost 21,937 21,042
 
Loans:
Commercial & Industrial 702,646 612,503
Municipal 128,412 135,418
Construction & Land Development 16,779 14,928
Commercial Real Estate 735,844 696,173
Residential Real Estate 272,588 241,357
Consumer and Other 18,594 11,697
Home Equity   237,784   211,857
 
Total Loans 2,112,647 1,923,933
Less: Allowance for Loan Losses   25,698   24,406
 
Net Loans 2,086,949 1,899,527
 
Bank Premises and Equipment, net 23,932 23,417
Accrued Interest Receivable 9,926 9,645
Goodwill 2,714 2,714
Other Assets   116,783   113,646
 
Total Assets $ 4,558,072 $ 4,462,608
 

Liabilities

Demand Deposits $ 702,527 $ 689,286
 
Interest Bearing Deposits:
Savings and NOW Deposits 1,276,135 1,304,394
Money Market Accounts 1,019,741 1,181,179
Time Deposits   607,279   478,359
 
Total Interest Bearing Deposits   2,903,155   2,963,932
 
Total Deposits 3,605,682 3,653,218
 
Borrowed Funds:
Securities Sold Under Agreements to Repurchase 228,848 182,280
Other Borrowed Funds   358,000   293,000
 
Total Borrowed Funds 586,848 475,280
 
Other Liabilities 66,811 57,986
Subordinated Debentures   36,083   36,083
 
Total Liabilities 4,295,424 4,222,567
 
Total Stockholders' Equity   262,648   240,041
 
Total Liabilities & Stockholders' Equity $ 4,558,072 $ 4,462,608
 
               
Century Bancorp, Inc. and Subsidiaries
Consolidated Comparative Statements of Income (unaudited)
For the quarter and nine months ended September 30, 2017 and 2016
(in thousands)
 
Quarter ended September 30, Nine months ended September 30,
2017     2016 2017     2016
 
Interest Income:
Loans $ 16,658 $ 15,045 $ 48,668 $ 43,380
Securities Held-to-Maturity 9,447 8,238 28,806 24,178
Securities Available-for-Sale 1,809 1,439 5,143 3,546
Federal Funds Sold and Interest-bearing Deposits In Other Banks   607   283     1,349   906
 
Total Interest Income 28,521 25,005 83,966 72,010
 
Interest Expense:
Savings and NOW Deposits 1,727 1,083 4,454 2,859
Money Market Accounts 1,395 909 3,903 2,485
Time Deposits 2,095 1,464 5,648 4,216
Securities Sold Under Agreements to Repurchase 129 122 352 363
Other Borrowed Funds and Subordinated Debentures   1,822   2,213     5,695   6,767
 
Total Interest Expense   7,168   5,791     20,052   16,690
 
Net Interest Income 21,353 19,214 63,914 55,320
 
Provision For Loan Losses   450   375     1,340   1,175
 
Net Interest Income After
Provision for Loan Losses 20,903 18,839 62,574 54,145
 
Other Operating Income
Service Charges on Deposit Accounts 2,089 1,983 6,179 5,882
Lockbox Fees 735 759 2,367 2,431
Net Gain on Sales of Loans - 533 370 1,331
Other Income   1,118   950     3,226   2,878
 
Total Other Operating Income 3,942 4,225 12,142 12,522
 
Operating Expenses
Salaries and Employee Benefits 10,282 10,544 32,144 30,360
Occupancy 1,427 1,509 4,663 4,639
Equipment 782 772 2,245 2,087
FDIC Assessment 340 343 1,218 1,503
Other   3,374   3,462     10,857   10,012
 
Total Operating Expenses   16,205   16,630     51,127   48,601
 
Income Before Income Taxes 8,640 6,434 23,589 18,066
 
Income Tax (Benefit) Expense   617   (52 )   1,313   32
 
Net Income $ 8,023 $ 6,486   $ 22,276 $ 18,034
 
       
Century Bancorp, Inc. and Subsidiaries
Consolidated Year-to-Date Average Comparative Statements of Condition (unaudited)
(in thousands)
September 30, September 30,

Assets

2017 2016
Cash and Due From Banks $ 72,206 $ 69,792
Federal Funds Sold and Interest-Bearing Deposits in Other Banks 177,233 233,531
 
Securities Available-For-Sale (AFS) 481,550 486,120
Securities Held-to-Maturity (HTM) 1,739,189 1,504,728
 
Total Loans 2,036,198 1,819,727
Less: Allowance for Loan Losses   25,089     23,714  
 
Net Loans 2,011,109 1,796,013
 
Unrealized (Loss)Gain on Securities AFS and HTM Transfers (6,750 ) (9,873 )
Bank Premises and Equipment 23,404 23,752
Accrued Interest Receivable 10,261 8,322
Goodwill 2,714 2,714
Other Assets   118,359     112,864  
 
Total Assets $ 4,629,275   $ 4,227,963  
 

Liabilities

Demand Deposits $ 676,655 $ 590,669
 
Interest Bearing Deposits:
Savings and NOW Deposits 1,479,433 1,296,861
Money Market Accounts 1,100,304 1,011,283
Time Deposits   550,996     450,800  
Total Interest Bearing Deposits   3,130,733     2,758,944  
 
Total Deposits 3,807,388 3,349,613
 
Borrowed Funds:
Securities Sold Under Agreements to Repurchase 193,519 229,668
Other Borrowed Funds   281,097     331,555  
 
Total Borrowed Funds 474,616 561,223
 
Other Liabilities 60,274 57,150
Subordinated Debentures   36,083     36,083  
 
Total Liabilities 4,378,361 4,004,069
 
Total Stockholders' Equity   250,914     223,894  
 
Total Liabilities & Stockholders' Equity $ 4,629,275   $ 4,227,963  
 
Total Average Earning Assets - QTD $ 4,378,433   $ 4,225,093  
 
Total Average Earning Assets - YTD $ 4,434,170   $ 4,044,106  
 
       
Century Bancorp, Inc. and Subsidiaries
Consolidated Selected Key Financial Information (unaudited)
(in thousands, except share data) September 30, September 30,
  2017     2016  
 

Performance Measures:

 
Earnings per average Class A share, diluted, quarter $ 1.44 $ 1.16
Earnings per average Class A share, diluted, year-to-date $ 4.00 $ 3.24
Return on average assets, year-to-date 0.64 % 0.57 %
Return on average stockholders' equity, year-to-date 11.87 % 10.76 %
Net interest margin (taxable equivalent), quarter 2.26 % 2.12 %
Net interest margin (taxable equivalent), year-to-date 2.24 % 2.15 %
Efficiency ratio, year-to-date - Non-GAAP (1) 59.1 % 62.7 %
Book value per share $ 47.17 $ 41.99
Tangible book value per share - Non-GAAP (1) $ 46.68 $ 41.50
Capital / assets 5.76 % 5.44 %
Tangible capital / tangible assets - Non-GAAP (1) 5.71 % 5.38 %
 
 
Common Share Data:
Average Class A shares outstanding, diluted, quarter & year-to-date 5,567,909 5,567,909
 
Shares outstanding Class A 3,605,829 3,600,729
Shares outstanding Class B   1,962,080     1,967,180  
Total shares outstanding at period end   5,567,909     5,567,909  
 
 

Asset Quality and Other Data:

 
Allowance for loan losses / loans 1.22 % 1.31 %
Nonaccrual loans $ 1,598 $ 958
Nonperforming assets $ 1,598 $ 958
Loans 90 days past due and still accruing $ - $ -
Accruing troubled debt restructures $ 2,843 $ 4,104
Net (recoveries)charge-offs, year-to-date $ 48 $ (47 )
 
Leverage ratio 6.56 % 6.46 %
Common equity tier 1 risk weighted capital ratio 10.53 % 10.74 %
Tier 1 risk weighted capital ratio 11.81 % 12.24 %
Total risk weighted capital ratio 12.83 % 13.28 %
Total risk weighted assets $ 2,534,210 $ 2,328,304
 
 
(1) Non-GAAP Financial Measures are reconciled in the following tables:            
 
Calculation of Efficiency ratio:
 
Total operating expenses(numerator) $ 51,127   $ 48,601  
 
Net interest income $ 63,914 $ 55,320
Total other operating income 12,142 12,522
Tax equivalent adjustment   10,383     9,725  
Total income(denominator) $ 86,439   $ 77,567  
 
Efficiency ratio, year - Non-GAAP       59.1 %       62.7 %
 
Calculation of tangible book value per share:
 
Total stockholders' equity $ 262,648 $ 233,781
Less: goodwill   2,714     2,714  
Tangible stockholders' equity(numerator) $ 259,934   $ 231,067  
 
Total shares outstanding at period end(denominator) 5,567,909 5,567,909
 
Tangible book value per share - Non-GAAP     $ 46.68       $ 41.50  
Book value per share - GAAP     $ 47.17       $ 41.99  
 
Calculation of tangible capital / tangible assets:
 
Total stockholders' equity $ 262,648 $ 233,781
Less: goodwill   2,714     2,714  
Tangible stockholders' equity(numerator) $ 259,934   $ 231,067  
 
Total assets $ 4,558,072 $ 4,298,323
Less: goodwill   2,714     2,714  
Tangible assets(denominator) $ 4,555,358   $ 4,295,609  
 
Tangible capital / tangible assets - Non-GAAP       5.71 %       5.38 %
Capital / assets - GAAP         5.76 %       5.44 %
 

Contacts

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

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