Century Bancorp, Inc. (NASDAQ:CNBKA) (www.centurybank.com) (“the Company”) today announced net income of $16,707,000 for the six months ended June 30, 2018, or $3.00 per Class A share diluted, an increase of 17.2% compared to net income of $14,253,000, or $2.56 per Class A share diluted, for the same period a year ago. Total assets increased 2.4% from $4.79 billion at December 31, 2017 to $4.90 billion at June 30, 2018. For the quarter ended June 30, 2018, net income totaled $8,998,000 or $1.62 per Class A share diluted, an increase of 10.3% compared to net income of $8,157,000, or $1.47 per Class A share diluted, for the same period a year ago.

Net interest income totaled $45.7 million for the six months ended June 30, 2018 compared to $42.6 million for the same period in 2017. The 7.3% increase in net interest income for the period is primarily due to an increase in average earning assets. The net interest margin decreased from 2.23% on a fully taxable equivalent basis in 2017 to 2.19% for the same period in 2018. This was primarily the result of prepayment penalties collected during the second quarter of 2017 as well as a decrease in the federal corporate tax rate from 34% to 21%. This decrease results in a lower tax equivalent yield on tax-exempt assets. The average balances of earning assets increased by 2.8% combined with a similar increase in average deposits. Also, interest expense increased 48.8% primarily as a result of an increase in rates on deposit balances.

The Company’s effective tax rate remained stable at 4.7% for the first six months of 2018 and 2017. This was primarily as a result of an increase in taxable income offset by a decrease in the federal tax rate from 34% to 21% as a result of the Tax Cuts and Jobs Act.

At June 30, 2018, total equity was $277.5 million compared to $260.3 million at December 31, 2017. The Company’s equity increased primarily as a result of earnings, offset somewhat by dividends paid.

The Company’s leverage ratio stood at 6.85% at June 30, 2018, compared to 6.70% at December 31, 2017. 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 June 30, 2018 was $49.84 per share compared to $46.75 at December 31, 2017.

The Company’s allowance for loan losses was $27.1 million or 1.22% of loans outstanding at June 30, 2018, compared to $26.3 million or 1.21% of loans outstanding at December 31, 2017, and $25.3 million or 1.24% of loans outstanding at June 30, 2017. The ratio of the allowance for loan losses to loans outstanding has remained relatively stable. Non-performing assets totaled $1.5 million at June 30, 2018, compared to $1.7 million at December 31, 2017 and $1.1 million at June 30, 2017.

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 August 15, 2018 to stockholders of record on August 1, 2018.

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

 2018 2017
Cash and Due From Banks $   70,692 $   77,199
Federal Funds Sold and Interest-bearing Deposits In Other Banks 183,586 279,231
 
Securities Available-for-Sale (AFS) 404,216 397,475
 
Securities Held-to-Maturity 1,858,298 1,701,233
 
Federal Home Loan Bank of Boston stock, at cost 28,012 21,779
 
Loans:
Commercial & Industrial 761,467 763,807
Municipal 103,027 106,599
Construction & Land Development 7,729 18,931
Commercial Real Estate 735,083 732,491
Residential Real Estate 316,248 287,731
Consumer and Other 21,662 19,040
Home Equity     276,397     247,345
 
Total Loans 2,221,613 2,175,944
Less: Allowance for Loan Losses     27,144     26,255
 
Net Loans 2,194,469 2,149,689
 
Bank Premises and Equipment, net 22,931 23,527
Accrued Interest Receivable 12,673 11,179
Goodwill 2,714 2,714
Other Assets     120,508     121,546
 
Total Assets $   4,898,099 $   4,785,572
 

Liabilities

Demand Deposits $ 723,677 $ 736,020
 
Interest Bearing Deposits:
Savings and NOW Deposits 1,458,476 1,367,358
Money Market Accounts 1,103,990 1,188,228
Time Deposits     579,990     625,361
 
Total Interest Bearing Deposits     3,142,456     3,180,947
 
Total Deposits 3,866,133 3,916,967
 
Borrowed Funds:
Securities Sold Under Agreements to Repurchase 140,580 158,990
Other Borrowed Funds     506,830     347,778
 
Total Borrowed Funds 647,410 506,768
 
Other Liabilities 70,992 65,457
Subordinated Debentures     36,083     36,083
 
Total Liabilities 4,620,618 4,525,275
 
Total Stockholders' Equity     277,481     260,297
 
Total Liabilities & Stockholders' Equity $   4,898,099 $   4,785,572
 
Century Bancorp, Inc. and Subsidiaries        
Consolidated Comparative Statements of Income (unaudited)
For the quarter and six months ended June 30, 2018 and 2017
(in thousands)
 
Quarter ended June 30, Six-months ended June 30,
2018   2017 2018   2017
 
Interest Income:
Loans $   19,179 $   16,910 $   37,446 $   32,010
Securities Held-to-Maturity 11,135 9,824 21,423 19,359
Securities Available-for-Sale 2,329 1,723 4,321 3,334
Federal Funds Sold and Interest-bearing Deposits In Other Banks     765     349     1,648     742
 
Total Interest Income 33,408 28,806 64,838 55,445
 
Interest Expense:
Savings and NOW Deposits 2,583 1,500 4,806 2,727
Money Market Accounts 2,934 1,234 5,387 2,508
Time Deposits 2,531 1,902 4,894 3,553
Securities Sold Under Agreements to Repurchase 188 120 369 223
Other Borrowed Funds and Subordinated Debentures     1,973     1,945     3,715     3,873
 
Total Interest Expense     10,209     6,701     19,171     12,884
 
Net Interest Income 23,199 22,105 45,667 42,561
 
Provision For Loan Losses     450     490     900     890
 
Net Interest Income After
Provision for Loan Losses 22,749 21,615 44,767 41,671
 
Other Operating Income
Service Charges on Deposit Accounts 2,064 2,074 4,131 4,090
Lockbox Fees 621 861 1,412 1,632
Net Gain on Sales of Loans - 269 - 370
Net Gain on Sales of Securities - - 197 -
Other Income     1,037     1,087     2,175     2,108
 
Total Other Operating Income 3,722 4,291 7,915 8,200
 
Operating Expenses
Salaries and Employee Benefits 10,536 10,370 21,761 21,164
Occupancy 1,461 1,495 3,098 3,236
Equipment 780 757 1,574 1,463
FDIC Assessment 359 440 742 878
Other     4,023     4,135     7,985     8,181
 
Total Operating Expenses     17,159     17,197     35,160     34,922
 
Income Before Income Taxes 9,312 8,709 17,522 14,949
 
Income Tax Expense     314     552     815     696
 
Net Income $   8,998 $   8,157 $   16,707 $   14,253
 
Century Bancorp, Inc. and Subsidiaries    
Consolidated Year-to-Date Average Comparative Statements of Condition (unaudited)
(in thousands)
June 30, June 30,

Assets

 2018 2017
Cash and Due From Banks $   71,146 $   73,301
Federal Funds Sold and Interest-Bearing Deposits in Other Banks 199,454 170,604
 
Securities Available-For-Sale (AFS) 404,032 512,153
Securities Held-to-Maturity (HTM) 1,795,422 1,761,470
 
Total Loans 2,189,044 2,018,274
Less: Allowance for Loan Losses     26,743       24,849  
 
Net Loans 2,162,301 1,993,425
 
Unrealized (Loss)Gain on Securities AFS and HTM Transfers (4,369 ) (7,207 )
Bank Premises and Equipment 23,290 23,437
Accrued Interest Receivable 11,189 10,261
Goodwill 2,714 2,714
Other Assets     123,101       118,137  
 
Total Assets $   4,788,280   $   4,658,295  
 

Liabilities

Demand Deposits $ 708,858 $ 670,241
 
Interest Bearing Deposits:
Savings and NOW Deposits 1,506,828 1,494,059
Money Market Accounts 1,196,783 1,140,030
Time Deposits     601,207       529,038  
Total Interest Bearing Deposits     3,304,818       3,163,127  
 
Total Deposits 4,013,676 3,833,368
 
Borrowed Funds:
Securities Sold Under Agreements to Repurchase 149,139 198,394
Other Borrowed Funds     252,054       283,964  
 
Total Borrowed Funds 401,193 482,358
 
Other Liabilities 69,242 59,506
Subordinated Debentures     36,083       36,083  
 
Total Liabilities 4,520,194 4,411,315
 
Total Stockholders' Equity     268,086       246,980  
 
Total Liabilities & Stockholders' Equity $   4,788,280   $   4,658,295  
 
Total Average Earning Assets - QTD $   4,622,577   $   4,450,981  
 
Total Average Earning Assets - YTD $   4,587,952   $   4,462,501  
 
Century Bancorp, Inc. and Subsidiaries    
Consolidated Selected Key Financial Information (unaudited)
(in thousands, except share data) June 30, June 30,
2018 2017
 

Performance Measures:

 
Earnings per average Class A share, diluted, quarter $   1.62 $   1.47
Earnings per average Class A share, diluted, year-to-date $ 3.00 $ 2.56
Return on average assets, year-to-date 0.70% 0.62%
Return on average stockholders' equity, year-to-date 12.57% 11.64%
Net interest margin (taxable equivalent), quarter 2.20% 2.31%
Net interest margin (taxable equivalent), year-to-date 2.19% 2.23%
Efficiency ratio, year-to-date - Non-GAAP (1) 60.8% 60.6%
Book value per share $ 49.84 $ 45.73
Tangible book value per share - Non-GAAP (1) $ 49.35 $ 45.24
Capital / assets 5.67% 5.60%
Tangible capital / tangible assets - Non-GAAP (1) 5.61% 5.54%
 
 
Common Share Data:
Average Class A shares outstanding, diluted, quarter and year-to-date 5,567,909 5,567,909
 
Shares outstanding Class A 3,608,029 3,603,729
Shares outstanding Class B     1,959,880     1,964,180
Total shares outstanding at period end     5,567,909     5,567,909
 
 

Asset Quality and Other Data:

 
Allowance for loan losses / loans 1.22% 1.24%
Nonaccrual loans $ 1,456 $ 1,122
Nonperforming assets $ 1,456 $ 1,122
Loans 90 days past due and still accruing $ - $ -
Accruing troubled debt restructures $ 5,295 $ 2,872
Net charge-offs(recoveries), year-to-date $ 11 $ 7
 
Leverage ratio 6.85% 6.31%
Common equity tier 1 risk weighted capital ratio 10.90% 10.43%
Tier 1 risk weighted capital ratio 12.19% 11.74%
Total risk weighted capital ratio 13.19% 12.76%
Total risk weighted assets $ 2,709,841 $ 2,490,113
 
 
(1) Non-GAAP Financial Measures are reconciled in the following tables:  
 
Calculation of Efficiency ratio:
 
Total operating expenses(numerator) $   35,160 $   34,922
 
Net interest income $ 45,667 $ 42,561
Total other operating income 7,915 8,200
Tax equivalent adjustment     4,249     6,827
Total income(denominator) $   57,831 $   57,588
 
Efficiency ratio, year - Non-GAAP       60.8%       60.6%
 
Calculation of tangible book value per share:
 
Total stockholders' equity $ 277,481 $ 254,625
Less: goodwill     2,714     2,714
Tangible stockholders' equity(numerator) $   274,767 $   251,911
 
Total shares outstanding at period end(denominator) 5,567,909 5,567,909
 
Tangible book value per share - Non-GAAP   $   49.35   $   45.24
Book value per share - GAAP   $   49.84   $   45.73
 
Calculation of tangible capital / tangible assets:
 
Total stockholders' equity $ 277,481 $ 254,625
Less: goodwill     2,714     2,714
Tangible stockholders' equity(numerator) $   274,767 $   251,911
 
Total assets $ 4,898,099 $ 4,549,237
Less: goodwill     2,714     2,714
Tangible assets(denominator) $   4,895,385 $   4,546,523
 
Tangible capital / tangible assets - Non-GAAP       5.61%       5.54%
Capital / assets - GAAP         5.67%       5.60%