Market Overview

Century Bancorp, Inc. Announces Record Earnings for Q3 2016, up 5.2%; Asset Growth to Record Size of $4.3 BB; Regular Dividend Declared

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MEDFORD, Mass.--(BUSINESS WIRE)--

Century Bancorp, Inc. (NASDAQ: CNBKA) (www.centurybank.com) ("the Company") today announced net income of $18,034,000 for the nine months ended September 30, 2016, or $3.24 per Class A share diluted, an increase of 5.8% compared to net income of $17,050,000, or $3.06 per Class A share diluted, for the same period a year ago. Total assets increased 8.9% from $3.9 billion at December 31, 2015 to $4.3 billion at September 30, 2016. For the quarter ended September 30, 2016, net income totaled a record $6,486,000 or $1.16 per Class A share diluted, an increase of 5.2% compared to net income of $6,166,000, or $1.11 per Class A share diluted, for the same period a year ago.

Net interest income totaled $55.3 million for the nine months ended September 30, 2016 compared to $52.7 million for the same period in 2015. The 4.9% increase in net interest income for the period is primarily due to an increase in average earning assets. The net interest margin decreased from 2.20% on a fully taxable equivalent basis for the first nine months of 2015 to 2.15% for the same period in 2016. This was primarily the result of a decrease in rates on earning assets. The average balances of earning assets increased by 9.1% combined with a similar increase in average deposits. Also, interest expense increased 12.3% as a result of an increase in deposit balances.

The provision for loan losses increased by $975,000 from $200,000 for the nine months ended September 30, 2015 to $1,175,000 for the same period in 2016, primarily as a result of an increase in loan balances. The Company's effective tax rate decreased from 3.6% in 2015 to 0.2% in 2016 primarily as a result of an increase in tax-exempt income.

At September 30, 2016, total equity was $233.8 million compared to $214.5 million at December 31, 2015. 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 and amortization of the pension liability. This was offset, somewhat, by an increase in unrealized losses on securities available-for-sale.

The Company's leverage ratio stood at 6.46% at September 30, 2016, compared to 6.79% at December 31, 2015. 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, 2016 was $41.99 per share compared to $38.53 at December 31, 2015.

The Company's allowance for loan losses was $24.2 million or 1.31% of loans outstanding at September 30, 2016, compared to $23.1 million or 1.33% of loans outstanding at December 31, 2015 and $22.3 million or 1.36% of loans outstanding at September 30, 2015. The change in the ratio of the allowance for loan losses to loans outstanding, when compared to September 30, 2015, was primarily due to changes in portfolio composition. Non-performing assets totaled $1.0 million at September 30, 2016, compared to $2.3 million at December 31, 2015 and $1.8 million at September 30, 2015.

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, 2016 to stockholders of record on November 1, 2016.

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

2016 2015
Cash and Due From Banks $ 58,975 $ 52,877
Federal Funds Sold and Interest-bearing Deposits In Other Banks 159,900 167,847
 
Short-term Investments 3,241 3,233
 
Securities Available-for-Sale (AFS) 526,122 404,623
 
Securities Held-to-Maturity 1,565,191 1,438,903
 
Federal Home Loan Bank of Boston stock, at cost 21,158 28,807
 
Loans:
Commercial & Industrial 549,290 452,235
Municipal 145,063 85,685
Construction & Land Development 19,522 27,421
Commercial Real Estate 692,778 721,506
Residential Real Estate 222,881 255,346
Consumer and Other 11,474 11,323
Home Equity   200,085   178,020
 
Total Loans 1,841,093 1,731,536
Less: Allowance for Loan Losses   24,208   23,075
 
Net Loans 1,816,885 1,708,461
 
Bank Premises and Equipment, net 23,334 24,106
Accrued Interest Receivable 7,597 8,002
Goodwill 2,714 2,714
Other Assets   113,206   107,868
 
Total Assets $ 4,298,323 $ 3,947,441
 

Liabilities

Demand Deposits $ 645,317 $ 541,955
 
Interest Bearing Deposits:
Savings and NOW Deposits 1,293,995 1,070,585
Money Market Accounts 1,067,170 989,094
Time Deposits   454,631   473,426
 
Total Interest Bearing Deposits   2,815,796   2,533,105
 
Total Deposits 3,461,113 3,075,060
 
Borrowed Funds:
Securities Sold Under Agreements to Repurchase 214,320 197,850
Other Borrowed Funds   293,000   368,000
 
Total Borrowed Funds 507,320 565,850
 
Other Liabilities 60,026 55,904
Subordinated Debentures   36,083   36,083
 
Total Liabilities 4,064,542 3,732,897
 
Total Stockholders' Equity   233,781   214,544
 
Total Liabilities & Stockholders' Equity $ 4,298,323 $ 3,947,441
 
             
Century Bancorp, Inc. and Subsidiaries
Consolidated Comparative Statements of Income (unaudited)
For the Quarter and Nine months ended September 30, 2016 and 2015
(in thousands)
 
Quarter ended September 30, Nine months ended September 30,
2016     2015 2016   2015
 
Interest Income:
Loans $ 15,045 $ 14,051 $ 43,380 $ 38,597
Securities Held-to-Maturity 8,238 8,834 24,178 26,373
Securities Available-for-Sale 1,439 830 3,546 2,299
Federal Funds Sold and Interest-bearing Deposits In Other Banks   283     35   906   328
 
Total Interest Income 25,005 23,750 72,010 67,597
 
Interest Expense:
Savings and NOW Deposits 1,083 729 2,859 2,049
Money Market Accounts 909 760 2,485 2,276
Time Deposits 1,464 1,231 4,216 3,594
Securities Sold Under Agreements to Repurchase 122 129 363 371
Other Borrowed Funds and Subordinated Debentures   2,213     2,285   6,767   6,570
 
Total Interest Expense   5,791     5,134   16,690   14,860
 
Net Interest Income 19,214 18,616 55,320 52,737
 
Provision For Loan Losses   375     -   1,175   200
 
Net Interest Income After
Provision for Loan Losses 18,839 18,616 54,145 52,537
 
Other Operating Income
Service Charges on Deposit Accounts 1,983 1,941 5,882 5,788
Lockbox Fees 759 782 2,431 2,458
Net Gain on Sales of Loans 533 225 1,331 742
Other Income   950     882   2,878   2,557
 
Total Other Operating Income 4,225 3,830 12,522 11,545
 
Operating Expenses
Salaries and Employee Benefits 10,544 10,087 30,360 28,701
Occupancy 1,509 1,499 4,639 4,621
Equipment 772 697 2,087 1,949
FDIC Assessment 343 554 1,503 1,602
Other   3,462     3,263   10,012   9,531
 
Total Operating Expenses   16,630     16,100   48,601   46,404
 
Income Before Income Taxes 6,434 6,346 18,066 17,678
 
Income Tax (Benefit) Expense   (52 )   180   32   628
 
Net Income $ 6,486   $ 6,166 $ 18,034 $ 17,050
 
       

Century Bancorp, Inc. and Subsidiaries

Consolidated Year-to-Date Average Comparative Statements of Condition (unaudited)
(in thousands)
September 30, September 30,

Assets

2016 2015
Cash and Due From Banks $ 69,792 $ 67,363
Federal Funds Sold and Interest-Bearing Deposits in Other Banks 233,531 163,144
 
Securities Available-For-Sale (AFS) 486,120 462,104
Securities Held-to-Maturity (HTM) 1,504,728 1,640,388
 
Total Loans 1,819,727 1,441,589
Less: Allowance for Loan Losses   23,714     22,432  
 
Net Loans 1,796,013 1,419,157
 
Unrealized (Loss)Gain on Securities AFS and HTM Transfers (9,873 ) (15,107 )
Bank Premises and Equipment 23,752 24,332
Accrued Interest Receivable 8,322 7,462
Goodwill 2,714 2,714
Other Assets   112,864     102,373  
 
Total Assets $ 4,227,963   $ 3,873,930  
 

Liabilities

Demand Deposits $ 590,669 $ 507,855
 
Interest Bearing Deposits:
Savings and NOW Deposits 1,296,861 1,134,195
Money Market Accounts 1,011,283 959,191
Time Deposits   450,800     395,915  
Total Interest Bearing Deposits   2,758,944     2,489,301  
 
Total Deposits 3,349,613 2,997,156
 
Borrowed Funds:
Securities Sold Under Agreements to Repurchase 229,668 254,521
Other Borrowed Funds   331,555     334,069  
 
Total Borrowed Funds 561,223 588,590
 
Other Liabilities 57,150 50,908
Subordinated Debentures   36,083     36,083  
 
Total Liabilities 4,004,069 3,672,737
 
Total Stockholders' Equity   223,894     201,193  
 
Total Liabilities & Stockholders' Equity $ 4,227,963   $ 3,873,930  
 
Total Average Earning Assets - QTD $ 4,225,093   $ 3,745,957  
 
Total Average Earning Assets - YTD $ 4,044,106   $ 3,707,225  
 
       
Century Bancorp, Inc. and Subsidiaries
Consolidated Selected Key Financial Information (unaudited)
(in thousands, except share data) September 30, September 30,
2016 2015
 

Performance Measures:

 
Earnings per average Class A share, diluted, quarter $ 1.16 $ 1.11
Earnings per average Class A share, diluted, year-to-date $ 3.24 $ 3.06
Return on average assets, year-to-date 0.57 % 0.59 %
Return on average stockholders' equity, year-to-date 10.76 % 11.33 %
Net interest margin (taxable equivalent), quarter 2.12 % 2.28 %
Net interest margin (taxable equivalent), year-to-date 2.15 % 2.20 %
Efficiency ratio, year-to-date - Non-GAAP (1) 62.7 % 64.0 %
Book value per share $ 41.99 $ 37.92
Tangible book value per share - Non-GAAP (1) $ 41.50 $ 37.43
Capital / assets 5.44 % 5.47 %
Tangible capital / tangible assets - Non-GAAP (1) 5.38 % 5.41 %
 
 
Common Share Data:
Average Class A shares outstanding, diluted, quarter & year-to-date 5,567,909 5,567,909
 
Shares outstanding Class A 3,600,729 3,600,729
Shares outstanding Class B   1,967,180     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 1.31 % 1.36 %
Nonaccrual loans $ 958 $ 1,760
Nonperforming assets $ 958 $ 1,760
Loans 90 days past due and still accruing $ - $ -
Accruing troubled debt restructures $ 4,104 $ 2,994
Net (recoveries)charge-offs, year-to-date $ (47 ) $ 188
 
Leverage ratio 6.46 % *

 

6.71

%

*

Common equity tier 1 risk weighted capital ratio 10.74 % *

 

10.18

%

*

Tier 1 risk weighted capital ratio 12.24 % *

 

11.74

%

*

Total risk weighted capital ratio 13.28 % *

 

12.74

%

*

Total risk weighted assets $ 2,328,304 *

 

$

2,240,879

*

 
* computed utilizing recently implemented Basel III regulatory capital framework.
 
(1) Non-GAAP Financial Measures are reconciled in the following tables:      
 
Calculation of Efficiency ratio:
 
Total operating expenses(numerator) $ 48,601   $ 46,404  
 
Net interest income $ 55,320 $ 52,737
Total other operating income 12,522 11,545
Tax equivalent adjustment   9,725     8,243  
Total income(denominator) $ 77,567   $ 72,525  
 
Efficiency ratio, year - Non-GAAP       62.7 %         64.0 %
 
Calculation of tangible book value per share:
 
Total stockholders' equity $ 233,781 $ 211,132
Less: goodwill   2,714     2,714  
Tangible stockholders' equity(numerator) $ 231,067   $ 208,418  
 
Total shares outstanding at period end(denominator) 5,567,909 5,567,909
 
Tangible book value per share - Non-GAAP     $ 41.50         $ 37.43  
Book value per share - GAAP     $ 41.99         $ 37.92  
 
Calculation of tangible capital / tangible assets:
 
Total stockholders' equity $ 233,781 $ 211,132
Less: goodwill   2,714     2,714  
Tangible stockholders' equity(numerator) $ 231,067   $ 208,418  
 
Total assets $ 4,298,323 $ 3,856,407
Less: goodwill   2,714     2,714  
Tangible assets(denominator) $ 4,295,609   $ 3,853,693  
 
Tangible capital / tangible assets - Non-GAAP       5.38 %         5.41 %
Capital / assets - GAAP         5.44 %         5.47 %
 

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

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