Century Bancorp, Inc. Announces Record Earnings for 2020, Up 6.3%; Record Assets, Loans, and Deposits; Increase in Quarterly Dividend Declared

Jan 19, 2021 04:45 pm
MEDFORD, Mass. -- 

Century Bancorp, Inc. (NASDAQ:CNBKA) (www.centurybank.com) (“the Company”) today announced net income of $42,209,000 for the year ended December 31, 2020, or $7.58 per Class A share diluted, an increase of 6.3% compared to net income of $39,699,000, or $7.13 per Class A share diluted, for the same period a year ago. Total assets increased 15.8% from $5.49 billion at December 31, 2019 to $6.36 billion at December 31, 2020. For the quarter ended December 31, 2020, net income totaled $11,600,000 or $2.08 per Class A share diluted, an increase of 8.1% compared to net income of $10,732,000, or $1.93 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 16.00 cents ($0.16) per share to 18.00 cents ($0.18) per share on the Company's Class A common stock, and from 8.00 cents ($0.08) per share to 9.00 cents ($0.09) per share on the Company's Class B common stock. The dividends were declared payable February 16, 2021 to stockholders of record on February 1, 2021.

Net interest income totaled $106.8 million for the year ended December 31, 2020 compared to $95.8 million for the same period in 2019. The 11.5% increase in net interest income for the period is primarily due to a decrease in interest expense as a result of falling interest rates. The net interest margin decreased from 2.10% on a fully tax-equivalent basis for 2019 to 2.00% for 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 2020 compared to the same period last year, by $719.9 million or 14.4%, combined with an average yield decrease of 0.63%, resulting in a decrease in interest income of $10.1 million. The average balance of interest-bearing liabilities increased for 2020 compared to the same period last year, by $568.3 million or 14.0%, combined with an average interest-bearing liabilities interest cost decrease of 0.65%, resulting in a decrease in interest expense of $21.1 million.

The provision for loan losses increased by $4,575,000 from $1,250,000 for the year ended December 31, 2019 to $5,825,000 for 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 2.7% for the year ended December 31, 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, offset by an increase in life insurance proceeds received. 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 December 31, 2020, total equity was $370.4 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 and an increase in total accumulated other comprehensive loss.

The Company’s leverage ratio stood at 6.64% at December 31, 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 December 31, 2020 was $66.53 per share compared to $59.73 at December 31, 2019.

The Company’s allowance for loan losses was $35.5 million or 1.18% of loans outstanding at December 31, 2020 compared to $29.6 million or 1.22% of loans outstanding at December 31, 2019. The ratio of the allowance for loan losses to loans outstanding has decreased from December 31, 2019, primarily from approximately $196 million of qualifying 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 $4.0 million at December 31, 2020, compared to $2.0 million at December 31, 2019.

As of December 31, 2020, the Company has COVID-19 modifications of 20 loans aggregating $25,022,000, primarily consisting of short-term payment deferrals. Of these modifications, $25,022,000, 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 elected to delay FASB ASU 2016-13. This ASU was 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. On December 27, 2020, the Coronavirus Response and Relief Supplemental Appropriations Act of 2021 was signed into law. The law changed the delayed implementation date to the earlier of the first day of the Company’s fiscal year that begins after the date on which the national emergency terminates or January 1, 2022.

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)

December 31,

December 31,

Assets

 

2020

 

2019

Cash and Due From Banks

$

136,735

$

44,420

Federal Funds Sold and Interest-bearing Deposits In Other Banks

 

237,265

 

214,273

 
Securities Available-for-Sale (AFS)

 

284,116

 

262,190

 
Securities Held-to-Maturity

 

2,509,088

 

2,351,120

 
Federal Home Loan Bank of Boston stock, at cost

 

13,361

 

19,471

 
Loans:
Commercial & Industrial

 

1,314,245

 

812,417

Municipal

 

137,607

 

120,455

Construction & Land Development

 

10,909

 

8,992

Commercial Real Estate

 

789,836

 

786,102

Residential Real Estate

 

448,436

 

371,897

Consumer and Other

 

20,439

 

21,893

Home Equity

 

274,357

 

304,363

 
Total Loans

 

2,995,829

 

2,426,119

Less: Allowance for Loan Losses

 

35,486

 

29,585

 
Net Loans

 

2,960,343

 

2,396,534

 
Bank Premises and Equipment, net

 

39,062

 

33,952

Accrued Interest Receivable

 

13,283

 

13,110

Goodwill

 

2,714

 

2,714

Other Assets

 

162,867

 

154,640

 
Total Assets

$

6,358,834

$

5,492,424

 
Liabilities
Demand Deposits

$

1,103,878

$

712,842

 
Interest Bearing Deposits:
Savings and NOW Deposits

 

1,728,092

 

1,678,250

Money Market Accounts

 

2,074,108

 

1,453,572

Time Deposits

 

546,143

 

555,447

 
Total Interest Bearing Deposits

 

4,348,343

 

3,687,269

 
Total Deposits

 

5,452,221

 

4,400,111

 
Borrowed Funds:
Securities Sold Under Agreements to Repurchase

 

232,090

 

266,045

Other Borrowed Funds

 

177,009

 

370,955

 
Total Borrowed Funds

 

409,099

 

637,000

 
Other Liabilities

 

91,022

 

86,649

Subordinated Debentures

 

36,083

 

36,083

 
Total Liabilities

 

5,988,425

 

5,159,843

 
Total Stockholders' Equity

 

370,409

 

332,581

 
Total Liabilities & Stockholders' Equity

$

6,358,834

$

5,492,424

 
Century Bancorp, Inc. and Subsidiaries
Consolidated Comparative Statements of Income (unaudited)
For the quarter and year ended December 31, 2020 and 2019
(in thousands)
 
Quarter ended December 31, Year ended December 31,

 

2020

 

2019

 

2020

 

2019

 
Interest Income:
Loans

$

22,405

$

22,781

$

85,883

$

87,887

Securities Held-to-Maturity

 

13,371

 

15,030

 

58,072

 

58,036

Securities Available-for-Sale

 

745

 

1,860

 

4,238

 

9,165

Federal Funds Sold and Interest-bearing Deposits In Other Banks

 

96

 

847

 

843

 

4,051

 
Total Interest Income

 

36,617

 

40,518

 

149,036

 

159,139

 
Interest Expense:
Savings and NOW Deposits

 

1,311

 

4,395

 

8,880

 

21,183

Money Market Accounts

 

2,922

 

5,365

 

15,012

 

21,170

Time Deposits

 

2,432

 

3,080

 

11,573

 

11,804

Securities Sold Under Agreements to Repurchase

 

200

 

775

 

1,376

 

2,347

Other Borrowed Funds and Subordinated Debentures

 

1,273

 

1,572

 

5,366

 

6,846

 
Total Interest Expense

 

8,138

 

15,187

 

42,207

 

63,350

 
Net Interest Income

 

28,479

 

25,331

 

106,829

 

95,789

 
Provision For Loan Losses

 

2,150

 

550

 

5,825

 

1,250

 
Net Interest Income After
Provision for Loan Losses

 

26,329

 

24,781

 

101,004

 

94,539

 
Other Operating Income:
Service Charges on Deposit Accounts

 

2,260

 

2,419

 

8,818

 

9,220

Lockbox Fees

 

895

 

955

 

3,745

 

3,973

Net Gain on Sales of Loans

 

-

 

258

 

-

 

412

Other Income

 

3,425

 

1,057

 

6,537

 

4,794

 
Total Other Operating Income

 

6,580

 

4,689

 

19,100

 

18,399

 
Operating Expenses:
Salaries and Employee Benefits

 

12,283

 

11,393

 

45,303

 

44,014

Occupancy

 

1,592

 

1,560

 

6,040

 

6,246

Equipment

 

887

 

798

 

3,495

 

3,238

Other

 

5,344

 

4,461

 

18,650

 

18,631

 
Total Operating Expenses

 

20,106

 

18,212

 

73,488

 

72,129

 
Income Before Income Taxes

 

12,803

 

11,258

 

46,616

 

40,809

 
Income Tax Expense

 

1,203

 

526

 

4,407

 

1,110

 
Net Income

$

11,600

$

10,732

$

42,209

$

39,699

 
Century Bancorp, Inc. and Subsidiaries
Consolidated Year-to-Date Average Comparative Statements of Condition (unaudited)
(in thousands)
December 31, December 31,
Assets

 

2020

 

 

2019

 

Cash and Due From Banks

$

91,121

 

$

75,025

 

Federal Funds Sold and Interest-Bearing Deposits in Other Banks

 

274,901

 

 

189,710

 

 
Securities Available-For-Sale (AFS)

 

295,474

 

 

313,604

 

Securities Held-to-Maturity (HTM)

 

2,372,491

 

 

2,152,580

 

 
Total Loans

 

2,774,069

 

 

2,341,190

 

Less: Allowance for Loan Losses

 

31,951

 

 

29,004

 

 
Net Loans

 

2,742,118

 

 

2,312,186

 

 
Unrealized (Loss)Gain on Securities AFS and HTM Transfers

 

(2,528

)

 

(3,198

)

Bank Premises and Equipment

 

36,735

 

 

27,867

 

Accrued Interest Receivable

 

12,863

 

 

13,752

 

Goodwill

 

2,714

 

 

2,714

 

Other Assets

 

166,097

 

 

134,704

 

 
Total Assets

$

5,991,986

 

$

5,218,944

 

 
Liabilities
Demand Deposits

$

921,718

 

$

760,420

 

 
Interest Bearing Deposits:
Savings and NOW Deposits

 

1,900,406

 

 

1,810,481

 

Money Market Accounts

 

1,708,674

 

 

1,273,389

 

Time Deposits

 

595,864

 

 

519,761

 

Total Interest Bearing Deposits

 

4,204,944

 

 

3,603,631

 

 
Total Deposits

 

5,126,662

 

 

4,364,051

 

 
Borrowed Funds:
Securities Sold Under Agreements to Repurchase

 

221,609

 

 

224,361

 

Other Borrowed Funds

 

165,573

 

 

195,843

 

 
Total Borrowed Funds

 

387,182

 

 

420,204

 

 
Other Liabilities

 

89,147

 

 

79,437

 

Subordinated Debentures

 

36,083

 

 

36,083

 

 
Total Liabilities

 

5,639,074

 

 

4,899,775

 

 
Total Stockholders' Equity

 

352,912

 

 

319,169

 

 
Total Liabilities & Stockholders' Equity

$

5,991,986

 

$

5,218,944

 

 
Total Average Earning Assets - QTD

$

6,150,592

 

$

5,100,333

 

 
Total Average Earning Assets - YTD

$

5,716,935

 

$

4,997,084

 

 
Century Bancorp, Inc. and Subsidiaries
Consolidated Selected Key Financial Information (unaudited)
(in thousands, except share data) December 31, December 31,

 

2020

 

 

2019

 

 
Performance Measures:
 
Earnings per average Class A share, diluted, quarter

$

2.08

 

$

1.93

 

Earnings per average Class A share, diluted, year

$

7.58

 

$

7.13

 

Return on average assets, year

 

0.70

%

 

0.76

%

Return on average stockholders' equity, year

 

11.96

%

 

12.44

%

Net interest margin (taxable equivalent), quarter

 

1.95

%

 

2.14

%

Net interest margin (taxable equivalent), year

 

2.00

%

 

2.10

%

Efficiency ratio, Non-GAAP (1)

 

55.2

%

 

58.4

%

Book value per share

$

66.53

 

$

59.73

 

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

$

66.04

 

$

59.24

 

Capital / assets

 

5.83

%

 

6.06

%

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

 

5.78

%

 

6.01

%

 
 
Common Share Data:
Average Class A shares outstanding, diluted, quarter and year

 

5,567,909

 

 

5,567,909

 

 
Shares outstanding Class A

 

3,655,469

 

 

3,650,949

 

Shares outstanding Class B

 

1,912,440

 

 

1,916,960

 

Total shares outstanding at period end

 

5,567,909

 

 

5,567,909

 

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

 

1.18

%

 

1.22

%

Nonaccrual loans

$

3,996

 

$

2,014

 

Nonperforming assets

$

3,996

 

$

2,014

 

Loans 90 days past due and still accruing

$

90

 

$

-

 

Accruing troubled debt restructures

$

2,202

 

$

2,361

 

Net charge-offs (recoveries), year

$

(76

)

$

208

 

 
Leverage ratio

 

6.64

%

 

7.25

%

Common equity tier 1 risk weighted capital ratio

 

11.39

%

 

11.80

%

Tier 1 risk weighted capital ratio

 

12.40

%

 

12.98

%

Total risk weighted capital ratio

 

13.43

%

 

13.97

%

Total risk weighted assets

$

3,458,416

 

$

2,976,650

 

 
 
(1) Non-GAAP Financial Measures are reconciled in the following tables:
 
Calculation of Efficiency ratio:
 
Total operating expenses

$

73,488

 

$

72,129

 

Less: other real estate owned expenses

 

-

 

 

134

 

Total adjusted operating expenses(numerator)

$

73,488

 

$

71,995

 

 
Net interest income

$

106,829

 

$

95,789

 

Total other operating income

 

19,100

 

 

18,399

 

Tax equivalent adjustment

 

7,280

 

 

9,068

 

Total income(denominator)

$

133,209

 

$

123,256

 

 
Efficiency ratio - Non-GAAP

 

55.2

%

 

58.4

%

 
Calculation of tangible book value per share:
 
Total stockholders' equity

$

370,409

 

$

332,581

 

Less: goodwill

 

2,714

 

 

2,714

 

Tangible stockholders' equity(numerator)

$

367,695

 

$

329,867

 

 
Total shares outstanding at period end(denominator)

 

5,567,909

 

 

5,567,909

 

 
Tangible book value per share - Non-GAAP

$

66.04

 

$

59.24

 

Book value per share - GAAP

$

66.53

 

$

59.73

 

 
Calculation of tangible capital / tangible assets:
 
Total stockholders' equity

$

370,409

 

$

332,581

 

Less: goodwill

 

2,714

 

 

2,714

 

Tangible stockholders' equity(numerator)

$

367,695

 

$

329,867

 

 
Total assets

$

6,358,834

 

$

5,492,424

 

Less: goodwill

 

2,714

 

 

2,714

 

Tangible assets(denominator)

$

6,356,120

 

$

5,489,710

 

 
Tangible capital / tangible assets - Non-GAAP

 

5.78

%

 

6.01

%

Capital / assets - GAAP

 

5.83

%

 

6.06

%

 

 

William P. Hornby, CPA
[email protected]
Phone: 781-393-4630
Fax: 781-393-4071