Century Bancorp, Inc. Announces Earnings for Q2 2021, Up 7.6%; Record Loans; Quarterly Dividend Declared

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MEDFORD, Mass.–()–Century Bancorp, Inc. (NASDAQ:CNBKA) (www.centurybank.com) (“the Company”) today announced net income of $21,593,000 for the six months ended June 30, 2021, or $3.88 per Class A share diluted, an increase of 9.5% compared to net income of $19,722,000, or $3.54 per Class A share diluted, for the same period a year ago. Total assets increased 14.2% from $6.36 billion at December 31, 2020 to $7.26 billion at June 30, 2021. For the quarter ended June 30, 2021, net income totaled $10,823,000, or $1.94 per Class A share diluted, an increase of 7.6% compared to net income of $10,056,000, or $1.81 per Class A share diluted, for the same period a year ago.

The Company’s Board of Directors voted a regular quarterly dividend of 18.00 cents ($0.18) per share on the Company’s Class A common stock, and 9.00 cents ($0.09) per share on the Company’s Class B common stock. The dividends were declared payable August 16, 2021 to shareholders of record on August 2, 2021.

Net interest income totaled $58.6 million for the six months ended June 30, 2021 compared to $51.0 million for the same period in 2020. The 14.8% 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 2.04% on a fully tax-equivalent basis for the first six months of 2020 compared to 1.81% for the same period in 2021. This was primarily the result of increased margin pressure during the recent decrease in interest rates across the yield curve. The average balances of interest-earning assets increased for 2021 compared to the same period last year, by $1.49 billion or 27.5%, combined with an average yield decrease of 0.79%, resulting in a decrease in interest income of $4.7 million. The average balance of interest-bearing liabilities increased for 2021 compared to the same period last year, by $1.14 billion or 26.0%, combined with an average interest-bearing liabilities interest cost decrease of 0.68%, resulting in a decrease in interest expense of $12.3 million.

The provision for loan losses decreased by $3.3 million from $2.8 million for the six months ended June 30, 2020 compared to a credit of $550,000 for the same period in 2021. The provision for the first six months of 2020 was primarily a result of provisions related to the onset of the COVID-19 pandemic. The credit provision for the first six months of 2021 was primarily attributable to a reduction in specific allocations to the allowance for loan losses and a reduction in the historical experience reserve allocation.

Total operating expenses totaled $41.9 million for the first six months of 2021 compared to $35.2 million for the same period last year, an increase of $6.7 million or 19.0%. The increase was primarily attributable to a $2.9 million increase in salaries and employee benefits and a $3.4 million increase in other expenses.

Salaries and employee benefits increased for the first six months of 2021 mainly as a result of merit increases, lower bonus accruals during the same period in 2020 as a result of uncertainties from the COVID-19 pandemic, decreased deferred origination cost credits, and increased employee benefits including health insurance costs. Other expenses increased for the first six months of 2021 mainly as a result of merger related expenses, increased FDIC insurance expense as a result of increased deposits and assessment rates, and increased COVID-19 related expenses.

The Company’s effective tax rate increased from 7.8% for the six months ended June 30, 2020 to 15.4% for the same period in 2021. This was primarily as a result of an increase in taxable income relative to total income and nondeductible merger related expenses.

At June 30, 2021, total stockholders’ equity was $392.6 million compared to $370.4 million at December 31, 2020. Total stockholders’ equity increased primarily as a result of an increase in earnings and a decrease in total accumulated other comprehensive loss, offset somewhat by dividends paid.

The Company’s leverage ratio stood at 6.13% at June 30, 2021, compared to 6.64% at December 31, 2020. The decrease in the leverage ratio was due to an increase in quarterly average assets, offset somewhat by an increase in total stockholders’ equity. Book value per share as of June 30, 2021 was $70.50 compared to $66.53 at December 31, 2020.

The Company’s allowance for loan losses was $34.9 million or 1.17% of loans outstanding at June 30, 2021, compared to $35.5 million or 1.18% of loans outstanding at December 31, 2020, and $32.5 million or 1.16% of loans outstanding at June 30, 2020. The ratio of the allowance for loan losses to loans outstanding has remained relatively stable for the time periods presented. Nonperforming assets totaled $1.3 million at June 30, 2021, compared to $4.0 million at December 31, 2020, and $1.5 million at June 30, 2020.

As of June 30, 2021, the Company had COVID-19 modifications of 4 loans aggregating $16.5 million, primarily consisting of short-term payment deferrals. Of these modifications, $16.5 million, or 100%, were performing in accordance with their modified terms.

The Coronavirus Aid, Relief and Economic Security Act (CARES Act) 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.

Proposed Transaction with Eastern Bankshares, Inc.

On April 7, 2021, the Company and Eastern Bankshares, Inc. (“Eastern” ) (NASDAQ: EBC) entered into an Agreement and Plan of Merger pursuant to which, through a series of transactions, Eastern will acquire the Company in a cash transaction for total consideration valued at approximately $642 million. Under the terms of the Agreement and Plan of Merger, (i) each holder of Class A common stock will receive a cash payment of $115.28 per share of Class A common stock and (ii) each holder of Class B common stock will receive a cash payment of $115.28 per share of Class B common stock. The transaction is expected to close in the fourth quarter of 2021 and is subject to customary closing conditions, including approval by the shareholders of the Company and required regulatory approvals. The Company’s shareholders approved the Agreement and Plan of Merger at the Special Meeting of the Shareholders held on July 7, 2021.

Additional information about the transaction can be found in the joint press release issued on April 7, 2021, which is available on the Investor Relations section of the Company’s website at www.centurybank.com.

About Century Bancorp, Inc.

The Company, through its subsidiary bank, Century Bank and Trust Company, a state chartered full service commercial bank, operating twenty-eight full-service branches in the Greater Boston area and Southern New Hampshire, 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.

Cautionary Note Regarding Forward-Looking Statements

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, which includes among other things, the ability of the Company and Eastern to satisfy the conditions set forth in the Agreement and Plan of Merger (as discussed above) and disruptions to the Company’s business during the pendency of the proposed merger (as discussed above). Actual performance and results of operations may differ materially from those projected or suggested in the forward-looking statements due to certain risks and uncertainties, which are included in more detail in the Annual Report on Form 10-K, as updated by Quarterly Reports on Form 10-Q and other filings submitted to the SEC. 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

2021

2020

Cash and Due From Banks

$

101,001

$

136,735

Federal Funds Sold and Interest-bearing Deposits In Other Banks

 

384,454

 

237,265

 
Securities Available-for-Sale (AFS)

 

233,730

 

284,116

 
Securities Held-to-Maturity

 

3,350,561

 

2,509,088

 
Federal Home Loan Bank of Boston stock, at cost

 

11,594

 

13,361

 
Loans:
Commercial & Industrial

 

1,296,399

 

1,314,245

Municipal

 

138,771

 

137,607

Construction & Land Development

 

6,404

 

10,909

Commercial Real Estate

 

813,163

 

789,836

Residential Real Estate

 

471,671

 

448,436

Consumer and Other

 

20,611

 

20,439

Home Equity

 

252,114

 

274,357

 
Total Loans

 

2,999,133

 

2,995,829

Less: Allowance for Loan Losses

 

34,949

 

35,486

 
Net Loans

 

2,964,184

 

2,960,343

 
Bank Premises and Equipment, net

 

40,824

 

39,062

Accrued Interest Receivable

 

13,122

 

13,283

Goodwill

 

2,714

 

2,714

Other Assets

 

161,830

 

162,867

 
Total Assets

$

7,264,014

$

6,358,834

 
Liabilities
Demand Deposits

$

1,183,266

$

1,103,878

 
Interest Bearing Deposits:
Savings and NOW Deposits

 

2,454,287

 

1,728,092

Money Market Accounts

 

2,302,147

 

2,074,108

Time Deposits

 

433,479

 

546,143

 
Total Interest Bearing Deposits

 

5,189,913

 

4,348,343

 
Total Deposits

 

6,373,179

 

5,452,221

 
Borrowed Funds:
Securities Sold Under Agreements to Repurchase

 

248,302

 

232,090

Other Borrowed Funds

 

119,029

 

177,009

 
Total Borrowed Funds

 

367,331

 

409,099

 
Other Liabilities

 

94,866

 

91,022

Subordinated Debentures

 

36,083

 

36,083

 
Total Liabilities

 

6,871,459

 

5,988,425

 
Total Stockholders’ Equity

 

392,555

 

370,409

 
Total Liabilities & Stockholders’ Equity

$

7,264,014

$

6,358,834

 

Century Bancorp, Inc. and Subsidiaries

Consolidated Comparative Statements of Income (unaudited)
For the quarter and six months ended June 30, 2021 and 2020
(in thousands)
 
Quarter ended June 30, Six months ended June 30,

2021

2020

2021

2020

 
Interest Income:
Loans

$

20,888

$

19,848

$

42,493

 

$

42,047

Securities Held-to-Maturity

 

14,113

 

15,222

 

27,230

 

 

30,515

Securities Available-for-Sale

 

557

 

982

 

1,187

 

 

2,675

Federal Funds Sold and Interest-bearing Deposits In Other Banks

 

112

 

68

 

291

 

 

678

 
Total Interest Income

 

35,670

 

36,120

 

71,201

 

 

75,915

 
Interest Expense:
Savings and NOW Deposits

 

753

 

2,118

 

1,871

 

 

5,843

Money Market Accounts

 

2,489

 

3,462

 

5,375

 

 

9,034

Time Deposits

 

1,115

 

3,111

 

2,696

 

 

6,283

Securities Sold Under Agreements to Repurchase

 

98

 

309

 

239

 

 

935

Other Borrowed Funds and Subordinated Debentures

 

1,224

 

1,302

 

2,462

 

 

2,801

 
Total Interest Expense

 

5,679

 

10,302

 

12,643

 

 

24,896

 
Net Interest Income

 

29,991

 

25,818

 

58,558

 

 

51,019

 
Provision(Credit) For Loan Losses

 

 

1,700

 

(550

)

 

2,775

 
Net Interest Income After
Provision for Loan Losses

 

29,991

 

24,118

 

59,108

 

 

48,244

 
Other Operating Income:
Service Charges on Deposit Accounts

 

2,171

 

2,023

 

4,389

 

 

4,319

Lockbox Fees

 

966

 

924

 

1,962

 

 

1,854

Other Income

 

969

 

1,094

 

1,958

 

 

2,178

 
Total Other Operating Income

 

4,106

 

4,041

 

8,309

 

 

8,351

 
Operating Expenses:
Salaries and Employee Benefits

 

12,302

 

10,287

 

24,552

 

 

21,658

Occupancy

 

1,591

 

1,456

 

3,293

 

 

2,971

Equipment

 

931

 

962

 

1,880

 

 

1,799

Other

 

6,188

 

4,337

 

12,158

 

 

8,787

 
Total Operating Expenses

 

21,012

 

17,042

 

41,883

 

 

35,215

 
Income Before Income Taxes

 

13,085

 

11,117

 

25,534

 

 

21,380

 
Income Tax Expense

 

2,262

 

1,061

 

3,941

 

 

1,658

 
Net Income

$

10,823

$

10,056

$

21,593

 

$

19,722

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

June 30,

June 30,

Assets

2021

2020

Cash and Due From Banks

$

129,392

 

$

76,264

 

Federal Funds Sold and Interest-Bearing Deposits in Other Banks

 

572,623

 

 

220,008

 

 
Securities Available-For-Sale (AFS)

 

278,200

 

 

282,092

 

Securities Held-to-Maturity (HTM)

 

3,066,945

 

 

2,335,136

 

 
Total Loans

 

2,988,205

 

 

2,577,120

 

Less: Allowance for Loan Losses

 

35,500

 

 

30,621

 

 
Net Loans

 

2,952,705

 

 

2,546,499

 

 
Unrealized (Loss)Gain on Securities AFS and HTM Transfers

 

(602

)

 

(3,248

)

Bank Premises and Equipment

 

39,992

 

 

35,895

 

Accrued Interest Receivable

 

13,924

 

 

12,653

 

Goodwill

 

2,714

 

 

2,714

 

Other Assets

 

172,922

 

 

163,547

 

 
Total Assets

$

7,228,815

 

$

5,671,560

 

 
Liabilities
Demand Deposits

$

1,206,719

 

$

841,339

 

 
Interest Bearing Deposits:
Savings and NOW Deposits

 

2,291,252

 

 

1,839,771

 

Money Market Accounts

 

2,345,499

 

 

1,530,442

 

Time Deposits

 

486,202

 

 

598,669

 

Total Interest Bearing Deposits

 

5,122,953

 

 

3,968,882

 

 
Total Deposits

 

6,329,672

 

 

4,810,221

 

 
Borrowed Funds:
Securities Sold Under Agreements to Repurchase

 

239,765

 

 

226,518

 

Other Borrowed Funds

 

144,038

 

 

169,258

 

 
Total Borrowed Funds

 

383,803

 

 

395,776

 

 
Other Liabilities

 

97,464

 

 

87,589

 

Subordinated Debentures

 

36,083

 

 

36,083

 

 
Total Liabilities

 

6,847,022

 

 

5,329,669

 

 
Total Stockholders’ Equity

 

381,793

 

 

341,891

 

 
Total Liabilities & Stockholders’ Equity

$

7,228,815

 

$

5,671,560

 

 
Total Average Earning Assets – QTD

$

7,008,472

 

$

5,635,101

 

 
Total Average Earning Assets – YTD

$

6,905,973

 

$

5,414,356

 

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

June 30,

June 30,

2021

2020

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

$

1.94

 

$

1.81

 

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

$

3.88

 

$

3.54

 

Return on average assets, year-to-date

 

0.60

%

 

0.70

%

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

 

11.41

%

 

11.60

%

Net interest margin (taxable equivalent), quarter

 

1.81

%

 

1.97

%

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

 

1.81

%

 

2.04

%

Efficiency ratio, Non-GAAP (1)

 

59.7

%

 

55.7

%

Book value per share

$

70.50

 

$

63.26

 

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

$

70.02

 

$

62.77

 

Capital / assets

 

5.40

%

 

5.92

%

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

 

5.37

%

 

5.88

%

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

 

5,567,909

 

 

5,567,909

 

 
Shares outstanding Class A

 

3,661,569

 

 

3,652,469

 

Shares outstanding Class B

 

1,906,340

 

 

1,915,440

 

Total shares outstanding at period end

 

5,567,909

 

 

5,567,909

 

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

 

1.17

%

 

1.16

%

Nonaccrual loans

$

1,270

 

$

1,538

 

Nonperforming assets

$

1,270

 

$

1,538

 

Loans 90 days past due and still accruing

$

 

$

 

Accruing troubled debt restructures

$

2,079

 

$

2,271

 

Net recoveries, year-to-date

$

(13

)

$

(156

)

 
Leverage ratio

 

6.13

%

 

6.92

%

Common equity tier 1 risk weighted capital ratio

 

11.22

%

 

11.66

%

Tier 1 risk weighted capital ratio

 

12.17

%

 

12.76

%

Total risk weighted capital ratio

 

13.12

%

 

13.77

%

Total risk weighted assets

$

3,688,146

 

$

3,196,338

 

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

$

41,883

 

$

35,215

 

 
Net interest income

$

58,558

 

$

51,019

 

Total other operating income

 

8,309

 

 

8,351

 

Tax equivalent adjustment

 

3,275

 

 

3,904

 

Total income(denominator)

$

70,142

 

$

63,274

 

 
Efficiency ratio – Non-GAAP

 

59.7

%

 

55.7

%

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

$

392,555

 

$

352,202

 

Less: goodwill

 

2,714

 

 

2,714

 

Tangible stockholders’ equity(numerator)

$

389,841

 

$

349,488

 

 
Total shares outstanding at period end(denominator)

 

5,567,909

 

 

5,567,909

 

 
Tangible book value per share – Non-GAAP

$

70.02

 

$

62.77

 

Book value per share – GAAP

$

70.50

 

$

63.26

 

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

$

392,555

 

$

352,202

 

Less: goodwill

 

2,714

 

 

2,714

 

Tangible stockholders’ equity(numerator)

$

389,841

 

$

349,488

 

 
Total assets

$

7,264,014

 

$

5,946,994

 

Less: goodwill

 

2,714

 

 

2,714

 

Tangible assets(denominator)

$

7,261,300

 

$

5,944,280

 

 
Tangible capital / tangible assets – Non-GAAP

 

5.37

%

 

5.88

%

Capital / assets – GAAP

 

5.40

%

 

5.92

%

 



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