Form 8-K CENTURY BANCORP INC For: Jul 10

 

 

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report: July 10, 2018

 

 

Century Bancorp, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Massachusetts		0-15752		04-2498617
(State or other jurisdiction of incorporation)		(Commission File No.)		(IRS Employer Identification No.)

 

400 Mystic Avenue Medford, MA		02155
(Address of principal executive offices)		(Zip Code)

(781) 391-4000

(Registrant’s telephone number, including area code)

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933(§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 

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Item 2.02 Results of Operations and Financial Condition

The following information is furnished under Item 2.02 – “Results of Operations and Financial Condition” and such information, including the exhibits attached hereto, shall not be deemed “filed” for any purpose, including for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section. The information in this Current Report on Form 8-K shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act regardless of any general incorporation language in such filing.

On July 10, 2018, Century Bancorp, Inc. issued a press release, a copy of which is attached hereto as Exhibit 99.1 and incorporated herein by reference, announcing its earnings for the second quarter ended June 30, 2018 and the declaration of a regular quarterly dividend on Century Bancorp Inc.’s Class A and Class B common stock.

Item 9.01 Financial Statements and Exhibits

 

(d)

Exhibits

 

99.1

Century Bancorp, Inc. press release dated July 10, 2018.

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SIGNATURES

Pursuant to the requirement of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Dated: July 11, 2018

Exhibit 99.1

 

NEWS RELEASE

FOR IMMEDIATE RELEASE

 

Contact:

William P. Hornby, CPA

[email protected]

 

Phone:

781-393-4630

 

Fax:	781-393-4071

CENTURY BANCORP, INC. ANNOUNCES RECORD EARNINGS FOR THE FIRST SIX MONTHS OF

2018, UP 17.2%; ASSET GROWTH TO RECORD $4.9 BB; REGULAR DIVIDEND DECLARED

Medford, MA, July 10, 2018 – 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.

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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.

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Century Bancorp, Inc. and Subsidiaries

Consolidated Comparative Statements of Condition (unaudited)

(in thousands)

 

Assets		June 30, 2018				December 31, 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

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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

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Century Bancorp, Inc. and Subsidiaries

Consolidated Year-to-Date Average Comparative Statements of Condition (unaudited)

(in thousands)

 

Assets		June 30, 2018				June 30, 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

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Century Bancorp, Inc. and Subsidiaries

Consolidated Selected Key Financial Information (unaudited)

(in thousands, except share data)

 

		June 30, 2018				June 30, 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	%

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