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Section 1: 8-K (8-K)

8-K

 

 

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.  ☐

 

 

 


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.


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.

 

CENTURY BANCORP, INC.
/s/ William P. Hornby
William P. Hornby, CPA
Chief Financial Officer and Treasurer

Dated: July 11, 2018

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Section 2: EX-99.1 (EX-99.1)

EX-99.1

Exhibit 99.1

 

LOGO

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.


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)

 

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  
  

 

 

    

 

 

 


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)

 

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  
  

 

 

   

 

 

 


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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