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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: October 9, 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 October 9, 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 third quarter ended September 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 October 9, 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: October 10, 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 THIRD QUARTER OF 2018, UP 19.4%; ASSET GROWTH TO $4.9 BB; REGULAR DIVIDEND DECLARED

Medford, MA, October 9, 2018 - Century Bancorp, Inc. (NASDAQ:CNBKA) (www.centurybank.com) (“the Company”) today announced net income of $26,288,000 for the nine months ended September 30, 2018, or $4.72 per Class A share diluted, an increase of 18.0% compared to net income of $22,276,000, or $4.00 per Class A share diluted, for the same period a year ago. Total assets increased 1.8% from $4.79 billion at December 31, 2017 to $4.87 billion at September 30, 2018. For the quarter ended September 30, 2018, net income totaled $9,581,000 or $1.72 per Class A share diluted, an increase of 19.4% compared to net income of $8,023,000, or $1.44 per Class A share diluted, for the same period a year ago.

Net interest income totaled $68.9 million for the nine months ended September 30, 2018 compared to $63.9 million for the same period in 2017. The 7.8% increase in net interest income for the period is primarily due to an increase in average earning assets. The net interest margin decreased from 2.24% on a fully taxable equivalent basis in 2017 to 2.19% for the same period in 2018. This was primarily the result of a decrease in the federal corporate tax rate from 34% to 21% as well as prepayment penalties collected during the second quarter of 2017. The decrease in the tax rate results in a lower tax equivalent yield on tax-exempt assets. The average balances of earning assets increased by 3.8% combined with an average yield increase of 0.24%, resulting in an increase in interest income of $15.6 million. The average balance of interest bearing liabilities increased 2.7% combined with an average yield increase of 0.36%, resulting in an increase in interest expense of $10.7 million.

The provision for loan losses decreased by $440,000 from $1,340,000 for the nine months ended September 30, 2017 to $900,000 for the same period in 2018, primarily as a result of net recoveries of $1.4 million offset by changes in qualitative factors.

The Company’s effective tax rate decreased from 5.6% for the first nine months of 2017 to 4.6% for the same period in 2018. This was primarily the result of a decrease in the federal tax rate from 34% to 21% as a result of the Tax Cuts and Jobs Act, offset somewhat by an increase in taxable income.

 

-more-


At September 30, 2018, total equity was $286.9 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 7.03% at September 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 September 30, 2018 was $51.52 per share compared to $46.75 at December 31, 2017.

The Company’s allowance for loan losses was $28.5 million or 1.26% of loans outstanding at September 30, 2018, compared to $26.3 million or 1.21% of loans outstanding at December 31, 2017, and $25.7 million or 1.22% of loans outstanding at September 30, 2017. The ratio of the allowance for loan losses to loans outstanding has increased, during the third quarter of 2018, primarily as a result of changes in qualitative factors related to general economic factors pertaining to certain industries. Non-performing assets totaled $3.7 million at September 30, 2018, compared to $1.7 million at December 31, 2017 and $1.6 million at September 30, 2017. Nonperforming loans increased mainly as a result of one residential real estate loan.

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, 2018 to stockholders of record on November 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

   September 30,
2018
     December 31,
2017
 

Cash and Due From Banks

   $ 68,945      $ 77,199  

Federal Funds Sold and Interest-bearing Deposits In Other Banks

     142,345        279,231  

Securities Available-for-Sale (AFS)

     368,119        397,475  

Securities Held-to-Maturity

     1,875,752        1,701,233  

Federal Home Loan Bank of Boston stock, at cost

     22,743        21,779  

Loans:

     

Commercial & Industrial

     783,960        763,807  

Municipal

     94,532        106,599  

Construction & Land Development

     12,434        18,931  

Commercial Real Estate

     730,265        732,491  

Residential Real Estate

     335,114        287,731  

Consumer and Other

     21,216        19,040  

Home Equity

     283,818        247,345  
  

 

 

    

 

 

 

Total Loans

     2,261,339        2,175,944  

Less: Allowance for Loan Losses

     28,545        26,255  
  

 

 

    

 

 

 

Net Loans

     2,232,794        2,149,689  

Bank Premises and Equipment, net

     24,023        23,527  

Accrued Interest Receivable

     12,878        11,179  

Goodwill

     2,714        2,714  

Other Assets

     120,110        121,546  
  

 

 

    

 

 

 

Total Assets

   $ 4,870,423      $ 4,785,572  
  

 

 

    

 

 

 
Liabilities      

Demand Deposits

   $ 731,095      $ 736,020  

Interest Bearing Deposits:

     

Savings and NOW Deposits

     1,359,334        1,367,358  

Money Market Accounts

     1,294,092        1,188,228  

Time Deposits

     579,886        625,361  
  

 

 

    

 

 

 

Total Interest Bearing Deposits

     3,233,312        3,180,947  
  

 

 

    

 

 

 

Total Deposits

     3,964,407        3,916,967  

Borrowed Funds:

     

Securities Sold Under Agreements to Repurchase

     140,490        158,990  

Other Borrowed Funds

     372,606        347,778  
  

 

 

    

 

 

 

Total Borrowed Funds

     513,096        506,768  

Other Liabilities

     69,960        65,457  

Subordinated Debentures

     36,083        36,083  
  

 

 

    

 

 

 

Total Liabilities

     4,583,546        4,525,275  

Total Stockholders' Equity

     286,877        260,297  
  

 

 

    

 

 

 

Total Liabilities & Stockholders' Equity

   $ 4,870,423      $ 4,785,572  
  

 

 

    

 

 

 


Century Bancorp, Inc. and Subsidiaries

Consolidated Comparative Statements of Income (unaudited)

For the quarter and nine months ended September 30, 2018 and 2017

(in thousands)

 

     Quarter ended
September 30,
     Nine-months ended
September 30,
 
     2018      2017      2018      2017  

Interest Income:

           

Loans

   $ 20,167      $ 16,658      $ 57,613      $ 48,668  

Securities Held-to-Maturity

     11,507        9,447        32,930        28,806  

Securities Available-for-Sale

     2,500        1,809        6,821        5,143  

Federal Funds Sold and Interest-bearing Deposits In Other Banks

     591        607        2,239        1,349  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Interest Income

     34,765        28,521        99,603        83,966  

Interest Expense:

           

Savings and NOW Deposits

     2,972        1,727        7,778        4,454  

Money Market Accounts

     3,652        1,395        9,039        3,903  

Time Deposits

     2,571        2,095        7,465        5,648  

Securities Sold Under Agreements to Repurchase

     288        129        657        352  

Other Borrowed Funds and Subordinated Debentures

     2,078        1,822        5,793        5,695  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Interest Expense

     11,561        7,168        30,732        20,052  
  

 

 

    

 

 

    

 

 

    

 

 

 

Net Interest Income

     23,204        21,353        68,871        63,914  

Provision For Loan Losses

     —          450        900        1,340  
  

 

 

    

 

 

    

 

 

    

 

 

 

Net Interest Income After Provision for Loan Losses

     23,204        20,903        67,971        62,574  

Other Operating Income

           

Service Charges on Deposit Accounts

     2,137        2,089        6,268        6,179  

Lockbox Fees

     892        735        2,304        2,367  

Net Gain on Sales of Loans

     —          —          —          370  

Net Gain on Sales of Securities

     105        47        302        47  

Other Income

     1,035        1,071        3,210        3,179  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Other Operating Income

     4,169        3,942        12,084        12,142  

Operating Expenses

           

Salaries and Employee Benefits

     10,570        9,933        32,331        31,097  

Occupancy

     1,481        1,427        4,579        4,663  

Equipment

     781        782        2,355        2,245  

FDIC Assessment

     368        340        1,110        1,218  

Other

     4,148        3,723        12,133        11,904  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Operating Expenses

     17,348        16,205        52,508        51,127  
  

 

 

    

 

 

    

 

 

    

 

 

 

Income Before Income Taxes

     10,025        8,640        27,547        23,589  

Income Tax Expense

     444        617        1,259        1,313  
  

 

 

    

 

 

    

 

 

    

 

 

 

Net Income

   $ 9,581      $ 8,023      $ 26,288      $ 22,276  
  

 

 

    

 

 

    

 

 

    

 

 

 


Century Bancorp, Inc. and Subsidiaries

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

(in thousands)

 

Assets

   September 30,
2018
    September 30,
2017
 

Cash and Due From Banks

   $ 71,034     $ 72,206  

Federal Funds Sold and Interest-Bearing Deposits in Other Banks

     171,773       177,233  

Securities Available-For-Sale (AFS)

     406,022       481,550  

Securities Held-to-Maturity (HTM)

     1,816,745       1,739,189  

Total Loans

     2,206,194       2,036,198  

Less: Allowance for Loan Losses

     27,235       25,089  
  

 

 

   

 

 

 

Net Loans

     2,178,959       2,011,109  

Unrealized (Loss)Gain on Securities AFS and HTM Transfers

     (4,154     (6,750

Bank Premises and Equipment

     23,481       23,404  

Accrued Interest Receivable

     11,608       10,261  

Goodwill

     2,714       2,714  

Other Assets

     122,502       118,359  
  

 

 

   

 

 

 

Total Assets

   $ 4,800,684     $ 4,629,275  
  

 

 

   

 

 

 
Liabilities     

Demand Deposits

   $ 718,215     $ 676,655  

Interest Bearing Deposits:

    

Savings and NOW Deposits

     1,495,464       1,479,433  

Money Market Accounts

     1,208,547       1,100,304  

Time Deposits

     587,742       550,996  
  

 

 

   

 

 

 

Total Interest Bearing Deposits

     3,291,753       3,130,733  
  

 

 

   

 

 

 

Total Deposits

     4,009,968       3,807,388  

Borrowed Funds:

    

Securities Sold Under Agreements to Repurchase

     149,970       193,519  

Other Borrowed Funds

     262,397       281,097  
  

 

 

   

 

 

 

Total Borrowed Funds

     412,367       474,616  

Other Liabilities

     69,404       60,274  

Subordinated Debentures

     36,083       36,083  
  

 

 

   

 

 

 

Total Liabilities

     4,527,822       4,378,361  

Total Stockholders' Equity

     272,862       250,914  
  

 

 

   

 

 

 

Total Liabilities & Stockholders' Equity

   $ 4,800,684     $ 4,629,275  
  

 

 

   

 

 

 

Total Average Earning Assets - QTD

   $ 4,625,880     $ 4,378,433  
  

 

 

   

 

 

 

Total Average Earning Assets - YTD

   $ 4,600,734     $ 4,434,170  
  

 

 

   

 

 

 


Century Bancorp, Inc. and Subsidiaries

Consolidated Selected Key Financial Information (unaudited)

(in thousands, except share data)

 

     September 30,
2018
    September 30,
2017
 
Performance Measures:     

Earnings per average Class A share, diluted, quarter

   $ 1.72     $ 1.44  

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

   $ 4.72     $ 4.00  

Return on average assets, year-to-date

     0.73     0.64

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

     12.88     11.87

Net interest margin (taxable equivalent), quarter

     2.19     2.26

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

     2.19     2.24

Efficiency ratio, year-to-date - Non-GAAP (1)

     60.0     59.1

Book value per share

   $ 51.52     $ 47.17  

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

   $ 51.04     $ 46.68  

Capital / assets

     5.89     5.76

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

     5.84     5.71

Common Share Data:

    

Average Class A shares outstanding, diluted, quarter and year-to-date

     5,567,909       5,567,909  

Shares outstanding Class A

     3,608,329       3,605,829  

Shares outstanding Class B

     1,959,580       1,962,080  
  

 

 

   

 

 

 

Total shares outstanding at period end

     5,567,909       5,567,909  
  

 

 

   

 

 

 
Asset Quality and Other Data:     

Allowance for loan losses / loans

     1.26     1.22

Nonaccrual loans

   $ 3,729     $ 1,598  

Nonperforming assets

   $ 3,729     $ 1,598  

Loans 90 days past due and still accruing

   $ 471     $ —    

Accruing troubled debt restructures

   $ 2,598     $ 2,843  

Net charge-offs (recoveries), year-to-date

   $ (1,390   $ 48  

Leverage ratio

     7.03     6.56

Common equity tier 1 risk weighted capital ratio

     11.14     10.53

Tier 1 risk weighted capital ratio

     12.42     11.81

Total risk weighted capital ratio

     13.46     12.83

Total risk weighted assets

   $ 2,733,491     $ 2,534,210  

(1) Non-GAAP Financial Measures are reconciled in the following tables:

    

Calculation of Efficiency ratio:

    

Total operating expenses (numerator)

   $ 52,508     $ 51,127  
  

 

 

   

 

 

 

Net interest income

   $ 68,871     $ 63,914  

Total other operating income

     12,084       12,142  

Tax equivalent adjustment

     6,547       10,383  
  

 

 

   

 

 

 

Total income (denominator)

   $ 87,502     $ 86,439  
  

 

 

   

 

 

 

Efficiency ratio, year - Non-GAAP

     60.0     59.1
  

 

 

   

 

 

 

Calculation of tangible book value per share:

    

Total stockholders' equity

   $ 286,877     $ 262,648  

Less: goodwill

     2,714       2,714  
  

 

 

   

 

 

 

Tangible stockholders' equity (numerator)

   $ 284,163     $ 259,934  
  

 

 

   

 

 

 

Total shares outstanding at period end (denominator)

     5,567,909       5,567,909  

Tangible book value per share - Non-GAAP

   $ 51.04     $ 46.68  
  

 

 

   

 

 

 

Book value per share - GAAP

   $ 51.52     $ 47.17  
  

 

 

   

 

 

 

Calculation of tangible capital / tangible assets:

    

Total stockholders' equity

   $ 286,877     $ 262,648  

Less: goodwill

     2,714       2,714  
  

 

 

   

 

 

 

Tangible stockholders' equity (numerator)

   $ 284,163     $ 259,934  
  

 

 

   

 

 

 

Total assets

   $ 4,870,423     $ 4,558,072  

Less: goodwill

     2,714       2,714  
  

 

 

   

 

 

 

Tangible assets (denominator)

   $ 4,867,709     $ 4,555,358  
  

 

 

   

 

 

 

Tangible capital / tangible assets - Non-GAAP

     5.84     5.71
  

 

 

   

 

 

 

Capital / assets - GAAP

     5.89     5.76
  

 

 

   

 

 

 
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