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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 9, 2019

 

 

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))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange

on which registered

Class A Common Stock, $1.00 par value   CNBKA   Nasdaq Global Market

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 9, 2019, 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, 2019 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 9, 2019.


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

Chief Financial Officer and Treasurer

 

Dated: July 10, 2019

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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

[email protected]

Phone:    781-393-4630
Fax:    781-393-4071

CENTURY BANCORP, INC. ANNOUNCES INCREASED EARNINGS FOR Q2 2019; RECORD YTD

EARNINGS, UP 13%; ASSET GROWTH TO $5.2 BB; REGULAR DIVIDEND DECLARED

Medford, MA, July 9, 2019 – Century Bancorp, Inc. (NASDAQ:CNBKA) (www.centurybank.com) (“the Company”) today announced net income of $18,884,000 for the six months ended June 30, 2019, or $3.39 per Class A share diluted, an increase of 13.0% compared to net income of $16,707,000, or $3.00 per Class A share diluted, for the same period a year ago. Total assets increased 0.7% from $5.16 billion at December 31, 2018 to $5.20 billion at June 30, 2019. For the quarter ended June 30, 2019, net income totaled $9,466,000 or $1.70 per Class A share diluted, an increase of 5.2% compared to net income of $8,998,000, or $1.62 per Class A share diluted, for the same period a year ago.

Net interest income totaled $46.7 million for the six months ended June 30, 2019 compared to $45.7 million for the same period in 2018. The 2.2% increase in net interest income for the period is primarily due to an increase in average earning assets. The net interest margin decreased from 2.19% on a fully taxable equivalent basis in 2018 to 2.09% for the same period in 2019. This was primarily the result of increased rates paid on deposits. The average balances of earning assets increased by 8.1% combined with an average yield increase of 0.36%, resulting in an increase in interest income of $13.9 million. The average balance of interest bearing liabilities increased 7.6% combined with an average cost of funds increase of 0.57%, resulting in an increase in interest expense of $12.9 million.

The Company’s effective tax rate decreased from 4.7% for the first six months of 2018 to 0.8% for the same period in 2019. This was primarily as a result of a reduction in tax accruals related to sequestration of the refundable portion of our alternative minimum tax (AMT) credit carryforward. 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. Therefore, the full amount of the AMT credit carryover will be refunded to the Company.

 

-more-


At June 30, 2019, total equity was $318.9 million compared to $300.4 million at December 31, 2018. The Company’s equity increased primarily as a result of earnings, offset somewhat by dividends paid.

The Company’s leverage ratio stood at 7.07% at June 30, 2019, compared to 6.91% at December 31, 2018. 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, 2019 was $57.28 per share compared to $53.96 at December 31, 2018.

The Company’s allowance for loan losses was $29.1 million or 1.26% of loans outstanding at June 30, 2019 compared to $28.5 million or 1.25% of loans outstanding at December 31, 2018, and $27.1 million or 1.22% of loans outstanding at June 30, 2018. The ratio of the allowance for loan losses to loans outstanding has increased from the same period last year, primarily as a result of changes in qualitative factors related to general economic factors pertaining to certain industries. Non-performing assets totaled $5.0 million at June 30, 2019, compared to $3.5 million at December 31, 2018, and $1.5 million at June 30, 2018. Nonperforming assets increased from the same period last year, mainly as a result of one residential real estate property classified as other real estate owned.

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, 2019 to stockholders of record on August 1, 2019.

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,
2019
     December 31,
2018
 

Cash and Due From Banks

   $ 69,317      $ 89,540  

Federal Funds Sold and Interest-bearing Deposits In Other Banks

     181,409        252,963  

Securities Available-for-Sale (AFS)

     293,051        338,327  

Securities Held-to-Maturity

     2,178,568        2,046,647  

Federal Home Loan Bank of Boston stock, at cost

     21,139        17,974  

Loans:

     

Commercial & Industrial

     764,492        761,775  

Municipal

     95,682        97,140  

Construction & Land Development

     13,751        13,628  

Commercial Real Estate

     758,242        750,362  

Residential Real Estate

     346,585        348,250  

Consumer and Other

     22,609        22,083  

Home Equity

     311,210        292,340  
  

 

 

    

 

 

 

Total Loans

     2,312,571        2,285,578  

Less: Allowance for Loan Losses

     29,070        28,543  
  

 

 

    

 

 

 

Net Loans

     2,283,501        2,257,035  

Bank Premises and Equipment, net

     25,296        23,921  

Accrued Interest Receivable

     14,655        14,406  

Goodwill

     2,714        2,714  

Other Assets

     130,851        120,408  
  

 

 

    

 

 

 

Total Assets

   $ 5,200,501      $ 5,163,935  
  

 

 

    

 

 

 

Liabilities

     

Demand Deposits

   $ 765,127      $ 813,478  

Interest Bearing Deposits:

     

Savings and NOW Deposits

     1,668,802        1,707,019  

Money Market Accounts

     1,172,283        1,325,888  

Time Deposits

     489,948        560,579  
  

 

 

    

 

 

 

Total Interest Bearing Deposits

     3,331,033        3,593,486  
  

 

 

    

 

 

 

Total Deposits

     4,096,160        4,406,964  

Borrowed Funds:

     

Securities Sold Under Agreements to Repurchase

     219,510        154,240  

Other Borrowed Funds

     451,419        202,378  
  

 

 

    

 

 

 

Total Borrowed Funds

     670,929        356,618  

Other Liabilities

     78,392        63,831  

Subordinated Debentures

     36,083        36,083  
  

 

 

    

 

 

 

Total Liabilities

     4,881,564        4,863,496  

Total Stockholders’ Equity

     318,937        300,439  
  

 

 

    

 

 

 

Total Liabilities & Stockholders’ Equity

   $ 5,200,501      $ 5,163,935  
  

 

 

    

 

 

 


Century Bancorp, Inc. and Subsidiaries

Consolidated Comparative Statements of Income (unaudited)

For the quarter and six months ended June 30, 2019 and 2018

(in thousands)

 

     Quarter ended June 30,      Six months ended June 30,  
     2019      2018      2019      2018  

Interest Income:

           

Loans

   $ 21,680      $ 19,179      $ 42,989      $ 37,446  

Securities Held-to-Maturity

     14,595        11,135        28,383        21,423  

Securities Available-for-Sale

     2,490        2,329        5,121        4,321  

Federal Funds Sold and Interest-bearing Deposits In Other Banks

     927        765        2,276        1,648  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Interest Income

     39,692        33,408        78,769        64,838  

Interest Expense:

           

Savings and NOW Deposits

     5,877        2,583        11,343        4,806  

Money Market Accounts

     5,412        2,934        10,755        5,387  

Time Deposits

     2,893        2,531        5,686        4,894  

Securities Sold Under Agreements to Repurchase

     490        188        875        369  

Other Borrowed Funds and Subordinated Debentures

     1,770        1,973        3,422        3,715  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Interest Expense

     16,442        10,209        32,081        19,171  
  

 

 

    

 

 

    

 

 

    

 

 

 

Net Interest Income

     23,250        23,199        46,688        45,667  

Provision For Loan Losses

     250        450        625        900  
  

 

 

    

 

 

    

 

 

    

 

 

 

Net Interest Income After

           

Provision for Loan Losses

     23,000        22,749        46,063        44,767  

Other Operating Income

           

Service Charges on Deposit Accounts

     2,282        2,064        4,491        4,131  

Lockbox Fees

     992        621        2,081        1,412  

Net Gain on Sales of Loans

     139        —          154        —    

Net Gain on Sales of Securities

     —          —          —          197  

Other Income

     1,584        1,037        2,698        2,175  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Other Operating Income

     4,997        3,722        9,424        7,915  

Operating Expenses

           

Salaries and Employee Benefits

     10,916        10,536        21,951        21,761  

Occupancy

     1,522        1,461        3,223        3,098  

Equipment

     795        780        1,578        1,574  

FDIC Assessment

     349        359        722        742  

Other

     4,682        4,023        8,980        7,985  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Operating Expenses

     18,264        17,159        36,454        35,160  
  

 

 

    

 

 

    

 

 

    

 

 

 

Income Before Income Taxes

     9,733        9,312        19,033        17,522  

Income Tax Expense

     267        314        149        815  
  

 

 

    

 

 

    

 

 

    

 

 

 

Net Income

   $ 9,466      $ 8,998      $ 18,884      $ 16,707  
  

 

 

    

 

 

    

 

 

    

 

 

 


Century Bancorp, Inc. and Subsidiaries

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

(in thousands)

 

Assets

   June 30,
2019
    June 30,
2018
 

Cash and Due From Banks

   $ 74,948     $ 71,146  

Federal Funds Sold and Interest-Bearing Deposits in Other Banks

     189,568       199,454  

Securities Available-For-Sale (AFS)

     340,664       404,032  

Securities Held-to-Maturity (HTM)

     2,121,043       1,795,422  

Total Loans

     2,306,165       2,189,044  

Less: Allowance for Loan Losses

     28,864       26,743  
  

 

 

   

 

 

 

Net Loans

     2,277,301       2,162,301  

Unrealized (Loss) Gain on Securities AFS and HTM Transfers

     (3,560     (4,369

Bank Premises and Equipment

     24,483       23,290  

Accrued Interest Receivable

     14,167       11,189  

Goodwill

     2,714       2,714  

Other Assets

     134,524       123,101  
  

 

 

   

 

 

 

Total Assets

   $ 5,175,852     $ 4,788,280  
  

 

 

   

 

 

 

Liabilities

    

Demand Deposits

   $ 759,653     $ 708,858  

Interest Bearing Deposits:

    

Savings and NOW Deposits

     1,834,278       1,506,828  

Money Market Accounts

     1,270,952       1,196,783  

Time Deposits

     509,710       601,207  
  

 

 

   

 

 

 

Total Interest Bearing Deposits

     3,614,940       3,304,818  
  

 

 

   

 

 

 

Total Deposits

     4,374,593       4,013,676  

Borrowed Funds:

    

Securities Sold Under Agreements to Repurchase

     181,252       149,139  

Other Borrowed Funds

     195,318       252,054  
  

 

 

   

 

 

 

Total Borrowed Funds

     376,570       401,193  

Other Liabilities

     79,440       69,242  

Subordinated Debentures

     36,083       36,083  
  

 

 

   

 

 

 

Total Liabilities

     4,866,686       4,520,194  

Total Stockholders’ Equity

     309,166       268,086  
  

 

 

   

 

 

 

Total Liabilities & Stockholders’ Equity

   $ 5,175,852     $ 4,788,280  
  

 

 

   

 

 

 

Total Average Earning Assets – QTD

   $ 4,965,815     $ 4,622,577  
  

 

 

   

 

 

 

Total Average Earning Assets – YTD

   $ 4,957,440     $ 4,587,952  
  

 

 

   

 

 

 


Century Bancorp, Inc. and Subsidiaries

Consolidated Selected Key Financial Information (unaudited)

(in thousands, except share data)

 

     June 30,
2019
    June 30,
2018
 

Performance Measures:

    

Earnings per average Class A share, diluted, quarter

   $ 1.70     $ 1.62  

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

   $ 3.39     $ 3.00  

Return on average assets, year-to-date

     0.74     0.70

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

     12.32     12.57

Net interest margin (taxable equivalent), quarter

     2.06     2.20

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

     2.09     2.19

Efficiency ratio, quarter – Non-GAAP (1)

     59.8     60.8

Book value per share

   $ 57.28     $ 49.84  

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

   $ 56.79     $ 49.35  

Capital / assets

     6.13     5.67

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

     6.08     5.61

Common Share Data:

    

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

     5,567,909       5,567,909  

Shares outstanding Class A

     3,620,449       3,608,029  

Shares outstanding Class B

     1,947,460       1,959,880  
  

 

 

   

 

 

 

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

   $ 2,899     $ 1,456  

Nonperforming assets

   $ 4,999     $ 1,456  

Loans 90 days past due and still accruing

   $ —       $ —    

Accruing troubled debt restructures

   $ 2,520     $ 5,295  

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

   $ 98     $ 11  

Leverage ratio

     7.07     6.85

Common equity tier 1 risk weighted capital ratio

     11.79     10.90

Tier 1 risk weighted capital ratio

     13.03     12.19

Total risk weighted capital ratio

     14.06     13.19

Total risk weighted assets

   $ 2,813,302     $ 2,709,841  

 

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

 

Calculation of Efficiency ratio:

    

Total operating expenses (numerator)

   $ 36,296     $ 35,160  
  

 

 

   

 

 

 

Net interest income

   $ 46,688     $ 45,667  

Total other operating income

     9,424       7,915  

Tax equivalent adjustment

     4,576       4,249  
  

 

 

   

 

 

 

Total income (denominator)

   $ 60,688     $ 57,831  
  

 

 

   

 

 

 

Efficiency ratio, quarter – Non-GAAP

     59.8     60.8
  

 

 

   

 

 

 

Calculation of tangible book value per share:

    

Total stockholders’ equity

   $ 318,937     $ 277,481  

Less: goodwill

     2,714       2,714  
  

 

 

   

 

 

 

Tangible stockholders’ equity (numerator)

   $ 316,223     $ 274,767  
  

 

 

   

 

 

 

Total shares outstanding at period end (denominator)

     5,567,909       5,567,909  

Tangible book value per share – Non-GAAP

   $ 56.79     $ 49.35  
  

 

 

   

 

 

 

Book value per share – GAAP

   $ 57.28     $ 49.84  
  

 

 

   

 

 

 

Calculation of tangible capital / tangible assets:

    

Total stockholders’ equity

   $ 318,937     $ 277,481  

Less: goodwill

     2,714       2,714  
  

 

 

   

 

 

 

Tangible stockholders’ equity (numerator)

   $ 316,223     $ 274,767  
  

 

 

   

 

 

 

Total assets

   $ 5,200,501     $ 4,898,099  

Less: goodwill

     2,714       2,714  
  

 

 

   

 

 

 

Tangible assets (denominator)

   $ 5,197,787     $ 4,895,385  
  

 

 

   

 

 

 

Tangible capital / tangible assets – Non-GAAP

     6.08     5.61
  

 

 

   

 

 

 

Capital / assets – GAAP

     6.13     5.67
  

 

 

   

 

 

 
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