Century Bancorp, Inc. Announces Record Earnings for Q3 2021, Up 7.8%

Rhea-AI Summary

Century Bancorp, Inc. (NASDAQ:CNBKA) reported a net income of $33.3 million for the nine months ended September 30, 2021, reflecting an 8.9% increase year-over-year. Total assets grew 12.1% to $7.13 billion. For Q3 2021, net income was $11.7 million, up 7.8% from the previous year. The company's net interest income rose 13.5% to $88.9 million, despite a decrease in the net interest margin to 1.81%. The firm is set to merge with Eastern Bankshares, Inc. in Q4 2021, with a total transaction value of approximately $642 million.

Positive

• Net income increased 8.9% to $33.3 million for the nine months ended September 30, 2021.
• Total assets rose 12.1% to $7.13 billion.
• Net interest income grew 13.5% to $88.9 million.

Negative

• Decrease in net interest margin from 2.01% to 1.81%.

MEDFORD, Mass.--(BUSINESS WIRE)-- Century Bancorp, Inc. (NASDAQ:CNBKA)(www.centurybank.com) (“the Company”) today announced net income of $33,325,000 for the nine months ended September 30, 2021, or $5.99 per Class A share diluted, an increase of 8.9% compared to net income of $30,609,000, or $5.50 per Class A share diluted, for the same period a year ago. Total assets increased 12.1% from $6.36 billion at December 31, 2020 to $7.13 billion at September 30, 2021. For the quarter ended September 30, 2021, net income totaled $11,732,000, or $2.11 per Class A share diluted, an increase of 7.8% compared to net income of $10,887,000, or $1.96 per Class A share diluted, for the same period a year ago. This is the Company’s final reporting period prior to its anticipated merger with Eastern Bankshares, Inc., as discussed below.

As previously announced on September 14, 2021, 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 October 15, 2021, to shareholders of record on October 1, 2021.

Net interest income totaled $88.9 million for the nine months ended September 30, 2021, compared to $78.4 million for the same period in 2020. The 13.5% 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 2.01% on a fully tax-equivalent basis for the first nine months of 2020 compared to 1.81% for the same period in 2021. This was primarily the result of increased margin pressure as a result of decreases in interest rates across the yield curve in 2020. The average balances of interest-earning assets increased for 2021 compared to the same period last year, by $1.36 billion, or 24.4%, combined with an average yield decrease of 0.68%, resulting in a decrease in interest income of $6.0 million. The average balance of interest-bearing liabilities increased for 2021 compared to the same period last year, by $1.04 billion, or 23.2%, combined with an average interest-bearing liabilities interest cost decrease of 0.59%, resulting in a decrease in interest expense of $16.5 million.

The provision for loan losses decreased by $4.4 million from $3.7 million for the nine months ended September 30, 2020, compared to a credit of $750,000 for the same period in 2021. The provision for the first nine months of 2020 was primarily a result of provisions related to the onset of the COVID-19 pandemic. The credit provision for the first nine 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 $62.6 million for the first nine months of 2021 compared to $53.4 million for the same period last year, an increase of $9.2 million or 17.3%. The increase was primarily attributable to a $3.4 million increase in salaries and employee benefits and a $5.3 million increase in other expenses.

Salaries and employee benefits increased for the first nine 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 nine 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 9.5% for the nine months ended September 30, 2020, to 15.7% for the same period in 2021. The increase in the effective tax rate was primarily the result of an increase in taxable income relative to total income and nondeductible merger related expenses.

At September 30, 2021, total stockholders’ equity was $403.0 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 declared.

The Company’s leverage ratio stood at 6.31% at September 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 September 30, 2021, was $72.37 compared to $66.53 at December 31, 2020.

The Company’s allowance for loan losses was $34.8 million or 1.19% of loans outstanding at September 30, 2021, compared to $35.5 million or 1.18% of loans outstanding at December 31, 2020, and $33.4 million or 1.12% of loans outstanding at September 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 September 30, 2021, compared to $4.0 million at December 31, 2020, and $1.4 million at September 30, 2020.

As of September 30, 2021, the Company had COVID-19 modifications of 2 loans aggregating $16.3 million, primarily consisting of short-term payment deferrals. Of these modifications, $16.3 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.

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 (the “Merger Agreement”) 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 Merger Agreement, (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. The Company’s shareholders approved the Merger Agreement at the Special Meeting of the Shareholders held on July 7, 2021. The Company received the required regulatory approvals for the transaction during the third quarter of 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 Merger Agreement, (as discussed above) and disruptions to the Company’s business during the pendency of the anticipated 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)
	September 30,			December 31,
Assets	2021			2020
Cash and Due From Banks	$	97,743		$	136,735
Federal Funds Sold and Interest-bearing Deposits In Other Banks		492,243			237,265
Securities Available-for-Sale (AFS)		205,861			284,116
Securities Held-to-Maturity		3,211,978			2,509,088
Federal Home Loan Bank of Boston stock, at cost		11,594			13,361
Loans:
Commercial & Industrial		1,321,907			1,314,245
Municipal		138,945			137,607
Construction & Land Development		6,358			10,909
Commercial Real Estate		729,384			789,836
Residential Real Estate		466,109			448,436
Consumer and Other		19,549			20,439
Home Equity		243,225			274,357
Total Loans		2,925,477			2,995,829
Less: Allowance for Loan Losses		34,764			35,486
Net Loans		2,890,713			2,960,343
Bank Premises and Equipment, net		42,222			39,062
Accrued Interest Receivable		13,413			13,283
Goodwill		2,714			2,714
Other Assets		161,081			162,867
Total Assets	$	7,129,562		$	6,358,834
Liabilities
Demand Deposits	$	1,203,943		$	1,103,878
Interest Bearing Deposits:
Savings and NOW Deposits		2,314,472			1,728,092
Money Market Accounts		2,337,665			2,074,108
Time Deposits		348,296			546,143
Total Interest Bearing Deposits		5,000,433			4,348,343
Total Deposits		6,204,376			5,452,221
Borrowed Funds:
Securities Sold Under Agreements to Repurchase		269,961			232,090
Other Borrowed Funds		118,786			177,009
Total Borrowed Funds		388,747			409,099
Other Liabilities		97,405			91,022
Subordinated Debentures		36,083			36,083
Total Liabilities		6,726,611			5,988,425
Total Stockholders' Equity		402,951			370,409
Total Liabilities & Stockholders' Equity	$	7,129,562		$	6,358,834

Century Bancorp, Inc. and Subsidiaries
Consolidated Comparative Statements of Income (unaudited)
For the quarter and nine months ended September 30, 2021 and 2020
(in thousands)
	Quarter ended September 30,							Nine months ended September 30,
	2021				2020			2021				2020
Interest Income:
Loans	$	20,926			$	21,431		$	63,419			$	63,478
Securities Held-to-Maturity		13,678				14,186			40,908				44,701
Securities Available-for-Sale		475				818			1,662				3,493
Federal Funds Sold and Interest-bearing Deposits In Other Banks		186				69			477				747
Total Interest Income		35,265				36,504			106,466				112,419
Interest Expense:
Savings and NOW Deposits		570				1,726			2,441				7,569
Money Market Accounts		2,368				3,056			7,743				12,090
Time Deposits		791				2,858			3,487				9,141
Securities Sold Under Agreements to Repurchase		91				241			330				1,176
Other Borrowed Funds and Subordinated Debentures		1,065				1,292			3,527				4,093
Total Interest Expense		4,885				9,173			17,528				34,069
Net Interest Income		30,380				27,331			88,938				78,350
Provision(Credit) For Loan Losses		(200	)			900			(750	)			3,675
Net Interest Income After
Provision for Loan Losses		30,580				26,431			89,688				74,675
Other Operating Income:
Service Charges on Deposit Accounts		2,243				2,239			6,632				6,558
Lockbox Fees		914				996			2,876				2,850
Other Income		1,015				934			2,973				3,112
Total Other Operating Income		4,172				4,169			12,481				12,520
Operating Expenses:
Salaries and Employee Benefits		11,907				11,362			36,459				33,020
Occupancy		1,457				1,477			4,750				4,448
Equipment		956				809			2,836				2,608
Other		6,419				4,519			18,577				13,306
Total Operating Expenses		20,739				18,167			62,622				53,382
Income Before Income Taxes		14,013				12,433			39,547				33,813
Income Tax Expense		2,281				1,546			6,222				3,204
Net Income	$	11,732			$	10,887		$	33,325			$	30,609

Century Bancorp, Inc. and Subsidiaries
Consolidated Year-to-Date Average Comparative Statements of Condition (unaudited)
(in thousands)
	September 30,				September 30,
Assets	2021				2020
Cash and Due From Banks	$	121,234			$	80,686
Federal Funds Sold and Interest-Bearing Deposits in Other Banks		544,227				238,525
Securities Available-For-Sale (AFS)		261,908				293,301
Securities Held-to-Maturity (HTM)		3,137,556				2,346,502
Total Loans		2,985,768				2,693,000
Less: Allowance for Loan Losses		35,332				31,359
Net Loans		2,950,436				2,661,641
Unrealized (Loss)Gain on Securities AFS and HTM Transfers		(250	)			(2,861	)
Bank Premises and Equipment		40,362				36,253
Accrued Interest Receivable		13,678				12,630
Goodwill		2,714				2,714
Other Assets		172,044				164,804
Total Assets	$	7,243,909			$	5,834,195
Liabilities
Demand Deposits	$	1,205,456			$	889,237
Interest Bearing Deposits:
Savings and NOW Deposits		2,342,016				1,881,897
Money Market Accounts		2,332,307				1,603,367
Time Deposits		460,474				597,589
Total Interest Bearing Deposits		5,134,797				4,082,853
Total Deposits		6,340,253				4,972,090
Borrowed Funds:
Securities Sold Under Agreements to Repurchase		247,665				220,796
Other Borrowed Funds		135,556				169,972
Total Borrowed Funds		383,221				390,768
Other Liabilities		96,964				88,028
Subordinated Debentures		36,083				36,083
Total Liabilities		6,856,521				5,486,969
Total Stockholders' Equity		387,388				347,226
Total Liabilities & Stockholders' Equity	$	7,243,909			$	5,834,195
Total Average Earning Assets - QTD	$	6,975,666			$	5,881,860
Total Average Earning Assets - YTD	$	6,929,459			$	5,571,328

Century Bancorp, Inc. and Subsidiaries
Consolidated Selected Key Financial Information (unaudited)
(in thousands, except share data)	September 30,				September 30,
	2021				2020
Performance Measures:
Earnings per average Class A share, diluted, quarter	$	2.11			$	1.96
Earnings per average Class A share, diluted, year-to-date	$	5.99			$	5.50
Return on average assets, year-to-date		0.62	%			0.70	%
Return on average stockholders' equity, year-to-date		11.50	%			11.78	%
Net interest margin (taxable equivalent), quarter		1.82	%			1.96	%
Net interest margin (taxable equivalent), year-to-date		1.81	%			2.01	%
Efficiency ratio, Non-GAAP (1)		58.9	%			55.4	%
Book value per share	$	72.37			$	65.27
Tangible book value per share - Non-GAAP (1)	$	71.88			$	64.79
Capital / assets		5.65	%			5.77	%
Tangible capital / tangible assets - Non-GAAP (1)		5.62	%			5.73	%
Common Share Data:
Average Class A shares outstanding, diluted, quarter and year-to-date		5,567,909				5,567,909
Shares outstanding Class A		3,672,969				3,655,469
Shares outstanding Class B		1,894,940				1,912,440
Total shares outstanding at period end		5,567,909				5,567,909
Asset Quality and Other Data:
Allowance for loan losses / loans		1.19	%			1.12	%
Nonaccrual loans	$	1,318			$	1,419
Nonperforming assets	$	1,318			$	1,419
Loans 90 days past due and still accruing	$	-			$	49
Accruing troubled debt restructures	$	2,058			$	2,240
Net recoveries, year-to-date	$	(28	)		$	(134	)
Leverage ratio		6.31	%			6.79	%
Common equity tier 1 risk weighted capital ratio		11.71	%			11.36	%
Tier 1 risk weighted capital ratio		12.68	%			12.40	%
Total risk weighted capital ratio		13.65	%			13.39	%
Total risk weighted assets	$	3,618,083			$	3,370,541
(1) Non-GAAP Financial Measures are reconciled in the following tables:
Calculation of Efficiency ratio:
Total operating expenses(numerator)	$	62,622			$	53,382
Net interest income	$	88,938			$	78,350
Total other operating income		12,481				12,520
Tax equivalent adjustment		4,939				5,558
Total income(denominator)	$	106,358			$	96,428
Efficiency ratio - Non-GAAP		58.9	%			55.4	%
Calculation of tangible book value per share:
Total stockholders' equity	$	402,951			$	363,434
Less: goodwill		2,714				2,714
Tangible stockholders' equity(numerator)	$	400,237			$	360,720
Total shares outstanding at period end(denominator)		5,567,909				5,567,909
Tangible book value per share - Non-GAAP	$	71.88			$	64.79
Book value per share - GAAP	$	72.37			$	65.27
Calculation of tangible capital / tangible assets:
Total stockholders' equity	$	402,951			$	363,434
Less: goodwill		2,714				2,714
Tangible stockholders' equity(numerator)	$	400,237			$	360,720
Total assets	$	7,129,562			$	6,295,426
Less: goodwill		2,714				2,714
Tangible assets(denominator)	$	7,126,848			$	6,292,712
Tangible capital / tangible assets - Non-GAAP		5.62	%			5.73	%
Capital / assets - GAAP		5.65	%			5.77	%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20211012006027/en/

William P. Hornby, CPA

whornby@centurybank.com

Phone: 781-393-4630

Fax: 781-393-4071

Source: Century Bancorp, Inc.

FAQ

What were Century Bancorp's earnings for Q3 2021?

Century Bancorp reported net income of $11.7 million, or $2.11 per Class A share diluted, for Q3 2021.

What is the total asset value for Century Bancorp as of September 30, 2021?

As of September 30, 2021, Century Bancorp's total assets were $7.13 billion.

When is the merger between Century Bancorp and Eastern Bankshares expected to close?

The merger between Century Bancorp and Eastern Bankshares is expected to close in the fourth quarter of 2021.

What is the cash payment per share in the merger transaction?

Under the merger agreement, shareholders will receive $115.28 per share for both Class A and Class B common stock.

How much did the net interest income increase by for the nine months ended September 30, 2021?

Net interest income increased by 13.5% to $88.9 million for the nine months ended September 30, 2021.