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 8, 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 October 8, 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 third quarter ended September 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 October 8, 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, CPA

Chief Financial Officer and Treasurer

Dated: October 9, 2019

EX-99.1

Exhibit 99.1

NEWS RELEASE    

FOR IMMEDIATE RELEASE

Contact:     William P. Hornby

                   whornby@centurybank.com

Phone:        781-393-4630

Fax:            781-393-4071

CENTURY BANCORP, INC. ANNOUNCES RECORD EARNINGS FOR Q3 2019; ASSET GROWTH TO

$5.3 BB; REGULAR DIVIDEND DECLARED

Medford, MA, October 8, 2019—Century Bancorp, Inc. (NASDAQ:CNBKA) (www.centurybank.com) (“the Company”) today announced net income of $28,967,000 for the nine months ended September 30, 2019, or $5.20 per Class A share diluted, an increase of 10.2% compared to net income of $26,288,000, or $4.72 per Class A share diluted, for the same period a year ago. Total assets increased 2.6% from $5.16 billion at December 31, 2018 to $5.30 billion at September 30, 2019. For the quarter ended September 30, 2019, net income totaled $10,084,000 or $1.81 per Class A share diluted, an increase of 5.2% compared to net income of $9,581,000, or $1.72 per Class A share diluted, for the same period a year ago.

Net interest income totaled $70.5 million for the nine months ended September 30, 2019 compared to $68.9 million for the same period in 2018. The 2.3% increase in net interest income for the period is primarily due to an increase in average earning assets. The net interest margin decreased from 2.19% on a fully taxable equivalent basis in 2018 to 2.08% 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 7.9% combined with an average yield increase of 0.30%, resulting in an increase in interest income of $19.0 million. The average balance of interest bearing liabilities increased 7.6% combined with an average cost of funds increase of 0.50%, resulting in an increase in interest expense of $17.4 million.

The Company’s effective tax rate decreased from 4.6% for the first nine months of 2018 to 2.0% 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 September 30, 2019, total equity was $329.0 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 7.25% at September 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 September 30, 2019 was $59.08 per share compared to $53.96 at December 31, 2018.

The Company’s allowance for loan losses was $29.1 million or 1.22% of loans outstanding at September 30, 2019 compared to $28.5 million or 1.25% of loans outstanding at December 31, 2018, and $28.5 million or 1.26% of loans outstanding at September 30, 2018. The ratio of the allowance for loan losses to loans outstanding has decreased from the same period last year, primarily as a result of improvements in historical loss rates. Non-performing assets totaled $1.1 million at September 30, 2019, compared to $3.5 million at December 31, 2018, and $3.7 million at September 30, 2018. Nonperforming assets decreased from the same period last year, mainly as a result of the resolution of one residential real estate property during the third quarter of 2019.

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, 2019 to stockholders of record on November 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)

	September 30, 2019		December 31, 2018
Assets
Cash and Due From Banks	$	85,014	$	89,540
Federal Funds Sold and Interest-bearing Deposits In Other Banks		249,091		252,963
Securities Available-for-Sale (AFS)		263,411		338,355
Securities Held-to-Maturity		2,164,135		2,046,647
Federal Home Loan Bank of Boston stock, at cost		14,025		17,974
Loans:
Commercial & Industrial		783,950		761,775
Municipal		121,802		97,140
Construction & Land Development		7,824		13,628
Commercial Real Estate		765,385		750,362
Residential Real Estate		364,317		348,250
Consumer and Other		21,748		22,083
Home Equity		310,635		292,340
Total Loans		2,375,661		2,285,578
Less: Allowance for Loan Losses		29,097		28,543
Net Loans		2,346,564		2,257,035
Bank Premises and Equipment, net		31,520		23,921
Accrued Interest Receivable		13,275		14,406
Goodwill		2,714		2,714
Other Assets		129,432		120,380
Total Assets	$	5,299,181	$	5,163,935
Liabilities
Demand Deposits	$	797,455	$	813,478
Interest Bearing Deposits:
Savings and NOW Deposits		1,759,401		1,707,019
Money Market Accounts		1,249,923		1,325,888
Time Deposits		533,074		560,579
Total Interest Bearing Deposits		3,542,398		3,593,486
Total Deposits		4,339,853		4,406,964
Borrowed Funds:
Securities Sold Under Agreements to Repurchase		307,235		154,240
Other Borrowed Funds		209,188		202,378
Total Borrowed Funds		516,423		356,618
Other Liabilities		77,862		63,831
Subordinated Debentures		36,083		36,083
Total Liabilities		4,970,221		4,863,496
Total Stockholders’ Equity		328,960		300,439
Total Liabilities & Stockholders’ Equity	$	5,299,181	$	5,163,935

Century Bancorp, Inc. and Subsidiaries

Consolidated Comparative Statements of Income (unaudited)

For the quarter and nine months ended September 30, 2019 and 2018

(in thousands)

	Quarter ended September 30,				Nine months ended September 30,
	2019		2018		2019		2018
Interest Income:
Loans	$	22,117	$	20,167	$	65,106	$	57,613
Securities Held-to-Maturity		14,623		11,507		43,006		32,930
Securities Available-for-Sale		2,184		2,500		7,305		6,821
Federal Funds Sold and Interest-bearing Deposits In Other Banks		928		591		3,204		2,239
Total Interest Income		39,852		34,765		118,621		99,603
Interest Expense:
Savings and NOW Deposits		5,445		2,972		16,788		7,778
Money Market Accounts		5,050		3,652		15,805		9,039
Time Deposits		3,038		2,571		8,724		7,465
Securities Sold Under Agreements to Repurchase		697		288		1,572		657
Other Borrowed Funds and Subordinated Debentures		1,852		2,078		5,274		5,793
Total Interest Expense		16,082		11,561		48,163		30,732
Net Interest Income		23,770		23,204		70,458		68,871
Provision For Loan Losses		75		—		700		900
Net Interest Income After
Provision for Loan Losses		23,695		23,204		69,758		67,971
Other Operating Income
Service Charges on Deposit Accounts		2,310		2,137		6,801		6,268
Lockbox Fees		937		892		3,018		2,304
Net Gain on Sales of Loans		—		—		154		—
Net Gain on Sales of Securities		53		105		61		302
Other Income		986		1,035		3,676		3,210
Total Other Operating Income		4,286		4,169		13,710		12,084
Operating Expenses
Salaries and Employee Benefits		10,670		10,570		32,621		32,331
Occupancy		1,463		1,481		4,686		4,579
Equipment		862		781		2,440		2,355
Other		4,467		4,516		14,170		13,243
Total Operating Expenses		17,462		17,348		53,917		52,508
Income Before Income Taxes		10,519		10,025		29,551		27,547
Income Tax Expense		435		444		584		1,259
Net Income	$	10,084	$	9,581	$	28,967	$	26,288

Century Bancorp, Inc. and Subsidiaries

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

(in thousands)

	September 30, 2019			September 30, 2018
Assets
Cash and Due From Banks	$	74,413		$	71,034
Federal Funds Sold and Interest-Bearing Deposits in Other Banks		184,035			171,773
Securities Available-For-Sale (AFS)		325,036			406,022
Securities Held-to-Maturity (HTM)		2,128,082			1,816,745
Total Loans		2,325,136			2,206,194
Less: Allowance for Loan Losses		28,936			27,235
Net Loans		2,296,200			2,178,959
Unrealized (Loss)Gain on Securities AFS and HTM Transfers		(3,352	)		(4,154	)
Bank Premises and Equipment		26,273			23,481
Accrued Interest Receivable		13,942			11,608
Goodwill		2,714			2,714
Other Assets		133,754			122,502
Total Assets	$	5,181,097		$	4,800,684
Liabilities
Demand Deposits	$	764,852		$	718,215
Interest Bearing Deposits:
Savings and NOW Deposits		1,818,017			1,495,464
Money Market Accounts		1,249,531			1,208,547
Time Deposits		512,228			587,742
Total Interest Bearing Deposits		3,579,776			3,291,753
Total Deposits		4,344,628			4,009,968
Borrowed Funds:
Securities Sold Under Agreements to Repurchase		205,185			149,970
Other Borrowed Funds		201,804			262,397
Total Borrowed Funds		406,989			412,367
Other Liabilities		79,327			69,404
Subordinated Debentures		36,083			36,083
Total Liabilities		4,867,027			4,527,822
Total Stockholders’ Equity		314,070			272,862
Total Liabilities & Stockholders’ Equity	$	5,181,097		$	4,800,684
Total Average Earning Assets—QTD	$	4,971,831		$	4,625,880
Total Average Earning Assets—YTD	$	4,962,289		$	4,600,734

Century Bancorp, Inc. and Subsidiaries

Consolidated Selected Key Financial Information (unaudited)

(in thousands, except share data)

	September 30,			September 30,
	2019			2018
Performance Measures:
Earnings per average Class A share, diluted, quarter	$	1.81		$	1.72
Earnings per average Class A share, diluted, year-to-date	$	5.20		$	4.72
Return on average assets, year-to-date		0.75	%		0.73	%
Return on average stockholders’ equity, year-to-date		12.33	%		12.88	%
Net interest margin (taxable equivalent), quarter		2.08	%		2.19	%
Net interest margin (taxable equivalent), year-to-date		2.08	%		2.19	%
Efficiency ratio, Non-GAAP (1)		59.1	%		60.0	%
Book value per share	$	59.08		$	51.52
Tangible book value per share—Non-GAAP (1)	$	58.59		$	51.04
Capital / assets		6.21	%		5.89	%
Tangible capital / tangible assets—Non-GAAP (1)		6.16	%		5.84	%
Common Share Data:
Average Class A shares outstanding, diluted, quarter and year-to-date		5,567,909			5,567,909
Shares outstanding Class A		3,650,449			3,608,329
Shares outstanding Class B		1,917,460			1,959,580
Total shares outstanding at period end		5,567,909			5,567,909
Asset Quality and Other Data:
Allowance for loan losses / loans		1.22	%		1.26	%
Nonaccrual loans	$	1,066		$	3,729
Nonperforming assets	$	1,066		$	3,729
Loans 90 days past due and still accruing	$	—		$	471
Accruing troubled debt restructures	$	2,404		$	2,598
Net charge-offs(recoveries), year-to-date	$	146		$	(1,390	)
Leverage ratio		7.25	%		7.03	%
Common equity tier 1 risk weighted capital ratio		11.90	%		11.14	%
Tier 1 risk weighted capital ratio		13.12	%		12.42	%
Total risk weighted capital ratio		14.13	%		13.46	%
Total risk weighted assets	$	2,867,422		$	2,733,491
(1)   Non-GAAP Financial Measures are reconciled in the following tables:
Calculation of Efficiency ratio:
Total operating expenses	$	53,917		$	52,508
Less: other real estate owned expenses		(139	)		—
Total adjusted operating expenses(numerator)	$	53,778		$	52,508
Net interest income	$	70,458		$	68,871
Total other operating income		13,710			12,084
Tax equivalent adjustment		6,875			6,547
Total income(denominator)	$	91,043		$	87,502
Efficiency ratio—Non-GAAP		59.1	%		60.0	%
Calculation of tangible book value per share:
Total stockholders’ equity	$	328,960		$	286,877
Less: goodwill		2,714			2,714
Tangible stockholders’ equity(numerator)	$	326,246		$	284,163
Total shares outstanding at period end(denominator)		5,567,909			5,567,909
Tangible book value per share—Non-GAAP	$	58.59		$	51.04
Book value per share—GAAP	$	59.08		$	51.52
Calculation of tangible capital / tangible assets:
Total stockholders’ equity	$	328,960		$	286,877
Less: goodwill		2,714			2,714
Tangible stockholders’ equity(numerator)	$	326,246		$	284,163
Total assets	$	5,299,181		$	4,870,423
Less: goodwill		2,714			2,714
Tangible assets(denominator)	$	5,296,467		$	4,867,709
Tangible capital / tangible assets—Non-GAAP		6.16	%		5.84	%
Capital / assets—GAAP		6.21	%		5.89	%