Century Bancorp (CNBKA) 8-K Century Bancorp, Inc. Announces Record Earnings of $36.2 MM for 2018, Core

Exhibit 99.1

                

NEWS RELEASE

FOR IMMEDIATE RELEASE

Contact:	William P. Hornby, CPA
	whornby@centurybank.com
Phone:	781-393-4630
Fax:	781-393-4071

CENTURY BANCORP, INC. ANNOUNCES RECORD EARNINGS OF $36.2 MM FOR 2018, CORE

EARNINGS UP 17.8%; ASSET GROWTH TO RECORD $5.2 BB; REGULAR DIVIDEND DECLARED

Medford, MA, January 15, 2019 — Century Bancorp, Inc. (NASDAQ:CNBKA) (www.centurybank.com) (“the Company”) today announced net income of $36.2 million for the year ended December 31, 2018, or $6.50 per Class A share diluted, an increase of 62.4% compared to net income of $22.3 million, or $4.01 per Class A share diluted, for the same period a year ago. The Company’s core earnings⁽¹⁾increased by $5.5 million or 17.8% from $30.7 million in 2017 to a record $36.2 million in 2018.

On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was enacted, which lowered the Company’s federal tax rate from 34% to 21%. As a result of the rate reduction, the Company recorded a reduction in the value of its net deferred tax asset resulting in a charge of $8.4 million to 2017 income tax expense. This $8.4 million charge is excluded from core earnings.

Total assets increased 7.9% from $4.79 billion at December 31, 2017 to $5.16 billion at December 31, 2018. For the quarter ended December 31, 2018, net income totaled $9.9 million or $1.78 per Class A share diluted, compared to $25,000, or $0.00 per Class A share diluted, for the same period a year ago.

Net interest income totaled $92.6 million for the year ended December 31, 2018 compared to $85.6 million for the same period in 2017. The 8.1% increase in net interest income for the period is primarily due to an increase in average earning assets. The net interest margin decreased from 2.25% on a fully taxable equivalent basis in 2017 to 2.18% 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 lower prepayment penalties collected during 2018. The decrease in the tax rate results in a lower tax equivalent yield ontax-exempt assets. The average balances of earning assets increased by 5.1% combined with an average yield increase of 0.26%, resulting in an increase in interest income of $23.6 million. The average balance of interest bearing liabilities increased 3.7% combined with an average yield increase of 0.41%, resulting in an increase in interest expense of $16.7 million.

-more-

The provision for loan losses decreased by $440,000 from $1,790,000 for the year ended December 31, 2017 to $1,350,000 for the same period in 2018, primarily as a result of net recoveries of $938,000 offset by changes in qualitative factors.

The Company’s effective tax rate decreased from 32.9% for 2017 to 4.2% for the same period in 2018. This was primarily as a result of a reduction in the value of its net deferred tax asset resulting in a charge of $8.4 million to 2017 income tax expense as a result of the Tax Act as previously discussed. Also, the federal tax rate decreased from 34% to 21% as a result of the Tax Act, offset somewhat by an increase in taxable income.

At December 31, 2018, total equity was $300.4 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 6.91% at December 31, 2018, compared to 6.78% 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 December 31, 2018 was $53.96 per share compared to $46.75 at December 31, 2017.

The Company’s allowance for loan losses was $28.5 million or 1.25% of loans outstanding at December 31, 2018, compared to $26.3 million or 1.21% of loans outstanding at December 31, 2017. The ratio of the allowance for loan losses to loans outstanding has increased, primarily as a result of changes in qualitative factors related to general economic factors pertaining to certain industries.Non-performing assets totaled $3.5 million at December 31, 2018, compared to $1.7 million at December 31, 2017. Nonperforming assets increased 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 February 15, 2019 to stockholders of record on February 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		December 31, 2018		December 31, 2017
Cash and Due From Banks	$	89,540	$	77,199
Federal Funds Sold and Interest-bearing Deposits In Other Banks		252,963		279,231
Securities Available-for-Sale (AFS)		338,327		397,475
Securities Held-to-Maturity		2,046,647		1,701,233
Federal Home Loan Bank of Boston stock, at cost		17,974		21,779
Loans:
Commercial & Industrial		761,775		763,807
Municipal		97,140		106,599
Construction & Land Development		13,628		18,931
Commercial Real Estate		750,362		732,491
Residential Real Estate		348,250		287,731
Consumer and Other		22,083		19,040
Home Equity		292,340		247,345
Total Loans		2,285,578		2,175,944
Less: Allowance for Loan Losses		28,543		26,255
Net Loans		2,257,035		2,149,689
Bank Premises and Equipment, net		23,921		23,527
Accrued Interest Receivable		14,406		11,179
Goodwill		2,714		2,714
Other Assets		120,408		121,546
Total Assets	$	5,163,935	$	4,785,572
Liabilities
Demand Deposits	$	813,478	$	736,020
Interest Bearing Deposits:
Savings and NOW Deposits		1,707,019		1,367,358
Money Market Accounts		1,325,888		1,188,228
Time Deposits		560,579		625,361
Total Interest Bearing Deposits		3,593,486		3,180,947
Total Deposits		4,406,964		3,916,967
Borrowed Funds:
Securities Sold Under Agreements to Repurchase		154,240		158,990
Other Borrowed Funds		202,378		347,778
Total Borrowed Funds		356,618		506,768
Other Liabilities		63,831		65,457
Subordinated Debentures		36,083		36,083
Total Liabilities		4,863,496		4,525,275
Total Stockholders' Equity		300,439		260,297
Total Liabilities & Stockholders' Equity	$	5,163,935	$	4,785,572

Century Bancorp, Inc. and Subsidiaries

Consolidated Comparative Statements of Income (unaudited)

For the quarter and year ended December 31, 2018 and 2017

(in thousands)

	Quarter ended December 31,				Year ended December 31,
	2018		2017		2018		2017
Interest Income:
Loans	$	20,938	$	17,345	$	78,551	$	66,013
Securities Held-to-Maturity		12,626		9,542		45,556		38,348
Securities Available-for-Sale		2,630		1,835		9,451		6,978
Federal Funds Sold and Interest-bearing Deposits In Other Banks		1,259		748		3,498		2,097
Total Interest Income		37,453		29,470		137,056		113,436
Interest Expense:
Savings and NOW Deposits		3,979		1,842		11,757		6,296
Money Market Accounts		4,883		1,723		13,922		5,626
Time Deposits		2,743		2,271		10,208		7,919
Securities Sold Under Agreements to Repurchase		319		144		976		496
Other Borrowed Funds and Subordinated Debentures		1,824		1,788		7,617		7,483
Total Interest Expense		13,748		7,768		44,480		27,820
Net Interest Income		23,705		21,702		92,576		85,616
Provision For Loan Losses		450		450		1,350		1,790
Net Interest Income After Provision for Loan Losses		23,255		21,252		91,226		83,826
Other Operating Income
Service Charges on Deposit Accounts		2,292		2,407		8,560		8,586
Lockbox Fees		970		923		3,274		3,290
Net Gain on Sales of Loans		—		—		—		370
Net Gain on Sales of Securities		—		—		302		47
Other Income		902		1,080		4,112		4,259
Total Other Operating Income		4,164		4,410		16,248		16,552
Operating Expenses
Salaries and Employee Benefits		10,379		9,420		42,710		40,517
Occupancy		1,513		1,477		6,092		6,140
Equipment		777		647		3,132		2,892
FDIC Assessment		361		363		1,471		1,581
Other		4,155		4,085		16,288		15,989
Total Operating Expenses		17,185		15,992		69,693		67,119
Income Before Income Taxes		10,234		9,670		37,781		33,259
Income Tax Expense		309		9,645		1,568		10,958
Net Income	$	9,925	$	25	$	36,213	$	22,301

Century Bancorp, Inc. and Subsidiaries

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

(in thousands)

Assets		December 31, 2018			December 31, 2017
Cash and Due From Banks	$	71,943		$	72,455
Federal Funds Sold and Interest-Bearing Deposits in Other Banks		183,903			189,193
Securities Available-For-Sale (AFS)		400,098			461,635
Securities Held-to-Maturity (HTM)		1,854,328			1,725,280
Total Loans		2,222,946			2,059,797
Less: Allowance for Loan Losses		27,531			25,329
Net Loans		2,195,415			2,034,468
Unrealized (Loss)Gain on Securities AFS and HTM Transfers		(4,017	)		(6,394	)
Bank Premises and Equipment		23,642			23,504
Accrued Interest Receivable		12,014			10,300
Goodwill		2,714			2,714
Other Assets		122,948			119,049
Total Assets	$	4,862,988		$	4,632,204
Liabilities
Demand Deposits	$	753,604		$	687,853
Interest Bearing Deposits:
Savings and NOW Deposits		1,514,259			1,457,872
Money Market Accounts		1,230,010			1,105,071
Time Deposits		577,975			566,941
Total Interest Bearing Deposits		3,322,244			3,129,884
Total Deposits		4,075,848			3,817,737
Borrowed Funds:
Securities Sold Under Agreements to Repurchase		147,944			189,684
Other Borrowed Funds		255,591			273,019
Total Borrowed Funds		403,535			462,703
Other Liabilities		70,020			60,925
Subordinated Debentures		36,083			36,083
Total Liabilities		4,585,486			4,377,448
Total Stockholders' Equity		277,502			254,756
Total Liabilities & Stockholders' Equity	$	4,862,988		$	4,632,204
Total Average Earning Assets—QTD	$	4,840,923		$	4,441,053
Total Average Earning Assets—YTD	$	4,661,275		$	4,435,905

Century Bancorp, Inc. and Subsidiaries

Consolidated Selected Key Financial Information (unaudited)

(in thousands, except share data)

	December 31, 2018			December 31, 2017
Performance Measures:
Earnings per average Class A share, diluted, quarter	$	1.78		$	0.00
Earnings per average Class A share, diluted, year	$	6.50		$	4.01
Return on average assets, year		0.74%			0.48%
Return on average stockholders' equity, year		13.05%			8.75%
Net interest margin (taxable equivalent), quarter		2.13%			2.26%
Net interest margin (taxable equivalent), year		2.18%			2.25%
Efficiency ratio, year — Non-GAAP (1)		59.2%			57.8%
Book value per share	$	53.96		$	46.75
Tangible book value per share — Non-GAAP (1)	$	53.47		$	46.26
Capital / assets		5.82%			5.44%
Tangible capital / tangible assets — Non-GAAP (1)		5.77%			5.39%
Common Share Data:
Average Class A shares outstanding, diluted, quarter and year		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		1.25%			1.21%
Nonaccrual loans	$	1,313		$	1,684
Nonperforming assets	$	3,538		$	1,684
Loans 90 days past due and still accruing	$	—		$	—
Accruing troubled debt restructures	$	2,559		$	2,749
Net charge-offs (recoveries), year	$	(938	)	$	(59	)
Leverage ratio		6.91%			6.78%
Common equity tier 1 risk weighted capital ratio		11.32%			10.71%
Tier 1 risk weighted capital ratio		12.59%			12.05%
Total risk weighted capital ratio		13.62%			13.05%
Total risk weighted assets	$	2,771,129		$	2,613,116
(1) Non-GAAP Financial Measures are reconciled in the following tables:
Calculation of Efficiency ratio:
Total operating expenses (numerator)	$	69,693		$	67,119
Net interest income	$	92,576		$	85,616
Total other operating income		16,248			16,552
Tax equivalent adjustment		8,853			13,979
Total income (denominator)	$	117,677		$	116,147
Efficiency ratio, year — Non-GAAP		59.2%			57.8%
Calculation of tangible book value per share:
Total stockholders' equity	$	300,439		$	260,297
Less: goodwill		2,714			2,714
Tangible stockholders' equity (numerator)	$	297,725		$	257,583
Total shares outstanding at period end (denominator)		5,567,909			5,567,909
Tangible book value per share — Non-GAAP	$	53.47		$	46.26
Book value per share — GAAP	$	53.96		$	46.75
Calculation of tangible capital / tangible assets:
Total stockholders' equity	$	300,439		$	260,297
Less: goodwill		2,714			2,714
Tangible stockholders' equity (numerator)	$	297,725		$	257,583
Total assets	$	5,163,935		$	4,785,572
Less: goodwill		2,714			2,714
Tangible assets (denominator)	$	5,161,221		$	4,782,858
Tangible capital / tangible assets — Non-GAAP		5.77%			5.39%
Capital / assets — GAAP		5.82%			5.44%
Calculation of core earnings:
Net income	$	36,213		$	22,301
Add: deferred tax remeasurement charge		—			8,448
Core earnings	$	36,213		$	30,749