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Century BanCorp Inc. Reports Operating Results (10-Q)

November 05, 2010 | About:
10qk

10qk

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Century BanCorp Inc. (CNBKA) filed Quarterly Report for the period ended 2010-09-30.

Century Bancorp Inc. has a market cap of $134.6 million; its shares were traded at around $24.35 with a P/E ratio of 10.5 and P/S ratio of 1.4. The dividend yield of Century Bancorp Inc. stocks is 2%.

Highlight of Business Operations:

Earnings for the third quarter ended September 30, 2010 were $3,267,000, or $0.59 per share diluted, compared to net income of $3,182,000, or $0.58 per share diluted, for the third quarter ended September 30, 2009. For the first nine months of 2010, net income totaled $9,650,000, or $1.74 per share diluted, compared to net income of $7,075,000, or $1.28 per share diluted, for the same period a year ago.

For the three months ended September 30, 2010, the loan loss provision was $1.2 million compared to a provision of $1.3 million for the same period last year for a decrease of $50,000. The decrease in the provision was due to reduced allocations related to impaired loans. During the third quarter of 2009 provisions were made for two impaired loans that were subsequently charged off during the fourth quarter of 2009. The provision for loan losses was $4.2 million for both of the nine month periods. The $75,000 increase was primarily the result of additional allocations related to impaired loans. Nonperforming loans decreased to $9.5 million at September 30, 2010 from $17.0 million on September 30, 2009. This was primarily the result of charge-offs of loans that occurred during the fourth quarter of 2009 as well as resolutions of loans made throughout the period.

The Company capitalized on favorable market conditions for the nine months ended September 30, 2010 and realized net gains on sales of investments of $1.0 million, compared to $1.1 million for the same period in 2009. Included in operating expenses for the third quarter and first nine months of 2010 are FDIC assessments of $785,000 and $2.2 million, respectively, as compared to $638,000 and $2.8 million for the same periods in 2009. FDIC assessments decreased primarily as a result of the special assessment charge of approximately $1.0 million during the second quarter of 2009. This was offset, somewhat, by an increase in assessment rate as well as an increase in the deposit base during 2010.

Commercial and industrial loans decreased to $102.4 million at September 30, 2010, from $141.1 million on December 31, 2009, primarily as a result of loan payoffs. Construction loans decreased to $54.2 million at September 30, 2010 from $60.3 million on December 31, 2009, primarily as a result of loan payoffs.

The Company owns Federal Home Loan Bank of Boston (FHLBB) stock which is considered a restricted equity security. As a voluntary member of the FHLBB, the Company is required to invest in stock of the FHLBB in an amount equal to 4.5% of its outstanding advances from the FHLBB. Stock is purchased at par value. As and when such stock is redeemed, the Company would receive from the FHLBB an amount equal to the par value of the stock. At its discretion, the FHLBB may declare dividends on the stock. On April 10, 2009, the FHLBB reiterated to its members that, while it currently meets all its regulatory capital requirements, it is focusing on preserving capital in response to ongoing market volatility, and accordingly, has suspended its quarterly dividend and has extended the moratorium on excess stock repurchases. It also announced that it had taken a write-down of $381.7 million in other-than-temporary impairment charges on its private-label mortgage-backed securities for the year ended December 31, 2008. This resulted in a net loss of $115.8 million. For the year ended December 31, 2009, the FHLBB reported a net loss of $186.8 million resulting from the recognition of $444.1 million of impairment losses which were recognized through income. For the first nine months of 2010, the FHLBB reported net income of $83.0 million. In the future, if additional unrealized losses are deemed to be other-than-temporary, the associated impairment charges could exceed the FHLBBs current level of retained earnings and possibly put into question whether the fair value of the FHLBB stock owned by the Company is less than par value. The FHLBB has stated that it expects and intends to hold its private-label mortgage-backed securities to maturity. Despite these negative trends, the FHLBB exceeded the regulatory capital requirements promulgated by the Federal Home Loan Banks Act and the Federal Housing Financing Agency. The FHLBB has the capacity to issue additional debt if necessary to raise cash. If needed, the FHLBB also has the ability to secure funding available to U.S. Government Sponsored Enterprises through the U.S. Treasury. Based on the capital adequacy and the liquidity position of the FHLBB, management believes there is no other-than-temporary impairment related to the carrying amount of the Companys FHLBB stock as of September 30, 2010. The Company will continue to monitor its investment in FHLBB stock.

At September 30, 2010, total equity was $145.9 million compared to $132.7 million at December 31, 2009. The Companys equity increased as a result of earnings and a decrease in accumulated other comprehensive loss, net of taxes, offset somewhat by dividends paid. The Companys leverage ratio stood at 7.13% at September 30, 2010, compared to 8.02% at September 30, 2009. This decline in the leverage ratio is due to an increase in assets, offset by an increase in stockholders equity. The Companys Tier 1 capital-to-risk assets and total capital-to-risk assets stood at 14.95% and 16.13%, respectively, at September 30, 2010. Book value as of September 30, 2010 was $26.35 per share.

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