Century Bancorp Inc. is a bank holding company. They offer a wide range of services to commercial enterprises state and local governments and agencies and individuals. They make commercial loans real estate and construction loans consumer loans and accepts savings time and demand deposits. In addition they offer to their corporate customers automated lock box collection services cash management services and account reconciliation services and actively promotes the marketing of these services to the municipal market. Century BanCorp Inc. has a market cap of $83.1 million; its shares were traded at around $14.54 with a P/E ratio of 8.9 and P/S ratio of 0.9. The dividend yield of Century BanCorp Inc. stocks is 3.3%. Century BanCorp Inc. had an annual average earning growth of 2.3% over the past 10 years.
Highlight of Business Operations:Earnings for the first quarter ended March 31, 2009 were $1,886,000, or $0.34 per share diluted, compared to net income of $1,800,000, or $0.32 per share diluted, for the first quarter ended March 31, 2008.
The provision for loan losses increased by $1.2 million from $700,000 to $1.9 million as a result of increases in loans on nonaccrual as well as continued deterioration in overall economic conditions such as increased unemployment. The Company capitalized on favorable market conditions and realized $978,000 of net gains on sales of investments. The Companys effective tax rate declined from 30.0% in 2008 to 12.8% in 2009 primarily as a result of an increase in tax-exempt income.
Commercial and industrial loans decreased to $133.7 million at March 31, 2009 from $141.4 million on December 31, 2008. Construction loans increased to $60.5 million at March 31, 2009 from $59.5 million on December 31, 2008.
The allowance for loan loss at March 31, 2009 was $12.5 million as compared to $11.1 million at December 31, 2008. This increase was due to the provision for loan losses exceeding net loan charge offs for the three month ended March 31, 2009 as shown in the table below. The provision for loan losses increased by $1.2 million from $700,000 to $1.9 million, this increase in the provision was due to an increase in nonperforming loans as well as current uncertainties in the economy such as increased unemployment. Also, the level of the allowance for loan losses to total loans increased from 1.33% at December 31, 2008 to 1.49% at March 31, 2009. This increase in the ratio is primarily a result of an increase in non-performing assets to $14.7 million from $3.7 million on December 31, 2008. The increase in nonperforming assets was primarily as a result of two loan relationships totaling $9.6 million with specific reserves of $600,000, one primarily commercial real estate and one construction.
Included in Obligations Issued by States and Political Subdivisions as of March 31, 2009, are $28.3 million of ARSs and $15.0 million of VRDNs with unrealized losses of $2.2 million for ARSs. VRDNs fair value is estimated to equal the cost. These debt securities were issued by governmental entities, but are not necessarily debt obligations of the issuing entity. Of the total of $43.3 million of ARSs and VRDNs, $20.0 million are obligations of governmental entities and the remainder is obligations of large non-profit entities. These obligations are variable rate securities with long-term maturities whose interest rates are set periodically through an auction process for ARSs and by prevailing market rates for VRDNs. Should the auction not attract sufficient bidders, the interest rate adjusts to the default rate defined in each obligations underlying documents. The Company increased its holdings in these types of securities during the second and third quarters of 2008 to take advantage of yields available at that time due to market disruption. Although many of these issuers have bond insurance, the Company purchased the securities based on the creditworthiness of the underlying obligor. Based on the creditworthiness of the underlying obligors, management does not believe that any of these securities are other-than-temporarily impaired. As of March 31, 2009 the weighted average taxable equivalent yield on these securities was 2.17%. At the time of purchase, these securities generally had higher yields. The overall yield has declined due to an overall decline in prevailing short-term interest rates as well as declining spreads to market rates.
In the case of a failed auction, the Company may not have access to funds as only a limited market exists for failed ARSs. As of March 31, 2009, three of the Companys ARSs were purchased subsequent to their failure with a fair value of $11.3 million and an amortized cost of $13.3 million. These securities were issued by governmental entities, and are the debt of non-profit organizations which the Company believes to be creditworthy. Securities issued by governmental entities were purchased prior to their failure with a fair value of $9.8 million and amortized cost of $10.0 million.
Read the The complete Report