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

May 06, 2011 | About:

Century BanCorp Inc. (NASDAQ:CNBKA) filed Quarterly Report for the period ended 2011-03-31.

Century Bancorp Inc. has a market cap of $141.6 million; its shares were traded at around $25.57 with a P/E ratio of 10.2 and P/S ratio of 1.5. The dividend yield of Century Bancorp Inc. stocks is 1.9%. Century Bancorp Inc. had an annual average earning growth of 1% over the past 5 years.

Highlight of Business Operations:

Earnings for the first quarter ended March 31, 2011 were $3,725,000, or $0.67 per share diluted, compared to net income of $3,422,000, or $0.62 per share diluted, for the first quarter ended March 31, 2010.

For the three months ended March 31, 2011, the loan loss provision was $1.2 million compared to a provision of $1.6 million for the same period last year for a decrease of $375,000. The decrease in the provision was primarily due to decreased provisions related to nonaccrual loans. Nonperforming loans decreased to $10.8 million at March 31, 2011 from $11.9 million on March 31, 2010. This was primarily the result of charge-offs of loans that occurred during the fourth quarter of 2010 as well as resolutions of non-accrual loans throughout the period.

The Company capitalized on favorable market conditions for the three months ended March 31, 2011 and realized net gains on sales of investments of $164,000, compared to $378,000 for the same period in 2010. Included in operating expenses for the first quarter are FDIC assessments of $735,000 compared to $650,000 for the same period in 2010. FDIC assessments increased primarily as a result of an increase in the deposit base during 2011.

Commercial and industrial loans remained stable at $90.7 million at March 31, 2011 from December 31, 2010. Construction loans increased slightly to $54.0 million at March 31, 2011 from $53.6 million on December 31, 2010.

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 year ended December 31, 2010, the FHLBB reported net income of $106.6 million. For the quarter ended March 31, 2011, the FHLBB reported net income of $23.1 million. The FHLBB also declared a dividend equal to an annual yield of 0.31%. The FHLBBs board of directors anticipates that it will continue to declare modest cash dividends through 2011. 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 March 31, 2011. The Company will continue to monitor its investment in FHLBB stock.

At March 31, 2011, total equity was $147.6 million compared to $145.0 million at December 31, 2010. The Companys equity increased primarily as a result of earnings offset by an increase in accumulated other comprehensive loss, net of taxes, and by dividends paid. The Companys leverage ratio stood at 7.21% at March 31, 2011, compared to 7.23% at March 31, 2010. 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 14.50% and 15.69%, respectively, at March 31, 2011. Book value as of March 31, 2011 was $26.64 per share.

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