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

May 05, 2010 | About:

Century BanCorp Inc. (NASDAQ:CNBKA) filed Quarterly Report for the period ended 2010-03-31.

Century Bancorp Inc. has a market cap of $103.2 million; its shares were traded at around $18.67 with a P/E ratio of 8.8 and P/S ratio of 1.1. The dividend yield of Century Bancorp Inc. stocks is 2.6%.

Highlight of Business Operations:

Earnings for the first quarter ended March 31, 2010 were $3,422,000, or $0.62 per share diluted, compared to net income of $1,886,000, or $0.34 per share diluted, for the first quarter ended March 31, 2009.

For the three months ended March 31, 2010, the loan loss provision was $1.6 million compared to a provision of $1.9 million for the same period last year for a decrease of $275,000. The decrease in the provision was due to a decrease in loans on nonaccrual.

Commercial and industrial loans decreased to $138.7 million at March 31, 2010 from $141.1 million on December 31, 2009. Construction loans decreased to $56.5 million at March 31, 2010 from $60.3 million on December 31, 2009.

The allowance for loan loss at March 31, 2010 was $13.2 million as compared to $12.4 million at December 31, 2009. This increase was due to the provision for loan losses exceeding net loan charge offs for the three months ended March 31, 2010 as shown in the table below. The provision for loan losses decreased by $275,000 from $1.9 million to $1.6 million; this decrease in the provision was due to a decrease in nonperforming loans. Also, the level of the allowance for loan losses to total loans increased from 1.49% at December 31, 2009 to 1.50% at March 31, 2010. This increase was due to the provision for loan losses exceeding net loan charge offs for the three months ended March 31, 2010. In evaluating the allowance for loan losses the Company considered the following categories to be higher risk:

Included in Obligations Issued by States and Political Subdivisions as of March 31, 2010, are $7.8 million of ARSs and $12.3 million of VRDNs with unrealized losses of $500,000 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 $20.1 million of ARSs and VRDNs, $10.0 million are obligations of governmental entities and the remainder are 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 obligors. As of March 31, 2010, the weighted average taxable equivalent yield on these securities was 0.42%.

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 quarter ended March 31, 2010, the FHLBB reported net income of $22.9 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 March 31, 2010. The Company will continue to monitor its investment in FHLBB stock.

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