Century Bank, Massachusetts

Century Bancorp, Inc. is a Massachusetts state chartered bank holding company headquartered in Medford, Massachusetts.  The holding company is a Massachusetts corporation formed in 1972 and has one banking subsidiary, Century Bank and Trust Company that was formed in 1969.  The bank had total assets of approximately $1.7 billion as of September 30, 2008.  The bank operates 22 branch banking offices in 16 cities and towns in Massachusetts ranging from Braintree in the south to Beverly in the north.  The Bank’s customers consist primarily of small and medium-sized businesses and retail customers in these communities and surrounding areas, as well as local governments and institutions throughout Massachusetts.

Century Bank and Trust Company offers a wide range of services to commercial enterprises, state and local governments and agencies, non-profit organizations and individuals.  It emphasizes service to small and medium-sized businesses and retail customers in its market area.  The bank makes commercial loans, real estate and construction loans and consumer loans, and accepts savings, time, and demand deposits.  Century Bank has a wide range of savings options for personal banking services.  The banks portfolio of savings products includes checking accounts, savings accounts, money market accounts, certificates of deposit and more.  The bank has retirement plans products and services including IRA fixed rate certificates of deposit and IRA variable rate accounts.

The banks loan department provides borrower with funds for land purchases, construction and permanent financing.  The bank has loan products that contain; construction loans, jumbo mortgages, adjustable rate mortgages, and fixed rate mortgages.  In addition the bank provides loans for automobiles, personal loans, home equity lines of credit and traditional home equity loans.

The bank offers to its corporate and institutional 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.  Also, the holding company provides full service securities brokerage services through its division, Investment Services at Century Bank, in conjunction with Linsco/Private Ledger Corp. an unaffiliated registered securities broker-dealer and investment advisor.  The bank is also a provider of financial services, including cash management, transaction processing and short term financing to municipalities in Massachusetts and Rhode Island.  The bank has deposit relationships with approximately 40% of the 351 cities and towns in Massachusetts.

Total assets for the bank at the end of the third quarter for 2008 stood at $1,745,250,000.00 an increase from $1,680,281,000.00 in the third quarter of 2007.  Bank deposits totaled $1.24 billion, representing a 9.5% increase in total deposits from December 31, 2007.

Earnings for the third quarter ended September 30, 2008 were $2,559,000.00 compared to net income of $2,864,000.00 for the third quarter ended September 30, 2007.  Included in income for the third quarter of 2007 is the after-tax gain of $872,000 the sale of the building which housed the banks previous location for a branch located in Medford Square.  For the first nine months of 2008, net income totaled $6,235,000.00 an increase of 13.5% when compared to net income of $5,491,000.00 for the same period a year ago.
Throughout 2007 and the third quarter of 2008, the bank has seen improvement in its net interest margin.

Total deposits in the third quarter of 2008 increased primarily as a result of increases in money market accounts and savings and NOW deposits, offset somewhat by decreases in time deposits and demand deposits.  Money market accounts and savings and NOW deposits increased mainly because the bank competed more aggressively for these types of deposits during the first nine months of the year.  Time deposits, which include certificates of deposit, decreased mainly because of decreases in higher interest rate deposits.  The bank competed less aggressively for these types of deposits.

The bank’s results of operations are largely dependent on net interest income, which is the difference between the interest earned on loans and securities and interest paid on deposits and borrowings.  The results of operations are also affected by the level of income and fees from loans, deposits, as well as operating expenses, the provision for loan losses, the impact of federal and state income taxes and the relative levels of interest rates and economic activity.

As of September 30, 2008, total loans outstanding with the bank were $801.6 million, an increase of 10.4% from the total on December 31, 2007.  At September 30, 2008, commercial real estate loans accounted for 40.9% and residential real estate loans, including home equity loans, accounted for 35.7% of total loans.  Commercial and industrial loans increased to $130.0 million at September 30, 2008 from $117.3 million on December 31, 2007.  Construction loans decreased to $48.9 million at September 30, 2008 from $62.4 million on December 31, 2007.

The allowance for loan loss at September 30, 2008 was $10,254 as compared to $9,633 at December 31, 2007.  This increase was due to the provision for loan losses exceeding net loan charge offs for the three and nine months ended September 30, 2008.  Increase in the provision was due to increased net loan charge offs and nonperforming loans as well as current uncertainties in the economy along with loan portfolio growth.  While the provision for loan losses has increased significantly in the nine months ended September 30, 2008 as compared to the first nine months in 2007, the level of the allowance for loan losses to total loans decreased from 1.33% at December 31, 2007 to 1.28% at September 30, 2008.  The decline in the ratio is primarily a result of significant loan growth during the first nine months of 2008.  The growth of the portfolio caused a shift in the composition of the portfolio such that there was a higher concentration of loans in categories with lower general allowance allocations.

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