-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VZvGKt2+BrMK58NRNtSF+tJ0J488WR3kKdmXH0mF8uYWo8oGgSMS3mjVoDHhOTDH L767IiBzuwdXrlRFDC7Mkg== 0000950135-00-002758.txt : 20000515 0000950135-00-002758.hdr.sgml : 20000515 ACCESSION NUMBER: 0000950135-00-002758 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000512 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CENTURY BANCORP INC CENTRAL INDEX KEY: 0000812348 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 042498617 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-15752 FILM NUMBER: 627907 BUSINESS ADDRESS: STREET 1: 400 MYSTIC AVENUE CITY: MEDFORD STATE: MA ZIP: 01887 BUSINESS PHONE: 6173934606 MAIL ADDRESS: STREET 1: 400 MYSTIC AVE CITY: MEDFORD STATE: MA ZIP: 01887 10-Q 1 CENTURY BANCORP INC 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended MARCH 31, 2000 -------------------------------------------------- or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________________________________________________ Commission file number. 0-15752 --------------------------------------------------------- CENTURY BANCORP, INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter)
COMMONWEALTH OF MASSACHUSETTS 04-2498617 - ------------------------------------------------------------------------------------------------------------------------ (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
400 MYSTIC AVENUE, MEDFORD, MA 02155 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (781)391-4000 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. _X_Yes ___No Indicate the number of shares outstanding of each of the registrant's classes of common stock as of March 31, 2000: CLASS A COMMON STOCK, $1.00 PAR VALUE 3,496,500 SHARES CLASS B COMMON STOCK, $1.00 PAR VALUE 2,144,350 SHARES SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: MAY 12, 2000 CENTURY BANCORP, INC. --------------------------- --------------------------------- (Registrant) /s/ Paul V. Cusick, Jr. /s/ Kenneth A. Samuelian - -------------------------------- --------------------------------- PAUL V. CUSICK, JR. KENNETH A. SAMUELIAN VICE PRESIDENT AND TREASURER VICE PRESIDENT AND CONTROLLER, (PRINCIPAL FINANCIAL OFFICER) CENTURY BANK & TRUST COMPANY (CHIEF ACCOUNTING OFFICER) 1 of 12 2 Century Bancorp, Inc.
PAGE INDEX NUMBER PART I. FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS Consolidated Balance Sheets: March 31, 2000 and December 31, 1999. 3 Consolidated Statements of Income: Three (3) Months Ended March 31, 2000 and 1999. 4 Consolidated Statements of Changes in Stockholders Equity: Three (3) Months Ended March 31, 2000 and 1999. 5 Consolidated Statements of Cash Flows: Three (3) Months Ended March 31, 2000 and 1999. 6 Notes to Consolidated Financial Statements 7 - 8 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 9 - 11 Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK 11 PART II. OTHER INFORMATION Item 1 through Item 6 12
2 of 12 3 PART I - Item 1
Century Bancorp, Inc. - Consolidated Balance Sheets (unaudited) - --------------------------------------------------------------------------------------------------------------- (000's) Mar 31, Dec. 31, ASSETS 2000 1999 --------- --------- Cash and due from banks $ 29,946 $ 34,512 Federal funds sold and interest-bearing deposits in other banks 1 32,016 --------- --------- Total cash and cash equivalents 29,947 66,528 --------- --------- Securities available-for-sale, amortized cost $265,358 and $263,690, respectively 255,762 254,975 Securities held-to-maturity, market value $145,223 and $146,603, respectively 151,293 152,599 Loans, net of unearned discount: Commercial & industrial 81,153 77,166 Construction & land development 23,473 21,682 Commercial real estate 214,034 209,332 Industrial revenue bonds 175 190 Residential real estate 83,480 82,968 Consumer 11,237 11,678 Home equity 19,224 19,227 Overdrafts 379 482 --------- --------- Total loans, net of unearned discount 433,155 422,725 Less: allowance for loan losses 4,418 7,646 --------- --------- Net loans 428,737 415,079 Bank premises and equipment, net 9,596 9,473 Accrued interest receivable 7,740 6,624 Other assets 19,244 20,255 --------- --------- Total assets $ 902,319 $ 925,533 ========= ========= LIABILITIES Deposits: Demand deposits $ 132,932 $ 143,280 Savings and NOW deposits 167,705 152,089 Money market accounts 80,613 77,729 Time deposits 237,157 270,575 --------- --------- Total deposits 618,407 643,673 Securities sold under agreements to repurchase 69,200 59,480 Federal Home Loan Bank (FHLB) borrowings and other borrowed funds 113,812 117,594 Other liabilities 11,225 15,740 Long term debt 28,750 28,750 --------- --------- Total liabilities 841,394 865,237 STOCKHOLDERS' EQUITY Class A common stock, $1.00 par value per share; authorized 10,000,000 shares; issued 3,754,600 and 3,721,850, respectively 3,755 3,722 Class B common stock, $1.00 par value per share; authorized 5,000,000 shares; issued 2,191,900 and 2,196,900, respectively 2,192 2,197 Additional paid-in capital 11,093 11,017 Retained earnings 54,175 52,188 Treasury stock, Class A, 258,100 and 200,600 shares, at cost, respectively (4,012) (3,122) Treasury stock, Class B, 47,550 shares, each period, at cost, respectively (41) (41) --------- --------- 67,162 65,961 Accumulated other comprehensive income (loss) (6,237) (5,665) --------- --------- Total stockholders' equity 60,925 60,296 --------- --------- Total liabilities and stockholders' equity $ 902,319 $ 925,533 ========= =========
See accompanying Notes to Consolidated Financial Statements. 3 of 12 4
Century Bancorp, Inc. - Consolidated Statements of Income (unaudited) - ------------------------------------------------------------------------------------------------------ (000's except share data) Three months ended March 31, 2000 1999 ---------- ---------- Interest income Loans $ 9,427 $ 8,648 Securities held-to-maturity 2,359 2,325 Securities available-for-sale 3,914 3,014 Federal funds sold and interest-bearing deposits in other banks 112 163 ---------- ---------- Total interest income 15,812 14,150 Interest expense Savings and NOW deposits 980 926 Money market accounts 540 571 Time deposits 3,055 2,927 Securities sold under agreements to repurchase 697 414 FHLB borrowings, other borrowed funds and long term debt 2,054 1,374 ---------- ---------- Total interest expense 7,326 6,212 ---------- ---------- Net interest income 8,486 7,938 Provision for loan losses 300 225 ---------- ---------- Net interest income after provision for loan losses 8,186 7,713 Other operating income Service charges on deposit accounts 457 425 Lockbox fees 402 391 Brokerage commissions 440 350 Other income 160 132 ---------- ---------- Total other operating income 1,459 1,298 ---------- ---------- Operating expenses Salaries and employee benefits 3,828 3,515 Occupancy 409 398 Equipment 366 335 Other 1,384 1,352 ---------- ---------- Total operating expenses 5,987 5,600 ---------- ---------- Income before income taxes 3,658 3,411 Provision for income taxes 1,307 1,275 ---------- ---------- Net income $ 2,351 $ 2,136 ========== ========== - ------------------------------------------------------------------------------------------------------ Share data: Weighted average number of shares outstanding, basic 5,672,269 5,825,528 Weighted average number of shares outstanding, diluted 5,674,306 5,858,711 Net income per share, basic $ 0.41 $ 0.37 Net income per share, diluted $ 0.41 $ 0.36 Cash dividends declared: Class A common stock $ 0.0800 $ 0.0600 Class B common stock $ 0.0370 $ 0.0170
See accompanying Notes to Consolidated Financial Statements. 4 of 12 5 Century Bancorp, Inc. - Consolidated Statement of Changes in Stockholders' Equity (unaudited) - --------------------------------------------------------------------------------
Accumulated Class A Class B Additional Treasury Treasury Other Total Common Common Paid-In Retained Stock Stock Comprehensive Stockholders' Three months ended March 31, Stock Stock Capital Earnings Class A Class B Income (Loss) Equity ------------------------------------------------------------------------------------------- (000's) 1999 - ---- Balance at December 31, 1998 $ 3,673 $ 2,227 $ 10,965 $ 44,451 $ (136) $ (41) $ (88) $ 61,051 Net income -- -- -- 2,136 -- -- -- 2,136 Other comprehensive income, net of tax: Increase in unrealized loss on securities available-for-sale -- -- -- -- -- -- (890) (890) -------- Comprehensive income 1,246 Stock options exercised, 5,000 shares 5 -- 13 -- -- -- -- 18 Treasury stock repurchase, 5,000 shares -- -- -- -- (87) -- -- (87) Cash dividends, Class A common stock, $.06 per share -- -- -- (219) -- -- -- (219) Cash dividends, Class B common stock, $.017 per share -- -- -- (37) -- -- -- (37) --------------------------------------------------------------------------------------- Balance at March 31, 1999 $ 3,678 $ 2,227 $ 10,978 $ 46,331 $ (223) $ (41) $ (978) $ 61,972 ======================================================================================= 2000 - ---- Balance at December 31, 1999 $ 3,722 $ 2,197 $ 11,017 $ 52,188 $(3,122) $ (41) $ (5,665) $ 60,296 Net income -- -- -- 2,351 -- -- -- 2,351 Other comprehensive income, net of tax: Increase in unrealized loss on securities available-for-sale -- -- -- -- -- -- (572) (572) -------- Comprehensive income 1,779 Conversion of Class B common stock to Class A common stock, 5,000 shares 5 (5) -- -- -- -- -- -- Stock options exercised, 27,750 shares 28 -- 76 -- -- -- -- 104 Treasury stock repurchases, 57,500 shares -- -- -- -- (890) -- -- (890) Cash dividends, Class A common stock, $.08 per share -- -- -- (284) -- -- -- (284) Cash dividends, Class B common stock, $.037 per share -- -- -- (79) -- -- -- (79) --------------------------------------------------------------------------------------- Balance at March 31, 2000 $ 3,755 $ 2,192 $ 11,093 $ 54,176 $(4,012) $ (41) $ (6,237) $ 60,926 =======================================================================================
See accompanying Notes to Consolidated Financial Statements. 5 of 12 6
Century Bancorp, Inc. - Consolidated Statements of Cash Flows (unaudited) 2000 1999 - ----------------------------------------------------------------------------------------------------------------- For the three months ended March 31, (000's) CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 2,351 $ 2,136 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses 300 225 Deferred income taxes 1,094 (178) Net depreciation and amortization 480 485 Increase in accrued interest receivable (1,116) (618) Increase in other assets (5) (195) Loans originated for sale -- -- Proceeds from sales of loans 4 -- Gain on sales of loans -- -- Increase (decrease) in other liabilities 1,485 (639) -------- -------- Net cash provided by operating activities 4,593 1,216 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from maturities of securities available-for-sale 2,332 35,620 Purchase of securities available-for-sale (4,000) (49,424) Proceeds from maturities of securities held-to-maturity 3,304 32,577 Purchase of securities held-to-maturity (1,997) (34,739) Decrease in payable for investments purchased (6,000) (17,992) Net increase in loans (13,892) (7,685) Capital expenditures (443) (206) -------- -------- Net cash used in investing activities (20,696) (41,849) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Net decrease in time deposits (33,418) (11,664) Net increase (decrease) in demand, savings, money market and NOW deposits 8,152 (29,435) Net proceeds from the issuance of common stock 104 18 Treasury stock repurchases (890) (87) Cash Dividends (364) (256) Net increase (decrease) in securities sold under agreements to repurchase 9,720 (15,230) Net (decrease) increase in FHLB borrowings and other borrowed funds (3,782) 81,755 -------- -------- Net cash (used in) provided by financing activities (20,478) 25,101 -------- -------- Net decrease in cash and cash equivalents (36,581) (15,532) Cash and cash equivalents at beginning of year 66,528 61,019 -------- -------- Cash and cash equivalents at end of period $ 29,947 $ 45,487 ======== ======== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for: Interest $ 7,857 $ 6,553 Income taxes 309 1,592 Noncash transactions: Property acquired through foreclosure -- $ 0 Change in unrealized (losses) gains on securities available-for-sale, net of taxes $ (572) $ (890)
See accompanying Notes to Consolidated Financial Statements. 6 of 12 7 Century Bancorp Inc. Notes to Consolidated Financial Statements BASIS OF PRESENTATION In the opinion of management, the accompanying unaudited interim consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, which are necessary to present a fair statement of the results for the interim period presented of Century Bancorp, Inc. (the "Company") and its wholly owned subsidiary, Century Bank and Trust Company (the "Bank"). The results of operations for the interim period ended March 31, 2000, are not necessarily indicative of results for the entire year. It is suggested that these statements be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's Annual Report on form 10K for year ended December 31, 1999. The financial statements have been prepared in conformity with generally accepted accounting principals and to general practices within the banking industry. In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and revenues and expenses for the period. Actual results could differ from those estimates. Material estimates that are susceptible to change in the near-term relate to the allowance for losses on loans. Management believes that the allowance for losses on loans is adequate based on independent appraisals and review of other factors associated with the assets. While management uses available information to recognize losses on loans, future additions to the allowance for loans may be necessary based on changes in economic conditions. In addition, regulatory agencies periodically review the Company's allowance for losses on loans. Such agencies may require the Company to recognize additions to the allowance for loans based on their judgements about information available to them at the time of their examination. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, the Bank. The Company provides a full range of banking services to consumer, business and municipal customers in Massachusetts. As a bank holding company, the Company is subject to the regulation and supervision of the Federal Reserve Board. The Bank, a state chartered financial institution, is subject to supervision and regulation by applicable state and federal banking agencies, including the Federal Reserve Board, the Federal Deposit Insurance Corporation (the "FDIC"), and the Massachusetts Division of Banks. The Bank is also subject to various requirements and restrictions under federal and state law, including requirements to maintain reserves against deposits, restrictions on the types and amounts of loans that may be granted and the interest that may be charged thereon, and limitations on the types of investments that may be made and the types of services that 7 of 12 8 may be offered. Various consumer laws and regulations also affect the operations of the Bank. In addition to the impact of regulation, commercial banks are affected significantly by the actions of the Federal Reserve Board as it attempts to control the money supply and credit availability in order to influence the economy. All aspects of the Company's business are highly competitive. The Company faces aggressive competition from other lending institutions and from numerous other providers of financial services. ======================================================= 8 of 12 9 ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. OVERVIEW For the quarter ended and year-to-date ended March 31, 2000. Earnings for the first quarter ended March 31, 2000 were $2.4 million, an increase of 10.1% when compared with the first quarter 1999 earnings of $2.1 million. Diluted earnings per share for the first quarter 2000 were $0.41 versus $0.36 for the first quarter of 1999. The increase was mainly attributable to balance sheet growth. Total assets were $902.3 million compared to $925.5 million at December 31, 1999. The reduction was mainly caused by municipal deposit trends. During the fourth quarter of 1999, the Company announced plans to continue its stock repurchase plan. Under the program, the Company is authorized to repurchase up to 225,000 shares, or less than 7%, of Century Bancorp Class A Common Stock. The program expires on October 21, 2000. Through the end of the first quarter 2000, the Company has repurchased 135,800 shares. FINANCIAL CONDITION LOANS On March 31, 2000 total loans outstanding, net of unearned discount, were $433.2 million, an increase of 2.5% from the total on December 31, 1999. At March 31, 2000 commercial real estate loans accounted for 49.4% and residential real estate loans accounted for 19.3% of total loans. Construction loans increased to $23.5 million at March 31, 2000 from $21.7 million at the end of the previous quarter. ALLOWANCE FOR LOAN LOSSES The allowance for loan losses was 1.02% of total loans on March 31, 2000 compared with 1.81% on December 31, 1999. Net charge-offs for the three month period ended March 31, 2000, were $3.6 million, compared with net recoveries of $74 thousand for the same period in 1999. The increase in net charge-offs primarily reflects the deterioration with one borrower's credit quality whose total relationship amounted to $4.1 million. Management reported this credit in the third quarter 10Q, placed it to nonaccrual loans during the fourth quarter of 1999 and subsequently charged-off $3.5 million during the first quarter of 2000. The allowance for loan losses is based on management's overview of the quality of the loan portfolio, previous loan loss experience and current economic conditions. As of March 31, 2000, loans on non-accrual status totaled $624 thousand or .14% of loans compared to $4.6 million or 1.09% of loans at December 31, 1999. Nonaccrual loans decreased primarily as a result of the previously mentioned charge-off. Loans past due 90 days or more totaled $0 thousand. SECURITIES HELD-TO-MATURITY The securities held-to-maturity portfolio totaled $151.3 million on March 31, 2000, an increase of 0.9% from the total on December 31, 1999. The portfolio is concentrated in United States Treasury and Agency securities and has an estimated weighted average maturity of 4.5 years. 9 of 12 10 Management's Discussion and Analysis of Financial Condition and Results of Operation (con't.) SECURITIES AVAILABLE-FOR-SALE The securities available-for-sale portfolio totaled $255.8 million at March 31, 2000, an increase of 0.3% from December 31, 1999. The portfolio is concentrated in United States Treasury and Agency securities and has an estimated weighted average maturity of 3.8 years. Total securities available-for-sale increased primarily as a result of leveraged balance sheet transactions. DEPOSITS AND BORROWED FUNDS On March 31, 2000 deposits totaled $618.4 million, representing a 3.9% decrease in total deposits from December 31, 1999. Total deposits decreased primarily as a result of the cyclical municipal deposit trends. Borrowed funds totaled $183.0 million compared to $177.1 million at December 31, 1999. The majority of the increase was an increase in borrowings from the Federal Home Loan Bank which were primarily used for leveraged balance sheet transactions. RESULTS OF OPERATIONS NET INTEREST INCOME For the three month period ended March 31, 2000 net interest income totaled $8.5 million, an increase of 6.9% from the comparable period in 1999. Interest income was primarily affected positively by balance sheet growth. The net yield on average earning assets on a fully taxable equivalent basis decreased to 3.98% in the first three months of 2000 from 4.11% during the same period in 1999. PROVISION FOR LOAN LOSSES For the three month period ended March 31, 2000 the loan loss provision totaled $300 thousand compared to $225 thousand for the same period in 1999. Loan loss provision increased due to growth in the loan portfolio. The Company's loan loss allowance as a percentage of total loans outstanding has decreased from 1.81% at March 31, 1999 to 1.02% at March 31, 2000, respectively. NON-INTEREST INCOME AND EXPENSE Other operating income for the quarter ended March 31, 2000 was $1.5 million compared to $1.3 million the first quarter of 1999. Brokerage commissions increased 25.7% due to an increase in investment related transactions. During the first quarter 2000, operating expenses increased by $387 thousand to $6.0 million or 6.9% from the same quarter last year. Most of the increase was in salaries and employee benefits with the remainder in all other expenses. 10 of 12 11 INCOME TAXES For the first quarter of 2000, the Company's income taxes totaled $1.3 million on pretax income of $3.7 million for an effective tax rate of 35.7%. For last year's corresponding quarter, the Company's income taxes totaled $1.3 million on pretax income of $3.4 million for an effective rate of 37.4%. ======================================================== ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK The response is incorporated herein by reference from the discussion under the subcaption "Market Risk and Asset Liability Management" of the caption "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" on pages 9 and 10 of the Annual Report which is incorporated herein by reference. ======================================================== 11 of 12 12 PART II - OTHER INFORMATION Item 1 Legal proceedings - The Company is not engaged in any legal proceedings of a material nature at the present time. From time to time, the Company is party to routine legal proceedings within the normal course of business. Such routine legal proceedings, in the aggregate, are believed by management to be immaterial to the Company's financial condition and results of operation. Item 2 Change in securities - Not applicable Item 3 Defaults upon senior securities - Not applicable Item 4 Submission of matters to a vote - Not applicable Item 5 Other information - Not applicable Item 6 Exhibits and reports on form 8-K - Not applicable 12 of 12 EX-27 2 FINANCIAL DATA SCHEDULE
9 1,000 U.S. DOLLARS 1-MO DEC-31-2000 JAN-01-2000 MAR-31-2000 1 29,946 1 0 0 255,762 151,293 145,223 433,155 4,418 902,319 618,407 183,012 11,225 28,750 0 0 5,947 54,978 902,319 9,427 6,273 112 15,812 4,575 7,326 8,486 300 8,186 5,987 3,658 2,351 0 0 2,351 .41 .41 3.98 624 0 842 5,796 7,646 3,561 33 4,418 4,418 0 0
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