Billions in Assets Thousands of Customers Dozens of Locations 1
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2015 Annual Report Our family’s bank. And yours. 400 Mystic Avenue, Medford, MA 02155 (866) 823-6887 CenturyBank.com Uniqueness Billions in assets Thousands of customers Dozens of locations 1 unique bank Equal Housing Lender/Member FDIC © 2016 Century Bancorp, Inc. All rights reserved. 002-CSN5E02 17495 ANNUAL_2015_EDITORIAL_V13 cc15.indd 1 3/2/16 12:24 PM Chairman’s Message About Century We are the largest family controlled bank in New England, an attribute that summarizes the uniqueness of our management style and ethical manner of operation. What began 47 years ago with determination and Century Bancorp, Inc. is a $3.9 billion banking and financial services company focus has evolved into my legacy. Having watched generations of banks and bankers come and go, I believe headquartered in Medford, Massachusetts. The Company operates 27 banking I’ve accumulated some wisdom along the way. offices in 20 cities and towns in Massachusetts and provides a full range of It is important I acknowledge the retirement of founding Board Member, Prof. Marshall I. Goldman, PhD, one business, personal, and institutional services. of our longest serving members with 47 years of service. In light of his extraordinary contribution to the Bank, Headquarters our Board appointed Dr. Goldman as Director Emeritus. I also want to acknowledge the retirement of Board Member Stephanie Sonnabend, with 18 years of service. I am extremely grateful for their combined years of tireless service, wisdom, and advice. I’m also excited to welcome two new Directors, Louis J. Grossman and Jo Ann Simons, who were elected to the Board of Directors starting in January 2016. Both represent the highest standards of leadership while each provides a unique perspective during this important period of growth and heightened focus on delivering value for our clients and shareholders. Allston Andover Back Bay Beverly The bank has carefully nurtured long-term relationships with many successful businesses whose families are now contemplating retirement and succession planning. We are uniquely positioned to understand the dynamics of the family business enabling us to provide expert advice and prospective from a position of experience. Our Wealth Management Division provides customized solutions not only to finance the transfer of the business to the next generation but also enable families to maintain their legacy and lifestyle. Braintree Brookline Burlington Cambridge Century Bank’s great managers, premier financial strength and family values combine to create a unique organization in today’s financial world. Our amalgamation of strengths greatly benefits our customers and our shareholders, and it will only become more advantageous over time. We’re proud of our achievements in 2015, and may 2016 be another year where we excel financially and in our social mission. Chestnut Hill Square Coolidge Corner Everett Federal Street Marshall M. Sloane, Founder and Chairman Fellsway Lynn Malden Medford Square Newton Centre North End Peabody Quincy Salem Somerville State Street Wellesley Our family’s bank. And yours. Winchester Woburn Pictured from left: Executive Vice President Linda Sloane Kay; Founder & Chairman Marshall M. Sloane; and President & CEO Barry R. Sloane 17495 ANNUAL_2015_EDITORIAL_V13 cc15.indd 2 3/2/16 11:33 AM 2015 President’s Message Dear Fellow Shareholders: 2015 is the sixth consecutive record year for Century Bank. In our 47th year, we continue to transcend in nearly all matters, financial and strategic. Capital, assets, deposits, earnings, and loans all again reached record year end levels. We wish to make particular note of our loan growth in 2015, $400 million, or 30%, to a total of $1.7 billion. We have achieved extraordinary percentage loan growth compared to all in our peer universe. We ended 2015 at $3.9 billion in assets and $23 million of annual earnings, an increase of 5.3%. Our stock rose 9.76% during the year to $43.46; a three-year cumulative total return of 37% and a five-year cumulative total return of 75%. All three principal business units performed very well in 2015. % Despite so much turmoil in our industry and the world, our path continues 9.76 to be clear and consistent. increase in stock price Our Family’s Bank. And Yours. By the time you read this report our Founder and Chairman, Marshall M. Sloane, will have celebrated his 90th birthday, making him, as far as we can tell, the most senior working bank Chairman in the country, if not the world. That’s a pretty unique achievement all by itself. We begin every day with the unparalleled knowledge and experience of our Founder. Our slogan translates into our devotion to treat our clients as we, as a family and a business, would wish to be treated. This credo translates into fair products, rates, and fees, quick credit decisions and closings, transparency of process, and respect for the continuity and loyalty of our clients. Yet we also appreciate the frailty of life and business conditions, and try to support our clients through those inevitable undulations. Let’s examine the multiple elements of Century’s uniqueness that have contributed to our success. 17495 ANNUAL_2015_EDITORIAL_V13 cc15.indd 1 3/2/16 11:34 AM 2015 ANNUAL REPORT Uniqueness of Centralized Hands on Management None of our peers run the way we do. We are unique in our centralized control and transparency of management. Our Loan Committee is a weekly institution that approves in open forum every loan over $500,000. So-called Deal of the Day meets almost every afternoon to approve all other loans and lines of credit. I attend virtually every one. It is a level of centralized credit approval that ensures we know the risks we take, makes sure we reward customer loyalty, and connects us to our clients and A communities. S&P Quality Ranking Our Management Committee is composed of the 11 most senior sector executives at Century. This bi-weekly, half-day, meeting follows an agenda that covers every officer hiring, contract, lease, audit, marketing campaign, significant complaint, policy change, and pipeline of all new business. MANCOM, as we call it, sets our cultural tone of centralized, yet participatory, management engagement. Opinions and dialogue are encouraged; the wisdom of our collective executive team is shared. All have a stake in decisions made. It works. Uniqueness in Consistency of Net Earnings Growth and Return on Equity Net income grew by 5.3% to a record $23 million, or $4.13 per Class A share diluted, for the year ended December 31, 2015, as compared to net income of $21.9 million, or $3.93 per Class A share diluted for 2014. Century’s return on average equity (ROE) is now 11.26%, as compared to 2014’s 11.57%. Our ROE remains within the top 15% of our regional peer group. The ROE is the primary building block of our financial goal setting. It reflects our priority to grow shareholder value as the key driver of our strategic plan, our annual budget, and our tactical decisions. We can’t control the equity markets, but we can have a high level of confidence that if we continue to produce a double digit ROE, the share price will follow over time. It is why we believe Standard and Poors rates Century’s shares an “A” and a “Strong Buy.” Total Assets (in thousands) Earnings per Class A share, Net Income (in thousands) diluted $ 3.93 $ 4.13 $ 3,431,154 $ 3,947,441 $ 3.61 $ 3,624,036 $ 21,860 $ 20,046 $ 23,021 ‘13 ‘14 ‘15 ‘13 ‘14 ‘15 ‘13 ‘14 ‘15 17495 ANNUAL_2015_EDITORIAL_V13 cc15.indd 2 3/2/16 11:34 AM 2015 ANNUAL REPORT Uniqueness Results in Significant Asset Growth Total assets grew 8.9% to a record of $3.9 billion on December 31, 2015, up from $3.6 billion on December 31, 2014, an increase of $323 million. All three business lines: consumer, business, and institutional services grew meaningfully in 2015. Our depositor confidence is pronounced and predicated on our consistent growth of earnings and assets. We are proud to have dozens of depositors who each routinely keep tens of millions at Century with confidence in our high performing earnings and $ asset growth. Being one of the nine S&P “A” rated banks in America, and one of only 3.9 two in Massachusetts, is a strong external contributing confidence factor. billion in total assets Uniqueness Supports Capital Adequacy Total equity was $214.5 million on December 31, 2015, an increase of $22 million or 11.5% from $192.5 million on December 31, 2014. Book value per share increased to $38.53 at December 31, 2015, up by $3.96 from $34.57 at December 31, 2014. Century is “well capitalized” by all regulatory standards, and we have passed all “Basel III” requirements through organic capital generation from earnings. Uniqueness Grows Our Loan Portfolio Ours is a unique loan portfolio. Total loans grew by a record $400 million or 30% to $1.73 billion on December 31, 2015; our largest loan portfolio ever, and our highest loan to deposit ratio, 56%, in decades. Non-performing assets fell from the previous year to $2.3 million, down from $4.1 million, a minimal number for a portfolio of our size. The education and healthcare sectors continue to anchor our loan growth, Pictured from left: Executive Vice President Paul A. Evangelista; Executive Vice President Brian J. Feeney; Executive Vice President David B. Woonton; and Chief Financial Officer & Treasurer William P. Hornby 17495 ANNUAL_2015_EDITORIAL_V13 cc15.indd 3 3/2/16 11:34 AM 2015 ANNUAL REPORT increasing some 41% as 2015 saw many quality not-for-profit institutions expanding and continuing to refinance older “swapped” debt with simpler and less expensive “direct purchase” loan placements.