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Filed by Century Bancshares, Inc.
Pursuant to Rule 425 of the Securities Act of 1933
Subject Company: GrandBanc, Inc.
Commission File No: 000-16234
THE FOLLOWING COMMUNICATION WILL BE DISSEMINATED TO STOCKHOLDERS, CUSTOMERS AND
FRIENDS OF CENTURY BANCSHARES, INC. BEGINNING ON NOVEMBER 6, 2000:
November 1, 2000
To Our Stockholders, Customers and Friends:
I want to call your attention to some exciting developments here at
Century as announced recently in the enclosed press releases. We see this as
good news for our stockholders, customers, and employees.
From a financial growth standpoint, the quarter ended September 30,
2000, was the best in Century's eighteen-year history. In these three months
alone, loans and deposits increased $26 million and $48 million, respectively,
bringing Century's total assets to a new high of $285 million. Net consolidated
income of $425,000 for the quarter was also a record.
The increase in deposits was primarily attributable to the acquisition
of our new branch in Reston, Virginia, on August 25, 2000. Deposit retention at
the Reston branch is currently running ahead of our projections. Strong
internal loan growth, together with $12 million in loan portfolio purchases,
has enabled the bank to put these new deposits to work profitably.
The GrandBanc acquisition represents another important milestone in
our plan to extend Century's franchise throughout the Washington metropolitan
area. GrandBanc's five branches are attractive and well situated within markets
Century has identified as priority expansion opportunities. We believe the
challenges GrandBanc has been facing in recent years can be resolved with the
infusion of Century's demonstrated ability to generate strong loan growth,
together with a reduction in overhead resulting from the consolidation of
Century's Bethesda branch into GrandBanc's larger office across the street,
data processing economies of scale, and elimination of redundant or overlapping
functions.
The combination of projected revenue enhancements and cost savings
should, we believe, result in earnings per share on a post-merger basis at
least as great as Century was forecasting on a stand-alone basis. In the
intermediate and longer term, the enlargement of our customer base and
expansion of our branch network into attractive new markets in Alexandria,
Virginia, and Montgomery County, Maryland, should enhance Century's earning
power and franchise value.
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From a customer standpoint, the expanded branch network and more
extensive financial resources should translate into greater banking
convenience, continued expansion of available products and services, and a
higher lending capacity to finance business expansion.
We at Century appreciate your continued loyalty and support, and
reiterate our commitment to providing superior customer service while building
solid value for our stockholders.
Sincerely yours,
/s/ JOSEPH S. BRACEWELL
-------------------------------
Joseph S. Bracewell
Chairman of the Board
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IMPORTANT NOTICE
SHAREHOLDERS OF CENTURY BANCSHARES, INC. AND GRANDBANC, INC. (COMPANIES) AND
OTHER INVESTORS ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS AND OTHER
DOCUMENTS THAT WILL BE INCLUDED IN THE REGISTRATION STATEMENT ON FORM S-4 TO BE
FILED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION (SEC) IN CONNECTION WITH
THE PROPOSED MERGER OF THE COMPANIES. THE PROXY STATEMENT/PROSPECTUS WILL
CONTAIN IMPORTANT INFORMATION ABOUT THE COMPANIES, THE MERGER, AND ABOUT
PERSONS SOLICITING PROXIES IN THE MERGER, INCLUDING OFFICERS AND DIRECTORS OF
THE COMPANIES AND THEIR INTEREST IN THE MERGER.
AFTER IT IS FILED WITH THE SEC, INVESTORS MAY OBTAIN A FREE COPY OF THE PROXY
STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS ON THE SEC'S WEB SITE
(HTTP://WWW.SEC.GOV). A PROXY STATEMENT/PROSPECTUS WITH RESPECT TO THE PROPOSED
MERGER AND OTHER RELEVANT DOCUMENTS WILL ALSO BE MADE AVAILABLE FOR FREE TO
STOCKHOLDERS OF THE COMPANIES UPON REQUEST DIRECTED TO THE COMPANIES'
RESPECTIVE SHAREHOLDER RELATIONS DEPARTMENTS AS FOLLOWS:
SHAREHOLDER RELATIONS SHAREHOLDER RELATIONS
GRANDBANC, INC. CENTURY BANCSHARES, INC.
1800 ROCKVILLE PIKE 1275 PENNSYLVANIA AVENUE, NW
ROCKVILLE, MD 20816 WASHINGTON, DC 20004
301-770-1300 202-496-4100
THIS LETTER AND THESE PRESS RELEASES CONTAIN FORWARD-LOOKING STATEMENTS WITHIN
THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND
SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. ALTHOUGH THE
COMPANIES BELIEVE THAT THE EXPECTATIONS REFLECTED IN SUCH FORWARD-LOOKING
STATEMENTS ARE BASED UPON REASONABLE ASSUMPTIONS, THEY CAN GIVE NO ASSURANCE
THAT THEIR EXPECTATIONS WILL BE ACHIEVED. IMPORTANT FACTORS THAT COULD CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE COMPANIES' EXPECTATIONS ARE
DISCLOSED IN THEIR RESPECTIVE FORMS 10-K FOR THE YEAR ENDED DECEMBER 31, 1999,
FILED WITH THE SEC AND ARE INCORPORATED BY REFERENCE HEREIN (CAUTIONARY
DISCLOSURES). SUBSEQUENT WRITTEN AND ORAL FORWARD-LOOKING STATEMENTS
ATTRIBUTABLE TO THE COMPANIES OR PERSONS ACTING ON THEIR BEHALF ARE EXPRESSLY
QUALIFIED IN THEIR ENTIRETY BY THE CAUTIONARY DISCLOSURES.
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CENTURY BANCSHARES, INC. TO ACQUIRE GRANDBANC, INC.
IN $8.8 MILLION STOCK SWAP
WASHINGTON, D.C., October 11, 2000 -- Century Bancshares, Inc.
(Nasdaq: CTRY) and GrandBanc, Inc. (OTC: GDBC) announced today that they have
entered into an agreement whereby Century will acquire GrandBanc in a
stock-for-stock exchange. The exchange ratio will be fixed at 0.3318 shares of
Century common stock for each share of GrandBanc common stock, making the
overall value of the transaction approximately $8.8 million. The transaction,
which has been approved by the Boards of Directors of both companies, is
intended to be accounted for as a pooling-of-interests.
According to Joseph S. Bracewell, Century's Chairman and CEO, the
acquisition represents an important milestone in the continuation of Century's
program to expand into the Maryland and Virginia suburbs of Washington, D.C.
"After this merger is concluded early next year, Century will have grown in
four years from a $100 million bank with two offices in downtown Washington, to
a $400 million bank with eleven branches throughout the metropolitan area,"
Bracewell said. "We are particularly pleased to add GrandBanc's strong
Montgomery County franchise to balance our recent expansion efforts in Northern
Virginia."
Subject to regulatory and shareholder approvals, the transaction is
expected to close in the first quarter of 2001. While Century expects to
continue its focus on growth and expansion, the company expects to realize
operating efficiencies from the consolidation of redundant operations and
facilities. In connection with the merger, Century expects to incur after-tax
charges totaling approximately $1.5 million. Excluding these one-time charges,
the transaction is expected to be accretive to Century's earnings per share in
2001.
"GrandBanc has a proud history of serving small businesses and
professionals for over twenty years," said Melvyn J. Estrin, Chairman of
GrandBanc. "Century shares our philosophy of customer service and community
involvement, and we believe the expanded scope and capabilities of our combined
organizations will add value for our stockholders, customers, and employees."
Under the terms of the agreement, two members of GrandBanc's Board of Directors
will join the Board of Directors of Century Bancshares, Inc. and four will join
the Board of Century National Bank.
GrandBanc, Inc., which had $114 million in total assets as of June 30,
2000, is the parent holding company of GrandBank, a Maryland chartered
commercial bank headquartered in Rockville, with two branches in Bethesda, one
in Germantown, and one in Old Town Alexandria.
Century Bancshares, Inc., is the parent company of Century National
Bank, a community bank providing a full range of loans and financial services
to professionals, small businesses, and non-profit organizations in the
Washington, D.C. metropolitan area. Century currently operates seven
full-service banking offices - two in downtown Washington, four in Northern
Virginia and one in Bethesda - a loan production office in Rockville, and an
insurance agency. Century had $228 million in total assets as of June 30, 2000,
and recently concluded the acquisition of a $52 million branch in Reston,
Virginia.
# # #
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CENTURY BANCSHARES, INC.
ANNOUNCES THIRD QUARTER 2000 EARNINGS UP 32%
Washington, D.C., October 13, 2000, CENTURY BANCSHARES, INC. (NASDAQ
SmallCap Market: CTRY) announced today that net income for the third quarter of
2000 was $425,000 or $0.15 per diluted common share, a 32% increase compared
with net income of $323,000 or $0.11 per diluted common share in the third
quarter of 1999. Net income for the first nine months of 2000 was $1,247,000 or
$0.45 per diluted common share, a 51% increase over 1999 when earnings were
$827,000 or $0.29 per diluted common share. Earnings per share for 1999 have
been adjusted to reflect the 5% stock dividend distributed to shareholders on
April 17, 2000.
The increase in third quarter earnings was primarily driven by
increases in net interest income resulting from earning asset growth. Average
earning assets for the third quarter of 2000 increased 43% compared with the
same quarter last year resulting in a 29% increase in net interest income for
the comparable periods. The increase in net interest income was partially
offset by a $165,000 increase in the provision for credit losses, which was
primarily attributable to the 26% growth in average loans outstanding, and a
29% increase in noninterest expenses coinciding with the expanded scope of the
Company's operations.
According to Joseph S. Bracewell, Chairman, President and CEO, "Total
assets reached a new high during the quarter as we continued to experience
solid growth in our loan portfolio complemented by the successful purchase of a
full-service branch in Reston, Virginia with over $52 million in deposits. Our
expanded presence in Northern Virginia represents another milestone in our
continued expansion efforts. We remain confident that our earnings performance
validates the strength of our business expansion model."
Total assets at September 30, 2000 were $285 million, an increase of
$84 million, or 42%, compared to $201 million one year earlier. Total deposits
at September 30, 2000 were $216 million and loans, net of unearned income, were
$180 million, reflecting increases of 58% and 36%, respectively, compared to
September 30, 1999.
Century Bancshares, Inc. is the parent company of Century National
Bank, a community bank providing a full range of loans and financial services
to professionals, small businesses, and non-profit organizations in the
Washington, DC metropolitan area. Century operates seven full-service banking
offices -- two in downtown Washington, four in Northern Virginia, and one in
Bethesda, MD -- a loan production office in Rockville, MD, and an insurance
agency.
Century recently announced the pending acquisition of GrandBanc, Inc.
via a stock-for-stock exchange valued at $ 8.8 million. GrandBanc, Inc., which
had $114 million in total assets at June 30, 2000, is the parent holding
company of GrandBank, a Maryland chartered commercial bank headquartered in
Rockville, MD.
Century also announced that it has terminated its previously announced
130,000-share repurchase program. As of the termination date, a total of 6,500
shares had been purchased under this program.
(tables follow)
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CENTURY BANCSHARES, INC.
FINANCIAL HIGHLIGHTS (UNAUDITED)
<TABLE>
<CAPTION>
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QUARTER ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------- -------------------------
(Dollars in thousands, except per share amounts) 2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
EARNINGS DATA:
Interest Income $ 5,009 $ 3,323 $ 13,159 $ 9,519
Interest Expense 2,375 1,284 5,670 3,595
---------- ---------- ---------- ----------
Net Interest Income 2,634 2,039 7,489 5,924
Provision for Credit Losses 275 110 655 435
---------- ---------- ---------- ----------
Net Interest Income After Provision 2,359 1,929 6,834 5,489
Noninterest Income 557 411 1,605 1,247
Noninterest Expense 2,340 1,820 6,521 5,402
---------- ---------- ---------- ----------
Income Before Income Tax Expense 576 520 1,918 1,334
Income Tax Expense 151 197 671 507
---------- ---------- ---------- ----------
NET INCOME $ 425 $ 323 $ 1,247 $ 827
========== ========== ========== ==========
PER SHARE DATA:
Basic Earnings Per Share * $ 0.16 $ 0.11 $ 0.46 $ 0.29
Diluted Earnings Per Share * $ 0.15 $ 0.11 $ 0.45 $ 0.29
Book Value Per Share (Period End) * $ 6.23 $ 5.63 $ 6.23 $ 5.63
Average Shares Outstanding (Basic)* 2,737,705 2,804,679 2,729,180 2,833,113
Average Shares Outstanding (Diluted)* 2,766,314 2,832,251 2,751,698 2,860,925
Shares Outstanding (Period End)* 2,742,998 2,721,694 2,742,998 2,721,694
PERIOD END BALANCE SHEET DATA:
Total Assets $ 284,784 $ 201,302
Total Loans, Net of Unearned Income 179,684 131,648
Allowance for Credit Losses 1,667 1,351
Total Earning Assets 264,727 187,587
Total Intangible Assets 5,124 1,404
Total Noninterest-Bearing Deposits 41,647 29,628
Total Interest-Bearing Deposits 173,893 107,787
Total Deposits 215,540 137,415
Total Other Interest-Bearing Liabilities 50,111 47,203
Total Liabilities 267,697 185,989
Total Stockholders' Equity 17,087 15,313
---------- ----------
Total Liabilities and Equity $ 284,784 $ 201,302
========== ==========
SELECTED KEY DATA:
Net Interest Margin 4.64% 4.99% 4.90% 5.12%
Efficiency Ratio 69.25% 72.35% 68.90% 73.34%
Return on Average Assets 0.68% 0.74% 0.76% 0.67%
Return on Average Stockholders' Equity 10.00% 8.25% 10.14% 7.11%
Stockholders' Equity to Total Assets (Period End) 6.00% 7.61% 6.00% 7.61%
================================================================================================================
</TABLE>
*-- adjusted for 5% stock dividend dated April 17, 2000.
--more--
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CENTURY BANCSHARES, INC.
FINANCIAL HIGHLIGHTS (UNAUDITED)
<TABLE>
<CAPTION>
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Quarter Ended Nine Months Ended
September 30, September 30,
----------------------- ---------------------
(Dollars in thousands, except per share amounts) 2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
SELECTED AVERAGE BALANCES:
Loans (net) $161,847 $128,388 $149,971 $125,629
Investment Securities 54,283 15,380 36,242 12,291
Federal Funds Sold 8,688 4,714 11,136 4,766
Interest Bearing Deposits in Other Banks 6,344 13,483 8,974 11,902
-------- -------- -------- --------
Total Earning Assets 231,162 161,965 206,323 154,588
-------- -------- -------- --------
Total Assets $247,571 $172,245 $219,868 $164,841
======== ======== ======== ========
Interest Bearing Deposits $138,887 $109,755 $128,408 $106,374
Borrowings 49,403 15,994 34,976 12,533
-------- -------- -------- --------
Total Interest Bearing Liabilities 188,290 122,749 163,384 118,907
-------- -------- -------- --------
Noninterest Bearing Deposits 40,067 29,520 37,439 28,801
Total Deposits 178,954 139,275 165,847 135,175
Total Liabilities 230,681 156,717 203,438 149,296
Stockholders' Equity 16,890 15,528 16,430 15,545
-------- -------- -------- --------
Total Liabilities and Equity $247,571 $172,245 $219,868 $164,841
======== ======== ======== ========
ALLOWANCE FOR CREDIT LOSSES:
Balance - Beginning of Period $ 1,743 $ 1,409 $ 1,519 $ 1,128
Provision for Credit Losses 275 110 655 435
Charge-offs 354 171 537 228
Recoveries 3 3 30 16
-------- -------- -------- --------
Balance - End of Period $ 1,667 $ 1,351 $ 1,667 $ 1,351
-------- -------- -------- --------
ASSET QUALITY:
Nonaccrual Loans $ 1,043 $ 693
90 Days Past Due 134 67
Other Real Estate Owned 0 0
------- --------
Total Nonperforming Assets $ 1,177 $ 760
------- --------
Nonperforming Assets to Total Assets 0.41% 0.38%
Allowance for Credit Losses to Nonperforming Assets 141.27% 177.80%
Allowance for Credit Losses to Total Loans 0.93% 1.03%
RISK BASED CAPITAL RATIOS (BANK):
Tier 1 7.16% 9.56%
Total 10.24% 10.53%
Leverage Capital Ratio 5.96% 7.76%
RISK BASED CAPITAL RATIOS (CONSOLIDATED):
Tier 1 8.70% 10.10%
Total 11.05% 11.07%
Leverage Capital Ratio 7.29% 8.57%
</TABLE>
