FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(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, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM____________ TO ____________.
COMMISSION FILE NUMBER: 0-16234
CENTURY BANCSHARES, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 52-1489098
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1275 PENNSYLVANIA AVENUE, N.W.
WASHINGTON, D. C. 20004
(Address of Principal Executive Offices)
(Zip Code)
(202) 496-4100
(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 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. Yes X No
At April 30, 1999 there were 2,589,212 shares of the registrant's Common
Stock, par value $1.00 per share outstanding.
<PAGE>
<TABLE>
<CAPTION>
CENTURY BANCSHARES, INC.
QUARTERLY REPORT ON FORM 10-Q
For The Quarter Ended March 31, 1999
TABLE OF CONTENTS
<S> <C> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements 1
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 21
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 22
Item 2. Changes in Securities and Use of Proceeds 22
Item 3. Defaults Upon Senior Securities 22
Item 4. Submission of Matters to a Vote of Security Holders 22
Item 5. Other Information 22
Item 6. Exhibits and Reports on Form 8-K 22
Signatures 23
Exhibit Index 24
Exhibit 27
Financial Data Schedule
for the quarter ended March 31, 1999 25
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Condensed Financial Information
CENTURY BANCSHARES, INC.
QUARTERLY REPORT ON FORM 10-Q
Consolidated Statements of Financial Condition
March 31, 1999, and December 31, 1998
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
(Unaudited)
---------------- ----------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 8,644,262 $ 8,950,733
Federal funds sold 5,000,000 4,285,000
Interest bearing deposits in other banks 8,802,149 9,847,315
Investment securities available-for-sale, at fair value 9,570,965 6,811,356
Investment securities, at cost, fair value of $2,188,796
and $2,449,680 at March 31, 1999
and December 31, 1998, respectively 2,214,132 2,441,537
Loans, net of unearned income 125,963,387 115,231,298
Less: allowance for credit losses (1,309,929) (1,128,147)
---------------- ----------------
Loans, net 124,653,458 114,103,151
Premises and equipment, net 1,272,600 1,372,370
Accrued interest receivable 799,794 742,721
Deposit premiums 1,498,848 1,546,232
Net deferred taxes 680,623 683,113
Other assets 618,226 566,373
---------------- ----------------
Total Assets $ 163,755,057 $ 151,349,901
---------------- ----------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Noninterest-bearing $ 29,062,424 $ 31,676,194
Interest-bearing 109,597,354 94,535,082
---------------- ----------------
Total deposits 138,659,778 126,211,276
Other borrowings 8,118,557 8,461,241
Other liabilities 1,425,880 1,360,710
---------------- ----------------
Total Liabilities 148,204,215 136,033,227
---------------- ----------------
Stockholders' Equity:
Common stock, $1 par value; 5,000,000 shares authorized; 2,583,462, and
2,574,219 shares issued and outstanding at March 31, 1999
and December 31, 1998, respectively 2,583,462 2,574,219
Additional paid in capital 12,367,473 12,343,631
Retained earnings 603,731 392,384
Accumulated other comprehensive income,
net of tax effect (3,824) 6,440
---------------- ----------------
Total Stockholders' Equity 15,550,842 15,316,674
Commitments and contingencies
---------------- ----------------
Total Liabilities and Stockholders' Equity $ 163,755,057 $ 151,349,901
---------------- ----------------
</TABLE>
See accompanying condensed notes to consolidated financial statements
(unaudited).
-1-
<PAGE>
CENTURY BANCSHARES, INC.
QUARTERLY REPORT ON FORM 10-Q
Consolidated Statements of Operations (Unaudited)
Three Months Ended March 31, 1999 and 1998
<TABLE>
<CAPTION>
<S> <C> <C>
Three Months Three Months
Ended Ended
March 31, 1999 March 31, 1998
---------------- ----------------
Interest income:
Interest and fees on loans $ 2,649,950 $ 2,333,592
Interest on federal funds sold 47,470 73,760
Interest on deposits in other banks 123,928 258,282
Interest on securities available-for-sale 100,109 215,428
Interest on securities held-to-maturity 37,583 82,552
--------------- ---------------
Total interest income 2,959,040 2,963,614
Interest expense:
Interest on deposits:
Savings accounts 215,121 192,708
NOW accounts 60,387 92,224
Money market accounts 164,140 233,220
Certificates under $100,000 286,368 360,397
Certificates $100,000 and over 208,988 222,680
--------------- ---------------
Total interest on deposits 935,004 1,101,229
Interest on other borrowings 128,663 126,289
--------------- ---------------
Total interest expense 1,063,667 1,227,518
--------------- ---------------
Net interest income 1,895,373 1,736,096
Provision for credit losses 180,000 193,000
--------------- ---------------
Net interest income after provision for credit losses 1,715,373 1,543,096
Noninterest income:
Service charges on deposit accounts 153,575 98,437
Other operating income 236,406 152,208
--------------- ---------------
Total noninterest income 389,981 250,645
--------------- ---------------
Noninterest expense:
Salaries and employee benefits 664,960 603,579
Occupancy and equipment expense 206,375 205,923
Professional fees 164,232 190,689
Depreciation and amortization of premises and equipment 117,415 118,367
Amortization of deposit premiums 47,384 47,384
Data processing 261,169 167,633
Communications 78,992 63,517
Federal deposit insurance premiums 4,351 6,260
Other operating expenses 218,812 166,832
--------------- ---------------
--------------- ---------------
Total noninterest expense 1,763,690 1,570,184
--------------- ---------------
Income before income tax expense 341,664 223,557
Income tax expense 130,317 91,667
--------------- ---------------
Net income $ 211,347 $ 131,890
--------------- ---------------
Basic income per common share $ 0.08 $ 0.06
Diluted income per common share 0.08 0.05
Weighted-average common shares outstanding 2,579,809 2,324,723
</TABLE>
See accompanying condensed notes to consolidated financial statements
(unaudited).
-2-
<PAGE>
CENTURY BANCSHARES, INC.
QUARTERLY REPORT ON FORM 10-Q
Consolidated Statements of Stockholders' Equity (Unaudited)
Three Months Ended March 31, 1999 and 1998
<TABLE>
<CAPTION>
Accumulated
Common Additional Other Total
stock paid in Retained Comprehensive Stockholders'
$1.00 par capital earnings Income Equity
----------------- ------------------- ---------------- -----------------------------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1997 $ 2,209,229 $ 10,695,480 $ 651,646 $ (20,829) $ 13,535,526
Comprehensive Income:
Net income 131,890 131,890
Unrealized gain on investment
securities available-for-sale,
net of tax effect of $18,092 33,600 33,600
-------------------------------------------------------------------------------------------
Total Comprehensive Income - - 131,890 33,600 165,490
Exercise of common stock options
13,469 shares 13,469 4,321 17,790
Exercise of warrants
1,519 shares 1,519 6,255 7,774
-------------------------------------------------------------------------------------------
Balance, March 31, 1998 $ 2,224,217 $ 10,706,056 $ 783,536 $ 12,771 $ 13,726,580
-------------------------------------------------------------------------------------------
Balance, December 31, 1998 $ 2,574,219 $ 12,343,631 $ 392,384 $ 6,440 $ 15,316,674
Comprehensive Income
Net income 211,347 211,347
Unrealized gain (loss) on investment
securities available-for-sale,
net of tax effect of $(5,527) (10,264) (10,264)
-------------------------------------------------------------------------------------------
Total Comprehensive Income - - 211,347 (10,264) 201,083
Exercise of common stock options
9,243 shares 9,243 23,842 33,085
-------------------------------------------------------------------------------------------
Balance, March 31, 1999 $ 2,583,462 $ 12,367,473 $ 603,731 $ (3,824) $ 15,550,842
-------------------------------------------------------------------------------------------
</TABLE>
See accompanying condensed notes to consolidated financial statements
(unaudited).
-3-
<PAGE>
CENTURY BANCSHARES, INC.
QUARTERLY REPORT ON FORM 10-Q
Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended March 31, 1999 and 1998
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, 1999 March 31, 1998
----------------- -----------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 211,347 $ 131,890
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization of premises and equipment 117,415 118,367
Amortization of deposit premiums 47,384 47,384
Provision for credit losses 180,000 193,000
(Increase) decrease in accrued interest receivable (57,073) 93,832
(Increase) decrease in other assets (57,848) (69,191)
Increase (decrease) in other liabilities 65,170 961
----------------- -----------------
Total adjustments 295,048 384,353
----------------- -----------------
Net cash provided by operating activities 506,395 516,243
----------------- -----------------
Cash flows from investing activities:
Net decrease (increase) in loans (10,732,089) (2,184,626)
Net decrease (increase) in interest bearing deposits in other banks 1,045,166 11,673,802
Purchases of securities available-for-sale (3,170,000) (1,998,440)
Repayments and maturities of securities available-for-sale 410,391 1,170,426
Repayments and maturities of securities held-to-maturity 227,405 773,597
Purchase of premises and equipment (17,645) (65,610)
----------------- -----------------
Net cash provided by (used in) investing activities (12,236,772) 9,369,149
----------------- -----------------
Cash flows from financing activities:
Net (decrease) increase in demand, savings, NOW and
money market deposit accounts 4,940,095 (5,117,028)
Net (decrease) increase in certificates of deposit 7,508,410 (3,830,300)
Net (decrease) increase in other borrowings (140,900) (314,533)
Repayment of long-term debt (201,784) (202,439)
Net proceeds from issuance of common stock 33,085 25,564
----------------- -----------------
Net cash (used in) provided by financing activities 12,138,906 (9,438,736)
----------------- -----------------
Net increase (decrease) in cash and cash equivalents 408,529 446,656
Cash and cash equivalents, beginning of year 13,235,733 12,069,139
----------------- -----------------
Cash and cash equivalents, end of period $ 13,644,262 $ 12,515,795
----------------- -----------------
Supplemental disclosures of cash flow information:
Interest paid on deposits and borrowings $ 1,055,008 $ 1,240,058
Income taxes paid 75,000 27,000
</TABLE>
See accompanying condensed notes to consolidated financial
statements (unaudited).
-4-
<PAGE>
CENTURY BANCSHARES, INC.
QUARTERLY REPORT ON FORM 10-Q
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(1) Basis of Presentation
In the opinion of management the unaudited consolidated financial
statements as of March 31, 1999 and December 31, 1998 and for the three months
ended March 31, 1999 and 1998 contain all adjustments (consisting only of normal
recurring adjustments) necessary to present fairly the financial position and
results of operations of the Company as of such dates and for such periods. The
unaudited consolidated financial statements should be read in conjunction with
the Consolidated Financial Statements of the Company and the Notes thereto
appearing in the Company's 1998 Annual Report on Form 10-K filed with the
Securities and Exchange Commission. The results of operations for the three
months ended March 31, 1999 are not necessarily indicative of the results of
operations that may be expected for the year ending December 31, 1999 or any
future periods. Certain prior period balances have been restated to conform with
the current period.
(2) Investment Securities
Investment securities available-for-sale, and their contractual maturities, at
March 31, 1999 are summarized as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Obligations of U.S. treasury and
government agencies:
Within one year $ 1,999,343 $ 8,995 $ - $ 2,008,338
After one, but within five years 3,168,374 - 7,078 3,161,296
After five, but within ten years 1,346,710 9,957 - 1,356,667
After ten years 533,086 522 7,212 526,396
------------------------------------------------------------
Total 7,047,513 19,474 14,290 7,052,697
------------------------------------------------------------
Collateralized mortgage obligations:
After one, but within five years 363,169 - 6,341 356,828
After ten years 233,854 - 4,726 229,128
------------------------------------------------------------
Total 597,023 - 11,067 585,956
------------------------------------------------------------
Federal Reserve Bank stock 236,350 - - 236,350
Federal Home Loan Bank stock 821,800 - - 821,800
Other 874,162 - - 874,162
------------------------------------------------------------
Total investment securities available-for-sale $ 9,576,848 $ 19,474 $ 25,357 $ 9,570,965
------------------------------------------------------------
Investment securities held-to-maturity, and their contractual maturities at
March 31, 1999, are summarized as follows:
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
- -------------------------------------------------------------------------------------------------------------------
Obligations of U.S. treasury and
government agencies:
After one, but within five years $ 128,883 $ 81 $ - $ 128,964
After ten years 2,085,249 - 25,417 2,059,832
------------------------------------------------------------
Total investment securities held-to-maturity $ 2,214,132 $ 81 $ 25,417 $ 2,188,796
------------------------------------------------------------
</TABLE>
-5-
<PAGE>
CENTURY BANCSHARES, INC.
QUARTERLY REPORT ON FORM 10-Q
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(3) Income per Common Share
Basic income per share is calculated by dividing net income by the
weighted-average common shares outstanding. Diluted income per share is
calculated by dividing net income by the sum of weighted-average common shares
and common stock equivalents. On May 19, 1998, the Company declared a 5 percent
stock dividend payable on June 29, 1998 to common stock shareholders of record
as of May 29, 1998 resulting in the issuance of 112,665 shares and a
corresponding increase in stock options and warrants outstanding.
Weighted-average shares outstanding and income per common share have been
restated for the effect of the 1998 stock dividends.
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------------
1999 1998
-----------------------------
<S> <C> <C>
Basic Income Per Share:
Net income applicable to common stock $211,347 $131,890
Weighted-average common shares outstanding 2,579,809 2,324,723
-----------------------------
Basic income per share $0.08 $0.06
-----------------------------
Diluted Income Per Share:
Net income applicable to common stock $211,347 $131,890
Weighted-average common shares outstanding 2,579,809 2,324,723
Dilutive effect of warrants and stock options 24,576 194,811
-----------------------------
Diluted weighted-average common shares outstanding 2,604,385 2,519,534
Diluted income per share $0.08 $0.05
-----------------------------
</TABLE>
-6-
<PAGE>
CENTURY BANCSHARES, INC.
QUARTERLY REPORT ON FORM 10-Q
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(4) New Financial Accounting Standards
Effective January 1, 1998, the Company adopted SFAS No. 130 "Reporting
Comprehensive Income." SFAS No. 130 requires that certain financial activity
normally disclosed in stockholders' equity be reported in the statement of
operations as an adjustment to net income in computing comprehensive income. In
addition, SFAS No. 130 requires restatement of all prior periods presented.
Items applicable to the Company include unrealized gains and losses on
investment securities. Accumulated comprehensive income components are to be
reported in a separate caption in the consolidated statements of stockholders'
equity. The Company did not experience any financial impact from the
implementation of SFAS No. 130.
In June 1998, SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities," was issued. SFAS 133 requires that an entity recognize all
derivatives as either assets or liabilities in the statement of financial
position and measure these instruments at fair value. In certain circumstances a
derivative may be specifically designed as a hedge of the exposure to changes in
the fair values of a recognized asset or liability or an unrecognized firm
commitment, the exposure to variable cash flows of a forecasted transaction, or
the exposure to fluctuations in foreign currency. SFAS No. 133 will be effective
for all periods beginning after June 15, 1999. Earlier application is permitted,
but the statement shall not be applied retroactively to financial statements of
prior periods. The Company does not anticipate any material impact from the
implementation of SFAS No. 133.
-7-
<PAGE>
CENTURY BANCSHARES, INC.
QUARTERLY REPORT ON FORM 10-Q
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Overview
Century Bancshares, Inc., a Delaware corporation ("Company"), and a
registered bank holding company under the Bank Holding Company Act of 1956, as
amended ("BHCA"), was incorporated and organized in 1985. The Company began
active operations in 1986 with the acquisition of its subsidiary, Century
National Bank ("Bank"), a full service bank which opened for business in 1982.
The Bank provides a broad line of financial products and services to small and
medium sized businesses and consumers, through its main office located at 1875
Eye Street, N.W., Washington, D.C., a branch office located at 1275 Pennsylvania
Avenue, N.W., two offices in Northern Virginia at 8251 Greensboro Drive and 6832
Old Dominion Drive, McLean, Virginia, and a branch office at 7625 Wisconsin
Avenue, Bethesda, Maryland. Lending services are concentrated in professional,
service, commercial business sectors located in the metropolitan Washington, DC
area. The Company's principal executive offices are located at 1275 Pennsylvania
Avenue, N.W., Washington, DC 20004, and its phone number at that address is
(202) 496-4100.
The Company derives substantially all of its revenue and income from the
operation of the Bank, which provides a full range of commercial and consumer
banking services to small and middle market businesses and individuals in the
Washington, DC metropolitan area. As of March 31, 1999, the Company had total
assets of $163.8 million, total deposits of $138.7 million, and stockholders'
equity of $15.6 million. At March 31, 1999, the Company had approximately 1,000
shareholders of the Company's common stock, par value $1.00 per share ("Common
Stock").
Items 2 and 3 of this report contain certain forward-looking statements
regarding future financial condition and results of operations and the Company's
business operations. The words "expect," "estimate," "anticipate," "predict" and
similar expressions are intended to identify forward-looking statements. Such
statements involve risks, uncertainties and assumptions and, although the
Company believes that assumptions are reasonable, it can give no assurance that
its expectations regarding these matters will be achieved. The important factors
that could cause actual results to differ materially from the forward-looking
statements include, without limitation, the factors discussed in the Company's
Form 10-K for the year ended December 31, 1998 under the caption "Management's
Discussion and Analysis of Financial Condition and Results of Operations" as
well as the following factors: general economic conditions in the Washington,
D.C. metropolitan area; changes in interest rates; changes in asset quality; the
effect on the Company of the extensive scheme of regulation by several federal
agencies; the departure of certain key executives; the year 2000 problem; and
competition from other providers of financial services. Should one or more of
these risks or uncertainties materialize, or should underlying assumptions prove
incorrect, such actual outcomes may vary materially from those indicated.
Net Income
For the three months ended March 31, 1999, the Company's net income was
$211 thousand, or $0.08 per diluted share, compared with $132 thousand for the
first three months of 1998, or $0.05 per diluted share. The 60% increase in net
income was primarily attributable to a $159 thousand increase in net interest
income resulting from a significant increase in earning assets, and a $139
thousand increase in noninterest income, offset by a $194 thousand increase in
noninterest expense. Service charges on deposit accounts increased by 56% to
$154 thousand, and other operating income also increased 55% to $236 thousand
primarily as a result of an increase in bank card revenues. Increases in
noninterest expenses included 10% a increase in the cost of salaries and
benefits and a 56% increase in data processing due largely to the increased
costs of bank card processing of merchant accounts. Return on average assets was
0.56% in the first quarter of 1999, compared to 0.36% for the same period in
1998. Return on average stockholders' equity was 5.56% for the quarter ended
March 31, 1999, compared with 3.91% for the same period in 1998. Stockholders'
equity to total assets was 9.50% at March 31, 1999 compared to 9.58% at March
31, 1998.
-8-
<PAGE>
CENTURY BANCSHARES, INC.
QUARTERLY REPORT ON FORM 10-Q
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, CONTINUED
Net Interest Income
Net interest income was $1.9 million for the quarter ended March 31, 1999,
compared with $1.7 million for the quarter ended March 31, 1998, an increase of
$159 thousand, or 9%. The increase in net interest income between the periods
was due to an increase in the net interest spread as the 0.53% reduction in the
cost of funds exceeded the 0.32% reduction in the gross yield on earning assets,
and there was a $6.8 million increase in average net interest earning assets
while the net interest margin improved 0.27% to 5.39% during the first three
months of 1999. While the reduction in the yields of each of the components of
earning assets was greater than the reduction in the average earning assets,
there was a redeployment of assets from relatively lower yielding securities and
interest bearing deposits to relatively higher yielding loans.
The following table sets forth the averages of interest earned or paid by
significant categories of interest earning assets and interest bearing
liabilities for the three month periods ending March 31, 1999 and 1998.
-9-
<PAGE>
CENTURY BANCSHARES, INC.
QUARTERLY REPORT ON FORM 10-Q
<TABLE>
<CAPTION>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, CONTINUED
Three Months Ended March 31,
-------------------------------------------------------------------------------
1999 1998
---------------------------------------- ------------------------------------
Interest Interest
Average Income/ Average Average Income/ Average
Balance Expense Rate Balance Expense Rate
---------------------------------------- ------------------------------------
<S> <C> <C> <C> <C> <C> <C>
($ in thousands)
Interest-Earning Assets
Loans, net (1) $ 118,858 $ 2,650 9.04% $ 94,262 $ 2,334 10.04%
Investment securities (2) 10,023 138 5.58% 19,217 298 6.29%
Federal funds sold 3,811 47 5.00% 5,417 74 5.54%
Interest bearing deposits
with banks 9,949 124 5.05% 18,720 258 5.59%
---------------------------------------- -----------------------------------
Total interest-earning assets 142,641 2,959 8.41% 137,616 2,964 8.73%
Cash and due from banks 6,841 5,281
Other assets 3,768 4,795
------------- --------------
Total Assets $ 153,250 $ 147,692
------------- --------------
Interest-Bearing Liabilities
Interest-Bearing Deposits:
NOW accounts $ 19,216 $ 61 1.29% $ 18,685 $ 92 2.00%
Savings accounts 20,680 215 4.22% 17,012 193 4.60%
Money market accounts 21,191 164 3.14% 24,198 233 3.91%
Time deposits 38,404 495 5.23% 42,202 583 5.60%
Borrowings and
notes payable 8,463 129 6.18% 7,677 127 6.71%
---------------------------------------- ------------------------------------
Total interest-bearing
liabilities 107,954 1,064 4.00% 109,774 1,228 4.53%
---------------------------------------- ------------------------------------
Non-interest bearing deposits 28,130 22,929
Other liabilities 1,744 1,323
------------- --------------
Total liabilities 137,828 134,026
Stockholders' equity 15,422 13,666
------------- --------------
Total liabilities and
stockholders' equity $ 153,250 $ 147,692
------------- --------------
Net interest income and spread $ 1,895 4.41% $ 1,736 4.20%
--------------------------- ----------------------
Net interest margin 5.39% 5.12%
------------- ---------
</TABLE>
(1) Non-accrual loan balances are included in the calculation of Average
Balances - Loans, Net. Interest income on non-accrual loan balances is
included in interest income to the extent that it has been collected.
(2) Average balance and average rate for investment securities are computed
based on book value of securities held-to-maturity and cost basis of
securities available-for-sale.
-10-
<PAGE>
CENTURY BANCSHARES, INC.
QUARTERLY REPORT ON FORM 10-Q
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, CONTINUED
Noninterest Income
Noninterest income was $390 thousand in the first quarter of 1999, a $139
thousand increase when compared with the same quarter of 1998, which totaled
$251 thousand (see table below). The increase between the periods was primarily
due to increases in deposit service charges, credit card and merchant fees
caused by increased volumes.
<TABLE>
<CAPTION>
Noninterest Income Three Months Ended
(in thousands) March 31, Change
-------------------------------------------------
1999 1998 $ %
-------------------------------------------------
<S> <C> <C> <C> <C>
Service charges on deposit accounts $ 153,575 $ 98,437 $ 55,138 56.0%
Credit card and merchant fees 189,635 115,475 74,160 64.2%
Commission and other fee income 32,984 25,152 7,832 31.1%
Other income 13,787 11,581 2,206 19.0%
-------------------------------------------------
Total noninterest income $ 389,981 $250,64 $ 139,336 55.6%
-------------------------------------------------
</TABLE>
-11-
<PAGE>
CENTURY BANCSHARES, INC.
QUARTERLY REPORT ON FORM 10-Q
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, CONTINUED
Noninterest Expense
Noninterest expense totaled $1.8 million in the first quarter of 1999, an
increase of $194 thousand, or 12%, when compared with 1998's totalnoninterest
expense of $1.6 million. The increase in moninterest expense included a $94
thousand (56%) increase in data processing, which corresponds with the growth in
the bank's operations, the volume of bank card processing of merchant accounts,
and the costs of Y2K preparedness. A significant increase in the scope of the
Company's operations was accompanied by increases in many of the noninterest
expense categories, including salaries and benefits, which increased by $61
thousand (10%) and communications which increased by $15 thousand (24%).
<TABLE>
<CAPTION>
Noninterest Expense Three Months Ended
(in thousands) March 31, Change
------------------------------------------------
1999 1998 $ %
------------------------------------------------
<S> <C> <C> <C> <C>
Salaries and employee benefits $ 664,960 $ 603,579 $ 61,381 10.2%
Occupancy and equipment expense 206,375 205,923 452 0.2%
Professional fees 164,232 190,689 (26,457) -13.9%
Data Processing 261,169 167,633 93,536 55.8%
Depreciation and amortization of
premises and equipment 117,415 118,367 (952) -0.8%
Amortization of deposit premiums 47,384 47,384 - 0.0%
Communications 78,992 63,517 15,475 24.4%
Other expenses 223,163 173,092 50,071 28.9%
-------------------------------------------------
Total noninterest expense $ 1,763,690 $1,570,184 $193,506 12.3%
-------------------------------------------------
</TABLE>
-12-
<PAGE>
CENTURY BANCSHARES, INC.
QUARTERLY REPORT ON FORM 10-Q
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, CONTINUED
Investments
The Company's investment portfolio of $11.8 million as of March 31, 1999
consisted mostly of U.S. Government Agency obligations. This represented an
increase of $2.5 million, or 27%, compared with the investment portfolio total
of $9.3 million at December 31, 1998. The increase during the first quarter of
1999 provided additional liquidity and collateral available for borrowing and
customer repurchase agreements. (see Note 2-- "Investment Securities").
Investment securities held-to-maturity are stated at cost, adjusted for
amortization of premium and accretion of discount. Investment securities
available-for-sale are stated at fair value.
Loans
The Company presently is, and in the future expects to remain, a middle
market banking organization serving professionals and businesses with interests
in and around the Washington, DC metropolitan area. Most of the Company's loan
portfolio is collateralized by first mortgages and home equity lines of credit
on residential real estate. Although residential real estate loans increased
over the past twelve months the Company anticipates that this concentration will
decline, as the Company continues its emphasis on the development of new
commercial loan business, including commercial real estate loans. Most of the
Company's commercial real estate loans are secured by owner-occupied properties
with borrowers that are also banking customers of the Company. As of March 31,
1999 and 1998, approximately $85.3 million (68%) and $59.2 million (61%) of the
Company's total loan portfolio, respectively, consisted of loans secured by real
estate, of which one-to-four family residential mortgage loans and home equity
lines of credit represented $36.2 million (29%) and $31.5 million (33%),
respectively, of the Company's total loan portfolio.
<TABLE>
<CAPTION>
March 31,
--------------------------------------------------
1999 1998
--------------------------------------------------
Type of loan ( in thousands): $ % $ %
--------------------------------------------------
<S> <C> <C> <C> <C>
1-4 family residential mortgage $ 29,612 23.5% $ 24,365 25.3%
Home equity loans 6,604 5.2% 7,160 7.4%
Multifamily residential 2,903 2.3% 1,851 1.9%
Construction 3,566 2.8% 983 1.0%
Commercial real estate 42,589 33.8% 24,887 25.8%
Commercial loans 30,106 23.9% 25,680 26.7%
Installment and credit card loans 10,347 8.2% 10,951 11.4%
Other loans 246 0.2% 480 0.5%
--------------------------------------------------
Gross loans 125,973 100.0% 96,357 100.0%
------------- -----------
Less: Unearned income 10 58
-------------- -----------
Total loans, net of unearned $ 125,963 96,299
-------------- -----------
</TABLE>
-13-
<PAGE>
CENTURY BANCSHARES, INC.
QUARTERLY REPORT ON FORM 10-Q
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, CONTINUED
Asset Quality
In originating loans, the Company recognizes that credit losses will be
experienced and the risk of loss will vary with, among other things, general
economic conditions, the type of loan being made, the creditworthiness of the
borrower over the term of the loan and, in the case of a collateralized loan,
the quality of the collateral for such loan. The Company maintains an allowance
for credit losses based upon, among other things, such factors as historical
experience, the volume and type of lending conducted by the Company, the amount
of nonperforming assets, regulatory policies, generally accepted accounting
principles, general economic conditions, and other factors related to the
collectibility of loans in the Company's portfolios. In addition to unallocated
allowances, specific allowances are provided for individual loans when ultimate
collection is considered questionable by management after reviewing the current
status of loans which are contractually past due and after considering the net
realizable value of the collateral for the loan.
Management actively monitors the Company's asset quality in a continuing
effort to charge-off loans against the allowance for loan losses when
appropriate and to provide specific loss allowances when necessary. Although
management believes it uses the best information available to make
determinations with respect to the allowance for credit losses, future
adjustments may be necessary if actual economic conditions and other assumptions
differ from those used in making the initial determinations. At March 31, 1999,
the allowance for credit losses amounted to $1.3 million, or 1.04% of total
loans. This represents an increase in the allowance compared to $1.1 million, or
0.98% of total loans as of December 31, 1998. The Company has increased the
allowance, as a percentage of total loans ourstanding, to reflect the upward
trend in loan charge-offs experienced by the Company over the previous two
years. The allowance for credit losses as a percentage of nonperforming loans
was 142% at March 31, 1999, compared to 72% at December 31, 1998 and 84% at
March 31, 1998.
Total nonperforming loans were $968 thousand at March 31, 1999, compared
with $1.5 million at December 31, 1998 and $1.2 million at March 31, 1998. Of
the $968 thousand in nonperforming loans as of March 31, 1999, approximately
$875 thousand (90%) was secured by real estate and other collateral. The
remaining $93 thousand in non-performing loans were either unsecured, secured by
various business assets, or secured by junior liens on real estate. The
commercial loans which are currently nonperforming were originated for the most
part during or prior to 1997, and their nonperforming status reflects business
and/or personal circumstances unique to each situation, rather than the result
of any discernible change in underwriting standards.
-14-
<PAGE>
CENTURY BANCSHARES, INC.
QUARTERLY REPORT ON FORM 10-Q
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, CONTINUED
Asset Quality , Continued
Provisions for credit losses are charged to income to bring the total
allowance for loan losses to a level deemed appropriate by management, based on
the factors identified above. The provision for loan losses during the first
quarter of 1999 was $180 thousand, representing an increase of $97 thousand or
117% compared to the fourth quarter of 1998. This increase was largely the
result of the $10.7 million (9%) increase in loans outstanding during the first
quarter of 1999 and the $29.7 million (31%) increase in loans during the past
twelve months. These trends, taken into consideration with other factors in the
Company's internal analysis of the allowance for credit loss, have led to
increased reserve requirements and a resulting increase in the provision expense
necessary to maintain the allowance at a level deemed appropriate by management
of the Company (see the table on the following page).
-15-
<PAGE>
CENTURY BANCSHARES, INC.
QUARTERLY REPORT ON FORM 10-Q
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, CONTINUED
<TABLE>
<CAPTION>
Nonperforming Loans
(in thousands)
March 31,
--------------------------
1999 1998
<S> <C> <C>
--------------------------
Non-accrual loans $ 721 $ 707
90 days past due 247 461
--------------------------
Total nonperforming loans 968 1,168
Other real estate owned - 52
--------------------------
Total nonperforming assets $ 968 $ 1,220
--------------------------
Nonperforming assets
to total assets 0.59% 0.85%
-------------------------
</TABLE>
<TABLE>
<CAPTION>
Provision and Allowance for Loan Losses
(in thousands)
Three Months Ended
March 31,
--------------------------
1999 1998
--------------------------
<S> <C> <C>
Average net loans outstanding $ 118,858 $ 94,262
Loans outstanding at period-end 125,963 96,299
Total nonperforming loans 968 1,168
Beginning balance of allowance $ 1,128 $ 887
Loans charged-off:
1-4 family residential mortgage - -
Home equity loans - 1
Commercial loans 6 10
Installment and credit card loans 1 82
--------------------------
Total loans charged off 7 93
Recoveries of previous charge-offs:
1-4 family residential mortgage 1 1
Home equity loans - 2
Commercial loans - -
Installment and credit card loans 8 33
--------------------------
Total recoveries 9 36
--------------------------
Net loans charged-off (recoveries) (2) 57
Provision for loan losses 180 193
--------------------------
Balance at end of period $ 1,310 $ 1,023
--------------------------
</TABLE>
-16-
<PAGE>
CENTURY BANCSHARES, INC.
QUARTERLY REPORT ON FORM 10-Q
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, CONTINUED
Deposits
The Company's total deposits at March 31, 1999 were $138.7 million, an
increase of $18.0 million, or 15%, over 1998's first quarter balance, and an
increase of $12.4 million, or 10%, compared to 1998's year-end balance. Total
average deposits were $127.6 million for the three months ended March 31, 1999,
an increase of $2.6 million, or 2%, compared to the first three months of 1998.
The Company views deposit growth as a significant challenge in its effort to
increase its asset size. Thus, the Company is focusing on its branching program
with increased emphasis on commercial accounts, and the offering of more
competitive interest rates and products to stimulate deposit growth. This
strategy has and will continue to result in a relatively higher cost of funds in
addition to lower fee income as many of these commercial customers may utilize
accounts with lower transaction costs and have a lower number of transactions
than retail customers.
<TABLE>
<CAPTION>
Three Months Ended March 31,
-----------------------------------------------------------------------
1999 1998
-----------------------------------------------------------------------
Weighted- Weighted-
Average Average % of Average Average % of
Balance Rate Total Balance Rate Total
-----------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Noninterest-Bearing Deposits $ 28,130 0.00% 22.0% $ 22,929 0.00% 18.3%
Interest-Bearing Deposits:
NOW accounts 19,216 1.29% 15.1% 18,685 2.00% 14.9%
Savings accounts 20,680 4.22% 16.2% 17,012 4.60% 13.6%
Money market accounts 21,191 3.14% 16.6% 24,198 3.91% 19.4%
Time deposits 38,404 5.23% 30.1% 42,202 5.60% 33.8%
-------------------------------------------------------------------------
Total $ 127,621 100.0% $ 125,026 100.0%
--------------------------------------------------------------------------
Weighted-Average Rate 2.97% 3.57%
-------------- --------------
</TABLE>
Capital Resources
Total stockholders' equity at March 31, 1999 was $15.5 million, an increase
of $234 thousand, compared to total stockholders' equity of $15.3 million at
December 31, 1998. Stockholders' equity was increased during the current quarter
of 1999 by net income of $211 thousand, and by $33 thousand received from the
exercise of stock options, and was reduced by $10 thousand attributable to the
decline in the market value of investment securities available for sale net of
the tax effect.
The Office of the Comptroller of the Currency has established certain
minimum risk-based capital standards that apply to national banks, and the
Company is subject to certain capital requirements imposed by the Federal
Reserve Board. At March 31, 1999, Century National Bank exceeded all applicable
regulatory capital requirements for classification as a "well capitalized" bank,
and the Company satisfied all applicable regulatory requirements imposed on it
by the Federal Reserve Board.
-17-
<PAGE>
CENTURY BANCSHARES, INC.
QUARTERLY REPORT ON FORM 10-Q
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, CONTINUED
Year 2000 Compliance
The "Year 2000 problem" arose because many existing computer programs use
only the last two digits to refer to a year. Therefore, these computer programs
do not properly recognize a year that begins with "20" instead of the familiar
"19." If not corrected, many computer applications could fail or create
erroneous results. The extent of the potential impact of the year 2000 problem
is not yet known; however, the consequences of the year 2000 problem could have
a material effect on the Company's business, results of operations, or financial
condition.
In December 1997, the Company adopted a year 2000 compliance plan ("Y2K Plan")
for the assessment of its exposure to the year 2000 problem, completion of any
required remediation, and testing of systems compliance. A specific timetable
was established, and a senior officer of the Company was assigned leadership
responsibility. The officer reports monthly to the Board of Directors concerning
the status of the Y2K Plan, and the Company's progress is also reviewed from
time to time by bank regulatory authorities.
The Company believes that it is presently on schedule with respect to its Y2K
Plan, and outside reviews to date have found the Company's Year 2000
compliance efforts to be satisfactory. As of March 31, 1999 the Company's
estimated percentage of completion on its Y2K Plan was 96%, and the estimated
date for 100% completion was August 31, 1999. Testing of mission critical
systems was completed in November 1998. Testing methodology included copying
the entire customer data base onto a Year 2000 compliant (hardware and software)
computer system, and utilizing the key Year 2000 dates defined by the FFIEC
to test date sensitive transactions and calculations. These tests were performed
on all mission critical systems and results revealed compliance or very minor
discrepancies were identified; such failed test transactions were tested again
in 1999 and the minor discrepancies have been resolved. Material third party
risks also include assessing the Year 2000 preparation status of bank borrowing
customers. The Company completed a risk assessment of Year 2000 preparedness of
borrowers within its loan portfolio as the bank regulatory target date,
September 30, 1998, and continues to monitor Y2K preparedness related to new
loans and any borrowers deemed to be at high risk.
As part of its Y2K Plan, the Company planned to spend approximately $145,000
for the replacement of outdated computer hardware and software. Much of these
expenses would have been incurred in the ordinary course of business to maintain
such computer systems, regardless of Year 2000 problem considerations. The human
resources requirement includes the time of regular Company employees, a network
administration consultant, and approximately $20,000 of additional consulting
expenses. Because most of the Company's data processing is provided by outside
vendors on a contract basis, management does not currently anticipate that the
costs to address the Company's year 2000 issues will have a significant impact
on the financial position or results of operations of the Company.
-18-
<PAGE>
The Company believes that the most likely worst case scenarios due to the
Year 2000 problem could include: (1) lack of liquidity caused by customers'
withdrawal of extra cash, (2) increased criminal activity stimulated by public
awareness that banks are holding additional cash to avoid liquidity problems,
and (3) short term electric power interruptions. The Company is taking steps to
establish and renew lines of credit with its correspondent banks and the Federal
Home Loan Bank of Atlanta to assure that adequate liquidity will be available to
meet the needs of customers. Additional security precautions will be taken to
prevent possible crimes due to heightened public awareness of additional cash
reserves. The Company does not believe that long term and widespread electric
power outages are likely, and has planned to address short term interruptions
by training bank management and staff to be ready to provide limited service to
customers. The Company is dependent upon the services of EDS in Reston,
Virginia, to provide access to customer data bases and other mission critical
functions. EDS has back-up service sites available and ready to provide services
to the Company should electric power interruptions or other problems occur in
the Reston location. The Company has completed the testing of the mission
critical systems provided by EDS. The Company does not expect any significant
loss in revenue to occur as a result of Year 2000 problems.
The Company's Y2K Plan includes certain contingency plans to be implemented in
the event compliance benchmarks are not met on a timely basis and/or systems
fail to perform in accordance with plans and expectations. For the most part,
these contingency plans involve a reversion to manual process for all mission
critical business functions, which the Company believes is practical in view of
the relative size and scope of its operations. Management and staff will be
trained on these procedures and processes prior to July 1999, and additional
refresher training will be provided during November and December 1999.
-19-
<PAGE>
CENTURY BANCSHARES, INC.
QUARTERLY REPORT ON FORM 10-Q
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, CONTINUED
Liquidity
The Company's Asset/Liability Management Policy is intended to maintain
adequate liquidity for the Company and thereby enhance its ability to raise
funds to support asset growth, meet deposit withdrawals and lending needs,
maintain reserve requirements and otherwise sustain operations. The Company
accomplishes this primarily through management of the maturities of its
interest-earning assets and interest-bearing liabilities. The Company believes
that its present liquidity position is adequate to meet its current and future
needs.
Asset liquidity is provided by cash and assets which are readily
marketable, or which can be pledged, or which will mature in the near future.
The asset liquidity of the Bank is maintained in the form of vault
cash, demand deposits with commercial banks, federal funds sold, interest
bearing deposits with other financial institutions, short-term investment
securities, other investment securities available-for-sale, and short-term
loans. The Company has defined "cash and cash equivalents" as those amounts
included in cash and due from banks and federal funds sold. At March 31, 1999,
the Company had cash and cash equivalents of $13.6 million, an increase of $408
thousand, when compared with the $13.2 million at December 31, 1998.
Liability liquidity is provided by access to core funding sources,
principally customers' deposit accounts in the Company's market area. As a
member of the Federal Home Loan Bank of Atlanta ("FHLBA"), the Company is
authorized to borrow up to $15.1 million secured by a blanket pledge of its
portfolio of 1-to-4-family residential mortgage loans and FHLB investment
securities. The Company also has lines of credit from larger correspondent banks
to borrow excess reserves on an overnight basis (known as "federal funds
purchased") in the amount of $4.0 million and to borrow on a secured basis
("repurchase agreements") in the amount of $5.0 million. At March 31, 1999, the
Company had no federal funds purchased, $1.5 million in customer repurchase
agreements, and was utilizing $6.3 million of its available FHLBA borrowings in
the form of fixed-rate term credit advances with an average cost of 6.74%. The
Company utilizes fixed rate term credit advances from the FHLBA to fund fixed
rate real estate loans of comparable terms and maturities.
The Company had cash on hand in the amount of $1.5 million at the holding
company level at March 31, 1999. The Company anticipates using these funds as
working capital available to support the future growth of the franchise as well
as to pay normal operating expenses. Additionally, working capital is further
augmented by dividends available from the Bank, subject to certain regulatory
restrictions generally applicable to national banks. At March 31, 1999, the
Company had no indebtedness outstanding at the holding company level.
-20-
<PAGE>
CENTURY BANCSHARES, INC.
QUARTERLY REPORT ON FORM 10-Q
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's principal market risk exposure is to interest rates.
Net interest income, which constitutes the principal source of income for
the Company, represents the difference between interest income on
interest-earning assets and interest expense on interest-bearing liabilities.
The difference between the Company's interest-rate sensitive assets and
interest-rate sensitive liabilities for a specified time-frame is referred to as
an interest sensitive "gap." Interest rate sensitivity reflects the potential
effect on net interest income of a movement in interest rates. A financial
institution is considered to be asset sensitive, or having a positive gap, when
the amount of its interest-earning assets maturing or repricing exceeds the
amount of its interest-bearing liabilities also maturing or repricing within
that time period. Conversely, a financial institution is considered to be
liability sensitive, or having a negative gap, when the amount of its
interest-bearing liabilities maturing or repricing exceeds the amount of its
interest-earning assets. During a period of rising (falling) interest rates, a
positive gap would tend to increase (decrease) net interest income, while a
negative gap would tend to decrease (increase) net interest income.
Management seeks to maintain a balanced interest rate risk position to
protect its net interest margin from market fluctuations. Toward this end, the
Company maintains an Asset/Liability Committee (the "ALCO") which reviews, on a
regular basis, the maturity and repricing of the assets and liabilities of the
Company. The ALCO has adopted the objective of achieving and maintaining a
one-year cumulative GAP, as a percent of total assets, of between plus 10% and
minus 10%. In addition, ALCO monitors potential changes in net interest income
under various interest rate scenarios. On a consolidated basis, the Company's
one year cumulative gap was a positive 0.74% of total assets at March 31, 1999.
Market risk is the risk of loss from adverse changes in market prices and
rates, arising primarily from interest rate risk in the Company's portfolios,
which can significantly impact the Company's profitability and market value of
equity. The ALCO has adopted the objective that an immediate increase or
decrease of 200 basis points in market interest rate should not result in a
change of more than 10% (plus or minus) in the Company's projected net interest
income over the next twelve months or in the Company's market value of portfolio
equity, and not more than 20% (plus or minus) in projected net income. At
March 31, 1999, the forecasted impact of an immediate increase (or decrease)of
200 basis points would have resulted in an increase (or decrease) in net
interest income over a twelve month period of (2.6%) and 0.32% respectively, an
increase (or decrease) in the market value of portfolio equity of 6.21% and
(7.35%) respectively, and an increase (or decrease) in net income over a twelve
month period of (10.61%) and 1.30% respecitvely.
Since there are limitations inherent in any methodology used to estimate the
exposure to changes in market interest rates, the analysis included herein is
not intended to be a forecast of the actual effect of a change in market
interest rates on the Company. The analysis is based on the Company's assets and
liabilities as of March 31, 1999, and does not contemplate any actions the
company might undertake in response to changes in market interest rates, which
could change the anticipated results. The analysis assumes repricing and/or
repayment of all assets and liabilities in accordance with their contractual
terms with the exception of (a) mortgage-backed securities, which are assumed to
prepay at a rate based on consensus market expectations, and (b) non-maturity
customer deposits, which are assumed to respond to interest rate changes on a
three-month time-lag basis consistent with the company's historical experience
for various types of deposit accounts.
-21-
<PAGE>
CENTURY BANCSHARES, INC.
QUARTERLY REPORT ON FORM 10-Q
PART II - OTHER INFORMATION
Items 1 through 5.
Management notes that no occurrences have taken place during the
reporting period which require disclosure under any of the
captioned headings.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits. The following exhibit is filed with tis report:
Exhibit 27 - Financial Data Schedule,
for the quarter ended March 31, 1999
(b) Reports on Form 8-K
None.
==============================================================================
This report contains 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 Company believes that the
expectations reflected in such forward looking statements are based upon
reasonable assumptions, it can give no assurance that its expectations will be
achieved. Important factors that could cause actual results to differ materially
from the Company's expectations are disclosed in its Form 10-K dated March 29,
1999, filed with the Securities and Exchange Commission and is incorporated by
reference herein (Cautionary Disclosures). Subsequent written and oral forward
looking statements attributable to the Company or persons acting on its behalf
are expressly qualified in their entirety by the Cautionary Disclosures.
-22-
<PAGE>
CENTURY BANCSHARES, INC.
QUARTERLY REPORT ON FORM 10-Q
For Quarter Ended March 31, 1999
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.
CENTURY BANCSHARES, INC.
Date: May 12, 1999 By: s/b JOSEPH S. BRACEWELL
------------ ------------------------
Joseph S. Bracewell
Chairman of the Board,
President and Chief Executive Officer
Date: May 12, 1999 By: s/b CHARLES V. JOYCE III
------------ --------------------------
Charles V. Joyce III
Senior Vice President and
Chief Financial Officer
(Principal Financial and Accounting Officer)
-23-
<PAGE>
CENTURY BANCSHARES, INC.
EXHIBIT INDEX
March 31, 1999
The following exhibit is filed with this report.
Exhibit Number Description
-------------- ------------------------------------------------------
27 Financial Data Schedule,
for the quarter ended March 31, 1999
-24-
<PAGE>
CENTURY BANCSHARES, Inc.
Financial Data Schedule
[ARTICLE] 9
[CIK] 785813
[NAME] CENTURY BANCSHARES, INC.
[MULTIPLIER] 1,000
[PERIOD-TYPE] 3-MOS
[FISCAL-YEAR-END] DEC-31-1999
[PERIOD-END] MAR-31-1999
[CASH] 8,644
[INT-BEARING-DEPOSITS] 8,802
[FED-FUNDS-SOLD] 5,000
[TRADING-ASSETS] -
[INVESTMENTS-HELD-FOR-SALE] 9,571 FV
[INVESTMENTS-CARRYING] 2,214 BV
[INVESTMENTS-MARKET] 2,189 MV
[LOANS] 125,963
[ALLOWANCE] 1,310
[TOTAL-ASSETS] 163,755
[DEPOSITS] 138,660
[SHORT-TERM] 1,808
[LIABILITIES-OTHER] 1,426
[LONG-TERM] 6,311
[COMMON] 2,583
[PREFERRED-MANDATORY] -
[PREFERRED] -
[OTHER-SE] 12,968
<TOTAL-LIABILITIES-AND-EQUITIES> 163,755
[INTEREST-LOAN] 2,650
[INTEREST-INVEST] 138
[INTEREST-OTHER] 171
[INTEREST-TOTAL] 2,959
<INTEREST-DEPOSITS> 935
[INTEREST-EXPENSE] 1,064
[INTEREST-INCOME-NET] 1,895
[LOAN-LOSSES] 180
[SECURITIES-GAINS] -
[EXPENSE-OTHER] 1,764
[INCOME-PRETAX] 341
[INCOME-PRE-EXTRAORDINARY] 130
[EXTRAORDINARY] -
[CHANGES] -
[NET-INCOME] 211
<EPS-BASIC> 0.08
[EPS-DILUTED] 0.08
[YIELD-ACTUAL] 5.39
[LOANS-NON] 721
[LOANS-PAST] 247
[LOANS-TROUBLED] -
[LOANS-PROBLEM] -
[ALLOWANCE-OPEN] 1,128
[CHARGE-OFFS] 7
[RECOVERIES] 9
[ALLOWANCE-CLOSE] 1,310
[ALLOWANCE-DOMESTIC] 1,310
[ALLOWANCE-FOREIGN] -
[ALLOWANCE-UNALLOCATED] 752
-25-
