Century Bancorp, Inc. Announces 7% Earnings Growth for Q2 2009 Despite FDIC Special Assessment; Assets at $2.0 BB; Regular Dividend Declared

Century Bancorp, Inc. (NASDAQ:CNBKA) (www.century-bank.com) ("the Company”) today announced net income of $2,007,000, or $0.36 per share diluted, for the quarter ended June 30, 2009, an increase of 7.0% as compared to net income of $1,876,000, or $0.34 per share diluted, for the quarter ended June 30, 2008. Total assets increased 13.1% from $1.8 billion at December 31, 2008 to $2.0 billion at June 30, 2009. For the first six months of 2009, net income totaled $3,893,000, or $0.70 per share diluted, an increase of 5.9% when compared to net income of $3,676,000, or $0.66 per share diluted, for the same period a year ago.

On May 22, 2009, the FDIC announced a special assessment on insured institutions as part of its efforts to rebuild the Deposit Insurance Fund and help maintain public confidence in the banking system. The special assessment is five basis points of each FDIC-insured depository institution’s assets minus Tier 1 capital, as of June 30, 2009. The Company recorded a pre-tax charge of approximately $1.0 million in the second quarter of 2009 in connection with the special assessment.

Net interest income totaled $22.8 million for the first six months of 2009 compared to $20.9 million for 2008. The 8.9% increase in net interest income for the period is mainly due to a 22.5% increase in the average balances of earning assets, combined with a similar increase in deposits. The increased volume was somewhat offset by a decrease of twenty-three basis points in the net interest margin. The net interest margin decreased from 2.85% on a fully taxable equivalent basis in 2008 to 2.62% on the same basis for 2009.

The provision for loan losses increased by $1.3 million from $1.6 million for the six months ended June 30, 2008 to $2.9 million, for the same period in 2009, as a result of increases in loans on nonaccrual as well as continued deterioration in overall economic conditions such as increased unemployment. The Company capitalized on favorable market conditions and realized $978,000 of net gains on sales of investments during the first quarter of 2009. Included in operating expenses for the second quarter and first six months of 2009 are FDIC assessments of $1.6 million and $2.1 million, respectively, as compared to $145,000 and $178,000 for the same periods in 2008. FDIC assessments increased primarily as a result of the special assessment charge of approximately $1.0 million as well as an increase in the assessment rate during the second quarter of 2009.

The Company’s effective tax rate declined from 27.0% for the six months ended June 30, 2008 to 10.1% for the same period in 2009 primarily as a result of an increase in tax-exempt income.

At June 30, 2009, total equity was $125.2 million compared to $120.5 million at December 31, 2008. The Company’s equity increased as a result of earnings and a decrease in accumulated other comprehensive loss, net of taxes, offset somewhat by dividends paid. The Company’s leverage ratio stood at 7.91% at June 30, 2009, compared to 9.22% at June 30, 2008. Book value as of June 30, 2009 was $22.64 per share compared to $21.76 at June 30, 2008.

The Company’s allowance for loan losses was $13.4 million or 1.60% of loans outstanding at June 30, 2009, compared to $11.1 million, or 1.33% of loans outstanding at December 31, 2008 and $9.5 million, or 1.24% of loans outstanding at June 30, 2008. Non-performing assets totaled $17.1 million at June 30, 2009, compared to $3.7 million at December 31, 2008 and $3.7 million at June 30, 2008. Non-performing assets increased primarily as a result of three loan relationships, one primarily commercial real estate and two construction.

The Company's Board of Directors voted a regular quarterly dividend of 12.00 cents ($0.12) per share on the Company's Class A common stock, and 6.00 cents ($0.06) per share on the Company's Class B common stock. The dividends were declared payable August 17, 2009 to stockholders of record on August 3, 2009.

The Company, through its subsidiary bank, Century Bank and Trust Company, a state chartered full service commercial bank, operating twenty-two full-service branches in the Greater Boston area, offers a full range of Business, Personal and Institutional Services.

Century Bank and Trust Company is a member of the FDIC and is an Equal Housing Lender.

This press release contains certain "forward-looking statements” with respect to the financial condition, results of operations and business of the Company. Actual results may differ from those contemplated by these statements. The Company wishes to caution readers not to place undue reliance on any forward-looking statements. The Company disclaims any intent or obligation to update publicly any such forward-looking statements, whether in response to new information, future events or otherwise.