Century Bank exec responds to criticism
By Ariel Z. Burch and Zeynep Erden

      The patriarch of the family controlling Century Bank wrote a letter to shareholders responding to criticism from institutional shareholders of the Bank’s Class B Common Stock this month.
     “We firmly believe that as an independent bank, we can achieve our dual objectives of outstanding customer service and high shareholder value,” said Marshall M. Sloane, chairman and CEO of Century Bank, in a June 15, 2005 press release.  Sloane, who founded Century Bank 1969 in Somerville, responded to the dismay expressed by shareholders with a positive outlook for the Bank’s future.
    “Our position is a long term one; we have invested in the future of our consumers, business, and institutional units, and intend to serve this community effectively for many years to come.”
      Sy Jacobs, managing member of Jacobs Asset Management, LLC, wrote a letter on behalf of a group of 10 percent of Century’s Class B shareholders that expressed concern that the bank has not lived up to its financial potential.
     “We are entirely befuddled by the air of achievement and optimism in the Sloane’s letter to shareholders,” said Jacobs.  Jacobs and the shareholders he represents said they are upset about both the way the bank has recently performed financially and that top management positions are dominated by members of the Sloane family.
     “Investors are usually the ones asking the questions and the questions would be ‘where is my fair return on my investment?’” said Joseph P. Lynch, a former Bank of Boston executive.  Lynch said that Class A shareholders may vote, while Class B shareholders may not.  The board of directors of Century Bank, which includes members of the Sloane family, is comprised of Class A shareholders.
     One of the issues that affect Century’s poor performance is “the family dominated management structure,” said Jacobs.  Marshall has not said when he will retire; he named in a March 9, 2004 press release his eventual plan for succession of the Bank’s management.  Marshall’s sons Jonathan G. Sloane, current co-president and co-chief executive officer and Barry R. Sloane, current co-president and co-chief executive officer are co-successors of Century Bank. 
     Jacobs said shareholders believe this family dominated management is neither good for the company nor its shareholders and that there are “potential conflicts of interest on Century’s board of directors.”
      Jacobs also said Century has not reached its financial potential and has not given back to shareholders what they are due. 
      Marshall Slaone said his response was, “The Bank’s performance over the past ten years has been strong and compares favorably with industry averages, according to a May 2, 2005 industry report published by Keefe, Bruyette and Woods, which ranks Century Bank among the top ten banks in the East.” 
      Sloane said, “though there are always opportunities to improve performance, bank leadership is confident in its overall strategy for growth management team and position in the marketplace.” 
       However, Jacobs said, “The Bank’s recent poor performance on both an absolute basis and relative to the rest of the banking industry is troubling to us.” 
       Sloane also said in his letter to shareholders “2004 was an important year of achievement for Century Bank.
      “Our asset growth this year was excellent.  However, our earnings were less so and are attributed to the clear and compelling reasons of a historically low interest rate environment and investments we made in our future.”
       Even more troubling than Century’s poor performance, said Jacobs, was the fact Century has the potential to perform much better.  Although Century’s “performance and prospects are amongst the worst in the bank universe, its potential value is still great,” said Jacobs.
      Jacobs said shareholders want to meet with Century’s independent board of directors to discuss the bank’s poor profitability and lacking return to its shareholders, neither of which match the bank’s potential.
     Paul Magidson of Castine Capital Management has been involved with buying CenturyBonCorp shares for about six years and owns 65 million shares.  He said the goal of the shareholder letter was to “get the attention of the independent board of directors.” 
    Magidson, Jacobs, and Century shareholders said they feel the bank has not lived up to its potential and has not returned a fair investment to shareholders, because of poor asset management and a management structure that does no function as well as it should. 
   “Independence is something you earn,” said Magidson, and he said that Century Bank has not earned its independence.
   Century Bank’s stock closed Monday July 18 at $8.20.