Item 8.01 Other Events
On April 7, 2021, Century Bancorp, Inc. ("Century"), the holding company of
Century Bank and Trust Company, and Eastern Bankshares, Inc. ("Eastern"), the
holding company of Eastern Bank, entered into an Agreement and Plan of Merger by
and among Eastern, Clarion Acquisition Corp. (the "Merger Sub"), Century, and
Century Bank and Trust Company (the "Merger Agreement"). Pursuant to the Merger
Agreement, Century will merge with and into the Merger Sub, with Century as the
surviving entity (the "Merger"). Immediately after the Merger, Century will
merge with and into Eastern, with Eastern as the surviving entity.
In connection with the proposed Merger, Century filed with the Securities and
Exchange Commission on June 3, 2021 a definitive proxy statement for Century's
special meeting of shareholders to be held on July 7, 2021, to consider matters
and transactions relating to the Merger (the "Proxy Statement").
Since the filing of the Proxy Statement, two purported shareholders of Century
sent demand letters (the "Demand Letters") to Century, alleging that the Proxy
Statement omits material information and demanding that Century provide
additional disclosures in an amendment or supplement to the Proxy Statement.
Century believes that the allegations in the Demand Letters are meritless and no
additional disclosure is required in the Proxy Statement. However, in order to
avoid nuisance, cost and distraction, and to preclude any efforts to delay the
closing of the Merger, Century hereby voluntarily amends and supplements the
Proxy Statement with the supplemental disclosures (the "Supplemental
Disclosures") set forth below in this Current Report on Form 8-K (this
"Report"). Century and the Century board of directors deny any liability or
wrongdoing in connection with the Proxy Statement, and nothing in this Report
should be construed as an admission of the legal necessity or materiality under
applicable laws of any of the Supplemental Disclosures.
SUPPLEMENTAL DISCLOSURES TO THE PROXY STATEMENT
The Supplemental Disclosures should be read in conjunction with the Proxy
Statement, which should be read in its entirety and is available free of charge
on the SEC's Internet site (http://www.sec.gov). Page number references below
are to page numbers in the Proxy Statement, and capitalized terms used but not
defined herein have the meanings set forth in the Proxy Statement. To the extent
the information in the Supplemental Disclosures differs from or conflicts with
the information contained in the Proxy Statement, the information set forth in
the Supplemental Disclosures shall be deemed to supersede the respective
information in the Proxy Statement. New text is underlined, and deleted text is
stricken through.
The disclosure on page 19 of the Proxy Statement is hereby supplemented by
amending and restating the fifth full paragraph as follows:
On February 22 and 23, 2021, Century and Goodwin negotiated the terms of
non-disclosure agreements with each of Eastern and Company A, each of which
included a one-year "don't-ask, don't waive" standstill provision and customary
obligations to preserve the confidentiality of information provided by Century.
The non-disclosure agreements were executed on February 23, 2021. Eastern and
Company A were then granted access to an electronic data room, which included a
confidential information memorandum requesting a non-binding expression of
interest no later than March 9, 2021.
The disclosure on page 20 of the Proxy Statement is hereby supplemented by
amending and restating the first full paragraph as follows:
On March 16, 2021, Century executed the non-binding expression of interest with
Eastern and entered into an exclusivity agreement with Eastern. The exclusivity
agreement provided that for a period of 30 days, Century agreed to negotiate
exclusively with Eastern and not to solicit or take any other action designed to
facilitate, or that could reasonably be expected to result in, a business
combination or sale of substantially all of Century's assets. Neither the
non-binding expression of interest submitted by Eastern on March 8, 2021 nor the
executed expression
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of interest on March 16, 2021, included a proposal by Eastern to enter into
continuing employment arrangements with any of Century's senior officers in the
combined company other than the change in control agreements detailed in the
section of this proxy statement titled "Interests of Century Directors and
Executive Officers in the Merger - Change in Control Agreements."
The disclosure on pages 27 and 28 of the Proxy Statement under the heading
"Comparable Company Analyses" is hereby supplemented by amending and restating
the following:
Piper Sandler used publicly available information to compare selected financial
information for Century with a group of financial institutions selected by Piper
Sandler based on its experience and professional judgment. The Century peer
group included major exchange-traded (NYSE, NYSEAM, and NASDAQ) banks and
thrifts headquartered in the New England region with total assets between $1B
and $10B, but excluded targets of announced merger transactions and New England
banks with differentiated business models (the "Century Peer Group"). The
Century Peer Group consisted of the following companies identified in the table
below.
The analysis compared publicly available financial information for Century with
corresponding data for the Century Peer Group as of or for the year ended
December 31, 2020 (unless otherwise noted) with pricing data as of April 5,
2021. The table below sets forth the data for Century, the Century Peer Group,
and the median, mean, low and high data for the Century Peer Group.
Century Comparable Company Analysis
Non- Tangible LTM LTM Price Price/
performing common CRE / Return Return LTM Price/ /LTM 2021
Assets¹ / equity/ Tier 1 Total Total on on Net LTM Tangible Earnings Estimated Current
Total Loans / Total Tangible Leverage RBC RBC average average interest Efficiency book per earnings Dividend Market
assets Deposits Assets assets Ratio Ratio Ratio assets equity margin ratio value share per share Yield value
Company ($mm) (%) (%)² (%) (%)³ (%)4 (%)5 (%) (%) (%) (%) (%) (x) (x)6 (%) ($mm)
Century Bancorp, Inc. 6,359 54.9 0.10 5.78 6.64 13.43 27.9 0.70 11.96 2.00 55.16 143 12.4 12.0 0.8 525
Brookline Bancorp, Inc. 8,942 105.2 0.63 8.86 8.92 13.51 344.2 0.55 5.09 3.17 56.35 154 25.3 14.5 3.0 1,187
Meridian Bancorp, Inc. 6,620 108.5 0.07 11.32 11.60 - 472.4 1.01 8.76 3.12 46.17 132 14.6 12.6 2.1 944
Washington Trust Bancorp, Inc. 5,713 95.8 0.46 8.22 8.95 13.51 308.8 1.22 13.54 2.40 54.37 195 13.1 14.3 4.0 907
Camden National Corporation 4,899 80.4 0.22 8.99 9.13 15.40 217.1 1.23 11.81 3.09 52.20 168 12.3 13.5 3.0 726
HarborOne Bancorp, Inc. 4,484 99.7 1.03 14.11 14.48 19.94 206.3 1.05 6.55 3.06 63.61 127 16.9 14.3 1.4 733
Enterprise Bancorp, Inc. 4,014 86.6 1.20 8.20 7.52 14.62 269.3 0.82 9.95 3.59 62.76 120 12.5 - 2.2 391
Cambridge Bancorp 3,949 92.7 0.26 8.91 8.89 13.93 317.8 0.91 9.09 3.65 56.23 169 16.9 12.7 2.6 590
Bar Harbor Bankshares, Inc. 3,726 88.2 0.33 7.90 8.12 13.56 243.3 0.88 8.17 3.09 60.54 160 14.0 - 2.9 456
Hingham Institution for Savings 2,857 117.5 0.31 10.25 10.59 13.75 427.3 1.88 18.96 3.22 24.87 210 12.4 - 0.7 616
Western New England Bancorp, Inc. 2,366 94.6 0.75 8.99 9.34 14.65 261.3 0.48 4.86 2.95 68.84 101 18.7 14.1 2.4 207
The First Bancorp, Inc. 2,361 80.1 0.72 8.27 8.49 14.82 147.1 1.21 12.35 2.94 49.82 167 11.8 - 4.2 322
Bankwell Financial Group, Inc. 2,254 88.8 1.82 7.73 8.34 13.30 494.1 0.28 3.35 2.77 66.91 125 NM 11.6 2.0 215
Provident Bancorp, Inc. 1,506 107.7 1.80 1 15.66 12.37 14.60 130.4 0.89 5.05 4.23 57.92 120 22.4 23.1 0.8 253
Salisbury Bancorp, Inc. 1,294 92.2 0.92 8.62 8.90 13.57 181.8 0.96 9.99 3.29 59.40 115 10.6 9.6 2.6 125
Union Bankshares, Inc. 1,094 77.5 0.44 7.20 7.31 13.87 335.2 1.33 16.87 3.54 62.64 174 10.7 - 4.3 137
High 8,942 117.5 1.82 15.66 14.48 19.94 494.1 1.88 18.96 4.23 68.84 210 25.3 23.1 4.3 1,187
Mean 3,739 94.4 0.73 9.55 9.53 14.50 290.4 0.98 9.63 3.21 56.18 149 15.2 14.0 2.6 521
Median 3,726 92.7 0.63 8.86 8.92 13.90 269.3 0.96 9.09 3.12 57.92 154 13.6 13.8 2.6 456
Low 1,094 77.5 0.07 7.20 7.31 13.30 130.4 0.28 3.35 2.40 24.87 101 10.6 9.6 0.7 125
1 Nonperforming assets defined as nonaccrual loans and leases, renegotiated loans
and leases, and real estate owned.
2 Bank level financial data shown for Provident Bancorp, Inc.
3 Bank level financial data shown for Provident Bancorp, Inc. and Salisbury
Bancorp, Inc.
4 Bank level financial data shown for Provident Bancorp, Inc. and Salisbury
Bancorp, Inc.; financial data not released at the holding company for Meridian
Bancorp, Inc.
5 Bank level financial data shown for Western New England Bancorp, Inc., The
First Bancorp, Inc., Bankwell Financial Group, Inc., Provident Bancorp, Inc.,
Salisbury Bancorp, Inc., and Union Bankshares, Inc.
6 As provided by Century senior management for Century; Peer projected earnings
per share data reflects median street consensus estimates per S&P Global Market
Intelligence.
The disclosure on pages 28 and 29 of the Proxy Statement under the heading
"Analysis of Precedent Transactions" is hereby supplemented by amending and
restating the following:
Piper Sandler reviewed two groups of selected merger and acquisition
transactions, including a regional and nationwide group, based on its experience
and professional judgment. The regional group consisted of bank and thrift
transactions announced between January 1, 2018 and April 5, 2021 where the
target was headquartered in New England and had total assets between
$500 million and $10 billion at announcement but excluded Merger of Equals
transactions (the "Regional Precedent Transactions"). The nationwide group
consisted of nationwide bank and thrift transactions announced between
January 1, 2019 and April 5, 2021 where the target's total assets were between
$2 billion and $10 billion at announcement, but excluded Merger of Equals
transactions and transactions with acquirers or targets not headquartered in the
continental United States (the "Nationwide Precedent Transactions").
Regional Precedent Transactions
Transaction Transaction Transaction
Price / Price / Price / Tangible Book
LTM Estimated Tangible Value 1-Day
Deal Earnings Earnings Book Value Premium to Market
Acquiror Target Value Per Share Per Share Per Share Core Deposits Premium
Company Company ($M) (x) (x)1 (%) (%) (%)
Eastern Century 642 15.2 14.6 175 5.5 22.2
SVB Boston Private Financial
Financial Holdings, Inc.
Group 943 21.5 27.1 115 2.2 29.5
LendingClub Radius Bancorp, Inc.
Corporation 188 35.4 - 179 9.4 -
Cambridge Wellesley Bancorp, Inc.
Bancorp 121 17.4 - 159 8.1 37.0
Centreville PB Bancorp, Inc.
Bank 116 25.4 - 145 11.4 33.2
People's United Financial
United Bancorp, Inc.
Financial,
Inc. 754 13.2 14.7 125 4.4 4.5
Berkshire SI Financial Group, Inc.
Hills
Bancorp,
Inc. 182 27.3 - 118 2.6 13.2
Cambridge Optima Bank & Trust
Bancorp Company 65 28.5 - 198 10.0 -
People's BSB Bancorp, Inc.
United
Financial,
Inc. 317 14.9 - 160 7.3 20.7
Independent Blue Hills Bancorp, Inc.
Bank Corp. 725 35.0 25.2 178 19.2 12.0
People's First Connecticut
United Bancorp, Inc
Financial,
Inc. 552 29.9 19.4 187 13.0 24.3
HarborOne Coastway Bancorp, Inc.
Bancorp,
Inc. 124 44.1 - 174 13.8 27.0
High 943 44.1 27.1 198 19.2 37.0
Mean 372 26.6 21.6 158 9.2 22.4
Median 188 27.3 22.3 160 9.4 24.3
Low 65 13.2 14.7 115 2.2 4.5
Nationwide Precedent Transactions
Transaction Transaction Transaction
Price / Price / Price / Tangible Book
LTM Estimated Tangible Value 1-Day
Deal Earnings Earnings Book Value Premium to Market
Acquiror Target Value Per Share Per Share Per Share Core Deposits Premium
Company Company ($M) (x) (x)1 (%) (%) (%)
Eastern Century 642 15.2 14.6 175 5.5 22.2
WSFS Financial Corporation Bryn Mawr Bank Corporation 990 29.8 17.8 229 13.6 14.2
SVB Financial Group Boston Private Financial Holdings, Inc. 943 21.5 27.1 115 2.2 29.5
Provident Financial Services, Inc. SB One Bancorp 212 9.2 8.8 121 3.3 23.4
Pacific Premier Bancorp, Inc. Opus Bank 1,031 16.6 16.2 141 5.1 0.7
FB Financial Corporation Franklin Financial Network, Inc. 588 40.3 - 149 7.0 14.5
United Bankshares, Inc. Carolina Financial Corporation 1,119 16.3 15.2 207 27.5 15.7
Northwest Bancshares, Inc. MutualFirst Financial, Inc. 362 16.0 15.9 178 12.6 25.7
Sandy Spring Bancorp, Inc. Revere Bank 461 14.8 14.1 173 12.9 27.9
CIT Group Inc. Mutual of Omaha Bank 1,000 10.9 - 125 3.2 -
Simmons First National Corporation. Landrum Company 447 14.3 - 181 8.4 -
WesBanco, Inc. Old Line Bancshares, Inc. 497 14.0 13.6 177 12.5 12.7
People's United Financial, Inc. United Financial Bancorp, Inc.
754 13.2 14.7 125 4.4 4.5
Valley National Bancorp Oritani Financial Corp. 735 13.7 14.2 138 9.7 0.5
Prosperity Bancshares LegacyTexas Financial Group 2,057 12.7 13.3 216 20.8 9.3
High 2,057 40.3 27.1 229 27.5 29.5
Mean 800 17.4 15.5 163 10.2 14.9
Median 744 14.6 14.7 161 9.0 14.3
Low 212 9.2 8.8 115 2.2 0.5
1 As provided by Century senior management for Century; Peer projected earnings
per share data reflects median street consensus estimates per S&P Global
Market Intelligence.
Using the latest publicly available information prior to the announcement of the
relevant transactions, Piper Sandler reviewed the following transaction metrics:
deal value, transaction price to last-twelve-months earnings per share,
transaction price to estimated earnings per share, transaction price to tangible
book value per share, core deposit premium, and one-day market premium for the
Regional Precedent Transactions group as well as the Nationwide Precedent
Transaction group. Piper Sandler compared the indicated transaction metrics for
the transaction to the median, mean, low and high metrics of the Regional
Precedent Transactions group as well as to the median, mean, low and high
metrics of the Nationwide Precedent Transactions group.
The disclosure on page 29 of the Proxy Statement under the heading "Net Present
Value Analyses" is hereby supplemented by amending and the following:
Piper Sandler performed an analysis that estimated the net present value of
Century common stock assuming Century performed in accordance with certain
internal financial projections for the year ending December 31, 2021, as well as
annual long-term earnings per share and balance sheet growth rates for the years
ending December 31, 2022 through December 31, 2025 and estimated dividends per
share for Class A Common Stock and
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Class B Common Stock for the years ending December 31, 2021 through December 31,
2025, as provided by the senior management of Century. To approximate the
terminal value of a share of Century common stock at December 31, 2025, Piper
Sandler applied price to 2025 earnings multiples ranging from 10.0x to 17.5x and
multiples of 2025 tangible book value ranging from 110% to 185% based on Piper
Sandler's professional judgment and experience. The terminal values were then
discounted to present values using different discount rates ranging from 10.0%
to 13.0%, which were chosen to reflect different assumptions regarding required
rates of return of holders or prospective buyers of Century common stock. As
illustrated in the following tables, using stock price as of April 5, 2021 and
approximately 5,568,000 of shares outstanding in 2025, the analysis indicated an
imputed range of values per share of Century common stock of $56.16 to $110.50
when applying multiples of earnings and $66.30 to $125.78 when applying
multiples of tangible book value.
The disclosure on page 30 of the Proxy Statement is hereby supplemented by
amending and restating the second full paragraph as follows:
Piper Sandler noted that the net present value analysis is a widely used
valuation methodology, but the results of such methodology are highly dependent
upon the numerous assumptions that must be made, and the results thereof are not
necessarily indicative of actual values or future results. The following table
describes the discount rate calculation prepared by Piper Sandler for Century
common stock. In its normal course of business, Piper Sandler employs the Duff &
Phelps Cost of Capital Navigator in determining an appropriate discount rate in
which the discount rate equals the sum of the risk free rate, the equity risk
premium, the size premium and the industry premium.
Risk Free Rate 1.70% Per Duff & Phelps Normalized Rate
Equity Risk Premium 7.15% Per Duff & Phelps Cost of Capital Navigator
Size Premium 1.42% Per Duff & Phelps Cost of Capital Navigator
Industry Premium 1.29% Per Duff & Phelps Cost of Capital Navigator
Discount Rate 11.56%
Important Information About the Merger and Where to Find It
A full description of the terms of the Merger is provided in the Proxy
Statement. Century urges its investors, shareholders and other interested
persons to read the Proxy Statement as well as other documents filed with the
SEC because these documents will contain important information about Century,
Eastern and the Merger. The Proxy Statement was mailed on or about June 8, 2021
to Century shareholders of record as of the close of business on May 27, 2021. A
free copy of the Proxy Statement, as well as other filings containing
information about Century and Eastern, when they become available, may be
obtained at the SEC's Internet site (http://www.sec.gov). Copies of the Proxy
Statement may also be obtained, free of charge, from Century's website at
https://investors.centurybank.com/, or by contacting Century's Investor
Relations at 400 Mystic Avenue, Medford, MA, Attention: William P. Hornby,
Telephone: (781) 391-4000.
Certain Information Regarding Participants
Century and Eastern and their respective directors, executive officers and other
members of management and employees may be deemed to be participants in the
solicitation of proxies of Century shareholders in connection with the proposed
transaction. You can find information about Century's executive officers and
directors in the materials filed by Century with the SEC. Additional information
regarding the interests of those participants and other persons who may be
deemed participants in the transaction and a description of their direct and
indirect interests, by security holdings or otherwise, may be obtained, with
respect to Century, by reading the Proxy Statement filed by Century with the SEC
on June 3, 2021, the Annual Report on Form 10-K filed by Century with the SEC on
March 10, 2021, and other relevant documents regarding the proposed merger to be
filed with the SEC and, with respect to Eastern, by reading Eastern's proxy
statement for its 2021 annual meeting of shareholders filed by Eastern with the
SEC on April 1, 2021 and other relevant documents regarding the proposed merger
to be filed with the SEC. Free copies of these documents may be obtained as
. . .
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