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Center Bancorp, Inc. Reports Second Quarter 2008 Earnings UNION, N.J., July 24, 2008 (PRIME NEWSWIRE) -- Center Bancorp,
Inc. (NasdaqGS:CNBC - News), parent company of Union Center National
Bank, today reported operating results for the second quarter
ended June 30, 2008. Earnings amounted to $1.4 million,
or $0.11 per diluted share, for the quarter ended June 30,
2008, as compared with earnings of $1.0 million, or $0.07
per diluted share, for the quarter ended June 30, 2007. ``The results for the period announced today continue to underscore our commitment to achieving quality results and execution of our long term strategic plan. Earnings for both the current period and year to date reflect the progress that the Corporation is making in transitioning the balance sheet, maintaining strong credit quality and improving the future stability of revenue streams consistent with the work started in 2007 that we intend to continue throughout 2008. Due to these actions, our second quarter results reflect a marked improvement in our balance sheet, a $98.0 million increase in loans or 18 percent over the comparable period in 2007, an expanding net interest margin, adequate loan loss reserves supported by continued good credit quality in our asset portfolios and reduced operating overhead,'' remarked Anthony C. Weagley, President and CEO. For the six months ended June 30, 2008, net income amounted to $2.6 million, an increase of $299,000 as compared to the comparable six-month period ended June 30, 2007. Diluted earnings per common share for the six months ended June 30, 2008 were $0.20 as compared with $0.17 for the same period in 2007.
Quarterly Condensed Consolidated Income Statements (unaudited)
(Dollars in thousands, except per share data)
For the quarter ended: 6/30/08 3/31/08
---------------------- -------- --------
Net interest income $ 6,429 $ 5,687
Provision for loan
losses 521 150
---------------------------------------------------------------------
Net interest income
after provision for
loan losses 5,908 5,537
Other income 1,116 866
Other expense (5,188) (4,953)
Income (loss) before
income tax 1,836 1,450
Income tax expense
(benefit) 428 233
NET INCOME $ 1,408 $ 1,217
Earnings per share
(basic) $ 0.11 $ 0.09
Earnings per share
(diluted) $ 0.11 $ 0.09
Weighted average common
shares outstanding:
Basic 13,070,868 13,144,747
Diluted 13,083,558 13,163,586
For the quarter ended: 12/31/07 9/30/07 6/30/07 3/31/07
---------------------- -------- -------- -------- --------
Net interest income $ 5,172 $ 5,481 $ 5,225 $ 5,621
Provision for loan
losses 150 100 100 0
---------------------------------------------------------------------
Net interest income
after provision for
loan losses 5,022 5,381 5,125 5,621
Other income 874 911 1,177 1,410
Other expense (6,034) (6,080) (6,056) (6,428)
Income (loss) before
income tax (138) 212 246 603
Income tax expense
(benefit) (670) (786) (771) (706)
NET INCOME $ 532 $ 998 $ 1,017 $ 1,309
Earnings per share
(basic) $ 0.04 $ 0.07 $ 0.07 $ 0.09
Earnings per share
(diluted) $ 0.04 $ 0.07 $ 0.07 $ 0.09
Weighted average common
shares outstanding:
Basic 13,441,082 13,864,722 13,910,450 13,910,450
Diluted 13,469,764 13,913,919 13,990,642 13,986,333
All common share and per common share amounts have been adjusted for
prior stock dividends.
Note: Due to rounding quarterly earnings per share may not add up to
the reported year-to-date earnings per share.
Selected financial ratios (annualized
where applicable)
As of or for the
quarter ended: 6/30/08 3/31/08 12/31/07 09/30/07 06/30/07 03/31/07
---------------- ------- ------- -------- -------- -------- --------
Return on
average assets 0.57% 0.50% 0.22% 0.40% 0.40% 0.50%
Return on average
equity 6.69% 5.60% 2.44% 4.21% 4.15% 5.37%
Net interest
margin (tax
equivalent basis) 3.00% 2.74% 2.48% 2.63% 2.43% 2.55%
Loan/Deposit ratio 101.61% 90.71% 78.91% 84.62% 78.71% 73.42%
Stockholders'
equity/total
assets 8.15% 8.58% 8.38% 9.49% 9.57% 9.36%
Efficiency ratio 67.7% 70.9% 92.7% 89.3% 92.8% 92.8%
Book value per
share $6.18 $6.51 $6.48 $6.85 $6.89 $7.06
Return on
average tangible
stockholders'
equity 8.41% 6.98% 3.04% 5.15% 5.04% 6.53%
Tangible
stockholders'
equity/tangible
assets 6.52% 6.98% 6.80% 7.88% 7.98% 7.84%
Tangible book
value per share $4.86 $5.20 $5.17 $5.59 $5.65 $5.81
The Corporation recorded net interest income on a fully taxable equivalent basis of $6.8 million for the three months ended June 30, 2008 as compared to $5.7 million for the comparable quarter in 2007. Interest income decreased by $0.8 million while interest expense decreased by $1.9 million from the same period last year. Compared to 2007, net interest average earning assets declined by $35.0 million while the net interest spread and net interest margin improved by 80 basis points and 57 basis points, respectively, due primarily to improved funding costs. On a linked quarter basis, net interest spread and margin improved by 33 basis points and 26 basis points, respectively. The Corporation recorded net interest income on a fully taxable equivalent basis of $12.9 million for the six months ended June 30, 2008 as compared to $11.8 million for the comparable six month period in 2007. Interest income declined by $2.0 million while interest expense decreased by $3.1 million from the same period last year. Compared to 2007, net interest earning assets declined by $50.0 million while net interest spread and net interest margin improved by 56 basis points and 38 basis points, respectively, due primarily to improved funding costs. Steps were taken during the fourth quarter of 2007 to improve the Corporation's net interest margin by allowing a runoff of certain high rate deposits and to position the Corporation's cash position for further outflows in the first and second quarters of 2008. The result was an improvement in margin from the comparison period in 2007. The current policy stance of the Federal Open Market Committee allowed the Corporation to further reduce liability costs in the later part of the first quarter and the second quarter of this year. During the first six months of 2008, the Corporation secured approximately $45 million of longer term lower cost funding with a weighted average rate of 2.67% in an effort to support continued loan growth. The $3.1 million decline in interest expense for the six months ended June 30, 2008 from the same period last year also reflects the runoff of higher cost deposits and the replacement with lower cost funding, due primarily to recent actions by the Federal Open Market Committee in lowering the target Federal funds rate. Compared to the comparable six-month period in 2007, the Corporation's average interest bearing deposits declined by $76.1 million, due primarily to the planned runoff of high cost deposits, while average borrowings, generally placed at favorable terms and rates, increased by $55 million. Other Income Total other income decreased $61,000 for the second quarter of 2008 compared with the comparable quarter of 2007, primarily as a result of decreases in net gains on securities sold. Excluding net securities gains, the Corporation recorded other income of $891,000 in the three months ended June 30, 2008, compared to $836,000 in the three months ended June 30, 2007, an increase of 6.6%. This increase was primarily attributable to a $77,000 increase in service charges, commissions and fees, partially offset by a decline in commissions from sales of mutual funds and annuities. For the six months ended June 30, 2008, total other income decreased $605,000 as compared to the first six months of 2007, primarily as a result of decreases in net gains on securities sold. Excluding net securities gains, the Corporation recorded other income of $1.8 million in the six months ended June 30, 2008, compared to $1.7 million in the six months ended June 30, 2007, an increase of 6.0%. This increase was primarily attributable to a $187,000 increase in service charges, commissions and fees, partially offset by a decline in commissions from sales of mutual funds and annuities. Quarterly Consolidated Non-Interest Income (unaudited) (Dollars in thousands) For the quarter ended: 6/30/08 3/31/08 12/31/07 9/30/07 6/30/07 3/31/07 --------------- ------- ------- -------- ------- ------- ------- Service charges on deposit accounts $ 383 $ 404 $ 399 $ 312 $ 306 $ 288 Commissions from mortgage broker activities 17 12 16 15 25 46 Loan related fees (LOC) 37 41 31 49 26 35 Commissions from sale of mutual funds and annuities 38 17 44 131 60 63 Debit card and ATM fees 130 125 132 126 130 131 Bank owned life insurance 227 221 217 223 230 223 Net securities gains (losses) 225 -- (43) 14 341 588 Other service charges and fees 59 46 78 41 59 36 ---------------------------------------------------------------------- Total other income $1,116 $ 866 $ 874 $ 911 $1,177 $1,410 ---------------------------------------------------------------------- Other Expense Other expense for the second quarter of 2008 totaled $5.2 million, a decrease of $0.9 million, or 14.3%, from the comparable period in 2007. Salary and benefit expense decreased by $310,000, or 10.9%, to $2.5 million. This reduction was primarily attributable to reductions in staff, pension curtailment and elimination of certain benefit plans. Full-time equivalent staffing levels were 164 at June 30, 2008 compared to 172 at December 31, 2007 and 187 at June 30, 2007. Other decreases were recognized in premises and equipment, professional fees and other general expenses, offset in part by an increase in occupancy costs. Other expense for the six months ended June 30, 2008 totaled $10.1 million, a decrease of $2.3 million, or 18.8%, from the comparable period in 2007. Salary and benefit expense decreased by $1.1 million, or 18.4%, to $4.9 million. This reduction was primarily attributable to reductions in staff, pension curtailment and elimination of certain benefit plans. Other decreases were recognized in premises and equipment, professional fees and other general expenses, offset in part by an increase in occupancy costs. The efficiency ratio for the second quarter of 2008 was 67.7% as compared to 92.7% in the fourth quarter of 2007 and 92.8% in the comparable quarterly period in 2007. The Corporation has moved ahead on the previously announced strategic outsourcing agreements, to aid in the realization of its goal to reduce operating overhead and shrink the infrastructure of the Corporation. The cost reduction plans resulted in the reduction of workforce by 12 staff positions in the quarter, which in turn resulted in a one-time charge of $145,000 for the three-month period ended June 30, 2008 for severance and termination benefits. Additionally the Corporation announced that it had completed its outsourcing arrangement with Atlantic Central Bankers Bank, BITS program and the migration of its telecommunications lines to their service platform. The result of these initiatives is expected to result in annual cost savings of $600,000. In February of 2008, the Corporation completed the sale of its Florham Park office for $2.4 million, which approximated the carrying value. As previously announced in June 2008, the Corporation had announced that it was pursuing strategic alternatives for its Union data center/operations building and had engaged Sperry Van Ness to assist the Corporation in the process. At present, the Corporation has no immediate plans and is continuing to review these options. If successful, it would seek to relocate all or part of its operations into other facilities in Union, which would ultimately reduce operating overhead. Quarterly Consolidated Non-Interest Expense (unaudited) (Dollars in thousands) For the quarter ended: 6/30/08 3/31/08 12/31/07 9/30/07 6/30/07 3/31/07 --------------- ------- ------- -------- ------- ------- ------- Employee salaries and wages $ 2,013 $ 1,896 $ 1,932 $ 3,551 $ 2,059 $ 2,300 Employee stock option expense 36 45 46 46 35 24 Health insurance and other employee benefits 285 218 237 (687) 543 575 Payroll taxes 182 179 124 183 181 234 Other employee related expenses 8 14 14 14 16 9 ---------------------------------------------------------------------- Total salaries and employee benefits $ 2,524 $ 2,352 $ 2,353 $ 3,107 $ 2,834 $ 3,142 Occupancy, net 734 759 799 692 629 723 Premises and equipment expense 356 366 437 442 436 462 Legal, auditing and other professional fees 190 172 690 311 599 539 Stationary and printing 118 95 104 87 115 159 Marketing and advertising 188 160 179 152 109 163 Computer expense 226 141 150 151 148 165 Bank regulatory related expenses 55 58 58 60 60 60 Postage and delivery 65 78 57 73 75 84 ATM related expenses 62 60 59 63 77 61 Amortization of CDI 24 25 25 26 27 29 Other expenses 646 687 1,123 916 947 841 ---------------------------------------------------------------------- Total other expense $ 5,188 $ 4,953 $ 6,034 $ 6,080 $ 6,056 $ 6,428 ---------------------------------------------------------------------- Quarterly Condensed Consolidated Balance Sheets (unaudited) (Dollars in thousands) At quarter ended: 6/30/08 3/31/08 12/31/07 9/30/07 6/30/07 3/31/07 ---------- -------- -------- -------- -------- -------- -------- Cash and due from banks $ 16,172 $ 15,155 $ 20,541 $ 15,277 $ 24,363 $ 19,245 Fed funds and money market funds 0 45,300 49,490 0 0 35,374 Invest- ments 253,780 281,746 314,194 343,979 366,224 381,493 Loans 631,221 565,025 551,669 550,847 533,675 530,573 Allowance for loan losses (5,660) (5,245) (5,163) (5,021) (4,974) (4,958) Restricted investment in bank stocks, at cost 10,325 10,036 8,467 7,347 8,299 7,832 Premises and equipment, net 18,203 17,404 17,419 17,662 18,400 18,314 Goodwill 16,804 16,804 16,804 16,804 16,804 16,804 Core deposit intangible 350 375 400 426 452 479 Bank owned life insurance 22,710 22,483 22,261 22,044 21,822 21,591 Other assets 22,531 26,084 21,563 18,425 16,557 22,219 ---------------------------------------------------------------------- TOTAL ASSETS $986,436 $995,167 $1,017,645 $987,790 $1,001,622 $1,048,966 ---------------------------------------------------------------------- Deposits 621,190 622,924 699,070 650,999 678,011 722,648 Other borrowings 279,585 279,024 223,264 237,744 221,994 220,327 Other liabil- ities 5,268 7,818 10,033 5,317 5,804 7,828 Stockholders' equity 80,393 85,401 85,278 93,730 95,813 98,163 ---------------------------------------------------------------------- TOTAL LIABILITIES AND STOCK- HOLDERS' EQUITY $986,436 $995,167 $1,017,645 $987,790 $1,001,622 $1,048,966 ---------------------------------------------------------------------- Condensed Consolidated Average Balance Sheets (unaudited) (Dollars in thousands) For the quarter ended: 6/30/08 3/31/08 12/31/07 9/30/07 6/30/07 3/31/07 -------- -------- -------- -------- -------- ---------- ---------- Investments, Fed funds, and other $301,118 $326,397 $351,302 $362,119 $ 404,975 $ 415,980 Loans 601,655 565,654 552,521 538,798 532,799 540,971 Allowance for loan losses (5,404) (5,237) (5,077) (4,984) (4,986) (4,959) All other assets 91,631 93,088 91,016 90,533 92,038 94,773 ---------------------------------------------------------------------- TOTAL ASSETS $989,000 $979,902 $989,762 $986,466 $1,024,826 $1,046,765 ---------------------------------------------------------------------- Deposits- interest bearing 499,342 519,295 564,334 557,555 578,819 592,073 Deposits- non interest bearing 114,744 112,695 115,859 128,449 130,701 135,161 Other borrowings 284,264 251,222 216,761 200,257 211,228 215,198 Other liabilities 6,508 9,769 5,543 5,372 6,159 6,867 Stockholders' equity 84,142 86,921 87,265 94,833 97,919 97,466 ---------------------------------------------------------------------- TOTAL LIABILITIES AND STOCK- HOLDERS' EQUITY $989,000 $979,902 $989,762 $986,466 $1,024,826 $1,046,765 ---------------------------------------------------------------------- Loans The Corporation had total loans of $631.2 million at June 30, 2008, representing a $66.2 million, or 11.7%, increase on a linked-quarter basis and a $97.5 million, or 18.3%, increase from June 30, 2007. Loan growth continued during the quarter in the Corporation's commercial related segments of the portfolio. At June 30, 2008, the Corporation had $47.8 million in overall undispersed loan commitments, $46.3 million of which it expects to fund over the next 90 days. Loan originations for the quarter increased in the commercial sector, primarily in commercial mortgages. ``We continue to be pleased with the loan and customer growth achieved for the second quarter and first six months of 2008 and are optimistic that the Corporation will continue to build its loans outstanding volume throughout 2008. Our pipelines are strong; we expect that increased activity in the commercial sectors of the portfolio will support our strategic goals of increased loan volume and improving our earning-asset mix. We continue to work aggressively at strengthening existing customer relationships and building new ones by seizing opportunities, resulting from the improved business development effort in the Bank,'' said Mr. Weagley. Loan Mix: (unaudited) (Dollars in thousands) At quarter ended: 6/30/08 3/31/08 12/31/07 9/30/07 6/30/07 3/31/07 ---------------- -------- -------- -------- -------- -------- -------- Real estate loans Residential $255,817 $260,237 $265,597 $265,301 $261,849 $262,958 Commercial 224,990 163,664 137,585 136,289 135,707 135,062 Construction 50,638 48,494 51,367 53,286 47,910 60,135 ---------------------------------------------------------------------- Total real estate loans 531,445 472,395 454,549 454,876 445,466 458,155 Commercial loans 98,845 91,492 95,978 94,444 86,848 71,020 Consumer and other loans 339 592 563 960 741 754 ---------------------------------------------------------------------- Total loans before unearned fees and costs 630,629 564,479 551,090 550,280 533,055 529,929 Unearned fees and costs, net 592 546 579 567 620 644 ---------------------------------------------------------------------- Total loans $631,221 $565,025 $551,669 $550,847 $533,675 $530,573 ====================================================================== Asset Quality
Selected credit quality ratios
(unaudited)
(Dollars in thousands)
As of or for
the quarter
ended: 6/30/08 3/31/08 12/31/07 9/30/07 6/30/07 3/31/07
----------- ------- -------- ---------- -------- ---------- ----------
Non-accrual
loans $ 265 $ 1,215 $ 3,907 $ 986 $ 1,070 $ 1,207
Troubled
debt
restruc-
turing 97 0 0 0 0 0
Past due
loans 90
days or
more and
still
accruing
interest 0 0 0 0 0 0
----------------------------------------------------------------------
Total non
performing
loans 362 1,215 3,907 986 1,070 1,207
Other real
estate owned
("OREO") 0 478 501 586 586 0
Repossessed
assets other
than real-
estate 0 0 0 0 0 0
----------------------------------------------------------------------
Total non
performing
assets $ 362 $ 1,693 $ 4,408 $ 1,572 $ 1,656 $ 1,207
----------------------------------------------------------------------
Non per-
forming
assets as a
percentage
of total
assets 0.04% 0.17% 0.43% 0.16% 0.17% 0.12%
Non performing
loans as a
percentage
of total
loans 0.06% 0.22% 0.71% 0.18% 0.20% 0.23%
Net charge-
offs $106 $68 $147 $139 $86 $2
Net charge-
offs as a
percentage of
average loans
for the
period 0.02% 0.01% 0.03% 0.03% 0.02% 0.00%
Allowance for
loan losses
as a per-
centage of
period end
loans 0.90% 0.93% 0.94% 0.91% 0.93% 0.93%
Allowance for
loan losses
as a per-
centage of
non-performing
loans 1,563.5% 431.7% 132.2% 509.2% 464.9% 410.8%
----------------------------------------------------------------------
Total
Assets $986,436 $995,167 $1,017,645 $987,790 $1,001,622 $1,048,966
Total
Loans 631,221 565,025 551,669 550,847 533,675 530,573
Average
loans
for the
quarter 601,655 565,654 552,521 538,798 532,799 540,971
Allowance
for loan
losses 5,660 5,245 5,163 5,021 4,974 4,958
----------------------------------------------------------------------
The Corporation has been successful in maintaining loan credit quality. At June 30, 2008, non-performing assets totaled $362,000, or 0.04% of total assets, as compared with $4.4 million, or 0.43%, at December 31, 2007 and $1.7 million, or 0.17%, at June 30, 2007. The decrease in non-accrual loans from December 31, 2007 was primarily attributable to one commercial mortgage in the amount of $2.5 million in which the Corporation has received full payment of the commercial mortgage, including principal of $2.5 million and interest of $83,277, during the first quarter of 2008. At June 30, 2008, the Corporation has no other real estate owned. ``The Corporation is well positioned to weather the unprecedented volatility in the credit markets as we do not have exposure to the sub prime home mortgage business or to other sub prime issues such as securitizations and collateralized debt obligations. Our home equity portfolio is sound and was originated with conservative underwriting practices,'' remarked Mr. Weagley. At June 30, 2008, the total allowance for loan losses amounted to approximately $5.7 million, or 0.90% of total loans. The allowance for loan losses as a percent of total non-performing loans amounted to 1563.5% at June 30, 2008 as compared to 132.2% at December 31, 2007 and 464.9% at June 30, 2007. Securities Investment securities reflected a decline of $112.4 million at June 30, 2008 compared to June 30, 2007. The decline is consistent with maintaining the balance sheet strategies the Corporation has previously outlined in seeking to reduce the size of its investment securities portfolio while increasing loans as a percentage of the earning-asset mix. The reduction in the volume of the investment portfolio was made in anticipation of providing cash flow for loan funding and forecasted liability outflows. This action had a positive impact on net interest income in the quarter and six months ended June 30, 2008. Deposits/Funding Sources The following table reflects the Corporation's deposits and other funding sources for the periods specified.
Deposit Mix
(unaudited)
(Dollars in thousands)
At quarter ended: 6/30/08 3/31/08 12/31/07 9/30/07 6/30/07 3/31/07
---------------- -------- -------- -------- -------- -------- --------
Checking accounts
Non interest
bearing $110,891 $117,053 $111,422 $121,884 $127,797 $128,703
Interest
bearing 124,469 125,152 155,406 110,177 126,112 131,337
Savings
deposits 63,918 68,028 86,341 92,789 92,474 95,233
Money market
accounts 147,202 170,742 196,601 167,442 171,923 173,569
Time Deposits 174,710 141,949 149,300 158,707 159,705 193,806
----------------------------------------------------------------------
Total Deposits $621,190 $622,924 $699,070 $650,999 $678,011 $722,648
======================================================================
Deposits totaled $621.2 million at June 30, 2008, a decrease of $56.8 million from June 30, 2007. The decline was a result of a decline in interest rates due to recent Federal Reserve actions and a decision to continue to reduce the Corporation's dependence on more rate sensitive high costing funds, which were subject to maturity and repricing in favor of lower costing wholesale funds available. Declines in volumes were primarily in savings and time deposits coupled with declines in non-interest demand deposits, due in part to balances swept into overnight repurchase agreements. Time certificates of deposit of $100,000 increased $26.6 million as compared to June 30, 2007, as the cost of this type of funding source became competitive with wholesale funds. Total deposit funding sources, including overnight repurchase agreements as such agreements are part of the demand deposit base, amounted to $671.3 million at June 30, 2008, which represents a decrease of $33.5 million as compared to June 30, 2007. Borrowings totaled $279.6 million at June 30, 2008, reflecting an increase of $57.6 million from June 30, 2007. Overnight customer repurchase transactions covering commercial customer sweep accounts totaled $50.1 million at June 30, 2008 as compared with $26.8 million at June 30, 2007. This shift in the volume of repurchase agreements also accounted for a portion of the decline in non-interest bearing commercial checking accounts during the period. Stockholders' Equity Total stockholders' equity amounted to $80.4 million, or 8.15% of total assets, at June 30, 2008. Tangible stockholders' equity was $63.2 million, or 6.52% of tangible assets. Book value per common share was $6.18 at June 30, 2008, compared to $6.48 at December 31, 2007 and $6.89 at June 30, 2007. Tangible book value per common share was $4.86 at June 30, 2008 compared to $5.17 at December 31, 2007 and $5.65 at June 30, 2007. During the three months ended June 30, 2008, the Corporation purchased 97,685 shares of common stock at an average cost of $9.60 per share. The total shares purchased to date in 2008 totaled 161,583 shares of common stock at an average price of $10.16 per share. During 2007, the Corporation purchased 850,527 common shares at an average cost per share of $11.79 under the stock buyback program adopted on January 24, 2002. The repurchased shares were recorded as Treasury Stock, which resulted in a decrease in stockholders' equity. On September 27, 2007, the Board approved an increase in its current share buyback program to an additional 5% of outstanding shares, enhancing its then current authorization by 684,627 shares. Subsequent to that action, on June 26, 2008 the Board approved an increase in its current share buyback program to an additional 5% of outstanding shares, enhancing its current authorization by 649,712 shares. Any purchases by the Corporation may be made, from time to time, in the open market, in privately negotiated transactions or otherwise. At June 30, 2008, there were 684,368 shares available for repurchase under the Corporation's stock buyback program. These actions allow the Corporation to continue to repurchase shares and deliver value to the shareholders. The Corporation's strong capital position allows the Corporation to increase the shares authorized for the stock repurchase program. The additional capacity to repurchase shares provides the flexibility to allocate capital as we seek to maximize shareholder returns. At June 30, 2008, the Corporation's Tier 1 Capital Leverage ratio was 8.03%, the Corporation's total Tier 1 Risk Based Capital ratio was 10.57% and the Corporation's Total Risk Based Capital ratio was 11.33%. Total Tier 1 capital decreased to approximately $78.0 million at June 30, 2008 from $79.1 million at December 31, 2007 and from $88.8 million at June 30, 2007. At June 2008, the Corporation's capital ratios continued to exceed the minimum Federal requirements for a bank holding company, and Union Center National Bank's capital ratios continued to exceed each of the minimum levels required for classification as a ``well capitalized institution'' under the Federal Deposit Insurance Corporation Improvement Act (``FDICIA''). About Center Bancorp Center Bancorp, Inc. is a Financial Services Holding Company and operates Union Center National Bank, its main subsidiary. Chartered in 1923, Union Center National Bank is one of the oldest National banks headquartered in the state of New Jersey and currently the largest commercial bank headquartered in Union County. Its primary market niche is its commercial banking business. The Bank focuses its lending activities on commercial lending to small and medium sized businesses, real estate developers and high net worth individuals. The Bank, through its Private Wealth Management Division which includes its wholly owned subsidiary, Center Financial Group LLC, and through a strategic partnership with American Economic Planning Group, provides financial services including brokerage services, insurance and annuities, mutual funds, financial planning, estate and tax planning, trust, elder care and benefit plan administration. Center additionally offers title insurance services, in connection with the closing of real estate transactions, through two subsidiaries, Union Title Company and Center Title Company. The Bank currently operates 13 banking locations in Union and Morris counties in New Jersey. Banking centers are located in Union Township (6 locations), Berkeley Heights, Boonton/Mountain Lakes, Madison, Millburn/Vauxhall, Morristown, Springfield, and Summit, New Jersey. The Bank also operates remote ATM locations in the Union, Chatham and Madison, New Jersey Transit train stations, Union Hospital and the Boys and Girls Club of Union. While the Bank's primary market area is comprised of Morris and Union Counties, New Jersey, the Corporation has expanded to northern and central New Jersey. At June 30, 2008, the Bank had total assets of $1.0 billion, total deposit funding sources, which includes overnight repurchase agreements, of $671.3 million and stockholders' equity of approximately $80.4 million. For further information regarding Center Bancorp, Inc., call 1-(800)-862-3683. For information regarding Union Center National Bank, visit our web site at http://www.centerbancorp.com Non-GAAP Financial Measures ``Return on average tangible stockholders' equity'' is a non-GAAP financial measure and is defined as net income as a percentage of tangible stockholders equity. This measure may be important to investors that are interested in analyzing our return on equity exclusive of the effect of changes in intangible assets on equity. The following table presents a reconciliation of return on stockholders equity and return on tangible stockholders equity for the periods presented:
(Dollars in thousands)
For the quarter
ended: 6/30/08 3/31/08 12/31/07 9/30/07 6/30/07 3/31/07
------- ------- ------- ------- ------- -------
Net income $ 1,408 $ 1,217 $ 532 $ 998 $ 1,017 $ 1,309
---------------------------------------------------------------------
Average
stockholders'
equity $84,142 $86,921 $87,265 $94,833 $97,919 $97,466
Less: Average
goodwill and
other intangible
assets 17,169 17,194 17,220 17,245 17,272 17,300
---------------------------------------------------------------------
Average tangible
stockholders'
equity $66,973 $69,727 $70,045 $77,588 $80,647 $80,166
---------------------------------------------------------------------
Return on average
stockholders'
equity 6.69% 5.60% 2.44% 4.21% 4.15% 5.37%
Add: Average
goodwill and
other intangible
assets 1.72 1.38 0.60 0.94 0.89 1.16
---------------------------------------------------------------------
Return on average
tangible
stockholders'
equity 8.41% 6.98% 3.04% 5.15% 5.04% 6.53%
---------------------------------------------------------------------
``Tangible book value per share'' is also a non-GAAP financial measure and represents tangible stockholders' equity (or tangible book value) calculated on a per common share basis. The Corporation believes that a disclosure of tangible book value per share may be helpful for those investors who seek to evaluate the Corporation's book value per share without giving effect to goodwill and other intangible assets. The following table presents a reconciliation of total book value per share to tangible book value per share as of the dates presented: (Dollars in thousands) At quarter ended: 6/30/2008 3/31/2008 12/31/2007 ----------------- --------- --------- --------- Common shares outstanding 13,016,075 13,113,760 13,155,784 Stockholders' equity $ 80,393 $ 85,401 $ 85,278 Less: Goodwill and other intangible assets 17,154 17,179 17,204 --------------------------------------------------------------------- Tangible stockholders' equity $ 63,239 $ 68,222 $ 68,074 --------------------------------------------------------------------- Book value per share $ 6.18 $ 6.51 $ 6.48 Less: Goodwill and other intangible assets 1.32 1.31 1.31 --------------------------------------------------------------------- Tangible book value per share $ 4.86 $ 5.20 $ 5.17 --------------------------------------------------------------------- (Dollars in thousands) At quarter ended: 9/30/2007 6/30/2007 3/31/2007 ----------------- --------- --------- --------- Common shares outstanding 13,692,534 13,910,826 13,910,450 Stockholders' equity $ 93,730 $ 95,813 $ 98,163 Less: Goodwill and other intangible assets 17,230 17,256 17,283 --------------------------------------------------------------------- Tangible stockholders' equity $ 76,500 $ 78,557 $ 80,880 --------------------------------------------------------------------- Book value per share $ 6.85 $ 6.89 $ 7.06 Less: Goodwill and other intangible assets 1.26 1.24 1.25 --------------------------------------------------------------------- Tangible book value per share $ 5.59 $ 5.65 $ 5.81 --------------------------------------------------------------------- ``Tangible stockholders' equity/tangible assets'' is a non-GAAP financial measure and is defined as tangible stockholders' equity as a percentage of total assets minus goodwill and other intangible assets. This measure may be important to investors that are interested in analyzing the financial condition of the Corporation without consideration for intangible assets, inasmuch as tangible stockholders' equity and tangible assets both back out goodwill and other intangible assets. The following table presents a reconciliation of total assets to tangible assets and then presents a reconciliation of total stockholders' equity/total assets to tangible stockholders' equity/tangible assets as of the dates presented: (Dollars in thousands) At quarter ended: 6/30/08 3/31/08 12/31/07 ----------------- ------- ------- -------- Total assets $ 986,436 $ 995,167 $1,017,645 Less: Goodwill and other intangible assets 17,154 17,179 17,204 --------------------------------------------------------------------- Tangible assets $ 969,282 $ 977,988 $1,000,441 --------------------------------------------------------------------- Total stockholders' equity/total assets 8.15% 8.58% 8.38% Tangible stockholders' equity/tangible assets 6.52% 6.98% 6.80% (Dollars in thousands) At quarter ended: 9/30/2007 6/30/2007 3/31/2007 ----------------- --------- --------- --------- Total assets $ 987,790 $1,001,622 $1,048,966 Less: Goodwill and other intangible assets 17,230 17,256 17,283 --------------------------------------------------------------------- Tangible assets $ 970,560 $ 984,366 $1,031,683 --------------------------------------------------------------------- Total stockholders' equity/total assets 9.49% 9.57% 9.36% Tangible stockholders' equity/tangible assets 7.88% 7.98% 7.84% Total non-interest income is presented both including and excluding net securities gains (losses). We believe that many investors desire to evaluate non-interest income without regard for securities transactions. The following table presents a reconciliation of total non-interest (or other) income with total non-interest (or other) income excluding the impact of securities transactions. (Dollars in thousands) For the quarter ended: 6/30/08 3/31/08 12/31/07 9/30/07 6/30/07 3/31/07 ------------------------ ------- -------- ------- ------- ------- Total non-interest income $ 1,116 $ 866 $ 874 $ 911 $ 1,177 $ 1,410 Net securities gains (losses) 225 -- (43) 14 341 588 --------------------------------------------------------------------- Total non-interest income, excluding net securities gains (losses) $ 891 $ 866 $ 917 $ 897 $ 836 $ 822 --------------------------------------------------------------------- ``Efficiency ratio'' is a non-GAAP financial measure and is defined as non-interest expense as a percentage of net interest income on a tax equivalent basis plus non-interest income, excluding net securities gains (losses), as follows:
(Dollars in thousands)
For the quarter
ended: 6/30/08 3/31/08 12/31/07 9/30/07 6/30/07 3/31/07
------------------------ ------- ------- ------- ------- -------
Other expense $ 5,188 $ 4,953 $ 6,034 $ 6,080 $ 6,056 $ 6,428
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Net interest
income (tax
equivalent
basis) $ 6,776 $ 6,117 $ 5,594 $ 5,915 $ 5,692 $ 6,104
Other income,
excluding net
securities
gains
(losses) 891 866 917 897 836 822
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$ 7,667 $ 6,983 $ 6,511 $ 6,812 $ 6,528 $ 6,926
---------------------------------------------------------------------
Efficiency ratio 67.7% 70.9% 92.7% 89.3% 92.8% 92.8%
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Forward-Looking Statements All non-historical statements in this press release (including statements regarding anticipated cost savings, the relocation of the Corporation's Union data center/operations, the funding of loan commitments and loan growth) constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may use such forward-looking terminology such as ``expect,'' ``look,'' ``believe,'' ``plan,'' ``anticipate,'' ``may,'' ``will'' or similar statements or variations of such terms or otherwise express views concerning trends and the future. Such forward-looking statements involve certain risks and uncertainties. These include, but are not limited to, the direction of interest rates, continued levels of loan quality and origination volume, continued relationships with major customers including sources for loans, as well as the effects of international, national, regional and local economic conditions and legal and regulatory barriers and structure, including those relating to the deregulation of the financial services industry, and other risks cited in reports filed by the Corporation with the Securities and Exchange Commission. Actual results may differ materially from such forward-looking statements. Center Bancorp, Inc. assumes no obligation for updating any such forward-looking statement at any time.
CENTER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION
(unaudited)
June 30, December 31,
(Dollars in Thousands) 2008 2007
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ASSETS
Cash and due from banks $ 16,172 $ 20,541
Federal funds sold and securities
purchased under agreement to resell 0 49,490
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Total cash and cash equivalents 16,172 70,031
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Investment securities available-for sale 253,780 314,194
Loans, net of unearned income 631,221 551,669
Less -- Allowance for loan losses 5,660 5,163
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Net Loans 625,561 546,506
Restricted investment in bank stocks, at cost 10,325 8,467
Premises and equipment, net 18,203 17,419
Accrued interest receivable 4,147 4,535
Bank owned life insurance 22,710 22,261
Other assets 18,384 17,028
Goodwill and other intangible assets 17,154 17,204
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Total assets $986,436 $1,017,645
=====================================================================
LIABILITIES
Deposits:
Non-interest bearing $110,891 $ 111,422
Interest-bearing
Time deposits $100 and over 94,270 63,997
Interest-bearing transactions, savings
and time deposits $100 and less 416,029 523,651
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Total deposits 621,190 699,070
Securities sold under agreement to repurchase 50,159 48,541
Short-term borrowings 10,900 1,123
Long-term borrowings 213,371 168,445
Subordinated debentures 5,155 5,155
Accounts payable and accrued liabilities 5,268 10,033
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Total liabilities 906,043 932,367
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STOCKHOLDERS' EQUITY
Preferred stock, no par value:
Authorized 5,000,000 shares; none issued -- --
Common stock, no par value:
Authorized 20,000,000 shares; issued
15,190,984 shares in 2008 and 2007;
outstanding 13,016,075 shares in 2008
and 13,155,784 shares in 2007 86,908 86,908
Additional paid in capital 5,234 5,133
Retained earnings 15,438 15,161
Treasury stock, at cost (2,174,909 shares
in 2008 and 2,035,200 shares in 2007) (17,568) (16,100)
Accumulated other comprehensive loss (9,619) (5,824)
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Total stockholders' equity 80,393 85,278
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Total liabilities and stockholders' equity $986,436 $1,017,645
=====================================================================
CENTER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
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(Dollars in Thousands,
Except Per Share Data) 2008 2007 2008 2007
---------------------------------------------------------------------
Interest income:
Interest and fees
on loans $8,677 $8,274 $17,148 $16,627
Interest and dividends
on investment
securities:
Taxable interest
income 2,635 3,259 5,400 6,954
Non-taxable interest
income 675 789 1,477 1,607
Dividends 213 366 456 727
Interest on Federal
funds sold and
securities purchased
under agreement to
resell 30 256 109 481
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Total interest income 12,230 12,944 24,590 26,396
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Interest expense:
Interest on
certificates of
deposit $100 or more 537 785 1,212 1,890
Interest on other
deposits 2,499 4,484 5,868 8,750
Interest on borrowings 2,765 2,450 5,394 4,910
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Total interest expense 5,801 7,719 12,474 15,550
---------------------------------------------------------------------
Net interest income 6,429 5,225 12,116 10,846
Provision for loan
losses 521 100 671 100
---------------------------------------------------------------------
Net interest income
after provision for
loan losses 5,908 5,125 11,445 10,746
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Other income:
Service charges,
commissions and fees 513 436 1,042 855
Annuity and insurance 38 60 55 123
Bank owned life
insurance 227 230 449 453
Net securities gains 225 341 225 929
Other income 113 110 211 227
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Total other income 1,116 1,177 1,982 2,587
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Other expense:
Salaries and employee
benefits 2,524 2,834 4,876 5,976
Occupancy, net 734 629 1,493 1,352
Premises and equipment 356 436 722 898
Professional and
consulting 190 599 362 1,138
Stationery and printing 118 115 213 274
Marketing and
advertising 188 109 348 272
Computer expense 226 148 367 313
Other 852 1,186 1,760 2,261
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Total other expense 5,188 6,056 10,141 12,484
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Income before income
tax expense (benefit) 1,836 246 3,286 849
Income tax expense
(benefit) 428 (771) 661 (1,477)
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Net income $1,408 $1,017 $2,625 $2,326
=====================================================================
Earnings per share:
Basic $0.11 $0.07 $0.20 $0.17
Diluted $0.11 $0.07 $0.20 $0.17
---------------------------------------------------------------------
Weighted average common
shares outstanding:
Basic 13,070,868 13,910,450 13,107,808 13,910,450
Diluted 13,083,558 13,990,642 13,123,136 13,986,680
=====================================================================
SUMMARY SELECTED QUARTERLY STATISTICAL INFORMATION AND FINANCIAL DATA
(Dollars in Thousands, Except per Share Data)
Three Months Ended
------------------
6/30/2008 3/31/2008 6/30/2007
--------- --------- ---------
Statements of Income Data:
Interest income $ 12,230 $ 12,360 $ 12,944
Interest expense 5,801 6,673 7,719
Net interest income 6,429 5,687 5,225
Provision for loan losses 521 150 100
Net interest income after
provision for loan losses 5,908 5,537 5,125
Other income 1,116 866 1,177
Other expense 5,188 4,953 6,056
Income before income
tax expense 1,836 1,450 246
Income tax (benefit) expense 428 233 (771)
Net income $ 1,408 $ 1,217 $ 1,017
Earnings per share:
Basic $ 0.11 $ 0.09 $ 0.07
Diluted $ 0.11 $ 0.09 $ 0.07
Statements of Condition Data
(Period End):
Investments $ 253,780 $ 281,746 $ 366,224
Total loans 631,221 565,025 533,675
Goodwill and other intangibles 17,154 17,179 17,256
Total assets 986,436 995,167 1,001,622
Deposits 621,190 622,924 678,011
Borrowings 279,585 279,024 221,994
Stockholders' equity $ 80,393 $ 85,401 $ 95,813
Dividend Data:
Cash dividends $ 1,177 $ 1,168 $ 1,252
Dividend payout ratio 83.59% 95.97% 123.11%
Cash dividends per share $ 0.09 $ 0.09 $ 0.09
Weighted Average Common
Shares Outstanding:
Basic 13,070,868 13,144,747 13,910,450
Diluted 13,083,558 13,163,586 13,990,642
Operating Ratios:
Return on average assets 0.57% 0.50% 0.40%
Average stockholders' equity
to average assets 8.51% 8.87% 9.55%
Return on average equity 6.69% 5.60% 4.15%
Return on average tangible
stockholders' equity 8.41% 6.98% 5.04%
Book value per common share $ 6.18 $ 6.51 $ 6.89
Tangible book value per
common share $ 4.86 $ 5.20 $ 5.65
Non-Financial Information
(Period End):
Common stockholders of record 658 666 706
Staff-full time equivalent 164 167 187
Contact: Center Bancorp, Inc.
Investor Inquiries:
Anthony C. Weagley, President & Chief Executive Officer
Investor Relations:
Joseph Gangemi
(908) 206-2886
Source: Center Bancorp, Inc.
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