UNION, N.J., July 30, 2009 (GLOBE NEWSWIRE) -- Center Bancorp, Inc. (Nasdaq:CNBC), parent company of Union Center National Bank (UCNB), today reported operating results for the second quarter ended June 30, 2009. Net income amounted to $1.2 million, or $0.08 per fully diluted common share, for the quarter ended June 30, 2009, as compared with earnings of $1.4 million, or $0.11 per fully diluted common share, for the quarter ended June 30, 2008.
For the six months ended June 30, 2009, net income amounted to $2.0 million, or $0.13 per fully diluted common share, as compared to $2.6 million, or $0.20 per fully diluted common share, for the same period in 2008.
President & CEO's Remarks
"Center Bancorp continues to reflect strong core performance despite difficult economic conditions in the second quarter," indicated Anthony C. Weagley, President & CEO. "Most notably, we see overall growth in our core business, a continued growth of deposits, loans and most important, client relationships. This continues to translate into improved balance sheet trends. Certain credit quality indicators improved, such as reduced net charge-offs and other real estate owned (OREO) compared to the previous quarter. We remain cautiously optimistic on market trends and resulting challenges in the months ahead. Furthermore, we believe we have taken the appropriate actions in dealing with the financial crisis and have positioned ourselves to continue to expand our franchise and build shareholder value. Another key factor underpinning our performance is the control of operating overhead."
The Corporation continued to focus on building a superior balance sheet and increasing its liquidity. This resulted in a minor compression in net interest margin in the quarter and in year-to-date key performance measures. As of June 30, 2009, the Corporation maintained $173.6 million in cash at the Federal Reserve Bank of New York compared to $10.8 million at December 31, 2008. This represented growth in the Corporation's customer base and enhanced our liquidity position while we continue to expand our earning asset base in a prudent manner. Further, the Corporation has had no outstanding overnight borrowings under its $93.7 million line of credit facility with the Federal Home Loan Bank of New York since October 2008. The Corporation's available for sale investment portfolio provides an additional source of liquidity.
"During the second quarter, the Corporation recorded an increase in other real estate expense of $1.3 million coupled with higher FDIC insurance expense of $920,000 due primarily to an additional expense taken on the special assessment coupled with changes in the premium rates. Taken together, these increases reduced second quarter earnings by approximately $0.10 per fully diluted common share, and skewed our efficiency ratio measurement for the period," indicated Mr. Weagley.
"Despite these actions, we maintained solid core quarterly earnings, which fortified an already strong capital position. Overall, loans continued to show marked growth with commercial and commercial real estate demand still gaining strength, while new production of 1-4 family loans for sale into the secondary market coupled with refinancing activity reduced the residential loan portfolio. As we move forward, our focus will remain on preserving and growing our core business, and providing sound, prudent management of the Corporation."
Key items for the quarter include:
* Net income of $1,201,000 for the second quarter of 2009 compared
with net income of $799,000 for the first quarter of 2009 and
$1.4 million for the second quarter of 2008.
* EPS of $0.08 per fully diluted common share compared with $0.05 per
fully diluted common share for the first quarter of 2009 and $0.11
per fully diluted common share for the comparable second quarter
period of 2008. Dividends and accretion relating to the preferred
stock and warrants issued to the U.S. Treasury reduced earnings by
approximately $0.01 per fully diluted common share.
* Other real estate expense increased by $1.3 million compared to the
same quarter last year, due primarily to the recognition of a
$926,000 write-down coupled with the continued build out costs
relating to the residential real estate condominium project in
Union County, New Jersey. The Corporation currently has a contract
for sale on this project, which is expected to close in the third
quarter of 2009.
* FDIC insurance expense increased $920,000 over the same quarter
last year due to the recording of the mandated FDIC special
assessment, which amounted to $630,000, along with higher FDIC
assessments resulting from changes in the premium rates.
* Overall credit quality in the Bank's portfolio remains high, even
though the economic weakness has impacted several potential problem
loans. Non-performing assets amounted to 0.80% of total assets at
June 30, 2009 compared to 0.81% at March 31, 2009 and 0.04% at
June 30, 2008.
* Strong Tier 1 capital ratio of 7.52% at June 30, 2009, 8.42% at
March 31, 2009, and 8.03% at June 30, 2008.
* A contraction in annualized net interest margin by 8 basis points
to 2.73% compared to 2.81% for the first quarter of 2009 and down
27 basis points as compared to the comparable quarter of 2008, as a
high level of uninvested excess cash has been accumulated due to
strong deposit growth experienced during the quarter.
* An increase in deposits to $955.1 million at June 30, 2009 from
$768.4 million at March 31, 2009 and $621.2 million at June 30,
2008, reflecting inflows in core savings deposits and CDARS
Reciprocal deposits, as customers' desires for safety and liquidity
became paramount in light of the financial crisis.
* Book value per common share amounting to $6.14 at June 30, 2009
compared to $6.15 at March 31, 2009 and $6.18 at June 30, 2008.
Tangible book value per common share was $4.83 at June 30, 2009
compared to $4.83 at March 31, 2009 and $4.86 at June 30, 2008.
Selected financial ratios (annualized where applicable)
As of or for the
quarter ended: 6/30/ 3/31/ 12/31/ 9/30/ 6/30/ 3/31/
----------------- 09 09 08 08 08 08
----- ----- ------ ----- ------ -----
Return on average
assets 0.40% 0.30% 0.66% 0.60% 0.57% 0.50%
Return on average
equity 5.35% 3.52% 8.38% 7.55% 6.69% 5.60%
Net interest margin
(tax equivalent
basis) 2.73% 2.81% 3.01% 3.09% 3.00% 2.74%
Loan/Deposit
ratio 72.68% 88.24% 102.53% 97.64% 101.61% 90.71%
Stockholders' equity/
total assets 6.67% 7.98% 7.99% 7.73% 8.15% 8.58%
Efficiency ratio 96.3% 72.5% 59.7% 55.4% 67.7% 70.9%
Book value per common
share $6.14 $6.15 $6.29 $6.21 $6.18 $6.51
Return on average
tangible
stockholders' equity 6.61% 4.33% 10.62% 9.60% 8.41% 6.98%
Tangible common
stockholders'
equity/tangible
assets 4.74% 5.69% 6.42% 6.19% 6.52% 6.98%
Tangible book value
per common share $4.83 $4.83 $4.97 $4.89 $4.86 $5.20
Capital and Liquidity
Center remained well capitalized with strong liquidity in the second quarter of 2009. Total stockholders' equity amounted to $89.5 million, or 6.67% of total assets, at June 30, 2009. Tangible common stockholders' equity was $62.8 million, or 4.74% of tangible assets. Book value per common share was $6.14 at June 30, 2009, compared to $6.18 at June 30, 2008. Tangible book value per common share was $4.83 at June 30, 2009 compared to $4.86 at June 30, 2008.
At June 30, 2009, the Corporation's Tier 1 Capital Leverage ratio was 7.52%, the Corporation's total Tier 1 Risk Based Capital ratio was 10.46% and the Corporation's Total Risk Based Capital ratio was 11.28%. Total Tier 1 capital increased to approximately $88.6 million at June 30, 2009 from $78.2 million at December 31, 2008, reflecting the Corporation's participation in the TARP Capital Purchase Program. At June 30, 2009, the Corporation's capital ratios continued to exceed each of 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.
The Corporation also announced that its Board of Directors has authorized a rights offering of up to approximately $11 million of common stock to its existing stockholders. The Corporation expects to use the net proceeds from the proposed rights offering to purchase the shares of preferred stock and the warrant to purchase shares of common stock issued to the U.S. Department of the Treasury in January 2009 under the TARP Capital Purchase Program.
Under the proposed rights offering, each shareholder of record as of a record date to be determined will receive, at no charge, one non-transferable subscription right for each share of Center Bancorp common stock owned on the record date. Each right will entitle the holder to purchase its pro rata allocation of the shares to be offered at a subscription price which is expected to be at a discount from the average market price of the Company's common stock for several trading days prior to the commencement of the rights offering. The proposed rights offering will also include an over-subscription privilege which will entitle each rights holder that exercises its basic subscription privilege in full to purchase any shares not purchased by other shareholders pursuant to the exercise of their basic subscription privileges at the same subscription price. Lawrence B. Seidman, an existing shareholder and member of the Corporation's Board of Directors, and certain of his affiliates have agreed to purchase any shares of common stock that remain unsubscribed for at the same price as the subscription price.
The Corporation anticipates that the specific terms of the rights offering will be determined, and the rights offering will commence, within the next month.
Center Bancorp plans to file a registration statement with the Securities and Exchange Commission pertaining to the rights offering. This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities in any jurisdiction, nor shall there be any offer or sale of the common stock referred to in this press release in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state. The proposed rights offering will be made only by means of a prospectus.
Asset Quality
At June 30, 2009, non-performing assets totaled $10.8 million, or 0.80% of total assets, as compared with $9.1 million, or 0.81%, at March 31, 2009 and $0.4 million, or 0.04%, at June 30, 2008.
"While overall credit quality in the Bank's portfolio remains high, continued economic weakness has impacted several problem loans in the portfolio which have been previously disclosed. Non-accrual loans increased from $4.6 million at March 31, 2009 to $5.0 million at June 30, 2009; this increase was due primarily to the addition of one residential mortgage credit. Troubled debt restructurings increased from $91,000 at March 31, 2009 to $1.0 million at June 30, 2009; the increase in troubled debt restructurings reflects modifications to residential mortgage loans, which are all performing according to the terms in their respective modification agreements. Loans past due 90 days or more and still accruing increased from none at March 31, 2009 to $1.3 million at June 30, 2009 due to three new credits which are well secured and in the process of collection. With respect to the $4.0 million industrial warehouse project placed into non-accrual during the first quarter of 2009, we are currently working with the borrowers and the participating bank that is involved with the project, in an effort to sell or lease the remaining industrial warehouse units. Proceeds from the current units under contract, as well as the remaining units, will be used to make further principal reductions to our loan," remarked Mr. Weagley.
The OREO balance decreased from $4.4 million at March 31, 2009 to $3.5 million at June 30, 2009. This decrease was related to the writedown of the carrying value of the residential condominium project that was taken into OREO during the fourth quarter of 2008. The Corporation currently has a contract for sale on the project, which is expected to close during the third quarter of 2009. Had this sale occurred on June 30, 2009, the Corporation's total non-performing assets would have reflected a significant improvement from March 31, 2009. The Corporation expects to record a gain on the sale of the property in the approximate amount of $150,000.
At June 30, 2009, the total allowance for loan losses amounted to approximately $6.9 million, or 1.00% of total loans. The allowance for loan losses as a percent of total non-performing loans amounted to 94.8% at June 30, 2009 as compared to 145.4% at March 31, 2009 and 1,563.5% at June 30, 2008.
Selected credit quality ratios (unaudited)
(Dollars in thousands)
As of or for the
quarter ended: 6/30/09 3/31/09 12/31/08 9/30/08
---------------- ------- ------- -------- -------
Non-accrual loans $ 5,058 $ 4,566 $ 541 $ 541
Troubled debt
restructuring 975 91 93 95
Past due loans 90 days
or more and still
accruing interest 1,260 -- 139 18
----------------------------------------------------------------------
Total non performing
loans 7,293 4,657 773 654
Other real estate owned
("OREO") 3,500 4,426 3,949 --
----------------------------------------------------------------------
Total non performing
assets $ 10,793 $ 9,083 $ 4,722 $ 654
----------------------------------------------------------------------
Non performing assets
as a percentage of
total assets 0.80% 0.81% 0.46% 0.06%
Non performing loans as
a percentage of total
loans 1.05% 0.69% 0.11% 0.10%
Net charge-offs $ 8 $ 906 $ 251 $ 45
Net charge-offs as a
percentage of average
loans for the period
(annualized) 0.00% 0.53% 0.15% 0.03%
Allowance for loan
losses as a percentage
of period end loans 1.00% 1.00% 0.92% 0.92%
Allowance for loan
losses as a percentage
of non-performing
loans 94.8% 145.4% 809.1% 929.7%
----------------------------------------------------------------------
Total Assets $1,341,603 $1,121,013 $1,023,293 $1,042,778
Total Loans 694,214 678,017 676,203 661,157
Average loans for the
quarter 686,675 679,953 670,212 651,766
Allowance for loan
losses 6,917 6,769 6,254 6,080
----------------------------------------------------------------------
(Dollars in thousands)
As of or for the quarter ended: 6/30/08 3/31/08
------------------------------- -------- --------
Non-accrual loans $ 265 $ 1,215
Troubled debt restructuring 97 --
Past due loans 90 days or more and still accruing
interest -- --
----------------------------------------------------------------------
Total non performing loans 362 1,215
Other real estate owned ("OREO") -- 478
----------------------------------------------------------------------
Total non performing assets $ 362 $ 1,693
----------------------------------------------------------------------
Non performing assets as a percentage of total
assets 0.04% 0.17%
Non performing loans as a percentage of total loans 0.06% 0.22%
Net charge-offs $ 106 $ 68
Net charge-offs as a percentage of average loans
for the period (annualized) 0.07% 0.05%
Allowance for loan losses as a percentage of
period end loans 0.90% 0.93%
Allowance for loan losses as a percentage of
non-performing loans 1,563.5% 431.7%
----------------------------------------------------------------------
Total Assets $986,436 $995,167
Total Loans 631,221 565,025
Average loans for the quarter 601,655 565,654
Allowance for loan losses 5,660 5,245
----------------------------------------------------------------------
Net Interest Income and Margin
The Corporation recorded net interest income on a fully taxable equivalent basis of $6.8 million for the three months ended June 30, 2009 as compared to $6.8 million for the comparable quarter in 2008. Interest income increased by $0.3 million and interest expense increased by $0.3 million from the same period last year. Compared to 2008, average interest earning assets increased by $88.4 million while the net interest spread and net interest margin improved by 6 basis points and decreased by 27 basis points, respectively. On a linked quarter basis, the net interest spread and margin increased by 12 basis points and decreased by 8 basis points, respectively. Our net interest margin was impacted by the high level of uninvested excess cash, which accumulated due to strong deposit growth experienced during the quarter.
For the six months ended June 30, 2009, net interest income on a fully taxable equivalent basis amounted to $13.3 million as compared to $12.9 million for the same period in 2008. Interest income declined by $0.4 million while interest expense decreased by $0.8 million from the same period last year. Compared to 2008, average interest earning assets increased $65.0 million while our net interest spread and margin increased by 17 basis points and decreased by 10 basis points, respectively. Our net interest margin was impacted by the high level of uninvested excess cash, which accumulated due to strong deposit growth experienced during the first six months.
Quarterly Condensed Consolidated Income Statements (unaudited) (Dollars in thousands, except per share data) For the quarter ended: 6/30/09 3/31/09 12/31/08 9/30/08 ---------------------- ------- ------- -------- ------- Net interest income $ 6,627 $ 6,379 $ 6,823 $ 6,860 Provision for loan losses 156 1,421 425 465 --------------------------------------------------------------------- Net interest income after provision for loan losses 6,471 4,958 6,398 6,395 Other income 2,551 1,384 615 47 Other expense (7,314) (5,319) (4,754) (4,578) Income before income tax 1,708 1,023 2,259 1,864 Income tax expense 507 224 560 346 Net income 1,201 799 1,699 1,518 Net income available to common stockholders $ 1,053 $ 670 $ 1,699 $ 1,518 Earnings per common share: Basic $ 0.08 $ 0.05 $ 0.13 $ 0.12 Diluted $ 0.08 $ 0.05 $ 0.13 $ 0.12 Weighted average common shares outstanding: Basic 12,994,429 12,991,312 12,989,304 12,990,441 Diluted 12,996,544 12,993,185 12,995,134 13,003,954 (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 before income tax 1,836 1,450 Income tax expense 428 233 Net income 1,408 1,217 Net income available to common stockholders $ 1,408 $ 1,217 Earnings per common share: Basic $ 0.11 $ 0.09 Diluted $ 0.11 $ 0.09 Weighted average common shares outstanding: Basic 13,070,868 13,144,747 Diluted 13,083,558 13,163,586
Other Income
Total other income increased $1.4 million for the second quarter of 2009 compared with the comparable quarter of 2008, primarily as a result of net securities gains. During the second quarter of 2009, the Corporation recorded net securities gains of $1.7 million. Excluding net securities gains, the Corporation recorded other income of $841,000 for the three months ended June 30, 2009 compared to $891,000 for the three months ended June 30, 2008, a decrease of $50,000 or 5.6%. This decrease was due primarily to lower levels of service charges offset in part by higher income on bank owned life insurance and commissions from sales of mutual funds and annuities.
For the six months ended June 30, 2009, total other income increased $2.0 million compared to the same period in 2008, primarily as a result of net securities gains. Excluding net securities gains, the Corporation recorded other income of $1.6 million for the six months ended June 30, 2009 compared to $1.7 million for the comparable period in 2008, a decrease of $132,000 or 7.5%. This decrease was primarily the result of lower levels of service charges offset partially by higher income on bank owned life insurance and commissions from sales of mutual funds and annuities.
Quarterly Consolidated Non-Interest Income (unaudited)
(Dollars in thousands)
For the quarter ended: 6/30/ 3/31/ 12/31/ 9/30/ 6/30/ 3/31/
---------------------- 09 09 08 08 08 08
------ ------ ------ ------- ------ ------
Service charges on
deposit accounts $ 324 $ 343 $ 376 $ 360 $ 383 $ 404
Commissions from
mortgage broker -- 2 7 6 17 12
activities
Loan related fees
(LOC) 45 30 53 46 37 41
Commissions from sale
of mutual funds 45 40 22 35 38 17
and annuities
Debit card and ATM
fees 116 106 113 124 130 125
Bank owned life
insurance 257 218 247 507 228 221
Net securities gains
(losses) 1,710 600 (256) (1,075) 225 --
Other service charges
and fees 54 45 53 44 58 46
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Total other income $2,551 $1,384 $ 615 $ 47 $1,116 $ 866
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Other Expense
Other expense for the second quarter of 2009 totaled $7.3 million, an increase of $2.1 million, or 41.0%, from the comparable period in 2008. For the six months ended June 30, 2009, other expense totaled $12.6 million, an increase of $2.5 million, or 24.6%. In May 2009, the FDIC adopted a final rule on the special assessment that will assess the industry 5 basis points on total assets less Tier 1 capital. The Corporation was required to accrue the charge during the second quarter of 2009, which amounted to approximately $630,000, even though the FDIC will collect the fee at the end of the third quarter when the regular quarterly assessments for the second quarter are collected. Additionally, in December 2008, the FDIC adopted a final rule increasing risk-based assessment rates beginning in the first quarter of 2009. As a result of these changes coupled with one-time assessment credits recognized in 2008, FDIC insurance expense amounted to $940,000 in the second quarter of 2009, an increase of $920,000, or 4,600%, over the comparable period in 2008. For the six months ended June 30, 2009, FDIC insurance expense increased $1.3 million, or 3,163%. OREO expense for the second quarter of 2009 and six months ended June 30, 2009 increased by $1.3 million compared to the same quarter and six month period last year, respectively, due primarily to the recognition of a $926,000 writedown coupled with the continued build out costs relating to the residential real estate condominium project in Union County, New Jersey. The Corporation currently has a contract for sale on this project, which is expected to close in the third quarter of 2009.
The efficiency ratio for the second quarter of 2009 was 96.3% as compared to 67.7% in the second quarter of 2008. For the six months ended June 30, 2009, the efficiency ratio was 84.6% as compared to 69.2% in the same period of 2008. This increase was due primarily to the increase in FDIC insurance expense and OREO expense.
Quarterly Consolidated Non-Interest Expense (unaudited)
(Dollars in thousands)
For the quarter ended: 6/30/ 3/31/ 12/31/ 9/30/ 6/30/ 3/31/
---------------------- 09 09 08 08 08 08
------ ------ ------ ------ ------ ------
Employee salaries and
wages $1,946 $1,861 $1,777 $1,752 $2,013 $1,896
Employee stock option
expense 25 22 23 23 36 45
Health insurance and
other employee
benefits 362 309 (246) (32) 285 218
Payroll taxes 166 194 139 167 182 179
Other employee related
expenses 8 7 17 9 8 14
---------------------------------------------------------------------
Total salaries and
employee benefits $2,507 $2,393 $1,710 $1,919 $2,524 $2,352
Occupancy, net 583 797 983 803 734 759
Premises and equipment 319 321 362 352 356 366
Professional and
consulting 236 212 152 189 190 172
Stationery and printing 102 70 97 87 118 95
FDIC Insurance 940 365 149 28 20 20
Marketing and
advertising 141 130 144 145 188 160
Computer expense 228 214 229 238 226 141
Bank regulatory related
expenses 60 60 55 54 55 58
Postage and delivery 64 46 69 67 65 78
ATM related expenses 61 61 59 61 62 60
OREO expense (benefit) 1,375 33 -- (44) 31 33
Amortization of core
deposit intangible 22 22 23 23 24 25
Other expenses 676 595 722 656 595 634
---------------------------------------------------------------------
Total other expense $7,314 $5,319 $4,754 $4,578 $5,188 $4,953
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Key Balance Sheet Changes at June 30, 2009
* The Corporation had total loans of $694.2 million at June 30, 2009, an $18.0 million, or 2.7%, increase from December 31, 2008 and a $63.0 million, or 10.0%, increase from June 30, 2008. * Loan growth continued during the quarter in the Corporation's commercial related segment of the portfolio. Total gross loans booked for the quarter included $52.6 million of new loans and $12.5 million in advances principally offset by payoffs and principal payments of $48.9 million. * At June 30, 2009, the Corporation had $44.9 million in overall undispersed loan commitments, which are expected to fund over the next 90 days. * Loan originations and pipelines for the quarter increased in the commercial sector, primarily in the commercial real estate segment of the loan portfolio. Loan Mix: (unaudited) (Dollars in thousands) At quarter ended: 6/30/09 3/31/09 12/31/08 9/30/08 6/30/08 3/31/08 ---------- ------- ------- -------- ------- ------- ------- Real estate loans Residential $218,340 $229,903 $240,316 $249,258 $255,817 $260,237 Commercial 262,676 256,885 256,527 246,089 224,990 163,664 Construction 54,105 41,242 42,075 47,722 50,638 48,494 --------------------------------------------------------------------- Total real estate loans 535,121 528,030 538,918 543,069 531,445 472,395 Commercial loans 157,621 148,444 135,232 116,891 98,845 91,492 Consumer and other loans 921 928 1,481 672 339 592 --------------------------------------------------------------------- Total loans before unearned fees and costs 693,663 677,402 675,631 660,632 630,629 564,479 Unearned fees and costs, net 551 615 572 525 592 546 --------------------------------------------------------------------- Total loans $694,214 $678,017 $676,203 $661,157 $631,221 $565,025 ===================================================================== * Investment securities increased by $125.1 million at June 30, 2009 compared to June 30, 2008 and increased by $136.2 million when compared to December 31, 2008. * Deposits totaled $955.1 million at June 30, 2009, an increase of $295.6 million from December 31, 2008 and an increase of $334.0 million from June 30, 2008. * Total deposit funding sources, including overnight repurchase agreements (which agreements are part of the demand deposit base), amounted to $979.3 million at June 30, 2009, an increase of $289.6 million from December 31, 2008, which reflected inflows in core savings deposits and CDARS Reciprocal deposits, as customers' needs for safety and more liquidity became paramount in light of the financial crisis. * Time certificates of deposit of $100,000 and over increased $169.3 million as compared to December 31, 2008 due primarily to an increase in CDARS Reciprocal deposits, which has become an attractive product for customers who are sensitive to obtaining full FDIC insurance for their time deposits. * The Corporation expects its deposit gathering efforts to remain strong, supported in part by the recent actions by the FDIC in temporarily raising the deposit insurance limits. The Corporation is a participant in the FDIC's Transaction Account Guarantee Program. Under this program, all non-interest bearing deposit transaction accounts are fully guaranteed by the FDIC, regardless of dollar amount, through December 31, 2009. The FDIC is currently seeking comment on whether to allow the guarantee to expire as scheduled on December 31, 2009 or extend the guarantee through June 30, 2010, with increased fees. * Borrowings totaled $252.5 million at June 30, 2009, reflecting a decrease of $21.1 million from December 31, 2008.
The following table reflects the Corporation's deposits for the periods specified.
Deposit Mix
(unaudited)
(Dollars in thousands)
At quarter
ended: 6/30/09 3/31/09 12/31/08 9/30/08 6/30/08 3/31/08
---------- ------- ------- -------- ------- ------- -------
Checking
accounts
Non interest
bearing $130,115 $114,607 $113,319 $114,631 $110,891 $117,053
Interest
bearing 137,578 132,682 139,349 129,070 124,469 125,152
Savings
deposits 185,074 137,197 66,359 61,623 63,918 68,028
Money market
accounts 129,756 114,363 111,308 140,533 147,202 170,742
Time deposits 372,619 269,530 229,202 231,287 174,710 141,949
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Total Deposits $955,142 $768,379 $659,537 $677,144 $621,190 $622,924
=====================================================================
Additional Information for the Second Quarter 2009
* Total assets of $1.3 billion at June 30, 2009, which positions the Corporation as one of the largest New Jersey headquartered financial institutions. * Continued improvement in earning asset mix from the same quarter last year, as average loans increased by $85.0 million while average investment securities, including federal fund sold, increased by $3.4 million * The Corporation relocated its Summit Banking Center on May 29, 2009, to the new Promenade Building on Morris Avenue in Summit from its existing downtown facility. Quarterly Condensed Consolidated Balance Sheets (unaudited) (Dollars in thousands) At quarter ended: 6/30/09 3/31/09 12/31/08 9/30/08 ----------------- ------- ------- -------- ------- Cash and due from banks $ 176,784 $ 90,634 $ 15,031 $ 15,952 Fed funds and money market funds -- -- -- -- Investments 378,895 266,032 242,714 284,349 Loans 694,214 678,017 676,203 661,157 Allowance for loan losses (6,917) (6,769) (6,254) (6,080) Restricted investment in bank stocks, at cost 10,675 10,228 10,230 10,277 Premises and equipment, net 18,430 18,313 18,488 18,545 Goodwill 16,804 16,804 16,804 16,804 Core deposit intangible 262 283 306 328 Bank owned life insurance 25,888 23,156 22,938 22,690 Other real estate owned 3,500 4,426 3,949 -- Other assets 23,068 19,889 22,884 18,756 --------------------------------------------------------------------- TOTAL ASSETS $1,341,603 $1,121,013 $1,023,293 $1,042,778 --------------------------------------------------------------------- Deposits $ 955,142 $ 768,379 $ 659,537 $ 677,144 Borrowings 252,498 255,365 273,595 281,046 Other liabilities 44,505 7,840 8,448 3,964 Stockholders' equity 89,458 89,429 81,713 80,624 --------------------------------------------------------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,341,603 $1,121,013 $1,023,293 $1,042,778 --------------------------------------------------------------------- (Dollars in thousands) At quarter ended: 6/30/08 3/31/08 ----------------- ------- ------- Cash and due from banks $ 16,172 $ 15,155 Fed funds and money market funds -- 45,300 Investments 253,780 281,746 Loans 631,221 565,025 Allowance for loan losses (5,660) (5,245) Restricted investment in bank stocks, at cost 10,325 10,036 Premises and equipment, net 18,203 17,404 Goodwill 16,804 16,804 Core deposit intangible 350 375 Bank owned life insurance 22,710 22,483 Other real estate owned -- -- Other assets 22,531 26,084 --------------------------------------------------------------------- TOTAL ASSETS $986,436 $995,167 --------------------------------------------------------------------- Deposits $621,190 $622,924 Borrowings 279,585 279,024 Other liabilities 5,268 7,818 Stockholders' equity 80,393 85,401 --------------------------------------------------------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $986,436 $995,167 --------------------------------------------------------------------- Condensed Consolidated Average Balance Sheets (unaudited) (Dollars in thousands) For the quarter ended: 6/30/09 3/31/09 12/31/08 9/30/08 ---------------------- ------- ------- -------- ------- Investments, Fed funds, and other $ 304,482 $ 253,445 $ 272,507 $ 273,337 Loans 686,675 679,953 670,212 651,766 Allowance for loan losses (6,891) (6,384) (6,235) (5,840) All other assets 211,495 131,861 95,514 93,535 --------------------------------------------------------------------- TOTAL ASSETS $1,195,761 $1,058,875 $1,031,998 $1,012,798 --------------------------------------------------------------------- Deposits-interest bearing $ 716,243 $ 588,599 $ 554,652 $ 521,459 Deposits-non interest bearing 121,482 115,541 112,936 118,623 Borrowings 253,310 255,269 278,524 288,002 Other liabilities 14,921 8,567 4,798 4,321 Stockholders' equity 89,805 90,899 81,088 80,393 --------------------------------------------------------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,195,761 $1,058,875 $1,031,998 $1,012,798 --------------------------------------------------------------------- (Dollars in thousands) For the quarter ended: 6/30/08 3/31/08 ---------------------- ------- ------- Investments, Fed funds, and other $301,118 $326,397 Loans 601,655 565,654 Allowance for loan losses (5,404) (5,237) All other assets 91,631 93,088 --------------------------------------------------------------------- TOTAL ASSETS $989,000 $979,902 --------------------------------------------------------------------- Deposits-interest bearing $499,342 $519,295 Deposits-non interest bearing 114,744 112,695 Borrowings 284,264 251,222 Other liabilities 6,508 9,769 Stockholders' equity 84,142 86,921 --------------------------------------------------------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $989,000 $979,902 ---------------------------------------------------------------------
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 Chatham and Madison New Jersey Transit train stations, 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, 2009, the Bank had total assets of $1.3 billion, total deposit funding sources, which includes overnight repurchase agreements, of $979.3 million and stockholders' equity of $89.5 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 average stockholders' equity and return on average tangible stockholders' equity for the periods presented:
(Dollars in thousands) For the quarter ended: 6/30/09 3/31/09 12/31/08 9/30/08 6/30/08 3/31/08 --------------- ------- ------- -------- ------- ------- ------- Net income $ 1,201 $ 799 $ 1,699 $ 1,518 $ 1,408 $ 1,217 ---------------------------------------------------------------------- Average stockholders' equity $89,805 $90,899 $81,088 $80,393 $84,142 $86,921 Less: Average goodwill and other intangible assets 17,078 17,101 17,123 17,145 17,169 17,194 ---------------------------------------------------------------------- Average tangible stockholders' equity $72,727 $73,798 $63,965 $63,248 $66,973 $69,727 ---------------------------------------------------------------------- Return on average stockholders' equity 5.35% 3.52% 8.38% 7.55% 6.69% 5.60% Add: Average goodwill and other intangible assets 1.26 0.81 2.24 2.05 1.72 1.38 ---------------------------------------------------------------------- Return on average tangible stockholders' equity 6.61% 4.33% 10.62% 9.60% 8.41% 6.98% ----------------------------------------------------------------------
"Tangible book value per common 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 common share may be helpful for those investors who seek to evaluate the Corporation's book value per common share without giving effect to goodwill and other intangible assets. The following table presents a reconciliation of total book value per common share to tangible book value per common share as of the dates presented:
(Dollars in thousands) ---------------------- At quarter ended: 6/30/09 3/31/09 12/31/08 9/30/08 ----------------- ------- ------- -------- ------- Common shares outstanding 13,000,601 12,991,312 12,991,312 12,988,284 Stockholders' equity $89,458 $89,429 $81,713 $80,624 Less: Preferred stock 9,578 9,557 -- -- Less: Goodwill and other intangible assets 17,066 17,087 17,110 17,132 --------------------------------------------------------------------- Tangible common stockholders' equity $62,814 $62,785 $64,603 $63,492 --------------------------------------------------------------------- Book value per common share $6.14 $6.15 $6.29 $6.21 Less: Goodwill and other intangible assets 1.31 1.32 1.32 1.32 --------------------------------------------------------------------- Tangible book value per common share $4.83 $4.83 $4.97 $4.89 --------------------------------------------------------------------- (Dollars in thousands) ---------------------- At quarter ended: 6/30/08 3/31/08 ----------------- ------- ------- Common shares outstanding 13,016,075 13,113,760 Stockholders' equity $80,393 $85,401 Less: Preferred stock -- -- Less: Goodwill and other intangible assets 17,154 17,179 --------------------------------------------------------------------- Tangible common stockholders' equity $63,239 $68,222 --------------------------------------------------------------------- Book value per common share $6.18 $6.51 Less: Goodwill and other intangible assets 1.32 1.31 --------------------------------------------------------------------- Tangible book value per common share $4.86 $5.20 ---------------------------------------------------------------------
"Tangible common stockholders' equity/tangible assets" is a non-GAAP financial measure and is defined as tangible common 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 common 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 common stockholders' equity/tangible assets as of the dates presented:
(Dollars in thousands) ---------------------- At quarter ended: 6/30/09 3/31/09 12/31/08 9/30/08 ----------------- ------- ------- -------- ------- Total assets $1,341,603 $1,121,013 $1,023,293 $1,042,778 Less: Goodwill and other intangible assets 17,066 17,087 17,110 17,132 --------------------------------------------------------------------- Tangible assets $1,324,537 $1,103,926 $1,006,183 $1,025,646 --------------------------------------------------------------------- Total stockholders' equity/total assets 6.67% 7.98% 7.99% 7.73% Tangible common stockholders' equity/ tangible assets 4.74% 5.69% 6.42% 6.19% (Dollars in thousands) ---------------------- At quarter ended: 6/30/08 3/31/08 ----------------- ------- ------- Total assets $986,436 $995,167 Less: Goodwill and other intangible assets 17,154 17,179 --------------------------------------------------------------------- Tangible assets $969,282 $977,988 --------------------------------------------------------------------- Total stockholders' equity/total assets 8.15% 8.58% Tangible common stockholders' equity/tangible assets 6.52% 6.98%
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: 6/30/09 3/31/09 12/31/08 9/30/08 6/30/08 3/31/08 --------------- ------- ------- -------- ------- ------- ------- Total non-interest income $2,551 $1,384 $615 $47 $1,116 $866 Net securities gains (losses) 1,710 600 (256) (1,075) 225 -- --------------------------------------------------------------------- Total non-interest income, excluding net securities gains (losses) $841 $784 $871 $1,122 $891 $866 ---------------------------------------------------------------------
"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: 6/30/09 3/31/09 12/31/08 9/30/08 6/30/08 3/31/08
--------------- ------- ------- -------- ------- ------- -------
Other expense $7,314 $5,319 $4,754 $4,578 $5,188 $4,953
----------------------------------------------------------------------
Net interest
income (tax
equivalent
basis) $6,753 $6,556 $7,086 $7,148 $6,776 $6,117
Other income,
excluding net
securities gains
(losses) 841 784 871 1,122 891 866
----------------------------------------------------------------------
$7,594 $7,340 $7,957 $8,270 $7,667 $6,983
----------------------------------------------------------------------
Efficiency ratio 96.3% 72.5% 59.7% 55.4% 67.7% 70.9%
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Forward-Looking Statements
All non-historical statements in this press release (including statements regarding market trends, management's focus, the timing of a sale of an OREO property, the timing of funding of undisbursed commitments and the continuing ability to attract deposits) 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 current global financial crisis and 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, Except Per Share Data) 2009 2008
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ASSETS
Cash and due from banks $ 176,784 $ 15,031
Investment securities available-for sale 378,895 242,714
Loans 694,214 676,203
Less -- Allowance for loan losses 6,917 6,254
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Net loans 687,297 669,949
Restricted investment in bank stocks, at cost 10,675 10,230
Premises and equipment, net 18,430 18,488
Accrued interest receivable 4,671 4,154
Bank owned life insurance 25,888 22,938
Other real estate owned 3,500 3,949
Goodwill and other intangible assets 17,066 17,110
Other assets 18,397 18,730
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Total assets $1,341,603 $1,023,293
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LIABILITIES
Deposits:
Non-interest bearing $ 130,115 $ 113,319
Interest-bearing
Time deposits $100 and over 269,770 100,493
Interest-bearing transactions, savings and
time deposits $100 and less 555,257 445,725
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Total deposits 955,142 659,537
Short-term borrowings 24,122 45,143
Long-term borrowings 223,221 223,297
Subordinated debentures 5,155 5,155
Accounts payable and accrued liabilities 8,659 8,448
Due to brokers for investment securities 35,846 --
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Total liabilities 1,252,145 941,580
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STOCKHOLDERS' EQUITY
Preferred stock, $1,000 liquidation value per
share:
Authorized 5,000,000 shares; issued 10,000
shares in 2009 and none in 2008 9,578 --
Common stock, no par value:
Authorized 20,000,000 shares; issued
15,190,984 shares in 2009 and 2008;
outstanding 13,000,601 in 2009 and 12,991,312
shares in 2008 86,908 86,908
Additional paid in capital 5,636 5,204
Retained earnings 16,458 16,309
Treasury stock, at cost (2,190,383 in 2009 and
2,199,672 shares in 2008) (17,720) (17,796)
Accumulated other comprehensive loss (11,402) (8,912)
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Total stockholders' equity 89,458 81,713
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Total liabilities and stockholders' equity $1,341,603 $1,023,293
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CENTER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------------------------------------------------
(Dollars in Thousands,
Except Per Share Data) 2009 2008 2009 2008
---------------------------------------------------------------------
Interest income:
Interest and fees on loans $9,211 $8,677 $18,313 $17,148
Interest and dividends on
investment securities:
Taxable interest income 3,079 2,635 5,459 5,400
Non-taxable interest
income 245 675 588 1,477
Dividends 171 213 288 456
Interest on Federal funds
sold and securities
purchased under agreement
to resell -- 30 -- 109
---------------------------------------------------------------------
Total interest income 12,706 12,230 24,648 24,590
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Interest expense:
Interest on certificates
of deposit $100 or more 989 537 1,767 1,212
Interest on other
deposits 2,552 2,499 4,829 5,868
Interest on borrowings 2,538 2,765 5,046 5,394
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Total interest expense 6,079 5,801 11,642 12,474
---------------------------------------------------------------------
Net interest income 6,627 6,429 13,006 12,116
Provision for loan losses 156 521 1,577 671
---------------------------------------------------------------------
Net interest income after
provision for loan losses 6,471 5,908 11,429 11,445
---------------------------------------------------------------------
Other income:
Service charges,
commissions and fees 440 513 889 1,042
Annuity and insurance 45 38 85 55
Bank owned life
insurance 257 227 475 449
Net securities gains 1,710 225 2,310 225
Other 99 113 176 211
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Total other income 2,551 1,116 3,935 1,982
---------------------------------------------------------------------
Other expense:
Salaries and employee
benefits 2,507 2,524 4,900 4,876
Occupancy, net 583 734 1,380 1,493
Premises and equipment 319 356 640 722
FDIC insurance 940 20 1,305 40
Professional and
consulting 236 190 448 362
Stationery and printing 102 118 172 213
Marketing and
advertising 141 188 271 348
Computer expense 228 226 442 367
OREO expense, net 1,375 31 1,408 64
Other 883 801 1,667 1,656
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Total other expense 7,314 5,188 12,633 10,141
---------------------------------------------------------------------
Income before income tax
expense 1,708 1,836 2,731 3,286
Income tax expense 507 428 731 661
---------------------------------------------------------------------
Net income 1,201 1,408 2,000 2,625
Preferred stock dividends
and accretion 148 -- 277 --
---------------------------------------------------------------------
Net income available to
common stockholders $1,053 $1,408 $1,723 $2,625
=====================================================================
Earnings per common share:
Basic $0.08 $0.11 $0.13 $0.20
Diluted $0.08 $0.11 $0.13 $0.20
---------------------------------------------------------------------
Weighted average common
shares outstanding:
Basic 12,994,429 13,070,868 12,992,879 13,107,808
Diluted 12,996,544 13,083,558 12,994,518 13,123,136
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SUMMARY SELECTED QUARTERLY STATISTICAL INFORMATION AND FINANCIAL DATA
(Dollars in Thousands, Except per Share Data)
Three Months Ended
------------------
6/30/2009 3/31/2009 6/30/2008
--------- --------- ---------
Statements of Income Data:
Interest income $ 12,706 $ 11,942 $ 12,230
Interest expense 6,079 5,563 5,801
Net interest income 6,627 6,379 6,429
Provision for loan losses 156 1,421 521
Net interest income after provision
for loan losses 6,471 4,958 5,908
Other income 2,551 1,384 1,116
Other expense 7,314 5,319 5,188
Income before income tax expense 1,708 1,023 1,836
Income tax expense 507 224 428
Net income 1,201 799 1,408
Net income available to common
stockholders $ 1,053 $ 670 $ 1,408
Earnings per common share:
Basic $ 0.08 $ 0.05 $ 0.11
Diluted $ 0.08 $ 0.05 $ 0.11
Statements of Condition Data
(Period End):
Investments $ 378,895 $ 266,032 $ 253,780
Total loans 694,214 678,017 631,221
Goodwill and other intangibles 17,066 17,087 17,154
Total assets 1,341,603 1,121,013 986,436
Deposits 955,142 768,379 621,190
Borrowings 252,498 255,365 279,585
Stockholders' equity $ 89,458 $ 89,429 $ 80,393
Dividend Data on Common Shares:
Cash dividends $ 390 $ 1,169 $ 1,177
Dividend payout ratio 37.04% 174.48% 83.59%
Cash dividends per share $ 0.03 $ 0.09 $ 0.09
Weighted Average Common Shares
Outstanding:
Basic 12,994,429 12,991,312 13,070,868
Diluted 12,996,544 12,993,185 13,083,558
Operating Ratios:
Return on average assets 0.40% 0.30% 0.57%
Average stockholders' equity to
average assets 7.51% 8.58% 8.51%
Return on average equity 5.35% 3.52% 6.69%
Return on average tangible
stockholders' equity 6.61% 4.33% 8.41%
Book value per common share $ 6.14 $ 6.15 $ 6.18
Tangible book value per common
share $ 4.83 $ 4.83 $ 4.86
Non-Financial Information (Period
End):
Common stockholders of record 627 633 658
Staff-full time equivalent 155 160 164