Exhibit 99.1
Investor Inquiries:
Anthony C. Weagley
President &
Chief Executive Officer
(908) 206-2886
Center Bancorp, Inc. Reports First Quarter 2014 Earnings
UNION, N.J., April 24, 2014 (GLOBE NEWSWIRE) – Center Bancorp, Inc. (NASDAQ: CNBC) (the “Corporation” or “Center”), parent company of Union Center National Bank (“UCNB” or the “Bank”), today reported operating results for the first quarter ended March 31, 2014. Net income available to common stockholders amounted to $4.4 million, or $0.27 per fully diluted common share, for the quarter ended March 31, 2014, compared with net income available to common stockholders of $4.9 million, or $0.30 per fully diluted common share, for the quarter ended March 31, 2013.
Net income available to common stockholders, excluding merger-related expenses for the pending merger with ConnectOne Bancorp, announced January 21, 2014, of approximately $1.1 million pre-tax or $703,000 post-tax, was $5.1 million or $0.31 per fully diluted common share for the quarter ended March 31, 2014.
| | | For the Three Months Ended |
| (dollar in thousands, except share data, unaudited) | | 3/31/2014 | | | 12/31/2013 | | | 3/31/2013 | |
| Net income available to common stockholders | | $ | 4,370 | | | $ | 4,955 | | | $ | 4,868 | |
| Net income available to common stockholders, excluding merger-related expenses (1) | | | 5,073 | | | | 4,955 | | | | 4,868 | |
| Earnings per common share - diluted | | $ | 0.27 | | | $ | 0.30 | | | $ | 0.30 | |
| Earnings per common share, excluding merger-related expenses – diluted (1) | | $ | 0.31 | | | $ | 0.30 | | | $ | 0.30 | |
| (1) | Adjusted for the merger-related expenses in the period of $1.1 million (pre-tax) or $703,000 (post-tax). |
“Overall 2014 has unfolded with a strong first quarter, net of the reported acquisition costs for the pending merger with ConnectOne Bank. The Corporation reported 18.8 percent commercial loan growth, 4.5 percent deposit growth, flat operating expense (excluding merger-related expenses) and continued strong asset quality compared to March 31, 2013. The continued momentum in expanding our franchise and client base with continued emphasis on the loan segments positions the balance sheet for further earnings momentum in 2014. Our actions, supported by our earnings performance and strategic growth, create incremental shareholder value,” said Anthony C. Weagley, President & Chief Executive Officer of Union Center National Bank.
Highlights for the quarter include:
| · | Strong balance sheet with strong credit quality compared to prior year. |
| · | 3.28 percent tax equivalent annualized net interest margin, compared to 3.28 percent in the linked sequential quarter. |
| · | 3.8 percent average earning asset growth in 2014. |
| · | 12.3 percent total loan growth in 2014 compared to March 31, 2013. |
| · | 4.5 percent deposit growth in 2014 compared to March 31, 2013. |
| · | 4.5 percent non-interest bearing deposit growth in 2014 compared to March 31, 2013. |
| · | Non-performing assets (NPA’s) of $3.9 million were 0.23 percent of total assets at March 31, 2014, compared to $4.2 million or 0.26 percent at March 31, 2013 and $3.4 million or 0.20 percent at December 31, 2013. The allowance for loan losses as a percentage of total non-performing loans was 291.6 percent at March 31, 2014 compared to 390.7 percent at March 31, 2013 and 329.4 percent at December 31, 2013. |
| · | The Tier 1 leverage capital ratio was 9.79 percent at March 31, 2014, compared to 9.31 percent at March 31, 2013, and 9.69 percent at December 31, 2013, exceeding regulatory guidelines in all periods. |
| · | Tangible book value per common share rose to $8.90 at March 31, 2014, compared to $8.36 at March 31, 2013 and $8.58 at December 31, 2013. |
| · | The efficiency ratio for the first quarter of 2014 on an annualized basis was 48.1 percent as compared to 48.5 percent in the first quarter of 2013 and 46.6 percent in the fourth quarter of 2013. |
| · | Deposits increased $57.7 million to $1.34 billion at March 31, 2014 from $1.28 billion at March 31, 2013. |
Selected Financial Ratios
(unaudited; annualized where applicable)
| | | Adjusted
for Merger
Related
Expenses | | | | |
| As of or for the quarter ended: | | 3/31/14 | | | 3/31/14 | | | 12/31/13 | | | 9/30/13 | | | 6/30/13 | | | 3/31/13 | |
| Return on average assets (a) | | | 1.22 | % | | | 1.05 | % | | | 1.20 | % | | | 1.23 | % | | | 1.22 | % | | | 1.23 | % |
| Return on average equity (a) | | | 11.78 | % | | | 10.16 | % | | | 11.85 | % | | | 12.53 | % | | | 11.84 | % | | | 12.09 | % |
| Net interest margin (tax equivalent basis) | | | 3.28 | % | | | 3.28 | % | | | 3.29 | % | | | 3.31 | % | | | 3.28 | % | | | 3.31 | % |
| Loans / deposits ratio | | | 73.70 | % | | | 73.70 | % | | | 71.61 | % | | | 72.85 | % | | | 70.48 | % | | | 68.60 | % |
| Stockholders’ equity / total assets (a) | | | 10.41 | % | | | 10.37 | % | | | 10.08 | % | | | 10.04 | % | | | 10.04 | % | | | 10.23 | % |
| Efficiency ratio (1) | | | 48.1 | % | | | 48.1 | % | | | 46.6 | % | | | 45.8 | % | | | 47.0 | % | | | 48.5 | % |
| Book value per common share (a) | | $ | 9.97 | | | $ | 9.93 | | | $ | 9.61 | | | $ | 9.40 | | | $ | 9.17 | | | $ | 9.39 | |
| Return on average tangible equity (1) (a) | | | 13.05 | % | | | 11.25 | % | | | 13.16 | % | | | 13.98 | % | | | 13.17 | % | | | 13.49 | % |
| Tangible common stockholders’ equity / tangible assets (1) (a) | | | 8.83 | % | | | 8.78 | % | | | 8.48 | % | | | 8.42 | % | | | 8.38 | % | | | 8.58 | % |
| Tangible book value per common share (1) (a) | | $ | 8.95 | | | $ | 8.90 | | | $ | 8.58 | | | $ | 8.37 | | | $ | 8.14 | | | $ | 8.36 | |
| (1) | Information reconciling non-GAAP measures to GAAP measures is presented elsewhere in this press release, and calculations for the “Adjusted for Merger Related Expenses” for the 3/31/14 period should also be adjusted for (a) below. |
| (a) | “Adjusted for Merger Related Expenses” for the 3/31/14 period reflect the exclusion of merger-related expenses of approximately $1.1 million (pre-tax) or $703,000 (post-tax) which would result in net income available to common stockholders of approximately $5.1 million, and stockholder’s equity of approximately $174.5 million . There are no significant merger-related expenses incurred for other historical periods presented. |
Net Interest Income
For the three months ended March 31, 2014, total interest income on a taxable equivalent basis increased $325,000 or 2.2 percent, to $15.0 million, compared to the three months ended March 31, 2013. Total interest expense decreased by $7,000, or 0.3 percent, to $2.7 million, for the three months ended March 31, 2014, compared to the same period last year. Net interest income on a taxable equivalent basis was $12.3 million for the three months ended March 31, 2014, increasing $332,000, or 2.8 percent, from $12.0 million for the comparable period in 2013. Compared to 2013, for the three months ended March 31, 2014, average interest earning assets increased $54.7 million while net interest spread was at 3.15 percent and 3.17 percent for the three months ended March 31, 2014 and March 31, 2013, respectively. For the quarter ended March 31, 2014, the Corporation’s net interest margin on a taxable equivalent annualized basis decreased to 3.28 percent as compared to 3.31 percent for the same three month period in 2013.
The 2.2 percent increase in total interest income on a taxable equivalent basis reflected an increase of $54.7 million in interest earning assets. The average volume contributed $543,000 of interest income offset in part by lower rates which reduced interest income by $218,000.
The 0.3 percent decrease in interest expense reflects a favorable shift in the deposit mix and the impact of the sustained low levels in short-term interest rates, offsetting higher volumes of interest bearing deposits. The average cost of funds declined 4 basis points to 0.86 percent from 0.90 percent for the quarter ended March 31, 2014 as compared to the quarter ended March 31, 2013 and on a linked sequential quarter decreased 5 basis points compared to the fourth quarter of 2013.
Commenting on the Corporation’s net interest margin, Mr. Weagley remarked: “We maintained our margins during the period, despite the high liquidity pool carried during the period, which has not been entirely offset by the projected investing activity. We continue to see opportunities to fund loans and position our cash accordingly. We expect an improvement in margin, principally given the continued volume of asset deployment into loans from cash and elimination of temporary factors holding the margin down as we move through the second quarter of 2014.”
Earnings Summary for the Period Ended March 31, 2014
The following table presents condensed consolidated statement of income data for the periods indicated.
Condensed Consolidated Statements of Income (unaudited)
(dollars in thousands, except per share data)
| For the quarter ended: | | 3/31/2014 | | | 12/31/13 | | | 9/30/13 | | | 6/30/13 | | | 3/31/13 | |
| Net interest income | | $ | 11,610 | | | $ | 11,866 | | | $ | 11,722 | | | $ | 11,228 | | | $ | 11,370 | |
| Provision for loan losses | | | 625 | | | | 350 | | | | — | | | | — | | | | — | |
| Net interest income after provision for loan losses | | | 10,985 | | | | 11,516 | | | | 11,722 | | | | 11,228 | | | | 11,370 | |
| Other income | | | 2,521 | | | | 1,756 | | | | 1,543 | | | | 1,707 | | | | 1,845 | |
| Other expense | | | 7,496 | | | | 6,459 | | | | 6,205 | | | | 6,076 | | | | 6,538 | |
| Income before income tax expense | | | 6,010 | | | | 6,813 | | | | 7,060 | | | | 6,859 | | | | 6,677 | |
| Income tax expense | | | 1,612 | | | | 1,829 | | | | 1,966 | | | | 1,936 | | | | 1,753 | |
| Net income | | $ | 4,398 | | | $ | 4,984 | | | $ | 5,094 | | | $ | 4,923 | | | $ | 4,924 | |
| Net income available to common stockholders | | $ | 4,370 | | | $ | 4,955 | | | $ | 5,066 | | | $ | 4,895 | | | $ | 4,868 | |
| Earnings per common share: | | | | | | | | | | | | | | | | | | | | |
| Basic | | $ | 0.27 | | | $ | 0.30 | | | $ | 0.31 | | | $ | 0.30 | | | $ | 0.30 | |
| Diluted | | $ | 0.27 | | | $ | 0.30 | | | $ | 0.31 | | | $ | 0.30 | | | $ | 0.30 | |
| Weighted average common shares outstanding: | | | | | | | | |
| Basic | | | 16,350,183 | | | | 16,350,183 | | | | 16,349,480 | | | | 16,348,915 | | | | 16,348,215 | |
| Diluted | | | 16,405,540 | | | | 16,396,931 | | | | 16,385,155 | | | | 16,375,774 | | | | 16,373,588 | |
Other Income
The following table presents the components of other income for the periods indicated.
| (in thousands, unaudited) | | | | | | | | | | | | | | | |
| For the quarter ended: | | 3/31/14 | | | 12/31/13 | | | 9/30/13 | | | 6/30/13 | | | 3/31/13 | |
| Service charges on deposit accounts | | $ | 393 | | | $ | 409 | | | $ | 356 | | | $ | 318 | | | $ | 289 | |
| Loan related fees | | | 181 | | | | 289 | | | | 297 | | | | 114 | | | | 227 | |
| Net gains on sales of loans held for sale | | | 36 | | | | 39 | | | | 26 | | | | 91 | | | | 138 | |
| Annuities and insurance commissions | | | 100 | | | | 151 | | | | 92 | | | | 146 | | | | 100 | |
| Debit card and ATM fees | | | 104 | | | | 124 | | | | 127 | | | | 133 | | | | 117 | |
| Bank-owned life insurance | | | 255 | | | | 260 | | | | 265 | | | | 274 | | | | 565 | |
| Net investment securities gains | | | 1,415 | | | | 449 | | | | 343 | | | | 600 | | | | 319 | |
| Other fees | | | 37 | | | | 35 | | | | 37 | | | | 31 | | | | 90 | |
| Total other income | | $ | 2,521 | | | $ | 1,756 | | | $ | 1,543 | | | $ | 1,707 | | | $ | 1,845 | |
Total other income increased $676,000 for the first quarter of 2014 compared with the same period in 2013. During the first quarter of 2014, the Corporation recorded net investment securities gains of $1,415,000 compared to net investment securities gains of $319,000 for the same period last year. Excluding net securities gains, the Corporation recorded other income of $1.1 million for the three months ended March 31, 2014 compared to other income of $1.5 million for the first quarter of 2013 and $1.3 million for the three months ended December 31, 2013. Increases in other income in the first quarter of 2014 when compared to the first quarter of 2013 (excluding securities gains) were primarily from an increase of $104,000 in service charges on deposit accounts, offset by a decline of $102,000 in net gains on sales of loans held for sale, a decrease of $46,000 in loan related fees, a decrease in bank owned life insurance income of $310,000, a $13,000 decline in debit card and ATM fees and a $53,000 decline in other fees.
Other Expense
The following table presents the components of other expense for the periods indicated.
| (in thousands, unaudited) | | | | | | | | | | | | | | | |
| For the quarter ended: | | 3/31/14 | | | 12/31/13 | | | 9/30/13 | | | 6/30/13 | | | 3/31/13 | |
| Salaries | | $ | 2,569 | | | $ | 2,659 | | | $ | 2,532 | | | $ | 2,652 | | | $ | 2,653 | |
| Employee benefits | | | 763 | | | | 734 | | | | 715 | | | | 683 | | | | 837 | |
| Occupancy and equipment | | | 1,080 | | | | 962 | | | | 839 | | | | 811 | | | | 906 | |
| Professional and consulting | | | 255 | | | | 310 | | | | 352 | | | | 230 | | | | 219 | |
| Stationery and printing | | | 84 | | | | 108 | | | | 62 | | | | 78 | | | | 85 | |
| FDIC Insurance | | | 300 | | | | 294 | | | | 283 | | | | 208 | | | | 313 | |
| Marketing and advertising | | | 40 | | | | 47 | | | | 94 | | | | 62 | | | | 101 | |
| Computer expense | | | 345 | | | | 364 | | | | 362 | | | | 343 | | | | 353 | |
| Bank regulatory related expenses | | | 93 | | | | 84 | | | | 86 | | | | 82 | | | | 90 | |
| Postage and delivery | | | 61 | | | | 63 | | | | 71 | | | | 70 | | | | 56 | |
| ATM related expenses | | | 66 | | | | 64 | | | | 66 | | | | 65 | | | | 71 | |
| Other real estate owned, net | | | 2 | | | | 4 | | | | 7 | | | | 107 | | | | 19 | |
| Amortization of core deposit intangible | | | 6 | | | | 7 | | | | 6 | | | | 8 | | | | 10 | |
| Merger-related expenses | | | 1,060 | | | | — | | | | — | | | | — | | | | — | |
| All other expenses | | | 772 | | | | 759 | | | | 730 | | | | 677 | | | | 825 | |
| Total other expense | | $ | 7,496 | | | $ | 6,459 | | | $ | 6,205 | | | $ | 6,076 | | | $ | 6,538 | |
Total other expense for the first quarter of 2014 amounted to $7.5 million, which was approximately $1,037,000 or 16.1 percent higher than other expense for the three months ended December 31, 2013. Excluding the merger-related expenses of $1.1 million, other expense decreased $23,000 or 0.4 percent,
primarily resulting from a decrease in salaries and benefit expense, which decreased $61,000. Other decreases contributing to the decrease in non-merger related operating overhead included professional and consulting of $55,000, stationery and printing of $24,000, marketing and advertising of $7,000 and computer expense of $19,000. These decreases were partially offset by increases in occupancy and equipment expense of $118,000, primarily due to the cost of snow removal and related expense, FDIC insurance expense of $6,000, bank regulatory expense of $9,000 and all other expense of $13,000.
The increase in other expense for the three months ended March 31, 2014, when compared to the quarter ended March 31, 2013, was approximately $958,000. Excluding the merger-related expenses of $1.1 million, other expense decreased $102,000 or 1.6 percent. Increases primarily included occupancy and equipment expense of $174,000 primarily due to the cost of snow removal and related expense, professional and consulting expense of $36,000, and postage and delivery expense of $5,000. These increases were partially offset by decreases of $158,000 in salary and benefit expense, FDIC insurance expense of $13,000, marketing and advertising expense of $61,000, computer expense of $8,000, ATM related expense of 5,000, other real estate owned expense of $17,000, ATM related expenses of $5,000, and all other expense of $53,000.
Statement of Condition Highlights at March 31, 2014
Condensed Statements of Condition
The following table presents condensed statements of condition data as of the dates indicated.
Condensed Consolidated Statements of Condition (unaudited)
| (in thousands) | | | | | | | | | | | | | | | |
| At quarter ended: | | 3/31/14 | | | 12/31/13 | | | 9/30/13 | | | 6/30/13 | | | 3/31/13 | |
| Cash and due from banks | | $ | 106,282 | | | $ | 82,692 | | | $ | 33,557 | | | $ | 61,959 | | | $ | 116,755 | |
| Investment securities: | | | | | | | | | | | | | | | | | | | | |
| Available for sale | | | 287,471 | | | | 323,070 | | | | 413,147 | | | | 419,773 | | | | 458,004 | |
| Held to maturity | | | 214,191 | | | | 215,286 | | | | 153,486 | | | | 136,786 | | | | 78,212 | |
| Loans held for sale, at fair value | | | — | | | | — | | | | 101 | | | | 585 | | | | 774 | |
| | | | | | | | | | | | | | | | | | | | | |
| Loans | | | 987,529 | | | | 960,943 | | | | 957,492 | | | | 902,822 | | | | 879,387 | |
| Allowance for loan losses | | | (10,633 | ) | | | (10,333 | ) | | | (10,194 | ) | | | (10,202 | ) | | | (10,232 | ) |
| Restricted investment in bank stocks, at cost | | | 8,986 | | | | 8,986 | | | | 8,986 | | | | 8,986 | | | | 8,966 | |
| Premises and equipment, net | | | 13,833 | | | | 13,681 | | | | 13,472 | | | | 13,456 | | | | 13,544 | |
| Goodwill | | | 16,804 | | | | 16,804 | | | | 16,804 | | | | 16,804 | | | | 16,804 | |
| Core deposit intangible | | | 17 | | | | 24 | | | | 29 | | | | 36 | | | | 45 | |
| Bank-owned life insurance | | | 35,989 | | | | 35,734 | | | | 35,474 | | | | 35,209 | | | | 34,935 | |
| Other real estate owned | | | 220 | | | | 220 | | | | 220 | | | | 220 | | | | 1,536 | |
| Other assets | | | 15,471 | | | | 25,975 | | | | 21,842 | | | | 19,264 | | | | 11,065 | |
| Total assets | | $ | 1,676,160 | | | $ | 1,673,082 | | | $ | 1,644,416 | | | $ | 1,605,698 | | | $ | 1,609,795 | |
| Deposits | | $ | 1,339,885 | | | $ | 1,342,005 | | | $ | 1,314,317 | | | $ | 1,280,894 | | | $ | 1,282,223 | |
| Borrowings | | | 151,155 | | | | 151,155 | | | | 151,155 | | | | 151,155 | | | | 151,155 | |
| Other liabilities | | | 11,307 | | | | 11,338 | | | | 13,806 | | | | 12,364 | | | | 11,664 | |
| Stockholders’ equity | | | 173,813 | | | | 168,584 | | | | 165,138 | | | | 161,285 | | | | 164,753 | |
| Total liabilities and stockholders’ equity | | $ | 1,676,160 | | | $ | 1,673,082 | | | $ | 1,644,416 | | | $ | 1,605,698 | | | $ | 1,609,795 | |
Highlights as of March 31, 2014 included:
| · | Continued balance sheet strength, with total assets amounting to $1.7 billion at March 31, 2014. |
| · | Total loans were $987.5 million at March 31, 2014, increasing $108.1 million, or 12.3 percent, from March 31, 2013. Total real estate loans increased $57.6 million, or 9.4 percent, from March 31, 2013. Commercial loans increased $50.2 million, or 18.8 percent, year over year. |
| · | Deposits totaled $1.34 billion at March 31, 2014, increasing $57.7 million, or 4.5 percent, since March 31, 2013. Total Demand, Savings, Money Market, and certificates of deposit less than $100,000 increased $47.0 million or 4.0 percent from March 31, 2013. The increases reflect continued core deposit growth. |
| · | Borrowings totaled $151.2 million at March 31, 2014 and March 31, 2013. |
Commenting on the balance sheet, Mr. Weagley indicated: “We strengthened our balance sheet during the first quarter of 2014, with a strong Tier 1 ratio of 9.79 percent, up from 9.31 percent in the first quarter of 2013, and 9.69 percent at December 31, 2013. We also continue to see positive signs for growth coupled with sustained asset quality.”
The following table reflects the composition of the Corporation’s deposits as of the dates indicated.
Deposits (unaudited)
| (in thousands) | | | | | | | | | | | | | | | |
| At quarter ended: | | 3/31/14 | | | 12/31/13 | | | 9/30/13 | | | 6/30/13 | | | 3/31/13 | |
| Demand: | | | | | | | | | | | | | | | | | | | | |
| Non-interest bearing | | $ | 223,332 | | | $ | 227,370 | | | $ | 238,214 | | | $ | 219,669 | | | $ | 213,794 | |
| Interest-bearing | | | 260,064 | | | | 266,613 | | | | 231,390 | | | | 195,954 | | | | 207,427 | |
| Savings | | | 180,032 | | | | 178,889 | | | | 186,194 | | | | 221,271 | | | | 221,274 | |
| Money market | | | 520,022 | | | | 522,578 | | | | 505,490 | | | | 493,155 | | | | 488,124 | |
| Time | | | 156,435 | | | | 146,555 | | | | 153,029 | | | | 150,845 | | | | 151,604 | |
| Total deposits | | $ | 1,339,885 | | | $ | 1,342,005 | | | $ | 1,314,317 | | | $ | 1,280,894 | | | $ | 1,282,223 | |
Loans
The Corporation’s total loans increased $26.6 million to $987.5 million or at an annualized rate of 11.1% at March 31, 2014, from $960.9 million at December 31, 2013. The allowance for loan losses amounted to $10.6 million and $10.3 million at March 31, 2014 and December 31, 2013, respectively. “We continue to see strong growth in demand and momentum in generating new prospects into our pipelines consistent with prior periods. The success that we have achieved continued to aid in growing the portfolio in 2014, as cited by our committed loan volume. During the first quarter we had a number of loans that delayed closing until late in the quarter and in certain cases into the second quarter of 2014. This, coupled with the prepayment volume, dampened the overall average growth; however, we expect the volume to continue to fuel overall net growth in future periods, “commented Mr. Weagley. At March 31, 2014, the Corporation had $184.5 million in overall undisbursed loan commitments, which consisted primarily of unused commercial lines of credit, home equity lines of credit and available usage from active construction facilities. Included in the overall undisbursed commitments are the Corporation’s “Approved, Accepted but Unfunded” pipeline, which includes approximately $29.8 million in commercial and commercial real estate loans and $3.4 million in residential mortgages expected to fund over the next 90 days.
The loan growth during the period resulted from approximately $81.5 million in new loans and advances during the first quarter. This growth was offset in part by prepayments of $33.9 million coupled with scheduled payments, maturities and payoffs of $20.7 million. Average loans during the first quarter of 2014 totaled $963.1 million as compared to $873.9 million during the first quarter of 2013, representing a 10.1 percent increase.
At the end of the first quarter of 2014, the loan portfolio remained well diversified with commercial and industrial (C&I) loans, including owner-occupied commercial real estate loans, accounting for 32.1 percent of the loan portfolio, commercial real estate loans representing 49.7 percent of the loan portfolio, and residential real estate and consumer and other loans representing 14.2 percent of the loan portfolio. Construction and development loans accounted for only 4.0 percent of the loan portfolio. The loan volume increase within the
portfolio compared to March 31, 2013, amounted to $108.8 million in commercial and commercial real estate loans and $4.1 million in construction loans, offset by a decrease of $5.2 million in residential mortgage loans. At March 31, 2014, net loans totaled $976.6 million compared to $869.2 million at March 31, 2013.
The following reflects the composition of the Corporation’s loan portfolio as of the dates indicated.
| Loans (unaudited) | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| (in thousands) | | | | | | | | | | | | | | | |
| At quarter ended: | | 3/31/14 | | | 12/31/13 | | | 9/30/13 | | | 6/30/13 | | | 3/31/13 | |
| Real estate loans: | | | | | | | | | | | | | | | | | | | | |
| Residential | | $ | 140,012 | | | $ | 140,477 | | | $ | 142,744 | | | $ | 142,772 | | | $ | 145,228 | |
| Commercial | | | 490,413 | | | | 479,083 | | | | 464,374 | | | | 443,441 | | | | 431,771 | |
| Construction | | | 39,308 | | | | 42,722 | | | | 42,727 | | | | 38,565 | | | | 35,166 | |
| Total real estate loans | | | 669,733 | | | | 662,282 | | | | 649,845 | | | | 624,778 | | | | 612,165 | |
| Commercial loans | | | 316,974 | | | | 297,762 | | | | 306,974 | | | | 277,734 | | | | 266,762 | |
| Consumer and other loans | | | 438 | | | | 561 | | | | 517 | | | | 147 | | | | 326 | |
| Total loans before deferred fees and costs | | | 987,145 | | | | 960,605 | | | | 957,336 | | | | 902,659 | | | | 879,253 | |
| Deferred costs, net | | | 384 | | | | 338 | | | | 156 | | | | 163 | | | | 134 | |
| Total loans | | $ | 987,529 | | | $ | 960,943 | | | $ | 957,492 | | | $ | 902,822 | | | $ | 879,387 | |
Asset Quality
Non-accrual loans increased from $3.1 million at December 31, 2013 to $3.4 million at March 31, 2014. Other real estate owned was $220,000 at March 31, 2014 and at December 31, 2013.
At March 31, 2014, non-performing assets totaled $3.87 million, or 0.23 percent of total assets, as compared with $4.2 million, or 0.26 percent, at March 31, 2013 and $3.36 million, or 0.20 percent, at December 31, 2013. The increase in non-performing assets from December 31, 2013 to March 31, 2014 reflected the addition of a commercial loan in the amount of $676,000 to non-accrual status, and subsequently reduced by a partial charge-off of $333,000. The decrease from March 31, 2013 to March 31, 2014 reflects the Corporation’s ability to satisfactorily work out certain problem loans. As of March 31, 2014, the major components of non-accrual loans were comprised of three relationships which equates to 56.8% of total non-performing assets. The largest component, totaling $723,000 of the total, is secured by a senior lien on a mixed use commercial property, located in Bergen County, New Jersey. The Corporation is adequately secured with sufficient cash flows to service the loan. The loan, while not reinstated into accruing status in the first quarter, is receiving monthly payments and is expected to be restored to accruing status in 2014. An additional $676,000 of the total is a commercial note secured by a mixed use property, located in Ocean County, New Jersey, with a low loan to value with no loss expected. Increased collection efforts have been implemented on these two notes. An additional $537,000 of the total is secured by a senior lien on a residential property located in Morris County, New Jersey. This loan has been restructured, and is being monitored for performance under the terms and conditions of the restructured agreement. The remaining non-accrual loans are primarily residential properties and are in the process of being worked out. Seven loans totaling $2.0 million or 60 percent of the total non-accrual loan balances were making payments at March 31, 2014.
The following table presents the components of non-performing assets and other asset quality data for the periods indicated.
| (dollars in thousands, unaudited) | | | | | | | | | | | | | | | |
| As of or for the quarter ended: | | 3/31/14 | | | 12/31/13 | | | 9/30/13 | | | 6/30/13 | | | 3/31/13 | |
| Non-accrual loans (1) | | $ | 3,409 | | | $ | 3,137 | | | $ | 2,032 | | | $ | 2,508 | | | $ | 2,565 | |
| Loans 90 days or more past due and still accruing | | | 237 | | | | — | | | | — | | | | 53 | | | | 55 | |
| Total non-performing loans | | | 3,646 | | | | 3,137 | | | | 2,032 | | | | 2,561 | | | | 2,620 | |
| Other real estate owned | | | 220 | | | | 220 | | | | 220 | | | | 220 | | | | 1,536 | |
| Total non-performing assets | | $ | 3,866 | | | $ | 3,357 | | | $ | 2,252 | | | $ | 2,781 | | | $ | 4,156 | |
| Non-performing assets / total assets | | | 0.23 | % | | | 0.20 | % | | | 0.14 | % | | | 0.17 | % | | | 0.26 | % |
| Non-performing loans / total loans | | | 0.37 | % | | | 0.33 | % | | | 0.21 | % | | | 0.28 | % | | | 0.30 | % |
| Net charge-offs | | $ | 325 | | | $ | 211 | | | $ | 8 | | | $ | 30 | | | $ | 5 | |
| Net charge-offs / average loans (2) | | | 0.13 | % | | | 0.09 | % | | | N/M | | | | 0.01 | % | | | N/M | |
| Allowance for loan losses / total loans | | | 1.08 | % | | | 1.08 | % | | | 1.06 | % | | | 1.13 | % | | | 1.16 | % |
| Allowance for loan losses / non-performing loans | | | 291.6 | % | | | 329.4 | % | | | 501.7 | % | | | 398.4 | % | | | 390.7 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Total assets | | $ | 1,676,160 | | | $ | 1,673,082 | | | $ | 1,644,416 | | | $ | 1,605,698 | | | $ | 1,609,795 | |
| Total loans | | | 987,529 | | | | 960,943 | | | | 957,492 | | | | 902,822 | | | | 879,387 | |
| Average loans | | | 963,098 | | | | 950,541 | | | | 921,523 | | | | 888,175 | | | | 873,916 | |
| Allowance for loan losses | | | 10,633 | | | | 10,333 | | | | 10,194 | | | | 10,202 | | | | 10,232 | |
| (1) | Seven loans totaling $2.0 million or (60%) of the total non-accrual loan balance were making payments at March 31, 2014. |
| (2) | Annualized. |
N/M – not meaningful
The allowance for loan losses at March 31, 2014 amounted to approximately $10.6 million, or 1.08 percent of total loans, compared to 1.16 percent of total loans at March 31, 2013. The allowance for loan losses as a percentage of total non-performing loans was 291.6 percent at March 31, 2014 compared to 390.7 percent at March 31, 2013.
Capital
At March 31, 2014, total stockholders’ equity amounted to $173.8 million, or 10.37 percent of total assets. Tangible common stockholders’ equity was $145.7 million, or 8.78 percent of tangible assets, compared to 8.58 percent at March 31, 2013. Book value per common share was $9.93 at March 31, 2014, compared to $9.39 at March 31, 2013. Tangible book value per common share was $8.90 at March 31, 2014 compared to $8.36 at March 31, 2013.
At March 31, 2014, the Corporation’s Tier 1 leverage capital ratio was 9.79 percent, the Tier 1 risk-based capital ratio was 12.39 percent and the total risk-based capital ratio was 13.21 percent. Tier 1 capital increased $14.7 million to approximately $162.5 million at March 31, 2014 from $147.8 million at March 31, 2013, reflecting an increase in retained earnings.
At March 31, 2014, 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.
Non-GAAP Financial Measures
Reported amounts are presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The Corporation’s management believes that the supplemental non-GAAP information provided in this press release is utilized by market analysts and others to evaluate a company’s financial condition and, therefore, that such information is useful to investors. These disclosures should not be viewed as a substitute for financial results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures presented by other companies.
“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. Tangible stockholders’ equity is defined as common stockholders’ equity less goodwill and other intangible assets. The return on average tangible stockholders’ equity measure may be important to investors that are interested in analyzing the Corporation’s return on equity excluding the effect of changes in intangible assets on equity.
The following table presents a reconciliation of average tangible stockholders’ equity and a reconciliation of the annualized return on average tangible stockholders’ equity for the periods presented.
| (dollars in thousands) | | | | | | | | | | | | | | | |
| For the quarter ended: | | 3/31/14 | | | 12/31/13 | | | 9/30/13 | | | 6/30/13 | | | 3/31/13 | |
| Net income | | $ | 4,398 | | | $ | 4,984 | | | $ | 5,094 | | | $ | 4,923 | | | $ | 4,924 | |
| Average stockholders’ equity | | $ | 173,184 | | | $ | 168,273 | | | $ | 162,557 | | | $ | 166,385 | | | $ | 162,853 | |
| Less: Average goodwill and other intangible assets | | | 16,825 | | | | 16,831 | | | | 16,838 | | | | 16,845 | | | | 16,855 | |
| Average tangible stockholders’ equity | | $ | 156,359 | | | $ | 151,442 | | | $ | 145,719 | | | $ | 149,540 | | | $ | 145,998 | |
| | | | | | | | | | | | | | | | | | | | | |
| Return on average stockholders’ equity (1) | | | 10.16 | % | | | 11.85 | % | | | 12.53 | % | | | 11.84 | % | | | 12.09 | % |
| Add: Average goodwill and other intangible assets (1) | | | 1.09 | % | | | 1.31 | % | | | 1.45 | % | | | 1.33 | % | | | 1.40 | % |
| Return on average tangible stockholders’ equity (1) | | | 11.25 | % | | | 13.16 | % | | | 13.98 | % | | | 13.17 | % | | | 13.49 | % |
(1) Annualized.
“Tangible book value per common share” is a non-GAAP financial measure and represents tangible stockholders’ equity (or tangible book value) calculated on a per common share basis. The disclosure of tangible book value per common share may be helpful to 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 stockholders’ equity to tangible common stockholders’ equity and book value per common share to tangible book value per common share as of the dates presented.
| (dollars in thousands, except per share data) |
| At quarter ended: | | 3/31/14 | | | 12/31/13 | | | 9/30/13 | | | 6/30/13 | | | 3/31/13 | |
| Common shares outstanding | | | 16,369,012 | | | | 16,369,012 | | | | 16,369,012 | | | | 16,367,744 | | | | 16,348,915 | |
| Stockholders’ equity | | $ | 173,813 | | | $ | 168,584 | | | $ | 165,138 | | | $ | 161,285 | | | $ | 164,753 | |
| Less: Preferred stock | | | 11,250 | | | | 11,250 | | | | 11,250 | | | | 11,250 | | | | 11,250 | |
| Less: Goodwill and other intangible assets | | | 16,821 | | | | 16,827 | | | | 16,834 | | | | 16,840 | | | | 16,849 | |
| Tangible common stockholders’ equity | | $ | 145,742 | | | $ | 140,507 | | | $ | 137,054 | | | $ | 133,195 | | | $ | 136,654 | |
| | | | | | | | | | | | | | | | | | | | | |
| Book value per common share | | $ | 9.93 | | | $ | 9.61 | | | $ | 9.40 | | | $ | 9.17 | | | $ | 9.39 | |
| Less: Goodwill and other intangible assets | | | 1.03 | | | | 1.03 | | | | 1.03 | | | | 1.03 | | | | 1.03 | |
| Tangible book value per common share | | $ | 8.90 | | | $ | 8.58 | | | $ | 8.37 | | | $ | 8.14 | | | $ | 8.36 | |
“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 of intangible assets, inasmuch as tangible common stockholders’ equity and tangible assets both exclude goodwill and other intangible assets.
The following table presents a reconciliation of total assets to tangible assets and a comparison of total stockholders’ equity/total assets to tangible common stockholders’ equity/tangible assets as of the dates presented.
| (dollars in thousands) | | | | | | | | | | | | | | | |
| At quarter ended: | | 3/31/14 | | | 12/31/13 | | | 9/30/13 | | | 6/30/13 | | | 3/31/13 | |
| Total assets | | $ | 1,676,160 | | | $ | 1,673,082 | | | $ | 1,644,416 | | | $ | 1,605,698 | | | $ | 1,609,795 | |
| Less: Goodwill and other intangible assets | | | 16,821 | | | | 16,827 | | | | 16,834 | | | | 16,840 | | | | 16,849 | |
| Tangible assets | | $ | 1,659,339 | | | $ | 1,656,255 | | | $ | 1,627,582 | | | $ | 1,588,858 | | | $ | 1,592,946 | |
| | | | | | | | | | | | | | | | | | | | | |
| Total stockholders’ equity / total assets | | | 10.37 | % | | | 10.08 | % | | | 10.04 | % | | | 10.04 | % | | | 10.23 | % |
| Tangible common stockholders’ equity / tangible assets | | | 8.78 | % | | | 8.48 | % | | | 8.42 | % | | | 8.38 | % | | | 8.58 | % |
Other income is presented in the table below including and excluding net gains. We believe that many investors desire to evaluate other income without regard for such gains.
| (in thousands) | | | | | | | | | | | | | | | |
| For the quarter ended: | | 3/31/14 | | | 12/31/13 | | | 9/30/13 | | | 6/30/13 | | | 3/31/13 | |
| Other income | | $ | 2,521 | | | $ | 1,756 | | | $ | 1,543 | | | $ | 1,707 | | | $ | 1,845 | |
| Less: Net investment securities gains | | | 1,415 | | | | 449 | | | | 343 | | | | 600 | | | | 319 | |
| Other income, excluding net investment securities gains | | $ | 1,106 | | | $ | 1,307 | | | $ | 1,200 | | | $ | 1,107 | | | $ | 1,526 | |
“Efficiency ratio” is a non-GAAP financial measure and is defined as other expense as a percentage of net interest income on a tax equivalent basis plus other income, excluding net investment securities gains, calculated as follows:
| (dollars in thousands) | | | | | | | | | | | | | | | |
| For the quarter ended: | | 3/31/14 | | | 12/31/13 | | | 9/30/13 | | | 6/30/13 | | | 3/31/13 | |
| Other expense | | $ | 7,496 | | | $ | 6,459 | | | $ | 6,205 | | | $ | 6,076 | | | $ | 6,538 | |
| Less: merger-related expenses | | | 1,060 | | | | — | | | | — | | | | — | | | | — | |
| Other expense, excluding special items | | $ | 6,436 | | | $ | 6,459 | | | $ | 6,205 | | | $ | 6,076 | | | $ | 6,538 | |
| | | | | | | | | | | | | | | | | | | | | |
| Net interest income (tax equivalent basis) | | $ | 12,282 | | | $ | 12,561 | | | $ | 12,342 | | | $ | 11,810 | | | $ | 11,950 | |
| Other income, excluding net investment securities gains | | | 1,106 | | | | 1,307 | | | | 1,200 | | | | 1,107 | | | | 1,526 | |
| Total | | $ | 13,388 | | | $ | 13,868 | | | $ | 13,542 | | | $ | 12,917 | | | $ | 13,476 | |
| | | | | | | | | | | | | | | | | | | | | |
| Efficiency ratio | | | 48.1 | % | | | 46.6 | % | | | 45.8 | % | | | 47.0 | % | | | 48.5 | % |
| | | | | | | | | | | | | | | | | | | | | |
The following table sets forth the Corporation’s consolidated average statements of condition for the periods presented. |
| | | | | | | | | | | | | | | | | | | | | |
Condensed Consolidated Average Statements of Condition (unaudited) |
| (in thousands) | | | | | | | | | | | | | | | |
| For the quarter ended: | | 3/31/14 | | | 12/31/13 | | | 9/30/13 | | | 6/30/13 | | | 3/31/13 | |
| Investment securities | | | | | | | | | | | | | | | | | | | | |
| Available for sale | | $ | 320,833 | | | $ | 384,554 | | | $ | 426,870 | | | $ | 457,484 | | | $ | 503,223 | |
| Held to maturity | | | 214,680 | | | | 190,817 | | | | 150,087 | | | | 95,163 | | | | 65,378 | |
| Loans | | | 963,098 | | | | 950,541 | | | | 921,523 | | | | 888,175 | | | | 873,916 | |
| Allowance for loan losses | | | (10,358 | ) | | | (10,296 | ) | | | (10,200 | ) | | | (10,214 | ) | | | (10,229 | ) |
| All other assets | | | 188,683 | | | | 146,119 | | | | 163,732 | | | | 183,894 | | | | 171,703 | |
| Total assets | | $ | 1,676,936 | | | $ | 1,661,735 | | | $ | 1,652,012 | | | $ | 1,614,502 | | | $ | 1,603,991 | |
| Non-interest bearing deposits | | $ | 225,407 | | | $ | 263,715 | | | $ | 238,194 | | | $ | 219,965 | | | $ | 212,860 | |
| Interest-bearing deposits | | | 1,113,213 | | | | 1,064,096 | | | | 1,086,757 | | | | 1,059,552 | | | | 1,061,261 | |
| Borrowings | | | 151,655 | | | | 151,155 | | | | 151,753 | | | | 151,924 | | | | 151,488 | |
| Other liabilities | | | 13,477 | | | | 14,496 | | | | 12,751 | | | | 16,676 | | | | 15,529 | |
| Stockholders’ equity | | | 173,184 | | | | 168,273 | | | | 162,557 | | | | 166,385 | | | | 162,853 | |
| Total liabilities and stockholders’ equity | | $ | 1,676,936 | | | $ | 1,661,735 | | | $ | 1,652,012 | | | $ | 1,614,502 | | | $ | 1,603,991 | |
About Center Bancorp
Center Bancorp, Inc. is a bank holding company, which 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 now ranks as the third largest national bank headquartered in the state. Union Center National Bank is 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 Banking and Wealth Management Division, which includes its wholly-owned subsidiary, Center Financial Group LLC, provides personalized wealth management and advisory services to high net worth individuals and families. Our services include banking, liquidity management, investment services, custody, tailored lending, wealth planning, trust and fiduciary services, insurance, family wealth advisory services and philanthropic advisory services. The Bank, through a strategic partnership between the Bank’s Private Banking Division and Alexander, Troy & Company, Family Office Services, of Katonah, New York, provides customized financial and administrative services to high-net worth individuals.
Center, through a strategic partnership with Compass Financial Management, LLC and ING, offers pension/401(k) planning services. Compass is an Investment Advisory Company with five decades of cumulative experience providing investment services in a personal, professional and attentive manner. They provide discretionary private investment management for individuals and corporate accounts as well as 401(k) advisory services.
The Bank currently operates 16 banking locations in Bergen, Mercer, Morris and Union Counties in New Jersey. Banking centers are located in Union Township (5 locations), Berkeley Heights, Boonton/Mountain Lakes, Englewood, Madison, Millburn/Vauxhall, Morristown, Oakland, Saddle River, Springfield, Princeton and Summit, New Jersey. The Bank’s primary market area is comprised of central and northern New Jersey.
For further information regarding Center Bancorp, Inc., please visit our web site athttp://www.centerbancorp.com or call (800) 862-3683. For information regarding Union Center National Bank, please visit our web site atwww.ucnb.com.
Forward-Looking Statements
All non-historical statements in this press release (including statements regarding earnings momentum, margin improvement, positive signs for growth coupled with sustained asset quality, loan volume growth, mortgages expected to fund over the next 90 days and restoration of non-accrual loans to accruing status in future periods,) constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may use 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, the ability to consummate the pending merger and then integrate the businesses of Center and ConnectOne, 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 economic recovery and the deregulation of the financial services industry, and other risks cited in the Corporation’s most recent Annual Report on Form 10-K and other 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.
Registration Statement
In connection with the proposed merger of Center Bancorp, Inc. (“Center”) and ConnectOne Bancorp, Inc. (“ConnectOne”), Center, Center has filed with the Securities and Exchange Commission (“SEC”) a
Registration Statement on Form S-4 that includes a joint proxy statement of Center and ConnectOne and a prospectus of Center, as well as other relevant documents concerning the proposed transaction. Center and ConnectOne will each mail the joint proxy statement and prospectus to its shareholders subsequent to the Registration Statement on Form S-4 being declared effective. SHAREHOLDERS OF CENTER AND CONNECTONE ARE URGED TO READ CAREFULLY THE REGISTRATION STATEMENT AND JOINT PROXY STATEMENT AND PROSPECTUS REGARDING THE PROPOSED MERGER IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Investors and security holders may obtain a free copy of the joint proxy statement and prospectus (when available) and other filings containing information about Center and ConnectOne at the SEC’s website at www.sec.gov. The joint proxy statement and prospectus (when available) and the other filings may also be obtained free of charge at Center’s website at www.centerbancorp.com under the tab “Investor Relations,” and then under the heading “SEC Filings” or at ConnectOne’s website at www.connectonebank.com under the tab “Investor Relations,” and then under the heading “SEC Filings.”
Center, ConnectOne and certain of their respective directors and executive officers, under the SEC’s rules, may be deemed to be participants in the solicitation of proxies of Center’s and ConnectOne’s shareholders in connection with the proposed merger. Information regarding the directors and executive officers of Center and their ownership of Center common stock is set forth in the proxy statement for Center’s 2013 annual meeting of shareholders, as filed with the SEC on Schedule 14A on April 15, 2013. Information regarding the directors and executive officers of ConnectOne and their ownership of ConnectOne common stock is set forth in the proxy statement for ConnectOne’s 2013 annual meeting of shareholders, as filed with the SEC on Schedule 14A on April 8, 2013. Additional information regarding the interests of those participants and other persons who may be deemed participants in the transaction may be obtained by reading the joint proxy statement and prospectus regarding the proposed merger when they become available. Free copies of these documents may be obtained as described in the preceding paragraph.
This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.
CENTER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION
| (in thousands, except for share and per share data) | | March 31,
2014 | | | December 31,
2013 | |
| | | (Unaudited) | | | | |
| ASSETS | | | | | | | | |
| Cash and due from banks | | $ | 106,282 | | | $ | 82,692 | |
| Investment securities: | | | | | | | | |
| Available for sale | | | 287,471 | | | | 323,070 | |
| Held to maturity (fair value of $214,952 at March 31, 2014 and $210,958 at December 31, 2013) | | | 214,191 | | | | 215,286 | |
| Loans held for sale | | | — | | | | — | |
| | | | | | | | | |
| Loans | | | 987,529 | | | | 960,943 | |
| Less: Allowance for loan losses | | | 10,633 | | | | 10,333 | |
| Net loans | | | 976,896 | | | | 950,610 | |
| Restricted investment in bank stocks, at cost | | | 8,986 | | | | 8,986 | |
| Premises and equipment, net | | | 13,833 | | | | 13,681 | |
| Accrued interest receivable | | | 6,341 | | | | 6,802 | |
| Bank-owned life insurance | | | 35,989 | | | | 35,734 | |
| Goodwill | | | 16,804 | | | | 16,804 | |
| Other real estate owned | | | 220 | | | | 220 | |
| Due from brokers for investment securities | | | — | | | | 8,759 | |
| Other assets | | | 9,147 | | | | 10,438 | |
| Total assets | | $ | 1,676,160 | | | $ | 1,673,082 | |
| | | | | | | | | |
| LIABILITIES | | | | | | | | |
| Deposits: | | | | | | | | |
| Non-interest bearing | | $ | 223,332 | | | $ | 227,370 | |
| Interest-bearing: | | | | | | | | |
| Time deposits $100 and over | | | 110,353 | | | | 99,444 | |
| Interest-bearing transaction, savings and time deposits less than $100 | | | 1,006,200 | | | | 1,015,191 | |
| Total deposits | | | 1,339,885 | | | | 1,342,005 | |
| Long-term borrowings | | | 146,000 | | | | 146,000 | |
| Subordinated debentures | | | 5,155 | | | | 5,155 | |
| Accounts payable and accrued liabilities | | | 11,307 | | | | 11,338 | |
| Total liabilities | | | 1,502,347 | | | | 1,504,498 | |
| | | | | | | | | |
| STOCKHOLDERS’ EQUITY | | | | | | | | |
| Preferred stock, $1,000 liquidation value per share, authorized 5,000,000 shares; issued and outstanding 11,250 shares of Series B preferred stock at March 31, 2014 and December 31, 2013; total liquidation value of $11,250,000 | | | 11,250 | | | | 11,250 | |
| Common stock, no par value, authorized 25,000,000 shares; issued 18,477,412 shares at March 31, 2014 and December 31, 2013; outstanding 16,369,012 shares at March 31, 2014 and December 31, 2013 | | | 110,056 | | | | 110,056 | |
| Additional paid in capital | | | 5,002 | | | | 4,986 | |
| Retained earnings | | | 65,053 | | | | 61,914 | |
| Treasury stock, at cost (2,108,400 common shares at March 31, 2014 and December 31, 2013) | | | (17,078 | ) | | | (17,078 | ) |
| Accumulated other comprehensive loss | | | (470 | ) | | | (2,544 | ) |
| Total stockholders’ equity | | | 173,813 | | | | 168,584 | |
| Total liabilities and stockholders’ equity | | $ | 1,676,160 | | | $ | 1,673,082 | |
CENTER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
| | | Three Months Ended
March 31, | |
| (in thousands, except for share and per share data) | | 2014 | | | 2013 | |
| | | | | | | |
| Interest income | | | | | | | | |
| Interest and fees on loans | | $ | 10,111 | | | $ | 9,923 | |
| Interest and dividends on investment securities: | | | | | | | | |
| Taxable | | | 3,016 | | | | 2,972 | |
| Tax-exempt | | | 1,056 | | | | 1,076 | |
| Dividends | | | 154 | | | | 131 | |
| Interest on federal funds sold and other short-term investment | | | — | | | | 2 | |
| Total interest income | | | 14,337 | | | | 14,104 | |
| Interest expense | | | | | | | | |
| Interest on certificates of deposit $100 or more | | | 207 | | | | 239 | |
| Interest on other deposits | | | 1,109 | | | | 1,045 | |
| Interest on borrowings | | | 1,411 | | | | 1,450 | |
| Total interest expense | | | 2,727 | | | | 2,734 | |
| Net interest income | | | 11,610 | | | | 11,370 | |
| Provision for loan losses | | | 625 | | | | — | |
| Net interest income after provision for loan losses | | | 10,985 | | | | 11,370 | |
| Other income | | | | | | | | |
| Service charges, commissions and fees | | | 497 | | | | 406 | |
| Annuities and insurance commissions | | | 100 | | | | 100 | |
| Bank-owned life insurance | | | 255 | | | | 565 | |
| Loan related fees | | | 181 | | | | 227 | |
| Net gains on sale of loans held for sale | | | 36 | | | | 138 | |
| Other | | | 37 | | | | 90 | |
| Other-than-temporary impairment losses on investment securities | | | — | | | | (24 | ) |
| Net gains on sale of investment securities | | | 1,415 | | | | 343 | |
| Net investment securities gains | | | 1,415 | | | | 319 | |
| Total other income | | | 2,521 | | | | 1,845 | |
| Other expense | | | | | | | | |
| Salaries and employee benefits | | | 3,332 | | | | 3,490 | |
| Occupancy and equipment | | | 1,080 | | | | 906 | |
| FDIC insurance | | | 300 | | | | 313 | |
| Professional and consulting | | | 255 | | | | 219 | |
| Stationery and printing | | | 84 | | | | 85 | |
| Marketing and advertising | | | 40 | | | | 101 | |
| Computer expense | | | 345 | | | | 353 | |
| Other real estate owned, net | | | 2 | | | | 19 | |
| Merger-related expenses | | | 1,060 | | | | — | |
| Other | | | 998 | | | | 1,052 | |
| Total other expense | | | 7,496 | | | | 6,538 | |
| Income before income tax expense | | | 6,010 | | | | 6,677 | |
| Income tax expense | | | 1,612 | | | | 1,753 | |
| Net Income | | | 4,398 | | | | 4,924 | |
| Preferred stock dividends and accretion | | | 28 | | | | 56 | |
| Net income available to common stockholders | | $ | 4,370 | | | $ | 4,868 | |
| Earnings per common share | | | | | | | | |
| Basic | | $ | 0.27 | | | $ | 0.30 | |
| Diluted | | $ | 0.27 | | | $ | 0.30 | |
| Weighted Average Common Shares Outstanding | | | | | | | | |
| Basic | | | 16,350,183 | | | | 16,348,215 | |
| Diluted | | | 16,405,540 | | | | 16,373,588 | |
CENTER BANCORP, INC. AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL AND STATISTICAL DATA
(Unaudited)
| | | Three Months Ended | |
| (in thousands, except for share and per share data) (annualized where applicable) | | 3/31/2014 | | | 12/31/2013 | | | 3/31/2013 | |
| Statements of Income Data | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Interest income | | $ | 14,337 | | | $ | 14,644 | | | $ | 14,104 | |
| Interest expense | | | 2,727 | | | | 2,778 | | | | 2,734 | |
| Net interest income | | | 11,610 | | | | 11,866 | | | | 11,370 | |
| Provision for loan losses | | | 625 | | | | 350 | | | | — | |
| Net interest income after provision for loan losses | | | 10,985 | | | | 11,516 | | | | 11,370 | |
| Other income | | | 2,521 | | | | 1,756 | | | | 1,845 | |
| Other expense | | | 7,496 | | | | 6,459 | | | | 6,538 | |
| Income before income tax expense | | | 6,010 | | | | 6,813 | | | | 6,677 | |
| Income tax expense | | | 1,612 | | | | 1,829 | | | | 1,753 | |
| Net income | | $ | 4,398 | | | $ | 4,984 | | | $ | 4,924 | |
| Net income available to common stockholders | | $ | 4,370 | | | $ | 4,955 | | | $ | 4,868 | |
| Earnings per Common Share | | | | | | | | | | | | |
| Basic | | $ | 0.27 | | | $ | 0.30 | | | $ | 0.30 | |
| Diluted | | $ | 0.27 | | | $ | 0.30 | | | $ | 0.30 | |
| Statements of Condition Data (Period-End) | | | | | | | | | | | | |
| Investment securities: | | | | | | | | | | | | |
| Available for sale | | $ | 287,471 | | | $ | 323,070 | | | $ | 458,004 | |
| Held for maturity( fair value $214,952, $210,958 and $81,921) | | | 214,191 | | | | 215,286 | | | | 78,212 | |
| Loans held for sale | | | — | | | | — | | | | 774 | |
| Loans | | | 987,529 | | | | 960,943 | | | | 879,387 | |
| Total assets | | | 1,676,160 | | | | 1,673,082 | | | | 1,609,795 | |
| Deposits | | | 1,339,885 | | | | 1,342,005 | | | | 1,282,223 | |
| Borrowings | | | 151,155 | | | | 151,155 | | | | 151,155 | |
| Stockholders’ equity | | | 173,813 | | | | 168,584 | | | | 164,753 | |
| Common Shares Dividend Data | | | | | | | | | | | | |
| Cash dividends | | $ | 1,228 | | | $ | 1,226 | | | $ | 899 | |
| Cash dividends per share | | $ | 0.075 | | | $ | 0.075 | | | $ | 0.055 | |
| Dividend payout ratio | | | 28.10 | % | | | 24.74 | % | | | 18.47 | % |
| Weighted Average Common Shares Outstanding | | | | | | | | | | | | |
| Basic | | | 16,350,183 | | | | 16,350,183 | | | | 16,348,215 | |
| Diluted | | | 16,405,540 | | | | 16,396,931 | | | | 16,373,588 | |
| Operating Ratios | | | | | | | | | | | | |
| Return on average assets (annualized) | | | 1.05 | % | | | 1.20 | % | | | 1.23 | % |
| Return on average equity (annualized) | | | 10.16 | % | | | 11.85 | % | | | 12.09 | % |
| Return on average tangible equity (annualized) | | | 11.25 | % | | | 13.16 | % | | | 13.49 | % |
| Average equity / average assets | | | 10.33 | % | | | 10.13 | % | | | 10.15 | % |
| Book value per common share (period-end) | | $ | 9.93 | | | $ | 9.61 | | | $ | 9.39 | |
| Tangible book value per common share (period-end) | | $ | 8.90 | | | $ | 8.58 | | | $ | 8.36 | |
| Non-Financial Information (Period-End) | | | | | | | | | | | | |
| Common shareholders of record | | | 501 | | | | 514 | | | | 536 | |
| Full-time equivalent staff | | | 166 | | | | 166 | | | | 173 | |
