Center Bancorp, Inc. Reports Second Quarter 2004 EarningsUNION, NJ -- 07/29/2004 -- Center Bancorp, Inc. (NASDAQ: CNBC), parent company to Union Center National Bank of Union, New Jersey, today reported earnings results for the second quarter ended June 30, 2004.
Net income for the second quarter of 2004 amounted to $1,782,000 or $.20 per fully diluted common share, an increase of $275,000 or 18.25% over the $1,507,000 or $.17 per fully diluted common share earned for the comparable quarter of the previous year.
Net income for the six-months ended June 30, 2004 amounted to $3.506,000 or $.39 per fully diluted common share, an increase of $313,000 or 9.80% over the $3,193,000 or $.36 per fully diluted common share earned for the comparable six-month period ended June 30, 2003. All common stock per share amounts have been restated to reflect all previously declared and paid common stock splits and common stock dividends.
"Given the positive results which were achieved in the first quarter of 2004, we are encouraged to see the positive trend continue with the Corporation's results for the second quarter," indicated John J. Davis, President & CEO. "Growth trends for the Corporation continued in the second quarter of 2004 and our strong credit quality was maintained. We believe these positive performance trends, such as healthy interest income growth and an improving margin, which has been on the rise since the end of the third quarter of 2003, should have a continued visible impact on the bottom line, in 2004." Other areas cited which contributed to second quarter results included increased non interest income, exclusive of securities gains, and a lower effective tax rate. This was offset in part by increased operating expense and an increased provision to the allowance for loan and lease losses.
Total interest income on a fully taxable-equivalent basis for the second quarter of 2004 increased by $745,000 or 7.90% to $10.2 million, from the comparable 2003 period, while total interest expense increased by only $26,000 or .81%.
Mr. Davis, in referring to the Corporation's revenue growth, cited the continued fee income growth, and the Corporation's continuing efforts to increase the size of its loan portfolio relative to total earning-assets, despite the challenges presented by the economy.
Total average loan volumes for the second quarter of 2004 increased to $361.5 million, an increase of $112.2 million (up 44.99% from $249.3 million for the comparable prior year quarter). The Corporation continues to experience loan demand in certain portfolio sectors, primarily real estate related. Demand for 1-4 family residential mortgages remained high during the second quarter.
While asset quality continues to remain strong, during the second quarter of 2004 the Corporation made a provision of $205,000 to the allowance for loan and lease losses, to maintain adequate loan loss reserves in relationship with loan portfolio growth. At June 30, 2004, the total allowance for loan and lease losses amounted to $3.4 million or .94% of total loans. Total charge offs for the second quarter amounted to only $5,000.
Net interest margins for the second quarter were in line with expectations and ongoing efforts to improve the yield on earning-assets and to control the cost of funds. For the three months ended June 30, 2004 the net interest margin (net interest income as a percentage of earning assets), increased 17 basis points to 3.22% from 3.05% for the second quarter in 2003; and increased 2 and 8 basis points, respectively, on a comparison to the first quarter of 2004 and fourth quarter of 2003, respectively.
Management believes that the margin can be maintained at or near the second quarter 2004 level during the balance of 2004 and that continuing growth in the loan portfolio, can be expected during the last six months of 2004.
Other non-interest income, exclusive of gains on securities sold (which increased $25,000 during the quarter), increased $54,000 or 7.34% for the second quarter compared with the comparable quarter in 2003. The change from the comparable period in 2003 was driven primarily by an increase in core service charges, commissions and fees derived from the check safe program launched during the fourth quarter of 2003.
Total non interest expense in the second quarter of 2004 was $4.9 million, up 6.31% from the second quarter of 2003. Personnel-related expenses, the Corporation's largest operating expense component, decreased 1.31% from a year ago, as a result of staffing levels and moderating employee related expenses and in certain cases reductions, such as employee health insurance costs, offset by increased salary expense associated with merit and promotional increases. The increase of 29.27% in other expenses in 2004 compared to the comparable quarter in 2003 was attributable to increased computer, telephone, audit, legal, consulting and correspondent fees in 2004.
The decrease in the effective tax rate was substantially as a result of increased levels of tax free income as compared to the comparable period in 2003.
Total assets at June 30, 2004, reached $933.4 million, an increase of $50.3 million or 5.70% from assets of $883.0 million at June 30, 2003. Average deposits increased $20.95 million or 3.68% for the three months ended June 30, 2004 as compared to the comparable period in 2003. The growth in average deposits was reflected in core demand accounts, money market and time deposits.
The total Tier 1 capital leverage ratio was 7.36%, the Tier 1 Risk Based Capital ratio was 13.27% and the Total Risk Based Capital ratio was 13.94%. Total Tier 1 capital increased to approximately $67.7 million at June 30, 2004 from $66.3 million at December 31, 2003. The increase in Tier 1 capital reflects the total cumulative issuance of $15.0 million in Trust Preferred Securities as of June 30, 2004. Book value per common share was $5.68 as compared with $6.29 a year ago. Tangible book value per common share was at $5.45 as compared to $6.06 a year ago. The change in book value for the period resulted primarily from a $9.4 million decrease in "accumulated other comprehensive income" which primarily reflects the effects of SFAS No. 115, which amounted to a $8.3 million change in unrealized holding losses, after tax, on the Corporation's securities available- for- sale investment portfolio at June 30, 2004 as compared with June 30, 2003. Annualized return on average stockholders' equity for the three months ended June 30, 2004 was 13.25% compared to 11.39% for the comparable period in 2003.
Center Bancorp Inc., through its wholly owned subsidiary, Union Center National Bank, Union, New Jersey, operates thirteen banking locations. Banking centers are located in Union Township (6 locations), Berkeley Heights, Madison, Millburn/Vauxhall, Morristown (2 locations), Springfield, and Summit New Jersey. The Bank also operates remote ATM locations in the Union New Jersey Transit train station and in Union Hospital. Union Center National Bank is the largest commercial Bank headquartered in Union County; was chartered in 1923 and is a full-service banking company.
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.
All non-historical statements in this press release (including statements regarding future net interest margin and overall performance) constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include expressions about management's views regarding future performance, including statements regarding earnings prospects. These forward-looking statements may use such forward-looking terminology as "expect," "look," "believe," "plan," "anticipate," "may," "will" or similar statements or variations of such terms or otherwise express views concerning trends and the future. Such forward-looking statements involve certain risks and uncertainties. These include, but are not limited to, the direction of interest rates, continued levels of loan quality and origination volume, continued relationships with major customers including sources for loans, as well as the effects of international, national, regional and local economic conditions and legal and regulatory barriers and structure, including those relating to the deregulation of the financial services industry. 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.
CONSOLIDATED STATEMENTS OF CONDITION
June 30, December 31, June 30,
(Dollars In Thousands) 2004 2003 2003
(unaudited) (unaudited)
--------- --------- ---------
ASSETS
Cash and due from banks $ 18,160 $ 16,509 $ 24,082
Investment securities held to
maturity (approximate market
value of $133,369 in 2004 and
$159,989 in 2003) 131,891 155,149 194,323
Investment securities
available-for-sale 376,490 364,085 361,628
--------- --------- ---------
Total investment securities 508,381 519,234 556,151
Loans, net of unearned income 365,964 349,525 268,260
Less--Allowance for loan losses 3,436 3,002 2,655
--------- --------- ---------
Net loans 362,528 346,523 265,605
Premises and equipment, net 15,988 15,610 13,697
Accrued interest receivable 4,452 4,485 4,752
Bank owned separate account
life insurance 17,472 14,614 14,502
Other assets 4,283 2,758 2,133
Goodwill 2,091 2,091 2,091
--------- --------- ---------
Total assets $ 933,355 $ 921,824 $ 883,013
========= ========= =========
LIABILITIES
Deposits:
Non-interest bearing $ 122,891 $ 120,526 $ 122,429
Interest bearing:
Certificates of deposit
$100,000 and over 121,054 58,245 55,486
Savings and time deposits 389,371 454,150 403,036
--------- --------- ---------
Total deposits 633,316 632,921 580,951
Federal funds purchased and
securities sold under agreements
to repurchase 129,683 99,724 104,526
Federal Home Loan Bank advances 100,000 115,000 125,000
Subordinated debentures 15,000 15,000 10,000
Accounts payable and accrued liabilities 4,219 4,999 6,544
--------- --------- ---------
Total liabilities 882,218 867,644 827,021
--------- --------- ---------
Commitments and contingencies
STOCKHOLDERS' EQUITY
Preferred Stock, no par value,
Authorized 5,000,000 shares;
None Issued 0 0 0
Common stock, no par value:
Authorized 20,000,000 shares;
issued 10,020,249 and 10,003,580
shares in 2004 and 2003, respectively 19,669 19,405 19,212
Additional paid in capital 4,734 4,677 4,616
Retained earnings 35,224 33,268 31,573
Treasury stock at cost (1,015,359
and 1,059,138 shares in 2004 and
2003, respectively) (3,808) (3,978) (4,110)
Restricted stock 0 (14) (14)
Accumulated other comprehensive
income (loss) (4,682) 822 4,715
--------- --------- ---------
Total stockholders' equity 51,137 54,180 55,992
--------- --------- ---------
Total liabilities and
stockholders' equity $ 933,355 $ 921,824 $ 883,013
========= ========= =========
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended Six Months Ended
(Unaudited) June 30, June 30,
(In Thousands, Except Per 2004 2003 2004 2003
Share Data) ----------- ----------- ----------- -----------
Interest income:
Interest and fees on loans $ 4,490 $ 3,522 $ 8,866 $ 7,108
Interest and dividends on
investment securities:
Taxable interest income 4,120 4,753 8,100 10,123
Non-taxable interest income 853 680 1,733 987
Dividends 269 121 603 296
----------- ----------- ----------- -----------
Total interest income 9,732 9,076 19,302 18,514
----------- ----------- ----------- -----------
Interest expense:
Interest on certificates
of deposit $100,000
and over 92 86 193 238
Interest on other deposits 1,561 1,666 3,202 3,463
Interest on borrowings 1,580 1,455 3,025 2,741
----------- ----------- ----------- -----------
Total interest expense 3,233 3,207 6,420 6,442
----------- ----------- ----------- -----------
Net interest income 6,499 5,869 12,882 12,072
Provision for loan losses 205 79 410 159
Net interest income after
provision for loan losses 6,294 5,790 12,472 11,913
----------- ----------- ----------- -----------
Other income:
Service charges,
commissions and fees 477 421 958 838
Other income 109 136 211 247
Annuity & Insurance 12 0 20 0
Bank Owned Life Insurance 192 179 358 359
Gain on securities sold 31 6 157 237
----------- ----------- ----------- -----------
Total other income 821 742 1,704 1,681
----------- ----------- ----------- -----------
Other expense:
Salaries and employee
benefits 2,641 2,676 5,278 5,327
Occupancy, net 459 444 1,022 972
Premises and equipment 475 447 920 894
Stationery and printing 144 131 296 305
Marketing and advertising 147 112 296 289
Other 1,038 803 2,083 1,559
----------- ----------- ----------- -----------
Total other expense 4,904 4,613 9,895 9,346
----------- ----------- ----------- -----------
Income before income
tax expense 2,211 1,919 4,281 4,248
Income tax expense 429 412 775 1,055
----------- ----------- ----------- -----------
Net income $ 1,782 $ 1,507 $ 3,506 $ 3,193
=========== =========== =========== ===========
Earnings per share: (Note 4)
Basic $ 0.20 $ 0.17 $ 0.39 $ 0.36
Diluted $ 0.20 $ 0.17 $ 0.39 $ 0.36
Weighted average common
shares outstanding:
Basic 8,974,248 8,889,050 8,962,305 8,875,852
Diluted 9,030,668 8,981,803 9,030,365 8,969,039
=========== =========== =========== ===========
All share and per share amounts have been restated to reflect the 5% common
stock dividend declared April 20, 2004, paid on June 1, 2004 to
shareholders of record May 18, 2004.
AVERAGE STATEMENTS OF CONDITION WITH INTEREST AND AVERAGE RATES
Six Month Period Ended June 30,
2004 2003
Interest Average Interest Average
(tax-equivalent basis, Average Income/ Yield/ Average Income/ Yield/
dollars in thousands) Balance Expense Rate Balance Expense Rate
------------------------------------------------
Assets
Interest-earning assets:
Investment securities:(1)
Taxable $412,670 $ 8,703 4.22% $500,617 $10,419 4.16%
Non-taxable 90,795 2,626 5.78% 48,778 1,495 6.13%
Federal funds sold and
securities purchased
under agreement to
resell 0 0 0.00% 0 0 0.00%
Loans, net of unearned
income (2) 354,665 8,866 5.00% 242,445 7,108 5.86%
-----------------------------------------------
Total interest-earning
assets $858,130 20,195 4.71% $791,840 19,022 4.80%
===============================================
Non-interest earning
assets
Cash and due from banks 19,841 21,907
BOLI 17,361 14,301
Other assets 25,617 26,756
Allowance for possible
loan losses (3,205) (2,571)
-----------------------------------------------
Total non-interest
earning assets 59,614 60,393
-----------------------------------------------
Total assets $917,744 $852,233
===============================================
Liabilities and
stockholders' equity
Interest-bearing
liabilities:
Money market deposits $101,407 498 0.98% $ 95,531 570 1.20%
Savings deposits 143,840 692 0.96% 156,450 1,039 1.33%
Time deposits 154,383 2,013 2.61% 143,884 1,867 2.60%
Other interest -
bearing deposits 74,032 192 0.52% 69,835 225 0.64%
Short-term Borrowings 242,323 2,683 2.21% 201,477 2,494 2.48%
Subordinated Debentures 15,000 342 4.56% 10,000 247 4.94%
-----------------------------------------------
Total interest-bearing
liabilities 730,985 6,420 1.76% 676,997 6,442 1.90%
===============================================
Non-interest-bearing
liabilities:
Demand deposits 125,268 117,322
Other non-interest-
bearing deposits 1,220 468
Other liabilities 5,655 5,251
-----------------------------------------------
Total non-interest-
bearing liabilities 132,143 123,041
-----------------------------------------------
Stockholders' equity 54,616 52,195
-----------------------------------------------
Total liabilities and
stockholders' equity $917,744 $852,233
-----------------------------------------------
Net interest income
(tax-equivalent basis) $13,775 $12,580
-----------------------------------------------
Net Interest Spread 2.95% 2.90%
-----------------------------------------------
Net interest income as
percent of
earning-assets
(net interest margin) 3.21% 3.18%
-----------------------------------------------
Tax equivalent adjustment (893) (508)
-----------------------------------------------
Net interest income $12,882 $12,072
===============================================
(1) Average balances for available-for-sale securities are based on
amortized cost.
(2) Average balances for loans include loans on non-accrual status.
(3) The tax-equivalent adjustment was computed based on a statutory
Federal income tax rate of 34 percent.
AVERAGE STATEMENTS OF CONDITION WITH INTEREST AND AVERAGE RATES
Three Month Period Ended June 30,
2004 2003
Interest Average Interest Average
(tax-equivalent basis, Average Income/ Yield/ Average Income/ Yield/
dollars in thousands) Balance Expense Rate Balance Expense Rate
------------------------------------------------
Assets
Interest-earning assets:
Investment securities:(1)
Taxable $409,893 $ 4,389 4.28% $495,838 $ 4,874 3.93%
Non-taxable 89,277 1,292 5.79% 69,097 1,030 5.96%
Federal funds sold and
securities purchased
under agreement
to resell 0 0 0.00% 0 0 0.00%
Loans, net of
unearned income(2) 361,523 4,490 4.97% 249,340 3,522 5.65%
-----------------------------------------------
Total interest-earning
assets 860,693 10,171 4.73% $814,275 9,426 4.63%
===============================================
Non-interest earning assets
Cash and due from banks 18,743 20,930
BOLI 16,062 14,395
Other assets 29,562 27,338
Allowance for possible
loan losses (3,315) (2,609)
-----------------------------------------------
Total non-interest
earning assets 61,052 60,054
-----------------------------------------------
Total assets $921,745 $874,329
===============================================
Liabilities and
stockholders' equity
Interest-bearing
liabilities:
Money market deposits $ 95,255 235 0.99% $ 90,331 264 1.17%
Savings deposits 141,138 339 0.96% 157,419 519 1.32%
Time deposits 151,299 977 2.58% 133,797 872 2.61%
Other interest -
bearing deposits 75,424 102 0.54% 67,461 97 0.58%
Short-term Borrowings 255,941 1,411 2.21% 235,974 1,333 2.26%
Subordinated Debentures 15,000 169 4.51% 10,000 122 4.88%
-----------------------------------------------
Total interest-bearing
liabilities 734,057 3,233 1.76% 694,982 3,207 1.85%
===============================================
Non-interest-bearing
liabilities:
Demand deposits 127,222 120,611
Other non-interest-bearing
deposits 631 453
Other liabilities 6,047 5,369
-----------------------------------------------
Total non-interest-bearing
liabilities 133,900 126,433
-----------------------------------------------
Stockholders' equity 53,788 52,914
-----------------------------------------------
Total liabilities and
stockholders' equity $921,745 $874,329
-----------------------------------------------
Net interest income
(tax-equivalent basis) $ 6,938 $ 6,219
-----------------------------------------------
Net Interest Spread 2.97% 2.78%
-----------------------------------------------
Net interest income
as percent of
earning-assets
(net interest margin) 3.22% 3.05%
-----------------------------------------------
Tax equivalent adjustment (439) (350)
-----------------------------------------------
Net interest income $ 6,499 $ 5,869
===============================================
(1) Average balances for available-for-sale securities are based
on amortized cost.
(2) Average balances for loans include loans on non-accrual status.
(3) The tax-equivalent adjustment was computed based on a statutory
Federal income tax rate of 34 percent.
Contact:
Anthony C. Weagley
Vice President & Treasurer
1-(800)-862-3683
