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Center Bancorp, Inc. Reports Third Quarter and Nine-Month 2011 Earnings; Net Income Up 4.76% on a Linked Quarter Basis; Nine-Month Net Income Up 57.1%
UNION, N.J., October 27, 2011 (GLOBE NEWSWIRE) -- Center Bancorp, Inc. (Nasdaq:CNBC) (the "Corporation", or "Center"), parent company of Union Center National Bank (“UCNB”), today reported operating results for the third quarter ended September 30, 2011. Net income available to common stockholders amounted to $3.6 million, or $0.22 per fully diluted common share, for the quarter ended September 30, 2011, as compared with net income available to common stockholders of $2.0 million, or $0.14 per fully diluted common share, for the quarter ended September 30, 2010 and net income available to common stockholders of $3.4 million, or $0.21 per fully diluted common share, for the quarter ended June 30, 2011.
For the nine months ended September 30, 2011, net income available to common stockholders amounted to $9.9 million, or $0.61 per fully diluted common share, compared to $4.0 million, or $0.27 per fully diluted common share, for the same period in 2010.
Highlights for the quarter include:
| · | Net interest income increased to $9.9 million, compared to $8.4 million for the third quarter 2010. Net interest margin on a fully taxable equivalent annualized basis increased 24 basis points to 3.54%, compared to 3.30% for the third quarter of 2010, driven by a lower cost of funds on the deposits mix and lower rates and volume on borrowings. |
| · | Focus on internal processes and expense controls further improved operating efficiency. The efficiency ratio for the third quarter of 2011 on an annualized basis was 49.5% as compared to 52.8% in the second quarter of 2011 and 57.3% in the third quarter of 2010. |
| · | Deposits increased by $94.3 million at September 30, 2011, or 9.77%, to $1.1 billion from $965.7 million at June 30, 2011 and increased $223.1 million from the balance reported at September 30, 2010. Growth occurred in noninterest-bearing checking deposits, savings and money market deposit accounts. During the third quarter of 2011 certain sweep relationships, in the amount of approximately $37 million, that were previously classified as short term borrowings were reclassified as Interest bearing checking accounts. |
| · | At September 30, 2011, total loans amounted to $721.6 million, an increase of $23.5 million, compared to total loans at June 30, 2011. The increase occurred primarily in the residential and commercial real estate portfolios. |
| · | Non-performing assets, consisting of non-accrual loans, accruing loans past due 90 days or more, other real estate owned (“OREO”) and other nonperforming assets, amounted to 1.08% of total assets at September 30, 2011, compared to 0.88% at June 30, 2011 and 0.98% at December 31, 2010. At September 30, 2011, the allowance for loan losses amounted to approximately $9.5 million, or 1.32% of total loans compared to $9.8 million, or 1.41% of total loans at June 30, 2011, and $8.9 million, or 1.25% of total loans at December 31, 2010. The allowance for loan losses as a percentage of total non-performing loans was 65.6% at September 30, 2011 compared to 88.2% at June 30, 2011 and 74.6% at December 31, 2010. |
| · | The Corporation successfully grew its capital base by $3.7 million in the third quarter. The Tier 1 leverage capital ratio was 9.51% at September 30, 2011, compared to 9.50% at June 30, 2011, and 9.60% at September 30, 2010, exceeding regulatory guidelines in all periods |
| · | On September 15, 2011, the Corporation issued $11.25 million in nonvoting senior preferred stock to the Treasury under the Small Business Lending Fund Program (“SBLF Program”) and utilized $10.0 million to repurchase preferred securities issued pursuant to the United States Government’s TARP program. |
"The results for the third quarter announced today are reflective of the continued strength and steady growth in core earnings and stable margins, despite the large cash position held during the period and increased liquidity. We are taking advantage of our high visibility and strong client relations to continue to expand our client base. This is extremely important in positioning Center for the future. In the current environment it is challenging to expand profit margins through asset deployment. We have strong pipelines that we believe will absorb excess cash as we move forward into the balance of 2011 and into 2012.
Mr. Weagley noted: “Center continues to strengthen its already strong balance sheet, ending the third quarter with a strong Tier 1 risk-based capital ratio of 12.37%. We have exited TARP, taking advantage of the Small Business Lending Fund to support our efforts to increase lending across a broader base of clients. Book value per common share rose to $7.54 at September 30, 2011, compared to $6.83 at December 31, 2010 and $6.90 at September 30, 2010. Tangible book value per common share also increased to $6.50 at September 30, 2011, compared to $5.79 at December 31, 2010 and $5.86 at September 30, 2010.”
Mr. Weagley noted, “Looking to the balance of 2011, as previously discussed, we are still gaining momentum on a number of key fronts, including control of operating overhead, margins and credit exposures. We are pleased with the quarterly results and continue to execute on our business plans to grow and build shareholder value."
Selected Financial Ratios (unaudited; annualized where applicable) | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| As of or for the quarter ended: | | 9/30/11 | | | 6/30/11 | | | 3/31/11 | | | 12/31/10 | | | 9/30/10 | |
| Return on average assets | | | 1.10 | % | | | 1.10 | % | | | 0.98 | % | | | 0.86 | % | | | 0.72 | % |
| Return on average equity | | | 11.12 | % | | | 11.17 | % | | | 9.86 | % | | | 8.34 | % | | | 7.74 | % |
| Net interest margin (tax equivalent basis) | | | 3.54 | % | | | 3.53 | % | | | 3.55 | % | | | 3.18 | % | | | 3.30 | % |
| Loans / deposits ratio | | | 68.07 | % | | | 72.30 | % | | | 76.62 | % | | | 82.35 | % | | | 83.87 | % |
| Stockholders’ equity / total assets | | | 9.72 | % | | | 9.95 | % | | | 9.67 | % | | | 10.02 | % | | | 10.00 | % |
Efficiency ratio (1) | | | 49.5 | % | | | 52.8 | % | | | 54.8 | % | | | 63.9 | % | | | 57.3 | % |
| Book value per common share | | $ | 7.54 | | | $ | 7.39 | | | $ | 7.05 | | | $ | 6.83 | | | $ | 6.90 | |
Return on average tangible stockholders’ equity (1) | | | 12.74 | % | | | 12.86 | % | | | 11.44 | % | | | 9.68 | % | | | 9.14 | % |
Tangible common stockholders’ equity / tangible assets (1) | | | 7.79 | % | | | 8.02 | % | | | 7.70 | % | | | 7.92 | % | | | 7.93 | % |
Tangible book value per common share (1) | | $ | 6.50 | | | $ | 6.35 | | | $ | 6.01 | | | $ | 5.79 | | | $ | 5.86 | |
(1) Information reconciling non-GAAP measures to GAAP measures is presented elsewhere in this press release.
Net Interest Income
For the three months ended September 30, 2011, total interest income on a fully taxable equivalent basis increased $1.2 million or 10.0%, to $13.2 million, compared to the three months ended September 30, 2010. Total interest expense decreased by $584,000, or 16.0%, to $3.1 million, for the three months ended September 30, 2011, compared to the same period last year. Net interest income on a fully taxable equivalent basis was $10.1 million for the three months ended September 30, 2011, increasing $1.7 million, or 20.2%, from $8.4 million for the comparable period in 2010. Compared to 2010, for the three months ended September 30, 2011, average interest earning assets increased $128 million while net interest spread and margin, on a tax-equivalent basis, increased on an annualized basis by 27 basis points and 24 basis points, respectively. The Corporation’s net interest income and margin were favorably impacted primarily by lower interest rates on deposits and borrowings and changes in volume mix.
The decrease in interest expense reflects the impact of the sustained low levels in short-term interest rates coupled with a favorable shift in the deposit mix in spite of higher volumes of time deposits. The combined positive effect was a decrease in the average cost of funds, which declined 40 basis points to 1.18% from 1.58% for the quarter ended September 30, 2010 and on a linked sequential quarter decreased 4 basis points compared to the second quarter of 2011.
For the quarter ended September 30, 2011, the Corporation’s net interest spread increased 27 basis points to 3.43% as compared to 3.16% for the same three month period in 2010, while the Corporation’s net interest margin (net interest income as a percentage of interest-earning assets) increased by 24 basis points from 3.30% to 3.54%, in all cases on an annualized tax-equivalent basis.
For the nine months ended September 30, 2011, net interest income on a fully taxable equivalent basis amounted to $30.1 million, compared to $25.6 million for the same period in 2010. For the nine month period ended September 30, 2011, interest income increased by $1.9 million while interest expense decreased by $2.6 million from the same period last year. Compared to the same period in 2010, for the nine months ended September 30, 2011, average interest earning assets increased $111.7 million while net interest spread and margin increased on an annualized tax-equivalent basis by 22 basis points and 20 basis points, respectively. The Corporation’s net interest income and margin were favorably impacted primarily by lower interest rates on deposits and borrowings and changes in volume mix.
Earnings Summary for the Period Ended September 30, 2011
The following tables present 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: | | 9/30/11 | | | 6/30/11 | | | 3/31/11 | | | 12/31/10 | | | 9/30/10 | |
| Net interest income | | $ | 9,850 | | | $ | 9,793 | | | $ | 9,945 | | | $ | 8,381 | | | $ | 8,382 | |
| Provision for loan losses | | | 1,020 | | | | 250 | | | | 878 | | | | 2,048 | | | | 1,307 | |
| Net interest income after provision for loan losses | | | 8,830 | | | | 9,543 | | | | 9,067 | | | | 6,333 | | | | 7,075 | |
| Other income | | | 2,283 | | | | 1,732 | | | | 1,597 | | | | 1,304 | | | | 2,135 | |
| Other expense | | | 5,529 | | | | 5,757 | | | | 5,935 | | | | 5,997 | | | | 5,442 | |
| Income before income tax expense | | | 5,584 | | | | 5,518 | | | | 4,729 | | | | 1,640 | | | | 3,768 | |
| Income tax expense (benefit) | | | 1,882 | | | | 1,934 | | | | 1,711 | | | | (930 | ) | | | 1,629 | |
| Net income | | $ | 3,702 | | | $ | 3,584 | | | $ | 3,018 | | | $ | 2,570 | | | $ | 2,139 | |
| Net income available to common stockholders | | $ | 3,557 | | | $ | 3,439 | | | $ | 2,872 | | | $ | 2,426 | | | $ | 1,993 | |
| Earnings per common share: | | | | | | | | | | | | | | | | | | | | |
| Basic | | $ | 0.22 | | | $ | 0.21 | | | $ | 0.18 | | | $ | 0.15 | | | $ | 0.14 | |
| Diluted | | $ | 0.22 | | | $ | 0.21 | | | $ | 0.18 | | | $ | 0.15 | | | $ | 0.14 | |
Weighted average common shares outstanding: | | | | | | | | | | | | | | | | | | | | |
| Basic | | | 16,290,700 | | | | 16,290,700 | | | | 16,290,391 | | | | 16,289,832 | | | | 14,649,397 | |
| Diluted | | | 16,313,366 | | | | 16,315,667 | | | | 16,300,604 | | | | 16,290,071 | | | | 14,649,397 | |
Other Income
The following tables present the components of other income for the periods indicated.
| (in thousands, unaudited) | | | | | | | | | | | | | | | |
| For the quarter ended: | | 9/30/11 | | | 6/30/11 | | | 3/31/11 | | | 12/31/10 | | | 9/30/10 | |
| Service charges on deposit accounts | | $ | 369 | | | $ | 328 | | | $ | 328 | | | $ | 427 | | | $ | 413 | |
| Loan related fees | | | 203 | | | | 145 | | | | 87 | | | | 132 | | | | 104 | |
| Annuities and insurance commissions | | | 42 | | | | 33 | | | | 6 | | | | 4 | | | | 3 | |
| Debit card and ATM fees | | | 135 | | | | 133 | | | | 121 | | | | 124 | | | | 122 | |
| Bank-owned life insurance | | | 260 | | | | 261 | | | | 260 | | | | 269 | | | | 429 | |
| Net investment securities gains | | | 1,250 | | | | 801 | | | | 766 | | | | 315 | | | | 1,033 | |
| Other service charges and fees | | | 24 | | | | 31 | | | | 29 | | | | 33 | | | | 31 | |
| Total other income | | $ | 2,283 | | | $ | 1,732 | | | $ | 1,597 | | | $ | 1,304 | | | $ | 2,135 | |
Other income increased $148,000 for the third quarter of 2011 compared with the same period in 2010. During the third quarter of 2011, the Corporation recorded net investment securities gains of $1,250,000 compared to $1,033,000 in net investment securities gains for the same period last year. Excluding net securities gains, the Corporation recorded other income of $1,033,000 for the three months ended September 30, 2011 compared to other income, excluding net securities gains, of $931,000 for the second quarter of 2011 and $1,102,000 for the three months ended September 30, 2010. The increase in other income in the third quarter 2011 when compared to the third quarter 2010 (excluding securities gains) was primarily from an increase of $99,000 in loan related fees, and $39,000 in commissions on Annuities and Insurance contracts offset by declines in service charges on Deposits of $44,000 and a decline in Bank Owned Life Insurance of $169,000
For the nine months ended September 30, 2011, total other income increased $4.5 million compared to the same period in 2010, primarily as a result of net securities losses including impairment charges taken on investment securities in 2010. Excluding net securities gains and losses, the Corporation recorded other income of $2.79 million for the nine months ended September 30, 2011 compared to $2.82 million for the comparable period in 2010, a decrease of $27,000 or 0.96%.
Other Expense
The following tables present the components of other expense for the periods indicated.
| (in thousands, unaudited) | | | | | | | | | | | | | | | |
| For the quarter ended: | | 9/30/11 | | | 6/30/11 | | | 3/31/11 | | | 12/31/10 | | | 9/30/10 | |
| Salaries | | $ | 2,235 | | | $ | 2,253 | | | $ | 2,208 | | | $ | 2,132 | | | $ | 2,178 | |
| Employee benefits | | | 613 | | | | 650 | | | | 659 | | | | 527 | | | | 543 | |
| Occupancy and equipment | | | 713 | | | | 667 | | | | 866 | | | | 804 | | | | 754 | |
| Professional and consulting | | | 319 | | | | 245 | | | | 241 | | | | 272 | | | | 153 | |
| Stationery and printing | | | 73 | | | | 99 | | | | 101 | | | | 74 | | | | 68 | |
| FDIC Insurance | | | 328 | | | | 528 | | | | 528 | | | | 540 | | | | 510 | |
| Marketing and advertising | | | 30 | | | | 65 | | | | 21 | | | | 34 | | | | 36 | |
| Computer expense | | | 300 | | | | 350 | | | | 339 | | | | 366 | | | | 320 | |
| Bank regulatory related expenses | | | 102 | | | | 100 | | | | 98 | | | | 97 | | | | 97 | |
| Postage and delivery | | | 67 | | | | 51 | | | | 76 | | | | 69 | | | | 65 | |
| ATM related expenses | | | 60 | | | | 57 | | | | 58 | | | | 55 | | | | 59 | |
| Other real estate owned expense | | | - | | | | - | | | | (1 | ) | | | 221 | | | | 20 | |
| Amortization of core deposit intangible | | | 12 | | | | 16 | | | | 16 | | | | 16 | | | | 16 | |
| All other expenses | | | 677 | | | | 676 | | | | 725 | | | | 790 | | | | 623 | |
| Total other expense | | $ | 5,529 | | | $ | 5,757 | | | $ | 5,935 | | | $ | 5,997 | | | $ | 5,442 | |
Other expense for the third quarter of 2011 amounted to $5.5 million, which was approximately $228,000 or 3.96 percent lower than other expense for the three months ended June 30, 2011. Employee salaries and benefits decreased by $55,000 or 1.89 percent, primarily driven by decreases in benefits expense as compared to the quarter ended June 30, 2011; other decreases included FDIC Insurance expense which decreased by $200,000. These decreases were partially offset by Occupancy and Equipment expense which increased by $46,000, primarily due to increases in repairs of $47,000 in the quarter; along with an increase of $74,000 in consulting expenses and legal fees related to loan workout activity.
The increase in other expense for the three months ended September 30, 2011, when compared to the quarter ended September 30, 2010, was approximately $87,000 and was primarily associated with increases of $127,000 in Salaries & Benefits, $166,000 in Professional and Consulting Fees, and miscellaneous other expenses of $58,000. These increases were partially offset by decreases of $182,000 in FDIC Insurance and $41,000 in Occupancy and Equipment Expenses.
For the nine months ended September 30, 2011, total other expense decreased $880,000, or 4.86%, compared to the same period in 2010. Decreases primarily included $427,000 in one-time charges incurred in 2010 with the lease/sale of the Corporation’s former operations facility, $202,000 in FDIC Insurance and $594,000 from the early termination of a structure repurchase agreement in the 2010 period. These decreases were partially offset by an increase in Salaries and employee benefits of $512,000.
As noted above, the efficiency ratio for the third quarter of 2011 on an annualized basis was 49.5% as compared to 52.8% in the second quarter of 2011 and 57.3% in the third quarter of 2010. The Corporation continues to pursue efficient operations.
Statement of Condition Highlights at September 30, 2011
| · | Total assets amounted to $1.4 billion at September 30, 2011. |
| · | Total loans were $721.6 million at September 30, 2011, increasing $19.7 million, or 2.80%, from September 30, 2010. Total real estate loans increased $13.3 million or 2.59%, from the comparable period in 2010. Commercial loans increased $6.8 million, or 3.65%, year over year. |
| · | Investment securities totaled $459.0 million at September 30, 2011, increasing $40.0 million compared to June 30, 2011, and reflecting an increase of $96.3 million from September 30, 2010. During the third quarter, the Corporation further bifurcated its investment portfolio into available for sale and held to maturity by transferring approximately $28.3 million into held to maturity. |
| · | Deposits totaled $1.1 billion at September 30, 2011, increasing $223.1 million, or 26.7%, since September 30, 2010. Total Demand, Savings, Money Market, and certificates of deposit less than $100,000 increased $195.7 million or 27.1% from September 30, 2010. Time certificates of deposit of $100,000 or more also increased by $27.4 million or 24.0% from September 30, 2010. These increases were attributable to continued core deposit growth in overall segments of the deposits base and in niche areas, such as municipal government, private schools and universities. |
| · | Borrowings totaled $166.2 million at September 30, 2011, decreasing $66.4 million from September 30, 2010, primarily due to repayment of Federal Home Loan Bank advances and a structured repurchase agreement in 2010, coupled with the transfer of $37 million in overnight repurchase agreements during the quarter into interest bearing business checking accounts. |
Condensed Statements of Condition
The following tables present condensed statements of condition as of the dates indicated.
Condensed Consolidated Statements of Condition (unaudited) | |
| | | | | | | | | | | | | | | | |
| (in thousands) | | | | | | | | | | | | | | | |
| At quarter ended: | | 9/30/11 | | | 6/30/11 | | | 3/31/11 | | | 12/31/10 | | | 9/30/10 | |
| Cash and due from banks | | $ | 113,080 | | | $ | 109,467 | | | $ | 80,129 | | | $ | 37,497 | | | $ | 75,478 | |
| Investment securities | | | | | | | | | | | | | | | | | | | | |
| Available for sale | | | 388,858 | | | | 377,214 | | | | 410,376 | | | | 378,080 | | | | 362,683 | |
| Held to maturity | | | 70,142 | | | | 41,804 | | | | — | | | | — | | | | — | |
| Loans | | | 721,608 | | | | 698,148 | | | | 716,096 | | | | 708,444 | | | | 701,936 | |
| Allowance for loan losses | | | (9,536 | ) | | | (9,836 | ) | | | (9,591 | ) | | | (8,867 | ) | | | (8,770 | ) |
| Restricted investment in bank stocks, at cost | | | 9,194 | | | | 9,194 | | | | 9,146 | | | | 9,596 | | | | 10,255 | |
| Premises and equipment, net | | | 12,386 | | | | 12,578 | | | | 12,747 | | | | 12,937 | | | | 13,178 | |
| Goodwill | | | 16,804 | | | | 16,804 | | | | 16,804 | | | | 16,804 | | | | 16,804 | |
| Core deposit intangible | | | 111 | | | | 123 | | | | 138 | | | | 155 | | | | 170 | |
| Bank-owned life insurance | | | 28,685 | | | | 28,426 | | | | 28,165 | | | | 27,905 | | | | 27,636 | |
| Other real estate owned | | | — | | | | — | | | | — | | | | — | | | | 1,927 | |
| Other assets | | | 25,185 | | | | 23,516 | | | | 24,636 | | | | 24,834 | | | | 19,981 | |
Total assets | | $ | 1,376,517 | | | $ | 1,307,438 | | | $ | 1,288,646 | | | $ | 1,207,385 | | | $ | 1,221,278 | |
| Deposits | | $ | 1,060,022 | | | $ | 965,676 | | | $ | 934,646 | | | $ | 860,332 | | | $ | 836,902 | |
| Borrowings | | | 166,155 | | | | 198,529 | | | | 202,072 | | | | 218,010 | | | | 232,568 | |
| Other liabilities | | | 16,532 | | | | 13,129 | | | | 27,344 | | | | 8,086 | | | | 29,651 | |
| Stockholders' equity | | | 133,808 | | | | 130,104 | | | | 124,584 | | | | 120,957 | | | | 122,157 | |
| Total liabilities and stockholders’ equity | | $ | 1,376,517 | | | $ | 1,307,438 | | | $ | 1,288,646 | | | $ | 1,207,385 | | | $ | 1,221,278 | |
The following tables reflect the composition of the Corporation’s deposits as of the dates indicated.
Deposits (unaudited) | | | | | | | | | | | | | | | |
| (in thousands) | | | | | | | | | | | | | | | |
| At quarter ended: | | 9/30/11 | | | 6/30/11 | | | 3/31/11 | | | 12/31/10 | | | 9/30/10 | |
| Demand: | | | | | | | | | | | | | | | |
| Non interest-bearing | | $ | 161,340 | | | $ | 158,689 | | | $ | 154,910 | | | $ | 144,210 | | | $ | 147,213 | |
| Interest-bearing | | | 224,052 | | | | 190,944 | | | | 179,900 | | | | 186,509 | | | | 176,728 | |
| Savings | | | 237,900 | | | | 204,051 | | | | 200,195 | | | | 196,291 | | | | 202,242 | |
| Money market | | | 245,787 | | | | 191,277 | | | | 178,956 | | | | 159,200 | | | | 139,440 | |
| Time | | | 190,943 | | | | 220,665 | | | | 220,595 | | | | 174,122 | | | | 171,279 | |
| Total deposits | | $ | 1,060,022 | | | $ | 965,676 | | | $ | 934,646 | | | $ | 860,332 | | | $ | 836,902 | |
Loans
Outstanding loan balances increased during the third quarter and lending opportunities continued to be steady and continued to fuel pipelines. Lending activity has been somewhat constrained by the uncertain economic environment. The Corporation continues to see economic instability and has moved cautiously in the process. Overall, the Corporation’s credit trends have improved. Nevertheless, the Corporation expects credit trends to be inconsistent over the next few quarters.
The Corporation experienced growth of $ 58.4 million in new loans and advances during the third quarter offset in part by prepayments of $12.9 million coupled with scheduled payments and payoffs of $ 21.8 million. Average loans during the third quarter totaled $707.9 million as compared to $715.9 million during the third quarter of 2010, representing a 1.1 percent decrease.
At September 30, 2011, the Corporation had $208.6 million in overall undisbursed loan commitments, which includes largely 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 $32.8 million in commercial and commercial real estate loans and $12.6 million in residential mortgages expected to fund over the next 90 days.
The Corporation’s net loans in the third quarter of 2011 increased $23.8 million, to $712.1 million at September 30, 2011, from $688.3 million at June 30, 2011. The loan volume increased by $14.3 million in commercial and multi-family mortgage loans, $9.1 million in residential mortgage loans and of $320,000 in consumer loans. At December 31, 2010, net loans totaled $699.6. Commercial real estate, commercial and construction loans represented 78.0% of the loan portfolio at September 30, 2011, compared to 78.0% at December 31, 2010.
The following reflects the composition of the Corporation’s loan portfolio as of the dates indicated.
| Loans (unaudited) | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| (in thousands) | | | | | | | | | | | | | | | |
| At quarter ended: | | 9/30/11 | | | 6/30/11 | | | 3/31/11 | | | 12/31/10 | | | 9/30/10 | |
| Real estate loans: | | | | | | | | | | | | | | | |
| Residential | | $ | 158,625 | | | $ | 150,271 | | | $ | 147,833 | | | $ | 154,909 | | | $ | 165,535 | |
| Commercial | | | 328,096 | | | | 310,475 | | | | 321,367 | | | | 301,284 | | | | 295,003 | |
| Construction | | | 39,621 | | | | 40,421 | | | | 46,310 | | | | 49,752 | | | | 52,518 | |
| Total real estate loans | | | 526,342 | | | | 501,167 | | | | 515,510 | | | | 505,945 | | | | 513,056 | |
| Commercial loans | | | 194,923 | | | | 196,464 | | | | 200,018 | | | | 201,663 | | | | 188,052 | |
| Consumer and other loans | | | 298 | | | | 434 | | | | 361 | | | | 577 | | | | 445 | |
| Total loans before deferred fees and costs | | | 721,563 | | | | 698,065 | | | | 715,889 | | | | 708,185 | | | | 701,553 | |
| Deferred costs, net | | | 45 | | | | 83 | | | | 207 | | | | 259 | | | | 383 | |
| Total loans | | $ | 721,608 | | | $ | 698,148 | | | $ | 716,096 | | | $ | 708,444 | | | $ | 701,936 | |
Asset Quality
The following tables present 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: | | 9/30/11 | | | 6/30/11 | | | 3/31/11 | | | 12/31/10 | | | 9/30/10 | |
| Non-accrual loans | | $ | 14,083 | | | $ | 10,137 | | | $ | 12,336 | | | $ | 11,174 | | | $ | 8,339 | |
| Loans 90 days or more past due and still accruing | | | 451 | | | | 1,013 | | | | 687 | | | | 714 | | | | 3,402 | |
| Total non-performing loans | | | 14,534 | | | | 11,150 | | | | 13,023 | | | | 11,888 | | | | 11,741 | |
| Other non-performing assets | | | 327 | | | | 327 | | | | 327 | | | | — | | | | — | |
| Other real estate owned | | | — | | | | — | | | | — | | | | — | | | | 1,927 | |
| Total non-performing assets | | $ | 14,861 | | | $ | 11,477 | | | $ | 13,350 | | | $ | 11,888 | | | $ | 13,668 | |
| Performing troubled debt restructured loans | | $ | 8,898 | | | $ | 8,223 | | | $ | 7,035 | | | $ | 7,035 | | | $ | 10,417 | |
| | | | | | | | | | | | | | | | | | | | | |
| Non-performing assets / total assets | | | 1.08 | % | | | 0.88 | % | | | 1.04 | % | | | 0.98 | % | | | 1.12 | % |
| Non-performing loans / total loans | | | 2.01 | % | | | 1.60 | % | | | 1.82 | % | | | 1.68 | % | | | 1.67 | % |
| Net charge-offs | | $ | 1,320 | | | $ | 5 | | | $ | 154 | | | $ | 1,950 | | | $ | 1,133 | |
Net charge-offs / average loans (1) | | | 0.75 | % | | | 0.003 | % | | | 0.09 | % | | | 1.13 | % | | | 0.63 | % |
| Allowance for loan losses / total loans | | | 1.32 | % | | | 1.41 | % | | | 1.34 | % | | | 1.25 | % | | | 1.25 | % |
| Allowance for loan losses / non-performing loans | | | 65.6 | % | | | 88.2 | % | | | 73.6 | % | | | 74.6 | % | | | 74.7 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Total assets | | $ | 1,376,517 | | | $ | 1,307,438 | | | $ | 1,288,646 | | | $ | 1,207,385 | | | $ | 1,221,278 | |
| Total loans | | | 721,608 | | | | 698,148 | | | | 716,096 | | | | 708,444 | | | | 701,936 | |
| Average loans | | | 707,935 | | | | 701,056 | | | | 716,568 | | | | 692,166 | | | | 715,849 | |
| Allowance for loan losses | | | 9,536 | | | | 9,836 | | | | 9,591 | | | | 8,867 | | | | 8,770 | |
_________________
Mr. Weagley noted that “We continued to take aggressive action to resolve and contain problem assets.” During the third quarter of 2011, $0.9 million of problem loans returned to performing status. However, $5.0 million of performing loans went non-accrual during the third quarter of 2011 after considering $0.9 million of charge offs associated with them. Despite sporadic legacy issues within the portfolio, we are well positioned from an asset quality perspective with continued improving trends and moreover we are focused on moving languishing foreclosures to close, which will significantly decrease our level of non-performers as we dispose of properties.” $1.5 million of the increase in non-accrual loans was represented by residential mortgage loans and as described in more detail below a $3.5 million participation loan was placed into non-accrual on September 30, 2011. In a subsequent event the investor group received a deed in lieu of foreclosure and the Corporation placed its pro rata share of that property into OREO on October 5, 2011.
Non-accrual loans increased from $10.1 million at June 30, 2011 to $14.1 million at September 30, 2011. Loans past due 90 days or more and still accruing decreased from $1,013,000 at June 30, 2011 to $451,000 at September 30, 2011. Other real estate owned (OREO) at September 30, 2011 was $0. Troubled debt restructured loans, which are performing loans, increased from $8.2 million at June 30, 2011 to $8.9 million at September 30, 2011. Interest income lost on loans placed into non-accrual during the three and nine months ended September 30, 2011 amounted to $210,000 and $534,000, respectively.
At September 30, 2011, non-performing assets totaled $14.9 million, or 1.08% of total assets, as compared with $11.9 million, or 0.98%, at December 31, 2010 and $13.7 million, or 1.12%, at September 30, 2010. The increase from December 31, 2010 was attributable to the addition of several new residential loans (totaling approximately $3.4 million) and commercial loans (totaling approximately $6.0 million) into non-performing status. This was partially offset by decreases from pay-downs of $2.4 million, total charge-offs of $1.8 million of existing loans, the transfer to performing troubled debt restructured from non-accrual status of $1.6 million and transfer to performing status of $0.5 million. The other non-performing asset represents a tax lien assignment related to the Highlands participation loan.
The allowance for loan losses at September 30, 2011 amounted to approximately $9.5 million, or 1.32% of total loans, compared to 1.25% of total loans at September 30, 2010. The allowance for loan losses as a percentage of total non-performing loans was 65.6% at September 30, 2011 compared to 74.7% at September 30, 2010.
A discussion of the significant components of non-performing assets at September 30, 2011 is outlined below.
| · | Two non-accrual relationships totaling $2,111,000 and $614,000, respectively, secured by senior liens on three separate residential properties, located in Morris and Somerset counties in New Jersey, respectively, are currently in foreclosure; no loss to the Corporation is anticipated,although no assurance can be made with respect to the outcome at this time. |
| · | A $2.2 million nonaccrual loan, secured by a commercial property located in Essex County, New Jersey, represents an expired participation with Highlands State Bank. The Corporation continues to aggressively pursue litigation in this matter. |
| · | Collection of a $3.0 million non-accrual participation loan secured by an operating oceanfront property in Nassau County, NY, has been stalled due to the borrower’s third quarter 2011 bankruptcy filing. Counsel representing the interests of all participant banks has filed a motion to convert the bankruptcy case to a liquidation matter. There were multiple prospective purchasers previously interested in purchasing this asset that may still have an interest in doing so. No assurance can be made with respect to the outcome at this time. |
| · | A $3.5 million participation loan secured by an office property in Union County, New Jersey went non-accrual on September 30, 2011after the borrower informed the lead bank that it had no intention of making any additional loan payments. Subsequently the bank group received a deed in lieu of foreclosure on October 5, 2011. The Corporation has taken its pro rata share into OREO on that date. The property is a 42,000 square foot two story office building. In October 2011 the property was listed for sale with a commercial brokerage firm and although no assurances can be made as to the disposition of the property, the Corporation feels confident that the property will be sold over the next six months. In the interim, this partially tenanted property does have cash flow that is expected to contribute significantly to defraying the building’s normal operating expenses. |
Capital
On September 15, 2011, the Corporation issued $11.25 million in nonvoting senior preferred stock to the Treasury under the Small Business Lending Fund Program (“SBLF Program”). Under the Securities Purchase Agreement, the Corporation issued to the Treasury a total of 11,250 shares of the Corporation’s Senior Non-Cumulative Perpetual Preferred Stock, Series B, having a liquidation value of $1,000 per share. Simultaneously, using the proceeds from the issuance of the SBLF Preferred Stock, the Corporation redeemed from the Treasury, all 10,000 outstanding shares of its Fixed Rate Cumulative Perpetual Preferred Stock, Series A, liquidation amount $1,000 per share, for a redemption price of $10,041,667, including accrued but unpaid dividends up to the date of redemption. The investment in the SBLF program provides the Corporation with approximately $1.25 million additional Tier 1 capital. The capital we received under the program will allow us to continue to serve our small business clients through the commercial lending program.
At September 30, 2011, total stockholders' equity amounted to $133.8 million, or 9.72% of total assets. Tangible common stockholders' equity was $105.9 million, or 7.79% of tangible assets, compared to 7.93% at September 30, 2010. Book value per common share was $7.54 at September 30, 2011, compared to $6.90 at September 30, 2010. Tangible book value per common share was $6.50 at September 30, 2011 compared to $5.86 at September 30, 2010.
At September 30, 2011, the Corporation’s Tier 1 leverage capital ratio was 9.51%, the Tier 1 risk-based capital ratio was 12.37% and the total risk-based capital ratio was 13.31%. Tier 1 capital increased to approximately $126.0 million at September 30, 2011 from $112.3 million at September 30, 2010, reflecting the proceeds from the Corporation’s common stock offerings in 2010 and increases in retained earnings.
At September 30, 2011, the Corporation's capital ratios continued to exceed the minimum Federal requirements for a bank holding company, and Union Center National Bank's capital ratios continued to exceed each of the minimum levels required for classification as a "well capitalized institution" under the Federal Deposit Insurance Corporation Improvement Act ("FDICIA").
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 which may be 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 tables present a reconciliation of average tangible stockholders’ equity and a reconciliation of return on average tangible stockholders’ equity for the periods presented.
| (dollars in thousands) | | | | | | | | | | | | | | | |
| For the quarter ended: | | 9/30/11 | | | 6/30/11 | | | 3/31/11 | | | 12/31/10 | | | 9/30/10 | |
| Net income | | $ | 3,702 | | | $ | 3,584 | | | $ | 3,018 | | | $ | 2,570 | | | $ | 2,139 | |
| Average stockholders’ equity | | $ | 133,151 | | | $ | 128,391 | | | $ | 122,492 | | | $ | 123,218 | | | $ | 110,544 | |
Less: Average goodwill and other intangible assets | | | 16,922 | | | | 16,936 | | | | 16,952 | | | | 16,968 | | | | 16,984 | |
| Average tangible stockholders’ equity | | $ | 116,229 | | | $ | 111,455 | | | $ | 105,540 | | | $ | 106,250 | | | $ | 93,560 | |
| | | | | | | | | | | | | | | | | | | | | |
| Return on average stockholders’ equity | | | 11.12 | % | | | 11.17 | % | | | 9.86 | % | | | 8.34 | % | | | 7.74 | % |
Add: Average goodwill and other intangible assets | | | 1.62 | % | | | 1.70 | % | | | 1.58 | % | | | 1.34 | % | | | 1.40 | % |
| Return on average tangible stockholders’ equity | | | 12.74 | % | | | 12.86 | % | | | 11.44 | % | | | 9.68 | % | | | 9.14 | % |
“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 tables present a reconciliation of 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: | | 9/30/11 | | | 6/30/11 | | | 3/31/11 | | | 12/31/10 | | | 9/30/10 | |
| Common shares outstanding | | | 16,290,700 | | | | 16,290,700 | | | | 16,290,700 | | | | 16,289,832 | | | | 16,289,832 | |
| Stockholders’ equity | | $ | 133,808 | | | $ | 130,104 | | | $ | 124,584 | | | $ | 120,957 | | | $ | 122,157 | |
| Less: Preferred stock | | | 11,012 | | | | 9,741 | | | | 9,721 | | | | 9,700 | | | | 9,680 | |
| Less: Goodwill and other intangible assets | | | 16,915 | | | | 16,927 | | | | 16,942 | | | | 16,958 | | | | 16,974 | |
| Tangible common stockholders’ equity | | $ | 105,881 | | | $ | 103,436 | | | $ | 97,921 | | | $ | 94,299 | | | $ | 95,503 | |
| | | | | | | | | | | | | | | | | | | | | |
| Book value per common share | | $ | 7.54 | | | $ | 7.39 | | | $ | 7.05 | | | $ | 6.83 | | | $ | 6.90 | |
| Less: Goodwill and other intangible assets | | | 1.04 | | | | 1.04 | | | | 1.04 | | | | 1.04 | | | | 1.04 | |
| Tangible book value per common share | | $ | 6.50 | | | $ | 6.35 | | | $ | 6.01 | | | $ | 5.79 | | | $ | 5.86 | |
"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 tables present a reconciliation of total assets to tangible assets and 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: | | 9/30/11 | | | 6/30/11 | | | 3/31/11 | | | 12/31/10 | | | 9/30/10 | |
| Total assets | | $ | 1,376,517 | | | $ | 1,307,438 | | | $ | 1,288,646 | | | $ | 1,207,385 | | | $ | 1,221,278 | |
| Less: Goodwill and other intangible assets | | | 16,915 | | | | 16,927 | | | | 16,942 | | | | 16,958 | | | | 16,974 | |
| Tangible assets | | $ | 1,359,602 | | | $ | 1,290,511 | | | $ | 1,271,704 | | | $ | 1,190,427 | | | $ | 1,204,304 | |
| | | | | | | | | | | | | | | | | | | | | |
| Total stockholders' equity / total assets | | | 9.72 | % | | | 9.95 | % | | | 9.67 | % | | | 10.02 | % | | | 10.00 | % |
| Tangible common stockholders' equity / tangible assets | | | 7.79 | % | | | 8.02 | % | | | 7.70 | % | | | 7.92 | % | | | 7.93 | % |
Other income is presented in the table below including and excluding net securities gains. We believe that many investors desire to evaluate other income without regard for securities gains.
| (in thousands) | | | | | | | | | | | | | | | |
| For the quarter ended: | | 9/30/11 | | | 6/30/11 | | | 3/31/11 | | | 12/31/10 | | | 9/30/10 | |
| Other income | | $ | 2,283 | | | $ | 1,732 | | | $ | 1,597 | | | $ | 1,304 | | | $ | 2,135 | |
| Less: Net investment securities gains | | | 1,250 | | | | 801 | | | | 766 | | | | 315 | | | | 1,033 | |
| Other income, excluding net investment securities gains | | $ | 1,033 | | | $ | 931 | | | $ | 831 | | | $ | 989 | | | $ | 1,102 | |
“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 securities gains, calculated as follows:
| (dollars in thousands) | | | | | | | | | | | | | | | |
| For the quarter ended: | | 9/30/11 | | | 6/30/11 | | | 3/31/11 | | | 12/31/10 | | | 9/30/10 | |
| Other expense | | $ | 5,529 | | | $ | 5,757 | | | $ | 5,935 | | | $ | 5,997 | | | $ | 5,442 | |
| | | | | | | | | | | | | | | | | | | | | |
| Net interest income (tax equivalent basis) | | $ | 10,130 | | | $ | 9,974 | | | $ | 9,990 | | | $ | 8,394 | | | $ | 8,393 | |
| Other income, excluding net investment securities gains | | | 1,033 | | | | 931 | | | | 831 | | | | 989 | | | | 1,102 | |
| Total | | $ | 11,163 | | | $ | 10,905 | | | $ | 10,821 | | | $ | 9,383 | | | $ | 9,495 | |
| | | | | | | | | | | | | | | | | | | | | |
| Efficiency ratio | | | 49.5 | % | | | 52.8 | % | | | 54.8 | % | | | 63.9 | % | | | 57.3 | % |
Condensed Consolidated Average Statements of Condition (unaudited) | |
| | | | |
| (in thousands) | | | |
| For the quarter ended: | | 9/30/11 | | | 6/30/11 | | | 3/31/11 | | | 12/31/10 | | | 9/30/10 | |
| Investment securities | | | | | | | | | | | | | | | |
| Available for sale | | $ | 365,422 | | | $ | 390,391 | | | $ | 410,014 | | | $ | 362,312 | | | $ | 301,316 | |
| Held to maturity | | | 71,789 | | | | 38,985 | | | | — | | | | — | | | | — | |
| Loans | | | 707,935 | | | | 701,056 | | | | 716,568 | | | | 692,166 | | | | 715,849 | |
| Allowance for loan losses | | | (10,383 | ) | | | (9,601 | ) | | | (9,139 | ) | | | (8,843 | ) | | | (8,738 | ) |
| All other assets | | | 206,857 | | | | 180,753 | | | | 111,688 | | | | 149,377 | | | | 180,974 | |
| Total assets | | $ | 1,341,620 | | | $ | 1,301,584 | | | $ | 1,229,131 | | | $ | 1,195,012 | | | $ | 1,189,401 | |
| Non interest-bearing deposits | | $ | 161,744 | | | $ | 157,002 | | | $ | 152,074 | | | $ | 151,038 | | | $ | 142,829 | |
| Interest-bearing deposits | | | 838,508 | | | | 805,752 | | | | 737,196 | | | | 697,619 | | | | 685,830 | |
| Borrowings | | | 199,747 | | | | 202,902 | | | | 213,664 | | | | 216,483 | | | | 238,266 | |
| Other liabilities | | | 8,470 | | | | 7,537 | | | | 3,705 | | | | 6,654 | | | | 11,932 | |
| Stockholders’ equity | | | 133,151 | | | | 128,391 | | | | 122,492 | | | | 123,218 | | | | 110,544 | |
| Total liabilities and stockholders’ equity | | $ | 1,341,620 | | | $ | 1,301,584 | | | $ | 1,229,131 | | | $ | 1,195,012 | | | $ | 1,189,401 | |
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 in the state and 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 Wealth Management Division, which includes its wholly-owned subsidiary, Center Financial Group LLC, provides financial services including brokerage services, insurance and annuities, mutual funds, financial planning, estate and tax planning, trust, elder care and benefit plan administration.
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 Union and Morris Counties, New Jersey, the Corporation has expanded to northern and central New Jersey. At September 30, 2011, the Corporation had total assets of $1.4 billion, total deposits of $1.1 billion and stockholders’ equity of $133.8 million. For further information regarding Center Bancorp, Inc., please visit our web site at http://www.centerbancorp.com or call (800) 862-3683. For information regarding Union Center National Bank, please visit our web site at
Forward-Looking Statements
All non-historical statements in this press release (including statements regarding the Corporation’s positioning for the future, the ability of the Corporation to absorb excess cash through its loan pipelines, lending opportunities, the impact of the Corporation’s client relationships on loan growth, the timing for funding of “Approved, Accepted but Unfunded” commitments, the ability of the Corporation to control operating overhead, margins and credit exposures in the future, the ability of the Corporation to grow and build shareholder value, future credit trends, future levels of non-performing assets, the results of pending foreclosure actions, actual losses to be taken on non-performing assets, other dispositions of properties included in OREO or subject to non-performing loans, the ability of cash flows on such properties to defray related operating expenses and the Corporation’s ability to take advantage of the benefits under the SBLF program) 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, 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.
CENTER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION
(Unaudited)
(in thousands, except for share data) | | September 30, 2011 | | December 31, 2010 | |
| | | | | | | |
| ASSETS | | | | | | |
| Cash and due from banks | | $ | 113,080 | | | $ | 37,497 | |
| Investment securities | | | | | | | | |
| Available for sale | | | 388,858 | | | | 378,080 | |
| Held to maturity (fair value of $72,371 in 2011 and $0 in 2010) | | | 70,142 | | | | — | |
| Loans | | | 721,608 | | | | 708,444 | |
| Less: Allowance for loan losses | | | 9,536 | | | | 8,867 | |
| Net loans | | | 712,072 | | | | 699,577 | |
| Restricted investment in bank stocks, at cost | | | 9,194 | | | | 9,596 | |
| Premises and equipment, net | | | 12,386 | | | | 12,937 | |
| Accrued interest receivable | | | 5,616 | | | | 4,134 | |
| Bank-owned life insurance | | | 28,685 | | | | 27,905 | |
| Goodwill | | | 16,804 | | | | 16,804 | |
| Prepaid FDIC assessments | | | 2,048 | | | | 3,582 | |
| Other assets | | | 17,632 | | | | 17,273 | |
| Total assets | | $ | 1,376,517 | | | $ | 1,207,385 | |
| | | | | | | | | |
| LIABILITIES | | | | | | | | |
| Deposits: | | | | | | | | |
| Non-interest bearing | | $ | 161,340 | | | $ | 144,210 | |
| Interest-bearing: | | | | | | | | |
| Time deposits $100 and over | | | 141,421 | | | | 119,651 | |
| Interest-bearing transaction, savings and time deposits $100 and less | | | 757,261 | | | | 596,471 | |
| Total deposits | | | 1,060,022 | | | | 860,332 | |
| Short-term borrowings | | | - | | | | 41,855 | |
| Long-term borrowings | | | 161,000 | | | | 171,000 | |
| Subordinated debentures | | | 5,155 | | | | 5,155 | |
| Accounts payable and accrued liabilities | | | 13,533 | | | | 8,086 | |
| Due to brokers for investment securities | | | 2,999 | | | | - | |
| Total liabilities | | | 1,242,709 | | | | 1,086,428 | |
| | | | | | | | | |
| STOCKHOLDERS’ EQUITY | | | | | | | | |
| Preferred stock, $1,000 liquidation value per share, authorized 5,000,000 shares; issued 11,250 shares at September 30, 2011 and 10,000 shares at December 31, 2010 | | | 11,012 | | | | 9,700 | |
| Common stock, no par value, authorized 25,000,000 shares; issued 18,477,412 shares at September 30, 2011 and December 31, 2010; outstanding 16,290,700 shares at September 30, 2011 and 16,289,832 shares at December 31, 2010 | | | 110,056 | | | | 110,056 | |
| Additional paid in capital | | | 4,968 | | | | 4,941 | |
| Retained earnings | | | 30,028 | | | | 21,633 | |
| Treasury stock, at cost (2,186,712 common shares at September 30, 2011 and 2,187,580 common shares at December 31, 2010) | | | (17,691 | ) | | | (17,698 | ) |
| Accumulated other comprehensive loss | | | (4,565 | ) | | | (7,675 | ) |
| Total stockholders’ equity | | | 133,808 | | | | 120,957 | |
| Total liabilities and stockholders’ equity | | $ | 1,376,517 | | | $ | 1,207,385 | |
CENTER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
| | | Three Months Ended September 30, | | | Nine Months Ended September 30, | |
| (in thousands, except for share data) | | 2011 | | | 2010 | | | 2011 | | | 2010 | |
| | | | | | | | | | | | | |
| Interest income | | | | | | | | | | | | |
| Interest and fees on loans | | $ | 8,956 | | | $ | 9,378 | | | $ | 27,123 | | | $ | 28,165 | |
| Interest and dividends on investment securities: | | | | | | | | | | | | | | | | |
| Taxable | | | 3,273 | | | | 2,464 | | | | 10,079 | | | | 8,337 | |
| Tax-exempt | | | 544 | | | | 21 | | | | 983 | | | | 194 | |
| Dividends | | | 146 | | | | 172 | | | | 479 | | | | 499 | |
| Total interest income | | | 12,919 | | | | 12,035 | | | | 38,664 | | | | 37,195 | |
| Interest expense | | | | | | | | | | | | | | | | |
| Interest on certificates of deposit $100 or more | | | 332 | | | | 282 | | | | 945 | | | | 1,036 | |
| Interest on other deposits | | | 1,059 | | | | 1,213 | | | | 3,133 | | | | 3,712 | |
| Interest on borrowings | | | 1,678 | | | | 2,158 | | | | 4,998 | | | | 6,899 | |
| Total interest expense | | | 3,069 | | | | 3,653 | | | | 9,076 | | | | 11,647 | |
| Net interest income | | | 9,850 | | | | 8,382 | | | | 29,588 | | | | 25,548 | |
| Provision for loan losses | | | 1,020 | | | | 1,307 | | | | 2,148 | | | | 3,028 | |
| Net interest income after provision for loan losses | | | 8,830 | | | | 7,075 | | | | 27,440 | | | | 22,520 | |
| Other income | | | | | | | | | | | | | | | | |
| Service charges, commissions and fees | | | 504 | | | | 535 | | | | 1,414 | | | | 1,424 | |
| Annuities and insurance commissions | | | 42 | | | | 3 | | | | 81 | | | | 119 | |
| Bank-owned life insurance | | | 260 | | | | 429 | | | | 781 | | | | 957 | |
| Other | | | 227 | | | | 135 | | | | 519 | | | | 322 | |
| Other-than-temporary impairment losses on investment securities | | | (66 | ) | | | (23 | ) | | | (303 | ) | | | (8,495 | ) |
| | | | | | | | | | | | | | | | | |
| Portion of losses recognized in other comprehensive income, before taxes | | | — | | | | — | | | | — | | | | 3,377 | |
| Net other-than-temporary impairment losses on investment securities | | | (66 | ) | | | (23 | ) | | | (303 | ) | | | (5,118 | ) |
| Net gains on sale of investment securities | | | 1,316 | | | | 1,056 | | | | 3,120 | | | | 3,464 | |
| Net investment securities gains (losses) | | | 1,250 | | | | 1,033 | | | | 2,817 | | | | (1,654 | ) |
| Total other income | | | 2,283 | | | | 2,135 | | | | 5,612 | | | | 1,168 | |
| Other expense | | | | | | | | | | | | | | | | |
| Salaries and employee benefits | | | 2,848 | | | | 2,721 | | | | 8,618 | | | | 8,106 | |
| Occupancy and equipment | | | 713 | | | | 754 | | | | 2,246 | | | | 2,377 | |
| FDIC insurance | | | 328 | | | | 510 | | | | 1,384 | | | | 1,586 | |
| Professional and consulting | | | 319 | | | | 153 | | | | 805 | | | | 849 | |
| Stationery and printing | | | 73 | | | | 68 | | | | 273 | | | | 242 | |
| Marketing and advertising | | | 30 | | | | 36 | | | | 116 | | | | 234 | |
| Computer expense | | | 300 | | | | 320 | | | | 989 | | | | 1,001 | |
| Other real estate owned, net | | | — | | | | 20 | | | | (1 | ) | | | 63 | |
| Loss on fixed assets, net | | | — | | | | — | | | | — | | | | 427 | |
| Repurchase agreement termination fee | | | — | | | | — | | | | — | | | | 594 | |
| Other | | | 918 | | | | 860 | | | | 2,791 | | | | 2,622 | |
| Total other expense | | | 5,529 | | | | 5,442 | | | | 17,221 | | | | 18,101 | |
| Income before income tax expense | | | 5,584 | | | | 3,768 | | | | 15,831 | | | | 5,587 | |
| Income tax expense | | | 1,882 | | | | 1,629 | | | | 5,527 | | | | 1,153 | |
| Net Income | | | 3,702 | | | | 2,139 | | | | 10,304 | | | | 4,434 | |
| Preferred stock dividends and accretion | | | 145 | | | | 146 | | | | 436 | | | | 437 | |
Net income available to common stockholders | | $ | 3,557 | | | $ | 1,993 | | | $ | 9,868 | | | $ | 3,997 | |
| Earnings per common share | | | | | | | | | | | | | | | | |
| Basic | | $ | 0.22 | | | $ | 0.14 | | | $ | 0.61 | | | $ | 0.27 | |
| Diluted | | $ | 0.22 | | | $ | 0.14 | | | $ | 0.61 | | | $ | 0.27 | |
| Weighted Average Common Shares Outstanding | | | | | | | | | | | | | | | | |
| Basic | | | 16,290,700 | | | | 14,649,397 | | | | 16,290,598 | | | | 14,599,919 | |
| Diluted | | | 16,313,366 | | | | 14,649,397 | | | | 16,310557 | | | | 14,601,478 | |
CENTER BANCORP, INC. AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL AND STATISTICAL DATA
(Unaudited)
| | | Three Months Ended | |
| (in thousands, except for share data) | | 9/30/2011 | | | 6/30/2011 | | | 9/30/2010 | |
| Statements of Income Data | | | | | | | | | |
| Interest income | | $ | 12,919 | | | $ | 12,878 | | | $ | 12,035 | |
| Interest expense | | | 3,069 | | | | 3,085 | | | | 3,653 | |
| Net interest income | | | 9,850 | | | | 9,793 | | | | 8,382 | |
| Provision for loan losses | | | 1,020 | | | | 250 | | | | 1,307 | |
| Net interest income after provision for loan losses | | | 8,830 | | | | 9,543 | | | | 7,075 | |
| Other income | | | 2,283 | | | | 1,732 | | | | 2,135 | |
| Other expense | | | 5,529 | | | | 5,757 | | | | 5,442 | |
| Income before income tax expense | | | 5,584 | | | | 5,518 | | | | 3,768 | |
| Income tax expense | | | 1,882 | | | | 1,934 | | | | 1,629 | |
| Net income | | $ | 3,702 | | | $ | 3,584 | | | $ | 2,139 | |
| Net income available to common stockholders | | $ | 3,557 | | | $ | 3,439 | | | $ | 1,993 | |
| Earnings per Common Share | | | | | | | | | | | | |
| Basic | | $ | 0.22 | | | $ | 0.21 | | | $ | 0.14 | |
| Diluted | | $ | 0.22 | | | $ | 0.21 | | | $ | 0.14 | |
| Statements of Condition Data (Period-End) | | | | | | | | | | | | |
| Investment securities | | | | | | | | | | | | |
| Available for sale | | $ | 388,858 | | | $ | 377,214 | | | $ | 362,683 | |
| Held for maturity( fair value $72,371, $42,122, and $0) | | | 70,142 | | | | 41,804 | | | | — | |
| Loans | | | 721,608 | | | | 698,148 | | | | 701,936 | |
| Assets | | | 1,376,517 | | | | 1,307,438 | | | | 1,221,278 | |
| Deposits | | | 1,060,022 | | | | 965,676 | | | | 836,902 | |
| Borrowings | | | 166,155 | | | | 198,529 | | | | 232,568 | |
| Stockholders' equity | | | 133,808 | | | | 130,104 | | | | 122,157 | |
| Common Shares Dividend Data | | | | | | | | | | | | |
| Cash dividends | | $ | 489 | | | $ | 489 | | | $ | 437 | |
| Cash dividends per share | | $ | 0.03 | | | $ | 0.03 | | | $ | 0.03 | |
| Dividend payout ratio | | | 13.75 | % | | | 14.22 | % | | | 21.93 | % |
| Weighted Average Common Shares Outstanding | | | | | | | | | | | | |
| Basic | | | 16,290,700 | | | | 16,290,700 | | | | 14,649,397 | |
| Diluted | | | 16,313,366 | | | | 16,315,667 | | | | 14,649,397 | |
| Operating Ratios | | | | | | | | | | | | |
| Return on average assets | | | 1.10 | % | | | 1.10 | % | | | 0.72 | % |
| Return on average equity | | | 11.12 | % | | | 11.17 | % | | | 7.74 | % |
| Return on average tangible equity | | | 12.74 | % | | | 12.86 | % | | | 9.14 | % |
| Average equity / average assets | | | 9.92 | % | | | 9.86 | % | | | 9.29 | % |
| Book value per common share (period-end) | | $ | 7.54 | | | $ | 7.39 | | | $ | 6.90 | |
| Tangible book value per common share (period-end) | | $ | 6.50 | | | $ | 6.35 | | | $ | 5.86 | |
| Non-Financial Information (Period-End) | | | | | | | | | | | | |
| Common stockholders of record | | | 570 | | | | 575 | | | | 592 | |
| Full-time equivalent staff | | | 161 | | | | 167 | | | | 165 | |
