CONTACT: ANTHONY C. WEAGLEY, VICE PRESIDENT & TREASURER
CENTER BANCORP, INC. REPORTS 33.1% INCREASE IN THIRD QUARTER 2004 EARNINGS
Union, NJ, October 28, 2004
UNION, N.J., October 28, 2004 -- Center Bancorp, Inc. (CNBC), parent company to
Union Center National Bank , today reported earnings results for the third
quarter ended September 30, 2004.
Net income for the third quarter of 2004 amounted to $2,017,000 or $.22 per
fully diluted common share, an increase of $502,000 or 33.1% over the $1,515,000
or $.17 per fully diluted common share earned for the comparable quarter of the
previous year.
Net income for the nine-months ended September 30, 2004 amounted to $5,523,000
or $.61 per fully diluted common share, an increase of $815,000 or 17.3% over
the $4,708,000 or $.52 per fully diluted common share earned for the comparable
nine-month period ended September 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.
"We are pleased with the continued positive results which were achieved in the
third quarter of 2004 and the positive trend throughout 2004", indicated John J.
Davis, President & CEO. "Growth trends for the Corporation continued in the
third quarter of 2004, with the loan portfolio reflecting healthy increases
while strong credit quality was maintained. We believe these positive
performance trends, together with increased interest income and a margin, which
has been on the rise since the end of the third quarter of 2003, should have a
continued visible impact on net income in 2004." Other areas, cited which
contributed to third 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.
Mr. Davis also commented on the benefits associated with the Company's September
29, 2004 sale of 888,888 shares of its common stock: "The recent stock issuance
will raise capital levels and should help to support our growth, which may
include branch expansion and the acquisition of non-bank financial services
companies. We additionally expect to continue to expand our commercial lending
business as we continue to see growing opportunities for commercial lending and
to hire seasoned lenders in our marketplace to support that business
opportunity."
Total interest income on a fully taxable-equivalent basis for the third quarter
of 2004 increased by $1,993,000 or 23.2% to $10.6 million, from the comparable
2003 period, while total interest expense increased by only $420,000 or 13.5%.
Total average loan volumes for the third quarter of 2004 increased to $370.6
million, an increase of $81.8 million (up 28.3% from $288.8 million for the
comparable prior year quarter). On a linked sequential quarter comparison, total
average loans increased by $9.0 million or 2.50% as compared to the second
quarter of 2004. The Corporation continues to experience loan demand in all
portfolio sectors. Demand for 1-4 family residential mortgages, fixed rate home
equity and commercial loans remained strong during the third quarter.
While asset quality remains strong, during the third 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 September 30, 2004, the total allowance for loan and lease
losses amounted to $3.6 million or .96% of total loans. We had no charge offs
during the third quarter of 2004, and year-to-date we have a net recovery to the
provision of $27,000.
Net interest margins for the third 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 September 30, 2004, the net interest margin
(net interest income as a percentage of earning assets), increased 56 basis
points to 3.23% from 2.67% for the third quarter in 2003; and increased 1, 3 and
9 basis points, respectively, in comparison to the second quarter of 2004, the
first quarter of 2004 and the fourth quarter of 2003, respectively.
Management believes that the margin can be maintained at or near the third
quarter 2004 level during the balance of 2004 and that continuing growth in the
loan portfolio, can be expected during the last three months of 2004, which
should help to support margins.
Other non-interest income, exclusive of gains on securities sold (which
increased $17,000 during the quarter) and nonrecurring other income of $97,000
recorded during the third quarter of 2003, increased $94,000 or 12.62% for the
third quarter compared with the comparable quarter in 2003. The change from the
comparable period in 2003 was driven primarily by sustained increased levels of
core service charges, commissions and fees derived from the check safe program
launched during the fourth quarter of 2003. After giving effect to gains on
securities sold and such death benefits, other non-interest income amounted to
$839,000 or an increase of 1.7% over the comparable quarter of 2003.
Total non interest expense in the third quarter of 2004 was $4.8 million, up
7.59% from the third quarter of 2003. Personnel-related expenses, the
Corporation's largest non-interest operating expense component, increased 7.1%
from a year ago, as a result of increased staffing levels, merit and promotional
pay increases and moderating employee related expenses offset in certain cases
by expense reductions, such as employee health insurance costs. Full time
equivalent staffing levels were 187 for the quarter compared to 181 in the third
quarter of 2003. The increase of 17.37% in occupancy and premises and equipment
in the third quarter of 2004 compared to the comparable quarter in 2003 was
attributable primarily to the new operations center which commenced operations
in October. The Corporation had purchased a 19,555 square foot facility in Union
Township on October 3, 2003 to serve as the Bank's new operations and data
center. The 3.86% increase in other expense was attributable to increased
computer, telephone, audit, legal, consulting and correspondent fees in 2004.
The effective tax rate continues to be less than the statutory rates
substantially as a result of tax free income generated from the Corporation's
municipal securities.
Total assets at September 30, 2004, reached $931.0 million, an increase of $73.8
million or 8.61% from assets of $857.2 million at September 30, 2003. Average
deposits increased $37.9 million or 6.55% for the three months ended September
30, 2004 as compared to the comparable period in 2003. The growth in average
deposits was reflected in core demand accounts, other interest bearing demand
and time deposits.
At September 30, 2004, the total Tier 1 capital leverage ratio was 8.56%, the
total Tier 1 Risk Based Capital ratio was 15.51% and the Total Risk Based
Capital ratio was 16.22%. Total Tier 1 capital increased to approximately $79.9
million at September 30, 2004 from $66.3 million at December 31, 2003. The
increase in Tier 1 capital reflects the issuance of 888,888 common shares to a
limited number of accredited investors in a private placement of the
Corporation's securities on September 29, 2004. These shares were issued at a
purchase price of $11.25 per share. Net proceeds to the holding company were
approximately $9.4 million, after commissions and expenses. The growth in Tier 1
capital also reflects the impact of the issuance of Trust Preferred Securities
in 2003. Book value per common share was $6.83 as compared with $5.77 a year
ago. Tangible book value per common share was at $6.62 as compared to $5.53 a
year ago. The change in book value for the period was impacted in part by a $1.5
million increase in "accumulated other comprehensive income" which primarily
reflects the effects of SFAS No. 115, which amounted to a $2.27 million change
in unrealized holding losses on the Corporation's securities available- for-
sale investment portfolio for the nine months ended September 30, 2004 as
compared with the comparable period ended September 30, 2003. Annualized return
on average stockholders' equity for the three months ended September 30, 2004
was 14.88% compared to 11.67% 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, 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" ~http://www.centerbancorp.com.
All non-historical statements in this press release (including statements
regarding future net interest margin, anticipated growth in the loan portfolio
and overall performance) constitute forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements may use such forward-looking terminology as "expect,"
"look," "believe," "plan," "anticipate," "may," "will" or similar statements or
variations of such terms or otherwise express views concerning trends and the
future. Such forward-looking statements involve certain risks and uncertainties.
These include, but are not limited to, the direction of interest rates,
continued levels of loan quality and origination volume, continued relationships
with major customers including sources for loans, as well as the effects of
international, national, regional and local economic conditions and legal and
regulatory barriers and structure, including those relating to the deregulation
of the financial services industry, and other risks cited in reports filed by
the Corporation with the Securities and Exchange Commission. Actual results may
differ materially from such forward-looking statements. Center Bancorp, Inc.
assumes no obligation for updating any such forward-looking statement at any
time.
CONSOLIDATED STATEMENTS OF CONDITION
September 30, December 31, September 30,
- ----------------------------------------------------------------------- -------------- ------------ -------------
(Dollars In Thousands) 2004 2003 2003
- ----------------------------------------------------------------------- -------------- ------------ -------------
(unaudited) (unaudited)
ASSETS
Cash and due from banks $17,257 $16,509 $25,344
Investment securities held to maturity (approximate market value of
$132,035 in 2004, $159,989 in Dec. 2003 and $172,365 in Sept. 2003) 127,899 155,149 167,578
Investment securities available-for-sale 364,623 364,085 321,420
- ----------------------------------------------------------------------- -------------- ------------ -------------
Total investment securities 492,522 519,234 488,998
Loans, net of unearned income 379,097 349,525 308,634
Less-Allowance for loan losses 3,644 3,002 2,751
- ----------------------------------------------------------------------- -------------- ------------ -------------
Net loans 375,453 346,523 305,883
Premises and equipment, net 16,933 15,610 13,499
Accrued interest receivable 4,943 4,485 4,952
Bank owned separate account life insurance 17,660 14,614 14,443
Other assets 4,106 2,758 1,941
Goodwill 2,091 2,091 2,091
- ----------------------------------------------------------------------- -------------- ------------ -------------
Total assets $930,965 $921,824 $857,151
======================================================================= ============== ============ =============
LIABILITIES
Deposits:
Non-interest bearing $124,746 $120,526 $124,236
Interest bearing:
Certificates of deposit $100,000 and over 91,354 58,245 49,083
Savings and time deposits 392,849 454,150 406,698
- ----------------------------------------------------------------------- -------------- ------------ -------------
Total deposits 608,949 632,921 580,017
Federal funds purchased and securities sold under agreements to
repurchase 132,360 99,724 87,195
Federal Home Loan Bank advances 100,000 115,000 125,000
Subordinated debentures 15,000 15,000 10,000
Accounts payable and accrued liabilities 6,943 4,999 3,554
- ----------------------------------------------------------------------- -------------- ------------ -------------
Total liabilities 863,252 867,644 805,766
- ----------------------------------------------------------------------- -------------- ------------ -------------
STOCKHOLDERS' EQUITY
Preferred Stock, no par value, Authorized 5,000,000 shares; None 0 0 0
Issued
Common stock, no par value: Authorized 20,000,000 shares; issued
10,919,418 in 2004, 10,003,580 at Dec. 2003 and 9,998,356 shares at
Sept. 2003, respectivel 30,326 19,405 19,317
Additional paid in capital 4,524 4,677 4,632
Retained earnings 35,900 33,268 32,323
Treasury stock at cost (1,009,055 in 2004, 1,059,138 at
Dec. 2003 and 1,088,949 shares at Sept. 2003, respectively) (3,783) (3,978) (4,091)
Restricted stock 0 (14) (14)
Accumulated other comprehensive income (loss) 746 822 (782)
- ----------------------------------------------------------------------- -------------- ------------ -------------
Total stockholders' equity 67,713 54,180 51,385
- ----------------------------------------------------------------------- -------------- ------------ -------------
Total liabilities and stockholders' equity $930,965 $921,824 $857,151
======================================================================= ============== ============ =============
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended Nine Months Ended
(Unaudited) September 30, September 30,
- ----------------------------------------------------- ---------- ------------ ----------- ------------
(In Thousands, Except Per Share Data) 2004 2003 2004 2003
- ----------------------------------------------------- ---------- ------------ ----------- ------------
Interest income:
Interest and fees on loans $4,705 $3,840 $13,571 $10,948
Interest and dividends on investment securities:
Taxable interest income 4,167 3,063 12,267 13,186
Non-taxable interest income 925 880 2,658 1,867
Dividends 324 369 927 665
- ----------------------------------------------------- ---------- ------------ ----------- ------------
Total interest income 10,121 8,152 29,423 26,666
- ----------------------------------------------------- ---------- ------------ ----------- ------------
Interest expense:
Interest on certificates of deposit $100,000 and over 345 117 538 355
Interest on other deposits 1,490 1,570 4,692 5,033
Interest on borrowings 1,696 1,424 4,721 4,165
- ----------------------------------------------------- ---------- ------------ ----------- ------------
Total interest expense 3,531 3,111 9,951 9,553
- ----------------------------------------------------- ---------- ------------ ----------- ------------
Net interest income 6,590 5,041 19,472 17,113
Provision for loan losses 205 103 615 262
- ----------------------------------------------------- ---------- ------------ ----------- ------------
Net interest income after provision for loan losses 6,385 4,938 18,857 16,851
- ----------------------------------------------------- ---------- ------------ ----------- ------------
Other income:
Service charges, commissions and fees 513 401 1,471 1,239
Other income 133 173 344 420
Annuity & Insurance 5 0 25 0
Bank Owned Life Insurance 188 268 546 627
Gain (Loss) on securities sold 0 (17) 157 220
- ----------------------------------------------------- ---------- ------------ ----------- ------------
Total other income 839 825 2,543 2,506
- ----------------------------------------------------- ---------- ------------ ----------- ------------
Other expense:
Salaries and employee benefits 2,685 2,507 7,963 7,834
Occupancy, net 455 393 1,477 1,365
Premises and equipment 457 384 1,377 1,278
Stationery and printing 127 131 423 436
Marketing and advertising 112 120 408 409
Other 914 880 2,997 2,439
- ----------------------------------------------------- ---------- ------------ ----------- ------------
Total other expense 4,750 4,415 14,645 13,761
- ----------------------------------------------------- ---------- ------------ ----------- ------------
Income before income tax expense 2,474 1,348 6,755 5,596
Income tax expense 457 (167) 1,232 888
- ----------------------------------------------------- ---------- ------------ ----------- ------------
Net income $2,017 $1,515 $5,523 $4,708
===================================================== ========== ============ =========== ============
Earnings per share:
Basic $0.22 $0. 17 $0.61 $0.53
Diluted $0.22 $0. 17 $0.61 $0.52
Weighted average common shares outstanding:
Basic 9,033,839 8,904,684 8,986,150 8,885,462
Diluted 9,076,188 8,999,418 9,045,639 8,979,165
===================================================== ========== ============ =========== ============
All per common share amounts have been adjusted retroactively for common stock
splits and common stock dividends impacting the periods presented.
AVERAGE STATEMENTS OF CONDITION WITH INTEREST AND AVERAGE RATES
Nine Month Period Ended September 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 $ 411,559 $13,194 4.27% $ 480,843 $ 13,851 3.84%
Non-taxable 91,973 4,027 5.84% 63,548 2,829 5.94%
Loans, net of unearned income (2) 360,002 13,571 5.03% 258,070 10,948 5.66%
- ----------------------------------------------------- ------------ ----------- --------- ----------- ------------ ---------
Total interest-earning assets $863,534 30,792 4.75% $802,461 27,628 4.59%
===================================================== ============ =========== ========= =========== ============ =========
Non-interest earning assets
Cash and due from banks 19,477 21,961
BOLI 16,562 14,350
Other assets 27,320 27,698
Allowance for possible loan losses (3,310) (2,608)
- ----------------------------------------------------- ------------ ----------- --------- ----------- ------------ ---------
Total non-interest earning assets 60,049 61,401
- ----------------------------------------------------- ------------ ----------- --------- ----------- ------------ ---------
Total assets $923,583 $863,862
===================================================== ============ =========== ========= =========== ============ =========
Liabilities and stockholders' equity
Interest-bearing liabilities:
Money market deposits $ 97,195 728 1.00% $93,063 779 1.12%
Savings deposits 141,663 1,027 0.97% 155,416 1,462 1.25%
Time deposits 165,898 3,157 2.54% 144,540 2,836 2.62%
Other interest - bearing deposits 73,856 318 0.57% 69,448 311 0.60%
Short-term Borrowings 243,122 4,186 2.30% 215,247 3,798 2.35%
Subordinated Debentures 15,000 535 4.76% 10,000 367 4.89%
- ----------------------------------------------------- ------------ ----------- --------- ----------- ------------ ---------
Total interest-bearing liabilities 736,734 9,951 1.80% 687,714 9,553 1.85%
===================================================== ============ =========== ========= =========== ============ =========
Non-interest-bearing liabilities:
- ----------------------------------------------------- ------------ ----------- --------- ----------- ------------ ---------
Demand deposits 126,056 118,736
Other non-interest-bearing deposits 906 452
Other liabilities 5,407 4,852
- ----------------------------------------------------- ------------ ----------- --------- ----------- ------------ ---------
Total non-interest-bearing liabilities 132,369 124,040
- ----------------------------------------------------- ------------ ----------- --------- ----------- ------------ ---------
Stockholders' equity 54,480 52,108
- ----------------------------------------------------- ------------ ----------- --------- ----------- ------------ ---------
Total liabilities and stockholders' equity $923,583 $863,862
- ----------------------------------------------------- ------------ ----------- --------- ----------- ------------ ---------
Net interest income (tax-equivalent basis) $20,841 $18,075
- ----------------------------------------------------- ------------ ----------- --------- ----------- ------------ ---------
Net Interest Spread 2.95% 2.74%
- ----------------------------------------------------- ------------ ----------- --------- ----------- ------------ ---------
Net interest income as percent
of earning-assets (net interest margin) 3.22% 3.00%
- ----------------------------------------------------- ------------ ----------- --------- ----------- ------------ ---------
Tax equivalent adjustment (3) (1,369) (962)
- ----------------------------------------------------- ------------ ----------- --------- ----------- ------------ ---------
Net interest income $19,472 $17,113
===================================================== ============ =========== ========= =========== ============ =========
(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 September 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 $409,360 $4,491 4.39% $ 438,432 $ 3,432 3.13%
Non-taxable 94,303 1,402 5.95% 96,115 1,333 5.55%
Loans, net of unearned income (2) 370,562 4,705 5.08% 288,810 3,840 5.32%
- ----------------------------------------------------- ------------ ----------- --------- ----------- ----------- --------
Total interest-earning assets 874,225 10,598 4.85% $823,357 8,605 4.18%
- ----------------------------------------------------- ------------ ----------- --------- ----------- ----------- --------
Non-interest earning assets
Cash and due from banks 18,759 22,068
BOLI 17,551 14,446
Other assets 28,119 29,549
Allowance for possible loan losses (3,519) (2,680)
- ----------------------------------------------------- ------------ ----------- --------- ----------- ----------- --------
Total non-interest earning assets 60,910 63,383
- ----------------------------------------------------- ------------ ----------- --------- ----------- ----------- --------
Total assets $935,135 $886,740
===================================================== ============ =========== ========= =========== =========== ========
Liabilities and stockholders' equity
Interest-bearing liabilities:
Money market deposits $ 88,863 230 1.04% $88,561 209 0.94%
Savings deposits 137,358 335 0.98% 153,381 423 1.10%
Time deposits 188,675 1,144 2.43% 145,831 969 2.66%
Other interest - bearing deposits 73,508 126 0.69% 68,686 86 0.50%
Short-term Borrowings 244,704 1,503 2.46% 242,338 1,304 2.15%
Subordinated Debentures 15,000 193 5.15% 10,000 120 4.80%
- ----------------------------------------------------- ------------ ----------- --------- ----------- ----------- --------
Total interest-bearing 748,108 3,531 1.89% 708,797 3,111 1.76%
- ----------------------------------------------------- ------------ ----------- --------- ----------- ----------- --------
Non-interest-bearing liabilities:
- ----------------------------------------------------- ------------ ----------- --------- ----------- ----------- --------
Demand deposits 127,616 121,518
Other non-interest-bearing deposits 285 422
Other liabilities 4,915 4,066
- ----------------------------------------------------- ------------ ----------- --------- ----------- ----------- --------
Total non-interest-bearing liabilities 132,816 126,006
- ----------------------------------------------------- ------------ ----------- --------- ----------- ----------- --------
Stockholders' equity 54,211 51,937
- ----------------------------------------------------- ------------ ----------- --------- ----------- ----------- --------
Total liabilities and stockholders' equity $935,135 $886,740
- ----------------------------------------------------- ------------ ----------- --------- ----------- ----------- --------
Net interest income (tax-equivalent basis) $7,067 $5,494
- ----------------------------------------------------- ------------ ----------- --------- ----------- ----------- --------
Net Interest Spread 2.96% 2.42%
- ----------------------------------------------------- ------------ ----------- --------- ----------- ----------- --------
Net interest income as percent
of earning-assets (net interest margin) 3.23% 2.67%
- ----------------------------------------------------- ------------ ----------- --------- ----------- ----------- --------
Tax equivalent adjustment (3) (477) (453)
- ----------------------------------------------------- ------------ ----------- --------- ----------- ----------- --------
Net interest income $6,590 $5,041
===================================================== ============ =========== ========= =========== =========== ========
(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