Exhibit 99
Center Bancorp, Inc., Reports First Quarter Earnings
UNION, N.J.--(BUSINESS WIRE)--April 15, 2003--Center Bancorp Inc.
(NASDAQ, NM:CNBC) parent company to Union Center National Bank of
Union, New Jersey, today reported earnings results for the first
quarter ended March 31, 2003.
Net income for the first quarter of 2003 amounted to $1,686,000 or
$.40 per fully diluted share, a decrease of 17.1% or $349,000 from the
$2,035,000 or $.48 per fully diluted share earned for the comparable
quarter of the previous year. Basic earnings per share were $.40, a
decrease of 18.4% from $.49 earned in the first quarter of 2002.
The Corporation's earnings results for the first quarter of 2003
reflected a decline in revenue impacted by low interest rates, which
prevailed due to the weak economy and unsettled business climate.
Revenue growth declined due to a continued compression of net interest
margins as the Corporation maintained an asset sensitive position
established to position the balance sheet for future changes in rates.
This strategy impacted returns on earning-assets for the current
period. For the industry in general, shrinking margins, spurred by low
interest rates have overshadowed performance over the past year and
likely will continue to negatively impact earnings performance in
2003.
Total interest income, on a tax-equivalent basis, for the first
quarter of 2003, decreased $860,000 or 8.22%, over the comparable 2002
period. Total interest expense decreased by $442,000 over the same
period.
A decline in net interest margins was offset in part by strong
growth in non-interest revenue, which increased by 15.2 % for the
quarter and continues to be a strong contributing factor for
performance of the Corporation.
John J. Davis, President & CEO, stated that, "the Corporation
continues to seek strategic initiatives to develop new sources of
noninterest revenue to enhance current earnings and to create
long-term sustainable quality earnings performance." He further
indicated that the Bank completed the formation of a new investment
and insurance subsidiary, Center Insurance & Investment Advisers LLC.
The new subsidiary operating pursuant to a strategic third party
partnership will market and sell insurance and investment products. He
indicated that he anticipated the company to commence operations in
the second quarter.
Volume growth in both the loan and the investment securities
portfolios reduced the effects of the decline in yield earned on those
assets. During the first three months of 2003, the loan portfolio
increased on average $21.9 million, an increase of 10.3% from the
comparable period in 2002.
Despite the slowdown experienced in the economy, loan demand
continues to remain steady, fueled by the branch network expansion,
higher visibility in new markets, and a continued enhancement of
product lines to meet market demands and aggressive promotion of a
Home Equity Loan product.
While asset quality continues to remain high, during the first
quarter, additional provisions of approximately $80,000 were made to
the allowance for loan losses, to maintain adequate loan loss reserves
in relationship with loan portfolio growth.
The Corporation's investment securities portfolio increased on
average $74.2 million (up 16.1% over the comparable prior year
quarter). The increased securities portfolio largely reflects recent
execution of the Corporation's investment strategies in response to
the growth in average funding sources.
Average funding sources grew $99.8 million or 14.8%.
Interest-bearing liabilities increased $89.4 million on average during
the first quarter of 2003, as compared to the first quarter in 2002.
Total non-interest bearing core deposits increased $10.4 million
on average in the first quarter of 2003 in comparison to the
comparable quarter in 2002 and continue to be a low-cost source of
funding. At March 31, 2003 this source of funding amounted to $119.9
million or 14.7% of total funding sources and 20.7% of total deposits.
Net interest margins continued to come under pressure from the
prevailing low interest rate environment during the first quarter of
2003, contracting 73 basis points for the period as compared with the
same quarter in 2002.
The continued compression of net interest margins is a result of
the effects of falling interest rates and its effects on the asset
sensitivity maintained in the balance sheet coupled with low
replacements yields received on shorter duration additions made to the
earning-asset portfolio.
The net interest spread decreased 60 basis points in the first
quarter of 2003 to 3.07% from 3.67% for the comparable quarter in 2002
and decreased 8 basis points compared to the fourth quarter of 2002.
For the three months ended March 31, 2003 the net interest margin
(net interest income as a percentage of earning assets), decreased 73
basis points to 3.35% from 4.08% for the first quarter in 2002; and
decreased 10 basis points from 3.45% from the fourth quarter of 2002.
Other non-interest income, exclusive of gains on securities sold
(which increased $45,000) increased $79,000 or 12.6% for the first
quarter compared with the comparable quarter in 2002. Other
non-interest income, including gains on securities sold, increased
$124,000 or 15.2% for the first quarter of 2003 as compared with the
comparable quarter in 2002.
The increased revenue was primarily driven by the increase in
service charges commissions and fees and other fee income, the latter
of which is primarily comprised of fees related to the sale of
residential mortgage loans originated for sale in the secondary
market.
Operating overhead increased 6.24% year-to-date over the
comparative period and was primarily related to increased staffing
expense and increased premise expense associated with increased
maintenance costs incurred in the first quarter of 2003.
Total assets at March 31, 2003, were $875.9 million, an increase
of 21.5% from assets of $721.1 million at March 31, 2002. The
annualized return on average assets for the first quarter ended March
31, 2003, decreased to .81% as compared with 1.12% for the first
quarter of 2002.
The total Tier 1 capital ratio was 7.04% at March 31, 2003, as
compared to 7.33% for the comparable quarter in 2002. Total Tier I
capital amounted to approximately $58.2 million, and includes $10.0
million in Trust Preferred Securities issued on December 18, 2001.
Book value per common share was $12.40 as compared with $10.88 a year
ago.
Tangible book value per common share increased to $11.91 from
$10.38 a year ago. Annualized return on average stockholders' equity
for the first quarter ended March 31, 2003 was 13.1% compared to 17.6%
for the comparable quarter in 2002.
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 offices),
Berkeley Heights, Madison, Millburn/Vauxhall, Morristown (2
locations), Springfield, and Summit, New Jersey.
The Bank also operates a remote ATM location in Union Hospital in
Union. Union Center National Bank is the largest commercial Bank
headquartered in Union County; it 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 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.
These 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.
CENTER BANCORP, INC.
FINANCIAL HIGHLIGHTS (UNAUDITED)
For the 3 Months Ended
----------------------
3/31/03 3/31/02
Net Income $1,686,000 $2,035,000
Earning per Share
- -----------------
Basic $ 0.40 $ 0.49
Diluted $ 0.40 $ 0.48
Weighted Average Shares Outstanding
- -----------------------------------
Basic 4,220,311 4,173,165
Diluted 4,264,893 4,207,730
Consolidated Statements of Condition March 31, December 31,
(Dollars in thousands) 2003 2002
- ---------------------------------------------------------------------
(unaudited)
Assets:
Cash and due from banks $ 26,729 $ 23,220
Federal funds sold - 0
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Total cash and cash equivalents 26,729 23,220
Investment securities held to
maturity (approximate market value
of $230,027 in 2003 and $219,921
in 2002) 225,023 214,902
Investment securities
available-for-sale 346,040 322,717
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Total investment securities 571,063 537,619
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Loans, net of unearned income 243,530 229,051
Less - Allowance for loan losses 2,581 2,498
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Net loans 240,949 226,553
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Premises and equipment, net 13,190 12,976
Accrued interest receivable 4,913 4,439
Bank owned separate account life
insurance 14,323 14,143
Other assets 2,657 2,395
Goodwill 2,091 2,091
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Total assets 875,915 823,436
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Liabilities
Deposits:
Non-interest bearing $119,923 $116,984
Interest bearing:
Certificates of deposit $100,000 and over 46,092 33,396
Savings and time deposits 414,084 465,971
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Total deposits 580,099 616,351
Federal funds purchased and securities
sold under agreements to repurchase 135,000 65,000
Federal Home Loan Bank advances 92,294 75,431
Corporation - obligated Mandatorily
redeemable trust preferred securities
of subsidiary trust holding solely
junior subordinated debentures of
the Corporation 10,000 10,000
Accounts payable and accrued liabilities 6,126 5,600
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Total Liabilities 823,519 772,382
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Stockholders' equity:
Preferred Stock, No Par value,
Authorized 5,000,000 Shares;
None Issued 0 0
Common stock, no par value:
Authorized 20,000,000 shares;
issued 4,753,701 and
4,749,557 shares in 2003 and 2002,
respectively 19,089 18,984
Additional paid in capital 4,597 4,562
Retained earnings 30,812 29,863
Treasury stock at cost (526,835 and
539,202 shares in 2003
and 2002, respectively) (4,156) (4,254)
Restricted stock (28) (285)
Accumulated other comprehensive income 2,082 2,184
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Total stockholders' equity 52,396 51,054
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Total liabilities and stockholders' equity $875,915 $823,436
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Center Bancorp, Inc
Consolidated Statements of Income
(unaudited)
Three Months Ended
(Dollars in thousands) March 31,
- ---------------------------------------------------------------------
2003 2002
Interest income:
Interest and fees on loans $ 3,586 $ 3,673
Interest and dividends on
investment securities:
Taxable interest income 5,545 6,552
Nontaxable interest income 307 151
Interest on Federal funds sold and
securities purchased under agreement
to resell - 2
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Total interest income $ 9,438 $ 10,378
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Interest expense:
Interest on certificates of
deposit $100,000 or more 152 174
Interest on savings and time deposits 1,797 2,191
Interest on borrowings 1,286 1,312
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Total interest expense 3,235 3,677
Net interest income 6,203 6,701
Provision for loan losses 80 90
Net interest income after provision for loan
losses 6,123 6,611
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Other income:
Service charges, commissions and fees 417 379
Other income 111 70
BOLI 180 180
Gain on securities sold 231 186
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Total other income $ 939 $ 815
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Other expense:
Salaries and employee benefits 2,651 2,300
Occupancy expense, net 528 456
Premises and equipment expense 447 389
Stationery and printing expense 174 156
Marketing and advertising 177 193
Other expenses 756 961
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Total other expense $ 4,733 $ 4,455
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Income before income tax expense 2,329 2,971
Income tax expense 643 936
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Net income $ 1,686 $ 2,035
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Earnings per share
Basic $ 0.40 $ 0.49
Diluted $ 0.40 $ 0.48
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Average weighted common shares outstanding
Basic 4,220,311 4,173,165
Diluted 4,264,893 4,207,730
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Average Balance Sheet with Interest and Average Rates
Three Month
Period Ended March 31,
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2003 2002
- ----------------------------------------------------------------------
(tax-equivalent
basis, Interest Average Interest Average
dollars in Average Income/ Yield/ Average Income/ Yield/
thousands) Balance Expense Rate Balance Expense Rate
- ----------------------------------------------------------------------
Assets
Interest-earning
assets:
Investment
securities: (1)
Taxable $505,498 $5,545 4.45% $446,402 $ 6,552 5.95%
Non-taxable 28,185 465 6.60% 13,122 229 6.98%
Federal funds sold
and securities
purchased under
agreement to
resell - - 0.00% 642 2 1.26%
Loans, net of
unearned
income (2) 235,474 3,586 6.18% 213,528 3,673 6.98%
Total
interest-
earning
assets $769,157 9,596 5.06% $673,694 10,456 6.29%
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Non-interest earning
assets
Cash and due
from banks 22,895 17,914
BOLI 14,205 13,448
Other assets 26,168 22,571
Allowance for
possible
loan losses (2,533) (2,224)
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Total non-
interest
earning
assets 60,735 51,709
Total
assets $829,892 $725,403
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Liabilities and stockholders'
equity
Interest-bearing
liabilities:
Money Market
deposits $100,427 306 1.24% $108,315 524 1.96%
Savings
deposits 155,472 520 1.36% 155,362 873 2.28%
Time deposits 154,084 995 2.62% 100,329 752 3.04%
Other
interest -
bearing
deposits 72,235 128 0.72% 66,644 216 1.31%
Trust Preferred 10,000 125 5.00% 10,000 137 5.48%
Short-term
borrowings &
FHLB
advances 166,595 1,161 2.79% 128,777 1,175 3.65%
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Total
interest-
bearing
liabilities $658,813 3,235 1.99% $569,427 3,677 2.62%
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Non-interest-bearing
liabilities:
Demand deposits 113,996 103,538
Other
non-interest-
bearing
deposits 483 514
Other
liabilities 5,132 5,661
Total
non-interest-
bearing
liabilities 119,611 109,713
Stockholders'
equity 51,468 46,263
Total
liabilities
and
stockholders'
equity $829,892 $725,403
Net interest
income
(tax-equivalent
basis) $6,361 $ 6,779
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Net Interest Spread 3.07% 3.67%
Net interest income as
percent
of earning-assets 3.35% 4.08%
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Tax equivalent adjustment (158) (78)
Net interest income $6,203 $ 6,701
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(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: Center Bancorp Inc.
Anthony C. Weagley, 908/688-9500