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For the nine months ended September 30, 2009, net income amounted to $3.5 million, or $0.24 per fully diluted common share, as compared to $4.1 million, or $0.32 per fully diluted common share, for the same period in 2008.
President & CEO's Remarks
Anthony C. Weagley, CEO, commented: "We improved core earnings during the quarter which helped to fortify our existing capital position. Our net income of $1.5 million in the quarter reflected the strong earnings base of the company, specifically on a core analysis with improved asset mix and solid margins. This translates into overall improved balance sheet trends. Loans continued to reflect growth with commercial and commercial real estate demand comprising the principal areas of growth. As we move forward, our focus will remain on preserving and growing our core business, and providing sound, prudent management of the Corporation with emphasis on credit quality."
In looking at the outlook for Center, Mr. Weagley remarked: "While we continue to see an improvement in balance sheet strength and core earnings performance, we are still concerned with the credit stability of the broader markets. We are not yet certain when the economy will stabilize and credit trends will show signs of improvement, and therefore have continued to take steps to strengthen the balance sheet through our capital position and underlying core earnings power. These core competencies along with the organic growth in our franchise that is occurring should enable us to continue to invest in our businesses, building sustained shareholder value."
"Certain credit quality indicators moderated during the period, reflected in reduced net charge-offs and other real estate owned (OREO) compared to the previous quarter in 2009. At September 30, 2009, non-performing assets totaled $13.9 million, or 1.03% of total assets, as compared with $10.8 million, or 0.80%, at June 30, 2009 and $0.7 million, or 0.06%, at September 30, 2008. We remain cautiously optimistic on market trends and resulting challenges in the months ahead."
"As previously announced, we are also pleased to report that in October, Center Bancorp successfully raised total gross proceeds of approximately $11 million in its rights offering and private placement with its standby purchaser. The Corporation intends to use the net proceeds of the rights offering to commence repurchase of the preferred stock and warrants to purchase common stock that the Corporation issued to the U.S. Department of Treasury in January 2009 under the TARP Capital Purchase Program," added Mr. Weagley.
Key items for the quarter include:
-- Net income of $1,535,000 for the third quarter of 2009 compared
with net income of $1,201,000 for the second quarter of 2009
and $1.5 million for the third quarter of 2008.
-- EPS of $0.11 per fully diluted common share compared with $0.08
per fully diluted common share for the second quarter of 2009
and $0.12 per fully diluted common share for the comparable
third quarter period of 2008. Dividends and accretion relating
to the preferred stock and warrants issued to the U.S. Treasury
reduced earnings by approximately $0.01 per fully diluted
common share during the third quarter of 2009.
-- Other real estate expense amounted to $30,000 for the third
quarter of 2009. The Corporation sold the residential real
estate condominium project in Union County, New Jersey, which
was carried as other real estate owned.
-- FDIC insurance expense increased $292,000 over the same quarter
last year due to higher FDIC assessments resulting from changes
in the premium rates.
-- Overall credit quality in the Bank's portfolio remains high,
even though the economic weakness has impacted several
potential problem loans. Non-performing assets amounted to 1.03%
of total assets at September 30, 2009 compared to 0.80% at June
30, 2009 and 0.06% at September 30, 2008.
-- Strong Tier 1 capital leverage ratio of 6.74% at September 30,
2009, 7.52% at June 30, 2009, and 7.78% at September 30, 2008.
-- An expansion in annualized net interest margin by 6 basis
points to 2.79% compared to 2.73% for the second quarter of
2009 and down 30 basis points as compared to the comparable
quarter of 2008, as a high level of uninvested excess cash has
been accumulated due to strong deposit growth experienced
during the quarter when compared to the same period last year.
-- An increase in deposits to $961.2 million at September 30, 2009
from $955.1 million at June 30, 2009 and $677.1 million at
September 30, 2008, reflecting inflows in core savings deposits
and Certificate of Deposit Account Registry Service (CDARS)
Reciprocal deposits, as customers' desires for safety and
liquidity became paramount in light of the financial crisis.
-- Book value per common share amounting to $6.35 at September 30,
2009 compared to $6.14 at June 30, 2009 and $6.21 at September
30, 2008. Tangible book value per common share was $5.04 at
September 30, 2009 compared to $4.83 at June 30, 2009 and $4.89
at September 30, 2008.
Selected financial ratios (annualized
where applicable)
As of or
for the
quarter
ended: 9/30/09 6/30/09 3/31/09 12/31/08 9/30/08 6/30/08
---------- ------- ------- ------- -------- ------- -------
Return on
average
assets 0.46% 0.40% 0.30% 0.66% 0.60% 0.57%
Return on
average
equity 6.77% 5.35% 3.52% 8.38% 7.55% 6.69%
Net
interest
margin (tax
equivalent
basis) 2.79% 2.73% 2.81% 3.01% 3.09% 3.00%
Loan/Deposit
ratio 74.50% 72.68% 88.24% 102.53% 97.64% 101.61%
Stockholders'
equity/total
assets 6.83% 6.67% 7.98% 7.99% 7.73% 8.15%
Efficiency
ratio 62.0% 96.3% 72.5% 59.7% 55.4% 67.7%
Book value
per common
share $ 6.35 $ 6.14 $ 6.15 $ 6.29 $ 6.21 $ 6.18
Return on
average
tangible
stockholders'
equity 8.33% 6.61% 4.33% 10.62% 9.60% 8.41%
Tangible
common
stockholders'
equity/tangible
assets 4.92% 4.74% 5.69% 6.42% 6.19% 6.52%
Tangible book
value per
common share $ 5.04 $ 4.83 $ 4.83 $ 4.97 $ 4.89 $ 4.86
Capital and Liquidity
Center remained well capitalized with strong liquidity in the third quarter of 2009. Total stockholders' equity amounted to $92.2 million, or 6.83% of total assets, at September 30, 2009. Tangible common stockholders' equity was $65.6 million, or 4.92% of tangible assets. Book value per common share was $6.35 at September 30, 2009, compared to $6.21 at September 30, 2008. Tangible book value per common share was $5.04 at September 30, 2009 compared to $4.89 at September 30, 2008.
At September 30, 2009, the Corporation's Tier 1 Capital Leverage ratio was 6.74%, the Corporation's total Tier 1 Risk Based Capital ratio was 10.23% and the Corporation's Total Risk Based Capital ratio was 11.04%. Total Tier 1 capital increased to approximately $89.6 million at September 30, 2009 from $78.2 million at December 31, 2008, reflecting the Corporation's participation in the TARP Capital Purchase Program. At September 30, 2009, the Corporation's capital ratios continued to exceed each of 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.
Asset Quality
At September 30, 2009, non-performing assets totaled $13.9 million, or 1.03% of total assets, as compared with $10.8 million, or 0.80%, at June 30, 2009 and $0.7 million, or 0.06%, at September 30, 2008.
While overall credit quality in the Bank's portfolio remains high, continued economic weakness has impacted several problem loans in the portfolio, which have been previously disclosed. Non-accrual loans increased from $5.0 million at June 30, 2009 to $11.4 million at September 30, 2009; this increase was due primarily to the addition of three credits, all of which are well secured. Troubled debt restructurings remained relatively unchanged at $1.0 million from June 30, 2009 to September 30, 2009. Loans past due 90 days or more and still accruing increased from $1.3 million at June 30, 2009 to $1.5 million at September 30, 2009. These loans are secured and in the process of collection. With respect to the $4.0 million industrial warehouse project placed into non-accrual during the first quarter of 2009, which was paid down to $3.7 million at September 30, 2009, the Bank is currently working with the borrowers and the participating bank that is involved with the project, in an effort to sell or lease the remaining industrial warehouse units. "Proceeds from the current units under contract, as well as the remaining units, will be used to make further principal reductions to our loan," remarked Mr. Weagley.
The OREO balance decreased from $3.5 million at June 30, 2009 to $0.00 at September 30, 2009. This decrease was related to the sale of the residential condominium project that was taken into OREO during the fourth quarter of 2008.
At September 30, 2009, the total allowance for loan losses amounted to approximately $7.1 million, or 1.00% of total loans. The allowance for loan losses as a percent of total non-performing loans amounted to 51.4% at September 30, 2009 as compared to 94.8% at June 30, 2009 and 929.7% at September 30, 2008.
Selected credit quality ratios
(unaudited)
(Dollars in thousands)
As of or for the quarter ended: 9/30/09 6/30/09 3/31/09
------------------------------- ------- ------- -------
Non-accrual loans $ 11,448 $ 5,058 $ 4,566
Troubled debt restructuring 970 975 91
Past due loans 90 days or more
and still accruing interest 1,477 1,260 --
---------------------------------------------------------------------
Total non performing loans 13,895 7,293 4,657
Other real estate owned ("OREO") -- 3,500 4,426
---------------------------------------------------------------------
Total non performing assets $ 13,895 $ 10,793 $ 9,083
---------------------------------------------------------------------
Non performing assets as a
percentage of total assets 1.03% 0.80% 0.81%
Non performing loans as a
percentage of total loans 1.94% 1.05% 0.69%
Net charge-offs $ 55 $ 8 $ 906
Net charge-offs as a percentage
of average loans for the
period (annualized) 0.03% 0.00% 0.53%
Allowance for loan losses as
a percentage of period end loans 1.00% 1.00% 1.00%
Allowance for loan losses as
a percentage of non-performing
loans 51.4% 94.8% 145.4%
---------------------------------------------------------------------
Total Assets $1,349,516 $1,341,603 $1,121,013
Total Loans 716,100 694,214 678,017
Average loans for the quarter 693,670 686,675 679,953
Allowance for loan losses 7,142 6,917 6,769
---------------------------------------------------------------------
(Dollars in thousands)
As of or for the quarter ended: 12/31/08 9/30/08 6/30/08
------------------------------- -------- ------- -------
Non-accrual loans $ 541 $ 541 $ 265
Troubled debt restructuring 93 95 97
Past due loans 90 days or
more and still accruing interest 139 18 --
---------------------------------------------------------------------
Total non performing loans 773 654 362
Other real estate owned ("OREO") 3,949 -- --
Total non performing assets $ 4,722 $ 654 $ 362
---------------------------------------------------------------------
Non performing assets as
a percentage of total assets 0.46% 0.06% 0.04%
Non performing loans as a
percentage of total loans 0.11% 0.10% 0.06%
Net charge-offs $ 251 $ 45 $ 106
Net charge-offs as a percentage
of average loans for the period
(annualized) 0.15% 0.03% 0.07%
Allowance for loan losses as
a percentage of period end loans 0.92% 0.92% 0.90%
Allowance for loan losses as
a percentage of non-performing
loans 809.1% 929.7% 1,563.5%
---------------------------------------------------------------------
Total Assets $1,023,293 $1,042,778 $ 986,436
Total Loans 676,203 661,157 631,221
Average loans for the quarter 670,212 651,766 601,655
Allowance for loan losses 6,254 6,080 5,660
---------------------------------------------------------------------
Net Interest Income and Margin
On a linked sequential quarter basis from the second quarter of 2009 to the third quarter of 2009, the net interest spread and margin increased by 19 basis points and by 6 basis points, respectively. The Corporation's net interest margin has been impacted by the high level of uninvested excess cash, which accumulated due to deposit growth and retention experienced during most of 2009.
The Corporation recorded net interest income on a fully taxable equivalent basis of $7.5 million for the three months ended September 30, 2009 as compared to $7.1 million for the comparable quarter in 2008. Interest income increased by $0.6 million and interest expense increased by $0.2 million from the same period last year. Compared to the third quarter of 2008, for the third quarter of 2009 average interest earning assets increased by $153.8 million while the net interest spread and net interest margin improved by 13 basis points and decreased by 30 basis points, respectively
For the nine months ended September 30, 2009, net interest income on a fully taxable equivalent basis amounted to $20.8 million as compared to $20.0 million for the same period in 2008. Interest income increased by $0.2 million while interest expense decreased by $0.6 million from the same period last year. Compared to the same period in 2008, for the nine months ended September 30, 2009, average interest earning assets increased $95.0 million while net interest spread and margin increased by 17 basis points and decreased by 18 basis points, respectively. The Corporation's net interest margin was impacted by the high level of uninvested excess cash, which accumulated due to strong deposit growth experienced during the first nine months.
Quarterly Condensed Consolidated Income Statements (unaudited)
(Dollars in thousands, except per share data)
For the quarter ended: 9/30/09 6/30/09 3/31/09
---------------------- ------- ------- -------
Net interest income $ 7,441 $ 6,627 $ 6,379
Provision for loan losses 280 156 1,421
---------------------------------------------------------------------
Net interest income after 7,161 6,471 4,958
provision for loan losses
Other income 311 2,551 1,384
Other expense (5,186) (7,314) (5,319)
Income before income tax 2,286 1,708 1,023
Income tax expense 751 507 224
Net income 1,535 1,201 799
Net income available to
common stockholders $ 1,387 $ 1,053 $ 670
Earnings per common share:
Basic $ 0.11 $ 0.08 $ 0.05
Diluted $ 0.11 $ 0.08 $ 0.05
Weighted average common
shares outstanding:
Basic 13,000,601 12,994,429 12,991,312
Diluted 13,005,101 12,996,544 12,993,185
(Dollars in thousands, except per share data)
For the quarter ended: 12/31/08 9/30/08 6/30/08
---------------------- -------- ------- -------
Net interest income $ 6,823 $ 6,860 $ 6,429
Provision for loan losses 425 465 521
---------------------------------------------------------------------
Net interest income after 6,398 6,395 5,908
provision for loan losses
Other income 615 47 1,116
Other expense (4,754) (4,578) (5,188)
Income before income tax 2,259 1,864 1,836
Income tax expense 560 346 428
Net income 1,699 1,518 1,408
Net income available to
common stockholders $ 1,699 $ 1,518 $ 1,408
Earnings per common share:
Basic $ 0.13 $ 0.12 $ 0.11
Diluted $ 0.13 $ 0.12 $ 0.11
Weighted average common
shares outstanding:
Basic 12,989,304 12,990,441 13,070,868
Diluted 12,995,134 13,003,954 13,083,558
Other Income
Total other income increased $264,000 for the third quarter of 2009 compared with the comparable quarter of 2008, primarily as a result of lower net investment securities losses. On a sequential linked basis in 2009, total other income decreased $2.2 million principally due to net investment securities transactions. During the third quarter of 2009, the Corporation recorded net investment securities losses of $511,000 as compared to $1.1 million for the same period last year. Investment securities losses in the third quarter of 2009 included $889,000 of net gains on the sale of securities, offset by a $1.4 million other-than-temporary impairment charge related to a pooled trust preferred security. During the third quarter of 2008, the Corporation recorded a $1.2 million other-than-temporary impairment charge related to its Lehman Brothers corporate bond. Excluding net securities losses, the Corporation recorded other income of $822,000 for the three months ended September 30, 2009 compared to $841,000 on a sequential linked basis and $1,122,000 for the three months ended September 30, 2008. During the third quarter of 2008, the Corporation recognized $230,000 in tax-free proceeds in excess of contract value on the Corporation's bank owned life insurance (BOLI) due to the death of one insured participant.
For the nine months ended September 30, 2009, total other income increased $2.2 million compared to the same period in 2008, primarily as a result of net securities gains. Excluding net securities gains, the Corporation recorded other income of $2.4 million for the nine months ended September 30, 2009 compared to $2.9 million for the comparable period in 2008, a decrease of $432,000 or 15.0%. This decrease was primarily attributable to the $230,000 in tax-free proceeds in excess of contract value on the Corporation's BOLI due to the death of one insured participant, which was recorded in the third quarter of 2008.
Quarterly Consolidated Non-Interest Income (unaudited) (Dollars in thousands) For the quarter ended: 9/30/09 6/30/09 3/31/09 12/31/08 9/30/08 6/30/08 --------- ------- ------- ------- -------- ------- ------- Service charges on deposit accounts $ 350 $ 324 $ 343 $ 376 $ 360 $ 383 Commissions from mortgage broker activities 4 -- 2 7 6 17 Loan related fees (LOC) 35 45 30 53 46 37 Commissions from sale of mutual funds and annuities 17 45 40 22 35 38 Debit card and ATM fees 114 116 106 113 124 130 Bank owned life insurance 273 257 218 247 507 228 Net securities gains (losses) (511) 1,710 600 (256) (1,075) 225 Other service charges and fees 29 54 45 53 44 58 --------------------------------------------------------------------- Total other income $ 311 $ 2,551 $ 1,384 $ 615 $ 47 $ 1,116 ---------------------------------------------------------------------
Other Expense
Other expense for the third quarter of 2009 totaled $5.2 million, an increase of $0.6 million, or 13.3%, from the comparable period in 2008. For the nine months ended September 30, 2009, other expense totaled $17.8 million, an increase of $3.1 million, or 21.1%. In May 2009, the FDIC adopted a final rule on the special assessment that assessed the industry 5 basis points on total assets less Tier 1 capital. The Corporation was required to accrue the charge during the second quarter of 2009, which amounted to approximately $630,000, even though the FDIC collected the fee at the end of the third quarter when the regular quarterly assessments for the second quarter were collected. Additionally, in December 2008, the FDIC adopted a final rule increasing risk-based assessment rates beginning in the first quarter of 2009. As a result of these changes coupled with one-time assessment credits recognized in 2008, FDIC insurance expense increased $292,000 and $1.6 million for the three months and nine months ended September 30, 2009, respectively, over the comparable periods in 2008. OREO expense for the third quarter of 2009 and nine months ended September 30, 2009 increased by $74,000 and $1.4 million compared to the same quarter and nine month period last year, respectively, due primarily to the recognition of a $926,000 write-down coupled with the build out costs relating to the residential real estate condominium project in Union County, New Jersey. The building was sold during the third quarter of 2009 for a gain of $19,000.
The efficiency ratio for the third quarter of 2009 was 62.0% as compared to 55.4% in the third quarter of 2008. For the nine months ended September 30, 2009, the efficiency ratio was 76.5% as compared to 64.2% in the same period of 2008. This increase was due primarily to the increase in FDIC insurance expense and OREO expense.
Quarterly Consolidated Non-Interest Expense (unaudited) (Dollars in thousands) For the quarter ended: 9/30/09 6/30/09 3/31/09 12/31/08 9/30/08 6/30/08 --------------- ------- ------- ------- -------- ------- ------- Employee salaries and wages $ 1,981 $ 1,946 $ 1,861 $ 1,777 $ 1,752 $ 2,013 Employee stock option expense 17 25 22 23 23 36 Health insurance and other employee benefits 361 362 309 (246) (32) 285 Payroll taxes 159 166 194 139 167 182 Other employee related expenses 11 8 7 17 9 8 --------------------------------------------------------------------- Total salaries and employee benefits $ 2,529 $ 2,507 $ 2,393 $ 1,710 $ 1,919 $ 2,524 Occupancy, net 539 583 797 983 803 734 Premises and equipment 323 319 321 362 352 356 Professional and consulting 190 236 212 152 189 190 Stationery and printing 81 102 70 97 87 118 FDIC Insurance 320 940 365 149 28 20 Marketing and advertising 75 141 130 144 145 188 Computer expense 220 228 214 229 238 226 Bank regulatory related expenses 63 60 60 55 54 55 Postage and delivery 72 64 46 69 67 65 ATM related expenses 63 61 61 59 61 62 OREO expense (benefit) 30 1,375 33 -- (44) 31 Amortization of core deposit intangible 19 22 22 23 23 24 Other expenses 662 676 595 722 656 595 --------------------------------------------------------------------- Total other expense $ 5,186 $ 7,314 $ 5,319 $ 4,754 $ 4,578 $ 5,188 ---------------------------------------------------------------------
Key Balance Sheet Changes at September 30, 2009
-- The Corporation had total loans of $716.1 million at September
30, 2009, a $39.9 million, or 5.9%, increase from December 31,
2008 and a $54.9 million, or 8.3%, increase from September 30,
2008.
-- Loan growth continued during the quarter in the Corporation's
commercial related segment of the portfolio. Total gross
loans booked for the quarter included $56.3 million of new
loans and $14.7 million in advances principally offset by
payoffs and principal payments of $49.4 million.
-- At September 30, 2009, the Corporation had $22.2 million in
overall undispersed loan commitments, which are expected to
fund over the next 90 days.
-- Loan originations and pipelines for the quarter increased in
the commercial sectors of the portfolio inclusive of commercial
and commercial real estate loans.
Loan Mix:
(unaudited)
(Dollars in
thousands)
At quarter
ended: 9/30/09 6/30/09 3/31/09 12/31/08 9/30/08 6/30/08
-------------- ------- ------- ------- -------- ------- -------
Real estate
loans
Residential $200,533 $218,340 $229,903 $240,316 $249,258 $255,817
Commercial 291,133 262,676 256,885 256,527 246,089 224,990
Construction 57,898 54,105 41,242 42,075 47,722 50,638
---------------------------------------------------------------------
Total real
estate
loans 549,564 535,121 528,030 538,918 543,069 531,445
Commercial
loans 165,173 157,621 148,444 135,232 116,891 98,845
Consumer
and other
loans 952 921 928 1,481 672 339
---------------------------------------------------------------------
Total loans
before
unearned
fees and
costs 715,689 693,663 677,402 675,631 660,632 630,629
Unearned
costs, net 411 551 615 572 525 592
---------------------------------------------------------------------
Total
loans $716,100 $694,214 $678,017 $676,203 $661,157 $631,221
=====================================================================
-- Investment securities increased by $133.4 at September 30, 2009
compared to December 31, 2008 and increased by $91.7 million
when compared to September 30, 2008.
-- Deposits totaled $961.2 million at September 30, 2009, an
increase of $301.6 million from December 31, 2008 and an
increase of $284.0 million from September 30, 2008.
-- Total deposit funding sources, including overnight repurchase
agreements (which agreements are part of the demand deposit
base), amounted to $1.0 billion at September 30, 2009, an
increase of $323.6 million from December 31, 2008, which
reflected inflows in core savings deposits and CDARS Reciprocal
deposits, as customers' needs for safety and more liquidity
became paramount in light of the financial crisis.
-- Time certificates of deposit of $100,000 and over increased
$165.5 million as compared to December 31, 2008 due primarily
to an increase in CDARS Reciprocal deposits, which has become
an attractive product for customers who are sensitive to
obtaining full FDIC insurance for their time deposits.
-- The Corporation expects its deposit gathering efforts to remain
strong, supported in part by the recent actions by the FDIC in
temporarily raising the deposit insurance limits. The
Corporation is a participant in the FDIC's Transaction Account
Guarantee Program. Under this program, all non-interest bearing
deposit transaction accounts are fully guaranteed by the FDIC,
regardless of dollar amount, through June 30, 2010, with
increased fees.
-- Borrowings totaled $280.5 million at September 30, 2009,
reflecting an increase of $6.9 million from December 31, 2008,
primarily reflecting short term purchase agreements.
The following table reflects the Corporation's deposits for the periods specified.
Deposit Mix
(unaudited)
(Dollars in
thousands)
At quarter
ended: 9/30/09 6/30/09 3/31/09 12/31/08 9/30/08 6/30/08
-------------- ------- ------- ------- -------- ------- -------
Checking
accounts
Non interest
bearing $126,205 $130,115 $114,607 $113,319 $114,631 $110,891
Interest
bearing 136,070 137,578 132,682 139,349 129,070 124,469
Savings
deposits 215,275 185,074 137,197 66,359 61,623 63,918
Money market
accounts 132,395 129,756 114,363 111,308 140,533 147,202
Time deposits 351,212 372,619 269,530 229,202 231,287 174,710
---------------------------------------------------------------------
Total Deposits $961,157 $955,142 $768,379 $659,537 $677,144 $621,190
=====================================================================
On September 30, 2009, the FDIC proposed a rule that would require insured institutions to prepay their estimated quarterly assessments through December 31, 2012 to strengthen the cash position of the Deposit Insurance Fund. Once final, the rule would require the cash prepayment on December 30, 2009. Management believes the prepayment (estimated to be approximately $4.5 million) will not have a significant impact on our future cash position or operations.
Additional Information for the Third Quarter 2009 -
-- Total assets amounted to $1.35 billion at September 30, 2009,
which positions the Corporation as one of the largest New
Jersey headquartered financial institutions.
-- Continued improvement in earning asset mix from the same
quarter last year, as average loans increased by $41.9 million
while average investment securities, including federal fund
sold, increased by $111.9 million
Quarterly Condensed Consolidated Balance Sheets (unaudited)
(Dollars in thousands)
At quarter ended: 9/30/09 6/30/09 3/31/09
----------------- ------- ------- -------
Cash and due from banks $ 172,401 $ 176,784 $ 90,634
Fed funds and money market funds -- -- --
Investments 376,097 378,895 266,032
Loans 716,100 694,214 678,017
Allowance for loan losses (7,142) (6,917) (6,769)
Restricted investment in bank
stocks, at cost 10,673 10,675 10,228
Premises and equipment, net 18,155 18,430 18,313
Goodwill 16,804 16,804 16,804
Core deposit intangible 243 262 283
Bank owned life insurance 26,162 25,888 23,156
Other real estate owned -- 3,500 4,426
Other assets 20,023 23,068 19,889
---------------------------------------------------------------------
TOTAL ASSETS $1,349,516 $1,341,603 $1,121,013
---------------------------------------------------------------------
Deposits $ 961,157 $ 955,142 $ 768,379
Borrowings 280,509 252,498 255,365
Other liabilities 15,642 44,505 7,840
Stockholders' equity 92,208 89,458 89,429
---------------------------------------------------------------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,349,516 $1,341,603 $1,121,013
---------------------------------------------------------------------
(Dollars in thousands)
At quarter ended: 12/31/08 9/30/08 6/30/08
----------------- -------- ------- -------
Cash and due from banks $ 15,031 $ 15,952 $ 16,172
Fed funds and money market funds -- -- --
Investments 242,714 284,349 253,780
Loans 676,203 661,157 631,221
Allowance for loan losses (6,254) (6,080) (5,660)
Restricted investment in bank
stocks, at cost 10,230 10,277 10,325
Premises and equipment, net 18,488 18,545 18,203
Goodwill 16,804 16,804 16,804
Core deposit intangible 306 328 350
Bank owned life insurance 22,938 22,690 22,710
Other real estate owned 3,949 -- --
Other assets 22,884 18,756 22,531
---------------------------------------------------------------------
TOTAL ASSETS $1,023,293 $1,042,778 $ 986,436
---------------------------------------------------------------------
Deposits $ 659,537 $ 677,144 $ 621,190
Borrowings 273,595 281,046 279,585
Other liabilities 8,448 3,964 5,268
Stockholders' equity 81,713 80,624 80,393
---------------------------------------------------------------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,023,293 $1,042,778 $ 986,436
---------------------------------------------------------------------
Condensed Consolidated Average Balance Sheets (unaudited)
(Dollars in thousands)
For the quarter ended: 9/30/09 6/30/09 3/31/09
---------------------- ------- ------- -------
Investments, Fed funds, and other $ 385,270 $ 304,482 $ 253,445
Loans 693,670 686,675 679,953
Allowance for loan losses (6,978) (6,891) (6,384)
All other assets 274,103 211,495 131,861
---------------------------------------------------------------------
TOTAL ASSETS $1,346,065 $1,195,761 $1,058,875
---------------------------------------------------------------------
Deposits-interest bearing $ 845,504 $ 716,243 $ 588,599
Deposits-non interest bearing 129,592 121,482 115,541
Borrowings 266,825 253,310 255,269
Other liabilities 13,411 14,921 8,567
Stockholders' equity 90,733 89,805 90,899
---------------------------------------------------------------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,346,065 $1,195,761 $1,058,875
---------------------------------------------------------------------
(Dollars in thousands)
For the quarter ended: 12/31/08 9/30/08 6/30/08
---------------------- -------- ------- -------
Investments, Fed funds, and other $ 272,507 $ 273,337 $ 301,118
Loans 670,212 651,766 601,655
Allowance for loan losses (6,235) (5,840) (5,404)
All other assets 95,514 93,535 91,631
---------------------------------------------------------------------
TOTAL ASSETS $1,031,998 $1,012,798 $ 989,000
---------------------------------------------------------------------
Deposits-interest bearing $ 554,652 $ 521,459 $ 499,342
Deposits-non interest bearing 112,936 118,623 114,744
Borrowings 278,524 288,002 284,264
Other liabilities 4,798 4,321 6,508
Stockholders' equity 81,088 80,393 84,142
---------------------------------------------------------------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,031,998 $1,012,798 $ 989,000
---------------------------------------------------------------------
About Center Bancorp
Center Bancorp, Inc. is a financial services holding company and 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 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. Center additionally offers title insurance services in connection with the closing of real estate transactions, through two subsidiaries, Union Title Company and Center Title Company.
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 Morris and Union Counties, New Jersey, the Corporation has expanded to northern and central New Jersey. At September 30, 2009, the Corporation had total assets of $1.3 billion, total deposit funding sources, which includes overnight repurchase agreements, of $1.0 billion and stockholders' equity of $92.2 million. 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
Non-GAAP Financial Measures
"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. This measure may be important to investors that are interested in analyzing our return on equity exclusive of the effect of changes in intangible assets on equity. The following table presents a reconciliation of return on average stockholders' equity and return on average tangible stockholders' equity for the periods presented:
(Dollars in thousands) For the quarter ended: 9/30/09 6/30/09 3/31/09 12/31/08 9/30/08 6/30/08 --------------- ------- ------- ------- -------- ------- ------- Net income $ 1,535 $ 1,201 $ 799 $ 1,699 $ 1,518 $ 1,408 --------------------------------------------------------------------- Average stockholders' equity $90,733 $89,805 $90,899 $ 81,088 $80,393 $84,142 Less: Average goodwill and other intangible assets 17,058 17,078 17,101 17,123 17,145 17,169 --------------------------------------------------------------------- Average tangible stockholders' equity $73,675 $72,727 $73,798 $ 63,965 $63,248 $66,973 --------------------------------------------------------------------- Return on average stockholders' equity 6.77% 5.35% 3.52% 8.38% 7.55% 6.69% Add: Average goodwill and other intangible assets 1.56 1.26 0.81 2.24 2.05 1.72 --------------------------------------------------------------------- Return on average tangible stockholders' equity 8.33% 6.61% 4.33% 10.62% 9.60% 8.41% ---------------------------------------------------------------------
"Tangible book value per common share" is also a non-GAAP financial measure and represents tangible stockholders' equity (or tangible book value) calculated on a per common share basis. The Corporation believes that a disclosure of tangible book value per common share may be helpful for those investors who seek to evaluate the Corporation's book value per common share without giving effect to goodwill and other intangible assets. The following table presents a reconciliation of total book value per common share to tangible book value per common share as of the dates presented:
(Dollars in thousands) At quarter ended: 9/30/09 6/30/09 3/31/09 ----------------- ------- ------- ------- Common shares outstanding 13,000,601 13,000,601 12,991,312 Stockholders' equity $ 92,208 $ 89,458 $ 89,429 Less: Preferred stock 9,599 9,578 9,557 Less: Goodwill and other intangible assets 17,047 17,066 17,087 ------------------------------------------------------------------- Tangible common stockholders' equity $ 65,562 $ 62,814 $ 62,785 ------------------------------------------------------------------- Book value per common share $ 6.35 $ 6.14 $ 6.15 Less: Goodwill and other intangible assets 1.31 1.31 1.32 ------------------------------------------------------------------- Tangible book value per common share $ 5.04 $ 4.83 $ 4.83 ------------------------------------------------------------------- (Dollars in thousands) At quarter ended: 12/31/08 9/30/08 6/30/08 ----------------- -------- ------- ------- Common shares outstanding 12,991,312 12,988,284 13,016,075 Stockholders' equity $ 81,713 $ 80,624 $ 80,393 Less: Preferred stock -- -- -- Less: Goodwill and other intangible assets 17,110 17,132 17,154 --------------------------------------------------------------------- Tangible common stockholders' equity $ 64,603 $ 63,492 $ 63,239 --------------------------------------------------------------------- Book value per common share $ 6.29 $ 6.21 $ 6.18 Less: Goodwill and other intangible assets 1.32 1.32 1.32 --------------------------------------------------------------------- Tangible book value per common share $ 4.97 $ 4.89 $ 4.86 ---------------------------------------------------------------------
"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 for intangible assets, inasmuch as tangible common stockholders' equity and tangible assets both back out goodwill and other intangible assets. The following table presents a reconciliation of total assets to tangible assets and then presents 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: 9/30/09 6/30/09 3/31/09 ----------------- ------- ------- ------- Total assets $1,349,516 $1,341,603 $1,121,013 Less: Goodwill and other intangible assets 17,047 17,066 17,087 --------------------------------------------------------------------- Tangible assets $1,332,469 $1,324,537 $1,103,926 --------------------------------------------------------------------- Total stockholders' equity/total assets 6.83% 6.67% 7.98% Tangible common stockholders' equity/tangible assets 4.92% 4.74% 5.69% (Dollars in thousands) At quarter ended: 12/31/08 9/30/08 6/30/08 ----------------- -------- ------- ------- Total assets $1,023,293 $1,042,778 $ 986,436 Less: Goodwill and other intangible assets 17,110 17,132 17,154 --------------------------------------------------------------------- Tangible assets $1,006,183 $1,025,646 $ 969,282 --------------------------------------------------------------------- Total stockholders' equity/total assets 7.99% 7.73% 8.15% Tangible common stockholders' equity/tangible assets 6.42% 6.19% 6.52%
Total non-interest income is presented both including and excluding net securities gains (losses). We believe that many investors desire to evaluate non-interest income without regard for securities transactions. The following table presents a reconciliation of total non-interest (or other) income with total non-interest (or other) income excluding the impact of securities transactions.
(Dollars in thousands) For the quarter ended: 9/30/09 6/30/09 3/31/09 12/31/08 9/30/08 6/30/08 ---------- ------- ------- ------- -------- ------- ------- Total non- interest income $ 311 $ 2,551 $ 1,384 $ 615 $ 47 $ 1,116 Net securities gains (losses) (511) 1,710 600 (256) (1,075) 225 -------------------------------------------------------------------- Total non- interest income, excluding net securities gains (losses) $ 822 $ 841 $ 784 $ 871 $ 1,122 $ 891 --------------------------------------------------------------------
"Efficiency ratio" is a non-GAAP financial measure and is defined as non-interest expense as a percentage of net interest income on a tax equivalent basis plus non-interest income, excluding net securities gains (losses), as follows:
(Dollars in thousands)
For the
quarter
ended: 9/30/09 6/30/09 3/31/09 12/31/08 9/30/08 6/30/08
------------- ------- ------- ------- -------- ------- -------
Other expense $ 5,186 $ 7,314 $ 5,319 $ 4,754 $ 4,578 $ 5,188
--------------------------------------------------------------------
Net interest
income (tax
equivalent
basis) $ 7,536 $ 6,753 $ 6,556 $ 7,086 $ 7,148 $ 6,776
Other income,
excluding net
securities
gains (losses) 822 841 784 871 1,122 891
--------------------------------------------------------------------
$ 8,358 $ 7,594 $ 7,340 $ 7,957 $ 8,270 $ 7,667
--------------------------------------------------------------------
Efficiency ratio 62.0% 96.3% 72.5% 59.7% 55.4% 67.7%
--------------------------------------------------------------------
Forward-Looking Statements
All non-historical statements in this press release (including statements regarding the Corporation's outlook, credit trends, future growth and the timing of funding of undisbursed commitments) 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 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 the current global financial crisis and 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.
CENTER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION
(unaudited)
Sept. 30, Dec. 31,
(Dollars in Thousands, Except Per Share Data) 2009 2008
----------------------------------------------------------------------
ASSETS
Cash and due from banks $ 172,401 $ 15,031
Investment securities available-for sale 376,097 242,714
Loans 716,100 676,203
Less -- Allowance for loan losses 7,142 6,254
----------------------------------------------------------------------
Net loans 708,958 669,949
Restricted investment in bank stocks, at cost 10,673 10,230
Premises and equipment, net 18,155 18,488
Accrued interest receivable 4,642 4,154
Bank owned life insurance 26,162 22,938
Other real estate owned -- 3,949
Goodwill and other intangible assets 17,047 17,110
Other assets 15,381 18,730
----------------------------------------------------------------------
Total assets $1,349,516 $1,023,293
======================================================================
LIABILITIES
Deposits:
Non-interest bearing $ 126,205 $ 113,319
Interest-bearing
Time deposits $100 and over 265,999 100,493
Interest-bearing transactions, savings and
time deposits $100 and less 568,953 445,725
----------------------------------------------------------------------
Total deposits 961,157 659,537
Short-term borrowings 52,171 45,143
Long-term borrowings 223,183 223,297
Subordinated debentures 5,155 5,155
Accounts payable and accrued liabilities 9,208 8,448
Due to brokers for investment securities 6,434 --
----------------------------------------------------------------------
Total liabilities 1,257,308 941,580
----------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Preferred stock, $1,000 liquidation value
per share:
Authorized 5,000,000 shares; issued 10,000
shares in 2009 and none in 2008 9,599 --
Common stock, no par value:
Authorized 20,000,000 shares; issued
15,190,984 shares in 2009 and 2008;
outstanding 13,000,601 in 2009 and
12,991,312 shares in 2008 86,908 86,908
Additional paid in capital 5,652 5,204
Retained earnings 17,440 16,309
Treasury stock, at cost (2,190,383 in 2009
and 2,199,672 shares in 2008) (17,720) (17,796)
Accumulated other comprehensive loss (9,671) (8,912)
----------------------------------------------------------------------
Total stockholders' equity 92,208 81,713
----------------------------------------------------------------------
Total liabilities and stockholders' equity $1,349,516 $1,023,293
======================================================================
CENTER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------------------------------------------------
(Dollars in Thousands,
Except Per Share Data) 2009 2008 2009 2008
---------------------------------------------------------------------
Interest income:
Interest and fees
on loans $ 9,255 $ 9,427 $ 27,568 $ 26,575
Interest and
dividends on
investment
securities:
Taxable interest
income 3,874 2,514 9,333 7,914
Non-taxable interest
income 185 559 773 2,036
Dividends 177 189 465 645
Interest on Federal
funds sold and
securities
purchased under
agreement to resell -- -- -- 109
Total interest income 13,491 12,689 38,139 37,279
---------------------------------------------------------------------
Interest expense:
Interest on
certificates of
deposit $100 or
more 1,077 618 2,844 1,830
Interest on other
deposits 2,974 2,434 7,803 8,302
Interest on
borrowings 1,999 2,777 7,045 8,171
---------------------------------------------------------------------
Total interest
expense 6,050 5,829 17,692 18,303
---------------------------------------------------------------------
Net interest income 7,441 6,860 20,447 18,976
Provision for loan
losses 280 465 1,857 1,136
---------------------------------------------------------------------
Net interest income
after provision for
loan losses 7,161 6,395 18,590 17,840
---------------------------------------------------------------------
Other income:
Service charges,
commissions and fees 464 484 1,353 1,526
Annuity and insurance 17 35 102 90
Bank owned life
insurance 273 507 748 956
Other 68 96 244 307
Total other-than-
temporary impairment
losses (1,878) (1,200) (2,018) (1,391)
Less: Portion of loss
recognized in other
comprehensive income
(before taxes) 478 -- 478 --
---------------------------------------------------------------------
Net other-than-
temporary
impairment losses (1,400) (1,200) (1,540) (1,391)
Net gains on sale
of investment
securities 889 125 3,339 541
---------------------------------------------------------------------
Net investment
securities gains
(losses) (511) (1,075) 1,799 (850)
---------------------------------------------------------------------
Total other income 311 47 4,246 2,029
---------------------------------------------------------------------
Other expense:
Salaries and
employee benefits 2,529 1,919 7,429 6,795
Occupancy, net 539 803 1,919 2,296
Premises and
equipment 323 352 963 1,074
FDIC insurance 320 28 1,625 68
Professional and
consulting 190 189 638 551
Stationery and
printing 81 87 253 300
Marketing and
advertising 75 145 346 493
Computer expense 220 238 662 605
OREO expense
(benefit), net 30 (44) 1,438 20
Other 879 861 2,546 2,517
---------------------------------------------------------------------
Total other expense 5,186 4,578 17,819 14,719
---------------------------------------------------------------------
Income before income
tax expense 2,286 1,864 5,017 5,150
Income tax expense 751 346 1,482 1,007
---------------------------------------------------------------------
Net income 1,535 1,518 3,535 4,143
Preferred stock
dividends and
accretion 148 -- 425 --
---------------------------------------------------------------------
Net income available
to common
stockholders $ 1,387 $ 1,518 $ 3,110 $ 4,143
=====================================================================
Earnings per
common share:
Basic $ 0.11 $ 0.12 $ 0.24 $ 0.32
Diluted $ 0.11 $ 0.12 $ 0.24 $ 0.32
---------------------------------------------------------------------
Weighted average
common shares
outstanding:
Basic 13,000,601 12,990,441 12,995,481 13,068,400
Diluted 13,005,101 13,003,954 12,998,211 13,083,112
=====================================================================
SUMMARY SELECTED QUARTERLY STATISTICAL INFORMATION AND FINANCIAL DATA
(Dollars in Thousands, Except per Share Data)
Three Months Ended
------------------
9/30/2009 6/30/2009 9/30/2008
---------- ---------- ----------
Statements of Income Data:
Interest income $ 13,491 $ 12,706 $ 12,689
Interest expense 6,050 6,079 5,829
Net interest income 7,441 6,627 6,860
Provision for loan losses 280 156 465
Net interest income after
provision for loan losses 7,161 6,471 6,395
Other income 311 2,551 47
Other expense 5,186 7,314 4,578
Income before income tax expense 2,286 1,708 1,864
Income tax expense 751 507 346
Net income 1,535 1,201 1,518
Net income available to common
stockholders $ 1,387 $ 1,053 $ 1,518
Earnings per common share:
Basic $ 0.11 $ 0.08 $ 0.12
Diluted $ 0.11 $ 0.08 $ 0.12
Statements of Condition Data
(Period End):
Investments 376,097 $ 378,895 $ 284,349
Total loans 716,100 694,214 661,157
Goodwill and other intangibles 17,047 17,066 17,132
Total assets 1,349,516 1,341,603 1,042,778
Deposits 961,157 955,142 677,144
Borrowings 280,509 252,498 281,046
Stockholders' equity $ 92,208 $ 89,458 $ 80,624
Dividend Data on Common Shares:
Cash dividends $ 390 $ 390 $ 1,169
Dividend payout ratio 28.14% 37.04% 77.01%
Cash dividends per share $ 0.03 $ 0.03 $ 0.09
Weighted Average Common Shares
Outstanding:
Basic 13,000,6 For full details for CNBC click here.
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