-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CY2Z9RCfMbaztSK4w2eOFd5XLedxK+Ia0zJSzkre/YtB7hqRCDqclX1aVf0HvcJ3 fJPDeTOGYA92QiwMK2gMIg== 0000950116-99-000543.txt : 19990330 0000950116-99-000543.hdr.sgml : 19990330 ACCESSION NUMBER: 0000950116-99-000543 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990329 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CENTER BANCORP INC CENTRAL INDEX KEY: 0000712771 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 521273725 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 000-11486 FILM NUMBER: 99575305 BUSINESS ADDRESS: STREET 1: 2455 MORRIS AVE CITY: UNION STATE: NJ ZIP: 07083 BUSINESS PHONE: 9086889500 MAIL ADDRESS: STREET 1: 2455 MORRIS AVE CITY: UNION STATE: NJ ZIP: 07083 10-K 1 SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 Form 10-K (Mark One) [X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 1998. [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. for the transition period from ____ to ____. Commission File Number 2-81353 CENTER BANCORP INC. - -------------------------------------------------------------------------------- (exact name of registrant as specified in its charter) New Jersey 52-1273725 - -------------------------------------------------------------------------------- (State or other jurisdiction of IRS Employer incorporation or organization) identification No.) 2455 Morris Avenue, Union, NJ 07083-0007 ------------------------------------------------------------ (Address of Principal Executive Offices, Including Zip Code) (908) 688-9500 ---------------------------------------------------- (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: none Securities registered pursuant to Section 12(g) of the Act: Common stock, no par value (Title of class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes _X_ or No_ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation 5-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of the Form 10-K or any amendment to the Form 10-K. _X_ Aggregate Market value of voting stock held by non-affiliates based on the average of Bid and Asked prices on February 26, 1999 was approximately $57.3 million Shares outstanding on February 26, 1999 - --------------------------------------- Common stock no par value - 3,582,841 shares Parts of Form 10-K in which Documents Incorporated by reference document is incorporated - ----------------------------------- ------------------------ Definitive proxy statement dated March 12, 1999, in connection with the 1999 Annual Stockholders Meeting filed with the Commission pursuant to Regulation 14A............................................ Part III Annual Report to Stockholders for the fiscal year ended December 31, 1998.............................. Part I and Part II INDEX TO FORM 10-K PART I ITEM 1 BUSINESS 1 ITEM 2 PROPERTIES 9-10 ITEM 3 LEGAL PROCEEDINGS 10 ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 10 ITEM 4A EXECUTIVE OFFICERS OF THE REGISTRANT 10 PART II ITEM 5 MARKET FOR THE REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS 11 ITEM 6 SELECTED FINANCIAL DATA 11 ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 11 ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 11 ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 11 ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 11 PART III ITEM 10 DIRECTORS OF THE REGISTRANT 12 ITEM 11 EXECUTIVE COMPENSATION 12 ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 12 ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 12 PART IV ITEM 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K 13-14 SIGNATURES 15 Center Bancorp Inc. Form 10 K Part I Item I-Business - -------------------------------------------------------------------------------- A)Historical Development Of Business Center Bancorp Inc., a one-bank holding company, was incorporated in the state of New Jersey on November 12, 1982. Center Bancorp Inc. commenced operations on May 1, 1983, upon the acquisition of all outstanding shares of The Union Center National Bank (the "Bank"). The holding company's sole activity, at this time, is to act as a holding company for the Bank. As used herein, the term "Corporation" shall refer to Center Bancorp Inc. and its subsidiary and the term "Parent Corporation" shall refer to Center Bancorp Inc. on an unconsolidated basis. The Bank was organized in 1923 under the law of the United States of America. The Bank operates five offices in Union Township, Union County, New Jersey, one office in Springfield Township, Union County, New Jersey, one office in Berkeley Heights, Union County, New Jersey, one office in Madison, and one office in Morristown, Morris County, New Jersey and currently employs 153 full time equivalent persons. A tenth office, located in Summit, Union County, New Jersey is scheduled to open in June 1999. The Bank is a full service commercial bank offering a complete range of individual and commercial services. On June 28, 1996, the Corporation acquired Lehigh Savings Bank SLA ("Lehigh"), a New Jersey chartered savings & loan association, in a transaction accounted for under the purchase method of accounting. At June 28, 1996, Lehigh Savings Bank SLA had assets of $70.9 million (primarily cash and cash equivalents of $53.0 million and loans of $15.0 million), deposits of $68.2 million and stockholders' equity of $2.7 million. The Corporation paid a total of $5.5 million in cash for Lehigh resulting in goodwill of $3.8 million. The goodwill is being amortized on a straight-line basis over 15 years. The consolidated financial statements of the Corporation include the assets, liabilities, and results of operations of Lehigh since the acquisition date. B)Narrative Description Of Business The Bank offers a broad range of lending, depository and related financial services to commercial, industrial and governmental customers. In the lending area, these services include short and medium term loans, lines of credit, letters of credit, working capital loans, real estate construction loans and mortgage loans. In the depository area, the Bank offers demand deposits, savings accounts and time deposits. In addition, the Bank offers collection services, wire transfers, night depository and lock box services. The Bank offers a broad range of consumer banking services, including interest bearing and non-interest bearing checking accounts, savings accounts, money market accounts, certificates of deposit, IRA accounts, Automated Teller Machines ("ATM") accessibility using Money Access(TM) service, secured and unsecured loans, mortgage loans, home equity lines of credit, safe deposit boxes, Christmas club accounts, vacation club accounts, collection services, money orders and traveler's checks. The Bank offers various money market services. It deals in U.S. Treasury and U.S. Governmental agency securities, certificates of deposits, commercial paper and repurchase agreements. Competitive pressures affect the Corporation's manner of conducting business. Competition stems not only from other commercial banks but also from other financial institutions such as savings banks, savings and loan associations, mortgage companies, leasing companies and various other financial service and advisory companies. Many of the financial institutions operating in the Corporation's primary market are substantially larger and offer a wider variety of products and services than the Corporation. The Parent Corporation is subject to regulation by the Board of Governors of the Federal Reserve System and the New Jersey Department of Banking. As a national bank, the Bank is subject to regulation and periodic examination by the Comptroller of the Currency. Deposits in the Bank are insured by the Federal Deposit Insurance Corporation (the "FDIC"). 29 March 99 Center Bancorp Inc. Form 10-K Page 1 The Parent Corporation is required to file with the Federal Reserve Board an annual report and such additional information as the Federal Reserve Board may require pursuant to the Bank Holding Company Act of 1956, as amended (the "Act"). In addition, the Federal Reserve Board makes examinations of bank holding companies and their subsidiaries. The Act requires each bank holding company to obtain the prior approval of the Federal Reserve Board before it may acquire substantially all of the assets of any bank, or before it may acquire ownership or control of any voting shares of any bank, if, after such acquisition, it would own or control, directly or indirectly, more than 5 percent of the voting shares of such bank. The Act also restricts the types of businesses and operations in which a bank holding company and its subsidiaries may engage. The operations of the Bank are subject to requirements and restrictions under federal law, including requirements to maintain reserves against deposits, restrictions on the types and amounts of loans that may be granted, limitations on the types of investments that may be made and the types of services which may be offered. Various consumer laws and regulations also affect the operations of the Bank. Approval of the Comptroller of the Currency is required for branching, bank mergers in which the continuing bank is a national bank and in connection with certain fundamental corporate changes affecting the Bank. Federal law also limits the extent to which the Parent Corporation may borrow from the Bank and prohibits the Parent Corporation and the Bank from engaging in certain tie-in arrangements. FDICIA The Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA") substantially revised the bank regulatory provisions of the Federal Deposit Insurance Act and several other federal banking statutes. Among other things, FDICIA requires federal banking agencies to broaden the scope of regulatory corrective action taken with respect to banks that do not meet minimum capital requirements and to take such actions promptly in order to minimize losses to the FDIC. Under FDICIA, federal banking agencies have established five capital tiers: "well capitalized", "adequately capitalized", "undercapitalized", "significantly undercapitalized" and "critically undercapitalized". Under regulations adopted under these provisions, for an institution to be well capitalized it must have a total risk-based capital ratio of at least 10 percent, a Tier I risk-based capital ratio of at least 6 percent and a Tier I leverage ratio of at least 5 percent and not be subject to any specific capital order or directive. For an institution to be adequately capitalized, it must have a total risk-based capital ratio of at least 8 percent, a Tier I risk-based capital ratio of at least 4 percent and a Tier I leverage ratio of at least 4 percent (or in some cases 3 percent). Under the regulations, an institution will be deemed to be undercapitalized if the bank has a total risk-based capital ratio that is less than 8 percent, a Tier I risk-based capital ratio that is less than 4 percent or a Tier I leverage ratio of less than 4 percent (or in some cases 3 percent). An institution will be deemed to be significantly undercapitalized if the bank has a total risk-based capital ratio that is less than 6 percent, a Tier I risk-based capital ratio that is less than 3 percent, or a Tier I leverage ratio of less than 3 percent and will be deemed to be critically undercapitalized if it has a ratio of tangible equity to total assets that is equal to or less than 2 percent. FDICIA also directs that each federal banking agency prescribe standards for depository institutions and depository institution holding companies relating to internal controls, information systems, internal audit systems, loan documentation, credit underwriting, interest rate exposure, asset growth, a maximum ratio of classified assets to capital, a minimum ratio of market value to book value for publicly traded shares (if feasible) and such other standards as the agency deems appropriate. FDICIA also contains a variety of other provisions that could affect the operations of the Corporation, including reporting requirements, regulatory standards for real estate lending, "truth in savings" provisions, the requirement that depository institutions give 90 days notice to customers and regulatory authorities before closing any branch, limitations on credit exposure between banks, restrictions on loans to a bank's insiders and guidelines governing regulatory examinations. 29 March 99 Center Bancorp Inc. Form 10-K Page 2 BIF Premiums and Recapitalization of SAIF The Corporation is a member of the Bank Insurance Fund ("BIF") of the FDIC. The FDIC also maintains another insurance fund, the Savings Association Insurance Fund ("SAIF"), which primarily covers savings and loan association deposits but also covers deposits that are acquired by a BIF-insured institution from a savings and loan association ("Oakar deposits"), the Corporation had approximately $64.5 million of deposits at December 31, 1998, with respect to which it pays SAIF insurance premiums. The Economic Growth and Regulatory Reduction Act of 1996 (the "1996 Act") signed into law on September 30, 1996, included the Deposit Insurance Funds Act of 1996 (the "Funds Act") under which the FDIC was required to impose a special assessments on SAIF-assessable deposits to recapitalize the SAIF. Under the Funds Act, the FDIC also will charge assessments for SAIF and BIF deposits in a 5 to 1 ratio to pay Financing Corp. ("FICO") bonds until January 1, 2000, at which time the assessment will be equal. A FICO rate of approximately 1.29 basis points will be charged on BIF deposits, and approximately 6.44 basis points will be charged on SAIF deposits. Oaker deposits will be treated as SAIF deposits for purposes of the FICO bond assessment. After the 1996 Act, SAIF deposit assessments were lowered to the BIF assessment level, except for the FICO bond assessment. The 1996 Act instituted a number of other regulatory relief provisions. Proposed Legislation From time to time proposals are made in the U.S. Congress and before various bank regulatory authorities which would alter the policies of and place restrictions on different types of banking operations. It is impossible to predict the impact, if any, of potential legislative trends on the business of the Corporation and the Bank. C)Dividend Restrictions Most of the revenue of the Corporation available for payment of dividends on its capital stock will result from amounts paid to the Parent Corporation by the Bank. There are a number of statutory and regulatory restrictions applicable to the payment of dividends by national banks and bank holding companies. First, the Bank must obtain the approval of the Comptroller of the Currency (the "Comptroller") if the total dividends declared by the Bank in any year will exceed the total of the Bank's net profits (as defined and interpreted by regulation) for that year and retained profits (as defined) for the preceding two years, less any required transfers to surplus. Second, the Bank cannot pay dividends except to the extent that net profits then on hand exceed statutory bad debts. Third, the authority of federal regulators to monitor the levels of capital maintained by the Corporation and the Bank (see Item 7 of this Annual Report on Form 10-K and the discussion of FDICIA above), as well as the authority of such regulators to prohibit unsafe or unsound practices, could limit the amount of dividends which the Parent Corporation and the Bank may pay. Regulatory pressures to reclassify and charge off loans to establish additional loan loss reserves also can have the effect of reducing current operating earnings and thus impacting an institution's ability to pay dividends. Regulatory authorities have indicated that bank holding companies which are experiencing high levels of non-performing loans and loan charge-offs should review their dividend policies. Reference is also made to Note 13 of the Notes to the Corporation's Consolidated Financial Statements included in the 1998 Annual Report incorporated herein by reference. D)Statistical Information (Reference is also made to Exhibit 13.1 of this Annual Report on Form 10-K) Information regarding interest sensitivity is incorporated by reference to pages 27 through 29 of the 1998 Annual Report to Shareholders (the 1998 Annual Report). Information regarding related party transactions is incorporated by reference to Note 5 of the Notes to the Corporation's Consolidated Financial Statements included in the 1998 Annual Report incorporated herein by reference. The market risk results and gap results noted on pages 27 through 29 of the 1998 Annual Report take into consideration repricing and maturities of assets and liabilities, but fail to consider the interest sensitivities of those asset and liability accounts. Management has prepared for its use an income simulation model to forecast 29 March 99 Center Bancorp Inc. Form 10-K Page 3 future net interest income, in light of the current gap position. Management has also prepared for its use alternative scenarios to measure levels of net interest income associated with various changes in interest rates. Results have indicated that an interest rate increase of 100 basis points and a decline of 100 basis resulted in an impact on future net interest income which is consistent with target levels contained in the Corporation's Asset/Liability Policy. Management cannot provide any assurances about the actual effect of changes in interest rates on the Corporation's net income. I. Investment Portfolio a) For information regarding the carrying value of the investment portfolio, see pages 41 and 42 of the 1998 Annual Report which is incorporated herein by reference. b) The following table illustrates the maturity distribution and weighted average yield on a tax-equivalent basis for investment securities at December 31, 1998, on a contractual maturity basis.
Obligations Other Securities, of US Obligations Federal Reserve Treasury & of States and Federal Government & Political Home Loan (Dollars in Thousands) Agencies Subdivisions Bank Stock Total - --------------------------------------------------------------------------------------------------------- Due in 1 year or less Amortized Cost $ 78,334 $ 5,793 $ 3,004 $ 87,131 Market Value 79,037 5,843 3,028 87,908 Weighted Average Yield 6.519% 5.678% 6.666% 6.469% Due after one year through five years Amortized Cost $ 100,207 $ 22,308 $ 19,428 $ 141,943 Market Value 100,961 22,997 19,883 143,841 Weighted Average Yield 6.644% 5.812% 6.614% 6.696% Due after five years through ten years Amortized Cost $ 12,607 $ 18,005 $ 1,495 $ 32,107 Market Value 13,243 18,449 1,540 33,232 Weighted Average Yield 6.752% 5.617% 6.300% 6.213% Due after ten years Amortized Cost $ 20,926 $ 0 $ 0 $ 20,926 Market Value 21,149 0 0 21,149 Weighted Average Yield 6.735% 0.000% 0.000% 6.735% No Maturity Amortized Cost $ 0 $ 0 $ 4,006 $ 4,006 Market Value 0 0 4,006 4,006 Weighted Average Yield 0.000% 0.000% 7.122% 7.122% - --------------------------------------------------------------------------------------------------------- Total Amortized Cost $ 212,074 $ 46,106 $ 27,933 $ 286,113 Market Value 214,390 47,289 28,457 290,136 Weighted Average Yield 6.616% 5.822% 6.679% 6.494% - ---------------------------------------------------------------------------------------------------------
c) Securities of a single issuer exceeding 10 percent of stockholders' equity amounted to -0- for 1998. For other information regarding the Corporation's investment securities portfolio, see Pages 20, 41 and 42 of the 1998 Annual Report. II. Loan Portfolio The following table presents information regarding the components of the Corporation's loan portfolio on the dates indicated.
Years Ended December 31, ------------------------ (Dollars in thousands) 1998 1997 1996 1995 1994 --------------------------------------------------------------------------------------------------------- Commercial $ 52,182 $ 39,397 $ 25,950 $ 21,302 $ 18,674 Real estate-mortgage 91,189 88,067 85,994 69,954 64,666 Installment Loan 7,060 5,565 6,584 7,012 6,250 --------------------------------------------------------------------------------------------------------- Total 150,431 133,029 118,528 98,268 89,590 Less: Unearned discount 332 605 698 698 785 Allowance for loan losses 1,326 1,269 1,293 1,073 1,073 --------------------------------------------------------------------------------------------------------- Net total $ 148,773 $ 131,155 $ 116,537 $ 96,497 $ 87,732 =========================================================================================================
29 March 99 Center Bancorp Inc. Form 10-K Page 4 Since 1994, demand for the Bank's commercial loan, commercial real estate and real estate mortgage products improved gradually. Business development and marketing programs coupled with positive market trends supported the growth in 1995, 1996, 1997 and 1998. The Lehigh acquisition also accounted for a portion of 1996 loan growth approximating $15.2 million. The maturities of commercial loans at December 31, 1998 are listed below.
At December 31, 1998, Maturing ---------------------------------------------------------------------------------- After One Year In One Year Through After (Dollars in thousands) Or Less Five Years Five Years Total - -------------------------------------------------- ------------------ ------------------ ---------------- Construction loans $ 654 $ 113 $ 0 $ 767 Commercial real estate loans 1,122 1,789 17,660 20,571 Commercial loans 16,098 5,652 9,094 30,844 ------- ------ ------- ------- Total $17,874 $7,554 $26,754 $52,182 ======= ====== ======= ======= Loans with: Fixed rates $ 421 $6,419 $26,754 $33,594 Variable rates 17,453 1,135 0 18,588 ------- ------ ------- ------- Total $17,874 $7,554 $26,754 $52,182 ======= ====== ======= =======
Lending is one of Center Bancorp's primary business activities. The Corporation's loan portfolio consists of both retail and commercial loans, serving the diverse customer base in its market area. In 1998, average total loans comprised 31.21 percent of average interest-earning assets. The Corporation has experienced a compound growth rate in average loans since 1994 of 10.9 percent. Average loans amounted to $139.0 million in 1998 compared with $125.5 million in 1997, $107.9 million in 1996. The composition of Center Bancorp's loan portfolio continues to change due to the local economy. Factors such as the economic climate, interest rates, real estate values and employment all contribute to these changes. Loan growth has been generated through marketing and business development efforts. Average commercial loans increased approximately $5.6 million or 26.7 percent in 1998 as compared with 1997. The Corporation seeks to create growth in commercial lending by offering new products, lowering pricing and capitalizing on the positive trends in its market area. Specialized products are offered to meet the financial requirements of the Corporation's clients. It is the objective of the Corporation's credit policies to diversify the commercial loan portfolio to limit concentrations in any single industry. The Corporation's commercial loan portfolio includes, in addition to real estate development, loans to the manufacturing, services, automobile, professional and retail trade sectors, and to specialized borrowers, including high technology businesses. A large proportion of the Corporation's commercial loans have interest rates which reprice with changes in short-term market interest rates or mature in one year or less. Average mortgage loans, which amounted to $86.4 million in 1998 increased $5.8 million or 7.2 percent as compared with average mortgage loans of $80.5 million in 1997 (which reflected a 12.4 percent increase over 1996). The Corporation's long-term mortgage portfolio includes both residential and commercial financing. Growth during the past two years largely reflected brisk activity in mortgage financing. Although a portion of the Corporation's commercial mortgages adjust to changes in the prime rate, as well as indices tied to the 5 year Treasury Notes, most of these loans and residential mortgage loans have fixed interest rates. Residential loans increased steadily in 1994 and 1995. In 1996 the increase is attributable to the Lehigh acquisition. During 1997 growth increased as rates stabilized with similar trends experienced during 1998. During 1997 and 1998 growth was affected by refinancing activity. Average construction loans and other temporary mortgage financing increased from 1997 to 1998 by $209,000 to $767,000. Such loans declined by $ 2.3 million from 1996 to 1997. The change in construction and other temporary mortgage lending has been generated by the market activity of our customers engaging in residential and commercial development throughout New Jersey. Interest rates on such mortgages are generally tied to key 29 March 99 Center Bancorp Inc. Form 10-K Page 5 short-term market interest rates. Funds are typically advanced to the builder or developer during various stages of construction and upon completion of the project it is contemplated that the loans will be repaid by cash flows derived from the ongoing project. Loans to individuals include personal loans, student loans, and home improvement loans, as well as financing for automobiles and other vehicles. Such loans averaged $7.1 million in 1998, as compared with $5.6 million in 1997 and $6.6 million in 1996. The growth in loans to individuals, during 1998, was buoyed by increases in personal loans, offset in part by sales of student loans and declines in automobile loans. Home equity loans, which the Corporation has been actively promoting since 1994, as well as traditional secondary mortgage loans, have become popular with consumers due to their tax advantages over other forms of consumer borrowing vehicles. Home equity loans and secondary mortgages averaged $21.5 million in 1998, an increase of $3.1 million or 17.1 percent as compared with average home equity loans of $18.2 million in 1997. Interest rates on floating rate home equity loans are generally tied to the prime rate while most other loans to individuals, including fixed rate home equity loans, are medium-term (ranging between one-to-five years) and carry fixed interest rates. At December 31, 1998, the Corporation had total lending commitments outstanding of $43.8 million, of which approximately 43.1 percent and 26.8 percent were for commercial loans and commercial real estate and construction loans, respectively. Credit risks are an inherent part of the lending function. The Corporation has set in place specific policies and guidelines to limit credit risks to the degree possible. The following describes the Corporation's credit management policy and describes certain risk elements in its earning assets portfolio. Credit Management. The maintenance of comprehensive and effective credit policies is a paramount objective of the Corporation. Credit procedures are enforced at each individual branch office and are maintained at the senior administrative level as well as through internal control procedures. Prior to extending credit, the Corporation's credit policy generally requires a review of the borrower's credit history, collateral and purpose of each loan. Requests for most commercial and financial loans are to be accompanied by financial statements and other relevant financial data for evaluation. After the granting of a loan or lending commitment, this financial data is typically updated and evaluated by the credit staff on a periodic basis for the purpose of identifying potential problems. Construction financing requires a periodic submission by the borrowers of sales/leasing status reports regarding their projects, as well as, in some cases, inspections of the project sites by independent engineering firms. Advances are normally made only upon the satisfactory completion of periodic phases of construction. Certain lending authorities are granted to loan officers based upon each officer's position and experience. However, large dollar loans and lending lines are reported to and are subject to the approval of the Bank's loan committee and/or board of directors. Loan committees are chaired by either the president or a senior officer of the Bank. Real estate lending policies include changes implemented by FDICIA, more specifically the requirement to monitor and report the aggregate of any loans with loan-to-value ratios in excess of the supervisory limits set forth in the Interagency Guidelines for Real Estate Lending Policies. The Corporation has established its own internal loan-to-value limits for real estate loans. In general, except as described below, these internal limits are not permitted to exceed the following supervisory limits. Loan Category Loan-to-Value Limit Raw Land 65% Land Development 75% Construction: Commercial, Multifamily *, and other Nonresidential 80% Improved Property 85% Owner-occupied 1 to 4 family and home equity ** 29 March 99 Center Bancorp Inc. Form 10-K Page 6 * Multifamily construction includes condominiums and cooperatives. ** A loan-to-value limit has not been established for permanent mortgage or home equity loans on owner-occupied, 1 to 4 family residential property. However, for any such loan with a loan-to-value ratio that equals or exceeds 90 percent at origination, an institution is expected to require appropriate credit enhancement in the form of either mortgage insurance or readily marketable collateral. It may be appropriate in individual cases to originate loans with loan-to-value ratios in excess of the supervisory loan-to-value limits, based on the support provided by other credit factors. The President or Board of Directors must approve such exceptions. These loans must be identified by the Bank as exceptions to the supervisory limits and their aggregate amount must be reported at least quarterly to the Board of Directors. Non-conforming loans should not exceed 100% of capital, or 30% with respect to non 1 to 4 family residential loans. Collateral margin guidelines are based on cost, market, or other appraised value to maintain a reasonable amount of collateral protection in relation to the inherent risk in the loan. This does not mitigate the fundamental analysis of cash flow from the conversion of assets in the normal course of business or from operations to repay the loan. It is merely designed to provide a cushion to minimize the risk of loss if the ultimate collection of the loan becomes dependent on the liquidation of security pledged. The Corporation also seeks to minimize lending risk through loan diversification. The composition of the Corporation's commercial loan portfolio reflects and is highly dependent upon the economy and industrial make-up of the region it serves. Effective loan diversification spreads risk to many different industries, thereby reducing the impact of downturns in any specific industry on overall loan profitability. Weakening credits are monitored through a loan review process which requires that, on a regular basis, a classified loan report is prepared. Classified loans are categorized into one of several categories depending upon the condition of the borrower and the strength of the underlying collateral. "Other assets especially mentioned" is an early warning signal consisting of loans with only modest deficiencies in documentation or with potentially weakening credit features. A consolidated classified loan report is prepared on a monthly basis and is examined by both the senior management of the Bank and the Corporation's Board of Directors. The review of classified loan reports is designed to enable management to take such action as is considered necessary to remedy problems on a timely basis. Regularly scheduled audits performed by the Corporation's internal and external credit review staff further the integrity of the credit monitoring process. Any noted deficiencies are expected to be corrected within a reasonable period of time. Risk Elements. Risk elements include non-performing loans, loans past due ninety days or more as to interest or principal payments but not placed on a non-accrual status, potential problem loans, other real estate owned, net, and other non-performing, interest-earning assets. Non-performing and Past Due Loans Non-performing loans include non accrual loans and troubled debt restructurings. Non-accrual loans represent loans on which interest accruals have been suspended. It is the Corporation's general policy to consider the charge-off of loans when they become contractually past due ninety days or more as to interest or principal payments or when other internal or external factors indicate that collection of principal or interest is doubtful. Troubled debt restructurings represent loans on which a concession was granted to a borrower, such as a reduction in interest rate which is lower than the current market rate for new debt with similar risks. At December 31, 1998, other real estate owned (OREO) consisted of a closed branch facility with a carrying value of approximately $73,000. 29 March 99 Center Bancorp Inc. Form 10-K Page 7 Loans accounted for on a non-accrual basis at December 31, 1998, 1997, 1996, 1995, and 1994 are as follows. (Dollars in thousands) 1998 1997 1996 1995 1994 ----------------------------------------------------------------------------- Mortgage Real Estate $ 38 $ 27 $ 298 $ 0 $ 0 Commercial 0 0 0 0 0 Installment 3 0 0 0 0 ----------------------------------------------------------------------------- Total non-accrual loans $ 41 $ 27 $ 298 $ 0 $ 0 ============================================================================= Accruing loans which are contractually past due 90 days or more as to principal or interest payments are as follows: December 31, ------------ (Dollars in thousands) 1998 1997 1996 1995 1994 ----------------------------------------------------------------------------- Commercial $ 0 $ 0 $ 11 $ 0 $ 0 Installment 24 73 110 48 0 ----------------------------------------------------------------------------- Total $ 24 $ 73 $ 121 $ 48 $ 0 ============================================================================= There were no loans which are "troubled debt restructurings" as of the last day of each of the last five years. In general, it is the policy of management to consider the charge-off of loans at the point that they become past due in excess of 90 days, with the exception of loans that are secured by cash or marketable securities or mortgage loans which are in the process of foreclosure. There were no other known "potential problem loans" (as defined by SEC regulations) as of December 31, 1998 that have not been identified and classified. Such loans, consisting of other assets especially mentioned and substandard loans, amounted to $119,440 and $75,670, respectively, at December 31, 1998. At December 31, 1997 these loans amounted to $239,304 and $0 respectively. The Corporation has no foreign loans. As of December 31, 1998, $10.3 million of the commercial loan portfolio, or 32.2 percent of $31.9 million, represented outstanding working capital loans to various real estate developers. All but $3.5 million of these loans are secured by mortgages on land and on buildings under construction. 29 March 99 Center Bancorp Inc. Form 10-K Page 8 III. Allowance for Loan Losses Implicit in the lending function is the fact that loan losses will be experienced and that the risk of loss will vary with the type of loan being made, the creditworthiness of the borrower and prevailing economic conditions. The allowance for loan losses has been allocated below according to the estimated amount deemed to be reasonably necessary to provide for the possibility of losses being incurred within the following categories of loans at December 31, for each of the past five years. The table below shows, for three types of loans, the amounts of the allowance allocable to such loans and the percentage of such loans to total loans. The percentage of loans to total loans is based upon the classification of loans shown on page 5 of this report.
Commercial Real Estate Mortgage Installment Unallocated ---------- -------------------- ----------- ----------- Amount Loans to Amount Loans to Amount Loans to Amount Total Loans Total Loans Total Loans (Dollars in thousands) % % % - --------------------------------------------------------------------------------------------------------------- 1998 $ 553 34.7 $ 330 60.6 $ 66 4.7 $ 377 1997 $ 498 29.6 $ 262 66.2 $ 56 4.2 $ 453 1996 $ 415 21.9 $ 220 66.1 $ 62 12.0 $ 596 1995 $ 467 21.7 $ 187 71.2 $ 22 7.1 $ 397 1994 $ 399 20.2 $ 185 72.8 $ 55 7.0 $ 434
Information regarding charge-offs and recoveries is incorporated by reference to page 22 of the 1998 Annual Report. IV. Deposits Information regarding average amounts/rates of deposits is incorporated by reference to pages 29 and 33 of the 1998 Annual Report. Information regarding the amount of time certificates of deposit of $100,000 or more is presented on pages 29, 30 and 34 of the 1998 Annual Report. V. Return on Equity and Assets Information regarding the return on average assets, return on average equity and dividend payout ratio is incorporated by reference to pages 1 and 15 of the 1998 Annual Report. Return on average assets was 0.88 percent, 0.94 percent and 1.00 percent for the years ended December 31, 1998, 1997 and 1996, respectively. The dividend payout ratio was 48.0 percent, 41.0 percent and 43.0 percent for the years ended December 31, 1998, 1997 and 1996, respectively. Return on tangible average shareholders equity was 12.9 percent in 1998, compared with 15.9 percent for 1997 and 15.2 percent in 1996. VI. Short-term Borrowings Information regarding the amount outstanding of short-term borrowings is incorporated by reference to page 30 of the 1998 Annual Report. ITEM 2-Properties - -------------------------------------------------------------------------------- The Bank's operations are located at five sites in Union Township, one in Springfield Township, one in Berkeley Heights, and one in Vauxhall, Union County, New Jersey. The Bank also has one site in Madison, and one site in Morristown, Morris County, New Jersey. The Bank is scheduled to open a full service branch in Summit, Union County, New Jersey in June 1999 The principal office is located at 2455 Morris Avenue, Union, Union County, New Jersey. The principal office is a two story building constructed in 1993. All but six of the locations are owned by the Bank. The lease of the Five Points Branch located at 356 Chestnut Street, Union, New Jersey expires November 30, 2002 and is subject to renewal at the Bank's option. The lease of the Career Center Branch located in Union High School expires December 31, 2002 and is also subject to renewal at the Bank's option and the lease of the Madison office located at 300 Main Street, Madison, New Jersey expires June 6, 2005 and is subject to renewal at the Bank's option. The lease of the Millburn Mall Branch located at 2933 Vauxhall Road, Vauxhall, New Jersey expires February 01, 2003 and is subject to renewal at the Bank's option and the lease of the Morristown office located at 86 South Street, Suite 2A, Morristown, New Jersey expires February 28, 2003 and is subject to renewal at the Bank's option. The lease of 29 March 99 Center Bancorp Inc. Form 10-K Page 9 the Summit branch located 392 Springfield Avenue, Summit, New Jersey expires March 31, 2009 and is subject to renewal at the Bank's option. (See page 56 of the 1998 Annual Report for a complete listing of all branches and locations. The Drive In/Walk Up located at 2022 Stowe Street, Union, New Jersey is adjacent to a part of the Main Office facility.) The Bank has two off-site ATM's, one at Union Hospital, 100 Galloping Hill Road, Union, New Jersey and one at Union County College, 1033 Springfield Avenue, Cranford, New Jersey. ITEM 3-Legal Proceedings - -------------------------------------------------------------------------------- There are no significant pending legal proceedings involving the Parent Corporation or Bank other than those arising out of routine operations. Management does not anticipate that the ultimate liability, if any, arising out of such litigation will have a material effect on the financial condition or results of operations of the Parent Corporation and Bank on a consolidated basis. ITEM 4-Submission of Matters to a Vote of Security Holders - -------------------------------------------------------------------------------- The Corporation had no matter submitted to a vote of security holders during the fourth quarter of 1998. ITEM 4 A-Executive Officers - -------------------------------------------------------------------------------- The following table sets forth the name and age of each executive officer of the Parent Corporation, the period during which each such person has served as an officer of the Parent Corporation or the Bank and each such person's business experience (including all positions with the Parent Corporation and the Bank) for the past five years:
Name and Age Officer Since Business Experience --------------------------------------------------------------------------------------------------------- John J. Davis 1982 the Parent Corporation President & Chief Executive Officer Age - 56 1977 the Bank of the Parent Corporation and the Bank Anthony C. Weagley 1996 the Parent Corporation Vice President & Treasurer of the Parent Age - 37 1995 the Bank Corporation 1985 the Bank Senior Vice President & Cashier (1996-Present), Vice President & Cashier (1991 - 1996) and Assistant Vice President prior years of the Bank Donald Bennetti 1996 the Parent Corporation Vice President of the Parent Corporation Age - 55 1990 the Bank Senior Vice President (1997-Present) Vice President of the Bank (1993-1997) Assistant Vice President (1992-1993) Assistant Cashier (1990-1992) Robert J. Diesner 1998 the Parent Corporation Vice President of the Parent Corporation Age - 51 1996 the Bank Senior Vice President & Senior Loan Officer (1998-Present) Vice President (1997-1998) Assistant Vice President (1996-1997) John F. McGowan 1998 the Parent Corporation Vice President of the Parent Corporation Age - 52 1996 the Bank Senior Vice President ( 1998-Present) Vice President (1996-1998) Lori A. Wunder 1998 the Parent Corporation Vice President of the Parent Corporation Age - 35 1995 the Bank Senior Vice President (1998-Present) Vice President (1997-1998) Assistant Vice President (1996-1997) Assistant Cashier (1995-1996)
29 March 99 Center Bancorp Inc. Form 10-K Page 10 Part II ITEM 5-Market Information For the Registrant's Stock and Related Stockholder Matters - -------------------------------------------------------------------------------- The information required by Item 5 of Form 10-K appears on page 32 of the 1998 Annual Report and is incorporated herein by reference. As of December 31, 1998 there were 606 holders of record of the Parent Corporation's Common Stock. ITEM 6-Selected Financial Data - -------------------------------------------------------------------------------- The information required by Item 6 of Form 10-K appears on pages 1 and 15 of the 1998 Annual Report and is incorporated herein by reference. ITEM 7-Management's Discussion And Analysis of Financial Condition and Results of Operations - -------------------------------------------------------------------------------- The information required by Item 7 of Form 10-K appears on pages 16 - 33 of the 1998 Annual Report and is incorporated herein by reference. ITEM 7A-Quantitative and Qualitative Disclosures About Market Risk - -------------------------------------------------------------------------------- The information required by Item 7A of Form 10-K appears on pages 27, 28, and 29 of the 1998 Annual Report and is incorporated herein by reference. ITEM 8-Financial Statements and Supplementary Data - -------------------------------------------------------------------------------- The information required by Item 8 of Form 10-K appears on pages 34 through 54 of the 1998 Annual Report and is incorporated herein by reference. ITEM 9-Changes In and Disagreements With Accountants on Accounting and Financial Disclosures - -------------------------------------------------------------------------------- None 29 March 99 Center Bancorp Inc. Form 10-K Page 11 Part III ITEM 10-Directors of the Registrant - -------------------------------------------------------------------------------- The Corporation responds to this item by incorporating herein by reference the material responsive to such item in the Corporation's definitive proxy statement for its 1999 Annual Meeting of Stockholders. ITEM 11-Executive Compensation - -------------------------------------------------------------------------------- The Corporation responds to this item by incorporating herein by reference the material responsive to such item in the Corporation's definitive proxy statement for its 1999 Annual Meeting of Stockholders. ITEM 12-Security Ownership of Certain Beneficial Owners and Management - -------------------------------------------------------------------------------- The Corporation responds to this item by incorporating herein by reference the material responsive to such item in the Corporation's definitive proxy statement for its 1999 Annual Meeting of Stockholders. ITEM 13-Certain Relationships and Related Transactions - -------------------------------------------------------------------------------- The Corporation responds to this item by incorporating herein by reference the material responsive to such item in the Corporation's definitive proxy statement for its 1999 Annual Meeting of Stockholders. 29 March 99 Center Bancorp Inc. Form 10-K Page 12 Part IV ITEM 14-Exhibits, Financial Statement Schedules, and Reports on Form 8 -K - -------------------------------------------------------------------------------- A1. Financial Statements
Page in Annual Report Consolidated Statements of Condition at December 31, 1998, and 1997 34 --------------------------------------------------------------------------------------------------- Consolidated Statements of Income for the years ended December 31, 1998, 1997 and 1996 35 --------------------------------------------------------------------------------------------------- Consolidated Statements of Changes in Stockholders' Equity for the years ended 36 December 31, 1998, 1997 and 1996 --------------------------------------------------------------------------------------------------- Consolidated Statements of Cash Flows for the years ended December 31, 1998, 1997 and 1996 37 --------------------------------------------------------------------------------------------------- Notes to Consolidated Financial Statements 38- 53 --------------------------------------------------------------------------------------------------- Report of Independent Auditors 54 ---------------------------------------------------------------------------------------------------
A2. Financial Statement Schedules All Schedules have been omitted as inapplicable, or not required, or because the required information is included in the Consolidated Financial Statements or the notes thereto. A3. Exhibits 3.1 Certificate of Incorporation of the Registrant 3.2 Bylaws of the Registrant 10.1 Employment agreement between the Registrant and Donald Bennetti, dated January 1, 1996, is incorporated by reference to exhibit 10.1 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1995. 10.2 Employment agreement between the Registrant and John J. Davis is incorporated by reference to exhibit 10.2 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1995 10.3 The Registrant's Employee Stock Option Plan is incorporated by reference to exhibit 10.3 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1993 10.4 The Registrant's Outside Director Stock Option Plan is incorporated by reference to exhibit 10.4 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1993 10.5 Supplemental Executive Retirement Plans ("SERPS") are incorporated by reference to exhibit 10.5 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1994 10.6 Executive Split Dollar Life Insurance Plan is incorporated by reference to exhibit 10.5 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1994 10.7 Employment agreement between the Registrant and Anthony C. Weagley, dated as of January 1, 1996 is incorporated by reference to exhibit 10.7 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1995 29 March 99 Center Bancorp Inc. Form 10-K Page 13 10.8 Agreement and Plan of Merger, by and between the Registrant and Lehigh Savings Bank, SLA., dated as of February 14, 1996, as amended is incorporated by reference to exhibit 2 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1995 10.9 Inducement Agreement, dated February 14, 1996 by and between the Registrant and the trustee under a trust agreement applicable to the majority shareholder of Lehigh Savings Bank, SLA is incorporated by reference to exhibit 10.2 of the Registrant's for 10-Q for the period ended March 31, 1996. 10.10 Directors' Retirement Plan 11.1 Statement regarding computation of per share earnings is omitted because the computation can be clearly determined from the material incorporated by reference in this Report. 13.1 Registrant's Annual Report to Shareholders for the year ended December 31, 1998 (parts not incorporated by reference are furnished for information purposes only and are not to be deemed to be filed herewith.) 21.1 Subsidiaries of the Registrant 23.1 Consent of KPMG LLP 27.1 Financial Data Schedule B. Reports on Form 8-K There were no reports on Form 8-K filed by the Registrant during the fourth quarter of 1998. 29 March 99 Center Bancorp Inc. Form 10-K Page 14 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Center Bancorp Inc. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CENTER BANCORP INC. /s/ JOHN J. DAVIS ------------------------------------- John J. Davis President and Chief Executive Officer Dated March 29, 1999 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant, in the capacities described below and on the date indicated above: /s/ CHARLES P. WOODWARD /s/ HUGO BARTH, III - ------------------------------------ ------------------------------------- Charles P. Woodward, Hugo Barth, III Director and Chairman of the Board Director /s/ ROBERT L. BISCHOFF /s/ ALEXANDER BOL - ------------------------------------ ------------------------------------- Robert L. Bischoff Alexander Bol Director Director /s/ BRENDA CURTIS /s/ DONALD G. KEIN - ------------------------------------ ------------------------------------- Brenda Curtis Donald G. Kein Director Director /s/ JOHN J. DAVIS /s/ HERBERT SCHILLER - ------------------------------------ ------------------------------------- John J. Davis Herbert Schiller President and Chief Executive Officer Director and Director /s/ PAUL LOMAKIN, JR. /s/ STAN R. SOMMER - ------------------------------------ ------------------------------------- Paul Lomakin, Jr. Stan R. Sommer Director Director /s/ WILLIAM THOMPSON /s/ ANTHONY C. WEAGLEY - ------------------------------------ ------------------------------------- William Thompson Anthony C. Weagley Director Vice President & Treasurer (Chief Accounting and Financial Officer) 29 March 99 Center Bancorp Inc. Form 10-K Page 15 EXHIBIT INDEX 3.1 Certificate of Incorporation of the Registrant 3.2 Bylaws of the Registrant 10.1 Employment agreement between the Registrant and Donald Bennetti, dated January 1, 1996, is incorporated by reference to exhibit 10.1 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1995. 10.2 Employment agreement between the Registrant and John J. Davis is incorporated by reference to exhibit 10.2 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1995 10.3 The Registrant's Employee Stock Option Plan is incorporated by reference to exhibit 10.3 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1993 10.4 The Registrant's Outside Director Stock Option Plan is incorporated by reference to exhibit 10.4 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1993 10.5 Supplemental Executive Retirement Plans ("SERPS") are incorporated by reference to exhibit 10.5 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1994 10.6 Executive Split Dollar Life Insurance Plan is incorporated by reference to exhibit 10.5 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1994 10.7 Employment agreement between the Registrant and Anthony C. Weagley, dated as of January 1, 1996 is incorporated by reference to exhibit 10.7 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1995 10.8 Agreement and Plan of Merger, by and between the Registrant and Lehigh Savings Bank, SLA., dated as of February 14, 1996, as amended is incorporated by reference to exhibit 2 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1995 10.9 Inducement Agreement, dated February 14, 1996 by and between the Registrant and the trustee under a trust agreement applicable to the majority shareholder of Lehigh Savings Bank, SLA is incorporated by reference to exhibit 10.2 of the Registrant's for 10-Q for the period ended March 31, 1996. 10.10 Directors' Retirement Plan 11.1 Statement regarding computation of per share earnings is omitted because the computation can be clearly determined from the material incorporated by reference in this Report. 13.1 Registrant's Annual Report to Shareholders for the year ended December 31, 1998 (parts not incorporated by reference are furnished for information purposes only and are not to be deemed to be filed herewith.) 21.1 Subsidiaries of the Registrant 23.1 Consent of KPMG LLP 27.1 Financial Data Schedule 29 March 99 Center Bancorp Inc. Form 10-K Page 16 EX-3.1 2 CERTIFICATE OF INCORPORATION FILED NOV 12, 1982 JANE BURGIO Secretary of State CERTIFICATE OF INCORPORATION OF CENTER BANCORP INC. This is to certify that, there is hereby organized a corporation under and by virtue of N.J. State 14:1-1 et seq., the New Jersey "Business Corporation Act." First: Corporate Name. The name of the Corporation is Center Bancorp Inc. Second: Registered Office. The address of this corporation's initial registered office is 2003 Morris Avenue, Union, New Jersey 07083, and the name of the corporation's initial registered agent at such address is John J. Davis. Third: Corporate Purposes. The purpose or purposes for which the corporation is organized are: (a) To act as a bank holding company, with all of the rights, powers and privileges, and subject to all of the limitations, specified in any applicable state or federal legislation from time to time in effect; (b) To engage in any other activities within the purposes for which corporations may be organized under the New Jersey Business Corporation Act. Fourth: Capitalization. The total authorized capital stock of the Corporation shall consist of 1,000,000 shares of common stock, par value $5.00 per share. Shares of the authorized capital stock may be issued from time to time for such consideration not less than the par value thereof as may be fixed from time to time by the Board of Directors. Fifth: Initial Directors. The number of directors constituting the initial Board of Directors of the corporation shall be three; and the names and addresses of the directors are: Name Address ---- ------- Jack McDonnell 1070 Wychwood Rd., Westfield, N. J. 07090 John J. Davis 6 Knollwood Dr., Morristown, N.J. 07960 Donald G. Kein 103 Huron Dr., Chatham Township, N.J. 07928 Sixth: Incorporation. The name and address of each incorporator is: Name Address ---- ------- Jack McDonnell 1070 Wychwood Rd., Westfield, N.J. 07090 John J. Davis 6 Knollwood Dr., Morristown, N.J. 07960 Donald G. Kein 103 Huron Dr., Chatham Township, N.J. 07928 Seventh: No Cumulative Voting Rights. Cumulative voting for the election of directors shall not be permitted. Eight: Indebtedness. The corporation shall have authority to borrow money and the Board of Directors, without the approval of the shareholders and acting within their sole discretion, shall have the authority to issue debt instruments of the corporation upon such terms and conditions and with such limitation as the Board of Directors deems advisable. The authority of the Board of Directors shall include, but not be limited to, the power to issue convertible debentures. Ninth: The Board of Directors may, if it deems advisable, oppose a tender, or other offer for the corporation's securities, whether the offer is in cash or in securities of a corporation or otherwise. When considering whether to oppose an offer, the Board of Directors may, but it is not legally obligated to, consider any and all of the following: (1) Whether the offer price is acceptable based on the historical and present operating results or financial conditions of the corporation. (2) Whether a more favorable price could be obtained for the corporation's securities in the future. (3) The impact which an acquisition of the corporation would have on its employees, depositors and customers of the corporation and its subsidiaries in the community which they serve. (4) The reputation and business practices of the offeror and its management and affiliates as they would affect the employees, depositors and customers of the corporation and its subsidiaries and the future value of the corporation's stock. (5) The value of the securities, if any, which the offeror is offering in exchange for the corporation's securities, based on an analysis of the worth of the corporation as compared to the corporation or other entity whose securities are being offered. (6) Any antitrust or other legal and regulatory issues that are raised by the offer. If the Board of Directors determines that an offer should be rejected, it may take any lawful action to accomplish its purpose including, but not limited to, any and all of the following: advising shareholders not to accept the offer; litigation against the offeror; filing complaints with all governmental and regulatory authorities; acquiring the corporation's securities; selling or otherwise issuing authorized but unissued securities or treasury stock or granting options with respect thereto; acquiring a company to create an antitrust or other regulatory problem for the offeror; and obtaining a more favorable offer from another individual or entity. Tenth: Preemptive Rights. No holder of common stock of the corporation, as such, shall be entitled, as a matter of right, to subscribe for or purchase any part of any new or additional issue of stock of any class whatsoever, any rights or options to purchase stock of any class whatsoever, or any securities covertible into, exchangeable for or carrying rights or options to purchase stock of any class whatsoever, whether now or hereafter authorized, and whether issued for cash or other consideration, or by way of dividend. Eleventh: Number of Directors. The By-Laws shall specify the number of directors other than the number constituting the First Board. Any vacancy in the Board, including a vacancy created by an increase in the number of directors, may be filled by the affirmative vote of a majority of the remaining directors, even though less than a quorum of the Board, or by a sole remaining director. Twelfth: Classification of Directors. The Board of Directors of the corporation shall be divided into three classes, the respective terms of office of which shall end in successive years. The number of directors in each class shall be specified in the By-Laws and shall be as nearly equal as possible. Unless they are elected to fill vacancies, the directors in each class shall be elected to hold office until the third successive annual meeting of shareholders after their election and until their successors shall have been elected and qualified. At each annual meeting of shareholders the directors of only one class shall be elected, except directors who may be elected to fill vacancies. Thirteenth: Indemnification. Every person who is or was a director, officer, employee, or agent of the corporation, or of any corporation which he served as such at the request of the corporation, shall be indemnified by the corporation to the fullest extent permitted by law against all expenses and liabilities reasonably incurred by or imposed upon him, in connection with any proceeding to which he may be made, or threatened to be made, a party, or in which he may become involved by reason of his being or having been a director, officer, employee or agent of the corporation, or of such other corporation, whether or not he is a director, officer, employee or agent of the corporation or such other corporation at the time the expenses or liabilities are incurred. Fourteenth: No mergers, consolidation, liquidation or dissolution of the Corporation nor any action that would result in the sale or other disposition of all or substantially all of the assets of the Corporation shall be valid unless first approved by the affirmative vote of the holders of at least sixty six and 2/3 percent (66-2/3%) of the outstanding shares of Common Stock. This Article 14 may not be amended unless first approved by the affirmative vote of the holders of at least sixty-six and 2/3 percent (66-2/3%) of the outstanding shares of Common Stock. IN WITNESS WHEREOF, we, the incorporators of the above-named corporation hereunto signed this Certificate of Incorporation on the Twelfth day of November 1982. /s/ JACK MCDONNELL --------------------- Incorporator /s/ JOHN J. DAVIS --------------------- Incorporator /s/ DONALD G. KEIN --------------------- Incorporator AMENDMENT TO CERTIFICATE OF INCORPORATION CENTER BANCORP, INC. Fourth: Capitalization. The total authorized capital stock of the Corporation shall consist of 10,000,000 shares of common stock, no par value per share. Shares of the authorized capital stock may be issued from time to time for such consideration as may be fixed from time to time by the Board of Directors. Fifteen: So long as permitted by law, no director of the corporation shall be personally liable to the corporation or its shareholders for damages for breach of any duty owed by such person to the corporation or its shareholders; provided, however, that this paragraph fifteen shall not relieve any person from liability to the extent provided by applicable law for any breach of duty based upon an act or omission (a) in breach of such person's duty of loyalty to the corporation or its shareholders, (b) not in good faith or involving a knowing violation of law or (c) resulting in receipt by such person of an improper personal benefit. No amendment to or repeal of this paragraph fifteen and to amendment, repeal or termination of effectiveness of any law authorizing this paragraph fifteen shall apply to or have any effect on the liability or alleged liability of any director for or with respect to any acts or omissions of such director occurring prior to such amendment, repeal or termination of effectiveness. Sixteen: So long as permitted by law, no officer of the corporation shall be personally liable to the corporation or its shareholders for damages for breach of any duty owed by such person to the corporation or its shareholders; provided, however, that this paragraph sixteen shall not relieve any person from liability to the extent provided by applicable law for any breach of duty based upon an act or omission (a) in breach of such person's duty of loyalty to the corporation or its shareholders, (b) not in good faith or involving a knowing violation of law or (c) resulting in receipt by such person of an improper personal benefit. No amendment to or repeal of this paragraph fifteen and to amendment, repeal or termination of effectiveness of any law authorizing this paragraph fifteen shall apply to or have any effect on the liability or alleged liability of any director for or with respect to any acts or omissions of such director occurring prior to such amendment, repeal or termination of effectiveness. It is hereby certified that the above amendments to the Certificate of Incorporation were approved by the Shareholders at the Annual Meeting held on March 15, 1988. Center Bancorp, Inc. /s/ JOHN J. DAVIS --------------- John J. Davis President and Chief Executive Officer Attest: /s/ JOHN J. DAVIS /s/ HELEN MAKO ----------------- -------------- John J. Davis Helen Mako Secretary Senior Vice President and Treasurer Form: C-102a Rev: 701071 FILED MAR 17 1988 JANE BURGIO Secretary of State CERTIFICATE OF AMENDMENT TO THE CERTIFICATE OF INCORPORATION OF CENTER BANCORP. INC. (For Use by Domestic Corporations Only) To: The Secretary of State State of New Jersey Pursuant to the provisions of Section 14A:9-2(4) and Section 14A:9-4(3), Corporations, General, of the New Jersey Statutes, the undersigned corporation executes the following Certificate of Amendment to its Certificate of Incorporation: 1. The name of the corporation is Center Bancorp Inc., a New Jersey Corporation. 2. The following amendment to the Certificate of Incorporation was approved by the directors and thereafter duly adopted by the shareholders of the corporation on the 15th day of March, 1988. Resolved, that the Article Fourth of the Certificate of Incorporation be amended to read as follows: Fourth: Capitalization. The total authorized capital stock of the Corporation shall consist of 10,000,000 shares of common stock, no par value per share. Shares of the authorized capital stock may be issued from time to time for such consideration as may be fixed from time to time by the Board of Directors. 3. The number of shares outstanding at the time of the adoption of the amendment was 348,158. The total number of shares entitled to vote thereon was 348,158. If the shares of any class or series are entitled to vote thereon as a class, set forth below the designation and number of outstanding shares entitled to vote thereon of each such class or series. (Omit if not Applicable.) 4. The number of shares voting for and against such amendment is as follows: (If the shares of any class or series are entitled to vote as a class, set forth the number of shares of each such class and series voting for and against the amendment, respectively.) Number of shares Number of shares Number of shares Voting for Amendment Voting Against Amendment Abstaining 267,697 19,300 4,876 5. The following amendment to the Certificate of Incorporation was approved by the directors and thereafter duly adopted by the share- holders of the corporation on the 15th day of March, 1988. Resolved, that the Certificate of Incorporation be amended to add Articles Fifteenth and Sixteenth and shall read as follows: Fifteenth: So long as permitted by law, no director of the corporation shall be personally liable to the corporation or its shareholders for damages for breach of any duty owed by such person to the corporation or its shareholders; provided, however, that this paragraph fifteen shall not relieve any person from liability to the extent provided by applicable law for any breach of duty based upon an act or omission (a) in breach of such person's duty of loyalty to the corporation or its shareholders, (b) not in good faith or involving a knowing violation of law or (c) resulting in receipt by such person of any improper personal benefit. No amendment to or repeal of this paragraph fifteen and no amendment, repeal or termination of effectiveness of any law authorizing this paragraph fifteen shall apply to or have any effect on the liability or alleged liability of any director or with respect to any acts or omissions of such director occurring prior to such amendment, repeal or termination of effectiveness. Sixteenth: So long as permitted by law, no officer of the corporation shall be personally liable to the corporation or its shareholders for damages for breach of any duty owed by such person to the corporation or its shareholders; provided, however, that this paragraph sixteen shall not relieve any person from liability to the extent provided by applicable law for any breach of duty based upon an act or omission (a) in breach of such person's duty of loyalty to the corporation or its shareholders, (b) not in good faith or involving a knowing violation of law or (c) resulting in receipt by such person of an improper personal benefit. No amendment to or repeal of this paragraph sixteen and no amendment, repeal or termination of effectiveness of any law authorizing this paragraph sixteen shall apply to or have any effect on the liability or alleged liability of any officer for or with respect to any acts or omissions of such officer occurring prior to such amendment, repeal or termination of effectiveness. 6. The number of shares outstanding at the time of the adoption of the amendment was 348,158. The total number of shares entitled to vote thereon was 348,158. (If the shares of any class of series are entitled to vote thereon as a class, set forth below the designation and number of outstanding shares entitled to vote thereon of each such class or series. (Omit if not Applicable). 7. The number of shares voting for and against such amendment is as follows: (If the shares of any class or series are entitled to vote as a class, set forth the number of shares of each such class and series voting for and against the amendment, respectively.) Number of shares Number of shares Number of shares Voting for Amendment Voting Against Amendment Abstaining 279,424 2,954 9,495 (If the amendment is accompanied by a reduction of stated capital, the following clause may be inserted in the Certificate of Amendment, in lieu of filing a Certificate of Reduction under Section 14A:7-19, Corporations, General, of the New Jersey Statutes. Omit this clause if not applicable.) 8. The stated capital of the corporation is reduced in the following amount: OMIT. The manner in which the reduction is effected is as follows: The amount of stated capital of the corporation after giving effect to the reduction is $ OMIT. (Must be set forth in dollars.) 9. If the amendment provides for an exchange, reclassification or cancellation of issued shares, set forth a statement of the manner in which the same shall be effected (Omit if not applicable.) OMIT (Use the following only if an effective date, not later than 30 days subsequent to the date of filing is desired.) 10. The effective date of this Amendment to the Certificate of Incorporation shall be _____________________. Dated this 17th day of March, 1988. CENTER BANCORP INC. --------------------- (Corporation Name) By: /s/ JOHN J. DAVIS ----------------------------- (Signature) JOHN J. DAVIS, President ----------------------------- (Type or Print Name & Title) (*May be executed by the chairman of the board, or the president, or a vice-president of the corporation) Return to Secretary of State, P.O. Box 1330, Trenton, N.J. 08625, Att: Corporation filing. Filing Fee $50.00 NOTE: No recording fees will be assessed. CERTIFICATE OF AMENDMENT TO CERTIFICATE OF INCORPORATION OF RECORDED AND FILED: CENTER BANCORP INC. -------------------------------- (Domestic Corporation Only) FILED BY: KEIN, POLLATSCHEK & GREENSTEIN 2042 Morris Avenue P.O. Box 68 ------------------- Union, New Jersey 07083 Recorder's Initials TRANSACTION NO.: FILED NOV 22 1993 DANNIEL J. DALTON Secretary of State CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF CENTER BANCORP, INC. Pursuant to N.J.S. 14A:7-15.1(3) Dated: As of July 1, 1993 The undersigned corporation, having adopted an amendment to its certificate of incorporation in connection with a stock split, hereby certifies as follows: 1. The name of the corporation is Center Bancorp, Inc. 2. The date of adoption by the board of directors of the corporation of the resolution approving the two for one stock split effectuated on July 1, 1993 (the "Stock Split") was May 20, 1993. 3. The amendment to the certificate of incorporation will not adversely affect the rights or preferences of the holders of outstanding shares of any class or series and will not result in the percentage of authorized shares that remains unissued after the Stock Split exceeding the percentage of authorized shares that was unissued before the Stock Split. 4. The only class of shares subject to the Stock Split was the corporation's Common Stock. The number of shares of Common Stock subject to the Stock Split was 800,000. The number of shares issued in connection the Stock Split was 800,000. 5. The certificate of incorporation is amended to increase the corporation's number of authorized shares of Common Stock from 10,000,000 to 20,000,000. In connection therewith, the fourth paragraph of the certificate of incorporation is deleted in its entirety and a new fourth paragraph, annexed hereto as Exhibit A, is substituted for it. IN WITNESS WHEREOF, the undersigned corporation has caused this certificate to be executed on its behalf by its duly authorized officer as of the date first above written. CENTER BANCORP, INC By: /s/ John Davis ----------------------- John Davis President Exhibit A Fourth: Capitalization. The total authorized capital stock of the Corporation shall consist of 20,000,000 shares of Common Stock, without par value. Shares of the authorized capital stock may be issued from time to time for such consideration as may be fixed from time to time by the Board of Directors. EX-3.2 3 BYLAWS BYLAWS - CENTER BANCORP INC. INDEX TO BYLAWS OF CENTER BANCORP, INC. ARTICLE I - MEETINGS OF SHAREHOLDERS Section 101. Place of Meetings Section 102. Annual Meetings Section 103. Special Meetings Section 104. Conduct of Shareholders' Meetings ARTICLE II - DIRECTORS AND BOARD MEETINGS Section 201. Management by Board of Directors Section 202. Nomination for Directors Section 203. Directors Must be Shareholders Section 204. Number of Directors Section 205. Classification of Directors Section 206. Vacancies Section 207. Resignations Section 208. Compensation of Directors Section 209. Regular Meetings Section 210. Special Meetings Section 211. Reports and Records ARTICLE III - COMMITTEES Section 301. Committees Section 302. Executive Committee Section 303. Audit Committee Section 304. Appointment of Committee Members Section 305. Organization and Proceedings ARTICLE IV - OFFICERS Section 401. Officers Section 402. Chairman Section 403. President Section 404. Vice Presidents Section 405. Secretary Section 406. Treasurer Section 407. Assistant Officers Section 408. Compensation Section 409. General Powers ARTICLE V - SHARES OF CAPITAL STOCK SECTION 501. Authority to Sign Share Certificates SECTION 502. Lost or Destroyed Certificates ARTICLE VI - GENERAL SECTION 601. Fiscal Year SECTION 602. Record Date SECTION 603. Absentee Participation in Meetings SECTION 604. Emergency Bylaws SECTION 605. Severability ARTICLE VII - AMENDMENT OR REPEAL SECTION 701. Amendment or Repeal by the Board of Directors SECTION 702. Recording Amendments and Repeals ARTICLE VIII - APPROVAL OF AMENDED BYLAWS AND RECORD OF AMENDMENTS AND REPEALS SECTION 801. Approval and Effective Date SECTION 802. Amendments or Repeals BYLAWS OF CENTER BANCORP, INC. These Bylaws are supplemental to the New Jersey Business Corporation Act and other applicable provisions of law, as the same shall from time to time be in effect. ARTICLE I. MEETINGS OF SHAREHOLDERS. Section 101. Place of Meetings. All meetings of the shareholders shall be held at such place or places, within or without the State of New Jersey, as shall be determined by the Board of Directors from time to time. Section 102. Annual Meetings. The annual meeting of the shareholders for the election of Directors and the transaction of such other business as may properly come before the meeting shall be held on such day, at such hour, and at such place, consistent with applicable law, as the Board shall from time to time designate or as may be designated in any notice from the Secretary calling the meeting. Any Business which is a proper subject for shareholder action may be transacted at the annual meeting, irrespective of whether the notice of said meeting contains any reference thereto, except as otherwise provided by applicable law. Section 103. Special Meetings. Special meetings of the shareholders may be called at any time by the Board of Directors, the Chairman of the Board, the President, or by the shareholders entitled to cast at least twenty-five percent (25%) of the vote which all shareholders are entitled to cast at the particular meeting. Section 104. Conduct of Shareholders' Meetings. The Chairman of the Board shall preside at all shareholders' meetings. In the absence of the Chairman of the Board, the President shall preside or, in his/her absence, any Officer designated by the Board of Directors. The Officer presiding over the shareholders' meeting may establish such rules and regulations for the conduct of the meeting as he/she may deem to be reasonably necessary or desirable for the orderly and expeditious conduct of the meeting. Unless the Officer presiding over the shareholders' meeting otherwise requires, shareholders need not vote by ballot on any question. ARTICLE II. DIRECTORS AND BOARD MEETINGS. Section 201. Management by Board of Directors. The business and affairs of the Corporation shall be managed by its Board of Directors. The Board of Directors may exercise all such powers at the Corporation and do all such lawful acts and things as are not by statute, regulation, the Articles of Incorporation or these Bylaws directed or required to be exercised or done by the shareholders. Section 202. Nomination for Directors. Nominations for directors to be elected at an annual meeting of shareholders must be submitted to the Secretary of the Corporation in writing not later than the close of business on the twentieth (20th) day immediately preceding the date of the meeting. Such notification shall contain the following information to the extent known to the notifying shareholder: (a) name and address of each proposed nominee; (b) the principal occupation of each proposed nominee; (c) the total number of shares of capital stock of the Corporation that will be voted for each proposed nominee; (d) the name and residence address of the notifying shareholder; and (e) the number of shares of capital stock of the Corporation owned by the notifying shareholder. Nominations not made in accordance herewithin may, in his/her discretion, be disregarded by the Presiding Officer of the meeting, and upon his/her instruction, the vote tellers may disregard all votes cast for each such nominee. In the event the same person is nominated by more than one shareholder, the nomination shall be honored, and all shares of capital stock of the Corporation shall be counted if at least one nomination for that person complies herewith. Section 203. Directors Must be Shareholders. Every Director must be a shareholder of the Corporation and shall own in his/her own right the number of shares (if any) required by law in order to qualify as such Director. Any Director shall forthwith cease to be a Director when he/she no longer holds such shares, which fact shall be reported to the Board of Directors by the Secretary, whereupon the Board of Directors shall declare the seat of such Directors vacated. Each Director, during the full term of his directorship, shall own a minimum of One Thousand and 00/ 100 ($1,000.00) Dollars par value of stock in the Corporation. Section 204. Number of Directors. The Board of Directors shall consist of not less than five (5) nor more than twenty-five (25) shareholders, the exact number to be fixed and determined from time to time by resolution of a majority of the full Board of Directors or by resolution of the shareholders at any annual or special meeting thereof. Section 205. Classification of Directors. The Directors shall be divided into three (3) classes, as nearly equal in number as possible, known as Class 1, consisting of not more than eight (8) Directors; Class 2, consisting of not more than eight (8) Directors; and Class 3, consisting of not more than nine (9) Directors. The initial Directors of Class 1 shall serve until the third (3rd) annual meeting of shareholders. At the third (3rd) annual meeting of the shareholders, the Directors of Class 1 shall be elected for a term of three (3) years and, after expiration of such term, shall thereinafter be elected every three (3) years for three (3) year terms. The initial Directors of Class 2 shall serve until the second (2nd) annual meeting of shareholders. At the second (2nd) annual meeting of the shareholders, the Directors of Class 2 shall be elected for a term of three (3) years and, after the expiration of such term, shall thereafter be elected every three (3) years for three (3) year terms. The initial Directors of Class 3 shall serve until the first (1st) annual meeting of shareholders. At The first (1st) annual meeting of shareholders, the Directors of Class 3 shall be elected for a term of three (3) years and, after the expiration of such term, shall thereafter be elected every three (3) years for three (3) year terms. Each Director shall serve until his/her successor shall have been elected and shall qualify, even though his/her term of office as herein provided has otherwise expired, except: in the event of his/her earlier resignation, removal or disqualification. Section 206. Vacancies. Vacancies in the Board of Directors, including vacancies resulting from an increase in the number of Directors, may be filled by the remaining members of the Board even though less than a quorum. Any Director elected to fill a vacancy in the Board of Directors shall become a member of the same Class of Directors in which the vacancy existed; but if the vacancy is due to an increase in the number of Directors a majority of the members of the Board of Directors shall designate such directorship as belonging to Class 1, Class 2 or Class 3 so as to maintain the three (3) classes of Directors as nearly equal in number as possible. Each Director so elected shall be a Director until his/her successor is elected by the shareholders, who may make such election at the next annual meeting of the shareholders or at any special meeting duly called for that purpose and held prior thereto. Section 207. Resignations. Any Director may resign at any time. Such resignation shall be in writing, but the acceptance thereof shall not be necessary to make it effective. Section 208. Compensation of directors. No Director shall be entitled to any salary as such; but the Board of Directors may fix, from time to time, a reasonable annual fee for acting as a Director and a reasonable fee to be paid each Director for his/her services in attending meetings of the Board and meetings of committees appointed by the Board. The Corporation may reimburse Directors for expenses related to their duties as a member of the Board. No salaried Officer is entitled to compensation as a Director. Section 209. Regular meetings. Regular meetings of the Board of Directors shall be held on such day, at such hour, and at such place, consistent with applicable law, as the Board shall from time to time designate or as may be designated in any notice from the Secretary of the meeting. The Board of Directors shall meet for reorganization at the first regular meeting following the annual meeting of shareholders at which the Directors are elected. Notice need not be given of regular meetings of the Board of Directors which are held at the time and place designated by the Board of Directors. If a regular meeting is not to be held at the time and place designated by the Board of Directors, notice of such meeting, which need not specify the business to be transacted thereat and which may be either verbal or in writing, shall be given by the Secretary to each member of the Board at least twenty-four (24) hours before the time of the meeting. A majority of the members of the Board of Directors shall constitute a quorum for the transaction of business. If at the time fixed for the meeting, including the meeting to organize the new Board following the annual meeting of shareholders, a quorum is not present, the directors in attendance may adjourn the meeting from time to time until a quorum is obtained. Except as otherwise provided herein, a majority of directors shall decide each matter considered. A director cannot vote by proxy, or otherwise act by proxy at a meeting of the Board of Directors. Section 210. Special Meetings. Special meetings of the Board of Directors may be called by the Chairman of the Board, the President or at the request of three (3) or more members of the Board of Directors. A special meeting of the Board of Directors shall be deemed to be any meeting other than the regular meeting of the Board of Directors. Notice of the time and place of every special meeting, which need not specify the business to be transacted thereat and which may be either verbal or in writing, shall be given by the Secretary to each member of the Board at least twenty-four (24) hours before the time of such meeting excepting the Organization Meeting following the election of Directors. Section 211. Reports and Records. The reports of Officers and Committees and the records of the proceedings of all Committees shall be filed with the Secretary of the Corporation and presented to the Board of Directors, if practicable, at its next regular meeting. The Board of Directors shall keep complete records of its proceedings in a minute book kept for that purpose. When a Director shall request it, the vote of each Director upon a particular question shall be recorded in the minutes. ARTICLE III. COMMITTEES. Section 301. Committees. The following two (2) Committees of the Board of Directors shall be established by the Board of Directors in addition to any other Committee the Board of Directors may in its discretion establish: Executive, Audit. Section 302. Executive Committee. The Executive Committee shall consist of any four (4) or more Directors. A majority of the members of the Executive Committee shall reconstitute a quorum, and actions of a majority and those present at a meeting at which a quorum is present shall be actions of the Committee. Meetings of the Committee may be called at any time by the Chairman or Secretary of the committee, and shall be called whenever two (2) or more members of the Committee so request in writing. The Executive Committee shall have and exercise the authority of the Board of Directors in the Management of the business of the Corporation between the dates of regular meetings of the Board. SECTION 303. Audit Committee. The Audit Committee shall consist of at least four (4) Directors, none of whom shall be Officers of the Corporation. Meetings of the Committee may be called at any time by the Chairman or Secretary of the Committee, and shall be called whenever two (2) or more members of the Committee so request in writing. A majority of the members of the Committee shall constitute a quorum, and actions of a majority of those present at a meeting at which a quorum is present shall be actions of the Committee. The Committee shall supervise the audit of the books of the Corporation and recommend for approval by the Board the services of a reputable Certified Public Accounting firm to examine the affairs of the Corporation. Section 304. Appointment of Committee Members. The Board of Directors shall elect the members of the Executive, Audit Committees to serve until the next annual meeting of shareholders. The Chairman of the Board shall appoint and shall establish a method of appointing, subject to the approval of the Board of Directors, the members of any other Committees established by the Board of Directors, and the Chairman of such Committee, to serve until the next annual meeting of shareholders. The Board of Directors may appoint, from time to time, other committees, for such purposes and with such powers as the Board may determine. Section 305. Organization and Proceedings. Each Committee of the Board of Directors shall have a chairman appointed by the Chairman of the Board. A record of proceedings of all Committees shall be kept by the Secretary of such Committee and filed and presented provided in Section 211 of these Bylaws. ARTICLE IV. OFFICERS. Section 401. Officers. The Officers of the Corporation shall be a Chairman of the Board, President, one (1) or more Vice Presidents. a Secretary, a Treasurer, and such other Officers and Assistant Officers as the Board of Directors may from time to time deem advisable. Except for the President, Secretary, and Treasurer, the Board may refrain from filling any of the said offices at any time and from time to time. The same individual may hold any two (2) or more offices except both the offices of President and Treasurer. The following Officers shall be elected by the Board of Directors at the time, in the manner and for such terms as the Board of Directors from time to time shall determine: Chairman of the Board, President, Executive Vice President, Senior Vice President, Administrative Vice President, Secretary, and Treasurer. The Chairman may, subject to change by the Board of Directors, appoint such Officers and Assistant Officers as he may deem advisable provided such Officers or Assistant Officers have a title not higher than Vice President, who shall hold office for such periods as the Chairman shall determine. Any Officer may be removed at any time, with or without cause, and regardless of the term for which such Officer was elected, but without prejudice to any contract right of such Officer. Each Officer shall hold his office for the current year for which he was elected or appointed by the Board unless he shall resign, becomes disqualified, or be removed at the pleasure of the Board of Directors. Section 402. Chairman. The Chairman shall have general supervision of all of the departments and business of the Corporation and shall prescribe the duties of the other Officers and Employees and see to the proper performance thereof. The Chairman shall be responsible for having all orders and resolutions of the Board of Directors carried into effect. The Chairman shall execute on behalf of the Corporation and may affix or cause to be affixed a seal to all authorized documents and instruments requiring such execution, except to the extent that signing and execution thereof shall have been delegated to some other Officer or Agent of the Corporation by the Board of Directors or by the Chairman. Section 403. President. The Board of Directors shall appoint one of its members to be President of the Association. In the absence of the Chairman, he shall preside at any meeting of the Board. The President shall have general executive powers, and shall have and may exercise any and all other powers and duties pertaining by law, regulation, or practice, to the office of President, or imposed by these Bylaws. He shall also have and may exercise such further powers and duties as from time to time may be conferred upon, or assigned to, him by the Board of Directors. The President shall be responsible for overall operations under the direction of the Chairman of the Board and Chief Executive Officer. Section 404. Vice Presidents. The Vice Presidents shall perform such duties, do such acts and be subject to such supervision as may be prescribed by the Board of Directors or the President. In the event of the absence or disability of the President or his/her refusal to act, the Vice Presidents, in the order of their rank, and within the same rank in the order of their authority, shall perform the duties and have the powers and authorities of the President, except to the extent inconsistent with applicable law. Section 404. Secretary. The Secretary shall act under the supervision of the President or such other Officers as the President may designate. Unless a designation to the contrary is made at a meeting, The Secretary shall attend all meetings of the Board of Directors and all meetings of the shareholders and record all of the proceedings at such meetings in a book to be kept for that purpose, and shall perform like duties for the standing Committees when required by these Bylaws or otherwise. The Secretary shall give, or cause to be given, notice of all the meeting of the shareholders and of the Board of Directors. The Secretary shall keep a seal of the Corporation, and, when authorized by the Board of Directors or the President, cause it to be affixed to any documents and instruments requiring it. The Secretary shall perform such other duties as may be prescribed by the Board of Directors, President, or such other Supervising Officer as the President may designate. Section 406. Treasurer. The Treasurer shall act under the supervision of the President or such other Officer as the President may designate. The Treasurer shall have custody of the Corporation's funds and such other duties as may be prescribed by the Board of Directors, President or such other Supervising Officer as the President may designate. Section 407. Assistant Officers. Unless otherwise provided by the Board of Directors, each Assistant Officer shall perform such duties as shall be prescribed by the Board of Directors, the President or the Officer to whom he/she is an Assistant. In the event of the absence or disability of an Officer or his/her refusal to act, his/her Assistant Officer shall, in the order of their rank, and within the same rank in the order of their seniority, have the powers and authorities of such Officer. Section 408. Compensation. Unless otherwise provided by the Board of Directors, the salaries and compensation of all Officers shall be fixed by and in the manner designated by the Board. Section 409. General Powers. The Officers are authorized to do and perform such corporate acts as are necessary in the carrying on of the business of the Corporation, subject always to the direction of the Board of Directors. ARTICLE V. SHARES OF CAPITAL STOCK. Section 501. Authority to Sign Share Certificates. Every share certificate of the Corporation shall be signed by the President and by the Treasurer. Certificates may be signed by a facsimile signature of the President and the Treasurer. Section 502. Lost or Destroyed Certificates. Any person claiming a share certificate to be lost, destroyed or wrongfully taken shall receive a replacement certificate if such person shall have: (a) requested such replacement certificate before the Corporation has notice that the shares have been acquired by a bonafide purchaser; (b) provided the Corporation with an indemnity agreement satisfactory in form and substance to the Board of Directors, or the President or the Treasurer; and (c) satisfied any other reasonable requirements (including providing an affidavit and a surety bond) fixed by the Board of Directors, or the President or the Treasurer. ARTICLE VI. GENERAL. Section 601. Fiscal Year. The fiscal year of the Corporation shall begin on the first (1st) day of January in each year and end on the thirty-first (31st) day of December in each year. Section 602. Record Date. The Board of Directors may fix any time whatsoever (whether or not the same is more than fifty (50) days) prior to the date of any meeting of shareholders, or the date for the payment of any dividend or distribution, or the date for the allotment of rights, or the date when any change or conversion or exchange of shares will be made or will go into effect, as a record date for the determination of the shareholders entitled to notice of, or to vote at, any such meetings, or entitled to receive payment of any such dividend or distribution, or to receive any such allotment of rights, or to exercise the rights in respect to any such change, conversion or exchange of shares. Section 603. Absentee Participation in Meetings. One (1) or more Directors may participate in a meeting of the Board of Directors, or of a Committee of the Board, by means of a conference telephone or similar communications equipment, by means of which all persons participating in the meeting can hear each other. Section 604. Emergency Bylaws. In the event of any emergency resulting from a nuclear attack or similar disaster, aid during the continuance of such emergency, the following Bylaw provisions shall be in effect, notwithstanding any other provisions of the Bylaws: (a) A meeting of the Board of Directors or of any Committee thereof may be called by any Officer or Director upon one (1) hour's notice to all persons entitled to notice whom, in the sole judgment of the notifier, it is feasible to notify; (b) The Director or Directors in attendance at the meeting of the Board of Directors or of any Committee thereof shall constitute a quorum; and (c) These Bylaws may be amended or repealed, in whole or in part, by a majority vote of tie Directors attending any meeting of the Board of Directors, provided such amendment or repeal shall only be effective for the duration of such emergency. Section 605. Severability. If any provision of these Bylaws is illegal or unenforceable as such, such illegality or unenforceability shall not affect any other provisions of these Bylaws and such other provisions shall continue in full force and effect. ARTICLE VII. AMENDMENT OR REPEAL. Section 701 Amendment or Repeal by the Board of Directors. These Bylaws may be amended or repealed, in whole or in part, by a majority vote of members of the Board of Directors at any regular or special meeting of the Board duly convened. Notice need not be given of the purpose of the meeting of the Board of Directors at which the amendment or repeal is to be considered. Section 702. Recording Amendments and Repeals. The text of all amendments and repeals to these Bylaws shall be attached to the Bylaws with a notation of the date and vote of such amendment or repeal. ARTICLE VIII. APPROVAL OF AMENDED BYLAWS AND RECORD OF AMENDMENTS AND REPEALS. Section 801. Approval and Effective Date. These Bylaws have been approved as the Bylaws of the Corporation this 18th day of November, 1982, and shall be effected as of said date. Section 802. Amendments or Repeals. Date Amended Section Involved or Repealed Approved by - ---------------- ----------- ----------- EX-10.10 4 DIRECTORS' RETIREMENT PLAN UNION CENTER NATIONAL BANK DIRECTORS' RETIREMENT PLAN TABLE OF CONTENTS ARTICLE 1 - PURPOSE AND SCOPE 1.1 ESTABLISHMENT ....................................................... 1 1.2 PURPOSE ............................................................. 1 1.3 APPLICATION OF THE PLAN ............................................. 1 1.4 SCOPE ............................................................... 1 ARTICLE II - DEFINITIONS ................................................... 1 ARTICLE III - PARTICIPATION 3.1 ELIGIBILITY FOR PARTICIPATION ....................................... 3 3.2 DURATION OF PARTICIPATION ........................................... 3 ARTICLE IV - BENEFITS 4.1 ELIGIBILITY TO RECEIVE BENEFITS ..................................... 3 4.2 AMOUNT AND FORM OF BENEFIT .......................................... 3 4.3 FORFEITURE FOR CAUSE ................................................ 3 ARTICLE V - ADMINISTRATION 5.1 DUTIES OF THE COMMITTEE ............................................. 4 5.2 LIABILITIES OF THE COMMITTEE ........................................ 4 5.3 EXPENSES ............................................................ 4 5.4 UNFUNDED CHARACTER OF THE PLAN ...................................... 4 ARTICLE VI - AMENDMENT AND TERMINATION 6.1 AMENDMENT AND TERMINATION ........................................... 4 6.2 PRESERVATION OF BENEFITS ON TERMINATION OR AMENDMENT ............................................ 5 6.3 DISTRIBUTION OF BENEFITS ON TERMINATION ............................. 5 ARTICLE VII - MISCELLANEOUS PROVISIONS 7.1 NO RIGHT TO CONTINUED EMPLOYMENT .................................... 5 7.2 CONSTRUCTION OF LANGUAGE ............................................ 5 7.3 NON-ALIENATION OF BENEFITS .......................................... 5 7.4 SEPARABILITY ........................................................ 5 -i- 7.5 AUTHORIZED OFFICERS ................................................. 6 7.6 CONSTRUCTION ........................................................ 6 -ii- ARTICLE I - PURPOSE AND SCOPE 1.1 ESTABLISHMENT Union Center National Bank hereby establishes effective as of July 1, 1998 an unfunded retirement plan for its eligible Directors and their beneficiaries as described herein which shall be known as the "Union Center National Bank Directors' Retirement Plan." 1.2 PURPOSE The purpose of this Plan is to provide benefits for eligible Directors of the Bank in recognition of their service to the Bank. 1.3 APPLICATION OF THE PLAN The terms of the Plan are applicable only to eligible Directors who serve on the Board of Directors of the Bank on or after July 1, 1998. Any Director who retired or whose relationship as Director with the Bank was otherwise terminated prior to such date shall not be eligible to participate in the Plan. 1.4 SCOPE This Plan is designed to provide Directors of the Bank certain retirement benefits. Nothing herein contained, and no action taken pursuant to the provisions of this Plan, shall create or be construed to create a fiduciary relationship between the Bank and any Director of the Bank, their surviving spouse or dependents, their estate or their beneficiaries or any other person. Any reserves or liabilities set upon the Bank's books of account with respect to any benefits to be paid under this Plan shall continue for all purposes to be a part of the general funds or assets of the Bank. To the extent that any person acquires right to receive payments from the Bank under this Plan, such right shall be no greater than the right of any unsecured general creditor of the Bank. ARTICLE II - DEFINITIONS 2.1 "BOARD" means the Board of Directors of the Bank, 2.2 "CODE" means the Internal Revenue Code of 1986, as amended. 2.3 "COMMITTEE" means such person, committee or entity as shall be designated by the Board to perform the duties set forth in Article V; provided, however, that if no such person, committee or entity is designated by the Board, then the Board shall serve as the Committee. -1- 2.4 "BANK" means Union Center National Bank, a national bank chartered under the laws of Congress, and its successors and assigns whether by merger, consolidation, sale of assets, statutory receivership, operation of law or otherwise. 2.5 "DIRECTOR" means any individual who serves as a director of the Board on or after the Effective Date. 2.6 "INSIDE DIRECTOR" means a Director who also serves as an employee or officer of the Bank. 2.7 "EFFECTIVE DATE" means July 1, 1998. 2.8 "OUTSIDE DIRECTOR" means a Director who is not an Inside Director. 2.9 "PARTICIPANT" means any Director who is participating in the Plan in accordance with its terms. 2.10 "PLAN" means the Union Center National Bank Directors' Retirement Plan. 2.11 "NORMAL RETIREMENT DATE" means with respect to a Director, the first day of the calendar month following the Director's Termination of Service occurring after (1) May 1, 2000, and (2) his attainment of age 70 and completion of 15 Years of Service. 2.12 "YEARS OF SERVICE" means each 12 month period for which a Director serves as a member of the Board. A Year of Service shall initially commence on the date on which a Director is appointed or elected to the Board and shall thereafter commence on each successive yearly anniversary of such date. A Director shall be deemed to have served as a member of the Board for a full month if he serves as a member of the Board for any portion of such month. Non-consecutive periods of service as a Director shall be aggregated for purposes of determining a Director's total Years of Service. Years of Service shall include service as a Director prior to the Effective Date. 2.13 "TERMINATION OF SERVICE" means a Director's termination of service as a member of the Board, whether by removal, resignation, death, disability or otherwise. 2.14 "VESTED PARTICIPANT" means a Participant who (1) is an Outside Director on or after July 1, 1999, (2) has completed fifteen (15) Years of Service, and (3) attains age 70 prior to incurring a Termination of Service. -2- ARTICLE III - PARTICIPATION 3.1 ELIGIBILITY FOR PARTICIPATION Each Outside Director who has completed 15 Years of Service as of the Effective Date shall become a Participant on the Effective Date. Each other Director shall become a Participant upon completion of 15 Years of Service; provided he is at such time an Outside Director. 3.2 DURATION OF PARTICIPATION A Director who becomes a Participant shall continue to be a Participant until the later of his Termination of Service or the date he or she is no longer entitled to benefits under the Plan. ARTICLE IV - BENEFITS 4.1 ELIGIBILITY TO RECEIVE BENEFITS A Vested Participant shall be paid a retirement benefit under the Plan in accordance with Section 4.2. 4.2 AMOUNT AND FORM OF BENEFIT A Vested Participant shall be paid an annual retirement benefit of $8,500.00 payable in substantially equal monthly installments for one hundred eighty (180) months commencing upon his Normal Retirement Date. In the event of the Vested Participant's death after payments have commenced but prior to the payment all such monthly installments, such installments shall continue to be paid to the Participant's surviving spouse, if any, until the earlier of (i) such spouse's death or (ii) the aggregate number of monthly payments to both the Participant and such spouse total one hundred eighty (180). In the event a Vested Participant and his surviving spouse both die before one hundred eighty (180) monthly payments have been paid, benefits shall cease as of the date of the second to die and no further benefits under the Plan shall be payable. In the event of the death of a Vested Participant after July 1, 1998 and after his completion of fifteen (15) Years of Service, but prior to the commencement of payment of benefits hereunder, his surviving spouse, if any, shall be paid an annual retirement benefit of $8,500.00 payable in substantially equal monthly installments until the earlier of (i) such spouse's death, or (ii) the payment of one hundred eighty (180) such installments. 4.3 FORFEITURE FOR CAUSE Notwithstanding any other provisions of this Plan, if a Director shall be terminated for reason of acts of fraud, dishonesty, larceny, misappropriation or embezzlement committed against the Company, all of such Director's rights to benefits under this Plan shall be forfeited. -3- ARTICLE V - ADMINISTRATION 5.1 DUTIES OF THE COMMITTEE The Committee shall have full responsibility for the management, operation, interpretation and administration of the Plan in accordance with its terms, and shall have such authority as is necessary or appropriate in carrying out its responsibilities. The Committee is expressly authorized to exercise discretion in carrying out its responsibilities and deciding any question of fact or law in connection therewith. Actions taken by the Committee pursuant to this Section 5.1 shall be conclusive and binding upon the Bank, Participants and any other interested parties. 5.2 LIABILITIES OF THE COMMITTEE Neither the Committee nor its individual members shall be deemed to be a fiduciary or fiduciaries with respect to this Plan; nor shall any of the foregoing individuals or entities be liable to any Participant or beneficiary in connection with the management, operation, interpretation or administration of the Plan, any such liability being solely that of the Bank. 5.3 EXPENSES Any expenses incurred in the management, operation, interpretation or administration of the Plan shall be paid by the Bank. In no event shall the benefits otherwise payable under this Plan be reduced to offset the expenses incurred in managing, operating, interpreting or administering the Plan. 5.4 UNFUNDED CHARACTER OF THE PLAN The benefits payable under the Plan shall be paid by the Bank out of its general assets; provided, however, that the Bank may establish a separate account, an escrow account or a trust or may purchase an annuity or insurance contract, which account, trust or contract shall be subject to the claims of the Bank's general unsecured creditors. Any liability of the Bank to any person with respect to benefits payable under the Plan shall be based solely upon such contractual obligations, if any, as shall be created by the Plan, and shall give rise only to a claim against the general assets of the Bank. No such liability shall be deemed to be secured by any pledge or any other encumbrance on any specific property of the Bank. Subject to the foregoing, in the event of a Change of Control (as defined below) or threatened Change in Control, the Bank may contribute to any such account, trust or contract an amount that the Board determines to be sufficient to pay each Plan participant or beneficiary the benefits to which such participants and beneficiaries would be entitled pursuant to the terms of the Plan as of the date on which the Change of Control occurs. A "Change in Control" shall mean: -4- (1) the consummation of an acquisition by a third party of a majority of the voting capital stock of the Bank or Center Bancorp Inc. or substantially all of the assets of the Bank or Center Bancorp Inc., or (2) a change in the composition of the Board of Directors of the Bank or Center Bancorp such that "Continuing Directors" (as defined herein) no longer constitute a majority of the Board. For purposes of this Agreement, the term "Continuing Director" shall mean (i) each current member of the Center Bancorp Inc. Board of Directors and (ii) each person who is hereinafter first nominated to such board by unanimous vote of the persons who then constitute Continuing Directors. ARTICLE VI - AMENDMENT AND TERMINATION 6.1 AMENDMENT AND TERMINATION Subject to the provisions of Section 6.2, the Board shall have the right to amend or terminate the Plan, in whole or in part. 6.2 PRESERVATION OF BENEFITS ON TERMINATION OR AMENDMENT Neither the termination nor amendment of the Plan shall reduce the benefits accrued by a Participant under this Plan. 6.3 DISTRIBUTION OF BENEFITS ON TERMINATION In the event of termination of the Plan, the retirement benefits, if any, to which recipients are entitled, or may become entitled, under Article IV shall continue to be payable as provided in Article IV. ARTICLE VII - MISCELLANEOUS PROVISIONS 7.1 NO RIGHT TO CONTINUED EMPLOYMENT Neither the establishment of the Plan nor any provisions of the Plan, nor any action of the Committee shall be held or construed to confer upon any Director the right to continue to serve on the board. 7.2 CONSTRUCTION OF LANGUAGE Wherever appropriate in the Plan, words used in the singular may be read in the plural, words in the plural may be read in the singular, and words importing the masculine gender shall be -5- deemed equally to refer to the feminine and the neuter. Any reference to any Article or Section shall be to an Article or Section of this Plan, unless otherwise indicated. -6- 7.3 NON-ALIENATION OF BENEFITS The right to receive a benefit under the Plan shall not be subject in any manner to anticipation, alienation, or assignment, nor shall such right be liable for or subject to debts, contracts, liabilities or torts. Should any Participant, beneficiary or other person attempt to anticipate, alienate or assign his interest in or right to a benefit, or should any person claiming against him seek to subject such interest or right to legal or equitable process, all the interest or right of such Participant or beneficiary or other person entitled to benefits under the Plan shall cease, and in that event, such interest or right shall be held or applied, at the direction of the Committee, to or for the benefit of such Participant, beneficiary or other person or his spouse, children or other dependents in such manner and in such proportion as the Committee may deem proper. 7.4 SEPARABILITY If any term or provision of this Plan as presently in effect or as amended from time to time, or the application thereof to any payments or circumstances, shall to any extent be invalid or unenforceable, the remainder of the Plan, and the application of such term or provision to payments or circumstances other than those as to which it is invalid or unenforceable, shall not be affected thereby, and each term or provision of the Plan shall be valid and enforced to the fullest extent permitted by law. 7.5 AUTHORIZED OFFICERS Whenever the Bank under the terms of the Plan is permitted or required to do or to perform any act or matter or thing, it shall be done and performed by a duly authorized officer of the Bank. 7.6 CONSTRUCTION The provisions of the plan shall be construed, administered and enforced according to the laws of the State of New Jersey. -7- EX-21.1 5 EXHIBIT 21.1 A3.Exhibits Organizational Chart 21.1 Subsidiaries of the Registrant As of December 31, 1998 CENTER BANCORP INC. 2455 Morris Avenue Union, NJ 07083 UNION CENTER NATIONAL BANK 2455 MORRIS AVENUE UNION, NJ 07083 (100% Owned by Center Bancorp Inc.) EX-23.1 6 EXHIBIT 23.1 INDEPENDENT AUDITORS' CONSENT The Board of Directors Center Bancorp Inc.: We consent to the incorporation by reference in the Registration Statement No. 33-72176 on Form S-8 and Registration Statement No. 33-72178 of Form S-3 of Center Bancorp Inc. of our report dated January 27, 1999, relating to the consolidated statements of condition of Center Bancorp Inc. as of December 31, 1998 and 1997 and the related consolidated statements of income, changes in stockholders' equity, and cash flows for each of the years in the three-year period ended December 31, 1998, which report is incorporated by reference in the December 31, 1998 Annual Report on Form 10-K of Center Bancorp Inc. KPMG LLP Short Hills, New Jersey March 29, 1999 EX-27.1 7 FINANCIAL DATA SCHEDULE WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
9 1,000 12-MOS DEC-31-1998 DEC-31-1998 15,975 0 0 0 115,952 172,014 174,184 150,099 (1,326) 470,134 377,167 52,602 3,734 0 0 0 7,616 29,015 470,134 10,924 19,212 550 30,686 12,151 13,573 17,113 120 0 971 11,651 6,313 6,313 0 0 4,172 1.17 1.16 6.97 41 24 0 0 1,269 70 120 7 1,326 949 0 377
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