EX-99.1 2 v104599_ex99-1.htm Unassociated Document
 

Center Bancorp, Inc. Reports Fourth Quarter 2007 Earnings

UNION, NJ -- (MARKET WIRE) -- 01/31/08 -- Center Bancorp, Inc. (NASDAQ: CNBC), parent company of Union Center National Bank, today reported operating results for the fourth quarter and the year ended December 31, 2007. Earnings amounted to $532,000 or $0.04 per share for the quarter ended December 31, 2007 as compared with earnings for the quarter ended December 31, 2006 of $2.3 million or $0.16 per share.

"The results for the period announced today reflect our progress on improving the future stability of revenue streams and are in line with the work started in 2007 that we intend to continue into 2008. With these actions, we enter 2008 with a marked improvement in our balance sheet, positioned to expand net interest margins, adequate loan loss reserves, good credit quality in the asset portfolios and a strong underpinning to reduce operating overhead and support net income levels," remarked Anthony C. Weagley, President & CEO.

The results for the fourth quarter of 2007 included certain extraordinary charges and amounts associated with the termination of the previously announced Beacon Trust acquisition, which amounted to $607,000 pre-tax and $347,000 after tax or $.04 per common share. In addition, there were additional charges related to other real estate owned properties, and the Corporation's previously announced cost-cutting measures, which included lease terminations from liquidated subsidiaries under the corporate wide entity restructuring, amounting to an additional $235,000 pre-tax and $134,000 after tax or $.01 per common share.

For the twelve months ended December 31, 2007, net income amounted to $3.9 million, a decrease of $42,000 as compared to the comparable twelve-month period ended December 31, 2006. Earnings per common share for the twelve months ended December 31, 2007 were $0.28, equal to the 2006 period.

Quarterly Condensed Consolidated Income Statements (unaudited)
(dollars in thousands, except per share data)
For the quarter ended:
  
12/31/07
  
9/30/07
  
6/30/07
  
3/31/07
  
12/31/06
  
9/30/06
  
Net interest income
  
$
5,172
  
$
5,481
  
$
5,225
  
$
5,621
  
$
5,691
  
$
5,952
  
Provision for loan losses
    
150
    
100
    
100
    
0
    
57
    
0
  
Net interest income after loan loss provision
    
5,022
    
5,381
    
5,125
    
5,621
    
5,634
    
5,952
  
Non interest income
    
874
    
911
    
1,177
    
1,410
    
1,618
    
1,007
  
Non interest expense
    
(6,034
)
  
(6,080
)
  
(6,056
)
  
(6,428
)
  
(6,656
)
  
(5,735
)
Income (loss) before income tax
    
(138
)
  
212
    
246
    
603
    
596
    
1,224
  
Income tax expense/ (benefit)
    
(670
)
  
(786
)
  
(771
)
  
(706
)
  
(1,695
)
  
(78
)
NET INCOME
  
$
532
  
$
998
  
$
1,017
  
$
1,309
  
$
2,291
  
$
1,302
  
EPS (basic)
  
$
0.04
  
$
0.07
  
$
0.07
  
$
0.09
  
$
0.16
  
$
0.09
  
EPS (diluted)
  
$
0.04
  
$
0.07
  
$
0.07
  
$
0.09
  
$
0.16
  
$
0.09
  

Weighted average common shares outstanding adjusted for 5% stock dividend:

Note: Due to rounding quarterly earnings per share may not add up to the reported annual earnings per share

Basic
    
13,441,082
    
13,864,272
    
13,910,450
    
13,910,450
    
13,898,178
    
13,896,165
  
Diluted
    
13,543,486
    
13,938,892
    
13,962,934
    
13,986,333
    
13,980,270
    
13,989,262
  
 

Selected financial ratios (annualized)

As of or for the quarter ended:
  
12/31/07
  
9/30/07
  
6/30/07
  
3/31/07
  
12/31/06
  
9/30/06
  
Return on average assets
    
0.22
%
  
0.40
%
  
0.40
%
  
0.50
%
  
0.88
%
  
0.50
%
Return on average equity
    
2.44
%
  
4.21
%
  
4.15
%
  
5.37
%
  
9.46
%
  
5.48
%
Net interest margin (tax equivalent basis)
    
2.48
%
  
2.63
%
  
2.43
%
  
2.55
%
  
2.62
%
  
2.70
%
Loan/Deposit ratio
    
78.91
%
  
84.62
%
  
78.71
%
  
73.42
%
  
75.73
%
  
73.44
%
Stockholders' equity/total assets
    
8.38
%
  
9.49
%
  
9.57
%
  
9.36
%
  
9.28
%
  
9.38
%
Efficiency ratio
    
92.7
%
  
89.3
%
  
92.8
%
  
92.8
%
  
94.5
%
  
78.3
%
Book value per share
  
$
6.48
  
$
6.85
  
$
6.89
  
$
7.06
  
$
7.02
  
$
6.96
  
Return on tangible equity
    
3.04
%
  
5.15
%
  
5.04
%
  
6.53
%
  
11.53
%
  
6.71
%
Tangible equity/tangible assets
    
6.80
%
  
7.88
%
  
7.98
%
  
7.84
%
  
7.77
%
  
7.83
%
Tangible book value per share
  
$
5.17
  
$
5.59
  
$
5.65
  
$
5.81
  
$
5.77
  
$
5.71
  

The Corporation recorded net interest income on a fully taxable equivalent basis of $5.6 million for the three-months ended December 31, 2007 and $6.2 million for the comparable period of 2006. The decrease in net interest income for the three-months ended December 31, 2007 related principally to the decrease in interest income as a result of a decline in average interest earning assets of $48.6 million.
 
The Corporation recorded net interest income on a fully taxable equivalent basis of $23.3 million for the twelve-months ended December 31, 2007 and $26.5 million for the comparable period of 2006. The decrease in net interest income for the twelve-months ended December 31, 2007 related principally to a decrease in average interest-earning assets of $41.4 million.

Steps were taken during the fourth quarter of 2007 to improve the Corporation's net interest margin by allowing a runoff of certain high rate deposits and to position the Corporation's cash position for further outflows in the first quarter of 2008. The result was a decline in margin from the comparison period in 2006. Recent action by the Federal Open Market Committee should benefit the Corporation's strategies to seek to reduce liability costs in the first quarter of 2008. At December 31, 2007, the Corporation has specific liabilities, not part of its core funding pool, in the amount of $71.0 million which the Corporation allowed to runoff its books on January 2, 2008. The Corporation expects to achieve a 225 basis point improvement in cost of these funds as a result.

During the three months ended December 31, 2007, the decline in interest expense was favorable and reflected recent actions by the Federal Open Market Committee in lowering the target federal funds rate. For the three-months ended December 31, 2007, the Corporation increased its average borrowings by $9.2 million (including subordinated debentures) as compared to the comparable quarter ended December 31, 2006. The positive effect of the change in rate and mix in this type of funding source, as well as, a reduction in time deposits was offset by an increase in the average cost of funds, which rose (on an annualized basis) by 1 basis point to 3.90% from 3.89% during the quarter ended December 31, 2006.
 
2
 
For the twelve-months ended December 31, 2007, the average balance of interest-bearing liabilities, including borrowings, declined by $26.5 million, or 3.27%, to $783.9 million compared to the twelve months ended December 31, 2006. However, the decline in the volume of interest-bearing liabilities was offset by an increase in the average cost of funds, which rose (on an annualized basis) by 33 basis points to 3.91% from 3.58% at December 31, 2006.

Other Income

Total other income decreased $744,000 for the fourth quarter of 2007 compared with the comparable quarter of 2006, primarily as a result of decreases in gains on securities sold. Excluding net securities gains and losses in the respective periods, the Corporation recorded other income of $917,000 in the three-months ended December 31, 2007, compared to $817,000 in the three-months ended December 31, 2006.
 
For the twelve-months ended December 31, 2007, total other income increased $3.7 million as compared with the twelve-months of 2006, primarily as a result of increases in gains on securities sold. Excluding net securities gains and losses in the respective periods, the Corporation recorded other income of $3.5 million in the twelve-months ended December 31, 2007, compared to $3.2 million in the twelve-months ended December 31, 2006. This increase was primarily attributable to a $206,000 increases in commissions from sales of mutual funds and annuities and bank owned life insurance income. This was bolstered by higher overdraft fees and service charge income on deposit accounts.

Quarterly Condensed Consolidated Non Interest Income (unaudited)

For the quarter ended:
  
12/31/07
  
9/30/07
  
6/30/07
  
3/31/07
  
12/31/06
  
9/30/06
  
Service charges on deposit accounts
  
$
399
   $
312
  
$
306
  
$
288
  
$
295
  
$
307
  
Commissions from mortgage broker activities
    
16
    
15
    
25
    
46
    
45
    
32
  
Loan related fees (LOC)
    
31
    
49
    
26
    
35
    
41
    
30
  
Commissions from sale of mutual funds and annuities
    
44
    
131
    
60
    
63
    
60
    
40
  
Debit card and ATM fees
    
132
    
126
    
130
    
131
    
134
    
136
  
BOLI income
    
217
    
223
    
230
    
223
    
183
    
213
  
Net gain (loss) on sale of investments
    
(43
)
  
14
    
341
    
588
    
801
    
212
  
Other service charges and fees
    
78
    
41
    
59
    
36
    
59
    
37
  
Total other income
  
$
874
  $
911
  
$
1,177
  
$
1,410
  
$
1,618
  
$
1,007
  
 
3
 
Other Expense

Other expense for the fourth quarter of 2007 totaled $6.0 million, a decrease of $622,000 or 9.34% over the comparable period in 2006. Salary and benefit expense decreased by $663,000 or 21.98% to $2.4 million. Full time equivalent staffing levels were 172 at December 31, 2007 compared to 180 as of September 30, 2007 and 214 at December 31, 2006.

For the twelve-months ended December 31, 2007, total salaries and benefits decreased by $854,000 or 6.95% to $11.4 million. The reduction in expense was attributable to the reduction in staff, pension curtailment and elimination of certain benefit plans, offset in part by one-time charges related to severance payments in the third quarter.

Other expense for the twelve-months ended December 31, 2007 totaled $24.6 million, an increase of $240,000, or .99%, over the comparable period in 2006. Higher operating expenses during the twelve-month period resulted primarily from increases in occupancy and premise expense and other general and administrative expenses. Other general and administrative expense increased $722,000 associated with increases in professional consulting, legal, OREO expense, insurance and customer corporate analysis charges and the charge off of the Beacon Trust acquisition.

The efficiency ratio for the period, exclusive of the aforementioned one-time items in the period, would have been 88.5% for the period. The Corporation has previously announced a number of cost cutting initiatives and has expanded those initiatives in the fourth quarter to include the closing of its Red Oak Banking Center and its 84 South Street Morristown branch location. These facilities have been combined with the Morristown Town Hall office and will improve efficiency and increase customer service. We have additionally signed an agreement to outsource certain telecommunication service with the Atlantic Central Banker BITS program that will reduce telephone expense by approximately $235,000 in 2008. Additional similar outsourcing arrangements are currently being reviewed.

Quarterly Condensed Consolidated Non Interest Expense (unaudited)
(dollars in thousands)
For the quarter ended:
  
12/31/07
  
9/30/07
  
6/30/07
  
3/31/07
  
12/31/06
  
9/30/06
  
Employee salaries and wages
  
$
2,005
  
$
3,632
  
$
2,133
  
$
2,372
  
$
2,303
  
$
2,214
  
Employee incentive/bonus compensation
    
0
    
0
    
0
    
0
    
0
    
0
  
Employee stock option expense
    
46
    
46
    
35
    
24
    
41
    
45
  
Health insurance and other employee benefits
    
237
    
(687
)
  
543
    
575
    
561
    
561
  
Payroll taxes
    
124
    
183
    
181
    
234
    
167
    
184
  
Other employee related expenses
    
14
    
14
    
16
    
9
    
32
    
21
  
Incremental direct cost of loan origination
    
(73
)
  
(81
)
  
(74
)
  
(72
)
  
(88
)
  
(70
)
Total salaries, wages and employee benefits
  
$
2,353
  
$
3,107
  
$
2,834
  
$
3,142
  
$
3,016
  
$
2,955
  
                                       
Occupancy expense
    
829
    
728
    
674
    
797
    
700
    
595
  
Depreciation of premises and equipment
    
407
    
406
    
391
    
388
    
482
    
430
  
Supplies stationary and printing
    
104
    
87
    
115
    
159
    
144
    
159
  
Marketing expenses
    
179
    
152
    
109
    
163
    
266
    
164
  
Data processing expenses
    
150
    
151
    
148
    
165
    
196
    
181
  
Legal, auditing and other professional fees
    
690
    
311
    
599
    
539
    
403
    
223
  
Bank regulatory related expenses
    
58
    
60
    
60
    
60
    
57
    
60
  
Postage and delivery
    
57
    
73
    
75
    
84
    
96
    
82
  
ATM related expenses
    
59
    
63
    
77
    
61
    
53
    
58
  
Amortization of CDI
    
25
    
26
    
27
    
29
    
29
    
28
  
Other expenses
    
1,122
    
916
    
947
    
841
    
1,214
    
800
  
Total other expense
   $
6,034
  $
6,080
  $
6,056
  $
6,428
  $
6,656
  
$
5,735
  
 
4
 
Balance Sheet Summary

Quarterly Condensed Consolidated Balance Sheets (unaudited)
(dollars in thousands )
At quarter ended:
 
12/31/07
  
9/30/07
  
6/30/07
  
3/31/07
  
12/31/06
  
9/30/06
  
Cash and due from banks
   $
20,541
  
$
15,277
  
$
24,363
  
$
19,245
  
$
34,088
  
$
18,431
  
Fed funds and money market
    
49,490
    
0
    
0
    
35,374
    
10,275
    
7,884
  
Investments
    
314,194
    
343,979
    
366,224
    
381,493
    
381,733
    
393,006
  
Loans
    
51,669
    
550,847
    
533,675
    
530,573
    
550,414
    
537,350
  
Allowance for loan losses
    
(5,163
)
  
(5,021
)
  
(4,974
)
  
(4,958
)
  
(4,960
)
  
(4,908
)
Restricted investment in bank stocks, at cost
    
8,467
    
7,347
    
8,299
    
7,832
    
7,805
    
6,924
  
Premises and equipment, net
    
17,419
    
17,662
    
18,400
    
18,314
    
18,829
    
18,621
  
Goodwill
    
16,804
    
16,804
    
16,804
    
16,804
    
16,804
    
16,804
  
Core deposit intangible
    
400
    
426
    
452
    
479
    
508
    
542
  
Bank owned life insurance
    
22,261
    
22,044
    
21,822
    
21,591
    
21,368
    
21,185
  
Other assets
    
21,563
    
18,425
    
16,557
    
22,219
    
14,520
    
14,587
  
TOTAL ASSETS
  
$
1,017,645
  
$
987,790
  
$
1,001,622
  
$
1,048,966
  
$
1,051,384
  
$
1,030,426
  
Deposits
    
699,070
    
650,999
    
678,011
    
722,648
    
726,771
    
731,727
  
Other borrowings
    
223,264
    
237,744
    
221,994
    
220,327
    
211,589
    
197,953
  
Other liabilities
    
10,033
    
5,317
    
5,804
    
7,828
    
15,411
    
4,069
  
Stockholders' equity
    
85,278
    
93,730
    
95,813
    
98,163
    
97,613
    
96,677
  
TOTAL LIABILITIES AND STOCK HOLDERS' EQUITY
  
$
1,017,645
  
$
987,790
  
$
1,001,622
  
$
1,048,966
  
$
1,051,384
  
$
1,030,426
  

Condensed Consolidated Average Balance Sheets (unaudited)
(dollars in thousands)
For three month period ended:
  
12/31/07
  
9/30/07
  
6/30/07
  
3/31/07
  
12/31/06
  
9/30/06
  
Investments, fed funds, and other
  
$
351,302
  
$
362,119
  
$
404,975
  
$
415,980
  
$
408,684
  
$
433,175
  
Loans
    
552,521
    
538,798
    
532,799
    
540,971
    
543,707
    
532,452
  
Allowance for loan losses
    
(5,077
)
  
(4,984
)
  
(4,986
)
  
(4,959
)
  
(4,918
)
  
(4,939
)
All other assets
    
91,016
    
90,533
    
92,038
    
94,773
    
88,008
    
85,271
  
TOTAL ASSETS
  
$
989,762
  
$
986,466
  
$
1,024,826
  
$
1,046,765
  
$
1,035,481
  
$
1,045,959
  
Deposits interest bearing
    
564,334
    
557,555
    
578,819
    
592,073
    
586,388
    
612,376
  
Deposits non interest bearing
    
115,859
    
128,449
    
130,701
    
135,161
    
140,745
    
132,094
  
Other borrowings
    
216,761
    
200,257
    
211,228
    
215,198
    
207,524
    
203,675
  
Other liabilities
    
5,543
    
5,372
    
6,159
    
6,867
    
4,004
    
2,858
  
Stockholders' equity
    
87,265
    
94,833
    
97,919
    
97,466
    
96,820
    
94,956
  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
  
$
989,762
  
$
986,466
  
$
1,024,826
  
$
1,046,765
  
$
1,035,481
  
$
1,045,959
  
 
5
 
Loans

The Corporation had total loans of $551.7 million at December 31, 2007, representing an $822,000, or 0.15%, increase on a linked-quarter basis. Loan growth continued during the quarter in our commercial related segments of the portfolio. At December 31, 2007, the Corporation had $49.3 million in overall undispersed loan commitments, $47.8 million of which it expected to fund over the next 90 days. This includes $47.8 million in commitments for commercial and commercial real estate loans.

Loan origination for the quarter increased in the commercial sector primarily commercial mortgages. "We are pleased with the growth achieved for the quarter and are optimistic that the Corporation will continue to build its loans outstanding volume from this level through 2008. Our pipelines are strong; we expect that increased activity in the commercial sectors of the portfolio will support our strategic goals of increased loan volume and improving our earning-asset mix. We continue to work aggressively at strengthening existing customer relationships and building new ones by seizing opportunities that have been created by these events and the improved business development effort in the Bank," said Mr. Weagley.

Loan Mix:
(unaudited)
(dollars in thousands)

For three month period ended:
  
12/31/07
  
9/30/07
  
6/30/07
  
3/31/07
  
12/31/06
  
9/30/06
  
Real estate loans Residential
  
$
265,597
  
$
265,301
  
$
261,849
  
$
262,958
  
$
268,748
  
$
261,652
  
Commercial
    
137,585
    
136,289
    
135,707
    
135,062
    
135,802
    
132,032
  
Construction
    
51,367
    
53,286
    
47,910
    
60,135
    
70,340
    
63,583
  
Total real estate loans
    
454,549
    
454,876
    
445,466
    
458,155
    
474,890
    
457,267
  
Commercial loans
    
95,978
    
94,444
    
86,848
    
71,020
    
74,135
    
77,925
  
Consumer and other loans
    
563
    
960
    
741
    
754
    
699
    
1,443
  
Total loans before unearned fees and costs
    
551,090
    
550,280
    
533,055
    
529,929
    
549,724
    
536,635
  
Unearned fees and costs
    
579
    
567
    
620
    
644
    
690
    
715
  
Total loans
  
$
551,669
  
$
550,847
  
$
533,675
  
$
530,573
  
$
550,414
  
$
537,350
  
 
6
 
Asset Quality

Selected credit quality ratios
(unaudited)
(dollars in thousands)
As of or for the quarter ended:
  
12/31/07
  
9/30/07
  
6/30/07
  
3/31/07
  
12/31/06
  
9/30/06
  
Non-accrual loans
  
$
3,907
  
$
986
  
$
1,070
  
$
1,207
  
$
475
  
$
315
  
Past due loans 90 days or more and still accruing interest
    
0
    
0
    
0
    
0
    
225
    
346
  
Total non performing loans
    
3,907
    
986
    
1,070
    
1,207
    
700
    
661
  
Other real estate owned ("OREO")
    
501
    
586
    
586
    
0
    
0
    
0
  
Repossessed assets other than real estate
    
0
    
0
    
0
    
0
    
0
    
0
  
Total non performing assets
  
$
4,408
  
$
1,572
  
$
1,656
  
$
1,207
  
$
700
  
$
661
  
Non performing assets as a percentage of total assets
    
0.43
%
  
0.16
%
  
0.17
%
  
0.12
%
  
0.07
%
  
0.06
%
Non performing loans as a percentage of total loans
    
0.80
%
  
0.29
%
  
0.31
%
  
0.23
%
  
0.13
%
  
0.12
%
Net charge-offs (recoveries)
  
$
147
  
$
139
  
$
86
  
$
2
  
$
34
  
$
29
  
Net charge-offs as a percentage of average loans for the period
    
0.03
%
  
0.03
%
  
0.02
%
  
0.00
%
  
0.01
%
  
0.01
%
Allowance for loan losses as a percentage of period end loans
    
0.94
%
  
0.91
%
  
0.93
%
  
0.93
%
  
0.90
%
  
0.91
%
Total Assets
  
$
1,017,645
  
$
987,790
  
$
1,001,622
  
$
1,048,966
  
$
1,051,384
  
$
1,030,426
  
Total Loans
    
551,669
    
550,847
    
533,675
    
530,573
    
550,414
    
537,350
  
Average loans for the quarter
    
552,521
    
538,798
    
532,799
    
540,971
    
543,707
    
532,452
  
Allowance for loan losses
    
5,163
    
5,021
    
4,974
    
4,958
    
4,960
    
4,908
  

At December 31, 2007, non-performing assets totaled $4.4 million or 0.43% of total assets at December 31, 2007, as compared with $700,000 or 0.07 % at December 31, 2006. The increase in non-accrual loans was primarily attributable to one commercial mortgage in the amount of $2.5 million which subsequent to December 31, 2007 the Corporation has received full payment of the commercial mortgage including principal of $2.5 million and interest of $83,277 all of which will be reflected in the first quarter results of 2008. The Corporation continues to aggressively pursue the sale of other real estate owned and currently has a contract of sale on one of the properties in the amount of $385,000. These actions support our strong credit quality and would bring total non-performing loans to $1.5 million or .14 % of total assets.
 
7
 
"The Corporation is well positioned to weather the unprecedented volatility in the credit markets as we do not have exposure to the sub prime home mortgage business or to other sub prime issues such as securitizations and collateralized debt obligations. Our home equity portfolio is sound and was originated with conservative underwriting practices," remarked Mr. Weagley.

At December 31, 2007, the total allowance for loan losses amounted to approximately $5.2 million, or 0.94% of total loans. The allowance for loan losses as a percent of total non-performing assets, exclusive of OREO, amounted to 132.15% for the fourth quarter of 2007 as compared 509.23% at September 30, 2007 and 708.6 % at December 31, 2006.
 
Securities

Investment securities reflected a decline of $67.5 million at December 31, 2007 compared to the comparable period in 2006. The decline is consistent with maintaining the balance sheet strategies the Corporation has previously outlined in seeking to reduce the size of its investment securities portfolio while increasing loans as a percentage of the earning-asset mix.

The reduction in the volume of the investment portfolio was made in anticipation of providing cash flow for loan funding and forecasted liability outflows on January 2, 2008. This action will have a positive impact on net interest income in the first quarter of 2008. Reductions in net interest income and the net interest margin were due to tighter spreads on deposits caused by the current interest rate environment and shifts in deposit mix driven by customer preference for higher rates.

On November 16, 2007, the Corporation transferred securities having a book value of $113.4 million and market value of $112.9 million from its held-to-maturity portfolio to its available-for-sale portfolio. The resultant loss of $272,000 after tax was record in other comprehensive income.
 
Deposits/Funding Sources

Deposit Mix
(dollars in thousands)
At quarter ended:
  
12/31/07
  
9/30/07
  
6/30/07
  
3/31/07
  
12/31/06
  
9/30/06
  
Checking accounts
  
  
  
  
  
  
  
  
  
  
  
  
  
Non interest bearing
  
$
111,262
  
$
121,451
  
$
127,479
  
$
128,394
  
$
136,284
  
$
134,774
  
Interest bearing
    
155,406
    
110,177
    
126,112
    
131,337
    
107,359
    
74,316
  
Savings deposits
    
86,501
    
93,222
    
92,792
    
95,542
    
99,823
    
107,038
  
Money market accounts
    
196,601
    
167,442
    
171,923
    
173,569
    
184,102
    
197,816
  
Time Deposits
    
149,300
    
158,707
    
159,705
    
193,806
    
199,203
    
217,783
  
Total Deposits
  
$
699,070
  
$
650,999
  
$
678,011
  
$
722,648
  
$
726,771
  
$
731,727
  
 
8
 
Deposits totaled $699.1 million at December 31, 2007, a decrease of $27.7 million from December 31, 2006. The declines were a result of a moderation in the yield curve and a decision to reduce the Corporation's dependence on more rate sensitive high costing funds, which were subject to maturity and repricing in favor of lower costing wholesale funds available. More volatile certificates of deposit of $100,000 or more declined as well as part of this strategy.

Borrowings totaled $223.3 million at December 31, 2007, reflecting an increase of $11.7 million, or 5.52%, from December 31, 2006. Overnight customer repurchase transactions covering commercial customer sweep accounts comprised $48.5 million of the securities sold under repurchase agreements figure at December 31, 2007 as compared with $29.4 million at December 31, 2006. This shift in the volume of repurchase agreements also accounted for a portion of the decline in non-interest bearing commercial checking accounts during the period.

Stockholders' Equity

Total stockholders' equity amounted to $85.3 million or 8.38% of total assets at December 31, 2007. Tangible equity was $68.1 million or 6.80% of tangible assets. Book value per common share was $6.48 at December 31, 2007, compared to $6.85 at September 30, 2007. Tangible book value per common share was $5.17at December 31, 2007 and $5.59 at September 30, 2007.

During the three months ended December 31, 2007 the Corporation purchased 558,353 shares of common stock at an average cost of $11.58 per share.

During 2007, the Corporation has purchased 850,527 common shares at an average cost per share of $11.79 under the stock buyback program adopted on January 24, 2002. The repurchased shares were recorded as Treasury Stock, which resulted in a decrease in stockholders' equity. On September 27, 2007 the Board approved an increase in its current share buyback program to an additional 5% of outstanding shares, enhancing its current authorization by 684,627 shares. Any purchases by the Corporation may be made, from time to time, in the open market, in privately negotiated transactions or otherwise. At December 31, 2007, there were 196,239 shares available for repurchase under the Corporation's stock buyback program.
 
9
 
At December 31, 2007, the Corporation's Tier 1 Capital Leverage ratio was 8.13%, the Corporation's total Tier 1 Risk Based Capital ratio was 11.65 % and the Corporation's total Risk Based Capital ratio was 12.41%. Total Tier 1 capital decreased to approximately $79.1 million at December 31, 2007 from $85.8 million at September 30, 2007 and decreased from $88.0 million at December 31, 2006.

At December 31, 2007, the Corporation's capital ratios continued to exceed the minimum Federal requirements for a bank holding company, and Union Center National Bank's capital ratios continued to exceed each of the minimum levels required for classification as a "well capitalized institution" under the Federal Deposit Insurance Corporation Improvement Act ("FDICIA").

About Center Bancorp

Center Bancorp, Inc. is a Financial Services Holding Company and operates Union Center National Bank, its main subsidiary. Chartered in 1923, Union Center National Bank is one of the oldest National banks headquartered in the state of New Jersey and currently the largest commercial bank headquartered in Union County. Its primary market niche is its commercial banking business. The Bank focuses its lending activities on commercial lending to small and medium sized businesses, real estate developers and high net worth individuals.

The Bank, through its subsidiary, Center Financial Group LLC, provides financial services including brokerage services insurance and annuities, mutual funds and financial planning. In the fourth quarter of 2007, Center formed a title Insurance partnership, Center Title LLC, with Progressive Title Company in Parsippany to provide title services in connection with the closing of real estate transactions.

The Bank currently operates 13 branches in Union and Morris counties. Banking centers are located in Union Township (6 locations), Berkeley Heights, Boonton/Mountain Lakes, Madison, Millburn/Vauxhall, Morristown (1 location), Springfield, and Summit, New Jersey. The Bank also operates remote ATM locations in the Union, Chatham and Madison, New Jersey Transit train stations, Union Hospital and the Boys and Girls Club of Union.

While the Bank's primary market area is comprised of Morris and Union Counties, New Jersey the Corporation has expanded to northern and central New Jersey. At December 31, 2007, the Bank had total assets of $1.0 billion, total deposits of $699 million and stockholders' equity of approximately $85.3 million.

For further information regarding Center Bancorp, Inc., call 1-(800)-862-3683. For information regarding Union Center National Bank, visit our web site at http://www.centerbancorp.com

Non-GAAP Financial Measures
 
10
 
The Corporation's reference to its total other income, exclusive of gains or losses recorded on securities sales, may constitute a "non-GAAP financial measure." The Corporation has provided a reconciliation by also reporting its total other income for the applicable periods. The Corporation believes that the above-mentioned reference enhances the public's ability to compare results between the applicable periods in 2006 and 2007. Tangible stockholders' equity represents a non-GAAP financial measure and equals total stockholders' equity minus recorded goodwill and other intangible assets. The Corporation has provided reconciliation by also reporting its total stockholders' equity. The Corporation believes that a disclosure of tangible stockholders' equity may be helpful for those investors who seek to evaluate the Corporation's total stockholders' equity without giving effect to intangible assets. Tangible book value is also a non-GAAP financial measure and represents total stockholders' equity less goodwill and other intangible assets, calculated on a per common share basis. The Corporation has provided a reconciliation by also reporting its total book value per share. The Corporation believes that a disclosure of tangible book value per share may be helpful for those investors who seek to evaluate the Corporation's book value per share without giving effect to goodwill and other intangible assets.
 
Forward-Looking Statements

All non-historical statements in this press release (including statements regarding growth in loan volume, changes in earning asset mix, the funding of loan commitments, cost reduction strategies, future net interest margin and other future results) constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may use such forward-looking terminology as "expect," "look," "believe," "plan," "anticipate," "may," "will" or similar statements or variations of such terms or otherwise express views concerning trends and the future. Such forward-looking statements involve certain risks and uncertainties. These include, but are not limited to, the direction of interest rates, continued levels of loan quality and origination volume, continued relationships with major customers including sources for loans, as well as the effects of international, national, regional and local economic conditions and legal and regulatory barriers and structure, including those relating to the deregulation of the financial services industry, and other risks cited in reports filed by the Corporation with the Securities and Exchange Commission. Actual results may differ materially from such forward-looking statements. Center Bancorp, Inc. assumes no obligation for updating any such forward-looking statement at any time.

11

CENTER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION

(Dollars in Thousands)
  
December 31, 2007
  
December 31, 2006
  
   
(unaudited)
      
ASSETS
  
 
  
 
  
Cash and due from banks
 
$
20,541
  
$
34,088
  
Federal funds sold and securities purchased under agreement to resell
    
49,490
    
10,275
  
Total cash and cash equivalents
    
70,031
    
44,363
  
Investment securities available-for sale
    
314,194
    
250,603
  
Investment securities held to maturity (approximate market value of $0 in 2007 and $130,900 in 2006)
    
--
    
131,130
  
Total investment securities
    
314,194
    
381,733
  
Loans, net of unearned income
    
551,669
    
550,414
  
Less -- Allowance for loan losses
    
5,163
    
4,960
  
Net Loans
    
546,506
    
545,454
  
Restricted investment in bank stocks, at cost
    
8,467
    
7,805
  
Premises and equipment, net
    
17,419
    
18,829
  
Accrued interest receivable
    
4,535
    
4,932
  
Bank owned life insurance
    
22,261
    
21,368
  
Other Assets
    
17,028
    
9,588
  
Goodwill and other intangible assets
    
17,204
    
17,312
  
Total assets
  
$
1,017,645
  
$
1,051,384
  
               
LIABILITIES              
Deposits:              
Non-interest bearing
 
$
111,422
  
$
136,453
  
Interest-bearing
              
Time deposits $100 and over
    
63,997
    
83,623
  
Interest-bearing transactions, savings and time deposits $100 and less
    
523,651
    
506,695
  
Total deposits
    
699,070
    
726,771
  
Overnight Federal funds and securities sold under agreement to repurchase
    
48,541
    
29,443
  
Short-term borrowings
    
1,123
    
2,000
  
Long-term borrowings
    
168,445
    
174,991
  
Subordinated debentures
    
5,155
    
5,155
  
Accounts payable and accrued liabilities
    
10,033
    
15,411
  
Total liabilities
    
932,367
    
953,771
  
               
STOCKHOLDERS' EQUITY
              
Preferred Stock, no par value:              
Authorized 5,000,000 shares; none issued
    
--
    
--
  
Common stock, no par value:
              
Authorized 20,000,000 shares; issued 15,190,984 shares at December 31, 2007 and December 31, 2006; outstanding 13,155,784 shares at December 31, 2007 and 13,910,450 shares at December 31, 2006, respectively
    
86,908
    
77,130
  
Additional paid in capital
    
5,133
    
4,535
  
Retained earnings
    
15,161
    
25,989
  
Treasury stock, at cost (2,035,200 shares at December 31, 2007 and 1,280,534 shares at December 31, 2006)
    
(16,100
)
  
(6,631
)
Accumulated other comprehensive loss
    
(5,824
)
  
(3,410
)
Total stockholders' equity
    
85,278
    
97,613
  
Total liabilities and stockholders' equity
  
$
1,017,645
  
$
1,051,384
  
 
12
 
CENTER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME

 
  
Three Months Ended
  
Twelve Months Ended
  
   
December 31,
  
December 31,
  
(Dollars in Thousands, Except Per Share Data)
  
2007
  
2006
  
2007
  
2006
  
   
(unaudited)
  
(unaudited)
  
Interest income: Interest and fees on loans
  
$
8,440
  
$
8,516
  
$
33,527
  
$
31,999
  
Interest and dividends on investment securities:                          
Taxable interest income
    
3,241
    
3,454
    
13,585
    
15,521
  
Non-taxable interest income
    
772
    
903
    
3,171
    
3,874
  
Dividends
    
261
    
373
    
1,242
    
1,384
  
Interest on Federal funds sold and securities purchased under agreement to resell
    
83
    
162
    
604
    
547
  
Total interest income
    
12,797
    
13,408
    
52,129
    
53,325
  
Interest expense:
                          
Interest on certificates of deposit $100 or more
    
942
    
1,047
    
3,964
    
4,930
  
Interest on other deposits
    
4,167
    
4,137
    
16,871
    
13,075
  
Interest on borrowings
    
2,516
    
2,533
    
9,795
    
10,969
  
Total interest expense
    
7,625
    
7,717
    
30,630
    
28,974
  
Net interest income
    
5,172
    
5,691
    
21,499
    
24,351
  
Provision for loan losses
    
150
    
57
    
350
    
57
  
Net interest income after provision for loan losses
    
5,022
    
5,634
    
21,149
    
24,294
  
Other income:
                          
Service charges, commissions and fees
    
531
    
429
    
1,824
    
1,759
  
Other income
    
125
    
145
    
457
    
454
  
Annuity and insurance
    
44
    
60
    
298
    
205
  
Bank owned life insurance
    
217
    
183
    
893
    
780
  
Net Gain (loss) on securities sold
    
(43
)
  
801
    
900
    
(2,565
)
Total other income (loss)
    
874
    
1,618
    
4,372
    
633
  
Other expense:
                          
Salaries and employee benefits
    
2,353
    
3,016
    
11,436
    
12,290
  
Occupancy, net
    
799
    
619
    
2,843
    
2,309
  
Premises and equipment
    
437
    
564
    
1,777
    
1,940
  
Professional and consulting
    
690
    
403
    
2,139
    
1,179
  
Stationery and printing
    
104
    
144
    
465
    
692
  
 Marketing and advertising
    
179
    
266
    
603
    
731
  
Computer expense
    
150
    
196
    
614
    
741
  
Other
    
1,322
    
1,448
    
4,721
    
4,476
  
Total other expense
    
6,034
    
6,656
    
24,598
    
24,358
  
Income (loss) before income tax expense (benefit)
    
(138
)
  
596
    
923
    
569
  
Income tax benefit
    
(670
)
  
(1,695
)
  
(2,933
)
  
(3,329
)
Net income
  
$
532
  
$
2,291
  
$
3,856
  
$
3,898
  
Earnings per share:
                          
Basic
  
$
0.04
  
$
0.16
  
$
0.28
  
$
0.28
  
Diluted
  
$
0.04
  
$
0.16
  
$
0.28
  
$
0.28
  
Weighted average common shares outstanding:
                          
Basic
    
13,441,082
    
13,898,178
    
13,780,504
    
13,959,684
  
Diluted
    
13,543,486
    
13,980,270
    
13,840,756
    
14,040,338
  
 
All common share and per common share amounts have been adjusted to reflect the 5 percent stock dividend declared on March 29, 2007 paid on June 1, 2007.
 
13
 
SUMMARY SELECTED YEAR-TO-DATE STATISTICAL INFORMATION AND FINANCIAL DATA

(Dollars in Thousands, Except per Share Data)

Summary of financial condition data through stockholders' equity
  
 12/31/2007
 
 9/30/2007
 
 12/31/2006
  
                  
Interest income
  
$
52,129
  
$
39,332
  
$
53,325
  
Interest expense
    
30,630
    
23,005
    
28,974
  
Net interest income
    
21,499
    
16,327
    
24,351
  
Provision for loan losses
    
350
    
200
    
57
  
Net interest income after provision
                    
 for loan losses
    
21,149
    
16,127
    
24,294
  
Other income
    
4,372
    
3,498
    
633
  
Other expense
    
24,598
    
18,564
    
24,358
  
Income before income tax expense
    
923
    
1,061
    
569
  
Income tax (benefit) expense
    
(2,933
)
  
(2,263
)
  
(3,329
)
Net income
  
$
3,856
  
$
3,324
  
$
3,898
  
                     
Statement of Financial Condition Data
                    
Investments
  
$
314,194
  
$
343,979
  
$
381,733
  
Total loans
    
551,669
    
550,847
    
550,414
  
Goodwill and other intangibles
    
17,204
    
17,230
    
17,312
  
Total assets
    
1,017,645
    
987,790
    
1,051,384
  
Deposits
    
699,070
    
650,999
    
726,771
  
Borrowings
    
223,264
    
237,744
    
206,434
  
Stockholders' equity
  
$
85,278
  
$
93,730
  
$
97,613
  
Summary of Income
                    
Dividends
                    
Cash Dividends
  
$
4,885
  
$
3,714
  
$
4,808
  
Dividend payout ratio
    
126.69
%
  
111.73
%
  
123.35
%
Cash Dividends Per Share
                    
Cash Dividends
  
$
0.37
  
$
0.27
  
$
0.35
  
Earnings Per Share
                    
Basic
  
$
0.28
  
$
0.24
  
$
0.28
  
Diluted
  
$
0.28
  
$
0.24
  
$
0.28
  
                     
Weighted Average Common Shares Outstanding
                    
Basic
    
13,780,504
    
13,894,888
    
13,959,684
  
Diluted
    
13,840,756
    
13,950,298
    
14,060,338
  
Operating Ratios
                    
Return on average assets
    
0.38
%
  
0.43
%
  
0.37
%
Average stockholders' equity to average assets
    
9.33
%
  
9.49
%
  
9.21
%
Return on average equity
    
4.09
%
  
4.58
%
  
4.04
%
Return on average tangible stockholders' equity
    
5.00
%
  
5.58
%
  
4.93
%
Book Value
                    
Book value per common share
  
$
6.48
  
$
6.85
  
$
7.02
  
Tangible book value per common share
  $
5.17
  
$
5.59
  
$
5.77
  
Non-Financial Information
                    
Common stockholders of record
    
679
    
689
    
717
  
Staff-full time equivalent
    
172
    
180
    
214
  
 
14
 
   
 12/31/2007
 
 9/30/2007
 
 12/31/2006
  
                  
Common shares outstanding
    
13,155,784
    
13,692,534
    
13,910,450
  
Stockholders' equity
  
$
85,278
  
$
93,730
  
$
97,613
  
Less: Goodwill and other intangible assets
    
17,204
    
17,230
    
17,312
  
Tangible Stockholders' Equity
  
$
68,074
  
$
76,500
  
$
80,301
  
Tangible Book Value
  
$
5.17
  
$
5.59
  
$
5.77
  
Net Income
  
$
3,856
  
$
3,324
  
$
3,898
  
Average Stockholders' Equity
    
94,345
    
96,730
    
96,505
  
Less: Average Goodwill and other intangible assets
    
17,259
    
17,272
    
17,378
  
Average Tangible Stockholders' Equity
    
77,086
    
79,458
    
79,127
  
Return on Average Tangible Stockholders' Equity
    
5.00
%
  
5.58
%
  
4.93
%

(1) "Return on average tangible stockholders' equity" is defined as net income as a percentage of average stockholders' equity reduced by recorded intangible assets. This measure may be important to investors that are interested in analyzing our return on equity exclusive of the effect of changes in intangible assets on equity.


Investor Inquiries:
Anthony C. Weagley
President & Chief Executive Officer
(908) 206-2886

Joseph Gangemi
Investor Relations
(908) 206-2886
 
15