EX-99.1 2 v120965_ex99-1.htm Unassociated Document
Center Bancorp, Inc. Reports Second Quarter 2008 Earnings
 
UNION, N.J., July 24, 2008 (PRIME NEWSWIRE) -- Center Bancorp, Inc. (Nasdaq:CNBC), parent company of Union Center National Bank, today reported operating results for the second quarter ended June 30, 2008. Earnings amounted to $1.4 million, or $0.11 per diluted share, for the quarter ended June 30, 2008, as compared with earnings of $1.0 million, or $0.07 per diluted share, for the quarter ended June 30, 2007.
 
"The results for the period announced today continue to underscore our commitment to achieving quality results and execution of our long term strategic plan. Earnings for both the current period and year to date reflect the progress that the Corporation is making in transitioning the balance sheet, maintaining strong credit quality and improving the future stability of revenue streams consistent with the work started in 2007 that we intend to continue throughout 2008. Due to these actions, our second quarter results reflect a marked improvement in our balance sheet, a $98.0 million increase in loans or 18 percent over the comparable period in 2007, an expanding net interest margin, adequate loan loss reserves supported by continued good credit quality in our asset portfolios and reduced operating overhead," remarked Anthony C. Weagley, President and CEO.
 
For the six months ended June 30, 2008, net income amounted to $2.6 million, an increase of $299,000 as compared to the comparable six-month period ended June 30, 2007. Diluted earnings per common share for the six months ended June 30, 2008 were $0.20 as compared with $0.17 for the same period in 2007.
 
Quarterly Condensed Consolidated Income Statements (unaudited)
           
(Dollars in thousands, except per share data) 
 
 
 
 
 
 
 
For the quarter ended: 
 
6/30/08 
 
3/31/08 
 
Net interest income 
 
$
6,429
  
$
5,687
  
Provision for loan 
         
losses 
   
521
    
150
  
Net interest income 
         
after provision for 
         
loan losses 
   
5,908
    
5,537
  
Other income 
   
1,116
    
866
  
Other expense 
   
(5,188
)
  
(4,953
)
Income (loss) before 
         
income tax 
   
1,836
    
1,450
  
Income tax expense 
         
(benefit) 
   
428
    
233
  
NET INCOME 
 
$
1,408
  
$
1,217
  
Earnings per share 
         
(basic) 
 
$
0.11
  
$
0.09
  
Earnings per share 
         
(diluted) 
 
$
0.11
  
$
0.09
  
Weighted average common 
         
shares outstanding: 
         
Basic 
   
13,070,868
    
13,144,747
  
Diluted 
   
13,083,558
    
13,163,586
  

For the quarter ended: 
   
12/31/07
    
9/30/07
    
6/30/07
    
3/31/07
  
Net interest income 
 
$
5,172
  
$
5,481
  
$
5,225
  
$
5,621
  
Provision for loan 
                 
losses 
   
150
    
100
    
100
    
0
  
Net interest income
                          
after provision for 
                 
loan losses 
   
5,022
    
5,381
    
5,125
    
5,621
  
Other income 
   
874
    
911
    
1,177
    
1,410
  
Other expense 
   
(6,034
)
  
(6,080
)
  
(6,056
)
  
(6,428
)
Income (loss) before 
                 
income tax 
   
(138
)
  
212
    
246
    
603
  
Income tax expense 
                 
(benefit) 
   
(670
)
  
(786
)
  
(771
)
  
(706
)
NET INCOME 
 
$
532
  
$
998
  
$
1,017
  
$
1,309
  
Earnings per share 
                 
(basic) 
 
$
0.04
  
$
0.07
  
$
0.07
  
$
0.09
  
Earnings per share 
                 
(diluted) 
 
$
0.04
  
$
0.07
  
$
0.07
  
$
0.09
  
Weighted average common 
                 
shares outstanding: 
                 
Basic 
   
13,441,082
    
13,864,722
    
13,910,450
    
13,910,450
  
Diluted 
   
13,469,764
    
13,913,919
    
13,990,642
    
13,986,333
  
All common share and per common share amounts have been adjusted for prior stock dividends.
Note: Due to rounding quarterly earnings per share may not add up to the reported year-to-date earnings per share.
 
Selected financial ratios (annualized where applicable)

As of or for the 
 
 
 
 
 
 
 
 
 
 
 
 
 
quarter ended: 
 
6/30/08 
 
3/31/08 
 
12/31/07 
 
09/30/07 
 
06/30/07 
 
03/31/07 
 
Return on 
 
 
 
 
 
 
 
 
 
 
 
 
 
average assets 
   
0.57
%
  
0.50
%
  
0.22
%
  
0.40
%
  
0.40
%
  
0.50
%
Return on average 
                         
equity 
   
6.69
%
  
5.60
%
  
2.44
%
  
4.21
%
  
4.15
%
  
5.37
%
Net interest 
                         
margin (tax 
                         
equivalent basis) 
   
3.00
%
  
2.74
%
  
2.48
%
  
2.63
%
  
2.43
%
  
2.55
%
Loan/Deposit ratio
    
101.61
%
  
90.71
%
  
78.91
%
  
84.62
%
  
78.71
%
  
73.42
%
Stockholders' 
                         
equity/total 
                         
assets 
   
8.15
%
  
8.58
%
  
8.38
%
  
9.49
%
  
9.57
%
  
9.36
%
Efficiency ratio 
   
67.7
%
  
70.9
%
  
92.7
%
  
89.3
%
  
92.8
%
  
92.8
%
Book value per 
                         
share 
 
$
6.18
  
$
6.51
  
$
6.48
  
$
6.85
  
$
6.89
  
$
7.06
  
Return on 
                         
average tangible 
                         
stockholders' 
                         
equity 
   
8.41
%
  
6.98
%
  
3.04
%
  
5.15
%
  
5.04
%
  
6.53
%
Tangible 
                         
stockholders' 
                         
equity/tangible 
                         
assets 
   
6.52
%
  
6.98
%
  
6.80
%
  
7.88
%
  
7.98
%
  
7.84
%
Tangible book value per share
 
$
4.86
  
$
5.20
  
$
5.17
  
$
5.59
  
$
5.65
  
$
5.81
  
The Corporation recorded net interest income on a fully taxable equivalent basis of $6.8 million for the three months ended June 30, 2008 as compared to $5.7 million for the comparable quarter in 2007. Interest income decreased by $0.8 million while interest expense decreased by $1.9 million from the same period last year. Compared to 2007, net interest average earning assets declined by $35.0 million while the net interest spread and net interest margin improved by 80 basis points and 57 basis points, respectively, due primarily to improved funding costs. On a linked quarter basis, net interest spread and margin improved by 33 basis points and 26 basis points, respectively.
 
The Corporation recorded net interest income on a fully taxable equivalent basis of $12.9 million for the six months ended June 30, 2008 as compared to $11.8 million for the comparable six month period in 2007. Interest income declined by $2.0 million while interest expense decreased by $3.1 million from the same period last year. Compared to 2007, net interest earning assets declined by $50.0 million while net interest spread and net interest margin improved by 56 basis points and 38 basis points, respectively, due primarily to improved funding costs.
 
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 and second quarters of 2008. The result was an improvement in margin from the comparison period in 2007. The current policy stance of the Federal Open Market Committee allowed the Corporation to further reduce liability costs in the later part of the first quarter and the second quarter of this year. During the first six months of 2008, the Corporation secured approximately $45 million of longer term lower cost funding with a weighted average rate of 2.67% in an effort to support continued loan growth.
 
The $3.1 million decline in interest expense for the six months ended June 30, 2008 from the same period last year also reflects the runoff of higher cost deposits and the replacement with lower cost funding, due primarily to recent actions by the Federal Open Market Committee in lowering the target Federal funds rate. Compared to the comparable six-month period in 2007, the Corporation's average interest bearing deposits declined by $76.1 million, due primarily to the planned runoff of high cost deposits, while average borrowings, generally placed at favorable terms and rates, increased by $55 million.
 
Other Income
 
Total other income decreased $61,000 for the second quarter of 2008 compared with the comparable quarter of 2007, primarily as a result of decreases in net gains on securities sold. Excluding net securities gains, the Corporation recorded other income of $891,000 in the three months ended June 30, 2008, compared to $836,000 in the three months ended June 30, 2007, an increase of 6.6%. This increase was primarily attributable to a $77,000 increase in service charges, commissions and fees, partially offset by a decline in commissions from sales of mutual funds and annuities.
 
For the six months ended June 30, 2008, total other income decreased $605,000 as compared to the first six months of 2007, primarily as a result of decreases in net gains on securities sold. Excluding net securities gains, the Corporation recorded other income of $1.8 million in the six months ended June 30, 2008, compared to $1.7 million in the six months ended June 30, 2007, an increase of 6.0%. This increase was primarily attributable to a $187,000 increase in service charges, commissions and fees, partially offset by a decline in commissions from sales of mutual funds and annuities.
 
 
Quarterly Consolidated Non-Interest Income 
 
 
 
 
 
 
 
(unaudited) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in thousands) 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the quarter 
 
 
 
 
 
 
 
 
 
 
 
 
 
ended: 
 
6/30/08 
 
3/31/08 
 
12/31/07 
 
9/30/07 
 
6/30/07 
 
3/31/07 
 
Service charges 
                         
on deposit 
                         
accounts 
 
$
383
  
$
404
  
$
399
  
$
312
  
$
306
  
$
288
  
Commissions from 
                         
mortgage broker 
                         
activities 
   
17
    
12
    
16
    
15
    
25
    
46
  
Loan related 
                         
fees (LOC) 
   
37
    
41
    
31
    
49
    
26
    
35
  
Commissions from 
                         
sale of mutual 
                         
funds and annuities
    
38
    
17
    
44
    
131
    
60
    
63
  
Debit card and ATM 
                   
fees 
   
130
    
125
    
132
    
126
    
130
    
131
  
Bank owned life 
                         
insurance 
   
227
    
221
    
217
    
223
    
230
    
223
  
Net securities 
                         
gains (losses) 
   
225
    
--
    
(43
)
  
14
    
341
    
588
  
Other service 
                         
charges and fees 
   
59
    
46
    
78
    
41
    
59
    
36
  
Total other income
  
$
1,116
  
$
866
  
$
874
  
$
911
  
$
1,177
  
$
1,410
  
 
Other Expense
 
Other expense for the second quarter of 2008 totaled $5.2 million, a decrease of $0.9 million, or 14.3%, from the comparable period in 2007. Salary and benefit expense decreased by $310,000, or 10.9%, to $2.5 million. This reduction was primarily attributable to reductions in staff, pension curtailment and elimination of certain benefit plans. Full-time equivalent staffing levels were 164 at June 30, 2008 compared to 172 at December 31, 2007 and 187 at June 30, 2007. Other decreases were recognized in premises and equipment, professional fees and other general expenses, offset in part by an increase in occupancy costs.
 
Other expense for the six months ended June 30, 2008 totaled $10.1 million, a decrease of $2.3 million, or 18.8%, from the comparable period in 2007. Salary and benefit expense decreased by $1.1 million, or 18.4%, to $4.9 million. This reduction was primarily attributable to reductions in staff, pension curtailment and elimination of certain benefit plans. Other decreases were recognized in premises and equipment, professional fees and other general expenses, offset in part by an increase in occupancy costs.
 
The efficiency ratio for the second quarter of 2008 was 67.7% as compared to 92.7% in the fourth quarter of 2007 and 92.8% in the comparable quarterly period in 2007. The Corporation has moved ahead on the previously announced strategic outsourcing agreements, to aid in the realization of its goal to reduce operating overhead and shrink the infrastructure of the Corporation. The cost reduction plans resulted in the reduction of workforce by 12 staff positions in the quarter, which in turn resulted in a one-time charge of $145,000 for the three-month period ended June 30, 2008 for severance and termination benefits. Additionally the Corporation announced that it had completed its outsourcing arrangement with Atlantic Central Bankers Bank, BITS program and the migration of its telecommunications lines to their service platform. The result of these initiatives is expected to result in annual cost savings of $600,000.
 
 
In February of 2008, the Corporation completed the sale of its Florham Park office for $2.4 million, which approximated the carrying value. As previously announced in June 2008, the Corporation had announced that it was pursuing strategic alternatives for its Union data center/operations building and had engaged Sperry Van Ness to assist the Corporation in the process. At present, the Corporation has no immediate plans and is continuing to review these options. If successful, it would seek to relocate all or part of its operations into other facilities in Union, which would ultimately reduce operating overhead.
 
Quarterly Consolidated Non-Interest Expense (unaudited)
 
(Dollars in thousands) 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the quarter 
 
 
 
 
 
 
 
 
 
 
 
 
 
ended: 
 
6/30/08 
 
3/31/08 
 
12/31/07 
 
9/30/07 
 
6/30/07 
 
3/31/07 
 
Employee 
 
 
 
 
 
 
 
 
 
 
 
 
 
salaries and 
 
 
 
 
 
 
 
 
 
 
 
 
 
wages 
 
$
2,013
  
$
1,896
  
$
1,932
  
$
3,551
  
$
2,059
  
$
2,300
  
Employee stock 
                         
option expense 
   
36
    
45
    
46
    
46
    
35
    
24
  
Health insurance 
                         
and other 
                         
employee 
                         
benefits 
   
285
    
218
    
237
    
(687
)
  
543
    
575
  
Payroll taxes 
   
182
    
179
    
124
    
183
    
181
    
234
  
Other employee 
                         
related expenses 
   
8
    
14
    
14
    
14
    
16
    
9
  
Total salaries 
 
   
 
 
 
 
 
 
 
 
 
and employee 
 
 
 
   
 
 
 
 
 
 
 
 
 
benefits 
 
$
2,524
  
$
2,352
  
$
2,353
  
$
3,107
  
$
2,834
  
$
3,142
  
Occupancy, net 
   
734
    
759
    
799
    
692
    
629
    
723
  
Premises and 
                         
equipment 
                         
expense 
   
356
    
366
    
437
    
442
    
436
    
462
  
Legal, auditing 
                         
and other 
                         
professional fees 
   
190
    
172
    
690
    
311
    
599
    
539
  
Stationary and 
                         
printing 
   
118
    
95
    
104
    
87
    
115
    
159
  
Marketing and 
                         
advertising 
   
188
    
160
    
179
    
152
    
109
    
163
  
Computer expense 
   
226
    
141
    
150
    
151
    
148
    
165
  
Bank regulatory 
                         
   
55
    
58
    
58
    
60
    
60
    
60
  
Postage and 
                         
delivery 
   
65
    
78
    
57
    
73
    
75
    
84
  
ATM related 
                         
expenses 
   
62
    
60
    
59
    
63
    
77
    
61
  
Amortization of CDI 
   
24
    
25
    
25
    
26
    
27
    
29
  
Other expenses 
   
646
    
687
    
1,123
    
916
    
947
    
841
  
Total other expense
  
$
5,188
  
$
4,953
  
$
6,034
  
$
6,080
  
$
6,056
  
$
6,428
  
 

Quarterly Condensed Consolidated Balance Sheets (unaudited)
                          
                           
(Dollars in thousands)
                          
At quarter
                          
ended:
 
6/30/08
 
3/31/08
 
12/31/07
 
9/30/07
 
6/30/07
 
3/31/07
  
Cash and due from banks
  
$
16,172
  
$
15,155
  
$
20,541
  
$
15,277
  
$
24,363
  
$
19,245
  
Fed funds and money market funds
    
0
    
45,300
    
49,490
    
0
    
0
    
35,374
  
Invest-ments
    
253,780
    
281,746
    
314,194
    
343,979
    
366,224
    
381,493
  
Loans
    
631,221
    
565,025
    
551,669
    
550,847
    
533,675
    
530,573
  
Allowance for loan losses
    
(5,660
)
  
(5,245
)
  
(5,163
)
  
(5,021
)
  
(4,974
)
  
(4,958
)
Restricted investment in bank stocks, at cost
    
10,325
    
10,036
    
8,467
    
7,347
    
8,299
    
7,832
  
Premises and equipment, net
    
18,203
    
17,404
    
17,419
    
17,662
    
18,400
    
18,314
  
Goodwill
    
16,804
    
16,804
    
16,804
    
16,804
    
16,804
    
16,804
  
Core deposit intangible
    
350
    
375
    
400
    
426
    
452
    
479
  
Bank owned life insurance
    
22,710
    
22,483
    
22,261
    
22,044
    
21,822
    
21,591
  
Other assets
    
22,531
    
26,084
    
21,563
    
18,425
    
16,557
    
22,219
  
TOTAL ASSETS
  
$
986,436
  
$
995,167
  
$
1,017,645
  
$
987,790
  
$
1,001,622
  
$
1,048,966
  
Deposits
    
621,190
    
622,924
    
699,070
    
650,999
    
678,011
    
722,648
  
Other borrowings 279,585
    
279,024
    
223,264
    
237,744
    
221,994
    
220,327
        
Other liabil-ities
    
5,268
    
7,818
    
10,033
    
5,317
    
5,804
    
7,828
  
Stockholders' equity
    
80,393
    
85,401
    
85,278
    
93,730
    
95,813
    
98,163
  
TOTAL
                                     
LIABILITIES AND STOCK-HOLDERS' EQUITY
  
$
986,436
  
$
995,167
  
$
1,017,645
  
$
987,790
  
$
1,001,622
  
$
1,048,966
  
 

Condensed Consolidated Average Balance Sheets (unaudited)
                          
                           
(Dollars in thousands)
                          
For the
                         
quarter
                         
ended:
 
6/30/08
 
3/31/08
 
12/31/07
 
9/30/07
 
6/30/07
 
3/31/07
  
Investments,
                         
Fed funds,
                         
and other
 
$
301,118
  
$
326,397
  
$
351,302
  
$
362,119
  
$
404,975
  
$
415,980
  
Loans
   
601,655
   
565,654
   
552,521
   
538,798
   
532,799
   
540,971
  
Allowance for
                                     
loan losses
   
(5,404
)
  
(5,237
)
  
(5,077
)
  
(4,984
)
  
(4,986
)
  
(4,959
)
All other
                                     
assets
   
91,631
   
93,088
   
91,016
   
90,533
   
92,038
   
94,773
  
TOTAL
                                     
ASSETS
 
$
989,000
  
$
979,902
  
$
989,762
  
$
986,466
  
$
1,024,826
  
$
1,046,765
  
Deposits-
                                      
interest
                                     
bearing
   
499,342
   
519,295
   
564,334
   
557,555
   
578,819
    
592,073
  
Deposits-
                                      
non interest
                                     
bearing
   
114,744
   
112,695
   
115,859
   
128,449
   
130,701
    
135,161
  
Other
                                     
borrowings
   
284,264
   
251,222
   
216,761
   
200,257
   
211,228
    
215,198
  
Other liabilities
   
6,508
   
9,769
   
5,543
   
5,372
   
6,159
   
6,867
  
Stockholders' equity
   
84,142
   
86,921
   
87,265
   
94,833
   
97,919
    
97,466
  
TOTAL
                                     
LIABILITIES AND STOCK- HOLDERS' EQUITY
 
$
989,000
  
$
979,902
  
$
989,762
  
$
986,466
  
$
1,024,826
  
$
1,046,765
  
 
Loans
 
The Corporation had total loans of $631.2 million at June 30, 2008, representing a $66.2 million, or 11.7%, increase on a linked-quarter basis and a $97.5 million, or 18.3%, increase from June 30, 2007. Loan growth continued during the quarter in the Corporation's commercial related segments of the portfolio. At June 30, 2008, the Corporation had $47.8 million in overall undispersed loan commitments, $46.3 million of which it expects to fund over the next 90 days.
 
 
Loan originations for the quarter increased in the commercial sector, primarily in commercial mortgages. "We continue to be pleased with the loan and customer growth achieved for the second quarter and first six months of 2008 and are optimistic that the Corporation will continue to build its loans outstanding volume throughout 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, resulting from the improved business development effort in the Bank," said Mr. Weagley.

Loan Mix:
                                      
(unaudited)
                                      
                                       
(Dollars in thousands)
                                      
At quarter ended:
    
6/30/08
 
 
3/31/08
 
 
12/31/07
 
 
9/30/07
 
 
6/30/07
 
 
3/31/07
  
                                       
Real estate loans
                                      
Residential
  
$
255,817
  
$
260,237
  
$
265,597
  
$
265,301
  
$
261,849
  
$
262,958
  
Commercial
    
224,990
    
163,664
    
137,585
    
136,289
    
135,707
    
135,062
  
Construction
    
50,638
    
48,494
    
51,367
    
53,286
    
47,910
    
60,135
  
                                       
Total real estate
                                      
Loans
    
531,445
    
472,395
    
454,549
    
454,876
    
445,466
    
458,155
  
Commercial loans
    
98,845
    
91,492
    
95,978
    
94,444
    
86,848
    
71,020
  
Consumer and
                                      
other loans
    
339
    
592
    
563
    
960
    
741
    
754
  
                                       
Total loans
                                      
before unearned
                                      
fees and costs
    
630,629
    
564,479
    
551,090
    
550,280
    
533,055
    
529,929
  
                                       
Unearned fees
                                      
and costs, net
    
592
    
546
    
579
    
567
    
620
    
644
  
 
                                      
Total loans
  
$
631,221
  
$
565,025
  
$
551,669
  
$
550,847
  
$
533,675
      $530,573  
 
 
Asset Quality

Selected credit quality ratios
                                      
(unaudited)
                                      
                                       
(Dollars in thousands)
                                      
As of or for the quarter ended:
    
6/30/08
 
 
3/31/08
 
 
12/31/07
 
 
9/30/07
 
 
6/30/07
 
 
3/31/07
  
                                     
Non-accrual Loans
  
$
265
  
$
1,215
  
$
3,907
  
$
986
  
$
1,070
  
$
1,207
  
                                     
Troubled debt restructuring
    
97
    
0
    
0
    
0
    
0
    
0
  
 
                                      
Past due loans 90 days or more and still accruing
interest
    
0
    
0
    
0
    
0
    
0
    
0
  
 
                                      
Total non performing loans
   
362
    
1,215
    
3,907
    
986
    
1,070
    
1,207
  
                                     
Other real estate owned("OREO")
    
0
    
478
    
501
    
586
    
586
    
0
  
 
                                      
Repossessed assets other than real-estate
    
0
    
0
    
0
    
0
    
0
    
0
  
 
                                      
Total non performing assets
  
$
362
  
$
1,693
  
$
4,408
  
$
1,572
  
$
1,656
  
$
1,207
  
 
                                      
Non per-forming assets as a percentage of total
assets
    
0.04
%
  
0.17
%
  
0.43
%
  
0.16
%
  
0.17
%
  
0.12
%
 
                                      
Non performing loans as a percentage of total loans
    
0.06
%
  
0.22
%
  
0.71
%
  
0.18
%
  
0.20
%
  
0.23
%
 
                                      
Net charge-Offs
  
$
106
  
$
68
  
$
147
  
$
139
  
$
86
  
$
2
  
                                     
Net charge-offs as apercentage of average loans for
the period
    
0.02
%
  
0.01
%
  
0.03
%
  
0.03
%
  
0.02
%
  
0.00
%
 
                                      
Allowance for loan losses as a per- centage of
period end loans
    
0.90
%
  
0.93
%
  
0.94
%
  
0.91
%
  
0.93
%
  
0.93
%
                                     
Allowance for loan losses as a per-centage of
non-performing loans
    
1,563.5
%
  
431.7
%
  
132.2
%
  
509.2
%
  
464.9
%
  
410.8
%
 
                                      
Total Assets
  
$
986,436
  
$
995,167
  
$
1,017,645
  
$
987,790
  
$
1,001,622
  
$
1,048,966
  
 
                                      
Total Loans
    
631,221
    
565,025
    
551,669
    
550,847
    
533,675
    
530,573
  
                                     
Average loans for the quarter
    
601,655
    
565,654
    
552,521
    
538,798
    
532,799
    
540,971
  
 
                                      
Allowance for loan losses
    
5,660
    
5,245
    
5,163
    
5,021
    
4,974
    
4,958
  
 
 
The Corporation has been successful in maintaining loan credit quality. At June 30, 2008, non-performing assets totaled $362,000, or 0.04% of total assets, as compared with $4.4 million, or 0.43%, at December 31, 2007 and $1.7 million, or 0.17%, at June 30, 2007. The decrease in non-accrual loans from December 31, 2007 was primarily attributable to one commercial mortgage in the amount of $2.5 million in which the Corporation has received full payment of the commercial mortgage, including principal of $2.5 million and interest of $83,277, during the first quarter of 2008. At June 30, 2008, the Corporation has no other real estate owned.
 
"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 June 30, 2008, the total allowance for loan losses amounted to approximately $5.7 million, or 0.90% of total loans. The allowance for loan losses as a percent of total non-performing loans amounted to 1563.5% at June 30, 2008 as compared to 132.2% at December 31, 2007 and 464.9% at June 30, 2007.
 
Securities
 
Investment securities reflected a decline of $112.4 million at June 30, 2008 compared to June 30, 2007. 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. This action had a positive impact on net interest income in the quarter and six months ended June 30, 2008.
 
Deposits/Funding Sources
 
The following table reflects the Corporation's deposits and other funding sources for the periods specified.
Deposit Mix
                                      
(unaudited)
                                      
                                       
(Dollars in thousands)
                                      
At quarter ended:
    
6/30/08
 
 
3/31/08
 
 
12/31/07
 
 
9/30/07
 
 
6/30/07
 
 
3/31/07
  
                                       
Checking accounts
                                      
Non interest
                                      
Bearing
  
$
110,891
  
$
117,053
  
$
111,422
  
$
121,884
  
$
127,797
  
$
128,703
  
Interest
                                      
Bearing
    
124,469
    
125,152
    
155,406
    
110,177
    
126,112
    
131,337
  
Savings
                                      
Deposits
    
63,918
    
68,028
    
86,341
    
92,789
    
92,474
    
95,233
  
Money market
                                     
Accounts
    
147,202
    
170,742
    
196,601
    
167,442
    
171,923
    
173,569
  
Time Deposits
    
174,710
    
141,949
    
149,300
    
158,707
    
159,705
    
193,806
  
 
                                      
Total Deposits
  
$
621,190
  
$
622,924
  
$
699,070
  
$
650,999
  
$
678,011
  
$
722,648
  
 
Deposits totaled $621.2 million at June 30, 2008, a decrease of $56.8 million from June 30, 2007. The decline was a result of a decline in interest rates due to recent Federal Reserve actions and a decision to continue 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. Declines in volumes were primarily in savings and time deposits coupled with declines in non-interest demand deposits, due in part to balances swept into overnight repurchase agreements. Time certificates of deposit of $100,000 increased $26.6 million as compared to June 30, 2007, as the cost of this type of funding source became competitive with wholesale funds. Total deposit funding sources, including overnight repurchase agreements as such agreements are part of the demand deposit base, amounted to $671.3 million at June 30, 2008, which represents a decrease of $33.5 million as compared to June 30, 2007.
 
Borrowings totaled $279.6 million at June 30, 2008, reflecting an increase of $57.6 million from June 30, 2007. Overnight customer repurchase transactions covering commercial customer sweep accounts totaled $50.1 million at June 30, 2008 as compared with $26.8 million at June 30, 2007. 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 $80.4 million, or 8.15% of total assets, at June 30, 2008. Tangible stockholders' equity was $63.2 million, or 6.52% of tangible assets. Book value per common share was $6.18 at June 30, 2008, compared to $6.48 at December 31, 2007 and $6.89 at June 30, 2007. Tangible book value per common share was $4.86 at June 30, 2008 compared to $5.17 at December 31, 2007 and $5.65 at June 30, 2007.
 
During the three months ended June 30, 2008, the Corporation purchased 97,685 shares of common stock at an average cost of $9.60 per share. The total shares purchased to date in 2008 totaled 161,583 shares of common stock at an average price of $10.16 per share.
 
During 2007, the Corporation 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 then current authorization by 684,627 shares. Subsequent to that action, on June 26, 2008 the Board approved an increase in its current share buyback program to an additional 5% of outstanding shares, enhancing its current authorization by 649,712 shares. Any purchases by the Corporation may be made, from time to time, in the open market, in privately negotiated transactions or otherwise. At June 30, 2008, there were 684,368 shares available for repurchase under the Corporation's stock buyback program.
 
These actions allow the Corporation to continue to repurchase shares and deliver value to the shareholders. The Corporation's strong capital position allows the Corporation to increase the shares authorized for the stock repurchase program. The additional capacity to repurchase shares provides the flexibility to allocate capital as we seek to maximize shareholder returns.
 
 
At June 30, 2008, the Corporation's Tier 1 Capital Leverage ratio was 8.03%, the Corporation's total Tier 1 Risk Based Capital ratio was 10.57% and the Corporation's Total Risk Based Capital ratio was 11.33%. Total Tier 1 capital decreased to approximately $78.0 million at June 30, 2008 from $79.1 million at December 31, 2007 and from $88.8 million at June 30, 2007.
 
At June 2008, 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 Private Wealth Management Division which includes its wholly owned subsidiary, Center Financial Group LLC, and through a strategic partnership with American Economic Planning Group, provides financial services including brokerage services, insurance and annuities, mutual funds, financial planning, estate and tax planning, trust, elder care and benefit plan administration. Center additionally offers title insurance services, in connection with the closing of real estate transactions, through two subsidiaries, Union Title Company and Center Title Company.
 
The Bank currently operates 13 banking locations in Union and Morris counties in New Jersey. Banking centers are located in Union Township (6 locations), Berkeley Heights, Boonton/Mountain Lakes, Madison, Millburn/Vauxhall, Morristown, Springfield, and Summit, New Jersey. The Bank also operates remote ATM locations in the 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 June 30, 2008, the Bank had total assets of $1.0 billion, total deposit funding sources, which includes overnight repurchase agreements, of $671.3 million and stockholders' equity of approximately $80.4 million. For further information regarding Center Bancorp, Inc., call 1-(800)-862-3683. For information regarding Union Center National Bank, visit our web site at http://www.centerbancorp.com 
 
Non-GAAP Financial Measures
 
"Return on average tangible stockholders' equity" is a non-GAAP financial measure and is defined as net income as a percentage of tangible stockholders equity. This measure may be important to investors that are interested in analyzing our return on equity exclusive of the effect of changes in intangible assets on equity. The following table presents a reconciliation of return on stockholders equity and return on tangible stockholders equity for the periods presented:
 
(Dollars in thousands)

For the quarter ended:
 
6/30/08
 
3/31/08
 
12/31/07
 
9/30/07
 
6/30/07
 
3/31/07
  
Net income
  
$
1,408
  
$
1,217
  
$
532
  
$
998
  
$
1,017
  
$
1,309
  
Average stockholders' equity
  
$
84,142
  
$
86,921
  
$
87,265
  
$
94,833
  
$
97,919
  
$
97,466
  
Less: Average goodwill and other intangible assets
    
17,169
    
17,194
    
17,220
    
17,245
    
17,272
    
17,300
  
Average tangible stockholders' equity
  
$
66,973
  
$
69,727
  
$
70,045
  
$
77,588
  
$
80,647
  
$
80,166
  
Return on average stockholders' equity
    
6.69
%
  
5.60
%
  
2.44
%
  
4.21
%
  
4.15
%
  
5.37
%
Add: Average goodwill and other intangible assets
    
1.72
    
1.38
    
0.60
    
0.94
    
0.89
    
1.16
  
Return on average tangible stockholders' equity
    
8.41
%
  
6.98
%
  
3.04
%
  
5.15
%
  
5.04
%
  
6.53
%
 
"Tangible book value per share" is also a non-GAAP financial measure and represents tangible stockholders' equity (or tangible book value) calculated on a per common share basis. The Corporation believes that a disclosure of tangible book value per 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. The following table presents a reconciliation of total book value per share to tangible book value per share as of the dates presented:

(Dollars in thousands)
              
               
At quarter ended:
 
6/30/2008
 
3/31/2008
 
12/31/2007
  
Common shares outstanding
   
13,016,075
   
13,113,760
   
13,155,784
  
Stockholders' equity
 
$
80,393
  
$
85,401
  
$
85,278
  
Less: Goodwill and other intangible assets
   
17,154
   
17,179
   
17,204
  
Tangible stockholders' equity
 
$
63,239
  
$
68,222
  
$
68,074
  
Book value per share
 
$
6.18
  
$
6.51
  
$
6.48
  
Less: Goodwill and other intangible assets
   
1.32
   
1.31
   
1.31
  
Tangible book value per share
 
$
4.86
  
$
5.20
  
$
5.17
  
 
 
(Dollars in thousands)
              
               
At quarter ended:
   
9/30/2007
 
 
6/30/2007
 
 
3/31/2007
 
Common shares outstanding
   
13,692,534
   
13,910,826
   
13,910,450
  
Stockholders' equity
 
$
93,730
  
$
95,813
  
$
98,163
  
Less: Goodwill and other intangible assets
   
17,230
   
17,256
   
17,283
  
Tangible stockholders' equity
 
$
76,500
  
$
78,557
  
$
80,880
  
Book value per share
 
$
6.85
  
$
6.89
  
$
7.06
  
Less: Goodwill and other intangible assets
   
1.26
   
1.24
   
1.25
  
Tangible book value per share
 
$
5.59
  
$
5.65
  
$
5.81
  
 
"Tangible stockholders' equity/tangible assets" is a non-GAAP financial measure and is defined as tangible stockholders' equity as a percentage of total assets minus goodwill and other intangible assets. This measure may be important to investors that are interested in analyzing the financial condition of the Corporation without consideration for intangible assets, inasmuch as tangible stockholders' equity and tangible assets both back out goodwill and other intangible assets. The following table presents a reconciliation of total assets to tangible assets and then presents a reconciliation of total stockholders' equity/total assets to tangible stockholders' equity/tangible assets as of the dates presented:

(Dollars in thousands)
              
               
At quarter ended:
 
6/30/08
 
3/31/08
 
12/31/07
  
Total assets
 
$
986,436
  
$
995,167
  
$
1,017,645
  
Less: Goodwill and other intangible assets
   
17,154
   
17,179
   
17,204
  
Tangible assets
 
$
969,282
  
$
977,988
  
$
1,000,441
  
Total stockholders' equity/total assets
   
8.15
%
  
8.58
%
  
8.38
%
Tangible stockholders' equity/tangible assets
   
6.52
%
  
6.98
%
  
6.80
%
                     
 
(Dollars in thousands)
                    
                     
At quarter ended:
 
9/30/2007
 
6/30/2007
 
3/31/2007
 
Total assets
 
$
987,790
  
$
1,001,622
  
$
1,048,966
  
Less: Goodwill and other intangible assets
   
17,230
   
17,256
   
17,283
  
Tangible assets
 
$
970,560
  
$
984,366
  
$
1,031,683
  
Total stockholders' equity/total assets
   
9.49
%
  
9.57
%
  
9.36
%
Tangible stockholders' equity/tangible assets
   
7.88
%
  
7.98
%
  
7.84
%
 
Total non-interest income is presented both including and excluding net securities gains (losses). We believe that many investors desire to evaluate non-interest income without regard for securities transactions. The following table presents a reconciliation of total non-interest (or other) income with total non-interest (or other) income excluding the impact of securities transactions.

(Dollars in thousands)
                          
                           
For the quarter ended:
 
6/30/08
 
3/31/08
 
12/31/07
 
9/30/07
 
6/30/07
 
3/31/07
 
Total non-interest income
 
$
1,116
  
$
866
  
$
874
  
$
911
  
$
1,177
  
$
1,410
  
Net securities gains (losses)
   
225
   
--
   
(43
)
  
14
   
341
   
588
  
Total non-interest income, excluding net securities gains (losses)
 
$
891
  
$
866
  
$
917
  
$
897
  
$
836
  
$
822
  
 
"Efficiency ratio" is a non-GAAP financial measure and is defined as non-interest expense as a percentage of net interest income on a tax equivalent basis plus non-interest income, excluding net securities gains (losses), as follows:
 
(Dollars in thousands)
                          
                           
For the quarter ended:
 
6/30/08
 
3/31/08
 
12/31/07
 
9/30/07
 
6/30/07
 
3/31/07
  
Other expense
 
$
5,188
  
$
4,953
  
$
6,034
  
$
6,080
  
$
6,056
  
$
6,428
  
Net interest income (tax equivalent basis)
 
$
6,776
  
$
6,117
  
$
5,594
  
$
5,915
  
$
5,692
  
$
6,104
  
                                       
Other income, excluding net securities gains (losses)
   
891
   
866
   
917
   
897
   
836
   
822
  
  
 
$
7,667
  
$
6,983
  
$
6,511
  
$
6,812
  
$
6,528
  
$
6,926
  
Efficiency ratio
   
67.7
%
  
70.9
%
  
92.7
%
  
89.3
%
  
92.8
%
  
92.8
%
 
 
 
 
Private Securities Litigation Reform Act of 1995. These forward-looking statements may use such forward-looking terminology such as "expect," "look," "believe," "plan," "anticipate," "may," "will" or similar statements or variations of such terms or otherwise express views concerning trends and the future. Such forward-looking statements involve certain risks and uncertainties. These include, but are not limited to, the direction of interest rates, continued levels of loan quality and origination volume, continued relationships with major customers including sources for loans, as well as the effects of international, national, regional and local economic conditions and legal and regulatory barriers and structure, including those relating to the deregulation of the financial services industry, and other risks cited in reports filed by the Corporation with the Securities and Exchange Commission. Actual results may differ materially from such forward-looking statements. Center Bancorp, Inc. assumes no obligation for updating any such forward-looking statement at any time.
 
CENTER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION
(unaudited)
           
           
           
   
June 30,
 
December 31,
 
(Dollars in Thousands)
 
2008
 
2007
  
           
ASSETS
          
Cash and due from banks
  
$
16,172
  
$
20,541
  
Federal funds sold and securities
              
purchased under agreement to resell
    
0
    
49,490
  
Total cash and cash equivalents
    
16,172
    
70,031
  
Investment securities available-for sale
    
253,780
    
314,194
  
Loans, net of unearned income
    
631,221
    
551,669
  
Less -- Allowance for loan losses
    
5,660
    
5,163
  
Net Loans
    
625,561
    
546,506
  
Restricted investment in bank stocks, at cost
    
10,325
    
8,467
  
Premises and equipment, net
    
18,203
    
17,419
  
Accrued interest receivable
    
4,147
    
4,535
  
Bank owned life insurance
    
22,710
    
22,261
  
Other assets
    
18,384
    
17,028
  
Goodwill and other intangible assets
    
17,154
    
17,204
  
Total assets
  
$
986,436
  
$
1,017,645
  
               
LIABILITIES
              
Deposits:
              
Non-interest bearing
  
$
110,891
  
$
111,422
  
Interest-bearing
              
Time deposits $100 and over
    
94,270
    
63,997
  
Interest-bearing transactions, savings
              
and time deposits $100 and less
    
416,029
    
523,651
  
Total deposits
    
621,190
    
699,070
  
Securities sold under agreement to repurchase
    
50,159
    
48,541
  
Short-term borrowings
    
10,900
    
1,123
  
Long-term borrowings
    
213,371
    
168,445
  
Subordinated debentures
    
5,155
    
5,155
  
Accounts payable and accrued liabilities
    
5,268
    
10,033
  
Total liabilities
    
906,043
    
932,367
  
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 in 2008 and 2007;
              
outstanding 13,016,075 shares in 2008
              
and 13,155,784 shares in 2007
    
86,908
    
86,908
  
Additional paid in capital
    
5,234
    
5,133
  
Retained earnings
    
15,438
    
15,161
  
Treasury stock, at cost (2,174,909 shares
              
in 2008 and 2,035,200 shares in 2007)
    
(17,568
)
  
(16,100
)
Accumulated other comprehensive loss
    
(9,619
)
  
(5,824
)
Total stockholders' equity
    
80,393
    
85,278
  
Total liabilities and stockholders' equity
  
$
986,436
  
$
1,017,645
  
 
 

CENTER BANCORP, INC. AND SUBSIDIARIES
  
CONSOLIDATED STATEMENTS OF INCOME
  
                   
   
Three Months Ended
  
Six Months Ended
  
   
June 30,
  
June 30,
  
(Dollars in Thousands, Except Per Share Data)
  
2008
 
2007
 
2008
 
2007
  
                   
                   
Interest income:
                  
Interest and fees on loans
  
$
8,677
  
$
8,274
  
$
17,148
  
$
16,627
  
Interest and dividends on investment securities:
                          
Taxable interest income
   
2,635
    
3,259
    
5,400
    
6,954
  
Non-taxable interest income
    
675
   
789
   
1,477
    
1,607
  
Dividends
   
213
   
366
    
456
   
727
  
Interest on Federal funds sold and securities
purchased under agreement to resell
   
30
   
256
   
109
   
481
  
Total interest income
    
12,230
    
12,944
    
24,590
    
26,396
  
Interest expense:
                          
Interest on certificates of deposit $100 or more
   
537
    
785
    
1,212
    
,890
  
Interest on other deposits
   
2,499
    
4,484
   
5,868
   
8,750
  
Interest on borrowings
   
2,765
   
2,450
   
5,394
   
4,910
  
Total interest expense
   
5,801
   
7,719
   
12,474
   
15,550
  
Net interest income
   
6,429
   
5,225
   
12,116
   
10,846
  
Provision for loan losses
   
521
   
100
   
671
   
100
  
Net interest income after provision for loan losses
   
5,908
   
5,125
    
11,445
   
10,746
  
Other income:
                          
Service charges, commissions and fees
   
513
   
436
   
1,042
   
855
  
Annuity and insurance
   
38
   
60
   
55
   
123
  
Bank owned life insurance
   
227
   
230
   
449
   
453
  
Net securities gains
   
225
   
341
   
225
   
929
  
Other income
   
113
   
110
   
211
   
227
  
Total other income
   
1,116
   
1,177
   
1,982
   
2,587
  
Other expense:
                          
Salaries and employee benefits
   
2,524
   
2,834
   
4,876
   
5,976
  
Occupancy, net
   
734
   
629
   
1,493
   
1,352
  
Premises and equipment
   
356
   
436
   
722
   
898
  
Professional and consulting
   
190
   
599
   
362
   
1,138
  
Stationery and printing
   
118
   
115
   
213
   
274
  
Marketing and advertising
   
188
   
109
   
348
   
272
  
Computer expense
   
226
   
148
   
367
   
313
  
Other
   
852
   
1,186
   
1,760
   
2,261
  
Total other expense
   
5,188
   
6,056
   
10,141
   
12,484
  
Income before income tax expense (benefit)
   
1,836
   
246
   
3,286
   
849
  
Income tax expense (benefit)
   
428
   
(771
)
  
661
    
(1,477
)
Net income
 
$
1,408
  
$
1,017
  
$
2,625
  
$
2,326
  
Earnings per share:
                          
Basic
 
$
0.11
  
$
0.07
  
$
0.20
  
$
0.17
  
Diluted
 
$
0.11
  
$
0.07
  
$
0.20
  
$
0.17
  
Weighted average common shares outstanding:
                          
Basic
   
13,070,868
   
13,910,450
   
13,107,808
   
13,910,450
  
Diluted
   
13,083,558
   
13,990,642
   
13,123,136
   
13,986,680
  
 
 
SUMMARY SELECTED QUARTERLY STATISTICAL INFORMATION AND FINANCIAL DATA
  
   
(Dollars in Thousands, Except per Share Data)
  
   
   
   
Three Months Ended
  
   
6/30/2008
  
3/31/2008
  
6/30/2007
  
Statements of Income Data:
              
Interest income
 
$
12,230
  
$
12,360
  
$
12,944
  
Interest expense
   
5,801
   
6,673
   
7,719
  
Net interest income
   
6,429
   
5,687
   
5,225
  
Provision for loan losses
   
521
   
150
   
100
  
Net interest income after provision for loan losses
   
5,908
   
5,537
   
5,125
  
Other income
   
1,116
   
866
   
1,177
  
Other expense
   
5,188
   
4,953
   
6,056
  
Income before income tax expense
   
1,836
   
1,450
   
246
  
Income tax (benefit) expense
   
428
   
233
   
(771
)
Net income
  
$
1,408
  
$
1,217
  
$
1,017
  
Earnings per share:
                    
Basic
 
$
0.11
  
$
0.09
  
$
0.07
  
Diluted
 
$
0.11
  
$
0.09
  
$
0.07
  
Statements of Condition Data
                    
(Period End):
                    
Investments
 
$
253,780
  
$
281,746
  
$
366,224
  
Total loans
   
631,221
   
565,025
   
533,675
  
Goodwill and other intangibles
   
17,154
   
17,179
   
17,256
  
Total assets
   
986,436
   
995,167
   
1,001,622
  
Deposits
   
621,190
   
622,924
   
678,011
  
Borrowings
   
279,585
   
279,024
   
221,994
  
Stockholders' equity
 
$
80,393
  
$
85,401
  
$
95,813
  
Dividend Data:
                    
Cash dividends
 
$
1,177
  
$
1,168
  
$
1,252
  
Dividend payout ratio
   
83.59
%
  
95.97
%
  
123.11
%
Cash dividends per share
 
$
0.09
  
$
0.09
  
$
0.09
  
Weighted Average Common Shares Outstanding:
                    
Basic
   
13,070,868
   
13,144,747
   
13,910,450
  
Diluted
   
13,083,558
   
13,163,586
   
13,990,642
  
Operating Ratios:
                    
Return on average assets
   
0.57
%
  
0.50
%
  
0.40
%
Average stockholders' equity to average assets
   
8.51
%
  
8.87
%
  
9.55
%
Return on average equity
   
6.69
%
  
5.60
%
  
4.15
%
Return on average tangible stockholders' equity
   
8.41
%
  
6.98
%
  
5.04
%
Book value per common share
 
$
6.18
  
$
6.51
  
$
6.89
  
Tangible book value per common share
 
$
4.86
  
$
5.20
  
$
5.65
  
Non-Financial Information (Period End):
                    
Common stockholders of record
   
658
   
666
   
706
  
Staff-full time equivalent
   
164
   
167
   
187
  
                     
CONTACT:   Center Bancorp, Inc.
                    
        Investor Inquiries:
                    
        Anthony C. Weagley, President & Chief Executive Officer
                   
        Investor Relations:
                    
        Joseph Gangemi
                    
        (908) 206-2886