Unassociated Document

Anthony C. Weagley, President and Chief Executive Officer , commented: "We continue to sustain growth in core earnings performance and strength in the balance sheet. Despite the extraordinary events that have unfolded over the last several months and the challenges of the current environment, the Corporation remains strong, well capitalized, with sufficient liquidity, focused on asset quality and positioned to weather the global financial crises and economic recession. Loans grew by 20.0 percent over the comparable period in 2007 and 4.7 percent from the prior quarter in 2008. The Corporation will continue to focus on fundamentals with an emphasis on credit and asset quality. Our healthy allowance for loan loss levels, our ability to reduce credit exposures and low credit losses provides us the opportunity to continue to manage risk exposures as we grow the loan portfolio.”

During the third quarter, the Corporation recorded certain non-recurring items, including gains related to employee benefit plans and our bank owned life insurance offset by an impairment charge taken on a Lehman Brothers corporate bond as a result of their September bankruptcy. These items amounted to an after-tax charge of $0.02 per diluted share. Nonetheless, the results for the period continue to reflect the core strengths of the Corporation -- asset growth, margin expansion and a reduction in operating overhead. Earnings for both the current period and year-to-date reflect the progress that the Corporation is making in building a strong balance sheet, maintaining strong credit quality and improving the future stability of revenue streams.

Quarterly Condensed Consolidated Income Statements (unaudited)

(Dollars in thousands, except per share data)
For the quarter ended:		9/30/08			6/30/08			3/31/08			12/31/07			9/30/07			6/30/07
Net interest income	$	6,860		$	6,429		$	5,687		$	5,172		$	5,481		$	5,225
Provision for loan losses		465			521			150			150			100			100
Net interest income after provision for loan losses		6,395			5,908			5,537			5,022			5,381			5,125
Other income		47			1,116			866			874			911			1,177
Other expense		(4,578	)		(5,188	)		(4,953	)		(6,034	)		(6,080	)		(6,056	)
Income (loss) before income tax		1,864			1,836			1,450			(138	)		212			246
Income tax expense (benefit)		346			428			233			(670	)		(786	)		(771	)
NET INCOME	$	1,518		$	1,408		$	1,217		$	532		$	998		$	1,017
Earnings per share (basic)	$	0.12		$	0.11		$	0.09		$	0.04		$	0.07		$	0.07
Earnings per share (diluted)	$	0.12		$	0.11		$	0.09		$	0.04		$	0.07		$	0.07

Selected financial ratios (annualized where applicable)

As of or for the quarter ended:		9/30/08			6/30/08			3/31/08			12/31/07			09/30/07			06/30/07
Return on average assets		0.60	%		0.57	%		0.50	%		0.22	%		0.40	%		0.40	%
Return on average equity		7.55	%		6.69	%		5.60	%		2.44	%		4.21	%		4.15	%
Net interest margin (tax equivalent basis)		3.09	%		3.00	%		2.74	%		2.48	%		2.63	%		2.43	%
Loan/Deposit ratio		97.64	%		101.61	%		90.71	%		78.91	%		84.62	%		78.71	%
Stockholders' equity/total assets		7.73	%		8.15	%		8.58	%		8.38	%		9.49	%		9.57	%
Efficiency ratio		55.4	%		67.7	%		70.9	%		92.7	%		89.3	%		92.8	%
Book value per share	$	6.21		$	6.18		$	6.51		$	6.48		$	6.85		$	6.89
Return on average tangible stockholders' equity		9.60	%		8.41	%		6.98	%		3.04	%		5.15	%		5.04	%
Tangible stockholders' equity/tangible assets		6.19	%		6.52	%		6.98	%		6.80	%		7.88	%		7.98	%
Tangible book value per share	$	4.89		$	4.86		$	5.20		$	5.17		$	5.59		$	5.65

The Corporation recorded net interest income on a fully taxable equivalent basis of $7.1 million for the three months ended September 30, 2008 as compared to $5.9 million for the comparable quarter in 2007. Interest income decreased by $0.4 million while interest expense decreased by $1.6 million from the same period last year. Compared to 2007, net interest average earning assets increased by $24.2 million while the net interest spread and net interest margin improved by 73 basis points and 46 basis points, respectively, due primarily to reduced funding costs. On a linked quarter basis, the net interest spread and margin improved by 12 basis points and 9 basis points, respectively.

The Corporation recorded net interest income on a fully taxable equivalent basis of $20.0 million for the nine months ended September 30, 2008 as compared to $17.7 million for the comparable nine month period in 2007. Interest income declined by $2.4 million while interest expense decreased by $4.7 million from the same period last year. Compared to 2007, net interest earning assets declined by $24.9 million while the net interest spread and net interest margin improved by 62 basis points and 42 basis points, respectively, due primarily to reduced 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 by positioning 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 comparable period in 2007. The 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 throughout the second and third quarters of this year. During the first nine months of 2008, the Corporation secured approximately $55 million of longer term lower cost funding with a weighted average rate of 2.90% in an effort to support continued loan growth.

The $4.7 million decline in interest expense for the nine months ended September 30, 2008 as compared with the same period last year 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 nine-month period in 2007, the Corporation’s average interest bearing deposits declined by $63 million, due primarily to the planned runoff of high cost deposits, while average borrowings, generally placed at favorable terms and rates, increased by $66 million.

Total other income decreased $864,000 for the third quarter of 2008 compared with the comparable quarter of 2007, primarily as a result of securities losses during the third quarter of 2008. During the third quarter of 2008, the Corporation incurred an impairment charge of $1.2 million in its securities portfolio related to Lehman Brothers . Excluding net securities gains (losses), the Corporation recorded other income of $1,122,000 in the three months ended September 30, 2008, compared to $897,000 in the three months ended September 30, 2007, an increase of $225,000 or 25.1%. During the third quarter of 2008, the Corporation recognized $230,000 in tax-free proceeds in excess of contract value on our bank owned life insurance (BOLI) due to the death of one insured participant. In addition, higher levels of service charges, commissions and fees and higher earnings from the appreciation in the cash surrender value of our BOLI investment were offset in part by a decline in commissions from sales of mutual funds and annuities.

For the nine months ended September 30, 2008, total other income decreased $1,469,000 as compared to the first nine months of 2007, primarily as a result of net securities losses and impairment charges in 2008 as compared to net securities gains in 2007. Excluding net securities gains (losses), the Corporation recorded other income of $2.9 million in the nine months ended September 30, 2008, compared to $2.6 million in the nine months ended September 30, 2007, an increase of 12.7%. This increase was primarily attributable to the $230,000 in tax-free proceeds in excess of contract value on our BOLI due to the death of one insured participant. Additionally, the Corporation recognized higher service charges, commissions and fees and higher earnings from the appreciation in the cash surrender value of our BOLI investment, 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:		9/30/08			6/30/08		3/31/08		12/31/07			9/30/07		6/30/07
Service charges on deposit accounts	$	360		$	383	$	404	$	399		$	312	$	306
Commissions from mortgage broker activities		6			17		12		16			15		25
Loan related fees (LOC)		46			37		41		31			49		26
Commissions from sale of mutual funds and annuities		35			38		17		44			131		60
Debit card and ATM fees		124			130		125		132			126		130
Bank owned life insurance		507			228		221		217			223		230
Net securities gains (losses)		(1,075	)		225		—		(43	)		14		341
Other service charges and fees		44			58		46		78			41		59
Total other income	$	47		$	1,116	$	866	$	874		$	911	$	1,177

Other expense for the third quarter of 2008 totaled $4.6 million, a decrease of $1.5 million, or 24.7%, from the comparable period in 2007. Salary and benefit expense decreased by $1.2 million or 38.2%, to $1.9 million. Other expense for the nine months ended September 30, 2008 totaled $14.7 million, a decrease of $3.8 million, or 20.7%, from the comparable period in 2007. Salary and benefit expense decreased by $2.3 million, or 25.2%, to $6.8 million. These reductions were primarily attributable to reductions in staff, pension curtailment and elimination of certain benefit plans. Full-time equivalent staffing levels were 156 at September 30, 2008 compared to 172 at December 31, 2007 and 180 at September 30, 2007. During the third quarter of 2008, the Corporation recognized a $272,000 benefit relating to the lump-sum payment and termination of the directors retirement plan. This benefit represented the difference between the actuarial present value of the lump-sum payment and the accrued liability previously recorded on the Corporation’s balance sheet. 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 third quarter of 2008 was 55.4% as compared to 92.7% in the fourth quarter of 2007 and 89.3% 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 second 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 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.

Quarterly Consolidated Non-Interest Expense (unaudited)

(Dollars in thousands)
For the quarter ended:		9/30/08			6/30/08		3/31/08		12/31/07		9/30/07			6/30/07
Employee salaries and wages	$	1,752		$	2,013	$	1,896	$	1,932	$	3,551		$	2,059
Employee stock option expense		23			36		45		46		46			35
Health insurance and other employee benefits		(32	)		285		218		237		(687	)		543
Payroll taxes		167			182		179		124		183			181
Other employee related expenses		9			8		14		14		14			16
Total salaries and employee benefits	$	1,919		$	2,524	$	2,352	$	2,353	$	3,107		$	2,834

Occupancy, net		803			734		759		799		692			629
Premises and equipment expense		352			356		366		437		442			436
Legal, auditing and other professional fees		189			190		172		690		311			599
Stationary and printing		87			118		95		104		87			115
Marketing and advertising		145			188		160		179		152			109
Computer expense		238			226		141		150		151			148
Bank regulatory related expenses		54			55		58		58		60			60
Postage and delivery		67			65		78		57		73			75
ATM related expenses		61			62		60		59		63			77
Amortization of CDI		23			24		25		25		26			27
Other expenses		640			646		687		1,123		916			947
Total other expense	$	4 ,578		$	5,188	$	4,953	$	6,034	$	6,080		$	6,056


(Dollars in thousands)
At quarter ended:		9/30/08			6/30/08			3/31/08			12/31/07			9/30/07			6/30/07
Cash and due from banks	$	15,952		$	16,172		$	15,155		$	20,541		$	15,277		$	24,363
Fed funds and money market funds		0			0			45,300			49,490			0			0
Investments		284,349			253,780			281,746			314,194			343,979			366,224
Loans		661,157			631,221			565,025			551,669			550,847			533,675
Allowance for loan losses		(6,080	)		(5,660	)		(5,245	)		(5,163	)		(5,021	)		(4,974	)
Restricted investment in bank stocks, at cost		10,277			10,325			10,036			8,467			7,347			8,299
Premises and equipment, net		18,545			18,203			17,404			17,419			17,662			18,400
Goodwill		16,804			16,804			16,804			16,804			16,804			16,804
Core deposit intangible		328			350			375			400			426			452
Bank owned life insurance		22,690			22,710			22,483			22,261			22,044			21,822
Other assets		18,756			22,531			26,084			21,563			18,425			16,557
TOTAL ASSETS	$	1,042,778		$	986,436		$	995,167		$	1,017,645		$	987,790		$	1,001,622
Deposits		677,144			621,190			622,924			699,070			650,999			678,011
Other borrowings		281,046			279,585			279,024			223,264			237,744			221,994
Other liabilities		3,964			5,268			7,818			10,033			5,317			5,804
Stockholders' equity		80,624			80,393			85,401			85,278			93,730			95,813
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY	$	1,042,778		$	986,436		$	995,167		$	1,017,645		$	987,790		$	1,001,622

Condensed Consolidated Average Balance Sheets (unaudited)

(Dollars in thousands)
For the quarter ended:		9/30/08			6/30/08			3/31/08			12/31/07			9/30/07			6/30/07
Investments, Fed funds, and other	$	271,064		$	301,118		$	326,397		$	351,302		$	362,119		$	404,975
Loans		651,766			601,655			565,654			552,521			538,798			532,799
Allowance for loan losses		(5,840	)		(5,404	)		(5,237	)		(5,077	)		(4,984	)		(4,986	)
All other assets		95,808			91,631			93,088			91,016			90,533			92,038
TOTAL ASSETS	$	1,012,798		$	989,000		$	979,902		$	989,762		$	986,466		$	1,024,826
Deposits-interest bearing		521,459			499,342			519,295			564,334			557,555			578,819
Deposits-non interest bearing		118,623			114,744			112,695			115,859			128,449			130,701
Other borrowings		288,002			284,264			251,222			216,761			200,257			211,228
Other liabilities		4,321			6,508			9,769			5,543			5,372			6,159
Stockholders’ equity		80,393			84,142			86,921			87,265			94,833			97,919
TOTAL LIABILITIES AND
STOCKHOLDERS’ EQUITY	$	1,012,798		$	989,000		$	979,902		$	989,762		$	986,466		$	1,024,826

The Corporation had total loans of $661.2 million at September 30, 2008, representing a $29.9 million, or 4.7%, increase on a linked-quarter basis and a $109.5 million, or 19.8%, increase from December 31, 2007. Loan growth continued during the quarter in the Corporation’s commercial real estate related segment of the portfolio. At September 30, 2008, the Corporation had $44 million in overall undispersed loan commitments which are expected to fund over the next 90 days.

Loan originations for the quarter increased in the commercial sector, primarily in commercial mortgages. “We are pleased with the loan and customer growth achieved for the third quarter and first nine months of 2008 and are optimistic that the Corporation will continue to build its loan volume throughout 2008. Our pipelines are strong; we expect that increased activity in commercial building will support continued growth in the portfolio and improvement in our earning-asset mix. As we continue to move through this economic downturn, we are focused on aggressively managing the risks associated with the current credit cycle and underwriting standards. We continue to work at strengthening existing customer relationships and building new ones by seizing opportunities resulting from the improved client base” said Mr. Weagley.

Loan Mix:
(unaudited)
(Dollars in thousands)
At quarter ended:		9/30/08		6/30/08		3/31/08		12/31/07		9/30/07		6/30/07
Real estate loans
Residential	$	249,258	$	255,817	$	260,237	$	265,597	$	265,301	$	261,849
Commercial		246,089		224,990		163,664		137,585		136,289		135,707
Construction		47,722		50,638		48,494		51,367		53,286		47,910
Total real estate loans		543,069		531,445		472,395		454,549		454,876		445,466
Commercial loans		116,891		98,845		91,492		95,978		94,444		86,848
Consumer and other loans		672		339		592		563		960		741
Total loans before unearned fees and costs		660,632		630,629		564,479		551,090		550,280		533,055
Unearned fees and costs, net		525		592		546		579		567		620
Total loans	$	661,157	$	631,221	$	565,025	$	551,669	$	550,847	$	533,675

The Corporation has been successful in maintaining loan credit quality. At September 30, 2008, non-performing assets totaled $654,000, or 0.06% of total assets, as compared with $4.4 million, or 0.43%, at December 31, 2007. The decrease in non-accrual loans from December 31, 2007 was primarily attributable to the repayment during the first quarter of 2008 of principal of $2.5 million and interest of $83,277 on one commercial mortgage. At September 30, 2008, the Corporation has no other real estate owned.

Selected credit quality ratios (unaudited)

(Dollars in thousands)
As of or for the quarter ended:		9/30/08			6/30/08			3/31/08			12/31/07			9/30/07			6/30/07
Non-accrual loans	$	541		$	265		$	1,215		$	3,907		$	986		$	1,070
Troubled debt restructuring		95			97			0			0			0			0
Past due loans 90 days or more and still accruing interest		18			0			0			0			0			0
Total non performing loans		654			362			1,215			3,907			986			1,070
Other real estate owned (“OREO”)		0			0			478			501			586			586
Repossessed assets other than real-estate		0			0			0			0			0			0
Total non performing assets	$	654		$	362		$	1,693		$	4,408		$	1,572		$	1,656
Non performing assets as a percentage of total assets		0.06	%		0.04	%		0.17	%		0.43	%		0.16	%		0.17	%
Non performing loans as a percentage of total loans		0.10	%		0.06	%		0.22	%		0.71	%		0.18	%		0.20	%
Net charge-offs	$	45		$	106		$	68		$	147		$	139		$	86
Net charge-offs as a percentage of average loans for the period (annualized)		0.03	%		0.07	%		0.05	%		0.11	%		0.10	%		0.06	%
Allowance for loan losses as a percentage of period end loans		0.92	%		0.90	%		0.93	%		0.94	%		0.91	%		0.93	%
Allowance for loan losses as a percentage of non-performing loans		929.7	%		1,563.5	%		431.7	%		132.2	%		509.2	%		464.9	%

Total Assets	$	1,042,778		$	986,436		$	995,167		$	1,017,645		$	987,790		$	1,001,622
Total Loans		661,157			631,221			565,025			551,669			550,847			533,675
Average loans for the quarter		651,766			601,655			565,654			552,521			538,798			532,799
Allowance for loan losses		6,080			5,660			5,245			5,163			5,021			4,974

Deposit Mix (unaudited)
(Dollars in thousands)
At quarter ended:		9/30/08		6/30/08		3/31/08		12/31/07		9/30/07		6/30/07
Checking accounts
Non interest bearing	$	114,631	$	110,891	$	117,053	$	111,422	$	121,884	$	127,797
Interest bearing		129,070		124,469		125,152		155,406		110,177		126,112
Savings deposits		61,623		63,918		68,028		86,341		92,789		92,474
Money market accounts		140,533		147,202		170,742		196,601		167,442		171,923
Time Deposits		231,287		174,710		141,949		149,300		158,707		159,705
Total Deposits	$	677,144	$	621,190	$	622,924	$	699,070	$	650,999	$	678,011

Non-interest bearing deposits totaled $114.6 million at September 30, 2008, an increase of $3.7 million from June 30, 2008 and an increase of $3.2 million from December 31, 2007. Interest bearing demand, savings, money market accounts and time deposits increased $52.2 million from June 30, 2008 as customers' preference in seeking more stable returns from certificates of deposit became more prevalent. These interest bearing deposits declined $25.1 million from December 31, 2007 as a result of a decision to continue to reduce the Corporation’s dependency on more rate sensitive high costing funds, which were subject to maturity and repricing in favor of lower costing wholesale funds available. Time certificates of deposit of $100,000 increased $22.7 million and $53.0 million as compared to June 30, 2008 and December 31, 2007, respectively, as the cost of this type of funding source became competitive with wholesale funds. Total deposit funding sources, including overnight repurchase agreements (which agreements are part of the demand deposit base), amounted to $721.7 million at September 30, 2008, which represents a decrease of $25.9 million as compared to December 31, 2007. The Corporation expects its deposit gathering efforts to remain strong, supported in part by the recent actions by the FDIC in temporarily raising the deposit insurance limits.

Borrowings totaled $281.0 million at September 30, 2008, reflecting an increase of $57.8 million from December 31, 2007. Overnight customer repurchase transactions covering commercial customer sweep accounts totaled $44.6 million at September 30, 2008 as compared with $48.5 million at December 31, 2007. This shift in the volume of repurchase agreements also accounted for a portion of the change in non-interest bearing commercial checking accounts during the period.

Total stockholders' equity amounted to $80.6 million, or 7.73% of total assets, at September 30, 2008. Tangible stockholders' equity was $63.5 million, or 6.19% of tangible assets. Book value per common share was $6.21 at September 30, 2008, compared to $6.48 at December 31, 2007 and $6.85 at September 30, 2007. Tangible book value per common share was $4.89 at September 30, 2008 compared to $5.17 at December 31, 2007 and $5.59 at September 30, 2007.

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 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 buyback program to an additional 5% of outstanding shares, enhancing its then 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 September 30, 2008, there were 652,868 shares available for repurchase under the Corporation’s stock buyback program.

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.

While the Bank's primary market area is comprised of Morris and Union Counties, New Jersey, the Corporation has expanded to northern and central New Jersey. At September 30, 2008, the Bank had total assets of $1.0 billion, total deposit funding sources, which includes overnight repurchase agreements, of $721.7 million and stockholders' equity of approximately $80.6 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

“Return on average tangible stockholders' equity” is a non-GAAP financial measure and is defined as net income as a percentage of tangible stockholders equity. This measure may be important to investors that are interested in analyzing our return on equity exclusive of the effect of changes in intangible assets on equity. The following table presents a reconciliation of return on average stockholders equity and return on average tangible stockholders equity for the periods presented:

(Dollars in thousands)
For the quarter ended:		9/30/08			6/30/08			3/31/08			12/31/07			9/30/07			6/30/07
Net income	$	1,518		$	1,408		$	1,217		$	532		$	998		$	1,017
Average stockholders’ equity	$	80,393		$	84,142		$	86,921		$	87,265		$	94,833		$	97,919
Less: Average goodwill and other intangible assets		17,145			17,169			17,194			17,220			17,245			17,272
Average tangible stockholders' equity	$	63,248		$	66,973		$	69,727		$	70,045		$	77,588		$	80,647
Return on average stockholders’ equity		7.55	%		6.69	%		5.60	%		2.44	%		4.21	%		4.15	%
Add: Average goodwill and other intangible assets		2.05			1.72			1.38			0.60			0.94			0.89
Return on average tangible stockholders' equity		9.60	%		8.41	%		6.98	%		3.04	%		5.15	%		5.04	%

"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:		9/30/08		6/30/08		3/31/08		12/31/07		9/30/07		6/30/07
Common shares outstanding		12,988,284		13,016,075		13,113,760		13,155,784		13,692,534		13,910,826
Stockholders’ equity	$	80,624	$	80,393	$	85,401	$	85,278	$	93,730	$	95,813
Less: Goodwill and other intangible assets		17,132		17,154		17,179		17,204		17,230		17,256
Tangible stockholders’ equity	$	63,492	$	63,239	$	68,222	$	68,074	$	76,500	$	78,557
Book value per share	$	6.21	$	6.18	$	6.51	$	6.48	$	6.85	$	6.89
Less: Goodwill and other intangible assets		1.32		1.32		1.31		1.31		1.26		1.24
Tangible book value per share	$	4.89	$	4.86	$	5.20	$	5.17	$	5.59	$	5.65

"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:		9/30/08			6/30/08			3/31/08			12/31/07			9/30/07			6/30/07
Total assets	$	1,042,778		$	986,436		$	995,167		$	1,017,645		$	987,790		$	1,001,622
Less: Goodwill and other intangible assets		17,132			17,154			17,179			17,204			17,230			17,256
Tangible assets	$	1,025,646		$	969,282		$	977,988		$	1,000,441		$	970,560		$	984,366
Total stockholders' equity/total assets		7.73	%		8.15	%		8.58	%		8.38	%		9.49	%		9.57	%
Tangible stockholders' equity/tangible assets		6.19	%		6.52	%		6.98	%		6.80	%		7.88	%		7.98	%

(Dollars in thousands)
For the quarter ended:		9/30/08			6/30/08			3/31/08			12/31/07			9/30/07			6/30/07
Other expense	$	4,578		$	5,188		$	4,953		$	6,034		$	6,080		$	6,056
Net interest income (tax equivalent basis)	$	7,148		$	6,776		$	6,117		$	5,594		$	5,915		$	5,692
Other income, excluding net securities gains (losses)		1,122			891			866			917			897			836
	$	8,270		$	7,667		$	6,983		$	6,511		$	6,812		$	6,528
Efficiency ratio		55.4	%		67.7	%		70.9	%		92.7	%		89.3	%		92.8	%

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

(Dollars in Thousands)		September 30, 2008			December 31, 2007

ASSETS
Cash and due from banks	$	15,952		$	20,541
Federal funds sold and securities purchased under agreement to resell		0			49,490
Total cash and cash equivalents		15,952			70,031
Investment securities available-for sale		284,349			314,194
Loans, net of unearned income		661,157			551,669
Less — Allowance for loan losses		6,080			5,163
Net Loans		655,077			546,506
Restricted investment in bank stocks, at cost		10,277			8,467
Premises and equipment, net		18,545			17,419
Accrued interest receivable		4,555			4,535
Bank owned life insurance		22,690			22,261
Other assets		14,201			17,028
Goodwill and other intangible assets		17,132			17,204
Total assets	$	1,042,778		$	1,017,645
LIABILITIES
Deposits:
Non-interest bearing	$	114,631		$	111,422
Interest-bearing
Time deposits $100 and over		116,986			63,997
Interest-bearing transactions, savings and time deposits $100 and less		445,527			523,651
Total deposits		677,144			699,070
Securities sold under agreement to repurchase		44,557			48,541
Short-term borrowings		8,000			1,123
Long-term borrowings		223,334			168,445
Subordinated debentures		5,155			5,155
Accounts payable and accrued liabilities		3,964			10,033
Total liabilities		962,154			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 12,988,284 shares in 2008 and 13,155,784 shares in 2007		86,908			86,908
Additional paid in capital		5,258			5,133
Retained earnings		15,784			15,161
Treasury stock, at cost (2,202,700 shares in 2008 and
2,035,200 shares in 2007)		(17,820	)		(16,100	)
Accumulated other comprehensive loss		(9,506	)		(5,824	)
Total stockholders’ equity		80,624			85,278
Total liabilities and stockholders’ equity	$	1,042,778		$	1,017,645

	Three Months Ended September 30,							Nine Months Ended September 30,

(Dollars in Thousands, Except Per Share Data)		2008			2007			2008			2007
Interest income:
Interest and fees on loans		9,427		$	8,460			26,575		$	25,087
Interest and dividends on investment securities:
Taxable interest income		2,514			3,390			7,914			10,344
Non-taxable interest income		559			792			2,036			2,399
Dividends		189			254			645			981
Interest on Federal funds sold and securities purchased under agreement to resell		-			40			109			521
Total interest income		12,689			12,936			37,279			39,332
Interest expense:
Interest on certificates of deposit $100 or more		618			1,132			1,830			3,022
Interest on other deposits		2,434			3,954			8,302			12,704
Interest on borrowings		2,777			2,369			8,171			7,279
Total interest expense		5,829			7,455			18,303			23,005
Net interest income		6,860			5,481			18,976			16,327
Provision for loan losses		465			100			1,136			200
Net interest income after provision for loan losses		6,395			5,381			17,840			16,127
Other income:
Service charges, commissions and fees		484			438			1,526			1,293
Annuity and insurance		35			131			90			254
Bank owned life insurance		507			223			956			676
Net securities gains (losses)		(1,075	)		14			(850	)		943
Other income		96			105			307			332
Total other income		47			911			2,029			3,498
Other expense:
Salaries and employee benefits		1,919			3,107			6,795			9,083
Occupancy, net		803			692			2,296			2,044
Premises and equipment		352			442			1,074			1,340
Professional and consulting		189			311			551			1,449
Stationery and printing		87			87			300			361
Marketing and advertising		145			152			493			424
Computer expense		238			151			605			464
Other		845			1,138			2,605			3,399
Total other expense		4,578			6,080			14,719			18,564
Income before income tax expense (benefit)		1,864			212			5,150			1,061
Income tax expense (benefit)		346			(786	)		1,007			(2,263	)
Net income	$	1,518		$	998		$	4,143		$	3,324
Earnings per share:
Basic	$	0.12		$	0.07		$	0.32		$	0.24
Diluted	$	0.12		$	0.07		$	0.32		$	0.24
Weighted average common shares outstanding:
Basic		12,990,441			13,864,722			13,068,400			13,894,888
Diluted		13,003,954			13,913,919			13,083,112			13,950,298

	Three Months Ended
		9/30/2008			6/30/2008			9/30/2007
Statements of Income Data:
Interest income	$	12,689		$	12,230		$	12,936
Interest expense		5,829			5,801			7,455
Net interest income		6,860			6,429			5,481
Provision for loan losses		465			521			100
Net interest income after provision for loan losses		6,395			5,908			5,381
Other income		47			1,116			911
Other expense		4,578			5,188			6,080
Income before income tax expense (benefit)		1,864			1,836			212
Income tax expense (benefit)		346			428			(786	)
Net income	$	1,518		$	1,408		$	998
Earnings per share:
Basic	$	0.12		$	0.11		$	0.07
Diluted	$	0.12		$	0.11		$	0.07
Statements of Condition Data (Period End):
Investments	$	284,349		$	253,780		$	343,979
Total loans		661,157			631,221			550,847
Goodwill and other intangibles		17,132			17,154			17,230
Total assets		1,042,778			986,436			987,790
Deposits		677,144			621,190			650,999
Borrowings		281,046			279,585			237,744
Stockholders' equity	$	80,624		$	80,393		$	93,730
Dividend Data:
Cash dividends	$	1,169		$	1,177		$	1,361
Dividend payout ratio		77.01	%		83.59	%		136.37	%
Cash dividends per share	$	0.09		$	0.09		$	0.09
Weighted Average Common Shares Outstanding:
Basic		12,990,441			13,070,868			13,864,722
Diluted		13,003,954			13,083,558			13,913,919
Operating Ratios:
Return on average assets		0.60	%		0.57	%		0.40	%
Average stockholders' equity to average assets		7.94	%		8.51	%		9.61	%
Return on average equity		7.55	%		6.69	%		4.21	%
Return on average tangible stockholders’ equity		9.60	%		8.41	%		5.15	%
Book value per common share	$	6.21		$	6.18		$	6.85
Tangible book value per common share	$	4.89		$	4.86		$	5.59
Non-Financial Information (Period End):
Common stockholders of record		649			658			689
Staff-full time equivalent		156			164			180