Center Bancorp, Inc. Reports Fourth Quarter 2009 Earnings

Union, NJ — (GLOBE NEWSWIRE) — 01/29/2010 — Center Bancorp, Inc. (NASDAQ: CNBC), parent company of Union Center National Bank (UCNB or the Bank), today reported operating results for the fourth quarter ended December 31, 2009. Net income amounted to $1.0 million, or $0.06 per fully diluted common share, for the quarter ended December 31, 2009, as compared with earnings of $1.7 million, or $0.13 per fully diluted common share, for the quarter ended December 31, 2008.

For the twelve months ended December 31, 2009, net income amounted to $4.6 million, or $0.30 per fully diluted common share, as compared to $5.8 million, or $0.45 per fully diluted common share, for the twelve months ended December 31, 2008.

Anthony C. Weagley, President & CEO commented: “Our performance for the quarter and for the twelve months ended December 31, 2009 was characterized by strong core earnings growth, solid levels of non-interest income and a continued control of operating expense.  On a linked quarter basis, our net interest margin increased nicely to 3.05 percent from 2.79 percent at September 30, 2009.  While we continue to see an improvement in balance sheet strength and core earnings performance, we are still concerned with the credit stability of the broader markets. The stability of the economy and credit markets remain uncertain, accordingly, we continue to make provisions to the allowance for loan losses as we continue to seek to stabilize credit quality issues.  We also incurred other than temporary impairment charges during the fourth quarter related to investment securities.  Weakened economic conditions will continue to present challenges; however, we believe we are positioning the company to effectively deal with those related issues.”

At December 31, 2009, non-performing assets totaled $8.1 million, or 0.68% of total assets, as compared with $13.9 million, or 1.03%, at September 30, 2009 and $4.7 million, or 0.46%, at December 31, 2008.  “We remain cautiously optimistic on market trends and resulting challenges in the months ahead. The decrease in non-performing assets in the fourth quarter was attributable to our taking steps to terminate a participation agreement with another New Jersey bank, as the participation ended on December 31, 2009. Center has filed suit for the return of the outstanding principal and has reclassified the outstanding loan into other assets on our balance sheet,” added Mr. Weagley.

Key items for the quarter include:

§ Net income of $1,038,000 for the fourth quarter of 2009 compared with net income of $1,535,000 for the third quarter of 2009 and $1,699,000 for the fourth quarter of 2008.

§ Earnings per share of $0.06 per fully diluted common share compared with $0.11 per fully diluted common share for the third quarter of 2009 and $0.13 per fully diluted common share for the comparable fourth quarter period of 2008. Dividends and accretion relating to the preferred stock and warrants issued to the U.S. Treasury reduced earnings by approximately $0.01 per fully diluted common share during the fourth quarter of 2009 (as well as by $.04 per fully diluted share for the twelve months ended December 31, 2009).

§ FDIC insurance expense increased $281,000 over the same quarter last year due to higher FDIC assessments resulting from changes in the premium rates and deposit growth.

§ Overall credit quality in the Bank’s portfolio remains strong, even though the economic weakness has impacted several potential problem loans. Non-performing assets amounted to 0.68% of total assets at December 31, 2009 compared to 1.03% at September 30, 2009 and 0.46% at December 31, 2008.

§ Tier 1 capital leverage ratio of 7.80% at December 31, 2009, 6.74% at September 30, 2009, and 7.71% at December 31, 2008.

§ An expansion in annualized net interest margin by 26 basis points to 3.05% compared to 2.79% for the third quarter of 2009 and an increase of 4 basis points as compared to the comparable quarter of 2008, primarily the result of lower deposit rates paid.

§ Deposits decreased to $813.7 million at December 31, 2009 from $961.2 million at September 30, 2009 but an increase from $659.5 million at December 31, 2008, reflecting inflows in core savings deposits and Certificate of Deposit Account Registry Service (CDARS) Reciprocal deposits, as customers’ desire for safety and liquidity became paramount in light of the financial crisis. The decline from September 30, 2009 was the result of our concerted effort to reduce non-core deposit balances.

§ Book value per common share amounting to $6.38 at December 31, 2009 compared to $6.36 at September 30, 2009 and $6.29 at December 31, 2008. Tangible book value per common share was $5.21 at December 31, 2009 compared to $5.04 at September 30, 2009 and $4.97 at December 31, 2008.

Selected financial ratios (annualized where applicable)
As of or for the quarter ended:	12/31/09			9/30/09			6/30/09			3/31/09			12/31/08			9/30/08
Return on average assets		0.32	%		0.46	%		0.40	%		0.30	%		0.66	%		0.60	%
Return on average equity		4.00	%		6.77	%		5.35	%		3.52	%		8.38	%		7.55	%
Net interest margin (tax equivalent basis)		3.05	%		2.79	%		2.73	%		2.81	%		3.01	%		3.09	%
Loan/Deposit ratio		87.93	%		74.50	%		72.68	%		88.24	%		102.53	%		97.64	%
Stockholders' equity/total assets		8.57	%		6.83	%		6.67	%		7.98	%		7.99	%		7.73	%
Efficiency ratio		57.6	%		62.0	%		96.3	%		72.5	%		59.7	%		55.4	%
Book value per common share	$	6.38		$	6.36		$	6.14		$	6.15		$	6.29		$	6.21
Return on average tangible stockholders' equity		4.78	%		8.33	%		6.61	%		4.33	%		10.62	%		9.60	%
Tangible common stockholders' equity/tangible assets		6.43	%		4.92	%		4.74	%		5.69	%		6.42	%		6.19	%
Tangible book value per common share	$	5.21		$	5.04		$	4.83		$	4.83		$	4.97		$	4.89

Capital and Liquidity

Center increased its capital base in the fourth quarter of 2009. Total stockholders' equity amounted to $102.6 million, or 8.57% of total assets, at December 31, 2009. Tangible common stockholders' equity was $75.9 million, or 6.43% of tangible assets. Book value per common share was $6.38 at December 31, 2009, compared to $6.29 at December 31, 2008. Tangible book value per common share was $5.21 at December 31, 2009 compared to $4.97 at December 31, 2008.

At December 31, 2009, the Corporation’s Tier 1 Capital Leverage ratio was 7.80%, the Corporation’s total Tier 1 Risk Based Capital ratio was 11.51% and the Corporation’s Total Risk Based Capital ratio was 12.46%. Total Tier 1 capital increased to approximately $99.3 million at December 31, 2009 from $78.2 million at December 31, 2008, reflecting the Corporation’s participation in the TARP Capital Purchase Program as well as the proceeds from the rights offering and private placement with its standby purchaser.

Asset Quality

At December 31, 2009, non-performing assets totaled $8.1 million, or 0.68% of total assets, as compared with $13.9 million, or 1.03%, at September 30, 2009 and $4.7 million, or 0.46%, at December 31, 2008.

While overall credit quality in the Bank’s portfolio remains high, continued economic weakness has impacted several problem loans in the portfolio, as previously disclosed. Non-accrual loans decreased from $11.4 million at September 30, 2009 to $7.1 million at December 31, 2009; this decrease was due primarily to our efforts to terminate a $5.1 million expired participation loan.  Troubled debt restructurings remained relatively unchanged at $966,000 from September 30, 2009 to December 31, 2009. Loans past due 90 days or more and still accruing decreased from $1.5 million at September 30, 2009 to $39,000 at December 31, 2009.

At December 31, 2009, the total allowance for loan losses amounted to approximately $8.3 million, or 1.16% of total loans. The allowance for loan losses as a percent of total non-performing loans amounted to 102.2% at December 31, 2009 as compared to 51.4% at September 30, 2009 and 809.1% at December 31, 2008.

Selected credit quality amounts and ratios (unaudited)
(Dollars in thousands)
As of or for the quarter ended:	12/31/09			9/30/09			6/30/09			3/31/09			12/31/08			9/30/08
Non-accrual loans	$	7,092		$	11,448		$	5,058		$	4,566		$	541		$	541
Troubled debt restructuring		966			970			975			91			93			95
Past due loans 90 days or more and still accruing interest		39			1,477			1,260			-			139			18
Total non performing loans		8,097			13,895			7,293			4,657			773			654
Other real estate owned (“OREO”)		-			-			3,500			4,426			3,949			-
Total non performing assets	$	8,097		$	13,895		$	10,793		$	9,083		$	4,722		$	654
Non performing assets as a percentage of total assets		0.68	%		1.03	%		0.80	%		0.81	%		0.46	%		0.06	%
Non performing loans as a percentage of total loans		1.13	%		1.94	%		1.05	%		0.69	%		0.11	%		0.10	%
Net charge-offs	$	271		$	55		$	8		$	906		$	251		$	45
Net charge-offs as a percentage of average loans for the period (annualized)		0.15	%		0.03	%		0.00	%		0.53	%		0.15	%		0.03	%
Allowance for loan losses as a percentage of period end loans		1.16	%		1.00	%		1.00	%		1.00	%		0.92	%		0.92	%
Allowance for loan losses as a percentage of non-performing loans		102.2	%		51.4	%		94.8	%		145.4	%		809.1	%		929.7	%
Total Assets	$	1,196,824		$	1,349,516		$	1,341,603		$	1,121,013		$	1,023,293		$	1,042,778
Total Loans		715,453			716,100			694,214			678,017			676,203			661,157
Average loans for the quarter		709,612			693,670			686,675			679,953			670,212			651,766
Allowance for loan losses		8,275			7,142			6,917			6,769			6,254			6,080

Net Interest Income and Margin

On a linked sequential quarter basis from the third quarter of 2009 to the fourth quarter of 2009, the net interest spread and margin increased by 14 basis points and by 26 basis points, respectively. The Corporation’s net interest margin was positively impacted by lower rates paid on deposits offset in part by the high level of uninvested excess cash, which accumulated due to deposit growth and retention experienced during most of 2009. During the fourth quarter, the Corporation made a concerted effort to reduce non-core deposit balances and accordingly, its uninvested cash position was reduced by an average of $35 million.

The Corporation recorded net interest income on a fully taxable equivalent basis of $8.1 million for the three months ended December 31, 2009 as compared to $7.1 million for the comparable quarter in 2008. Interest income increased by $0.2 million and interest expense decreased by $0.8 million from the same period last year. Compared to the fourth quarter of 2008, average interest earning assets increased by $124.4 million while the net interest spread and net interest margin improved by 32 basis points and by 4 basis points, respectively.

For the twelve months ended December 31, 2009, net interest income on a fully taxable equivalent basis amounted to $29.0 million as compared to $27.1 million for the same period in 2008. Interest income increased by $0.4 million while interest expense decreased by $1.5 million from the prior year. Compared to 2008, average interest earning assets increased $102.4 million while net interest spread and margin increased by 21 basis points and decreased by 11 basis points, respectively. The Corporation’s net interest margin was impacted by the high level of uninvested excess cash, which accumulated due to strong deposit growth experienced during the year.

Quarterly Condensed Consolidated Income Statements (unaudited)
(Dollars in thousands, except per share data)
For the quarter ended:	12/31/09			9/30/09			6/30/09			3/31/09			12/31/08			9/30/08
Net interest income	$	8,018		$	7,441		$	6,627		$	6,379		$	6,823		$	6,860
Provision for loan losses		1,404			280			156			1,421			425			465
Net interest income after provision for loan losses		6,614			7,161			6,471			4,958			6,398			6,395
Other income (charges)		(340	)		311			2,551			1,384			615			47
Other expense		(5,238	)		(5,186	)		(7,314	)		(5,319	)		(4,754	)		(4,578	)
Income before income tax		1,036			2,286			1,708			1,023			2,259			1,864
Income tax expense		(2	)		751			507			224			560			346
Net income		1,038			1,535			1,201			799			1,699			1,518
Net income available to common stockholders	$	896		$	1,387		$	1,053		$	670		$	1,699		$	1,518
Earnings per common share:
Basic	$	0.06		$	0.11		$	0.08		$	0.05		$	0.13		$	0.12
Diluted	$	0.06		$	0.11		$	0.08		$	0.05		$	0.13		$	0.12
Weighted average common shares outstanding:
Basic		14,531,387			13,000,601			12,994,429			12,991,312			12,989,304			12,990,441
Diluted		14,534,255			13,005,101			12,996,544			12,993,185			12,995,134			13,003,954

Other Income

Total other income decreased $955,000 for the fourth quarter of 2009 compared with the comparable quarter of 2008, primarily as a result of higher net investment securities losses.  On a sequential linked basis in 2009, total other income decreased $651,000 principally due to higher net investment securities losses. During the fourth quarter of 2009, the Corporation recorded net investment securities losses of $1.3 million as compared to $256,000 for the same period last year. Investment securities losses in the fourth quarter of 2009 reflected $1.4 million of net gains on the sale of securities, offset by $2.3 million of net other-than-temporary impairment charges on investment securities. These charges included a $2.0 million credit charge relating to two pooled trust preferred securities, an $188,000 credit charge relating to three variable rate collateralized mortgage obligations and an $113,000 writedown on an equity security. Additionally, the Corporation recorded a $364,000 charge related to a court order for the liquidation of the Reserve Funds Primary Fund. It is expected that 99 percent of Fund assets will be returned to the Corporation. During the fourth quarter of 2008, the Corporation recorded impairment charges of $370,000 in its securities portfolio. Excluding net securities losses, the Corporation recorded other income of $968,000 for the three months ended December 31, 2009 compared to $822,000 on a sequential linked basis and $871,000 for the three months ended December 31, 2008. During the fourth quarter of 2009, the Corporation recognized $136,000 in tax-free proceeds in excess of contract value on the Corporation’s bank owned life insurance (BOLI) due to the death of one insured participant.

For the twelve months ended December 31, 2009, total other income increased $1.3 million compared to the same period in 2008, primarily as a result of net securities transactions. Excluding net securities gains (losses), the Corporation recorded other income of $3.4 million for the twelve months ended December 31, 2009 compared to $3.8 million for the comparable period in 2008, a decrease of $335,000 or 8.9%. This decrease was primarily attributable to lower service charges, other income and BOLI income.

Quarterly Consolidated Non-Interest Income (unaudited)
(Dollars in thousands)
For the quarter ended:	12/31/09			9/30/09			6/30/09		3/31/09		12/31/08			9/30/08
Service charges on deposit accounts	$	371		$	350		$	324	$	343	$	376		$	360
Commissions from mortgage broker activities		1			4			-		2		7			6
Loan related fees (LOC)		25			35			45		30		53			46
Commissions from sale of mutual funds and annuities		24			17			45		40		22			35
Debit card and ATM fees		111			114			116		106		113			124
Bank owned life insurance		408			273			257		218		247			507
Net investment securities gains (losses)		(1,308	)		(511	)		1,710		600		(256	)		(1,075	)
Other service charges and fees		28			29			54		45		53			44
Total other income (charges)	$	(340	)	$	311		$	2,551	$	1,384	$	615		$	47

Other Expense

Other expense for the fourth quarter of 2009 totaled $5.2 million, an increase of $0.5 million, or 10.2%, from the comparable period in 2008. For the twelve months ended December 31, 2009, other expense totaled $23.1 million, an increase of $3.6 million, or 18.4%. In May 2009, the FDIC adopted a final rule on the special assessment that assessed the industry 5 basis points on total assets less Tier 1 capital. The Corporation was required to accrue the charge during the second quarter of 2009, which amounted to approximately $630,000, even though the FDIC collected the fee at the end of the third quarter when the regular quarterly assessments for the second quarter were collected. Additionally, in December 2008, the FDIC adopted a final rule increasing risk-based assessment rates beginning in the first quarter of 2009. As a result of these changes coupled with one-time assessment credits recognized in 2008, FDIC insurance expense increased $281,000 and $1.8 million for the three months and twelve months ended December 31, 2009, respectively, over the comparable periods in 2008. OREO expense for the twelve months ended December 31, 2009 increased by $1.4 million  compared to the twelve month period last year,  due primarily to the recognition of a $926,000 write-down coupled with the build out costs relating to the residential real estate condominium project in Union County, New Jersey. The building was sold during the third quarter of 2009 for a gain of $19,000.

The efficiency ratio for the fourth quarter of 2009 was 57.6% as compared to 59.7% in the fourth quarter of 2008. For the twelve months ended December 31, 2009, the efficiency ratio was 71.2% as compared to 63.1% in the same period of 2008. This increase in the twelve month period was due primarily to the increase in FDIC insurance expense and OREO expense.

Quarterly Consolidated Non-Interest Expense (unaudited)
(Dollars in thousands)
For the quarter ended:	12/31/09		9/30/09		6/30/09		3/31/09		12/31/08			9/30/08
Employee salaries and wages	$	1,934	$	1,981	$	1,946	$	1,861	$	1,777		$	1,752
Employee stock option expense		13		17		25		22		23			23
Health insurance and other employee benefits		379		361		362		309		(246	)		(32	)
Payroll taxes		152		159		166		194		139			167
Other employee related expenses		8		11		8		7		17			9
Total salaries and employee benefits	$	2,486	$	2,529	$	2,507	$	2,393	$	1,710		$	1,919
Occupancy, net		617		539		583		797		983			803
Premises and equipment		300		323		319		321		362			352
Professional and consulting		173		190		236		212		152			189
Stationery and printing		86		81		102		70		97			87
FDIC Insurance		430		320		940		365		149			28
Marketing and advertising		20		75		141		130		144			145
Computer expense		302		220		228		214		229			238
Bank regulatory related expenses		68		63		60		60		55			54
Postage and delivery		76		72		64		46		69			67
ATM related expenses		63		63		61		61		59			61
OREO expense (benefit)		-		30		1,375		33		11			(44	)
Amortization of core deposit intangible		19		19		22		22		23			23
Other expenses		598		662		676		595		711			656
Total other expense	$	5,238	$	5,186	$	7,314	$	5,319	$	4,754		$	4, 578

Key Balance Sheet Changes at December 31, 2009

§ The Corporation had total loans of $715.5 million at December 31, 2009, a $39.3 million, or 5.8%, increase from December 31, 2008.

§ Loan originations continued during the quarter in the Corporation’s commercial related segment of the portfolio, even though the portfolio at December 31, 2009 was unchanged  from September 30, 2009. Total gross loans booked for the quarter included $33.5 million  of new loans and $21.5 million in advances principally offset by payoffs and principal payments of $55.5 million.

§ At December 31, 2009, the Corporation had $8.2 million in overall undispersed loan commitments, which are expected to fund over the next 90 days.

§ Loan originations and pipelines for the quarter increased in the commercial sectors of the portfolio inclusive of commercial and commercial real estate loans.

Loan Mix:
(unaudited)
(Dollars in thousands)
At quarter ended:	12/31/09		9/30/09		6/30/09		3/31/09		12/31/08		9/30/08
Real estate loans
Residential	$	190,138	$	200,533	$	218,340	$	229,903	$	240,316	$	249,258
Commercial		304,662		291,133		262,676		256,885		256,527		246,089
Construction		46,946		57,898		54,105		41,242		42,075		47,722
Total real estate loans		541,746		549,564		535,121		528,030		538,918		543,069
Commercial loans		172,226		165,173		157,621		148,444		135,232		116,891
Consumer and other loans		954		952		921		928		1,481		672
Total loans before unearned fees and costs		714,926		715,689		693,663		677,402		675,631		660,632
Unearned costs, net		527		411		551		615		572		525
Total loans	$	715,453	$	716,100	$	694,214	$	678,017	$	676,203	$	661,157

§ Investment securities increased by $55.4 million at December 31, 2009 compared to December 31, 2008.

§ Deposits totaled $813.7 million at December 31, 2009, an increase of $154.2 million from December 31, 2008.

§ Total deposit funding sources, including overnight repurchase agreements (which agreements are part of the demand deposit base), amounted to $859.8 million at December 31, 2009, an increase of $155.1 million from December 31, 2008, which reflected inflows in core savings deposits and CDARS Reciprocal deposits, as customers’ need for safety and more liquidity became paramount in light of the financial crisis.

§ Time certificates of deposit of $100,000 and over increased $44.3 million as compared to December 31, 2008 due primarily to an increase in CDARS Reciprocal deposits, which has become an attractive product for customers who are sensitive to obtaining full FDIC insurance for their time deposits.

§ The Corporation expects its core deposit gathering efforts to remain strong, supported in part by the recent actions by the FDIC in temporarily raising the deposit insurance limits. The Corporation is a participant in the FDIC’s Transaction Account Guarantee Program. Under this program, all non-interest bearing deposit transaction accounts are fully guaranteed by the FDIC, regardless of dollar amount, through June 30, 2010, with increased fees.

§ Borrowings totaled $223.1 million at December 31, 2009, relatively unchanged from December 31, 2008.

The following table reflects the Corporation’s deposits for the periods specified.

Deposit Mix (unaudited)
(Dollars in thousands)
At quarter ended:	12/31/09		9/30/09		6/30/09		3/31/09		12/31/08		9/30/08
Checking accounts
Non interest bearing	$	130,518	$	126,205	$	130,115	$	114,607	$	113,319	$	114,631
Interest bearing		156,738		136,070		137,578		132,682		139,349		129,070
Savings deposits		192,996		215,275		185,074		137,197		66,359		61,623
Money market accounts		116,450		132,395		129,756		114,363		111,308		140,533
Time deposits		217,003		351,212		372,619		269,530		229,202		231,287
Total Deposits	$	813,705	$	961,157	$	955,142	$	768,379	$	659,537	$	677,144

On September 30, 2009, the FDIC proposed and subsequently adopted a rule that required insured institutions to prepay their estimated quarterly assessments through December 31, 2012 to strengthen the cash position of the Deposit Insurance Fund. The rule required the cash prepayment on December 30, 2009, which amounted to approximately $5.7 million and has been classified in other assets. This cash payment did not have a significant impact on our future cash position or operations.

Additional Information for the Fourth Quarter 2009 -

§ Total assets amounted to $1.2 billion at December 31, 2009, which positions the Corporation as one of the largest New Jersey headquartered financial institutions.

§ Average loans increased by $39.4 million while average investment securities, including federal fund sold, increased by $85.0 million.

Quarterly Condensed Consolidated Balance Sheets (unaudited)

(Dollars in thousands)
At quarter ended:	12/31/09			9/30/09			6/30/09			3/31/09			12/31/08			9/30/08
Cash and due from banks	$	89,168		$	172,401		$	176,784		$	90,634		$	15,031		$	15,952
Fed funds and money market funds		-			-			-			-			-			-
Investments		298,124			376,097			378,895			266,032			242,714			284,349
Loans		715,453			716,100			694,214			678,017			676,203			661,157
Allowance for loan losses		(8,275	)		(7,142	)		(6,917	)		(6,769	)		(6,254	)		(6,080	)
Restricted investment in bank stocks, at cost		10,672			10,673			10,675			10,228			10,230			10,277
Premises and equipment, net		17,860			18,155			18,430			18,313			18,488			18,545
Goodwill		16,804			16,804			16,804			16,804			16,804			16,804
Core deposit intangible		224			243			262			283			306			328
Bank owned life insurance		26,304			26,162			25,888			23,156			22,938			22,690
Other real estate owned		-			-			3,500			4,426			3,949			-
Other assets		30,490			20,023			23,068			19,889			22,884			18,756
TOTAL ASSETS	$	1,196,824		$	1,349,516		$	1,341,603		$	1,121,013		$	1,023,293		$	1,042,778
Deposits	$	813,705		$	961,157		$	955,142		$	768,379		$	659,537		$	677,144
Borrowings		274,408			280,509			252,498			255,365			273,595			281,046
Other liabilities		6,160			15,623			44,505			7,840			8,448			3,964
Stockholders' equity		102,551			92,227			89,458			89,429			81,713			80,624
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY	$	1,196,824		$	1,349,516		$	1,341,603		$	1,121,013		$	1,023,293		$	1,042,778

Condensed Consolidated Average Balance Sheets (unaudited)
(Dollars in thousands)
For the quarter ended:	12/31/09			9/30/09			6/30/09			3/31/09			12/31/08			9/30/08
Investments, Fed funds, and other	$	357,471		$	385,270		$	304,482		$	253,445		$	272,507		$	273,337
Loans		709,612			693,670			686,675			679,953			670,212			651,766
Allowance for loan losses		(7,401	)		(6,978	)		(6,891	)		(6,384	)		(6,235	)		(5,840	)
All other assets		233,343			274,103			211,495			131,861			95,514			93,535
TOTAL ASSETS	$	1,293,025		$	1,346,065		$	1,195,761		$	1,058,875		$	1,031,998		$	1,012,798
Deposits-interest bearing	$	764,469		$	845,504		$	716,243		$	588,599		$	554,652		$	521,459
Deposits-non interest bearing		134,325			129,592			121,482			115,541			112,936			118,623
Borrowings		279,344			266,825			253,310			255,269			278,524			288,002
Other liabilities		11,018			13,411			14,921			8,567			4,798			4,321
Stockholders’ equity		103,869			90,733			89,805			90,899			81,088			80,393
TOTAL LIABILITIES AND
STOCKHOLDERS’ EQUITY	$	1,293,025		$	1,346,065		$	1,195,761		$	1,058,875		$	1,031,998		$	1,012,798

About Center Bancorp

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

The Bank, through its Private Wealth Management Division which includes its wholly owned subsidiary, Center Financial Group LLC, provides financial services, including brokerage services, insurance and annuities, mutual funds, financial planning, estate and tax planning, trust, elder care and benefit plan administration.

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

While the Bank’s primary market area is comprised of Morris and Union Counties, New Jersey, the Corporation has expanded to northern and central New Jersey. At December 31, 2009, the Corporation had total assets of $1.2 billion, total deposit funding sources, which includes overnight repurchase agreements, of $859.8 million and stockholders’ equity of $102.6 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

Non-GAAP Financial Measures

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

(Dollars in thousands)
For the quarter ended:	12/31/09			9/30/09			6/30/09			3/31/09			12/31/08			9/30/08
Net income	$	1,038		$	1,535		$	1,201		$	799		$	1,699		$	1,518
Average stockholders’ equity	$	103,869		$	90,733		$	89,805		$	90,899		$	81,088		$	80,393
Less: Average goodwill and other intangible assets		17,039			17,058			17,078			17,101			17,123			17,145
Average tangible stockholders’ equity	$	86,830		$	73,675		$	72,727		$	73,798		$	63,965		$	63,248
Return on average stockholders’ equity		4.00	%		6.77	%		5.35	%		3.52	%		8.38	%		7.55	%
Add: Average goodwill and other intangible assets		0.78			1.56			1.26			0.81			2.24			2.05
Return on average tangible stockholders’ equity		4.78	%		8.33	%		6.61	%		4.33	%		10.62	%		9.60	%

“Tangible book value per common share” is also a non-GAAP financial measure and represents tangible stockholders’ equity (or tangible book value) calculated on a per common share basis. The Corporation believes that a disclosure of tangible book value per common share may be helpful for those investors who seek to evaluate the Corporation’s book value per common share without giving effect to goodwill and other intangible assets. The following table presents a reconciliation of total book value per common share to tangible book value per common share as of the dates presented:

(Dollars in thousands)
At quarter ended:	12/31/09		9/30/09		6/30/09		3/31/09		12/31/08		9/30/08
Common shares outstanding		14,572,029		13,000,601		13,000,601		12,991,312		12,991,312		12,988,284
Stockholders’ equity	$	102,551	$	92,227	$	89,458	$	89,429	$	81,713	$	80,624
Less: Preferred stock		9,619		9,599		9,578		9,557		-		-
Less: Goodwill and other intangible assets		17,028		17,047		17,066		17,087		17,110		17,132
Tangible common stockholders’ equity	$	75,904	$	65,581	$	62,814	$	62,785	$	64,603	$	63,492
Book value per common share	$	6.38	$	6.36	$	6.14	$	6.15	$	6.29	$	6.21
Less: Goodwill and other intangible assets		1.17		1.32		1.31		1.32		1.32		1.32
Tangible book value per common share	$	5.21	$	5.04	$	4.83	$	4.83	$	4.97	$	4.89

"Tangible common stockholders' equity/tangible assets" is a non-GAAP financial measure and is defined as tangible common stockholders' equity as a percentage of total assets minus goodwill and other intangible assets. This measure may be important to investors that are interested in analyzing the financial condition of the Corporation without consideration for intangible assets, inasmuch as tangible common stockholders' equity and tangible assets both back out goodwill and other intangible assets. The following table presents a reconciliation of total assets to tangible assets and then presents a reconciliation of total stockholders' equity/total assets to tangible common stockholders' equity/tangible assets as of the dates presented:

(Dollars in thousands)
At quarter ended:	12/31/09			9/30/09			6/30/09			3/31/09			12/31/08			9/30/08
Total assets	$	1,196,824		$	1,349,516		$	1,341,603		$	1,121,013		$	1,023,293		$	1,042,778
Less: Goodwill and other intangible assets		17,028			17,047			17,066			17,087			17,110			17,132
Tangible assets	$	1,179,796		$	1,332,469		$	1,324,537		$	1,103,926		$	1,006,183		$	1,025,646
Total stockholders' equity/total assets		8.57	%		6.83	%		6.67	%		7.98	%		7.99	%		7.73	%
Tangible common stockholders' equity/tangible assets		6.43	%		4.92	%		4.74	%		5.69	%		6.42	%		6.19	%

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:	12/31/09			9/30/09			6/30/09		3/31/09		12/31/08			9/30/08
Total other income	$	(340	)	$	311		$	2,551	$	1,384	$	615		$	47
Net securities gains (losses)		(1,308	)		(511	)		1,710		600		(256	)		(1,075	)
Total other income, excluding net securities gains (losses)	$	968		$	822		$	841	$	784	$	871		$	1,122

“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:	12/31/09			9/30/09			6/30/09			3/31/09			12/31/08			9/30/08
Other expense	$	5,238		$	5,186		$	7,314		$	5,319		$	4,754		$	4,578
Net interest income (tax equivalent basis)	$	8,129		$	7,536		$	6,753		$	6,556		$	7,086		$	7,148
Other income, excluding net securities gains (losses)		968			822			841			784			871			1,122
	$	9,097		$	8,358		$	7,594		$	7,340		$	7,957		$	8,270
Efficiency ratio		57.6	%		62.0	%		96.3	%		72.5	%		59.7	%		55.4	%

Forward-Looking Statements

All non-historical statements in this press release (including statements regarding the Corporation’s outlook, credit and market trends, future growth, future core deposit gathering efforts and the timing of funding of undisbursed commitments) constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may use such forward-looking terminology such as "expect," "look," "believe," "plan," "anticipate," "may," "will" or similar statements or variations of such terms or otherwise express views concerning trends and the future. Such forward-looking statements involve certain risks and uncertainties. These include, but are not limited to, the direction of interest rates, continued levels of loan quality and origination volume, continued relationships with major customers including sources for loans, as well as the effects of international, national, regional and local economic conditions and legal and regulatory barriers and structure, including those relating to the current global financial crisis and the deregulation of the financial services industry, and other risks cited in the Corporation’s most recent Annual Report on Form 10-K and other 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.

Investor Inquiries:

Anthony C. Weagley

President & Chief Executive Officer

 (908) 206-2886

Joseph Gangemi

Investor Relations

 (908) 206-2886

CENTER BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CONDITION

(unaudited)

(Dollars in Thousands, Except Per Share Data)	December 31, 2009			December 31, 2008
ASSETS
Cash and due from banks	$	89,168		$	15,031
Investment securities available-for sale		298,124			242,714
Loans		715,453			676,203
Less — Allowance for loan losses		8,275			6,254
Net loans		707,178			669,949
Restricted investment in bank stocks, at cost		10,672			10,230
Premises and equipment, net		17,860			18,488
Accrued interest receivable		4,033			4,154
Bank owned life insurance		26,304			22,938
Other real estate owned		—			3,949
Goodwill and other intangible assets		17,028			17,110
Other assets		26,457			18,730
Total assets	$	1,196,824		$	1,023,293
LIABILITIES
Deposits:
Non-interest bearing	$	130,518		$	113,319
Interest-bearing
Time deposits $100 and over		144,802			100,493
Interest-bearing transactions, savings and time deposits $100 and less		538,385			445,725
Total deposits		813,705			659,537
Short-term borrowings		46,109			45,143
Long-term borrowings		223,144			223,297
Subordinated debentures		5,155			5,155
Accounts payable and accrued liabilities		6,160			8,448
Total liabilities		1,094,273			941,580
STOCKHOLDERS’ EQUITY
Preferred stock, $1,000 liquidation value per share:
Authorized 5,000,000 shares; issued 10,000 shares in 2009 and none in 2008		9,619			—
Common stock, no par value:
Authorized 20,000,000 shares; issued 16,762,412 shares in 2009 and 15,190,984 in 2008, outstanding 14,572,029 in 2009 and 12,991,312 shares in 2008		97,908			86,908
Additional paid in capital		5,650			5,204
Retained earnings		17,870			16,309
Treasury stock, at cost (2,190,383 in 2009 and 2,199,672 shares in 2008)		(17,720	)		(17,796	)
Accumulated other comprehensive loss		(10,776	)		(8,912	)
Total stockholders’ equity		102,551			81,713
Total liabilities and stockholders’ equity	$	1,196,824		$	1,023,293

CENTER BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
((Dollars in Thousands, Except Per Share Data)	2009			2008			2009			2008
Interest income:
Interest and fees on loans	$	9,183		$	9,535		$	36,751		$	36,110
Interest and dividends on investment securities:
Taxable interest income		3,394			2,439			12,727			10,353
Non-taxable interest income		216			511			989			2,547
Dividends		178			126			643			771
Interest on Federal funds sold and securities purchased under agreement to resell		—			4			—			113
Total interest income		12,971			12,615			51,110			49,894
Interest expense:
Interest on certificates of deposit $100 or more		707			551			3,551			2,351
Interest on other deposits		1,566			2,604			8,757			10,936
Interest on borrowings		2,680			2,637			10,337			10,808
Total interest expense		4,953			5,792			22,645			24,095
Net interest income		8,018			6,823			28,465			25,799
Provision for loan losses		1,404			425			3,261			1,561
Net interest income after provision for loan losses		6,614			6,398			25,204			24,238
Other income:
Service charges, commissions and fees		482			489			1,835			2,015
Annuity and insurance		24			22			126			112
Bank owned life insurance		408			247			1,156			1,203
Other		54			113			298			420
Total other-than-temporary impairment losses		(6,458	)		(370	)		(8,476	)		(1,761	)
Less: Portion of loss recognized in other comprehensive income (before taxes)		4,350			—			4,828			—
Net other-than-temporary impairment losses		(2,698	)		(370	)		(4,238	)		(1,761	)
Net gains on sale of investment securities		1,390			114			4,729			655
Net investment securities gains (losses)		(1,308	)		(256	)		491			(1,106	)
Total other income (charges)		(340	)		615			3,906			2,644
Other expense:
Salaries and employee benefits		2,486			1,710			9,915			8,505
Occupancy, net		617			983			2,536			3,279
Premises and equipment		300			362			1,263			1,436
FDIC insurance		430			149			2,055			217
Professional and consulting		173			152			811			703
Stationery and printing		86			97			339			397
Marketing and advertising		20			144			366			637
Computer expense		302			229			964			834
OREO expense, net		—			11			1,438			31
Other		824			917			3,370			3,434
Total other expense		5,238			4,754			23,057			19,473
Income before income tax expense (benefit)		1,036			2,259			6,053			7,409
Income tax expense (benefit )		(2	)		560			1,480			1,567
Net income		1,038			1,699			4,573			5,842
Preferred stock dividends and accretion		142			—			567			—
Net income available to common stockholders	$	896		$	1,699		$	4,006		$	5,842
Earnings per common share:
Basic	$	0.06		$	0.13		$	0.30		$	0.45
Diluted	$	0.06		$	0.13		$	0.30		$	0.45
Weighted average common shares     outstanding:
Basic		14,531,387			12,989,304			13,382,614			13,048,518
Diluted		14,534,255			12,995,134			13,385,416			13,061,410

SUMMARY SELECTED QUARTERLY STATISTICAL INFORMATION AND FINANCIAL DATA

(Dollars in Thousands, Except per Share Data)

	Three Months Ended
	12/31/2009			9/30/2009			12/31/2008
Statements of Income Data:
Interest income	$	12,971		$	13,491		$	12,615
Interest expense		4,953			6,050			5,792
Net interest income		8,018			7,441			6,823
Provision for loan losses		1,404			280			425
Net interest income after provision for loan losses		6,614			7,161			6,398
Other income (charges)		(340	)		311			615
Other expense		5,238			5,186			4,754
Income before income tax expense		1,036			2,286			2,259
Income tax expense (benefit)		(2	)		751			560
Net income		1,038			1,535			1,699
Net income available to common stockholders	$	896		$	1,387		$	1,699
Earnings per common share:
Basic	$	0.06		$	0.11		$	0.13
Diluted	$	0.06		$	0.11		$	0.13
Statements of Condition Data (Period End):
Investments		298,124			376,097		$	242,714
Total loans		715,453			716,100			676,203
Goodwill and other intangibles		17,028			17,047			17,110
Total assets		1,196,824			1,349,516			1,023,293
Deposits		813,705			961,157			659,537
Borrowings		274,408			280,509			273,595
Stockholders' equity	$	102,551		$	92,227		$	81,713
Dividend Data on Common Shares:
Cash dividends	$	437		$	390		$	1,169
Dividend payout ratio		48.77	%		28.12	%		68.81	%
Cash dividends per share	$	0.03		$	0.03		$	0.09
Weighted Average Common Shares Outstanding:
Basic		14,531,387			13,000,601			12,989,304
Diluted		14,534,255			13,005,101			12,995,134
Operating Ratios:
Return on average assets		0.32	%		0.46	%		0.66	%
Average stockholders' equity to average assets		8.03	%		6.74	%		7.86	%
Return on average equity		4.00	%		6.77	%		8.38	%
Return on average tangible stockholders’ equity		4.78	%		8.33	%		10.62	%
Book value per common share	$	6.38		$	6.36		$	6.29
Tangible book value per common share	$	5.21		$	5.04		$	4.97
Non-Financial Information (Period End):
Common stockholders of record		605			617			640
Staff-full time equivalent		160			165			160