SOURCE: Center Bancorp, Inc.

March 20, 2008 09:12 ET

Center Bancorp, Inc. Announces Outsourcing Partnerships With Compushare, Inc. and PHH Mortgage to Reduce Operating Overhead in 2008

UNION, NJ--(Marketwire - March 20, 2008) - Center Bancorp, Inc. (NASDAQ: CNBC), parent company of Union Center National Bank, today announced the Corporation had signed two 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 are expected to significantly improve operating efficiencies, business and technical operations.

A key component of the plan is an Information Technology (IT) infrastructure and business process outsourcing initiative to migrate certain service, development and support functions -- including IT infrastructure services, application support and maintenance, transactional services and support services to Orange County, California-based financial technology management company, Compushare, Inc.

The strategic outsourcing agreement has been hailed by a strategic technical expert at Compushare as a smart move by Union Center in times of increasing margin compression and economic uncertainty for the nation. Union Center sought a trusted, national, and financially stable technology provider to assist in security, compliance, risk management, systems integration, technology support and management efforts for the financial institution and Compushare was the clear choice.

"It's never an easy decision to change a set way of doing business, especially when a reduction to headcount is a necessary factor to take into consideration. Union Center has recognized the need to evolve with the changing landscape of the industry and we strongly believe the outsourcing agreement will streamline operations and enable continued success for the bank," said Romir Bosu, President and Chief Executive Officer of Compushare, Inc.

Compushare is the nation's leading provider of outsourced technology and compliance services for community financial institutions. Through the newly formed relationship, Union Center now has direct access to the team of nationally recognized technology and compliance experts and services that Compushare offers in areas of managed technology services, risk management programs and strategic technology development.

In a separate action the Corporation announced it is partnering with PHH Mortgage, a subsidiary of PHH Corporation (NYSE: PHH) as a strategic outsourcing partner for its mortgage loan origination and servicing business. PHH Mortgage will provide end-to-end mortgage solutions that seamlessly promote the Union Center brand in all customer communications.

PHH Mortgage will provide the Bank with a multi channel origination platform, integrated loan processing, branded loan servicing, and certain secondary marketing functions. The alliance allows the Bank loan officers to use Web-based software while PHH employees will do the entire loan processing, underwriting and closing in the name of Union Center. The PHH Mortgage platform will also allow the Bank to expand its origination channels, making mortgages more convenient for its customers. The Bank will use PHH Mortgage's inbound call center and fully private labeled internet origination site.

"It has become apparent that outsourcing key components of our service platforms and internal structure to third party professional organizations was the right thing to do from a timing, technical and financial perspective. The Corporation briefly considered continuing to support itself internally but has realized through an intensive review both with outside consultants and senior management that it continues to be too expensive, time consuming and distracts our resources from our core competency: providing high quality commercial banking services. This realization led us to incorporate this into our strategic plan for fiscal 2008 and we reviewed a number of local providers that could offer a high level of service, security, contingency, compliance risk, as well as state of the art customer platforms," indicated Anthony C. Weagley, President & CEO.

Both of these arrangements will allow the Company to offer competitive products and services without the internal costs of maintaining its own platforms and effectively allowing the Corporation to leverage its banking franchise.

Expense reductions generated by the plan are expected to be realized in 2008, with a moderate benefit to operating expenses during the second half of 2008, due primarily to the timing of implementation in the first half of 2008 coupled with one time charges that it expects it will incur as a result of severance payments to affected employees in the second quarter of 2008. The company expects to reduce the workforce by employees who will be eliminated or reassigned, while others will be eligible to apply for other open positions within the Corporation.

These actions are part of our overall restructuring which includes our recent branch consolidations, and our new telecommunications partnership with Atlantic Central Bankers Bank's "BITS" program and our implementation of remote branch capture technology which will also contribute to reduce operating expenses during 2008.

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

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

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

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

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

Forward-Looking Statements

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

Contact Information

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

    Joseph Gangemi
    Investor Relations
    (908) 206-2886