SOURCE: Center Bancorp, Inc.

July 28, 2005 09:20 ET

Center Bancorp, Inc. Reports 8.47% Increase in Second Quarter Earnings

UNION, NJ -- (MARKET WIRE) -- July 28, 2005 -- Center Bancorp, Inc. (NASDAQ: CNBC), parent company to Union Center National Bank of Union, New Jersey, today reported earnings results for the second quarter ended June 30, 2005.

Highlights for the quarter:

    
--  Successful completion of the acquisition of Red Oak Bank, a $98.3
    million commercial bank, on May 20, 2005.  This merger serves to strengthen
    the Corporation's presence in the Morris County market.
    
--  Second Quarter EPS of $.18 per share.
    
--  Total assets increased to $1.2 billion and positions Center as one of
    the largest New Jersey headquartered commercial banks.
    
--  Consummation of a $20.0 million private placement of the Corporation's
    stock on June 30, 2005.
    
--  Continued growth in the Corporation's loan portfolio. Excluding the
    impact of the merger with Red Oak, the Corporation achieved a net growth in
    loan volume on average of 11.06% for the second quarter and 9.2%,
    annualized for the six months ended June 30, 2005.
    
--  Credit quality continues to remain high.
    
--  Deposit growth continues to remain strong with total deposits
    increasing to $721.2 million at June 30, 2005.
    
--  Payment of a 5% stock dividend to shareholders on June 15, 2005.
    
--  Book value increased to $7.57 at June 30, 2005 from $5.41 a year ago.
    
Net income for the second quarter of 2005 amounted to $1,933,000, an increase of 8.47% or $151,000 from the $1,782,000 earned for the comparable quarter of the previous year. On a per share basis, basic and fully diluted earnings per share were $.18; a 5.26% decrease from $.19 earned in the comparable three month period ended June 30, 2004. All common stock per share amounts in this press release have been restated to reflect all previously declared and paid common stock splits and common stock dividends.

For the six months ended June 30, 2005, net income amounted to $3,678,000, an increase of $172,000 or 4.91% as compared with the comparable six month period ended June 30, 2004. On a per share basis, basic and fully diluted earnings per share were $.34; a decrease of 8.11% from $.37 earned in the comparable six month period ended June 30, 2004.

The Corporation's earnings per share figures include the increase in shares as a result of the acquisition of Red Oak Bank on May 20, 2005, the issuance of 1,904,761 shares of the holding company's common stock on June 30, 2005 in a private placement of its securities and the issuance of 888,888 shares of the holding company's common stock in a private placement of its securities on September 29, 2004.

John J. Davis, President & CEO of Center Bancorp, welcomed the shareholders and customers of Red Oak Bank, which was merged into the Corporation's Union Center National Bank subsidiary on May 20, 2005. He stated: "We welcome the opportunity to continue to expand our franchise in the attractive Morris County market with the addition of a true community bank. The merger with Red Oak was consistent with our company's continued strategy of highly focused growth within approximately 50 miles of our headquarters, through new branches and acquisitions of other financial institutions with a similar customer culture. In our view, Red Oak represented Center's best possible acquisition candidate currently in Morris County. This compliments our existing business strategies and core focus of providing personalized service to local markets through a diversified product line. We additionally see significant loan and core deposit growth opportunities as a result of an expanded market."

Commenting on the financial results for the quarter, he noted: "Results are consistent with prior periods, an achievement given the challenges resulting from both a highly competitive marketplace and the uncertainties of the economy. We did continue to experience some margin compression as a result of the continued flattening of the yield curve and increased cost of funds. We continue to make progress in sustaining positive trends such as loan and core deposit growth and an increase in noninterest income. Other factors which contributed to the results for the second quarter included a reduction in the provision for loan losses, offset by an increase in other expense."

Total interest income, on a fully tax-equivalent basis, for the second quarter of 2005, increased $2.8 million or 27.4% over the comparable 2004 quarterly period. Total interest expense increased by $2.3 million or 69.7% over the same quarterly period of 2004. For the six months ended June 30, 2005 total interest income on a fully tax-equivalent increased $4.3 million or 21.3% as compared to the comparable six month period in 2004. For the six months ended June 30, 2005 total interest expense increased $3.6 million or 56.2% as compared to the comparable six month period in 2004.

The Corporation's net interest margin declined by 30 basis points to 2.93% for the second quarter period ended June 30, 2005 as compared to the comparable period in 2004; on a linked sequential quarter, the Corporation's net interest margin declined 4 basis points from 2.97% for the first quarter of 2005. For the six months ended June 30, 2005, the Corporation's net interest margin declined 26 basis points from 3.21% for the comparable six month period in 2004. The decline in margin for both periods was in part due to the recent actions by the Federal Reserve Board raising rates 50 basis points in the second quarter of 2005 and 200 basis points since June 30, 2004; the flattening of the yield curve and a shift toward higher costing funds as part of the funding mix also contributed to the increase in interest expense in both periods. Continued efforts to improve the yield on interest earning-assets and to control the cost of funds have helped to mitigate some of the effects of the current margin compression. Management believes that the margin can be stabilized; however, a protracted flat yield curve is expected to have further impact on compression. Management believes that continuing growth in the loan portfolio can be expected in 2005, which should help to support margins as the yield curve continues to moderate and short term rates continue to rise.

The impact on net interest margins was to some extent mitigated by non-interest income, which increased by 12.8%, net of gains on securities sold, for the quarter and continues to be a strong contributing factor to the performance of the Corporation. Mr. Davis noted: "The Corporation continues to seek strategic initiatives to develop new sources of noninterest income to enhance current earnings and to create long-term sustainable quality earnings performance."

Interest expense for the second quarter increased $2.3 million or 69.7%. Mr. Davis stated: "As we had noted in the first quarter, the flattening of the yield curve has had a negative effect on our ability to increase spreads. We experienced an increase in the cost of funds during the second quarter, which increased at a faster pace (as a result of the Federal Reserve's rate tightening policy) than our ability to substantially increase asset yields."

Mr. Davis added: "We remain encouraged by the prospects for continued revenue growth in subsequent quarters in light of the sustained growth of the loan portfolio and increased opportunities to further increase the size of the loan portfolio with the completion of the Red Oak acquisition. The continued change in the earning asset mix should have a positive impact on net interest income."

Total average loan volumes for the second quarter of 2005 increased to $435.5 million, an increase of $74.0 million or 20.5% on average from $361.5 million on average for the comparable prior year quarter. On a linked sequential quarter comparison, total average loans increased by $54.8 million or 14.4% from $380.7 million on average during the first quarter of 2005. The merger with Red Oak Bank contributed $89.6 million in net loans. Strong growth in commercial and commercial real estate related loans provided the bulk of the loan growth in the second quarter.

For the six months ended June 30, 2005, total average loan volumes increased to $408.3 million, an increase of $53.6 million on average (up 15.1% from $354.7 million on average for the comparable six months ended June 30, 2004).

Mr. Davis stated: "We are encouraged by the key credit quality trends, which have been maintained during a period of strong loan growth and national economic instability." Asset quality continues to remain high and no additional provisions were made to the allowance for loan losses during the quarter. At June 30, 2005, the total allowance for loan and lease losses amounted to $4.9 million or 1.0% of total loans. The acquisition of Red Oak Bank contributed $1.2 million to the allowance. Net recoveries amounted to $6,000 for the six month period. Non-performing assets at June 30, 2005 consisted of non-accrual loans totaling $350,000 comprised of five commercial loans, $300,000 was related to assets acquired from Red Oak Bank; no loans were on non-accrual status at December 31, 2004 or March 31, 2005.

Interest-bearing liabilities increased $139.8 million on average during the second quarter of 2005, as compared to the second quarter in 2004. Total non-interest bearing core deposits increased $10.4 million on average in the second quarter of 2005 in comparison to the comparable quarter in 2004. At June 30, 2005 this source of funding amounted to $148.7 million or 20.6% of total deposits. The Corporation acquired $70.8 million total deposits with the merger with Red Oak Bank.

Non-interest income, increased $101,000, exclusive of gains on securities sold (which decreased $8,000). This was an increase of 12.8% for the second quarter compared with the comparable quarter in 2004. Noninterest income, including gains on securities sold, increased $93,000 or 11.3% for the second quarter compared with the comparable quarter in 2004. The increased revenue was primarily driven by the increase in other income, which includes loan fees, and annuity and insurance sales fees.

Total non-interest expense in the second quarter of 2005 was $5.4 million, up 10.58% as compared to the second quarter of 2004. Personnel-related expenses, the Corporation's largest non-interest operating expense component, increased 13.7% from a year ago. The increase was driven primarily by increased staffing levels, coupled with merit and promotional pay increases and certain employee related expenses. Red Oak Bank added $38,465 to personnel-related expenses during the second quarter. Full time equivalent staffing levels were 212 for the quarter compared to 189 in the second quarter of 2004. The 11.08% increase in other expense in the second quarter was primarily attributable to increased audit, legal and consulting expenses, in part due to continued compliance with Sarbanes Oxely.

The effective tax rate continues to be less than the statutory rates, substantially as a result of tax free income generated from the Corporation's municipal and other tax advantaged securities.

Total assets at June 30, 2005 reached $1.2 billion, an increase of $245.6 million or 26.3% from assets of $933.8 million at June 30, 2004 and $169.6 million or 16.8% from December 31, 2004. The acquisition of Red Oak Bank on May 20, 2005 contributed to this growth.

On June 30, 2005 Center Bancorp, Inc. announced that it issued 1,904,761 shares of the holding company's common stock to a limited number of accredited investors in a private placement of its securities. The shares were issued at a purchase price of $10.50 per share. Net proceeds to the holding company were approximately $18.9 million, after commissions and expenses. Center Bancorp intends to utilize the net proceeds from this offering for general working capital purposes and to expand the Company's capital position in order to support future asset growth, to fund bank and non-bank acquisitions and to supply capital at the holding company (as distinct from the bank subsidiary) level.

At June 30, 2005, the total Tier 1 capital leverage ratio was 9.45%, the total Tier 1 Risk Based Capital ratio was 14.67% and the Total Risk Based Capital ratio was 15.39%. Total Tier 1 capital increased to approximately $101.4 million at June 30, 2005 from $67.7 million at June 30, 2004. These ratios continue to exceed those necessary to be considered a well-capitalized institution under Federal Regulatory guidelines.

At June 30, 2005, book value per common share was $7.57 as compared with $5.41 a year ago. At June 30, 2005, tangible book value per common share was $6.32 as compared to $5.19 a year ago. The Corporation recorded approximately $15.3 million in goodwill resulting from the merger with Red Oak Bank. Annualized return on average stockholders' equity for the three months ended June 30, 2005 was 10.45% compared to 13.25% for the comparable period in 2004.

Mr. Davis concluded: "Our challenge will be to continue to grow our commercial business base and increase loans while containing operating expense and the more significant cost of funds as we make progress in driving more revenue to the bottom line. We believe that the second quarter results are supportive of the Company's stated goals to deliver consistent earnings performance."

Center Bancorp, Inc., through its wholly owned subsidiary, Union Center National Bank, Union, New Jersey, currently operates thirteen banking locations. Banking centers are located in Union Township (6 locations), Berkeley Heights, Madison, Millburn/Vauxhall, Morristown (2 locations), Springfield, and Summit, New Jersey. The Bank also operates remote ATM locations in the Union New Jersey Transit train station and in Union Hospital. The Bank recently received approvals to install and operate two additional off-premise ATM locations in the Chatham and Madison New Jersey Transit Stations.

Union Center National Bank is the largest commercial Bank headquartered in Union County; it was chartered in 1923 and is a full-service banking company.

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" http://www.centerbancorp.com.

All non-historical statements in this press release (including statements regarding loan and core deposit growth, interest rates and the Corporation's net interest margin) 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.


Center Bancorp, Inc. and Subsidiaries
Consolidated Statements of Condition

                                             June 30,        December 31,
(Dollars In Thousands)                         2005              2004
                                           (unaudited)
ASSETS
Cash and due from banks                    $    32,001       $    12,033
Federal funds sold and securities
 purchased under agreement to resell                 0                 0
                                           -----------       -----------
   Total cash and cash equivalents         $    32,001            12,033
Investment securities held to maturity
 (approximate market value of $154,017 in
 2005 and $127,898 in 2004)                    151,088           124,162
Investment securities available-for-sale       436,670           453,524
                                           -----------       -----------
   Total investment securities                 587,758           577,686
Loans, net of unearned income                  498,602           377,304
Less--Allowance for loan losses                  4,995             3,781
                                           -----------       -----------
   Net loans                                   493,607           373,523
Premises and equipment, net                     18,110            17,622
Accrued interest receivable                      5,649             4,533
Bank owned separate account life insurance      18,215            17,848
Other assets                                     6,452             3,679
Goodwill                                        16,776             2,091
                                           -----------       -----------
  Total assets                             $ 1,178,568       $ 1,009,015
                                           ===========       ===========

LIABILITIES
Deposits:
Non-interest-bearing                       $   148,742       $   127,226
Interest-bearing:
   Certificates of deposit $100,000
    and over                                   118,126           163,810
   Interest-bearing demand, savings
    and time deposits                          454,338           411,236
                                           -----------       -----------
Total deposits                                 721,206           702,272
Short-term borrowings                          164,934           101,357
Long-term borrowings                           168,555           115,000
Subordinated debentures                         15,465            15,465
Accounts payable and accrued liabilities         6,724             6,278
                                           -----------       -----------
Total liabilities                            1,076,844           940,372
                                           -----------       -----------

STOCKHOLDERS' EQUITY
Preferred Stock, no par value, Authorized
 5,000,000 shares; None Issued                       0                 0
Common stock, no par value: Authorized
 20,000,000 shares; issued 14,467,962 and
 11,475,446 shares in 2005 and 2004,
 respectively                                   65,592            30,441
Additional paid in capital                       3,775             4,477
Retained earnings                               37,081            36,973
Treasury stock at cost (1,041,920  and
 1,056,972 shares in 2005 and 2004,
 respectively)                                  (3,721)           (3,775)
Restricted stock                                     0                 0
Accumulated other comprehensive
 (loss)/income                                  (1,043)              527
                                           -----------       -----------
Total stockholders' equity                     101,684            68,643
                                           -----------       -----------
Total liabilities and stockholders' equity $ 1,178,568       $ 1,009,015
                                           ===========       ===========

All per common share amounts have been adjusted retroactively for common
stock splits and common stock dividends impacting the periods presented.


Center Bancorp, Inc. and Subsidiaries
Consolidated Statements of Income

(Unaudited)                     Three Months Ended     Six Months Ended
(In Thousands, Except Per         June 30,                June 30,
  Share Data)                  2005       2004         2005       2004
                           ----------- ----------- ----------- -----------
 Interest income:
 Interest and fees on
  loans                    $     5,928 $     4,490 $    10,961 $     8,866
 Interest and dividends
  on investment
  securities:
 Taxable interest
  income                         4,935       4,119       9,423       8,099
 Non-taxable interest
  income                           992         853       1,965       1,733
 Dividends                         465         270         915         604
 Interest on Federal
  funds sold and
  securities
  purchased under
  agreement to resell               17           0          29           0
                           ----------- ----------- ----------- -----------
 Total interest income          12,337       9,732      23,293      19,302
                           ----------- ----------- ----------- -----------
 Interest expense:
   Interest on
    certificates of
    deposit $100,000
    and over                       987          92       1,986         193
   Interest on other
    deposits                     1,896       1,561       3,456       3,202
   Interest on
    borrowings                   2,605       1,580       4,587       3,025
                           ----------- ----------- ----------- -----------
 Total interest expense          5,488       3,233      10,029       6,420
                           ----------- ----------- ----------- -----------
 Net interest income             6,849       6,499      13,264      12,882
 Provision for loan
  losses                             0         205           0         410
                           ----------- ----------- ----------- -----------
 Net interest income after
  provision for loan
  losses                         6,849       6,294      13,264      12,472
                           ----------- ----------- ----------- -----------
Other income:
 Service charges,
 commissions and fees              475         477         970         958
 Other income                      159         109         255         211
 Annuity & Insurance                72          12         114          20
 Bank Owned Life Insurance         185         192         367         358
 Gain on securities sold            23          31          36         157
                           ----------- ----------- ----------- -----------
 Total other income                914         821       1,742       1,704
                           ----------- ----------- ----------- -----------
Other expense:
 Salaries and employee
  benefits                       3,004       2,641       5,881       5,278
 Occupancy, net                    442         459       1,012       1,022
 Premises and equipment            483         475         941         920
 Stationery and printing           181         144         302         296
 Marketing and
  advertising                      160         147         332         296
 Other                           1,153       1,038       2,294       2,083
                           ----------- ----------- ----------- -----------
 Total other expense             5,423       4,904      10,762       9,895
                           ----------- ----------- ----------- -----------
 Income before income
  tax expense                    2,340       2,211       4,244       4,281
 Income tax expense                407         429         566         775
                           ----------- ----------- ----------- -----------
 Net income                $     1,933 $     1,782 $     3,678 $     3,506
                           =========== =========== =========== ===========
 Earnings per share:
 (Note 4)
 Basic                     $       .18 $       .19 $       .34 $       .37
 Diluted                   $       .18 $       .19 $       .34 $       .37
                           ----------- ----------- ----------- -----------
 Weighted average common
  shares outstanding:
 Basic                      10,962,507   9,422,960  10,697,411   9,410,420
 Diluted                    11,005,043   9,482,201  10,741,239   9,481,883
                           =========== =========== =========== ===========

All per common share amounts have been adjusted retroactively for common
stock splits and common stock dividends impacting the periods presented.


Center Bancorp, Inc. and Subsidiaries
Average Balance Sheet with Interest and Average Rates
Period Ended June 30
(unaudited)
                                      Six Month Period Ended June 30, 2005
                                                    Interest    Average
(tax-equivalent basis,                   Average    Income/      Yield/
 dollars in thousands)                   Balance    Expense       Rate
Assets
                                       ----------  ----------  ----------
Interest-earning assets:
  Investment securities: (1)
    Taxable                            $  425,932  $    9,676        4.54%
    Non-taxable                           145,900       3,846        5.27%
  Loans, net of unearned income (2)       408,292      10,961        5.37%
  Federal funds sold and securities
   purchased under agreement to resell      2,201          29        2.64%
                                       ----------  ----------  ----------
     Total interest-earning assets        982,325      24,512        4.99%
Non-interest-earning assets
  Cash and due from banks                  19,840
  BOLI                                     18,013
  Other assets                             33,541
Allowance for possible loan losses         (4,082)
                                       ----------  ----------  ----------
  Total non-interest-earning assets        67,312
                                       ----------  ----------  ----------
    Total assets                       $1,049,637
                                       ==========  ==========  ==========
Liabilities and stockholders' equity
Interest-bearing liabilities:
  Money market deposits                $   87,849         932        2.12%
  Savings deposits                        113,732         765        1.35%
  Time deposits                           240,274       3,311        2.76%
  Other interest - bearing deposits       120,873         434        0.72%
Short-term Borrowings & FHLB Advances     260,048       4,125        3.17%
Subordinated Debentures                    15,465         462        5.97%
                                       ----------  ----------  ----------
    Total interest-bearing liabilities    838,241      10,029        2.39%
                                       ----------  ----------  ----------
Non-interest-bearing liabilities:
  Demand deposits                         132,781
  Other non-interest-bearing deposits       2,224
  Other liabilities                         5,042
                                       ----------  ----------  ----------
    Total non-interest-bearing
     liabilities                          140,047
                                       ----------  ----------  ----------
Stockholders' equity                       71,349
                                       ----------  ----------  ----------
    Total liabilities and
     stockholders' equity              $1,049,637
                                       ==========  ==========  ==========
Net interest income (tax-equivalent
 basis)                                            $   14,483
                                       ----------  ----------  ----------
Net Interest Spread                                                  2.60%
                                       ----------  ----------  ----------
Net interest income as percent of
 earning-assets (net interest margin)                                2.95%
                                       ----------  ----------  ----------
Tax-equivalent adjustment (3)                          (1,219)
                                       ----------  ----------  ----------
Net interest income                                $   13,264
                                       ==========  ==========  ==========

                                      Six Month Period Ended June 30, 2004
                                                    Interest    Average
(tax-equivalent basis,                   Average    Income/      Yield/
 dollars in thousands)                   Balance    Expense       Rate
Assets
                                       ----------  ----------  ----------
Interest-earning assets:
  Investment securities: (1)
    Taxable                            $  409,582  $    8,676        4.24%
    Non-taxable                            93,883       2,663        5.67%
  Loans, net of unearned income (2)       354,665       8,865        5.00%
  Federal funds sold and securities
   purchased under agreement to resell          0           0        0.00%
                                       ----------  ----------  ----------
     Total interest-earning assets        858,130      20,204        4.71%
Non-interest-earning assets
  Cash and due from banks                  19,841
  BOLI                                     16,062
  Other assets                             27,380
Allowance for possible loan losses         (3,205)
                                       ----------  ----------  ----------
  Total non-interest-earning assets        60,078
                                       ----------  ----------  ----------
    Total assets                       $  918,208
                                       ==========  ==========  ==========
Liabilities and stockholders' equity
Interest-bearing liabilities:
  Money market deposits                $   86,634         497        1.15%
  Savings deposits                        113,220         693        1.12%
  Time deposits                           154,383       2,013        2.61%
  Other interest - bearing deposits       109,365         192        0.35%
Short-term Borrowings & FHLB Advances     242,323       2,683        2.21%
Subordinated Debentures                    15,465         342        4.42%
                                       ----------  ----------  ----------
    Total interest-bearing liabilities    731,390       6,420        1.76%
                                       ----------  ----------  ----------
Non-interest-bearing liabilities:
  Demand deposits                         125,327
  Other non-interest-bearing deposits       1,220
  Other liabilities                         5,655
                                       ----------  ----------  ----------
    Total non-interest-bearing
     liabilities                          132,202
                                       ----------  ----------  ----------
Stockholders' equity                       54,616
                                       ----------  ----------  ----------
    Total liabilities and
     stockholders' equity              $  918,208
                                       ==========  ==========  ==========
Net interest income (tax-equivalent
 basis)                                            $   13,784
                                       ----------  ----------  ----------
Net Interest Spread                                                  2.95%
                                       ----------  ----------  ----------
Net interest income as percent of
 earning-assets (net interest margin)                                3.21%
                                       ----------  ----------  ----------
Tax-equivalent adjustment (3)                            (902)
                                       ----------  ----------  ----------
Net interest income                                $   12,882
                                       ==========  ==========  ==========

(1) Average balances for available-for-sale securities are based on
     amortized cost
(2) Average balances for loans include loans on non-accrual status
(3) The tax-equivalent adjustment was computed based on a statutory
     Federal income tax rate of 34 percent


Center Bancorp, Inc. and Subsidiaries
Average Balance Sheet with Interest and Average Rates
Period Ended June 3
(unaudited)
                                          Three Month Period Ended June 30,
                                                        2005
                                          ---------------------------------
                                                          Interest  Average
(tax-equivalent basis,                           Average   Income/   Yield/
 dollars in thousands)                           Balance   Expense    Rate
                                              ----------  --------    -----
Assets
Interest-earning assets:
  Investment securities: (1)
    Taxable                                   $  437,799  $  5,041    4.61%
    Non-taxable                                  143,506     1,974    5.50%
  Loans, net of unearned income (2)              435,539     5,928    5.44%
  Federal funds sold and securities
   purchased under
   agreement to resell                             2,397        17    2.84%
                                              ----------  --------    -----
      Total interest-earning assets            1,019,241    12,960    5.09%
Non-interest-earning assets
  Cash and due from banks                         20,478
  BOLI                                            18,103
  Other assets                                    38,143
Allowance for possible loan losses               (4,343)
                                              ----------  --------    -----
  Total non-interest-earning assets               72,381
                                              ----------  --------    -----
      Total assets                            $1,091,622
                                              ==========  ========    =====
Liabilities and stockholders' equity
Interest-bearing liabilities:
  Money market deposits                          $91,206       526    2.31%
  Savings deposits                               137,004       410    1.20%
  Time deposits                                  235,311     1,672    2.84%
  Other interest - bearing deposits              109,153       275    1.01%
 Short-term  Borrowings & FHLB Advances          286,144     2,364    3.30%
 Subordinated Debentures                          15,465       241    6.23%
                                              ----------  --------    -----
      Total interest-bearing liabilities         874,283     5,488    2.51%
Non-interest-bearing liabilities:
  Demand deposits                                135,433
  Other non-interest-bearing deposits              2,785
  Other liabilities                                5,150
                                              ----------  --------    -----
      Total non-interest-
       bearing  liabilities                      143,368
                                              ----------  --------    -----
Stockholders' equity                              73,971
      Total liabilities and
       stockholders' equity                   $1,091,622
                                              ==========  ========    =====
Net interest income (tax-equivalent basis)                $  7,472
                                              ----------  --------    -----
Net Interest Spread                                                   2.58%
                                              ----------  --------    -----
Net interest income as percent
 of earning-assets (net interest margin)                              2.93%
                                              ----------  --------    -----
Tax-equivalent adjustment (3)                                (623)
                                              ----------  --------    -----
Net interest income                                       $  6,849
                                              ==========  ========    =====

(1) Average balances for available-for-sale securities are based on
amortized cost
(2) Average balances for loans include loans on non-accrual status
(3) The tax-equivalent adjustment was computed based on a statutory
Federal income tax rate of 34 percent


Center Bancorp, Inc. and Subsidiaries
Average Balance Sheet with Interest and Average Rates
Period Ended June 30
(unaudited)
                                          Three Month Period Ended June 30,
                                                        2004
                                          ---------------------------------
                                                          Interest  Average
(tax-equivalent basis,                           Average   Income/   Yield/
 dollars in thousands)                           Balance   Expense     Rate
                                              ----------  --------    -----
Assets
Interest-earning assets:
  Investment securities: (1)
    Taxable                                   $  409,893   $ 4,384    4.28%
    Non-taxable                                   89,277     1,299    5.82%
  Loans, net of unearned income (2)              361,523     4,490    4.97%
  Federal funds sold and securities
   purchased under
   agreement to resell                                 0         0    0.00%
                                              ----------  --------    -----
      Total interest-earning assets              860,693    10,173    4.73%
Non-interest-earning assets
  Cash and due from banks                         18,743
  BOLI                                            16,062
  Other assets                                    30,027
Allowance for possible loan losses                (3,315)
                                              ----------  --------    -----
  Total non-interest-earning assets               61,517
                                              ----------  --------    -----
      Total assets                            $  922,210
                                              ==========  ========    =====
Liabilities and stockholders' equity
Interest-bearing liabilities:
  Money market deposits                          $95,255       235    0.99%
  Savings deposits                               141,138       339    0.96%
  Time deposits                                  151,299       977    2.58%
  Other interest - bearing deposits               75,424       102    0.54%
 Short-term  Borrowings & FHLB Advances          255,941     1,411    2.21%
 Subordinated Debentures                          15,465       169    4.37%
                                              ----------  --------    -----
      Total interest-bearing liabilities         734,522     3,233    1.76%
                                              ----------  --------    -----
Non-interest-bearing liabilities:
  Demand deposits                                127,222
  Other non-interest-bearing deposits                631
  Other liabilities                                6,047
                                              ----------  --------    -----
      Total non-interest-
       bearing Liabilities                       133,900
                                              ----------  --------    -----
Stockholders' equity                              53,788
                                              ----------  --------    -----
      Total liabilities and
       stockholders' equity                     $922,210
                                               =========  ========    =====
Net interest income (tax-equivalent basis)                   6,940
                                              ----------  --------    -----
Net Interest Spread                                                   2.97%
                                              ----------  --------    -----
Net interest income as percent
 of earning-assets (net interest margin)                              3.23%
                                              ----------  --------    -----
Tax-equivalent adjustment (3)                                 (441)
                                              ----------  --------    -----
Net interest income                                        $ 6,499
                                              ==========  ========    =====

(1) Average balances for available-for-sale securities are based on
amortized cost
(2) Average balances for loans include loans on non-accrual status
(3) The tax-equivalent adjustment was computed based on a statutory Federal
income tax rate of 34 percent

Contact Information

  • Anthony C. Weagley
    Vice President & Treasurer
    908-688-9500