SOURCE: Center Bancorp, Inc.

April 24, 2008 16:00 ET

Center Bancorp, Inc. Reports First Quarter 2008 Earnings

UNION, NJ--(Marketwire - April 24, 2008) - Center Bancorp, Inc. (NASDAQ: CNBC), parent company of Union Center National Bank, today reported operating results for the first quarter ended March 31, 2008. Earnings amounted to $1.2 million or $0.09 per diluted share for the quarter ended March 31, 2008 as compared with earnings of $1.3 million or $0.09 per diluted share for the quarter ended March 31, 2007.

"The results for the period announced today reflect our progress in improving the future stability of revenue streams and are in line with the work started in 2007 that we intend to continue into 2008. With these actions, our first quarter results reflect a marked improvement in our balance sheet and net interest margin, adequate loan loss reserves supported by continued good credit quality in our asset portfolios and reduced operating overhead," remarked Anthony C. Weagley, President and CEO.

Quarterly Condensed Consolidated Income Statements (unaudited)

(dollars in thousands, except per share data)
For the
 quarter
 ended:    3/31/08   12/31/07    9/30/07    6/30/07    3/31/07   12/31/06
         ---------- ---------- ---------- ---------- ---------- ----------
Net interest
 income  $    5,687 $    5,172 $    5,481 $    5,225 $    5,621 $    5,691
Provision
 for loan
 losses         150        150        100        100          0         57
         ---------- ---------- ---------- ---------- ---------- ----------
Net interest
 income after
 loan loss
 provision    5,537      5,022      5,381      5,125      5,621      5,634
Non interest
 income         866        874        911      1,177      1,410      1,618
Non interest
 expense     (4,953)    (6,034)    (6,080)    (6,056)    (6,428)    (6,656)
         ---------- ---------- ---------- ---------- ---------- ----------
Income
 (loss)
 before
 income
 tax          1,450       (138)       212        246        603        596
Income tax
 expense
 (benefit)      233       (670)      (786)      (771)      (706)    (1,695)
         ---------- ---------- ---------- ---------- ---------- ----------
NET
 INCOME  $    1,217 $      532 $      998 $    1,017 $    1,309 $    2,291
         ---------- ---------- ---------- ---------- ---------- ----------
Earnings
 per share
 (basic) $     0.09 $     0.04 $     0.07 $     0.07 $     0.09 $     0.16
Earnings
 per share
 (dilut-
 ed)     $     0.09 $     0.04 $     0.07 $     0.07 $     0.09 $     0.16
Weighted
 average
 common
 shares
 outstanding:
Basic    13,145,078 13,441,082 13,864,722 13,910,450 13,910,450 13,898,178
Diluted  13,163,917 13,469,764 13,913,919 13,990,642 13,986,333 13,980,270

All common share and per common share amounts have been adjusted for 5%
stock dividend

Note: Due to rounding quarterly earnings per share may not add up to the
reported annual earnings per share




Selected financial ratios (annualized where applicable)

As of or for the
 quarter ended:       3/31/08  12/31/07 09/30/07 06/30/07 03/31/07 12/31/06
                      -------  -------  -------  -------  -------  -------
Return on average
 assets                  0.50%    0.22%    0.40%    0.40%    0.50%    0.88%
Return on average
 equity                  5.60%    2.44%    4.21%    4.15%    5.37%    9.46%
Net interest margin
 (tax equivalent
 basis)                  2.74%    2.48%    2.63%    2.43%    2.55%    2.62%
Loan/Deposit ratio      90.71%   78.91%   84.62%   78.71%   73.42%   75.73%
Stockholders'
 equity/total assets     8.58%    8.38%    9.49%    9.57%    9.36%    9.28%
Efficiency ratio         70.9%    92.7%    89.3%    92.8%    92.8%    94.5%
Book value per share  $  6.51  $  6.48  $  6.85  $  6.89  $  7.06  $  7.02
Return on average
 tangible
 stockholders' equity    6.98%    3.04%    5.15%    5.04%    6.53%   11.53%
Tangible
 stockholders'
 equity/tangible
 assets                  6.98%    6.80%    7.88%    7.98%    7.84%    7.77%
Tangible book value
 per share            $  5.20  $  5.17  $  5.59  $  5.65  $  5.81  $  5.77

The Corporation recorded net interest income on a fully taxable equivalent basis of $6.1 million for both the three months ended March 31, 2008 and 2007. Interest income and interest expense each declined by $1.1 million from the same period last year. Compared to 2007, net interest earning assets declined by $28.1 million while net interest spread improved by 34 basis points, due primarily to improved funding costs. On a linked quarter basis, net interest spread and margin improved by 33 basis points and 26 basis points, respectively.

Steps were taken during the fourth quarter of 2007 to improve the Corporation's net interest margin by allowing a runoff of certain high rate deposits and to position the Corporation's cash position for further outflows in the first quarter of 2008. The result was an improvement in margin from the comparison period in 2007. Recent action by the Federal Open Market Committee allowed the Corporation to further reduce liability costs in the later part of the first quarter of this year. As such, the effect of these positive changes is expected to have a greater impact in the second quarter of 2008. During the first quarter, the Corporation secured approximately $45 million of longer term funding with a weighted average rate of 2.67% in an effort to support continued loan growth.

The $1.1 million decline in interest expense in the first quarter of 2008 from 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 first quarter of 2007, the Corporation's average deposits during the first quarter of 2008 declined by $72.8 million, due primarily to the planned runoff of high cost deposits, while average borrowings, generally placed at favorable terms and rates, increased by $36 million.

Other Income

Total other income decreased $544,000 for the first quarter of 2008 compared with the comparable quarter of 2007, primarily as a result of decreases in gains on securities sold. Excluding net securities gains and losses, the Corporation recorded other income of $866,000 in the three months ended March 31, 2008, compared to $822,000 in the three months ended March 31, 2007, an increase of 5.4%. This increase was primarily attributable to an $111,000 increase in service charges, commissions and fees, partially offset by a decline in commissions from sales of mutual funds and annuities and other income.

Quarterly Consolidated Non-Interest Income (unaudited)

(dollars in thousands)
For the quarter
 ended:               3/31/08  12/31/07 9/30/07  6/30/07  3/31/07  12/31/06
                      -------- -------  -------- -------- -------- --------
Service charges on
 deposit accounts     $    404 $   399  $    312 $    306 $    288 $    295
Commissions from
 mortgage broker
 activities                 12      16        15       25       46       45
Loan related fees
 (LOC)                      41      31        49       26       35       41
Commissions from sale
 of mutual funds and
 annuities                  17      44       131       60       63       60
Debit card and ATM
 fees                      125     132       126      130      131      134
Bank owned life
 insurance                 221     217       223      230      223      183
Net securities gains
 (losses)                   --     (43)       14      341      588      801
Other service charges
 and fees                   46      78        41       59       36       59
                      -------- -------  -------- -------- -------- --------
Total other income    $    866 $   874  $    911 $  1,177 $  1,410 $  1,618
                      -------- -------  -------- -------- -------- --------

Other Expense

Other expense for the first quarter of 2008 totaled $5.0 million, a decrease of $1.5 million or 22.9% from the comparable period in 2007. Salary and benefit expense decreased by $790,000, or 25.1%, to $2.4 million. This reduction was primarily attributable to reductions in staff, pension curtailment and elimination of certain benefit plans. Full-time equivalent staffing levels were 167 at March 31, 2008 compared to 172 as of December 31, 2007 and 187 at March 31, 2007. 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 first quarter of 2008 was 70.9% as compared to 92.7% in the fourth quarter of 2007 and 92.8% in the first quarter of 2007. The Corporation recently announced a number of cost cutting initiatives, including outsourcing partnerships with Compushare, PHH Mortgage and the Atlantic Central Banker BITS program. These initiatives collectively once implemented are expected to reduce operating expense by approximately $600,000 annually. Additionally, in February of 2008, the Corporation completed the sale of its Florham Park office for $2.4 million, which approximated the carrying value.

Quarterly Consolidated Non-Interest Expense (unaudited)

(dollars in thousands)
For the quarter
 ended:               3/31/08  12/31/07 9/30/07  6/30/07  3/31/07  12/31/06
                      -------- -------- -------  -------- -------- --------
Employee salaries and
 wages                $  1,896 $  1,932 $ 3,551  $  2,059 $  2,300 $  2,215
Employee stock option
 expense                    45       46      46        35       24       41
Health insurance and
 other employee
 benefits                  218      237    (687)      543      575      561
Payroll taxes              179      124     183       181      234      167
Other employee related
 expenses                   14       14      14        16        9       32
                      -------- -------- -------  -------- -------- --------
Total salaries and
 employee benefits    $  2,352 $  2,353 $ 3,107  $  2,834 $  3,142 $  3,016

Occupancy, net             759      799     692       629      723      618
Premises and equipment
 expense                   366      437     442       436      462      564
Stationery and printing     95      104      87       115      159      144
Marketing and
 advertising               160      179     152       109      163      266
Computer expense           141      150     151       148      165      196
Legal, auditing and
 other professional
 fees                      172      690     311       599      539      403
Bank regulatory
 related expenses           58       58      60        60       60       57
Postage and delivery        78       57      73        75       84       96
ATM related expenses        60       59      63        77       61       53
Amortization of CDI         25       25      26        27       29       29
Other expenses             687    1,123     916       947      841    1,214
                      -------- -------- -------  -------- -------- --------
Total other expense   $  4,953 $  6,034 $ 6,080  $  6,056 $  6,428 $  6,656
                      -------- -------- -------  -------- -------- --------



Balance Sheet Summary

Quarterly Condensed Consolidated Balance Sheets (unaudited)

(dollars in thousands)
At quarter
 ended:      3/31/08   12/31/07  9/30/07    6/30/07    3/31/07   12/31/06
             -------- ---------- -------- ---------- ---------- ----------
Cash and due
 from banks  $ 15,155 $   20,541 $ 15,277 $   24,363 $   19,245 $   34,088
Fed funds and
 money market
 funds         45,300     49,490        0          0     35,374     10,275
Investments   281,746    314,194  343,979    366,224    381,493    381,733
Loans         565,025    551,669  550,847    533,675    530,573    550,414
Allowance for
 loan losses   (5,245)    (5,163)  (5,021)    (4,974)    (4,958)    (4,960)
Restricted
 investment
 in bank
 stocks, at
 cost          10,036      8,467    7,347      8,299      7,832      7,805
Premises and
 equipment,
 net           17,404     17,419   17,662     18,400     18,314     18,829
Goodwill       16,804     16,804   16,804     16,804     16,804     16,804
Core deposit
 intangible       375        400      426        452        479        508
Bank owned
 life
 insurance     22,483     22,261   22,044     21,822     21,591     21,368
Other assets   26,084     21,563   18,425     16,557     22,219     14,520
             -------- ---------- -------- ---------- ---------- ----------
TOTAL ASSETS $995,167 $1,017,645 $987,790 $1,001,622 $1,048,966 $1,051,384
             -------- ---------- -------- ---------- ---------- ----------
Deposits      622,924    699,070  650,999    678,011    722,648    726,771
Other
 borrowings   279,024    223,264  237,744    221,994    220,327    211,589
Other
 liabilities    7,818     10,033    5,317      5,804      7,828     15,411
Stockholders'
 equity        85,401     85,278   93,730     95,813     98,163     97,613
             -------- ---------- -------- ---------- ---------- ----------
TOTAL
 LIABILITIES AND
 STOCKHOLDERS'
 EQUITY      $995,167 $1,017,645 $987,790 $1,001,622 $1,048,966 $1,051,384
             -------- ---------- -------- ---------- ---------- ----------


Condensed Consolidated Average Balance Sheets (unaudited)

(dollars in thousands)
For the quarter
 ended:        3/31/08  12/31/07 9/30/07    6/30/07    3/31/07   12/31/06
               -------- -------- -------- ---------- ---------- ----------
Investments,
 Fed funds,
 and other     $326,397 $351,302 $362,119 $  404,975 $  415,980 $  408,684
Loans           565,654  552,521  538,798    532,799    540,971    543,707
Allowance for
 loan losses     (5,237)  (5,077)  (4,984)    (4,986)    (4,959)    (4,918)
All other assets 93,088   91,016   90,533     92,038     94,773     88,008
               -------- -------- -------- ---------- ---------- ----------
TOTAL ASSETS   $979,902 $989,762 $986,466 $1,024,826 $1,046,765 $1,035,481
               -------- -------- -------- ---------- ---------- ----------
Deposits-
 interest
 bearing        519,295  564,334  557,555    578,819    592,073    586,388
Deposits-non
 interest
 bearing        112,695  115,859  128,449    130,701    135,161    140,745
Other
 borrowings     251,222  216,761  200,257    211,228    215,198    207,524
Other
 liabilities      9,769    5,543    5,372      6,159      6,867      4,004
Stockholders'
 equity          86,921   87,265   94,833     97,919     97,466     96,820
               -------- -------- -------- ---------- ---------- ----------
TOTAL LIABILITIES
 AND
 STOCKHOLDERS'
 EQUITY        $979,902 $989,762 $986,466 $1,024,826 $1,046,765 $1,035,481
               -------- -------- -------- ---------- ---------- ----------

Loans

The Corporation had total loans of $565.0 million at March 31, 2008, representing a $13.4 million, or 2.4%, increase on a linked-quarter basis. Loan growth continued during the quarter in the Corporation's commercial related segments of the portfolio. At March 31, 2008, the Corporation had $58.6 million in overall undispersed loan commitments, $55.1 million of which it expects to fund over the next 90 days.

Loan originations for the quarter increased in the commercial sector, primarily in commercial mortgages. "We are pleased with the growth achieved for the quarter and are optimistic that the Corporation will continue to build its loans outstanding volume throughout 2008. Our pipelines are strong; we expect that increased activity in the commercial sectors of the portfolio will support our strategic goals of increased loan volume and improving our earning-asset mix. We continue to work aggressively at strengthening existing customer relationships and building new ones by seizing opportunities, reflecting the improved business development effort in the Bank," said Mr. Weagley.

Loan Mix:
(unaudited)

(dollars in thousands)
At quarter ended:     3/31/08  12/31/07 9/30/07  6/30/07  3/31/07  12/31/06
                      -------- -------- -------- -------- -------- --------
Real estate loans
  Residential         $260,237 $265,597 $265,301 $261,849 $262,958 $268,748
  Commercial           163,664  137,585  136,289  135,707  135,062  135,802
  Construction          48,494   51,367   53,286   47,910   60,135   70,340
                      -------- -------- -------- -------- -------- --------
Total real estate
 loans                 472,395  454,549  454,876  445,466  458,155  474,890
Commercial loans        91,492   95,978   94,444   86,848   71,020   74,135
Consumer and other
 loans                     592      563      960      741      754      699
                      -------- -------- -------- -------- -------- --------
Total loans before
 unearned fees and
 costs                 564,479  551,090  550,280  533,055  529,929  549,724
Unearned fees and
 costs                     546      579      567      620      644      690
                      -------- -------- -------- -------- -------- --------
Total loans           $565,025 $551,669 $550,847 $533,675 $530,573 $550,414
                      ======== ======== ======== ======== ======== ========



Asset Quality

Selected credit quality ratios (unaudited)

(dollars in thousands)
As of or for
 the quarter
 ended:      3/31/08   12/31/07  9/30/07    6/30/07    3/31/07   12/31/06
             -------- ---------- -------- ---------- ---------- ----------
Non-accrual
 loans       $  1,215 $    3,907 $    986 $    1,070 $    1,207 $      475
Past due
 loans 90
 days or more
 and still
 accruing
 interest           0          0        0          0          0        225
             -------- ---------- -------- ---------- ---------- ----------
Total non
 performing
 loans          1,215      3,907      986      1,070      1,207        700
Other real
 estate owned
 ("OREO")         478        501      586        586          0          0
Repossessed
 assets other
 than
 real-estate        0          0        0          0          0          0
             -------- ---------- -------- ---------- ---------- ----------
Total non
 performing
 assets      $  1,693 $    4,408 $  1,572 $    1,656 $    1,207 $      700
Non performing
 assets as a
 percentage
 of total
 assets          0.17%      0.43%    0.16%      0.17%      0.12%      0.07%
Non performing
 loans as a
 percentage
 of total loans  0.22%      0.71%    0.18%      0.20%      0.23%      0.13%
Net
 charge-offs $     68 $      147 $    139 $       86 $        2 $       34
Net charge-offs
 as a percentage
 of average
 loans for
 the period      0.01%      0.03%    0.03%      0.02%      0.00%      0.01%
Allowance for
 loan losses
 as a percentage
 of period
 end loans       0.93%      0.94%    0.91%      0.93%      0.93%      0.90%
Allowance for
 loan losses
 as a percentage
 of non-
 performing
 loans          431.7%     132.2%   509.2%     464.9%     410.8%     708.6%
             -------- ---------- -------- ---------- ---------- ----------

Total Assets $995,167 $1,017,645 $987,790 $1,001,622 $1,048,966 $1,051,384
Total Loans   565,025    551,669  550,847    533,675    530,573    550,414
Average loans
 for the
 quarter      565,654    552,521  538,798    532,799    540,971    543,707
Allowance for
 loan losses    5,245      5,163    5,021      4,974      4,958      4,960
             -------- ---------- -------- ---------- ---------- ----------

At March 31, 2008, non-performing assets totaled $1.7 million, or 0.17% of total assets, as compared with $4.4 million, or 0.43%, at December 31, 2007 and $1.2 million, or 0.12% at March 31, 2007. The decrease in non-accrual loans from December 31, 2007 was primarily attributable to one commercial mortgage in the amount of $2.5 million in which the Corporation has received full payment of the commercial mortgage, including principal of $2.5 million and interest of $83,277, during the first quarter of 2008. The Corporation continues to aggressively pursue the sale of other real estate owned and currently has a contract of sale on both of the properties in the amount of approximately $485,000.

"The Corporation is well positioned to weather the unprecedented volatility in the credit markets as we do not have exposure to the sub prime home mortgage business or to other sub prime issues such as securitizations and collateralized debt obligations. Our home equity portfolio is sound and was originated with conservative underwriting practices," remarked Mr. Weagley.

At March 31, 2008, the total allowance for loan losses amounted to approximately $5.2 million, or 0.93% of total loans. The allowance for loan losses as a percent of total non-performing loans amounted to 431.7% for the first quarter of 2008 as compared 132.2% at December 31, 2007 and 410.8% at March 31, 2007.

Securities

Investment securities reflected a decline of $99.7 million at March 31, 2008 compared to the comparable period in 2007. The decline is consistent with maintaining the balance sheet strategies the Corporation has previously outlined in seeking to reduce the size of its investment securities portfolio while increasing loans as a percentage of the earning-asset mix.

The reduction in the volume of the investment portfolio was made in anticipation of providing cash flow for loan funding and forecasted liability outflows. This action had a positive impact on net interest income in the first quarter of 2008.

Deposits/Funding Sources

Deposit Mix (unaudited)

(dollars in thousands)
At quarter ended:     3/31/08  12/31/07 9/30/07  6/30/07  3/31/07  12/31/06
                      -------- -------- -------- -------- -------- --------
Checking accounts
  Non interest
   bearing            $117,053 $111,422 $121,884 $127,797 $128,703 $136,453
  Interest bearing     125,152  155,406  110,177  126,112  131,337  107,359
Savings deposits        68,028   86,341   92,789   92,474   95,233   99,654
Money market accounts  170,742  196,601  167,442  171,923  173,569  184,102
Time Deposits          141,949  149,300  158,707  159,705  193,806  199,203
                      -------- -------- -------- -------- -------- --------
Total Deposits        $622,924 $699,070 $650,999 $678,011 $722,648 $726,771
                      ======== ======== ======== ======== ======== ========

Deposits totaled $622.9 million at March 31, 2008, a decrease of $99.7 million from March 31, 2007. The decline was a result of a moderation in the yield curve due to recent Federal Reserve actions and a decision to reduce the Corporation's dependence on more rate sensitive high costing funds, which were subject to maturity and repricing in favor of lower costing wholesale funds available. More volatile certificates of deposit of $100,000 or more declined as well as part of this strategy.

Borrowings totaled $279.0 million at March 31, 2008, reflecting an increase of $58.7 million from March 31, 2007. Overnight customer repurchase transactions covering commercial customer sweep accounts totaled $59.4 million at March 31, 2008 as compared with $39.3 million at March 31, 2007. This shift in the volume of repurchase agreements also accounted for a portion of the decline in non-interest bearing commercial checking accounts during the period.

Stockholders' Equity

Total stockholders' equity amounted to $85.4 million, or 8.58% of total assets, at March 31, 2008. Tangible stockholders' equity was $68.2 million, or 6.98% of tangible assets. Book value per common share was $6.51 at March 31, 2008, compared to $6.48 at December 31, 2007 and $7.06 at March 31, 2007. Tangible book value per common share was $5.20 at March 31, 2008 compared to $5.17 at December 31, 2007 and $5.81 at March 31, 2007.

During the three months ended March 31, 2008, the Corporation purchased 63,898 shares of common stock at an average cost of $11.01 per share.

During 2007, the Corporation purchased 850,527 common shares at an average cost per share of $11.79 under the stock buyback program adopted on January 24, 2002. The repurchased shares were recorded as Treasury Stock, which resulted in a decrease in stockholders' equity. On September 27, 2007 the Board approved an increase in its current share buyback program to an additional 5% of outstanding shares, enhancing its current authorization by 684,627 shares. Any purchases by the Corporation may be made, from time to time, in the open market, in privately negotiated transactions or otherwise. At March 31, 2008, there were 132,341 shares available for repurchase under the Corporation's stock buyback program.

At March 31, 2008, the Corporation's Tier 1 Capital Leverage ratio was 8.17%, the Corporation's total Tier 1 Risk Based Capital ratio was 11.47% and the Corporation's total Risk Based Capital ratio was 12.23%. Total Tier 1 capital decreased to approximately $78.7 million at March 31, 2008 from $79.1 million at December 31, 2007 and from $89.0 million at March 31, 2007.

At March 31, 2008, the Corporation's capital ratios continued to exceed the minimum Federal requirements for a bank holding company, and Union Center National Bank's capital ratios continued to exceed each of the minimum levels required for classification as a "well capitalized institution" under the Federal Deposit Insurance Corporation Improvement Act ("FDICIA").

About Center Bancorp

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

The Bank, through its 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, 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 March 31, 2008, the Bank had total assets of $1.0 billion, total deposits of $623 million and stockholders' equity of approximately $85.4 million.

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

Non-GAAP Financial Measures

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

(dollars in thousands)
For the quarter
 ended:               3/31/08  12/31/07 9/30/07  6/30/07  3/31/07  12/31/06
                      -------  -------  -------  -------  -------  -------
Net income            $ 1,217  $   532  $   998  $ 1,017  $ 1,309  $ 2,291
                      -------  -------  -------  -------  -------  -------
Average stockholders'
 equity               $86,921  $87,265  $94,833  $97,919  $97,466  $96,820
Less: Average
 goodwill and other
 intangible assets     17,194   17,220   17,245   17,272   17,300   17,334
                      -------  -------  -------  -------  -------  -------
Average tangible
 stockholders' equity $69,727  $70,045  $77,588  $80,647  $80,166  $79,486
                      -------  -------  -------  -------  -------  -------
Return on average
 stockholders' equity    5.60%    2.44%    4.21%    4.15%    5.37%    9.46%
Add: Average goodwill
 and other intangible
 assets                  1.38     0.60     0.94     0.89     1.16     2.07
                      -------  -------  -------  -------  -------  -------
Return on average
 tangible
 stockholders' equity    6.98%    3.04%    5.15%    5.04%    6.53%   11.53%
                      -------  -------  -------  -------  -------  -------

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

(dollars in thousands)
At quarter
 ended:    3/31/08   12/31/07    9/30/07    6/30/07    3/31/07   12/31/06
          ---------- ---------- ---------- ---------- ---------- ----------
Common
 shares
 outstand-
 ing      13,113,760 13,155,784 13,692,534 13,910,826 13,910,450 13,910,450
Stockholders'
 equity   $   85,401 $   85,278 $   93,730 $   95,813 $   98,163 $   97,613
Less:
 Goodwill
 and other
 intangible
 assets       17,179     17,204     17,230     17,256     17,283     17,312
          ---------- ---------- ---------- ---------- ---------- ----------
Tangible
 stockholders'
 equity   $   68,222 $   68,074 $   76,500 $   78,557 $   80,880 $   80,301
          ---------- ---------- ---------- ---------- ---------- ----------
Book value
 per share $    6.51 $     6.48 $     6.85 $     6.89 $     7.06 $     7.02
Less:
 Goodwill
 and other
 intangible
 assets         1.31       1.31       1.26       1.24       1.25       1.25
          ---------- ---------- ---------- ---------- ---------- ----------
Tangible
 book value
 per
 share    $     5.20 $     5.17 $     5.59 $     5.65 $     5.81 $     5.77
          ---------- ---------- ---------- ---------- ---------- ----------

"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:      3/31/08   12/31/07  9/30/07    6/30/07    3/31/07   12/31/06
             -------- ---------- -------- ---------- ---------- ----------
Total assets $995,167 $1,017,645 $987,790 $1,001,622 $1,048,966 $1,051,384
Less:
 Goodwill and
 other
 intangible
 assets        17,179     17,204   17,230     17,256     17,283     17,312
             -------- ---------- -------- ---------- ---------- ----------
Tangible
 assets      $977,988 $1,000,441 $970,560 $  984,366 $1,031,683 $1,034,072
             -------- ---------- -------- ---------- ---------- ----------
Total
 stockholders'
 equity/total
 assets          8.58%      8.38%    9.49%      9.57%      9.36%      9.28%
Tangible
 stockholders'
 equity/tangible
 assets          6.98%      6.80%    7.88%      7.98%      7.84%      7.77%

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:    3/31/08 12/31/07 9/30/07 6/30/07 3/31/07 12/31/06
                          ------- -------  ------- ------- ------- --------
Total non-interest income $   866 $   874  $   911 $ 1,177 $ 1,410 $  1,618
Net securities gains
 (losses)                       -     (43)      14     341     588      801
                          ------- -------  ------- ------- ------- --------
Total non-interest
 income, excluding  net
 securities gains
 (losses)                 $   866 $   917  $   897 $   836 $   822 $    817
                          ------- -------  ------- ------- ------- --------

"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:               3/31/08  12/31/07 9/30/07  6/30/07  3/31/07  12/31/06
                      -------  -------  -------  -------  -------  -------
Non-interest expense  $ 4,953  $ 6,034  $ 6,080  $ 6,056  $ 6,428  $ 6,656
                      -------  -------  -------  -------  -------  -------
Net interest income
 (tax equivalent
 basis)               $ 6,117  $ 5,594  $ 5,915  $ 5,692  $ 6,104  $ 6,230
Non-interest income,
 excluding net
 securities gains
 (losses)                 866      917      897      836      822      817
                      -------  -------  -------  -------  -------  -------
                      $ 6,983  $ 6,511  $ 6,812  $ 6,528  $ 6,926  $ 7,047
                      -------  -------  -------  -------  -------  -------
Efficiency ratio         70.9%    92.7%    89.3%    92.8%    92.8%    94.5%
                      -------  -------  -------  -------  -------  -------

Forward-Looking Statements

All non-historical statements in this press release (including statements regarding future revenue streams, future margins and the impact on future margins resulting from actions taken previously, the expectation of future loan growth, plans for 2008, the need to fund loan commitments during the second quarter of 2008 and other future results) 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 deregulation of the financial services industry, and other risks cited in reports filed by the Corporation with the Securities and Exchange Commission. Actual results may differ materially from such forward-looking statements. Center Bancorp, Inc. assumes no obligation for updating any such forward-looking statement at any time.

                  CENTER BANCORP, INC. AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF CONDITION
                                (unaudited)


                                                   March 31,   December 31,
(Dollars in Thousands)                                2008         2007
                                                  -----------  -----------

ASSETS
Cash and due from banks                           $    15,155  $    20,541
Federal funds sold and securities purchased under
 agreement to resell                                   45,300       49,490
                                                  -----------  -----------
   Total cash and cash equivalents                     60,455       70,031
                                                  -----------  -----------
Investment securities available-for sale              281,746      314,194
Loans, net of unearned income                         565,025      551,669
Less -- Allowance for loan losses                       5,245        5,163
                                                  -----------  -----------
   Net Loans                                          559,780      546,506
Restricted investment in bank stocks, at cost          10,036        8,467
Premises and equipment, net                            17,404       17,419
Accrued interest receivable                             4,495        4,535
Bank owned life insurance                              22,483       22,261
Other assets                                           21,589       17,028
Goodwill and other intangible assets                   17,179       17,204
                                                  -----------  -----------
Total assets                                      $   995,167  $ 1,017,645
                                                  ===========  ===========
LIABILITIES
Deposits:
   Non-interest bearing                           $   117,053  $   111,422
   Interest-bearing
      Time deposits $100 and over                      61,634       63,997
      Interest-bearing transactions, savings and
       time deposits $100 and less                    444,237      523,651
                                                  -----------  -----------
      Total deposits                                  622,924      699,070
Securities sold under agreement to repurchase          59,435       48,541
Short-term borrowings                                   1,026        1,123
Long-term borrowings                                  213,408      168,445
Subordinated debentures                                 5,155        5,155
Accounts payable and accrued liabilities                7,818       10,033
                                                  -----------  -----------
Total liabilities                                     909,766      932,367
                                                  -----------  -----------
STOCKHOLDERS' EQUITY
Preferred stock, no par value:
   Authorized 5,000,000 shares; none issued                --           --
Common stock, no par value:
   Authorized 20,000,000 shares; issued
    15,190,984 shares in 2008 and 2007;
    outstanding 13,113,760 shares in 2008 and
    13,155,784 shares in 2007                          86,908       86,908
Additional paid in capital                              5,198        5,133
Retained earnings                                      15,205       15,161
Treasury stock, at cost (2,077,224 shares in
 2008 and 2,035,200 shares in 2007)                   (16,630)     (16,100)
Accumulated other comprehensive loss                   (5,280)      (5,824)
                                                  -----------  -----------
Total stockholders' equity                             85,401       85,278
                                                  -----------  -----------
Total liabilities and stockholders' equity        $   995,167  $ 1,017,645
                                                  ===========  ===========



                  CENTER BANCORP, INC. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF INCOME
                                (unaudited)


                                                      Three Months Ended
                                                          March 31,

                                                  ------------------------
(Dollars in Thousands, Except Per Share Data)        2008         2007
                                                  ------------ -----------

Interest income:
Interest and fees on loans                        $      8,471 $     8,353
Interest and dividends on investment securities:
   Taxable interest income                               2,765       3,695
   Non-taxable interest income                             802         818
   Dividends                                               243         361
Interest on Federal funds sold and securities
 purchased under agreement to resell                        79         225
                                                  ------------ -----------
   Total interest income                                12,360      13,452
                                                  ------------ -----------
Interest expense:
   Interest on certificates of deposit $100 or
    more                                                   675       1,105
   Interest on other deposits                            3,369       4,266
   Interest on borrowings                                2,629       2,460
                                                  ------------ -----------
Total interest expense                                   6,673       7,831
                                                  ------------ -----------
Net interest income                                      5,687       5,621
Provision for loan losses                                  150          --
                                                  ------------ -----------
Net interest income after provision for loan
 losses                                                  5,537       5,621
                                                  ------------ -----------
Other income:
   Service charges, commissions and fees                   529         419
   Other income                                             99         117
   Annuity and insurance                                    17          63
   Bank owned life insurance                               221         223
   Net securities gains                                     --         588
                                                  ------------ -----------
Total other income                                         866       1,410
                                                  ------------ -----------
Other expense:
   Salaries and employee benefits                        2,352       3,142
   Occupancy, net                                          759         723
   Premises and equipment                                  366         462
   Professional and consulting                             172         539
   Stationery and printing                                  95         159
   Marketing and advertising                               160         163
   Computer expense                                        141         165
   Other                                                   908       1,075
                                                  ------------ -----------
Total other expense                                      4,953       6,428
                                                  ------------ -----------
Income before income tax expense (benefit)               1,450         603
Income tax expense (benefit)                               233        (706)
                                                  ------------ -----------
Net income                                        $      1,217 $     1,309
                                                  ============ ===========
Earnings per share:
   Basic                                          $       0.09 $      0.09
   Diluted                                        $       0.09 $      0.09
                                                  ------------ -----------
Weighted average common shares outstanding:
   Basic                                            13,145,078  13,910,450
   Diluted                                          13,163,917  13,986,333
                                                  ============ ===========




SUMMARY SELECTED YEAR-TO-DATE STATISTICAL INFORMATION AND FINANCIAL DATA

(Dollars in Thousands, Except per Share Data)

                                        3/31/2008   12/31/2007  3/31/2007
                                        ----------  ----------  ----------
Statements of Income Data:
Interest income                         $   12,360  $   12,797  $   13,452
Interest expense                             6,673       7,625       7,831
Net interest income                          5,687       5,172       5,621
Provision for loan losses                      150         150          --
Net interest income after provision for
 loan losses                                 5,537       5,022       5,621
Other income                                   866         874       1,410
Other expense                                4,953       6,034       6,428
Income before income tax expense             1,450        (138)        603
Income tax (benefit) expense                   233        (670)       (706)
Net income                              $    1,217  $      532  $    1,309
Earnings per share:
Basic                                   $     0.09  $     0.04  $     0.09
Diluted                                 $     0.09  $     0.04  $     0.09
Statements of Condition Data:
Investments                             $  281,746  $  314,194  $  381,493
Total loans                                565,025     551,669     530,573
Goodwill and other intangibles              17,179      17,204      17,283
Total assets                               995,167   1,017,645   1,048,966
Deposits                                   622,924     699,070     722,648
Borrowings                                 273,869     218,109     215,172
Stockholders' equity                    $   85,401  $   85,278  $   98,163
Dividend Data:
Dividends
Cash dividends                          $    1,168  $    1,197  $    1,195
Dividend payout ratio                        95.97%     225.00%      91.29%
Cash dividends per share                $     0.09  $     0.09  $     0.09
Weighted Average Common Shares
 Outstanding:
Basic                                   13,145,078  13,441,082  13,910,450
Diluted                                 13,163,917  13,469,764  13,986,333
Operating Ratios:
Return on average assets                      0.50%       0.22%       0.50%
Average stockholders’ equity to average
 assets                                       8.87%       8.82%       9.31%
Return on average equity                      5.60%       2.44%       5.37%
Return on average tangible
 stockholders’ equity                         6.98%       3.04%       6.53%
Book value
Book value per common share             $     6.51  $     6.48  $     7.06
Tangible book value per common share    $     5.20  $     5.17  $     5.81
Non-Financial Information:
Common stockholders of record                  666         679         706
Staff-full time equivalent                     167         172         187

Contact Information

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

    Joseph Gangemi
    Investor Relations
    (908) 206-2886