Center Bancorp, Inc. Reports Fourth Quarter Net Income Available To Common Shareholders Of $4.4 Million Or $0.27 Per Share And Full Year 2012 Earnings Available To Common Shareholders Of $17.2 Million Or $1.05 Per Share
UNION, N.J., Jan. 25, 2013 (GLOBE NEWSWIRE) -- Center Bancorp, Inc. (Nasdaq:CNBC) (the "Corporation", or "Center"), parent company of Union Center National Bank ("UCNB" or the "Bank"), today reported operating results for the fourth quarter ended December 31, 2012. Net income available to common stockholders amounted to $4.4 million, or $0.27 per fully diluted common share, for the quarter ended December 31, 2012, as compared with net income available to common stockholders of $3.2 million, or $0.20 per fully diluted common share, for the quarter ended December 31, 2011. For the twelve months ended December 31, 2012, net income available to common stockholders amounted to $17.2 million, or $1.05 per fully diluted common share, compared to $13.1 million, or $0.80 per fully diluted common share, for the same period in 2011. "Our fourth quarter operating performance remained strong and was characterized by solid revenue growth, positive organic loan generation and a continuation of our stable and favorable asset quality profile. We continue to move forward with momentum in expanding our presence in key markets. With the opening of our Englewood office we are working to solidify and expand the service relationship with our new customers and remain excited by the potential to create incremental shareholder value from our strategic growth. We believe that this type of sequential earnings performance demonstrates the Corporation's commitment to achieving meaningful growth in earnings performance -- an essential component of providing consistent and favorable long-term returns to our shareholders," said Anthony C. Weagley, President and Chief Executive Officer of Union Center National Bank. Highlights for the quarter include:
Strong balance sheet with improved credit trends compared to prior year.
At December 31, 2012, total loans amounted to $889.7 million, an increase of $134.7 million compared to total loans at December 31, 2011.
Noninterest expense decreased $29,000, or 0.47 percent, for the three months ended December 31, 2012 compared to the quarter ended December 31, 2011
Reduction in non-performing assets, to 0.31 percent of total assets at December 31, 2012, compared to 0.34 percent at September 30, 2012 and 0.59 percent at December 31, 2011. The allowance for loan losses as a percentage of total non-performing loans was 278.9 percent at December 31, 2012 compared to 184.9 percent at September 30, 2012 and 121.5 percent at December 31, 2011.
The Tier 1 leverage capital ratio was 9.02 percent at December 31, 2012, compared to 8.96 percent at September 30, 2012, and 9.29 percent at December 31, 2011, exceeding regulatory guidelines in all periods.
Tangible book value per common share rose to $8.11 at December 31, 2012, compared to $6.60 at December 31, 2011 and $7.90 at September 30, 2012.
The efficiency ratio for the fourth quarter of 2012 on an annualized basis was 46.9 percent as compared to 53.7 percent in the fourth quarter of 2011 and 47.7 percent in the third quarter of 2012.
Deposits increased $185.5 million to $1.3 billion at December 31, 2012, from $1.1 billion at December 31, 2011 in part as a result of the Saddle River Valley Bank transaction.
Selected Financial Ratios (unaudited; annualized where applicable)
As of or for the quarter ended:
12/31/12
9/30/12
6/30/12
3/31/12
12/31/11
Return on average assets
1.11%
1.13%
1.16%
1.16%
1.03%
Return on average equity
11.17%
11.67%
11.96%
12.05%
10.72%
Net interest margin (tax equivalent basis)
3.32%
3.28%
3.29%
3.39%
3.50%
Loans / deposits ratio
68.07%
67.28%
68.70%
68.36%
67.32%
Stockholders' equity / total assets
9.86%
9.75%
9.86%
9.62%
9.49%
Efficiency ratio (1)
46.9%
47.7%
47.1%
49.3%
53.7%
Book value per common share
$ 9.14
$ 8.93
$ 8.36
$ 8.01
$ 7.63
Return on average tangible equity (1)
12.49%
13.12%
13.53%
13.70%
12.25%
Tangible common stockholders' equity / tangible assets (1)
8.22%
8.09%
8.08%
7.81%
7.61%
Tangible book value per common share (1)
$ 8.11
$ 7.90
$ 7.33
$ 6.98
$ 6.60
(1) Information reconciling non-GAAP measures to GAAP measures is presented elsewhere in this press release.
Non-performing assets (NPAs) at the end of the fourth quarter totaled $5.0 million, or 0.31 percent of total assets, as compared with $8.5 million, or 0.59 percent, at December 31, 2011 and $5.5 million, or 0.34 percent, at September 30, 2012. "Asset quality remains a primary focus, and our actions with respect to asset quality have placed us near the top of all publicly traded banks and thrifts in the state of New Jersey," said Mr. Weagley. "At the same time, we continue to cautiously maintain our reserves for any potential loan losses."
Net Interest Income For the three months ended December 31, 2012, total interest income on a fully taxable equivalent basis increased $1.2 million or 8.6 percent, to $14.8 million, compared to the three months ended December 31, 2011. Total interest expense decreased by $260,000, or 8.4 percent, to $2.8 million, for the three months ended December 31, 2012, compared to the same period last year. Net interest income on a fully taxable equivalent basis was $12.0 million for the three months ended December 31, 2012, increasing $1.5 million, or 13.7 percent, from $10.5 million for the comparable period in 2011. Compared to 2011, for the three months ended December 31, 2012, average interest earning assets increased $237.9 million while net interest spread and margin, on a tax-equivalent basis, decreased on an annualized basis by 21 basis points and 18 basis points, respectively. For the quarter ended December 31, 2012, the Corporation's net interest margin on a fully taxable equivalent annualized basis decreased to 3.32 percent as compared to 3.50 percent for the same three month period in 2011. The 8.4 percent decrease in interest expense reflects a favorable shift in the deposit mix and the impact of the sustained low levels in short-term interest rates, offsetting higher volumes of interest bearing deposits. The average cost of funds declined 21 basis points to 0.92 percent from 1.13 percent for the quarter ended December 31, 2011 and on a linked sequential quarter decreased 3 basis points compared to the third quarter of 2012. For the quarter ended December 31, 2012, the Corporation's annualized net interest spread decreased to 3.19 percent as compared to 3.40 percent for the same three month period in 2011.
Earnings Summary for the Period Ended December 31, 2012
The following tables present condensed consolidated statement of income data for the periods indicated.
Condensed Consolidated Statements of Income (unaudited)
(dollars in thousands, except per share data)
For the quarter ended:
12/31/12
9/30/12
6/30/12
3/31/12
12/31/11
Net interest income
$ 11,422
$ 11,183
$ 10,546
$ 10,345
$ 10,162
Provision for loan losses
100
225
(107)
107
300
Net interest income after provision for loan losses
11,322
10,958
10,653
10,238
9,862
Other income
1,016
2,635
1,604
1,955
1,866
Other expense
6,193
7,507
5,690
5,807
6,222
Income before income tax expense
6,145
6,086
6,567
6,386
5,506
Income tax expense
1,676
1,632
2,214
2,155
1,884
Net income
$ 4,469
$ 4,454
$ 4,353
$ 4,231
$ 3,622
Net income available to common stockholders
$ 4,441
$ 4,426
$ 4,269
$ 4,090
$ 3,238
Earnings per common share:
Basic
$ 0.27
$ 0.27
$ 0.26
$ 0.25
$ 0.20
Diluted
$ 0.27
$ 0.27
$ 0.26
$ 0.25
$ 0.20
Weighted average common shares outstanding:
Basic
16,347,564
16,347,088
16,333,653
16,332,327
16,311,193
Diluted
16,363,698
16,362,635
16,341,767
16,338,162
16,327,990
For the twelve months ended December 31, 2012, net interest income on a fully taxable equivalent basis amounted to $45.4 million, compared to $40.6 million for the same period in 2011. For the twelve month period ended December 31, 2012, interest income increased by $4.4 million while interest expense decreased by $401,000 from the same period last year. Compared to the same period in 2011, for the twelve months ended December 31, 2012, average interest earning assets increased $216.7 million while net interest spread and margin decreased on a tax-equivalent basis by 20 basis points and 21 basis points, respectively.
Commenting on the Corporation's net interest margins, Mr. Weagley remarked: "Prior compression during quarterly periods of 2012, occurred primarily as result of a continued high liquidity pool carried during the periods, which has not been entirely offset by investing activity; however, during the fourth quarter prior action to improve margins started to abate further compression. We expect an improvement in margin, principally given the continued volume of asset deployment into loans from cash and elimination of temporary factors holding the margin down."
Other Income The following tables present the components of other income for the periods indicated.
(in thousands, unaudited)
For the quarter ended:
12/31/12
9/30/12
6/30/12
3/31/12
12/31/11
Service charges on deposit accounts
$ 324
$ 333
$ 287
$ 314
$ 344
Loan related fees
220
85
95
110
149
Net gains on sales of loans held for sale
170
88
100
126
99
Annuities and insurance commissions
67
45
48
44
29
Debit card and ATM fees
125
126
134
132
137
Bank-owned life insurance
282
239
246
251
258
Net investment securities gains (losses)
(201)
763
513
937
817
Bargain gain on acquisition
—
899
—
—
—
Other fees
29
57
181
41
33
Total other income
$ 1,016
$ 2,635
$ 1,604
$ 1,955
$ 1,866
Other income decreased $850,000 for the fourth quarter of 2012 compared with the same period in 2011. During the fourth quarter of 2012, the Corporation recorded net investment securities losses of $201,000 compared to $817,000 in net investment securities gains for the same period last year. Excluding net securities losses, the Corporation recorded other income of $1.2 million for the three months ended December 31, 2012 compared to other income, excluding net securities gains, of $1.0 million for the fourth quarter of 2011 and $1.9 million for the three months ended September 30, 2012. The increase in other income in the fourth quarter of 2012 when compared to the fourth quarter of 2011 (excluding securities losses/gains) was primarily from an increase of $71,000 in loan related fees, an increase of $71,000 in gains on loans held for sale, an increase in bank owned life insurance income of $24,000 and an increase of $38,000 in annuities and insurance commissions, partially offset by a $20,000 decline in service charges on deposit accounts, a $12,000 decline in debit card and ATM fees, and a $4,000 decline in other income .
For the twelve months ended December 31, 2012, total other income decreased $268,000 compared to the same period in 2011, as a $899,000 bargain gain on acquisition, $311,000 in higher loan fees and higher net gains on sale of loans held for sale, a $150,000 gain from the sale of judgments and $94,000 in higher annuity commissions were offset by lower net securities gains of $1.6 million and decreases of $121,000 in fee income and $20,000 in BOLI revenue. Excluding net securities gains and losses and the 2012 bargain gain on acquisition, the Corporation recorded other income of $4.3 million for the twelve months ended December 31, 2012 compared to other income, excluding net securities gains, of $3.8 million for the comparable period in 2011, an increase of $455,000 or 11.8 percent.
Total other expense for the fourth quarter of 2012 amounted to $6.2 million, which was approximately $1.3 million or 17.5 percent lower than other expense for the three months ended September 30, 2012; excluding repurchase agreement prepayment and termination fee and acquisition costs incurred during the third quarter of 2012, total other expense increased by $160,000 or 2.7 percent. Employee salaries and benefits increased $12,000, occupancy and equipment expense increased $203,000, stationery and printing expense increased $31,000, bank regulatory related expense increased $5,000, postage and delivery increased $6,000, ATM related expense increased $8,000, and all other expense increased $32,000; these increases were partially offset by decreases in professional and consulting of $17,000, marketing and advertising of $29,000 and computer expense of $28,000. Other Expense The following tables present the components of other expense for the periods indicated.
(in thousands, unaudited)
For the quarter ended:
12/31/12
9/30/12
6/30/12
3/31/12
12/31/11
Salaries
$ 2,495
$ 2,505
$ 2,347
$ 2,344
$ 2,290
Employee benefits
710
688
708
774
619
Occupancy and equipment
942
739
606
700
701
Professional and consulting
260
277
294
246
351
Stationery and printing
100
69
96
84
95
FDIC Insurance
293
292
270
299
328
Marketing and advertising
35
64
56
31
15
Computer expense
338
366
362
353
323
Bank regulatory related expenses
82
77
75
78
108
Postage and delivery
61
55
71
79
42
ATM related expenses
72
64
69
62
58
Other real estate owned, net
1
65
22
62
399
Amortization of core deposit intangible
10
10
11
13
12
Repurchase agreement prepayment and termination fee
—
1,012
—
—
—
Acquisition cost
10
472
—
—
—
All other expenses
784
752
703
682
881
Total other expense
$ 6,193
$ 7,507
$ 5,690
$ 5,807
$ 6,222
The decrease in other expense for the three months ended December 31, 2012, when compared to the quarter ended December 31, 2011, was approximately $29,000. Decreases primarily included professional and consulting of $91,000, FDIC insurance of $35,000, bank regulatory related expense of $26,000, OREO expense of $398,000 and all other expenses of $97,000. These decreases were partially offset by increases of $296,000 in salaries and benefit expense, $241,000 in occupancy and equipment expense, which primarily reflect the increased costs of the Saddle River Valley Bank acquisition and the new Englewood office.
For the twelve months ended December 31, 2012, total other expense increased $1.8 million, or 7.5 percent, compared to the same period in 2011. Excluding the repurchase agreement prepayment and termination fee and acquisition cost, the increase was $260,000, or 1.1 percent. Increases primarily included salaries and employee benefits of $1.0 million, $40,000 in occupancy and equipment, which primarily reflect the increased costs of the Saddle River Valley Bank acquisition and the new Englewood office , $55,000 in marketing and advertising and $107,000 in computer expense. These increases were partially offset by decreases of $558,000 in FDIC insurance expense, $79,000 in professional and consulting, $248,000 in OREO expense and $82,000 in all other expenses.
Statement of Condition Highlights at December 31, 2012
Total assets amounted to $1.6 billion at December 31, 2012.
Total loans were $889.7 million at December 31, 2012, increasing $134.7 million, or 17.8 percent, from December 31, 2011. Total real estate loans increased $86.9 million, or 16.1 percent, from December 31, 2011. Commercial loans increased $47.6 million, or 22.2 percent, year over year.
Investment securities totaled $554.9 million at December 31, 2012, reflecting an increase of $68.1 million or 14.0 percent from December 31, 2011.
Deposits totaled $1.3 billion at December 31, 2012, increasing $185.5 million, or 16.5 percent, since December 31, 2011. Total Demand, Savings, Money Market, and certificates of deposit less than $100,000 increased $212.7 million or 21.6 percent from December 31, 2011. Time certificates of deposit of $100,000 or more decreased by $27.2 million or 19.7 percent from December 31, 2011. The increases were attributable to continued core deposit growth in overall segments of the deposit base, as well as the Saddle River Valley Bank transaction.
Borrowings totaled $146.0 million at December 31, 2012, decreasing $15.0 million from December 31, 2011, primarily due to the termination of a $10.0 million repurchase agreement and the prepayment of a $5.0 million FHLB New York advance.
Condensed Statements of Condition The following tables present condensed statements of condition as of the dates indicated.
Condensed Consolidated Statements of Condition (unaudited)
(in thousands)
At quarter ended:
12/31/12
9/30/12
6/30/12
3/31/12
12/31/11
Cash and due from banks
$ 104,134
$ 100,106
$ 73,668
$ 78,207
$ 111,101
Interest bearing deposits with banks
2,004
2,002
12,000
—
—
Investment securities:
Available for sale
496,815
509,605
467,190
454,994
414,507
Held to maturity
58,064
56,503
62,997
69,610
72,233
Loans held for sale, at lower of cost or fair value
1,491
1,055
501
2,060
1,018
Loans
889,672
869,998
806,953
788,562
754,992
Allowance for loan losses
(10,237)
(10,240)
(10,221)
(9,754)
(9,602)
Restricted investment in bank stocks, at cost
8,964
8,964
9,139
9,233
9,233
Premises and equipment, net
13,563
13,564
12,218
12,266
12,327
Goodwill
16,804
16,804
16,804
16,804
16,804
Core deposit intangible
54
64
73
85
98
Bank-owned life insurance
34,961
29,679
29,440
29,194
28,943
Other real estate owned
1,300
—
453
558
591
Other assets
12,176
13,975
19,807
24,776
20,493
Total assets
$ 1,629,765
$ 1,612,079
$ 1,501,022
$ 1,476,595
$ 1,432,738
Deposits
$ 1,306,922
$ 1,293,013
$ 1,174,649
$ 1,153,473
$ 1,121,415
Borrowings
151,155
151,205
166,262
166,155
166,155
Other liabilities
10,997
10,676
12,128
14,886
9,252
Stockholders' equity
160,691
157,185
147,983
142,081
135,916
Total liabilities and stockholders' equity
$ 1,629,765
$ 1,612,079
$ 1,501,022
$ 1,476,595
$ 1,432,738
The following tables reflect the composition of the Corporation's deposits as of the dates indicated.
Deposits (unaudited)
(in thousands)
At quarter ended:
12/31/12
9/30/12
6/30/12
3/31/12
12/31/11
Demand:
Non-interest bearing
$ 215,071
$ 192,321
$ 181,282
$ 172,342
$ 167,164
Interest-bearing
217,922
222,660
199,064
197,648
215,523
Savings
216,274
218,732
207,151
209,436
200,930
Money market
493,836
488,189
432,507
411,626
351,237
Time
163,819
171,111
154,645
162,421
186,561
Total deposits
$ 1,306,922
$ 1,293,013
$ 1,174,649
$ 1,153,473
$ 1,121,415
Loans The following reflects the composition of the Corporation's loan portfolio as of the dates indicated.
Loans (unaudited)
(in thousands)
At quarter ended:
12/31/12
9/30/12
6/30/12
3/31/12
12/31/11
Real estate loans:
Residential
$ 158,361
$ 162,070
$ 147,431
$ 147,607
$ 150,749
Commercial
428,673
424,574
381,348
371,855
358,245
Construction
40,272
40,867
33,521
34,093
31,378
Total real estate loans
627,306
627,511
562,300
553,555
540,372
Commercial loans
261,791
242,008
244,294
234,549
214,167
Consumer and other loans
452
324
196
399
436
Total loans before deferred fees and costs
889,549
869,843
806,790
788,503
754,975
Deferred costs, net
123
155
163
59
17
Total loans
$ 889,672
$ 869,998
$ 806,953
$ 788,562
$ 754,992
The Corporation's net loans in the fourth quarter of 2012 increased $19.7 million, to $879.4 million at December 31, 2012, from $859.8 million at September 30, 2012. This includes allowance for loan losses of $10.2 million at both December 31, 2012 and September 30, 2012. The loan growth during the period amounted to approximately $89.2 million in new loans and advances during the fourth quarter. This growth was offset in part by prepayments of $31.5 million coupled with scheduled payments, maturities and payoffs of $38.1 million. Average loans during the fourth quarter of 2012 totaled $864.9 million as compared to $726.0 million during the fourth quarter of 2011, representing a 19.1 percent increase.
At the end of the fourth quarter of 2012, the loan portfolio remained well diversified with commercial and industrial (C&I) loans, including owner-occupied commercial real estate loans, accounting for 30.4 percent of the loan portfolio, commercial real estate loans representing 45.0 percent of the loan portfolio, and personal and other loans representing 20.1 percent of the loan portfolio. Construction and development loans accounted for only 4.5 percent of the loan portfolio. The loan volume increase within the portfolio amounted to $70.4 million in commercial and commercial real estate loans, $8.9 million in construction loans, and $7.6 million in residential mortgage loans. At December 31, 2011, net loans totaled $745.4 million.
At December 31, 2012, the Corporation had $242.2 million in overall undisbursed loan commitments, which includes largely unused commercial lines of credit, home equity lines of credit and available usage from active construction facilities. Included in the overall undisbursed commitments are the Corporation's "Approved, Accepted but Unfunded" pipeline, which includes approximately $58.1 million in commercial and commercial real estate loans and $10.9 million in residential mortgages expected to fund over the next 90 days. Asset Quality Non-accrual loans decreased from $5.0 million at September 30, 2012 to $3.6 million at December 31, 2012. Loans past due 90 days or more and still accruing decreased from $570,000 at September 30, 2012 to $55,000 at December 31, 2012. Other real estate owned at December 31, 2012 was $1.3 million, as compared to zero at September 30, 2012. Performing troubled debt restructured loans, which are performing loans, decreased from $6.9 million at September 30, 2012 to $6.8 million at December 31, 2012, reflecting the receipt of payments of $38,000 on loans in performing status. "We continued to move forward with resolution of outstanding credit quality issues during the fourth quarter. As previously stated, our approach to credit management and diligence at monitoring and managing problem credits has aided in the continued reduction in the levels of nonaccrual loans and problem credits. Our underwriting and overall credit philosophies remain conservative and have provided the Bank with the high quality well-diversified loan portfolio that the Corporation has today," commented Mr. Weagley.
The following tables present the components of non-performing assets and other asset quality data for the periods indicated.
(dollars in thousands, unaudited)
As of or for the quarter ended:
12/31/12
9/30/12
6/30/12
3/31/12
12/31/11
Non-accrual loans
$ 3,616
$ 4,967
$ 3,943
$ 7,125
$ 6,871
Loans 90 days or more past due and still accruing
55
570
1,026
1,062
1,029
Total non-performing loans
3,671
5,537
4,969
8,187
7,900
Other non-performing assets
—
—
—
—
—
Other real estate owned
1,300
—
453
558
591
Total non-performing assets
$ 4,971
$ 5,537
$ 5,422
$ 8,745
$ 8,491
Performing troubled debt restructured loans
$ 6,813
$ 6,851
$ 8,736
$ 6,900
$ 7,459
Non-performing assets / total assets
0.31%
0.34%
0.36%
0.59%
0.59%
Non-performing loans / total loans
0.41%
0.64%
0.62%
1.04%
1.05%
Net charge-offs (recoveries)
$ 103
$ 206
$ (574)
$ (45)
$ 234
Net charge-offs (recoveries) / average loans (1)
0.05%
0.10%
(0.29)%
(0.02)%
0.13%
Allowance for loan losses / total loans
1.15%
1.18%
1.27%
1.24%
1.27%
Allowance for loan losses / non-performing loans
278.9%
184.9%
205.7%
119.1%
121.5%
Total assets
$1,629,765
$1,612,079
$1,501,022
$1,476,595
$1,432,738
Total loans
889,672
869,998
806,953
788,562
754,981
Average loans
864,829
850,059
790,382
755,813
725,974
Allowance for loan losses
10,237
10,240
10,221
9,754
9,602
(1) Annualized.
At December 31, 2012, non-performing assets totaled $5.0 million, or 0.31 percent of total assets, as compared with $8.5 million, or 0.59 percent, at December 31, 2011 and $5.5 million, or 0.34 percent, at September 30, 2012. The decrease from December 31, 2011 was achieved notwithstanding the addition of several new residential loans (totaling approximately $1.2 million) and construction and commercial loans (totaling approximately $1.0 million) into non-performing status. This was more than offset by decreases from payoffs and pay-downs of $1.7 million, total charge-offs or write downs of $175,000, the transfer to other real estate owned during the last twelve months of $1.3 million and the return to performing status of $3.9 million.
The allowance for loan losses at December 31, 2012 amounted to approximately $10.2 million, or 1.15 percent of total loans. Excluding loans acquired from Saddle River Valley Bank and carried at fair value, the coverage ratio was 1.22 percent, compared to 1.27 percent of total loans at December 31, 2011. The allowance for loan losses as a percentage of total non-performing loans was 278.9 percent at December 31, 2012 compared to 121.5 percent at December 31, 2011. A discussion of the significant components of non-performing assets at December 31, 2012 is outlined below.
One non-accrual relationship totaling $2.1 million, secured by senior liens on two separate residential properties, located in Morris County, New Jersey, has been in foreclosure; no material loss to the Corporation is anticipated, although no assurance can be made with respect to the outcome at this time. One of the two loans secured by residential Morris County properties totaling $699,000 was modified, and is current with its modification plan. A deed in lieu was accepted in the amount of $1.3 million on the second property, which was subsequently transferred to OREO. The Corporation is marketing the property for sale.
Two loans acquired from Saddle River Valley Bank during the third quarter of 2012 were deemed impaired at the time of acquisition.
The fair value at acquisition of the first loan had been calculated at $453,100, a steep discount to the borrower's true balance. The Corporation has negotiated a full settlement with the borrower in lieu of foreclosure on multiple residential properties in New York State, which is expected to result in proceeds at or about the loan's fair value. The transaction is expected to be completed in the first quarter of 2013.
The second loan when acquired had a calculated fair value of $310,585. Similarly, the value of this loan was a significant discount to the borrower's true balance. A sale of the loan, secured with a property in New York State, is expected to close in the first quarter of 2013 at a value in excess of the loan's fair value.
No assurance can be made with respect to the outcome of either transaction. Capital At December 31, 2012, total stockholders' equity amounted to $160.7 million, or 9.86 percent of total assets. Tangible common stockholders' equity was $132.6 million, or 8.22 percent of tangible assets, compared to 7.61 percent at December 31, 2011. Book value per common share was $9.14 at December 31, 2012, compared to $7.63 at December 31, 2011. Tangible book value per common share was $8.11 at December 31, 2012 compared to $6.60 at December 31, 2011. At December 31, 2012, the Corporation's Tier 1 leverage capital ratio was 9.02 percent, the Tier 1 risk-based capital ratio was 11.39 percent and the total risk-based capital ratio was 12.22 percent. Tier 1 capital increased to approximately $143.8 million at December 31, 2012 from $129.4 million at December 31, 2011, reflecting an increase in retained earnings. At December 31, 2012, 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"). Non-GAAP Financial Measures Reported amounts are presented in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The Corporation's management believes that the supplemental non-GAAP information provided in this press release is utilized by market analysts and others to evaluate a company's financial condition and, therefore, that such information is useful to investors. These disclosures should not be viewed as a substitute for financial results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures presented by other companies.
"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. Tangible stockholders' equity is defined as common stockholders' equity less goodwill and other intangible assets. The return on average tangible stockholders' equity measure may be important to investors that are interested in analyzing the Corporation's return on equity excluding the effect of changes in intangible assets on equity.
The following tables present a reconciliation of average tangible stockholders' equity and a reconciliation of return on average tangible stockholders' equity for the periods presented.
(dollars in thousands)
For the quarter ended:
12/31/12
9/30/12
6/30/12
3/31/12
12/31/11
Net income
$ 4,469
$ 4,454
$ 4,353
$ 4,231
$ 3,622
Average stockholders' equity
$ 160,006
$ 152,686
$ 145,607
$ 140,411
$ 135,142
Less: Average goodwill and other intangible assets
16,864
16,874
16,884
16,897
16,910
Average tangible stockholders' equity
$ 143,142
$ 135,812
$ 128,723
$ 123,514
$ 118,232
Return on average stockholders' equity
11.17%
11.67%
11.96%
12.05%
10.72%
Add: Average goodwill and other intangible assets
1.32%
1.45%
1.57%
1.65%
1.53%
Return on average tangible stockholders' equity
12.49%
13.12%
13.53%
13.70%
12.25%
"Tangible book value per common share" is a non-GAAP financial measure and represents tangible stockholders' equity (or tangible book value) calculated on a per common share basis. The disclosure of tangible book value per common share may be helpful to those investors who seek to evaluate the Corporation's book value per common share without giving effect to goodwill and other intangible assets.
The following tables present a reconciliation of stockholders' equity to tangible common stockholders' equity and book value per common share to tangible book value per common share as of the dates presented.
(dollars in thousands, except per share data)
At quarter ended:
12/31/12
9/30/12
6/30/12
3/31/12
12/31/11
Common shares outstanding
16,347,915
16,347,088
16,347,088
16,332,327
16,332,327
Stockholders' equity
$ 160,691
$ 157,185
$ 147,983
$ 142,081
$ 135,916
Less: Preferred stock
11,250
11,250
11,250
11,250
11,250
Less: Goodwill and other intangible assets
16,858
16,868
16,877
16,889
16,902
Tangible common stockholders' equity
$ 132,583
$ 129,067
$ 119,856
$ 113,942
$ 107,764
Book value per common share
$ 9.14
$ 8.93
$ 8.36
$ 8.01
$ 7.63
Less: Goodwill and other intangible assets
1.03
1.03
1.03
1.03
1.03
Tangible book value per common share
$ 8.11
$ 7.90
$ 7.33
$ 6.98
$ 6.60
"Tangible common stockholders' equity/tangible assets" is a non-GAAP financial measure and is defined as tangible common stockholders' equity as a percentage of total assets minus goodwill and other intangible assets. This measure may be important to investors that are interested in analyzing the financial condition of the Corporation without consideration of intangible assets, inasmuch as tangible common stockholders' equity and tangible assets both exclude goodwill and other intangible assets.
The following tables present a reconciliation of total assets to tangible assets and a comparison of total stockholders' equity/total assets to tangible common stockholders' equity/tangible assets as of the dates presented.
(dollars in thousands)
At quarter ended:
12/31/12
9/30/12
6/30/12
3/31/12
12/31/11
Total assets
$1,629,765
$1,612,079
$1,501,022
$1,476,595
$1,432,738
Less: Goodwill and other intangible assets
16,858
16,868
16,877
16,889
16,902
Tangible assets
$1,612,907
$1,595,211
$1,484,145
$1,459,706
$1,415,836
Total stockholders' equity / total assets
9.86%
9.75%
9.86%
9.62%
9.49%
Tangible common stockholders' equity / tangible assets
8.22%
8.09%
8.08%
7.81%
7.61%
Other income is presented in the table below including and excluding net gains. We believe that many investors desire to evaluate other income without regard for gains.
(in thousands)
For the quarter ended:
12/31/12
9/30/12
6/30/12
3/31/12
12/31/11
Other income
$ 1,016
$ 2,635
$ 1,604
$ 1,955
$ 1,866
Less: Net investment securities gains (losses)
(201)
763
513
937
817
Less: Bargain gain on acquisition
—
899
—
—
—
Other income, excluding net investment securities gains ( losses) and bargain gain on acquisition
$ 1,217
$ 973
$ 1,091
$ 1,018
$ 1,049
"Efficiency ratio" is a non-GAAP financial measure and is defined as other expense as a percentage of net interest income on a tax equivalent basis plus other income, excluding net securities gains, calculated as follows:
(dollars in thousands)
For the quarter ended:
12/31/12
9/30/12
6/30/12
3/31/12
12/31/11
Other expense
$ 6,193
$ 7,507
$ 5,690
$ 5,807
$ 6,222
Less: Repurchase agreement termination fee
—
1,012
—
—
—
Less: Acquisition cost
10
472
—
—
—
Other expense, excluding extraordinary items
$ 6,183
$ 6,023
$ 5,690
$ 5,807
$ 6,222
Net interest income (tax equivalent basis)
$ 11,969
$ 11,663
$ 10,990
$ 10,761
$ 10,531
Other income, excluding net investment securities gains
1,217
973
1,091
1,018
1,049
Total
$ 13,186
$ 12,636
$ 12,081
$ 11,779
$ 11,580
Efficiency ratio
46.9%
47.7%
47.1%
49.3%
53.7%
The following table sets forth the Corporation's consolidated average statements of condition for the periods presented.
Condensed Consolidated Average Statements of Condition (unaudited)
(in thousands)
For the quarter ended:
12/31/12
9/30/12
6/30/12
3/31/12
12/31/11
Investment securities
Available for sale
$ 517,179
$ 508,864
$ 473,963
$ 443,109
$ 409,480
Held to maturity
58,929
60,275
66,626
72,401
69,587
Loans
864,829
850,059
790,382
755,813
725,974
Allowance for loan losses
(10,188)
(10,197)
(9,813)
(9,683)
(9,506)
All other assets
181,306
172,032
177,100
199,631
214,984
Total assets
$ 1,612,055
$ 1,581,033
$ 1,498,258
$ 1,461,271
$ 1,410,519
Non-interest bearing deposits
$ 205,278
$ 183,858
$ 173,248
$ 167,921
$ 166,027
Interest-bearing deposits
1,079,351
1,066,849
1,002,230
976,958
934,774
Borrowings
151,364
164,294
166,299
166,375
166,155
Other liabilities
16,056
13,346
10,874
9,606
8,421
Stockholders' equity
160,006
152,686
145,607
140,411
135,142
Total liabilities and stockholders' equity
$ 1,612,055
$ 1,581,033
$ 1,498,258
$ 1,461,271
$ 1,410,519
About Center Bancorp Center Bancorp, Inc. is a bank holding company, which operates Union Center National Bank, its main subsidiary. Chartered in 1923, Union Center National Bank is one of the oldest national banks headquartered in the state of New Jersey and now ranks as the third largest national bank headquartered in the state. Union Center National Bank is currently the largest commercial bank headquartered in Union County. Its primary market niche is its commercial banking business. The Bank focuses its lending activities on commercial lending to small and medium-sized businesses, real estate developers and high net worth individuals.
The Bank, through its Private Banking and Wealth Management Division, which includes its wholly-owned subsidiary, Center Financial Group LLC, provides personalized wealth management and advisory services to high net worth individuals and families. Our services include banking, liquidity management, investment services, custody, tailored lending, wealth planning, trust and fiduciary services, insurance, family wealth advisory services and philanthropic advisory services. The Bank through a strategic partnership between the Bank's Private Banking Division and Alexander, Troy & Company ("AT&CO."), Family Office Services, of Katonah, New York, provides customized financial and administrative services to high-net worth individuals.
Center, through a strategic partnership with Compass Financial Management, LLC and ING, offers pension/401(k) planning services. Compass is an Investment Advisory Company with five decades of cumulative experience providing investment services in a personal, professional and attentive manner. They provide discretionary private investment management for individuals and corporate accounts as well as 401(k) advisory services. The Bank currently operates 15 banking locations in Union, Morris and Bergen Counties in New Jersey. Banking centers are located in Union Township (5 locations), Berkeley Heights, Boonton/Mountain Lakes, Madison, Millburn/Vauxhall, Morristown, Oakland, Saddle River, Springfield, and Summit, New Jersey. The Bank's primary market area is comprised of Union, Morris and Bergen Counties, New Jersey. Also, the Corporation opened the new Englewood banking center, located in downtown Englewood, NJ, in December. For further information regarding Center Bancorp, Inc., please visit our web site at http://www.centerbancorp.com or call (800) 862-3683. For information regarding Union Center National Bank, please visit our web site at www.ucnb.com . Forward-Looking Statements All non-historical statements in this press release (including statements regarding our expanding our presence in key markets, our potential to create incremental shareholder value from our strategic growth, growth in earnings performance, the amount of the Small Business Lending Fund dividend and margin improvement, ) constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may use 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, Center Bancorp's ability to integrate Saddle River Valley Bank's branches into Center Bancorp's branch network, 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 economic recovery and the deregulation of the financial services industry, and other risks cited in the Corporation's most recent Annual Report on Form 10-K and other reports filed by the Corporation with the Securities and Exchange Commission. Actual results may differ materially from such forward-looking statements. Center Bancorp, Inc. assumes no obligation for updating any such forward-looking statement at any time.
CENTER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION
(Unaudited)
( Audited)
( in thousands, except for share and per share data)
December 31, 2012
December 31, 2011
ASSETS
Cash and due from banks
$ 104,134
$ 111,101
Interest bearing deposits with banks
2,004
—
Total cash and cash equivalents
106,138
111,101
Investment securities:
Available for sale
496,815
414,507
Held to maturity (fair value of $62,431 at December 31, 2012 and $74,922 at December 31, 2011)
58,064
72,233
Loans held for sale, at lower of cost or fair value
1,491
1,018
Loans
889,672
754,992
Less: Allowance for loan losses
10,237
9,602
Net loans
879,435
745,390
Restricted investment in bank stocks, at cost
8,964
9,233
Premises and equipment, net
13,563
12,327
Accrued interest receivable
6,849
6,219
Bank-owned life insurance
34,961
28,943
Goodwill
16,804
16,804
Prepaid FDIC assessments
811
1,884
Other real estate owned
1,300
591
Other assets
4,570
12,488
Total assets
$ 1,629,765
$ 1,432,738
LIABILITIES
Deposits:
Non-interest bearing
$ 215,071
$ 167,164
Interest-bearing:
Time deposits $100 and over
110,835
137,998
Interest-bearing transaction, savings and time deposits less than $100
981,016
816,253
Total deposits
1,306,922
1,121,415
Long-term borrowings
146,000
161,000
Subordinated debentures
5,155
5,155
Accounts payable and accrued liabilities
10,997
9,252
Total liabilities
1,469,074
1,296,822
STOCKHOLDERS' EQUITY
Preferred stock, $1,000 liquidation value per share, authorized 5,000,000 shares; issued 11,250 shares Series B at December 31, 2012 and December 31, 2011
11,250
11,250
Common stock, no par value, authorized 25,000,000 shares; issued 18,477,412 shares at December 31, 2012 and December 31, 2011; outstanding 16,347,915 shares at December 31, 2012 and 16,332,327 shares at December 31, 2011
110,056
110,056
Additional paid in capital
4,801
4,715
Retained earnings
46,753
32,695
Treasury stock, at cost (2,129,497 common shares at December 31, 2012 and 2,145,085common shares December 31, 2011)
(17,232)
(17,354)
Accumulated other comprehensive income (loss)
5,063
(5,446)
Total stockholders' equity
160,691
135,916
Total liabilities and stockholders' equity
$ 1,629,765
$ 1,432,738
CENTER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
(in thousands, except for share and per share data)
2012
2011
2012
2011
Interest income
Interest and fees on loans
$ 10,083
$ 9,197
$ 38,921
$ 36,320
Interest and dividends on investment securities:
Taxable
3,022
3,199
12,269
13,278
Tax-exempt
1,016
717
3,507
1,700
Dividends
141
150
567
629
Interest on federal funds sold and other short-term investment
1
—
8
—
Total interest income
14,263
13,263
55,272
51,927
Interest expense
Interest on certificates of deposit $100 or more
202
270
839
1,215
Interest on other deposits
1,163
1,172
4,569
4,305
Interest on borrowings
1,476
1,659
6,368
6,657
Total interest expense
2,841
3,101
11,776
12,177
Net interest income
11,422
10,162
43,496
39,750
Provision for loan losses
100
300
325
2,448
Net interest income after provision for loan losses
11,322
9,862
43,171
37,302
Other income
Service charges, commissions and fees
449
481
1,775
1,896
Annuities and insurance commissions
67
29
204
110
Bank-owned life insurance
282
258
1,018
1,038
Loan related fees
220
149
510
432
Net gains on sale of loans held for sale
170
99
484
251
Bargain gain on acquisition
—
—
899
—
Other
29
33
308
117
Other-than-temporary impairment losses on investment securities
(538)
(39)
(870)
(342)
Net other-than-temporary impairment losses on investment securities
(538)
(39)
(870)
(342)
Net gains on sale of investment securities
337
856
2,882
3,976
Net investment securities gains (losses)
(201)
817
2,012
3,634
Total other income
1,016
1,866
7,210
7,478
Other expense
Salaries and employee benefits
3,205
2,909
12,571
11,527
Occupancy and equipment
942
701
2,987
2,947
FDIC insurance
293
328
1,154
1,712
Professional and consulting
260
351
1,077
1,156
Stationery and printing
100
95
349
368
Marketing and advertising
35
15
186
131
Computer expense
338
323
1,419
1,312
Other real estate owned, net
1
399
150
398
Repurchase agreement prepayment and termination fee
—
—
1,012
—
Acquisition cost
10
—
482
—
Other
1,009
1,101
3,810
3,892
Total other expense
6,193
6,222
25,197
23,443
Income before income tax expense
6,145
5,506
25,184
21,337
Income tax expense
1,676
1,884
7,677
7,411
Net Income
4,469
3,622
17,507
13,926
Preferred stock dividends and accretion
28
384
281
820
Net income available to common stockholders
$ 4,441
$ 3,238
$ 17,226
$ 13,106
Earnings per common share
Basic
$ 0.27
$ 0.20
$ 1.05
$ 0.80
Diluted
$ 0.27
$ 0.20
$ 1.05
$ 0.80
Weighted Average Common Shares Outstanding
Basic
16,347,564
16,311,193
16,340,197
16,295,761
Diluted
16,363,698
16,327,990
16,351,046
16,314,899
CENTER BANCORP, INC. AND SUBSIDIARIESSELECTED QUARTERLY FINANCIAL AND STATISTICAL DATA (Unaudited)
Three Months Ended
(in thousands, except for share and per share data) (annualized where applicable)
12/31/2012
9/30/2012
12/31/2011
Statements of Income Data
Interest income
$ 14,263
$ 14,118
$ 13,263
Interest expense
2,841
2,935
3,101
Net interest income
11,422
11,183
10,162
Provision for loan losses
100
225
300
Net interest income after provision for loan losses
11,322
10,958
9,862
Other income
1,016
2,635
1,866
Other expense
6,193
7,507
6,222
Income before income tax expense
6,145
6,086
5,506
Income tax expense
1,676
1,632
1,884
Net income
$ 4,469
$ 4,454
$ 3,622
Net income available to common stockholders
$ 4,441
$ 4,426
$ 3,238
Earnings per Common Share
Basic
$ 0.27
$ 0.27
$ 0.20
Diluted
$ 0.27
$ 0.27
$ 0.20
Statements of Condition Data (Period-End)
Investment securities:
Available for sale
$ 496,815
$ 509,605
$ 414,507
Held for maturity( fair value $62,431, $60,946 and $74,922)
58,064
56,503
72,233
Loans held for sale, at lower of cost or fair value
1,491
1,055
1,018
Loans
889,672
869,998
754,992
Total assets
1,629,765
1,612,079
1,432,738
Deposits
1,306,922
1,293,013
1,121,415
Borrowings
151,155
151,205
166,155
Stockholders' equity
160,691
157,185
135,916
Common Shares Dividend Data
Cash dividends
$ 899
$ 899
$ 489
Cash dividends per share
$ 0.055
$ 0.055
$ 0.030
Dividend payout ratio
20.24%
20.31%
15.10%
Weighted Average Common Shares Outstanding
Basic
16,347,564
16,347,088
16,311,193
Diluted
16,363,698
16,362,635
16,327,990
Operating Ratios
Return on average assets
1.11%
1.13%
1.03%
Return on average equity
11.17%
11.67%
10.72%
Return on average tangible equity
12.49%
13.12%
12.25%
Average equity / average assets
9.93%
9.66%
9.58%
Book value per common share (period-end)
$ 9.14
$ 8.93
$ 7.63
Tangible book value per common share (period-end)
$ 8.11
$ 7.90
$ 6.60
Non-Financial Information (Period-End)
Common stockholders of record
551
554
563
Full-time equivalent staff
178
174
163
CONTACT: Investor Inquiries: Joseph D. Gangemi VP, Investor Relations (908) 206-2863 France Delle Donne VP, Director of Communications & PR (908) 206-2668
