Center Bancorp, Inc., Reports First Quarter Earnings.Business Editors UNION, N.J.--(BUSINESS WIRE)--April 15, 2003 Center Bancorp Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on , NM:CNBC CNBC Center for the Neural Basis of Cognition (artificial intelligence) CNBC Consumer News and Business Channel CNBC Congress of National Black Churches, Inc. ) parent company to Union Center National Bank of Union, New Jersey, today reported earnings results for the first quarter ended March 31, 2003. Net income for the first quarter of 2003 amounted to $1,686,000 or $.40 per fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, a decrease of 17.1% or $349,000 from the $2,035,000 or $.48 per fully diluted share earned for the comparable quarter of the previous year. Basic earnings per share were $.40, a decrease of 18.4% from $.49 earned in the first quarter of 2002. The Corporation's earnings results for the first quarter of 2003 reflected a decline in revenue impacted by low interest rates, which prevailed due to the weak economy and unsettled business climate. Revenue growth declined due to a continued compression compression, external stress applied to an object or substance, tending to cause a decrease in volume (see pressure). Gases can be compressed easily, solids and liquids to a very small degree if at all. of net interest margins as the Corporation maintained an asset sensitive position established to position the balance sheet for future changes in rates. This strategy impacted returns on earning-assets for the current period. For the industry in general, shrinking margins, spurred by low interest rates have overshadowed performance over the past year and likely will continue to negatively impact earnings performance in 2003. Total interest income, on a tax-equivalent basis, for the first quarter of 2003, decreased $860,000 or 8.22%, over the comparable 2002 period. Total interest expense decreased by $442,000 over the same period. A decline in net interest margins was offset in part by strong growth in non-interest revenue, which increased by 15.2 % for the quarter and continues to be a strong contributing factor for performance of the Corporation. John J. Davis See also John J. Davis (congressman) for the West Virginia politician. John J. Davis was a U.S. Army officer. From September 1, 1965 to October 19, 1966, Davis, then a Major General, served as the Assistant chief of Staff for Intelligence, Headquarters, Department , President & CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , stated that, "the Corporation continues to seek strategic initiatives to develop new sources of noninterest revenue to enhance current earnings and to create long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. sustainable quality earnings performance." He further indicated that the Bank completed the formation of a new investment and insurance subsidiary, Center Insurance & Investment Advisers LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control . The new subsidiary operating pursuant to a strategic third party partnership will market and sell insurance and investment products. He indicated that he anticipated the company to commence operations in the second quarter. Volume growth in both the loan and the investment securities portfolios reduced the effects of the decline in yield earned on those assets. During the first three months of 2003, the loan portfolio increased on average $21.9 million, an increase of 10.3% from the comparable period in 2002. Despite the slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. experienced in the economy, loan demand continues to remain steady, fueled by the branch network expansion, higher visibility in new markets, and a continued enhancement of product lines to meet market demands and aggressive promotion of a Home Equity Loan product. While asset quality continues to remain high, during the first quarter, additional provisions of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $80,000 were made to the allowance for loan losses, to maintain adequate loan loss reserves in relationship with loan portfolio growth. The Corporation's investment securities portfolio increased on average $74.2 million (up 16.1% over the comparable prior year quarter). The increased securities portfolio largely reflects recent execution of the Corporation's investment strategies in response to the growth in average funding sources. Average funding sources grew $99.8 million or 14.8%. Interest-bearing Adj. 1. interest-bearing - of financial obligations on which interest is paid liabilities increased $89.4 million on average during the first quarter of 2003, as compared to the first quarter in 2002. Total non-interest bearing core deposits increased $10.4 million on average in the first quarter of 2003 in comparison to the comparable quarter in 2002 and continue to be a low-cost source of funding. At March 31, 2003 this source of funding amounted to $119.9 million or 14.7% of total funding sources and 20.7% of total deposits. Net interest margins continued to come under pressure from the prevailing low interest rate environment during the first quarter of 2003, contracting 73 basis points for the period as compared with the same quarter in 2002. The continued compression of net interest margins is a result of the effects of falling interest rates and its effects on the asset sensitivity maintained in the balance sheet coupled with low replacements yields received on shorter duration additions made to the earning-asset portfolio. The net interest spread decreased 60 basis points in the first quarter of 2003 to 3.07% from 3.67% for the comparable quarter in 2002 and decreased 8 basis points compared to the fourth quarter of 2002. For the three months ended March 31, 2003 the net interest margin (net interest income as a percentage of earning assets Earning Assets Any income-earning asset owned by a company. Notes: These assets are generally interest-bearing accounts, bonds, and securities available for sale. See also: Asset, Asset Valuation, Earnings, Net Interest Margin ), decreased 73 basis points to 3.35% from 4.08% for the first quarter in 2002; and decreased 10 basis points from 3.45% from the fourth quarter of 2002. Other non-interest income, exclusive of gains on securities sold (which increased $45,000) increased $79,000 or 12.6% for the first quarter compared with the comparable quarter in 2002. Other non-interest income, including gains on securities sold, increased $124,000 or 15.2% for the first quarter of 2003 as compared with the comparable quarter in 2002. The increased revenue was primarily driven by the increase in service charges commissions and fees and other fee income, the latter of which is primarily comprised of fees related to the sale of residential mortgage loans originated for sale in the secondary market. Operating overhead increased 6.24% year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. over the comparative period and was primarily related to increased staffing expense and increased premise expense associated with increased maintenance costs incurred in the first quarter of 2003. Total assets at March 31, 2003, were $875.9 million, an increase of 21.5% from assets of $721.1 million at March 31, 2002. The annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. return on average assets for the first quarter ended March 31, 2003, decreased to .81% as compared with 1.12% for the first quarter of 2002. The total Tier 1 capital Tier 1 Capital A term used to describe the capital adequacy of a bank. Tier I capital is core capital, this includes equity capital and disclosed reserves. Notes: Equity capital includes instruments that can't be redeemed at the option of the holder. ratio was 7.04% at March 31, 2003, as compared to 7.33% for the comparable quarter in 2002. Total Tier I capital amounted to approximately $58.2 million, and includes $10.0 million in Trust Preferred Securities issued on December December: see month. 18, 2001. Book value per common share Book Value Per Common Share A measure used by owners of common shares in a firm to determine the level of safety associated with each individual share after all debts are paid accordingly. Formula: was $12.40 as compared with $10.88 a year ago. Tangible Possessing a physical form that can be touched or felt. Tangible refers to that which can be seen, weighed, measured, or apprehended by the senses. A tangible object is something that is real and substantial. An automobile is an example of tangible Personal Property. book value per common share increased to $11.91 from $10.38 a year ago. Annualized return on average stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. for the first quarter ended March 31, 2003 was 13.1% compared to 17.6% for the comparable quarter in 2002. Center Bancorp Inc., through its wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. , Union Center National Bank, Union, New Jersey operates thirteen-banking locations. Banking centers are located in Union Township There are many townships named Union Township in the United States: Michigan
Madison. 1 City (1990 pop. 12,006), seat of Jefferson co., SE Ind., on the Ohio River; settled c.1806, inc. 1838. It is a port of entry and a tobacco marketing center. , Millburn/Vauxhall, Morristown Morristown. 1 Town (1990 pop. 16,189), seat of Morris co., N N.J., on the Whippany River; settled c.1710, inc. 1865. Although chiefly residential, it has diverse manufactures, including electronic products, health and beauty aids, auto parts, and (2 locations), Springfield Springfield. 1 City (1990 pop. 105,227), state capital and seat of Sangamon co., central Ill., on the Sangamon River; settled 1818, inc. as a city 1840. , and Summit, New Jersey. The Bank also operates a remote ATM location in Union Hospital in Union. Union Center National Bank is the largest commercial Bank headquartered in Union County; it was chartered in 1923 and is a full service banking company. For further information regarding Center Bancorp Inc., call 1-(800)-862-3683. For information regarding Union Center National Bank visit our web site at http://www.centerbancorp.com. All non-historical statements in this press release constitute forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Such statements include expressions about management's views regarding future performance. These statements may use such forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. terminology The terminology used in the computer and telecommunications field adds tremendous confusion not only for the lay person, but for the technicians themselves. What many do not realize is that terms are made up by anybody and everybody in a nonchalant, casual manner without any regard or 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 Origination The process through which a mortgage lender creates a mortgage secured by some amount of the mortgagor's real property. Notes: Also known as loan origination, everyone must go through the origination process when securing a mortgage for a piece of real 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 reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. barriers and structure, including those relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the deregulation Deregulation The reduction or elimination of government power in a particular industry, usually enacted to create more competition within the industry. Notes: Traditional areas that have been deregulated are the telephone and airline industries. of the financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. industry. 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.
FINANCIAL HIGHLIGHTS (UNAUDITED)
For the 3 Months Ended
----------------------
3/31/03 3/31/02
Net Income $1,686,000 $2,035,000
Earning per Share
-----------------
Basic $ 0.40 $ 0.49
Diluted $ 0.40 $ 0.48
Weighted Average Shares Outstanding
-----------------------------------
Basic 4,220,311 4,173,165
Diluted 4,264,893 4,207,730
Consolidated Statements of Condition March 31, December 31,
(Dollars in thousands) 2003 2002
---------------------------------------------------------------------
(unaudited)
Assets:
Cash and due from banks $ 26,729 $ 23,220
Federal funds sold - 0
---------------------------------------------------------------------
Total cash and cash equivalents 26,729 23,220
Investment securities held to
maturity (approximate market value
of $230,027 in 2003 and $219,921
in 2002) 225,023 214,902
Investment securities
available-for-sale 346,040 322,717
---------------------------------------------------------------------
Total investment securities 571,063 537,619
---------------------------------------------------------------------
Loans, net of unearned income 243,530 229,051
Less - Allowance for loan losses 2,581 2,498
---------------------------------------------------------------------
Net loans 240,949 226,553
---------------------------------------------------------------------
Premises and equipment, net 13,190 12,976
Accrued interest receivable 4,913 4,439
Bank owned separate account life
insurance 14,323 14,143
Other assets 2,657 2,395
Goodwill 2,091 2,091
---------------------------------------------------------------------
Total assets 875,915 823,436
---------------------------------------------------------------------
Liabilities
Deposits:
Non-interest bearing $119,923 $116,984
Interest bearing:
Certificates of deposit $100,000 and over 46,092 33,396
Savings and time deposits 414,084 465,971
---------------------------------------------------------------------
Total deposits 580,099 616,351
Federal funds purchased and securities
sold under agreements to repurchase 135,000 65,000
Federal Home Loan Bank advances 92,294 75,431
Corporation - obligated Mandatorily
redeemable trust preferred securities
of subsidiary trust holding solely
junior subordinated debentures of
the Corporation 10,000 10,000
Accounts payable and accrued liabilities 6,126 5,600
---------------------------------------------------------------------
Total Liabilities 823,519 772,382
---------------------------------------------------------------------
Stockholders' equity:
Preferred Stock, No Par value,
Authorized 5,000,000 Shares;
None Issued 0 0
Common stock, no par value:
Authorized 20,000,000 shares;
issued 4,753,701 and
4,749,557 shares in 2003 and 2002,
respectively 19,089 18,984
Additional paid in capital 4,597 4,562
Retained earnings 30,812 29,863
Treasury stock at cost (526,835 and
539,202 shares in 2003
and 2002, respectively) (4,156) (4,254)
Restricted stock (28) (285)
Accumulated other comprehensive income 2,082 2,184
---------------------------------------------------------------------
Total stockholders' equity 52,396 51,054
---------------------------------------------------------------------
Total liabilities and stockholders' equity $875,915 $823,436
---------------------------------------------------------------------
Center Bancorp, Inc
Consolidated Statements of Income
(unaudited)
Three Months Ended
(Dollars in thousands) March 31,
---------------------------------------------------------------------
2003 2002
Interest income:
Interest and fees on loans $ 3,586 $ 3,673
Interest and dividends on
investment securities:
Taxable interest income 5,545 6,552
Nontaxable interest income 307 151
Interest on Federal funds sold and
securities purchased under agreement
to resell - 2
---------------------------------------------------------------------
Total interest income $ 9,438 $ 10,378
---------------------------------------------------------------------
Interest expense:
Interest on certificates of
deposit $100,000 or more 152 174
Interest on savings and time deposits 1,797 2,191
Interest on borrowings 1,286 1,312
---------------------------------------------------------------------
Total interest expense 3,235 3,677
Net interest income 6,203 6,701
Provision for loan losses 80 90
Net interest income after provision for loan
losses 6,123 6,611
---------------------------------------------------------------------
Other income:
Service charges, commissions and fees 417 379
Other income 111 70
BOLI 180 180
Gain on securities sold 231 186
---------------------------------------------------------------------
Total other income $ 939 $ 815
---------------------------------------------------------------------
Other expense:
Salaries and employee benefits 2,651 2,300
Occupancy expense, net 528 456
Premises and equipment expense 447 389
Stationery and printing expense 174 156
Marketing and advertising 177 193
Other expenses 756 961
---------------------------------------------------------------------
Total other expense $ 4,733 $ 4,455
---------------------------------------------------------------------
Income before income tax expense 2,329 2,971
Income tax expense 643 936
---------------------------------------------------------------------
Net income $ 1,686 $ 2,035
---------------------------------------------------------------------
Earnings per share
Basic $ 0.40 $ 0.49
Diluted $ 0.40 $ 0.48
---------------------------------------------------------------------
Average weighted common shares outstanding
Basic 4,220,311 4,173,165
Diluted 4,264,893 4,207,730
---------------------------------------------------------------------
Average Balance Sheet with Interest and Average Rates
Three Month
Period Ended March 31,
----------------------------------------------------------------------
2003 2002
----------------------------------------------------------------------
(tax-equivalent
basis, Interest Average Interest Average
dollars in Average Income/ Yield/ Average Income/ Yield/
thousands) Balance Expense Rate Balance Expense Rate
----------------------------------------------------------------------
Assets
Interest-earning
assets:
Investment
securities: (1)
Taxable $505,498 $5,545 4.45% $446,402 $ 6,552 5.95%
Non-taxable 28,185 465 6.60% 13,122 229 6.98%
Federal funds sold
and securities
purchased under
agreement to
resell - - 0.00% 642 2 1.26%
Loans, net of
unearned
income (2) 235,474 3,586 6.18% 213,528 3,673 6.98%
Total
interest-
earning
assets $769,157 9,596 5.06% $673,694 10,456 6.29%
----------------------------------------------------------------------
Non-interest earning
assets
Cash and due
from banks 22,895 17,914
BOLI 14,205 13,448
Other assets 26,168 22,571
Allowance for
possible
loan losses (2,533) (2,224)
----------------------------------------------------------------------
Total non-
interest
earning
assets 60,735 51,709
Total
assets $829,892 $725,403
----------------------------------------------------------------------
Liabilities and stockholders'
equity
Interest-bearing
liabilities:
Money Market
deposits $100,427 306 1.24% $108,315 524 1.96%
Savings
deposits 155,472 520 1.36% 155,362 873 2.28%
Time deposits 154,084 995 2.62% 100,329 752 3.04%
Other
interest -
bearing
deposits 72,235 128 0.72% 66,644 216 1.31%
Trust Preferred 10,000 125 5.00% 10,000 137 5.48%
Short-term
borrowings &
FHLB
advances 166,595 1,161 2.79% 128,777 1,175 3.65%
----------------------------------------------------------------------
Total
interest-
bearing
liabilities $658,813 3,235 1.99% $569,427 3,677 2.62%
----------------------------------------------------------------------
Non-interest-bearing
liabilities:
Demand deposits 113,996 103,538
Other
non-interest-
bearing
deposits 483 514
Other
liabilities 5,132 5,661
Total
non-interest-
bearing
liabilities 119,611 109,713
Stockholders'
equity 51,468 46,263
Total
liabilities
and
stockholders'
equity $829,892 $725,403
Net interest
income
(tax-equivalent
basis) $6,361 $ 6,779
----------------------------------------------------------------------
Net Interest Spread 3.07% 3.67%
Net interest income as
percent
of earning-assets 3.35% 4.08%
----------------------------------------------------------------------
Tax equivalent adjustment (158) (78)
Net interest income $6,203 $ 6,701
----------------------------------------------------------------------
(1) Average balances for available-for-sale securities are based on
amortized cost
(2) Average balances for loans include loans on non-accrual status
(3) The tax-equivalent adjustment was computed based on a statutory
Federal income tax rate of 34 percent
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