UNION, N.J., April 26, 2012 (GLOBE NEWSWIRE) -- Center Bancorp, Inc.(Nasdaq:CNBC) (the "Corporation", or "Center"), parent company of Union Center National Bank ("UCNB"), today reported operating results for the first quarter ended March 31, 2012. Net income available to common stockholders amounted to $4.1 million, or $0.25 per fully diluted common share, for the quarter ended March 31, 2012, as compared with net income available to common stockholders of $2.9 million, or $0.18 per fully diluted common share, for the quarter ended March 31, 2011.

Anthony C. Weagley, President and Chief Executive Officer of Center, indicated: "The results for the first quarter announced today mark another quarter of positive earnings results and continued performance momentum for the Corporation. We achieved return on average tangible stockholders' equity of 13.70%, representing solid results. We posted top line revenue growth and strong earnings despite the prevailing economic climate. Earnings for the period also reflect reduced credit related costs as credit trends were stable."

Highlights for the quarter include:

• Strong balance sheet with stable credit trends.
   
• At March 31, 2012, total loans amounted to $790.6 million, an increase of $74.5 million compared to total loans at March 31, 2011.
   
• Non-performing assets, consisting of non-accrual loans, accruing loans past due 90 days or more, other real estate owned ("OREO") and other nonperforming assets amounted to 0.59% of total assets at March 31, 2012, compared to 1.04% at March 31, 2011 and 0.59% at December 31, 2011. The allowance for loan losses as a percentage of total non-performing loans was 119.1% at March 31, 2012 compared to 73.6% at March 31, 2011 and 121.5% at December 31, 2011.
   
• The Tier 1 leverage capital ratio was 9.21% at March 31, 2012, compared to 9.83% at March 31, 2011, and 9.29% at December 31, 2011, exceeding regulatory guidelines in all periods.
   
• Tangible Book value per common share rose to $6.98 at March 31, 2012, compared to $6.60 at December 31, 2011 and $6.01 at March 31, 2011.
   
• The efficiency ratio for the first quarter of 2012 on an annualized basis was 49.3% as compared to 54.8% in the first quarter of 2011 and 53.7% in the fourth quarter of 2011.
   
• Deposits increased $218.8 million to $1.2 billion at March 31, 2012, from $934.6 million at March 31, 2011.

Mr. Weagley added: "Challenges within the marketplace for financial institutions will continue, and moreover we believe continue to impede a solid recovery in 2012; however, Center continues to move forward with solid growth, expansion into new markets encompassed by the pending purchase and assumption of specific assets and liabilities of Saddle River Valley Bank and our recently announced new financial banking center in Englewood, New Jersey. This was accomplished while adding to tangible book value per common share, a key measure of value creation for stockholders. We believe this underscores our ability to perform and create value for the shareholders."

Net Interest Income

For the three months ended March 31, 2012, total interest income on a fully taxable equivalent basis increased $0.9 million or 6.97%, to $13.8 million, compared to the three months ended March 31, 2011. Total interest expense increased by $0.1 million, or 4.42%, to $3.1 million, for the three months ended March 31, 2012, compared to the same period last year. Net interest income on a fully taxable equivalent basis was $10.8 million for the three months ended March 31, 2012, increasing $0.8 million, or 7.72%, from $10.0 million for the comparable period in 2011. Compared to 2011, for the three months ended March 31, 2012, average interest earning assets increased $144.7 million while net interest spread and margin, on a tax-equivalent basis, decreased on an annualized basis by 7 basis points and 16 basis points, respectively. For the quarter ended March 31, 2012, the Corporation's net interest margin on a fully taxable equivalent annualized basis decreased 16 basis points to 3.39% as compared to 3.55% for the same three month period in 2011.

The modest increase in interest expense reflects higher volumes of interest bearing deposits offset in part by a favorable shift in the deposit mix and the impact of the sustained low levels in short-term interest rates. The average cost of funds declined 16 basis points to 1.07% from 1.23% for the quarter ended March 31, 2011 and on a linked sequential quarter decreased 6 basis points compared to the fourth quarter of 2011. For the quarter ended March 31, 2012, the Corporation's net interest spread decreased 7 basis points to 3.28% as compared to 3.35% for the same three month period in 2011.

Speaking directly to the net interest margin for the period, Mr. Weagley noted, "While the net interest margin decreased 11 basis points on a sequentially linked quarter, the Corporation expects the margin to return to the 3.50% net level, principally given the volume of asset deployment from cash achieved in both the loan and investment portfolios. This coupled with actions taken to lower the cost of funds in March are projected to increase the margin on a core basis back to the prior level achieved  moving into the second quarter. Compression during the period occurred primarily by a high liquidity pool carried throughout the quarter and timing of the asset deployment achieved, which was late in the quarter and thus not sufficient to offset the high liquidity pool. Other factors contributing to the decline in the net interest margin included accelerated amortization from isolated prepayments on mortgage-backed securities in the investment portfolio and nonaccrual interest charges in the loan portfolio."

Earnings Summary for the Period Ended March 31, 2012

The following tables present condensed consolidated statement of income data for the periods indicated.

Other Income

The following tables present the components of other income for the periods indicated.

Other income increased $358,000 for the first quarter of 2012 compared with the same period in 2011. During the first quarter of 2012, the Corporation recorded net investment securities gains of $937,000 compared to $766,000 in net investment securities gains for the same period last year. Excluding net securities gains, the Corporation recorded other income of $1,018,000 for the three months ended March 31, 2012 compared to other income, excluding net securities gains, of $831,000 for the first quarter of 2011 and $1,049,000 for the three months ended December 31, 2011. The increase in other income in the first quarter 2012 when compared to the first quarter 2011 (excluding securities gains) was primarily from an increase of $149,000 in loan related fees, and $38,000 in commissions on annuities and insurance contracts offset by declines in service charges on deposits of $14,000 and a decline in bank owned life insurance income of $9,000.

Other Expense

The following tables present the components of other expense for the periods indicated. 

Total other expense for the first quarter of 2012 amounted to $5.8 million, which was approximately $415,000 or 6.7% lower than other expense for the three months ended December 31, 2011. Employee salaries and benefits increased by $209,000 or 7.2%, reflecting increases in salaries of $54,000 and benefits expense of $155,000 as compared to the quarter ended December 31, 2011. OREO expense decreased $337,000, professional and consulting decreased $105,000 while other expense decreased $199,000 primarily due to a loss related to tax certificates acquired to perfect the banks interest in property subsequently sold in December 2011.

The decrease in other expense for the three months ended March 31, 2012, when compared to the quarter ended March 31, 2011, was approximately $128,000 and was primarily associated with decreases of $229,000 in FDIC Insurance, $166,000 in occupancy and equipment expenses and $43,000 in all other expenses. These decreases were partially offset by increases of $251,000 in salaries and benefits and OREO expenses of $63,000.  

Statement of Condition Highlights at March 31, 2012

• Total assets amounted to $1.5 billion at March 31, 2012.
   
• Total loans were $790.6 million at March 31, 2012, increasing $74.5 million, or 10.4%, from March 31, 2011. Total real estate loans increased $40.1 million or 7.78%, from March 31, 2011. Commercial loans increased $34.5 million, or 17.26%, year over year.
   
• Investment securities totaled $524.6 million at March 31, 2012, reflecting an increase of $114.2 million from March 31, 2011.
   
• Deposits totaled $1.2 billion at March 31, 2012, increasing $218.8 million, or 23.41%, since March 31, 2011. Total Demand, Savings, Money Market, and certificates of deposit less than $100,000 increased $271.1 million or 35.26% from March 31, 2011. Time certificates of deposit of $100,000 or more decreased by $52.3 million or 31.61% from March 31, 2011. These increases were attributable to continued core deposit growth in overall segments of the deposit base and in niche areas, such as municipal government, private schools and universities.
   
• Borrowings totaled $166.2 million at March 31, 2012, decreasing $35.9 million from March 31, 2011, primarily due to the fact that certain sweep relationships that were previously classified as short term borrowings were discontinued and were moved to interest bearing checking accounts during the third quarter of 2011.

Condensed Statements of Condition

The following tables present condensed statements of condition as of the dates indicated. 

The following tables reflect the composition of the Corporation's deposits as of the dates indicated. 

Loans

Outstanding loan balances increased during the first quarter and additional lending opportunities continued to fuel the Corporation's pipelines. While the overall economy has been restrictive and somewhat constrained by the uncertain economic environment, the Corporation's growth in loans continued in the quarter. Growth in our client base and in our New Jersey market continues to underpin the overall business process. For the quarter ended March 31, 2012, the Corporation's credit trends are stable and the Corporation expects credit trends to improve over the next few quarters.

The Corporation experienced growth of approximately $101.8 million in new loans and advances during the first quarter offset in part by prepayments of $31.3 million coupled with scheduled payments and payoffs of $36.0 million. Average loans during the first quarter totaled $755.8 million as compared to $716.6 million during the first quarter of 2011, representing a 5.48% increase.

At March 31, 2012, the Corporation had $214.0 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 $50.0 million in commercial and commercial real estate loans and $11.0 million in residential mortgages expected to fund over the next 90 days.  

The Corporation's net loans in the first quarter of 2012 increased $34.5 million, to $780.9 million at March 31, 2012, from $746.4 million at December 31, 2011.  The loan volume increase was $36.7 million in commercial loans, offset by a decrease of $2.1 million in residential mortgage loans and a decrease of $37,000 in consumer loans.  At March 31, 2011, net loans totaled $706.5 million. Commercial real estate, commercial and construction loans represented 81.0% of the loan portfolio at March 31, 2012, compared to 79.3% at March 31, 2011.

The following reflects the composition of the Corporation's loan portfolio as of the dates indicated. 

Mr. Weagley noted that "During the first quarter of 2012 the level of non-performing loans remained stable and significant efforts are being made to reduce the levels during the remainder of 2012. During the first quarter of 2012, non-performing loans increased by a net of $287,000, $45,000 was received in payments, and there were no transfers to OREO. This was offset by new non-performing loans of $335,000. Other real estate owned peaked at $591,000 during the first quarter of 2012. By March 31, 2012, this was reduced by $33,000 to $558,000 resulting in additional expense during the period. Despite sporadic legacy issues within the portfolio, we are well positioned from an asset quality perspective with continued improving trends. Moreover, as we have noted in prior reports we are focused on moving languishing foreclosures to conclusion, which will significantly decrease our level of non-performers as we dispose of loans." 

Asset Quality

The following tables present the components of non-performing assets and other asset quality data for the periods indicated. 

Non-accrual loans increased from $6.9 million at December 31, 2011 to $7.1 million at March 31, 2012. Loans past due 90 days or more and still accruing increased from $1.0 million at December 31, 2011 to $1.1 million at March 31, 2012. Other real estate owned at March 31, 2012 was $558,000. Troubled debt restructured loans, which are performing loans, decreased from $7.5 million at December 31, 2011 to $6.9 million at March 31, 2012, reflecting the return to original contractual repayment terms for one (1) residential mortgage totaling $500,000.Interest income lost on loans placed into non-accrual status during the three months ended March 31, 2012 amounted to $7,000.

At March 31, 2012, non-performing assets totaled $8.7 million, or 0.59% of total assets, as compared with $13.4 million, or 1.04%, at March 31, 2011 and $8.5 million, or 0.59%, at December 31, 2011. The decrease from March 31, 2011 was achieved notwithstanding the addition of several new residential loans (totaling approximately $1.8 million) and commercial loans (totaling approximately $1.7 million) into non-performing status. This was more than offset by decreases from pay-downs of $4.5 million, total charge-offs or write downs of $1.0 million of existing loans, and the transfer to performing troubled debt restructured from non-accrual status of $1.6 million and the return to performing status of $1.0 million. 

The allowance for loan losses at March 31, 2012 amounted to approximately $9.8 million, or 1.23% of total loans, compared to 1.34% of total loans at March 31, 2011. The allowance for loan losses as a percentage of total non-performing loans was 119.1% at March 31, 2012 compared to 73.6% at March 31, 2011.

A discussion of the significant components of non-performing assets at March 31, 2012 is outlined below.

• Two non-accrual relationships totaling $2,108,000 and $600,000, respectively, secured by senior liens on three separate residential properties, located in Morris and Somerset counties in New Jersey, respectively, have 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. The Somerset County loan has been modified; the related foreclosure action was suspended; the loan is currently performing and should come out of nonaccrual status in the second quarter of 2012 with performance under the modified terms. One of the loans secured by a Morris County property totaling $711,000 has been modified. The related foreclosure action was suspended and the loan is currently performing. The property is listed for sale by the borrower.
   
• Collection of $3.0 million, representing the Bank's portion of a non-accrual participation loan secured by an operating ocean front property in Nassau County, NY, was stalled due to the borrower's third quarter 2011 bankruptcy filing. Counsel representing the interests of all participant banks has filed a motion to convert the bankruptcy case to a liquidation matter. As an alternative to the bankruptcy conversion, the borrower, on January 9, 2012, signed a term sheet proposed by counsel for the participating banks, which, among other things, reinstates the full amount of the loan, provides for the payment of all delinquent real estate taxes, release of all mechanics' liens, and pre-payments of interest for a 24 month period. Formal documentation memorializing the agreement was executed during the first quarter of 2012 and presentation to the bankruptcy court for confirmation is scheduled for May 3, 2012.

Capital

At March 31, 2012, total stockholders' equity amounted to $142.1 million, or 9.62% of total assets. Tangible common stockholders' equity was $113.9 million, or 7.81% of tangible assets, compared to 7.70% at March 31, 2011. Book value per common share was $8.01 at March 31, 2012, compared to $7.05 at March 31, 2011. Tangible book value per common share was $6.98 at March 31, 2012 compared to $6.01 at March 31, 2011.

At March 31, 2012, the Corporation's Tier 1 leverage capital ratio was 9.21%, the Tier 1 risk-based capital ratio was 11.67% and the total risk-based capital ratio was 12.52%. Tier 1 capital increased to approximately $133.1 million at March 31, 2012 from $119.1 million at March 31, 2011, reflecting an increase in retained earnings.

At March 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. 

"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. 

"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. 

Other income is presented in the table below including and excluding net securities gains. We believe that many investors desire to evaluate other income without regard for securities gains. 

"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: 

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 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.

Center also recently announced a strategic partnership with Compass Financial Management, LLC and ING to offer 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 12 banking locations in Union and Morris Counties in New Jersey. Banking centers are located in Union Township (5 locations), Berkeley Heights, Boonton/Mountain Lakes, Madison, Millburn/Vauxhall, Morristown, Springfield, and Summit, New Jersey. While the Bank's primary market area is comprised of Union and Morris Counties, New Jersey, the Corporation is expanding to northern New Jersey with its recent announcement of the pending purchase and assumption of specific assets and liabilities of Saddle River Valley Bank.  Saddle River Valley Bank has two branch locations in Saddle River and Oakland, NJ. Also the pending opening of the new Englewood banking center location located in downtown Englewood.   As of December 31, 2011, Saddle River Valley Bank had approximately $120.2 million in assets, $55.8 million in loans, $105.9 million of deposits and $13.1 million of stockholders' equity.

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 http://www.ucnb.com.

Forward-Looking Statements

All non-historical statements in this press release (including statements regarding future margin figures, future credit trends, levels of future non-performing loans and the future status of particular non-performing loans) 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.

CONTACT: Investor Inquiries:
         Joseph D. Gangemi
         Vice President, Investor Relations
         (908) 206-2863