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Center Bancorp Inc. Reports Operating Results (10-Q/A)

May 21, 2010 | About:
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10qk

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Center Bancorp Inc. (CNBC) filed Amended Quarterly Report for the period ended 2010-03-31.

Center Bancorp Inc. has a market cap of $114.9 million; its shares were traded at around $7.88 with a P/E ratio of 30.3 and P/S ratio of 2.1. The dividend yield of Center Bancorp Inc. stocks is 1.4%.CNBC is in the portfolios of Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC.

Highlight of Business Operations:

In instances when a determination is made that an other-than-temporary impairment exists but the investor does not intend to sell the debt security and it is not more likely than not that it will be required to sell the debt security prior to its anticipated recovery, FASB ASC 320-10-65 changes the presentation and amount of the other-than-temporary impairment recognized in the income statement. The other-than-temporary impairment is separated into (a) the amount of the total other-than-temporary impairment related to a decrease in cash flows expected to be collected from the debt security (the credit loss) and (b) the amount of the total other-than-temporary impairment related to all other factors. The amount of the total other-than-temporary impairment related to the credit loss is recognized in earnings. The amount of the total other-than-temporary impairment related to all other factors is recognized in other comprehensive income. Other-than-temporary impairment charges on certain investment securities of approximately $4.4 million were recognized in earnings for the three months ended March 31, 2010. For the three months ended March 31, 2009, the Corporation recorded $140,000 of other-than temporary-impairment charges on investment securities.

Net income for the three months ended March 31, 2010 amounted to $281,000, compared to net income of $799,000 for the comparable three-month period ended March 31, 2009. The Corporation recorded earnings per diluted common share of $0.01 for the three months ended March 31, 2010 as compared with earnings of $0.05 per diluted common share for the three months ended March 31, 2009. Dividends and accretion relating to the preferred stock issued to the U.S. Treasury reduced earnings by approximately $0.01 per fully diluted common share. The annualized return on average assets was .010 percent for the three months ended March 31, 2010, compared to 0.30 percent for three months ended March 31, 2009. The annualized return on average stockholders equity was 1.07 percent for the three-month period ended March 31, 2010, compared to 3.52 percent for the three months ended March 31, 2009.

Net interest income on a fully tax-equivalent basis increased $2.0 million or 30.7 percent to $8.6 million for the three months ended March 31, 2010 as compared to the same period in 2009. For the three months ended March 31, 2010, the net interest margin increased 54 basis points to 3.35 percent from 2.81 percent during the three months ended March 31, 2009. For the three months ended March 31, 2010, a decrease in the average yield on interest-earning assets of 21 basis points was more than offset by a decrease in the average cost of interest-bearing liabilities of 85 basis points, which increased the Corporation s net interest spread by 64 basis points for the period. On a quarterly linked sequential basis, net interest spread increased 19 basis points and net interest margin increased by 30 basis points, respectively. Net interest spread and margin have been impacted by a high level of uninvested excess cash, which accumulated due to strong deposit growth experienced predominantly over the last nine months of 2009. This represented growth in the Corporation s customer base and enhanced the Corporation s liquidity position while the Corporation continued to expand its earning assets base.

For the three-month period ended March 31, 2010, interest income on a tax-equivalent basis increased by $613,000 or 5.1 percent from the comparable three-month period in 2009. This increase was due primarily to both an increase in balances of the Corporation s investment securities and loan portfolios offset in part by a decline in rates due to the actions taken by the Federal Reserve to lower market interest rates over the past year. Average investment volume, including short-term investments and restricted investment in bank stocks, increased during the current three month period by $57.1 million, to $310.5 million, compared to the first quarter of 2009. The Corporation s loan portfolio increased on average $31.9 million, to $711.9 million, from $680.0 million in the same quarter in 2009, primarily driven by growth in commercial real estate business related sectors of the loan portfolio. The loan portfolio represented approximately 69.6 percent of the Corporation s average interest-earning assets during the first quarter of 2010 as compared to 72.8 percent in the same quarter in 2009.

For the three months ended March 31, 2010, interest expense declined $1.4 million, or 25.2 percent from the same period in 2009. The average rate of interest-bearing liabilities decreased 85 basis points to 1.79 percent for the three months ended March 31, 2010, from 2.64 percent for the three months ended March 31, 2009. At the same time, the average volume of interest-bearing liabilities increased by $86.4 million. The increase in the average balance of interest-bearing liabilities during the three months ended March 31, 2010 was primarily in savings deposits of $75.2 million and in other interest-bearing deposits of $26.6 million, an increase of $13.5 million in other borrowings and a $4.0 million increase in money market accounts, offset by a $32.9 million decline in time deposits. Steps were taken in 2008, 2009 and into 2010 to improve the Corporation s net interest margin by allowing the runoff of certain high rate deposits and to position the Corporation for further high cost cash outflows during the year. The result was an improvement in the Corporation s cost of funds. As a result of these factors, for the three months ended March 31, 2010, the Corporation s net interest spread on a tax-equivalent basis increased to 3.19 percent, from 2.55 percent for the three months ended March 31, 2009.

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