<PAGE>
SECURITIES & EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED March 31, 1999 OR
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____________TO______________
Commission file number 2-81353
-------
CENTER BANCORP INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
New Jersey 52-1273725
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2455 Morris Avenue, Union, New Jersey 07083
- --------------------------------------------------------------------------------
(Address of principal executives offices) (Zip Code)
(908) 688-9500
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes |X| No| |
Shares outstanding on March 31, 1999
- ------------------------------------
Common stock no par value - 3,764,487 shares
<PAGE>
CENTER BANCORP INC.
INDEX TO FORM 10-Q
PART I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Consolidated Statements of Condition
March 31, 1999 (unaudited) and December 31, 1998 3
Consolidated Statements of Income
Three Months Ended March 31, 1999 and 1998 4
(unaudited)
Consolidated Statements of Cash Flows
Three Months Ended March 31, 1999 and 1998 5
(unaudited)
Notes to the Consolidated Financial Statements 6-7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8-20
Item 3. Qualitative and Quantitative Disclosures about
Market Risks 20
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 21
Item 2. Changes in Securities 21
Item 4. Submission of Matters to a Vote of Security Holders 21
Item 6. Exhibits 22
Signature 22
Exhibit Index 23
<PAGE>
<TABLE>
<CAPTION>
Center Bancorp Inc.
Consolidated Statements of Condition
March 31, December 31,
(Dollars in thousands) 1999 1998
- ----------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
Assets:
Cash and due from banks $17,134 $15,975
Federal funds sold 1,200 0
Securities purchased under agreement to resell 16,000 0
- ----------------------------------------------------------------------------------------------------------------
Total cash and cash equivalents 34,334 15,975
- ----------------------------------------------------------------------------------------------------------------
Investment securities held to maturity (approximate
market value of $174,901 in 1999 and $174,184 in 1998) 174,058 172,014
Investment securities available-for- sale 114,791 115,952
- ----------------------------------------------------------------------------------------------------------------
Total investment securities 288,849 287,966
- ----------------------------------------------------------------------------------------------------------------
Loans, net of unearned income 156,930 150,099
Less - Allowance for loan losses 1,337 1,326
- ----------------------------------------------------------------------------------------------------------------
Net loans 155,593 148,773
- ----------------------------------------------------------------------------------------------------------------
Premises and equipment, net 9,471 9,426
Accrued interest receivable 4,453 4,120
Other assets 1,065 815
Goodwill 2,978 3,059
- ----------------------------------------------------------------------------------------------------------------
Total assets $496,743 $470,134
- ----------------------------------------------------------------------------------------------------------------
Liabilities
Deposits:
Non-interest bearing $83,186 $82,072
Interest bearing:
Certificates of deposit $100,000 and over 56,386 53,056
Savings and Time Deposits 258,299 242,039
- ----------------------------------------------------------------------------------------------------------------
Total deposits 397,871 377,167
Federal funds purchased and securities sold under
agreements to repurchase 18,097 12,602
Federal Home Loan Bank advances 40,000 40,000
Accounts payable and accrued liabilities 3,955 3,734
- ----------------------------------------------------------------------------------------------------------------
Total liabilities 459,923 433,503
Stockholders' equity:
Common stock, no par value: Authorized 20,000,000 shares;
issued 4,237,500 and 4,232,169 in 1999 and 1998 7,701 7,616
Additional paid-in-capital 3,677 3,660
Retained earnings 26,572 25,978
- ----------------------------------------------------------------------------------------------------------------
37,950 37,254
Treasury stock at cost (473,012 and 475,112
shares 1999 in and 1998 respectively) (1,728) (1,736)
Accumulated other comprehensive income 598 1,113
- ----------------------------------------------------------------------------------------------------------------
Total stockholders' equity 36,820 36,631
- ----------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $496,743 $470,134
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
All share and per share amounts have been restated to reflect the 5% stock
dividend payable June 1, 1999 to stockholders of record May 18, 1999 and the
3-for-2 stock split distributed on May 29, 1998.
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
Center Bancorp Inc.
Consolidated Statements of Income (unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------------
(Dollars in thousands, except per share data) 1999 1998
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Interest income:
Interest and fees on loans $ 2,879 $ 2,672
Interest and dividends on investment securities:
Taxable interest income 4,311 4,537
Nontaxable interest income 207 193
Interest on Federal funds sold and securities
purchased under agreement to resell 143 123
- ---------------------------------------------------------------------------------------------------------
Total interest income 7,540 7,525
- ---------------------------------------------------------------------------------------------------------
Interest expense:
Interest on certificates of deposit $100,000 or more 577 1,311
Interest on savings and time deposits 1,780 2,001
Interest on short-term borrowings 592 153
- ---------------------------------------------------------------------------------------------------------
Total interest expense 2,949 3,465
- ---------------------------------------------------------------------------------------------------------
Net interest income 4,591 4,060
Provision for loan losses 18 30
- ---------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 4,573 4,030
- ---------------------------------------------------------------------------------------------------------
Other income:
Service charges, commissions and fees 176 180
Other income 70 43
- ---------------------------------------------------------------------------------------------------------
Total other income 246 223
- ---------------------------------------------------------------------------------------------------------
Other expense:
Salaries and employee benefits 1,668 1,335
Occupancy expense, net 297 262
Premises and equipment expense 320 271
Marketing and Advertising 165 109
Stationery and printing 91 40
Other expenses 591 560
- ---------------------------------------------------------------------------------------------------------
Total other expense 3,132 2,577
- ---------------------------------------------------------------------------------------------------------
Income before income tax expense 1,687 1,676
Income tax expense 556 543
- ---------------------------------------------------------------------------------------------------------
Net income $ 1,131 $ 1,133
- ---------------------------------------------------------------------------------------------------------
Earnings per share:
Basic $ 0.30 $ 0.30
Diluted 0.30 0.30
- ---------------------------------------------------------------------------------------------------------
Weighted average common shares outstanding:
Basic 3,760,772 3,726,115
Diluted 3,787,237 3,770,864
- ---------------------------------------------------------------------------------------------------------
</TABLE>
All share and per share amounts have been restated to reflect the 5% stock
dividend payable June 1,1999 to stockholders of record May 18, 1999 and 3-for-2
stock split distributed on May 29, 1998.
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
Center Bancorp Inc.
Consolidated Statements of Cash Flows (unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------------
(Dollars in thousands) 1999 1998
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,131 $ 1,133
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 332 338
Provision for loan losses 18 30
(Increase) decrease in accrued interest receivable (333) 334
Increase in other assets (268) (239)
Increase in other liabilities 221 295
Amortization of premium and accretion of
discount on investment securities, net 17 66
- -----------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 1,118 1,957
- -----------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of securities available-for-sale 14,023 26,432
Proceeds from maturities of securities held-to-maturity 20,453 12,189
Purchase of securities available-for-sale (13,378) (28,668)
Purchase of securities held-to-maturity (22,513) (11,532)
Net increase in loans (6,820) (2,217)
Property and equipment expenditures, net (296) (194)
- -----------------------------------------------------------------------------------------------------------
Net cash used in investing activities (8,531) (3,990)
- -----------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in deposits 20,704 (17,487)
Dividends paid (537) (473)
Proceeds from issuance of common stock 110 163
Net increase in short term borrowing 5,495 9,815
- -----------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 25,772 (7,982)
- -----------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 18,359 (10,015)
- -----------------------------------------------------------------------------------------------------------
Cash and cash equivalents at beginning of period 15,975 26,110
- -----------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 34,334 $ 16,095
- -----------------------------------------------------------------------------------------------------------
Supplemental disclosures of cash flow information:
Interest paid on deposits and short-term borrowings $ 3,047 $ 3,410
Income taxes $ 455 $ 537
- -----------------------------------------------------------------------------------------------------------
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
Notes to Consolidated Financial Statements
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements of Center Bancorp Inc., (the Corporation)
are prepared on the accrual basis and include the accounts of the Corporation
and its wholly owned subsidiary, Union Center National Bank (the Bank). All
significant intercompany accounts and transactions have been eliminated from the
accompanying consolidated financial statements.
BUSINESS
The Bank provides a full range of banking services to individual and corporate
customers through branch locations in Union and Morris Counties, New Jersey. The
Bank is subject to competition from other financial institutions and is subject
to the regulations of certain federal agencies and undergoes periodic
examinations by those regulatory authorities.
BASIS OF FINANCIAL STATEMENT PRESENTATION
The consolidated financial statements have been prepared in conformity with
generally accepted accounting principles. In preparing the consolidated
financial statements, management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities as of the date of the
statement of condition and revenues and expenses for the applicable period.
Actual results could differ significantly from those estimates.
In the opinion of Management, all adjustments necessary for a fair presentation
of the Corporation's financial position and results of operations for the
interim periods have been made. Such adjustments are of a normal recurring
nature. All share and per share amounts have been restated to reflect the 5%
stock dividend declared on April 13, 1999, payable June 1, 1999 to stockholders
of record on May 18, 1999 and the 3-for-2 stock split distributed May 29, 1998.
Results for the period ended March 31, 1999 are not necessarily indicative of
results for any other interim period or for the entire fiscal year. Reference is
made to the Corporation's Annual Report on Form 10-K for the year ended December
31, 1998 for information regarding accounting principles.
NOTE 2
RECENT ACCOUNTING PRONOUNCEMENTS
SFAS No. 133
In June 1998, the FASB issued a New Statement of Accounting Standards, SFAS No.
133, "Accounting for Derivatives and Similar Financial Instruments and for
Hedging Activities." This Statement establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts, (collectively referred to as derivatives) and for
hedging activities. It requires that an entity recognize all derivatives as
either assets or liabilities in the statement of financial condition and measure
those instruments at fair value. If certain conditions are met, a derivative may
be specifically designated as (a) a hedge of the exposure to changes in the fair
value of a recognized asset or liability or an unrecognized firm commitment, or
(b) a hedge of the exposure of a net investment in a foreign operation, an
unrecognized firm commitment, an available-for-sale security, or a
foreign-currency-denominated forecasted transaction.
<PAGE>
This Statement is effective for all fiscal quarters of fiscal years beginning
after June 15, 1999. Initial application of this Statement should be as of the
beginning of an entity's fiscal quarter; on that date, hedging relationships
must be designated anew and documented pursuant to the provisions of this
Statement. Earlier application of all of the provisions of this Statement is
encouraged, but is permitted only as of the beginning of any fiscal quarter that
begins after issuance of this Statement. This Statement should not be applied
retroactively to financial statements of prior periods. The adoption of this
statement by the Corporation is not expected to have a material effect on the
financial statements of the Corporation.
SFAS No. 134
On October 9, 1998 the FASB issued SFAS No. 134, "Accounting for Mortgage-Backed
Securities Retained after the Securitization of Mortgage Loans Held-for-Sale by
a Mortgage Banking Enterprise". SFAS No. 134 changes the way mortgage banking
firms account for certain securities and other interests they retain after
securitizing mortgage loans that were held for sale. This statement is effective
for fiscal quarters beginning after December 15, 1998. The adoption of this
statement by the Corporation is not expected to have a material effect on the
financial statements of the Corporation.
NOTE 3
The Corporation adopted FASB Statement No. 130, "Reporting Comprehensive Income"
on January 1, 1998 and the required disclosure is contained in the table set
forth below.
Three Months Ended March 31,
----------------------------
Comprehensive Income 1999 1998
- --------------------------------------------------------------------------
(Dollars in thousands)
- --------------------------------------------------------------------------
Net Income $1,131 $1,133
Other comprehensive income
Unrealized holding (losses) gains arising
during the period, net of taxes (515) 135
- --------------------------------------------------------------------------
Other comprehensive income (loss) (515) 135
==========================================================================
Total comprehensive income $616 $1,268
==========================================================================
<PAGE>
Management's Discussion & Analysis of Financial Condition
and Results of Operations
Net income and earnings per share (Basic and Diluted) were flat for the first
quarter of 1999 when compared to the first quarter of 1998. Net income for the
three months ended March 31, 1999 was $1,131,000 as compared to $1,133,000
earned for the comparable three month period of 1998. On a diluted per share
basis, earnings were $0.30 for the three months ended March 31, 1999 and 1998.
The annualized return on average assets was 0.94 percent for the three months
ended March 31, 1999 as compared with 0.96 percent for the comparable period in
1998, while the annualized return on average stockholders' equity was 12.21
percent and 13.25 percent, respectively. Earnings performance for the three
months ended March 31, 1999 reflected increased net interest income offset by
increases in non-interest expense. All share and per share amounts have been
restated to reflect the 5% stock dividend declared on April 13, 1999, payable
June 1, 1999 to stockholders of record on May 18, 1999 and the 3-for-2 stock
split distributed May 29, 1998.
Net interest income is the difference between the interest earned on the
portfolio of earning-assets (principally loans and investments) and the interest
paid on deposits and short-term borrowings which support these assets. Net
interest income is presented below first in accordance with the Corporation's
consolidated financial statements and then on a fully tax-equivalent basis by
adjusting tax-exempt income (primarily interest earned on various obligations of
state and political subdivisions) by the amount of income tax which would have
been paid had the assets been invested in taxable issues.
Net Interest Income
- --------------------------------------------------------------------------------
Three Months Ended
March 31,
Percent
(dollars in thousands) 1999 1998 Change
------ ------ -------
Interest income:
Investments $4,518 $4,730 (4.5)%
Loans, including fees 2,879 2,672
7.7
Federal funds sold and securities
sold under agreement to repurchase 143 123 16.3
------ ------ ------
Total interest income 7,540 7,525 .2
- --------------------------------------------------------------------------------
Interest expense:
Certificates $100,000 or more 577 1,311
(56.0)
Savings and Time 1,780 2,001
(11.0)
Borrowings 592 153 286.9
------ ------ ------
Total interest expense 2,949 3,465
(14.9)
- --------------------------------------------------------------------------------
NET INTEREST INCOME* 4,591 4,060 13.1
- --------------------------------------------------------------------------------
Tax-equivalent adjustment 106 99 7.0
Net interest income on a fully
tax-equivalent basis $4,697 $4,159 12.9%
- --------------------------------------------------------------------------------
*Before the provision for loan losses. NOTE: The tax-equivalent adjustment was
computed based on an assumed statutory Federal income tax rate of 34 percent.
Adjustments were made for interest accrued on securities of state and political
subdivisions.
<PAGE>
Net interest income on a fully tax-equivalent basis increased $538,000 or 12.9
percent to approximately $4.7 million for the three months ended March 31, 1999,
from approximately $4.2 million for the comparable period in 1998. The net
interest spread increased to 3.58 percent from 3.11 percent due to the decreased
cost of funds reflecting the lower rates paid on interest-bearing liabilities
and a more favorable mix of interest-bearing liabilities. For the first three
months of 1999, the decrease in the average yield on interest-earning assets of
9 basis points was offset by a more substantial decrease in the average cost of
interest-bearing liabilities of 56 basis points. The increase in the net
interest spread is primarily a result of the decreased cost of interest-bearing
liabilities and the Corporation's ability to fund a greater portion of the
increase in earning assets through increases in noninterest-bearing sources,
core deposits and a strategic departure from Certificates of Deposit of $100,000
and more into borrowings from the Federal Home Loan Bank. Average
interest-earning assets increased $6.8 million as compared with the three month
period in 1998. The net decrease in average interest-bearing liabilities was
$2.7 million over the comparable three month period in 1998. The 1999 first
quarter changes in average volumes were primarily due to increased volumes of
loans and non-taxable investments funded with less costly interest-bearing
liabilities.
For the three month period ended March 31, 1999, interest income
(tax-equivalent) increased by $22,000 or .29 percent over the comparable three
month period in 1998. The primary factor contributing to the increase was the
growth of earning assets, primarily loans. The Corporation's loan portfolio
increased on average $17.7 million to $152.3 million from $134.6 million in the
same quarter in 1998, primarily reflecting growth in commercial loans,
commercial mortgages and home equity lines of credit. This growth was funded
through a decrease in the taxable investment portfolio and increased short-term
borrowing. The loan portfolio (traditionally the Corporation's highest yielding
earning-asset) represented 34 and 31 percent, of the Corporation's
interest-earning assets (on average) during the first quarter of 1999 and 1998,
respectively. Interest income generated from the loan portfolio during the first
three months of 1999 was driven by the increased loan demand attributed in part
to an aggressive business development program.
Within the investment portfolio the changes in volumes took place among the
taxable and non-taxable portfolios. The Corporation's taxable securities
portfolio decreased on average $15.5 million to $265.2 million from $280.7
million in the same quarter in 1998. The non-taxable portfolio increased on
average $1.8 million to $18.3 million from $16.5 million in the same quarter in
1998. The growth of non-taxable investment securities reflects the change in
interest rates, making the yields on non-taxable investments more attractive.
For the three months ended March 31, 1999, interest expense decreased $516,000
or 14.9 percent as compared with the comparable three month period in 1998.
Total interest-bearing liabilities decreased on average $2.7 million to $356.8
million for the 1999 quarter from $359.5 million in the same quarter in 1998.
The most significant change was in the average rates paid on interest bearing
liabilities. During the first quarter of 1999 the average rate paid was 3.35
percent, a decrease of 56 basis points from the 3.91 percent paid during the
same quarter in 1998.
<PAGE>
For the three months ended March 31, 1999, the Corporation's net interest yield
on a tax-equivalent basis (i.e., net interest income on a tax equivalent basis
as a percent of average interest-earning assets) increased to 4.26 percent from
3.83 percent, for the three months ended March 31, 1998. The increase reflected
a lower cost of funds offset by a narrowing of spreads between yields earned on
loans and investments. There was a favorable change in the mix of
interest-earning assets, primarily the increased loan volumes, further augmented
by the change in the mix of interest-bearing liabilities to less costly funding.
The contribution of non interest-bearing sources (i.e. the differential between
the average rate paid on all sources of funds and the average rate paid on
interest-bearing sources) decreased to approximately 68 basis points during the
first three months of 1999 compared to 72 basis points for 1998. This decrease
was partially due to a lower interest environment, lessening the contribution of
non-interest bearing deposits.
The table "Analysis of Variance in Net Interest Income Due to Volume and Rates"
analyzes net interest income by segregating the volume and rate components of
various interest-earning assets and interest-bearing liabilities and the changes
in the rates earned and paid by the Corporation
Analysis of Variance in Net Interest Income Due to Volume and Rates
(Tax-Equivalent Basis)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
1999/1998 Increase/(Decrease)
Due to Change in:
(dollars in thousands) Average Average Net
Volume Rate Change
------ ---- ------
<S> <C> <C> <C>
Interest-earning assets
Investment Securities
Taxable $(252) $ 26 $(226)
Non-taxable 31 (10) 21
Federal funds sold and securities purchased
under agreement to resell 36 (16) 20
Loans, net of unearned discount 339 (132) 207
----- ----- -----
Total interest-earning assets 154 (132) 22
- ------------------------------------------------------------------------------------------------
Interest-bearing liabilities:
Money Market deposits 42 19 61
Savings deposits (11) (87) (98)
Time deposits (640) (273) (913)
Other interest-bearing deposits 18 (23) (5)
Borrowings 473 (34) 439
----- ----- -----
Total interest-bearing liabilities (118) (398) (516)
- ------------------------------------------------------------------------------------------------
Change in net interest income $ 272 $(266) $ 538
- ------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
The table "Average Balance Sheet with Interest and Average Rates" presents the
Corporation's average assets, liabilities and stockholders' equity. The
Corporation's net interest income, net interest spreads and net interest income
as a percentage of interest-earning assets for the periods ended March 31, 1999
and 1998 are also reflected.
Average Balance Sheet with Interest and Average Rates
<TABLE>
<CAPTION>
Three Month
Period Ended March 31,
1999 1998
- --------------------------------------------------------------------------------- -------------------------------
Interest Average Interest Average
Average Income/ Yield/ Average Income/ Yield/
(tax equivalent basis, dollars in (thousands) Balance Expense Rate Balance Expense Rate
thousands)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Assets
Interest-earning assets:
Investment securities:
Taxable $265,165 $4,311 6.59% $280,648 $4,537 6.56%
Non-taxable 18,371 313 6.82% 16,543 292 7.06%
Federal funds sold and securities
purchased under agreement to resell 11,432 143 5.07% 8,669 123 5.75%
Loans, net of unearned income (1) 152,335 2,879 7.66% 134,643 2,672 8.05%
-------- ------ ----- -------- ------ -----
Total interest-earning assets 447,303 7,646 6.93% 440,503 7,624 7.02%
------ ------
Non-interest earning assets
Cash and due from banks 13,128 12,961
Other assets 17,881 17,569
Allowance for possible loan losses (1,329) (1,278)
-------- --------
Total non-interest earning
assets 29,680 29,252
-------- --------
Total assets $476,983 $469,755
-------- --------
Liabilities and stockholders' equity
Interest-bearing liabilities:
Money Market deposits $ 64,321 475 2.99% $ 58,529 414 2.87%
Savings deposits 74,669 362 1.97% 76,585 460 2.44%
Time deposits 118,392 1,346 4.61% 172,127 2,259 5.32%
Other interest bearing deposits 45,189 174 1.56% 40,929 179 1.77%
Borrowings 54,227 592 4.37% 11,307 153 5.41%
-------- ------ ----- -------- ------ -----
Total interest-bearing
liabilities 356,798 2,949 3.35% $359,477 3,465 3.91%
-------- ------ ----- -------- ------ -----
Noninterest-bearing liabilities:
Demand deposits 78,953 72,601
Other noninterest-bearing deposits 436 289
Other liabilities 3,699 3,138
-------- --------
Total noninterest-bearing
liabilities 83,088 76,028
Stockholders' equity 37,097 34,250
-------- --------
Total liabilities and
stockholders' equity $476,983 $469,755
-------- --------
Net interest income (tax-equivalent basis) $4,697 $4,159
------ ------
Net Interest Spread 3.58% 3.11%
------ ------
Net interest income as percent
of earning-assets 4.26% 3.83%
------ ------
Tax equivalent adjustment (106) (99)
------ ------
Net interest income $4,591 $4,060
------ ------
Includes loan fees (fee income is not material)
</TABLE>
<PAGE>
Investments
For the three months ended March 31, 1999, the average balance of investment
securities decreased by $13.7 million as compared to the same period in 1998.
The tax-equivalent yield on investments increased to 6.61 percent or by 3 basis
points from a yield of 6.58 percent during the three month period ended March
31, 1998. The increased yield on the investment portfolio in 1999 resulted from
purchases made at rates equal to or higher than investments which had matured,
were prepaid or were called.
The impact of repricing activity on yields was lessened by longer investment
maturities, resulting in similar or wider spreads. Securities available-for-sale
are a part of the Corporation's interest rate risk management strategy and may
be sold in response to changes in interest rates, changes in prepayment risk,
liquidity management and other factors. At March 31, 1999, the total investment
portfolio, excluding overnight investments, averaged $283.5 million, or 63.4
percent of earning assets, as compared to $297.2 million or 67.5 percent of
earning-assets at March 31, 1998. The principal components of the investment
portfolio are Federal Agency, Treasury and Municipal, securities.
At March 31, 1999 the net unrealized gain included in the accumulated other
comprehensive income component of shareholders' equity amounted to an unrealized
gain of $598,000, as compared with an unrealized gain of $1,113,000 at December
31, 1998.
Loans
Loan growth during the first quarter of 1999 occurred in all segments of the
loan portfolio. This growth resulted primarily from the Corporation's business
development programs and new markets. The decrease in the yield in the portfolio
was a result of a lower prime rate environment coupled with a competitive rate
structure to attract new loans. The results of increased volume were lessened by
continued prepayment activity and by the heightened demand in the competing
lending markets.
For the three months ended March 31, 1999, average loans increased $17.7
million, while the portfolio yield decreased 39 basis points as compared with
the same period in 1998. The volume related factors contributed increased
interest income of $339,000 offset by $132,000 of rate related changes. Total
average loans increased to $152.3 million with a net interest yield of 7.66
percent, as compared to $134.6 million with a yield of 8.05% for the three
months ended March 31, 1998.
Allowance for Loan Losses
The purpose of the allowance for loan losses is to absorb the impact of losses
inherent in the loan portfolio. Additions to the allowance are made through
provisions charged against current operations and through recoveries made on
loans previously charged-off. The allowance for loan losses is maintained at an
amount considered adequate by Management to provide for potential credit losses
based upon a periodic evaluation of the risk characteristics of the loan
portfolio. In establishing an appropriate allowance, an assessment of the
individual borrowers, a determination of the value of the underlying collateral,
a review of historical loss experience and an analysis of the levels and trends
of loan categories, delinquencies, and problem loans are considered. Such
factors as the level and trend of interest rates and current economic conditions
are also reviewed. At March 31, 1999 the allowance was $1,337,000 as compared to
$1,326,000 at December 31, 1998 and $1,297,000 at March 31, 1998. The provision
for loan losses for the quarter ended March 31, 1999 amounted to $18,000
compared to $30,000 for the first quarter of 1998. Various regulatory agencies,
as an integral part of their examination process, periodically review the
Corporation's allowance for loan losses. Such agencies may require the
<PAGE>
Corporation to increase the allowance based on their analysis of information
available to them at the time of their examinations. The allowance for loan
losses as a percentage of total loans amounted to .85 percent and .96 percent at
March 31, 1999, and 1998, respectively. In Management's view the level of the
allowance during the first three months of 1999 was adequate to cover loss
inherent in the loan portfolio.
During the quarter ended March 31, 1999, the Corporation did not experience any
substantial problems within its loan portfolio. Net charge-offs were $7,000. At
March 31, 1999,the Corporation had non-performing loans amounting to $223,000 of
which all were in non-accrual status, versus $75,000 in non-performing loans at
December 31, 1998 of which $41,000 was in non-accrual status and $308,000 in
non-performing loans at March 31, 1998 of which $225,000 was in non-accrual
status. The Corporation continues to aggressively pursue collections of
principal and interest on loans previously charged off.
The Corporation defines impaired loans to consist of non-accrual loans and loans
internally classified as substandard, doubtful or loss, in each instance above
an established dollar threshold, of $250,000. All loans below the established
dollar threshold are considered homogenous and are collectively evaluated for
impairment. The Corporation did not have any impaired loans in either 1999 or
1998.
The Corporation's statements herein regarding the adequacy of the allowance for
loan losses may constitute forward looking statements under the Private
Securities Reform Litigation Act of 1995. Actual results may indicate that the
amount of the Corporation's allowance was inadequate. Factors that could cause
the allowance to be inaccurate are the same factors that are analyzed by the
Corporation in establishing the amount of the allowance.
Changes in the allowance for possible loans losses for the period ended March
31, 1999 and 1998, respectively, are set forth below.
Allowance for Loan Losses
- --------------------------------------------------------------------------------
Three Months Ended March 31
---------------------------
(Dollars in thousands) 1999 1998
--------- ---------
Average loans outstanding $152,335 $134,643
- --------------------------------------------------------------------------------
Total loans at end of period 156,930 134,669
- --------------------------------------------------------------------------------
Analysis of the allowance for loan losses
Balance at the beginning of period 1,326 1,269
Charge-offs:
Commercial 0 0
Real estate mortgage 0 0
Installment loans 8 7
- --------------------------------------------------------------------------------
Total charge-offs 8 7
Recoveries:
Commercial 0 0
Real estate mortgage 0 0
Installment loans 1 5
- --------------------------------------------------------------------------------
Total recoveries 1 5
Net charge-offs: 7 2
Provision for Loan Losses 18 30
- --------------------------------------------------------------------------------
Balance at end of period $ 1,337 $ 1,297
- --------------------------------------------------------------------------------
Ratio of net charge-offs during the period to
Average loans outstanding during the period 0.00% 0.00%
- --------------------------------------------------------------------------------
Allowance for loan losses as a percentage of total loans .85 .96
- --------------------------------------------------------------------------------
<PAGE>
Asset Quality
The Corporation manages asset quality and credit risk by maintaining
diversification in its loan portfolio and through review processes that include
analysis of credit requests and ongoing examination of outstanding loans and
delinquencies, with particular attention to portfolio dynamics and mix. The
Corporation strives to identify loans experiencing difficulty early enough to
correct the problems, to record charge-offs promptly based on realistic
assessments of current collateral values, and to maintain an adequate allowance
for loan losses at all times. These practices have protected the Corporation
during economic downturns and periods of uncertainty.
It is generally the Corporation's policy to discontinue interest accruals once a
loan is past due as to interest/or principal payments for a period of ninety
days. When a loan is placed on non-accrual, interest accruals cease and
uncollected accrued interest is reversed and charged against current income.
Payments received on non-accrual loans are applied against principal. A loan may
only be restored to an accruing status when it again becomes well secured and in
the process of collection and all past due amounts have been collected. Loan
origination fees and certain direct loan origination costs are deferred and
recognized over the life of the loan as an adjustment to the loan's yield.
At March 31, 1999, December 31, 1998 and March 31, 1998, the Corporation had no
restructured loans. Non-accrual loans amounted to $223,000 at March 31, 1999,
and were comprised of residential mortgage, home equity and student loans. At
December 31, 1998 non-accrual loans amounted to $41,000, comprised of home
equity loans. Non-accrual loans as of March 31, 1998 amounted to $225,000 and
were comprised of residential mortgage and home equity loans. At March 31, 1999
the Corporation did not have any loans past due 90 days or more and still
accruing. Such loans amounted to $24,000 at December 31, 1998 and $83,000 as of
March 31, 1998. All of such loans at, December 31, 1998 and March 31, 1998,
consisted of student loans.
------------------------------------------------------------------------
Three Months Ended
Non-Performing Loans March 31,
------------------------------------------------------------------------
(dollars in thousands) 1999 1998
------------------------------------------------------------------------
Loans past due 90 days and still accruing $ 0 $ 83
Non-accrual loans 223 225
------------------------------------------------------------------------
Total non-performing loans $223 $308
------------------------------------------------------------------------
At March 31, 1999 and December 31, 1998 the Corporation's other real estate
owned consisted of a closed branch facility with a carrying value of
approximately $73,000. The Corporation did not have any other real estate owned
at March 31, 1998.
<PAGE>
Other Non-Interest Income
The following table presents the principal categories of non-interest income for
the three month periods ended March 31, 1999 and 1998.
- --------------------------------------------------------------------------------
Three Months Ended
March 31,
Percent
(dollars in thousands) 1999 1998 Change
- --------------------------------------------------------------------------------
Other income:
- --------------------------------------------------------------------------------
Service charges, commissions and fees $176 $180 (2.2)%
Other income 70 43 62.8
---- ---- ----
Total other income $246 $223 10.3 %
- --------------------------------------------------------------------------------
For the three months ended March 31, 1999, total other (non-interest) income
increased $23,000 or 10.3 percent as compared to the three months ended March
31, 1998. The decrease in service charges, commissions and fees is primarily the
result of a decline in account service charges offset in part by an increase in
automated teller machine income. The increase of $27,000 in other income is
primarily attributable to letters of credit income.
Other Non-interest Expense
The following table presents the principal categories of non-interest expense
for the three month periods ended March 31, 1999 and 1998.
- --------------------------------------------------------------------------------
Three Months Ended
March 31,
Percent
(dollars in thousands) 1999 1998 Change
- --------------------------------------------------------------------------------
Other expense:
- --------------------------------------------------------------------------------
Salaries and employee benefits $1,668 $1,335 24.9%
Occupancy expense, net 297 262 13.4%
Premise and equipment expense 320 271 18.1%
Marketing and advertising 165 109 51.4%
Stationery and printing 91 40 127.5%
Other expenses 591 560 5.5%
- --------------------------------------------------------------------------------
Total other expense $3,132 $2,577 21.5%
- --------------------------------------------------------------------------------
For the three month period ended March 31, 1999 total other (non-interest)
expenses increased $555,000 or 21.5 percent over the three months ended March
31, 1998. The level of operating expenses during the first three months of 1999
was unfavorably impacted by an increase in all categories. While management
continues to emphasize expense control, the year to year increases in expenses
are attributable to the continued expansion of facilities, continued investment
in technology and the need to attract, develop and retain high-calibre
employees. The Corporation's ratio of other expenses (annualized) to average
assets increased to 2.63 percent in the first three months of 1998 from 2.19
percent in the first three months of 1998. The Corporation's efficiency ratio
(defined as non-interest expenses divided by taxable-equivalent net interest
income plus non-interest income) at March 31, 1999 was 63.4 percent compared to
58.8 percent for the first quarter of 1998.
<PAGE>
Salaries and employees benefits increased $333,000 or 24.9 percent in the first
three months of 1999 over the comparable three month period ended March 31,
1998. This increase is primarily attributable to higher staffing levels, normal
merit increases; promotional raises and higher benefit costs. Staffing levels
overall increased to 155 full-time equivalent employees at March 31, 1999 as
compared to 144 full-time equivalent employees at March 31, 1998.
Occupancy and bank premise and equipment expense for the three month period
ended March 31, 1999 increased $84,000 or 15.8 percent over the comparable three
month period in 1998. This increase in bank premise and equipment expense in
1999 is primarily attributable to higher operating costs of the Corporation's
facilities coupled with a higher depreciation expense. Occupancy expenses also
reflect increased weather related operating expenses of the Corporation's
facilities. For the three month period ended March 31, 1999, rental expenses
increased $5,000 over the comparable three month period in 1998.
Provision for Income Taxes
The effective tax rate for the three month period ended March 31, 1999 was 32.9
percent as compared to 32.4 percent for the three months ended March 31, 1998.
The effective tax rates for the first quarter of 1999 and 1998 approximate the
statutory Federal tax rate of 34 percent, offset by an increase in tax-exempt
interest income on obligations of states and political subdivisions.
Asset Liability Management
The composition of the Corporation's statement of condition is planned and
monitored by the Asset and Liability Committee (ALCO). Asset and Liability
management encompasses the control of interest rate risk (interest sensitivity
management) and the ongoing maintenance and planning of liquidity and capital.
In general, management's objective is to optimize net interest income and
minimize interest rate risk by monitoring these components of the statement of
condition.
Interest Sensitivity
The management of interest rate risk is also important to the profitability of
the Corporation. Interest rate risk arises when an earning asset matures or when
its interest rate changes in a time period different from that of a supporting
interest bearing liability, or when an interest bearing liability matures or
when its interest rate changes in a time period different from that of an
earning asset that it supports. While the Corporation matches only a small
portion of specific assets and liabilities, total earning assets and interest
bearing liabilities are grouped to determine the overall interest rate risk
within a number of specific time frames.
Interest sensitivity analysis attempts to measure the responsiveness of net
interest income to changes in interest rate levels. The difference between
interest sensitive assets and interest sensitive liabilities is referred to as
the interest sensitivity gap. At any given point in time, the Corporation may be
in an asset sensitive position, whereby its interest-sensitive assets exceed its
interest-sensitive liabilities, or in a liability sensitive position, whereby
its interest-sensitive liabilities exceed its interest-sensitive assets,
depending on management's judgment as to projected interest rate trends.
<PAGE>
The Corporation's rate sensitivity position in each time frame may be expressed
as assets less liabilities, as liabilities less assets, or as the ratio between
rate sensitive assets (RSA) and rate sensitive liabilities (RSL). For example, a
short funded position (liabilities repricing before assets) would be expressed
as a net negative position, when period gaps are computed by subtracting
repricing liabilities from repricing assets. When using the ratio method, a
RSA/RSL ratio of 1 indicates a balanced position, a ratio greater than 1
indicates an asset sensitive position, and a ratio less than 1 indicates a
liability sensitive position.
A negative gap and/or a rate sensitivity ratio less than 1 tends to expand net
interest margins in a falling rate environment and to reduce net interest
margins in a rising rate environment. Conversely, when a positive gap occurs,
generally margins expand in a rising rate environment and contract in a falling
rate environment.
From time to time, the Corporation may elect to deliberately mismatch
liabilities and assets in a strategic gap position.
At March 31, 1999, the Corporation reflects an interest sensitivity gap (or an
interest sensitivity ratio) of .88 at the cumulative one year position. During
much of 1998 the Corporation had a negative interest sensitivity gap. The
maintenance of a liability-sensitive position during 1998 had a favorable impact
on the Corporation's net interest margins; however, based on management's
perception that interest rates will continue to be unpredictable, emphasis has
been placed on interest-sensitivity matching with the objective of achieving a
wider net interest spread during 1999.
Liquidity
The liquidity position of the Corporation is dependent on successful management
of its assets and liabilities so as to meet the needs of both deposit and credit
customers. Liquidity needs arise principally to accommodate possible deposit
outflows and to meet customers' requests for loans. Such needs can be satisfied
by scheduled principal loan repayments, maturing investments, short-term liquid
assets and deposit in-flows. The objective of liquidity management is to enable
the Corporation to maintain sufficient liquidity to meet its obligations in a
timely and cost-effective manner. Management monitors current and projected cash
flows, and adjusts positions as necessary to maintain adequate levels of
liquidity. By using a variety of potential funding sources and staggering
maturities, the risk of potential funding pressure is significantly reduced.
Management also maintains a detailed liquidity contingency plan designed to
adequately respond to situations which could lead to liquidity concerns.
Anticipated cash flows at March 31, 1999 which provide the Bank with liquidity
remain strong with approximately $91 million in anticipated repayments and
maturities over the next twelve months. This projection represents a
forward-looking statement under the Private Securities Litigation Reform Act of
1995. Actual results could differ materially from this projection depending upon
a number of factors, including the liquidity needs of the Bank's customers, the
availability of sources of liquidity and general economic conditions.
The Corporation derives a significant portion of its liquidity from its core
deposit base. At March 31, 1999, core deposits (comprised of total demand and
savings accounts plus money market accounts under $100,000) represented 58.6
percent of total deposits. More volatile rate sensitive deposits, concentrated
in certificates of deposit $100,000 and more, decreased to 14.2 percent of total
deposits from 23.7 percent at March 31, 1998.
<PAGE>
The decrease in average funding sources during the three months ended March 31,
1999 resulted primarily from an increase in core deposits offset by a decrease
of $53.7 million in time deposits primarily Certificates of Deposit of $100,000
and more. Non-interest bearing funding sources as a percentage of the funding
mix increased to 18.9 percent on average as compared to 17.5 percent for the
three month period ended March 31, 1998. Demand deposits as a percentage of the
funding mix replaced more expensive interest-bearing core deposits.
Borrowings can be used to satisfy daily funding needs. Balances in these
accounts fluctuate on a day-to-day basis. The Corporation's principal short-term
funding sources are securities sold under agreement to repurchase. The
Corporation also utilizes advances from the Federal Home Loan Bank of New York
as a funding source. Average short-term borrowings during the first three months
of 1999 were $54.2 million, an increase of $42.9 million from $11.3 million in
average short-term borrowings during the comparable three months ended March 31,
1998. This change was due to a decrease in more volatile Certificates of Deposit
of $100,000 and more.
Cash Flow
The consolidated statements of cash flows present the changes in cash and cash
equivalents from operating, investing and financing activities. During the three
months ended March 31, 1999, cash and cash equivalents (which increased overall
by $18.4 million) were provided (on a net basis) by operating and financing
activities and used in investing activities to expand loan volume and purchase
investments.
Stockholders' Equity
Stockholders' equity averaged $37.1 million for the three month period ended
March 31, 1999, an increase of $2.8 million or 8.3 percent from $34.3 million,
the same period in 1998. The Corporation's dividend reinvestment and optional
stock purchase plan raised $110,000 in new capital for the three months ended
March 31, 1999. Tangible book value per common share, which has been restated to
reflect the 5% stock dividend payable June 1, 1999 to stockholders of record on
May 18, 1999 and the 3-for-2 stock split distributed on May 29, 1998 was $8.99
at March 31, 1999 as compared to $8.33 at March 31, 1998.
Capital
The maintenance of a solid capital foundation continues to be a primary goal for
the Corporation. Accordingly, capital plans and dividend policies are monitored
on an ongoing basis. The most important objective of the capital planning
process is to balance effectively the retention of capital to support future
growth and the goal of providing stockholders with an attractive long-term
return on their investment.
Risk-Based Capital/Leverage
FDIC regulations require banks to maintain minimum levels of regulatory capital.
Under the regulations in effect at March 31, 1999, the Bank was required to
maintain (i) a minimum leverage ratio of Tier 1 capital to total adjusted assets
of 4.0%, and (ii) minimum ratios of Tier 1 and total capital to risk-weighted
assets of 4.0% and 8.0%, respectively.
<PAGE>
At March 31, 1999, total Tier I capital (defined as tangible stockholders'
equity for common stock and certain perpetual preferred stock) amounted to $33.2
million or 6.69 percent of total assets. The total Tier I leverage capital ratio
was 7.01 percent of total assets. Tier I capital excludes the effect of SFAS No.
115, which amounted to $598,000 of net unrealized gain, after tax, on securities
available-for-sale (included in the accumulated other comprehensive income
component of stockholders' equity) and goodwill of $2,978,000 as of March 31,
1999.
At March 31, 1999, the Corporation's estimated Tier I and total risk-based
capital ratios were 15.68 percent and 16.31 percent, respectively. These ratios
are well above the minimum guidelines of capital to risk adjusted assets in
effect as of March 31, 1999.
Under its prompt corrective action regulations, the FDIC is required to take
certain supervisory actions (and may take additional discretionary actions) with
respect to an undercapitalized institution. Such actions could have a direct
material effect on the institution's financial statements. The regulations
establish a framework for the classification of financial institutions into five
categories: well capitalized, adequately capitalized, undercapitalized,
significantly undercapitalized, and critically undercapitalized. Generally, an
institution is considered well capitalized if it has a leverage (Tier 1) capital
ratio of at least 5.0%; a Tier 1 risk-based capital ratio of at least 6.0%; and
a total risk-based capital ratio of at least 10.0%.
The foregoing capital ratios are based in part on specific quantitative measures
of assets, liabilities and certain off-balance sheet items as calculated under
regulatory accounting practices. Capital amounts and classifications are also
subject to qualitative judgments by the FDIC about capital components, risk
weightings and other factors.
As of March 31, 1999, management believes that the Bank meets all capital
adequacy requirements to which it is subject.
Year 2000 Century Date Change
In May 1997, the Federal Financial Institutions Examination Council (FFIEC)
issued a joint statement updating its prior statement, issued in June of 1996,
addressing the assessment and preparedness for the Year 2000 Century date
change. Regulators have defined a formal year 2000 management process to assist
the financial industry in dealing with this issue on a timely basis.
The year 2000 century date change poses a significant challenge for financial
institutions, as well as all businesses, because many computer programs and
applications will cease to function normally as a result of the way that date
fields have been programmed historically. This date problem exists because the
two-digit representation of the year will be interpreted in many applications to
mean the year 1900, not 2000, unless the date or program logic is changed. The
result could be a number of errors, including incorrect mathematical
calculations and lost system files.
The Corporation has implemented a strategic plan designed to ensure that all
information technology, including software and hardware, used in connection with
the Corporation's business will handle date related data in a manner which will
provide accurate results. The project objectives include assessment of the full
effect of the Year 2000 issue, system development for testing and implementing
solutions, determining how the Corporation will coordinate processing
capabilities with its customer, vendor, and payment partners, and determining
internal control requirements.
<PAGE>
As of March 1999, management has completed all phases of the plan, including
identification, modification, and testing. Management believes that the
Corporation is currently compliant with regulatory milestone dates. At present,
total costs to the Corporation of achieving Year 2000 compliance are estimated
at $470,000 of which the Corporation has incurred $328,000 as of March 31, 1999.
Approximately 75 to 80 percent has been invested in new technology while the
remainder approximates the amount of direct expense. However, management
believes that such costs may rise if and when additional issues arise that may
require additional expenditures to make the Corporation Year 2000 compliant. In
addition management has begun an evaluation process necessary to formulate a
comprehensive contingency plan. As part of the contingency planning, the
Corporation will implement a due diligence process that identifies significant
customers, and third parties posing material Year 2000 risks, evaluates their
Year 2000 preparedness, assesses their Year 2000 risk and implements appropriate
risk controls. The contingency planning process was completed during the fourth
quarter of 1998 and implementation of the various components of the contingency
plan is scheduled for the second quarter of 1999. Management's goal is to be
compliant with regulatory guidelines by June 1999, although no assurances can be
given that the Corporation will be able to satisfy this objective. The
immediately preceding sentence constitutes a forward-looking statement under the
Private Securities Litigation Reform Act of 1995. Actual results could differ
materially from the Corporation's forward-looking statement as a result of a
variety of factors, including potential unavailability of technological
resources, increased expenses associated with obtaining such resources and
unanticipated technological difficulties.
The Corporation believes that its Year 2000 project will allow it to be Year
2000 compliant in a timely manner. There can be no assurances, however, that the
Corporation's information technology systems or those of a third party on which
the Corporation relies will be Year 2000 compliant by the year 2000 or that the
Corporation's contingency plans will mitigate the effects of any noncompliance.
An interruption of the Corporation's ability to conduct its business due to a
Year 2000 readiness problem could have a material adverse effect on the
Corporation's business operations or financial condition.
Qualitative and Quantitative Disclosures About Market Risks
Not applicable
No significant change from the information provided in the Corporation's Annual
Report on Form 10-K for the year ended December 31, 1998.
<PAGE>
II. OTHER INFORMATION
Item 1 Legal proceedings
The Corporation is subject to claims and lawsuits which arise primarily in the
ordinary course of business. Based upon the information currently available, it
is the opinion of management that the disposition or ultimate determination of
such claims will not have a material adverse impact on the consolidated
financial position or results of operations, or liquidity of the Corporation.
Item 2 Changes in Securities
On April 13, 1999, the Board of Directors of the registrant declared a 5% stock
dividend on the common stock of the registrant, payable on June 1, 1999 to
stockholders of record May 18, 1999. All share data has been retroactively
adjusted for the common stock dividend.
Item 4 Submission of Matters to Vote of Security Holders
The Annual Meeting of shareholders was held on Tuesday, April 13, 1999.
The following Class 3 Directors, whose three year terms will expire in 2002,
were re-elected on the following share votes.
For Withheld/Agaisnt
--- ----------------
Robert L. Bischof 2,801,738 21,192
Paul Lomakin, Jr. 2,801,738 21,192
Herbert Schiller 2,801,738 21,192
The following Class 2 Directors, terms continue until the 2000 Annual Meeting
Hugo Barth
Stanley R. Sommer
Alexander A. Bol
William A. Thompson
The following Class 1 Directors, terms continue until the 2001 Annual Meeting.
John J. Davis
Brenda Curtis
Donald G. Kein
Charles P. Woodward
The shareholders also approved the adoption of the Center Bancorp 1999 Employee
Stock Incentive Plan by the following share vote.
For 2,698,596
Agaisnt 140,768
Abstain 158,897
Broker Non-Votes 6,670
<PAGE>
Item 6 Exhibits and Reports on Form 8-K
A) Exhibits: Exhibit (27-1) - Center Bancorp Inc.
Financial Data Schedule - March 31, 1999
B) Reports on Form 8-K
There were no reports on Form 8-K filed during the three
months ended March 31, 1999.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf, by the
undersigned, thereunto duly authorized.
CENTER BANCORP INC.
DATE: May 14, 1999 /s/ Anthony C. Weagley
- --------------------------- ----------------------
Anthony C. Weagley, Treasurer
(Chief Financial Officer)
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 17,134
<INT-BEARING-DEPOSITS> 314,685
<FED-FUNDS-SOLD> 17,200
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 114,791
<INVESTMENTS-CARRYING> 174,058
<INVESTMENTS-MARKET> 175,901
<LOANS> 156,930
<ALLOWANCE> (1,337)
<TOTAL-ASSETS> 496,743
<DEPOSITS> 397,871
<SHORT-TERM> 58,097
<LIABILITIES-OTHER> 3,955
<LONG-TERM> 0
0
0
<COMMON> 7,701
<OTHER-SE> 29,116
<TOTAL-LIABILITIES-AND-EQUITY> 496,743
<INTEREST-LOAN> 2,879
<INTEREST-INVEST> 4,603
<INTEREST-OTHER> 58
<INTEREST-TOTAL> 7,540
<INTEREST-DEPOSIT> 2,357
<INTEREST-EXPENSE> 2,949
<INTEREST-INCOME-NET> 4,573
<LOAN-LOSSES> 18
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 3,132
<INCOME-PRETAX> 1,687
<INCOME-PRE-EXTRAORDINARY> 1,131
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,131
<EPS-BASIC> .30
<EPS-DILUTED> .30
<YIELD-ACTUAL> 6.93
<LOANS-NON> 223
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,326
<CHARGE-OFFS> 8
<RECOVERIES> 1
<ALLOWANCE-CLOSE> 1,337
<ALLOWANCE-DOMESTIC> 1,290
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 47
</TABLE>
