<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, 2000 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 April 30, 2000
Common stock no par value - 3,815,346 shares
-1-
<PAGE>
CENTER BANCORP, INC.
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE
<S> <C>
Item 1. Financial Statements
Consolidated Statements of Condition
March 31, 2000 (unaudited) and December 31, 1999 3
Consolidated Statements of Income
Three Months Ended March 31, 2000 and 1999 4
(unaudited)
Consolidated Statements of Cash Flows
Three Months Ended March 31, 2000 and 1999 5
(unaudited)
Notes to the Consolidated Financial Statements 6-7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8-18
Item 3. Qualitative and Quantitative Disclosures about
Market Risks 18
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 18
Item 4. Submission of Matters to a Vote of Security Holders 19
Item 6. Exhibits 19
Signature 19
Exhibit Index 20
</TABLE>
-2-
<PAGE>
Center Bancorp, Inc.
Consolidated Statements of Condition
<TABLE>
<CAPTION>
March 31, December 31
(Dollars in Thousands) 2000 1999
- ----------------------------------------------------------------------------------------------------
unaudited
<S> <C> <C>
Assets:
Cash and due from banks $ 16,473 $ 18,675
Investment securities held to maturity approximate
market value of $163,085 in 2000 and $176,542 in 1999) 170,113 183,450
Investment securities available-or-sale 135,832 120,490
--------------------------------------------------------------------------------------------------
Total investment securities 305,945 303,940
--------------------------------------------------------------------------------------------------
Loans, net of unearned income 177,994 169,089
Less - Allowance for loan losses 1,451 1,423
--------------------------------------------------------------------------------------------------
Net loans 176,543 167,66
--------------------------------------------------------------------------------------------------
Premises and equipment, net 9,633 9,778
Accrued interest receivable 4,961 4,727
Other assets 2,747 2,102
Goodwill 2,656 2,736
--------------------------------------------------------------------------------------------------
Total Assets $518,958 $509,624
--------------------------------------------------------------------------------------------------
Liabilities
Deposits:
Non-interest bearing $ 92,391 $ 94,829
Interest bearing:
Certificates of Deposit $100,000 and over 62,966 43,641
Savings and Time Deposits 250,496 250,785
--------------------------------------------------------------------------------------------------
Total Deposits 405,853 389,255
Federal funds purchased and securities sold under
agreements to repurchase 31,915 30,752
Federal Home Loan Bank advances 40,000 50,000
Accounts payable and accrued liabilities 3,950 3,104
--------------------------------------------------------------------------------------------------
Total liabilities 481,718 473,111
Stockholders' equity
Common Stock, no par value:
Authorized 20,000,000 shares; issued 4,258,044 and 4,253,441
shares in 2000 and 1999, respectively 10,825 10,760
Additional paid-in-capital 3,934 3,807
Retained earnings 26,195 25,568
Treasury stock at cost (442,765 and 458,964 shares in 2000
and 1999, respectively) (1,611) (1,674)
Restricted stock (71) (71)
Accumulated other comprehensive loss (2,032) (1,877)
--------------------------------------------------------------------------------------------------
Total stockholders' equity 37,240 36,513
--------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $518,958 $509,624
--------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Consolidated Financial Statements
-3-
<PAGE>
Center Bancorp, Inc.
Consolidated Statements of Income (unaudited)
<TABLE>
<CAPTION>
(Dollars in Thousands, except per share data) 2000 1999
---------------------------------------------------------------------------------------
<S> <C> <C>
Interest Income:
Interest and fees on loans $3,301 $2,879
Interest and dividends on investment securities:
Taxable interest income 4,682 4,311
Non-Taxable interest income 232 207
Interest on Federal funds sold and securities
Purchased under agreement to resell 59 143
---------------------------------------------------------------------------------------
Total interest income 8,274 7,540
---------------------------------------------------------------------------------------
Interest expense:
Interest on certificates of deposit $100,000 or more 715 577
Interest on other deposits 1,884 1,780
Interest on borrowings 927 592
---------------------------------------------------------------------------------------
Total interest expense 3,526 2,949
---------------------------------------------------------------------------------------
Net interest income 4,748 4,591
Provision for loan losses 51 18
---------------------------------------------------------------------------------------
Net interest income after provision for loan losses 4,697 4,573
---------------------------------------------------------------------------------------
Other income:
Service charges, commissions and fees 255 176
Other income 85 70
(Loss) gain on securities sold (55) 0
---------------------------------------------------------------------------------------
Total other income 285 246
---------------------------------------------------------------------------------------
Other expense:
---------------------------------------------------------------------------------------
Salaries and employee benefits 1,683 1,668
---------------------------------------------------------------------------------------
Occupancy expense, net 357 297
---------------------------------------------------------------------------------------
Premises and equipment expense 344 320
---------------------------------------------------------------------------------------
Marketing and advertising 121 165
---------------------------------------------------------------------------------------
Stationery and printing 934 91
---------------------------------------------------------------------------------------
Other expenses 627 591
---------------------------------------------------------------------------------------
Total other expense 3,225 3,132
---------------------------------------------------------------------------------------
Income before income tax expense 1,757 1,687
Income tax expense 561 556
---------------------------------------------------------------------------------------
Net income $1,196 $1,131
---------------------------------------------------------------------------------------
Earnings per share
Basic $0.31 $0.30
Diluted $0.31 $0.30
---------------------------------------------------------------------------------------
Weighted average common shares outstanding
Basic 3,801,598 3,760,772
Diluted 3,820,368 3,787,237
---------------------------------------------------------------------------------------
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
-4-
<PAGE>
Center Bancorp, Inc.
Consolidated Statements of Cash Flows (unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------
(Dollars in thousands) 2000 1999
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,196 $1,131
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 371 332
Provision for loan losses 51 18
Loss on sale of investment securities available-for-sale 55 0
Increase in accrued interest receivable (234) (333)
Increase in other assets (646) (268)
Increase in other liabilities 846 221
Amortization of premium and accretion of
discount on investment securities, net (11) 17
- --------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 1,628 1,118
- --------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of securities available-for sale 2,892 14,023
Proceeds from maturuties of securities held-to maturity 3,425 20,453
Proceeds from sales of securities available-for-sale 11,232 0
Proceeds from redemption of FHLB stock 4,803 0
Purchase of securities available-for-sale (9,123) (13,378)
Purchase of securities held-to-maturity (15,433) (22,513)
Net increase in loans (8,928) (6,820)
Property and equipment expenditures, net (145) (296)
- --------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (11,277) (8,531)
- --------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits 16,598 20,704
Dividends paid (569) (537)
Proceeds from issuance of common stock 255 110
Net (decrease) increase in short term borrowing (8,837) 5,495
- --------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 7,447 25,772
- --------------------------------------------------------------------------------------------------------------
Net (decrease) increase in cash and cash equivalents (2,202) 18,359
- --------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at beginning of period 18,675 15,975
- --------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $16,473 $34,334
- --------------------------------------------------------------------------------------------------------------
Supplemental disclosures of cash flow information:
Interest paid on deposits and short-term borrowings $ 3,316 $ 3,047
Income Taxes $ 561 $ 455
- --------------------------------------------------------------------------------------------------------------
Transfer of investment securities held to maturity
to investment securities available-for-sale $25,358 $ 0
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
-5-
<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. Results for the period ended March 31, 2000 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, 1999 for information regarding accounting principles.
NOTE 2
RECENT ACCOUNTING PRONOUNCEMENTS
SFAS No. 133 and 137 In June 1998, the FASB issued 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 recognizes 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
market 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.
This Statement was originally 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 quarterly; 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.
-6-
<PAGE>
In June 1998, the Financial Accounting Standards Board issued Statement No. 137
"Accounting for Derivative Instruments and Hedging Activities - Deferral of the
Effective Date of FASB Statement No. 133" which amended SFAS No. 133 to be
effective for all fiscal years beginning after June 15, 2000.
On January 1, 2000 the Corporation adopted SFAS 133 and SFAS 137. The transition
provisions contained in SFAS 133 provide that at the date of initial
application, an entity may transfer any debt security classified as "held to
maturity (HTM) " to "available-for-sale (AFS)" or "trading." On the initial
adoption date of SFAS 133 as amended by SFAS 137, the Bank transferred
$25,357,952 (amortized cost) of its securities previously classified as held to
maturity to the available-for-sale classification. The related unrealized net
gain as of transfer date was $5,109, which has been recognized in the
comprehensive income component of stockholders' equity, as the cumulative effect
of adopting the new accounting principles.
NOTE 3
The Corporation has adopted FASB Statement No. 130, "Reporting Comprehensive
Income"; the required disclosure is contained in the table set forth below.
Three Months Ended March 31,
Comprehensive Income 2000 1999
-----------------------------------------------------------------------
(Dollars in thousands)
-----------------------------------------------------------------------
Net income $1,196 $1,131
Other comprehensive income
Unrealized holding losses gains arising
during the period, net of taxes (191) (515)
Less reclassification adjustment
for losses included in net
income (net of tax benefit) 36 0
-----------------------------------------------------------------------
Other comprehensive income (loss) (155) (515)
-----------------------------------------------------------------------
Total comprehensive income $ 1,041 $ 616
=======================================================================
-7-
<PAGE>
ITEM 2.
Management's Discussion & Analysis of Financial Condition
and Results of Operations
Net income and earnings per share (Basic and Diluted) increased 5.8% for the
first quarter of 2000 when compared to the first quarter of 1999. Net income for
the three months ended March 31, 2000 was $1,196,000 as compared to $1,131,000
earned for the comparable three-month period of 1999. On a diluted per share
basis, earnings were $0.31 and $.30 for the three months ended March 31, 2000
and 1999, respectively. The annualized return on average assets was 0.94 percent
for the three months ended March 31, 2000, and 1999, while the annualized return
on average stockholders' equity was 12.96 percent and 12.21 percent,
respectively. Earnings performance for the three months ended March 31, 2000
reflected increased net interest income partially offset by increases in
non-interest expense.
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,
(dollars in thousands) Percent
2000 1999 Change
------- ------- -------
Interest income:
Investments $4,914 $4,518 8.8%
Loans, including fees 3,301 2,879 14.7
Federal funds sold and securities
sold under agreement to repurchase 59 143 (58.7)
------ ------ -----
Total interest income 8,274 7,540 9.7
-----------------------------------------------------------------
Interest expense:
Certificates of Deposit of $100,000
or more 715 577 23.9
Savings and Time 1,884 1,780 5.8
Borrowings 927 592 56.6
------ ------ -----
Total interest expense 3,526 2,949 19.6
------ ------ -----
NET INTEREST INCOME* 4,748 4,591 3.4
-----------------------------------------------------------------
Tax-equivalent adjustment 120 106 13.2
Net interest income on a fully
tax equivalent basis $4,868 $4,697 3.6%
-------------------------------------------------------------------
*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.
-8-
<PAGE>
Net interest income on a fully tax-equivalent basis increased $171,000 or 3.6
percent to $4.9 million for the three months ended March 31, 2000, from $4.7
million for the comparable period in 1999. The net interest spread decreased to
3.42 percent from 3.58 percent due to the increased cost of funds reflecting the
higher rates paid on interest-bearing liabilities. For the first three months of
2000, the increase in the average yield on interest-earning assets of 24 basis
points was offset by a more substantial increase in the average cost of
interest-bearing liabilities of 40 basis points. Average interest-earning assets
increased $27.2 million as compared with the three-month period in 1999. The net
decrease in average interest-bearing liabilities was $24.3 million over the
comparable three-month period in 1999. The 2000 first quarter changes in average
volumes were primarily due to increased volumes of loans and non-taxable
investments funded with more costly interest-bearing liabilities.
For the three-month period ended March 31, 2000, interest income
(tax-equivalent) increased by $171,000 or 3.6 percent over the comparable three
month period in 1999. The primary factor contributing to the increase was the
growth of earning assets, primarily loans. The Corporation's loan portfolio
increased on average $20.7 million to $173.0 million from $152.3 million in the
same quarter in 1999, primarily reflecting growth in commercial loans,
commercial mortgages and home equity lines of credit. This growth was funded
through a decrease in federal funds sold and increased short-term borrowings.
The loan portfolio (traditionally the Corporation's highest yielding
earning-asset) represented 36 and 34 percent, of the Corporation's
interest-earning assets (on average) during the first quarter of 2000 and 1999,
respectively. Interest income generated from the loan portfolio during the first
three months of 2000 was driven by the increased loan demand attributed in part
to an aggressive business development program.
The Corporation's taxable securities portfolio increased on average $11.8
million to $277.0 million from $265.2 million in the same quarter in 1999. The
non-taxable portfolio increased (on average) $2.0 million to $20.4 million from
$18.4 million in the same quarter in 1999. The continued growth of non-taxable
investment securities reflects the change in interest rates, which at the time
of Purchase made the yield on the individual non-taxable investments more
attractive.
For the three months ended March 31, 2000, interest expense increased $577,000
or 19.6 percent as compared with the comparable three-month period in 1999.
Total interest-bearing liabilities increased on average $24.3 million to $381.1
million for the 2000-quarter from $356.8 million in the same quarter in 1999.
The most significant change in the cost of funding was in the average rates paid
on borrowings and time deposits. During the first quarter of 2000 the average
rate paid on borrowings was 5.09 percent, an increase of or 72 basis points from
the 4.37 percent paid during the same quarter in 1999. The rates paid for time
deposits increased 48 basis points to 5.09 percent compared to 4.61 percent paid
in first quarter 1999.
For the three months ended March 31, 2000, 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) decreased to 4.16 percent from
4.26 percent, for the three months ended March 31, 1999. The decrease reflected
a higher cost of funds, driven by an increase in interest rates twice by the
Federal Reserve, coupled with a narrowing of spreads between yields earned on
loans and investments. The favorable change in the mix of interest-earning
assets, primarily the increased loan volumes, was sufficient to offset the
unfavorable change in the mix of interest-bearing liabilities to more costly
funding, primarily short-term borrowings.
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) remained stable at approximately 68 basis points
during the first three months of 2000 and 1999. The consumer changes that
currently prevail in the industry, primarily the movement of all monies to some
sort of interest-bearing deposit product, continue to lessen the contribution of
non-interest bearing deposits.
-9-
<PAGE>
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.
<TABLE>
<CAPTION>
Analysis of Variance in Net Interest Income Due to Volume and Rates
(Tax-Equivalent Basis)
---------------------------------------------------------------------------------
(2000/1999 Increase/(Decrease)
Due to Change in:
(dollars in thousands) Average Average Net
Interest-earning assets Volume Rate Change
------- ------- -------
<S> <C> <C> <C>
Investment Securities
Taxable $196 $175 $371
Non-taxable 34 5 39
Federal funds sold and securities purchased
under agreement to resell (100) 16 (84)
Loans, net of unearned discount 395 27 422
------ ------ ------
Total interest-earning assets 525 223 748
----------------------------------------------------------------------------
Interest-bearing liabilities:
Money Market deposits 45 17 62
Savings deposits (15) 1 (14)
Time deposits 41 142 183
Other interest-bearing deposits (3) 14 11
Borrowings 227 108 335
------ ------ ------
Total interest-bearing liabilities 295 282 577
----------------------------------------------------------------------------
Change in net interest income $230 $ (59) $171
----------------------------------------------------------------------------
</TABLE>
-10-
<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, 2000
and 1999 are also reflected.
Average Balance Sheet with Interest and Average Rates
<TABLE>
<CAPTION>
Three Month
Period Ended March 31,
2000 1999
- -------------------------------------------------------------------------------- -------------------------------
Interest Average Interest Average
(tax equivalent basis, dollars in Average Income/ Yield/ Average Income/ Yield/
thousands) Balance Expense Rate Balance Expense Rate
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Assets
Interest-earning assets:
Investment securities: (1)
Taxable $276,970 $4,682 6.86% $265,165 $4,311 6.59%
Non-taxable 20,352 352 6.92% 18,371 313 6.82%
Federal Funds sold and securities
Purchased under agreement to resell 4,179 59 5.73% 11,432 143 5.07%
---------- ---------- ------ -------- ------ ------
Loans, net of unearned income(2) 173,030 3,301 7.74% 152,335 2,879 7.66%
---------- ---------- ------ -------- ------ ------
Total interest-earning assets 474,531 8,394 7.17% 447,303 7,646 6.93%
---------- ------
Non-interest earning assets
Cash and due from banks 14,879 13,128
Other assets 20,380 17,881
Allowance for possible loan losses (1,428) (1,329)
---------- --------
Total non-interest earning
assets 33,831 29,680
---------- --------
Total assets $508,362 $476,983
========== ========
Liabilities and stockholders'
equity
Interest-bearing liabilities:
Money Market deposits $ 70,264 537 3.10% $ 64,321 475 2.99%
Savings deposits 71,596 348 1.97% 74,669 362 1.97%
Time deposits 121,927 1,529 5.09% 118,392 1,346 4.61%
Other interest bearing deposits 44,362 185 1.69% 45,189 174 1.56%
Borrowings 72,908 927 5.09% 54,227 592 4.37%
---------- ---------- ------ -------- ------ -----
Total interest-bearing liabilities
liabilities 381,057 3,526 3.75% 356,798 2,949 3.35%
Noninterest-bearing liabilities:
Demand deposits 86,395 78,953
Other noninterest-bearing deposits 573 436
Other liabilities 3,419 3,699
---------- --------
Total noninterest-bearing
liabilities 90,387 83,088
Stockholders' equity 36,918 37,097
---------- --------
Total liabilities and
Stockholders' equity $508,362 $476,983
========== ========
Net Interest Income
(tax equivalent basis) 4,868 4,697
---------- ------
Net interest spread 3.42% 3.58%
Net Interest Income as percent of
Earning assets (margin) 4.16% 4.26%
Tax equivalent adjustment (3) (120) (106)
---------- ------
Net interest income $4,748 $4,591
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Average balances for available -for-sale securities are based on amortized
cost
(2) Average balances for loans include loans on non-accrual status
(3) The tax-equivalent adjustment was computed based on a statutory Federal
income tax rate of 34 percent
-11-
<PAGE>
Investments
For the three months ended March 31, 2000, the average balance of investment
securities increased by $13.8 million as compared to the same period in 1999.
The tax-equivalent yield on investments increased to 6.77 percent or by 16 basis
points from a yield of 6.61 percent during the three-month period ended March
31, 1999. The increased yield on the investment portfolio in 2000 resulted from
purchases made at rates equal to or higher than investments which had matured,
were prepaid or were called, coupled with the increased average volume of
securities in the investment portfolio.
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, 2000, the total investment
portfolio, excluding overnight investments, averaged $297.3 million, or 62.7
percent of earning assets, as compared to $283.5 million or 63.4 percent of
earning-assets at March 31, 2000. The principal components of the investment
portfolio are Federal Agency, Treasury and Municipal securities.
In response to rising interest rates, during the first quarter of 2000 the
Corporation sold approximately $11.3 million of securities from the available
for sale portfolio and recorded net loss of approximately $55,000. The proceeds
from the sale of these securities were subsequently reinvested, as part of an
overall investment strategy, into the available-for-sale portfolio at higher
interest rates.
At March 31, 2000 the net unrealized loss included in the accumulated other
comprehensive income component of shareholders' equity amounted to an unrealized
loss $2.0 million, as compared with an unrealized loss of $1.9 million at
December 31, 1999.
Loans
Loan growth during the first quarter of 2000 occurred in all segments of the
loan portfolio. This growth resulted primarily from the Corporation's business
development programs and new markets. The increase in the yield in the portfolio
was a result of a higher prime rate environment, coupled with the increased
volumes as a result of more competitive rate structures, to attract new loans.
The results of increased volume were lessened by continued prepayment activity
and by the heightened competitive activity in our lending markets.
For the three months ended March 31, 2000, average loans increased $24.7
million, while the portfolio yield increased 8 basis points as compared with the
same period in 1999. The volume-related factors contributed increased interest
income of $395,000 coupled with $27,000 of rate related changes. Total average
loans increased to $173.0 million with a net interest yield of 7.74 percent, as
compared to $152.3 million with a yield of 7.66 percent for the three months
ended March 31, 1999.
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, 2000 the allowance was $1,451,000 as compared to
$1,423,000 at December 31, 1999. The provision for loan losses for the quarter
ended March 31, 2000, amounted to $51,000 compared to $18,000 for the first
quarter of 1999. 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 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 .82 percent and .85 percent at March 31, 2000, and 1999,
respectively. In Management's view the level of the allowance at March 31, 2000
was adequate to cover loss inherent in the loan portfolio.
-12-
<PAGE>
During the quarter ended March 31, 2000, the Corporation did not experience any
substantial problems within its loan portfolio. Net charge-offs were $23,000. At
March 31, 2000, the Corporation had non-performing loans amounting to $275,000
of which all but $2,000 were in non-accrual status, versus $292,000 in
non-performing loans at December 31, 1999 which were in non-accrual status and
$232,000 in non-performing loans at March 31, 1999. The Corporation continues to
aggressively pursue collections of principal and interest on loans previously
charged off.
The value of impaired loans is based on the present value of expected future
cash flows discounted at the loan's effective interest rate or, as a practical
expedient, at the loan's observable market price or at the fair value of the
collateral if the loan is collateral dependent. Impaired loans consist of
non-accrual loans and loans internally classified as substandard or below, in
each instance above an established dollar threshold of $200,000. All loans below
the established dollar threshold are considered homogenous and are collectively
evaluated for impairment. At March 31, 2000 and 1999 the Corporation did not
have any impaired loans. At December 31, 1999, total impaired loans were
approximately $519,000. On March 21, 2000 a $500,000 loan classified as
substandard at December31, 1999 was repaid in full by the borrower while a
$19,000 loan also classified as impaired was charged off.
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 loan losses for the period ended March 31, 2000 and
1999, respectively, are set forth below.
Allowance for Loan Losses
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended March 31
-----------------------------
(Dollars in thousands) 2000 1999
-------- --------
<S> <C> <C>
Average loans outstanding $177,994 $152,335
----------------------------------------------------------------------------------------------
Total loans at end of period 173,030 156,930
----------------------------------------------------------------------------------------------
Analysis of the allowance for loan losses
Balance at the beginning of period 1,423 1,326
Charge-offs:
Commercial 0 0
Real estate mortgage 0 0
Installment loans 23 8
-----------------------------------------------------------------------------------------------
Total charge-offs 23 8
Recoveries:
Commercial 0 0
Real estate mortgage 0 0
Installment loans 0 1
-----------------------------------------------------------------------------------------------
Total recoveries 0 1
Net charge-offs: 23 7
Provision for Loan Losses 51 18
-----------------------------------------------------------------------------------------------
Balance at end of period $1,451 $1,337
-----------------------------------------------------------------------------------------------
Ratio of net charge-offs during the period to
Average loans outstanding during the period 0.01% 0.00%
-----------------------------------------------------------------------------------------------
Allowance for loan losses as a percentage of total loans .82 .85
-----------------------------------------------------------------------------------------------
</TABLE>
-13-
<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, 2000, December 31, 1999 and March 31, 1999, the Corporation had no
restructured loans. Non-accrual loans amounted to $273,000 at March 31, 2000,
and were comprised of residential mortgage and a home equity loan. At December
31, 1999, non-accrual loans amounted to $292,000, comprised of residential
mortgage and home equity loans. Non-accrual loans as of March 31, 1999 amounted
to $223,000 and were comprised of residential mortgage and home equity loans. At
March 31, 2000 and 1999 loans past due 90 days or more and still accruing
amounted to $2,000 and $0 respectively.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
Non-Performing Loans at March 31, December 31, March 31,
------------------------------------------------------------------------------------------------
(dollars in thousands) 2000 1999 1999
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Loans past due 90 days and still accruing $ 2 $ 0 $ 0
Non-accrual loans 273 292 223
------------------------------------------------------------------------------------------------
Total non-performing loans $275 $292 $223
------------------------------------------------------------------------------------------------
</TABLE>
At March 31, 2000, December 31, 1999, and March 31, 1999, the Corporation's
other real estate owned consisted of a closed branch facility with a carrying
value of approximately $73,000. On April 17, 2000 the Corporation sold the
closed branch facility.
Other Non-Interest Income
The following table presents the principal categories of non-interest income for
the three-month periods ended March 31, 2000 and 1999.
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------
Three Months Ended
March 31,
Percent
(dollars in thousands) 2000 1999 Change
---------------------------------------------------------------------------------
<S> <C> <C> <C>
Other income:
---------------------------------------------------------------------------------
Service charges, commissions and fees $ 255 $ 176 44.9%
Other income 85 70 21.4
Net loss on securities sold (55) 0 100.0
---------------------------------------------------------------------------------
Total other income $ 285 $ 246 15.9%
---------------------------------------------------------------------------------
</TABLE>
-14-
<PAGE>
For the three months ended March 31, 2000, total other (non-interest) income,
exclusive of losses on securities sold, increased $95,000 or 38.8 percent as
compared to the three months ended March 31, 1999. The increase in service
charges, commissions and fees was a result of increased fee income derived from
ATM fees and deposit account activity. The increase of $15,000 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, 2000 and 1999.
<TABLE>
<CAPTION>
---------------------------------------------------------------------------
Three Months Ended
March 31,
Percent
(dollars in thousands) 2000 1999 Change
---------------------------------------------------------------------------
<S> <C> <C> <C>
Other expense:
---------------------------------------------------------------------------
Salaries and employee benefits $1,683 $1,668 .9%
Occupancy expense, net 357 297 20.2%
Premise and equipment expense 344 320 7.5%
Marketing and advertising 121 165 (26.7)%
Stationery and printing 93 91 2.2%
Other expenses 627 591 6.1%
---------------------------------------------------------------------------
Total other expense $3,225 $3,132 3.0%
---------------------------------------------------------------------------
</TABLE>
For the three month period ended March 31, 2000, total other (non-interest)
expenses increased $93,000 or 3.0 percent over the three months ended March 31,
1999. The level of operating expenses during the first three months of 2000 was
impacted by increases related to the continued growth of the Bank. 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-caliber employees. The Corporation's ratio of other expenses (annualized)
to average assets decreased to 2.54 percent in the first three months of 2000
from 2.63 percent in the first three months of 1999.
The Corporation's efficiency ratio (defined as non-interest expenses divided by
taxable-equivalent net interest income plus non-interest income) at March 31,
2000 was 61.0 percent compared to 63.4 percent for the first quarter of 1999.
Salaries and employees benefits increased $15,000 or only 0.9 percent in the
first three months of 2000 over the comparable three month period ended March
31, 1999. Staffing levels overall increased to 160 full-time equivalent
employees at March 31, 2000 as compared to 155 full-time equivalent employees at
March 31, 1999.
Occupancy and bank premise and equipment expense for the three-month period
ended March 31, 2000 increased $84,000 or 13.6 percent over the comparable
three-month period in 1999. This $24,000 increase in bank premise and equipment
expense in 2000 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, as an
increase of $23,000 in rental expenses.
Provision for Income Taxes
The effective tax rate for the three-month period ended March 31, 2000 was 31.9
percent as compared to 32.9 percent for the three months ended March 31, 1999.
The effective tax rates for the first quarter of 2000 and 1999 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.
-15-
<PAGE>
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.
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, 2000, the Corporation reflected an interest sensitivity gap (or an
interest sensitivity ratio) of .40 at the cumulative one year position. During
the first quarter of 2000, the Corporation's negative interest sensitivity gap
had an unfavorable impact on the Corporation's net interest margins; however,
based on management's perception that interest rates will continue to be
unpredictable, with an upward bias, emphasis has been placed on
interest-sensitivity matching with the objective of achieving a wider net
interest spread during 2000. No assurances can be given that the Corporation
will be able to meet this objective.
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. Scheduled principal loan
repayments, maturing investments, short-term liquid assets and deposit in-flows,
can satisfy such needs. The Corporation's 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, 2000, which provide
the Bank with liquidity, remain strong with approximately $157.0 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.
-16-
<PAGE>
The Corporation derives a significant portion of its liquidity from its core
deposit base. At March 31, 2000, core deposits (comprised of total demand and
savings accounts plus money market accounts under $100,000) represented 55.6
percent of total deposits. More volatile rate sensitive deposits, concentrated
in certificates of deposit $100,000 and more, remained stable at 14.2 percent of
total deposits at March 31, 2000 and 1999.
The increase in average funding sources during the three months ended March 31,
2000 resulted primarily from an increase in short-term borrowings of $18.7
million coupled with additional growth of approximately $5.6 million from
deposits. Non-interest bearing funding sources as a percentage of the funding
mix increased to 23.7 percent on average as compared to 18.7 percent for the
three-month period ended March 31, 1999.
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 2000 were $72.9 million, an increase of $18.7 million from $54.2 million in
average short-term borrowings during the comparable three months ended March 31,
1999. 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, 2000, cash and cash equivalents (which decreased overall
by $2.2 million) were used (on a net basis) in investing activities to expand
loan volume and purchase investments. Operating activities provided $1.6 million
in cash flows, principally from net earnings for the quarter. Financing
activities provided $7.4 million, principally reflecting an increase in deposits
over levels at December 31, 1999.
Stockholders' Equity
Stockholders' equity averaged $36.9 million for the three-month period ended
March 31, 2000, a decrease of $179,000 or 4.8 percent from $37.1 million for the
same period in 1999. Tangible book value per common share, was $9.06 at March
31, 2000 as compared to $8.99 at March 31, 1999.
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.
-17-
<PAGE>
Risk-Based Capital/Leverage
FDIC regulations require banks to maintain minimum levels of regulatory capital.
Under the regulations in effect at March 31, 2000, 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.
At March 31, 2000, total Tier I capital (defined as tangible stockholders'
equity for common stock and certain perpetual preferred stock) amounted to $36.6
million or 7.24 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 $2.0 million of net unrealized losses, after tax, on
securities available-for-sale (included in the accumulated other comprehensive
income component of stockholders' equity) and goodwill of $2.6 million as of
March 31, 2000.
At March 31, 2000, the Corporation's estimated Tier I and total risk-based
capital ratios were 15.0 percent and 15.6 percent, respectively. These ratios
are well above the minimum guidelines of capital to risk adjusted assets in
effect as of March 31, 2000.
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, 2000, management believes that the Bank meets all capital
adequacy requirements to which it is subject.
Item 3. Qualitative and Quantitative Disclosures About Market Risks
There was no significant change from the information provided in the
Corporation's Annual Report on Form 10-K for the year ended December 31, 1999.
II. OTHER INFORMATION
Item 1 Legal proceedings
The Corporation is subject to claims and lawsuits that 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, results of operations, or liquidity of the Corporation.
-18-
<PAGE>
Item 4 Submission of Matters to Vote of Security Holders
The Annual Meeting of shareholders was held on Tuesday, April 18, 2000.
The following Class 2 Directors, whose three year terms will expire in 2003,
were re-elected on the following share votes.
For Withheld/Against
---------- ----------------
Hugo Barth 3,237,549 31,048
Alexander A. Bol 3,178,632 89,965
William A. Thompson 3,244,983 23,614
The following Class 1 Directors', terms continue until the 2001 Annual Meeting.
John J. Davis
Brenda Curtis
Donald G. Kein
Charles P. Woodward
The following Class 3 Directors', terms continue until the 2002 Annual Meeting
Robert L. Bischof
Paul Lomakin, Jr.
Herbert Schiller
Item 6 Exhibits and Reports on Form 8-K
A) Exhibits: Exhibit (27-1) - Center Bancorp, Inc. Financial
Data Schedule - March 31, 2000
B) Reports on Form 8-K
There were no reports on Form 8-K filed during the three
months ended March 31, 2000.
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 15, 2000 /s/ Anthony C. Weagley
- -------------------- -------------------------------
Anthony C. Weagley, Treasurer
(Chief Financial Officer)
-19-
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 16,473
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 135,832
<INVESTMENTS-CARRYING> 170,113
<INVESTMENTS-MARKET> 163,085
<LOANS> 177,994
<ALLOWANCE> (1,451)
<TOTAL-ASSETS> 518,958
<DEPOSITS> 405,853
<SHORT-TERM> 71,915
<LIABILITIES-OTHER> 3,950
<LONG-TERM> 0
0
0
<COMMON> 10,825
<OTHER-SE> 26,415
<TOTAL-LIABILITIES-AND-EQUITY> 518,958
<INTEREST-LOAN> 3,301
<INTEREST-INVEST> 4,914
<INTEREST-OTHER> 59
<INTEREST-TOTAL> 8,274
<INTEREST-DEPOSIT> 2,599
<INTEREST-EXPENSE> 3,526
<INTEREST-INCOME-NET> 4,748
<LOAN-LOSSES> 51
<SECURITIES-GAINS> (55)
<EXPENSE-OTHER> 1,757
<INCOME-PRETAX> 1,196
<INCOME-PRE-EXTRAORDINARY> 6,928
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,196
<EPS-BASIC> .31
<EPS-DILUTED> .31
<YIELD-ACTUAL> 7.17
<LOANS-NON> 273
<LOANS-PAST> 2
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,423
<CHARGE-OFFS> 23
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 1,451
<ALLOWANCE-DOMESTIC> 1,334
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 117
</TABLE>
