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SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
Form 10-K
(Mark One)
X Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the fiscal year ended December 31,2001.
___ 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.
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(exact name of registrant as specified in its charter)
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New Jersey 52-1273725
(State or other jurisdiction of IRS Employer
incorporation or organization) identification No.)
2455 Morris Avenue, Union, NJ 07083-0007
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(Address of Principal Executive Offices, Including Zip Code)
(908) 688-9500
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(Registrant's telephone number, including area code)
Securities registered
pursuant to Section 12(b) of the Act: none
Securities registered pursuant to Section 12(g) of the Act:
Common stock, no par value
(Title of class)
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. YesX or No_
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation 5-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of the Form 10-K or any amendment to the
Form 10-K .X
Aggregate Market value of voting stock held by non-affiliates based on the
average of Bid and Asked prices on February 28, 2002 was approximately $77.2
Million.
Shares outstanding on February 28, 2002
Common stock no par value 3,979,557 shares
Parts of Form 10-K in which
Documents Incorporated by reference document is incorporated
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Definitive proxy statement dated March 15, 2002 in connection with the 2002
Annual Stockholders Meeting filed with the Commission pursuant to
Regulation 14A..............................................................................Part III
Annual Report to Stockholders for the fiscal
year ended December 31, 2001......................................................Part I and Part II
INDEX TO FORM 10-K
PART I
ITEM 1 BUSINESS 1
ITEM 2 PROPERTIES 11
ITEM 3 LEGAL PROCEEDINGS 11
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 11
ITEM 4A EXECUTIVE OFFICERS OF THE REGISTRANT 12
PART II
ITEM 5 MARKET FOR THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS 13
ITEM 6 SELECTED FINANCIAL DATA 13
ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 13
ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 13
ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 13
ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE 13
PART III
ITEM 10 DIRECTORS OF THE REGISTRANT 14
ITEM 11 EXECUTIVE COMPENSATION 14
ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT 14
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 14
PART IV
ITEM 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K 15-16
SIGNATURES 17
Center Bancorp Inc.
Form 10 K
Part I
Item I-Business
A)Historical Development Of Business
Center Bancorp, Inc., a one-bank holding company, was incorporated in the state
of New Jersey on November 12, 1982. Center Bancorp, Inc. commenced operations on
May 1, 1983, upon the acquisition of all outstanding shares of The Union Center
National Bank (the "Bank"). The holding company's sole activity, at this time,
is to act as a holding company for the Bank. As used herein, the term
"Corporation" shall refer to Center Bancorp, Inc. and its subsidiaries and the
term "Parent Corporation" shall refer to Center Bancorp, Inc. on an
unconsolidated basis.
The Bank was organized in 1923 under the law of the United States of America.
The Bank operates five offices in Union Township, Union County, New Jersey, one
office in Summit, Union County, New Jersey, one office in Springfield Township,
Union County, New Jersey, one office in Berkeley Heights, Union County, New
Jersey, one office in Madison, Morris County, New Jersey and one office in
Morristown, Morris County, New Jersey and currently employs 172 full-time
equivalent persons. The Bank is a full service commercial bank offering a
complete range of individual and commercial services.
During 2001, the Corporation formed a statutory business trust under the laws of
the State of Connecticut, which exists for the exclusive purpose of (i) issuing
Trust Securities representing undivided beneficial interests in the assets of
the Trust; (ii) investing the gross proceeds of the Trust securities in junior
subordinated deferrable interest debentures (subordinated debentures) of the
Corporation; and (iii) engaging in only those activities necessary or incidental
thereto. These subordinated debentures and the related income effects are
eliminated in the consolidated financial statements. Distributions on the
mandatorily redeemable securities of subsidiary trusts below have been
classified as interest expense in the Consolidated Statement of Income.
On December 11, 2001, the Corporation completed an issuance of $10.0 million in
floating rate Capital Trust Preferred Securities, through a pooled offering with
First Tennessee Capital Markets. The securities are included as a component of
Tier I capital for regulatory capital purposes. The Tier I Leverage capital
ratio subsequently increased to 7.77 percent of total assets at December 31,
2001.
B)Narrative Description Of Business
The Bank offers a broad range of lending, depository and related financial
services including trust, to commercial, industrial and governmental customers.
In 1999, the Bank obtained full trust powers enabling it to offer a variety of
trust services to its customers. In the lending area, the Bank's services
include short and medium term loans, lines of credit, letters of credit, working
capital loans, real estate construction loans and mortgage loans. In the
depository area, the Bank offers demand deposits, savings accounts and time
deposits. In addition, the Bank offers collection services, wire transfers,
night depository and lock box services.
The Bank offers a broad range of consumer banking services, including interest
bearing and non-interest bearing checking accounts, savings accounts, money
market accounts, certificates of deposit, IRA accounts, Automated Teller
Machines ("ATM") accessibility using Money AccessTM service, secured and
unsecured loans, mortgage loans, home equity lines of credit, safe deposit
boxes, Christmas club accounts, vacation club accounts, collection services,
money orders and traveler's checks.
The Bank offers various money market services. It deals in U.S. Treasury and
U.S. Governmental agency securities, certificates of deposits, commercial paper
and repurchase agreements.
Competitive pressures affect the Corporation's manner of conducting business.
Competition stems not only from other commercial banks but also from other
financial institutions such as savings banks, savings and loan associations,
mortgage companies, leasing companies and various other financial service and
advisory companies. Many of the financial institutions operating in the
Corporation's primary market are substantially larger and offer a wider variety
of products and services than the Corporation.
March 29, 2002 Center Bancorp, Inc., Form 10-K Page 1
The Parent Corporation is subject to regulation by the Board of Governors of the
Federal Reserve System and the New Jersey Department of Banking. As a national
bank, the Bank is subject to regulation and periodic examination by the Office
of the Comptroller of the Currency (the "OCC"). Deposits in the Bank are insured
by the Federal Deposit Insurance Corporation (the "FDIC").
The Parent Corporation is required to file with the Federal Reserve Board an
annual report and such additional information as the Federal Reserve Board may
require pursuant to the Bank Holding Company Act of 1956, as amended (the
"Act"). In addition, the Federal Reserve Board makes periodic examinations of
bank holding companies and their subsidiaries. The Act requires each bank
holding company to obtain the prior approval of the Federal Reserve Board before
it may acquire substantially all of the assets of any bank, or before it may
acquire ownership or control of any voting shares of any bank, if, after such
acquisition, it would own or control, directly or indirectly, more than 5
percent of the voting shares of such bank. The Act also restricts the types of
businesses and operations in which a bank holding company and its subsidiaries
may engage.
The operations of the Bank are subject to requirements and restrictions under
federal law, including requirements to maintain reserves against deposits,
restrictions on the types and amounts of loans that may be granted, limitations
on the types of investments that may be made and the types of services, which
may be offered. Various consumer laws and regulations also affect the operations
of the Bank. Approval of the Comptroller of the Currency is required for
branching, bank mergers in which the continuing bank is a national bank and in
connection with certain fundamental corporate changes affecting the Bank.
Federal law also limits the extent to which the Parent Corporation may borrow
from the Bank and prohibits the Parent Corporation and the Bank from engaging in
certain tie-in arrangements.
FDICIA
The Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA")
substantially revised the bank regulatory provisions of the Federal Deposit
Insurance Act and several other federal banking statutes. Among other things,
FDICIA requires federal banking agencies to broaden the scope of regulatory
corrective action taken with respect to banks that do not meet minimum capital
requirements and to take such actions promptly in order to minimize losses to
the FDIC. Under FDICIA, federal banking agencies have established five capital
tiers: "well capitalized", "adequately capitalized", "undercapitalized",
"significantly undercapitalized" and "critically undercapitalized".
Under regulations adopted under these provisions, for an institution to be well
capitalized it must have a total risk-based capital ratio of at least 10
percent, a Tier I risk-based capital ratio of at least 6 percent and a Tier I
leverage ratio of at least 5 percent and not be subject to any specific capital
order or directive. For an institution to be adequately capitalized, it must
have a total risk-based capital ratio of at least 8 percent, a Tier I risk-based
capital ratio of at least 4 percent and a Tier I leverage ratio of at least 4
percent (or in some cases 3 percent). Under the regulations, an institution will
be deemed to be undercapitalized if the bank has a total risk-based capital
ratio that is less than 8 percent, a Tier I risk-based capital ratio that is
less than 4 percent or a Tier I leverage ratio of less than 4 percent (or in
some cases 3 percent). An institution will be deemed to be significantly
undercapitalized if the bank has a total risk-based capital ratio that is less
than 6 percent, a Tier I risk-based capital ratio that is less than 3 percent,
or a Tier I leverage ratio of less than 3 percent and will be deemed to be
critically undercapitalized if it has a ratio of tangible equity to total assets
that is equal to or less than 2 percent. An institution may be deemed to be in a
lower capitalization category if it receives an unsatisfactory examination
rating.
FDICIA also directs that each federal banking agency prescribe standards for
depository institutions and depository institution holding companies relating to
internal controls, information systems, internal audit systems, loan
documentation, credit underwriting, interest rate exposure, asset growth, a
maximum ratio of classified assets to capital, a minimum ratio of market value
to book value for publicly traded shares (if feasible) and such other standards
as the agency deems appropriate.
FDICIA also contains a variety of other provisions that could affect the
operations of the Corporation, including reporting requirements, regulatory
standards for real estate lending, "truth in savings" provisions, the
requirement that depository institutions give 90 days notice to customers and
regulatory authorities before closing any branch, limitations on credit exposure
between banks, restrictions on loans to a bank's insiders and guidelines
governing regulatory examinations.
March 29, 2002 Center Bancorp, Inc., Form 10-K Page 2
BIF Premiums and Recapitalization of SAIF
The Corporation is a member of the Bank Insurance Fund ("BIF") of the FDIC. The
FDIC also maintains another insurance fund, the Savings Association Insurance
Fund ("SAIF"), which primarily covers savings and loan association deposits but
also covers deposits that are acquired by a BIF-insured institution from a
savings and loan association ("Oakar deposits"). The Corporation had
approximately $68.7 million of deposits at December 31, 2001, with respect to
which it pays SAIF FICO Assessments.
The Economic Growth and Regulatory Reduction Act of 1996 (the "1996 Act") signed
into law on September 30, 1996, included the Deposit Insurance Funds Act of 1996
(the "Funds Act") under which the FDIC was required to impose special
assessments on SAIF-assessable deposits to recapitalize the SAIF. Under the
Funds Act, the FDIC also changed assessments for SAIF and BIF deposits in a 5 to
1 ratio to pay Financing Corp. ("FICO") bonds until January 1, 2000. A FICO rate
of approximately 1.29 basis points was charged on BIF deposits, and
approximately 6.44 basis points was on SAIF deposits.
The Gramm-Leach-Bliley Financial Modernization Act Of 1999
On November 12, 1999, President Clinton signed into law the Gramm-Leach-Bliley
Financial Modernization Act (the "GLB") which, among other things, permits
qualifying bank holding companies to become financial holding companies and
thereby affiliate with securities firms and insurance companies and engage in
other activities that are financial in nature. The GLB Act defines "financial in
nature" to include securities underwriting, dealing and market making;
sponsoring mutual funds and investment companies; insurance underwriting and
agency; merchant banking activities; and activities that the Board has
determined to be closely related to banking. A qualifying national bank also may
engage, subject to limitations on investment, in activities that are financial
in nature, other than insurance underwriting, insurance company portfolio
investment, real estate development, and real estate investment, through a
financial subsidiary of the bank.
Community Reinvestment
Under the Community Reinvestment Act ("CRA"), as implemented by OCC regulations,
a national bank has a continuing and affirmative obligation consistent with its
safe and sound operation to help meet the credit needs of its entire community,
including low and moderate income neighborhoods. The CRA does not establish
specific lending requirements or programs for financial institutions nor does it
limit an institution's discretion to develop the types of products and services
that it believes are best suited to its particular community, consistent with
the CRA. The CRA requires the OCC, in connection with its examination of a
national bank, to assess the bank's record of meeting the credit needs of its
community to take such record into account in its evaluation of certain
applications by such association.
Recent Legislation
As part of the USA Patriot Act, signed into law on October 26, 2001, Congress
adopted the International Money Laundering Abatement and Financial
anti-Terrorism Act of 2001 (the "Act). The Act authorizes the Secretary of the
Treasury, in consultation with the heads of other government agencies, to adopt
special measures applicable to financial institutions, such as banks, bank
holding companies, broker-dealers and insurance companies. Among its other
provisions, the Act requires each financial institution: (i) to establish an
anti-money laundering program; (ii) to establish due diligence policies,
procedures and controls that are reasonably designed to detect and report
instances of money laundering in United States private banking accounts and
correspondent accounts maintained for non-United States persons or their
representatives; and (iii) to avoid establishing, maintaining, administering, or
managing correspondent accounts in the United States for, or on behalf of, a
foreign shell bank that does not have a physical presence in any country. In
addition, the Act expands the circumstances under which funds in a bank account
may be forfeited and requires covered financial institutions to respond under
certain circumstances to requests for information from federal banking agencies
within 120 hours.
Treasury regulations implementing the due diligence requirements must be issued
no later than April 24, 2002. Whether or not regulations are adopted, the law
becomes effective July 23, 2002. Additional regulations are to be adopted during
2002 to implement minimum standards to verify customer identity, to encourage
cooperation among financial institutions, federal banking agencies, and law
enforcement authorities regarding possible money laundering or terrorist
activities, to prohibit the anonymous use of "concentration accounts," and to
require all covered financial institutions to have in place a Bank Secrecy Act
compliance program.
March 29, 2002 Center Bancorp, Inc., Form 10-K Page 3
Proposed Legislation
From time to time proposals are made in the U.S. Congress and before various
bank regulatory authorities, which would alter the policies of and place
restrictions on different types of banking operations. It is impossible to
predict the impact, if any, of potential legislative trends on the business of
the Corporation and the Bank.
C)Dividend Restrictions
Most of the revenue of the Corporation available for payment of dividends on its
capital stock will result from amounts paid to the Parent Corporation by the
Bank. There are a number of statutory and regulatory restrictions applicable to
the payment of dividends by national banks and bank holding companies. First,
the Bank must obtain the approval of the Comptroller of the Currency (the
"Comptroller") if the total dividends declared by the Bank in any year will
exceed the total of the Bank's net profits (as defined and interpreted by
regulation) for that year and retained profits (as defined) for the preceding
two years, less any required transfers to surplus. Second, the Bank cannot pay
dividends unless, after the payment of such dividends, capital would be
unimpaired and remaining surplus would equal 100% of capital. Third, the
authority of federal regulators to monitor the levels of capital maintained by
the Corporation and the Bank (see Item 7 of this Annual Report on Form 10-K and
the discussion of FDICIA above), as well as the authority of such regulators to
prohibit unsafe or unsound practices, could limit the amount of dividends which
the Parent Corporation and the Bank may pay. Regulatory pressures to reclassify
and charge-off loans to establish additional loan loss reserves also can have
the effect of reducing current operating earnings and thus impacting an
institution's ability to pay dividends. Regulatory authorities have indicated
that bank holding companies, which are experiencing high levels of
non-performing loans and loan charge-offs should review their dividend policies.
Reference is also made to Note 14 of the Notes to the Corporation's Consolidated
Financial Statements included in the 2001 Annual Report incorporated herein by
reference.
D)Statistical Information
(Reference is also made to Exhibit 13.1 of this Annual Report on Form 10-K)
Information regarding interest sensitivity is incorporated by reference to pages
32 through 34 of the 2001 Annual Report to Shareholders (the 2001 Annual
Report).
Information regarding related party transactions is incorporated by reference to
Note 5 of the Notes to the Corporation's Consolidated Financial Statements
included in the 2001 Annual Report incorporated herein by reference.
The market risk results and gap results noted on pages 32 through 34 of the 2001
Annual Report take into consideration repricing and maturities of assets and
liabilities, but fail to consider the interest sensitivities of those asset and
liability accounts. Management has prepared for its use an income simulation
model to forecast future net interest income, in light of the current gap
position. Management has also prepared for its use alternative scenarios to
measure levels of net interest income associated with various changes in
interest rates. Results have indicated that an interest rate increase of 200
basis points and a decline of 200 basis resulted in an impact on future net
interest income, which is consistent with target levels contained in the
Corporation's Asset/Liability Policy. Management cannot provide any assurances
about the actual effect of changes in interest rates on the Corporation's net
income.
March 29, 2002 Center Bancorp, Inc., Form 10-K Page 4
I. Investment Portfolio
a) For information regarding the carrying value of the investment
portfolio, see pages 48 and 49 of the 2001 Annual Report, which is
incorporated herein by reference.
b) The following table illustrates the maturity distribution and weighted
average yield on a tax-equivalent basis for investment securities at
December 31, 2001, on a contractual maturity basis.
Other
Securities
Obligations Obligations Federal
of US of Reserve
Treasury & States & & Federal
Government Political Home Loan
(Dollars in Thousands) Agencies Subdivison Bank Stock Total
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Due in 1 year or less
Amortized Cost $72,969 $6,225 $15,275 $94,469
Market Value 73,243 6,265 16,273 95,781
Weighted Average Yield 4.94% 5.99% 1.05% 4.36%
Due after one year through five years
Amortized Cost $127,621 $10,830 $40,224 $178,675
Market Value 127,888 11,173 40,545 179,606
Weighted Average Yield 6.13% 6.98% 6.38% 6.24%
Due after five years through ten years
Amortized Cost $39,530 $93,629 $15,672 $148,831
Market Value 39,036 9,519 15,865 64,420
Weighted Average Yield 6.36% 6.65% 7.60% 6.66%
Due after ten years
Amortized Cost $31,386 $8,905 $31,666 $71,957
Market Value 30,989 9,047 32,309 72,340
Weighted Average Yield 6.14% 7.03% 8.30% 7.20%
No Maturity
Amortized Cost $0 $0 $5,489 $5,489
Market Value 0 0 5,489 5,489
Weighted Average Yield 0.00% 0.00% 5.08% 5.08%
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Total
Amortized Cost $271,506 $35,589 $108,326 $415,421
Market Value 271,156 36,004 110,481 417,641
Weighted Average Yield 5.84% 6.76% 5.95% 6.03%
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c) Securities of a single issuer exceeding 10 percent of stockholders'
equity amounted to $30.0 million with a market value of $31.1 million at
December 31, 2001 and are listed in the table below:
Aggregate
(Dollars in Thousands) Issuer Book Value Market Value
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Bank of America Corp $ 4,772 $ 5,130
Bear Stearns Inc. 5,421 5,598
Chase Manhattan JP Morgan (1) 4,451 4,457
Citigroup, Inc. (2) 5,421 5,793
Goldman Sachs Group Inc. 5,409 5,619
Verizon (3) 4,571 4,478
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Total $ 30,045 $ 31,075
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(1) Chase Manhattan JP Morgan includes bonds from both Chase Manhattan Corp and
JP Morgan & Co.
(2) Citigroup includes a security holding in Salomon Smith Barney.
(3) Verizon includes securities issued by New England Telephone. The Verizon
bonds were called on March 4, 2002.
March 29, 2002 Center Bancorp, Inc., Form 10-K Page 5
The securities listed in the table above are rated investment grade by Moody's
and/or Standard and Poors and conform to the Corporation's investment policy
guidelines.
For other information regarding the Corporation's investment securities
portfolio, see Pages 25, 34, 47 and 48 of the 2001 Annual Report.
II. Loan Portfolio
The following table presents information regarding the components of the
Corporation's loan portfolio on the dates indicated.
Years Ended December 31
(Dollars in thousands) 2001 2000 1999 1998 1997
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Commercial $ 89,722 $ 75,280 $ 61,861 $ 52,182 $ 39,397
Real estate Residential-mortgage 116,335 117,762 99,801 91,189 88,067
Installment 5,179 5,907 7,669 7,060 5,565
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Total 211,236 198,949 169,331 150,431 133,029
Less:
Unearned discount - - 242 332 605
Allowance for loan losses 2,191 1,655 1,423 1,326 1,269
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Net total $ 209,045 $ 197,294 $ 167,666 $ 148,773 $ 131,155
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Since 1997, demand for the Bank's commercial loan, commercial real estate and
real estate mortgage products improved gradually. Business development and
marketing programs coupled with positive market trends supported the growth in
1998, 1999, 2000 and 2001.
The maturities of commercial loans at December 31, 2001 are listed below.
At December 31, 2001, Maturing
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After One Year
In One Year Through After
(Dollars in thousands) Or Less Five Years Five Years Total
- -------------------------------------------------- -------------------- --------------- -------------
Construction loans $ 8,128 $ 34 $ 0 $ 8,162
Commercial real estate loans 571 14,726 29,346 44,643
Commercial loans 11,340 11,593 13,984 36,917
----------------- -------------------- --------------- -------------
Total $ 20,039 $ 26,353 $ 43,330 $ 89,722
================= ==================== =============== =============
Loans with:
Fixed rates $ 825 $ 5,102 $ 9,901 $ 15,828
Variable rates 19,214 21,251 33,429 73,894
----------------- -------------------- --------------- -------------
Total $ 20,039 $ 26,353 $ 43,330 $ 89,722
================= ==================== =============== =============
Lending is one of Center Bancorp's primary business activities. The
Corporation's loan portfolio consists of both retail and commercial loans,
serving the diverse customer base in its market area. In 2001, average total
loans comprised 36.40 percent of average interest-earning assets. The
Corporation has experienced a compound growth rate in average loans since 1997
of 13.8 percent. Average loans amounted to $206.0 million in 2001 compared with
$185.8 million in 2000 and $160.2 million in 1999. The composition of Center
Bancorp's loan portfolio continues to change due to the local economy. Factors
such as the economic climate, interest rates, real estate values and employment
all contribute to these changes. Loan growth has been generated through business
development efforts and entry, through branching, into new markets.
March 29, 2002 Center Bancorp, Inc., Form 10-K Page 6
Average commercial loans decreased approximately $4.6 million or 12.6 percent in
2001 as compared with 2000. The Corporation seeks to create growth in commercial
lending by offering customized products, and competitive pricing and by
capitalizing on the positive trends in its market area. Specialized products are
offered to meet the financial requirements of the Corporation's clients. It is
the objective of the Corporation's credit policies to diversify the commercial
loan portfolio to limit concentrations in any single industry. The decrease in
2001 was attributable to a shift from construction to permanent financing.
The Corporation's commercial loan portfolio includes, in addition to real estate
development, loans to the manufacturing, services, automobile, professional and
retail trade sectors, and to specialized borrowers, including high technology
businesses. A large proportion of the Corporation's commercial loans have
interest rates, which reprice with changes in short-term market interest rates
or mature in one year or less.
Average mortgage loans, which amounted to $136.8 million in 2001, increased
$26.2 million or 23.7 percent as compared with average mortgage loans of $110.6
million in 2000 (which reflected a 16.1 percent increase over 1999). The
Corporation's long-term mortgage portfolio includes both residential and
commercial financing. Growth during the past two years largely reflected brisk
activity in mortgage financing. Although a portion of the Corporation's
commercial mortgages adjust to changes in the prime rate, as well as indices
tied to 5 year Treasury Notes, and the Federal Home Loan Bank of New York 5-year
advance rate, most of these loans and residential mortgage loans have fixed
interest rates.
Residential loans increased steadily in 1997 and in 1998. During 1999 growth
increased as rates stabilized with similar trends experienced during 2000.
During 2000 and 2001 growth was affected by refinancing activity, competition
among lenders and falling interest rates during the second half of 2000 and
throughout 2001.
Average construction loans and other temporary mortgage financing increased from
2000 to 2001 by $3,938,000 to $8,162,000. Such loans increased by $3,854,000
from 1999 to 2000. The change in construction and other temporary mortgage
lending has been generated by the market activity of the Corporation's customers
engaging in residential and commercial development throughout New Jersey.
Interest rates on such mortgages are generally tied to key short-term market
interest rates. Funds are typically advanced to the builder or developer during
various stages of construction and upon completion of the project it is
contemplated that the loans will be repaid by cash flows derived from the
ongoing project.
Loans to individuals include personal loans, student loans, and home improvement
loans, as well as financing for automobiles and other vehicles. Such loans
averaged $5.2 million in 2001, as compared with $5.9 million in 2000 and $7.7
million in 1999. The decrease in loans to individuals during 2001 was due to
decreases in personal loans, and declines in automobile loans, as a result of
aggressive marketing campaigns by automobile manufacturers.
Home equity loans, as well as traditional secondary mortgage loans, have become
popular with consumers due to their tax advantages over other forms of consumer
borrowing. Home equity loans and secondary mortgages averaged $34.6 million in
2001, a decrease of $624,000 or 1.8 percent as compared with average home equity
loans of $35.2 million in 2000. Interest rates on floating rate home equity
loans are generally tied to the prime rate while most other loans to
individuals, including fixed rate home equity loans, are medium-term (ranging
between one-to-five years) and carry fixed interest rates. The decrease in home
equity loans outstanding during 2001 was attributable to the lower interest
environment, which resulted in refinancing activity.
At December 31,2001, the Corporation had total lending commitments outstanding
of $37.1 million, of which approximately 56.0 percent were for commercial loans,
commercial real estate and construction loans.
Credit risks are an inherent part of the lending function. The Corporation has
set in place specific policies and guidelines to limit credit risks. The
following describes the Corporation's credit management policy and describes
certain risk elements in its earning assets portfolio.
Credit Management. The maintenance of comprehensive and effective credit
policies is a paramount objective of the Corporation. Credit procedures are
enforced at each individual branch office and are maintained at the senior
administrative level as well as through internal control procedures.
March 29, 2002 Center Bancorp, Inc., Form 10-K Page 7
Prior to extending credit, the Corporation's credit policy generally requires a
review of the borrower's credit history, collateral and purpose of each loan.
Requests for most commercial and financial loans are to be accompanied by
financial statements and other relevant financial data for evaluation. After the
granting of a loan or lending commitment, this financial data is typically
updated and evaluated by the credit staff on a periodic basis for the purpose of
identifying potential problems. Construction financing requires a periodic
submission by the borrowers of sales/leasing status reports regarding their
projects, as well as, in some cases, inspections of the project sites by
independent engineering firms. Advances are normally made only upon the
satisfactory completion of periodic phases of construction.
Certain lending authorities are granted to loan officers based upon each
officer's position and experience. However, large dollar loans and lending lines
are reported to and are subject to the approval of the Bank's loan committee
and/or board of directors. Loan committees are chaired by either the president
or a senior officer of the Bank.
The Corporation has established its own internal loan-to-value limits for real
estate loans. In general, except as described below, these internal limits are
not permitted to exceed the following supervisory limits:
Loan Category Loan-to-Value Limit
Raw Land 65%
Land Development 75%
Construction:
Commercial, Multifamily*
and other Nonresidential 80%
Improved Property 85%
Owner-occupied 1 to 4 family and home equity**
* Multifamily construction includes condominiums and cooperatives.
** A loan-to-value limit has not been established for permanent mortgage or
home equity loans on owner-occupied, 1 to 4 family residential property.
However, for any such loan with a loan-to-value ratio that equals or
exceeds 90 percent at origination, an institution is expected to require
appropriate credit enhancement in the form of either mortgage insurance or
readily marketable collateral.
It may be appropriate in individual cases to originate loans with loan-to-value
ratios in excess of the supervisory loan-to-value limits, based on support
provided by other credit factors. The President or Board of Directors must
approve such exceptions. The Bank must identify these loans, as exceptions to
the supervisory limits and their aggregate amount must be reported at least
quarterly to the Board of Directors. Non-conforming loans should not exceed 100%
of capital, or 30% with respect to non 1 to 4 family residential loans.
Collateral margin guidelines are based on cost, market or other appraised value
to maintain a reasonable amount of collateral protection in relation to the
inherent risk in the loan. This does not mitigate the fundamental analysis of
cash flow from the conversion of assets in the normal course of business or from
operations to repay the loan. It is merely designed to provide a cushion to
minimize the risk of loss if the ultimate collection of the loan becomes
dependent on the liquidation of security pledged.
The Corporation also seeks to minimize lending risk through loan
diversification. The composition of the Corporation's commercial loan portfolio
reflects and is highly dependent upon the economy and industrial make-up of the
region it serves. Effective loan diversification spreads risk to many different
industries, thereby reducing the impact of downturns in any specific industry on
overall loan profitability.
March 29, 2002 Center Bancorp, Inc., Form 10-K Page 8
Credit quality is monitored through an internal review process, which includes a
Credit Risk rating System that facilitates the early detection of problem loans.
Under this grading system all commercial loans and commercial mortgage loans are
graded in accordance with the risk characteristics inherent in each loan.
Problem loans include "Watch List" loans, non-accrual loans, and loans, which
conform to the regulatory definitions of criticized and classified loans.
A Problem Asset Report is prepared monthly and is examined by both the senior
management of the Bank and the Corporation's Board of Directors. This review is
designed to enable management to take actions as are considered necessary to
identify and remedy problems on a timely basis.
The Bank's internal loan review process is complimented by an independent loan
review conducted on an annual basis, under the mandate and approval of the
Corporation's Board of Directors. In addition, regularly scheduled audits
performed by the Bank's internal audit function further ensures the integrity of
the credit and risk monitoring systems currently in place.
Risk Elements. Risk elements include non-performing loans, loans past due ninety
days or more as to interest or principal payments but not placed on a
non-accrual status, potential problem loans, other real estate owned, net, and
other non-performing interest-earning assets.
Non-performing and Past Due Loans, OREO. Non-performing loans include
non-accrual loans and troubled debt restructuring. Non-accrual Loans represent
loans on which interest accruals have been suspended. It is the Corporation's
general policy to consider the charge-off of loans when they become
contractually past due ninety days or more as to interest or principal payments
or when other internal or external factors indicate that collection of principal
or interest is doubtful. Troubled debt restructurings represent loans on which a
concession was granted to a borrower, such as a reduction in interest rate,
which is lower than the current market rate for new debt with similar risks. At
December 31, 2001, the Corporation did not have any other real estate owned
(OREO), while at December 31, 2000 OREO consisted of a two family residential
property with a carrying value of $49,000.
Loans accounted for on a non-accrual basis at December 31, 2001, 2000, 1999,
1998, and 1997 are as follows:
(Dollars in thousands) 2001 2000 1999 1998 1997
- --------------------------------------------------------------------------------
Mortgage Real Estate $ 0 $246 $269 $38 $27
Commercial $ 84 $ 0 $ 0 $ 0 $ 0
Installment $ 25 $ 0 $ 23 $ 3 $ 0
- --------------------------------------------------------------------------------
Total non-accrual loans $109 $246 $292 $41 $27
- --------------------------------------------------------------------------------
Accruing loans which are contractually past due 90 days or more as to principal
or interest payments are as follows:
December 31
(Dollars in thousands) 2001 2000 1999 1998 1997
- --------------------------------------------------------------------------------
Commercial $0 $0 $0 $ 0 $ 0
Installment 8 2 0 24 73
- --------------------------------------------------------------------------------
Total $8 $2 $0 $24 $73
- --------------------------------------------------------------------------------
There were no loans, which are "troubled debt restructurings" as of the last day
of each of the last five years.
In general, it is the policy of management to consider the charge-off of loans
at the point that they become past due in excess of 90 days, with the exception
of loans that are secured by cash or marketable securities or mortgage loans,
which are in the process of foreclosure.
March 29, 2002 Center Bancorp, Inc., Form 10-K Page 9
There were no other known "potential problem loans" (as defined by SEC
regulations) as of December 31, 2001 that have not been identified and
classified. Such loans, consisting of other assets especially mentioned and
substandard loans, amounted to $215,000 and $1,882,000, respectively, at
December 31, 2001. At December 31, 2000 these loans amounted to $321,000 and
$1,461,000 respectively. The Corporation has no foreign loans.
As of December 31, 2001, $7.6 million of the commercial loan portfolio or 20.4
percent of $37.3 million, represented outstanding working capital loans to
various real estate developers. All but $1.6 million of these loans are secured
by mortgages on land and on buildings under construction.
III. Allowance for Loan Losses
Implicit in the lending function is the fact that loan losses will be
experienced and that the risk of loss will vary with the type of loan being
made, the creditworthiness of the borrower and prevailing economic conditions.
The allowance for loan losses has been allocated below according to the
estimated amount deemed to be reasonably necessary to provide for the
possibility of losses being incurred within the following categories of loans at
December 31, for each of the past five years. The table below shows, for three
types of loans, the amounts of the allowance allocable to such loans and the
percentage of such loans to total loans. The percentage of loans to total loans
is based upon the classification of loans shown on page 5 of this report.
Commercial Real Estate Mortgage Installment Unallocated
Loans to Loans to Loans to
Amount Total Loans Amount Total Loans Amount Total Loans Amount Total
(Dollars in thousands) % % %
- ----------------------------------------------------------------------------------------------------------------------------------
2001 $877 42.5 $876 55.1 $297 2.4 $141 $2,191
2000 $530 37.8 $894 59.2 $191 3.0 $ 40 $1,655
1999 $718 36.6 $492 58.9 $155 4.5 $ 58 $1,423
1998 $553 34.7 $330 60.6 $ 66 4.7 $377 $1,326
1997 $498 29.6 $262 66.2 $ 56 4.2 $453 $1,269
Information regarding charge-offs and recoveries is incorporated by reference to
page 27 of the 2001 Annual Report.
IV. Deposits
Information regarding average amounts/rates of deposits is incorporated by
reference to pages 34 and 39 of the 2001 Annual Report. Information regarding
the amount of time certificates of deposit of $100,000 or more is presented on
pages 34 and 35 of the 2001 Annual Report.
V. Return on Equity and Assets
Information regarding the return on average assets, return on average equity,
the equity to assets ratio and dividend payout ratio is incorporated by
reference to pages 1 and 19 of the 2001 Annual Report. Return on average assets
was 0.99 percent, 0.94 percent and 0.92 percent for the years ended December 31,
2001, 2000, and 1999, respectively. The dividend payout ratio was 38.9 percent,
45.3 percent, and 47.8 percent for the years ended December 31, 2001, 2000, and
1999, respectively. Return on tangible average shareholders equity was 14.9
percent in 2001, compared with 14.4 percent in 2000, and 13.5 percent for 1999.
VI. Short-term Borrowings
Information regarding the amount outstanding of short-term borrowings is
incorporated by reference to pages 34 and 35 of the 2001 Annual Report.
March 29, 2002 Center Bancorp, Inc., Form 10-K Page 10
ITEM 2-Properties
The Bank's operations are located at five sites in Union Township, one in
Springfield Township, one in Berkeley Heights, one in Vauxhall and one in
Summit, Union County, New Jersey. The Bank also has one site in Madison, and one
site in Morristown, Morris County, New Jersey. The principal office is located
at 2455 Morris Avenue, Union, Union County, New Jersey. The principal office is
a two story building constructed in 1993. During 2000, the Bank completed the
purchase of property located at 214 South Street, Morristown, NJ 07960.
Construction of a full service branch facility will be completed during the
first quarter of 2002.
Five of the locations are owned by the Bank and six of the locations are leased
by the Bank. The lease of the Five Points Branch located at 356 Chestnut Street,
Union, New Jersey expires November 30, 2002 and is subject to renewal at the
Bank's option. The lease of the Career Center Branch located in Union High
School expires March 30, 2002 and is also subject to renewal at the Bank's
option and the lease of the Madison office located at 300 Main Street, Madison,
New Jersey expires June 6, 2005 and is subject to renewal at the Bank's option.
The lease of the Millburn Mall Branch located at 2933 Vauxhall Road, Vauxhall,
New Jersey expires February 01, 2003 and is subject to renewal at the Bank's
option and the lease of the Morristown office located at 86 South Street, Suite
2A, Morristown, New Jersey expires February 28, 2003 and is subject to renewal
at the Bank's option. The lease of the Summit branch located at 392 Springfield
Avenue, Summit, New Jersey expires March 31, 2009 and is subject to renewal at
the Bank's option. (See page 65 of the 2001 Annual Report for a complete listing
of all branches and locations. The Drive In/Walk Up located at 2022 Stowe
Street, Union, New Jersey is adjacent to a part of the Main Office facility.)
The Bank has one off-site ATM at Union Hospital, 100 Galloping Hill Road, Union,
New Jersey.
ITEM 3-Legal Proceedings
There are no significant pending legal proceedings involving the Parent
Corporation or Bank other than those arising out of routine operations.
Management does not anticipate that the ultimate liability, if any, arising out
of such litigation will have a material effect on the financial condition or
results of operations of the Parent Corporation and Bank on a consolidated
basis. Such statement constitutes a forward-looking statement under the Private
Securities Litigation Reform Act of 1995. Actual results could differ materially
from this statement as a result of various factors, including the uncertainties
arising in proving facts within the judicial system.
ITEM 4-Submission of Matters to a Vote of Security Holders
The Corporation had no matter submitted to a vote of security holders during the
fourth quarter of 2001.
March 29, 2002 Center Bancorp, Inc., Form 10-K Page 11
ITEM 4 A-Executive Officers
The following table sets forth the name and age of each executive officer of the
Parent Corporation, the period during which each such person has served as an
officer of the Parent Corporation or the Bank and each such person's business
experience (including all positions with the Parent Corporation and the Bank)
for the past five years:
Name and Age Officer Since Business Experience
John J. Davis 1982 the Parent Corporation President & Chief Executive Officer
Age - 59 1977 the Bank of the Parent Corporation and the Bank
Anthony C. Weagley 1996 the Parent Corporation Vice President & Treasurer of the Parent Corporation
Age - 40 1995 the Bank Senior Vice President & Cashier (1996-Present),
1985 the Bank Vice President & Cashier (1991 - 1996) and
Assistant Vice President prior years of the Bank
Donald Bennetti 1996 the Parent Corporation: Vice President of the Parent Corporation
Age - 58 1990 the Bank Senior Vice President (1997-Present)
Vice President (1993-1997)
Assistant Vice President (1992-1993) and
Assistant Cashier (1990-1992) of the Bank
John F. McGowan 1998 the Parent Corporation Vice President of the Parent Corporation
Age -55 1996 the Bank Senior Vice President (1998-Present) and
Vice President (1996-1998) of the Bank
Lori A. Wunder 1998 the Parent Corporation Vice President of the Parent Corporation
Age - 38 1995 the Bank Senior Vice President (1998-Present)
Vice President (1997-1998)
Assistant Vice President (1996-1997) and
Assistant Cashier (1995-1996) of the Bank
Julie D'Aloia 1999 the Parent Corporation Vice President & Secretary (2001)
Age - 40 Corporate Secretary (1998-2000)
1998 the Bank Senior Vice President & Secretary (2001)
Assistant-TO-The-President & Corporate Secretary
(1998-2000)
William A. Arnold 2000 the Parent Corporation Vice President of the Parent Corporation
Age - 50 2000 the Bank Senior Vice President & Senior Loan Officer (2000-Present)
Mark S. Cardone 2001 the Parent Corporation Vice President of the Parent Corporation
Age - 38 2001 the Bank Senior Vice President & Branch Administrator
March 29, 2002 Center Bancorp, Inc., Form 10-K Page 12
Part II
ITEM 5-Market Information For the Registrant's Stock and Related
Stockholder Matters
The information required by Item 5 of Form 10-K appears on pages 36 and 37 of
the 2001 Annual Report and is incorporated herein by reference. As of December
31, 2001 there were 581 holders of record of the Parent Corporation's Common
Stock.
ITEM 6-Selected Financial Data
The information required by Item 6 of Form 10-K appears on pages 1 and 19 of the
2001 Annual Report and is incorporated herein by reference.
ITEM 7-Management's Discussion and Analysis of Financial Condition and Results
of Operations
The information required by Item 7 of Form 10-K appears on pages 20 through 38
of the 2001 Annual Report and is incorporated herein by reference.
ITEM 7A-Quantitative and Qualitative Disclosures About Market Risk
The information required by Item 7A of Form 10-K appears on pages 32 through 35
of the 2001 Annual Report and is incorporated herein by reference.
ITEM 8-Financial Statements and Supplementary Data
The information required by Item 8 of Form 10-K appears on pages 40 through 62
of the 2001 Annual Report and is incorporated herein by reference.
ITEM 9-Changes In and Disagreements With Accountants on
Accounting and Financial Disclosures
None
March 29, 2002 Center Bancorp, Inc., Form 10-K Page 13
Part III
ITEM 10-Directors of the Registrant
The Corporation responds to this item by incorporating herein by reference the
material responsive to such item in the Corporation's definitive proxy statement
for its 2002 Annual Meeting of Stockholders.
ITEM 11-Executive Compensation
The Corporation responds to this item by incorporating herein by reference the
material responsive to such item in the Corporation's definitive proxy statement
for its 2002 Annual Meeting of Stockholders.
ITEM 12-Security Ownership of Certain Beneficial Owners and Management
The Corporation responds to this item by incorporating herein by reference the
material responsive to such item in the Corporation's definitive proxy statement
for its 2002 Annual Meeting of Stockholders.
ITEM 13-Certain Relationships and Related Transactions
The Corporation responds to this item by incorporating herein by reference the
material responsive to such item in the Corporation's definitive proxy statement
for its 2002 Annual Meeting of Stockholders.
March 29, 2002 Center Bancorp, Inc., Form 10-K Page 14
Part IV
ITEM 14-Exhibits, Financial Statement Schedules, and
Reports on Form 8 -K
Pages in Annual Report
Consolidated Statements of Condition at December 31, 2001, and 2000 40
Consolidated Statements of Income for the years ended
December 31, 2001, 2000 and 1999 41
Consolidated Statements of Changes in Stockholders' Equity for the years ended
December 31, 2001, 2000 and 1999 42
Consolidated Statements of Cash Flows for the years ended
December 31, 2001, 2000 and 1999 43
Notes to Consolidated Financial Statements 44-62
Independent Auditors' Report 63
A2. Financial Statement Schedules
All Schedules have been omitted as inapplicable, or not required, or because the
required information is included in the Consolidated Financial Statements or the
notes thereto.
A3. Exhibits
3.1 Certificate of Incorporation of the Registrant is incorporated by
reference to exhibit 3.1 to the Registrant's Annual Report on Form 10K for
the year ended December 31, 1998.
3.2 By- Laws of the Registrant is incorporated by reference to exhibit 3.2
to the Registrant's Annual Report on Form 10K for the year ended December
31, 1998.
10.1 Employment agreement between the Registrant and Donald Bennetti, dated
January 1, 1996, is incorporated by reference to exhibit 10.1 to the
Registrant's Annual Report on Form 10-K for the year ended December 31,
1995.
10.2 Employment agreement between the Registrant and John J. Davis is
incorporated by reference to exhibit 10.2 to the Registrant's Annual Report
on Form 10-K for the year ended December 31, 1995
10.3 The Registrant's Employee Stock Option Plan is incorporated by
reference to exhibit 10.3 to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1993
10.4 The Registrant's Outside Director Stock Option Plan is incorporated by
reference to exhibit 10.4 to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1993
10.5 Supplemental Executive Retirement Plans ("SERPS") are incorporated by
reference to exhibit 10.5 to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1994
10.6 Executive Split Dollar Life Insurance Plan is incorporated by
reference to exhibit 10.5 to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1994
10.7 Employment agreement between the Registrant and Anthony C. Weagley,
dated as of January 1, 1996 is incorporated by reference to exhibit 10.7 to
the Registrant's Annual Report on Form 10-K for the year ended December 31,
1995
10.8 Employment agreement between the Registrant and Lori A. Wunder, dated
as of January 1, 1999.
10.9 Employment agreement between the Registrant and William E. Arnold,
dated as of January 1, 2002.
March 29, 2002 Center Bancorp, Inc., Form 10-K Page 15
10.10 Directors' Retirement Plan is incorporated by reference to exhibit
10.10 to the Registrant's Annual Report on Form 10K for the year ended
December 31, 1998.
10.11 Center Bancorp, Inc. 1999 Stock Incentive Plan is incorporated by
reference to exhibit 10.11 to the Registrant's Annual Report on Form 10K
for the year ended December 31, 1999.
10.12 Registrants' placement agreement with First Tennessee Capital Markets
and Keefe Bruyette & Woods Inc., to issue and sell 10,000 floating rate
capital securities with a liquidation of amount of $1,000 per capital
security.
10.13 Indenture between Registrant and State Street Bank and Trust Company
as debenture trustee for floating rate junior subordinated deferrable
interest debentures due 2031.
10.14 Registrants amended and restated declaration of Trust of Center
Bancorp Statutory Trust 1, dated December 18, 2001.
10.15 Guarantee agreement by Registrant and between Center Bancorp, Inc.
and State Street Bank and Trust Company of Connecticut, National
Association, dated as of December 18, 2001.
11.1 Statement regarding computation of per share earnings is omitted
because the computation can be clearly determined from the material
incorporated by reference in this Report.
13.1 Registrant's Annual Report to Shareholders for the year ended December
31, 2001 (parts not incorporated by reference are furnished for information
purposes only and are not to be deemed to be filed herewith.)
21.1 Subsidiaries of the Registrant
23.1 Consent of KPMG LLP
B. Reports on Form 8-K
There were no reports on Form 8-K filed by the Registrant during the fourth
quarter of 2001.
March 29, 2002 Center Bancorp, Inc., Form 10-K Page 16
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, Center Bancorp Inc. has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
CENTER BANCORP, INC.
/s/ JOHN J. DAVIS
John J. Davis
President and Chief Executive Officer
Dated March 29, 2002
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant, in
the capacities described below and on the date indicated above:
/s/ ALEXANDER BOL /s/ HUGO BARTH, III
- ----------------- -------------------
Alexander A. Bol Hugo Barth, III
Director and Chairman of the Director
Board
/s/ ROBERT L. BISCHOFF /s/ BRENDA CURTIS
- ---------------------- -----------------
Robert L. Bischoff Brenda Curtis
Director Director
/s/ JOHN J. DAVIS /s/ DONALD G. KEIN
- ----------------- ------------------
John J. Davis Donald G. Kein
President and Chief Executive Officer Director
and Director
/s/ JAMES J. KENNEDY /s/ HERBERT SCHILLER
- -------------------- --------------------
James J. Kennedy Herbert Schiller
Director Director
/s/ PAUL LOMAKIN, JR. /s/ NORMAN F. SCHROEDER
- --------------------- -----------------------
Paul Lomakin, Jr. Norman F. Schroeder
Director Director
/s/ WILLIAM THOMPSON /s/ ANTHONY C. WEAGLEY
- -------------------- ----------------------
William Thompson Anthony C. Weagley
Director Vice President & Treasurer
(Chief Accounting and
Financial Officer)
March 29, 2002 Center Bancorp, Inc., Form 10-K Page 17
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Center Bancorp, Inc.:
We consent to the incorporation by reference in the Registration Statements No.
33-72176, No. 333-37436, and No. 333-37434 on Form S-8 and Registration
Statement No. 33-72178 of Form S-3 of Center Bancorp, Inc. of our report dated
January 23 2002, relating to the consolidated statements of condition of Center
Bancorp, Inc. and subsidiaries as of December 31, 2001 and 2000 and the related
consolidated statements of income, changes in stockholders' equity, and cash
flows for each of the years in the three-year period ended December 31, 2001,
which report is incorporated by reference in the December 31, 2001 Annual Report
on Form 10-K of Center Bancorp, Inc.
/s/ KPMG LLP
-------------
Short Hills, New Jersey
March 29, 2002
March 29, 2002 Center Bancorp, Inc., Form 10-K Page 18
A3. Exhibits
Organizational Chart
21.1 Subsidiaries of the Registrant
As of December 31, 2001
UNION CENTER NATIONAL BANK
2455 MORRIS AVENUE
UNION, NEW JERSEY 07083
(100% Owned by Center Bancorp, Inc.)
CENTER BANCORP STATUTORY TRUST I
March 29, 2002 Center Bancorp, Inc., Form 10-K Page 19