Center Bancorp - Value
Center Bancorp Inc. ( CNBC ) delivered a third-quarter earnings surprise of 8.0%, marking the 6th positive earnings surprise for this regional bank in the last 7 quarters. Shares have been on the rise since the latest earnings announcement, while upward earnings estimate revisions helped it achieve a Zacks #1 Rank (Strong Buy) on October 31. Moreover, a P/B multiple of just 1.3 makes this stock an attractive pick for value investors.
Solid Q3 Results
On October 25, Center Bancorp reported third quarter earnings of 27 cents per share, outpacing the Zacks Consensus Estimate of 25 cents by 8.0% and the year-ago earnings of 22 cents by 22.7%. An improved top line helped the performance, partly offset by higher expenses.
During the quarter, the company wrapped up the acquisition of Saddle River Valley Bank, thereby further consolidating its presence in New Jersey.
The company's net interest income jumped 15.1% year over year to $11.2 million. Furthermore, other income totaled $2.6 million, surging 15.4% and including a bargain gain related to the acquisition of Saddle River. Total other expenses rose 31.9% year over year to $7.5 million.
Credit quality progressively improved at Center Bancorp. Provision for loan losses plummeted drastically from $1.0 million in the prior-year quarter to $0.23 million. Similarly, as of September 30, 2012, nonperforming assets were 0.34% of total loans, down 74 basis points from the prior-year quarter.
Earnings Momentum Improving
Over the past 30 days, the Zacks Consensus Estimate for 2012 increased 4.9% to $1.07 per share as both estimates moved higher. For 2013, the Zacks Consensus Estimate advanced 6.7% to $1.12 over the same time frame as both estimates again moved north.
The estimates reflect year-over-year improvements of about 33.1% for 2012 and 5.2% for 2013.
Along with a P/B multiple of 1.3, Center Bancorp has an attractive forward P/E ratio of 10.3 (a P/E ratio under 15.0 and a P/B ratio below 3.0 generally indicate value). Also, the company has a trailing 12-month ROE of 12.7%, compared with the peer group average of 7.8%. This implies that the company reinvests its earnings more efficiently than its industry peers.
Headquartered in Union County, New Jersey, Center Bancorp is the holding company for Union Center National Bank. The company, with 14 banking locations in Union, Morris and Bergen Counties in New Jersey, provides a wide range of banking services to commercial, industrial, and governmental customers. With a market cap of approximately $180.0 million, Center Bancorp competes with Horizon Bancorp. ( HBNC ) and United Financial Bancorp, Inc. ( UBNK ), among others.
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