Center Bancorp Inc. in Union, N.J., announced Monday that it has hired an investment bank to help it review its strategic options, including a possible sale.
Trading was halted briefly after Center said it had retained Keefe, Bruyette & Woods Inc. as a financial adviser to its board. By late afternoon, shares were up more than 4% in heavy trading, to $15.75.
The $1 billion-asset company has been under pressure from its largest shareholder, Lawrence B. Seidman, to sell itself or improve its performance. Mr. Seidman has taken particular issue with Center's expenses. Last year the efficiency ratio at its Union Center National Bank was 82.3%, up from about 69% in 2005, according to Federal Deposit Insurance Corp. data.
Mr. Seidman, a well-known activist investor, and affiliated parties own 9.76% of Center's outstanding shares. He has nominated himself and an ally, Raymond Vanaria, for election to the board at next week's annual meeting. Two proxy advisory firms, Institutional Shareholder Services and Glass Lewis & Co. LLC, are recommending that shareholders vote for the two candidates.
But John J. Davis, Center's president and chief executive officer, urged shareholders in a press release Monday to vote for the company's slate of nominees, arguing that the "review of strategic alternatives will best be accomplished without the disruption of Mr. Seidman and other dissident directors on our board."
Center Bancorp said that it would not disclose further developments of its strategic review until it is completed, and that "there could be no assurance of any particular outcome."
Also, Center said it is committed to slashing overhead and improving profitability. It reduced its staff roughly 10% in the first quarter and estimates it will save roughly $1 million a year in salaries and benefits as a result and it plans to lower compensation paid to senior managers by 20% this year.
Center also announced it had bought Beacon Trust Co., a Madison, N.J., company it said would boost noninterest income and diversify revenue.
For the first quarter, Center reported net income of $1.3 million, compared with a $1.1 million loss a year earlier, but it said that its net interest margin declined, because of higher funding costs. Deposits rose 10.8% from a year earlier, to $723 million. Total borrowings dropped 7%, to $220 million.
