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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
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or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number: 1-6451
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UJB Financial Corp.
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(Exact name of registrant as specified in its charter)
New Jersey 22-1903313
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(State or other jurisdiction of (I.R.S Employer
incorporation or organization) Identification No.)
301 Carnegie Center, P.O. Box 2066, Princeton, New Jersey 08543-2066
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(Address of principal executive offices) (Zip Code)
(609)987-3200
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(Registrant's telephone number, including area code)
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(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 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.
[X] Yes [ ] No
As of July 31, 1995 there were 57,473,698 shares of common stock,
$1.20 par value, outstanding.
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PART I. FINANCIAL INFORMATION.
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ITEM 1. FINANCIAL STATEMENTS.
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In accordance with Instruction D, included herein as Exhibit
(99)A is UJB Financial Corp. consolidated balance sheets as of
June 30, 1995, December 31, 1994 and June 30, 1994; as Exhibit
(99)B is UJB Financial Corp. consolidated statements of income
for the six months and three months ended June 30, 1995 and
1994; and as Exhibit (99)C is UJB Financial Corp. consolidated
statements of cash flows for the six months ended June 30, 1995
and 1994. Also included herein as Exhibit (99)D is UJB
Financial Corp. consolidated statements of shareholders' equity
as of June 30, 1995 and 1994; as Exhibit (99)E is UJB Financial
Corp. consolidated average balance sheets with resultant
interest and rates for the six months ended June 30, 1995 and
1994; and as Exhibit (99)F is UJB Financial Corp. consolidated
reconciliations of allowance for loan losses for the six months
ended June 30, 1995 and 1994.
The consolidated financial statements included herein as
Exhibits include the accounts of UJB Financial Corp. and all of
its subsidiaries (the Company). Significant intercompany
transactions have been eliminated in consolidation. Prior
period information has been restated to include the acquisition
of VSB Bancorp, Inc. This acquisition occurred on July 1,1994
and was accounted for on the pooling-of-interests method.
On September 16, 1994, the Company acquired Palisade Savings
Bank, FSB (Palisade). This acquisition was recorded under the
purchase method of accounting, with the operating results of
Palisade included from the date of acquisition.
The consolidated financial statements have been prepared on an
accrual basis. For additional information and disclosures
required under generally accepted accounting principles,
reference is made to the registrant's 1994 Annual Report on Form
10-K.
The accompanying financial statements reflect in the opinion of
management, all normal, recurring adjustments necessary to
present fairly the financial position of the Company, the
results of its operations and changes in its cash flows. The
financial statements presented, in all material respects, comply
with the current reporting requirements of supervisory
authorities.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
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FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
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FINANCIAL CONDITION
JUNE 30, 1995 VERSUS DECEMBER 31, 1994
At June 30,1995, total assets were $15.4 billion unchanged from
year-end 1994, as the decline in the investment portfolio was
offset by an increase in total loans.
Investment securities at June 30, 1995 were $3.8 billion, a
decrease of $285.3 million or 7.0 percent from year-end 1994.
The decline from year-end 1994 was the result of $334.7 million
in maturities, partially offset by $45.9 million in purchases.
This portfolio is recorded at amortized cost. At June 30, 1995,
the aggregate market value of the investment portfolio was $3.8
billion which represented 99.0 percent of the carrying value.
The aggregate market value at December 31, 1994 was $3.9 billion
or 95.3 percent of the carrying value.
At June 30, 1995, investment securities available for sale,
reported at fair value, amounted to $227.4 million. These
securities increased $26.2 million or 13.0 percent from year-end
1994, and comprised $118.3 million of U.S. Government and agency
collateralized mortgage obligations and $109.1 million of other
securities. During the first six months of 1995, $35.7 million
of securities were purchased, offset by maturities of $6.6
million and sales of $3.0 million.
At June 30, 1995, total loans amounted to $9.8 billion and
increased $110.0 million or 1.1 percent from year-end 1994.
Mortgage loans increased $134.7 million or 4.8 percent from
December 31, 1994 to $2.9 billion at June 30, 1995. Instalment
loans increased $54.6 million or 2.4 percent from year-end 1994
to $2.3 billion. Partially offsetting these increases,
commercial loans decreased $79.2 million or 1.7 percent to $4.5
billion at June 30, 1995.
Total deposits were $12.7 billion at June 30, 1995, an increase
of $120.6 million or 1.0 percent from December 31, 1994. Retail
savings and time deposits increased $102.0 million or 1.1
percent from December 31, 1994 to $9.0 billion. Demand deposits
increased $17.1 million or .5 percent from year-end 1994 to $3.3
billion. Commercial certificates of deposit $100,000 and over
were $372.7 million, an increase of $1.5 million or .4 percent
compared to December 31, 1994.
Borrowed funds, including commercial paper and long-term debt,
at June 30, 1995 decreased $205.9 million or 13.4 percent from
December 31, 1994 to $1.3 billion. Cash flows from maturities
and principal pay downs on investment securities were used to
reduce the level of borrowed funds from year-end 1994.
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Total shareholders' equity increased $59.3 million or 5.4
percent from December 31, 1994 to $1.2 billion. Unrealized
gains and losses on investment securities were recorded net of
taxes as a separate component of shareholders' equity. As of
June 30, 1995, the unrealized loss recorded in equity amounted
to $4.4 million, compared to $9.2 million from year-end 1994.
Under the risk-based capital guidelines, the Tier I leverage
ratio of the Company was 7.49 percent at June 30, 1995,
compared to 7.02 percent at December 31, 1994. The Company's
Tier I capital was 9.82 percent and total capital was 12.62
percent at June 30, 1995, compared with 9.27 percent and 12.04
percent, respectively, at December 31, 1994. The current minimum
regulatory guideline for the Tier I leverage ratio is 4.0
percent for institutions that have a regulatory rating of two or
more. The current minimum regulatory guidelines for Tier I and
total capital ratios are 4.0 percent and 8.0 percent,
respectively.
JUNE 30, 1995 VERSUS JUNE 30, 1994
Compared to June 30, 1994, total assets increased $622.7 million
or 4.2 percent. Included in this increase was the impact of the
purchase acquisition of Palisade, consummated on September 16,
1994. Palisade had total assets of $324.2 million, loans of
$164.8 million and deposits of $266.7 million.
At June 30, 1995, investment securities available for sale
increased $34.8 million or 18.1 percent from the prior year. As
a result of the acquisition of Palisade, $121.6 million of
securities were added to the portfolio, most of which were
subsequently sold. Investment securities at June 30, 1995
decreased $446.7 million or 10.5 percent from June 30, 1994.
This decrease was primarily the result of maturities.
Compared to June 30, 1994, total loans increased $675.4 million
or 7.4 percent. Mortgage loans increased $446.2 million or 18.0
percent. The Palisade acquisition represented $157.5 million of
this mortgage loan increase. Compared to June 30, 1994,
instalment loans increased $142.3 million or 6.6 percent.
Commercial loans increased $86.9 million or 1.9 percent.
Total deposits increased $838.0 million or 7.1 percent from a
year ago. The Palisade acquisition accounted for $266.7 million
of this increase. Compared to June 30, 1994, demand deposits
increased $298.2 million or 10.0 percent and retail savings and
time deposits increased $465.5 million or 5.4 percent.
Commercial certificates of deposit $100,000 and over increased
$74.3 million or 24.9 percent from the prior year.
Compared to June 30, 1994, borrowed funds decreased $349.1
million or 20.8 percent. This decline represented principal
repayments on long-term debt and a decrease of treasury tax and
loan deposits.
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NON-PERFORMING LOANS AND OTHER REAL ESTATE OWNED
Non-performing loans were $192.2 million at June 30, 1995, or
1.97 percent of total loans compared to $167.6 million at
year-end 1994, or 1.74 percent of total loans. At June 30,
1994, non-performing loans were $226.9 million or 2.50 percent
of total loans. Non-performing loans increased from year-end
1994 principally due to the inclusion of one large construction
loan relationship during the second quarter of 1995. Non-performing
loans also increased partially due to the adoption of Statement
of Financial Accounting Standards No. 114, Accounting by
Creditors for Impairment of a Loan (SFAS No. 114). This
statement was adopted prospectively by the Company on January 1,
1995. SFAS No. 114 requires in-substance foreclosures to be
classified as non-performing loans. Prior period balances have
not been restated as the amounts have been deemed immaterial.
The implementation of this statement resulted in a
reclassification of $6.4 million, net of specific reserves of
$3.8 million, from other real estate owned (OREO) to
non-performing loans.
The Company has defined the population of impaired loans to be
all non-accrual loans. At June 30, 1995, the total impaired
loan portfolio was $192.2 million for which general and specific
allocations to the allowance for loan losses of $30.3 million
were identified. Interest collections on non-accrual loans are
generally credited to interest income when received. However,
if ultimate collectibility of the principal is in doubt,
interest collections are applied as principal reductions. The
amount of cash basis interest income that was recognized on
impaired loans at June 30, 1995 was $1.2 million.
Compared to June 30, 1994, non-performing loans were down $34.8
million. The reduction in non-performing loans compared to June
30, 1994 reflected ongoing workout efforts, as well as the
year-end 1994 transfer of certain accruing and non-accruing
loans to assets held for accelerated disposition. The following
table summarizes the trends in the components of non-performing
loans (dollars in thousands):
Jun 30, Dec 31, Jun 30,
1995 1994 1994
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Commercial and industrial $ 47,932 $ 37,362 $ 43,339
Real estate:
Construction and development 82,388 45,075 88,368
Real estate related 61,836 85,210 95,214
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Total real estate 144,224 130,285 183,582
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Total $192,156 $167,647 $226,921
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At June 30, 1995, OREO was $22.9 million, net of an $11.4
million allowance. OREO decreased $8.6 million since December
31, 1994 and $47.0 million since June 30, 1994. These declines
were in part the result of a transfer of assets from OREO to
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assets held for accelerated disposition at year-end 1994 and the
SFAS No. 114 reclassification of in-substance foreclosures from OREO
to non-performing loans.
Assets held for accelerated disposition at June 30, 1995 were
$30.0 million, a decrease of $60.9 million from December 31,
1994 primarily due to sales during the year. The December 31,
1994 balance of $90.9 million reflects the transfer of assets
from accruing and non-accruing loans and OREO. These assets
were identified for bulk sale in order to accelerate the
resolution of non-performing loans and OREO.
ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses at June 30, 1995 was $199.0
million or 2.04 percent of loans, compared to $214.2 million or
2.22 percent of loans at December 31, 1994 and $238.6 million or
2.62 percent of loans at June 30, 1994. For the three months
ended June 30, 1995, net charge offs were $22.5 million or .93
percent of average loans compared to $21.3 million, or .96
percent the previous year. This compares to net charge offs of
$23.4 million, or .98 percent, in the first quarter of 1995.
For the six months ended June 30, 1995, net charge offs were
$45.9 million, or .96 percent of average loans compared to $42.5
million, or .97 percent the previous year.
RESULTS OF OPERATIONS
For the second quarter of 1995, net income was $40.3 million or
$.72 per share compared with net income of $28.7 million or $.52
per share earned during the second quarter of 1994. Net income
for the six months ended June 30, 1995 was $80.3 million
compared with $57.3 million for the first half of 1994. On a
per share basis, net income for the six months ended June 30,
1995 was $1.44 compared to $1.03 for the same period in 1994.
The results for the six months of 1994 were impacted by the
adoption of Statement of Financial Accounting Standards No. 112,
Employers' Accounting for Postemployment Benefits (SFAS No. 112),
which had the effect of reducing net income by $1.7 million or
$.03 per share.
Interest income on a tax-equivalent basis was $548.5 million for
the six months ended June 30, 1995, an increase of $89.0 million
or 19.4 percent compared to the same period in 1994. The
increase in interest income was due to the rise in interest
rates and growth in the loan portfolio. For the first six months
of 1995, the average prime rate was 8.91 percent compared to
6.46 percent for the prior year period. The increase in rates
contributed $33.5 million and the increase in volume provided an
additional $50.4 million to interest income on loans. Interest
earning assets averaged $13.9 billion during the first six
months of 1995, an increase of $597.6 million or 4.5 percent
over the same period of 1994.
Interest expense increased $64.2 million or 41.3 percent for the
six months ended June 30, 1995 compared to the same period in
1994. This increase reflects the rise in interest rates and the
resultant increased cost of retail savings and time deposits.
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In addition, there was a disintermediation of funds from savings
and other lower costing deposits to higher costing retail
certificates of deposit. Interest expense on retail savings and
time deposits increased $40.3 million or 35.4 percent, which
includes an increase in retail certificates of deposit of $32.4
million or 86.1 percent. In addition, the increase in interest
expense on borrowed funds and commercial certificates of deposit
$100,000 and over, was $15.3 million and $8.6 million,
respectively, over the 1994 six-month period. On average
borrowed funds were $1.4 billion during the first six months of
1995, a decrease of $135.9 million. Commercial certificates of
deposit $100,000 and over increased $176.7 million over the
comparable period in 1994.
Net interest income on a tax-equivalent basis was $328.6 million
for the first six months of 1995 compared with $303.9 million
for the six months ended June 30, 1994, an increase of $24.7
million or 8.1 percent. The net interest spread percentage on a
tax-equivalent basis (the difference between the rate earned on
average interest earning assets and the rate paid on average
interest bearing liabilities) was 3.85 percent for the six
months ended June 30, 1995 compared to 3.95 percent for the
prior year period. Net interest margin (net interest income on
a tax-equivalent basis as a percentage of average interest
earning assets) was 4.76 percent during the first six months of
1995 compared to 4.60 percent during the same period in 1994.
The increase in net interest margin reflected the benefits from
an improved asset mix and favorable spreads between loan yields
and deposit costs.
Asset and liability management efforts involve the use of
certain derivative financial instruments. At June 30, 1995, the
notional value of this derivative financial instruments
portfolio consisted of $880.3 million of interest rate swaps.
Interest rate swaps are contractual agreements between two
parties to exchange interest payments at particular intervals.
These swaps are accounted for as hedges and are not recorded on
the balance sheet. Income or expense related to these
instruments is accrued monthly and recognized as an adjustment
to interest income or interest expense for those balance sheet
instruments being hedged. Hedged transactions resulted in a net
interest income reduction of $4.6 million for the first six
months of 1995, compared to a $2.4 million contribution in the
comparable period in 1994. The market value of these contracts
at June 30, 1995 was negative $9.9 million compared to negative
$28.0 million at March 31, 1995 and negative $52.0 million at
December 31, 1994.
The provision for loan losses for the quarter ended June 30,
1995 was $15.8 million, compared with $18.5 million for the same
period a year earlier. On a year-to-date basis, the provision
was $30.8 million, a decline of $6.3 million or 16.9 percent,
compared with the first half of 1994.
Non-interest income, including securities transactions, for the
second quarter of 1995 totaled $43.7 million, an increase of
$4.4 million or 11.2 percent compared with the second quarter of
1994. For the six months ended June 30, 1995, non-interest
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income totaled $85.1 million, an increase of $5.4 million or 6.8
percent from the prior year period. Effective this quarter,
merchant credit card and ATM fees are recorded net of related
processing expenses. Amounts for prior periods have been
reclassified for comparative purposes.
Service and loan fee income for the second quarter of 1995
increased $.6 million or 9.5 percent compared with the same
period a year earlier. Service and loan fee income increased
$1.0 million or 7.8 percent during the six month period ended
June 30, 1995 compared to the corresponding period in 1994.
This increase was primarily due to higher commercial loan fees
and merchant bank card processing fees. Trust fee income
declined $.4 million or 3.3 percent during the first half of
1995 compared to the same period in 1994.
Other income for the second quarter of 1995 was $12.8 million,
an increase of $2.2 million or 21.1 percent. For the first six
months of 1995, other income was $23.9 million, an increase of
$2.1 million or 9.5 percent. These increases can be attributable
primarily to the gains on the sales of several branches during the
second quarter of 1995.
For the second quarter of 1995, net gains of $2.0 million on the
sales of investment securities were realized compared with net
gains of $.5 million over the prior year period. For the first
six months of 1995, net gains were $4.2 million, compared with
net gains of $1.8 million for the first six months in 1994.
These gains were recognized as $3.0 million of securities were
sold out of the available-for-sale portfolio during the first
half of 1995.
Non-interest expenses for the second quarter of 1995 totaled
$124.8 million, up $.6 million, or .5 percent compared to the
second quarter of 1994 and for the six months ended June 30,
1995 were $250.2 million, an increase of $5.7 million or 2.3
percent from the 1994 six month period.
Salaries expense increased $3.5 million or 7.8 percent during
the second quarter of 1995 compared to the second quarter of
1994 and rose $7.6 million or 8.6 percent during the first half
of 1995 compared to the corresponding period in 1994. More than
half of the increase was attributable to merit increases, which
included salary adjustments recorded in connection with the
reorganization along lines of business. In addition, salaries
expense in the first half of 1995 reflected the Palisade
purchase acquisition and higher levels of commission and
fee-based compensation. Pension and other employee benefits for
the second quarter of 1995 were $16.0 million, up $2.5 million
or 18.8 percent compared with the second quarter of 1994. These
expenses were $31.9 million for the six months ended June 30,
1995, up $4.5 million or 16.3 percent compared to the
corresponding period in 1994. These increases reflected higher
payroll taxes, pension and other postemployment benefit costs.
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Occupancy expenses for the second quarter of 1995 increased $.5
million or 4.5 percent compared to the prior year period. These
expenses were $26.2 million for the six months ended June 30, 1995
and remained relatively unchanged compared to the corresponding
period in 1994. Furniture and equipment expense rose $.4
million or 3.5 percent for the second quarter of 1995, and $1.1
million or 4.5 percent during the first half of 1995 when
compared with the corresponding periods in 1994.
Other real estate owned expenses were $2.0 million for the
second quarter of 1995, a decrease of $3.5 million or 63.3
percent from the second quarter of 1994. On a year-to-date
basis, other real estate owned expenses were $3.7 million for
1995 compared to $9.6 million for 1994. Included in these
amounts was a provision for losses on other real estate owned and
expenses related to holding property. A provision of $.9
million for the second quarter of 1995 and $2.3 million for the
six months of 1995 was added to the allowance for other real estate
owned. This compares to a provision of $3.5 million for the
second quarter of 1994 and $5.9 million for the first half of
1994. Expenses for operating and maintaining other real estate
owned amounted to $1.1 million for the second quarter of 1995 and
$1.5 million for the six months ended June 30, 1995, compared with
$2.0 million and $3.7 million respectively for the corresponding
periods in 1994. The decline in these expenses reflect the
benefits generated from the ongoing workout efforts.
LIQUIDITY
Liquidity is the ability to meet the borrowing needs and deposit
withdrawal requirements of customers and support asset growth.
Principal sources of liquidity are deposit generation, access to
purchased funds, maturities and repayments of loans and
investment securities and interest and fee income.
The consolidated statements of cash flows present the change in
cash and cash equivalents from operating, investing and
financing activities. During the first half of 1995, net cash
provided by operating activities totaled $212.3 million.
Contributing to net cash provided by operating activities were
the results of operations adjusted for the provisions for loan
losses and other real estate owned, and proceeds from the sales
of mortgages held for sale. Net cash provided by investing
activities totaled $112.4 million and was the result of
investment and loan activity. Net cash used in financing
activities totaled $111.2 million, reflecting the reductions in
borrowed funds offset by a net increase in deposits from
year-end 1994.
During the first six months of 1995, proceeds of $341.3 million
from maturities in the investment portfolio, including
investment securities available for sale, an increase of $102.0
million in savings and time deposits and an increase in demand
deposits of $17.1 million contributed to liquidity. Offsetting
these sources, were increases in total loans of $110.0 million,
purchases of investment securities, including available for
sale, totaling $81.6 million and a decrease of $205.9 million in
borrowed funds.
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Additional liquidity is generated from maturities and principal
repayments in the investment portfolio. Scheduled maturities
and anticipated principal repayments of the investment portfolio
will approximate $280 million throughout the balance of 1995.
In addition, all or part of the investment securities available
for sale of $227.4 million could be sold to provide liquidity.
These sources can be used to meet the funding needs during
periods of loan growth. Liquidity is also available through
additional lines of credit and the ability to incur additional
debt. At June 30, 1995, there were $40.0 million of short-term
lines of credit available for general corporate purposes, with
no outstandings. In addition, the banking subsidiaries have
established lines of credit with the Federal Reserve Bank and
the Federal Home Loan Bank of New York which further support
and enhance liquidity.
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PART II. OTHER INFORMATION
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ITEM 1. LEGAL PROCEEDINGS.
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In re Payroll Express Corporation of New York and Payroll
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Express Corporation, United States Bankruptcy Court for the
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Southern District of New York, Case Nos. 92-B-43149 (CB) and
92-B-43150 (CB), filed June 5, 1992.
Reported on Form 10-K for the period ended December 31, 1994 and
on Form 10-Q for the period ended March 31, 1995. The Trustee
in Bankruptcy for Payroll Express Corporation has settled his
claim against the primary insurance carrier for Payroll (Lloyds)
for the policy limits of $1 million and will seek bankruptcy
court approval of the settlement on August 3, 1995. The Trustee
has commenced litigation against certain insurance companies
which had issued fidelity insurance policies to Payroll.
United Jersey Bank has filed a motion to dismiss the Complaints
in the Beth Israel and the Frederick Goldman lawsuits for
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failure to state a claim upon which relief can be granted. The
motion is pending.
On May 19, 1995, the New York City Transit Authority filed a
Complaint against United Jersey Bank captioned New York City
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Transit Authority v. United Jersey Bank and National Westminster
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Bank New Jersey in the United States District Court for the
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Southern District of New York under Civil Action No. 95-3685.
The Complaint, which alleges causes of action sounding in
conversion, aiding and abetting conversion, fraud, constructive
fraud, constructive trust, unjust enrichment, monies had and
received, restitution of payments by mistake, and negligence,
seeks the recovery of approximately $2 million plus
consequential and punitive damages from the defendant banks.
United Jersey Bank has filed a motion for a more definite
statement as to certain allegations of the Complaint. This
Complaint is substantially similar to the complaints of other
Payroll Express customers described in the Forms 10-K and 10-Q
referred to above.
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ITEM 5. OTHER EVENTS.
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On August 2, 1995, the Company announced a definitive merger
agreement to acquire The Flemington National Bank and Trust
Company with total assets of approximately $288 million. The
merger is expected to be completed in the first quarter of 1996.
In addition, the Company successfully completed the acquisition
of Bancorp New Jersey, Inc. (Bancorp) on July 11, 1995 which was
accounted for under the purchase method. The proforma results
of operations for the period January 1, 1995 to July 10, 1995
and for the year ended December 31, 1994, assuming Bancorp had
been acquired as of January 1, 1994 would not have been
significantly different from those presented in the Consolidated
Statements of Income.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
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(a) EXHIBITS
(11) UJB Financial Corp. computation of net income per common share
for the six months and three months ended June 30, 1995 and 1994.
(27) UJB Financial Corp. financial data schedule - June 30, 1995.
(99)A UJB Financial Corp. consolidated balance sheets as of June 30,
1995, December 31, 1994 and June 30, 1994.
(99)B UJB Financial Corp. consolidated statements of income for the
six months and three months ended June 30, 1995 and 1994.
(99)C UJB Financial Corp. consolidated statements of cash flows for the
six months ended June 30, 1995 and 1994.
(99)D UJB Financial Corp. consolidated statements of shareholders' equity
as of June 30, 1995 and 1994.
(99)E UJB Financial Corp. consolidated average balance sheets with
resultant interest and rates for the six months ended June 30,
1995 and 1994.
(99)F UJB Financial Corp. consolidated reconciliations of allowance for
loan losses for the six months ended June 30, 1995 and 1994.
(b) REPORTS ON FORM 8-K
None
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SIGNATURES
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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.
UJB FINANCIAL CORP.
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Registrant
DATE: August 14,1995 BY: /s/ WILLIAM J. HEALY
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William J. Healy
Executive Vice President and Comptroller
(Chief Accounting Officer)
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EXHIBIT INDEX
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Exhibit No.
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(11) UJB Financial Corp. computation of net income per common share
for the six months and three months ended June 30, 1995 and 1994.
(27) UJB Financial Corp. financial data schedule - June 30, 1995.
(99)A UJB Financial Corp. consolidated balance sheets as of June 30,
1995, December 31, 1994 and June 30, 1994.
(99)B UJB Financial Corp. consolidated statements of income for the
six months and three months ended June 30, 1995 and 1994.
(99)C UJB Financial Corp. consolidated statements of cash flows for the
six months ended June 30, 1995 and 1994.
(99)D UJB Financial Corp. consolidated statements of shareholders' equity
as of June 30, 1995 and 1994.
(99)E UJB Financial Corp. consolidated average balance sheets with
resultant interest and rates for the six months ended June 30,
1995 and 1994.
(99)F UJB Financial Corp. consolidated reconciliations of allowance for
loan losses for the six months ended June 30, 1995 and 1994.
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UJB FINANCIAL CORP. Exhibit (11)
COMPUTATION OF NET INCOME PER COMMON SHARE
(dollars in thousands, except per share data)
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30,
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1995 1994 1995 1994
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<S> <C> <C> <C> <C>
Average number of common
shares outstanding
(in thousands) (A) 55,257 54,506 55,374 54,610
========= ========= ========= =========
Net income $80,323 $57,256 $40,336 $28,696
less: Preferred dividends 932 900 458 450
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Net income available to
common shareholders (B) $79,391 $56,356 $39,878 $28,246
========= ========= ========= =========
Net income per common share (B)/(A) $1.44 $1.03 $0.72 $0.52
========= ========= ========= =========
<FN>
Note: The dilutive effect of common stock equivalents in 1995 and 1994 was not
material for all periods shown.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE JUNE 30, 1995 10-Q FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 1058858
<INT-BEARING-DEPOSITS> 13275
<FED-FUNDS-SOLD> 125000
<TRADING-ASSETS> 40960
<INVESTMENTS-HELD-FOR-SALE> 227413
<INVESTMENTS-CARRYING> 3807686
<INVESTMENTS-MARKET> 3770151
<LOANS> 9766549
<ALLOWANCE> 198980
<TOTAL-ASSETS> 15442954
<DEPOSITS> 12688436
<SHORT-TERM> 1127760
<LIABILITIES-OTHER> 258751
<LONG-TERM> 204486
<COMMON> 66562
0
30008
<OTHER-SE> 1066951
<TOTAL-LIABILITIES-AND-EQUITY> 15442954
<INTEREST-LOAN> 411424
<INTEREST-INVEST> 127353
<INTEREST-OTHER> 2674
<INTEREST-TOTAL> 541451
<INTEREST-DEPOSIT> 167519
<INTEREST-EXPENSE> 219833
<INTEREST-INCOME-NET> 321618
<LOAN-LOSSES> 30750
<SECURITIES-GAINS> 4225
<EXPENSE-OTHER> 250178
<INCOME-PRETAX> 125789
<INCOME-PRE-EXTRAORDINARY> 80323
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 80323
<EPS-PRIMARY> 1.44
<EPS-DILUTED> 1.44
<YIELD-ACTUAL> 4.76
<LOANS-NON> 191906
<LOANS-PAST> 2756
<LOANS-TROUBLED> 250
<LOANS-PROBLEM> 61160
<ALLOWANCE-OPEN> 214161
<CHARGE-OFFS> 56037
<RECOVERIES> 10106
<ALLOWANCE-CLOSE> 198980
<ALLOWANCE-DOMESTIC> 133637
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 65343
</TABLE>
<TABLE>
UJB FINANCIAL CORP. Exhibit (99)A
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
<CAPTION>
June 30, December 31, June 30,
1995 1994 1994
-------------- -------------- --------------
<S> <C> <C> <C>
Assets
Cash and cash equivalents:
Cash and due from banks $ 1,058,858 $ 925,421 $ 874,742
Federal funds sold and securities purchased under agreements to resell 125,000 44,875 2,125
-------------- -------------- --------------
Total cash and cash equivalents 1,183,858 970,296 876,867
Interest bearing deposits with banks 13,275 18,809 15,971
Trading account securities 40,960 33,513 27,455
Investment securities available for sale 227,413 201,215 192,597
Investment securities:
U.S. Government and Federal agencies 1,860,816 2,016,615 2,065,602
States and political subdivisions 300,848 331,000 334,443
Other securities 1,646,022 1,745,373 1,854,330
-------------- -------------- --------------
Total investment securities 3,807,686 4,092,988 4,254,375
Loans (net of unearned discount):
Commercial 4,548,111 4,627,349 4,461,204
Mortgage 2,925,644 2,790,988 2,479,442
Instalment 2,292,794 2,238,237 2,150,476
-------------- -------------- --------------
Total loans 9,766,549 9,656,574 9,091,122
Less: Allowance for loan losses 198,980 214,161 238,636
-------------- -------------- --------------
Net loans 9,567,569 9,442,413 8,852,486
Premises and equipment 165,816 167,905 164,525
Assets held for accelerated disposition 30,044 90,888 -
Accrued interest receivable 87,698 89,926 80,534
Other real estate owned, net 22,864 31,449 69,864
Due from customers on acceptances 20,101 21,159 21,373
Other assets 275,670 268,911 264,161
-------------- -------------- --------------
Total Assets $ 15,442,954 $ 15,429,472 $ 14,820,208
============== ============== ==============
Liabilities and Shareholders' Equity
Deposits:
Non-interest bearing demand deposits $ 3,277,751 $ 3,260,641 $ 2,979,586
Interest bearing deposits:
Savings and time deposits 9,038,002 8,936,009 8,572,472
Commercial certificates of deposit $100,000 and over 372,683 371,141 298,409
-------------- -------------- --------------
Total deposits 12,688,436 12,567,791 11,850,467
Commercial paper 45,947 42,211 39,889
Other borrowed funds 1,081,813 1,291,219 1,435,030
Long-term debt 204,486 204,754 206,402
Accrued interest payable 47,697 30,234 26,220
Bank acceptances outstanding 20,101 21,159 21,373
Accrued expenses and other liabilities 190,953 167,844 183,444
-------------- -------------- --------------
Total liabilities 14,279,433 14,325,212 13,762,825
Shareholders' equity:
Preferred stock: Authorized 4,000,000 shares without par value:
Series B: Authorized 1,200,000 shares; issued and outstanding 600,166
in 1995 and 1994, adjustable-rate cumulative, $50 stated value 30,008 30,008 30,008
Common stock par value $1.20:
Authorized 130,000,000 shares; issued and outstanding
55,468,117 at June 30, 1995, 55,005,306 at
December 31, 1994 and 54,683,772 at June 30, 1994 66,562 66,006 65,621
Surplus 420,579 413,429 405,842
Retained earnings 650,787 604,066 561,248
Net unrealized gain (loss) on investment securities, net of tax (4,415) (9,249) (5,336)
-------------- -------------- --------------
Total shareholders' equity 1,163,521 1,104,260 1,057,383
-------------- -------------- --------------
Total Liabilities and Shareholders' Equity $ 15,442,954 $ 15,429,472 $ 14,820,208
============== ============== ==============
</TABLE>
<TABLE>
UJB FINANCIAL CORP. Exhibit (99)B
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share data)
<CAPTION> Six Months Ended Three Months Ended
June 30, June 30,
----------------- -----------------
1995 1994* 1995 1994*
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Interest Income
Interest and fees on loans $411,424 $327,468 $208,523 $168,477
Interest on investment securities:
Taxable 109,506 85,454 54,316 44,864
Tax-exempt 10,663 11,264 5,289 5,823
Interest on investment securities available for sale 7,184 26,791 3,752 13,135
Interest on Federal funds sold and securities
purchased under agreements to resell 1,518 243 1,382 41
Interest on trading account securities 781 437 526 180
Interest on deposits with banks 375 260 146 103
-------- -------- -------- --------
Total interest income 541,451 451,917 273,934 232,623
Interest Expense
Interest on savings and time deposits 154,326 113,985 80,512 57,545
Interest on commercial certificates of deposit
$100,000 and over 13,193 4,608 6,806 2,736
Interest on borrowed funds 52,314 37,003 25,889 21,324
-------- -------- -------- --------
Total interest expense 219,833 155,596 113,207 81,605
-------- -------- -------- --------
Net interest income 321,618 296,321 160,727 151,018
Provision for loan losses 30,750 37,000 15,750 18,500
-------- -------- -------- --------
Net interest income after provision for loan losses 290,868 259,321 144,977 132,518
Non-Interest Income
Service charges on deposit accounts 32,223 32,381 16,279 16,414
Service and loan fee income 13,534 12,560 7,124 6,507
Trust income 10,723 11,086 5,191 5,279
Investment securities gains 4,225 1,788 2,033 513
Trading account gains 542 88 263 9
Other 23,852 21,781 12,765 10,545
-------- -------- -------- --------
Total non-interest income 85,099 79,684 43,655 39,267
Non-Interest Expenses
Salaries 96,844 89,209 48,297 44,812
Pension and other employee benefits 31,911 27,429 16,028 13,492
Occupancy, net 26,164 26,129 12,814 12,267
Furniture and equipment 25,133 24,040 12,680 12,253
FDIC assessment 13,678 13,826 6,839 6,911
Other real estate owned expenses 3,716 9,565 2,014 5,492
Advertising and public relations 5,864 5,516 2,953 2,755
Other 46,868 48,804 23,195 26,214
-------- -------- -------- --------
Total non-interest expenses 250,178 244,518 124,820 124,196
-------- -------- -------- --------
Income before income taxes 125,789 94,487 63,812 47,589
Federal and state income taxes 45,466 35,500 23,476 18,893
-------- -------- -------- --------
Income before cumulative effect of a change in accounting principle 80,323 58,987 40,336 28,696
Cumulative effect of a change in accounting principle - (1,731) - -
-------- -------- -------- --------
Net Income $ 80,323 $ 57,256 $ 40,336 $ 28,696
======== ======== ========= ========
Net Income Per Common Share:
Income before cumulative effect of a change in accounting principle $ 1.44 $ 1.06 $ 0.72 $ 0.52
Cumulative effect of a change in accounting principle - (0.03) - -
-------- -------- --------- --------
Net Income Per Common Share $ 1.44 $ 1.03 $ 0.72 $ 0.52
======== ======== ========= ========
Average Common Shares Outstanding (in thousands) 55,257 54,506 55,374 54,610
======== ======== ========= ========
<FN>
Certain prior period amounts have been reclassified for comparative purposes.
* Effective January 1994, the company adopted SFAS No. 112, Accounting for Postemployment Benefits.
</FN>
</TABLE>
<TABLE>
UJB FINANCIAL CORP. Exhibit (99)C
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
<CAPTION>
Six Months Ended
June 30,
-----------------------
1995 1994
----------- -----------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 80,323 $ 57,256
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses and other real estate owned 33,000 42,860
Depreciation, amortization and accretion 14,510 19,297
Gains on sales of investment and trading account securities (4,767) (1,876)
Gains on sales of mortgages held for sale (171) (425)
Gains on sales of other real estate owned (1,984) (661)
Proceeds from sales of other real estate owned 13,134 17,704
Proceeds from sales of mortgages held for sale 17,706 124,372
Originations of mortgages held for sale (23,812) (92,432)
Net (increase) decrease in trading account securities (6,905) 2,368
Decrease (increase) in accrued interest receivable and other assets 51,800 (43,636)
Increase in accrued interest payable, accrued
expenses and other liabilities 39,514 40,488
----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 212,348 165,315
----------- -----------
INVESTING ACTIVITIES
Proceeds from maturities of investment securities 334,705 683,500
Purchases of investment securities (45,876) (1,549,616)
Purchases of investment securities available for sale (35,731) -
Proceeds from maturities of investment securities available for sale 6,550 246,103
Proceeds from sales of investment securities available for sale 7,144 5,109
Net decrease in interest bearing deposits with banks 5,534 3,991
Net increase in loans (152,169) (437,278)
Purchases of premises and equipment, net (7,754) (2,941)
----------- -----------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 112,403 (1,051,132)
----------- -----------
FINANCING ACTIVITIES
Net (decrease) increase in demand and savings deposits (423,198) 220,897
Net increase (decrease) in time deposits 543,843 (121,929)
Net (decrease) increase in short-term borrowings (205,468) 857,130
Principal payments on long-term debt (470) (5,190)
Proceeds from issuance of long-term debt - 1,040
Dividends paid (31,290) (23,185)
Proceeds from issuance of common stock under dividend
reinvestment and other stock plans 7,706 7,284
Other, net (2,312) 1,963
----------- -----------
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES (111,189) 938,010
----------- -----------
INCREASE IN CASH AND CASH EQUIVALENTS 213,562 52,193
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 970,296 824,674
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,183,858 $ 876,867
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid:
Interest payments $ 202,370 $ 152,716
Income tax payments 34,391 29,894
Noncash investing activities:
Loans made in conjunction with the sale of other real estate owned 2,054 6,366
Net transfer of loans to other real estate owned 9,703 22,145
Transfer of assets to assets held for accelerated disposition 2,765 -
Transfer of investments from investment securities available for sale - 707,808
</TABLE>
<TABLE>
UJB FINANCIAL CORP. Exhibit (99)D
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(dollars in thousands)
<CAPTION>
Net Total
Preferred Common Retained Unrealized Shareholders'
Stock Stock Surplus Earnings Gain (Loss) Equity
-------- -------- --------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1993 $30,008 $65,113 $398,723 $525,408 $ - $1,019,252
Net unrealized gain (loss) on investment
securities upon adoption of a change
in accounting principle, net of tax - - - - 9,355 9,355
Adjustment for the pooling of a company
with a different fiscal year end - - 343 1,769 - 2,112
Net income - - - 57,256 - 57,256
Cash dividends declared:
Preferred stock - - - (900) - (900)
Common stock - - - (22,285) - (22,285)
Common stock issued:
Dividend reinvestment and other stock plans
(236,759 shares) - 284 5,509 - - 5,793
Exercise of stock options, net (186,245 shares) - 224 1,267 - - 1,491
Change in unrealized gain (loss) on investment
securities, net of tax - - - - (14,691) (14,691)
-------- -------- --------- --------- ----------- -----------
Balance, June 30, 1994 $30,008 $65,621 $405,842 $561,248 ($5,336) $1,057,383
======== ======== ========= ========= =========== ===========
Balance, December 31, 1994 $30,008 $66,006 $413,429 $604,066 ($9,249) $1,104,260
Net income - - - 80,323 - 80,323
Cash dividends declared:
Preferred stock - - - (932) - (932)
Common stock - - - (32,670) - (32,670)
Common stock issued:
Dividend reinvestment and other stock plans
(215,336 shares) - 259 5,522 - - 5,781
Exercise of stock options, net (247,475 shares) - 297 1,628 - - 1,925
Change in unrealized gain (loss) on investment
securities, net of tax - - - - 4,834 4,834
-------- -------- --------- --------- ----------- -----------
Balance, June 30, 1995 $30,008 $66,562 $420,579 $650,787 ($4,415) $1,163,521
======== ======== ========= ========= =========== ===========
</TABLE>
<TABLE>
UJB FINANCIAL CORP. Exhibit (99)E
CONSOLIDATED AVERAGE BALANCE SHEETS WITH RESULTANT INTEREST AND RATES
(Tax-equivalent basis, dollars in thousands)
<CAPTION>
Six Months Ended June 30,
-------------------------------------------------------------
1995 1994
----------------------------- -----------------------------
Average Average Average Average
Balance Interest Rate Balance Interest Rate
------------ -------- ------- ------------ -------- -------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Interest earning assets:
Federal funds sold and securities purchased
under agreements to resell $ 45,999 $ 1,518 6.65 % $ 7,622 $ 243 6.43 %
Interest bearing deposits with banks 12,745 375 5.93 16,462 260 3.18
Trading account securities 24,845 816 6.62 31,070 501 3.25
Investment securities available for sale 217,227 7,184 6.61 1,013,055 26,791 5.29
Investment securities:
U.S. Government and Federal agencies 1,912,130 57,471 6.01 1,704,944 48,877 5.73
States and political subdivisions 314,830 15,728 9.99 305,356 16,731 10.96
Other securities 1,703,286 52,202 6.13 1,399,830 36,834 5.26
------------ -------- ------- ------------ -------- -------
Total investment securities 3,930,246 125,401 6.38 3,410,130 102,442 6.01
------------ -------- ------- ------------ -------- -------
Loans:
Commercial 4,566,933 197,873 8.74 4,334,607 154,306 7.18
Mortgage 2,867,121 117,742 8.21 2,465,619 95,103 7.71
Instalment 2,258,092 97,554 8.71 2,046,994 79,857 7.87
------------ -------- ------- ------------ -------- -------
Total loans 9,692,146 413,169 8.60 8,847,220 329,266 7.51
------------ -------- ------- ------------ -------- -------
Total interest earning assets 13,923,208 548,463 7.94 13,325,559 459,503 6.95
------------ -------- ------- ------------ -------- -------
Non-interest earning assets:
Cash and due from banks 837,790 874,480
Allowance for loan losses (211,264) (250,093)
Other assets 623,317 587,042
------------ ------------
Total non-interest earning assets 1,249,843 1,211,429
------------ ------------
TOTAL ASSETS $ 15,173,051 $ 14,536,988
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest bearing liabilities:
Savings deposits $ 5,100,642 57,546 2.28 $ 5,583,513 56,053 2.02
Other time deposits 3,887,249 96,780 5.02 3,051,268 57,932 3.83
Commercial certificates of deposit
$100,000 and over 461,806 13,193 5.76 285,131 4,608 3.26
------------ -------- ------- ------------ -------- -------
Total interest bearing deposits 9,449,697 167,519 3.57 8,919,912 118,593 2.68
------------ -------- ------- ------------ -------- -------
Commercial paper 48,408 1,390 5.79 43,903 752 3.45
Other borrowed funds 1,142,639 42,129 7.44 1,274,573 27,092 4.29
Long-term debt 205,809 8,795 8.55 214,290 9,159 8.55
------------ -------- ------- ------------ -------- -------
Total interest bearing liabilities 10,846,553 219,833 4.09 10,452,678 155,596 3.00
------------ -------- ------- ------------ -------- -------
Non-interest bearing liabilities:
Demand deposits 2,943,092 2,830,816
Other liabilities 240,170 201,828
------------ ------------
Total non-interest bearing liabilities 3,183,262 3,032,644
Shareholders' equity 1,143,236 1,051,666
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 15,173,051 $ 14,536,988
============ ============
Net Interest Income (tax-equivalent basis) 328,630 3.85 % 303,907 3.95 %
======= =======
Tax-equivalent basis adjustment (7,012) (7,586)
--------- ---------
Net Interest Income $ 321,618 $ 296,321
========= =========
Net Interest Income as a Percent of Interest
Earning Assets (tax-equivalent basis) 4.76 % 4.60 %
======= =======
<FN>
Note: -The tax-equivalent adjustment was computed based on a Federal income tax rate of 35% for 1995 and 1994.
</FN>
</TABLE>
<TABLE>
UJB FINANCIAL CORP. Exhibit (99)F
CONSOLIDATED RECONCILIATIONS OF ALLOWANCE FOR LOAN LOSSES
(dollars in thousands)
<CAPTION>
Six Months Ended June 30,
-----------------------------
1995 1994
------------- -------------
<S> <C> <C>
Balance, January 1 $214,161 $244,154
Provision charged to expense 30,750 37,000
------------- -------------
244,911 281,154
------------- -------------
Net charge offs:
Loans charged off 56,037 49,629
Less recoveries 10,106 7,111
------------- -------------
Net loans charged off 45,931 42,518
------------- -------------
Balance, June 30 $198,980 $238,636
============= =============
</TABLE>
