<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED SEPTEMBER 30, 1994 COMMISSION FILE #0-9623
------------------------
UST CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MASSACHUSETTS 04-2436093
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
40 COURT STREET, BOSTON, MASSACHUSETTS 02108
(Address of principal executive offices)
(617) 726-7000
(Registrant's telephone number, including area code)
NO CHANGE
(Former name, former address and former fiscal year, if changed since last year)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/ No / /.
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date. At October 31, 1994,
there were issued and outstanding 17,512,756 shares of common stock, par value
$0.625 per share.
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<TABLE>
UST CORP. AND SUBSIDIARIES
TABLE OF CONTENTS
<CAPTION>
PAGE
----
<S> <C> <C>
Part I. FINANCIAL INFORMATION........................................................
Item 1. Financial Statements................................................
Consolidated Balance Sheets -- September 30, 1994 and December 31, 1993...... 3
Consolidated Statements of Income -- Three and Nine Months Ended September
30, 1994 and 1993............................................................ 4
Consolidated Statements of Changes in Stockholders' Investment -- Nine Months
Ended September 30, 1994 and 1993............................................ 5
Consolidated Statements of Cash Flows -- Nine Months Ended September 30, 1994
and 1993..................................................................... 6
Notes to Consolidated Financial Statements................................... 7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results
of Operations................................................................ 8
Part II. OTHER INFORMATION............................................................
Item 1. Legal Proceedings................................................... 17
Item 5. Other Information................................................... 17
Item 6. Exhibits and Reports on Form 8-K.................................... 17
SIGNATURES................................................................... 18
</TABLE>
2
<PAGE> 3
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
UST CORP.
CONSOLIDATED BALANCE SHEETS
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1994 1993
------------- ------------
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<S> <C> <C>
ASSETS
Cash, due from banks and interest-bearing deposits............. $ 87,572 $ 90,198
Excess funds sold to banks and other short-term investments.... 16,164 96,647
Securities:
Securities held-to-maturity............................... 100
Securities available-for-sale:
Mortgage-backed securities........................... 203,841 263,435
U.S. Treasury, corporate notes, and other............ 205,033 210,474
--------- ----------
Total securities available-for-sale............. 408,874 473,909
--------- ----------
Total securities........................... 408,974 473,909
Loans:
Loans -- net of unearned discount of $10,598,000 in 1994
and $7,026,000 in 1993.................................. 1,249,775 1,338,807
Reserve for possible loan losses (Note 2)................. (62,173) (62,547)
--------- ----------
1,187,602 1,276,260
Premises, furniture and equipment, net......................... 31,973 32,661
Goodwill....................................................... 2,101 2,192
Other real estate owned........................................ 17,682 19,468
Other assets................................................... 41,900 52,931
--------- ----------
Total Assets.................................... $1,793,968 $2,044,266
========== ==========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Deposits:
Demand:
Noninterest bearing.................................. $ 350,418 $ 373,793
Interest bearing..................................... 158,401 170,642
Savings:
Money market......................................... 271,979 323,979
Other................................................ 302,171 320,924
Time:
Certificates of deposit over $100 thousand........... 60,547 72,911
Other................................................ 324,253 378,549
--------- ----------
Total deposits....................................... 1,467,769 1,640,798
Short-term borrowings.......................................... 169,303 226,268
Other borrowings............................................... 10,143 14,286
Other liabilities.............................................. 10,413 10,095
--------- ----------
Total liabilities.................................... 1,657,628 1,891,447
Commitments and contingencies (Note 3)
Stockholders' investment (Note 5):
Preferred stock $1 par value; Authorized -- 4,000,000
shares; Outstanding -- None
Common stock $0.625 par value; Authorized-30,000,000
shares; Outstanding -- 17,482,017 and 17,304,795
shares in 1994 and 1993, respectively.............. 10,926 10,815
Additional paid-in capital........................... 70,813 69,694
Retained earnings.................................... 71,819 68,437
Unrealized gain (loss) on securities
available-for-sale, net
of tax............................................. (17,689) 3,335
Deferred compensation, net........................... 471 538
--------- ----------
Total stockholders' investment....................... 136,340 152,819
--------- ----------
Total Liabilities and Stockholders'
Investment.................................... $1,793,968 $2,044,266
========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
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<TABLE>
UST CORP.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------- -------------------------
1994 1993 1994 1993
------- ------- ------- --------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans.................... $ 26,369 $ 28,100 $ 76,098 $ 84,293
Interest and dividends on securities:
Taxable.................................. 6,640 6,619 20,264 21,442
Nontaxable............................... 54 71 159 209
Dividends................................ 41 117 120 265
Interest on excess funds and other............ 367 303 1,433 405
---------- ----------- ----------- -----------
Total interest income............... 33,471 35,210 98,074 106,614
---------- ----------- ----------- -----------
Interest expense:
Interest on deposits.......................... 7,926 9,913 24,582 31,036
Interest on short-term borrowings............. 1,615 1,482 4,434 4,943
Interest on other borrowings.................. 265 330 909 1,103
---------- ----------- ----------- -----------
Total interest expense.............. 9,806 11,725 29,925 37,082
---------- ----------- ----------- -----------
Net interest income........................... 23,665 23,485 68,149 69,532
Provision for possible loan losses................. 6,600 8,050 18,625 61,083
---------- ----------- ----------- -----------
17,065 15,435 49,524 8,449
---------- ----------- ----------- -----------
Noninterest income:
Asset management fees......................... 3,383 3,415 11,079 12,293
Service charges on deposit accounts........... 1,235 1,357 3,702 4,099
Gain on sale of securities, net............... 504 646 1,022 4,291
Corporate services income..................... 2,017 2,054 5,936 6,203
Other......................................... 439 606 1,355 2,590
---------- ----------- ----------- -----------
Total noninterest income............ 7,578 8,078 23,094 29,476
---------- ----------- ----------- -----------
Noninterest expense:
Salary and employee benefits.................. 11,462 9,453 31,891 27,942
Net occupancy expense......................... 1,985 1,710 6,275 5,692
Credit card processing expense................ 981 949 2,815 2,790
Deposit insurance assessment.................. 1,174 1,170 3,522 3,756
Foreclosed asset and workout expense.......... 2,427 3,034 6,572 18,478
Other......................................... 5,111 4,340 16,686 13,703
---------- ----------- ----------- -----------
Total noninterest expense........... 23,140 20,656 67,761 72,361
---------- ----------- ----------- -----------
Income (loss) before income taxes.................. 1,503 2,857 4,857 (34,436)
Income tax provision (benefit)................ 447 834 1,475 (12,051)
---------- ----------- ----------- -----------
Net income (loss) before change in accounting
method........................................... 1,056 2,023 3,382 (22,385)
Cumulative effect of change in method of accounting
for income taxes (Note 4)........................ -- -- -- 750
Net income (loss).................................. $ 1,056 $ 2,023 $ 3,382 $ (21,635)
========== =========== =========== ===========
Per Share Data:
Net income (loss)............................. $ 0.06 $ 0.12 $ 0.19 $ (1.47)
Cash dividends declared....................... -- -- -- --
Weighted average number of common shares (Note
5)............................................... 17,805,079 16,199,447 17,814,670 14,716,664
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
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<TABLE>
UST CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' INVESTMENT
(UNAUDITED)
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-------------------------
1994 1993
-------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Balance, January 1................................................ $152,819 $143,880
Net income (loss)............................................ 3,382 (21,635)
Exercise of stock options and vesting of restricted stock.... 1,230 519
Proceeds from sale of common stock........................... 23,244
Change in deferred compensation.............................. (67) 1,421
Change from unrealized gain to unrealized loss on securities
available-for-sale......................................... (21,024)
Change in unrealized loss on marketable equity securities.... 17
-------- --------
Balance, September 30............................................. $136,340 $147,446
======== ========
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
5
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<TABLE>
UST CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-------------------------
1994 1993
-------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Cash flows from operating activities:
Net income (loss)............................................ $ 3,382 $(21,635)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Cumulative effect of change (Note 4) in accounting
method................................................ (750)
Provision for possible loan losses...................... 18,625 61,083
Depreciation and amortization........................... 3,485 3,850
Amortization of gain on sale/leaseback.................. (288) (288)
Amortization of security premiums, net.................. 551 1,111
Gain on sale of securities available-for-sale, net...... (1,022) (4,291)
(Gain)/loss on sale of other real estate owned, net..... (608) 1,198
Writedowns of other real estate owned................... 3,115 13,455
Deferred income tax benefit............................. (463) (10,476)
Increase in accruals and other, net..................... 17,773 49,610
-------- --------
Net cash provided by operating activities......................... 44,550 92,867
Cash flows provided by investing activities:
Proceeds from sales of securities available-for-sale......... 51,390 203,928
Proceeds from maturities of securities available-for-sale.... 114,581 25,034
Purchases of securities available-for-sale................... (127,272) (250,958)
Purchases of securities held-to-maturity..................... (100)
Net decrease in short-term investments....................... 80,483 (7,018)
Net loans paid............................................... 60,817 49,857
Proceeds from other real estate owned........................ 8,495 13,223
Purchases of premises and equipment.......................... (2,113) (763)
-------- --------
Net cash provided by investing activities......................... 186,281 33,303
Cash flows used by financing activities:
Net decrease in nontime deposits............................. (106,369) (136,797)
Net payments on certificates of deposit...................... (66,660) (34,903)
Net (payments) proceeds on short-term borrowings............. (56,965) (2,789)
Net payments on other borrowings............................. (4,143) (4,000)
Issuance of common stock for cash, net....................... 680 23,243
-------- --------
Net cash used by financing activities............................. (233,457) (155,246)
-------- --------
Decrease in cash and cash equivalents........................ (2,626) (29,076)
Cash and cash equivalents at beginning of year............... 90,198 116,529
-------- --------
Cash and cash equivalents at end of period................... $ 87,572 $ 87,453
======== ========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest................................................ $ 29,899 $ 37,725
Income taxes............................................ $ 2,144 $ 1,949
Noncash transactions:
Transfers from investment portfolio to securities held
for sale.............................................. $ 453
Transfers from other assets to securities
available-for-sale.................................... $ 300
Transfers from loans to other real estate owned......... $ 14,043 $ 34,350
Financed other real estate owned........................ $ 5,073 $ 22,483
Stock issuance............................................... $ 550 $ 519
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
6
<PAGE> 7
UST CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: The consolidated financial statements of UST Corp. and its subsidiaries
(the "Company") included herein have been prepared by the Company,
without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. The Company, however, believes
that the disclosures are adequate to make the information presented not
misleading. Certain prior period amounts have been reclassified to
conform to current classifications. The amounts shown reflect, in the
opinion of management, all adjustments necessary for a fair
presentation of the financial statements for the periods reported. All
such adjustments were of a normal recurring nature, except as disclosed
herein. These financial statements should be read in conjunction with
the financial statements and the notes thereto included in the
Company's Report on Form 10-K for the fiscal year ended December 31,
1993. The results of operations for the three-and nine-month periods
ended September 30, 1994 are not necessarily indicative of the results
of operations for the full year or any other interim period.
<TABLE>
NOTE 2: An analysis of the reserve for possible loan losses for the nine months
ended September 30, 1994 and 1993 follows:
<CAPTION>
1994 1993
------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Balance at beginning of period....................... $62,547 $50,126
Loans charged off.................................... (22,181) (38,400)
Recoveries on loans previously charged off........... 3,182 2,042
------- -------
Net chargeoffs....................................... (18,999) (36,358)
Provided from operations............................. 18,625 61,083
------- -------
Balance at end of period............................. $62,173 $74,851
======= =======
</TABLE>
The reserve for possible loan loss is based on a consistent, systematic
method which analyzes the size and risk of the loan portfolio on a monthly
basis. See "Credit Quality and Reserve for Possible Loan Loss" in Management's
Discussion and Analysis of Financial Condition and Results of Operations herein.
The increase in the reserve for 1993 resulted from a change in the Company's
strategy regarding the management of problem assets. As a result, a $30 million
special provision for loan losses was recorded during the 1993 period.
<TABLE>
NOTE 3: At September 30, 1994, the Company had the following off-balance sheet
financial instruments whose contract amounts represent credit risk:
<CAPTION>
AMOUNT
--------
(DOLLARS IN THOUSANDS)
<S> <C>
Commitments to extend credit......................... $306,000
Standby letters of credit and financial guarantees... 60,000
Commercial letters of credit......................... 2,000
</TABLE>
NOTE 4: Cumulative effect of change in accounting method: See "Income Taxes" in
Management's Discussion and Analysis of Financial Condition and Results
of Operations herein for information.
NOTE 5: The weighted average number of common shares for calculating earnings
per share includes shares related to a directors deferred compensation
plan and dilutive options totaling 387,253, 448,096, and 266,346 for
the three- and nine-month periods ended September 30, 1994, and
three-month period ended September 30, 1993, respectively. Due to the
net loss for the nine-month period ended September 30, 1993, shares
related to the directors deferred compensation plan and options have
been excluded from the earnings per share calculations due to their
antidilutive effect.
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FINANCIAL CONDITION AT SEPTEMBER 30, 1994
INTRODUCTION
The Company's primary loan market, the New England region, experienced a
weak economic environment from 1990 to 1993. The economic climate contributed to
a decline in real estate values and adversely affected the net worth of certain
borrowing customers of the Company's subsidiary banks and the Company's
collateral position with respect to certain loans. The majority of the Company's
outstanding loans are collateralized by real estate located in New England, more
specifically, Eastern Massachusetts.
Management of the Company has identified the reduction of the aggregate
amount of nonperforming assets and substandard loans, as measured by the
Company's internal risk rating system, as a high priority. Although the level of
nonperforming assets has fluctuated from quarter to quarter, total substandard
loans have declined over $100 million to $153 million at September 30, 1994 from
a peak of $255 million at December 31, 1993. As of September 30, 1994,
approximately 75 percent of substandard loans were collateralized with real
estate, and the remainder were collateralized with accounts receivable,
inventory, equipment and other business assets. Of the loans secured by real
estate, approximately 60 percent were collateralized by commercial real estate
development, approximately 25 percent by owner-occupied commercial properties
and approximately 10 percent by residential real estate. The remaining were
collateralized by real estate under construction and raw land.
While the New England economy has shown recent signs of improvement, the
foregoing factors influenced the Company's financial results for both the third
quarter and first nine months of 1994, particularly with regard to the provision
for possible loan losses and expenses associated with foreclosed asset and
workout expense. Such factors may continue to influence future operating
results.
Recent amendments to the Federal Deposit Insurance Improvement Act of 1991
require each federal banking agency to prescribe standards by regulation or
guideline, relating to (i) certain operational and managerial matters and (ii)
to the extent determined to be appropriate by such regulators, asset quality,
earnings and stock valuation. Any such standards would apply to the Company's
banking subsidiaries only and not to the Company directly. The Company is not
aware of any presently proposed regulations or guidelines that would have any
material effect on the operations or results of any of the Company's banking
subsidiaries or, indirectly, of the Company.
This discussion should be read in conjunction with the financial
statements, notes, and tables included in the Company's Report on Form 10-K for
the fiscal year ended December 31, 1993.
ASSETS
Total assets at September 30, 1994 were $1.8 billion compared with $2.0
billion at December 31, 1993. The Company's loan portfolio decreased 7%, or $89
million, since December 31, 1993. The decrease is primarily due to repayments
while new loan activity has been affected by increased competition for the
small-to-middle market credits. Another factor in the reduction of the portfolio
was the chargeoffs of certain credits. See "Credit Quality and Reserve for Loan
Loss" herein.
Securities decreased $64.9 million since December 31, 1993 to $409.0
million at September 30, 1994, reflecting the maturity of short-term U.S.
Treasury and Agency securities. At September 30, 1994, securities were
principally comprised of mortgage-backed securities, U.S. Treasury and Agency
securities, and corporate notes.
On December 31, 1993, the Company adopted Statement of Financial Accounting
Standards No. 115 ("SFAS 115"), "Accounting for Certain Investments in Debt and
Equity Securities," issued by the Financial Accounting Standards Board. This
Standard addresses the accounting and reporting for debt and equity securities
that have readily determinable market values. According to SFAS 115, these
securities must be classified as either held-to-maturity, available-for-sale, or
trading and are reported at either amortized cost or
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fair value, depending upon the classification. At September 30, 1994, the
Company's portfolio consisted of $.1 million of securities held-to-maturity and
$408.9 million available-for-sale. At December 31, 1993, all securities were
classified in the available-for-sale category. Between December 31, 1993 and
September 30, 1994, the application of SFAS 115 resulted in a decrease of $21.0
million to stockholders' investment, representing the change from an unrealized
gain of $3.3 million after tax at December 31, 1993 to an unrealized loss of
$17.7 million after tax at September 30, 1994. In light of the size of the
unrealized loss and the current level of taxable income, the Company has
concluded that $3.7 million is the appropriate deferred tax asset related to
unrealized loss to be recorded at September 30, 1994. The decline in market
value reflects the rapid increase in interest rates and corresponding decline in
market prices for bonds, which has continued throughout the first nine months of
1994.
LIQUIDITY AND FUNDING
Liquidity involves the Company's ability to raise or gain access to funds
in order to fulfill its existing and anticipated financial obligations. It may
be provided through the maturity or sale of an entity's assets, such as loans
and securities, liability sources such as increased deposits and purchased or
borrowed funds, and access to the capital markets. While the Company's security
portfolio is currently classified almost entirely as available-for-sale, the
Company has no present intention or need to sell any of its securities or
existing loan portfolio, other than a nominal volume of fixed rate residential
mortgage loans sold to investors as they are originated.
At September 30, 1994, liquidity, which includes excess cash, excess funds
sold and unpledged securities, totaled approximately $246 million, or 14% of
quarter-end assets compared to $310 million, or 15%, at December 31, 1993.
The funds needed to support the Company's loan and securities portfolios
are provided through a combination of commercial and retail deposits. Total
deposits decreased $173.0 million, or 11%, to $1.5 billion since December 31,
1993. Approximately 79% of the decline occurred in savings and time deposits as
the average yield has fallen from 2.91% for the fourth quarter of 1993 to 2.75%
for the third quarter of 1994. Generally, rate-conscious investors are
increasingly utilizing mutual funds and other nonbank vehicles to obtain higher
rates of return.
As shown in the Consolidated Statements of Cash Flows, cash and cash
equivalents decreased $2.6 million during the nine-month period ended September
30, 1994. Cash provided by operations resulted largely from net interest income
from loans and securities, less the net difference of noninterest expense over
noninterest income. Net cash provided by investing activities was due
principally to the net decreases in short-term investments, net decreases in
loans through repayment, and to an excess of proceeds from sales and maturities
of securities over securities purchases. Net cash used for financing activities
was primarily the result of decreases in both nontime deposits and certificates
of deposit and a net decrease in short-term borrowings.
At September 30, 1994, the parent company had $16.0 million in short-term
investments. This balance reflects the investment of proceeds received from the
sale of 2.87 million shares of the Company's common stock to more than sixty
institutional investors in a European offering made under Regulation S of the
United States Securities and Exchange Commission on August 12, 1993. These
investments were reduced from $20 million to $16 million during the third
quarter of 1994 as the Company paid its third annual principal installment of $4
million on its 8.5% senior notes.
For the nine months ended September 30, 1994, the Company received a total
of $3.0 million in dividends from United States Trust Company ("USTC"). During
the same period, $4.9 million was contributed to UST Bank/Connecticut ("UST/CT")
and $500 thousand was contributed to USTrust by the Company to supplement their
respective equity capital accounts.
INTEREST RATE RISK
Volatility in interest rates requires the Company to manage interest rate
risk. Interest rate risk arises from differences in the timing of repricing
assets and liabilities. Management monitors and adjusts the difference
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between interest-sensitive assets and interest-sensitive liabilities ("GAP"
position) within various time frames. An institution with more assets repricing
than liabilities within a given time frame is considered asset sensitive
("positive GAP") and in time frames with more liabilities repricing than assets
it is liability sensitive ("negative GAP"). Within GAP limits established by the
Board of Directors, the Company seeks to balance the objective of insulating the
net interest margin from rate exposure with that of taking advantage of
anticipated changes in rates in order to enhance income. The Company's policy is
to limit its one-year cumulative GAP position to 2.5 times equity, presently
equal to approximately 19% of total assets. The Company manages its interest
rate GAP primarily by lengthening or shortening the maturity structure of the
Company's securities portfolio.
The Company's GAP presentation may not reflect the degrees to which
interest-earning assets and core deposit costs respond to changes in market
interest rates. The Company's rate-sensitive assets consist primarily of loans
tied to the prime rate. As interest rates rose during the first nine months of
1994, the prime rate and, therefore, the Company's yield on earning assets
increased faster than the rate paid on interest-bearing liabilities.
<TABLE>
The following table summarizes the Company's GAP position at September 30,
1994. The majority of loans are included in 0-30 days as they reprice in
response to changes in the interest rate environment. Securities and demand
deposits are categorized according to their expected lives. They are evaluated
in conjunction with the Company's asset/liability management strategy and
securities may be purchased or sold in response to expected or actual changes in
interest rates, prepayment risk, loan growth and similar factors. The reserve
for possible loan losses is included in the "Over 1 Year" category of loans. At
September 30, 1994, the one-year cumulative GAP position was slightly negative
at $57 million, or approximately 3% of total assets.
<CAPTION>
INTEREST SENSITIVITY PERIODS
--------------------------------------------------------------
0-30 DAYS 31-90 DAYS 91-365 DAYS OVER 1 YEAR TOTAL
--------- ---------- ----------- ----------- -----
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Loans...................................... $799 $ 18 $ 83 $350 $1,250
Short-term investments..................... 16 16
Securities................................. 4 4 27 374 409
Other assets............................... 4 115 119
---- ----- ----- ---- ------
Total assets............................... 819 22 114 839 $1,794
---- ----- ----- ---- ------
Interest-bearing deposits.................. 622 57 168 270 1,117
Borrowed funds............................. 168 11 179
Demand deposits............................ (4) 354 350
Other liabilities and stockholders'
investment............................... 1 147 148
---- ----- ----- ---- ------
Total liabilities and equity............... 787 57 168 782 $1,794
---- ----- ----- ---- ------
GAP for period............................. $ 32 $ (35) $ (54) $ 57
==== ===== ===== ====
Cumulative GAP............................. $ 32 $ (3) $ (57) $ 0
==== ===== ===== ====
As a percent of total assets............... 1.78% (0.17)% (3.18)%
==== ===== =====
</TABLE>
CREDIT QUALITY AND RESERVE FOR POSSIBLE LOAN LOSS
The Company maintains a reserve for possible loan losses to absorb future
chargeoffs of loans in the existing portfolio. The reserve is increased by a
loan loss provision charged to expense. When a loan, or portion thereof, is
considered uncollectible, it is charged against the reserve. Recoveries on
amounts previously charged off are added to the reserve when collected. Adequacy
of the reserve for possible loan losses is determined using a consistent,
systematic methodology which analyzes the size and risk of the loan portfolio on
a monthly basis. Factors in this analysis include historical loan loss
experience and asset quality, as reflected by delinquency trends, nonaccrual and
restructured loans and the Company's credit risk rating profile. The Company's
credit risk rating profile uses categories of risk based on those currently used
by its primary regulators and accuracy of the ratings is monitored by an ongoing
evaluation by the Company's Loan Review Department. Consideration is also given
to the current and expected economic conditions and in
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particular how such conditions affect the types of credits in the portfolio and
the market area in general. This analysis is documented monthly using a
combination of numerical, statistical and qualitative analysis (including
sensitivity tests) and a written conclusion discussing the rationale supporting
the monthly adequacy of the loan loss reserve.
<TABLE>
The following table measures the Company's performance regarding some key
indicators of asset quality:
<CAPTION>
SEPTEMBER 30, JUNE 30, MARCH 31, DECEMBER 31, SEPTEMBER 30,
1994 1994 1994 1993 1993
------------ ------- --------- ------------ -------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Nonperforming assets:
Nonaccrual loans............... $ 69.5 $63.2 $48.6 $ 49.3 $ 65.4
Accruing loans 90 days or more
past due..................... 1.2 1.0 1.3 .5 .9
Other real estate owned (OREO),
net.......................... 17.7 10.1 16.2 19.5 27.1
Restructured loans............. 17.7 18.4 25.8 41.5 34.9
------ ----- ----- ------ ------
Total nonperforming
assets.................. $106.1 $92.7 $91.9 $110.8 $128.3
====== ===== ===== ====== ======
Reserve for loan losses............. $ 62.2 $61.0 $60.9 $ 62.5 $ 74.9
Net chargeoffs for the quarter...... 5.5 6.5 7.1 51.8** 8.0
OREO reserve........................ 3.6 3.1 6.6 6.6 8.0
Ratios:
Reserve to nonaccrual loans.... 89.4% 96.6% 125.2% 127.0% 114.4%
Reserve to total of nonaccrual
loans, accruing loans 90 days
or more past due and
restructured loans........... 70.3% 74.0% 80.5% 68.5% 74.0%
Reserve to period-end loans.... 5.0% 4.7% 4.7% 4.7% 5.4%
Nonaccrual loans to period-end
loans........................ 5.6% 4.9% 3.8% 3.7% 4.8%
Nonaccrual and accruing loans
over 90 days past due to
period-end loans............. 5.7% 5.0% 3.9% 3.8% 4.8%
Nonperforming assets to
period-end loans, and OREO... 8.4% 7.1% 7.1% 8.3% 9.2%
Nonperforming assets to total
assets....................... 5.9% 5.0% 4.6% 5.4% 4.6%
Net chargeoffs to average
loans........................ 1.7%* 2.0%* 2.2%* 3.7%** 2.3%*
OREO reserve to OREO........... 16.9% 23.4% 28.9% 25.2% 22.7%
- - ---------------
<FN>
* Annualized
** Full year 1993
</TABLE>
During the second quarter of 1993, a strategy was developed which
recognized that many troubled credits would require resolution in an expeditious
manner in order to reduce the management and staff involvement and associated
carrying costs. While this strategy would increase the initial cost of the
workouts, it would allow the Company's resources to be redirected toward new
business. One result of this strategy was to record a $30 million special loan
loss provision in the second quarter of 1993 to reflect Management's estimate of
possible future losses based upon the identified level of substandard and
nonperforming assets.
Total nonperforming assets at September 30, 1994 have decreased $4.7
million, or 4%, to $106.1 million since December 31, 1993, and have increased
14% from the $92.7 million reported at June 30, 1994. Nonperforming assets have
declined $22.2 million, or 17%, from September 30, 1993 due primarily to
paydowns, OREO sales, and chargeoffs.
Future economic conditions could result in further deterioration of the
Company's loan portfolio and the value of its OREO portfolio. Adverse
developments could produce increases in delinquencies, nonperforming assets,
restructured loans, and OREO writedowns which individually or collectively could
have a material negative effect on future earnings. These factors could
negatively affect the Company's income statement
11
<PAGE> 12
through reduced interest income, increased loan loss provisions, and higher
costs to collect loans and maintain repossessed collateral.
CAPITAL AND REGULATORY AGREEMENTS
There are three capital requirements which bank and bank holding companies
must meet. Two requirements take into consideration risk inherent in assets for
both on-balance and off-balance sheet items on a weighted basis ("risk-based
assets"). Under these requirements, the Company must meet minimum Tier 1 and
Total risk-based capital ratios (capital, as defined in the regulations, divided
by risk-based assets) of 4% and 8%, respectively. Tier 1 capital is essentially
shareholders' investment, net of intangible assets and Tier 2 capital is the
allowable portion of the loan loss reserve (as defined) and discounted
subordinated debt. Total capital is the combination of Tier 1 and Tier 2. The
Company's risk-based assets were $1.51 billion at September 30, 1994 and $1.64
billion at December 31, 1993.
The third requirement is a leverage capital ratio, defined as Tier 1
capital divided by total average assets, net of intangibles. It requires a
minimum of 3% for the highest rated institutions and higher percentages for
others.
<TABLE>
At September 30, 1994 and December 31, 1993, the Company's ratios and the regulatory minimum
requirements applicable to the Company were:
<CAPTION>
SEPTEMBER 30, 1994 DECEMBER 31, 1993
-------------------- --------------------
AMOUNT PERCENT AMOUNT PERCENT
------ ----- ------ -----
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Tier 1 capital:
Actual................................ $147.1 9.74% $141.7 8.68%
Minimum required*..................... $ 60.4 4.00% $ 65.3 4.00%
Total (Tier 1 and Tier 2) capital:
Actual................................ $166.8 11.38% $164.5 10.35%
Minimum required*..................... $117.3 8.00% $130.6 8.00%
Tier 1 leverage capital:*.................. $147.1 7.98% $141.7 7.06%
- - ---------------
<FN>
* See discussion below. The Company has not been notified of a specific minimum requirement above
the 3% for highest-rated institutions. However, two of the Company's banking subsidiaries,
comprising almost all of the consolidated assets, have a 6% Tier 1 leverage capital requirement.
</TABLE>
Capital ratios have been calculated consistent with current regulatory
policy which excludes the impact of SFAS 115 and the recording of an unrealized
gain/loss on securities available-for-sale.
The Company understands that a modification to current regulations is under
consideration which would disallow, for regulatory capital calculations, the
amount of deferred tax assets that are dependent upon future taxable income for
a period greater than one year. If adopted, this proposal would not materially
affect the reported ratios of the Company.
The Company further understands that a new proposal by the FDIC would
reduce capital by the unrealized loss resulting from SFAS 115. If adopted, Tier
1, total capital and Tier 1, leverage capital ratios at September 30, 1994 would
be 8.58%, 10.18% and 7.08%, respectively.
In February 1992, the Company's two Massachusetts-based banking
subsidiaries, USTC and USTrust, each entered into a Consent Agreement and Order
with the Federal Deposit Insurance Corporation ("FDIC") and the Commissioner of
Banks in the Commonwealth of Massachusetts ("Massachusetts Commissioner"). In
accordance with these agreements, the banks agreed to, among other things,
maintain a Tier 1 leverage capital ratio at or in excess of 6% by February 1993.
At September 30, 1994 the Tier 1 leverage capital ratio of USTrust was 7.30% and
was 31.75% for USTC. This compares with 6.49% and 23.75%, respectively, at
December 31, 1993. In February 1994 the FDIC and Massachusetts Commissioner
terminated and lifted the Consent Agreement and Order with USTC.
12
<PAGE> 13
Since June 1991, the Company's Connecticut-based banking subsidiary, UST/CT
has been operating under a Stipulation and Agreement with the Commissioner of
Banks for the State of Connecticut. This agreement was amended in August 1992,
November 1993, and July 1994 and requires UST/CT to maintain a 6% Tier 1
leverage capital ratio. During the second quarter of 1994, regulators for UST/CT
required that a portion of its deferred tax asset not be included in capital
calculations. UST/CT's Tier 1 leverage capital ratio as modified in the
preceding sentence at September 30, 1994 was 7.68% compared with 6.21% at
December 31, 1993.
Effective August 3, 1992, UST Corp. entered into a written agreement with
the Federal Reserve Bank of Boston and the Massachusetts Commissioner which
requires the Company to maintain Tier 1, Total risk-based and Tier 1 leverage
capital ratios which conform to the Capital Adequacy Guidelines of the Board of
Governors of the Federal Reserve System, and which take into account the current
and future capital requirements of the subsidiary banks, without specifying a
numeric minimum for the Tier 1 leverage capital ratio. The Company believes its
consolidated ratios meet the required minimums.
Additionally, per these agreements, the Company has agreed not to pay any
dividends to stockholders, nor take any dividends from its banking subsidiaries,
without prior regulatory approval. Similarly, the banking subsidiaries have
agreed to refrain from transferring funds in the form of dividends to the
Company without prior regulatory approval. The FDIC and Massachusetts
Commissioner terminated and lifted the Consent Agreement and Order with USTC in
February 1994; however, USTC has agreed to continue to request regulatory
consent prior to the payment of dividends.
The Company and each of its subsidiary banks is currently in compliance
with its respective capital requirements under these regulatory agreements. The
Company believes that each of its subsidiary banks is also in satisfactory
compliance with the other terms of the respective regulatory agreements (See
Part II, Item 1).
RESULTS OF OPERATIONS
COMPARISON OF 1994 WITH 1993
The Company reported net income of $1.1 million, or $.06 per share, in the
third quarter of 1994 and $3.4 million, or $.19 per share in the first nine
months of 1994. This compares with net income of $2.0 million or $0.12 per share
and net loss of $21.6 million, or $1.47 per share, for the same periods in 1993.
Results for the nine-month period ending September 30, 1993 include a special
loan loss provision of $30 million recorded in the second quarter in connection
with the aforementioned strategy regarding problem asset resolution. Results for
the first nine months of 1994 reflect declines in net interest income and
noninterest income from the prior year, which were more than offset by a lower
loan loss provision and decreased expenses associated with foreclosed assets and
loan workout.
The Company's net interest income on a fully taxable equivalent basis was
$23.9 million in the third quarter of 1994 compared with $23.8 million for the
same period in 1993. For the first nine months of 1994, net interest income on a
fully taxable basis was $68.9 million compared with $70.4 million for the same
period in 1993. Interest rate spread and margin increased in the third quarter
of 1994 from the second quarter of 1994. The improved interest rate spread and
margin this quarter was a direct result of increased earning asset yields
coupled with stable rates on interest-bearing liabilities. (See "Net Interest
Income Analysis" below.) The resultant increase in net interest income was
partially offset by a continued decline in the volume of earning assets.
NET INTEREST INCOME ANALYSIS
Due to the continued rise in interest rates since the beginning of 1994,
increases in earning asset yields outpaced increases in the cost of
interest-bearing liabilities. Specifically, the yield on interest-earning assets
increased to 7.71% for the third quarter of 1994 compared with 7.38% for the
second quarter of 1994. However, the cost of interest-bearing liabilities only
increased from 2.89% last quarter to 2.93% this quarter. Although rates have
risen throughout 1994, they are lower than both the third quarter and first nine
months of
13
<PAGE> 14
1993. The yield on interest-earning assets for the first nine months of 1994 was
7.40% compared to 7.69% in the first nine months of 1993, and the cost of
interest-bearing liabilities was 2.87% compared to 3.19% in the first nine
months of 1993.
Average loans outstanding in the third quarter were $1.3 billion, $122
million lower than the same period in 1993. Average interest-bearing deposits
were $1.1 billion, a decrease of $126 million from the 1993 third quarter
average. For the first nine months of 1994, average loans outstanding were $1.3
billion, a decrease of $140 million from 1993, and average interest-bearing
deposits were $1.2 billion, a decrease of $97 million. See "Assets" section
above for discussion of changes in loan volume.
Interest rate spread in the third quarter of 1994 was 4.78% compared with
4.50% for the second quarter of 1994. Net interest margin was 5.47% in the third
quarter of 1994 compared with 5.13% last quarter. Interest rate spread was 4.53%
and the net interest margin was 5.16% for the first nine months of 1994 compared
with 4.49% and 5.04% for the same periods in 1993. See "Financial Condition"
above for a discussion regarding loans and deposits.
<TABLE>
The following tables attribute changes in interest income, interest expense
and the related net interest income for the quarter and nine months ended
September 30, 1994 when compared with the quarter and nine months ended
September 30, 1993, either to changes in average balances or to changes in
average rates on interest-bearing assets and liabilities. In this table, changes
attributable to both rate and volume are allocated on a weighted basis.
<CAPTION>
INCREASE (DECREASE) FROM
QUARTER ENDED SEPTEMBER 30, 1993
----------------------------------
QUARTER AMOUNTS DUE TO
ENDED CHANGES IN
SEPTEMBER 30, TOTAL --------------------
1994 CHANGE VOLUME RATE
------- ------- ------- ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans*.............. $26,570 $(1,757) $(2,611) $ 854
Interest and dividends on securities:
Taxable............................. 6,652 13 125 (112)
Nontaxable*......................... 122 (126) (46) (80)
Interest on excess funds and other....... 367 64 (39) 103
------- ------- ------- ------
Total interest income*.............. 33,711 (1,806) (2,571) 765
------- ------- ------- ------
Interest expense:
Interest on deposits..................... 7,926 (1,987) (937) (1,050)
Interest on short-term borrowings........ 1,615 133 (164) 297
Interest on other borrowings............. 265 (65) (106) 41
------- ------- ------- ------
Total interest expense.............. 9,806 (1,919) (1,207) (712)
------- ------- ------- ------
Net interest income*.......................... $23,905 $ 113 $(1,364) $1,477
======= ======= ======= ======
- - ---------------
<FN>
* Fully taxable equivalent at the Federal income tax rate of 35% and includes applicable state taxes
net of Federal benefit.
</TABLE>
14
<PAGE> 15
<TABLE>
<CAPTION>
INCREASE (DECREASE) FROM
NINE MONTHS ENDED SEPTEMBER 30, 1993
NINE ------------------------------------
MONTHS AMOUNTS DUE TO
ENDED CHANGES IN
SEPTEMBER 30, TOTAL --------------------
1994 CHANGE VOLUME RATE
------- ------- ------- ------
<S> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Interest income:
Interest and fees on loans*.............. $76,702 $(8,288) $(8,358) $ 70
Interest and dividends on securities:
Taxable............................. 20,300 (1,188) 1,836 (3,024)
Nontaxable*......................... 357 (273) (130) (143)
Interest on excess funds and other....... 1,433 1,028 945 83
------- ------- ------- ------
Total interest income*.............. 98,792 (8,721) (5,707) (3,014)
------- ------- ------- ------
Interest expense:
Interest on deposits..................... 24,582 (6,454) (2,223) (4,231)
Interest on short-term borrowings........ 4,434 (509) (1,510) 1,001
Interest on other borrowings............. 909 (194) (304) 110
------- ------- ------- ------
Total interest expense.............. 29,925 (7,157) (4,037) (3,120)
------- ------- ------- ------
Net interest income*.......................... $68,867 $(1,564) $(1,670) $ 106
======= ======= ======= ======
- - ---------------
<FN>
* Fully taxable equivalent at the Federal income tax rate of 35% and includes applicable state taxes
net of Federal benefit.
</TABLE>
NONINTEREST INCOME
Total noninterest income decreased $.5 million in the third quarter of 1994
compared with the same period in 1993. Service charges on deposit accounts and
gain-on-sale of securities declined $.1 million and $.1 million, respectively,
while other noninterest income decreased $.2 million, a direct result of lower
residual income from maturing equipment leases.
Total noninterest income decreased $6.4 million in the nine months ended
September 30, 1994 compared with the same period in 1993. The decrease is
primarily due to fluctuations and variances in asset management fee-based income
contingent on transaction volume and other factors. In addition, a decline in
securities gains from $4.3 million in 1993 to $1.0 million in 1994 contributed
to the decrease. Gains on securities were lower in 1994 compared with 1993 which
included a larger amount of sales in response to a decrease in total deposits in
the first quarter of 1993. Other noninterest income decreased $1.2 million and
the following are the more significant reasons: Lease income decreased $.7
million due to a decline in residuals on completed leases and income from home
equity loans purchased from the Resolution Trust Corporation at a substantial
discount in late 1991 decreased $.4 million as the principal declines due to
paydowns.
NONINTEREST EXPENSE
Total noninterest expense for the third quarter of 1994 increased $2.4
million to $23.1 million from $20.7 million for the same period in 1993. The
increase is due to the following significant reasons: Personnel-related costs
increased $2.0 million due to third quarter 1994 severance payments of $.5
million, an asset management division revenue-sharing provision of $.6 million
(See discussion below), higher pension expense of $.4 million and additional
staffing. Other noninterest expense increased $.8 million as a result of a
special reduction in the Company's reserve for litigation recorded in the third
quarter of 1993. Foreclosed asset and workout expense declined $.6 million.
The Company and certain senior executives in USTC's asset management
division are presently negotiating the terms of employment agreements designed
to maximize the profitability and grow the assets under management of the asset
management business. The proposed agreements are also designed to increase the
foregoing executives' participation in the value created in the asset management
business and, in a change-in-control situation, increase the likelihood that a
prospective purchaser will retain the services of the executives. The agreements
are expected to contain revenue-sharing provisions which will permit the asset
management division to use a specified percentage of its base revenues for the
payment of expenses of the
15
<PAGE> 16
operation, including incentive compensation. The revenue-sharing provisions are
expected to represent a percentage of base revenues to be defined in the
agreements and would become effective upon the execution of the agreements. In
connection therewith, the Company has recorded an estimated revenue-sharing
accrual of $.6 million for the quarter ended September 30, 1994 and, subject to
the level of defined base revenues, would record a similar accrual for the
fourth quarter. It has also been proposed that the revenue-sharing provisions be
applied retroactively to January 1, 1994. In the event of such retroactive
application, the Company would record an additional accrual during the fourth
quarter subject to the final terms of the proposed agreements. Such accrual
would include adjustments for incentive accruals already recorded under existing
arrangements and would contain other exclusions from defined base revenues.
Total noninterest expense for the first nine months of 1994 decreased $4.6
million to $67.8 million from $72.4 million for the same period in 1993.
Foreclosed asset and workout expense declined $11.9 million primarily due to
decreases in writedowns of OREO to net realizable value. Personnel-related costs
increased $3.9 million due to severance payments of $.7 million, an asset
management division revenue-sharing provision of $.6 million, higher pension
expense of $.8 million and additional staffing and merit increases. Net
occupancy expense for the 1994 period includes a writedown of $.3 million in
connection with a sale of a former branch building. Other noninterest expense
increased $3.0 million in the nine-month comparisons. This increase was largely
due to a special reduction of $.8 million in the Company's reserve for
litigation recorded in the 1993. An increase of $.7 million was attributable to
fees paid for consulting services on a number of planning and operational
improvement initiatives and for consulting services by certain Company
executives. Appraisal fees increased $.6 million for new appraisals ordered on a
large number of collateral-based loans. Advertising expense increased $.8
million due to increased promotional campaigns.
INCOME TAXES
The Company recorded tax provisions of $447 thousand in the third quarter
of 1994, and $834 thousand in the third quarter of 1993. This compares with a
tax provision of $1.5 million for the first nine months of 1994 and a tax
benefit of $12.8 million, net of the effect of SFAS No. 109 noted below, in
1993. Income taxes are a direct result of the level and composition of pre-tax
income.
In February 1992 the Financial Accounting Standards Board issued a new
standard, SFAS No. 109 "Accounting for Income Taxes," a modification of SFAS No.
96, which changes the accounting for deferred income tax to the "liability
method." The Company adopted SFAS No. 109 on January 1, 1993. This change
increased net income $750 thousand in January 1993. This represented the
cumulative effect of the new standard on the balance sheet.
As of September 30, 1994, the Company had a deferred tax asset of
approximately $10.4 million, net of a valuation allowance of $4.0 million,
included in other assets which is expected to be realized against future taxable
income. Management believes that it is more likely than not that the Company
will realize the benefit of these deferred tax assets.
RECENT ACCOUNTING DEVELOPMENTS
The Financial Accounting Standards Board (FASB) has issued SFAS No. 112,
"Employers' Accounting for Postemployment Benefits," which requires accrual of a
liability for all types of benefits paid to former or inactive employees after
employment but before retirement. The Company has determined that this statement
will have no material effect on its financial statements. Adoption of the
statement was required for fiscal years beginning after December 15, 1993.
FASB has issued SFAS No. 114, "Accounting by Creditors for Impairment of a
Loan," which requires that all creditors value all loans for which it is
probable that the creditor will be unable to collect all amounts due according
to the terms of the loan agreement at the present value of expected future cash
flows discounted at the loan's effective interest rate or, as a practical
expedient at the loan's observable market price or the fair value of the
collateral if the loan is collateral dependent. This statement would apply for
fiscal years beginning after December 15, 1994. Portions of SFAS No. 114 have
been amended by SFAS No. 118, "Accounting by Creditors for Impairment of a
Loan-Income Recognition and Disclosures." The effect on the Company's results of
operations has not yet been determined.
16
<PAGE> 17
PART II -- OTHER INFORMATION
For the quarter ended September 30, 1994, Items 2 through 4 of Part II are
either inapplicable or would elicit a response of "NONE" and therefore no
reference thereto has been made herein.
ITEM 1. LEGAL PROCEEDINGS
In the ordinary course of operations, the Company and its subsidiaries
become defendants in a variety of judicial and administrative proceedings. In
the opinion of management, however, there is no proceeding pending, or to the
knowledge of management threatened, which in the event of an adverse decision
would be likely to result in a material adverse change in the financial
condition or results of operations of the Company and its subsidiaries. With
respect to the potential regulatory penalties referred to under Item 1 -- Recent
Developments -- Potential Regulatory Sanctions of the Company's Annual Report on
Form 10-K for its fiscal year ended December 31, 1993, while the Company does
not know whether the FDIC will attempt to assess any penalties with respect to
this matter, the person or persons upon whom any penalty would be assessed or
the amounts of any such penalties, were they to be assessed, management of the
Company believes that it is unlikely that this matter will have a material
adverse effect on its financial condition or results of operations.
Consequently, no provision in respect of penalties has been made in the
Company's Consolidated Financial Statements. In the event penalties are imposed,
the Company and its legal counsel will evaluate the grounds upon which the
penalties are based, consider the size of such penalties, note upon which
entities or individuals such penalties are imposed and determine whether it will
independently (or jointly with the directly affected entity or individual)
contest the imposition of the penalty.
ITEM 5. OTHER INFORMATION
(a) Retirement of Paul M. Siskind as Chairman of the Board and Director of
the Company.
Effective October 18, 1994 Paul M. Siskind retired (and accordingly
resigned) as Chairman of the Board and as a Director of the Company. William
Schwartz, Vice Chairman of the Board of UST Corp. has assumed the
responsibilities of the Chairman until a successor is named.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits -- Press Release, dated September 29, 1994 concerning the
retirement (and related resignation) of Paul M. Siskind as Chairman and
as a Director of the Company effective October 18, 1994.
(b) Exhibits -- Article 9 Summary financial information for nine months
ended September 30, 1994 (Exhibit 27).
(c) Reports on Form 8-K -- The Company filed a Current Report on Form 8-K
with the Commission on October 3, 1994 regarding the retirement (and
related resignation) of Paul M. Siskind as Chairman of the Board and as
a Director of the Company.
17
<PAGE> 18
<TABLE>
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.
UST CORP.
<S> <C>
Date: November 14, 1994 By: /S/ NEAL F. FINNEGAN
......................................
NEAL F. FINNEGAN, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
Date: November 14, 1994 By: /S/ JAMES K. HUNT
......................................
JAMES K. HUNT, EXECUTIVE VICE
PRESIDENT, TREASURER AND
CHIEF FINANCIAL OFFICER
</TABLE>
18
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF UST CORP. FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1994,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> SEP-30-1994
<EXCHANGE-RATE> 1.00
<CASH> 87,521
<INT-BEARING-DEPOSITS> 51
<FED-FUNDS-SOLD> 16,164
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 408,874
<INVESTMENTS-CARRYING> 100
<INVESTMENTS-MARKET> 98
<LOANS> 1,249,775
<ALLOWANCE> 62,173
<TOTAL-ASSETS> 1,793,968
<DEPOSITS> 1,467,769
<SHORT-TERM> 169,303
<LIABILITIES-OTHER> 10,413
<LONG-TERM> 10,143
<COMMON> 10,926
0
0
<OTHER-SE> 125,414
<TOTAL-LIABILITIES-AND-EQUITY> 1,793,968
<INTEREST-LOAN> 76,098
<INTEREST-INVEST> 20,543
<INTEREST-OTHER> 1,433
<INTEREST-TOTAL> 98,074
<INTEREST-DEPOSIT> 24,582
<INTEREST-EXPENSE> 29,925
<INTEREST-INCOME-NET> 68,149
<LOAN-LOSSES> 18,625
<SECURITIES-GAINS> 1,022
<EXPENSE-OTHER> 67,761
<INCOME-PRETAX> 4,857
<INCOME-PRE-EXTRAORDINARY> 3,382
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,382
<EPS-PRIMARY> .19
<EPS-DILUTED> .19
<YIELD-ACTUAL> 5.16
<LOANS-NON> 69,563
<LOANS-PAST> 1,189
<LOANS-TROUBLED> 17,701
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 62,547
<CHARGE-OFFS> 22,181
<RECOVERIES> 3,182
<ALLOWANCE-CLOSE> 62,173
<ALLOWANCE-DOMESTIC> 62,173
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 11,261
</TABLE>
<PAGE> 1
PAUL M. SISKIND RETIRES AS UST CORP. CHAIRMAN
BOSTON, MASS . . . SEPTEMBER 29, 1994 . . . The Board of Directors of
UST Corp. (NASDAQ:USTB), parent company of USTrust, and United States Trust
Company in Massachusetts and USTBank/Connecticut, announced today that Chairman
of the Board Paul M. Siskind has decided to retire and will accordingly resign
as a director effective October 18, 1994. Mr. Siskind has been a member of the
UST Corp. Board of Directors since 1967 and has served as Chairman for 27
years.
In addition to his many significant contributions to UST Corp., Mr.
Siskind has had a distinguished legal career. Appointed Assistant Professor of
Law at Boston University in 1948, he went on to serve as Dean of the Boston
University School of Law from 1966 until 1976. He continued as Professor of Law
until 1980 and is currently Professor Emeritus.
"I've enjoyed and appreciated the opportunity to help build UST and I
feel this is a good time for me to move on," notes Siskind. "I am confident
that the Company is well-positioned for the future, and will continue to
benefit from the guidance of the Board and senior management."
"Paul Siskind has played an integral part in the growth of UST,"
commented Neal F. Finnegan, UST Corp. President and Chief Executive Officer.
"His leadership and guidance have been invaluable in shaping our Company. He is
greatly admired and respected by the Board, management and employees alike."
William Schwartz, Vice Chairman of the Board of UST Corp., will assume
the responsibilities of the Chairman until a successor has been named.
