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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT: August 30, 1996
UST CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MASSACHUSETTS 0-9623 04-2436093
(STATE OR OTHER JURISDICTION OF (COMMISSION FILE NO.) (IRS EMPLOYER
INCORPORATION) IDENTIFICATION NO.)
40 COURT STREET 02108
BOSTON, MASSACHUSETTS (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(617) 726-7000
(REGISTRANT'S TELEPHONE NUMBER,
INCLUDING AREA CODE)
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<PAGE>
ITEM 2. ACQUISITION OF ASSETS.
Acquisition of Walden Bancorp, Inc.
On August 30, 1996, UST Corp. (the "Company") executed an agreement
with Walden Bancorp, Inc. ("Walden") of Acton, Massachusetts pursuant to which
the Company agreed to acquire Walden (the "Merger"). On January 3, 1997, the
Company consummated the Merger. Walden is the bank holding company for two
community banks, The Co-operative Bank of Concord ("Concord") and The Braintree
Savings Bank ("Braintree"), which operate an aggregate of seventeen (17)
branches in the Massachusetts counties of Middlesex, Norfolk and Plymouth. The
transaction was structured as a tax-free exchange of 1.9 shares of the
Company's common stock for each share of Walden common stock and accounted
for as a pooling of interests. As of the closing date, the transaction was
valued at approximately $207 million. A total of 10,125,540 shares of UST
common stock were issued in exchange for the 5,329,232 Walden shares
outstanding at the closing date.
The Company hereby files its Unaudited Pro Forma Combined Financial
Statements and Notes thereto in connection with the Merger as of December 31,
1996.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Historical financial statements of UST (Incorporated by
reference to UST's Annual Report on Form 10-K for its fiscal year ended
December 31, 1995)
(b) Historical financial statements of Walden (Incorporated by
reference to Walden's Annual Report on Form 10-K for its fiscal year ended
December 31, 1995)
(c) Unaudited Pro Forma Condensed Combined Statements of Income for
the years ended December 31, 1994 and 1993 (Incorporated by reference to UST's
Registration Statement on Form S-4 (Registration No. 333-15521) filed with the
Securities and Exchange Commission on November 5, 1996)
(d) Unaudited Pro Forma Combined Financial Statements and Notes
thereto (Exhibit 99)
(e) Exhibits
23.1 Consent of Arthur Andersen LLP (concerning UST financials).
<PAGE>
23.2 Consent of Arthur Andersen LLP (concerning Walden financials)
99 Unaudited Pro Forma Combined Financial Statements and Notes
thereto.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
UST Corp.
/s/ James K. Hunt
James K. Hunt
Executive Vice President, Treasurer
and Chief Financial Officer
Dated: March 4, 1997
<PAGE>
UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION
UST CORP. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED COMBINING BALANCE SHEET
DECEMBER 31, 1996
The following Unaudited Pro Forma Condensed Combining Balance Sheet presents
the combined financial position of UST Corp. ("UST") and subsidiaries and
Walden Bancorp, Inc. and subsidiaries ("Walden") as of December 31, 1996,
assuming the combination, which was consummated on January 3, 1997, had
occurred as of December 31, 1996.
The accompanying pro forma information is based on historical balance sheet
data of UST and Walden as of December 31, 1996, giving effect to the
combination of UST and Walden under the pooling of interests method of
accounting, UST's fourth quarter purchase of twenty former Bank of Boston
and BayBank branches and the November sale of UST's former banking subsidiary,
UST Bank/Connecticut. The combination of Walden with UST reflects the issuance
of 1.9 shares of UST Common Stock in exchange for, and in cancellation of,
each outstanding share of Walden Common Stock. The difference between the par
value of the UST Common Stock issued and the par value of the Walden Common
Stock acquired ($999,000) has been charged to Additional paid-in-capital.
The Unaudited Pro Forma Condensed Combining Balance Sheet should be read in
conjunction with the Unaudited Pro Forma Condensed Combined Statements of
Income contained herein and the historical financial statements and notes
thereto of each of UST and Walden which are incorporated by reference in this
Form 8-K/A. The Unaudited Pro Forma Condensed Combining Balance Sheet is
presented for informational purposes only and is not necessarily indicative
of the combined financial position that would have occurred if the combination
of UST and Walden had been consummated on December 31, 1996, or at the
beginning of the periods indicated or which may be obtained in the near future.
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<TABLE>
<CAPTION>
UST CORP. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED
COMBINING BALANCE SHEET
DECEMBER 31, 1996
Historical Historical Adjustments Pro Forma
(In thousands) UST Walden (Notes 1 & 2) Combined
--------------- ---------------- ----------------- ---------------
<S> <C> <C> <C> <C>
Cash and Due From Banks, and Interest
Bearing Deposits $ 111,532 $ 28,537 $(13,500) $ 126,569
Excess Funds Sold 127,469 19,432 (4,000) 142,901
Securities: -
Available for Sale 528,174 142,180 670,354
Held to Maturity - 145,564 145,564
Loans, net of Reserve for Possible Loan
Losses 1,809,353 593,256 2,402,609
Premises, Furniture and Equipment 41,512 11,927 53,439
Intangible Assets, net 53,878 12,948 66,826
Other Real Estate Owned 688 1,104 1,792
Other Assets 34,008 40,681 74,689
=============== ================ ============== ================
Total Assets $ 2,706,614 $ 995,629 $ (17,500) $ 3,684,743
=============== ================ ============== ================
Deposits:
Demand and NOW Accounts $ 799,279 $ 182,430 $ 981,709
Regular Savings 457,769 190,967 648,736
Money Market 243,749 69,310 313,059
Time Deposits 605,069 307,239 912,308
--------------- ---------------- -------------- ----------------
Total Deposits 2,105,866 749,946 2,855,812
Borrowed Funds 348,066 134,356 (4,000) 478,422
Other Liabilities 54,722 13,697 (4,400) 64,019
--------------- ---------------- -------------- ----------------
Total Liabilities 2,508,654 897,999 (8,400) 3,398,253
---------------- -------------- --------------- ----------------
Stockholders' Investment:
Common Stock 11,262 5,326 999 17,587
Additional Paid In Capital 75,710 35,937 (999) 110,648
Retained Earnings 112,975 56,490 (9,100) 160,365
Net Unrealized Loss on Securities
Available for Sale (2,453) (123) (2,576)
Deferred Compensation and Other 466 - 466
--------------- ---------------- -------------- ----------------
Total Stockholders' Investment 197,960 97,630 (9,100) 286,490
--------------- ---------------- -------------- ----------------
--------------- --------------- --------------- ---------------
Total Liabilities and Stockholders'
Investment $ 2,706,614 $ 995,629 $ (17,500) $ 3,684,743
=============== ================ ============== ================
See accompanying Notes to Unaudited Pro Forma Condensed Financial Information.
</TABLE>
<PAGE>
UST CORP. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED
COMBINED STATEMENTS OF INCOME SUMMARY
The following Unaudited Pro Forma Condensed Combined Statements of Income give
effect to UST's acquisition of Walden by combining the results of operations of
UST for the year ended December 31, 1996, with the results of operations of
Walden for the year ended December 31, 1996, on a pooling of interests basis,
assuming the combination, which was consummated on January 3, 1997, had
occurred as of January 1, 1996. Income per weighted average common share
outstanding is based on the exchange ratio of 1.9 shares of UST for each share
of Walden as specified in the Affiliation Agreement. The Unaudited Pro Forma
Condensed Combined Statements of Income should be read in conjunction with
the Unaudited Pro Forma Condensed Combining Balance Sheet appearing elsewhere
in this Form 8-K/A. The Unaudited Pro Forma Condensed Combining Balance Sheet
reflects an after-tax charge for estimated, as of the date hereof, merger and
reorganization expenses of $9.1 million ($13.5 million pre-tax) net of an
estimated 40% tax benefit (after excluding $2.5 million of nondeductible
expense); however, since these expenses are nonrecurring, they have not been
reflected in the Unaudited Pro Forma Condensed Combined Statements of Income.
The pro forma combined statements of income do not give effect to any
anticipated cost savings in connection with the combination. The Unaudited Pro
Forma Condensed Combined Statements of Income are presented for information
purposes only and are not necessarily indicative of the combined results of
operations that would have occurred if the combination of UST and Walden had
been consummated on December 31, 1996 or at the beginning of the period
indicated or which may be obtained in the future.
<PAGE>
<TABLE>
<CAPTION>
UST CORP. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1996
Historical Historical Pro Forma
(In thousands, except share data) UST Walden Combined
-------------------- ------------------ --------------------
<S> <C> <C> <C>
Interest Income
Interest and Fees on Loans $ 122,279 $ 54,618 $ 176,897
Interest and Dividends on Securities 34,317 18,871 53,188
Interest on Excess Funds and Other 1,058 1,165 2,223
------------------- ------------------ --------------------
Total Interest Income 157,654 74,654 232,308
------------------- ------------------ --------------------
Interest Expense
Interest on Deposits 45,256 26,369 71,625
Interest on Borrowings 16,272 9,156 25,428
------------------- ------------------ --------------------
Total Interest Expense 61,528 35,525 97,053
------------------- ------------------ --------------------
------------------- ------------------ --------------------
Net Interest Income 96,126 39,129 135,255
Provision (Credit) for Possible Loan Losses (18,600) 1,300 (17,300)
Net Interest Income after Provision
------------------- ------------------ --------------------
(Credit) for Possible Loan Losses 114,726 37,829 152,555
------------------- ------------------ --------------------
Non-Interest Income
Asset Management Fees 12,569 - 12,569
Fees and Charges 14,249 3,509 17,758
Mortgage Loan Servicing Fees - 2,394 2,394
Gain on Sale of Subsidiary Bank 6,806 - 6,806
Securities Gains, net 1,113 51 1,164
Gain on Sale of Loans - 17 17
Other 2,551 957 3,508
------------------- ------------------ --------------------
Total non-interest income 37,288 6,928 44,216
------------------- ------------------ --------------------
Non-Interest Expense
Salaries and Employee Benefits 48,009 14,047 62,056
Occupancy and Equipment 11,735 4,142 15,877
Foreclosed Asset and Workout Expense 1,583 139 1,722
Acquisition Charges 5,933 - 5,933
Credit Card Processing Expense 5,356 - 5,356
Deposit Insurance Assessment 3,954 5 3,959
Other 21,768 9,658 31,426
------------------- ------------------ --------------------
Total non-interest expense 98,338 27,991 126,329
------------------- ------------------ --------------------
------------------- ------------------ --------------------
Income before Taxes 53,676 16,766 70,442
Income Tax Expense 21,014 6,247 27,261
=================== ================== ====================
Net Income $ 32,662 $ 10,519 $ 43,181
=================== ================== ====================
Weighted Average Number of Common
Shares Outstanding 18,227,036 5,352,089 28,396,005
Net Income per Share $ 1.79 $ 1.97 $ 1.52
See accompanying Notes to Unaudited Pro Forma Condensed Financial Information.
</TABLE>
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION
NOTE 1:
The combination has been accounted for as a pooling of interests. Accordingly,
pro forma financial information assumes that the combination was consummated as
of the beginning of the periods indicated herein. Certain reclassifications
have been made to the accounts of Walden in the accompanying Unaudited Pro
Forma Condensed Combining Balance Sheet and Unaudited Pro Forma Condensed
Combined Statements of Income to conform to UST presentation. Pro forma
results of operations do not reflect nonrecurring items of income and
expense relating directly from the proposed Affiliation.
The effect of an estimated, as of the date hereof, one-time after-tax charge
of $9.1 million, ($13.5 million pre-tax), to be taken by UST in connection
with the combination, has been reflected in the accompanying Unaudited Pro
Forma Condensed Combined Balance Sheet as a reduction in cash and retained
earnings, net of a 40% tax benefit of $4.4 million recorded in other
liabilities after excluding $2.5 million of nondeductible expense. The charge
has not been reflected in the Unaudited Pro Forma Condensed Combined Statements
of Income since it is nonrecurring. The pro forma financial information does
not give effect to any cost savings in connection with the combination.
NOTE 2:
The pro forma stockholders' investment accounts of UST and Walden have been
adjusted in the accompanying Unaudited Pro Forma Condensed Combining Balance
Sheet to reflect the issuance of shares of UST Common Stock in exchange for all
of the outstanding shares of Walden Common Stock. The number of shares of UST
Common Stock issued pursuant to the acquisition of Walden was based upon the
number of Walden shares outstanding as of December 31, 1996, and the exchange
ratio of 1.9 shares of UST Common Stock for each share of Walden Common Stock
as specified in the Affiliation Agreement. The difference between the par
value of the UST Common Stock issued ($0.625 per share) and the par value of
the Walden Common Stock acquired ($1.00 per share) has been charged to
Additional paid-in-capital.
NOTE 3:
Pro forma earnings per share amounts in the accompanying Unaudited Pro Forma
Condensed Combined Statements of Income are based on the weighted average
number of common shares of the constituent companies outstanding during the
period
<PAGE>
assuming an exchange ratio of 1.9 shares of UST Common Stock for each share of
Walden Common Stock as specified in the Affiliation Agreement.
Note 4:
In June 1996, UST's principal banking subsidiary, USTrust, entered
into a definitive agreement with The First National Bank of Boston ("FNBB")
and its parent company, Bank of Boston Corporation, pursuant to which USTrust
agreed to purchase twenty banking branches (the "Branch Purchase") of FNBB and
BayBank, N.A. ("BayBank"). The transaction was consummated in November and
December 1996 and included the assumption of an aggregate of $527 million in
demand deposits, NOW accounts, regular savings and money market accounts; $140
million in certificates of deposit and $77 million of repurchase agreements.
USTrust received $18 million in premises and equipment and $508 million in
commercial, residential real estate and other loans with businesses and
consumers, and the remainder in cash, net of a premium equal to 7 percent of
the average deposit liabilities assumed, or approximately $49 million. USTrust
recorded a pre-tax provision of $5.1 million for acquisition expenses related
to the Branch Purchase which is reported as other expense in the accompanying
Unaudited Pro Forma Condensed Combined Statements of Income. The Branch
Purchase provision for acquisition expenses consisted primarily of customer
related expenses such as direct mailings, replacement checks and ATM and debit
cards, promotions, target advertising, professional services and various
incentive programs directed toward the customers of the branches acquired.
Since the Branch Purchase does not represent the acquisition of a business,
separate entity or subsidiary of the seller, and there are no historical
financial statements related thereto, the effect of the Branch Purchase is
included only since the dates on which the deposit liabilities were assumed and
the assets were purchased.
On November 29, 1996, UST completed the sale of its Connecticut
banking subsidiary, UST Bank/Connecticut ("UST/Conn"). Under the terms of the
transaction, UST received cash of $13.4 million representing UST/Conn's
adjusted capital plus a deposit premium of 7 percent. As a result, UST
recorded a $6.8 million gain on the sale. Also, in connection with the sale of
UST/Conn, UST recorded a one-time provision of $830,000 for the remaining
obligation to fund the UST/Conn Directors' retirement plan. Both the $6.8
million gain on sale and $830,000 expense provision are included in the
accompanying Unaudited Pro Forma Condensed Combined Statements of Income.
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
As independent accountants, we consent to the incorporation by reference
in this Current Report on Form 8-K/A, of our report dated January 29, 1996
included in UST Corp.'s Form 10-K for the year ended December 31, 1995 and to
all references to our Firm included in this Current Report.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Boston, Massachusetts
February 28, 1997
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
As independent accountants, we consent to the incorporation by reference
in this Current Report on Form 8-K/A, of our report dated January 25, 1996
included in Walden Bancorp, Inc.'s Form 10-K for the year ended December 31,
1995 and to all references to our Firm included in this Current Report.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Boston, Massachusetts
February 28, 1997
