SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(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, 2000
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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: 000-16931
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United National Bancorp
-----------------------
(Exact name of registrant as specified in its charter)
New Jersey 22-2894827
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification No.)
1130 Route 22 East, Bridgewater, New Jersey 08807-0010
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(Address of principal executive offices) (Zip Code)
(908) 429-2200
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(Registrant's telephone number, including area code)
N/A (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 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.
[X] Yes [ ] No
As of August 1, 2000, there were 15,307,711 shares of common stock, $1.25 par
value, outstanding.
<PAGE>
UNITED NATIONAL BANCORP
FORM 10-Q
INDEX
PART I - FINANCIAL INFORMATION PAGE(S)
ITEM 1 Consolidated Financial Statements and Notes to
Consolidated Financial Statements 1-8
ITEM 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-16
ITEM 3 Quantitative and Qualitative Disclosure About Market Risk 17
PART II - OTHER INFORMATION
ITEM 4 Submission of Matters to a Vote of Security Holders 18
ITEM 6 Exhibits and Reports on Form 8-K 18
SIGNATURES 19
<PAGE>
Part I - Financial Information
Item 1 - Financial Statements
United National Bancorp
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share Data)
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
----------- -----------
<S> <C> <C>
ASSETS
Cash and Due from Banks ...................................................... $ 48,135 $ 53,490
Securities Available for Sale, at Market Value ............................... 589,866 631,661
Securities Held to Maturity .................................................. 48,244 37,908
Trading Account Securities, at Market Value .................................. 850 929
Loans, Net of Unearned Income ................................................ 1,309,069 1,237,536
Less: Allowance for Possible Loan Losses ................................... 11,311 10,386
----------- -----------
Loans, net ............................................................ 1,297,758 1,227,150
Loans, Net
Mortgage Loans Held for Sale ................................................. 19,353 23,807
Premises and Equipment, Net .................................................. 28,109 29,024
Other Real Estate, Net ....................................................... 208 56
Intangible Assets, Primarily Core Deposit Premiums ........................... 6,765 7,202
Cash Surrender Value of Life Insurance Policies .............................. 51,481 35,253
Other Assets ................................................................. 55,638 43,903
----------- -----------
Total Assets ............................................................ $ 2,146,407 $ 2,090,383
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits:
Demand ..................................................................... $ 238,010 $ 235,386
Savings .................................................................... 608,215 562,673
Time ....................................................................... 653,627 683,150
----------- -----------
Total Deposits .......................................................... 1,499,852 1,481,209
Short-Term Borrowings ........................................................ 253,385 199,931
Other Borrowings ............................................................. 229,349 236,397
Other Liabilities ............................................................ 29,920 34,381
----------- -----------
Total Liabilities ....................................................... 2,012,506 1,951,918
Company-Obligated Mandatorily Redeemable Preferred Series B
Capital Securities of a Subsidiary Trust Holding Solely Junior
Subordinated Debentures of the Company ....................................... 20,000 20,000
STOCKHOLDERS' EQUITY
Preferred Stock, authorized 1,000,000 shares,
None issued and outstanding ................................................ -- --
Common Stock, $1.25 Par Value, Authorized Shares 25,000,000
Issued Shares 16,145,434 in 2000 and 16,145,931 in 1999,
Outstanding Shares 15,307,711 in 2000 and 15,646,073 in 1999 ............... 20,209 20,182
Additional Paid-in Capital ................................................... 129,191 129,460
Retained Earnings ............................................................ 11,383 5,592
Treasury Stock, at Cost - 837,723 shares in 2000 and
499,858 shares in 1999 ..................................................... (15,933) (9,817)
Restricted Stock ............................................................. (73) (97)
Accumulated Other Comprehensive Loss ......................................... (30,876) (26,855)
----------- -----------
Total Stockholders' Equity............................................... 113,901 118,465
----------- -----------
Total Liabilities and Stockholders' Equity .............................. $ 2,146,407 $ 2,090,383
=========== ===========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
1
<PAGE>
UNITED NATIONAL BANCORP
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Share Data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and Fees on Loans .......................... $ 26,521 $ 22,558 $ 52,381 $ 44,270
Interest and Dividends on Securities Available
for Sale:
Taxable .......................................... 9,837 9,102 19,971 17,667
Tax-Exempt ....................................... 983 1,308 1,972 2,413
Interest and Dividends on Securities Held to
Maturity:
Taxable .......................................... 418 225 797 723
Tax-Exempt ....................................... 307 256 604 511
Dividends on Trading Account Securities ............. 7 9 18 17
Interest on Federal Funds Sold and
Deposits with Federal Home Loan Bank ............. 11 21 22 418
-------- -------- -------- --------
Total Interest Income ............................ 38,084 33,479 75,765 66,019
-------- -------- -------- --------
INTEREST EXPENSE
Interest on Savings Deposits ........................ 4,272 2,606 7,855 5,395
Interest on Time Deposits ........................... 9,615 8,093 19,108 15,749
Interest on Short-Term Borrowings ................... 2,999 1,427 5,229 3,146
Interest on Other Borrowings ........................ 3,813 2,992 7,307 5,549
-------- -------- -------- -------
Total Interest Expense ........................... 20,699 15,118 39,499 29,839
-------- -------- -------- -------
Net Interest Income ................................. 17,385 18,361 36,266 36,180
Provision for Possible Loan Losses .................. 1,200 900 2,400 1,875
-------- -------- -------- --------
Net Interest Income After Provision for Possible
Loan Losses ....................................... 16,185 17,461 33,866 34,305
-------- -------- -------- -------
NON-INTEREST INCOME
Trust Income ........................................ 1,635 1,567 3,270 3,133
Service Charges on Deposit Accounts ................. 1,070 1,139 2,061 2,290
Other Service Charges, Commissions and Fees ......... 1,711 1,663 3,286 3,138
Net Gains from Securities Transactions .............. 509 639 1,438 1,314
Income on Life Insurance ............................ 666 358 1,228 716
Other Income ........................................ 377 467 1,062 898
-------- -------- -------- --------
Total Non-Interest Income ........................ 5,968 5,833 12,345 11,489
-------- -------- -------- --------
NON-INTEREST EXPENSE
Salaries, Wages and Employee Benefits ............... 4,860 5,720 11,608 12,264
Occupancy Expense, Net .............................. 1,304 1,246 2,680 2,529
Furniture and Equipment Expense ..................... 1,193 1,096 2,322 2,174
Data Processing Expense ............................. 1,839 1,346 3,634 2,848
Distributions of Series B Capital Securities ........ 500 500 1,001 1,001
Amortization of Intangible Assets ................... 333 81 663 684
Net Cost to Operate Other Real Estate ............... 34 75 101 101
Non-Recurring Charges ............................... -- 6,185 -- 17,258
Other Expenses ...................................... 3,824 3,377 7,762 6,827
-------- -------- -------- --------
Total Non-Interest Expense ....................... 13,887 19,626 29,771 45,686
-------- -------- -------- --------
Income Before Provision for Income Taxes ............ 8,266 3,668 16,440 108
Provision for Income Taxes .......................... 2,212 945 4,484 831
-------- -------- -------- --------
NET INCOME (LOSS) ................................... $ 6,054 $ 2,723 $ 11,956 $ (723)
======== ======== ======== =======
NET INCOME (LOSS) PER COMMON SHARE:
Basic ............................................ $ 0.39 $ 0.17 $ 0.77 $ (0.05)
======== ======== ======== ========
Diluted .......................................... $ 0.39 $ 0.17 $ 0.77 $ (0.05)
======== ======== ======== ========
Weighted Average Shares Outstanding:
Basic ............................................ 15,390 16,026 15,493 15,905
Diluted .......................................... 15,531 16,255 15,628 15,905
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
2
<PAGE>
UNITED NATIONAL BANCORP
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(In Thousands, Except Share Data)
(Unaudited)
<TABLE>
<CAPTION>
Accumulated
Additional Other Total
Common Paid-In Retained Treasury Restricted Comprehensive Stockholders'
Stock Capital Earnings Stock Stock Loss Equity
-------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance December 31, 1999 ............. $ 20,182 $ 129,460 $ 5,592 $ (9,817) $ (97) $ (26,855) $ 118,465
Net Income ............................ -- -- 11,956 -- -- -- 11,956
Cash Dividends Declared
($0.20 Per Share) .................. -- -- (6,165) -- -- -- (6,165)
Exercise of Stock Options
(22,235 Shares) .................... 27 (269) -- 435 -- -- 193
Change in Unrealized Loss on
Securities Available for Sale,
Net of Tax .......................... -- -- -- -- -- (4,021) (4,021)
Purchase of Treasury Stock ............ -- -- (6,551) -- -- (6,551)
(360,100 shares)
Restricted Stock Activity, Net ........ -- -- -- -- 24 -- 24
-------- --------- --------- --------- --------- --------- ---------
Balance-June 30, 2000 ................. $ 20,209 $ 129,191 $ 11,383 $ (15,933) $ (73) $ (30,876) $ 113,901
======== ========= ========= ========= ========= ========= =========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
3
<PAGE>
United National Bancorp
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------
2000 1999
--------- ---------
<S> <C> <C>
OPERATING ACTIVITIES
Net Income (Loss) ............................................................ $ 11,956 $ (723)
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided
By (Used in) Operating Activities:
Depreciation and Amortization .............................................. 1,984 2,075
(Accretion) Amortization of Securities Premiums, Net ....................... (338) 1,037
Provision for Possible Loan Losses ......................................... 2,400 1,875
(Benefit) Provision for Deferred Income Taxes .............................. 45 (2,160)
Net Gain on Disposition of Premises and Equipment .......................... -- (6)
Net Gains from Securities Transactions ..................................... (1,517) (1,314)
Net Gain on the Sale of Loans Held for Sale ................................ (287) --
Trading Account Securities Activity, Net ................................... 79 9
(Increase) Decrease in Other Assets ........................................ (10,851) 3,217
(Decrease) Increase in Other Liabilities ................................... (4,506) 3,445
Restricted Stock Activity, Net ............................................. 24 199
--------- ---------
Net Cash (Used in) Provided by Operating Activities ........................ (1,011) 7,654
--------- ---------
INVESTING ACTIVITIES Securities Available for Sale:
Proceeds from Sales of Securities .......................................... 125,783 145,146
Proceeds from Maturities of Securities ..................................... 2,250 39,622
Purchases of Securities .................................................... (90,534) (280,950)
Securities Held to Maturity:
Proceeds from Maturities of Securities ..................................... 6,786 30,952
Purchases of Securities .................................................... (17,157) (6,926)
Purchase of Corporate-Owned Life Insurance ................................... (15,000) --
Net Increase in Loans ........................................................ (73,008) (81,390)
Increase in Loans Held for Sale .............................................. (19,353) --
Proceeds from Sale of Loans Held for Sale .................................... 24,094 --
Expenditures for Premises and Equipment ...................................... (632) (1,148)
Proceeds from Sale of Premises and Equipment ................................. -- 38
(Increase) Decrease in Other Real Estate, Net ................................ (99) 378
--------- ---------
Net Cash Used in Investing Activities ...................................... (56,870) (154,278)
--------- ---------
FINANCING ACTIVITIES
Net Increase in Demand and Savings Deposits .................................. 48,166 24,414
Net (Decrease) Increase in Time Deposits ..................................... (29,523) 62,127
Net Increase (Decrease) in Short-Term Borrowings ............................. 53,454 (17,011)
Net (Decrease) Increase in Other Borrowed Funds .............................. (7,048) 48,482
Cash Dividends on Common Stock ............................................... (6,165) (6,357)
Proceeds from Exercise of Stock Options ...................................... 193 1,741
Treasury Stock Acquired, at Cost ............................................. (6,551) --
--------- ---------
Net Cash Provided by Financing Activities .................................. 52,526 113,396
--------- ---------
Net Decrease in Cash and Cash Equivalents .................................... (5,355) (33,228)
Cash and Cash Equivalents at Beginning of Period ............................. 53,490 102,967
--------- ---------
Cash and Cash Equivalents at End of Period ................................... $ 48,135 $ 69,739
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash Paid During the Period:
Interest ................................................................... $ 39,051 $ 30,196
Income Taxes ............................................................... 10,053 5,214
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
4
<PAGE>
UNITED NATIONAL BANCORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) Basis of Presentation
The accompanying unaudited consolidated financial statements included herein
have been prepared by United National Bancorp (the "Company"), in accordance
with generally accepted accounting principles and pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements have been
condensed or omitted pursuant to such rules and regulations. These consolidated
financial statements should be read in conjunction with the financial statements
and the notes thereto included in the Company's latest annual report on Form
10-K.
In the opinion of the Company, all adjustments (consisting only of normal
recurring accruals), which are necessary for a fair presentation of the
operating results for the interim periods, have been included. The results of
operations for periods of less than a year are not necessarily indicative of
results for the full year.
Certain reclassifications have been made to the prior years' financial
statements to conform with the classifications used in 2000.
(2) Comprehensive Income (Loss)
Total comprehensive income (loss) amounted to the following for the periods
indicated (amounts in thousands):
Three Months Ended Six Months Ended
June 30, June 30,
------------------ --------------------
2000 1999 2000 1999
-------- ------- --------- --------
Net Income (Loss) $ 6,054 $ 2,723 $ 11,956 $ (723)
Change in Unrealized Loss On
Securities Available for Sale (1,891) (5,032) (4,021) (19,402)
-------- ------- --------- --------
Comprehensive Income (Loss) $ 4,163 $(2,309) $ 7,935 $(20,125)
======== ======= ========= ========
(3) Net Income (Loss) Per Common Share
Basic net income (loss) per common share is computed by dividing net income by
the weighted average number of shares outstanding during each period.
Diluted net income (loss) per common share is computed by dividing net income by
the weighted average number of shares outstanding, as adjusted for the assumed
exercise of options for common stock, using the treasury stock method. Potential
shares of common stock resulting from stock option agreements totaled 135,000
for the six months ended June 30, 2000. As the Company reported a net loss for
the six months ended June 30, 1999, potential shares of common stock resulting
from stock option agreements were anti-dilutive and no shares were assumed to be
exercised. Potential shares of common stock resulting from stock option
agreements totaled 141,000 and 229,000 for the three months ended June 30, 2000
and June 30, 1999, respectively.
Share amounts for all periods presented have been adjusted for the 6% stock
dividend declared in September 1999.
5
<PAGE>
(4) Recent Accounting Pronouncements
In March 2000, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 44 "Accounting for Certain Transactions Involving Stock
Compensation, an Interpretation of APB Opinion No. 25". The interpretation
clarifies certain issues with respect to the application of Accounting
Principles Board Opinion No. 25 "Accounting for Stock Issued to Employees" (APB
Opinion No. 25). The interpretation results in a number of changes in the
application of APB Opinion No. 25 including, the accounting for modifications to
equity awards as well as extending APB Opinion No. 25 accounting treatment to
options granted to outside directors for their services as directors. The
provisions of the interpretation were effective July 1, 2000 and apply
prospectively, except for certain modifications to equity awards made after
December 15, 1998. The initial adoption of the interpretation did not have a
significant impact on the Company's financial statements.
In June 2000, the FASB issued Statement of Financial Accounting Standards No.
138 "Accounting for Certain Derivative Instruments and Certain Hedging
Activities, an Amendment to FASB Statement No. 133". Statement No 138 amends
certain aspects of Statement No. 133 to simplify the accounting for derivatives
and hedges under Statement No. 133. Statement No 138 is effective upon the
Company's adoption of Statement 133 (January 1, 2001). The initial adoption of
Statement No.138 is not expected to have a material impact on the Company's
financial statements.
(5) Dissolution of Joint Venture
In the latter part of 1998, the Company decided to terminate its interest in
United Financial Services, Inc. ("UFS"), its joint venture data service
provider. At that time, the Company anticipated that its joint venture partner
would continue to operate UFS. In connection with its decision to exit the joint
venture, the Company evaluated the estimated lives and salvage values of
equipment, software and leases held by UFS, as well as related goodwill during
the fourth quarter of 1998. Based upon this evaluation, the Company accelerated
depreciation and amortization charges totaling approximately $1,200,000 through
the first quarter of 1999. In April 1999, the Company completed the conversion
of its own data processing operations to an independent third-party provider.
In June 1999, the Company was advised that its joint venture partner signed a
definitive agreement with a third party servicer. UFS subsequently ceased
operations in the fourth quarter of 1999. In light of that development, the
Company expects that the value of the Company's interest in UFS may be
substantially less than it would have been had UFS continued in operation. The
Company may incur liabilities in connection with the obligations of UFS under
operating leases which remain in effect at the time UFS was dissolved, to the
extent such liabilities are not assumed by the joint venture partner's servicer.
UFS is currently negotiating the termination of its lease obligations.
The Company reevaluated the potential losses associated with UFS based upon its
joint venture partner's decision to exit the operations of UFS. Based upon this
reevaluation, the Company recognized an additional charge of $4,500,000,
pre-tax, during the second quarter of 1999 relating to the pending dissolution
of UFS. The additional charge related primarily to write-offs of leasehold
improvements of $500,000, equipment and software of $900,000 and accrual for
lease buyouts of $2,900,000 and severance payments of $200,000.
Ultimately, the Company's potential loss on its investment in UFS and liability
for 50% of UFS' obligations to lessors could be reduced based upon, among other
things, the ability of UFS to negotiate discounts with lessors, and the
Company's ability to obtain compensation for the use of the equipment and leases
of UFS by a third party subsequent to dissolution. The third-party processor
retained by our joint venture partner has assumed some leases and purchased some
of the UFS equipment. In addition, certain of the equipment lease buyouts have
been negotiated and are in the process of final approval. Our estimated losses
are currently on target and additional losses are not anticipated at this time.
No charges against the reserve have occurred during the six months ended June
30, 2000. It is anticipated that the above charges will be realized during the
third quarter of 2000.
6
<PAGE>
(6) Segment Reporting
The Company, for management purposes, is segmented into the following lines of
business: Retail Banking, Commercial Banking, Investments, and Trust and
Investment Services. Activities not included in these lines are reflected in
Corporate. In 1999, the Company completed its acquisition of Raritan Bancorp
Inc., combined computer systems of Raritan into the Company's computer system,
and completed the conversion of the Company's own data processing operations to
an independent third-party provider. Based upon these facts, no segment
information is provided for 1999, as such information was not deemed meaningful.
Summary financial information on a fully taxable equivalent basis for the lines
of business is presented below.
<TABLE>
<CAPTION>
Results of Operations for
The Three Months Ended June 30, 2000 Retail Commercial Investments Trust Corporate Consolidated
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Interest Income ...................... $ 14,200 $ 12,752 $ 11,863 $ -- $ -- $ 38,815
Interest Expense ..................... 14,081 386 6,232 -- -- 20,699
Funds Transfer Pricing Allocation .... 12,613 (8,405) (5,135) -- 927 --
---------- ---------- ---------- --------- ---------- ----------
Net Interest Income ............... 12,732 3,961 496 -- 927 18,611
Provision for Loan Losses ............ 477 723 -- -- -- 1,200
---------- ---------- ---------- --------- ---------- ----------
Net Interest Income
After Provision for Loan Losses 12,255 3,238 496 -- 927 16,916
Non-Interest Income .................. 2,598 168 1,218 1,852 132 5,968
Non-Interest Expense ................. 10,772 1,171 574 1,229 141 13,887
---------- ---------- ---------- --------- ---------- ----------
Net Income Before Taxes ........... $ 4,081 $ 2,235 $ 1,140 $ 623 $ 918 $ 8,997
========== ========== ========== ========= ========== ==========
Average Balances:
Gross Funds Provided ................. $1,545,276 $ 16,411 $ 384,252 $ -- $ 182,246 $2,128,185
Funds Used: Interest-Earning Assets .. 729,024 576,870 687,788 -- -- 1,993,682
Non-Interest-Earning Assets ....... 14,892 7,142 51,149 -- 61,320 134,503
---------- ---------- ---------- --------- ---------- ----------
Net Funds Provided (Used) ............ $ 801,360 $ (567,601) $ (354,685) $ -- $ 120,926 $ --
========== ========== ========== ========= ========== ==========
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
Results of Operations for
The Six Months Ended June 30, 2000 Retail Commercial Investments Trust Corporate Consolidated
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Interest Income ...................... $ 28,912 $ 24,312 $ 23,974 $ -- $ -- $ 77,198
Interest Expense ..................... 27,352 771 11,376 -- -- 39,499
Funds Transfer Pricing Allocation .... 23,904 (15,859) (10,738) (3) 2,696 --
---------- ---------- ---------- --------- ---------- ----------
Net Interest Income ............... 25,464 7,682 1,860 (3) 2,696 37,699
Provision for Loan Losses ............ 692 1,708 -- -- -- 1,200
---------- ---------- ---------- --------- ---------- ----------
Net Interest Income
After Provision for Loan Losses 24,772 5,974 1,860 (3) 2,696 35,299
Non-Interest Income .................. 5,268 384 2,837 3,633 223 12,345
Non-Interest Expense ................. 22,908 2,957 1,152 2,467 287 29,771
---------- ---------- ---------- --------- ---------- ----------
Net Income Before Taxes ........... $ 7,132 $ 3,401 $ 3,545 $ 1,163 $ 2,632 $ 17,873
========== ========== ========== ========= ========== ==========
Average Balances:
Gross Funds Provided ................. $1,551,238 $ 15,627 $ 374,820 $ 176 $ 208,602 $2,150,463
Funds Used: Interest-Earning Assets .. 730,200 756,553 652,636 -- -- 2,014,892
Non-Interest-Earning Assets ....... 14,650 14,554 58,248 -- 48,119 135,571
---------- ---------- ---------- --------- ---------- ----------
Net Funds Provided (Used) ............ $ 806,388 $ (630,983) $ (336,064) $ 176 $ 160,483 $ --
========== ========== ========== ========= ========== ==========
</TABLE>
8
<PAGE>
Item 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The following discussion of the operating results and financial condition at
June 30, 2000 is intended to help readers analyze the accompanying financial
statements, notes and other supplemental information contained in this document.
Results of operations for the three- and six-month period ended June 30, 2000
are not necessarily indicative of results to be attained for any other period.
Forward-Looking Statements
This report contains forward-looking statements within the meaning of The
Private Securities Litigation Reform Act of 1995. Such statements are not
historical facts and include expressions about our confidence and strategies and
our expectations about new and existing programs and products, relationships,
opportunities, technology and market conditions. These statements may be
identified by an "asterisk" ("*") or such forward-looking terminology as
"expect", "believe", "anticipate", or by expressions of confidence such as
"continuing" or "strong" or similar statements or variations of such terms. Such
forward-looking statements involve certain risks and uncertainties. These
include, but are not limited to, expected cost savings not being realized or not
being realized within the expected time frame; income or revenues being lower
than expected or operating costs higher; competitive pressures in the banking or
financial services industries increasing significantly; business disruption
related to program implementation or methodologies; weakening of general
economic conditions nationally or in New Jersey; changes in legal and regulatory
barriers and structures; and unanticipated occurrences delaying planned programs
or initiatives or increasing their costs or decreasing their benefits. Actual
results may differ materially from such forward-looking statements. The Company
assumes no obligation for updating any such forward-looking statements at any
time.
RESULTS OF OPERATIONS
Three and Six Months Ended June 30, 2000 and June 30, 1999:
OVERVIEW
The Company realized net income of $6,054,000 for the three months ended June
30, 2000, as compared to $2,723,000 reported for the same period in 1999. The
three months ended June 30, 1999 included non-recurring charges, net of taxes,
totaling $4,020,000 or $0.24 per diluted share in connection with the Bank's
conversion to a new operating system as well as the dissolution of the Bank's
joint venture in United Financial Services. Net income per diluted share was
$0.39 for the three months ended June 30, 2000 compared to $0.17 per diluted
share for the prior year period.
For the six months ended June 30, 2000, net income totaled $11,956,000, as
compared to a net loss of $723,000 reported for the same period in 1999. Net
income per diluted share was $0.77 for the six months ended June 30, 2000 as
compared to a net loss per diluted share of $0.05 for the prior year period. The
six months ended June 30, 1999 included non-recurring charges, net of taxes,
totaling $12,884,000 or $0.80 per diluted share in connection with the
acquisition of the Raritan Bancorp Inc. ("Raritan"), the sale of non-performing
assets, the Bank's conversion to a new operating system and the dissolution of
the Bank's joint venture in United Financial Services.
For the six months ended June 30, 2000 operating earnings, net of taxes, totaled
$11,956,000 as compared to $12,161,000 for the prior year. For the six months
ended June 30, 2000, operating earnings increased to $0.77 per diluted share, or
2.7%, compared to $0.75 per diluted share for the prior year period.
The decrease in operating earnings before non-recurring charges for the
six-month period ended June 30, 2000 compared to 1999 was the result of
increases in non-interest expense, partially offset by an increase in net
interest income combined with an increase in non-interest income.
9
<PAGE>
EARNINGS ANALYSIS
Interest Income
Interest income for the quarter ended June 30, 2000 was $38,084,000, an increase
of $4,605,000 or 13.8% from the $33,479,000 reported in the same period of 1999.
For the six months ended June 30, 2000, interest income totaled $75,765,000, an
increase of $9,746,000 or 14.8% from the $66,019,000 reported for the same
period in 1999. These increases are primarily attributable to increases in
earning asset volume. For the three months ended June 30, 2000, average interest
earning assets were up $161,053,000 or 8.8%, compared with the same period in
1999. For the six months ended June 30, 2000, average interest earning assets
were up $169,152,000 or 9.3%, compared with the same period in 1999, with most
of the growth coming in the consumer, real estate and commercial loan
categories. The increase in interest income resulting from increases in earning
asset volume was coupled with an increase in average yield. For the six months
ended June 30, 2000, the average yield on earning assets increased 33 basis
points to 7.80% from 7.47% for the same period last year.
Interest Expense
The Company's interest expense for the three months ended June 30, 2000
increased $5,581,000 to $20,699,000 from $15,118,000 for the same period last
year. For the six months ended June 30, 2000, interest expense increased
$9,660,000 to $39,499,000 from $29,839,000 for the same period last year. The
average cost of interest bearing liabilities increased 71 basis points to 4.68%
for the first six months of 2000 from 3.97% for the same period last year,
primarily as a result of an increase in rates paid on deposits and short-term
borrowed funds. Total average interest bearing liabilities increased by
$183,208,000 for the first six months of 2000 compared to the same period in
1999, while non-interest bearing deposits increased by $2,639,000.
Net Interest Income
The net effect of the changes in interest income and interest expense for the
three and six months ended June 30, 2000 compared to the prior year periods was
a decrease of $976,000 and an increase of $86,000, respectively, in net interest
income. For the six months ended June 30, 2000, the net interest margin and net
interest spread, on a fully taxable equivalent basis, decreased 38 basis points
and 36 basis points, respectively, from the same period last year. The decrease
in the net interest margin and spread were the result of interest bearing
liabilities repricing faster than interest earning assets. Additionally, the
Company's investment in corporate owned life insurance has had an impact on net
interest margin, as this investment reduces investable funds, while increasing
non-interest income.
Provision for Possible Loan Losses
For the three months ended June 30, 2000, the provision for possible loan losses
was $1,200,000, compared to $900,000 for the same period last year. For the six
months ended June 30, 2000, the provision for possible loan losses was
$2,400,000, compared to $1,875,000. The increases for both periods compared to
the prior year periods were due primarily to increases in the loan portfolio, as
well as a shift in the composition of the portfolio to commercial and
installment loans, partially offset by a decrease in non-performing loans. The
amount of the loan loss provision and the level of the allowance for possible
loan losses are based upon a number of factors including Management's evaluation
of potential losses in the portfolio, after consideration of appraised
collateral values, financial condition and past credit history of the borrowers
as well as prevailing and anticipated economic conditions.
Non-Interest Income
For the three months ended June 30, 2000, compared to the same period of 1999,
total non-interest income increased $135,000 or 2.3%, to $5,968,000 compared to
$5,833,000. The increase was due primarily to increases of $308,000 in income on
10
<PAGE>
corporate owned life insurance, $48,000 in other service charges, commission and
fees, and $68,000 in trust income. These increases were partially offset by a
decline in service charges on deposits accounts of $69,000, and decreases of
$130,000 in net security gains and $90,000 in other income.
For the six months ended June 30, 2000, compared to the same period of 1999,
total non-interest income increased $856,000 or 7.5%, due primarily to increases
of $512,000 in income on corporate owned life insurance, $148,000 in other
service charges, commission and fees, $137,000 in trust income, $124,000 in net
securities gains, and $164,000 in other income. These increases were partially
offset by a decline in service charges on deposits accounts of $229,000. This
decrease in 2000 resulted from the Company's continued drive to build upon its
relationship banking with customers by increasing the efforts on offering its
Combined Banking services, which in turn has resulted in fewer occurrences of
service charges assessed.
Non-Interest Expense
For the three months ended June 30, 2000, non-interest expense decreased
$5,739,000 from the same period last year. Included in the three months of 1999
were non-recurring charges totaling $6,185,000, pre-tax, related to the Bank's
conversion to a new operating system as well as the dissolution of the Bank's
joint venture in United Financial Services. Excluding these charges,
non-interest expense increased by $446,000 or 3.3% from 1999. Data processing
expense increased $493,000 compared to the prior year period primarily due to
increased transaction volume. Furniture and equipment expense increased $97,000.
Partially contributing to this increase was the Company's innovation of
improving customer banking relationships by purchasing a mobile branch.
Occupancy expense increased $58,000. Other expenses increased $447,000, which
consisted primarily of increased marketing, telephone, legal and professional
fees. Amortization of intangible assets was $252,000 higher in 2000 due to the
1999 amortization on UFS being included in non-recurring charges. Partially
offsetting these increases was a decrease in salaries and benefits expense of
$860,000 or 15.0% due to a reduction of expense in certain benefit plans.
For the six months ended June 30, 2000, non-interest expense decreased
$15,915,000 from the same period last year. Included in the six months of 1999
were non-recurring charges totaling $17,258,000, pre-tax, related to the
Company's acquisition of Raritan, the sale of non-performing assets, the Bank's
conversion to a new operating system as well as the dissolution of the Bank's
joint venture in United Financial Services. Excluding these charges,
non-interest expense increased by $1,343,000 or 4.7% from 1999. Data processing
expense increased $786,000 compared to the prior year period primarily due to
increased transaction volume. Furniture and equipment expense increased
$148,000. Partially contributing to this increase was the Company's innovation
of improving customer banking relationships by purchasing a mobile branch.
Occupancy expense increased $151,000. Other expenses increased $935,000, which
consisted primarily of increased marketing, telephone, legal and professional
fees. Partially offsetting these increases was a decrease in amortization of
intangible assets of $21,000. Salaries and benefits expense decreased by
$656,000, or 5.3%, due to a reduction of expense in certain benefit plans.
Income Taxes
The provision for income taxes increased by $1,267,000 to $2,212,000 for the
three months ended June 30, 2000 as compared to $945,000 for the same period in
1999. The provision for income taxes increased by $3,653,000 to $4,484,000 for
the six months ended June 30, 2000 as compared to $831,000 for the same period
in 1999. The increase in the effective tax rate for the six-month period is
attributable to the prior year containing certain non-deductible one-time
charges taken in 1999.
Segment Reporting
The Company, for management purposes, is segmented into the following lines of
business: Retail Banking, Commercial Banking, Investments, and Trust and
Investment Services. Activities not included in these lines are reflected in
11
<PAGE>
Corporate. Retail Banking includes the branches and ATMs, consumer and mortgage
lending, and credit card operations. Commercial Banking includes commercial and
construction lending, commercial credit and the operations of United Commercial
Capital Group, Inc. In 1999, the Company completed its acquisition of Raritan
Bancorp Inc., combined computer systems of Raritan into the Company's computer
system, and completed the conversion of the Company's own data processing
operations to an independent third-party provider. Based upon these facts, no
segment information is provided for 1999, as such information was not deemed
meaningful. Summary financial information on a fully taxable equivalent basis
for the lines of business is presented in Note 6.
The following table shows the percentage contribution of the various lines of
business to consolidated net income before taxes on a fully taxable equivalent
basis:
<TABLE>
<CAPTION>
Retail Commercial Investments Trust Corporate Consolidated
------ ---------- ----------- ----- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Three Months Ended June 30, 2000 45.4% 24.8% 12.7% 6.9% 10.2% 100.0%
Six Months Ended June 30, 2000 39.9% 19.0% 19.9% 6.5% 14.7% 100.0%
</TABLE>
FINANCIAL CONDITION
June 30, 2000 as compared to December 31, 1999:
Total assets increased $56,024,000, or 2.7% from December 31, 1999. Loans, net
of allowance and excluding loans held for sale, increased by $70,608,000, cash
surrender value of life insurance policies increased by $16,228,000 and other
assets increased by $11,735,000. Conversely, there were decreases of $31,538,000
in securities, $4,454,000 in mortgage loans held for sale, $5,355,000 in cash
and due from banks, $915,000 in premises and equipment and $437,000 in
intangible assets.
Total loans at June 30, 2000, excluding loans held for sale and unearned income,
increased $70,567,000, or 5.7% to $1,318,996,000 from year-end 1999. Commercial
loans contributed $48,642,000 to the first six months of loan growth, an
increase of 20.8% over December 31, 1999. Lease financing grew by $4,831,000 or
26.2% compared with December 31, 1999. Installment loans increased $47,339,000
or 23.7% from December 31, 1999. Real estate loans decreased by $28,975,000 or
3.9% compared with year-end 1999 and credit card loans declined by $1,270,000 or
2.9%.
The following schedule presents the components of gross loans, excluding
mortgage loans held for sale, by type, for each period presented.
June 30, December 31,
(In Thousands) 2000 1999
-------------- ------------
Commercial $282,598 $ 233,956
Real Estate 723,543 752,518
Installment 246,916 199,577
Lease Financing 23,293 18,462
Retail Credit Card Plan 42,646 43,916
-------------- ------------
Total Loans Outstanding 1,318,996 1,248,429
Less: Unearned Income 9,927 10,893
-------------- ------------
Loans, Net of Unearned Income $1,309,069 $1,237,536
============== ============
12
<PAGE>
Within the securities portfolio, the majority of the decrease was due to the
sale of equity securities. The amortized cost and approximate market value of
securities are summarized as follows:
June 30, 2000 December 31, 1999
------------------- -------------------
Amortized Market Amortized Market
Securities Available for Sale Costs Value Costs Value
----------------------------- -------- -------- -------- --------
(in thousands)
Obligations of U.S. Government
Agencies and Corporations ...... $ 95,512 $ 87,475 $ 97,738 $ 88,683
Obligations of States and
Political Subdivisions ......... 84,945 79,123 80,520 75,223
Mortgage-Backed Securities .......... 385,063 354,619 398,106 370,794
Corporate Debt Securities ........... 47,901 42,119 47,908 44,021
Equity Securities ................... 23,946 26,530 48,705 52,940
-------- -------- -------- --------
Total Securities Available For Sale.. 637,367 589,866 672,977 631,661
-------- -------- -------- --------
Securities Held to Maturity
---------------------------
U.S. Treasury Securities ............ 3,000 2,973 5,000 4,961
Obligations of U.S. Government
Agencies and Corporations ...... 19,869 19,336 4,997 4,663
Obligations of States and
Political Subdivisions ......... 23,116 22,615 25,515 24,978
Mortgage-Backed Securities .......... 2,059 1,985 2,221 2,143
Other Securities .................... 200 200 175 173
-------- -------- -------- --------
Total Securities Held To Maturity ... 48,244 47,109 37,908 36,918
-------- -------- -------- --------
Trading Securities .................. 743 850 743 929
-------- -------- -------- --------
Total Securities .................... $686,354 $637,825 $711,628 $669,508
======== ======== ======== ========
Total deposits increased $18,643,000 or 1.3%. Savings deposits increased
$45,542,000, or 8.1%, and demand deposits increased $2,624,000, or 1.1%, while
time deposits decreased $29,523,000, or 4.3%. Short-term borrowings increased by
$53,454,000, or 26.7% while other borrowings decreased by $7,048,000, or 3.0%.
Management continues to monitor the shift of deposits and level of borrowings
through its Asset/Liability Management Committee.
13
<PAGE>
Asset Quality
-------------
During the first quarter of 1999, the Company sold non-performing assets having
a carrying value of $4,465,000, resulting in a one-time charge of $736,000, net
of tax. The following table provides an analysis of non-performing assets as of
June 30, 2000 and December 31, 1999, 1998, 1997, and 1996:
<TABLE>
<CAPTION>
June 30, December 31, December 31, December 31, December 31,
(Dollars in Thousands) 2000 1999 1998 1997 1996
---------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Total Assets ................. $2,146,407 $2,090,383 $1,916,809 $1,789,426 $1,550,129
Total Loans (Net of Unearned
Income) (1)................... $1,309,069 $1,237,536 $1,056,953 $ 931,266 $ 898,788
Allowance for Possible Loan
Losses ....................... $ 11,311 $ 10,386 $ 11,174 $ 11,739 $ 11,874
% of Total Loans .......... 0.86% 0.84% 1.06% 1.26% 1.32%
Total Non-Performing Loans (2) $ 6,354 $ 8,142 $ 8,612 $ 9,973 $ 13,018
% of Total Assets ......... 0.30% 0.39% 0.45% 0.56% 0.84%
% of Total Loans .......... 0.49% 0.66% 0.81% 1.07% 1.45%
Allowance for Possible Loan
Losses
To Non-Performing Loans .... 178.01% 127.56% 129.75% 117.71% 91.21%
Total of Non-Performing Assets $ 6,613 $ 8,251 $ 9,170 $ 11,650 $ 15,163
% of Total Assets ......... 0.31% 0.39% 0.48% 0.65% 0.98%
</TABLE>
(1) Excludes mortgage loans held for sale.
(2) Non-performing loans consist of:
(a) impaired loans, which includes non-accrual and renegotiated loans, and
(b) loans which are contractually past due 90 days or more as to principal or
interest, but are still accruing interest at previously negotiated rates to
the extent that such loans are both well secured and in the process of
collection.
At June 30, 2000, there were $503,000 of loans that are considered to be
impaired under SFAS No. 114. There was one troubled debt restructuring of
$21,000, which is performing in accordance with the restructured agreement.
For the six months ended June 30, 2000, the Company recognized no interest
income on impaired loans.
Allowance for Possible Loan Losses
----------------------------------
The allowance is increased by provisions charged to expense and reduced by
charge-offs, net of recoveries. At June 30, 2000, the allowance for possible
loan losses was $11,311,000, up $925,000 compared to $10,386,000 at year-end
1999. Net charge-offs for the six months ended June 30, 2000 were $1,475,000
compared to $1,566,000 for the prior year period, excluding the charge related
to the non-performing asset sale.
The level of the allowance for possible loan losses is based upon a number of
factors including Management's evaluation of potential losses in the portfolio,
after consideration of appraised collateral values, financial condition and past
credit history of the borrowers as well as prevailing and anticipated economic
conditions.
At June 30, 2000, the ratio of the allowance for possible loan losses to
non-performing loans was 178.01% as compared to 127.56% at December 31, 1999. In
the opinion of Management, the allowance for possible loan losses at June 30,
2000 was adequate to absorb possible future losses on existing loans and
commitments based upon currently available information.*
14
<PAGE>
Liquidity Management
--------------------
At June 30, 2000, the amount of liquid assets remained at a level Management
believed adequate to ensure that contractual liabilities, depositors' withdrawal
requirements, and other operational and customer credit needs could be
satisfied.* This liquidity was maintained at the same time the Company was
managing the interest rate sensitivity of interest earning assets and interest
bearing liabilities so as to improve profitability.
Liquidity is generated from maturities and principal payments in the investment
portfolio. Scheduled maturities and anticipated principal payments of the
investment portfolio will approximate $33,000,000 throughout the next twelve
months.* In addition, all or part of the investment securities available for
sale 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,
2000, the Company had $395,156,000 of lines of credit with the Federal Home Loan
Bank and correspondent banks under which $99,819,000 was available.
Capital
-------
Total stockholders' equity decreased $4,564,000 to $113,901,000 at June 30, 2000
from $118,465,000 at December 31, 1999. The decrease during the six-month period
was due to the two quarterly cash dividends declared totaling $6,165,000, a
decrease of $4,021,000 (net of tax) in the June 30, 2000 market value of the
Company's available for sale securities portfolio from the valuation at December
31, 1999 and the repurchase of 360,100 shares of the Company's common stock
amounting to $6,551,000. Partially offsetting these decreases were the exercise
of stock options of $193,000, restricted stock activity of $24,000, and net
income of $11,956,000.
15
<PAGE>
The following table reflects the Company's capital ratios, as of June 30, 2000
and December 31, 1999 in accordance with current regulatory guidelines.
(Dollars in Thousands) June 30, 2000 December 31, 1999
----------------- -----------------
Amount Ratio Amount Ratio
-------- ------- ------- -------
Risk-Based Capital
------------------
Tier I Capital
Actual ................................. $158,018 10.17% $158,123 10.93%
Regulatory Minimum Requirements ........ 62,142 4.00 57,874 4.00
For Classification as Well Capitalized.. 93,213 6.00 86,811 6.00
Combined Tier I and Tier II Capital
Actual ................................. $169,329 10.90% $168,509 11.65%
Regulatory Minimum Requirements ........ 124,285 8.00 115,748 8.00
For Classification as Well Capitalized.. 155,356 10.00 144,685 10.00
Leverage
Actual ................................. $158,018 7.34% $158,123 7.46%
Regulatory Minimum Requirements ........ 86,092 4.00 84,744 4.00
For Classification as Well Capitalized.. 107,615 5.00 105,930 5.00
The Company's risk-based capital ratios (Tier I and Combined Tier I and Tier II
Capital) and Tier I leverage ratio continue to exceed the minimum requirements
set forth by the Company's regulators.
Year 2000 Issue
---------------
To date, no Year 2000 related problems have been experienced by the Company. In
addition, the Company has no knowledge of any borrower that is unable to meet
their obligations to the Company because of a Year 2000 issue. The Company will
continue to monitor for Year 2000 issues throughout the year 2000.
16
<PAGE>
Item 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
MARKET RISK - ASSET/LIABILITY MANAGEMENT.
The primary market risk faced by the Company is interest rate risk. The
Company's Asset/Liability Committee ("ALCO") monitors the changes in the
movement of funds and rate and volume trends to enable appropriate management
response to changing market and rate conditions.
The Company's income simulation model analyzes interest rate sensitivity by
projecting net interest income over the next 24 months in a flat rate scenario
versus net interest income in alternative interest rate scenarios. Management
reviews and refines its interest rate risk management process in response to the
changing economic climate. Currently, the Company's model projects a 200 basis
point change in rates during the first year, in even monthly increments, with
rates held constant in the second year. The Company's ALCO has established that
interest income sensitivity will be considered acceptable if net interest income
in the above interest rate scenario is within 10% of net interest income in the
flat rate scenario in the first year. Additionally, the Company's ALCO policy
states that income sensitivity will be considered acceptable if the change in
net income in the above interest rate scenario is within 20% of net income from
the flat rate scenario in the first year. At June 30, 2000, the Company's income
simulation model indicates an acceptable, but increasing, level of interest rate
risk.*
At June 30, 2000, the simulation model reflects increased interest rate
sensitivity over the next 24 months. The six rate increases over the last year,
and a shortening of the Company's liability repricing opportunities, has
resulted in this increased sensitivity. While the interest rate sensitivity is
increasing, it is still within the Company's acceptable range.
Computation of prospective effects of hypothetical interest rate changes are
based on numerous assumptions, including relative levels of market interest
rates, loan prepayments and duration of deposits, and should not be relied upon
as indicative of actual results. Further, the computations do not contemplate
any actions the ALCO could undertake in response to the increasing interest rate
sensitivity.
17
<PAGE>
Part II - Other Information
Item 4 - Submission of Matters to a Vote of Security Holders
On or about March 27, 2000, the Company mailed to its shareholders a proxy
statement ("Proxy Statement") for the purpose of soliciting proxies for use at
its Annual Meeting of Shareholders. The proxies were solicited pursuant to
Regulation 14A under the Securities Exchange Act of 1934 and there were no
solicitations in opposition thereto.
At the Annual Meeting, held on April 18, 2000, the shareholders approved the
following proposals set forth in the Proxy Statement, by the votes indicated:
1. Election of the five (5) directors nominated by the Company's Board
of Directors to serve until the expiration of their terms and
thereafter until their successors shall have been duly elected and
have been qualified. The vote tabulation with respect to each
nominee for director is as follows:
Term Affirmative Votes
Director Expiration Votes Against
------------------------- ------------- ---------------- ------------
William T. Kelleher, Jr. 2003 11,166,016 860,356
------------------------- ------------- ---------------- ------------
Antonia S. Marotta 2003 11,166,144 860,228
------------------------- ------------- ---------------- ------------
Charles N. Pond, Jr. 2003 11,166,560 859,812
------------------------- ------------- ---------------- ------------
Arlyn D. Rus 2003 11,168,424 857,948
------------------------- ------------- ---------------- ------------
Ronald E. West 2003 11,169,596 856,776
------------------------- ------------- ---------------- ------------
The following directors' terms of office continued after the meeting:
George W. Blank
C. Douglas Cherry
Thomas C. Gregor
Charles E. Hance
John R. Kopicki
John W. McGowan, III
Patricia A. McKiernan
Paul K. Ross
David R. Walker
George J. Wickard
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
(3)(i) Certificate of Incorporation of the Company as amended though
August 1999.
(3)(ii) By-laws of the Company.
(27) Financial Data Schedule
(b) Reports on Form 8-K
None
18
<PAGE>
SIGNATURES
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.
UNITED NATIONAL BANCORP
(Registrant)
Dated: August 11, 2000 By: THOMAS C. GREGOR
----------------
Thomas C. Gregor, Chairman
President and CEO
Dated: August 11, 2000 By: A. RICHARD ABRAHAMIAN
---------------------
A. Richard Abrahamian
Senior Vice President & Chief
Accounting Officer of United National Bank
(Principal Accounting Officer)
19
