UJB Financial Corp. announced a major reorganization on Wednesday that will result in a work force reduction of 7%, a consolidation of its New Jersey and Pennsylvania bank subsidiaries, and a more concentrated focus on small business lending and mortage banking.
The Princeton, N.J.-based company, the subject of intense takeover rumors for the past year, expects the program to improve profitability and operating efficiencies, said chairman and chief executive T. Joseph Semrod.
Better Price the Goal?
"Our goal is to achieve a return on assets of 1.20%, return on equity of over 15%" by the fourth quarter of 1995, Mr. Semrod said in a prepared statement.
UJB's ROA for the first six months of the year was 0.63% and its ROE was 9.24%.
Analysts said the restructuring signals UJB's intent to remain independent long enough to strengthen its balance sheet so as to become more attractive and draw a better price from acquirers.
"This tells you we're not for sale today," said Anthony Polini an analyst at Mabon Securities.
"Longer term, it can provide shareholders with a better company to sell."
UJB is the third-largest banking company in New Jersey, with 13.5 billion of assets.
Has 257 Branches
The company was hit hard by a weak economy and problem realty loans a few years ago, but has steadily returned to health over the past 18 months.
Improved earnings and diminishing credit problems, coupled with an attractive network of 257 branches in New Jersey and eastern Pennyslvania, makes UJB an attractive merger partner, analysts said.
The restructuring is aimed at producing $40 million in annual savings and incremental revenues by the third quarter of 1994, the company said.
"If everything works, it should be one of the top-performing banks in the country," said Mr. Polini.
448 More Jobs to Be Cut
The bank said it will recognize a restructuring charge in either the third or fourth quarter, but said it will not cause a loss. Mr. Polini estimated that the charge will be less than $20 million.
The jobs program is intended to reduce 448 more positions at UJB Financial - which has already trimmed 240 jobs from its payroll this year. At June 30, the company had 6,400 full-time employees.
The restructuring also will consolidate UJB's six subsidiary banks into two-one in New Jersey and one in Pennsylvania -- leading to the elimination of many senior management jobs, a spokeswoman said.
Mr. Semrod, 56, will be chairman of the New Jersey bank, while John R. Howell, 60, a UJB Financial vice chairman and chairman of First Valley Bank, will be chairman of the Pennysylvania bank.
4 Product Areas Stressed
The business line realignment will be organized around four product areas, and will be put in place over the next several months, the bank said.
Wholesale banking will be run by Stephen H. Peneyko, a senior executive vice president.
Retail banking - including small-business lending-will be headed by Sabry Mackoul, an executive vice president.
The bank said it will put special emphasis on making loans to businesses with less than $2 million of sales.
Mortgages and investment management - including UJB's private banking operation and discount brokerage subsidiary -- will report to John O'Gorman, chairman and chief executive officer of United Jersey Bank/Central.
In late trading Wednesday, UJB's stock was at $29 a share, up 12.5 cents.
