Wall Street continues to focus on the major banks of New Jersey, where acquisitions this year have sparked takeover fever.

On Wednesday, Mabon Securities Corp. opened coverage of the six largest remaining independent banks in the state, and gave a "buy" rating to Midlantic Corp.. Edison.

UJB Financial Corp., Princeton, recently the hottest New Jersey banking stock, is rated "hold" by Mabon.

UJB was also cut to "neutral" from "buy" on Wednesday by Dean Witter Reynolds Inc. because of its strong price gains.

Before Wednesday, UJB shares had risen 20% since July 20.

Strategy Session at UJB?

Midlantic shares gained 12.5 cents on Wednesday to $25.125, while UJB was down $1.375 to $29.75.

UJB's stock was wrapped in uncertainty as the bank's board reportedly mulled a new strategic plan that might affect the bank's status among investors as a prime takeover target.

The bank declined to comment on the board's agenda for its Wednesday afternoon meeting.

"Recently, merger announcements and strong second-quarter results have sparked a rally" in the New Jersey banks, wrote Anthony Polini and Michael Doppelt of Mabon in a report released this week.

"Most stocks appear fully valued, based solely on their fundamental appeal," they wrote.

Also ranked "hold" were First Fidelity Bancorp., Lawrenceville, the state's largest bank; Summit Bancorp, Summit; Valley National Bancorp, Clifton; and Citizens First Bancorp, Glen Rock.

|Well on the Way'

The Mabon analysts said they recommended Midlantic as a "buy" because "the turnaround is starting to blossom" and because its stock is attractively valued.

Management, led by chief executive Garry J. Scheuring, "has clearly demonstrated that Midlantic is well, on the way to recovery," they said.

The bank suffered huge real-estate-related losses of $5.22 per share in 1990 and $14.38 per share in 1991, suffering heavily at the end of New Jersey's 1980s boom.

The company earned 8 cents per share in 1992 and $1.28 per share in the first half of 1993.

At Bank Since 1991

Mr. Scheuring arrived at Midlantic in April 1991 after having served as vice chairman of Continental Bank Corp., Chicago, during that company's turnaround.

The Mabon analysts think shares of Midlantic could hit $36 by yea end 1994. If an acquisition deal should be struck, they estimated, the takeover price would be in the low to mid 40s.

Trading at 135% of Book Value

Currently, the stock trades at 135% of book value and only 5.8 times 1994 estimated earnings of $4.35 per share.

Mr. Polini and Mr. Doppelt noted that by this year-end, nonperforming assets will have dropped 60% at Midlantic in two years, that its capital ratios are strong, that the bank still has $190 million in tax credits worth $3.76 per share, and that pretax earnings will likely boom from a currently depressed level.

Bank of N.Y. Deal Stirred Pot

Speculation about takeovers in New Jersey has been stirred by Bank of New York Co.'s recently completed $560 million acquisition of Maywood-based National Community Banks, and CoreStates Financial Corp.'s pending $312 million deal for Constellation Bancorp, Elizabeth.

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