Moving to strengthen its retail network in New Jersey, National Westminister Bank announced Thursday that it had agreed to acquire Freeholdbased Central Jersey Bancorp.

Central Jersey's main subsidiary, Central Jersey Bank and Trust Co., has $1.8 billion of assets and 38 branches, principally in Monmouth County, where it has the No. 1 market share.

The bank will become part of the New Jersey affiliate of London-based National Westminster Bank's U.S. holding company.

Per-Share Price

The price of $33.50 a share, to be paid either in cash or Natwest stock, represents 2.4 times Central Jersey's book value, or 2.26 times when adjusted for dilutive effects and a nearly 3% stake already held by Natwest.

"It was a steep price, but anything in New Jersey can be steep," said Todd Isom, an analyst with Duff & Phelps in Chicago.

In March, Natwest paid $500 million, or 2.47 times book value, for Citizens First Bancorp of Glen Rock, N.J.

Natwest Bancorp chairman and CEO John Tugwell said the Central Jersey acquisition would be dilutive to earnings per-share, but not enough to require a quarterly charge.

Called 'a Small Deal'

"This is such a small deal that, although clearly it will be dilutive, we're really (dealing with) fractions of pence here," Mr. Tugwell said in a telephone press conference Thursday afternoon.

He said he had initiated discussions with Central Jersey last fall and believed that it had attracted attention from a number of other bidders. A Central Jersey spokesman could not be reached for comment Thursday.

Mr. Tugwell also said Natwest Bancorp expected to cut Central Jersey's expenses by $12 million, or about 35% over two years, with most of the savings coming in the first year. He said about six of Central Jersey's 38 branches overlapped with existing Natwest offices.

Natwest said it expects to complete the acquisition by early next year, following regulatory and Central Jersey shareholder approvals. It will fund the deal by a combination of cash and issuance of new ADR shares.

Central Jersey shareholders will have the right to take either cash or Natwest ADRs, subject to certain allocation procedures. ADRs will make up about 55% of the total consideration offered in order to keep the deal tax-free.

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Major N.J. Presence

After concluding the acquisition of both Citizens Bancorp and Central Jersey, Natwest Bancorp will have total assets of about $30 billion and 348 branches, with 221 of those offices and $11 billion of assets located in New Jersey.

Mr. Tugwell said Natwest would then rank second in deposit share in New Jersey, after Lawrenceville-based First Fidelity Bancorp.

Central Jersey has a troubled past but cleaned up most of its problems last year, largely through a bulk sale of $71 million in bad loans in December. "This is now a very clean bank indeed," Mr. Tugwell said.

At the end of the first quarter, Central Jersey reported a 2.19% ratio of nonperforming assets as a percentage of total loans, down from 8.66% in the year-ago quarter, with a reserve covering 116% of nonperformers.

It returned 0.83% on assets in the first quarter and 12.01% on equity.

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