NEW YORK -- Summit Bancorp., a $4.3 billion-asset bankholding company headquartered in Chatham, N.J., expects to more than double its asset size in the next three to five years, chairman and chief executive Robert Cox told analysts Tuesday.
In a presentation before the New York Society of Security Analysts, Mr. Cox said the company wants to dramatically broaden its commercial banking subsidiary's market share and significantly increase the value of its franchise during the same period.
Summit's subsidiary, called Summit Bank, operates 84 banking offices in 11 northern and central New Jersey counties.
Deal to Buy Crestmont
Mr. Cox maintained that the bank had made a significant step in reaching its objectives by signing a definitive agreement to acquire Crestmont Financial Corp. of Edison, N.J. The deal is expected to be completed by the fourth quarter of 1994.
Crestmont will be merged into Summit Bank, resulting in combined assets of $5.3 billion, with over 90 branches in northern and central New Jersey, and significantly increasing Summit's market share, competitive position, and retail franchise.
"We not only grow in size and market share, we also increase our earnings," Mr. Cox said.
Once the acquisition is complete and savings are realized, earnings per share are expected to increase 5%, return on assets will increase by five basis points, return on equity will increase by 125 basis points, and the organization's overall efficiency ratio will decline to under 60%, according to Summit's chairman.
Will Be 4th Largest in NJ
This merger will make Summit the fourth largest bank in New Jersey, with the seventh largest market share of all banks in the state.
Another acquisition - of Lancaster Financial Inc., a mortgage company headquartered in Parsippany, N.J. - is pending, Lancaster will be merged into the Summit Mortgage Co.
Summit earned $42 million in 1993. During the first quarter of 1994, it earned $11.3 million, a 14% increase over the same period last year. Return on assets for the first quarter was 1.06% annualized, up from 1.04% for the full year 1993. Earnings per share for the first quarter of 1994 were 44 cents.
Drop in Nonperforming Assets
Summit Bank closed 1993 with approximately $81 million in nonperforming assets, a 19% decrease from the previous year, and reduced that number to $71 million at the end of the first quarter of 1994.
The company's efficiency ratio had reached 69% in 1991. Through consolidation and other cost efficiencies, it had declined to 63% by the end of the first quarter of 1994, Mr. Cox said.
"Through continued reductions in our efficiency ratio, which is targeted to fall below 60% by yearend 1995, we feel confident that we'll hit our profitability targets of 1.25% ROA and 16% to 18% ROE," he added.