Banking industry consolidation continued at its red-hot pace Monday as two New Jersey companies announced a $1.2 billion merger agreement, but Wall Street's reaction this time was less than enthusiastic.

UJB Financial Corp. of Princeton, paying 2.4 times book value plus some shareholder dilution for Summit Bancorp. of Chatham, insisted that cost reductions and the companies' combined 26% market penetration in New Jersey would yield a formidable, $22 billion-asset "strategic partnership."

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