Item 1 - Business
(a) General Development of Business
United National Bancorp ("United", "Registrant" or the "Company") is a bank holding company registered with the Board of Governors of the Federal Reserve System (the "FRB") under the Bank Holding Company Act of 1956, as amended (the "BHCA"). United was incorporated by United National Bank (the "Bank") in the State of New Jersey on August 13, 1987 and commenced operations August 1, 1988 as a bank holding company for the Bank. The corporate headquarters of both United and the Bank are located at 1130 Route 22 East, Bridgewater, New Jersey, and the phone number is (908) 429-2200.
As of December 31, 2000, United had consolidated assets of approximately $2.1 billion, deposits of $1.5 billion and stockholders' equity of $140.5 million.
Banking Subsidiary
The Bank, a wholly-owned subsidiary of United, is a commercial bank established in 1902 which presently exists under authority of the laws of the United States of America. The Bank is a member of the Federal Reserve System and the Federal Home Loan Bank and its deposits are insured by the Federal Deposit Insurance Corporation ("FDIC"). The Bank is headquartered in Bridgewater, New Jersey and operates thirty four branches throughout Central New Jersey. The Bank operates seven branches in Hunterdon County, three branches in Middlesex County, one branch in Essex County, two branches in Morris County, twelve branches in Somerset County, five branches in Union County and four branches in Warren County, New Jersey. The Bank also operates forty two automatic teller machines ("ATMs") affiliated with the MAC System, an eight-state network with membership in the Plus Nationwide network, Honor, a Florida network, and Cirrus.
The Bank provides a full range of commercial and retail bank services, including the acceptance of demand, savings and time deposits. The Bank also provides retail and commercial loans and mortgages to a variety of individuals and businesses and offers full personal, corporate and pension trust and other fiduciary services.
Growth of United National Bank
On March 31, 1999, the Company acquired Raritan Bancorp, Inc. ("Raritan"). Each share of Raritan was converted into 1.595 shares of the Company's common stock for a total of approximately 3,785,000 shares issued, not adjusted for subsequent stock dividends and splits. At December 31, 1998, Raritan had approximately $432 million in assets. The acquisition was accounted for as a pooling-of-interests.
On September 30, 1998, the Company acquired State Bank of South Orange ("SBSO"). Each share of SBSO was converted into 1.245 shares of the Company's common stock for a total of 796,271 shares issued, not adjusted for subsequent stock dividends and splits. At the time of the acquisition, SBSO had approximately $75 million in assets. The acquisition was accounted for as a pooling-of-interests.
(b) Industry Segments
See "Lines of Business" on page 5 and "Note 20 - Segment Reporting" on pages 34-35 of United's 2000 Financial Review section of the Annual Report for the information required by this item and that information is incorporated herein by reference.
(c) Narrative Description of Business
Personal Banking Services
The Bank, through its thirty four branch network and forty two MAC installations, provides both retail and commercial services. Among the services provided at the branch locations are: checking accounts, money market accounts, NOW accounts, certificates of deposit, statement and passbook savings accounts, individual retirement accounts ("IRAs"), self-employed pension plans ("SEPs"), safe deposit services, installment and other personal loans, home equity loans, mortgage loans, lines of credit and other consumer financing. The Bank also issues secured and unsecured credit cards.
The Bank offers a full range of trust and investment services for individuals and corporations. These services include: fiduciary services, estate planning, custodial, employee benefits, pension as well as profit sharing plans. The market value of trust assets under administration was approximately $1.2 billion at December 31, 2000. Additionally, other services include the sale of alternative investments, such as annuities and mutual funds, as well as the sale of long-term care insurance.
Discount brokerage service has been offered since 1986 as an additional service to customers and is currently managed by Fiserv Investor Services, Inc.
Commercial Banking Services
The Bank provides commercial customers with a wide array of financial services, which are administered at the branch level as well as at the Headquarters Office in Bridgewater. These services include secured and unsecured loans, term loans, lines of credit and corporate credit cards. The Bank also participates in the New Jersey Economic Development Authority programs, which make tax-exempt, low interest financing programs available to borrowers who wish to relocate or expand their activity in New Jersey. As a Small Business Administration ("SBA") Preferred Lender, the Bank is able to offer streamlined processing on SBA loans. In addition, the Bank makes other Government loan programs available. As a member of the Automated Clearing House, the Bank makes direct deposit services available.
Other Subsidiaries
In August 2000, the Bank established a subsidiary corporation in New Jersey, United National Agency, Inc., to provide long-term health care solutions.
In 1997, the Bank established a subsidiary corporation in New Jersey, United Commercial Capital Group, to provide timely and innovative financing solutions for real estate and commercial transactions that do not fall within the boundaries of traditional financing.
In 1989, the Bank established a subsidiary corporation in New Jersey, United National Investment Company, Inc. (formerly UNB Investment Co., Inc.), to manage a portion of its investment portfolio and to operate under state tax law as an investment company. As of December 31, 2000, approximately $222.1 million of the Bank's investment portfolio was managed by this New Jersey corporation.
Supervision and Regulation
The banking industry is highly regulated. Statutory and regulatory controls increase a bank holding company's cost of doing business and limit management's options to deploy assets and maximize income. Areas subject to regulation and supervision by the bank regulatory agencies include: nature of business activities; minimum capital levels; dividends; affiliate transactions; expansion and closing of locations; acquisitions and mergers; interest rates paid on certain types of deposits; reserves against deposits; terms, amounts and interest rates charged to various types of borrowers; and investments.
Bank Holding Company Regulation
The Company is a bank holding company within the meaning of the BHCA, and is registered as such with and is supervised by the FRB. The Company is required to file reports with the FRB and provide such additional information as the FRB may require.
The Company is required to obtain the approval of the FRB before it may acquire all or substantially all of the assets of any bank, or direct or indirect ownership of any voting securities of any bank if, after giving effect to such acquisition, the Company would, directly or indirectly, own or control more than 5% of the voting shares of such bank. The BHCA also prohibits acquisition by the Company of more than 5% of the voting shares of a bank located outside the State of New Jersey, unless laws of the state in which such bank is located specifically authorize such an acquisition. In addition to the approval of the FRB, prior approval must also be obtained from any other banking agency having supervisory jurisdiction over the bank to be acquired before any bank acquisition can be completed. Many states, including New Jersey, have adopted legislation, which permits banks and bank holding companies resident in New Jersey to acquire banks and bank holding companies in states with reciprocal legislation. The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (the "Interstate Banking Act") provides that the FRB may approve an acquisition by a bank holding company of a bank located in a state other than the bank holding company's home state without regard to whether such transaction is prohibited under the laws of any state. The Interstate Banking Act also permits Federal banking agencies to approve interstate bank mergers without regard to state law. States have authority to opt out of the legislation subject to certain conditions. In addition, the Interstate Banking Act permits de novo branching across state lines but only with respect to states that affirmatively adopt legislation authorizing de novo interstate branching.
New Jersey has enacted legislation to opt-in with respect to the entry into New Jersey of foreign country banks. New Jersey did not authorize de novo branching into the state. However, under Federal law, Federal savings banks, which meet certain conditions, may branch into a state, regardless of state law.
A bank holding company is prohibited from engaging in, or acquiring direct or indirect control of more than 5% of the voting shares of any company engaged in nonbanking activities unless the FRB, by order or regulation, has found such activities to be so closely related to banking or managing or controlling banks as to be a proper incident thereto.
Under the FRB's policy, a bank holding company is required to serve as a source of financial and managerial strength to its subsidiary banks and is required to commit resources to support its subsidiary banks.
Regulation of the Bank
The Bank is presently and during the year 2000 was subject to regulation and examination by the Comptroller of the Currency ("Comptroller"). The Bank is also subject to regulations of the Federal Reserve System (the "Federal Reserve"). The deposits of the Bank are insured by the FDIC to the extent provided by law. The Bank has applied to the New Jersey Department of Banking for approval of conversion to a state charter which it anticipates will take place in the second quarter of 2001. The Bank does not anticipate that such charter conversion will have a material effect on the Bank's business.
The Company and the Bank are also subject to applicable provisions of New Jersey law insofar as they do not conflict with or are not preempted by Federal law.
Community Reinvestment
Under the Community Reinvestment Act ("CRA"), as implemented by OCC regulations, a national bank has a continuing and affirmative obligation consistent with its safe and sound operation to help meet the credit needs of its entire community, including low and moderate-income neighborhoods. The CRA does not establish specific lending requirements or programs for financial institutions nor does it limit an institution's
discretion to develop the types of products and services that it believes are best suited to its particular community, consistent with the CRA. The CRA requires the OCC, in connection with its examination of a national bank, to assess the association's record of meeting the credit needs of its community and to take such record into account in its evaluation of certain applications by such association. The CRA also requires all institutions to make public disclosure of their CRA ratings. The Bank received a "Satisfactory" CRA rating in its most recent examination.
Dividend Restrictions and Other Actions
The Company is a legal entity separate and distinct from the Bank. Most of the Company's revenues, including funds available for the payment of dividends and for operating expenses, are provided by dividends paid by the Bank. There are statutory and regulatory limitations on the amount of dividends, which may be paid to the Company by the Bank. The prior approval of the Comptroller is required if the total of all dividends declared by the Bank in any calendar year exceeds the Bank's net profits for that year combined with its retained net profits for the preceding two years, less any required transfers to surplus.
The Comptroller has the authority to prohibit a national bank from engaging in what, in the Comptroller's opinion, constitutes an unsafe or unsound practice in conducting its business. It is possible that the Comptroller could assert that the payment of dividends or other payments might, under some circumstances, be an unsafe or unsound practice for a national bank.
If, in the opinion of the Comptroller, a bank under its jurisdiction is engaged in or is about to engage in an unsafe or unsound practice (which, depending on the financial condition of the bank, could include the payment of dividends), the Comptroller may require, after notice and hearing, that such bank cease and desist from such practice or, as a result of an unrelated practice, require the bank to limit dividends in the future. The FRB has similar authority with respect to bank holding companies. In addition, the FRB and the Comptroller have issued policy statements, which provide that insured banks and bank holding companies should generally only pay dividends out of current operating earnings. Regulatory pressures to reclassify and charge-off loans and to establish additional loan loss reserves can have the effect of reducing current operating earnings and thus impact an institution's ability to pay dividends. The regulatory authorities have established guidelines with respect to the maintenance of appropriate levels of capital by a bank or bank holding company under their jurisdiction.
See "Capital" on page 10, "Note 13 - Capital Requirements" on pages 27-28, and "Cash Dividend Restrictions" on page 37 of United's 2000 Financial Review section of the Annual Report.
Capital Requirements
The FRB measures capital adequacy for bank holding companies on the basis of a risk-based capital framework and a leverage ratio. The minimum ratio of total risk-based capital to risk-weighted assets is 8%. At least half of the total capital must be common stockholders' equity (not inclusive of net unrealized gains and losses on available for sale securities) and perpetual preferred stock, less goodwill and other non-qualifying intangible assets ("Tier 1 capital"). The remainder (i.e., the "Tier 2 risk-based capital") may consist of hybrid capital instruments, perpetual debt, term-subordinated debt, other preferred stock and a limited amount of the allowance for loan losses. At December 31, 2000, the Company had Tier 1 capital as a percentage of risk-weighted assets of 10.87% and total risk-based capital as a percentage of risk-weighted assets of 11.69%.
In addition, the FRB has established minimum leverage ratio guidelines for bank holding companies. These guidelines currently provide for a minimum ratio of Tier 1 capital as a percentage of total assets (the "Leverage Ratio") of 3% for bank holding companies that meet certain criteria, including that they maintain the highest regulatory rating. All other bank holding companies are required to maintain a Leverage Ratio of at least 100 to 200 basis points above the minimum. At December 31, 2000, the Company had a Leverage Ratio of 7.81%.
The Bank is subject to the FDIC's Statement of Policy on Risk-Based Capital, the requirements of which are substantially identical to the FRB's risk-based capital framework. At December 31, 2000, the Bank had Tier 1 capital as a percentage of risk-weighted assets of 10.64% and a total risk-based capital ratio of 11.47%.
In addition to the Statement of Policy on Risk-Based Capital, the FDIC requires banks to operate with a minimum Leverage Ratio of 3%. Under these guidelines, institutions operating at the 3% minimum are expected to have well diversified risk profiles, including no undue interest rate risk, excellent asset quality, high liquidity and good earnings. Institutions not meeting these characteristics, as well as institutions experiencing growth, would be expected to maintain capital levels at least 100 to 200 basis points above the minimum. The FDIC is authorized to set higher capital requirements for an individual bank when the bank's particular circumstances so warrant. At December 31, 2000, the Bank had a Leverage Ratio of 7.64%.
The FRB and the FDIC have regulations which identify concentration of credit risk and certain risks arising from nontraditional activities, as well as an institution's ability to manage these risks, as important factors in assessing an institution's overall capital adequacy. The FRB capital adequacy guidelines limit the amount of certain deferred tax assets that may be included in a bank holding company's Tier 1 capital for risk-based and leverage capital purposes.
Financial Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA")
Under FIRREA, a bank insured by the FDIC can be held liable for any loss incurred by, or reasonably expected to be incurred by, the FDIC in connection with (i) the default of a commonly controlled FDIC-insured depository institution or (ii) any assistance provided by the FDIC to a commonly controlled insured depository institution in danger of default. The term "default" is defined to mean the appointment of a conservator or receiver for such institution and "in danger of default" is defined generally as the existence of certain conditions indicating that a "default" is likely to occur in the absence of regulatory assistance. Thus, the Bank could incur liability to the FDIC pursuant to this statutory provision in the event of the default of any other insured depository institution owned or controlled by the Company.
At the present time, the Bank is the only FDIC-insured depository institution controlled by the Company. Such liability to the FDIC is subordinated in right of payment to deposit liabilities, secured obligations, any other general or senior liability and any obligation subordinated to depositors or other general creditors, other than obligations owed to any affiliate of the depository institution (with certain exceptions) and any obligations to shareholders in such capacity. The imposition of such liability in sufficient amounts, however, could lead to the appointment of the FDIC as conservator or receiver for the Bank.
FIRREA also broadened the enforcement powers of the Federal banking agencies, including the power to impose fines and penalties, over all financial institutions. FIRREA also prohibits an insured depository institution from entering into a written or oral contract with any person for goods, products or services that would jeopardize the safety or soundness of the institution. Further, under FIRREA the failure to meet capital guidelines could subject a financial institution to a variety of regulatory actions, including the termination of deposit insurance by the FDIC.
In addition, if any insured depository institution becomes insolvent and the FDIC is appointed its conservator or receiver, within a reasonable period following such appointment the FDIC may disaffirm or repudiate any contract or lease to which such institution is a party, the performance of which it determines to be burdensome, and the disaffirmance or repudiation of which it determines to promote the orderly administration of the institution's affairs.
Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA")
FDICIA was enacted in December 1991 and was primarily designed to provide additional financing for the FDIC by increasing its borrowing ability. The FDIC was given the authority to increase deposit insurance
premiums to repay any such borrowing. In addition, FDICIA identifies the following capital standard categories for financial institutions: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized. As a result of FDICIA, the various banking regulatory agencies have set certain capital and other measures for determining the categories into which financial institutions fall. FDICIA imposes progressively more restrictive constraints on operations, management and capital distributions depending on the category in which an institution is classified. Pursuant to FDICIA, undercapitalized institutions must submit recapitalization plans, and a company controlling a failing institution must guarantee such institution's compliance with its plan. FDICIA also required the various regulatory agencies to prescribe certain non-capital standards for safety and soundness relating generally to operations and management, asset quality and executive compensation, and permits regulatory action against a financial institution that does not meet such standards.
Recent Legislation
On November 12, 1999, the President signed the Gramm-Leach-Bliley Financial Modernization Act of 1999 into law. The Modernization Act:
o allows bank holding companies meeting management, capital and Community Reinvestment Act standards to engage in a substantially broader range of nonbanking activities than previously permissible, including insurance underwriting and making merchant banking investments in commercial and financial companies; if a bank holding company elects to become a financial holding company, it files a certification, effective in 30 days, and thereafter may engage in certain financial activities without further approvals;
o allows insurers and other financial services companies to acquire banks;
o removes various restrictions that previously applied to bank holding company ownership of securities firms and mutual fund advisory companies; and
o established the overall regulatory structure applicable to bank holding companies that also engage in insurance and securities operations.
This part of the Modernization Act became effective on March 13, 2000.
The OCC has adopted rules to allow national banks to form subsidiaries to engage in financial activities allowed for financial holding companies. Electing national banks must meet the same management and capital standards as financial holding companies but may not engage in insurance underwriting, real estate development or merchant banking. Sections 23A and 23B of the Federal Reserve Act apply to financial subsidiaries and the capital invested by a bank in its financial subsidiaries will be eliminated from the bank's capital in measuring all capital ratios.
The Modernization Act also modified other current financial laws, including laws related to financial privacy and community reinvestment.
In late 2000, the American Home Ownership and Economic Act of 2000 instituted a number of regulatory relief provisions for national banks, such as permitting national banks to have classified directors and to merge their business subsidiaries into the bank.
Securities and Exchange Commission
The Company's Common Stock is registered with the Securities and Exchange Commission ("SEC") under the Securities Exchange Act of 1934 (the "1934 Act"). As a result of such registration, the Company and its officers, directors and major shareholders are obligated to file certain reports with the SEC. Furthermore, the Company is subject to proxy and tender offer rules promulgated pursuant to the 1934 Act.
Monetary Policy and Economic Conditions
The earnings and business of the Company and the Bank are affected by the policies of regulatory authorities, including the FRB. The monetary policies of the FRB have had a significant effect on the operating results of commercial banks in the past and are expected to continue to do so in the future. Because of the changing conditions in the national and international economy and in the money markets, as a result of actions by monetary and fiscal authorities, interest rates, credit availability and deposit levels may change due to circumstances beyond the control of the Company and the Bank.
Future Regulatory Changes
From time to time, various proposals are made in the United States Congress and the New Jersey Legislature and before various bank regulatory authorities that would alter the powers of, and restrictions on, different types of banking companies and other financial institutions. It is impossible to predict whether any of the proposals will be adopted and the impact, if any, of such adoption on the business of the Bank or the Company.
Effects of Inflation
A bank's asset and liability structure differs from that of an industrial company, since its assets and liabilities fluctuate over time based upon monetary policies and changes in interest rates. The growth in the bank's earning assets, regardless of the effects of inflation, will increase net interest income if the bank is able to maintain a consistent interest spread between earning assets and supporting liabilities.
A purchasing power gain or loss from holding net monetary assets during the year represents the effect of general inflation on monetary assets and liabilities. Almost all of the assets and liabilities of the Company are considered monetary because they are fixed in terms of dollars and therefore, are not materially affected by inflation.
Concentration of Customers and Seasonality of Business
No single person, group of persons, enterprise or other entity produces a material portion of the Bank's deposits or loans. No customer accounts for as much as two percent of the Bank's overall business. There is no material impact on the Bank's volume, deposits or loans, as a result of seasonal changes. The majority of the Bank's customers operate or reside within New Jersey. The ability of its customers to meet contractual obligations is, to a certain extent, dependent upon the economic conditions existing in the state.
Competition
Banking in New Jersey has become increasingly competitive. The Bank competes for loans and deposits with commercial banks, non-bank banks, savings and loan associations, savings banks, finance companies, credit unions and other large interstate and foreign banks now allowed to bank in New Jersey. Money market funds increasingly compete for the deposit dollar. Larger financial institutions with larger lending limits and a greater array of sophisticated services provide an additional competitive feature.
Employees
On December 31, 2000, there were 547 full-time equivalent persons employed by the Company and the Bank.
(e)(1) Statistical Information - Consolidated
The following are the statistical disclosures, on a consolidated basis, for a bank holding company required pursuant to Industry Guide 3. The tables should be read in conjunction with the consolidated financial statements contained in United's 2000 Annual Report, incorporated herein by reference as Exhibit 13.
DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY; INTEREST RATES AND INTEREST DIFFERENTIAL
The following table reflects the components of net interest income, setting forth, for the three years presented, (1) average assets, liabilities and stockholders' equity, (2) interest earned on earning assets and interest paid on interest-bearing liabilities, (3) average rates earned on earning assets and average rates paid on interest-bearing liabilities, (4) net interest spread (i.e., the difference between the average rate earned on earning assets and the average rate paid on interest-bearing liabilities and (5) the net interest margin (i.e., net interest income divided by average earning assets). Dollar amounts are presented on a tax-equivalent basis assuming a tax rate of 35%, 35% and 34%, in 2000, 1999 and 1998, respectively. Average balances have been derived from daily balances.
(1) Securities are stated at amortized cost. (2) Average loan balances and yields include non-accruing loans. Loan fees are included in the interest amounts and are not material.
ANALYSIS OF CHANGES IN NET INTEREST INCOME (TAX-EQUIVALENT BASIS)
The following table sets forth for the periods indicated a summary of the changes in interest earned and interest paid resulting from changes in volume and changes in rates:
The change in interest due to both volume and rate has been allocated proportionally to both, based on their relative absolute values.
INVESTMENT PORTFOLIO
The following table sets forth the amortized cost of securities held to maturity at year-end 2000, 1999 and 1998.
(1) Include mortgage loans held for sale amounting to $23,807,000 and $128,000 as of December 31, 1999 and 1998, respectively.
Maturities and Sensitivities of Loans to Changes in Interest Rates - ------------------------------------------------------------------ The following table shows the maturity of loans (excluding residential mortgages of one-to-four family residences, installment loans and lease financing) outstanding as of December 31, 2000, and segregates loans with fixed interest rates from those with floating or variable interest rates.
(1) Generally represents those loans on which Management has determined that borrowers may be unable to meet contractual principal and/or interest obligations or where interest or principal is past due for a period of 90 days or more (except when such loans are both well-secured and in the process of collection). When loans are placed on non-accrual status, all accrued but unpaid interest is reversed.
(2) Represents loans on which payments of interest and/or principal are contractually past due 90 days or more, but are currently accruing interest at the previously negotiated rates, based on a determination that such loans are both well-secured and in the process of collection.
(3) Consists of real estate acquired through foreclosure.
(4) Consists of assets, other than real estate, acquired through repossession, forfeiture or abandonment.
Potential Problem Loans
At December 31, 2000, the Company had no material loans where payments were presently current or less than 90 days past due, yet the borrowers were known to the Company to be experiencing severe financial difficulties. Management continues to review and evaluate all loans on an ongoing basis so that potential problems can be addressed immediately.
SUMMARY OF LOAN LOSS EXPERIENCE
The following table provides an analysis of the allowance for possible loan losses for each of the five years ending December 31:
Allocation of the Allowance for Possible Loan Losses
The accompanying table sets forth the allocation of the allowance for possible loan losses (the "Allowance") by category of loans and the percentage of loans in each category to total loans at December 31 for each of the past five years.
The Company utilizes a comprehensive approach when calculating the adequacy of its Allowance. A migration analysis tracks the loss experience of individual commercial and commercial real estate loans over a minimum eight quarter period. Loss factors are developed as a result of this migration analysis and applied to the current commercial and commercial real estate portfolios. The loss factors may be adjusted by certain qualitative factors to reflect the impact of current conditions. Qualitative factors taken into consideration are delinquency trends, portfolio characteristics and volume changes, lending policies, depth of management, economic trends, credit concentrations and legal and regulatory requirements. Historical loss experience is utilized for the Company's residential mortgage and consumer installment loan portfolios. Management's Allowance adequacy analysis is presented to the Company's Executive Committee of the Board for review and approval.
All commercial and commercial real estate loans, $100,000 and greater, containing elements of credit concern are tested individually for impairment utilizing one of three methods. Such loans are considered impaired when the discounted cash flow, fair value of collateral or the observable market price of such loans is lower than the carrying value of that loan. The Company will establish a specific reserve for such loans when certain important, reasonably specific factors may strengthen the loan or lease. Otherwise the company will take an immediate charge to the Allowance for the amount of the impairment. Smaller commercial and commercial real estate loans as well as residential mortgage loans and consumer installment loans are evaluated as a group.
A thorough loan review process has been established for the Company. Various credit quality committees are used to monitor and manage credit risk involving relationship managers, department heads and the Company's executive management. On a monthly basis, management reviews all portfolios for performance and reports to the Company's Executive Committee of the Board on the status of these portfolios. Additionally, the Company engages the services of an outside loan review consulting firm to review the Company's loan portfolios. They review different segments of the loan portfolios each month and prepare a quarterly report that is reviewed with the Company's Audit Committee of the Board.
Management believes that the Allowance is adequate based on the Company's historical loss levels as well as the inherent risk of loss that exists as of the review date.
DEPOSITS
The following table reflects the average balances and average rates paid on deposits for each of the past three years.
The following table sets forth a summary of the maturities of time certificates of deposit $100,000 and over at December 31, 2000.
RETURN ON EQUITY AND ASSETS
United's 2000 Annual Report, Financial Review section, contains on page 14, "Selected Consolidated Financial Data," the information required by this Item and that information is incorporated herein by reference.
SHORT-TERM BORROWINGS
The following table sets forth certain information regarding the Company's short-term borrowed funds at or for the years ended December 31:
(f) Executive Officers of the Registrant
The following persons are executive officers of the Company or the Bank who do not also serve as directors of the Company.
Item 2
Item 2 - Properties
The corporate headquarters of United is located in a three-story facility in Bridgewater, New Jersey. The building, which is leased, is approximately 65,000 square feet and houses the executive offices of the Company and the Bank, and a branch office of the Bank. The Bank occupies thirty three additional branch offices, of which eighteen are owned and fifteen are leased.
United's 2000 Annual Report Financial Review section contains information on page 26, Note 8; page 27, Note 11 and pages 32 through 33, Note 17 that is incorporated herein by reference.
Item 3
Item 3 - Legal Proceedings
United's 2000 Annual Report, Financial Review section, contains on pages 32 through 33, Note 17, the information required by Item 3 and that information is incorporated herein by reference.
Item 4
Item 4 - Submission of Matters to a Vote of Shareholders
There were no matters submitted to a vote of Shareholders during the fourth quarter of the fiscal year ended December 31, 2000.
PART II
Item 5
Item 5 - Market for Registrant's Common Stock and Related Shareholder Matters
The only voting securities of the Company consist of its common stock outstanding. The shares are listed on the NASDAQ Stock Market, formerly known as the National Association of Securities Dealers Automated Quotation National Market System, under the symbol UNBJ.
On December 31, 2000, there were 2,363 shareholders of the Company's common stock.
The following table sets forth by quarter the range of high and low closing sales price for United National Bancorp's capital stock and the cash dividends declared per common share during the past two years as reported on NASDAQ:
Item 6
Item 6 - Selected Financial Data
United's 2000 Annual Report, Financial Review section, contains on pages 14 and 19 through 21 (Note 1) information required by Item 6 and that information is incorporated herein by reference.
Item 7
Item 7 - Management's Discussion and Analysis of Consolidated Financial Condition and Results of Operations
United's 2000 Annual Report, Financial Review section, contains on pages 2 through 13 information required by Item 7 and that information is incorporated herein by reference.
Item 8
Item 8 - Financial Statements and Supplementary Data
United's 2000 Annual Report, Financial Review section, contains on pages 13 and 15 through 38 information required by Item 8 and that information is incorporated herein by reference.
Item 9
Item 9 - Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None
PART III
Item 10
Item 10 - Directors and Executive Officers of the Registrant
United's Proxy Statement for its 2001 Meeting will contain, under the caption "Election of Directors", the information required by Item 10 with respect to directors of United and certain information with respect to executive officers and that information is incorporated herein by reference. Certain additional information regarding executive officers of United, who are not also directors, appears in Part I, Item 1(f).
Item 11
Item 11 - Executive Compensation
United's Proxy Statement for its 2001 Meeting will contain, under the captions "Executive Compensation", and "Compensation Committee Interlocks and Insider Participation", the information required by Item 11 and that information is incorporated herein by reference.
Item 12
Item 12 - Security Ownership of Certain Beneficial Owners and Management
United's Proxy Statement for its 2001 Annual Meeting will contain, under the caption "Stock Ownership of Management and Principal Shareholder", the information required by Item 12 and that information is incorporated herein by reference.
Item 13
Item 13 - Certain Relationships and Related Transactions
United's Proxy Statement for its 2001 Annual Meeting will contain, under the caption "Compensation Committee Interlocks and Insider Participation", the information required by Item 13 and that information is incorporated herein by reference.
PART IV
Item 14
Item 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a)(1) Financial Statements
The consolidated financial statements and report of independent public accountants listed below of United National Bancorp, included in United's 2000 Annual Report, are incorporated herein by reference.
*Refers to respective page numbers of United National Bancorp's 2000 Annual Report to Shareholders, Financial Review section, included as Exhibit 13. Such pages are incorporated herein by reference.
(a)(2) Financial Statement Schedules
Financial statement schedules are omitted as the required information, if applicable, is presented in the above financial statements or notes thereto.
(a)(3) Other Exhibits
(b) Reports on Form 8-K
No Form 8-K's were filed during the fourth quarter of 2000.
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
UNITED NATIONAL BANCORP
By: /s/ Thomas C. Gregor ____________________________ Thomas C. Gregor Chairman of the Board, President and Chief Executive Officer
Dated: March 28, 2001
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.