UST Corp.
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BUILDING A STRONGER AND
MORE ATTRACTIVE FRANCHISE
__________________________
A FURTHER ASSEMBLY OF THE METROPOLITAN FRANCHISE
THROUGH THE ACQUISITION OF WALDEN
BANCORP, WITH $1 BILLION IN ASSETS, 17 DESIRABLE
BRANCH LOCATIONS AND AN ATTRACTIVE BALANCE
SHEET MIX AND RISK PROFILE
August 30, 1996
UST Corp.
Walden Bancorp - Company Profit
- - A $1 billion bank holding company which operates 17 banking offices
through two subsidiary banks with offices in three Eastern Massachusetts
Counties: Middlesex (8), Norfolk (7) and Plymouth (2)
- - Financial Highlights:
Total Assets $1,051.7 MM Equity Capital $97.30 MM
Total Loans $636.3 MM Total Shares 5,109.9 MM
Total Deposits $768.2 MM Fully Diluted Shares 5,210.0 MM
- - Loan and Deposit Data:
Residential Mortgage $361.9 57% Demand and NOW $156.8 20%
Commercial Mortgage $172.8 27% Regular Savings $191.8 25%
Commercial Loans $69.7 11% Money Market $96.3 13%
Other Loans $31.9 5% Time Deposits $323.3 42%
- - Formed in 1995 through the combination of The Co-operative Bank of
Concord and Braintree Savings Bank
- - Above average ratios:
Equity/assets 9.25% Return on Assets 1.14%
Tangible equity/assets 7.96% Return of Equity 12.45%
Net Interest Margin 4.09% Efficiency Ratio 56.36%
UST Corp.
A More Attractive USTB Franchise
- - Continued in-market Metropolitan expansion
- - Fills-in Route 2 Corridor; extends South Shore/Route 3 Presence
- - Strong market demographics (Middlesex, Norfolk and Plymouth
Counties)
- - Improved leverage and efficiency (WLDN efficiency ratio 56%
versus USTB @68%)
- - Attractive Balance Sheet mix and risk profile
- - Accretive to earnings after attaining save level of 21%
- - Opportunity to exceed 35% saves on a prospective basis
- - Adds to equity capital; accretive to book value
- - Improved float; market cap increases to $450 million
- - 3 Directorships to be filled with Nominees from WLDN
UST Corp.
Transaction Summary
Terms: Fixed exchange ratio: 1.9 shares USTB per share of
WLDN
No collars
19.9% Stock Option in place
Walkaway provision - 15% absolute decline and 15%
relative decline to bank index
Accounting/Tax: Pooling of interests; Tax-free exchange
Due Diligence: Completed
Approvals: Shareholders of each corporation
Federal Reserve
Commissioner of Banks
Targeted Closing: First Quarter, 1997
Board Composition: 20 USTB, 3 WLDN
New Branches (17): Arlington, Braintree, Concord, Groton, Hanover,
Lexington, Littleton, Maynard, Quincy, North Quincy,
Norwell & Randolph
UST Corp.
Transaction Pricing
Purchase Price per Share: $30.88 (USTB @ $16.25 X 1.9 shares)
Price to Market: 1.50 X
Price to Book: 1.69 X
Price to Tangible Book: 1.96 X
Price to Analyst 1996 EPS: 14.0 X
Price to Analyst 1997 EPS: 13.1 X
WLDN Fully Diluted Shares: 5.2 MM
Fixed Exchange Ratio: 1.9
New Shares Issued: 9.88 MM
Indicated Deal Value: $161 MM
UST Corp.
Stronger Metropolitan Franchise
Branch Pro
(In thousands) (1) USTB (2) Purchase (3) WLDN Forma
-------- ------------ ---- -----
Total Assets 1,925,796 860,000 1,051,743 3,837,539
Total Loans 1,278,507 501,000 636,261 2,415,768
Total Deposits 1,416,268 860,000 768,229 3,044,497
Total Capital 181,545 0 97,255 278,800
Total Branches 28 20 17 65
Branch Locations: Middlesex - 8 Middlesex - 10 Middlesex - 8 Middlesex - 26
Norfolk - 8 Norfolk - 5 Norfolk - 7 Norfolk - 20
Suffolk - 8 Suffolk - 5 Suffolk - 0 Suffolk - 13
Essex - 4 Essex - 0 Essex - 0 Essex - 4
Plymouth - 0 Plymouth - 0 Plymouth - 2 Plymouth - 2
(1) Financial data as of June 30, 1996
(2) USTB balance reflect pro forma sale of UST Bank/Connecticut
announced on August 16, 1996
(3) Purchase of 20 BayBank and Bank of Boston Branches announced
on June 18, 1996
UST Corp
Balanced Loan and Deposit Mix
Branch Pro
(In thousands) (1) USTB (2) Purchase (3) WLDN Forma Percent
------------------ -------- --------- ---- ----- -------
LOAN DATA:
Commercial and Industrial 627,370 127,500 69,695 824,565 45%
Industrial real estat 202,467 172,778 375,245 16%
Residential mortgage 71,405 382,500 361,876 815,781 34%
Home equity 76,386 23,661 100,047 4%
Indirect auto 228,701 0 228,701 9%
Other 8,251 71,429 3%
63,178
--------- ------- ------ --------- ----
Total loans 1,269,507 510,000 636,261 2,415,768 100%
DEPOSIT DATA:
Demand and NOW 466,490 378,400 156,800 1,001,690 33%
Regular savings 231,655 189,200 191,782 612,637 20%
Money Market 193,902 154,800 96,317 445,019 15%
Time 524,221 137,600 323,330 985,151 32%
--------- ------- ------- --------- ---
Total deposits 1,416,268 860,000 768,229 3,044,497 100%
(1) Financial data as of June 30, 1996
(2) USTB balances reflect pro forma sale of UST Bank/Connecticut
announced on August 16, 1996
(3) Purchase of 20 BayBanks and Bank of Boston Branches announced
on June 18, 1996
UST Corp.
Accretive Expectations
1997 FULLY
ANALYST DILUTED PRO FORMA WITH SAVES AT
ESTIMATES SHARES 25% 30% 35%
--------- -------- -------- ------- -------
USTB $1.60 18,160 29,056 29,056 29,056
WLDN $2.35 5,210 12,244 12,244 12,244
------ ------ ------
PRO FORMA, BEFORE SAVES 41,300 41,300 41,300
WLDN NONINTEREST EXPENSE
at $26 MM TIMES SAVE RATE 6,500 7,800 9,100
RELATED TAXES @ 40% -2,600 -3,120 -3,640
------- ------- -------
ESTIMATED PRO FORMA WITH SAVES 45,200 45,980 46,760
====== ====== ======
PRO FORMA SHARES (F/D) 28,100 28,100 28,100
EARNINGS PER SHARES:
USTB, BEFORE TRANSACTION $1.60 $1.60 $1.60
PRO FORMA, BEFORE SAVES $1.47 $1.47 $1.47
PRO FORMA, WITH SAVES $1.61 $1.64 $1.66
UST Corp.
One-Time Charges and Future Saves
(In thousands)
One-Time Restructuring Future Saves
Employment Agreements $6,000 Personnel $5,300
Facilities and equipment 2,700 Marketing, supplies,
professional, insurance,
miscellaneous 2,000
Redundant staff functions Occupancy & equipment 1,000
severance benefits 1,300
$8,300
Signage, supplies, etc. 1,000
Other 2,500
Total $13,500
UST Corp.
Supplemental Specifics
- - Definitive Agreement approved by both Boards of Directors
- - Acquiring entity will be UST Corp. under the Bank Holding
Company Act
- - Authorized capital is sufficient to accomplish transaction;
would seek additional authorization
- - Subsidiary Banks (Concord and Braintree) will be operated separately
pending completion of the BKB/BBNK branch purchase, and will be
subsequently merged with and into USTrust
- - No anticipated branch closings; additive to existing franchise
- - One-time charges for change-in control buy-out of senior
management
- - Arthur Andersen, LLP serves as common Auditor to both companies
- - Fox-Pitt, Kelton Inc. serves as USTB investment advisors
- - PaineWebber serves as WLDN investment advisors
UST Corp.