HU Hudson United Bancorp

Executive Overview - Hudson United Bancorp ("the Company") (NYSE:HU) today reported significant progress towards the repositioning of its balance sheet in preparation for the merger of the Company and TD Banknorth Inc., which is anticipated to close during the first quarter of 2006. Core loans increased $144.0 million during the third quarter and core deposits excluding time deposits increased $656.7 million representing annualized growth rates of 11.6% and 57.1% respectively. The investment securities portfolio decreased by $368.8 million with the proceeds applied to decreases of $206.2 million in time deposits excluding brokered certificates of deposits, a decrease of $216.9 in total brokered deposits and a $284.9 million decrease in borrowings. The Company today reported net income of $14.8 million, or $0.33 per diluted share, for the quarter ended September 30, 2005 compared to the $0.72 per diluted share reported for the comparable quarter in 2004. Net income for the third quarter of 2005 includes merger related expenses of $3.1 million, foreclosed property expense of $8.6 million, a provision of $2.4 million related to Landfill Gas investments held for sale, $1.0 million of additional marketing expense and a $1.1 million reduction in Section 29 U.S. Federal income tax credits. The Company's return on average equity was 11.03% and return on average assets was 0.64% for the third quarter of 2005. The net interest margin was 3.46% The Company's return on average equity was 26.07% and return on average assets was 1.46% for the third quarter of 2004. The net interest margin was 3.93%. The Company's diluted EPS for the first nine months of 2005 was $1.77 per diluted share. The Company's return on average equity was 19.90% and return on average assets was 1.17% for the first nine months of 2005. The net interest margin was 3.69%. For the first nine months of 2004 the Company reported diluted EPS of $2.12 per share. The Company's return on average equity was 26.38% and return on average assets was 1.50%. The net interest margin was 4.09%. "We are pleased to report strong growth in our loans, retail deposits and non-interest income from continuing lines of business" said Kenneth T. Neilson, Chairman, President and CEO. "An additional $1.0 million in marketing expense during the third quarter allowed us to achieve a 29.9% annualized branch deposit increase of local deposits which were utilized to fund core loan growth of $144.0 million and repay brokered deposits of $216.9 million. Our core loan growth was 11.6% annualized. Our average branch size grew by $2.2 million during the quarter and we expect continued strong growth in the fourth quarter as we continue our marketing expenditures and position ourselves for the upcoming merger with TD Banknorth." Results of Operations for Quarter End and Year to Date September 30, 2005 Net interest income for the third quarter of 2005 was $72.4 million and the net interest margin was 3.46%. Net interest income for the third quarter of 2004 was $80.0 million and the net interest margin was 3.93%. Net interest income decreased by $7.6 million in the third quarter of 2005 compared to the third quarter of 2004. Net interest margin was increased by higher yields on loans and reduced by lower yields on investment securities and increased yields on borrowings and public sector deposits. The net interest margin was also affected by the Company maintaining higher liquidity (fed funds) to repay borrowings as they mature. Net interest income for the first nine months of 2005 was $226.4 million and the net interest margin was 3.69%. Net interest income for the first nine months of 2004 was $ 236.0 million and the net interest margin was 4.09%. Net interest income decreased by $9.6 million in the first nine months of 2005 compared to the first nine months of 2004. The decrease in net interest income in the first nine months of 2005 compared to the first nine months of 2004 was due primarily to higher interest expense on deposits and borrowings. This was offset in part by higher yields on new loans being originated in a higher interest rate environment. Interest income on securities increased in the first nine months of 2005 compared to the comparable period in 2004 due to an increase in the average volume being partially offset by a decline in average yield. The commercial loan portfolio quality remains good while increased consumer loan net charge offs in 2005 resulted in the provision for loan and lease losses of $11.2 million for the third quarter of 2005 compared to $4.5 million for the third quarter of 2004. The increase in the provision is a result of increases in loan growth, non-performing consumer loans charged off during the quarter and increased credit card delinquencies. Net charge offs for the third quarter of 2005 were $11.3 million compared to $4.3 million for the third quarter of 2004. The provision for loan and lease losses was $21.4 million for the first nine months of 2005 and $14.9 million for the first nine months of 2004. The increase in the provision is a result of increases in loan growth, non-performing consumer loans charged off during the quarter and increased credit card delinquencies. Net charge offs for the first nine months ended 2005 were $22.9 million compared to $15.7 million for the first nine months ended 2004. Noninterest income was $34.6 million in the third quarter of 2005 and $44.4 million in the third quarter of 2004. Noninterest income for the third quarter of 2004 included $12.1 million of securities gains. Credit card fee income increased by $1.7 million and loan fees decreased by $1.7 million in the third quarter of 2005 as compared to the comparable period in 2004. During the fourth quarter of 2004 the Company sold its merchant processing business. Loan fees for the third quarter 2004 include $2.0 million of merchant processing fees from the sold portfolio which were zero in 2005. Noninterest income was $101.3 million in the first nine months of 2005 and $119.0 million in the first nine months of 2004. Noninterest income for the first nine months of 2005 decreased by $17.7 million compared to the first nine months of 2004. The decrease in noninterest income in 2005 compared to 2004 was due to a $14.2 million decrease in security gains and a $4.7 million decrease in loan fees. During the fourth quarter of 2004 the Company sold its merchant processing business. Loan fees for the first nine months ended 2004 include $5.0 million of merchant processing fees from the sold portfolio which were zero in 2005. Credit card fee income increased by $5.3 million in the first nine months of 2005 compared to the comparable period in 2004. A decrease was also experienced in income from Landfill Investments related to bankruptcy claims in the amount of $4.7 million in the second quarter of 2004. Noninterest expense was $78.4 million for the third quarter of 2005 compared to $ 75.9 million for the third quarter of 2004. The increase in non interest expense is primarily due to higher foreclosed property expense related to a property that was foreclosed in December 2004 totaling $8.3 million. Increases in non interest expense was also experienced in marketing expense as a result of marketing programs aimed at increasing deposit growth and in merger related expenses. These increases were partially offset by a decrease in salaries and benefits and outside services for data processing. Salaries and benefits for the three months ended September 30, 2004 includes a $7.9 million charge related to severance, retirement and early vesting of certain benefits. The decrease in outside services is due to lower expenses associated with the modification of the Company's data processing and item processing contracts during the third quarter of 2004. Noninterest expense in 2005 includes a provision of $2.4 million to reduce the carrying value of the landfill gas investments to their net realizable value less cost to sell. Noninterest expense was $219.8 million for the first nine months of 2005 compared to $212.2 million for the first nine months of 2004. The increase in noninterest expense in the first nine months of 2005 compared to the first nine months of 2004 was primarily due to increases in expense from Landfill Investments, foreclosed property expense and merger related expense. Expense from Landfill Investments includes a provision of $8.9 million to reduce the carrying value of the landfill gas investments to their net realizable value less cost to sell. Higher foreclosed property expense is related to a write down of a property that was foreclosed in December of 2004. Foreclosed property expense includes $10.4 million of expense relating to this property. Merger-related expenses are related to the merger with TD Banknorth which is expected to occur in the first quarter of 2006. These increases were partially offset by decreases in salaries and benefits, equipment expense and outside services for data processing. Salary and benefits expense is lower due to a $7.9 million charge related to severance, retirement and early vesting of certain benefits that occurred during the third quarter of 2004. A decrease in outside services was experienced during the first nine months of 2005 resulting from lower expenses associated with the modification of the Company's data processing and item processing contracts in 2004. The Company's net income for the third quarter of 2005 was $14.8 million, a decrease of $17.8 million compared to the third quarter of 2004. The Company's provision for income taxes was $2.7 million for the third quarter of 2005 compared to $11.5 million for the third quarter of 2004. The change in the tax provision for the third quarter of 2005 compared to the comparable period in 2004 is a result of lower levels of pre-tax income and a $1.1 million decrease in Section 29 U.S. Federal income tax credits in 2005. The Company's net income for the first nine months of 2005 was $79.2 million, a decrease of $16.0 million compared to the first nine months of 2004. The Company's provision for income taxes was $7.2 million for the first nine months ended September 30, 2005. The Company's provision for income taxes for the first nine months of 2004 was $32.7 million. The lower tax rate in 2005 is due to lower pre-tax income, the IRS settlement that occurred during the second quarter of 2005 and a $1.1 million reduction in Section 29 U.S. Federal income tax credits recognized in the third quarter of 2005. Nonperforming Loans and Leases, and Asset Quality Nonperforming loans and leases totaled $15.8 million at September 30, 2005. This was an increase of $3.5 million compared to $12.3 million of nonperforming loans and leases as of December 31, 2004 and $12.5 million at September 30, 2004. Nonperforming loans and leases were 0.30% of total loans and leases at September 30, 2005, compared to 0.25% at December 31, 2004 and 0.26% at September, 2004. Nonperforming assets were $24.9 million at September 30, 2005, down from $27.9 million at December 31, 2004 and up from $14.6 million at September 30, 2004. Nonperforming assets as a percent of loans, leases and foreclosed property were 0.48% at September 30, 2005, 0.58% at December 31, 2004 and 0.30% at September 30, 2004. One foreclosed property accounts for $8.0 million of the September 30, 2005 total. During the third quarter of 2005, the Company completed an evaluation of its consumer and credit card loan portfolios. Credit card loans include customers affected by hurricanes Katrina and Rita and one private label credit card portfolio with an elevated level of delinquencies. Credit card and consumer loans include an increased volume of bankruptcy filings related to the October 2005 changes in the U.S. Bankruptcy laws. Certain consumer loans classified as nonperforming including loans with reduced or rescheduled payment programs and consumer loans in the bankruptcy process were charged-off in the third quarter of 2005. Consumer and credit card charge-offs were $11.5 million and recoveries were $1.0 million for the third quarter of 2005. Consumer and credit card charge-offs were $23.9 million and recoveries were $3.5 million for the nine month period ended September 30, 2005. The allowance for loan and lease losses totaled $59.3 million at September 30, 2005, $60.8 million at December 31, 2004 and $66.3 million at September 30, 2004. It represented 375% of nonperforming loans and leases at September 30, 2005, compared to 496% at December 31, 2004, and 530% at September 30, 2004. The Allowance as a percentage of total loans and leases was 1.14% at September 30, 2005, 1.26% December 31, 2004 and 1.37 % at September 30, 2004. Other Balance Sheet Data Loan and lease categories consisting of commercial and financial, commercial real estate, consumer, and credit card loans totaled $5.1 billion at September 30, 2005, compared to $4.7 billion at December 31, 2004, an increase of $399.4 million or 8.5%. These four loan and lease categories are the areas of loans that the Company emphasizes. This is because they generally have more attractive yields, interest rate sensitivity, and maturity characteristics than single family first mortgage loans. These four loan and lease categories represented approximately 98% of loans and leases at September 30, 2005, compared to 97% at December 31, 2004. The loan to deposit ratio was 77% at September 30, 2005 and 76% at December 31, 2004. Residential mortgage loans, which are not an area of emphasis for the Company, were $106.4 million as of September 30, 2005, compared to $126.8 million at December 31, 2004. Total investment securities were $3.0 billion at September 30, 2005, compared to $3.5 billion at December 31, 2004. Total assets were $9.1 billion at September 30, 2005 and December 31, 2004. Deposits other than time deposits were $5.3 billion at September 30, 2005 and $4.5 billion December 31, 2004 an increase of $772.8 million or 17.2%. Total deposits were $6.8 billion at September 30, 2005 and $6.3 billion at December 31, 2004. Repurchase agreements and other borrowings were $1.3 billion at September 30, 2005 and $1.7 billion at December 31, 2004, a decrease of $435.6 million or 25.3%. Total stockholders' equity was $520.5 million and book value per common share was $11.71 at September 30, 2005. All regulatory capital ratios exceed those necessary to be considered a well-capitalized institution. Share Repurchases and Cash Dividends During April 2005, the board of directors approved a treasury share repurchase plan of up to 4.5 million shares. The Company repurchased 810,500 shares at an average price of $33.69 per share in the second quarter of 2005. There were no repurchases during the third quarter of 2005. Total shares outstanding were 44.5 million shares at September 30, 2005 and $45.0 million December 31, 2004. The Company paid cash dividends of $0.37 per share in the third quarter of 2005. Total cash dividends paid in the third quarter of 2005 was $16.4 million. Dividends paid in 2005 year to date were $1.11 per share. Total cash dividends paid in 2005 year to date were $49.8 million. The Company is the multi-state bank holding company for the Bank, which has 204 offices in New Jersey, New York, Connecticut and Pennsylvania. This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are not historical facts and include expressions about management's confidence and strategies and management's expectations about new and existing programs and products, relationships, opportunities, technology and market conditions. These statements may be identified by such forward-looking terminology as "expect", "look", "believe", "anticipate", "consider", "may", "will", or similar statements or variations of such terms. Such forward- looking statements involve certain risks and uncertainties. Actual results may differ materially from the results discussed in these forward-looking statements. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, unexpected changes in interest rates, the failure to sell or material delay in selling the Company's Landfill Investments, deterioration in economic conditions, declines in deposit or a decline in loan volume trends, decline in levels of loan quality, change in the trends in loan loss provisions, the unexpected unavailability of tax credits, especially in the Company's Section 29 credits, the unanticipated effects of legal, tax and regulatory provisions applicable to the Company including the impact of the Company's agreement to merge with and into TD Banknorth. The Company assumes no obligation for updating any such forward-looking statements at any time. Important information on other material factors or supplemental factors that could cause the Company's financial results to differ from the forward-looking statements also is included in the Company's public reports filed with the SEC, including in our Form 10-K for the year ending December 31, 2004. -0- *T HUDSON UNITED BANCORP AND SUBSIDIARIES ---------------------------------------------------------------------- CONSOLIDATED BALANCE SHEETS September December 30, 31, 2005 2004 (in thousands) (Unaudited) --------------------------------------------------------------------- ASSETS Cash and due from banks $181,456 $161,878 Interest bearing due from banks 200,441 99,028 ----------- ----------- TOTAL CASH AND CASH EQUIVALENTS $ 381,897 $ 260,906 Investment securities available for sale, at fair value $1,874,868 $2,166,627 ($1,536,784 and $1,491,084 in fair value pledged at September 30, 2005 and December 31, 2004 respectively) Investment securities held to maturity,at cost ($1,090,421 and $1,364,900 fair value at September 30, 2005 and December 31, 2004 respectively) $1,110,401 $1,372,228 ($851,525 and $1,201,730 ,at cost pledged at September 30, 2005 and December 31, 2004 respectively) Trading Assets, fair value $ - $1,477 Loans and leases: ($419,711 and $345,664 pledged at September 30, 2005 and December 31, 2004, respectively) Commercial and financial $2,306,968 $2,190,339 Commercial real estate mortgages 1,291,540 1,113,604 Consumer 1,075,205 995,766 Credit card 426,100 400,700 ----------- ----------- Sub-total $5,099,813 $4,700,409 Residential mortgages 106,377 126,775 ----------- ----------- TOTAL LOANS AND LEASES $5,206,190 $4,827,184 Less: Allowance for loan and lease losses (59,334) (60,799) ----------- ----------- NET LOANS AND LEASES $5,146,856 $4,766,385 Premises and equipment, net 81,205 121,037 Core deposit and other intangibles, net of amortization 17,186 20,104 Goodwill 83,653 83,561 Investment in separate account bank owned life insurance 154,402 150,073 Landfill Investment assets held for sale 48,032 - Forclosed property 9,112 15,618 Other assets 158,061 121,026 ----------- ----------- TOTAL ASSETS $9,065,673 $9,079,042 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Deposits: Noninterest bearing $1,367,601 $1,355,624 NOW, money market, and savings 3,890,206 3,129,355 Time deposits 1,541,893 1,859,219 ----------- ----------- TOTAL DEPOSITS $6,799,700 $6,344,198 Repurchase agreements 1,078,806 842,893 Other borrowings 208,009 879,530 ----------- ----------- TOTAL BORROWINGS 1,286,815 1,722,423 Landfill Investment liabilities held for sale 22,368 - Other liabilities 211,248 255,587 Subordinated debt 225,000 225,184 ----------- ----------- TOTAL LIABILITIES 8,545,131 8,547,392 Common stock, no par value $92,788 $92,788 Additional paid-in capital 310,437 310,102 Retained earnings 333,445 304,000 Treasury stock, at cost (188,658) (170,183) Effect of stock compensation plans (5,646) (1,359) Accumulated other comprehensive loss (21,824) (3,698) ----------- ----------- TOTAL STOCKHOLDERS' EQUITY $ 520,542 $ 531,650 ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $9,065,673 $9,079,042 =========== =========== HUDSON UNITED BANCORP AND SUBSIDIARIES --------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF INCOME --------------------------------------------------------------------- Three Months Ended September 30, (Unaudited) ----------- ----------- (in thousands, except share data) 2005 2004 --------------------------------------------------------------------- INTEREST AND FEE INCOME: Loans and leases $ 82,671 $ 68,450 Investment securities 34,579 37,498 Other 1,169 384 ----------- ----------- TOTAL INTEREST AND FEE INCOME $ 118,419 $ 106,332 ----------- ----------- INTEREST EXPENSE: Deposits $ 28,840 $ 12,836 Borrowings 10,266 7,188 Subordinated and other debt 6,900 6,287 ---------- ----------- TOTAL INTEREST EXPENSE $ 46,006 $ 26,311 ----------- ----------- NET INTEREST INCOME $ 72,413 $ 80,021 PROVISION FOR LOAN AND LEASE LOSSES, PORTFOLIO LOANS 11,150 4,500 ----------- ----------- NET INTEREST INCOME AFTER PROVISION FOR LOAN AND LEASE LOSSES $ 61,263 $ 75,521 ----------- ----------- NONINTEREST INCOME: Retail service fees $ 8,655 $ 8,044 Credit card fee income 9,703 7,981 Loan Fees 2,249 3,965 ATM and debit card fees 1,766 1,757 Separate bank owned life insurance income 1,414 1,441 Trust income 764 740 Income from Landfill Investments 6,100 6,321 Securities gains 366 12,050 Other income 3,537 2,052 ----------- ----------- TOTAL NONINTEREST INCOME $ 34,554 $ 44,351 --------- ----------- NONINTEREST EXPENSE: Salaries and benefits $ 25,382 $ 33,498 Occupancy expense 8,096 7,459 Equipment expense 3,241 4,111 Deposit and other insurance 584 664 Outside services - data processing 6,081 10,507 Outside services - other 5,961 6,281 Amortization of intangibles 1,222 1,222 Marketing expense 2,696 1,580 Telephone expense 1,441 1,378 Expense from Landfill Investments 8,424 5,188 Foreclosed Property Expense 8,610 119 Merger related expenses 3,082 - Other 3,531 3,877 ----------- ----------- TOTAL NONINTEREST EXPENSE $ 78,351 $ 75,884 ----------- ----------- INCOME BEFORE INCOME TAXES $ 17,466 $ 43,988 (BENEFIT) / PROVISION FOR INCOME TAXES 2,704 11,450 ----------- ----------- NET INCOME $ 14,762 $ 32,538 =========== =========== Basic net income per share $ 0.33 $ 0.73 Diluted net income per share $ 0.33 $ 0.72 WEIGHTED AVERAGE SHARES OUTSTANDING: Basic 44,260 44,700 Diluted 44,438 44,952 HUDSON UNITED BANCORP AND SUBSIDIARIES --------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF INCOME Year to Date September 30, ---------- ----------- (in thousands, except share data) 2005 2004 --------------------------------------------------------------------- INTEREST AND FEE INCOME: Loans and leases $ 234,707 $ 202,109 Investment securities 107,309 101,500 Other 1,939 1,097 ----------- ----------- TOTAL INTEREST AND FEE INCOME $ 343,955 $ 304,706 ----------- ----------- INTEREST EXPENSE: Deposits $ 67,297 $ 35,780 Borrowings 29,683 14,327 Subordinated and other debt 20,615 18,590 ----------- ----------- TOTAL INTEREST EXPENSE $ 117,595 $ 68,697 ----------- ----------- NET INTEREST INCOME $ 226,360 $ 236,009 PROVISION FOR LOAN AND LEASE LOSSES, PORTFOLIO LOANS 21,400 14,850 ----------- ----------- NET INTEREST INCOME AFTER PROVISION FOR LOAN AND LEASE LOSSES $ 204,960 $ 221,159 ----------- ----------- NONINTEREST INCOME: Retail service fees $ 22,561 $ 23,834 Credit card fee income 27,453 22,109 Loan Fees 8,602 13,254 ATM and debit card fees 5,078 5,230 Separate bank owned life insurance income 4,329 4,488 Trust income 2,315 2,349 Income from Landfill Investments 17,432 21,936 Securities (losses) gains 2,135 16,377 Other income 11,403 9,429 ----------- ----------- TOTAL NONINTEREST INCOME $ 101,308 $ 119,006 ----------- ----------- NONINTEREST EXPENSE: Salaries and benefits $ 78,503 $ 84,533 Occupancy expense 24,350 23,095 Equipment expense 10,081 12,937 Deposit and other insurance 1,772 1,925 Outside services - data processing 18,581 26,074 Outside services - other 19,949 21,659 Amortization of intangibles 3,667 3,689 Marketing expense 6,685 5,073 Telephone expense 4,284 4,239 Expense from Landfill Investments 27,912 18,567 Foreclosed Property Expense 10,645 362 Merger Related Expense 3,082 - Other 10,321 10,090 ----------- ----------- TOTAL NONINTEREST EXPENSE $ 219,832 $ 212,243 ----------- ----------- INCOME BEFORE INCOME TAXES $ 86,436 $ 127,922 PROVISION FOR INCOME TAXES 7,211 32,743 ----------- ----------- NET INCOME $ 79,225 $ 95,179 =========== =========== Basic net income per share $ 1.78 $ 2.13 Diluted net income per share $ 1.77 $ 2.12 WEIGHTED AVERAGE SHARES OUTSTANDING: Basic 44,592 44,649 Diluted 44,741 44,888 Supplemental Information ---------------------------------------------------------------------- Hudson United Bancorp ($ in thousands) 1Q05 2Q05 3Q05 4Q05 Y-T-D ---------- ---------- ---------- ---------- ---------- End of Period --------------- Total NA Securities 3,400,861 3,354,070 2,985,269 0 Total Assets 8,850,443 9,188,085 9,065,673 0 NA Total Deposits 6,254,058 6,566,285 6,799,700 0 NA Total NA Stockholders' Equity 530,866 535,036 520,542 0 Shares NA Outstanding 45,030 44,376 44,468 0 Average Balance Sheet --------------- Commercial/ Consumer Loans 4,678,900 4,762,597 4,996,897 0 4,813,963 Residential Real Estate Mortgage 120,052 115,059 112,584 0 115,871 Total Loans and Leases 4,798,952 4,877,656 5,109,481 0 4,929,834 Other Earning Assets 3,592,655 3,377,864 3,367,104 0 3,445,048 Total Earning Assets 8,391,607 8,255,520 8,476,585 0 8,374,882 Total Assets 9,016,140 8,899,741 9,148,650 0 9,021,958 Noninterest Bearing Deposits 1,318,727 1,346,901 1,364,940 0 1,343,692 Interest Bearing Deposits 4,981,068 4,991,011 5,432,775 0 5,136,606 Common Equity 533,843 531,987 530,818 0 532,205 Loan Portfolio Composition --------------- Commercial and NA Financial 2,173,713 2,279,100 2,306,968 0 Commercial Real NA Estate Mortgage 1,130,665 1,203,633 1,291,540 0 Consumer 1,005,885 1,051,020 1,075,205 0 NA Credit Card 378,274 422,085 426,100 0 NA Sub-total 4,688,537 4,955,838 5,099,813 0 NA Residential NA Real Estate Mortgage 118,865 111,542 106,377 0 Total NA Loans and Leases 4,807,402 5,067,380 5,206,190 0 Allowance for NA Losses 59,750 59,506 59,334 0 Net Loans NA and Leases 4,747,652 5,007,874 5,146,856 0 End of Period --------------- Nonaccruing NA Loans 17,229 14,555 15,802 0 Forclosed NA Property 15,976 15,420 9,112 0 Total Non- NA performing Assets 33,205 29,975 24,914 0 90 Days Past NA Due & Accruing 13,252 13,760 15,714 0 Net Charge Offs 5,549 5,994 11,322 0 NA Intangible NA Assets 102,442 102,061 100,839 0 ($ in 1Q04 2Q04 3Q04 4Q04 Y-T-D thousands) ---------- ---------- ---------- ---------- ---------- End of Period --------------- Total NA Securities 2,667,362 3,506,055 3,301,000 3,540,332 Total Assets 7,972,645 8,958,718 8,825,227 9,079,062 NA Total Deposits 6,242,598 6,128,993 6,290,439 6,344,198 NA Total NA Stockholders' Equity 492,751 478,170 516,925 531,650 Total Shares NA Outstanding 44,826 44,948 44,954 44,983 Average Balance Sheet --------------- Commercial/ Consumer Loans 4,442,326 4,503,975 4,624,471 4,652,812 4,556,828 Residential Real Estate Mortgage 162,044 149,086 137,692 128,324 143,745 Total Loans and Leases 4,604,370 4,653,061 4,762,163 4,781,136 4,700,573 Other Earning Assets 2,851,895 3,199,375 3,489,497 3,622,725 3,292,322 Total Earning Assets 7,456,265 7,852,436 8,251,660 8,403,861 7,992,895 Total Assets 8,071,442 8,436,611 8,852,794 9,013,718 8,594,976 Noninterest Bearing Deposits 1,254,798 1,314,739 1,334,238 1,356,682 1,315,280 Interest Bearing Deposits 4,921,224 4,830,107 4,955,853 4,935,262 4,910,803 Common Equity 470,068 478,972 496,533 521,261 491,803 Loan Portfolio Composition --------------- Commercial and NA Financial 2,126,354 2,208,139 2,231,299 2,190,339 Commercial Real NA Estate Mortgage 989,182 1,041,677 1,089,828 1,113,604 Consumer 1,032,885 1,049,631 1,027,347 995,766 NA Credit Card 296,680 323,763 344,320 400,700 NA Sub-total 4,445,101 4,623,210 4,692,794 4,700,409 NA Residential NA Real Estate Mortgage 156,981 140,571 132,671 126,775 Total NA Loans and Leases 4,602,082 4,763,781 4,825,465 4,827,184 Allowance for NA Losses 67,839 66,048 66,289 60,799 Net Loans NA and Leases 4,534,243 4,697,733 4,759,176 4,766,385 End of Period --------------- Nonaccruing NA Loans 14,211 12,286 12,519 12,257 Restructured NA Loans 0 0 0 0 Other Real NA Estate 769 2,144 2,111 15,618 Total Non- NA performing Assets 14,980 14,430 14,630 27,875 90 Days Past NA Due & Accruing 13,988 13,516 15,934 14,617 Net Charge Offs 5,607 5,846 4,259 5,490 NA Intangible NA Assets 100,781 99,557 99,334 103,665 Supplemental Information ---------------------------------------------------------------------- Hudson United Bancorp ($ in thousands) 1Q05 2Q05 3Q05 4Q05 Y-T-D ---------- ---------- ---------- ---------- ---------- Condensed Income Statement --------------- Interest Income 110,866 114,670 118,419 0 343,955 Interest Expense 33,569 38,020 46,006 0 117,595 Net Interest Income 77,297 76,650 72,413 0 226,360 Provision for Possible Loan and Lease Losses 4,500 5,750 11,150 0 21,400 Income from Landfill Investments 5,378 5,954 6,100 0 17,432 Total Non interest Income 31,551 35,203 34,554 0 101,308 Amortization of Intangibles Expense 1,222 1,223 1,222 0 3,667 Expense from Landfill Investments 6,549 12,939 8,424 0 27,912 Total Non interest Expense 64,588 76,893 78,351 0 219,832 Pre-tax Income 39,760 29,210 17,466 0 86,436 Provision for Income Taxes 10,029 (5,522) 2,704 0 7,211 Net Income 29,731 34,732 14,762 0 79,225 Fully-taxable Equivalent Adjustment 1,546 1,567 1,607 0 4,720 Performance --------------- Return on Average Assets 1.34% 1.57% 0.64% 0.00% 1.17% Return on Average Equity 22.59% 26.19% 11.03% 0.00% 19.90% Basic Earnings Per Share $ 0.66 $ 0.78 $ 0.33 $ - $ 1.78 Diluted Earnings Per Share $ 0.66 $ 0.78 $ 0.33 $ - $ 1.77 Weighted Average Shares - Basic 44,966 44,557 44,260 - 44,592 Weighted Average Shares - Diluted 45,119 44,673 44,438 - 44,741 Net Interest Margin (2)(3) 3.81% 3.80% 3.46% 0.00% 3.69% Capital Information --------------- Tier 1 Leverage NA Ratio (1) 6.85% 6.86% 6.64% 0.00% Tier 1 Risk- NA Based Capital (1) 10.06% 9.44% 9.24% 0.00% Total Risk- NA Based Capital (1) 14.42% 13.60% 13.31% 0.00% Common Equity $ 530,866 $ 535,036 $ 520,542 $ - NA Common Shares NA Outstanding 45,030 44,376 44,468 - Book Value Per NA Share (Common) $ 11.79 $ 12.06 $ 11.71 $ - ($ in 1Q04 2Q04 3Q04 4Q04 Y-T-D thousands) ---------- ---------- ---------- ---------- ---------- Condensed Income Statement --------------- Interest Income 98,145 100,229 106,332 109,728 414,434 Interest Expense 20,254 22,132 26,311 30,085 98,782 Net Interest Income 77,891 78,097 80,021 79,643 315,652 Provision for Possible Loan and Lease Losses 5,600 4,750 4,500 0 14,850 Income from Landfill Investments 5,162 10,453 6,321 4,116 26,052 Total Noninterest Income 35,563 39,092 44,351 37,321 156,327 Amortization of Intangibles Expense 1,244 1,223 1,222 1,222 4,911 Expense from Landfill Investments 5,882 7,497 5,188 4,741 23,308 Total Noninterest Expense 66,569 69,790 75,884 71,463 283,706 Pre-tax Income 41,285 42,649 43,988 45,501 173,423 Provision for Income Taxes 10,303 10,990 11,450 12,597 45,340 Net Income 30,982 31,659 32,538 32,904 128,083 Fully-taxable Equivalent Adjustment 1,595 1,571 1,571 1,605 6,342 Performance --------------- Return on Average Assets 1.54% 1.51% 1.46% 1.45% 1.49% Return on Average Equity 26.51% 26.58% 26.07% 25.11% 26.04% Basic Earnings Per Share $ 0.69 $ 0.71 $ 0.73 $ 0.73 $ 2.86 Diluted Earnings Per Share $ 0.69 $ 0.70 $ 0.72 $ 0.73 $ 2.85 Weighted Average Shares - Basic 44,808 44,651 44,700 44,921 44,717 Weighted Average Shares - Diluted 45,003 44,920 44,952 45,110 44,944 Net Interest Margin (2)(4) 4.29% 4.08% 3.93% 3.85% 4.03% Capital Information --------------- Tier 1 Leverage NA Ratio 6.83% 6.75% 6.69% 6.69% Tier 1 Risk- NA Based Capital 9.50% 9.26% 9.45% 9.60% Total Risk- NA Based Capital 14.42% 13.84% 13.83% 13.89% Common Equity 492,751 478,170 516,925 531,650 NA Common Shares NA Outstanding 44,826 44,948 44,954 44,983 Book Value Per NA Share (Common) $ 10.99 $ 10.64 $ 11.50 $ 11.82 (1)Capital ratios are preliminary numbers (2)Net Interst Margin is calculated on a fully taxable equivalent basis (3)Net Interest Margin has been restated for the first quarter 2005 (4)Net Interest Margin has been restated for the year 2004 *T