SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
OR
- --- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
------------------ -------------------
Commission File Number 0-010699
HUBCO, INC.
----------
(Exact name of registrant as specified in its charter)
New Jersey 22-2405746
---------- ----------
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1000 MacArthur Blvd
Mahwah, New Jersey 07430
---------------------- -----
(Address of principal executive office) (Zip Code)
(201)-236-2600
--------------
(Registrant's telephone number, including area code)
Not Applicable
--------------
Former name, former address, and formal fiscal year, if changed since
last report.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days Yes X No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the last practicable date:
10,064,739 shares, no par value, outstanding as of April 30, 1995.
<PAGE>
HUBCO, INC. AND SUBSIDIARIES
INDEX
Page
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets
March 31, 1995 and December 31, 1994 ........................ 1
Consolidated Statements of Income
Three Months Ended March 31, 1995
and March 31, 1994 .......................................... 2
Consolidated Statements of Cash Flows
Three Months ended March 31, 1995
and March 31, 1994 .......................................... 3
Asset Quality Schedule--Quarterly Recaps ...................... 4
S.E.C. Guide 3--Item IV
Summary of loan loss experience ............................. 5
Notes to Consolidated Financial Statements .................... 6-7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations .............. 8-14
PART II. OTHER INFORMATION
Item 5. Other Information ............................................. 15
Item 6. Exhibits and Reports on Form 8-K .............................. 16
Signatures .................................................... 17-18
<PAGE>
Page 1
<TABLE>
<CAPTION>
HUBCO, Inc. and Subsidiaries
PART I. FINANCIAL INFORMATION
CONSOLIDATED BALANCE SHEETS
(In Thousands)
March 31 December 31
1995 1994
---------- -----------
<S> <C> <C>
ASSETS
Cash and due from banks ............................................................... $ 52,391 $ 52,832
Investment Securities (Note--B)
Available for Sale, at market value (amortized cost of
$56,571 and $58,174 in 1995 and 1994, respectively) ............................... 58,195 58,731
Held to maturity, at cost (market value of $448,158
and $458,399 for 1995 and 1994, respectively) ..................................... 455,965 478,498
---------- ----------
514,160 537,229
Federal funds sold and securities purchased under agreements to resell ................ 29,600 --
Loans:
Real estate-mortgage ................................................................ 374,485 378,505
Commercial and financial ............................................................ 189,002 188,062
Consumer credit ..................................................................... 97,629 99,216
Credit Card ......................................................................... 58,100 67,577
---------- ---------
719,216 733,360
Less:
Allowance for possible loan losses .................................................. 13,376 13,228
Deferred loan fees .................................................................. 1,117 1,149
Unearned income ..................................................................... 3,164 3,037
---------- ----------
NET LOANS ........................................................................ 701,559 715,946
---------- ----------
Property and equipment, net ........................................................... 32,251 32,734
Other real estate ..................................................................... 3,054 3,194
Accrued interest receivable ........................................................... 10,488 13,393
Other assets .......................................................................... 17,615 21,794
---------- ----------
TOTAL ASSETS ..................................................................... $1,361,118 $1,377,122
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-interest bearing ............................................................... $ 201,574 $ 209,655
Interest bearing ................................................................... 954,720 990,078
---------- ----------
TOTAL DEPOSITS ................................................................... 1,156,294 1,199,733
---------- ----------
Federal funds purchased and securities sold under agreements to repurchase ............ 69,712 30,353
Treasury tax and loan note ............................................................ 1,000 1,000
Accrued taxes and other liabilities ................................................... 6,173 22,016
---------- ----------
TOTAL LIABILITIES ................................................................ 1,233,179 1,253,102
---------- ----------
Subordinated Debt ..................................................................... 25,000 25,000
Stockholders' equity:
Preferred Stock-Series A, no par value; authorized 3,300,000 shares,
issued 797,811 shares; and outstanding 692,497 shares
(1995); and 788,811 shares (1994) ................................................. 16,908 19,147
Common stock, no par value, issued 10,400,042 shares; and outstanding
9,750,333 shares (1995); and 9,610,374 shares (1994) .............................. 18,492 18,492
Capital in excess of par .............................................................. 49,240 49,048
Retained earnings ..................................................................... 28,687 25,647
Treasury stock, at cost, 649,709 and 789,668 shares in 1995 and 1994, respectively,
and 12,000 and 9,000 Preferred shares in 1995 and 1994 respectively ................. (9,747) (11,723)
Unearned Compensation-Restricted stock awards ......................................... (1,119) (1,266)
Unrealized gain/loss on investment securities available for sale, net of income taxes . 478 (325)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY ....................................................... 102,939 99,020
---------- ----------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY ............................................. $1,361,118 $1,377,122
========== ==========
</TABLE>
See notes to consolidated financial statements
<PAGE>
Page 2
<TABLE>
<CAPTION>
HUBCO, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands)
THREE MONTHS ENDED MARCH 31
-------------------------------
1995 1994
------- -------
<S> <C> <C>
INTEREST INCOME
Interest & fees on loans:
Taxable ....................................................................... $16,799 $10,515
Tax exempt .................................................................... 78 61
------- -------
16,877 10,576
------- -------
Interest & dividends on investment securities:
Taxable ....................................................................... 8,126 6,520
Tax exempt .................................................................... 233 309
------- -------
8,359 6,829
------- -------
Interest on federal funds sold ................................................. 16 105
------- -------
TOTAL INTEREST INCOME ..................................................... 25,252 17,510
------- -------
INTEREST EXPENSE
Interest on deposits:
Savings deposits .............................................................. 3,960 2,854
Time deposits ................................................................. 3,074 1,739
Interest on borrowings ........................................................ 1,120 538
------- ------
TOTAL INTEREST EXPENSE .................................................... 8,154 5,131
------- -------
NET INTEREST INCOME ....................................................... 17,098 12,379
------- -------
Provision for possible loan losses ............................................. 1,050 450
------- -------
NET INTEREST INCOME AFTER PROVISION FOR POSSIBLE LOAN LOSSES............... 16,048 11,929
NON-INTEREST INCOME
Trust department income ....................................................... 148 172
Service charges on deposit accounts ........................................... 1,951 1,577
Investment securities gains ................................................... 590 --
Other income .................................................................. 1,048 460
------- -------
3,737 2,209
------- -------
19,785 14,138
------- -------
OPERATING EXPENSES
Salaries ..................................................................... 4,294 3,106
Pension and other employee benefits .......................................... 1,970 1,559
Occupancy expense of property ................................................ 1,230 914
Equipment expense ............................................................ 989 427
Other operating expenses ..................................................... 3,886 2,000
------- -------
12,369 8,006
------- -------
INCOME BEFORE INCOME TAXES ................................................ 7,416 6,132
INCOME TAXES .............................................................. 2,628 2,346
------- -------
NET INCOME ................................................................ $ 4,788 $ 3,786
======= =======
INCOME PER COMMON SHARE:
Primary ..................................................................... $ .47 $ .39
Fully Diluted ............................................................... $ .44 $ .39
WEIGHTED AVERAGE SHARES OUTSTANDING:
Common ...................................................................... 9,675 9,782
Preferred ................................................................... 744 --
See notes to consolidated financial statements
</TABLE>
<PAGE>
Page 3
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS (NET)
HUBCO, Inc. and Subsidiaries
(in thousands)
Three Months Ended
March 31
-----------------------
1995 1994
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income .............................................................. $ 4,788 $ 3,786
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Provision for possible loan losses ................................. 1,050 450
Provision for depreciation and amortization ........................ 1,423 491
Amortization of investment security premiums ....................... 566 328
Accretion of investment security discount .......................... (203) (59)
Realized investment security (gains) losses ........................ (590) --
Gain on sale of fixed assets (net) ................................. (46) --
Deferred income taxes .............................................. 320 320
Decrease in interest receivable ...................................... 2,905 1,187
Increase (decrease) in interest payable .............................. (592) 319
Increase (decrease) in accrued taxes and other liabilities ........... (15,982) 230
(Increase) decrease in other assets .................................. 3,102 (7,830)
------- -------
NET CASH (USED IN) OPERATING ACTIVITIES ...................... (3,259) (778)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of investment securities ............................ 12,266 --
Proceeds from maturities of investment securities ....................... 13,374 41,136
Sale of fixed assets .................................................... 1,036 --
Net decrease in loans ................................................... 13,337 5,705
Purchase of investment securities ....................................... (1,296) (78,560)
Purchases of premises and equipment ..................................... (538) (129)
Decrease in other real estate ........................................... 139 1,498
------- -------
NET CASH PROVIDED BY (USED IN)INVESTING ACTIVITIES ........... 38,318 (30,350)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in demand deposits,
NOW accounts and savings accounts .................................... (43,341) 23,228
Net (decrease) in certificates of deposit ............................... (98) (5,912)
Net increase in federal funds purchased and securities sold under
agreements to repurchase ............................................. 39,359 24
Subordinated Debt ....................................................... -- 25,000
Cash dividends .......................................................... (1,749) (779)
Purchase of treasury stock .............................................. (71) (5,298)
------- -------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES .......... (5,900) 36,263
------- -------
INCREASE IN CASH AND CASH EQUIVALENTS ........................ 29,159 5,135
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ............. 52,832 59,342
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ................... $81,991 $64,477
======= =======
</TABLE>
<PAGE>
Page 4
HUBCO, Inc. and Subsidiaries
ASSET QUALITY SCHEDULE--QUARTERLY RECAP
(In Thousands)
<TABLE>
<CAPTION>
3/31/95 12/31/94 9/30/94 6/30/94
------- -------- ------- -------
<S> <C> <C> <C> <C>
Non-Accruing Loans:
Commercial .............................................. $ 4,756 $ 5,165 $4,842 $ 1,943
Real Estate ............................................. 3,816 4,271 8,221 3,725
Consumer Loans .......................................... 427 481 580 384
Credit Cards ............................................ 398 -- -- --
------- ------- ------- -------
Total Non-Accruing Loans .............................. 9,397 9,917 13,643 6,052
------- ------- ------- -------
Renegotiated Loans ......................................... 538 539 540 713
------- ------- ------- -------
Total Non-Performing Loans ............................ 9,935 10,456 14,183 6,765
Other Real Estate .......................................... 3,054 3,193 2,874 1,873
------- ------- ------- -------
Total Non-Performing Assets ........................... $12,989 $13,649 $17,057 $ 8,638
======= ======= ======= =======
Non-Accruing Loans to Total Loans, Net ..................... 1.31% 1.36% 2.06% 1.16%
Non-Performing Loans to Total Loans, Net ................... 1.39 1.43 2.14 1.29
Non-Performing Assets to Total Assets ...................... .95 .99 1.21 .74
Non-Performing Assets to Total Loans, Net Plus
Other Real Estate ........................................ 1.81 1.86 2.57 1.64
Loans Past Due 90 Days or More and Accruing:
Commercial .............................................. $ 14 $ 448 $ 632 $ 622
Real Estate ............................................. 2,323 1,060 1,800 209
Installment ............................................. 73 47 88 229
Credit Cards ............................................ 458 644 -- --
------ ------ ------ -------
Total Past Due Loans .................................. $2,868 $2,198 $2,520 $ 1,060
====== ====== ====== =======
</TABLE>
<PAGE>
Page 5
HUBCO, Inc. and Subsidiaries
S.E.C. GUIDE 3 ITEM IV
SUMMARY OF LOAN LOSS EXPERIENCE
<TABLE>
<CAPTION>
Summary of Activity in the Allowance,
Broken Down by Loan Category
--------------------------------------
Three Months Year
Ended Ended
3/31/95 12/31/94
-------- --------
(In Thousands of Dollars)
<S> <C> <C>
Amount of Loans Outstanding .................................................... $719,216 $733,360
======== ========
Daily Average Amount of Loans .................................................. $722,268 $604,622
======== ========
Balance of Allowance for Possible Loan Losses at Beginning of Period ........... $ 13,228 $ 10,811
Loans Charged Off:
Commercial, Financial, and Agricultural ...................................... (862) (190)
Real Estate--Mortgage ........................................................ (111) (5,701)
Installment .................................................................. (123) (214)
Credit Card .................................................................. (335) --
-------- --------
Total Loans Charged Off ................................................... (1,431) (6,105)
-------- --------
Recoveries of Loans Previously Charged Off:
Commercial, Financial, and Agricultural ...................................... 32 531
Real Estate--Mortgage ........................................................ 182 129
Installment .................................................................. 35 145
Credit Card .................................................................. 280 --
-------- --------
Total Recoveries .......................................................... 529 805
-------- --------
Net Loans Charged Off .......................................................... (902) (5,300)
Addition to Allowance Charged to Operations .................................... 1,050 3,000
Additions Acquired Through Acquisitions ........................................ -- 4,717
-------- --------
Balance at End of Period ....................................................... $ 13,376 $ 13,228
======== ========
Ratio of Net Loans Charged-Off During Period to Average Loans Outstanding ...... .50% .88%
</TABLE>
<PAGE>
Page 6
HUBCO, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 1995
NOTE A--BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form l0-Q and Rule l0-0l of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles to complete
financial statements. In the opinion of management, the information presented
includes all adjustments considered necessary to a fair presentation of the
interim period results.
NOTE B--SECURITIES
The amortized cost and estimated market value of securities are summarized as
follows:
<TABLE>
<CAPTION>
March 31, 1995
----------------------------------------------------
Gross Unrealized Estimated
Amortized ---------------------- Market
Cost Gains (Losses) Value
--------- ------- -------- ---------
<S> <C> <C> <C> <C>
Available for Sale
U.S. Government .............................. $ 33,133 $ 67 ($ 31) $ 33,169
U.S. Government agencies ..................... 15,012 -- (45) 14,967
State and political subdivisions ............. -- -- -- --
Other securities ............................. -- -- -- --
Equity securities ............................ 8,426 1,649 (16) 10,059
-------- ------- ------ --------
$ 56,571 $ 1,716 ($ 92) $ 58,195
======== ======= ====== ========
<CAPTION>
March 31, 1995
---------------------------------------------------
Gross Unrealized Estimated
Amortized ---------------------- Market
Cost Gains (Losses) Value
--------- ------- -------- ---------
<S> <C> <C> <C> <C>
Held to Maturity
U.S. Government .............................. $214,407 $ 248 ($2,515) $212,140
U.S. Government agencies ..................... 222,435 151 (5,717) 216,869
State and political subdivisions ............. 14,238 150 (144) 14,244
Other securities ............................. 4,885 60 (40) 4,905
-------- ------- ------ --------
$455,965 $ 609 ($8,416) $448,158
======== ======= ====== ========
</TABLE>
<PAGE>
Page 7
<TABLE>
<CAPTION>
December 31, 1994
----------------------------------------------------
Gross Unrealized Estimated
Amortized ---------------------- Market
Cost Gains (Losses) Value
--------- ------- -------- ---------
<S> <C> <C> <C> <C>
Available for Sale
U.S. Government .............................. $ 33,196 $ 11 ($ 374) $ 32,833
U.S. Government Agencies ..................... 15,013 -- (360) 14,653
States and Political Subdivisions ............ 580 -- (2) 578
Other securities ............................. 1,000 -- -- 1,000
Equity securities ............................ 8,385 1,405 (123) 9,667
-------- ------ ------ --------
$ 58,174 $1,416 ($ 859) $ 58,731
======== ====== ====== ========
<CAPTION>
December 31, 1994
-----------------------------------------------------
Gross Unrealized Estimated
Amortized ----------------------- Market
Cost Gains (Losses) Value
--------- ------- -------- ---------
<S> <C> <C> <C> <C>
Held to Maturity
U.S. Government .............................. $225,434 $ 4 ($ 6,407) $219,031
U.S. Government Agencies ..................... 224,954 32 (13,286) 211,700
State and Political Subdivisions ............. 23,152 50 (358) 22,844
Other securities ............................. 4,958 20 (154) 4,824
-------- ------ -------- --------
$478,498 $ 106 $(20,205) $458,399
======== ====== ======== ========
</TABLE>
<PAGE>
Page 8
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This financial review presents management's discussion and analysis of financial
condition and results of operations. It should be read in conjunction with the
Company's Consolidated Financial Statements and the accompanying notes. Unless
otherwise noted, all dollar amounts, other than per share information, are
presented in thousands.
As of March 31, 1995 the Company had two acquisitions pending. See Item 5 under
Part II of this Form 10-Q for a description of these pending acquisitions.
In 1994, the Company consummated three acquisitions. On May 6, 1994, the
Company, through Hudson United Bank, acquired four branches, deposits and
certain assets of Polifly Federal Savings and Loan Association ("Polifly") from
the Resolution Trust Corporation ("RTC"). The purchase price for the acquisition
was $6.2 million. On July 1, 1994, the Company consummated its merger with
Washington Bancorp, Inc. ("Washington") for a combination of cash and
convertible preferred stock with an aggregate value of approximately $40.5
million. On December 7, 1994, the Bank acquired Shoppers Charge Accounts Co.
("Shoppers") for approximately $16.3 million in cash.
The balance sheet and income statement comparisons are influenced by the
transactions mentioned above. On October 13, 1994, HUBCO announced that its
Board of Directors had approved a 3 for 2 stock split payable January 14, 1995
to record holders of HUBCO common stock as of January 3, 1995. As a result, all
share data has been retroactively restated.
RESULTS OF OPERATIONS
For the three month period ended March 31, 1995, the Company earned net income
of $4,788, or $.44 per share on a fully diluted basis, compared to $3,786, or
$.39 per share, for the same period in 1994. The increase in earnings of $1,002,
or 26.5%, is the result of a combination of items. Earnings for the period were
improved by increases in net interest income and other income of $4,719, or
38.1%, and $1,528, or 69.2%, respectively. Partially offsetting these gains was
an increase in other expenses of $4,363, or 54.5%, and an increase in income
taxes of $282, or 12%. Investment security gains included in other income were
$590 and $0 for 1995 and 1994, respectively.
The increase in net interest income from $12,379 for the three month period
ended March 31, 1994 to $17,098 for the three month period ending March 31, 1995
is a result of the increase in net earning assets resulting from the Polifly,
Washington and Shoppers transactions. Partially offsetting the increased net
interest income was the increased interest paid on the increased deposit base.
<PAGE>
Page 9
The net interest margin (fully tax equivalent) increased 48 basis points to
5.53% for the three month period ended March 31, 1995 from 5.05% for the
comparable period in 1994 primarily as a result of the credit card portfolio
which was acquired as part of the Shoppers acquisition.
Total non-interest income increased by $1,528, or 69.2%, as a result of service
charges on deposit accounts increasing $374, or 23.7%, Investment Securities
gains of $590 and an increase in other non-interest income of $588, or 128.8%.
The increase in service charges on deposit accounts results from a 31.2%
increase in average deposits, from $738,150 in 1994 to $968,110 in 1995,
resulting from the Polifly, Washington and Shoppers acquisitions. The gain on
sale of investment securities is the result of the sale of approximately $12,266
of equity investments from the available for sale category. The increase in
other non-interest income is primarily attributable to the acquisition of
Shoppers, producing approximately $717, of non-interest income, along with the
acquisitions of Polifly and Washington.
The provision for possible loan losses increased by $600, or 133.3%, from $450
for the three month period ended March 31, 1994 to $1,050 for the first quarter
of 1995. During 1995, the provision has been increased to build the allowance to
a level deemed adequate to support the increase in non-performing loans
resulting from recent acquisitions.
Operating expenses for the three month period ended March 31, 1995 increased by
$4,363 or 54.5 %. Of that amount $1,599, (36.6%, of the total increase) was in
salaries and benefits, an increase of 34.3% for the category. This increase is
primarily attributable to the additional personnel expense incurred as a result
of the addition of four Polifly branches, the merger of Washington Bancorp, and
the Shoppers Charge Co. acquisition; along with salary increases of
approximately 3% and the corresponding salary-related increases in payroll
taxes.
Occupancy expense increased $316, or 34.6%, as a result of the additional 12
branches resulting from the year's acquisition activity as well as Shopper's
rental expense and maintaining two headquarter buildings. Equipment expense
increased $562, or 131.6%, due primarily to the equipment needs of the
additional branches, the new Corporate Headquarters, the Shoppers computer
expenses and the Company's new Imaging system.
Other operating expenses increased by $1,886, or 94.3%, as a result of the
write-down of fixed assets in anticipation of sale of $700, intangible asset
amortization related to the Polifly and Washington acquisitions of $545,
additional insurance premiums of $187 related to the acquired deposits, $117 in
telephone expense related to the additional branches and $123 for increase in
postage as a result of the Polify, Washington and Shoppers acquisitions.
Income taxes (state and federal) for the three month period ended March 31, 1995
increased by $282, or 12%, over the comparable period in 1994, due to a 20.9%
increase in net income before taxes, which is offset by a reduction in the
effective tax rate for the period from 38% in 1994 to 35% in 1995.
<PAGE>
Page 10
The increase in net interest income, as previously discussed, is produced by
rate/volume changes in product mix which are summarized for the comparative
three month periods, on a tax equivalent basis in the following table. The
average net interest earning assets and the tax equivalent interest rates are
also provided. The tax equivalent interest margin, which measures net interest
income as a percent of average earning assets, was 5.53% for the three months
ended March 31, 1995, compared to 5.05% for the comparable period in 1994. The
increase is primarily attributable to a larger increase in the yield on earning
assets than on interest bearing liabilities primarily resulting from the new
credit card portfolio.
<PAGE>
Page 11
DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS'
EQUITY: INTEREST RATES AND INTEREST DIFFERENTIALS
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
--------------------------------------------------------------------------------------
1995 1994
-------------------------------------- --------------------------------------
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
------- -------- ------ ------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Interest Earning Assets:
Domestic Loans & Direct
Lease Financing(1):
Taxable ..................... $ 714,027 $16,799 9.41% $ 519,821 $10,515 8.09%
Nontaxable................... 3,998 120 12.01 4,810 94 7.82
Taxable Investment Securities.. 509,634 8,126 6.38 430,737 6,520 6.05
Nontaxable Investment Securities 20,030 358 7.15 28,873 476 6.59
Federal Funds Sold and
Securities Purchased Under
Agreements to Resell......... 876 17 7.76% 11,336 105 3.71%
---------- ------- --------- -------
Total Interest Earning Assets 1,248,565 25,420 8.14% 995,577 17,710 7.12%
Non-interest Earning Assets:
Cash and Due From Banks........ 50,756 47,535
Premises and Equipment, Net.... 33,048 17,910
Accrued Interest Receivable.... 12,454 9,018
Other Assets................... 22,478 10,868
Less Allowance for Possible
Loan Losses ................... (13,487) (10,872)
---------- ----------
TOTAL ASSETS.................. $1,353,814 $1,070,036
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Interest Bearing Liabilities:
Demand Deposits................ $ 200,072 $ 1,221 2.44% $ 137,959 $ 861 2.50%
Savings Deposits............... 425,617 2,739 2.57 367,555 1,994 2.17
Time Deposits.................. 342,421 3,074 3.59 232,636 1,738 2.99
Federal Funds Purchased and
Securities Sold Under
Agreements to Repurchase..... 44,290 555 5.01 20,858 119 2.28
Subordinated Debt............ 25,000 550 8.80 21,389 412 7.70
Other.......................... 1,571 15 3.82 969 7 2.89
---------- ------- ---------- -------
Total Interest Bearing
Liabilities...................... 1,038,971 8,154 3.14 781,366 5,131 2.63
Non-interest Bearing Liabilities:
Demand Deposits................ 206,970 204,710
Other.......................... 7,052 7,996
---------- ----------
1,252,993 994,072
Stockholders' Equity 100,821 75,964
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY ......... $1,353,814 $1,070,036
========== ==========
Net Interest Earnings............ $17,266 $12,579
Net Yield on Interest
Earning Assets ................ 5.53% 5.05%
Tax-Equivalent Adjustments:
Loans......................... $ 42 $ 33
Investment Securities......... 125 166
------- -------
TOTAL................ $ 167 $ 199
======= =======
</TABLE>
<PAGE>
Page 12
CHANGES IN NET INTEREST EARNINGS DUE TO VOLUME/RATE
(In Thousand of Dollars)
<TABLE>
<CAPTION>
Three Months Ended March 31, 1995
Compared to Three Months
Ended March 31, 1994
Increase (Decrease) Due To
------------------------------------------
Volume Rate Net
-------- -------- -------
<S> <C> <C> <C>
Interest Earned On:
Domestic Loans and Direct
Lease Financing:
Taxable ......................................... $4,374 $1,910 $6,284
Nontaxable ...................................... (90) 116 26
Taxable Investment Securities ...................... 1,238 368 1,606
Nontaxable Investment Securities ................... (155) 37 (118)
Federal Funds Sold and
Securities Purchased under
Agreements to Resell ............................ (145) 57 (88)
------ ------ ------
Total Interest Earning Assets ...................... 5,222 2,488 7,710
Interest Paid On:
Demand Deposits ................................. 381 (21) 360
Savings Deposits ................................ 344 401 745
Time Deposits ................................... 937 399 1,336
Federal Funds Purchased and
Securities Sold Under Agreements
to Repurchase ................................. 212 224 436
Other ........................................... 5 3 8
Subordinated Debt ............................... 75 63 138
------ ------ ------
Total Interest Bearing Liabilities ................. 1,954 1,069 3,023
Net Interest Earnings .............................. $3,268 $1,419 $4,687
====== ====== ======
</TABLE>
<PAGE>
Page 13
FINANCIAL CONDITION
Total assets at March 31, 1995 decreased by $16,004, or 1.2%, from December 31,
1994. The decrease is primarily attributable to a runoff in deposits of $43,439,
or 3.2%; Partially offsetting the decline in deposits was the increase in
Federal Funds purchased of $25,000 in 1995.
The Company's Loan Portfolio decreased by $14,144, or 1.9% from $733,360 at
December 31, 1994 to $719,216 at March 31, 1995. This is primarily the result of
seasonal runoff in the credit card portfolio after the Christmas season and a
continued reduction in the indirect automobile loan portfolio.
Total non-performing loans, which include non-accruing and renegotiated loans,
decreased by $521, or 5.2%, from $10,456, at December 31, 1994 to $9,935, at
March 31, 1995. Non-accruing commercial loans decreased by $409, or 7.9%, from
$5,165, at December 31, 1994 to $4,756, at March 31, 1995. Non-accruing real
estate loans decreased by $455, or 10.7%, from $4,271, at December 1994 to
$3,816, at March 31, 1995. Renegotiated loans remain unchanged, while total
non-performing assets decreased from $13,649 at December 31, 1994 to $12,989 at
March 31, 1995, a decrease of $660, or 5.1%. Loans past due 90 days or more and
still accruing increased by $670, or 30.5%, from $2,198 at December 31, 1994 to
$2,868 at March 31, 1995. This is primarily due to the addition of four real
estate loans totalling approximately $1,100 which aged past ninety days.
Overall, asset quality ratings at March 31, 1995 improved, with ratios for
non-accruing loans to total loans net, decreasing from 1.36%, at December 31,
1994 to 1.31% at March 31, 1995. Non-performing loans to total loans net,
decreased from, 1.43%, at December 31, 1994 to 1.39%, at March 31, 1995.
Non-performing assets to total assets decreased from .99% at December 31, 1994
to .95%, at March 31, 1995. Non-performing assets to total loans net, plus other
real estate decreased from 1.86%, at December 31, 1994 to 1.81%, at March 31,
1995.
The allowance for possible loan losses increased from $13,228 at December 31,
1994 to $13,376 at March 31, 1995 as a result of the provision exceeding net
loans charged-off by $148.
The investment portfolio decreased by $23,069, or 4.5%, as a result of the sale
of available for sale equity securities of approximately $12,266 coupled with
the maturity of securities of $11,484 during the quarter. Approximately 11.3% of
the investment portfolio is categorized as "Available for Sale", compared to
10.9%, at December 31, 1994.
Property and equipment decreased by $483, or 1.5%, from $32,734 at December 31,
1994 to $32,251 at March 31, 1995. The decrease is entirely attributable to the
sale of a building as a result of branch consolidations and the writedown of
buildings in anticipation of sale.
<PAGE>
Page 14
Accrued interest receivable decreased by $2,905, or 21.7%, as a result of the
timing of interest payments.
Other assets decreased from $21,794 at December 31, 1994 to $17,615 at March 31,
1995, a decrease of $4,179, or 19.2%. The decrease is primarily attributable to
a decline in the deferred tax asset of $2,700, along with the amortization of
prepaid expenses and intangible assets of $820 and $545 respectively.
Total deposits at March 31, 1995 decreased by $43,439, or 3.6%, from $1,199,733
at December 31, 1994 to $1,156,294 at March 31, 1995. The deposit outflow was
caused by increased competition from mutual funds and other financial
institutions. Non-interest bearing deposits totalled 17.4% of deposits on March
31, 1995.
Federal Funds purchased increased by $39,359 at March 31, 1995 in order to meet
short-term liquidity needs.
Other liabilities decreased $15,843, or 72%, from $22,016 at December 31, 1994
to $6,173 at March 31, 1995. The decrease is attributable to the repayment of a
$16,275 note payable arising from the December closing of the Shopper
acquisition. Cash payment took place in January 1995 in settlement of the note.
At the end of the reporting period, the Company is not aware of any current
recommendations by the regulatory authorities which would have a material
adverse effect on the Company's capital resources or operations. The capital
ratios for HUBCO, Inc. and subsidiaries at March 31, 1995, and the minimum
regulatory requirements for such capital ratios are as follows:
Ratios at 1995 Minimum
March 31, 1995 Requirements*
-------------- -------------
Tier I Risk-Based Capital Ratio .......... 13.07% 6.0%
Total Risk-Based Capital Ratio ........... 18.83% 10.0%
Leverage Capital Ratio ................... 6.74% 5.0%
- -----------
* For qualification as a well-capitalized institution.
<PAGE>
Page 15
Item 5: Other Information
1) In February 1995, the Company and Hudson United Bank (the "Bank") signed a
definitive agreement to merge Urban National Bank into Hudson United Bank. Under
the terms of the Agreement, Urban shareholders will receive 2.170 shares of
HUBCO Common Stock in exchange for each of Urban's shares subject to adjustment
in certain circumstances. The transaction will be accounted for under a pooling
of interests. The merger is subject to approval by federal and state bank
regulatory authorities and the shareholders of HUBCO and Urban. The merger is
expected to close in the third quarter of 1995. The merger agreement provides
that if Urban enters in an acquisition transaction with a third party acquiror,
the third party acquiror will be responsible to pay HUBCO, Inc. a break-up fee.
2) On April 5, 1995 HUBCO completed its acquisition of Jefferson National Bank
which added four branches in Passaic County. The acquisition was accounted for
under a pooling of interests.
<PAGE>
Page 16
Item 6: Exhibits and Reports on Form 8-K
(a) Exhibits
(2) Agreement and Plan of Merger, dated February 14, 1995, among Urban
National Bank, HUBCO, Inc. and Hudson United Bank. (Incorporated by reference
from the Company's Current Report on Form 8-K filed February 23, 1995.)
(3)(i) The Certificate of Incorporation of HUBCO, Inc. filed May 5, 1982
and amendments to the Certificate of Incorporation, dated November 22, 1983,
January 30, 1984, January 11, 1985, July 17, 1986, March 25, 1987, April 26,
1991, November 26, 1991, March 25, 1992, May 17, 1993 and January 4, 1995.
(Incorporated by reference from the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994, Exhibit (3i).)
(3)(ii) The By-Laws of HUBCO, Inc. (Incorporated by reference from the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1994, Exhibit (3ii).)
(b) Reports on Form 8-K
(1) On February 23, 1995, HUBCO filed a Form 8-K to announce that it had
entered into a definitive agreement with Urban National Bank pursuant to which
Urban National Bank would be merged with and into Hudson United Bank, the
registrant's commercial bank subsidiary. Under the terms of the agreement,
shareholders of Urban National Bank will receive 2.17 shares of HUBCO common
stock in exchange for each of the 984,372 Urban shares outstanding. The exchange
ratio will be adjusted in certain circumstances. The merger agreement provides
that if Urban enters in an acquisition transaction with a third party acquiror,
the third party acquiror will be responsible to pay HUBCO, Inc. a break-up fee.
(2) On March 6, 1995, HUBCO filed a Form 8-K containing pro-forma
financials with respect to Jefferson National Bank and Urban National Bank along
with Urban financial statements.
(3) On April 19, 1995, HUBCO filed a Form 8-K to report the consummation on
April 5, 1995 of the merger of Jefferson National Bank into Hudson United Bank
with Jefferson's year-end audited financial statements attached. This Form 8-K
was amended by Form 8-K/A on April 25, 1995 to include the Consent of Arthur
Andersen LLP dated April 21, 1995.
(4) On April 21, 1995, HUBCO filed a Form 8-K to report that on April 18,
1995 HUBCO issued a press release reporting its earnings for the first quarter
of 1995.
<PAGE>
Page 17
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HUBCO, Inc.
May 12, 1995 /S/ KENNETH T. NEILSON
------------------------------- -----------------------------------
Date Kenneth T. Neilson
President & Chief Executive Officer
May 12, 1995 /S/ CHRISTINA L. MAIER
------------------------------- -----------------------------------
Date Christina L. Maier
Assistant Treasurer
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 52,391
<INT-BEARING-DEPOSITS> 954,720
<FED-FUNDS-SOLD> 29,600
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 58,195
<INVESTMENTS-MARKET> 455,965
<LOANS> 719,216
<ALLOWANCE> 13,376
<TOTAL-ASSETS> 1,361,118
<DEPOSITS> 1,156,294
<SHORT-TERM> 69,712
<LIABILITIES-OTHER> 7,173
<LONG-TERM> 25,000
<COMMON> 18,492
0
16,908
<OTHER-SE> 67,539
<TOTAL-LIABILITIES-AND-EQUITY> 1,361,118
<INTEREST-LOAN> 16,877
<INTEREST-INVEST> 8,359
<INTEREST-OTHER> 3,737
<INTEREST-TOTAL> 25,252
<INTEREST-DEPOSIT> 7,034
<INTEREST-EXPENSE> 8,154
<INTEREST-INCOME-NET> 17,098
<LOAN-LOSSES> 1,050
<SECURITIES-GAINS> 590
<EXPENSE-OTHER> 12,369
<INCOME-PRETAX> 7,416
<INCOME-PRE-EXTRAORDINARY> 7,416
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,788
<EPS-PRIMARY> 0.47
<EPS-DILUTED> 0.44
<YIELD-ACTUAL> 5.53
<LOANS-NON> 9,397
<LOANS-PAST> 2,868
<LOANS-TROUBLED> 538
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 13,228
<CHARGE-OFFS> 1,431
<RECOVERIES> 529
<ALLOWANCE-CLOSE> 13,376
<ALLOWANCE-DOMESTIC> 8,638
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 4,738
</TABLE>
