SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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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, 1996
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
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(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1000 MacArthur Blvd
Mahwah, New Jersey 07430
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(Address of principal executive office) (Zip Code)
(201)-236-2600
(Registrant's telephone number, including area code)
NOT APPLICABLE
--------------
Former name, former address, and former 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:
13,629,415 shares, no par value, outstanding as of May 13, 1996.
<PAGE>
HUBCO, INC. AND SUBSIDIARIES
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited):
Consolidated Balance Sheets
March 31, 1996 and December 31, 1995........................... 1
Consolidated Statements of Income
Three Months Ended March 31, 1996
and March 31, 1995............................................. 2
Consolidated Statements of Cash Flows
Three Months ended March 31, 1996
and March 31, 1995............................................. 3
Notes to Consolidated Financial Statements..................... 4-6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.................. 7-14
PART II. OTHER INFORMATION
Item 5. Other Information.............................................. 15
Item 6. Exhibits and Reports on Form 8-K............................... 15
Signatures..................................................... 16
<PAGE>
<TABLE>
<CAPTION>
HUBCO, INC. and Subsidiaries
- - -------------------------------------------------------------------------------------------
PART I. FINANCIAL INFORMATION
CONSOLIDATED BALANCE SHEETS
(In Thousands Except Share Data)
MARCH 31 DECEMBER 31
1996 1995
---------- ----------
<S> <C> <C>
ASSETS
Cash and due from banks $ 86,215 $ 90,583
Federal funds sold -- 49,700
---------- ----------
TOTAL CASH EQUIVALENTS 86,215 140,283
Securities Available for Sale, at market value
(amortized cost of $392,874 and $309,558
in 1996 and 1995, respectively) 396,173 313,279
Securities held to maturity, at cost (market value of
$245,653 and $268,902 for 1996 and 1995, respectively) 242,417 265,703
Loans:
Real estate-mortgage 485,809 482,572
Commercial and financial 272,236 274,223
Consumer credit 140,043 141,214
Credit card 53,658 57,915
---------- ---------
TOTAL LOANS 951,746 955,924
Less: allowance for possible loan losses (18,708) (18,689)
----------- -----------
NET LOANS 933,038 937,235
Premises and equipment, net 34,958 32,424
Other real estate owned 6,307 6,104
Intangibles, net of amortization 10,075 7,572
Other assets 31,964 36,845
---------- ----------
TOTAL ASSETS $1,741,147 $1,739,445
========== ==========
Liabilities and Stockholders' Equity
Deposits:
Non-interest bearing $ 307,381 $ 329,820
Interest bearing 1,212,118 1,205,440
---------- ----------
TOTAL DEPOSITS 1,519,499 1,535,260
Short-term borrowings 49,150 21,654
Other liabilities 15,835 15,174
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TOTAL LIABILITIES 1,584,484 1,572,088
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Subordinated Debt 25,000 25,000
Commitments and contingencies
Stockholders' equity:
Convertible Preferred Stock-Series A, no par value;
authorized 3,300,000 shares, no shares outstanding -- --
Common stock, no par value, authorized 25,000,000
shares; issued 14,342,949 and outstanding
13,629,415 shares in 1996 and issued 14,379,581
and outstanding 14,340,149 in 1995 25,502 25,567
Additional paid-in capital 62,328 63,016
Retained earnings 56,811 52,740
Treasury shares, at cost, 713,534 shares in 1996
and 39,432 in 1995 (14,678) (606)
Restricted stock awards (566) (688)
Unrealized gain on securities
available for sale, net of income taxes 2,266 2,328
---------- ----------
TOTAL STOCKHOLDERS' EQUITY 131,663 142,357
---------- ----------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $1,741,147 $1,739,445
========== ==========
</TABLE>
See notes to consolidated financial statements.
1
<PAGE>
<TABLE>
<CAPTION>
HUBCO, Inc. and Subsidiaries
- - -------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands Except For Share Data)
THREE MONTHS ENDED
MARCH 31
-------------------------------
1996 1995
------- -------
<S> <C> <C>
INTEREST AND FEE INCOME:
Loans-taxable $21,159 $21,959
Loans-tax exempt 57 78
Securities-taxable 9,234 10,156
Securities-tax-exempt 115 323
Other 197 251
------- -------
TOTAL INTEREST AND FEE INCOME 30,762 32,767
------- -------
INTEREST EXPENSE:
Deposits 9,617 9,445
Short-term borrowings 289 791
Subordinated debt 510 550
------- -------
TOTAL INTEREST EXPENSE 10,416 10,786
------- -------
NET INTEREST INCOME 20,346 21,981
------- -------
PROVISION FOR POSSIBLE LOAN LOSSES 903 1,125
------- -------
NET INTEREST INCOME AFTER PROVISION
FOR POSSIBLE LOAN LOSSES 19,443 20,856
NON-INTEREST INCOME:
Trust department income 241 148
Service charges on deposit accounts 2,043 2,401
Securities gains 286 589
Other income 1,896 1,184
------- -------
TOTAL NON-INTEREST INCOME 4,466 4,322
------- -------
NON-INTEREST EXPENSE:
Salaries 5,214 5,865
Pension and other employee benefits 1,584 2,378
Occupancy expense 1,546 1,122
Equipment expense 720 1,190
Deposit insurance and other insurance 103 1,042
Outside services 2,127 1,440
Other real estate owned expense 196 159
Amortization of intangibles 597 545
Other 1,540 2,672
------- -------
TOTAL NON-INTEREST EXPENSE 13,627 16,413
------- -------
INCOME BEFORE INCOME TAXES 10,282 8,765
PROVISION FOR INCOME TAXES 3,735 3,039
------- -------
NET INCOME $ 6,547 $ 5,726
======= =======
INCOME PER COMMON SHARE:
Primary $ .47 $ .40
Fully Diluted $ .47 $ .39
WEIGHTED AVERAGE SHARES OUTSTANDING:
Common 14,065 13,571
Preferred -- 1,116
</TABLE>
See notes to consolidated financial statements.
2
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<TABLE>
<CAPTION>
HUBCO, Inc. and Subsidiaries
- - -------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
THREE MONTHS ENDED
MARCH 31
----------------------
1996 1995
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 6,547 $ 5,726
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Provision for possible loan losses 903 1,125
Provision for depreciation and amortization 1,462 1,581
Amortization of security premiums, net 506 490
Securities gains (286) (589)
Gain on sale of premises and equipment -- (46)
Deferred income tax provision (benefit) (658) 430
Decrease in other assets 5,558 2,534
Increase (decrease) in other liabilities 513 (15,233)
--------- --------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 14,545 (3,982)
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of securities:
Available for sale 13,732 12,266
Held to maturity -- --
Proceeds from repayments and maturities of securities:
Available for sale 37,766 3,767
Held to maturity 23,193 19,510
Purchases of securities:
Available for sale (134,584) (3,778)
Held to maturity -- (3,999)
Deposit premium paid on branch acquisitions (3,433) --
Net decrease in loans 3,323 6,984
Proceeds from sales of premises and equipment 34 1,036
Purchases of premises and equipment (2,946) (605)
(Increase) decrease in other real estate (203) 2,306
--------- --------
NET CASH PROVIDED BY
(USED IN)INVESTING ACTIVITIES (63,118) 37,487
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net decrease in demand deposits,
NOW accounts and savings accounts (51,338) (47,479)
Net decrease in certificates of deposits (35,577) (2,815)
Net increase in short-term borrowings 27,496 32,801
Redemption of convertible preferred stock -- (11)
Cash dividends (2,406) (1,749)
Acquisition of treasury stock (14,824) (71)
--------- --------
NET CASH USED IN FINANCING ACTIVITIES (5,495) (19,324)
--------- --------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (54,068) 14,181
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 140,283 113,280
--------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 86,215 $127,461
========= ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for--
Interest $ 10,584 $ 11,801
Income taxes 800 4,700
======== ========
</TABLE>
See Notes to Consolidated Financial Statements.
3
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE A--BASIS OF PRESENTATION
The accompanying financial statements of HUBCO, Inc. and Subsidiaries ("HUBCO"
or "the Company") include the accounts of the parent company, HUBCO, Inc. and
its wholly-owned subsidiaries: Hudson United Bank ("Hudson United Bank") and HUB
Investment Co. All material intercompany balances and transactions have been
eliminated in consolidation. These unaudited consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and
Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, the information
presented includes all adjustments, consisting of normal recurring accruals,
considered necessary for a fair presentation, in all material respects, of the
interim period results. The results of operations for periods of less than one
year are not necessarily indicative of results for the full year.
NOTE B--ACQUISITIONS
On January 12, 1996, HUBCO acquired Growth Financial Corp. ("Growth"), a $128
million bank holding company with 3 branch locations in Somerset and Morris
counties, New Jersey, in a stock-for-stock transaction which was accounted for
on the pooling-of-interests method of accounting. Under the terms of the merger
agreement, Growth Bank was immediately merged into Hudson United Bank and
Growth's stockholder's received .69 shares of HUBCO common stock in exchange for
each share of Growth common stock, resulting in the issuance of approximately
1.2 million shares of HUBCO common stock. Since the Growth acquisition was
accounted for as a pooling-of-interests, the consolidated financial statements
have been restated to include the accounts of Growth for all periods presented.
On February 29, 1996, HUBCO acquired three branch offices located in Bergen and
Middlesex counties, New Jersey, and related deposits from CrossLand Federal
Savings Bank ("CrossLand"). As a result of this transaction, Hudson United Bank
assumed approximately $60.6 million of deposit liabilities and cash of
approximately $56.7 million, net of a deposit premium of approximately $3.0
million.
On February 6, 1996, HUBCO executed a Definitive Agreement to acquire Lafayette
American Bank and Trust Company ("Lafayette"), a $735 million bank headquartered
in Bridgeport, Connecticut. The transaction calls for HUBCO to exchange .588 of
a share of HUBCO common stock for each share of Lafayette outstanding common
stock. Lafayette will become a separate subsidiary of HUBCO. The transaction
will be accounted for as a pooling-of-interests and is subject to regulatory
approval and approval of HUBCO and Lafayette shareholders and other customary
conditons.
On April 29, 1996, HUBCO executed a Definitive Agreement with Hometown
Bancorporation ("Hometown"), by which HUBCO will acquire Hometown for $17.75 per
share in cash and will merge its subsidiary, The Bank of Darien, into Lafayette
if the Lafayette acquisition has closed, adding approximately $212 million of
assets to
4
<PAGE>
HUBCO. This transaction will be accounted for as a purchase and is expected to
close in the third quarter of 1996.
NOTE C--EARNINGS PER SHARE
Earnings per share have been computed based on the weighted average number of
common shares outstanding during the periods. All share data has been
retroactively restated for all poolings and stock dividends.
NOTE D--SECURITIES
The following table presents the amortized cost and estimated market value of
securities at the dates indicated:
MARCH 31, 1996
--------------------------------------------
GROSS UNREALIZED ESTIMATED
AMORTIZED ------------------ MARKET
COST GAINS (LOSSES) VALUE
--------- ------ -------- ---------
AVAILABLE FOR SALE
U.S. Government $120,228 $1,243 $ (194) $121,277
U.S. Government
agencies 225,702 543 (984) 225,261
States and political
subdivisions 9,831 20 (7) 9,844
Other debt securities 3,844 79 (12) 3,911
Equity securities 33,269 3,230 (619) 35,880
-------- ------ ------- --------
$392,874 $5,115 $(1,816) $396,173
======== ====== ======= ========
MARCH 31, 1996
--------------------------------------------
GROSS UNREALIZED ESTIMATED
AMORTIZED ------------------ MARKET
COST GAINS (LOSSES) VALUE
--------- ------ -------- ---------
HELD TO MATURITY
U.S. Government $ 80,592 $2,354 $( --) $ 82,946
U.S. Government
agencies 161,825 1,901 (1,019) 162,707
-------- ------ ------- --------
$242,417 $4,255 $(1,019) $245,653
======== ====== ======= ========
5
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NOTE D--SECURITIES (Continued)
DECEMBER 31, 1995
--------------------------------------------
GROSS UNREALIZED ESTIMATED
AMORTIZED ------------------ MARKET
COST GAINS (LOSSES) VALUE
--------- ------ -------- ---------
AVAILABLE FOR SALE
U.S. Government $144,496 $1,662 $ (402) $145,756
U.S. Government
agencies 139,516 770 (1,023) 139,263
States and political
subdivisions 9,970 30 (10) 9,990
Other debt securities 3,849 70 (11) 3,908
Equity securities 11,727 2,889 (254) 14,362
-------- ------ ------- --------
$309,558 $5,421 $(1,700) $313,279
======== ====== ======= ========
DECEMBER 31, 1995
--------------------------------------------
GROSS UNREALIZED ESTIMATED
AMORTIZED ------------------ MARKET
COST GAINS (LOSSES) VALUE
--------- ------ -------- ---------
HELD TO MATURITY
U.S. Government $ 95,521 $2,438 $ (18) $ 97,941
U.S. Government
agencies 170,182 1,939 (1,160) 170,961
-------- ------- ------- --------
$265,703 $4,377 $(1,178) $268,902
======== ====== ======= ========
6
<PAGE>
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
HUBCO's Consolidated Financial Statements and the accompanying notes. Unless
otherwise noted, all dollar amounts, other than per share information, are
presented in thousands.
RESULTS OF OPERATIONS
General
Net income for the three-month period ended March 31, 1996 was $6.5 million, an
increase of 14% when compared to net income of $5.7 million for the three-month
period ended March 31, 1995. Earnings per share for the three-month period ended
March 31, 1996 were $.47 per share, an increase of 21% when compared to $.39 per
share for the same period in 1995.
Return on average equity and return on average assets were 18.94% and 1.52%,
respectively for the three-month period ended March 31, 1996 compared to 17.54%
and 1.28% , respectively, for the same period in 1995.
Net Interest Income
Net interest income for the three-month period ended March 31, 1996 was $20.3
million compared to $22.0 million for the same period in 1995. The decrease in
net interest income is attributable to a decrease in average earning assets of
$81.2 million coupled with a decline in HUBCO's net interest margin (net
interest income on a tax equivalent basis divided by average interest-earning
assets) to 5.18% for the three-month period ended March 31, 1996 from 5.35% for
the same period in 1995.
Interest and fees on loans were $21.2 million for the three-month period ended
March 31, 1996 compared to $22.0 million for the same period in 1995. The
average balance of loans was $945.6 million with an average yield of 9.04% for
the three-month period ended March 31, 1996 compared to an average balance of
$948.1 million with an average yield of 9.44% for the same period in 1995. The
decrease in average loans is primarily the result of a decline in the credit
card portfolio and contractual payments on residential mortgage loans and
consumer loans.
Interest and dividends on securities were $9.3 million for the three-month
period ended March 31, 1996 compared to $10.5 million for the same period in
1995. The average balance of securities was $617.3 million with an average yield
of 6.13% for the three-month period ended March 31, 1996 compared to an average
balance of $686.3 million with an average yield of 6.19% for the same period in
1995. The decrease in average securities is primarily due to maturities
occurring during the comparable periods with the reinvestment of funds dependent
on the liquidity requirements of the Company.
7
<PAGE>
Interest on deposits was $9.6 million for the three-month period ended March 31,
1996 compared to $9.4 million for the same period in 1995. The average balance
of interest-bearing deposits at March 31, 1996 was $1.20 billion with an average
cost of 3.21% compared to an average balance of $1.28 billion with an average
cost of 2.98% for the same period in 1995. The decrease in the average balance
of deposits is primarily due to a reduction in the interest-bearing transaction
account products. The decline was partially offset by the addition of
approximately $60.6 million of deposit liabilities acquired in the CrossLand
acquisition. The cost of interest-bearing deposits has increased due to the
higher cost of acquired deposits.
Interest on borrowings decreased 63%, or $502, as a result of a decrease in the
volume of borrowings from March 31, 1995 to March 31, 1996, based on the
liquidity needs of the Company.
8
<PAGE>
Provision for Possible Loan Losses
The provision for possible loan losses decreased $222, or 19.7%, from $1.1
million for the three-month period ended March 31, 1995 to $903 for the first
quarter 1996. See "Financial Condition and Loan Portfolio" for a discussion of
credit quality of HUBCO's loan portfolio.
The following table presents the activity in the allowance for possible loan
losses for the periods indicated:
SUMMARY OF LOAN LOSS EXPERIENCE
SUMMARY OF ACTIVITY IN THE ALLOWANCE,
BROKEN DOWN BY LOAN CATEGORY
-----------------------------------------
THREE MONTHS ENDED YEAR ENDED
MARCH 31, 1996 DECEMBER 31, 1995
------------------ -----------------
(In Thousands)
Amount of Loans Outstanding $951,746 $955,924
======== ========
Daily Average Amount of Loans $945,630 $944,065
======== ========
Balance at Beginning of Period $ 18,689 $ 17,986
Loans Charged-Off:
Real Estate--Mortgage (343) (1,283)
Commercial (385) (3,219)
Consumer (559) (1,233)
-------- --------
Total Loans Charged-Off (1,287) (5,735)
-------- --------
Recoveries of Loans Previously
Charged-Off:
Real Estate--Mortgage 184 728
Commercial 99 401
Consumer 120 484
-------- --------
Total Recoveries 403 1,613
-------- --------
Net Loans Charged-Off (884) (4,122)
Provision for Possible Loan Losses 903 4,825
-------- --------
Balance at End of Period $ 18,708 $ 18,689
======== ========
Ratio of Net Loans Charged-Off
During the Period to Average
Loans Outstanding .37% .44%
=== ===
9
<PAGE>
Non-Interest Income
Non-interest income was $ 4.5 million for the three-month period ended March 31,
1996 compared to $4.3 million for the same period in 1995.
Trust department income increased 62.8% to $241 for the three-month period ended
March 31, 1996 compared to $148 for the same period in 1995. This increase is a
result of an increase in trust accounts arising from a three-year new business
program developed in 1994.
Service charges on deposit accounts were down 14.9% to $2.0 million for the
three-month period ended March 31, 1996 from $2.4 million for the same period in
1995. This reduction in deposit fee income is primarily the result of the 5.1%
reduction in transaction accounts during the first quarter of 1996 compared to
1995's first quarter.
Securities gains were $286 for the three-month period ended March 31, 1996
compared to $589 for the same period in 1995. The gains resulted from the sale
of government securities following the Growth-related restructuring of the
portfolio.
Other income increased by $712, or 60.1%, to $1.9 million for the three-month
period ended March 31, 1996 from $1.2 million for the same period in 1995. This
increase is primarily the result of late charges and other fees on the private
label credit card portfolio and fee income generated by the international
department.
Non-Interest Expense
Salaries and employee benefits decreased by $1.4 million, or 17.5%, to $6.8
million for the three-month period ended March 31, 1996 from $8.2 million for
the same period in 1995. The decrease is attributable to the efficiencies
attained from the staffing consolidations of the acquired institutions and the
sale of a 50% interest in the Company's data processing subsidiary.
Occupancy expense increased by $424, or 37.8%, as a result of the acquired
CrossLand branches and renovations to some of the Bank's older facilities.
Equipment expense decreased by $470, or 39.5%, as a result of the sale in the
fourth quarter of 1995, of a 50% interest in the Company's data processing
subsidiary to another financial institution.
Deposit and other insurance expense decreased in 1996 to one-tenth of its 1995
level due to the FDIC's rate reduction, for which Hudson United Bank received
full benefit.
Outside service fees increased from $1.4 million in 1995 to $2.1 million in
1996, an increase of $678, or 47.7%. The increase is partially due to
acquisition related expenses incurred in the first quarter of 1996, in
connection with HUBCO's acquisitions of Growth and CrossLand. Also contributing
to this increase is the Company's payment of data processing and deposit
servicing fees to the new financial services company, which is now 50% owned by
HUBCO and no longer consolidated by HUBCO. Prior to the subsidiary's partial
sale, these servicing charges were recognized mainly as salaries and benefits
and equipment expense, which displayed offsetting decreases in the first quarter
of 1996 compared to the same period in 1995.
10
<PAGE>
Other real estate expense increased slightly from $159 in 1995 to $196 in 1996
due primarily to the 1996 provision for the other real estate reserve.
Amortization of intangibles increased by $52 or 9.5%, as a result of the
addition beginning in March 1996, of the deposit premium amortization applicable
to the CrossLand branches.
Other expenses decreased by $1.1 million, or 42.4%, from $2.7 million for the
three-month period ended March 31, 1995 to $1.5 million for the first quarter of
1996. The decrease is primarily due to a write-down of $700 in 1995 on fixed
assets, to their realizable value in anticipation of their sale, and to cost
efficiencies in supplies, communication systems and administration fees of the
merged institution in 1996 when compared with the separate entities of HUBCO,
Jefferson, Urban and Growth during the first quarter of 1995.
Provision for Income Taxes
The provision for income taxes increased by $696, or 22.9%, as a result of an
increase in net income before taxes of $1.5 million, or 17.3% and an increase in
the Company's effective tax rate from 35% in 1995 to 36% in 1996.
FINANCIAL CONDITION
Loan Portfolio
The loan portfolio decreased by $4.2 million to $951.7 million at March 31, 1996
from $955.9 million at December 31, 1995. The decrease is primarily attributable
to a seasonal runoff in the credit card portfolio. Slight decreases in the
commercial and consumer portfolios due to repayments were almost entirely offset
by growth in the mortgage real estate portfolio.
At March 31, 1996 HUBCO's non-performing loans, which include non-accruing and
renegotiated loans, were $19.7 million compared to $17.8 million at December 31,
1995. Other real estate at March 31, 1996 was $6.3 million compared to $6.1
million at December 31, 1995.
11
<PAGE>
The following table presents the composition of non-performing assets and loans
past due 90 days or more and accruing and selected asset quality ratios at the
dates indicated:
ASSET QUALITY SCHEDULE - QUARTERLY RECAP
(In thousands)
3/31/96 12/31/95 9/30/95 6/30/95
------- -------- -------- -------
Non-Accrual Loans:
Commercial $ 6,865 $ 6,966 $ 6,581 $ 7,501
Real Estate 10,651 7,835 8,335 9,099
Consumer 875 856 621 647
Credit Cards -- 443 250 448
------- ------- ------- -------
Total Non-Accrual Loans 18,391 16,100 15,787 17,695
------- ------- ------- -------
Renegotiated Loans 1,357 1,700 2,261 3,328
------- ------- ------- -------
Total Non-performing Loans 19,748 17,800 18,048 21,023
Other Real Estate 6,307 6,104 8,246 5,828
------- ------- ------- -------
Total Non-Performing Assets $26,055 $23,904 $26,294 $26,851
======= ======= ======= =======
Non-Accrual Loans to Total Loans 1.93% 1.68% 1.67% 1.86%
Non-Performing Assets to
Total Assets 1.50% 1.37% 1.52% 1.55%
Allowance for Loan Losses to
Non-Accrual Loans 101.72 116.08 114.28 102.94
Allowance for Loan Losses to
Non-Performing Loans 94.73 104.99 99.96 86.64
Loans Past Due 90 Days or
More and Accruing:
Commercial $ 13 $ 1,026 $ 1,751 $ 473
Real Estate 1,878 4,137 2,967 3,121
Consumer 567 307 169 179
Credit Cards 2,066 592 624 383
------- ------- ------- -------
Total Past Due Loans $ 4,524 $ 6,062 $ 5,511 $ 4,156
======= ======= ======= =======
Management evaluates the adequacy of its allowance for possible loan losses to
absorb potential loan losses taking into consideration the risks inherent in the
loan portfolio, past loan loss experience, geographic and industry
concentrations, delinquency trends and economic conditions. Based on these
factors, the allowance for possible loan losses has been maintained at a level
which management believes to be adequate to dispose of problem loans and other
real estate. At March 31, 1996 the allowance for possible loan losses was $18.7
million or 1.97% of total loans and 94.7% of non-performing loans.
Securities Portfolio
The securities portfolio increased $59.6 million, or 10.3% to $638.6 million at
March 31, 1996 from $579.0 million at December 31, 1995. This increase is mainly
attributable to the investment of the cash received in the CrossLand acquisition
12
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and to the purchase of 500,000 shares of Lafayette common stock, which are
classified as available-for-sale. This increase was slightly offset by a
decrease in the U.S. Government securities of $39.5 million which was primarily
the result of maturities.
The securities portfolio consists primarily of U.S. Government and government
agencies securities, securities of states and political subdivisions and
corporate debt securities generally with original maturities of 5 years or less.
HUBCO also maintains a portfolio of equity securities which it holds in its
available-for-sale portfolio.
Intangible Assets
Total intangibles at March 31, 1996 were $10.1 million compared to $7.6 million
at December 31, 1995. The increase is the result of the CrossLand acquisition
which added $3.0 million of intangibles.
Deposits
Total deposits at March 31, 1996 were $1.52 billion compared to $1.54 billion at
December 31, 1995. The decrease in deposits primarily occurred in the
transaction deposit account products and the deposit accounts acquired in the
Growth transaction, as a result of HUBCO's deposit pricing. Growth offered
higher rates of interest on their deposit accounts which, when lowered to
HUBCO's interest rate level, caused some decrease in these accounts.
Short-term Borrowings
Short-term borrowings increased $27.5 million to $49.2 million at March 31, 1996
from $21.7 million at December 31, 1995. The increase in borrowings is primarily
attributable to the pre-investment of certain securities maturing in the near
term.
Stockholders' Equity
Total stockholders' equity at March 31, 1996 was $131.7 million compared to
$142.4 million at December 31, 1995. This decrease is attributable to the
purchase of $14.8 million of treasury stock by HUBCO, to be reissued through the
Company's benefit plans, which was offset by the retention of $6.5 million of
earnings less a cash dividend of $2.4 million.
Capital Resources
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 at March 31, 1996, and the minimum regulatory requirements for
such capital ratios are as follows:
13
<PAGE>
RATIOS AT 1996 MINIMUM
MARCH 31, 1996 REQUIREMENTS*
-------------- ------------
Tier I Risk-Based Capital Ratio 11.56% 6.0%
Total Risk-Based Capital Ratio 15.24% 10.0%
Leverage Capital Ratio 6.96% 5.0%
* For qualification as a well-capitalized institution.
14
<PAGE>
Items 1 through 5 are not applicable or the responses are negative.
Item 6: Exhibits and Reports on Form 8-K
(a) EXHIBITS
(27) Financial Data Schedule
(b) REPORTS ON FORM 8-K
(1) On January 16, 1996, HUBCO filed a Form 8-K (date of earliest event --
January 12, 1996), containing HUBCO's press release announcing the merger of
HUBCO and Growth Financial Corp., the consummation of which occurred on January
12, 1996.
(2) On February 20, 1996, HUBCO filed a Form 8-K (date of earliest event --
February 6, 1996), to announce the signing of a definitive merger agreement with
Lafayette American Bank and Trust Company.
(3) On March 6, 1996, HUBCO filed a Form 8-K (date of earliest event -- March 5,
1996), to report HUBCO's estimates of the one-time merger related and
restructuring charge that it anticipates will result from its acquisition of
Lafayette American Bank and Trust Company.
(4) On March 7, 1996, HUBCO filed a Form 8-K (date of earliest event -- February
28, 1996), which contained a press release reporting HUBCO's consummation of its
acquisition of three branches from CrossLand Federal Savings Bank.
(5) On March 18, 1996, HUBCO filed a Form 8-K/A (date of earliest event -- March
5, 1996), to amend certain information contained in its Form 8-K filed on March
7, 1996 containing estimates of HUBCO's one-time merger related restructuring
charge.
(6) On April 29, 1996, HUBCO filed a Form 8-K (date of earliest event -- April
28, 1996), to announce the signing of a definitive agreement with Hometown
Bancorporation, Inc. a Delaware corporation and registered bank holding company,
whereby Hometown will be merged with and into HUBCO.
(7) On May 8, 1996, HUBCO filed a Form 8-K (date of earliest event -- May 3,
1996), to make readily available, a copy of Hometown Bancorporation, Inc.'s
Annual Report of Form 10-K for the year ended December 31, 1995, without
exhibits.
15
<PAGE>
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 15, 1996 /S/ KENNETH T. NEILSON
- - ------------------------------- ----------------------
Date Kenneth T. Neilson
President & Chief Executive Officer
May 15, 1996 /S/ RICHARD I. LINHART
- - ------------------------------- ----------------------
Date Richard I. Linhart
Executive Vice President &
Chief Financial Officer
16
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