================================================================================
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 June 30, 1998
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 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:
27,661,881 shares, no par value, outstanding as of August 12, 1998.
================================================================================
<PAGE>
HUBCO, INC. AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited):
Consolidated Balance Sheets
At June 30, 1998 and December 31, 1997......................... 1
Consolidated Statements of Income and Comprehensive Income
For the three-months and six-months ended
June 30, 1998 and 1997......................................... 2-3
Consolidated Statements of Changes in Stockholders' Equity
For the three months and six-months ended
June 30, 1998 and for the Year ended December 31, 1997......... 4
Consolidated Statements of Cash Flows
For the six-months ended
June 30, 1998 and 1997......................................... 5
Notes to Consolidated Financial Statements..................... 6-11
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.................. 12-17
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K............................... 18-19
Signatures..................................................... 20
PART III. FINANCIAL DATA SCHEDULE .................................... 21
<PAGE>
<TABLE>
<CAPTION>
HUBCO, Inc. and Subsidiaries
- ------------------------------------------------------------------------------------------
PART I. FINANCIAL INFORMATION CONSOLIDATED BALANCE SHEETS (Unaudited)
JUNE 30, December 31,
(in thousands, except share data) 1998 1997
- ------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and due from banks ................................... $ 194,985 $ 206,399
Federal funds sold ........................................ 70,793 241,365
----------- -----------
TOTAL CASH AND CASH EQUIVALENTS ............... 265,778 447,764
Securities available for sale, at market value ............ 1,423,753 958,210
Securities held to maturity, at cost (market value
of $350,140 and $255,099 for 1998 and 1997,
respectively) ........................................... 348,217 253,107
Loans:
Real estate mortgage ................................. 1,931,521 2,020,723
Commercial and financial ............................. 541,508 546,878
Consumer credit ...................................... 267,148 267,811
Credit card .......................................... 78,946 91,047
----------- -----------
TOTAL LOANS ................................... 2,819,123 2,926,459
Less: Allowance for possible loan losses ............. (52,538) (51,468)
----------- -----------
NET LOANS ..................................... 2,766,585 2,874,991
Premises and equipment, net ............................... 70,330 66,369
Other real estate owned ................................... 9,148 10,752
Intangibles, net of amortization .......................... 80,611 53,505
Other assets .............................................. 145,130 117,481
----------- -----------
TOTAL ASSETS .................................. $ 5,109,552 $ 4,782,179
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest bearing ..................................... $ 746,950 $ 739,723
Interest bearing ........................................ 3,118,576 2,992,010
----------- -----------
TOTAL DEPOSITS ................................ 3,865,526 3,731,733
Short-term borrowings ..................................... 694,161 530,187
Other liabilities ......................................... 76,545 59,149
----------- -----------
TOTAL LIABILITIES ............................. 4,636,232 4,321,069
Subordinated debt ......................................... 100,000 100,000
Company-obligated mandatorily redeemable preferred
series B capital securities of a subsidiary trust
holding solely junior subordinated debentures of
the company ............................................. 100,000 50,000
----------- -----------
Commitments and contingencies
Stockholders' Equity:
Convertible Preferred stock - Series B, no par
value; authorized 10,300,000 shares; 500
shares issued and outstanding
in 1998; 1,250 shares issued and outstanding in 1997 .. 50 125
Common stock, no par value; authorized 53,045,000 shares;
29,002,318 shares issued and 28,047,704 shares
outstanding in 1998; and 28,942,165 shares issued
and28,705,621 shares outstanding in 1997 .............. 51,566 51,459
Additional paid-in capital .............................. 146,599 154,770
Retained earnings ....................................... 107,787 107,888
Treasury stock, at cost 954,614 shares in 1998
and 236,544 shares in 1997 ............................ (34,562) (5,878)
Employee stock awards and unallocated shares
held by ESOP, at cost ................................ (917) (668)
Unrealized gain on securities available
for sale, net of income taxes ........................ 2,797 3,414
----------- -----------
TOTAL STOCKHOLDERS' EQUITY .................... 273,320 311,110
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ......... $ 5,109,552 $ 4,782,179
=========== ===========
</TABLE>
See notes to consolidated financial statements.
1
<PAGE>
HUBCO,Inc. and Subsidiaries
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Unaudited)
For the Three-Months Ended June 30, 1998 1997
(in thousands, except share data)
- --------------------------------------------------------------------------------
INTEREST AND FEE INCOME:
Loans ............................................ $61,338 63,710
Securities ....................................... 22,449 24,330
Other ............................................ 1,223 894
------- -------
TOTAL INTEREST AND FEE INCOME ........ 85,010 88,934
------- -------
INTEREST EXPENSE:
Deposits ......................................... 24,243 28,605
Short-term borrowings ............................ 8,199 6,496
Subordinated and other debt ...................... 3,327 3,183
------- -------
TOTAL INTEREST EXPENSE ............... 35,769 38,284
------- -------
NET INTEREST INCOME .................. 49,241 50,650
PROVISION FOR POSSIBLE LOAN LOSSES ............... 2,681 2,346
------- -------
NET INTEREST INCOME AFTER PROVISION
FOR POSSIBLE LOAN LOSSES ........... 46,560 48,304
------- -------
NONINTEREST INCOME:
Trust department income .......................... 865 956
Service charges on deposit accounts .............. 4,743 5,071
Securities gains ................................. 784 1,861
Shoppers Charge fee income ....................... 3,291 2,033
Other income ..................................... 4,096 1,783
------- -------
TOTAL NONINTEREST INCOME ............. 13,779 11,704
------- -------
NONINTEREST EXPENSE:
Salaries ......................................... 11,150 13,387
Pension and other employee benefits .............. 3,512 2,956
Occupancy expense ................................ 3,652 3,304
Equipment expense ................................ 2,188 2,323
Deposit and other insurance ...................... 242 761
Outside services ................................. 5,358 5,509
Other real estate owned expense .................. 531 670
Amortization of intangibles ...................... 2,325 2,188
Merger related and restructuring costs ........... 25,036 35
Other expense .................................... 4,412 4,833
------- -------
TOTAL NONINTEREST EXPENSE ............ 58,406 35,966
------- -------
INCOME BEFORE INCOME TAXES ........... 1,933 24,042
PROVISION FOR INCOME TAXES ....................... 1,677 9,844
------- -------
NET INCOME ........................... $ 256 $14,198
======= =======
COMPREHENSIVE INCOME, NET OF TAX:
Total holding gains (losses) arising during period $ 1,210 $ 7,992
Less: reclassification adjustment for gains
included in net income ......................... 482 1,099
------- -------
Net unrealized holding gains ..................... 728 6,893
------- -------
COMPREHENSIVE INCOME ................. $ 984 21,091
======= =======
NET INCOME PER SHARE:
Basic ............................................ $ 0.01 $ 0.48
Diluted .......................................... $ 0.01 $ 0.46
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic ............................................ 28,651 29,267
Diluted .......................................... 29,185 30,916
2
See notes to consolidated financial statements.
<PAGE>
HUBCO,Inc. and Subsidiaries
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Unaudited)
For the Six-Months Ended June 30, 1998 1997
(in thousands, except share data)
- --------------------------------------------------------------------------------
INTEREST AND FEE INCOME:
Loans ............................................ $ 123,920 $ 125,589
Securities ....................................... 40,349 48,252
Other ............................................ 2,887 1,461
--------- ---------
TOTAL INTEREST AND FEE INCOME ........ 167,156 175,302
--------- ---------
INTEREST EXPENSE:
Deposits ......................................... 50,954 58,328
Short-term borrowings ............................ 12,620 11,815
Subordinated and other debt ...................... 6,527 6,021
--------- ---------
TOTAL INTEREST EXPENSE ............... 70,101 76,164
--------- ---------
NET INTEREST INCOME .................. 97,055 99,138
PROVISION FOR POSSIBLE LOAN LOSSES ............... 8,794 4,680
--------- ---------
NET INTEREST INCOME AFTER PROVISION
FOR POSSIBLE LOAN LOSSES ........... 88,261 94,458
--------- ---------
NONINTEREST INCOME:
Trust department income .......................... 1,729 1,547
Service charges on deposit accounts .............. 9,438 10,049
Securities gains ................................. 3,053 3,149
Shoppers Charge fee income ....................... 5,562 3,362
Other income ..................................... 6,492 4,233
--------- ---------
TOTAL NONINTEREST INCOME ............. 26,274 22,340
--------- ---------
NONINTEREST EXPENSE:
Salaries ......................................... 23,337 25,216
Pension and other employee benefits .............. 7,521 7,515
Occupancy expense ................................ 7,145 6,782
Equipment expense ................................ 4,559 4,447
Deposit and other insurance ...................... 850 1,262
Outside services ................................. 11,018 10,335
Other real estate owned expense .................. 1,142 1,521
Amortization of intangibles ...................... 4,659 4,376
Merger related and restructuring costs ........... 27,516 121
Other expense .................................... 8,599 9,180
--------- ---------
TOTAL NONINTEREST EXPENSE ............ 96,346 70,755
--------- ---------
INCOME BEFORE INCOME TAXES ........... 18,189 46,043
PROVISION FOR INCOME TAXES ....................... 7,348 18,378
--------- ---------
NET INCOME .......................... $ 10,841 $ 27,665
========= =========
COMPREHENSIVE INCOME, NET OF TAX:
Total holding gains (losses) arising during period $ 1,203 $ 1,696
Less: reclassification adjustment for gains
included in net income ......................... 1,820 1,892
--------- ---------
Net unrealized holding loss ...................... (617) (196)
--------- ---------
COMPREHENSIVE INCOME ................. $ 10,224 27,469
========= =========
NET INCOME PER SHARE:
Basic ............................................ $ 0.38 $ 0.93
Diluted .......................................... $ 0.37 $ 0.89
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic ............................................ 28,813 29,266
Diluted .......................................... 29,371 31,044
See notes to consolidated financial statements.
3
<PAGE>
HUBCO, INC. and Subsidiaries
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Employee
Stock
Awards and Unrealized
Convertible Unallocated Gain(loss)
Preferred Stock Common Stock Additional Shares Held on Securities
----------------------------------------- Paid-in- Retained Treasury in ESOP, at Available
Shares Amount Shares Amount Capital Earnings Stock Cost for Sale Total
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1996 39,600 $ 3,960 28,630,003 $50,904 $187,841 $ 98,521 $ (6,074) $(883) $(8,110) $326,159
- ------------------------------------------------------------------------------------------------------------------------------------
Net income -- -- -- -- -- 53,217 -- -- -- 53,217
Cash dividends paid:
Common -- -- -- -- -- (20,177) -- -- -- (20,177)
Preferred -- -- -- -- -- (650) -- -- -- (650)
3% stock dividend -- -- 287,033 510 9,896 (23,029) 12,709 -- -- 86
Issuance of common stock for:
Stock options exercised -- -- 21,685 39 (6,386) -- 9,112 -- -- 2,765
Warrants exercised -- -- -- -- (48) -- 65 -- -- 17
Dividend reinvestment and
stock purchase plan -- -- 3,444 6 77 -- -- -- -- 83
Preferred stock conversion (38,350) (3,835) -- -- (36,513) -- 40,348 -- -- --
Cash in lieu of fractional
shares -- -- -- -- (97) -- -- -- -- (97)
Purchase of treasury stock -- -- -- -- -- -- (62,338) -- -- (62,338)
Effect of compensation plans -- -- -- -- -- 6 300 215 -- 521
Change in unrealized
gain(loss) on securities
available for sale -- -- -- -- -- -- -- -- 11,524 11,524
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1997 1,250 $ 125 28,942,165 $51,459 $154,770 $107,888 $ (5,878) $(668) $ 3,414 $311,110
- ------------------------------------------------------------------------------------------------------------------------------------
Net income -- -- -- -- -- 10,841 -- -- -- 10,841
Cash dividends paid - common -- -- -- -- -- (10,893) -- -- -- (10,893)
Issuance of common stock for:
Stock options exercised -- -- 52,163 92 (397) -- 1,624 -- -- 1,319
Warrants exercised -- -- 7,158 13 37 -- -- -- -- 50
Preferred stock conversion (750) (75) 16,608 30 (130) -- 175 -- -- --
Issuance and retirement of
treasury stock -- -- (30,651) (55) (7,708) -- 7,763 -- -- --
Cash in lieu of fractional
shares -- -- -- -- (142) -- -- -- -- (142)
Purchase of treasury stock -- -- -- -- -- -- (38,314) -- -- (38,314)
Effect of compensation plans -- -- 14,875 27 247 -- 68 (249) -- 93
Other Transactions -- -- -- -- (78) (49) -- -- -- (127)
Change in Unrealized
gain(loss) on securities
available for sale -- -- -- -- -- -- -- -- (617) (617)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at June 30, 1998 500 $ 50 29,002,318 $51,566 $146,599 $107,787 $(34,562 $(917) $ 2,797 $273,320
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
HUBCO, INC. and Subsidiaries
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in thousands)
SIX MONTHS ENDED
JUNE 30,
---------------------
1998 1997
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income ........................................... $ 10,841 $ 27,665
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for possible loan losses ............... 8,794 4,680
Provision for depreciation and amortization ...... 8,286 8,228
Amortization of security premiums, net ........... 724 1,148
Securities gains ................................. (3,053) (3,149)
Loss (Gain) on sale of premises and equipment .... 510 (119)
Deferred income tax provision .................... -- 1,476
Gain on sale of loans ............................ (974) (94)
Net change in loans originated for sale ............ -- 395
(Increase) decrease in other assets ............... (23,315) 5,953
Increase in other liabilities ...................... 14,477 16,130
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES .............. 16,290 62,313
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of securities:
Available for sale ................................. 148,589 77,065
Proceeds from repayments and maturities of securities:
Available for sale ................................. 213,724 88,671
Held to maturity ................................... 38,278 50,060
Purchase of securities
Available for sale ................................. (848,307) (142,424)
Held to maturity ................................... (87,837) --
Net cash acquired through acquisitions ............... 209,498 --
Loan originations net of repayments .................. 93,705 (3,762)
Proceeds from sales of premises and equipment ........ 25 36
Proceeds from sales of loans ......................... 54,424 18,306
Purchases of premises and equipment .................. (3,091) (3,184)
Decrease in other real estate ........................ 1,604 5,649
--------- ---------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES .... (179,388) 90,417
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net decrease in demand deposits, NOW accounts,
and savings accounts ............................... (89,519) (33,565)
Net decrease in certificates of deposits ............. (93,899) (173,729)
Net increase in short term borrowings ................ 163,631 41,555
Net proceeds from issuance of debt securities ........ 48,737 49,250
Repayment of ESOP loan ............................... -- (152)
Proceeds from issuance of common stock ............... 1,369 2,213
Cash dividends ....................................... (10,893) (10,280)
Acquisition of treasury stock ........................ (38,314) (10,228)
--------- ---------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES .... (18,888) (134,936)
--------- ---------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS ....... (181,986) 17,794
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ....... 447,764 217,353
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ............. $ 265,778 $ 235,147
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for-
Interest ............................................. $ 68,088 $ 74,114
Income Taxes ......................................... 9,066 15,729
========= =========
See note to Consolidated Financial Statements.
5
<PAGE>
HUBCO, Inc. and Subsidiaries
- --------------------------------------------------------------------------------
HUBCO INC. AND SUBSIDIARIES
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"), Lafayette
American Bank ("Lafayette"), Bank of the Hudson ("BOTH"), HUB Capital Trust I
and HUB Capital Trust II. 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. The consolidated financial statements should be read in conjunction with
the Annual Report on Form 10-K for the year ended December 31, 1997.
NOTE B -- EARNINGS PER SHARE
In the fourth quarter of 1997, the Company adopted SFAS No. 128, "Earnings per
Share." This statement establishes standards for computing and presenting
earnings per share and requires dual presentation of basic and diluted earnings
per share. Basic earnings per share is computed by dividing net income, less
dividends on the convertible preferred stock, by the weighted average number of
common shares outstanding during the period. Diluted earnings per share is
computed by dividing net income by the weighted average number of common shares
plus the number of shares issuable upon conversion of the preferred stock and
the incremental number of shares issuable from the exercise of stock options and
stock warrants, calculated using the treasury stock method. All per share
amounts have been retroactively restated to reflect all stock splits and stock
dividends. All prior periods presented have been restated in this new format.
6
<PAGE>
A reconciliation of net income to net income available to common stockholders
and a reconciliation of weighted average common shares outstanding to weighted
average shares outstanding assuming dilution follows (in thousands, except per
share data):
Three Months Ended June 30,
- --------------------------------------------------------------------------------
1998 1997
- --------------------------------------------------------------------------------
BASIC EARNINGS PER SHARE
Net Income ................................ $ 256 $14,198
Less Preferred Stock Dividends ............ -- 216
------- -------
Net Income Available To Common Stockholders 256 13,982
Weighted Average Common Shares Outstanding 28,651 29,267
Basic Earnings Per Share .................. $ 0.01 $ 0.48
======= =======
DILUTED EARNINGS PER SHARE
Net Income ................................ $ 256 $14,198
Weighted Average Common Shares Outstanding 28,651 29,267
Effect Of Dilutive Securities:
Convertible Preferred Stock ............ 22 1,217
Warrants ............................... 23 25
Stock Options .......................... 489 407
------- -------
Weighted Average Shares Outstanding
Assuming Dilution ....................... 29,185 30,916
Diluted Earnings Per Share ................ $ 0.01 $ 0.46
======= =======
Six Months Ended June 30,
- --------------------------------------------------------------------------------
1998 1997
- --------------------------------------------------------------------------------
BASIC EARNINGS PER SHARE
Net Income ................................ $10,841 $27,665
Less Preferred Stock Dividends ............ -- 435
------- -------
Net Income Available To Common Stockholders 10,841 27,230
Weighted Average Common Shares Outstanding 28,813 29,266
Basic Earnings Per Share .................. $ 0.38 $ 0.93
======= =======
DILUTED EARNINGS PER SHARE
Net Income ................................ $10,841 $27,665
Weighted Average Common Shares Outstanding 28,813 29,266
Effect Of Dilutive Securities:
Convertible Preferred Stock ............ 27 1,266
Warrants ............................... 24 25
Stock Options .......................... 507 487
------- -------
Weighted Average Shares Outstanding
Assuming Dilution ....................... 29,371 31,044
Diluted Earnings Per Share ................ $ 0.37 $ 0.89
======= =======
NOTE C -- ACQUISITIONS
On January 8, 1998, the Company acquired The Bank of Southington ("BOS"), and
merged it into Lafayette. BOS was a $135 million asset state bank and trust
company with 3 branch locations, headquartered in Southington, Connecticut. In
the merger, each share of BOS common stock was converted into .618 shares of
HUBCO common stock. The acquisition was treated as a pooling of interests for
accounting purposes. The financial statements have been restated to include BOS
for all periods presented.
On February 5, 1998, the Company acquired Security National Bank & Trust Company
of New Jersey ("SNB"), and merged it into Hudson United. Security was a $86
million asset bank and trust company with 4 branch locations, headquartered in
Newark, New Jersey. In the merger, shareholders of SNB received $34.00 in cash
for each share of SNB common stock. The merger was accounted for under the
purchase method of accounting and
7
<PAGE>
therefore, SNB's results of operations have been included in the accompanying
financial statements subsequent to February 5, 1998.
On March 3, 1998, the Company signed a definitive agreement to acquire Community
Financial Holding Corporation ("CFHC"), and merge Community National Bank,
CFHC's wholly-owned subsidiary, into Hudson United. In the merger, each share of
CFHC common stock will be exchanged for .695 shares of HUBCO common stock for
each share of CFHC. CFHC is a $163 million asset bank headquartered in Westmont,
New Jersey. The CFHC merger is expected to close in the third quarter of 1998
and to be treated as a pooling of interests.
On March 31, 1998, the Company signed a definitive agreement to acquire IBS
Financial Corp. ("IBSF"), and merge Inter-Boro Savings and Loan Association,
IBSF's wholly-owned subsidiary, into Hudson United Bank. In the merger, each
share of IBSF common stock will be exchanged for a fixed number of shares of
HUBCO common stock at an exchange ratio of .534 share of HUBCO common stock for
each share of IBSF. IBSF is a $734 million asset savings and loan holding
company headquartered in Cherry Hill, New Jersey. The IBSF merger is expected to
close in the third quarter of 1998 and to be treated as a pooling of interests.
On March 31, 1998, the Company signed a definitive agreement to acquire Dime
Financial Corp. ("DFC"), and merge The Dime Savings Bank of Wallingford, DFC's
wholly-owned subsidiary, into Lafayette. In the merger, DFC shareholders will
receive HUBCO common stock with an indicated value of $38.25 per share based
upon the median price of HUBCO common stock in a period immediately before
regulatory approval. A maximum exchange ratio of 1.05 shares of HUBCO common
stock for each share of DFC common stock will apply if HUBCO's pre-approval
price is below $36.43. A minimum exchange ratio of .93 shares will apply if
HUBCO's pre-approval price is above $41.13. DFC is a $961 million asset holding
company headquartered in Wallingford, Connecticut. The DFC merger is expected to
close in the third quarter of 1998 and to be treated as a pooling of interests.
On April 24, 1998, the Company completed its acquisition of Poughkeepsie
Financial Corp. ("PFC"). PFC's wholly-owned subsidiary, Bank of the Hudson
became HUBCO's New York-based bank subsidiary. In the merger, each share of PFC
common stock was converted into .30 shares of HUBCO common stock. PFC had $875
million in assets and was treated as a pooling of interests for accounting
purposes. The financial statements have been restated to include PFC for all
periods presented.
On May 29, 1998, the Company completed its acquisition of MSB Bancorp ("MSB"),
and merged MSB Bank, MSB's wholly-owned subsidiary into Bank of the Hudson. In
the merger, each share of MSB common stock was converted into 1.0209 shares of
HUBCO common stock. MSB had $765 million in assets and was treated as a pooling
of interests for accounting purposes. The financial statements have been
restated to include MSB for all periods presented.
On June 25, 1998, the Company completed its acquisition of 21 branches of First
Union National Bank located in New Jersey and Connecticut with deposits of
approximately $243 million, in the aggregate. On July 24, 1998, the Company
completed its acquisition of 2 branches of First Union National Bank located in
New York with deposits of approximately $25 million, in the aggregate.
8
<PAGE>
NOTE D -- SECURITIES
The following table presents the amortized cost and estimated market value of
securities available-for sale and held-to maturity at the dates indicated:
June 30, 1998
----------------------------------------------------
Gross Unrealized Estimated
Amortized ---------------------------- Market
Cost Gains (Losses) Value
----------- ------------ ------------- -----------
AVAILABLE FOR SALE
U.S. Government ....... $ 83,463 $ 761 $ (6) $ 84,218
U.S. Government
agencies ........... 335,458 1,042 (193) 336,307
Mortgage-backed
securities ......... 893,076 2,655 (797) 894,934
States and political
subdivisions ....... 13,757 58 (35) 13,780
Other debt securities.. 25,081 92 (3) 25,170
Equity securities ..... 68,128 1,648 (432) 69,344
----------- ----------- ----------- -----------
$ 1,418,963 $ 6,256 $ (1,466) $ 1,423,753
=========== =========== =========== ===========
June 30, 1998
----------------------------------------------------
Gross Unrealized Estimated
Amortized ---------------------------- Market
Cost Gains (Losses) Value
----------- ------------ ------------- -----------
HELD TO MATURITY
U.S. Government ....... $ 42,240 $ 411 $ (1) $ 42,650
U.S. Government
agencies ........... 84,536 1,387 (83) 85,840
Mortgage-backed
securities ......... 219,272 1,038 (800) 219,510
States and political
subdivisions ....... 2,014 -- (29) 1,985
Other debt securities . 155 -- -- 155
----------- ----------- ----------- -----------
$ 348,217 $ 2,836 $ (913) $ 350,140
=========== =========== =========== ===========
9
<PAGE>
NOTE D -- SECURITIES (CONTINUED)
December 31, 1997
------------------------------------------------
Gross Unrealized Estimated
Amortized ---------------------- Market
Cost Gains (Losses) Value
----------- ----------- ---------- -----------
AVAILABLE FOR SALE
U.S. Government .............. $ 110,485 $ 890 $ (340) $ 111,035
U.S. Government
agencies .................. 253,437 1,726 (249) 254,914
Mortgage-backed
securities ................ 502,697 1,522 (2,499) 501,720
States and political
subdivisions .............. 10,619 59 (26) 10,652
Other debt securities
31,378 105 (8) 31,475
Equity securities ............ 43,637 4,839 (62) 48,414
--------- --------- --------- ---------
$ 952,253 $ 9,141 $ (3,184) $ 958,210
========= ========= ========= =========
December 31, 1997
--------------------------------------------------
Gross Unrealized Estimated
Amortized ---------------------- Market
Cost Gains (Losses) Value
----------- ----------- ---------- -------------
HELD TO MATURITY
U.S. Government .......... $ 42,108 $ 546 $ -- $ 42,654
U.S. Government
agencies .............. 97,662 1,575 (160) 99,077
Mortgage-backed
securities ............ 113,337 838 (807) 113,368
--------- --------- --------- ---------
$ 253,107 $ 2,959 $ (967) $ 255,099
========= ========= ========= =========
NOTE E -- COMPANY-OBLIGATED MANDATORILY REDEEMABLE PREFERRED SERIES B CAPITAL
SECURITIES OF A SUBSIDIARY TRUST HOLDING SOLELY JUNIOR SUBORDINATED DEBENTURES
OF THE COMPANY
On January 31, 1997, the Company placed $50.0 million in aggregate liquidation
amount of 8.98% Capital Securities due February 2027, using HUBCO Capital Trust
I, a statutory business trust formed under the laws of the State of Delaware.
The sole asset of the trust, that is the obligor on the Series B Capital
Securities, is $51.5 million principal amount of 8.98% Junior Subordinated
Debentures due 2027 of HUBCO. The net proceeds of the offering are being used
for general corporate purposes and to increase capital levels of the Company and
its subsidiaries. The securities qualify as Tier I capital under the capital
guidelines of the Federal Reserve.
On June 19, 1998, the Company placed $50.0 million in aggregate liquidation
amount of 7.65% Capital Securities due June 2028, using HUBCO Capital Trust II,
a statutory business trust formed under the laws of the State of Delaware. The
sole asset of the trust, that is the obligor on the Series B Capital Securities,
is $51.5 million principal amount of 7.65% Junior Subordinated Debentures due
2028 of HUBCO. The net proceeds of the offering are being used for general
corporate purposes and to increase capital levels of the Company and its
subsidiaries. The securities qualify as Tier I capital under the capital
guidelines of the Federal Reserve.
10
<PAGE>
NOTE F -- RECENT ACCOUNTING STANDARDS
Effective January 1, 1998, the Company adopted SFAS No. 130, "Reporting
Comprehensive Income", which establishes standards for the reporting of
comprehensive income and its components in a full set of general-purpose
financial statements. The Company has elected to utilize the Consolidated
Statements of Income and Comprehensive Income to display its comprehensive
income related to the disclosed periods. Comprehensive income is displayed on
the Consolidated Balance Sheets and Consolidated Statements of Changes in
Stockholders' Equity as a separate item entitled unrealized gains(losses) on
securities available for sale since this is the only component of comprehensive
income. The following is a reconciliation of the tax effect allocated to each
component of comprehensive income for the periods presented (in thousands):
<TABLE>
<CAPTION>
For the three-months ended For the six-months ended
June 30, 1998 June 30, 1998
------------------------------------------- --------------------------------------------
Tax Tax
Before tax (Expense) Net of Tax Before tax (Expense) Net of Tax
amount Benefit Amount amount Benefit Amount
-------------- -------------- ------------- ------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Unrealized holding gains
arising during the period ...... $ 1,943 $ (733) $ 1,210 $ 1,886 $ (683) $ 1,203
Less: reclassification
adjustment for gains
realized in net income ......... 784 (302) 482 3,053 (1,233) 1,820
------- ------- ------- ------- ------- -------
Net change during period ........ $ 1,159 $ (431) $ 728 $(1,167) $ 550 $ (617)
------- ------- ------- ------- ------- -------
</TABLE>
<TABLE>
<CAPTION>
For the three-months ended For the six-months ended
June 30, 1997 June 30, 1997
------------------------------------------- --------------------------------------------
Tax Tax
Before tax (Expense) Net of Tax Before tax (Expense) Net of Tax
amount Benefit Amount amount Benefit Amount
-------------- -------------- ------------- ------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Unrealized holding gains
arising during the period ....... $13,258 $(5,266) $ 7,992 $ 2,876 $(1,180) $ 1,696
Less: reclassification
adjustment for gains
realized in net income .......... 1,861 (762) 1,099 3,149 (1,257) 1,892
------- ------- ------- ------- ------- -------
Net change during period ......... $11,397 $(4,504) $ 6,893 $ (273) $ 77 $ (196)
------- ------- ------- ------- ------- -------
</TABLE>
Effective January 1, 1998, the Company adopted SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information", which requires that a public
business enterprise report financial and descriptive information about its
reportable operating segments. The Company's three banking subsidiaries, Hudson
United Bank, Lafayette, and BOTH, which meet the criteria of SFAS No. 131 to be
considered in the aggregate, have been aggregated for purposes of segment
reporting. HUBCO, Inc., the banks' holding company, is not a reportable segment
because it does not exceed any of the quantitative thresholds.
11
<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 the
Company's Consolidated Financial Statements and the accompanying notes. All
dollar amounts, other than per share information, are presented in thousands
unless otherwise noted.
The financial statements for the comparative periods presented herein have been
restated to reflect the acquisitions that have been accounted for on the
pooling-of-interests accounting method during the periods presented herein. The
Bank of Southington was acquired on January 8, 1998, Poughkeepsie Financial
Corporation was acquired on April 24, 1998 and MSB Bancorp was acquired on May
29, 1998. These acquisitions were accounted for on a pooling-of-interests
method, and accordingly, the consolidated financial statements have been
restated to include these institutions for all periods presented. All share data
has been retroactively restated to reflect the shares issued in the
aforementioned transactions including restatement of all prior periods. In
addition, the Company acquired Security National Bank on February 5, 1998 and 22
branches of First Union National Bank on June 25, 1998, both of which were
accounted for on the purchase method and thus operations and earnings are
reflected in the Company's results subsequent to the date of acquisition. The
balance sheet and income statement comparisons are influenced by these purchase
transactions.
This document contains forward-looking statements within the meaning of The
Private Securities Litigation Reform Act of 1995. Forward-looking statements can
be identified by the use of words such as "believes, expects" and similar words
or variations. Such statements are not historical facts and involve certain
risks and uncertainties. Actual results may differ materially from the results
discussed in these forward-looking statements. Factors that might cause a
difference include, but are not limited to, changes in interest rates, economic
conditions, deposit and loan growth, loan loss provisions, and customer
retention. The Company assumes no obligation for updating any such
forward-looking statements at any time.
The Company, through its data processing subsidiary, established a "Year 2000
Team" which is responsible for ensuring implementation of the required change to
the Date of Century format for all software programs used by the Company. The
management of the Company anticipates that they will be in Year 2000 compliance
before the beginning of the new century. The Company has not incurred
significant expenses related to this project and does not anticipate the impact
will be material to the Company's business, operations, financial condition,
results of operations, liquidity or capital resources.
RESULTS OF OPERATIONS
OVERVIEW
Net income for the three-month period ended June 30, 1998 was $0.256 million
compared to net income of $14.2 million for the three-month period ended June
30, 1997. Excluding pre-tax merger related and restructuring charges of $25.0
million, second quarter 1998 net income was $16.6 million. Diluted earnings per
share were $0.01 ($0.57 excluding merger related costs) for the second quarter
of 1998 compared to $0.46 for the same period in 1997. Basic earnings per share
were $0.01 ($0.58 excluding merger related costs) for the second quarter of 1998
compared to $0.48 for the same period in 1997. Return on average equity and
return on average assets were 0.34% and 0.02%, respectively, as reported for the
three-month period ended June 30, 1998, 17.46% and 1.20%, respectively, for the
same period in 1997 and 22.15% and 1.40% respectively, for the three-month
period ended June 30, 1998 excluding merger related costs.
12
<PAGE>
Net income for the six-month period ended June 30, 1998 was $10.8 million
compared to net income of $27.7 million for the six-month period ended June 30,
1997. Excluding pre-tax merger related and restructuring charges of $28.1
million, net income for the six-month period ended June 30, 1998 was $29.3
million. Diluted earnings per share were $0.37 ($1.00 excluding merger related
costs) for the first six months of 1998 compared to $0.89 for the same period in
1997. Basic earnings per share were $0.38 ($1.02 excluding merger related costs)
for the first six months of 1998 compared to $0.93 for the same period in 1997.
Return on average equity and return on average assets were 7.15% and 0.47%,
respectively, as reported for the six-month period ended June 30, 1998, 16.96%
and 1.16%, respectively, for the same period in 1997 and 19.33% and 1.27%
respectively, for the six-month period ended June 30, 1998 excluding merger
related costs.
NET INTEREST INCOME
Net interest income for the three-month and six month periods ended June 30,
1998 was $49.2 million and $97.1 million compared to $50.7 million and $99.1
million for the same period in 1997. This represents a decrease of $1.4 million
or 3% for the three month period and a decrease of $2.1 million or 2% for the
six month period. The net interest margin for the three-month and six month
periods ended June 30, 1998 was 4.49% and 4.57%, respectively, compared to 4.66%
and 4.53%, respectively for the same periods in 1997.
Interest income for the six-month period ended June 30, 1998 was $167.2 million
compared to $175.3 million for the same period in 1997, a decrease of $8.1
million or 5%, while interest expense decreased $6.1 million, or 8%. These
decreases in interest income and expense were the result of a lower volume of
investment and mortgage backed securities and borrowings in the first quarter of
1998 compared to the same period in 1997.
Interest income for the three-month period ended June 30, 1998 was $85.0 million
compared to $88.9 million for the same period in 1997, a decrease of $3.9
million or 4%, while interest expense decreased $2.5 million, or 7%. The lower
level of interest income was primarily related to a decrease in the yield on
average interest-earning assets of 44 basis points from the three month periods
ending June 30, 1997 to June 30, 1998 resulting from maturities of higher
yielding investment securities and the sale of new mortgage loan originations.
PROVISION FOR POSSIBLE LOAN LOSSES
The provision for possible loan losses for the three-month and six month periods
ended June 30, 1998 was $2.7 million and $8.8 million, respectively, compared to
$2.3 million and $4.7 million , respectively, for the same periods in 1997. The
increase in the provision for possible loan losses is primarily attributable to
$3.5 million of loan loss provisions taken by the Bank of the Hudson and MSB in
the first quarter to conform their reserve policy closer to HUBCO's. The Company
performs an evaluation of the adequacy of the allowance for loan losses each
quarter. The results of this analysis and the expectation of potential credit
losses and economic conditions are some of the factors which determine the
required quarterly provision. The allowance for possible loan losses includes
$1.2 million related to the purchase of credit card receivables by Shoppers
Charge. Management believes that the allowance at June, 1998 of $52.5 million,
or 1.86% of total loans and 101% of non-performing loans, is adequate.
Comparative ratios for June 30, 1997 and December 31, 1997 are 1.72% and 73% and
1.76% and 81%, respectively.
13
<PAGE>
Non-performing assets as a percentage of total assets at June 30, 1998 was 1.20%
compared to 1.55% at December 31, 1997. 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
--------------------------
6/30/98 12/31/97
---------- ------------
(In Thousands)
Non-Accrual Loans:
Commercial .................................... $15,091 $10,904
Real Estate ................................... 34,149 34,782
Consumer ...................................... 2,196 1,489
------- -------
Total Non-Accrual Loans .................... 51,436 47,175
------- -------
Renegotiated Loans ............................... 588 16,162
------- -------
Total Nonperforming Loans .................. 52,024 63,337
Other Real Estate Owned .......................... 9,148 10,752
------- -------
Total Nonperforming Assets ................. $61,172 $74,089
======= =======
Non-Accrual Loan to Total Loans .................. 1.82% 1.61%
Non-Performing Assets to Total Assets ............ 1.20% 1.55%
Allowance for Loans Losses to Non-Accrual Loans .. 102% 109%
Allowance for Loans Losses to Non-Performing Loans 101% 81%
Loans Past Due 90 Days or More and Accruing
Commercial ................................. $ 2,520 $ 2,926
Real estate ................................ 2,846 8,752
Consumer ................................... 1,215 1,786
Credit card ................................ 4,397 2,749
------- -------
Total Past Due Loans .................... $10,978 $16,213
======= =======
14
<PAGE>
The following table presents the activity in the allowance for possible loan
losses for the periods indicated:
Summary of Activity in the Allowance
Broken Down by Loan Category
-----------------------------
Six Months Ended Year Ended
6/30/98 12/31/97
-------------------------------
(Dollars in thousands)
Amount of Loans Outstanding at Period End .... $2,819,123 $2,926,459
========== ==========
Daily Average Amount of Loans Outstanding .... $2,890,624 $2,915,843
========== ==========
ALLOWANCE FOR LOAN LOSSES
Balance at beginning of year ................. $ 51,468 $ 47,304
Loans charged off:
Real estate mortgages ................... (5,512) (4,893)
Commercial .............................. (795) (4,202)
Consumer ................................ (5,003) (5,796)
Other loans ............................. -- (384)
---------- ----------
Total loans charged off ............ (11,310) (15,275)
---------- ----------
Recoveries:
Real estate mortgages ................... 341 1,203
Commercial .............................. 518 2,023
Consumer ................................ 777 1,427
Other recoveries ........................ -- 41
---------- ----------
Total recoveries ................... 1,636 4,694
---------- ----------
Net loans charged off ........................ (9,674) (10,581)
Allowance of acquired companies .............. 1,950 2,800
Provision for loan losses .................... 8,794 11,945
---------- ----------
Balance at end of period ..................... $ 52,538 $ 51,468
========== ==========
Ratio of Annualized Net Loans Charged-Off
During Period to Average Loans Outstanding 0.67% 0.36%
========== ==========
Non-interest income increased 18% or $2.1 million from $11.7 million for the
second quarter of 1997 to $13.8 million for the same period in 1998, and
increased 18% or $3.9 million from $22.3 million for the six months ended June
30, 1997 to $26.3 million for the same period in 1998. This increase in
non-interest income relates primarily to increased fees from Shoppers Charge,
trust services revenue, loan fees, including mortgage banking, international
services, and various other fees.
Non-interest expense was $58.4 million for the second quarter of 1998 and $33.4
million excluding merger related costs, compared to $36.0 million for the same
period in 1997, and for the six months ended June 30, 1998 non-interest expense
was $96.3 million and $68.9 million excluding merger related costs compared to
$70.8 million for the same period in 1997 Efficiencies were realized for the
three and six-month periods ended June 30, 1998 compared to the same periods in
1997 in salaries due primarily to the consolidation of operational support
functions of acquired institutions. Increases for the six month period ended
June 30, 1998 compared to the same period in 1997 occurred in the categories of
occupancy and equipment expense, due to an increased number of branches, outside
services, due to payments for data processing
15
<PAGE>
services, and the amortization of intangibles resulting from the acquisition of
Security National Bank which are amortized over a ten year period.
The Company's effective tax rate for the three-month and six month periods ended
June 30, 1998 was 87% and 40% respectively, due to non-deductible restructuring
charges and goodwill amortization, and 38% and 37% , respectively, excluding the
effect of restructuring charges . This compares with an effective tax rate for
the comparable period in 1997 of 41% and 40% respectively. The decrease in the
effective tax rate excluding restructuring items is related to having fully
utilized all tax loss carry forward in Connecticut and tax planning initiatives.
FINANCIAL CONDITION
Total assets at June 30, 1998, were $5.11 billion, an increase of $327 million
or 7% from $4.78 billion of assets at December 31, 1997, as restated for all
poolings through June 30, 1998. The investment and mortgage backed securities
portfolio increased 46% or $560.6 million from $1.21 billion at December 31,
1997 to $1.77 billion at June 30, 1998 due primarily to the purchase of
securities in 1998. Total Loans decreased $107.3 million, or 4% to $2.82 billion
at June 30, 1998 from $2.93 billion at December 31, 1997 reflecting declines in
residential mortgage loans where new originations are being sold and credit card
loans which have experienced seasonal repayments. Other real estate owned
decreased $1.6 million or 15% from $10.8 million at December 31, 1997 to $9.1
million at June 30, 1998 as management continued to focus on asset quality.
Intangibles, net of amortization, increased from $53.5 million at December 31,
1997 to $80.6 million at June 30, 1998 due to the addition of the goodwill
created from the Security National Bank and First Union branch acquisitions.
Deposits increased slightly from $3.73 billion at December 31, 1997, to $3.87
billion at June 30, 1998, due to the purchase accounting acquisitions. Total
borrowings increased $164.0 million from $530.2 million at December 31, 1997 to
$694.2 million at June 30, 1998. This increase is primarily related to funding
growth in the investment portfolio. Total stockholders' equity at June 30, 1998
was $273.3 million compared to $311.1 million at December 31, 1997. The change
in stockholders' equity is primarily attributable to $10.8 million in earnings
for the six-month period ended June 30, 1998, offset by $10.9 million of cash
dividends, the purchase of $38.3 million in treasury shares.
On June 19, 1998, the Company placed $50.0 million in aggregate liquidation
amount of 7.65% Capital Securities due June 2028, using HUBCO Capital Trust II,
a statutory business trust formed under the laws of the State of Delaware. The
net proceeds of the offering are being used for general corporate purposes and
to increase capital levels of the Company and its subsidiaries. The securities
qualify as Tier I capital under the capital guidelines of the Federal Reserve.
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 the Company at June 30, 1998,
and the minimum regulatory guidelines for such capital ratios for qualification
as a well-capitalized institution are as follows:
Ratios at Regulatory
June 30, 1998 Guidelines
------------- ----------
Tier I Risk-Based Capital .............. 9.2% 6.0%
Total Risk-Based Capital ............... 13.8% 10.0%
Tier 1 Leverage Ratio .................. 5.9% 4.0%
16
<PAGE>
PART II. OTHER INFORMATION
Items 1 through 3 are not applicable or the responses are negative
Item 4(a)-(d) See Part II. Other Information in HUBCO's Form 10-Q filed May 15,
1998.
Item 5: not applicable
Item 6: Exhibits and Reports on Form 8-K
(a) Exhibits
(3)(a) The Revised Certificate of Incorporation of HUBCO, Inc. filed
January 31, 1997. (Incorporated by reference from the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1996,
Exhibit (3)).
(3)(b) 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, 1995, Exhibit (3b).
(b) Reports on Form 8-K
(1) On May 15, 1998, HUBCO filed a Form 8-K/A Item 2 (date of earliest
event - October 20, 1998), amending Form 8-K filed October 22, 1997 to
announce the completion of its acquisition of Poughkeepsie Financial
Corp. and its wholly owned banking subsidiary bank of the Hudson.
(2) On June 2, 1998, HUBCO filed a Form 8-K Item 2 (date of earliest event
- May 29, 1998), to announce the completion of its acquisition of MSB
Bancorp, Inc. and its wholly owned banking subsidiary, MSB Bank.
(3) On June 11, 1998, HUBCO filed a Form 8-K Item 2 (date of earliest
event - May 29, 1998), to announce the completion of its acquisition
of MSB Bancorp, Inc. and its wholly owned banking subsidiary, MSB Bank
and containing first quarter financial statements for MSB Bancorp,
Inc. and Subsidiaries
(4) On June 26, 1998, HUBCO filed a Form 8-K Item 5 (date of earliest
event - June 16, 1998), to announce that HUBCO, Inc. ("HUBCO") placed
$50,000,000 in aggregate liquidation amount of 7.65% Capital
Securities due June 15, 2028 using HUBCO Capital Trust II, a statutory
business trust formed under the laws of the State of Delaware.
(5) On June 29, 1998, HUBCO filed a Form 8-K/A Item 2 (date of earliest
event - September 20, 1997), amending Form 8-K filed on October 22,
1997 and Form 8-K/A filed on May 15, 1998 to provide pro forma
information with the recent acquisitions of Poughkeepsie Financial
Corp. and MSB Bancorp, Inc.
(6) On July 2, 1998, HUBCO filed a Form 8-K Item 5 (date of earliest event
- June 25, 1998), to announce the completion of its purchase of 13 New
Jersey and 8 Connecticut branches of First Union National Bank.
(7) On July 6, 1998, HUBCO filed a Form 8-K/A Item 2 (date of earliest
event - October 22, 1997), amending Form 8-K's filed on October 22,
1997, June 2, 1998, and June 11, 1998 and Form 8-K/A's filed on May
15, 1998 and June 29, 1998 to provide pro forma information with the
recent acquisitions of Poughkeepsie Financial Corp. and MSB Bancorp,
Inc.
(8) On July 10, 1998, HUBCO filed a Form 8-K/A Item 5 (date of earliest
event - June 25,1998), amending Form 8-K filed on July 2, 1998
announcing the completion of its purchase of 13 New Jersey and 8
Connecticut branches of First Union National Bank.
17
<PAGE>
(9) On July 10, 1998, HUBCO filed a Form 8-K Item 5 (date of earliest
event - April 24, 1998), containing supplemental consolidated
financial statements of HUBCO restating HUBCO's historical
consolidated financial statements as of and for the three years ended
December 31, 1997 to reflect the Mergers and the acquisition of the
Bank of Southington, Poughkeepsie Financial Corp. and MSB Bancorp,
Inc.
(10) On July 10, 1998, HUBCO filed a Form 8-K/A Item 5 (date of earliest
event - June 25, 1998), amending Form 8-K filed on July 2, 1998
announcing the completion of its purchase of 13 New Jersey and 8
Connecticut branches of First Union National Bank.
(11) On July 15, 1998, HUBCO filed a Form 8-K Item 5 (date of earliest
event - July 15, 1998), containing HUBCO's press release reporting
earnings for the second quarter of 1998.
(12) On July 17, 1998, HUBCO filed a Form 8-K/A Item 5 (date of earliest
event - June 25, 1998), amending Form 8-K filed on July 10, 1998 to
include KPMG Peat Marwick LLP's ("KPMG") and Deloitte & Touche LLP's
("Deloitte") consents to incorporate by reference, in HUBCO's
Registration Statement on Forms S-8, KPMG's and Deloitte's respective
Auditors Reports included therein.
(13) On July 23, 1998, HUBCO filed a Form 8-K Item 5 (date of earliest
event - July 17, 1998), containing HUBCO's press release announcing an
increase in its quarterly cash dividend to $0.25 per common share and
a 3% stock dividend.
18
<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.
August 14, 1998 /s/ KENNETH T. NEILSON
- -------------------- ----------------------------------------------
Date Kenneth T. Neilson
Chairman, President & Chief Executive Officer
August 14, 1998 /s/ JOSEPH F. HURLEY
- -------------------- ----------------------------------------------
Date Joseph F. Hurley
Executive Vice President & Chief Financial
Officer
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 194,985
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 70,793
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 1,423,753
<INVESTMENTS-CARRYING> 348,217
<INVESTMENTS-MARKET> 350,140
<LOANS> 2,819,123
<ALLOWANCE> 52,538
<TOTAL-ASSETS> 5,109,552
<DEPOSITS> 3,865,526
<SHORT-TERM> 694,161
<LIABILITIES-OTHER> 76,545
<LONG-TERM> 200,000
<COMMON> 51,566
0
50
<OTHER-SE> 221,704
<TOTAL-LIABILITIES-AND-EQUITY> 5,109,552
<INTEREST-LOAN> 123,920
<INTEREST-INVEST> 40,349
<INTEREST-OTHER> 2,887
<INTEREST-TOTAL> 167,156
<INTEREST-DEPOSIT> 50,954
<INTEREST-EXPENSE> 19,147
<INTEREST-INCOME-NET> 97,055
<LOAN-LOSSES> 8,794
<SECURITIES-GAINS> 3,053
<EXPENSE-OTHER> 96,346
<INCOME-PRETAX> 18,189
<INCOME-PRE-EXTRAORDINARY> 18,189
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,841
<EPS-PRIMARY> .38
<EPS-DILUTED> .37
<YIELD-ACTUAL> 4.57
<LOANS-NON> 51,346
<LOANS-PAST> 10,978
<LOANS-TROUBLED> 588
<LOANS-PROBLEM> 52,025
<ALLOWANCE-OPEN> 51,468
<CHARGE-OFFS> 11,310
<RECOVERIES> 1,636
<ALLOWANCE-CLOSE> 52,538
<ALLOWANCE-DOMESTIC> 52,538
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 14,640
</TABLE>
