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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549

FORM 10-K

Commission file number 1-08660

Hudson United Bancorp
(Exact name of registrant as specified in its Charter)

Registrant's telephone number, including area code: (201)236-2600

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

None

        Indicate by check mark whether the registrant (l) 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 ý    NO o

        Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ý

        Indicate by check mark whether the Registrant is an accelerated filer as defined in Exchange Act Rule 126-2 ý

        The aggregate market value of the voting stock held by non-affiliates of the Registrant, as of June 30, 2003 was $73,922,707.

        The number of shares of Registrant's common stock, no par value, outstanding as of March 10, 2004 was 44,805,950.

        Documents incorporated by reference: Contains portions of the Registrants Definitive Proxy Statement for the 2004 Annual Meeting of Shareholders to be held April 1 2004 will be incorporated by reference in Part III

PART I

ITEM 1. BUSINESS

(a)    General Development of Business

        Hudson United Bancorp ("HUB", "Registrant" or the "Company") is a bank holding company registered under the Bank Holding Company Act of 1956, as amended (the "Bank Holding Company Act"). The Company was organized under the laws of New Jersey in 1982 by Hudson United Bank ("Hudson United" or the "Bank") for the purpose of creating a bank holding company to take advantage of the additional powers provided to bank holding companies.

        The Company directly owns Hudson United plus six additional subsidiaries, which are HUBCO Capital Trust I, HUBCO Capital Trust II, JBI Capital Trust I, Hudson United Capital Trust I, Hudson United Capital Trust II and Jefferson Delaware, Inc. In March 1999, the former Lafayette American Bank and Bank of the Hudson were merged into Hudson United. In addition, the shareholders of the Company on April 21, 1999 approved an amendment to the certificate of incorporation to change the name of the Company from HUBCO, Inc. to Hudson United Bancorp. The Company is also the indirect owner, through Hudson United, of thirteen subsidiaries. All of the assets and liabilities of the subsidiaries of the Company and the Bank are consolidated on the balance sheet of the Company for shareholder reporting purposes. A further description of these subsidiaries is contained in the section "Other Subsidiaries" in this current document.

        At December 31, 2003, HUB, through its subsidiaries, had total deposits of $6.2 billion, total loans and leases of $4.7 billion and total assets of $8.1 billion. HUB ranked third among commercial banks and bank holding companies headquartered in New Jersey in terms of asset size at December 31, 2003. Hudson United operates over 205 branches located throughout the state of New Jersey; in the Hudson Valley area of New York State; in New York City; in southern Connecticut in the areas between Greenwich and Hartford; and in Philadelphia and surrounding areas in Pennsylvania.

        Hudson United is a full service commercial bank and offers the services generally provided by commercial banks of similar size and character, including imaged checking, savings, and time deposit accounts; 24-hour telephone banking; internet banking; trust services; cash management services; merchant services; safe deposit boxes; insurance, stock, bond, and mutual fund sales; secured and unsecured personal and commercial loans; residential and commercial real estate loans; and international services including import and export financing, foreign currency exchange and letters of credit. The Bank's deposit accounts are competitive with those of other banks and include checking, savings, money market accounts, a variety of interest-bearing transaction accounts and time deposits. In the lending area, the Bank primarily engages in commercial lending; commercial real estate lending; insurance premium finance lending; consumer lending primarily consisting of automobile loans and home equity loans; and "private label" credit card programs for certain retailers and other businesses. Most of the Company's loans are secured by commercial real estate, residential real estate or other assets of borrowers.

        The Company's main focus is on building banking relationships with individuals, and small and medium sized businesses. Management attempts to differentiate the Company from competitors by creating a superior "customer experience". In addition, the Company believes its ability to supply the services of a large institution with the personal touch of a small community bank represents a competitive advantage.

Available Information

        The Company makes available free of charge on or through its website, www.hudsonunitedbank.com, all materials that it files electronically with the Securities and Exchange Commission ("SEC"), including its annual report on Form 10-K, quarterly reports on Form 10Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to

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Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after electronically filing such materials with, or furnishing them to, the SEC. During the period covered by this Form 10-K, the Company made all such materials available through its website as soon as reasonably practicable after filing such materials with the SEC.

        You may also read and copy any materials filed by the Company with the SEC at the SEC's Public Reference Room at 450 Fifth Street. N.W., Washington, D.C. 20549, and you may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet website, www.sec.gov, that contains reports, proxy and information statements and other information that the Company files electronically with the SEC.

        A copy of the Company's Corporate Governance Guidelines, its Code of Business Conduct and Ethics, and the charters of the Audit Committee, Compensation Committee, and Nominating and Governance Committee of the Board of Directors are posted on the Company's website, www.hudsonunitedbank.com, and are available in print to any shareholder who requests copies by contacting D. Lynn Van Borkulo-Nuzzo, Corporate Secretary, at the Company's principal executive offices set forth above.

Areas of Emphasis in Loans, and in Deposits

Loans:

        The Company classifies its loans into five major categories: commercial and financial; commercial real estate mortgages; consumer; private label credit cards; and residential mortgages.

        Loan and lease categories consisting of commercial and financial, commercial real estate mortgages, consumer, and private label credit cards totaled $4.5 billion at December 31, 2003, or 96% of total loans. The Company emphasizes these types of loans, because they generally have more attractive yields; interest rate sensitivity; and maturity characteristics than single-family mortgage loans. The Company also believes that these loans provide better opportunities to obtain deposit relationships and/or fee based product relationships with borrowers than do single-family mortgage loans, which tend to be transactional.

        The Company emphasizes commercial loans to small and mid-sized privately owned businesses, most of which are located in its four state business area. Most of the Company's loans are in the form of annually renewable lines of credit, indexed to the Prime Rate or LIBOR, and term loans with either variable or fixed rates. The average size of the Company's commercial loans is less than $1 million. Most of the Company's commercial loans are secured by assets owned by the borrower, including commercial real estate. Most of the Company's commercial loans are also supported by personal guarantees from the owners of those private companies. The Company has an immaterial amount of "shared national credits" for regulatory purposes in its commercial loans outstanding at December 31, 2003. All of these credits are considered in market.

        The Company emphasizes short maturity and intermediate maturity loans in its commercial real estate activities. These loans may be collateralized by existing properties, or by properties acquired by a borrower for their use or in an attempt to improve the value of the property prior to refinancing or sale of the property; or may be construction loans generally supported by pre-sale or pre-lease commitments for the completed properties. Most of these properties collateralizing these loans are located in the Company's four state business area. These loans have variable interest rates indexed to the Prime Rate, LIBOR or other indices, or have fixed interest rates generally not longer than 5 years. The average size of the Company's commercial real estate loan is less than $1 million. The Company also originates some commercial real estate loans in the size range of $10 million or greater. Most of the Company's loans are also supported by personal guarantees by the owners of the properties. The Company does not emphasize long term, fixed rate, non recourse loans to investors in commercial real estate. The Company had very few purchased participations in both its commercial real estate loans and commercial and financial loans at December 31, 2003.

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        The Company emphasizes automobile loans and home equity loans in its consumer lending activities. The Company's consumer loan portfolio also includes some recreational vehicle loans, manufactured housing loans, boat loans, unsecured consumer loans, and other miscellaneous loans. The Company's automobile loans generally are originated by dealers located in the Company's four state business area, and purchased by the Company throughout the year on a periodic basis after the Company performs an independent review of the borrower's credit worthiness and an assessment of the loan collateral. Most of these loans have fixed interest rates and intermediate maturities. The Company's home equity loans are generally collateralized by properties located in the Company's four state business area, secured by the primary residence of the borrower, and originated by the Bank's employees. Most of these loans have variable interest rates indexed to the Prime Rate, or may have fixed interest rates. The Company uses Fair Isaacs Company ("FICO") scores and other underwriting techniques to evaluate the credit worthiness of the borrowers for the Company's consumer loans and leases. The borrowers for the Company's consumer loans and leases had an average FICO score of greater than 720 at December 31, 2003. The total lease receivables for the Company at December 31, 2003 were $65.7 million with a residual value of $56.9 million at December 31, 2003. These residual values are guaranteed by a third party, and the guarantee is also supported by collateral up to a certain amount, which was approximately $5.2 million at December 31, 2003. The Company's risk exposure at December 31, 2003 calculated using industry standards for the lease industry was $5.7 million, which was mitigated in part by the $5.2 collateral. These auto leases were purchased in 2001. The Company believes that the residual values are properly recorded as of December 31, 2003.

        The Company emphasizes "private label" credit card activities, and it does not emphasize VISA or MasterCard credit card activities. The Company has relationships with approximately 110 retailers located throughout the United States, which merchants offer unsecured sales financing to their customers through a private label credit card, and which merchants allow the Company to underwrite the resulting credit card receivables on a daily basis. The Company's relationships with its merchants are generally multi year contractual relationships. The Company generates these merchant relationships through the marketing efforts of its employees, as well as by purchasing the right to merchant relationships from other financial institutions. The Company receives a fee from the merchants when it underwrites a purchase, and it receives interest, late fees and credit card account insurance income from the individual customers that maintain balances on their private label credit card accounts. The Company's credit card loans include both fixed and variable interest rates. The average balance outstanding on the Company's credit card loans was less than $700 at December 31, 2003. The Company uses FICO scores and other underwriting techniques to evaluate the creditworthiness of the borrowers for its credit card loans. The borrowers for the Company's private label credit card loans had an average credit score of 703,at December 31, 2003. New loans approved during 2003 had average credit scores greater than 735. The Company, in the normal course of business, does not approve loan applications with credit scores less than 650. The Company's total credit card loans of $326.7 million at December 31, 2003 include $5.8 million of VISA and MasterCard credit card loans.

Deposits

        The Company classifies its deposits into non-interest bearing; NOW; savings; money market deposit accounts ("MMDA"); and time deposit categories.

        Deposits consisting of non-interest bearing; NOW; savings; and MMDA accounts totaled $4.3 billion at December 31, 2003, or 69% of total deposits. The Company emphasizes these categories of deposits because they generally have lower yields; are subject to repricing at the Company's option; and provide more fee based product opportunities than time deposits, which tend to be transactional.

        The Company primarily generates deposits from individuals, but it also obtains deposits from businesses, and municipalities and related entities ("public sector deposits").

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        Most of the Company's deposits are generated through its more than 200 branches in its four state business area. Most of the Company's deposits are in amounts less than $100,000, and are fully insured by the FDIC. Deposits in amounts greater than $100,000 are primarily from businesses and public sector deposits, and are generally secured at the depositor's request by a portion of the Company's investment securities portfolio.

Changes in Asset Size in Recent Years

        The Company's total assets at December 31, 2003 were $8.1 billion, which represented an increase in its total assets from the prior year, which were $7.7 billion at December 31, 2002. This increase was due to increases in investment securities of $89.7 million; an increase in commercial, commercial real estate and consumer credit of $440.3 million; partially offset by a decrease in residential mortgages of $106.6 million. The increase in investment securities in 2003 was partly due to purchases made in connection with an increase in deposits and borrowings. The increase in commercial, commercial real estate and consumer loans in 2003 reflected the Company's focus on its major loan categories and the acquisition of the Flatiron insurance premium finance loan business in October 2003. The Flatiron acquisition added $248.4 million in commercial and financial loans as of December 31, 2003. The Company's total assets at December 31, 2002 were $7.7 billion, which represented an increase in its total assets from the prior year, which were $7.0 billion at December 31, 2001. This increase was due mainly to increases in investment securities and trading assets of $631.6 million, commercial, commercial real estate, consumer and credit card loans of $263.6 million being offset in part by a decrease of $262.6 million in residential mortgage loans. The increase in securities and the decline in residential mortgage loans was due in part to exchanges of residential mortgages for comparable mortgage backed securities, backed by the same mortgages of $118.0 million in 2002

        The Company's primary focus in 2003 and 2002 was on core business growth. Management focused on executing its business strategies and in providing superior customer service.

Proposed Merger with Dime Bancorp, Inc. ("Dime") which was Terminated in 2000

        HUB entered into a merger agreement in 1999 with Dime, a New York City based financial institution, under which HUB and Dime were to merge, with Dime as the surviving corporation in the merger changing its name to Dime United Bancorp, Inc. ("Dime United"). Dime shareholders would have owned 56% of the outstanding Dime United stock and HUB shareholders would have owned 44% of the outstanding Dime United Stock following the merger. The proposed merger with Dime would have been the largest business combination in HUB's corporate history.

        The closing of the proposed merger was initially delayed, and the merger was eventually terminated in 2000, following the announcement by North Fork Bancorporation of an unsolicited acquisition bid for Dime. The initial delay and the eventual termination of the merger between the Company and Dime had a negative impact on the Company's growth and profitability during 1999 and 2000. Dime agreed to merge with Washington Mutual, Inc. in June of 2001. The Dime/Washington Mutual merger was completed in January of 2002.

        Under the terms of the merger termination agreement between Dime and the Company, Dime was required to pay the Company a minimum merger termination fee of $15 million on or before October 28, 2001. Dime was also required to pay additional amounts to the Company, up to a maximum amount of $92 million, in the event that Dime entered into certain transactions with third parties involving a sale by Dime of a substantial portion of its assets, a significant subsidiary, Dime itself or the acquisition of a certain percentage of Dime's outstanding common stock, on or before October 28, 2001.

        HUB recognized the minimum termination fee payable from Dime as revenue when the pending merger was terminated in 2000, which revenue was less than the expenses incurred by the Company in the terminated merger. Pursuant to the above mentioned termination agreement, Dime was required to

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pay Hudson United $77 million upon the closing of the merger with Washington Mutual. The Company recognized the additional $77 million of termination payments as revenue in the first quarter of 2002, when it was received. The Company also recorded in the first quarter of 2002 approximately $8.3 million of expenses related to the terminated merger including financial advisor fees and acceleration of employee retention awards, $13.2 million of other expenses, and a $21.3 million provision for possible loan losses related to the accelerated disposition of certain non performing loans.

Acquisition Activity by the Company

        The Company has engaged in only limited acquisition activity in recent years, as it focused on core business growth within its four state business area. The Company had an explicit focus on acquisitions in the 1990s, when acquisitions were its primary source of growth in those years.

        The Company, through its subsidiary Hudson United Bank, acquired Flatiron Credit Company ("Flatiron") on October 31, 2003. Flatiron is the seventh largest insurance premium finance company in the nation. The purchase price of the acquisition was approximately $40 million in cash based on the estimated book value of Flatiron on the closing date of the acquisition. The Bank may also be obligated to make additional earn-out payments, based on the increase in net income of Flatiron in the next two years after the closing of the acquisition. The purchase price (excluding any potential earn-out payments) represents a $3.4 million premium to Flatiron's estimated book value (before acquisition costs), which were $259.6 million on the closing date. The majority of Flatiron's loans are short-term fixed rate loans made to small business customers located throughout the nation. The loans are secured by the remaining unearned insurance premiums from the insurance company.

        The Company announced, on June 26, 2002, a purchase and assumption transaction with the FDIC as the receiver for the failed Connecticut Bank of Commerce ("the CBC transaction"). The Company, in this transaction, purchased certain consumer loans that could be put back to the FDIC, and assumed certain insured deposits, of initially, $180.2 million along with an option to purchase two branches in Connecticut and to lease one branch in Connecticut and two branches in New York City. Subsequently, the Bank put back the consumer loans, purchased the two Connecticut branches and assumed the leases of the one branch in Connecticut and two branches in New York City. The Bank paid an acquisition premium of $17.3 million to the FDIC in this transaction, of this total $4.1 million was classified as core deposit intangible and $13.2 million was considered goodwill. Subsequently in the fourth quarter of 2003 $1.9 of this intangible was written-off (see Note 28 "Subsequent Events" for further discussion).

        The Company entered into agreements at several times in 2003 and 2002 to purchase third party credit card assets from unaffiliated third parties. The Company paid total consideration of $19.0 million for $23.0 million of these assets in 2003, with an associated discount of $4.0 million. The Company paid total consideration of $62.6 million for $66.2 million of these assets in 2002, with an associated discount of $3.6 million.

Stock Repurchases by the Company

        In November 1993, the Board authorized management to repurchase up to 10 percent of its outstanding common stock each year. The program may be discontinued or suspended at any time, and there is no assurance that the Company will purchase the full amount authorized. The acquired shares are to be held in treasury and to be used for stock option and other employee benefit plans, stock dividends, or in connection with the issuance of common stock in future acquisitions.

        On January 29, 2003, the Company's Board of Directors (the "Board") extended the Company's stock repurchase program until June 2004 and authorized additional repurchases of up to 10% of the Company's outstanding shares.

        During 2003, the Company purchased 527.1 thousand treasury shares at an aggregate cost of $16.5 million. During 2003, 250 thousand shares were reissued for stock options.

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        During 2002, the Company purchased 1.3 million treasury shares at an aggregate cost of $37.7 million. During 2002, the Company reissued 434,813 shares for stock options.

        At December 31, 2003, there were 44.8 million shares of the Company's common stock outstanding.

Other Subsidiaries

        In addition to Hudson United Bank, the Company directly owns six consolidated subsidiaries that were established for the purpose of issuing the capital trust securities of the Company which enhance the regulatory capital of the Company. They are Hudson United Capital Trust I, Hudson United Capital Trust II, HUBCO Capital Trust I, HUBCO Capital Trust II, JBI Capital Trust I and Jefferson Delaware Inc.

        The Company is also the indirect owner, through Hudson United, of the thirteen consolidated subsidiaries as discussed below.

        In 1987, Hudson United established a directly owned subsidiary called Hendrick Hudson Corp. Hendrick Hudson Corp. directly owns HUB Mortgage Investments Inc., which was established in 1997 and operates as a real estate investment trust. As of December 31, 2003, Hendrick Hudson Corp. had no assets other than its investment in HUB Mortgage Investments Inc. As of December 31, 2003, $1,427.2 million of mortgage loans and $1,713.1 million in mortgage related investment securities were being managed by HUB Mortgage Investments Inc. These two entities were established to assist in managing a portion of the Company's investment portfolio.

        In 1998, Hudson United established NJ Investments of Delaware, Inc. As of December 31, 2003, $121.8 million of Hudson United's investment portfolio was being managed by NJ Investments of Delaware, Inc. This subsidiary was established to assist in managing a portion of the Company's investment portfolio.

        Hudson Trader Brokerage Services, Inc., which was established in 1991, is a subsidiary that was engaged in brokerage services. This subsidiary is inactive and is expected to be officially dissolved in 2004. The Company now provides investment securities brokerage services to its customers through a business relationship with an affiliate of John Hancock Insurance.

        In 2002, Hudson United established Hudson Insurance Services, Inc. This subsidiary provides a wide range of insurance risk management services as an agent; it does not engage in any insurance underwriting activities.

        In 2003 Hudson United acquired ownership interests in two companies involved in landfill gas projects ("LGPs"). These LGPs lease gas rights within landfills and own and operate the equipment that recovers methane gas and converts the gas to electricity, and generate revenues by selling the electricity. The Company as the owner of the LGPs is eligible to receive tax credits under Section 29 of the Internal Revenue Code ("Section 29 tax credits"), which are available to producers of fuel from non-conventional sources. These Section 29 tax credits are anticipated to amount to approximately $9.5 million per year, and are scheduled to expire on December 31, 2007. The acquisition of the ownership interests was recorded at a value of $19.6 million, which was approximately equal to the carrying value of the Company's loan to the LGPs on the closing date. The difference between the acquisition value of $20 million and the net asset value was recorded as a reduction of the carrying value of long lived equipment. The acquisition occurred in connection with the satisfaction of a loan the Company had previously made to the prior owner of LGPs. The LGPs or predecessor entities have been in existence since 1997, and generated net income for the previous owner of the LGPs in prior years. The Company expected the ownership in the LGPs to result in an increase to its revenues; an increase to its operating expenses in an amount greater than the increase in revenues; and an increase in net income and accretion to EPS, primarily due to the reduction in its provision for taxes due to the Section 29 tax credits.

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        In 2003 Hudson United acquired Flatiron Credit Company. This subsidiary provides insurance premium financing and is the seventh largest provider of such service in the United States. Flatiron Credit Company directly owns the following subsidiaries: FPF, Inc. a Colorado corporation, FPCAL, Inc., a California corporation and Westchester Premium Acceptance Corporation, a Texas corporation. Flatiron Credit Company indirectly owns the following subsidiaries through its direct subsidiaries: Westchester Premium Acceptance Corporation of California, Inc., a California corporation, Elite Premium Services, Inc., a Texas corporation, Elite Premium Finance, Ltd, a limited partnership, Advantage Specialty Programs, Ltd, a limited partnership and Flatiron IPF trust, a Delaware business trust.

        Hudson United owns five subsidiaries that were established for the purpose of holding real estate assets. They are: Lafayette Development Corp., Plural Realty, Inc., PSB Associates, Inc., AMBA Realty Corporation and Riverdale Timber Ridge, Inc.

        The FASB issued FIN 46,"Consolidation of Variable Interest Entities" as amended in December 2003. This interpretation provides guidance on how to identify a variable interest entity and determine when the assets, liabilities, noncontrolling interests and results of operations are to be included in an entity's consolidated financial statements. The Company applied the provisions of FIN 46 to wholly-owned subsidiary trusts in 2003 and 2002 that issued capital trust securities to third-party investors. For purposes of financial statement presentation, the Company has deconsolidated the trusts issuing the capital trust preferred securities and now includes the junior subordinated debentures under other liabilities on its consolidated balance sheet. This does not have a material impact on the Company's operations.

        The Company has no other subsidiaries that are not consolidated into the Company's financial statements.

Employee Relations

        Hudson United Bank enjoys a good relationship with its employees and is not party to any collective bargaining agreements.

Regulatory Matters

        The banking industry is highly regulated. Statutory and regulatory controls increase a bank holding company's cost of doing business and limit the options of its management to deploy assets and maximize income. Proposals to change the laws and regulations governing the banking industry are frequently introduced in Congress, in the state legislatures and before the various bank regulatory agencies. The likelihood and timing of any changes and the impact such changes might have on HUB cannot be determined at this time. The following discussion is not intended to be a complete list of all the activities regulated by the banking laws or of the impact of such laws and regulations on HUB or its banks. It is intended only to briefly summarize some material provisions.

Capital Adequacy Guidelines and Deposit Insurance

        The Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"), required each federal banking agency to revise its risk-based capital standards to ensure that those standards take adequate account of interest rate risk, concentration of credit risk and the risks of non-traditional activities. In addition, pursuant to FDICIA, each federal banking agency has promulgated regulations, specifying the levels at which a bank would be considered "well capitalized", "adequately capitalized", "undercapitalized", "significantly undercapitalized", or "critically undercapitalized", and to take certain mandatory and discretionary supervisory actions based on the capital level of the institution.

        The regulations implementing these provisions of FDICIA provide that a bank will be classified as "well capitalized" if it (i) has a total risk-based capital ratio of at least 10.0 percent, (ii) has a Tier 1 risk-based capital ratio of at least 6.0 percent, (iii) has a Tier 1 leverage ratio of at least 5.0 percent,

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and (iv) meets certain other requirements. A bank will be classified as "adequately capitalized" if it (i) has a total risk-based capital ratio of at least 8.0 percent, (ii) has a Tier 1 risk-based capital ratio of at least 4.0 percent, (iii) has a Tier 1 leverage ratio of (a) at least 4.0 percent, or (b) at least 3.0 percent if the institution was rated 1 in its most recent examination, and (iv) does not meet the definition of "well capitalized". A bank will be classified as "undercapitalized" if it (i) has a total risk-based capital ratio of less than 8.0 percent, (ii) has a Tier 1 risk-based capital ratio of less than 4.0 percent, or (iii) has a Tier 1 leverage ratio of (a) less than 4.0 percent, or (b) less than 3.0 percent if the institution was rated 1 in its most recent examination. A bank will be classified as "significantly undercapitalized" if it (i) has a total risk-based capital ratio of less than 6.0 percent, (ii) has a Tier 1 risk-based capital ratio of less than 3.0 percent, or (iii) has a Tier 1 leverage ratio of less than 3.0 percent. An institution will be classified as "critically undercapitalized" if it has a tangible equity to total assets ratio that is equal to or less than 2.0 percent. An insured depository institution may be deemed to be in a lower capitalization category if it receives an unsatisfactory examination.

        As of December 31, 2003, the Bank's capital ratios exceed the requirements to be considered a well capitalized institution under the FDIC regulations.

        Bank holding companies must comply with the Federal Reserve Board's risk-based capital guidelines. Under the guidelines, risk weighted assets are calculated by assigning assets and certain off-balance sheet items to broad risk categories. The total dollar value of each category is then weighted by the level of risk associated with that category. A minimum risk-based capital to risk based assets ratio of 8.00% must be attained. At least one half of an institution's total risk-based capital must consist of Tier 1 capital, and the balance may consist of Tier 2, or supplemental capital. Tier 1 capital consists primarily of common stockholders' equity along with preferred or convertible preferred stock and qualifying trust preferred securities, minus goodwill. Tier 2 capital consists of an institution's allowance for loan and lease losses, subject to limitation, hybrid capital instruments and certain subordinated debt. The allowance for loan and lease losses which is considered Tier 2 capital is limited to 1.25% of an institution's risk-based assets. As of December 31, 2003, HUB's total risk-based capital ratio was 13.67% and its Tier 1 risk-based capital ratio was 8.72%.

        In addition, the Federal Reserve Board has promulgated a leverage capital standard, with which bank holding companies must comply. Bank holding companies must maintain a minimum Tier 1 capital to total assets ratio of 3%. However, institutions which are not among the most highly rated by federal regulators must maintain a ratio 100-to-200 basis points above the 3% minimum. As of December 31, 2003, HUB had a leverage capital ratio of 6.36%.

        HUB and its subsidiary bank are subject to various regulatory capital requirements administered by federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory—and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on HUB's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, HUB and its subsidiary bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by the regulators as to components, risk weightings, and other factors. Quantitative measures established by regulation to ensure capital adequacy require banks to maintain minimum amounts and ratios of total and Tier 1 capital (as defined in the regulations) to risk weighted assets (as defined) and of Tier 1 capital (as defined) to average assets (as defined). Management believes, as of December 31, 2003, that HUB and its subsidiary bank meet all capital adequacy requirements to which they are subject.

        Hudson United is a member of the Bank Insurance Fund ("BIF") of the FDIC. The FDIC also maintains another insurance fund, the Savings Association Insurance Fund ("SAIF"), which primarily covers savings and loan association deposits but also covers deposits that are acquired by a BIF-insured institution from a savings and loan association ("Oakar deposits").

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        The Economic Growth and Regulatory Reduction Act of 1996 (the "1996 Act") included the Deposit Insurance Funds Act of 1996 (the "Funds Act") under which the FDIC was required to impose a special assessment on SAIF assessable deposits to recapitalize the SAIF. Under the Funds Act, the FDIC also charged assessments for SAIF and BIF deposits in a 5 to 1 ratio to pay Financing Corporation ("FICO") bonds until January 1, 2000, at which time the assessment became equal. The 1996 Act instituted a number of other regulatory relief provisions.

        The Basel Committee on Banking Supervision ("Basel Committee") is developing a new set of risk-based capital standards("New Accord"). In a press release dated January 15, 2004, it was announced that the Basel Committee will make further refinements to certain critical components of the New Accord. The Basel Committee intends to finalize the New Accord by mid-year 2004. U.S. banking regulators have proposed an effective date of January 1, 2007, for the New Accord, which will effect the Company. The Company will continue to monitor the progress of the Basel initiative.

Restrictions on Dividend Payments, Loans, or Advances

        The holders of HUB's common stock will receive dividends only when, and if such dividends are declared by the Board of Directors of HUB out of funds legally available, subject to the preferential dividend rights of any preferred stock that may be outstanding from time to time.

        The only statutory limitation is that such dividends may not be paid when HUB is insolvent. Because funds for the payment of dividends by HUB come primarily from the earnings of HUB's bank subsidiary, as a practical matter, restrictions on the ability of Hudson United to pay dividends act as restrictions on the amount of funds available for the payment of dividends by HUB.

        Certain restrictions exist regarding the ability of Hudson United to transfer funds to HUB in the form of cash dividends, loans or advances. New Jersey state banking regulations allow for the payment of dividends in any amount provided that capital stock will be unimpaired and there remains an additional amount of paid-in capital of not less than 50 percent of the capital stock amount. As of December 31, 2003 the maximum amount available for distribution to HUB from Hudson United was $169.5 million, subject to regulatory capital limitations.

        HUB is also subject to Federal Reserve Bank ("FRB") policies which may, in certain circumstances, limit its ability to pay dividends. The FRB policies require, among other things, that a bank holding company maintain a minimum capital base. The FRB would most likely seek to prohibit any dividend payment which would reduce a holding company's capital below these minimum amounts.

        Under Federal Reserve regulations, Hudson United is limited as to the amounts it may loan to its affiliates, including HUB. All such loans from the Bank are required to be collateralized by specific assets owned by HUB or affiliates. Loans outstanding from Hudson United to HUB were $1.2 million at December 31, 2003.

Holding Company Supervision

        Under the Bank Holding Company Act, HUB may not acquire directly or indirectly more than 5 percent of the voting shares of, or substantially all of the assets of, any bank without the prior approval of the Federal Reserve Board.

        In general, the Federal Reserve Board, under its regulations and the Bank Holding Company Act, regulates the activities of bank holding companies and non-bank subsidiaries of banks. The regulation of the activities of banks, including bank subsidiaries of bank holding companies, generally has been left to the authority of the supervisory government agency, which for Hudson United is the FDIC and the New Jersey Department of Banking and Insurance (the "NJDOBI").

10

Interstate Banking Authority

        The Riegle-Neale Interstate Banking and Branching Efficiency Act of 1994 (the "Interstate Banking and Branching Act") enables a bank holding company to acquire banks in states other than its home state regardless of applicable state law.

        The Interstate Banking and Branching Act also authorizes banks to merge across state lines, thereby creating interstate branches. Under the legislation, each state had the opportunity to "opt out" of this provision, thereby prohibiting interstate branching in such states. Furthermore, a state may "opt in" with respect to de novo branching, thereby permitting a bank to open new branches in a state in which the bank does not already have a branch. Without de novo branching, an out-of-state bank can enter the state only by acquiring an existing bank. The vast majority of states have allowed interstate banking by merger but have not authorized de novo branching.

Recent Legislation

        On July 30, 2002 the Sarbanes-Oxley Act of 2002 (SOA) was signed into law. The stated goals of SOA are to increase corporate responsibility, provide for enhanced penalties for accounting and auditing improprieties at publicly traded companies and to protect investors by improving the accuracy and reliability of corporate disclosures pursuant to the securities laws. The SOA includes very specific additional disclosure requirements and new corporate governance rules, requires the SEC and security exchanges to adopt extensive additional disclosure, corporate governance and other related rules and mandates further studies of certain issues by the SEC and the Comptroller General. The SOA represents significant federal involvement in matters traditionally left to state regulatory systems, such as the regulation of the accounting profession, and to state corporate law, such as the relationship between a board of directors and its committees.

        As part of the USA Patriot Act, signed into law on October 26, 2001, Congress adopted the International Money Laundering Abatement and Financial Anti-Terrorism Act of 2001 (the "Act"). The Act authorizes the Secretary of the Treasury, in consultation with the heads of other government agencies, to adopt special measures applicable to financial institutions such as banks, bank holding companies, broker-dealers and insurance companies. Among its other provisions, the Act requires each financial institution: (i) to establish an anti-money laundering program; (ii) to establish due diligence policies, procedures and controls that are reasonably designed to detect and report instances of money laundering in United States private banking accounts and correspondent accounts maintained for non-United States persons or their representatives; and (iii) to avoid establishing, maintaining, administering, or managing correspondent accounts in the United States for, or on behalf of, a foreign bank that does not have a physical presence in any country. In addition, the Act expands the circumstances under which funds in a bank account may be forfeited and requires covered financial institutions to respond under certain circumstances to requests for information from federal banking agencies within 120 hours.

        The Act also amends the Bank Holding Company Act and the Bank Merger Act to require the federal banking agencies to consider the effectiveness of a financial institution's anti-money laundering activities when reviewing an application under these acts.

        The Gramm-Leach-Bliley Financial Modernization Act of 1999 became effective in early 2000. The Modernization Act:

•

allows bank holding companies meeting management, capital and Community Reinvestment Act Standards to engage in a substantially broader range of nonbanking activities than previously permissible, including insurance underwriting and making merchant banking investments in commercial and financial companies; if a bank holding company elects to become a financial holding company, it files a certification, effective in 30 days, and thereafter may engage in certain financial activities without further approvals;

11

•

allows insurers and other financial service companies to acquire banks;



•

removes various restrictions previously applied to bank holding company ownership of securities firms and mutual fund advisory companies; and



•

establishes the overall regulatory structure applicable to bank holding companies that also engage in insurance and securities operations.

        The Modernization Act also modified other financial laws, including laws related to financial privacy and community reinvestment.

        Additional proposals to change the laws and regulations governing the banking and financial services industry are frequently introduced in Congress, in the state legislatures and before the various bank regulatory agencies. The likelihood and timing of any such changes and the impact such changes might have on HUB cannot be determined at this time.

Cross Guarantee Provisions and Source of Strength Doctrine

        Under the Financial Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA"), a depository institution insured by the FDIC can be held liable for any loss incurred by, or reasonably expected to be incurred by, the FDIC in connection with the default of a commonly controlled FDIC-insured depository institution in danger of default. "Default" is defined generally as the appointment of a conservatory or receiver and "in danger of default" is defined generally as the existence of certain conditions, including a failure to meet minimum capital requirements, indicative that a "default" is likely to occur in the absence of regulatory assistance. These provisions have commonly been referred to as FIRREA's "cross guarantee" provisions. Further, under FIRREA the failure to meet capital guidelines could subject a banking institution to a variety of enforcement remedies available to federal regulatory authorities, including the termination of deposit insurance by the FDIC.

        According to Federal Reserve Board policy, bank holding companies are expected to act as a source of financial strength to each subsidiary bank and to commit resources to support each such subsidiary. This support may be required at times when a bank holding company may not be able to provide such support. Furthermore, in the event of a loss suffered or anticipated by the FDIC—either as a result of default of a bank subsidiary of the Company or related to FDIC assistance provided to the subsidiary in danger of default—the other bank subsidiaries of the Company may be assessed for the FDIC's loss, subject to certain exceptions.

(b)

Industry Segments

        The Registrant has one industry segment—commercial banking.

(c)

Narrative Description of Business

        HUB exists primarily to hold the stock of its subsidiaries. At December 31, 2003, HUB had seven wholly-owned subsidiaries including Hudson United. In addition, HUB, through Hudson United, indirectly owns 13 additional wholly-owned subsidiaries. The historical growth of, and regulations affecting, each of HUB's direct and indirect subsidiaries is described in Item 1(a) above, which is incorporated herein by reference.

        HUB is a legal entity separate from its subsidiaries. The stock of Hudson United is HUB's principal asset. Dividends from Hudson United are the primary source of income for HUB. As explained above in Item 1(a), legal and regulatory limitations are imposed on the amount of dividends that may be paid by the Bank to HUB.

        At December 31, 2003, HUB, through its subsidiaries, had total deposits of $6.2 billion, total loans of $4.7 billion and total assets of $8.1 billion. HUB ranked third among commercial banks and bank holding companies headquartered in New Jersey in terms of asset size at December 31, 2003. The Bank operates branch offices throughout the state of New Jersey; in the Hudson Valley area of New York

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State; in New York City; in southern Connecticut in the areas between Greenwich and Hartford; and in Philadelphia and surrounding areas in Pennsylvania.

        Hudson United is a full service commercial bank and offers the services generally provided by commercial banks of similar size and character, including imaged checking, savings, and time deposit accounts; 24-hour telephone banking, internet banking; trust services; cash management services; merchant services; safe deposit boxes; insurance; stock, bond, and mutual fund sales; secured and unsecured personal and commercial loans; residential and commercial real estate loans; and international services including import and export financing, foreign currency exchange and letters of credit. The Bank's deposit accounts are competitive with those of other banks and include checking, savings, money market accounts, a variety of interest-bearing transaction accounts and time deposits. In the lending area, the Bank primarily engages in commercial lending; commercial real estate lending; consumer lending primarily consisting of auto loans and home equity loans; and "private label" credit card programs for certain retailers and other businesses. Most of the Company's loans are secured by commercial real estate, residential real estate or other assets of borrowers.

        The Company's main focus is on building banking relationships with individuals, and small and medium sized businesses. Management attempts to differentiate the Company from competitors by creating a superior "customer experience". In addition, the Company believes its ability to supply the services of a large institution with the personal touch of a small community bank represents a competitive advantage.

        Hudson United offers a variety of trust services. At December 31, 2003, Hudson United's Wealth Management Department had approximately $337.6 million of assets under management and total trust assets of $566.1 million.

        There are numerous commercial banks headquartered in New Jersey, Connecticut, Pennsylvania and New York, which compete in the market areas serviced by the Company. In addition, large out-of-state banks compete for the business of residents and businesses located in the Company's primary market. A number of other depository institutions compete for the business of individuals and commercial enterprises including savings banks, savings and loan associations, brokerage houses, financial subsidiaries of other industries and credit unions. Other financial institutions, such as mutual funds, consumer finance companies, factoring companies, and insurance companies, also compete with the Company for loans or deposits. Competition for depositors' funds, for creditworthy loan customers and for trust business is intense.

        Despite intense competition with institutions commanding greater financial resources, the Bank has been able to attract deposits, extend loans, sell its services and operate at a strong level of performance.

        Hudson United has focused on becoming an integral part of the communities it serves. Officers and employees are incented to meet the needs of their customers and to meet the needs of the local communities served.

        The Company had 1,859 full-time equivalent employees as of December 31, 2003.

(d)

Financial Information about foreign and domestic operations and export sales.

Not Applicable

(e)

Executive Officers of the Registrant

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        The following table sets forth certain information as to each executive officer of the Company who is not a director.

(f)

Statistical Disclosure Required Pursuant to Securities Exchange Act, Industry Guide 3

        The statistical disclosures for a bank holding company required pursuant to Industry Guide 3 are contained on the following pages of this Annual Report on Form 10-K, within Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.

ITEM 2. PROPERTIES

        The corporate headquarters of the Company and the Bank is located in a three story facility in Mahwah, New Jersey. HUB owns the building, which is approximately 64,350 square feet and houses the executive offices of the Company and its subsidiaries. Hudson United occupied 205 branch offices as of December 31, 2003, of which 88 are owned and 117 are leased. The Company owns three additional non-branch facilities, in addition to leasing another six.

ITEM 3. LEGAL PROCEEDINGS

        In the normal course of business, lawsuits and claims may be brought by and may arise against HUB and its subsidiaries. In the opinion of management, no legal proceedings which have arisen and which are presently pending or threatened against HUB or its subsidiaries, when resolved, will have a material adverse effect on the business or financial condition of HUB or any of its subsidiaries. In December 2003, the Company terminated, its banking business for its correspondent customers. The Company had been notified of an investigation by government authorities concerning certain accounts and customers of the correspondent business and the Company's administration of the business. On March 2, 2004 the Company announced that Hudson United Bank had entered into a settlement with the New York County District Attorney's Office concerning the District Attorney's investigation of the Company's banking business for correspondent customers. Under the terms of the agreement, the Company agreed to pay $3.5 million to the City of New York and $1.5 million to the District Attorney's office for the costs of the investigation. The Company, which recently upgraded its compliance program, agreed to continue its corrective actions. The $5 million was charged against fourth quarter 2003 results of operations. The FDIC currently is conducting a compliance examination covering the same issues which were involved in the settlement with the District Attorney's Office.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

        No matters were submitted to a vote of shareholders of HUB during the fourth quarter of the year ended December 31, 2003.

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PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

        As of December 31, 2003, the Company had approximately 8,198 shareholders of record.

        The Company's common stock is listed on the New York Stock Exchange under the symbol of "HU". The following represents the high and low closing sale prices from each quarter during the last two years.

        The following table shows the per share quarterly cash dividends paid upon the common stock over the last two years.

        The Company's restrictions on the payment of dividends is covered under Note 17 ("Restrictions on Bank Dividends, Loans or Payments"). In addition to these restrictions, under the terms of the Company's junior subordinated debentures, the Company could not pay dividends on its common stock if it deferred payments on the junior subordinated debentures which provide the cash flow for the payments on the trust preferred securities.

ITEM 6. SELECTED FINANCIAL DATA
(In Thousands Except For Per Share Amounts)

        The following selected financial data should be read in conjunction with HUB's Consolidated Financial Statements and the notes presented elsewhere herein.

        Results reported in this table for year 1999 have been restated to reflect pooling of interest transactions. Reference should be made to Note 2, Business Combinations, of the Financial Statements

15

for a discussion of recent acquisitions that affect the comparability of the information contained in this table.

(1)

Per share data is adjusted retroactively to reflect a 10% stock dividend paid December 1, 2000 and a 3% stock dividend paid December 1, 1999.

Cautionary Statement Regarding Forward-Looking Information

        This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are not historical facts and include expressions about management's confidence and strategies and management's expectations about new and existing programs and products, relationships, opportunities, technology and market conditions. These statements may be identified by such forward-looking terminology as "expect", "look", "believe", "anticipate", "consider", "may", "will", or similar statements or variations of such terms. Such forward-looking statements involve certain risks and uncertainties. Actual results may differ materially from the results discussed in these forward-looking statements. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, unexpected changes in interest rates, deterioration in economic conditions, declines in deposit or a decline in loan volume trends, decline in levels of loan quality, change in the trend in loan loss provisions, the unexpected unavailability of tax credits, especially the Company's Section 29 credits, additional expense, costs or limitations arising from exiting the correspondent banking business or the investigation of the Company's administration of the business and the unanticipated effects of legal, tax and regulatory provisions applicable to the Company. The Company assumes no obligation for updating any such forward-looking statements at any time.

ITEM 7    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Executive Overview

        The year 2003 continued to be a challenging one for the Company and the banking sector as a whole. Historically high prepayments on mortgage loans, the historically low interest rate environment and the suppressed economy all contributed to the challenges of the past year. In the third and fourth quarter of 2003, the Company experienced a slow reversing of the trends that had been evident over the prior quarters.

        Net interest margin in the fourth quarter started a reversal of the downward trend that had been exhibited over previous quarters. This was a welcome change since the Company's margin has been and continues to be its major source of revenue. The Company saw a marked slowdown in the prepayments

16

on the mortgage backed portion of its investment portfolio and subsequent pick up in yield on these investments. The third and fourth quarters of 2003 also saw a pickup in commercial loan growth as new business owners chose to move their accounts and loans to Hudson United Bank. The Company is optimistic that these trends will continue and expand into 2004.

        The Company is increasing its focus on the high growth, high profit areas of its business. Commercial lending has exhibited a growth rate of 16% over the past year and these loans continue to bring in associated deposit balances. These particular business owners appreciate the full service and quick loan response time that the Company's lenders provide. The Company enjoys a strong credit card niche through its third party credit card business. This business enjoyed a 14% growth in credit card fee income in 2003 as compared to 2002. The Company believes that it competes successfully in this sector due to the high level of service that our merchants receive. The Company's acquisition of Flatiron Credit Company ("Flatiron") on October 31, 2003 provided yet another potentially profitable diversification of its business (see discussion under Part I "Acquisition Activity by the Company"). Flatiron already has started contributing to the Company's bottom line with a $567 thousand after tax contribution in November and December of 2003. As with all its loan products, the Company is continuing its stringent loan quality guidelines which has resulted in stable, low levels of non performing loans during 2003.

        The Company's major contributors from operating activities, include net interest income and fee income from its retail franchise and private label credit card business. Financing activities received cash flow from increases in certificates of deposit and borrowings, offset in part by the use of cash for payment of debt securities, declines in core deposits, cash dividends and acquisition of treasury stock. Investing activities, which utilized cash, came mainly from net purchase activity in the Company's investment portfolio. The Company's net cash position saw an increase of $38.4 million in 2003 compared to 2002.

        During 2004 and subsequent years, the Company expects to continue to focus on the internal growth of its businesses through seizing opportunities that arise in its market as well as supplementing internal growth through acquisitions. Acquisitions will be considered only if the Company believes they add customer relationships, product capabilities and can be accretive to earnings per share.

Results of Operations for the Years Ended December 31, 2003, 2002 and 2001

        Certain amounts from prior years have been reclassified to conform to the current year's presentation.

        The Company had net income of $112.3 million or $2.50 per fully diluted share in 2003.

        The Company had net income of $123.2 million or $2.72 per fully diluted share in 2002. Earnings for 2002 include the $77 million cash payment from Dime Bancorp, Inc. ("Dime") on January 7, 2002, representing the final termination payment relating to the uncompleted merger of the Company and Dime. Earnings for 2002 also include $21.5 million of one time expenses resulting from the merger dissolution of $8.3 million and $13.2 million of other charges, and an additional $21.3 million provision for possible loan and lease losses relating to the accelerated disposition of certain nonperforming commercial and industrial loans.

        The Company had net income of $94.5 million, or $2.00 per diluted share in 2001.

17

Average Balances, Net Interest Income, Yields, and Rates

(Net interest income is on a tax equivalent basis, see footnotes below)