SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2004
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
HUDSON UNITED BANCORP
(Exact name of registrant as specified in its charter)
| New Jersey | 22-2405746 | |
| (State of other jurisdiction of | (I.R.S. Employer Identification Number) | |
| incorporation or organization) | ||
| 1000 MacArthur Blvd, Mahwah, NJ | 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 ¨
Indicate by check mark whether the Registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2)
Yes x No ¨
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the last practicable date: shares, no par value, 44,874,517 outstanding as of May 3, 2004.
HUDSON UNITED BANCORP
| PART I. FINANCIAL INFORMATION |
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| Item 1. |
Financial Statements (Unaudited): |
|||
| Consolidated Balance Sheets At March 31, 2004 and December 31, 2003 |
2 | |||
| Consolidated Statements of Income For the Three Months Ended March 31, 2004 and 2003 |
3 | |||
| Consolidated Statements of Comprehensive Income For the Three Months Ended March 31, 2004 and 2003 |
4 | |||
| 5 | ||||
| Consolidated Statements of Cash Flows For the Three Months Ended March 31, 2004 and 2003 |
6 | |||
| 7-13 | ||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
13-19 | ||
| Item 3. |
19 | |||
| Item 4. |
19 | |||
| PART II. OTHER INFORMATION |
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| Item 1. |
20 | |||
| Item 6. |
20 | |||
| 20-21 | ||||
| 21 | ||||
1
CONSOLIDATED BALANCE SHEETS (Unaudited)
| (in thousands, except per share data) |
March 31, 2004 |
December 31, 2003 |
||||||
| ASSETS |
||||||||
| Cash and due from banks |
$ | 194,126 | $ | 272,636 | ||||
| Interest bearing due from banks |
94,883 | 41,358 | ||||||
| TOTAL CASH AND CASH EQUIVALENTS |
$ | 289,009 | $ | 313,994 | ||||
| Investment securities available for sale, at market value ($ 1,110 and $1,813 million pledged at March 31, 2004 and December 31, 2003 respectively) |
$ | 1,851,445 | $ | 2,706,185 | ||||
| Investment securities held to maturity, at cost; $816,304 market value ($748,995, at cost pledged at March 31, 2004) |
$ | 815,917 | $ | — | ||||
| Loans and leases: |
||||||||
| Commercial and financial |
$ | 2,126,354 | $ | 2,137,499 | ||||
| Commercial real estate mortgages |
989,182 | 993,937 | ||||||
| Consumer |
1,032,885 | 1,033,693 | ||||||
| Credit card |
296,680 | 326,713 | ||||||
| Sub-total |
$ | 4,445,101 | $ | 4,491,842 | ||||
| Residential mortgages |
156,981 | 167,913 | ||||||
| TOTAL LOANS AND LEASES |
$ | 4,602,082 | $ | 4,659,755 | ||||
| Less: Allowance for loan and lease losses |
(67,839 | ) | (67,846 | ) | ||||
| NET LOANS AND LEASES |
$ | 4,534,243 | $ | 4,591,909 | ||||
| Premises and equipment, net |
$ | 124,063 | $ | 125,168 | ||||
| Other real estate owned |
769 | 977 | ||||||
| Intangibles, net of amortization |
21,771 | 22,664 | ||||||
| Goodwill |
79,010 | 81,068 | ||||||
| Investment in separate account bank owned life insurance |
145,672 | 144,126 | ||||||
| Other assets |
110,746 | 114,567 | ||||||
| TOTAL ASSETS |
$ | 7,972,645 | $ | 8,100,658 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Deposits |
||||||||
| Noninterest bearing |
$ | 1,292,628 | $ | 1,328,586 | ||||
| NOW, money market and savings |
3,063,369 | 3,009,821 | ||||||
| Time deposits |
1,886,601 | 1,904,952 | ||||||
| TOTAL DEPOSITS |
$ | 6,242,598 | $ | 6,243,359 | ||||
| Repurchase agreements |
438,584 | 532,485 | ||||||
| Other borrowings |
306,798 | 388,734 | ||||||
| TOTAL BORROWINGS |
$ | 745,382 | $ | 921,219 | ||||
| Other liabilities |
256,980 | 238,117 | ||||||
| Subordinated debt |
234,934 | 239,773 | ||||||
| TOTAL LIABILITIES |
$ | 7,479,894 | $ | 7,642,468 | ||||
| Stockholders’ Equity: |
||||||||
| Common stock, no par value; authorized 103,000,000 shares; |
||||||||
| 52,186,866 shares issued and 44,826,051 shares outstanding in 2004 and 52,186,866 shares issued and 44,798,901 shares outstanding in 2003 |
$ | 92,788 | $ | 92,788 | ||||
| Additional paid-in capital |
311,198 | 311,310 | ||||||
| Retained earnings |
253,174 | 237,046 | ||||||
| Treasury stock, at cost, 7,360,815 shares in 2004 and 7,387,965 shares in 2003 |
(175,532 | ) | (176,505 | ) | ||||
| Effect of Stock Based Compensation |
(4,789 | ) | (3,899 | ) | ||||
| Accumulated other comprehensive income (loss) |
15,912 | (2,550 | ) | |||||
| TOTAL STOCKHOLDERS’ EQUITY |
$ | 492,751 | $ | 458,190 | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
$ | 7,972,645 | $ | 8,100,658 | ||||
See Notes to Unaudited Consolidated Financial Statements
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
| Three Months Ended March 31, |
|||||||
| (in thousands, except per share data) |
2004 |
2003 |
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| INTEREST AND FEE INCOME: |
|||||||
| Loans and leases |
$ | 67,197 | $ | 72,337 | |||
| Investment securities |
30,590 | 29,448 | |||||
| Other |
358 | 625 | |||||
| TOTAL INTEREST AND FEE INCOME |
$ | 98,145 | $ | 102,410 | |||
| INTEREST EXPENSE: |
|||||||
| Deposits |
$ | 11,958 | $ | 17,472 | |||
| Borrowings |
2,210 | 3,222 | |||||
| Subordinated and other debt |
6,086 | 6,512 | |||||
| TOTAL INTEREST EXPENSE |
$ | 20,254 | $ | 27,206 | |||
| NET INTEREST INCOME |
$ | 77,891 | $ | 75,204 | |||
| PROVISION FOR LOAN AND LEASE LOSSES, PORTFOLIO LOANS |
5,600 | 7,000 | |||||
| NET INTEREST INCOME AFTER PROVISION FOR LOAN AND LEASE LOSSES |
$ | 72,291 | $ | 68,204 | |||
| NONINTEREST INCOME: |
|||||||
| Retail service fees |
$ | 8,088 | $ | 9,003 | |||
| Credit card fee income |
7,199 | 6,396 | |||||
| Loan Fees |
4,534 | 3,457 | |||||
| ATM and debit card fees |
1,653 | 1,773 | |||||
| Separate account bank owned life insurance income |
1,546 | 1,796 | |||||
| Trust income |
798 | 495 | |||||
| Income From Landfill Investments |
5,162 | — | |||||
| Trading asset gain |
— | 3,536 | |||||
| Securities (losses)/gains |
3,470 | (3,259 | ) | ||||
| Other income |
3,113 | 3,686 | |||||
| TOTAL NONINTEREST INCOME |
$ | 35,563 | $ | 26,883 | |||
| NONINTEREST EXPENSE: |
|||||||
| Salaries and benefits |
$ | 25,635 | $ | 22,942 | |||
| Occupancy expense |
8,201 | 8,217 | |||||
| Equipment expense |
4,480 | 4,493 | |||||
| Deposit and other insurance |
621 | 520 | |||||
| Outside services – data processing |
7,511 | 6,893 | |||||
| Outside services-other |
8,204 | 5,444 | |||||
| Amortization of intangibles |
1,244 | 1,055 | |||||
| Marketing expense |
706 | 700 | |||||
| Telephone expense |
1,366 | 1,445 | |||||
| Expense for Landfill Investments |
5,882 | — | |||||
| Other expense |
2,719 | 2,948 | |||||
| TOTAL NONINTEREST EXPENSE |
$ | 66,569 | $ | 54,657 | |||
| INCOME BEFORE INCOME TAXES |
41,285 | 40,430 | |||||
| PROVISION FOR INCOME TAXES |
10,303 | 12,129 | |||||
| NET INCOME |
$ | 30,982 | $ | 28,301 | |||
| NET INCOME PER COMMON SHARE |
|||||||
| Basic |
$ | 0.69 | $ | 0.63 | |||
| Diluted |
$ | 0.69 | $ | 0.63 | |||
| WEIGHTED AVERAGE SHARES OUTSTANDING: |
|||||||
| Basic |
44,808 | 44,756 | |||||
| Diluted |
45,003 | 44,966 | |||||
See Notes to Unaudited Consolidated Financial Statements
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
| Three Months Ended March 31, |
|||||||
| (In thousands) |
2004 |
2003 |
|||||
| NET INCOME |
$ | 30,982 | $ | 28,301 | |||
| OTHER COMPREHENSIVE INCOME, NET OF TAX: |
|||||||
| Net unrealized securities gains (losses) on available for sale securities arising during period (tax expense of $10,866 and tax benefit of $3,197 respectively) |
$ | 18,555 | $ | (5,453 | ) | ||
| Change in valuation of derivative contracts (tax benefit of $1,866 in 2003) |
— | (2,702 | ) | ||||
| Less: reclassification for net gains (losses) included in net income (tax expense of $71 and tax benefit of $2,447 respectively) |
93 | (3,544 | ) | ||||
| Other comprehensive (loss) income |
$ | 18,462 | $ | (4,611 | ) | ||
| COMPREHENSIVE INCOME |
$ | 49,444 | $ | 23,690 | |||
See Notes to Unaudited Consolidated Financial Statements
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Unaudited)
(in thousands, except shares)
| Common Stock |
Additional Capital |
Retained Earnings |
Treasury Stock |
Effect of Stock Based Compensation |
Accumulated Income (Loss) |
Total |
||||||||||||||||||||||||
| Shares |
Amount |
|||||||||||||||||||||||||||||
| Balance at December 31, 2002 |
45,023,459 | $ | 92,788 | $ | 313,467 | $ | 177,544 | $ | (169,871 | ) | $ | (2,456 | ) | $ | 21,054 | $ | 432,526 | |||||||||||||
| Net income |
— | — | — | 112,321 | — | — | — | 112,321 | ||||||||||||||||||||||
| Cash dividends ($1.18 cash paid per share) |
— | — | — | (52,819 | ) | — | — | — | (52,819 | ) | ||||||||||||||||||||
| Stock options exercised |
250,383 | — | (2,332 | ) | — | 7,778 | — | — | 5,446 | |||||||||||||||||||||
| Other transactions |
(11,220 | |||||||||||||||||||||||||||||