Hudson United Bancorp Reports EPS of $0.66 per share for the First Qua

    Business Editors

    MAHWAH, N.J.--(BUSINESS WIRE)--April 25, 2005--Executive Overview--Hudson United Bancorp ("the Company") (NYSE: HU) today reported net income of $29.7 million, or $0.66 per diluted share, for the quarter ended March 31, 2005, compared to the $0.69 per diluted share reported for the comparable quarter in 2004.
    Several factors impacted the first quarter results. Net interest margin was reduced as the Company experienced significant interest rate competition for branch and public sector deposits. Net interest margin was 3.78% for the first quarter of 2005 as compared to 4.25% in the first quarter of 2004. Another factor was the delay in the sale of an OREO property foreclosed by the Company during December 2004. The sale is expected to close in the second quarter of 2005. The terms of sale provide that the Company will be reimbursed for all operating expenses of the property which aggregated $0.01 per diluted share for the first quarter of 2005. Diluted earnings per share was decreased by $0.01 as a result of accelerated budgeted property repairs and maintenance expenditures related to the Company's Landfill Gas Investments. Lastly, retail service fees declined $0.03 per diluted share compared to the first quarter 2004. The impact of the reduction in service fees was recognized in February and the Company readjusted fees immediately, which the Company expects will favorably impact future quarters.
    The Company's return on average equity was 22.59% and return on average assets was 1.34% for the first quarter 2005. The net interest margin was 3.78% and noninterest income as a percent of net revenue was 29% for the first quarter of 2005.
    The Company's return on average equity was 26.51% and return on average assets was 1.54% for the first quarter of 2004. The net interest margin was 4.25% for the first quarter of 2004.

    Results of Operations for Quarter End March 31, 2005

    Net interest income for the first quarter of 2005 was $77.3 million and the net interest margin was 3.78%. Net interest income for the first quarter of 2004 was $77.9 million and the net interest margin was 4.25%. Net interest income decreased by $0.6 million in the first quarter of 2005 compared to the first quarter of 2004. Net interest margin was reduced by lower yields on investment securities and increased yields on borrowings and public sector deposits.
    The loan portfolio quality remains good and the continued low levels of nonperforming loans and low net charge offs in 2005 resulted in the provision for loan and lease losses of $4.5 million for the first quarter of 2005 and $5.5 million for the first quarter of 2004. The decrease in 2005 over 2004 was due to continued low levels of nonperforming loans and lower net charge-offs over recent quarters. Net charge offs for the first quarter of 2005 were $5.5 million compared to $5.6 million for the first quarter of 2004.
    Noninterest income was $31.6 million in the first quarter of 2005 and $35.6 million in the first quarter of 2004. Noninterest income for the first quarter of 2005 decreased by $4.0 million, or 11.3%, compared to the first quarter of 2004. The decrease in noninterest income in the first quarter of 2005 compared to 2004 was due mainly to decreases in retail service fees and lower security gains. During the fourth quarter of 2004 the Company sold its merchant processing business. Loan fees for the first quarter 2004 include $1.4 million of merchant processing fees.
    Noninterest expense was $64.6 million for the first quarter of 2005 compared to $66.6 million for the first quarter of 2004. The decrease in noninterest expense in the first quarter of 2005 compared to the first quarter of 2004 is due mainly to decreases in outside services resulting from lower expenses associated with the modification of the Company's data processing and item processing contracts, as well as nonrecurring expenses in 2004 from the Company's termination of its correspondent banking business. Increases experienced in noninterest expense in the Company's Landfill Gas Investments were due to budgeted repair and maintenance expenditures related to the business which were accelerated in the first quarter. An increase in other noninterest expense is due to higher foreclosed property expense related to the property that is expected to close during the second quarter of 2005 at which time all operating expenses will be reimbursed.
    The Company's pretax income for the first quarter of 2005 was $39.8 million, a decrease of $1.5 million, or 3.7%, compared to the first quarter of 2004. The Company's provision for income taxes was $10.0 million for the first quarter of 2005 compared to $10.3 million for the first quarter of 2004.

    Nonperforming Loans and Leases, and Asset Quality

    Nonperforming loans and leases totaled $17.2 million at March 31, 2005. This was an increase of $5.0 million compared to $12.3 million of nonperforming loans and leases as of December 31, 2004 and a increase of $3.0 million compared to $14.2 million of nonperforming loans and leases at March 31, 2004. Nonperforming loans and leases were 0.36% of total loans and leases at March 31, 2005, compared to 0.25% at December 31, 2004 and 0.31% at March 31, 2004.
    Nonperforming assets were $33.2 million at March 31, 2005, up from $27.9 million at December 31, 2004 and up from $15.0 million at March 31, 2004. Nonperforming assets as a percent of loans, leases and foreclosed property was 0.69% at March 31, 2005, 0.58% at December 31, 2004 and 0.33% at March 31, 2004. Nonperforming assets at March 31, 2005 include a property with a carrying value of $13.8 million under a contract to sell scheduled to close during the second quarter of 2005.
    The Allowance for loan and lease losses totaled $59.8 million at March 31, 2005, $60.8 million at December 31, 2004 and $67.8 million at March 31, 2004. It represented 347% of nonperforming loans and leases at March 31, 2005, compared to 496% at December 31, 2004, and 477% at March 31, 2004. The Allowance as a percentage of total loans and leases was 1.24% at March 31, 2005, 1.26% December 31, 2004 and 1.47% at March 31, 2004.

    Other Balance Sheet Data

    Loan and lease categories consisting of commercial and financial, commercial real estate, consumer, and credit card loans totaled $4.7 billion at March 31, 2005 and December 31, 2004. These four loan and lease categories are the areas of loans that the Company emphasizes. This is because they generally have more attractive yields, interest rate sensitivity, and maturity characteristics than single family first mortgage loans. These four loan and lease categories represented approximately 98% of loans and leases at March 31, 2005, compared to 97% at December 31, 2004. The loan to deposit ratio at March 31, 2005 and December 31, 2004 was 77% and 76%, respectively.
    Residential mortgage loans, which are not an area of emphasis for the Company, were $118.9 million as of March 31, 2005, compared to $126.8 million at December 31, 2004.
    Total investment securities were $3.4 billion at March 31, 2005, compared to $3.5 billion at December 31, 2004. Total assets were $8.9 billion at March 31, 2005, compared to $9.1 billion at December 31, 2004.
    Deposits other than time deposits were $4.5 billion at March 31, 2005 and December 31, 2004. Total deposits were $6.3 billion at March 31, 2005 and December 31, 2004.
    Total stockholders' equity was $530.9 million and book value per common share was $11.79 at March 31, 2005. All regulatory capital ratios exceed those necessary to be considered a well-capitalized institution.

    Share Repurchases and Cash Dividends

    The Company did not repurchase any shares in the first quarter of 2005. During April 2005, the board of directors approved a treasury share repurchase plan of up to 4.5 million shares.
    Total shares outstanding were 45.0 million shares at March 31, 2005 and December 31, 2004.
    The Company paid cash dividends of $0.37 per share in the first quarter of 2005. Total cash dividends paid in the first quarter of 2005 was $16.7 million.
    The Company is the multi-state bank holding company for the Bank, which has 204 offices in New Jersey, New York, Connecticut and Pennsylvania.
    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 trends in loan loss provisions, the unexpected unavailability of tax credits, especially in the Company's Section 29 credits, and the unanticipated effects of legal, tax and regulatory provisions applicable to the Company including compliance with the regulatory order from the FDIC which the Company is under. The Company assumes no obligation for updating any such forward-looking statements at any time. Important information on other material factors or supplemental factors that could cause the Company's financial results to differ from the forward-looking statements also is included in the Company's public reports filed with the SEC, including in our Form 10-K for the year ending December 31, 2004.

HUDSON UNITED BANCORP AND SUBSIDIARIES --------------------------------------------- CONSOLIDATED BALANCE SHEETS

March 31, December 31, 2005 2004 (in thousands) (Unaudited) ---------------------------------------------------------------------- ASSETS Cash and due from banks $ 182,281 $ 161,878 Interest bearing due from banks 12,051 99,028 ---------- ---------- TOTAL CASH AND CASH EQUIVALENTS $ 194,332 $ 260,906

Investment securities available for sale, at fair value $2,108,882 $2,166,627 ($1,431,162 and $1,491,084 in fair value pledged at March 31, 2005 and December 31, 2004 respectively) Investment securities held to maturity,at cost; $1,264,309 fair value $1,291,979 $1,372,228 ($1,154,512 and $1,201,730 ,at cost pledged at March 31, 2005 and December 31, 2004 respectively)

Trading Assets, fair value $ - $ 1,477

Loans and leases: ($339,306 pledged at March 31, 2005) Commercial and financial $2,173,713 $2,190,339 Commercial real estate mortgages 1,130,665 1,113,604 Consumer 1,005,885 995,766 Credit card 378,274 400,700 ---------- ---------- Sub-total $4,688,537 $4,700,409 Residential mortgages 118,865 126,775 ---------- ---------- TOTAL LOANS AND LEASES $4,807,402 $4,827,184 Less: Allowance for loan and lease losses (59,750) (60,799) ---------- ---------- NET LOANS AND LEASES $4,747,652 $4,766,385

Premises and equipment, net 119,168 121,037 Core deposit and other intangibles, net of amortization 18,881 20,104 Goodwill 83,561 83,561 Investment in separate account bank owned life insurance 151,514 150,073 Other assets 134,474 136,644 ---------- ---------- TOTAL ASSETS $8,850,443 $9,079,042 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Deposits: Noninterest bearing $1,319,769 $1,355,624 NOW, money market, and savings 3,220,405 3,129,355 Time deposits 1,713,884 1,859,219 ---------- ---------- TOTAL DEPOSITS $6,254,058 $6,344,198 Repurchase agreements 910,534 842,893 Other borrowings 682,558 879,530 ---------- ---------- TOTAL BORROWINGS 1,593,092 1,722,423 Other liabilities 247,305 255,587

Subordinated debt 225,122 225,184 ---------- ---------- TOTAL LIABILITIES 8,319,577 8,547,392 Stockholders' Equity: Common stock, no par value $ 92,788 $ 92,788 Additional paid-in capital 310,124 310,102 Retained earnings 317,081 304,000 Treasury stock, at cost (169,005) (170,183) Effect of stock compensation plans (1,342) (1,359) Accumulated other comprehensive loss (18,780) (3,698) ---------- ---------- TOTAL STOCKHOLDERS' EQUITY $ 530,866 $ 531,650 ---------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $8,850,443 $9,079,042 ========== ==========

HUDSON UNITED BANCORP AND SUBSIDIARIES ------------------------------------------------ CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended March 31, ---------------------- (Unaudited) ---------------------------------------------------------------------- (in thousands, except share data) 2005 2004 INTEREST AND FEE INCOME: Loans and leases $ 73,607 $67,197 Investment securities 36,913 30,590 Other 346 358 -------- ------- TOTAL INTEREST AND FEE INCOME $110,866 $98,145 -------- ------- INTEREST EXPENSE: Deposits $ 17,267 $11,958 Borrowings 9,459 2,210 Subordinated and other debt 6,843 6,086 -------- ------- TOTAL INTEREST EXPENSE $ 33,569 $20,254 -------- ------- NET INTEREST INCOME $ 77,297 $77,891

PROVISION FOR LOAN AND LEASE LOSSES, PORTFOLIO LOANS 4,500 5,600 -------- ------- NET INTEREST INCOME AFTER PROVISION FOR - - LOAN AND LEASE LOSSES $ 72,797 $72,291 -------- ------- NONINTEREST INCOME: Retail service fees $ 6,295 $ 8,088 Credit card fee income 7,810 7,199 Loan Fees 3,465 4,534 ATM and debit card fees 1,537 1,653 Separate bank owned life insurance income 1,441 1,546 Trust income 796 798 Income from Landfill Investments 5,378 5,162 Other income 3,314 3,113 Securities gains 1,515 3,470 -------- ------- TOTAL NONINTEREST INCOME $ 31,551 $35,563 -------- ------- NONINTEREST EXPENSE: Salaries and benefits $ 25,216 $25,635 Occupancy expense 8,111 8,201 Equipment expense 3,562 4,480 Outside services - data processing 6,458 7,511 Outside services - other 6,435 8,204 Amortization of intangibles 1,222 1,244 Marketing expense 1,164 706 Deposit and other insurance 586 621 Telephone expense 1,401 1,366 Expense from Landfill Investments 6,549 5,882 Other 3,884 2,719 -------- ------- TOTAL NONINTEREST EXPENSE $ 64,588 $66,569 -------- ------- INCOME BEFORE INCOME TAXES $ 39,760 $41,285 PROVISION FOR INCOME TAXES 10,029 10,303 -------- ------- NET INCOME $ 29,731 $30,982 ======== =======

NET INCOME PER COMMON SHARE: Basic $ 0.66 $ 0.69 Diluted $ 0.66 $ 0.69 WEIGHTED AVERAGE SHARES OUTSTANDING: Basic 44,966 44,808 Diluted 45,119 45,003

Supplemental Information -------------------------

Hudson United Bancorp ($ in thousands) 1Q05 2Q05 3Q05 4Q05 Y-T-D -------- ---------- ---------- ---------- ---------- End of Period ---------------- Total Securities 3,400,861 0 0 0 NA Total Assets 8,850,443 0 0 0 NA Total Deposits 6,254,058 0 0 0 NA Total Stockholders' Equity 530,866 0 0 0 NA Shares Outstanding 45,030 0 0 0 NA

Average Balance Sheet ---------------- Commercial/ Consumer Loans 4,678,900 0 0 0 4,678,900 Residential Real Estate Mortgage 120,052 0 0 0 120,052 Total Loans and Leases 4,798,952 0 0 0 4,798,952 Other Earning Assets 3,592,655 0 0 0 3,592,655 Total Earning Assets 8,391,607 0 0 0 8,391,607 Total Assets 9,016,140 0 0 0 9,016,140 Noninterest Bearing Deposits 1,318,727 0 0 0 1,318,727 Interest Bearing Deposits 4,981,068 0 0 0 4,981,068 Common Equity 533,843 0 0 0 533,843

Loan Portfolio Composition -------------------------- Commercial and Financial 2,173,713 0 0 0 NA Commercial Real Estate Mortgage 1,130,665 0 0 0 NA Consumer 1,005,885 0 0 0 NA Credit Card 378,274 0 0 0 NA Sub-total 4,688,537 0 0 0 NA Residential Real Estate Mortgage 118,865 0 0 0 NA Total Loans and Leases 4,807,402 0 0 0 NA Allowance for Losses 59,750 0 0 0 NA Net Loans and Leases 4,747,652 0 0 0 NA

End of Period ---------------- Nonaccruing Loans 17,229 0 0 0 NA Forclosed Property 15,976 0 0 0 NA Total Nonperforming Assets 33,205 0 0 0 NA 90 Days Past Due & Accruing 13,252 0 0 0 NA Net Charge Offs 5,549 0 0 0 NA Intangible Assets 102,442 0 0 0 NA

($ in thousands) 1Q04 2Q04 3Q04 4Q04 Y-T-D ---------- ---------- ---------- ---------- ---------- End of Period ---------------- Total Securities 2,667,362 3,506,055 3,301,000 3,540,332 NA Total Assets 7,972,645 8,958,718 8,825,227 9,079,062 NA Total Deposits 6,242,598 6,128,993 6,290,439 6,344,198 NA Total Stockholders' Equity 492,751 478,170 516,925 531,650 NA Total Shares Outstanding 44,826 44,948 44,954 44,983 NA

Average Balance Sheet --------------------- Commercial/ Consumer Loans 4,442,326 4,503,975 4,624,471 4,652,812 4,556,828 Residential Real Estate Mortgage 162,044 149,086 137,692 128,324 143,745 Total Loans and Leases 4,604,370 4,653,061 4,762,163 4,781,136 4,700,573 Other Earning Assets 2,851,895 3,199,375 3,489,497 3,622,725 3,292,322 Total Earning Assets 7,456,265 7,852,436 8,251,660 8,403,861 7,992,895 Total Assets 8,071,442 8,436,611 8,852,794 9,013,718 8,594,976 Noninterest Bearing Deposits 1,254,798 1,314,739 1,334,238 1,356,682 1,315,280 Interest Bearing Deposits 4,921,224 4,830,107 4,955,853 4,935,262 4,910,803 Common Equity 470,068 478,972 496,533 521,261 491,803

Loan Portfolio Composition -------------------------- Commercial and Financial 2,126,354 2,208,139 2,231,299 2,190,339 NA Commercial Real Estate Mortgage 989,182 1,041,677 1,089,828 1,113,604 NA Consumer 1,032,885 1,049,631 1,027,347 995,766 NA Credit Card 296,680 323,763 344,320 400,700 NA Sub-total 4,445,101 4,623,210 4,692,794 4,700,409 NA Residential Real Estate Mortgage 156,981 140,571 132,671 126,775 NA Total Loans and Leases 4,602,082 4,763,781 4,825,465 4,827,184 NA Allowance for Losses 67,839 66,048 66,289 60,799 NA Net Loans and Leases 4,534,243 4,697,733 4,759,176 4,766,385 NA

End of Period ---------------- Nonaccruing Loans 14,211 12,286 12,519 12,257 NA Restructured Loans 0 0 0 0 NA Other Real Estate 769 2,144 2,111 15,618 NA Total Nonperforming Assets 14,980 14,430 14,630 27,875 NA 90 Days Past Due & Accruing 13,988 13,516 15,934 14,617 NA Net Charge Offs 5,607 5,846 4,259 5,490 NA Intangible Assets 100,781 99,557 99,334 103,665 NA

Supplemental Information ------------------------- Hudson United Bancorp ($ in thousands) 1Q05 2Q05 3Q05 4Q05 Y-T-D --------- -------- -------- -------- -------- Condensed Income Statement ------------------------- Interest Income 110,866 0 0 0 110,866 Interest Expense 33,569 0 0 0 33,569 Net Interest Income 77,297 0 0 0 77,297 Provision for Possible Loan and Lease Losses 4,500 0 0 0 4,500 Income from Landfill Investments 5,378 0 0 0 5,378 Total Non interest Income 31,551 0 0 0 31,551 Amortization of Intangibles Expense 1,222 0 0 0 1,222 Expense from Landfill Investments 6,549 0 0 0 6,549 Total Non interest Expense 64,588 0 0 0 64,588 Pre-tax Income 39,760 0 0 0 39,760 Provision for Income Taxes 10,029 0 0 0 10,029 Net Income 29,731 0 0 0 29,731 Fully-taxable Equivalent Adjustment 907 0 0 0 907

Performance ------------------------- Return on Average Assets 1.34% 0.00% 0.00% 0.00% 0.33% Return on Average Equity 22.59% 0.00% 0.00% 0.00% 5.57% Basic Earnings Per Share $0.66 $- $- $- $0.66 Diluted Earnings Per Share $0.66 $- $- $- $0.66 Weighted Average Shares - Basic 44,966 - - - 44,966 Weighted Average Shares - Diluted 45,119 - - - 45,119 Net Interest Margin (2) 3.78% 0.00% 0.00% 0.00% 3.78%

Capital Information ------------------------- Tier 1 Leverage Ratio (1) 6.85% 0.00% 0.00% 0.00% NA Tier 1 Risk-Based Capital (1) 10.06% 0.00% 0.00% 0.00% NA Total Risk-Based Capital (1) 14.42% 0.00% 0.00% 0.00% NA Common Equity $530,866 $- $- $- NA Common Shares Outstanding 45,030 - - - NA Book Value Per Share (Common) $11.79 $- $- $- NA

($ in thousands) 1Q04 2Q04 3Q04 4Q04 Y-T-D --------- -------- -------- -------- -------- Condensed Income Statement ------------------------- Interest Income 98,145 100,229 106,332 109,728 414,434 Interest Expense 20,254 22,132 26,311 30,085 98,782 Net Interest Income 77,891 78,097 80,021 79,643 315,652 Provision for Possible Loan and Lease Losses 5,600 4,750 4,500 0 14,850 Income from Landfill Investments 5,162 10,453 6,321 4,116 26,052 Total Noninterest Income 35,563 39,092 44,351 37,321 156,327 Amortization of Intangibles Expense 1,244 1,223 1,222 1,222 4,911 Expense from Landfill Investments 5,882 7,497 5,188 4,741 23,308 Total Noninterest Expense 66,569 69,790 75,884 71,463 283,706 Pre-tax Income 41,285 42,649 43,988 45,501 173,423 Provision for Income Taxes 10,303 10,990 11,450 12,597 45,340 Net Income 30,982 31,659 32,538 32,904 128,083 Fully-taxable Equivalent Adjustment 946 934 922 957 3,759

Performance ------------------------- Return on Average Assets 1.54% 1.51% 1.46% 1.45% 1.49% Return on Average Equity 26.51% 26.58% 26.07% 25.11% 26.04% Basic Earnings Per Share $0.69 $0.71 $0.73 $0.73 $2.86 Diluted Earnings Per Share $0.69 $0.70 $0.72 $0.73 $2.85 Weighted Average Shares - Basic 44,808 44,651 44,700 44,921 44,717 Weighted Average Shares - Diluted 45,003 44,920 44,952 45,110 44,944 Net Interest Margin (2) 4.25% 4.05% 3.90% 3.82% 4.00%

Capital Information ------------------------- Tier 1 Leverage Ratio 6.83% 6.75% 6.69% 6.69% NA Tier 1 Risk-Based Capital 9.50% 9.26% 9.45% 9.60% NA Total Risk-Based Capital 14.42% 13.84% 13.83% 13.89% NA Common Equity 492,751 478,170 516,925 531,650 NA Common Shares Outstanding 44,826 44,948 44,954 44,983 NA Book Value Per Share (Common) $10.99 $10.64 $11.50 $11.82 NA

(1)Capital ratios are preliminary numbers (2)Net Interest Margin is calculated on a fully taxable equivalent basis

--30--MD/ch*

CONTACT: Hudson United Bancorp Kenneth T. Neilson, 201-236-2631 James W. Nall, 201-236-2769

KEYWORD: CONNECTICUT PENNSYLVANIA NEW YORK NEW JERSEY INDUSTRY KEYWORD: BANKING EARNINGS DIVIDEND SOURCE: Hudson United Bancorp

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