SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D. C. 20549

                                    FORM 10-K

    /X/ ANNUAL REPORT  PURSUANT TO SECTION 13  OR  15(d)
        OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE  REQUIRED]
        For the fiscal  year ended  December 31, 2000

                                       OR

    / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
        OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

          For the transition period from _____________ to _____________

                         Commission file number 1-08660

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

      New Jersey                                     22-2405746
---------------------------------         --------------------------------------
(State or other jurisdiction             (I.R.S. Employer Identification No.)
of Incorporation or organization)

                              1000 MacArthur Blvd.
                               Mahwah, New Jersey               07430
                            ------------------------            -----
                 (Address of principal executive offices)     (Zip Code)

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

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

                                      None

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

                           Common Stock, no par value
                           --------------------------
                                (Title of Class)

       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 X NO

       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. [X]

       The aggregate market value of the voting stock held by  non-affiliates of
       the Registrant, as of March 10, 2001 was $ TBD.

       The  number  of  shares  of  Registrant's  common  stock,  no par  value,
       outstanding as of March 10, 2001 was TBD.


<PAGE>


                              Hudson United Bancorp

                             Form 10-K Annual Report
                   For The Fiscal Year Ended December 31, 2000

                                     PART I

ITEM 1. BUSINESS
        --------

        (a) General Development of Business

Hudson United Bancorp ("HUB" or "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  for Hudson  United.  The  Company
directly owns Hudson United,  HUBCO Capital Trust I, HUBCO Capital Trust II, JBI
Capital Trust I, Jefferson  Delaware  Inc., and AMFDCM,  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 13 subsidiaries.

Recent Change in Asset Size and Acquisition Activity of the Company
-------------------------------------------------------------------

The  Company's  total  assets at  December  31,  2000 were $6.8  billion,  which
represented  a  significant  reduction  in its total assets from the prior year,
which were $9.7 billion at December 31, 1999.

The  reduction  in total  assets  during the year ended  December  31,  2000 was
primarily  the result of the  Company's  decision to  implement a balance  sheet
deleveraging strategy,  under which the Company sold a significant amount of its
lower yielding investment  securities  portfolio and used the proceeds from such
sale to  reduce  its  borrowings.  The  Company  implemented  this  deleveraging
strategy to attempt to increase the  Company's  net interest  margin,  return on
assets,  return  on equity  and  earnings  per share  while  also  reducing  the
Company's exposure to changes in interest rates (See Management's Discussion and
Analysis).

The  reduction  in total  assets  during  2000 was also due in part to runoff in
certain loan portfolios and deposit  categories,  primarily related to runoff in
loans and deposits of institutions  acquired in the year ended December 31, 1999
and in prior  years.  The Company did not  complete  any  acquisitions  in 2000,
whereas it had been a frequent acquirer in 1999 and in prior years.

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 a  hostile,  unsolicited  acquisition  bid for Dime,  and the
subsequent  vote by the  shareholders of Dime to not proceed with the previously
announced  proposed  merger  with  HUB.  The  initial  delay  and  the  eventual
termination  of the  merger had a negative  impact on the  Company's  growth and
profitability.

Dime agreed to pay the Company a minimum merger  termination  fee of $15 million
on or before October 28, 2001. Dime also agreed to pay additional amounts to the
Company on or before October 28, 2001, in excess of the minimum termination fee,
up to a maximum  amount of $92  million in the event that Dime enters in certain
transactions  with  third  parties  involving  a sale by  Dime of a  substantial
portion of its assets,  a significant  subsidiary or Dime itself.  Management of
the Company  believes  that it is unlikely  that it will  receive  from Dime any
amounts in excess of the minimum  termination  fee payable.  HUB  recognized the
minimum  termination  fee payable from Dime as revenue when the proposed  merger
was  terminated  in 2000,  which revenue  recognized  was less than the expenses
incurred by the Company in the terminated merger.

<PAGE>

Acquisition Activity by the Company
-----------------------------------

The Company did not complete any acquisitions in 2000.

The Company  completed six  acquisitions in 1999,  however,  and had completed a
total of 31  acquisitions  from October 1990 to December  1999.  The Company had
increased  its total assets over this period from $550 million to $9.7  billion,
and had increased  its branch  network over this period from 15 branches to over
200 branches, primarily as a result of acquisitions.

On March 26,  1999,  the Company  completed  its  assumption  of $151 million of
deposit  liabilities  and  purchase  of a  retail  branch  office  in  Hartford,
Connecticut from First International Bank.

On May 20, 1999, the Company  acquired Little Falls Bancorp,  Inc. ("LFB") which
had  assets of  approximately  $341  million  and  operated  six  offices in the
Hunterdon and Passaic counties of New Jersey.

On October 22, 1999, the Company acquired the assets of Lyon Credit Corporation,
a $350 million asset finance company and subsidiary of Credit Lyonnais Americas.

On December 1, 1999, the Company completed its purchase of loans  (approximately
$148  million)  and other  financial  assets,  as well as  assumed  the  deposit
liabilities  (approximately $112 million) of Advest Bank and Trust. In addition,
a strategic partnership with Advest, Inc. was consummated on October 1, 1999, in
which Hudson United Bank became the exclusive  provider of banking  products and
services to the clients of Advest, Inc.

The above  acquisitions  in 1999 were accounted for under the purchase method of
accounting.

On November 30, 1999, the Company  completed its acquisition of JeffBanks,  Inc.
("Jeff"),  a  $1.8  billion  bank  holding  company  with  32  branches  located
throughout  the greater  Philadelphia  area of  Pennsylvania  and  Southern  New
Jersey.

On December 1, 1999, the Company  completed its  acquisition of Southern  Jersey
Bancorp ("SJB"),  a $425 million asset  institution with 17 branches in Southern
New Jersey.

The Jeff and SJB acquisitions in the year ended December 31, 1999 were accounted
for under the poolings-of-interests method of accounting.



<PAGE>


Summary of Acquisitions
-----------------------

The following chart summarizes the acquisitions  undertaken by the Company since
October 1990. The amounts shown as "Purchase  Price"  represent either cash paid
or the  market  value of  securities  issued by  Hudson  United  Bancorp  to the
shareholders or owners of the acquired entity:

<TABLE>
<CAPTION>

                                                                PURCHASE        DEPOSITS           LOANS
                                                                    PRICE       ASSUMED PURCHASED         BRANCHES
INSTITUTION                                                   (IN MILLIONS)    (IN MILLIONS)     (IN MILLIONS)     ACQUIRED
---------------------------------------------------------------------------------------------------------------------------
<S>                                                             <C>                  <C>               <C>             <C>
Mountain Ridge State Bank                                       $     0.3            $  47             $  12           1
Meadowlands National Bank                                             0.4               36                22           3
Center Savings and Loan                                               0.1               90                79           1
Irving Federal Savings and Loan                                       0.1              160                62           5
Broadway Bank and Trust                                               3.4              346                10           8
Pilgrim State Bank                                                    6.0              123                47           6
Polifly Federal Savings and Loan                                      6.2              105                 1           4
Washington Savings Bank                                              40.5              238               169           8
Shoppers Charge Accounts                                             16.3                -                56           -
Jefferson National Bank                                               9.7               85                42           4
Urban National Bank                                                  38.2              204                90           9
Growth Financial Corp                                                25.6              110               102           3
CrossLand Federal Savings Branches                                    3.0               60                 1           3
Lafayette American Bank & Trust                                     120.0              647               548          19
Hometown Bancorporation, Inc.                                        31.6              162                99           2
UST Bank, CT                                                         13.7               95                70           4
Westport Bancorp, Inc.                                               67.8              259               183           7
The Bank of Southington                                              26.7              122                85           2
Security National Bank & Trust                                       11.0               77                48           4
Poughkeepsie Financial                                              136.0              611               648          16
MSB Bancorp                                                         115.0              686               375          16
First Union Branches                                                 32.0              320                 1          23
Community Financial                                                  29.6              137                87           8
Dime Financial                                                      201.0              817               374          11
IBS Financial                                                       227.0              560               218          10
FNB Branch Purchase                                                   9.1              151                 -           1
Little Falls Bancorp, Inc.                                           55.0              234               153           6
Lyon Credit Corporation                                            not disclosed         -               350           -
Advest Bank & Trust Assets/Liabilities                                2.0              112               148           -
JeffBanks, Inc.                                                     371.0            1,380             1,429          32
Southern Jersey Bancorp                                              54.0              382               213          17

</TABLE>

The Company believes that its profitability  and its financial  condition may be
significantly  impacted by its acquisition  strategy and by the  consummation of
its acquisitions.

The Company intends to continue to seek  opportunities to acquire other banks or
financial  services  companies,  and to acquire  specific  loans or other assets
and/or  to assume  deposit  or other  liabilities  of other  banks or  financial
services  companies.  There  can  be no  assurance  that  the  Company  will  be
successful in making additional  acquisitions or, if additional acquisitions are
made, that these acquisitions will enhance the profitability of the Company.

Stock Repurchases by the Company in 2000
----------------------------------------

On  November  8,  1993,  the  Company's  Board  of  Directors  approved  a stock
repurchase  plan  and  authorized  management  to  repurchase  up to  10% of its
outstanding  common stock per year.  There is no assurance that the Company will
purchase the full amount  authorized in any year. 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
pending or future acquisitions.

The Board of Directors  authorized an increase in the Company's stock repurchase
program in the year ended December 31, 2000,  following the previously mentioned
implementation  of the  deleveraging  strategy and the  termination  of the Dime
merger.  The  Company  repurchased  9.4  million  shares  of its own stock at an
aggregate cost of $193.3 million in 2000, which represented a much larger volume
of stock repurchases in that year than the Company had ever previously done. The
Company  repurchased 3.7 million shares of its own stock at an aggregate cost of
$121.4 million in 1999.

<PAGE>

Other Subsidiaries
------------------

The Company is the indirect owner or has been the indirect owner, through Hudson
United,  of other  subsidiaries  involved in data processing;  owning investment
securities and real estate assets; and in certain other activities.

In 1983, HUB formed a directly owned subsidiary  called HUB Financial  Services,
Inc., which was a wholly owned data processing subsidiary. In 1995, HUB sold 50%
of the stock in HUB  Financial  Services,  Inc. to United  National  Bank, a New
Jersey based institution.  HUB simultaneously made a capital contribution of the
remaining  50% to Hudson  United  Bank.  Simultaneously  with the sale of 50% to
United  National Bank, the name of HUB Financial  Services,  Inc. was changed to
United Financial  Services,  Inc.("UFS").  UFS ceased to provide data processing
and imaged check processing  services to both of its owner banks through October
1999. The Company  currently  outsources  such services to an independent  third
party provider of such data processing and other services. UFS is in the process
of dissolution.

In 1997,  Hudson  United  established  a directly  owned  subsidiary  called HUB
Mortgage Investments,  Inc. At December 31, 2000, $790 million of mortgage loans
and $83 million in mortgage-related  investment securities of Hudson United were
being managed by this subsidy, which operates as a real estate investment trust.

In 1987,  Hendrick  Hudson Corp. was  established.  As of December 31, 2000, $24
million of Hudson  United's  investment  portfolio is being  managed by Hendrick
Hudson Corp. of New Jersey.

In 1998, three additional investment companies were established:  NJ Investments
of Delaware,  Inc., LAB Investment Corp. of Delaware, Inc., and BOTH Investments
of Delaware,  Inc. In 1999, in conjunction with the merger of Lafayette American
Bank  and Bank of the  Hudson  into  Hudson  United,  LAB  Investment  Corp.  of
Delaware,  Inc.  and BOTH  Investments  of  Delaware,  Inc.  were merged into NJ
Investments  of Delaware,  Inc. As of December 31, 2000,  $323 million of Hudson
United's  investment  portfolio was being managed by NJ Investments of Delaware,
Inc.

In 1995,  the  Company  established  a  directly  owned  subsidiary  called  HUB
Investment  Services,  Inc.  This wholly  owned  subsidiary  provided  brokerage
services  through an agreement  with BFP  Financial  Partners,  Inc.  which is a
subsidiary  of Legg Mason,  Inc.  In August  1997,  the  Company  made a capital
contribution  of this  subsidiary  to Hudson  United.  In February of 1998,  the
agreement with BFP Financial Partners, Inc. was terminated.

Hudson United owns eight real estate  holding  companies  that engage in various
aspects of the real estate  business.  They are: Fair Street  Associates,  Inc.,
Markgard Realty, Inc., Plural Realty of Chappaqua, Inc., Riverdale Timber Ridge,
Inc., Plural Realty, Inc. Posabk, Inc., PSB Associates and PSB Building Corp.

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,
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, 2000, 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, 2000, HUB's total risk-based
capital ratio was 11.1%, consisting of a Tier 1 ratio of 7.6% and a Tier 2 ratio
of 3.5%. Both ratios exceed the requirements under these regulations.

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,  2000,  HUB had a  leverage  capital  ratio of 5.96%.  HUB and its
subsidiary  bank  is  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,
2000, 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").

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.
During  2000,  a rate of  approximately  2.06 basis  points  was  charged on all
deposits.   The  1996  Act  instituted  a  number  of  other  regulatory  relief
provisions.

<PAGE>

Restrictions on Dividend Payments, Loans, or Advances
-----------------------------------------------------

The holders of HUB's common stock are entitled to receive  dividends,  when, and
if 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, 2000 the maximum  amount  available  for  distribution  to HUB from
Hudson United was $525.9 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 are required to be
collateralized by specific obligations.

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").

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
------------------

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

o    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;

o    allows insurers and other financial service companies to acquire banks;

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

o    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 (I) 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,
2000,  HUB had six  directly-owned  subsidiaries  including  Hudson  United.  In
addition,   HUB,   through   Hudson  United,   indirectly   owns  13  additional
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, 2000, HUB, through its subsidiaries,  had total deposits of $5.8
billion,  total loans of $5.3  billion  and total  assets of $6.8  billion.  HUB
ranked 3rd among  commercial banks and bank holding  companies  headquartered in
New Jersey in terms of asset size at December 31, 2000.

Hudson  United  is a full  service  commercial  bank  and  offers  the  services
generally performed 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, 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  needs,  foreign  currency
purchases and letters of credit.  The Bank's  deposit  accounts are  competitive
with those of other banks and include  money  market  accounts  and a variety of
interest-bearing  transaction  accounts. In the lending area, the Bank primarily
engages in commercial lending, real estate lending,  consumer lending and credit
card programs.

Hudson United offers a variety of trust services.  At December 31, 2000,  Hudson
United's  Trust  Department  had  approximately  $758.1  million of assets under
management or in its custodial control.

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
both loans and 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 and extend loans.

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 1,899 full-time equivalent employees as of December 31, 2000.

                  (d) Financial Information about foreign and
                      ---------------------------------------
                           domestic operations and export sales.
                           ------------------------------------

                           Not Applicable

                  (e) Executive Officers of the Registrant

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

<TABLE>
<CAPTION>

Name, Age and                                    Officer of
Position with                                   the Company
the Company                                        Since                     Principal Position
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                  <C>                     <C>

John F. McIlwain, 62                                 1991                    Executive Vice President and
                                                                             Chief Credit Officer

Thomas R. Nelson, 56                                 1994                    Executive Vice President;
                                                                             President, Shoppers Charge Accounts Co.

D. Lynn Van Borkulo-Nuzzo, 51                        1988                    Executive Vice President and
                                                                             Corporate Secretary

Thomas J. Shara, 43                                  1994                    Executive Vice President and
                                                                             Senior Loan Officer

Susan M. Staudmyer, 43                               1998                    Executive Vice President,
                                                                             Retail Banking

William R. Coda, 43                                  2000                    Executive Vice President,
                                                                             Human Resources and
                                                                             Professional Development

James Mayo, 61                                       2000                    Executive Vice President,
                                                                             Operations and Technology

William A. Houlihan, 45                              2001                    Executive Vice President, and
                                                                             Chief Financial Officer

</TABLE>

<PAGE>



                  (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 Report on Form
10K.

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 202 branch offices as of December
31, 2000, of which 103 are owned and 99 are leased.

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 in the normal course of the Company's business 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.

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, 2000.



<PAGE>


                                     PART II

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

As of December 31, 2000, the Company had approximately 8,105 shareholders.

The  Company's  common  stock is  listed  on the New York  Stock  Exchange.  The
following  represents  the high and low closing  sale  prices from each  quarter
during the last two years.  The numbers have been  restated to reflect all stock
dividends.

                                                  2000

                                          High              Low
                                    ----------------- ----------------
         1st Quarter                        $22.61           $16.42
         2nd Quarter                         24.77            17.67
         3rd Quarter                         25.11            20.34
         4th Quarter                         24.27            17.27

                                                  1999

                                          High              Low
                                    ----------------- ----------------
         1st Quarter                        $30.23           $26.26
         2nd Quarter                         31.78            27.03
         3rd Quarter                         29.79            24.99
         4th Quarter                         29.73            22.73

The following  table shows the per share  quarterly cash dividends paid upon the
common  stock over the last two years,  restated to give  retroactive  effect to
stock dividends.

                          2000                                  1999
                          ----                                  ----

        March 1          $0.227                 March 1         $0.221
        June 1            0.227                 June 1           0.221
        September 1       0.227                 September 1      0.221
        December 1        0.250                 December 1       0.221

Dividends  are generally  declared  within 30 days prior to the payable date, to
stockholders of record 10 to 20 days after the declaration date.



<PAGE>


ITEM 6. SELECTED FINANCIAL DATA
        -----------------------

(In Thousands Except For Per Share Amounts)

Reference should be made to footnote 2, Business Combinations,  of the financial
statements of this Report on Form 10-K for a discussion  of recent  acquisitions
that affect the comparability of the information contained in this table.

<TABLE>
<CAPTION>

                                                       2000            1999            1998            1997            1996
                                                       ----            ----            ----            ----            ----
<S>                                               <C>             <C>             <C>             <C>             <C>
Net Interest Income                               $ 319,726       $ 343,066       $ 328,850       $ 326,544       $ 312,627
Provision for Possible Loan Losses
                                                     24,000          52,200          35,607          24,442          29,060

Net Income                                           49,821          69,338          26,751          83,995          47,304
Per Share Data(1)
Earnings Per Share:
   Basic                                               0.93            1.21            0.46            1.41            0.78

   Diluted                                             0.92            1.18            0.44            1.35            0.75
Cash Dividends - Common                                0.93            0.88            0.77            0.65            0.56

Balance Sheet Totals
(at or for the year ended December 31,):
Total Assets
                                                  6,817,226       9,686,286       8,897,775       8,649,847       8,262,962

Long Term Debt                                      248,300         257,300         257,300         210,050         134,750

Average Assets                                    8,206,796       9,248,141       8,721,572       8,314,181       7,884,000

Average Deposits                                  5,901,510       6,596,220       6,879,120       6,669,840       6,519,607

Average Equity                                      464,860         580,238         646,851         669,756         670,979

</TABLE>

(1)   Per share data is adjusted  retroactively  to reflect a 10% stock dividend
      paid December 1, 2000 to stockholders of record on November 20, 2000, a 3%
      stock dividend paid December 1, 1999 to stockholders of record on November
      26, 1999, a 3% stock  dividend paid September 1, 1998 to  stockholders  of
      record on August 14, 1998, a 3% stock  dividend  paid  December 1, 1997 to
      stockholders  of record on November 13, 1997, and a 3% stock dividend paid
      November 15, 1996 to stockholders of record on November 4, 1996.


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

         Statements Regarding Forward-Looking Information

This form 10-K,  both in the  Management  Discussion & Analysis  and  elsewhere,
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.  These include,  but are not limited to, changes in interest
rates,  changes in economic  conditions,  deposit and loan growth, and loan loss
provisions; changes in relationships with customers, failure to realize expected
cost  savings or  revenue  enhancements  from  changes  in  business  models and
acquisitions,  and the effects of legal and regulatory  provisions applicable to
the Company and its competitors.  Actual results may differ  materially from the
results discussed in these  forward-looking  statements.  The Company assumes no
obligation for updating any such forward-looking statements at this time.

         Recent Change in Asset Size and Acquisition Activity of the Company

The  Company  had total  assets  at  December  31,  2000 of $6.8  billion  which
represented  a  significant  reduction  in its total assets from the prior year,
which were $9.7 billion at December 31, 1999.

The  reduction  in total  assets  during the year ended  December  31,  2000 was
primarily  the result of the  Company's  decision to  implement a balance  sheet
deleveraging strategy,  under which the Company sold a significant amount of its
lower yielding investment  securities  portfolio and used the proceeds from such
sale to  reduce  its  borrowings.  The  Company  implemented  this  deleveraging
strategy  to attempt to increase  the  Company's  net margin,  return on assets,
return on equity and  earnings  per share  while  also  reducing  the  Company's
exposure to changes in interest rates.

The  reduction  in total  assets  during  2000 was also due in part to runoff in
certain loan portfolios and deposit  categories,  primarily related to runoff in
loans and deposits of institutions  acquired in the year ended December 31, 1999
and in prior  years.  The Company did not  complete  any  acquisitions  in 2000,
whereas it had been a frequent acquirer in prior years.

         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 coporate 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 a  hostile,  unsolicited  acquisition  bid for Dime,  and the
subsequent  vote by the  shareholders of Dime to not proceed with the previously
announced   propsed  merger  with  HUB.  The  initial  delay  and  the  eventual
termination  of the  merger had a negative  impact on the  Company's  growth and
profitability.

Dime agreed to pay the Company a minimum merger  termination  fee of $15 million
on or before October 28, 2001. Dime also agreed to pay additional amounts to the
Company on or before October 28, 2001, in excess of the minimum termination fee,
up to a maximum amount of $92 million in the event that Dime enters 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. HUB recognized the
minimum  termination  fee payable from Dime as revenue when the proposed  merger
was terminated in 2000, which revenue was less than the expenses incurred by the
Company in the terminated merger.

         Acquisition Summary

The Company began its acquisition  program in the fall of 1990. Since that time,
the Company has  completed 31  acquisitions.  Through  these  acquisitions,  the
Company  has grown from a $550  million  asset  banking  company to a  community
banking  franchise.  The  acquisition  program  has  been  utilized  to  achieve
efficiencies and to distribute the cost of new products and technologies  over a
larger asset base.  It is the  Company's  philosophy  that  acquisitions  should
become  accretive to earnings  within a short time frame,  generally  within one
year. The financial  results of certain of these  acquisitions  are difficult to
measure other than on an as-reported  basis each quarter because stock for stock
acquisitions  accounted  for  using  the   pooling-of-interests   method  change
historical results from those actually reported by the Company.

No acquisitions were announced or completed by the Company in 2000.

The Company consummated six acquisitions in 1999. On March 26, 1999, the Company
completed its purchase of $151 million in deposits and a retail branch office in
Hartford,  Connecticut  from First  International  Bank.

On May 20, 1999, the Company acquired Little Falls Bancorp, Inc. ("LFB"),  which
had  assets of  approximately  $341  million  and  operated  six  offices in the
Hunterdon and Passaic  counties of New Jersey.

On October 22, 1999, the Company acquired the assets of Lyon Credit Corporation,
a $350 million asset finance company and subsidiary of Credit Lyonnais Americas.

On December 1, 1999, the Company acquired the loans (approximately $148 million)
and  other  financial  assets,  as  well  as  assumed  the  deposit  liabilities
(approximately $112 million) of Advest Bank and Trust. In addition,  a strategic
partnership  with Advest,  Inc.  was  consummated  on October 1, 1999,  in which
Hudson  United  Bank  became the  exclusive  provider  of banking  products  and
services to the clients of Advest,  Inc. That  agreement was  terminated in 2000
due to Advest's recent acquisition by a third party.

The above 1999  acquisitions  were  accounted  for under the purchase  method of
accounting  and, as such,  the assets and  earnings of the  acquired  entity are
included in the Company's consolidated results only from the date of acquisition
and thereafter.

<PAGE>

On November 30, 1999, the Company  completed its acquisition of JeffBanks,  Inc.
("Jeff"),  a  $1.8  billion  bank  holding  company  with  32  branches  located
throughout the greater Philadelphia area of Pennsylvania and Southern Jersey.

On December 1, 1999, the Company  completed its  acquisition of Southern  Jersey
Bancorp ("SJB"),  a $425 million asset  institution with 17 branches in Southern
New  Jersey.

The Jeff and SJB acquisitions were accounted for using the  pooling-of-interests
accounting  method and,  accordingly,  the  statements  for periods prior to the
acquisitions have been restated to include these  institutions and their results
of operations.

         Special Charges Summary

In 2000,  1999  and  1998,  the  Company  incurred  one-time  charges  ("special
charges") as detailed below. Further details relative to the special charges are
discussed in the "Noninterest  Income" and "Noninterest  Expenses" sections that
follow.

<PAGE>

<TABLE>
<CAPTION>

                                  Years Ended December 31,
                                  ------------------------
 Special Charges
 (In Thousands)                   2000       1999      1998
 -------------------------------------------------------------
<S>                              <C>       <C>       <C>
 Merger related and
   restructuring charges         $15,004   $32,031   $ 69,086
 Nonrecurring Operating
   Charges                         7,000       --         --
 Writedown of assets held
   for sale                          --         --     23,303
 Investment Security losses       63,619     5,162        663
 Special provision for loan
   losses                            --     33,000        --
                               ---------------------------------
Total special charges pre-tax    $85,623  $ 70,193   $ 93,052
                                 =======   =======    =======

Total special charges after-tax  $58,472  $ 47,854   $ 63,634
                                 =======   =======     ======

</TABLE>

         Results of Operations for the Years
         Ended December 31, 2000,  1999 and 1998

The Company  reported net income of $49.8 million and fully diluted earnings per
share of $0.92 in 2000.  Excluding  special  charges,  operating  earnings  were
$108.3  million and fully  diluted  earnings per share were $2.00 for 2000.  The
Company had net income of $69.3 million and fully diluted  earnings per share of
$1.18 in 1999. Excluding special charges, operating earnings were $117.2 million
and fully  diluted  earnings  per share were $2.00 in 1999.  The Company had net
income of $26.8 million and fully  diluted  earnings per share of $0.44 in 1998.
Excluding  special  charges,  operating  earnings  were $90.4  million and fully
diluted  earnings  per share were $1.49 for 1998.

Return on average assets was 0.61% for 2000, 0.75% for 1999, and 0.31% for 1998.
Excluding  special  charges,  return on average assets was 1.32% for 2000, 1.27%
for 1999 and 1.04% for 1998.  Return on  average  equity  was  10.72%  for 2000,
11.95% for 1999 and 4.14% for 1998. Excluding special charges, return on average
equity was 23.30% for 2000, 20.20% for 1999 and 13.97% for 1998.

The  financial  results in years in which  acquisitions  occur are  difficult to
measure other than on an as-reported  basis because  acquisitions  accounted for
under the  pooling-of-interests  method  change  historical  results  from those
actually  reported by the Company.  On an as-reported  basis,  excluding special
charges,  the  return on average  assets was 1.32% for 2000,  1.41% for 1999 and
1.46% for 1998 and return on average equity was 23.30% for 2000, 23.26% for 1999
and 21.94% for 1998.


<PAGE>

<TABLE>
<CAPTION>

         Average Balances, Net Interest Income, Yields, and Rates
                                                                   Years Ended December 31,
---------------------------------------------------------------------------------------------------------------------------------
For the Years Ending                    2000                               1999                               1998
                           --------------------------------  ---------------------------------  ---------------------------------
                             Average               Yield/      Average               Yield/       Average               Yield/
                             Balance    Interest    Rate       Balance   Interest     Rate        Balance   Interest     Rate
                           --------------------------------  ---------------------------------  ---------------------------------
<S>                        <C>         <C>         <C>        <C>        <C>          <C>        <C>        <C>          <C>
Assets
------
Interest-bearing
  deposits with banks     $        -   $      -       -     $   17,441  $  1,132      6.49%    $   34,475  $  1,864      5.41%
Federal funds sold             1,170        111    6.31%        76,672     4,980      6.50%       202,794    10,809      5.33%
Securities-taxable         2,098,809    133,921    6.38%     3,328,654   204,937      6.16%     2,873,677   183,632      6.39%
Securities-tax exempt(1)      36,217      2,643    7.30%        85,184     7,249      8.51%       112,716     9,448      8.38%
Loans (2)                  5,470,763    475,672    8.69%     5,136,467   432,041      8.41%     4,923,410   424,359      8.62%
                          ----------   --------    -----    ----------  --------      -----    ----------  --------      -----
Total Earning Assets      $7,607,559   $612,347    8.10%    $8,644,418  $650,339      7.52%    $8,147,072  $630,112      7.73%



Cash and due from banks      243,729                           273,926                            251,799
Allowance for loan losses    (97,500)                          (79,095)                           (84,605)
Premises and equipment       129,502                           115,924                            112,609
Other assets                 324,094                           292,968                            294,697
                          ----------                        ----------                        -----------
Total Assets              $8,207,384                        $9,248,141                        $ 8,721,572
------------              ==========                        ==========                        ===========

Liabilities and Stockholders' Equity
------------------------------------
 Interest-bearing
   transaction accounts   $1,029,708   $ 23,035    2.24%    $1,199,059  $ 24,125      2.01%   $  1,365,426 $ 32,070       2.35%
 Savings accounts          1,504,151     38,506    2.56%     1,405,688    28,184      2.00%      1,328,052   31,121       2.34%
 Time deposits             2,192,996    112,290    5.12%     2,821,338   138,426      4.91%      3,106,134  165,144       5.32%
                           ---------   --------    -----    ----------  --------      -----   ------------ --------       -----
 Total Interest-Bearing
   Deposits                $4,726,855  $173,831    3.68%    $5,426,085  $190,735      3.52%   $5,799,612   $228,335       3.94%
 Borrowings                 1,575,481    93,564    5.94%     1,722,512    88,902      5.16%      859,372     47,907       5.57%
 Long-term debt               253,882    21,188    8.35%       257,218    21,873      8.50%      235,886     20,231       8.58%
                           ----------  --------    -----    ----------  --------      -----   ----------   --------       ------
 Total Interest-Bearing
   Liabilities             $6,556,218  $288,583    4.40%    $7,405,815  $301,510      4.07%   $6,894,870   $296,473       4.30%
 Demand deposits            1,174,655                        1,170,135                         1,079,508
 Other liabilities             11,651                           91,953                           100,343
 Stockholders' equity         464,860                          580,238                           646,851
                           ----------                        ---------                        ----------
   Total Liabilities and
   Stockholders' Equity    $8,207,384                       $9,248,141                        $ 8,721,572
   ---------------------   ==========                       ==========                        ===========
 Net Interest Income                   $323,764                         $348,829                           $333,639
 -------------------                   ========                         ========                           ========
 Net Interest Margin (3)                           4.26%                              4.04%                              4.10%
 -----------------------                           =====                              =====                              =====


</TABLE>

(1) The tax equivalent  adjustments  for the years ended December 31, 2000, 1999
    and 1998 were $925, $2,245 and $3,289, respectively,  and are based on a tax
    rate of 35.00% and an assumed cost of funds 3.73%.

(2) The tax equivalent  adjustments  for the years ended December 31, 2000, 1999
    and 1998 were $3,113,  $3,518 and $1,500,  respectively,  and are based on a
    tax rate of 35.00%. Average loan balances include nonaccrual loans and loans
    held for resale.

(3) Represents tax equivalent  net interest  income divided by  interest-earning
    assets.

<PAGE>


The following table presents the relative contribution of changes in volumes and
changes in rates to changes in net  interest  income for the periods  indicated.
The change in interest income and interest expense  attributable to the combined
impact of both volume and rate has been allocated  proportionately to the change
due to volume and the change due to rate (in thousands):

<TABLE>
<CAPTION>

Changes in Taxable Equivalent Net Interest Income-Rate/Volume Analysis

                                          Increase/(Decrease)                  Increase/(Decrease)
                                    --------------------------------   -------------------------------------
For the Years Ending December 31,           2000 over 1999                        1999 over 1998
                                    --------------------------------   -------------------------------------
                                     Volume       Rate       Total         Volume         Rate      Total
---------------------------------------------------------------------  -------------------------------------
<S>                                <C>         <C>        <C>            <C>          <C>        <C>
Loans                              $ 29,050    $14,581    $ 43,631        $18,079     $ 10,397)  $  7,682
Securities-taxable                  (78,355)     7,339     (71,016)        28,211       (6,906)    21,305
Securities-tax exempt                (3,575)    (1,031)     (4,606)        (2,341)         142     (2,199)
Federal funds sold                   (4,869)         0      (4,869)        (7,810)        1,81     (5,829)
Interest bearing deposits            (1,131)         0      (1,131)        (1,052)         320       (732)
                                   ----------------------------------  -------------------------------------
Total interest income              $(58,880)   $20,889    $(37,991)       $35,087     $(14,860)  $ 20,227
                                   ----------------------------------  -------------------------------------

Interest bearing transaction         (3,793)     2,703      (1,090)        (3,650)      (4,295)    (7,945)
accounts
Savings                               2,521      7,801      10,322          1,744       (4,681)    (2,937)
Time deposits                       (32,171)     6,035     (26,136)       (14,507)     (12,211)   (26,718)
Short-term borrowings                (8,734)    13,396       4,662         44,794       (3,799)    40,995
Long-term debt                         (279)      (405)       (684)         1,815         (173)     1,642
                                    ---------------------------------  -------------------------------------
Total interest expense              $(42,456)  $29,530    $(12,926)       $30,196    $ (25,159)   $ 5,037
                                    ---------------------------------  -------------------------------------
Net Interest Income                 $(16,424) $ (8,641)   $(25,065)       $ 4,891      $10,299   $ 15,190
                                    =================================  =====================================

</TABLE>

<PAGE>


Net Interest Income

Net interest  income is the  difference  between the interest  earned on earning
assets and the interest  paid on interest  bearing  liabilities.  The  principal
earning  assets  are the  loan  portfolio,  comprised  of  commercial  loans  to
businesses,  mortgage loans to businesses and individuals,  consumer loans (such
as car loans, home equity loans, etc.) and credit card loans; and the investment
securities  portfolio.  The securities  portfolio is invested  primarily in U.S.
Government Agency securities,  U.S. Government Agency mortgage-backed securities
and  mortgage-related  securities.  Deposits and borrowings not required to fund
loans and other  assets  are  invested  primarily  in U.S.  Government  and U.S.
Government Agency  securities.  The principal  interest bearing  liabilities are
deposit accounts and borrowings.

Net  interest  income is  affected by a number of factors  including  the level,
pricing,  and  maturity  of  earning  assets and  interest-bearing  liabilities,
interest rate fluctuations,  asset quality and the amount of noninterest-bearing
deposits and capital. In the following discussion,  interest income is presented
on a fully taxable-equivalent  basis ("FTE"). Fully taxable-equivalent  interest
income restates  reported  interest income on tax-exempt loans and securities as
if such interest were taxed at the statutory Federal income tax rate of 35%.

Net  interest  income on a FTE basis was $323.8  million  for 2000  compared  to
$348.8  million  for 1999 and  $333.6  million  for 1998.  The  decrease  in net
interest income in 2000 compared to 1999 was due to a $1.04 billion  decrease in
average  interest-earning  assets,  partially  offset by an  increase in the net
interest  margin of 22 basis  points.  The decrease in average  interest-earning
assets was mainly due to a lower average  volume of investment  securities.  The
improvement  in net interest  income in 1999  compared to 1998 was due to a $497
million increase in average  interest-earning  assets, partially offset by a six
basis point decline in the net interest margin.

Net Interest Margin

Net interest  margin is computed by dividing net interest  income on a FTE basis
by average  interest-earning assets. The Company's net interest margin was 4.26%
in 2000 compared to 4.04% in 1999 and 4.10% in 1998. The 22 basis point increase
in net interest margin in 2000 from 1999 was due mainly to an improvement in the
asset  mix,  caused by an  increase  in average  loans and a  decrease  in lower
yielding investment securities,  offset in part by higher interest rates paid on
deposits and  borrowings.  The six basis point decline in net interest margin in
1999 from 1998 was  primarily  due to an increase in lower  yielding  investment
securities.

Noninterest Income

Noninterest income,  excluding security gains and losses and loss on assets held
for sale was $89.7  million for 2000 and $89.9  million for 1999.  The amount in
1999 was an increase of 26.8% over the $70.9 million  reported in 1998. In 2000,
deposit account service fees had grown 7% which was offset by declines in credit
card and non-deposit  related fee income. The increase for 1999 compared to 1998
was due to growth in Shoppers  Charge fees (the  Company's  private label credit
card  department)  and mortgage  department  and increased  sales of alternative
investment products. Noninterest income, excluding security gains and losses and
loss on assets held for sale, as a percentage of total net revenue (net interest
income plus non interest  income  excluding  gains and losses on securities  and
assets held for sale) was 22% in 2000, 21% in 1999 and 18% in 1998.  Included in
noninterest  income for 2000 is a $63.6 million pre-tax special charge,  related
to the  Company's  balance  sheet  deleveraging  program.

Noninterest Expenses

Noninterest expense,  excluding special charges,  decreased to $228.0 million in
2000 from $239.3  million in 1999.  The decline in expense was due  primarily to
cost savings related to the JeffBanks and Southern Jersey Bancorp  acquisitions.
The increase in expenses to $239.3  million in 1999 from $232.4  million in 1998
was due to the higher cost of supporting the Company's expanding business lines.

Salary and benefit expense was $89.9 million in 2000, $102.7 million in 1999 and
$107.2  million in 1998.  The  decline  in 2000  compared  to 1999,  and in 1999
compared  to  1998,  was due to  efficiencies  realized  in  staff  and  support
functions and consolidation of benefit plans.

Equipment expense was $20.4 million in 2000 as compared to $14.7 million in 1999
and $11.3  million in 1998.  The higher  expense in 2000 when  compared  to 1999
resulted from improvements in the Company's technological infastructure.

Outside  services expense was $43.9 million in 2000 as compared to $48.8 million
in 1999 and $34.8 million in 1998.  The decrease in 2000 from 1999 resulted from
a $4.5 million  decrease in professional  fees. The increase in 1999 compared to
1998 reflected higher expenses incurred to support business expansion, primarily
related to Shoppers Charge.

Amortization  of  intangibles  expense  increased to $16.2  million in 2000 from
$14.9  million  in 1999 and  from  $12.1  million  in 1998.  The  increases  are
attributable to the additional  goodwill  established for the  acquisitions  and
branch purchases described previously.

Merger related and restructuring costs were $15.0 million and other nonrecurring
operating  charges were $7.0 million in 2000.  Merger related and  restructuring
costs include the  approximate  amounts of $4.8 million for the  recognition  of
severance  benefits  and  consulting  agreements,  $2.0  million  for  stay  pay
obligations to current employees, $2.0 million for payments and reserves for the
settlements of pre-existing litigation at acquired institutions and $4.2 million
for the  recognition of  obligations  for which the bank will not receive future
benefits.  The balance of the expenses are comprised of building  writedowns and
miscellaneous  expenses  including  search  fees,  advisor  expenses,  and other
miscellaneous  items.  The nonrecurring  operating  charges include $3.7 million
related to the change to a new  outsource  service  provider,  $2.0  million for
planned  branch   consolidation,   and  $1.3  million  for  the  recognition  of
obligations for which the Bank will not recover future benefits.

Merger related and  restructuring  costs were $32.0 million in 1999. These costs
include  $12.6  million  for  payout  and  accruals  for  employment  contracts,
severance and other employee  related costs,  $3.9 million for branch  closings,
fixed asset  disposition  and other  occupancy  related costs,  $5.6 million for
technical  support for system conversion and early termination of system related
contracts,  $1.8 million for legal and accounting  professional  services,  $4.1
million for  financial  advisor  costs,  $2.0 million  provision  for other real
estate owned and $2.0 million for other merger related expenses.

Merger  related and  restructuring  costs were $69.1  million in 1998.  The 1998
costs include $29.5  million for payout and accruals for  employment  contracts,
severance and other employee  related costs,  $13.2 million for branch closings,
fixed asset  disposition,  and other occupancy related costs,  $13.6 million for
professional services, and $12.8 million for other merger related expenses.

Federal Income Taxes

The income tax provision for Federal and state taxes was approximately 35.0% for
2000,  36.0% for 1999 and 38.8% for 1998.  The lower  effective tax rate in 2000
and  1999  when  compared  to 1998 was due  primarily  to  higher  nondeductible
merger-related expenses in 1998.

Financial Condition

Total  assets at December  31,  2000 were $6.8  billion,  a decrease  from total
assets at December 31, 1999 of $9.7  billion.  This  overall  decrease in assets
resulted  primarily from a $2.4 billion decrease in investment  securities and a
$402 million decrease in loans. The decrease in investment  securities  resulted
from the  implementation  of the  deleveraging  strategy.  The decrease in loans
related primarily to runoff in loans of institutions  acquired in 1999 and prior
years.

Total liabilities at December 31, 2000 were $6.4 billion,  a decrease from total
liabilities at December 31, 1999 of $8.9 billion. This overall decrease resulted
primarily from a $2.0 billion decrease in borrowings and a $700 million decrease
in deposits.  The decrease in borrowings  related to the deleveraging  strategy.
The decrease in deposits related primarily to runoff in certificates of deposits
and other deposit accounts of institutions acquired in 1999 and in prior years.

Total  Stockholders'  Equity was $368.5 million at December 31, 2000, a decrease
of $150.7  million from  Stockholders'  Equity of $519.2 million at December 31,
1999. The decline in  Stockholders'  Equity of $150.7 million  resulted from the
Company's  repurchase in treasury  shares of $193.3  million and payment of cash
dividends of $49.4 million,  which were partially  offset by net income of $49.8
million and an increase in equity of $35.8 million resulting from a reduction in
the  unrealized  loss  on  the  Company's  available  for  sale  (AFS)  security
portfolio.

Securities Held to Maturity and Securities Available for Sale

The securities portfolio serves as a source of liquidity,  earnings, and a means
of managing  interest  rate risk.  Consequently,  the  securities  portfolio  is
managed over time in response to changes in market  conditions  and loan demand.
The  securities  portfolio  comprised  14% of the total assets of the Company at
December  31, 2000 and 35% of the total  assets of the  Company at December  31,
1999.

The Company's  securities  portfolio consists  primarily of U.S.  government and
agency  securities  as  well  as  U.S.  government  agency  mortgage-backed  and
mortgage-related securities.


<PAGE>

     The following  tables  summarize the  composition  of the  portfolios as of
     December 31, 2000 and 1999 (in thousands):

<TABLE>
<CAPTION>

                                         2000                                                1999
                    ------------------------------------------------  ---------------------------------------------------
                                  Gross    Unrealized  Estimated                     Gross   Unrealized     Estimated
                    Amortized     -------------------    Market        Amortized     ------------------      Market
                      Cost        Gains     (Losses)     Value           Cost        Gains     (Losses)       Value
-------------------------------------------------------------------------------------------------------------------------
<S>                   <C>           <C>        <C>       <C>          <C>             <C>      <C>           <C>
Available for Sale
   Portfolio
   ---------
U.S. Government      $  31,839      $  37    $   (48)    $  31,828    $   87,332    $   196    $  (303)      $   87,225
U.S. Government
   Agencies              3,500          -          -         3,500       350,040         85     (7,595)         342,530
Mortgage-backed
   securities          241,356        320     (3,642)      238,034     2,167,606      1,431    (48,880)       2,120,157
States and
   Political             1,516         41          -         1,557         3,118         12        (10)           3,120
   subdivisions
Other debt               3,754          -       (193)        3,561        47,128          4     (1,813)          45,319
   securities
Federal Home Loan
    Bank stock         105,924          -          -       105,924       125,405          -           -         125,405
Other equity            43,092        279     (5,048)       38,323        88,421      1,932     (9,807)          80,546
   securities
                   ------------------------------------------------- ----------------------------------------------------
                     $ 430,981      $ 677    $(8,931)    $ 422,727    $2,869,050    $ 3,660    $(68,408)     $2,804,302
                   ================================================= ====================================================

<CAPTION>

                                         2000                                               1999
                     ----------------------------------------------   -------------------------------------------------
                                   Gross   Unrealized   Estimated                     Gross    Unrealized   Estimated
                      Amortized    ------------------     Market       Amortized      -------------------    Market
                        Cost       Gains     (Losses)     Value           Cost        Gains     (Losses)      Value
-----------------------------------------------------------------------------------------------------------------------
<S>                   <C>           <C>        <C>       <C>          <C>             <C>      <C>           <C>
Held to Maturity
   Portfolio
   ---------
U.S. Government      $  24,199      $   -     $  (69)   $ 24,130       $  24,195   $       -   $   (253)   $  23,942
U.S. Government
   Agencies             38,229        488        (45)     38,672          45,960         201       (636)      45,525
Mortgage-backed
   securities          406,518        543     (7,845)    399,216         467,540         220    (19,967)     447,793
States and
   Political            51,246        187        (41)     51,392          24,500          26       (575)      23,951
   subdivisions
Other debt                   -          -          -           -              29           -          -           29
   securities        ----------------------------------------------   -------------------------------------------------
                     $ 520,192    $ 1,218   $ (8,000)   $513,410       $ 562,224   $     447   $(21,431)   $ 541,240
                     ==============================================   =================================================

</TABLE>

<PAGE>

<TABLE>
<CAPTION>
         Loan Portfolio Distribution of Loans by Category
                  As of December 31,
-------------------------------------------------------
 (Dollars in             2000        1999        1998
thousands)           ----------------------------------
<S>                  <C>         <C>         <C>
Loans secured by
  real estate:

  Residential
   mortgage loans    $1,433,697  $1,639,578  $1,739,054

  Mortgages held
   for sale                   -       9,073      14,600

  Residential home
   equity loans         338,164     357,941     230,587

  Commercial
   mortgage loans       920,397   1,024,844     978,040
                    -----------------------------------
                    $ 2,692,258 $ 3,031,436  $2,962,281
                    -----------------------------------
Commercial and
  industrial loans:
  Secured by
   real estate          280,544     275,411     233,536
  Other               1,610,627   1,490,837   1,004,149
                    -----------------------------------
                    $ 1,891,171 $ 1,766,248  $1,237,685
                    -----------------------------------
Credit cards        $   158,922 $   209,863  $  107,331
Other loans to
  individuals           535,172     672,034     578,346
                    -----------------------------------
Total Loan
  Portfolio         $ 5,277,523 $ 5,679,581  $4,885,643
                    ===================================

</TABLE>

Total loans  decreased by $403.3  million to $5.27  billion at December 31, 2000
from $5.68 billion at December 31, 1999.  Residential  and  commercial  mortgage
loans, and secured and unsecured  individual  loans decreased,  while commercial
and  industrial  loans  increased.  The decrease in  residential  mortgage loans
accounted  for over 50% of the  overall  decrease in the loan  portfolio.  These
loans were $1.43 billion at December 31, 2000 and represented 27% of total loans
compared to 29% of total loans at December 31, 1999.  The Company  continued its
strategy of reducing its percentage of lower yielding residential mortgage loans
arising from the thrift institutions acquired in 1998. Commercial mortgage loans
decreased by $104.4 million to 920.3 million at December 31, 2000.  Home equity,
credit  card and  loans to  individuals  decreased  by $207.6  million  to $1.17
billion at December 31, 2000.  Commercial and industrial  loans increased $124.9
million to $1.9 billion at year-end 1999.


<PAGE>

         Asset Quality

The Company's  principal earning assets are its loans,  which are made primarily
to businesses and individuals  located in New Jersey, New York,  Connecticut and
Pennsylvania, the areas in which the Company's branches are located. Inherent in
the lending  business is the risk of  deterioration  in a borrower's  ability to
repay loans under  existing loan  agreements.  Other risk  elements  include the
amount of nonaccrual and past-due loans, the amount of potential  problem loans,
industry or geographic loan  concentrations,  and the level of OREO that must be
managed and disposed of.

Nonaccruing  loans include  commercial loans and commercial  mortgage loans past
due for payment 90-days or more or deemed uncollectable. Residential real estate
loans are generally  placed on nonaccrual  status after 180 days of delinquency.
Consumer  loans are charged off after 120 days and credit card loans are charged
off after 180 days.  Any loan may be put on  nonaccrual  status  earlier  if the
Company has concern about the future  collectability  of the loan or its ability
to return to current status.

Nonaccrual real estate  mortgage loans are principally  loans in the foreclosure
process   secured  by  real  estate,   including   single  family   residential,
multi-family,  and commercial properties.  Nonaccruing consumer credit loans are
loans to  individuals.  Excluding the credit card  receivables,  these loans are
principally secured by automobiles or real estate.

Renegotiated  loans are loans which were  renegotiated as to the term or rate or
both to assist the borrower after the borrower has suffered  adverse  effects in
financial  condition.  Terms are  designed to fit the ability of the borrower to
repay and the  Company's  objective of obtaining  repayment.  The Company has no
loans which are considered renegotiated as of December 31, 2000.

OREO consists of properties on which the Bank has foreclosed or has taken a deed
in lieu of the loan obligation. OREO properties are carried at the lower of cost
or fair value at all times, net of estimated costs to sell. The cost to maintain
the  properties  during  ownership  and any  further  declines in fair value are
charged to current  earnings.  The Company has been  successful  in disposing of
OREO properties,  including those acquired in acquisitions. OREO, including OREO
classified  in "Assets  Held for Sale" on the  balance  sheet,  amounted to $4.3
million at December  31,  2000,  $3.9  million at December  31,  1999,  and $8.2
million at December 31, 1998. The overall decline in 2000 from 1998 reflects the
Company's continuing efforts to dispose of OREO properties.


<PAGE>


         Nonperforming Assets

Nonperforming  assets were $62.2  million at December 31, 2000 compared to $53.1
at December 31, 1999 and $60.0  million at December  31,  1998.  The increase at
December  31,  2000 from  December  31,  1999 was mainly due to an  increase  in
non-performing  commercial and industrial loans. The decline at December 1, 1999
from December 31, 1998 was mainly the result of the Company's  continuing effort
to reduce the level of  nonperforming  assets.

The amount of  interest  income on  nonperforming  loans  which  would have been
recorded  had these  loans  continued  to perform  under  their  original  terms
amounted to $4.5  million in 2000,  $3.2  million in 1999,  and $8.0  million in
1998. The amount of interest income recorded on such loans for each of the years
was $0.6 million in 2000,  $0.4 million in 1999,  and $0.7 million in 1998.  The
Company has no outstanding  commitments to advance additional funds to borrowers
whose loans are in a nonperforming status.

Measures to control and reduce the level of nonperforming  loans are continuing.
Efforts are made to identify  slow paying loans and  collection  procedures  are
instituted. After identification,  steps are taken to understand the problems of
the borrower  and to work with the borrower  toward  resolving  the problem,  if
practicable. Continuing collection efforts are a priority for the Company.


<PAGE>


The following table summarizes the Company's  nonperforming  assets at the dates
indicated (in thousands):

<TABLE>
<CAPTION>

                                                                              December 31,
Nonperforming Assets (including assets held for sale)               2000          1999           1998
-----------------------------------------------------------------------------------------------------------
<S>                                                                <C>           <C>            <C>
Nonaccrual Loans                                                   $ 57,898      $ 46,352       $ 46,178
Renegotiated Loans                                                        -         2,751          5,632
                                                               --------------------------------------------
   Total Nonperforming Loans                                       $ 57,898       $49,103       $ 51,810
Other Real Estate Owned                                               4,318         3,948          8,151
                                                               --------------------------------------------
   Total Nonperforming Assets                                      $ 62,216       $53,051       $ 59,961
                                                               ============================================
Ratios:
   Nonaccrual Loans to Total Loans                                     1.10%         0.82%          0.95%
   Nonperforming Assets to Total Assets                                0.91          0.55           0.67
   Allowance for Loan Losses to Nonaccrual Loans                        164           213            165
   Allowance for Loan Losses to Nonperforming Loans                     164           201            147

</TABLE>

<PAGE>


The following  table shows the loans past due 90 days or more and still accruing
and applicable asset quality ratios:

<TABLE>
<CAPTION>

                                                 As of December 31,
                                         -------------------------------
                  (Dollars in thousands)      2000      1999      1998
                  ------------------------------------------------------
                  <S>                      <C>       <C>       <C>
                  Commercial & industrial  $ 4,293   $ 3,004   $ 3,048
                  Real estate mortgages     13,080    13,085     9,739
                  Consumer credit            4,034     3,011     4,263
                  Credit card                8,371     4,139     4,211
                                         -------------------------------
                    Total Loans
                    Past-Due 90-Days or
                    More and Still
                    Accruing              $ 29,778  $ 23,239  $ 21,261
                                         ===============================
                    As a percent of
                    Total Loans              0.56%     0.41%     0.44%
                    As a percent of
                    Total Assets             0.44%     0.24%     0.24%

</TABLE>

<PAGE>


         Allowance for Possible Loan Losses

The  provision for possible loan losses was $24.0 million for 2000 compared with
$52.2 million in 1999 and $35.6 million in 1998.  The decrease in 2000 from 1999
was due to a $33.0 million  special  provision taken in 1999 to conform the loan
reserve policies of Jeff and SJB to that of the Company. The decreased provision
in 1999 when compared to 1998 (excluding the special provision of $33 million in
1999) was primarily due to higher  provisions  taken to cover loans arising from
acquired companies.

The  determination  of the adequacy of the  Allowance  for Possible  Loan Losses
("the Allowance") and the periodic provisioning for estimated losses included in
the consolidated  financial statements is the responsibility of management.  The
evaluation  process is undertaken on a monthly basis.  The methodology  employed
for  assessing  the  adequacy of the  Allowance  consists of the  following  two
criteria:

1.   The  establishment  of  reserve  amounts  for all  specifically  identified
     criticized loans, including those arising from business combinations,  that
     have been designated as requiring  attention by management's  internal loan
     review program.

2.   The  establishment  of reserves for pools of homogenous  types of loans not
     subject to specific  review,  including 1-4 family  residential  mortgages,
     consumer loans, and credit card accounts, based upon historical loss rates.

An allocation of the allowance for the  non-criticized  loans in each  portfolio
and for all off-balance  sheet exposures is determined based upon the historical
average loss experience of those portfolios.

Consideration  is also given to the changed  risk profile  brought  about by the
aforementioned business combinations, customer knowledge, the results of ongoing
credit quality monitoring processes, the adequacy and expertise of the Company's
lending staff,  underwriting policies,  loss histories,  delinquency trends, the
cyclical  nature of economic and business  conditions and the  concentration  of
real estate related loans located in the Northeastern part of the United States.
Since many of the loans depend upon the sufficiency of collateral as a secondary
source of repayment,  any adverse trend in the real estate  markets could affect
underlying  values  available to protect the Company from loss.  Other  evidence
used to determine the amount of the Allowance and its components are as follows:

- regulatory and other examinations

- the amount and trend of criticized loans

- actual losses

- peer comparisons with other financial institutions

- economic data  associated with the real estate market in the Company's area of
  operations

- opportunities  to dispose of marginally  performing  loans for cash
  considerations

Based upon the process employed and giving  recognition to all attendant factors
associated  with the loan  portfolio,  management  considers  the  Allowance for
Possible  Loan Losses to be adequate at December  31, 2000.

The Allowance as a percentage of total loans  outstanding  was 1.80% at December
31,  2000,  1.74% at  December  31,  1999 and 1.56% at December  31,  1998.  The
Allowance as a percentage of nonperforming  loans was 164% at December 31, 2000,
201% at December 31, 1999 and 147% at December 31, 1998.


<PAGE>


The  following is a summary of the activity in the  allowance  for possible loan
losses, by loan category, for the years indicated (in thousands):

<TABLE>
<CAPTION>

         Allowance for Possible Loan Losses
                                                                   Years Ending December 31,
                                                  -------------------------------------------------------------
                                                              2000                1999                1998
                                                  -------------------------------------------------------------
  <S>                                                    <C>                 <C>                 <C>
  Amount of Loans Outstanding at End of Year             $ 5,277,523         $ 5,679,581         $ 4,885,643
                                                  =============================================================
  Daily Average Amount of Loans Outstanding              $ 5,470,763         $ 5,136,467         $ 4,923,410
                                                  =============================================================
  Allowance for Possible Loan Losses
  ----------------------------------
  Balance at beginning of year                             $  98,749           $  76,043           $  85,230
  Loans charged off:
      Real estate mortgages                                    2,847              13,657              11,207
      Commercial and Industrial                                8,778              10,388              10,034
      Consumer Credit                                         23,781              24,012              22,083
      Other                                                        -                   -                   -
      Writedown of assets held for sale (1)                        -                   -               9,521
                                                  -------------------------------------------------------------
                                                  -------------------------------------------------------------
         Total loans charged off                            $ 35,406           $  48,057           $  52,845
                                                  -------------------------------------------------------------
  Recoveries:
      Real estate mortgages                                      772               1,902                 988
      Commercial and Industrial                                1,822               1,962               1,629
      Consumer Credit                                          5,243               6,065               3,437
      Other                                                        -                   -                  47
                                                  -------------------------------------------------------------
         Total recoveries                                   $  7,837           $   9,929           $   6,101
                                                  -------------------------------------------------------------
         Net loans charged off                              $ 27,569           $  38,128           $  46,744
                                                  -------------------------------------------------------------
  Provision for possible loan losses                        $ 24,000           $  52,200           $  35,607
  Allowance of acquired companies                                  -               8,634               1,950
                                                  -------------------------------------------------------------
  Balance at end of year                                    $ 95,180           $  98,749           $  76,043
                                                  =============================================================
  Provision for possible loan losses as a
    percentage of average loans outstanding                     0.44%               1.02%               0.72%
  Net charge offs as a percentage of average
    loans outstanding                                           0.50%               0.74%               0.95%
  Allowance for possible loan losses as a
      percentage of loans outstanding at year end               1.80%               1.74%               1.56%

</TABLE>

(1) The  writedown of assets held for sale  pertains to the planned  disposal of
    $54 million of nonaccrual loans and OREO properties.


<PAGE>

The  following is the  allocation  of the  allowance for possible loan losses by
loan category (in thousands):

<TABLE>
<CAPTION>

Allocation of the Allowance for Possible Loan Losses
----------------------------------------------------

                                                    As of December 31,
                            --------------------------------------------------------------------
                                    2000                    1999                  1998
                            --------------------------------------------------------------------
                                       Category               Category               Category
                                       Percent                Percent                Percent
                                       of                     of                     of
                            Allowance  Loans(%)    Allowance  Loans(%)    Allowance  Loans(%)
------------------------------------------------------------------------------------------------
<S>                          <C>           <C>     <C>            <C>     <C>            <C>
Real estate mortgages        $23,245       44.4    $ 25,484       46.5    $ 23,868       60.6
Commercial and industrial     42,355       36.2      43,974       31.8      18,493       25.3
Consumer Credit               28,278       19.4      24,895       21.7      20,650       14.1
Unallocated                    1,302                  4,396                 13,032
                            --------------------------------------------------------------------
Total                        $95,180      100.0    $ 98,749      100.0    $ 76,043      100.0
                            ====================================================================

</TABLE>


<PAGE>


         Deposits

As of December 31, 2000,  Hudson had 99 branch offices in New Jersey,  36 branch
offices  in New York  State,  42 branch  offices in  Connecticut,  and 25 branch
offices  in  Pennsylvania,  for a total of 202  branches.

The  following  table  summarizes  the deposit base at the dates  indicated  (in
thousands):

<TABLE>
<CAPTION>
                                       December 31,
                           2000            1999            1998
                        ------------------------------------------
 <S>                    <C>        <C>        <C>
 Noninterest-
 bearing deposits       $1,162,677      $1,231,478      $1,214,521
 NOW/MMDA deposits       1,080,641       1,145,398       1,249,772
 Savings deposits        1,441,073       1,528,033       1,367,117
 Time deposits           2,128,876       2,550,436       2,941,826
                         ------------------------------------------
 Total Deposits         $5,813,267      $6,455,345      $6,773,236
                         ==========================================

</TABLE>


Although  total  deposits  declined at December 31, 2000 from December 31, 1999,
there was a favorable  change in the mix, as noninterest  bearing and lower cost
deposits  declined by $220 million while higher cost time  deposits  declined by
$422 million.

Approximately  20%  of the  Company's  deposits  were  in  non-interest  bearing
accounts,  43% in NOW, MMDA and savings accounts, and 37% in time deposits as of
December 31, 2000.

         Liquidity

Liquidity is a measure of the Company's ability to meet the needs of depositors,
borrowers,  and  creditors at a reasonable  cost and without  adverse  financial
consequences.  The Company has several liquidity measurements that are evaluated
on a frequent  basis.  The Company has adequate  sources of liquidity  including
Securities  Available for Sale,  Federal funds lines,  and the ability to borrow
funds from the Federal Home Loan Bank and Federal Reserve discount  window.  The
management of balance sheet volumes,  mixes, and maturities  enables the Company
to maintain adequate levels of liquidity.

         Capital

Capital  adequacy is a measure of the amount of capital  needed to support asset
growth,  absorb  unanticipated  losses,  and provide safety for depositors.  The
regulators establish minimum capital ratio guidelines for the banking industry.

The following table sets forth the regulatory  minimum capital ratio guidelines,
the capital ratio  guidelines  an  institution  must meet to be considered  well
capitalized and the current capital ratios of the Company.

<TABLE>
<CAPTION>

                      Regulatory        Well
                        Minimum       Capitalized       Company
                        Capital         Capital         Capital
                        Ratios          Ratios          Ratios
                        ------          ------          ------
<S>                         <C>             <C>          <C>
Tier 1 Leverage Ratio       4%              5%            6.0%
Tier 1 Risk-Based
   Capital Ratio            4%              6%            7.6%
Total Risk-Based Capital    8%             10%           11.1%

</TABLE>

<PAGE>

At December 31,  2000,  1999,  and 1998,  the Company  exceeded  all  regulatory
capital  guidelines  including  those for a  well-capitalized  institution  (See
Footnote 23 to the Consolidated Financial Statements).

On September 3, 1998,  the Company paid a 3% stock  dividend and  increased  its
regular  quarterly cash dividend to $0.25 per common share. On December 1, 1999,
the Company paid a 3% stock dividend and  maintained its regular  quarterly cash
dividend at $0.25 per common share.  On December 1, 2000, the Company paid a 10%
stock dividend and  maintained its regular  quarterly cash dividend at $0.25 per
common share.  The dividend payout ratio,  based on cash dividends per share and
diluted  earnings per share, was 101% for 2000 compared to 75% for 1999 and 175%
in 1998.  The higher  ratios in 2000 and 1998 when  compared to 1999 were due to
lower net income  resulting  from the  higher  special  charges in those  years.
Excluding special charges,  the payout ratio would have been 47% in 2000, 44% in
1999 and 52% in 1998.

In January 1994, the Company issued $25.0 million aggregate  principal amount of
subordinated  debentures  which  mature in 2004 and bear  interest  at 7.75% per
annum payable semi-annually.

In March 1996, the Company issued $23.0 million  aggregate  principal  amount of
subordinated  debentures  which  mature in 2006 and bear  interest  at 8.75% per
annum  payable  semi-annually.  These notes are  redeemable at the option of the
Company,  in whole or in part,  at any time after April 1, 2001, at their stated
principal amount plus accrued interest, if any.

In September  1996, the Company issued $75.0 million of  subordinated  debt. The
subordinated  debentures bear interest at 8.20% per annum payable  semi-annually
and mature in 2006.

Proceeds  of the  above  issuances  were  used for  general  corporate  purposes
including  providing  Tier I capital to the  subsidiary  bank. The debt has been
structured  to  comply  with the  Federal  Reserve  Bank  rules  regarding  debt
qualifying as Tier 2 capital at the Company.

In January  1997,  the Company  placed $50.0  million in  aggregate  liquidation
amount of 8.98% Capital  Securities due February 2027, using HUBCO Capital Trust
I, a statutory  business  trust  formed under the laws of the State of Delaware.
The sole  asset of the  trust,  which is the  obligor  on the  Series B  Capital
Securities,  is $51.5  million  principal  amount of 8.98%  Junior  Subordinated
Debentures due 2027 of the Company.  The 8.98% Capital securities are redeemable
by the  company  on or after  February  1,  2007,  or  earlier  in the event the
deduction of related interest for federal income taxes is prohibited,  treatment
as Tier 1 capital is no longer permitted or certain other contingencies arise.

In February  1997,  the Company  placed $25.0  million in aggregate  liquidation
amount of 9.25% Capital  Securities due March 2027, using JBI Capital Trust I, a
statutory  business  trust formed  under the laws of the State of Delaware.  The
sole  asset  of  the  trust,  which  is the  obligor  on the  Series  B  Capital
Securities,  is $25.3  million  principal  amount of 9.25%  Junior  Subordinated
Debentures  due 2027 of the Company.  The 9.25% Trust  preferred  securities are
callable by the Company on or after March 31, 2002,  or earlier in the event the
deduction of related interest for federal income taxes is prohibited,  treatment
as Tier I capital is no longer permitted or certain other contingencies arise.

In June 1998, the Company placed $50.0 million in aggregate  liquidation  amount
of 7.65%  Capital  Securities  due June 2028,  using HUBCO  Capital  Trust II, a
statutory  business  trust formed  under the laws of the State of Delaware.  The
sole  assets  of the  trust,  which  is the  obligor  on the  Series  B  Capital
Securities,  is $51.5  million  principal  amount of 7.65%  Junior  Subordinated
Debentures due 2028 of the Company.  The 7.65% Capital securities are redeemable
by the company on or after June 15, 2008,  or earlier in the event the deduction
of related interest for federal income taxes is prohibited,  treatment as Tier 1
capital is no longer permitted or certain other contingencies arise.

The  three  issues  of  capital  securities  have  preference  over  the  common
securities under certain  circumstances  with respect to cash  distributions and
amounts  payable on  liquidation  and are  guaranteed  by the  Company.  The net
proceeds of the offerings are being used for general  corporate  purposes and to
increase  capital  levels of the  Company  and its  subsidiaries.  Except  for a
minimal  amount,  the  securities  qualify as Tier I capital  under the  capital
guidelines of the Federal Reserve.

At the end of the reporting period,  there were no known uncertainties that will
have or that are  reasonably  likely to have a material  effect on the Company's
liquidity or capital resources.

<PAGE>

         Liquidity and interest rate sensitivity management

The primary  objectives  of  asset/liability  management  are to provide for the
safety of depositor and investor funds, assure adequate  liquidity,  maintain an
appropriate    balance   between    interest-sensitive    earning   assets   and
interest-sensitive  liabilities and enhance earnings.  Interest rate sensitivity
management ensures that the Company maintains  acceptable levels of net interest
income  throughout a range of interest rate  environments.  The Company seeks to
maintain  its  interest  rate  risk  within  a range  that it  believes  is both
manageable and prudent, given its capital and income generating capacity.

Liquidity risk is the risk to earnings or capital that would arise from a bank's
inability  to meet  its  obligations  when  they  come  due,  without  incurring
unacceptable  losses.  Liquidity  management is a planning  process that ensures
that the Company has ample funds to satisfy operational needs, projected deposit
outflows,  repayment of borrowing and loan  obligations and the projected credit
needs of its customer base. The Company uses several  measurements in monitoring
its  liquidity  position.  In  addition,  the Company has a number of  borrowing
facilities with banks,  primary broker  dealers,  the Federal Home Loan Bank and
Federal  Reserve that are or can be used as sources of liquidity  without having
to sell assets to raise cash.  At December 31,  2000,  the  Company's  liquidity
ratios exceed all minimum standards set forth by internal policies.

The Company has an asset/liability management committee, which manages the risks
associated with the volatility of interest rates and the resulting impact on net
interest income, net income and capital. The management of interest rate risk at
the  Company  is  performed   by:  (i)  analyzing  the  maturity  and  repricing
relationships  between interest earning assets and interest bearing  liabilities
at specific points in time (`GAP') and (ii) "income  simulation  analysis" which
analyzes the effects of interest rate changes on net interest income, net income
and capital over  specific  periods of time and  captures the dynamic  impact of
interest rate changes on the Company's mix of assets and liabilities.

The  following  table  presents  the GAP position of the Company at December 31,
2000.  In preparing  this table,  management  has  anticipated  prepayments  for
mortgage-backed securities and mortgage-related securities according to standard
industry  prepayment  assumptions  in effect at  year-end.  Total loans  include
adjustable rate loans,  which are placed according to repricing  periods.  Fixed
rate  residential  mortgages  are  assumed  to prepay at rates  consistent  with
historical  average housing  turnover rates.  Money market deposits and interest
bearing  demand  accounts have been included in the due within 90 days category.
Assets  with  daily  floating  rates  are  included  in the due  within  90 days
category.  Assets  and  liabilities  are  included  in the table  based on their
maturities,  expected cash repayments or period of first  repricing,  subject to
the foregoing  assumptions.

In analyzing its GAP  position,  although all time periods are  considered,  the
Company emphasizes the next twelve-month period. An institution is considered to
be  liability  sensitive,   or  having  a  negative  GAP,  when  the  amount  of
interest-bearing  liabilities  maturing or repricing  within a given time period
exceeds the amount of its  interest-earning  assets also  repricing  within that
time period.  Conversely, an institution is considered to be asset sensitive, or
having a  positive  GAP,  when the  amount of its  interest-bearing  liabilities
maturing or  repricing  is less than the amount of its  interest-earning  assets
also maturing or repricing during the same period.  Theoretically,  in a falling
interest  rate  environment,  a negative GAP should result in an increase in net
interest  income,  and in a rising interest rate  environment  this negative GAP
should adversely  affect net interest  income.  The converse would be true for a
positive GAP.

However,  shortcomings are inherent in a simplified GAP analysis that may result
in changes in interest rates affecting net interest income more or less than the
GAP  analysis  would  indicate.   For  example,   although  certain  assets  and
liabilities may have similar maturities or periods to repricing,  they may react
in different degrees to changes in market interest rates. Furthermore, repricing
characteristics of certain assets and liabilities may vary substantially  within
a given time period. In the event of a change in interest rates,  prepayment and
early withdrawal levels could also deviate  significantly  from those assumed in
calculating GAP. Also, GAP does not permit analysis of how changes in the mix of
various assets and liabilities and growth rate  assumptions  impact net interest
income.


<PAGE>

The  following  table shows the Gap position of the Company at December 31, 2000
(in thousands):

<TABLE>
<CAPTION>

         GAP Analysis
                                          Due Within    Due Between
                                           One Year       One and       Due Over   Noninterest
                                            or Less      Five Years    Five Years    Bearing       Total
-------------------------------------------------------------------------------------------------------------
<S>                                      <C>            <C>           <C>          <C>         <C>
ASSETS

Fed Funds Sold                           $    18,755    $         -    $       -    $       -   $   18,755
Securities                                   419,870        316,048      215,256      (8,255)      942,919
Total Loans                                2,505,895      1,995,546      731,692       44,390    5,277,523
Noninterest Bearing Assets                         -              -            -      578,029      578,029
                                         --------------------------------------------------------------------
Total Assets                             $ 2,944,520    $ 2,311,594    $ 946,948    $ 614,164   $6,817,226
Percent of Total Assets                        43.19%         33.91%       13.89%        9.01%      100.00%

SOURCE OF FUNDS

Interest-Bearing Deposits                $ 2,934,088    $ 1,401,605    $ 314,897            -   $4,650,590
Borrowings                                   344,503          1,452       12,906            -      358,861
Long-Term Debt                                     -         25,000      223,300            -      248,300
Noninterest Bearing Deposits                 383,684        699,931       79,062            -    1,162,677
Other Liabilities                                  -              -            -       28,325       28,325
Stockholders' Equity                               -              -            -      368,473      368,473
                                         --------------------------------------------------------------------
Total Source Of Funds                    $ 3,662,275    $ 2,127,988    $ 630,165    $ 396,798   $6,817,226
Percent of Total Source of Funds               53.72%         31.21%        9.24%        5.82%      100.00%
=============================================================================================================
Interest Rate Sensitivity Gap            $  (717,755)       183,606      316,783    $  17,366   $       (0)
-------------------------------------------------------------------------------------------------------------
Cumulative Interest Rate Sensitivity Gap $  (717,755)   $  (534,149)   $(217,366)   $      (0)  $        0
-------------------------------------------------------------------------------------------------------------

</TABLE>

<PAGE>

Due in part to the shortcomings of GAP analysis,  the Asset/Liability  Committee
of Hudson  United  Bancorp  believes  that  financial  simulation  modeling more
accurately  estimates the effects and exposure to changes in interest rates. Net
interest  income  simulation   considers  the  relative   sensitivities  of  the
components of the balance  sheet  including the effects of interest rate caps on
adjustable rate mortgages and the relatively stable aspects of core deposits. As
such,  net  interest  income  simulation  is  designed  to  address  the  likely
probability of interest rate changes and  behavioral  response of the components
of the balance  sheet to those  changes.  The Market Value of  Portfolio  Equity
represents the fair values of the net present value of assets, liabilities,  and
off-balance sheet items.

Financial  modeling is performed under several scenarios  including a regulatory
rate shock scenario which measures  changes in net interest income over the next
twelve  months and market value of  portfolio  equity  given  instantaneous  and
sustained changes in interest rates.


The following  table depicts the Company's  sensitivity to interest rate changes
and the effects on the Market Value of Portfolio  Equity as of December 31, 2000
under  several  scenarios  including  the  regulatory  rate shock  scenario  (in
thousands).

Rate Shock Model
----------------

<TABLE>
<CAPTION>

Basis point rate change      Net Interest Income                    Effect on Market Value of Portfolio Equity
--------------------------------------------------------------------------------------------------------------
<S>                               <C>                                                     <C>
+200 bp                           +7%                                                     -9%
+100 bp                           +3%                                                     -4%
-100 bp                           -2%                                                     +1%
-200 bp                           -3%                                                     +3%

</TABLE>

<PAGE>

                     Hudson United Bancorp and Subsidiaries

                            S.E.C. GUIDE 3 - ITEM II

                              INVESTMENT PORTFOLIO

                         Book Value at End of Each Year


<TABLE>
<CAPTION>
                                                                              As of December 31,
                                                          --------------------------------------------------------
                                                             2000                      1999                      1998
                                                             ----                      ----                      ----
                                                                                   (in thousands)
<S>                                                               <C>                     <C>                        <C>
U.S. Treasury and other U.S.
   Government Agencies and
   Corporations                                                    $742,308                $3,087,607                $ 3,056,717
State and Political Subdivisions                                     52,803                    27,620                    106,255
Other Debt Securities                                                 3,561                    45,348                     20,784
Equity Securities                                                   144,247                   205,951                    112,200
                                                         -------------------       -------------------             --------------
         TOTAL                                                     $942,919                $3,366,526                $ 3,295,956
                                                         ===================       ===================             ==============

</TABLE>

Maturities and Weighted  Average Yield for the Year Ending December 31, 2000 (in
thousands)

<TABLE>
<CAPTION>

                                                                  Maturing
                               ------------------------------------------------------------------------------------
                                                          After One But            After Five But
                               Within One Year          Within Five Years         Within Ten Years          After Ten Years
                               ---------------          -----------------         ----------------          ---------------
                               Amount     Yield          Amount     Yield          Amount    Yield          Amount    Yield
                               ------     ------         ------     -----          ------    -----          ------    -----
<S>                             <C>           <C>       <C>             <C>         <C>           <C>       <C>            <C>
U.S. Treasury and other
   U.S. Government
   Agencies and
   Corporations                 $ 74,060      5.47%     $ 230,068       6.30%       $283,861      6.21%     $ 154,319      6.19%
States and Political
   Subdivisions                   41,807      6.98%         6,318       7.13%          3,634      7.77%         1,044      7.95%
Other Debt Securities              3,058      7.36%           503       6.57%              -                        -
Equity Securities                      -                        -                          -                  144,247      6.34%
                           ----------------         ----------------          -----------------         ----------------
                     TOTAL     $ 118,925      6.02%     $ 236,889       6.32%      $ 287,495      6.23%     $ 299,610      6.27%
                           ================         ================          =================         ================

</TABLE>

Weighted average yields on tax-exempt  obligations have been computed on a fully
tax-equivalent basis assuming a federal tax rate of 35.0 percent.

<PAGE>


                     Hudson United Bancorp and Subsidiaries

                            S.E.C. GUIDE 3 - ITEM III

                                 LOAN PORTFOLIO


<TABLE>
<CAPTION>

                                                     Types of Loans (in thousands)

                                                         As of    December 31,
                               ------------------------------------------------------------------------------
                                        2000               1999           1998           1997            1996
                                        ----               ----           ----           ----            ----
<S>                              <C>                <C>            <C>              <C>             <C>
Commercial, Financial,
  and Agricultural               $ 1,688,582        $ 1,550,070    $ 1,070,844      $ 918,106       $ 923,380

Real Estate -
  Construction                       202,589            216,178        166,841        185,435         163,387

Real Estate -
  Mortgage                         2,692,258          3,031,436      2,962,281      3,203,870       3,225,591

Installment                          694,094            881,897        685,677        604,350         504,853
                               ------------------------------------------------------------------------------
     TOTAL                       $ 5,277,523        $ 5,679,581    $ 4,885,643    $ 4,911,761     $ 4,817,211
                               ==============================================================================

</TABLE>

<PAGE>


                     Hudson United Bancorp and Subsidiaries

                            S.E.C. GUIDE 3 - ITEM III

                                 LOAN PORTFOLIO


The  following  table  shows  the  maturity  of  loans  outstanding   (excluding
residential  mortgages  of 1-4 family  residences,  installment  loans and lease
financing).   Also  provided  are  the  amounts  classified   according  to  the
sensitivity to changes in interest rates.

<TABLE>
<CAPTION>

          Maturities and Sensitivity to Changes in Interest Rates as of December 31, 2000 (in thousands)
          ----------------------------------------------------------------------------------------------

(In thousands)                                                              MATURING
--------------------------------------------- ----------------- ----------------- ---------------- -----------------
                                                                  After One
                                                  Within          But Within          After
                                                 One Year         Five Years       Five Years          Total
--------------------------------------------- ----------------- ----------------- ---------------- -----------------
<S>                                                 <C>               <C>               <C>             <C>
Commercial, Financial,
   and Agricultural                                 $408,886          $499,337          $12,174         $ 920,397

Real Estate Construction                             881,837           605,024          201,721         1,688,582

Real Estate - Mortgage                               181,826            18,341            2,422           202,589
                                              ----------------- ----------------- ---------------- -----------------
                   TOTAL                         $ 1,472,549       $ 1,122,702         $216,317       $ 2,811,568
                                              ================= ================= ================ =================

<CAPTION>
                                                                    SENSITIVITY TO CHANGES IN INTEREST RATES
                                                                             As of December 31, 2000
                                                                             -----------------------
                                                                             Fixed               Variable
                                                                             Rate                 Rate
                                                                         ---------------------------------

    Due Within One Year                                                    $  311,758        $  1,160,791

    Due After One But Within Five Year                                        927,169             195,533

    Due After Five Years                                                      215,765                 552
                                                                         --------------------------------

      TOTAL                                                                $1,454,692        $  1,356,876
                                                                         ================================

</TABLE>

<PAGE>


                     Hudson United Bancorp and Subsidiaries

                            S.E.C. GUIDE 3 - ITEM III

                                 LOAN PORTFOLIO

<TABLE>
<CAPTION>

                   Nonaccrual, Past Due and Restructured Loans

 (In thousands)                                                      As of December 31,
                                          --------------------------------------------------------------------------
                                                   2000           1999           1998           1997           1996
                                                   ----           ----           ----           ----           ----
<S>                                             <C>           <C>            <C>            <C>            <C>
Loans accounted for on
  a nonaccrual basis                            $57,898       $ 46,352       $ 46,178       $ 64,766       $ 72,883

Loans contractually past
  due 90 days or more as
  to interest or principal
  payments
                                                 29,778         23,239         21,261         24,349         22,628

Loans whose terms have been
  renegotiated  to provide
  a reduction or deferral of
  interest or principal because
  of a deterioration in the
  financial  position of
  the borrower                                        0          2,751          5,632         19,054         13,261

</TABLE>

At the end of the year,  all loans were  disclosed  in the above  table if known
information about possible credit problems of borrowers caused management of the
Company to have  serious  doubts as to the ability of such  borrowers  to comply
with the present loan repayment terms.

At December 31, 2000 and at December 31, 1999, there were no  concentrations  of
loans  exceeding  10% of total  loans  which are not  otherwise  disclosed  as a
category of loans pursuant to Item III.A. of Guide 3.

Recognition  of  interest  on  the  accrual  method  is  discontinued  based  on
contractual  delinquency  and when timely payment is not expected.  A nonaccrual
loan is not returned to an accrual  status until interest is received up to date
on a current basis and other factors  indicate  collection  ability is no longer
doubtful.


<PAGE>


                     Hudson United Bancorp and Subsidiaries

                            S.E.C. GUIDE 3 - ITEM IV

                         SUMMARY OF LOAN LOSS EXPERIENCE

The  following is a summary of the activity in the  allowance  for possible loan
losses, broken down by loan category (in thousands):

<TABLE>
<CAPTION>

                                                                               Year Ended December 31
                                                          -----------------------------------------------------------------
                                                                  2000           1999          1998           1997           1996
                                                                  ----           ----          ----           ----           ----
<S>                                                        <C>            <C>            <C>            <C>            <C>
Amount of Loans Outstanding at End of Year                 $ 5,277,523    $ 5,679,581    $4,885,643     $4,911,761     $4,817,211
                                                          =======================================================================
Daily Average Amount of Loans                              $ 5,470,763    $ 5,136,467    $4,923,410     $4,824,845     $4,547,221
                                                          =======================================================================
Balance of Allowance for Possible
  Loan Losses at Beginning of Year                         $    98,749    $    76,043       $85,230        $81,979     $   79,968
Loans Charged Off:
  Commercial, Financial and Agricultural                        (8,778)       (10,388)      (10,034)        (7,489)       (10,493)
  Real Estate - Construction                                         -             --         (213)              -          (473)
  Real Estate - Mortgage                                        (2,847)       (13,657)      (10,994)       (10,861)       (13,980)
  Installment                                                  (23,781)       (24,012)      (22,083)       (15,364)        (4,647)
  Write down of assets held for sale                                --             --       (9,521)             --             --
  Other Loans                                                       --             --            --          (384)        (9,452)
                                                          -----------------------------------------------------------------------
Total Loans Charged Off                                    $   (35,406)   $   (48,057)   $  (52,845)    $  (34,098)    $  (39,045)
                                                          -----------------------------------------------------------------------
Recoveries of Loans Previously Charged Off:
  Commercial, Financial and Agricultural                   $     1,822    $     1,962    $    1,629     $    3,113     $    1,874
  Real Estate-Mortgage                                             772          1,902           988          2,684          2,429
  Installment                                                    5,243          6,065         3,437          3,512          1,534
  Other Loans                                                       --             --            47            798          1,501
                                                          -----------------------------------------------------------------------
Total Recoveries                                           $     7,837    $     9,929    $    6,101     $   10,107     $    7,338
                                                          -----------------------------------------------------------------------
Net Loans Charged Off                                      $   (27,569)   $   (38,128)   $  (46,744)    $  (23,991)    $  (31,707)
                                                          -----------------------------------------------------------------------
Provision Charged to Expense                               $    24,000    $    52,200    $   35,607     $   24,442     $   29,060
Additions Acquired Through Acquisitions                             --          8,634         1,950          2,800          4,658
                                                          -----------------------------------------------------------------------
Balance at end of year                                     $    95,180    $    98,749    $   76,043     $   85,230     $   81,979
                                                          =======================================================================

Ratios
   Net Loans Charged Off to
    Average Loans Outstanding                                    0.50%          0.74%          0.95%         0.50%          0.70%
 Allowance for Possible Loan
    Losses to Average Loans
    Outstanding                                                  1.74%          1.92%          1.54%         1.77%          1.80%

</TABLE>

Management  formally  reviews the loan portfolio and evaluates  credit risk on a
monthly basis  throughout  the year.  Such review takes into  consideration  the
financial condition of the borrowers, fair market value of collateral,  level of
delinquencies, historical loss experience by loan category, industry trends, and
the impact of local and national economic conditions.

<PAGE>


                     Hudson United Bancorp and Subsidiaries

                            S.E.C. GUIDE 3 - ITEM IV

                         SUMMARY OF LOAN LOSS EXPERIENCE

          ALLOWANCE FOR POSSIBLE LOAN LOSSES ALLOCATION (in thousands)

<TABLE>
<CAPTION>


                                         2000                        1999
                              --------------------------- ---------------------------
                                             % of Loans                  % of Loans
                                              In Each                     In Each
                                            Category to                 Category to
                                 Amount     Total Loans      Amount     Total Loans
                              ------------- ------------- ------------- -------------

Balance at end of period
 applicable to domestic loans:
                                   <S>             <C>        <C>              <C>
Commercial
Financial and
Agricultural....................   $37,171         34.7%      $38,592         27.9%

Real Estate -
Construction....................     5,184          1.5         5,382          3.9

Real Estate -
Mortgage .......................    23,245         44.4        25,484         46.5

Installment ....................    28,278         19.4        24,895         21.7

Unallocated ....................     1,302                      4,396
                                     -----                      -----

TOTAL ..........................   $95,180        100.0%      $98,749        100.0%
                                   =======        =====       =======        =====

<CAPTION>


                                         1998                         1997                    1996
                              --------------------------- ---------------------------  ------------------------
                                             % of Loans                  % of Loans                % of Loans
                                              In Each                     In Each                  In Each
                                            Category to                 Category to                Category to
                                 Amount     Total Loans      Amount     Total Loans     Amount     Total Loans
                              ------------- ------------- ------------- -------------  ----------  ------------

Commercial
Financial and
Agricultural....................   $16,789         21.9%      $19,751         18.7%      $20,328    19.2%

Real Estate -
Construction....................     1,704          3.4           482          3.8           685     3.3

Real Estate -
Mortgage .......................    23,868         60.6        30,273         65.2        30,541    67.0

Installment ....................    20,650         14.1        11,650         12.3        12,876    10.5

Unallocated ....................    13,032                     23,074                     17,549
                                   -----------------------------------------------------------------------
TOTAL ..........................   $76,043       100.0%       $85,230         100.0%     $81,979    100.0%
                                   =======================================================================

</TABLE>

The  allowance  for  possible  loan losses has been  allocated  according to the
amount  deemed to be  reasonably  necessary  to provide for the  possibility  of
losses  being  incurred  within  the  above  categories  of  loans  at the  date
indicated.


<PAGE>



                     Hudson United Bancorp and Subsidiaries

                             S.E.C. GUIDE 3 - ITEM V

                                    DEPOSITS

The following  table sets forth  average  deposits and average rates for each of
the years indicated.

<TABLE>
<CAPTION>


                                                                         As of December 31,
                                               2000                             1999                             1998
                                   -----------------------------    -----------------------------    -----------------------------
                                                  Interest                         Interest
                                            Amount         Rate              Amount         Rate            Amount  Interest Rate
                                            ------         ----              ------         ----            ------          -----
                                                                  (In thousands)
Domestic Bank Offices:

<S>                                     <C>              <C>              <C>              <C>             <C>
Noninterest bearing demand
deposits                                $ 1,174,655                       $ 1,170,135                      $ 1,079,508

Interest-bearing
demand deposits                           1,029,708      2.24%              1,199,059      2.01%             1,365,426      2.35%

Savings deposits                          1,504,151      2.56%              1,405,688      2.00%             1,328,052      2.34%

Time deposits                             2,192,996      5.12%              2,821,338      4.91%             3,106,134      5.32%
                                          ---------                         ---------                        ---------
         TOTAL                          $ 5,901,510                       $ 6,596,220                      $ 6,879,120
                                         ==========                        ==========                        =========

</TABLE>

Maturities  of  certificates  of deposit and other time  deposits of $100,000 or
more issued by domestic offices, outstanding at December 31, 2000 are summarized
as follows:

<TABLE>
<CAPTION>

                                                 Time Certificates            Other Time
                                                    of Deposit                 Deposits                 Total
                                                    ----------                 --------                 -----
                                                                           (In thousands)
<S>                                                     <C>                   <C>                     <C>
3 months or less                                        $ 285,991             $      0                $ 285,991
Over 3 through 6 months                                    47,286                                        47,286
Over 6 through 12 months                                   72,104                                        72,104
12 months                                                 298,124                                       298,124
                                            ---------------------------- ---------------------- ----------------------
TOTAL                                                   $ 703,505             $      0                $ 703,505
                                            ============================ ====================== ======================

</TABLE>

<PAGE>


                     Hudson United Bancorp and Subsidiaries

                            S.E.C. GUIDE 3 - ITEM VI

                           RETURN ON EQUITY AND ASSETS

<TABLE>
<CAPTION>

                                                                   Year Ended December 31,
                                                    -----------------------------------------------
                                                      2000             1999              1998
                                                    -----------------------------------------------
<S>                                                  <C>               <C>                 <C>
Return on Average Assets                              0.61%             0.75%              0.31%

Return on Average Equity                             10.72%            11.95%              4.14%

Common Dividend Payout Ratio                        101.09%            74.58%            175.00%

Average Stockholders' Equity to
  Average Assets Ratio                                5.66%             6.27%              7.42%


</TABLE>

<PAGE>


                     Hudson United Bancorp and Subsidiaries

                            S.E.C. GUIDE 3 - ITEM VII

                                   BORROWINGS

The following table shows the  distribution of the Company's  borrowings and the
weighted  average  interest  rates  thereon at the end of each of the last three
years.  Also  provided  are the maximum  amounts of  borrowings  and the average
amounts of borrowings as well as weighted  average  interest  rates for the last
three years.

<TABLE>
<CAPTION>
                                                           Federal Funds
                                                           Purchased and
                                                           Securities Sold
                                                           Under Agreement                Other
                                                           to Repurchase                Borrowings
                                                           -----------------            ----------
                                                                       (In Thousands)
<S>                                                               <C>                    <C>
At December 31:
       2000                                                       $  176,878             $   181,983
       1999                                                          985,170               1,398,496
       1998                                                          422,158                 548,252

Weighted average interest rate at year end:
       2000                                                             4.69%                   6.23%
       1999                                                             5.24                    5.76
       1998                                                             4.83                    5.09

Maximum amount outstanding at any month's end:
       2000                                                       $1,268,412             $ 1,500,562
       1999                                                          994,143               1,500,677
       1998                                                          470,382                 696,048

Average amount outstanding during the year:
       2000                                                       $  718,444             $   857,037
       1999                                                          950,039                 725,604
       1998                                                          414,793                 444,579

Weighted average interest rate during the year:
       2000                                                             5.75%                   6.09%
       1999                                                             5.08                    5.47
       1998                                                             5.21                    5.92

</TABLE>

<PAGE>

ITEM 7a. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
         ----------------------------------------------------------

For information regarding Quantitative and Qualitative  Disclosures About Market
Risk,  see Part II, Item 7,  "Management's  Discussion and Analysis of Financial
Condition and Results of Operations - Interest Rate Sensitivity".

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
         -------------------------------------------

<TABLE>
<CAPTION>
                  Hudson United Bancorp and Subsidiaries
                  Consolidated Balance Sheets

December 31, (in thousands, except share data)                               2000           1999
---------------------------------------------------------------------------------------------------
ASSETS
<S>                                                                      <C>           <C>
Cash and due from banks                                                  $276,784      $ 277,558
Federal funds sold                                                         18,755              -
                                                                      -----------------------------
                                     TOTAL CASH AND CASH EQUIVALENTS     $295,539      $ 277,558
Investment securities available for sale, at market value                 422,727      2,804,302
Investment securities held to maturity, at cost (market value of
   $513,410 and $541,240 at December 31, 2000 and December 31,            520,192        562,224
   1999, respectively)
Mortgage loans and assets held for sale                                         -          9,073
Loans:
   Residential mortgages                                                1,433,697      1,639,578
   Commercial real estate mortgages                                       920,397      1,024,844
   Commercial and industrial                                            1,891,171      1,766,248
   Consumer credit                                                        873,336      1,029,975
   Credit card                                                            158,922        209,863
                                                                      -----------------------------
                                                         TOTAL LOANS   $5,277,523     $5,670,508
   Less: Allowance for possible loan losses                              (95,180)       (98,749)
                                                                      -----------------------------
                                                           NET LOANS   $5,182,343     $5,571,759

Premises and equipment, net                                               124,821        129,720
Other real estate owned                                                     4,318          3,948
Intangibles, net of amortization                                          100,760        115,841
Other assets                                                              166,526        211,861
                                                                      =============================
                                                        TOTAL ASSETS   $6,817,226     $9,686,286
                                                                      =============================
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
   Noninterest bearing                                                 $1,162,677     $1,231,478
   Interest bearing                                                     4,650,590      5,223,867
                                                                      -----------------------------
                                                      TOTAL DEPOSITS   $5,813,267     $6,455,345
Borrowings                                                                358,861      2,383,666
Other liabilities                                                          28,325         70,809
                                                                      -----------------------------
                                                                       $6,200,453     $8,909,820

Subordinated debt                                                         123,000        132,000
Company-obligated mandatorily redeemable preferred capital
  securities of three subsidiary trusts holding solely junior             125,300        125,300
  subordinated debentures of the Company
                                                                      -----------------------------
                                                   TOTAL LIABILITIES   $6,448,753     $9,167,120
Stockholders' Equity:
   Common stock, no par value; authorized 103,000,000
    shares;  52,171,701 shares issued and 47,964,579 shares
    outstanding December 31, 2000 and 57,379,429
    shares issued and 57,085,884 shares outstanding
    December 31, 1999                                                      92,762         92,794
   Additional paid-in capital                                             322,131        326,673
   Retained earnings                                                       56,759        152,591
    Treasury stock, at cost, 4,207,122 shares December 31, 2000
     and 293,545 shares December 31, 1999                                (92,293)        (8,438)
   Restricted Stock                                                       (5,759)        (3,549)
   Accumulated other comprehensive loss                                   (5,127)       (40,905)
                                                                      -----------------------------
                                          TOTAL STOCKHOLDERS' EQUITY     $368,473       $519,166
                                                                      -----------------------------
                         TOTAL LIABILITIES AND STOCKHOLDERS'  EQUITY   $6,817,226     $9,686,286
                                                                      =============================

</TABLE>

See Notes to Consolidated Financial Statements.


<PAGE>

<TABLE>
<CAPTION>

         Hudson United Bancorp and Subsidiaries
         Consolidated Statements of Income

Years Ended December 31, (in thousands, except per share data)                2000        1999       1998
------------------------------------------------------------------------------------------------------------
INTEREST AND FEE INCOME:
<S>                                                                       <C>         <C>        <C>
Loans                                                                     $472,559    $428,523   $422,859
Investment securities                                                      134,881     209,941    189,791
Other                                                                          869       6,112     12,673
                                                                          ----------------------------------
                                            TOTAL INTEREST AND FEE INCOME $608,309    $644,576   $625,323
                                                                          ----------------------------------
INTEREST EXPENSE:
Deposits                                                                  $173,831    $190,735   $228,335
Borrowings                                                                  93,564      88,902     47,907
Subordinated and other debt                                                 21,188      21,873     20,231
                                                                          ----------------------------------
                                                   TOTAL INTEREST EXPENSE $288,583    $301,510   $296,473
                                                                          ----------------------------------
                                                      NET INTEREST INCOME $319,726    $343,066   $328,850
PROVISION FOR POSSIBLE LOAN LOSSES                                          24,000      52,200     35,607
                                                                          ----------------------------------
                         NET INTEREST INCOME AFTER PROVISION FOR POSSIBLE
                                                              LOAN LOSSES $295,726    $290,866   $293,243
                                                                          ----------------------------------
NONINTEREST INCOME:
Trust department income                                                     $3,773      $4,574     $4,472
Service charges on deposit accounts                                         29,538      27,576     27,314
Credit card fee income                                                      21,798      22,128     12,353
Other income                                                                34,625      35,584     26,713
Securities (losses) gains                                                  (58,639)     (1,164)     4,474
Loss on assets held for sale                                                     -           -    (23,303)
                                                                          ----------------------------------
                                                 TOTAL NONINTEREST INCOME  $31,095     $88,698    $52,023
                                                                          ----------------------------------

NONINTEREST EXPENSE:
Salaries and employee benefits                                             $88,917    $102,749   $107,244
Occupancy expense                                                           25,492      24,927     24,784
Equipment expense                                                           20,388      14,681     11,317
Deposit and other insurance                                                  2,596       3,521      3,118
Outside services                                                            43,942      48,805     34,819
Other real estate owned expense                                                 42          90      3,337
Amortization of intangibles                                                 15,537      14,870     12,105
Other                                                                       38,113      29,613     35,721
Merger related and restructuring costs                                      15,004      32,031     69,086
                                                                          ----------------------------------
                                                TOTAL NONINTEREST EXPENSE $250,031    $271,287   $301,531
                                                                          ----------------------------------
                                               INCOME BEFORE INCOME TAXES  $76,790    $108,277    $43,735
PROVISION FOR INCOME TAXES                                                  26,969      38,939     16,984
                                                                          ----------------------------------
                                                               NET INCOME $ 49,821     $69,338    $26,751
                                                                          ==================================

EARNINGS PER SHARE:
Basic                                                                        $0.93       $1.21      $0.46
Diluted                                                                      $0.92       $1.18      $0.44

WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic                                                                       53,845      57,465     58,718
Diluted                                                                     54,186      58,566     60,668

</TABLE>

See Notes to Consolidated Financial Statements.


<PAGE>

<TABLE>
<CAPTION>

                  Hudson United Bancorp and Subsidiaries
                  Consolidated Statements of Comprehensive Income

       Years Ended December 31,  (in thousands)                                  2000             1999            1998
       ------------------------------------------------------------------ -- ------------ --- ------------ -- ------------

                                                              NET INCOME     $ 49,821           $69,338        $ 26,751
                                                                             ============     ============    ============
       <S>                                                                   <C>              <C>               <C>
       OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
       Unrealized securities (losses) gains arising during period            $  (2,273)       $ (54,364)        $ 8,508
       Less: reclassification for losses (gains) included in net income         38,051              757          (2,858)
                                                                             ------------     ------------    ------------
       Other comprehensive income (loss)                                     $  35,778        $ (53,607)        $ 5,650
                                                                             ------------     ------------    ------------
                                                    COMPREHENSIVE INCOME     $  85,599          $15,731        $ 32,401
                                                                             ============     ============    ============

</TABLE>

         See Notes to Consolidated Financial Statements.


<PAGE>



Hudson United Bancorp and  Subsidiaries - Consolidated  Statements of Changes in
Stockholders' Equity For the Years Ended December 31, 2000, 1999 and 1998

<TABLE>
<CAPTION>




                                                    Convertible
                                                  Preferred Stock               Common Stock            Additional
                                                  ---------------               ------------              Paid-in
(in thousands, except share data)              Shares          Amount      Shares          Amount         Capital
                                           -----------------------------------------------------------------------
<S>                                            <C>           <C>        <C>              <C>           <C>
Balance at December 31, 1997 .........         1,250         $  125     48,805,624       $ 86,776      $ 383,667
                                           =======================================================================
Net income ...........................          --             --             --             --           26,751
IBSF fiscal year adjustment ..........          --             --             --             --             --
Cash dividends common ................          --             --             --             --             --
3% stock dividend ....................          --             --           82,629            147            270
Stock dividend of acquired company ...          --             --        4,057,468          7,214         (3,067)
Shares issued for:
   Stock options exercised ...........          --             --          582,159          1,035         (6,282)
   Warrants exercised ................          --             --            7,158             13            (97)
   Dividend reinvestment and stock
   reinvestment plan..................          --             --            4,893              9
   Preferred stock conversion ........          (750)           (75)        16,608             30           (130)
Cash in lieu of fractional shares ....          --             --             --             --             (212)
Other transactions ...................          --             --            3,750              7             (7)
Purchase of treasury stock ...........          --             --             --             --             --
Issue and retirement of treasury stock          --             --         (989,058)        (1,759)       (18,930)
Effect of compensation plans .........          --             --             (783)            (2)         5,248
Other comprehensive income ...........          --             --             --             --             --
                                           -----------------------------------------------------------------------
Balance at December 31, 1998 .........           500    $        50     52,570,448    $    93,470    $   360,621
                                           =======================================================================
Net income ...........................          --             --             --             --             --
Cash dividends common ................          --             --             --             --             --
3% stock dividend ....................          --             --          159,131            283          2,890
Shares issued for:
   Stock options exercised ...........          --             --          590,164          1,050         (7,868)
   Warrants exercised ................          --             --             --             --             (182)
   Dividend reinvestment and stock
   reinvestment plan .................          --             --           11,742             21            276
   Preferred stock conversion ........          (500)           (50)          --             --             (478)
Cash in lieu of fractional shares ....          --             --             --             --              (22)
Other transactions ...................          --             --           (2,106)            (4)             4
Purchase of  treasury stock ..........          --             --             --             --             --
LFB acquisition ......................          --             --             --             --             --
Issue and retirement of treasury stock          --             --       (1,139,576)        (2,026)       (32,853)
Effect of compensation plans .........          --             --             --             --            4,285
Other comprehensive loss .............          --             --             --             --             --
                                           -----------------------------------------------------------------------
Balance at December 31, 1999 .........          --      $      --       52,189,803    $    92,794    $   326,673
                                           =======================================================================

Net income ...........................          --             --             --             --           49,821
Cash dividends common ................          --             --             --             --          (49,319)
10% stock dividend ...................          --             --        5,217,177           --              771
Shares issued for:
   Stock options exercised ...........          --             --             --           (4,336)          --
Cash in lieu of fractional shares ....          --             --             --             (172)          --
Other transactions ...................          --             --          (18,027)           (32)            67
Purchase of  treasury stock ..........          --             --       (9,424,374)          --             --
Effect of compensation plans .........          --             --             --             (872)          --
Other comprehensive income ...........          --             --             --             --             --
                                           -----------------------------------------------------------------------
Balance at December 31, 2000 .........          --      $      --       47,964,579    $    92,762    $   322,131
                                           =======================================================================

<PAGE>

<CAPTION>

                                                                      Employee Stock
                                                                        Awards and
                                                                        Unallocated   Accumulated
                                                                        Shares held       Other
                                           Retained       Treasury       in ESOP at   Comprehensive
                                           Earnings         Stock           Cost      Income (loss)      Total
                                           --------         -----           ----      -------------      -----
Balance at December 31, 1997 .........   $   222,687    $   (22,889)   $    (9,609)   $     7,052    $   667,809
                                           =======================================================================

Net income ...........................        26,751           --             --             --           26,751
IBSF fiscal year adjustment ..........         1,539           --             --             --            1,539
Cash dividends common ................       (39,706)          --             --             --          (39,706)
3% stock dividend ....................       (41,851)        41,434           --             --             --
Stock dividend of acquired company ...        (4,147)          --             --             --             --
Shares issued for:
   Stock options exercised ...........          --           18,548           --             --           13,301
   Warrants exercised ................          --              173           --             --               89
   Dividend reinvestment and
   stock .............................           161           --             --             --              170
   Preferred stock conversion ........          --              175           --             --             --
Cash in lieu of fractional shares ....            (4)          --             --             --             (216)
Other transactions ...................          --             --             --             --             --
Purchase of treasury stock ...........          --          (70,138)          --             --          (70,138)
Issue and retirement of treasury stock          --           20,689           --             --             --
Effect of compensation plans .........          --            2,189          7,241           --           14,676
Other comprehensive income ...........          --             --             --            5,650          5,650
                                           -----------------------------------------------------------------------
Balance at December 31, 1998 .........   $   165,269    $    (9,819)   $    (2,368)   $    12,702    $   619,925
                                           =======================================================================
Net income ...........................        69,338           --             --             --           69,338
Cash dividends common ................       (45,257)          --             --             --          (45,257)
3% stock dividend ....................       (36,759)        33,586           --             --             --
Shares issued for:
   Stock options exercised ...........          --           24,986           --             --           18,168
   Warrants exercised ................          --              236           --             --               54
   Dividend reinvestment and stock
   reinvestment plan .................          --             --             --             --              297
   Preferred stock conversion ........          --              528           --             --             --
Cash in lieu of fractional shares ....          --             --             --             --              (22)
Other transactions ...................          --             --             --             --             --
Purchase of  treasury stock ..........          --         (121,367)          --             --         (121,367)
LFB acquisition ......................          --           26,563           --             --           26,563
Issue and retirement of treasury stock          --           34,879           --             --             --
Effect of compensation plans .........          --            1,970         (1,181)          --            5,074
Other comprehensive loss .............          --             --             --          (53,607)       (53,607)
                                           -----------------------------------------------------------------------
Balance at December 31, 1999 .........   $   152,591    $    (8,438)   $    (3,549)   $   (40,905)   $   519,166
                                           =======================================================================
Net income ...........................        49,821           --             --             --           49,821
Cash dividends common ................       (49,319)          --             --             --          (49,319)
10% stock dividend ...................       (96,334)        95,563           --             --             --
Shares issued for:
   Stock options exercised ...........          --            8,426           --             --            4,090
Cash in lieu of fractional shares ....          (172)          --             --             --             (172)
Other transactions ...................          --              (35)          --             --             --
Purchase of  treasury stock ..........          --         (193,271)          --             --         (193,271)
Effect of compensation plans .........          --            5,462         (2,210)          --            2,380
Other comprehensive income ...........          --             --             --           35,778         35,778
                                           -----------------------------------------------------------------------
Balance at December 31, 2000 .........   $    56,759    $   (92,293)   $    (5,759)   $    (5,127)   $   368,473
                                           =======================================================================

</TABLE>

See Notes to Consolidated Financial Statements.


<PAGE>

                                          Hudson United Bancorp and Subsidiaries
                                          Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>

For the Years Ended December 31, 2000, 1999 and 1998 (in thousands)                2000           1999             1998
------------------------------------------------------------------------- ---------------- --------------- ----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                             <C>             <C>              <C>
Net income                                                                      $49,821         $ 69,338         $ 26,751
Adjustments  to  reconcile   net  income  to  net  cash  provided
 by  operating  activities:
     Provision for possible loan losses                                          24,000          52,200           35,607
     Provision for depreciation and amortization                                 33,465          28,131           23,887
     Amortization of security premiums, net                                         423           1,776            2,344
     Securities (gains) losses                                                   58,639           1,164           (4,474)
     (Gain) loss on sale of premises and equipment                                 (591)           (892)           1,964
     Gain on sale of loans                                                       (1,795)         (5,065)          (3,029)
     Loss on assets held for sale                                                     -               -           23,303
     Market adjustment on ESOP                                                        -               -              728
     MRP earned                                                                       -               -            2,809
     IBSF fiscal year adjustment                                                      -               -            1,539
     Mortgage loans originated for sale                                        (22,487)       (148,616)        (203,172)
     Mortgage loan sales                                                         31,560         154,143          192,899
     Deferred income tax provision                                                9,997             554            1,750
     Net (increase) decrease in assets held for sale                                  -          14,147         (14,147)
     Decrease (increase) in other assets                                         45,335          15,521         (14,036)
     (Decrease) increase in other liabilities                                  (42,484)        (21,201)          179,872
                                                                          ---------------- --------------- ----------------
                               NET CASH PROVIDED BY OPERATING ACTIVITIES        185,883         161,200          254,595
                                                                          ---------------- --------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of investment securities available for sale               2,047,169         332,512          479,997
Proceeds from repayments and maturities of investment securities:
   Available for sale                                                           332,343         834,451          996,197
   Held to maturity                                                              81,409         155,126          532,366
Purchases of investment securities:
   Available for sale                                                             (977)     (1,428,159)      (1,861,926)
   Held to maturity                                                            (39,628)        (82,085)        (684,718)
Net cash (used) acquired through acquisitions                                         -       (262,763)          231,417
Decrease (increase) in loans other than purchases and sales                     300,521       (158,391)        (108,014)
Loans purchased                                                                       -       (114,273)                -
Loans sold                                                                       38,434         100,449          129,842
Proceeds from sales of premises and equipment                                    11,120           7,939              124
Purchases of premises and equipment                                            (23,541)        (31,483)         (14,646)
(Increase) decrease in other real estate owned                                    (370)             876           11,047
                                                                          ---------------- --------------- ----------------
                     NET CASH PROVIDED BY (USED) IN INVESTING ACTIVITIES      2,746,480       (645,801)        (288,314)
                                                                          ---------------- --------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net decrease in demand deposits, NOW and savings accounts                     (220,517)       (229,760)         (83,664)
Net decrease in certificates of deposit                                       (421,560)       (595,770)        (262,524)
Net (decrease) increase in borrowings                                       (2,024,805)       1,354,442           69,240
Reduction of ESOP loan                                                                -           2,073              853
Net repayment of debt                                                           (9,000)               -                -
Net proceeds from issued of debt                                                      -               -           45,987
Net proceeds from the issuance of stock                                           4,090          18,519           13,560
Termination of ESOP Plan                                                              -               -           10,220
Cash dividends paid                                                            (49,319)         (45,257)        (39,706)
Purchase of stock for pension plan                                                    -               -            (341)
Acquisition of treasury stock                                                 (193,271)       (121,367)         (70,138)
                                                                          ---------------- --------------- ----------------
                    NET CASH  (USED IN) PROVIDED BY FINANCING ACTIVITIES    (2,914,382)         382,880        (316,513)
                                                                          ---------------- --------------- ----------------
                        INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS         17,981       (101,721)        (350,232)

                          CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR        277,558         379,279          729,511
                                                                          ---------------- --------------- ----------------
                                CASH AND CASH EQUIVALENTS AT END OF YEAR      $ 295,539       $ 277,558        $ 379,279
                                                                          ================ =============== ================

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for-
    Interest                                                                  $ 299,562       $ 297,116        $ 292,807
    Income taxes                                                                 20,278          23,167           27,684
Liabilities assumed in purchase business combinations and branch
   acquisitions                                                                       -         572,981          342,720
                                                                          ================ =============== ================
</TABLE>

See Notes to  Consolidated Financial Statements.
<PAGE>

         Notes To Consolidated Financial Statements


(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Hudson United Bancorp (the Company) provides a full range of banking services to
individual and corporate customers through its banking subsidiary, Hudson United
Bank (Hudson United), with branch locations in New Jersey, Connecticut, New York
and  Pennsylvania.  The Company is subject to the regulations of certain Federal
and  State  banking  agencies  and  undergoes  periodic  examinations  by  those
agencies.

Basis of Presentation and Consolidation

The  consolidated  financial  statements  include the accounts of Hudson  United
Bancorp  and its  subsidiaries,  all of which are wholly  owned.  The  financial
statements of  institutions  acquired by the Company in  acquisitions  that have
been accounted for by the  pooling-of-interests  method are included  herein for
all periods  presented.

In preparing the consolidated  financial  statements,  management is required to
make estimates and  assumptions  that affect the reported  amounts of assets and
liabilities,  and  disclosure of contingent  liabilities,  as of the date of the
financial  statements  and revenues and expenses for the period.  Actual results
could differ significantly from those estimates.

All  significant  intercompany  accounts  and  transactions  are  eliminated  in
consolidation.

Securities

The Company  classifies its  securities as held to maturity,  available for sale
and held for trading purposes.  Securities for which the Company has the ability
and intent to hold until  maturity are  classified  as held to  maturity.  These
securities  are  carried at cost  adjusted  for  amortization  of  premiums  and
accretion  of  discounts  on a  straight-line  basis,  which  is not  materially
different  from the  interest  method.  Management  reviews  its  intent to hold
securities to maturity as a result of changes in circumstances,  including major
business combinations.

Securities  which  are held for  indefinite  periods  of time  which  management
intends to use as part of its asset/liability  management strategy,  or that may
be sold in response to changes in interest  rates,  changes in prepayment  risk,
increases in capital  requirements or other similar  factors,  are classified as
available for sale and are carried at fair value.  Differences between available
for sale securities' amortized cost and fair value are charged/credited directly
to  stockholders'  equity,  net of income taxes.  The cost of securities sold is
determined  on a specific  identification  basis.  The Company had no securities
held for trading purposes at December 31, 2000 and 1999.

Security purchases and sales are recorded on the trade date.

Mortgage Loans and Assets Held for Sale

Mortgages held for sale are recorded at cost, which approximates  market.  These
mortgages  are  typically  sold  within  three  months  of  origination  without
recourse.  Assets  held for sale are  carried at lower of cost or market.

Loans

Loans are recorded at their principal  amounts  outstanding.  Interest income on
loans not made on a  discounted  basis is credited to income  based on principal
amounts  outstanding at applicable  interest rates.  Interest income on consumer
credit loans is recorded primarily using the simple interest method.

Recognition of interest on the accrual  method is  discontinued  when,  based on
contractual  delinquency,  timely payment is not expected.  A nonaccrual loan is
not returned to an accrual  status until interest is received on a current basis
and other  factors  indicate  that  collection  of principal  and interest is no
longer  doubtful.

The net amount of all loan origination  fees,  direct loan origination costs and
loan  commitment fees are deferred and recognized over the estimated life of the
related loans as an adjustment of yield.

<PAGE>

Allowance For Possible Loan Losses

The allowance is maintained at a level believed adequate by management to absorb
potential  losses  in the  loan  portfolio.  Management's  determination  of the
adequacy of the allowance is based on an evaluation of the portfolio,  past loan
loss experience,  current economic conditions, volume, growth and composition of
the loan  portfolio and other  relevant  factors.  The allowance is increased by
provisions charged to expense and reduced by net charge-offs.

In accordance  with SFAS No. 114,  "Accounting  by Creditors for Impairment of a
Loan" and SFAS No. 118,"  Accounting  by Creditors  for  Impairment  of a Loan -
Income  Recognition and  Disclosure," a loan is deemed  impaired when,  based on
current  information and events,  it is probable that the Company will be unable
to collect  all  amounts  due  according  to the  contractual  terms of the loan
agreement. These accounting standards require that the measurement of impairment
of a loan be based on one of the following: the present value of expected future
cash flows,  net of estimated costs to sell,  discounted at the loan's effective
interest  rate;  a  loan's  observable  market  price;  or  the  fair  value  of
collateral,  if the loan is collateral dependent. If the measure of the impaired
loan is less than the  recorded  investment  in the loan,  the  Company  will be
required to  establish  a  valuation  allowance,  or adjust  existing  valuation
allowances,  with a corresponding charge or credit to the provision for possible
loan losses.  The  valuation  allowance,  if any, is  maintained  as part of the
allowance  for  possible  loan  losses.  The  Company's  process of  identifying
impaired  loans is  conducted  as part of its  review  for the  adequacy  of the
allowance for possible loan losses.

While  management uses available  information to recognize  potential  losses on
loans,  future  additions to the allowance may be necessary  based on changes in
economic  conditions,  particularly in the Company's  market areas. In addition,
various regulatory agencies, as an integral part of their examination processes,
periodically  review the allowance for possible loan losses of subsidiary banks.
Such agencies may require additions to the allowance based on their judgments of
information  available to them at the time of their  examinations.

Premises and Equipment

Land,  buildings  and  furniture,  fixtures and  equipment  are carried at cost.
Depreciation  on  substantially  all  buildings  and  furniture,   fixtures  and
equipment is provided using the  straight-line  method based on estimated useful
lives ranging from 3-25 years.  Maintenance and repairs are expensed as incurred
and additions and improvements are capitalized.

Other Real Estate Owned

Other real estate owned (OREO)  includes loan  collateral that has been formally
repossessed.  These assets are  transferred to OREO and recorded at the lower of
carrying cost or fair value of the properties. Subsequent provisions that result
from  ongoing  periodic  evaluations  of these OREO  properties  are  charged to
expense in the period in which they are identified. OREO is carried at the lower
of cost or fair value,  less estimated costs to sell.  Carrying  costs,  such as
maintenance and property taxes, are charged to expense as incurred.

Intangibles

Intangible  assets  resulting  from  acquisitions  under the purchase  method of
accounting consist of goodwill and core deposit  intangibles.  Goodwill is being
amortized on a straight-line  basis over periods ranging from five to ten years.
Core deposit intangibles are being amortized, on a straight-line basis, over the
estimated  average  remaining  lives of such intangible  assets  (primarily five
years).

Federal Income Taxes

The Company uses the liability  method of accounting  for income taxes.  Certain
income and  expense  items are  recorded  differently  for  financial  reporting
purposes than for Federal  income tax purposes and provisions for deferred taxes
are made in recognition of these temporary differences. A deferred tax valuation
allowance is  established if it is more likely than not that all or a portion of
the Company's  deferred tax asset will not be realized.  Changes in the deferred
tax valuation  allowance are reported  through  charges or credits to the income
tax provision.

The Company and its subsidiaries file a consolidated  Federal income tax return.
Under tax sharing  agreements,  each subsidiary  provides for and settles income
taxes with the Company as if they would have filed on a separate return basis.

<PAGE>

Treasury Stock

The Company  determines the cost of treasury  shares under the  weighted-average
cost  method.

Stock-Based  Compensation

SFAS No. 123  established  financial  accounting  and  reporting  standards  for
stock-based  employee  compensation plans and allows companies to choose either:
1) a fair value  method of valuing  stock-based  compensation  plans  which will
affect reported net income; or 2) to continue following the existing  accounting
rules for stock option  accounting  but disclose what the impact would have been
had the new standard been adopted.  The Company elected the disclosure option of
this standard. See Note 15.

Cash Equivalents

Cash equivalents include amounts due from banks and Federal
funds sold.

Reclassifications

Certain  reclassifications  have been made to the 1999 and 1998 amounts in order
to conform to 2000's  presentation.

Per Share Amounts

Basic  earnings  per common  share is  computed by  dividing  net  income,  less
dividends on any convertible  preferred stock, by the weighted average number of
common  shares  outstanding  during  the  year.  Diluted  earnings  per share is
computed by dividing net income by the weighted  average number of common shares
plus the number of shares  issuable upon  conversion of any preferred  stock and
the incremental number of shares issuable from the exercise of stock options and
warrants  calculated using the treasury stock method. All per share amounts have
been  retroactively  adjusted  for all stock  dividends.  All prior  annual  and
interim periods presented have been restated in the new format.

Reporting Comprehensive Income

SFAS No. 130 which  established  standards  for the  reporting of  comprehensive
income and its components in a full set of general-purpose financial statements.
The  Company  has  elected  to  display  Consolidated  Statements  of Income and
Consolidated  Statements of  Comprehensive  Income  separately for the disclosed
periods.

Disclosures  about Segments of an Enterprise  and Related  Information

SFAS No. 131 requires that a public  business  enterprise  report  financial and
descriptive  information about its reportable operating segments.  Hudson United
Bancorp, the bank's holding company, is not a reportable segment because it does
not exceed any of the quantitative thresholds.

Employers' Disclosures about Pensions and Other Postretirement Benefits

SFAS No. 132  standardized  the  disclosure  requirements  for pension and other
postretirement  benefits  to the  extent  practicable  and  requires  additional
information  on  changes  in the  benefit  obligations  and fair  values of plan
assets.

Recent Accounting Standards

The Financial Accounting Standards Board (FASB) issued SFAS No. 133, "Accounting
for Derivative  Instruments and Hedging Activities,"  establishing standards for
the  accounting  and  reporting of  derivatives.  The statement is effective for
fiscal years  beginning after June 15, 2000;  earlier  application is permitted.
The Company has elected not to adopt this statement prior to its effective date.
The adoption of the statement  will not have a material  effect on its financial
position or results of operations.

In September of 2000,  the FASB issued SFAS No. 140,  "Accounting  for Transfers
and  Servicing  of  Financial  Assets and  Extinguishments  of  Liabilities  - a
replacement  of FASB  Statement No. 125".  SFAS 140 amends the  recognition  and
reclassification   of  collateral  and  disclosures  related  to  securitization
transactions and collateral. These changes are effective for fiscal years ending
after  December 15, 2000.  SFAS 140 also amends the accounting for transfers and
servicing of financial assets and extinguishments of liabilities occurring after
March 31, 2001. The SFAS 140 provisions  effective  subsequent to March 31, 2001
are not  anticipated  to have a material  impact on the  Company's  consolidated
financial statements.

Securities  purchased  and sold under  agreements to resell and  repurchase  are
accounted  for as  collateralized  financing  transactions  and are  carried  at
contract value plus accrued interest.  It is the policy of the Company to obtain
possession  of  collateral  with market value equal to or in excess of principal
amount  loaned under resale  agreements.  Collateral  is valued  daily,  and the
Company  may  require  counterparties  to  deposit  additional  collateral  when
appropriate.  As of December 31, 2000, the Company had pledged  securities  with
market values of $ 206,594 related to repurchase agreements.

<PAGE>

(2) BUSINESS COMBINATIONS

The  following   business   combinations  have  been  accounted  for  using  the
pooling-of-interests  method  of  accounting.

The Company did not make any  acquisitions in 2000 that were accounted for under
the pooling-of-interests method.

On November 30, 1999, the Company acquired all the outstanding shares of
JeffBanks, Inc. (Jeff) based in Philadelphia,  Pennsylvania.  Each share of Jeff
common stock was converted into .9785 shares of the Company's common stock for a
total  of  11,949,376  shares.  At  the  time  of  the  acquisition,   Jeff  had
approximately $1.8 billion in assets.

On December 1, 1999, the Company acquired all the outstanding shares of Southern
Jersey  Bancorp (SJB) based in Bridgeton,  New Jersey.  Each share of SJB common
stock was converted into 1.2978 shares of the Company's common stock for a total
of 1,614,146 shares. At the time of the acquisition,  SJB had approximately $425
million in assets.

On January 8, 1998, the Company acquired all the outstanding  shares of The Bank
of Southington (BOS) bases in Southington, Connecticut. Each share of BOS common
stock  outstanding was converted into .637 shares of the Company's  common stock
for a  total  of  755,133  shares.  At the  time  of the  acquisition,  BOS  had
approximately $135 million in assets.

On  April  24,  1998,  the  Company  acquired  all  the  outstanding  shares  of
Poughkeepsie  Financial Corp. (PFC) based in Poughkeepsie,  New York. Each share
of PFC's  common  stock  outstanding  was  converted  into  .309  shares  of the
Company's  common  stock  for a total of  3,586,360  shares.  At the time of the
acquisition, PFC had approximately $830 million in assets.

On May 29, 1998, the Company acquired all the outstanding  shares of MSB Bancorp
(MSB) based in Goshen,  New York.  Each share of MSB's common stock  outstanding
was  converted  into 1.052 shares of the  Company's  common stock for a total of
2,933,710  shares.  At the time of the  acquisition MSB had  approximately  $745
million in assets.

On August 14,  1998,  the Company  acquired  all the  outstanding  shares of IBS
Financial (IBS) based in Cherry Hill, New Jersey. Each share of IBS common stock
outstanding  was converted into .550 shares of the Company's  common stock for a
total of 5,946,880 shares. At the time of the acquisition, IBS had approximately
$743 million in assets.

On August 14, 1998, the Company acquired all the outstanding shares of Community
Financial Holding  Corporation (CFHC) based in Westmont,  New Jersey. Each share
of CFHC common  stock was  converted  into .716 shares of the  Company's  common
stock for a total of 766,144 shares.  At the time of the  acquisition,  CFHC had
approximately $150 million in assets.

On August 21,  1998,  the Company  acquired all the  outstanding  shares of Dime
Financial Corporation (DFC) based in Wallingford, Connecticut. Each share of DFC
common stock was converted into 1.0815 shares of the Company's  common stock for
a  total  of  5,221,614  shares.  At  the  time  of  the  acquisition,  DFC  had
approximately $961 million in assets.

Under the pooling-of-interests  method, the accompanying  consolidated financial
statements  include the accounts of these acquired  institutions for all periods
presented.

<PAGE>

Separate  results of the combining pooled entities for the period prior to their
acquisition are as follows-

                                  1998
                            -----------
    Net interest income-
    The Company, as
       previously reported  $ 254,194

           JEFF                59,773
           SJB                 14,883
                            -----------
                            $ 328,850
                            ===========

    Net income-
    The Company, as
       previously reported  $  23,151

           JEFF                11,432
           SJB                 (7,832)
                            -----------
                              $26,751
                            ===========

Results  of  operations  have  been  included  for  periods  subsequent  to  the
acquisition  date for business  combinations  that have been accounted for using
the purchase  method.

On March 26,  1999,  the  Company  completed  its  purchase  of $151  million in
deposits  and a  retail  branch  office  in  Hartford,  Connecticut  from  First
International Bank.

On May 20, 1999,  the Company  acquired  Little Falls  Bancorp,  Inc. (LFB) in a
combination  stock  and cash  purchase  price of $55.0  million  which was $21.8
million  in  excess  of  the  fair  value  of  net  assets  acquired.   LFB  had
approximately $341 million in assets at the time of acquisition.

On October 22, 1999, the Company acquired the assets of Lyon Credit Corporation,
a $350 million asset finance company and subsidiary of Credit Lyonnais Americas.

On December 1, 1999, the Company completed its purchase of loans  (approximately
$148  million)  and other  financial  assets,  as well as  assumed  the  deposit
liabilities  (approximately  $112  million) of Advest Bank and Trust.  Pro forma
results of  operations  have not been  disclosed  herein  because  the  Hartford
branch, LFB, Lyon Credit Corporation, and Advest combinations were not deemed to
be significant.

Merger related and restructuring costs were $15.0 million and other nonrecurring
operating  charges were $7.0 million in 2000.  Merger related and  restructuring
costs include the  approximate  amounts of $4.8 million for the  recognition  of
severance  benefits  and  consulting   agreements,   $2  million  for  stay  pay
obligations to current  employees,  $2 million for payments and reserves for the
settlements of pre-existing litigation at acquired institutions and $4.2 million
for the  recognition of  obligations  for which the bank will not receive future
benefits.

The  balance  of  the  expenses  are  comprised  of  building   writedowns   and
miscellaneous  expenses  including  search  fees,  advisor  expenses,  and other
miscellaneous  items.  The nonrecurring  operating  charges include $3.7 million
related to the change to a new  outsource  service  provider,  $2.0  million for
planned  branch  consolidations,   and  $1.3  million  for  the  recognition  of
obligations for which the Bank will not receive future benefits.

Merger related and  restructuring  costs were $32.0 million in 1999. These costs
include  $12.6  million  for  payout  and  accruals  for  employment  contracts,
severance and other  employee  related costs,  $3.9 million for branch  closing,
fixed asset  disposition  and other  occupancy  related costs,  $5.6 million for
technical  support for system conversion and early termination of system related
contracts,  $1.8  million for legal and  accounting  professional  services  and
approval costs, $4.1 million for financial advisor costs, $2.0 million provision
for other real estate owned and $2.0 million for other merger related expenses.

Merger  related and  restructuring  costs were $69.1  million in 1998.  The 1998
costs include $29.5  million for payout and accruals for  employment  contracts,
severance and other employee  related costs,  $13.2 million for branch closings,
fixed asset  disposition,  and other occupancy related costs,  $13.6 million for
professional services, and $12.8 million for other merger related expenses.


<PAGE>


The table that  follows  presents  the  activity in 2000 and 1999 related to the
restructuring  charge  reserves  established in 2000, 1999 and 1998. The Company
believes that the remaining  restructuring  reserves as of December 31, 2000 are
adequate and that no revisions of estimates are necessary at this time.

<TABLE>
<CAPTION>

                                           1999                                            2000
                      --------------------------------------------------------------------------------------------------------
                        12/31/98   Restructuring  Cash    Noncash   12/31/99 Restructuring Cash      Noncash     Remaining
($ Millions)             Balance      Charge    Activity  Activity  Balance    Charge    Activity    Activity     Reserve
                                                                                                                  12/31/00
                      --------------------------------------------------------------------------------------------------------
<S>                       <C>         <C>         <C>       <C>      <C>        <C>       <C>         <C>         <C>
2000 Reserves
-----------------------
Severance and related
    costs                 $ 0.0       $ 0.0       $ 0.0     $ 0.0    $ 0.0      $ 6.8      $ 6.3      $ 0.0        $ 0.5
Costs of consolidating
    operations              0.0         0.0         0.0       0.0      0.0       15.2        9.3        0.0          5.9
                      --------------------------------------------------------------------------------------------------------
Total                     $ 0.0         0.0       $ 0.0     $ 0.0     $0.0      $ 22.0     $15.6      $ 0.0          6.4
                      --------------------------------------------------------------------------------------------------------
1999 Reserves
-----------------------
Severance and related
   costs                  $ 0.0       $ 12.6      $ 0.4     $ 0.0    $ 12.2     $ 0.0     $ 12.2      $ 0.0        $ 0.0
Costs of consolidating
   operations               0.0         19.4        7.7       0.0      11.7       0.0       11.7        0.0          0.0
                      --------------------------------------------------------------------------------------------------------
        Total             $ 0.0       $ 32.0      $ 8.1     $ 0.0    $ 23.9     $ 0.0     $ 23.9      $ 0.0        $ 0.0
                      ========================================================================================================
1998 Reserves
-----------------------
Severance and related
   costs                 $ 29.4       $ 0.0      $ 26.2    $ (3.1)   $ 0.1      $ 0.0      $ 0.1      $ 0.0        $ 0.0
Costs of consolidating
   operations              39.7         0.0        34.5      (3.4)     1.8        0.0        1.8        0.0          0.0
                      --------------------------------------------------------------------------------------------------------
        Total           $  69.1       $ 0.0      $ 60.7    $ (6.5)   $ 1.9      $ 0.0      $ 1.9      $ 0.0        $ 0.0
                      ========================================================================================================

</TABLE>

$6.5 million of the 1998 charges were reversed in the second and third  quarters
of 1999, and other  unanticipated  restructuring costs of approximately the same
amount were recognized relating to the disposition of United Financial Services,
Inc. and the Bank's charter consolidations and Company name change.


<PAGE>


(3) CASH AND DUE FROM BANKS

The Company's subsidiary bank is required to maintain an average reserve balance
as established by the Federal  Reserve Board.  The amount of the reserve balance
for the reserve  computation  period,  which  included  December 31,  2000,  was
approximately $24.1 million.

(4) INVESTMENT SECURITIES

The  amortized  cost and estimated  market value of Investment  Securities as of
December 31, are summarized as follows (in thousands):

                                           2000
                       ---------------------------------------------
                                    Gross Unrealized    Estimated
                        Amortized  --------------------   Market
                          Cost      Gains    (Losses)     Value
--------------------------------------------------------------------
Available for Sale
------------------
U.S. Government         $ 31,839   $   37   $   (48)     $ 31,828
U.S. Government
   agencies                3,500        -          -        3,500
Mortgage-backed
   securities            241,356      320    (3,642)      238,034
States and political
   subdivisions            1,516       41          -        1,557
Other debt securities      3,754        -      (193)        3,561
Federal Home Loan
     Bank stock          105,924        -          -      105,924
Other equity
   securities             43,092      279    (5,048)       38,323
                       ---------------------------------------------
                        $430,981   $  677   $(8,931)     $422,727
                       =============================================
Held to Maturity
----------------
U. S. Government        $ 24,199   $    -   $   (69)     $ 24,130
U. S. Government
   agencies               38,229      488       (45)       38,672
Mortgage-backed
   securities            406,518      543    (7,845)      399,216
States and political
   subdivisions           51,246      187       (41)       51,392
Other debt securities          -        -          -            -
                       ---------------------------------------------
                        $520,192   $1,218   $(8,000)     $513,410
                       =============================================

<PAGE>

                                           1999
                       ---------------------------------------------
                                    Gross Unrealized    Estimated
                        Amortized  --------------------   Market
                          Cost      Gains    (Losses)     Value
--------------------------------------------------------------------
Available for Sale
------------------
U.S. Government       $   87,332   $  196  $   (303)   $   87,225
U.S. Government
   agencies              350,040       85    (7,595)      342,530
Mortgage-backed
   securities          2,167,606    1,431   (48,880)    2,120,157
States and political
   subdivisions            3,118       12       (10)        3,120
Other debt securities     47,128        4    (1,813)       45,319
Federal Home Loan
    Bank stock           125,405        -          -      125,405
Other equity
   securities             88,421    1,932    (9,807)       80,546
                      ----------------------------------------------
                      $2,869,050   $3,660  $(68,408)   $2,804,302
                      ==============================================
Held to Maturity
----------------
U. S. Government      $   24,195   $    -  $   (253)   $   23,942
U. S. Government
   agencies               45,960      201      (636)       45,525
Mortgage-backed
   securities            467,540      220   (19,967)      447,793
States and political
   subdivisions           24,500       26      (575)       23,951
Other debt securities         29        -          -           29
                      ----------------------------------------------
                      $  562,224   $  447  $(21,431)   $  541,240
                      ==============================================

<PAGE>

The amortized cost and estimated market value of debt securities at December 31,
2000, by contractual maturity,  are shown below. Expected maturities will differ
from  contractual  maturities  because  borrowers  may have the right to call or
prepay obligations with or without call or prepayment penalties.

                                        Amortized    Estimated
(in thousands)                             Cost     Market Value
-----------------------------------------------------------------
Available for Sale
------------------
Due in one year or less                 $   32,376    $  32,384
Due after one year through five years        5,061        5,082
Due after five years through ten years         172          173
Due after ten years                          3,000        2,807
                                       --------------------------
                                        $   40,609    $  40,446
Mortgage-backed securities                 241,356      238,034
Equity securities                          149,016      144,247
                                       --------------------------
                                        $  430,981    $ 422,727
                                       ==========================
Held to Maturity
----------------
Due in one year or less                 $   65,330    $  65,379
Due after one year through five years       34,109       34,448
Due after five years through ten years      13,191       13,320
Due after ten years                          1,044        1,047
                                       --------------------------
                                        $  113,674    $ 114,194
Mortgage-backed securities                 406,518      399,216
                                       --------------------------
                                        $  520,192    $ 513,410
                                       ==========================

Sales of securities  for the years ended  December 31, are summarized as follows
(in thousands):

                                   2000        1999        1998
------------------------------------------------------------------
Proceeds from sales           $2,047,169  $ 332,512   $ 479,997
Gross gains from sales             3,482      4,156       5,342
Gross losses from sales          (62,121)    (5,320)      (868)

Securities  with a book value of $336.9 million and $1.6 billion at December 31,
2000 and 1999,  respectively,  were pledged to secure public  funds,  repurchase
agreements and for other purposes as required by law.


<PAGE>


(5) LOANS AND THE ALLOWANCE FOR POSSIBLE LOAN LOSSES

The Company's loan portfolio is diversified with no industry  comprising greater
than 10% of the total loans outstanding. Real estate loans are primarily made in
the local lending area of the subsidiary  banks. The allowance for possible loan
losses is based on  estimates,  and  ultimate  losses may vary from the  current
estimates.  These estimates are reviewed periodically and, as adjustments become
necessary,  they are reflected in operations in the periods in which they become
known.

A summary of the  activity  in the  allowance  for  possible  loan  losses is as
follows (in thousands):

                                   2000       1999      1998
---------------------------------------------------------------
Balance at January 1           $ 98,749   $ 76,043   $85,230
Additions (deductions):
     Provision charged to        24,000     52,200    35,607
   expense
   Allowance acquired through
     mergers or acquisitions          -      8,634     1,950
   Recoveries on loans
     previously charged off       7,837      9,929     6,101
   Loans charged off (1)        (35,406)   (48,057)  (52,845)
                               --------------------------------
Balance at December 31         $ 95,180   $ 98,749   $76,043
                               ================================

1) Includes $9,521 writedown on assets held for sale in 1998.

(6) NONPERFORMING ASSETS

The  following  table  presents  information  related  to  loans  which  are  on
nonaccrual,  contractually  past  due  ninety  days or more  as to  interest  or
principal payments and loans which have been restructured to provide a reduction
or  deferral  of  interest or  principal  for  reasons  related to the  debtors'
financial difficulties.

(in thousands)
                                         December 31,
                           ------------------------------------
                                2000        1999        1998
---------------------------------------------------------------
Nonaccrual loans            $ 57,878    $ 46,352    $ 46,178
Renegotiated loans                 -       2,751       5,632
                           ------------------------------------
   Total nonperforming
   loans                    $ 57,878    $ 49,103    $ 51,810
                           ====================================
90 days or more past due
   and still accruing       $ 29,784    $ 23,239     $21,261
                           ====================================


                                          December 31,
                                   ----------------------------
                                     2000     1999      1998
                                   ----------------------------
Gross interest income which would
have been recorded under original
terms                               $4,505   $ 3,217  $ 8,012
                                   ============================
Gross interest income recorded
   during the year                  $  564     $ 407    $ 685
                                   ============================

At December 31, 2000,  1999 and 1998 impaired  loans,  comprised  principally of
nonaccruing  loans,  totaled  $58.5  million,  $49.1  million,  and 38.4 million
respectively.  The allowance  for possible loan losses  related to such impaired
loans was $9.9 million, $8.3 million, and 9.9 million at December 31, 2000, 1999
and 1998, respectively. The average balance of impaired loans for 2000, 1999 and
1998 was $52.1 million, $34.4 million and $41.3 million, respectively.

<PAGE>

(7) LOANS TO RELATED PARTIES

In the ordinary  course of business,  the subsidiary bank has extended credit to
various  directors,  officers  and  their  associates.  In  connection  with its
restricted  stock plan and in light of the fact that no bonuses were awarded for
the year, but officers would have a tax liability  connected with the restricted
stock which had vested during 2000, the Compensation  Committee  recommended and
the Board of  Directors  in  October,  2000  approved a program  to lend  senior
officers of the  Corporation  up to 70 percent of the value of restricted  stock
which vested  during 2000.  Pursuant to the  program,  on December 1, 2000,  the
Corporation loaned $295,000 to one senior officer, who elected to participate in
the program - Susan Staudmyer,  Executive Vice President. The loan is secured by
shares, bears interest at HUB's prime rate and is payable on demand. The current
outstanding balance as of February 28, 2001 is $295,000.

The aggregate loans  outstanding to related parties are summarized below for the
year ended December 31, 2000 (in thousands):

Balance at January 1                $ 26,028
New loans issued                       4,966
Repayment of loans                   (1,814)
Loans to former directors           (12,515)
                                 --------------
Balance at December 31              $ 16,665
                                 ==============

Charles F.X.  Poggi who is the  Chairman of the  Compensation  Committee  and is
involved in setting  executive  compensation  is  President  of Poggi  Press,  a
general  printing  company.  During 2000 Poggi Press was paid $416  thousand for
printing  work for Hudson  United  Bancorp.  Management  believes  the terms and
conditions  of the  transactions  with  Poggi  Press to be  equivalent  to terms
available from an independent third party.

W. Peter McBride who is on the Compensation Committee and is involved in setting
executive  compensation,  is  affiliated  with  McBride  Corporate  Real Estate.
McBride  Corporate Real Estate was retained to assist in the sale and/or leasing
of various Hudson United Bancorp  properties and in doing so earned  commissions
of approximately $240 thousand.  Management believes the terms and conditions of
the  transactions  with McBride  Corporate Real Estate to be equivalent to terms
available from an independent third party.

(8) PREMISES AND EQUIPMENT

The  following  is a summary  of  premises  and  equipment  at  December  31 (in
thousands):

                                           2000        1999
--------------------------------------------------------------
Land                                   $ 18,339   $  19,634
Premises                                 98,068     108,767
Furniture, fixtures and equipment       125,424     111,724
                                       -----------------------
                                       $241,831   $ 240,125
Less- Accumulated depreciation         (117,010)   (110,405)
                                       -----------------------
                                       $124,821   $ 129,720
                                       =======================

Depreciation and amortization  expense for premises and equipment for 2000, 1999
and  1998  amounted  to  $15.8   million,   $12.5  million  and  $11.6  million,
respectively.

<PAGE>

(9) INCOME TAXES

The  components of the  provision  (benefit) for income taxes for the year ended
December 31 are as follows (in thousands):

                                2000       1999       1998
-------------------------------------------------------------
Federal-
   Current                  $ 16,919   $ 32,179   $ 15,614
   Deferred                    9,997        554      1,750
State                             53      6,206      (380)
                            ---------------------------------
   Total provision for
   income taxes             $ 26,969   $ 38,939    $16,984
                            =================================


A  reconciliation  of the  provision  for income  taxes,  as reported,  with the
Federal  income tax at the statutory  rate for the year ended  December 31 is as
follows (in thousands):

                                  2000       1999        1998
-----------------------------------------------------------------
Tax at statutory rate          $ 26,876    $37,897     $15,281
     Increase (decrease)in
     taxes resulting from-
   Tax-exempt income             (2,625)    (3,075)     (4,180)
   Non-deductible merger
     related expenses             2,083      1,750       5,232
   State income taxes, net of
     Federal income tax
     benefit                         34      4,033        (247)
   Other, net                       601     (1,666)        898
                               ----------------------------------
   Provision for income taxes  $ 26,969   $ 38,939     $16,984
                               ==================================


<PAGE>


Significant components of deferred tax assets and liabilities are as follows (in
thousands):

                                               December 31,
                                              2000         1999
------------------------------------------------------------------
Deferred Tax Assets (Liabilities):
   Allowance for possible loan losses     $ 32,613     $ 30,504
   Federal and state tax operating loss
     carry forwards                          9,122        7,040
   Capital Losses                            6,513            -
   Director/Officer Compensation Plans       1,122        1,820
   Allowance for Losses on OREO              3,478        2,170
   Depreciation                             (4,412)      (3,877)
   Accumulated  Other Comprehensive
     Loss                                    2,762       22,662
   Acquisition Related Expenses              7,620        6,650
   Change in Value of Assets Held for
     Sale                                     (298)       3,332
   Other                                    (3,341)     (18,511)
                                         -------------------------
     Subtotal Net Deferred Tax Asset      $ 55,179     $ 51,790
   Less Valuation Allowance Against
     Capital Losses                         (2,900)           -
                                         -------------------------
   Net Deferred Tax Asset                 $ 52,279     $ 51,790
                                         =========================

Management  periodically  evaluates the  realizability of its deferred tax asset
and will adjust the level of the valuation allowance if it is deemed more likely
than  not that all or a  portion  of the  asset  is  realizable.  The  valuation
allowance  at  December  31, 2000 and 1999 was $2.9  million  and $0.0  million,
respectively.

The following represents the tax impact of unrealized  securities gains (losses)
(in thousands):
                                          For the year ended
                                          December 31, 2000
                               ------------ ----------- -----------
                                 Before                   Net of
                                  tax           Tax        Tax
                                 Amount       Benefit     Amount
                               ------------ ----------- -----------
Unrealized holding gains
  (losses) arising during
  period                          $ (3,293) $   1,020   $  (2,273)
Less: reclassification for
  gains  (losses) realized
  in Net Income                    (58,639)    20,588     (38,051)
                               ------------ ----------- -----------
Net change during period          $ 55,346  $ (19,568)  $  35,778
                               ============ =========== ===========

                                        For the year ended
                                        December 31, 1999
                               ------------ ----------- -----------
                               Before                   Net of
                                tax            Tax       Tax
                               Amount        Benefit    Amount
                               ------------ ----------- -----------
Unrealized holding gains
  (losses) arising during
  period                         $(86,200)    $ 31,836   $(54,364)
Less: reclassification for
  gains  (losses) realized
  in Net Income                    (1,164)         407       (757)
                               ------------ ----------- -----------
Net change during period         $(85,036)    $ 31,429   $(53,607)
                               ============ =========== ===========

<PAGE>

                                         For the year ended
                                         December 31, 1998
                               ------------ ----------- -----------
                               Before                   Net of
                                Tax            Tax       Tax
                               Amount        Expense    Amount
                               ------------ ----------- -----------
Unrealized holding gains
  arising during period
                                $ 13,224    $(4,716)     $ 8,508
Less: reclassification for
  gains realized in Net
  Income                           4,474     (1,616)       2,858
                               ------------ ----------- -----------
Net change during period        $  8,750    $(3,100)     $ 5,650
                               ============ =========== ===========

(10) BENEFIT PLANS AND POSTRETIREMENT BENEFITS

The Company and its acquired subsidiaries have certain pension plans which cover
eligible employees.  The plans provide for payments to qualified employees based
on salary and years of service.  The Company's funding policy for these plans is
to make the maximum annual contributions allowed by the applicable regulations.

Information  regarding  the  benefit  obligation  resulting  from the  actuarial
valuations prepared as of January 1, 2000 and 1999 is as follows (in thousands):

                                           2000          1999
----------------------------------------------------------------
Change in benefit obligation:
Benefit obligation at beginning of      $33,664      $ 40,059
   year
Service cost                              2,220         1,965
Interest cost                             2,483         2,447
Actuarial (gain)/loss                     1,779        (6,822)
Amendments                                (155)            60
Settlements                               (391)        (1,589)
Benefits paid                           (2,347)        (2,456)
                                       -----------  ------------
Benefit obligation at end of year       $37,253      $ 33,664
                                       ===========  ============

Change in plan assets:
Fair value of plan assets at
   beginning of year                    $43,285       $42,875
Actual return on plan assets              2,184         4,162
Employer contribution                       191           293
Settlements                               (391)       (1,589)
Benefits paid                           (2,347)       (2,456)
                                       -----------  ------------
Fair value of plan assets at end of
   year                                 $42,922      (43,285)
                                       ===========  ============

Prepaid pension cost consists of the
   following as of December 31:
Funded status                           $ 5,669      $  9,621
Unrecognized net transition obligation     (237)         (299)
Unrecognized net actuarial loss          (5,542)       (8,455)
Unrecognized prior service cost             578           654
                                       -----------  ------------
Prepaid pension cost                    $   468      $  1,521
                                       ===========  ============

Assumptions used by the Company in the accounting for its plans in 2000 and 1999
were:

<PAGE>

Weighted average assumptions as of
December 31                                  2000        1999
----------------------------------------------------------------
Discount rate                             7.5-8.0%    7.5-7.8%
Expected return on plan assets            8.0-9.0%    8.0-8.3%
Rate of compensation increase             0.0-5.5%    3.5-4.5%


Components of net periodic
benefit cost as of December           2000        1999       1998
31, (in thousands):
-------------------------------- ---------- ----------- ----------
Service cost                      $ 2,220     $ 2,023    $ 1,437
Interest cost                       2,482       2,388      2,364
Expected return on plan assets     (2,649)     (3,403)    (3,137)
Amendments                             -           60           -
Settlements                            30         473           -
Net Amortization and deferral        (986)         44       (118)
                                 ---------- ----------- ----------
Net periodic benefit cost         $ 1,097     $ 1,585    $   546
                                 ========== =========== ==========

The  Company  has  401(k)  savings  plans  covering  substantially  all  of  its
employees.  Under these Plans,  the Company matches  varying  percentages of the
employee's  contribution.  The  Company's  contributions  under these Plans were
approximately $1.8, $1.2, and $1.4 million in 2000, 1999, and 1998.

In addition,  the Company provides  supplemental  employee  retirement plans for
certain current and former management employees.

(11) DEPOSITS

The aggregate  amount of short-term jumbo  certificates of deposit,  each with a
minimum  denomination of $100,000,  was approximately  $703.5 million and $545.1
million at December 31, 2000 and 1999, respectively.

The scheduled  maturities of  certificates of deposit are as follows at December
31, 2000 (in thousands):

         3 months or less                 $  339,494
         Greater than 3 months to 1 year     246,435
         Greater than 1 year to 3 years    1,275,157
         Greater than 3 years                267,790
                                          -------------
                                          $2,128,876
                                          =============

<PAGE>

(12) BORROWINGS

The following is a summary of borrowings at December 31 (in thousands):

                                              2000        1999
                                        -------------------------
Federal Home Loan Bank advances           $173,847   $1,371,760
Securities sold under agreements to
   repurchase                              176,878     759,670
Federal funds purchased                          -     225,500
Treasury, Tax and Loan note                  2,567       4,149
Other borrowings                             5,569      22,587
                                        -------------------------
   Total borrowings                       $358,861   $2,383,666
                                        =========================

Maturity distribution of borrowings at December 31, 2000 (in thousands):

                 2001                     $344,503
                 2002                          104
                 2004                          230
                 2009                        8,969
                 2010 and after              5,055
                                         ------------
                              Total       $358,861
                                         ============

Information concerning securities sold
under agreements to repurchase and
FHLB advances is summarized as follows
(in thousands):                               2000         1999
------------------------------------------------------------------
Average daily balance during the year   $1,463,467   $1,588,007
Average interest rate during the year         6.01%        5.18%
Maximum month-end balance during the
   year                                 $2,463,527   $2,169,579


Investment  securities  underlying the repurchase  agreements at December 31 (in
thousands):
                                             2000         1999
---------------------------------------- ----------- -----------
Carrying value                             $209,947    $983,012
Estimated fair value                       $206,594    $986,507

<PAGE>

(13) SUBORDINATED DEBT

In January,  1994, the Company sold $25.0 million aggregate  principal amount of
subordinated debentures. The debentures,  which mature in 2004, bear interest at
7.75% per annum payable  semi-annually.

In March 1996, the Company issued $23.0 million  aggregate  principal  amount of
subordinated  debentures  which  mature in 2006 and bear  interest  at 8.75% per
annum  payable  semi-annually.  These notes are  redeemable at the option of the
Company,  in whole or in part,  at any time after April 1, 2001, at their stated
principal amount plus accrued interest, if any.

In September 1996, the Company sold $75.0 million aggregate  principal amount of
subordinated debentures. The debentures,  which mature in 2006, bear interest at
8.20% per annum payable semi-annually.

Proceeds  of the  above  issuances  were  used for  general  corporate  purposes
including  providing  Tier I  capital  to  Hudson  United.  The  debt  has  been
structured  to  comply  with the  Federal  Reserve  Bank  rules  regarding  debt
qualifying as Tier 2 capital at the Company.

(14) CAPITAL TRUST SECURITIES

On January 31, 1997, the Company  placed $50.0 million in aggregate  liquidation
amount of 8.98% Capital  Securities due February 2027, using HUBCO Capital Trust
I, a statutory  business  trust  formed under the laws of the State of Delaware.
The sole  asset of the  trust,  which is the  obligor  on the  Series B  Capital
Securities,  is $51.5  million  principal  amount of 8.98%  Junior  Subordinated
Debentures due 2027 of the Company.  The 8.98% Capital securities are redeemable
by the  company  on or after  February  1,  2007,  or  earlier  in the event the
deduction of related interest for federal income taxes is prohibited,  treatment
as Tier 1 capital is no longer permitted or certain other contingencies arise.

On February 5, 1997, the Company  placed $25.0 million in aggregate  liquidation
amount of 9.25% Capital  Securities due March 2027, using JBI Capital Trust I, a
statutory  business  trust formed  under the laws of the State of Delaware.  The
sole  asset  of  the  trust,  which  is the  obligor  on the  Series  B  Capital
Securities,  is $25.3  million  principal  amount of 9.25%  Junior  Subordinated
Debentures  due 2027 of the Company.  The 9.25% Trust  preferred  securities are
redeemable  by the Company on or after March 31,  2002,  or earlier in the event
the  deduction  of related  interest  for federal  income  taxes is  prohibited,
treatment  as  Tier  I  capital  is  no  longer   permitted  or  certain   other
contingencies arise.

On June 19,  1998,  the Company  placed $50.0  million in aggregate  liquidation
amount of 7.65% Capital  Securities due June 2028, using HUBCO Capital Trust II,
a statutory  business trust formed under the laws of the State of Delaware.  The
sole  asset  of  the  trust,  which  is the  obligor  on the  Series  B  Capital
Securities,  is $51.5  million  principal  amount of 7.65%  Junior  Subordinated
Debentures due 2028 of the Company.  The 7.65% Capital securities are redeemable
by the company on or after June 15,  2008 or earlier in the event the  deduction
of related interest for federal income taxes is prohibited,  treatment as Tier 1
capital is no longer permitted or certain other contingencies arise.

The  three  issues  of  capital  securities  have  preference  over  the  common
securities under certain  circumstances  with respect to cash  distributions and
amounts  payable on  liquidation  and are  guaranteed  by the  Company.  The net
proceeds of the offerings are being used for general  corporate  purposes and to
increase  capital  levels of the  Company  and its  subsidiaries.  Except  for a
minimal  amount,  the  securities  qualify as Tier I capital  under the  capital
guidelines of the Federal Reserve.

<PAGE>

(15) STOCKHOLDERS' EQUITY

On December 1, 2000,  the Company paid a 10% stock dividend to  stockholders  of
record on November  20, 2000.  On December 1, 1999,  the Company paid a 3% stock
dividend to  stockholders  of record on November 26, 1999. On September 1, 1998,
the Company  paid a 3% stock  dividend to  stockholders  of record on August 14,
1998. As a result, all share data has been retroactively restated.

In December 1996, as part of the Westport Bancorp, Inc. (Westport)  acquisition,
the Company  converted all outstanding  preferred  shares of Westport into a new
class of  preferred  stock.  Holders of the  preferred  stock were  entitled  to
dividends when and if declared by the Company's  Board of Directors.  Each share
of the preferred  stock was  convertible at any time at the option of the holder
thereof into 33.217 shares of common stock.  All the preferred  shares have been
converted into common stock.

In July 1996, as part of the Lafayette  American Bank  (Lafayette)  acquisition,
the Company  converted  all  outstanding  Lafayette  warrants into Hudson United
Bancorp  warrants.  Each Hudson United Bancorp  warrant was exercisable at $6.85
for one  share  of  Hudson  United  Bancorp  common  stock.  The  warrants  were
exercisable at the option of the holder,  until February 1999, at which time the
warrants expired. During 1999, all remaining warrants were exercised.

The Board of Directors  adopted the 1995 Stock Option Plan,  which  provides for
the  issuance of up to  1,030,000  stock  options to employees of the Company in
addition to those previously  granted.  The option or grant price cannot be less
than the fair market value of the common  stock at the date of the grant.  These
options were granted under the existing plans of the acquired companies.

In connection  with the PFC, MSB,  DFC, IBS, and Jeff  acquisitions,  all of the
outstanding  PFC, MSB, DFC, IBS, and Jeff options were converted into options to
purchase common stock of the Company. Transactions under the Company's plans are
summarized as follows:

                                                       Option
                                     Number of       Price Per
                                      Shares           Share
----------------------------------------------------------------
Outstanding, December 31, 1998        3,334,118   $4.29-$30.79
                                   -----------------------------
   Granted                              367,762  $14.63-$31.00
   Exercised                         (1,478,666)  $6.25-$25.30
   Forfeited/Cancelled                  (64,186)  $4.29-$29.19
                                   -----------------------------
Outstanding, December 31, 1999        2,159,028   $4.29-$31.00
                                   -----------------------------
   Granted                              289,300   $9.38-$26.06
   Exercised                           (471,315)  $6.26-$29.62
   Forfeited/Cancelled                 (26,930)   $8.39-$27.55
                                   -----------------------------
Outstanding, December 31, 2000        1,950,083   $6.26-$29.62
                                   -----------------------------

As of December 31, 2000,  1,257,442 shares are  exercisable.  In connection with
the BOS, CNB, and SJB  acquisitions,  the Company  issued Hudson United  Bancorp
common  shares to the holders of options to purchase  BOS,  CNB,  and SJB common
stock,  the value of which was based on the value of the  options on the date of
acquisition.

<PAGE>

The Company applies APB Opinion 25 and related Interpretations in accounting for
its  plan.   Accordingly,   no  compensation  cost  has  been  recognized.   Had
compensation cost been determined based on the fair value at the grant dates for
awards  under  those  plans  consistent  with the  method of SFAS No.  123,  the
Company's  net  income  and  income  per share  would  have been  reduced to the
proforma amounts indicated below (in thousands, except share data):

                                   2000      1999      1998
---------------------------------------------------------------
Net income          As reported  $49,821   $69,338   $26,751
                    Pro forma     48,679    67,781    24,730

Basic earnings per
   share            As reported    $0.93     $1.21     $0.46
                    Pro forma       0.90      1.18      0.43

Diluted earnings
   per share        As reported    $0.92     $1.18     $0.44
                    Pro forma       0.90      1.15      0.41

The fair value of each option  grant is estimated on the date of grant using the
Black-Scholes  option-pricing model with the following assumptions used for 2000
and  1999:  dividend  yield of  4.24%  for 2000  and  2.87% to 3.05%  for  1999;
risk-free  interest  rates  of  4.66% to  4.91%  in 2000  and  6.55%  for  1999;
volatility factors of the expected market price of the Company's common stock of
approximately 46% to 56% in 2000 and 51% in 1999 and an expected life of 5 to 10
years in 2000,  7 years in 1999  and 7 to 10 years in 1998.

The Company has a restricted stock plan in which 583,495 shares of the Company's
common stock may be granted to officers and key employees.  219,750,  68,055 and
84,495  shares of common stock were awarded  which vest between two to ten years
from the date of grant during 2000,  1999 and 1998,  respectively.  The value of
shares issued that have not been vested are $5.8 million, $3.5 million, and $2.3
million  for 2000,  1999 and 1998,  respectively  and they  been  recorded  as a
reduction of  stockholders'  equity.  Amortization  of  restricted  stock awards
charged to expense amounted to $1.4 million,  $0.7 million,  and $0.3 million in
2000, 1999 and 1998, respectively.

Prior to termination of the merger  agreement  between Hudson United Bancorp and
Dime Bancorp, Inc., the compensation committee adopted the Hudson United Bancorp
and Subsidiaries  Key Employee  Retention  Program.  The program was designed to
encourage designated key employees of Hudson United Bancorp and its subsidiaries
(collectively,  the "Company") to remain with the Company in connection with the
then pending merger and subsequent  transition in light of the uncertainty  then
surrounding the consummation of the merger.  Eligible  employees received awards
under the program that totaled,  in the aggregate,  186,000 shares of restricted
stock and $90,000 in cash  awards.  Restricted  stock and cash awards  under the
program become 100% vested ten years from the date of the award.  Restricted and
cash awards will also become fully and  immediately  vested if, within two years
after the Hudson-Dime merger agreement,  (1) the Company receives payment of $25
million or more in  satisfaction  of its rights under the terms of the September
16, 1999 Stock Option  Agreement  between Hudson and Dime; or (2) there occurs a
change in control,  as defined in the  Restricted  Stock Plan.  If neither event
described in the  preceding  sentence  occurs within two years after the date of
termination of the merger  agreement,  however,  the  restricted  stock and cash
awards will expire.  The Stock Committee may, in its sole discretion,  extend or
modify  this  expiration  provision  for  up to the  balance  of  the  ten  year
Restricted  Period.  The  Compensation  Committee  retains  the  right to amend,
modify, or terminate the program in its sole discretion,  including the right to
increase the $25 million  minimum  required  payment to $50 million or more.

The Company  maintained two Bank Recognition and Retention Plan and Trusts (BRP)
in  which  shares  of  the  Company's  common  stock  may  be  granted  to  plan
participants.  These plans were  originally  established  by MSB and IBS but the
shares were fully vested and allocated in 1998.  The expense  recognized for the
BRP and ESOP amounted to $9,953 for the year ended December 31, 1998.

In November  1993,  the Company's  Board of Directors  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 pending or future  acquisitions.  In June 2000, the Company's  Board of
Directors  authorized the  repurchase of up to 20% of the Company's  outstanding
shares.  During 2000, the Company  purchased 9.4 million  treasury  shares at an
aggregate cost of $193.3 million.  During 2000, 5.2 million shares were reissued
for stock dividends, stock option and other employee benefit plans.

<PAGE>

(16) EARNINGS PER SHARE

In the fourth quarter of 1997, the Company  adopted SFAS No. 128,  "Earnings Per
Share." This  statement  established  standards  for  computing  and  presenting
earnings per share and requires dual  presentation of basic and diluted earnings
per share.  A  reconciliation  of net income to net income  available  to common
stockholders  and of weighted  average  common  shares  outstanding  to weighted
average  common shares  outstanding  assuming  dilution  follows (in  thousands,
except share data):
                                            Year Ended
                                            December 31,
                                 ---------- ----------- ----------
                                   2000        1999       1998
                                 ---------- ----------- ----------
Basic Earnings Per Share
Net income                        $ 49,821    $ 69,338   $ 26,751
Weighted average common shares
   outstanding                      53,845      57,465     58,718

Basic Earnings Per Share            $ 0.93      $ 1.21     $ 0.46
                                 ========== =========== ==========

Diluted Earnings Per Share
Net income                        $ 49,821    $ 69,338   $ 26,751
Weighted average common shares
   outstanding                      53,845      57,465     58,718
Effect of Dilutive Securities:
   Convertible Preferred Stock           -           -         23
   Warrants                              -           -         23
   Unearned MRP                          -           -          -
   Stock Options                       341       1,107      1,950
                                 ---------- ----------- ----------
                                    54,186      58,566     60,668

Diluted Earnings Per Share          $ 0.92      $ 1.18     $ 0.44
                                 ========== =========== ==========

(17) RESTRICTIONS ON BANK DIVIDENDS, LOANS OR ADVANCES

Certain  restrictions  exist  regarding the ability of Hudson United to transfer
funds to the  Company  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, 2000,  $525.9  million,  subject to regulatory
capital  limitations,  was available for distribution to the Company from Hudson
United.

Under Federal Reserve regulations, Hudson United is limited as to the amounts it
may loan to its affiliates,  including the Company.  All such loans are required
to be collateralized by specific obligations.

(18) LEASES

Total rental  expense for all leases  amounted to  approximately  $10.8 million,
$10.3  million  and  $12.7  million  in 2000,  1999 and 1998,  respectively.  At
December 31, 2000, the minimum total rental commitments under all noncancellable
leases on bank  premises  with initial or remaining  terms of more than one year
were as follows (in thousands):

    2001                                            $ 9,446
    2002                                              7,845
    2003                                              6,800
    2004                                              5,875
    2005 and Thereafter                              18,294

It is expected that in the normal course of business, leases that expire will be
renewed or replaced by leases of other properties.

(19) COMMITMENTS AND CONTINGENT LIABILITIES

The Company and its subsidiaries,  from time to time, may be defendants in legal
proceedings. In the fourth quarter of 2000, the Company established a $2 million
reserve  for  potential   legal   settlements   related  to  the  Jeff  and  SJB
acquisitions.  In the opinion of management,  based upon consultation with legal
counsel,  the ultimate  resolution  of these legal  proceedings  will not have a
material effect on the consolidated  financial statements.  In the normal course
of  business,  the Company and its  subsidiaries  have various  commitments  and
contingent  liabilities such as commitments to extend credit,  letters of credit
and  liability  for  assets  held  in  trust  which  are  not  reflected  in the
accompanying financial statements. Loan commitments, commitments to extend lines
of credit and standby  letters of credit are made to  customers  in the ordinary
course of business.  Both  arrangements have credit risk essentially the same as
that  involved in extending  loans to customers and are subject to the Company's
normal credit policies.  The Company's  maximum exposure to credit loss for loan
commitments,  primarily  unused lines of credit,  and standby  letters of credit
outstanding  at  December  31,  2000  was  $904.5  million  and  $39.3  million,
respectively.  Commitments under commercial letters of credit used to facilitate
customers trade transactions were $2.3 million at December 31, 2000.


<PAGE>

(20) HUDSON UNITED BANCORP (PARENT COMPANY ONLY) FINANCIAL INFORMATION

<TABLE>
<CAPTION>

(in thousands)                                                                                                 December 31,
BALANCE SHEETS                                                                                             2000           1999
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                                     <C>             <C>
ASSETS:
Cash                                                                                                     $     828      $  11,868
Federal Funds                                                                                                  159             --
Securities:
    Available for sale                                                                                      36,868         79,413
    Held to maturity                                                                                             -            800
Investment in subsidiaries                                                                                 587,922        653,553
Investments in bank's subordinated notes                                                                         -         23,000
Accounts receivable                                                                                            238         11,502
Premises and equipment, net                                                                                  8,247          7,945
Other assets                                                                                                 9,996         48,715
                                                                                                       -----------------------------
                                                                                          TOTAL ASSETS   $ 644,258      $ 836,796
                                                                                                       =============================
LIABILITIES AND STOCKHOLDERS' EQUITY:
Notes payable-subsidiaries                                                                               $  24,911      $  62,194
Accrued taxes and other liabilities                                                                          2,574          7,136
                                                                                                       -----------------------------
                                                                                                         $  27,485      $  69,330

Subordinated Debt                                                                                          123,000        123,000
Company-obligated mandatorily redeemable preferred capital securities of three subsidiary trusts
   holding solely junior subordinated debentures of the Company                                            125,300        125,300
                                                                                                       -----------------------------
                                                                                     TOTAL LIABILITIES   $ 275,785      $ 317,630

Stockholders' equity                                                                                       368,473        519,166
                                                                                                       -----------------------------

                                                            TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $ 644,258      $ 836,796
                                                                                                       =============================

<CAPTION>

(in thousands)                                                                                   Years Ended December 31,
                                                                                       ---------------------------------------------
STATEMENTS OF INCOME                                                                        2000           1999           1998
------------------------------------------------------------------------------------------------------------------------------------
Income:
   Cash dividends from bank subsidiaries                                                    $37,761        $53,052        $33,244
   Interest                                                                                   2,272          4,183          4,687
   Securities gains                                                                           3,533          1,849          3,698
   Rental income                                                                                927          1,142          1,166
   Other                                                                                      3,445          7,955         24,489
                                                                                       ---------------------------------------------
                                                                                            $47,938        $68,181        $67,284
Expenses:
General and administrative                                                                    3,960          6,608         30,836
Interest                                                                                     21,042         25,442         19,585
                                                                                       ---------------------------------------------
                                                                                            $25,002        $32,050        $50,421
                                                                                       ---------------------------------------------
Income before income taxes and equity in
   undistributed net income of subsidiaries                                                 $22,936        $36,131        $16,863
Income taxes                                                                                 (4,979)        (6,046)        (6,529)
                                                                                       ---------------------------------------------
                                                                                            $27,915        $42,177        $23,392
Equity in undistributed net income of subsidiaries                                           21,906         27,161          3,359
                                                                                       ---------------------------------------------
                                                                            NET INCOME      $49,821        $69,338        $26,751
                                                                                       =============================================

</TABLE>

<PAGE>


HUDSON UNITED BANCORP (PARENT COMPANY ONLY) FINANCIAL INFORMATION (CONTINUED)

<TABLE>
<CAPTION>

(in thousands)                                                                                   Years Ended December 31,
STATEMENTS OF CASH FLOWS                                                                    2000           1999           1998
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                         <C>           <C>            <C>
Operating activities:
   Net income                                                                              $  49,821     $  69,338      $  26,751
   Adjustments to reconcile net income to net cash provided by operating
     activities-Amortization and depreciation                                                    811           988            701
     Amortization of restricted stock                                                          1,388           673            275
     Securities gains                                                                         (3,533)       (1,849)        (3,698)
     Equity in undistributed net income                                                            -             -          1,071
     Decrease in investment in subsidiaries                                                   65,631        78,881         81,929
     IBSF fiscal year adjustment                                                                   -             -          1,539
     Decrease (increase) in accounts receivable                                               11,264         2,024         (4,305)
     Decrease (increase) in other assets                                                      38,719       (30,470)       (29,789)
     (Decrease) increase in notes payable                                                    (37,283)       59,745           (373)
     (Decrease) increase in accounts payable                                                    (147)      (15,458)        10,308
     (Decrease) increase in accrued taxes and other liabilities                               (4,414)       (2,239)         8,066
                                                                                       ---------------------------------------------
                                             NET CASH PROVIDED BY OPERATING ACTIVITIES     $ 122,257     $ 161,633      $  92,475
                                                                                       ---------------------------------------------
Investing activities:
   Proceeds from sale of securities                                                        $  46,078     $   9,232      $  13,961
   Proceeds from maturities of securities                                                        800        10,000          4,895
   Purchase of securities                                                                          -       (65,813)       (39,686)
   Investments in bank's subordinated notes                                                   23,000             -              -
   Capital expenditures                                                                       (1,113)       (1,422)        (1,985)
                                                                                       ---------------------------------------------

                                   NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES     $  68,765     $ (48,003)     $ (22,815)
                                                                                       ---------------------------------------------
Financing activities:
   Proceeds from issuance of common stock                                                  $   4,090     $  18,519      $  13,385
   Net proceeds from issuance of capital trust securities                                          -             -         48,737
   Net proceeds from issuance of subordinated debt                                                 -             -         (2,750)
   Dividends paid                                                                            (49,319)      (45,257)       (39,706)
   Purchase of treasury stock                                                               (193,271)     (121,367)       (70,138)
   Sale of treasury stock                                                                          -             -            175
   Termination of ESOP                                                                             -             -         10,220
   Other                                                                                      36,597         2,073           (341)
                                                                                       ---------------------------------------------
                                                 NET CASH USED IN FINANCING ACTIVITIES     $(201,903)    $(146,032)     $ (40,418)
                                                                                       ---------------------------------------------
                                      (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS     $ (10,881)    $ (32,402)     $  29,242
                                        CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR        11,868        44,270         15,028
                                                                                       ---------------------------------------------
                                              CASH AND CASH EQUIVALENTS AT END OF YEAR       $   987     $  11,868      $  44,270
                                                                                       =============================================


</TABLE>


<PAGE>


(21) SUMMARY OF QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

The following quarterly  financial  information for the two years ended December
31,  2000 and 1999 is  unaudited.  However,  in the opinion of  management,  all
adjustments,  which  include  only normal  recurring  adjustments  necessary  to
present fairly the results of operations for the periods, are reflected. Results
of operations for the periods are not  necessarily  indicative of the results of
the entire year or any other interim period.

<TABLE>
<CAPTION>
                                                                                    Three Months Ended
(Dollars in thousands)                                         March 31(a)         June 30(a)  September 30 (a)       December 31
                                                                                                                           (b)(c)
                                                        ---------------------------------------------------------------------------
<S>                                                             <C>               <C>                <C>                 <C>
2000
Net interest income                                             $ 87,687          $  84,665          $ 75,814           $  71,560
Provision for possible loan losses                                 6,000              6,000             6,000               6,000
Income (loss) before income taxes                                 45,053           (15,766)            36,805              10,698
Net income (loss)                                                 29,873           (12,567)            24,457               8,040
Earnings (loss) per share-basic                                     0.53             (0.22)              0.46                0.16
Earnings (loss) per share-diluted                                   0.53             (0.22)              0.45                0.16

1999
Net interest income                                             $ 80,770          $  86,962          $ 87,925           $  87,409
Provision for possible loan losses                                 4,521              4,524             5,245              37,910
Income (loss) before income taxes                                 43,093             43,749            45,301            (23,866)
Net income (loss)                                                 28,751             28,989            29,149            (17,551)
Earnings (loss) per share-basic                                     0.49               0.50              0.51              (0.31)
Earnings (loss) per share-diluted                                   0.48               0.49              0.50              (0.31)

</TABLE>

(a) Net income and  related  per share  amounts  for these  periods in 2000 were
    significantly  impacted by merger related and restructuring costs related to
    the proposed merger with the Dime.

(b) Net  income  and  related  per share  amounts  for this  period in 1999 were
    significantly  impacted by merger related and  restructuing  costs resulting
    from the 1999 acquisitions of SJB and Jeff (See Note 2).

(c) During the fourth quarter,  the Company  identified and recorded a liability
    in the amount of approximately $3.4 million,  representing the present value
    of retirement  benefits under a supplemental  Employee  Retirement Plan that
    was  established  for an executive of Jeff.  The  executive  resigned in the
    second quarter of 2000.



<PAGE>



(22) ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial  instruments  include cash, loan agreements,  accounts  receivable and
payable, debt securities, deposit liabilities, loan commitments, standby letters
of credit and financial guarantees,  among others. The fair value of a financial
instrument is the amount at which the instrument could be exchanged in a current
transaction between willing parties, other than a forced or liquidation sale.

Estimated  fair  values  have  been  determined  by the  Company  using the best
available  data  and  estimation  methodology  suitable  for  each  category  of
financial  instruments.  For those loans and deposits with floating rates, it is
presumed that estimated fair values  generally  approximate  their recorded book
balances.  The  estimation  methodologies  used,  the estimated  fair values and
recorded book balances of the Company's  financial  instruments  at December 31,
2000 and 1999 were as follows:

Cash and cash  equivalents  include cash and due from bank  balances and Federal
funds sold. For these instruments,  the recorded book balance approximates their
fair value.

For  securities  in the  Company's  portfolio,  fair  value  was  determined  by
reference to quoted  market  prices.  In the few  instances  where quoted market
prices were not available,  prices for similar securities were used.  Additional
detail is contained in Note 4 to these consolidated financial statements.

<TABLE>
<CAPTION>

                                                                              2000                                1999
                                                                 Estimated Fair   Recorded Book          Estimated      Recorded
                                                                      Value           Value             Fair Value     Book Value
---------------------------------------------------------------- ---------------- --------------- ---- -------------- -------------
<S>                                                                    <C>             <C>                <C>          <C>
Cash and cash equivalents                                              $ 295,539       $ 295,539          $  277,558   $   277,558
Investment securities available for sale                                 422,727         422,727           2,804,302     2,804,302
Investment securities held to maturity                                   513,410         520,192             541,240       562,224

</TABLE>


The Company  aggregated  loans into pools having  similar  characteristics  when
comparing their terms,  contractual rates, type of collateral,  risk profile and
other  pertinent loan  characteristics.  Since no active market exists for these
pools,  fair values were estimated  using the present value of future cash flows
expected to be received.  Loan rates currently  offered by the Bank were used in
determining the appropriate discount rate.


<PAGE>

<TABLE>
<CAPTION>
                                                                              2000                                1999
                                                                 Estimated Fair   Recorded Book          Estimated      Recorded
                                                                      Value           Value             Fair Value     Book Value
---------------------------------------------------------------- ---------------- --------------- ---- -------------- -------------
<S>                                                                   <C>             <C>                 <C>
Loans, net of allowance, and assets held for sale                     $5,293,567      $5,182,343          $5,444,824    $5,580,832

</TABLE>

The fair value of demand  deposits,  savings  deposits and certain  money market
accounts  approximates  their  recorded book  balances.  The fair value of fixed
maturity  certificates  of deposit  was  estimated  using the  present  value of
discounted cash flows based on rates  currently  offered for deposits of similar
remaining maturities.

<TABLE>
<CAPTION>
                                                                              2000                                1999
                                                                 Estimated Fair   Recorded Book          Estimated      Recorded
                                                                      Value           Value             Fair Value     Book Value
---------------------------------------------------------------- ---------------- --------------- ---- -------------- -------------
<S>                                                                   <C>             <C>                 <C>
Deposits                                                              $5,508,970      $5,813,267          $6,318,508    $6,455,345

</TABLE>

The fair value for accrued  interest  receivable and the cash surrender value of
life insurance policies approximates their respective recorded book balance. The
fair value of borrowed funds is estimated  using the present value of discounted
cash flows based on the rates currently  offered for debt instruments of similar
remaining maturities.

<TABLE>
<CAPTION>

                                                                              2000                                1999
                                                                 Estimated Fair   Recorded Book          Estimated      Recorded
                                                                      Value           Value             Fair Value     Book Value
---------------------------------------------------------------- ---------------- --------------- ---- -------------- -------------
<S>                                                                   <C>             <C>                 <C>
Accrued interest receivable                                             $ 55,283       $  55,283            $ 71,275      $ 71,275
Cash surrender value of life insurance                                    23,054          23,054              22,812        22,812
Borrowings                                                               358,054         358,861           2,336,403     2,383,666

</TABLE>

The fair  value  of the  subordinated  debt and  capital  trust  securities  was
determined by reference to quoted market prices.

<TABLE>
<CAPTION>

                                                                              2000                                1999
                                                                 Estimated Fair   Recorded Book          Estimated      Recorded
                                                                      Value           Value             Fair Value     Book Value
---------------------------------------------------------------- ---------------- --------------- ---- -------------- -------------
<S>                                                                   <C>             <C>                 <C>
Subordinated Debt                                                      $ 117,799       $ 123,000            $128,023      $132,000
Capital Trust Securities                                                 104,249         125,300             109,012       125,300

</TABLE>

The  Company's  remaining  assets  and  liabilities,  which  are not  considered
financial instruments,  have not been valued differently than has been customary
with historical cost  accounting.  There is no material  difference  between the
notional  amount and estimated fair value of  off-balance  sheet items which are
primarily  comprised of unfunded loan commitments  which are generally priced at
market at the time of funding.

For certain homogeneous categories of loans, such as some residential mortgages,
fair value is estimated using the quoted market prices for securities  backed by
similar loans, adjusted for differences in loan characteristics.  The fair value
of other types of loans is estimated by discounting  the future cash flows using
the current rates at which similar loans would be made to borrowers with similar
credit ratings and for the same remaining maturities.


<PAGE>


(23) REGULATORY MATTERS

The Company 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 the Company's  financial  statements.  Under capital adequacy
guidelines  and the  regulatory  framework  for prompt  corrective  action,  the
Company 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 classification are also subject to qualitative judgements by
the  regulators  about   components,   risk   weightings,   and  other  factors.
Quantitative  measures  established  by  regulation to ensure  capital  adequacy
require  the Bank to  maintain  minimum  amounts  and ratios of Total and Tier I
capital (as defined in the  regulations) to  risk-weighted  assets (as defined),
Tier I capital (as defined) to average assets (as defined). Management believes,
as of December  31,  2000,  that the Company  and its  subsidiary  bank meet all
capital adequacy requirements to which they are subject.

The Company's and the Bank's actual  capital  amounts and ratios at December 31,
2000 and 1999 are presented in the following table (dollars in thousands):

<TABLE>
<CAPTION>
                                                                                                       To Be Well Capitalized
                                                                                 For Capital           Under Prompt Corrective
                                                       Actual                 Adequacy Purposes           Action Provisions
                                             ---------------------------- -------------------------- ----------------------------
                                                   Amount         Ratio        Amount         Ratio         Amount         Ratio
                                             ------------- ------------- ------------- ------------- -------------- -------------
<S>                                             <C>              <C>        <C>              <C>         <C>              <C>
As of December 31, 2000:
  Total Capital to Risk Weighted Assets:
         Hudson United Bancorp                  $ 571,433        11.05%     $ 413,565         >8.0%      $ 516,956        >10.0%
         Hudson United Bank                       528,548        10.27%       411,818         >8.0%        514,773        >10.0%
  Tier I Capital to Risk Weighted Assets:
         Hudson United Bancorp                  $ 393,436         7.61%     $ 206,782         >4.0%      $ 310,174         >6.0%
         Hudson United Bank                       440,525         8.56%       205,909         >4.0%        308,864         >6.0%

  Tier I Capital to Average Assets:
         Hudson United Bancorp                  $ 393,436         5.96%     $ 264,031         >4.0%      $ 330,039         >5.0%
         Hudson United Bank                       440,525         6.62%       266,363         >4.0%        332,954         >5.0%

<CAPTION>

                                                                                                       To Be Well Capitalized
                                                                                 For Capital           Under Prompt Corrective
                                                       Actual                 Adequacy Purposes           Action Provisions
                                             ---------------------------- -------------------------- ----------------------------
                                                   Amount         Ratio        Amount         Ratio         Amount         Ratio
                                             ------------- ------------- ------------- ------------- -------------- -------------
<S>                                             <C>              <C>        <C>              <C>         <C>              <C>
As of December 31, 1999:
  Total Capital to Risk Weighted Assets:
         Hudson United Bancorp                  $ 739,846        12.00%     $ 493,019         >8.0%      $ 616,274        >10.0%
         Hudson United Bank                       625,687        10.30%       487,894         >8.0%        609,867        >10.0%
  Tier I Capital to Risk Weighted Assets:
         Hudson United Bancorp                  $ 535,730         8.70%     $ 246,509         >4.0%      $ 369,764         >6.0%
         Hudson United Bank                       522,362         8.60%       243,947         >4.0%        365,920         >6.0%

  Tier I Capital to Average Assets:
         Hudson United Bancorp                  $ 535,730         5.70%     $ 378,920         >4.0%      $ 473,650         >5.0%
         Hudson United Bank                       522,362         5.60%       375,835         >4.0%        469,794         >5.0%

</TABLE>

<PAGE>


                              Report of Independent
                               Public Accountants


To the Stockholders of Hudson United Bancorp:


We have audited the  accompanying  consolidated  balance sheets of Hudson United
Bancorp (a New Jersey  corporation) and subsidiaries as of December 31, 2000 and
1999, and the related consolidated  statements of income,  comprehensive income,
changes in stockholders'  equity,  and cash flows for each of the three years in
the  period  ended  December  31,  2000.  These  financial  statements  are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the  financial  position of Hudson  United  Bancorp and
subsidiaries  as of  December  31,  2000  and  1999,  and the  results  of their
operations  and their cash flows for each of the three years in the period ended
December 31, 2000 in conformity with accounting principles generally accepted in
the United States.



Arthur Andersen LLP

Roseland, New Jersey
January 16, 2001


<PAGE>

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
         ACCOUNTING AND FINANCIAL DISCLOSURE
         -----------------------------------
         None.


<PAGE>


                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
         --------------------------------------------------

HUB's Proxy Statement for its 2001 Annual Meeting under the captions Proposal 1-
"Election  of  Directors"  and  "Governance  of the  Corporation--Section  16(a)
Beneficial Ownership Reporting Compliance" will contain the information required
by Item 10 with respect to directors of HUB and certain information with respect
to  executive  officers and that  information  is to be  incorporated  herein by
reference. Certain additional information regarding executive officers of HUBCO,
who are not also directors,  appears under subsection (e) of Item 1 of this Form
10-K.

ITEM 11. EXECUTIVE COMPENSATION
         ----------------------

HUB's  Proxy  Statement  for its 2001 Annual  Meeting  will  contain,  under the
captions "Executive Compensation",  "Governance of the Corporation--Compensation
of  Directors"  and "  Governance  of  the  Corporation--Compensation  Committee
Interlocks and Insider  Participation",  the information required by Item 11 and
that information is to be incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
         --------------------------------------------------------------

HUB's Proxy  Statement  for its 2001  Annual  Meeting  under the caption  "Stock
Ownership  of  Management   and  Principal   Shareholders",   will  contain  the
information  required  by Item 12 and  that  information  is to be  incorporated
herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
         ----------------------------------------------

HUB's  Proxy   Statement  for  its  2001  Annual   meeting  under  the  captions
"Compensation Committee Interlocks and Insider Participation" and "Governance of
the  Corporation--Certain   Transactions  with  Management",  will  contain  the
information  required  by Item 13 and  that  information  is to be  incorporated
herein by reference.

                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
         ON FORM 8-K
         ----------------------------------------------------

(a) (1) & (2)     List of Financial Statements and Financial
                  ------------------------------------------
                  Statement Schedules

                  Schedules to the Consolidated Financial Statements required by
                  Article 9 of Regulation S-X are not required under the related
                  instructions  or are  inapplicable,  and  therefore  have been
                  omitted.


(a)      (3)      Exhibits
                  --------

                  List of Exhibits


         (3)(A)      The Certificate of  Incorporation  of the Company in effect
                     on May  11,  1999.  (Incorporated  by  reference  from  the
                     Company's  Amended  Quarterly Report on Form 10 Q/A for the
                     quarter  ended June 30,  1999  filed  September  10,  1999,
                     Exhibit (3a)).

         (3)(B)      The By-Laws of HUBCO, Inc.

         (4a)        Indenture dated as of January 14, 1994, between HUBCO, Inc.
                     and  Summit   Bank  as  Trustee   for   $25,000,000   7.75%
                     Subordinated Debentures due 2004.

         (4b)        Indenture  dated as of September 13, 1996,  between  HUBCO,
                     Inc.  and Summit  Bank as  Trustee  for  $75,000,000  8.20%
                     Subordinated   Debentures   due  2006.   (Incorporated   by
                     reference  from the  Company's  Current  Report on Form 8-K
                     dated September 18, 1996, Exhibit 99.2).

<PAGE>

         (4c)        Indenture dated as of January 31, 1997, between HUBCO, Inc.
                     and The Bank of New York as Trustee for  $50,000,000  8.98%
                     Junior Subordinated  Debentures due 2027.  (Incorporated by
                     reference  from the  Company's  Current  Report on Form 8-K
                     dated February 11, 1997, Exhibit (4(a)).

         (4d)        Indenture  dated as of June 19, 1998,  between HUBCO,  Inc.
                     and The Bank of New York as Trustee for  $50,000,000  7.65%
                     Junior Debentures due 2028. (Incorporated by reference from
                     the  Company's  Current  Report on Form 8-K dated  June 26,
                     1998, Exhibit 4(a)).

         (10a)       The  Agreement  and Plan of Merger  between  Hudson  United
                     Bancorp and Dime  Bancorp,  Inc. as amended and restated on
                     December 27,  1999.  (Incorporated  by  reference  from the
                     company's  Amended  Annual  Report  on Form  10K/A  for the
                     fiscal  year  ended  December  31,  1999 filed on March 31,
                     2000, Exhibit 10(a)).

         (10b)       The Stock Option Agreement  between Dime Bancorp,  Inc. and
                     Hudson   United   Bancorp   dated   September   16,   1999.
                     (Incorporated  by reference  from the  Company's  filing on
                     Form 8-K dated September 24, 1999, Exhibit 99.2).

         (10c)       The   Termination,   Option   Cancellation  and  Settlement
                     Agreement  between  Hudson United Bancorp and Dime Bancorp,
                     Inc. dated April 28, 2000.  (Incorporated by reference from
                     the Company's filing on Form 8-K dated May 1, 2000, Exhibit
                     99.1).

         (10d)       Change in Control,  Severance and Employment Agreement with
                     Susan  Staudmyer  dated August 16, 1999.  (Incorporated  by
                     reference from the company's  Amended Annual Report on Form
                     10K/A for the fiscal year ended  December 31, 1999 filed on
                     March 31, 2000, Exhibit 10(d)).

         (10e)       The Agreement and Plan of Merger dated June 28, 1999, among
                     Hudson United Bancorp, Hudson United Bank, JeffBanks, Inc.,
                     Jefferson   Bank,   and  Jefferson   Bank  of  New  Jersey.
                     (Incorporated  by reference  from the  Company's  filing on
                     Form 8-K/A dated June 30, 1999, Exhibit 99.1).

         (10f)       The Stock Option  Agreement  dated June 28,  1999,  between
                     Hudson United Bancorp and JeffBanks,  Inc. (Incorporated by
                     reference from the Company's filing on Form 8-KA dated June
                     30, 1999, Exhibit 99.2).

         (10g)       The Agreement and Plan of Merger dated June 28, 1999, among
                     Hudson United Bancorp,  Hudson United Bank, Southern Jersey
                     Bancorp  of  Delaware,  Inc.,  and  Farmers  and  Merchants
                     National   Bank.   (Incorporated   by  reference  from  the
                     Company's filing on Form 8-KA dated June 30, 1999,  Exhibit
                     99.4).

         (10h)       The Stock Option  Agreement  dated June 28,  1999,  between
                     Hudson  United  Bancorp  and  Southern  Jersey  Bancorp  of
                     Delaware,   Inc.   (Incorporated   by  reference  from  the
                     Company's filing on Form 8-KA dated June 30, 1999,  Exhibit
                     99.5).

         (10i)       Change in Control,  Severance and Employment Agreement with
                     Thomas R. Nelson  dated March 30,  1998.  (Incorporated  by
                     reference from the company's  Amended Annual Report on Form
                     10K/A for the fiscal year ended  December 31, 1999 filed on
                     March 31, 2000, Exhibit 10(o)).

         (10j)       Change in Control,  Severance and Employment Agreement with
                     Kenneth T. Neilson dated January 1, 1997.  (Incorporated by
                     reference from the Company's  Amended Annual Report on Form
                     10-K/A for the fiscal year ended December 31, 1996 filed on
                     April 3, 1997, Exhibit (10g)).

         (10k)       Change in Control,  Severance and Employment Agreement with
                     D.  Lynn  Van   Borkulo-Nuzzo   dated   January   1,  1997.
                     (Incorporated  by  reference  from  the  Company's  Amended
                     Annual  Report on Form  10-K/A  for the  fiscal  year ended
                     December 31, 1996 filed April 3, 1997, Exhibit (10h)).

         (10l)       Change in Control,  Severance and Employment Agreement with
                     John F. McIlwain  dated January 1, 1997.  (Incorporated  by
                     reference from the Company's  Amended Annual Report on Form
                     10-K/A for the fiscal  year ended  December  31, 1996 filed
                     April 3, 1997, Exhibit (10I)).

<PAGE>

         (10m)       Change in Control,  Severance and Employment Agreement with
                     Thomas  Shara  dated  January  1,  1997.  (Incorporated  by
                     reference from the Company's  Amended Annual Report on Form
                     10-K/A for the fiscal year ended December 31, 1999 filed on
                     March 31, 2000, Exhibit (10s)).

         (10n)       HUBCO Supplemental Employees' Retirement Plan dated January
                     1, 1996.  (Incorporated  by  reference  from the  Company's
                     Amended  Annual  Report on Form  10-K/A for the fiscal year
                     ended  December  31,  1996  filed  April 3,  1997,  Exhibit
                     (10k)).

         (10o)       HUBCO, Inc. Directors Deferred Compensation Plan.

         (10p)       Resignation  Agreement  between  Betsy Z.  Cohen and Hudson
                     United Bancorp dated July 14, 2000.

         (10q)       Resignation  Agreement  between  William  Lamb  and  Hudson
                     United Bancorp dated July 14, 2000.

         (10r)       Change in Control,  Severance and Employment Agreement with
                     William R. Coda dated October 31, 2000.

         (10s)       Change in Control,  Severance and Employment Agreement with
                     William A. Houlihan dated January 17, 2001.

         (10t)       Clarification  letter  dated March 1, 2000  relating to the
                     Change in Control,  Severance and Employment Agreement with
                     Thomas R. Nelson.

         (10u)       Clarification  letter  dated March 1, 2000  relating to the
                     Change in Control,  Severance and Employment Agreement with
                     John F. Mcllwain.

         (10v)       Clarification  letter  dated March 1, 2000  relating to the
                     Change in Control,  Severance and Employment Agreement with
                     D. Lynn Van Borkulo-Nuzzo.

         (10w)       Clarification  letter  dated March 1, 2000  relating to the
                     Change in Control,  Severance and Employment Agreement with
                     Susan M. Staudmyer.

         (10x)       Clarification  letter  dated March 1, 2000  relating to the
                     Change in Control,  Severance and Employment Agreement with
                     Thomas J. Shara.

         (10y)       Termination of Employment  Agreement between Betsy Z. Cohen
                     and Hudson United Bancorp dated March 31, 2000.

         (10z)       Change in Control,  Severance and Employment Agreement with
                     James Mayo dated December 18, 2000.

         (23)        Consent of Arthur Andersen dated March 19, 2001.


(b)       Reports on Form 8-K

          None.

<PAGE>

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) of the Securities  Exchange
Act of 1934,  the  registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                                Hudson United Bancorp

                                                  KENNETH T. NEILSON
                                             By: _______________________________
                                                 Kenneth T. Neilson
                                                 Chairman of the Board

Dated:  March 19, 2001

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  registrant and
in the capacities and on the dates indicated.

<TABLE>
<CAPTION>

Signature                                             Title                                Date
---------                                             -----                                ----
<S>                                                   <C>                                 <C>
KENNETH T. NEILSON                                    Chairman of the Board               March 19, 2001
----------------------------------------              President, CEO, Director
Kenneth T. Neilson                                    Principal Executive Officer

ROBERT J. BURKE                                       Director                            March 19, 2001
----------------------------------------
Robert J. Burke

DONALD P. CALCAGNINI                                  Director                            March 19, 2001
----------------------------------------
Donald P. Calcagnini

JOAN DAVID                                            Director                            March 19, 2001
----------------------------------------
Joan David

NOEL DECORDOVA, JR.                                   Director                            March 19, 2001
----------------------------------------
Noel deCordova, Jr.

                                                      Director                            March 19, 2001
----------------------------------------
Thomas R. Farley, Esq.

                                                      Director                            March 19, 2001
----------------------------------------
Bryant D. Malcolm

W. PETER MCBRIDE                                      Director                            March 19, 2001
----------------------------------------
W. Peter McBride

CHARLES F. X. POGGI                                   Director                            March 19, 2001
----------------------------------------
Charles F. X. Poggi

DAVID A. ROSOW                                        Director                            March 19, 2001
----------------------------------------
David A. Rosow

JAMES E. SCHIERLOH                                    Director                            March 19, 2001
----------------------------------------
James E. Schierloh

SISTER GRACE FRANCES STRAUBER                         Director                            March 19, 2001
----------------------------------------
Sister Grace Frances Strauber

JOHN H. TATIGIAN, JR.                                 Director                            March 19, 2001
----------------------------------------
John H. Tatigian, Jr.

WILLIAM A. HOULIHAN                                   Executive Vice President            March 19, 2001
----------------------------------------              and Chief Financial Officer
William A. Houlihan
</TABLE>