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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549



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FORM 10-Q



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|x |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- |  | ---------------------------------------------------------------------------------------



For the quarterly period ended March 31, 2003



OR



| ̈ |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- |  | ----------------------------------------------------------------------------------------



For the transition period from
             to



Commission File Number 0-010699



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HUDSON
UNITED BANCORP

(Exact name of registrant as specified in its charter)



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|New Jersey                                                    |  | 22-2405746                             
|------------------------------------------------------------- |  | ---------------------------------------
|(State of other jurisdiction ofincorporation or organization) |  | (I.R.S. Employer Identification Number)
|                                                             
|1000 MacArthur Blvd, Mahwah, NJ                               |  | 07430                                  
|(Address of principal executive office)                       |  | (Zip Code)                             



(201)-236-2600

(Registrants telephone number, including area code)



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Not Applicable

Former name, former address,
and former fiscal year,

if changed since last report.



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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days    Yes  x    No ̈



Indicate by check mark whether the Registrant is an accelerated filer (as defined in Exchange Act Rule 120-2)
    Yes  x    No ̈



Indicate the number of shares outstanding of
each of the issuers classes of common stock, as of the last practicable date: 44,587,140 shares, no par value, outstanding as of May 9, 2003.



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##### Table of Contents



HUDSON
UNITED BANCORP



INDEX



|PART I. FINANCIAL INFORMATION |  |                                                                                                                                            
|----------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------
|                             
|Item 1.                       |  | Financial Statements (Unaudited):                                                                                                          
|                             
|                              |  | Consolidated Balance SheetsAt March 31, 2003 and December 31, 2002                                                                         
|                             
|                              |  | Consolidated Statements of IncomeFor the Three Months EndedMarch 31, 2003 and 2002                                                         
|                             
|                              |  | Consolidated Statements of Comprehensive IncomeFor the Three Months EndedMarch 31, 2003 and 2002                                           
|                             
|                              |  | Consolidated Statements of Changes in Stockholders EquityFor the Three Months EndedMarch 31, 2003 and for the Year Ended December 31, 2002
|                             
|                              |  | Consolidated Statements of Cash FlowsFor the Three Months EndedMarch 31, 2003 and 2002                                                     
|                             
|                              |  | Notes to Consolidated Financial Statements                                                                                                 
|                             
|Item 2.                       |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                                      
|Item 3.                       |  | Quantitative and Qualitative Disclosure about Market Risk                                                                                  
|Item 4.                       |  | Controls and Procedures                                                                                                                    
|                             
|PART II. OTHER INFORMATION    |  |                                                                                                                                            
|                             
|Item 6.                       |  | Exhibits and Reports on Form 8-K                                                                                                           
|                              |  | Signatures                                                                                                                                 
|                              |  | Certifications                                                                                                                             



1



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##### Table of Contents

HUDSON UNITED BANCORP



CONSOLIDATED BALANCE SHEETS (Unaudited)



|                                                                                                                                                                                                     |  | March 31,2003                         |           |   | December 31,2002 |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------- | --------- | - | ---------------- | -
|                                                                                                                                                                                                     |  | (in thousands, except per share data) |          
|ASSETS                                                                                                                                                                                               |  |                                       |           |   |                  |  
|Cash and due from banks (primarily non-interest bearing)                                                                                                                                             |  | $                                     | 220,245   |   |                  | $
|Interest bearing due from banks                                                                                                                                                                      |  |                                       | 17,987    |   |                  |  
|                                                                                                                                                                                                     |  |                                       |           |   |                  |  
|TOTAL CASH AND CASH EQUIVALENTS                                                                                                                                                                      |  | $                                     | 238,232   |   |                  | $
|Investment securities available for sale, at market value ($1,332 and $1,072 pledged at
March 31, 2003 and December 31, 2002 respectively)                                                           |  | $                                     | 2,804,830 |   |                  | $
|Trading assets, market value                                                                                                                                                                         |  |                                       | 133,457   |   |                  |  
|Loans and leases:                                                                                                                                                                                    |  |                                       |           |   |                  |  
|Commercial and financial                                                                                                                                                                             |  | $                                     | 1,761,415 |   |                  | $
|Commercial real estate mortgages                                                                                                                                                                     |  |                                       | 923,710   |   |                  |  
|Consumer                                                                                                                                                                                             |  |                                       | 1,028,953 |   |                  |  
|Credit card                                                                                                                                                                                          |  |                                       | 306,526   |   |                  |  
|                                                                                                                                                                                                     |  |                                       |           |   |                  |  
|Sub-total                                                                                                                                                                                            |  | $                                     | 4,020,604 |   |                  | $
|Residential mortgages                                                                                                                                                                                |  |                                       | 242,286   |   |                  |  
|                                                                                                                                                                                                     |  |                                       |           |   |                  |  
|TOTAL LOANS AND LEASES                                                                                                                                                                               |  | $                                     | 4,262,890 |   |                  | $
|Less: Allowance for loan and lease losses                                                                                                                                                            |  |                                       | (71,888   | ) |                  |  
|                                                                                                                                                                                                     |  |                                       |           |   |                  |  
|NET LOANS AND LEASES                                                                                                                                                                                 |  | $                                     | 4,191,002 |   |                  | $
|Premises and equipment, net                                                                                                                                                                          |  |                                       | 97,801    |   |                  |  
|Other real estate owned                                                                                                                                                                              |  |                                       | 1,044     |   |                  |  
|Goodwill                                                                                                                                                                                             |  |                                       | 73,733    |   |                  |  
|Core deposit intangibles, net of amortization                                                                                                                                                        |  |                                       | 25,368    |   |                  |  
|Investment in separate account bank owned life insurance                                                                                                                                             |  |                                       | 138,954   |   |                  |  
|Other assets                                                                                                                                                                                         |  |                                       | 105,473   |   |                  |  
|                                                                                                                                                                                                     |  |                                       |           |   |                  |  
|TOTAL ASSETS                                                                                                                                                                                         |  | $                                     | 7,809,894 |   |                  | $
|                                                                                                                                                                                                     |  |                                       |           |   |                  |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                                                 |  |                                       |           |   |                  |  
|Deposits                                                                                                                                                                                             |  |                                       |           |   |                  |  
|Noninterest bearing                                                                                                                                                                                  |  | $                                     | 1,276,026 |   |                  | $
|NOW, money market and savings                                                                                                                                                                        |  |                                       | 3,084,491 |   |                  |  
|Time deposits                                                                                                                                                                                        |  |                                       | 1,823,586 |   |                  |  
|                                                                                                                                                                                                     |  |                                       |           |   |                  |  
|TOTAL DEPOSITS                                                                                                                                                                                       |  | $                                     | 6,184,103 |   |                  | $
|Customer repurchase agreements                                                                                                                                                                       |  |                                       | 134,434   |   |                  |  
|FHLB and other borrowings                                                                                                                                                                            |  |                                       | 585,220   |   |                  |  
|Other liabilities                                                                                                                                                                                    |  |                                       | 67,734    |   |                  |  
|Subordinated debt                                                                                                                                                                                    |  |                                       | 280,326   |   |                  |  
|Company-obligated mandatory redeemable preferred capital securities of subsidiary trusts
holding solely junior subordinated debentures of the Company                                                |  |                                       | 130,000   |   |                  |  
|                                                                                                                                                                                                     |  |                                       |           |   |                  |  
|TOTAL LIABILITIES                                                                                                                                                                                    |  | $                                     | 7,381,817 |   |                  | $
|Stockholders Equity:                                                                                                                                                                                |  |                                       |           |   |                  |  
|Common stock, no par value; authorized 103,000,000 shares; 52,186,866 shares issued and
44,546,032 shares outstanding in 2003 and 52,186,866 shares issued and 45,023,459 shares outstanding in 2002 |  |                                       | 92,788    |   |                  |  
|Additional paid-in capital                                                                                                                                                                           |  |                                       | 312,945   |   |                  |  
|Retained earnings                                                                                                                                                                                    |  |                                       | 193,153   |   |                  |  
|Treasury stock, at cost, 7,640,834 shares in 2003 and 7,163,407 shares in
2002                                                                                                                       |  |                                       | (184,987  | ) |                  |  
|Restricted stock                                                                                                                                                                                     |  |                                       | (2,265    | ) |                  |  
|Accumulated other comprehensive income                                                                                                                                                               |  |                                       | 16,443    |   |                  |  
|                                                                                                                                                                                                     |  |                                       |           |   |                  |  
|TOTAL STOCKHOLDERS EQUITY                                                                                                                                                                           |  | $                                     | 428,077   |   |                  | $
|                                                                                                                                                                                                     |  |                                       |           |   |                  |  
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                                           |  | $                                     | 7,809,894 |   |                  | $
|                                                                                                                                                                                                     |  |                                       |           |   |                  |  



See Notes
to Consolidated Financial Statements



2



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HUDSON UNITED BANCORP



CONSOLIDATED STATEMENTS OF INCOME (Unaudited)



|                                                                    |  | Three Months EndedMarch 31,          
|------------------------------------------------------------------- |  | -------------------------------------
|                                                                    |  | 2003                                 
|                                                                    |  | (in thousands, except per share data)
|INTEREST AND FEE INCOME:                                            |  |                                      
|Loans and leases                                                    |  | $                                    
|Investment securities                                               |  |                                      
|Other                                                               |  |                                      
|                                                                    |  |                                      
|TOTAL INTEREST AND FEE INCOME                                       |  | $                                    
|                                                                    |  |                                      
|INTEREST EXPENSE:                                                   |  |                                      
|Deposits                                                            |  | $                                    
|Borrowings                                                          |  |                                      
|Subordinated and other debt                                         |  |                                      
|                                                                    |  |                                      
|TOTAL INTEREST EXPENSE                                              |  | $                                    
|                                                                    |  |                                      
|NET INTEREST INCOME                                                 |  | $                                    
|PROVISION FOR LOAN AND LEASE LOSSES, PORTFOLIO LOANS                |  |                                      
|                                                                    |  |                                      
|PROVISION FOR LOAN AND LEASE LOSSES, ACCELERATED DISPOSITION        |  |                                      
|                                                                    |  |                                      
|TOTAL PROVISION FOR LOAN AND LEASE LOSSES                           |  |                                      
|                                                                    |  |                                      
|NET INTEREST INCOME AFTER TOTAL PROVISION FOR LOAN AND LEASE LOSSES |  | $                                    
|                                                                    |  |                                      
|NONINTEREST INCOME:                                                 |  |                                      
|Retail service fees                                                 |  | $                                    
|Credit card fee income                                              |  |                                      
|ATM and debit card fees                                             |  |                                      
|Separate account bank owned life insurance income                   |  |                                      
|Trust income                                                        |  |                                      
|Dime merger termination payment                                     |  |                                      
|Securities (losses)gains                                            |  |                                      
|Trading asset gains                                                 |  |                                      
|Other income                                                        |  |                                      
|                                                                    |  |                                      
|TOTAL NONINTEREST INCOME                                            |  | $                                    
|                                                                    |  |                                      
|NONINTEREST EXPENSE:                                                |  |                                      
|Salaries and benefits                                               |  | $                                    
|Occupancy expense                                                   |  |                                      
|Equipment expense                                                   |  |                                      
|Outside servicesdata processing                                    |  |                                      
|Outside servicesother                                              |  |                                      
|Telephone expense                                                   |  |                                      
|Marketing expense                                                   |  |                                      
|Amortization of intangibles                                         |  |                                      
|Deposit and other insurance                                         |  |                                      
|Expenses related to Dime termination payment                        |  |                                      
|Other expense                                                       |  |                                      
|                                                                    |  |                                      
|TOTAL NONINTEREST EXPENSE                                           |  | $                                    
|                                                                    |  |                                      
|INCOME BEFORE INCOME TAXES                                          |  | $                                    
|PROVISION FOR INCOME TAXES                                          |  |                                      
|                                                                    |  |                                      
|NET INCOME                                                          |  | $                                    
|                                                                    |  |                                      
|NET INCOME PER COMMON SHARE                                         |  |                                      
|Basic                                                               |  | $                                    
|Diluted                                                             |  | $                                    
|WEIGHTED AVERAGE SHARES OUTSTANDING:                                |  |                                      
|Basic                                                               |  |                                      
|Diluted                                                             |  |                                      



See Notes
to Consolidated Financial Statements



3



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HUDSON UNITED BANCORP



CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)



|                                                                                                              |  | Three Months EndedMarch 31 |       
|------------------------------------------------------------------------------------------------------------- |  | -------------------------- | ------
|                                                                                                              |  | 2003                       |       
|                                                                                                              |  | (In thousands)             |       
|NET INCOME                                                                                                    |  | $                          | 28,301
|OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:                                                                |  |                            |       
|Net unrealized securities losses arising during period (tax benefits of $3,197 and
$10,133 respectively)      |  | $                          | (5,453
|Change in valuation of derivative contracts (tax benefits of $1,866 and $2,178
respectively)                  |  |                            | (2,702
|Less: reclassification for net losses included in net income (tax benefits of $2,447 and
$2,451 respectively) |  |                            | (3,544
|                                                                                                              |  |                            |       
|Other comprehensive loss                                                                                      |  | $                          | (4,611
|                                                                                                              |  |                            |       
|COMPREHENSIVE INCOME                                                                                          |  | $                          | 23,690
|                                                                                                              |  |                            |       



See Notes
to Consolidated Financial Statements



4



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##### Table of Contents

HUDSON UNITED BANCORP



CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY (Unaudited)

(in thousands,
except shares)



|                                  |  | Common Stock |   |  | AdditionalPaid-in-Capital |        |   | RetainedEarnings |   |         | TreasuryStock |  |   | RestrictedStock |   |  | AccumulatedOtherComprehensiveIncome (Loss) |          |   | Total |  
|--------------------------------- |  | ------------ | - |  | ------------------------- | ------ | - | ---------------- | - | ------- | ------------- |  | - | --------------- | - |  | ------------------------------------------ | -------- | - | ----- | -
|                                  |  | Shares       |   |  | Amount                    |        |   |                  |   |         |               | 
|Balance at December 31, 2001      |  | 47,814,227   |   |  | $                         | 92,796 |   |                  | $ | 320,309 |               |  | $ | 104,570         |   |  | $                                          | (146,560 | ) |       | $
|                                  |  |              |   |  |                           |        |   |                  |   |         |               |  |   |                 |   |  |                                            |          |   |       |  
|Net income                        |  |             |   |  |                           |       |   |                  |   |        |               |  |   | 123,206         |   |  |                                            |         |   |       |  
|Cash dividends                    |  |             |   |  |                           |       |   |                  |   |        |               |  |   | (50,232         | ) |  |                                            |         |   |       |  
|Stock options exercised           |  | 434,813      |   |  |                           |       |   |                  |   | (6,842  | )             |  |   |                |   |  |                                            | 12,250   |   |       |  
|Other transactions                |  |             |   |  |                           | (8     | ) |                  |   |        |               |  |   |                |   |  |                                            |         |   |       |  
|Purchase of treasury stock        |  | (1,303,952   | ) |  |                           |       |   |                  |   |        |               |  |   |                |   |  |                                            | (37,686  | ) |       |  
|Effect of compensation plans      |  | 78,371       |   |  |                           |       |   |                  |   |        |               |  |   |                |   |  |                                            | 2,125    |   |       |  
|Other comprehensive income        |  |             |   |  |                           |       |   |                  |   |        |               |  |   |                |   |  |                                            |         |   |       |  
|                                  |  |              |   |  |                           |        |   |                  |   |         |               |  |   |                 |   |  |                                            |          |   |       |  
|Balance at December 31, 2002      |  | 45,023,459   |   |  | $                         | 92,788 |   |                  | $ | 313,467 |               |  | $ | 177,544         |   |  | $                                          | (169,871 | ) |       | $
|                                  |  |              |   |  |                           |        |   |                  |   |         |               |  |   |                 |   |  |                                            |          |   |       |  
|Net income                        |  |             |   |  |                           |       |   |                  |   |        |               |  |   | 28,301          |   |  |                                            |         |   |       |  
|Cash dividends                    |  |             |   |  |                           |       |   |                  |   |        |               |  |   | (12,692         | ) |  |                                            |         |   |       |  
|Stock options exercised           |  | 51,118       |   |  |                           |        |   |                  |   | (516    | )             |  |   |                |   |  |                                            | 1,443    |   |       |  
|Other transactions                |  | 200          |   |  |                           |        |   |                  |   | (6      | )             |  |   |                 |   |  |                                            | 6        |   |       |  
|Purchase of treasury stock        |  | (527,095     | ) |  |                           |       |   |                  |   |        |               |  |   |                |   |  |                                            | (16,525  | ) |       |  
|Effect of compensation plans      |  | (1,650       | ) |  |                           |       |   |                  |   |        |               |  |   |                |   |  |                                            | (40      | ) |       |  
|Other comprehensive income (loss) |  |             |   |  |                           |       |   |                  |   |        |               |  |   |                |   |  |                                            |         |   |       |  
|                                  |  |              |   |  |                           |        |   |                  |   |         |               |  |   |                 |   |  |                                            |          |   |       |  
|Balance at March 31, 2003         |  | 44,546,032   |   |  | $                         | 92,788 |   |                  | $ | 312,945 |               |  | $ | 193,153         |   |  | $                                          | (184,987 | ) |       | $
|                                  |  |              |   |  |                           |        |   |                  |   |         |               |  |   |                 |   |  |                                            |          |   |       |  



See Notes
to Consolidated Financial Statements



5



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HUDSON UNITED BANCORP



CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(in thousands)



|                                                                                  |  | Three Months EndedMarch 31, |           
|--------------------------------------------------------------------------------- |  | --------------------------- | ----------
|                                                                                  |  | 2003                        |           
|                                                                                  |  |                             |           
|CASH FLOWS FROM OPERATING ACTIVITIES:                                             |  |                             |           
|Net Income                                                                        |  | $                           | 28,301    
|Adjustments to reconcile net income to net cash provided by operating
activities: |  |                             |           
|Provision for loan and lease losses                                               |  |                             | 7,000     
|Provision for depreciation and amortization                                       |  |                             | 4,956     
|Amortization (Accretion) of investment securities premiums (discounts),
net       |  |                             | (4,160    
|Securities gains                                                                  |  |                             | (3,259    
|Loss on sales of premises and equipment                                           |  |                             | (153      
|Increase in other assets                                                          |  |                             | 47,410    
|Decrease in other liabilities                                                     |  |                             | (79,061   
|                                                                                  |  |                             |           
|NET CASH PROVIDED BY OPERATING ACTIVITIES                                         |  | $                           | 1,034     
|                                                                                  |  |                             |           
|CASH FLOWS FROM INVESTING ACTIVITIES:                                             |  |                             |           
|Proceeds from sales of investment securities:                                     |  |                             |           
|Available for sale                                                                |  | $                           | 637,153   
|Proceeds from repayments and maturities of investment securities:                 |  |                             |           
|Available for sale                                                                |  |                             | 358,450   
|Purchases of investment securities:                                               |  |                             |           
|Available for sale                                                                |  |                             | (1,317,246
|Net decrease in loans other than purchases and sales                              |  |                             | 72,262    
|Increase in loans due to purchases                                                |  |                             | (2,718    
|Proceeds from sales of loans                                                      |  |                             |          
|Acquisition of credit card assets                                                 |  |                             |          
|Proceeds from sales of premises and equipment                                     |  |                             | 407       
|Purchases of premises and equipment                                               |  |                             | (814      
|Decrease (increase) in other real estate                                          |  |                             | 271       
|                                                                                  |  |                             |           
|NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES                               |  | $                           | (252,235  
|                                                                                  |  |                             |           
|CASH FLOWS FROM FINANCING ACTIVITIES:                                             |  |                             |           
|Net decrease in deposits                                                          |  | $                           | (15,598   
|Net increase (decrease) in borrowings                                             |  |                             | 249,968   
|Payment of subordinated debt securities                                           |  |                             |          
|Proceeds from issuance of debt securities                                         |  |                             | 35,000    
|Payment of debt securities                                                        |  |                             | (25,300   
|Decrease of MTM on debt securities                                                |  |                             | (1,927    
|Proceeds from issuance of Common stock                                            |  |                             | 927       
|Cash dividends                                                                    |  |                             | (12,692   
|Acquisition of treasury stock                                                     |  |                             | (16,525   
|                                                                                  |  |                             |           
|NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                               |  | $                           | 213,853   
|                                                                                  |  |                             |           
|DECREASE IN CASH AND CASH EQUIVALENTS                                             |  | $                           | (37,348   
|CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                  |  |                             | 275,580   
|                                                                                  |  |                             |           
|CASH AND CASH EQUIVALENTS AT END OF PERIOD                                        |  | $                           | 238,232   
|                                                                                  |  |                             |           
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:                                |  |                             |           
|Cash paid during the period                                                       |  |                             |           
|Interest                                                                          |  | $                           | 26,396    
|Taxes                                                                             |  |                             | 12,956    



See Notes
to Consolidated Financial Statements



6



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##### Table of Contents

HUDSON UNITED BANCORP



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in thousands, except per
share data)



NOTE
ABASIS OF PRESENTATION



The accompanying unaudited
financial statements of Hudson United Bancorp and Subsidiaries (Hudson Unitedor the Company) include the accounts of the parent company, Hudson United Bancorp, and its wholly-owned subsidiaries: Hudson United Bank (the
Bank), HUBCO Capital Trust I, HUBCO Capital Trust II, Hudson United Capital Trust I and Hudson United Capital Trust II. All material intercompany balances and transactions have been eliminated in consolidation. These unaudited consolidated
financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the information presented includes all adjustments and normal recurring accruals considered necessary
for a fair presentation, in all material respects, of the interim period results. The results of operations for periods of less than one year are not necessarily indicative of results for the full year. The consolidated financial statements should
be read in conjunction with the Companys Annual Report on Form 10-K for the year ended December 31, 2002.



For purposes of presentation, management has discussed some comparisions to the prior quarter of 2003 and year ended 2002 on a GAAP and non-GAAP basis excluding certain items, which are listed in the
body of the individual discussions. Management feels that it is necessary to discuss certain items in this manner to give the reader a more meaningful assessment of the Companys performance because of certain income and expense items that
occurred in the first quarter of 2002 related to the Dime merger termination (see paragraph below under Reclassification of Certain Assets, Revenues and Expenses).



Reclassification of Certain Assets, Revenues and Expenses



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



Net income for the first
three months of 2002 included $77.0 million cash payment received from Dime Bancorp, Inc. (Dime) on January 7, 2002, representing the final termination payment relating to the uncompleted merger of the Company and Dime. Also included in
the first quarter of 2002 were $21.5 million of certain expenses resulting from the merger resolution and other charges ($8.3 million in expenses directly related to the Dime termination payment and other expenses including, $0.2 million in salaries
and benefits, $1.3 million in occupancy expenses, $1.1 million in equipment expenses, $0.2 million in expenses classified as outside servicesother, and $10.4 million in other expense) and an additional $21.3 million provision for possible loan
and lease losses relating to the accelerated disposition of certain nonperforming commercial and industrial loans.



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NOTE BEARNINGS PER SHARE



Basic earnings
per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income by the weighted average number of common shares plus and the
incremental number of shares issuable from the exercise of stock options, calculated using the treasury stock method.



A reconciliation of weighted average common shares outstanding to weighted average common shares outstanding assuming dilution follows (in thousands,
except per share data):



|                                                             |  | Three Months EndedMarch 31,
|------------------------------------------------------------ |  | ---------------------------
|                                                             |  | 2003                       
|Basic Earnings Per Share                                     |  |                            
|Net Income                                                   |  | $                          
|Weighted average common shares outstanding                   |  |                            
|Basic earnings per share                                     |  | $                          
|Diluted Earnings Per Share                                   |  |                            
|Net Income                                                   |  | $                          
|Weighted average common shares outstanding                   |  |                            
|Effect of dilutive securities:                               |  |                            
|Stock options                                                |  |                            
|                                                             |  |                            
|Weighted average common shares outstanding assuming dilution |  |                            
|Diluted earnings per share                                   |  | $                          

---

|(1) |  | 2002 figures include $77 million cash payment received from Dime Bancorp, Inc. (Dime) on January 7, 2002, representing the final termination payment
relating to the uncompleted merger of the Company and Dime, $21.5 million of certain expenses resulting from the merger resolution and other charges, and an additional $21.3 million provision for possible loan and lease losses relating to the
accelerated disposition of certain nonperforming commercial and industrial loans.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



NOTE CACQUISITIONS



The Company announced, on June 26, 2002, a purchase and assumption transaction with the FDIC as the receiver for the failed Connecticut Bank of Commerce
(the CBC transaction). The Company in this transaction, assumed certain insured deposits and consumer loans, along with an option to purchase two branches in Connecticut and to lease two branches in New York City and one in Connecticut.
Subsequently, the Bank has put back the consumer loans, purchased the two Connecticut branches and assumed the leases of the two branches in New York City and the one branch in Connecticut. The Bank paid an acquisition premium of $17.3 million to
the FDIC in this transaction.



During the first quarter of 2003
the Company made no purchases of credit card portfolios. The Company entered into agreements at several times in 2002 to purchase third party credit card assets from unrelated third parties. The Company had paid total consideration during 2002 of
$62.6 million for $66.2 million of these assets, with an associated discount of $3.6 million.



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NOTE DINVESTMENT SECURITIES



The following
table presents the amortized cost and estimated market value of investment securities available for sale at the dates indicated excluding trading assets (in thousands):



|                                                 |  | March 31, 2003
|------------------------------------------------ |  | --------------
|                                                 |  | AmortizedCost 
|                                                 |  |               
|Available for Sale                               |  |               
|U.S. Government securities/agencies              |  | $             
|Mortgage-backed securities                       |  |               
|Asset backed and other debt securities           |  |               
|Obligations of states and political subdivisions |  |               
|FHLB stock                                       |  |               
|Other equity securities                          |  |               
|                                                 |  |               
|                                                 |  | $             
|                                                 |  |               



|                                                 |  | December 31, 2002
|------------------------------------------------ |  | -----------------
|                                                 |  | AmortizedCost    
|                                                 |  |                  
|Available for Sale                               |  |                  
|U.S. Government securities                       |  | $                
|Mortgage-backed securities                       |  |                  
|Asset backed and other debt securities           |  |                  
|Obligations of states and political subdivisions |  |                  
|FHLB stock                                       |  |                  
|Other equity securities                          |  |                  
|                                                 |  |                  
|                                                 |  | $                
|                                                 |  |                  



Investment securities
with a market value of $1,332.2 million at March 31, 2003 and $1,072.0 million at December 31, 2002 were pledged as collateral for public sector deposits, customer repurchase agreements and borrowings from the Federal Home Loan Bank and other
counterparties.



Other equity securities include preferred stocks
of Government Sponsored Entities, and common and preferred stocks of other financial institutions.



The following table presents the estimated market value of trading assets at March 31, 2003 (in thousands):



|                           |  | EstimatedMarketValue
|-------------------------- |  | --------------------
|Trading Assets             |  |                     
|Mortgage-backed securities |  | $                   
|                           |  |                     



The securities
classified as trading assets at March 31, 2003 were transferred from investments securities available for sale into the trading assets category in the first quarter of 2003. At the time of transfer a $3.5 million gain was realized. These assets
subsequently were sold in April of 2003. At December 31, 2002 no investment securities were classified as trading assets.



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NOTE E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 a fixed rate of 7.75% per annum payable semi-annually. The Company repurchased $7.8 million of this debt
during the second quarter of 2002, $8.8 million remains outstanding as of March 31, 2003



In March 1996, Jeff Banks, Inc. issued $23.0 million aggregate principal amount of subordinated debentures which mature in 2006 and bear interest at a fixed interest rate of 8.75% per annum payable semi-annually. The Company
acquired JeffBanks, Inc. in 1999. These notes were 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. On January 7, 2002, the Company
announced redemption of this issue. The notes were redeemed in February 2002.



In September 1996, the Company sold $75 million aggregate principal amount of subordinated debentures. The debentures, which mature in 2006, bear interest at a fixed interest rate of 8.20% per annum payable semi-annually. The
outstanding balance of this debt is $68 million as of March 31, 2003.



On May 6, 2002, Hudson United Bank issued $200 million of 7.00% subordinated notes due May of 2012. Interest on the note are payable semi-annually.



NOTE FCOMPANY-OBLIGATED MANDATORILY REDEEMABLE PREFERRED CAPITAL SECURITIES OF SUBSIDIARY TRUSTS HOLDING SOLELY JUNIOR
SUBORDINATED DEBENTURES OF THE COMPANY



On March 31, 2003, the
Company issued $20 million of trust preferred securities, with a final maturity on April 15, 2033, using Hudson United Capital Trust I, a statutory business trust formed under the laws of the State of Delaware. The trust preferred securities are
callable at par on April 15, 2008, and have a fixed rate yield of 6.85% until the call date. Thereafter the yield on this issuance is based on 6-month LIBOR plus 3.30%. The Company issued on March 28, 2003 $15 million of trust preferred securities,
with a final maturity of April 10, 2033, using Hudson United Capital Trust II, a statutory business trust formed under the laws of the State of Delaware. The trust preferred securities are callable at par on April 24, 2008, and have a fixed rate
yield of 6.45% until the call date.



On January 31, 1997, the
Company issued $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 tax is prohibited, treatment as Tier 1 capital is no longer permitted or certain other contingencies arise. As of March 31, 2003, $45.0 million of the 8.98% Capital Securities remained
outstanding.



On February 5, 1997, the Company issued $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 Deferrable Debentures due 2027 of the Company. The 9.25% Trust Capital Securities became redeemable by the Company on March 31, 2002. On February 3, 2003, the
Company redeemed at par all of the aforementioned securities.



On
June 19, 1998, the Company issued $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.



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The following is a maturity
distribution of outstanding subordinated debt and capital trust securities at March 31, 2003:



|Year Maturing |  | Year Callable |  | Subordinated Debt |       | Capital TrustSecurities |   | Total       
|------------- |  | ------------- |  | ----------------- | ----- | ----------------------- | - | ------------
|              |  |               |  |                   |       |                         |   | ($ millions)
|2004          |  | Not callable  |  | $                 | 8.8   |                         |   |             
|2006          |  | Not callable  |  |                   | 68.0  |                         |   |             
|2012          |  | Not callable  |  |                   | 203.5 |                         |   |             
|2027          |  | 2007          |  |                   |       |                         | $ | 45.0        
|2028          |  | 2008          |  |                   |       |                         |   | 50.0        
|2033          |  | 2008          |  |                   |       |                         |   | 35.0        
|              |  |               |  |                   |       |                         |   |             
|              |  |               |  | $                 | 280.3 |                         | $ | 130.0       
|              |  |               |  |                   |       |                         |   |             



The table above includes
$3.5 million in mark to market adjustment that is included in the Companys balance sheet on the portion of the Companys subordinated debt that is hedged with interest rate derivatives.



NOTE GCOMPREHENSIVE INCOME (LOSS)



The Company displays Consolidated Statements of Income and
Consolidated Statements of Comprehensive Income separately for the disclosed periods. Comprehensive Income is displayed on the Consolidated Balance Sheets and Consolidated Statements of Changes in Stockholders Equity as a separate item
entitled Accumulated Other Comprehensive Income (Loss). The following is a reconciliation of the tax effect allocated to each component of comprehensive income for the periods presented.



|                                                                        |  | Three-Months EndedMarch 31, 2003 |       
|----------------------------------------------------------------------- |  | -------------------------------- | ------
|                                                                        |  | Before taxamount                 |       
|Unrealized net securities losses arising during the period              |  | $                                | (8,650
|Change in valuation of derivative contracts                             |  |                                  | (4,568
|Less: reclassification adjustment for net losses realized in net income |  |                                  | (5,991
|                                                                        |  |                                  |       
|Net change during period                                                |  | $                                | (7,227
|                                                                        |  |                                  |       



|                                                                        |  | Three Months EndedMarch 31, 2002 |        
|----------------------------------------------------------------------- |  | -------------------------------- | -------
|                                                                        |  | Before taxamount                 |        
|Unrealized net security losses arising during the period                |  | $                                | (24,807
|Change in valuation of derivative contracts                             |  |                                  | (5,331 
|Less: reclassification adjustment for net losses realized in net income |  |                                  | (6,001 
|                                                                        |  |                                  |        
|Net change during period                                                |  | $                                | (24,137
|                                                                        |  |                                  |        



NOTE HRECENT ACCOUNTING STANDARDS



The
FASB issued SFAS No. 142 Goodwill and Other Intangible Assets during 2001. Under this standard, intangible assets must continue to be amortized, but goodwill is no longer amortized starting January 1, 2002. Goodwill that is determined to
be impaired must be written-off when that determination is made. The Company has concluded that no impairment charge was required during the first quarter of 2003 or year ended 2002. The Company is required to perform an impairment test of its
goodwill on at least an annual basis. Core deposit intangibles, with a carrying value of $25.4 million at March 31, 2003 are being amortized and the related amortization expense for the first quarter of 2003 was $1.1 million. The carrying values for
goodwill and core deposit intangibles include the premium paid in the CBC transaction. (see footnote J for additional details).



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The FASB issued SFAS No. 143
Accounting for Asset Retirement Obligations in June 2001. This statement will be effective for financial statements issued for fiscal years beginning after June 15, 2002. SFAS No. 143 addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. The adoption of this statement did not have a material effect on the Companys operations.



The FASB issued SFAS No. 144 Accounting for the Impairment or Disposal
of Long-Lived Assets in August 2002. This statement is effective for financial statements issued for fiscal years beginning after December 15, 2001. SFAS No. 144 establishes a single accounting model for long-lived assets to be disposed of as
well as establishing criteria for both long-lived assets to be disposed of other than by sale and long-lived assets to be disposed of by sale. The adoption of this statement did not have a material effect on the Companys operations.



The FASB issued SFAS No. 145, which was a rescission of SFAS
Nos. 4, 44 and 64, amendment of SFAS No. 13 and technical corrections in April 2002. The amendment to SFAS No. 13 requires that lease modifications be accounted for in the same manner as sale-leaseback transactions. The adoption of this statement
did not have a material effect on the Companys operations.



The FASB issued SFAS No. 146 Accounting for Costs Associated with Exit or Disposal Activities in June of 2002 SFAS No. 146 addresses financial accounting and reporting for costs associated with exit or disposal activities
and nullifies EITF Issue No. 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity. SFAS No. 146 requires that a liability for a cost associated with an exit or disposal activity be
recognized and measured initially at fair value only when the liability is incurred. The adoption of this statement did not have a material effect on the Companys operations.



The FASB issued SFAS No. 147 Acquisitions of Certain Financial Institutions on October 1, 2002. This statement is
effective for acquisitions for which the date of acquisition is on or after October 1, 2002. SFAS No. 147 is an amendment of FASB Statements No. 72 and 144 and FASB Interpretation No. 9 and provides guidance and clarification as to the treatment of
certain types of acquisitions. The adoption of this statement did not have a material effect on the Companys operations.



The FASB issued SFAS No. 148 Accounting for Stock-Based Compensation-Transition and Disclosure on December 31, 2002. This pronouncement
provides alternative methods of transition to FAS 123. The Company has adopted FASB No. 148 effective January 1, 2003. The Company has elected to utilize the prospective method, which requires that the companies apply the recognition provisions of
Statement 123 to all employee awards granted, modified, or settled after the beginning of the fiscal year in which the recognition are first applied. The Company expects no material impact on its operations from adoption of this statement. The
Company did not record any expense related to the adoption of this statement in the first quarter of 2003.



NOTE I:STOCK OPTIONS



The Board of Directors adopted and the shareholders approved 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. There are other options outstanding that were granted under the plans of acquired companies. The option or grant price cannot be less than the fair market value of the common stock
at the date of the grant.



On April 17, 2002, the Board of
Directors adopted and the shareholders approved the 2002 Stock Option Plan, which provides for the issuance of up to 1,250,000 stock options to employees of the Company. As of the adoption date there are no further issuances from any of the previous
plans. As of March 31, 2003, there remained 965,500 shares and as of December 31, 2002 there remained 968,000 shares available for grant from the 2002 Stock Option Plan.



In connection with the acquisitions completed by the Company in prior years, any outstanding options were converted into
options to purchase common stock of the Company.



If compensation
cost had been determined based on the fair value at the grant dates for stock options awarded under the Companys plans consistent with the method of SFAS No. 123, the Companys net income and income per share would have



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been reduced to the proforma amounts indicated below for March 31, 2002. The results for March 31, 2003 are actual as the Company has adopted
the prospective method of recording stock compensation expense effective January 1, 2003(in thousands except per share data):



|                           |  |             |  | March 31, 2003 |      | March 31, 2002
|-------------------------- |  | ----------- |  | -------------- | ---- | --------------
|Net income                 |  | As reported |  | $              | 28.3 |               
|                           |  | Pro forma   |  |                | 28.3 |               
|                          
|Basic earnings per share   |  | As reported |  | $              | 0.63 |               
|                           |  | Pro forma   |  |                | 0.63 |               
|                          
|Diluted earnings per share |  | As reported |  | $              | 0.63 |               
|                           |  | Pro forma   |  |                | 0.63 |               



For both the quarters
ended March 31, 2003 and March 31, 2002 there was no stock-based employee compensation cost, net of related tax effects that was included in net income.



NOTE J:



Core deposit intangibles is as follows for the periods indicated ($ in thousands)



|                         |  | Gross CarryingAmount |        | AccumulatedAmortization |   | Net CarryingAmount
|------------------------ |  | -------------------- | ------ | ----------------------- | - | ------------------
|At March 31, 2003        |  |                      |        |                         |   |                   
|Core deposit intangibles |  | $                    | 42,029 |                         | $ | 16,667            
|                         |  |                      |        |                         |   |                   



|                         |  | Gross CarryingAmount |        | AccumulatedAmortization |   | Net CarryingAmount
|------------------------ |  | -------------------- | ------ | ----------------------- | - | ------------------
|At December 31, 2002     |  |                      |        |                         |   |                   
|Core deposit intangibles |  | $                    | 42,029 |                         | $ | 15,606            
|                         |  |                      |        |                         |   |                   



The following is the
estimated amortization expense on core deposit intangibles for the years ended December 31:



|2003 |  | $4,222
|---- |  | ------
|2004 |  | 4,222 
|2005 |  | 4,222 
|2006 |  | 4,222 
|2007 |  | 4,222 



MANAGEMENTS DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



This financial review presents managements discussion
and analysis of financial condition and results of operations. It should be read in conjunction with the Companys Consolidated Financial Statements and the accompanying notes. All dollar amounts, other than per share information, are presented
in thousands unless otherwise noted.



STATEMENTS REGARDING FORWARD-LOOKING INFORMATION



This document, 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. Actual results may differ materially from the results discussed in these forward-looking statements. Factors that may cause actual results to differ materially from those
contemplated by such forward-looking statements include, among others, changes in interest rates,



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changes in economic conditions, deposit and loan volume trends, changes in levels of loan quality, trends in 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, tax and regulatory provisions applicable to the Company. The Company assumes
no obligation for updating any such forward-looking statements at any time. Information on potential factors that could cause the Companys financial results to differ from the forward-looking statements also is included from time to time in
the Companys public reports filed with the SEC, including in our Form 10-K for the year ending December 31, 2002.



RESULTS OF OPERATIONS



OVERVIEW



The Company had net income of $28.3 million, or $0.63 per diluted share, for the first quarter of 2003 compared to $42.3 million, or $0.93 per diluted
share for the comparable period in 2002. Net income for the first three months of 2002 included $77.0 million cash payment received from Dime Bancorp, Inc. (Dime) on January 7, 2002, representing the final termination payment relating to
the uncompleted merger of the Company and Dime. Also included in the first quarter of 2002 were $21.5 million of certain expenses resulting from the merger resolution and other charges ($8.3 million in expenses directly related to the Dime
termination payment and other expenses including, $0.2 million in salaries and benefits, $1.3 million in occupancy expenses, $1.1 million in equipment expenses, $0.2 million in expenses classified as outside servicesother, and $10.4 million in
other expense) and an additional $21.3 million provision for loan and lease losses relating to the accelerated disposition of certain nonperforming commercial and industrial loans.



The Companys return on average equity was 26.86 % and return on average assets was 1.49% for the first quarter of 2003.
The net interest margin was 4.36% and the efficiency ratio was 51.94% for the first quarter of 2003. The Companys return on average equity was 43.40%, return on average assets was 2.48% for the first quarter of 2002. The net interest margin
was 4.73% and the efficiency ratio was 41.67% for the first quarter of 2002. The Companys efficiency ratio is calculated by dividing noninterest expense (minus amortization expense and ORE expense) by the sum of net interest income,
noninterest income and the tax equivalent adjustment, minus securities gains. The Companys ORE expense, included as a part of other expense on the Companys Consolidated Statements of Income, was $0.2 million and $0.5 million for the
quarters ended March 31, 2003 and March 31, 2002 respectively. The Companys tax equivalent adjustments were $1.0 million and $0.8 million respectively for the quarters ended March 31, 2003 and March 31, 2002.



NET REVENUE



Net revenue, which is the sum of net interest income and noninterest income,
was $102.1 million for the first quarter of 2003. This was comprised of net interest income of $75.2 million and noninterest income of $26.9 million. Net revenue for the first quarter of 2003 decreased by $72.1 million or 41.4% compared to the first
quarter of 2002. The decrease in the first quarter of 2003 compared to the first quarter of 2002 is primarily attributed to the aforementioned $77.0 million Dime merger termination payment received in the first quarter of 2002. Net revenue for the
first quarter of 2003 increased by $4.9 million, or 5.1%, compared to the first quarter of 2002, excluding the Dime merger termination payment in 2002. This was mainly due to an increase in net interest income of $3.6 million and increases in credit
card income of $1.0 million and other income of $1.1 million, partially offset by a decrease in retail service fees of $0.5 million.



NET INTEREST INCOME



Net interest income for the first quarter of 2003 was $75.2 million and the net interest margin,on a tax equivalent basis, was 4.36%. Net interest income
was $71.6 million with a net interest margin of 4.73% for the comparable first quarter of 2002. Net interest income increased by $3.6 million or 5.1% compared to the first quarter of 2002.The increase in net interest income in the first
quarter of 2003 compared to the comparable quarter in 2002 was due primarily to lower interest expense on deposits, which resulted from a lower cost of deposits. This was offset in part by lower interest income on loans in the first quarter of 2003
as compared to the first quarter of 2002, which was primarily attributable to prepayments on existing loans and subsequent new loans originated at lower interest rates due to the lower interest rate environment in 2003 compared to 2002.



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NONINTEREST INCOME



Noninterest income was $26.9
million for the first quarter of 2003. This represented a decrease of $75.7 million compared to $102.6 million of noninterest income in the first quarter of 2002. The decrease resulted primarily from the $77.0 million Dime merger termination payment
received in 2002. Noninterest income in the first quarter of 2003 increased by $1.3 million compared to the first quarter of 2002, excluding the Dime merger termination payment in 2002. This was due in most part to increases in credit card fees of
$1.0 million and other income of $1.1 million, with the latter attributable mainly to commercial banking fees, being offset in part by decreases in retail service fees of $0.5 million. The Company recorded a $3.5 million gain on trading assets
transferred from available for sale securities on March 31, 2003. This gain was offset substantially by a $3.3 million loss on available for sale securities sold during the first quarter of 2003.



NONINTEREST EXPENSE



Noninterest expense was $54.7 million for the first quarter
of 2003 compared to $74.3 million for the comparable period in 2002.The decrease in noninterest expense in the first quarter of 2003 compared to the first quarter of 2002 was due primarily to the aforementioned $21.5 million of certain
expenses incurred in 2002. Noninterest expense increased by $1.9 million in the first quarter of 2003 over the same period in 2002, excluding these expenses in 2002. The $1.9 million increase in the first quarter of 2003 was mainly due to increases
in occupancy and salaries and benefits expenses related to the purchase and assumption transaction with the FDIC as the receiver for the failed CBC transaction. This increase in expenses was offset by reductions in marketing and telephone expenses.
The efficiency ratio was 51.94% for the first quarter of 2003 and 41.67% for the first quarter of 2002. The increase in 2003 compared to 2002 was primarily attributable to the aforementioned Dime merger termination payment in 2002.



INCOME TAXES



The Companys provision for income taxes was $12.1
million at quarter ended March 31, 2003 compared to $28.8 million at quarter ended March 31, 2002. The Companys effective tax rate for the three months ended March 31, 2003 was 30.0% compared to 40.5% for the same period in 2002.This
decrease in the provision for income tax and the lower effective tax rate for the first quarter of 2003 was due to several factors. One factor was that pretax income for the first quarter of 2002 included the Dime merger termination payment and
certain expenses, as noted above. Other factors included the Companys increased investment in tax advantaged securities during the second half of 2002, and an updated assessment of the Companys tax preference income, reserves and related
liabilities in the first quarter of 2003.



PROVISION FOR LOAN AND LEASE LOSSES AND ALLOWANCE FOR LOAN AND LEASE LOSSES



Introduction



The provision for loan and lease losses was $7.0 million for the first quarter of 2003 and $28.8 million for the first quarter of 2002. The higher
provisions in 2002 compared to 2003 was due to a $21.3 million provision for the accelerated disposition of certain commercial and industrial loans in the quarter ended March 31, 2002.



The Allowance for Loan and Lease Losses (the Allowance) was $71.9 million at March 31, 2003 and December 31,
2002. The Allowance at March 31, 2003 represented 472% of nonperforming loans and 1.69% of total loans. The Allowance at year-end 2002 represented 468% of nonperforming loans and 1.66% of total loans.



The determination of the adequacy of 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:



| |  |  | the establishment of allowance 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.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | 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
leases, and credit card portfolios, based upon historical loss rates.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



Consideration is also given to the changed risk profile brought about by business combinations, knowledge about customers,
industries, the results of ongoing credit quality monitoring processes, the adequacy and expertise of the Companys lending staff, underwriting policies, loss histories, delinquency trends, nature of economic and business conditions, and any
concentration in the portfolio including real estate related loans located in the northeastern part of the United States. Since many of the loans depend upon the sufficiency of real estate 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 consideration
| | - |  | ------------------------------------------------------------------------------



Based upon the process employed and giving recognition to all attendant factors associated with the loan portfolio,
management considers the Allowance to be adequate at March 31, 2003.



Non Performing Loans and Non Performing Assets



Non-performing loans totaled $15.2 million at March 31, 2003, a decrease of $0.2 million when compared to $15.4 million at December 31, 2002. Non-performing assets were $16.3 million at March 31, 2003
and $16.7 million at December 31, 2002.



The following table
presents the composition of non-performing assets and selected asset quality ratios at the dates indicated:



|                                                        |  | March 31, 2003 |        |   | December 31, 2002 |  
|------------------------------------------------------- |  | -------------- | ------ | - | ----------------- | -
|                                                        |  | (in thousands) |       
|Nonaccrual Loans:                                       |  |                |        |   |                   |  
|Commercial                                              |  | $              | 6,501  |   |                   | $
|Real Estate                                             |  |                | 8,307  |   |                   |  
|Consumer                                                |  |                | 432    |   |                   |  
|                                                        |  |                |        |   |                   |  
|Total Nonaccrual Loans                                  |  | $              | 15,240 |   |                   | $
|Other Real Estate Owned                                 |  |                | 1,044  |   |                   |  
|                                                        |  |                |        |   |                   |  
|Total Nonperforming Assets                              |  | $              | 16,284 |   |                   | $
|                                                        |  |                |        |   |                   |  
|Nonaccrual Loans to Total Loans and Leases              |  |                | 0.36   | % |                   |  
|Allowance for Loan and Lease Losses to Nonaccrual Loans |  |                | 472    | % |                   |  



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Loans Past Due 90 Days and Still Accruing



The following table shows loans past due 90 days or more and still accruing, along with the applicable asset quality ratio:



|                                            |  | March 31, 2003 |        |   | December 31, 2002 |  
|------------------------------------------- |  | -------------- | ------ | - | ----------------- | -
|                                            |  | (in thousands) |       
|Loans Past Due 90 Days or More and Accruing |  |                |        |   |                   |  
|Commercial                                  |  | $              | 2,901  |   |                   | $
|Real Estate                                 |  |                | 7,372  |   |                   |  
|Consumer                                    |  |                | 2,077  |   |                   |  
|Credit card                                 |  |                | 8,148  |   |                   |  
|                                            |  |                |        |   |                   |  
|Total Past Due Loans                        |  | $              | 20,498 |   |                   | $
|                                            |  |                |        |   |                   |  
|As a percent of Total Loans and Leases      |  |                | 0.48   | % |                   |  



Allowance for Loan and Lease Losses



The
following table presents the activity in the allowance for loan and lease losses for the periods indicated:



|                                                                                             |  | Summary of Activity in the AllowanceBy Loan
Category |          
|-------------------------------------------------------------------------------------------- |  | ---------------------------------------------------- | ---------
|                                                                                             |  | Three Months EndedMarch 31, 2003                     |          
|                                                                                             |  | (Dollars in thousands)                               |          
|Amount of Loans and Leases Outstanding at Period End                                         |  | $                                                    | 4,262,890
|                                                                                             |  |                                                      |          
|Daily Average Amount of Loans and Leases Outstanding                                         |  | $                                                    | 4,266,623
|                                                                                             |  |                                                      |          
|Allowance for Loan and Lease Losses                                                          |  |                                                      |          
|Balance at beginning of the period                                                           |  | $                                                    | 71,929   
|Loans charged off:                                                                           |  |                                                      |          
|Real estate                                                                                  |  | $                                                    | 355      
|Commercial                                                                                   |  |                                                      | 1,567    
|Consumer                                                                                     |  |                                                      | 7,504    
|Accelerated disposition(1)                                                                   |  |                                                      |         
|                                                                                             |  |                                                      |          
|Total loans charged off                                                                      |  | $                                                    | 9,426    
|                                                                                             |  |                                                      |          
|Recoveries:                                                                                  |  |                                                      |          
|Real estate                                                                                  |  | $                                                    | 115      
|Commercial                                                                                   |  |                                                      | 763      
|Consumer                                                                                     |  |                                                      | 1,507    
|                                                                                             |  |                                                      |          
|Total recoveries                                                                             |  | $                                                    | 2,385    
|                                                                                             |  |                                                      |          
|Net loans charged off                                                                        |  | $                                                    | 7,041    
|Provision for loan and lease losses, portfolio loans                                         |  |                                                      | 7,000    
|Provision for loan and lease losses, accelerated disposition(1)                              |  |                                                      |         
|                                                                                             |  |                                                      |          
|Balance at period end                                                                        |  | $                                                    | 71,888   
|                                                                                             |  |                                                      |          
|Allowance for Loan and Lease Losses to Total Loans and Leases                                |  |                                                      | 1.69     
|                                                                                             |  |                                                      |          
|Provision for loan and lease losses, as a percentage of average loans and leases
outstanding |  |                                                      | 0.66     
|                                                                                             |  |                                                      |          
|Net loans charged off during period to average loans and leases
outstanding                  |  |                                                      | 0.66     
|                                                                                             |  |                                                      |          

---

|(1) |  | Relates primarily to the planned accelerated disposition of certain nonperforming commercial and industrial loans at March 31, 2002.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------

|(2) |  | Annualized
|--- |  | ----------



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FINANCIAL CONDITION



Loan and lease categories
consisting of commercial and financial; commercial real estate; consumer; and credit card loans totaled $4.0 billion at March 31, 2003, compared to $4.1 billion at December 31, 2002. These four categories, which exclude residential mortgages,
represented 94% of loans and leases at March 31, 2003, and at December 31, 2002. These four loan and lease categories are the areas of loans that the Company emphasizes. This is because they generally have more attractive yields; interest rate
sensitivity; and maturity characteristics than single family loans. Residential mortgage loans decreased by $32.2 million to $242.3 million at March 31, 2003, as compared to December 31, 2002 due to amortization and prepayments on the portfolio.



Total investment securities, excluding trading assets of $133.5
million, were $2.8 billion at March 31, 2003, compared to $2.6 billion at December 31, 2002. Investment securities pledged as collateral for public sector deposits, repurchase agreements, borrowings and other purposes increased by $260.2 million in
the first three months of 2003. The Company had trading assets of $133.5 million as of March 31, 2003 and no trading assets as of December 31, 2002. The trading assets at March 31, 2003 were transferred from investments securities available for sale
into the trading assets category in the first quarter of 2003. At time of transfer a gain of $3.5 million was realized. These assets were subsequently sold in April of 2003. Other investment securities sold during the first quarter were at a
realized loss of $3.3 million.



The Companys total assets
were $7.8 billion at March 31, 2003, compared to $7.7 billion at year-end 2002.



Total deposits were $6.2 billion at both March 31, 2003 and December 31, 2002.



Total borrowings at March 31, 2003 were $719.7 million an increase of $250.0 million over year end 2002 levels of $469.7 million. This increase was primarily in the form of fixed rate advances from the
Federal Home Loan Bank with maturities of two and three years.



Total stockholders equity was $428.1 million at March 31, 2003 and $432.5 million at December 31, 2002. The change in stockholders equity resulted primarily from $28.3 million of net income, offset by payment of cash
dividends of $12.7 million, treasury repurchases of $16.5 million, stock compensation exercises of $1.1 million and a decrease in accumulated other comprehensive (loss) of $4.6 million.



The Company repurchased a total of 527,095 shares of common stock in the first three months of 2003, at an average price of
$31.35 per share. The total cash allocated for these repurchases was $16.5 million. Total shares outstanding at March 31, 2003 were 44.5 million shares, compared to 45.0 million shares at December 31, 2002.



MARKET RISK



Interest Rate Risk



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.



The Company evaluates on a
monthly basis its simulation model to measure the sensitivity of net interest income to changes in market interest rates. There have been no material changes in these monthly simulations from the Companys results outlined in its Form 10-K for
year end December 31, 2002



The Company enters into interest rate
derivative contracts (interest rate swaps; interest rate floors; and interest rate caps) from time to time for asset liability management purposes. The notional amount of the derivative contracts totals $860 million at March 31, 2003 and December
31, 2002.



18



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The purpose of these contracts
is to attempt to limit the volatility in the Companys net interest income and net interest margin in the event of changes in interest rates, in the context of the management of the Companys overall asset liability risk. Management did
not enter into these contracts for speculative purposes. Under SFAS No.133, the Company has adopted hedge accounting for these contracts. The derivative contracts hedging the pool of prime rate-based loans are being accounted for as cash flow
hedges under SFAS No.133, whereby the net payments under the contracts are recorded in interest income and the change in valuation of the contracts are recorded in accumulated other comprehensive income (loss) in total
stockholders equity. Changes in interest rates will impact the cash flows and valuation of the derivative contracts, but management does not expect the overall financial statement impact to be material under any interest rate scenario. The
derivative contracts hedging the fixed rate certificates of deposit and fixed rate subordinated debt are accounted for as fair value hedges using the short-cut method under SFAS No. 133. Under the short-cut method, any
changes in value of the hedged item is assumed to be exactly as much as the change in the value of the derivative contract. Therefore, in a fair value hedge, the hedged item is adjusted by exactly the same amount as the derivative, with no impact on
earnings.



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 the ability to attract deposits from businesses and individuals through its branches; brokered deposits from securities firms; cash flow from interest, prepayments and principal repayments on investment securities and loans; Securities
Available for Sale; and the ability to borrow funds on a collateralized basis from the Federal Home Loan Bank and Federal Reserve discount window, repurchase agreements collateralized by securities with customers and with securities firms; and other
sources. The management of balance sheet volumes, mixes and maturities enables the Company to maintain adequate levels of liquidity.



Capital



The capital ratios for the Company at March 31, 2003 and the minimum regulatory guidelines for such capital ratios for qualification as a well-capitalized
institution are as follows:



Holding Company Capital Ratios



|                          |  | Ratios atMarch 31, 2003 |  | Minimum RegulatoryGuidelines for Well-Capitalized
|------------------------- |  | ----------------------- |  | -------------------------------------------------
|Total Risk-Based Capital  |  | 13.48%                  |  | 10.0%                                            
|Tier 1 Risk-Based Capital |  | 8.14%                   |  | 6.0%                                             
|Tier 1 Leverage Ratio     |  | 5.83%                   |  | 4.0%                                             
|                         
|Bank Capital Ratios       |  |                         |  |                                                  
|                          |  | Ratios atMarch 31, 2003 |  | Minimum RegulatoryGuidelines for Well-Capitalized
|Total Risk-Based Capital  |  | 13.34%                  |  | 10.0%                                            
|Tier 1 Risk-Based Capital |  | 8.37%                   |  | 6.0%                                             
|Tier 1 Leverage Ratio     |  | 5.99%                   |  | 4.0%                                             



The Company is not aware
of any current recommendations by the regulatory authorities that would have a material adverse effect on the Companys capital resources or operations.



Item 3. Quantitative and Qualitative Disclosure about Market Risk



(see discussion above under market Risk, Interest rate Risk)



Item 4. Controls and Procedures



Based
on their evaluation of the Companys disclosure controls and procedures performed within the 90 days prior to the date hereof, the Companys principal executive officer and principal financial officer have determined that such controls and



19



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##### Table of Contents

procedures are effective. No significant change has occurred in the Companys internal controls since the date of the evaluation that
could significantly affect these controls subsequent to the date of the evaluation.



The Companys management, including the CEO and CFO, does not expect that our disclosure controls and procedures or our internal controls will prevent all error and all fraud. A control system, no matter how well
conceived and operated, provides reasonable, not absolute, assurance that the objectives of the control system are met. The design of a control system reflects resource constraints; the benefits of controls must be considered relative to their
costs. Because there are inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been or will be detected. These inherent
limitations include the realities that judgments in decision-making can be faulty and that breakdowns occur because of simple error or mistake. Controls can be circumvented by the individual acts of some persons, by collusion of two or more people,
or by management override of the controls. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events. There can be no assurance that any design will succeed in achieving its stated goals
under all future conditions; over time, control may become inadequate because of changes in conditions or deterioration in the degree of compliance with the policies or procedures. Because of the inherent limitations in a cost-effective control
system, misstatements due to error or fraud may occur and not be detected.



PART II. OTHER INFORMATION



Item 6: Exhibits and Reports on Form 8-K



Exhibits



a.)Current Reports on Form 8-K



1) Current Report on From 8-K dated April 14, 2003, filed April 14, 2003. (Announcing first quarter earnings for Hudson United Bancorp)



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



|3(b) |  | (b) Revised By-Laws of Hudson United Bancorp, Inc. dated April 15, 2003. (Filed herewith)
|---- |  | -----------------------------------------------------------------------------------------



|10(a) |  | Indenture dated March 28, 2003 between Hudson United Bancorp, Inc. and Wilmington Trust Company as Trustee for $20,000,000 6.85% Junior Subordinated Debentures due
2033 (filed herewith)
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|10(b) |  | Guarantee Agreement dated March 28, 2003 between Hudson United Bancorp Inc. and Wilmington Trust Company (filed herewith)
|----- |  | -------------------------------------------------------------------------------------------------------------------------



|10(c) |  | Amended and Restated Declaration of Trust for Hudson United Capital Trust II dated March 28, 2003 (filed herewith)
|----- |  | ------------------------------------------------------------------------------------------------------------------



|10(d) |  | Purchase Agreement dated March 28, 2003 between Hudson United Capital Trust II, Hudson United Bancorp Inc. and Sandler ONeill & Partners, LP(filed
herewith)
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------



|10(e) |  | Indenture dated March 31, 2003 between Hudson United Bancorp, Inc. and Bank of New York as Trustee for $15,000,000 6.448% Junior Subordinated Debentures due 2033
(filed herewith)
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|10(f) |  | Guarantee Agreement dated March 31, 2003 between Hudson United Bancorp Inc. and Bank of New York (filed herewith)
|----- |  | -----------------------------------------------------------------------------------------------------------------



|10(g) |  | Amended and Restated Declaration of Trust for Hudson United Capital Trust I dated March 31, 2003 (filed herewith)
|----- |  | -----------------------------------------------------------------------------------------------------------------



|10(h) |  | Purchase Agreement dated March 31, 2003 between Hudson United Capital Trust I, Hudson United Bancorp Inc. and Trapeza CDO II, LLC(filed herewith)
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

SIGNATURES



Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.





|             |  | Hudson United Bancorp |  |                                                                  
|------------ |  | --------------------- |  | -----------------------------------------------------------------
|             |  |                       |  |                                                                  
|             |  |                       |  |                                                                  
|May 15, 2003 |  |                       |  | /s/    KENNETH T.
NEILSON                                        
|Date         |  |                       |  | Kenneth T. NeilsonChairman, President and Chief Executive
Officer



|May 15, 2003 |  |  |  | /s/    WILLIAM A.
HOULIHAN                                             
|------------ |  |  |  | -----------------------------------------------------------------------
|Date         |  |  |  | William A. HoulihanExecutive Vice President and Chief Financial
Officer



21



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##### Table of Contents



I, Kenneth T. Neilson, certify that:



| | 1. |  | I have reviewed this quarterly report on Form 10-Q of Hudson United Bancorp;
| | -- |  | ----------------------------------------------------------------------------



| | 2. |  | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3. |  | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4. |  | The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and we have:
| | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) |  | evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report
(the Evaluation Date); and
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c) |  | presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation
Date;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 5. |  | The registrants other certifying officers and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee
of registrants board of directors (or persons performing the equivalent function):
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize
and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) |  | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



| | 6. |  | The registrants other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Date: May 15, 2003



|                                                                 
|-----------------------------------------------------------------
|/s/    KENNETH T.
NEILSON                                        
|Kenneth T. NeilsonChairman, President and Chief Executive
Officer



22



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##### Table of Contents



I, William A. Houlihan,
certify that:



| | 1. |  | I have reviewed this quarterly report on Form 10-Q of Hudson United Bancorp;
| | -- |  | ----------------------------------------------------------------------------



| | 2. |  | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3. |  | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4. |  | The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and we have:
| | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) |  | evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report
(the Evaluation Date); and
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c) |  | presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation
Date;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 5. |  | The registrants other certifying officers and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee
of registrants board of directors (or persons performing the equivalent function):
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize
and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) |  | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



| | 6. |  | The registrants other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Date: May 15, 2003



|                                                                       
|-----------------------------------------------------------------------
|/s/    WILLIAM A.
HOULIHAN                                             
|William A. HoulihanExecutive Vice President and Chief Financial
Officer



23