Exhibit 1
Press Release
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Joseph B. Tockarshewsky Robert J. Hughes
Chairman, President & Executive Vice President
Chief Executive Officer & Chief Financial Officer
(914) 431-6211 (914) 431-6386
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Poughkeepsie Financial Corp. Reports
Fourth Quarter and Full Year Results
and Declares Dividend
Poughkeepsie, NY, January 27, 1998. -- Poughkeepsie Financial Corp.
(NASDAQ: PKPS) today reported net income for the year 1997 of $2.4 million
compared with $1.4 million in 1996. Basic and diluted earnings per share for
1997 were $.19 and $.18, respectively, both compared with $.11 per share
reported in 1996. For the quarter ended December 31, 1997, there was a net loss
of $953 thousand compared with net income of $1.2 million in the same quarter of
1996. Basic and diluted loss per share for the quarter ended December 31, 1997
was ($.08), compared with $.10 and $.09 income per share reported in the same
period of 1996, respectively.
Income from operations for the year 1997 was $3.4 million compared with
$3.5 million in 1996. There was a loss from operations for the fourth quarter of
1997 of $180 thousand compared with income from operations of $1.2 million in
1996's fourth quarter. Income from operations in 1997 consists of results
from banking activities before considering costs ($.04 per share) relating to
the Company's pending merger with HUBCO, Inc. which was announced on October 23,
1997 and is expected to close in the first quarter of 1998, and charges
associated with the termination of the Directors' Retirement Plan ($.04 per
share). Income from operations in 1996 excludes the FDIC imposed SAIF Special
Assessment ($.12 per share) and an additional loss on bulk sale of commercial
real estate loans ($.04 per share).
As previously announced on October 23, 1997, Poughkeepsie Financial Corp.
and HUBCO, Inc. (NASDAQ: HUBC) signed a definitive merger agreement and
Poughkeepsie Financial issued an option, exercisable under certain
circumstances, to HUBCO to purchase up to 2,000,000 shares of Poughkeepsie
Financial common stock. The merger transaction is expected to be treated as a
tax-free exchange of HUBCO common stock for Poughkeepsie
-more-
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Financial common stock and to be accounted for as a pooling of interests. In
addition, the definitive merger agreement provides for quarterly cash dividends
to Poughkeepsie Financial stockholders increased to an amount substantially
equivalent to HUBCO's cash dividend multiplied by the exchange ratio in the
merger. Consistent with that provision, the Poughkeepsie Financial Corp.
Board of Directors, at its regular meeting today, declared an adjusted quarterly
dividend of $.06 per share on the outstanding common stock to be paid on
March 5, 1998 to stockholders of record on February 17, 1998.
In connection with the merger, Poughkeepsie Financial Corp. incurred legal,
accounting and financial advisory expenses, net of tax benefits for certain
deductible items, of $315,000 and $496,000 for the fourth quarter and year
ended December 31, 1997, respectively. In addition to these costs, a curtailment
expense of $458 thousand, net of tax, was recorded in the fourth quarter of 1997
as a result of Board action to terminate the Retirement Plan for Non-Employee
Directors. Additional charges which aggregated $1.2 million, net of tax
benefits, were recorded in the fourth quarter of 1997, primarily for possible
loan losses and costs of operating other real estate owned ("OREO").
Effective December 15, 1997, The Financial Accounting Standards Board
promulgated new standards regarding the computation of earnings per share
("EPS"). Under these new standards, both "basic" and "diluted" EPS must be
presented for all periods and prior periods restated, if applicable. For
Poughkeepsie Financial Corp., basic EPS excludes the dilutive effect of certain
stock options and diluted EPS includes the effect of these options using the
treasury stock method. Diluted EPS is equivalent to previously reported EPS as
computed under standards then in effect.
Total assets at December 31, 1997 were $875.5 million, an increase of $16.8
million, or 2.0%, from year-end 1996. Net loans increased by $30.4 million while
investment securities decreased by $13.3 million. The increase in net loans was
attributable to a 13% increase in commercial mortgage loans and a 28% increase
in consumer loans. Residential mortgage loans declined slightly. The allowance
for loan losses increased by $0.8 million from year-end 1996 as provisions for
loan losses were $1.9 million and net charge-offs for the year totaled $1.1
million. Deposits increased from year-end 1996 by $45.1 million, or 7.8%, and
borrowings declined by $29.9 million, or 15.0%.
Stockholders' Equity was $72.6 million at December 31, 1997, reflecting an
increase of $0.9 million from year-end 1996. This increase was the result of
$2.4 million of earnings for the year and proceeds from exercised stock options,
reduced in part by dividends of $1.6 million. At December 31 1997, there were
12,610,315 common shares outstanding and book value per share was $5.75. The
"core," "tangible" and "risk-based" regulatory capital ratios of the Company's
wholly owned subsidiary, Bank of the Hudson, were 6.95%, 6.95% and 11.62%,
respectively, at December 31, 1997 all of which are in excess of regulatory
requirements.
Net interest income was $6.9 million for the quarter ended December 31,
1997, approximately level with the fourth quarter of 1996. For the full year
1997, net interest income was $27.4 million, a 6.5% increase over the $25.8
million reported in 1996. Net interest margins for the three and twelve months
ended December 31, 1997 were 3.23% and 3.30%,
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respectively, compared to 3.32% and 3.21% for the same periods of 1996.
For the years 1997 and 1996, residential loan originations totaled $72.5
million and $130.4 million, respectively, and commercial real estate loan
originations/advances totaled $103.9 million and $73.4 million, respectively.
Non-performing assets ("NPA"), which include loans delinquent 90 days or
more as to interest, non-accrual loans, loans in foreclosure and other real
estate owned, were $14.8 million before reserves at December 31, 1997, or 1.69%
of total assets, as compared with $17.2 million at September 30, 1997 and $26.1
million at year-end 1996. NPAs declined from year-end 1996 primarily due to the
payoff on a non-accrual $3.1 million commercial real estate loan and the sale of
a $3.0 million commercial OREO property, the sale of $2.0 million of
non-performing residential loans and approximately $2.8 million of
charge-offs/write-downs on non-performing assets. The payoff on the
non-performing loan resulted in a recovery of $0.5 million which was credited
to the allowance for loan losses. The net cost of operating real estate owned
increased by $1.3 million and $1.4 million for the three and twelve month
periods ended December 31, 1997, respectively, primarily due to valuation
adjustments of $1.0 million on certain commercial OREO properties recognized
in the fourth quarter of 1997.
Retail banking and other fee income for the quarter and twelve months ended
December 31, 1997 totaled $0.8 million and $3.3 million, respectively,
reflecting increases of $0.2 million and $1.2 million over the comparable
periods of 1996. These increases were primarily due to increased deposit levels,
fees from the "High Performance Checking" account products, fees earned on sales
of alternative investment products and, for the twelve month period,
$0.3 million of prepayment fees on commercial real estate loans.
Operating expenses (excluding the SAIF special assessment in 1996)
increased from prior year levels by $1.3 million and $1.8 million for the fourth
quarter and full year 1997, respectively. The increases were primarily due to a
curtailment expense recorded in the fourth quarter as a result of Board action
to terminate the Retirement Plan for Non-Employee Directors, the incremental
costs of seven new supermarket branches opened since November 1996 and
professional costs incurred in connection with merger activities. The effect of
these increases has been mitigated by lower deposit insurance premiums.
Poughkeepsie Financial Corp., based in Poughkeepsie, New York, is the
holding company for Bank of the Hudson (previously known as Poughkeepsie Savings
Bank, FSB). The Bank is a community banking institution whose principal market
is the Mid-Hudson Valley region of New York, where it operates sixteen branches
and five residential loan offices. The Bank's deposits are insured by the
Federal Deposit Insurance Corporation to the full extent permitted by law and
regulation.
(Tables attached)
###
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POUGHKEEPSIE FINANCIAL CORP.
(Dollars in thousands, except per share data)
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION:
December 31, December 31,
1997 1996
----------- ------------
Assets
- ------
Cash and equivalents $11,750 $6,863
Securities 152,474 165,747
Loans 674,546 643,339
Less allowance for loan losses (9,421) (8,652)
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Total loans, net 665,125 634,687
Other real estate owned 4,564 10,726
Federal Home Loan Bank stock 10,071 9,760
Net deferred tax assets 14,991 16,812
Other assets 16,517 14,095
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Total assets $875,492 $858,690
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Liabilities and Stockholders' Equity
- ------------------------------------
Savings accounts $98,336 $93,371
Time deposits 330,279 314,059
Money market deposits 139,030 126,233
Demand deposits 52,732 41,583
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Total deposits 620,377 575,246
Borrowings 168,836 198,694
Other liabilities 13,708 13,082
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Total liabilities 802,921 787,022
Stockholders' equity 72,571 71,668
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Total liabilities and stockholders' equity $875,492 $858,690
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Book value per share $5.75 $5.69
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Shares outstanding 12,610,315 12,591,825
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SUMMARY OF NON-PERFORMING ASSETS
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December 31, September 30, December 31,
1997 1997 1996
------------ ------------- ------------
Loans 90 days or more past due as to interest
and accounted for on a non-accrual basis:
Residential real estate loans $3,062 $4,554 $5,453
Commercial real estate loans 6,579 6,557 9,447
Commercial business loans 431 414 436
Loans 90 days or more past due as to interest
and still accruing 176 127 87
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Total non-performing loans 10,248 11,652 15,423
Other real estate owned 4,564 5,572 10,726
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Total non-performing assets $14,812 $17,224 $26,149
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Ratio of non-performing assets to total assets 1.69% 1.95% 3.05%
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POUGHKEEPSIE FINANCIAL CORP.
(Dollars in thousands, except per share data)
CONDENSED CONSOLIDATED STATEMENTS OF INCOME:
- --------------------------------------------
Three months ended
December 31, Year Ended December 31,
-------------------------- ---------------------------
1997 1996 1997 1996
----------- ---------- ---------- ----------
Interest income $16,978 $16,586 $66,723 $63,620
Interest expense 10,123 9,751 39,275 37,857
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Net interest income 6,855 6,835 27,448 25,763
Provision for loan losses 900 300 1,850 850
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Net interest income after provision 5,955 6,535 25,598 24,913
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Retail banking fees and other income 774 609 3,340 2,188
Residential mortgage banking income 47 99 234 168
Loss on Commercial Loans Held for Bulk Sale -- -- -- (894)
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Total non-interest income 821 708 3,574 1,462
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Net cost of operating real estate owned 1,491 239 2,508 1,143
SAIF special assessment -- -- -- 2,624
Operating expenses 6,304 4,965 21,976 20,209
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Total non-interest expenses 7,795 5,204 24,484 23,976
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Income (loss) before income taxes (1,019) 2,039 4,688 2,399
Income tax expense (benefit) (66) 817 2,259 963
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Net income (loss) ($953) $1,222 $2,429 $1,436
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Net income (loss) per share - basic ($0.08) $0.10 $0.19 $0.11
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Net income (loss) per share - diluted ($0.08) $0.09 $0.18 $0.11
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Dividends per share $0.050 $0.025 $0.125 $0.100
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Weighted average shares outstanding:
Basic 12,598,758 12,561,010 12,595,307 12,546,881
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Diluted 13,398,272 12,920,090 13,238,711 12,910,458
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Average interest-earning assets $848,205 $823,845 $832,799 $802,149
Yield on interest-earning assets 7.96% 8.05% 8.01% 7.93%
Average interest-bearing liabilities $802,670 $782,058 $789,404 $763,261
Cost of interest-bearing liabilities 5.01% 5.00% 4.96% 4.95%
Excess of average interest-earning assets over
average interest-bearing liabilities $45,535 $41,787 $43,395 $38,888
Interest rate spread 2.95% 3.05% 3.05% 2.98%
Net interest margin 3.23% 3.32% 3.30% 3.21%
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