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Hudson Valley Holding Corp. Announces Financial Results For The Fourth Quarter And 12 Months Of 2013

-- Bank exceeds loan growth targets while reducing operating expenses and continuing to improve asset quality--

YONKERS, N.Y., Jan. 27, 2014  Hudson Valley Holding Corp. (NYSE: HVB) reported fourth quarter and 12 month results for 2013 including growth of the Bank's loan and securities portfolios and core deposits, lower recurring operating expenses and continued improvement in asset quality.

"We are pleased with the progress we made on many fronts during 2013.  We added very talented members to our management team, took definitive steps to grow and diversify our loan portfolio and we have fully resolved issues raised in 2012 by the Office of the Comptroller of the Currency with their lifting of the Formal Written Agreement in October, 2013," stated Stephen R. Brown, President and Chief Executive Officer.   "We now turn our full attention to increasing profitability through continued growth and diversification of our loan portfolio utilizing our experienced management team, our ample capital, our stable low cost deposits and our strengthened infrastructure," Brown added.

The parent Company of Hudson Valley Bank reported a loss of $8.5 million, or $0.43 per diluted share, in the fourth quarter of 2013.  Profitability was reduced by an $11.1 million after tax, or $0.55 per diluted share goodwill impairment charge and a $0.7 million after tax loss, or $0.04 per diluted share, other than temporary impairment charge on the Company's $10 million portfolio of collateralized debt obligation bank issued trust preferred securities.  The Company earned $3.1 million, or $0.16 per diluted share, in the fourth quarter of 2012.

The following table details the Company's net income and diluted earnings per common share and the effect of the goodwill impairment and other-than temporary impairment charge.



Three Months Ended


Year Ended



December 31, 2013


December 31, 2013



Dollars in
thousands


Diluted
Earnings Per
Common Share


Dollars in
thousands


Diluted
Earnings Per
Common Share

Net income before goodwill impairment and other-than-temporary-impairment loss


$              3,329


$                0.16


$             12,962


$                0.65

Goodwill impairment, net of tax


(11,106)


(0.55)


(11,106)


(0.56)

Other-than-temporary-impairment loss, net of tax


(726)


(0.04)


(726)


(0.03)

Net (loss) income, as reported


$             (8,503)


$              (0.43)


$              1,130


$                0.06

 

"While actively addressing the asset management business' recent performance, we will not be distracted from executing our strategy for efficiently growing the size and diversity of our Bank's loan and security portfolios with high-quality earning assets," President and Chief Executive Officer Stephen R. Brown said.  "The actions taken in 2013 to deploy liquidity enabled the Company to reduce the rate of net interest margin compression, while our remaining liquidity and strong deposit franchise position us to take advantage of rising rates.  More important, though, are the lasting structural and cultural changes we've made in our business to drive long-term value for our customers and shareholders."

Liquidity Deployment

The success of Hudson Valley's liquidity deployment strategy lowered cash to $699.4 million at December 31, 2013, a 15.5% reduction from $827.5 million at December 31, 2012.

Loan originations and loan purchases of $402 million exceeded the Company's full-year target growth of 10% or $200 million.  The Bank also purchased $296 million in investment securities in 2013, offsetting securities portfolio run-off by more than $93 million.  Loan originations of $94 million in the fourth quarter reflect the Company's focus on increasing value through organic growth and decreasing reliance on purchased assets to deploy liquidity.

Summary of Earning Asset Balances (Excludes Loans Held for Sale)


Full

Fourth

Third

Second

First


(Dollars in thousands)

Year

Quarter

Quarter

Quarter

Quarter



2013

2013

2013

2013

2013

Starting loans, gross

$      1,469,783

$      1,576,779

$    1,480,373

$   1,414,986

$ 1,469,783


Loan originations

259,105

94,247

64,195

75,933

24,730


Loan purchases

142,860

28,063

78,474

36,323

-


Payoffs, paydowns and other changes

(240,958)

(68,299)

(46,263)

(46,869)

(79,527)


Increase (decrease) in gross loans

161,007

54,011

96,406

65,387

(54,797)

Ending loans, gross

$      1,630,790

$      1,630,790

$   1,576,779

$  1,480,373

$ 1,414,986








Starting Securities

$         455,295

$         536,339

$      530,704

$     483,792

$    455,295


Securities purchases

295,550

42,251

42,923

110,137

100,239


Paydowns, maturities and other changes

(202,409)

(30,154)

(37,288)

(63,225)

(71,742)


Increase in securities

93,141

12,097

5,635

46,912

28,497

Ending securities

$         548,436

$         548,436

$      536,339

$     530,704

$    483,792

 

Hudson Valley continues to focus capital and investment on developing new middle market, small business and other lending products to successfully grow and diversify its loan portfolio beyond its traditional strength in commercial real estate (CRE).  Brown said, "Our asset-based lending team has hit the ground running and we are already seeing results from this investment."

While the Company continues to expand its portfolio of earning assets, the prolonged low interest rate environment continues to negatively affect the yield on interest-earning assets.  The yield on interest-earning assets averaged 3.14 percent in the fourth quarter of 2013, compared to 3.19 percent in the linked quarter and 3.50 percent in the fourth quarter of 2012. Even with its excess cash position, Hudson Valley's net interest margin was 2.95 percent in the fourth quarter of 2013, compared to 2.99 percent in the linked quarter and 3.28 percent in the fourth quarter of 2012.

The Company maintained its historically low average cost of deposits at 0.18 percent in the fourth quarter of 2013, unchanged from the linked quarter and 3 basis points below the fourth quarter of 2012.

The year ending December 31, 2013 saw continued growth of Hudson Valley's low-cost core deposit base, which represented 97 percent of total deposits at year end.  Core deposits, which exclude time deposits greater than $100,000, totaled $2.5 billion at December 31, 2013, representing an increase of $126.3 million over the core deposit balance at December 31, 2012.

Non-Interest Income and Non-Interest Expense

Total non-interest income was $2.6 million in the fourth quarter of 2013, compared to $4.2 million in the linked quarter and $4.3 million in the fourth quarter of 2012. Hudson Valley's service charge revenue was $1.2 million in the fourth quarter of 2013, compared to $1.4 million in both the linked quarter and the fourth quarter of 2012. The fourth quarter of 2013 included the $1.2 million other-than-temporary impairment charge related to management's intent to sell the trust preferred collateralized debt obligations. Hudson Valley's investment management fees remained relatively stable at about $1.9 million in the fourth quarter of 2013, unchanged from the linked quarter and a decrease from $2.2 million in the fourth quarter of 2012.

Non-interest expense for 2013 included approximately $1.3 million of non-recurring fees and expenses incurred to fully address matters raised by the Office of the Comptroller of the Currency in the previously disclosed Formal Written Agreement, which was lifted in October. Excluding the $18.7 million pre-tax impact of the goodwill impairment and the $1.3 million write-off associated with the branch consolidations, and the above mentioned non-recurring fees, non-interest expense declined by $3.7 million or 4.5 percent in 2013, close to meeting the Company's target 5.0 percent reduction in non-interest expense year over year.

The Bank's efficiency ratio, which has reflected the impact of excess liquidity on net interest income, excluding the impact of the goodwill impairment, was 82.5 percent in the fourth quarter of 2013, compared to 84.2 percent in the third quarter of 2013 and 75.7 percent in the fourth quarter of 2012.

Portfolio Credit Quality

The Company demonstrated continued progress toward diversifying its lending base. During 2013 loans secured by 1-4 family residential mortgages balances grew by $36.5 million, or 9.2 percent, over the linked quarter and by $107.2 million, or 32.9 percent, over the fourth quarter of 2012. Loans secured by 1-4 family residential mortgages totaled $433.0 million at December 31, 2013, compared to $325.8 million at the end of the fourth quarter of 2012.

CRE represented 307 percent of risk-based capital at December 31, 2013, and continues to be within the Company's previously disclosed commitment to maintain CRE concentration levels below 400 percent.

Overall portfolio trends continue to reflect a gradually improving credit environment across Hudson Valley's niche commercial franchise in metropolitan New York. Hudson Valley's total nonperforming assets (NPAs), including nonaccrual loans, nonaccrual loans held for sale, accruing loans delinquent over 90 days and other real estate owned (OREO), were $23.5 million at December 31, 2013, compared to $34.0 million at September 30, 2013 and $35.1 million at December 31, 2012. NPAs totaled 0.78 percent of total assets at December 31, 2013, compared to 1.12 percent at September 30, 2013 and 1.21 percent at December 31, 2012.

Reflecting generally improving credit trends, net charge-offs declined to $0.5 million for the fourth quarter of 2013, compared to $0.8 million and $3.0 million in the linked and year-ago quarters, respectively. As a percentage of average loans, annualized net charge-offs were 0.13 percent in the fourth quarter of 2013, compared to 0.23 percent in the third quarter of 2013 and 0.82 percent in the fourth quarter of 2012.

The Bank's provision for loan losses in the fourth quarter of 2013 was $0.6 million, compared to $0.8 million in the linked quarter and $1.5 million in the fourth quarter of 2012.

The Bank's allowance for loan losses was $26.0 million at December 31, 2013, compared to $25.9 million at September 30, 2013 and $26.6 million at December 31, 2012. The allowance measured 1.59 percent, 1.64 percent and 1.81 percent of total loans at each of those dates, respectively.

At December 31, 2013, classified assets represented 20.7 percent of Tier 1 capital plus the allowance, compared to 29.1 at September 30, 2013 and 35.6 percent at December 31, 2012.

The goodwill impairment charge was primarily driven by the recent loss of clients and a reduction in the projected earnings capacity of the Company's asset management subsidiary.  The goodwill impairment represents a noncash accounting adjustment which will not affect cash flows, liquidity or tangible capital. Since goodwill is excluded from regulatory capital, the impairment charge will not have an adverse impact on the capital ratios of the Company and its Banking subsidiary Hudson Valley Bank, both of which will continue to have regulatory capital in excess of levels to be considered well capitalized. The Company's asset management subsidiary's earnings for the year 2013, before the impairment charge was $0.9 million, or $0.05 per diluted share. The Company does not consider these earnings to be material to the Company's financial results.

The other than temporary impairment charge on the Company's trust preferred securities portfolio resulted from management's decision to sell the trust preferred securities portfolio in late December given the uncertainty of the pending final regulations of the Volker rule. The Company sold its entire portfolio of trust preferred securities, in January 2014, for approximately $8.7 million, prior to the federal Banking agencies' interim final rule.  The securities had been carried at an estimated fair value of $3.3 million.

 Quarterly Cash Dividend and Capital Management

Hudson Valley's board of directors declared a quarterly cash dividend of $0.06 per share, payable on February 14, 2014 to all common stock shareholders of record as of the close of business on February 7, 2014.

At December 31, 2013, Hudson Valley Holding Corp. posted a total risk-based capital ratio of 17.5 percent, a Tier 1 risk-based capital ratio of 16.2 percent, and a Tier 1 leverage ratio of 9.5 percent. Its Hudson Valley Bank subsidiary at December 31, 2013 posted a total risk-based capital ratio of 17.1 percent, a Tier 1 risk-based capital ratio of 15.8 percent, and a Tier 1 leverage ratio of 9.3 percent.  

Subsequent Event

In early January 2014, the Company prepaid all of its outstanding Federal Home Loan Bank borrowings. The borrowings totaled $16.4 million and the related prepayment penalty totaled $1.9 million.  The effect of the prepayment will be reflected in the Company's first quarter 2014 financial results.

Non-GAAP Financial Disclosures and Reconciliation to GAAP

In addition to evaluating Hudson Valley Holding Corp's results of operations in accordance with U.S. generally accepted accounting principles ("GAAP"), management routinely supplements this evaluation with an analysis of certain non-GAAP financial measures, such as the tangible equity ratio and tangible book value per share.  Management believes these non-GAAP financial measures provide information useful to investors in understanding Hudson Valley Holding Corp's underlying operating performance and trends, and facilitates comparisons with the performance of other Banks.  Further, the tangible equity ratio and tangible book value per share are used by management to analyze the relative strength of Hudson Valley Holding Corp's capital position.

In addition, Hudson Valley Holding Corp. in this press release discloses net income exclusive of the charge related to goodwill impairment and other-than-temporary impairment charge.  The Company believes that this presentation of net income is important to investors because it provides a more appropriate comparison to the prior quarter and prior year results.

In light of diversity in presentation among financial institutions, the methodologies used by Hudson Valley Holding Corp. for determining the non-GAAP financial measures discussed above may differ from those used by other financial institutions.

Conference Call

As previously announced, Hudson Valley will hold its quarterly conference call to review the Company's financial results on Tuesday, January 28, 2014 at 10:00 AM ET:

Domestic (toll free): 1-888-317-6016; International (toll): + 1-412-317-6016.

All participants should dial in at least ten minutes prior to the call and request the "HVB Fourth Quarter 2013 Earnings Call."

A replay of the call will be available one hour from the close of the conference through February 10, 2014 at 9:00 AM ET:

Domestic Toll Free: 1-877-344-7529 - Conference ## 10039312; International Toll: +1-412-317-0088 - Conference # 10039312.

Participants will be required to state their name and Company upon entering call.

The Company webcast will be available live at 10:00 AM ET, and archived after the call through its website at www.hudsonvalleyBank.com.

About Hudson Valley Holding Corp. Through its Hudson Valley Bank subsidiary, Hudson Valley Holding Corp. (NYSE: HVB) serves small- and mid-sized businesses, professional services firms, not-for-profit organizations and select individuals in metropolitan New York.  Headquartered in Yonkers, N.Y., the Company provides a full range of Banking, trust and investment management services to niche commercial customers and their principals throughout Westchester and Rockland counties, the Bronx, Brooklyn and Manhattan.  Hudson Valley is the largest Bank headquartered in Westchester County, with $3.0 billion in assets, $2.6 billion in deposits and 28 branches.  Its common stock is traded on the New York Stock Exchange and is a Russell 3000® Index component.  More information is available at www.hudsonvalleyBank.com

**************************************************************************************

Hudson Valley Holding Corp. ("Hudson Valley") has made in this press release various forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to earnings, credit quality and other financial and business matters for periods subsequent to December 31.2012. These statements may be identified by such forward-looking terminology as "expect", "may", "will", "anticipate", "continue", "believe" or similar statements or variations of such terms.  Hudson Valley cautions that these forward-looking statements are subject to numerous assumptions, risks and uncertainties, and that statements relating to subsequent periods increasingly are subject to greater uncertainty because of the increased likelihood of changes in underlying factors and assumptions. Actual results could differ materially from forward-looking statements.

Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements, in addition to those risk factors disclosed in the Hudson Valley's Annual Report on Form 10-K for the year ended December 31, 2012 include, but are not limited to:

  • the OCC and other Bank regulators may require us to further modify or change our mix of assets, including our concentration in certain types of loans, or require us to take further remedial actions;
  • our inability to deploy our excess cash, reduce our expenses and improve our operating leverage and efficiency;
  • our inability to pay quarterly cash dividends to shareholders in light of our earnings, the current and future economic environment,  Federal Reserve Board guidance, our Bank's capital plan and other regulatory requirements applicable to Hudson Valley or Hudson Valley Bank;
  • the possibility that we may need to raise additional capital in the future and our ability to raise such capital on terms that are favorable to us;
  • further increases in our non-performing loans and allowance for loan losses;
  • ineffectiveness in managing our commercial real estate portfolio;
  • lower than expected  future performance of our investment portfolio;
  • a lack of opportunities for growth, plans for expansion (including opening new branches) and increased or unexpected competition in attracting and retaining customers;
  • continued poor economic conditions generally and in our market area in particular, which may adversely affect the ability of borrowers to repay their loans and the value of real property or other property held as collateral for such loans;
  • lower than expected demand for our products and services;
  • possible impairment of our goodwill and other intangible assets;
  • our inability to manage interest rate risk;
  • the revenue from our asset management subsidiary may not remain at current levels;
  • increased expense and burdens resulting from the regulatory environment in which we operate and our inability to comply with existing and future  regulatory requirements;
  • our inability to maintain regulatory capital above the minimum levels Hudson Valley Bank has set as its minimum capital levels in its capital plan provided to the OCC, or such higher capital levels as may be required;
  • proposed legislative and regulatory action may adversely affect us and the financial services industry;
  • future increased Federal Deposit Insurance Corporation, or FDIC, special assessments or changes to regular assessments;
  • potential liabilities under federal and state environmental laws;
  • regulatory limitations on dividends payable by Hudson Valley or Hudson Valley Bank.

We assume no obligation for updating any such forward-looking statements at any given time.

 


HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

For the three months ended December 31, 2013 and 2012

Dollars in thousands, except per share amounts





Three Months Ended


December 31


2013

2012

Interest Income:



Loans, including fees

$18,319

$20,058

Securities:



Taxable

2,499

2,543

Exempt from Federal income taxes

671

814

Federal funds sold

8

11

Deposits in Banks

449

519

Total interest income

21,946

23,945

Interest Expense:



Deposits

1,149

1,340

Securities sold under repurchase agreements and other short-term borrowings

5

13

Other borrowings

182

182

Total interest expense

1,336

1,535

Net Interest Income

20,610

22,410

Provision for loan losses

648

1,531

Net interest income after provision for loan losses

19,962

20,879

Non Interest Income:



Service charges

1,246

1,429

Investment advisory fees

1,924

2,245

Other-than-temporary impairment loss:



Total impairment loss

(1,240)

-

Loss recognized in comprehensive income

-

-

Net impairment loss recognized in earnings

(1,240)

-

Losses on sales and revaluations of loans and other real estate owned, net

-

-

Other income

627

672

Total non interest income

2,557

4,346

Non Interest Expense:



Salaries and employee benefits

11,494

11,269

Occupancy

2,287

2,130

Professional services

1,631

1,941

Equipment

1,050

1,222

Business development

575

518

FDIC assessment

979

989

Goodwill impairment

18,700

-

Other operating expenses

2,410

2,524

Total non interest expense

39,126

20,593

(Loss) Income Before Income Taxes

(16,607)

4,632

Income Taxes

(8,104)

1,559

Net (Loss) Income

($8,503)

$3,073

Basic (Loss) Earnings Per Common Share

($0.43)

$0.16

Diluted (Loss) Earnings Per Common Share

($0.43)

$0.16

 

 

HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

For the years ended December 31, 2013 and 2012

Dollars in thousands, except per share amounts





Year Ended


December 31


2013

2012

Interest Income:



Loans, including fees

$75,209

$93,255

Securities:



Taxable

9,436

11,898

Exempt from Federal income taxes

2,915

3,606

Federal funds sold

38

39

Deposits in Banks

1,985

1,254

Total interest income

89,583

110,052

Interest Expense:



Deposits

4,895

5,897

Securities sold under repurchase agreements and other short-term borrowings

27

98

Other borrowings

724

728

Total interest expense

5,646

6,723

Net Interest Income

83,937

103,329

Provision for loan losses

2,476

8,507

Net interest income after provision for loan losses

81,461

94,822

Non Interest Income:



Service charges

5,813

6,279

Investment advisory fees

7,731

9,458

Other-than-temporary impairment loss:



Total impairment loss

(1,240)

(528)

Loss recognized in comprehensive income

-

-

Net impairment loss recognized in earnings

(1,240)

(528)

Realized gains on securities available for sale, net

-

-

Gains on sales and revaluation of loans held for sale and other real estate owned, net

17

15,920

Other income

2,823

2,713

Total non interest income

15,144

33,842

Non Interest Expense:



Salaries and employee benefits

45,109

44,813

Occupancy

8,590

8,693

Professional services

6,846

7,587

Equipment

4,139

4,522

Business development

2,165

2,417

FDIC assessment

3,879

3,154

Goodwill impairment

18,700

-

Other operating expenses

10,673

11,352

Total non interest expense

100,101

82,538

(Loss) Income Before Income Taxes

(3,496)

46,126

Income Taxes

(4,626)

16,945

Net Income

$1,130

$29,181

Basic Earnings Per Common Share

$0.06

$1.49

Diluted Earnings Per Common Share

$0.06

$1.49

 

 

HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

December 31, 2013 and 2012

Dollars in thousands, except per share and share amounts





Dec 31

Dec 31


2013

2012

ASSETS



Cash and non interest earning due from Banks

$37,711

$57,836

Interest earning deposits in Banks

661,643

769,687

Total cash and cash equivalents

699,354

827,523

Federal funds sold

27,134

19,251

Securities available for sale, at estimated fair value (amortized cost of $550,785 in



2013 and $444,243 in 2012)

542,198

445,070

Securities held to maturity, at amortized cost (estimated fair value of $6,555 in



2013 and $10,825 in 2012)

6,238

10,225

Federal Home Loan Bank of New York (FHLB) stock

3,478

4,826

Loans (net of allowance for loan losses of $25,990 in 2013 and $26,612 in 2012)

1,606,179

1,440,760

Loans held for sale

-

2,317

Accrued interest and other receivables

14,663

24,826

Premises and equipment, net

15,103

23,996

Other real estate owned

-

250

Deferred income tax, net

31,433

19,263

Bank owned life insurance

41,224

39,257

Goodwill

5,142

23,842

Other intangible assets

713

903

Other assets

6,340

8,937

TOTAL ASSETS

$2,999,199

$2,891,246




LIABILITIES



Deposits:



Non interest bearing

$1,069,631

$1,035,847

Interest bearing

1,564,113

1,484,114

Total deposits

2,633,744

2,519,961

Securities sold under repurchase agreements and other short-term borrowings

34,379

34,624

Other borrowings

16,388

16,428

Accrued interest and other liabilities

30,379

29,262

TOTAL LIABILITIES

2,714,890

2,600,275




STOCKHOLDERS' EQUITY



Preferred Stock, $0.01 par value; authorized 15,000,000 shares; no shares



outstanding in 2013 and 2012, respectively

-

-

Common stock, $0.20 par value; authorized 25,000,000 shares: outstanding



19,935,559 and 19,761,426 shares in 2013 and 2012, respectively

4,247

4,212

Additional paid-in capital

351,108

348,643

Retained earnings (deficit)

(7,111)

(3,471)

Accumulated other comprehensive loss

(6,371)

(849)

Treasury stock, at cost; 1,299,414 shares in 2013 and 2012

(57,564)

(57,564)

TOTAL STOCKHOLDERS' EQUITY

284,309

290,971

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$2,999,199

$2,891,246




 

 

HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES

Average Balances and Interest Rates

For the three months ended December 31, 2013 and 2012









       The following table sets forth the average balances of interest earning assets and interest bearing liabilities for the periods indicated, as well as total interest and corresponding yields and rates.


Three Months Ended December 31,



2013




2012


(Unaudited)

Average


Yield/


Average


Yield/


Balance

Interest (3)

Rate


Balance

Interest (3)

Rate

ASSETS








Interest earning assets:








 Deposits in Banks

$653,258

$449

0.27%


$787,497

$519

0.26%

 Federal funds sold

20,905

8

0.15%


22,636

11

0.19%

 Securities: (1)








    Taxable

468,687

2,499

2.13%


370,755

2,543

2.74%

    Exempt from federal income taxes

89,447

1,033

4.62%


85,391

1,253

5.87%

 Loans, net (2)

1,572,554

18,319

4.66%


1,467,153

20,058

5.47%

Total interest earning assets

2,804,851

22,308

3.18%


2,733,432

24,384

3.57%









Non interest earning assets:








 Cash & due from Banks

56,861




21,496



 Other assets

123,598




125,580



Total non interest earning assets

180,459




147,076



Total assets

$2,985,310




$2,880,508



LIABILITIES AND STOCKHOLDERS' EQUITY








Interest bearing liabilities:








 Deposits:








    Money market

$898,246

$880

0.39%


$862,123

$861

0.40%

    Savings

125,393

63

0.20%


128,810

93

0.29%

    Time

117,324

130

0.44%


133,176

179

0.54%

    Checking with interest

451,279

76

0.07%


369,710

207

0.22%

 Securities sold under repo & other s/t borrowings

23,213

5

0.09%


36,171

13

0.14%

 Other borrowings

16,392

182

4.44%


16,432

182

4.43%

Total interest bearing liabilities

1,631,847

1,336

0.33%


1,546,422

1,535

0.40%

Non interest bearing liabilities:








 Demand deposits

1,030,419




1,020,999



 Other liabilities

30,414




20,991



Total non interest bearing liabilities

1,060,833




1,041,990



Stockholders' equity (1)

292,630




292,096



Total liabilities and stockholders' equity

$2,985,310




$2,880,508



Net interest earnings


$20,972




$22,849


Net yield on interest earning assets



2.99%




3.34%

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








(1) Excludes unrealized gains (losses) on securities available for sale. Management believes that this presentation more closely reflects actual performance, as it is more consistent with the Company's stated asset/liability management strategies, which have not resulted in significant realization of temporary market gains or losses on securities available for sale which were primarily related to changes in interest rates. Effects of these adjustments are presented in the table below.

(2)  Includes loans classified as non-accrual and loans held-for-sale.

(3) The data contained in the table has been adjusted to a tax equivalent basis, based on the Company's federal statutory rate of 35 percent. Management believes that this presentation provides comparability of net interest income and net interest margin arising from both taxable and tax-exempt sources and is consistent with industry practice and SEC rules. Effects of these adjustments are presented in the table below.

 

 

HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES

Average Balances and Interest Rates

For the years ended December 31, 2013 and 2012









       The following table sets forth the average balances of interest earning assets and interest bearing liabilities for the periods indicated, as well as total interest and corresponding yields and rates.


Year Ended December 31,



2013




2012


(Unaudited)

Average


Yield/


Average


Yield/


Balance

Interest (3)

Rate


Balance

Interest (3)

Rate

ASSETS








Interest earning assets:








 Deposits in Banks

$759,011

$1,985

0.26%


$535,868

$1,254

0.23%

 Federal funds sold

22,256

38

0.17%


19,695

39

0.20%

 Securities: (1)








    Taxable

434,926

9,436

2.17%


376,450

11,898

3.16%

    Exempt from federal income taxes

84,825

4,485

5.29%


92,323

5,548

6.01%

 Loans, net (2)

1,464,100

75,209

5.14%


1,636,097

93,255

5.70%

Total interest earning assets

2,765,118

91,153

3.30%


2,660,433

111,994

4.21%









Non interest earning assets:








 Cash & due from Banks

57,258




41,898



 Other assets

131,197




145,184



Total non interest earning assets

188,455




187,082



Total assets

$2,953,573




$2,847,515



LIABILITIES AND STOCKHOLDERS' EQUITY








Interest bearing liabilities:








 Deposits:








    Money market

$885,502

$3,244

0.37%


$894,068

$3,858

0.43%

    Savings

126,605

330

0.26%


124,244

500

0.40%

    Time

122,761

596

0.49%


138,863

838

0.60%

    Checking with interest

437,673

725

0.17%


353,206

701

0.20%

 Securities sold under repo & other s/t borrowings

26,738

27

0.10%


45,619

98

0.21%

 Other borrowings

16,407

724

4.41%


16,446

728

4.43%

Total interest bearing liabilities

1,615,686

5,646

0.35%


1,572,446

6,723

0.43%

Non interest bearing liabilities:








 Demand deposits

1,013,154




959,566



 Other liabilities

30,823




26,553



Total non interest bearing liabilities

1,043,977




986,119



Stockholders' equity (1)

293,910




288,950



Total liabilities and stockholders' equity

$2,953,573




$2,847,515



Net interest earnings


$85,507




$105,271


Net yield on interest earning assets



3.09%




3.96%

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








(1) Excludes unrealized gains (losses) on securities available for sale. Management believes that this presentation more closely reflects actual performance, as it is more consistent with the Company's stated asset/liability management strategies, which have not resulted in significant realization of temporary market gains or losses on securities available for sale which were primarily related to changes in interest rates. Effects of these adjustments are presented in the table below.

(2)  Includes loans classified as non-accrual and loans held-for-sale.

(3) The data contained in the table has been adjusted to a tax equivalent basis, based on the Company's federal statutory rate of 35 percent. Management believes that this presentation provides comparability of net interest income and net interest margin arising from both taxable and tax-exempt sources and is consistent with industry practice and SEC rules. Effects of these adjustments are presented in the table below.

 

 

HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES

Financial Highlights

Fourth Quarter 2013

(Dollars in thousands, except per share amounts)







3 mos end

3 mos end

Year end

Year end


Dec 31

Dec 31

Dec 31

Dec 31


2013

2012

2013

2012






Earnings:





Net Interest Income

$20,610

$22,410

$83,937

$103,329

Non Interest Income

$2,557

$4,346

$15,144

$33,842

Non Interest Expense

$39,126

$20,593

$100,101

$82,538

Net (Loss) Income

($8,503)

$3,073

$1,130

$29,181

Net Interest Margin

2.95%

3.28%

3.04%

3.88%

Net Interest Margin (FTE) (1)

2.99%

3.34%

3.09%

3.96%






Diluted Earnings Per Share

($0.43)

$0.16

$0.06

$1.49

Dividends Per Share

$0.06

$0.18

$0.24

$0.72

Return on Average Equity

-11.9%

4.2%

0.4%

10.0%

Return on Average Assets

-1.1%

0.4%

0.0%

1.0%






Average Balances:





Average Assets

$2,973,970

$2,883,086

$2,946,892

$2,849,669

Average Net Loans

$1,572,554

$1,467,153

$1,464,100

$1,636,097

Average Investments

$558,134

$456,146

$519,751

$468,773

Average Interest Earning Assets

$2,793,511

$2,736,010

$2,758,437

$2,662,587

Average Deposits

$2,622,661

$2,514,818

$2,585,695

$2,469,947

Average Borrowings

$39,605

$52,603

$43,145

$62,065

Average Interest Bearing Liabilities

$1,631,847

$1,546,422

$1,615,686

$1,572,446

Average Stockholders' Equity

$285,800

$293,886

$289,925

$290,486






Asset Quality - During Period:





Provision for Loan Losses

$648

$1,531

$2,476

$8,507

Net Charge-offs

$520

$3,026

$3,098

$12,580

Annualized Net Charge-offs/Avg Net Loans

0.13%

0.82%

0.21%

0.77%






(1) See Non-GAAP financial measures and reconciliation to GAAP below.

 

 

HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES

Selected Balance Sheet Data

Fourth Quarter 2013

(Dollars in thousands except per share amounts)








Dec 31

Sep 30

Jun 30

Mar 31

Dec 31


2013

2013

2013

2013

2012







Period End Balances:






Total Assets

$2,999,199

$3,021,520

$2,981,975

$2,828,809

$2,891,246

Total Investments

$548,436

$536,339

$530,704

$483,792

$455,295

Net Loans

$1,606,179

$1,552,125

$1,454,191

$1,386,694

$1,440,760

Goodwill and Other Intangible Assets

$5,855

$24,602

$24,650

$24,697

$24,745

Total Deposits

$2,633,744

$2,664,940

$2,625,115

$2,464,197

$2,519,961

Total Stockholders' Equity

$284,309

$290,702

$289,466

$292,895

$290,971

Tangible Common Equity (1)

$278,454

$266,100

$264,816

$268,198

$266,226

Common Shares Outstanding

19,935,559

19,903,337

19,898,145

19,880,657

19,761,426

Book Value Per Share

$14.26

$14.61

$14.55

$14.73

$14.72

Tangible Book Value Per Share (1)

$13.97

$13.37

$13.31

$13.49

$13.47

Tangible Common Equity Ratio - HVHC (1)

9.3%

8.9%

9.0%

9.6%

9.3%







Tier 1 Leverage Ratio - HVHC

9.5%

9.2%

9.3%

9.5%

9.3%

Tier 1 Risk Based Capital Ratio - HVHC

16.2%

15.9%

16.5%

17.1%

16.5%

Total Risk Based Capital Ratio - HVHC

17.5%

17.2%

17.7%

18.3%

17.7%

Tier 1 Leverage Ratio - HVB

9.3%

9.0%

9.1%

9.3%

9.2%

Tier 1 Risk Based Capital Ratio - HVB

15.8%

15.7%

16.2%

16.8%

16.2%

Total Risk Based Capital Ratio - HVB

17.1%

16.9%

17.4%

18.0%

17.4%







Gross Loans (excluding Loans Held-For-Sale):






Commercial Real Estate

$593,476

$598,996

$594,301

$576,409

$550,786

Construction

88,311

82,310

72,337

70,212

74,727

Residential Multi-Family

226,898

214,853

196,438

195,016

196,199

Residential Other

432,999

396,477

328,922

294,798

325,774

Commercial and Industrial

258,578

254,723

261,469

249,794

288,809

Individuals

17,388

17,352

16,752

17,696

21,725

Lease Financing

13,140

12,068

10,154

11,043

11,763

Total Loans

$1,630,790

$1,576,779

$1,480,373

$1,414,968

$1,469,783







Asset Quality - Period End:






Allowance for Loan Losses

$25,990

$25,863

$25,926

$26,088

$26,612

Loans 31-89 Days Past Due Accruing

$4,625

$3,704

$8,824

$19,323

$12,630

Loans 90 Days or More Past Due Accruing (90 PD)

$0

$0

$0

$0

$0

Nonaccrual Loans (NAL)

$23,489

$33,964

$30,267

$32,140

$34,808

Other Real Estate Owned (OREO)

$0

$0

$0

$0

$250

Nonperforming Loans Held For Sale (HFS)

$0

$0

$0

$0

$0

Nonperforming Assets (90 PD+NAL+OREO+HFS)

$23,489

$33,964

$30,267

$32,140

$35,058

Allowance / Total Loans

1.59%

1.64%

1.75%

1.84%

 

1.81%

NAL / Total Loans

1.44%

2.15%

2.04%

2.27%

2.37%

NAL + 90 PD / Total Loans

1.44%

2.15%

2.04%

2.27%

2.37%

NAL + 90 PD + OREO / Total Assets

0.78%

1.12%

1.01%

1.14%

1.21%

Nonperforming Assets / Total Assets

0.78%

1.12%

1.01%

1.14%

1.21%







(1) See Non-GAAP financial disclosures and reconciliation to GAAP  below.

 

 

HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES

Selected Income Statement Data

Fourth Quarter 2013

(Dollars in thousands except per share amounts)








3 mos end

3 mos end

3 mos end

3 mos end

3 mos end


Dec 31

Sep 30

Jun 30

Mar 31

Dec 31


2013

2013

2013

2013

2012







Interest Income

$21,946

$22,409

$22,547

$22,681

$23,945

Interest Expense

1,336

1,396

1,479

1,435

1,535

Net Interest Income

20,610

21,013

21,068

21,246

22,410

Provision for Loan Losses

648

767

289

772

1,531

Non Interest Income

2,557

4,189

3,881

4,517

4,346

Non Interest Expense

39,126

21,546

19,818

19,611

20,593

(Loss) Income Before Income Taxes

(16,607)

2,889

4,842

5,380

4,632

Income Taxes

(8,104)

394

1,355

1,729

1,559

Net (Loss) Income

($8,503)

$2,495

$3,487

$3,651

$3,073

Diluted (Loss) Earnings Per Share

($0.43)

$0.13

$0.18

$0.18

$0.16

Net Interest Margin

2.95%

2.99%

3.06%

3.18%

3.28%

Average Cost of Deposits (1)

0.18%

0.18%

0.20%

0.20%

0.21%







(1) Includes noninterest bearing deposits






 

 

HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES

Non-GAAP Financial Measures and Reconciliation to GAAP

(Dollars in thousands except per share amounts)







Three Months Ended

Year Ended


December 31

December 31


2013

2012

2013

2012

Total interest earning assets:





  As reported

$2,793,511

$2,736,010

$2,758,437

$2,662,587

  Unrealized (loss) gain on securities





    available-for-sale (a)

(11,340)

2,578

(6,681)

2,154

Adjusted total interest earning assets (1)

$2,804,851

$2,733,432

$2,765,118

$2,660,433

Net interest earnings:





  As reported

$20,611

$22,411

$83,937

$103,329

  Adjustment to tax equivalency basis (b)

361

438

1,570

1,942

Adjusted net interest earnings (1)

$20,972

$22,849

$85,507

$105,271

Net yield on interest earning assets:





  As reported

2.95%

3.28%

3.04%

3.88%

  Effects of (a) and (b) above

0.04%

0.06%

0.05%

0.08%

Adjusted net yield on interest earning assets (1)

2.99%

3.34%

3.09%

3.96%

Average stockholders' equity:





  As reported

$285,800

$293,886

$289,925

$290,486

  Effects of (a) and (b) above

(6,830)

1,790

(3,985)

1,536

Adjusted average stockholders' equity (1)

$292,630

$292,096

$293,910

$288,950

Interest income:





  As reported

$21,947

$23,946

$89,583

$110,052

  Adjustment to tax equivalency basis (b)

361

438

1,570

1,942

Adjusted interest income (1)

$22,308

$24,384

$91,153

$111,994

Gross yield on interest earning assets:





  As reported

3.14%

3.50%

3.25%

4.13%

  Effects of (a) and (b) above

0.04%

0.07%

0.05%

0.08%

Adjusted gross yield on interest earning assets (1)

3.18%

3.57%

3.30%

4.21%






 

 

HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES

Non-GAAP Financial Measures and Reconciliation to GAAP - (Continued)

(Dollars in thousands except per share amounts)








Dec 31

Sep 30

Jun 30

Mar 31

Dec 31


2013

2013

2013

2013

2012







Tangible Equity Ratio:






Total Stockholders' Equity:






As reported

$284,309

$290,702

$289,466

$292,895

$290,971

Less: Goodwill and other intangible assets

5,855

24,602

24,650

24,697

24,745

Tangible stockholders' equity

$278,454

$266,100

$264,816

$268,198

$266,226

Total Assets:






As reported

$2,999,199

$3,021,520

$2,981,975

$2,828,809

$2,891,246

Less: Goodwill and other intangible assets

5,855

24,602

24,650

24,697

24,745

Tangible Assets

$2,993,344

$2,996,918

$2,957,325

$2,804,112

$2,866,501

Tangible equity ratio (2)

9.3%

8.9%

9.0%

9.6%

9.3%

Tangible Book Value Per Share:






Tangible stockholders' equity

$278,454

$266,100

$264,816

$268,198

$266,226

Common shares outstanding

19,935,559

19,903,337

19,898,145

19,880,657

19,761,426

Tangible book value per share (2)

$13.97

$13.37

$13.31

$13.49

$13.47







(1) Adjusted total interest earning assets, net interest earnings, net yield on interest earning assets and average stockholders equity exclude the effects of unrealized net gains and losses on securities available for sale. These are non-GAAP financial measures. Management believes that this alternate presentation more closely reflects actual performance, as it is more consistent with the Company's stated asset/liability management strategies which have not resulted in significant realization of temporary market gains or losses on securities available for sale which were primarily related to changes in interest rates. As noted in the Company's 2013 Proxy Statement, net income as a percentage of adjusted average stockholders' equity is one of several factors utilized by management to determine total compensation.   


(2) Tangible equity ratio and tangible book value for share are non-GAAP financial measurements. Management believes these non-GAAP financial measures provide information useful to investors in understanding the Company's underlying operating performance and trends, and facilitates comparisons with the performance of other Banks and are used by management to analyze the relative strength of the Company's capital position.

 

SOURCE Hudson Valley Holding Corp.

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