Hudson Valley Holding Corp. Reports Second Quarter 2013 Results Including Loan And Securities Portfolio Growth -- Net income totaled $3.5 million, or $0.18 per share for the quarter ended June 30 --

-- Loan originations and purchases totaled $112.3 million in the second quarter and $137.0 million in the first half of 2013 --

-- Securities portfolio grew by $46.9 million in the second quarter and $75.4 million in the first half of 2013 --

-- Non-interest expense lowered by 5.7% for the second quarter, and 6.0% for the first half of 2013, compared to the same periods last year --

YONKERS, N.Y., July 23, 2013 /PRNewswire/ -- Hudson Valley Holding Corp. (NYSE: HVB) reported second quarter 2013 financial results, including solid earnings, continued expansion of core deposits, and growth in the bank's loan and securities portfolios.

The parent company of Hudson Valley Bank earned $3.5 million, or $0.18 per diluted share, in the second quarter of 2013, compared to $3.7 million, or $0.18 per share, in the first three months of 2013 and $5.0 million, or $0.25 per share, in the second quarter of 2012.

"We made good progress on our efforts to deploy our cash into earning assets in the second quarter and first half of the year," President and Chief Executive Officer Stephen R. Brown said.  "As our results show, we're executing our strategy for growing the breadth and diversity of loan products we can offer our niche customers in metro New York, while continuing our longstanding success in attracting and retaining the low-cost deposits that are the foundation of our franchise value."

Liquidity Deployment

As previously announced, the bank is targeting total loan growth of about 10 percent in 2013, compared to the year prior, with total loan originations or purchases projected to exceed $200 million, in addition to expansion of its investment securities portfolio by $100 million this year.

 

Summary of Earning Asset Balances

(Excludes Loans-Held-For-Sale)

 

(dollars in thousands)

First

Half

Second

Quarter

First

Quarter

2013

2013

2013

Starting loans, gross

$1,469,783

$1,414,986

$1,469,783

Loan originations

100,663

75,933

24,730

Loan purchases

36,323

36,323

0

Payoffs, pay-downs and other changes

(126,396)

(46,869)

(79,527)

Increase (decrease) in gross loans

10,590

65,387

(54,797)

Ending loans, gross

$1,480,373

$1,480,373

$1,414,986

Starting securities

$455,295

$483,792

$455,295

Securities purchases

210,376

110,137

100,239

Pay-downs, maturities and other changes

(134,967)

(63,225)

(71,742)

Increase (decrease) in securities

75,409

46,912

28,497

Ending securities

$530,704

$530,704

$483,792

 

Hudson Valley continues to focus capital and investment on developing new middle market, small business and other business lending products to successfully grow and diversify its loan portfolio beyond its traditional strength in commercial real estate (CRE).  The company remains committed to a prudent timeline for deployment of excess liquidity, without compromising credit quality, risk management or market strength. 

Newly originated loans in the first half of 2013 totaled $100.7 million and included $50.6 million of commercial real estate loans, $30.2 million of business loans and $19.9 million of residential 1-4 family loans.

Loans purchased in the second quarter of 2013 totaled $36.3 million and are largely jumbo adjustable rate mortgages collateralized by single-family residences in and around metropolitan New York.  Prior to their acquisition from an in-market financial institution late in the second quarter, Hudson Valley carried out a thorough on-site credit and compliance review of each of these loans, which exhibit high-quality credit risk characteristics, and carry an average yield of 3.09 percent. 

Year-to-date, the bank has originated or purchased nearly $137 million in loans toward our $200 million target for 2013 – that's more than 68 percent through June 30.

In addition, during the second quarter of 2013, the company experienced $8.6 million in payoffs and paydowns on problem credits as the company continues to actively facilitate resolutions.

The company believes its investment securities purchases continue to exhibit conservative interest rate and credit risk characteristics.  Including recently acquired securities, Hudson Valley's total portfolio yield averaged 2.53 percent in the second quarter of 2013, with an average duration of just 3.2 years.

Core Deposits

Even as the bank executed its liquidity deployment and loan growth strategy, Hudson Valley continued to drive the ongoing expansion of its core deposit franchise in the second quarter of 2013. These low-cost core deposits, which exclude time deposits greater than $100,000, grew to $2.5 billion, or 96.6 percent of total deposits, at June 30, 2013, compared to $2.4 billion and $2.3 billion at March 31, 2013 and June 30, 2012, respectively. 

Contributing to core deposit growth in the second quarter were high levels of customer retention following previously announced branch consolidations that were completed in the first half of the year.  At June 30, 2013, as a result of branch consolidations, Hudson Valley retained 88 percent of deposits which was higher than anticipated.

Continued improvement in the company's historically low average cost of deposits to 20 basis points in the first and second quarters of 2013 from 23 basis points in the second quarter of 2012 continues to help to mitigate the impact of remaining excess liquidity on net interest margin.  

Profitability

Hudson Valley's net interest margin was 3.06 percent in the second quarter of 2013, compared to 3.18 percent in the first quarter of 2013 and 3.93 percent in the second quarter of 2012.  As previously disclosed, the company continues to expect the pace of margin compression to moderate in 2013, as compared to the prior year.  Looking ahead, Hudson Valley now expects stabilizing net interest margin  as mid- and long-term interest rates begin to rise and the bank continues to make progress on deploying cash into earning assets.

Average loans totaled $1.41 billion in the second quarter of 2013 compared to $1.42 billion in the first quarter of 2013 and $1.58 billion in the second quarter of 2012.  The yield on the loan portfolio declined by 8 basis points to 5.34 percent for the second quarter of 2013, compared to 5.42 percent for the first quarter of 2013 and declined by 41 basis points compared to 5.75 percent for the second quarter of 2012.

Net interest income totaled $21.1 million for the second quarter of 2013, compared to $21.2 million for the first quarter of 2013 and $25.5 million in the second quarter of 2012.

Hudson Valley's total non-interest income was $3.9 million in the second quarter of 2013, compared to $4.5 million in the first quarter of 2013 and $4.8 million in the second quarter of 2012, primarily reflecting lower deposit service and investment management fees.  Investment management fees were $2.0 million in the second quarter of 2013, compared to $1.9 million in the first three months of the year and $2.5 million in the year-ago quarter on lower balances.

Hudson Valley remained on pace to achieve its previously disclosed target of non-interest expense reductions of approximately 5.0 percent for the 12 months of 2013, compared to 2012, trimming these costs by 5.7 percent for the second quarter, and 6.0 percent for the six months ended  June 30, 2013, compared to the same periods in the prior year.  Non-interest expense fell to $19.8 million and $39.4 million for the three and six months ended June 30, 2013, respectively, compared to $21.0 million and $41.9 million for the three and six months ended June 30, 2012, respectively. 

As of June 30, the bank completed all steps believed to be necessary for full implementation of expense reductions that were announced earlier this year in order to achieve Hudson Valley's target for non-interest expense in 2013 and improve operating leverage and efficiency in the quarters ahead.  However, we can provide no assurances that other factors may arise which will prevent us from reaching our target.

The bank's efficiency ratio, which since the first half of 2012 has reflected the impact of excess liquidity on net interest income, was 78.1 percent in the second quarter of 2013, compared to 75.0 percent in the first quarter of 2013 and 68.1 percent in the second quarter of 2012.

Rising Rate Environment

Hudson Valley's second quarter originations and asset purchases have further enhanced its asset sensitive balance sheet.  The company believes that this positions it to profit from a rising interest rate environment.  For example, the company estimates that net interest income from June 30, 2013 would increase 7.1 percent with a gradual 200 basis point increase in interest rates, given the bank's balance sheet at the end of the second quarter and considering the continuation of the current shape and steepness of the yield curve.

Credit Quality

Overall portfolio trends continue to reflect an uneven but generally 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 $30.3 million at June 30, 2013, compared to $32.1 million at March 31, 2013 and $39.6 million at June 30, 2012.  NPAs totaled 1.01 percent of total assets at June 30, 2013, compared to 1.14 percent at March 31, 2013 and 1.40 percent at June 30, 2012. 

Reflecting generally improving credit trends, net charge-offs were $0.5 million for the second quarter of 2013, compared to $1.3 million and $5.0 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 second quarter of 2013, compared to 0.36 percent in the first quarter of 2013 and 1.27 percent in the second quarter of 2012.

The bank's provision for loan losses in the second quarter of 2013 was $0.3 million, compared to $0.8 million in the linked quarter and $1.9 million in the year-ago quarter.  The decline in the provision reflected meaningful recoveries during the second quarter from prior charge-offs.

The bank's allowance for loan losses was $25.9 million at June 30, 2013, compared to $26.1 million at March 31, 2013 and $28.7 million at June 30, 2012.  The allowance measured 1.75 percent, 1.84 percent and 1.85 percent of total loans at each of those dates, respectively.  At June 30, 2013, classified assets represented 31.0 percent of risk-based capital, down from 36.2 percent at March 31, 2013.

Quarterly Cash Dividend

Hudson Valley's board of directors declared a cash dividend of $0.06 per share, payable on August 16, 2013 to all common stockholders of record as of the close of business on August 5, 2013. 

Capital Strength

At June 30, 2013, Hudson Valley Holding Corp. posted a total risk-based capital ratio of 17.7 percent, a Tier 1 risk-based capital ratio of 16.5 percent, and a Tier 1 leverage ratio of 9.3 percent.  Its Hudson Valley Bank subsidiary at June 30, 2013 posted a total risk-based capital ratio of 17.4 percent, a Tier 1 risk-based capital ratio of 16.2 percent, and a Tier 1 leverage ratio of 9.1 percent. 

Hudson Valley believes that it already meets the Basel III risk-based capital standards for financial institutions of its size when such standards are fully phased in.  The Basel III standards were adopted by U.S. regulators earlier this month and go into effect on January 1, 2015.

Non-GAAP Financial Disclosures and Reconciliation to GAAP

In addition to disclosing Hudson Valley Holding Corp's results of operations in accordance with U.S. generally accepted accounting principles ("GAAP"), management routinely supplements this disclosure 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 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 Wednesday, July 24, 2013 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 "Hudson Valley - Second Quarter Earnings Call."

A replay of the call will be available one hour from the close of the conference through August 9, 2013 at 9:00 AM ET:

Domestic Toll Free: 1-877-344-7529 - Conference # 10030640; International Toll: +1-412-317-0088- Conference # 10030640.

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 June 30, 2013. 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:

  • our ability to comply with the formal agreement entered into with the Office of the Comptroller of the Currency (the "OCC") and any additional restrictions placed on us as a result of future regulatory exams or changes in regulatory policy implemented by the OCC or other bank regulators;
  • 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 ability to deploy our excess cash, reduce our expenses and improve our operating leverage and efficiency;
  • the results of the investigation of A.R. Schmeidler & Co., Inc. by the Securities and Exchange Commission (the "SEC") and the Department of Labor (the "DOL") and the possibility that our management's attention will be diverted to the SEC and DOL  investigations and settlement discussions and we will incur further costs and legal expenses;
  • the adverse effects on the business of A.R. Schmeidler & Co., Inc. and our trust department arising from a settlement with the SEC and DOL investigations;
  • 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;
  • 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 June 30, 2013 and 2012

Dollars in thousands, except per share amounts





Three Months Ended


June 30


2013

2012

Interest Income:



Loans, including fees

$18,826

$22,663

Securities:



Taxable

2,390

3,140

Exempt from Federal income taxes

780

1,010

Federal funds sold

11

9

Deposits in banks

540

298

Total interest income

22,547

27,120

Interest Expense:



Deposits

1,292

1,414

Securities sold under repurchase agreements and other short-term borrowings

7

16

Other borrowings

180

182

Total interest expense

1,479

1,612

Net Interest Income

21,068

25,508

Provision for loan losses

289

1,894

Net interest income after provision for loan losses

20,779

23,614

Non Interest Income:



Service charges

1,394

1,529

Investment advisory fees

1,959

2,512

Other-than-temporary impairment loss:



Total impairment loss

-

(50)

Loss recognized in comprehensive income

-

-

Net impairment loss recognized in earnings

-

(50)

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

-

(15)

Other income

528

813

Total non interest income

3,881

4,789

Non Interest Expense:



Salaries and employee benefits

11,120

11,360

Occupancy

2,101

2,210

Professional services

1,731

2,040

Equipment

1,001

1,161

Business development

591

837

FDIC assessment

949

726

Other operating expenses

2,325

2,700

Total non interest expense

19,818

21,034

Income Before Income Taxes

4,842

7,369

Income Taxes

1,355

2,408

Net Income

$3,487

$4,961

Basic Earnings Per Common Share

$0.18

$0.25

Diluted Earnings Per Common Share

$0.18

$0.25

 


 

HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

For the six months ended June 30, 2013 and 2012

Dollars in thousands, except per share amounts





Six Months Ended


June 30


2013

2012

Interest Income:



Loans, including fees

$38,085

$51,578

Securities:



Taxable

4,585

6,453

Exempt from Federal income taxes

1,548

1,996

Federal funds sold

22

17

Deposits in banks

988

354

Total interest income

45,228

60,398

Interest Expense:



Deposits

2,539

3,164

Securities sold under repurchase agreements and other short-term borrowings

16

67

Other borrowings

359

363

Total interest expense

2,914

3,594

Net Interest Income

42,314

56,804

Provision for loan losses

1,061

3,253

Net interest income after provision for loan losses

41,253

53,551

Non Interest Income:



Service charges

3,133

3,396

Investment advisory fees

3,892

4,910

Other-than-temporary impairment loss:



Total impairment loss

-

(528)

Loss recognized in comprehensive income

-

-

Net impairment loss recognized in earnings

-

(528)

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

17

15,920

Other income

1,356

1,445

Total non interest income

8,398

25,143

Non Interest Expense:



Salaries and employee benefits

22,402

22,178

Occupancy

4,210

4,442

Professional services

3,236

3,907

Equipment

2,057

2,229

Business development

1,043

1,354

FDIC assessment

1,893

1,354

Other operating expenses

4,588

6,446

Total non interest expense

39,429

41,910

Income Before Income Taxes

10,222

36,784

Income Taxes

3,084

13,810

Net Income

$7,138

$22,974

Basic Earnings Per Common Share

$0.36

$1.17

Diluted Earnings Per Common Share

$0.36

$1.17

 


 

HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

June 30, 2013 and December 31, 2012

Dollars in thousands, except per share and share amounts





Jun 30

Dec 31


2013

2012

ASSETS



Cash and non interest earning due from banks

$61,892

$57,836

Interest earning deposits in banks

773,754

769,687

Total cash and cash equivalents

835,646

827,523

Federal funds sold

24,360

19,251

Securities available for sale, at estimated fair value (amortized cost of $534,263 in



2013 and $444,243 in 2012)

523,364

445,070

Securities held to maturity, at amortized cost (estimated fair value of $7,755 in



2013 and $10,825 in 2012)

7,340

10,225

Federal Home Loan Bank of New York (FHLB) stock

3,479

4,826

Loans (net of allowance for loan losses of $25,926 in 2013 and $26,612 in 2012)

1,454,191

1,440,760

Loans held for sale

-

2,317

Accrued interest and other receivables

16,580

24,826

Premises and equipment, net

21,171

23,996

Other real estate owned

-

250

Deferred income tax, net

23,603

19,263

Bank owned life insurance

40,417

39,257

Goodwill

23,842

23,842

Other intangible assets

808

903

Other assets

7,174

8,937

TOTAL ASSETS

$2,981,975

$2,891,246




LIABILITIES



Deposits:



Non interest bearing

$1,003,682

$1,035,847

Interest bearing

1,621,433

1,484,114

Total deposits

2,625,115

2,519,961

Securities sold under repurchase agreements and other short-term borrowings

23,902

34,624

Other borrowings

16,409

16,428

Accrued interest and other liabilities

27,083

29,262

TOTAL LIABILITIES

2,692,509

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



19,898,145 and 19,761,426 shares in 2013 and 2012, respectively

4,240

4,212

Additional paid-in capital

349,388

348,643

Retained earnings (deficit)

1,288

(3,471)

Accumulated other comprehensive loss

(7,886)

(849)

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

(57,564)

(57,564)

TOTAL STOCKHOLDERS' EQUITY

289,466

290,971

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$2,981,975

$2,891,246




 


 

HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES

Average Balances and Interest Rates

For the three months ended June 30, 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 June 30,



2013




2012


(Unaudited)

Average


Yield/


Average


Yield/


Balance

Interest

(3)

Rate


Balance

Interest

(3)

Rate

ASSETS








Interest earning assets:








 Deposits in Banks

$822,288

$540

0.26%


$532,009

$298

0.22%

 Federal funds sold

23,279

11

0.19%


16,658

9

0.22%

 Securities: (1)








    Taxable

421,394

2,390

2.27%


373,009

3,140

3.37%

    Exempt from federal income taxes

82,236

1,200

5.84%


96,953

1,554

6.41%

 Loans, net (2)

1,409,875

18,826

5.34%


1,577,190

22,663

5.75%

Total interest earning assets

2,759,072

22,967

3.33%


2,595,819

27,664

4.26%









Non interest earning assets:








 Cash & due from banks

60,270




46,279



 Other assets

132,272




150,049



Total non interest earning assets

192,542




196,328



Total assets

$2,951,614




$2,792,147



LIABILITIES AND STOCKHOLDERS' EQUITY








Interest bearing liabilities:








 Deposits:








    Money market

$894,878

$784

0.35%


$856,977

$917

0.43%

    Savings

123,925

95

0.31%


126,547

148

0.47%

    Time

124,058

155

0.50%


140,963

211

0.60%

    Checking with interest

442,048

258

0.23%


358,670

138

0.15%

 Securities sold under repo & other s/t borrowings

26,115

7

0.11%


44,715

16

0.14%

 Other borrowings

16,412

180

4.39%


16,450

182

4.43%

Total interest bearing liabilities

1,627,436

1,479

0.36%


1,544,322

1,612

0.42%

Non interest bearing liabilities:








 Demand deposits

1,001,674




925,569



 Other liabilities

27,658




28,830



Total non interest bearing liabilities

1,029,332




954,399



Stockholders' equity (1)

294,846




293,426



Total liabilities and stockholders' equity

$2,951,614




$2,792,147



Net interest earnings


$21,488




$26,052


Net yield on interest earning assets



3.12%




4.01%

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








(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 six months ended June 30, 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.


Six Months Ended June 30,



2013




2012


(Unaudited)

Average


Yield/


Average


Yield/


Balance

Interest

(3)

Rate


Balance

Interest

(3)

Rate

ASSETS








Interest earning assets:








 Deposits in Banks

$787,982

$988

0.25%


$327,322

$354

0.22%

 Federal funds sold

24,415

22

0.18%


16,647

17

0.20%

 Securities: (1)








    Taxable

403,689

4,585

2.27%


384,002

6,453

3.36%

    Exempt from federal income taxes

83,058

2,382

5.74%


98,806

3,071

6.22%

 Loans, net (2)

1,415,970

38,085

5.38%


1,787,290

51,578

5.77%

Total interest earning assets

2,715,114

46,062

3.39%


2,614,067

61,473

4.70%









Non interest earning assets:








 Cash & due from banks

56,284




47,850



 Other assets

134,438




154,651



Total non interest earning assets

190,722




202,501



Total assets

$2,905,836




$2,816,568



LIABILITIES AND STOCKHOLDERS' EQUITY








Interest bearing liabilities:








 Deposits:








    Money market

$878,399

$1,625

0.37%


$919,917

$2,156

0.47%

    Savings

127,108

187

0.29%


121,171

261

0.43%

    Time

126,521

318

0.50%


142,953

465

0.65%

    Checking with interest

405,065

409

0.20%


329,671

282

0.17%

 Securities sold under repo & other s/t borrowings

28,019

16

0.11%


49,150

67

0.27%

 Other borrowings

16,417

359

4.37%


16,455

363

4.41%

Total interest bearing liabilities

1,581,529

2,914

0.37%


1,579,317

3,594

0.46%

Non interest bearing liabilities:








 Demand deposits

1,002,967




923,730



 Other liabilities

28,458




27,016



Total non interest bearing liabilities

1,031,425




950,746



Stockholders' equity (1)

292,882




286,505



Total liabilities and stockholders' equity

$2,905,836




$2,816,568



Net interest earnings


$43,148




$57,879


Net yield on interest earning assets



3.18%




4.43%

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








(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

Second Quarter 2013

(Dollars in thousands, except per share amounts)







3 mos end

3 mos end

6 mos end

6 mos end


Jun 30

Jun 30

Jun 30

Jun 30


2013

2012

2013

2012






Earnings:





Net Interest Income

$21,068

$25,508

$42,314

$56,804

Non Interest Income

$3,881

$4,789

$8,398

$25,143

Non Interest Expense

$19,818

$21,034

$39,429

$41,910

Net Income

$3,487

$4,961

$7,138

$22,974

Net Interest Margin

3.06%

3.93%

3.12%

4.34%

Net Interest Margin (FTE) (1)

3.12%

4.01%

3.18%

4.43%






Diluted Earnings Per Share

$0.18

$0.25

$0.36

$1.17

Dividends Per Share

$0.06

$0.18

$0.12

$0.36

Return on Average Equity

4.75%

6.72%

4.88%

15.90%

Return on Average Assets

0.47%

0.71%

0.49%

1.63%






Average Balances:





Average Assets

$2,949,423

$2,795,090

$2,904,681

$2,820,157

Average Net Loans

$1,409,875

$1,577,190

$1,415,970

$1,787,290

Average Investments

$503,630

$469,962

$486,747

$482,808

Average Interest Earning Assets

$2,756,881

$2,598,762

$2,713,959

$2,617,656

Average Deposits

$2,586,583

$2,408,726

$2,540,060

$2,437,442

Average Borrowings

$42,527

$61,165

$44,436

$65,605

Average Interest Bearing Liabilities

$1,627,436

$1,544,322

$1,581,529

$1,579,317

Average Stockholders' Equity

$293,616

$295,378

$292,290

$288,918






Asset Quality - During Period:





Provision for Loan Losses

$289

$1,894

$1,061

$3,253

Net Charge-offs

$452

$5,018

$1,748

$5,205

Annualized Net Charge-offs/Avg Net Loans

0.13%

1.27%

0.25%

0.58%






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

 


 

HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES

Selected Balance Sheet Data

Second Quarter 2013

(Dollars in thousands except per share amounts)








Jun 30

Mar 31

Dec 31

Sep 30

Jun 30


2013

2013

2012

2012

2012







Period End Balances:






Total Assets

$2,981,975

$2,828,809

$2,891,246

$2,929,042

$2,816,244

Total Investments

$530,704

$483,792

$455,295

$458,355

$467,623

Net Loans

$1,454,191

$1,386,694

$1,440,760

$1,476,814

$1,523,833

Goodwill and Other Intangible Assets

$24,650

$24,697

$24,745

$24,932

$25,119

Total Deposits

$2,625,115

$2,464,197

$2,519,961

$2,548,610

$2,439,848

Total Stockholders' Equity

$289,466

$292,895

$290,971

$292,900

$292,599

Tangible Common Equity (1)

$264,816

$268,198

$266,226

$267,968

$267,480

Common Shares Outstanding

19,898,145

19,880,657

19,761,426

19,638,090

19,633,977

Book Value Per Share

$14.55

$14.73

$14.72

$14.91

$14.90

Tangible Book Value Per Share (1)

$13.31

$13.49

$13.47

$13.65

$13.62

Tangible Common Equity Ratio - HVHC (1)

9.0%

9.6%

9.3%

9.2%

9.6%







Tier 1 Leverage Ratio - HVHC

9.3%

9.5%

9.3%

9.4%

9.6%

Tier 1 Risk Based Capital Ratio - HVHC

16.5%

17.1%

16.5%

16.1%

15.8%

Total Risk Based Capital Ratio - HVHC

17.7%

18.3%

17.7%

17.4%

17.0%

Tier 1 Leverage Ratio - HVB

9.1%

9.3%

9.2%

9.2%

9.5%

Tier 1 Risk Based Capital Ratio - HVB

16.2%

16.8%

16.2%

15.9%

15.6%

Total Risk Based Capital Ratio - HVB

17.4%

18.0%

17.4%

17.2%

16.8%







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






Commercial Real Estate

$594,301

$576,409

$550,786

$583,653

$633,581

Construction

72,337

70,212

74,727

91,241

96,211

Residential Multi-Family

196,438

195,016

196,199

209,192

212,655

Residential Other

328,922

294,798

325,774

322,841

346,489

Commercial and Industrial

261,469

249,794

288,809

266,118

231,140

Individuals

16,752

17,696

21,725

22,270

21,495

Lease Financing

10,154

11,043

11,763

12,373

14,015

Total Loans

$1,480,373

$1,414,968

$1,469,783

$1,507,688

$1,555,586







Asset Quality - Period End:






Allowance for Loan Losses

$25,926

$26,088

$26,612

$28,107

$28,733

Loans 31-89 Days Past Due Accruing

$8,824

$19,323

$12,630

$7,557

$5,436

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

-

-

-

-

-

Nonaccrual Loans (NAL)

$30,267

$32,140

$34,808

$42,305

$39,304

Other Real Estate Owned (OREO)

-

-

$250

$250

$250

Nonperforming Loans Held For Sale (HFS)

-

-

-

-

-

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

$30,267

$32,140

$35,058

$42,555

$39,554

Allowance / Total Loans

1.75%

1.84%

1.81%

1.86%

1.85%

NAL / Total Loans

2.04%

2.27%

2.37%

2.81%

2.53%

NAL + 90 PD / Total Loans

2.04%

2.27%

2.37%

2.81%

2.53%

NAL + 90 PD + OREO / Total Assets

1.01%

1.14%

1.21%

1.45%

1.40%

Nonperforming Assets / Total Assets

1.01%

1.14%

1.21%

1.45%

1.40%







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

 


 

HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES

Selected Income Statement Data

Second Quarter 2013

(Dollars in thousands except per share amounts)








3 mos end

3 mos end

3 mos end

3 mos end

3 mos end


Jun 30

Mar 31

Dec 31

Sep 30

Jun 30


2013

2013

2012

2012

2012







Interest Income

$22,547

$22,681

$23,945

$25,709

$27,120

Interest Expense

1,479

1,435

1,535

1,594

1,612

Net Interest Income

21,068

21,246

22,410

24,115

25,508

Provision for Loan Losses

289

772

1,531

3,723

1,894

Non Interest Income

3,881

4,517

4,346

4,353

4,789

Non Interest Expense

19,818

19,611

20,593

20,035

21,034

Income Before Income Taxes

4,842

5,380

4,632

4,710

7,369

Income Taxes

1,355

1,729

1,559

1,576

2,408

Net Income

$3,487

$3,651

$3,073

$3,134

$4,961

Diluted Earnings per share

$0.18

$0.18

$0.16

$0.16

$0.25

Net Interest Margin

3.06%

3.18%

3.28%

3.60%

3.93%

Average Cost of Deposits (1)

0.20%

0.20%

0.21%

0.22%

0.23%







(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

Six Months Ended


June 30

June 30


2013

2012

2013

2012

Total interest earning assets:





  As reported

$2,756,881

$2,598,762

$2,713,959

$2,617,656

  Unrealized (loss) gain on securities





    available-for-sale (a)

(2,191)

2,943

(1,155)

3,589

Adjusted total interest earning assets (1)

$2,759,072

$2,595,819

$2,715,114

$2,614,067

Net interest earnings:





  As reported

$21,068

$25,508

$42,314

$56,804

  Adjustment to tax equivalency basis (b)

420

544

834

1,075

Adjusted net interest earnings (1)

$21,488

$26,052

$43,148

$57,879

Net yield on interest earning assets:





  As reported

3.06%

3.93%

3.12%

4.34%

  Effects of (a) and (b) above

0.06%

0.08%

0.06%

0.09%

Adjusted net yield on interest earning assets (1)

3.12%

4.01%

3.18%

4.43%

Average stockholders' equity:





  As reported

$293,616

$295,378

$292,290

$288,918

  Effects of (a) and (b) above

(1,230)

1,952

(592)

2,413

Adjusted average stockholders' equity (1)

$294,846

$293,426

$292,882

$286,505

Interest income:





  As reported

$22,547

$27,120

$45,228

$60,398

  Adjustment to tax equivalency basis (b)

420

544

834

1,075

Adjusted interest income (1)

$22,967

$27,664

$46,062

$61,473

Gross yield on interest earning assets:





  As reported

3.27%

4.17%

3.33%

4.61%

  Effects of (a) and (b) above

0.06%

0.09%

0.06%

0.09%

Adjusted gross yield on interest earning assets (1)

3.33%

4.26%

3.39%

4.70%






 


 

HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES

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

(Dollars in thousands except per share amounts)








Jun 30

Mar 31

Dec 31

Sep 30

Jun 30


2013

2013

2012

2012

2012







Tangible Equity Ratio:






Total Stockholders' Equity:






As reported

$289,466

$292,895

$290,971

$292,900

$292,599

Less: Goodwill and other intangible assets

24,650

24,697

24,745

24,932

25,119

Tangible stockholders' equity

$264,816

$268,198

$266,226

$267,968

$267,480

Total Assets:






As reported

$2,981,975

$2,828,809

$2,891,246

$2,929,042

$2,816,244

Less: Goodwill and other intangible assets

24,650

24,697

24,745

24,932

25,119

Tangible Assets

$2,957,325

$2,804,112

$2,866,501

$2,904,110

$2,791,125

Tangible equity ratio (2)

9.0%

9.6%

9.3%

9.2%

9.6%

Tangible Book Value Per Share:






Tangible stockholders' equity

$264,816

$268,198

$266,226

$267,968

$267,480

Common shares outstanding

19,898,145

19,880,657

19,761,426

19,638,090

19,633,977

Tangible book value per share (2)

$13.31

$13.49

$13.47

$13.65

$13.62







(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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