HUDSON VALLEY HOLDING CORP. 
By 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 Diluted Dollars in Diluted
thousands Earnings Per thousands Earnings Per
Common Share 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.
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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.
