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 | |||||
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% | |||||
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(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.
