Greater Hudson Bank, N.A. (the "Bank") (OTCQB: GHDS), with assets of $299.2 million, today reported net income for the 2011 fourth quarter of $632,000 or $0.06 per common share and net income of $2.6 million, or $0.26 per common share for the twelve months ended December 31, 2011, thus marking the third straight year of profitable earnings for the Hudson Valley, N.Y. based Bank.

"We are pleased to announce another profitable year for our community bank," stated Kenneth J. Torsoe, chairman of the board of directors of Greater Hudson Bank.'' Mr. Torsoe further stated that, "In an effort to meet the needs of our loyal local customers, we have made technology enhancements, upgraded our online banking services, and completely redesigned our website. In addition, we plan to expand our branch footprint to further service our clients. The growth we are experiencing is evidence that we are accomplishing our primary goal of helping our clients by giving them what they expect, which is a greater banking experience."

Income from operations for the year ended December 31, 2011 totaled $4.2 million with $1.0 million coming in the fourth quarter, which is an increase of $2.4 million year over year and $493,000 quarter over quarter. Return on average common stockholders' equity was 7.45 percent for the twelve months ended December 31, 2011.

"We are very proud to report that Greater Hudson continues to deliver strong results during a very challenging economic environment," commented Eric J. Wiggins, president and CEO of Greater Hudson Bank. "Significant increases in our net interest income and pre-tax operating income of 21% and 132%, respectively, year over year is a testament to the hard work of the entire Greater Hudson team," Mr. Wiggins further stated.

The Bank's net income for both the three and twelve months ended December 31, 2011 declined compared to the 2010 prior year periods due to the $2.2 million credit to the provision for income taxes booked in the fourth quarter of 2010 as a result of management's recognition of the Bank's remaining deferred tax asset related to net operating losses the Bank experienced in previous years.

Mr. Wiggins added, "With a focus on relationship banking, the Bank continues to grow and expand its customer base. In a very competitive market, the Bank was able to increase its loans outstanding by more than 25%. The Bank's entire staff and its board of directors are not only committed to the Bank's success, but to providing a strong community bank which local business owners and consumers can rely upon. We thank all of our customers who have chosen to join our banking family."

Financial highlights as of and for the three months ended December 31, 2011 compared to the December 31, 2010 period are as follows:

  • Total assets increased $41.6 million, or 16.2 percent, to $299.2 million.
  • Loans, net of unearned income increased $32.5 million, or 26.1 percent, to $156.8 million.
  • Investments increased $17.4 million, or 15.4 percent, to $130.6 million.
  • Deposits increased $27.4 million, or 12.5 percent, to $245.8 million.
  • Net interest income increased $318,000, or 14.1 percent, to $2.6 million.
  • Net gains on securities transactions increased to $71,000.
  • Provision for loan losses decreased $11,000, or 7.3 percent, to $140,000.
  • Non-interest expense decreased $129,000, or 7.7 percent, to $1.5 million.
  • Provision for income taxes increased $2.6 million, reflecting the impact of the $2.2 million credit booked in the fourth quarter of 2010.
  • Efficiency ratio improved to 58.8 percent from 71.4 percent.

Financial highlights as of and for the twelve months ended December 31, 2011 compared to the December 31, 2010 period are as follows:

  • Net interest income increased $1.7 million, or 21.2 percent, to $9.9 million.
  • Provision for loan losses decreased $603,000, or 59.9 percent, to $404,000.
  • Non-interest expense increased $463,000, or 8.3 percent, to $6.1 million.
  • Net gains on securities transactions increased $467,000 to $528,000.
  • Provision for income taxes increased $3.9 million.
  • Efficiency ratio improved to 59.8 percent from 67.0 percent.

EARNINGS

   
*Results Unaudited Three months Ended Twelve months Ended
December 31, December 31,

 

(in thousands, except ratios)

SUMMARY OF OPERATIONS DATA: 2011   2010 2011   2010
Net interest income $ 2,573 $ 2,255 $ 9,933 $ 8,195
Provision for loan losses 140 151 404 1,007
Noninterest income 43 79 216 171
Net gains on securities transactions 88 17 528 61
Noninterest Expense   1,537     1,666     6,067     5,604  
Income before income taxes 1,027 534 4,206 1,816
Provision for income taxes   395     (2,241 )   1,624     (2,241 )
Net income $ 632   $ 2,775   $ 2,582   $ 4,057  
 
Efficiency Ratio 58.8 % 71.4 % 59.8 % 67.0 %
 
 
AVERAGE BALANCE SHEET DATA:   2011     2010     2011     2010  
Earning Assets $ 264,478 $ 223,806 $ 272,709 $ 217,121
Total Interest Bearing Liabilities 243,018 207,793 236,482 184,432
Net interest spread 3.81 % 3.95 % 3.52 % 3.60 %
Net interest margin 3.89 % 4.03 % 3.64 % 3.77 %
 

Net interest income increased for both the three and twelve months ended December 31, 2011 compared to the 2010 comparable periods as a result of an increase in the balance of the Bank's average earning assets. The increase in net interest income was partially offset by both the increase in average interest bearing liabilities and a decline in the Bank's net interest margin for both the three and twelve months ended December 31, 2011 compared to the 2010 comparable periods.

The provision for credit losses decreased $11,000 in the fourth quarter of 2011 compared to the fourth quarter of 2010 and decreased $603,000 for the year ended December 31, 2011 compared to the year ended December 31, 2010 primarily due to a decrease in loans charged off from $392,000 to $45,000 and the allowance for loan losses ratio declining from 1.40 percent to 1.37 percent.

Non-interest expense decreased $129,000 in the 2011 fourth quarter primarily due to reductions in FDIC insurance expense, legal fees, and the reserve for unfunded commitments. Non-interest expense increased for the year ended December 31, 2011 primarily due to increases in salary, occupancy, and marketing expenses, as well as increases in director fees and audit related expenses. These increases in non-interest expenses for the year are attributable to the Bank's growth and are partially offset by decreases in expenses related to maintaining the Bank's other real estate owned and reserve for unfunded commitments. While the Bank's non-interest expenses have increased, management has been able to successfully manage these expenses as evidenced by the improvement in the Bank's efficiency ratio over the past year from 67.0 percent for the year ended December 31, 2010 to 59.8 percent for the year ended December 31, 2011.

The provision for income taxes increased $2.6 million and $3.9 million for the three and twelve months ended December 31, 2011 compared to the prior year periods as a result of the change in the Bank's tax position and an effective tax rate of approximately 38.4 percent and 38.6 percent, respectively. In 2010, the Bank recognized a $2.2 million tax benefit as a result of the reversal of the valuation allowance related to deferred tax assets against net operating losses from previous years.

BALANCE SHEET & CREDIT QUALITY

 
SELECTED BALANCE SHEET DATA - Unaudited: As of
(in thousands, except ratios) December 31,
2011   2010
Total Investments $ 130,645 $ 113,205
Federal funds sold 64 1,675
Loans, net of unearned income 156,830 124,364
Allowance for loan losses 2,148 1,737
Total assets 299,185 257,546
Total deposits 245,810 218,412
Nonperforming assets 910 849
Allowance for loan losses to total net loans 1.37 % 1.40 %
Nonperforming assets to total assets 0.30 % 0.33 %
 

The Bank increased loans, net of unearned income, and the investment portfolio by $32.5 million and $17.4 million, respectively, as of December 31, 2011 compared to the prior year period. The increases in both the loan and investment portfolios were partially funded by the $27.4 million, or 12.5 percent increase in deposits to $245.8 million. In addition, the Bank's growth was funded by an increase of $10.0 million in Federal Home Loan Bank of New York advances, the decrease in federal funds sold of $1.6 million, and a decrease of $6.4 million in due from banks as of December 31, 2011 compared to December 31, 2010.

CAPITAL

 
EQUITY - Unaudited As of
(in thousands, except ratios) December 31,
2011   2010
Tier 1 Capital $ 35,727 $ 31,985
Total Stockholders' Equity 36,634 32,996
Book value per common share 3.66 3.30
Tier 1 Leverage Ratio 11.93 % 12.56 %
 

At December 31, 2011, the Bank had $36.6 million in stockholders' equity. As of December 31, 2011, the Bank's leverage ratio was 11.93 percent and as a result, the Bank is considered a well-capitalized institution under Federal regulatory requirements.

Greater Hudson Bank, N.A. founded in 2002, is headquartered in Middletown, New York and was the first community bank chartered in Orange County, New York in over fifty years. The Bank has 4 branches which are located in Middletown and Warwick, Orange County, New York, Bardonia, Rockland County, New York, and White Plains, Westchester County, New York. The Bank is chartered by the Office of the Comptroller of the Currency and its deposits are insured by the Federal Deposit Insurance Corporation. Further information can be found on the Bank's website at www.GreaterHudsonBank.com.

Forward-Looking Statements: This Press Release may contain certain statements which are not historical facts or which concern the Bank's future operations or economic performance and which are to be considered forward-looking statements. Any such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The Bank cautions that all forward-looking statements involve risk and uncertainties, and that actual results may differ from those indicated in the forward-looking statements as a result of various factors, such as changing economic and competitive conditions and other risk and uncertainties. In addition, any statements in this news release regarding historical stock price performance are not indicative of or guarantees of future price performance.

Elser & Aucone
Jon Lieb, 212-563-8025