HUDSON VALLEY HOLDING CORP. ANNOUNCES FINANCIAL RESULTS FOR THE FOURTH QUARTER AND 12 MONTHS OF 2010

- Credit Quality Improves with Reduction in Non-Performing Loans -
- Net Interest Margin Increases -
- Quarterly Cash Dividend of $0.15 Declared -

YONKERS, N.Y. – February 4, 2011– Hudson Valley Holding Corp. (NASDAQ: HUVL) reported net income of $7.1 million, or $0.41 per diluted share, for the quarter ended December 31, 2010, compared to $4.1 million or $0.23 per diluted share during the prior quarter and $5.2 million or $0.32 per diluted share during the fourth quarter of 2009.

For the 12 months of 2010, the parent company of Hudson Valley Bank reported net income of $5.1 million or $0.29 per diluted share, compared to earnings of $19.0 million or $1.37 per diluted share in 2009. All earnings per share data reported today reflect additional shares outstanding as of December 10, 2010, following Hudson Valley’s declaration of a 10 percent stock dividend.

Hudson Valley, which serves middle-market commercial customers and their principals in Westchester County, metropolitan New York City and lower Connecticut, continued to deliver the core deposit growth, low cost of funds, superior net interest margin and low non-interest expenses that longtime shareholders have come to expect from the bank’s business-focused community banking model.

“In the fourth quarter, we began to see the payoff from the decisive steps we took during early 2010 to improve Hudson Valley’s credit quality,” President and Chief Executive Officer James J. Landy said. “While these measures negatively impacted second and third quarter earnings, we believe Hudson Valley’s credit quality is stabilizing, laying a solid foundation for long-term growth. In the meantime, during the fourth quarter, Hudson Valley generated improved profits while maintaining its strong and healthy capital position.”

The company again demonstrated its low cost of deposits, which averaged 44 basis points in the fourth quarter of 2010, compared to an average of 51 basis points in the third quarter of 2010 and 64 basis points in the fourth quarter of 2009.

Hudson Valley’s net interest margin was 4.29 percent in the fourth quarter of 2010, compared to 4.09 percent in the third quarter of 2010 and 4.67 percent in the fourth quarter of 2009. Hudson Valley continues to maintain net interest margins that are superior to most other banks, while reflecting the current low-interest-rate environment.

Indicative of the bank’s low-cost business model and streamlined operations, Hudson Valley also continued to maintain its strong efficiency ratio of 58.4 percent for the fourth quarter of 2010 and 56.2 percent for the full year.

Portfolio Credit Quality

Hudson Valley’s loan loss provision was $5.8 million for the fourth quarter and $46.5 million for the 12 months of 2010. As previously disclosed, the company adopted a more aggressive approach to resolving problem loans early in 2010, with $28.5 million of the full year’s loan loss provision in the second quarter.

The bank’s allowance to total loans ratio in 2010 was 2.25 percent at December 31, 2.15 percent at September 30 and 2.70 percent at June 30.

Net charge-offs were $3.8 million in the fourth quarter 2010, compared to $16.8 million in the third quarter and $20.8 million in the second quarter. As a percentage of average loans, annualized net charge-offs were 0.90 percent in the fourth quarter of 2010, compared to 3.97 percent in the third quarter and 4.80 percent in the second quarter.

Hudson Valley’s total nonperforming loans (including loans held for sale and OREO) in 2010 were $64.1 million at December 31, compared to $73.4 million on September 30, $75.6 million at June 30 and $66.7 million at December 31, 2009. Nonperforming loans totaled 2.62 percent of total loans at December 31, compared to 2.46 percent at September 30, 4.01 percent at June 30 and 3.17 percent at the end of 2009.

During the fourth quarter, Hudson Valley successfully closed on the sale of $14.1 million of pooled loans, at their recorded fair value. As a result, loans held-for-sale was reduced from $21.9 million at September 30, 2010 to $7.8 million at December 31, 2010.

Lending Activity

While seeing some sequential improvement, fourth quarter lending activity overall at Hudson Valley continued to reflect the soft demand experienced by most U.S. banks. Net loans totaled $1.69 billion at December 31, 2010. This represented an increase of 1.0 percent from September 30, 2010 and a decrease of 4.7 percent from December 31, 2009.

An exception to the overall soft loan demand at Hudson Valley has been very strong demand for local market multi-family loans. Hudson Valley’s multi-family loan balances grew to $152.3 million at December 31, 2010, from $124.6 million at September 30, 2010 and $85.5 million at December 31, 2009.

“Early in 2010 Hudson Valley began actively deploying its ample liquidity to take full advantage of the ready market for multi-family lending,” Landy explained. “Our board has currently authorized up to $300 million in lending through Hudson Valley’s multi-family program, which is focused on refinancing or purchase financing of residential apartment buildings with established rent rolls. This growing market is characterized by reasonable loan pricing and good quality credits. Since launching the program, we’ve had particular success in loans up to $7.5 million for buildings with at least 10 units in metropolitan New York, and we see plenty of opportunity to continue competing for and winning multi-family business here on our home turf.”

In addition, Hudson Valley saw a modest increase in commercial real estate (CRE) lending, which was 46.0% of total loans at the end of 2010 and has historically been it’s single-largest lending category. CRE loans were $796.3 million at December 31, 2010, compared to $788.0 million at September 30 and $783.6 million at December 31, 2009.

15 Cent Dividend Declared

The Hudson Valley Board of Directors declared a cash dividend of $0.15 per share payable to all common stock shareholders of record as of the close of business February 14, 2011. The dividend will be distributed to shareholders on or about February 24, 2011.

Fourth Quarter and Year End Review

The company recorded net income for the three month period ended December 31, 2010 of $7.1 million or $0.41 per diluted share, an increase of $1.9 million compared to net income of $5.2 million or $0.32 per diluted share for the same period in the prior year. The company recorded net income for the year ended December 31, 2010 of $5.1 million or $0.29 per diluted share, a decrease of $13.9 million compared to earnings of $19.0 million or $1.37 per diluted share for the year ended December 31, 2009. Per share amounts for the 2009 periods have been adjusted to reflect the effects of the 10 percent stock dividend issued in December 2010.

The overall decline in earnings in 2010, compared to 2009, resulted primarily from significant increases in the provision for loan losses which totaled $5.8 million and $46.5 million, respectively, for the three month period and year ended December 31, 2010, compared to $7.1 million and $24.3 million, respectively, for the same periods in the prior year. Earnings were also adversely affected by real estate owned valuation provisions of $1.4 million and $0.6 million, respectively, in the second and third quarters of 2010. These provisions are reflective of continued weakness in the overall economy which has resulted in the company’s decision to follow a more aggressive strategy for problem asset resolution. The severity of the decline in real estate values has provided new market opportunities for the disposition of distressed assets as investors search for yield in the current low interest rate environment and our more aggressive policy has begun to take advantage of those opportunities. As part of the revised resolution strategy, the company has reevaluated each problem

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loan and has made a determination of net realizable value based on management’s estimation of the best possible outcome considering the individual characteristics of each asset against the likelihood of resolution with the current borrower, expectations for resolution through the court system, or other available market opportunities.

Total loans decreased $84.2 million during the year ended December 31, 2010 compared to the 2009 full year. This decline resulted from a number of factors including decreased loan demand, charge-offs, pay downs of existing loans and the transfer of $21.9 million of nonperforming loans to the loans held for sale category. The company recognized $46.2 million of net charge-offs during 2010. The company has continued to experience a slowdown in payments of certain loans, such as construction loans, whose repayment is often dependent on sales of completed properties, as well as additional increases in delinquent and nonperforming loans in other sectors of the loan portfolio, all of which have been adversely impacted by the economic downturn and decline in the real estate market. The company, however, continues to provide lending availability to both new and existing customers.

Nonperforming assets, which include nonaccrual loans, accruing loans delinquent over 90 days and other real estate owned, decreased to $56.3 million at December 31, 2010, compared to $66.7 million at December 31, 2009. The decrease includes the transfer of $21.9 of nonperforming loans to the held for sale category discussed above. Overall asset quality continued to be adversely affected by the current state of the economy and the real estate market. Although there is growing evidence that the current economic downturn may have begun to slowly turn around, higher than normal levels of delinquent and nonperforming loans, slowdowns in repayments and declines in the loan-to-value ratios on existing loans continued during 2010. Despite recent improvement in most economic indicators, the company’s loan portfolio continued to be adversely impacted by the effects of severe declines in the demand for and values of virtually all commercial and residential real estate properties. These declines, together with the limited availability of residential mortgage financing, resulted in continued downward pressure on the overall asset quality of the company’s loan portfolio during 2010. In addition, recent significant increases in filings of bankruptcy and foreclosure proceedings have overloaded the court systems and have resulted in what the company believes to be unacceptable delays in attempts to obtain title to real estate and other collateral through conventional foreclosure. As a result of these factors, since the second quarter of 2010, the company has followed the more aggressive strategy for resolving problem assets discussed above including the anticipated sale of certain nonperforming loans discussed above.

Total deposits increased $61.8 million during the year ended December 31, 2010, compared to the 2009 full year, as the company continued to experience significant growth in new customers both in existing branches and new branches added during the last two years. Proceeds from deposit growth were used to reduce maturing term borrowings or were retained in liquid investments, principally interest earning bank deposits.

During 2009 and 2010, the company was able to repay maturing long-term borrowings, all of its brokered certificates of deposit and non-customer related short-term borrowings with liquidity provided primarily by core deposit growth and planned utilization of run-off from our investment securities. Additional liquidity from deposit growth was retained in the company’s short-term liquidity portfolios, available to fund future loan growth. With interest rates remaining at historical low levels, this increase in liquidity contributed to margin compression. The net interest margin declined to 4.29 percent and 4.23 percent, respectively, for the three month period and full year ended December 31, 2010, compared to 4.67 percent and 4.72 percent for the same periods in the prior year. The 4.29 percent net interest margin for the fourth quarter of 2010 was a slight increase over the 4.09 percent for the prior quarter, primarily as a result of the effects of increases in multi-family loans and a $15 million reduction of term borrowings.

As a result of the aforementioned activity in the company’s core businesses of loans and deposits and other asset/liability management activities, tax equivalent basis net interest income declined by $1.8 million or 6.0 percent to $28.2 million for the three month period ended December 31, 2010, compared to $30.0 million for the same period in the prior year. Tax equivalent basis net interest income declined by $4.6 million or 3.9 percent to $113.8 million for the year ended December 31, 2010, compared to $118.4 million for the year ended December 31, 2009. The effect of the adjustment to a tax equivalent basis was $0.7 million and $3.2 million, respectively, for the three month period and full year ended December 31, 2010, compared to $0.9 million and $4.1 million, respectively, for the same periods in the prior year.

The company’s non interest income was $4.4 million and $13.7 million, respectively, for the three month period and full year ended December 31, 2010. This represented increases of $1.7 million or 63.0 percent and $3.2 million or 30.5 percent, respectively, compared to $2.7 million and $10.5 million, respectively, for the same periods in the prior year. These increases were primarily as a result of an increase in investment advisory fees. Fee income from this source increased primarily as a result of the effects of recent improvement in both domestic and international equity markets. Assets under management were approximately $1.5 billion at December 31, 2010 and $1.3 billion at December 31, 2009. The overall increases in non interest income also included growth in deposit service charges. Non interest income also included recognized pre-tax impairment charges on securities available for sale of $0.2 million and $2.6 million, respectively, for the three month period and full year ended December 31, 2010 and $1.3 million and $5.5 million, respectively, for the same periods in the prior year. The impairment charges were related to the company’s investments in pooled trust preferred securities. The company has decided to hold its investments in pooled trust preferred securities as it does not believe that the current market value estimates for these investments are indicative of their underlying value. The pooled trust preferred securities are primarily backed by various U.S. financial institutions many of which are experiencing severe financial difficulties as a result of the current economic downturn. Continuation of these conditions may result in additional impairment charges on these securities in the future. Non interest income for the full year ended December 31, 2010 also included $2.0 million of valuation losses on other real estate owned.

Non interest expense was $19.1 million for the three month period ended December 31, 2010. This represented an increase of $2.0 million or 11.7 percent, compared to $17.1 million for the same period in the prior year. Non interest expense was $74.1 million for both the full year ended December 31, 2010 and the full year ended December 31, 2009. Increases in non interest expense resulting from the company’s continued investment in its branch offices, technology and personnel to accommodate growth, the expansion of services and products available to new and existing customers and the upgrading of certain internal processes were more than offset by cost saving measures implemented by the company during 2009 and 2010. In addition, 2010 reflected significantly lower FDIC deposit insurance premiums. Additional premiums imposed by the FDIC in 2009 to replenish shortfalls in the FDIC Insurance Fund were not imposed to the same degree in 2010. However, additional premium increases and special assessments may continue to be imposed by the FDIC in the future. Decreases resulting from the lower FDIC premiums and other cost saving measures were offset by significant increases in costs related to problem loan resolutions and other real estate owned.

Hudson Valley’s capital ratios remain in excess of “well capitalized” levels generally applicable to banks under current regulations. At December 31, 2010, Hudson Valley Holding Corp. posted a total risk-based capital ratio of 15.2 percent, a Tier 1 risk-based capital ratio of 13.9 percent, and a Tier 1 leverage ratio of 9.6 percent.

Conference Call

As previously announced we will be holding a fourth quarter earnings conference call Friday, February 4, 2011 at 10:00 AM ET:

Domestic (toll free): 1-877-317-6789;

International (toll): +1-412-317-6789.

All participants should dial in at least ten minutes prior to the call and request the “HUVL Fourth Quarter Earnings call.”

A replay of the call will be available 1 hour from the close of the conference through February 21, 2011 at 9:00 AM ET:

Domestic Toll Free: 1-877-344-7529 — Conference # 447431;
International Toll: +1-412-317-0088 — Conference # 447431.

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 our website at www.hudsonvalleybank.com.

About Hudson Valley Holding Corp.
Hudson Valley Holding Corp. (HUVL), headquartered in Yonkers, NY, is the parent company of Hudson Valley Bank (HVB). Hudson Valley Bank is a Westchester based bank with more than $2.6 billion in assets, serving the metropolitan area with 36 branches located in Westchester, Rockland, the Bronx, Manhattan, Queens and Brooklyn in New York and Fairfield County and New Haven County, in Connecticut. HVB specializes in providing a full range of financial services to businesses, professional services firms, not-for-profit organizations and individuals; and provides investment management services through a subsidiary, A. R. Schmeidler & Co., Inc. Hudson Valley Holding Corp.’s common stock is traded on the NASDAQ Global Select Market under the ticker symbol “HUVL” and is included in the Russell 3000® Index. Additional information on Hudson Valley Bank can be obtained on their web-site 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 September 30, 2010. 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, 2009 and our subsequent Quarterly Reports of Form 10-Q include, but are not limited to, statements regarding:

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