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| 8-K - FORM 8-K - HUDSON VALLEY HOLDING CORP | d586615d8k.htm |
 Metro New York’s
Premier Business Bank
Seizing Tomorrow’s Opportunities
While Maintaining Our Core Fundamentals
August 2013
Exhibit 99.1 |
 1
Safe Harbor Statement
“Safe Harbor” Statement under the Private Securities Litigation Reform Act of
1995:
This presentation contains various forward-looking statements with respect to
earnings, credit quality and other financial and business matters within the
meaning of the Private Securities Litigation Reform Act of 1995. These
forward-statements can be identified by words such as “expects,” “anticipates,”
“intends,” “believes,” “estimates,” “predicts”
and words of similar import. The Company cautions that these forward-looking statements are subject to
numerous assumptions, risks and uncertainties, and that statements relating to future
periods are subject to 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, include, but are not limited to, statements
regarding: (a) our ability to comply with the formal agreement entered into with the Office of the Comptroller of the Currency (the “OCC”) and any
additional restrictions placed on us as a result of future regulatory exams or changes
in regulatory policy implemented by the OCC or other bank regulators; (b) 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; (c) our ability to deploy our excess cash,
reduce our expenses and improve our operating leverage and efficiency; (d)
the results of the investigation of A.R. Schmeidler & Co., Inc. by the Securities and Exchange Commission (the “SEC”) and the Department of Labor (the
“DOL”) and the possibility that our management’s attention will be
diverted to the SEC and DOL investigations and settlement discussions and we will incur
further costs and legal expenses; (e) the adverse affects on the business of A.R.
Schmeidler & Co., Inc. and our trust department arising from a settlement
with the SEC and DOL investigations; (f) 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; (g)
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; (h)
further increases in our non-performing loans and allowance for loan losses; (i)
ineffectiveness in managing our commercial real estate portfolio; (j) lower than
expected future performance of our investment portfolio; (k) a lack of opportunities for growth, plans for expansion (including opening new branches)
and increased or unexpected competition in attracting and retaining customers; (l)
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; (m) lower than expected demand for our products and services; (n) possible
impairment of our goodwill and other intangible assets; (o) our inability to
manage interest rate risk; (p) increased expense and burdens resulting from the
regulatory environment in which we operate and our inability to comply with
existing and future regulatory requirements; (q) 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; (r) proposed legislative and regulatory action
may adversely affect us and the financial services industry; (s) future increased
Federal Deposit Insurance Corporation, or FDIC, special assessments or changes
to regular assessments; (t) potential liabilities under federal and state environmental laws.
For a more detailed discussion of these factors, see the Risk Factors discussion in the
Company’s most recent Annual Report on Form 10-K, and subsequent
Quarterly Reports on Form 10-Q. The forward-looking statements included in this presentation are made only as of the date hereof and the
Company undertakes no obligation to update or revise any of its forward-looking
statements.
Unless otherwise noted, information presented is from Company sources. |
 2
Hudson Valley’s Business Model
•
Commercial bank focused on small and middle market businesses, professional service
firms
and
their
principals
–
they
view
us
as
their
“private
bankers”
•
Niche businesses synergistically compliment each other to form the core of HVB’s
business model
•
Relationship
Focus
--
high
quality
banking
products
and
exceptional
personal
service
Focus on
Targeted
Niche
Segments
Attorneys
Not-For-
Profits
Property
Managers
Real Estate
Developers
Municipal-
ities
Trusts
General
Business |
 3
NOT A TRADITIONAL RETAIL COMMUNITY BANK
•
A
“Community
Business
Bank”
founded
to
focus
on
small
and
middle
market
commercial
customers and their principals
•
Focus on targeted niche businesses, entrepreneurs and professional service firms with
high deposit transaction volume throughout the Metro New York area
•
Low-cost, core deposits = foundation of customer relationships
•
We
sell
service,
with
a
strong
commitment
to
acting
as
a
“private
bank”
to
our
niche
commercial
customers
WE LEND WHERE WE LIVE
•
Providing
prudent,
conservatively
underwritten
loans
in
our
home
market
•
Stable and deep management team has extensive in-market experience and is highly
accessible to customers
•
Unique Metro NYC market allows for competitive positioning with high-touch service
and significant opportunities for growth
A Differentiated Business Model |
 4
Our Mission is Unchanged
OUR METRO NYC SMALL-
AND MID-SIZED COMMERCIAL CUSTOMERS
REMAIN OUR FOUNDATION AND OUR PRIORITY
•
What changes is the number and diversity of products offered to serve them
OBJECTIVE IS TO GAIN COMPETITIVE ADVANTAGE WHILE MAINTAINING
COMPLIANCE
•
More nimble in adapting to new environments, products, and competitors
•
More effectively serve our niche markets with an even broader array of customized
products that meet their needs |
   5
Metro New York Franchise
•
$2.8 billion commercial bank with 28 branches throughout Westchester, Rockland, the
Bronx, Manhattan and Brooklyn in New York •
Largest bank headquartered in Westchester County
•
Historic growth achieved by taking share from larger national bank competitors
•
There are more than 33,000 small and middle market companies with revenues of $1
million or more in this market Source: SNL Financial; deposit data as of
06/30/2012; branch count and map as of 06/30//2013 Branch Network - County Level
Deposits
Branches
(1)
US $000s
New York State
Westchester
17
1,770,169
$
New York (Manhattan)
4
321,111
Bronx
4
194,924
Rockland
2
75,508
Kings (Brooklyn)
1
11,883
(1) 6 Connecticut branches are excluded and closed July-2013 and 2 New York
branches consolidated into other branch locations in June-2013 |
  6
Summary Financial Highlights
3.66%
65.00%
0.94%
9.07%
8.6%
VS.
PEERS:
(1)
Excludes income from loan sales.
Peers = Median of US-based, publicly traded commercial banks with assets between
$1-$5 billion as of June 30, 2013. (Dollars in thousands, except per share
amounts) 2012
2012 (1)
2013
Net Interest Income
$56,804
$56,804
$42,314
Non Interest Income
$25,143
$9,208
$8,398
Non Interest Expense
$41,910
$41,910
$39,429
Net Income
$22,974
$13,603
$7,138
Diluted Earnings Per Share
$1.17
$0.69
$0.36
Dividends Per Share
$0.36
$0.36
$0.12
Net Interest Margin
4.34%
4.34%
3.12%
Return on Average Equity
15.90%
12.24%
4.88%
Return on Average Assets
1.63%
1.21%
0.49%
Efficiency Ratio
61.97%
61.97%
76.52%
Tangible Common Equity Ratio
9.6%
9.6%
9.0%
Average Assets
$2,820,157
$2,820,157
$2,904,681
Average Net Loans
$1,787,290
$1,787,290
$1,415,970
Average Deposits
$2,437,442
$2,437,442
$2,540,060
Average Stockholders' Equity
$288,918
$288,918
$292,290
Six Months Ended June 30 |
 7
Historical Profitability
Income from loan sale
1.02
10.05
1.49
1.30
0.74
0.18
0.70
0.49
-0.08
2007
2008
2009
2010
2011
2012
2013Q2
RETURN
ON AVERAGE
ASSETS %
RETURN ON
AVERAGE EQUITY
%
18.00
14.76
8.74
6.82
4.88
1.75
-0.72
2007
2008
2009
2010
2011
2012
2013Q2 |
 8
Historical Profitability
Income from loan sale
$2.78
Pre-Tax Pre-Provision Diluted Earnings per Share is a Non-GAAP
measure. See Appendix slide 43 for reconciliation $1.49
PRE
-TAX
PRE
-PROVISION DILUTED
EARNINGS
PER SHARE*
DILUTED
EARNINGS
PER
SHARE
|
 9
Net Interest Margin
(1)
Fully tax equivalent basis.
(2)
Peers = Median of US-based, publicly traded commercial banks with assets between
$1-$5 billion as of June 30, 2013. 0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013Q2
Net Interest Margin (FTE)
Yield on Loans
Cost of Deposits
Federal Funds Rate
VS. 3.79%
PEERS
(1,2) |
 10
Strong Capital Position
Median of US-based, publicly traded commercial banks with assets between $1-$5
billion as of June 30, 2013. 7.9
7.3
10.1
10.0
9.1
9.3
9.0
2007
2008
2009
2010
2011
2012
2013Q2
8.3
7.5
10.2
9.6
8.8
9.3
9.3
2007
2008
2009
2010
2011
2012
2013Q2
12.6
10.1
13.9
13.9
11.3
16.5
16.5
2007
2008
2009
2010
2011
2012
2013Q2
13.8
11.3
15.2
15.2
12.6
17.7
17.7
2007
2008
2009
2010
2011
2012
2013Q2
TANGIBLE
COMMON
EQUITY
/
TANGIBLE
ASSETS
%
LEVERAGE
RATIO
%
TIER
1
RISK
BASED
CAPITAL
RATIO
%
TOTAL
RISK
BASED
CAPITAL
RATIO
% |
 11
Summary –
Why HVB is Different
•
“Private Bank”
model emphasizes selling service over products
•
Value of service relationship outweighs price sensitivity in HVB’s
highly specialized, targeted niche customer segments
•
Loyal depositors trust HVB with their operating cash management
needs,
providing
a
stable
source
of
low-cost
deposits
–
and
an
opportunity for future business |
 12
Growth Strategy
ORGANIC GROWTH IS OUR STRENGTH
•
We have been successful in going to market in a very focused way
in the highly competitive
Metro NYC commercial banking market
–
Larger bank M&A in the market provides opportunities to acquire new customers and
new talent with intact books of business
•
Referrals and reputation for service have historically generated
profitable, controlled growth
in customers
•
Always seeking to grow sources of fee revenue
–
A.R. Schmeidler acquisition in 2004 is a good example of investing in a niche business
with strong fee generating capabilities
•
Breadth and depth of niche business markets in Metro NYC provide
unusually high growth
opportunities compared to other areas of the U.S.
•
Opportunistic and targeted M&A could supplement organic growth in the future,
particularly in fee income |
 13
HOW DO WE DO IT?
•
Weekly reporting from branches about significant customer activity
–
Reporting provides market and customer intelligence
–
Reported to Chairman, President, EVPs, key managers
–
Outlines loan/deposit/customer opportunities
–
Highlights significant accomplishments from the week
•
Reporting to the Board on Relationships at Risk
–
Raises
executive
awareness
–
NO
SURPRISES
–
Flat corporate structure means highest-level executives know the
customers and can personally reach out
Institutional Attention to Relationships |
 14
Relationship Management = Differentiation
•
Hiring the right people to manage and service relationships
•
All
3,600
Relationships
assigned
to
an
Officer
–
approximately
2/3rds
assigned
to
a
Relationship Manager (RM)
–
Relationships are measured on total balances, not just loan balances
–
Depositors receive high-touch personalized service just like borrowers
•
Branch
Managers
have
the
other
1/3rd
assigned
to
them
and
“co-manage”
all
RM
assigned relationships
•
Branch Managers and Relationship Managers have very good, cooperative
relationships
•
Branches responsible for daily servicing and providing an exceptional customer
banking experience
•
Relationship Managers provide ongoing professional skill, communication and any
necessary decision making |
 15
Leveraging Relationships for Additional Business
RELATIONSHIP MANAGEMENT DEEP DIVE INITIATIVE
•
Objective:
Ongoing
annual
Structured,
joint
(Branch
Manager/RM)
review
and meeting with all relationships to
–
Review existing business
–
Seek additional business
–
Ask for referrals
•
The Private Banking and Middle Market Model (versus the Retail banking
approach) |
 16
Balance Sheet Diversification is Underway
OUR BALANCE SHEET IS IN TRANSITION
•
Redeployment efforts are underway to diversify balance sheet in an efficient and
profitable way
–
We are implementing three approaches simultaneously:
1.
Asset purchases –
NEAR TERM
2.
Loan
participations
with
other
institutions
–
NEAR
&
LONG
TERM
3.
Building internal ability to originate, underwrite and service non-CRE
credits –
LONG TERM |
 17
Liquidity Deployment and Portfolio Diversity
•
Primarily in our metro New York markets
•
Enhancing and complementing small-
and mid-sized commercial
banking customer focus
•
Additional opportunities outside CRE
•
Possible initiatives include:
–
Additional asset purchases
–
Loan participations
–
Diversification |
 18
Liquidity Deployment: In-Market Participations
•
Build on longstanding CRE-participation experience with new
opportunities
–
Continue to underwrite both the borrower and the lead lender
•
Some examples
–
New large-regional bank relationship
•
Participations on upper middle market and large corporate C&I
–
New peer-bank relationship
•
Receivables financing
•
Mortgage warehouse financing
•
Other non-CRE lending |
 19
Liquidity Deployment: Diversifying Offering
•
New products for our niche commercial customers and their owners, principals and
managers
•
Focused on metro New York
•
Some examples
–
Equipment leasing
•
Excellent opportunities for deals sized from $250,000 to $5 million
•
Categories including building equipment (e.g. HVAC), business, office,
medical, dental and light industrial equipment
–
Jumbo residential mortgage and home equity products complementing
commercial
•
For existing commercial customer owners, principals and managers, a
broader array of competitive residential options than previously
•
For prospective customers, a whole new line of products at our bankers’
disposal to develop new commercial relationships
•
No retail marketing or advertising |
 20
Liquidity Deployment
$-
$50,000,000
$100,000,000
$150,000,000
$200,000,000
$250,000,000
2012 Q3
2012 Q4
2013 Q1
2013 Q2
Investment
Purchases
Loan Originations
& Purchases |
 21
Redeployment Aimed at Balance Sheet Efficiency
Diversifying by simultaneously implementing three approaches
1.Asset
purchases
–
CURRENT
•
$36.3 Million in Residential ARMs purchased in 2Q13
•
Evaluating others
2.Loan
participations
with
other
institutions
–
NEAR
TERM
•
Building on HVB’s longstanding CRE-participation experience by leveraging
other institutions’ expertise and infrastructure for C&I and
residential lending 3.Building
internal
ability
to
originate,
underwrite
and
service
non-CRE
credits
–
NEAR
&
LONG
TERM
•
Focus is new products for longstanding niche business and industry targets in metro
NYC –
New commercial lending including equipment leases, lines of credit, term loans, ABL,
etc. –
Complementary
jumbo
mortgage
and
HELOC
products
for
RMs
to
offer
commercial-account
principals
All while continuing to leverage historic strength in CRE underwriting to capitalize on
solid demand from quality CRE credits |
 22
Loan Originations and Payoffs
$-
$20,000,000
$40,000,000
$60,000,000
$80,000,000
$100,000,000
$120,000,000
2012 Q3
2012 Q4
2013 Q1
2013 Q2
Loan
Originations
&
Purchases
Loan Payoffs &
Paydowns |
 23
Successful Measures to Manage Concentrations
MEASURES TO MANAGE CONCENTRATIONS
•
Effective risk management process
•
Active pipeline management process
•
Commitment to developing non-CRE lines of business
•
Participate with in-market financial institutions to reduce CRE
exposure while maintaining strategic relationships
CONCENTRATION MEASURES
Q1-13
Q2-13
TARGET
CRE % of Risk Based
Capital 319.7%
333.7%
326.6%
< 400%
Classified Assets % of Risk Based
Capital 36.2%
36.2%
31.0%
< 25%
Q4-12
In
2Q13
purchased
$36.3
million
in
residential
ARMs
supported
by in-market collateral |
 24
Asset Quality Measures Strengthen Balance Sheet
NONACCRUAL
LOANS
/ TOTAL
ASSETS
%
LOAN
LOSS
RESERVE
/ GROSS
LOANS
%
LOAN
LOSS
RESERVE
/ NONACCRUAL
LOANS
%
NET
CHARGEOFFS
/ AVERAGE
NET
LOANS
%
Median of US-based, publicly traded commercial banks with assets between $1-$5
billion as of June 30, 2013. 1.33
1.33
2.13
2.25
1.95
1.81
1.75
2007
2008
2009
2010
2011
2012
2013Q2
0.47
2.70
3.85
0.25
0.07
0.77
0.39
2007
2008
2009
2010
2011
2012
2013Q2
0.46
0.44
1.90
1.64
1.07
1.20
1.01
2007
2008
2009
2010
2011
2012
2013Q2
162
200
76
89
103
76
86
2007
2008
2009
2010
2011
2012
2013Q2 |
 25
Core Deposits –
The Jewel of the Franchise
Low Cost, Dependable Source of Funding
How we Identify, Maintain and Grow Them! |
 26
Institutional Attention to Relationships
HOW DO WE DO IT?
•
Business managed by relationship profitability rather than volume of accounts
–
Very different from traditional retail banking models
•
“Relationship
Status”
reflects
achievement
of
a
profitability
hurdle
•
“Resumes”
for each actively maintained relationship
–
i.e. how the business came into the Bank; who their key service
providers are (attorney, accountant, insurance broker, etc.); how they
like to be entertained
–
Who really makes the banking decision in each relationship
•
Recognize that the core deposit is a key source of value for both our clients and
for Hudson Valley –
value proposition is mutually beneficial for the clients we
target |
 27
Marketing for Core Deposits
HOW WE IDENTIFY, SECURE AND GROW THEM!
•
Marketing
to
the
right
business
segments
–
large
deposits,
low
activity,
not
as
rate sensitive
•
Marketing
“relationship”
and
“service”
versus
interest
rate
•
Utilizing testimonials and recommendations of current customers
–
Ongoing
calling
–
10,200
documented
calls
in
2012
and
5,272
in
the
1st half of 2013
–
Calls made to prospective individuals/businesses that have recently
interacted with a Hudson Valley RM or client |
 June 30, 2012
HVB
HVB
Peers
(2)
Core Deposits / Total Deposits
(1)
96%
97%
88%
Non Interest Bearing/Total Deps
40%
38%
21%
Deposits / Total Funding
98%
98%
92%
Loans / Deposits Ratio
(3)
62%
55%
80%
Cost of Total Deposits
26 bp
20 bp
38 bp
Deposit Metrics
June 30, 2013
Period Ended
28
A Core Deposit Driven Franchise
(1)
Core Deposits defined as total deposits less time deposits >$100,000.
(2)
Peers = Median of US-based, publicly traded commercial banks with assets between
$1-$5 billion as of June 30, 2013. (3)
Represents Net Loans to Deposits |
 29
A Core Deposit Driven Franchise
DEPOSIT
COMPOSITION
–
June
30,
2013
(1)
Net loans excluding loans held-for-sale.
(2)
Core Deposits defined as total deposits less time deposits >$100,000.
Money
Market,
34%
Demand,
38%
Savings, 5%
Time > $100m,
3%
Time < $100m,
1%
Checking with
Interest, 19%
71%
55%
89%
97%
50%
60%
70%
80%
90%
100%
2007
2008
2009
2010
2011
2012
2013
Loan/Dep Ratio
Core/Total Deposits
(2)
(1)
TOTAL DEPOSITS – $2,625 MILLION CORE FUNDING |
 30
HVB Funding
Advantage
Peers = Median of US-based, publicly traded commercial banks with assets between
$1-$5 billion as of June 30, 2013. Cost of Deposits
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
HVB
National Peers |
 31
Deposit Growth Drives Long-Term Profitability
67.2%
CORE
DEPOSITS
(1)
96.6%
CORE
DEPOSITS
(1)
VS.
88.3% FOR
PEERS
(2)
(1)
Core deposits defined as total deposits less time deposits > $100,000 and brokered
deposits. December 2006 Includes approximately $127 million of deposits as part of New York National Bank acquisition
(2)
Peers = Median of US-based, publicly traded commercial banks with assets between
$1-$5 billion as of June 30, 2013. $0
$250
$500
$750
$1,000
$1,250
$1,500
$1,750
$2,000
$2,250
$2,500
$2,750
$3,000
$880
$888
$1,027
$1,125
$1,235
$1,408
$1,626
$1,813
$1,839
$2,173
$2,234
$2,425
$2,520
$2,625
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Jun
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Demand Deposits
Checking with Interest
Money Market Accounts
Savings Accounts
Time Deposits < $100m
Time Deposits > $100m
Brokered Deposits |
 32
Branch Network –
Local Service & Execution
•
Low-cost branch infrastructure supports core deposit franchise
•
Branch value grows with age –
deeper penetration into existing relationships and new referrals
increase deposits per branch over time
6 Branches
11 Branches
(2)
(1)
6 Connecticut
branches
excluded
closed
July
-
2013
(2)
2 New
York
branches
were
consolidated
June
-
2013
6 Branches
5 Branches
June 2013 YTD Avg Deposit Balances per Branch
(1)
$21.3
$55.1
$81.3
$114.3
$0
$20
$40
$60
$80
$100
$120
$140
< 5 Yrs
5-10 Yrs
10-20 Yrs
> 20 Yrs
Age of Branch |
 33
Key Takeaways
HISTORIC DIFFERENTIATING QUALITIES REMAIN OUR STRENGTH
•
Low-cost core deposit base = source of stable funding for future growth
•
Efficient mindset is in our DNA
•
“Private Bank”
approach wins and retains customers
AN INCREASINGLY NIMBLE AND SOPHISTICATED BANK
•
Ahead of the curve in adopting best practices typically reserved
for $10-$25 billion banks
•
Increased sophistication = heightened competitive edge
•
Developing diversified lending skills as a strategic and tactical focus
USING ENHANCED OPERATIONAL EFFECTIVENESS TO OUR ADVANTAGE
•
Quicker reaction to customers’
needs
•
Quicker reaction to regulatory and market changes
•
Quicker ability to diversify lending sources and maximize capital allocation
–
Results in: Quicker ability to grow shareholder returns |
 34
THANK YOU
THANK YOU
FOR YOUR INTEREST IN
FOR YOUR INTEREST IN
HUDSON VALLEY HOLDING
HUDSON VALLEY HOLDING
CORP.
CORP. |
 35
Ticker: HVB
Ticker: HVB
www.hudsonvalleybank.com
www.hudsonvalleybank.com
APPENDIX
APPENDIX
FINANCIAL DETAIL AND NON-GAAP
FINANCIAL DETAIL AND NON-GAAP
RECONCILIATION
RECONCILIATION |
 36
New York Metro Market Profile
DEMOGRAPHICS
•
Along with being rich in deposits and HVB’s niche businesses, the market also has
very favorable demographics
Consumer Demographics (1)
Manhattan /
NY
Brooklyn
Bronx
Westchester
Rockland
Total
Population
1,585,873
2,504,700
1,385,108
949,113
311,687
19,378,102
Housing Units (2)
847,090
1,000,293
511,896
370,821
104,057
8,108,103
Home ownership rate
22.8%
30.3%
20.7%
62.7%
71.0%
55.2%
Persons per household, 2006-
2010
2.09
2.68
2.79
2.64
3.02
2.59
Median household income 2006-
2010
$64,971
$43,567
$34,264
$79,619
$82,534
$55,603
Median Income Per Capita
$59,149
$23,605
$17,575
$47,814
$34,304
$30,948
Unemployment Rate (3)
8.7%
9.4%
11.8%
6.2%
5.9%
7.6%
Business Demographics (4)
Revenues: < $1 million
137,028
85,670
29,701
54,096
16,678
323,173
Revenues: $1 million - $5 million
13,535
4,113
1,398
3,172
914
23,132
Revenue: > $5 million
6,651
1,129
472
1,238
266
9,756
Revenue: Not reported
18,393
8,897
4,465
5,606
1,669
39,030
Total Business Entities
175,607
99,809
36,036
64,112
19,527
395,091
(3)
County
unemployment
rates
as
of
June,
2013
Bureau
of
Labor
Statistics
(4)
Hoovers|D&B
(2)
A
housing
unit
is
defined
as
a
house,
an
apartment,
a
mobile
home,
a
group
of
rooms,
or
a
single
room
that
is
occupied
(1)
2010
US
Census
Quick
Facts
by
State|County |
 37
New York Metro Market Profile
NICHE BUSINESSES
•
Just as this market is deposit rich, it is also rich with HVB’s targeted niche
businesses •
We have leading market share among Westchester attorneys and property managers
•
High
growth
potential
in
all
other
segments
and
counties,
each
with
HVB
market
share
currently
<2%
1 –
Dunn & Bradstreet Market Data based on Primary & Secondary NAICS
codes DATA DEMONSTRATES TREMENDOUS UNTAPPED ORGANIC GROWTH POTENTIAL IN HVB’S
CORE NICHE MARKETS Segment
Manhattan /
NY
Brooklyn
Bronx
Westchester
Rockland
Total
Attorney
9,251
1,784
546
2,266
563
14,410
Not for Profit
7,512
8,413
3,288
3,322
1,365
23,900
Real Estate Investors
4,169
1,251
578
933
227
7,158
Property Managers
5,253
3,202
1,269
1,907
499
12,130
Municipalities
809
417
283
537
197
2,243
Sub-Total
26,994
15,067
5,964
8,965
2,851
59,841
HVB NICHE BUSINESS BY COUNTY
(1) |
 38
Client Retention
RELATIONSHIPS
ARE
NOT
BUILT
OVERNIGHT
–
IT
TAKES
TIME
DISTRIBUTION OF STRATEGIC CLIENT
RELATIONSHIPS (AS OF JUNE 30, 2013)
SEGMENT
% <2 YEARS
TENURE
% 2 TO 5
YEARS
TENURE
% 5 TO 10
YEARS
TENURE
% > 10 YEARS
TENURE
Attorney
4%
29%
30%
36%
Not-for-Profit
5%
31%
19%
45%
Property Managers /
Real Estate Investors
13%
40%
14%
33%
Municipalities
4%
27%
13%
56%
General Business
5%
26%
21%
48%
•
The
wait
is
worth
it
–
the
value
of
the
relationship
generally
increases
over
time |
 39
Strength in Diversified Commercial Lending
80%
LOAN COMPOSITION –
June 30, 2013
(1)
Total is gross of unearned income. |
 40
HVB General Business Average Loan = $509,713
Businesses in Market > 395,091
> $201 BILLION LENDING OPPORTUNITY
Market Potential Example
AS OF JUNE 30, 2013
SEGMENT
% OF STRATEGIC
CLIENT
RELATIONSHIPS
% OF
TOTAL BANK
DEPOSITS
AVERAGE
DEPOSITS PER
STRATEGIC CLIENT
RELATIONSHIP
(IN THOUSANDS)
% OF STRATEGIC
CLIENT
RELATIONSHIPS
WITH LOANS
Attorney
29%
20%
$853
29%
Not-for-Profit
18%
14%
$919
38%
Property
Managers/Real Estate
Investors
17%
23%
$1,618
59%
Municipalities
2%
8%
$4,970
7%
General Business
34%
24%
$839
49%
TOTAL / AVERAGE
100%
89%
$1,070 |
 41
Quarterly Summary Financial Highlights
(a)
Excludes income from loan sales.
Dollars in thousands, except per share amounts
Q3 2011
Q4 2011
Q1 2012 (a)
Q1 2012
Q2 2012
Q3 2012
Q4 2012
Q1 2013
Q2 2013
Net Interest Income
$30,038
$30,739
$31,296
$31,296
$25,508
$24,115
$22,410
$21,246
$21,068
Non Interest Income
$5,714
$4,136
$4,419
$20,354
$4,789
$4,353
$4,346
$4,517
$3,881
Non Interest Expense
$20,090
$18,967
$20,876
$20,876
$21,034
$20,035
$20,593
$19,611
$19,818
Net Income (Loss)
$8,508
($22,901)
$8,656
$18,013
$4,961
$3,134
$3,073
$3,651
$3,487
Net Interest Margin
4.47%
4.60%
4.75%
4.75%
3.93%
3.60%
3.28%
3.18%
3.06%
Diluted Earnings (Loss) Per Share
$0.43
($1.17)
$0.44
$0.92
$0.25
$0.16
$0.16
$0.18
$0.18
Dividends Per Share
$0.18
$0.18
$0.18
$0.18
$0.18
$0.18
$0.18
$0.06
$0.06
Return on Average Equity
11.33%
-30.07%
12.20%
25.51%
6.72%
4.32%
4.18%
5.02%
4.75%
Return on Average Assets
1.18%
-3.19%
1.21%
2.53%
0.71%
0.44%
0.43%
0.51%
0.47%
Efficiency Ratio
56.67%
52.79%
56.81%
56.81%
68.06%
69.33%
75.73%
74.97%
78.12%
Tangible Common Equity Ratio
9.6%
9.1%
9.6%
9.6%
9.6%
9.2%
9.3%
9.6%
9.0%
Average Assets
$2,872,159
$2,867,304
$2,845,223
$2,845,223
$2,795,090
$2,874,634
$2,883,086
$2,859,443
$2,949,423
Average Net Loans
$1,928,888
$2,028,587
$1,997,391
$1,997,391
$1,577,190
$1,505,942
$1,467,153
$1,422,132
$1,409,875
Average Deposits
$2,468,359
$2,463,056
$2,466,159
$2,466,159
$2,408,726
$2,489,378
$2,514,818
$2,493,021
$2,586,583
Average Stockholders' Equity
$300,338
$304,624
$282,459
$282,459
$295,378
$290,189
$293,886
$290,950
$293,616
Earnings |
  42
Quarterly Loan Balances
(1)
Total is gross of unearned income.
Dollars in Millions
3Q 2011
4Q 2011
1Q 2012
2Q 2012
3Q 2012
4Q 2012
1Q 2013
2Q 2013
REAL ESTATE
C&D - RESIDENTIAL
62
53
51
53
48
34
27
35
C&D - NON RESIDENTIAL
83
57
56
43
43
41
43
37
OWNER OCCUPIED CRE
318
244
256
229
195
181
177
186
NON-OWNER OCCUPIED CRE
500
447
449
405
389
369
399
408
MULTIFAMILY LOANS
507
228
225
213
209
196
195
196
1-4 FAMILY MORTGAGE
187
175
232
237
214
216
189
222
HOME EQUITY
118
113
111
109
109
110
106
107
COMMERCIAL & INDUSTRIAL
222
219
222
231
266
289
250
261
CONSUMER
28
27
27
19
20
19
17
16
LEASE FINANCING
13
12
15
14
14
14
11
10
OTHER
2
0
1
3
3
3
1
2
TOTAL (1)
$2,040
$1,575
$1,645
$1,557
$1,510
$1,472
$1,415
$1,480
Period Ending |
 43
Non-GAAP Reconciliation
(a) Year Ended Dec 31,2012
(b) The loan sale in the first quarter of 2012 resulted in a gross gain of
$15,935. Related income taxes totaled $6,578. Excluding
Loan Sale
in thousands except share and per share
numbers
2007
2008
2009
2010
2011
2012(a)
2012(a,b)
2013
Net Income as reported
34,483
$
30,877
$
19,012
$
5,113
$
(2,137)
$
29,181
$
19,824
$
7,138
$
Income attributable to participating
shares as reported
-
-
-
-
-
(85)
(57)
(96)
Net Income attributable to common
shares as reported
34,483
$
30,877
$
19,012
$
5,113
$
(2,137)
$
29,096
$
19,766
$
7,042
$
Net Income as reported
34,483
$
30,877
$
19,012
$
5,113
$
(2,137)
$
29,181
$
19,824
$
7,138
$
Exclude:
Income Tax (1)
18,259
15,646
7,310
(1,406)
(5,413)
16,945
10,367
3,083
Provision for Loan Loss (2)
1,470
11,025
24,306
46,527
64,154
8,507
8,507
1,061
Income attributable to participating
shares (3)
-
-
-
-
-
(158)
(112)
(152)
Pre-tax, Pre-provision Earnings
54,212
$
57,548
$
50,628
$
50,234
$
56,605
$
54,474
$
38,586
$
11,130
$
Weighted Average Diluted common
shares
14,906,752
14,973,866
15,307,674
19,455,971
19,462,055
19,545,037
19,545,037
19,572,975
Diluted Earnings per Share as reported
2.31
$
2.06
$
1.24
$
0.26
$
(0.11)
$
1.49
$
1.01
$
0.36
$
Effects of (1) and (2) above
1.33
$
1.78
2.07
2.32
3.02
1.30
0.96
0.21
Pre-Tax, Pre-Provision Diluted Earnings
per Common Share
3.64
$
3.84
$
3.31
$
2.58
$
2.91
$
2.79
$
1.97
$
0.57
$
Tangible Equity Ratio:
Total Stockholders' Equity:
As reported
203,687
$
207,500
$
293,678
$
289,917
$
277,562
$
290,971
$
290,971
$
289,466
$
Less: Goodwill and other intangible
assets
20,296
25,040
27,118
26,296
25,493
24,745
24,745
24,650
Tangible stockholders' equity
183,391
$
182,460
$
266,560
$
263,621
$
252,069
$
266,226
$
266,226
$
264,816
$
Total Assets:
As reported
2,330,748
$
2,540,890
$
2,665,556
$
2,669,033
$
2,797,670
$
2,891,246
$
2,891,246
$
2,981,975
$
Less: Goodwill and other intangible
assets
20,296
25,040
27,118
26,296
25,493
24,745
24,745
24,650
Tangible assets
2,310,452
$
2,515,850
$
2,638,438
$
2,642,737
$
2,772,177
$
2,866,501
$
2,866,501
$
2,957,325
$
Tangible equity ratio
7.9%
7.3%
10.1%
10.0%
9.1%
9.3%
9.3%
9.0% |
 44
THANK YOU FOR YOUR INTEREST IN
THANK YOU FOR YOUR INTEREST IN
HUDSON VALLEY HOLDING CORP.
HUDSON VALLEY HOLDING CORP.
Ticker: HVB
Ticker: HVB
www.hudsonvalleybank.com
www.hudsonvalleybank.com
August 2013
August 2013 |