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| 8-K - FORM 8-K - HUDSON VALLEY HOLDING CORP | d627739d8k.htm |
 Metro New York’s
Premier Business Bank
Seizing Tomorrow’s Opportunities
While Maintaining Our Core Fundamentals
November 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) 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; (b) our inability to deploy our excess cash, reduce our expenses and improve our operating leverage and
efficiency; (c) 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; (d) 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; (e) further increases in our non-
performing loans and allowance for loan losses; (f) ineffectiveness in managing our
commercial real estate portfolio; (g) lower than expected future performance of
our investment portfolio; (h) a lack of opportunities for growth, plans for expansion (including opening new branches) and increased or unexpected
competition in attracting and retaining customers; (i) 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; (j) lower than expected demand
for our products and services; (k) possible impairment of our goodwill and other intangible assets; (l) our inability to manage interest rate risk; (m)
increased expense and burdens resulting from the regulatory environment in which we
operate and our inability to comply with existing and future regulatory
requirements; (n) 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; (o) proposed legislative and regulatory action may adversely affect us and the
financial services industry; (p) future increased Federal Deposit Insurance
Corporation, or FDIC, special assessments or changes to regular assessments; (q)
potential liabilities under federal and state environmental laws; (r) regulatory
limitations on dividends payable by Hudson Valley or Hudson Valley Bank .
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
General
Business
Attorneys
Not-For-
Profits
Trusts
Focus on
Targeted
Niche
Segments
Property
Managers
Municipal-
ities
Real Estate
Developers |
 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
•
$3 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 32,000 small and middle market companies with revenues of $1
million or more in this market Branch Network - County Level
Deposits
Branches
(1)
US $000s
New York State
Westchester
17
1,883,059
New York (Manhattan)
4
354,392
Bronx
4
232,442
Rockland
2
86,556
Kings (Brooklyn)
1
11,122
(1) 6
Connecticut
branches
are
excluded
and
closed
July-2013
and
2
New
York
branches
consolidated
into
other
branch
locations
in
September-
2013
Source: SNL Financial; deposit data as of 06/30/2013; branch count and map as of
09/30/2013 |
    6
Summary Financial Highlights
3.70%
64.34%
0.97%
9.86%
8.7%
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 September 30, 2013. (Dollars in thousands, except per share
amounts) 2012
2012 (1)
2013
Net Interest Income
$80,919
$80,919
$63,327
Non Interest Income
$29,496
$13,561
$12,587
Non Interest Expense
$61,945
$61,945
$60,975
Net Income
$26,108
$16,751
$9,633
Diluted Earnings Per Share
$1.33
$0.85
$0.49
Dividends Per Share
$0.54
$0.54
$0.18
Net Interest Margin
4.09%
4.09%
3.07%
Return on Average Equity
12.03%
7.72%
4.41%
Return on Average Assets
1.23%
0.79%
0.44%
Efficiency Ratio
64.17%
64.17%
79.08%
Tangible Common Equity Ratio
9.2%
9.2%
8.9%
Average Assets
$2,838,448
$2,838,448
$2,937,766
Average Net Loans
$1,692,823
$1,692,823
$1,427,552
Average Deposits
$2,454,881
$2,454,881
$2,573,237
Average Stockholders' Equity
$289,345
$289,345
$291,315
Nine Months Ended September 30 |
 7
Historical Profitability
RETURN ON AVERAGE
ASSETS % RETURN ON AVERAGE EQUITY % Income from loan
sale 1.02
10.05
1.49
1.30
0.74
0.18
0.70
0.44
-0.08
2007
2008
2009
2010
2011
2012
2013 YTD
18.00
14.76
8.74
6.82
4.41
1.75
-0.72
2007
2008
2009
2010
2011
2012
2013 YTD |
 8
Historical Profitability
Income from loan sale
$2.78
$1.49
$3.64
$3.84
$3.31
$2.58
$2.91
$1.97
$0.75
2007
2008
2009
2010
2011
2012
2013 YTD
$2.31
$2.06
$1.24
$0.26
$1.01
($0.11)
$0.49
2007
2008
2009
2010
2011
2012
2013 YTD
Pre-Tax
Pre-Provision
Diluted
Earnings
per
Share
is
a
Non-GAAP
measure.
See
Appendix
slide
44
for
reconciliation
PRE
-TAX PRE
-PROVISION
DILUTED
EARNINGS PER
SHARE
SHARE
*
DILUTED
EARNINGS PER |
 9
Net Interest Margin
VS. 3.58%
PEERS
(1,2)
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013Q3
3.13%
4.89%
5.31%
8.57%
0.19%
2.08%
Net Interest Margin (FTE)
Yield on Loans
Cost of Deposits
Federal Funds Rate
(1)
Fully tax equivalent basis.
(2)
Peers = Median of US-based, publicly traded commercial banks with assets
between $1-$5 billion as of September 30, 2013. |
 10
Strong Capital Position
TANGIBLE
COMMON
EQUITY
/
TANGIBLE
ASSETS
%
LEVERAGE
RATIO
%
TIER
1
RISK
BASED
CAPITAL
RATIO
%
TOTAL
RISK
BASED
CAPITAL
RATIO
%
Median of US-based, publicly traded commercial banks with assets between $1-$5
billion as of September 30, 2013. 7.9
7.3
10.1
10.0
9.1
9.3
8.9
2007
2008
2009
2010
2011
2012
2013 YTD
8.3
7.5
10.2
9.6
8.8
9.3
9.2
2007
2008
2009
2010
2011
2012
2013 YTD
12.6
10.1
13.9
13.9
11.3
16.5
15.9
2007
2008
2009
2010
2011
2012
2013 YTD
13.8
11.3
15.2
15.2
12.6
17.7
17.2
2007
2008
2009
2010
2011
2012
2013 YTD |
 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
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 |
 17
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 |
 18
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 |
 19
Liquidity Deployment
$-
$50,000,000
$100,000,000
$150,000,000
$200,000,000
$250,000,000
2012 Q4
2013 Q1
2013 Q2
2013 Q3
Investment
Purchases
Loan Originations
& Purchases |
 20
Redeployment Aimed at Balance Sheet Efficiency
Diversifying by simultaneously implementing three approaches
1.Asset
purchases
–
CURRENT
•
$78.5
Million
in
Residential
ARMs
purchased
in
3Q13
•
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 |
 21
Loan Originations and Payoffs
$-
$20,000,000
$40,000,000
$60,000,000
$80,000,000
$100,000,000
$120,000,000
$140,000,000
$160,000,000
2012 Q4
2013 Q1
2013 Q2
2013 YTD
Loan Originations
& Purchases
Loan Payoffs &
Paydowns |
 22
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
•
In
3Q13
purchased
$78.5
million
in
residential
ARMs
supported
by
in-market collateral
CONCENTRATION
MEASURES Q1-13
Q2-13
Q3-13
TARGET
CRE
%
of
Risk
Based
Capital
333.7%
326.6%
327.7%
< 400%
Classified
Assets
%
of
Tier
1
Capital
&
ALLL
35.3%
30.8%
29.1%
< 25% |
 23
Asset Quality Measures Strengthen Balance Sheet
Median of US-based, publicly traded commercial banks with assets between $1-$5
billion as of September 30, 2013. 1.33
1.33
2.13
2.25
1.95
1.81
1.64
2007
2008
2009
2010
2011
2012
2013 YTD
0.07
0.39
0.47
2.70
3.85
0.77
0.23
2007
2008
2009
2010
2011
2012
2013 YTD
0.46
0.44
1.90
1.64
1.07
1.20
1.12
2007
2008
2009
2010
2011
2012
2013 YTD
162
200
76
89
103
76
76
2007
2008
2009
2010
2011
2012
2013 YTD
NONACCRUAL
LOANS / TOTAL ASSETS %
LOAN
LOSS RESERVE / GROSS LOANS %
LOAN
LOSS RESERVE / NONACCRUAL LOANS %
NET
CHARGEOFFS / AVERAGE NET LOANS % |
 24
Recent Successes
OCC AGREEMENT TERMINATED
•
October 2013, agreement terminated following regular annual examination
DISCIPLINED EXECUTION
•
Unwavering focus on strategy for diversifying balance sheet
•
Implemented ERM platform suitable for $10-$15 billion-asset bank
PRUDENT LIQUIDITY DEPLOYMENT CONTINUES
($ millions) |
 25
Asset Based Lending
•
Diversifies and improves risk profile of overall portfolio
•
Provide a growing array of products and services in demand by
small-
and mid-sized commercial customers and prospects in metro
NYC and beyond
•
Addition
of
veteran
ABL
team
builds
on
long
record
of
attracting
top
talent from national/multinational banks
•
Mark
Fagnani
–
Wachovia,
Wells
Fargo,
First
Union,
Congress
Financial
•
Kenneth
Murphy
–
Transportation
Alliance
Bank,
Transamerica,
Fleet
•
Richard
Lampack
–
Wells
Fargo,
Wachovia |
 26
Core Deposits –
The Jewel of the Franchise
Low Cost, Dependable Source of Funding
How we Identify, Maintain and Grow Them! |
 27
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 |
 28
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
6,179
in
the
first 9 months of 2013
–
Calls made to prospective individuals/businesses that have recently
interacted with a Hudson Valley RM or client |
 2012
HVB
HVB
Peers
(2)
Core Deposits / Total Deposits
(1)
96%
97%
88%
Non Interest Bearing/Total Deps
39%
37%
21%
Deposits / Total Funding
98%
99%
92%
Loans / Deposits Ratio
(3)
58%
58%
80%
Cost of Total Deposits
25 bp
19 bp
37 bp
Deposit Metrics
2013
Period
Ended
-
September
30,
29
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 September 30, 2013. (3)
Represents Net Loans to Deposits |
 30
A Core Deposit Driven Franchise
DEPOSIT COMPOSITION –
September 30, 2013
CORE FUNDING
(1)
Net loans excluding loans held-for-sale.
(2)
Core Deposits defined as total deposits less time deposits >$100,000.
TOTAL DEPOSITS -
2,665
$
Million
Money
Market,
35%
Demand,
37%
Savings, 5%
Time > $100m,
3%
Time < $100m,
1%
Checking with
Interest, 19%
71%
58%
89%
97%
50%
60%
70%
80%
90%
100%
2007
2008
2009
2010
2011
2012
2013
Loan/Dep Ratio
Core/Total Deposits
(2)
(1) |
 31
HVB Funding
Advantage
Peers = Median of US-based, publicly traded commercial banks with assets between
$1-$5 billion as of September 30, 2013. Cost of Deposits
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
HVB
National Peers |
 32
Deposit Growth Drives Long-Term Profitability
67.2%
CORE
DEPOSITS
(1)
96.8%
CORE
DEPOSITS
(1)
VS.
88.9% FOR
PEERS
(2)
$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
$2,665
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Sep
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
(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
September
30,
2013. |
 33
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
7 Branches
11 Branches
(2)
(1)
6 Connecticut branches excluded closed July-2013
(2)
2 New York branches were consolidated June -2013
7 Branches
3 Branches
September
2013
YTD
Avg
Deposit
Balances
per
Branch
(1)
$21.8
$43.5
$85.5
$132.3
-$10
$10
$30
$50
$70
$90
$110
$130
$150
< 5 Yrs
5-10 Yrs
10-20 Yrs
> 20 Yrs
Age of Branch |
 34
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 |
 35
THANK YOU
THANK YOU
FOR YOUR INTEREST IN
FOR YOUR INTEREST IN
HUDSON VALLEY HOLDING
HUDSON VALLEY HOLDING
CORP.
CORP. |
 36
Ticker: HVB
www.hudsonvalleybank.com
APPENDIX
APPENDIX
FINANCIAL DETAIL AND NON-GAAP
FINANCIAL DETAIL AND NON-GAAP
RECONCILIATION
RECONCILIATION |
 37
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%
9.6%
12.0%
6.2%
6.2%
7.6%
Business Demographics (4)
Revenues: < $1 million
132,064
83,131
28,992
52,991
16,425
313,603
Revenues: $1 million - $5 million
13,081
3,993
1,381
3,073
887
22,415
Revenue: > $5 million
6,542
1,108
462
1,212
260
9,584
Revenue: Not reported
17,521
8,580
4,279
5,397
1,613
37,390
Total Business Entities
169,208
96,812
35,114
62,673
19,185
382,992
(1)
2010 US Census Quick Facts by State|County
(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
County unemployment rates as of August, 2013 Bureau of Labor Statistics
(4)
Hoovers|D&B
(3) |
 38
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
9,036
1,756
533
2,217
557
14,099
Not for Profit
7,278
8,196
3,210
3,261
1,334
23,279
Real Estate Investors
4,053
1,216
559
917
220
6,965
Property Managers
5,069
3,059
1,222
1,843
490
11,683
Municipalities
77
409
277
525
186
1,474
Sub-Total
25,513
14,636
5,801
8,763
2,787
57,500
HVB NICHE BUSINESS BY COUNTY
(1) |
 39
Client Retention
RELATIONSHIPS
ARE
NOT
BUILT
OVERNIGHT
–
IT
TAKES
TIME
•The
wait
is
worth
it
–
the
value
of
the
relationship
generally
increases
over
time
DISTRIBUTION OF STRATEGIC CLIENT
RELATIONSHIPS (AS OF SEPTEMBER 30, 2013)
SEGMENT
% <2 YEARS
TENURE
% 2 TO 5
YEARS
TENURE
% 5 TO 10
YEARS
TENURE
% > 10 YEARS
TENURE
Attorney
5%
29%
30%
36%
Not-for-Profit
7%
29%
19%
46%
Property Managers /
Real Estate Investors
14%
36%
15%
34%
Municipalities
7%
25%
14%
55%
General Business
8%
26%
21%
46% |
   40
Strength in Diversified Commercial Lending
80%
LOAN COMPOSITION –September 30, 2013
Loan Balances
In Millions
2012
2013
REAL ESTATE
C&D - RESIDENTIAL
$48
$41
C&D - NON RESIDENTIAL
43
42
OWNER OCCUPIED CRE
195
191
NON-OWNER OCCUPIED CRE
389
408
MULTIFAMILY LOANS
209
215
1-4 FAMILY MORTGAGE
214
289
HOME EQUITY
109
107
COMMERCIAL & INDUSTRIAL
266
255
CONSUMER
20
15
LEASE FINANCING
14
12
OTHER
3
2
TOTAL (1)
$1,510
$1,577
Sept 30
(1)
Total is gross of unearned income.
C&D -
RESIDENTIAL
3%
CONSUMER
1%
C&D
-
NON
RESIDENTIAL
3%
LEASE
FINANCING
1%
HOME EQUITY
7%
1-4 FAMILY
MORTGAGE
18%
MULTIFAMILY
LOANS
14%
NON-OWNER
OCCUPIED
CRE
25%
OWNER
OCCUPIED
CRE
12%
COMMERCIAL
& INDUSTRIAL
16% |
 41
HVB General Business Average Loan = $503,361
Businesses in Market > 382,992
> $193 BILLION LENDING OPPORTUNITY
Market Potential Example
AS OF SEPTEMBER 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%
19%
$783
28%
Not-for-Profit
18%
15%
$949
38%
Property
Managers/Real Estate
Investors
17%
24%
$1,693
60%
Municipalities
2%
9%
$5,417
7%
General Business
34%
23%
$810
49%
TOTAL / AVERAGE
100%
89%
$1,065 |
  42
Quarterly Summary Financial Highlights
(a)
Excludes income from loan sales.
Dollars in thousands, except per share amounts
Q4 2011
Q1 2012 (a)
Q1 2012
Q2 2012
Q3 2012
Q4 2012
Q1 2013
Q2 2013
Q3 2013
Net Interest Income
$30,739
$31,296
$31,296
$25,508
$24,115
$22,410
$21,246
$21,068
$21,013
Non Interest Income
$4,136
$4,419
$20,354
$4,789
$4,353
$4,346
$4,517
$3,881
$4,189
Non Interest Expense
$18,967
$20,876
$20,876
$21,034
$20,035
$20,593
$19,611
$19,818
$21,546
Net Income (Loss)
($22,901)
$8,656
$18,013
$4,961
$3,134
$3,073
$3,651
$3,487
$2,495
Net Interest Margin
4.60%
4.75%
4.75%
3.93%
3.60%
3.28%
3.18%
3.06%
2.99%
Diluted Earnings (Loss) Per Share
($1.17)
$0.44
$0.92
$0.25
$0.16
$0.16
$0.18
$0.18
$0.13
Dividends Per Share
$0.18
$0.18
$0.18
$0.18
$0.18
$0.18
$0.06
$0.06
$0.06
Return on Average Equity
-30.07%
12.20%
25.51%
6.72%
4.32%
4.18%
5.02%
4.75%
3.45%
Return on Average Assets
-3.19%
1.21%
2.53%
0.71%
0.44%
0.43%
0.51%
0.47%
0.33%
Efficiency Ratio
52.79%
56.81%
56.81%
68.06%
69.33%
75.73%
74.97%
78.12%
84.24%
Tangible Common Equity Ratio
9.1%
9.6%
9.6%
9.6%
9.2%
9.3%
9.6%
9.0%
8.9%
Average Assets
$2,867,304
$2,845,223
$2,845,223
$2,795,090
$2,874,634
$2,883,086
$2,859,443
$2,949,423
$3,002,857
Average Net Loans
$2,028,587
$1,997,391
$1,997,391
$1,577,190
$1,505,942
$1,467,153
$1,422,132
$1,409,875
$1,450,338
Average Deposits
$2,463,056
$2,466,159
$2,466,159
$2,408,726
$2,489,378
$2,514,818
$2,493,021
$2,586,583
$2,638,509
Average Stockholders' Equity
$304,624
$282,459
$282,459
$295,378
$290,189
$293,886
$290,950
$293,616
$289,395
Earnings |
  43
Quarterly Loan Balances
(1)
Total is gross of unearned income.
Dollars in Millions
4Q 2011
1Q 2012
2Q 2012
3Q 2012
4Q 2012
1Q 2013
2Q 2013
3Q 2013
REAL ESTATE
C&D - RESIDENTIAL
53
51
53
48
34
27
35
41
C&D - NON RESIDENTIAL
57
56
43
43
41
43
37
42
OWNER OCCUPIED CRE
244
256
229
195
181
177
186
191
NON-OWNER OCCUPIED CRE
447
449
405
389
369
399
408
408
MULTIFAMILY LOANS
228
225
213
209
196
195
196
215
1-4 FAMILY MORTGAGE
175
232
237
214
216
189
222
289
HOME EQUITY
113
111
109
109
110
106
107
107
COMMERCIAL & INDUSTRIAL
219
222
231
266
289
250
261
255
CONSUMER
27
27
19
20
19
17
16
15
LEASE FINANCING
12
15
14
14
14
11
10
12
OTHER
0
1
3
3
3
1
2
2
TOTAL (1)
$1,575
$1,645
$1,557
$1,510
$1,472
$1,415
$1,480
$1,577
Period Ending |
 44
Non-GAAP Reconciliation
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
$
9,633
$
Income attributable to participating
shares as reported
-
-
-
-
-
(85)
(57)
(136)
Net Income attributable to common
shares as reported
34,483
$
30,877
$
19,012
$
5,113
$
(2,137)
$
29,096
$
19,766
$
9,497
$
Net Income as reported
34,483
$
30,877
$
19,012
$
5,113
$
(2,137)
$
29,181
$
19,824
$
9,633
$
Exclude:
Income Tax (1)
18,259
15,646
7,310
(1,406)
(5,413)
16,945
10,367
3,478
Provision for Loan Loss (2)
1,470
11,025
24,306
46,527
64,154
8,507
8,507
1,828
Income attributable to participating
shares (3)
-
-
-
-
-
(158)
(112)
(211)
Pre-tax, Pre-provision Earnings
54,212
$
57,548
$
50,628
$
50,234
$
56,605
$
54,474
$
38,586
$
14,729
$
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
19,581,238
Diluted Earnings per Share as reported
2.31
$
2.06
$
1.24
$
0.26
$
(0.11)
$
1.49
$
1.01
$
0.49
$
Effects of (1) and (2) above
1.33
$
1.78
2.07
2.32
3.02
1.30
0.96
0.27
Pre-Tax, Pre-Provision Diluted Earnings
per Common Share
3.64
$
3.84
$
3.31
$
2.58
$
2.91
$
2.79
$
1.97
$
0.75
$
Tangible Equity Ratio:
Total Stockholders' Equity:
As reported
203,687
$
207,500
$
293,678
$
289,917
$
277,562
$
290,971
$
290,971
$
290,702
$
Less: Goodwill and other intangible
assets
20,296
25,040
27,118
26,296
25,493
24,745
24,745
24,602
Tangible stockholders' equity
183,391
$
182,460
$
266,560
$
263,621
$
252,069
$
266,226
$
266,226
$
266,100
$
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
$
3,021,520
$
Less: Goodwill and other intangible
assets
20,296
25,040
27,118
26,296
25,493
24,745
24,745
24,602
Tangible assets
2,310,452
$
2,515,850
$
2,638,438
$
2,642,737
$
2,772,177
$
2,866,501
$
2,866,501
$
2,996,918
$
Tangible equity ratio
7.9%
7.3%
10.1%
10.0%
9.1%
9.3%
9.3%
8.9%
(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. |
 THANK
YOU FOR YOUR INTEREST IN THANK YOU FOR YOUR INTEREST IN
HUDSON VALLEY HOLDING CORP.
HUDSON VALLEY HOLDING CORP.
Ticker: HVB
www.hudsonvalleybank.com
November 2013 |