Greater Hudson Bank Reports Earnings for the Three and Twelve Months Ended December 31, 2017
BARDONIA, NY–(Marketwired – January 29, 2018) – Greater Hudson Bank (the “Bank”) (OTCQX: GHDS), with assets of $482.9 million, today reported a net loss of $477,000 or $(0.04) per common share for the fourth quarter of 2017 compared to earnings of $217,000 or $0.02 per common share for the 2016 fourth quarter. For the twelve months ended December 31, 2017, net income was $2.495 million or $0.20 per common share compared to $3.0 million or $0.27 per common share for the twelve months ended December 31, 2016. Return on average common stockholders’ equity was (3.46) percent and 4.30 percent for the three and twelve months ended December 31, 2017 compared to 1.91 percent and 6.58 percent for the three and twelve months ended December 31, 2016, respectively.
Edward T. Lutz, President and CEO stated, “Earnings in the 4th quarter were skewed by the write-down of the Bank’s deferred tax assets due to the passage of the Tax Cuts and Jobs Act, but the Bank will benefit prospectively from a reduction in its tax rate going forward. Results for 2017 featured a contraction of total assets, deposits and loans as loan production failed to compensate for a large volume of loan prepayments and deposit outflows primarily attributed to a reduction of municipal deposits. Nevertheless, fundamentals in the deposit and loan areas are showing improvement in the loan pipeline and deposit generation and composition as reflected in the number of accounts and importantly non-interest bearing checking balances are stronger. The staff continues to work efficiently and diligently in all departments while the Bank’s critical metrics and ratios remain quite strong. We look forward to a resumption of positive growth in 2018.”
Financial highlights as of December 31, 2017 compared to December 31, 2016 are as follows:
- Deposits decreased $16.4 million, or 4.1 percent, to $381.8 million.
- Borrowings decreased $10.3 million, or 20.9 percent, to $39.3 million.
- Total assets decreased $22.7 million, or 4.5 percent, to $482.9 million.
- Loans, net of unearned income, decreased $9.5 million or 2.9 percent, to $322.6 million.
- Investments decreased $23.4 million, or 16.2 percent to $121.0 million.
Performance highlights for the three months ended December 31, 2017 compared to the December 31, 2016 period are as follows:
- Net interest income increased $60,000, or 1.6 percent, to $3.9 million.
- Non-interest income increased $58,000 to $228,000.
- Non-interest expense increased $362,000 or 13.1 percent to $3.1 million.
- The provision for loan losses decreased $763,000.
- The provision for income taxes increased $1.2 million.
Performance highlights for the twelve months ended December 31, 2017 compared to the December 31, 2016 period are as follows:
- Net interest income increased $1.4 million, or 9.5 percent, to $16.3 million.
- Non-interest expense increased $1.7 million or 16.1 percent to $12.1 million.
- Non-interest income increased $634,000 to $1.2 million.
- The provision for loan losses decreased $803,000.
- Security gains declined by $363,000.
- The provision for income taxes increased $1.3 million.
Kenneth J. Torsoe, Chairman of the Board commented, “The Board is supportive of management’s efforts to deepen the Bank’s share of business in its core markets – Rockland, Orange, and Westchester counties. It is clear that the organizational changes instituted in July are gaining traction and having beneficial effects on both loan and deposit production. The staff continues to perform at a high level.”
|*Results Unaudited||Three months Ended||Twelve months ended|
|December 31,||December 31,|
|(in thousands, except ratios)|
|SUMMARY OF OPERATIONS DATA:||2017||2016||2017||2016|
|Net interest income||$ 3,902||$ 3,842||$ 16,338||$ 14,919|
|Provision for loan losses||220||983||393||1,196|
|Gains on securities transactions||-||-||155||518|
|Income before income taxes||794||275||5,186||4,364|
|Provision for income taxes||1,271||58||2,692||1,363|
|Net income||$ (477)||$ 217||$ 2,494||$ 3,001|
|AVERAGE BALANCE SHEET DATA:||2017||2016||2017||2016|
|Earning Assets||$ 449,868||$ 457,810||$ 464,007||$ 433,829|
|Total Interest Bearing Liabilities||349,458||355,257||362,754||342,456|
|Net interest spread||3.34%||3.23%||3.47%||3.37%|
|Net interest margin||3.47%||3.36%||3.52%||3.44%|
Results of the three and twelve months ended December 31, 2017 were adversely impacted by the recorded charge of $1.0 million in the fourth quarter of 2017 in income tax expense to write-down the Bank’s net deferred tax assets to their estimated value. The charge arose as a result of the Tax Cuts and Jobs Act, which was signed into law on December 22, 2017. Starting in 2018, the Bank will benefit from the lower corporate tax rate of 21 percent.
As a result of the increase in income before income taxes and the write-down of $1.0 million of the Bank’s Federal deferred tax assets, the provision for income taxes increased $1.2 million for the fourth quarter of 2017 and $1.3 million for the year compared to the prior year comparable periods, respectively.
Income before income taxes increased for the fourth quarter of 2017 by $519,000 compared to the fourth quarter of 2016, primarily due to a decline in the provision for loan losses of $763,000, which was partially offset by an increase in non-interest expense of $362,000 related to increases in salary expense, medical benefits, legal fees, OREO expense, and the reserve for unfunded commitments.
Income before income taxes increased for the twelve months ended December 31, 2017 by $822,000 compared to the twelve months ended December 31, 2016, primarily due to an increase in net interest income of $1.4 million and non-interest income of $634,000, which was partially offset by a decline in security gains of $363,000 and an increase in non-interest expense of $1.7 million related to increases in salary expense, medical benefits, occupancy expense, OREO expense, and the reserve for unfunded commitments.
BALANCE SHEET & CREDIT QUALITY
|SELECTED BALANCE SHEET DATA – Unaudited:||As of|
|(in thousands, except ratios)||December 31,||December 31,|
|Total Investments||$ 120,990||$ 144,433|
|Loans, net of unearned income||322,633||332,175|
|Allowance for loan losses||3,873||4,746|
|Allowance for loan losses to total net loans||1.20%||1.43%|
|Nonperforming assets to total assets||1.71%||1.58%|
The Bank’s investment and loan portfolios decreased $23.4 million and $9.5 million, respectively as of December 31, 2017 compared to December 31, 2016. The Bank used security sales, maturities, and loan prepayments to offset the decrease in borrowings of $10.3 million and the decrease in deposits of $16.4 million of as of December 31, 2017 compared to December 31, 2016.
Nonperforming assets increased $284,000 to $8.3 million as of December 31, 2017 from $8.0 million as of December 31, 2016. The nonperforming assets are comprised of a limited number of relationships that the Bank’s management is aggressively attempting to resolve and are monitored closely.
|EQUITY – Unaudited||As of|
|(in thousands, except ratios)||December 31,|
|Tier 1 Capital||$ 57,962||$54,813|
|Total Stockholders’ Equity||57,615||54,972|
|Book value per common share||4.65||4.46|
|Tier 1 Leverage Ratio||12.0%||11.4%|
The Bank’s leverage ratio was 12.0 percent at December 31, 2017 compared to 11.4 percent at December 31, 2016. The Bank continues to be considered a well-capitalized institution under current Federal regulatory guidelines.
Greater Hudson Bank’s annual Stockholders’ Meeting will be held Thursday, April 26, 2018 at 10:00 a.m. at the Crestview Conference Center, 440 West Nyack Road, West Nyack, NY 10994. All shareholders and interested parties are invited to attend.
Greater Hudson Bank, founded in 2002, is a premier NY community bank which specializes in providing customized banking services, SBA loans, commercial mortgages, and business lines of credit to Hudson Valley-based businesses, non-profits, and municipal agencies. The Bank is chartered by the New York State Department of Financial Services and its deposits are insured by the FDIC. As evidence of the Bank’s financial strength, Greater Hudson Bank has been recognized with a superior rating by the country’s leading independent bank rating and research firm, BauerFinancial, Inc. Further information can be found on the Bank’s website at GreaterHudsonBank.com or by calling 844-GREAT-11.
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.