Greater Hudson Bank Reports 2018 Third Quarter Results

BARDONIA, N.Y., Oct. 19, 2018 (GLOBE NEWSWIRE) -- Greater Hudson Bank (the “Bank”) (OTCQX: GHDS), with assets of $528.5 million, today reported net income of $810,000, or $0.07 per common share, for the third quarter of 2018 compared to net income of $1.092 million, or $0.09 per common share, for the 2017 third quarter.  For the nine months ended September 30, 2018, the Bank had a net loss of $2.729 million, or $(0.22) per common share, compared to net income of $2.971 million, or $0.24 per common share, for the nine months ended September 30, 2017.  Return on average common stockholders’ equity was 5.67 percent and (6.76) percent for the three and nine months ended September 30, 2018 compared to 7.68 percent and 6.78 percent for the three and nine months ended September 30, 2017, respectively.

Edward T. Lutz, President and CEO stated, “As expected, the third quarter returned to profitability albeit at a lesser rate due to absorption of merger related expenses.  Fundamentals continue to be sound as loan and deposit generation continue to be robust.  It is particularly noteworthy that our margins have expanded while many of our competitors struggle with margin compression.  Our staff continues to drive the business forward.  Progress on the completion of our merger with ConnectOne Bank continues at a good pace as staffs of both institutions are cooperating effectively.  A first quarter 2019 merger closing is expected.”

Financial highlights as of September 30, 2018 compared to December 31, 2017 are as follows:

• Deposits increased $44.8 million, or 11.7 percent, to $426.6 million.
• Borrowings increased $4.7 million, or 12.1 percent, to $44.0 million.
• Total assets increased $45.7 million, or 9.5 percent, to $528.5 million.
• Loans, net of unearned income, increased $53.9 million, or 16.7 percent, to $376.5 million.
• Investments increased $4.0 million, or 3.3 percent, to $125.0 million.

Performance highlights for the three months ended September 30, 2018 compared to the September 30, 2017 period are as follows:

• Net interest income increased $408,000, or 10.0 percent, to $4.5 million.
• Non-interest income decreased $129,000 to $171,000.
• Non-interest expense increased $673,000, or 23.3 percent, to $3.6 million.
• The provision for loan losses increased $130,000 to $70,000.
• Security gains declined by $60,000.

Performance highlights for the nine months ended September 30, 2018 compared to the September 30, 2017 period are as follows:

• Net interest income increased $603,000, or 4.8 percent, to $13.0 million.
• Non-interest expense increased $2.0 million, or 22.2 percent, to $11.0 million.
• Non-interest income decreased $203,000 to $735,000.
• The provision for loan losses increased $6.2 million.
• Security gains declined by $155,000.

Kenneth J. Torsoe, Chairman of the Board commented, “The Board is pleased that continued growth in loans and deposits has been robust as we work towards consummation of the merger.  This is a testimony to the inherent strength of our core markets and the energy of our staff in seeking out and closing new business.  Operating results continue to cut into the deficit incurred in the first half of the year. The overall results point to strength in fundamentals and the inherent value of the Bank’s franchise.”

EARNINGS

*Results Unaudited		Three months Ended								Nine month ended
		September 30,								September 30,
	(in thousands, except ratios)
SUMMARY OF OPERATIONS DATA:			2018				2017				2018				2017
Net interest income		$	4,501			$	4,093			$	13,038			$	12,435
Provision for loan losses			70				(60	)			6,385				173
Noninterest income			171				300				735				938
Gains on securities transactions			-				60				-				155
Noninterest Expense			3,562				2,889				10,952				8,963
Income before income taxes			1,040				1,624				(3,564	)			4,392
Provision for income taxes			230				532				(835	)			1,421
Net income		$	810			$	1,092			$	(2,729	)		$	2,971
Efficiency Ratio			76.2%				65.8%				79.5%				67.0%
AVERAGE BALANCE SHEET DATA:			2018				2017				2018				2017
Earning Assets		$	490,469			$	452,807			$	477,859			$	468,848
Total Interest Bearing Liabilities			376,732				351,533				368,425				367,234
Net interest spread			3.52%				3.48%				3.53%				3.44%
Net interest margin			3.67%				3.62%				3.60%				3.50%

The decrease in net income for the three months ended September 30, 2018 compared to the three months ended September 30, 2017, is primarily attributable to increases in the provision for loan losses and non-interest expense along with a decrease in non-interest income. Non-interest expense increased primarily due to increases in salaries and occupancy expenses, as well as $346,000 in legal and advisory fees for merger-related expenditures.

The decrease in net income for the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017, is primarily attributable to an increase in the provision for loan losses of $6.2 million, primarily as a result of $2.8 million in charge-offs for the year and an increase in specific reserves of $2.8 million, as well as growth in the loan portfolio.

While one-time charges and the increase in the provision for loan losses have negatively impacted the Bank’s overall results in 2018, the Bank continues to experience healthy growth in its earnings assets, as well as improvement in its net interest margin.

BALANCE SHEET & CREDIT QUALITY

SELECTED BALANCE SHEET DATA – Unaudited:		As of
(in thousands, except ratios)		Sept. 30,				December 31,				Sept. 30,
			2018				2017				2017
Total Investments		$	124,997			$	120,990			$	124,253
Loans, net of unearned income			376,545				322,633				307,616
Allowance for loan losses			7,514				3,873				3,810
Total assets			528,538				482,867				479,099
Total deposits			426,556				381,764				382,412
Borrowings			44,009				39,276				34,363
Nonperforming assets			5,317				8,261				8,552
Allowance for loan losses to total net loans			2.00%				1.20%				1.24%
Nonperforming assets to total assets			1.01%				1.71%				1.79%

The Bank’s investment and loan portfolios increased $4.0 million and $53.9 million, respectively as of September 30, 2018 compared to December 31, 2017.  These increases were primarily funded by the increase in deposits of $44.8 million and the increase in borrowings of $4.7 million as of September 30, 2018 compared to December 31, 2017.

Nonperforming assets decreased $2.9 million to $5.3 million as of September 30, 2018 from $8.3 million as of December 31, 2017.  The nonperforming assets are comprised of a limited number of relationships.  Management is diligently attempting to resolve these nonperforming loans and they continue to be monitored closely.

CAPITAL

EQUITY – Unaudited		As of
(in thousands, except ratios)		Sept. 30,
			2018				2017
Tier 1 Capital		$	55,570			$	57,956
Total Stockholders' Equity			53,225				58,634
Book value per common share			4.30				4.73
Tier 1 Leverage Ratio			10.6%				12.0%

The Bank's leverage ratio was 10.6 percent at September 30, 2018 compared to 12.0 percent at September 30, 2017.  The Bank continues to be considered a well-capitalized institution under current Federal regulatory guidelines.

Greater Hudson Bank, founded in 2002, is headquartered in Bardonia, NY. The Bank, which specializes in providing customized banking services to Hudson Valley based businesses, non-profits and municipal agencies 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 www.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.  Such statements may be identified by the use of words such as “expect,” “estimate,” “assume,” “believe,” “anticipate,” “will,” “forecast,” “plan,” “project” or similar words.  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.  Except as required by law, the Bank undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Contact:     
Jenet Ferris
(845) 367-4998