SECURITIES AND EXCHANGE COMMISSION
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
For the Quarter Ended September 30, 2002
Commission File No. 030525
HUDSON VALLEY HOLDING CORP.
| NEW YORK | 13-3149845 | |
|
(State or other jurisdiction of
incorporation or organization) |
(I.R.S. Employer Identification No.) |
21 Scarsdale Road, Yonkers, NY 10707
914-961-6100
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
| Outstanding at | ||
| Class | November 1, 2002 | |
|
Common stock, par value $0.20 per share
|
5,348,767 |
FORM 10-Q
TABLE OF CONTENTS
| Page | |||||
| No. | |||||
|
PART I — FINANCIAL
INFORMATION
|
|||||
|
ITEM 1 FINANCIAL STATEMENTS
|
2 | ||||
|
ITEM 2 MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
11 | ||||
|
ITEM 3 QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
24 | ||||
|
ITEM 4 CONTROLS AND PROCEDURES
|
24 | ||||
|
PART II — OTHER
INFORMATION
|
|||||
|
ITEM 6 EXHIBITS AND REPORTS ON
FORM 8-K
|
25 | ||||
|
SIGNATURES
|
26 | ||||
|
CERTIFICATIONS
|
27 | ||||
1
PART 1 — FINANCIAL INFORMATION
Item 1. Financial Statements
HUDSON VALLEY HOLDING CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
| Three Months Ended | |||||||||||
| September 30, | |||||||||||
| 2002 | 2001 | ||||||||||
|
Interest Income:
|
|||||||||||
|
Loans, including fees
|
$ | 12,627 | $ | 12,149 | |||||||
|
Securities:
|
|||||||||||
|
Taxable
|
7,019 | 8,603 | |||||||||
|
Exempt from federal income taxes
|
1,964 | 1,816 | |||||||||
|
Federal funds sold
|
326 | 115 | |||||||||
|
Deposits in banks
|
10 | — | |||||||||
|
Total interest income
|
21,946 | 22,683 | |||||||||
|
Interest Expense:
|
|||||||||||
|
Deposits
|
1,975 | 4,004 | |||||||||
|
Securities sold under repurchase agreements and
other short-term borrowings
|
617 | 1,291 | |||||||||
|
Other borrowings
|
2,559 | 2,214 | |||||||||
|
Total interest expense
|
5,151 | 7,509 | |||||||||
|
Net Interest Income
|
16,795 | 15,174 | |||||||||
|
Provision for loan losses
|
813 | 1,404 | |||||||||
|
Net interest income after provision for loan
losses
|
15,982 | 13,770 | |||||||||
|
Non Interest Income:
|
|||||||||||
|
Service charges
|
428 | 304 | |||||||||
|
Realized gain (loss) on security transactions, net
|
9 | (226 | ) | ||||||||
|
Other income
|
633 | 909 | |||||||||
|
Total non interest income
|
1,070 | 987 | |||||||||
|
Non Interest Expense:
|
|||||||||||
|
Salaries and employee benefits
|
4,176 | 3,776 | |||||||||
|
Occupancy
|
629 | 579 | |||||||||
|
Professional services
|
780 | 725 | |||||||||
|
Equipment
|
464 | 424 | |||||||||
|
Business development
|
294 | 215 | |||||||||
|
FDIC assessment
|
39 | 41 | |||||||||
|
Other operating expenses
|
1,251 | 1,017 | |||||||||
|
Total non interest expense
|
7,633 | 6,777 | |||||||||
|
Income Before Income Taxes
|
9,419 | 7,980 | |||||||||
|
Income Taxes
|
3,026 | 2,858 | |||||||||
|
Net Income
|
$ | 6,393 | $ | 5,122 | |||||||
|
Basic Earnings Per Common Share
|
$ | 1.20 | $ | 0.98 | |||||||
|
Diluted Earnings Per Common Share
|
$ | 1.17 | $ | 0.95 | |||||||
See notes to consolidated financial statements
2
HUDSON VALLEY HOLDING CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
| Nine Months Ended | |||||||||||
| September 30, | |||||||||||
| 2002 | 2001 | ||||||||||
|
Interest Income:
|
|||||||||||
|
Loans, including fees
|
$ | 36,644 | $ | 36,186 | |||||||
|
Securities:
|
|||||||||||
|
Taxable
|
21,270 | 26,470 | |||||||||
|
Exempt from Federal income taxes
|
5,796 | 5,409 | |||||||||
|
Federal funds sold
|
1,142 | 501 | |||||||||
|
Deposits in banks
|
29 | — | |||||||||
|
Total interest income
|
64,881 | 68,566 | |||||||||
|
Interest Expense:
|
|||||||||||
|
Deposits
|
6,303 | 15,738 | |||||||||
|
Securities sold under repurchase agreements and
other short-term borrowings
|
1,838 | 5,033 | |||||||||
|
Other borrowings
|
7,594 | 5,742 | |||||||||
|
Total interest expense
|
15,735 | 26,513 | |||||||||
|
Net Interest Income
|
49,146 | 42,053 | |||||||||
|
Provision for loan losses
|
3,519 | 2,464 | |||||||||
|
Net interest income after provision for loan
losses
|
45,627 | 39,589 | |||||||||
|
Non Interest Income:
|
|||||||||||
|
Service charges
|
1,176 | 883 | |||||||||
|
Realized gain (loss) on sales of securities, net
|
48 | (202 | ) | ||||||||
|
Other income
|
1,293 | 1,376 | |||||||||
|
Total non interest income
|
2,517 | 2,057 | |||||||||
|
Non Interest Expense:
|
|||||||||||
|
Salaries and employee benefits
|
12,279 | 10,974 | |||||||||
|
Occupancy
|
1,853 | 1,718 | |||||||||
|
Professional services
|
2,376 | 1,840 | |||||||||
|
Equipment
|
1,406 | 1,444 | |||||||||
|
Business development
|
977 | 746 | |||||||||
|
FDIC assessment
|
119 | 126 | |||||||||
|
Other operating expenses
|
3,367 | 3,267 | |||||||||
|
Total non interest expense
|
22,377 | 20,115 | |||||||||
|
Income Before Income Taxes
|
25,767 | 21,531 | |||||||||
|
Income Taxes
|
8,102 | 6,974 | |||||||||
|
Net Income
|
$ | 17,665 | $ | 14,557 | |||||||
|
Basic Earnings Per Common Share
|
$ | 3.33 | $ | 2.79 | |||||||
|
Diluted Earnings Per Common Share
|
$ | 3.26 | $ | 2.72 | |||||||
See notes to consolidated financial statements
3
HUDSON VALLEY HOLDING CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
| Three Months Ended | Nine Months Ended | ||||||||||||||||
| September 30, | September 30, | ||||||||||||||||
| 2002 | 2001 | 2002 | 2001 | ||||||||||||||
|
Net Income
|
$ | 6,393 | $ | 5,122 | $ | 17,665 | $ | 14,557 | |||||||||
|
Other comprehensive income, net of tax:
|
|||||||||||||||||
|
Unrealized holding gain on securities available
for sale arising during the period
|
5,329 | 11,317 | 13,767 | 17,410 | |||||||||||||
|
Income tax effect
|
(2,099 | ) | (4,708 | ) | (5,067 | ) | (7,235 | ) | |||||||||
| 3,230 | 6,609 | 8,700 | 10,175 | ||||||||||||||
|
Reclassification adjustment for net (gain) loss
realized on securities available for sale
|
(9 | ) | 226 | (48 | ) | 202 | |||||||||||
|
Income tax effect
|
4 | (94 | ) | 20 | (85 | ) | |||||||||||
| (5 | ) | 132 | (28 | ) | 117 | ||||||||||||
|
Unrealized holding gain on securities available
for sale
|
3,225 | 6,741 | 8,672 | 10,292 | |||||||||||||
|
Minimum pension liability adjustment
|
8 | — | 15 | — | |||||||||||||
|
Income tax effect
|
(3 | ) | — | (6 | ) | — | |||||||||||
| 5 | — | 9 | — | ||||||||||||||
|
Other comprehensive income
|
3,230 | 6,741 | 8,681 | 10,292 | |||||||||||||
|
Comprehensive Income
|
$ | 9,623 | $ | 11,863 | $ | 26,346 | $ | 24,849 | |||||||||
See notes to consolidated financial statements
4
HUDSON VALLEY HOLDING CORP. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
| September 30, | December 31, | |||||||||
| 2002 | 2001 | |||||||||
|
ASSETS
|
||||||||||
|
Cash and due from banks
|
$ | 48,324 | $ | 29,821 | ||||||
|
Federal funds sold
|
85,900 | 76,300 | ||||||||
|
Securities available for sale at estimated fair
value (amortized cost of $682,257 in 2002 and $614,385 in 2001)
|
705,800 | 624,209 | ||||||||
|
Federal Home Loan Bank of New York (FHLB) Stock
|
10,459 | 10,459 | ||||||||
|
Loans (net of allowance for loan losses of
$11,310 in 2002 and $8,018 in 2001)
|
624,240 | 600,377 | ||||||||
|
Accrued interest and other receivables
|
9,511 | 8,976 | ||||||||
|
Premises and equipment, net
|
12,746 | 12,129 | ||||||||
|
Other real estate owned
|
1,878 | 2,021 | ||||||||
|
Other assets
|
8,792 | 8,161 | ||||||||
|
TOTAL ASSETS
|
$ | 1,507,650 | $ | 1,372,453 | ||||||
|
LIABILITIES
|
||||||||||
|
Deposits:
|
||||||||||
|
Non interest-bearing
|
$ | 399,463 | $ | 342,112 | ||||||
|
Interest-bearing
|
599,977 | 546,265 | ||||||||
|
Total deposits
|
999,440 | 888,377 | ||||||||
|
Securities sold under repurchase agreements and
other short-term borrowings
|
142,785 | 143,529 | ||||||||
|
Other borrowings
|
209,176 | 209,191 | ||||||||
|
Deferred income taxes, net
|
6,180 | 3,958 | ||||||||
|
Accrued interest and other liabilities
|
14,581 | 14,056 | ||||||||
|
TOTAL LIABILITIES
|
1,372,162 | 1,259,111 | ||||||||
|
STOCKHOLDERS’ EQUITY
|
||||||||||
|
Common stock, $0.20 par value; authorized
10,000,000 shares; outstanding 5,345,007 and 5,260,158 shares in
2002 and 2001, respectively
|
1,255 | 1,232 | ||||||||
|
Additional paid-in capital
|
127,962 | 125,057 | ||||||||
|
Retained earnings
|
16,753 | 4,829 | ||||||||
|
Accumulated other comprehensive income
|
13,696 | 5,015 | ||||||||
|
Treasury stock, at cost
|
(24,178 | ) | (22,791 | ) | ||||||
|
Total stockholders’ equity
|
135,488 | 113,342 | ||||||||
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$ | 1,507,650 | $ | 1,372,453 | ||||||
See notes to consolidated financial statements
5
HUDSON VALLEY HOLDING CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)
| Accumulated | |||||||||||||||||||||||||||||
| Number of | Additional | Other | |||||||||||||||||||||||||||
| Shares | Common | Treasury | Paid-in | Retained | Comprehensive | ||||||||||||||||||||||||
| Outstanding | Stock | Stock | Capital | Earnings | Income (Loss) | Total | |||||||||||||||||||||||
|
Balance at January 1, 2002
|
5,260,158 | $ | 1,232 | $ | (22,791 | ) | $ | 125,057 | $ | 4,829 | $ | 5,015 | $ | 113,342 | |||||||||||||||
|
Net income
|
17,665 | 17,665 | |||||||||||||||||||||||||||
|
Exercise of stock options
|
115,739 | 23 | 2,811 | ||||||||||||||||||||||||||