In a release on
"We are pleased with the progress we made on many fronts during 2013. We added very talented members to our management team, took definitive steps to grow and diversify our loan portfolio and we have fully resolved issues raised in 2012 by the
The parent Company of
"While actively addressing the asset management business' recent performance, we will not be distracted from executing our strategy for efficiently growing the size and diversity of our Bank's loan and security portfolios with high-quality earning assets," President and Chief Executive Officer
The success of Hudson Valley's liquidity deployment strategy lowered cash to
Loan originations and loan purchases of
Hudson Valley continues to focus capital and investment on developing new middle market, small business and other lending products to successfully grow and diversify its loan portfolio beyond its traditional strength in commercial real estate (CRE). Brown said, "Our asset-based lending team has hit the ground running and we are already seeing results from this investment."
While the Company continues to expand its portfolio of earning assets, the prolonged low interest rate environment continues to negatively affect the yield on interest-earning assets. The yield on interest-earning assets averaged 3.14 percent in the fourth quarter of 2013, compared to 3.19 percent in the linked quarter and 3.50 percent in the fourth quarter of 2012. Even with its excess cash position, Hudson Valley's net interest margin was 2.95 percent in the fourth quarter of 2013, compared to 2.99 percent in the linked quarter and 3.28 percent in the fourth quarter of 2012.
The Company maintained its historically low average cost of deposits at 0.18 percent in the fourth quarter of 2013, unchanged from the linked quarter and 3 basis points below the fourth quarter of 2012.
The year ending
Non-Interest Income and Non-Interest Expense
Total non-interest income was
Non-interest expense for 2013 included approximately
The Bank's efficiency ratio, which has reflected the impact of excess liquidity on net interest income, excluding the impact of the goodwill impairment, was 82.5 percent in the fourth quarter of 2013, compared to 84.2 percent in the third quarter of 2013 and 75.7 percent in the fourth quarter of 2012.
Portfolio Credit Quality
The Company demonstrated continued progress toward diversifying its lending base. During 2013 loans secured by 1-4 family residential mortgages balances grew by
CRE represented 307 percent of risk-based capital at
Overall portfolio trends continue to reflect a gradually improving credit environment across Hudson Valley's niche commercial franchise in metropolitan
Reflecting generally improving credit trends, net charge-offs declined to
The Bank's provision for loan losses in the fourth quarter of 2013 was
The Bank's allowance for loan losses was
The goodwill impairment charge was primarily driven by the recent loss of clients and a reduction in the projected earnings capacity of the Company's asset management subsidiary. The goodwill impairment represents a noncash accounting adjustment which will not affect cash flows, liquidity or tangible capital. Since goodwill is excluded from regulatory capital, the impairment charge will not have an adverse impact on the capital ratios of the Company and its Banking subsidiary
The other than temporary impairment charge on the Company's trust preferred securities portfolio resulted from management's decision to sell the trust preferred securities portfolio in late December given the uncertainty of the pending final regulations of the Volker rule. The Company sold its entire portfolio of trust preferred securities, in
Quarterly Cash Dividend and
Hudson Valley's board of directors declared a quarterly cash dividend of
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In a release on