Greater Hudson Bank Reports Increased Net Income for the 2015 Third Quarter

BARDONIA, NY--(Marketwired - October 15, 2015) - Greater Hudson Bank (the "Bank") (OTCQX: GHDS), with assets of $413.8 million, today reported net income of $768,000 or $0.08 per common share for the third quarter of 2015 compared to $587,000 or $0.06 per common share for the 2014 third quarter. For the nine months ended September 30, 2015, net income was $2.341 million or $0.23 per common share, compared to $2.227 million or $0.22 per common share for the nine months ended September 30, 2014. Return on average common stockholders' equity was 6.93 percent and 7.18 percent for the three and nine months ended September 30, 2015 compared to 5.65 percent and 7.33 percent for the three and nine months ended September 30, 2014, respectively.

Edward T. Lutz, president and CEO stated, "I am pleased to report that our quarterly results continue the earnings momentum that we have enjoyed in prior quarters. We continue to show improvement in net interest revenue and non-interest income through our measured growth in our core markets all while keeping expenses reasonably well managed. In addition, we continue to demonstrate year over year growth in tangible book value as we work to provide our shareholders with an attractive sound reward for their confidence in our stewardship."

Financial highlights as of September 30, 2015 compared to December 31, 2014 are as follows:

• Total assets increased $19.4 million, or 4.9 percent, to $413.8 million.
• Loans, net of unearned income, increased $11.1 million, or 4.3 percent, to $267.8 million.
• Investments increased $2.3 million, or 2.0 percent, to $115.4 million.
• Deposits increased $3.7 million, or 1.2 percent, to $320.7 million.

Performance highlights for the three months ended September 30, 2015 compared to the September 30, 2014 period are as follows:

• Net interest income increased $162,000, or 5.0 percent, to $3.4 million.
• Non-interest expense increased $202,000 or 8.9 percent to $2.5 million.
• Provision for loan losses decreased $201,000.
• Gains on securities transactions increased $38,000.
• Provision for income taxes decreased $10,000, or 2.8 percent to $344,000.

Performance highlights for the nine months ended September 30, 2015 compared to the September 30, 2014 period are as follows:

• Net interest income increased $768,000, or 8.2 percent, to $10.1 million.
• Gains on securities transactions decreased $201,000.
• Non-interest expense increased $396,000, or 5.8 percent, to $7.3 million.
• Provision for loan losses increased $306,000.
• Provision for income taxes decreased $262,000, or 19.2 percent, to $1.1 million.

Kenneth J. Torsoe, chairman of the board, stated that, "The team continues to produce high quality results while effectively and profitably expanding our presence in our core markets. Our business direction and management effort bode well for continued, effective execution of our strategic direction."

EARNINGS

The increase in net income for the three months ended September 30, 2015 compared to the three months ended September 30, 2014, is primarily attributable to an increase in net interest income of $162,000 as a result of an increase in earning assets combined with a decrease to the provision for loan losses of $201,000 as the Bank's allowance for loan losses ratio has declined from 1.31 percent of total loans as of September 30, 2014 to 1.27 percent of total loans as of September 30, 2015. The Bank was also able to take advantage of market opportunities and realized security gains of $141,000, which is an increase of $38,000 compared to the 2014 third quarter. These increases were partially offset by an increase to noninterest expense of $202,000, primarily attributable to increases in salary expense and the reserve for unfunded commitments.

Net income for the nine months ended September 30, 2015 increased $114,000 compared to the nine months ended September 30, 2014. The increase was primarily attributable to an increase in net interest income of $768,000 due to an increase in earning assets of $38.4 million combined with a decrease in the provision for income taxes of $262,000 primarily as a result of the benefit of deductions for lending in the state of New York that were included in changes to the New York State Tax Law that took effect in 2015. These increases were partially offset by increases in the provision for loan losses and noninterest expense, as well as a decrease in security gains.

BALANCE SHEET & CREDIT QUALITY

The Bank increased loans, net of unearned income, by $11.1 million as of September 30, 2015 compared to December 31, 2014. The increase in the loan portfolio was funded by an increase to total deposits of $3.7 million, as well as an increase in borrowings of $13.1 million during the year.

Nonperforming assets increased to $3.2 million as of September 30, 2015 from $3.0 million as of December 31, 2014. The balance is related to a limited number of loan relationships that the Bank is actively attempting to remediate and is closely monitoring.

CAPITAL

At September 30, 2015, the Bank had $44.3 million in stockholders' equity. The Bank's leverage ratio was 10.4 percent at September 30, 2015 compared to 10.9 percent at September 30, 2014. 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 Banks' 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. 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.