Greater Hudson Bank, N.A. Reports a 92.2% Increase in Net Income for the 2014 Second Quarter

MIDDLETOWN, NY--(Marketwired - July 15, 2014) - Greater Hudson Bank, N.A. (the "Bank") (OTCQX: GHDS), with assets of $366.1 million, today reported net income of $986,000 or $0.10 per common share for the second quarter of 2014 compared to $513,000 or $0.05 per common share for the 2013 second quarter. For the six months ended June 30, 2014, net income was $1.641 million, or $0.16 per common share, compared to $1.032 million, or $0.10 per common share, for the six month period ending June 30, 2013. Return on average common stockholders' equity was 9.80 percent and 8.20 percent for the three and six months ended June 30, 2014 compared to 5.16 percent and 5.22 percent for the three and six months ended June 30, 2013, respectively.

Edward T. Lutz, President and CEO stated, "Second quarter results continue to reflect progress in building our franchise and increasing shareholder value. Our Greater bankers continue to penetrate our core markets and take advantage of opportunities to attract new business from a variety of sources. The quarterly net income, one of the best results in the Bank's history, reflect both growth in our business and success in remediating two large problem assets. We continue to have great confidence in our future as our intensified calling efforts and our Ambassador program gain traction. We anticipate continued progress in meeting our business goals and objectives."

Financial highlights as of June 30, 2014 compared to December 31, 2013 are as follows:

• Total assets increased $30.3 million, or 9.0 percent, to $366.1 million.
• Loans, net of unearned income, increased $11.6 million, or 5.2 percent, to $232.3 million.
• Investments increased $24.3 million, or 26.6 percent, to $115.3 million.
• Deposits increased $28.1 million, or 10.5 percent, to $295.3 million.

Performance highlights for the three months ended June 30, 2014 compared to the June 30, 2013 period are as follows:

• Net interest income increased $222,000, or 7.7 percent, to $3.1 million.
• Non-interest expense increased $367,000, or 19.1 percent, to $2.3 million.
• Non-interest income increased $51,000, or 61.4 percent, to $134,000.
• Gains on securities transactions decreased $17,000 or 48.6 percent.
• Provision for loan losses declined $912,000.
• Provision for income taxes increased $328,000, to $623,000.

Performance highlights for the six months ended June 30, 2014 compared to the June 30, 2013 period are as follows:

• Net interest income increased $546,000, or 9.8 percent, to $6.1 million.
• Non-interest expense increased $650,000, or 16.5 percent, to $4.6 million.
• Non-interest income increased $22,000, or 10.4 percent, to $233,000.
• Gains on securities transactions increased $405,000.
• Provision for loan losses decreased $700,000.
• Provision for income taxes increased $414,000, or 69.8 percent, to $1.0 million.

"We are very pleased with the results for the second quarter and the six months ended June 30, 2014," stated Kenneth J. Torsoe, chairman of the board of directors of Greater Hudson Bank. Mr. Torsoe further stated that, "The dedication and hard work of the Bank's staff is having a very positive impact on our results. Our focus on core markets in the Hudson Valley is bringing about improved results and greater market share. We will continue to do everything possible to enhance our position in these markets as we build our reputation as the Bank of choice in the Hudson Valley."

EARNINGS

The increase in net income for the three months ended June 30, 2014 compared to the three months ended June 30, 2013, is primarily attributable to an increase in net interest income of $222,000 and a reduction to the provision for loan losses of $912,000 primarily as a result of the elimination of a specific reserve for a non-accrual loan that was paid off in the second quarter of 2014 as well as an increase in non-interest income. The increase in net interest income was driven by the growth in the loan portfolio. These increases were partially offset by an increase in non-interest expense, primarily related to increases in salary, loan, and occupancy expenses, reflecting the Bank's continued growth.

Net income for the six months ended June 30, 2014 increased $609,000 compared to the six months ended June 30, 2013. An increase in net interest income of $546,000 combined with the reduction in the provision for loan losses of $700,000 and an increase in security gains of $405,000 attributed to the rise in net income. This increase in net income was offset by increases in non-interest expense of $650,000 primarily related to increases in salary, occupancy, data processing, loan expenses and legal fees. The Bank's reserve for unfunded commitments also declined year-over-year.

As a result of increased income before taxes, the provision for income taxes increased $328,000 for the second quarter of 2014 and $414,000 for the year compared to the prior year three and six month periods, respectively.

BALANCE SHEET & CREDIT QUALITY

The Bank increased loans, net of unearned income, by $11.6 million and investments by $24.3 million as of June 30, 2014 compared to December 31, 2013. These increases were funded primarily by an increase in deposits of $28.1 million.

Nonperforming assets increased slightly to $3.8 million as of June 30, 2014 from $3.7 million as of December 31, 2013. While non-performing assets were up year-to-date, they are down $2.5 million from the first quarter of 2014. The Bank continues to actively attempt to remediate and closely monitor the limited loan relationships that comprise the Bank's remaining non-performing asset balance.

CAPITAL

At June 30, 2014, the Bank had $41.0 million in stockholders' equity. The Bank's leverage ratio was 11.3 percent at June 30, 2014 compared to 12.6 percent at June 30, 2013. The Bank continues to be considered a well-capitalized institution under current Federal regulatory guidelines.

Greater Hudson Bank, N.A., founded in 2002, is headquartered in Middletown, New York. The Bank has 5 branches located in Middletown, Monroe and Warwick, Orange County, New York; Bardonia, Rockland County, New York; and White Plains, Westchester County, New York. The Hudson Valley's bank of choice for local businesses, not-for-profits and municipalities is chartered by the Office of the Comptroller of the Currency and its deposits are insured by the Federal Deposit Insurance Corporation. 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.

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.