HNB Herald National Bank Common Stock

Herald National Bank (NYSE AMEX: HNB), a New York-based full-service commercial bank, announced today financial results for its fourth quarter and year ending December 31, 2009, the bank’s first complete year of operations since opening in November, 2008.

Key highlights for the quarter and year ended December 31, 2009 include:

• Total assets increased 21% during the quarter to $443 million from $366 million, and 492% during the year from $74.9 million at prior year end.
• Deposits increased 24% during the quarter, to $405 million from $326 million, of which 93% are core deposits and 35% are checking accounts.
• Loans increased by $76 million during the quarter. Loans increased 34% to $301 million from $225 million.
• Tier 1 leverage ratio stood at 8.52%, a level in excess of all minimum regulatory capital ratios applicable to the bank.
• Net interest margin increased to 3.22% at December 31, 2009, up from 2.58% at September 30, 2009.
• Net loss for the quarter was $3.7 million or $0.59 per share as compared to a net loss of $5.5 million or $0.89 per share. The $1.8 million decrease in the quarterly loss represents a 33% improvement quarter over quarter. Net loss for the first full year of operations was $23.9 million or $3.86 per share, which was in line with the business plan.
• Net loss prior to the provision for loan losses was $2.1 million for the quarter, an improvement of $2.0 million or 49% against the $4.1 million loss for the period ended September 30, 2009. The improvement is predominantly due to a decrease in operating expenses and an increase in net interest income, which was fueled by increases in the bank’s net interest margin and the overall growth of the institution.
• Nonperforming loans are $1.3 million, or 0.42% of Loans, net at December 31, 2009. Allowance for Loan & Lease Losses was $4.1 million, or 1.37% of Loans, net.

“The conclusion of our first full year of operations is highlighted by significant achievements. Most notably, high quality loan origination and core deposit growth have yielded increases to net interest income and net interest margin. Together with actions taken by management to reduce operating expenses, Herald National Bank is on pace to become profitable on a quarterly basis in 2010, as initially projected. From the client perspective, our model is working well. When comparing first full fiscal years of operations, our private banking teams have attracted and retained relationships that equate to more deposits, more loans and greater assets generated than any other de novo bank started in the nation since 2006,” stated David S. Bagatelle, President and CEO of Herald National Bank.

About Herald National Bank

Herald National Bank is a relationship-based banking institution dedicated to serving the commercial and private banking needs of small to mid-size businesses, their owners, executives and senior managers, as well as high net worth individuals in the New York metropolitan area. Herald National Bank presently has three offices located in Manhattan (623 Fifth Avenue), Brooklyn (1333 60th Street), and Melville, Long Island (58 South Service Road).

For more information, visit www.heraldnb.com.

Forward Looking Statements Disclaimer

Certain matters in this press release constitute forward-looking statements that involve assumptions and potential risks and uncertainties, which are made in a manner consistent with the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward looking statements involve known and unknown risks, uncertainties, and other factors that may cause the actual results, performance and achievements of Herald National Bank to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. These factors include: general economic, capital market and business conditions; risks arising from litigation or similar proceedings; interest rate fluctuations; levels of delinquent loans; employee turnover; government regulation; and those other factors discussed in the filings of Herald National Bank with the Office of the Comptroller of the Currency. Herald National Bank undertakes no obligation, and expressly disclaims any obligation, to update publicly or revise any forward looking statement, which speaks only as of the date it is made, whether as a result of new information, future events or otherwise.

 

Herald National Bank

Financial Highlights

(unaudited)

(dollars in thousands, except per share data)

      Three months ended Twelve months ended December 31, December 31,

Statement of Operations (1)

2009

 

2008

2009

 

2008

Interest income $ 4,416 $ 238 $ 9,264 $ 238 Interest expense   1,377     14     3,355     14   Net interest income 3,039 224 5,909 224 Provision for loan losses 1,582 105 4,022 105 Noninterest income 150 1 319 1 Noninterest expense, net   5,244     10,424     26,059     10,424   Pretax loss (3,637 ) (10,304 ) (23,853 ) (10,304 ) Tax expense   23     79     57     79   Net loss $ (3,660 ) $ (10,383 ) $ (23,910 ) $ (10,383 ) (1) During the three and twelve month periods ending December 31, 2008, the Bank was a development stage corporation and the Bank was in formation.   Basic earnings per share $ (0.59 ) $ (1.67 ) $ (3.86 ) $ (1.67 ) Weighted average shares - basic 6,230 6,201 6,202 6,201   Selected Financial Highlights

Data at End of Period

12/31/2009

9/30/2009

6/30/2009

3/31/2009

12/31/2008

Total loans $ 301,177 $ 225,418 $ 98,876 $ 42,927 $ 10,249 Allowance for loan losses 4,127 2,546 1,092 459 105 Securities available for sale 71,779 78,693 90,042 70,714 28,885 Securities held to maturity 41,515 32,635 30,713 - - Total assets 443,194 366,095 261,475 160,097 74,817 Total deposits 404,628 326,278 216,147 114,686 22,069 Stockholders' equity 35,226 31,317 36,176 42,998 50,430 Net loss before provision for loan losses (2,079 ) (4,045 ) (6,379 ) (7,383 ) n/a Net interest margin 3.22 % 2.58 % 1.82 % 1.36 % n/a  

Capital Ratios

Equity to Assets 7.95 % 8.55 % 13.84 % 26.86 % 67.40 % Tier 1 Leverage Ratio 8.52 % 10.36 % 16.90 % 37.73 % 189.75 % Tier 1 Risk-based Capital Ratio 10.63 % 12.06 % 24.34 % 53.00 % 139.24 % Total Risk-based Capital Ratio 11.88 % 13.05 % 25.07 % 53.56 % 139.53 %