HNB Herald National Bank Common Stock

Herald National Bank (NYSE AMEX: HNB), a New York-based full-service commercial bank, today announced financial results for the quarter ended March 31, 2010.

Key highlights for the quarter ended March 31, 2010 include:

• Private placement stock offering completed with net proceeds of approximately $29 million after placement fees and offering expenses. The private placement was completed in two tranches, with the first tranche of $7.5 million (gross) closing December 30, 2009 and the second tranche of $24.5 million (gross) closing on March 31, 2010.
• Tier 1 leverage ratio increased to 11.94% at March 31, 2010 vs. 8.52% at December 31, 2009. Both figures exceed the amounts required to be “well capitalized,” the highest regulatory capital classification by the OCC.
• Net interest margin increased to 3.85% at March 31, 2010, up from 3.22% at December 31, 2010.
• Expense reductions and increases in operational efficiency drive net loss for the quarter down to $1.90 million or $0.29 per share vs. a loss of $7.74 million or $1.25 per share for the same period in 2009.
• Net loss prior to the provision for loan losses was $1.21 million for the quarter, an improvement of 42% or $868 thousand against the $2.08 million loss for the quarter ended December 31, 2009
• 93% of $392 million total deposits are considered by the bank to be “core,” contributing to a low cost of funds, 1.62%.

“Having posted impressive growth of deposits and assets in 2009, the bank has transitioned into a more controlled growth plan rate as we continue to execute on our relationship based banking model,” stated David S. Bagatelle, President of Herald National Bank.

“With the infusion of greater than $29 million in net proceeds from our recent private placement and a focus on net interest margin expansion, the bank is well positioned to achieve profitability in the near future. Sound asset quality and strong capital levels supporting our core deposit based relationship banking model will lead our drive to building long term shareholder value,” added Chairman and CEO, Raymond A. Nielsen.

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). As of March 31, 2010 the Bank had $452 million in assets of which $344 million were loans. Deposits at March 31, 2010 were $392 million, of which 93% were considered by the bank to be core deposits and 35% of which were transaction accounts, largely the operating accounts of the businesses served by the Bank.

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   March 31,

Statement of Operations

2010

 

2009

Interest income $ 5,467 $ 569 Interest expense   1,288   280 Net interest income 4,179 289 Provision for loan losses 687 354 Noninterest income 105 21 Noninterest expense, net   5,470   7,691 Pretax loss (1,873 ) (7,735 ) Tax expense   25   4 Net loss $ (1,898 ) $ (7,739 )       Basic earnings per share $ (0.29 ) $ (1.25 ) Weighted average shares - basic 6,607 6,201   Selected Financial Highlights

Data at End of Period

3/31/2010

12/31/2009

9/30/2009

6/30/2009

3/31/2009

Total loans $ 344,467 $ 301,177 $ 225,418 $ 98,876 $ 42,927 Allowance for loan losses 4,584 4,127 2,546 1,092 459 Securities available for sale 50,128 71,779 78,693 90,042 70,714 Securities held to maturity 34,533 41,515 32,635 30,713 - Total assets 452,537 443,194 366,095 261,475 160,097 Total deposits 392,227 404,628 326,278 216,147 114,686 Stockholders' equity 55,569 35,226 31,317 36,176 42,998 Net loss before provision for loan losses (1,211 ) (2,079 ) (4,045 ) (6,379 ) (7,383 ) Net interest margin 3.85 % 3.22 % 2.58 % 1.82 % 1.36 % Cost of funds 1.62 % 1.86 % 1.95 % 1.90 % 2.07 %  

Capital Ratios

Equity to Assets 12.28 % 7.95 % 8.55 % 13.84 % 26.86 % Tier 1 Leverage Ratio 11.94 % 8.52 % 10.36 % 16.90 % 37.73 % Tier 1 Risk-based Capital Ratio 15.20 % 10.63 % 12.06 % 24.34 % 53.00 % Total Risk-based Capital Ratio 16.45 % 11.88 % 13.05 % 25.07 % 53.56 %