Herald National Bank Reports Results for First Quarter of 2011; Third Consecutive Quarter of Profitability

Herald National Bank (NYSE AMEX: HNB), a full-service commercial bank, today reported results for the first quarter of 2011, ended March 31. It was the third consecutive quarter of sustained profitability recently reported by Herald, which opened as a de novo bank in November 2008.

“Herald National Bank has continued our profitability trend in the first quarter of 2011, supporting the soundness of our business strategy and our focus on relationship banking and stable asset quality. Our Banking, Credit and Operations teams are continuing to cooperatively develop and improve our unique relationship-based business banking model, which focuses on small and middle market clients in the New York metropolitan area and surrounding business communities. Although the economic environment continues to be unsettled, we continue to see promising opportunities to develop secure, long-term small and middle market relationships. A number of these opportunities have already materialized and others are currently in progress,” said Chairman and Chief Executive Officer Raymond A. Nielsen.

Key highlights for the quarter included the following:

Net income for the first quarter increased 63.5% to $206,000, or $0.02 per share, versus $126,000 or $0.01 per share in the fourth quarter of 2010. This compares to a loss of $1.9 million in the first quarter of 2010.
Total assets decreased moderately to $501 million, down 0.7% from $505 million at December 31 2010. As compared to the first quarter of 2010, assets increased 10.7% from $453 million.
Deposits increased 1.5% to $437 million, of which 91.1% are core deposits and 30% are checking accounts. This compares to deposits of $431 million on December 31, 2010 and $392 million at March 31, 2010.
Net interest margin was 3.87%, a slight decline from 4.10% in the fourth quarter but a slight increase from 3.85% in the first quarter last year.
Total loans declined to $322 million at March 31, 2011 from $333 million at December 31, 2010 and $344 million at March 31, 2010.
Tier 1 leverage ratio was 10.61% at March 31, 2011, compared to 10.97% at year-end 2010 and 11.94% at March 31, 2010. This exceeds the minimum regulatory capital ratios applicable to the bank.
Non-performing loans were $1.7 million as of March 31, 2011, compared to $0.4 million at December 31, 2010. There were no non-performing loans at March 31, 2010. Non-performing loans increased during the quarter by one loan with a $1.3 million loan balance. Non-performing loans to total loans were 0.53% at March 31, 2011 and 0.12% at December 31, 2010 which compare favorably to industry averages. In addition, the Bank’s Allowance for Loan & Lease Losses increased to 1.94% of loans at March 31, 2011, from 1.92% at December 31, 2010.

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; legislation affecting the banking industry, 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.

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