HNB Herald National Bank Common Stock

Herald National Bank (NYSE AMEX: HNB), a full-service commercial bank, today reported fourth quarter and 12-month results for 2011. The bank, which opened as a de novo in November 2008, ended the year with solidly positive results, concluding its first full year and sixth consecutive quarter of sustained profitability.

“Herald ended 2011 on a strong note of profitability, both for the fourth quarter and for the year. Our continued focus on fundamentals, with a priority on strong asset quality and sound risk management, positions us well to face the challenges of the current operating environment,” said Chairman and Chief Executive Officer Raymond A. Nielsen.

Key highlights for the quarter and the year include the following:

• 2011 concluded with a net profit of $747,000, compared to a loss of $5.4 million in 2010. For the fourth quarter ended December 31, net income increased 123% to $281,000 from $126,000 in the same period the prior year.
• Total assets increased both quarter-to-quarter and year-to-year. As of December 31, assets were $524.2 million, up 7.7% from $486.7 million in the third quarter and up 3.9% from $504.7 million at the end of 2010.
• Total deposits also showed strong growth, with a quarterly gain of 12.5% to $465.7 million as of December 31, versus $414.1 million the prior period, and 8.2% from $430.6 million at the same date a year ago. At year-end 2011, 91.3% were core deposits and 38.0% were noninterest bearing products.
• Net interest margin in the fourth quarter declined moderately to 3.88%, as compared to 4.11% in the third quarter and 4.10% in the fourth quarter of 2010.
• Tier I leverage ratio was 10.63% for the fourth quarter, down from 10.94% in the third quarter and 10.97% in the fourth quarter of 2010. This level continues to exceed the minimum regulatory capital ratios applicable to the bank.
• The bank significantly reduced its nonperforming loan portfolio during the fourth quarter to $169,000, an improvement of 85.3% from $1.15 million the prior period and 61.0% from $433,000 in the last quarter of 2010. The Bank did not set aside a provision for loan and lease losses for the quarter ended December 31, 2011 as there was no loan growth during the quarter and asset quality improved. The Bank believes it is adequately reserved with a loan loss allowance to loan ratio of 1.95%.
• Reflecting the strong performance of the bank’s balance sheet, earnings per share of Herald National Bank common stock improved in the fourth quarter to $0.02 per share, versus $0.01 in the third quarter and compared to a loss of $0.50 per share a year earlier.

“Our financial performance was even more impressive considering that we had merger-related expenses of approximately $263,000 during the fourth quarter and approximately $752,000 for all of 2011. Without these expenses, our net income would have been approximately double what we are reporting for the quarter and the year. We anticipate continuing this trend in 2012 and look forward to positively contributing to the Bank United results as we expect to complete closing this transaction on February 29, 2012,” Mr. Nielsen said.

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 previously announced, Herald National Bank anticipates a merger with BankUnited in the first quarter of 2012. For more information, visit www.heraldnb.com.

FORWARD-LOOKING STATEMENTS

This Press Release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect the current views of Herald National Bank with respect to, among other things, future events and financial performance. Herald National Bank generally identifies forward-looking statements by terminology such as “outlook”, “believes,” “expects,” “potential,” “continues,” “may,” “will,” “could,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of those words or other comparable words. Any forward-looking statements contained in this Press Release are based on the current plans, estimates and expectations of Herald National Bank. The inclusion of this forward-looking information should not be regarded as a representation by Herald National Bank that the future plans, estimates or expectations contemplated herein will be achieved. Such forward-looking statements are subject to various risks and uncertainties and assumptions relating to Herald National Bank’s respective operations, financial results, financial condition, business prospects, ability to complete the merger, growth, strategy and liquidity. If one or more of these or other risks or uncertainties materialize, or if the underlying assumptions prove to be incorrect, actual results may vary materially from those indicated in these statements. These factors should not be construed as exhaustive. Herald National Bank undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. A number of important factors could cause actual results to differ materially from those indicated by the forward-looking statements. Information on these factors can be found in the 2010 Annual Reports on Form 10-K Herald National Bank, and in the Quarterly Reports on Form 10-Q Herald National Bank, filed with the Office of the Comptroller of the Currency and available at Herald National’s website (www.heraldnb.com).

Additional Information for Stockholders

In connection with the proposed merger, BankUnited has filed with the SEC a Registration Statement on Form S-4 that will include a Proxy Statement of Herald National Bank and a Prospectus of BankUnited, as well as other relevant documents concerning the proposed transaction. INVESTORS ARE URGED TO READ THE REGISTRATION STATEMENT AND THE PROXY STATEMENT/PROSPECTUS REGARDING THE MERGER WHEN IT BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED BY BANKUNITED WITH THE SEC AND BY HNB WITH THE OCC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.

Investors will be able to obtain a free copy of the Proxy Statement/Prospectus, as well as other filings containing information about BankUnited and Herald National Bank at the SEC’s website (http://www.sec.gov), and with respect to Herald National Bank, its website (www.Heraldnb.com). You will also be able to obtain these documents, free of charge, at http://www.bankunited.com under the tab “About Us” and then under the heading “Investor Relations” and then under “SEC Filings.” Copies of the Proxy Statement/Prospectus and the SEC and OCC filings that will be incorporated by reference in the Proxy Statement/Prospectus can also be obtained, free of charge, by directing a request to Douglas J. Pauls, 14817 Oak Lane, Miami Lakes, FL 33016, (305) 461-6841.

BankUnited and Herald National Bank and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the stockholders of Herald National Bank in connection with the proposed merger. Information about the directors and executive officers of BankUnited is set forth in the Annual Report on Form 10-K of BankUnited for the year ended December 31, 2010, as filed with the SEC on March 31, 2011. Information about the directors and executive officers of Herald National Bank is set forth in the proxy statement for Herald National Bank’s 2011 annual meeting of stockholders, as filed with the OCC and posted on Herald National Bank’s website and dated April 22, 2011. Additional information regarding the interests of those persons and other persons who may be deemed participants in the transaction may be obtained by reading the Proxy Statement/Prospectus regarding the proposed merger when it becomes available. You may obtain free copies of this document as described in the preceding paragraph.

           

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

2011

 

2010

2011

 

2010

Interest income $ 5,232 $ 5,642 $ 21,626 $ 22,390 Interest expense   718     948     3,443     4,421   Net interest income 4,514 4,694 18,183 17,969 Provision for loan losses - 323 100 4,357 Noninterest income 572 160 1,862 861 Noninterest expense 4,508 4,380 18,322 19,748 Merger-related expenses   263     -     752     -   Pretax income (loss) 315 151 871 (5,275 ) Tax expense   34     25     124     102   Net income (loss) $ 281   $ 126   $ 747   $ (5,377 )   Basic earnings (loss) per share $ 0.02 $ 0.01 $ 0.06 $ (0.50 ) Weighted average shares - basic 12,227 12,207 12,227 10,819   Selected Financial Highlights

Data at End of Period

12/31/2011

9/30/2011

6/30/2011

3/31/2011

12/31/2010

Total loans $ 304,506 $ 318,854 $ 319,570 $ 321,990 $ 332,909 Allowance for loan losses 5,943 5,924 6,112 6,265 6,404 Nonperforming assets 169 1,151 1,442 1,666 433 Securities available for sale 157,373 137,129 107,397 108,200 132,076 Securities held to maturity 12,548 12,989 16,203 16,347 16,657 Total assets 524,190 486,718 486,551 501,114 504,690 Total deposits 465,734 414,087 430,974 437,145 430,569 Stockholders' equity 54,181 53,776 52,313 51,066 50,679 Net interest margin 3.88 % 4.11 % 4.02 % 3.87 % 4.10 % Cost of funds 0.98 % 1.08 % 1.22 % 1.25 % 1.14 %  

Capital Ratios

Equity to Assets 10.34 % 11.05 % 10.75 % 10.19 % 10.04 % Tier 1 Leverage Ratio 10.63 % 10.94 % 10.58 % 10.61 % 10.97 % Tier 1 Risk-based Capital Ratio 15.97 % 15.87 % 15.86 % 15.53 % 15.10 % Total Risk-based Capital Ratio 17.23 % 17.12 % 17.11 % 16.78 % 16.36 %