Bloomberg News

Hudson Valley Plunges After Real Estate Charge: New York Mover

February 01, 2012

Feb. 1 (Bloomberg) -- Hudson Valley Holding Corp. plunged the most in more than two years as the commercial banking company’s earnings missed analyst estimates after a charge to meet a regulatory order to cut commercial real estate loans.

The fourth-quarter profit excluding some items was 27 cents a share, missing the average analyst estimate of a profit of 41 cents a share in a Bloomberg survey. The stock sank 21 percent $17.38 as of 12:39 p.m. in New York after falling as much as 22 percent, the most intraday since September 2009.

The Yonkers, New York-based parent of Hudson Valley Bank said it took charge-offs of $60.2 million reflecting a plan to sell $474 million in loans by the middle of this year to comply with an order from the Office of the Comptroller of the Currency to reduce its concentration in commercial real estate and classified loans.

“They’ve been forced to sell a portion of their assets, which means they’re going to be earning less money,” Collyn Bement Gilbert, an analyst at Stifel, Nicolaus & Co., said in a phone interview. “It draws into question their risk management practices, because the capital guidelines imposed by the OCC have been pretty clear. For them to be caught off guard by this and having the OCC to force them to sell this loan pool is kind of puzzling.”

She cut her rating on the stock to “hold” from “buy,” saying the shares would be “more fairly valued” in the $17 to $18 range.

--Editors: Stephen Kleege, Jeff Sutherland

To contact the reporter on this story: Katia Porzecanski in New York at kporzecansk1@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net


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