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Hudson Valley Bank: Staying Close to Home

By Christina P. O’Neill

Hudson Valley Bank opened in May 1972 with $2.5 million in capital, out of a trailer in Yonkers. The founding stakeholders, anxious to get the bank up and running, didn’t want to wait an additional 10 months for their new headquarters to be finished. “At that time, a lot of the money center banks were expanding by acquiring community banks,” says President James J. Landy. “A group of business people saw a real need for a community bank.”

The 10 early stakeholders, all business and professional leaders based in or near its home town of Yonkers, included the late Robert Abplanalp, inventor of the aerosol valve,  who had built his business, Precision Valve, from scratch. HVB’s current chair, William E. Griffin, is a successful attorney who started his own law firm. The late George J. Pacchiana founded Thalle Construction Co., run by his grandson today. 
Hudson Valley Bank (HVB) grew its asset base to more than $10 million by the end of its founding year. The bank’s mission was to keep its decision-making capacity within the communities it serves. Today, HVB is the largest independently-owned commercial bank in Westchester County. “We take our deposits locally and reinvest them back into community, making local loans to local businesses,” Landy says. “What was true back then is true now.  Our focus is to stay independent. … We’re not for sale; we’ve never entertained the idea of being for sale. We concentrate on providing service to our community and a return for our shareholders by remaining independent.”
While HVB commands about 4 percent of the entire deposit base of Westchester County by focusing on niche products and hiring experts in those niche fields, Landy estimates that HVB has about 50 percent of the attorney market in Westchester County. The bank  developed specialty products and services for the legal profession, and hired several lawyers to service those other lawyers.
In the past 15 months HVB has opened five branches in Fairfield County, CT. It researched the business concentration and niche businesses to find the right locations and fit and hired a team of local Connecticut bankers to serve this new market . Landy adds that the current spate of mergers and acquisitions has created hiring opportunities for HVB.
Today HVB, still headquartered in Yonkers, has $2.5 billion in assets, and 30 branches throughout the metropolitan area; a subsidiary investment management firm, A. R. Schmeidler & Co., Inc.; and a charitable foundation, the Hudson Valley National Foundation. Its clients range from individuals to municipalities. Private sector industries include legal, real estate, property management, construction and health care companies, as well as not-for-profit organizations and religious institutions. 
As did many other banks in 2008, HVB experienced a decline in earnings, reporting $30.9 million in 2008 EPS compared to $34.5 million EPS for 2007. The bank realized about $1.5 million in losses or write downs from certain investments and added $11 million to its loan loss allowance.  But its cost of interest declined in 2008, due to declining interest rates and its net loans grew by 30.1 percent, or $387 million. HVB booked over $600 million in gross loans in 2008 and now has about $1.6 billion in loans outstanding. Meanwhile, many other, larger banks reduced their lending volumes. The bank had not participated in subprime loans or investments during the credit bubble and appears to be benefiting from a flight to quality now that the bubble has burst.
Last November, HVB’s board of directors voted to forego accepting funds from the TARP. “We elected to decline receiving such assistance, which we did not need nor believe was in our shareholders’ best interests,” Landy says. “Hudson Valley is well positioned as an independent community bank to continue to meet the deposit and lending needs of our customers and the communities we serve today and in the future.” He adds, “Given our positive earnings and strong financial position, we would rather not take government funding. We plan to stay with the community banking business model that has contributed to our success over the past 36 years, and which we believe is in the best interest of our customers, shareholders, staff and the communities we serve.”
Additionally, Hudson Valley opened seven new branches in 2008 – four in New York and three in Connecticut. HVB has regulatory approval to open two more branches in the first half of 2009, one in New York and one in Connecticut. Expansion is expected to continue this year. 

Christina P. O’Neill is Custom Publications Editor at The Warren Group, publisher of Banking New York.

Posted on Thursday, April 16, 2009 (Archive on Wednesday, July 15, 2009)
Posted by Scott  Contributed by Scott


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