Yet another banking company has cited a regulatory order as the impetus for its stock offering — this time, in the Northeast.
In reporting third-quarter earnings of $6.9 million Monday, Hudson Valley Holding Corp. in Yonkers, N.Y., said a $90 million common stock offering it has in the works was prompted partly by regulators.
The $2.6 billion-asset company said that, because of a high concentration of commercial real estate loans and sharp increases in nonperformers during recent quarters, the Office of the Comptroller of the Currency has ordered its two bank units to have a total risk-based capital ratio of at least 12% by yearend. Typically, this ratio must be 10% for a bank to be considered well capitalized.
Hudson Valley said that it had been expecting regulators to require higher capital ratios since the end of the second quarter and that they did so Oct. 13.
But it said credit trends have been moderating lately. Its third-quarter earnings jumped 23-fold from the second quarter, when its provision for loan losses spiked to $11.5 million. It set aside $2.7 million for loan losses in the third quarter.
Its ratio of nonaccrual loans to total loans was 2.23% at Sept. 30, compared with 2.31% at June 30.
The company said it continued to invest in new branches since the end of the second quarter, increasing its total by three, to 36. It also said deposits have grown by 18%, or $330.5 million, since Jan. 1, partly because it has been attracting many new customers.
Hudson Valley initially announced the stock offering in September, but had postponed it because of a technical issue.