Hopewell Valley Community Bank’s first-quarter earnings this year were reduced by the repayment three long-term Federal Home Loan Bank (FHLB) advances that totaled $20 million. The early repayment also resulted in a penalty of some $2.7 million that was charged against the bank’s earnings.
In the long run, the bank will save $750,000 a year in interest expenses for a total savings of $3.2 million, according to a bank news release. HVCB was paying interest at an average effective rate of 3.78 percent annually.
“While we are not happy to report the effects of the FHLB advance repayment and the negative consequences of our loan portfolio adjustments, we are pleased that our institutional growth and core asset performance continues in a positive direction,” said bank chairman Patrick Ryan.
“While repayment of the FHLB advances was painful, it was determined that keeping them on our balance sheet for their almost five year remaining term would have been detrimental to our long term profitability,” said James Hyman, president and CEO.
The bank’s first quarter earnings were also reduced by a $476,000 as the result of the revaluation of collateral for a mortgage loan on a single commercial property. “We subsequently took a partial write-down of that loan to more accurately reflect the reduced collateral value. The Bank is actively working with the owner of the property in question to seek recovery,” said the bank.
The bank’s first quarter net income before a tax loss of $2.8 million was offset by an income tax benefit of $1.2 million. Overall, HVCB’s net income for the first quarter came in at a loss of $1.6 million as compared to a profit of $490,255 during the first quarter of 2012.
Hopewell Valley Community Bank (HWDY), 4 Route 31 South, Box 999, Pennington 08534; 609-466-2900; fax, 609-730-9144. James Hyman, president and CEO. www.hvcbonline.com.