##### Table of Contents





UNITED STATES
 SECURITIES AND EXCHANGE
    COMMISSION
 Washington, D.C.
    20549
    FORM 10-K
  ANNUAL REPORT PURSUANT TO
    SECTION 13 OR 15(d)
 OF THE SECURITIES EXCHANGE ACT
    OF 1934
  For the
    fiscal year ended December 31, 2010
  Commission File number 001-34453
  HUDSON VALLEY HOLDING
    CORP.
 (Exact name of registrant as
    specified in its charter)
    New York(State or other jurisdiction of
    incorporation or organization)

13-3148745(I.R.S. Employer
    Identification No.)21 Scarsdale Road, Yonkers, New York(Address of principal executive
    offices)

10707(Zip Code)   Registrants telephone number, including area code:
    (914) 961-6100
  Securities Registered Pursuant to Section 12(b) of the
    Act:
  Name ofeach exchangeon whichTitle of each Class

registeredCommon Stock, ($0.20 par value per share)

The NASDAQ Stock Market LLC     Securities Registered Pursuant to Section 12(g) of the
    Act:
  o x
  o x
  x o
  Regulation S-T o o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
  o x o o
  Rule 12b-2 o x
   Outstanding atMarch 1,Class

2011Common Stock
    ($0.20 par value)

17,680,895      Documents incorporated by reference:




---



##### 





FORM
    10-K
 TABLE OF CONTENTS
  Page No.PART IITEM 1

BUSINESS


1ITEM 1A

RISK FACTORS


15ITEM 1B

UNRESOLVED STAFF COMMENTS


24ITEM 2

PROPERTIES


24ITEM 3

LEGAL PROCEEDINGS


25ITEM 4

(REMOVED AND RESERVED)


25PART IIITEM 5

MARKET FOR REGISTRANTS COMMON EQUITY,
    RELATED MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES


26ITEM 6

SELECTED FINANCIAL DATA


28ITEM 7

MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS


30ITEM 7A

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
    MARKET RISK


72ITEM 8

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


74ITEM 9

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
    ACCOUNTING AND FINANCIAL DISCLOSURE


112ITEM 9A

CONTROLS AND PROCEDURES


112ITEM 9B

OTHER INFORMATION


112PART IIIITEM 10

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
    GOVERNANCE


113ITEM 11

EXECUTIVE COMPENSATION


113ITEM 12

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
    AND MANAGEMENT, AND RELATED STOCKHOLDER MATTERS


113ITEM 13

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,
    AND DIRECTOR INDEPENDENCE


113ITEM 14

PRINCIPAL ACCOUNTANT FEES AND SERVICES


113PART IVITEM 15

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES


114SIGNATURES


116EX-11EX-12EX-21EX-23.1EX-31.1EX-31.2EX-32.1EX-32.2




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##### Table of Contents



PART
    I ITEM
    1  BUSINESS  General
              Forward-Looking
    Statements
  Form 10-K
  Form 10-K
  
    further increases in our non-performing loans and allowance for
    loan losses;
    our ability to manage our commercial real estate portfolio;
    the future performance of our investment portfolio;
    our opportunities for growth, our plans for expansion (including
    opening new branches) and the competition we face in attracting
    and retaining customers;
    economic conditions generally and in our market area in
    particular, which may affect the ability of borrowers to repay
    their loans and the value of real property or other property
    held as collateral for such loans; 1




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
    demand for our products and services;
    possible impairment of our goodwill and other intangible assets;
    our ability to manage interest rate risk;
    the regulatory environment in which we operate, our regulatory
    compliance and future regulatory requirements;
    our intention and ability to maintain regulatory capital above
    the levels required by the Office of the Comptroller of the
    Currency (the OCC) for the Bank and the levels
    required for us to be
    well-capitalized,
    or such higher capital levels as may be required;
    proposed legislative and regulatory action affecting us and the
    financial services industry;
    legislative and regulatory actions (including the impact of the
    Dodd-Frank Wall Street Reform and Consumer Protection Act and
    related regulations) subject us to additional regulatory
    oversight which may result in increased compliance costs
    and/or
    require us to change our business model;
    future Federal Deposit Insurance Corporation (FDIC)
    special assessments or changes to regular assessments;
    our ability to raise additional capital in the future;
    potential liabilities under federal and state environmental
    laws; and
    limitations on dividends payable by the Company or the Bank.    Subsidiaries
    of the Bank and the Company
                       2




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Employees
    Our
    Market Area
  out-of-area
           3




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Competition
            not-for-profit
 4




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Lending
    Real estate


83.0
%Commercial and industrial


14.2Individuals


1.9Lease financing


0.9Total


100.0
%         (ii)
    the establishment of individual internal comfort levels of
    lending authority below HVBs legal lending authority,(iii)
    the involvement by senior management and the Board of Directors
    in the loan approval process for designated categories, types or
    amounts of loans,              Deposits
     5




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Portfolio
    Management Services
    Other
    Services
    Segments
    Supervision
    and Regulation
        out-of-state
   6




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Basel
    III
     7




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
    3.5% CET1 to risk-weighted assets.
    4.5% Tier 1 capital to risk-weighted assets.
    8.0% Total capital to risk-weighted assets.        The
    Dodd-Frank Wall Street Reform and Consumer Protection Act of
    2010
    
    Directs the Federal Reserve to issue rules which are expected to
    limit debit-card interchange fees; 8




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
    After a three-year phase-in period which begins January 1,
    2013, removes trust preferred securities as a permitted
    component of Tier 1 capital for bank holding companies with
    assets of $15 billion or more, however, bank holding
    companies with assets of less than $15 billion will be
    permitted to include trust preferred securities that were issued
    before May 19, 2010 as Tier 1 capital;
    Provides for increases in the minimum reserve ratio for the
    deposit insurance fund from 1.15 percent to
    1.35 percent and changes the basis for determining FDIC
    premiums from deposits to assets;
    Creates a new Consumer Financial Protection Bureau that will
    have rulemaking authority for a wide range of consumer
    protection laws that would apply to all banks and would have
    broad powers to supervise and enforce consumer protection laws;
    Requires public companies to give shareholders a non-binding
    vote on executive compensation at their first annual meeting
    following enactment and at least every three years thereafter
    and on golden parachute payments in connection with
    approvals of mergers and acquisitions unless previously voted on
    by shareholders;
    Authorizes the SEC to promulgate rules that would allow
    shareholders to nominate their own candidates using a
    companys proxy materials;
    Directs federal banking regulators to promulgate rules
    prohibiting excessive compensation paid to executives of
    depository institutions and their holding companies with assets
    in excess of $1 billion, regardless of whether the company
    is publicly traded or not;
    Prohibits a depository institution from converting from a state
    to a federal charter or vice versa while it is the subject of a
    cease and desist order or other formal enforcement action or a
    memorandum of understanding with respect to a significant
    supervisory matter unless the appropriate federal banking agency
    gives notice of conversion to the federal or state authority
    that issued the enforcement action and that agency does not
    object within 30 days;
    Changes standards for Federal preemption of state laws related
    to federally chartered institutions and their subsidiaries;
    Provides mortgage reform provisions regarding a customers
    ability to repay, requiring the ability to repay for
    variable-rate loans to be determined by using the maximum rate
    that will apply during the first five years of the loan term,
    and making more loans subject to provisions for higher cost
    loans, new disclosures, and certain other revisions;
    Creates a Financial Stability Oversight Council that will
    recommend to the Federal Reserve increasingly strict rules for
    capital, leverage, liquidity, risk management and other
    requirements as companies grow in size and complexity;
    Makes permanent the $250 thousand limit for federal deposit
    insurance and provides unlimited federal deposit insurance
    through December 31, 2012 for non-interest bearing demand
    transaction accounts at all insured depository
    institutions; and
    Repeals the federal prohibitions on the payment of interest on
    demand deposits, thereby permitting depository institutions to
    pay interest on business transactions and other accounts.
    Authorizes de novo interstate branching, subject to
    non-discriminatory state rules, such as home office protection.   9




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Emergency
    Economic Stabilization Act of 2008
    Temporary
    Liquidity Guarantee Program
        Regulation
    of HVB
    Dividend
    Limitations
   10




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Capital
    Standards
         11




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Insurance
    of Deposit Account
            Loans to
    Related Parties
    FIRREA
   12




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##### Table of Contents



loan-to-value
  Community
    Reinvestment Act and Fair Lending Developments
    USA
    Patriot Act
    Sarbanes-Oxley
    Act of 2002
      
    a prohibition on personal loans made or arranged by the issuer
    to its directors and executive officers (except for loans made
    by a bank subject to Regulation O);
    independence requirements for audit committee members;
    independence requirements for company auditors; 13




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
    certification of financial statements within the Annual Report
    on
    Form 10-K
    and Quarterly Reports on
    Form 10-Q
    by the chief executive officer and the chief financial officer;
    the forfeiture by the chief executive officer and the chief
    financial officer of bonuses or other incentive-based
    compensation and profits from the sale of an issuers
    securities by such officers in the twelve month period following
    initial publication of any financial statements that later
    require restatement due to corporate misconduct;
    disclosure of off-balance sheet transactions;
    two-business day filing requirements for insiders filing on
    Form 4;
    disclosure of a code of ethics for financial officers and filing
    a Current Report on
    Form 8-K
    for a change in or waiver of such code;
    the reporting of securities violations up the ladder
    by both in-house and outside attorneys;
    restrictions on the use of non-GAAP financial measures in press
    releases and SEC filings;
    the formation of a public accounting oversight board;
    various increased criminal penalties for violations of
    securities laws; and
    an assertion by management with respect to the effectiveness of
    internal control over financial reporting.  Governmental
    Monetary Policy
      Investment
    Advisers Act of 1940
    Available
    Information
  (http://www.hudsonvalleybank.com) Form 10-K, Form 10-Q, Form 8-K,
 14




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ITEM 1A 
    RISK FACTORS  Risks
    Related to Our Business
  Further
    increases in our nonperforming loans may occur and adversely
    affect our results of operations and financial
    condition.
  31-89 days
      As
    regulated entities, the Company and the Bank are subject to
    extensive supervision and prudential regulation, including
    maintaining certain capital requirements, which may limit their
    operations and potential growth. Failure to meet any such
    requirements would subject us to regulatory action.
     15




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Further
    increases to the allowance for loan losses may cause our
    earnings to decrease.
    Our
    concentration of commercial real estate loans has resulted in
    increased loan losses and could result in further increases in
    future periods.
     16




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Declines
    in value may adversely impact the carrying amount of our
    investment portfolio and result in
    other-than-temporary
    impairment charges.
  other-than-temporary.
  A
    prolonged or worsened downturn in the economy in general and the
    real estate market in our key market areas in particular would
    adversely affect our loan portfolio and our growth
    potential.
  not-for-profit
      Difficult
    market conditions have adversely affected our
    industry.
   17




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Higher
    FDIC deposit insurance premiums and assessments could adversely
    affect our financial condition.
        A
    substantial decline in the value of our Federal Home Loan Bank
    of New York common stock may adversely affect our financial
    condition.
    Certain
    of our goodwill and intangible assets may become impaired in the
    future.
   18




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The
    opening of new branches could reduce our
    profitability.
    Our
    income is sensitive to changes in interest rates.
      We may
    need to raise additional capital in the future and such capital
    may not be available when needed or at all.
    Our
    markets are intensely competitive, and our principal competitors
    are larger than us.
      Impact of
    inflation and changing prices
   19




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Extensive
    Regulation and Supervision.
  and/or
  The
    Dodd-Frank Wall Street Reform and Consumer Protection Act May
    Affect Our Business Activities, Financial Position and
    Profitability By Increasing Our Regulatory Compliance Burden and
    Associated Costs, Placing Restrictions on Certain Products and
    Services, and Limiting Our Future Capital Raising
    Strategies.
      Technological
    change may affect our ability to compete.
   20




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Changes
    in Accounting Policies or Accounting Standards.
      We may
    incur liabilities under federal and state environmental laws
    with respect to foreclosed properties.
  clean-up. clean-up
  We Are
    Subject to Environmental Liability Risk Associated With Lending
    Activities.
   21




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Risks
    Relating to Our Common Stock
  Market
    conditions and other factors may affect the value of our common
    stock.
    
    conditions in the credit, mortgage and housing markets, the
    markets for securities relating to mortgages or housing, and
    developments with respect to financial institutions generally;
    interest rates;
    the market for similar securities;
    government action or regulation;
    general economic conditions or conditions in the financial
    markets;
    our past and future dividend practice; and
    our financial condition, performance, creditworthiness and
    prospects.    There may
    be future dilution of our common stock.
    We may
    further reduce or eliminate the cash dividend on our common
    stock.
    Government
    regulation restricts our ability to pay cash
    dividends.
   22




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Our
    common stock price may fluctuate due to the potential sale of
    stock by our existing stockholders.
    Our
    earnings may be subject to increased volatility.
    
    a continuation of the current economic downturn, or further
    adverse economic developments;
    instability in the financial markets;
    our inability to generate or maintain creditworthy customer
    relationships in our primary markets;
    unexpected increases in operating costs, including special
    assessments for FDIC insurance;
    further credit deterioration in our loan portfolio or
    unanticipated credit deterioration, or defaults by our loan
    customers;
    credit deterioration or defaults by issuers of securities within
    our investment portfolio; or
    a decrease in our common stock price below its book value
    potentially impacting the valuation of our goodwill.  other-than-temporary),
  Our
    certificate of incorporation, the New York Business Corporation
    Law and federal banking laws and regulations may prevent a
    takeover of our company.
   23




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ITEM
    1B  UNRESOLVED STAFF COMMENTS   ITEM
    2  PROPERTIES      Address

City

County

State37 East Main Street

Elmsford

Westchester

New York61 South Broadway

Yonkers

Westchester

New York150 Lake Avenue

Yonkers

Westchester

New York865 McLean Avenue

Yonkers

Westchester

New York512 South Broadway

Yonkers

Westchester

New York21 Scarsdale Road

Yonkers

Westchester

New York664 Main Street

Mount Kisco

Westchester

New York369 East 149th Street

Bronx

Bronx

New York2256 Second Avenue

Manhattan

New York

New York     Address

City

County

State35 East Grassy Sprain Road

Yonkers

Westchester

New York403 East Sandford Boulevard

Mount Vernon

Westchester

New York1835 East Main Street

Peekskill

Westchester

New York500 Westchester Avenue

Port Chester

Westchester

New York501 Marble Avenue

Pleasantville

Westchester

New York328 Central Avenue

White Plains

Westchester

New York5 Huguenot Street

New Rochelle

Westchester

New York40 Church Street

White Plains

Westchester

New York875 Mamaroneck Avenue

Mamaroneck

Westchester

New York399 Knollwood Road

White Plains

Westchester

New York111 Brook Street

Eastchester

Westchester

New York3130 East Tremont Avenue

Bronx

Bronx

New York975 Allerton Avenue

Bronx

Bronx

New York1250 Waters Place

Bronx

Bronx

New York16 Court Street

Brooklyn

Kings

New York60 East 42nd Street

Manhattan

New York

New York233 Broadway

Manhattan

New York

New York350 Park Avenue

Manhattan

New York

New York112 West 34th Street

Manhattan

New York

New York162-05 Crocheron Avenue

Flushing

Queens

New York254 South Main Street

New City

Rockland

New York1055 Summer Street

Stamford

Fairfield

Connecticut420 Post Road West

Westport

Fairfield

Connecticut500 West Putnam Avenue

Greenwich

Fairfield

Connecticut200 Post Road

Fairfield

Fairfield

Connecticut 24




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Address

City

County

State2505 Main Street

Stratford

Fairfield

Connecticut54 Broad Street

Milford

New Haven

Connecticut          ITEM
    3  LEGAL PROCEEDINGS   ITEM
    4  (REMOVED AND RESERVED) 25




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PART
    II ITEM 5 
    MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER
    MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES      2010High

LowFirst Quarter

$
24.67


$
23.01Second Quarter


26.73



22.66Third Quarter


23.53



15.79Fourth Quarter


24.68



18.74   2009High

LowThird Quarter (from September 21, 2009)

$
26.87


$
24.77Fourth Quarter


27.75



21.68
(1)         Form 10-K.
   26




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Form 10-K.
    Stockholder
    Return Performance Graph
    Total
    Return Performance
  
  Period EndingIndex

12/31/05


12/31/06


12/31/07


12/31/08


12/31/09


12/31/10Hudson Valley Holding Corp.


100.00



107.79



136.51



133.85



75.23



85.76Russell 2000


100.00



118.37



116.51



77.15



98.11



124.46SNL Bank $1B-$5B


100.00



115.72



84.29



69.91



50.11



56.81    27




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ITEM 6 
    SELECTED FINANCIAL DATA  Form 10-K. Form 10-K. Form 10-K.
  Year Ended December 31,2010


2009


2008


2007


2006(000s except share data)Operating Results:Total interest income

$
128,339


$
136,579


$
140,112


$
150,367


$
141,157Total interest expense


17,683



22,304



30,083



46,299



41,600Net interest income


110,656



114,275



110,029



104,068



99,557Provision for loan losses


46,527



24,306



11,025



1,470



2,130Income before income taxes


3,708



26,322



46,523



52,742



52,094Net income


5,113



19,012



30,877



34,483



34,059Basic earnings per common share


0.29



1.39



2.35



2.65



2.60Diluted earning per common share


0.29



1.37



2.27



2.54



2.52Weighted average shares outstanding


17,630,814



13,644,736



13,166,931



13,029,183



13,107,578Diluted weighted average share outstanding


17,687,246



13,916,067



13,612,605



13,551,592



13,528,691Cash dividends per common share

$
0.65


$
1.15


$
1.53


$
1.36


$
1.20   December 31,2010


2009


2008


2007


2006Financial position:Securities

$
459,934


$
522,285


$
671,355


$
780,251


$
917,660Loans, net


1,689,187



1,772,645



1,677,611



1,289,641



1,205,243Total assets


2,669,033



2,665,556



2,540,890



2,330,748



2,291,734Deposits


2,234,412



2,172,615



1,839,326



1,812,542



1,626,441Borrowings


124,345



176,903



466,398



286,941



456,559Stockholders equity


289,917



293,678



207,501



203,687



185,566  28




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Financial
    Ratios
    December 31,2010

2009

2008

2007

2006Earnings RatiosNet income as a percentage of:Average earning assets


0.20
%


0.79
%


1.39
%


1.59
%


1.64
%Average total assets


0.18



0.74



1.30



1.49



1.54Average total stockholders equity


1.75



8.74



14.76



18.03



19.40Adjusted average total stockholders equity(1)


1.77



8.78



14.55



17.61



18.57Capital RatiosAverage total stockholders equity to average total assets


10.43
%


8.43
%


8.79
%


8.27
%


7.95
%Average net loans as a multiple of average total
    stockholders equity


5.86



8.00



7.09



6.45



6.44Leverage capital


9.60
%


10.17
%


7.53
%


8.31
%


7.74
%Tier 1 capital (to risk weighted assets)


13.92



13.94



10.11



12.61



12.32Total risk-based capital (to risk weighted assets)


15.18



15.16



11.33



13.77



13.49OtherAllowance for loan losses as a percentage of year-end loans


2.25
%


2.13
%


1.33
%


1.33
%


1.37
%Loans (net) as a percentage of year-end total assets


63.29



66.50



66.02



55.33



52.59Loans (net) as a percentage of year-end total deposits


75.60



81.59



91.21



71.15



74.10Securities as a percentage of year-end total assets


17.23



19.59



26.42



33.48



40.04Average interest earning assets as a percentage of average
    interest bearing liabilities


150.04



145.87



146.90



146.83



148.34Dividends per share as a percentage of diluted earnings per share


224.14



83.94



67.40



53.54



47.62    (1)
    Adjusted average stockholders equity excludes unrealized
    gains, net of tax, of $3,078 and $981 in 2010 and 2009,
    respectively and unrealized losses, net of tax, of $2,955,
    $4,521 and $7,846 in 2008, 2007 and 2006, respectively.
    Management believes this alternate presentation more closely
    reflects actual performance, as it is more consistent with the
    Companys stated asset/liability management strategies,
    which have not resulted in significant realization of temporary
    market gains or losses on securities available for sale which
    were primarily related to changes in interest rates. As noted in
    the Companys 2011 Proxy Statement, which is incorporated
    herein by reference, net income as a percentage of adjusted
    average stockholders equity is one of several factors
    utilized by management to determine total compensation. 29




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ITEM 7 
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
    AND RESULTS OF OPERATIONS  Form 10-K.
  Overview
    of Managements Discussion and Analysis
  Form 10-K. Form 10-K.
        held-for-sale
   30




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held-for-sale
  held-for-sale
         31




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Critical
    Accounting Policies
  Application of Critical Accounting Policies 
  Securities  other-than-temporary other-than-temporary
 32




---



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Allowance for Loan Losses 
  and/or
        Other Real Estate Owned (OREO) 
 33




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Goodwill and Other Intangible Assets and/or
  Income Taxes 
  Results
    of Operations for Each of the Three Years in the Period Ended
    December 31, 2010
  Summary
    of Results
     34




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loan-to-value held-for-sale
  available-for-sale, available-for-sale available-for-sale
 35




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36




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Average
    Balances and Interest Rates
    (000s except percentages)Year ended December 31,2010


2009


2008Average





Yield/


Average





Yield/


Average





Yield/Balance


Interest(3)


Rate


Balance


Interest(3)


Rate


Balance


Interest(3)


RateASSETSInterest earning assets:Deposits in banks

$
300,703


$
737



0.25
%

$
35,508


$
81



0.23
%

$
5,362


$
152



2.83
%Federal funds sold


78,748



168



0.21



43,910



100



0.23



24,899



827



3.32Securities:(1)Taxable


367,421



13,905



3.78



413,781



18,077



4.37



507,943



24,873



4.90Exempt from federal income taxes


149,355



9,032



6.05



184,772



11,783



6.38



208,730



13,274



6.36Loans, net(2)


1,714,325



107,658



6.28



1,739,421



110,662



6.36



1,483,196



105,632



7.12Total interest earning assets


2,610,552



131,500



5.04



2,417,392



140,703



5.82



2,230,130



144,758



6.49Non interest earning assets:Cash and due from banks


41,490











43,197











49,786Other assets


145,905











118,118











105,478Total non interest earning assets


187,395











161,315











155,264Total assets

$
2,797,947










$
2,578,707










$
2,385,394LIABILITIES AND STOCKHOLDERS EQUITYInterest bearing liabilities:Deposits:Money market

$
926,755


$
8,099



0.87
%

$
787,347


$
9,145



1.16
%

$
642,784


$
10,498



1.63
%Savings


115,624



562



0.49



101,846



503



0.49



95,296



708



0.74Time


202,244



2,455



1.21



263,065



3,899



1.48



263,506



6,757



2.56Checking with interest


332,315



1,091



0.33



250,314



1,048



0.42



149,793



1,072



0.72Securities sold under repurchase agreements and other short-term
    borrowings


56,899



271



0.48



101,818



536



0.53



161,749



2,187



1.35Other borrowings


109,349



5,205



4.76



153,799



7,173



4.66



201,687



8,861



4.39Total interest bearing liabilities


1,743,186



17,683



1.01



1,658,189



22,304



1.35



1,514,815



30,083



1.99Non interest bearing liabilities:Demand deposits


745,290











675,953











625,630Other liabilities


20,199











28,049











32,797Total non interest bearing liabilities


765,489











704,002











658,427Stockholders equity(1)


289,272











216,516











212,152Total liabilities and stockholders equity(1)

$
2,797,947










$
2,578,707










$
2,385,394Net interest earnings





$
113,817










$
118,399










$
114,675Net yield on interest earning assets










4.36
%










4.90
%










5.14
%   (1)
    Excludes unrealized gains (losses) on securities available for
    sale. Management believes that this presentation more closely
    reflects actual performance, as it is more consistent with the
    Companys stated asset/liability management strategies,
    which have not resulted in significant realization of temporary
    market gains or losses on securities available for sale which
    were primarily related to changes in interest rates. Effects of
    these adjustments are presented in the table below.(2)
    Includes loans classified as non-accrual.(3)
    The data contained in the table has been adjusted to a tax
    equivalent basis, based on the Companys federal statutory
    rate of 35 percent. Management believes that this
    presentation provides comparability of net interest income and
    net interest margin arising from both taxable and tax-exempt
    sources and is consistent with industry practice and SEC rules.
    Effects of these adjustments are presented in the table below. 37




---



##### Table of Contents



HUDSON
    VALLEY HOLDING CORP. AND SUBSIDIARIES
    Average Balances and Interest Rates
    Non-GAAP disclosures
 Year ended December 31,2010


2009


2008Total interest earning assets:As reported

$
2,615,461


$
2,418,855


$
2,225,320Unrealized gain (loss) on securities available-for-sale(1)


4,909



1,463



(4,810
)Adjusted total interest earning assets

$
2,610,552


$
2,417,392


$
2,230,130Net interest earnings:As reported

$
110,656


$
114,275


$
110,029Adjustment to tax equivalency basis(2)


3,161



4,124



4,646Adjusted net interest earnings

$
113,817


$
118,399


$
114,675Net yield on interest earning assets:As reported


4.23
%


4.72
%


4.94
%Effects of (1) and (2) above


0.13
%


0.18
%


0.20
%Adjusted net interest earnings


4.36
%


4.90
%


5.14
%
  38




---



##### Table of Contents



Interest
    Differential
    (000s)2010 Compared to 2009


2009 Compared to 2008Increase (Decrease)


Increase (Decrease)Due to Change in


Due to Change inVolume


Rate


Total(1)


Volume


Rate


Total(1)Interest income:Deposits in banks

$
605


$
51


$
656


$
855


$
(926
)

$
(71
)Federal funds sold


79



(11
)


68



631



(1,358
)


(727
)Securities:Taxable


(2,025
)


(2,147
)


(4,172
)


(4,611
)


(2,185
)


(6,796
)Exempt from federal income taxes


(2,259
)


(492
)


(2,751
)


(1,524
)


33



(1,491
)Loans, net


(1,597
)


(1,407
)


(3,004
)


18,248



(13,218
)


5,030Total interest income


(5,197
)


(4,006
)


(9,203
)


13,599



(17,654
)


(4,055
)Interest expense:Deposits:Money market


1,619



(2,665
)


(1,046
)


2,361



(3,714
)


(1,353
)Savings


68



(9
)


59



49



(254
)


(205
)Time


(901
)


(543
)


(1,444
)


(11
)


(2,847
)


(2,858
)Checking with interest


343



(300
)


43



719



(743
)


(24
)Securities sold under repurchase agreements and other short-term
    borrowings


(236
)


(29
)


(265
)


(810
)


(841
)


(1,651
)Other borrowings


(2,073
)


105



(1,968
)


(2,104
)


416



(1,688
)Total interest expense


(1,180
)


(3,441
)


(4,621
)


204



(7,983
)


(7,779
)Increase in interest differential

$
(4,017
)

$
(565
)

$
(4,582
)

$
13,395


$
(9,671
)

$
3,724   (1)
    Changes attributable to both rate and volume are allocated
    between the rate and volume variances based upon their absolute
    relative weights to the total change.  Net
    Interest Income
  loan-to-value
   39




---



##### Table of Contents



40




---



##### Table of Contents



41




---



##### Table of Contents



2010


2009


2008Average interest rate on:Total average interest earning assets


5.04
%


5.82
%


6.49
%Total average interest bearing liabilities


1.01



1.35



1.99Total interest rate spread


4.03



4.47



4.50     Provision
    for Loan Losses
    Non
    Interest Income
       42




---



##### Table of Contents



Non
    Interest Expense
      2010


2009


2008Employees at December 31,Full Time Employees


438



463



478Part Time Employees


40



35



55   43




---



##### Table of Contents



(000s except percentages)2010


2009


2008Salaries and Employee BenefitsSalaries

$
29,821


$
30,294


$
29,122Payroll Taxes


2,455



2,468



2,357Medical Plans


2,354



2,168



2,356Incentive Compensation Plans


1,816



780



4,839Employee Retirement Plans


1,336



2,536



2,661Other


725



442



522Total

$
38,507


$
38,688


$
41,857Percentage of total non interest expense


51.9
%


52.2
%


58.9
%            44




---



##### Table of Contents



2010


2009


2008(000s except percentages)Other Operating ExpensesStationery and printing

$
711


$
1,160


$
1,619Communications expense


764



779



890Courier expense


861



774



941Other loan expense


2,468



1,961



685Outside services


4,044



3,810



3,123Dues, meetings and seminars


325



289



463Other


2,145



2,084



2,557Total

$
11,318


$
10,857


$
10,278Percentages of total non interest expense


15.3
%


14.6
%


14.5
%       Income
    Taxes
      Financial
    Condition at December 31, 2010 and 2009
  Cash
    and Due from Banks
   45




---



##### Table of Contents



Federal
    Funds Sold
    Securities
    Portfolio
            2010
    (000s)
  GrossUnrealized


Estimated FairClassified as Available for Sale

Amortized Cost


Gains


Losses


ValueU.S. Treasury and government agencies

$
3,001


$
11






$
3,012Mortgage-backed securities  residential


303,479



6,648


$
587



309,540Obligations of states and political subdivisions


111,912



4,170



1



116,081Other debt securities


12,329







7,956



4,373Total debt securities


430,721



10,829



8,544



433,006Mutual funds and other equity securities


10,071



706



116



10,661Total

$
440,792


$
11,535


$
8,660


$
443,667Classified as Held to
    MaturityMortgage-backed securities  residential

$
11,131


$
700


$
1


$
11,830Obligations of states and political subdivisions


5,136



306







5,442Total

$
16,267


$
1,006


$
1


$
17,272  46




---



##### Table of Contents



2009
    (000s)
  GrossUnrealized


Estimated FairClassified as Available for Sale

Amortized Cost


Gains


Losses


ValueU.S. Treasury and government agencies

$
4,995


$
33


$
20


$
5,008Mortgage-backed securities  residential


312,996



5,600



2,208



316,388Obligations of states and political subdivisions


158,465



5,897



91



164,271Other debt securities


14,712



14



9,904



4,822Total debt securities


491,168



11,544



12,223



490,489Mutual funds and other equity securities


9,172



1,109



135



10,146Total

$
500,340


$
12,653


$
12,358


$
500,635Classified as Held to
    MaturityMortgage-backed securities  residential

$
16,515


$
733


$
1


$
17,247Obligations of states and political subdivisions


5,135



346







5,481Total

$
21,650


$
1,079


$
1


$
22,728   2008
    (000s)
  GrossUnrealized


Estimated FairClassified as Available for Sale

Amortized Cost


Gains


Losses


ValueU.S. Treasury and government agencies

$
45,206


$
288


$
79


$
45,415Mortgage-backed securities  residential


371,963



3,487



1,313



374,137Obligations of states and political subdivisions


200,858



2,341



1,710



201,489Other debt securities


20,082



227



8,665



11,644Total debt securities


638,109



6,343



11,767



632,685Mutual funds and other equity securities


9,170



613



105



9,678Total

$
647,279


$
6,956


$
11,872


$
642,363Classified as Held to
    MaturityMortgage-backed securities  residential

$
23,859


$
525


$
78


$
24,306Obligations of states and political subdivisions


5,133



108



1



5,240Total

$
28,992


$
633


$
79


$
29,546     Within 1 Year


After 1 Year but Within 5 Years


After 5 Years Within 10 Years


After 10 Years


TotalAmount


Yield


Amount


Yield


Amount


Yield


Amount


Yield


Amount


YieldU.S. Treasuries and government agencies

$
3,001



0.73
%

























$
3,001



0.73
%Mortgage-backed securities  residential


138,173



4.03
%

$
138,822



2.89
%

$
37,615



3.13
%










314,610



3.42
%Obligations of states and political subdivisions


30,911



7.18
%


42,313



6.33
%


43,771



5.89
%


53



6.97
%


117,048



6.39
%Other debt securities


4,335



1.91
%


















7,994



2.08
%


12,329



0.67
%Total

$
176,420



4.54
%

$
181,135



3.69
%

$
81,386



4.62
%

$
8,047



2.13
%

$
446,988



4.10
%Estimated fair value

$
177,718






$
182,469






$
81,985






$
8,106






$
450,278  47




---



##### Table of Contents



48




---



##### Table of Contents



Loan
    Portfolio
  Real Estate Loans:
       49




---



##### Table of Contents



1-4 unit
  sub-prime loan-to-value
  Commercial and Industrial Loans:
  Loans to Individuals and Leasing:
   50




---



##### Table of Contents




    Increases of $12.7 million and $140.7 million in 2010
    and 2009, respectively, in commercial real estate mortgages. The
    increases were due to increased activity in commercial mortgages,
    Decrease of $81.3 million and an increase of
    $0.9 million in 2010 and 2009, respectively, in
    construction loans. The decrease in 2010 was due to increased
    payoffs, charge-offs and a lower volume of originations. The
    increase in 2009 resulted from a slightly higher volume of
    originations.
    Increases in residential real estate mortgages of
    $12.8 million and $45.1 million in 2010 and 2009,
    respectively, primarily as a result of increased activity
    principally in multi-family loans,
    Decreases of $29.6 million and $83.2 million in 2010
    and 2009, respectively, in commercial and industrial loans. The
    decreases were primarily the result of lower loan volume due to
    the ongoing economic crisis.
    Increases of $6.3 million and $5.5 million in 2010 and
    2009, respectively in other loans, and
    Decrease of $5.0 million and an increase of
    $2.3 million in 2010 and 2009, respectively, in lease
    financings.    (000s)2010


2009


2008


2007


2006Real Estate:Commercial

$
796,253


$
783,597


$
642,923


$
355,044


$
290,185Construction


174,369



255,660



254,837



211,837



252,941Residential


467,326



454,532



409,431



324,488



289,553Commercial and industrial


245,263



274,860



358,076



377,042



355,214Other


33,257



26,970



21,536



29,686



28,777Lease financing


15,783



20,810



18,461



12,463



8,766Total


1,732,251



1,816,429



1,705,264



1,310,560



1,225,436Deferred loan fees


(4,115
)


(5,139
)


(5,116
)


(3,552
)


(3,409
)Allowance for loan losses


(38,949
)


(38,645
)


(22,537
)


(17,367
)


(16,784
)Loans, net

$
1,689,187


$
1,772,645


$
1,677,611


$
1,289,641


$
1,205,243  51




---



##### Table of Contents



(000s except percentages)After 1Within


Year but


After1


Within


5Year


5 Years


Years


Total


PercentLoans:Real Estate  commercial

$
157,441


$
392,856


$
245,956


$
796,253



65.5
%Real Estate  construction


152,923



21,446







174,369



14.3
%Commercial & industrial


104,438



51,194



89,631



245,263



20.2
%Total

$
414,802


$
465,496


$
335,587


$
1,215,885



100.0
%Rate sensitivity:Fixed or predetermined interest rates

$
281,516


$
443,646


$
288,477


$
1,013,639



83.4
%Floating or adjustable interest rates


133,286



21,850



47,110



202,246



16.6
%Total

$
414,802


$
465,496


$
335,587


$
1,215,885



100.0
%Percent


34.1
%


38.3
%


27.6
%


100.0
%       (000s)December 31,2010

2009

2008

2007

2006Loans past due 90 days or more and still accruing

$
1,625


$
6,941


$
7,019


$
3,953


$
3,879Non-accrual loans at period end


43,684



50,590



11,284



10,719



5,572Other real estate owned


11,028



9,211



5,467







Nonperforming loans held for sale


7,811















Additional interest income that would have been recorded if
    these borrowers had complied with contractual terms


4,346



3,032



875



933



474    52




---



##### Table of Contents



(000s except percentages)December 31,2010


2009


2008


2007


2006Loans Past Due 90 Days or More and Still Accruing:Real Estate:Commercial

$
292


$
6,210


$
897


$
1,865



Construction


1,323







5,797






$
894Residential






401



325



767



Total Real Estate


1,615



6,611



7,019



2,632



894Commercial & Industrial


10



273







1,237



2,934Lease Financing and Other






57







84



51Total Loans Past Due 90 Days or More and Still Accruing


1,625



6,941



7,019



3,953



3,879Non-Accrual Loans:Real Estate:Commercial


15,295



20,957



2,241



143



658Construction


15,689



10,057



2,824



4,646



1,799Residential


7,744



15,621



4,618



340



761Total Real Estate


38,728



46,635



9,683



5,129



3,218Commercial & Industrial


4,563



3,821



1,601



5,590



2,346Lease Financing and Other


393



134











8Total Non-Accrual Loans


43,684



50,590



11,284



10,719



5,572Other Real Estate Owned


11,028



9,211



5,467







Nonperforming Assets (excluding loans held for sale)


56,337



66,742



23,770



14,672



9,451Nonperforming loans held for sale


7,811















Total Nonperforming Assets

$
64,148


$
66,742


$
23,770


$
14,672


$
9,451Net charge-offs during period

$
46,223


$
8,198


$
5,855


$
887


$
400Nonperforming assets (excluding loans held for sale to total
    assets at period end


2.11
%


2.50
%


0.94
%


0.63
%


0.41
%Nonperforming assets to total assets at period end


2.40
%


2.50
%


0.94
%


0.63
%


0.41
%      53




---



##### Table of Contents



31-89 days
    loan-to-value sub-prime
   54




---



##### Table of Contents



Form 10-K.
  Allowance for Loan
    Losses
  Allowance
    for Loan Losses
   55




---



##### Table of Contents



(000s)Change





ChangeDecember 31,


During


December 31,


During


December 31,2010


2010


2009


2009


2008ComponentsSpecific:Real Estate:Commercial


















Construction

$
850


$
725


$
125


$
125



Residential


17



(2,461
)


2,478



2,478



Commercial and Industrial


25



(471
)


496



496



Lease Financing and other






(475
)


475



475



Total Specific component


892



(2,682
)


3,574



3,574



Formula:Real Estate:Commercial


16,736



1,463



15,273



7,053



8,220Construction


6,290



613



5,677



2,007



3,670Residential


9,834



2,606



7,228



3,034



4,194Commercial and Industrial


4,265



(2,565
)


6,830



558



6,272Lease Financing and other


932



869



63



(118
)


181Total Formula component


38,057



2,986



35,071



12,534



22,537Total Allowance

$
38,949






$
38,645






$
22,537Net Change






304







16,108Net Charge-offs






(46,223
)






(8,198
)Provision for loan losses





$
46,527






$
24,306  56




---



##### Table of Contents



Change





Change





ChangeDuring


December 31,


During


December 31,


During


December 31,2008


2007


2007


2006


2006


2005ComponentsSpecific:Real Estate:Commercial






















Construction

$
(500
)

$
500


$
500











Residential


(950
)


950



150


$
800






$
800Commercial and Industrial


(207
)


207



(471
)


678


$
525



153Lease Financing and other


(120
)


120



(197
)


317



(30
)


347Total Specific component


(1,777
)


1,777



(18
)


1,795



495



1,300Formula:Real Estate:Commercial


3,993



4,227



550



3,677



678



2,999Construction


509



3,161



(811
)


3,972



732



3,240Residential


1,226



2,968



316



2,652



489



2,163Commercial and Industrial


1,227



5,045



394



4,651



858



3,793Lease Financing and other


(8
)


189



152



37



7



30Total Formula component


6,947



15,590



601



14,989



2,764



12,225Total Allowance





$
17,367






$
16,784






$
13,525Net Change


5,170







583







3,259Amount Acquired


















1,529Net Charge-offs


(5,855
)






(887
)






(400
)Provision for loan losses

$
11,025






$
1,470






$
2,130    57




---



##### Table of Contents



2010
  
    Economic and business conditions  The volatility in
    energy costs and the cost of raw materials used in construction,
    the demand for and value of real estate, the primary collateral
    for the Companys loans, and the level of real estate taxes
    within the Companys market area, together with the general
    state of the economy, trigger economic uncertainty. While there
    continue to be some recent signs of increased activity in the
    real estate sectors of the market, persistent negative effects
    from the unprecedented economic downturn experienced in 2009 and
    2008 have continued to negatively affect the cash flow of many
    of the Companys customers in 2010. In addition,
    significant increases in filings of bankruptcy and foreclosure
    proceedings have overloaded the court systems and have resulted
    in what the Company believes to be unacceptable delays in
    attempts to obtain title to real estate and other collateral
    through conventional foreclosure which has resulted in the
    Company considering alternate strategies for problem loan
    resolution including loan sales. Although current indicators
    show that the economic downturn may have begun to turn around,
    recovery is expected to be a slow process. Also, despite
    evidence of recent improvement, there has been continued
    volatility in housing prices and the availability of mortgage
    financing continues to be limited. After considering the
    significant increase in the historical loss factor resulting
    from the impact of 2010 net charge-offs, the Company has
    continued to include an additional factor for adverse economic
    and business conditions in the determination of the formula
    component of the allowance. The aforementioned factors 58




---



##### Table of Contents



were reduced slightly during 2010 from December 2009 levels due
    to managements judgment of limited improvement in major
    economic indicators, and have remained unchanged since then, due
    to the continuing lag effect of the economic downturn offsetting
    the improvements in the economic indicators.  
    Concentration  The primary collateral for the
    Companys loans is real estate, particularly commercial
    real estate. The economic downturn has had a severe negative
    effect on activity and values throughout the real estate
    industry, which has heightened risk associated with this
    concentration. Therefore, consideration of the changes in levels
    of risk associated with concentrations resulting from adverse
    conditions in the marketplace is part of the determination of
    the formula component of the allowance. As result of
    charge-offs, paydowns and reduced production of new loans,
    concentrations in construction loans have been significantly
    reduced, and concentrations in commercial real estate loans have
    grown slightly. After considering the significant increase in
    the historical loss factor resulting from 2010 net
    charge-offs and the overall reduction in total construction
    loans, in the third quarter the Company slightly reduced the
    additional factor for concentrations in construction compared to
    December 2009. The additional factor for concentration in
    commercial real estate was maintained at the December 2009 level
    as there was no significant change in the concentration.
    Collateral Values  Real estate loans in general have
    taken on a heightened degree of risk during the recent economic
    downturn. Underlying values of real estate have generally
    declined throughout 2010 both nationally and within our local
    market area. Construction loans, in particular, have a higher
    degree of risk than other types of loans which the Company
    makes, since repayment of the loans is generally dependent on
    the borrowers ability to successfully construct and sell
    or lease completed properties. After considering the significant
    increase in the historical loss factor resulting from
    2010 net charge-offs, the Company increased the additional
    factor for real estate values on construction loans and
    commercial real estate loans in the first two quarters of 2010.
    This increase was designed at that time to reflect significant
    valuation adjustments expected to result from the loan sale
    being contemplated as part of the Companys more aggressive
    strategy on loan resolution which began in the second quarter of
    2010. Upon completion of partial charge-offs related to the
    valuation adjustments related to the sale, the additional
    factors were reduced in the third quarter, and maintained for
    the remainder of the 2010 at a level slightly above the amounts
    of December 2009. The additional factor for residential real
    estate values had been higher than that for commercial real
    estate in December 2009 as the impact of the financial downturn
    on the Companys residential portfolio had been felt
    earlier in the cycle. The additional factor however was
    increased in the second quarter of 2010 as certain nonperforming
    residential loans were also being considered for sale. Upon
    completion of partial charge-offs related to the sale, the
    additional factor was reduced in the third quarter, and
    maintained for the remainder of 2010 at the December 2009 level.
    Asset quality  Changes in the amount of nonperforming
    loans, classified loans, delinquencies, and the results of the
    Companys periodic loan review process are also considered
    in the process of determining the formula component. During the
    year ended December 31, 2010, the lagging effects of the
    economic downturn within the economy and our local market area
    have had negative effects on the Companys loans.
    Significant charge-offs have continued to increase the
    historical loss factor used for determination of the formula
    component of the allowance, and continued additions to
    nonperforming assets and fluctuating delinquency, have added
    additional economic uncertainty, although the Company has
    experienced some recent improvement in overall delinquencies.
    After considering the significant increase in the historical
    loss factor resulting from 2010 net charge-offs, in the
    third quarter of 2010 the Company reduced the additional factors
    for charge-offs compared to December 31, 2009 as management
    believes the impact of the level of charge-offs recorded in 2010
    have had more than a sufficient impact on the historical loss
    factor. This level was maintained for the remainder of 2010. The
    additional factors for delinquency and extension risk were
    generally reduced slightly below December 2009 levels by the
    third quarter of 2010, reflective of general improvement in
    delinquency levels after the aggressive resolution strategy
    implemented in the second quarter. This level was maintained in
    the fourth quarter as there was no evidence to warrant further
    adjustment to the factor after considering the combination of
    the increase in the historical loss factor and the changes in
    the delinquency pipeline.
    Nature of Portfolio Volume  We purchase loan
    participations from a number of banks, including some outside
    our primary market area. While we review each loan and make our
    own determination regarding whether to participate in the loan,
    we rely on the other banks knowledge of their customer and
    marketplace. 59




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##### Table of Contents



Due to the severely negative impact that the recent economic
    downturn has had on the financial services industry, risk
    associated with participation with other financial institutions
    has increased. The Company also recognizes potential risk
    differentials between different types of collateral within
    portfolios. Owner occupied versus non owner occupied real estate
    and primary versus secondary liens are examples. The potential
    impact of these factors on any probable losses with respect to
    nature of portfolio volume is considered in the determination of
    the formula component of the allowance for loan losses. Despite
    the significant increase in the historical loss factor resulting
    from 2010 net charge-offs, the Company has maintained or,
    in the case of the additional factor for Commercial Real Estate,
    slightly reduced the additional factors for nature of portfolio
    volume compared to December 31, 2009 in the determination
    of the formula component of the allowance, as it does not
    believe that there has been significant changes in these risk
    factors during 2010.  2009
  
    Economic and business conditions  The volatility in
    energy costs and the cost of raw materials used in construction,
    the demand for and value of real estate, the primary collateral
    for the Companys loans, and the level of real estate taxes
    within the Companys market area, together with the general
    state of the economy, trigger economic uncertainty. During 2009,
    these factors generally continued to worsen, particularly in the
    second quarter. Although there may be indications that the
    economic downturn has bottomed out, we believe any economic
    recovery will be a slow process. In addition, during the fourth
    quarter of 2008 and continuing through 2009, housing prices have
    significantly declined and the availability of mortgage
    financing continues to be limited. We have considered these
    trends in determining the formula component of the allowance for
    loan losses.
    Concentration  The primary collateral for the
    Companys loans is real estate, particularly commercial
    real estate. The current economic downturn has had a severely
    negative effect on activity and values throughout the real
    estate industry, which has heightened risk associated with this
    concentration. Therefore, consideration of the changes in levels
    of risk associated with concentrations resulting from adverse
    conditions in the marketplace is part of the determination of
    the formula component of the allowance.
    Credit risk  Construction loans currently have a
    higher degree of risk than other types of loans which the
    Company makes, since repayment of the loans is generally
    dependent on the borrowers ability to successfully
    construct and sell or lease completed properties. Changes in
    concentration and the associated changes in various risk factors
    are considered in the determination of the formula component of
    the allowance. During the year ended December 31, 2009, the
    market for new construction has continued to slow significantly
    in the Companys primary market area. Houses are taking
    longer to sell and prices have declined. We have considered
    these trends in determining the formula component of the
    allowance for loan losses.
    Asset quality  Changes in the amount of nonperforming
    loans, classified loans, delinquencies, and the results of the
    Companys periodic loan review process are also considered
    in the process of determining the formula component. During the
    year ended December 31, 2009, nonperforming assets and
    delinquencies increased substantially. We believe the overall
    increase in nonperforming assets in 2009 is due to lagging
    effects of the economic downturn within the economy and our
    local market area.
    Loan Participations  We purchase loan participations
    from a number of banks, including some outside our primary
    market area. While we review each loan and make our own
    determination regarding whether to participate in the loan, we
    rely on the other banks knowledge of their customer and
    marketplace. Since many of these relationships are new, we do
    not yet have an established record of performance and,
    therefore, any probable losses with respect to these new loan
    participation relationships is considered in the determination
    of the formula component of the allowance for loan losses  2008
  
    Economic and business conditions  The volatility in
    energy costs and the cost of raw materials used in construction,
    the demand for and value of real estate, the primary collateral
    for the Companys loans, and the level of real estate taxes
    within the Companys market area, together with the general
    state of the economy, trigger economic uncertainty. During the
    year ended December 31, 2008, these factors have generally 60




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##### Table of Contents



worsened. Further deterioration in the economy in general and
    business conditions in the Companys primary market area
    continue. During the fourth quarter, housing prices have
    significantly declined and the availability of mortgage
    financing is limited. We have considered these trends in
    determining the formula component of the allowance for loan
    losses.  
    Credit risk  Construction loans currently have a
    higher degree of risk than other types of loans which the
    Company makes, since repayment of the loans is generally
    dependent on the borrowers ability to successfully
    construct and sell or lease completed properties. Changes in
    concentration and the associated changes in various risk factors
    are considered in the determination of the formula component of
    the allowance. During the year ended December 31, 2008, the
    market for new construction has slowed significantly in the
    Companys primary market area. Houses are taking longer to
    sell and prices have declined. We have considered these trends
    in determining the formula component of the allowance for loan
    losses.
    Asset quality  Changes in the amount of nonperforming
    loans, classified loans, delinquencies, and the results of the
    Companys periodic loan review process are also considered
    in the process of determining the formula component. During the
    year ended December 31, 2008, nonperforming assets
    increased. We believe this increase is due to current trends
    within the economy and our local market area.
    Loan Participations  We will purchase loan
    participations from a number of banks, including some outside
    our primary market area. While we review each loan and make our
    own determination regarding whether to participate in the loan,
    we rely on the other banks knowledge of their customer and
    marketplace. Since many of these relationships are new, we do
    not yet have an established record of performance and,
    therefore, any probable losses with respect to these new loan
    participation relationships is considered in the determination
    of the formula component of the allowance for loan losses. 61




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##### Table of Contents



(000s except percentages)2010


2009


2008


2007


2006Net loans outstanding at end of year

$
1,689,187


$
1,772,645


$
1,677,611


$
1,289,641


$
1,205,243Average net loans outstanding during the year

$
1,714,325


$
1,739,421


$
1,483,196


$
1,233,360


$
1,131,300Allowance for loan losses:Balance, beginning of year

$
38,645


$
22,537


$
17,367


$
16,784


$
13,525Amount acquired


















1,529Provision charged to expense


46,527



24,306



11,025



1,470



2,13085,172



46,843



28,392



18,254



17,184Charge-offs and recoveries during the year:Charge offs:Real estate:Commercial


(13,452
)


(2,790
)


(78
)






Construction


(16,582
)


(1,090
)


(775
)


(237
)


Residential


(14,911
)


(1,173
)


(1,270
)


(16
)


(153
)Commercial and industrial


(3,150
)


(4,404
)


(3,422
)


(649
)


(216
)Lease financing and other


(544
)


(42
)


(632
)


(139
)


(76
)Recoveries:Real estate:Commercial


833















Construction


151



1











Residential


856



14



180



20



Commercial and industrial


535



1,259



65



97



22Lease financing and other


41



27



77



37



23Net charge-offs during the year


(46,223
)


(8,198
)


(5,855
)


(887
)


(400
)Balance, end of year

$
38,949


$
38,645


$
22,537


$
17,367


$
16,784Ratio of net charge-offs to average net loans outstanding during
    the year


2.70
%


0.47
%


0.39
%


0.07
%


0.04
%Ratio of allowance for loan losses to gross loans outstanding at
    end of the year


2.25
%


2.13
%


1.33
%


1.33
%


1.39
%    62




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##### Table of Contents



2010


2009Percentage








Percentageof Loans








of LoansAmount





in each


Amount





in eachof Loan


Loan


Category


of Loan


Loan


CategoryLoss


Amount


by Total


Loss


Amount


by TotalAllowance


By Category


Loans


Allowance


By Category


LoansReal Estate:Commercial

$
16,736


$
796,253



45.97
%

$
15,273


$
783,597



43.14
%Construction


7,140



174,369



10.07
%


5,802



255,660



14.07
%Residential


9,851



467,326



26.98
%


9,706



454,532



25.02
%Commercial & Industrial


4,290



245,263



14.16
%


7,326



274,860



15.13
%Lease Financing & Other


932



49,040



2.82
%


538



47,780



2.64
%Total

$
38,949


$
1,732,251



100.00
%

$
38,645


$
1,816,429



100.00
%   2008


2007Percentage








Percentageof Loans








of LoansAmount





in each


Amount





in eachof Loan


Loan


Category


of Loan


Loan


CategoryLoss


Amount


by Total


Loss


Amount


by TotalAllowance


By Category


Loans


Allowance


By Category


LoansReal Estate:Commercial

$
8,220


$
642,923



37.70
%

$
4,227


$
355,044



27.09
%Construction


3,670



254,837



14.94
%


3,661



211,837



16.16
%Residential


4,194



409,431



24.01
%


3,918



324,488



24.76
%Commercial & Industrial


6,272



358,076



21.00
%


5,252



377,042



28.77
%Lease Financing & Other


181



39,997



2.35
%


309



42,149



3.22
%Total

$
22,537


$
1,705,264



100.00
%

$
17,367


$
1,310,560



100.00
%   2006Percentageof LoansAmount





in eachof Loan


Loan


CategoryLoss


Amount


by TotalAllowance


By Category


LoansReal Estate:Commercial

$
3,677


$
290,185



23.68
%Construction


3,972



252,941



20.64
%Residential


3,452



289,553



23.63
%Commercial & Industrial


5,329



355,214



28.99
%Lease Financing & Other


354



37,543



3.06
%Total

$
16,784


$
1,225,436



100.00
%    63




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##### Table of Contents



Form 10-K.
      Deposits
        (000s)2010


2009Demand deposits

$
756,917


$
686,856Money market accounts


862,450



859,693Savings accounts


120,238



111,393Time deposits of $100,000 or more


144,497



144,817Time deposits of less than $100,000


43,851



61,231Checking with interest


306,459



308,625Total

$
2,234,412


$
2,172,615  64




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##### Table of Contents



December 31,2010


2009Time


Time





Time


TimeDeposits


Deposits


Total


Deposits


Deposits


Totalof $100,000


of $100,000


Time


of $100,000


of $100,000


Timeor More


or Less


Deposits


or More


or Less


Deposits(000s)3 months of less

$
83,069


$
14,544


$
97,613


$
94,450


$
20,140


$
114,590Over three months through 6 months


22,136



9,177



31,313



26,420



13,362



39,782Over 6 months through 12 months


31,778



7,571



39,349



23,705



9,691



33,396Over 12 months


7,514



12,559



20,073



242



18,038



18,280Total

$
144,497


$
43,851


$
188,348


$
144,817


$
61,231


$
206,048         (000s except percentages)Year ended December 31,2010


2009


2008Average


Average


AverageAmount


Rate


Amount


Rate


Amount


RateDemand deposits  Non interest bearing

$
745,290






$
675,953






$
625,630



Money market accounts


926,755



0.87
%


787,347



1.16
%


642,784



1.63
%Savings accounts


115,624



0.49



101,846



0.49



95,296



0.74Time deposits


202,244



1.21



263,065



1.48



263,506



2.56Checking with interest


332,315



0.33



250,314



0.42



149,793



0.72Total

$
2,322,228



0.53
%

$
2,078,525



0.70
%

$
1,777,009



1.07
%      65




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##### Table of Contents



Borrowings
        (000s except percentages)2010

2009

2008Average balance:


Short-term


$
56,899


$
101,818


$
161,749Other borrowings



109,349



153,799



201,687Weighted average interest rate (for the year):


Short-term



0.5
%


0.5
%


1.4
%Other borrowings



4.8



4.7



4.4Weighted average interest rate (at year end):


Short-term



0.3
%


0.2
%


1.0
%Other borrowings



4.5



4.9



4.3Maximum month-end outstanding amount:


Short-term


$
71,822


$
256,084


$
269,585Other borrowings



123,784



196,815



210,844    66




---



##### Table of Contents



and/or
    Borrower-in-Custody
    Capital
    Resources
    Form 10-K.
         67




---



##### Table of Contents



2010

2009

2008Tier 1 capital:Company


13.9
%


13.9
%


10.1
%HVB


12.8



11.4



9.9NYNB


N/A



13.4



10.1Total capital:Company


15.2
%


15.2
%


11.3
%HVB


14.0



12.7



11.1NYNB


N/A



14.7



11.4Leverage:Company


9.6
%


10.2
%


7.5
%HVB


8.8



8.4



7.4NYNB


N/A



8.3



6.7     Liquidity
     68




---



##### Table of Contents



and/or
    Borrower-in-Custody
       69




---



##### Table of Contents



Payments DueAfter


After1


3Year


Yearsbut


butWithin


Within


Within


After1


3


5


5Year


Years


Years


Years


TotalContractual Obligations:(1)Time Deposits

$
168,275


$
13,182


$
6,774


$
117


$
188,348FHLB Borrowings


71,286



77



88



16,300



87,751Operating lease and license obligations


4,159



6,160



5,568



8,521



24,408Total

$
243,720


$
19,419


$
12,430


$
24,938


$
300,507Credit Commitments:Available lines of credit

$
101,457


$
35,222


$
1,936


$
56,439


$
195,054Letters of credit


19,022



7,680











26,702Total

$
120,479


$
42,902


$
1,936


$
56,439


$
221,756               Quarterly
    Results of Operations
    2010 Quarters

2009 QuartersFourth

Third

Second

First

Fourth

Third

Second

FirstInterest income

$
31,196


$
31,537


$
32,510


$
33,096


$
34,194


$
33,839


$
33,910


$
34,636Net interest income


27,537



27,253



27,680



28,186



29,065



28,646



28,179



28,385Provision for loan losses


5,825



6,572



28,548



5,582



7,082



2,732



11,527



2,965Income (loss) before income taxes


6,985



6,102



(16,322
)


6,943



7,527



10,324



(1,150
)


9,621Net income


7,142



4,071



(10,955
)


4,855



5,212



6,898



310



6,592Basic earnings per common share

$
0.41


$
0.23


$
(0.63
)

$
0.28


$
0.32


$
0.53


$
0.02


$
0.52Diluted earnings per common share

$
0.41


$
0.23


$
(0.62
)

$
0.27


$
0.32


$
0.53


$
0.02


$
0.50  70




---



##### Table of Contents



Forward-Looking
    Statements
    Form 10-K
  
    further increases in our non-performing loans and allowance for
    loan losses;
    our ability to manage our commercial real estate portfolio;
    the future performance of our investment portfolio;
    our opportunities for growth, our plans for expansion (including
    opening new branches) and the competition we face in attracting
    and retaining customers;
    economic conditions generally and in our market area in
    particular, which may affect the ability of borrowers to repay
    their loans and the value of real property or other property
    held as collateral for such loans;
    demand for our products and services;
    possible impairment of our goodwill and other intangible assets;
    our ability to manage interest rate risk;
    the regulatory environment in which we operate, our regulatory
    compliance and future regulatory requirements;
    our intention and ability to maintain regulatory capital above
    the levels required by the OCC for the Bank and the levels
    required for us to be well-capitalized, or such
    higher capital levels as may be required;
    proposed legislative and regulatory action affecting us and the
    financial services industry;
    legislative and regulatory actions (including the impact of the
    Dodd-Frank Wall Street Reform and Consumer Protection Act and
    related regulations) subject us to additional regulatory
    oversight which may result in increased compliance costs
    and/or
    require us to change our business model;
    future FDIC special assessments or changes to regular
    assessments;
    our ability to raise additional capital in the future;
    potential liabilities under federal and state environmental
    laws; and
    limitations on dividends payable by the Company or the Bank.   71




---



##### Table of Contents



ITEM 7A
     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
    RISK             72




---



##### Table of Contents



Percentage Change

Percentage Changein Estimated

in EstimatedNet Interest

Net InterestIncome from

Income fromGradual Change in Interest Rates

December 31, 2010

December 31, 2009+200 basis points


1.3
%


2.1
%100 basis points


(1.6
)%


(1.1
)%              73




---



##### Table of Contents



ITEM
    8  FINANCIAL STATEMENTS AND SUPPLEMENTARY
    DATA  INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS
  REPORT OF INDEPENDENT REGISTERED PUBLIC
    ACCOUNTING FIRM


75CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2010 AND
    2009 AND FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED
    DECEMBER 31, 2010:Consolidated Statements of Income


76Consolidated Statements of Comprehensive
    Income


77Consolidated Balance Sheets


78Consolidated Statements of Changes in
    Stockholders Equity


79Consolidated Statements of Cash Flows


80Notes to Consolidated Financial Statements


81  74




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM                     75




---



##### Table of Contents



HUDSON
    VALLEY HOLDING CORP. AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF
    INCOME
 For the years ended December 31,
    2010, 2009 and 2008
 Dollars in thousands, except per share amounts
  2010


2009


2008Interest Income:Loans, including fees

$
107,658


$
110,662


$
105,632Securities:Taxable


13,905



18,077



24,873Exempt from Federal income taxes


5,871



7,659



8,628Federal funds sold


168



100



827Deposits in banks


737



81



152Total interest income


128,339



136,579



140,112Interest Expense:Deposits


12,207



14,595



19,035Securities sold under repurchase agreements and other short-term
    borrowings


271



536



2,187Other borrowings


5,205



7,173



8,861Total interest expense


17,683



22,304



30,083Net Interest Income


110,656



114,275



110,029Provision for loan losses


46,527



24,306



11,025Net interest income after provision for loan losses


64,129



89,969



99,004Non Interest Income:Service charges


6,627



5,914



5,951Investment advisory fees


9,070



7,716



11,181Recognized impairment charge on securities available for sale
    (includes $2,169 and $13,829 of total losses in 2010 and 2009,
    respectively, less $383 of gains and $8,333 of losses recognized
    in other comprehensive income in 2010 and 2009, respectively.)


(2,552
)


(5,496
)


(1,547
)Realized gains on securities available for sale, net


168



52



148Loss on sales of other real estate owned, net


(1,974
)


(251
)


Other income


2,386



2,559



2,871Total non interest income


13,725



10,494



18,604Non Interest Expense:Salaries and employee benefits


38,507



38,688



41,857Occupancy


8,413



8,272



7,490Professional services


5,175



4,447



4,295Equipment


3,986



4,354



4,219Business development


2,035



2,032



2,053FDIC assessment


4,712



5,491



893Other operating expenses


11,318



10,857



10,278Total non interest expense


74,146



74,141



71,085Income Before Income Taxes


3,708



26,322



46,523Income Taxes (Benefit)


(1,405
)


7,310



15,646Net Income

$
5,113


$
19,012


$
30,877Basic Earnings per Common Share

$
0.29


$
1.39


$
2.35Diluted Earnings per Common Share


0.29



1.37



2.27    76




---



##### Table of Contents



HUDSON
    VALLEY HOLDING CORP. AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF
    COMPREHENSIVE INCOME
 For the years ended December 31,
    2010, 2009 and 2008
 Dollars in thousands
  2010


2009


2008Net Income

$
5,113


$
19,012


$
30,877Other comprehensive income (loss), net of tax:Net change in unrealized gains (losses):Other-than-temporarily
    impaired securities available for sale:Total losses


(2,169
)


(13,829
)


(1,547
)Losses recognized in earnings


2,552



5,496



1,547Losses recognized in comprehensive income


383



(8,333
)


Income tax effect


(157
)


3,417



Unrealized holding (gains) losses on
    other-than-temporarily
    impaired securities available for sale, net of tax


226



(4,916
)


Securities available for sale not
    other-than-temporarily
    impaired:Gains (losses) arising during the year


2,365



13,596



(1,909
)Income tax effect


(897
)


(5,546
)


1,0341,468



8,050



(875
)Gains recognized in earnings


(168
)


(52
)


(148
)Income tax effect


67



21



59(101
)


(31
)


(89
)Unrealized holding gains (losses) on securities available for
    sale not
    other-than-temporarily-impaired,
    net of tax


1,367



8,019



(964
)Unrealized holding gain (loss) on securities, net


1,593



3,103



(964
)Minimum pension liability adjustment


243



2,049



309Income tax effect


(97
)


(820
)


(123
)146



1,229



186Other comprehensive income (loss)


1,739



4,332



(778
)Comprehensive Income

$
6,852


$
23,344


$
30,099    77




---



##### Table of Contents



HUDSON
    VALLEY HOLDING CORP. AND SUBSIDIARIES
  CONSOLIDATED BALANCE SHEETS
 December 31, 2010 and 2009
 Dollars in thousands, except per share and share amounts
  2010


2009ASSETSCash and non interest earning due from banks

$
25,876


$
39,321Interest earning deposits in banks


258,280



127,659Federal funds sold


72,071



51,891Securities available for sale, at estimated fair value
    (amortized cost of $440,792 in 2010 and $500,340 in 2009)


443,667



500,635Securities held to maturity, at amortized cost (estimated fair
    value of $17,272 in 2010 and $22,728 in 2009)


16,267



21,650Federal Home Loan Bank of New York (FHLB) stock


7,010



8,470Loans (net of allowance for loan losses of $38,949 in 2010 and
    $38,645 in 2009)


1,689,187



1,772,645Nonperforming loans held for sale


7,811



Accrued interest and other receivables


16,396



15,200Premises and equipment, net


28,611



30,383Other real estate owned


11,028



9,211Deferred income tax, net


25,043



20,957Bank owned life insurance


25,976



24,458Goodwill


23,842



23,842Other intangible assets


2,454



3,276Other assets


15,514



15,958TOTAL ASSETS

$
2,669,033


$
2,665,556LIABILITIESDeposits:Non interest bearing

$
756,917


$
686,856Interest bearing


1,477,495



1,485,759Total deposits


2,234,412



2,172,615Securities sold under repurchase agreements and other short-term
    borrowings


36,594



53,121Other borrowings


87,751



123,782Accrued interest and other liabilities


20,359



22,360TOTAL LIABILITIES


2,379,116



2,371,878Commitments and contingencies (Note 14)STOCKHOLDERS EQUITYPreferred Stock, $0.01 par value; authorized
    15,000,000 shares; no shares outstanding in 2010 and 2009,
    respectively






Common stock, $0.20 par value; authorized
    25,000,000 shares: outstanding 17,665,908 and
    16,016,738 shares in 2010 and 2009, respectively


3,793



3,463Additional paid-in capital


346,750



346,297Retained earnings (deficit)


(3,989
)


2,294Accumulated other comprehensive income (loss)


927



(812
)Treasury stock, at cost; 1,299,414 shares in 2010 and 2009


(57,564
)


(57,564
)TOTAL STOCKHOLDERS EQUITY


289,917



293,678TOTAL LIABILITIES AND STOCKHOLDERS EQUITY

$
2,669,033


$
2,665,556    78




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##### Table of Contents



HUDSON
    VALLEY HOLDING CORP. AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF
    CHANGES IN STOCKHOLDERS EQUITY
 For the years ended December 31,
    2010, 2009 and 2008
 Dollars in thousands, except share amounts
  AccumulatedNumber














Otherof








Additional


Retained


ComprehensiveShares


Common


Treasury


Paid-In


Earnings


IncomeOutstanding


Stock


Stock


Capital


(Deficit)


(Loss)


TotalBalance at January 1, 2008


9,841,890


$
2,091


$
(23,580
)

$
227,173


$
2,369


$
(4,366
)

$
203,687Net income


















30,877







30,877Grants and exercises of stock options, net of tax


395,447



78







12,032











12,110Purchase of treasury stock


(366,365
)






(18,883
)














(18,883
)Sale of treasury stock


12,738







528



142











670Stock dividend


987,899



198







10,782



(10,980
)






Cash dividends ($1.53 per share)


















(20,182
)






(20,182
)Minimum pension liability adjustment, net of tax






















186



186Net unrealized loss on securities available for sale






















(964
)


(964
)Balance at December 31, 2008


10,871,609



2,367



(41,935
)


250,129



2,084



(5,144
)


207,501Net income


















19,012







19,012Sale of common stock ($25.00 per share, gross)


3,993,395



799







92,522











93,321Grants and exercises of stock options, net of tax


30,843



6







815











821Purchase of treasury stock


(334,703
)






(15,631
)














(15,631
)Sale of treasury stock


52







2















2Stock dividend


1,455,542



291







2,831



(3,122
)






Cash dividends ($1.15 per share)


















(15,680
)






(15,680
)Minimum pension liability adjustment, net of tax






















1,229



1,229Net unrealized gain on securities available for sale






















3,103



3,103Balance at December 31, 2009


16,016,738



3,463



(57,564
)


346,297



2,294



(812
)


293,678Net income


















5,113







5,113Grants and exercises of stock options, net of tax


46,584



9







774











783Stock dividend


1,602,586



321







(321
)










Cash dividends ($0.65 per share)


















(11,396
)






(11,396
)Minimum pension liability adjustment, net of tax






















146



146Net unrealized gain on securities available for sale






















1,593



1,593Balance at December 31, 2010


17,665,908


$
3,793


$
(57,564
)

$
346,750


$
(3,989
)

$
927


$
289,917    79




---



##### Table of Contents



HUDSON
    VALLEY HOLDING CORP. AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF
    CASH FLOWS
 For the years ended December 31,
    2010, 2009 and 2008
 Dollars in thousands
  2010


2009


2008Operating Activities:Net income

$
5,113


$
19,012


$
30,877Adjustments to reconcile net income to net cash provided by
    operating activities:Provision for loan losses


46,527



24,306



11,025Depreciation and amortization


3,993



3,864



3,554Recognized impairment charge on securities available for sale


2,552



5,496



1,547Realized gain on security transactions, net


(168
)


(52
)


(148
)Loss on other real estate owned


1,974



251



Amortization of premiums on securities, net


2,120



624



32Increase in cash value of bank owned life insurance


(1,191
)


(1,261
)


(943
)Amortization of other intangible assets


822



821



821Stock option expense and related tax benefits


160



276



2,671Deferred taxes (benefit)


(5,237
)


(9,855
)


(2,777
)(Increase) decrease in deferred loan fees


(1,025
)


24



1,563(Increase) decrease in accrued interest and other receivables


(1,196
)


1,157



(1,105
)Decrease (increase) in other assets


444



(11,367
)


(217
)Excess tax benefits from share based payment arrangements


(13
)


(22
)


(2,075
)(Decrease) increase in accrued interest and other liabilities


(2,001
)


(5,305
)


87Decrease in minimum pension liability adjustment


147



2,055



311Net cash provided by operating activities


53,021



30,024



45,223Investing Activities:(Increase) decrease in short term investments


(20,180
)


(45,212
)


92,375Decrease (increase) in FHLB stock


1,460



12,023



(8,816
)Proceeds from maturities of securities available for sale


250,294



457,550



274,216Proceeds from maturities of securities held to maturity


5,391



7,337



4,800Proceeds from sales of securities available for sale


21,915



8,750



65,506Purchases of securities available for sale


(217,009
)


(325,430
)


(239,115
)Net decrease (increase) in loans


5,754



(126,752
)


(406,025
)Proceeds from sales of loans held for sale


14,053







Proceeds from sales of other real estate owned


6,546



3,393



Net purchases of premises and equipment


(2,221
)


(3,260
)


(7,185
)Premiums paid on bank owned life insurance


(327
)


(344
)


(413
)Increase in goodwill






(2,900
)


(5,565
)Net cash provided by (used in) investing activities


65,676



(14,845
)


(230,222
)Financing Activities:Net increase in deposits


61,797



333,289



26,784Repayment of other borrowings


(36,031
)


(73,031
)


(14,031
)Net (decrease) increase in securities sold under repurchase
    agreements and short term borrowings


(16,527
)


(216,464
)


193,488Proceeds from issuance of common stock


623



93,866



9,439Proceeds from sale of treasury stock






2



670Cash dividends paid


(11,396
)


(15,680
)


(20,182
)Acquisition of treasury stock






(15,631
)


(18,883
)Excess tax benefits from share based payment arrangements


13



22



2,075Net cash provided by (used in) financing activities


(1,521
)


106,373



179,360Increase (Decrease) in Cash and Due from Banks


117,176



121,552



(5,639
)Cash and due from banks, beginning of year


166,980



45,428



51,067Cash and due from banks, end of year

$
284,156


$
166,980


$
45,428Supplemental Disclosures:Interest paid

$
18,300


$
24,364


$
31,396Income tax payments


6,898



15,851



17,751Transfer to loans held for sale


21,864







Transfer to other real estate owned


10,337



8,400



5,467    80




---



##### Table of Contents



HUDSON
    VALLEY HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS
 Dollars in thousands, except per share and share
    amounts
  1  Summary
    of Significant Accounting Policies
  Description of Operations and Basis of
    Presentation 
  Securities  other-than-temporary other-than-temporary
  Loans 
  Allowance for Loan Losses 
 81




---



##### Table of Contents



HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  and/or
        Income Recognition on Loans 
 82




---



##### Table of Contents



HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Premises and Equipment 
  Other Real Estate Owned (OREO) 
  Goodwill and Other Intangible Assets and/or
  Income Taxes 
  Stock-Based Compensation
    Earnings per Common Share 
 83




---



##### Table of Contents



HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
      2010

2009

2008Weighted average common shares:Basic


17,630,814



13,644,736



13,166,931Effect of stock options


56,432



271,332



445,674Diluted


17,687,246



13,916,068



13,612,605     Disclosures About Segments of an Enterprise and Related
    Information 
  Bank Owned Life Insurance 
  Retirement Plans 
  Recent
    Accounting Pronouncements
     84




---



##### Table of Contents



HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    2010-20 Disclosures about the Credit Quality of Financing
    Receivables and the Allowance for Credit Losses.
  Other 
  2  Securities
    (000s)2010


2009Estimated











EstimatedAmortized


Gross Unrealized


Fair


Amortized


Gross Unrealized


FairCost


Gains


Losses


Value


Cost


Gains


Losses


ValueClassified as Available for SaleU.S. Treasury and government agencies

$
3,001


$
11






$
3,012


$
4,995


$
33


$
20


$
5,008Mortgage-backed securities  residential


303,479



6,648


$
587



309,540



312,996



5,600



2,208



316,388Obligations of states and political subdivisions


111,912



4,170



1



116,081



158,465



5,897



91



164,271Other debt securities


12,329







7,956



4,373



14,712



14



9,904



4,822Total debt securities


430,721



10,829



8,544



433,006



491,168



11,544



12,223



490,489Mutual funds and other equity securities


10,071



706



116



10,661



9,172



1,109



135



10,146Total

$
440,792


$
11,535


$
8,660


$
443,667


$
500,340


$
12,653


$
12,358


$
500,635   (000s)2010


2009Estimated











EstimatedAmortized


Gross Unrealized


Fair


Amortized


Gross Unrealized


FairCost


Gains


Losses


Value


Cost


Gains


Losses


ValueClassified as Held to MaturityMortgage-backed securities  residential

$
11,131


$
700


$
1


$
11,830


$
16,515


$
733


$
1


$
17,247Obligations of states and political subdivisions


5,136



306







5,442



5,135



346







5,481Total

$
16,267


$
1,006


$
1


$
17,272


$
21,650


$
1,079


$
1


$
22,728  85




---



##### Table of Contents



HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  other-than-temporary
  other-than-temporary
  other-than-temporary
  Annual prepayment

1.00%Projected specific defaults/deferrals

27.1% - 81.0%Projected severity of loss on specific defaults/deferrals

28.8% - 95.0%Projected additional defaults:Year 1

2.00%Year 2

1.00%Thereafter

0.25%Projected severity of loss on additional defaults

85.00%Range of present value discount rates

3m LIBOR+1.60%-2.25%     2010


2009Balance at beginning of year

$
6,558


$
1,062Credit related impairment not previously recognized


304



5,492Increases to the amount related to the credit loss for which
    other-than-temporary impairment was previously recognized


2,248



4Balance at end of year

$
9,110


$
6,558    86




---



##### Table of Contents



HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
      available-for-sale.
    December 31,
    2010
 Duration of Unrealized LossGreater thanLess than 12 Months


12 Months


TotalGross





Gross





GrossFair


Unrealized


Fair


Unrealized


Fair


UnrealizedValue


Loss


Value


Loss


Value


LossClassified as Available for SaleU.S. Treasuries and government agencies






















Mortgage-backed securities  residential

$
72,105


$
587










$
72,105


$
587Obligations of states and political subdivisions


461



1











461



1Other debt securities









$
4,193


$
7,956



4,193



7,956Total debt securities


72,566



588



4,193



7,956



76,759



8,544Mutual funds and other equity securities










118



116



118



116Total temporarily impaired securities

$
72,566


$
588


$
4,311


$
8,072


$
76,877


$
8,660Classified as Held to MaturityMortgage-backed securities  residential

$
400


$
1










$
400


$
1Total temporarily impaired securities

$
400


$
1










$
400


$
1  87




---



##### Table of Contents



HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  December 31,
    2009
 Duration of Unrealized LossGreater thanLess than 12 Months


12 Months


TotalGross





Gross





GrossFair


Unrealized


Fair


Unrealized


Fair


UnrealizedValue


Loss


Value


Loss


Value


LossClassified as Available for SaleU.S. Treasuries and government agencies









$
2,980


$
20


$
2,980


$
20Mortgage-backed securities  residential

$
94,211


$
2,208











94,211



2,208Obligations of states and political subdivisions


2,055



12



2,889



79



4,944



91Other debt securities










4,433



9,904



4,433



9,904Total debt securities


96,266



2,220



10,302



10,003



106,568



12,223Mutual funds and other equity securities










128



135



128



135Total temporarily impaired securities

$
96,266


$
2,220


$
10,430


$
10,138


$
106,696


$
12,358Classified as Held to MaturityMortgage-backed securities  residential

$
489


$
1


$



$



$
489


$
1Total temporarily impaired securities

$
489


$
1


$



$



$
489


$
1       Available for Sale


Held to MaturityAmortized


Fair


Amortized


FairCost


Value


Cost


ValueContractual MaturityWithin 1 year

$
9,065


$
9,132







After 1 but within 5 years


32,484



34,007







After 5 years but within 10 years


69,642



72,161


$
5,136


$
5,442After 10 years


16,051



8,166







Mortgaged-back Securities


303,479



309,540



11,131



11,830Total

$
430,721


$
433,006


$
16,267


$
17,272  88




---



##### Table of Contents



HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  3  Credit
    Commitments and Concentrations of Credit Risk
    2010

2009Contract

ContractAmount

AmountCredit commitments-variable

$
158,788


$
237,733Credit commitments-fixed


36,266



37,094Guarantees written


26,702



27,847           Residential


CommercialProperty


Property


Total2010Loans

$
555,816


$
970,301


$
1,526,117Credit commitments


62,865



54,153



117,018$
618,681


$
1,024,454


$
1,643,1352009Loans

$
665,249


$
1,037,286


$
1,702,535Credit commitments


102,224



79,950



182,174$
767,473


$
1,117,236


$
1,884,709    89




---



##### Table of Contents



HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  4  Loans
    December 312010


2009Real Estate:Commercial

$
796,253


$
783,597Construction


174,369



255,660Residential


467,326



454,532Commercial and industrial


245,263



274,860Lease financing and other


49,040



47,780Total


1,732,251



1,816,429Deferred loan fees


(4,115
)


(5,139
)Allowance for loan losses


(38,949
)


(38,645
)Loans, net

$
1,689,187


$
1,772,645       December 312010


2009


2008Balance, beginning of year

$
38,645


$
22,537


$
17,367Add (deduct):Provision for loan losses


46,527



24,306



11,025Recoveries on loans previously charged-off


2,416



1,301



322Charge-offs


(48,639
)


(9,499
)


(6,177
)Balance, end of year

$
38,949


$
38,645


$
22,537  90




---



##### Table of Contents



HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    LeaseCommercial





Residential


Commercial &


FinancingTotal


Real Estate


Construction


Real Estate


Industrial


& Other2010Balance at beginning of year

$
38,645


$
15,273


$
5,802


$
9,706


$
7,326


$
538Charge-offs


(48,639
)


(13,452
)


(16,582
)


(14,911
)


(3,150
)


(544
)Recoveries


2,416



833



151



856



535



41Net Charge-offs


(46,223
)


(12,619
)


(16,431
)


(14,055
)


(2,615
)


(503
)Provision for loan losses


46,527



14,082



17,769



14,200



(421
)


897Net change during the year


304



1,463



1,338



145



(3,036
)


394Balance at end of year

$
38,949


$
16,736


$
7,140


$
9,851


$
4,290


$
932         Unpaid





Allowance forPrincipal


Recorded


Loan LossesBalance


Investment


AllocatedWith no related allowance recorded:Commercial

$
22,714


$
21,166



Construction


16,985



11,868



Residential


11,476



7,223



Commercial & industrial


5,543



4,538



Lease financing & other


651



393



With an allowance recorded:Commercial










Construction


3,821



3,821


$
850Residential


521



521



17Commercial & industrial


25



25



25Lease financing & other










Total loans

$
61,736


$
49,555


$
892  91




---



##### Table of Contents



HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    LeaseCommercial





Residential


Commercial &


FinancingTotal


Real Estate


Construction


Real Estate


Industrial


& OtherAllowance for loan losses:Ending balance attributed to loans:Collectively evaluated for impairment

$
38,057


$
16,736


$
6,290


$
9,834


$
4,265


$
932Individually evaluated for impairment


892







850



17



25



Total ending balance of allowance

$
38,949


$
16,736


$
7,140


$
9,851


$
4,290


$
932Total loans:Ending balance of loans:Collectively evaluated for impairment

$
1,682,696


$
775,087


$
158,680


$
459,582


$
240,700


$
48,647Individually evaluated for impairment


49,555



21,166



15,689



7,744



4,563



393Total ending balance of loans

$
1,732,251


$
796,253


$
174,369


$
467,326


$
245,263


$
49,040     2010

2009

2008Total non-accrual loans

$
43,684


$
50,590


$
11,284Interest income that would have been recorded under the original
    contract terms


4,346



3,032



875    92




---



##### Table of Contents



HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    2010


2009Past Due





Past Due90 Days





90 Daysand Still





and StillNon-Accrual


Accruing


Non-Accrual


AccruingLoans:Commercial Real Estate:Owner occupied

$
1,942


$
292


$
7,682


$
5,244Non owner occupied


13,353







13,275



966Construction:Commercial


4,477



1,323



4,889



Residential


11,212







5,168



Residential:Multifamily


1,437







1,135



1-4 family


4,649







13,084



401Home equity


1,658







1,402Commercial & Industrial


4,563



10



3,821



273Other:Lease financing and other


393







134



57Overdrafts














Total

$
43,684


$
1,625


$
50,590


$
6,941     90 Days31-59 Days


60-89 Days


or More


TotalTotal


Past Due


Past Due


Past Due


Past Due


CurrentLoans:Commercial Real Estate:Owner occupied

$
317,926


$
100


$
3,204


$
2,234


$
5,538


$
312,388Non owner occupied


478,327



4,199



7,014



8,899



20,112



458,215Construction:Commercial


104,466







2,913



5,799



8,712



95,754Residential


69,903







3,821



7,390



11,211



58,692Residential:Multifamily


152,295



1,160



1,132



1,437



3,729



148,5661-4 family


187,728



1,096



2,064



4,211



7,371



180,357Home equity


127,303



721



1,240



1,657



3,618



123,685Commercial & Industrial


245,263



2,258



738



2,414



5,410



239,853Other:Lease financing and other


45,096



219



70



323



612



44,484Overdrafts


3,944



















3,944Total

$
1,732,251


$
9,753


$
22,196


$
34,364


$
66,313


$
1,665,938  93




---



##### Table of Contents



HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
      Special Mention
  Substandard
  Doubtful
      SpecialTotal


Pass


Mention


Substandard


DoubtfulCommercial Real Estate:Owner occupied

$
317,926


$
247,210


$
25,164


$
45,552



Non owner occupied


478,327



406,949



42,552



25,826


$
3,000Construction:Commercial


104,466



79,861



5,426



19,179



Residential


69,903



48,777







21,126



Residential:Multifamily


152,295



139,725



2,620



9,950



1-4 family


91,761



67,401



12,342



12,018



Home equity


12,135



6,715



249



5,171



Commercial & Industrial


245,262



218,088



11,559



15,615



Other:Lease Financing & Other


43,570



41,502



332



1,736



Total loans

$
1,515,645


$
1,256,228


$
100,244


$
156,173


$
3,000    94




---



##### Table of Contents



HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    31-59 Days


60-89 Days


TotalTotal


Past Due


Past Due


Past Due


CurrentResidential:1-4 family

$
95,968


$
1,090


$
413


$
1,503


$
94,465Home equity


115,167



342







342



114,825Other:Other loans


1,527















1,527Overdrafts


3,944















3,944Total loans

$
216,606


$
1,432


$
413


$
1,845


$
214,761   Loans
    Held for Sale
  held-for-sale
  5  Premises
    and Equipment
    December 312010


2009Land

$
2,589


$
2,589Buildings


22,869



22,392Leasehold improvements


12,590



12,034Furniture, fixtures and equipment


18,189



17,315Automobiles


838



734Total


57,075



55,064Less accumulated depreciation and amortization


(28,464
)


(24,681
)Premises and equipment, net

$
28,611


$
30,383     6  Goodwill
    and Other Intangible Assets
     95




---



##### Table of Contents



HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
      2010


2009Gross





GrossCarrying


Accumulated


Carrying


AccumulatedAmount


Amortization


Amount


AmortizationDeposit Premium

$
3,907


$
2,791


$
3,907


$
2,232Customer Relationships


2,470



1,188



2,470



998Employment Related


516



460



516



387Total

$
6,893


$
4,439


$
6,893


$
3,617     Year

Amount2011

$
8032012


7482013


1902014


1902015


190     Balance at December 31, 2008

$
20,942Performance-based payment


2,900Balance at December 31, 2009

$
23,842Balance at December 31, 2010

$
23,842     7  Deposits
    (000s)2010


2009Demand deposits

$
756,917


$
686,856Money Market accounts


862,450



859,693Savings accounts


120,238



111,393Time deposits of $100,000 or more


144,497



144,817Time deposits of less than $100,000


43,851



61,231Checking with interest


306,459



308,625Total Deposits

$
2,234,412


$
2,172,615      96




---



##### Table of Contents



HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Year

Amount2011

$
168,2752012


9,9402013


3,2432014


2,9352015


3,839   8  Borrowings
        2010

2009

2008Average balance:Short-term

$
56,899


$
101,818


$
161,749Other Borrowings


109,349



153,799



201,687Weighted average interest rate (for the year):Short-term


0.5
%


0.5
%


1.4
%Other Borrowings


4.8



4.7



4.4Weighted average interest rate (at year end):Short-term


0.3
%


0.2
%


1.4
%Other borrowings


4.5



4,9



4.4
%Maximum month-end outstanding amount:Short-term

$
71,822


$
256,084


$
269,585Other Borrowings


123,784



196,815



210,844   and/or
   97




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##### Table of Contents



HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Borrower-in-Custody
      9  Income
    Taxes
    Years Ended December 312010


2009


2008Income tax at statutory rate

$
1,298



35.0
%

$
9,213



35.0
%

$
16,283



35.0
%State income tax, net of Federal benefit


(85
)


(0.9
)


977



3.7



2,330



5.0Tax-exempt interest income


(2,307
)


(51.4
)


(2,566
)


(9.7
)


(2,832
)


(6.1
)Non-deductible expenses and other


(311
)


(6.9
)


(314
)


(1.2
)


(135
)


(0.3
)Provision for income taxes

$
(1,405
)


(24.3
)%

$
7,310



27.8
%

$
15,646



33.6
%     Years Ended December 312010


2009


2008Federal:Current

$
2,771


$
13,543


$
14,278Deferred


(4,046
)


(7,736
)


(2,217
)State and Local:Current


994



3,622



4,144Deferred


(1,124
)


(2,119
)


(559
)Total

$
(1,405
)

$
7,310


$
15,646  98




---



##### Table of Contents



HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    December 31, 2010


December 31, 2009Asset


Liability


Asset


LiabilityAllowance for loan losses

$
20,348






$
15,470



Supplemental pension benefit


4,073







3,871



Other


4,065







2,966



Interest on non-accrual loans


1,232







1,576



Accrued benefit liability


601







698



Deferred compensation


264







275



Share based compensation costs


134







129



Intangible Assets





$
2,902






$
2,413Property and equipment






1,725







1,555Securities available for sale






1,047







60Total

$
30,717


$
5,674


$
24,985


$
4,028Net deferred tax asset

$
25,043






$
20,957           10  Stockholders
    Equity
   99




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##### Table of Contents



HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
      Minimum to beMinimum for

Well Capitalized

EnhancedCapital Adequacy

Under Prompt

CapitalActual

Purposes

Corrective Action

RequirementCapital Ratios:

Amount

Ratio

Amount

Ratio

Amount

Ratio

Amount

RatioHVB Only:As of December 31, 2010:Total Capital (To Risk Weighted Assets)

$
264,574



14.0
%

$
150,768



8.0
%

$
188,460



10.0
%

$
226,152



12.0
%Tier 1 Capital (To Risk Weighted Assets)


240,834



12.8
%


75,384



4.0
%


113,076



6.0
%


188,460



10.0
%Tier 1 Capital (To Average Assets)


240,834



8.8
%


109,191



4.0
%


136,489



5.0
%


218,383



8.0
%As of December 31, 2009:Total Capital (To Risk Weighted Assets)

$
233,080



12.7
%

$
146,999



8.0
%

$
183,749



10.0
%

$
220,499



12.0
%Tier 1 Capital (To Risk Weighted Assets)


210,102



11.4
%


73,500



4.0
%


110,249



6.0
%


183,749



10.0
%Tier 1 Capital (To Average Assets)


210,102



8.4
%


99,682



4.0
%


124,602



5.0
%


199,363



8.0
%NYNB Only:As of December 31, 2009:Total Capital (To Risk Weighted Assets)

$
11,775



14.7
%

$
6,404



8.0
%

$
8,005



10.0
%

$
9,606



12.0
%Tier 1 Capital (To Risk Weighted Assets)


10,675



13.4
%


3,202



4.0
%


4,803



6.0
%


8,005



10.0
%Tier 1 Capital (To Average Assets)


10,675



8.3
%


5,185



4.0
%


6,482



5.0
%


10,371



8.0
%   100




---



##### Table of Contents



HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Minimum forCapital AdequacyActual

PurposesAmount

Ratio

Amount

RatioConsolidated:As of December 31, 2010:Total Capital (To Risk Weighted Assets)

$
286,144



15.2
%

$
150,810



8.0
%Tier 1 Capital (To Risk Weighted Assets)


262,389



13.9
%


75,405



4.0
%Tier 1 Capital (To Average Assets)


262,389



9.6
%


109,277



4.0
%As of December 31, 2009:Total Capital (To Risk Weighted Assets)

$
290,633



15.2
%

$
153,335



8.0
%Tier 1 Capital (To Risk Weighted Assets)


267,120



13.9
%


76,667



4.0
%Tier 1 Capital (To Average Assets)


267,120



10.2
%


105,016



4.0
%     Rule 15c3-1
  Stock
    Dividend
    11  Stock-Based
    Compensation
   101




---



##### Table of Contents



HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
   WeightedAggregate

AverageShares

Weighted Average

Intrinsic

RemainingUnderlying

Exercise Price

Value(1)

ContractualOutstanding Options

Options

Per Share

($000s)

Term (Yrs.)As of December 31, 2009


793,925


$
23.13Granted






Cancelled or expired


(45,925
)


21.60Exercised


(47,930
)


12.98As of December 31, 2010


700,070


$
23.93



2,645



3.2Exercisable as of December 31, 2010


658,646


$
23.16



2,645



3.2Available for future grant


1,210,000    (1)
    The aggregate intrinsic value of a stock option in the table
    above represents the total pre-tax intrinsic value (the amount
    by which the current market value of the underlying stock
    exceeds the exercise price of the option) that would have been
    received by the option holders had all option holders exercised
    their options on December 31, 2010. This amount changes
    based on changes in the market value of the Companys stock.   Weighted AverageNumber

Remainingof

Life

ExerciseExercise Price

Options

(yrs)

Price$
13.03


$
18.94



211,678



1.9


$
16.7818.95



26.09



260,740



3.9



21.3226.10



45.40



227,652



3.6



33.57Total Options Outstanding


13.03



45.40



700,070



3.2



23.93Exercisable


13.03



45.40



658,646



3.2



23.16Not Exercisable


26.12



45.40



41,424



2.8



36.09     Year EndedDecember 312008Weighted average assumptions:Dividend yield


3.3
%Expected volatility


67.6
%Risk-free interest rate


0.3
%Expected lives (in years)


0.4      102




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##### Table of Contents



HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    12  Fair
    Value
    Level 1:
  Level 2:
  Level 3:
       103




---



##### Table of Contents



HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Fair Value Measurements at December 31, 2010 Using:Quoted Prices in


Significant


SignificantActive Markets


Other


Unobservablefor Identical


Observable Inputs


InputsAssets (Level 1)


(Level 2)


(Level 3)


TotalMeasured on a recurring basis:Available for sale securitiesU.S. Treasury and government agencies





$
3,012






$
3,012Mortgage-backed securities  residential






309,540







309,540Obligations of states and political subdivisions






116,081







116,081Other debt securities






686


$
3,687



4,373Mutual funds and other equity securities






10,661







10,661Total assets at fair value





$
439,980


$
3,687


$
443,667Measured on a non-recurring basis:Impaired loans(1)









$
18,594


$
18,594Loans held for sale(2)










7,811



7,811Other real estate owned(3)










11,028



11,028Total assets at fair value









$
37,433


$
37,433     (1)
    
    Impaired loans are reported at the fair value of the underlying
    collateral if repayment is expected solely from the collateral.
    Collateral values are estimated using Level 2 and
    Level 3 inputs which include independent appraisals and
    internally customized discounting criteria. The recorded
    investment in impaired loans subject to fair value reporting on
    December 31, 2010 was $19,486 for which a specific
    allowance of $892 has been established within the allowance for
    loan losses. The fair values were based on internally customized
    discounting criteria of the collateral and thus classified as
    Level 3 fair values.(2)
    
    Loans held for sale are reported at lower of cost or fair value.
    Fair value is based on average bid indicators received from
    third parties expected to participate in the loans sales.(3)
    
    Other real estate owned is reported at fair value less
    anticipated costs to sell. Fair value is based on third party or
    internally developed appraisals which, considering the
    assumptions in the valuation, are considered Level 2 or
    Level 3 inputs. The fair value of other real estate owned
    at December 31, 2010 was derived by management from
    appraisals which used various assumptions and were discounted as
    necessary, resulting in a Level 3 classification.  104




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##### Table of Contents



HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Fair Value Measurements at December 31, 2009 Using:Quoted Prices in


Significant


SignificantActive Markets


Other


Unobservablefor Identical


Observable Inputs


InputsAssets (Level 1)


(Level 2)


(Level 3)


TotalMeasured on a recurring basis:Available for sale securitiesU.S. Treasury and government agencies





$
5,008






$
5,008Mortgage-backed securities






316,388







316,388Obligations of states and political subdivisions






164,271







164,271Other debt securities






884


$
3,938



4,822Mutual funds and other equity securities






10,146







10,146Total assets at fair value





$
496,697


$
3,938


$
500,635Measured on a non-recurringbasisImpaired loans(1)









$
16,921


$
16,921Other real estate owned(2)










9,211



9,211Total assets at fair value









$
26,132


$
26,132     (1)
    
    Impaired loans are reported at the fair value of the underlying
    collateral if repayment is expected solely from the collateral.
    Collateral values are estimated using Level 2 and Level 3 inputs
    which include independent appraisals and internally customized
    discounting criteria. The recorded investment in impaired loans
    subject to fair value measurement on December 31, 2009 was
    $20,494 for which a specific allowance of $3,573 has been
    established within the allowance for loan losses.(2)
    
    Other real estate owned is reported at fair value less
    anticipated costs to sell. Fair value is based on third party or
    internally developed appraisals which, considering the
    assumptions in the valuation, are considered Level 2 or Level 3
    inputs. The fair value of other real estate owned at
    December 31, 2009 was derived by management from appraisals
    which used various assumptions and were discounted as necessary,
    resulting in a Level 3 classification.    Level 3 AssetsMeasured on a RecurringBasis For the Year EndedDecember 31,2010


2009(000s)Balance at beginning of period

$
3,938


$
10,786Transfers into (out of) Level 3


367



174Net unrealized gain (loss) included in other comprehensive
    income(1)


1,934



(1,526
)Principal payments






Recognized impairment charge included in the statement of
    income(2)


(2,552
)


(5,496
)Balance at end of period

$
3,687


$
3,938     (1)
    
    Reported under Unrealized (loss) gain on securities
    available for sale arising during the period.(2)
    
    Reported under Recognized impairment charge on securities
    available for sale, net. 105




---



##### Table of Contents



HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  13  Benefit
    Plans
            2010


2009


2008Change in benefit obligation:Benefit obligation at beginning of year

$
11,161


$
11,754


$
11,570Service cost


296



1,006



448Interest cost


596



560



621Amendments






(1,156
)


(861
)Actuarial (gain) loss


164



(336
)


587Benefits paid


(803
)


(668
)


(611
)Benefit obligation at end of year


11,414



11,160



11,754 106




---



##### Table of Contents



HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  2010


2009


2008Change in plan assets:Fair value of plan assets at beginning of year










Actual return on assets










Employer contributions


803



668



611Benefits paid


(803
)


(668
)


(611
)Fair value of plan assets at end of year










Funded  status at year end

$
(11,414
)

$
(11,160
)

$
(11,754
)     2010


2009Net actuarial loss

$
2,184


$
2,618Prior service cost


(681
)


(872
)$
1,503


$
1,746     2010


2009Weighted average assumptions:Discount rate


5.25
%


5.25
%Expected return on plan assets






Rate of compensation increase


3.00
%


3.00
%Components of net periodic benefit cost and other amounts
    recognized in other comprehensive income:Service cost

$
296


$
1,006Interest cost


596



560Expected return on plan assets






Amortization of transition obligation






Amortization of prior service cost


(191
)


(191
)Amortization of net loss


598



748Net periodic benefit cost

$
1,299


$
2,123Net (gain) loss


(434
)


(2,240
)Amortization of prior service cost


191



191Total recognized in other comprehensive income


(243
)


(2,049
)Total recognized in net periodic benefit cost and other
    comprehensive income

$
1,056


$
74    107




---



##### Table of Contents



HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Year

Pension Benefits2011

$
6122012


8332013


1,1102014


1,0882015


1,088Years 2016-2020


4,884    14  Commitments,
    Contingent Liabilities and Other Disclosures
    Year

Amount2011

$
4,1592012


3,2052013


2,9552014


2,8022015


2,766Thereafter


8,521Total minimum future rentals

$
24,408         Cash
    Reserve Requirements
    Restrictions
    on Funds Transfers
    15  Segment
    Information
   108




---



##### Table of Contents



HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
      16  Fair
    Value of Financial Instruments
      December 312010

2009Carrying

Estimated

Carrying

EstimatedAmount

Fair Value

Amount

Fair Value(In millions)Assets:Financial assets for which carrying value approximates fair value

$
356.2


$
356.2


$
218.9


$
218.9Held to maturity securities and accrued interest


16.3



17.3



21.7



22.8FHLB Stock


7.0



N/A



8.5



N/ALoans and accrued interest


1,717.8



1,759.8



1,770.4



1,769.9Liabilities:Deposits with no stated maturity and accrued interest


2,047.4



2,047.4



1,968.3



1,968.3Time deposits and accrued interest


188.5



188.9



206.3



205.9Securities sold under repurchase agreements and other short-term
    borrowings and accrued interest


36.6



36.6



53.1



53.1Other borrowings and accrued interest


88.2



85.6



124.4



119.2     Financial assets for which carrying value approximates fair
    value
  Held to maturity securities and accrued
    interest
  FHLB Stock
 109




---



##### Table of Contents



HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Loans and accrued interest
  Deposits with no stated maturity and accrued
    interest
  Time deposits and accrued interest
  Securities sold under repurchase agreements and other
    short-term borrowings and accrued
    interest
  Other borrowings and accrued
    interest
  17  Condensed
    Financial Information of Hudson Valley Holding Corp.
 (Parent Company Only)
  Condensed Balance Sheets
    2010


2009AssetsCash

$
19,895


$
46,707Investment in subsidiaries


269,469



246,214Other assets


29



72Equity securities


1,133



1,521Total Assets

$
290,526


$
294,514Liabilities and Stockholders EquityOther liabilities

$
609


$
836Stockholders equity


289,917



293,678Total Liabilities and Stockholders Equity

$
290,526


$
294,514   Condensed
    Statements of Income
    2010


2009


2008Dividends from subsidiaries

$
7


$
24,354


$
28,208Dividends from equity securities


77



78



85Other income










Operating expenses


720



243



344Income before equity in undistributed earnings in the
    subsidiaries


(636
)


24,189



27,949Equity in (overdistributed) undistributed earnings of the
    subsidiaries


5,749



(5,177
)


2,928Net Income

$
5,113


$
19,012


$
30,877  110




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##### Table of Contents



HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Condensed
    Statements of Cash Flows
    2010


2009


2008Operating Activities:Net income

$
5,113


$
19,012


$
30,877Adjustments to reconcile net income to net cash provided by
    operating activities:Equity in overdistributed (undistributed) earnings of the
    subsidiaries


(5,749
)


5,177



(2,928
)Increase in other assets


(119
)


118



(95
)Increase (decrease) in other liabilities


43



48



18Other changes, net


1



11



Net cash (used in) provided by operating activities


(711
)


24,366



27,872Investing Activities:Capital contribution to subsidiaries


(15,350
)


(44,000
)


Proceeds from sales of equity securities


22







2Purchase of equity securities






(3
)


(85
)Net cash (used in) provided by investing activities


(15,328
)


(44,003
)


(83
)Financing Activities:Proceeds from issuance of common stock and sale of treasury stock


623



93,868



10,109Purchase of treasury stock






(15,631
)


(18,883
)Cash dividends paid


(11,396
)


(15,680
)


(20,182
)Net cash (used in) provided by financing activities


(10,773
)


62,557



(28,956
)Increase (decrease) Cash and Due from Banks


(26,812
)


42,920



(1,167
)Cash and due from banks, beginning of year


46,707



3,787



4,954Cash and due from banks, end of year

$
19,895


$
46,707


$
3,787  111




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##### Table of Contents



ITEM 9  CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE    ITEM 9A.  CONTROLS
    AND PROCEDURES    Managements
    Report on Internal Control Over Financial Reporting
  Rules 13a-15(f) 15d-15(f)
         ITEM 9B.  OTHER
    INFORMATION   112




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##### Table of Contents



PART
    III  ITEM 10.  DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE   ITEM 11.  EXECUTIVE
    COMPENSATION   ITEM 12.  SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT, AND
    RELATED STOCKHOLDER MATTERS      Number of



Number ofShares to



Shares Remainingbe Issued



Available forUpon Exercise

Weighted-Average Exercise

Future Issuance Underof

Price of

Equity CompensationPlan Category

Outstanding Options

Outstanding Options

PlansEquity compensation plans approved by stockholders


658,646


$
23.16



1,210,000Equity compensation plans not approved by stockholders










   Form 10-K.
 ITEM
    13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,
    AND DIRECTOR INDEPENDENCE   ITEM
    14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES   113




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##### Table of Contents



PART
    IV  ITEM 15.  EXHIBITS
    AND FINANCIAL STATEMENT SCHEDULES  1. Financial
    Statements
    
    Report of Independent Registered Public Accounting Firm
    Consolidated Statements of Income for the Years Ended
    December 31, 2010, 2009 and 2008
    Consolidated Statements of Comprehensive Income for the Years
    Ended December 31, 2010, 2009 and 2008
    Consolidated Balance Sheets at December 31, 2010 and 2009
    Consolidated Statements of Changes in Stockholders Equity
    for the Years Ended December 31, 2010, 2009 and 2008
    Consolidated Statements of Cash Flows for the Years Ended
    December 31, 2010, 2009 and 2008
    Notes to Consolidated Financial Statements  2. Financial
    Statement Schedules
   114




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##### Table of Contents



3. Exhibits
    Required by Securities and Exchange Commission Regulation
    S-K
  Number


Exhibit Title3
.1


Restated Certificate of Incorporation of Hudson Valley Holding
    Corp.(4)3
.2


Amended and Restated By-Laws of Hudson Valley Holding
    Corp.(5)4
.1


Specimen of Common Stock
    Certificate(3)10
.1


Hudson Valley Bank Amended and Restated Directors Retirement
    Plan Effective December 31,
    2008*(6)10
.2


Hudson Valley Bank Restated and Amended Supplemental Retirement
    Plan of
    1995*(3)10
.3


Form of Amendment No. 1 to Hudson Valley Bank Restated and
    Amended Supplemental Retirement Plan of
    1995*(7)10
.4


Hudson Valley Bank Supplemental Retirement Plan of
    1997*(3)10
.5


Form of Amendment No. 1 to Hudson Valley Bank Supplemental
    Retirement Plan of
    1997*(7)10
.6


Form of Amendment No. 2 to Hudson Valley Bank Supplemental
    Retirement Plan of 1995 and
    1997*(7)10
.7


Form of Amendment No. 3 to Hudson Valley Bank Supplemental
    Retirement Plan of 1995 and
    1997*(7)10
.8


Amended and Restated 2002 Stock Option
    Plan*(6)10
.9


Specimen Non-Statutory Stock Option
    Agreement*(3)10
.10


Specimen Incentive Stock Option
    Agreement*(1)10
.11


Consulting Agreement Between the Company and Director
    John A.
    Pratt, Jr.*(3)10
.12


Hudson Valley Holding Corp. 2010 Omnibus Incentive
    Plan*(8)11



Statements re: Computation of Per Share
    Earnings(9)12



Computation of Ratios of Earnings to Fixed
    Charges(9)21



Subsidiaries of the
    Company(9)23
.1


Consent of Crowe Horwath
    LLP(9)31
.1


Certification of Chief Executive Officer Pursuant to
    Section 302 of the Sarbanes-Oxley Act of
    2002(9)31
.2


Certification of Chief Financial Officer Pursuant to
    Section 302 of the Sarbanes-Oxley Act of
    2002(9)32
.1


Certification of Chief Executive Officer Pursuant to 18 U.S.C.
    Section 1350, as Adopted Pursuant to Section 906 of the
    Sarbanes-Oxley Act of
    2002(9)32
.2


Certification of Chief Financial Officer Pursuant to
    18 U.S.C. Section 1350, as Adopted Pursuant to Section 906
    of the Sarbanes-Oxley Act of
    2002(9)     (1)
    Incorporated herein by reference in this document to the
    Form 10-K
    filed on March 11, 2005(2)
    Incorporated herein by reference in this document to the
    Form 10-Q
    filed on August 9, 2006(3)
    Incorporated herein by reference in this document to the
    Form 10-K
    filed on March 15, 2007(4)
    Incorporated herein by reference in this document to the
    Form 10-Q
    filed October 20, 2009(5)
    Incorporated herein by reference in this document to the
    Form 8-K
    filed on April 28, 2010(6)
    Incorporated herein by reference in this document to the
    Form 10-K
    filed on March 16, 2009(7)
    Incorporated herein by reference in this document to the
    Form 10-K
    filed on March 16, 2010(8)
    Incorporated herein by reference in this document to the Form
    8-K filed on
    June 1, 2010(9)
    Filed herewith 115




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##### Table of Contents



SIGNATURES       By:
    /s/  James
    J. Landy       James
    J. Landy
     Stephen
    R. Brown
      John
    P. Cahill
     William
    E. Griffin
     Mary
    Jane Foster
     Gregory
    F. Holcombe
     Adam
    Ifshin
     Michael
    J. Maloney
      Angelo
    R. Martinelli
     John
    A. Pratt Jr.
     Cecile
    D. Singer
     Craig
    S. Thompson
     Andrew
    J. Reinhart
     116