##### 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, 2008
  Commission File number 030525
  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: None
    Securities Registered Pursuant to Section 12(g) of the
    Act:
  Name ofeach exchangeon whichTitle of each Class

registeredCommon Stock, ($0.20 par value per share)

None   o x
  o x
  x 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 2,Class

2009Common Stock
    ($0.20 par value)

10,600,201 Shares      Documents incorporated by reference:




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##### 



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

BUSINESS


1ITEM 1A

RISK FACTORS


12ITEM 1B

UNRESOLVED STAFF COMMENTS


17ITEM 2

PROPERTIES


17ITEM 3

LEGAL PROCEEDINGS


18ITEM 4

SUBMISSION OF MATTERS TO A VOTE OF SECURITY
    HOLDERS


18PART IIITEM 5

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


19ITEM 6

SELECTED FINANCIAL DATA


22ITEM 7

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


24ITEM 7A

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
    MARKET RISK


61ITEM 8

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


65ITEM 9

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
    ACCOUNTING AND FINANCIAL DISCLOSURE


100ITEM 9A

CONTROLS AND PROCEDURES


100ITEM 9B

OTHER INFORMATION


100PART IIIITEM 10

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
    GOVERNANCE


101ITEM 11

EXECUTIVE COMPENSATION


101ITEM 12

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


101ITEM 13

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,
    AND DIRECTOR INDEPENDENCE


101ITEM 14

PRINCIPAL ACCOUNTANT FEES AND SERVICES


101PART IVITEM 15

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES


101SIGNATURES


104EX-10.1: AMENDED AND RESTATED DIRECTORS RETIREMENT PLANEX-10.4: 2002 STOCK OPTION PLANEX-11: STATEMENTS RE: COMPUTATION OF PER SHARE EARNINGSEX-21: SUBSIDIARIESEX-23.1: CONSENT OF CROWE HORWATH LLPEX-23.2: CONSENT OF DELOITTE & TOUCHE LLPEX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATIONEX-32.2: CERTIFICATION




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##### Table of Contents



PART
    I
 ITEM
    1  BUSINESS  General
              Forward-Looking
    Statements
  Form 10-K
 1




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##### Table of Contents



Subsidiaries
    of the Banks
                  Employees
    Our
    Market Area
       2




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Competition
           3




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##### Table of Contents



Lending
    Real estate


76.7
%Commercial and industrial


21.0Individuals


1.3Lease financing


1.0Total


100.0
%         (ii)
    the establishment of individual lending authorities well below
    the Banks 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,         4




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Deposits
          Portfolio
    Management Services
    Other
    Services
    Segments
    Supervision
    and Regulation
       5




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6




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Emergency
    Economic Stabilization Act of 2008
    Temporary
    Liquidity Guarantee Program
    American
    Recovery and Reinvestment Act of 2009
    Future
    Legislation
   7




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Regulation
    of Bank Subsidiaries
    Dividend
    Limitations
    Capital
    Standards
     8




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Loans
    to Related Parties
    FIRREA
  FDIC-insured FDIC-insured
    Community
    Reinvestment Act and Fair Lending Developments
   9




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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;
    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; 10




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
    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
  Form 10-K, Form 10-Q, Form 8-K,
 11




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##### Table of Contents



ITEM
    1A  RISK FACTORS  Risks
    Related to Our Business
  Recent
    negative developments in the financial services industry and
    U.S. and global credit markets may adversely impact our
    operations and results.
    Declines
    in value may adversely impact the carrying amount of our
    investment portfolio and result in other-than-temporary
    impairment charges.
    Increases
    to the allowance for credit losses may cause our earnings to
    decrease.
  and/or
  A
    downturn in the economy in our market area would adversely
    affect our loan portfolio and our growth potential.
   12




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Our
    profitability depends on our customers ability to repay
    their loans and our ability to make sound judgments concerning
    credit risk.
    Our
    markets are intensely competitive, and our principal competitors
    are larger than us.
        We
    operate in a highly regulated industry and could be adversely
    affected by governmental monetary policy or regulatory
    change.
     13




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The
    opening of new branches could reduce our
    profitability.
  up-front
  Our
    income is sensitive to changes in interest rates.
          We may
    incur liabilities under federal and state environmental laws
    with respect to foreclosed properties.
    A
    downturn in the real estate market could negatively affect our
    business.
     14




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Technological
    change may affect our ability to compete.
      There is
    currently no active market for the common stock and there can be
    no assurance that a market will develop.
            The
    development of a market for the common stock could be limited by
    existing agreements with respect to resale.
   15




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Government
    regulation restricts our ability to pay cash
    dividends.
           16




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ITEM
    1B  UNRESOLVED STAFF COMMENTS   ITEM
    2  PROPERTIES  th
    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 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 York233 Marble Avenue

Thornwood

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 York3130 East Tremont Avenue

Bronx

Bronx

New York975 Allerton Avenue

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 YorkNew York, NY 10120

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  17




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##### Table of Contents



Address

City

County

State369 East 149th Street

Bronx

Bronx

New York2256 Second Avenue

Manhattan

New York

New York     Address

City

County

State1042 Westchester Avenue

Bronx

Bronx

New York4211 Broadway

Manhattan

New York

New York619 Main Street

Roosevelt Island

New York

New York          ITEM
    3  LEGAL PROCEEDINGS   ITEM
    4  SUBMISSION OF MATTERS TO A VOTE OF SECURITY
    HOLDERS   18




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PART
    II
 ITEM
    5  MARKET FOR REGISTRANTS COMMON EQUITY,
    RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
    SECURITIES      2008


2007High


Low


High


LowFirst Quarter

$
51.82


$
47.27


$
48.90


$
35.33Second Quarter


59.09



47.95



46.28



36.15Third Quarter


47.95



47.95



46.90



46.28Fourth Quarter


48.00



47.95



47.27



46.69            19




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##### Table of Contents



Total Number


Maximum Numberof Shares


of SharesPurchased as


That MayPart of


Yet BeTotal Number


Average Price


Publicly


Purchasedof Shares


Paid Per


Announced


Under thePeriod

Purchased


Share


Programs


Programs(2)October 1-October 31, 2008(1)


3,877


$
52.75



3,877November 1-November 30, 2008(1)


15,405



52.75



15,405December 1 - December 31, 2008(1)(2)


120,022



48.80



120,022



280,315Total


139,304



49.52



139,304



280,315     (1)
    On February 26, 2008, the Company announced that the Board
    of Directors had approved a share repurchase program, effective
    February 22, 2008, which authorized the repurchase of up to
    250,000 of the Companys shares at a price of $52.75 per
    share. This offer expired on May 27, 2008, when it was
    extended to September 3, 2008, when it was further extended
    through December 12, 2008 at the same price per share.(2)
    On December 2, 2008, the Company announced that the Board
    of Directors had approved a share repurchase program, effective
    December 15, 2008, which authorized the repurchase of up to
    300,000 of the Companys shares at a price of $48.00 per
    share. This offer was subsequently increased to
    375,000 shares. The full amount of authorized shares were
    repurchased prior to the March 3, 2009 expiration of the
    program. 20




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##### Table of Contents



Stockholder
    Return Performance Graph
    Total
    Return Performance
  
  Period EndingIndex

12/31/03


12/31/04


12/31/05


12/31/06


12/31/07


12/31/08Hudson Valley Holding Corp.


100.00



98.83



87.96



94.81



120.08



117.74Russell 2000


100.00



118.33



123.72



146.44



144.15



95.44SNL Bank $1B-$5B


100.00



123.42



121.31



140.38



102.26



84.81    21




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##### Table of Contents



ITEM 6 
    SELECTED FINANCIAL DATA  Form 10-K. Form 10-K. Form 10-K.
  Year Ended December 31,2008


2007


2006


2005


2004(000s except share data)Operating Results:Total interest income

$
140,112


$
150,367


$
141,157


$
110,364


$
88,432Total interest expense


30,083



46,299



41,600



25,306



16,795Net interest income


110,029



104,068



99,557



85,058



71,637Provision for loan losses


11,025



1,470



2,130



2,059



473Income before income taxes


46,523



52,742



52,094



46,983



40,970Net income


30,877



34,483



34,059



30,945



27,540Basic earnings per common share


2.84



3.20



3.14



2.86



2.57Diluted earning per common share


2.74



3.08



3.05



2.77



2.52Weighted average shares outstanding


10,881,761



10,767,920



10,832,709



9,822,647



9,732,197Diluted weighted average share outstanding


11,250,087



11,199,663



11,180,736



10,170,674



9,927,759Cash dividends per common share


1.85



1.64



1.46



1.26



1.07   December 31,2008


2007


2006


2005


2004Financial position:Securities

$
671,355


$
780,251


$
917,660


$
883,992


$
875,120Loans, net


1,677,611



1,289,641



1,205,243



1,009,819



862,496Total assets


2,540,890



2,330,748



2,291,734



2,032,721



1,840,874Deposits


1,839,326



1,812,542



1,626,441



1,407,996



1,235,341Borrowings


466,398



286,941



456,559



435,212



427,593Stockholders equity


207,501



203,687



185,566



169,789



159,662  22




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##### Table of Contents



Financial
    Ratios
    December 31,2008


2007


2006


2005


2004Earnings RatiosNet income as a percentage of:Average earning assets


1.39
%


1.59
%


1.64
%


1.67
%


1.63
%Average total assets


1.30



1.49



1.54



1.58



1.55Average total stockholders equity


14.76



18.03



19.40



18.77



18.33Adjusted average total stockholders equity(1)


14.55



17.61



18.57



18.54



18.55Capital RatiosAverage total stockholders equity to average total assets


8.79
%


8.27
%


7.95
%


8.44
%


8.48
%Average net loans as a multiple of average total
    stockholders equity


7.09



6.45



6.44



5.63



5.20Leverage capital


7.53



8.31



7.74



8.30



8.17Tier 1 capital (to risk weighted assets)


10.11



12.61



12.32



13.82



14.46Total risk-based capital (to risk weighted assets)


11.33



13.77



13.49



14.94



15.59OtherAllowance for loan losses as a percentage of year-end loans


1.33
%


1.33
%


1.37
%


1.32
%


1.35
%Loans (net) as a percentage of year-end total assets


66.02



55.33



52.59



49.68



46.85Loans (net) as a percentage of year-end total deposits


91.21



71.15



74.10



71.72



69.82Securities as a percentage of year-end total assets


26.43



32.03



40.04



41.02



47.54Average interest earning assets as a percentage of average
    interest bearing liabilities


146.90



146.83



148.34



153.96



155.28Dividends per share as a percentage of diluted earnings per share


67.35



53.40



47.79



45.40



42.62    (1)
    Adjusted average stockholders equity excludes unrealized
    losses, net of tax, of $2,955, $4,521, $7,846 and $2,108 in
    2008, 2007, 2006 and 2005, respectively, and unrealized gains,
    net of tax, of $1,706 in 2004, respectively, on securities
    available for sale. 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 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. 23




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##### Table of Contents



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.
       24




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25




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Critical
    Accounting Policies
  Application of Critical Accounting Policies 
 26




---



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Allowance for Loan Losses 
  and/or
       27




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Income Recognition on Loans 
  Securities  other-than-temporary
  Other Real Estate Owned (OREO) 
  Goodwill and Other Intangible Assets 
  Bank Owned Life Insurance  No. 06-5, Bulletin No. 85-4 No. 06-5), EITF No. 06-5,
  Retirement Plans 
 28




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Results
    of Operations for Each of the Three Years in the Period Ended
    December 31, 2008
  Summary
    of Results
          29




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30




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##### Table of Contents



Average
    Balances and Interest Rates
    (000s except percentages)Year ended December 31,2008


2007


2006Average





Yield/


Average





Yield/


Average





Yield/Balance


Interest(3)


Rate


Balance


Interest(3)


Rate


Balance


Interest(3)


RateASSETSInterest earning assets:Deposits in banks

$
5,362


$
152



2.83
%

$
10,537


$
527



5.00
%

$
4,749


$
205



4.32
%Federal funds sold


24,899



827



3.32



58,603



2,938



5.01



12,669



600



4.74Securities:(1)Taxable


507,943



24,873



4.90



665,761



32,868



4.94



733,062



34,591



4.72Exempt from federal income taxes


208,730



13,274



6.36



214,093



14,022



6.55



213,885



14,206



6.64Loans, net(2)


1,483,196



105,632



7.12



1,233,360



104,920



8.51



1,131,300



96,527



8.53Total interest earning assets


2,230,130



144,758



6.49



2,182,354



155,275



7.12



2,095,665



146,129



6.97Non interest earning assets:Cash and due from banks


49,786











51,887











46,836Other assets


105,478











85,390











78,093Total non interest earning assets


155,264











137,277











124,929Total assets

$
2,385,394










$
2,319,631










$
2,220,594LIABILITIES AND STOCKHOLDERS EQUITYInterest bearing liabilities:Deposits:Money market

$
642,784


$
10,498



1.63
%

$
560,325


$
15,052



2.69
%

$
431,628


$
8,950



2.07
%Savings


95,296



708



0.74



93,223



775



0.83



97,567



675



0.69Time


263,506



6,757



2.56



276,908



10,787



3.90



246,538



8,181



3.32Checking with interest


149,793



1,072



0.72



153,446



1,545



1.01



134,874



1,053



0.78Securities sold under repurchase agreements and other short-term
    borrowings


161,749



2,187



1.35



167,255



7,809



4.67



234,959



11,149



4.75Other borrowings


201,687



8,861



4.39



230,014



10,331



4.49



258,308



11,592



4.49Total interest bearing liabilities


1,514,815



30,083



1.99



1,481,171



46,299



3.13



1,403,874



41,600



2.96Non interest bearing liabilities:Demand deposits


625,630











612,346











601,983Other liabilities


32,797











30,292











31,347Total non interest bearing liabilities


658,427











642,638











633,330Stockholders equity(1)


212,152











195,822











183,390Total liabilities and stockholders equity(1)

$
2,385,394










$
2,319,631










$
2,220,594Net interest earnings





$
114,675










$
108,976










$
104,529Net yield on interest earning assets










5.14
%










4.99
%










4.99
%   (1)
    Excludes unrealized gains and losses on securities
    available for sale.(2)
    Includes loans classified as non-accrual.(3)
    Effect of adjustment to a tax equivalent basis was $4,646,
    $4,908 and $4,972 for the years ended December 31, 2008,
    2007 and 2006, respectively. 31




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Interest
    Differential
    (000s)2008 Compared to 2007


2007 Compared to 2006Increase (Decrease)


Increase (Decrease)Due to Change in


Due to Change inVolume


Rate


Total(1)


Volume


Rate


Total(1)Interest income:Deposits in banks

$
(259
)

$
(116
)

$
(375
)

$
250


$
72


$
322Federal funds sold


(1,690
)


(421
)


(2,111
)


2,175



163



2,338Securities:Taxable


(7,791
)


(204
)


(7,995
)


(3,176
)


1,453



(1,723
)Exempt from federal income taxes


(351
)


(397
)


(748
)


14



(198
)


(184
)Loans, net


21,253



(20,541
)


712



8,708



(315
)


8,393Total interest income


11,162



(21,679
)


(10,517
)


7,971



1,175



9,146Interest expense:Deposits:Money market


2,215



(6,769
)


(4,554
)


2,669



3,433



6,102Savings


17



(84
)


(67
)


(30
)


130



100Time


(522
)


(3,508
)


(4,030
)


1,008



1,598



2,606Checking with interest


(37
)


(436
)


(473
)


145



347



492Securities sold under repurchase agreements and other short-term
    borrowings


(257
)


(5,365
)


(5,622
)


(3,213
)


(127
)


(3,340
)Other borrowings


(1,272
)


(198
)


(1,470
)


(1,270
)


9



(1,261
)Total interest expense


144



(16,360
)


(16,216
)


(691
)


5,390



4,699Increase in interest differential

$
11,018


$
(5,319
)

$
5,699


$
8,662


$
(4,215
)

$
4,447   (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
     32




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33




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2008


2007


2006Average interest rate on:Total average interest earning assets


6.49
%


7.12
%


6.97
%Total average interest bearing liabilities


1.99



3.13



2.96Total interest rate spread


4.50



3.99



4.01  34




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##### Table of Contents



Provision
    for Loan Losses
    Non
    Interest Income
            Non
    Interest Expense
     35




---



##### Table of Contents



2008


2007


2006Employees at December 31,Full Time Employees


478



431



395Part Time Employees


55



40



45   (000s except percentages)2008


2007


2006Salaries and Employee BenefitsSalaries

$
29,122


$
26,210


$
22,956Payroll Taxes


2,357



2,146



2,005Medical Plans


2,356



1,771



1,734Incentive Compensation Plans


4,839



4,320



3,725Employee Retirement Plans


2,661



2,267



1,657Other


522



859



714Total

$
41,857


$
37,573


$
32,791Percentage of total non interest expense


58.9
%


58.1
%


56.1
%            36




---



##### Table of Contents



2008


2007


2006(000s except percentages)Other Operating ExpensesOther insurance

$
163


$
65


$
(9
)Stationery and printing


1,619



1,446



1,338Communications expense


890



1,411



1,220Courier expense


941



1,050



1,003Other loan expense


685



453



350Outside services


3,123



2,441



2,537Dues, meetings and seminars


463



560



482Other


2,394



2,723



2,658Total

$
10,278


$
10,149


$
9,579Percentages of total non interest expense


14.5
%


15.7
%


16.4
%       Income
    Taxes
      Financial
    Condition at December 31, 2008 and 2007
  Securities
    Portfolio
   37




---



##### Table of Contents



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


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



228



8,665



11,644Total debt securities


638,109



6,344



11,767



632,685Mutual funds and other equity securities


9,170



613



105



9,678Total

$
647,279


$
6,957


$
11,872


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

$
23,859


$
525


$
78


$
24,306Obligations of states and political subdivisions


5,133



108



1



5,240Total

$
28,992


$
633


$
79


$
29,546  38




---



##### Table of Contents



2007
    (000s)
  GrossUnrealized


Estimated FairClassified as Available for Sale

Amortized Cost


Gains


Losses


ValueU.S. Treasury and government agencies

$
107,083


$
90


$
384


$
106,789Mortgage-backed securities


384,711



628



6,464



378,875Obligations of states and political subdivisions


204,184



3,555



191



207,548Other debt securities


22,231



39



791



21,479Total debt securities


718,209



4,312



7,830



714,691Mutual funds and other equity securities


31,145



682



25



31,802Total

$
749,354


$
4,994


$
7,855


$
746,493Classified as Held to
    MaturityMortgage-backed securities

$
28,626


$
41


$
178


$
28,489Obligations of states and political subdivisions


5,132



148







5,280Total

$
33,758


$
189


$
178


$
33,769     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

$
40,338



2.69
%

$
4,868



4.80
%

















$
45,206



2.91
%Mortgage-backed securities


274,635



4.72
%


101,142



4.61
%

$
18,040



4.87
%

$
2,005



4.83
%


395,822



4.70
%Obligations of states and political subdivisions


71,085



6.65
%


84,645



6.44
%


50,105



6.01
%


157



6.97
%


205,991



6.41
%Other debt securities


18,819



3.54
%


428



4.66
%


835



6.43
%










20,082



3.69
%Total

$
404,877



4.81
%

$
191,083



5.44
%

$
68,980



5.71
%

$
2,162



4.99
%

$
667,101



5.08
%Estimated fair value

$
399,190






$
191,921






$
68,945






$
2,176






$
662,231        39




---



##### Table of Contents



40




---



##### Table of Contents



Loan
    Portfolio
  Real Estate Loans:
         41




---



##### Table of Contents



1-4 unit
  sub-prime loan-to-value
  Commercial and Industrial Loans:
  Loans to Individuals and Leasing:
      
    Increases of $287.9 million and $64.9 million in 2008
    and 2007, respectively, in commercial real estate mortgages. The
    increases were due to increased activity in commercial mortgages, 42




---



##### Table of Contents




    Increase of $43.0 million in 2008 and decrease of
    $41.1 million in 2007, respectively, in construction loans.
    The increase in 2008 resulted from a higher volume of
    originations. The decrease in 2007 was due to paydowns and a
    general slowdown in construction projects.
    Increases in residential real estate mortgages of
    $84.9 million and $34.9 million in 2008 and 2007,
    respectively, primarily as a result of increased activity
    principally in multi-family loans,
    Decrease of $18.9 million in 2008 and increase of
    $21.8 million in 2007, respectively, in commercial and
    industrial loans. The decrease in 2008 was primarily the result
    of the Companys greater emphasis on the origination of
    real estate secured loans, together with an increase in
    charge-offs. The increase in 2007 was primarily due to increased
    activity and a greater emphasis on this product with resulting
    increased market penetration,
    Decrease of $8.2 million in 2008 and increase of
    $0.9 million in 2007 in loans to individuals, and
    Increases of $6.0 million and $3.7 million in 2008 and
    2007, respectively, in lease financings.    (000s)2008


2007


2006


2005


2004Real Estate:Commercial

$
642,923


$
355,044


$
290,185


$
220,384


$
233,452Construction


254,837



211,837



252,941



178,731



116,064Residential


409,431



324,488



289,553



276,384



222,392Commercial and industrial


358,076



377,042



355,214



316,907



277,013Individuals


21,536



29,686



28,777



25,632



21,787Lease financing


18,461



12,463



8,766



8,348



6,276Total


1,705,264



1,310,560



1,225,436



1,026,386



876,984Deferred loan fees


(5,116
)


(3,552
)


(3,409
)


(3,042
)


(2,687
)Allowance for loan losses


(22,537
)


(17,367
)


(16,784
)


(13,525
)


(11,801
)Loans, net

$
1,677,611


$
1,289,641


$
1,205,243


$
1,009,819


$
862,496      43




---



##### Table of Contents



(000s except percentages)After 1Within


Year but


After1


Within


5Year


5 Years


Years


Total


PercentLoans:Real Estate  commercial

$
128,290


$
275,941


$
238,692


$
642,923



51.2
%Real Estate  construction


213,157



36,407



5,273



254,837



20.3
%Commercial & industrial


130,335



123,516



104,226



358,077



28.5
%Total

$
471,782


$
435,864


$
348,191


$
1,255,837



100.0
%Rate sensitivity:Fixed or predetermined interest rates

$
134,002


$
378,235


$
316,110


$
828,347



66.0
%Floating or adjustable interest rates


331,493



60,127



35,870



427,490



34.0
%Total

$
465,495


$
438,362


$
351,980


$
1,255,837



100.0
%Percent


37.1
%


34.9
%


28.0
%


100.0
%       (000s except percentages)December 31,2008


2007


2006


2005


2004Non-Accrual loans at period end

$
11,284


$
10,719


$
5,572


$
3,837


$
2,301Loans past due 90 days or more and still accruing


7,019



3,953



3,879



3,522



3,227Other Real Estate Owned


5,467















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


875



933



474



283



243    44




---



##### Table of Contents



(000s except percentages)December 31,2008


2007


2006


2005


2004Non-Accrual LoansReal Estate:Commercial

$
2,241


$
143


$
658


$
496


$
590Construction


2,824



4,646



1,799



1,599



426Residential


4,618



340



761



845



469Total Real Estate


9,683



5,129



3,218



2,940



1,485Commercial and Industrial


1,601



5,590



2,346



897



719Lease Financing and individuals










8







97Total Non-Accrual Loans


11,284



10,719



5,572



3,837



2,301Other Real Estate Owned


5,467















Total Nonperforming assets

$
16,751


$
10,719


$
5,572


$
3,837


$
2,301Nonperforming assets to total assets at year end


0.66
%


0.46
%


0.24
%


0.19
%


0.13
%   
    Nonperforming commercial real estate loans increased
    $2.1 million to $2.2 million at December 31, 2008
    from $0.1 million at December 31, 2007 which was a
    decrease of $0.6 million from $0.7 million at
    December 31, 2006. The 2008 increase resulted from the
    addition of four loans totaling $2.2 million which was
    partially offset by charge-offs and principal payments of
    $0.1 million. The 2007 decrease resulted from principal
    payments of $0.6 million.
    Nonperforming construction loans decreased $1.8 million to
    $2.8 million at December 31, 2008 from
    $4.6 million at December 31, 2007, which was an
    increase of $2.8 million from $1.8 million at
    December 1, 2006. The 2008 decrease resulted from a
    $1.9 million transfer of a loan to other real estate owned,
    a $1.2 million loan which returned to accrual status,
    charge-offs of $0.8 million and principal payments of
    $0.1 million partially offset by the addition of two loans
    totaling $2.1 million. The 2007 increase resulted from the
    addition of four loans totaling $6.1 million which was
    partially offset by payments of $3.0 million and
    charge-offs of $0.3 million.
    Nonperforming residential real estate loans increased
    $4.3 million to $4.6 million at December 31, 2008
    from $0.3 million at December 31, 2007 which was a
    decrease of $0.5 million from $0.8 million at
    December 31, 2006. The 2008 increase resulted from the
    addition of ten loans totaling $6.9 million which were
    partially offset by principal payments of $2.3 million and
    charge-offs of $0.3 million. The 2007 decrease resulted
    from principal payments of $1.2 million partially offset by
    the addition of two loans totaling $0.7 million.
    Nonperforming commercial and industrial loans decreased
    $4.0 million to $1.6 million at December 31, 2008
    from $5.6 million at December 31, 2007 which was an
    increase of $3.2 million from $2.3 million at
    December 31, 2006. The 2008 decrease resulted from
    charge-offs of $4.9 million, the transfer of two loans
    totaling $3.6 million to other real estate owned, and
    payments of $1.5 million which were partially offset by the
    addition of thirty one loans totaling $6.0 million.
    In 2008, $0.1 million of nonperforming loans and overdrafts
    to individuals were charged-off. In 2007, additions of
    $0.1 million of nonperforming loans and overdrafts to
    individuals were offset by $0.1 million of charge-offs.
    In 2008, other real estate owned increased $5.5 million.
    The increase resulted from foreclosure proceedings on one
    property related to a nonperforming construction loan and two
    properties related to nonperforming commercial and industrial
    loans.   45




---



##### Table of Contents



Allowance
    for Loan Losses
         46




---



##### Table of Contents



(000s)Change





ChangeDecember 31,


During


December 31,


During


December 31,2008


2008


2007


2007


2006ComponentsSpecific:Real Estate:Commercial


















Construction





$
(500
)

$
500


$
500



Residential






(950
)


950



150


$
800Commercial and Industrial






(207
)


207



(471
)


678Lease Financing and individuals






(120
)


120



(197
)


317Total Specific component





$
(1,777
)

$
1,777


$
(18
)

$
1,795Formula:Real Estate:Commercial

$
8,220


$
3,993


$
4,227


$
550


$
3,677Construction


3,670



509



3,161



(811
)


3,972Residential


4,194



1,226



2,968



316



2,652Commercial and Industrial


6,272



1,227



5,045



394



4,651Lease Financing and individuals


181



(8
)


189



152



37Total Formula component

$
22,537


$
6,947


$
15,590


$
601


$
14,989Total Allowance

$
22,537






$
17,367






$
16,784Net Change






5,170







583Net Charge-offs






5,855







887Provision for loan losses





$
11,025






$
1,470   47




---



##### Table of Contents



Change





ChangeDuring


December 31,


During


December 31,2006


2005


2005


2004ComponentsSpecific:Real Estate:Commercial









$
(590
)

$
590Construction














Residential





$
800



800



Commercial and Industrial

$
525



153



153



Lease Financing and individuals


(30
)


347



(678
)


1,025Total Specific component

$
495


$
1,300


$
(315
)

$
1,615Formula:Real Estate:Commercial

$
678


$
2,999


$
500


$
2,499Construction


732



3,240



540



2,699Residential


489



2,163



361



1,802Commercial and Industrial


858



3,793



633



3,161Lease Financing and individuals


7



30



5



25Total Formula component

$
2,764


$
12,225


$
2,039


$
10,186Total Allowance





$
13,525






$
11,801Net Change


3,259







1,724Amount Acquired


1,529







Net Charge-offs


400







335Provision for loan losses

$
2,130






$
2,059       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
    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 48




---



##### Table of Contents



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 have
    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.  2007
  
    Economic and business conditions  Indications of
    increased inflation, such as the pronounced rise in energy
    costs, increases in the cost of raw materials used in
    construction and significant increases in real estate taxes
    within the Companys market area, together with the general
    slowdown in real estate activity and the recent crisis in the
    sub-prime mortgage market have had negative effects on the
    demand for and value of real estate, the primary collateral for
    the Companys loans, and the ability of borrowers to repay
    their loans. Consideration of such events that trigger economic
    uncertainty or possible slowing economic conditions are part of
    the determination of the formula component of the allowance.
    Concentration  Construction loans totaled
    $211.8 million or 16.4 percent of net loans at
    December 31, 2007. These 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. During the year ended
    December 31, 2007, the number of completed properties and
    their time on the market has increased and there has been
    further downward pressure on prices. Further exacerbating the
    ability to sell newly constructed homes and condominiums is the
    tightening of credit in the secondary markets for residential
    borrowers, particularly sub-prime borrowers and, recently, jumbo
    loan borrowers. Therefore, the borrowers ability to pay
    and collateral values may be negatively impacted. Such
    concentration and the associated increase in various risk
    factors is reflected in the formula component of the allowance.
    Therefore, consideration of concentrations is a part of the
    determination of the formula component of the allowance.
    Credit quality  The dollar amount of nonperforming
    loans increased to $10.7 million or 0.82 percent of
    total loans at December 31, 2007, compared to
    $5.6 million or 0.45 percent of total loans at
    December 31, 2006. Although the Companys regular
    periodic loan review process noted continued strength in overall
    credit quality, the continuation of recent trends of rising
    construction, energy and interest costs, as well as real estate
    taxes, an increase in the inventory of new residential
    construction and its time on the market and recent indications
    of a decline in real estate values in the Companys primary
    market area may negatively impact the borrowers ability to
    pay and collateral values. Certain loans were downgraded due to
    potential deterioration of collateral values, the
    borrowers cash flows or other specific factors that
    negatively impacted the borrowers ability to meet their
    loan obligations. Certain of these loans are also considered in
    connection with the analysis of impaired loans performed to
    determine the specific component of the allowance. 49




---



##### Table of Contents



However, due to the uncertainty of that determination, such
    loans are also considered in the process of determining the
    formula component of the allowance.  
    Loan Participations  The Company expanded the number
    of banks from which we will purchase loan participations,
    particularly outside our primary market area. While we review
    each loan, we greatly 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 are not reflected
    in the formula component of the allowance for loan losses.  2006
  
    Economic and business conditions  Indications of
    increased inflation, such as the pronounced rise in energy
    costs, increases in the cost of raw materials used in
    construction, significant increases in real estate taxes within
    the Companys market area and the steady rise in short-term
    interest rates which began in the third quarter of 2004,
    continued throughout 2005 and the first half of 2006. Such
    conditions have had negative effects on the demand for and value
    of real estate, the primary collateral for the Companys
    loans, and the ability of borrowers to repay their loans.
    Consideration of such events that trigger economic uncertainty
    or possible slowing economic conditions are part of the
    determination of the formula component of the allowance.
    Concentration  Construction loans increased to
    $252.9 million or 20.6 percent of total loans at
    December 31, 2006 from $178.7 million or
    17.4 percent of total loans at December 31, 2005.
    These loans generally 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.
    Increases in such concentrations, and the associated increase in
    risk, is considered in the formula component of the allowance.
    Therefore, consideration of changes in concentrations is a part
    of the determination of the formula component of the allowance.
    Credit quality  Delinquencies increased within HVB
    and NYNBs portfolios during the year ended
    December 31, 2006. In addition, the dollar amount of
    nonperforming loans increased, partially due to the addition of
    $1.0 million of nonperforming loans acquired with NYNB.
    Although the Companys regular periodic loan review process
    noted continued strength in overall credit quality, the
    continuation of recent trends of rising construction, energy and
    interest costs, as well as real estate taxes, an increase in the
    inventory of new residential construction and its time on the
    market and recent indications of a decline in real estate values
    in the Companys primary market area may negatively impact
    the borrowers ability to pay and collateral values.
    Certain loans were downgraded due to potential deterioration of
    collateral values, the borrowers cash flows or other
    specific factors that negatively impacted the borrowers
    ability to meet their loan obligations. Certain of these loans
    are also considered in connection with the analysis of impaired
    loans performed to determine the specific component of the
    allowance.
    Loan Participations  We expanded the number of banks
    from which we will purchase loan participations, particularly
    outside our primary market area. While we review each loan, we
    greatly 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 formula
    component of the allowance for loan losses. 50




---



##### Table of Contents



(000s except percentages)2008


2007


2006


2005


2004Net loans outstanding at end of year

$
1,677,611


$
1,289,641


$
1,205,243


$
1,009,819


$
862,496Average net loans outstanding during the year


1,483,196



1,233,360



1,131,300



928,866



780,331Allowance for loan losses:Balance, beginning of year

$
17,367


$
16,784


$
13,525


$
11,801


$
11,441Amount acquired










1,529







Provision charged to expense


11,025



1,470



2,130



2,059



47328,392



18,254



17,184



13,860



11,914Charge-offs and recoveries during the year:Charge offs:Real estate:Commercial


(78
)














(62
)Construction


(775
)


(237
)










Residential


(1,270
)


(16
)


(153
)






Commercial and industrial


(3,422
)


(649
)


(216
)


(318
)


(102
)Lease financing and individuals


(632
)


(139
)


(76
)


(53
)


(30
)Recoveries:Real estate:Commercial














4



Construction


















Residential


180



20











Commercial and industrial


65



97



22



26



72Lease financing and individuals


77



37



23



6



9Net charge-offs during the year


(5,855
)


(887
)


(400
)


(335
)


(113
)Balance, end of year

$
22,537


$
17,367


$
16,784


$
13,525


$
11,801Ratio of net charge-offs to average net loans outstanding during
    the year


0.39
%


0.07
%


0.04
%


0.04
%


0.01
%Ratio of allowance for loan losses to gross loans outstanding at
    end of the year


1.33
%


1.33
%


1.39
%


1.32
%


1.35
%      51




---



##### Table of Contents



2008


2007Percentage








Percentageof Loans








of LoansAmount





in each


Amount





in eachof Loan


Loan


Category


of Loan


Loan


CategoryLoss


Amounts


by Total


Loss


Amounts


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 and Industrial


6,272



358,076



21.00
%


5,252



377,042



28.77
%Lease Financing and individuals


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
%   2006


2005Percentage








Percentageof Loans








of LoansAmount





in each


Amount





in eachof Loan


Loan


Category


of Loan


Loan


CategoryLoss


Amounts


by Total


Loss


Amounts


by TotalAllowance


by Category


Loans


Allowance


by Category


LoansReal Estate:Commercial

$
3,677


$
290,185



23.68
%

$
2,999


$
220,384



21.47
%Construction


3,972



252,941



20.64
%


3,240



178,731



17.41
%Residential


3,452



289,553



23.63
%


2,963



276,384



26.93
%Commercial and Industrial


5,329



355,214



28.99
%


3,946



316,907



30.88
%Lease Financing and individuals


354



37,543



3.06
%


377



33,980



3.31
%Total

$
16,784


$
1,225,436



100.00
%

$
13,525


$
1,026,386



100.00
%   2004Percentageof LoansAmount





in eachof Loan


Loan


CategoryLoss


Amounts


by TotalAllowance


by Category


LoansReal Estate:Commercial

$
3,089


$
233,452



26.62
%Construction


2,699



116,064



13.23
%Residential


1,802



222,392



25.36
%Commercial and Industrial


3,161



277,013



31.59
%Lease Financing and individuals


1,055



28,063



3.20
%Total

$
11,806


$
876,984



100.00
%    52




---



##### Table of Contents



Provision
    for Loan Losses
    Deposits
        (000s)2008


2007Demand deposits

$
647,828


$
568,418Money market accounts


631,948



730,429Savings accounts


99,022



93,331Time deposits of $100,000 or more


156,481



202,151Time deposits of less than $100,000


138,504



60,493Checking with interest


165,543



157,720Total

$
1,839,326


$
1,812,542     December 31,2008


2007Time


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

$
92,298


$
104,103


$
196,401


$
141,688


$
20,930


$
162,618Over three months through 6 months


22,775



11,902



34,677



25,329



12,023



37,352Over 6 months through 12 months


37,849



7,457



45,306



34,702



10,477



45,179Over 12 months


3,559



15,042



18,601



432



17,063



17,495Total

$
156,481


$
138,504


$
294,985


$
202,151


$
60,493


$
262,644  53




---



##### Table of Contents



(000s except percentages)Year ended December 31,2008


2007


2006Average


Average


AverageAmount


Rate


Amount


Rate


Amount


RateDemand deposits  Non interest bearing

$
625,630






$
612,346






$
601,983



Money market accounts


642,784



1.63
%


560,325



2.69
%


431,628



2.07
%Savings accounts


95,296



0.74
%


93,223



0.83
%


97,567



0.69
%Time deposits


263,506



2.56
%


276,908



3.90
%


246,538



3.32
%Checking with interest


149,793



0.72
%


153,446



1.01
%


134,874



0.78
%Total

$
1,777,009



1.07
%

$
1,696,248



1.66
%

$
1,512,590



1.25
%              54




---



##### Table of Contents



Borrowings
        (000s except percentages)2008


2007


2006Average balance:


Short-term


$
161,749


$
167,255


$
234,959Other borrowings



201,687



230,014



258,308Weighted average interest rate (for the year):


Short-term



1.4
%


4.7
%


4.8
%Other borrowings



4.4



4.5



4.5Weighted average interest rate (at year end):


Short-term



1.0
%


2.6
%


2.0
%Other borrowings



4.3



4.4



4.8Maximum month-end outstanding amount:


Short-term


$
269,585


$
254,581


$
289,575Other borrowings



210,844



249,369



264,395     and/or Borrower-in-Custody
 55




---



##### Table of Contents



Capital
    Resources
                2008


2007


2006Tier 1 capital:Company


10.1
%


12.5
%


12.3
%HVB


9.9



12.3



12.3NYNB


10.1



11.3



12.5Total capital:Company


11.3
%


13.7
%


13.5
%HVB


11.1



13.4



13.5NYNB


11.4



12.6



13.7    56




---



##### Table of Contents



2008


2007


2006Company


7.5
%


8.3
%


7.8
%HVB


7.4



8.1



7.8NYNB


6.7



7.1



7.0       Liquidity
           57




---



##### Table of Contents



and/or
    Borrower-in-Custody
       After


After1


3Year


Yearsbut


butWithin


Within


Within


After1


3


5


5Year


Years


Years


Years


TotalContractual Obligations:(1)Time Deposits

$
276,384


$
10,618


$
7,844


$
139


$
294,985FHLB Borrowings


73,030



107,340



15,143



1,300



196,813Operating lease and license obligations


2,695



4,843



4,190



10,583



22,311Total

$
352,109


$
122,801


$
27,177


$
12,022


$
514,109Credit Commitments:Available lines of credit

$
181,304


$
69,782


$
26,229


$
83,975


$
361,290Letters of credit


18,667



2,428











21,095Total

$
199,971


$
72,210


$
26,229


$
83,975


$
382,385           58




---



##### Table of Contents



Quarterly
    Results of Operations (Unaudited)
    2008 Quarters


2007 QuartersFourth


Third


Second


First


Fourth


Third


Second


FirstInterest income

$
35,670


$
35,776


$
33,565


$
35,101


$
37,050


$
38,117


$
38,144


$
37,056Net interest income


28,840



28,753



26,561



25,875



26,500



26,342



26,090



25,136Provision for loan losses


7,540



1,040



2,114



331



180



180



555



555Income before income taxes


7,777



13,979



11,922



12,845



13,261



13,880



12,855



12,746Net income


5,485



9,049



7,896



8,447



8,714



9,091



8,377



8,301Basic earnings per common share


0.51



0.83



0.72



0.78



0.81



0.85



0.77



0.77Diluted earnings per common share


0.49



0.80



0.70



0.75



0.78



0.81



0.75



0.74   Forward-Looking
    Statements
      
    unanticipated write-down or other-than-temporary impairment to
    investment securities;
    insufficient allowance for loan losses;
    a higher level of net loan charge-offs and delinquencies than
    anticipated;
    changes in loan, investment and mortgage prepayment assumptions;
    changes in monetary and fiscal policies of the
    U.S. Government, including policies of the
    U.S. Treasury, the Office of the Comptroller of the
    Currency and the Federal Reserve Board, and the impact of any
    policies or programs implemented pursuant to the Emergency
    Economic Stabilization Act of 2008.
    the extent and timing of legislative and regulatory actions and
    reform;
    competitive pressure on loan and deposit product pricing;
    other actions of competitors;
    adverse changes in economic conditions especially those
    effecting real estate;
    the extent and timing of actions of the Federal Reserve Board;
    a loss of customer deposits;
    changes in customers acceptance of the Banks
    products and services;
    regulatory delays or conditions imposed by regulators in
    connection with the conversion of the Banks to national banks,
    acquisitions or other expansion plans;
    increases in federal and state income taxes and/or the
    Companys effective income tax rate; 59




---



##### Table of Contents




    difficulties in integrating acquisitions, offering new services
    or expanding into new markets;
    higher or lower cash flow levels than anticipated;
    a decrease in loan origination volume;
    a change in legal and regulatory barriers including issues
    related to compliance with anti-money laundering
    (AML) and bank secrecy act (BSA) laws;
    adoption, interpretation and implementation of new or
    pre-existing accounting pronouncements;
    the development of new tax strategies or the disallowance of
    prior tax strategies; and
    operational risks, including the risk of fraud by employees or
    outsiders and unanticipated litigation pertaining to our
    fiduciary responsibility. 60




---



##### Table of Contents



ITEM 7A
     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
    RISK             61




---



##### Table of Contents



Percentage Change


Percentage Changein Estimated


in EstimatedNet Interest


Net InterestIncome from


Income fromGradual Change in Interest Rates

December 31, 2008


December 31, 2007+200 basis points


(2.9
)%


1.8
%100 basis points


(0.5
)%


(4.8
)%              62




---



##### Table of Contents



Interest
    Rate Sensitivity Analysis
  December 31,
    2008
  Over One


Over Three


Over OneDay to


Months


Year to


OverOne


Three


to One


Five


Five


Non-InterestDay


Months


Year


Years


Years


Bearing


TotalAssets:Loans, net





$
759,153


$
143,649


$
394,415


$
364,901


$
15,493


$
1,677,611Mortgage Backed securities






131,136



146,958



98,073



21,828







397,995Other securities






89,463



61,272



89,941



53,178







293,854Other earning assets

$
6,679























6,679Other assets






















164,751



164,751Total Assets


6,679



979,752



351,879



582,429



439,907



180,244



2,540,890Liabilities & Stockholders Equity:Interest bearing deposits





$
828,349


$
79,983


$
18,462


$
264,705






$
1,191,499Other borrowed funds

$
269,585



6



73,015



107,342



16,450







466,398Demand deposits





















$
647,828



647,828Other liabilities






















27,664



27,664Stockholders equity






















207,501



207,501Total Liabilities & Stockholders Equity


269,585



828,355



152,998



125,804



281,155



882,993



2,540,890Net interest rate sensitivity gap

$
(262,906
)

$
151,397


$
198,881


$
456,625


$
158,752


$
(702,749
)


Cumulative gap

$
(262,906
)

$
(111,509
)

$
87,372


$
543,997


$
702,749







Cumulative gap to interest earning assets


(11.06
)%


(4.69
)%


3.68
%


22.89
%


29.58
%  63




---



##### Table of Contents



December 31, 2007
  Over


Over


OverOne


Three


OneDay


Months


Yearto


to


to


OverOne


Three


One


Five


Five


Non-InterestDay


Months


Year


Years


Years


Bearing


TotalAssets:Loans, net





$
580,555


$
111,990


$
429,743


$
143,515


$
23,838


$
1,289,641Mortgage Backed securities






45,654



112,173



216,262



33,412







407,501Other securities






65,045



93,355



107,554



118,473







384,427Other earning assets

$
99,875























99,875Other assets






















149,166



149,166Total Assets


99,875



691,254



317,518



753,559



295,400



173,004



2,330,610Liabilities & Stockholders Equity:Interest bearing deposits





$
887,714


$
82,531


$
17,245


$
256,634






$
1,244,124Other borrowed funds

$
76,097



6



14,016



180,350



16,472







286,941Demand deposits





















$
568,418



568,418Other liabilities






















27,238



27,238Stockholders equity






















203,889



203,889Total Liabilities & Stockholders Equity


76,097



887,720



96,547



197,595



273,106



799,545



2,330,610Net interest rate sensitivity gap

$
23,778


$
(196,466
)

$
220,971


$
555,964


$
22,294


$
(626,541
)


Cumulative gap

$
23,778


$
(172,688
)

$
48,283


$
604,247


$
626,541







Cumulative gap to interest earning assets


1.09
%


(7.92
)%


2.21
%


27.70
%


28.72
%  64




---



##### Table of Contents



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


66REPORT OF INDEPENDENT REGISTERED PUBLIC
    ACCOUNTING FIRM


67CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER
    31, 2008 AND 2007 AND FOR EACH OF THE THREE YEARS IN THE PERIOD
    ENDED DECEMBER 31, 2008:Consolidated Statements of Income


68Consolidated Statements of Comprehensive
    Income


69Consolidated Balance Sheets


70Consolidated Statements of Changes in
    Stockholders Equity


71Consolidated Statements of Cash Flows


72Notes to Consolidated Financial Statements


73  65




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM                 66




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  To the Board
    of Directors and Stockholders of
              Deloitte &
    Touche LLP
    67




---



##### Table of Contents



HUDSON
    VALLEY HOLDING CORP. AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF INCOME
 For the years ended December 31, 2008, 2007 and
    2006
 Dollars in thousands, except per share amounts
  2008


2007


2006Interest Income:Loans, including fees

$
105,632


$
104,920


$
96,527Securities:Taxable


24,873



32,868



34,591Exempt from Federal income taxes


8,628



9,114



9,234Federal funds sold


827



2,938



600Deposits in banks


152



527



205Total interest income


140,112



150,367



141,157Interest Expense:Deposits


19,035



28,159



18,859Securities sold under repurchase agreements and other short-term
    borrowings


2,187



7,809



11,149Other borrowings


8,861



10,331



11,592Total interest expense


30,083



46,299



41,600Net Interest Income


110,029



104,068



99,557Provision for loan losses


11,025



1,470



2,130Net interest income after provision for loan losses


99,004



102,598



97,427Non Interest Income:Service charges


5,951



4,701



4,529Investment advisory fees


11,181



9,053



7,008Realized loss on securities available for sale, net


(1,399
)


(559
)


(199
)Other income


2,871



1,626



1,741Total non interest income


18,604



14,821



13,079Non Interest Expense:Salaries and employee benefits


41,857



37,573



32,791Occupancy


7,490



6,437



5,779Professional services


4,295



4,704



4,941Equipment


4,219



3,289



2,821Business development


2,053



2,332



2,120FDIC assessment


893



193



381Other operating expenses


10,278



10,149



9,579Total non interest expense


71,085



64,677



58,412Income Before Income Taxes


46,523



52,742



52,094Income Taxes


15,646



18,259



18,035Net Income

$
30,877


$
34,483


$
34,059Basic Earnings per Common Share

$
2.84


$
3.20


$
3.14Diluted Earnings per Common Share


2.74



3.08



3.05    68




---



##### Table of Contents



HUDSON
    VALLEY HOLDING CORP. AND SUBSIDIARIES  CONSOLIDATED STATEMENTS OF COMPREHENSIVE
    INCOME
 For the years ended December 31, 2008, 2007 and
    2006
 Dollars in thousands
  2008


2007


2006Net Income

$
30,877


$
34,483


$
34,059Other comprehensive income, (loss) net of tax:Unrealized holding (loss) gain on securities available for sale
    arising during the year


(3,455
)


5,012



696Income tax effect


1,658



(2,194
)


(285
)(1,797
)


2,818



411Reclassification adjustment for net loss realized on securities
    available for sale


1,399



559



199Income tax effect


(566
)


(226
)


(81
)833



333



118Unrealized holding (loss) gain on securities, net


(964
)


3,151



529Accrued benefit liability adjustment


309



(1,011
)


(22
)Income tax effect


(123
)


404



9186



(607
)


(13
)Other comprehensive (loss) income


(778
)


2,544



516Comprehensive Income

$
30,099


$
37,027


$
34,575    69




---



##### Table of Contents



HUDSON
    VALLEY HOLDING CORP. AND SUBSIDIARIES
  CONSOLIDATED BALANCE SHEETS
 December 31, 2008 and 2007
 Dollars in thousands, except per share and share amounts
  2008


2007ASSETSCash and due from banks

$
45,428


$
51,067Federal funds sold


6,679



99,054Securities available for sale, at estimated fair value
    (amortized cost of $647,279 in 2008 and $749,354 in 2007)


642,363



746,493Securities held to maturity, at amortized cost (estimated fair
    value of $29,546 in 2008 and $33,769 in 2007)


28,992



33,758Federal Home Loan Bank of New York (FHLB) stock


20,493



11,677Loans (net of allowance for loan losses of $22,537 in 2008 and
    $17,367 in 2007)


1,677,611



1,289,641Accrued interest and other receivables


16,357



15,252Premises and equipment, net


30,987



27,356Other real estate owned


5,467



Deferred income taxes, net


14,030



10,284Bank owned life insurance


22,853



21,497Goodwill


20,942



15,377Other intangible assets


4,097



4,919Other assets


4,591



4,373TOTAL ASSETS

$
2,540,890


$
2,330,748LIABILITIESDeposits:Non interest-bearing

$
647,828


$
568,418Interest-bearing


1,191,498



1,244,124Total deposits


1,839,326



1,812,542Securities sold under repurchase agreements and other short-term
    borrowings


269,585



76,097Other borrowings


196,813



210,844Accrued interest and other liabilities


27,665



27,578TOTAL LIABILITIES


2,333,389



2,127,061Commitments and contingencies (Note 14)STOCKHOLDERS EQUITYCommon Stock, $0.20 par value; authorized 25,000,000 shares;
    outstanding 10,871,609 and 9,841,890 shares in 2008 and
    2007, respectively


2,367



2,091Additional paid-in capital


250,129



227,173Retained earnings


2,084



2,369Accumulated other comprehensive loss


(5,144
)


(4,366
)Treasury stock, at cost; 964,763 and 611,136 shares in 2008
    and 2007, respectively


(41,935
)


(23,580
)Total stockholders equity


207,501



203,687TOTAL LIABILITIES AND STOCKHOLDERS EQUITY

$
2,540,890


$
2,330,748    70




---



##### Table of Contents



HUDSON
    VALLEY HOLDING CORP. AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF CHANGES IN
    STOCKHOLDERS EQUITY
 For the years ended December 31, 2008, 2007 and
    2006
 Dollars in thousands, except share amounts
  AccumulatedNumber














Otherof








Additional





ComprehensiveShares


Common


Treasury


Paid-In


Retained


IncomeOutstanding


Stock


Stock


Capital


Earnings


(Loss)


TotalBalance at January 1, 2006


8,138,752


$
1,856


$
(34,588
)

$
207,372


$
1,431


$
(6,282
)

$
169,789Net income


















34,059







34,059Grants and exercises of stock options, net of tax


116,319



24







4,510











4,534Purchase of treasury stock


(129,703
)






(6,593
)














(6,593
)Sale of treasury stock


5,730







180



61











241Stock dividend


814,026







26,197



(8,980
)


(17,217
)






Cash dividends ($1.46 per share)


















(15,836
)






(15,836
)Accrued benefit liability adjustment, net of tax






















(13
)


(13
)Adjustment for the initial application of SFAS No. 158, net of
    tax






















(1,144
)


(1,144
)Net unrealized gain on securities available for sale






















529



529Balance at December 31, 2006


8,945,124



1,880



(14,804
)


202,963



2,437



(6,910
)


185,566Net income


















34,483







34,483Grants and exercises of stock options, net of tax


160,766



32







7,041











7,073Purchase of treasury stock


(193,361
)






(10,109
)














(10,109
)Sale of treasury stock


34,871







1,333



562











1,895Stock dividend


894,490



179







16,607



(16,786
)






Cash dividends ($1.64 per share)


















(17,765
)






(17,765
)Accrued benefit liability adjustment, net of tax






















(607
)


(607
)Net unrealized gain on securities available for sale






















3,151



3,151Balance at December 31, 2007


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 ($1.85 per share)


















(20,182
)






(20,182
)Accrued benefit 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
)

$
207,501    71




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##### Table of Contents



HUDSON
    VALLEY HOLDING CORP. AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the years ended December 31, 2008, 2007 and
    2006
 Dollars in thousands
  2006As Restated2008


2007


See Note 18Operating Activities:Net income

$
30,877


$
34,483


$
34,059Adjustments to reconcile net income to net cash provided by
    operating activities:Provision for loan losses


11,025



1,470



2,130Depreciation and amortization


3,554



2,878



2,572Realized loss on security transactions, net


1,399



559



199Amortization of premiums on securities, net


32



389



598Increase in cash value of bank owned life insurance


(943
)


(581
)


(427
)Amortization of other intangible assets


822



822



822Stock option expense and related tax benefits


2,671



995



944Deferred taxes (benefit)


(2,777
)


(998
)


1,283Increase in deferred loan fees


1,564



142



365(Increase) decrease in accrued interest and other receivables


(1,105
)


1,669



(4,296
)(Increase) decrease in other assets


(218
)


30



(799
)Excess tax benefits from share based payment arrangements


(2,075
)


(239
)


(247
)Increase in accrued interest and other liabilities


86



4,410



3,444Decrease (increase) in accrued benefit liability adjustment


311



(1,012
)


(1,921
)Net cash provided by operating activities


45,223



45,017



38,726Investing Activities:Decrease (increase) in short term investments


92,375



(87,196
)


5,471(Increase) decrease in FHLB stock


(8,816
)


2,334



(339
)Proceeds from maturities of securities available for sale


274,216



178,701



165,145Proceeds from maturities of securities held to maturity


4,800



6,205



10,282Proceeds from sales of securities available for sale


65,506



3,003



45,634Purchases of securities available for sale


(239,115
)


(45,876
)


(254,629
)Net increase in loans


(406,025
)


(86,010
)


(197,921
)Net purchases of premises and equipment


(7,185
)


(8,565
)


(10,650
)Premiums paid on bank owned life insurance


(413
)


(10,403
)


(680
)Increase in goodwill


(5,565
)


(4,769
)


(4,544
)Increase in other intangible assets










(3,907
)Net cash used in investing activities


(230,222
)


(52,576
)


(246,138
)Financing Activities:Net increase in deposits


26,784



186,101



218,445Repayment of other borrowings


(14,031
)


(38,527
)


(51,276
)Proceeds from other borrowings










37,550Net increase (decrease) in securities sold under repurchase
    agreements and short term borrowings


193,488



(131,091
)


35,073Proceeds from issuance of common stock


9,439



6,078



3,590Proceeds from sale of treasury stock


670



1,895



241Cash dividends paid


(20,182
)


(17,765
)


(15,836
)Acquisition of treasury stock


(18,883
)


(10,109
)


(6,593
)Excess tax benefits from share based payment arrangements


2,075



239



247Net cash provided by (used in) financing activities


179,360



(3,179
)


221,441(Decrease) Increase in Cash and Due from Banks


(5,639
)


(10,738
)


14,029Cash and due from banks, beginning of year


51,067



61,805



47,776Cash and due from banks, end of year

$
45,428


$
51,067


$
61,805Supplemental Disclosures:Interest paid

$
31,396


$
45,428


$
39,567Income tax payments


17,751



19,452



19,089    72




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##### 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
  Loans 
  Interest Rate Contracts 
 73




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##### Table of Contents



HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Allowance for Loan Losses 
  and/or
        Loan Restructurings 
 74




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##### Table of Contents



HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Income Recognition on Loans 
  Premises and Equipment 
  Other Real Estate Owned (OREO) 
  Goodwill and Other Intangible Assets
  Income Taxes 
  Stock-Based Compensation
 75




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##### Table of Contents



HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Earnings per Common Share 
    2008


2007


2006Weighted average common shares:Basic


10,881,761



10,767,920



10,832,709Effect of stock options


368,326



431,743



348,027Diluted


11,250,087



11,199,663



11,180,736     Disclosures About Segments of an Enterprise and Related
    Information 
  Bank Owned Life Insurance  No. 06-5, Bulletin No. 85-4 No. 06-5), EITF 06-5,
  Retirement Plans 
  Recent
    Accounting Pronouncements
  Fair Value Measurements
 76




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##### Table of Contents



HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  157-2,
  No. 157-3 No. 157-3), No. 157-3 No. 157-3 No. 157-3 No. 157-3
  Employers Accounting for Defined Benefit Pension and
    Other Postretirement Plans
  Accounting for Purchases of Life Insurance  No. 06-5, Bulletin No. 85-4 No. 06-5.) No. 06-5 No. 06-5 EITF No. 06-5
  The Fair Value Option for Financial Assets and Financial
    Liabilities 
  Other 
 77




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##### Table of Contents



HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  2  Securities
    (000s)2008


2007Estimated











EstimatedAmortized


Gross Unrealized


Fair


Amortized


Gross Unrealized


FairCost


Gains


Losses


Value


Cost


Gains


Losses


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

$
45,206


$
288


$
79


$
45,415


$
107,083


$
90


$
384


$
106,789Mortgage-backed securities


371,963



3,487



1,313



374,137



384,711



628



6,464



378,875Obligations of states and political subdivisions


200,858



2,341



1,710



201,489



204,184



3,555



191



207,548Other debt securities


20,082



227



8,665



11,644



22,231



39



791



21,479Total debt securities


638,109



6,343



11,767



632,685



718,209



4,312



7,830



714,691Mutual funds and other equity securities


9,170



613



105



9,678



31,145



682



25



31,802Total

$
647,279


$
6,956


$
11,872


$
642,363


$
749,354


$
4,994


$
7,855


$
746,493   (000s)2008


2007Estimated











EstimatedAmortized


Gross Unrealized


Fair


Amortized


Gross Unrealized


FairCost


Gains


Losses


Value


Cost


Gains


Losses


ValueClassified as Held to MaturityMortgage-backed securities

$
23,859


$
525


$
78


$
24,306


$
28,626


$
41


$
178


$
28,489Obligations of states and political subdivisions


5,133



108



1



5,240



5,132



148







5,280Total

$
28,992


$
633


$
79


$
29,546


$
33,758


$
189


$
178


$
33,769      78




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##### Table of Contents



HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    December 31,
    2008
 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

$
11,700


$
79










$
11,700


$
79Mortgage-backed securities


84,610



472


$
79,505


$
841



164,115



1,313Obligations of states and political subdivisions


52,538



1,477



8,868



233



61,406



1,710Other debt securities


414



102



18,207



8,563



18,621



8,665Total debt securities


149,262



2,130



106,580



9,637



255,842



11,767Mutual funds and other equity securities


8,128



92



83



13



8,211



105Total temporarily impaired securities

$
157,390


$
2,222


$
106,663


$
9,650


$
264,053


$
11,872Classified as Held to MaturityMortgage-backed securities

$
1,621


$
73


$
974


$
5


$
2,595


$
78Obligations of states and political subdivisions


276



1











276



1Total temporarily impaired securities

$
1,897


$
74


$
974


$
5


$
2,871


$
79  79




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##### Table of Contents



HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  December 31,
    2007
  Duration of Unrealized LossLess than 12 Months


Greater than 12 Months


TotalGross





Gross





GrossFair


Unrealized


Fair


Unrealized


Fair


UnrealizedValue


Loss


Value


Loss


Value


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

$
4,997


$
1


$
73,762


$
383


$
78,759


$
384Mortgage-backed securities


43,692



487



207,645



5,977



251,337



6,464Obligations of states and political subdivisions


8,327



42



21,662



149



29,989



191Other debt securities


19,887



791











19,887



791Total debt securities


76,903



1,321



303,069



6,509



379,972



7,830Mutual funds and other equity securities


77



16



27



9



104



25Total temporarily impaired securities

$
76,980


$
1,337


$
303,096


$
6,518


$
380,076


$
7,855Classified as Held to
    MaturityMortgage-backed securities

$
4,951


$
116


$
7,219


$
62


$
12,170


$
178Obligations of states and political subdivisions






















Total temporarily impaired securities

$
4,951


$
116


$
7,219


$
62


$
12,170


$
178    80




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##### Table of Contents



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


FairCost


ValueContractual MaturityWithin 1 year

$
130,242


$
122,736After 1 but within 5 years


89,941



90,109After 5 years but within 10 years


50,940



50,786After 10 years


157



158Mortgaged-back Securities


395,822



398,443Total

$
667,102


$
662,232   3  Credit
    Commitments and Concentrations of Credit Risk
    2008


2007Contract


ContractAmount


AmountCredit commitments-variable

$
357,497


$
375,052Credit commitments-fixed


3,793



3,698Guarantees written


21,095



12,898          81




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##### Table of Contents



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


CommercialProperty


Property


Total2008Loans

$
521,344


$
926,771


$
1,448,115Credit commitments


135,046



98,030



233,076$
656,390


$
1,024,801


$
1,681,1912007Loans

$
351,500


$
758,218


$
1,109,718Credit commitments


150,771



133,029



283,800$
502,271


$
891,247


$
1,393,518     4  Loans
    December 312008


2007Real Estate:Commercial

$
642,923


$
355,044Construction


254,837



211,837Residential


409,431



324,488Commercial and industrial


358,076



377,042Individuals


21,536



29,686Lease financing


18,461



12,463Total


1,705,264



1,310,560Deferred loan fees


(5,116
)


(3,552
)Allowance for loan losses


(22,537
)


(17,367
)Loans, net

$
1,677,611


$
1,289,641    82




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##### Table of Contents



HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    December 312008


2007


2006Balance, beginning of year

$
17,367


$
16,784


$
13,525Add (deduct):Provision for loan losses


11,025



1,470



2,130Amount acquired










1,529Recoveries on loans previously charged-off


322



154



45Charge-offs


(6,177
)


(1,041
)


(445
)Balance, end of year

$
22,537


$
17,367


$
16,784         2008


2007


2006Amount

$
11,284


$
10,719


$
5,572Interest income recorded










Interest income that would have been recorded under the original
    contract terms


875



933



474        83




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##### Table of Contents



HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  5  Premises
    and Equipment
    December 312008


2007Land

$
2,589


$
2,589Buildings


21,917



18,679Leasehold improvements


10,318



6,319Furniture, fixtures and equipment


16,490



20,849Automobiles


719



671Total


52,033



49,107Less accumulated depreciation and amortization


(21,046
)


(21,751
)Premises and equipment, net

$
30,987


$
27,356     6
    Goodwill
    and Other Intangible Assets          2008


2007Gross





GrossCarrying


Accumulated


Carrying


AccumulatedAmount


Amortization


Amount


AmortizationDeposit Premium

$
3,907


$
1,674


$
3,907


$
1,116Customer Relationships


2,470



808



2,470



618Employment Related


516



314



516



240Total

$
6,893


$
2,796


$
6,893


$
1,974  84




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##### Table of Contents



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

Amount2009

$
8222010


8222011


8222012


2642013


264     7
    Deposits    (000s)2008


2007Demand deposits

$
647,828


$
568,418Money Market accounts


631,948



730,429Savings accounts


99,022



93,331Time deposits of $100,000 or more


156,481



202,151Time deposits of less than $100,000


138,504



60,493Checking with interest


165,543



157,720Total Deposits

$
1,839,326


$
1,812,542       December 31,2008


2007Time


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 or less

$
92,298


$
104,103


$
196,401


$
141,688


$
20,930


$
162,618Over three months through 6 months


22,775



11,902



34,677



25,329



12,023



37,352Over 6 months through 12 months


37,849



7,457



45,306



34,702



10,477



45,179Over 12 months


3,559



15,042



18,601



432



17,063



17,495Total

$
156,481


$
138,504


$
294,985


$
202,151


$
60,493


$
262,644  85




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##### Table of Contents



HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  8  Borrowings
        2008


2007


2006Average balance:Short-term

$
161,749


$
167,255


$
234,959Other Borrowings


201,687



230,014



258,308Weighted average interest rate:Short-term


1.4
%


4.7
%


4.8
%Other Borrowings


4.4



4.5



4.5Maximum month-end outstanding amount:Short-term

$
269,585


$
254,581


$
289,575Other Borrowings


210,844



249,369



264,395     and/or Borrower-in-Custody
 86




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##### Table of Contents



HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  9  Income
    Taxes
    Years Ended December 312008


2007


2006Income tax at statutory rate

$
16,283



35.0
%

$
18,442



35.0
%

$
18,233



35.0
%State income tax, net of Federal benefit


2,330



5.0



2,704



5.0



2,746



5.3Tax-exempt interest income


(2,832
)


(6.1
)


(2,914
)


(5.5
)


(2,970
)


(5.7
)Non-deductible expenses and other


(135
)


(0.3
)


27



0.1



26



Provision for income taxes

$
15,646



33.6
%

$
18,259



34.6
%

$
18,035



34.6
%     Years Ended December 312008


2007


2006Federal:Current

$
14,278


$
15,007


$
14,786Deferred


(2,217
)


(880
)


(991
)State and Local:Current


4,144



4,473



4,591Deferred


(559
)


(341
)


(351
)Total

$
15,646


$
18,259


$
18,035     December 31, 2008


December 31, 2007Asset


Liability


Asset


LiabilityAllowance for loan losses

$
9,010






$
7,028Supplemental pension benefit


3,242







3,042Accrued benefit liability


1,518







1,641Securities available for sale


2,048







955Interest on non-accrual loans


554







421Deferred compensation


285







413Share based compensation costs


123







186Other


716







111Intangible Assets





$
(2,063
)





$
(1,911
)Property and equipment






(1,403
)






(1,602
)Total

$
17,496


$
(3,466
)

$
13,797


$
(3,513
)Net deferred tax asset

$
14,030






$
10,284    87




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##### Table of Contents



HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
          10  Stockholders
    Equity
       88




---



##### Table of Contents



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


Under PromptCapital Adequacy


Corrective ActionActual


Purposes


ProvisionCapital Ratios:

Amount


Ratio


Amount


Ratio


Amount


RatioHVB Only:As of December 31,2008:Total Capital (To Risk Weighted Assets)

$
195,390



11.1
%

$
140,709



8.0
%

$
175,887



10.0
%Tier 1 Capital (To Risk Weighted Assets)


174,375



9.9
%


70,355



4.0
%


105,532



6.0
%Tier 1 Capital (To Average Assets)


174,375



7.4
%


94,258



4.0
%


117,823



5.0
%As of December 31,2007:Total Capital (To Risk Weighted Assets)

$
190,043



13.5
%

$
112,612



8.0
%

$
140,765



10.0
%Tier 1 Capital (To Risk Weighted Assets)


173,936



12.4
%


56,306



4.0
%


84,459



6.0
%Tier 1 Capital (To Average Assets)


173,936



8.2
%


84,909



4.0
%


106,137



5.0
%NYNB Only:As of December 31,2008:Total Capital (To Risk Weighted Assets)

$
10,619



11.4
%

$
7,455



8.0
%

$
9,319



10.0
%Tier 1 Capital (To Risk Weighted Assets)


9,444



10.1
%


3,727



4.0
%


5,591



6.0
%Tier 1 Capital (To Average Assets)


9,444



6.7
%


5,674



4.0
%


7,092



5.0
%As of December 31,2007Total Capital (To Risk Weighted Assets)

$
11,103



12.6
%

$
7,054



8.0
%

$
8,817



10.0
%Tier 1 Capital (To Risk Weighted Assets)


9,991



11.3
%


3,527



4.0
%


5,290



6.0
%Tier 1 Capital (To Average Assets)


9,991



7.1
%


5,590



4.0
%


6,987



5.0
%   Minimum forCapital AdequacyActual


PurposesAmount


Ratio


Amount


RatioConsolidated:As of December 31,2008:Total Capital (To Risk Weighted Assets)

$
209,608



11.3
%

$
148,035



8.0
%Tier 1 Capital (To Risk Weighted Assets)


187,070



10.1
%


74,017



4.0
%Tier 1 Capital (To Average Assets)


187,070



7.5
%


99,412



4.0
%As of December 31,2007:Total Capital (To Risk Weighted Assets)

$
205,297



13.8
%

$
119,264



8.0
%Tier 1 Capital (To Risk Weighted Assets)


187,930



12.6
%


59,632



4.0
%Tier 1 Capital (To Average Assets)


186,949



8.3
%


90,510



4.0
%     Rule 15c3-1
 89




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##### Table of Contents



HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Stock
    Dividend
    11  Stock-Based
    Compensation
      WeightedAggregate


AverageShares


Weighted Average


Intrinsic


RemainingUnderlying


Exercise Price


Value(1)


ContractualOutstanding Options

Options


Per Share


($000s)


Term (Yrs.)As of December 31, 2007


1,128,116


$
25.38Granted


22,958



48.01Cancelled or expired


(27,149
)


22.19Exercised


(425,313
)


38.63As of December 31, 2008


698,612


$
27.54



14,293



4.8Exercisable as of December 31, 2008


497,075


$
24.72



11,573



4.6Available for future grant


959,243    (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, 2008. This amount changes
    based on changes in the market value of the Companys stock. 90




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##### Table of Contents



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


RemainingExercise Price


of


Life


ExerciseRange


Options


(yrs)


Price$
13.32


$
22.55



213,248



2.8


$
17.91$
22.56


$
27.08



239,119



5.7


$
24.18$
31.56


$
51.08



246,245



5.8


$
39.15Total Options Outstanding

$
13.32


$
51.08



698,612



4.8


$
27.54Exercisable

$
13.32


$
51.08



497,075



4.6


$
24.72Not Exercisable

$
22.55


$
51.08



201,537



5.5


$
34.51     Years Ended December 312008


2007


2006Weighted average assumptions:Dividend yield


3.3
%


3.6
%


4.4
%Expected volatility


67.6
%


30.9
%


9.8
%Risk-free interest rate


0.3
%


3.8
%


4.6
%Expected lives


0.4



2.5



4.8       12  Fair
    Value
    Level 1:
  Level 2:
 91




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##### Table of Contents



HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Level 3:
        Fair Value Measurements at December 31, 2008Quoted Prices in


Significant


SignificantActive Markets


Other


Unobservablefor Identical


Observable Inputs


InputsAssets (Level 1)


(Level 2)


(Level 3)


Total(000s)Measured on a recurring basis:Available for sale securities





$
631,577


$
10,786


$
642,363Total assets at fair value

$



$
631,577


$
10,786


$
642,363Measured on a non-recurring basis:Impaired loans(1)









$
11,284


$
11,284Total assets at fair value

$



$



$
11,284


$
11,284     (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 on December 31, 2008 was
    $11.3 million for which no specific allowance has been
    established within the allowance for loan losses. 92




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##### Table of Contents



HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
     Level 3 AssetsMeasured on aRecurring Basis(000s)Beginning balance as of January 1, 2008


Transfers into (out of) Level 3

$
19,887Total unrealized loss included in comprehensive income(1)


(7,568
)Principal payments


(472
)Total realized loss included in the statement of income(2)


(1,061
)Balance as of December 31, 2008

$
10,786     (1)
    
    Reported under Unrealized (loss) gain on securities
    available for sale arising during the period.(2)
    
    Reported under Realized (loss) gain on securities
    available for sale, net.  13  Benefit
    Plans
           93




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##### Table of Contents



HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    2008


2007Change in benefit obligation:Benefit obligation at beginning of year

$
11,570


$
9,307Service cost


448



404Interest cost


621



565Amendments


(861
)


Actuarial (gain) loss


587



1,905Benefits paid


(611
)


(611
)Benefit obligation at end of year


11,754



11,570Change in plan assets:Fair value of plan assets at beginning of year






Actual return on assets






Employer contributions


611



611Benefits paid


(611
)


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






     2008


2007Net actuarial loss

$
3,703


$
3,709Prior service cost


92



394$
3,795


$
4,103     2008


2007Weighted average assumptions:Discount rate


5.25
%


5.25
%Expected return on plan assets






Rate of compensation increase


5.00
%


5.00
%Components of net periodic benefit cost and other amounts
    recognized in other comprehensive income:Service cost

$
448


$
404Interest cost


621



565Expected return on plan assets






Amortization of transition obligation


(603
)


95Amortization of prior service cost


44



145Amortization of net loss


593



652Net periodic benefit cost

$
1,103


$
1,861Net (gain) loss


(265
)


1,157Amortization of prior service cost


(44
)


(145
)Total recognized in other comprehensive income


(309
)


1,012Total recognized in net periodic benefit cost and other
    comprehensive income

$
794


$
2,873    94




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##### Table of Contents



HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Pension Benefits2009

$
6112010


7532011


6382012


8502013


1,012Years 2014-2018


4,185    14  Commitments,
    Contingent Liabilities and Other Disclosures
    Year Ending December 31,2009

$
2,6952010


2,5832011


2,2602012


2,1922013


1,998Thereafter


10,583Total minimum future rentals

$
22,311         Cash
    Reserve Requirements
    Restrictions
    on Funds Transfers
    15  Segment
    Information
   95




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##### Table of Contents



HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
      16  Fair
    Value of Financial Instruments
      December 312008


2007Carrying


Estimated


Carrying


EstimatedAmount


Fair Value


Amount


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

$
52.1


$
52.1


$
150.1


$
150.1Held to maturity securities, FHLB stock and accrued interest


49.6



50.1



45.6



45.6Loans and accrued interest


1,698.4



1,700.7



1,314.8



1,336.8Liabilities:Deposits with no stated maturity and accrued interest


1,547.4



1,547.4



1,553.8



1,553.8Time deposits and accrued interest


295.7



294.8



263.7



265.7Securities sold under repurchase agreements and other short-term
    borrowings and accrued interest


269.6



269.6



76.1



76.1Other borrowings and accrued interest


197.7



186.1



211.8



206.4Financial liabilities for which carrying value approximates fair
    value














     Financial assets for which carrying value approximates fair
    value
  Held to maturity securities, FHLB stock and accrued
    interest
 96




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##### 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
    2008


2007AssetsCash

$
3,787


$
4,954Investment in subsidiaries


202,906



198,100Other assets


1,308



25Equity securities


120



1,199Total Assets

$
208,121


$
204,278Liabilities and Stockholders EquityOther liabilities

$
620


$
591Stockholders equity


207,501



203,687Total Liabilities and Stockholders Equity

$
208,121


$
204,278   Condensed
    Statements of Income
    2008


2007


2006Dividends from subsidiaries

$
28,208


$
24,708


$
32,955Dividends from equity securities


85



65



61Other income






12



24Operating expenses


344



234



537Income before equity in undistributed earnings in the
    subsidiaries


27,949



24,551



32,503Equity in undistributed earnings of the subsidiaries


2,928



9,932



1,556Net Income

$
30,877


$
34,483


$
34,059  97




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##### Table of Contents



HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Condensed
    Statements of Cash Flows
    2008


2007


2006Operating Activities:Net income

$
30,877


$
34,483


$
34,059Adjustments to reconcile net income to net cash provided by
    operating activities:Equity in undistributed earnings of the subsidiaries


(2,928
)


(9,932
)


(1,556
)Increase in other assets


(95
)


(25
)


Increase (decrease) in other liabilities


18



(20
)


(121
)Other changes, net






(11
)


(38
)Net cash provided by operating activities


27,872



24,495



32,344Investing Activities:Proceeds from sales of equity securities


2



19



29Purchase of equity securities including acquisition of New York
    National Bank


(85
)


(9
)


(13,520
)Net cash (used in) provided by investing activities


(83
)


10



(13,491
)Financing Activities:Proceeds from issuance of common stock and sale of treasury stock


10,109



7,973



3,831Purchase of treasury stock


(18,883
)


(10,109
)


(6,593
)Cash dividends paid


(20,182
)


(17,765
)


(15,836
)Net cash used in financing activities


(28,956
)


(19,901
)


(18,598
)(Decrease) increase Cash and Due from Banks


(1,167
)


4,604



255Cash and due from banks, beginning of year


4,954



350



95Cash and due from banks, end of year

$
3,787


$
4,954


$
350   18  Restatement
     98




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##### Table of Contents



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





As(Dollars in thousands)

Presented


Adjustment


RestatedFor the year ended December 31, 2006:Increase in cash value of bank owned life insurance





$
(427
)

$
(427
)Amortization of other intangible assets






822



822Deferred tax (benefit)

$
959



324



1,283Decrease (increase) in other assets


(9,211
)


8,412



(799
)Net cash provided by operating activities


29,595



9,131



38,726Premiums paid on bank owned life insurance






(680
)


(680
)Increase in goodwill






(4,544
)


(4,544
)Increase in other intangible assets






(3,907
)


(3,907
)Net cash used in investing activities


(237,007
)


(9,131
)


(246,138
)   19  
    Financial Crisis and Recent Regulatory Actions
     99




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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   100




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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


698,612


$
27.54



959,243Equity 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    PART
    IV
  ITEM 15.  EXHIBITS
    AND FINANCIAL STATEMENT SCHEDULES  1. Financial
    Statements
    
    Report of Independent Registered Public Accounting Firm
    Report of Independent Registered Public Accounting Firm 101




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##### Table of Contents




    Consolidated Statements of Income for the Years Ended
    December 31, 2008, 2007 and 2006
    Consolidated Statements of Comprehensive Income for the Years
    Ended December 31, 2008, 2007 and 2006
    Consolidated Balance Sheets at December 31, 2008 and 2007
    Consolidated Statements of Changes in Stockholders Equity
    for the Years Ended December 31, 2008, 2007 and 2006
    Consolidated Statements of Cash Flows for the Years Ended
    December 31, 2008, 2007 and 2006
    Notes to Consolidated Financial Statements  2. Financial
    Statement Schedules
   102




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##### Table of Contents



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


Exhibit Title3.1


Amended and Restated Certificate of Incorporation of Hudson
    Valley Holding
    Corp.(6)3.2


Amended and Restated By-Laws of Hudson Valley Holding
    Corp.(7)3.3


Specimen of Common Stock
    Certificate(5)4.1


Specimen Stock Restriction Agreement Between the Company and a
    Shareholder who Acquired Shares from the Company or a
    Shareholder Subject to the
    Agreement(4)10.1


Hudson Valley Bank Amended and Restated Directors Retirement
    Plan Effective December 31,
    2008(8)10.2


Hudson Valley Bank Restated and Amended Supplemental Retirement
    Plan, effective
    December 1, 1995*(5)10.3


Hudson Valley Bank Supplemental Retirement Plan of
    1997*(5)10.4


Amended and Restated 2002 Stock Option
    Plan*(8)10.5


Specimen Non-Statutory Stock Option
    Agreement*(5)10.6


Specimen Incentive Stock Option
    Agreement*(3)10.7


Consulting Agreement Between the Company and Director
    John A.
    Pratt, Jr.*(5)10.8


Acquisition Agreement dated June 29, 2004 by and among the
    shareholders of A. R. Schmeidler & Co., Inc., as Sellers,
    A. R. Schmeidler & Co., Inc., Hudson Valley Bank, as Buyer,
    and Hudson Valley Holding
    Corp.(1)10.9


Agreement and Plan of Consolidation, dated December 23,
    2004, between Hudson Valley Holding Corp., a New York
    corporation and registered bank holding company and New York
    National Bank, a national banking
    association.(2)11


Statements re: Computation of Per Share
    Earnings(8)21


Subsidiaries of the
    Company(8)23.1


Consent of Crowe Horwath
    LLP(8)23.2


Consent of Deloitte & Touche
    LLP(8)31.1


Certification of Chief Executive Officer Pursuant to
    Section 302 of the Sarbanes-Oxley Act of
    2002(8)31.2


Certification of Chief Financial Officer Pursuant to
    Section 302 of the Sarbanes-Oxley Act of
    2002(8)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(8)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(8)     (1)
    Incorporated herein by reference in this document to the
    Form 8-K
    filed on June 30, 2004(2)
    Incorporated herein by reference in this document to the
    Form 8-K
    filed on December 27, 2004(3)
    Incorporated herein by reference in this document to the
    Form 10-K
    filed on March 11, 2005(4)
    Incorporated herein by reference in this document to the
    Form 10-Q
    filed on August 9, 2006(5)
    Incorporated herein by reference in this document to the
    Form 10-K
    filed on March 15, 2007(6)
    Incorporated herein by reference in this document to the
    Form 10-Q
    filed November 9, 2007(7)
    Incorporated herein by reference in this document to the
    Form 10-Q
    filed on May 12, 2008(8)
    Filed herewith 103




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##### Table of Contents



SIGNATURES       By:
    /s/  James
    J. Landy       James
    J. Landy
     Stephen
    R. Brown
      William
    E. Griffin
     James
    M. Coogan
     Mary
    Jane Foster
     Gregory
    F. Holcombe
     Adam
    Ifshin
     Michael
    J. Maloney
      Angelo
    R. Martinelli
     William
    J. Mulrow
     John
    A. Pratt Jr.
     Cecile
    D. Singer
     Craig
    S. Thompson
     Andrew
    J. Reinhart
     104