Worst CEO of 2011 (NASDAQ: HCBK)

NEW YORK - So soon after winning the "Banker of the Year Award" from non credible Jim Cramer, HCBK has fallen on very tough times mostly the result of their arrogant CEO. We here are naming Hermance the worst CEO of 2011. The CEO who used to love going on CNBC saying why HCBK is different in all the right ways has disappeared not explaining why HCBK is different but in all the wrong ways.

What Hermance did to HCBK was destroy shareholder value. Hermance leveraged up the bank before the financial crisis buying government guaranteed short term mortgage backed security bonds at above 5% yields he then sold Hudson City long term bonds at 4% and made a nice little difference on the spread. Hermance did this with $30 billion dollars which after tax added about $180 million a year to net income. However Hermance's gamble did not pay off. The CEO decided his bank was a conservatively invested overleveraged hedge fund. All Hermance's bets lost with the mortgage crisis. Mortgage backed securities rates plummeted and the debt that Hermance sold could not be repriced. This led to shrinking margins until the calamity which has followed in the last year. The calamity happened since margins shrunk so much that it could no longer continue and HCBK had to buy out its debt. The value of debt goes up as interest rates decline because less attractive rates can be found elsewhere.

HCBK reported another huge loss today to the tune of $360.5 million as the bank refinances its debt. The company is also making poor operating profits. The company's adjusted operating profit would have been $89 million assuming all one time costs are eliminated. That would be an adjusted return on tangible equity of 8%.

The bank still has huge fair value holes on its balance sheet and either expect declining returns or more buyouts of debt and further losses going forward. The bank is now competing with Fannie Mae and Freddie Mac which is buying loans from other banks which were typically not bought before. The company suffers from declining loans and poor loan quality.

Let 2012 be another disastrous year for the worst CEO in banking