Quarterly Cash Dividend Declared of $0.07 per Common Share PARAMUS,
N.J., Oct. 19 /PRNewswire-FirstCall/ -- Hudson City Bancorp, Inc.
(NASDAQ:HCBK), the holding company for Hudson City Savings Bank,
reported today the results of its operations for the three- and
nine-month periods ended September 30, 2005. Financial Highlights
-- Net income was $75.0 million for the third quarter of 2005, an
increase of 21.0% as compared to the third quarter of 2004 and an
increase of 16.6% as compared to the second quarter of 2005. Net
income increased 13.9% to $201.3 million for the nine-month period
ended September 30, 2005 from $176.7 million for the nine-month
period ended September 30, 2004. -- Basic and diluted earnings per
common share were $0.13 for the third quarter of 2005 compared with
$0.11 for the third quarter of 2004 and $0.11 for the second
quarter of 2005. Basic and diluted earnings per common share were
$0.35 and $0.34, respectively, for the first nine months of 2005
compared with basic and diluted earnings per common share of $0.31
and $0.30, respectively, for the first nine months of 2004.
Earnings per share, dividends per share and share counts for
quarterly and year-to-date periods prior to the second quarter of
2005 have been adjusted to reflect the 3.206 stock split due to our
second- step conversion. -- At its meeting yesterday, the Board of
Directors declared a quarterly cash dividend of $0.07 per common
share. The cash dividend is payable on December 1, 2005 to
stockholders of record at the close of business on November 4,
2005. -- The Board of Directors also approved a plan to repurchase
up to 29,880,000 shares of Hudson City Bancorp stock. The shares
approved to be repurchased approximate five percent of outstanding
shares. The fifth stock repurchase program, which has been
suspended due to our second-step conversion and stock offering, has
been canceled due to the approval of this sixth plan. -- Net
interest income was $152.2 million for the third quarter of 2005,
an increase of 22.7% as compared to the third quarter of 2004 and
an increase 15.6% as compared to the second quarter of 2005. Net
interest income was $409.7 million for the nine-month period ended
September 30, 2005, an increase of 14.3% from $358.5 million for
the nine-month period ended September 30, 2004. -- Our annualized
return on average stockholders' equity and annualized return on
average assets for the third quarter of 2005 were 5.56% and 1.15%,
respectively, compared with 18.98% and 1.31%, respectively, for the
third quarter of 2004 and 10.26% and 1.11%, respectively, for the
second quarter of 2005. Our annualized return on average
stockholders' equity and annualized return on average assets for
the nine-month period ended September 30, 2005 were 8.57% and
1.15%, respectively, compared with 17.55% and 1.29%, respectively,
for the nine-month period ended September 30, 2004. -- Our net
interest rate margin and net interest rate spread were 2.37% and
1.68%, respectively, for the third quarter of 2005 compared with
2.67% and 2.45%, respectively, for the third quarter of 2004 and
2.34% and 2.02%, respectively, for the second quarter of 2005. For
the first nine months of 2005, our net interest rate margin and net
interest rate spread were 2.38% and 1.95%, respectively, compared
with 2.67% and 2.45%, respectively, for the first nine months of
2004. -- Our efficiency ratio for the third quarter of 2005 was
21.44% compared with 22.42% for the third quarter of 2004 and
22.76% for the second quarter of 2005. Our efficiency ratio for the
first nine months of 2005 was 22.57% compared with 23.49% for the
first nine months of 2004. -- Total loans outstanding increased
$2.46 billion to $13.82 billion at September 30, 2005. This
increase reflected purchases and originations of first mortgage
loans of $2.62 billion and $1.45 billion, respectively, during the
first nine months of 2005 compared with $2.36 billion and $1.11
billion, respectively, during the first nine months of 2004. First
mortgage loans purchased and originated during the third quarter of
2005 were $702.9 million and $639.2 million, respectively. --
Non-performing loans as a percent of total loans were 0.11% as of
September 30, 2005 compared with 0.19% as of December 31, 2004. The
allowance for loan losses as a percent of non-performing loans was
175.98% as of September 30, 2005 compared with 126.44% as of
December 31, 2004. We provided $65,000 to the allowance for loan
losses and had a net recovery of $8,000 during the first nine
months of 2005 compared with a provision of $675,000 and a net
charge-off of $12,000 during the first nine months of 2004. --
Borrowed funds increased $2.60 billion to $9.75 billion for the
nine months ended September 30, 2005. The funds borrowed during the
first nine months of 2005 have maturities of ten years and initial
call dates ranging from three to five years. -- During the third
quarter of 2005, the independent trustee of our Employee Stock
Ownership Plan ("ESOP") purchased 15,719,223 shares of common
stock, or four percent of the outstanding shares after completion
of our second-step conversion, at an aggregate cost of $189.3
million. The purchase of these additional shares completes the
purchase of shares for our ESOP. "We continue to see balance sheet
growth as the key to our future economic success, particularly in
this challenging interest rate environment," said Ronald E.
Hermance, Jr., Chairman, President and Chief Executive Officer.
"The capital we acquired from our highly successful second-step
conversion and stock offering will allow us to maintain this growth
strategy, which we anticipate will be funded by borrowed funds and
customer deposits. In keeping with our thrift business model, we
intend the asset growth to be primarily through the origination and
purchase of traditional fixed- and variable-rate first mortgage
loans. We believe this growth strategy and our attention to
efficient operation, even in this market interest rate environment,
will provide value to our shareholders through continued earnings
and payment of dividends," added Mr. Hermance. Statement of Income
Summary Our results of operations depend primarily on net interest
income, which, in part, is a direct result of the market interest
rate environment. Net interest income is the difference between the
interest income we earn on our interest-earning assets, primarily
mortgage loans, mortgage-backed securities and investment
securities, and the interest we pay on our interest-bearing
liabilities, primarily time deposits, interest-bearing demand
deposits and borrowed funds. Net interest income is affected by the
shape of the market yield curve, the timing of the placement and
repricing of interest-earning assets and interest-bearing
liabilities on our balance sheet, and the prepayment rate on our
mortgage-related assets. Our results of operations may also be
affected significantly by general and local economic and
competitive conditions, particularly those with respect to changes
in market interest rates, government policies and actions of
regulatory authorities. Our results are also affected by the market
price of our stock, as the expense of certain of our employee stock
compensation plans is related to the current price of our common
stock. For both the three- and nine-month periods ended September
30, 2005, our growth in interest income was derived from the
overall growth in our balance sheet, while the increase in interest
expense reflected the growth in our interest-bearing liabilities
and increases in the prevailing interest rate environment.
Short-term market interest rates generally increased during the
first nine months of 2005 following increases during the entirety
of 2004. The Federal Open Market Committee of the Federal Reserve
Bank ("FOMC") increased the overnight lending rate 25 basis points
at each of the regularly scheduled meetings beginning in June 2004
to the current rate of 3.75%. Intermediate- term market interest
rates, those with maturities of two to five years, and long-term
market interest rates, in particular the 10- and 30- year bonds,
also increased during the first nine months of 2005, but at a
slower pace than short-term interest rates. The result of these
market interest rate changes was a continued flattening of the
market yield curve during the first nine months of 2005. In this
rate environment, our net interest margin decreased 30 basis points
when comparing the third quarter of 2005 with the same period in
2004 and 29 basis points when comparing the first nine months of
2005 to the first nine months of 2004, as our interest income, in
general, reflects movements in long-term rates while our interest
expense, in general, reflects movements in short-term rates. The
$28.2 million increase in the third quarter of 2005 and the $51.2
million increase during the first nine months of 2005 in our net
interest income, when compared to the same periods in 2004,
reflects the 38.7% and 27.9% growth, respectively, in the average
balance of our total interest- earning assets over the prior year
periods, as compared to the growth in the average balance of our
total interest-bearing liabilities of 18.3% and 20.0%, over those
same periods. This difference in growth rates offset the negative
impact of the flattening market yield curve. We anticipate that
short-term interest rates will continue to increase through the
remainder of 2005 and into 2006, as it is anticipated the FOMC will
continue to increase the Fed funds rate at its current measured
pace, and long-term interest rates will increase at a similar rate,
thus maintaining the flat market yield curve. The result of this
potential market interest rate scenario would have a negative
impact on our results of operations and our net interest margin as
our interest-earning assets, both loans and securities, generally
price off long-term interest rates, while our interest-bearing
liabilities, primarily deposits, generally price off short-term
interest rates. Additionally, the cost on both deposits and
borrowed funds will reset to the current market interest rates
faster than the change to our interest- earning assets. Total
interest and dividend income for the three months ended September
30, 2005 increased $79.5 million, or 33.9%, to $313.8 million
compared with $234.3 million for the three months ended September
30, 2004. This increase was primarily due to a $7.21 billion, or
38.7%, increase in the average balance of interest-earning assets
to $25.86 billion for the three months ended September 30, 2005
from $18.65 billion for the three months ended September 30, 2004,
reflecting our internally generated balance sheet growth and the
investment of the net proceeds from the second-step conversion and
stock offering. The increase in interest and dividend income due to
the growth in average interest-earning assets was partially offset
by a 17 basis point decrease in the annualized weighted-average
yield on total average interest- earning assets to 4.85% for the
third quarter of 2005 compared with 5.02% for the third quarter of
2004. This decrease in yield was primarily the result of a shift in
our interest-earning asset mix to shorter-term investment
securities to help manage our interest rate risk. More
specifically, part of the proceeds from our second-step conversion
and stock offering were invested into agency discount notes with
maturities ranging from one to six months. The $39.2 million
increase in interest and fees on mortgage loans was due to the
growth in the average balance of $3.04 billion. The $25.9 million
increase in interest and dividends on total investment securities
was primarily due to growth in the average balance of $2.81
billion, which reflected the investment during 2004 of certain of
the cash flows from prepayment activity on our mortgage-related
assets into investment securities and the investment of part of the
net proceeds from the second-step conversion and stock offering.
The $12.3 million increase in interest on mortgage-backed
securities was primarily due to a $1.32 billion increase in the
average balance reflecting increased purchases of adjustable-rate
securities during the first nine months of 2005 and the investment
of part of the net proceeds from the second-step offering. Total
interest and dividend income for the nine months ended September
30, 2005 increased $178.5 million, or 26.7%, to $846.6 million
compared with $668.1 million for the nine months ended September
30, 2004. This increase was primarily due to a $4.99 billion, or
27.9%, increase in the average balance of interest-earning assets
to $22.87 billion for the nine months ended September 30, 2005 from
$17.88 billion for the nine months ended September 30, 2004,
reflecting our balance sheet growth and the investment of the net
proceeds from the second-step conversion and stock offering. The
increase in interest and dividend income due to the growth in
average interest-earning assets was partially offset by a 5 basis
point decrease in the annualized weighted- average yield on total
average interest-earning assets to 4.93% for the first nine months
of 2005 compared with 4.98% for the first nine months of 2004. This
decrease in yield was primarily the result of a shift in our
interest- earning asset mix to shorter-term investment securities.
The $110.8 million increase in interest and fees on mortgage loans
was due to the growth in the average balance of $2.82 billion. The
$45.2 million increase in interest and dividends on total
investment securities was primarily due to growth in the average
balance of $1.56 billion, which reflected the investment during
2004 of certain of the cash flows from prepayment activity on our
mortgage-related assets into investment securities and the
investment of part of the net offering proceeds from the
second-step conversion and stock offering. The $14.6 million
increase in interest on mortgage-backed securities was primarily
due to a $554.3 million increase in the average balance due to the
investment of part of the net offering proceeds from the
second-step conversion and stock offering. Total interest expense
for the three months ended September 30, 2005 increased $51.3
million, or 46.5%, to $161.6 million compared with $110.3 million
for the three months ended September 30, 2004. This increase was
partially due to a $3.12 billion, or 18.3%, increase in the average
balance of total interest-bearing liabilities to $20.20 billion for
the three months ended September 30, 2005 compared with $17.08
billion for the corresponding period in 2004. The increase in the
average balance of interest-bearing liabilities funded a portion of
our asset growth. The increase in total interest expense was also
due to a 60 basis point increase in the annualized weighted-average
cost of total interest-bearing liabilities to 3.17% for the
three-month period ended September 30, 2005 compared with 2.57% for
the three- month period ended September 30, 2004, which reflected
the growth and repricing of our interest-bearing liabilities during
the rising short-term interest rate environment experienced during
2004 and the first nine months of 2005. The $29.2 million increase
in interest expense on borrowed funds for the three months ended
September 30, 2005 was due to an increase in the average balance of
borrowed funds of $2.97 billion, which was primarily used to fund
loan growth, and an 11 basis point increase in the annualized
weighted-average cost. The $22.1 million increase in interest
expense on interest-bearing deposits was due to a $152.6 million
increase in the average balance of interest-bearing deposits and a
78 basis point increase in the annualized weighted-average cost due
to rising short-term interest rates experienced during 2004 and the
first nine months of 2005. Total interest expense for the nine
months ended September 30, 2005 increased $127.3 million, or 41.1%
to $436.9 million compared with $309.6 million for the nine months
ended September 30, 2004. This increase was partially due to a
$3.27 billion, or 20.0%, increase in the average balance of total
interest-bearing liabilities to $19.60 billion for the nine months
ended September 30, 2005 compared with $16.33 billion for the
corresponding period in 2004. The increase in the average balance
of interest-bearing liabilities funded a portion of our asset
growth. The increase in total interest expense was also due to a 45
basis point increase in the annualized weighted-average cost of
total interest-bearing liabilities to 2.98% for the nine-month
period ended September 30, 2005 compared with 2.53% for the
nine-month period ended September 30, 2004, which reflected the
growth and repricing of our interest- bearing liabilities during
the rising short-term interest rate environment experienced during
2004 and the first nine months of 2005. The $72.4 million increase
in interest expense on borrowed funds for the nine months ended
September 30, 2005 was due to an increase in the average balance of
borrowed funds of $2.58 billion and a 7 basis point increase in the
annualized weighted-average cost. The $54.8 million increase in
interest expense on interest-bearing deposits was due to a $696.4
million increase in the average balance of interest-bearing
deposits and a 54 basis point increase in the annualized
weighted-average cost due to rising short-term interest rates
experienced during 2004 and the first nine months of 2005. Net
interest income for the three months ended September 30, 2005
increased $28.2 million, or 22.7%, to $152.2 million compared with
$124.0 million for the corresponding period in 2004. Our net
interest rate spread, determined by subtracting the annualized
weighted-average cost of total interest-bearing liabilities from
the annualized weighted-average yield on total interest-earning
assets, was 1.68% for the third quarter of 2005 compared with 2.45%
for the corresponding period in 2004. For the third quarter of
2005, our net interest margin, determined by dividing annualized
net interest income by total average interest-earning assets, was
2.37% compared with 2.67% for the corresponding 2004 period. Net
interest income for the nine months ended September 30, 2005
increased $51.2 million, or 14.3%, to $409.7 million compared with
$358.5 million for the corresponding period in 2004. Our net
interest rate spread was 1.95% for the first nine months of 2005
compared with 2.45% for the corresponding period in 2004. For the
first nine months of 2005, our net interest margin was 2.38%
compared with 2.67% for the corresponding 2004 period. The increase
in our net interest income in both the three- and nine-month
periods reflected, in part, our overall internally generated
balance sheet growth and the investment of the net proceeds from
the second-step conversion and stock offering, partially offset by
the increase in the costs of our deposits and borrowed funds. The
decrease in the net interest rate spread and net interest margin
was primarily due to the increase in the weighted-average cost of
interest-bearing liabilities and the decrease in the
weighted-average yield on our interest-earning assets. The increase
in the cost of our interest-bearing liabilities reflected the
rising short-term interest rate environment and the borrowing of
funds with longer terms to initial reprice or maturity than in
previous periods. The decrease in the yield on our interest-
earning assets reflected the shift in our investment portfolio to
shorter-term interest-earning assets; by purchasing and originating
a larger percentage of adjustable-rate instruments and purchasing
agency discount notes with part of the proceeds from our
second-step conversion and stock offering. We did not provide for
the allowance for loan losses during the three- month period ended
September 30, 2005, however, we provided $225,000 during the
three-month period ended September 30, 2004. The provision for loan
losses was $65,000 for the nine-month period ended September 30,
2005 compared to $675,000 for the nine-month period ended September
30, 2004. Net recoveries for the first nine months of 2005 were
$8,000 compared with net charge-offs of $12,000 for the
corresponding 2004 period. The allowance for loan losses increased
$73,000 to $27.4 million at September 30, 2005 compared with $27.3
million at December 31, 2004. The allowance for loan losses as a
percent of total loans was 0.20% at September 30, 2005 compared
with 0.24% at December 31, 2004. Non-performing loans at September
30, 2005 were $15.6 million compared with $21.6 million at December
31, 2004. The ratio of non-performing loans to total loans was
0.11% at September 30, 2005 compared with 0.19% at December 31,
2004. The ratio of allowance for loan losses to total non-
performing loans was 175.98% at September 30, 2005 compared with
126.44% at December 31, 2004. Total non-interest income for the
three months ended September 30, 2005 was $1.4 million compared
with $4.9 million for the corresponding 2004 period. Total
non-interest income for the nine months ended September 30, 2005
was $6.5 million compared with $12.4 million for the corresponding
2004 period. These decreases in total non-interest income reflected
decreases in gains on securities transactions, net, as no sales of
securities occurred during the second or third quarters of 2005.
Total non-interest expense for the three months ended September 30,
2005 and 2004 was $32.9 million and $28.9 million, respectively,
which primarily reflected increases in net occupancy expense and
employee compensation. Our efficiency ratio for the three months
ended September 30, 2005, determined by dividing total non-interest
expense by the sum of net interest income and total non-interest
income, was 21.44% compared with 22.42% for the corresponding 2004
period. Our annualized ratio of non-interest expense to average
total assets for the three months ended September 30, 2005 was
0.50% compared with 0.61% for the corresponding period in 2004.
Total non-interest expense for the nine months ended September 30,
2005 and 2004 was $93.9 million and $87.1 million, respectively,
which primarily reflected increases in net occupancy expense and
employee compensation. Our efficiency ratio for the nine months
ended September 30, 2005 was 22.57% compared with 23.49% for the
corresponding 2004 period. Our annualized ratio of non-interest
expense to average total assets for the nine months ended September
30, 2005 was 0.54% compared with 0.64% for the corresponding period
in 2004. Income tax expense for the three months ended September
30, 2005 was $45.6 million compared with $37.7 million for the
corresponding 2004 period. Our effective tax rate for the three
months ended September 30, 2005 and 2004 was 37.82% and 37.83%,
respectively. Income tax expense for the nine months ended
September 30, 2005 was $121.0 million compared with $106.4 million
for the corresponding 2004 period. Our effective tax rate for the
nine months ended September 30, 2005 and 2004 was 37.55% and
37.60%, respectively. These increases in the amount of income tax
expense were primarily due to increases in income before income
tax. Statement of Financial Condition Summary Total assets
increased $6.40 billion, or 31.8%, to $26.55 billion at September
30, 2005 from $20.15 billion at December 31, 2004, primarily due to
the receipt of the $3.80 billion of net offering proceeds from our
second-step conversion and stock offering, as well as our
internally generated growth. The increase in total assets reflected
a $2.55 billion increase in total investment securities; a $2.46
billion increase in loans and a $1.34 billion increase in total
mortgage-backed securities. The net $3.80 billion increase to
stockholders' equity due to the conversion reflected the receipt of
the $3.93 billion offering proceeds less the payment of $125.0
million in conversion related expenses. Equity was further
increased by $145.8 million due to the consolidation of Hudson
City, MHC into Hudson City Bancorp, Inc. The amount of funds
available for investment from the net offering proceeds was $3.57
billion, reflecting a further $229.9 million reduction from the net
offering proceeds due to the use of customer deposits to purchase
stock. Of this amount, and reflected in the increase in investment
securities, approximately $1.50 billion was invested into
government-sponsored agency discount notes, approximately $900.0
million was invested into government-sponsored agency securities
and approximately $400.0 million was invested into
government-sponsored agency step-up notes. Hudson City Bancorp
contributed $3.0 billion of the net proceeds to Hudson City Savings
Bank. We purchased and originated first mortgage loans of
approximately $2.62 billion and $1.45 billion, respectively, during
the nine-month period ended September 30, 2005 compared with $2.36
billion and $1.11 billion, respectively, for the corresponding
period in 2004. Of the first mortgage loans originated and
purchased during the first nine months of 2005, approximately
42.10% were variable-rate loans. Loan originations and purchases
were exclusively in one- to four-family mortgage loans. Purchased
mortgage loans allow us to grow and geographically diversify our
mortgage loan portfolio at a relatively low overhead cost while
maintaining our traditional thrift business model. At September 30,
2005, we are committed to purchase and originate $588.6 million and
$292.3 million, respectively, of first mortgage loans, which are
expected to settle during the fourth quarter of 2005. Total
mortgage-backed securities increased $1.34 billion during the nine-
month period ended September 30, 2005, reflecting purchases of
approximately $2.68 billion. Of the mortgage-backed securities
purchased, approximately 92.11% were adjustable-rate or hybrid
instruments. All of our mortgage-backed securities are directly or
indirectly insured or guaranteed by a government or
government-sponsored agency. At September 30, 2005, we are
committed to purchase $326.0 million of when-issued mortgage-backed
securities, which are expected to settle during the fourth quarter
of 2005. Total liabilities increased $2.52 billion, or 13.4%, to
$21.26 billion at September 30, 2005 from $18.74 billion at
December 31, 2004. The increase in total liabilities primarily
reflected a $2.60 billion increase in borrowed funds, partially
offset by a $95.9 million decrease in deposits. The increase in
borrowed funds was the result of securing $2.7 billion of new
borrowings with initial reprice dates ranging from three to five
years and final maturities of ten years. Of total borrowed funds,
$7.10 billion are pursuant to reverse repurchase agreements and
$2.65 billion are advances from the Federal Home Loan Bank. Total
deposits decreased $95.9 million during the nine-month period ended
September 30, 2005, but increased $117.3 million during the
three-month period from June 30, 2005 to September 30, 2005. The
year-to-date decrease reflected the consolidation of the $145.8
million deposit of Hudson City, MHC, which was added to our
capital, and the use of approximately $229.9 million of customer
deposits to purchase stock during our second-step stock offering.
We plan to grow our assets during the remainder of 2005 and into
2006 primarily through the origination and purchase of mortgage
loans, while purchasing investment and mortgage-backed securities
as a supplement to our investments in mortgage loans. During the
third quarter of 2005, total loans increased $727.6 million,
mortgage-backed securities increased $172.9 million, and investment
securities decreased $397.2 million. The decrease in investment
securities reflected the maturity of certain of the discount notes
purchased with the proceeds from the second-step conversion. We
also plan that approximately half of these originations and
purchases will be short-term or variable-rate in nature, in order
to assist in the management of our interest rate risk. We consider
a loan or security to be variable rate if there exists a
contractual rate adjustment during the life of the instrument,
including those variable-rate mortgage-related assets with three-,
five- or ten-year initial fixed-rate periods. The primary funding
for our asset growth is expected to come from customer deposits and
borrowed funds. During the third quarter of 2005, total deposits
increased $117.3 million and borrowed funds increased $600.0
million. We plan that the funds borrowed will primarily have
initial non-call periods of three to five years and final
maturities of ten years in order to extend the maturity of our
liabilities and assist in the management of our interest rate risk.
We intend to grow customer deposits by continuing to offer
desirable products at competitive rates and by opening new branch
offices. We opened two branch offices in Suffolk County, NY and two
branch offices in Richmond County (Staten Island), NY during the
first nine months of 2005. In early October of 2005, we opened one
additional branch office in Suffolk County. We will continue to
explore branch expansion opportunities in market areas that present
significant opportunities for our traditional thrift business model
and intend to open ten to fifteen branches annually. Total
stockholders' equity increased $3.89 billion to $5.29 billion at
September 30, 2005 from $1.40 billion at December 31, 2004. The
increase in stockholders' equity was primarily due to the net
offering proceeds of $3.80 billion, a $145.8 million increase due
to the consolidation of Hudson City, MHC into Hudson City Bancorp,
and net income of $201.3 million for the first nine months of 2005.
Also increasing stockholders' equity was a $2.5 million increase
due to the exercise of stock options, an $8.8 million permanent tax
benefit due to the exercise of stock options and the vesting of
employee stock benefit plans, and a $9.7 million increase due to
the commitment of shares for our employee stock benefit plans.
These increases to stockholders' equity were partially offset by
cash dividends declared and paid to common stockholders of $63.1
million, purchases of 15,719,223 shares for our employee stock
ownership plan at an aggregate cost of $189.3 million, purchases of
shares of common stock for our recognition and retention plan at an
aggregate cost of $1.3 million, a $2.7 million purchase of treasury
stock directly from vesting shares in our recognition and retention
plan for payment of income taxes and a $33.1 million further
decrease in our accumulated other comprehensive loss primarily due
to higher market interest rates decreasing the market value of our
available for sale portfolio. A sixth stock repurchase plan has
been approved to repurchase up to 29,880,000 shares, or
approximately five percent of the outstanding common stock. The
fifth repurchase plan was terminated upon approval of the sixth
plan. At September 30, 2005, our stockholders' equity to asset
ratio was 19.92% and our year-to-date average stockholders' equity
to asset ratio was 13.42%. At September 30, 2005, our stockholders'
equity per common share, using the period-end share count of
outstanding shares, less purchased but unallocated employee stock
ownership plan shares and less purchased but unvested management
plan shares, was $9.46. Hudson City Bancorp maintains its corporate
offices in Paramus, New Jersey. Hudson City Savings Bank, a
well-established community financial institution serving its
customers since 1868, is the largest savings bank based in New
Jersey. Hudson City Savings currently operates 84 branch offices in
New Jersey, three branches in Suffolk County, NY and two branches
in Richmond County (Staten Island), NY. Hudson City Savings
currently has 1,111 full-time equivalent employees. The Federal
Deposit Insurance Corporation insures Hudson City Savings'
deposits. This release may contain certain "forward looking
statements" within the meaning of the Private Securities Litigation
Reform Act of 1995, and may be identified by the use of such words
as "believe," "expect," "anticipate," "should," "planned,"
"estimated," and "potential." Examples of forward looking
statements include, but are not limited to, estimates with respect
to the financial condition, results of operations and business of
Hudson City Bancorp that are subject to various factors which could
cause actual results to differ materially from these estimates.
These factors include, but are not limited to, general economic and
market conditions, legislative and regulatory conditions, changes
in interest rates that adversely affect Hudson City Bancorp's
interest rate spread, changes in deposit flows, loan demand or real
estate values and other economic, governmental, competitive,
regulatory and technological factors that may affect Hudson City
Bancorp's operations. Hudson City Bancorp, Inc. and Subsidiary
Consolidated Statements of Financial Condition September 30,
December 31, 2005 2004 (Unaudited) (In thousands) Assets: Cash and
due from banks $93,923 $122,483 Federal funds sold 15,400 45,700
Total cash and cash equivalents 109,323 168,183 Investment
securities held to maturity 1,534,213 1,334,249 Investment
securities available for sale 3,949,004 1,594,639 Federal Home Loan
Bank of New York stock 175,000 140,000 Mortgage-backed securities
held to maturity 4,163,152 3,755,921 Mortgage-backed securities
available for sale 2,555,958 1,620,708 Loans 13,816,352 11,363,039
Less: Deferred loan fees 2,260 8,073 Allowance for loan losses
27,392 27,319 Net loans 13,786,700 11,327,647 Foreclosed real
estate, net 1,092 878 Accrued interest receivable 134,660 97,490
Banking premises and equipment, net 48,108 36,399 Other assets
95,529 69,867 Total Assets $26,552,739 $20,145,981 Liabilities and
Stockholders' Equity: Deposits: Interest-bearing $10,915,672
$11,059,798 Noninterest-bearing 465,722 417,502 Total deposits
11,381,394 11,477,300 Borrowed funds 9,750,000 7,150,000 Accrued
expenses and other liabilities 132,715 115,797 Total liabilities
21,264,109 18,743,097 Common stock, $0.01 par value, 3,200,000,000
shares authorized; 741,466,555 shares issued; 597,602,158 shares
outstanding at September 30, 2005; 596,777,836 shares outstanding
at December 31, 2004 (1) 7,415 7,415 Additional paid-in capital (1)
4,531,741 565,403 Retained earnings 1,724,238 1,588,792 Treasury
stock, at cost; 143,864,397 shares at September 30, 2005 and
144,688,719 shares at December 31, 2004 (1) (694,262) (696,812)
Unallocated common stock held by the employee stock ownership plan
(235,092) (47,552) Unearned common stock held by the recognition
and retention plan (3,231) (5,267) Accumulated other comprehensive
loss, net of tax (42,179) (9,095) Total stockholders' equity
5,288,630 1,402,884 Total Liabilities and Stockholders' Equity
$26,552,739 $20,145,981 (1) All prior share data, the balance in
the common stock account and the balance in the additional paid-in
capital account have been adjusted to reflect the 3.206 to 1 stock
split effected as part of the second- step conversion and stock
offering completed June 7, 2005. Hudson City Bancorp, Inc. and
Subsidiary Consolidated Statements of Income (Unaudited) For the
Three Months Ended September 30, 2005 2004 (In thousands, except
per share data) Interest and Dividend Income: Interest and fees on
first mortgage loans $177,562 $138,421 Interest and fees on
consumer and other loans 2,795 2,213 Interest on mortgage-backed
securities held to maturity 45,865 42,409 Interest on
mortgage-backed securities available for sale 26,359 17,540
Interest on investment securities held to maturity 18,634 14,199
Interest and dividends on investment securities available for sale
39,720 18,262 Dividends on Federal Home Loan Bank of New York stock
2,116 858 Interest on federal funds sold 736 359 Total interest and
dividend income 313,787 234,261 Interest Expense: Interest on
deposits 76,446 54,253 Interest on borrowed funds 85,165 56,040
Total interest expense 161,611 110,293 Net interest income 152,176
123,968 Provision for Loan Losses -- 225 Net interest income after
provision for loan losses 152,176 123,743 Non-Interest Income:
Service charges and other income 1,413 1,373 Gains on securities
transactions, net -- 3,526 Total non-interest income 1,413 4,899
Non-Interest Expense: Compensation and employee benefits 21,534
19,878 Net occupancy expense 5,681 4,044 Federal deposit insurance
assessment 413 405 Computer and related services 607 529 Other
expense 4,688 4,032 Total non-interest expense 32,923 28,888 Income
before income tax expense 120,666 99,754 Income Tax Expense 45,635
37,734 Net income $75,031 $62,020 Basic Earnings Per Share (1)
$0.13 $0.11 Diluted Earnings Per Share (1) $0.13 $0.11 Weighted
Average Number of Common Shares Outstanding (1): Basic 566,667,689
573,760,934 Diluted 580,174,828 589,020,292 (1) All prior share and
per share data has been adjusted to reflect the 3.206 to 1 stock
split effected as part of the second-step conversion and stock
offering completed June 7, 2005. Hudson City Bancorp, Inc. and
Subsidiary Consolidated Statements of Income (Unaudited) For the
Nine Months Ended September 30, 2005 2004 (In thousands, except per
share data) Interest and Dividend Income: Interest and fees on
first mortgage loans $500,218 $389,400 Interest and fees on
consumer and other loans 7,561 6,345 Interest on mortgage-backed
securities held to maturity 133,210 132,364 Interest on
mortgage-backed securities available for sale 63,956 50,200
Interest on investment securities held to maturity 53,950 25,901
Interest and dividends on investment securities available for sale
77,863 60,649 Dividends on Federal Home Loan Bank of New York stock
7,031 2,250 Interest on federal funds sold 2,821 970 Total interest
and dividend income 846,610 668,079 Interest Expense: Interest on
deposits 210,264 155,453 Interest on borrowed funds 226,597 154,159
Total interest expense 436,861 309,612 Net interest income 409,749
358,467 Provision for Loan Losses 65 675 Net interest income after
provision for loan losses 409,684 357,792 Non-Interest Income:
Service charges and other income 3,791 3,849 Gains on securities
transactions, net 2,740 8,597 Total non-interest income 6,531
12,446 Non-Interest Expense: Compensation and employee benefits
61,739 59,349 Net occupancy expense 14,729 11,788 Federal deposit
insurance assessment 1,235 1,228 Computer and related services
1,835 1,485 Other expense 14,406 13,275 Total non-interest expense
93,944 87,125 Income before income tax expense 322,271 283,113
Income Tax Expense 121,020 106,446 Net income $201,251 $176,667
Basic Earnings Per Share (1) $0.35 $0.31 Diluted Earnings Per Share
(1) $0.34 $0.30 Weighted Average Number of Common Shares
Outstanding (1): Basic 571,809,470 577,955,597 Diluted 585,122,824
594,304,055 (1) All prior share and per share data has been
adjusted to reflect the 3.206 to 1 stock split effected as part of
the second-step conversion and stock offering completed June 7,
2005. Hudson City Bancorp, Inc. and Subsidiary Consolidated Average
Balance Sheets (Unaudited) For the Three Months Ended September 30,
2005 2004 Average Average Average Yield/ Average Yield/ Balance
Interest Cost Balance Interest Cost (Dollars in thousands) Assets:
Interest- earnings assets: First mortgage loans, net (1)
$13,087,551 $177,562 5.43% $10,053,014 $138,421 5.51% Consumer and
other loans 191,038 2,795 5.85 148,268 2,213 5.97 Federal funds
sold 85,983 736 3.40 103,830 359 1.38 Mortgage-backed securities at
amortized cost 6,640,580 72,224 4.35 5,324,117 59,949 4.50 Federal
Home Loan Bank of New York stock 178,657 2,116 4.74 144,511 858
2.37 Investment securities at amortized cost 5,676,595 58,354 4.11
2,874,795 32,461 4.52 Total interest- earning assets 25,860,404
313,787 4.85 18,648,535 234,261 5.02 Noninterest- earnings assets
346,613 295,252 Total Assets $26,207,017 $18,943,787 Liabilities
and Stockholders' Equity: Interest-bearing liabilities: Savings
accounts $859,240 2,141 0.99 $948,515 2,366 0.99 Interest- bearing
demand accounts 4,133,327 31,258 3.00 3,790,740 21,010 2.20 Money
market accounts 386,599 1,167 1.20 585,848 1,408 0.96 Time deposits
5,497,737 41,880 3.02 5,399,202 29,469 2.17 Total interest- bearing
deposits 10,876,903 76,446 2.79 10,724,305 54,253 2.01 Borrowed
funds 9,328,016 85,165 3.62 6,359,782 56,040 3.51 Total interest-
bearing liabil- ities 20,204,919 161,611 3.17 17,084,087 110,293
2.57 Noninterest- bearing liabilities: Noninterest- bearing
deposits 450,142 427,877 Other noninterest- bearing liabilities
153,184 124,862 Total noninterest- bearing liabilities 603,326
552,739 Total liabil- ities 20,808,245 17,636,826 Stockholders'
equity 5,398,772 1,306,961 Total Liabilities and Stockholders'
Equity $26,207,017 $18,943,787 Net interest income/net interest
rate spread (2) $152,176 1.68% $123,968 2.45% Net interest- earning
assets/net interest margin (3) $5,655,485 2.37% $1,564,448 2.67%
Ratio of interest- earning assets to interest- bearing liabilities
1.28x 1.09x (1) Amount is net of deferred loan fees and allowance
for loan losses and includes non-performing loans. (2) Determined
by subtracting the annualized weighted average cost of total
interest-bearing liabilities from the annualized weighted average
yield on total interest-earning assets. (3) Determined by dividing
annualized net interest income by total average interest-earning
assets. Hudson City Bancorp, Inc. and Subsidiary Consolidated
Average Balance Sheets (Unaudited) For the Nine Months Ended
September 30, 2005 2004 Average Average Average Yield/ Average
Yield/ Balance Interest Cost Balance Interest Cost (Dollars in
thousands) Assets: Interest- earnings assets: First mortgage loans,
net (1) $12,244,226 $500,218 5.45% $9,421,679 $389,400 5.51%
Consumer and other loans 173,556 7,561 5.81 140,897 6,345 6.00
Federal funds sold 131,938 2,821 2.86 122,842 970 1.06 Mortgage-
backed securities at amortized cost 6,010,245 197,166 4.37
5,455,954 182,564 4.46 Federal Home Loan Bank of New York stock
161,380 7,031 5.81 153,533 2,250 1.95 Investment securities at
amortized cost 4,153,466 131,813 4.23 2,586,558 86,550 4.46 Total
interest- earning assets 22,874,811 846,610 4.93 17,881,463 668,079
4.98 Noninterest- earnings assets 437,058 331,634 Total Assets
$23,311,869 $18,213,097 Liabilities and Stockholders' Equity:
Interest-bearing liabilities: Savings accounts $1,033,838 7,655
0.99 $947,351 7,042 0.99 Interest- bearing demand accounts
4,233,540 89,216 2.82 3,392,201 54,486 2.15 Money market accounts
504,996 4,082 1.08 601,600 4,308 0.96 Time deposits 5,402,361
109,311 2.71 5,537,205 89,617 2.16 Total interest- bearing deposits
11,174,735 210,264 2.52 10,478,357 155,453 1.98 Borrowed funds
8,428,269 226,597 3.59 5,853,544 154,159 3.52 Total interest-
bearing liabil- ities 19,603,004 436,861 2.98 16,331,901 309,612
2.53 Noninterest- bearing liabilities: Noninterest- bearing
deposits 436,163 416,808 Other noninterest- bearing liabilities
143,273 122,459 Total noninterest- bearing liabilities 579,436
539,267 Total liabil- ities 20,182,440 16,871,168 Stockholders'
equity 3,129,429 1,341,929 Total Liabilities and Stockholders'
Equity $23,311,869 $18,213,097 Net interest income/net interest
rate spread (2) $409,749 1.95% $358,467 2.45% Net interest- earning
assets/net interest margin (3) $3,271,807 2.38% $1,549,562 2.67%
Ratio of interest-earning assets to interest-bearing liabilities
1.17x 1.09x (1) Amount is net of deferred loan fees and allowance
for loan losses and includes non-performing loans. (2) Determined
by subtracting the annualized weighted average cost of total
interest-bearing liabilities from the annualized weighted average
yield on total interest-earning assets. (3) Determined by dividing
annualized net interest income by total average interest-earning
assets. (4) At September 30, 2005, the weighted-average rate on our
outstanding interest-earning assets, other than our FHLB stock, was
as follows: first mortgage loans, 5.62%, consumer and other loans,
5.79%, federal funds sold, 3.75%, mortgage-backed securities,
4.70%, investment securities, 4.22%. At September 30, 2005, the
weighted-average rate on our outstanding interest-bearing
liabilities was as follows: savings accounts, 0.98%,
interest-bearing demand accounts, 3.00%, money market accounts,
1.20%, time deposits, 3.22%, borrowed funds, 3.59%. Hudson City
Bancorp, Inc. and Subsidiary Selected Performance Ratios (1) For
the Three Months Ended September 30, 2005 2004 Return on average
assets 1.15 % 1.31 % Return on average stockholders' equity 5.56
18.98 Net interest rate spread 1.68 2.45 Net interest margin 2.37
2.67 Non-interest expense to average assets 0.50 0.61 Efficiency
ratio (2) 21.44 22.42 Dividend payout ratio (3) 53.85 50.91 Cash
dividends paid per common share (3) $0.07 $0.056 (1) Ratios are
annualized where appropriate. (2) Determined by dividing total
non-interest expense by the sum of net interest income and total
non-interest income. (3) All prior share and per share data has
been adjusted to reflect the 3.206 to 1 stock split effected as
part of the second-step conversion and stock offering completed
June 7, 2005. For the Nine Months Ended September 30, 2005 2004
Return on average assets 1.15 % 1.29 % Return on average
stockholders' equity 8.57 17.55 Net interest rate spread 1.95 2.45
Net interest margin 2.38 2.67 Non-interest expense to average
assets 0.54 0.64 Efficiency ratio (2) 22.57 23.49 Dividend payout
ratio (3) 56.57 51.29 Cash dividends paid per common share (3)
$0.198 $0.159 (1) Ratios are annualized where appropriate. (2)
Determined by dividing total non-interest expense by the sum of net
interest income and total non-interest income. (3) All prior share
and per share data has been adjusted to reflect the 3.206 to 1
stock split effected as part of the second-step conversion and
stock offering completed June 7, 2005. Hudson City Bancorp, Inc.
and Subsidiary Selected Financial Ratios At or For The At or For
The Period Ended Period Ended September 30, December 31, 2005 2004
Asset Quality Ratios: Non-performing loans to total loans 0.11 %
0.19 % Non-performing assets to total assets 0.06 0.11 Allowance
for loan losses to non-performing loans 175.98 126.44 Allowance for
loan losses to total loans 0.20 0.24 Capital Ratios: Average
stockholders' equity to average assets 13.42 % 7.29 % Stockholders'
equity to assets 19.92 6.96 Book value per common share $9.46 $7.85
Regulatory Capital Ratios: Bank: Tangible capital 15.51 % 6.36 %
Leverage (core) capital 15.51 6.36 Total risk-based capital 44.39
17.49 DATASOURCE: Hudson City Bancorp, Inc. CONTACT: Louis J.
Beierle, First Vice President, Investor Relations, Hudson City
Bancorp, Inc., +1-201-967-8290, Web site: http://www.hcbk.com/
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