Quarterly Cash Dividend Increased to $0.08 Per Share PARAMUS, N.J., Jan. 24 /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-month period and year ended December 31, 2006. Financial Highlights -- Basic and diluted earnings per common share were both $0.13 for the fourth quarter of 2006 and 2005. Basic and diluted earnings per common share were $0.54 and $0.53, respectively, for 2006 compared with $0.49 and $0.48, respectively, for 2005. -- At its meeting yesterday, the Board of Directors increased the quarterly cash dividend to $0.08 per common share. The cash dividend is payable on March 1, 2007 to stockholders of record at the close of business on February 2, 2007. -- Net income increased 4.5% to $288.6 million for the year ended December 31, 2006 and decreased 7.5% to $69.2 million for the three months ended December 31, 2006. -- Net interest income increased 9.1% to $613.2 million for the year ended December 31, 2006 and decreased 2.4% to $148.8 million for the three months ended December 31, 2006. -- Our annualized return on average stockholders' equity and annualized return on average assets for the fourth quarter of 2006 were 5.55% and 0.80%, respectively, compared with 5.68% and 1.10%, respectively, for the fourth quarter of 2005. Our return on average stockholders' equity and return on average assets for 2006 were 5.70% and 0.91%, respectively, compared with 7.52% and 1.14%, respectively, for 2005. -- Our net interest rate margin and net interest rate spread were 1.78% and 1.16%, respectively, for the fourth quarter of 2006 compared with 2.29% and 1.59%, respectively, for the fourth quarter of 2005. For 2006, our net interest rate margin and net interest rate spread were 1.96% and 1.31%, respectively, compared with 2.35% and 1.84%, respectively, for 2005. -- Our efficiency ratio for the fourth quarter of 2006 was 27.58% compared with 21.94% for the fourth quarter of 2005. Our efficiency ratio for 2006 was 25.66% compared with 22.40% for 2005. -- Net loans increased $4.03 billion to $19.07 billion at December 31, 2006 reflecting purchases and originations of first mortgage loans of $2.71 billion and $2.12 billion, respectively, during 2006 compared with $3.68 billion and $2.07 billion, respectively, during 2005. The increase in total loans also reflects the acquisition of Sound Federal Bancorp, Inc. ("Sound Federal") and it's $786.1 million portfolio during the third quarter of 2006. -- Deposits increased $2.03 billion, reflecting an increase in time deposits and $1.06 billion in deposits due to the acquisition of Sound Federal. -- Borrowed funds increased $5.62 billion to $16.97 billion at December 31, 2006. All funds borrowed in 2006 have maturities of ten years and initial call dates ranging from one to three years. -- The Board of Directors has established April 24, 2007 as the date for the Annual Meeting of Stockholders. The voting record date will be March 2, 2007. "The interest rate environment continued to exert downward pressure on our net interest margin and interest rate spread during the fourth quarter of 2006," said Ronald E. Hermance, Jr., Chairman, President and Chief Executive Officer. "Despite the inverted yield curve, we were able to grow assets by over $7 billion, successfully complete the acquisition of Sound Federal, and maintain a favorable total return for our shareholders. We plan to continue our strategy of focused balance sheet growth, repurchase of stock, and development of our newly entered markets as we head into 2007. With our experienced management team and strong capital base in place, we are well prepared for the challenges which lie ahead." Statement of Income Summary Total interest and dividend income for the three months ended December 31, 2006 increased $116.7 million, or 35.1%, to $449.0 million compared with $332.3 million for the three months ended December 31, 2005. This increase was primarily due to a $7.05 billion, or 26.2%, increase in the average balance of interest-earning assets to $33.94 billion for the three months ended December 31, 2006 from $26.89 billion for the three months ended December 31, 2005. The increase in interest and dividend income was also due to a 35 basis point increase in the annualized weighted-average yield on total average interest- earning assets to 5.29% for the fourth quarter of 2006 compared with 4.94% for the fourth quarter of 2005. Interest and fees on mortgage loans increased $64.3 million primarily due to a $4.19 billion increase in the average balance, reflecting increases in our core investment of first mortgage loans. The $34.3 million increase in interest on mortgage-backed securities was primarily due to a $2.05 billion increase in the average balance reflecting increased purchases of variable- rate securities during 2006. Total interest and dividend income for the year ended December 31, 2006 increased $435.9 million, or 36.9%, to $1.61 billion compared with $1.18 billion for the year ended December 31, 2005. This increase was primarily due to a $7.26 billion, or 30.3%, increase in the average balance of interest- earning assets to $31.23 billion for the year ended December 31, 2006 from $23.97 billion for the year ended December 31, 2005, primarily reflecting our internally generated balance sheet growth and the investment of the net proceeds from the second-step conversion and stock offering in June 2005. The increase in interest and dividend income was also due to a 25 basis point increase in the weighted-average yield on total average interest-earning assets to 5.17% for 2006 compared with 4.92% for 2005. Interest and fees on mortgage loans increased $243.1 million primarily due to an increase in the average balance of $4.03 billion. The $64.6 million increase in interest and dividends on total investment securities was primarily due to growth in the average balance of $1.19 billion, which reflected the investment into short-term securities of part of the net proceeds from the second-step conversion and stock offering. The $108.9 million increase in interest on mortgage-backed securities was primarily due to a $1.80 billion increase in the average balance reflecting increased purchases of variable-rate securities during 2006. Total interest expense for the three months ended December 31, 2006 increased $120.2 million, or 66.8%, to $300.1 million compared with $179.9 million for the three months ended December 31, 2005. This increase was partially due to a $7.51 billion, or 35.2%, increase in the average balance of total interest-bearing liabilities to $28.84 billion for the three months ended December 31, 2006 compared with $21.33 billion for the corresponding period in 2005. The increase in the average balance of interest-bearing liabilities funded our asset growth. The increase in total interest expense was also due to a 78 basis point increase in the annualized weighted-average cost of total interest-bearing liabilities to 4.13% for the three-month period ended December 31, 2006 compared with 3.35% for the three-month period ended December 31, 2005, which reflected the growth and repricing of our interest- bearing liabilities during the rising short-term interest rate environment experienced during 2006. Interest expense on borrowed funds for the three months ended December 31, 2006 increased $71.3 million, or 73.9%, to $167.7 million primarily due to a $5.84 billion increase in the average balance of borrowed funds and a 41 basis point increase in the annualized weighted-average cost. The increase in the average balance of borrowed funds was used to fund asset growth. The increase in the annualized weighted-average cost of borrowed funds reflected the continued growth of our borrowed funds in the increasing interest rate environment. The $48.9 million increase in interest expense on interest- bearing deposits was due to a 114 basis point increase in the annualized weighted-average cost due to the rising short-term interest rate environment, the competitive pricing of our deposit products and a shift by our customers, during 2006, to higher costing short-term time deposits from our High Value Checking product. The increase in interest expense on interest-bearing deposits also was due to the growth in the average balance of $1.67 billion, reflecting in part, the acquisition of Sound Federal. Total interest expense for the year ended December 31, 2006 increased $384.8 million, or 62.4%, to $1.00 billion compared with $616.8 million for the year ended December 31, 2005. This increase was partially due to a $5.89 billion, or 29.4%, increase in the average balance of total interest-bearing liabilities to $25.93 billion for the year ended December 31, 2006 compared with $20.04 billion for the corresponding period in 2005. The increase in the average balance of interest-bearing liabilities funded our asset growth. The increase in total interest expense was also due to a 78 basis point increase in the weighted-average cost of total interest-bearing liabilities to 3.86% for the year ended December 31, 2006 compared with 3.08% for the year ended December 31, 2005, which reflected the growth and repricing of our interest- bearing liabilities during the rising short-term interest rate environment experienced during 2006. Interest expense on borrowed funds for 2006 increased $242.5 million due to a $5.38 billion increase in the average balance of borrowed funds and a 34 basis point increase in the weighted-average cost of borrowed funds. The increase in the average balance of borrowed funds was used to fund asset growth. The increase in the average cost of borrowed funds reflected new borrowings with a higher rate than the existing borrowings. The $142.4 million increase in interest expense on interest-bearing deposits was due to a 111 basis point increase in the weighted-average cost due to the rising short-term interest rate environment, the competitive pricing of our deposit products and a shift by our customers, during 2006, to higher costing short-term time deposits from our High Value Checking product. Net interest income for the three months ended December 31, 2006 decreased $3.6 million, or 2.4%, to $148.8 million compared with $152.4 million for the corresponding period in 2005. 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 1.16% for the fourth quarter of 2006 compared with 1.59% for the corresponding period in 2005. For the fourth quarter of 2006, our net interest margin, determined by dividing annualized net interest income by total average interest-earning assets, was 1.78% compared with 2.29% for the corresponding 2005 period. Net interest income for the year ended December 31, 2006 increased $51.1 million, or 9.1%, to $613.2 million compared with $562.1 million for the corresponding 2005 period. Our net interest rate spread was 1.31% for 2006 compared with 1.84% for the year 2005. Our net interest margin was 1.96% for the year ended December 31, 2006 compared with 2.35% for 2005. The decrease in our net interest income when comparing the fourth quarter of 2006 to the fourth quarter of 2005 reflected the tightening of our net interest rate spread as a result of the rising short-term interest rate environment. The increase in our net interest income when comparing the year ended December 31, 2006 to the comparable 2005 period reflected our overall balance sheet growth and the investment into short-term securities 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 due to the rising short-term interest rate environment. 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. This increase reflected the rising short-term interest rate environment, affecting both our deposits and borrowed funds, and the shift within our deposits to higher costing short- term time deposits. The allowance for loan losses amounted to $30.6 million and $27.4 million at December 31, 2006 and 2005, respectively. The increase in the allowance for loan losses was due to the inclusion of Sound Federal's allowance for loan losses as a result of the acquisition. The allowance for loan losses as a percent of total loans was 0.16% at December 31, 2006 compared with 0.18% at December 31, 2005. We did not record a provision for loan losses during the three-month periods ended December 31, 2006 and 2005, nor did we record a provision for loan losses for the year ended December 31, 2006. We did record a provision of $65,000 during 2005. Net charge-offs for the year 2006 were $76,000 compared with net recoveries of $8,000 for 2005. Non-performing loans at December 31, 2006 were $30.0 million compared with $19.3 million at December 31, 2005. The ratio of non-performing loans to total loans was 0.16% at December 31, 2006 compared with 0.13% at December 31, 2005. The ratio of allowance for loan losses to total non-performing loans was 102.09% at December 31, 2006 compared with 141.84% at December 31, 2005. Total non-interest income for the three months ended December 31, 2006 was $1.9 million compared with $1.5 million for the corresponding 2005 period. Total non-interest income for the year ended December 31, 2006 was $6.3 million compared with $8.0 million for the comparable period in 2005. The decrease in total non-interest income in the year reflected decreases in gains on securities transactions, net, as there were minimal realized gains/losses from sales of securities that occurred during 2006. Total non-interest expense for the three months ended December 31, 2006 was $41.6 million compared with $33.8 million during the corresponding 2005 period. This increase reflected a $3.6 million increase in compensation and employee benefits primarily due to an increase in compensation expense of $1.4 million and a $664,000 increase in expense related to our employee stock ownership plan, reflecting increases in our stock price. Expense related to stock options granted amounted to $2.3 million during the fourth quarter of 2006, primarily reflecting the expensing of the options granted in July 2006. Total non-interest expense for the year ended December 31, 2006 was $159.0 million compared with $127.7 million for 2005. This increase reflected a $20.2 million increase in compensation and employee benefits primarily due to an increase in the expense related to our employee stock ownership plan. Expense related to stock options granted amounted to $5.5 million during 2006. Income tax expense for the three months ended December 31, 2006 was $40.0 million compared with $45.3 million for the corresponding 2005 period. Our effective tax rate for the three months ended December 31, 2006 was 36.60% compared with 37.72% for the corresponding period in 2005. The 11.7% decrease in income tax expense reflected the 9.1% decrease in income before income tax expense. Income tax expense for the year ended December 31, 2006 was $172.0 million compared with $166.3 million for the corresponding 2005 period. Our effective tax rate for the year ended December 31, 2006 was 37.34% compared with 37.60% for the year 2005. The 3.4% increase in income tax expense reflected the 4.1% increase in income before income tax expense. Final regulations were issued in February 2006 by the State of New Jersey eliminating the deduction for dividends received from a real estate investment trust subsidiary. As a result of this change in tax regulations, we anticipate our effective tax rate may increase approximately 2% beginning in 2007. Statement of Financial Condition Summary Total assets increased $7.43 billion, or 26.5%, to $35.51 billion at December 31, 2006 from $28.08 billion at December 31, 2005. The increase in total assets primarily reflected a $4.03 billion increase in net loans and a $2.42 billion increase in total mortgage-backed securities. The increase in loans reflected purchases and originations of first mortgage loans of approximately $2.71 billion and $2.12 billion, respectively, for the year ended December 31, 2006 compared with $3.68 billion and $2.07 billion, respectively, for the year 2005. The increase in loans also reflected the addition of approximately $786.1 million of loans due to the acquisition of Sound Federal. Loan originations and purchases were substantially all 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 December 31, 2006, we were committed to purchase and originate $951.0 million and $169.6 million, respectively, of first mortgage loans, which are expected to settle during the first quarter of 2007. The increase in total mortgage-backed securities reflected purchases of approximately $3.93 billion, approximately 98.7% of which were variable-rate (adjustable annually) or hybrid (adjustable annually after fixed periods of three to five years) instruments. All of our mortgage-backed securities are directly or indirectly insured or guaranteed by a U.S. government agency or a U.S. government-sponsored enterprise. At December 31, 2006, we were committed to purchase $846.9 million of mortgage-backed securities, which are expected to settle during the first quarter of 2007. Total liabilities increased $7.72 billion, or 33.7%, to $30.59 billion at December 31, 2006 from $22.87 billion at December 31, 2005. The increase in total liabilities primarily reflected a $5.62 billion increase in borrowed funds and a $2.03 billion increase in deposits, including the $1.06 billion of deposits due to the acquisition of Sound Federal. The increase in borrowed funds was the result of securing $9.14 billion of new borrowings at a weighted-average rate of 4.30%. These new borrowings have final maturities of ten years and initial reprice dates ranging from one to three years. The increase in total deposits reflected a $2.92 billion increase in our time deposits, including $780.0 million due to the acquisition of Sound Federal, and a $576.5 million increase in our money market checking accounts. These increases were partially offset by a $1.52 billion decrease in our interest- bearing transaction accounts, primarily from our High Value Checking account product, due to customers shifting deposits to short-term time deposits. Total stockholders' equity decreased $280.6 million to $4.92 billion at December 31, 2006 from $5.20 billion at December 31, 2005. The decrease was primarily due to repurchases of 33,747,243 shares of outstanding common stock at an aggregate cost of $448.2 million and cash dividends declared and paid to common stockholders of $161.4 million. These decreases to stockholders' equity were partially offset by net income of $288.6 million for 2006. As of December 31, 2006, 44,314,000 shares were available for repurchase under our existing stock repurchase programs. At December 31, 2006, our stockholders' equity to asset ratio was 13.86% and our year-to-date average stockholders' equity to asset ratio was 16.00%. At December 31, 2006, our tangible book value per share was $9.13. 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 ranked in the top fifty U.S. financial institutions by asset size. Hudson City Savings currently operates a total of 111 branch offices in the New York metropolitan area. The Federal Deposit Insurance Corporation insures Hudson City Savings' deposits. Forward-Looking Statements 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 "may," "believe," "expect," "anticipate," "should," "plan," "estimate," "predict," "continue," and "potential" or the negative of these terms or other comparable terminology. 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. Any or all of the forward-looking statements in this release and in any other public statements made by Hudson City may turn out to be wrong. They can be affected by inaccurate assumptions Hudson City might make or by known or unknown risks and uncertainties. Consequently, no forward-looking statement can be guaranteed. Hudson City does not intend to update any of the forward-looking statements after the date of this release or to conform these statements to actual events. Hudson City Bancorp, Inc. and Subsidiary Consolidated Statements of Financial Condition December 31, December 31, 2006 2005 (In thousands, except share and per share amounts) Assets: Cash and due from banks $125,630 $97,672 Federal funds sold 56,616 4,587 Total cash and cash equivalents 182,246 102,259 Securities available for sale: Mortgage-backed securities 2,404,421 2,520,633 Investment securities 4,379,615 3,962,511 Securities held to maturity: Mortgage-backed securities, (fair value of $6,804,598 and $4,288,772 at December 31, 2006 and 2005, respectively) 6,925,210 4,389,864 Investment securities, (fair value of $1,502,934 and $1,508,055 at December 31, 2006 and 2005, respectively) 1,533,969 1,534,216 Total securities 15,243,215 12,407,224 Loans, net of deferred loan costs 19,099,776 15,064,102 Allowance for loan losses (30,625) (27,393) Net loans 19,069,151 15,036,709 Federal Home Loan Bank of New York stock 445,006 226,962 Foreclosed real estate, net 3,161 1,040 Accrued interest receivable 194,229 140,723 Banking premises and equipment, net 73,929 49,132 Goodwill 150,831 - Other intangible assets 13,407 - Other assets 131,406 111,304 Total Assets $35,506,581 $28,075,353 Liabilities and Stockholders' Equity: Deposits: Interest-bearing $12,917,286 $10,941,258 Noninterest-bearing 498,301 442,042 Total deposits 13,415,587 11,383,300 Repurchase agreements 8,923,000 7,900,000 Federal Home Loan Bank of New York advances 8,050,000 3,450,000 Total borrowed funds 16,973,000 11,350,000 Accrued expenses and other liabilities 197,109 140,577 Total liabilities 30,585,696 22,873,877 Common stock, $0 01 par value, 3,200,000,000 shares authorized; 741,466,555 shares issued; 557,787,921 and 588,905,543 shares outstanding at December 31, 2006 and 2005, respectively 7,415 7,415 Additional paid-in capital 4,553,614 4,533,329 Retained earnings 1,877,840 1,759,492 Treasury stock, at cost; 183,678,634 and 152,561,012 shares at December 31, 2006 and 2005, respectively (1,230,793) (798,232) Unallocated common stock held by the employee stock ownership plan (228,257) (234,264) Unearned common stock held by the recognition and retention plan - (2,815) Accumulated other comprehensive loss, net of tax (58,934) (63,449) Total stockholders' equity 4,920,885 5,201,476 Total Liabilities and Stockholders' Equity $35,506,581 $28,075,353 Hudson City Bancorp, Inc. and Subsidiary Consolidated Statements of Income (Unaudited) For the Three Months Ended December 31, 2006 2005 (In thousands, except per share data) Interest and Dividend Income: Interest and fees on first mortgage loans $253,501 $189,217 Interest and fees on consumer and other loans 6,876 3,225 Interest on mortgage-backed securities held to maturity 80,383 49,099 Interest on mortgage-backed securities available for sale 29,790 26,798 Interest on investment securities held to maturity 18,656 18,632 Interest and dividends on investment securities available for sale 50,628 40,772 Dividends on Federal Home Loan Bank of New York stock 6,150 2,363 Interest on federal funds sold 2,986 2,192 Total interest and dividend income 448,970 332,298 Interest Expense: Interest on deposits 132,430 83,472 Interest on borrowed funds 167,703 96,441 Total interest expense 300,133 179,913 Net interest income 148,837 152,385 Provision for Loan Losses - - Net interest income after provision for loan losses 148,837 152,385 Non-Interest Income: Service charges and other income 1,903 1,476 Gains on securities transactions, net - - Total non-interest income 1,903 1,476 Non-Interest Expense: Compensation and employee benefits 25,067 21,472 Net occupancy expense 7,386 5,482 Federal deposit insurance assessment 438 421 Computer and related services 734 663 Other expense 7,942 5,721 Total non-interest expense 41,567 33,759 Income before income tax expense 109,173 120,102 Income Tax Expense 39,961 45,298 Net income $69,212 $74,804 Basic Earnings Per Share $0.13 $0.13 Diluted Earnings Per Share $0.13 $0.13 Weighted Average Number of Common Shares Outstanding: Basic 525,402,246 555,860,264 Diluted 535,514,559 569,088,786 Hudson City Bancorp, Inc. and Subsidiary Consolidated Statements of Income (Unaudited) For the Years Ended December 31, 2006 2005 (In thousands, except per share data) Interest and Dividend Income: Interest and fees on first mortgage loans $932,550 $689,435 Interest and fees on consumer and other loans 19,698 10,786 Interest on mortgage-backed securities held to maturity 262,417 182,309 Interest on mortgage-backed securities available for sale 119,578 90,754 Interest on investment securities held to maturity 74,592 72,582 Interest and dividends on investment securities available for sale 181,259 118,635 Dividends on Federal Home Loan Bank of New York stock 16,507 9,394 Interest on federal funds sold 8,242 5,013 Total interest and dividend income 1,614,843 1,178,908 Interest Expense: Interest on deposits 436,096 293,736 Interest on borrowed funds 565,514 323,038 Total interest expense 1,001,610 616,774 Net interest income 613,233 562,134 Provision for Loan Losses - 65 Net interest income after provision for loan losses 613,233 562,069 Non-Interest Income: Service charges and other income 6,287 5,267 Gains on securities transactions, net 4 2,740 Total non-interest income 6,291 8,007 Non-Interest Expense: Compensation and employee benefits 103,443 83,211 Net occupancy expense 25,015 20,211 Federal deposit insurance assessment 1,695 1,656 Computer and related services 2,812 2,498 Other expense 25,990 20,127 Total non-interest expense 158,955 127,703 Income before income tax expense 460,569 442,373 Income Tax Expense 171,990 166,318 121,020 Net income $288,579 $276,055 Basic Earnings Per Share $0.54 $0.49 Diluted Earnings Per Share $0.53 $0.48 Weighted Average Number of Common Shares Outstanding: Basic 536,214,778 567,789,397 Diluted 546,790,604 581,063,426 Hudson City Bancorp, Inc. and Subsidiary Consolidated Average Balance Sheets (Unaudited) For the Three Months Ended December 31, 2006 Average Average Yield/ Balance Interest Cost (Dollars in thousands) Assets: Interest-earnings assets: First mortgage loans, net (1) $18,066,112 $253,501 5.61 % Consumer and other loans 418,754 6,876 6.57 Federal funds sold 224,945 2,986 5.27 Mortgage-backed securities at amortized cost 8,887,791 110,173 4.96 Federal Home Loan Bank of New York stock 423,484 6,150 5.81 Investment securities at amortized cost 5,915,679 69,284 4.68 Total interest-earning assets 33,936,765 448,970 5.29 Noninterest-earnings assets 579,248 Total Assets $34,516,013 Liabilities and Stockholders' Equity: Interest-bearing liabilities: Savings accounts $811,329 2,025 0.99 Interest-bearing transaction accounts 2,174,634 17,841 3.25 Money market accounts 877,976 7,627 3.45 Time deposits 8,763,673 104,937 4.75 Total interest-bearing deposits 12,627,612 132,430 4.16 Repurchase agreements 8,589,848 86,186 3.98 Federal Home Loan Bank of New York advances 7,619,760 81,517 4.24 Total borrowed funds 16,209,608 167,703 4.10 Total interest-bearing liabilities 28,837,220 300,133 4.13 Noninterest-bearing liabilities: Noninterest-bearing deposits 484,074 Other noninterest-bearing liabilities 205,001 Total noninterest-bearing liabilities 689,075 Total liabilities 29,526,295 Stockholders' equity 4,989,718 Total Liabilities and Stockholders' Equity $34,516,013 Net interest income/net interest rate spread (2) $148,837 1.16 % Net interest-earning assets/net interest margin (3) $5,099,545 1.78 % Ratio of interest-earning assets to interest-bearing liabilities 1.18 x For the Three Months Ended December 31, 2005 Average Average Yield/ Balance Interest Cost (Dollars in thousands) Assets: Interest-earnings assets: First mortgage loans, net (1) $13,878,363 $189,217 5.45 % Consumer and other loans 220,228 3,225 5.86 Federal funds sold 219,837 2,192 3.96 Mortgage-backed securities at amortized cost 6,835,732 75,897 4.44 Federal Home Loan Bank of New York stock 194,709 2,363 4.85 Investment securities at amortized cost 5,541,857 59,404 4.29 Total interest-earning assets 26,890,726 332,298 4.94 Noninterest-earnings assets 314,632 Total Assets $27,205,358 Liabilities and Stockholders' Equity: Interest-bearing liabilities: Savings accounts $823,245 2,054 0.99 Interest-bearing transaction accounts 3,800,369 29,314 3.06 Money market accounts 363,187 1,090 1.19 Time deposits 5,973,680 51,014 3.39 Total interest-bearing deposits 10,960,481 83,472 3.02 Repurchase agreements 7,413,043 67,130 3.59 Federal Home Loan Bank of New York advances 2,954,565 29,311 3.94 Total borrowed funds 10,367,608 96,441 3.69 Total interest-bearing liabilities 21,328,089 179,913 3.35 Noninterest-bearing liabilities: Noninterest-bearing deposits 442,628 Other noninterest-bearing liabilities 164,106 Total noninterest-bearing liabilities 606,734 Total liabilities 21,934,823 Stockholders' equity 5,270,535 Total Liabilities and Stockholders' Equity $27,205,358 Net interest income/net interest rate spread (2) $152,385 1.59 % Net interest-earning assets/net interest margin (3) $5,562,637 2.29 % Ratio of interest-earning assets to interest-bearing liabilities 1.26 x (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 Years Ended December 31, 2006 Average Average Yield/ Balance Interest Cost(4) (Dollars in thousands) Assets: Interest-earnings assets: First mortgage loans, net (1) $16,685,920 $932,550 5.59 % Consumer and other loans 316,844 19,698 6.22 Federal funds sold 165,380 8,242 4.98 Mortgage-backed securities at amortized cost 8,022,309 381,995 4.76 Federal Home Loan Bank of New York stock 345,870 16,507 4.77 Investment securities at amortized cost 5,697,565 255,851 4.49 Total interest-earning assets 31,233,888 1,614,843 5.17 Noninterest-earnings assets 414,084 Total Assets $31,647,972 Liabilities and Stockholders' Equity: Interest-bearing liabilities: Savings accounts $796,410 7,851 0.99 Interest-bearing transaction accounts 2,734,787 90,936 3.33 Money market accounts 688,311 20,670 3.00 Time deposits 7,417,812 316,639 4.27 Total interest-bearing deposits 11,637,320 436,096 3.75 Repurchase agreements 8,313,321 316,444 3.81 Federal Home Loan Bank of New York advances 5,977,115 249,070 4.17 Total borrowed funds 14,290,436 565,514 3.96 Total interest-bearing liabilities 25,927,756 1,001,610 3.86 Noninterest-bearing liabilities: Noninterest-bearing deposits 462,022 Other noninterest-bearing liabilities 195,845 Total noninterest-bearing liabilities 657,867 Total liabilities 26,585,623 Stockholders' equity 5,062,349 Total Liabilities and Stockholders' Equity $31,647,972 Net interest income/net interest rate spread (2) $613,233 1.31 % Net interest-earning assets/net interest margin (3) $5,306,132 1.96 % Ratio of interest-earning assets to interest-bearing liabilities 1.20 x For the Years Ended December 31, 2005 Average Average Yield/ Balance Interest Cost (Dollars in thousands) Assets: Interest-earnings assets: First mortgage loans, net (1) $12,656,118 $689,435 5.45 % Consumer and other loans 185,320 10,786 5.82 Federal funds sold 236,288 5,013 2.12 Mortgage-backed securities at amortized cost 6,218,312 273,063 4.39 Federal Home Loan Bank of New York stock 169,781 9,394 5.53 Investment securities at amortized cost 4,503,416 191,217 4.25 Total interest-earning assets 23,969,235 1,178,908 4.92 Noninterest-earnings assets 324,004 Total Assets $24,293,239 Liabilities and Stockholders' Equity: Interest-bearing liabilities: Savings accounts $980,707 9,709 0.99 Interest-bearing transaction accounts 4,124,359 118,530 2.87 Money market accounts 469,254 5,172 1.10 Time deposits 5,546,364 160,325 2.89 Total interest-bearing deposits 11,120,684 293,736 2.64 Repurchase agreements 6,447,560 226,909 3.52 Federal Home Loan Bank of New York advances 2,469,529 96,129 3.89 Total borrowed funds 8,917,089 323,038 3.62 Total interest-bearing liabilities 20,037,773 616,774 3.08 Noninterest-bearing liabilities: Noninterest-bearing deposits 437,790 Other noninterest-bearing liabilities 148,523 Total noninterest-bearing liabilities 586,313 Total liabilities 20,624,086 Stockholders' equity 3,669,153 Total Liabilities and Stockholders' Equity $24,293,239 Net interest income/net interest rate spread (2) $562,134 1.84 % Net interest-earning assets/net interest margin (3) $3,931,462 2.35 % Ratio of interest-earning assets to interest-bearing liabilities 1.20 x (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 December 31, 2006, the weighted-average rate on our outstanding interest-earning assets, other than our FHLB stock, was as follows: first mortgage loans, 5.78%, consumer and other loans, 6.55%, federal funds sold, 5.25%, mortgage-backed securities, 5. Hudson City Bancorp, Inc. and Subsidiary Selected Performance Ratios (1) For the Three Months Ended December 31, 2006 2005 Return on average assets 0.80% 1.10% Return on average stockholders' equity 5.55 5.68 Net interest rate spread 1.16 1.59 Net interest margin 1.78 2.29 Non-interest expense to average assets 0.48 0.50 Efficiency ratio (2) 27.58 21.94 Dividend payout ratio 57.69 53.85 Cash dividends paid per common share $0.075 $0.07 For the Year Ended December 31, 2006 2005 Return on average assets 0.91% 1.14% Return on average stockholders' equity 5.70 7.52 Net interest rate spread 1.31 1.84 Net interest margin 1.96 2.35 Non-interest expense to average assets 0.50 0.53 Efficiency ratio (2) 25.66 22.40 Dividend payout ratio 55.56 54.69 Cash dividends paid per common share $0.30 $0.268 (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. Hudson City Bancorp, Inc. and Subsidiary Selected Financial Ratios and Other Data At or For The At or For The Period Ended Period Ended December 31, December 31, 2006 2005 Asset Quality Ratios: Non-performing loans to total loans 0.16% 0.13% Non-performing assets to total assets 0.09 0.07 Allowance for loan losses to non- performing loans 102.09 141.84 Allowance for loan losses to total loans 0.16 0.18 Capital Ratios: Average stockholders' equity to average assets 16.00% 15.10% Stockholders' equity to assets 13.86 18.53 Book value per common share $9.45 $9.44 Tangible book value per common share 9.13 9.44 Regulatory Capital Ratios: Bank: Tangible capital 11.28% 14.68% Leverage (core) capital 11.28 14.68 Total risk-based capital 30.92 41.31 Other Data: Full-time equivalent employees 1,272 1,108 Hudson City Bancorp, Inc. and Subsidiary Book Value Calculations December 31, 2006 (In thousands, except share and per share amounts) Stockholders' equity (thousands) $4,920,885 Goodwill and other intangible assets (164,238) Tangible stockholders' equity $4,756,647 Book Value Share Computation: Issued 741,466,555 Treasury shares (183,678,634) Shares outstanding 557,787,921 Unallocated ESOP shares (36,563,019) Unvested RRP shares (398,174) Shares in trust (23,494) Book value shares 520,803,234 Book value per share $9.45 Tangible book value per share $9.13 DATASOURCE: Hudson City Bancorp, Inc. CONTACT: Susan Munhall, Investor Relations, Hudson City Bancorp, Inc., +1-201-967-8290, Web site: http://www.hcbk.com/

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