HCBK (MM)

Quarterly Cash Dividend Increased To $0.14 Per Share PARAMUS, N.J., Jan. 21 /PRNewswire-FirstCall/ -- Hudson City Bancorp, Inc. (NASDAQ:HCBK), the holding company for Hudson City Savings Bank, reported today that net income for the fourth quarter of 2008 increased 60.4% to $124.3 million, a record for Hudson City, as compared to $77.5 million for the fourth quarter of 2007. Diluted earnings per share increased 56.3% to $0.25 for the fourth quarter of 2008 as compared to $0.16 for the fourth quarter of 2007. For the year ended December 31, 2008, net income increased 50.6% to $445.6 million as compared to $295.9 million for 2007. Diluted earnings per share increased 55.2% to $0.90 for the year ended December 31, 2008 as compared to $0.58 for 2007. The Board of Directors declared an increase in the quarterly cash dividend to $0.14 per share, an increase of 55.6% from the quarterly cash dividend of $0.09 declared for the fourth quarter of 2007. Ronald E. Hermance, Jr., Chairman, President and Chief Executive Officer, commented, "These certainly are difficult economic times. At the very least, 2008 will be remembered as a year that saw our economy fall into a deep recession and a year that witnessed unprecedented turmoil and changes in the financial marketplace. Despite these unpleasant events, Hudson City is reporting record results. We continue to stand apart from our competitors as we never engaged in risky lending practices. We are delighted with our earnings in the fourth quarter of 2008, which increased 60% over the same quarter last year and our earnings for calendar 2008 increased over 50% from 2007. We reached other milestones in 2008 - our loan production in 2008 was a record for Hudson City as was our deposit growth. In addition, we increased our dividend in January 2009 for the 5th consecutive quarter and we have paid a cash dividend every quarter since our initial public offering in 1999. In fact, our dividends have grown at a compounded annual rate of over 59% since that time. These successes are due in large part to our continued focus on our business model as a conservative and efficient thrift. While our non-performing assets increased during 2008, our conservative underwriting principles have helped us to mitigate charge-offs which amounted to only $4.4 million in 2008." Mr. Hermance continued, "In the fourth quarter of 2008, we grew deposits by $1.18 billion, capping a full year of deposit growth of $3.31 billion, as depositors looked for competitive rates and a bank with a strong capital position. We introduced our internet deposit product in December 2008 and although we have not yet fully implemented our marketing plan for this product, we have already taken in over $52 million of deposits through this channel. We are very excited about the prospects of increasing deposit funding nationally through the internet with the same competitive rates and brand our customers enjoy in our physical branch network. We believe that our retail branch network coupled with our internet deposit products will further enhance the value of our franchise." Mr. Hermance further commented, "While we have grown at an annual compounded growth rate of over 20% since our 1999 offering, we recognize that our growth in 2009 may be affected by the current economic conditions. However, we believe that 2009 will present many opportunities for us. While mortgage rates have decreased for conforming loans, rates for our primary product, jumbo mortgage loans, should still provide attractive returns. We will remain competitive in the marketplace for these loans and we believe that the reduced number of lenders will continue to fuel our mortgage growth. We believe that the conditions in the financial markets may also provide us with an opportunity to repurchase our shares as an alternative to either growth or to available asset yields for securities we would normally purchase. In the fourth quarter we seized on market conditions to repurchase 900,000 shares of our common stock for the first time since January 2008. We currently have over 54 million shares available for repurchase under existing programs." Mr. Hermance concluded, "In 2008, Hudson City was the best performing bank in the S&P 500 with a total return of 9.02%. Hudson City was also selected to be honored by the Foreign Policy Association for its 2008 Corporate Responsibility Award. Finally, Forbes added Hudson City to its Platinum 400 list of Best Big Companies in America and also named Hudson City the "Best-Managed Bank of 2008" for the second year in a row. I am proud of the hard work and success of our staff and humbled by the significance of these awards." Financial highlights for the fourth quarter of 2008 are as follows: -- Basic and diluted earnings per common share were both $0.25 for the fourth quarter of 2008 as compared to $0.16 for both basic and diluted earnings per share for the fourth quarter of 2007. Basic and diluted earnings per common share were $0.92 and $0.90, respectively, for 2008 compared to $0.59 and $0.58, respectively, for 2007. -- The Board of Directors declared an increase in the quarterly cash dividend to $0.14 per common share payable on February 28, 2009 to shareholders of record at the close of business on February 9, 2009. -- Net income amounted to $124.3 million for the fourth quarter of 2008, as compared to $77.5 million for the fourth quarter of 2007. For the year ended December 31, 2008, net income amounted to $445.6 million as compared to $295.9 million for 2007. -- Net interest income increased 52.4% to $260.5 million for the fourth quarter of 2008 and 45.6% to $942.0 million for the year ended December 31, 2008. -- Our annualized return on average assets and annualized return on average shareholders' equity for the fourth quarter of 2008 were 0.94% and 10.24%, respectively. Our return on average assets and return on average shareholders' equity for the year ended December 31, 2008 were 0.91% and 9.36%, respectively. -- Our net interest rate spread and net interest margin were 1.67% and 2.02%, respectively, for the fourth quarter of 2008 and 1.57% and 1.96%, respectively, for 2008. -- Our efficiency ratio was 19.91% for the fourth quarter of 2008 and 20.84% for the year ended December 31, 2008. -- Net loans increased $5.24 billion to $29.44 billion at December 31, 2008 from $24.20 billion at December 31, 2007. -- Deposits increased $3.31 billion to $18.46 billion at December 31, 2008 from $15.15 billion at December 31, 2007. -- Borrowed funds increased $6.09 billion to $30.23 billion at December 31, 2008 from $24.14 billion at December 31, 2007. -- The Board of Directors established April 21, 2009 as the date for Annual Meeting of Shareholders. The voting record date will be March 2, 2009. Statement of Financial Condition Summary Total assets increased $9.74 billion, or 21.9%, to $54.16 billion at December 31, 2008 from $44.42 billion at December 31, 2007. The increase in total assets reflected a $5.24 billion increase in loans and a $4.92 billion increase in total mortgage-backed securities, partially offset by a $710.3 million decrease in investment securities. The increase in loans reflected our focus on the origination of one- to four-family first mortgage loans in New Jersey, New York and Connecticut, as well as our continued loan purchase activity. During 2008, we originated $5.04 billion and purchased $3.06 billion of loans, compared to originations of $3.35 billion and purchases of $3.97 billion in 2007. While the residential real estate markets have weakened considerably during the past year, our competitive rates and the decreased mortgage lending competition have resulted in increased origination productivity. The $4.92 billion increase in total mortgage-backed securities reflected purchases of $7.18 billion, which were primarily variable-rate instruments, partially offset by repayments of $2.31 billion. Total investment securities decreased $710.3 million to $3.46 billion at December 31, 2008. Investment securities held to maturity decreased $1.36 billion partially offset by a $648.1 million increase in investment securities available for sale. The decrease was the result of calls of held to maturity and available for sale investment securities of $1.36 billion and $1.45 billion, respectively. The calls were partially offset by purchases of investment securities available for sale of $2.10 billion. Total liabilities increased $9.40 billion, or 23.6%, to $49.21 billion at December 31, 2008 from $39.81 billion at December 31, 2007. The increase in total liabilities primarily reflected a $6.09 billion increase in borrowed funds and a $3.31 billion increase in deposits. The increase in borrowed funds was the result of $6.65 billion of new borrowings at a weighted-average rate of 2.99%, partially offset by repayments of $566.0 million with a weighted average rate of 3.05%. The new borrowings primarily have final maturities of ten years and initial reprice dates of one to three years. During 2008, we also borrowed $600 million with maturities of less than one year. The increase in total deposits reflected a $2.21 billion increase in our time deposits and a $1.14 billion increase in our money market checking accounts. Total shareholders' equity increased $338.2 million to $4.95 billion at December 31, 2008 from $4.61 billion at December 31, 2007. The increase was primarily due to net income of $445.6 million for the year ended December 31, 2008 and a $41.7 million increase in accumulated other comprehensive income. This increase to shareholders' equity was partially offset by cash dividends paid to common shareholders of $218.0 million. At December 31, 2008, our shareholders' equity to asset ratio was 9.14% and our tangible book value per share was $9.80. The accumulated other comprehensive income of $58.3 million at December 31, 2008 includes a $74.6 million after-tax net unrealized gain on securities available for sale ($126.1 million pre-tax). We invest primarily in mortgage-backed securities issued by Ginnie Mae, Fannie Mae and Freddie Mac, as well as other securities issued by U.S. government-sponsored enterprises. We do not purchase unrated or private label mortgage-backed securities or other higher risk securities such as those backed by sub-prime loans. In addition, we do not own any common or preferred stock issued by Fannie Mae or Freddie Mac. There were no debt securities past due or securities for which the Company currently believes it is not probable that it will collect all amounts due according to the contractual terms of the security. Statement of Income Summary During 2008, the national economy continued to falter with particular emphasis on the deterioration of the housing and real estate markets. During the fourth quarter of 2008, it became widely accepted that the United States economy had entered a recession by the first quarter of 2008. The faltering economy has been marked by contractions in the availability of business and consumer credit, increases in borrowing rates, falling home prices and increasing levels of home foreclosures and unemployment. In response, the Federal Open Market Committee of the Federal Reserve Bank ("FOMC") decreased the overnight lending rate by 400 to 425 basis points during 2008 to a target rate of 0.00% to 0.25%. This unprecedented decrease in the overnight lending rate was in response to the continued liquidity crisis in the credit markets as well as an attempt to stimulate the housing markets and the overall economy. As a result, short-term market interest rates decreased during 2008. The sharp decline in short-term interest rates during 2008 lowered our deposit and borrowing costs. Longer-term market interest rates also decreased during 2008, but at a slower pace than short-term interest rates and, as a result, the yield curve continued to steepen. Notwithstanding the decrease in long-term market interest rates noted above, mortgage rates maintained a wider credit spread relative to U.S. Treasury securities resulting in higher yields on our mortgage loans. As a result, our net interest rate spread and net interest margin increased from both the fourth quarter and for the year ended December 31, 2007. Recent actions by the Federal Reserve to purchase securities issued by Fannie Mae and Freddie Mac have resulted in a decrease in mortgage rates late in the fourth quarter of 2008 and continuing into January 2009. Net interest income increased $89.6 million, or 52.4%, to $260.5 million for the fourth quarter of 2008 as compared to $170.9 million for the fourth quarter of 2007. Net interest income increased $294.8 million, or 45.6%, to $942.0 million for the year ended December 31, 2008 compared to $647.2 million for 2007. During the fourth quarter of 2008, our net interest rate spread increased 51 basis points to 1.67% and our net interest margin increased 38 basis points to 2.02% as compared to the fourth quarter of 2007. During 2008, our net interest rate spread increased 46 basis points to 1.57% and our net interest margin increased 31 basis points to 1.96% as compared to 2007. Total interest and dividend income for the three months ended December 31, 2008 increased $123.8 million, or 21.0%, to $712.0 million as compared to $588.2 million for the three months ended December 31, 2007. The increase in total interest and dividend income was primarily due to a $9.41 billion, or 22.1%, increase in the average balance of total interest-earning assets to $51.98 billion for the fourth quarter of 2008 as compared to $42.57 billion for the fourth quarter of 2007. The increase in interest and dividend income was partially offset by a decrease of 5 basis points in the annualized weighted-average yield on total interest-earning assets to 5.48% for the three month period ended December 31, 2008 from 5.53% for the comparable period in 2007. Total interest and dividend income for the year ended December 31, 2008 increased $525.7 million, or 24.7%, to $2.65 billion as compared to $2.13 billion for the year ended December 31, 2007. The increase in total interest and dividend income was primarily due to an $8.88 billion, or 22.6%, increase in the average balance of total interest-earning assets to $48.10 billion for the year ended December 31, 2008 as compared to $39.22 billion for the corresponding period in 2007. The increase in interest and dividend income was also partially due to an increase of 10 basis points in the annualized weighted-average yield on total interest-earning assets to 5.52% for the year ended December 31, 2008 from 5.42% for 2007. Interest and fees on mortgage loans increased $81.3 million to $413.4 million for the fourth quarter of 2008 as compared to $332.1 million for the same period in 2007 primarily due to a $5.43 billion increase in the average balance of first mortgage loans to $28.56 billion as compared to $23.13 billion for the fourth quarter of 2007, which reflected our continued emphasis on the growth of our mortgage loan portfolio. The increase in mortgage loan income was also due to a 5 basis point increase in the weighted-average yield to 5.79%. Notwithstanding the decrease in long-term market interest rates noted above, mortgage rates have maintained a wider credit spread resulting in higher yields on mortgage loans relative to U.S. Treasury securities. For the year ended December 31, 2008, interest and fees on mortgage loans increased $318.1 million to $1.52 billion as compared to $1.21 billion for the year ended December 31, 2007 primarily due to a $5.17 billion increase in the average balance of first mortgage loans to $26.38 billion as compared to $21.21 billion for 2007. The increase in interest income on mortgage loans was also due to a 10 basis point increase in the weighted-average yield to 5.78%. Interest on mortgage-backed securities increased $66.2 million to $242.8 million for the fourth quarter of 2008 as compared to $176.6 million for the fourth quarter of 2007. This increase was due primarily to a $5.30 billion increase in the average balance of mortgage-backed securities to $18.62 billion during the fourth quarter of 2008 as compared to $13.32 billion for the fourth quarter of 2007. This increase was partially offset by a 9 basis point decrease in the weighted-average yield to 5.21%. The decrease in the yield during the quarter is a result of the decrease in market rates. Interest on mortgage-backed securities increased $287.1 million to $875.0 million for the year ended December 31, 2008 as compared to $587.9 million for the year ended December 31, 2007. This increase was due primarily to a $5.30 billion increase in the average balance of mortgage-backed securities to $16.69 billion during 2008 as compared to $11.39 billion for 2007, and an 8 basis point increase in the weighted-average yield to 5.24%. The increases in the average balances of mortgage-backed securities were due to purchases of variable-rate mortgage-backed securities as part of our interest rate risk management strategy. Since a substantial portion of our loan production consists of fixed-rate mortgage loans, the purchase of variable-rate mortgage-backed securities provides us with an asset that reduces our exposure to interest rate fluctuations while providing a source of cash flow from monthly principal and interest payments. The increase in the weighted average yields for 2008 on mortgage-backed securities is a result of the purchase of new securities during the second half of 2007 and the first half of 2008 when market interest rates were higher than the yield earned on the existing portfolio. Dividends on FHLB stock decreased $5.4 million or 42.5% to $7.3 million for the fourth quarter of 2008 as compared to $12.7 million for the fourth quarter of 2007. This decrease was due to a 408 basis point decrease in the average yield earned to 3.45% as compared to 7.53% for the fourth quarter of 2007. The decrease in the average yield earned was partially offset by a $173.2 million increase in the average balance to $845.1 million for the fourth quarter of 2008 as compared to $671.9 million for the same quarter in 2007. For the year ended December 31, 2008, dividends on FHLB stock increased $8.5 million or 21.5% to $48.0 million as compared to $39.5 million for 2007. This increase was due to a $204.3 million increase in the average balance to $790.3 million for 2008 as compared to $586.0 million for 2007. This increase was partially offset by a 67 basis point decrease in the average yield earned to 6.07% as compared to 6.74% for 2007. Total interest expense for the three months ended December 31, 2008 increased $34.2 million, or 8.2%, to $451.5 million as compared to $417.3 million for the three months ended December 31, 2007. This increase was primarily due to a $9.21 billion, or 24.3%, increase in the average balance of total interest-bearing liabilities to $47.09 billion for the quarter ended December 31, 2008 compared with $37.88 billion for the fourth quarter of 2007. This increase in interest-bearing liabilities was primarily used to fund asset growth. The increase in the average balance of total interest-bearing liabilities was partially offset by a 56 basis point decrease in the weighted-average cost of total interest-bearing liabilities to 3.81% for the quarter ended December 31, 2008 compared with 4.37% for the quarter ended December 31, 2007. Total interest expense for the year ended December 31, 2008 increased $230.9 million, or 15.6%, to $1.71 billion as compared to $1.48 billion for the year ended December 31, 2007. This increase was primarily due to an $8.92 billion, or 26.0%, increase in the average balance of total interest-bearing liabilities to $43.28 billion for the year ended December 31, 2008 compared with $34.36 billion for the corresponding period in 2007. The increase in average balance of total interest-bearing liabilities was partially offset by a 36 basis point decrease in the weighted-average cost of total interest-bearing liabilities to 3.95% for the year ended December 31, 2008 compared with 4.31% for the year ended December 31, 2007. Interest expense on deposits decreased $15.5 million to $148.0 million for the fourth quarter of 2008 as compared to $163.5 million for the fourth quarter of 2007. This decrease is due primarily to a 110 basis point decrease in the average cost of deposits to 3.39% for the 2008 quarter as compared to 4.49% for the 2007 quarter. This decrease was partially offset by a $2.93 billion increase in the average balance of interest-bearing deposits to $17.37 billion during the fourth quarter of 2008 as compared to $14.44 billion for the comparable period in 2007. For the year ended December 31, 2008, interest expense on deposits decreased $25.5 million to $581.4 million as compared to $606.9 million for the year ended December 31, 2007. This decrease is due primarily to a 79 basis point decrease in the average cost of deposits to 3.62% for the year ended December 31, 2008 as compared to 4.41% for the comparable period in 2007. This decrease was partially offset by a $2.32 billion increase in the average balance of interest-bearing deposits to $16.08 billion for the year ended December 31, 2008 as compared to $13.76 billion for 2007. The increases in the average balance of interest-bearing deposits reflect our growth strategy. In addition, we believe the turmoil in the credit and equity markets have made deposit products in strong financial institutions desirable for many customers. The decrease in the average cost of deposits for the three- and twelve-month periods reflected lower market interest rates. At December 31, 2008, time deposits scheduled to mature within one year totaled $12.48 billion with an average cost of 3.61%. Interest expense on borrowed funds increased $49.7 million to $303.5 million for the fourth quarter of 2008 as compared to $253.8 million for the fourth quarter of 2007 primarily due to a $6.27 billion increase in the average balance of borrowed funds to $29.71 billion as compared to $23.44 billion for the fourth quarter of 2007. The weighted average cost of borrowed funds decreased 24 basis points to 4.06% for the fourth quarter of 2008 as compared to 4.30% for the fourth quarter of 2007. Interest expense on borrowed funds increased $256.5 million to $1.13 billion for the year ended December 31, 2008 as compared to $873.4 million for the year ended December 31, 2007 primarily due to a $6.61 billion increase in the average balance of borrowed funds to $27.20 billion as compared to $20.59 billion in 2007. The weighted average cost of borrowed funds decreased 9 basis points to 4.15% for the year ended December 31, 2008 as compared to 4.24% for 2007. Borrowed funds were used to fund a significant portion of the growth in interest-earning assets. The decrease in the average cost of borrowings for the three- and twelve-month periods reflected new borrowings in 2008, when market interest rates were lower than existing borrowings and borrowings that were called. Substantially all of our borrowings are callable quarterly at the discretion of the lender after an initial non-call period of one to five years with a final maturity of ten years. We anticipate that none of the borrowings will be called in 2009 assuming that market interest rates remain at current levels. The provision for loan losses amounted to $9.0 million for the quarter ended December 31, 2008 as compared to $2.0 million for the quarter ended December 31, 2007 and amounted to $19.5 million for the year ended December 31, 2008 as compared to $4.8 million for the year ended December 31, 2007. The increase in the provision for loan losses was due primarily to an increase in non-performing loans and growth in the loan portfolio. Non-performing loans, defined as non-accruing loans and accruing loans delinquent 90 days or more, amounted to $217.6 million at December 31, 2008 and $79.4 million at December 31, 2007. The ratio of non-performing loans to total loans was 0.74% at December 31, 2008 compared with 0.33% at December 31, 2007. The allowance for loan losses amounted to $49.8 million and $34.7 million at December 31, 2008 and December 31, 2007 respectively. The allowance for loan losses as a percent of total loans and non-performing loans was 0.17% and 22.89%, respectively at December 31, 2008, as compared to 0.14% and 43.75%, respectively at December 31, 2007. We recorded net charge-offs of $1.8 million for the three months ended December 31, 2008 as compared to net charge-offs of $109,000 for the same period in 2007. For the year ended December 31, 2008, net charge-offs amounted to $4.4 million as compared to net charge-offs of $684,000 for 2007. The increase in charge-offs was related primarily to non-performing residential mortgage loans for which appraised values indicated declines in the value of the underlying collateral. Total non-interest income was $2.0 million for the fourth quarter of 2008 compared with $1.9 million for the fourth quarter of 2007. Total non-interest income for the year ended December 31, 2008 was $8.5 million compared with $7.3 million for 2007. The increase in non-interest income is primarily due to an increase in service charges on deposits as a result of deposit account growth. Total non-interest expense increased $7.5 million, or 16.7%, to $52.3 million for the fourth quarter of 2008 from $44.8 million for the fourth quarter of 2007. The increase is primarily due to a $3.8 million increase in compensation and employee benefits expense, a $2.1 million increase in Federal deposit insurance expense and a $945,000 increase in other non-interest expense. The increase in compensation and employee benefits expense included a $1.6 million increase in compensation costs, due primarily to normal increases in salary and additional full time employees for our new branches, and a $601,000 increase in stock option plan expense. At December 31, 2008, we had 1,451 full-time equivalent employees as compared to 1,307 at December 31, 2007. The increase in the Federal deposit insurance expense is the result of an assessment credit that was used to offset our 2007 deposit insurance assessment. Included in other non-interest expense for the fourth quarter of 2008 were write downs on foreclosed real estate and net losses from the sale of foreclosed real estate of $218,000 as compared to $157,000 for the fourth quarter of 2007. Total non-interest expense increased $30.2 million, or 18.0%, for the year ended December 31, 2008 to $198.1 million compared with $167.9 million during 2007. The increase is primarily due to a $20.6 million increase in compensation and employee benefits expense, a $2.6 million increase in Federal deposit insurance expense and a $5.9 million increase in other non-interest expense. The increase in compensation and employee benefits expense included an $8.4 million increase in expense related to our employee stock ownership plan primarily as a result of increases in our stock price and a $6.3 million increase in compensation costs, due primarily to normal increases in salary and additional full time employees for our new branches, and a $2.3 million increase in stock option plan expense. The increase in the Federal deposit insurance expense is the result of an assessment credit that was used to offset 100% of our 2007 deposit insurance assessment of $7.3 million. At January 1, 2008, we had a remaining assessment credit of $3.3 million which was used to offset a portion of our 2008 deposit insurance. Included in other non-interest expense for the year ended December 31, 2008 were write-downs on foreclosed real estate and net losses on the sale of foreclosed real estate, of $1.3 million as compared to $112,000 for 2007. Our efficiency ratio was 19.91% for the three months ended December 31, 2008 as compared to 25.92% for the three months ended December 31, 2007. Our ratio of non-interest expense to average total assets for the fourth quarter of 2008 was 0.40% as compared to 0.41% for the fourth quarter of 2007. Our efficiency ratio for the year ended December 31, 2008 was 20.84% compared with 25.66% for 2007. Our ratio of non-interest expense to average total assets for the year ended December 31, 2008 was 0.41% compared with 0.42% for 2007. Income tax expense amounted to $76.9 million for the three months ended December 31, 2008 as compared to $48.4 million for the corresponding period in 2007. Our effective tax rate for the three months ended December 31, 2008 was 38.23% as compared to 38.46% for the corresponding period in 2007. Income tax expense for the year ended December 31, 2008 was $287.3 million as compared to $185.9 million for 2007. Our effective tax rate for the year ended December 31, 2008 was 39.21% as compared to 38.59% for the year ended December 31, 2007. 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 twenty-five U.S. financial institutions by asset size and is the largest thrift institution headquartered in New Jersey. In addition, Hudson City Bancorp is ranked in the top ten bank and thrift holding companies by residential mortgage portfolio. Hudson City Savings currently operates a total of 127 branch offices in the New York metropolitan area. 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 Bancorp may turn out to be wrong. They can be affected by inaccurate assumptions Hudson City Bancorp might make or by known or unknown risks and uncertainties. Consequently, no forward-looking statement can be guaranteed. Hudson City Bancorp 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, (In thousands except share and 2008 2007 per share amounts) (unaudited) Assets: Cash and due from banks $ 184,915 $ 111,245 Federal funds sold 76,896 106,299 Total cash and cash equivalents 261,811 217,544 Securities available for sale: Mortgage-backed securities 9,915,554 5,005,409 Investment securities 3,413,633 2,765,491 Securities held to maturity: Mortgage-backed securities 9,572,257 9,565,526 Investment securities 50,086 1,408,501 Total securities 22,951,530 18,744,927 Loans 29,418,888 24,192,281 Deferred loan costs 71,670 40,598 Allowance for loan losses (49,797) (34,741) Net loans 29,440,761 24,198,138 Federal Home Loan Bank of New York stock 865,570 695,351 Foreclosed real estate, net 15,532 4,055 Accrued interest receivable 299,045 245,113 Banking premises and equipment, net 73,502 75,094 Goodwill 152,109 152,109 Other assets 103,561 91,640 Total Assets $54,163,421 $44,423,971 Liabilities and Shareholders' Equity: Deposits: Interest-bearing $17,949,846 $14,635,412 Noninterest-bearing 514,196 517,970 Total deposits 18,464,042 15,153,382 Repurchase agreements 15,100,000 12,016,000 Federal Home Loan Bank of New York advances 15,125,000 12,125,000 Total borrowed funds 30,225,000 24,141,000 Due to brokers 239,100 281,853 Accrued expenses and other liabilities 285,807 236,429 Total liabilities 49,213,949 39,812,664 Common stock, $0.01 par value, 3,200,000,000 shares authorized; 741,466,555 shares issued; 523,770,617 and 518,569,602 shares outstanding at December 31, 2008 and 2007, respectively 7,415 7,415 Additional paid-in capital 4,641,571 4,578,578 Retained earnings 2,196,235 2,002,049 Treasury stock, at cost; 217,695,938 and 222,896,953 shares at December 31, 2008 and 2007, respectively (1,737,838) (1,771,106) Unallocated common stock held by the employee stock ownership plan (216,244) (222,251) Accumulated other comprehensive income, net of tax 58,333 16,622 Total shareholders' equity 4,949,472 4,611,307 Total Liabilities and Shareholders' Equity $54,163,421 $44,423,971 Hudson City Bancorp, Inc. and Subsidiary Consolidated Statements of Income (Unaudited) For the Three Months For the Years Ended December 31, Ended December 31, 2008 2007 2008 2007 (In thousands, except share and per share data) Interest and Dividend Income: First mortgage loans $413,400 $332,064 $1,523,521 $1,205,461 Consumer and other loans 6,206 7,170 26,184 28,247 Mortgage-backed securities held to maturity 125,558 128,116 497,912 457,720 Mortgage-backed securities available for sale 117,224 48,469 377,096 130,185 Investment securities held to maturity 626 18,335 13,390 74,198 Investment securities available for sale 41,464 37,332 162,818 179,909 Dividends on Federal Home Loan Bank of New York stock 7,280 12,657 48,009 39,492 Federal funds sold 202 4,018 4,295 12,293 Total interest and dividend income 711,960 588,161 2,653,225 2,127,505 Interest Expense: Deposits 147,959 163,486 581,357 606,936 Borrowed funds 303,549 253,820 1,129,891 873,386 Total interest expense 451,508 417,306 1,711,248 1,480,322 Net interest income 260,452 170,855 941,977 647,183 Provision for Loan Losses 9,000 2,000 19,500 4,800 Net interest income after provision for loan losses 251,452 168,855 922,477 642,383 Non-Interest Income: Service charges and other income 1,995 1,845 8,485 7,267 Gains on securities transactions, net - 6 - 6 Total non-interest income 1,995 1,851 8,485 7,273 Non-Interest Expense: Compensation and employee benefits 32,302 28,516 127,198 106,630 Net occupancy expense 8,020 7,592 30,457 29,589 Federal deposit insurance assessment 2,536 408 4,320 1,701 Computer and related services 807 591 2,851 2,605 Other expense 8,599 7,654 33,250 27,388 Total non-interest expense 52,264 44,761 198,076 167,913 Income before income tax expense 201,183 125,945 732,886 481,743 Income Tax Expense 76,905 48,437 287,328 185,885 Net income $124,278 $77,508 $445,558 $295,858 Basic Earnings Per Share $0.25 $0.16 $0.92 $0.59 Diluted Earnings Per Share $0.25 $0.16 $0.90 $0.58 Weighted Average Number of Common Shares Outstanding: Basic 487,856,516 484,247,113 484,907,441 499,607,828 Diluted 495,581,054 495,337,581 495,856,156 509,927,433 Hudson City Bancorp, Inc. and Subsidiary Consolidated Average Balance Sheets (Unaudited) For the Three Months Ended December 31, 2008 Average Average Yield/ Balance Interest Cost (Dollars in thousands) Assets: Interest-earnings assets: First mortgage loans, net(1) $28,557,645 $413,400 5.79% Consumer and other loans 412,540 6,206 6.02 Federal funds sold 132,144 202 0.61 Mortgage-backed securities at amortized cost 18,623,487 242,782 5.21 Federal Home Loan Bank stock 845,115 7,280 3.45 Investment securities, at amortized cost 3,407,181 42,090 4.94 Total interest-earning assets 51,978,112 711,960 5.48 Noninterest-earnings assets 827,322 Total Assets $52,805,434 Liabilities and Shareholders' Equity: Interest-bearing liabilities: Savings accounts $712,675 1,353 0.76 Interest-bearing transaction accounts 1,560,839 11,506 2.93 Money market accounts 2,606,648 20,603 3.14 Time deposits 12,493,602 114,497 3.65 Total interest-bearing deposits 17,373,764 147,959 3.39 Repurchase agreements 15,032,609 153,671 4.07 Federal Home Loan Bank of New York advances 14,682,213 149,878 4.06 Total borrowed funds 29,714,822 303,549 4.06 Total interest-bearing liabilities 47,088,586 451,508 3.81 Noninterest-bearing liabilities: Noninterest-bearing deposits 538,191 Other noninterest-bearing liabilities 323,814 Total noninterest-bearing liabilities 862,005 Total liabilities 47,950,591 Shareholders' equity 4,854,843 Total Liabilities and Shareholders' Equity $52,805,434 Net interest income/net interest rate spread (2) $260,452 1.67% Net interest-earning assets/net interest margin(3) $4,889,526 2.02% Ratio of interest-earning assets to interest-bearing liabilities 1.10x For the Three Months Ended December 31, 2007 Average Average Yield/ Balance Interest Cost (Dollars in thousands) Assets: Interest-earnings assets: First mortgage loans, net(1) $23,125,486 $332,064 5.74% Consumer and other loans 437,095 7,170 6.56 Federal funds sold 342,690 4,018 4.65 Mortgage-backed securities at amortized cost 13,324,671 176,585 5.30 Federal Home Loan Bank stock 671,921 12,657 7.53 Investment securities, at amortized cost 4,672,616 55,667 4.77 Total interest-earning assets 42,574,479 588,161 5.53 Noninterest-earnings assets 669,677 Total Assets $43,244,156 Liabilities and Shareholders' Equity: Interest-bearing liabilities: Savings accounts $739,820 1,405 0.75 Interest-bearing transaction accounts 1,600,935 13,587 3.37 Money market accounts 1,468,580 15,744 4.25 Time deposits 10,635,653 132,750 4.95 Total interest-bearing deposits 14,444,988 163,486 4.49 Repurchase agreements 11,831,217 128,347 4.30 Federal Home Loan Bank of New York advances 11,604,348 125,473 4.29 Total borrowed funds 23,435,565 253,820 4.30 Total interest-bearing liabilities 37,880,553 417,306 4.37 Noninterest-bearing liabilities: Noninterest-bearing deposits 509,005 Other noninterest-bearing liabilities 245,548 Total noninterest-bearing liabilities 754,553 Total liabilities 38,635,106 Shareholders' equity 4,609,050 Total Liabilities and Shareholders' Equity $43,244,156 Net interest income/net interest rate spread(2) $170,855 1.16% Net interest-earning assets/net interest margin(3) $4,693,926 1.64% Ratio of interest-earning assets to interest-bearing liabilities 1.12x (1) Amount includes deferred loan costs and non-performing loans and is net of the allowance for loan losses. (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, 2008 Average Average Yield/ Balance Interest Cost (Dollars in thousands) Assets: Interest-earnings assets: First mortgage loans, net (1) $26,379,724 $1,523,521 5.78% Consumer and other loans 422,097 26,184 6.20 Federal funds sold 209,607 4,295 2.05 Mortgage-backed securities at amortized cost 16,694,279 875,008 5.24 Federal Home Loan Bank stock 790,305 48,009 6.07 Investment securities, at amortized cost 3,602,206 176,208 4.89 Total interest-earning assets 48,098,218 2,653,225 5.52 Noninterest-earnings assets 788,032 Total Assets $48,886,250 Liabilities and Shareholders' Equity: Interest-bearing liabilities: Savings accounts $724,943 5,485 0.76 Interest-bearing transaction accounts 1,578,419 48,444 3.07 Money market accounts 2,227,261 73,180 3.29 Time deposits 11,546,958 454,248 3.93 Total interest-bearing deposits 16,077,581 581,357 3.62 Repurchase agreements 13,465,540 561,301 4.17 Federal Home Loan Bank of New York advances 13,737,057 568,590 4.14 Total borrowed funds 27,202,597 1,129,891 4.15 Total interest-bearing liabilities 43,280,178 1,711,248 3.95 Noninterest-bearing liabilities: Noninterest-bearing deposits 554,584 Other noninterest-bearing liabilities 289,930 Total noninterest-bearing liabilities 844,514 Total liabilities 44,124,692 Shareholders' equity 4,761,558 Total Liabilities and Shareholders' Equity $48,886,250 Net interest income/net interest rate spread (2) $941,977 1.57% Net interest-earning assets/net interest margin(3) $4,818,040 1.96% Ratio of interest-earning assets to interest-bearing liabilities 1.11x For the Years Ended December 31, 2007 Average Average Yield/ Balance Interest Cost (Dollars in thousands) Assets: Interest-earnings assets: First mortgage loans, net (1) $21,208,167 $1,205,461 5.68% Consumer and other loans 431,491 28,247 6.55 Federal funds sold 248,201 12,293 4.95 Mortgage-backed securities at amortized cost 11,391,487 587,905 5.16 Federal Home Loan Bank stock 586,021 39,492 6.74 Investment securities, at amortized cost 5,358,155 254,107 4.74 Total interest-earning assets 39,223,522 2,127,505 5.42 Noninterest-earnings assets 621,860 Total Assets $39,845,382 Liabilities and Shareholders' Equity: Interest-bearing liabilities: Savings accounts $775,802 6,330 0.82 Interest-bearing transaction accounts 1,806,203 60,641 3.36 Money market accounts 1,176,185 47,172 4.01 Time deposits 10,005,377 492,793 4.93 Total interest-bearing deposits 13,763,567 606,936 4.41 Repurchase agreements 10,305,216 432,852 4.20 Federal Home Loan Bank of New York advances 10,286,869 440,534 4.28 Total borrowed funds 20,592,085 873,386 4.24 Total interest-bearing liabilities 34,355,652 1,480,322 4.31 Noninterest-bearing liabilities: Noninterest-bearing deposits 514,685 Other noninterest-bearing liabilities 222,760 Total noninterest-bearing liabilities 737,445 Total liabilities 35,093,097 Shareholders' equity 4,752,285 Total Liabilities and Shareholders' Equity $39,845,382 Net interest income/net interest rate spread (2) $647,183 1.11% Net interest-earning assets/net interest margin(3) $4,867,870 1.65% Ratio of interest-earning assets to interest-bearing liabilities 1.14x (1) Amount includes deferred loan costs and non-performing loans and is net of the allowance for loan losses. (2) Determined by subtracting the weighted average cost of total interest-bearing liabilities from the weighted average yield on total interest-earning assets. (3) Determined by dividing net interest income by total average interest-earning assets. Hudson City Bancorp, Inc. and Subsidiary Other Financial Data (Unaudited) At or for the Quarter Ended Dec. 31, Sept. 30, June 30, March 31, Dec. 31, 2008 2008 2008 2008 2007 (Dollars in thousands, except per share data) Net interest income $260,452 $255,078 $233,132 $193,315 $170,855 Provision for loan losses 9,000 5,000 3,000 2,500 2,000 Non-interest income 1,995 2,181 2,088 2,221 1,851 Non-interest expense: Compensation and employee benefits 32,302 32,052 31,299 31,545 28,516 Other non-interest expense 19,962 17,371 16,978 16,567 16,245 Total non-interest expense 52,264 49,423 48,277 48,112 44,761 Income before income tax expense 201,183 202,836 183,943 144,924 125,945 Income tax expense 76,905 80,928 73,240 56,255 48,437 Net income $124,278 $121,908 $110,703 $88,669 $77,508 Total assets $54,163,421 $51,774,718 $49,161,986 $46,770,250 $44,423,971 Loans, net 29,440,761 28,519,807 27,239,501 24,900,281 24,198,138 Mortgage-backed securities Available for sale 9,915,554 8,404,667 7,600,182 6,727,124 5,005,409 Held to maturity 9,572,257 9,669,841 9,336,644 9,676,864 9,565,526 Other securities Available for sale 3,413,633 3,258,594 3,287,143 3,717,331 2,765,491 Held to maturity 50,086 50,086 71,695 121,715 1,408,501 Deposits 18,464,042 17,287,463 16,719,345 16,077,113 15,153,382 Borrowings 30,225,000 29,275,000 27,475,000 25,225,000 24,141,000 Shareholders' equity 4,949,472 4,786,132 4,709,594 4,710,089 4,611,307 Performance Data: Return on average assets (1) 0.94% 0.97% 0.93% 0.79% 0.72% Return on average equity (1) 10.24% 10.19% 9.27% 7.60% 6.73% Net interest rate spread (1) 1.67 1.70 1.56 1.27 1.16 Net interest margin (1) 2.02% 2.08% 1.97% 1.72% 1.64% Non-interest expense to average assets (1) 0.40% 0.39% 0.41% 0.43% 0.41% Efficiency ratio (2) 19.91% 19.21% 20.52% 24.66% 25.92% Dividend payout ratio 52.00% 48.00% 50.00% 50.00% 53.13% Per Common Share Data: Basic earnings per common share $0.25 $0.25 $0.23 $0.18 $0.16 Diluted earnings per common share $0.25 $0.25 $0.22 $0.18 $0.16 Book value per share (3) $10.12 $9.85 $9.73 $9.75 $9.55 Tangible book value per share (3) $9.80 $9.52 $9.40 $9.41 $9.22 Dividends per share $0.130 $0.120 $0.110 $0.090 $0.085 Capital Ratios: Equity to total assets (consolidated) 9.14% 9.24% 9.58% 10.07% 10.38% Tier 1 leverage capital (Bank) 7.99% 8.16% 8.41% 8.85% 9.16% Total risk-based capital 21.48% 21.87% 22.56% 24.07% 24.83% Other Data: Full-time equivalent employees 1,451 1,406 1,391 1,355 1,307 Number of branch offices 127 125 121 119 119 Asset Quality Data: Total non-performing loans $217,574 $142,141 $116,315 $102,256 $79,402 Number of non-performing loans 580 386 328 283 234 Total number of loans 83,556 81,949 79,929 76,447 75,857 Total non-performing assets $233,106 $151,602 $124,466 $107,146 $83,457 Non-performing loans to total loans 0.74% 0.50% 0.43% 0.41% 0.33% Non-performing assets to total assets 0.43% 0.29% 0.25% 0.23% 0.19% Allowance for loan losses $49,797 $42,628 $39,078 $36,772 $34,741 Allowance for loan losses to non-performing loans 22.89% 29.99% 33.60% 35.96% 43.75% Allowance for loan losses to total loans 0.17% 0.15% 0.14% 0.15% 0.14% Provision for loan losses $9,000 $5,000 $3,000 $2,500 $2,000 Net charge-offs $1,833 $1,449 $694 $469 $109 (1) Ratios are annualized. (2) Computed by dividing non-interest expense by the sum of net interest income and non-interest income. (3) Computed based on total common shares issued, less treasury shares, unallocated ESOP shares, unvested stock awards and shares held in trust. Tangible book value excludes goodwill and other intangible assets. Hudson City Bancorp, Inc. and Subsidiary Book Value Calculations December 31, 2008 (In thousands, except share and per share amounts) Shareholders' equity $4,949,472 Goodwill and other intangible assets (160,207) Tangible Shareholders' equity $4,789,265 Book Value Share Computation: Issued 741,466,555 Treasury shares (217,695,938) Shares outstanding 523,770,617 Unallocated ESOP shares (34,638,643) Unvested RRP shares (196,376) Shares in trust (65,031) Book value shares 488,870,567 Book value per share $10.12 Tangible book value per share $9.80 DATASOURCE: Hudson City Bancorp, Inc. CONTACT: Susan Munhall, Investor Relations, Hudson City Bancorp, Inc., +1-201-967-8290,

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