PARAMUS, N.J., July 21 /PRNewswire-FirstCall/ -- Hudson City
Bancorp, Inc. (Nasdaq: HCBK), the holding company for Hudson City
Savings Bank, reported today that net income for the second quarter
of 2010 increased 11.5% to $142.6
million as compared to $127.9
million for the second quarter of 2009. Diluted
earnings per share increased 11.5% to $0.29 for the second quarter of 2010 as compared
to $0.26 for the second quarter of
2009. For the six months ended June
30, 2010, net income increased 14.1% to $291.5 million as compared to $255.6 million for the same period in 2009.
Diluted earnings per share increased 13.5% to $0.59 for the six months ended June 30, 2010 as compared to $0.52 for the same period in 2009. The Board of
Directors declared a quarterly cash dividend of $0.15 per share payable on August 27, 2010 to shareholders of record on
August 5, 2010.
Ronald E. Hermance, Jr.,
Chairman, President and Chief Executive Officer commented, "While
the current economic conditions and interest rate environment are
posing many challenges, we are very pleased to report net income
for the 2010 second quarter of $142.6
million or $0.29 per diluted
share. During the quarter, market interest rates on mortgage
loans reached historical lows. The yields available on
securities issued by U.S. government-sponsored enterprises, the
only securities we purchase, also fell. This has made growth
very difficult and has brought pressure on our net interest margin.
Despite these difficulties, we are reporting a return on
average equity of 10.4% for the second quarter and continue to pay
regular quarterly dividends to shareholders as we have since 1999.
Based on our closing price of $12.44 on July 16,
2010, this represents a dividend yield of 4.82% - the
highest among banks and thrifts with assets greater than
$50 billion. We have also
maintained favorable expense control. For the first six
months of 2010, fees and tax expense to Federal and state
governments were $218.2 million while
our remaining overhead, including compensation, was $105.2 million. In other words, our ratio
of government fees and taxes to overhead was 2.07 to 1."
Mr. Hermance continued, "Our non-performing assets are growing
at a slower pace and we believe the real estate markets are
stabilizing. Non-performing loans increased by $45.3 million which is the smallest increase
since the third quarter of 2008 and charge-offs for this quarter
were slightly less than in the linked 2010 first quarter.
However, the elevated unemployment and underemployment rates
and a weak economic recovery will continue to put pressure on the
level of non-performing loans and charge-offs as customers struggle
in this difficult economy."
Mr. Hermance further commented, "Last week, the U.S. Congress
adopted regulatory reform. This sweeping legislation, once
signed by the President, will affect financial institutions in many
ways. Many of the more significant provisions of this
legislation will not affect us. For example, all of our
capital is common capital – we have never issued trust preferred
shares which will generally no longer be included in regulatory
capital for institutions our size. We will not be affected by
the new prohibitions on certain forms of proprietary trading,
derivative instruments and hedge fund investments. All of
these activities will be limited or affected by the reform
legislation. Banks that securitize their loan portfolios will
be required to retain some of the credit risk. We do not sell
loans to the secondary market or securitize loans. We do
expect that the legislation will increase our overhead costs as
Congress and the Administration consider levying new fees and taxes
on banks our size. While it is too early to determine the
amount or type of fees and taxes that will ultimately be levied, we
believe the cost of the legislation and the various bailouts should
be borne by those that accepted taxpayer dollars. Hudson City
never took, or needed, any TARP or other assistance. In fact,
during the crisis we remained one of the few home lenders that
supported our markets and customers with home mortgage loans.
From January 1, 2008 through
June 30, 2010, our total loan
production was approximately $21.0
billion, all of which we retained in our portfolio."
Mr. Hermance concluded, "I am very pleased to announce that the
Board of Directors has appointed Cornelius
E. Golding, 62, to the Company's Board of Directors.
Mr. Golding has extensive experience as a certified public
accountant and holds a master's degree in Finance. Prior to
his retirement, Mr. Golding was the chief financial officer of
Atlantic Mutual Insurance Company where, among many other
responsibilities, he oversaw the corporate investment portfolio.
Mr. Golding serves on several boards of directors, including
a publicly-held company and recently served on the board of a
publicly-held bank-holding company. Mr. Golding's extensive
financial and accounting experience positions him well to serve as
a director and to fill the critical roles of a financial expert.
With the addition of Mr. Golding, a majority of our
independent directors meet the definition of an audit committee
financial expert and are qualified to serve on our Audit Committee.
We welcome Mr. Golding to Hudson City and look forward to his valued
contributions to our Company."
Financial highlights for the second quarter of 2010 are as
follows:
- Both basic and diluted earnings per share were $0.29 for the second quarter of 2010 as compared
to $0.26 for both basic and diluted
earnings per share for the second quarter of 2009. Basic and
diluted earnings per common share were both $0.59 for the first six months of 2010 as
compared to $0.52 for both basic and
diluted earnings per share for the same period in 2009.
- The Board of Directors declared a quarterly cash dividend of
$0.15 per share payable on
August 27, 2010 to shareholders of
record at the close of business on August 5,
2010.
- Net income amounted to $142.6
million for the second quarter of 2010, as compared to
$127.9 million for the second quarter
of 2009, an increase of 11.5%. For the six months ended
June 30, 2010, net income amounted to
$291.5 million as compared to
$255.6 million for the same period in
2009.
- Net interest income increased 5.0% to $317.5 million for the second quarter of 2010 and
10.7% to $648.7 million for the six
months ended June 30, 2010.
- Our net interest rate spread and net interest margin were 1.89%
and 2.13%, respectively, for the second quarter of 2010 and 1.93%
and 2.17%, respectively, for the first six months of 2010.
- The provision for loan losses amounted to $50.0 million for the second quarter of 2010 as
compared to $32.5 million for the
second quarter of 2009. For the six months ended June 30, 2010, the provision for loan losses
amounted to $100.0 million as
compared to $52.5 million for the
same period in 2009.
- Our annualized return on average assets and annualized return
on average shareholders' equity for the second quarter of 2010 were
0.93% and 10.42%, respectively. Our annualized return on average
assets and annualized return on average shareholders' equity for
the six months ended June 30, 2010
were 0.96% and 10.69%, respectively.
- Our efficiency ratio was 18.42% for the second quarter of 2010
and 18.34% for the first six months of 2009. The efficiency ratio
is calculated by dividing non-interest expense by the sum of net
interest income and non-interest income.
- Non-interest income amounted to $33.2
million for the second quarter of 2010 and $66.2 million for the six months ended
June 30, 2010. Included in
non-interest income were net realized securities gains of
$30.6 million and $61.4 million, respectively, for the three and
six months ended June 30, 2010.
- Our loan production was $3.37
billion for the first six months of 2010, which resulted in
a net increase of $341.7 million in
net loans to $32.06 billion at
June 30, 2010 from $31.72 billion at December
31, 2009.
- Deposits increased $590.4
million, or 2.4%, to $25.17
billion at June 30, 2010 from
$24.58 billion at December 31, 2009.
Statement of Financial Condition Summary
Total assets increased $665.4
million, or 1.1%, to $60.93
billion at June 30, 2010 from
$60.27 billion at December 31, 2009. The increase in total assets
reflected a $365.6 million increase
in total mortgage-backed securities and a $341.7 million increase in net loans. Total
assets decreased $298.5 million from
March 31, 2010 as mortgage
refinancing activity caused an increase in loan repayments and
prepayments on mortgage-backed securities remained at elevated
levels. During this same time period, available reinvestment
yields on these types of assets also decreased. We lowered
our deposit rates beginning in the first quarter of 2010 to slow
our deposit growth from the 2009 levels since the low yields that
are available to us for mortgage loans and investment securities
have made a growth strategy less prudent until market conditions
improve.
The increase in loans reflected loan portfolio growth through
the origination of one- to four-family first mortgage loans in
New Jersey, New York, Pennsylvania and Connecticut and, to a lesser extent, the
continued purchase of mortgage loans. We are a portfolio
lender and do not sell loans in the secondary market. For the
first six months of 2010, we originated $2.83 billion and purchased $542.2 million of loans, compared to originations
of $2.97 billion and purchases of
$1.88 billion for the first six
months of 2009. The origination and purchases of loans were
substantially offset by principal repayments of $2.90 billion for the first six months of 2010 as
compared to $3.50 billion for the
same period in 2009. Loan origination activity continues to be
strong as a result of an increase in mortgage refinancing caused by
market interest rates that remain at near-historic lows.
However, loan purchase activity declined as conditions in the
secondary mortgage market have made it more difficult for us to
purchase loans that meet our underwriting standards. The
refinancing activity has also caused the increased levels of
repayments to continue in 2010 as some of our customers refinanced
with other banks.
Total mortgage-backed securities increased $365.6 million during the first six months of
2010, reflecting purchases of $6.01
billion of mortgage-backed securities issued by GSEs,
substantially all of which were adjustable-rate. The increase
was partially offset by repayments received of $4.58 billion and sales of $1.09 billion. The sales resulted in net
realized securities gains of $61.4
million (pre-tax). We believe that the continued
elevated levels of prepayments and the eventual increase in
interest rates will reduce the amount of unrealized gains available
in the portfolio. Accordingly, we sold these securities to
take advantage of the favorable pricing that currently exists in
the market.
Total liabilities increased $461.3
million, or 0.8%, to $55.39
billion at June 30, 2010 from
$54.93 billion at December 31, 2009. The increase in total
liabilities primarily reflected a $590.4
million increase in deposits. The increase in total deposits
reflected a $386.1 million increase
in our interest-bearing transaction accounts and savings accounts,
a $159.9 million increase in our time
deposits, and a $15.7 million
increase in our money market checking accounts. The increase in our
interest-bearing transaction accounts is primarily due to a
$310.0 million increase in our High
Value checking account product. Borrowings amounted to $29.98 billion at June 30,
2010, unchanged from December 31,
2009. During the first six months of 2010, we modified
$3.18 billion of borrowings to extend
the call dates of the borrowings by between three and four years,
thereby reducing our interest rate risk and the amount of
borrowings that may be called in any one quarter.
Total shareholders' equity increased $204.1 million to $5.54 billion at June 30, 2010 from $5.34
billion at December 31, 2009.
The increase was primarily due to net income of $291.5 million for the six months ended
June 30, 2010 and a $46.2 million increase in accumulated other
comprehensive income primarily due to an increase in the net
unrealized gain on securities available-for-sale. These increases
to shareholders' equity were partially offset by cash dividends
paid to common shareholders of $147.9
million. At June 30,
2010, our shareholders' equity to asset ratio was 9.10% and
our tangible book value per share was $10.93.
The accumulated other comprehensive income of $230.7 million at June 30,
2010 includes a $251.4 million
after-tax net unrealized gain on securities available for sale
($425.0 million pre-tax) partially
offset by a $20.7 million after-tax
accumulated other comprehensive loss related to the funded status
of our employee benefit plans.
Statement of Income Summary
The Federal Open Market Committee of the Board of Governors of
the Federal Reserve System (the "FOMC") noted that the economic
outlook softened somewhat in the second quarter of 2010 but that
the economy is continuing to grow although at a slower pace than
anticipated. The national unemployment rate decreased to 9.5%
in June 2010 as compared to 9.7% in
March 2010 and 10.0% in December 2009. Although there has been
recent improvement in the economy, the FOMC decided to maintain the
overnight lending rate at zero to 0.25% during the second quarter
of 2010. As a result, short-term market interest rates have
remained at low levels during the second quarter of 2010.
This allowed us to continue to re-price our short-term
deposits thereby reducing our cost of funds. The yields on
mortgage-related assets have also remained at relatively low levels
as the 10 year treasury fell below 3.00% during the second quarter
of 2010. Our net interest rate spread remained unchanged at
1.89% for the second quarter of 2010 as compared to the second
quarter of 2009 and net interest margin decreased to 2.13% for the
second quarter of 2010 as compared to 2.20% for the linked first
quarter of 2010 and 2.18% for the second quarter of 2009.
While our deposits continued to reprice to lower rates during
the second quarter of 2010, the low market interest rates resulted
in lower yields on our mortgage-related interest-earning assets as
customers refinanced to lower mortgage rates and our new loan
production and asset purchases were at the current low market
interest rates. Mortgage-related assets represented 87.8% of
our average interest-earning assets during the 2010 second
quarter.
Net interest income increased $15.1
million, or 5.0%, to $317.5
million for the second quarter of 2010 as compared to
$302.4 million for the second quarter
of 2009. Our net interest rate spread was unchanged at 1.89% for
the three months ended June 30, 2010
and 2009, respectively. Our net interest margin decreased 5 basis
points to 2.13% as compared to 2.18% for the second quarter of
2009. Net interest income increased $62.5
million, or 10.7%, to $648.7
million for the first six months of 2010 as compared to
$586.2 million for the first six
months of 2009. During the first six months of 2010, our net
interest rate spread increased 12 basis points to 1.93% and our net
interest margin increased 5 basis points to 2.17% as compared to
the same period in 2009.
Total interest and dividend income for the second quarter of
2010 decreased $10.2 million, or
1.4%, to $717.6 million as compared
to $727.8 million for the second
quarter of 2009. The decrease in total interest and dividend income
was primarily due to a decrease of 44 basis points in the
annualized weighted-average yield to 4.83% for the quarter ended
June 30, 2010 from 5.27% for the same
quarter in 2009. The decrease in the annualized
weighted-average yield was partially offset by an increase in the
average balance of total interest-earning assets of $4.15 billion, or 7.5%, to $59.41 billion for the second quarter of 2010 as
compared to $55.26 billion for the
second quarter of 2009.
Total interest and dividend income was $1.45 billion for both six month periods ended
June 30, 2010 and 2009. The
average balance of total interest-earning assets increased
$4.59 billion, or 8.4%, to
$59.25 billion for the six months
ended June 30, 2010 as compared to
$54.66 billion for the six months
ended June 30, 2009. The
increase in the average balance of total interest-earning assets
was partially offset by a decrease of 41 basis points in the
annualized weighted-average yield to 4.90% for the six months ended
June 30, 2010 from 5.31% for the
comparable period in 2009.
Interest on first mortgage loans increased $12.9 million to $426.2 million for the second
quarter of 2010 as compared to $413.3
million for the same period in 2009. This was primarily due
to a $1.92 billion increase in the
average balance of first mortgage loans to $31.61 billion, reflecting our historical
emphasis on the growth of our mortgage loan portfolio.
However, during 2010 the growth rate of our mortgage loan
portfolio slowed significantly as refinancing activity resulted in
continued elevated levels of loan repayments and weak real estate
markets resulted in decreased home purchase mortgage activity.
In addition, loan purchase activity declined as conditions in
the secondary mortgage market have made it more difficult for us to
purchase loans that meet our underwriting standards. The
increase in the average balance of first mortgage loans was
partially offset by an 18 basis point decrease in the
weighted-average yield to 5.39% from 5.57% for the 2009 second
quarter.
For the six months ended June 30,
2010, interest on first mortgage loans increased
$26.9 million to $854.4 million as
compared to $827.5 million for the
six months ended June 30, 2009. This
was primarily due to a $2.04 billion
increase in the average balance of first mortgage loans to
$31.56 billion, reflecting our
continued emphasis on the growth of our mortgage loan portfolio.
The increase in the average balance of first mortgage loans
was partially offset by a 19 basis point decrease in the
weighted-average yield to 5.42% for the six months ended
June 30, 2010 as compared to 5.61%
for the same period in 2009.
Interest on mortgage-backed securities decreased $26.4 million to $222.1 million for the second
quarter of 2010 as compared to $248.5
million for the second quarter of 2009. This decrease
was due primarily to a 74 basis point decrease in the
weighted-average yield to 4.32% for the second quarter of 2010 from
5.06% for the second quarter of 2009. The decrease in the
weighted-average yield was partially offset by a $930.2 million increase in the average balance of
mortgage-backed securities to $20.57
billion during the second quarter of 2010 as compared to
$19.64 billion for the second quarter
of 2009.
Interest on mortgage-backed securities decreased $45.6 million to $453.8 million for the six
months ended June 30, 2010 as
compared to $499.4 million for the
six months ended June 30, 2009.
This decrease was due primarily to a 68 basis point decrease
in the weighted-average yield to 4.45% during the first six months
of 2010 from 5.13% for the same period in 2009. The decrease in the
weighted-average yield was partially offset by a $937.8 million increase in the average balance of
mortgage-backed securities to $20.42
billion during the first six months of 2010 as compared to
$19.48 billion for the comparable
period in 2009.
The increases in the average balances of mortgage-backed
securities were due to purchases of these securities. We
purchase these securities as part of our overall management of
interest rate risk and to provide us with a source of monthly cash
flows. The decrease in the weighted average yield on
mortgage-backed securities is a result of lower yields on
securities purchased during the second half of 2009 and the first
six months of 2010 when market interest rates were lower than the
yield earned on the existing portfolio.
Interest on investment securities increased $6.5 million to $54.8 million for the second
quarter of 2010 as compared to $48.3
million for the same period in 2009. This increase was
due primarily to a $928.7 million
increase in the average balance of investment securities to
$5.11 billion for the second quarter
of 2010 from $4.18 billion for the
second quarter of 2009. The impact on interest income from
the increase in the average balance of investment securities was
partially offset by a decrease in the average yield of investment
securities of 34 basis points to 4.29% for the second quarter of
2010 as compared to 4.63% for the second quarter of 2009.
For the six months ended June 30,
2010, interest on investment securities increased
$18.2 million to $112.2 million as
compared to $94.0 million for the six
months ended June 30, 2009.
This increase was due primarily to a $1.27 billion increase in the average balance of
investment securities to $5.21
billion during the first six months of 2010 from
$3.94 billion for the same period in
2009. The impact on interest income from the increase in the
average balance of investment securities was partially offset by a
decrease in the average yield of investment securities of 46 basis
points to 4.31% for the 2010 six-month period as compared to 4.77%
for the same period in 2009.
Dividends on Federal Home Loan Bank of New York ("FHLB") stock decreased $2.8 million, or 23.3%, to $9.2 million for the second quarter of 2010 as
compared to $12.0 million for the
second quarter of 2009. This decrease was due primarily to a
133 basis point decrease in the average dividend yield earned to
4.15% as compared to 5.48% for the second quarter of 2009.
The decrease in dividend income was partially offset by a
$3.5 million increase in the average
balance to $882.8 million for the
second quarter of 2010 as compared to $879.3
million for the same period in 2009.
Dividends on FHLB stock increased $3.1
million, or 17.0%, to $21.5
million for the first six months of 2010 as compared to
$18.4 million for the same period in
2009. This increase was due primarily to a 69 basis point
increase in the average dividend yield earned to 4.90% for the
first six months of 2010 as compared to 4.21% for the same period
in 2009. The increase in dividend income was also due to a
$3.1 million increase in the average
balance to $878.8 million for the
first six months of 2010 as compared to $875.7 million for the same period in 2009.
Interest on Federal funds sold amounted to $576,000 for the second quarter of 2010 as
compared to $187,000 for the second
quarter of 2009. The average balance of Federal funds sold
amounted to $886.4 million for the
second quarter of 2010 as compared to $477.4
million for the second quarter of 2009. The yield
earned on Federal funds sold was 0.26% for the 2010 second quarter
and 0.16% for the 2009 second quarter. The increase in the
average balance of Federal funds sold is a result of liquidity
provided by increased levels of repayments on mortgage-related
assets and calls of investment securities.
Interest on Federal funds sold amounted to $1.0 million for the first six months of 2010 as
compared to $363,000 for the
comparable period in 2009. The average balance of Federal
funds sold amounted to $838.1 million
for the first six months of 2010 as compared to $452.7 million for the same period in 2009.
The yield earned on Federal funds sold was 0.25% for the six
months ended June 30, 2010 and 0.16%
for the six months ended June 30,
2009. The increase in the average balance of Federal
funds sold is a result of liquidity provided by increased levels of
repayments on mortgage-related assets and calls of investment
securities.
Total interest expense for the quarter ended June 30, 2010 decreased $25.3 million, or 6.0%, to $400.1 million as compared to $425.4 million for the quarter ended June 30, 2009. This decrease was primarily
due to a 44 basis point decrease in the weighted-average cost of
total interest-bearing liabilities to 2.94% for the quarter ended
June 30, 2010 compared with 3.38% for
the quarter ended June 30, 2009. The
decrease was partially offset by a $4.21
billion, or 8.3%, increase in the average balance of total
interest-bearing liabilities to $54.67
billion for the quarter ended June
30, 2010 compared with $50.46
billion for the second quarter of 2009. This increase in
interest-bearing liabilities was primarily used to fund asset
growth.
Total interest expense for the six months ended June 30, 2010 decreased $61.1 million, or 7.1%, to $803.8 million as compared to $864.9 million for the six months ended
June 30, 2009. This decrease
was primarily due to a 53 basis point decrease in the
weighted-average cost of total interest-bearing liabilities to
2.97% for the six months ended June 30,
2010 compared with 3.50% for the six months ended
June 30, 2009. The decrease was
partially offset by a $4.70 billion,
or 9.4%, increase in the average balance of total interest-bearing
liabilities to $54.57 billion for the
six months ended June 30, 2010
compared with $49.87 billion for the
first six months of 2009. This increase in interest-bearing
liabilities was primarily used to fund asset growth.
Interest expense on deposits decreased $27.6 million, or 22.4%, to $95.7 million for the second quarter of 2010 as
compared to $123.3 million for the
second quarter of 2009. This decrease is due primarily to a
decrease in the average cost of interest-bearing deposits of 88
basis points to 1.55% for the second quarter of 2010 as compared to
2.43% for the second quarter of 2009. The decrease was
partially offset by a $4.33 billion
increase in the average balance of interest-bearing deposits to
$24.69 billion during the second
quarter of 2010 as compared to $20.36
billion for the second quarter of 2009.
For the six months ended June 30,
2010, interest expense on deposits decreased $62.5 million, or 23.9%, to $199.6 million as compared to $262.1 million for the six months ended
June 30, 2009. This decrease is
due primarily to a decrease in the average cost of interest-bearing
deposits of 105 basis points to 1.64% for the first six months of
2010 as compared to 2.69% for the first six months of 2009.
The decrease was partially offset by a $4.96 billion increase in the average balance of
interest-bearing deposits to $24.60
billion during the first six months of 2010 as compared to
$19.64 billion for the first six
months of 2009.
The increases in the average balances of interest-bearing
deposits reflect our expanded branch network and efforts to grow
deposits in our existing branches by offering competitive rates.
Also, in response to the economic conditions in 2009, we
believe that households increased their personal savings and
customers sought insured bank deposit products as an alternative to
investments such as equity securities and bonds. We believe
these factors contributed to our deposit growth. However,
during the second quarter of 2010, total deposits decreased
$220.3 million from March 31, 2010. We lowered our deposit
rates to slow our deposit growth from 2009 levels since the low
yields that are available to us for mortgage loans and investment
securities have made a growth strategy less prudent until market
conditions improve. The decrease in the average cost of
deposits for 2010 reflected lower market interest rates. At
June 30, 2010, time deposits
scheduled to mature within one year totaled $11.27 billion with an average cost of 1.45%.
These time deposits are scheduled to mature as follows:
$4.98 billion with an average cost of
1.40% in the third quarter of 2010, $2.73
billion with an average cost of 1.35% in the fourth quarter
of 2010, $1.73 billion with an
average cost of 1.75% in the first quarter of 2011 and $1.83 billion with an average cost of 1.47% in
the second quarter of 2011. The current yields offered for
our six month, one year and two year time deposits are 1.05%, 1.25%
and 2.00%, respectively. In addition, our money market
accounts are currently yielding 1.00%. Based on our deposit
retention experience and current pricing strategy, we anticipate
that a significant portion of these time deposits will remain with
us as renewed time deposits or as transfers to other deposit
products at the prevailing rate.
We have historically used borrowings to fund a portion of the
growth in interest-earning assets. However, we were able to
fund substantially all of our growth in 2009 and for the first six
months of 2010 with deposits. 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 believe, given current market
conditions, that the likelihood that a significant portion of these
borrowings would be called will not increase substantially unless
interest rates were to increase by at least 300 basis points.
During the first six months of 2010, we modified $3.18 billion of borrowings to extend the call
dates of the borrowings by between three and four years, thereby
reducing our interest rate risk.
Interest expense on borrowed funds increased $2.3 million to $304.4 million for the second
quarter of 2010 as compared to $302.1
million for the second quarter of 2009. This increase was
primarily due to a 4 basis point increase in the weighted-average
cost of borrowed funds to 4.07% for the second quarter of 2010 as
compared to 4.03% for the second quarter of 2009 reflecting the
incremental cost of the debt modifications. This increase was
primarily offset by a $126.1 million
decrease in the average balance of borrowed funds to $29.98 billion for the second quarter of 2010 as
compared to $30.10 billion for the
second quarter of 2009.
Interest expense on borrowed funds increased $1.4 million to $604.2 million for the six months
ended June 30, 2010 as compared to
$602.8 million for the comparable
period in 2009. This increase was primarily due to a 4 basis point
increase in the weighted-average cost of borrowed funds to 4.06%
for the first six months of 2010 as compared to 4.02% for the first
six months of 2009 reflecting the incremental cost of the debt
modifications. This increase was partially offset by a
$258.1 million decrease in the
average balance of borrowed funds to $29.98
billion for the first six months of 2010 as compared to
$30.23 billion for the first six
months of 2009.
The provision for loan losses amounted to $50.0 million for the quarter ended June 30, 2010 as compared to $32.5 million for the quarter ended June 30, 2009. The increase in the
provision for loan losses for the quarter ended June 30, 2010 and the resulting increase in the
allowance for loan losses ("ALL") is due primarily to the increase
in non-performing loans during the first six months of 2010,
continuing relatively high levels of unemployment and an increase
in charge-offs. In addition, although home prices appear to
have started to stabilize, they are still declining slightly in
some of our lending markets. Non-performing loans, defined
as non-accruing loans and accruing loans delinquent 90 days or
more, amounted to $790.1 million at
June 30, 2010 compared with
$744.9 million at March 31, 2010 and $627.7
million at December 31, 2009.
The ratio of non-performing loans to total loans was 2.46% at
June 30, 2010 compared with 2.32% at
March 31, 2010 and 1.98% at
December 31, 2009. Loans
delinquent 30 to 59 days amounted to $396.5
million at June 30, 2010 as
compared to $370.7 million at
March 31, 2010 and $430.9 million at December
31, 2009. Loans delinquent 60 to 89 days amounted to
$168.6 million at June 30, 2010 as compared to $171.5 million at March
31, 2010 and $182.5 million at
December 31, 2009. The ALL
amounted to $193.0 million and
$140.1 million at June 30, 2010 and December
31, 2009, respectively. The allowance for loan losses
as a percent of total loans and as a percent of non-performing
loans was 0.60% and 24.42%, respectively at June 30, 2010, as compared to 0.44% and 22.32%,
respectively at December 31, 2009.
The increases in these ratios were due to our consideration
of the continuing weak economic conditions, particularly prolonged
elevated levels of unemployment and underemployment and the
continuing declines in house prices, in our determination of the
allowance for loan losses at June 30,
2010.
Net charge-offs amounted to $22.8
million for the quarter ended June
30, 2010 as compared to net charge-offs of $9.6 million for the same quarter in 2009.
For the six months ended June 30,
2010, net charge-offs amounted to $47.1 million as compared to $14.2 million of net charge-offs for the same
period in 2009. We generally obtain new collateral values for loans
on or before 180 days of delinquency. If the estimated fair
value of the collateral (less estimated selling costs) is less than
the recorded investment in the loan, we charge-off an amount to
reduce the loan to the fair value of the collateral less estimated
selling costs. As a result, certain losses inherent in our
non-performing loans are being recognized as charge-offs which may
result in a lower ratio of the allowance for loan losses to
non-performing loans.
Total non-interest income was $33.2
million for the second quarter 2010 as compared to
$26.6 million for the same quarter in
2009. Included in non-interest income for the three month period
ended June 30, 2010 were net gains on
securities transactions of $30.6
million which resulted from the sale of $515.2 million of mortgage-backed securities
available-for-sale. Included in non-interest income for the three
month period ended June 30, 2009 were
net gains on securities transactions of $24.0 million which resulted from the sale of
$761.6 million of mortgage-backed
securities available-for-sale.
Total non-interest income for the six months ended June 30, 2010 was $66.2
million compared with $28.9
million for the comparable period in 2009. Included in
non-interest income for the six months ended June 30, 2010 were net gains on securities
transactions of $61.4 million which
resulted from the sale of $1.09
billion of mortgage-backed securities available-for-sale.
Included in non-interest income for the six months ended
June 30, 2009 were net gains on
securities transactions of $24.2
million substantially all of which resulted from the sale of
$761.6 million of mortgage-backed
securities available-for-sale.
Total non-interest expense decreased $20.3 million, or 23.9%, to $64.6 million for the second quarter of 2010 from
$84.9 million for the second quarter
of 2009. The decrease is primarily due to the absence of the
Federal Deposit Insurance Corporation ("FDIC") special assessment
of $21.1 million that was assessed
during the second quarter of 2009 as well as a $3.6 million decrease in compensation and
employee benefits expense. These decreases were partially
offset by an increase of $3.6 million
in Federal deposit insurance expense. The increase in Federal
deposit insurance expense is due primarily to an increase in total
deposits. The decrease in compensation and employee benefits
expense included a $3.3 million
decrease in expense related to our stock benefit plans, partially
offset by a $1.0 million increase in
compensation costs due primarily to normal increases in salary as
well as additional full time employees. There was also a
decrease of $178,000 in costs related
to our health plan and a $1.1 million
decrease in pension expense. At June
30, 2010, we had 1,557 full-time equivalent employees as
compared to 1,458 at June 30, 2009.
Included in other non-interest expense for the second quarter
of 2010 were write-downs on foreclosed real estate and net losses
on the sale of foreclosed real estate of $173,000 as compared to $399,000 for the second quarter of 2009.
Total non-interest expense decreased $8.6
million, or 6.2%, to $131.1
million for the six months ended June
30, 2010 from $139.7 million
for the six months ended June 30,
2009. The decrease is primarily due to the absence of
the FDIC special assessment of $21.1
million that was assessed during the second quarter of 2009
and a $2.1 million decrease in
compensation and employee benefits expense. These decreases
were partially offset by an increase of $13.5 million in Federal deposit insurance
expense. The increase in Federal deposit insurance expense is
due primarily to an increase in total deposits and the increases in
our deposit insurance assessment rate as a result of a restoration
plan implemented by the FDIC to recapitalize the Deposit Insurance
Fund. The decrease in compensation and employee benefits
expense included a $2.4 million
decrease in expense related to our stock benefit plans, a decrease
of $1.3 million in costs related to
our health plan and a $1.9 million
decrease in pension expense. These decreases were partially
offset by a $3.0 million increase in
compensation costs due primarily to normal increases in salary as
well as additional full time employees. Included in other
non-interest expense for the six months ended June 30, 2010 were write-downs on foreclosed real
estate and net losses on the sale of foreclosed real estate, of
$1.5 million as compared to
$1.6 million for the comparable
period in 2009.
Our efficiency ratio was 18.42% for the 2010 second quarter as
compared to 25.82% for the 2009 second quarter. For the six
months ended June 30, 2010, our
efficiency ratio was 18.34% compared with 22.72% for the
corresponding 2009 period. The efficiency ratio is calculated
by dividing non-interest expense by the sum of net interest income
and non-interest income. Our annualized ratio of non-interest
expense to average total assets for the second quarter of 2010 was
0.43% as compared to 0.60% for the second quarter of 2009.
Our annualized ratio of non-interest expense to average total
assets for the six months ended June 30,
2010 was 0.43% compared with 0.51% for the corresponding
period in 2009.
Income tax expense amounted to $93.5
million for the second quarter of 2010 compared with
$83.6 million for the same quarter in
2009. Our effective tax rate for the second quarter of 2010
was 39.61% compared with 39.53% for the second quarter of 2009.
Income tax expense for the six months ended June 30, 2010 was $192.3
million compared with $167.3
million for the corresponding 2009 period. Our
effective tax rate for the six months ended June 30, 2010 was 39.75% compared with 39.56% for
the six months ended June 30,
2009.
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. Hudson City Savings Bank currently operates a
total of 135 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
|
|
|
|
|
June 30,
|
|
December 31,
|
|
|
|
|
|
2010
|
2009
|
|
|
(In thousands, except share and
per share amounts)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
Cash and due from
banks
|
|
$
138,112
|
|
$
198,752
|
|
|
Federal funds sold and other
overnight deposits
|
|
180,892
|
|
362,449
|
|
|
Total cash and cash equivalents
|
|
319,004
|
|
561,201
|
|
|
|
|
|
|
|
|
|
|
Securities available for
sale:
|
|
|
|
|
|
|
Mortgage-backed
securities
|
|
13,825,644
|
|
11,116,531
|
|
|
Investment
securities
|
|
366,937
|
|
1,095,240
|
|
|
Securities held to
maturity:
|
|
|
|
|
|
|
Mortgage-backed
securities
|
|
7,619,996
|
|
9,963,554
|
|
|
Investment
securities
|
|
5,139,794
|
|
4,187,704
|
|
|
|
Total securities
|
|
26,952,371
|
|
26,363,029
|
|
|
|
|
|
|
|
|
|
|
Loans
|
|
32,164,303
|
|
31,779,921
|
|
|
Net deferred loan
costs
|
|
91,509
|
|
81,307
|
|
|
Allowance for loan
losses
|
|
(192,983)
|
|
(140,074)
|
|
|
|
Net loans
|
|
32,062,829
|
|
31,721,154
|
|
|
|
|
|
|
|
|
|
|
Federal Home Loan Bank of New
York stock
|
|
883,190
|
|
874,768
|
|
|
Foreclosed real estate,
net
|
|
21,690
|
|
16,736
|
|
|
Accrued interest
receivable
|
|
283,550
|
|
304,091
|
|
|
Banking premises and equipment,
net
|
|
70,617
|
|
70,116
|
|
|
Goodwill
|
|
152,109
|
|
152,109
|
|
|
Other assets
|
|
187,774
|
|
204,556
|
|
|
|
Total Assets
|
|
$ 60,933,134
|
|
$ 60,267,760
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders’
Equity:
|
|
|
|
|
|
|
Deposits:
|
|
|
|
|
|
|
Interest-bearing
|
|
$ 24,553,676
|
|
$ 23,992,007
|
|
|
Noninterest-bearing
|
|
614,789
|
|
586,041
|
|
|
|
Total deposits
|
|
25,168,465
|
|
24,578,048
|
|
|
|
|
|
|
|
|
|
|
Repurchase agreements
|
|
15,100,000
|
|
15,100,000
|
|
|
Federal Home Loan Bank of New
York advances
|
|
14,875,000
|
|
14,875,000
|
|
|
|
Total borrowed funds
|
|
29,975,000
|
|
29,975,000
|
|
|
|
|
|
|
|
|
|
|
Due to brokers
|
|
-
|
|
100,000
|
|
|
Accrued expenses and other
liabilities
|
|
246,413
|
|
275,560
|
|
|
|
Total liabilities
|
|
55,389,878
|
|
54,928,608
|
|
|
|
|
|
|
|
|
|
|
Common stock, $0.01 par value,
3,200,000,000 shares authorized; 741,466,555 shares issued;
526,611,096 shares outstanding at June 30, 2010 and
526,493,676 shares outstanding at December 31,
2009
|
|
7,415
|
|
7,415
|
|
|
Additional paid-in
capital
|
|
4,694,235
|
|
4,683,414
|
|
|
Retained earnings
|
|
2,544,987
|
|
2,401,606
|
|
|
Treasury stock, at cost;
214,855,459 shares at June 30, 2010 and 214,972,879 shares at
December 31, 2009
|
|
(1,726,808)
|
|
(1,727,579)
|
|
|
Unallocated common stock held by
the employee stock ownership plan
|
|
(207,234)
|
|
(210,237)
|
|
|
Accumulated other comprehensive
income, net of tax
|
|
230,661
|
|
184,533
|
|
|
|
Total shareholders’
equity
|
|
5,543,256
|
|
5,339,152
|
|
|
|
Total Liabilities and Shareholders’ Equity
|
|
$ 60,933,134
|
|
$ 60,267,760
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hudson City Bancorp, Inc. and
Subsidiary
Consolidated Statements of
Income
(Unaudited)
|
|
|
|
|
|
For the Three
Months
Ended June 30,
|
|
For the Six
Months
Ended June 30,
|
|
|
|
|
|
2010
|
|
2009
|
|
2010
|
|
2009
|
|
|
|
|
|
(In thousands, except per share
data)
|
|
Interest and Dividend
Income:
|
|
|
|
|
|
|
|
|
|
|
First mortgage loans
|
|
$
426,244
|
|
$
413,282
|
|
$
854,405
|
|
$
827,490
|
|
|
Consumer and other
loans
|
|
4,654
|
|
5,427
|
|
9,413
|
|
11,417
|
|
|
Mortgage-backed securities held
to maturity
|
|
92,319
|
|
117,285
|
|
202,445
|
|
239,216
|
|
|
Mortgage-backed securities
available for sale
|
|
129,790
|
|
131,191
|
|
251,382
|
|
260,174
|
|
|
Investment securities held to
maturity
|
|
49,627
|
|
11,727
|
|
96,691
|
|
14,085
|
|
|
Investment securities available
for sale
|
|
5,203
|
|
36,616
|
|
15,549
|
|
79,919
|
|
|
Dividends on Federal Home Loan
Bank of New York stock
|
|
9,167
|
|
12,044
|
|
21,540
|
|
18,417
|
|
|
Federal funds sold and other
overnight deposits
|
|
576
|
|
187
|
|
1,025
|
|
363
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest and
dividend income
|
|
717,580
|
|
727,759
|
|
1,452,450
|
|
1,451,081
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Expense:
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
95,670
|
|
123,254
|
|
199,589
|
|
262,078
|
|
|
Borrowed funds
|
|
304,396
|
|
302,108
|
|
604,202
|
|
602,775
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest
expense
|
|
400,066
|
|
425,362
|
|
803,791
|
|
864,853
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
|
317,514
|
|
302,397
|
|
648,659
|
|
586,228
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for Loan
Losses
|
|
50,000
|
|
32,500
|
|
100,000
|
|
52,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income after
provision for loan losses
|
|
267,514
|
|
269,897
|
|
548,659
|
|
533,728
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Interest Income:
|
|
|
|
|
|
|
|
|
|
|
Service charges and other
income
|
|
2,584
|
|
2,569
|
|
4,814
|
|
4,694
|
|
|
Gain on securities transactions,
net
|
|
30,626
|
|
24,037
|
|
61,394
|
|
24,185
|
|
|
Total non-interest
income
|
|
33,210
|
|
26,606
|
|
66,208
|
|
28,879
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Interest Expense:
|
|
|
|
|
|
|
|
|
|
|
Compensation and employee
benefits
|
|
32,789
|
|
36,392
|
|
66,951
|
|
69,123
|
|
|
Net occupancy expense
|
|
7,924
|
|
7,815
|
|
16,271
|
|
16,295
|
|
|
Federal deposit insurance
assessment
|
|
13,300
|
|
9,748
|
|
25,927
|
|
12,364
|
|
|
FDIC special
assessment
|
|
-
|
|
21,098
|
|
-
|
|
21,098
|
|
|
Other expense
|
|
10,583
|
|
9,894
|
|
21,978
|
|
20,861
|
|
|
Total non-interest
expense
|
|
64,596
|
|
84,947
|
|
131,127
|
|
139,741
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income tax
expense
|
|
236,128
|
|
211,556
|
|
483,740
|
|
422,866
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
93,537
|
|
83,637
|
|
192,264
|
|
167,284
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
142,591
|
|
$
127,919
|
|
$
291,476
|
|
$
255,582
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share
|
|
$
0.29
|
|
$
0.26
|
|
$
0.59
|
|
$
0.52
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share
|
|
$
0.29
|
|
$
0.26
|
|
$
0.59
|
|
$
0.52
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Number of
Common Shares Outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
492,888,447
|
|
486,984,601
|
|
492,728,025
|
|
487,282,183
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
494,406,802
|
|
489,447,012
|
|
494,807,046
|
|
490,760,670
|
|
|
|
|
|
|
|
|
|
|
|
|
Hudson City Bancorp, Inc. and
Subsidiary
Consolidated Average Balance
Sheets
(Unaudited)
|
|
|
|
|
For the Three Months Ended June
30,
|
|
|
|
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
Average
|
|
|
|
|
|
Average
|
|
|
|
Yield/
|
|
Average
|
|
|
|
Yield/
|
|
|
|
|
|
Balance
|
|
Interest
|
|
Cost
|
|
Balance
|
|
Interest
|
|
Cost
|
|
|
|
|
|
(Dollars in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-earnings
assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First mortgage loans, net
(1)
|
$31,614,795
|
|
$426,244
|
|
5.39
|
%
|
$29,693,723
|
|
$413,282
|
|
5.57
|
%
|
|
|
Consumer and other
loans
|
349,749
|
|
4,654
|
|
5.32
|
|
386,060
|
|
5,427
|
|
5.62
|
|
|
|
Federal funds sold and other
overnight deposits
|
886,378
|
|
576
|
|
0.26
|
|
477,376
|
|
187
|
|
0.16
|
|
|
|
Mortgage-backed securities at
amortized cost
|
20,570,629
|
|
222,109
|
|
4.32
|
|
19,640,390
|
|
248,476
|
|
5.06
|
|
|
|
Federal Home Loan Bank
stock
|
882,819
|
|
9,167
|
|
4.15
|
|
879,323
|
|
12,044
|
|
5.48
|
|
|
|
Investment securities, at
amortized cost
|
5,109,046
|
|
54,830
|
|
4.29
|
|
4,180,303
|
|
48,343
|
|
4.63
|
|
|
|
|
Total interest-earning
assets
|
59,413,416
|
|
717,580
|
|
4.83
|
|
55,257,175
|
|
727,759
|
|
5.27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest-earnings assets
(4)
|
1,600,216
|
|
|
|
|
|
1,211,856
|
|
|
|
|
|
|
|
|
Total Assets
|
$61,013,632
|
|
|
|
|
|
$56,469,031
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders’
Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing
liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings accounts
|
$
834,784
|
|
1,555
|
|
0.75
|
|
$
743,736
|
|
1,394
|
|
0.75
|
|
|
|
Interest-bearing transaction
accounts
|
2,374,298
|
|
6,288
|
|
1.06
|
|
1,739,356
|
|
8,039
|
|
1.85
|
|
|
|
Money market accounts
|
5,179,001
|
|
12,958
|
|
1.00
|
|
3,417,795
|
|
16,253
|
|
1.91
|
|
|
|
Time deposits
|
16,302,646
|
|
74,869
|
|
1.84
|
|
14,461,215
|
|
97,568
|
|
2.71
|
|
|
|
|
Total interest-bearing
deposits
|
24,690,729
|
|
95,670
|
|
1.55
|
|
20,362,102
|
|
123,254
|
|
2.43
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repurchase agreements
|
15,100,000
|
|
154,992
|
|
4.12
|
|
15,100,934
|
|
152,025
|
|
4.04
|
|
|
|
Federal Home Loan Bank of New
York advances
|
14,875,000
|
|
149,404
|
|
4.03
|
|
15,000,178
|
|
150,083
|
|
4.01
|
|
|
|
|
Total borrowed funds
|
29,975,000
|
|
304,396
|
|
4.07
|
|
30,101,112
|
|
302,108
|
|
4.03
|
|
|
|
|
Total interest-bearing
liabilities
|
54,665,729
|
|
400,066
|
|
2.94
|
|
50,463,214
|
|
425,362
|
|
3.38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest-bearing
liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest-bearing
deposits
|
594,131
|
|
|
|
|
|
544,230
|
|
|
|
|
|
|
|
Other noninterest-bearing
liabilities
|
278,876
|
|
|
|
|
|
332,295
|
|
|
|
|
|
|
|
|
Total noninterest-bearing
liabilities
|
873,007
|
|
|
|
|
|
876,525
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
55,538,736
|
|
|
|
|
|
51,339,739
|
|
|
|
|
|
|
Shareholders’ equity
|
5,474,896
|
|
|
|
|
|
5,129,292
|
|
|
|
|
|
|
|
|
Total Liabilities and
Shareholders’ Equity
|
$61,013,632
|
|
|
|
|
|
$56,469,031
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income/net interest
rate spread (2)
|
|
|
$317,514
|
|
1.89
|
|
|
|
$302,397
|
|
1.89
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest-earning assets/net
interest margin (3)
|
$ 4,747,687
|
|
|
|
2.13
|
%
|
$ 4,793,961
|
|
|
|
2.18
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratio of interest-earning assets
to interest-bearing liabilities
|
|
|
|
|
1.09
|
x
|
|
|
|
|
1.09
|
x
|
|
(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.
|
|
(4)
|
Includes the average balance of
principal receivable related to FHLMC mortgage-backed securities of
$397.8 million and $188.9 million for the quarters ended June 30,
2010 and 2009, respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hudson City Bancorp, Inc. and
Subsidiary
Consolidated Average Balance
Sheets
(Unaudited)
|
|
|
|
|
For the Six Months Ended June
30,
|
|
|
|
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
Average
|
|
|
|
|
|
Average
|
|
|
|
Yield/
|
|
Average
|
|
|
|
Yield/
|
|
|
|
|
|
Balance
|
|
Interest
|
|
Cost
|
|
Balance
|
|
Interest
|
|
Cost
|
|
|
|
|
|
(Dollars in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-earnings
assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First mortgage loans, net
(1)
|
$31,555,931
|
|
$ 854,405
|
|
5.42
|
%
|
$29,521,178
|
|
$ 827,490
|
|
5.61
|
%
|
|
|
Consumer and other
loans
|
354,169
|
|
9,413
|
|
5.32
|
|
394,016
|
|
11,417
|
|
5.80
|
|
|
|
Federal funds sold and other
overnight deposits
|
838,112
|
|
1,025
|
|
0.25
|
|
452,727
|
|
363
|
|
0.16
|
|
|
|
Mortgage-backed securities at
amortized cost
|
20,417,100
|
|
453,827
|
|
4.45
|
|
19,479,342
|
|
499,390
|
|
5.13
|
|
|
|
Federal Home Loan Bank
stock
|
878,816
|
|
21,540
|
|
4.90
|
|
875,729
|
|
18,417
|
|
4.21
|
|
|
|
Investment securities, at
amortized cost
|
5,205,697
|
|
112,240
|
|
4.31
|
|
3,937,618
|
|
94,004
|
|
4.77
|
|
|
|
|
Total interest-earning
assets
|
59,249,825
|
|
1,452,450
|
|
4.90
|
|
54,660,610
|
|
1,451,081
|
|
5.31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest-earnings assets
(4)
|
1,617,883
|
|
|
|
|
|
1,130,161
|
|
|
|
|
|
|
|
|
Total Assets
|
$60,867,708
|
|
|
|
|
|
$55,790,771
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders’
Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing
liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings accounts
|
$
815,904
|
|
3,022
|
|
0.75
|
|
$
731,297
|
|
2,742
|
|
0.76
|
|
|
|
Interest-bearing transaction
accounts
|
2,289,876
|
|
13,797
|
|
1.22
|
|
1,682,232
|
|
17,108
|
|
2.05
|
|
|
|
Money market accounts
|
5,221,284
|
|
29,688
|
|
1.15
|
|
3,188,583
|
|
32,958
|
|
2.08
|
|
|
|
Time deposits
|
16,270,803
|
|
153,082
|
|
1.90
|
|
14,034,078
|
|
209,270
|
|
3.01
|
|
|
|
|
Total interest-bearing
deposits
|
24,597,867
|
|
199,589
|
|
1.64
|
|
19,636,190
|
|
262,078
|
|
2.69
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repurchase agreements
|
15,100,000
|
|
306,421
|
|
4.09
|
|
15,100,445
|
|
303,077
|
|
4.05
|
|
|
|
Federal Home Loan Bank of New
York advances
|
14,875,000
|
|
297,781
|
|
4.04
|
|
15,132,686
|
|
299,698
|
|
3.99
|
|
|
|
|
Total borrowed funds
|
29,975,000
|
|
604,202
|
|
4.06
|
|
30,233,131
|
|
602,775
|
|
4.02
|
|
|
|
|
Total interest-bearing
liabilities
|
54,572,867
|
|
803,791
|
|
2.97
|
|
49,869,321
|
|
864,853
|
|
3.50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest-bearing
liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest-bearing
deposits
|
537,283
|
|
|
|
|
|
534,824
|
|
|
|
|
|
|
|
Other noninterest-bearing
liabilities
|
304,347
|
|
|
|
|
|
321,350
|
|
|
|
|
|
|
|
|
Total noninterest-bearing
liabilities
|
841,630
|
|
|
|
|
|
856,174
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
55,414,497
|
|
|
|
|
|
50,725,495
|
|
|
|
|
|
|
Shareholders’ equity
|
5,453,211
|
|
|
|
|
|
5,065,276
|
|
|
|
|
|
|
|
|
Total Liabilities and
Shareholders’ Equity
|
$60,867,708
|
|
|
|
|
|
$55,790,771
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income/net interest
rate spread (2)
|
|
|
$ 648,659
|
|
1.93
|
|
|
|
$ 586,228
|
|
1.81
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest-earning assets/net
interest margin (3)
|
$ 4,676,958
|
|
|
|
2.17
|
%
|
$ 4,791,289
|
|
|
|
2.12
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratio of interest-earning assets
to interest-bearing liabilities
|
|
|
|
|
1.09
|
x
|
|
|
|
|
1.10
|
x
|
|
(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.
|
|
(4)
|
Includes the average balance of
principal receivable related to FHLMC mortgage-backed securities of
$381.7 million and $154.2 million for the six months ended June 30,
2010 and 2009, respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hudson City
Bancorp, Inc. and
Subsidiary
Book Value
Calculations
|
|
|
|
June 30,
|
|
|
|
|
2010
|
|
|
(In thousands, except share and
per share amounts)
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity
|
|
$
5,543,256
|
|
|
Goodwill and other intangible
assets
|
|
(157,469)
|
|
|
Tangible Shareholders'
equity
|
|
$
5,385,787
|
|
|
|
|
|
|
|
Book Value Share
Computation:
|
|
|
|
|
Issued
|
|
741,466,555
|
|
|
Treasury
shares
|
|
(214,855,459)
|
|
|
Shares outstanding
|
|
526,611,096
|
|
|
Unallocated ESOP
shares
|
|
(33,195,372)
|
|
|
Unvested RRP
shares
|
|
(423,880)
|
|
|
Shares in
trust
|
|
(135,475)
|
|
|
Book value shares
|
|
492,856,369
|
|
|
|
|
|
|
|
Book value per share
|
|
$
11.25
|
|
|
|
|
|
|
|
Tangible book value per
share
|
|
$
10.93
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hudson
City Bancorp,
Inc.
Other Financial
Data
|
|
Securities Portfolio at June 30,
2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortized
|
|
Estimated
|
|
Unrealized
|
|
|
Cost
|
|
Fair Value
|
|
Gain/(Loss)
|
|
|
(dollars in
thousands)
|
|
Held to Maturity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage-backed
securities:
|
|
|
|
|
|
|
FHLMC
|
$ 3,553,869
|
|
$ 3,749,158
|
|
$
195,289
|
|
FNMA
|
1,972,997
|
|
2,084,630
|
|
111,633
|
|
FHLMC and FNMA
CMO's
|
1,987,864
|
|
2,041,977
|
|
54,113
|
|
GNMA
|
105,266
|
|
108,091
|
|
2,825
|
|
Total
mortgage-backed securities
|
7,619,996
|
|
7,983,856
|
|
363,860
|
|
|
|
|
|
|
|
|
Investment
securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States GSE
debt
|
5,139,694
|
|
5,167,685
|
|
27,991
|
|
Municipal
bonds
|
100
|
|
100
|
|
-
|
|
Total
investment securities
|
5,139,794
|
|
5,167,785
|
|
27,991
|
|
|
|
|
|
|
|
|
Total held to
maturity
|
$ 12,759,790
|
|
$ 13,151,641
|
|
$
391,851
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available for
sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage-backed
securities:
|
|
|
|
|
|
|
FHLMC
|
$ 4,028,549
|
|
$ 4,231,474
|
|
$
202,925
|
|
FNMA
|
6,495,519
|
|
6,663,652
|
|
168,133
|
|
FHLMC and FNMA
CMO's
|
896,765
|
|
905,015
|
|
8,250
|
|
GNMA
|
1,985,286
|
|
2,025,503
|
|
40,217
|
|
Total
mortgage-backed securities
|
13,406,119
|
|
13,825,644
|
|
419,525
|
|
|
|
|
|
|
|
|
Investment
securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States GSE
debt
|
354,710
|
|
359,676
|
|
4,966
|
|
Equity
securities
|
6,767
|
|
7,261
|
|
494
|
|
Total
investment securities
|
361,477
|
|
366,937
|
|
5,460
|
|
|
|
|
|
|
|
|
Total available for
sale
|
$ 13,767,596
|
|
$ 14,192,581
|
|
$
424,985
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hudson City Bancorp,
Inc.
Other Financial
Data
|
|
Loan Data at June 30,
2010:
|
|
|
|
|
|
|
|
Non-Performing
Loans
|
|
Total Loans
|
|
|
|
Loan
|
|
|
|
Percent of
|
|
Loan
|
|
|
Percent of
|
|
|
|
Balance
|
|
Number
|
|
Total Loans
|
|
Balance
|
|
Number
|
Total Loans
|
|
|
|
(dollars in
thousands)
|
|
First Mortgage
Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
One- to four- family
|
|
$ 722,805
|
|
1,882
|
|
2.25%
|
|
$ 31,146,263
|
|
73,993
|
96.83%
|
|
FHA/VA
|
|
47,618
|
|
173
|
|
0.15%
|
|
385,823
|
|
1,667
|
1.20%
|
|
PMI
|
|
4,772
|
|
18
|
|
0.01%
|
|
234,460
|
|
729
|
0.73%
|
|
Construction
|
|
8,272
|
|
6
|
|
0.03%
|
|
11,317
|
|
8
|
0.04%
|
|
Commercial
|
|
3,098
|
|
3
|
|
0.01%
|
|
51,884
|
|
96
|
0.16%
|
|
Total mortgage
loans
|
|
786,565
|
|
2,082
|
|
2.45%
|
|
31,829,747
|
|
76,493
|
98.96%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home equity loans
|
|
2,566
|
|
22
|
|
0.01%
|
|
315,003
|
|
8,238
|
0.98%
|
|
Other loans
|
|
1,006
|
|
6
|
|
0.00%
|
|
19,553
|
|
2,310
|
0.06%
|
|
Total
|
|
$ 790,137
|
|
2,110
|
|
2.46%
|
|
$ 32,164,303
|
|
87,041
|
100.00%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Charge-offs amounted to $22.8
million for the second quarter of 2010 and $47.1 million for the six months ended
June 30, 2010. These
charge-offs include $22.0 million and
$44.4 million for the same respective
periods, that relate to loans that are still in the loan portfolio
at June 30, 2010 and are working
through the foreclosure process.
- Updated valuations are received on or before the time a loan
becomes 180 days past due. If necessary, we charge-off an
amount to reduce the loan's carrying value to the updated valuation
less estimated selling costs. Our policy is that we receive
an updated valuation for these loans annually.
- Based on the valuation indices, house prices have declined in
the New York metropolitan area,
where 67.7% of our non-performing loans were located at
June 30, 2010, by approximately 21%
from the peak of the market in 2006 through April 2010 and by 29% nationwide during that
period. For the first four months of 2010, the house price
indices decreased by 0.6% in the New
York metropolitan area and increased 0.9% nationwide.
- Our quantitative analysis of the allowance for loan losses
considers the results of the reappraisal process as well as the
results of our foreclosed property transactions.
- Our qualitative analysis of the allowance for loan losses
includes a further evaluation of economic factors, such as trends
in the unemployment rate, as well as ratio analysis to evaluate the
overall measurement of the allowance for loan losses. This
analysis includes a review of delinquency ratios, house price
indices, net charge-off ratios and the ratio of the allowance for
loan losses to both non-performing loans and total loans.
Foreclosed real estate at
June 30, 2010:
|
|
|
|
|
|
Carrying
|
|
|
Number Under
|
|
|
|
|
Number
|
|
Value
|
|
|
Contract of Sale
|
|
|
|
|
(dollars in
thousands)
|
|
|
Foreclosed real
estate
|
|
52
|
|
$ 21,690
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- During the first six months of 2010, we sold 38 foreclosed
properties. It is currently taking up to 30 months to
foreclose on a loan once it becomes non-performing.
Hudson City Bancorp, Inc. and
Subsidiary
Other Financial
Data
(Unaudited)
|
|
|
At or for the Quarter
Ended
|
|
|
June 30, 2010
|
|
March 31, 2010
|
|
Dec. 31, 2009
|
|
Sept. 30, 2009
|
|
June 30, 2009
|
|
|
(Dollars in thousands, except
per share data)
|
|
Net interest income
|
$
317,514
|
|
$
331,145
|
|
$
331,793
|
|
$
325,457
|
|
$
302,397
|
|
Provision for loan
losses
|
50,000
|
|
50,000
|
|
45,000
|
|
40,000
|
|
32,500
|
|
Non-interest income
|
33,210
|
|
32,998
|
|
2,192
|
|
2,513
|
|
26,606
|
|
Non-interest expense:
|
|
|
|
|
|
|
|
|
|
|
Compensation and employee
benefits
|
32,789
|
|
34,162
|
|
33,905
|
|
34,043
|
|
36,392
|
|
Other non-interest
expense
|
31,807
|
|
32,369
|
|
29,030
|
|
28,877
|
|
48,555
|
|
Total non-interest
expense
|
64,596
|
|
66,531
|
|
62,935
|
|
62,920
|
|
84,947
|
|
Income before income tax
expense
|
236,128
|
|
247,612
|
|
226,050
|
|
225,050
|
|
211,556
|
|
Income tax expense
|
93,537
|
|
98,727
|
|
89,474
|
|
89,964
|
|
83,637
|
|
Net income
|
$
142,591
|
|
$
148,885
|
|
$
136,576
|
|
$
135,086
|
|
$
127,919
|
|
Total assets
|
$
60,933,134
|
|
$
61,231,651
|
|
$
60,267,760
|
|
$
58,884,535
|
|
$
57,406,338
|
|
Loans, net
|
32,062,829
|
|
32,012,852
|
|
31,721,154
|
|
31,088,146
|
|
30,718,887
|
|
Mortgage-backed
securities
|
|
|
|
|
|
|
|
|
|
|
Available for
sale
|
13,825,644
|
|
12,662,490
|
|
11,116,531
|
|
9,550,806
|
|
9,796,644
|
|
Held to
maturity
|
7,619,996
|
|
9,110,956
|
|
9,963,554
|
|
10,751,866
|
|
10,322,782
|
|
Other securities
|
|
|
|
|
|
|
|
|
|
|
Available for
sale
|
366,937
|
|
457,538
|
|
1,095,240
|
|
2,117,664
|
|
2,209,470
|
|
Held to
maturity
|
5,139,794
|
|
4,887,949
|
|
4,187,704
|
|
3,238,044
|
|
2,289,869
|
|
Deposits
|
25,168,465
|
|
25,388,800
|
|
24,578,048
|
|
23,113,949
|
|
21,692,265
|
|
Borrowings
|
29,975,000
|
|
29,975,000
|
|
29,975,000
|
|
30,025,000
|
|
30,025,000
|
|
Shareholders’ equity
|
5,543,256
|
|
5,396,077
|
|
5,339,152
|
|
5,270,181
|
|
5,143,265
|
|
Performance Data:
|
|
|
|
|
|
|
|
|
|
|
Return on average assets
(1)
|
0.93%
|
|
0.98%
|
|
0.92%
|
|
0.93%
|
|
0.91%
|
|
Return on average equity
(1)
|
10.42%
|
|
10.96%
|
|
10.21%
|
|
10.34%
|
|
9.98%
|
|
Net interest rate spread
(1)
|
1.89%
|
|
1.97%
|
|
2.02%
|
|
2.02%
|
|
1.89%
|
|
Net interest margin
(1)
|
2.13%
|
|
2.20%
|
|
2.30%
|
|
2.30%
|
|
2.18%
|
|
Non-interest expense to average
assets (1) (4)
|
0.43%
|
|
0.44%
|
|
0.42%
|
|
0.43%
|
|
0.60%
|
|
Compensation and benefits to
total revenue (5)
|
9.35%
|
|
9.38%
|
|
10.15%
|
|
10.38%
|
|
11.06%
|
|
Efficiency ratio
(2)
|
18.42%
|
|
18.27%
|
|
18.84%
|
|
19.18%
|
|
25.82%
|
|
Dividend payout ratio
|
51.72%
|
|
50.00%
|
|
53.57%
|
|
53.57%
|
|
57.69%
|
|
Per Common Share
Data:
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per common
share
|
$0.29
|
|
$0.30
|
|
$0.28
|
|
$0.28
|
|
$0.26
|
|
Diluted earnings per common
share
|
$0.29
|
|
$0.30
|
|
$0.28
|
|
$0.27
|
|
$0.26
|
|
Book value per share
(3)
|
$11.25
|
|
$10.96
|
|
$10.85
|
|
$10.75
|
|
$10.54
|
|
Tangible book value per
share (3)
|
$10.93
|
|
$10.63
|
|
$10.53
|
|
$10.43
|
|
$10.21
|
|
Dividends per share
|
$0.15
|
|
$0.15
|
|
$0.15
|
|
$0.15
|
|
$0.15
|
|
Capital Ratios:
|
|
|
|
|
|
|
|
|
|
|
Equity to total assets
(consolidated)
|
9.10%
|
|
8.81%
|
|
8.86%
|
|
8.95%
|
|
8.96%
|
|
Tier 1 leverage capital
(Bank)
|
7.75%
|
|
7.60%
|
|
7.59%
|
|
7.66%
|
|
7.73%
|
|
Total risk-based capital
(Bank)
|
21.90%
|
|
21.24%
|
|
21.02%
|
|
21.27%
|
|
21.09%
|
|
Other Data:
|
|
|
|
|
|
|
|
|
|
|
Full-time equivalent
employees
|
1,557
|
|
1,500
|
|
1,482
|
|
1,483
|
|
1,458
|
|
Number of branch
offices
|
134
|
|
131
|
|
131
|
|
131
|
|
131
|
|
Asset Quality
Data:
|
|
|
|
|
|
|
|
|
|
|
Total non-performing
loans
|
$
790,137
|
|
$
744,872
|
|
$
627,695
|
|
$
517,585
|
|
$
430,907
|
|
Number of non-performing
loans
|
2,110
|
|
1,934
|
|
1,636
|
|
1,315
|
|
1,088
|
|
Total number of loans
|
87,041
|
|
86,863
|
|
86,433
|
|
85,362
|
|
84,487
|
|
Total non-performing
assets
|
$
811,827
|
|
$
764,435
|
|
$
644,431
|
|
$
530,362
|
|
$
442,705
|
|
Non-performing loans to total
loans
|
2.46%
|
|
2.32%
|
|
1.98%
|
|
1.66%
|
|
1.40%
|
|
Non-performing assets to total
assets
|
1.33%
|
|
1.25%
|
|
1.07%
|
|
0.90%
|
|
0.77%
|
|
Allowance for loan
losses
|
$
192,983
|
|
$
165,830
|
|
$
140,074
|
|
$
114,833
|
|
$
88,053
|
|
Allowance for loan losses to
non-performing loans
|
24.42%
|
|
22.26%
|
|
22.32%
|
|
22.19%
|
|
20.43%
|
|
Allowance for loan losses to
total loans
|
0.60%
|
|
0.52%
|
|
0.44%
|
|
0.37%
|
|
0.29%
|
|
Provision for loan
losses
|
$
50,000
|
|
$
50,000
|
|
$
45,000
|
|
$
40,000
|
|
$
32,500
|
|
Net charge-offs
|
$
22,846
|
|
$
24,245
|
|
$
19,758
|
|
$
13,220
|
|
$
9,569
|
|
Ratio of net charge-offs to
average loans (1)
|
0.29%
|
|
0.30%
|
|
0.25%
|
|
0.17%
|
|
0.13%
|
|
Write-downs and net losses on
foreclosed real estate
|
$
173
|
|
$
1,372
|
|
$
325
|
|
$
481
|
|
$
399
|
|
(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.
|
|
(4) Computed by dividing
non-interest expense by average assets.
|
|
(5) Computed by dividing
compensation and benefits by the sum of net interest income and
non-interest income.
|
|
|
|
|
|
|
|
|
|
|
|
SOURCE Hudson City Bancorp, Inc.