Hudson City Bancorp's Chairman and CEO Reaffirms Positive Growth Outlook
June 25 2008 - 10:00AM
PR Newswire (US)
PARAMUS, N.J., June 25 /PRNewswire-FirstCall/ -- At a time when the
financial sector of the economy has been facing an unprecedented
level of stress and volatility, Hudson City Bancorp, Inc.'s
("Hudson City") (NASDAQ: HCBK) Chairman, President and Chief
Executive Officer, Ronald E. Hermance, Jr. sites positive trends in
several of the Bank's key performance metrics. In reaffirming
strength in such areas as loan production and market share,
capital, asset quality and net interest margin, Mr. Hermance also
projected a significant increase in diluted earnings per share
(EPS) for the current year. According to Mr. Hermance, "Although
Hudson City does not provide guidance, we feel compelled to provide
our shareholders and customers with an interim performance update
because of the level of uncertainty which currently exists within
the banking industry. Last year our EPS were $0.58 and analyst
consensus for this year is $0.85, a 46% increase. Given current
market conditions, we see the estimate as reasonable." Mr. Hermance
further added, "The Bank has significantly reduced deposit costs
and improved net interest margin over the past several months, as
the yield curve has steepened and short-term rates have declined.
Hudson City's net interest margin for the fourth quarter of 2007
was 1.64% and 1.65% for the full calendar year. Our net interest
margin subsequently increased to 1.72% during the first quarter of
2008 and was 1.83% for the first five months of 2008." "These
results can be attributed to record mortgage application growth
coupled with a decrease in deposit costs and stable yields within
our mortgage portfolio," said Mr. Hermance. Hudson City mortgage
production is up 17% (through May 31, 2008) compared to the
corresponding period last year. "The bank has been able to achieve
market share growth by offering highly competitive mortgage rates
and attracting mortgage refinancing held by other banks," said Mr.
Hermance. Hudson City's primary loan product is prime residential
mortgages. Its primary retail origination markets of Bergen County,
New Jersey, Westchester County, New York and Fairfield County,
Connecticut (ranked as some of the nation's top 50 counties
measured by median household income) continue to provide Hudson
City with prime mortgage loans that qualify for Hudson City's
strict underwriting standards that include a loan-to-value ratio of
no more than 80%. According to Mr. Hermance, "The growth of our
loan portfolio contrasts dramatically with current industry
performance primarily because of conditions within our geographic
market and the fact that we are a portfolio lender. (Hudson City
does not sell loan production, and is largely unaffected by
conditions in the secondary market). Hudson City is able to be a
portfolio lender because we have the capital and liquidity to
support this type of growth. Our ability to attract funds from
deposits, which increased over 9% in the first five months of 2008,
and borrow from the Federal Home Loan Bank as well as other banks,
enables us to continue to fund Hudson City's growth. Total assets
have grown at a compounded annual rate of 22.96% from our first
step public stock offering in 1999 through May 2008." Mr. Hermance
also added that Hudson City's loan production growth has not come
at the expense of credit quality. "At May 31, 2008 Hudson City had
79,500 loans in its loan portfolio. This included 313
non-performing loans amounting to $109.8 million or 0.41% of total
loan portfolio at May 31, 2008 as compared to $102.3 million or
0.41% of total loans at March 31, 2008. While we are not immune
from the effects of weakening economic conditions and the housing
markets, Hudson City never participated in sub-prime lending or
other risky loans such as option ARM loans." In fact Hudson City's
total residential loan portfolio had an average loan-to-value
ratio, using appraised values at the time of origination, of
approximately 61% at March 31, 2008. In addition, the Bank does not
have any credit card receivables in its portfolio, and other loans,
including construction, commercial, consumer and home equity loans,
amounted to $481.1 million or only 1.8% of total loans at May 31,
2008. "Our business model is simple," said Mr. Hermance. "We
purchase and originate single-family loans that meet strict
underwriting standards, purchase securities issued by U.S.
government-sponsored enterprises and fund our growth with deposits
and borrowings. We are able to offer some of the best mortgage and
deposit rates, in the New York metropolitan area, because we are
The Most Efficient Bank in America and, as such, are the low-cost
provider. Our efficiency ratio for the first five months of 2008
was 23.1% (more than 50% lower than the average efficiency ratio of
the Nation's top 50 largest banks). I have said repeatedly that
2007, with its inverted yield curve, was a far greater challenge
than 2008 where the curve has normalized and margins have widened.
We believe that efficiency, capital strength, and asset quality
makes Hudson City well-positioned not only to weather difficult
times, but to capitalize on it." Hudson City Savings Bank, among
the top fifty banks in the United States by asset size, is
recognized as The Most Efficient Bank in the country. This enables
Hudson City to deliver significant values to customers in the form
of higher deposit yields, competitive mortgage rates, and lower
fees. Hudson City, the largest savings bank headquartered in New
Jersey, also serves customers throughout the surrounding
metropolitan area with branches located in Westchester, Fairfield,
Putnam, and Rockland counties, as well as in Long Island, Staten
Island, and the New Jersey suburbs of Philadelphia. Deposit
accounts at Hudson City are FDIC insured to the maximum allowed by
law. 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 that are subject to various factors which could
cause actual results to differ materially from these estimates. Any
or all of the forward-looking statements in this release and in any
other public statements made by Hudson City may turn out to be
wrong. They can be affected by inaccurate assumptions Hudson City
might make or by known or unknown risks and uncertainties.
Consequently, no forward-looking statement can be guaranteed.
Hudson City does not intend to update any of the forward-looking
statements after the date of this release or to conform these
statements to actual events. DATASOURCE: Hudson City Bancorp, Inc.
CONTACT: Susan Munhall, Investor Relations, Hudson City Bancorp,
Inc., +1-201-967-8290, Web site: http://www.hcsbonline.com/
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