DOW JONES NEWSWIRES
Hudson City Bancorp Inc.'s (HCBK) second-quarter earnings rose
16% on deposit growth and increased revenue as the New Jersey
regional bank's results beat analysts' expectations.
The company stuck to its core business of writing conservative
loans to borrowers, mostly in the New York metropolitan area and,
as a result, avoided the sky-high rates of default that have
plagued its competitors.
Shares were recently up 5 cents at $14.66 in premarket
trading.
Hudson City posted income of $127.9 million, or 26 cents a
share, up from $110.7 million, or 22 cents a share, a year earlier.
The latest results inculded $21.1 million for a Federal Deposit
Insurance Corp. special assessment.
Revenue increased 40% to $329 million.
Analysts polled by Thomson Reuters expected earnings of 25 cents
on revenue of $293 million.
Net interest income rose 30%. Deposits rose 17% in the first
half of the year, while total assets climbed 6% during that same
time to $57.41 billion.
Loan-loss provisions soared to $32.5 million in the latest
quarter from $20 million in the first quarter and $3 million a year
earlier amid an increase in nonperforming loans as economic
conditions, especially unemployment levels, continue to
deteriorate. Net charge-offs rose to $9.6 million in the quarter
from $4.7 million and $694,000, respectively. Nonperforming assets
rose to 0.77% from 0.59% and 0.25%.
The company's Tier 1 capital leverage ratio, a key measure of
financial strength, fell to 7.7% from 8.4% a year earlier and 7.8%
in the prior quarter.
Chairman and Chief Executive Ronald Hernance Jr. reiterated an
earlier warning that charge-offs are increasing. He has cited
defaults from rising unemployment coupled with expected further
declines in home values, which are expected to plague the New York
region, as reasons for the increase.
Hudson City, which didn't participate in the federal
government's Troubled Asset Relief Program, was the best performing
bank in the Standard & Poor's 500 index last year, rising 7.7%
as most other banks' shares were plummeting.
-By Kerry Grace Benn, Dow Jones Newswires; 212-416-2353;
kerry.benn@dowjones.com