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Hudson City Bancorp, Inc. Reports Record Second Quarter Earnings of $110.7 MillionSecond Quarter EPS Increased 57.1%Dividend Increased to $0.12 Per Share
PARAMUS, N.J., July 23 /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 2008 increased 52.3% to $110.7 million as compared to $72.7 million for the second quarter of 2007. Diluted earnings per share increased 57.1% to $0.22 for the second quarter of 2008 as compared to $0.14 for the second quarter of 2007. For the six months ended June 30, 2008, net income increased 38.6% to $199.4 million as compared to $143.9 million for the same period in 2007. Diluted earnings per share increased 42.9% to $0.40 for the six months ended June 30, 2008 as compared to $0.28 for the same period in 2007. The Board of Directors declared a quarterly cash dividend of $0.12 per share, an increase of 50% since the second quarter of 2007. Ronald E. Hermance, Jr., Chairman, President and Chief Executive Officer, commented, "Our business model and the current interest rate environment continue to provide Hudson City with record earnings in the most difficult financial and credit markets in decades. Our diluted earnings per share for the second quarter of 2008 increased 57% from the second quarter of 2007. Our earnings growth is due primarily to a steeper yield curve that has allowed us to lower deposit rates while mortgage yields have remained stable. As a result, our net interest margin has increased to 1.97% for the second quarter of 2008 from 1.72% for the first quarter of 2008 and 1.64% for the fourth quarter of 2007. Net income for the second quarter of 2008 increased 52% as compared to the second quarter of 2007 and is more than the net income for the full year of 1999 - the year we completed our first public offering. These results have allowed us to increase our quarterly cash dividend 50% since the second quarter of 2007." Mr. Hermance continued, "We continued to grow our balance sheet during the first six months of 2008, increasing our total assets 10.7% to $49.16 billion at June 30, 2008. Our loan portfolio has grown 12.6% since December 31, 2007 to $27.23 billion at June 30, 2008. Mortgage loan applications received through July 21, 2008 have surpassed the application volume for the full calendar year of 2007, which itself was a record year for us. Approximately 49% of these applications are for home purchases and 51% are for the refinancing of mortgages held by other banks. As always, substantially all of our loan production consists of high quality mortgages for owner-occupied residential properties. The average loan-to-value of our 2008 originations is 61%. As always, we do not offer sub-prime loans, negative amortization loans or loans with high loan-to-value ratios without private mortgage insurance. Since we keep all of the loans that we originate in our portfolio, our ability to originate loans is largely unaffected by the turmoil in the secondary mortgage markets. In fact our strong capital and liquidity position allows us to take advantage of a market in turmoil since many of our competitors have liquidity or capital constraints and have reduced their lending operations." Mr. Hermance further commented, "While economic conditions and the housing markets have shown further weakening, our asset quality remains strong. Non- performing loans were $116.3 million or 0.43% of total loans at June 30, 2008. While non-performing loans have increased in recent quarters, our strict underwriting guidelines have helped to moderate loan charge-offs which amounted to $694,000 for the second quarter of 2008. In addition, we invest in mortgage-backed securities and debt securities issued by government- sponsored enterprises. We do not, however, own any common or preferred stock issued by FNMA or FreddieMac." "We are also proud to have grown deposits by 17.8% for the twelve months ended June 30, 2008. We did this organically and in a declining rate environment. So far this year, we have opened 4 new branches and anticipate opening 4 more in the second half of 2008," Mr. Hermance added. Financial highlights for the second quarter of 2008 are as follows: -- Basic and diluted earnings per common share were $0.23 and $0.22, respectively, for the second quarter of 2008 as compared to $0.14 for both basic and diluted earnings per share for the second quarter of 2007. Basic and diluted earnings per common share were $0.41 and $0.40, respectively for the first six months of 2008 and $0.28 for both basic and diluted earnings per share for the same period in 2007. -- The Board of Directors declared an increased quarterly cash dividend of $0.12 per common share payable on August 29, 2008 to stockholders of record at the close of business on August 11, 2008. -- Net income amounted to $110.7 million for the second quarter of 2008, as compared to $72.7 million for the second quarter of 2007. For the six months ended June 30, 2008, net income amounted to $199.4 million as compared to $143.9 million for the same period in 2007. -- Net interest income increased 47.8% to $233.1 million for the second quarter of 2008 and 35.8% to $426.4 million for the six months ended June 30, 2008. -- Our annualized return on average assets and annualized return on average shareholders' equity for the second quarter of 2008 were 0.93% and 9.27%, respectively. Our annualized return on average assets and annualized return on average shareholders' equity for the six months ended June 30, 2008 were 0.86% and 8.44%, respectively. -- Our net interest rate spread and net interest margin were 1.56% and 1.97%, respectively, for the second quarter of 2008 and 1.42% and 1.85%, respectively, for the first six months of 2008. -- Our efficiency ratio was 20.52% for the second quarter of 2008 and 22.40% for the first six months of 2008. -- Net loans increased $3.04 billion to $27.24 billion at June 30, 2008 from $24.20 billion at December 31, 2007. -- Deposits increased $1.57 billion to $16.72 billion at June 30, 2008 from $15.15 billion at December 31, 2007. -- Borrowed funds increased $3.34 billion to $27.48 billion at June 30, 2008 from $24.14 billion at December 31, 2007. Statement of Financial Condition Summary Total assets increased $4.74 billion, or 10.7%, to $49.16 billion at June 30, 2008 from $44.42 billion at December 31, 2007. The increase in total assets reflected a $3.04 billion increase in loans and a $2.37 billion increase in total mortgage-backed securities, partially offset by an $815.2 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. For the first six months of 2008, we originated $2.42 billion and purchased $2.17 billion of loans, compared to originations of $1.60 billion and purchases of $2.37 billion for the first six months of 2007. In addition, commitments to originate and purchase loans amounted to $672.1 million and $203.6 million, respectively, at June 30, 2008 as compared to commitments to originate and purchase loans of $405.9 million and $575.8 million at June 30, 2007. While conditions in the residential housing markets have worsened during 2008, our competitive rates and the decreased mortgage lending competition have resulted in increased origination productivity. The $2.37 billion increase in total mortgage-backed securities reflected purchases of $3.67 billion, which were primarily variable-rate instruments, partially offset by repayments of $1.28 billion. Total investment securities decreased $815.2 million during the first six months of 2008. Investment securities held to maturity decreased $1.34 billion partially offset by a $521.7 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 $1.34 billion and $1.35 billion, respectively. The calls were partially offset by purchases of investment securities available for sale of $1.90 billion for the first six months of 2008. Total liabilities increased $4.64 billion, or 11.7%, to $44.45 billion at June 30, 2008 from $39.81 billion at December 31, 2007. The increase in total liabilities primarily reflected a $3.34 billion increase in borrowed funds and a $1.57 billion increase in deposits. The increase in borrowed funds was the result of $3.71 billion of new borrowings at a weighted-average rate of 3.01%, partially offset by repayments of $366.0 million with a weighted average rate of 3.93%. The new borrowings have final maturities of ten years and initial reprice dates of two to three years. The increase in total deposits reflected a $574.5 million increase in our time deposits, an $849.5 million increase in our money market checking accounts and a $29.3 million increase in our demand accounts. Total shareholders' equity increased $98.3 million to $4.71 billion at June 30, 2008 from $4.61 billion at December 31, 2007. The increase was primarily due to net income of $199.4 million for the six months ended June 30, 2008. These increases to shareholders' equity were partially offset by cash dividends paid to common shareholders of $96.7 million and repurchases of 224,262 shares of our outstanding common stock in January 2008 at an aggregate cost of $3.6 million. At June 30, 2008, our shareholders' equity to asset ratio was 9.58% and our tangible book value per share was $9.40. The accumulated other comprehensive loss of $10.2 million at June 30, 2008 includes a $7.0 million after-tax net unrealized loss on securities available for sale ($12.0 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. The unrealized loss in the available for sale portfolio at June 30, 2008 was caused by increases in market yields subsequent to purchase and is not attributable to credit quality concerns. 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. Because the Company has the intent and the ability to hold securities with unrealized losses until a market price recovery (which, for debt securities may be until maturity), the Company did not consider these securities to be other-than-temporarily impaired at June 30, 2008. Statement of Income Summary The Federal Open Market Committee of the Federal Reserve Bank ("FOMC") decreased the overnight lending rate by 225 basis points to 2.00% during the first six months of 2008. The large decrease in the overnight lending rate was in response to the continued liquidity crisis in the credit markets and recessionary concerns. As a result, short-term market interest rates continued to decrease during the first half of 2008. Longer-term market interest rates also decreased during the first six months of 2008, but at a slower pace than the short-term interest rates and, as a result, the yield curve continued to steepen. The sharp decline of short-term interest rates during the first six months resulted in lower deposit costs. As a result, our net interest rate spread and net interest margin increased from both the second quarter and first six months of 2007. Net interest income increased $75.4 million, or 47.8%, to $233.1 million for the second quarter of 2008 as compared to $157.7 million for the second quarter of 2007. Net interest income increased $112.3 million, or 35.8%, to $426.4 million for the six months ended June 30, 2008 compared to $314.1 million for the corresponding period in 2007. During the second quarter of 2008, our net interest rate spread increased 46 basis points to 1.56% and our net interest margin increased 32 basis points to 1.97% as compared to the second quarter of 2007. During the first six months of 2008, our net interest rate spread increased 32 basis points to 1.42% and our net interest margin increased 18 basis points to 1.85% as compared to the same period in 2007. For the month of June 2008, our net interest margin was 2.06%. Total interest and dividend income for the three months ended June 30, 2008 increased $135.2 million, or 26.4%, to $646.7 million as compared to $511.5 million for the three months ended June 30, 2007. The increase in total interest and dividend income was primarily due to a $9.03 billion, or 23.8%, increase in the average balance of total interest-earning assets to $46.95 billion for the second quarter of 2008 as compared to $37.92 billion for the second quarter of 2007. The increase in interest and dividend income was also partially due to an increase of 11 basis points in the annualized weighted- average yield on total interest-earning assets to 5.51% for the three month period ended June 30, 2008 from 5.40% for the comparable period in 2007. Total interest and dividend income for the six months ended June 30, 2008 increased $268.8 million, or 27.1%, to $1.26 billion as compared to $991.1 million for the six months ended June 30, 2007. The increase in total interest and dividend income was primarily due to an $8.80 billion, or 23.9%, increase in the average balance of total interest-earning assets to $45.67 billion for the six months ended June 30, 2008 as compared to $36.87 billion for the corresponding period in 2007. The increase in interest and dividend income was also partially due to an increase of 14 basis points in the annualized weighted-average yield on total interest-earning assets to 5.52% for the six months ended June 30, 2008 from 5.38% for the comparable period in 2007. Interest and fees on mortgage loans increased $79.3 million to $369.1 million for the second quarter of 2008 as compared to $289.8 million for the same period in 2007 primarily due to a $5.27 billion increase in the average balance of first mortgage loans, which reflected our continued emphasis on the growth of our mortgage loan portfolio. The increase in mortgage loan income was also due to a seven basis point increase in the weighted-average yield to 5.74%. 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 six months ended June 30, 2008, interest and fees on mortgage loans increased $155.9 million to $715.4 million as compared to $559.5 million for the six months ended June 30, 2007 primarily due to a $5.15 billion increase in the average balance of first mortgage loans. The increase in interest income on mortgage loans was also due to an eight basis point increase in the weighted-average yield to 5.75%. Interest on mortgage-backed securities increased $76.2 million to $212.6 million for the second quarter of 2008 as compared to $136.4 million for the second quarter of 2007. This increase was due primarily to a $5.63 billion increase in the average balance of mortgage-backed securities during the second quarter of 2008 as compared to the second quarter of 2007, and a 10 basis point increase in the weighted-average yield to 5.21%. Interest on mortgage-backed securities increased $146.7 million to $406.9 million for the six months ended June 30, 2008 as compared to $260.2 million for the six months ended June 30, 2007. This increase was due primarily to a $5.26 billion increase in the average balance of mortgage-backed securities during the first six months of 2008 as compared to the first six months of 2007, and a 17 basis point increase in the weighted-average yield to 5.25%. 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 our primary lending activities are the origination and purchase 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 on mortgage-backed securities is a result of the purchase of new securities at higher rates than the existing portfolio. Total interest expense for the three months ended June 30, 2008 increased $59.7 million, or 16.9%, to $413.5 million as compared to $353.8 million for the three months ended June 30, 2007. This increase was primarily due to a $9.13 billion, or 27.7%, increase in the average balance of total interest- bearing liabilities to $42.13 billion for the quarter ended June 30, 2008 compared with $33.00 billion for the second 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 35 basis point decrease in the weighted-average cost of total interest-bearing liabilities to 3.95% for the quarter ended June 30, 2008 compared with 4.30% for the quarter ended June 30, 2007. Total interest expense for the six months ended June 30, 2008 increased $156.5 million, or 23.1%, to $833.5 million as compared to $677.0 million for the six months ended June 30, 2007. This increase was primarily due to a $9.01 billion, or 28.3%, increase in the average balance of total interest- bearing liabilities to $40.90 billion for the six months ended June 30, 2008 compared with $31.89 billion for the corresponding period in 2007. The increase in average balance of total interest-bearing liabilities was partially offset by an 18 basis point decrease in the weighted-average cost of total interest-bearing liabilities to 4.10% for the six months ended June 30, 2008 compared with 4.28% for the six months ended June 30, 2007. The decrease in the average cost of interest-bearing liabilities for the three- and six-month periods in 2008 reflected the decrease in market interest rates during the first quarter of 2008. Interest expense on deposits decreased $5.0 million to $141.4 million for the second quarter of 2008 as compared to $146.4 million for the second quarter of 2007. This decrease is due primarily to a 79 basis point decrease in the average cost of deposits to 3.58% for the 2008 quarter as compared to 4.37% for the 2007 quarter. This decrease was partially offset by a $2.47 billion increase in the average balance of interest-bearing deposits to $15.90 billion during the second quarter of 2008 quarter as compared to $13.43 billion for the comparable period in 2007. For the six months ended June 30, 2008, interest expense on deposits increased $11.0 million to $299.4 million as compared to $288.4 million for the six months ended June 30, 2007. This increase is due primarily to a $2.12 billion increase in the average balance of interest-bearing deposits to $15.42 billion during the second quarter of 2008 quarter as compared to $13.30 billion for the comparable period in 2007. This increase was partially offset by 46 basis point decrease in the average cost of deposits to 3.91% for the six months ended June 30, 2008 as compared to 4.37% for the comparable period in 2007. The increases in the average balance of interest-bearing deposits reflect our growth strategy. The decrease in the average cost of deposits for the three- and six-month periods reflected lower market interest rates. Interest expense on borrowed funds increased $64.7 million to $272.1 million for the second quarter of 2008 as compared to $207.4 million for the second quarter of 2007 primarily due to a $6.66 billion increase in the average balance of borrowed funds. The weighted average cost of borrowed funds decreased 8 basis points to 4.17% for the second quarter of 2008 as compared to 4.25% for the second quarter of 2007. Interest expense on borrowed funds increased $145.5 million to $534.1 million for the six months ended June 30, 2008 as compared to $388.6 million for the six months ended June 30, 2007 primarily due to a $6.89 billion increase in the average balance of borrowed funds. The weighted average cost of borrowed funds remained unchanged at 4.22% for the six months ended June 30, 2008. Borrowed funds were primarily used to fund the growth in interest-earning assets. The decrease in the average cost of borrowed funds reflected new borrowings with a lower interest rate than existing borrowings and borrowings that were called. The provision for loan losses amounted to $3.0 million for the quarter ended June 30, 2008 as compared to $500,000 for the quarter ended June 30, 2007 and amounted to $5.5 million for the six months ended June 30, 2008 as compared to $800,000 for the six months ended June 30, 2007. The provision for loan losses was $4.8 million for the full calendar 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 $116.3 million at June 30, 2008 and $79.4 million at December 31, 2007. The ratio of non-performing loans to total loans was 0.43% at June 30, 2008 compared with 0.33% at December 31, 2007. The allowance for loan losses amounted to $39.1 million and $34.7 million at June 30, 2008 and December 31, 2007 respectively. The allowance for loan losses as a percent of total loans and non-performing loans was 0.14% and 33.6%, respectively at June 30, 2008 as compared to 0.14% and 43.75%, respectively at December 31, 2007. We recorded net charge-offs of $694,000 for the three months ended June 30, 2008 as compared to net charge-offs of $36,000 for the same period in 2007. For the six months ended June 30, 2008, net charge-offs amounted to $1.2 million as compared to net recoveries of $31,000 for the same period in 2007. The increase in charge-offs was related to non-performing residential mortgage loans for which appraised values indicated declines in the value of the underlying collateral. Total non-interest income was $2.1 million for the second quarter of 2008 compared with $1.8 million for the second quarter of 2007. Total non-interest income for the six months ended June 30, 2008 was $4.3 million compared with $3.4 million for the comparable period in 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 $7.4 million, or 18.1%, to $48.3 million for the second quarter of 2008 from $40.9 million for the second quarter of 2007. The increase is primarily due to a $5.5 million increase in compensation and employee benefits expense, a $1.6 million increase in other non-interest expense and a $300,000 increase in net occupancy expense. The increase in compensation and employee benefits expense reflected a $3.1 million increase in expense related to our employee stock ownership plan primarily as a result of increases in our stock price and a $1.3 million increase in compensation costs. Included in other non-interest expense for the second quarter of 2008 were write-downs on foreclosed real estate of $430,000 (none in 2007). Total non-interest expense for the six months ended June 30, 2008 was $96.4 million compared with $82.0 million during the corresponding 2007 period. The increase is primarily due to an $11.2 million increase in compensation and employee benefits expense and a $2.6 million increase in other non-interest expense. The increase in compensation and employee benefits expense reflected a $6.7 million increase in expense related to our employee stock ownership plan primarily as a result of increases in our stock price and a $2.9 million increase in compensation costs. The increase in compensation costs was due primarily to normal salary increases and increased staffing related to our branch expansion strategy. Included in other non-interest expense for the six months ended June 30, 2008 were write-downs on foreclosed real estate of $514,000 (none in 2007). Our efficiency ratio was 20.52% for the three months ended June 30, 2008 as compared to 25.62% for the three months ended June 30, 2007. Our ratio of non-interest expense to average total assets for the second quarter of 2008 was 0.41% as compared to 0.42% for the second quarter of 2007. Our efficiency ratio for the six months ended June 30, 2008 was 22.40% compared with 25.82% for the corresponding 2007 period. Our ratio of non-interest expense to average total assets for the six months ended June 30, 2008 was 0.42% compared with 0.44% for the corresponding period in 2007. Income tax expense amounted to $73.2 million for the three months ended June 30, 2008 compared with $45.5 million for the corresponding period in 2007. Our effective tax rate for the three months ended June 30, 2008 was 39.82% compared with 38.48% for the corresponding period in 2007. Income tax expense for the six months ended June 30, 2008 was $129.5 million compared with $90.8 million for the corresponding 2007 period. Our effective tax rate for the six months ended June 30, 2008 was 39.38% compared with 38.69% for the six months ended June 30, 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 fifty U.S. financial institutions by asset size and is the largest thrift institution headquartered in New Jersey. Hudson City Savings currently operates a total of 123 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,
2008 2007
(In thousands except share and per (unaudited)
share amounts)
Assets:
Cash and due from banks $128,629 $111,245
Federal funds sold 56,957 106,299
Total cash and cash equivalents 185,586 217,544
Securities available for sale:
Mortgage-backed securities 7,600,182 5,005,409
Investment securities 3,287,143 2,765,491
Securities held to maturity:
Mortgage-backed securities 9,336,644 9,565,526
Investment securities 71,695 1,408,501
Total securities 20,295,664 18,744,927
Loans 27,229,771 24,192,281
Deferred loan costs 48,808 40,598
Allowance for loan losses (39,078) (34,741)
Net loans 27,239,501 24,198,138
Federal Home Loan Bank of New York stock 809,320 695,351
Foreclosed real estate, net 8,151 4,055
Accrued interest receivable 277,664 245,113
Banking premises and equipment, net 74,276 75,094
Goodwill 152,109 152,109
Other assets 119,715 91,640
Total Assets $49,161,986 $44,423,971
Liabilities and Shareholders' Equity:
Deposits:
Interest-bearing $16,088,244 $14,635,412
Noninterest-bearing 631,101 517,970
Total deposits 16,719,345 15,153,382
Repurchase agreements 13,550,000 12,016,000
Federal Home Loan Bank of New York
advances 13,925,000 12,125,000
Total borrowed funds 27,475,000 24,141,000
Due to brokers 12,889 281,853
Accrued expenses and other liabilities 245,158 236,429
Total liabilities 44,452,392 39,812,664
Common stock, $0.01 par value,
3,200,000,000 shares authorized;
741,466,555 shares issued;
519,478,371 and 518,569,602 shares
outstanding at June 30, 2008 and
December 31, 2007 7,415 7,415
Additional paid-in capital 4,597,370 4,578,578
Retained earnings 2,099,941 2,002,049
Treasury stock, at cost; 221,988,184
and 222,896,953 shares at
June 30, 2008 and December 31, 2007 (1,765,696) (1,771,106)
Unallocated common stock held by the
employee stock ownership plan (219,247) (222,251)
Accumulated other comprehensive
(loss) income, net of tax (10,189) 16,622
Total shareholders' equity 4,709,594 4,611,307
Total Liabilities and
Shareholders' Equity $49,161,986 $44,423,971
Hudson City Bancorp, Inc. and Subsidiary
Consolidated Statements of Income
(Unaudited)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
2008 2007 2008 2007
(In thousands, except per share data)
Interest and Dividend
Income:
First mortgage loans $369,096 $289,772 $715,373 $559,454
Consumer and other
loans 6,877 7,078 13,733 13,970
Mortgage-backed
securities held to
maturity 123,619 109,563 248,464 205,080
Mortgage-backed
securities
available for sale 88,952 26,805 158,462 55,096
Investment securities
held to maturity 944 18,630 11,890 37,243
Investment securities
available for sale 41,974 48,351 80,529 99,186
Dividends on Federal
Home Loan Bank of
New York stock 13,993 8,747 28,219 16,219
Federal funds sold 1,205 2,548 3,278 4,893
Total interest
and dividend
income 646,660 511,494 1,259,948 991,141
Interest Expense:
Deposits 141,399 146,432 299,415 288,395
Borrowed funds 272,129 207,404 534,086 388,634
Total interest
expense 413,528 353,836 833,501 677,029
Net interest
income 233,132 157,658 426,447 314,112
Provision for Loan
Losses 3,000 500 5,500 800
Net interest
income after
provision for
loan losses 230,132 157,158 420,947 313,312
Non-Interest Income:
Service charges and
other income 2,088 1,823 4,309 3,373
Non-Interest Expense:
Compensation and
employee benefits 31,299 25,812 62,844 51,560
Net occupancy expense 7,433 7,070 14,804 14,279
Federal deposit
insurance assessment 423 447 839 888
Computer and related
services 748 715 1,387 1,381
Other expense 8,374 6,823 16,515 13,856
Total non-interest
expense 48,277 40,867 96,389 81,964
Income before
income tax
expense 183,943 118,114 328,867 234,721
Income Tax Expense 73,240 45,450 129,495 90,814
Net income $110,703 $72,664 $199,372 $143,907
Basic Earnings Per
Share $0.23 $0.14 $0.41 $0.28
Diluted Earnings Per
Share $0.22 $0.14 $0.40 $0.28
Weighted Average
Number of Common
Shares Outstanding:
Basic 483,885,720 504,902,448 483,491,345 511,622,385
Diluted 496,078,754 514,998,167 495,362,864 522,157,901
Hudson City Bancorp, Inc. and Subsidiary
Consolidated Average Balance Sheets
(Unaudited)
For the Three Months Ended June 30,
2008
Average
Average Yield/
Balance Interest Cost
(Dollars in thousands)
Assets:
Interest-earnings assets:
First mortgage loans, net (1) $25,708,148 $369,096 5.74 %
Consumer and other loans 426,390 6,877 6.45
Federal funds sold 244,780 1,205 1.98
Mortgage-backed securities at
amortized cost 16,308,532 212,571 5.21
Federal Home Loan Bank stock 774,089 13,993 7.23
Investment securities, at
amortized cost 3,488,540 42,918 4.92
Total interest-earning assets 46,950,479 646,660 5.51
Noninterest-earnings assets 817,708
Total Assets $47,768,187
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Savings accounts $736,421 1,382 0.75
Interest-bearing transaction
accounts 1,595,180 11,788 2.97
Money market accounts 2,146,642 16,570 3.10
Time deposits 11,417,332 111,659 3.93
Total interest-bearing
deposits 15,895,575 141,399 3.58
Repurchase agreements 12,884,615 134,454 4.20
Federal Home Loan Bank of New
York advances 13,345,879 137,675 4.15
Total borrowed funds 26,230,494 272,129 4.17
Total interest-bearing
liabilities 42,126,069 413,528 3.95
Noninterest-bearing liabilities:
Noninterest-bearing deposits 588,089
Other noninterest-bearing
liabilities 276,299
Total noninterest-bearing
liabilities 864,388
Total liabilities 42,990,457
Shareholders' equity 4,777,730
Total Liabilities and
Shareholders' Equity $47,768,187
Net interest income/net interest
rate spread (2) $233,132 1.56
Net interest-earning assets/net
interest margin (3) $4,824,410 1.97 %
Ratio of interest-earning assets to
interest-bearing liabilities 1.11 x
For the Three Months Ended June 30,
2007
Average
Average Yield/
Balance Interest Cost
Assets:
Interest-earnings assets:
First mortgage loans, net (1) $20,437,687 $289,772 5.67 %
Consumer and other loans 428,474 7,078 6.61
Federal funds sold 195,085 2,548 5.24
Mortgage-backed securities at
amortized cost 10,673,572 136,368 5.11
Federal Home Loan Bank stock 567,694 8,747 6.16
Investment securities, at
amortized cost 5,615,664 66,981 4.77
Total interest-earning assets 37,918,176 511,494 5.40
Noninterest-earnings assets 607,385
Total Assets $38,525,561
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Savings accounts $790,499 1,639 0.83
Interest-bearing transaction
accounts 1,878,714 15,799 3.37
Money market accounts 1,019,661 9,836 3.87
Time deposits 9,736,187 119,158 4.91
Total interest-bearing
deposits 13,425,061 146,432 4.37
Repurchase agreements 9,383,033 98,186 4.20
Federal Home Loan Bank of New
York advances 10,191,209 109,218 4.30
Total borrowed funds 19,574,242 207,404 4.25
Total interest-bearing
liabilities 32,999,303 353,836 4.30
Noninterest-bearing liabilities:
Noninterest-bearing deposits 527,819
Other noninterest-bearing
liabilities 205,159
Total noninterest-bearing
liabilities 732,978
Total liabilities 33,732,281
Shareholders' equity 4,793,280
Total Liabilities and
Shareholders' Equity $38,525,561
Net interest income/net interest
rate spread (2) $157,658 1.10
Net interest-earning assets/net
interest margin (3) $4,918,873 1.65 %
Ratio of interest-earning assets to
interest-bearing liabilities 1.15 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.
Hudson City Bancorp, Inc. and Subsidiary
Consolidated Average Balance Sheets
(Unaudited)
For the Six Months Ended June 30,
2008
Average
Average Yield/
Balance Interest Cost
(Dollars in thousands)
Assets:
Interest-earnings assets:
First mortgage loans, net (1) $24,883,976 $715,373 5.75 %
Consumer and other loans 430,984 13,733 6.37
Federal funds sold 261,000 3,278 2.53
Mortgage-backed securities at
amortized cost 15,503,898 406,926 5.25
Federal Home Loan Bank stock 747,960 28,219 7.55
Investment securities, at
amortized cost 3,837,728 92,419 4.82
Total interest-earning assets 45,665,546 1,259,948 5.52
Noninterest-earnings assets 783,080
Total Assets $46,448,626
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Savings accounts $734,107 2,754 0.75
Interest-bearing transaction
accounts 1,580,337 24,689 3.14
Money market accounts 1,915,999 32,465 3.41
Time deposits 11,186,331 239,507 4.31
Total interest-bearing deposits 15,416,774 299,415 3.91
Repurchase agreements 12,448,055 262,861 4.25
Federal Home Loan Bank of New York
advances 13,032,868 271,225 4.19
Total borrowed funds 25,480,923 534,086 4.22
Total interest-bearing
liabilities 40,897,697 833,501 4.10
Noninterest-bearing liabilities:
Noninterest-bearing deposits 549,223
Other noninterest-bearing
liabilities 278,675
Total noninterest-bearing
liabilities 827,898
Total liabilities 41,725,595
Shareholders' equity 4,723,031
Total Liabilities and
Shareholders' Equity $46,448,626
Net interest income/net interest rate
spread (2) $426,447 1.42
Net interest-earning assets/net
interest margin (3) $4,767,849 1.85 %
Ratio of interest-earning assets to
interest-bearing liabilities 1.12 x
For the Six Months Ended June 30,
2007
Average
Average Yield/
Balance Interest Cost
Assets:
Interest-earnings assets:
First mortgage loans, net (1) $19,731,035 $559,454 5.67 %
Consumer and other loans 426,018 13,970 6.56
Federal funds sold 187,396 4,893 5.27
Mortgage-backed securities at
amortized cost 10,239,739 260,176 5.08
Federal Home Loan Bank stock 520,601 16,219 6.23
Investment securities, at
amortized cost 5,764,587 136,429 4.73
Total interest-earning assets 36,869,376 991,141 5.38
Noninterest-earnings assets 596,273
Total Assets $37,465,649
Liabilities and Shareholders'
Equity:
Interest-bearing liabilities:
Savings accounts $794,209 3,468 0.88
Interest-bearing transaction
accounts 1,945,341 32,516 3.37
Money market accounts 977,515 17,992 3.71
Time deposits 9,584,729 234,419 4.93
Total interest-bearing
deposits 13,301,794 288,395 4.37
Repurchase agreements 9,153,243 187,617 4.13
Federal Home Loan Bank of New
York advances 9,436,740 201,017 4.30
Total borrowed funds 18,589,983 388,634 4.22
Total interest-bearing
liabilities 31,891,777 677,029 4.28
Noninterest-bearing liabilities:
Noninterest-bearing deposits 507,294
Other noninterest-bearing
liabilities 213,065
Total noninterest-bearing
liabilities 720,359
Total liabilities 32,612,136
Shareholders' equity 4,853,513
Total Liabilities and
Shareholders' Equity $37,465,649
Net interest income/net interest
rate spread (2) $314,112 1.10
Net interest-earning assets/net
interest margin (3) $4,977,599 1.67 %
Ratio of interest-earning assets to
interest-bearing liabilities 1.16 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.
Hudson City Bancorp, Inc. and Subsidiary
Other Financial Data
(Unaudited)
At or for the Quarter Ended
June 30, March 31, Dec. 31,
2008 2008 2007
(Dollars in thousands, except per share data)
Net interest income $233,132 $193,315 $170,855
Provision for loan losses 3,000 2,500 2,000
Non-interest income 2,088 2,221 1,851
Non-interest expense:
Compensation and employee benefits 31,299 31,545 28,516
Other non-interest expense 16,978 16,567 16,245
Total non-interest expense 48,277 48,112 44,761
Income before income tax expense 183,943 144,924 125,945
Income tax expense 73,240 56,255 48,437
Net income $110,703 $88,669 $77,508
Total assets $49,161,986 $46,770,250 $44,423,971
Loans, net 27,239,501 24,900,281 24,198,138
Mortgage-backed securities
Available for sale 7,600,182 6,727,124 5,005,409
Held to maturity 9,336,644 9,676,864 9,565,526
Other securities
Available for sale 3,287,143 3,717,331 2,765,491
Held to maturity 71,695 121,715 1,408,501
Deposits 16,719,345 16,077,113 15,153,382
Borrowings 27,475,000 25,225,000 24,141,000
Shareholders' equity 4,709,594 4,710,089 4,611,307
Performance Data:
Return on average assets (1) 0.93% 0.79% 0.72%
Return on average equity (1) 9.27% 7.60% 6.73%
Net interest rate spread (1) 1.56 1.27 1.16
Net interest margin (1) 1.97% 1.72% 1.64%
Non-interest expense to average
assets (1) 0.41% 0.43% 0.41%
Efficiency ratio (2) 20.52% 24.66% 25.92%
Dividend payout ratio 50.00% 50.00% 53.13%
Per Common Share Data:
Basic earnings per common share $0.23 $0.18 $0.16
Diluted earnings per common share $0.22 $0.18 $0.16
Book value per share (3) $9.73 $9.75 $9.55
Tangible book value per share (3) $9.40 $9.41 $9.22
Dividends per share $0.110 $0.090 $0.085
Capital Ratios:
Equity to total assets (consolidated) 9.58% 10.07% 10.38%
Tier 1 leverage capital (Bank) 8.41% 8.85% 9.16%
Total risk-based capital 22.56% 24.07% 24.83%
Other Data:
Full-time equivalent employees 1,391 1,355 1,307
Number of branch offices 121 119 119
Asset Quality Data:
Total non-performing loans $116,315 $102,256 $79,402
Number of non-performing loans 328 283 234
Total number of loans 79,929 76,447 75,857
Total non-performing assets $124,466 $107,146 $83,457
Non-performing loans to total loans 0.43% 0.41% 0.33%
Non-performing assets to total
assets 0.25% 0.23% 0.19%
Allowance for loan losses $39,078 $36,772 $34,741
Allowance for loan losses to non-
performing loans 33.60% 35.96% 43.75%
Allowance for loan losses to total
loans 0.14% 0.15% 0.14%
Provision for loan losses $3,000 $2,500 $2,000
Net charge-offs $694 $469 $109
At or for the Quarter Ended
Sept. 30, 2007 June 30, 2007
Net interest income $162,216 $157,658
Provision for loan losses 2,000 500
Non-interest income 2,049 1,823
Non-interest expense:
Compensation and employee benefits 26,554 25,812
Other non-interest expense 14,634 15,055
Total non-interest expense 41,188 40,867
Income before income tax expense 121,077 118,114
Income tax expense 46,634 45,450
Net income $74,443 $72,664
Total assets $42,316,794 $39,691,435
Loans, net 23,031,415 21,888,126
Mortgage-backed securities
Available for sale 2,683,594 2,071,133
Held to maturity 9,837,898 9,028,614
Other securities
Available for sale 3,663,715 3,782,151
Held to maturity 1,533,982 1,533,978
Deposits 14,625,726 14,190,510
Borrowings 22,891,000 20,666,000
Shareholders' equity 4,589,510 4,653,147
Performance Data:
Return on average assets (1) 0.73% 0.75%
Return on average equity (1) 6.41% 6.06%
Net interest rate spread (1) 1.14 1.10
Net interest margin (1) 1.65% 1.65%
Non-interest expense to average assets (1) 0.40% 0.42%
Efficiency ratio (2) 25.07% 25.62%
Dividend payout ratio 56.67% 57.14%
Per Common Share Data:
Basic earnings per common share $0.15 $0.14
Diluted earnings per common share $0.15 $0.14
Book value per share (3) $9.44 $9.39
Tangible book value per share (3) $9.10 $9.06
Dividends per share $0.085 $0.080
Capital Ratios:
Equity to total assets (consolidated) 10.85% 11.72%
Tier 1 leverage capital (Bank) 9.59% 10.18%
Total risk-based capital 25.99% 27.50%
Other Data:
Full-time equivalent employees 1,321 1,298
Number of branch offices 118 115
Asset Quality Data:
Total non-performing loans $58,792 $38,452
Number of non-performing loans 192 135
Total number of loans 73,682 69,538
Total non-performing assets $62,197 $42,151
Non-performing loans to total loans 0.26% 0.18%
Non-performing assets to total assets 0.15% 0.11%
Allowance for loan losses $32,850 $31,457
Allowance for loan losses to non-
performing loans 55.87% 81.81%
Allowance for loan losses to total loans 0.14% 0.14%
Provision for loan losses $2,000 $500
Net charge-offs $606 $36
(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
June 30,
2008
(In thousands, except share and per share amounts)
Shareholders' equity $4,709,594
Goodwill and other intangible assets (161,214)
Tangible Shareholders' equity $4,548,380
Book Value Share Computation:
Issued 741,466,555
Treasury shares (221,988,184)
Shares outstanding 519,478,371
Unallocated ESOP shares (35,119,737)
Unvested RRP shares (196,377)
Shares in trust (52,419)
Book value shares 484,109,838
Book value per share $9.73
Tangible book value per share $9.40
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