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8-K - FORM 8-K - HUDSON CITY BANCORP INC | y89090e8vk.htm |
Exhibit 99.1
RELEASE 8:00 AM January 19, 2011
CONTACT:
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Susan Munhall, Investor Relations Hudson City Bancorp, Inc. West 80 Century Road, Paramus, New Jersey 07652 |
|
TELEPHONE:
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(201) 967-8290 | |
E-MAIL:
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smunhall@hcsbnj.com |
HUDSON CITY BANCORP, INC. REPORTS QUARTERLY EARNINGS OF $121.2 MILLION
DECLARED QUARTERLY CASH DIVIDEND OF $0.15 PER SHARE
Paramus, New Jersey, January 19, 2011 Hudson City Bancorp, Inc. (NASDAQ: HCBK), the holding
company for Hudson City Savings Bank, reported today that net income for the fourth quarter of 2010
amounted to $121.2 million as compared to $136.6 million for the fourth quarter of 2009. Diluted
earnings per share was $0.25 for the fourth quarter of 2010 as compared to $0.28 for the fourth
quarter of 2009. For the year ended December 31, 2010, net income amounted to $537.2 million as
compared to $527.2 million for 2009. Diluted earnings per share was $1.09 for the year ended
December 31, 2010 as compared to $1.07 for 2009. The Board of Directors declared a quarterly cash
dividend of $0.15 per share payable on February 25, 2011 to shareholders of record on February 4,
2011.
Ronald E. Hermance, Jr., Chairman and Chief Executive Officer commented, We are very proud of
reporting another record year of earnings, our 11th in a row. However, our fourth
quarter earnings are more reflective of the trend we expect in 2011. Conditions in the mortgage
market continued to produce substantial headwinds. During 2010, market interest rates were at
historical lows and pushed mortgage rates below 5%. This caused prepayments and refinancing
activity to increase, resulting in lower yields on our mortgage-related assets. As expected, the
continued low interest rate environment continued to negatively impact our net interest margin in
the fourth quarter. The recent increase in longer term market interest rates have pushed mortgage
rates higher, but the continued elevated levels of unemployment, the weak housing market and the
unprecedented level of the U.S. government-sponsored enterprises (the GSEs) involvement in the
mortgage market have impacted our ability to grow our loan portfolio as the GSEs were involved in
over 90% of U.S. mortgage production.
Mr. Hermance continued, Going forward we expect these conditions will significantly hinder our
ability to continue earnings at recent historical levels. During 2011 our net interest margin may
decrease from the 2010 fourth quarter level. A positive event in the fourth quarter was the
slowing in the rate of loan delinquency growth. This plus a relatively stable level of charge-offs
allowed us to decrease our quarterly provision for loan losses from $50.0 million to $45.0
million.
Mr. Hermance also commented, As we look forward to market conditions that are more conducive to
our business model, we are exploring the best ways to reduce interest rate risk, strengthen our
balance sheet to restore traditional earnings trends and to prepare our balance sheet for future
growth. We expect that this process would result in a further restructuring of our funding mix a
process we started in 2009 with the modification of putable borrowings to extend or eliminate put
dates and to fund asset growth with customer deposits. Any such restructuring will focus on the
prospects for long-term overall earnings stability and growth as market and economic conditions
become normalized. We believe that it is important to adjust to current market conditions and
prepare to capture a greater share of the residential mortgage market when conditions improve.
While it is difficult to predict when that may occur, we believe that this is the time to look
ahead to the new normal.
Mr. Hermance continued, We are also very aware that the regulatory environment, as indicated by
legislative and regulatory reactions to the recent recession and financial crisis, is expected to
result in
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greater oversight and additional regulations for Hudson City and the entire industry. We expect
capital and liquidity levels to become an even greater focus in 2011. Although our regulatory
capital ratios are in excess of the requirements to be considered well capitalized for bank
regulatory purposes, we believe the current regulatory environment will necessitate maintaining a
reasonable cushion above the applicable regulatory requirements to be considered well
capitalized. Accordingly, we will consider our level of earnings, capital ratios and asset growth
in our future decisions regarding dividends.
Mr. Hermance concluded, With all of the challenges facing our business, we are committed to
shareholder value. Your management team remains focused on our core residential lending model and
adapting this model to changes in the marketplace as they occur. We thank you for your continued
support of Hudson City.
Financial highlights for the fourth quarter of 2010 are as follows:
| Both basic and diluted earnings per share were $0.25 for the fourth quarter of 2010 as compared to $0.28 for both basic and diluted earnings per share for the fourth quarter of 2009. Both basic and diluted earnings per common share were $1.09 for 2010 as compared to $1.08 and $1.07 for basic and diluted earnings per share, respectively, for 2009. | ||
| Net income amounted to $121.2 million for the fourth quarter of 2010, as compared to $136.6 million for the fourth quarter of 2009. For the year ended December 31, 2010, net income amounted to $537.2 million as compared to $527.2 million for 2009. | ||
| Net interest income decreased 24.1% to $251.8 million for the fourth quarter of 2010 as compared to the fourth quarter of 2009 and decreased 4.3% to $1.19 billion for the year ended December 31, 2010. | ||
| Our net interest rate spread and net interest margin were 1.48% and 1.73%, respectively, for the fourth quarter of 2010 and 1.77% and 2.01%, respectively, for 2010. | ||
| The provision for loan losses amounted to $45.0 million for both the fourth quarter of 2010 and 2009, respectively. For the year ended December 31, 2010, the provision for loan losses amounted to $195.0 million as compared to $137.5 million for 2009. | ||
| Our annualized return on average assets and annualized return on average shareholders equity for the fourth quarter of 2010 were 0.80% and 8.50%, respectively. Our return on average assets and return on average shareholders equity for the year ended December 31, 2010 were 0.88% and 9.66%, respectively. | ||
| Our annualized ratio of non-interest expense to average assets was 0.46% for the fourth quarter of 2010 and 0.44% for 2010. | ||
| Non-interest income amounted to $62.9 million for the fourth quarter of 2010 and $163.0 million for the year ended December 31, 2010. Included in non-interest income were net realized securities gains of $60.2 million and $152.6 million, respectively, for the quarter and year ended December 31, 2010. | ||
| Deposits increased $595.1 million, or 2.4%, to $25.17 billion at December 31, 2010 from $24.58 billion at December 31, 2009. |
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| Borrowings decreased $300.0 million to $29.68 billion at December 31, 2010 from $29.98 billion at December 31, 2009. We modified $4.03 billion of borrowings during 2010 to extend put dates by between three and five years. |
Statement of Financial Condition Summary
Total assets increased $898.3 million, or 1.5%, to $61.17 billion at December 31, 2010 from
$60.27 billion at December 31, 2009. The increase in total assets reflected a $2.95 billion
increase in total mortgage-backed securities partially offset by a $1.25 billion decrease in
investment securities and a $947.2 million decrease in net loans.
Our net loans decreased $947.2 million during year ended December 31, 2010 to $30.77 billion. The
decrease in loans primarily reflects the elevated levels of loan repayments during 2010 as a result
of continued low market interest rates. Historically our focus has been on 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 purchases of mortgage loans. During
2010, we originated $5.83 billion and purchased $764.3 million of loans, compared to originations
of $6.06 billion and purchases of $3.16 billion for 2009. The origination and purchases of loans
were offset by principal repayments of $7.26 billion in 2010 as compared to $6.77 billion for 2009.
Loan originations continue to be strong as a result of elevated levels of mortgage refinancing
activity caused by low market interest rates. The refinancing activity caused increased levels of
repayments in 2010 as some of our customers refinanced with other banks. Our loan purchase activity
has significantly declined as the GSEs have been actively purchasing loans as part of their efforts
to keep mortgage rates low to support the housing market during the recent economic recession. As
a result, the sellers from whom we have historically purchased loans are selling many of their
loans to the GSEs. We expect that the amount of loan purchases will continue to be at reduced
levels for the near-term.
Total mortgage-backed securities increased $2.95 billion during 2010 to $24.03 billion, reflecting
purchases of $15.49 billion of mortgage-backed securities issued by GSEs, substantially all of
which were hybrid adjustable-rate securities. The increase was partially offset by repayments
received of $8.37 billion and sales of $3.92 billion. The sales resulted in net realized
securities gains of $152.6 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 $727.2 million, or 1.3%, to $55.66 billion at December 31, 2010 from
$54.93 billion at December 31, 2009. The increase in total liabilities primarily reflected a
$595.1 million increase in deposits and a $438.2 million increase in amounts due to brokers
partially offset by a $300.0 million decrease in borrowed funds. The increase in total deposits
reflected a $1.25 billion increase in our money market accounts and a $151.5 million increase in
our interest-bearing transaction accounts and savings accounts. These increases were partially
offset by a decrease of $788.9 million in our time deposits as customers shifted deposits to our
money market savings account. Borrowings amounted to $29.68 billion at December 31, 2010 as
compared to $29.98 billion at December 31, 2009. During 2010, we modified $4.03 billion of
borrowings to extend the put dates of the borrowings by between three and five years.
Total shareholders equity increased $171.1 million to $5.51 billion at December 31, 2010 from
$5.34 billion at December 31, 2009. The increase was primarily due to net income of $537.2 million
for the year ended December 31, 2010. These increases to shareholders equity were partially offset
by cash dividends paid to common shareholders of $295.8 million and a $99.1 million decrease in
accumulated other
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comprehensive income. At December 31, 2010, our shareholders equity to asset ratio was 9.01% and
our tangible book value per share was $10.85.
The accumulated other comprehensive income of $85.4 million at December 31, 2010 includes a $117.3
million after-tax net unrealized gain on securities available for sale ($198.3 million pre-tax)
partially offset by a $31.9 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 recovery is continuing, though at a rate that has been insufficient
to bring down unemployment. Household spending is increasing gradually, but remains constrained by
high unemployment, modest income growth, lower housing wealth, and tight credit. The national
unemployment rate was 9.4% in December 2010 as compared to 9.6% in September 2010 and 9.9% in
December 2009. The FOMC decided to maintain the overnight lending rate at zero to 0.25% during the
fourth quarter of 2010. As a result, short-term market interest rates have remained at low levels
during the fourth quarter of 2010. The yields on mortgage-related assets have also remained at low
levels during that same quarter. Our net interest rate spread decreased to 1.48% for the fourth
quarter of 2010 as compared to 1.73% for the linked third quarter of 2010 and 2.04% for the fourth
quarter of 2009. Our net interest margin decreased to 1.73% for the fourth quarter of 2010 as
compared to 1.97% for the linked third quarter of 2010 and 2.30% for the fourth quarter of 2009.
The decrease in net interest margin during the fourth quarter of 2010 is primarily due to the low
market interest rates that 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 88.4% of our
average interest-earning assets during the 2010 fourth quarter.
Net interest income decreased $80.0 million, or 24.1%, to $251.8 million for the fourth quarter of
2010 as compared to $331.8 million for the fourth quarter of 2009. Net interest income decreased
$52.7 million, or 4.3%, to $1.19 billion for 2010 from $1.24 billion for 2009. During 2010, our
net interest rate spread decreased 16 basis points to 1.77% and our net interest margin decreased
21 basis points to 2.01% as compared to 2009.
Total interest and dividend income for the fourth quarter of 2010 decreased $103.3 million, or
13.8%, to $643.2 million from $746.5 million for the fourth quarter of 2009. The decrease in total
interest and dividend income was primarily due to a decrease of 78 basis points in the annualized
weighted-average yield on total interest-earning assets to 4.35% for the quarter ended December 31,
2010 from 5.13% 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 $871.1 million, or 1.5%, to $59.10 billion for the fourth quarter of 2010 as compared to $58.23
billion for the fourth quarter of 2009.
Total interest and dividend income decreased $157.3 million, or 5.4%, to $2.78 billion for the year
ended December 31, 2010 from $2.94 billion for the year ended December 31, 2009. The decrease in
interest and dividend income was due to a decrease of 54 basis points in the weighted-average yield
on total interest-earning assets to 4.70% for the year ended December 31, 2010 from 5.24% for 2009.
The decrease in the weighted-average yield was partially offset by an increase in the average
balance of total interest-earning assets of $3.14 billion, or 5.6%, to $59.27 billion for the year
ended December 31, 2010 as compared to $56.13 billion for the year ended December 31, 2009.
Interest on first mortgage loans decreased $31.2 million to $395.6 million for the fourth quarter
of 2010 as compared to $426.8 million for the comparable period in 2009. This was primarily due to
a 39 basis point
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decrease in the weighted-average yield to 5.12% from 5.51% for the 2009 fourth quarter. The
decrease in interest income on mortgage loans was also due to an $84.1 million decrease in the
average balance of first mortgage loans to $30.91 billion. During 2010 our mortgage loan portfolio
decreased as refinancing activity resulted in continued elevated levels of loan repayments and the
weak real estate markets resulted in decreased home purchase mortgage activity. In addition, loan
purchase activity has significantly declined as the GSEs have been actively purchasing loans as
part of their efforts to keep mortgage rates low to support the housing market during the recent
economic recession. As a result, the sellers from whom we have historically purchased loans are
selling a greater percentage of their product to the GSEs.
For the year ended December 31, 2010, interest on first mortgage loans decreased slightly to $1.67
billion as compared to $1.68 billion for the year ended December 31, 2009. This was primarily due
to a 26 basis point decrease in the weighted-average yield to 5.31% for the year ended December 31,
2010 as compared to 5.57% for 2009. The effect of the decrease in the weighted-average yield was
partially offset by a $1.27 billion increase in the average balance of first mortgage loans to
$31.40 billion, which reflected our historical emphasis on the growth of our mortgage loan
portfolio.
Interest on mortgage-backed securities decreased $49.4 million to $191.1 million for the fourth
quarter of 2010 as compared to $240.5 million for the fourth quarter of 2009. This decrease was
due primarily to a 124 basis point decrease in the weighted-average yield to 3.64% for the fourth
quarter of 2010 from 4.88% for the fourth quarter of 2009. The effect of the decrease in the
weighted-average yield was partially offset by a $1.30 billion increase in the average balance of
mortgage-backed securities to $20.99 billion during the fourth quarter of 2010 as compared to
$19.69 billion for the fourth quarter of 2009.
Interest on mortgage-backed securities decreased $132.1 million to $851.6 million for the year
ended December 31, 2010 as compared to $983.7 million for the year ended December 31, 2009. This
decrease was due primarily to an 88 basis point decrease in the weighted-average yield to 4.14%
during 2010 from 5.02% for 2009. The effect of the decrease in the weighted-average yield was
partially offset by a $953.0 million increase in the average balance of mortgage-backed securities
to $20.56 billion during 2010 as compared to $19.60 billion for 2009.
The increases in the average balances of mortgage-backed securities were due to purchases of
primarily variable-rate hybrid securities. We purchased these securities to reinvest cash flows
resulting from prepayments on our mortgage loans and the calls of investment securities. The
elevated levels of prepayments, weak home purchase activity and the GSEs involvement in the
mortgage market have made it difficult for us to reinvest cash flows into the mortgage portfolio.
The decrease in the weighted average yield on mortgage-backed securities is a result of lower
yields on securities that have been purchased since the second half of 2009 when market interest
rates were lower than the yield earned on the existing portfolio.
Interest on investment securities decreased $24.8 million to $36.6 million for the fourth quarter
of 2010 as compared to $61.4 million for the fourth quarter of 2009. This decrease was due
primarily to a decrease in the average yield of investment securities of 117 basis points to 3.36%
for the fourth quarter of 2010 as compared to 4.53% for the fourth quarter of 2009. The decrease
in interest income on investment securities was also due to a $1.05 billion decrease in the average
balance of investment securities to $4.37 billion for the fourth quarter of 2010 from $5.42 billion
for the fourth quarter of 2009.
For the year ended December 31, 2010, interest on investment securities decreased $14.7 million to
$198.7 million as compared to $213.4 million for the year ended December 31, 2009. This decrease
was due primarily to a decrease in the average yield of investment securities of 68 basis points to
3.98% for 2010 as compared to 4.66% for 2009. The decrease in the weighted-average yield on
investment
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securities was partially offset by a $415.1 million increase in the average balance of investment
securities to $4.99 billion during 2010 from $4.58 billion for 2009.
Dividends on Federal Home Loan Bank of New York (FHLB) stock increased $2.0 million, or 16.1%, to
$14.4 million for the fourth quarter of 2010 as compared to $12.4 million for the fourth quarter of
2009. This increase was due primarily to a 94 basis point increase in the average dividend yield
earned to 6.60% as compared to 5.66% for the fourth quarter of 2009. The increase in the average
dividend yield was partially offset by a $944,000 decrease in the average balance to $875.7 million
for the fourth quarter of 2010 as compared to $876.6 million for the fourth quarter of 2009.
Dividends on FHLB stock increased $3.0 million, or 7.0%, to $46.1 million for 2010 as compared to
$43.1 million for 2009. This increase was due primarily to a 33 basis point increase in the
average dividend yield earned to 5.25% for 2010 as compared to 4.92% for 2009. The increase in
dividend income was also due to a $2.0 million increase in the average balance to $878.7 million
for 2010 as compared to $876.7 million for 2009. The increase in the average balance was due to
purchases of FHLB stock to meet membership requirements.
Interest on Federal funds sold amounted to $985,000 for the fourth quarter of 2010 as compared to
$479,000 for the fourth quarter of 2009. The average balance of Federal funds sold amounted to
$1.62 billion for the fourth quarter of 2010 as compared to $880.1 million for the fourth quarter
of 2009. The yield earned on Federal funds sold was 0.24% for the 2010 fourth quarter and 0.22%
for the 2009 fourth 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 $2.6 million for 2010 as compared to $1.2 million for
2009. The average balance of Federal funds sold amounted to $1.10 billion for 2010 as compared to
$566.1 million for 2009. The yield earned on Federal funds sold was 0.24% for the year ended
December 31, 2010 and 0.21% for the year ended December 31, 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 December 31, 2010 decreased $23.3 million, or 5.6%, to
$391.4 million from $414.7 million for the quarter ended December 31, 2009. This decrease was
primarily due to a 22 basis point decrease in the weighted-average cost of total interest-bearing
liabilities to 2.87% for the quarter ended December 31, 2010 compared with 3.09% for the quarter
ended December 31, 2009. The decrease was partially offset by a $743.8 million, or 1.4%, increase
in the average balance of total interest-bearing liabilities to $54.08 billion for the quarter
ended December 31, 2010 compared with $53.33 billion for the fourth quarter of 2009.
Total interest expense for the year ended December 31, 2010 decreased $104.6 million, or 6.2%, to
$1.59 billion from $1.70 billion for the year ended December 31, 2009. This decrease was primarily
due to a 38 basis point decrease in the weighted-average cost of total interest-bearing liabilities
to 2.93% for the year ended December 31, 2010 compared with 3.31% for the year ended December 31,
2009. The effect of the decrease in the weighted-average cost was partially offset by a $3.13
billion, or 6.1%, increase in the average balance of total interest-bearing liabilities to $54.40
billion for the year ended December 31, 2010 compared with $51.27 billion for 2009.
Interest expense on deposits decreased $22.3 million, or 20.6%, to $86.2 million for the fourth
quarter of 2010 from $108.5 million for the fourth quarter of 2009. This decrease is due primarily
to a decrease in the average cost of interest-bearing deposits of 44 basis points to 1.41% for the
fourth quarter of 2010 as compared to 1.85% for the fourth quarter of 2009. The decrease was
partially offset by a $1.00 billion
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increase in the average balance of interest-bearing deposits to $24.32 billion during the fourth
quarter of 2010 as compared to $23.32 billion for the fourth quarter of 2009.
For the year ended December 31, 2010, interest expense on deposits decreased $107.2 million, or
22.2%, to $376.3 million from $483.5 million for the year ended December 31, 2009. This decrease
is due primarily to a decrease in the average cost of interest-bearing deposits of 75 basis points
to 1.54% for 2010 compared with 2.29% for 2009. The decrease was partially offset by a $3.36
billion increase in the average balance of interest-bearing deposits to $24.49 billion during 2010
as compared to $21.13 billion for 2009.
The increases in the average balances of interest-bearing deposits reflect our expanded branch
network and our efforts to grow deposits in 2009 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 in 2009. We lowered our deposit rates during 2010 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 and our
decision to lower deposit rates to slow deposit growth. At December 31, 2010, time deposits
scheduled to mature within one year totaled $10.60 billion with an average cost of 1.32%. These
time deposits are scheduled to mature as follows: $4.58 billion with an average cost of 1.18% in
the first quarter of 2011, $2.96 billion with an average cost of 1.19% in the second quarter of
2011, $1.40 billion with an average cost of 1.44% in the third quarter of 2011 and $1.66 billion
with an average cost of 1.82% in the fourth quarter of 2011. The current yields offered for our
six month, one year and two year time deposits are 0.75%, 1.00% and 1.50%, respectively. In
addition, our money market savings accounts are currently yielding 1.25%. 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, in the past, 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 2010 with deposits.
Substantially all of our borrowings are putable quarterly at the discretion of the lender after an
initial non-put 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 put back will not increase substantially unless interest rates were to increase by at least 200
basis points.
Interest expense on borrowed funds decreased $1.1 million to $305.2 million for the fourth quarter
of 2010 as compared to $306.3 million for the fourth quarter of 2009. This decrease was primarily
due to a $259.8 million decrease in the average balance of borrowed funds to $29.76 billion for the
fourth quarter of 2010 as compared to $30.02 billion for the fourth quarter of 2009. This decrease
was substantially offset by a 2 basis point increase in the weighted-average cost of borrowed funds
to 4.07% for the fourth quarter of 2010 as compared to 4.05% for the fourth quarter of 2009. The
slight increase in the average cost of our borrowings is due primarily to our strategy of modifying
current borrowings to extend the put dates.
Interest expense on borrowed funds increased $2.5 million to $1.22 billion for the year ended
December 31, 2010 as compared to $1.21 billion for 2009. This increase was primarily due to a 4
basis point increase in the weighted-average cost of borrowed funds to 4.07% for 2010 as compared
to 4.03% for
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2009. This increase was primarily offset by a $226.9 million decrease in the average balance of
borrowed funds to $29.91 billion for 2010 as compared to $30.14 billion for 2009.
The provision for loan losses amounted to $45.0 million for the quarters ended December 31, 2010
and 2009, respectively. For the linked third quarter of 2010, the provision for loan losses
amounted to $50.0 million. For the year ended December 31, 2010, the provision for loan losses
amounted to $195.0 million as compared to $137.5 million for 2009. The increase in our provision
for loan losses during 2010 as compared to 2009 was a result of the increase in non-performing
loans, continuing elevated levels of unemployment and an increase in charge-offs. The decrease in
the provision for loan losses during the fourth quarter of 2010 as compared to the linked third
quarter was due to a slower growth rate in non-performing loans, a stable level of charge-offs,
stabilizing economic conditions and slightly improved unemployment and underemployment rates. In
addition, home prices appear to have started to stabilize in many of our lending markets. While
there has been a modest improvement in the factors we consider in the determination of the
allowance for loan losses, adverse changes in these factors in the future may require increases in
the allowance for loan losses and in the provision for loan losses. Non-performing loans, defined
as non-accruing loans and accruing loans delinquent 90 days or more, amounted to $871.3 million at
December 31, 2010 compared with $837.5 million at September 30, 2010 and $627.7 million at December
31, 2009. The ratio of non-performing loans to total loans was 2.82% at December 31, 2010 compared
with 2.64% at September 30, 2010 and 1.98% at December 31, 2009. Loans delinquent 30 to 59 days
amounted to $418.9 million at December 31, 2010 as compared to $432.7 million at September 30, 2010
and $430.9 million at December 31, 2009. Loans delinquent 60 to 89 days amounted to $193.2 million
at December 31, 2010 as compared to $188.6 million at September 30, 2010 and $182.5 million at
December 31, 2009. The allowance for loans losses amounted to $236.6 million and $140.1 million at
December 31, 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 0.77% and 27.15%, respectively at
December 31, 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 weak economic conditions during
2010, particularly prolonged elevated levels of unemployment and underemployment, and continued
weak conditions in the housing markets in our primary lending area, in our determination of the
allowance for loan losses.
Net charge-offs amounted to $24.7 million for the quarter ended December 31, 2010 as compared to
net charge-offs of $19.8 million for the same quarter in 2009. For the year ended December 31,
2010, net charge-offs amounted to $98.5 million as compared to $47.2 million of net charge-offs for
2009. The ratio of net charge-offs to average loans was 0.32% and 0.31% for the three months and
year ended December 31, 2010, respectively as compared to 0.25% and 0.15% for the same respective
periods in 2009.
Total non-interest income was $62.9 million for the fourth quarter 2010 as compared to $2.2 million
for the same quarter in 2009. Included in non-interest income for the three month period ended
December 31, 2010 were net gains on securities transactions of $60.2 million which resulted from
the sale of $2.02 billion of mortgage-backed securities available-for-sale.
Total non-interest income for the year ended December 31, 2010 was $163.0 million compared with
$33.6 million for 2009. Included in non-interest income for the year ended December 31, 2010 were
net gains on securities transactions of $152.6 million which resulted from the sale of $3.92
billion of mortgage-backed securities available-for-sale. Included in non-interest income for the
year ended December 31, 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. We believe that the continued elevated levels of prepayments and the eventual
increase in interest rates will reduce the amount of unrealized gains in the available-for-sale
portfolio. Accordingly, we sold these securities to take advantage of the favorable pricing that
currently exists in the market.
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Total non-interest expense increased $6.7 million, or 10.7%, to $69.6 million for the fourth
quarter of 2010 from $62.9 million for the fourth quarter of 2009. The increase is
primarily due to increases of $3.2 million in Federal deposit insurance expense due primarily
to an increase in total deposits, $2.4 million in other expense and $893,000 in compensation and
employee benefits expense. The increase in compensation and employee benefits included a $2.2
million increase in compensation costs due primarily to normal increases in salary as well as
additional full time employees. This increase was partially offset by a $1.4 million decrease in
expense related to our stock benefit plans. At December 31, 2010, we had 1,562 full-time equivalent
employees as compared to 1,482 at December 31, 2009. Included in other expense for the fourth
quarter of 2010 were write-downs on foreclosed real estate and net losses on the sale of foreclosed
real estate of $1.6 million as compared to $325,000 for the fourth quarter of 2009. In addition,
the increase in other expense is also due to an $887,000 increase in regulatory and professional
services.
Total non-interest expense increased $791,000 to $266.4 million for the year ended December 31,
2010 from $265.6 million for the year ended December 31, 2009. The increase is primarily
due to a $20.9 million increase in Federal deposit insurance expense and a $3.9 million
increase in other expense partially offset by the absence of the FDIC special assessment of
$21.1 million and a decrease of $3.3 million in compensation and employee benefits
expense. The decrease in compensation and employee benefits expense included a $6.0
million decrease in expense related to our stock benefit plans and a $3.6 million decrease in
pension expense. These decreases were partially offset by a $5.8 million increase in compensation
costs due primarily to normal increases in salary as well as additional full time employees. 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 increase in other expense
is due primarily to a $2.9 million increase in regulatory and professional services. Included in
other non-interest expense for the year ended December 31, 2010 were write-downs on foreclosed real
estate and net losses on the sale of foreclosed real estate, of $2.7 million as compared to $2.4
million for 2009.
Our efficiency ratio was 22.10% for the 2010 fourth quarter as compared to 18.84% for the 2009
fourth quarter. For the year ended December 31, 2010, our efficiency ratio was 19.68% compared
with 20.80% for 2009. 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 fourth quarter of 2010 was 0.46% as compared to 0.42% for the
fourth quarter of 2009. Our ratio of non-interest expense to average total assets for the year
ended December 31, 2010 was 0.44% compared with 0.46% for the year ended December 31, 2009.
Income tax expense amounted to $79.0 million for the fourth quarter of 2010 compared with $89.5
million for the same quarter in 2009. Our effective tax rate for the fourth quarter of 2010 was
39.48% compared with 39.58% for the fourth quarter of 2009. Income tax expense for the year ended
December 31, 2010 was $355.2 million compared with $346.7 million for the year ended December 31,
2009. Our effective tax rate for the year ended December 31, 2010 was 39.80% compared with 39.67%
for the year ended December 31, 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.
Page 9
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.
TABLES FOLLOW
Page 10
Hudson City Bancorp, Inc. and Subsidiary
Consolidated Statements of Financial Condition
Consolidated Statements of Financial Condition
December 31, | December 31, | |||||||
2010 | 2009 | |||||||
(In thousands, except share and per share amounts) | (unaudited) | |||||||
Assets: |
||||||||
Cash and due from banks |
$ | 175,769 | $ | 198,752 | ||||
Federal funds sold and other overnight deposits |
493,628 | 362,449 | ||||||
Total cash and cash equivalents |
669,397 | 561,201 | ||||||
Securities available for sale: |
||||||||
Mortgage-backed securities |
18,120,537 | 11,116,531 | ||||||
Investment securities |
89,795 | 1,095,240 | ||||||
Securities held to maturity: |
||||||||
Mortgage-backed securities |
5,914,372 | 9,963,554 | ||||||
Investment securities |
3,939,006 | 4,187,704 | ||||||
Total securities |
28,063,710 | 26,363,029 | ||||||
Loans |
30,923,897 | 31,779,921 | ||||||
Net deferred loan costs |
86,633 | 81,307 | ||||||
Allowance for loan losses |
(236,574 | ) | (140,074 | ) | ||||
Net loans |
30,773,956 | 31,721,154 | ||||||
Federal Home Loan Bank of New York stock |
871,940 | 874,768 | ||||||
Foreclosed real estate, net |
45,693 | 16,736 | ||||||
Accrued interest receivable |
245,546 | 304,091 | ||||||
Banking premises and equipment, net |
69,444 | 70,116 | ||||||
Goodwill |
152,109 | 152,109 | ||||||
Other assets |
274,238 | 204,556 | ||||||
Total Assets |
$ | 61,166,033 | $ | 60,267,760 | ||||
Liabilities and Shareholders Equity: |
||||||||
Deposits: |
||||||||
Interest-bearing |
$ | 24,605,896 | $ | 23,992,007 | ||||
Noninterest-bearing |
567,230 | 586,041 | ||||||
Total deposits |
25,173,126 | 24,578,048 | ||||||
Repurchase agreements |
14,800,000 | 15,100,000 | ||||||
Federal Home Loan Bank of New York advances |
14,875,000 | 14,875,000 | ||||||
Total borrowed funds |
29,675,000 | 29,975,000 | ||||||
Due to brokers |
538,200 | 100,000 | ||||||
Accrued expenses and other liabilities |
269,469 | 275,560 | ||||||
Total liabilities |
55,655,795 | 54,928,608 | ||||||
Common stock, $0.01 par value, 3,200,000,000 shares authorized;
741,466,555 shares issued; 526,718,310 shares outstanding
and 526,493,676 shares outstanding at December 31, 2010
and 2009, respectively |
7,415 | 7,415 | ||||||
Additional paid-in capital |
4,705,255 | 4,683,414 | ||||||
Retained earnings |
2,642,338 | 2,401,606 | ||||||
Treasury stock, at cost; 214,748,245 and 214,972,879 shares at
December 31, 2010 and 2009, respectively |
(1,725,946 | ) | (1,727,579 | ) | ||||
Unallocated common stock held by the employee stock ownership plan |
(204,230 | ) | (210,237 | ) | ||||
Accumulated other comprehensive income, net of tax |
85,406 | 184,533 | ||||||
Total shareholders equity |
5,510,238 | 5,339,152 | ||||||
Total Liabilities and Shareholders Equity |
$ | 61,166,033 | $ | 60,267,760 | ||||
Page 11
Hudson City Bancorp, Inc. and Subsidiary
Consolidated Statements of Income
(Unaudited)
Consolidated Statements of Income
(Unaudited)
For the Three Months | For the Years | |||||||||||||||
Ended December 31, | Ended December 31, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
(In thousands, except per share data) | ||||||||||||||||
Interest and Dividend Income: |
||||||||||||||||
First mortgage loans |
$ | 395,551 | $ | 426,778 | $ | 1,667,027 | $ | 1,678,789 | ||||||||
Consumer and other loans |
4,471 | 5,047 | 18,409 | 21,676 | ||||||||||||
Mortgage-backed securities held to maturity |
70,795 | 125,337 | 356,023 | 493,549 | ||||||||||||
Mortgage-backed securities available for sale |
120,349 | 115,114 | 495,572 | 490,109 | ||||||||||||
Investment securities held to maturity |
35,526 | 41,661 | 179,632 | 86,581 | ||||||||||||
Investment securities available for sale |
1,120 | 19,719 | 19,112 | 126,793 | ||||||||||||
Dividends on Federal Home Loan Bank of New York stock |
14,439 | 12,405 | 46,107 | 43,103 | ||||||||||||
Federal funds sold and other overnight deposits |
985 | 479 | 2,614 | 1,186 | ||||||||||||
Total interest and dividend income |
643,236 | 746,540 | 2,784,496 | 2,941,786 | ||||||||||||
Interest Expense: |
||||||||||||||||
Deposits |
86,232 | 108,465 | 376,347 | 483,468 | ||||||||||||
Borrowed funds |
305,170 | 306,282 | 1,217,322 | 1,214,840 | ||||||||||||
Total interest expense |
391,402 | 414,747 | 1,593,669 | 1,698,308 | ||||||||||||
Net interest income |
251,834 | 331,793 | 1,190,827 | 1,243,478 | ||||||||||||
Provision for Loan Losses |
45,000 | 45,000 | 195,000 | 137,500 | ||||||||||||
Net interest income after provision for loan losses |
206,834 | 286,793 | 995,827 | 1,105,978 | ||||||||||||
Non-Interest Income: |
||||||||||||||||
Service charges and other income |
2,713 | 2,192 | 10,369 | 9,399 | ||||||||||||
Gain on securities transactions, net |
60,214 | | 152,625 | 24,185 | ||||||||||||
Total non-interest income |
62,927 | 2,192 | 162,994 | 33,584 | ||||||||||||
Non-Interest Expense: |
||||||||||||||||
Compensation and employee benefits |
34,798 | 33,905 | 133,803 | 137,071 | ||||||||||||
Net occupancy expense |
8,143 | 8,010 | 32,689 | 32,270 | ||||||||||||
Federal deposit insurance assessment |
15,030 | 11,800 | 55,957 | 35,094 | ||||||||||||
FDIC special assessment |
| | | 21,098 | ||||||||||||
Other expense |
11,584 | 9,220 | 43,939 | 40,063 | ||||||||||||
Total non-interest expense |
69,555 | 62,935 | 266,388 | 265,596 | ||||||||||||
Income before income tax expense |
200,206 | 226,050 | 892,433 | 873,966 | ||||||||||||
Income tax expense |
79,045 | 89,474 | 355,227 | 346,722 | ||||||||||||
Net income |
$ | 121,161 | $ | 136,576 | $ | 537,206 | $ | 527,244 | ||||||||
Basic earnings per share |
$ | 0.25 | $ | 0.28 | $ | 1.09 | $ | 1.08 | ||||||||
Diluted earnings per share |
$ | 0.25 | $ | 0.28 | $ | 1.09 | $ | 1.07 | ||||||||
Weighted Average Number of Common Shares Outstanding: |
||||||||||||||||
Basic |
493,505,586 | 491,439,292 | 493,032,873 | 488,908,260 | ||||||||||||
Diluted |
494,146,907 | 492,231,761 | 494,314,390 | 491,295,511 |
Page 12
Hudson City Bancorp, Inc. and Subsidiary
Consolidated Average Balance Sheets
(Unaudited)
Consolidated Average Balance Sheets
(Unaudited)
For the Three Months Ended December 31, | ||||||||||||||||||||||||
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) |
$ | 30,913,700 | $ | 395,551 | 5.12 | % | $ | 30,997,843 | $ | 426,778 | 5.51 | % | ||||||||||||
Consumer and other loans |
334,216 | 4,471 | 5.35 | 366,953 | 5,047 | 5.50 | ||||||||||||||||||
Federal funds sold and other overnight deposits |
1,620,716 | 985 | 0.24 | 880,067 | 479 | 0.22 | ||||||||||||||||||
Mortgage-backed securities at amortized cost (4) |
20,988,617 | 191,144 | 3.64 | 19,693,013 | 240,451 | 4.88 | ||||||||||||||||||
Federal Home Loan Bank stock |
875,682 | 14,439 | 6.60 | 876,626 | 12,405 | 5.66 | ||||||||||||||||||
Investment securities, at amortized cost |
4,368,329 | 36,646 | 3.36 | 5,415,707 | 61,380 | 4.53 | ||||||||||||||||||
Total interest-earning assets |
59,101,260 | 643,236 | 4.35 | 58,230,209 | 746,540 | 5.13 | ||||||||||||||||||
Noninterest-earnings assets |
1,541,372 | 1,346,298 | ||||||||||||||||||||||
Total Assets |
$ | 60,642,632 | $ | 59,576,507 | ||||||||||||||||||||
Liabilities and Shareholders Equity: |
||||||||||||||||||||||||
Interest-bearing liabilities: |
||||||||||||||||||||||||
Savings accounts |
$ | 862,473 | 1,407 | 0.65 | $ | 774,812 | 1,460 | 0.75 | ||||||||||||||||
Interest-bearing transaction accounts |
2,283,511 | 4,547 | 0.79 | 1,958,061 | 7,444 | 1.51 | ||||||||||||||||||
Money market accounts |
5,498,997 | 13,573 | 0.98 | 4,905,054 | 18,445 | 1.49 | ||||||||||||||||||
Time deposits |
15,677,530 | 66,705 | 1.69 | 15,680,966 | 81,116 | 2.05 | ||||||||||||||||||
Total interest-bearing deposits |
24,322,511 | 86,232 | 1.41 | 23,318,893 | 108,465 | 1.85 | ||||||||||||||||||
Repurchase agreements |
14,880,978 | 153,458 | 4.09 | 15,100,000 | 154,524 | 4.06 | ||||||||||||||||||
Federal Home Loan Bank of New York advances |
14,875,000 | 151,712 | 4.05 | 14,915,761 | 151,758 | 4.04 | ||||||||||||||||||
Total borrowed funds |
29,755,978 | 305,170 | 4.07 | 30,015,761 | 306,282 | 4.05 | ||||||||||||||||||
Total interest-bearing liabilities |
54,078,489 | 391,402 | 2.87 | 53,334,654 | 414,747 | 3.09 | ||||||||||||||||||
Noninterest-bearing liabilities: |
||||||||||||||||||||||||
Noninterest-bearing deposits |
593,393 | 573,011 | ||||||||||||||||||||||
Other noninterest-bearing liabilities |
268,040 | 319,989 | ||||||||||||||||||||||
Total noninterest-bearing liabilities |
861,433 | 893,000 | ||||||||||||||||||||||
Total liabilities |
54,939,922 | 54,227,654 | ||||||||||||||||||||||
Shareholders equity |
5,702,710 | 5,348,853 | ||||||||||||||||||||||
Total Liabilities and Shareholders Equity |
$ | 60,642,632 | $ | 59,576,507 | ||||||||||||||||||||
Net interest income/net interest rate spread (2) |
$ | 251,834 | 1.48 | $ | 331,793 | 2.04 | ||||||||||||||||||
Net interest-earning assets/net interest margin (3) |
$ | 5,022,771 | 1.73 | % | $ | 4,895,555 | 2.30 | % | ||||||||||||||||
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 $218.0 million and $167.1 million for the quarters ended December 31, 2010 and 2009, respectively. |
Page 13
Hudson City Bancorp, Inc. and Subsidiary
Consolidated Average Balance Sheets
(Unaudited)
Consolidated Average Balance Sheets
(Unaudited)
For the Years Ended December 31, | ||||||||||||||||||||||||
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) |
$ | 31,395,378 | $ | 1,667,027 | 5.31 | % | $ | 30,126,469 | $ | 1,678,789 | 5.57 | % | ||||||||||||
Consumer and other loans |
346,166 | 18,409 | 5.32 | 381,029 | 21,676 | 5.69 | ||||||||||||||||||
Federal funds sold and other overnight deposits |
1,102,575 | 2,614 | 0.24 | 566,079 | 1,186 | 0.21 | ||||||||||||||||||
Mortgage-backed securities at amortized cost (4) |
20,557,582 | 851,595 | 4.14 | 19,604,600 | 983,658 | 5.02 | ||||||||||||||||||
Federal Home Loan Bank stock |
878,672 | 46,107 | 5.25 | 876,736 | 43,103 | 4.92 | ||||||||||||||||||
Investment securities, at amortized cost |
4,992,249 | 198,744 | 3.98 | 4,577,148 | 213,374 | 4.66 | ||||||||||||||||||
Total interest-earning assets |
59,272,622 | 2,784,496 | 4.70 | 56,132,061 | 2,941,786 | 5.24 | ||||||||||||||||||
Noninterest-earnings assets |
1,560,439 | 1,209,257 | ||||||||||||||||||||||
Total Assets |
$ | 60,833,061 | $ | 57,341,318 | ||||||||||||||||||||
Liabilities and Shareholders Equity: |
||||||||||||||||||||||||
Interest-bearing liabilities: |
||||||||||||||||||||||||
Savings accounts |
$ | 839,029 | 5,952 | 0.71 | $ | 749,439 | 5,640 | 0.75 | ||||||||||||||||
Interest-bearing transaction accounts |
2,323,618 | 23,996 | 1.03 | 1,789,361 | 31,903 | 1.78 | ||||||||||||||||||
Money market accounts |
5,217,815 | 54,949 | 1.05 | 3,823,116 | 69,008 | 1.81 | ||||||||||||||||||
Time deposits |
16,111,567 | 291,450 | 1.81 | 14,771,051 | 376,917 | 2.55 | ||||||||||||||||||
Total interest-bearing deposits |
24,492,029 | 376,347 | 1.54 | 21,132,967 | 483,468 | 2.29 | ||||||||||||||||||
Repurchase agreements |
15,034,110 | 616,488 | 4.10 | 15,100,221 | 611,776 | 4.05 | ||||||||||||||||||
Federal Home Loan Bank of New York advances |
14,875,000 | 600,834 | 4.04 | 15,035,798 | 603,064 | 4.01 | ||||||||||||||||||
Total borrowed funds |
29,909,110 | 1,217,322 | 4.07 | 30,136,019 | 1,214,840 | 4.03 | ||||||||||||||||||
Total interest-bearing liabilities |
54,401,139 | 1,593,669 | 2.93 | 51,268,986 | 1,698,308 | 3.31 | ||||||||||||||||||
Noninterest-bearing liabilities: |
||||||||||||||||||||||||
Noninterest-bearing deposits |
588,150 | 576,575 | ||||||||||||||||||||||
Other noninterest-bearing liabilities |
284,335 | 317,972 | ||||||||||||||||||||||
Total noninterest-bearing liabilities |
872,485 | 894,547 | ||||||||||||||||||||||
Total liabilities |
55,273,624 | 52,163,533 | ||||||||||||||||||||||
Shareholders equity |
5,559,437 | 5,177,785 | ||||||||||||||||||||||
Total Liabilities and Shareholders Equity |
$ | 60,833,061 | $ | 57,341,318 | ||||||||||||||||||||
Net interest income/net interest rate spread (2) |
$ | 1,190,827 | 1.77 | $ | 1,243,478 | 1.93 | ||||||||||||||||||
Net interest-earning assets/net interest margin (3) |
$ | 4,871,483 | 2.01 | % | $ | 4,863,075 | 2.22 | % | ||||||||||||||||
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 $297.1 million and $164.3 million for the years ended December 31, 2010 and 2009, respectively. |
Page 14
Hudson City Bancorp, Inc. and Subsidiary
Book Value Calculations
Book Value Calculations
December 31, | ||||
(In thousands, except share and per share amounts) | 2010 | |||
Shareholders equity |
$ | 5,510,238 | ||
Goodwill and other intangible assets |
(156,714 | ) | ||
Tangible Shareholders equity |
$ | 5,353,524 | ||
Book Value Share Computation: |
||||
Issued |
741,466,555 | |||
Treasury shares |
(214,748,245 | ) | ||
Shares outstanding |
526,718,310 | |||
Unallocated ESOP shares |
(32,714,280 | ) | ||
Unvested RRP shares |
(282,583 | ) | ||
Shares in trust |
(164,845 | ) | ||
Book value shares |
493,556,602 | |||
Book value per share |
$ | 11.16 | ||
Tangible book value per share |
$ | 10.85 | ||
Page 15
Hudson City Bancorp, Inc.
Other Financial Data
Other Financial Data
Securities Portfolio at December 31, 2010:
Amortized | Estimated | Unrealized | ||||||||||
Cost | Fair Value | Gain/(Loss) | ||||||||||
(dollars in thousands) | ||||||||||||
Held to Maturity: |
||||||||||||
Mortgage-backed securities: |
||||||||||||
FHLMC |
$ | 2,943,565 | $ | 3,091,813 | $ | 148,248 | ||||||
FNMA |
1,622,994 | 1,710,265 | 87,271 | |||||||||
FHLMC and FNMA CMOs |
1,248,926 | 1,295,740 | 46,814 | |||||||||
GNMA |
98,887 | 101,689 | 2,802 | |||||||||
Total mortgage-backed securities |
5,914,372 | 6,199,507 | 285,135 | |||||||||
Investment securities: |
||||||||||||
United States GSE debt |
3,939,006 | 3,867,488 | (71,518 | ) | ||||||||
Total investment securities |
3,939,006 | 3,867,488 | (71,518 | ) | ||||||||
Total held to maturity |
$ | 9,853,378 | $ | 10,066,995 | $ | 213,617 | ||||||
Available for sale: |
||||||||||||
Mortgage-backed securities: |
||||||||||||
FHLMC |
$ | 5,521,741 | $ | 5,619,172 | $ | 97,431 | ||||||
FNMA |
10,333,033 | 10,397,788 | 64,755 | |||||||||
FHLMC and FNMA CMOs |
509,755 | 523,095 | 13,340 | |||||||||
GNMA |
1,560,755 | 1,580,482 | 19,727 | |||||||||
Total mortgage-backed securities |
17,925,284 | 18,120,537 | 195,253 | |||||||||
Investment securities: |
||||||||||||
United States GSE debt |
80,000 | 82,647 | 2,647 | |||||||||
Equity securities |
6,767 | 7,148 | 381 | |||||||||
Total investment securities |
86,767 | 89,795 | 3,028 | |||||||||
Total available for sale |
$ | 18,012,051 | $ | 18,210,332 | $ | 198,281 | ||||||
Page 16
Hudson City Bancorp, Inc.
Other Financial Data
Other Financial Data
Loan Data at December 31, 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 |
$ | 787,572 | 2,121 | 2.55 | % | $ | 29,832,040 | 70,815 | 96.47 | % | ||||||||||||||
FHA/VA |
63,947 | 234 | 0.21 | % | 499,724 | 2,273 | 1.62 | % | ||||||||||||||||
PMI |
6,743 | 23 | 0.02 | % | 217,358 | 681 | 0.70 | % | ||||||||||||||||
Construction |
7,560 | 6 | 0.02 | % | 9,081 | 7 | 0.03 | % | ||||||||||||||||
Commercial |
1,117 | 4 | 0.00 | % | 48,067 | 95 | 0.16 | % | ||||||||||||||||
Total mortgage loans |
866,939 | 2,388 | 2.80 | % | 30,606,270 | 73,871 | 98.97 | % | ||||||||||||||||
Home equity loans |
3,289 | 34 | 0.01 | % | 298,363 | 7,805 | 0.96 | % | ||||||||||||||||
Other loans |
1,031 | 8 | 0.01 | % | 19,264 | 2,253 | 0.06 | % | ||||||||||||||||
Total |
$ | 871,259 | 2,430 | 2.82 | % | $ | 30,923,897 | 83,929 | 100.00 | % | ||||||||||||||
| Charge-offs amounted to $24.7 million for the fourth quarter of 2010 and $98.5 million for the year ended December 31, 2010. | ||
| 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 loans carrying value to the updated valuation less estimated selling costs. | ||
| Based on the valuation indices, house prices have declined in the New York metropolitan area, where 71.2% of our non-performing loans were located at December 31, 2010, by approximately 21% from the peak of the market in 2006 through October 2010 and by 31% nationwide during that period. For the first ten months of 2010, the house price indices decreased by 0.8% in the New York metropolitan area and 1.5% 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 December 31, 2010:
Carrying | Number Under | |||||||||||
Number | Value | Contract of Sale | ||||||||||
(dollars in thousands) | ||||||||||||
Foreclosed real estate |
127 | $ | 45,693 | 44 |
During 2010, we sold 71 foreclosed properties. Write-downs on foreclosed real estate and
net losses on the sale of foreclosed real estate amounted to $2.7 million for 2010.
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Hudson City Bancorp, Inc. and Subsidiary
Other Financial Data
(Unaudited)
Other Financial Data
(Unaudited)
At or for the Quarter Ended | ||||||||||||||||||||
Dec. 31, 2010 | Sept. 30, 2010 | June 30, 2010 | March 31, 2010 | Dec. 31, 2009 | ||||||||||||||||
(Dollars in thousands, except per share data) | ||||||||||||||||||||
Net interest income |
$ | 251,834 | $ | 290,334 | $ | 317,514 | $ | 331,145 | $ | 331,793 | ||||||||||
Provision for loan losses |
45,000 | 50,000 | 50,000 | 50,000 | 45,000 | |||||||||||||||
Non-interest income |
62,927 | 33,859 | 33,210 | 32,998 | 2,192 | |||||||||||||||
Non-interest expense: |
||||||||||||||||||||
Compensation and employee benefits |
34,798 | 32,054 | 32,789 | 34,162 | 33,905 | |||||||||||||||
Other non-interest expense |
34,757 | 33,652 | 31,807 | 32,369 | 29,030 | |||||||||||||||
Total non-interest expense |
69,555 | 65,706 | 64,596 | 66,531 | 62,935 | |||||||||||||||
Income before income tax expense |
200,206 | 208,487 | 236,128 | 247,612 | 226,050 | |||||||||||||||
Income tax expense |
79,045 | 83,918 | 93,537 | 98,727 | 89,474 | |||||||||||||||
Net income |
$ | 121,161 | $ | 124,569 | $ | 142,591 | $ | 148,885 | $ | 136,576 | ||||||||||
Total assets |
$ | 61,166,033 | $ | 60,616,632 | $ | 60,933,134 | $ | 61,231,651 | $ | 60,267,760 | ||||||||||
Loans, net |
30,773,956 | 31,626,561 | 32,062,829 | 32,012,852 | 31,721,154 | |||||||||||||||
Mortgage-backed securities |
||||||||||||||||||||
Available for sale |
18,120,537 | 14,961,441 | 13,825,644 | 12,662,490 | 11,116,531 | |||||||||||||||
Held to maturity |
5,914,372 | 6,777,579 | 7,619,996 | 9,110,956 | 9,963,554 | |||||||||||||||
Other securities |
||||||||||||||||||||
Available for sale |
89,795 | 90,797 | 366,937 | 457,538 | 1,095,240 | |||||||||||||||
Held to maturity |
3,939,006 | 4,939,922 | 5,139,794 | 4,887,949 | 4,187,704 | |||||||||||||||
Deposits |
25,173,126 | 24,914,621 | 25,168,465 | 25,388,800 | 24,578,048 | |||||||||||||||
Borrowings |
29,675,000 | 29,825,000 | 29,975,000 | 29,975,000 | 29,975,000 | |||||||||||||||
Shareholders equity |
5,510,238 | 5,622,770 | 5,543,256 | 5,396,077 | 5,339,152 | |||||||||||||||
Performance Data: |
||||||||||||||||||||
Return on average assets (1) |
0.80 | % | 0.82 | % | 0.93 | % | 0.98 | % | 0.92 | % | ||||||||||
Return on average equity (1) |
8.50 | % | 8.86 | % | 10.42 | % | 10.96 | % | 10.21 | % | ||||||||||
Net interest rate spread (1) |
1.48 | % | 1.73 | % | 1.89 | % | 1.97 | % | 2.04 | % | ||||||||||
Net interest margin (1) |
1.73 | % | 1.97 | % | 2.13 | % | 2.20 | % | 2.30 | % | ||||||||||
Non-interest expense to average assets (1) (4) |
0.46 | % | 0.43 | % | 0.43 | % | 0.44 | % | 0.42 | % | ||||||||||
Compensation and benefits to total revenue (5) |
11.06 | % | 9.89 | % | 9.35 | % | 9.38 | % | 10.15 | % | ||||||||||
Efficiency ratio (2) |
22.10 | % | 20.27 | % | 18.42 | % | 18.27 | % | 18.84 | % | ||||||||||
Dividend payout ratio |
60.00 | % | 60.00 | % | 51.72 | % | 50.00 | % | 53.57 | % | ||||||||||
Per Common Share Data: |
||||||||||||||||||||
Basic earnings per common share |
$ | 0.25 | $ | 0.25 | $ | 0.29 | $ | 0.30 | $ | 0.28 | ||||||||||
Diluted earnings per common share |
$ | 0.25 | $ | 0.25 | $ | 0.29 | $ | 0.30 | $ | 0.28 | ||||||||||
Book value per share (3) |
$ | 11.16 | $ | 11.40 | $ | 11.25 | $ | 10.96 | $ | 10.85 | ||||||||||
Tangible book value per share (3) |
$ | 10.85 | $ | 11.08 | $ | 10.93 | $ | 10.63 | $ | 10.53 | ||||||||||
Dividends per share |
$ | 0.15 | $ | 0.15 | $ | 0.15 | $ | 0.15 | $ | 0.15 | ||||||||||
Capital Ratios: |
||||||||||||||||||||
Equity to total assets (consolidated) |
9.01 | % | 9.28 | % | 9.10 | % | 8.81 | % | 8.86 | % | ||||||||||
Tier 1 leverage capital (Bank) |
7.95 | % | 7.91 | % | 7.75 | % | 7.60 | % | 7.59 | % | ||||||||||
Total risk-based capital (Bank) |
23.04 | % | 22.42 | % | 21.90 | % | 21.24 | % | 21.02 | % | ||||||||||
Other Data: |
||||||||||||||||||||
Full-time equivalent employees |
1,562 | 1,573 | 1,557 | 1,500 | 1,482 | |||||||||||||||
Number of branch offices |
135 | 135 | 134 | 131 | 131 | |||||||||||||||
Asset Quality Data: |
||||||||||||||||||||
Total non-performing loans |
$ | 871,259 | $ | 837,469 | $ | 790,137 | $ | 744,872 | $ | 627,695 | ||||||||||
Number of non-performing loans |
2,430 | 2,291 | 2,110 | 1,934 | 1,636 | |||||||||||||||
Total number of loans |
83,929 | 85,953 | 87,041 | 86,863 | 86,433 | |||||||||||||||
Total non-performing assets |
$ | 916,952 | $ | 877,745 | $ | 811,827 | $ | 764,435 | $ | 644,431 | ||||||||||
Non-performing loans to total loans |
2.82 | % | 2.64 | % | 2.46 | % | 2.32 | % | 1.98 | % | ||||||||||
Non-performing assets to total assets |
1.50 | % | 1.45 | % | 1.33 | % | 1.25 | % | 1.07 | % | ||||||||||
Allowance for loan losses |
$ | 236,574 | $ | 216,283 | $ | 192,983 | $ | 165,830 | $ | 140,074 | ||||||||||
Allowance for loan losses to non-performing loans |
27.15 | % | 25.83 | % | 24.42 | % | 22.26 | % | 22.32 | % | ||||||||||
Allowance for loan losses to total loans |
0.77 | % | 0.68 | % | 0.60 | % | 0.52 | % | 0.44 | % | ||||||||||
Provision for loan losses |
$ | 45,000 | $ | 50,000 | $ | 50,000 | $ | 50,000 | $ | 45,000 | ||||||||||
Net charge-offs |
$ | 24,709 | $ | 26,701 | $ | 22,846 | $ | 24,245 | $ | 19,758 | ||||||||||
Ratio of net charge-offs to average loans (1) |
0.32 | % | 0.33 | % | 0.29 | % | 0.30 | % | 0.25 | % | ||||||||||
Write-downs
and net losses (gains) on foreclosed real estate |
$ | 1,585 | $ | (391 | ) | $ | 173 | $ | 1,372 | $ | 325 | |||||||||
(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. |
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