HUDSON CITY BANCORP, INC. 
By PARAMUS, N.J., Jan. 19, 2011 /PRNewswire/ -- 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 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.
-- 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 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 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 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 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 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.
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.
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
Hudson City Bancorp, Inc. and Subsidiary
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
Hudson City Bancorp, Inc. and Subsidiary
Consolidated Statements of Income
(Unaudited)
For the Three
Months
-------------
Ended December 31,
------------------
2010 2009
---- ----
(In thousands, except per share data)
Interest and Dividend Income:
First mortgage loans $395,551 $426,778
Consumer and other loans 4,471 5,047
Mortgage-backed securities held
to maturity 70,795 125,337
Mortgage-backed securities
available for sale 120,349 115,114
Investment securities held to
maturity 35,526 41,661
Investment securities available
for sale 1,120 19,719
Dividends on Federal Home Loan
Bank of New York stock 14,439 12,405
Federal funds sold and other
overnight deposits 985 479
--- ---
Total interest and dividend
income 643,236 746,540
------- -------
Interest Expense:
Deposits 86,232 108,465
Borrowed funds 305,170 306,282
------- -------
Total interest expense 391,402 414,747
------- -------
Net interest income 251,834 331,793
Provision for Loan Losses 45,000 45,000
------ ------
Net interest income after
provision for loan losses 206,834 286,793
------- -------
Non-Interest Income:
Service charges and other income 2,713 2,192
Gain on securities transactions,
net 60,214 -
Total non-interest income 62,927 2,192
------ -----
Non-Interest Expense:
Compensation and employee
benefits 34,798 33,905
Net occupancy expense 8,143 8,010
Federal deposit insurance
assessment 15,030 11,800
FDIC special assessment - -
Other expense 11,584 9,220
------ -----
Total non-interest expense 69,555 62,935
------ ------
Income before income tax expense 200,206 226,050
Income tax expense 79,045 89,474
------ ------
Net income $121,161 $136,576
======== ========
Basic earnings per share $0.25 $0.28
===== =====
Diluted earnings per share $0.25 $0.28
===== =====
Weighted Average Number of Common
Shares Outstanding:
Basic 493,505,586 491,439,292
Diluted 494,146,907 492,231,761
For the Years
-------------
Ended December 31,
------------------
2010 2009
---- ----
(In thousands, except per share data)
Interest and Dividend Income:
First mortgage loans $1,667,027 $1,678,789
Consumer and other loans 18,409 21,676
Mortgage-backed securities held
to maturity 356,023 493,549
Mortgage-backed securities
available for sale 495,572 490,109
Investment securities held to
maturity 179,632 86,581
Investment securities available
for sale 19,112 126,793
Dividends on Federal Home Loan
Bank of New York stock 46,107 43,103
Federal funds sold and other
overnight deposits 2,614 1,186
----- -----
Total interest and dividend
income 2,784,496 2,941,786
--------- ---------
Interest Expense:
Deposits 376,347 483,468
Borrowed funds 1,217,322 1,214,840
--------- ---------
Total interest expense 1,593,669 1,698,308
--------- ---------
Net interest income 1,190,827 1,243,478
Provision for Loan Losses 195,000 137,500
------- -------
Net interest income after
provision for loan losses 995,827 1,105,978
------- ---------
Non-Interest Income:
Service charges and other income 10,369 9,399
Gain on securities transactions,
net 152,625 24,185
Total non-interest income 162,994 33,584
------- ------
Non-Interest Expense:
Compensation and employee
benefits 133,803 137,071
Net occupancy expense 32,689 32,270
Federal deposit insurance
assessment 55,957 35,094
FDIC special assessment - 21,098
Other expense 43,939 40,063
------ ------
Total non-interest expense 266,388 265,596
------- -------
Income before income tax expense 892,433 873,966
Income tax expense 355,227 346,722
------- -------
Net income $537,206 $527,244
======== ========
Basic earnings per share $1.09 $1.08
===== =====
Diluted earnings per share $1.09 $1.07
===== =====
Weighted Average Number of Common
Shares Outstanding:
Basic 493,032,873 488,908,260
Diluted 494,314,390 491,295,511
Hudson City Bancorp, Inc. and Subsidiary
Consolidated Average Balance Sheets
(Unaudited)
For the Three Months Ended December 31,
---------------------------------------
2010
----
Average
Average Yield/
Balance Interest Cost
------- -------- ----
(Dollars in thousands)
Assets:
-------
Interest-earnings
assets:
First mortgage loans,
net (1) $30,913,700 $395,551 5.12%
Consumer and other
loans 334,216 4,471 5.35
Federal funds sold and
other overnight
deposits 1,620,716 985 0.24
Mortgage-backed
securities at
amortized cost (4) 20,988,617 191,144 3.64
Federal Home Loan Bank
stock 875,682 14,439 6.60
Investment securities,
at amortized cost 4,368,329 36,646 3.36
--------- ------
Total interest-earning
assets 59,101,260 643,236 4.35
-------
Noninterest-earnings
assets 1,541,372
---------
Total Assets $60,642,632
===========
Liabilities and
Shareholders' Equity:
----------------------
Interest-bearing
liabilities:
Savings accounts $862,473 1,407 0.65
Interest-bearing
transaction accounts 2,283,511 4,547 0.79
Money market accounts 5,498,997 13,573 0.98
Time deposits 15,677,530 66,705 1.69
---------- ------
Total interest-bearing
deposits 24,322,511 86,232 1.41
---------- ------
Repurchase agreements 14,880,978 153,458 4.09
Federal Home Loan Bank
of New York advances 14,875,000 151,712 4.05
---------- -------
Total borrowed funds 29,755,978 305,170 4.07
---------- -------
Total interest-bearing
liabilities 54,078,489 391,402 2.87
---------- -------
Noninterest-bearing
liabilities:
Noninterest-bearing
deposits 593,393
Other noninterest-
bearing liabilities 268,040
-------
Total noninterest-
bearing liabilities 861,433
-------
Total liabilities 54,939,922
Shareholders' equity 5,702,710
---------
Total Liabilities and
Shareholders' Equity $60,642,632
===========
Net interest income/
net interest rate
spread (2) $251,834 1.48
========
Net interest-earning
assets/net interest
margin (3) $5,022,771 1.73%
==========
Ratio of interest-
earning assets to
interest-bearing
liabilities 1.09 x
For the Three Months Ended December 31,
---------------------------------------
2009
----
Average
Average Yield/
Balance Interest Cost
------- -------- ----
(Dollars in thousands)
Assets:
-------
Interest-earnings
assets:
First mortgage loans,
net (1) $30,997,843 $426,778 5.51%
Consumer and other
loans 366,953 5,047 5.50
Federal funds sold and
other overnight
deposits 880,067 479 0.22
Mortgage-backed
securities at
amortized cost (4) 19,693,013 240,451 4.88
Federal Home Loan Bank
stock 876,626 12,405 5.66
Investment securities,
at amortized cost 5,415,707 61,380 4.53
--------- ------
Total interest-earning
assets 58,230,209 746,540 5.13
-------
Noninterest-earnings
assets 1,346,298
---------
Total Assets $59,576,507
===========
Liabilities and
Shareholders' Equity:
----------------------
Interest-bearing
liabilities:
Savings accounts $774,812 1,460 0.75
Interest-bearing
transaction accounts 1,958,061 7,444 1.51
Money market accounts 4,905,054 18,445 1.49
Time deposits 15,680,966 81,116 2.05
---------- ------
Total interest-bearing
deposits 23,318,893 108,465 1.85
---------- -------
Repurchase agreements 15,100,000 154,524 4.06
Federal Home Loan Bank
of New York advances 14,915,761 151,758 4.04
---------- -------
Total borrowed funds 30,015,761 306,282 4.05
---------- -------
Total interest-bearing
liabilities 53,334,654 414,747 3.09
---------- -------
Noninterest-bearing
liabilities:
Noninterest-bearing
deposits 573,011
Other noninterest-
bearing liabilities 319,989
-------
Total noninterest-
bearing liabilities 893,000
-------
Total liabilities 54,227,654
Shareholders' equity 5,348,853
---------
Total Liabilities and
Shareholders' Equity $59,576,507
===========
Net interest income/
net interest rate
spread (2) $331,793 2.04
========
Net interest-earning
assets/net interest
margin (3) $4,895,555 2.30%
==========
Ratio of interest-
earning assets to
interest-bearing
liabilities 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.
Hudson City Bancorp, Inc. and Subsidiary
Consolidated Average Balance Sheets
(Unaudited)
For the Years Ended December 31,
--------------------------------
2010
----
Average
Average Yield/
Balance Interest Cost
------- -------- ----
(Dollars in thousands)
Assets:
-------
Interest-earnings
assets:
First mortgage loans,
net (1) $31,395,378 $1,667,027 5.31%
Consumer and other
loans 346,166 18,409 5.32
Federal funds sold
and other overnight
deposits 1,102,575 2,614 0.24
Mortgage-backed
securities at
amortized cost (4) 20,557,582 851,595 4.14
Federal Home Loan
Bank stock 878,672 46,107 5.25
Investment
securities, at
amortized cost 4,992,249 198,744 3.98
--------- -------
Total interest-
earning assets 59,272,622 2,784,496 4.70
---------
Noninterest-earnings
assets 1,560,439
---------
Total Assets $60,833,061
===========
Liabilities and
Shareholders'
Equity:
---------------
Interest-bearing
liabilities:
Savings accounts $839,029 5,952 0.71
Interest-bearing
transaction accounts 2,323,618 23,996 1.03
Money market accounts 5,217,815 54,949 1.05
Time deposits 16,111,567 291,450 1.81
---------- -------
Total interest-
bearing deposits 24,492,029 376,347 1.54
---------- -------
Repurchase agreements 15,034,110 616,488 4.10
Federal Home Loan
Bank of New York
advances 14,875,000 600,834 4.04
---------- -------
Total borrowed funds 29,909,110 1,217,322 4.07
---------- ---------
Total interest-
bearing liabilities 54,401,139 1,593,669 2.93
---------- ---------
Noninterest-bearing
liabilities:
Noninterest-bearing
deposits 588,150
Other noninterest-
bearing liabilities 284,335
-------
Total noninterest-
bearing liabilities 872,485
-------
Total liabilities 55,273,624
Shareholders' equity 5,559,437
---------
Total Liabilities and
Shareholders' Equity $60,833,061
===========
Net interest income/
net interest rate
spread (2) $1,190,827 1.77
==========
Net interest-earning
assets/net interest
margin (3) $4,871,483 2.01%
==========
Ratio of interest-
earning assets to
interest-bearing
liabilities 1.09 x
For the Years Ended December 31,
--------------------------------
2009
----
Average
Average Yield/
Balance Interest Cost
------- -------- ----
(Dollars in thousands)
Assets:
-------
Interest-earnings
assets:
First mortgage loans,
net (1) $30,126,469 $1,678,789 5.57%
Consumer and other
loans 381,029 21,676 5.69
Federal funds sold
and other overnight
deposits 566,079 1,186 0.21
Mortgage-backed
securities at
amortized cost (4) 19,604,600 983,658 5.02
Federal Home Loan
Bank stock 876,736 43,103 4.92
Investment
securities, at
amortized cost 4,577,148 213,374 4.66
--------- -------
Total interest-
earning assets 56,132,061 2,941,786 5.24
---------
Noninterest-earnings
assets 1,209,257
---------
Total Assets $57,341,318
===========
Liabilities and
Shareholders'
Equity:
---------------
Interest-bearing
liabilities:
Savings accounts $749,439 5,640 0.75
Interest-bearing
transaction accounts 1,789,361 31,903 1.78
Money market accounts 3,823,116 69,008 1.81
Time deposits 14,771,051 376,917 2.55
---------- -------
Total interest-
bearing deposits 21,132,967 483,468 2.29
---------- -------
Repurchase agreements 15,100,221 611,776 4.05
Federal Home Loan
Bank of New York
advances 15,035,798 603,064 4.01
---------- -------
Total borrowed funds 30,136,019 1,214,840 4.03
---------- ---------
Total interest-
bearing liabilities 51,268,986 1,698,308 3.31
---------- ---------
Noninterest-bearing
liabilities:
Noninterest-bearing
deposits 576,575
Other noninterest-
bearing liabilities 317,972
-------
Total noninterest-
bearing liabilities 894,547
-------
Total liabilities 52,163,533
Shareholders' equity 5,177,785
---------
Total Liabilities and
Shareholders' Equity $57,341,318
===========
Net interest income/
net interest rate
spread (2) $1,243,478 1.93
==========
Net interest-earning
assets/net interest
margin (3) $4,863,075 2.22%
==========
Ratio of interest-
earning assets to
interest-bearing
liabilities 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.
Hudson City Bancorp, Inc. and Subsidiary
Book Value Calculations
December 31,
2010
----
(In thousands, except share and
per share amounts)
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
======
Hudson City Bancorp, Inc.
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 CMO's 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 CMO's 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
=========== =========== ========
Hudson City Bancorp, Inc.
Other Financial Data
Loan Data at December 31, 2010:
Non-Performing Loans
--------------------
Loan Percent of
Total
Balance Number Loans
------- ------ ------
(dollars in thousands)
First Mortgage
Loans:
One- to four-
family $787,572 2,121 2.55%
FHA/VA 63,947 234 0.21%
PMI 6,743 23 0.02%
Construction 7,560 6 0.02%
Commercial 1,117 4 0.00%
----- --- ----
Total mortgage
loans 866,939 2,388 2.80%
Home equity loans 3,289 34 0.01%
Other loans 1,031 8 0.01%
Total $871,259 2,430 2.82%
======== ===== ====
Total Loans
-----------
Percent
Loan of
Total
Balance Number Loans
------- ------ ------
(dollars in thousands)
First Mortgage
Loans:
One- to four-
family $29,832,040 70,815 96.47%
FHA/VA 499,724 2,273 1.62%
PMI 217,358 681 0.70%
Construction 9,081 7 0.03%
Commercial 48,067 95 0.16%
------ --- ----
Total mortgage
loans 30,606,270 73,871 98.97%
Home equity loans 298,363 7,805 0.96%
Other loans 19,264 2,253 0.06%
Total $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
loan's 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:
Number
Carrying Under
Contract of
Number Value 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.
Hudson City Bancorp, Inc. and Subsidiary
Other Financial Data
(Unaudited)
At or for the Quarter Ended
---------------------------
Sept.
Dec. 31, 30, June 30,
2010 2010 2010
--------- ------ ---------
(Dollars in thousands, except per share data)
Net interest
income $251,834 $290,334 $317,514
Provision for
loan losses 45,000 50,000 50,000
Non-interest
income 62,927 33,859 33,210
Non-interest
expense:
Compensation and
employee
benefits 34,798 32,054 32,789
Other non-
interest expense 34,757 33,652 31,807
Total non-
interest expense 69,555 65,706 64,596
------ ------ ------
Income before
income tax
expense 200,206 208,487 236,128
Income tax
expense 79,045 83,918 93,537
Net income $121,161 $124,569 $142,591
======== ======== ========
Total assets $61,166,033 $60,616,632 $60,933,134
Loans, net 30,773,956 31,626,561 32,062,829
Mortgage-backed
securities
Available for
sale 18,120,537 14,961,441 13,825,644
Held to maturity 5,914,372 6,777,579 7,619,996
Other securities
Available for
sale 89,795 90,797 366,937
Held to maturity 3,939,006 4,939,922 5,139,794
Deposits 25,173,126 24,914,621 25,168,465
Borrowings 29,675,000 29,825,000 29,975,000
Shareholders'
equity 5,510,238 5,622,770 5,543,256
Performance Data:
Return on average
assets (1) 0.80% 0.82% 0.93%
Return on average
equity (1) 8.50% 8.86% 10.42%
Net interest rate
spread (1) 1.48% 1.73% 1.89%
Net interest
margin (1) 1.73% 1.97% 2.13%
Non-interest
expense to
average assets
(1) (4) 0.46% 0.43% 0.43%
Compensation and
benefits to
total revenue
(5) 11.06% 9.89% 9.35%
Efficiency ratio
(2) 22.10% 20.27% 18.42%
Dividend payout
ratio 60.00% 60.00% 51.72%
Per Common Share
Data:
Basic earnings
per common share $0.25 $0.25 $0.29
Diluted earnings
per common share $0.25 $0.25 $0.29
Book value per
share (3) $11.16 $11.40 $11.25
Tangible book
value per share
(3) $10.85 $11.08 $10.93
Dividends per
share $0.15 $0.15 $0.15
Capital Ratios:
Equity to total
assets
(consolidated) 9.01% 9.28% 9.10%
Tier 1 leverage
capital (Bank) 7.95% 7.91% 7.75%
Total risk-based
capital (Bank) 23.04% 22.42% 21.90%
---------------- ----- ----- -----
Other Data:
Full-time
equivalent
employees 1,562 1,573 1,557
Number of branch
offices 135 135 134
Asset Quality
Data:
Total non-
performing loans $871,259 $837,469 $790,137
Number of non-
performing loans 2,430 2,291 2,110
Total number of
loans 83,929 85,953 87,041
Total non-
performing
assets $916,952 $877,745 $811,827
Non-performing
loans to total
loans 2.82% 2.64% 2.46%
Non-performing
assets to total
assets 1.50% 1.45% 1.33%
Allowance for
loan losses $236,574 $216,283 $192,983
Allowance for
loan losses to
non-performing
loans 27.15% 25.83% 24.42%
Allowance for
loan losses to
total loans 0.77% 0.68% 0.60%
Provision for
loan losses $45,000 $50,000 $50,000
Net charge-offs $24,709 $26,701 $22,846
Ratio of net
charge-offs to
average loans
(1) 0.32% 0.33% 0.29%
Write-downs and
net losses
(gains) on
foreclosed
real estate $1,585 $(391) $173
----------- ------ ----- ----
At or for the Quarter Ended
---------------------------
March
31, Dec. 31,
2010 2009
------ ---------
(Dollars in thousands, except per share data)
Net interest income $331,145 $331,793
Provision for loan
losses 50,000 45,000
Non-interest income 32,998 2,192
Non-interest expense:
Compensation and
employee benefits 34,162 33,905
Other non-interest
expense 32,369 29,030
Total non-interest
expense 66,531 62,935
------ ------
Income before income
tax expense 247,612 226,050
Income tax expense 98,727 89,474
Net income $148,885 $136,576
======== ========
Total assets $61,231,651 $60,267,760
Loans, net 32,012,852 31,721,154
Mortgage-backed
securities
Available for sale 12,662,490 11,116,531
Held to maturity 9,110,956 9,963,554
Other securities
Available for sale 457,538 1,095,240
Held to maturity 4,887,949 4,187,704
Deposits 25,388,800 24,578,048
Borrowings 29,975,000 29,975,000
Shareholders' equity 5,396,077 5,339,152
Performance Data:
Return on average
assets (1) 0.98% 0.92%
Return on average
equity (1) 10.96% 10.21%
Net interest rate
spread (1) 1.97% 2.04%
Net interest margin
(1) 2.20% 2.30%
Non-interest expense
to average assets
(1) (4) 0.44% 0.42%
Compensation and
benefits to total
revenue (5) 9.38% 10.15%
Efficiency ratio (2) 18.27% 18.84%
Dividend payout ratio 50.00% 53.57%
Per Common Share
Data:
Basic earnings per
common share $0.30 $0.28
Diluted earnings per
common share $0.30 $0.28
Book value per share
(3) $10.96 $10.85
Tangible book value
per share (3) $10.63 $10.53
Dividends per share $0.15 $0.15
Capital Ratios:
Equity to total
assets
(consolidated) 8.81% 8.86%
Tier 1 leverage
capital (Bank) 7.60% 7.59%
Total risk-based
capital (Bank) 21.24% 21.02%
---------------- ----- -----
Other Data:
Full-time equivalent
employees 1,500 1,482
Number of branch
offices 131 131
Asset Quality Data:
Total non-performing
loans $744,872 $627,695
Number of non-
performing loans 1,934 1,636
Total number of loans 86,863 86,433
Total non-performing
assets $764,435 $644,431
Non-performing loans
to total loans 2.32% 1.98%
Non-performing
assets to total
assets 1.25% 1.07%
Allowance for loan
losses $165,830 $140,074
Allowance for loan
losses to non-
performing loans 22.26% 22.32%
Allowance for loan
losses to total
loans 0.52% 0.44%
Provision for loan
losses $50,000 $45,000
Net charge-offs $24,245 $19,758
Ratio of net charge-
offs to average
loans (1) 0.30% 0.25%
Write-downs and net
losses (gains) on
foreclosed
real estate $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.
SOURCE Hudson City Bancorp, Inc.
