Hudson City Bancorp, Inc. Reports Record Annual Earnings of $527.2 Million
FOURTH QUARTER EPS INCREASED 12.0%
TOTAL ASSETS SURPASS $60 BILLION
PARAMUS, N.J., Jan. 20 /PRNewswire-FirstCall/ -- Hudson City Bancorp, Inc. (Nasdaq: HCBK), the holding company for Hudson City Savings Bank, reported today that net income for the fourth quarter of 2009 increased 9.9% to $136.6 million as compared to $124.3 million for the fourth quarter of 2008. Diluted earnings per share increased 12.0% to $0.28 for the fourth quarter of 2009 as compared to $0.25 for the fourth quarter of 2008. For the year ended December 31, 2009, net income increased 18.3% to $527.2 million as compared to $445.6 million for 2008. Diluted earnings per share increased 18.9% to $1.07 for the year ended December 31, 2009 as compared to $0.90 for 2008. Net interest margin widened to 2.30% for the fourth quarter of 2009 as compared to 2.02% for the fourth quarter of 2008. The Board of Directors declared a quarterly cash dividend of $0.15 per share payable on March 2, 2010 to shareholders of record on February 5, 2010.
Ronald E. Hermance, Jr., Chairman, President and Chief Executive Officer commented, "While many financial institutions continued to struggle in these difficult times, Hudson City achieved record earnings for the quarter and the year despite the recession. Earnings for 2009 of $527.2 million marked our 11th consecutive year of earnings growth since our 1999 public offering. Net income increased despite significant increases in FDIC insurance premiums and in the provision for loan losses. The secret to our success is no secret at all – at Hudson City, whether you are a customer or shareholder, "what you see is what you get". It is becoming more difficult to distinguish a traditional bank from an investment bank. Hudson City's financial performance did not come from financial engineering products such as hedges or derivatives. It did not come from investment banking fees or trading operations. It did not come from "restructuring" or "reinventing" ourselves. It came from making residential first mortgages, which we keep on our books, and funding our 2009 growth with deposits. In fact, during 2009 we increased our market share in 96% of our branch locations and we grew deposits by $6.1 billion – a record for Hudson City. Our strength comes from an industry-leading efficiency ratio and our commitment to basic lending and banking principles. Our efficiency ratio was 18.8% in the fourth quarter. One component of our efficiency is the ratio of compensation and benefits to total revenue, which is the total of net interest income and non-interest income. This ratio is 10.2% for Hudson City as compared to an average of 30.0% for banks and thrifts with assets greater than $50 billion. Our low efficiency ratio provides us with the flexibility to offer very competitive rates for both loans and deposits."
Mr. Hermance continued, "With all of the good news to report about Hudson City during 2009, there is no escaping that the economic recession of 2009 affected our asset quality. Non-performing loans amounted to $627.7 million at December 31, 2009 as compared to $217.6 million at December 31, 2008. Accordingly, we increased our allowance for loan losses during 2009 to $140.1 million at December 31, 2009 from $49.8 million at December 31, 2008. Our provision for loan losses during 2009 was $137.5 million and our net charge-offs were $47.2 million. Since our primary loan products are residential first mortgage loans, rising unemployment rates affect our borrowers' ability to make loan payments. Compounding the difficulties associated with rising unemployment, weak housing markets make it difficult to sell homes and declining house prices diminish a borrower's equity. However, our loan products and underwriting standards have resulted in a first mortgage loan portfolio with an average loan-to-value ratio of 61% using appraised values at the time of origination, which generally speaking have increased since origination. This has moderated the level of charge-offs required as loans become non-performing. While charge-offs have increased, they have not been large enough to jeopardize our earnings growth."
Mr. Hermance continued, "As we consider what 2010 may hold for us, we look forward to improving financial and housing markets and improving economic conditions overall. We believe we are well-positioned for this. In December, we filed a shelf registration statement on Form S-3 with the Securities and Exchange Commission. The shelf registration statement will allow the Company to issue and sell common stock, preferred stock, or other types of debt or equity securities in one or more future offerings in amounts that will be determined at the time of the offerings. The shelf registration enables us to easily access the capital markets to support organic growth and should an opportunistic transaction arise."
Financial highlights for the fourth quarter of 2009 are as follows:
- Basic and diluted earnings per share were both $0.28 for the fourth quarter of 2009 as compared to $0.25 for both basic and diluted earnings per share for the fourth quarter of 2008. Basic and diluted earnings per share were $1.08 and $1.07, respectively for 2009 as compared to $0.92 and $0.90, respectively for 2008.
- The Board of Directors declared a quarterly cash dividend of $0.15 per share payable on March 2, 2010 to shareholders of record at the close of business on February 5, 2010.
- Net income amounted to $136.6 million for the fourth quarter of 2009, as compared to $124.3 million for the fourth quarter of 2008, an increase of 9.9%. For the year ended December 31, 2009, net income amounted to $527.2 million as compared to $445.6 million for 2008, an increase of 18.3%.
- Net interest income increased 27.4% to $331.8 million for the fourth quarter of 2009 as compared to $260.5 million for the fourth quarter of 2008 and 32.0% to $1.24 billion for the year ended December 31, 2009 as compared to $942.0 million for 2008.
- The provision for loan losses amounted to $45.0 million for the fourth quarter of 2009 as compared to $9.0 million for the fourth quarter of 2008. For the year ended December 31, 2009, the provision for loan losses amounted to $137.5 million as compared to $19.5 million for 2008.
- Our annualized return on average assets and annualized return on average shareholders' equity for the fourth quarter of 2009 were 0.92% and 10.21%, respectively. Our return on average assets and return on average shareholders' equity for the year ended December 31, 2009 were 0.92% and 10.18%, respectively.
- Our net interest rate spread and net interest margin were 2.02% and 2.30%, respectively, for the fourth quarter of 2009 and 1.92% and 2.21%, respectively, for 2009.
- Our efficiency ratio was 18.84% for the fourth quarter of 2009 and 20.80% for 2009.
- Our loan production was $9.22 billion for the year ended December 31, 2009, which resulted in a net increase of $2.36 billion in total loans to $31.78 billion at December 31, 2009 from $29.42 billion at December 31, 2008.
- Deposits increased $6.12 billion, or 33.2%, to $24.58 billion at December 31, 2009 from $18.46 billion at December 31, 2008.
- Borrowed funds decreased $250.0 million to $29.98 billion at December 31, 2009 from $30.23 billion at December 31, 2008.
Statement of Financial Condition Summary
Total assets increased $6.12 billion, or 11.3%, to $60.27 billion at December 31, 2009 from $54.15 billion at December 31, 2008. The increase in total assets reflected a $2.28 billion increase in loans, a $1.82 billion increase in investment securities, and a $1.59 billion increase in total mortgage-backed securities.
The increase in loans reflected our focus on loan portfolio growth through the origination of one- to four-family first mortgage loans in New Jersey, New York and Connecticut, as well as our continued loan purchase activity. For 2009, we originated $6.06 billion and purchased $3.16 billion of loans, compared to originations of $5.04 billion and purchases of $3.06 billion for 2008. The origination and purchases of loans were partially offset by principal repayments of $6.77 billion for 2009 as compared to $2.82 billion for 2008. Loan originations have increased primarily due to our competitive rates and an increase in mortgage refinancing caused by market interest rates that are at near-historic lows. The increase in refinancing activity occurring in the marketplace has also caused the increase in principal repayments during 2009.
Total investment securities increased $1.82 billion during 2009. The increase in investment securities is primarily due to purchases of $5.87 billion, partially offset by calls of investment securities of $4.02 billion. Total mortgage-backed securities increased $1.59 billion during 2009, reflecting purchases of $6.87 billion of variable-rate mortgage-backed securities and collateralized mortgage obligations ("CMOs"), all of which were issued by U.S. government-sponsored enterprises ("GSEs"). The increase was partially offset by repayments of $4.73 billion and sales of $761.6 million. The sales of the mortgage-backed securities, which occurred in the second quarter, resulted in a net gain of $24.0 million. We used the proceeds from the securities sales to fund the purchase of first mortgage loans. We decided to use securities sales as a funding source because the yields on the purchased loans were similar to those of the securities sold and we believe that if we held the securities, the unrealized gains would diminish since prepayment speeds are relatively high. There are no securities for which the Company currently believes it is not probable that it will collect all amounts due according to the contractual terms of the security.
Total liabilities increased $5.72 billion, or 11.6%, to $54.93 billion at December 31, 2009 from $49.21 billion at December 31, 2008. The increase in total liabilities primarily reflected a $6.12 billion increase in deposits, partially offset by a $250.0 million decrease in borrowed funds. The increase in total deposits reflected a $3.12 billion increase in our time deposits, a $2.34 billion increase in our money market checking accounts and a $575.5 million increase in our interest-bearing transaction accounts and savings accounts. The decrease in borrowed funds was the result of repayments of $1.00 billion with a weighted average rate of 1.62% largely offset by $750.0 million of new borrowings at a weighted-average rate of 1.69%. During 2009, we modified $1.73 billion of borrowings to extend the call dates of the borrowings by between three and four years, thereby reducing our interest rate risk. Due to brokers amounted to $100.0 million as compared to $239.1 million at December 31, 2008. Due to brokers at December 31, 2009 represents securities purchased in the fourth quarter of 2009 with settlement dates in the first quarter of 2010.
Total shareholders' equity increased $400.4 million to $5.34 billion at December 31, 2009 from $4.94 billion at December 31, 2008. The increase was primarily due to net income of $527.2 million for the year ended December 31, 2009 and a $136.9 million increase in accumulated other comprehensive income primarily due to an increase in the net unrealized gain on securities available-for-sale. These increases to shareholders' equity were partially offset by cash dividends paid to common shareholders of $288.4 million and repurchases of our common stock of $43.5 million. At December 31, 2009, our shareholders' equity to asset ratio was 8.86% and our tangible book value per share was $10.53.
The accumulated other comprehensive income of $184.5 million at December 31, 2009 includes a $205.8 million after-tax net unrealized gain on securities available for sale ($347.9 million pre-tax) partially offset by a $21.3 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 Federal Reserve Bank (the "FOMC") noted that economic activity has continued to improve during the fourth quarter of 2009. The FOMC also noted that the housing sector has shown signs of improvement. However, the national unemployment rate increased to 10.0% in December 2009 as compared to 9.8% in September 2009 and 7.4% in December 2008. Lower household wealth and tight credit conditions in addition to the increase in the national unemployment rate has resulted in the FOMC maintaining the overnight lending rate at zero to 0.25% during the fourth quarter of 2009. As a result, short-term market interest rates have remained at low levels during the fourth quarter of 2009. This allowed us to continue to re-price our short-term deposits thereby reducing our cost of funds. While longer-term market interest rates increased during the fourth quarter of 2009, rates on mortgage-related assets have declined slightly, although to a lesser extent than the decline in our cost of funds. As a result, our net interest rate spread and net interest margin increased for the fourth quarter and full year of 2009 from the three and twelve-month periods ended December 31, 2008.
Net interest income increased $71.3 million, or 27.4%, to $331.8 million for the fourth quarter of 2009 as compared to $260.5 million for the fourth quarter of 2008. During the fourth quarter of 2009, our net interest rate spread increased 35 basis points to 2.02%, as compared to 1.67% for the same quarter in 2008. Our net interest margin increased 28 basis points to 2.30% as compared to 2.02% for the fourth quarter of 2008. Net interest income increased $301.5 million, or 32.0%, to $1.24 billion for 2009 as compared to $942.0 million for 2008. During 2009, our net interest rate spread increased 35 basis points to 1.92% and our net interest margin increased 25 basis points to 2.21% as compared to 2008.
Total interest and dividend income for the fourth quarter of 2009 increased $34.5 million, or 4.9%, to $746.5 million as compared to $712.0 million for the fourth quarter of 2008. The increase in total interest and dividend income was primarily due to a $6.42 billion, or 12.4%, increase in the average balance of total interest-earning assets to $58.40 billion for the fourth quarter of 2009 as compared to $51.98 billion for the fourth quarter of 2008. The increase in the average balance of total interest-earning assets was partially offset by a decrease of 37 basis points in the annualized weighted-average yield to 5.11% for the quarter ended December 31, 2009 from 5.48% for the same quarter in 2008.
Total interest and dividend income for the year ended December 31, 2009 increased $288.6 million, or 10.9%, to $2.94 billion as compared to $2.65 billion for the year ended December 31, 2008. The increase in total interest and dividend income was primarily due to an $8.20 billion, or 17.0%, increase in the average balance of total interest-earning assets to $56.30 billion for the year ended December 31, 2009 as compared to $48.10 billion for 2008. The increase in the average balance of total interest-earning assets was partially offset by a decrease of 29 basis points in the weighted-average yield on total interest-earning assets to 5.23% for the year ended December 31, 2009 from 5.52% for 2008.
Interest and fees on mortgage loans increased $13.4 million to $426.8 million for the fourth quarter of 2009 as compared to $413.4 million for the same period in 2008. This was primarily due to a $2.44 billion increase in the average balance of first mortgage loans, reflecting our continued emphasis on the growth of our mortgage loan portfolio. The increase in the average balance of first mortgage loans was partially offset by a 28 basis point decrease in the weighted-average yield to 5.51% from 5.79% for the 2008 fourth quarter.
For the year ended December 31, 2009, interest and fees on mortgage loans increased $155.3 million to $1.68 billion as compared to $1.52 billion for the year ended December 31, 2008 primarily due to a $3.75 billion increase in the average balance of first mortgage loans to $30.13 billion as compared to $26.38 billion 2008. The increase in the average balance of first mortgage loans was partially offset by a decrease of 21 basis points in the weighted-average yield to 5.57% for 2009 as compared to 5.78% for 2008.
Interest on mortgage-backed securities decreased $2.3 million to $240.5 million for the fourth quarter of 2009 as compared to $242.8 million for the fourth quarter of 2008. This decrease was due primarily to a 37 basis point decrease in the weighted-average yield to 4.84% for the fourth quarter of 2009 from 5.21% for the fourth quarter of 2008. The decrease in the weighted-average yield was partially offset by a $1.24 billion increase in the average balance of mortgage-backed securities to $19.86 billion during the fourth quarter of 2009 as compared to $18.62 billion for the fourth quarter of 2008.
Interest on mortgage-backed securities increased $108.7 million to $983.7 million for the year ended December 31, 2009 as compared to $875.0 million for the year ended December 31, 2008. This increase was due primarily to a $3.08 billion increase in the average balance of mortgage-backed securities to $19.77 billion during 2009 as compared to $16.69 billion for 2008, partially offset by a 26 basis point decrease in the weighted-average yield to 4.98% for 2009 as compared to 5.24% for 2008.
The increases in the average balances of mortgage-backed securities provide us with a source of cash flow from monthly principal and interest payments. The decrease in the weighted average yield on mortgage-backed securities is a result of lower yields on securities purchased during the second half of 2008 and for 2009 when market interest rates were lower than the yield earned on the existing portfolio.
Interest on investment securities increased $19.3 million to $61.4 million for the fourth quarter of 2009 as compared to $42.1 million for the same period in 2008. This increase was due primarily to a $2.01 billion increase in the average balance of investment securities to $5.42 billion for the fourth quarter of 2009 from $3.41 billion for the fourth quarter of 2008. The impact on interest income from the increase in the average balance of investment securities was partially offset by a decrease in the average yield of investment securities of 41 basis points to 4.53%.
Interest on investment securities increased $37.2 million to $213.4 million for 2009 as compared to $176.2 million for 2008. This increase was due primarily to a $974.9 million increase in the average balance of investment securities to $4.58 billion for 2009 from $3.60 billion for 2008. The impact on interest income from the increase in the average balance of investment securities was partially offset by a decrease in the average yield of investment securities of 23 basis points to 4.66%.
Dividends on Federal Home Loan Bank of New York ("FHLB") stock increased $5.1 million, or 69.9%, to $12.4 million for the fourth quarter of 2009 as compared to $7.3 million for the fourth quarter of 2008. This increase was due primarily to a 221 basis point increase in the average yield earned to 5.66% as compared to 3.45% for the fourth quarter of 2008. The increase in dividend income was also due to a $31.5 million increase in the average balance to $876.6 million for the fourth quarter of 2009 as compared to $845.1 million for the same period in 2008.
Dividends on FHLB stock decreased $4.9 million, or 10.2%, to $43.1 million for 2009 as compared to $48.0 million for 2008. This decrease was due primarily to a 115 basis point decrease in the average yield earned to 4.92% as compared to 6.07% for the year ended December 31, 2008. The decrease in the average yield earned was partially offset by an $86.4 million increase in the average balance to $876.7 million for 2009 as compared to $790.3 million for 2008.
Total interest expense for the quarter ended December 31, 2009 decreased $36.8 million, or 8.2%, to $414.7 million as compared to $451.5 million for the quarter ended December 31, 2008. This decrease was primarily due to a 72 basis point decrease in the weighted-average cost of total interest-bearing liabilities to 3.09% for the quarter ended December 31, 2009 compared with 3.81% for the quarter ended December 31, 2008. The decrease was partially offset by a $6.24 billion, or 13.3%, increase in the average balance of total interest-bearing liabilities to $53.33 billion for the quarter ended December 31, 2009 compared with $47.09 billion for the fourth quarter of 2008. This increase in interest-bearing liabilities was primarily used to fund asset growth.
Total interest expense for the year ended December 31, 2009 decreased $12.9 million to $1.70 billion as compared to $1.71 billion for the year ended December 31, 2008. This decrease was primarily due to a 64 basis point decrease in the weighted-average cost of total interest-bearing liabilities to 3.31% for the year ended December 31, 2009 compared with 3.95% for the year ended December 31, 2008. The decrease was partially offset by a $7.99 billion, or 18.5%, increase in the average balance of total interest-bearing liabilities to $51.27 billion for the year ended December 31, 2009 as compared to $43.28 billion for 2008.
Interest expense on deposits decreased $39.5 million, or 26.7%, to $108.5 million for the fourth quarter of 2009 as compared to $148.0 million for the fourth quarter of 2008. This decrease is due primarily to a decrease in the average cost of interest-bearing deposits of 154 basis points to 1.85% for the fourth quarter of 2009 as compared to 3.39% for the fourth quarter of 2008. The decrease was partially offset by a $5.95 billion increase in the average balance of interest-bearing deposits to $23.32 billion during the fourth quarter of 2009 as compared to $17.37 billion for the fourth quarter of 2008.
For the year ended December 31, 2009, interest expense on deposits decreased $97.9 million to $483.5 million as compared to $581.4 million for the year ended December 31, 2008. This decrease is due primarily to a 133 basis point decrease in the average cost of deposits to 2.29% for the year ended December 31, 2009 as compared to 3.62% for 2008. This decrease was partially offset by a $5.05 billion increase in the average balance of interest-bearing deposits to $21.13 billion during 2009 as compared to $16.08 billion for 2008.
The increases in the average balances of interest-bearing deposits reflect our plan to expand our branch network and to grow deposits in our existing branches by offering competitive rates. Also, in response to the economic recession, we believe that households have increased their personal savings and customers have 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. The decrease in the average cost of deposits for 2009 reflected lower market interest rates. At December 31, 2009, time deposits scheduled to mature within one year totaled $13.08 billion with an average cost of 1.87%. These time deposits are scheduled to mature as follows: $6.11 billion with an average cost of 1.86% in the first quarter of 2010, $4.53 billion with an average cost of 1.86% in the second quarter of 2010, $1.51 billion with an average cost of 1.98% in the third quarter of 2010 and $930.4 million with an average cost of 1.84% in the fourth quarter of 2010. The current rates for our six month and one year time deposits are 1.35% and 1.55%, respectively. 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.
Interest expense on borrowed funds increased $2.8 million to $306.3 million for the fourth quarter of 2009 as compared to $303.5 million for the fourth quarter of 2008. This was primarily due to a $300.9 million increase in the average balance of borrowed funds to $30.02 billion for the fourth quarter of 2009 as compared to $29.71 billion for the fourth quarter of 2008. The weighted-average cost of borrowed funds amounted to 4.05%.
Interest expense on borrowed funds increased $84.9 million to $1.21 billion for the year ended December 31, 2009 as compared to $1.13 billion for the year ended December 31, 2008. This was primarily due to a $2.94 billion increase in the average balance of borrowed funds to $30.14 billion, partially offset by a 12 basis point decrease in the weighted-average cost of borrowed funds to 4.03% for 2009.
We have historically used borrowings to fund a portion of the growth in interest-earning assets. However, we have been able to fund substantially all of our growth in 2009 with deposits. We anticipate that we will be able to continue to use deposit growth to fund our asset growth, however, we may use borrowings as a supplemental funding source if deposit growth decreases. The decrease in the average cost of borrowings for 2009 reflected new borrowings in 2009 and 2008, when market interest rates were lower than existing borrowings and borrowings that matured. Substantially all of our borrowings are callable quarterly at the discretion of the lender after an initial non-call 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 called will not increase substantially unless interest rates were to increase by at least 300 basis points. During 2009, we modified $1.73 billion of borrowings to extend the call dates of the borrowings by between three and four years, thereby reducing our interest rate risk.
The provision for loan losses amounted to $45.0 million for the quarter ended December 31, 2009 as compared to $9.0 million for the quarter ended December 31, 2008. For the year ended December 31, 2009, the provision for loan losses amounted to $137.5 million as compared to $19.5 million for the year ended December 31, 2008. The increase in the provision for loan losses was due primarily to an increase in non-performing loans and rising levels of unemployment during 2009. Non-performing loans, defined as non-accruing loans and accruing loans delinquent 90 days or more, amounted to $627.7 million at December 31, 2009 compared with $217.6 million at December 31, 2008. The ratio of non-performing loans to total loans was 1.98% at December 31, 2009 compared with 0.74% at December 31, 2008. The allowance for loan losses amounted to $140.1 million and $49.8 million at December 31, 2009 and December 31, 2008, respectively. The allowance for loan losses as a percent of total loans and as a percent of non-performing loans was 0.44% and 22.32%, respectively at December 31, 2009, as compared to 0.17% and 22.89%, respectively at December 31, 2008.
Net charge-offs amounted to $19.8 million for the quarter ended December 31, 2009 as compared to net charge-offs of $1.8 million for the same quarter in 2008. For the year ended December 31, 2009, net charge-offs amounted to $47.2 million as compared to $4.4 million of net charge-offs for 2008. These charge-offs were primarily due to the results of our reappraisal process for our non-performing residential first mortgage loans and include $1.7 million and $7.4 million in charge-offs for the quarter and year ended December 31, 2009, respectively, for loans that were transferred to foreclosed real estate. We generally obtain new collateral values for loans on or before 180 days of delinquency. If the estimated fair value of the collateral (less estimated selling costs) is less than the recorded investment in the loan, we charge-off an amount to reduce the loan to the fair value of the collateral less estimated selling costs. As a result, certain losses inherent in our non-performing loans are being recognized as charge-offs which may result in a lower ratio of the allowance for loan losses to non-performing loans, particularly when accompanied by a concurrent increase in total non-performing loans (i.e. due to the addition of new non-performing loans).
Total non-interest income was $2.2 million for the fourth quarter 2009 as compared to $2.0 million for the same quarter in 2008. Total non-interest income for the year ended December 31, 2009 was $33.6 million compared with $8.5 million for 2008. 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. Proceeds from the securities sale were primarily used to fund the purchase of first mortgage loans during the second quarter of 2009.
Total non-interest expense increased $10.6 million, or 20.3%, to $62.9 million for the fourth quarter of 2009 from $52.3 million for the fourth quarter of 2008. The increase is primarily due to increases of $9.3 million in Federal deposit insurance expense and $1.6 million increase in compensation and employee benefits expense. The increase in Federal deposit insurance expense is due primarily to 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 compensation and employee benefits expense included a $672,000 increase in pension costs, a $446,000 increase in costs related to our health plan and a $527,000 increase in expense related to our stock benefit plans. At December 31, 2009, we had 1,482 full-time equivalent employees as compared to 1,451 at December 31, 2008. Included in other non-interest expense for the fourth quarter of 2009 were write-downs on foreclosed real estate and net losses on the sale of foreclosed real estate of $325,000 as compared to $218,000 for the fourth quarter of 2008.
Total non-interest expense for the year ended December 31, 2009 was $265.6 million as compared to $198.1 million during 2008. The increase is primarily due to the FDIC special assessment of $21.1 million, a $30.8 million increase in Federal deposit insurance expense, a $9.9 million increase in compensation and employee benefits expense, and a $4.0 million increase in other non-interest expense. The special assessment and the increase in our deposit assessment rate were the result of the restoration plan implemented by the FDIC to recapitalize the Deposit Insurance Fund. The increase in compensation and employee benefits expense included a $6.0 million increase in compensation costs, due primarily to normal increases in salary as well as additional full time employees, a $3.3 million increase in pension costs and a $3.4 million increase in costs related to our health plan. These increases were partially offset by a $2.8 million decrease in expenses related to our stock benefit plans. This decrease was due primarily to a decrease in ESOP expense as a result of changes in the price of our common stock during 2009. Included in other non-interest expense for the year ended December 31, 2009 were write-downs on foreclosed real estate and net losses on the sale of foreclosed real estate, of $2.4 million as compared to $1.3 million for 2008.
Our efficiency ratio was 18.84% for the 2009 fourth quarter as compared to 19.91% for the 2008 fourth quarter. For the year ended December 31, 2009, our efficiency ratio was 20.80% compared with 20.84% for 2008. 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 2009 was 0.42% as compared to 0.40% for the fourth quarter of 2008. Our ratio of non-interest expense to average total assets for the year ended December 31, 2009 was 0.46% compared with 0.41% for 2008.
Income tax expense amounted to $89.5 million for the three months ended December 31, 2009 compared with $76.9 million for the corresponding period in 2008. Our effective tax rate for the fourth quarter of 2009 was 39.58% compared with 38.23% for the fourth quarter of 2008. Income tax expense for the year ended December 31, 2009 was $346.7 million compared with $287.3 million for 2008. Our effective tax rate for the year ended December 31, 2009 was 39.67% compared with 39.21% for the year ended December 31, 2008.
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 131 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, |
||||||
2009 |
2008 |
||||||
(In thousands, except share and per share amounts) |
(unaudited) |
||||||
Assets: |
|||||||
Cash and due from banks |
$ 198,752 |
$ 184,915 |
|||||
Federal funds sold and other overnight deposits |
362,449 |
76,896 |
|||||
Total cash and cash equivalents |
561,201 |
261,811 |
|||||
Securities available for sale: |
|||||||
Mortgage-backed securities |
11,116,531 |
9,915,554 |
|||||
Investment securities |
1,095,240 |
3,413,633 |
|||||
Securities held to maturity: |
|||||||
Mortgage-backed securities |
9,963,554 |
9,572,257 |
|||||
Investment securities |
4,187,704 |
50,086 |
|||||
Total securities |
26,363,029 |
22,951,530 |
|||||
Loans |
31,779,921 |
29,418,888 |
|||||
Net deferred loan costs |
81,307 |
71,670 |
|||||
Allowance for loan losses |
(140,074) |
(49,797) |
|||||
Net loans |
31,721,154 |
29,440,761 |
|||||
Federal Home Loan Bank of New York stock |
874,768 |
865,570 |
|||||
Foreclosed real estate, net |
16,736 |
15,532 |
|||||
Accrued interest receivable |
304,091 |
299,045 |
|||||
Banking premises and equipment, net |
70,116 |
73,502 |
|||||
Goodwill |
152,109 |
152,109 |
|||||
Other assets |
204,556 |
85,468 |
|||||
Total Assets |
$ 60,267,760 |
$ 54,145,328 |
|||||
Liabilities and Shareholders' Equity: |
|||||||
Deposits: |
|||||||
Interest-bearing |
$ 23,992,007 |
$ 17,949,846 |
|||||
Noninterest-bearing |
586,041 |
514,196 |
|||||
Total deposits |
24,578,048 |
18,464,042 |
|||||
Repurchase agreements |
15,100,000 |
15,100,000 |
|||||
Federal Home Loan Bank of New York advances |
14,875,000 |
15,125,000 |
|||||
Total borrowed funds |
29,975,000 |
30,225,000 |
|||||
Due to brokers |
100,000 |
239,100 |
|||||
Accrued expenses and other liabilities |
275,560 |
278,390 |
|||||
Total liabilities |
54,928,608 |
49,206,532 |
|||||
Common stock, $0.01 par value, 3,200,000,000 shares authorized; |
|||||||
741,466,555 shares issued; 526,493,676 shares outstanding |
|||||||
at December 31, 2009 and 523,770,617 shares outstanding |
|||||||
at December 31, 2008 |
7,415 |
7,415 |
|||||
Additional paid-in capital |
4,683,414 |
4,641,571 |
|||||
Retained earnings |
2,401,606 |
2,196,235 |
|||||
Treasury stock, at cost; 214,972,879 shares at December 31, 2009 and |
|||||||
217,695,938 shares at December 31, 2008 |
(1,727,579) |
(1,737,838) |
|||||
Unallocated common stock held by the employee stock ownership plan |
(210,237) |
(216,244) |
|||||
Accumulated other comprehensive income, net of tax |
184,533 |
47,657 |
|||||
Total shareholders' equity |
5,339,152 |
4,938,796 |
|||||
Total Liabilities and Shareholders' Equity |
$ 60,267,760 |
$ 54,145,328 |
|||||
Hudson City Bancorp, Inc. and Subsidiary Consolidated Statements of Income (Unaudited) |
|||||||||||||
For the Three Months |
For the Years |
||||||||||||
Ended December 31, |
Ended December 31, |
||||||||||||
2009 |
2008 |
2009 |
2008 |
||||||||||
(In thousands, except per share data) |
|||||||||||||
Interest and Dividend Income: |
|||||||||||||
First mortgage loans |
$ 426,778 |
$ 413,400 |
$ 1,678,789 |
$ 1,523,521 |
|||||||||
Consumer and other loans |
5,047 |
6,206 |
21,676 |
26,184 |
|||||||||
Mortgage-backed securities held to maturity |
125,337 |
125,558 |
493,549 |
497,912 |
|||||||||
Mortgage-backed securities available for sale |
115,114 |
117,224 |
490,109 |
377,096 |
|||||||||
Investment securities held to maturity |
41,661 |
626 |
86,581 |
13,390 |
|||||||||
Investment securities available for sale |
19,719 |
41,464 |
126,793 |
162,818 |
|||||||||
Dividends on Federal Home Loan Bank of New York stock |
12,405 |
7,280 |
43,103 |
48,009 |
|||||||||
Federal funds sold and other overnight deposits |
479 |
202 |
1,186 |
4,295 |
|||||||||
Total interest and dividend income |
746,540 |
711,960 |
2,941,786 |
2,653,225 |
|||||||||
Interest Expense: |
|||||||||||||
Deposits |
108,465 |
147,959 |
483,468 |
581,357 |
|||||||||
Borrowed funds |
306,282 |
303,549 |
1,214,840 |
1,129,891 |
|||||||||
Total interest expense |
414,747 |
451,508 |
1,698,308 |
1,711,248 |
|||||||||
Net interest income |
331,793 |
260,452 |
1,243,478 |
941,977 |
|||||||||
Provision for Loan Losses |
45,000 |
9,000 |
137,500 |
19,500 |
|||||||||
Net interest income after provision for loan losses |
286,793 |
251,452 |
1,105,978 |
922,477 |
|||||||||
Non-Interest Income: |
|||||||||||||
Service charges and other income |
2,192 |
1,995 |
9,399 |
8,485 |
|||||||||
Gain on securities transactions, net |
- |
- |
24,185 |
- |
|||||||||
Total non-interest income |
2,192 |
1,995 |
33,584 |
8,485 |
|||||||||
Non-Interest Expense: |
|||||||||||||
Compensation and employee benefits |
33,905 |
32,302 |
137,071 |
127,198 |
|||||||||
Net occupancy expense |
8,010 |
8,020 |
32,270 |
30,457 |
|||||||||
Federal deposit insurance assessment |
11,800 |
2,536 |
35,094 |
4,320 |
|||||||||
FDIC special assessment |
- |
- |
21,098 |
- |
|||||||||
Other expense |
9,220 |
9,406 |
40,063 |
36,101 |
|||||||||
Total non-interest expense |
62,935 |
52,264 |
265,596 |
198,076 |
|||||||||
Income before income tax expense |
226,050 |
201,183 |
873,966 |
732,886 |
|||||||||
Income tax expense |
89,474 |
76,905 |
346,722 |
287,328 |
|||||||||
Net income |
$ 136,576 |
$ 124,278 |
$ 527,244 |
$ 445,558 |
|||||||||
Basic earnings per share |
$ 0.28 |
$ 0.25 |
$ 1.08 |
$ 0.92 |
|||||||||
Diluted earnings per share |
$ 0.28 |
$ 0.25 |
$ 1.07 |
$ 0.90 |
|||||||||
Weighted Average Number of Common Shares Outstanding: |
|||||||||||||
Basic |
491,439,292 |
487,856,516 |
488,908,260 |
484,907,441 |
|||||||||
Diluted |
492,231,761 |
495,581,054 |
491,295,511 |
495,856,156 |
|||||||||
Hudson City Bancorp, Inc. and Subsidiary Consolidated Average Balance Sheets (Unaudited) |
||||||||||||||||
For the Three Months Ended December 31, |
||||||||||||||||
2009 |
2008 |
|||||||||||||||
Average |
Average |
|||||||||||||||
Average |
Yield/ |
Average |
Yield/ |
|||||||||||||
Balance |
Interest |
Cost |
Balance |
Interest |
Cost |
|||||||||||
(Dollars in thousands) |
||||||||||||||||
Assets: |
||||||||||||||||
Interest-earnings assets: |
||||||||||||||||
First mortgage loans, net (1) |
$ 30,997,843 |
$ 426,778 |
5.51 |
% |
$ 28,557,645 |
$ 413,400 |
5.79 |
% |
||||||||
Consumer and other loans |
366,953 |
5,047 |
5.50 |
412,540 |
6,206 |
6.02 |
||||||||||
Federal funds sold and other overnight deposits |
880,067 |
479 |
0.22 |
132,144 |
202 |
0.61 |
||||||||||
Mortgage-backed securities at amortized cost |
19,860,114 |
240,451 |
4.84 |
18,623,487 |
242,782 |
5.21 |
||||||||||
Federal Home Loan Bank stock |
876,626 |
12,405 |
5.66 |
845,115 |
7,280 |
3.45 |
||||||||||
Investment securities, at amortized cost |
5,415,707 |
61,380 |
4.53 |
3,407,181 |
42,090 |
4.94 |
||||||||||
Total interest-earning assets |
58,397,310 |
746,540 |
5.11 |
51,978,112 |
711,960 |
5.48 |
||||||||||
Noninterest-earnings assets |
1,179,197 |
827,322 |
||||||||||||||
Total Assets |
$ 59,576,507 |
$ 52,805,434 |
||||||||||||||
Liabilities and Shareholders' Equity: |
||||||||||||||||
Interest-bearing liabilities: |
||||||||||||||||
Savings accounts |
$ 774,812 |
1,460 |
0.75 |
$ 712,675 |
1,353 |
0.76 |
||||||||||
Interest-bearing transaction accounts |
1,958,061 |
7,444 |
1.51 |
1,560,839 |
11,506 |
2.93 |
||||||||||
Money market accounts |
4,905,054 |
18,445 |
1.49 |
2,606,648 |
20,603 |
3.14 |
||||||||||
Time deposits |
15,680,966 |
81,116 |
2.05 |
12,493,602 |
114,497 |
3.65 |
||||||||||
Total interest-bearing deposits |
23,318,893 |
108,465 |
1.85 |
17,373,764 |
147,959 |
3.39 |
||||||||||
Repurchase agreements |
15,100,000 |
154,524 |
4.06 |
15,032,609 |
153,671 |
4.07 |
||||||||||
Federal Home Loan Bank of New York advances |
14,915,761 |
151,758 |
4.04 |
14,682,213 |
149,878 |
4.06 |
||||||||||
Total borrowed funds |
30,015,761 |
306,282 |
4.05 |
29,714,822 |
303,549 |
4.06 |
||||||||||
Total interest-bearing liabilities |
53,334,654 |
414,747 |
3.09 |
47,088,586 |
451,508 |
3.81 |
||||||||||
Noninterest-bearing liabilities: |
||||||||||||||||
Noninterest-bearing deposits |
573,011 |
538,191 |
||||||||||||||
Other noninterest-bearing liabilities |
319,989 |
323,814 |
||||||||||||||
Total noninterest-bearing liabilities |
893,000 |
862,005 |
||||||||||||||
Total liabilities |
54,227,654 |
47,950,591 |
||||||||||||||
Shareholders' equity |
5,348,853 |
4,854,843 |
||||||||||||||
Total Liabilities and Shareholders' Equity |
$ 59,576,507 |
$ 52,805,434 |
||||||||||||||
Net interest income/net interest rate spread (2) |
$ 331,793 |
2.02 |
$ 260,452 |
1.67 |
||||||||||||
Net interest-earning assets/net interest margin (3) |
$ 5,062,656 |
2.30 |
% |
$ 4,889,526 |
2.02 |
% |
||||||||||
Ratio of interest-earning assets to |
||||||||||||||||
interest-bearing liabilities |
1.09 |
x |
1.10 |
x |
||||||||||||
(1) |
Amount includes deferred loan costs and non-performing loans and is net of the allowance for loan losses. |
|||||||||||||||
(2) |
Determined by subtracting the annualized weighted average cost of total interest-bearing liabilities from the annualized weighted average yield on total interest-earning assets. |
|||||||||||||||
(3) |
Determined by dividing annualized net interest income by total average interest-earning assets. |
|||||||||||||||
Hudson City Bancorp, Inc. and Subsidiary Consolidated Average Balance Sheets (Unaudited) |
||||||||||||||||
For the Year Ended December 31, |
||||||||||||||||
2009 |
2008 |
|||||||||||||||
Average |
Average |
|||||||||||||||
Average |
Yield/ |
Average |
Yield/ |
|||||||||||||
Balance |
Interest |
Cost |
Balance |
Interest |
Cost |
|||||||||||
(Dollars in thousands) |
||||||||||||||||
Assets: |
||||||||||||||||
Interest-earnings assets: |
||||||||||||||||
First mortgage loans, net (1) |
$ 30,126,469 |
$ 1,678,789 |
5.57 |
% |
$ 26,379,724 |
$ 1,523,521 |
5.78 |
% |
||||||||
Consumer and other loans |
381,029 |
21,676 |
5.69 |
422,097 |
26,184 |
6.20 |
||||||||||
Federal funds sold and other overnight deposits |
566,079 |
1,186 |
0.21 |
209,607 |
4,295 |
2.05 |
||||||||||
Mortgage-backed securities at amortized cost |
19,768,874 |
983,658 |
4.98 |
16,694,279 |
875,008 |
5.24 |
||||||||||
Federal Home Loan Bank stock |
876,736 |
43,103 |
4.92 |
790,305 |
48,009 |
6.07 |
||||||||||
Investment securities, at amortized cost |
4,577,148 |
213,374 |
4.66 |
3,602,206 |
176,208 |
4.89 |
||||||||||
Total interest-earning assets |
56,296,335 |
2,941,786 |
5.23 |
48,098,218 |
2,653,225 |
5.52 |
||||||||||
Noninterest-earnings assets |
1,044,983 |
788,032 |
||||||||||||||
Total Assets |
$ 57,341,318 |
$ 48,886,250 |
||||||||||||||
Liabilities and Shareholders’ Equity: |
||||||||||||||||
Interest-bearing liabilities: |
||||||||||||||||
Savings accounts |
$ 749,439 |
5,640 |
0.75 |
$ 724,943 |
5,485 |
0.76 |
||||||||||
Interest-bearing transaction accounts |
1,789,361 |
31,903 |
1.78 |
1,578,419 |
48,444 |
3.07 |
||||||||||
Money market accounts |
3,823,116 |
69,008 |
1.81 |
2,227,261 |
73,180 |
3.29 |
||||||||||
Time deposits |
14,771,051 |
376,917 |
2.55 |
11,546,958 |
454,248 |
3.93 |
||||||||||
Total interest-bearing deposits |
21,132,967 |
483,468 |
2.29 |
16,077,581 |
581,357 |
3.62 |
||||||||||
Repurchase agreements |
15,100,221 |
611,776 |
4.05 |
13,465,540 |
561,301 |
4.17 |
||||||||||
Federal Home Loan Bank of New York advances |
15,035,798 |
603,064 |
4.01 |
13,737,057 |
568,590 |
4.14 |
||||||||||
Total borrowed funds |
30,136,019 |
1,214,840 |
4.03 |
27,202,597 |
1,129,891 |
4.15 |
||||||||||
Total interest-bearing liabilities |
51,268,986 |
1,698,308 |
3.31 |
43,280,178 |
1,711,248 |
3.95 |
||||||||||
Noninterest-bearing liabilities: |
||||||||||||||||
Noninterest-bearing deposits |
576,575 |
554,584 |
||||||||||||||
Other noninterest-bearing liabilities |
317,972 |
289,930 |
||||||||||||||
Total noninterest-bearing liabilities |
894,547 |
844,514 |
||||||||||||||
Total liabilities |
52,163,533 |
44,124,692 |
||||||||||||||
Shareholders’ equity |
5,177,785 |
4,761,558 |
||||||||||||||
Total Liabilities and Shareholders’ Equity |
$ 57,341,318 |
$ 48,886,250 |
||||||||||||||
Net interest income/net interest rate spread (2) |
$ 1,243,478 |
1.92 |
$ 941,977 |
1.57 |
||||||||||||
Net interest-earning assets/net interest margin (3) |
$ 5,027,349 |
2.21 |
% |
$ 4,818,040 |
1.96 |
% |
||||||||||
Ratio of interest-earning assets to |
||||||||||||||||
interest-bearing liabilities |
1.10 |
x |
1.11 |
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 weighted average cost of total interest-bearing liabilities from the weighted average yield on total interest-earning assets. |
|||||||||||||||
(3) |
Determined by dividing net interest income by total average interest-earning assets. |
|||||||||||||||
Hudson City Bancorp, Inc. and Subsidiary Book Value Calculations |
||||
December 31, |
||||
2009 |
||||
(In thousands, except share and per share amounts) |
||||
Shareholders’ equity |
$ 5,339,152 |
|||
Goodwill and other intangible assets |
(158,336) |
|||
Tangible Shareholders' equity |
$ 5,180,816 |
|||
Book Value Share Computation: |
||||
Issued |
741,466,555 |
|||
Treasury shares |
(214,972,879) |
|||
Shares outstanding |
526,493,676 |
|||
Unallocated ESOP shares |
(33,676,464) |
|||
Unvested RRP shares |
(593,283) |
|||
Shares in trust |
(108,945) |
|||
Book value shares |
492,114,984 |
|||
Book value per share |
$ 10.85 |
|||
Tangible book value per share |
$ 10.53 |
|||
Hudson City Bancorp, Inc. Other Financial Data Securities Portfolio at December 31, 2009: |
||||||
Amortized |
Estimated |
Unrealized |
||||
Cost |
Fair Value |
Gain/(Loss) |
||||
(dollars in thousands) |
||||||
Held to Maturity: |
||||||
Mortgage-backed securities: |
||||||
FHLMC |
$ 4,764,429 |
$ 4,995,782 |
$ 231,353 |
|||
FNMA |
2,510,095 |
2,616,604 |
106,509 |
|||
FHLMC and FNMA CMO's |
2,577,011 |
2,597,658 |
20,647 |
|||
GNMA |
112,019 |
114,787 |
2,768 |
|||
Total mortgage-backed securities |
9,963,554 |
10,324,831 |
361,277 |
|||
Investment securities: |
||||||
United States GSE debt |
4,187,599 |
4,070,900 |
(116,699) |
|||
Municipal bonds |
105 |
105 |
- |
|||
Total investment securities |
4,187,704 |
4,071,005 |
(116,699) |
|||
Total held to maturity |
$ 14,151,258 |
$ 14,395,836 |
$ 244,578 |
|||
Available for sale: |
||||||
Mortgage-backed securities: |
||||||
FHLMC |
$ 4,655,629 |
$ 4,888,326 |
$ 232,697 |
|||
FNMA |
3,782,198 |
3,907,368 |
125,170 |
|||
FHLMC and FNMA CMO's |
1,057,007 |
1,050,763 |
(6,244) |
|||
GNMA |
1,257,590 |
1,270,074 |
12,484 |
|||
Total mortgage-backed securities |
10,752,424 |
11,116,531 |
364,107 |
|||
Investment securities: |
||||||
United States GSE debt |
1,104,699 |
1,088,165 |
(16,534) |
|||
Equity securities |
6,770 |
7,075 |
305 |
|||
Total investment securities |
1,111,469 |
1,095,240 |
(16,229) |
|||
Total available for sale |
$ 11,863,893 |
$ 12,211,771 |
$ 347,878 |
|||
Hudson City Bancorp, Inc. Other Financial Data Loan Data at December 31, 2009: |
||||||||||||
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 |
$ 579,036 |
1,469 |
1.82% |
$ 30,831,520 |
73,606 |
97.02% |
||||||
FHA/VA |
31,855 |
115 |
0.10% |
283,750 |
1,146 |
0.89% |
||||||
PMI |
2,750 |
11 |
0.01% |
246,562 |
763 |
0.78% |
||||||
Construction |
9,764 |
6 |
0.03% |
13,030 |
9 |
0.04% |
||||||
Commercial |
1,414 |
1 |
0.00% |
54,694 |
101 |
0.17% |
||||||
Total mortgage loans |
624,819 |
1,602 |
1.97% |
31,429,556 |
75,625 |
98.90% |
||||||
Home equity loans |
2,794 |
29 |
0.01% |
329,362 |
8,443 |
1.04% |
||||||
Other loans |
82 |
5 |
0.00% |
21,003 |
2,365 |
0.07% |
||||||
Total |
$ 627,695 |
1,636 |
1.98% |
$ 31,779,921 |
86,433 |
100.00% |
||||||
- Charge-offs amounted to $19.8 million for the fourth quarter of 2009, consisting of 187 loans, and $47.2 million for the year ended December 31, 2009, consisting of 517 loans. These charge-offs include $18.0 million and $37.8 million for the same respective periods, that relate to loans that are still in the loan portfolio at December 31, 2009 and are working through the foreclosure process.
- 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. Our policy is that we receive an updated valuation for these loans annually.
- The average loan-to-value ratio, using appraised values at time of origination, of our non-performing one- to four-family mortgage loans and total one- to four-family mortgage loans was 70.2% and 60.8%, respectively at December 31, 2009.
- Based on the valuation indices, house prices have declined in the New York metropolitan area, where 64.0% of our non-performing loans were located at December 31, 2009, by approximately 19.5% from the peak of the market in 2006 through October 2009 and by 29.6% nationwide during that period. From July 2009 through October 2009, the house price indices increased by 1.1% in the New York metropolitan area.
- 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, 2009: |
|||||||||
Carrying |
Number Under |
||||||||
Number |
Value |
Contract of Sale |
|||||||
(dollars in thousands) |
|||||||||
Foreclosed real estate |
41 |
$ 16,736 |
4 |
||||||
- During 2009, we sold 55 foreclosed properties. It is currently taking up to 30 months to foreclose on a loan once it becomes non-performing. Write-downs and net losses on the sale of foreclosed real estate are charged to operating expenses and amounted to $325,000 and $2.4 million for the quarter and year ended December 31, 2009, respectively.
Hudson City Bancorp, Inc. and Subsidiary |
||||||||||
Other Financial Data |
||||||||||
(Unaudited) |
||||||||||
At or for the Quarter Ended |
||||||||||
Dec. 31, 2009 |
Sept. 30, 2009 |
June 30, 2009 |
March 31, 2009 |
Dec. 31, 2008 |
||||||
(Dollars in thousands, except per share data) |
||||||||||
Net interest income |
$ 331,793 |
$ 325,457 |
$ 302,397 |
$ 283,831 |
$ 260,452 |
|||||
Provision for loan losses |
45,000 |
40,000 |
32,500 |
20,000 |
9,000 |
|||||
Non-interest income |
2,192 |
2,513 |
26,606 |
2,273 |
1,995 |
|||||
Non-interest expense: |
||||||||||
Compensation and employee benefits |
33,905 |
34,043 |
36,392 |
32,731 |
32,302 |
|||||
Other non-interest expense |
29,030 |
28,877 |
48,555 |
22,063 |
19,962 |
|||||
Total non-interest expense |
62,935 |
62,920 |
84,947 |
54,794 |
52,264 |
|||||
Income before income tax expense |
226,050 |
225,050 |
211,556 |
211,310 |
201,183 |
|||||
Income tax expense |
89,474 |
89,964 |
83,637 |
83,647 |
76,905 |
|||||
Net income |
$ 136,576 |
$ 135,086 |
$ 127,919 |
$ 127,663 |
$ 124,278 |
|||||
Total assets |
$ 60,267,760 |
$ 58,884,535 |
$ 57,406,338 |
$ 56,569,758 |
$ 54,145,328 |
|||||
Loans, net |
31,721,154 |
31,088,146 |
30,718,887 |
30,110,130 |
29,440,761 |
|||||
Mortgage-backed securities |
||||||||||
Available for sale |
11,116,531 |
9,550,806 |
9,796,644 |
11,149,867 |
9,915,554 |
|||||
Held to maturity |
9,963,554 |
10,751,866 |
10,322,782 |
9,537,148 |
9,572,257 |
|||||
Other securities |
||||||||||
Available for sale |
1,095,240 |
2,117,664 |
2,209,470 |
3,532,186 |
3,413,633 |
|||||
Held to maturity |
4,187,704 |
3,238,044 |
2,289,869 |
450,140 |
50,086 |
|||||
Deposits |
24,578,048 |
23,113,949 |
21,692,265 |
20,435,916 |
18,464,042 |
|||||
Borrowings |
29,975,000 |
30,025,000 |
30,025,000 |
30,275,000 |
30,225,000 |
|||||
Shareholders’ equity |
5,339,152 |
5,270,181 |
5,143,265 |
5,052,798 |
4,938,796 |
|||||
Performance Data: |
||||||||||
Return on average assets (1) |
0.92% |
0.93% |
0.91% |
0.93% |
0.94% |
|||||
Return on average equity (1) |
10.21% |
10.34% |
9.98% |
10.21% |
10.24% |
|||||
Net interest rate spread (1) |
2.02 |
2.02 |
1.87 |
1.75 |
1.67 |
|||||
Net interest margin (1) |
2.30% |
2.30% |
2.17% |
2.06% |
2.02% |
|||||
Non-interest expense to average assets (1) (4) |
0.42% |
0.43% |
0.49% |
0.40% |
0.40% |
|||||
Compensation and benefits to total revenue (5) |
10.15% |
10.38% |
11.06% |
11.44% |
12.31% |
|||||
Efficiency ratio (2) |
18.84% |
19.18% |
25.82% |
19.15% |
19.91% |
|||||
Dividend payout ratio |
53.57% |
53.57% |
57.69% |
53.85% |
52.00% |
|||||
Per Common Share Data: |
||||||||||
Basic earnings per common share |
$0.28 |
$0.28 |
$0.26 |
$0.26 |
$0.25 |
|||||
Diluted earnings per common share |
$0.28 |
$0.27 |
$0.26 |
$0.26 |
$0.25 |
|||||
Book value per share (3) |
$10.85 |
$10.75 |
$10.54 |
$10.40 |
$10.10 |
|||||
Tangible book value per share (3) |
$10.53 |
$10.43 |
$10.21 |
$10.07 |
$9.77 |
|||||
Dividends per share |
$0.150 |
$0.150 |
$0.150 |
$0.140 |
$0.130 |
|||||
Capital Ratios: |
||||||||||
Equity to total assets (consolidated) |
8.86% |
8.95% |
8.96% |
8.93% |
9.12% |
|||||
Tier 1 leverage capital (Bank) |
7.59% |
7.66% |
7.73% |
7.79% |
7.99% |
|||||
Total risk-based capital (Bank) |
21.02% |
21.27% |
21.09% |
21.20% |
21.48% |
|||||
Other Data: |
||||||||||
Full-time equivalent employees |
1,482 |
1,483 |
1,458 |
1,458 |
1,451 |
|||||
Number of branch offices |
131 |
131 |
131 |
129 |
127 |
|||||
Asset Quality Data: |
||||||||||
Total non-performing loans |
$ 627,695 |
$ 517,585 |
$ 430,907 |
$ 320,158 |
$ 217,574 |
|||||
Number of non-performing loans |
1,636 |
1,315 |
1,088 |
826 |
580 |
|||||
Total number of loans |
86,433 |
85,362 |
84,487 |
83,982 |
83,556 |
|||||
Total non-performing assets |
$ 644,431 |
$ 530,362 |
$ 442,705 |
$ 331,784 |
$ 233,106 |
|||||
Non-performing loans to total loans |
1.98% |
1.66% |
1.40% |
1.06% |
0.74% |
|||||
Non-performing assets to total assets |
1.07% |
0.90% |
0.77% |
0.59% |
0.43% |
|||||
Allowance for loan losses |
$ 140,074 |
$ 114,833 |
$ 88,053 |
$ 65,121 |
$ 49,797 |
|||||
Allowance for loan losses to non-performing loans |
22.32% |
22.19% |
20.43% |
20.34% |
22.89% |
|||||
Allowance for loan losses to total loans |
0.44% |
0.37% |
0.29% |
0.22% |
0.17% |
|||||
Provision for loan losses |
$ 45,000 |
$ 40,000 |
$ 32,500 |
$ 20,000 |
$ 9,000 |
|||||
Net charge-offs |
$ 19,758 |
$ 13,220 |
$ 9,569 |
$ 4,675 |
$ 1,833 |
|||||
Write-downs and net losses on foreclosed real estate |
$ 325 |
$ 481 |
$ 399 |
$ 1,162 |
$ 218 |
|||||
(1) Ratios are annualized. (2) Computed by dividing non-interest expense by the sum of net interest income and non-interest income. For the second quarter of 2009, the efficiency ratio includes the FDIC special assessment of $21.1 million and net securities gains of $24.0 million. (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.
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