Hudson City Bancorp, Inc. Reports Quarterly Earnings Of $42.5 Million

    Hudson City Bancorp, Inc. Reports Quarterly Earnings Of $42.5 Million

DECLARED QUARTERLY CASH DIVIDEND OF $0.04 PER SHARE

PR Newswire

PARAMUS, N.J., April 29, 2014

PARAMUS, N.J., April 29, 2014 /PRNewswire/ -- Hudson City Bancorp, Inc.
(NASDAQ: HCBK) (the "Company"), the holding company for Hudson City Savings
Bank (the "Bank"), reported today net income of $42.5 million for the quarter
ended March 31, 2014 as compared to net income of $47.9 million for the
quarter ended March 31, 2013. Diluted earnings per share amounted to $0.09
for the quarter ended March 31, 2014 as compared to diluted earnings per share
of $0.10 for the quarter ended March 31, 2013.

The Company also reported today that the Board of Directors declared a
quarterly cash dividend of $0.04 per share payable on May 30, 2014 to
shareholders of record on May 13, 2014.

Financial highlights for the first quarter of 2014 are as follows:

  oThe Bank's Tier 1 leverage capital ratio increased to 11.03% at March 31,
    2014 as compared to 10.82% at December 31, 2013.
  oNon-performing loans decreased $22.7 million to $1.03 billion at March 31,
    2014 as compared to $1.05 billion at December 31, 2013. Early stage loan
    delinquencies (defined as loans that are 30 to 89 days delinquent)
    decreased $40.3 million to $433.1 million at March 31, 2014 from $473.4
    million at December 31, 2013.
  oThere was no provision for loan losses for the first quarter of 2014 and
    the linked fourth quarter of 2013 as compared to $20.0 million for the
    first quarter of 2013 reflecting improving home prices and economic
    conditions and decreases in total delinquent loans and total loans.
  oOur interest rate spread and net interest margin were 1.12% and 1.41%,
    respectively, for the first quarter of 2014 as compared to 1.56% and
    1.80%, respectively, for the first quarter of 2013. For the linked fourth
    quarter of 2013, our interest rate spread and net interest margin were
    1.20% and 1.47%, respectively.
  oFDIC expense decreased $10.2 million to $13.9 million for the first
    quarter of 2014 as compared to $24.1 million for the first quarter of 2013
    due to decreases in our assessment rate and a reduction in the size of our
    balance sheet. FDIC expense increased $3.0 million from the linked fourth
    quarter of 2013. FDIC expense for the fourth quarter of 2013 included
    $5.3 million of one-time adjustments that reduced our expense in that
    quarter.
  oFederal funds sold and other overnight deposits increased $806.9 million
    to $5.00 billion at March 31, 2014 from $4.19 billion at December 31, 2013
    primarily due to repayments of mortgage-related assets and the lack of
    reinvestment opportunities attractive to the Company.
  oTotal deposits decreased $406.7 million, or 1.9%, to $21.07 billion at
    March 31, 2014 from $21.47 billion at December 31, 2013 due to our
    decision to maintain lower deposit rates allowing us to manage deposit
    reductions at a time when we are experiencing excess liquidity from
    prepayment activity on mortgage-related assets and limited investment
    opportunities with attractive yields.

Ronald E. Hermance, Jr., the Company's Chairman and Chief Executive Officer
commented, "We are continuing to focus on the development and implementation
of the prioritized initiatives that were included in our Strategic Plan. We
developed a transformative strategic plan in 2012 that included various
initiatives, including the introduction of commercial real estate lending and
secondary mortgage market operations. With the delay in our merger with M&T,
we decided to pursue implementation of these two initiatives. I am pleased to
announce that we have hired an individual who has over 30 years of experience
in the commercial lending field to lead the commercial real estate team. In
addition, we hope to hire very shortly the individual who will lead our
secondary mortgage market team."

Mr. Hermance further commented, "For the last several years, we have discussed
the impact that the low interest rate environment and elevated levels of
prepayments on mortgage assets has had on us. While interest rates still
remain low, prepayments on our mortgage related assets have slowed although
they continue to be at an elevated level. As a result, we continue to carry
an elevated and increasing level of overnight funds since we do not want to
invest in longer duration assets at these low interest rates. We believe that
while this impacts our current earnings, it better positions us for future
initiatives such as a further balance sheet restructuring and the completion
of the merger with M&T."

Statement of Financial Condition Summary

Total assets decreased $376.7 million, or 1.0%, to $38.23 billion at March 31,
2014 from $38.61 billion at December 31, 2013. The decrease in total assets
reflected a $761.1 million decrease in total mortgage-backed securities and a
$363.5 million decrease in net loans, partially offset by a $778.3 million
increase in cash and cash equivalents.

Total cash and cash equivalents increased $778.3 million to $5.10 billion at
March 31, 2014 as compared to $4.32 billion at December 31, 2013. This
increase is primarily due to repayments on mortgage-related assets and the
lack of attractive reinvestment opportunities in the current low interest rate
environment as available short term reinvestment opportunities continue to
carry low yields, and medium and longer term opportunities available to us are
creating more significant duration risk at relatively low yields despite the
recent increase in market interest rates.

Net loans decreased to $23.58 billion at March 31, 2014 as compared to $23.94
billion at December 31, 2013. The decrease in net loans primarily reflects
reduced levels of loan production (loan purchases and originations).
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 purchase of
mortgage loans. During the first quarter of 2014, our loan production
(origination and purchases) amounted to $476.1 million as compared to $824.8
million for the first quarter of 2013. Loan production was offset by
principal repayments of $812.8 million during the first quarter of 2014, as
compared to principal repayments of $1.73 billion for the first quarter of
2013. Loan production declined during the first three months of 2014 as
compared to the same period in 2013 which reflects our limited appetite for
adding long-term fixed-rate mortgage loans to our portfolio in the current low
market interest rate environment. In addition, loan production has been
impacted by the new qualified mortgage regulations issued by the Consumer
Financial Protection Bureau ("CFPB") which went into effect in January of
2014. Effective in January 2014, we discontinued our reduced documentation
loan program in order to comply with the CFPB's new requirements to validate a
borrower's ability to repay and the corresponding safe harbor for qualified
mortgages. During 2013, 22% of our total loan production consisted of reduced
documentation loans. 

Total mortgage-backed securities decreased $761.1 million to $8.19 billion at
March 31, 2014 from $8.95 billion at December 31, 2013. The decrease was due
primarily to security sales of $419.3 million and repayments of $391.2 million
of mortgage-backed securities during the first quarter of 2014. These
decreases were partially offset by purchases of $41.4 million of
mortgage-backed securities issued by U.S. government-sponsored entities during
the first quarter of 2014. 

Total liabilities decreased $417.0 million, or 1.2%, to $33.45 billion at
March 31, 2014 from $33.86 billion at December 31, 2013 due primarily to a
$406.7 million decrease in deposits. The decrease in deposits reflects our
decision to maintain lower deposit rates allowing us to manage deposit
reductions at a time when we are experiencing excess liquidity from prepayment
activity on mortgage-related assets and limited investment opportunities with
attractive yields.

Total shareholders' equity increased $40.3 million to $4.78 billion at March
31, 2014 as compared to $4.74 billion at December 31, 2013. The increase was
primarily due to net income of $42.5 million and a $12.7 million change in
accumulated other comprehensive income, partially offset by cash dividends
paid to common shareholders of $19.9 million. At March 31, 2014, our
consolidated shareholders' equity to asset ratio was 12.51% and our tangible
book value per share was $9.29.

Accumulated other comprehensive income amounted to $19.0 million at March 31,
2014 as compared to accumulated other comprehensive income of $6.3 million at
December 31, 2013. The resulting $12.7 million change in accumulated other
comprehensive income primarily reflects an increase in the net unrealized gain
on securities available for sale at March 31, 2014 as compared to December 31,
2013.

Statement of Income Summary

The Federal Open Market Committee of the Board of Governors of the Federal
Reserve System (the "FOMC") noted that economic activity slowed during the
winter months, due in part to the adverse weather conditions. The FOMC noted
that labor market indicators were mixed but have shown further improvement in
recent months. Household spending and business fixed investment continue to
advance, while the recovery in the housing sector remained slow. The national
unemployment rate remained at 6.7% in March 2014 and December 2013 and
decreased from 7.5% in March 2013. The FOMC decided to maintain the overnight
lending target rate at zero to 0.25% during the first quarter of 2014.

Beginning in April 2014, the FOMC decided to reduce the rate of purchases of
agency mortgage-backed securities to $25.0 billion per month from $30.0
billion per month and to reduce purchases of longer-term Treasury securities
to $30.0 billion per month from $35.0 billion per month. The FOMC noted that
its sizeable and increasing holdings of longer-term securities should maintain
downward pressure on longer-term interest rates, after the FOMC's securities
purchase program ends.

Net interest income decreased $45.1 million, or 25.4%, to $132.3 million for
the first quarter of 2014 from $177.4 million for the first quarter of 2013
reflecting the overall decrease in the average balance of interest-earning
assets and interest-bearing liabilities, the continued low interest rate
environment and an increase in the already high average balance of Federal
funds sold and other overnight deposits. Our interest rate spread decreased
to 1.12% for the first quarter of 2014 as compared to 1.20% for the linked
fourth quarter of 2013 and 1.56% for the first quarter of 2013. Our net
interest margin was 1.41% for the first quarter of 2014 as compared to 1.47%
for the linked fourth quarter of 2013 and 1.80% for the first quarter of
2013.

Total interest and dividend income for the first quarter of 2014 decreased
$53.6 million, or 14.6%, to $312.5 million from $366.1 million for the first
quarter of 2013. The decrease in total interest and dividend income was due to
a $1.71 billion decrease in the average balance of total interest-earning
assets during the first quarter of 2014 to $37.50 billion from $39.21 billion
for the first quarter of 2013 as well as a decrease in the annualized
weighted-average yield on total interest earning assets. The decrease in the
average balance of total interest-earning assets for the first quarter of 2014
as compared to the first quarter of 2013 was due primarily to repayments of
mortgage-related assets as a result of the low interest rate environment and
our decision not to reinvest in low yielding, long term assets. The annualized
weighted-average yield on total interest-earning assets was 3.33% for the
first quarter of 2014 as compared to 3.73% for the first quarter of 2013. The
decrease in the annualized weighted average yield of interest-earning assets
was due to lower market interest rates earned on mortgage-related assets and a
$2.95 billion increase in the average balance of Federal funds sold and other
overnight deposits to $4.63 billion which had an average yield of 0.25% during
the first quarter of 2014.

Interest on first mortgage loans decreased $41.3 million, or 14.0%, to $253.1
million for the first quarter of 2014 from $294.4 million for the first
quarter of 2013. The decrease in interest on first mortgage loans was
primarily due to a $2.64 billion decrease in the average balance of first
mortgage loans to $23.54 billion for the first quarter of 2014 from $26.18
billion for the same quarter in 2013. The decrease in interest income on
first mortgage loans was also due to a 20 basis point decrease in the
annualized weighted-average yield to 4.30% for the first quarter of 2014 from
4.50% for the first quarter of 2013.

The decrease in the average yield earned on first mortgage loans during the
first quarter of 2014 was due to continued mortgage refinancing activity and
the rates on newly originated mortgage loans which have been below the average
yield on our portfolio, reflecting overall low market rates. Consequently,
the average yield on our loan portfolio continued to decline during the first
quarter of 2014. Refinancing activity, which resulted in continued elevated
levels of loan repayments, also caused the average balance of our first
mortgage loans to decline for those same periods as our loan production
decreased reflecting our low appetite for adding long-term fixed-rate mortgage
loans to our portfolio in the current low interest rate environment and also
the impact of the CFPB's new qualified mortgage regulations, which went into
effect in January 2014.

Interest on mortgage-backed securities decreased $12.2 million to $48.7
million for the first quarter of 2014 from $60.9 million for the first quarter
of 2013. This decrease was due primarily to a $1.86 billion decrease in the
average balance of mortgage-backed securities to $8.43 billion for the first
quarter of 2014 from $10.29 billion for the first quarter of 2013. The
decrease in interest on mortgage-backed securities was also due to a 6 basis
point decrease in the annualized weighted-average yield to 2.31% for the first
quarter of 2014 from 2.37% for the first quarter of 2013.

The decrease in the average yield earned on mortgage-backed securities during
the first quarter of 2014 was a result of principal repayments on securities
that have higher yields than the existing portfolio as well as the re-pricing
of variable rate mortgage-backed securities in this low interest rate
environment. The decrease in the average balance of mortgage-backed securities
during this same period was due to sales of mortgage-backed securities and
elevated levels of principal repayments in the current low interest rate
environment. During the first quarter of 2014, we sold $419.3 million of
mortgage-backed securities to realize gains that would decrease as market
interest rates increase and as repayments reduced the outstanding principal
balance on these securities.

Interest on investment securities decreased $1.6 million to $1.4 million for
the first quarter of 2014 as compared to $3.0 million for the first quarter of
2013. This decrease was due to a 104 basis point decrease in the annualized
weighted-average yield to 1.60% for the first quarter of 2014 from 2.64% for
the first quarter of 2013. The decrease in the average yield earned reflects
current market interest rates. This decrease in interest on investment
securities was also due to a $108.0 million decrease in the average balance of
investment securities to $344.4 million for the first quarter of 2014 from
$452.4 million for the first quarter of 2013. The decrease in the average
balance of investment securities was primarily due to the sale of corporate
bonds with an amortized cost of $405.7 million partially offset by purchases
of $298.0 million of investment securities during 2013.

Interest on Federal funds sold and other overnight deposits amounted to $2.9
million for the first quarter of 2014 as compared to $872,000 for the first
quarter of 2013. The increase in interest income on Federal funds sold and
other overnight deposits was primarily due to an increase in the average
balance of Federal funds sold and other overnight deposits. The average
balance of Federal funds sold and other overnight deposits amounted to $4.63
billion for the first quarter of 2014 as compared to $1.68 billion for the
first quarter of 2013. The yield earned on Federal funds sold and other
overnight deposits was 0.25% for the 2014 first quarter and 0.21% for the 2013
first quarter.

The increase in the average balance of Federal funds sold and other overnight
deposits for the first quarter of 2014 as compared to the first quarter of
2013 was due primarily to the elevated levels of repayments on
mortgage-related assets and our low appetite for adding long-term fixed-rate
mortgage loans to our portfolio in the current low interest rate environment.

Total interest expense for the quarter ended March 31, 2014 decreased $8.5
million, or 4.5%, to $180.2 million from $188.7 million for the quarter ended
March 31, 2013. This decrease was primarily due to a $2.07 billion, or 5.9%,
decrease in the average balance of total interest-bearing liabilities to
$32.76 billion for the quarter ended March 31, 2014 from $34.83 billion for
the quarter ended March 31, 2013. The annualized weighted-average cost of
total interest-bearing liabilities was 2.21% for the quarter ended March 31,
2014 as compared to 2.17% for the quarter ended March 31, 2013. The decrease
in the average balance of total interest-bearing liabilities was due to a
$2.07 billion decrease in the average balance of total deposits.

Interest expense on deposits decreased $8.5 million, or 17.3%, to $40.6
million for the first quarter of 2014 from $49.1 million for the first quarter
of 2013. The decrease is primarily due to the decline in the average cost of
interest-bearing deposits of 8 basis points to 0.80% for the first quarter of
2014 from 0.88% for the first quarter of 2013. This decrease was also due to
a $2.07 billion decrease in the average balance of interest-bearing deposits
to $20.59 billion for the first quarter of 2014 from $22.66 billion for the
first quarter of 2013. 

The decrease in the average cost of deposits for 2014 reflected the low market
interest rates and our decision to maintain lower deposit rates to continue
our balance sheet reduction. At March 31, 2014, time deposits scheduled to
mature within one year totaled $6.90 billion with an average cost of 0.89%.
These time deposits are scheduled to mature as follows: $2.93 billion with an
average cost of 0.62% in the second quarter of 2014, $1.93 billion with an
average cost of 0.73% in the third quarter of 2014, $1.04 billion with an
average cost of 1.34% in the fourth quarter of 2014 and $1.00 billion with an
average cost of 1.49% in the first quarter of 2015.

Interest expense on borrowed funds increased slightly to $139.6 million for
the first quarter of 2014 from $139.5 million for the first quarter of 2013.
Borrowings amounted to $12.18 billion at March 31, 2014 with an average cost
of 4.59%. There are no scheduled maturities for 2014. During the first
quarter of 2014, we modified $800.0 million of FHLB repurchase agreements to
be FHLB advances. This reduced our collateral requirements related to the
repurchase agreements, which use securities as collateral. FHLB advances are
secured by a blanket lien on our loan portfolio. The modification resulted in
a slight increase in the weighted average cost of our total borrowed funds as
the average balance of our higher-costing FHLB advances increased.

There was no provision for loan losses for the quarter ended March 31, 2014
and for the linked fourth quarter of 2013 as compared to a $20.0 million
provision for loan losses for the quarter ended March 31, 2013. The decrease
in our provision for loan losses was due primarily to improving economic
conditions, increasing home prices, a decrease in the size of the loan
portfolio and a decrease in the amount of total delinquent loans.

Non-performing loans, defined as non-accruing loans and accruing loans
delinquent 90 days or more, amounted to $1.03 billion at March 31, 2014 as
compared to $1.05 billion at December 31, 2013 and $1.14 billion at March 31,
2013. The ratio of non-performing loans to total loans was 4.32% at March 31,
2014 as compared to 4.35% at both December 31, 2013 and March 31, 2013.
Notwithstanding the decrease in non-performing loans, the foreclosure process
and the time to complete a foreclosure, while improving, continue to be
prolonged, especially in New York and New Jersey where 68.2% of our
non-performing loans are located. This protracted foreclosure process delays
our ability to resolve non-performing loans through the sale of the underlying
collateral and our ability to maximize any recoveries.

Loans delinquent 30 to 59 days amounted to $276.0 million at March 31, 2014 as
compared to $311.9 million at December 31, 2013 and $372.0 million at March
31, 2013. Loans delinquent 60 to 89 days amounted to $157.1 million at March
31, 2014 as compared to $161.5 million at December 31, 2013 and $188.8 million
at March 31, 2013. The allowance for loan losses amounted to $265.7 million
at March 31, 2014 as compared to $276.1 million at December 31, 2013. The
allowance for loan losses as a percent of total loans and as a percent of
non-performing loans was 1.12% and 25.88%, respectively, at March 31, 2014, as
compared to 1.15% and 26.50%, respectively, at March 31, 2013 and 1.15% and
26.31%, respectively, at December 31, 2013.

Net charge-offs amounted to $10.4 million for the first quarter of 2014 as
compared to $21.3 million for the first quarter of 2013 and $14.9 million for
the linked fourth quarter of 2013. The ratio of net charge-offs to average
loans was 0.18% for the first quarter of 2014 as compared to 0.32% for the
first quarter of 2013 and 0.24% for the linked fourth quarter of 2013.

Total non-interest income was $17.8 million for the first quarter of 2014 as
compared to $2.5 million for the first quarter of 2013. Included in
non-interest income for the first quarter of 2014 was a $15.9 million gain on
the sale of $419.3 million of mortgage-backed securities. The remainder of
non-interest income is primarily made up of service fees and charges on
deposit and loan accounts.

Total non-interest expense decreased $1.6 million to $79.7 million for the
first quarter of 2014 as compared to $81.3 million for the first quarter of
2013. This decrease was due to a $10.2 million decrease in Federal deposit
insurance expense partially offset by a $5.7 million increase in other
non-interest expense and a $2.0 million increase in compensation and benefits.

Compensation and employee benefit costs increased $2.0 million, or 6.3%, to
$33.6 million for the first quarter of 2014 as compared to $31.6 million for
the same period in 2013. The increase in compensation and employee benefit
costs is primarily due to increases of $1.9 million in stock benefit plan
expense and $950,000 in medical plan expenses partially offset by a $1.6
million decrease in postretirement benefit costs. The increase in stock
benefit plan expense was due primarily to an increase in the market price of
our common stock. At March 31, 2014, we had 1,535 full-time equivalent
employees as compared to 1,580 at March 31, 2013.

For the quarter ended March 31, 2014, Federal deposit insurance expense
decreased $10.2 million, or 42.2%, to $13.9 million from $24.1 million for the
quarter ended March 31, 2013. The decrease in Federal deposit insurance
expense for the quarter ended March 31, 2014 is primarily due to a reduction
in the size of our balance sheet and a decrease in our assessment rate.

Other non-interest expense increased $5.7 million to $22.5 million for the
quarter ended March 31, 2014 as compared to $16.8 million for the first
quarter of 2013. This increase was due primarily to a $3.0 million write-down
in the receivable related to the Lehman Brothers, Inc. liquidation, an
increase of $2.2 million in professional service fees, and an increase of $1.6
million in foreclosed real estate expenses.

The increase in professional service fees is due primarily to fees related to
the use of consultants to assist the Company in preparing its capital stress
tests and capital plan as well the use of consultants to supplement staffing
during the pendency of the merger with M&T Bank Corporation (the "Merger").

The Bank had two collateralized borrowings in the form of repurchase
agreements totaling $100.0 million with Lehman Brothers, Inc. that were
secured by mortgage-backed securities with an amortized cost of approximately
$114.1 million. The trustee for the liquidation of Lehman Brothers, Inc. (the
"Trustee") notified the Bank in the fourth quarter of 2011 that it considered
our claim to be a non-customer claim, which has a lower payment preference
than a customer claim and that the value of such claim is approximately $13.9
million representing the excess of the fair value of the collateral over the
$100.0 million repurchase price. At that time we established a reserve of
$3.9 million against the receivable balance at December 31, 2011. On June 25,
2013, the Bankruptcy Court affirmed the Trustee's determination that the
repurchase agreements did not entitle the Bank to customer status and on
February 26, 2014, the U.S. District Court upheld the Bankruptcy Court's
decision that our claim should be treated as a non-customer claim. As a
result, we increased our reserve by $3.0 million to $6.9 million against the
receivable balance at March 31, 2014.

Included in other non-interest expense were write-downs on foreclosed real
estate and net gains and losses on the sale of foreclosed real estate which
amounted to a net gain of $78,000 for the first quarter of 2014 as compared to
net losses of $396,000 for the first quarter of 2013. We sold 46 properties
during the first quarter of 2014 and had 235 properties in foreclosed real
estate with a carrying value of $78.6 million, 24 of which were under contract
to sell as of March 31, 2014. For the first quarter of 2013, we sold 33
properties and had 168 properties in foreclosed real estate with a carrying
value of $63.7 million, of which 55 were under contract to sell as of March
31, 2013. At March 31, 2014, 128 loans were scheduled for foreclosure sale as
compared to 120 loans at March 31, 2013.

Our efficiency ratio was 51.11% for the 2014 first quarter as compared to
45.12% for the 2013 first quarter. The calculation of the efficiency ratio is
included in a table contained in this press release. Our return on average
assets was 0.44% for the 2014 first quarter as compared to 0.47% for the 2013
first quarter. Our annualized ratio of non-interest expense to average total
assets for the first quarter of 2014 was 0.83% as compared to 0.80% for the
first quarter of 2013.

Income tax expense amounted to $27.9 million for the first quarter of 2014 as
compared to income tax expense of $30.7 million for the corresponding period
in 2013. Our effective tax rate for the first quarter of 2014 was 39.58%
compared with 39.07% for the first quarter of 2013. 

Hudson City Bancorp, Inc. maintains its corporate offices in Paramus, New
Jersey. Hudson City Savings Bank, a well-established community financial
institution serving its customers since 1868, is the largest thrift
institution headquartered in New Jersey. Hudson City Savings Bank currently
operates a total of 135 banking offices in the New York metropolitan and
surrounding areas.

Forward-Looking Statements

This release may contain certain "forward looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995 that are based
on certain assumptions and describe future plans, strategies and expectations
of Hudson City Bancorp, Inc. Such forward-looking statements may be
identified by the use of such words as "may," "believe," "expect,"
"anticipate," "should," "plan," "estimate," "predict," "continue," "probable,"
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, Inc. and Hudson City Bancorp,
Inc.'s strategies, plans, objectives, expectations, and intentions, including
the Merger and the Strategic Plan, and other statements contained in this
release that are not historical facts. Hudson City Bancorp, Inc.'s ability to
predict results or the actual effect of future plans or strategies, including
the Merger and the implementation of the Strategic Plan, is inherently
uncertain and actual results and performance could differ materially from
those contemplated or implied by these forward-looking statements. They can be
affected by inaccurate assumptions Hudson City Bancorp, Inc. might make or by
known or unknown risks and uncertainties. Factors that could cause assumptions
to be incorrect include, but are not limited to, changes in interest rates,
general economic conditions, legislative, regulatory and public policy
changes, Hudson City Bancorp Inc's ability to successfully implement the
Strategic Plan initiatives, further delays in closing the Merger and the
ability of Hudson City Bancorp, Inc. or M&T Bank Corporation to obtain
regulatory approvals and meet other closing conditions to the Merger. These
risks and uncertainties should be considered in evaluating forward-looking
statements and undue reliance should not be placed on such statements. For a
summary of important factors that could affect Hudson City Bancorp, Inc.'s
forward-looking statements, please refer to Hudson City Bancorp, Inc.'s
filings with the Securities and Exchange Commission available at www.sec.gov.
Hudson City Bancorp, Inc. does not intend to update any of the forward-looking
statements after the date of this release or to conform these statements to
actual events.



Hudson City Bancorp, Inc. and Subsidiary
Consolidated Statements of Financial Condition

                                          March 31,          December 31,
                                          2014               2013
(In thousands, except share and per share (unaudited)
amounts)
Assets:
Cash and due from banks                   $          $        
                                          105,116           133,665
Federal funds sold and other overnight    4,997,668          4,190,809
deposits
 Total cash and cash             5,102,784          4,324,474
equivalents
Securities available for sale:
 Mortgage-backed securities             6,591,315          7,167,555
 Investment securities                 299,026            297,283
Securities held to maturity:
 Mortgage-backed securities            1,599,578          1,784,464
 Investment securities                 39,011             39,011
          Total securities                8,528,930          9,288,313
Loans                                    23,738,689         24,112,829
 Net deferred loan costs                105,754            105,480
 Allowance for loan losses              (265,732)          (276,097)
          Net loans                       23,578,711         23,942,212
Federal Home Loan Bank of New York stock  347,102            347,102
Foreclosed real estate, net               78,591             70,436
Accrued interest receivable               53,568             52,887
Banking premises and equipment, net       62,819             65,353
Goodwill                                  152,109            152,109
Other assets                              326,012            364,468
           Total Assets          $            $      
                                          38,230,626         38,607,354
Liabilities and Shareholders' Equity:
Deposits:
 Interest-bearing                $            $      
                                          20,396,905         20,811,108
 Noninterest-bearing             668,677            661,221
          Total deposits                  21,065,582         21,472,329
Repurchase agreements                     6,150,000          6,950,000
Federal Home Loan Bank of New York        6,025,000          5,225,000
advances
          Total borrowed funds            12,175,000         12,175,000
Accrued expenses and other liabilities    207,186            217,449
          Total liabilities               33,447,768         33,864,778
Common stock, $0.01 par value,
3,200,000,000 shares authorized;
          741,466,555 shares issued;
          528,447,289 and 528,419,170
          shares
          outstanding at March 31, 2014   7,415              7,415
          and December 31, 2013
Additional paid-in capital               4,746,646          4,743,388
Retained earnings                         1,906,331          1,883,754
Treasury stock, at cost; 213,019,266 and
213,047,385 shares at
          March 31, 2014 and December     (1,711,906)        (1,712,107)
          31, 2013
Unallocated common stock held by the      (184,660)          (186,210)
employee stock ownership plan
Accumulated other comprehensive income,   19,032             6,336
net of tax
          Total shareholders' equity      4,782,858          4,742,576
           Total Liabilities     $            $      
          and Shareholders' Equity        38,230,626         38,607,354



Hudson City Bancorp, Inc. and Subsidiary
Consolidated Statements of Income
(Unaudited)

                                     For the Three Months
                                     Ended March 31,
                                     2014                 2013
                                     (In thousands, except share and per share
                                     data)
Interest and Dividend Income:
 First mortgage loans                $            $        
                                     253,139             294,390
 Consumer and other loans            2,278                2,705
 Mortgage-backed securities held to  11,211               23,996
 maturity
 Mortgage-backed securities          37,490               36,911
 available for sale
 Investment securities held to       585                  585
 maturity
 Investment securities available     794                  2,398
 for sale
 Dividends on Federal Home Loan      4,156                4,208
 Bank of New York stock
 Federal funds sold                  2,886                872
  Total interest and dividend    312,539              366,065
 income
Interest Expense:
 Deposits                            40,638               49,139
 Borrowed funds                      139,565              139,543
  Total interest expense         180,203              188,682
   Net interest income               132,336              177,383
Provision for Loan Losses            -                    20,000
   Net interest income after         132,336              157,383
   provision for loan losses
Non-Interest Income:
 Service charges and other income    1,815                2,533
 Gain on securities transactions,    15,943               -
 net
  Total non-interest income      17,758               2,533
Non-Interest Expense:
 Compensation and employee benefits  33,611               31,601
 Net occupancy expense               9,711                8,810
 Federal deposit insurance           13,924               24,075
 assessment
 Other expense                       22,467               16,769
  Total non-interest expense     79,713               81,255
   Income before income tax expense  70,381               78,661
Income Tax Expense                   27,860               30,730
   Net income                        $           $         
                                     42,521              47,931
Basic Earnings Per Share            $           $         
                                       0.09               0.10
Diluted Earnings Per Share          $           $         
                                       0.09               0.10
Weighted Average Number of Common
Shares Outstanding:
   Basic                             498,409,428          497,324,412
   Diluted                           498,409,428          497,364,942



Hudson City Bancorp, Inc. and Subsidiary
Consolidated Average Balance Sheets
(Unaudited)

                        For the Three Months Ended March 31,
                        2014                            2013
                                              Average                         Average
                        Average               Yield/    Average               Yield/
                        Balance     Interest  Cost      Balance     Interest  Cost
                        (Dollars in thousands)
Assets:
Interest-earnings
assets:
  First mortgage loans, $         $        4.30    % $         $        4.50    %
  net (1)               23,538,424  253,139             26,182,603  294,390
  Consumer and other    212,098     2,278     4.30      245,687     2,705     4.40
  loans
  Federal funds sold
  and other overnight   4,629,158   2,886     0.25      1,677,616   872       0.21
  deposits
  Mortgage-backed
  securities at         8,427,527   48,701    2.31      10,292,070  60,907    2.37
  amortized cost
  Federal Home Loan     347,102     4,156     4.79      356,467     4,208     4.72
  Bank stock
  Investment
  securities, at        344,351     1,379     1.60      452,367     2,983     2.64
  amortized cost
    Total
    interest-earning    37,498,660  312,539   3.33      39,206,810  366,065   3.73
    assets
Noninterest-earnings    917,835                         1,288,300
assets (4)
    Total Assets        $                             $  
                        38,416,495                      40,495,110
Liabilities and
Shareholders' Equity:
Interest-bearing
liabilities:
  Savings accounts      $        378       0.15      $       602       0.25
                        1,021,143                       961,884
  Interest-bearing      2,195,612   1,560     0.29      2,273,146   2,135     0.38
  transaction accounts
  Money market accounts 5,054,582   2,473     0.20      6,460,700   5,586     0.35
  Time deposits         12,314,050  36,227    1.19      12,959,500  40,816    1.28
    Total
    interest-bearing    20,585,387  40,638    0.80      22,655,230  49,139    0.88
    deposits
  Repurchase agreements 6,656,667   73,647    4.43      6,950,000   77,054    4.43
  Federal Home Loan
  Bank of New York      5,518,333   65,918    4.78      5,225,000   62,489    4.78
  advances
    Total borrowed      12,175,000  139,565   4.59      12,175,000  139,543   4.58
    funds
    Total
    interest-bearing    32,760,387  180,203   2.21      34,830,230  188,682   2.17
    liabilities
Noninterest-bearing
liabilities:
  Noninterest-bearing   651,298                         631,174
  deposits
  Other
  noninterest-bearing   218,175                         299,017
  liabilities
    Total
    noninterest-bearing 869,473                         930,191
    liabilities
  Total liabilities     33,629,860                      35,760,421
Shareholders' equity    4,786,635                       4,734,689
    Total Liabilities   $                             $  
    and Shareholders'   38,416,495                      40,495,110
    Equity
Net interest income/net             $                              $ 
interest rate spread                132,336   1.12                  177,383   1.56
(2)
Net interest-earning    $                            $   
assets/net interest     4,738,273             1.41    % 4,376,580             1.80    %
margin (3)
Ratio of
interest-earning assets
to
  interest-bearing                            1.14    x                       1.13    x
  liabilities
(1) Amount includes deferred loan costs and non-performing loans and is net of the
    allowance for loan losses.
    Determined by subtracting the annualized weighted average cost of total
(2) 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$50.2 million and $111.8 million
    for the quarters ended March 31, 2014 and
    2013, respectively.



Hudson City Bancorp, Inc. and Subsidiary
Calculation of Efficiency Ratio and Book Value Ratios
(Unaudited)

                   At or for the Quarter Ended
                   March 31,      Dec. 31, 2013  Sept. 30,      June 30, 2013  March 31,
                   2014                          2013                          2013
                   (In thousands, except share data)
Efficiency Ratio:
    Net interest   $        $        $        $        $      
    income         132,336         135,864       139,413    159,853      177,383
    Total
    non-interest   17,758         13,512         13,456         9,588          2,533
    income
     Total       $        $        $        $        $      
    operating      150,094         149,376       152,869    169,441      179,916
    income
    Total          $        $        $        $        $      
    non-interest    79,713         73,473                 76,621      81,255
    expense                                      78,488
    Less:
    
    Merger-related -              (623)          -              -              (69)
    costs
     Valuation
    allowance
    related to
     Lehman   (3,000)        -              -              -              -
    Brothers, Inc.
     Total                                     $      
    non-interest   $        $                   $        $      
    operating       76,713         72,850   78,488            76,621      81,186
    expense
    Efficiency     51.11%         48.77%         51.34%         45.22%         45.12%
    ratio (1)
Book Value
Calculations:
    Shareholders'  $         $        $        $        $      
    equity        4,782,858      4,742,576      4,689,105   4,660,900     4,711,443
    Goodwill and
    other          (152,972)      (153,218)      (153,469)      (153,721)      (153,970)
    intangible
    assets
    Tangible       $         $        $        $        $      
    shareholders'  4,629,886      4,589,358      4,535,636   4,507,179     4,557,473
    equity
    Book Value
    Share
    Computation:
               741,466,555    741,466,555    741,466,555    741,466,555    741,466,555
    Issued
     Treasury  (213,019,266)  (213,047,385)  (213,047,385)  (213,047,385)  (213,032,583)
    shares
    
    Shares         528,447,289    528,419,170    528,419,170    528,419,170    528,433,972
    outstanding
    
    Unallocated    (29,587,177)   (29,827,724)   (30,068,270)   (30,308,816)   (30,549,363)
    ESOP shares
     Shares in (427,916)      (426,103)      (396,754)      (396,906)      (394,926)
    trust
    
    Book value     498,432,196    498,165,343    497,954,146    497,713,448    497,489,683
    shares
    Book value per $        $        $        $        $      
    share             9.60                                     
                                  9.52           9.42           9.36           9.47
    Tangible book
    value per      9.29           9.21           9.11           9.06           9.16
    share
(1) Calculated by dividing total non-interest operating expense by total operating income.
    These measures are non-GAAP financial measures.
    We believe these measures, by excluding merger-related costs and the valuation allowance
    related to Lehman Brothers, provides a better
    measure of our non-interest
    income and expenses.



Hudson City Bancorp, Inc.
Other Financial Data
(Unaudited)

Securities Portfolio at March 31, 2014:

                                   Amortized  Estimated      Unrealized
                                   Cost       Fair Value     Gain/(Loss)
                                              (Dollars in
                                              thousands)
Held to Maturity:
Mortgage-backed securities:
 FHLMC                          $       $        $        
                                   1,053,037  1,117,388        64,351
 FNMA                           367,674    391,645        23,971
 FHLMC and FNMA CMO's           118,129    124,175        6,046
 GNMA                           60,738     63,087         2,349
 Total mortgage-backed       1,599,578  1,696,295      96,717
securities
Investment securities:
 United States GSE debt        39,011     42,735         3,724
 Total investment securities 39,011     42,735         3,724
Total held to maturity             $       $        $        
                                   1,638,589  1,739,030       100,441
Available for sale:
Mortgage-backed securities:
 FHLMC                          $       $        $        
                                   2,175,639  2,218,031        42,392
 FNMA                           3,539,568  3,562,258      22,690
 FHLMC and FNMA CMO's           36,593     37,167         574
 GNMA                           755,853    773,859        18,006
 Total mortgage-backed       6,507,653  6,591,315      83,662
securities
Investment securities:
 United States GSE debt        298,290    291,883        (6,407)
 Equity securities             6,873      7,143          270
 Total investment securities 305,163    299,026        (6,137)
Total available for sale         $       $        $        
                                   6,812,816  6,890,341        77,525



Hudson City Bancorp, Inc.
Other Financial Data
(Unaudited)

Loan Data at March 31, 2014:

                    Non-Performing Loans         Total Loans
                    Loan                 Percent  Loan                 Percent
                                         of                           of
                    Balance    Number  Total    Balance     Number Total
                                         Loans                         Loans
                                         (Dollars in
                                         thousands)
First Mortgage
Loans:
One- to four-       $      2,514     3.68%    $        55,193   95.52%
family              874,117                      22,675,929
FHA/VA              135,937    568       0.57%    727,706     3,715    3.07%
PMI                 7,198      21        0.03%    101,945     345      0.43%
Construction        177        1         -        177         1        -
Commercial          2,066      4         0.01%    24,080      60       0.10%
 Total mortgage   1,019,495  3,108     4.29%    23,529,837  59,314   99.12%
loans
Home equity loans   5,465      70        0.02%    189,439     5,303    0.80%
Other loans         1,631      7         0.01%    19,413      1,875    0.08%
 Total           $       3,185     4.32%    $        66,492   100.00%
                    1,026,591                     23,738,689



Foreclosed real estate at March 31, 2014:

                                Carrying                 Number Under
                        Number  Value                    Contract of Sale
                                (Dollars in thousands)
Foreclosed real estate  235     $    78,591           24

Hudson City Bancorp, Inc. and Subsidiary
Other Financial Data
(Unaudited)


                                          At or for
                                          the Quarter
                                          Ended
                 March 31,   Dec. 31,     Sept. 30,    June 30,     March 31,
                 2014        2013         2013         2013         2013
                 (Dollars in thousands, except per share data)
Net interest     $       $       $         $         $    
income           132,336  135,864      139,413     159,853      177,383
Provision for    -           -            4,000        12,500       20,000
loan losses
Non-interest     17,758      13,512       13,456       9,588        2,533
income
Non-interest
expense:
 Compensation
and employee     33,611      33,717       34,802       32,613       31,601
benefits
 FDIC
insurance        13,924      10,938       18,850       19,600       24,075
assessment
 Other
non-interest     32,178      28,818       24,836       24,408       25,579
expense
Total
non-interest     79,713      73,473       78,488       76,621       81,255
expense
Income before
income tax       70,381      75,903       70,381       80,320       78,661
expense
Income tax       27,860      30,074       27,647       31,598       30,730
expense
                 $       $       $       $       $    
Net income                  45,829     42,734       48,722        
                 42,521                                            47,931
Total assets    $        $          $           $           $   
                 38,230,626  38,607,354  39,186,560  39,696,453  40,286,698
Loans, net      23,578,711  23,942,212   24,362,961   24,977,668   25,923,210
Mortgage-backed  8,190,893   8,952,019    9,686,630    10,311,102   10,112,098
securities
Other securities 338,037     336,294      337,656      336,165      466,210
Deposits        21,065,582  21,472,329   22,079,731   22,619,271   23,163,092
Borrowings       12,175,000  12,175,000   12,175,000   12,175,000   12,175,000
Shareholders'    4,782,858   4,742,576    4,689,105    4,660,900    4,711,443
equity
Performance
Data:
Return on
average assets   0.44%       0.47%        0.43%        0.49%        0.47%
(1)
Return on
average equity   3.55%       3.87%        3.63%        4.10%        4.05%
(1)
Net interest     1.12%       1.20%        1.22%        1.38%        1.56%
rate spread(1)
Net interest     1.41%       1.47%        1.48%        1.64%        1.80%
margin (1)
Non-interest
expense to       0.83%       0.76%        0.80%        0.76%        0.80%
average assets
(1) (4)
Compensation and
benefits to      22.39%      22.57%       22.77%       19.25%       17.56%
total revenue
(5)
Operating
efficiency ratio 51.11%      48.77%       51.34%       45.22%       45.12%
(2)
Dividend payout  44.44%      44.44%       44.44%       40.00%       80.00%
ratio
Per Common Share
Data:
Basic earnings
per common       $0.09       $0.09        $0.09        $0.10        $0.10
share
Diluted earnings
per common       $0.09       $0.09        $0.09        $0.10        $0.10
share
Book value per   $9.60       $9.52        $9.42        $9.36        $9.47
share (3)
Tangible book
value per share  $9.29       $9.21        $9.11        $9.06        $9.16
(3)
Dividends per    $0.04       $0.04        $0.04        $0.04        $0.08
share
Capital Ratios:
Equity to total
assets           12.51%      12.28%       11.97%       11.74%       11.69%
(consolidated)
Tier 1 leverage  11.03%      10.82%       10.57%       10.41%       10.20%
capital (Bank)
Total risk-based 26.10%      25.31%       24.40%       23.78%       22.77%
capital (Bank)
Other Data:
Full-time
equivalent       1,535       1,520        1,525        1,522        1,580
employees
Number of        135         135          135          135          135
banking offices
Asset Quality
Data:
Total            $        $         $          $          $   
non-performing   1,026,591  1,049,244   1,071,196    1,112,206    1,136,280
loans
Number of
non-performing   3,185       3,233        3,288        3,414        3,407
loans
Total number of  66,492      67,046       67,940       69,578       72,205
loans
Total            $        $         $          $          $   
non-performing   1,105,182  1,119,680   1,136,902    1,173,778    1,199,959
assets
Non-performing
loans to total   4.32%       4.35%        4.36%        4.42%        4.35%
loans
Non-performing
assets to total  2.89%       2.90%        2.90%        2.96%        2.98%
assets
Allowance for    $       $       $         $         $    
loan losses       265,732   276,097      291,007     297,288      301,093
Allowance for
loan losses to   25.88%      26.31%       27.17%       26.73%       26.50%
non-performing
loans
Allowance for
loan losses to   1.12%       1.15%        1.19%        1.18%        1.15%
total loans
Provision for    $       $       $       $        $    
loan losses                    4,000       12,500        20,000
                   -       -
Net charge-offs  $       $       $        $        $    
                   10,365  14,910      10,281      16,305        21,255
Ratio of net
charge-offs to   0.18%       0.24%        0.17%        0.26%        0.32%
average loans
(1)
Net gains        $                                              $    
(losses) on             $       $       $         
foreclosed real  78            908      346        803      (396)
estate
(1) Ratios are
annualized.
(2) See page 12 for a calculation of our
Operating Efficiency Ratios.
(3) See page 12 for the Book Value
Calculations for book value per share
and tangible book value per share.
(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.

Contact: Susan Munhall, Investor Relations, Hudson City Bancorp, Inc., (201)
967-8290, or smunhall@hcsbnj.com
 
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