Hudson City Bancorp (HCBK) faces the same tough sledding as do most medium-sized regional banks. It relies on mortgage lending to pay its bills, so pressure on the housing market is being felt across the banking spectrum. Analysts are mixed, but the bank pays a healthy dividend, a sign of management confidence.
Hudson City Bancorp is the holding company of its only subsidiary, Hudson City Savings Bank. Hudson City Savings is a federally chartered stock savings bank which has served its customers since 1868.
The bank works from corporate offices in Paramus in Bergen County, New Jersey and through 135 branches in the New York metropolitan area. It operates 97 branches located in 17 counties throughout the State of New Jersey. In New York State, the bank operates 10 branch offices in Westchester County, 12 branch offices in Suffolk County, one branch office each in Putnam and Rockland Counties and five branch offices in Richmond County (Staten Island).
It also operates nine branch offices in Fairfield County, Connecticut and opens deposit accounts through an Internet banking service.
“Our revenues are derived principally from interest on our mortgage loans and mortgage-backed securities and interest and dividends on our investment securities,” management wrote in a recent filing.
“Our primary sources of funds are customer deposits, borrowings, scheduled amortization and prepayments of mortgage loans and mortgage-backed securities, maturities and calls of investment securities and funds provided by operations.”
Hudson City Bancorp has a market cap of $3.45 billion in a sector, thrifts and mortgage finance, where the average company size is $790.14 million. Its projected earnings per share growth for the coming year is negative 5.26 percent, compared to a sector average of 43.03 percent.
High quality earnings
Analysts are mixed on HCBK, with a buy call from Stifel Nicolaus but underperform ratings from Raymond James and RBC Capital Markets.
“In our view, HCBK's positives include high capital levels, low non-interest expenses, high quality of earnings, and its $0.08 a share quarterly dividend, recently yielding 4.9 percent. The negatives we see include asset shrinkage, with little clarity for growth catalysts in the current low interest rate environment,” S&P analysts wrote on Aug. 8.
Hudson City Bancorp next reports on Oct. 24.
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