Profile: Hudson City Bancorp Inc (HCBK.O)

Hudson City Bancorp, Inc. (Hudson City Bancorp) serves as the holding company of its wholly owned subsidiary, Hudson City Savings Bank (Hudson City Savings), retail savings bank offering traditional deposit products, residential real estate mortgage loans and consumer loans. In addition, the Company purchases mortgages and mortgage-backed securities and other securities issued by United States government-sponsored enterprises, as well as other investments permitted by applicable laws and regulations. Its revenues are derived principally from interest on its mortgage loans and mortgage-backed securities, and interest and dividends on its investment securities.

Lending Activities

Hudson City Savings’ loan portfolio primarily consists of one- to four-family residential first mortgage loans. To a lesser degree, the loan portfolio includes multi-family and commercial mortgage loans, construction loans and consumer loans, which primarily consist of fixed-rate second mortgage loans and home equity credit lines. As of December 31, 2008, it had total loans of $29.42 billion, of which $29.03 billion, or 98.7%, were first mortgage loans. Of the first mortgage loans outstanding, as of December 31, 2008, 75.7% were fixed-rate mortgage loans and 24.3% were adjustable-rate mortgage (ARM) loans. As of December 31, 2008, multi-family and commercial mortgage loans totaled $53.4 million, or 0.2% of the loan portfolio, construction loans totaled $24.8 million, or 0.1% of total loans and consumer and other loans, primarily fixed-rate second mortgage loans and home equity credit lines, amounted to $384.8 million, or 1.3%, of total loans.

Hudson City Savings’ primary lending emphasis is the origination and purchase of first mortgage loans secured by one- to four-family properties that serve as the primary or secondary residence of the owner. At December 31, 2008, $53.4 million, or 0.18%, of the total loan portfolio consisted of multi-family and commercial mortgage loans. Commercial mortgage loans are secured by office buildings, religious facilities and other commercial properties.

Investment Activities

Hudson City Savings has authority to invest in various types of assets, including United States Treasury obligations, federal agency securities, mortgage-backed securities, certain time deposits of insured banks and savings institutions, certain bankers’ acceptances, repurchase agreements, federal funds sold, and corporate debt and equity securities, commercial paper and mutual funds. It invests primarily in mortgage-backed securities issued by Government National Mortgage Association (Ginnie Mae), Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac), as well as other securities issued by United States government-sponsored enterprises.

Sources of Funds

Hudson City Savings’ 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 its operations. It offers a variety of deposit accounts having a range of interest rates and terms. Hudson City Savings offer passbook and statement savings accounts, interest-bearing transaction accounts, checking accounts, money market accounts and time deposits. It also offers individual retirement account (IRA) accounts and qualified retirement plans. As of December 31, 2008, total core deposits (defined as non-time deposit accounts) represented approximately 29.9% of total deposits.

Subsidiaries

Hudson City Savings has two wholly owned and consolidated subsidiaries: HudCiti Service Corporation and HC Value Broker Services, Inc. HudCiti Service Corporation, which qualifies as an investment company, has two wholly owned and consolidated subsidiaries, Hudson City Preferred Funding Corporation and Sound REIT, Inc. Hudson City Preferred Funding and Sound REIT qualify as real estate investment trusts, and had $6.58 billion and $36.2 million, respectively, of residential mortgage loans outstanding at December 31, 2008. HC Value Broker Services, Inc., whose primary operating activity is the referral of insurance applications, formed an alliance that jointly markets insurance products with Savings Bank Life Insurance of Massachusetts. HC Value Broker Services offers customers access to a variety of life insurance products.