-
Click on individual bank names in the table below to access American Banker's coverage of each company's earnings report. Links to relevant coverage, filings, and releases can be found in the Related Links area of each article.
January 28
Hudson City Bancorp Inc. said Wednesday that its net income fell 11% in the fourth quarter as record low interest rates cut into yields it earns on mortgage-related assets — a condition the lender anticipates will continue throughout 2011.
The Paramus, N.J., thrift, whose primary business is mortgage lending, reported net income of $121.2 million, or 25 cents per share, down from $136.6 million, or 28 cents per share, a year earlier. Despite the dip, Hudson's results fared better than the 22 cents-per-share profit analysts polled by Bloomberg had expected.
During the fourth quarter, Hudson City made $395.6 million of first mortgage loans, compared with $426.8 million a year earlier. Consumer and other loans dropped 11% to $4.5 million from $5 million.
For the full year, net loans decreased 3% to $30.8 billion, while total deposits rose 2% to $25.2 billion.
The $61.2 billion asset thrift said its loan portfolio decreased primarily due to a high level of loan repayments spurred by low interest rates. Additionally, Hudson City said some customers chose to refinance their mortgages with other banks. In total, there was $7.26 billion of principal repayments in 2010, compared with $6.77 billion in 2009.
Hudson City also has historically been a big buyer of mortgage loans. But purchase activity in recent quarters has been stifled by Fannie Mae and Freddie Mac, which have been buying up the majority of mortgages loans made in an effort to prop up the housing market. So lenders that would normally sell their loans to Hudson City have been selling to Fannie and Freddie instead. The bank said it expects the amount of future loan purchases to remain at lower levels, at least in the near term.
"The recent increase in longer term market interest rates have pushed mortgage rates higher, but the continued elevated levels of unemployment, the weak housing market and the unprecedented level of the U.S. government-sponsored enterprises involvement in the mortgage market have impacted our ability to grow our loan portfolio as the GSEs were involved in over 90% of U.S. mortgage production," said Ronald E. Hermance Jr., chairman and chief executive, in a press release.
Total mortgage-backed securities increased by roughly $3 billion during 2010 to $24 billion. During the year, the bank bought $15.5 billion of Fannie and Freddie MBS, substantially all of which were hybrid adjustable-rate securities.
One positive trend in the fourth quarter was a dip in the rate of loan delinquency growth, which enabled Hudson City to set aside less for future loan losses. The provision for loan losses was $45 million, down from $50 million in the third quarter.
At year end, 2.82% of all loans were nonperforming, compared with 2.64% in the third quarter and 1.98% a year earlier. The net chargeoff rate stood at 0.32%, down from 0.33% in the prior quarter, but up from 0.25% in the fourth quarter of 2009.
