On Jun 20, 2014, we issued an updated research report on
Hudson City Bancorp, Inc.
). This New Jersey-based savings and loan institute is on track
with its strategic initiatives to boost the overall performance of
Hudson City adopted a strategic plan laying down objectives for the
company's overall risk profile, earnings performance, growth and
balance sheet mix and enhancement of the enterprise risk management
program. The initiatives include secondary mortgage market
operations, commercial real estate lending and introduction of
small business banking products.
Notably, given the delay in the merger with
M&T Bank Corporation
), Hudson City initiated commercial real estate lending and
secondary mortgage market operations during first-quarter 2014.
In the fourth quarter of 2011, Hudson City completed its balance
sheet restructuring, which substantially reduced higher-cost
structured borrowings. Interest expenses declined in the subsequent
years, and the downward trend continued in the last quarter. As
part of its strategic plan, the company proposes further
restructuring in 2014 and anticipates net interest margin and
future earnings to improve.
Though the full implementation of such initiatives will require
significant time, we believe these to be beneficial for the company
in the long run.
Further, Hudson City reported first-quarter 2014 earnings per share
of 9 cents, beating the Zacks Consensus Estimate by 28.6%. Results
were aided by increased non-interest income, lower expenses and no
provision for loan losses.
Nevertheless, we remain cautious owing to several issues faced by
Hudson City. The persistent delay in completion of the merger deal
with M&T Bank owing to regulatory issues raises concern for the
company's future growth prospects. Moreover, a sluggish economic
growth and stringent regulations remains the headwinds.
Over the past 60 days, the Zacks Consensus Estimate advanced 3.7%
to 28 cents per share for 2014, while it fell 12.5% to 28 cents per
share for 2015.
Hudson City currently carries a Zacks Rank #3 (Hold).
Great Southern Bancorp Inc.
) are better-ranked stocks in this space. Both the stocks sport a
Zacks Rank #1 (Strong Buy).
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