On Apr 5, 2013, we reiterated our long-term recommendation on
Hudson City Bancorp, Inc
) at Neutral. Our decision rests on lower expenses and solid
capital ratios. However, these positives were offset by a decline
in both net interest and non-interest income.
Hudson City's fourth-quarter 2012 earnings came in at $0.10 per
share, marginally missing the Zacks Consensus Estimate. The
company experienced lower expenses and a robust capital position.
Following its fourth-quarter results, the Zacks Consensus
Estimate for 2013 remained stable at $0.43 per share over the
last 60 days. However, the Zacks Consensus Estimate for 2014 fell
2.9% to $0.41 per share over the same time frame. Due to lack of
significant estimate revisions, Hudson City currently holds a
Zacks Rank #3 (Hold).
Hudson City completed its balance sheet restructuring in 2011,
which substantially reduced its higher-cost structured
borrowings. Further, Hudson City was not required to participate
in the aid provided by the government during the height of the
financial crisis. Therefore, it has no loans outstanding to the
On the flip side, credit metrics at Hudson City remain a matter
of concern over the last couple of years. Nonperforming assets
have continuously increased over the past few quarters. Moreover,
Hudson City's net interest margin has been steadily declining
along with a decrease in net interest income.
Further, the unfavorable interest rate environment, sluggish
economic recovery combined with the uncertainty surrounding the
new and anticipated regulations are likely to affect its revenues
Other Major Banks to Consider
Other major banks that are performing better than Hudson City
Capitol Federal Financial, Inc
Heritage Financial Corp
). All these companies carry a Zacks Rank #2 (Buy).
BANNER CORP (BANR): Free Stock Analysis
CAPITOL FEDL FN (CFFN): Free Stock Analysis
HUDSON CITY BCP (HCBK): Free Stock Analysis
HERITAGE FIN CP (HFWA): Free Stock Analysis
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