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Hudson City Remains Neutral - Analyst Blog

Posted
4/8/2013 11:10:00 AM
By: Zacks.com
Referenced Stocks:BANR;CFFN;HCBK;HFWA

On Apr 5, 2013, we reiterated our long-term recommendation on Hudson City Bancorp, Inc . ( HCBK ) 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.

Why Neutral?

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 government.

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 going forward.

Other Major Banks to Consider

Other major banks that are performing better than Hudson City include Banner Corporation ( BANR ), Capitol Federal Financial, Inc . ( CFFN ) and Heritage Financial Corp . ( HFWA ). All these companies carry a Zacks Rank #2 (Buy).



BANNER CORP (BANR): Free Stock Analysis Report

CAPITOL FEDL FN (CFFN): Free Stock Analysis Report

HUDSON CITY BCP (HCBK): Free Stock Analysis Report

HERITAGE FIN CP (HFWA): Free Stock Analysis Report

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