Hudson City Bancorp, Inc. (NASDAQ: HCBK) may have reported a net loss of $360.5 million for the quarter of -$0.73 EPS against positive earnings net income of $121.2 million or $0.25 per diluted share in the fourth quarter of 2010. This loss was expected based upon the previously announced debt extinguishments causing a charge of $416.8 million.
On an operating basis, the bank reported earnings of $58.6 million, or $0.12 in earnings per share. The earnings were adversely hit due to elevated levels of liquidity that were held in overnight funds with an average yield of 0.28% and those funds were used to fund the debt extinguishments in December. The bank did declare a quarterly cash dividend of $0.08 per share as well.
The net interest rate spread and net interest margin fell down to 1.51% and 1.73%, respectively, for the fourth quarter (versus 1.76% and 1.97%, respectively, a year earlier).
The Bank’s Tier 1 leverage capital ratio increased to 8.83% at December 31, 2011 from 8.77% at September 30, 2011. The ratio of shareholders’ equity to total assets was 10.05% at December 31, 2011 as compared to 9.01% at December 31, 2010.
Where this gets interesting is in the book value. Hudson City closed at $7.10 and the pre-market trading has the stock down around $6.90 against a 52-week trading range of $5.09 to $11.52. The bank listed its stated book value at $9.20 per share and its tangible book value at $8.89 per share. This is a huge discount to book value, but that is the current climate for bank stocks and book value is likely going to act as a ceiling in major bank stocks for the time being.
JON C. OGG
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