At least one money manager sees the decline in the shares as a buying opportunity.
"We're believers in the stock," said Scott Schluederberg, a portfolio manager with Hardesty Capital Management in Baltimore, Md., who also said Hudson City "should trade at more like 1.5 times book, but all the thrifts are down quite a bit given the economic uncertainty."
Earlier in the session, the shares scraped a low of $12.08, a level that's roughly 1.1 times tangible book value. Year-to-date, Hudson City is down nearly 8%. In recent trading, the stock was off 3.9% to $12.21. Volume of 5.2 million was creeping up on the issue's trailing three-month daily average of 7.6 million.Before Wednesday's opening bell, the bank reported second-quarter net income of $142.6 million or 29 cents a share, a penny ahead of the average estimate of analysts polled by Thomson Reuters. That performance was down from earnings of $148.9 million, or 30 cents a share, in the first quarter, but up 11% from a profit of $127.9 million or 26 cents a share, in the same period a year earlier. The biggest factor in the sequential earnings decline was pressure on Hudson City's net interest margin, which is essentially a bank's average yield on loans and investments, less its average cost of funds. The net interest margin was 2.13% for the second quarter, declining from 2.20% in the first quarter and 2.18% a year earlier. CEO Ronald Hermance said that mortgage loan rates had reached "historical lows" during the second quarter, and "the yields available on securities issued by U.S. government-sponsored enterprises, the only securities we purchase, also fell." Hudson City's return on average assets (ROA) for the second quarter was 0.93% and the company's return on average equity (ROE) was 10.42%, which is a respectable earnings performance in the current industry environment. While Hudson City's net interest margin is quite narrow when compared to the first-quarter national aggregate margin of 3.83% reported by the Federal Deposit Insurance Corp., the company's high efficiency drives earnings. The efficiency ratio -- noninterest expense divided by the sum of net interest income and noninterest income -- was 18.42%. While second-quarter numbers weren't yet available for many of the largest banks, Hudson City's first-quarter efficiency ratio of 18.27% was by far the lowest among the largest 50 U.S. bank and thrift holding companies. The next-best was Washington Federal (WFSL) with a first-quarter efficiency ratio of 25.03% followed by New York Community Bancorp (NYB) with a first-quarter efficiency ratio of 36.62%, according to SNL Financial.
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