NEW YORK (TheStreet) -- Shares of Hudson City Bancorp (HCBK) shares are up 1.25% to $9.75 in morning trading on Friday after the company agreed to settle an unfair lending practices suit for $33 million.
The Paramus, NJ-based bank will pay the fine to the U.S. government to settle allegations that it discriminated against prospective black and Hispanic home buyers.
The Justice Department accused the bank of trying to avoid locating branches and marketing mortgages in majority black and Hispanic neighborhoods.
If the settlement is approved by the courts, Hudson City will pay $25 million in direct loan subsidies to qualified borrowers in the affected communities, according to Rueters.
TheStreet Ratings team rates HUDSON CITY BANCORP INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
We rate HUDSON CITY BANCORP INC (HCBK) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. Among the primary strengths of the company is its expanding profit margins over time. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 8.9%. Since the same quarter one year prior, revenues slightly dropped by 6.4%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- 41.74% is the gross profit margin for HUDSON CITY BANCORP INC which we consider to be strong. Regardless of HCBK's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, HCBK's net profit margin of 11.89% is significantly lower than the industry average.
- The change in net income from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Thrifts & Mortgage Finance industry average. The net income has decreased by 9.0% when compared to the same quarter one year ago, dropping from $39.18 million to $35.66 million.
- Net operating cash flow has significantly decreased to -$28.19 million or 269.33% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Thrifts & Mortgage Finance industry and the overall market on the basis of return on equity, HUDSON CITY BANCORP INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
- You can view the full analysis from the report here: HCBK