Mounting loan losses, a growing problem for all banks, didn't deter Hudson City Bancorp ( HCBK), which posted a 16% gain it its second-quarter. Aided by gains from sale of mortgage-backed securities and growth in interest-generating assets, the company managed to earn $127.9 million, or 26 cents a share. Analysts expected earnings of 25 cents. Last year Hudson City recorded a profit of $110.7 million, or 22 cents. In the second-quarter, the company saw a boost from a $24 million gain on the sale of certain mortgage-backed securities during the quarter and a 30% increase in net interest income. Net interest income, or the difference between how much it costs a bank to borrow money and how much it receives from lending it to customers, reached $302.4 million from $233.1 million last year. But bad loans, which amounted to about $32.5 million in losses, sent shares of the company down nearly 3% to $14.24 during morning. Hudson City's results also include a special charge to help the Federal Deposit Insurance bolster its insurance fund. The bank paid a $21.1 million special assessment fee to the FDIC during the quarter.
The company also declared a quarterly dividend of 15 cents a share, up from 11 cents in the second quarter of 2008. Shares in the company were changing hands in late-morning trading down 4.3%, to $13.98.