Loan loss reserves covered 0.68% of total loans as of September 30, which was "way ahead of the pace" of loan losses, as the annualized ratio of net charge-offs to average loans for the third quarter was a very low 0.33%.

Hudson City was very strongly capitalized, especially for a profitable holding company in the current environment. For main subsidiary Hudson City Savings Bank, the Tier 1 leverage ratio was 7.91% and the total risk-based capital ratio was 22.42%. These ratios need to be at least 5% and 10% for most banks to be considered well-capitalized by regulators. While the company didn't include a tangible common equity ratio in its third-quarter earnings release, its tangible common equity ratio was 8.86% as of June 30, according to SNL Financial.

Hudson City's shares trade for about 1.1 times the tangible book value of $11.08 the company reported as of September 30. Based on a 15 cent quarterly dividend payout, the forward yield on the shares is 5.09%, and the dividend is very comfortably supported by earnings.

Analysts lack conviction on the shares. Out of 16 analysts covering Hudson City, 12 have hold ratings, two rate the shares a buy and two recommend investors sell the shares.


-- Written by Philip van Doorn in Jupiter, Fla.

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Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.

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