Hudson City CEO says bank performance improving

Analysts polled by Thomson Financial, on average, forecast earnings of 85 cents per share for the year at Hudson City. The bank earned 58 cents per share in 2007.

Chairman, President and Chief Executive Ronald Hermance Jr. said in a statement the bank has improved interest margins and increased mortgage production at a time when home sales are falling. He asserted that credit quality remains strong.

Many banks across the country have been faced with steeply declining profits or outright losses in recent quarter because or rising defaults on mortgages and other loans. Many banks have also been forced to raise new cash or slash their dividend to shore up their capital position because of those losses.

Hudson City's net interest margin--the profit margin from lending--was 1.83 percent for the first five months of the year. The bank's net interest margin was 1.72 percent during the first quarter and 1.65 percent in 2007.

Mortgage lending increased 17 percent during the first five months of 2008, compared with the year-ago period. With that increase in production, credit quality has remained strong.

Hudson City's non-performing loan ratio was 0.41 percent as of May 31, the same level it was two months earlier.

The bank's loan portfolio also had very few construction, commercial, consumer and home equity loans, Hermance said in the statement. Those loans have also been defaulting at increasing rates in recent months.

Construction, commercial, consumer and home equity loans accounted for 1.8 percent of Hudson City's total loan portfolio as of May 31.

Shares of Hudson City rose 70 cents, or 4.1 percent, to $17.96 in morning trading.