Hudson City Beats by a Penny

After market close, Hudson City Bancorp (HCBK - Analyst Report) reported 1Q09 earnings of $0.26 per share, a penny above our expectation and consensus. Results again experienced strong lending revenues, even though provisioning level increased and other credit quality metrics expanded.

Despite stability in the EPS trends, we remain concerned as to the relationship of provisions and non-performing assets, as well as the adverse trends with respect to credit quality metrics and regulatory capital ratios.

For now we are leaving our FY09E EPS at $1.10 per share, but lowering our FY10E EPS to $1.30 per share. We continue to view the shares of HCBK as a Hold, though our concerns remain for the industry and this company over the near term.